Sandcastles [2025] QBCCMCmr 258 (25 July 2025)

Body Corporate and Community Management (Accommodation Module) Regulation 2020 (Accommodation Module)

INSURANCE - GENERAL MEETING RESOLUTION - who is liable for the excess payable for an insurance claim - whether a resolution about the excess was valid - how the claim should be settled.

Act, ss 94(2), 100(5); Accommodation Module, ss 188, 193, 199

1. Motion 2C as resolved at the extraordinary general meeting of the Body Corporate for Sandcastles on 10 September 2024 is void.
2. The owners of Lot 3 are not liable to pay the $5000 excess for insurance claim CL02104048.
3. The application is otherwise dismissed.

• [1] This application is about an insurance claim and excess.
• [2] On about 10 January 2024 there was a water ingress event at the scheme. The applicant says a hot water system in Lot 6 burst, apparently resulting in water leaking into to Lots 3 and 4 below. An insurance claim was lodged with respect to the damage to the applicant's Lot 3. It seems the insurer paid the owners of Lot 3 for temporary accommodation and accepted liability for building rectification works. There was also a claim for damage to Lot 4. Another claim in respect of Lot 6 was apparently closed because there was no damage to that lot.
• [3] The body corporate's insurance policy had an excess of $5,000. There was dispute about the responsibility to pay that excess. Motion 2 at an extraordinary general meeting (EGM) on 10 September 2024 was a group of same-issue motions about the excess. Under Motion 2A Lot 6 would pay the excess, Motion 2B proposed that the body corporate pay it, and Motion 2C proposed that Lot 3 pay it. Motion 2C passed. The applicant alleges procedural defects with the EGM and says the body corporate did not act reasonably in passing Motion 2C.
• [4] In around October 2024 the insurer offered a cash settlement for the Lot 3 damage. It appears the committee did not agree to the settlement and wanted the insurer to undertake the rectification works. The applicant objects to this as unreasonable and discriminatory when payouts were provided for other insurance claims.
• [5] The applicant says they have not paid the excess and the body corporate refused to, so their repairs have not been undertaken. They say the committee does not understand the legislation or its role, and the claims are not finalised because of its conduct. They seek an order to invalidate EGM Motion 2C. They want a declaration that they are not liable for the excess, and that the body corporate pay it, and also to authorise the settlement payment.

• [6] Sandcastles community titles scheme 9740 (Sandcastles) is a 9-lot scheme at Bargara. The community management statement (CMS) shows the Accommodation Module applies. The scheme is registered as building unit plan 5459.
• [7] The application seeks the following:[1]

These orders relate to motions 2a 2b and 2c of 10/9/24 EGM.

1. An order declaring that a resolution passed at the EGM of 10 September 2024 was at all times void.
2. An order declaring that Lot 3 is not responsible for the insurance excess of $5000 for insurance claim no. CL02104048.
3. An order declaring that the motion passed at a general meeting of the Body Corporate was unreasonable and the Body Corporate pay the insurance excess of $5000 for insurance claim no. CL02104048.
4. An order declaring that a decision made by a lot owner agreement to not pay the cash insurance settlement for insurance claim no. CL02104048 was unreasonable and the Body Corporate authorise the settlement payment of $56,908.86 To Lot 3 for Insurance Claim No. CL02104048.

• [8] An adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute about a claimed or anticipated contravention of the Act or the CMS, or the exercise of rights or powers or performance of duties under the Act or the CMS.[2] I am satisfied I have jurisdiction to determine this matter under the dispute resolution provisions.[3]

• [9] The applicant initially applied for conciliation against the body corporate in September 2024.[4] The parties participated in conciliation in October but could not reach an agreement.
• [10] This application was lodged on 6 January 2025. The Commissioner's delegate sought clarification from the applicant on some aspects of the application,[5] which was amended.[6]
• [11] The Commissioner invited submissions from the committee, the affected persons, and all owners.[7] Submissions were made on behalf of the committee and by an owner of Lot 6. The applicant did not initially obtain or respond to the submissions.[8]
• [12] Having regard to the substance of the submissions, the Commissioner's delegate contacted the applicant to ascertain if the dispute was resolved. The applicant advised they wanted the application to proceed and responded to the committee submission.
• [13] The application was referred to department adjudication.[9]
• [14] I have now investigated the dispute, including reviewing the application and submissions.[10]
• [15] I note the submitted material includes comments on matters discussed in the conciliation. However, evidence of anything said or done about a dispute in a conciliation session is inadmissible in a proceeding.[11] Accordingly, I have not had regard to those comments.

• [16] A submission by an owner on behalf of the committee says the first 3 orders sought are 'null and void' because the body corporate was now not requiring the excess to be paid by Lot 3. It said the body corporate would absorb the excess and it would be paid as part of the cash settlement process for the claim with no payment required by Lot 3.
• [17] In regard to the fourth order, the submission says the body corporate has now accepted a cash settlement payment instead of rectification work to Lot 3 being undertaken by the insurer. It said this would allow the owners of Lot 3 to have their own tradespeople undertake the work.
• [18] An owner of Lot 6 says they did not admit fault for the damage. They say a minor leak in their hot water system was found on 9 January 2024, and a small amount of water mopped up with a towel. A failed element in the hot water system was repaired on 10 January. They say Lot 6 had no damage and there is no evidence the leak caused the insurance claim. They say they were not contacted about the claim and Lot 6 was not inspected. They say the report only assumed that the damage was caused by a burst hot water system. But they say the hot water system was compliant and its installation in June 2021 was organised by the owners of Lot 3. They also say their conflict of interest as a committee member was disclosed.
• [19] The applicant disputes that the first 3 orders are 'void'. They say the committee has not voted on the responsibility for the excess. They say the committee is required to act reasonably and in the interests of the body corporate. The applicant questions why Lot 6, as the source of the water event, is not being considered as responsible for the insurance excess.
• [20] In regard to the fourth order, the applicant says the body corporate has now accepted a cash settlement, instead of rectification, and the cash has been received. But they say the body corporate has not authorised payment of the settlement funds to Lot 3. Rather, the funds are being withheld until the completion of the works. They applicant say they have to submit all invoices and then the body corporate will pay the contractors.
• [21] They object to the committee's delayed decision-making. They say the occupiers of Lot 3 have been living in a damaged lot for (at the time of the response) 476 days. The applicant also says the payments to be made to the contractor exceeds the expenditure limits which would require multiple quotes which they cannot provide.

• [22] In deciding the orders sought by the applicant I will consider first the legislation regarding insurance and body corporate decision-making. I will then address the particular issues raised by the applicant. I have considered the relevant events and the applicant's concerns as best as I can ascertain from the submitted material. However, I note that I have found the voluminous and repetitive material submitted by the applicant to be difficult to follow.

• [23] The Accommodation Module sets out detailed provisions regarding the insurance arrangements for a community titles scheme.[12] This includes a requirement, in a scheme created under a building format plan of subdivision (which Sandcastles is), to insure each building containing a lot for full replacement value.[13]
• [24] The legislation then sets out the following about insurance excesses:
  1. Excess [SM, s 203]

(1) Despite a requirement under this part to insure for full replacement value, the body corporate is not prevented from insuring on the basis that an excess is payable on the happening of an event for which the insurance gives cover.

(2) However, in putting the insurance in place, the body corporate must ensure the arrangements for the liability for an excess under the insurance would not impose an unreasonable burden on the owners of individual lots, having regard to subsections (3) and (4).

(3) For an event affecting only 1 lot, the owner of the lot is liable to pay the excess unless the body corporate decides it is unreasonable in all the circumstances for the owner to bear the liability.

If a shower screen is damaged in a lot and an insurance claim is made under the body corporate's reinstatement insurance, the owner of the lot would be liable under subsection (3) to pay the excess unless the body corporate decides it is unreasonable for the owner to be required to pay it. However, if there is a fire within a lot caused by a short circuit in electrical wiring located in an internal partition, the body corporate might decide it would be unreasonable for the owner to be required to pay the excess.

(4) For an event affecting 2 or more lots, or 1 or more lots and common property, the body corporate is liable to pay the excess unless the body corporate decides it is reasonable in all the circumstances for the excess to be paid for by the owner of a particular lot, or to be shared between owners of particular lots, or between the owner of a lot and the body corporate, or between owners of particular lots and the body corporate.

• [25] Under section 94(2) of the Act a body corporate must act reasonably in regard to its functions, including in making or not making a decision. Similarly, section 100(5) of the Act requires that a committee must act reasonably in making a decision.
• [26] There is considerable case law about the body corporate's responsibility to act reasonably. Reasonable decision-making "...involves an evaluation of the known facts, circumstances and considerations that tend to have a rational bearing on the issue..." and "...requires that all relevant matters are taken into consideration and irrelevant ones are left out".[14] I note the view that a "...legally reasonable decision is not a uniquely right one. It involves matters of degree about which contrary - even opposite - conclusions can be reasonably reached on the same body of evidence by different lines of reasoning or by reference to other determinants without either being demonstrably right or manifestly wrong."[15]
• [27] Where a body corporate or its committee acts unreasonably, an adjudicator may intervene to make an order that is just and equitable to resolve the dispute including overturning that decision overturning or amending that decision.[16] However, an applicant bears the onus of establishing that a decision or action was unreasonable.

• [28] The applicant asserts that Motion 2C was passed without complying with proper procedures. However, the application is not clear as to what procedures were allegedly not compliant.
• [29] The applicant says an owner of Lot 6 voted on all EGM motions, including Motion 2C. They say that owner is a committee member and has a direct interest in the matter. The applicant also says another owner who is a committee member has an indirect interest due to alleged conduct towards the applicant. The applicant also says the body corporate has unreasonably failed to manage conflicts of interest for the committee.
• [30] It appears the applicant may be suggesting these owners (or at least the owner of Lot 6) should have declared a conflict of interest and should not have voted at the EGM. If that is their position, the argument is unclear, and it is incorrect.
• [31] A committee member must disclose a direct or indirect interest in an issue to be considered by the committee at a committee meeting (including a vote outside a committee meeting), if that interest would conflict with the appropriate performance of their duties about the committee's consideration of the issue.[17] If a committee member must disclose a conflict of interest, they cannot vote on the motion. However, this only applies to voting on committee motions. It does not affect voting at a general meeting. Regardless of their personal interest in general meeting motions, all committee members who are owners are entitled to vote in their own interests at a general meeting, like all other owners.
• [32] The applicant also asserted they were prevented from exercising their rights, powers and obligations. But this is not explained. If the applicant is referring to their rights regarding the conduct of the EGM, I am unable to ascertain what legislative breach the applicant is alleging.

• [33] It is not disputed that the body corporate had a building insurance policy with an excess, at the time and for the purposes of the water ingress event, of $5,000. The question is who was liable for that. The circumstances of the insured event in January 2024 are somewhat unclear from the submitted material. However, that is not significant for present purposes.
• [34] The applicant says it was unreasonable to pass EGM Motion 2C. They say Lot 3 is not responsible for the excess, and either the owner of Lot 6 or the body corporate should pay it. The applicant says the committee argued the insurance claim had nothing to do with the body corporate and Lot 3 was responsible for the excess. But they argue the body corporate failed to consider responsibility for maintaining the property that caused or contributed to the damage. They assert that the owner of Lot 6 admitted fault.
• [35] I am unclear from the submitted material why the body corporate decided to pass Motion 2C. It appears there were questions about the claim for Lot 4, but I am uncertain why that was seen as relevant or whether it affected the EGM decision. At least initially, it appears the committee was of the view that Lot 3 was liable for the excess because only Lot 3 was damaged.
• [36] To determine the basis for deciding liability for an insurance excess, it is immaterial how many lots were damaged, or how many lots made or were the subject of an insurance claim, or who was involved in the claims process. The only relevant question is many lots were involved in the insured event (not the claim). If more than one lot is affected by an event, regardless of how many lots were damaged or were involved in a claim, liability for the excess is determined by subsection (4) rather than subsection (3) of section 193 of the Accommodation Module.
• [37] On the submitted material, it seems clear the event giving rise to the insurance claim affected more than one lot. It is evident from the earliest communications between the committee and the applicant that it was known the event involved at least Lots 3 and 6. The insurer subsequently accepted there was damage to Lot 4 that was associated with the claim for Lot 3. Accordingly, it is section 193(4) of the Accommodation Module that applies to this excess.
• [38] Section 193(4) of the Accommodation Module sets the default position that the body corporate is liable for the excess. The body corporate could decide to require one or more owners to share the cost of the excess. But the body corporate could not automatically pass on the excess. It needed to make an express decision to do so, based on the circumstances. The body corporate had to act reasonably in making that decision, pursuant to section 193(4), as well as under its general statutory responsibility to act reasonably.
• [39] Where there appears to be no evidence that any owner or occupier of Lot 3 was responsible for or contributed to the event that resulted in damage to Lot 3, or caused or contributed to the damage itself, I am unable to identify any rational basis for the body corporate to decide to require the owners of Lot 3 to pay any or all of the insurance excess for this event.
• [40] Indeed, if an insured event involves multiple lots or lots and common property (regardless of who makes claims) and the body corporate does not have clear evidence that the event or damage was caused by any owner or occupier, there would arguably be no reasonable basis to depart from the default legislative position that the body corporate should pay the excess.
• [41] Issues of whether the body corporate was involved in the claim, or whether the body corporate has any responsibility for the property, the event, or the damage, are not relevant in my view. The legislation requires the body corporate to hold building insurance to protect the property interests of owners and occupiers as well as the body corporate. Accordingly, owners and occupiers have a right, whether directly or via the body corporate, to make claims on that insurance for any property damage that is covered by the insurance policy. It is usually a matter for the insurer (rather than the committee or its body corporate manager) to determine if damage is covered by the policy. And again, I do not consider questions of whether there was damage to another lot, or a claim made in respect of another lot, are relevant considerations.
• [42] There appear to have been concerns for the body corporate as a result of a previous insurance claim for Lot 3. But where the insurer clearly accepted the claim in this case, it is not clear what genuine relevance previous claims had on the current claim.
• [43] I am satisfied it was not reasonable for the body corporate to decide to pass EGM Motion 2C.
• [44] It seems the committee considers the matter has now been resolved because it does not intend to seek payment of the excess from the owners of Lot 3. However, the committee did not evidence a committee resolution determining that position.[18] And, even if the committee has resolved not to require the owners of Lot 3 to pay the excess, it does not have the authority to decide not to implement an EGM resolution.[19] There is no indication that the body corporate has passed, or proposed, a general meeting resolution to rescind EGM Motion 2C. Unless that occurs, the resolution could technically be enforced against the owners of Lot 3.
• [45] For that reason, I consider it appropriate to make an order voiding EGM Motion 2C.
• [46] The applicant appears to consider the owners of Lot 6 should be liable for the insurance excess. The applicant says there was an independent assessment that Lot 6 was responsible. In an assessment report prepared for the insurer based on an inspection of Lot 3 on 31 January 2024 the assessor indicated they were 'informed' that the damage occurred when a hot water system in the unit above burst, and subsequently said they believed the damages were caused by the burst hot water system. However, it is not clear that the assessor inspected Lot 6 at the time. And if the Lot 6 hot water system failed, the submitted material does not necessarily establish that the damage to Lots 3 and 4 arose because of a maintenance failure or other conduct of the owners or occupiers of Lot 6.
• [47] This application was not brought against an owner of Lot 6 and (as amended) does not specifically seek an order that the owners of Lot 6 be liable for the excess. Accordingly, I do not consider it would be appropriate in the context of this application to investigate or make findings on whether any owner or occupier of Lot 6 was responsible for the insured event, such that they should be liable for the excess.
• [48] In those circumstances, while it is appropriate to declare that the owners of Lot 3 are not liable for the excess, I do not consider it would be appropriate to definitively determine whether the body corporate is liable for the excess (although that is the default legislative position) or would have reasonable grounds on the evidence to claim the excess from the owners of Lot 6.

• [49] The applicant seeks an order about the settlement of the insurance claim. The precise meaning or intent of the order is unclear to me from the wording. The statement of grounds indicates the applicant seeks a determination on whether the body corporate acted reasonably in refusing to provide the insurer with its bank details to disperse funds for the insurance claim.
• [50] The body corporate's insurer made a cash settlement offer relating to the Lot 3 claim in October 2024 and sought body corporate account details to enable the settlement to be paid. It appears the body corporate did not agree to provide those payment details, although I have not been given evidence of a specific committee decision on this point. It also appears the insurer may have offered to pay the settlement amount directly to the applicant, and the committee may have offered for the applicant to provide account details.
• [51] A committee meeting in February 2025 discussed the insurance claims for Lots 3, 4 and 6. The minutes indicated a view that it was for the committee to decide whether to accept a cash payout or for rectification work to be carried out, and that insurer rectification was preferred. However, the minutes indicate the committee did not reach a final decision because of a lack of information and evidence.
• [52] I am unclear why the body corporate initially refused the cash settlement, despite that being the apparent preference of the owners of Lot 3, and why it preferred that the insurer undertake the repairs. Ultimately, however, it is evident the body corporate has now accepted the cash settlement and that the settlement funds have been received by the body corporate.
• [53] Accordingly, if the applicant is seeking an order about the acceptance of a cash settlement by the body corporate, I can see no utility in it now. Where there is no longer a live issue about the provision of bank details or the acceptance by the body corporate of a cash settlement, a declaration about that is not required to settle a current dispute.
• [54] It may be the applicant wants an order that the insurance funds received now be paid to the owners of Lot 3. If that is the case, it is not clear from the application. I am uncertain if the applicant has asked the body corporate to transfer those funds directly to them since they were received by the body corporate.
• [55] The legislation provides for the use of insurance money received by a body corporate for damage to property.[20] Unless authorised by a resolution without dissent, the body corporate must '...apply the amount as soon as practicable to the repair, reinstatement or replacement of the damaged property." The body corporate must also, in accordance with its general obligations, act reasonably in dealing with an insurance payout. However, the legislation does not further prescribe how insurance funds are to be managed.
• [56] The submitted material does not appear to explain why the cash settlement was paid by the insurer to the body corporate rather than to the owners directly, and who made that decision. I am also unclear why the body corporate is apparently requiring the owners to give it contractor invoices for payment by the body corporate rather than passing the settlement funds directly to the owners so they can organise and pay their contractors themselves.
• [57] The body corporate was not responsible for the insured event or the damage, and the repairs are not on common property. As such, the body corporate does not appear to have any responsibility for the undertaking the repairs, or how they are undertaken. Also, as the owners are responsible for the work being funded by the insurance payment, there does not appear to be any expenditure that would need to be approved by the body corporate.
• [58] Where the owners are responsible for organising the repairs, it is arguable that the most practical way of pursuing the repairs promptly (as required by the legislation) would be to pass the settlement funds directly to the owners. However, this issue was not squarely part of the application. The application did not explicitly question how cash settlement funds would be managed if accepted, and the applicant has not demonstrated that they have raised this with the body corporate since the monies were received. Accordingly, I have insufficient information on why the body corporate is managing the funds in this way to determine that its conduct or decisions are unreasonable.
• [59] Notwithstanding that, I encourage the committee to review the way it is managing the settlement funds having regard to the reasons for this order. However the funds are managed, the body corporate must ensure the entirety of the settlement is used for the repairs. As the owners of Lot 3 are not liable for the insurance excess for the claim (except to the extent that all owners are liable for a proportionate share of that amount), the excess should not be deducted from the total amount assessed by the insurer as payable for the repairs to Lot 3.

• [60] The grounds to the application refer to alleged breaches of the code of conduct for committee members. The applicant indicates they want a determination on whether the body corporate or the committee breached the code of conduct.
• [61] The Act sets out a code of conduct for committee voting members.[21] The code applies to committee voting members, with members taken to have agreed to comply with it upon becoming a committee member.[22] Notably, the code imposes obligations on individual committee members, rather than collectively on the committee or body corporate.
• [62] The applicant makes various allegations about the committee, the treasurer, and one of the owners of Lot 6 who is a committee member. However, the applicant does not explain how individual committee member have allegedly breached the code of conduct. If the applicant genuinely believes a committee member has contravened a provision of the code, the regulations provide for a course of action that could be pursued.[23]

• [63] I am satisfied the decision of the body corporate to pass EGM Motion 2C was unreasonable in the circumstances. I will invalidate that resolution and make a declaration that the owners of Lot 3 are not liable for the excess related to the insurance claim. However, for the reasons outlined, I will dismiss the balance of the application.
• [64] It appears to me from the submitted material that the body corporate's handling of the insurance claim has been unnecessarily complicated and protracted. But the nature and contents of some of the communications on both sides may have hindered the progress of the matter. It may also be that the progress of the dispute has been impeded the by imperfect knowledge of the legislation by all parties. That is unsurprising given the complexity of the body corporate legislation. I note the Commissioner's office provides a wide range of resources for volunteer committee members and owners.[24] These include online information, forms, online training, webinars and seminars, newsletters, and an online and telephone inquiry service. I encourage all owners to avail themselves of these resources.

[1] In parts of the submitted material the applicant appears to seek different orders. However, I have only had regard to the orders stated as being sought in section 7 of the application form, as amended.

[3] Sections 227, 228, 276 and schedule 5 of the Act

[12] Chapter 8, Part 6 of the Accommodation Module

[13] Section 188 of the Accommodation Module

[14] Body Corporate for Beaches Surfers Paradise v Backshall [2016] QCATA 177 at 43, citing McKinnon v Department of Treasury [2006] HCA 45; (2006) 228 CLR 423

[15] Body Corporate for Beaches Surfers Paradise v Backshall [2016] QCATA 177 at 47

[16] For example, Item 24 of schedule 5 of the Act

[17] Section 58 of the Accommodation Module

[18] I note the committee can only make decisions through properly minuted resolutions.

[20] Other than for a voluntary insurance scheme, which is not relevant here, see section 198 of the Accommodation Module

[23] Section 37 of the Accommodation Module

[24] www.qld.gov.au/law/housing-and-neighbours/body-corporate/legislation-and-bccm