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@Hutchinson said:
If it was installed with permission, then in the absence of a by law holding the owner responsible for its maintenance, it would be owners corp responsibility. If without permission, it is hard to see why the OC would have any liability at all.This is true unless the property has been sold by the person who installed the flooring, in which case, in the absence of a by-law, responsibility reverts to the Owners Corp.
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I just Googled “strata committee liability” and up came this paper from our old friends at Bannerman’s strata lawyers.
It’s called Executive Committee Members – How Broad is their Personal Liability? and includes the following:
Executive committee members can also have personal liability in relation to performance of their functions, including:
- Approval of renovations to lots.
- Entry into or termination of agreements, e.g. caretaker agreements.
- Acts in conflict of interest.
- Defamation.
- Negligence.
In some cases, office bearers’ liability cover may be available under the owners corporation’s insurance policy. However, there will typically be exclusions which are generally not well understood, such as:
- Dishonest, fraudulent or criminal acts.
- Acts in conflict of interest.
- Acts outside the scope of the executive committee member’s authority, such as when a decision is made without a requisite general meeting resolution.
- Acts causing death, personal injury or damage or loss to any property, unless an exception applies.
Now, David Bannerman who co-authored the paper, is one of our top strata lawyers. So, Austman, unless you have a clear ruling that proves what he says is not true, this aspect of the topic is closed.
However, there is a whole other discussion about personal liability of EC members for failure to maintain common property HERE.
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As far as I know, youi can reissue the minutes, due to “errors” even after they have been distributed.
If anyone objects, the can call for an EGM at which they could be rejected and amended.
But really, your problem here is an incompetent manager and the fact that you appear to have delegated the secretary role (and others?) to them.
You are now discovering why this is not a satisfactory state of affairs. The strata manager can’t be trusted and is pushing hard for an extended contract in clear effort to by-pass laws that have been brought in specifically to allow Owners Corps to remove under-performing strata professionals.
Here’s what I think you should do:
1. Appoint a secretary
2. Reissue the amended minutes to reflect what actually happened at the meeting.
3. Start looking for a new strata manager – there are plenty of good, reliable ones around. Our friends at the OCN may be able to recommend one in your area.
4. Tell your current strata manager that they WILL be considered for the new contract. Otherwise, why would a crap service suddenly get even worse?
On the question of motions being approved, rejected or deferred, unless you have standing orders that restrict how decisions can be made – and most ECs don’t – all it takes is a motion to be proposed that item such and such be deferred and there’s your decision.
Even a suggestion by the chair to defer would be fine so long as no one objects and demands a vote.
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@RL said:
I would expect that since an owners corporation (O/C) is a separate entity to the owners that comprise it, a loss to the O/C is distinct from a loss to an individual owners – the fact that the O/C no longer has that money to spend on the owner’s building does not mean the individual owner incurred a loss.Sorry – I’m not sure what you mean by the above. I’m also not sure that the Owners Corp is entirely separate from the owners as ownership of a lot means you are part of the Owners Corp whether you want to be or not and you share its responsibilities and liabilities, whehter ot not you voted in favout of them.
The committee is another matter entirely and its members are pretty well protected by “good faith” provisions. However, if a committee was told that there was a problem and decided to do nothing (especially if they didn’t inform the other owners) then they should be made accountable.
There are far too many strata committee members who refuse to learn the basics of their role, refuse to take tough decisions or uncomfortable advice and then don’t want to be held accountable when it all goes pear-shaped.
But if committee members act responsibly and transparently, they have no need to fear they will be left carrying the can when things go wrong, even if they made the wrong decisions.
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@PJ said:
I would appreciate some advice as to when the ‘new Act’ come into effect and what are the transitional arrangements, if any?The last time I spoke to the Minister, he said probably about October this year. Apparently strata industry professionals had asked for more time to get all their literature in order and I know there is still some fine tuning going on regarding voting processes and proxies..
As far as transitional arrangements go, everything that’s in place in a strata scheme (committees, contracts and so on) will remain until that scheme has its first AGM after the Bill becomes law.
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Once again we are back at this argument of the difference between legal liability and what is covered by insurance.
I have put in a call to our insurance sponsors CHU to get a definitive answer on this and other insurance issues but in the meantime I am going to agree with Scottie.
And I will draw your attention to THIS STORY where an insurer refused to cover a unit block roof that was blown off in a storm (a so-called “act of God”) because the building was defective and the roof was considered not fit for purpose.
Owners corps and committees are generally covered for accidental negligence, but not willful negligence. Knowing there is a problem and choosing not to anything about it can invalidate your insurance coverage and, I believe, make the members of the committee and owners corp who chose not to do anything about it PERSONALLY liable for damages if there is an accident.
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Just to add to the argument of why you need to get your defects checks done ASAP, have a look at this story where the developer was a mate of the notorious Auburn deputy mayor and the strata manager was a mate of the developer.
When the roof blew off in a storm, the insurer refused to pay out because the building was riddled with defects.
I’m not referring to this story specifically, but, as I’ve said elsewhere, it’s time the government started cracking down on all the cowboys, crooks and dodgy dealers in the strata industry.
And by cracking down, I mean, let’s strip them of their assets under “proceeds of crime” legislation and jail the worst of them. Until then, these grubs will never get the message that it’s not OK to rip off people who just want a roof over their heads.
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Maybe I am the one who has missed the point.
I thought the difference was between saying to owners, a) this is now your responsibility and b) this is now your obligation to maintain.
For instance, our OC passed a special resolution saying that lighting and cabling within the ceiling space was the responsibility of the lot owner.
Under this, if I choose not to replace blown downlights, it’s up to me. There is no obligation to do so but if I want them replaced or repaired, it’s my responsibility
Does that make sense?
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There will be no compulsion to review insurance under the new legislation.
Here is the definitive answer, from a Ministerial spokesman:
Section 83 (2) of the Strata Schemes Management Act 1996 required strata scheme buildings to be insured for at least the value of the building indicated by the last valuation obtained for the building. Section 85 required property valuations for the purpose of insurance under the Act to be obtained at least every five years. Both of these sections were repealed on 5 November 2015 by the Regulatory Reform and Other Legislation Repeals Act 2015. The repeal of these sections related to the de-regulation of the property valuer profession in NSW.
These provisions were not therefore included in the Strata Schemes Management Act 2015, and it is not intended to address the issue in the forthcoming Regulations.
Clause 9 of Schedule 1 of the Strata Schemes Management Act 2015 requires that the particulars of each insurance policy taken out by the owners corporation must be included in, or accompany, the notice given to lot owners of each annual general meeting. This enables lot owners to assess the need for any adjustment of the amounts the property is to be insured for. The owners corporation can obtain a property valuation at any time they wish.
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Just to drive home the difference referred to by Whale, owners corps can, by special resolution, agree not to maintain common property, provided it doesn’t affect the safety or appearance of the strata scheme.
Apportioning responsibility to owners is another matter. If the owner doesn’t want to spend money fixing up common property within their lot, then it’s up to them, provided the above exclusions are addressed. But it would take a unanimous decision to pass responsibility on to individual owners, rather than just taking it away from the owners corp.
Just as an example, the Owners Corp could not legitimately decide not to maintain automatic closers on apartment front doors as that would affect the safety of the building. But they might decide not to repair and maintain electric garage door equipment (on individual garages) as that is neither a safety nor an appearance issue.
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On the most recent advice I have on by-laws, a by-law banning short-term lets has no standing if short-term lets would be permissible under council zoning.
Your council’s R4 zoning is for high-density residential development but allows for applications for other uses, ranging from multi-occupancy houses, through fast food outlets to places of worship.
So would a by-law stand on its own? Possibly not. However, a clear indication from the Owners Corporation that you are opposed to short-term letting in your building would be taken into consideration if someone applied for a B&B or backpacker accommodation.
Check with council. If they say a by-law would be seen as trying to supersede planning regulations, simply pass a special resolution that makes it clear the overwhelming majority o owners don’t want them in your building.
It could be something that says the owners corporation is opposed to short-term lets of less than 90 days (as defined by the Land & Environment Court) and instructs the strata committee to object to any applications for non-permanent residential use and to pursue any breaches that occur.
That way both the council and future investor owners will be in no doubt about your position on this.
Also, generally speaking, councils pay considerable heed to owners corps when it comes to DAs with a strata scheme. Just make sure your position is loud and clear.
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OK, here is the definitive answer from a Ministerial spokesman:
Schedule 3 continues the provisions of the current Act by providing that members of existing executive committees as the time of commencement of the new Act will continue in that role for the balance of their term of appointment.
That is, a person who becomes ineligible upon commencement of the new Act would not be able to be reappointed but their current term of appointment would be continued until the end of their term.
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Thanks Scottie – you learn something new every day. We are so lucky to have all these people who are smarter than me contributing to this page. If anyone wants me, I’ll be on the dunce stool in the corner.
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