This matter relates to a units plan development consisting of two townhouses. The owners of the two units brought this claim in their capacity as the owners corporation against the respondent, Civium Property Group Pty Ltd (Civium), who they incorrectly thought was the developer of the units plan but was the managing agent for the owners corporation.
On 27 October 2017 the respondent paid the premium for a property and workers compensation insurance policy for the period 27 October 2017 to 27 October 2018. The policy was initially in the respondent’s name, but on 23 November 2017 (the registration date of the units plan) the owners corporation became the insured. The owner/applicants settled their purchases on 4 and 7 December 2017. In July 2018, the respondent, acting in its capacity as the managing agent, transferred the whole insurance premiums from the owners corporation’s account to its own account without prior notice to or approval of the owners corporation. The dispute was in essence about who should be responsible for the payment of the insurance premium.
The Tribunal began by stating that section 100 of the UTMA places a duty on the developer to take out the insurance on behalf of the owners corporation. Prior to the registration of the units plan, there was no obligation on the respondent to take out insurance on behalf of the applicant although when it did so, it was for its own sake and was therefore a business cost to the developer.
During the developer control period (from 23 November 2017 to 4 December 2017) and afterwards, the duty to insure fell upon the owners corporation although the newly formed owners corporation had no funds to pay the insurance. The respondent argued that the premium payment was a loan from itself to the applicant. However, the respondent should have formally recorded the resolution to borrow the money at the inaugural AGM pursuant to section 70 of the UTMA or disclosed it as an adjustment in the contracts of sale pursuant to section 33 of the UTMA.
The immediate consequence of this failure is that the alleged loan contract between the respondent and the applicant was void being contrary to law meaning the applicant would be entitled to the return of the money taken from its account. However, the Tribunal agreed that the applicants were attempting to rely on a technicality to take advantage of the respondent. As the fault of the respondent was an oversight over a small amount of money and the applicant did not suffer any loss, repayment to the applicants would be unjust enrichment and the application was dismissed.
The Tribunal also noted that none of above in any way justified the respondent in its capacity as managing agent accessing the owners corporation’s bank account and taking the funds without prior approval (which might raise a disciplinary issue).