This article and video explores the important discussion about unfair contracts, consumer protection and the impact on lot owners within the strata industry. We ask Todd Garsden, Partner at Mahoneys and Gerard Brody, an independent consultant working in the Consumer Advocacy, governance and public policy space for their thoughts.
Video: Unfair contracts, consumer protection and the impact on lot owners
We explore the complexities surrounding consumer protection and whether a body corporate or owners corporation qualifies as a consumer under the Australian Consumer Law (ACL).
Recent concerns about unethical practices in the strata industry highlight the need for clarity and potential reform in this area.
Gerard explains the legalities of unfair contract terms and how the legislative framework applies (or doesn’t apply) to owners corporations. He’ll also explore solutions implemented in specific jurisdictions like Victoria and discuss potential reforms, both for contract terms and broader consumer protection measures.
Todd sheds light on how these issues might unfold in everyday strata management scenarios. He offers valuable insights for committee members who may encounter unfair contracts or be pressured to enter into them.
During the interview, we cover the following questions:
- What are the specific types of unfair contract terms prohibited by the ACL?
- Why is there a current lack of protection for owners corporations under the ACL, even though they may enter into contracts for essential services?
- Building on the Victorian example, what’s happening in other jurisdictions? Who is addressing this issue?
- Looking towards the future, what reforms do you see as essential, not just for unfair contract terms, but also for broader unfair trading practices under the ACL?
- Can you walk us through some practical scenarios where unfair contract terms might arise in the context of a body corporate?
- What steps can a committee take if they suspect a contract might be unfair or are pressured to accept one?
- Given the current legal landscape, what proactive measures can committees implement to safeguard themselves and their owners from potentially unfair contracts?
- Is there a measure of hope for lot owners navigating potentially unfair contracts within the strata system?
Todd Garsden
Mahoneys
E: tgarsden@mahoneys.com.au
P: 07 3007 3753
Gerard Brody
Independent consultant
Email
This post appears in Strata News #697.
Have a question or something to add to the article? Leave a comment below.
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Great discussion. The need for ACL protection for OC’s is urgent.
Because of this absence of protection owners corporations sign up to new strata management agreements at least every 3 years, that would fall foul of ACL in such areas as:
Termination provisions
Liability clauses
Indemnification of Strata Managers
Restrictions on us of non panel Insurance brokers etc
As it is, the imbalances entrenched by these provisions are perpetuated by strata industry bodies incorporating such clauses in their “Standard” template agreements.
There is a clear power imbalance with OC’s being told that Standard Contract terms are non negotiable and OC’s not having the resources to call in lawyers to make the arguments very 3 years…
Why should they have to ?
In the absence of strata managers stepping up with template contracts that are fair to all, the watchdog Fair Trading office in each state needs to step in with a standard contract in the same way as they have provided residential tenants with contract protection.
This could all be fixed tomorrow with strata industry bodies reviewing their template contracts in the light of Australian Consumer Law before they are made to do so.
I emailed Fair Trading NSW April 2024 regarding the unfair contract now used by strata managers to be emailed by Fair Trading NSW that this does not fall within their jurisdiction. Their file number is 11242109