Negligence in good faith and other gems from new strata laws


An owners corporation is a curious entity for many reasons, not the least of which is whether it is essentially of a public or private nature. There are more rules for public entities because they deal with all-comers. Private entities get more latitude because your actions or inaction hurt only yourself. The difference between public and private enterprises is perhaps best illustrated by the significant costs of compliance and governance imposed on listed public companies compared with the $2 shelf companies we use for our private businesses.

Are our bodies corporate and owners corporations really the fourth level of government managing our micro communities, or are they just private entities to manage private property? The new strata laws proposed for NSW make the point that our legislators have not yet thought this through. For example, on the one hand it is proposed that owners corporation take on the role of policing how many people stay in a bedroom, something local government has traditionally done, and on the other it provides protection against committee members acting negligently, something we would never see in the public arena.

Proposals about the duty of care of strata committee members makes the point. Presently the strata laws in NSW say nothing either about the liability of, or the protection for, volunteer members of strata committees. The new laws propose that strata committee members will owe the owners corporation a duty to exercise due care and diligence (section 37). I get that but then elsewhere it says if you get it wrong you’re not liable if you acted in good faith (section 255). So I have a duty not to be negligent but there’s no consequence of a breach of that duty if I’m good?

If clear agreements make for good friends, then this needs to be tidied up.

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