Australian Capital Territory Numbered Acts Australian Capital Territory Numbered Actsinsert
Division 5.3B Service contractors
Subdivision 5.3B.1 Service contractor—contract and functions
55J Definitions—div 5.3B
In this division:
"service contract" means a contract to provide service contractor services to an owners corporation.
"service contractor" means a person—
(a) contracted under section 55K; or
(b) with whom an owners corporation has a service contract.
"service contractor services" means services provided by a service contractor in exercising the contractor's functions.
55K Service contractor—contract
(1) An owners corporation may, by ordinary resolution, enter into a service contract with a person.
(2) To remove any doubt, an owners corporation also enters into a service contract if the corporation appoints a person to carry out service contractor services.
(3) However, the owners corporation must not enter into a service contract with a service contractor for a period longer than 3 years (including any period for which the service contractor may renew or extend the contract) unless—
(a) the contract is made by special resolution after the end of the developer control period for the units plan; or
(b) each of the following applies:
(i) the ACAT is satisfied that the contract is reasonably required for the purpose for which the units plan is intended and authorises the contract before any unit in the units plan is sold, or any agreement for sale has been entered into;
(ii) the contract is disclosed by the developer in each sale contract entered into after the contract is made.
(4) A service contract entered into in breach of subsection (3) is void.
(5) In deciding whether a service contract is reasonably required for the purpose for which the units plan is intended, the ACAT must consider the following:
(a) the layout of each building making up the units plan;
(b) whether the units plan is to be used for residential, commercial or other purposes;
(c) the kind of people likely to purchase units in the units plan;
(d) how management of the units plan is intended to operate.
(6) In this section:
"units plan" includes part of a units plan.
55L Service contractor not to be contracted for longer than 25 years
(1) An owners corporation must not enter into a service contract with a service contractor for longer than 25 years.
(2) If an owners corporation enters into a service contract with a service contractor for longer than 25 years, the contract is taken, for all purposes, to be a contract for 25 years.
(3) To remove any doubt, this section does not apply to a service contract entered into before the commencement of this section.
55M Service contractor—functions
A service contractor for an owners corporation assists the corporation to exercise 1 or more of the following functions in relation to the common property, or part of the common property, of the units plan:
(a) managing the common property or part of the common property;
(b) supervising use of the common property or part of the common property;
(c) maintaining and repairing the common property or part of the common property.
55N Service contractor—transfer
(1) A service contractor's rights under a service contract may be transferred only if the transfer is approved by the owners corporation by ordinary resolution.
(2) In deciding whether to approve the proposed transfer, the owners corporation may consider the following:
(a) the character of the proposed transferee and associates of the proposed transferee;
(b) the proposed transferee's financial standing;
(c) the terms of the proposed transfer;
(d) the competence, qualifications and experience of the proposed transferee and associates of the proposed transferee;
(e) whether the proposed transferee or associates of the proposed transferee have received, or are likely to receive, training;
(f) anything else relevant to the service contract.
(3) The owners corporation must decide whether to approve a proposed transfer not later than 30 days after the day the corporation receives the application for transfer.
(4) However, the owners corporation must not—
(a) unreasonably withhold the approval to transfer; or
(b) require or receive a fee or other consideration for approving the transfer, other than reimbursement of legal or administrative expenses reasonably incurred by the corporation for the approval.
(5) In this section:
"associates of the proposed transferee" means—
(a) if the proposed transferee is a corporation—the corporation's directors, substantial shareholders and principal staff; or
(b) if the proposed transferee is in partnership—the partners and principal staff of the partnership.
55O Service contractor—ending contract
(1) The owners corporation may end a service contract—
(a) for a remedial breach if notice has been given under section 55P; or
(b) for misbehaviour; or
(c) if the service contractor becomes bankrupt or executes a personal insolvency agreement or otherwise applies to take the benefit of any law for the relief of bankrupt or insolvent debtors; or
(d) if the service contractor is convicted in the ACT of an offence punishable by imprisonment for at least 1 year; or
(e) if the service contractor is convicted outside the ACT, in Australia or elsewhere, of an offence that, if it had been committed in the ACT, would be punishable by imprisonment for at least 1 year.
(2) However, before ending a service contract under subsection (1) (d) or (e) the owners corporation must be satisfied that the conviction affects the service contractor's suitability to exercise the contractor's functions.
(3) The owners corporation must end a service contract—
(a) if the service contractor is absent, other than on approved leave, for 14 consecutive days or for 28 days in any 12-month period; or
(b) for physical or mental incapacity, if the incapacity substantially affects the exercise of the service contractor's functions.
(4) In this section:
"remedial breach" means a remedial breach under section 55P.
55P Service contractor—remedial breaches
(1) A service contractor commits a remedial breach if the service contractor—
(a) fails to exercise the service contractor's functions; or
(b) while exercising the service contractor's functions, is grossly negligent or engages in misconduct.
(2) If the owner's corporation believes on reasonable grounds that a service contractor has committed a remedial breach, the corporation may give the service contractor written notice stating—
(a) that the corporation believes the service contractor has committed a remedial breach; and
(b) details of the remedial breach committed, sufficient to allow the service contractor to identify—
(i) the function the service contractor failed to exercise; or
(ii) the gross negligence or misconduct; and
(c) that the service contractor must, within 14 days after the day the notice is given to the service contractor —
(i) give the corporation a written representation explaining why the service contractor's actions do not amount to a remedial breach; or
(ii) remedy the breach; and
(d) that the owners corporation may end the service contract if—
(i) the service contractor does not comply with the notice; or
(ii) if the service contractor gives a written representation explaining why the service contractor's actions do not amount to a remedial breach—the corporation does not accept the service contractor's representation.
Subdivision 5.3B.2 Service contractor—protection of contract financier
55Q Meaning of financed service contract and financier —subdiv 5.3B.2
In this subdivision:
"financed service contract" means a service contract financed by a financier under section 55R.
"financier"—see section 55R.
55R Who is a financier for a service contract?
(1) A person is a financier for a service contract if—
(a) the person—
(i) is a financial institution; or
(ii) in the ordinary course of the person's business, supplies, or might reasonably be expected to supply, finance for business acquisitions, using charges over contracts for security; or
(iii) if the contract exists immediately before the commencement of this subdivision—at the time the finance was supplied for a business acquisition using a charge over the contract for security, was a person mentioned in subparagraph (ii); and
(b) a service contractor for the contract and the person give written notice signed by each of them to the owners corporation that the person is a financier for the contract.
(2) A person stops being a financier for a service contract if the person gives the owners corporation written notice withdrawing the notice given under subsection (1).
(3) A notice under subsection (2) may be given without the service contractor's agreement.
55S Financed service contract—notice of change
The owners corporation must give the financier of a financed service contract written notice of—
(a) any change made to the contract by the corporation and the service contractor; or
(b) any arrangement entered into by the corporation and the service contractor that affects the contract.
55T Financed service contract—limitation on ending
(1) The owners corporation may end a financed service contract only if—
(a) the corporation gives the financier written notice that the corporation has the right to end the contract; and
(b) when the notice is given to the financier, the corporation has the right to end the contract; and
(c) the corporation gives the notice to the financier not less than 21 days before the day the contract is ended.
(2) However, the owners corporation may not end the financed service contract if, under an arrangement between the financier and the service contractor, the financier has given the corporation notice under section 55U.
(3) Subsection (2) does not stop the owners corporation ending a service contract for something done or not done after the financier started to act under the contract.
(4) This section does not stop a financed service contract ending by agreement between the owners corporation, service contractor and financier.
55U Financed service contract—person authorised to act for financier
(1) The financier for a financed service contract may take the following action:
(a) act under the contract in place of the contractor;
(b) appoint a receiver, or a receiver and manager, for the contract.
(2) However, the financier may only take action under subsection (1) if—
(a) the financier has given written notice to the owners corporation of the financier's intention to take the action; and
(b) at the time the notice is given to the owners corporation, the corporation—
(i) has not given the financier notice under section 55T (1) (c); or
(ii) has given and withdrawn the notice to the financier.
(3) The financier may authorise a person to act for the financier for subsection (1) (a) if—
(a) the person is not the service contractor or an associate of the contractor; and
(b) the owners corporation approves the person.
(4) In deciding whether to approve a person under subsection (3), the owners corporation—
(a) must act reasonably in the circumstances and decide as soon as practicable; and
(b) may only consider—
(i) the person's character; and
(ii) the person's competence, qualifications and experience.
(5) However, the owners corporation must not—
(a) unreasonably withhold the person's approval; or
(b) require or receive a fee or other consideration for approving the person, other than reimbursement of legal or administrative expenses reasonably incurred by the corporation for the approval.
55V Financed service contract—agreement between owners corporation and financier prohibited
(1) A financier for a financed service contract must not enter into an agreement or other arrangement with the owners corporation under the contract for a matter relating to—
(a) the financier's role for the contract; or
(b) arrangements between the financier and service contractor under which the financier is acting, or may act, under the contract in the contractor's place; or
(c) the operation of this subdivision in relation to the contract.
(2) An agreement or arrangement to which this section applies is void to the extent it contravenes this section.