Island Park Gardens [2002] QBCCMCmr 15 (14 January 2002)

RA MeekREFERENCE: 0464-2001

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20219
Name of Scheme:	Island Park Gardens
Address of Scheme:	29-37 Island Street CLEVELAND QLD 4163

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Beverley Dawn Little, the former owner of lot 20

RA MeekI hereby order that, within fourteen (14) days after being contacted by the former owner of lot 20, Beverley Dawn Little, the body corporate shall pay to Ms Little the amount of $325.80 being reimbursement of penalty interest which she was incorrectly charged before the date of 17 February 2001.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0464-2001

“Island Park Gardens” CTS 20219

The applicant, Beverley Dawn Little, the former owner of lot 20, has sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), that she be “exonerated” from payment of penalty interest charges for reasons as set out in her application.

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)).

I do not intend to restate the applicant’s grounds in any detail. Suffice to say, I consider that they contain detail not strictly relevant to the dispute at hand, but rather is background on why the applicant considers that she should not be liable to pay default interest on her (then) outstanding contributions. The applicant seeks to evidence her grounds with statements like –

B&D Body Corporate Manage – Should have letters also, but most or our discussions were by phone – in which Mr Saunders assured me – that it was fine and no need to worry.

This is not a satisfactory basis to evidence an application. The applicant does attach a document headed “Lot 20 Island park Gardens CMS 20219” which appears to be a chronological listing of all penalty interest charged at the rate of 2.5% on her outstanding contributions balance during the period 1 September 1999 to 1 May 2001. The total default interest charged to the applicant during this period is stated at the end of the document to be $381.43.

The chairperson of the body corporate, in his submission in response to the application, denies that any agreement was reached with the applicant that she not be liable for default interest on outstanding contributions. The submission states in part –

... the committee decided not to allow the waiver as Ms Little had ample time to pay her levies and this applied to all owners who did not or were late payers of levies.

I do not consider that it is appropriate for me to make a determination of whether or not a body corporate should waive default interest in the case of an owner with outstanding contributions. This is so principally as this is an issue on which the body corporate should maintain a common and clear policy. This the committee has referred to in its submission; namely that other owners are liable to pay the penalty, and in these circumstances, it would be unreasonable if one owner were to be exempted in consequence of an application to this office.

However having said this, there is a procedure which a body corporate must follow before it is entitled to charge default interest on overdue contributions. Section 98 provides that –

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

In closing the submission, the chairperson states –

We also enclose copies of committee meetings and letters referring to Interest Rates. ...

Included with the material is a letter of 12 May 2000 from the chairperson to B&D Body Corporate Management stating in part that –

The committee of the body corporate ... requests that interest calculated at 2.5% be administered to any overdue levy accounts, as set out in the Body Corporate & Community Management Act 1997, as amended. ...

Moreover, minutes of a committee meeting held on 8 November 2000, under the heading “Correspondence Out” state the following entry –

A letter to B&D Body Corporate Management confirming that Interest Penalty by charged which (a) immediately a levy becomes outstanding. Rate: 24% - 30% per annum.

In response to a request by this office, I have been provided with copies of minutes of the 2001 AGM held on 17 February 2001. Motion 10, which was resolved, states that –

A contribution to the administrative fund, sinking fund, or special fund if not paid on or before the date it becomes due and payable shall bear interest at the rate of two and one half per cent (2.5%) per month on the amount unpaid until payment is made .... n

The manager apparently stated to Tim Williams of this office on 14 December 2001 that “a motion is passed to this effect every year”. I requested a copy of the 2000 AGM minutes and can find no reference to a motion to this effect in those minutes. Moreover, it would not be necessary to keep resolving to this effect. One resolution would suffice.

On the evidence available to me, it seems that whilst the committee gave instructions for the imposition of default interest in 2000, an ordinary resolution at a general meeting to this effect was not carried until the 2001 AGM in February 2001. Consequently, before 17 February 2001, the body corporate were not authorised to charge default interest as it obviously did in the case of the applicant.

Based on the statement of penalty interest charges provided by the applicant, I intend to order that the applicant be reimbursed all penalty interest which she was charged before the relevant date being 17 February 2001. I calculate the relevant amount to be $325.80. The applicant is however liable for penalty interest after 17 February 2001, which I calculate to be $55.63 according to the statement.

I intend to order that within 14 days of being contacted by the applicant, the body corporate is to pay to the applicant the amount of $325.80 in reimbursement of penalty interest incorrectly charged to the applicant. I have made the order subject to the applicant contacting the body corporate, via its manager, as the manager has informed this office that the applicant has since this application sold her lot, and the manager does not have a current address for the manager. It is not for this office to disclose the applicant current address. For this reason, the applicant should contact the body corporate, via the manager, to advise an address for posting of her reimbursement cheque.

In a final piece of correspondence received recently from the applicant, there is a concluding statement that “I am seeking refund of $600.00 + interest”. This appears to be a reference to a tenancy matter where the on-site manager is alleged to have refunded a bond to a former tenant of the applicant’s lot. This is not a matter within the jurisdiction of this office, and this aspect, belated though it was, will not be considered further.