NSW: Do strata managers have fiduciary duties to owners?

Question: Does a strata managing agent have a duty to keep the committee informed about building safety and insurance issues?

In advance of our upcoming annual strata building insurance renewal, I recently became aware that specific fire safety commercial cleaning conditions of our strata building insurance policy were not being met by some lot owners.

When raised directly with the strata managing agent, he advised he had requested the cleaning be undertaken five months earlier but had not received any response. I thereafter confirmed that, despite his knowledge and awareness of our building insurance policy conditions, there had been no subsequent follow-up by the strata managing agent, no communication or advice given to the strata committee, and no disclosure raised at our AGM, and that this remained outstanding.

The strata managing agent advised that the responsibility to comply with all conditions of the by-laws, as well as any additional insurance obligations, rests with the lot owner. Further, regardless of the timing of the last correspondence, notification and advice had been provided, and these lots are considered to have been duly informed of their obligations.

Does a strata managing agent have statutory, professional and fiduciary responsibilities to keep the strata committee members and owners up to date with issues impacting on the safety and protection of strata property?

Answer: Strata managing agents owe statutory and fiduciary duties, but it’s unclear any obligation was breached here.

I have not been provided any materials in respect of the situation and can only speak generally.

In general terms, a strata managing agent owes to the owners corporations that they act for statutory and fiduciary duties in addition to the contractual obligations set out in the strata management agreement. For example, a strata managing agent is an agent for the purposes of the Property and Stock Agents Act 2002 (NSW), see, section 3(1), definition of agent. Pursuant to Schedule 1 of the Property and Stock Agents Regulation 2022, agents are required to, inter alia:

• comply with the fiduciary obligations arising as an agent: section 2;
• act honestly, fairly and professionally with all parties in a transaction: section 3(1); and
• exercise reasonable skill, care and diligence: section 4.

However, it is unclear how the strata managing agent has breached any obligations he owed to the owners corporation. A strata managing agent exercises functions delegated to it by the owners corporation: section 52 of the Strata Schemes Management Act 2015 (NSW) (“SSMA“) and by the strata committee or its officers: section 54, SSMA. That the strata managing agent exercises delegated functions means that those functions originate from either the owners corporation or the strata committee or its officers. Those obligations continue despite any delegation: c.f. sections 53(2) and 54(2), SSMA.

Pursuant to section 55 of the SSMA:

1. the strata managing agent must record their exercise of delegated functions; and
2. provide a copy of those records to the owners corporation every 6 months.

Insofar as there is an obligation for lot owners to perform certain functions, that is not an obligation which the owners corporation can perform and cannot otherwise be delegated to a strata managing agent, there is no such power under the SSMA. An owners corporation can, pursuant to section 146 of the SSMA, issue Notices to Comply to lot owners (or residents) in respect of breaches of by-laws.

I’d also note that the SSMA provides what matters are to be discussed or considered at an annual general meeting at schedule 1, section 8 and 9.

This post appears in Strata News #804.

Matthew Lo
Kerin Strata Lawyers
E: matthew@kerinstratalawyers.com.au