The Owners Units Plan No 1447 v Carroll (Civil Dispute)
[2022] ACAT 1
•6 January 2022
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
THE OWNERS – UNITS PLAN NO 1447 v CARROLL (Civil Dispute) [2022] ACAT 1
XD 1206/2020
Catchwords: CIVIL DISPUTE – recovery of unpaid levies – expenses incurred by the owners corporation in taking action to recovery unpaid levies – statutory expenses – section 31 expenses under the Unit Titles (Management) Act 2011 – recovery of legal costs – reasonable costs in the circumstances – costs assessment – significant litigation history on costs recovery – respondent ordered to pay the applicant’s legal costs
Legislation cited: Unit Titles (Management) Act 2011 s 31
Cases cited:In the matter of the Ruling Tribunal Section 31 of the Unit Titles (Management) Act 2011 [2017] ACAT 56
The Owners – Units Plan 3182 v Carroll [2018] ACAT 6
The Owners – Units Plan No 3182 v Black & Anor ACAT [2018] 6
Wright v The Owners – Units Plan No 14 [2021] ACAT 77
Tribunal:Senior Member D Mulligan
Date of Orders: 6 January 2022
Date of Reasons for Decision: 6 January 2022
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 1206/2020
BETWEEN:
THE OWNERS – UNITS PLAN NO 1447
Applicant
AND:
CAROL JEAN CARROLL
Respondent
TRIBUNAL:Senior Member D Mulligan
DATE:6 January 2022
ORDER
The Tribunal orders that:
The respondent is to pay the applicant the total sum of $13,033.20 comprised of:
(a)$12,777.55; and
(b)$255.65 interest on the original debt amount.
………………………………..
Senior Member D Mulligan
REASONS FOR DECISION
The respondent in this matter is a 71-year-old divorced mother, who lives in one of the units that make up Units Plan Number 1447. She lives on a government pension and pays her mortgage from those funds.[1]
[1] Respondent’s “overview and summary” of 21 July 2021
Ms Carroll has a history of being behind with her body corporate levies. Interest and other fees are added to any unpaid levies. These debts had been accumulating since 2014, despite Ms Carroll making regular payments.
This has resulted in earlier ACAT proceeding.[2] According to the applicant’s submissions there have been a total of five previous proceedings at ACAT related to debt matters owed to the owners corporation (the OC).[3]
[2] For example, The Owners – Units Plan 3182 v Carroll [2018] ACAT 6
[3] Paragraph 17 of the applicant’s written submissions of 3 July 2021
According to Mr Athol Mapham, one of Ms Carroll’s friends and the person who assisted her through the latter parts of the current ACAT process, Ms Carroll does not have “a firm grasp of basic accounting, arrears and associated costs”. [4]
[4] Respondent’s “overview and summary” of 21 July 2021
I accept Mr Mapham’s description of Ms Carroll and do not believe that she has understood the extra costs and interest that have resulted from her not paying her levies in full on the due date.
I also believe Ms Carroll did not understand that each time she interacted with CCA Legal, she would be charged for that contact and every time CCA Legal did something on her file they would seek to charge her.
From the perspective of a 71-year-old woman living on a government pension the amounts charged by CCA Legal would seem to be very high. According to a spreadsheet supplied by CCA Legal[5] she has been charged at the following rates:
$150/hour – Admin Staff
$200/hour – Senior Paralegal – Renae Barnett
$250/hour – Senior Paralegal – Stephen Ecob
$300/hour – Solicitor – Lauren Ikin
$450/hour – Solicitor – John Frankcom
[5] Applicant’s costs schedule dated 3 July 2021
Additionally, CCA Legal also charge a $6 fee for each file note created by one of its employees.
The effect of this is that every time she had a query, phone call, sought information or an ACAT hearing, a charge would flow[6] for which ultimately the OC would seek her to pay.
[6] It should be noted, that according to the spreadsheet supplied by CCA Legal there were some activities for which they did not either record time or seek to make a charge.
Notwithstanding her previous experience at ACAT, I doubt the respondent would have appreciated just how quickly those legal fees could accumulate.
According to Mr Mapham, and the spreadsheet he prepared, Ms Carroll owed the owners corporation $8,030.59 on 23 December 2020.
On 24 November 2020 the OC commenced a debt application at ACAT in relation to unpaid levies between 1 September 2018 to 1 September 2020, which totalled $5,945.88. The claim also sought interest of $687.18 and the expenses of CCA Legal in the sum of $649.29. In total the OC sought $7,282.35.
CCA Legal’s fees continued to rise as they continued to be involved with the ongoing proceedings.
According to Mr Mapham by 16 June 2021, the respondent had cleared the debt owed to the applicant and her account was $11.10 in credit.
It was accepted by the applicant that the original amount claimed by the applicant in the debt application, $4,529.77, was paid in full by 18 June 2021. I was advised of that fact by Mr Ecob during a conference held on that day.
The applicant wants to recover the costs and disbursements charged by CCA Legal in pursuing Ms Carroll for the $4,529.77, which currently stand at $14,377.55.
The law
On 2 August 2017 the ACT Civil and Administrative Ruling Tribunal (Ruling Tribunal) sitting in In the matter of the Ruling Tribunal Section 31 of the Unit Titles (Management) Act 2011 [2017] ACAT 56 (Ruling Tribunal Decision), determined that legal professional costs and disbursements, company title and similar searches, filing and hearing fees and administrative costs (for example, charges for the owners corporation managing agent and the collections agency) incurred in bringing Tribunal proceedings to recover unpaid unit title levies are ‘expenses’ for the purposes of section 31 of the Unit Titles (Management) Act 2011 (UTM Act) if:
…it was reasonable for the owners corporation to incur expenses of the type described … and the amount of each component of the expenses sought is reasonable.[7]
[7] In the Matter of Ruling Tribunal Section 31 of the Unit Titles (Management) Act 2011 [2017] ACAT 56 at Order 1; [55], [104]
This test may be described as the ‘double reasonableness test’.
The Ruling Tribunal also determined that legal and administrative costs incurred in enforcement proceedings in the Magistrates Court against the same owner in relation to the enforcement of debts incurred in relation to previous proceedings in the tribunal were recoverable in subsequent tribunal proceedings as ‘expenses’ under section 31 of the UTM Act, despite no order for costs having been made in the enforcement proceedings, provided the same ‘double reasonableness’ test is met.
It is clear from that ruling and subsequent cases such as The Owners – Units Plan No 3182 v Black & Anor ACAT [2018] 6 and Wright v The Owners – Units Plan No 14 [2021] ACAT 77 that the OC can seek to recover CCA Legal’s fees under section 31 of the UTM Act provided that each individual charge is:
(a)reasonably incurred; and
(b)the amount of each component is at a reasonable rate.
Ms Carroll in her “respondent’s submission” of 21 July 2021, listed seven items which she claims were not necessary nor reasonably incurred. These items are:
1. $3400 Statement by the debt collector.
2. $775 unsolicited phone calls to the respondent.
3. $3235 duplication of evidence that should have already been known to and relied upon by the applicant in making their application.
4. Preparation for unrelated considerations such as reputational harm.
5. Preparation of bill of costs and submission.
6. Telephone calls to the respondent’s grand son’s school.
7. Stephen Ecob’s interview with himself.
8. Title searches.
There are 45 items in the CCA Legal spreadsheet of charges (the spreadsheet) (plus disbursements) which make up the applicant’s claim, most of which are unremarkable.
I will comment on two items raised by the respondent: items seven and eight. Mr Ecob was to be a witness in the proceedings. It is therefore reasonable for him to charge for preparing his witness statement. It is also prudent for the applicant to undertake a title search in order to satisfy themselves and ACAT that the respondent was the owner of the property at the time the levies and legal/debt recovery fees were incurred.
Unfortunately, other than items seven and eight, the respondent’s submissions do not track or reference the 45 items numbers in the spreadsheet of charges. It is therefore not possible for me to relate the matters raised by the respondent with an actual cost in a particular line item in the spreadsheet.
I do not intend to try and work-out how the respondent arrived at her global figure under the eight points she has raised.
Instead, I have kept in mind the concerns she raised as I considered the line items in the spreadsheet for which she has been asked to pay, as I undertake the double reasonableness test.
There is one item; item six, that gives me pause for concern.
Item 6
Item six on the spreadsheet is in the sum of $1,600 seeks payment claims for:
At Respondents request/demand due to allegations of the claim being totally incorrect due to the strata manager misappropriating payment, losing payments and/or not recording payments on the Respondents strata records. Therefore the Applicant was ordered to Reconcile the debtors Account as owner of Lot 10 - from 1/1/2010 to 1/3/2021 - Numbered every transaction (contribution, expense, payment) from 1 to 228 and cross referenced each item with every transaction on the schedule on each previous Debt Application, Judgment and After judgment schedule. Files XD1030/2014, XD723/2015, XD638/2016, XD690/2017, XD859/2018, XD1206/2020. Highlight payments (orange), contributions (purple) and expenses (green). Created separate schedule with items that needed some explanation. Job commenced at 8am and completed with email to SE at 4:08pm when documentation emailed to SE. RB had no lunch or breaks except 2 smoke breaks for 5 minutes each.Deduct 15 minutes for 2 smoke breaks.488 minutes - 20 mins (smoke breaks x 2) Time recorded. [errors in original]
The work essentially involved attributing past payments made by Ms Carroll to the appropriate prior ACAT debt and which payment related to the current claim.
With respect, either the managing agent should have had this information to hand in their ledger accounts or CCA Legal should have had that information to hand as they were administering the prior ACAT debts and should readily have known what payment went to which debt and consequently how much was said to be owed under the current proceeding.
In the circumstances, I do not believe the expense to be reasonably incurred. The information should have been readily to hand in a coherent format in a digital ledger system. It should be something that is readily retrieved and certainly not something that would take a person eight hours to complete.
Accordingly, I delete the sum of $1,600 from the amount owed by the respondent.
The respondent is to pay the applicant the sum of $12,777.55 ($14,377.55 minus $1,600).
The applicant has claimed interest from the date of filing application through to 18 June 2021 when the debt amount was paid in full. The applicant is entitled to interest at the prescribed rate for that period, the amount of interest payable is $255.65.
Conclusion
The current case shows that a person in the respondent’s position may regularly pay $100/month towards her levies, but never be able to escape from the burden of legal and debt recovery fees which continue to accrue.
The respondent’s costs of $12,777.55 are understandable, given the notoriously high costs of litigation.
Having said that, the costs of recovery seem to be out of all proportion to the amount claimed and are about two and a half times the amount of the original debt.
I note ACAT is, generally speaking, a no cost jurisdiction. I also note that had the respondent been represented by a lawyer and had she been successful in defending the claim, then she would not have been able to have claimed those legal costs against the OC.
The current state of the law allows an OC to litigate against one of the owners safe in the knowledge that their costs of litigation will likely be borne by their opponent on a party/party basis; a contingency that is unlikely to occur in most proceedings in either the Magistrates Court or the Supreme Court, where costs in some form are routinely awarded to a successful litigant.
………………………………..
Senior Member D Mulligan
| Date(s) of hearing | 17 May 2021 & 18 June 2021 |
| Applicant: | Mr S Ecob, Collection Corporation of Australia |
| Respondent: | Mr A Mapham, authorised representative |
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