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Our NSW strata ceased paying a caretaker given we discovered

the contract was invalid and...
Our NSW strata ceased paying a caretaker given we discovered the contract was invalid and the performance warranted it ( we have a record of breaches). We said that we weren't paying him any more on these grounds but did not use the word termination. Can we still approach the CTTT to ratify the decision as a termination on invalidity, harshness, repudiation of the contract ?
Did he repudiate the contract by outsourcing duties he admitted were his and passing on the outsourced service fee. He also is double what we can get the comparable services for which is very harsh.
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Answered in 4 minutes by:
7/25/2013
Sean
Sean, Experienced lawyer
Category: Australia Law
Satisfied Customers: 855
Experience: Law degree with 1st class honours from Australian National University.
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Hello and thank you for your question. My name is XXXXX XXXXX I would be happy to assist you with this.

Can you please tell me why you say his contract was invalid?

Did he have a standard employment contract?

What did he say in his letter of demand?

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Customer reply replied 4 years ago

the strata manager in 2007 allowed the original caretaker to use proxies to achieve a quorum to resolve the motion where he should not have as he got a pecuniary benefit and also 2 EC member took it on themselves to assign it to this new caretaker and so owners did not have a say as it requires a general meeting. we did not realise this did not occur but we are 5 years down the track. The caretaker even admitted that he thought it was invalid too in a tape at a general meeting.


 

Customer reply replied 4 years ago

Sorry sent that before finished. It was a contract for 10 plus 10 ( 10 years too long we now know).


Letter of demand seeking balance of 5 years contract payments and costs or will go to district court. We are wondering if we get into CTTT can we head him off and throw it all at him.


He had offered to sell it for 1 years payment 6 months ago.


 


 

OK thank you. If that is the case, I would write to him and point out that his contract was invalid from the beginning because of how it came about, and he has admitted this is the case. In any event, he has committed a fundamental breach of his contract by outsourcing duties that he was required to perform himself. Therefore, he has repudiated the contract and the strata accepts the breach and wishes to terminate the contract. It is important that you accept his repudiation to bring the contract to an end.

You don't need to go to the CTTT to do this, you just need a letter that is worded correctly (it may be worth your while asking a lawyer to draft it for you).

Even if he did bring a claim in the District Court on the basis that he is entitled to damages, and somehow successfully argued that the contract was valid, he is subject to the doctrine of mitigation, which means he would only get damages up the point where he finds commensurate alternative employment. He would certainly not get 5 years, he would more likely get a few months.

However, I think there are good grounds to say that the contract is invalid and that in any event he has repudiated it so the contract is at an end.
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Customer reply replied 4 years ago

Thanks Sean, but given that we kind of have already terminated him, we say recognise there is no contract and have ceased paying him ( bit of a cop out).... can we still take it to the CTTT to have the decision ratified.


Are we screwed if he takes it to the District court and , even though we only found out about the breaches, he argues that we paid him for 5 years and it was our error and we are liable.


Unfortunately the insurer has dumped us as we thought we had cover, but they say we only have office bearer cover and he is going for the OC.


Would we be best to put in a CTTT case which is lower cost and have our decision ratified as a blocking tactic or just a strong letter from a lawyer.


Even though you ceased paying him, you still need to expressly state that you accept his repudiation of the contract. This is important, otherwise it won't be an effective termination.

The CTTT wouldn't ratify a termination. They are a dispute resolution body - so you would need to take a complaint to them for them to make a decision on. But it wouldn't be that they would ratify your termination - they would decide whether or not there has been a breach of the contract.

So I think you are better off having a strong letter come from a lawyer. And I don't think you are screwed if they take you to the district court. You have strong defences here - not only was the contract invalid to start with, he repudiated the contract, and and damages claim will be subject to mitigation. You should ask your lawyer to point all of this out to him so he thinks twice about bringing a claim.

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Customer reply replied 4 years ago

He has disputed the repudiation and performance breaches in general statements , does that give us grounds to ask the CTTT to make a ruling. Some of our owners are nervous about the cost of district court vresus CTTT. If we get our foot in the door at CTTT does that block him taking us to district court?


Hey thanks Sean this is really helpful.


Ros


OK, here's something else to think about before you go down that track.

Section 40B of the Strata Schemes Management Act 1996 (NSW) has the following provisions:

(3) The functions of a caretaker under a caretaker agreement may be transferred to another person only with the approval of the owners corporation. A person to whom those functions are transferred is taken to be appointed as a caretaker by the caretaker agreement.

(4) An owners corporation may terminate a caretaker agreement in accordance with its terms, and may approve a transfer of the functions of a caretaker, if authorised by a resolution at a general meeting of the owners corporation.

Has there been any kind of meeting of the owners corporation or a general meeting to approve termination of the agreement with the caretaker?

Also, is there are caretaker agreement and do you know what it says about termination? ie does it allow termination after a certain period of notice?

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Customer reply replied 4 years ago

yes, thanks, XXXXX XXXXX sections and have letters from DOFT confirming this and the invalidity seems rock solid, it is just that we have paid him for 5 years and even though we just found out about the invalidity and have acted , could we have "created" a contract by virtue of him doing some duties over this length of time. We had an EGM and we voted to view the contract as invalid and noted that the performance breaches were such that we had grounds in gross negligence and non rectification after 14 days notice of a breach ( the 2 types of termination clause). He knew we had termites in a fence and never told us. When the tenant he put intot eh caretaker unit he owned told us and we found out, we asked him and he didn't reply over a period of a month ( the rectification period is 14 days. He gave favourite owners exclusive access to common property storage rooms and did not act in the best interest of the owners. We also asked him in writing on several occasions to reopen a guest bathroom and he flatly refused and when he did, he promptly locked it up again. that we in effect had a monthly service only and so gave him a months notice. There are photos of doors covered in mould, pool carpet with holes never reported etc. He thinks he did a great job, is this dispute enough to go to CTTT or once we have made the decision is that it and the next step is his?


Ok that's good, so you have followed the requirements of the legislation and under his contract. The only thing is, from the sounds of it you have pointed to having the ability to terminate under the two grounds in the contract, but not actually said you are terminating under those clauses. I think it would be good for you to expressly state this. Otherwise, you may only be left with the argument that the contract was invalid from the beginning, and he will have an argument that the strata waived this breach on the basis that it allowed him to work for 5 years. This is a 50-50 argument though, because if he did not reveal it he may not be able to rely on waiver.

However, I can see you guys really want to take this to the CTTT so I looked a bit further into it. Under section 183A of the Act, the Strata can bring an application to CTTT for an order terminating the agreement on the following grounds:

(a) that the caretaker has refused or failed to perform the agreement or has performed it unsatisfactorily,

(b) that charges payable by the owners corporation under the agreement for the services of the caretaker are unfair,

(c) that the agreement is, in the circumstances of the case, otherwise harsh, oppressive, unconscionable or unreasonable.

Therefore, I think go for it - you will cut him off at the pass and I think have good grounds to succeed with this.

If you go to this website you will see all the forms you need for making an application:

http://www.cttt.nsw.gov.au/Divisions/Strata_and_community_schemes.html

You need to use the forms for Tribunal orders as the Act specifies that this is to be taken to the Tribunal.


Sean
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Experience: Law degree with 1st class honours from Australian National University.
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