Sherwood Glen [2000] QBCCMCmr 339 (11 July 2000)

RA MeekREFERENCE: 0140-2000

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20173
Name of Scheme:	Sherwood Glen
Address of Scheme:	4 Sherwood Close MUDGEERABA QLD 4213

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

Richard Alexander Plogg and Janine Maree Ploog, the former owners of lot 1


RA MeekI hereby order that the application by Richard Alexander Plogg and Janine Maree Ploog, the owners of lot 1, for orders

1.	That the body corporate for Sherwood Glen was not authorised by the AGM on 16/3/99 nor any AGM in the calendar years 1998 or 1997 to impose journal fees or a penalty rate of interest at 2.5% per month or 30% per annum on dues and levies remaining unpaid after a certain period of time.
2.	That the body corporate for Sherwood Glen must now remit any journal fees or penalty interest charges made during 1998 or 1999 without proper authority, and re-credit any monies incorrectly allocated in settlement of those charges from the original date of payment,

is dismissed.



STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0140-2000

“Sherwood Glen” CTS 20173

The applicants, Richard Alexander Plogg and Janine Maree Ploog, the former owners of lot 1, have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

3.	That the body corporate for Sherwood Glen be required to correct its records that no AGM of the body corporate took place during calendar year 1998.
4.	That the body corporate for Sherwood Glen was not authorised by the AGM on 16/3/99 nor any AGM in the calendar years 1998 or 1997 to impose journal fees or a penalty rate of interest at 2.5% per month or 30% per annum on dues and levies remaining unpaid after a certain period of time.
5.	That the body corporate for Sherwood Glen must now remit any journal fees or penalty interest charges made during 1998 or 1999 without proper authority, and re-credit any monies incorrectly allocated in settlement of those charges from the original date of payment.

Section 223(1) provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about –

a) a claimed or anticipated contravention of the Act or the community management statement; or

b) the exercise of rights or powers, or the performance of duties, under this Act or the community management statement; or

c) a claimed or anticipated contravention of the terms, or the termination of, or the exercise of rights or powers under the terms of, or the performance of duties under the terms of an engagement contract or an authorisation contract.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 223(2)). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1)).

The applicants have since advised that the first of the above orders sought is now withdrawn.

There are two factors affecting my consideration of this application. Firstly I have been advised that the applicants have sold their lot, and are no longer owners in the scheme. In some circumstances, this might be grounds for dismissing this application. However I consider that the issue raised by the applicants is of general application. Namely whether the body corporate is entitled to charge penalty rates of interest on overdue but unpaid contributions. In the circumstances, I intend to proceed with the application.

Secondly, I have given consideration to dismissing this application under section 193 of the Act, however, on reflection I consider that this order being sought is not properly within the terms of that section. I have therefore elected to proceed with the application. Moreover, the application of this section would have implications for the first of the orders sought, which has now been withdrawn.

The question for determination is whether the body corporate, at any meeting, resolved to impose interest charges of 30% per annum or 2.5% per month on overdue contributions.

In the supporting grounds, the applicants state that –

Minutes of the 1999 AGM ... refer to decisions made on the amount of dues and levies payable by members, and that a 10% discount be available for payment of dues and levies by a date also decided, but no decision was made nor authorisation given for the imposition of any penalties for late or non-payment by any particular date. Whether by intentional or unintentional omission, the meeting did not set penalty conditions for the late payment of dues and levies decided upon at the meeting.

To the applicant’s knowledge they have never sighted nor signed any document which would allow penalties to be imposed with any other authorisation than that required by the Body Corporate and Community Management Act viz, a decision of the AGM in association with decisions on dues, levies, discount dates and amounts.

The right for a body corporate to impose a penalty for late payment arises under section 98 of the standard module which provides –
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Penalties for late payment

98.(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.
Example—
Suppose that—
 a contribution of $400 is payable in 4 instalments of $100 and the body
corporate has fixed a penalty interest rate of 2% per month
 an account requiring payment of an instalment of $100 by 31 March is
given to the owner of a lot
 the instalment is not paid until 27 June.
In this case, the instalment has been in arrears for 2 months and a penalty of $4 is
payable.

This section can be contrasted with section 95 which provides that a body corporate must, by ordinary resolution, fix on the basis of its budgets for a financial year, the contributions to be levied on the owner of each lot for the financial year.

Section 95 explicitly requires that that there be a resolution fixing the amount of contributions to be levied. Moreover, such resolution must be taken once a year, so that it refers to the contributions to be levied based on the budget for the forthcoming year. In contrast, the granting of a discount under section 97 for timely payment or the imposition of a penalty under section 98 for late payment, is not so affected by time. I consider that there is nothing in the wording of each of those sections which requires as the applicant’s proposes; namely that the body corporate is required to set the percentage rate of discount or penalty at each annual meeting at which contributions are determined.



I note that at the 1997 AGM the body corporate resolved that –

... if a contribution ... is unpaid 30 days after it falls due for payment then the amount of the unpaid contribution will bear interest at a rate not exceeding 2.5% per month calculated on a day to day basis and computed on and from the date which is 30 days after the due date for payment until the day on which payment is made in full.

In the circumstances, I consider the resolution of the body corporate carried at the 1997 AGM to be generally applicable to all unpaid contributions thereafter occurring unless and until the body corporate next resolves otherwise. I therefore intend to dismiss this application. y