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

INTERIM ORDER - whether an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.

ADJUDICATOR POWERS - whether Adjudicator can be satisfied that an application raises a serious legal question and the balance of convenience between the parties justifies injunctive relief.

1. The interim order made by me on 29 September 2025 is cancelled pursuant to section 279(2)(b) of the Act.

• [1] Surfers Plaza Resort consists of 146 lots on a building format plan, 144 of which are residential lots and 2 of which are commercial lots. Lot 1 is a retail shop and lot 2 is designated as a Backpacker Hostel.
• [2] An application dated 24 September 2025, seeking interim and final orders was lodged with this Office by Crestden Pty. Ltd., the owner of Lot 2 (first applicant), and

Tequila Sunrise Pods Pty Ltd, the lessee and occupier of Lot 2 (second applicant).

• [3] On 29 September 2025 I made the following interim order pursuant to section 279 of the Act:

Pending further orders, and until this dispute resolution application is finally determined or discontinued, the Body Corporate for the Surfers Plaza Resort must not implement, or take any action, pursuant to resolution 9 and 10, purportedly passed at the Annual General Meeting of the lot owners in the Scheme held on 21 August 2025.

• [4] In making the requested interim order on an ex parte basis, I noted that an urgent application for an interim order may be referred even though notice of the application has not been given under section 243 of the Act.
• [5] However, I pointed out that this was a temporary order and submissions would be sought before any further orders were made. I also pointed out that, if necessary, it is possible for me to make further interim orders before the matter is finally determined.

• [6] The applicants argued that resolutions on Motions 9 and 10, passed at an Annual General Meeting, on 21 August 2025, were unreasonable, void, and of no effect because they unfairly reallocated most of a substantial increase in the body corporate insurance premium primarily to Lot 2, from which a 270-bed backpacker hostel is operated.
• [7] The body corporate sought to reallocate the contribution of lot 2 to the total insurance premium to "fairly reflect the proportion of the total risks attributable to activities carried out on the owner's lot", pursuant to section 191(2)(c) of the Body Corporate and Community Management (Accommodation Module) Regulation 2020.
• [8] The applicants stated that on 13 June 2024, the previous insurer of the Surfers Plaza Resort building, Strata Community Insurance, advised that it would not renew the policy due to various factors, including the resignation of their broker, an open claim from 2022, and the advice that a 270-bed backpacker business was operating from Lot 2.
• [9] Another insurance broker engaged by the body corporate informed them in July 2024 that other local insurers had declined coverage. The applicant stated that this was primarily because the coverage had lapsed and there was risk past due date. Current renovations and the hostel tenancy also posed additional challenges.
• [10] The applicants stated that as of July 1, 2024, the scheme became uninsured after the previous policy expired and the Body Corporate failed to secure replacement insurance. Due to the difficulty of obtaining new coverage from local insurers, their broker sought coverage in the London Market (via Lloyds of London) and was able to obtain coverage by means of a 'Line Slip' i.e., a syndicate of insurers willing to take on that risk. Although coverage was secured, the resulting premium was very high. Whereas the 2024 premium was $71,708 the new premium was $704,727[1] for 2024/2025.
• [11] The Interest Schedule of Lot Entitlements for the Scheme[2] provide that Lot 2 has 184 lot entitlements[3] out of a total of 10,000 lot entitlements. Therefore, it would ordinarily contribute 184/10,000 or 1.84% of the total cost of insurance.
• [12] However, under section 191(2) of the Accommodation Module a body corporate may adjust the contribution payable by an owner of a lot under section 191(1) in a way that 'fairly reflects':

(c) the proportion of the total risks covered by the policy attributable to activities carried on, or proposed to be carried on, on the owner's lot.

• [13] At the last Annual General Meeting for the scheme on 21 August 2025, the following motions were purportedly carried:

9. Fair Apportionment of Insurance 2024 - 2025 Premium (ordinary resolution)

THAT pursuant to section 191(2)(c) of the Body Corporate and Community Management (Accommodation Module) Regulation 2020 the contribution of the respective lot owners to the total insurance premium for the reinstatement insurance policy for the 2024 to 2025 period with Co-insurance - Lloyds of London Policy No. WHHCTS6388 of $704,727.89 be adjusted so that it fairly reflects the proportion of the total risks covered by the policy attributable to activities carried on, on the owner's lot as follows:

AND contribution notices for the reinstatement insurance policy be issued to the respective owners for the total amounts as follows:

$246,654.76, in proportion to their respective contribution entitlements for Lots 3 - 146

AND THAT the amount of the contribution will be payable by two equal instalments with the due date for each instalment as follows:

Amount - 50% of total amount owing in accordance with the above, and in line with the respective contribution entitlements.

Amount - 50% of total amount owing in accordance with the above, and in line with the respective contribution entitlements.

10. Fair Apportionment of Insurance 2024 - 2025 Premium (ordinary resolution)

THAT pursuant to section 191(2)(c) of the Body Corporate and Community Management (Accommodation Module) Regulation 2020 the contribution of the respective lot owners to the total insurance premium for the reinstatement insurance policy for the 2024 to 2025 period with Co-insurance - Lloyds of London Policy No. WHHCTS6388 of $388,045.73 be adjusted so that it fairly reflects the proportion of the total risks covered by the policy attributable to activities carried on, on the owner's lot as follows:

AND contribution notices for the reinstatement insurance policy be issued to the

$177,724.94 in proportion to their respective contribution entitlements for Lots 1 and 3 - 146

AND THAT the amount of the contribution will be payable by two equal instalments with the due date for each instalment as follows:

Amount - 50% of total amount owing in accordance with the above, and in line with the respective contribution entitlements.

Amount - 50% of total amount owing in accordance with the above, and in line with the respective contribution entitlements.

• [14] As can be seen, the proposed reallocation of contributions levied a substantial portion of the premium for the 2024-2025 and 2025-2026 financial years against Lot 2[4]:

Of the 2024-2025 insurance premium ($704,727.89), 63% ($443,978.57) was allocated to Lot 2 which is used as a backpacker hostel.

Of the 2025-20265 insurance premium ($388,045.73), 54.2% ($210,320.79) was allocated to Lot 2 which is used as a backpacker hostel.

The applicants' grounds for Invalidating Resolutions 9 and 10

• [15] The applicants argued that the reallocation power applies only to "reinstatement insurance".[5] However they believed the body corporate was seeking to reallocate the entirety of the policy premiums, which included coverage for industrial special risks, public liability, and management liability.
• [16] Secondly, they argued that a fair reallocation requires precise and quantifiable evidence from the insurer that the specific activities in Lot 2 led to a quantifiable increase in the premium. They stated that despite requests, the Body Corporate failed to produce such evidence, rendering the percentage reallocation (63% and 54.2%) arbitrary.
• [17] They further argued that the Body Corporate had attributed all of the Premium Difference to the Second Applicant's activities, but the cause of the increase was multifactorial, including the Body Corporate's failure to secure timely insurance.
• [18] Further, they argued that the Reallocation Motions authorize a retrospective collection of costs already incurred whereas the relevant section contemplates recovery as part of the owners' prospective annual contribution to the administrative fund.

The Original Request for Interim Orders- Urgency

• [19] The applicants' arguments regarding urgency and the balance of convenience were based on the submission that:

• The first payment instalment was due on October 1, 2025.

• Requiring the Second Applicant to pay the allocated premium difference (totalling $443,978.57 for 2024/2025 and $210,320.79 for 2025/2026) would be a "severe and ruinous financial burden" that could lead to the financial ruin and closure of the Business.

• [20] The applicants had stated that of the $704,727.89 insurance premium for the current year, $443,978.57 or 63% was allocated to Lot 2 as a result of the resolutions dated 21 August 2025. The applicants stated that they were required to pay 50% of this amount, or $221,989 by 1 October 2025, which they said would be financially ruinous.
• [21] Further, they argued that if the interim order was granted, the only prejudice suffered by the Body Corporate is a delay in recovering the cost, which has already been funded through a premium funding facility, minimizing prejudice to the Body Corporate while protecting the Applicants from "practical destruction".
• [22] I expressed my preliminary view that based on the information provided, the applicants had made out a prima facie case that the proposed levy may be disproportionate to additional risk presented by carrying on a hostel business in lot 2.
• [23] In making my decision to grant the interim order I noted that the application may be referred even though notice of the application has not been given under section 243 of the Act.
• [24] However, I pointed out that this was a temporary order and submissions would be sought before any further orders were made. I also pointed out that, if necessary, it was possible that further interim orders could be made.

• [25] On 25 November I received an urgent application to cancel the interim order from Herdlaw, the solicitors for the body corporate.
• [26] They advised that the Body Corporate is in an extremely dire financial position as a result of the interim order. Further, they made detailed submissions outlining why they believe the Interim should not have been made.
• [27] The initial order was made on an ex parte basis, partly in reliance upon the applicants' statement that if the interim order was granted, the only prejudice to be suffered by the Body Corporate would be a delay in recovering the cost, "which has already been funded through a premium funding facility, minimizing prejudice to the Body Corporate while protecting the Applicants from practical destruction".
• [28] However, I am now advised that applicants failed to disclose the Body Corporate's existing dire financial stress and minimal cash reserves. It is submitted that if this information had been disclosed, it is probable that the application would have been dismissed as the balance of convenience would not have favoured granting the interim order.
• [29] The interim order prohibits the Body Corporate from implementing Motion 9, which was intended to recover the proportional risk cost of approximately $444,000 from the Lot 2 owner, Crestden Pty Ltd. The Body Corporate argues that the Adjudicator was misled because the initial order was made ex parte (without their input), and the applicants failed to disclose the Body Corporate's existing dire financial stress and minimal cash reserves.
• [30] Consequently, the body corporate says the scheme is unable to recoup the massive unbudgeted expenditure and now faces the imminent risk of becoming uninsured for the following financial year. The application asserts that allowing the interim order to stand would be unjust and inequitable to all other members of the Scheme.
• [31] It is submitted that if I had been provided with the balance sheet of the body corporate as at the date of the making of the application[6], and been informed that there was a very real risk that the body corporate would not have sufficient funds to pay the insurance premium for the current insurance year.
• [32] The body corporate therefore urgently seeks a further interim order that I cancel the current interim order pursuant to section 279(2)(b) of the Act which provides:

An interim order may be extended, varied, renewed or cancelled by the adjudicator.

• [33] As stated, the central controversy involves a massive increase in the scheme's reinstatement insurance premium. Whereas the 2024 premium was $71,708 the new premium was $704,727[7] for 2024/2025.
• [34] The Body Corporate says that in June 2024 their insurance broker and insurer resigned or declined renewal due to factors including the building's claims history, and the use of Lot 2 as a backpacker's hostel. As a result, the Body Corporate was forced to source offshore insurance, resulting in a premium for the 2024-2025 reinstatement policy of $704,727.89.
• [35] While the applicants alleged that Motion 9 sought to reallocate more than just the reinstatement premium, I am advised by the body corporate that Motion 9 related only to the reinstatement insurance policy of $704,727.89 as stated in the motion.
• [36] The body corporate has advised that it had not budgeted for this expense. Motion 9 was passed to recover the cost, apportioning it in accordance with the insurer's advice as to the proportion of total risks attributable to activities carried out on the owner's lot. Lot 2 was designated to pay $443,978.57 (about 63% of the premium), reflecting the risk associated with its use as a backpacker's hostel.
• [37] In addition to the severe financial impact of the insurance premium, the body corporate argues that in making the application for interim orders, the applicant failed to disclose material information.
• [38] Practice Direction 4, relevantly provides as follows:

An interim order is a temporary order designed to stop harm or disadvantage occurring while an application for a final order is being processed and decided,[8] and

Because an interim order application may be decided without submissions from the respondent and affected persons, the application must fully provide all of the relevant facts, evidence, and arguments, both for and against the application.[9]

• [39] Of most concern to me is the failure to disclose the drastic financial effect the interim order would have on the Body Corporate. The Body Corporate had only $7,636.30 in its bank account as of 30 September 2025.[10] The effect of the Interim Order is that the Body Corporate has no present ability to recover the unbudgeted $704,000 insurance premium for the 2024-2025 Insurance year expense leaving it with insufficient funds to meet the insurance premium for the 2025-2026 year and/or to meet other statutory obligations.
• [40] The Applicants submitted that the only prejudice to the Body Corporate would be a "delay in recovering the cost" because the premium had been funded through a premium funding facility. However, the fact remains that the Body Corporate needs to recoup the unbudgeted expenditure. On a more detailed review of the 525 pages of material accompanying the application, I am unable to find any evidence of a premium funding agreement.
• [41] A further matter of concern to me is the applicants' grounds for urgency focused on the potential financial ruin of the Second Applicant (the lessee/tenant) if Motion 9 were implemented. The Accommodation Module provides that the Body Corporate can only recover unpaid contributions from the owner (the First Applicant, Crestden Pty Ltd). The body corporate advises that the lease agreement between Crestden Pty Ltd and Tequila Sunrise Pods Pty Ltd,[11] does not oblige the Second Applicant to pay the Landlord's (First Applicant's) outgoings, making the Second Applicant's financial plight irrelevant to the Body Corporate.
• [42] I am also advised that the Applicants failed to provide evidence of the First Applicant's financial status, despite the First Applicant having recently purchased an adjacent property for over $4.1 million without a mortgage. This suggests the owner had the means to pay the contribution on an interim basis.
• [43] Finally, while not making a final determination regarding the proportion of risk attributable to activities carried out on the owner's lot, I accept that it is appropriate to apportion the premium based on the perceived additional risk posed by a 270-bed backpacker hostel.
• [44] For the above reasons, I am of the view that the balance of convenience does not favour a continuation of the interim order made by me on 29 September 2025, and the order is cancelled pursuant to section 279(2)(b) of the Act.
• [45] The application for final orders remains outstanding.

[1] By my calculation this would be an increase of about 883%

[2] Schedule A to the Community Management Statement

[3] Both Interest Schedule and Contribution Schedule

[4] Payable by 2nd applicant as Tenant, pursuant to a lease agreement entered into on 7 September 2022.

[5] Section 191 of the Accommodation Module

[7] By my calculation this would be an increase of about 883%

[10] See Balance Sheet as of 30 September 2025