What are the liabilities of strata committee members?
Posted 08 November 2024
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Strata committee members are acting in a position of power and owe fiduciary duties to the owners corporation and owners. As such, they can have personal liability in relation to performance of their functions including:
- approval of renovations (major works) for lots which is beyond the power of the committee to grant;
- entry into or termination of agreements (e.g. building management agreement);
- acts in conflict of interest;
defamation; or
- negligence.
A claim for damages may be available against one or more strata committee members where they have not complied with their duties or made decision beyond their power. Further, although those duties are strictly speaking owed to the owners corporation, the owners corporation is not the only party who could potentially bring such a claim. There are limited circumstances in which individual owners can bring such a claim.
However, section 260 of the SSMA states that the owners corporation will indemnify an officer of the strata committee, member of a strata committee, or persons acting under their direction in relation to things “done or omitted to be done in good faith for the purpose of executing functions as such a person under this or any other Act”.
Office bearers’ liability cover is often available from the owners corporation’s insurer, and is recommended. However, there will typically be exclusions which are generally not well understood and excluded common instances where cover would be needed, such as:
- Dishonest, fraudulent, or criminal acts.
- Acts in conflict of interest.
- Acts outside the scope of the strata committee member’s authority, such as when a decision is made without a requisite general meeting resolution.
This is an extract from our Strata Committee Manual.
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