There are three codes of conduct under the BCCM Act in schedules 1A, 2, and 3. These codes of conduct are for committee voting members, caretaking service contractors and body corporate managers, and letting agents.
A body corporate manager has the same code of conduct as a caretaker. A caretaker is someone who is both a service contractor and a letting agent. If someone is only a letting agent, then they have a separate code of conduct.
Under the code of conduct for body corporate managers and caretakers, they must have a good working knowledge of the BCCM Act and must ensure they and their employees comply with the BCCM Act and code of conduct. They must act with honesty, fairness, professionalism, skill, care, and diligence.
They must also act in the body corporate’s best interests and must avoid a conflict of interest. They must keep the body corporate informed of developments relevant to their activities. They must avoid fraudulent, misleading, or unconscionable conduct and must supply goods and services at competitive prices. Body corporate managers particularly must demonstrate that they are keeping body corporate records that are required to be kept under the legislation.
A letting agent has a slightly less onerous code of conduct. They must still act with honesty, fairness, professionalism, skill, care and diligence. They must also ensure they and their employees comply with the BCCM Act and the code of conduct. They must also avoid fraudulent, misleading, or unconscionable conduct. They must also provide goods and services at competitive prices. They must not cause a nuisance either, and they have to act in the best interests of the body corporate and individual lot owners.
These codes of conduct are not merely aspirational statements. They are law, and by virtue of s 118 of the BCCM Act, the codes of conduct are taken to be included in the terms of their contract. Further, if there is any inconsistency between their contractual duties and the code of conduct, the code of conduct prevails. This means that, regardless of what is in a contract, the code of conduct rules supreme.
If the code is contravened, the body corporate may resolve at a general meeting to issue a notice of contravention. If the body corporate manager, caretaker, or letting agent does not comply, then the agreement might be able to be terminated by the body corporate.
This is important, because management rights might be worth a lot of money – some may be worth in excess of $1,000,000. However, this is not something that the body corporate has to care about. As stated by the District Court in Body Corporate for Palm Springs Residences v J Patterson Holdings Pty Ltd [2008] QDC 300, if the agreement may be terminated by the body corporate:
“I would have thought the best way for a caretaker to preserve its valuable asset was to ensure that its obligations under the agreement were properly complied with. If a caretaker has allowed circumstances to arise where the body corporate is entitled to terminate the agreement, that option is available to the body corporate.”
If a body corporate has taken steps under the contract to try and remedy the caretaker’s failures, then the body corporate is entitled to exercise its right of termination under that contract. A code of conduct is enforceable, and it is the caretaker who owes a duty to the body corporate to act in its best interests, not the other way around. A management rights agreement is to provide services to the body corporate. The body corporate has no obligation at all to be concerned about the value of that asset.
This article is intended as general information only and should not be relied upon as legal advice. For specific legal advice please contact us here.