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Merrimac Heights Lessons Learned
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A presentation by Michael Teys 25 November 2011
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Merrimac Heights Lessons Learned
1.
Merrimac Heights Case:
Lessons Learned Friday 25 November 2011 © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
2.
Well May We
Say………. © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
3.
Gardening agreement
valid to 2022 despite requiring work on lots Caretaking agreement valid to 2022 despite manager’s obligation to supervise itself doing gardening Damages awarded for the manager’s loss of ‘profit’ on gardening of $59,200 © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
4.
Management Rights at
Merrimac Heights 150 Lot Owners Caretaking $135,949 pa Gardening New Gardener $42,996 pa $11,700 pa Common Lots Property © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
5.
The Essence of
the Merrimac Decision !"#$%&'()& !"#$%&'()& !**+%&',-& !**+%&',-& !"#$%&"'(%)*((+,-)%+".% !"#$%&"'(%)*((+,-)%+".% !"#$%&"'(%42$%)*((+$%+".% !"#$%&"'(%42$%)*((+$%+".% "/0-')%*0#-'%/',1-0% "/0-')%*0#-'%/',1-0% "/0-')%)-'5,&-)% "/0-')%)-'5,&-)% 23'--4-0.% 23'--4-0.% 67-0%42$%-4(+"$%23-0.)%."% 67-0%42$%-4(+"$%23-0.)%."% !"#$%&"'(%42$%&72'3-%+".% !"#$%&"'(%42$%&72'3-%+".% (-'8"'4%+".%"/0-'% (-'8"'4%+".%"/0-'% "/0-')% "/0-')% 23'--4-0.)% 23'--4-0.)% 9"%+".%"/0-')%23'--4-0.%:% 9"%+".%"/0-')%23'--4-0.%:% !"#$%&"'(%4*).%'-&"5-'% !"#$%&"'(%4*).%'-&"5-'% 0"%-;(-0#,.*'-%"8%<"#$% 0"%-;(-0#,.*'-%"8%<"#$% &").)%."%3'-2.-).%('2&=&2<+-% &").)%."%3'-2.-).%('2&=&2<+-% &"'(%8*0#)% &"'(%8*0#)% -;.-0.% -;.-0.% © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
6.
So Where Does
This Leave Us? • The body corp contracts with Sadie to clean each apartment weekly • The body corp takes a margin to cover its costs of supplying Sadie’s services • Some owners won’t have Sadie but she gets paid anyway • Some owners don’t pay the body corp but the body corp pays anyway • The developer sells Sadie’s secure income stream to the highest bidder © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
7.
New FronYers for
Body Corps Maintenance Communica-on Domes-c • Cleaning • Telephone • Electricity • Repair • Intercom • Gas • PainYng • Broadband • Water • Pests • Television • Garbage • Mowing • Air Con • HeaYng © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
8.
Is This New
FronYer a Good Thing? Good Evil Complexity Mowing Control PainYng Costs © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
9.
It’s a Queensland
Thing 2,350 20 10 200 25 Number of management rights around Australia Source: Col Myers, Management Rights, The Good, The Bad and The Ugly, ACCAL 10 March 2011 5 © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
10.
Why Management Rights
Have Not Spread • LegislaYve restricYons on developers elsewhere • Common law fiduciary duYes not displaced elsewhere (Arrow case) • NSW liYgiousness © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
11.
LegislaYon Eroding Queenslander’s
Common Law Rights • Fiduciary duYes by a developer gone • Ultra vires (outside powers) gone, Merrimac Heights case • Fiduciary duYes of a manager watered down by code of conduct, Merrimac Heights case So where is the upside? © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
12.
Tired Old Management
Rights Chestnuts • Someone with ‘skin in the game’ will do a beder job than a mere employee • A resident manager will pick a beder tenant because they live there • Developers will not build without management rights to sell © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
13.
Lesson 1 -‐
Long Term Contracts Eliminate CompeYYve Pricing Tension • The award of damages in Merrimac Heights proves this point • Code of conduct duYes about compeYYveness do not trump long term contracts • Absent evidence of value, they ought to be rejected when they end © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
14.
Lesson 2 –
Resident Managers Will Fight for Their Livelihoods • Life savings invariably invested • DepreciaYng assets heavily financed • Market driven percepYon of ever-‐ renewing contract terms © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
15.
Lesson 3 –
LiYgaYon Will Divide the Body Corporate • Passive v aggressive • Investors v owner occupiers • AcYve commidee v disengaged owners © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
16.
Contract Term
Finance ConstricYons Expiry Increasing Receiverships Social Media / Blogging Dark Clouds Over Queensland Management Rights © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
17.
Unit Owners Must
Take Responsibility for Their Own Affairs © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
18.
About the Presenter
Michael Teys is the Founder and Principal Lawyer of TEYS Lawyers. He has a Bachelor of Laws and pracYces exclusively in the area of strata Ytle law. He is a Fellow of the Australian College of Community AssociaYon Lawyers. He was formerly an Adjunct Lecturer with Charles Sturt University. He appears weekly on SKY News Business Channel's Property Success with Margaret Lomas and is a regular panellist for the property ediYon of Your Money, Your Call for the same channel. You can find out more about Michael at www.michaelteys.com TEYS Lawyers pracYce naYonally in strata Ytle law represenYng owners corporaYons, bodies corporate and apartment owners. The firm’s pracYce groups include building defects, management rights, strata community disputes, by-‐laws and rules and levy and fee collecYon. Subscribe for their free e-‐newsleder StrataSpace and find out more about them at www.teyslawyers.com.au © Copyright 2011 Teys Lawyers www.teyslawyers.com.au
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