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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?
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