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  • #60689
    Incertus
    Flatchatter

    Surely we can do better than the standard Strata Management Agency agreement?

    I recently found myself having to read a copy of the Strata Management Agency Agreement published by Strata Community Australia (NSW), an exercise which served to convince me that both the form and content of this document leave an awful lot to be desired.

    But for present purposes, I concentrate on the egregious provisions to be found in Clause 6, and then add a few more questions.

    6.1 is probably harmless, if somewhat awkwardly expressed. But …

    6.2 seeks to exclude the Agent from all liability except for “wilful breach of this agreement, gross negligence, dishonesty, or fraud”.  I am not sure why we need (or even what is meant by) the word “gross” in this context. Surely negligence should be sufficient, without quibbling over whether it might be “gross”, a word does not appear in Clause 10 of the Regulation.
    And why should the Agent not be liable for all the causes of action which it is required to be insured for?

    Then follows a stipulation that the Owners Corporation indemnify the Agent against claims “which may arise in the course of … the Agent’s management of the scheme”, etc., being claims made:

    “(a) by third parties against the Agent;

    (b) by the Owners Corporation …  before, during, or after this agreement”.

    I struggled to work this out.
    Why, or in what circumstances, should the Owners Corporation give such a sweeping indemnity?

    Fair enough to indemnify an Agent who is taking some action on behalf of the Owners Corporation which is clearly authorised.
    But on the face of it, this convoluted provision would have the Owners Corporation indemnifying the Agent against claims which the OC itself might bring against the Agent.

    6.3 seeks to limit the Agent’s liability to “the amount of the agreed services fees for the year in which the liability arose”. In many cases, that might be as little as $5,000.
    Why such restriction, when the Regulation (in Clause 10(4)) requires an Agent to have cover of $1,000,000 for any one claim (inclusive of costs) or $3,000,000 in aggregate in any period of insurance ?

    6.4 imposes a limitation period of just two years from any act or omission, after which the agent is deemed to be discharged from any liability.
    The normal limitation period for a breach of contract, or for negligence, is six years.

    6.5 is harmless but unnecessary. It is saying no more than that the law applies to this contract.

    6.6 is another unacceptable attempt at requiring the Owners Corporation to indemnify the Agent, in this case “against any matter for which the Agent has no liability to the Owners Corporation”, but in circumstances which are not spelt out, and remain obscure.
    And the words “including in respect of the matters referred to in clause 6.2 and 6.3” are hopelessly vague, simply adding another layer of confusion.

    Can anyone correct my assertions? Or offer any re-assurance? If not, what can we do about this?
    Are there agents who are prepared to accept amendment of these provisions?
    Or can we perhaps prevail on Strata Community Australia to re-draft their agreement?

    Incertus

    • This topic was modified 3 weeks, 6 days ago by .
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  • #60706
    kaindub
    Flatchatter

    You are in no way obliged to use the SCA agency agreement.

    But what is the alternatives?

    You may change the SCA agreement by striking out or adding clauses with agreement of the strata manager. But it’s unlikely that a strata manager will agree. They will give lots of reasons, both genuine and bogus not to. Remember that the SCA agreement is written by the organisation that strata managers are members of and the agreement favours the strata manager.

    Write your own agreement. Of course you can’t take the SCA agreement as a basis because that [document] is copyrighted. You would need to hire a lawyer to draft such an agreement, the cost of which would be thousands.

    Perhaps , if JT reads t his, it’s a call to get OCN to draft a contract that committees can put to their strata managers, or perrhaps the government could draft a contract similar to what they have done for residential tenancies.

    • This reply was modified 3 weeks, 2 days ago by .
    #60709
    Jimmy-T
    Keymaster

    .. if JT reads this, it’s a call to get OCN to draft a contract that committees can put to their strata managers, or perhaps the government could draft a contract similar to what they have done for residential tenancies.

    A couple of points:

    1. I read everything that appears on this forum (although I don’t always understand it).
    2. I am not nor ever have been a member of OCN (although we are on good terms).
    3. I believe OCN has been trying to formulate an independent and fair strata management contract for a while now, but it keeps butting up against issues of copyright (see item 4).
    4. In the past, as Kaindub mentions, efforts to adapt the standard SCA contract have met resistance from SCA claiming that the contract is their copyright and therefore it can only be altered with their permission. The fear is that the use of any legalisitic phrase in another contract, which is almost unavoidable, would trigger refusal at least and legal action at worst.

    SCA members may not have a stated policy of only allowing its contract in an unadulterated form, but that’s effectively what they do.  If we were in any other evolved jurisdiction, this might well be seen as operating a cartel. Ironically – that they can’t be seen to operate as a cartel – is the reason SCA’s predecessor ISTM used to give for not issuing a table of reasonable strata management fees.

    Last year, SCA NSW instituted a government approved Professional Standards Scheme which, its website says, “has advanced consumer protections in New South Wales to the highest level nationally”.

    According to the SCA NSW website its Strata Manager members are bound by a Code of Ethics that compels them to act “honestly, ethically and with a duty of care to their clients.”

    According to another page on its website, the SCA Code of Ethics defines ethical behaviour as being ‘in accordance with the moral standards customarily applied in a business or professional relationship’.

    It  goes on to draw from the Property, Stock and Business Agents Act 2002 and Property, Stock and Business Agents Regulation 2014 – the laws that govern the behaviour of strata managers – rules regarding Fiduciary obligations, honesty, fairness and professionalism and acting in clients’ best interests while eschewing “high pressure tactics, harassment and unconscionable conduct”.

    Is strata managers refusing to sign any contract except one that appears to be weighted excessively in their favour “high pressure tactics” or “unconscionable conduct”?

    Marry that to their implied assertions that any strata manager who isn’t a member of the SCA has dubious standing in the industry, and any “take it or leave it” position seems to be unethical, by their own standards, at the very least.

    Kaindub’s idea that the state government should create its own standard strata management agreement has a lot of merit. Maybe the new Fair Trading minister will make that one of her first priorities (ROFL).

     

    #60759
    old28cycle
    Flatchatter

    We have objected to Clause 6 lopsided text for years, generally told that is was written by SCA lawyers, oh really, that wasn’t obvious.

    Each time the agreeement comes up for renewal, we raise objection to Clause 6 at the AGM and get it minuted that we object to the clause making the owners responsible for the mistakes of the managers. We are happy to take responsibility for our actions / inactions, not happy to take responsiblitiy for action / inaction of manager being strung back to our decision to engage a particular stata company.

    Also get told that no one has taken owners to court using Clause 6. That doesn’t remove the danger hanging over our head of a strata manager stuffing up as the dodgy clause is in the contract.

    If another standard contract ( purchase of car for example ) is used as a base for a new strata contract, this may reduce the opportunity for SCA to claim copyright infringement on the improved contract.

     

    #60761
    Jimmy-T
    Keymaster

    If another standard contract ( purchase of car for example ) is used as a base for a new strata contract, this may reduce the opportunity for SCA to claim copyright infringement on the improved contract.

    But then you have to find a competent strata manager who’ll agree to sign away their extraordinary protection under the SCA contract.

    In this regard, if no other, SCA sails perilously close to operating as a cartel while at the same time touting its professional integrity via the Professional Standards Scheme.  They can’t have it both ways and I will raise this with the SCA, the Fair Trading minister, another minister whom I know is frustrated by one-sided strata management contracts and maybe even the Fair Trading Commissioner, Rose (the invisible woman) Webb.

    #60776
    scotlandx
    Strataguru

    Setting aside clauses 6.4 and 6.6 which I haven’t looked at in detail, the other provisions are standard in service contracts generally. I don’t believe any strata manager would agree to change them.

    #60851
    Jimmy-T
    Keymaster

    There is movement. Yesterday I received this note from Sadiye Ince, General Manager of Strata Community Association (NSW) the state umbrella association for strata managers:

    SCA (NSW) is aware of the need to make necessary changes to contemporise parts of the agreement to accord with the commencement of the Professional Standards Scheme and the proposed amendments to the Strata Act.

    These changes will take effect once the [proposed NSW Strata] regulations have been finalised.

    #60883
    Jimmy-T
    Keymaster

    More good news.  I had skimmed over the section on strata management contracts in the proposed changes to strata laws and regulations because it stated there was no need to have a prescriptive strata management contract, as there is  for residential rents).

    However, it has opened the door to changes making the contracts fairer.  This is what it says:

    Having considered the feedback, the review considers that prescribing a standard form agreement in legislation at this point may not be necessary and notes that the PSA Act does not impose standard form agency agreements on other agents regulated under that Act (real estate agents and stock and station agents).

    There are other ways to improve the regulation of contractual arrangements. Moreover, based on the feedback received, it appears that the key driver for much of the support for standard agreements is a concern with what are perceived to be unfair clauses in some strata managing agency agreements.

    It was suggested to the review by several stakeholders including the Law Society, ACSL, UDIA and PICA, that instead of prescribing a standard form agency agreement, terms of concern could be addressed through a prohibition on their inclusion in management contracts.

    This latter approach is already in place through Schedule 14 of the PSA Regulation and ensures a baseline level of protection and consistency for contracts without being overly prescriptive.  A project to remake the PSA Regulation has recently commenced and is due to be completed by 1 September 2022. The remake process will involve the broader examination of the provisions under Schedule 14 and provides an ideal opportunity for an exploration of the inclusion of any additional mandatory or prohibited terms in Rules of Conduct.

    Recommendation
    65. The inclusion of additional mandatory or prohibited terms for strata management agency agreements should be considered as part of the remake of the Property and Stock Agents Regulation in 2022.

    It will be interesting to see what those mandatory inclusions and exclusions turn out to be.

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