Trustee Duties and Liabilities: What You're Signing Up For

Nominating for trustee is often treated as a small act of community service. Legally, it's a fiduciary appointment that carries real duties – and, in certain circumstances, personal exposure if those duties are breached.

The Core Fiduciary Duty

Trustees act on behalf of the body corporate and, by extension, all owners. This means acting in good faith, in the best interests of the scheme as a whole – not in the interest of any individual owner, including themselves.

What Trustees Are Actually Responsible For

Approving and monitoring the annual budget and reserve fund contributions
Ensuring levies are collected and the scheme remains financially solvent
Overseeing maintenance of common property to a reasonable standard
Ensuring compliance with the STSM Act, rules, and other applicable legislation
Appointing and supervising the managing agent, where one is used
Convening AGMs and trustee meetings, and keeping accurate records

Conflicts of Interest

A trustee with a personal or financial interest in a matter before the trustees – a contract with a business they own, for example – must disclose that interest and generally recuse themselves from the decision. Failing to disclose a conflict is one of the most common sources of trustee disputes.

When Personal Liability Can Arise

Trustees May Face Personal Exposure If They

Act with gross negligence or in bad faith, rather than making a reasonable decision that simply didn't work out
Knowingly allow the body corporate to trade while factually insolvent
Misappropriate or negligently allow misuse of scheme funds
Act outside the authority granted to them by the rules or a valid resolution

Ordinary business judgment, made honestly and with reasonable care, is generally protected – trustees aren't expected to be infallible, just diligent and acting in good faith.

Protecting Yourself as a Trustee

Practical Safeguards

Insist on trustee liability (D&O-style) insurance for the body corporate
Keep detailed minutes recording the reasoning behind significant decisions
Disclose any potential conflict of interest immediately, in writing
Lean on a competent managing agent for technical and compliance matters
Seek professional advice before any major or unusual decision

Serving With Eyes Open

Most trustees never face any personal liability – the standard is reasonable care and good faith, not perfection. But understanding the duties involved from day one makes for better decisions, and a much less stressful term.

Support for Your Trustees, Every Step of the Way

PPSP works alongside trustees to keep decisions compliant, well-documented, and properly authorised.

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