Please Sir, Can I Spend $1.2 Million on Strata Insurance?
McWhirters Apartments [2024] QBCCMCmr 44
GoStrata’s CaseWatch is a short, sharp and easy-to-understand review of important and interesting Court and Tribunal decisions affecting Australian strata title stakeholders.
Quick Read
This 2024 decision by a Queensland Body Corporate and Community Management Adjudicator is about a dispute [kind of] in a large historic Fortitude Valley strata title building about its building insurance coverage. We don’t usually prepare Case Watch about single member Tribunal decisions since they’re not binding and usually very building specific, but this one is a bit different. This strata building had been insured for $120 Million at a yearly premium of $280,645 up until early 2024 when the existing insurer refused to renew the policy because of increasing claims and defects that had been identified in the strata building. When the strata building tried to find another Australian insurer it couldn’t. Eventually Lloyds of London offered insurance but at a yearly premium that was more the 4.5 times higher at $1.2 Million. Time was running out on insurance cover, the strata committee was not able to spend that amount and there wasn’t time to hold a strata owners’ meeting. So, the strata committee asked the BCCMA Commissioner for orders authorising the insurance policy and premium cost. After reviewing Queensland strata insurance provisions and its powers, the BCCMA Adjudicator decided that the insurance policy was compliant, there was an emergency about insurance and that it was appropriate to authorise the $1.2 Million premium. The decision is unsurprising since it’s about having insurance to protect strata owners’ risks and also extraordinary by authorising such a huge expenditure. It also demonstrates the impact of the Australian strata insurance crisis on strata buildings. But it’s concerning as the decision was made urgently, without notifying strata owners, and without any contrary arguments or opposition.
Implications
The key implications of this strata case are as follows.
Queensland strata buildings must insure buildings for their full replacement value under s 187.
An alternative insurance policy can be approved by the BCCMA Commissioner under s 188(4).
Spending outside the strata committee’s limit can be approved by the BCCMA Commissioner under s 162(1)(c) for an emergency.
In emergency circumstances, the BCCMA Commissioner can also bypass the normal notification, submission and referral procedures under s 243A so that an Adjudicator can make orders.