Can body corporate committee members be held personally liable?

Key takeaway

Committee members are mostly protected from personal liability for decisions they make while carrying out their committee duties, provided they act reasonably, in good faith and without negligence.

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Personal liability for committee members not an issue if people act reasonably

One of the most common questions we get asked regarding strata is about personal liability for committee members.

The question either comes from committee members who are concerned about whether they’re incurring personal liability on the committee, or from an affected lot owner or someone else in a body corporate who’s saying, Can I sue any of this mob personally?

There are typically multiple layers of protection built around a body corporate committee that make personal liability a rare occurrence.

Statutory protection for committees

The statutory position under the BCCM Act is that committee members are protected from personal liability for acts taken in good faith and without negligence. That’s a significant statutory protection.

Policy protection for committees

It’s also important to remember that the state government doesn’t want committee members being sued by bodies corporate or by other lot owners – that would result in the more than 50,000 bodies corporate we’ve got in Queensland having no committees the morning after that became public.

It’s challenging enough to find volunteers to take on committee roles without adding that disincentive.

Insurance is a must

Every committee should have insurance.

Bodies corporate have statutory obligations to keep common property insured for the full replacement value. Tacked on to every policy should be a committee members’ liability policy or a directors and office holders policy where the insurer would protect a committee member from any proceeding that might be filed against them personally.

Legal action is rare

For legal action to ensue, a plaintiff must be decided and the issue must be one that is clearly worth pursuing at law.

If the plaintiff is proposed to be the body corporate then it’s going to need a special resolution to kick any proceeding off.

If the plaintiff was to be a lot owner, or a group of lot owners, their claim is going to have to be significant to justify any proceeding.

They are also going to need to be able to make out that the issue complained of was as a result of a decision taken, or not taken, in bad faith and with negligence.

It’s all well and good to assert that a committee member might be personally liable, but the circumstances in which it would happen are rare.

In nearly 30 years in strata law, never have we commenced a proceeding against a committee member personally, and we are aware of only a handful of cases where committee members were sued in a personal capacity – but not aware of the outcome of any of those, meaning they more than likely settled on some basis.

The bottom line: Act reasonably

If you’re on a committee, make sure that you continue to act reasonably.

The easiest legal test for that is: be able to explain why you’ve made a particular decision.

If you can do that, more often than not you’re on the right path.

Clearly, if there’s any doubt about personal liability seek legal advice and get it quickly. That should be on the body corporate’s account, since the only reason you’re being exposed to that question is because you’re acting as a committee member.

This article has been republished with permission from the author and first appeared on the Redchip Strata Law website.