Question: If the strata manager gives incorrect advice causing a monetary loss to the owners corporation, what remedy is available to the OC?
Answer: The type and quantum of liability of the managing agent is limited.
Generally, the strata management agency agreement between the Strata Management Agency and Owners Corporation will set out the liability of the agent in performing services under such agreement.
Under the Strata Community Australia (NSW) standard form of strata management agency agreement, the type and quantum of liability of the managing agent is limited to:
- The agent’s wilful breach of the agreement, gross negligence, dishonesty or fraud
- The agent’s maximum liability to the owners corporation for any breach of the agreement, is limited to the amount of the agreed services fees for the year in which the liability arose.
As it is likely the Owners Corporation will need to commence legal proceedings for the “negligence” or “breach of contract”, we strongly recommend you seek legal advice on this matter, as the Owners Corporation will require evidence to establish its case and will carry the burden of proof.
Please note also under the terms of the standard agreement (among other things), that the Owners Corporation may be required to indemnify the strata managing agent for the agent’s legal costs in defending the Owners Corporation’s proceedings against it.
This post appears in Strata News #573.
Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440