Body corporate committee members are generally not paid for their time. Often they may be on the committee simply ‘because no-one else wanted to put their hand up’. So it may come as a shock to many that they could also be personally liable for what they do as part of the committee.

This comes in the wake of the recent Guardian Retail Holdings case where the High Court held that members of a body corporate committee have personal obligations to act in accordance with the relevant statutory powers and rules “and are personally exposed for their wrongful acts.” The High Court was also of the view that committee members could be liable both to the body corporate itself and to individual members.

Some steps that committee members can take to protect themselves include:

  1. Conflicts of interest – Taking particular care to ensure that they do not place themselves in a position of conflict between their duties as committee members and their personal interests. For example, body corporate committees should maintain an interests register, declare any clear conflicts of interest and not participate in any decision making in which they have a personal interest. We say ‘clear’ conflicts of interest, because every committee member is an owner in the development and so obviously will have some interest in most decisions.
  2. Understand the key documents – Committee members must ensure they have a good understanding of the terms of the Unit Titles Act 2011, the body corporate rules, and the authority that these give to the committee. The committee should seek authority from the body corporate where necessary, and probably err on the side of caution in doing so.
  3. Seek advice – Committee members should be ready to seek specialist advice when a matter is obviously beyond the expertise or knowledge of the committee.
  4. Insurance – Committee members must obtain appropriate insurance cover, and it is important that such insurance covers as broad a scope of personal liability as possible. It should include, at least, cover for costs incurred in legal proceedings as in light of the Guardian case the body corporate may not be able to contribute to these costs.

If your committee needs professional advice, give us a call on (04) 473 6850.