Anthony Delaney, of Anthony Delaney Lawyers, said yesterday he was finalising the brief and intended to hand it to Brisbane barrister Brian O’Donnell QC later this week. He said he was confident that within days the challenge would have the support of 200 people, the minimum needed to pursue a class action. “Some 180 unit owners have committed to funding the challenge, and every day last week a number of people became parties to the action,” Mr Delaney said. “Owners of group-title properties from Noosa to Coolangatta are joining the action.” Parties to the class action contribute $250 each towards the cost of obtaining the barrister’s opinion.

Mr Delaney said many lawyers considered the Act breached principles of natural justice, a view shared by the Queensland Law Society. “If the barrister’s opinion supports that view, we expect the Government to enter into discussions, obviating the need to launch a class action,” he said. The challenge relates to the Body Corporate and Community Management and Other Legislation Amendment Act 2010, which has caused body corporate fees of many unit-dwellers to skyrocket.

It replaces earlier law enabling judges to determine fair and equitable body corporate fees and allows an owner to place a motion before the body corporate committee calling for a reversion to charges set by a building’s developer. Also, in general it denies other owners the right to oppose the move.

Mr Delaney said the Act aimed to ensure a fair system for apportioning costs and overcoming loopholes that saw owners of high-value units apply to the Queensland Civil and Administrative Tribunal to obtain cuts in body corporate charges.

However, Mr Delaney said lack of avenue for appeal ensured it had not worked out that way. “To overcome any inequity in group-title schemes put in place by developers, laws were introduced in 1997 allowing owners to challenge the charges and enabling judges, specialist adjudicators and QCAT to revise them on grounds of fairness,” he said. “After its introduction, there were many rulings to ensure levies were fair and equitable. “The present legislation ignores those decisions.”

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On Wednesday 21 March 2012, the report of the inquiry into residential strata title insurance, entitled: In the Wake of Disasters Volume Two: The affordability of residential strata title insurance was tabled in Parliament.

Reference link:

It is a significant business sector in Queensland and is expected to grow in future years as development, housing and accommodation needs increase. As such, it is vital that the legislation governing these schemes remains relevant and appropriate. Since the commencement of the Body Corporate and Community Management Act 1997 (BCCM Act), management rights arrangements have been a source of significant discussion amongst community titles sector stakeholders and the subject of several amendments to the Act. This discussion paper seeks submissions about the current state of management rights in Queensland.

The defining characteristics of the management rights business model and market are discussed, alongside concerns about the impacts of rising costs on lot owners and the relative lack of competition in the provision of management rights services. Feedback is also sought on the effectiveness of legislative obligations on developers as original scheme owners when establishing management rights. The paper also discusses legislative protections, powers and remedies provided to bodies corporate and their lot owners.

Reference: www.strataliving.com

Brisbane residents say lives were in danger when apartment block basements flooded, inundating electrical substations in January.

The Queensland Floods Commission of Inquiry has in recent weeks heard several residents, business owners and body corporate members say the buildings’ electricity supply hadto be cut when floodwaters became electrified.

Energex network performance general manager Christopher Arnold told the inquiry in Brisbane on Tuesday that Energex always aimed to have substations installed above the defined flood level.

But commercial interests often prevented them from being installed on a higher floor, he said.

Mr Arnold said legislation should be amended to give Energex more control over the situation.

Asked whether the legislation should include a mandatory requirement for substations to be placed on a particular floor, he said Energex should be given discretionary involvement.

The inquiry, which has just eight days of hearings remaining, on Tuesday also heard from Paul Belz, of water retailer Queensland Urban Utilities.

Mr Belz said a number of investigations were under way to examine the performance of the city’s sewerage systems, including pipes that cross the Brisbane River, which were fractured by floating debris.

He explained the company was developing a number of strategies to prevent sewage backflow, including a “Think at the Sink” public awareness campaign.

About 2.5 million people were affected and at least 35 died when more than 70 per cent of the state flooded last summer.

Several insurance bosses are scheduled to give evidence to the inquiry on Tuesday afternoon.

The recent floods have left many bodies corporate with the momentous task of repairing the damage that has been done.  Ruined gardens and walkways, external walls, flooded car parks, swimming pools, damaged electricity switchboards, lifts and electrical equipment are among the list of items requiring immediate attention, the repair of which can cost very significant amounts of money.

Many bodies corporate are finding it extremely difficult to pay for these repairs.  This is a time when lot owners need to work together in the best interest of their homes, workplaces and investments.  Rectification to complexes needs to be undertaken quickly so as to ensure that they are safe and secure.  In many cases a special levy may be required in order to achieve this.

The Thursday 20 January 2011 edition of The Courier-Mail reported on how very difficult it is for bodies corporate to obtain flood insurance, and how it is nigh on impossible to obtain flood insurance if the body corporate complex is located in a flood-prone area. 

The online version of this article generated a significant volume of comment which indicates not only a very significant level of strong feeling within the community about the issue, but also considerable misunderstanding of the rights and entitlements of lot owners and bodies corporate, and who should carry the risk of flood damage. 

We set out below a sample of the comments which appeared online in response to the report in The Courier-Mail:

•  Risky Business of Brisbane Posted at 8:08 AM January 20, 2011

Why are we still dwelling on the insurance issue? It’s simple, don’t build or live in a flood zone. It’s your risk not the insurance company or taxpayers. I bet Bligh doesn’t live in a flood zone!

• Greg of Brisbane Posted at 8:43 AM January 20, 2011

That puts a whole different aspects on the continued push from councils and government to build high-rise units. If Body Corp insurance is so difficult, if not impossible to cover jointly owned property, obviously something needs to be done on a government level when they allow these buildings to be built where they are and at least make it plain in contracts that this is the case. Though we do need to remember – The Government ultimately is US.

• PaxUs of Brisbane Posted at 8:50 AM January 20, 2011

Why should they? It’s a flood zone. Sue whoever approved the development, be it Council or Government. The same applies to beachfront buildings and tidal surges, you probably won’t be covered. Lucky we haven’t had a significant tidal surge recently. The last one, at Redcliffe, came up to the top of the power poles. Not many people are aware of them, or will take the risk anyway, due to the old ‘once in a hundred years’ sales pitch. The odds of winning the lotto are far greater, yet people religiously pay for their lotto each week.

• Marc Ruitenberg of West End Posted at 9:46 AM January 20, 2011

To all those saying “of course, why should they pay?” There is one thing that I do not understand: Why is it difficult / impossible for body corporates to get flood insurance while an individual living in a house next door can? Are they not living in a flood zone too?

• Rooster of Brisbane Posted at 9:59 AM January 20, 2011

This is not the fault of insurance companies and nor is the confusion of what is or what is not a flood. I checked the Insurance Council of Australia website and I quote ‘The general insurance industry made application in early 2008 to the ACCC for insurers to voluntarily adopt a common definition for flooding. Unfortunately, comsumer legal groups objected to the common definition for flood and as a consequence the ACCC did not authorise insurance companies to adopt a common definition for this hazard.’ Sounds to me like the legal eagles thought they might miss some easy money disputing the interpretation of policies on behalf of disgruntled flood victims. It’s time this was sorted and we have an approved definition and individuals in high risk zones pay the appropriate premium for the risk, be it floods, storms, cyclones etc. rather than spreading the cost to consumers who are in low risk areas.

• Robert of Carina Posted at 10:10 AM January 20, 2011

If an insurance company won’t touch it, its usually because its high risk….So if its high risk, why shouldn’t the onwer take the responsiiblity first than expect the insurance companys policy holders to subsidise a high risk? Let the unit owners take responsibilty !! I’ll pay my own insurance thanks and take responsibility for my own actions, I suggest you do the same….

• Fiat Lux of Caloundra Posted at 10:17 AM January 20, 2011

I hope Governments and Councils will now stop encouraging people to live in units . There’s no home like a house .

• Jason of Ipswich Posted at 10:47 AM January 20, 2011

So in summary the body corporates have knowingly not insured against the risk of flood, SO HAVE ACCEPTED THE RISK! and will need to fund this from the owners! I am so sick of people not accepting the consequences of their own actions!

• Martin of Cairns Posted at 11:58 AM January 20, 2011

Most unit owners would be unaware that their complex may not be covered by flood. Developers are unlikely to bring this to the attention of new purchasers. It certainly appears that government legislation may be required to ensure that investors and owner occupiers are protected by this general lack of understanding and perhaps naivety. Its like groundhog day where everytime we have a flood or a fire we all run around wondering why people are not adequately covered and looking for someone to blame.  Perhaps insurance should not be able to be sold without advice being provided even if it is basic advice.  Buying online without advice is always going to be a recipie for disaster for many.  Call centres certainly dont let you know about the policy being purchased unless you ask specific questions.  Most simply do not ask and just accept the cheapest quote.

Comment 28 of 49

• Orla Mahony Posted at 12:52 PM January 20, 2011

There is a very real inconsistency between the legal obligation of a body corporate to insure ‘buildings” against “damage”( which specifically includes ‘water damage” ) and the refusal of insurers to provide flood cover. Refer to Part 9 Body Corporate and Community Management(Accommodation Module) Regulation 2008 – in particular section 174 which defines “damage’ for for coverage under insurance required to be in place to mean “earthquake, explosion, fire, lightning, storm, tempest and water damage. If the words “water damage’ were to be interpreted in the context of the words surrounding them in the legislation, i think that water damage should include flood. If the legal obligation to insure the “building” (as defined in section 174) is to have any relevance/meaning, then even if the insurer decides to impose a higher premium to cover increased risk of flood for the particular property, then the body corporate has no option but to pay the required premium if they are to truly fulfill their legal obligation to insure the units. That legal requirement is clearly expressed both in the regulation and its parent statute – Body Corporate and Community Management Act 1997 s189.

Comment 38 of 49

• JC of Brisbane Posted at 1:43 PM January 20, 2011

To be clear the “Body Corporate” is simply the collective of all owners – owners can not sue the body corporate. It’s nonsense to suggest unit owners should be legally obliged to pay any, unlimited, amount for flood insurance when other home owners aren’t required to be insured at all.

Comment 42 of 49

The high level of feeling which these comments demonstrate is perfectly understandable.  Many people whose homes and/or businesses are located in strata complexes have suffered significant loss, in some cases not only of their homes and their personal possessions, but also of their livelihoods.  In such cases, it is not surprising that lot owners will be canvassing all options in order to ascertain whether they have any rights of redress from a third party.

Now is an important time for all strata lot owners to evaluate the funds of their Body Corporate to ensure that when disasters like this occur, there are sufficient funds available to make good.

It may not be prudent to rely on changes which may or may not occur which might in future allow bodies corporate to be insured for flood damage.  The whole debate relating to flood cover still has a long way to run, and there is no certainty that flood cover will ever be made available to bodies corporate in flood-prone areas – even if it is, the premium is likely to be prohibitive.

The prudent course to adopt will be for lot owners to require budgets to be set so as to ensure that there are sufficient funds available to pay for the repair of a strata complex when a disaster like this occurs.  Unfortunately, in Queensland there are only a small number of insurance companies that currently offer insurance to bodies corporate, but the policies offered by these insurers to bodies corporate do not generally cover “flood damage”. 

In the past, some lot owners have opposed the build up of significant balances in their body corporate’s sinking fund.  Recent events dictate that it is essential that the required level of levies be struck in order to ensure that the sinking fund balance is sufficient to meet the very significant costs which might be incurred as a result of a natural disaster like a flood or a cyclone.