When You Are Not Too Big to Fail
Queensland Unit Owners response to call for national contract law
The federal Attorney General, Robert McClelland, last week signaled his intention to explore options for a national system of contract law. As poor, suffering Queensland unit owners come to grips with the recent Merrimac Heights management rights case, their response might be, ‘Why should we suffer alone – welcome to our nightmare!’
Since 1997, Queensland has had an extensive array of laws governing long-term contracts between unit owners and resident mangers known as ‘management rights’. Effectively, these laws outrank the common law of contracts inherited from England and developed over centuries.
The unit owners of Merrimac Heights who recently lost a case commenced by their resident managers, will rue the day the government stepped into this area. If the common law was left alone, they would have succeed in their quite straight forward case that a body corporate can’t pay for things done to lot because a body corporate has powers only to spend money on common property.
Due to government intervention, this ancient legal principle of ‘ultra vires’ has been overturned and now it has been declared that a body corporate can contract for all manner of things to do with domestic services to lots, even if the body corporate doesn’t recover the cost of doing so from the members that use this service.
This is a disaster for Queensland unit owners. Developers and managers in Queensland have, over more than 40 years, shown no restraint or regard for the average unit owners by exploiting these statutory laws to long-term income streams sold off to the highest bidder.
Experience has shown, at least in strata living, government intervention in the commercial affairs of bodies corporate and their right to contract has been as successful in Queensland as the introduction of the cane toad.