Is the Honeymoon Over for Aussie Strata Committees?

Australian strata committees have enjoyed a pretty benign life for the last 50 years.  

They haven't had to do too much, mostly defer to owners meetings on key decisions, rely on strata managers for most day-to-day operations and have not been sued very often or for very much.  

That is starting to change as the responsibilities and accountability of strata committees begin to increase.  But, how far will that go and will we follow the US pattern or not? If we do in Australia, then this slide from a recent US Strata Law Conference presentation might cause some concerns.

The slide comes from a presentation by Kevin Davis as the CAI 2013 Law Seminar about directors and officers liability in US community associations and whilst it is based on too a small statistical sample to prove anything, it is representative enough to give you a good sense of the US strata claims environment.  And, it's enough to make me worry for future strata committees who don't take more care about their decisions, actions and in-actions.

Interestingly, the statistics indicate that over half of the losses claimed against US committees relates to breaches of their fiduciary duties as committee members, breaches of their CCRs (our by-laws and management statements) and breaches of strata contracts.  And, the next 2 largest categories are for discrimination and EPL (employment practices liability).  

It may be a very different world for strata committees (and those assisting them) in the future if these kinds of claims become more prevalent in Australia and the end of the Aussie strata committee honeymoon.

Thanks to Kevin Davis and Clifford Treese for sourcing and providing this information.

Francesco …