Nimrod 1 [2007] QBCCMCmr 203 (12 April 2007)

Last Updated: 24 April 2007

REFERENCE: 0025-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	893
Name of Scheme:	Nimrod 1
Address of Scheme:	QUEENSLAND

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

Thomas & Katherine Carra, the Owner(s) of lot 16

I hereby order that the body corporate must not add any claimed recovery costs to amounts payable by the owner of lot 16 pursuant to contribution notices under section 94 of the Body Corporate and Community Management (Accommodation Module) Regulation. I further order that, within one month, the body corporate must provide the applicants with a new contribution notice that removes any claimed recovery costs, removes any interest imposed because of these claimed costs, and restores any discounts lost because of the claimed recovery costs. I further order that the application is otherwise dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0025-2007

"Nimrod 1" CTS 893

Application

Nimrod 1 Community Titles Scheme (Nimrod 1) is a 51 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Accommodation Module Regulation (Accommodation Module).

This application is by Thomas and Katherine Carra, owners of lot 16 (applicants) seeking orders against the body corporate for Nimrod 1 (respondent). The applicants are seeking orders in relation to debt recovery costs claimed by the body corporate.

Submissions

The applicants’ main submissions were to the effect that:

• They should not be liable to pay recovery costs for unpaid levies claimed by the body corporate as the costs claimed were not reasonably incurred;
• The recovery costs claimed by the body corporate should not be added to their contribution statements as they are not a body corporate debt as defined by the legislation; and
• Payments made by the applicants have not been recorded in the manner required by the legislation.

The main submissions on behalf of the body corporate were to the effect that:

• The applicants changed their address and failed to notify the body corporate;
• The body corporate continued to send levy notices to the roll address and received no returned mail;
• The various actions of the applicants have determined the expenses necessarily incurred by the body corporate in recovery; and
• In all the circumstances, giving serious consideration to principles of fairness and equity to all lot owners within the scheme, the reasonable costs of recovery should be the actual costs incurred by the body corporate.

Other owners have also provided submissions. All submissions are available for the parties to inspect upon request and it is unnecessary for me to summarise these submissions here.

Decision

Applicable law

The legislation includes provisions to the effect that:

• At least 30 days before the payment of a contribution is required the body corporate must give the owner written notice of the contribution, the date for payment, any discount, any arrears and any penalty. This notice may also include amounts payable for a specially contracted service enjoyed by the owner or payable under an exclusive use by-law (Accommodation Module, 94);
• If a contribution is not paid by the due date the body corporate may recover, as a debt, the contribution, any applicable penalty and any recovery costs reasonably incurred by the body corporate (Accommodation Module, 97(1));
• If a contribution has been outstanding for two years the body corporate must start proceedings to recover the amount (Accommodation Module, 97(2)); and
• A body corporate debt is a contribution, penalty, and other amounts related to ownership of a lot such as amounts agreed to be paid under an exclusive use by-law or for provision of services to the lot (Accommodation Module, definition "body corporate debt").

Dispute of amount showed on current notice of contributions

The legislation specifically provides that the body corporate can recover as a debt any reasonably incurred recovery costs (Accommodation Module, 97(1)(c)). However, the body corporate cannot simply pass a by-law or decide itself what costs should be payable and add those costs to the contribution statement of an owner. The body corporate needs to claim those costs as a debt and await either agreement by the defendant or a court order specifying which recovery costs are "reasonably incurred".

The body corporate has already obtained orders from the Magistrates Court requiring payment of some unpaid levies and some recovery costs. If the applicants do not pay levies that have subsequently accrued then the body corporate can take further court action seeking payment of those levies. Further, if the applicants and the body corporate cannot agree on what subsequent recovery costs are reasonably incurred then the body corporate can take further court action seeking its reasonable recovery costs.

However, the body corporate is not entitled to ignore the need to seek recovery costs as a debt and simply add unsubstantiated and disputed costs to an owner’s contribution notice. The notice of contribution can include notice about an amount the owner has agreed to pay for a specially contracted service or under an exclusive use by-law (Accommodation Module, 94(2)). However, the detailed specification of the amounts that can be included on a notice of contribution does not include recovery costs. Recovery costs are not a fixed sum agreed to by an owner and would not appear to fall within the definition of a body corporate debt that would deprive the relevant owner of voting rights. The right to recover reasonable costs as a debt provides a broader basis for recovery than the standard court scale of costs but does not remove the need to seek recovery in court and establish those costs are in fact reasonable.

I will therefore order that the body corporate must not add any claimed recovery costs to the contribution notice and must provide the applicants with a new contribution notice that removes any claimed recovery costs, removes any interest imposed because of these claimed costs, and restores any discounts lost because of the claimed recovery costs.

Whether costs a recoverable debt?

The applicants submit that the costs claimed by the body corporate do not constitute a debt recoverable by the body corporate because the costs are not reasonably incurred. The body corporate committee submits that the costs are reasonably incurred.

I do not consider it appropriate in the present circumstances to consider the details of all the costs claimed and determine whether or not those costs are reasonable. The body corporate has already taken debt recovery action in the Magistrates Court and obtained orders that include compensation for some of these costs. For any subsequent costs the body corporate can take further debt recovery action seeking those costs and the dispute can be determined by agreement between the parties or by a court or tribunal of competent jurisdiction as necessary. I therefore dismiss the application in this respect.

No order for costs of this application

The applicants have sought an order that the body corporate pay the applicants’ costs of the present application.

However, this order is made pursuant to the dispute resolution processes under the Act, which are designed to assist in the low cost resolution of body corporate disputes. There is no provision authorising a departmental adjudicator to make a costs order in these circumstances.^[1] The specific power for a departmental adjudicator to grant payment of costs is limited to circumstances where the application is dismissed as being frivolous, vexatious, misconceived or without substance (Act, 270).

Order

For the reasons above, I will order that the body corporate must not add any claimed recovery costs to amounts claimed from the applicant in the notice of contributions.

Ultimately the question of what further recovery costs are reasonably incurred is a question to be determined on any further debt recovery action by the body corporate. However, I would encourage the parties to consider the provisions of the legislation outlined above and to endeavour to come to some reasonable settlement to avoid unnecessary further costs being incurred.

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^[1] Refer Woodrange Pty Ltd v. Le Grande Broadwater Body Corporate [2004] QDC 215, McGill DCJ, 19 July 2004 at page 225.