Blame game is an expensive risk for all players

This article was first published in the LookUpStrata Queensland Strata Magazine, October 2024

There’s an old saying about any project: If you don’t know who’s in charge, then no one is in charge.

In strata, where most projects involve multiple stakeholders, this is doubly so – and doubly risky.

If a body corporate committee is not alert to the potential dangers of a poorly managed project—if they’re asleep at the wheel—then lot owners may face unexpected and unnecessary costs to remedy a problem that would not have occurred had the job been managed properly in the first place.

Here’s a typical example of the type of situation that we often see as strata lawyers: a body corporate committee engages us, complaining that the resident manager has incurred unauthorised expenditure for a maintenance job. Contractors have been engaged who don’t hold the right licences or skills to complete the job to a satisfactory standard. The resident manager thought they were doing the right thing even though it was outside the scope of their expertise. They didn’t have the right training, but they were trying to be helpful.

The contractors produce a shoddy job and it’s going to cost lot owners $100,000 to remedy the work.

The resident manager says to the committee, ‘But you wanted the job done. You never said I was supposed to report back to you about every detail or do a due diligence on the contractor.’

Meanwhile, the body corporate manager has been paying the contractor’s bills as they appear in the accounting system, assuming everything is under control because they are ticked off in the approval process without anyone checking the quality of the work.

There’s no formal paper trail to follow because all the instructions have been issued through WhatsApp or text message chats.

The committee pays the remediation cost from the sinking fund without general meeting approval. The only way to recoup the money is now to strike a special levy.

That’s when the real finger pointing begins.

So, who’s at fault?

The committee, because they should have appointed and paid for a project manager to oversee the job from the outset?

The resident manager, because they have acted outside the scope of their expertise?

The contractors, because they have undertaken work they weren’t licensed to perform?

Or the body corporate manager, who just paid the loaded-up bills without checking them against the contract first?

It’s a mess; a chorus of ‘he said, she said’.

Ultimately, every stakeholder in an effective strata scheme has a part to play in good governance. A triangle of management works very well when everyone knows who is doing what.

The committee needs to actively manage any project affecting the common property of the scheme. A resident manager needs to have clear lines of communication with the committee and be trained to a level to provide the services they are contracted to supply. A body corporate manager should keep an auditor’s eye on outgoings and ensure they accord with properly minuted decisions at general meetings. No one can afford to doze off at the wheel, especially when everyone assumes it’s someone else doing the driving.