We were recently retained by a committee which was on the receiving end of some very hostile correspondence from an owner who alleged that it had been invalidly elected. The owner then threatened each of the committee members with personal liability for anything they did.
On a review of the matter, it became apparent that the nomination forms, and the time when notices were sent out, did not strictly comply with the law.
However, we advised the committee that they had no need to worry about personal liability as:
- there was a strong argument that they were validly elected despite the non-compliance;
- there was no evidence that they had caused the non-compliance;
- they were performing their role as committee members in good faith;
- the Act provides protection from liability for committee members who act in good faith;
- a committee member would have to act extremely badly to be found to have acted in bad faith, otherwise nobody would ever be on a committee; and
- if there was any doubt as to their conduct then they would be covered by their insurance – except in very limited circumstances.
However, to prevent the allegations from continuing, the committee agreed to call new elections so that everyone would be happy with the process.
The case was a good example of a situation which could have descended into endless allegations and counter allegations as to who was right and who was wrong, but was solved with a minimum of fuss through commercial understanding of the easiest and quickest way to solve the problem.
The body corporate was fortunate to have had such a sensible committee as their actions have saved a lot of money on legal fees. It is a true example of a committee acting reasonably.