Terminating a caretaker or letting agreement isn’t just a paperwork exercise—it can lead to serious consequences if done incorrectly. That’s exactly what happened in the case of Linali Pty Ltd v Body Corporate for Crown CTS 41282, where the Queensland Civil and Administrative Tribunal (QCAT) ordered the Body corporate to pay $311,958 in damages. The case is now a key example of what can go wrong in the termination of management rights.

This blog breaks down the facts of the case and shares key lessons to help other bodies corporate avoid a similar outcome.

A Quick Look at the Case

Back in 2018, a Caretaker signed both a Caretaking Agreement and a Letting Agreement with the Body corporate. A few years later, the Body corporate sent out remedial action notices in May and September 2021. These notices raised concerns about things like garden maintenance, cleaning of fire sprinkler pipes, and lack of communication with the committee.

By November 2021, the Body corporate passed a resolution to terminate the Caretaking Agreement. They also denied the Caretaker access to their office. In response, the Caretaker claimed the termination was unlawful and ended both agreements. The matter was taken to QCAT, where the decision went against the Body corporate.

Where It Went Wrong

1. Faulty Remedial Action Notices

The biggest issue was the invalid remedial action notice given in May. It failed to clearly say that the Caretaking Agreement could be terminated if the Caretaker didn’t fix the problems listed. This made the notice legally weak.

The September notice listed 37 issues, but only six were followed up in the hearing—and only three of those were proven. This weakened the Body corporate’s position even further.

2. Termination Was Premature

When the termination decision was made in November 2021, the September notice hadn’t even been delivered. The Body corporate relied heavily on the invalid May notice, which didn’t give them proper legal grounds to end the agreement. This is where the termination of management rights process broke down.

They also allowed the committee to act on the resolution, which goes against legal rules. Termination decisions can’t be handed off to the committee—they must be made at a general meeting.

3. Refusing Office Access Was a Serious Breach

After the resolution, the Caretaker was locked out of their office. Since access to that office was key to running the letting business, this was seen as a breach of the Letting Agreement. The Tribunal found that this action blocked the Caretaker from doing their job and broke a basic rule of cooperation between both parties.

The Financial Hit

Because the Body corporate wrongly ended both agreements and broke the Letting Agreement, they were seen as having walked away from the contracts. This gave the Caretaker the right to end the agreements and ask for damages.

Experts gave evidence on both sides, calculating future lost income. The Tribunal reviewed all the details and ordered the Body corporate to pay $311,958 in damages. On top of that, they were ordered to cover 85% of the Caretaker’s legal costs—which could mean thousands more.

What Other Bodies Corporate Can Learn

This case highlights some clear lessons:

• Follow the correct process when issuing remedial action notices. If the notice doesn’t meet the rules, it's worthless.
• Only move to termination if there’s a valid legal reason backed by a proper notice and a failure to fix the issues.
• Keep decision-making at the general meeting level—termination can’t be left to the committee.
• Avoid heavy-handed actions, like locking someone out of their workspace. That could turn a disagreement into a breach of contract.
• Understand that a mistake in the termination of management rights can open the door to big legal and financial consequences