13 Feb 2014
Words Tim Admin

Another Successful Remuneration Review

I have in previous articles written about increasing a resident manager’s remuneration pursuant to the statutory review mechanism. Whilst we have run a number of successful actions, a recent one in which we were involved has helped to create certainty about how these reviews will be treated by the Queensland Civil and Administrative Tribunal (“QCAT”) in the future. In this particular case our client manager was successful in securing an increase in the annual remuneration from around $135,000 to around $220,000 as at the hearing date after allowing for CPI increases since the time the increase took effect. The Tribunal also ordered the payment of back pay and interest for the almost 2 years it took to conduct the statutory review. The particular section of the Act sets out the requirements for a statutory review. Paraphrasing the relevant parts of that section, it applies if -

• a Caretaking Agreement was entered into after March 4, 2003;
• the Agreement was put into effect while the developer had control over the Body Corporate;
• the developer no longer has control over the Body Corporate; and
• the review is instigated within 3 years of the Agreement commencing.

Typically, as was the case here, it is the manager that instigates a review. In this case the expert we engaged was the well known and respected Barry Turner of Building Management and Consultancy Services. Barry’s report recommended an increase in remuneration to around $224,000, whereas the expert engaged by the Body Corporate argued that the figure should be just over $170,000. At the hearing, both experts were extensively cross examined about their reports and methodology used to arrive at their proposed remuneration. The Tribunal member preferred Barry’s evidence and methodology and seemed to place weight on Barry’s past experience as a resident manager, the time he spent at the complex to better understand the nature and extent of the duties and his views about the standards to which the duties should be performed. Managers and Bodies Corporate can take a number of lessons from the Tribunal’s decision. Firstly, in engaging an expert to prepare a report, it is essential to engage one who is truly independent, adopts sound methodology and has a thorough knowledge of the relevant complex and the duties in the Agreement. Secondly, successfully pursuing such an increase requires sound legal advice from an experienced lawyer with a good understanding of the legislation and the process. Thirdly, the parties should engage in meaningful settlement negotiations and try and reach an acceptable outcome without the risks and expenses of a hearing. In this case the Body Corporate no doubt regrets its rejection at mediation of a settlement offer for an amount well below that which was ordered by the Tribunal.