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Body Corporate Bullying Under Fire

COMMISSION FIRES WARNING SHOT TO BODIES CORPORATE AND OWNERS ENGAGED IN ‘BULLYING’


A recent decision by the Fair Work Commission (FWC) is set to have some significant implications for the strata industry in Australia.

The matter concerned a community titles scheme on the Gold Coast. The scheme incorporates two Bodies Corporate, one for each of the two towers. The Applicant is a shareholder, director and employee of the on-site management company (Management Company), who is contracted to provide caretaking and letting services to the Bodies Corporate.

The Applicant applied for an order under section 789FC of the Fair Work Act 2009 (FW Act) to prevent bullying by five persons named in the application. All such persons were individual owners or occupiers in the scheme, some of who were also members of the committee. The Bodies Corporate were also named in the application.

The nature of the alleged bullying included:

  • Ongoing use of threatening, intimidating and derogatory language;
  • Shouting and abusive language; and
  • Threats of violence, including grabbing or snatching at the Applicant’s property, by at least one of the individuals.

Whilst the substance of the allegations are yet to be tested, a number of jurisdictional issues arose for determination as follows:

  • Whether the Applicant is a ‘worker’;
  • Whether, when the alleged bullying took place, the Applicant was at work in a ‘constitutionally covered business’; and
  • Whether the Bodies Corporate and individuals are proper parties to the application.

Is the Applicant a ‘worker’?

In relation the first issue of whether the Applicant is a ‘worker’, the FW Act relies on the definition of worker under the Work Health and Safety Act 2011 (WHS Act). This definition requires that the Applicant carry out work for a ‘person conducting a business or undertaking’ (PCBU).

Whilst the WHS Act specifically excludes residential bodies corporate from being a PCBU in respect to contractors, the FWC decided that this was irrelevant in the present circumstances. As the Management Company is a PCBU (and the Applicant is an employee of the Management Company), the FWC held that the Applicant is a ‘worker’ for the purposes of the FW Act.

Constitutionally covered business

In relation to the second issue of whether the alleged bullying took place whilst the Applicant was at work in a ‘constitutionally covered business’, the FW Act requires that the business be a PCBU, and that it fall within the other limbs of section 789FD of the FW Act.

Again, the FWC determined that it is the circumstances of the Management Company (and not the Bodies Corporate) that must be considered.

Having already determined that the Management Company is a PCBU, the only remaining matter for the FWC to consider was whether the Management Company was a person of the type mentioned in section 789FD(3) of the FW Act. This section captures a wide range of entities and includes a ‘constitutional corporation’ (e.g. the Management Company). Accordingly, the FWC held that when the alleged bullying took place, the Applicant was at work in a ‘constitutionally covered business’.

Parties to the application

The third and final matter for determination was whether the Bodies Corporate and individuals were properly named as Respondents to the application.

Significantly, as noted earlier, the individual Respondents included lot owners who were not members of the management committee. Of further significance, it is noted that none of the Respondents have any direct contractual relationship with the Applicant. The legal relationships exist only between the Bodies Corporate and the Management Company (under the caretaking and letting agreements), and between the Management Company and the Applicant (under an employment contract).

The fact that the Respondents were effectively third parties and not the Applicant’s employer did not matter. Section 789FD of the FW Act applies to conduct by ‘individuals or groups of individuals’. It is not necessary to establish that the bullying was carried out by the Applicant’s employer or co-workers.

Implications

The implications of the FWC’s decision could be far reaching in the strata industry in Australia. Whilst residential bodies corporate are generally excluded from the provisions of the FW Act, the actions of committee members, lot owners or other persons, will infringe the FW Act where they amount to the bullying of the on-site manager’s employees (or another ‘worker’ as defined in the FW Act).

Significantly, the worker in question does not need to be employed or contracted directly by the body corporate. However, the Applicant was, in addition to a director and shareholder, an employee of the Management Company (which acted as agent for a partnership). In the writer’s view, the protection afforded under the FW Act would not extend to directors and shareholders of a management company where no employment or contractual relationship exists between the company and the individual.

Where a person is contracted in their individual capacity by a body corporate to perform caretaking and letting services, the issue of whether the FW Act applies is likely to depend on the issue of whether the scheme is residential in nature. There is an indication in the FWC’s decision that the operation of short-term holiday letting could create the necessary commercial element to bring such an arrangement within the provisions of the FW Act.

The decision of the FWC means that, not only the conduct of committee members acting on behalf of a body corporate, but also that of individual owners and other persons, can amount to bullying under the FW Act. Such behaviour can make the participants liable to orders from the FWC to cease engaging in such activity. If those orders are breached, such ‘bullies’ could be exposed to civil and criminal penalties.

Liability limited by a scheme approved under Professional Standards Legislation

Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice. 

Posted in: Body Corp Blog at 16 February 16

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Author: Jarad Maher

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