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The Motel Lease – the term

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The term of the Lease is extremely important to both the value of the Tenant's business and the value of the Freehold owner's investment.  It is simple – certainty equals value.

The length of a Tenant's tenure and security will be derived from the Lease.  This is extremely important in creating value in a motel business.  A Lease which has 5 years left to run is obviously of far less value than one with 20 years left.

Most motel leases will start for a term of twenty-five years  (this is usually broken down into an initial term of 10 years, with options for a further five years each).

At the outset, it is important to understand the distinction between “extending” your lease and exercising an option (which is an existing contractual right).

‘Extending” your lease is adding a new right to the existing lease. It is not exercising an existing right under that lease (which is what exercising an option is).

Generally, in a commercial lease, you will find that to exercise an option, the Tenant must give notice to the Landlord within a certain period of time.  If the option period is not exercised within the time frame and in the manner specified in the lease then the Tenant will lose their right to exercise the option.  It is as simple as that.

However, in a motel, the value of the motel business is linked to the length of the lease and therefore having a clause requiring notice to be given to exercise an option can be risky.  We prefer to draft a motel lease so that the options operate automatically – which means that the Landlord has to recognise the options (provided that the Tenant has observed and performed all of the terms of the lease).  The Tenant only needs to give notice where the Tenant does not want to exercise the option (which would be rare).

When an option is exercised the further lease will be on the same terms as is in existence, except that the number of option periods will be reduced by one.  The rent will generally be reviewed in the same manner as it is every other year.  In some cases, the rent may be reviewed to market. 

If you do have a lease which requires notice to exercise the option then it is very important that you diarise the dates and exercise the option strictly in accordance with the terms of the lease.

As options are exercised the remaining term of the lease is decreasing and it is worthwhile considering the best time to negotiate adding more time to the end of the Lease – which will “extend” the lease.  Often this is done by “buying” further years from the landlord and the best advice is to undertake these negotiations to purchase further years from the Landlord sooner rather than later.  Before negotiating with the Landlord, we would recommend seeking advice from your accountant and a specialised valuer in relation to the price per year of extension.

 

The key legal differences between motels and management rights

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There are (obviously) two very different business models in the management rights and motel industries.

While everyone seems to write about one or the other, we thought that it would be interesting to compare the legal characteristics of both for our management rights and motel audiences.

For the purposes of this article, when we talk about a motel, we are talking about a leasehold motel. If you own a freehold going concern motel, a lot of the decision making issues fade away as you are in complete control of everything as both landlord and tenant.

A decision to enter either industry comes down to your own personal preferences around a range of factors.

Some of those factors might be what we cover below, so read on if you're interested.


Concept Management rights Motels
Legal documents

The main documents for a management rights business will be a Caretaking Agreement and a Letting Agreement (between the management rights owner and the body corporate).

There will also need to be a letting appointment in place with the owner of each lot in the letting pool.  Sometimes these can be leasebacks as well under which a fixed return is paid (as opposed to an amount after management expenses).

There will be a registered lease in place between the owner of the freehold land (landlord) and the motel operator.

There are no letting appointments because the motel operator is renting the motel rooms on their own account.

Tenure or term Management rights agreements will have a term limitation of 10 years (Standard  Module) or 25 years (Accommodation Module).  They cannot go above that at law.

There is no limitation on term on a lease.  It can be for as long as you can negotiate, but that will often be 25 to 30 years.

Other parties interested 

There are three groups you need to deal with.

A body corporate made up of:

  • a committee of up to seven people (usually active); and
  • owners of the number of lots in the scheme in general meeting (usually passive). 
  • The last group is the investors that have appointed you to act as their letting agent.  
A single entity which is the landlord. 
Incoming cash flow

There are two streams of income:

  • Caretaking remuneration (fixed and usually increased annually by CPI); and
  • Letting income (commission and other income able to be charged in the letting appointment), which can vary subject to the number of letting appointments you hold and in short-term letting, the state of the market you operate in.
All of the income from motel guests in whatever form – tariffs, food and beverage and so on.
Expenses

Usual operational business expenses (bank charges, depreciation etc).

The body corporate usually pays for consumables used in maintaining the common property (chemicals, fuel etc).  Caretaking equipment is sometimes yours but sometimes the body corporate’s.

Usual operational business expenses (bank charges, depreciation etc).

The big difference here is that in a motel you pay rent to the landlord in exchange for exclusive occupancy of the motel.

The landlord usually pays for capital type expenditure but all other expenses are usually the moteliers.  It is critical these are properly set out in the lease.

Key drivers of counterparty                           

Presentation of gardens and grounds (owner occupiers) and investment returns (investors).

This can lead to (via owner occupiers) daily supervision in effect.

Rent paid on time; the capital value of income stream from that.

Landlords usually do not regularly come onsite. 

Licencing Need a Property Occupations Act licence and a trust account when letting.  If the business is caretaking only there is no need for a licence.  

No licence to own a motel, but may need associated council health licences or a liquor licence to operate any ancillary businesses (i.e. a restaurant).

Residency Might or might not be required to live onsite.  This depends on the management rights agreements. Usually, someone must reside onsite to manage the business.
GST Usually no GST on tariffs/rents. GST on tariffs/rents.
Day to day decision making

As a contractor to the body corporate, it is usual for there to be some direction provided at committee level.

The motelier can make all their own decisions on the day to day running of the business without referring to any other party.

Decision making with respect to the buildings and improvements

Some at committee level, some at general meeting level.

There is the ability to divide and conquer via personal relationships.

The landlord. 

One decision maker which makes this personal relationship very important.

Financial accountability  To all of the individual letting owners for income received and to any financier. To landlord for rent and after that – no one (other than any financier)
Bank security Protected under the Body Corporate and Community Management Act 1997 (BCCM Act) via notice (Qld only) – otherwise, a right of entry document is required. Needs a right of entry document.
Statutory support Management rights are relatively heavily supported via the BCCM Act. Support in some key areas under the Property Law Act.
Food and beverage  Rarely offered in management rights. Common in motels, whether that be a simple breakfast, or a fully stocked and licenced restaurant.
Obligations and duties Set out in the management rights agreements – usually a very detailed list of what needs to be done from a caretaking/facility management perspective. Set out in the lease – but generally, the motelier is left to their own devices as to how or what they do to ensure that the motel is maintained and kept in good repair and condition.

 

 

Hynes Legal appoints clinical consultant to aged care and retirement living team

Hynes Legal is thrilled to announce that Anne Marie Cassaniti, a highly experienced Clinical Consultant, has joined our aged care and retirement living team.

Anne Marie has a Degree is Nursing and has operated in senior clinical, care and nursing positions throughout her career. Anne Marie’s experience includes senior roles such as Regional Operations Manager, Director of Care, Facility Manager and Assistant Care Manager for a number of aged care providers.

Approved providers now have a ‘one stop shop’ via our full service legal and clinical consultancy service offering. Complementing the suite of legal services provided by Hynes Legal’s highly experience Aged Care and Retirement Living team, with the addition of Anne Marie’s expertise, Hynes Legal can now extend our services to such areas as:

  • Clinical governance and compliance
  • Accreditation
  • Systems implementation
  • Policy development and review
  • Site commissioning
  • Workforce development

In announcing the new appointment, Julie McStay, Director of Hynes Legal’s Aged Care and Retirement Living team, said: “For many years now approved providers have enquired about how we can assist them beyond the legal frameworks of their operation. With Anne Marie on board, Hynes Legal can offer a single point of contact for aged care providers for all their legal and clinical compliance advice. We are very excited to have Anne Marie join the Hynes Legal team.”

Hynes Legal’s additional offering is perfect timing for approved aged care providers with the soon to be released Single Quality Framework from the Australian Aged Care Quality Agency. Hynes Legal is now well positioned to support providers to ensure their compliance with the new standards and assist in the transition over the coming months.

If you would like to discuss how Hynes Legal can assist you across both legal and clinical governance compliance and advice or if you would like more information about Hynes Legal’s new range of clinical consulting services please contact us.

Hynes Legal listed as a leading health and aged care law firm in Doyles Guide 2018

Hynes Legal’s aged care and retirement living team have reinforced their position as one of the leading practices, both nationally and in Queensland after featuring in Doyles Guide’s Leading Health and Aged Care Law Firm List. The firm was ranked, as one of three firms, in the first tier. The guide is regarded as a leading resource in identifying the leading law firms and practitioners across a range of industries and practice areas. 

Further reinforcing the firm’s status in the industry, two members of the Hynes Legal team, Practice Group Leader, Julie McStay and Associate Director, Helen Kay, featured in Doyles Guide's Leading Health and Aged Care Lawyers – Queensland 2018 List.

Julie McStay was recognised, once again, as one of two preeminent practitioners in Queensland. As an active participant in the industry, Julie works closely with key clients, peers and industry stakeholders on a day to day basis and featuring as a preeminent lawyer in Doyles Guide reflects her position within the sector.

Helen Kay was recognised as a recommended lawyer in the space with her expertise, knowledge and practical experience across the property, corporate and commercial elements of the health and aged care sectors.

Hynes Legal's specialist focus on the aged care and retirement living industries has resulted in a number of accolades being awarded including featuring in Best Lawyers, with Julie recognised as a leading lawyer in “Retirement Living and Senior Living Law” and “Health and Aged Care Law”, for the seventh consecutive year. 

The BUGTA law reform recommendations paper has been released

QUT has now produced the final outstanding recommendations report for strata law reform relating to the Building Units and Group Titles Act 1980 (BUGTA) and other legacy legislation that applies to bodies corporate other than the more well-known and widely used Body Corporate and Community Management Act 1997 (BCCM Act).

BUGTA regulates integrated resorts like Sanctuary Cove, Hope Island and Royal Pines along with many buildings at Southbank and other earlier built staged developments like Brett’s Wharf, Cathedral Place and Couran Cove.

The biggest recommendations from our end are that BUGTA should become more aligned with the BCCM Act with respect to:

  • dispute resolution processes;
  • meeting procedures;
  • restrictions on delegating the body corporate’s powers; and
  • by-laws (which will mean BUGTA regulated buildings could no longer unreasonably prohibit pets).

 A copy of the report can be read here.

 In the grand scheme of things, we think there are probably bigger fish to fry for the majority of strata title owners in Queensland, but for those who are in BUGTA regulated buildings, this is a much bigger deal.

Now we are all in the hands of the state government about whether any of this will actually become law. Our newsletters on previous recommendations papers can be found here.

Lot entitlements

By-law reform

Governance and administrative issues

Timetable released for implementation of 2017 Queensland Retirement Village reforms

As reported by Hynes Legal last year, the Housing Legislation (Building Better Futures) Amendment Bill 2017 made a number of amendments to the Retirement Villages Act 1999 (Qld) (RV Act). The majority of the changes are yet to commence and will not begin until a date to be determined by proclamation. A link to our previous article can be accessed here.

The Department of Housing and Public Works (DHPW) has now released a timetable which reveals that the remaining changes to the RV Act will commence in stages involving consultation and implementation phases. The timetable can be accessed here.

Stage 1 involves the following RV Act amendments:

  • Pre-contractual disclosure;
  • Access to documents; and
  • Reinstatement of units.

Consultation on Stage 1 is timetabled between May 2018 and June 2018.

Implementation of Stage 1 is scheduled for between August 2018 and October 2018.

Stage 2 is in relation to the following:

  • Change in village operations; and
  • Retirement village contracts.

Consultation on Stage 2 is scheduled between October 2018 and December 2018.

Implementation of Stage 2 is proposed to take place between April 2019 and June 2019.

Stage 3 involves consultation on the amendments relating to standard financial reports and budgets.

Consultation on Stage 3 is scheduled between April 2019 and August 2019. There is no implementation phase scheduled for on Stage 2 yet. However, the Property Council of Australia has remarked in their article on the Implementation of the amendments that: “Remarkably the final stage of implementation is not scheduled until January 2020.”

Anticipated release of new approved forms

While the descriptions released by the DHPW  about each of the three Stages, is broad, we anticipate that the new approved forms (including the new Village Comparison Document -which replaces the Public Information Document and the new Prospective Costs Document for the Residence Contract) are likely to be consulted on during Stage 1 and implemented between August 2018 and October 2018. This is on the assumption that these forms fall within the DHPW’s “pre-contractual disclosure” process. If not, we assume that they would instead be consulted upon in Stage 2, when the attention turns to the “Retirement village contracts” and then implemented between April 2019 and June 2019. Only time will tell whether we will have these new forms this year or next.

In the meantime, we remind operators to ensure that their current village documents refer to the new behaviour standards for operators and residents and exit entitlement repayment provisions that have already commenced.

If you have any queries or concerns please feel free to contact our retirement villages team to discuss.

This article is for information purposes only and should not be taken as legal advice.

What is a quorum?

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We don’t do much Latin these days in law.  Plain English is all the rage (as it should be), but without a single doubt the most frequently used word is 'quorum.'

In strataland, a quorum is the minimum number of voters who must be present at any general meeting (be that the annual one or an extraordinary one) to have a valid meeting. 

Simply put, if you don’t have a quorum you don’t have a meeting. 

If a quorum for a meeting is not present within 30 minutes of the proposed starting time, the meeting must be adjourned to be held at the same place, on the same day and at the same time, in the next week.  

If at the adjourned meeting a quorum is not present after 30 minutes, the people who are there (whether personally or otherwise) are deemed to form a quorum.  So an adjourned meeting can have every resolution decided by a single vote if only one person chooses to participate.

This covers the apathy that reigns supreme in most bodies corporate.  If no one shows up, that is a different story for another day.

But back to that initial meeting.  There are two requirements for a quorum:

  1. the required minimum number of voters being physically present at the meeting; and
  2. votes from at least 25% of voters.

Who is a voter?

The first step is to determine how many voters there are in the scheme and the key thing here is remembering that the number of voters is not necessarily the same as the number of owners.      

Unfinancial owners are counted as a voter for the purposes of this question.  All you are asking at the moment is how many voters there are – not whether they can vote.  

On top of that, if a lot is owned by a company there must be an individual noted as the company’s representative in some way for the company to count as a voter.  That can be by way of corporate nominee, proxy or power of attorney.  If the company has not appointed anyone, they are not a voter for the purposes of this question.

The hypothetical scheme we will use for illustration purposes has 100 lots.  We are lawyers because we are not good at maths so dividing things into 100 makes it easier for our non-linear brains.  

So:

  • If there are 100 different individuals all owning lots in a scheme, there are 100 voters.  Simple.  
  • If one entity owned fifteen lots, and the rest are individually owned there are only 86 voters – the 85 individual lot owners and the single multiple lot owner. 
  • If 15 of those owners appointed someone to represent them all, then we are down to only 72 voters – 70 individual lot owners, the multiple lot owner and the representative of the other 15 lots.
  • If there were ten lots owned by companies who had not appointed a representative in a required form, we are down to just 62 voters.

Minimum number of owners in physical attendance 

The next issue is that you need at least two voters physically present at the meeting (unless there are only two voters or fewer in the whole scheme – in which case one is a quorum).  Other than that, how many voters there are at the moment is academic.  You just need two of them to show up.  

This is where unfinancial owners do not count. They are not a voter for the purposes of determining whether two people are present.  If one of the only two people present was unfinancial, the first limb of physical attendance has not been met and you are adjourning the meeting no matter what. 

Do you have votes from 25% of voters?

We then get to the final question.  For a quorum to exist there must be votes from at least 25% of the voters.

Since voters cannot be cut in half, for the purpose of the 25% you must round up to the nearest whole number.

So, using our prior examples, the required percentage of voters would be

  • 100 voters – 25 
  • 86 voters – 22 (rounded up from 21.5) 
  • 72 voters – 18
  • 62 voters – 16 (rounded up from 15.5)

Unfinancial owners still do not count. They are not present for the purposes of determining whether 25% of voters are present.  

Using our first 100 lot example above again, if we had two people present in person along with 25 voting papers from individual lot owners, but four of those voting in that way were unfinancial, then we only have 21 voters there – meaning we do not have a quorum.  

If you do get past the two tests for a quorum (physical attendance and 25% of voters), then unfinancial owners can vote, but only on motions requiring a resolution without dissent or for the committee.  

That can become very complex, so let us know if you ever need help deciphering this any further.

Instructing service providers

This article first appeared on the Smart Strata website on 20 February 2018.


Have you ever tried to take instructions from seven people at once?

It happens quite a bit to us here in strataland.

We send out a set of questions to a client committee and everyone copies us in with their responses, comments, clarifications and questions.

As specialist Body Corporate Solicitors we are regular receivers of body corporate instructions and know how to manage these things. But; many service providers and contractors have not regularly dealt with bodies corporate before leaving them confused about who to listen to. The other issue is that many committees are not necessarily good givers of instructions and some lot owners don’t know where to start.

As usual with our commentary, rather than sit here and look up the most obtuse parts of the BCCM Act to bamboozle you all with, we will actually deal with stuff that will make a day-to-day difference in your strata lives.

What is best practice with instructions?

From the committee side

Every job should have one person running it. That is not to say that one person then makes the decisions. They don’t. The committee must make every decision in a valid way but it absolutely can appoint a single member to be a liaison for a particular piece of work.

The most common ones will be dealing with:-

the body corporate manager;

the resident manager;

a particular issue – be that a legal matter or a particular body corporate project;

‘interested’ lot owners. I would use the word ‘difficult’ (and while some are), most just have a particular need to be heard on their particular topic.

These don’t all need to be the same person, but we usually find one committee martyr steps up to them all and then burns out from the volunteering over a long period of time. For bigger schemes it is much better to try to share the load.

Having the one point of contact just makes sense. Everything is funnelled through that person. Instructions are clear and can be clarified. The contact can go back to the committee if needing further guidance. Instructions can be reduced to writing, quite easily avoiding later disputes over who said what to who and when – which is what happens when multiple people start chipping in.

Dealing with one person brings clarity.

From the body corporate manager side

As you would expect, body corporate managers know bodies corporate and are usually pretty good at managing multiple instructions back into shape. When it comes to their committees, we usually find they will respond to all committee requests because their ongoing engagement, like most service providers, is largely tied back to good service.

Where body corporate managers sometimes come unstuck is responding to or the perception of not responding to owner emails and complaints. What is sometimes forgotten is that a body corporate manager is a creature of instructions, like we are as lawyers.

We don’t make decisions for clients but ask them for what they want to do after advising them of their choices. Body corporate managers in their efforts to provide good service can sometimes be lulled into providing answers on the hop to lot owners which really should be tabled at a committee meeting for consideration by the committee. And on the flip side, if they are not instructed by the committee to respond, they can be blamed by the owner for not providing good service!

It also doesn’t help that many lot owners are relatively new to strata or simply don’t understand it and therefore blame the body corporate manager or hold them responsible for committee decisions. Education and management of expectations remains key, and an ongoing battle.

From the resident manager side

Depending on the resident manager’s experience they can manage communications successfully or they can be caught up responding to everything and everyone. Simply understanding what their role is can be a bit complicated.

It starts with the management rights agreements and the BCCM Act. Prior experience helps and we do find that those resident managers with English as a second language (and new to the management rights industry) can find managing communications a bit more difficult.

We have been involved in disputes where both the resident manager and the committee had completely wrong expectations around each other’s role, and the body corporate manager (who did know the rules) simply stepped out for fear of offending one of them. When someone thinks the other one isn’t doing what they should and handbags start flying, the relationship can deteriorate rather quickly.

Resident managers can get caught up in all manner of issues and dragged into matters that are simply not their problem. By-law enforcement is a big one. So is towing of cars. We sometimes get resident managers being blamed for the committee not dealing with major common property issues – which are all committee matters.

Resident managers can quite often be pilloried by owners who are not on the committee about the scheme land. That is akin to a lot owner ringing us and telling us they are not happy with the advice we gave a committee or asking us to advise on further things. No. We take instructions from the committee alone so channel what you want to them. Resident managers need to be the same – and the difficulty is handling that delicately and without simply saying ‘that’s not my job’.

But it becomes a lot simpler if the committee has a liaison person and the resident manager understands that their only interaction with the body corporate as caretaker is through that person – not every Tom, Dick or Harriet who pipes up with a comment about the depth of the mulch.

And before anyone blows up – yes, people who own lots and pay levies are entitled to their opinions about how things are done. It is just that they should direct them to the committee in the first instance 99 times out of 100. And if they feel really strongly about it, put their hand up at nomination time at the next AGM and get involved!

From the owner side

Last but certainly not least.

If you are on the committee, start back at the top of this column. If you are not on the committee and want to get involved, then talk to the body corporate manager or a committee member about how to do so.

If you only have one specific issue you want dealt with then understand what it is, do your research on Smart Strata, our website or the Commissioner’s, get legal advice if you think you need it, and then ask what it is you need to ask – professionally and politely.

Misuse of Enduring Powers of Attorney

As specialists in the aged care industry, we are regularly approached by aged care providers who are concerned about an attorney misusing their powers (granted under an Enduring Power of Attorney/EPoA) and are unsure what to do.

Deciding who to appoint as an attorney is one of the most significant decisions a person can make, as an attorney will be using their powers to make decisions/access funds on a person’s behalf while they are still alive. Although this article relates to EPoAs and the appointment of guardians/administrators in Queensland, we also have experience in other jurisdictions and can assist you with the process in other States and Territories as well.

Attorney misuse of power

Although an attorney is required to act in the best interests of the principal, sometimes an attorney may ignore this obligation and make inappropriate financial, personal or health decisions in breach of their duty to act honestly and with reasonable diligence.

Often in cases of financial abuse, by the time the misuse of power is noticed it is too late to recover the funds that have been spent or misappropriated.

While attorneys can commit other forms of abuse of the principal (other than financial), financial abuse seems to be more commonly noticed in aged care facilities. The following are some examples of financial abuse in an aged care environment:

  • the costs of the resident’s care are not being paid;
  • the attorney appears to be gifting assets of the resident to themselves or others; or
  • the attorney appears to be using the resident’s pension or other payments for themselves.

Is it our responsibility to do something?

Although aged care providers in Queensland are not required under any legislation to report suspected financial abuse, failing to do so may have significant legal consequences because a duty of care is owed to the residents.

While aged care providers are not responsible for investigating or ensuring that attorneys are acting properly, where there is a clear breach of their statutory obligations, the aged care provider may be required to act to comply with their duty of care to the resident. For instance, where an attorney is misappropriating a resident’s assets and the aged care provider is aware, but chooses not to act, it may be breaching its duty of care obligations.

Where an aged care provider does not take any action in these circumstances (such as reporting the conduct to the Public Guardian), it may also be liable for a claim in negligence. However, any risk to the facility will always depend on the circumstances of the matter.

What can we do?

Aside from making a confidential complaint to the Office of the Public Guardian, which we have detailed previously, aged care providers can file an application in the Queensland Civil and Administrative Tribunal guardianship and/or administration division seeking that a guardian (who deals with personal/health decisions) and/or administrator (who deals with financial decisions) be appointed for the resident. In order to do this, it must be established that the adult has an impaired decision-making capacity. Otherwise QCAT will not intervene.

What is impaired decision-making capacity?

The most common and easily identifiable example of an impaired decision-making capacity (IDMC) is where the resident has been diagnosed with advanced levels of dementia or Alzheimers. However, an IDMC does not always stem from a diagnosable illness. QCAT will require evidence from a suitably qualified professional (such as a doctor) to support that the person:

  • cannot understand the nature and effect of decisions about the matter;
  • is unable to freely and voluntarily make a decision; and
  • cannot communicate the decision in some way.

Where a decision needs to be made and the person cannot carry out a part of the above process, it is likely they will be considered to have an IDMC.  

Appointing a guardian and/or administrator

Once QCAT is satisfied the resident has an IDMC, they will consider whether the circumstances establish a need for a guardian or an administrator to be appointed.

As part of the application process, the aged care provider can request that another family member/spouse of the resident be appointed as the guardian and/or administrator. Alternatively, if there is no appropriate family member, the Public Guardian or Public Trustee may be appointed.

How can we help?

We can help if you are concerned about an attorney acting inappropriately. In these circumstances, it is crucial to take the correct steps to protect the interests of your organization. The best strategy is to be prepared and Hynes Legal can assist you in preventing and dealing with these issues.

Sale of Retirement Village: Do I need a Heads of Agreement?

Selling your Retirement Village can be a daunting prospect, especially if you have not been through this process before. How can you maximise your chances of achieving a successful sale? How do you ensure that this sale goes as smoothly as possible and that there are no nasty surprises along the way? One way to help achieve this is to engage the support and assistance of experts who can assist you through the transaction. Experienced business brokers, accountants and lawyers can all be invaluable in the successful sale of your Village.

Another way is to ensure that the deal is documented correctly and often this process starts with a Heads of Agreement.  

What is a Heads of Agreement?

A Heads of Agreement is a pre-contractual document which identifies, broadly, the terms of the arrangement between the parties for the proposed transaction. The purpose of a Heads of Agreement is for the parties to effectively set out the framework of a formal Contract of Sale – which will be entered into in more detailed terms at a later date.

There are other documents which could alternatively be prepared for the same purpose as a Heads of Agreement, such as a Memorandum of Understanding or a letter of intent. While these documents all do essentially the same thing, for clarity, we will continue to refer to a Heads of Agreement in this article.

What does a Heads of Agreement contain?

A Heads of Agreement can be significant in the transaction process as it allows the parties to record and identify the key agreed terms, such as the purchase price and timeframes. The Heads of Agreement should also address the parties’ position regarding exclusivity and confidentiality so that negotiations can move forward in a more secure environment. Although Heads of Agreement are generally considered not to be binding (we will discuss this further below) they can certainly assist in refining the negotiations and enabling the parties to reach a binding contractual arrangement.

Generally, a Heads of Agreement can provide:

  • a broad framework of the arrangement;
  • a record of the key terms as agreed between the parties;
  • an agreed position regarding pre-contractual matters such as exclusivity, confidentiality and due diligence periods; and
  • a degree of comfort to the parties that they are heading in the same direction and that an agreement is made on the matters set out above before incurring significant costs.

In many circumstances, a Heads of Agreement can be an asset during the negotiation phase of the sale of a retirement village and should be considered by parties who may require some assurance from the other side.

Are Heads of Agreement binding?

In order for a Heads of Agreement (and the terms within it) to be enforceable, it must be stated to be binding on the parties.

As mentioned above, Heads of Agreement are generally considered to be non-binding. This is because they are prepared on the basis that an enforceable contract will be entered into down the track. However, this position can be displaced where the phrases used in the Heads of Agreement indicate that the parties did in fact intend for the Heads of Agreement (in whole or in part) to be binding.

The most common example of this is where the Heads of Agreement contain a clause which expressly identifies certain clauses which the parties do intend to be binding. Usually these clauses will record that provisions such as confidentiality and exclusivity are to be binding.

Generally, the inclusion of a clause such as this is not contentious as it protects both parties and allows negotiations to move forward with some form of protection.

If it is the parties’ intention for the entire Heads of Agreement to be binding, it will need to consistently evidence this intention. The Heads of Agreement should include a clause expressing that the agreement is intended to be legally binding on the parties. It is also important to:

  • ensure the parties’ details are correctly recorded in the Heads of Agreement so that there can be no confusion about which entities were to be bound by the Heads of Agreement;
  • include all the essential terms of the arrangement (such as purchase price, deposit and each party’s obligations); and
  • ensure both parties execute the Heads of Agreement correctly (ie if a company, two directors or a director and a secretary execute the agreement).

However, despite what is contained in the Heads of Agreement, in the event of a dispute, the Courts may also consider the actions of the parties and the circumstances surrounding the drafting and execution of the Heads of Agreement. The Courts can look at external factors to determine the parties’ intention and as a result may find that a party did not intend the Heads of Agreement to be legally binding, despite the above suggestions being present.

To an extent, this risk can be reduced where both parties have legal representatives advising them.

What are the pros and cons of a Heads of Agreement?

One of the most significant advantages for parties entering into a Heads of Agreement is that they do not have to negotiate every term of the transaction before entering into a Heads of Agreement. Unlike a Contract of Sale, a Heads of Agreement is more like a roadmap of the proposed transaction, with the essential terms recorded, but without needing to address all of the finer details. Accordingly, this can be a cost-effective option for parties in the early stages of a negotiation and can also offer comfort to the parties as it provides a platform for the negotiations moving forward and shows the parties are moving in the same direction.

There are also some potential disadvantages entering into a Heads of Agreement which should also be considered by the parties including:

  • whether entering into a Heads of Agreement will limit your ability to negotiate the transaction going forward (which may include reducing your bargaining position);
  • a Heads of Agreement with a binding exclusivity period, for example, will prevent a seller from being able to accept another offer during that period; and
  • the risk of liability that the Heads of Agreement will be or will not be considered binding – which may not have been the intention of one or both of the parties (as discussed above).

Finally, it is important to consider whether a Heads of Agreement is, in fact, the appropriate document for the circumstances. For example, if the parties simply want to protect the confidential nature of the arrangement – a non-disclosure/confidentiality deed could be entered into instead.

We can help!

As explained above, it is important that a Heads of Agreement is drafted clearly and unambiguously, so as to evidence your intentions in the proposed transaction. We have experience drafting Heads of Agreements in a variety of circumstances and are able to provide you with advice relevant to your specific situation. Although a Heads of Agreement may not be binding, it is still important to get it right so that your responsibilities/rights are adequately protected.

Hynes Legal provides legal advice on a range of issues relating to the sale or purchase of Retirement Villages and Aged Care Facilities. Contact us for more information.

Medication management in home care – managing risk under the new Standards

Medication management is one of the highest risk areas for home care providers. As care recipients’ needs escalate and the complexity of their care increases, so too does the risk for providers who offer medication management services.

As your service offering evolves over time, you may find the risk profile of your service has outgrown the policies and procedures in place, or in some cases, there may be no medication management systems or risk management frameworks in place at all.

Under the new Aged Care Quality Standards, approved providers of home care who offer clinical care such as medication management will be required to demonstrate that they have systems in place to ensure effective management of high-impact or high-prevalence risks. There is an expectation that provider offering medication services have robust frameworks in place to ensure compliance and demonstrate services are provided in accordance with consumer choice.

The first step to ensuring compliance with the new Standards is to have a comprehensive medication management policy and procedure in place.

In conjunction with our Clinical Consultant, we have developed a medication management policy and procedure framework which can be easily implemented in a home care service to ensure compliance. Our framework can also be used by retirement village operators who provide medication assistance or other community care service providers who wish to implement a best practice approach.

Our medication management policy and procedure is very comprehensive and includes (not an exhaustive list):

  • Roles and responsibilities including clients, doctors, pharmacists, registered nurses, enrolled nurses, assistants in nursing etc;
  • Safe practice requirements including assessment and administration;
  • Levels of support for administration;
  • Supply and packaging of medication;
  • Storage of medication;
  • Disposal of medication (including controlled medication);
  • Record keeping;
  • Medication terms and abbreviations and descriptions;
  • Medication errors; and
  • Medication routes (how the medication is administered).

Each policy and procedure is specific to the relevant state/territory to ensure compliance in each jurisdiction, as well as adhering to Federal legislative obligations.

In addition to the policy and procedure, we also offer supporting document templates including medication management forms including assessments and consent forms as well as organisational training, in conjunction with our clinical consultant.

Now is the best time to strengthen your systems and processes as we work towards the new Home Care Standards.

Please contact us to discuss our medication management framework.

 

The timing for body corporate debt recovery proceedings is clarified

The confusion over the time limit a body corporate has to commence recovery proceedings for body corporate debts has been clarified by the Court of Appeal.

Section 145(2) of the Body Corporate and Community Management (Standard Module) Regulation 2008 provides that:

‘If the amount of a contribution or contribution instalment has been outstanding for 2 years, the body corporate must, within 2 months from the end of the 2-year period, start proceedings to recover the amount.’

A decision of the District Court had interpreted that section to mean that if a body corporate did not commence recovery proceedings within that time frame that it was statute barred from doing so.

The Court of Appeal in this decision has restored the previous industry-wide interpretation that while a body corporate is obliged to commence proceedings within that two years and two months, it does not lose the right to do so if the proceedings are not commenced in that time.

That right is capped only by the Limitation of Actions Act 1974 to six years.

If you need help with debt recovery, let us know.

Chairperson ordered to stop bullying a caretaker

Click here to access a PDF version of this article.


We first wrote about bullying in strata more than two years ago.

We have been waiting for a while, but we finally have a decision from the Fair Work Commission (FWC) that gives some guidance about whether the sort of conduct we regularly see in terms of committee and resident manager communications constitutes bullying.

And if we are going to gloat just a little bit, it played out the way we predicted it would.

Every other day we deal with business relationship breakdowns in strata. Tit gets exchanged for tat. Petty email wars ensue. Mud gets thrown and names called.

A committee/management rights relationship is a special one. If you don’t like what we write, you simply unsubscribe. If we are acting for you and (heaven forbid) you don’t want us to act anymore, our services can be terminated with a single email and it is all over. In either situation, you never hear from us again.

That is not the case in management rights. The manager has normally spent a substantial part of their own life savings to buy their business and it means everything to them. The only way they can usually move on is by sale.

The body corporate committee is (for want of a better word) captive to the contractual relationship that it has with a manager in the management rights agreements. Those agreements are a contract that can only be changed with the consent of both parties, so no matter what the committee thinks about the agreements, and how they came into existence or have been varied over time, they are stuck with them.

If when the relationship breaks down, which is what happened here, it sort of becomes the irresistible force meeting the immovable object. When neither party is willing to move, what happens?

The parties remain anonymous but the essential facts are this:

  • The management rights agreements had been in place for some time;
  • Both parties agreed that the terms were not as clear as they could be (which is a common complaint); and
  • There were competing interpretations over what the duties meant and what the payment of the caretaking remuneration extended to.

This resulted in significant frustration for everyone.

We have been waiting for a decision in this forum for a while and it covers some of the most regular issues we see in management rights disputes. So settle in while we walk you through the issues.

Jurisdiction

The first thing is that for a manager to have access to the FWC it needs to be a company. Managers who own management rights in their individual names cannot use the FWC for constitutional reasons because the Commonwealth Government’s legislative abilities in this context only extend to companies.

What is bullying?

The key terms of the legislation are that:

  1. Someone behaves unreasonably towards a worker; and
  2. That behaviour causes a risk to health and safety.

A manager is a worker for the purposes of the law even though they are not an actual employee of the body corporate.

The issues

There were numerous allegations in the claim by the manager which we have broken down into the following:

The phone call and the exclusive use areas

The chairperson made a ‘loud’ phone call. The manager logged this as a breach of the by-laws and reported it to the committee without further reference to the chairperson.

The chairperson retaliated to this by bringing up an argument about whether the manager was required to maintain exclusive use areas and started making assertions about reducing the remuneration paid to the manager if they didn’t maintain them. The chairperson later admitted that the manager did not have to maintain the areas.

Reimbursements

The caretaking agreement (like almost every single caretaking agreement out there) required that the manager is reimbursed caretaking expenses such as petrol, gardening materials and telephone calls. There were arguments over what these should be and how to quantify them.

It didn’t help that the body corporate seemingly provided the caretaking equipment for the manager to use, but the manager was using that equipment for the maintenance of the exclusive use areas which it was at the same time alleging it didn’t have to maintain and could charge additional amounts for.

The chicken wire

There was an argument over whether the manager had to remove the chicken wire that had been put in place to stop bush turkeys scratching around.

By-law enforcement

Managers cannot enforce by-laws for the body corporate. They can as agent for landlords through tenancy agreements for properties they manage on instructions of those landlords. Otherwise, it is committees who must enforce by-laws. We first wrote about that here in 2011.

There was a long-running argument over what the manager’s role extended to with respect to by-law ‘enforcement’ or ‘policing’. It got down to stuff like pulling up kids riding bikes without helmets.

The common property toilet

There was an argument about whether the common property toilet was cleaned as per the caretaking schedule or whether it had to be clean at all times. We can guarantee you the correct position is the former, but that argument continued on email with to and fro until nearly midnight one day and finished with the chairperson copying other committee members saying the manager was not doing their job.

Spending by the committee

There are rules around committee spending which we covered here. The chairperson wanted to sign off on some spending without committee approval. The manager pulled him up on that and the chairperson’s response was to call the manager ‘stupid’.

The chairperson’s front yard

The chairperson complained that his front yard was not cleaned daily, but under cross-examination admitted that it might not have necessarily needed it. It was also never made clear whether this was common property or not (leading back to the argument above about whether the manager had to maintain it anyway).

Dealing with tenants

Tenants were allegedly complaining to the chairperson about the conduct of the manager. The chairperson engaged with the tenants and sent them material from the Residential Tenancies Authority (RTA).

Skilled trades

This old chestnut made its usual appearance. This management rights agreement had been varied many years back to arguably cover some tree lopping. There was lots of argument over what heights the manager had to work to, which we covered here.

Work orders

The manager suggested work should be done to the pool area, a deck and some plumbing. There was clearly a misunderstanding about these things between the parties in terms of whether the work was actually needed, and if so, what was needed. But the decision tellingly notes that the chairperson’s replies included gratuitous comments about the manager’s inability to understand what the chairperson was saying.

The pool gate

The latch on the pool gate broke. The manager responded by completely removing the pool gate, leaving open and unfettered access to the pool. The body corporate (appropriately) addressed this with the manager who responded aggressively and argued their position.

The manager was not blameless

It takes two to tango and clearly things descended into pettiness.

The Deputy President noted that the manager was not blameless in the matter and that the management services left much to be desired. The manager was not necessarily meeting their onsite residence or contract obligations. They should have dealt with the chicken wire. The straight out removal of the pool gate was inexcusable and the reaction to being called out on it was inappropriate.

Other than the exclusive use area maintenance argument (on which the chairperson conceded he was wrong), the chairperson was held to be largely right to raise the issues that he did with the manager.

What matters though is this…

What the Deputy President has found though is that the manner in which those issues were raised and the frequency of the raising of them was not appropriate.

The key paragraph in the decision for us is this:

‘… there are appropriate mechanisms and processes to resolve such disputes than a war engaged in by email. [The chairperson] of the body corporate committee has access to a strata management company and to other sources of information about how such disputes should be resolved. It is not reasonable for [him] to continue to send emails to [the manager] raising issues about why remuneration under the agreement is set at a particular level; what the remuneration covers; and whether it should be reduced. Such emails will not resolve the underlying issue and they are causing distress to [the manager].’

Yes, the manager’s conduct was clearly frustrating to the chairperson. He was right to address it – but not in the way he did.

As a simple example, there is no point in having an email argument about the cleanliness of a common property toilet until nearly midnight. It simply wasn’t urgent and it could have waited.

Sarcasm, derogatory or belittling language is also simply not on. Adding some snark is always easy to do when you are frustrated, but it never, ever, helps sort out stuff like this.

And yes, the manager seemingly engaged in the same sort of behaviour and provoked the chairperson. That did not make a difference. The manager does not have the same statutory obligations as a worker to the body corporate as the body corporate does to the manager as the engager of a worker. Like it or not, that’s the law.

Our takeaways

One of the first things we tell graduate lawyers that start at Hynes Legal is that every single email or letter you send at some stage may appear in evidence in front of a judge. Draft whatever it is you are writing in light of that.

The same lesson applied here would have led to a different outcome in this dispute.

Even though managers are not employees, we think the safest bet is for a committee to engage with them about matters of this nature as if they were. What the chairperson was complaining about was largely held to be appropriate – it is just the manner of the complaining that was not. You would not send emails to employees blowing up about things at 11 pm, and managers should be treated in the same way.

Both parties here were self-represented which led to some concessions and argument on both sides that were simply misguided (or wrong). Take the whole by-law argument for example. Everyone got hung up on the difference between ‘police’ and ‘enforce’ and what the caretaking agreement said, when if a reference was made to the BCCM Act, the argument was over.

Yes, lawyers cost money, but the right ones can cut to the chase a lot quicker and argue what matters (as opposed to everything – which seems to have happened here).

And keen readers will note what the manager wanted as an order was not granted, but what will happen going forward is phone conversations before email ones.

Play nicely. Be courteous and professional. And if you need help on anything like this – whether for a body corporate or manager – let us know.

The decision can be read here.

A few years back we ran a webinar on bullying in strata.  If you are interested in watching it, click here.

 

Combustible cladding laws in Queensland announced

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If you don’t know whether the cladding on your building is combustible (or to use the less scary word – non-conforming), you are soon going to be forced to find out.

The issue over what cladding has been used on buildings crystallised after the Grenfell Tower fire in the UK in 2017.  Australia’s equivalent (without the horrific loss of life in Grenfell) was the Lacrosse Tower fire in Melbourne in 2014. The ABC’s Four Corners covered the issue in this excellent episode.

Since then the wheels of respective state governments have turned very slowly.  Victoria has their cladding task force and has now come up with a rectification solution that will allow lot owners in bodies corporate to pay back the cost of addressing the defective cladding through their rates.

Other states have equivalent bodies but no solutions yet.

The Queensland approach has been to create the Non-Conforming Building Products audit taskforce which led to the government addressing concerns with all of their own buildings.

Now it is the turn of the public at large.

It’s a seemingly innocuous title, but it has some real kick.  The new regulation is:

Building and Other Legislation (Cladding) Amendment Regulation 2018

And what it means for bodies corporate when it commences on 1 October 2018 is this:

The compliance zone

If your building:

  • is any of classes 2 to 9 (which covers basically everything residential and commercial other than houses); and
  • had a building development approval issued after 1 January 1994 but before 1 October 2018 to build the building or alter the cladding; and
  • is of Type A or Type B construction (essentially buildings of three storeys or higher)

then the building is caught by the new regulation. 

Stage 1 – registration

If your building is one of those in the compliance zone you need to register and complete an online checklist via the QBCC that will run you through whether the building is likely to be one of those with non-conforming cladding.  Every building will have until 29 March 2019 to complete this. 

If you don’t complete it, there is a maximum fine of 20 penalty units ($2,611).

If there is no issue, then all is well and you just need to keep that certification. If not, you are onto stage two.  

And no – we don’t know what the checklist will include yet or even a link to where you will be able to find it, but when we do we will let you know.

Stage 2 – building industry professional

If your building is one that may have non-conforming cladding you have until 29 May 2019 to go back to the QBCC with a statement from a building industry professional about whether the cladding on your building is non-conforming. 

If you know the cladding on your building is non-conforming you can skip the completion of the report, notify the QBCC you have non-conforming cladding and go to straight to stage three.

There is only two months between the last date to register and the date on which this first assessment is required.  We suspect it will not pay to be tardy in getting started, as there are fines for missing the deadlines. 

There maximum fine for missing this date is the same as that for missing stage one.

Stage three – fire risk assessment

If you have non-conforming cladding then you must have a qualified fire engineer complete a fire risk assessment about the safety of the building. That assessment will determine whether the scheme as it is will essentially remain safe or whether rectification works are necessary.

Every building must give the name of their fire engineer to the QBCC by 27 August 2019 and have the final report to the QBCC by 3 May 2021.  That is less than three years away.

If you have not nominated your fire engineer or completed the risk assessment by the required dates the fines gear up to a maximum of 50 and 165 penalty units respectively ($6,527.50 and $21,540.75). 

After assessment

If the building has non-conforming cladding then:

  • a notice to that effect must be displayed in a conspicuous part of the building for so long as the cladding remains in place; and
  • every lot owner and tenant must be given a copy of the notice – including new tenants and new owners.

The crystal ball

This is where the fun begins.  Not.

We see the following compliance headaches with all of this, but these are just the immediate issues.

Ignorance of the need to comply

Everyone will be out there trying to make bodies corporate aware of their obligations.  But some will simply ignore them.  Some strata managers may also simply ignore them.  It is ultimately the role of the committee to get this done, but no doubt fingers will be pointed at strata managers if it isn’t. 

Strata managers need to be vigilant to make sure they have covered their backsides by addressing this with every body corporate they manage.  It may not be pretty when the government starts rounding up those buildings that have not participated in stage one by the required date.

It would also seem that there will need to be some form of evidence (termed ‘a proof of agency’) produced to the QBCC about the ability of anyone to complete the document on behalf of the body corporate.  What that looks like is also yet to be determined.

Stage two timing

There are only two months from the last date for registration to the time to return the building industry professional report. 

If bodies corporate leave it to the last minute we suspect there won’t be enough experts to go around.  Get started and get started early, because when you allow for the Australian holiday season (Melbourne Cup Day through to Australia Day) there is also another three months that disappears very quickly during that registration period.

Fire risk assessment notifications

If a building has non-conforming cladding, notifying new owners is easy.  They appear on the roll, and (hopefully) the strata manager’s software programs then deal with the notification.

Tenants will be a lot harder.  For those with onsite management or professional property managers, it may be okay as they should have systems that will deal with it. Communicating what needs to be done with property managers will be important.   

For people who self-manage or use a property manager who does not know what they are doing, the reality is tenants may not be told.  Our immediate interpretation is that holiday / corporate tenants probably do not need to be told (as they might not be ‘leasehold interest holders’), but time will tell.

The bigger issues

The uncertainty. 

These are all guesses, but try these as flow on effects:

  • the fact that non-conforming cladding may be present is going to be a potential disincentive to prospective property buyers while it is not known, and a probable genuine turn off to them once it is certain. 
  • what will banks do with their lending policies for potentially affected, or known to be affected, buildings?
  • strata insurers will now have to price the (soon to be) known risks for building insurance. 

It wouldn’t surprise us if there was some change to the disclosure regime to specifically address this issue.  After all, the statutory disclosure at the moment includes who the body corporate secretary is. Whether the building has non-conforming cladding is probably a tad more important.

Rectification costs

The Lacrosse Tower owners are still fighting about who wears what cost five years after their fire.  The statutory position is that if rectification is required, then the body corporate must do it.  It may well have a right to recover those costs from parties involved in the construction process, but that right is independent of the immediate obligation to sort the issue out.  We will leave limitation periods aside for the moment too.

This means owners are going to have to pay special levies, or bodies corporate borrow money, to bring their building back to having conforming cladding.  Bodies corporate will not be allowed to delay that while they try to recover the costs from a third party.

The statutory obligation to disclose defects

And for you faithful readers who have come this far, this is the biggest issue we see for property sellers.

Just because cladding is non-conforming might not mean it needs to be removed.  The other fire safety mechanisms may cover any risk appropriately.  Having said that, the non-conforming cladding could still very well be considered a defect in common property (although we are still debating that internally).  There are arguments for and against this, but if it is not a defect, why is there the need for the conspicuous sign in the building about it?   

Section 223 of the Body Corporate and Community Management Act 1997 imposes an obligation on sellers to disclose to buyers latent or patent defects in common property that the seller is aware of or ‘ought’ to be aware of. 

Sellers ‘ought’ to be aware of issues identified in the body corporate minutes.  Committee members who are actively involved in the decision-making process around this have nowhere to hide under any definition. 

If buildings have non-conforming cladding, which is not disclosed in the sale contract by a seller, and there are subsequent rectification works required along with the special levies or borrowings, we can see a raft of litigation about the lack of that disclosure against sellers, sales agents and those who prepared contracts for sale (such as lawyers). 

We like providing solutions, but with this one there is a long way to go before the air clears.  We will keep you updated as this one evolves.

New standards under the Single Aged Care Quality Framework passed by Parliament

The Aged Care (Single Quality Framework) Reform Bill 2018, which establishes the new quality standards was passed by parliament on Monday evening.

The new standards, which apply to all aged care providers, represent the Federal Government’s commitment to reforming and driving continuous improvements in the quality of aged care and represents a significant challenge for providers, being the first upgrade to the aged care standards in 20 years.

Now that the legislation has passed, providers will be assessed against the new standards from 1 July 2019 and the Australian Aged Care Quality Agency has indicated that it expects that providers will use the intervening period between now and 1 July 2019 to understand the new standards and implement them in their own service models.

While the new standards represent a much-needed reform to the assessment of the performance of providers of aged care and the information about quality and safety that is available to consumers, they also pose a significant challenge which all providers will need to embrace.

Accordingly, we strongly encourage all of our subscribers to start thinking about the new standards immediately, how they will be implemented into your organisation’s service model and how your organisation will ensure compliance by 1 July 2019.

Hynes Legal is currently offering a comprehensive service which allows providers to transition seamlessly to the new standards and to assist providers to reach compliance by July 2019. For more information about this service please click here.

If you would like more information about the new standards or the other transitional supports and services which Hynes Legal offers to assist providers in transitioning to the new standards, please contact us here.

Home care pricing now required to be published on My Aged Care

By 30 November 2018, all existing home care providers will need to provide their pricing information about the costs of care and services for publication on the My Aged Care website.

The User Rights Amendment (Home Care Pricing) Principles 2018 (Amendment Principles) which contains the new requirement commenced on 30 August 2018.

The explanatory statement to the Amendment Principles state that this new requirement has been introduced to increase transparency and comparability in home care pricing in response to home care recipients and their families raising concerns and complaints on this issue directly to the Minister for Aged Care and through the Legislated Review of Aged Care 2017 process.

New providers of home care that have not commenced providing home care services by 30 November 2018 will need to provide their pricing information before they offer to enter into a home care agreement with their first care recipient.

Home care providers will have flexibility on the contents of their pricing information, however, the explanatory statement provides the following guidance about what providers should include:

  • the core services offered by the provider and an associated indicative price for each service; and
  • an outline of the circumstances where the care recipient could expect the price to vary from this published indicative price, such as where services can be bundled or where additional charges may be included.

The pricing information is expected to be submitted by home care providers through the My Aged Care online portal.

Want to keep up to date with changes to aged care legislation and industry changes?

Our Quarterly Legislation Update gives providers a high value and targeted solution for compliance by providing clear concise updates on legislation and analysis of industry changes.

If you are interested in signing up, click here to receive more information and pricing.

Questions?

If you are interested in obtaining further advice in relation to the provision of pricing information in aged care please contact Julie McStay, Director – Aged Care and Retirement Living.

Legislation proposed to require residential aged care providers to disclose staff ratios

The Aged Care Amendment (Staffing Ratio Disclosure) Bill 2018 (the Bill) was introduced to the House of Representatives on Monday by independent MP Rebekha Sharkie.

What does the Bill involve?

If passed, the Bill would require all residential aged care providers to disclose staffing ratios to the Department of Health with a view to the information being published on the MyAgedCare website. 

The information would be disclosed on a quarterly basis and would include information about ratios of:

  • registered nurses;
  • enrolled nurses;
  • nurses with a certificate IV or equivalent qualification;
  • personal care attendants;
  • allied health staff; and
  • other staff members.

Providers would have an opportunity to give the public a short explanation with their ratio information, to “provide context for why they have the particular staffing ratio”, said MP Sharkie.

What does this mean for providers?

Aged care providers already have an obligation under the Aged Care Act to ensure they maintain an adequate number of appropriately skilled staff to ensure that the care needs of care recipients are met and services are delivered in accordance with the Accreditation Standards. This is necessarily flexible to take into account the different needs of residents and factors relating to the service, including its location.

Attempts to introduce mandatory staffing ratios have been unsuccessful to date as ratios present a potentially prescriptive and unreasonable blanket requirement for providers, with no good evidence that they improve care outcomes.

While this Bill is more likely to gain traction, as it relates to reporting staffing ratios rather than mandating a certain ratio, we still question whether the Bill will progress any further than previous attempts to amend the legislation.

Nevertheless, we will continue to monitor the progress of the Bill and keep subscribers updated.

Want to keep up to date with changes to aged care legislation?

Our Quarterly Legislation Update gives providers a high value and targeted solution for compliance by providing clear concise updates on legislation and analysis of industry changes.

Click here to access a free sample of a recent report.

Click here to sign up.

Questions?

The content of this report is not intended to be a substitute for legal advice. If you are interested in obtaining further advice in relation to consumer choice and risk management in home care please contact Julie McStay, Director – Aged Care and Retirement Living, Hynes Legal.

The meaning of ‘full and accurate minutes’ – the devil is in the detail

Click here to access a PDF version of this article.


This article first appeared on the Smart Strata website.

There are two sets of minutes that must be kept by every body corporate.  Those at committee level and those at general meeting level. 

This article deals with what must happen at committee level. 

Everyone has seen some version of minutes somewhere.  It could be from their local sporting club’s Annual General Meeting or that of BHP.  What those minutes look like will be referenced back to what the legislation that governs them requires.

As you would expect, what needs to be in a set of committee meeting minutes is covered in the Body Corporate and Community Management Act 1997 and the related Modules.

Each committee must ensure that:

But what does this actually mean?

The easy stuff

There is a bunch of information that is factual and uncontroversial, including:

  • The date, time and place of the meeting;
  • the names of persons present and details of the capacity in which they attended the meeting;
  • details of proxies tabled;
  • the time the meeting closed;
  • details of the next scheduled meeting;
  • the secretary’s name and contact address.

These are all matters of fact and do not require further explanation. Nothing here is open to interpretation.

What was voted on

This is where we get into the dispute territory.  The first section requires:

‘for each motion voted on at the meeting – 

  • the words of the motion; and
  • the number of votes for and against the motion.

This was disputed in The Cannery [2008] QBCCMCmr 17. 

This decision held that (our underlining):-

"A minute must record a decision made by the Committee. General discussion and who said what need not be recorded at all. The minutes are not a transcript of what was said. The committee is free to discuss what it likes. However, where discussion is recorded, it should be recorded fairly and accurately, which would suffice the requirement that the body corporate acts reasonably.”

In Pelican Heights [2011] QBCCMCmr 167 the adjudicator relevantly provided that:

“Accuracy relates to the truth of what happened in the meeting or vote, rather than the truth of opinions or facts considered in the vote. The record is entitled to report what actually happened or views actually held regardless of the validity of what was done or considered.”

So our takeaways are these:

  • Transcripts of who said what are not required. 
  • The minutes do not need to delve into any detail if there is debate on each motion.
  • If the minutes do record discussion, debate or opinions, they must be presented fairly and accurately.  This would ideally be in a dot point summary like we are doing with our comments here.

What was tabled

The minutes must record:

‘details of correspondence, reports, notices or other documents tabled’

In Parkwood Villas [2010] QBCCMCmr 521 the adjudicator relevantly provided that (our emphasis):

"Correspondence or other documents should be tabled at a committee meeting (and then minuted) if a committee member (perhaps most commonly the secretary who would handle most correspondence) chooses to table it. In particular, documents would be tabled if they are the subject of discussion at the meeting. It is arguable that the mere discussion of a document amounts to its tabling such that it should be minuted if it is discussed at the meeting".

In Valley Terraces Echohamlets [2012] QBCCMCmr 314 the adjudicator relevantly provided that (our emphasis):

Further, I am not satisfied the committee has contravened the legislation by failing to list every item of correspondence received within the minutes. The legislation requires the minutes include 'details of correspondence, reports, notices or other documents tabled' (Standard Module, 55(5)(e)). The use of the word 'or' indicates this should be read as 'correspondence tabled, reports tabled, notices tabled or other documents tabled'. Bodies corporate might receive wide ranges of correspondence in varying quantities and there is no requirement that every single item of correspondence received by the body corporate be tabled at a committee meeting. The requirement is simply that if an item of correspondence is tabled then it should be listed in the minutes.

So, similar to the discussion on what was voted on, there is no obligation to table all documents received by the body corporate.  If material is tabled the detail of it must be recorded in the minutes.

The overriding obligation of the body corporate to act reasonably comes into play here.  Clearly, tabling every email of a 40 person long email chain is not necessary. Tabling a formal complaint from a lot owner about the chairperson’s abusive conduct at the recent Annual General Meeting would be necessary.

Finding that balance is always the battle.

What are ‘details’?

The first part of the section talks about the ‘details’ of correspondence that was tabled.

This does not mean a copy of any material tabled needs to be sent to owners with the minutes. 

The tabled document would form part of the body corporate record. To that end, the adjudicator in The Astor Centre [2013] QBCCMCmr 477, relevantly provided that:

“The body corporate has an obligation to give details of correspondence tabled in the minutes. If documents are tabled, they must be given to an ‘interested person’ when requested as they would form part of body corporate records.”

Again, each committee needs to find the balance.  In some instances, it might be easier to send a whole document.  In others, it may be simpler to send a summary of the material.

This will avoid any argument that the committee failed to provide adequate details.

In Contessa Condominiums [2013] QBCCMCmr 383, the adjudicator relevantly provided that:

“The committee failed, however, to attach written quotations (if any) from TP to the minutes of the meeting, or details of any other documents tabled and considered at the meeting, for example, “the design shown” to the meeting in respect of the lounge or brochures about flooring, contrary to section 55(5)(e) Standard Module. It is also a failure of the committee’s duty to owners to act reasonably and transparently. Owners who are not present at committee meetings have a right to know in what way the committee is exercising its powers and spending body corporate funds.”

Accordingly, unless the material is voluminous, it may be worthwhile on contentious matters to attach copies of tabled documents to the committee minutes.  This may go beyond a committee’s statutory obligations, but prevent the sometimes inevitable Commissioner’s application.  

The alternative would be to provide details that are relevant – which for a quote might be:

  • who it was received from;
  • the quoted price;
  • the inclusions or exclusions;
  • the date it was received;
  • what the purpose is for; and,
  • other important commercial terms

with a note that a full copy can be obtained from the body corporate records.

The devil literally is in the detail. 

Committees definitely do not have to circulate every piece of correspondence received from owners, but if they are going to exclude it (especially on contentious matters), they need to be wary. 

A set of committee meeting minutes is not a propaganda tool for disaffected owners to get free distribution of their concerns to all lot owners, but if what owners are sending is relevant, the committee needs to be mindful to ensure it finds the middle ground in terms of what is sent, bearing in mind that obligation to act reasonably.

The cladding bus has left the station

It is terrifying how quickly time flies. Two months ago we wrote about the new cladding regulation. It has now commenced.

Every building in the compliance zone is now on the compliance bus.

That means that unless you actually get off the bus at the first stop (being stage one on 29 March 2019), then you stay on the bus and must ride all the way to stage two. Likewise, if you don’t get off at the second stop (being stage two on 29 May 2019) then you have to go all the way to stage three, which is the fire engineer.

The QBCC will be the conductor (eventually) inspecting tickets, and its inspectors will not be as jovial as Merv Hughes was in this clip for those buildings who don’t do what they have to.

Other than that, we think a few things are worth noting:

  • The safer buildings website where buildings that are caught by the regulation has gone live. There is lots of information there for all affected buildings.
  • Buildings will register by their real property description. For community titles schemes that is actually lot 0 in their plan number. That is the common property title where all dealings for the body corporate (like the CMS or easements etc) are recorded.
  • We think the better view is that the decisions made in stage one are not restricted issues, meaning that the committee can make them. That is not to say they have to – but we think they can. Stage two decisions might involve spending limits, which we wrote about here.
  • Given the potential liability that would come with swearing a statutory declaration saying your building is clear of non-conforming cladding when it actually isn’t, we think getting professional advice from a qualified service provider about the status of any cladding on your building would be a no-brainer for stage one.

If you are in an affected building you simply must get started now.