Australia Tops Charts for Litigation Claims

Litigation is increasing in Australia. We’ve become one of the most heavily litigated countries in the world, turning to legal action much quicker than ever before.

However, with legal expenses increasing, the potential cost of defending or bringing action may prevent some from receiving their deserved access to justice. Strata schemes and companies might question whether to participate in legal action, even if they have a strong case.


Strata scheme mediation applications have surged almost 50% in five years.

Most applications were submitted by owners against a volunteer-based strata committee or professional strata manager.

Typical issues are common property repairs and maintenance and by-law breaches.

Source: NSW Fair Trading


Protection within your strata insurance policy

It’s not widely understood which sections of the policy respond to litigation claims, when and how the policy applies, and who’s covered.

Three main sections relate to litigation — specifically defending the proceedings or claim. Demands, claims, threats or legal proceedings by third parties may trigger multiple sections.

  • Public Liability (PL) provides the strata scheme with a legal defence against claims made by third parties for personal property damage (must be owned by a third party), injury and death. Legislation mandates that all schemes must have PL.
  • Office Bearer’s Liability (OBL) provides a legal defence for Office Bearers, as defined by the policy, for claims made against them for wrongful acts. This includes past and present Office Bearers and strata managers acting in that capacity.
  • Legal Defence Expenses (LDE) helps strata schemes and strata companies fund legal expenses to defend any action taken against them. It doesn’t provide cover for compensation, fines or penalties, just legal costs. 

It’s the “last resort” policy, as indemnity under the other two policies must be considered first. LDE will not be considered if it fits under either of those covers, regardless of whether the scheme has these insurances.

Are all claims covered?

PL and LDE claims must name the strata scheme as the Defendant as they are the entity named on the policy schedule.

A strata policy doesn’t offer any cover where the strata scheme initiates legal action against others — it’s only where legal action is taken against the scheme.

However, if the scheme finds itself subject to a counterclaim, this may be considered as the scheme must prepare a defence. A counterclaim is a separate legal action, generally linked to the initial proceedings and usually heard by the Court or Tribunal simultaneously.

The lawyers acting for the scheme must separate their costs and provide separate invoices for the counterclaim, as only these costs may be claimable.

Warning – timing is everything!

LDE and OBL are “Claims Made” policies, where the date of loss becomes the date the scheme or Office Bearer first became aware of circumstances that might give rise to the claim. The insurer must be notified of a possible claim within the same renewal period that the scheme first became aware of the matter.

However, PL is an “occurrence-based” claim that occurs on an identifiable date. An insurer must consider a lodged claim, even if a policy has lapsed.

For all claims, it’s best to collect all relevant information when the incident occurs, before people move on, memories fade and CCTV is lost. It will help any potential future claims and improve the defence of any litigation.

What about defamation claims?

Defamation is the publishing of information that may cause harm to an individual (who doesn’t have to be named). Content may still be defamatory if it’s obvious who it refers to.

Always review communications carefully before sending and don’t forget to check the recipients. Group emails help pass information to multiple people quickly, but they can be dangerous if misused.

Defamation is considered an injury, so it’s covered by PL. Cover is only available to the scheme, not Office Bearers, members, strata managers or caretakers.

Instead, OBL provides a defence for Office Bearers who receive a Defamation Concerns Notice, including strata managers acting in that position. OBL only covers defence costs though, so if found guilty, they may have to repay the costs to the insurer.

Strata managers with separate Professional Indemnity insurance will be covered for defamation allegations as a breach of their professional duty.

Even if you’re not the author of a message, by publishing the message, you’re deemed to be the sender and distributor. Strata managers are particularly vulnerable here. So, if you disagree with message content or believe it may be defamatory, don’t send it and refer your concerns back to the author.


The stakes are high in the litigation minefield. Please try to resolve any issue amicably before pursuing legal action, and get professional advice and advocacy from a specialist broker and/or strata lawyer.

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