QLD: Storm damaged PVC shutters but by-laws require aluminium — who pays the upgrade cost?

Question: The original shutters on our building were PVC. By-laws now require aluminium shutters to be installed. A storm damaged some original PVC shutters. Strata insurance will only replace like for like, so who pays for the upgrade to aluminium shutters?

PVC shutters were installed on individual apartment balconies when the complex was built around 2008. Shutters are included in the body corporate building insurance. Building compliance by-laws now requires shutters to be made of aluminium rather than PVC. A recent storm caused damage to shutters on several apartment balconies. Insurance will only replace like for like.

1. Who is responsible for the excess from an insurance claim?
2. Who is responsible for paying the difference between the insurance payout for PVC material and the cost of compliant aluminium material? The difference is several thousand per shutter.
3. Who decides which quote to accept for replacing the shutters? The cheapest quote may not be the best choice.
4. Can apartment owners refuse to install aluminium shutters if they cannot afford the cost difference?

Answer: The by-laws cannot typically change the maintenance requirements or place the requirement on an owner to upgrade.

Who is responsible for the excess from an insurance claim?

The body corporate’s ability to allocate insurance excess to a lot owner is regulated by sections 203(3) and 203(4) of the Standard Module, which relevantly provide that for an insurable event affecting:

1. only 1 lot – the owner of that 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); and
2. 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:
   
   1. the owner of a particular lot; or
   2. to be shared between owners of particular lots; or
   3. between the owner of a lot and the body corporate; or
   4. between owners of particular lots and the body corporate.

A determination of reasonableness within the context of allocating insurance excess depends upon the circumstances at hand.

Who is responsible for paying the difference between the insurance payout for PVC material and the cost of compliant aluminium material? The difference is several thousand per shutter.

Assuming the building is constructed as a building format plan, and provided it is, in fact, a requirement that the aluminium shutters be installed (which is not always the case), then the body corporate would be responsible for the shutters. The by-laws cannot typically change the maintenance requirements or place the requirement on an owner to upgrade.

Who decides which quote to accept for replacing the shutters? The cheapest quote may not be the best choice.

If the insurance is in the name of the body corporate, the decision must be made by the body corporate (rather than the relevant lot owners). In making any decisions, the spending limits of the body corporate should be observed.

Can apartment owners refuse to install aluminium shutters if they cannot afford the cost difference?

No, not if it is a requirement. However, we would expect the body corporate to be responsible in this instance. To confirm, we would need to carry out a more detailed review and provide an advice.

Katya Prideaux
Mahoneys
E: kprideaux@mahoneys.com.au
P: 07 3007 3753