Jephson Apartments [2002] QBCCMCmr 631 (15 October 2002)

C G YOUNGREFERENCE: 0480-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	1901
Name of Scheme:	Jephson Apartments
Address of Scheme:	29 Jephson Street TOOWONG QLD 4066

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Kamalakaran RATNAM and Raji RATNAM, as the co-owners of Lot 12,

C G YOUNGI hereby order that the application for an order that Kamalakaran and Raji Ratnam, the co-owners of Lot 12, are not liable for the reimbursement of $339.80 in collection costs to the body corporate, is dismissed. 2y
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0480-2002

“Jephson Apartments” CTS 1901

The applicants, Kamalakaran and Raji Ratnam of Lot 12, through their agent Network Real Estate Pty Ltd trading as Rental Hotline Toowong, have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”) -

“Relief from payment by our owner Mr & Mrs Ratnam of $339.80 recovery costs. Such payments to be met by Body Corporate. Rental Hotline Toowong to pay Interest $3.56 and Administration fees $55.”

JURISDICTION:
This is a dispute between owners, the applicants Ratnam of Lot 12, and the body corporate, the respondent, concerning debt recovery costs charged against the owners in respect of outstanding contributions payable to the body corporate. This is a matter that comes within the dispute resolution provisions of the legislation (see sections 182, 183 and 223 of the Act).

General powers:
Section 223(1) of the Act 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) of the Act). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1) of the Act).


APPLICATION AND SUBMISSIONS:
Under section 194 of the Act, a copy of the application was served on the committee inviting it to respond to the matters raised in the application. A submission was received from the Body Corporate Manager, AD Body Corporate Pty Ltd (“ADBC”), claiming it was acting on behalf of the committee. The applicants (agent) inspected the submission and subsequently made a written reply.

The application seeks to deny responsibility for debt recovery costs of $339.80 charged to them by the body corporate. The amount is sought by the body corporate in reimbursement of fees payable to Mutual Commercial Investigators, commercial agents, arising from its referral of outstanding contributions of the applicants for collection.

The body corporate contends that it acted properly in referring the debts for collection and in seeking to recover the costs it incurred in doing so.


DETERMINATION:
It would not be difficult in determining this application to become entangled in the overlapping levies, penalty impositions, collection charges, and late payments that characterise the series of transactions giving rise to the contested charges and this application. I have read the sequence of events and arguments put forward by the parties and with the benefit of some past accounting experience, understand the transactions and events as they occurred.

I do not propose to follow through these transactions and events in detail in these reasons, but will mainly refer to the key happenings and general principles which have caused me to dismiss the application for relief from collection costs.

Rental Hotline Toowong (“RHT”) states that it manages three properties for the applicants and there are always sufficient rental moneys on hand to meet contribution levies by the date for payment. It has been paying the Ratnam’s levies for some 8 years without any previous similar problem.

RHT blames the postal system for it not having received the contribution notice for its clients for the quarterly period 1 December 2001 – 28 February 2002 for $381.65; it was the applicant’s failure to pay this contribution on time that initiated the series of events leading eventually to the collection costs subject of this application. The committee states that the quarterly dates for payment have remained the same for the whole of the time RHT has acted for the Ratnam’s, and it should have anticipated the notice and queried ADBC when it didn’t arrive. That may be an unreasonable expectation, however the body corporate is entitled to rely on its having mailed the account for payment.

After receipt of the overdue account notice from the body corporate, RHT had no right to deduct the penalty charges ($56.60) from its payment. The legislation provides that an owner may seek a waiver of a penalty from the committee by arguing the existence of special reasons. In its fax to ADBC of 20 February, RHT sought a waiver based on the fault of the postal system and notified it was only remitting the amount levied net of the penalty; ADBC subsequently advised it to seek its waiver from the body corporate committee. In a separate fax on the same date, RHT asked that Ratnam accounts be sent to it for payment. However, notice for the next quarterly payment had already been sent and was due in a matter of days (1 March). When it was not paid by 20 March, the outstanding amounts were referred to the commercial agent for collection. On 31 March a further penalty was imposed on the Ratnam’s.

I will not track the events further, except to say that the commercial agent was serving its notices on the owners at their home address and, from the statement by RHT in its application, the owners referred the notices to RHT. I consider the serving of the notices directly on the owners was a reasonable action given that the owner’s agent had failed to pay contributions on time. The problem of outstanding contributions and penalties then continued on to involve the next quarterly contribution (June –August).

I note that RHT had a meeting with ADBC on 6 June. It seems to me that it should have sought that meeting much earlier when it could not only have sorted out the outstanding amounts to date, including penalties, and promptly paid them, but noted what further payments were impending and readied itself to make the payment on time.

In the circumstances, I do not consider ADBC (acting for the body corporate) acted unreasonably in referring the matter for collection when it did. Other bodies corporate or Body Corporate Managers may have allowed more than the 3 months the account was overdue, and some a lesser period, but I consider the body corporate was not unreasonable in taking action to engage the collection agent. I have therefore dismissed the application in respect of the collection costs, assuming that RHT will be meeting the remaining $58.56 regardless of the outcome.2y