Can an individual SC officer be held liable for costly mistakes of their making?

I apologise for the length of this post in advance but there is some background required to understand my problem.

My question ultimately comes down to whether the strata management company or individual officers of the strata committee can be held liable when they have made costly stuff ups due to their breaches of the NSW SSMA 2015.

Let me preface this by saying that:

1. Our small strata (6 units with equal entitlement) has signed the standard SCA NSW strata management agency agreement without any changes to the liability clauses.

2. I’m aware that Section 260 of SSMA 2015 says that officers or members of the strata committee can’t be held liable if they’ve acted “in good faith”. Any liability falls back to the owners corporation.

So I understand that I’m not starting from a position of strength.

Now to the events that triggered this…

In early December, our strata committee (3 members out of 6 units) passed some motions to have the interior and exterior common areas of the building painted with a different colour scheme and to have the common area stairwell re-carpeted with different coloured carpet to match the new painting colour scheme.

We only had our AGM on 31 August this year and painting the building and carpet replacement were not included in the agenda for either the AGM or the SCM that followed. Nor was this work included in the proposed capital works budget for the following year.

The SCM passed their motions on 6 December and the painting work started the very next day on 7 December. That’s the first I knew about it as the strata manager failed to send the SCM meeting notice to the owners corporation (OC), nor was it placed on the building’s noticeboard.

There is one person on the strata committee (SC) who appears to be calling all of the shots and is acting as the chairperson, secretary and treasurer. I sent an email to the 3 SC members and the strata manager asking them about the building painting and why I wasn’t given any notice about it. The secretary responded that it had been all done by the books and was very dismissive of my request in an overly smug way. That really got up my nose and that’s when I decided to do some research.

I found out that because they had changed the colour scheme, they were effectively altering common property, which can only be done via a special resolution at a general meeting of the OC according to section 108 of NSW SSMA 2015.

I sent a follow-up email to the SC members and the strata manager and let them know that the SC didn’t have the authority to pass the motions about repainting the building with a different colour scheme. I asked for the painting to be stopped immediately and said that we needed to have a general meeting of the owners corporation to discuss it. The secretary continued to dismiss me because he was so confident that he was in the right. The strata manager never responded to any of my emails or phone calls about this matter.

I asked the SC for a copy of the SCM meeting notice that wasn’t sent to the OC. There was a single quote for interior/exterior painting of $25K, along with proof of liability insurance, but there was no signed contract and no proof of home building compensation (HBC) cover which is mandatory for any building works (including painting) above $20K. I sent an email to the SC and strata manager asking whether there was any signed contract or proof of HBC cover and received no response.

Because no action was taken by either the SC or strata manager to either stop the painting or call a general meeting, I got the support of another lot owner and we sent out a “qualified request” for a general meeting and provided our agenda and motions in accordance with the SSMA. 14 days passed and they hadn’t send out a meeting notice. So in the end, I sent the meeting notice out myself, on behalf of the secretary (I’m not an SC member), making sure to follow all of the guidelines in the SSMA. I’m not sure whether I had the authority to send out the meeting notice myself, but I didn’t see much choice.

The general meeting is this Tuesday. There are various motions to approve the painting work and carpet replacement that are going to be defeated. There are also motions to vacate the chairperson/secretary/treasurer from the strata committee, change strata management company at the next AGM, as well as one to file an official complaint against the strata management company with their governing body, SCA NSW.

After the meeting on Tuesday, the situation is going to be that the painting work and carpet replacement motions are going to be defeated and we’re going to be stuck with a building colour scheme and new carpet colour that hasn’t been agreed to. Further, the paint job that has been done is pretty shonky. So given that we’re going to either need to repaint the building with a different colour scheme (to be agreed on) or repaint it with the original colour scheme, this is where the question of liability will come up.

Having read the the liability clauses that we’ve signed in the strata management agency agreement, it looks like we’re pretty screwed there. That’s unfortunate, because a good strata manager should have never have allowed the SC to vote on this work in the first place, let alone allow the work to commence. However, as we’ve only paid a 10% deposit for the painting, I’m wondering if we refuse to pay the rest of the payment, what that will trigger and whether any strata management or strata liability insurance might cover that stuff up because the work was never properly authorised. Knowing how insurance companies work, probably not.

That’s why I’ve also filed a pre-emptive mediation request with the Dept of Fair Trading, solely in my name, against the chairperson/secretary/treasurer of the SC with a view to taking him to NCAT to seek damages. I’m not sure whether I”m allowed to file in my own name or whether I’m supposed to attach the OC. I’m also not sure whether I can target an individual member of the SC, as opposed to the entire SC. I’d appreciate some advice on this.

I would have to prove that he hasn’t acted “in good faith”. Given that he has just moved out of his unit, it looks like he’s about to sell it. So it looks pretty clear to me that he’s rushed this paint job and carpet replacement through to tart the building up a bit so that he can get a better sale price for his unit. He doesn’t care that the painters have done a dodgy job because he’ll be gone in a few months.

So with all of that background out of the way, based on other peoples’ experience with NCAT, what chance do I have of making this individual strata committee member/officer liable for all of these unauthorised works?

What course of action would you recommend? I do plan on getting an opinion from a strata lawyer but most of them aren’t back at work until this week.