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What would be a serious enough failure to justify removal of a committee and replacement with a compulsorily appointed strata manager under section 238.
But what about the middle ground, where the owners vote to remove a committee member for non-performance or poor behaviour. What constitutes a failure to act?
And can committee members be held liable for decisions they make that cost owners financially?
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And there’s a really interesting case in which the owner had a leaking building and they sued the strata manager, the individual committee members, the building manager, and the owners’ corporation.
And during that case, it was found that one of the committee members basically didn’t appreciate the person’s point of view. And when provided with an expert report by that person to support their point of view about the water entry, didn’t read it.
Right. And that led to the order for that person’s removal. Okay. So there’s an example where, you know, people aren’t performing the duty with due diligence. So that’s where they’re not using their best endeavours or reasonably best endeavours to fulfil that duty. And so you can get removed on that basis.
So that’s an example. And there’s been interesting other claims against committees as well.
So we had a matter where we gave some advice to an owner’s corporation about an expiry of a warranty period and told them that, you know, if you’re dealing with this builder, you should look to lodge a claim in the tribunal just so the warranty doesn’t lapse, which means that the builder can walk away from it. And that was only a few thousand dollars to lodge that.
And the committee just thought, oh, he’s been coming back. We won’t bother following that advice. We won’t support that advice. And then it turned out that as soon as the warranty lapsed, the builder stopped coming back. And that was a rectification cost of about $440,000.
And so the owners corporation then changed the committee because they weren’t happy with that performance and then brought a claim against the committee members. And then the office bearers’ insurer answered that claim and paid the $440,000 worth of damages.
There was an interesting case also regarding a building on on the waterfront where they had a particular colour and the committee decided that they would change the colour of the building. But that required a special resolution of the Owners’ Corporation, not something the committee could do.
Anyway, the colour of the building was change and the other owners weren’t happy so they changed the committee. Then they brought a claim against that committee and they got a payout from the office-bearers insurer to repaint the building back to the original colour because they didn’t like the new colour.
So there’s some examples of non-performing committees and some of the consequences that can flow from that.
Bannermans Lawyers
www.bannermans.com.auI think it would be useful to provide case references so members could read the judgements themselves, in order to understand the nuances of these decisions. If in fact NCAT chooses to publish the decisions.
Does a claim against a committee mean via the Tribunal CATs?
How does that work – do you first have to make a claim via NCAT and then the committee apply to the insurance provider and then the t indemnity clause gets invoked?You would think that would make the Insurance company keen to pay for Committee education.
Committee member should be held responsible for bad decisions. At present owners blame the Strata Managers. Strata Managers maintain that their advice was ignored.
In the first instance the Strata Manager and/or OC should prove what advice was given, if it was correct and/or ignored.
In VCAT disputes between owners and Strata Committees, the Respondent is usually the OC.
This would make sense if the Strata Manager is “only the administrator”*, but in most OCs the Strata Manager is the most “experienced and qualified” in the room.
Responsibility should be able to be rightly attributed between Manager and Committee.*The SCA says that:
“The Strata Manager is an administrator providing secretarial type services and does not provide expert serivces such as ESM(fire safety). OH&S (health and safety), supervision of buildig works, legal or financnial advice etc.”
https://vic.strata.community/wp-content/uploads/2024/12/SCA-Vic-CoA-2024-User-Guide-for-Owners-Corporations.pdf)