The Docks [2006] QBCCMCmr 53 (8 February 2006)

Last Updated: 19 December 2006

REFERENCE: 0547-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	30658
Name of Scheme:	The Docks
Address of Scheme:	Corner Rotherham and Goodwin Street Kangaroo Point

TAKE NOTICE that pursuant to an application made under the abovementioned Act by John Chan and Faith Chan, the co-owners of Lot 113

I hereby order that the application for an order by John Chan and Faith Chan, the co-owners of Lot 113 seeking an outcome that the penalty interest totalling $344.57 fixed by the body corporate for The Docks community titles scheme 30658 (the body corporate) as being payable by the co-owners of Lot 113 be waived; or in the alternative that the correct interest fixed by the body corporate should total $104.00 and that the body corporate refund the co-owners of Lot 113 the amount of $240.00, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0547-2005

"The Docks" CTS 30658

APPLICATION

This application is by John Chan and Faith Chan, the co-owners of Lot 113 (applicants) against the body corporate (respondent). The applicants are seeking an outcome that penalty interest totalling $344.57 applied by the body corporate be waived; or in the alternative that the correct interest should be about $104 and that the body corporate refund $240.

JURISDICTION

"The Docks" Community Titles Scheme 30658 is a scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

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)).

SUBMISSIONS

In accordance with the Act, submissions were called and a copy of the application was provided to the body corporate manager for distribution to the owner of each lot (excluding the applicant) and the committee. A submission was received from the body corporate manager on behalf of the committee and a lot owner.

DETERMINATION

A person is the owner of a lot included in a community titles scheme where the person is, or is entitled to be the registered owner of the lot (Schedule 6 Dictionary, Act). Section 142(2) of the Accommodation Module provides that the roll of lots and entitlements kept by the body corporate must contain "the name, residential or business address and the address for service (if it is different from the residential or business address) of the current owner, or the current co-owners, of each lot included in the scheme". Section 139 of the Accommodation Module provides that where a person becomes the owner of a lot by transfer, transmission, or in another way, the person must give notice for the roll to the body corporate within 2 months after the event concerned happens or the person becomes aware of the happening of the event.

Section 93(1) of the Accommodation Module provides that the body corporate must by ordinary resolution in general meeting fix on the basis of its budgets for a financial year, the contributions to be levied on the owner of each lot. Section 94 of the Accommodation Module provides that the body corporate must give written notice of a contribution levied on a lot owner at the lot owner’s address for service or in a way directed by the lot owner. Section 96 of the Accommodation Module makes provision for the imposition of a penalty for late payment and provides, quote:

96 Penalties for late payment [SM, s 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.
Section 97(6) of the Accommodation Module provides that "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".

The applicants claim that the body corporate has unfairly and incorrectly applied penalties to Lot 113 for the late payment of a contribution as:

1. The body corporate waived the penalty for the late payment of a contribution by the owner of Lot 44.
2. The penalty interest was fixed at 2.5% per month without regard to actual expenses.
3. The interest fixed by the body corporate exceeded what is stipulated under Queensland law, and therefore a refund of $240 should be payable to the applicants.

It is evident that the body corporate, at the Annual General Meeting dated 13 November 2003 (AGM), resolved to fix administrative fund contributions payable in three instalments from 1 January 2004 and sinking fund contributions payable in three instalments from 1 January 2004. It is also apparent that the body corporate fixed a penalty of 2.5% for each month a contribution is in arrears in accordance with section 96 of the Accommodation Module.

The body corporate manager has provided a contributions statement for Lot 113 for the period from 1 September 2003 to 16 August 2005. This statement indicates that the penalty was initially applied on 29 February 2004 given the non-payment of the first contribution instalment fixed at the AGM and the insurance contribution. The interest penalty was subsequently applied for each month until 30 June 2004 as a number of contribution payments were made in July 2004. The total interest stated in the statement of $196.93 has been paid.

This is the amount submitted by the body corporate manager as being applied as penalty interest to Lot 113. Given the discrepancy between this amount and the amount being claimed by the applicants, by letter dated 28 November 2005, I required the applicants provide "written material and any calculations to support the claim of $344.57 and the reduced penalty of $104.00". By letter dated 7 December 2005, the applicants stated that the figures were provided orally by Keith Burton of Ernst Body Corporate Management Pty Ltd on 9 November 2005 and that these amounts had not been subsequently contested by the body corporate. In my view, the applicants have not demonstrated that the body corporate has required the payment of $344.57 as a penalty for the late payment of a contribution.
The contributions statement provided by the body corporate clearly accounts for the contributions due and payable for Lot 113 over the disputed period and in my view it is demonstrable that the total interest due and payable by the owner of the Lot totalled $196.93. The applicants have also claimed that the interest amount should total not more than $104. It would seem that this amount is determined by equating an interest rate of 30% per annum to 123 days that the payment of the initial administrative fund and sinking fund contribution was overdue. I do not agree with this determination as the penalty must be applied based on each month a contribution is in arrears, not the number of days; the body corporate fixed the penalty interest at an amount permitted under the legislation; and the applicants have not taken into consideration the insurance contribution and the non-payment of the second instalment.

The applicants also claim that the body corporate has not acted reasonably in regards to this matter as the penalty for the late payment of a contribution by the owner of Lot 44 has been waived. The body corporate manager submitted that payment of a penalty by the owner of Lot 44 was waived as the owner had shown that the contribution was paid via B-Pay but that the transaction was not processed. The Minutes of the Committee Meeting dated 15 September 2004 indicates that the committee did resolve to waive the payment of the contribution by the owner of Lot 44.

By letter dated 28 November 2005, I required the applicants provide the reason for their late payment of contributions. By letter dated 7 December 2005, the applicants submitted the reason that the contribution notices were sent to the scheme developer and that they paid the outstanding contributions after the contribution arrears was brought to their attention. Given this information, by letter dated 19 December 2005, I required the body corporate provide certain information with respect to the ownership of Lot 113. By letter dated 8 January 2006, the body corporate provided a copy of the roll of lots and entitlements for Lot 113 indicating that the applicants were recorded as the owner of the Lot after notice dated 23 June 2004. The copy of the section 139 notice provided by the body corporate shows that the notice was given by the applicants as the owner of Lot 113 to the body corporate on 23 June 2004 and that the purchase of the lot settled on 22 April 2003. The date of the transfer of the Lot to the applicants is verified by reference to the titling information held by the registrar of titles, Department of Natural Resources and Mines. In my view, this documentation indicates that the applicants provided ownership information to the body corporate over 12 months after becoming the lot owner and contrary to the time constraints specified in section 139 of the Accommodation Module. As the persons who became the owner of Lot 113, the applicants had a duty to promptly provide this information to the body corporate. This information is essential to the ongoing administration of the body corporate, and in its absence, the body corporate may reasonably continue to give notices to the person who was the previous owner of the Lot, but who was recorded on the roll as the owner of the lot. Given the applicants’ statement in their letter dated 7 December 2005 that notices were sent to the developer of the property, this would seem to be the case. While the applicants may have paid the contributions in arrears after receiving notice from the body corporate, I do not consider that the applicants have demonstrated that there are special reasons for the waiving of the penalty for the late payment of contributions. I consider that the reason for the waiving of the penalty interest for Lot 44 is clearly distinguishable and that the circumstances giving rise to the non-receipt of a contribution paid by the owner of Lot 44 constitute a special reason for waiving any penalty.

For these reasons, the application is dismissed.