Glades Easthill South [2005] QBCCMCmr 523 (23 September 2005)

Last Updated: 19 July 2006

REFERENCE: 0382-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	30074
Name of Scheme:	Glades Easthill South
Address of Scheme:	160 Easthill Drive ROBINA QLD 4226

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

Leslie Belay and Kate Belay, the co-owners of lot 29

I hereby order that the owners of lot 29, Leslie Belay and Kate Belay, are not liable to pay the body corporate any amount of recovery costs in relation to unpaid contributions by the former owner of their lot. I further order that the debt the body corporate is seeking to be paid pursuant to section 97(3)(b) of the Body Corporate and Community Management (Accommodation Module) Regulation 1997 by the said Leslie Belay and Kate Belay is not a debt recoverable from them. I further order that the body corporate shall within 7 days of the date of this order issue a statement to the owners of lot 29, Leslie Belay and Kate Belay, showing a reversal of any recovery costs in relation to unpaid contributions by the former owner of lot 29, as well as a reversal of further costs (if any) accrued and debited since 8 March 2005 in relation to those recovery costs.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0382-2005

"Glades Easthill South" CTS 30074

ORDERS SOUGHT

The applicants have sought orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) as follows:

1. Mr and Mrs Belay are not liable to the body corporate for "The Grand Apartments" for the amount of $1,469.15 being "recovery costs" pursuant to section 97(1)(c) of the Accommodation Module of the Body Corporate and Community Management Act 1997.
2. The debt the body corporate is seeking pursuant to section 97(3)(b) is not a debt recoverable from Mr and Mrs Belay.
3. That the respondent pays the applicant’s costs of and incidental to this application.
4. Such further or other orders as the Commissioner or Adjudicator thinks fit.

JURISDICTION

The application evidences a dispute between the owners of a lot included in a community titles scheme and the body corporate for the scheme (section 227(1)(b) of the Act).

Section 276(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 the Act or the community management statement; or

(c) a claimed or anticipated contractual matter about-

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

SCHEME DETAILS

The Glades Easthill South registered as a building format plan on 19 February 2002. The scheme comprises 106 lots and common property, and is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the Accommodation Module).

BACKGROUND

The applicants purchased their lot in the scheme in March 2005. A Body Corporate Information Certificate under section 205 of the Act obtained by their solicitors on 23 February 2005 disclosed that the total amount due but unpaid by the then owner of the lot was $3,383.14. That amount comprised contributions (including insurance premiums), penalties and recovery costs.

Settlement was effected on 8 March 2005. The applicants alleged that on 7 March 2005 both the seller’s solicitors and their solicitors telephoned the then body corporate manager to obtain an updated balance of unpaid monies in order to make an appropriate adjustment from settlement proceeds. The applicants further alleged that the amount so advised was $1,982.01, which sum was then paid to the body corporate after settlement. The body corporate manager denied that such information was conveyed to the respective solicitors prior to settlement, and claimed instead that the information was conveyed following settlement when the applicants’ solicitors were informed that the sum of $1,982.01 did not clear the total amount outstanding.

The applicants contended that the body corporate was not entitled to seek reimbursement from them of "recovery costs" incurred against the previous owner, because such costs are not included in the definition of "body corporate debt", and therefore section 97(3) of the Accommodation Module does not apply.

SUBMISSIONS

All owners and the body corporate committee were invited to respond to the application. A submission was received from the current body corporate manager on behalf of the body corporate.

DETERMINATION

Section 97 of the Accommodation Module provides as follows:

97 Payment and recovery of body corporate debts [SM, s 99]

(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.

"Body corporate debt" is defined in the regulations as:

body corporate debt means a following amount owed by a lot

owner to the body corporate--

(a) a contribution or instalment of a contribution;

(b) a penalty for not paying a contribution or instalment of a

contribution by the date for payment;

(c) another amount associated with the ownership of a lot.

Examples of another amount for paragraph (c)--

• an annual payment for parking under an exclusive use

by-law

• an amount owing to the body corporate for lawn mowing

services arranged by the body corporate on behalf of the lot

owner

The applicants contend that the "recovery costs" of $1,469.15 sought against them by the body corporate do not fall within the definition of a body corporate debt. It is evident that such costs do not constitute either a contribution, or a penalty for not paying a contribution or another amount associated with the ownership of the lot. It is uncontested that such costs were incurred in relation to the recovery of unpaid contributions from the former owner. I therefore accept the applicants’ argument, and accordingly find that the body corporate cannot recover such costs from the applicants. My orders reflect this finding.

In view of this finding, it is not necessary for me to make any finding regarding the alleged conversations on 7 March 2005 or 11 March 2005.

I have not made an order for costs against the respondent. The Act provides limited circumstances in which a costs order may be made by an adjudicator (section 270(3)). Such circumstances do not apply to this application.