Bodies Corporate – Business or Bully?

Ever wondered if a Body Corporate could be held responsible for bullying and harassment?

You’re not alone.

You might recall a few years ago, a decision of the Fair Work Commission (“FWC”) called “the Application by Manderson”  in which Commissioner Hampton decided that in the circumstances of that case at a preliminary hearing, that it was at least appropriate for the body corporate to be included in the complaint process.

The Manderson application did not proceed to a final hearing, so we still do not know what orders the FWC would attempt to make against a body corporate where it is alleged a Committee member or Lot Owner bullied an employee of a caretaker.

Since the Manderson decision, there has been much speculation about:

  1. What orders if any, the FWC might make against a body corporate in those circumstances; and

  2. Whether a body corporate could be brought into the FWC complaints process if the Caretaker contracted directly with the body corporate, rather than operate through a caretaking company.

We recently came so close to ending the speculation once and for all about the second question, when a client came to us with an application of this nature.

Similarly to Manderson, our client’s situation was that:

  • a caretaker made an application for an order to stop bullying and harassment against a Body Corporate;

  • committee members and lot owners were included in the application;

  • a jurisdictional objection was made (by us), requesting a decision on whether the FWC even had a right to hear this type of application.

Unlike Manderson, the caretaker was directly contracted to the Body Corporate (ie did not operate through a company). Finally, we had the pivotal piece of the puzzle and a date with Commissioner Hampton to know one way or the other.

We were excited, we were ready and we knew what would be assessed, in that the body corporate had to be operating a ‘constitutionally covered business’.

Those issues involved a consideration of whether the Body Corporate:

  1. Was a ‘constitutional corporation’;

  2. Participated in ‘trading activities’ (ie was a PCBU) and/or had any employees?

Because of the fact the Caretaker did not operate through a company, it became essential to establish that the body corporate was a constitutional corporation participating in a constitutionally covered business for the FWC to be even entitled to consider the complaint.

After that (if the FWC was entitled to consider the complaint), there were then further issues to consider (although we touch on it briefly below, perhaps it is an issue for a future Activated…) such as whether the Body Corporate had in any way condoned or directed the alleged bullying behavior?

So looking briefly at each of those in turn:

1.    Is the Body Corporate a constitutional corporation?

​A “constitutional corporation” includes “Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.”

So, in order to be a Constitutional Corporation, the body corporate had to be a “trading corporation”.

2.     Did the Body Corporate participate in ‘trading activities’ and/or have any employees?

To be considered a Person Conducting a Business or Undertaking PCBU one significant issue looked at is whether there are any employees?

As you know, it is rare for a Body Corporate to hire employees as they are typically run by unpaid volunteers (ie the Committee).

However, that is not the complete answer.  The “trading activities” of the Body Corporate also fall under scrutiny.

Here we ascertained that the Work Health and Safety laws provided a gift with a bow on it. It stated that a body corporate that is responsible for common areas used only for residential purposes may be taken not to be a person conducting a business or undertaking in relation to those premises.

This was the case here, so it could be assumed that the Body Corporate was not a PCBU. A few things should be noted however, before popping the “champas” and celebrating a win on this one:

  • ​If you are a Body Corporate who is responsible for commercial common areas such as shops or restaurants then this does not apply;

  • Trading must be substantial and not peripheral; and

  • It is unclear how short term letting within the scheme would affect the operation of this exclusion.

For those reasons we were of the view the FWC was not entitled to hear the complaint and a preliminary application was sought to dispose of the matter.

Unfortunately, the Applicants in this matter withdrew their application once the preliminary hearing was listed (probably because of the compelling nature of our submissions…), so we still have no conclusive authority to lay to rest any speculation on this issue.  It is probably only a matter of time though, before this crops up again.

3.    Did the Body Corporate direct or condone bullying behaviour?

In terms of this issue (for those instances where the FWC is entitled to hear the complaint) there is still the unresolved issue of what orders in fact might be made against the body corporate itself (as opposed to any person found to have actually perpetrated the bullying conduct).  Whether an order should even be made, we think must be dependent on the extent to which the body corporate has directed or condoned the bullying behaviour.

The alleged bullying in this instance was by lot owners and committee members. As recognised in Manderson, Bodies Corporate have little ability to control committee members and even less ability to control lot owners.  So it is difficult to see precisely what orders the FWC might make against a Body Corporate.

In fact we sincerely hope the FWC considers the matter very carefully before making any order against a Body Corporate – in our view, Bodies Corporate are all too often burdened with unnecessary responsibility and expense. We hope that this trend does not continue into the jurisdiction of the FWC.

That said, one way we see that Bodies Corporate might get themselves into trouble within the jurisdiction of the FWC (that is, when the Caretaker is operating as a company) is where the Bodies Corporate direct, or at least condone, the bullying behaviour.

In the meantime though, whilst we have our views, we are left to speculate on the approach the FWC will adopt in relation to:

  1. What orders if any, the FWC might make against a body corporate in those circumstances; and

  2. Whether a Body Corporate could be brought into the FWC complaints process if the Caretaker contracted directly with the body corporate, rather than operate through a caretaking company.