INSURANCE and LEGAL LIABILITIES
Given that the committee has, in my opinion and experience and in all likely hood, breached several regulations and made innumerable financial accounting errors; and then, having been advised formally of these errors but having to date refused to acknowledge, investigate, act, or correct any of these, it is highly probable that:
1. The Quays Insurance Policy DUTY OF DISCLOSURE - was not met on last renewal.
2. The Quays Insurance Policy, Reasonable Care Condition - "to comply with any law, by-law, safety requirement, Australian Standard or regulation of any Government or Local Government body, including but not limited to those covering the disposal of waste products and the handling, storage or use of flammable liquids or substances, gasses or toxic chemicals." - has also not been met. (See Doc-Ref 600J)
As a result and in the event of a claim by an Owner, (perhaps a claim by a recent buyer, or a current seller with either affected financially by the current confusion of two sets of financial statements for FYE 31 March 2022), the Quays BC would, in my opinion, most likely be exposed by its non-compliance with the Reasonable Care Condition clause; and, the liability of our insurer would be reduced and/or cancelled in regard to our covers for Fidelity Guarantee and Office Bearers' Legal Liability.
Moreover the committee members could be personally exposed if their failure to acknowledge, investigate or correct the accounting errors was determined to be negligent.
In my opinion and experience, reinforced by the corrections made by the auditor to the v1 21/22 financials, it is certain that there has been Financial Statement Misrepresentation; but it remains to be disclosed:-
1. Who committed the misrepresentation?
2. Was the misrepresentation Innocent, Negligent or Fraudulent?
3. BCCM Act 1997, Sect. 101A
Protection of committee members from liability:
A committee member is not civilly liable for an act done or omission made in good faith and without negligence in performing the person’s role as a committee member - in my opinion, these conditions have not been met.
Meanwhile, two sets of financials for the FYE 31 March 2022 have been sent to Owners and are available for inspection by potential buyers at the offices of our BCM.
So which set is legal?
Unfortunately, I beleive it is the first set (v1) with unaudited and incorrect figures but as approved by the Owners at an AGM.
Potential buyers will be appalled by these anomalies, and Owners by the resultant exposure to legal liability.
4. Insurance - other
I believe that we need a new valuation before we renew this year as I did mention at the last committee meeting on 12 Dec 2022 – the minutes of which state: “……it was decided the Committee will source quotations along with obtaining an updated Insurance Replacement Valuation.”.
5. Insurance Update
Despite the above minuted obligation to obtain a updated insurance replacement valuation, the committee did not do so - presumably because of increased premiums.
However, given the increases in property values and a substantial rise in building costs, we are nevertheless most probably underinsured which could be problematic.
Also, given the increases in property values and a substantial rise in building cost our Sinking Fund Forecast will also be under-funded. One example is exterior painting due again in 2027 - Amalgamated Group have advised that in 2023 alone their costs have risen 28%. That alone would affect our provision of $1.1m by $312k.
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Please see the Document Library, references 600J thru 600Z, for more information and policy documents