- This topic has 4 replies, 4 voices, and was last updated 9 years, 5 months ago by .
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Topic
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If the Strata is to respond to a Tribunal matter and they wish to get legal representation using the legal costs coverage in the strata insurance, does it need to GAIN APPROVAL before the claim can be lodged against the strata insurance?
can the decision to lodge a claim be done by one person alone without consultation with the others – eg strata manager, secretary or lot owner?
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I think the legal costs element in strata insurance is there in case someone sues the Owners Corp and costs are awarded against it, not so that you can fight a battle that you choose to take on.
But I may be wrong. It depends on the specific wording of your policy. In any case, you would be well advised to check with your insurer before ambarking on legal action.
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I think JT is right. The OC would defend an action out of its own money. Insurance is unlikely to cover that. If the OC were found liable for something, the liability insurance is to cover what the OC might have to pay to another party.
Ideally, the OC would have some contingency funds up its sleeve. The committee could at least initially get some legal advice about the matter which might not cost so much.
In the ACT, which I am more familiar with, the committee can spend a certain amount on legal action before needing to put the matter to a general meeting.
In the ACT, Tribunal matters generally start with a directions hearing which can give consent orders or orders that the matter go to a hearing. Parties are advised to come to some mutually agreeable solution which can be made binding by the consent orders. Parties are warned that if the matter goes to a hearing the orders given there might not be to either party’s liking.
I recall the first time I was on our committee and an owner took us to the Tribunal it was quite scary and we didn’t really know what to expect. Now we have been to the Tribunal about half a dozen times over various matters over the last 6 years, we have found the process generally quite reasonable and almost straight-forward. We were legally represented in one matter that was too important to leave to amateurs such as myself but the rest were manageable by intelligent non-lawyers on the committee. A lot of work to get everything just right though!
The committee should advise the insurer if there is a risk that it might be found liable for something, even if it thinks the other party’s action is likely to fail.
In NSW if the Owner Corporation (OC) or the Strata Committe (SC) wishes to seek legal advice or take legal action where the cost will be borne by the Strata Scheme then they need an authority to proceed motion to be resolved at a general meeting.
Limited circumstance exceptions to this requirement for a resolution at a general meeting are when the SC may approve such legal action when:
(1) the matter is urgent AND the legal costs do not exceed $15,000.00, or
(2) the matter is not urgent AND the cost does not exceed $3,000.00.
Quotes for legal costs should be obtained prior to proceeding to ensure that the correct process is being undertaken.
The relevant section in SSMA 2015 for authority, exceptions, and notifications etc are found in [s26] and [s103] and [s105].
Contributions for legal costs awarded in proceedings between owners and OC are found in [s90].
https://www.austlii.edu.au/au/legis/nsw/consol_act/ssma2015242/
@madamme said:
can the decision to lodge a claim be done by one person alone without consultation with the others – eg strata manager, secretary or lot owner?The insurance is held by the owners corporation so it is only the OC that can make a claim. The committee exercises the functions of the OC, so generally the committee makes the decision to make a claim, though in principle a general meeting of the OC could make the decision. In practice, the committee would usually direct the manager to make the claim on behalf of the OC.
By the way, the advice veered off into discussion of claiming against the OC’s liability insurance but we don’t know what the Tribunal matter is about. Perhaps more useful advice could be given if we knew more about the matter.