Body Corporate for Nut Tree Hill v Lilley
[2012] QCAT 23
•13 January 2012
| CITATION: | Body Corporate for Nut Tree Hill CTS 27771 v Lilley [2012] QCAT 23 |
| PARTIES: | Body Corporate for Nut Tree Hill CTS 27771 (Applicant) |
| v | |
| Allison Lilley (Respondent) | |
| APPLICATION NUMBER: | MCDO50280-11 |
| MATTER TYPE: | Other minor civil disputes matters |
| HEARING DATE: | 24 November 2011 |
| HEARD AT: | Southport |
| DECISION OF: | Christine Trueman, Adjudicator |
| DELIVERED ON: | 13 January 2012 |
| DELIVERED AT: | Southport |
ORDERS MADE: | [1] That the Respondent is not liable to pay for the debt recovery costs in the sum of $2,277.72 or any other debt recovery costs relating to this claim. [2] That the claim is dismissed. |
| CATCHWORDS: | Body Corporate levies – unpaid contributions, whether costs reasonably incurred for the recovery of overdue levies – whether Applicant made reasonable attempt to contact the Respondent regarding outstanding contributions Body Corporate and Community Management Act 1997, ss 33(2), 94, 150, 129, 140, 143 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANTS: | Mr William Payne |
| RESPONDENT: | Ms Allison Lilley |
REASONS FOR DECISION
The Applicant, Body Corporate for Nut Tree Hill CTS 27771 (“the Body Corporate”) filed an Application for Minor Civil Dispute – Minor Debt on 17 February 2011 against the Respondent claiming the sum of $4,622.79 that included a claim of $4,463.74, a filing fee of $92.00, service fee of $55.00 and a Citec fee of $12.05, together with interest on $4,463.74 and costs.
The Applicant is a duly incorporated Body Corporate pursuant to the Body Corporate and Community Management Act 1997 (“the Act”) in respect of land situated at 37 Dasyure Place, Wynnum West in Queensland. It is contained in a Community Titles Scheme (“CTS”) which has been registered with the Community Management Statement Number 27771 (“CMS”).
The Body Corporate may sue and be sued in its corporate name pursuant to section 33(2) of the Act. That section provides:
33 Name of Body Corporate
(1) The name of the Body Corporate for a community titles scheme is the words ‘Body Corporate for’ plus the name of the scheme.
Example of name—
Body Corporate for Seaview community titles scheme 1234(2) The Body Corporate for a community titles scheme may sue and be sued in its corporate name.
The Applicant is required, pursuant to section 94 of the Act, to administer the common property and assets for the benefit of the owners and enforce the CMS including any By-Laws. Section 94 states:
94 Body Corporate’s general functions
(1) The Body Corporate for a community titles scheme must—
(a) administer the common property and Body Corporate assets for the benefit of the owners of the lots included in the scheme; and
(b) enforce the community management statement (including any by-laws for the scheme); and
(c) carry out the other functions given to the Body Corporate under this Act and the community management statement.
(2) The Body Corporate must act reasonably in anything it does under subsection (1) including making, or not making, a decision for the subsection.
The Act provides, at section 150, that the Body Corporate must comply with the financial management arrangements that apply to the CTS and those stated in the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (“the Regulation”) including the:
a) Financial arrangements regarding the levying of contributions on owners of lots in the CTS: and
b) Financial arrangements regarding the recovery of unpaid contributions; and
c) Financial management arrangements contained in the regulations applying to the CTS and may impose obligations and limitations on lot owners.
Section 150 of the Act states:
150 Financial management arrangements
(1) Subject to section 151, the financial management arrangements applying to a community titles scheme are those stated in the regulation module applying to the scheme.
(2) Without limiting subsection (1), the regulation module applying to a community titles scheme may provide for financial arrangements about the following—
(a) the budget of the Body Corporate;
(b) levying lot owners for contributions, including contributions of an interim nature for the period from the end of a financial year to 30 days after the annual general meeting for the next financial year;
(c) discounts and penalties relating to the payment of contributions;
(d) recovery of unpaid contributions;
(e) funds to be kept by the Body Corporate;(f) powers and restrictions relating to borrowing;
(g) application of amounts in funds;
(h) spending limitations applying to the Body Corporate, and spending limitations applying to the committee for the Body Corporate;
(i) keeping accounts and preparing statements of accounts;
(j) auditing of statements of accounts by an auditor.
(3) To avoid doubt, it is declared that the financial management arrangements contained in a regulation module applying to a community titles scheme may impose obligations and limitations on both the Body Corporate (including the committee for the Body Corporate) and lot owners.Section 129 of the Regulation provides that contributions fixed by ordinary resolution of the Body Corporate are to be levied on the owners of each lot in the CTS.
Section 140 of the Regulation provides that the Body Corporate must give written notice of contributions payable by each lot owner in the CTS.
If a contribution is not paid by the requested date for payment the Body Corporate can recover the amount of the contribution together with any interest penalty as a debt against the lot owner pursuant to section 143 of the Regulation.
The Body Corporate relies on By-Law 25.2 of the By-laws in the CMS that provides that if a lot owner does not pay the levies, may pay on demand as a liquidated debt all the costs incurred in recovering the overdue levies from such lot owner. That By-Law states:
25Recovery of Levies and Other Monies
25.1An Owner (which shall extend to a mortgagee in possession) must pay on demand the whole of the Boyd (sic) Corporate’s costs and expenses including solicitor and own client costs plus any applicable GST, such amount to be deemed a liquidated debt due by the owner to the Body Corporate in connection with;
(a) Recovering levies or monies payable to the Body Corporate pursuant to the Act or these by-laws duly levied upon the Owner by the Body Corporate, or otherwise pursuant to these by-laws: and/or
(b) All legal or other proceedings concluded by way of settlement or Court determination in favour of the Body Corporate taken by or against the Owner or Occupier of a Lot.
25.2If the Owner fails to pay any such costs upon demand the Body Corporate may treat such costs and expenses as liquidated debt and take action for the recovery of same in a Court of competent jurisdiction, and/or enter such costs and expenses against the levy account of the owner in which case the amount owed shall be paid to the Body Corporate upon a subsequent sale or disposal of the Owner’s Lot failing which the purchaser of such Lot shall be liable to the Body Corporate for the payment of same.
The Body Corporate is the registered owner of Lot 74 on Survey Plan 126617 situated at 37 Dasyure Place, Wynnum West in the State of Queensland, being a lot included in the CTS which is contained in a Community Titles Scheme which has been registered with the Community Management Statement Number 27771.
The Respondent, Ms Allison Lilley (“Ms Lilley”) filed a Response on 17 March 2011 and sought the following orders from the tribunal, that:
a) “The Body Corporate provide to me a statement and reconciliation showing all levies outstanding from 1 February 2009, to date;
b) That the claim be dismissed in relation to all interest claimed;
c) That the claim be dismissed in relation to all recovery and collection costs, including the costs of issuing this claim.”
THE APPLICANT’S EVIDENCE
An order was made on 23 June 2011 granting Leave for the Body Corporate to be represented by Strata & Corporate Collections Pty Ltd (“SCC”) and Mr William Payne (“Mr Payne”) appeared on behalf of the SCC Company. SCC was appointed by the Body Corporate to act as their debt recovery agent and to recover all outstanding levies, fees and debt recovery costs from Ms Lilley. At the commencement of the hearing Mr Payne provided to the tribunal a summary[i] and revised statement of particulars of claim[ii] which indicated that the claim was reduced to the sum of $2,434.77 which represented a claim for debt recovery costs of $2,277.72, filing fee $90.00, service fee of $55.00 and the Citec fee of $12.05. The claim also included interest on $2,277.72 and claimed that pursuant to section 47 of the Supreme Court Act 1995 interest should be paid at “10% per annum from the date hereof to the date of judgement or the day of payment whichever is the earlier and costs.”
Mr Payne claimed that the Ms Lilley had moved residence and failed to notify the Body Corporate. He stated that it was Ms Lilley’s responsibility to notify the Body Corporate of any change of details particularly her residential or mailing address. He provided to the tribunal a bundle of Body Corporate statements[iii] that were addressed to Ms Lilley at the address of Fiona Avenue at Wahroonga in New South Wales. Those statements were for the period 1 February 2010 to 24 November 2011. The statements set out the sinking and administrative fund amounts, insurances, sinking fund special levies and overdue interest.
Mr Payne also provided statements for the unliquidated claims[iv] dated 24 November 2011 which commenced with arrears notice fees and recovery costs from 14 December 2009 up to 4 October 2011. The total amount in the statements as at 4/10/2011 was $3,186.31.
Mr Payne stated that Ms Lilley did not advise the Body Corporate of her new address at Fiona Avenue in Wahroonga in New South Wales until some time had elapsed and Body Corporate levies had become outstanding and he was engaged to recover them. Mr Payne said he had to engage the services of Redchip Lawyers to attempt to locate Ms Lilley after notices and letters were sent to her and ignored and the demand for payment of outstanding levies remained unpaid. He said that many attempts were made to locate Ms Lilley but that mail sent to her address on the Body Corporate Roll at Boundary Street, Roseville in New South Wales did not result in Ms Lilley making Body Corporate levy payments.
Mr Payne provided to the tribunal a copy of the Information for Body Corporate Roll[v] signed by an Agent of the Owner on 5 September 2003 advising of the Boundary Street address. Mr Payne stated that Ms Lilley did not currently live at that address and had not lived there for some time.
Mr Payne gave copies of tax invoices from SCC to the Nut Tree Hill Body Corporate for debt recovery costs for Ms Lilley and the property at Lot 74 Nut Tree Hill. The details of those invoices provided were:
Tax Invoice No Date Amount
81062 14/1/2010 $133.61
81469 27/1/2010 $404.55
81993 8/2/2010 $136.40
82443 23/2/2010 $46.20
83140 15/3/2010 $46.20
84948 27/4/2010 $110.00
85767 7/5/2010 $474.13
88973 7/7/2010 $390.50
89707 22/7/2010 $72.60
96362 8/2/2011 $134.33
96651 18/2/2011 $407.54
97084 1/3/2011 $137.50
101639 29/6/2011 $204.16
105005 29/9/2011 $244.75
Mr Payne provided copies of two Redchip Lawyers tax invoices[vi] for their professional costs and disbursements in acting on behalf of SCC. They were as follows:
Invoice Number Date Amount
315795 30/4/2010 $408.13
100474 14/7/2010 $324.50
Mr Payne relied on copies of file notes[vii] as evidence of attempts to contact Ms Lilley and justification for the amount of debt recovery costs. The file notes range in date from 8 February 2010 to 1 July 2010. Mr Payne provided to the tribunal the relevant parts of the Body Corporate By-Laws which included page 9 and 14 of 28 that referred to part 25 and the Recovery of Levies and Other Monies.[viii]
THE RESPONDENT’S EVIDENCE
Ms Lilley filed a Response on 17 March 2011 stating that the claim should not have been filed as she had already resolved the payment of all Body Corporate levies and fees when the claim had been filed. She claims that she has attempted to resolve the issues by contacting the Body Corporate on numerous occasions and that the Body Corporate had either refused to speak to her when she either phoned, nor had they answered any of her emails with a satisfactory response. She alleges she sent 15 emails between June 2010 and March 2011 as well as making many phone calls to them.
Ms Lilley stated that for more than six years she had always paid her Body Corporate fees on time and had never been late with overdue payments or arrears. She said that this was the first occasion that she has ever had an issue with the Body Corporate. She stated that she did not receive a Body Corporate statement during 2009. She said that the payment that she missed was for the period from 1 October 2009 to 31 January 2010.
Ms Lilley said that she did move house in late 2009 but that she had an active Australia Post mail redirection in place. She stated that she paid for two periods of three months, making a total of six months of mail redirection. She said that she received all her usual mail during that period and had not had any problems with not receiving her mail except for the Body Corporate fees and levies notice.
Ms Lilley claims that while she was always prepared to pay for any overdue Body Corporate levies she had requested a “proper statement” from the Body Corporate that showed all monies owing and monies that she had paid. She stated that a major problem that she had with the Body Corporate was that she emailed them on at least five occasions stating that she would pay immediately all outstanding levies owed if they would advise the exact amount and confirm that any funds paid by her would be paid towards the strata levies and not firstly to pay any overdue interest or debt recovery costs. She stated that she had advised the Body Corporate that she was disputing the penalty interest and debt recovery costs and so that any further payments were to be paid towards the levies and not towards reducing late interest penalties and debt recovery costs. She said that she had not received a response to any of those queries and emails relating to these issues.
Ms Lilley said that she had contacted Mr Peter Bone, who was the Body Corporate Manager by telephone and he requested that she email him with her concerns. She said that she then emailed him but had not received a response from him only a “generic message not specific to my email asking them if the funds would be paid towards the strata.” She provided to the tribunal copies of all the emails she had sent to the Body Corporate and some of the Body Corporate responses.[ix] Ms Lilley stated that the reasons she should not have to pay the debt recovery costs are “due to the complexity of the way they do business” and that “they only have strata meetings every 3 months and are unable to make decisions without the strata body corporation agreement”. She said that this meant that until a meeting was scheduled and a decision made on her request to waiver penalties, interest and costs, that the costs continued to accumulate which was unfair and unreasonable. She said that “the Body Corporate could have easily contacted me by calling her mobile, but they never did and both the Body Corporate and Onsite manager had my number.” She said that she was enrolled on the current electoral roll and that she had voted at all elections and that she could be easily located. She said that she could not understand what actual amounts of Body Corporate levies she owed as when she made payments the Body Corporate had offset her payment towards overdue interest and debt recovery costs, so working out what she actually owed for levies was “difficult” and “impossible”.
Ms Lilley gave evidence that she did not receive any telephone calls from the Body Corporate or their Agent SCC, despite them having her current telephone contact details. She said the Body Corporate or SCC have failed to provide adequate explanation as to why they failed to make any contact with her at all by telephone. She stated that she has had the same mobile phone number for the last ten years. She said that she did not receive any mail, email or phone call from the Body Corporate regarding the unpaid levy and that they made no reasonable attempt to try and contact her. She stated that it was unreasonable for the Body Corporate and SCC to engage solicitors to try and contact her and that she should not be liable for any of those costs.
Ms Lilley said that she was eventually contacted by the Solicitors Redchip Lawyers, acting for the Body Corporate. She said they contacted her by Facebook on 10 June 2010. Ms Lilley said she initially thought that the contact through Facebook was a ‘scam’ and she asked the person to provide proof of who they were. She also asked them to call her to verify their identity. She said she was wary when contacted on Facebook as the contact had asked her for her banking details and she was immediately sceptical and suspicious. Ms Lilley said she did not give the contact person her phone number but that someone from Redchip Lawyers did later call her. Ms Lilley said that the only possibility of Redchip gaining her mobile phone number would have been through the Body Corporate records. She said that this incident was proof that they had always had and knew her current telephone contact details.
Ms Lilley stated that after the person from Redchip Lawyers called her she immediately gave them her updated email work address and clarified all telephone numbers and requested a current statement so she could pay the levies. She said that when she tried to make payment of the outstanding levies she was told conflicting advices. She stated that she was told she had to deal with Redchip Lawyers and then told to deal with the Body Corporate. She said that at this stage she requested that any debt recovery fees be waived as she had paid the levies as soon as contact was made and that the Body Corporate could have telephoned her to request payment. She said she told the Body Corporate that had they telephoned her that this would have prevented the issue of outstanding levies and any debt recovery costs.
Ms Lilley said that once she had received a statement and the alleged amount she owed, she was informed the sum in total was $4,872.91 as at 28 June 2010. She stated that she tried to calculate what the actual amount was for. She said she wanted to know what the actual amount was for levies (without interest and debt recovery fees) and based on her calculations she paid immediately the sum of $3,600. She said she paid the levies shortly after being contacted on Facebook and immediately after being provided with a current statement. She said she was contacted on Facebook on 10 June and paid that sum on 28 June 2010, just over 2 weeks later after she received a levy statement.
Ms Lilley stated that she later calculated the amount she had actually paid, which included the missed payment of $1,455.88 for the statement period from 1 October 2009 to 31 January 2010 and also the next due payment of $1,712.15 for the period 1 February 2010 to 31 May 2010. She said that the payment she made was in fact an overpayment, and that she had partly paid a contribution towards a future levy payment that was not yet due for the period from 1 June 2010 to 31 September 2010.
Ms Lilley claimed that she paid her account in full once she was contacted on Facebook by Redchip Lawyers and in fact over paid levies due and owing by her at that particular time. She stated that she had tried many times to resolve the matter with the Body Corporate but that they were not prepared to negotiate at all in relation to the overdue interest and debt recovery costs.
Ms Lilley states that part of her complaint is that the overdue interest and fees are unfair and not reasonable in all the circumstances. She says the reasons being, in part, that overdue interest is accumulating on levies that she has in fact paid for, but due to the fact that the Body Corporate had elected to direct levy payments to pay debt recovery costs and late interest, that she was effectively being charged interest on interest for levies not paid when in fact they have been paid. She claims it is unfair to make payments towards overdue interest while they are in dispute and she does not agree with them.
Ms Lilley stated that the claim was filed on 17 February 2011 alleging she owed Body Corporate fees and levies amounting to some $4,463.74 yet the Applicants acknowledged that they were in contact with Ms Lilley, had her current work address, phone number and email details, were provided with her current residential address and she had made large payments towards the arrears, and in fact, as at June 2010 had made payments for levies, in advance. Ms Lilley suggested that the claim was filed with the tribunal prematurely in that she had made arrangements to pay all levies and arrears and in fact paid the following:
Date Paid Amount Paid
28/6/2010 $3,600.00
4/10/2010 $1,368.00
31/5/2011 $3,150.00
13/10/2011 $1,600.00So that as at the date of the hearing on 24 November 2011 there were no outstanding payments for Body Corporate levies and fees. Ms Lilley stated that she felt that to be then served with a Copy of the Claim by a process server at her workplace was both unnecessary and embarrassing to her and could have possibly “risked me losing my employment”. She claims that she felt the personal service on her at work “breached my privacy” and that was unfair that the Body Corporate was now only pursing a claim against her for a sum that was entirely debt recovery fees. She claims that such fees have not been reasonably incurred in all the circumstances as a phone call to her would have eliminated all of the issues and problems.
Ms Lilley provided a summary and date log[x] of all the contact she had made to the Applicants both via email and telephone to resolve the issues. She has provided dates that include contact after the initial Facebook contact by Redchip Lawyers to her. It is the evidence of Ms Lilley that between 10 June 2010 and 30 June 2011 there had been 42 contacts, or attempts at contact by her to the Body Corporate to resolve issues. Ms Lilley claimed that most of the contacts she instigated were not responded to by the Body Corporate or SCC and that when she was requesting statements or clarification as to the amounts she owed, because she could not understand the statements sent to her, that despite no response from them, she paid an amount anyway. She said that she just paid what she thought would more than cover the levies owed by her.
Ms Lilley said she wrote a letter to the Body Corporate and emailed it to them on or around September 2010[xi] attempting to resolve the issue of the Body Corporate fees and requesting the Body Corporate committee consider waiving the debt recovery fees and outlining reasons why her request should be favourably considered.
Ms Lilley claims that the interest component on the unpaid levies is also inconsistent and does not make sense. She stated by way of example that “the overdue interest on outstanding levies on the statement for February 2010 to 10 March, 2011 claims that monthly interest of $87.68 on an outstanding balance of $3,969.16, which implies an interest rate of 26.5% on an annual basis” which is inconsistent with the Body Corporate Bylaws and other Notices sent to me.”
Ms Lilley alleges that the emails and evidence provided to the tribunal by her supports her contention that she had attempted to resolve the issues and that the Body Corporate ignored her requests for an explanation for the overdue interest and the debt recovery costs. In an email dated 9 March 2010 from the Body Corporate to Ms Lilley she said she was directed to contact Mr Peter Bone of Ernst Body Corporate Management for any queries regarding her questions and issues with outstanding levies and request for waiver of debt recovery costs. She claims the emails advised her that it was not appropriate for her to contact Mr Ian Aldred, the General Manager of the Ernst Body Corporate Management as his role was to deal with “large, complex Body Corporate issues” and that all contact should be directed to Mr Bone, the Body Corporate Manager. This email gave her the details to contact Mr Bone and stated “Please direct any queries regarding to Peter Bone of Ernst Body Corporate management on (07) 36200600.”
From the evidence Ms Lilley claims it is obvious that she must have telephoned Mr Bone as she was told not to contact him in person. She stated that this occurred around February 2011. She said that she then emailed him and put her problems and issues in writing around the 10th of February 2010. Ms Lilley stated that as a result of the fact that she did not receive a response she again emailed Mr Bone on the 4th of March 2011. On 7 March 2011 Ms Lilley emailed again requesting to speak to Mr Bone’s Manager as she could not speak to him and he refused to respond to her email. Ms Lilley provided a copy of the email of 9 March 2011 where she was advised that she could not speak to Mr Bone’s Manager as he was only to deal with more complex issues. She says the emails she presented to the tribunal support her contentions and facts.
Ms Lilley’s claim that she did not notice that she had not received any notices for payment of levies as she was overseas for a period of time representing Australia in running in Keswick and in Brive in France in May and September 2010. She said that she was pretty busy at this time and described herself as “a pretty unorganised person”. She said that she just “paid her bills as and when I got them”. Ms Lilley said that she overlooked the fact that she had not received Body Corporate notices for her property at Nut Tree Hill, and particularly in light of the fact she said she was representing Australia in running overseas and was away, busy, and spending money on her sport she did not even think about the levies. She said that she has always paid her levies and fees early and on time and had always been able to utilise the early bird payments. She said if she had received the notices she would have paid them. She said that she did not receive the notices in the mail, and could not explain the failings of her mail redirection not forwarding them to her. She said as far as she knew she received all other mail via her mail redirection and could not understand why the levy notices had not been received.
APPLICABLE LAW
The Body Corporate can by ordinary resolution fix a penalty (consisting of simple interest at a rate 2.5%) to be paid by Ms Lilley if a contribution is not received by the Body Corporate by the due date. Section 142 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 provides that:
142 Penalties for late payment [SM, s 144]
(1) The Body Corporate may, by ordinary resolution, fix a penalty to be paid by owners of lots if a contribution, or instalment of contribution, is not received by the Body Corporate by the date for payment fixed in notices of contribution given to the owners.
(2) The penalty must consist of simple interest at a stated rate (of not more than 2.5%) for each month the contribution or instalment is in arrears.
The Body Corporate may, if a contribution is not paid by the due date, recover as a debt, the contribution, any applicable penalty and any recovery costs reasonably incurred by the Body Corporate. The relevant section is 143 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 which states:
143 Payment and recovery of Body Corporate debts [SM, s 145]
(1) If a contribution or contribution instalment is not paid by the date for payment, the Body Corporate may recover each of the following amounts as a debt:
(a) the amount of the contribution or instalment;
(b) any penalty for not paying the contribution or instalment;
(c) any costs (recovery costs) reasonably incurred by the Body Corporate in recovering the amount.(2) If the amount of a contribution or contribution instalment has been outstanding for 2 years, the Body Corporate must, within 2 months from the end of the 2 year period, start proceedings to recover the amount.
(3) A liability to pay a Body Corporate debt in relation to a lot is enforceable jointly and severally against each of the following persons:
(a) a person who was the owner of the lot when the debt became payable; (b) a person (including a mortgagee in possession) who becomes an owner of the lot before the debt is paid.
(4) If there are 2 or more co-owners of a lot, the co-owners are jointly and severally liable to pay a Body Corporate debt in relation to the lot.
(5) If an owner is liable for a contribution or a contribution instalment, and a penalty, an amount paid by the owner must be paid:
(a) first, towards the penalty; and
(b) second, in reduction of the outstanding contribution or instalment; and
(c) third, towards any recovery costs for the debt.(6) If the Body Corporate is satisfied there are special reasons for allowing a discount of a contribution, or waiving a penalty or liability for recovery costs, the Body Corporate may allow the discount, or waive the penalty or costs in whole or part.
Ms Lilley claims that the Body Corporate is not entitled to or should not apply her levy payments to the costs incurred in debt recovery and late interest payments. Pursuant to section 143 the Body Corporate is entitled to apply any payment made by Ms Lilley towards the interest penalty and then to the reduction of the outstanding levies. From the statements it is clear that the payments made by Ms Lilley have not been applied to the debt recovery costs and that the Unliquidated Claims statement[xii] is a summary of those costs that include arrears notice fees, debt recovery costs and legal costs incurred in the recovery of the levies from Ms Lilley.
Summary of Debt Recovery Costs
The summary of the unliquidated claims statement appears to indicate that the claim for debt recovery costs commenced on 14 December 2009 and are up to and including costs to 10 February 2011. The two page statement provided to the tribunal dated 24 November 2011 lists other amounts of debt recovery charges from that date until 4 October 2011 with the total statement amount being $3,186.31. The reason as to why other debt recovery charges have been incurred since 10 February 2011 and yet not pursed at this hearing was not obvious. From the statement it appears the total debt recovery costs owing by Ms Lilley is in fact $3,186.31 and not the sum sought in this claim.
Mr Payne explained that a prior claim filed in this tribunal for the sum of $1,648.52[xiii] against Ms Lilley for outstanding Body Corporate fees and levies, filed in 2010 was withdrawn. The reason provided was that the Body Corporate fees were paid and the claim did not proceed. It appears that this current claim for debt recover costs to some extent relate to and include debt recovery costs for a prior claim that was later withdrawn. I cannot understand why those debt recovery costs for the first claim were not pursued at that particular time and are now sought to be claimed in this matter.
While the legislation specifically provides that a Body Corporate can recover as a debt any reasonably incurred recovery costs it is not to be construed that the Body Corporate can simply refer all outstanding unpaid levies to a debt recovery agency, debt collector, a lawyer or any other party without consideration to the fact that the debt recovery costs that may be incurred are reasonable in all the circumstances. It cannot be expected that all debt recovery costs, can and will be recovered from the lot owner without consideration to the actual amount of costs incurred and whether they are reasonable in all the circumstances. The Body Corporate should ensure and monitor all costs associated with recovering contributions from the lot owners and ensure, as best they can, that any debt recovery costs are reasonably incurred.
While the Body Corporate are entitled to refer the unpaid levies to a debt recovery agency, I find that they, to some extent, should ensure they have made at least some attempt to contact the Lot Owner prior to referring the matter through a formal debt recovery process. In this case I find that the Body Corporate did not.
The Body Corporate claims that they sent notices to Ms Lilley at her last known address, that she had moved and had not provided them with the requisite residential address or mailing address for such notices.
I find that evidence confirms that Ms Lilley was late paying her Body Corporate fees and levies that would have been advised to her in a notice sent around September 2009. Ms Lilley stated that she moved house at the end of 2009 and she had in place a mail redirection and that she should have received the notice.
Were the incurred debt recovery costs reasonable in all the circumstances?
While the Body Corporate is entitled to refer unpaid fees and levies to a debt recovery agency for collection the costs for such services must be fair and reasonable in all the circumstances. Ms Lilley has not specifically alleged that the particular fees are unfairly excessive, she claims that in all the circumstances that they have been unreasonably incurred and applied against her property and have been incurred unnecessarily. While I am not therefore specifically required to consider if the debt recovery fees are excessive in the circumstances of this matter I do find that that the evidence of some of the costs are excessive in the circumstances and unreasonable. I find that the evidence supports a finding that some of the debt recovery costs were unreasonably incurred and evidence of costs that were unnecessary and or a duplication of costs to Ms Lilley.
The statement of unliquidated claims indicates that there have been fees that have been incurred, and appear as “arrears notice fee”, “arrears scheduled”, and “debt recovery fee”. It is not clear what each of these individual amounts for fees are for and other than the debt recovery fees, appear to be fees related to the work performed by either Redchip Lawyers or SCC. The “arrears notice fees” were applied to the account for sums of $24.20 on a regular basis. They appear on the statement on 14/12/2009, 26/7/2010, 6/8/2010, 20/8/2010, 9/11/2010, 26/11/2010, 26/8/2011 and 29/9/2011. There are other amounts on the statement for “arrears scheduled” and “commence action” for various amounts that include:
a) $26.40 on 11/1/2010
b) $8.00 on 13/1/2010
c) $17.60 on 15/1/2010
d) $17.60 on 28/1/2010
e) $17.60 on 9/2/2010
f) $17.60 on 25/3/2010
g) $17.60 on 16/3/2010
h) $17.60 on 29/4/2010
i) $17.60 on 12/5/2010
j) $17.60 on 12/7/2010
k) $26.40 on 26/7/2010
l) $26.40 on 4/2/2011
m) $8.80 on 8/2/2011
n) $17.60 on 10/2/2011
o) $17.60 on 21/2/2011
p) $17.60 on 7/3/2011
q) $17.60 on 4/7/2011
r) $17.60 on 4/10/2011
The statement lists debt recovery costs as follows:
Date Amount
14/1/2010 $133.61
27/1/2010 $314.55
27/1/2010 $90.00
8/2/2010 $136.40
23/2/2010 $46.20
27/4/2010 $110.00
7/5/2010 $474.13
7/7/2010 $390.50
22/7/2010 $72.60
8/2/2011 $134.33
18/2/2011 $92.00
18/2/2011 $315.54
1/3/2011 $137.50
29/9/2011 $244.75
FINDINGS
It appears that there are other fees, other than debt recovery fees, that are in addition to the late overdue interest which has accumulated to Ms Lilley of approximately between $30 and $80 per month while levies were not paid.
The evidence contained in the tax invoices for debt recovery costs from SCC and Redchip Lawyers in some instances appear to be excessive and in some instances a duplication and therefore overcharging Ms Lilley. In particular I find that the total cost incurred to Ms Lilley for SCC to send to her a Letter of Demand and evidenced in invoice no 81062 in the sum of $133.61 excessive in all the circumstances. The letter would be a simple precedent letter and involve the mere inserting of Ms Lilley’s name and address and an amount. The cost of that particular item, in my view, is excessive in all the circumstances.
I find that an example of a doubling up of penalties for late payment is that fact that the Body Corporate appears to impose various penalties for late payment, including arrears notice fee, a scheduled arrears fee, debt recovery fees and late interest penalties, which appears excessive in all the circumstances. The claim filed in 2010 for late fees and levies was for $1,648.52, which was effectively a quarterly Body Corporate payment that was late. From the evidence it appears that costs were incurred in the sum of $2,090.59 to recover such sum and that ultimately the claim was dismissed due to the funds having been paid before the matter was heard in this tribunal.
I find an example of excessive charging relating to the particular tax invoices that include debt recovery costs and details work performed and charges that include: “perusing correspondence, taking instructions, checking file, checking if payment made, preparing statement of claim, forwarding claim to process server, letter of instructions, perusal of report and affidavit of attempted service, checking Body Corporate max, sending letter to onsite manager, perusal of file, preparing file for Redchip Lawyers, meeting to instruct Redchip Lawyers, perusal of correspondences from Redchip Lawyers, closing file fees and disbursements of filing fees and electronic lodgement fees”. I find that Ms Lilley has already been charged for filing fees and lodgement fees that are contained in the invoices applied to her account. I find that the same filing fees and Citec fees are sought to be recouped again in this claim as additional fees and costs to the claim for debt recovery costs. I find this is a direct doubling up of fees and costs sought against Ms Lilley and entirely unreasonable in all the circumstances.
I find that some of the costs of debt recovery from SCC in tax invoices provided to the tribunal to be excessive in the circumstances. I cannot understand nor was provided with adequate explanation that if SCC were appointed as the debt recovery agents by the Body Corporate, to undertake all work to recover the outstanding Body Corporate fees and levies, why it was necessary to instruct lawyers to perform some of the work. I find that the appointment of Redchip Lawyers to undertake work to find Ms Lilley was work that SCC could have undertaken. I do not accept that a debt recovery agency should be required to instruct solicitors to undertake particular works that they could have undertaken themselves, and should they choose to do so, that those costs are not reasonably incurred and should not be paid by the lot owner. The act of SCC instructing Redchip Lawyers to undertake work, has directly caused further and increased costs in the debt recovery fees. By way of example I find the costs contained in the tax invoices for “preparing file, correspondences to and from Redchip Lawyers perusing file and correspondences from Redchip Lawyers” both unnecessary and a double handling of a simple debt recovery matter. The evidence of the tax invoices from Redchip Lawyers is that they have undertaken work in making an application for substituted service of the Claim. I find that this work could have been performed by SCC and that the only work referred to any solicitor should be work that requires specialised legal expertise or skills to prepare. I find that by instructing solicitors to undertake this work has increased debt recovery costs two fold. I find the legal costs were not justified and reasonable in all the circumstances. I find that the costs incurred by redchip for work to prepare the Application for Substituted Service and affidavit in support incurred a cost of $408.13 in Redchip tax invoice no 315795 dated 30 April 2010 which was superfluous, as it was not required and not lodged nor proceeded with as it was not necessary after they had contacted Ms Lilley via Facebook. I find this application and legal costs for such work, both a complete waste of time and money and unnecessary in all the circumstances. Further the invoice from Redchip Lawyers no 316466 dated 30 June 2010 for $324.50 were costs incurred in them emailing Ms Lilley and for the contact to her on Facebook , a telephone call to her and perusing an email from Ms Lilley. Such contact could have been made by SCC and the legal costs incurred in Redchip conferring and advising SCC about their progress with the matter a duplication of costs, unreasonable and unnecessary in the circumstances.
I find that SCC appear to have structured their fees and charges to be similar to those charged by solicitors including perusing and costs for all works performed. As their invoices are not itemised in time recorded units it is difficult to ascertain what their hourly rates and charges are and I cannot therefore determine if those costs are reasonable in all the circumstances. Further, I find that if SCC are unable to perform the necessary searches and prepare documents for a simple debt recovery matter including preparing applications for substituted service and affidavits of attempted service, without having to engage solicitors, then the Body Corporate might consider appointing a Debt Recovery Agency that can perform all the necessary works and keep debt recovery costs to a minimum.
In this case I found it necessary to consider the details of all of the costs that were claimed and for a determination to be made as to whether the debt recovery costs were “reasonable” and not just “reasonably incurred” in all the circumstances. This Body Corporate, or any Body Corporate, should not expect to proceed with debt recovery and approve such costs of the agency or solicitors, carte blanche, and expect to recover all of those debt recovery costs from a lot owner and shirk any responsibility or need to establish that the costs are in fact reasonable. In this case I do find that the Body Corporate have not in fact turned their mind to the costs that have been incurred but have relied upon the provisions of the legislation that the debt recovery costs are recoverable from the lot owner and are able to be pursued as a debt against the lot owner without recourse to them.
I find that the Body Corporate must provide evidence to the tribunal that recovery costs have been “reasonably incurred”. The relevant considerations that I might take into account in circumstances such as this could include the type and amount of work done, the reasonableness of the amounts charged for such work, whether the work was relevant and necessary to be performed, any conduct of the Body Corporate including failings to make adequate or reasonable attempts to locate or make contact with the lot owner, whether the Body Corporate has provided a reasonable opportunity for a lot owner to address their arrears before incurring significant further debt recovery costs, and the proportion of debt recover costs charged to the lot owner compared to the amount of outstanding arrears of levies.
In this case I have considered all these matters and I find that the simple act of the Body Corporate telephoning Ms Lilley on her mobile phone could have alleviated the need for any arrears of levy payments and any debt recovery costs whatsoever. I accept the evidence of Ms Lilley that she has had the same mobile phone number for many years and that it was an undisputed fact that the solicitor from Redchip Lawyers telephoned Ms Lilley on her mobile after contacting her via her Facebook page. Ms Lilley stated, and I accept that she did not give her mobile phone number to the Redchip lawyer and that when contact was made to the on-site manager the lot owner’s contact details including her home and mobile telephone numbers were provided. I find that this information was provided to Mr Payne and recorded in a diary file note dated 10 June 2010 noting that the contact details of the lot owner were provided to ‘Linda’ the lawyer from Redchip Lawyers. I find that this information was readily available to the Body Corporate and with minimal effort an enquiry to the on-site manager could have provided to them the mobile phone number of the lot owner. Had this occurred the lot owner would have been advised sooner of the outstanding levies and made payment without the need for incurring any debt recovery expenses whatsoever.
While I find that lot owners are obligated to advise the Body Corporate of their current residential or mailing address for the purposes of sending notices I accept and find that having a mail redirection in place, while perhaps adequate but not ideal, it is reasonable that Ms Lilley relied upon the mail redirection she had in place for some six months, and that all levy notices would be forwarded to her. I find that Ms Lilley has already, to some extent, been penalised by the failure of her mail redirection and incurred overdue interest on those outstanding levies at a very high rate of interest of 30% per annum.
I find that Ms Lilley should be liable for the overdue interest as the levy payment was paid late. I find that in all the circumstances it should have occurred to her that she had not received a Body Corporate notice for some time and that she should have perhaps made enquiry of the Body Corporate regarding such notices.
I have considered the actual debt recovery costs that have been accrued in this case to Ms Lilley and I find the amounts to be excessive in the circumstances. I find that the legal costs incurred by Redchip Lawyers involved some costs that were not reasonably incurred, although I do not find any fault with Redchip Lawyers in that regard as they were only acting on instructions from SCC. I find that the Debt Recovery agent appointed by the Body Corporate, SCC was instructed to recover the debt of the late levy payment. I find that SCC should have undertaken some of the work that Redchip Lawyers did, and that only work referred to Redchip Lawyers should be that work that required specialist legal knowledge or expertise. I find that the double handling of work required by referring the debt recovery file to Redchip Lawyers increased the debt recovery costs two fold and therefore unreasonably escalated the costs unnecessarily.
The tax invoices provided to the tribunal as evidence of the costs claimed for debt recovery costs were at times unreasonable and extreme. I find by way of example that the tax invoices for the cost of sending a letter of demand including costs of disbursements of a QVAS and title search fees, such work totalling $133.61 to be excessive. Further, I find that were invoices from SCC indicating that they charged for “perusal” and “checking” and were costs, that in my view, appear to be excessive in the circumstances. Such charges are usually reserved for fees and disbursements that would be charged by a firm of lawyers and not a debt recovery agency. SCC are not a legal firm yet I find their scale of costs resemble costs charged by some law firms. I find that there were examples of charging twice for the same matter and an example was the charge in tax invoice dated 27 January 2010 for a filing fee and electronic lodgement fee totally more than $100 that is also claimed as a separate amount in the initial claim filed in this tribunal. I find that other fees charged in tax invoices of Redchip Lawyers relating to payment of process servers and charges for time to call the on-site manager to ascertain the lot owner’s mobile phone number, unreasonable and unnecessary in all the circumstances. I find that the Body Corporate themselves could have called the on-site manager to check the lot owner’s telephone number or checked their own records as they had access to the number themselves. I find it is unreasonable to refer the task of telephoning the lot owner to a debt recovery agency to do this, while charging the lot owner for such work, both unfair and unreasonable in all the circumstances.
I find that an adequate explanation was not provided to the tribunal as to the costs charged to the lot owner for the regular amounts called “arrears notice fee” and “arrears scheduled fees” as they appear to be fees and penalties over and above the actual debt recovery fees and overdue interest payments that were accumulating on the lot owner’s account as due and owing. I find that the amount of debt recovery costs, which are included in this claim only up to and including the 10 February 2011 on $2,277.72 and note that from the evidence, such debt recovery costs have continued from 10 February 2011 up to 4 October 2011 to an amount of $3,186.31 and perhaps still continuing. I find that the debt recovery costs are excessive considering the amount of the outstanding levies that were initially claimed in this application of $4,463.74 against the current sum of debt recovery costs as at 4 October 2011 of $3,186.31.
I find that had the Body Corporate made a simple telephone call to Ms Lilley on her mobile telephone, after the levies fell into arrears, that the debt recovery costs would not have been incurred at all. In all the circumstances the Body Corporate have not provided sufficient evidence that the debt recovery costs sought in this claim, incurred by both a debt collection agency and legal costs, were reasonably incurred, taking into account all the circumstances. I find that Ms Lilley is liable for all overdue interest relating to overdue Body Corporate levy payments and her application to waiver overdue interest is refused. I find that she should not be liable to pay for the debt recovery costs relating to this claim and other debt recovery costs that are not particularised in this claim but contained in the unliquidated claims statement relating to the recovery of the late levy payment subject to this application.
After considering all of the evidence of the parties and having carefully considered the content of all of the voluminous exhibits provided to the tribunal and for the reasons set out above I make the following decision and order as follows.
ORDERS
That the Respondent is not liable to pay for the debt recovery costs in the sum of $2,277.72 in this claim or any other debt recovery costs relating to this application.
That the claim is dismissed.
[i] Exhibit 1.
[ii] Exhibit 2.
[iii] Exhibit 1.
[iv] Exhibit 1.
[v] Exhibit 1.
[vi] Exhibit 5.
[vii] Exhibit 3.
[viii] Exhibit 4.
[ix] Exhibits 7 and 8.
[x] Exhibit 6.
[xi] Exhibit 8.
[xii] Exhibit 1.
[xiii] Exhibit 2.
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