The personal cost of power -Strata managers control over strata schemes comes at a not so hidden cost which can extend to their personal assets

 by Ganesh Sahathevan 


                                                                         

                                  Anoulack Chanthivong the NSW  Minister for Better Regulation and Fair Trading

   



The ABC's investigation into strata management industry misdeeds and the reforms the NSW Government has promised  is also interesting for it reveals how strata managers by  assuming  either directly or indirectly control of the management of the strata schemes they are hired to manage, assume the liabilities that come with that power. 

Strata managers may under ordinary circumstances be fiduciaries vis-a-vis strata unit owners and that alone can expose them personally to liability for any loss or damage suffered in or at the buildings under their schemes. While the rules with regards who may or may not be considered a fiduciary are complex Bugden Allan Graham Lawyers has published on its website an easy to read and informative summary of the law in the area.  

However, in the cases reported by ABC's Linton Besser and Ninah Kopel there is evidence of strata managers acting   as if they were themselves the strata committee, deciding what may or may not be in the best interest of the scheme. The ABC has reported these as instances of conflicts of interest, but underlying such conduct is an assumption that what is best for the strata manager, the fiduciary, is also in the best interest of the scheme.

Assuming such power is not without costs, for by doing so the strata manager becomes, in effect, the scheme, and assumes all the liabilities that the scheme is exposed to. That can include liability for damage to the building, or even persons injured on the premises as for example the caretaker in Borg v The Owners – Strata Plan 64425 [2010] NSWDC 203 discovered. Strata managers say and do things in the course of their dealings with scheme unit owners and thus the liability may not be limited to anything that may be in any written contract for services. Besser and Kopel report that strata managers are preying on the ignorance of unit owners, but the real ignorance may well be in the  ignorance of owners and managers of  the strata managers' liability. 

END 

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