Achiam v The Owners - Strata Plan No. 58026

[2022] NSWCATCD 66

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Achiam v The Owners – Strata Plan No. 58026 [2022] NSWCATCD 66

Hearing dates:

8 February 2022

Date of orders:

05 May 2022

Decision date:

05 May 2022

Jurisdiction:

Consumer and Commercial Division

Before:

D Moujalli, Senior Member

Decision:

1. No interest is chargeable by the respondent to the applicants on the contributions levied on the applicants in respect of the period from 1 May 2019 to 31 December 2020.

2. The respondent is to pay the applicants the sum of $892.34 immediately.

Catchwords:

STRATA TITLES LAW — Strata schemes — Interest on late payment of strata levies – Whether reasonable to charge interest on late payment of strata levies

Legislation Cited:

Strata Schemes Management Act 2015 (NSW)

Cases Cited:

Coshott v The Owners of SP 48892 [2006] NSWSC 308

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Jose Achiam and Si Leng Leng (Applicants)
The Owners – Strata Plan No. 58026 (Respondent)

Representation:

R Perez (Applicants)
S Ecob (Respondent)

File Number(s):

SC 21/35875

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. On or about 18 August 2021 the applicants lodged an application with the Tribunal against the owners corporation of Strata Plan 58026 (the Application).

2. The applicants are lot owners in the strata scheme in respect of Strata Plan 58026.

3. The Application seeks orders under the Strata Schemes Management Act 2015 (NSW) (the SSMA). Specifically it seeks orders under ss 85 and 232 in respect of interest which has been charged to the applicants in respect of the late payment of certain strata contributions and expenses of the owners corporation in recovering such contributions.

4. The Application was listed for hearing on 8 February 2022.

5. At the hearing on 8 February 2022, the applicants were represented by their property manager, Mr Perez, and the respondent was represented by its commercial agent, Mr Ecob.

6. The hearing proceeded by telephone. At the hearing each party was given an opportunity to present evidence, ask questions of the other party and make submissions.

Evidence

7. In determining the Application, the Tribunal has had regard to the following:

1. The matters stated in the Application and the documents attached to the Application.

2. A statement of Mr Perez made on 21 October 2021 which was received by the Tribunal on 5 November 2021.

3. A further statement by Mr Perez dated 16 January 2022.

4. Documents emailed to the Tribunal by Mr Ecob on behalf of the respondent on 7 February 2022.

5. An affidavit made by Mr Ecob on 8 February 2022.

6. The oral evidence and submissions of the parties at the hearing on 8 February 2022.

8. The findings made by the Tribunal on the basis of the above evidence is set out below.

Jurisdiction

9. The applicants are lot owners in the relevant strata scheme.

10. Pursuant to s 85(8) of the SSMA the Tribunal may determine an application by them for an order that no interest is chargeable on specified strata contributions.

11. The applicants also have standing as an “interested person” as defined by s 226 of the SSMA to make an application to the Tribunal under s 232(1)(a) of the SSMA for an order for the settlement of a dispute in relation to the “operation, administration or management of a strata scheme”. The payment of interest on over-due strata contributions which have been levied by an owners corporation is as aspect of the operation, administration or management of a strata scheme.

12. Accordingly, the Tribunal has jurisdiction to consider the application in relation to interest on strata contributions that have been charged to the applicants.

13. There is, however, no provision in the SSMA in relation to the expenses incurred in recovering strata contributions which is comparable to s 85(8) in relation to interest. Pursuant to s 86(1) and (2) the Tribunal may order that such expenses are payable on application of an owners corporation. However, there is no provision empowering the Tribunal to make an order that expenses are not to be paid on the application of an owner.

14. The Tribunal does not therefore consider that it has jurisdiction to determine the application in relation to the expenses of the owners corporation incurred in recovering the relevant strata contributions.

15. The Tribunal will therefore only consider the Application to the extent that it seeks relief in relation to interest on strata contributions that have been charged to the applicants.

The Applicable Law

16. Section 81 of the SSMA relevantly provides as follows:

81   Owners corporation to set contributions to administrative and capital works funds

(1)  The owners corporation must determine the amounts to be levied as a contribution to the administrative fund and the capital works fund to raise the amounts estimated as needing to be credited to those funds.

(2)  That determination must be made at the same meeting at which those estimated amounts are determined.

(3)  The owners corporation must levy on each person liable for it such a contribution.

17. Section 83 of the SSMA provides as follows:

83   Levying of contributions

(1)  An owners corporation levies a contribution required to be paid to the administrative fund or capital works fund by an owner of a lot by giving the owner written notice of the contribution payable.

(2)  Contributions levied by an owners corporation must be levied in respect of each lot and are payable (subject to this section and section 82) by the owners in shares proportional to the unit entitlements of their respective lots.

(3)  Any contribution levied by an owners corporation becomes due and payable to the owners corporation on the date set out in the notice of the contribution. The date must be at least 30 days after the notice is given.

(4)  Regular periodic contributions to the administrative fund and capital works fund of an owners corporation are taken to have been duly levied on an owner of a lot even though notice levying the contributions was not given to the owner.

18. Section 85 of the SSMA relevantly provides as follows:

85   Interest, discounts on contributions and payment plans

(1)  A contribution, if not paid when it becomes due and payable, bears until paid simple interest at an annual rate of 10% or, if the regulations provide for another rate, that other rate.

(2)  Interest is not payable if the contribution is paid not later than one month after it becomes due and payable.

(3)  However, an owners corporation may by resolution determine (either generally or in a particular case) that a contribution is to bear no interest.

…

(8)  The Tribunal or a court may, on application by an owner, order that no interest is chargeable on a specified contribution if the Tribunal or the court is satisfied that the owners corporation should reasonably have made a determination not to charge interest for the late contribution.

19. Section 86 of the SSMA relevantly provides as follows:

86   Recovery of unpaid contributions and interest

(1)  The Tribunal may order the owner of a lot in the strata scheme, or other person, to pay a contribution that is payable by the owner or other person under this Act that is not paid at the end of 1 month after it becomes due and payable, together with any interest payable on that unpaid contribution and the reasonable expenses of the owners corporation incurred in recovering those amounts.

(2)  The Tribunal may make an order under subsection (1) only—

(a)  on the application of the owners corporation, and

(b)  if proceedings between the owners corporation and the owner of a lot in the strata scheme or other person are pending before the Tribunal.

(2A)  An owners corporation may, without obtaining an order under this section, recover as a debt in a court of competent jurisdiction, a contribution not paid at the end of 1 month after it becomes due and payable, together with any interest payable on that unpaid contribution and the reasonable expenses of the owners corporation incurred in recovering those amounts.

20. Section 232 of the SSMA relevantly provides as follows:

232   Orders to settle disputes or rectify complaints

(1) Orders relating to complaints and disputes The Tribunal may, on application by an interested person, original owner or building manager, make an order to settle a complaint or dispute about any of the following—

(a)  the operation, administration or management of a strata scheme under this Act,

….

Assessment of the Evidence and Findings of Fact

21. The applicants are the owners of lot 15 (which is also known as unit 15) in the strata scheme constituting Strata Plan 58026. They purchased the unit in about October 2017. They have not lived in the unit and are resident overseas. The unit has been occupied by tenants. Since their purchase of the unit, it has been managed for them by Mr Perez who is a licensed real estate agent.

22. From the time of the purchase of the unit by the applicants in about October 2017 until sometime in the first quarter of 2019, the strata manager of the strata scheme was NSW Strata Management.

23. While NSW Strata Management was the strata manager, the notices of quarterly strata levies were sent to Mr Perez on behalf of the applicants. In relation to these notices, Mr Perez gave the following evidence (which was not disputed by Mr Ecob and which evidence I accept):

1. The notices were sent to Mr Perez at the email address [email protected];

2. The strata levies stated in these notices were paid by Mr Perez on behalf of the applicants by the due date; and

3. The final notice issued in this manner was on 21 February 2019 and related to the period 1 April 2019 to 30 June 2019. Payment of the amount stated in this notice was due on 1 April 2019 but Mr Perez arranged for it to be paid on 20 March 2019.

24. Sometime in the first quarter of 2019 (the evidence does not permit a more specific indication as to the timing) Jameson & Associate Unit Services Pty Ltd (Jamesons) replaced NSW Strata Management as the strata manager of the strata scheme.

25. The respondent’s evidence includes the notices of strata levies which were intended to be issued to the applicants care of Mr Perez by Jamesons in the period from May 2019 to December 2020. I have used the words “intended to be issued” because unfortunately these notices were never received by Mr Perez. That is because the notices were sent to the email address [email protected]. Mr Perez’s email address does not have the letter “s” after the word “service”. Mr Perez gave evidence, which I accept, that the email address to which the notices were sent is not an email address which he uses or has used. I also accept his evidence that he did not receive the notices sent to this email address. I note that Mr Ecob conceded in his oral evidence that the notices were send to the wrong email address.

26. The first notice which was sent by Jamesons to the wrong email address was on 20 May 2019. This was for a contribution for “capital works fund deficiency”. The notice stated that the contribution was due on 1 May 2019. The notice of the quarterly contribution to the administrative and capital works fund was sent on 3 July 2019. Further notices then continued to be sent to the wrong email address [email protected].

27. Mr Perez gives evidence that is September 2019 he realised that he had not received the notice of strata levies for the July to September 2019 quarter. He says he contacted NSW Strata Management to inquire why this was the case. He was told that he should be contacting Jamesons as they had now been appointed the strata manager.

28. Mr Perez gives evidence that he contacted Jamesons on several occasions between September 2019 and October 2020 in an effort to work out why he was not receiving notices of strata levies. He gives evidence that he left numerous messages which were often not returned. On the occasions when he did manage to speak to someone, he was not given an explanation as to why the notices were not being sent to him. He says that on one occasion, an employee of Jamesons said to him “that she does not know where the levies are being sent to”.

29. Mr Perez also says that he was told by employees of Jamesons that he should contact the “debt collectors” being Collection Corporation of Australia Pty Ltd (which is the firm owned and managed by Mr Ecob). This is corroborated by emails attached to his statement of 21 October 2021 (at pages 7 to 9) with employees of Jamesons. He was bluntly told “you will need to speak with [Collection Corporation Australia]”. It should be noted that these emails were sent to an alternative address for Mr Perez (ie, not the wrong address to which the notices were sent) which allowed him to receive the emails.

30. I accept Mr Perez’s evidence that Jamesons did not take seriously the concerns he raised about not receiving notices of strata levies. It is corroborated by the fact that Jamesons continued to send the notices to the wrong email address until late 2020. There is no evidence to contradict Mr Perez’s evidence that Jamesons made no real or genuine effort to ascertain why Mr Perez was not receiving the notices of strata levies.

31. The inference is reasonably available that had Jamesons taken seriously the concerns which Mr Perez was raising, they would have realised they were sending the notices to the wrong email address and rectified this error. The fact that they did not rectify their error indicates that they did not take Mr Perez’s concerns seriously.

32. Mr Ecob gave evidence that notices were sent to the correct email address from 20 April 2020. I reject this evidence. It is contradicted by the respondent’s own evidence. As referred to in paragraph 30, that evidence includes emails showing that Jamesons continued to send the notices to the wrong email address until late 2020.

33. Mr Perez says that he eventually resigned himself to the unlikelihood of being able to resolve the problem directly with Jamesons. He contacted Mr Ecob on 23 November 2020 to discuss the problem with him. He says that Mr Ecob said words to the effect of: “You probably put the invoices in the rubbish bin and now you are embarrassed to admit it”. He also says that Mr Ecoob referred to one of the applicants as an “idiot”. He says that he told Mr Ecob that his comments were “unprofessional”.

34. I accept Mr Perez’s evidence about his conversation with Mr Ecob. Mr Perez appeared to be credible and doing his best to assist the Tribunal with its fact finding function.

35. It is sufficient to note that the Tribunal considers Mr Ecob’s comments to Mr Perez to have been inappropriate.

36. Mr Perez gives evidence that in December 2020, he became aware that default judgment had been obtained by the owners corporation against the applicants in the Local Court. The owners corporation also obtained a garnishee order in respect of rental income payable to the applicants by the tenants of the unit.

37. Mr Ecob gave evidence that the Local Court proceedings were undefended. Mr Perez said that this was because the applicants were not served with the statement of claim. Mr Ecob disputes this and says that the statement of claim was posted to Mr Perez’s office address. It is to be recalled that for parts of 2020, there were public health orders and/or recommendations requiring and/or encouraging residents of Sydney to work from home because of the Covid-19 pandemic. Mr Perez says that he was working from home during this period. This may explain why Mr Perez and the applicants were not aware of the Local Court proceedings until they were served with a garnishee order.

38. In any event, it is not for the Tribunal to inquire whether there were irregularities in the manner in which the owners corporation obtained default judgment in the Local Court. As has already been noted above, the Tribunal has limited jurisdiction in relation to this matter, namely, its jurisdiction is confined to considering whether any relief is available to the applicants in relation to the interest charged to the applicants on over-due strata contributions.

39. Mr Perez gives evidence that the applicants paid the amounts in respect of which default judgment had been obtained even though the owners corporation had still not provided the relevant notices of strata levies. He says that this was done so as to prevent the ongoing accumulation of expenses and interest for which the owners corporation would charge the applicants.

40. Very little evidence has been given by the respondent as to how the amounts the subject of default judgment were calculated. It is, however, clear from the affidavit of Mr Ecob that they related to “levies, interest and section 86 expenses”.

Consideration and Decision

41. At the hearing, Mr Ecob placed great emphasis on s 83(4) of the SSMA and appeared to contend that this provided a complete answer to the Application. In my opinion, this contention appears to misconceive the nature of the relief being sought by the applicants.

42. The applicants do not dispute their liability to pay the strata contributions in respect of which they were not served with notices. Their position in this respect is consistent with the decision in Coshott v The Owners of SP 48892 [2006] NSWSC 308 that the effect of a provision in similar terms to s 83(4) is to cast “the responsibility on the [lot] owner to pay the contributions as levied even if notice levying the contributions was not served on the owner”: see [26] – [39]. Section 83(4) of the SSMA does not specifically address the issue of interest on late paid strata contributions.

43. As has already been noted, the Tribunal’s power in relation to interest chargeable on late payments of strata contributions arises from s 85(8) of the SSMA. That confers a discretion on the Tribunal which is enlivened if the Tribunal is satisfied that the “owners corporation should reasonably have made a determination not to charge interest for the late contribution”.

44. I am satisfied that the owners corporation should reasonably have made a determination not to charge interest to the applicants for the late payment of strata contributions levied for the period from 1 May 2019 to 31 December 2020. That is because the reason for these late payments was the failure of Jamesons, the strata managers of the owners corporation, to take reasonable steps that would have allowed them to ascertain that they were sending the notices for the contributions to the wrong address.

45. As I have already noted, the undisputed evidence of Mr Perez was that prior to the involvement of Jamesons, the notices were sent to the correct email address and were paid by the due date.

46. It is understandable how Jamesons could have made an initial error in entering Mr Perez’s email address as [email protected] [emphasis added] instead of [email protected]. There is, however, no reasonable explanation for how Jamesons failed to correct this error in circumstances where Mr Perez was doing all he reasonably could to notify Jamesons that he was not receiving notices of strata levies.

47. It was reasonable for Mr Perez, as the property manager for the applicants, to seek to obtain the notices of strata levies so that he could advise his clients as to the amount of the strata levies payable by them and their due date and also to satisfy himself that the notices accurately stated these matters. There was, however, no reasonable response by Jamesons to Mr Perez’s inquiries. Often his calls went unreturned, when he was able to speak to someone his concerns were not taken seriously and then he was effectively told that Jamesons could not assist and that he had to talk to Mr Ecob. As I have already noted, Mr Ecob’s response to Mr Perez’s concerns was unhelpful and inappropriate.

48. The owners corporation appear to have invested some effort in obtaining default judgment against the applicants in respect of strata levies which were not notified to the applicants because they were sent to the wrong email address. It is difficult to avoid the conclusion that had a fraction of that effort been put into working out why the notices were not being received, this dispute could have been resolved sometime ago without the need for litigation in either the Local Court or the Tribunal.

41. For the above reasons the Tribunal is satisfied that the owners corporation should reasonably have made a determination not to charge interest to the applicants for the late payment of strata contributions levied for the period from 1 May 2019 to 31 December 2020. An order will be made that no interest is chargeable on these contributions.

42. It is also appropriate to make an order pursuant to s 232(1)(a) that the respondent pay to the applicants the interest which has been charged to the applicants. Mr Ecob did not identify to the Tribunal the specific amount of interest charged on the relevant contributions. In the absence of specific assistance on this appoint, the Tribunal is left to do the best it can on the basis of the evidence before it.

43. I have totalled the interest charges referred to in the notices in the respondent’s evidence (which were intended to be sent to the applicants but were not received by them) for strata contributions levied for the period from 1 May 2019 to 31 December 2020 (ie, the notices at pages 8, 13, 15, 17, 19, 22 and 24 of the bundle of documents provided by the respondent). This gives a total of $892.34. The Tribunal will make an order for the payment of this amount by the respondent to the applicants.

Conclusion and Orders

52. For the above reasons, the Tribunal will order:

1. No interest is chargeable by the respondent to the applicants on the contributions levied on the applicants in respect of the period from 1 May 2019 to 31 December 2020.

2. The respondent is to pay the applicants the sum of $892.34 immediately.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 04 July 2022