A pub and strip club must pay more for insurance than homeowners in the same complex after a tribunal ruled the block’s premium soared because of the venue.

The NSW Civil and Administrative Tribunal’s appeal panel has backed an earlier decision on the dispute at the Citadel Complex in Sydney.

The complex has two strata schemes – one for residential lots and the other for commercial lots including the Petersham Inn and associated Strip Inn.  

When the strata management statement for the two schemes was registered in 2002, it said the residential owners would pay 90% of the insurance premium and the commercial owners 10%.

In 2022, CHU refused to renew the policy and other some insurers would not take on the risk because of the strip club. CHU had insured the complex since 2010 and the last premium it charged was $58,131.

In August 2022, Breeze Underwriting issued a policy for a premium of $525,615, but it cancelled this the next March.

Then, in September 2023, the management committee secured cover with is-Strata and ARX Placement Solutions for a premium of $254,268.

The residents applied to the tribunal to have the insurance cost split 81/19 rather than the 90/10.

A real estate expert valued the residential units at $30 million and the commercial units at $7.5 million.

In 2022-23 the premium paid was $330,376, with $297,339 from the residents.  

An insurance expert estimated the premium would have been $67,142 if the pub owner had not operated, reducing the residents’ 90% share to $60,428.

The tribunal altered the split to 81/19 and the residents’ 2022-23 premium to $60,428. For 2023-24, the residents’ cost would be adjusted to $68,517. 

All sides appealed.

The appeal panel agrees with the 81/19 split but says if the 2022-23 premium would be $67,142 without the Strip Inn, the residents should pay 81% of that amount.

The balance of the $330,376 premium should be paid by the commercial strata scheme.

Read the judgment here.