Analysis and Performance Results of a Molecular Modeling Application on Merrimac
Merrimac Heights Lessons Learned
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Transcript of Merrimac Heights Lessons Learned
© Copyright 2011 Teys Lawyers www.teyslawyers.com.au
Merrimac Heights Case: Lessons Learned
Friday 25 November 2011
© Copyright 2011 Teys Lawyers www.teyslawyers.com.au
Well May We Say……….
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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
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Management Rights at Merrimac Heights
150 Lot Owners
Caretaking $135,949 pa
Gardening $42,996 pa
Common Property
Lots
New Gardener $11,700 pa
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The Essence of the Merrimac Decision
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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
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New FronYers for Body Corps
Maintenance • Cleaning • Repair • PainYng • Pests • Mowing
Communica-on • Telephone • Intercom • Broadband • Television
Domes-c • Electricity • Gas • Water • Garbage • Air Con • HeaYng
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Is This New FronYer a Good Thing?
Good Evil
Costs
Control
Complexity
PainYng
Mowing
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It’s a Queensland Thing
2,350
5
20
Number of management rights around Australia Source: Col Myers, Management Rights, The Good, The Bad and The Ugly, ACCAL 10 March 2011
10
200
25
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Why Management Rights Have Not Spread
• LegislaYve restricYons on developers elsewhere
• Common law fiduciary duYes not displaced elsewhere (Arrow case)
• NSW liYgiousness
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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?
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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
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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
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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
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Lesson 3 – LiYgaYon Will Divide the Body Corporate
• Passive v aggressive
• Investors v owner occupiers
• AcYve commidee v disengaged owners
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Contract Term Expiry
Increasing Receiverships
Finance ConstricYons
Social Media / Blogging
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Dark Clouds Over Queensland Management Rights
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Unit Owners Must Take Responsibility for Their Own Affairs
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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