Lessons from The Rocks

24 August 2017

Following the successful Court of Appeal decision relating to the resident manager at The Rocks Resort at Currumbin, it is appropriate to look at what lessons other managers and the industry generally can learn from the case.

To briefly recap, our client was prosecuted by the Office of Fair Trading (OFT) which alleged a manager could charge no more than the actual expenses of items like cleaning and Foxtel – so nothing for the manager’s time and effort in arranging and supervising these things. Our client won in QCAT, lost at QCAT Appeal but won in the Court of Appeal.

So what are the lessons? First and foremost, make sure your letting appointments are in order and make sure you comply with them. As this case indicates you never know when the Office of Fair Trading might come knocking on your door wanting to inspect your letting appointments. It may be that a disgruntled owner or owners complain to the OFT (as happened to our client) or it may be that the OFT is conducting random checks. In many respects our client’s letting appointments saved the day for our client – although not perfect they were adequate to justify our client charging for the services the subject of the OFT allegation.

Importantly make sure all of the charges you are making are included in the letting appointment. Make sure any increases are properly communicated to owners and unless your appointment allows for you to impose increases, ideally get your owners to confirm any increases.

Secondly, the OFT is not always right in its interpretation of the legislation. You should not accept blindly what you are told by the OFT, particularly if it is contrary to standard industry practice. Get sound legal advice if in doubt. The action of the OFT in prosecuting this case to the full extent was unusual. That office is generally receptive to arguments showing where it may not be correct and to giving a manager an opportunity to change business practices where they are clearly wrong.

Thirdly, recognise the benefits of being an ARAMA member. Fighting legal battles with OFT (or indeed anyone for that matter) can be an expensive exercise, especially when, like in this case, the services of a QC are required. Our client was fortunate to have the financial support of ARAMA to fund the bulk of the Court of Appeal legal costs.

On a related note, there are also benefits in following the ARAMA recommended POA form 6 letting appointment and addendum. Those forms had already dealt with some of the arguments put up by the OFT and since the case commenced these have been strengthened further.