Given that something similar to what happened to you is used as an example in the Queensland Act, I’d say you were on pretty solid ground. I’m not sure how these things work in Queensland but if this was in NSW I’d be telling the committee that they can do this this hard way – fight it, lose and have to pay costs (from which you would be excluded) – or come to a mutually acceptable compromise over the costs.
Just because your body corporate is under-insured doesn’t mean you should have to pay.