Imperial Surf [2007] QBCCMCmr 374 (20 June 2007)

Last Updated: 6 July 2007

REFERENCE: 0187-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9742
Name of Scheme:	Imperial Surf
Address of Scheme:	72 - 80 Esplanade SURFERS PARADISE QLD 4217

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

Joseph Forni , owner of Lot 39 and with Tonia-Rita Forni, co-owner of lot 64

I hereby order that within 21 days of the date of this order that the body corporate shall credit Joseph Forni as owner of Lot 39 and Joseph Forni and Tonia-Rita Forni as co-owners of Lot 64 with all sums now stated on the respective statements of Lot 39 and Lot 64 to be "overdue interest", " arrears notice fees" and " debt collection fees", and shall allow ‘lost discount’ for all quarterly contributions levied where such discount has not been allowed on the respective statements of Lot 39 and Lot 64. The period of time for such credits to the statements of Lot 39 and Lot 64 is to be from 15th June 2006 to 1st May 2007 in respect of Lot 39; and from 15th June 2006 to the date of this order in respect of Lot 64.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0187-2007

"Imperial Surf" CTS 9742

APPLICATION

This is an application dated 15^th March 2007 and amended on 21^st March 2007, by Joseph Forni, sole owner of Lot 39 in the scheme and Tonia-Rita Forni and the said Joseph Forni (the Applicants) co-owners of Lot 64 in the scheme, against the body corporate of the scheme (the body corporate) for an order that a decision of the committee made on 20^th November 2006 at a committee meeting be reversed; and a further decision of the committee made at a committee meeting on 26^th February 2007 be reversed since it was based on inaccurate information being provided.


JURISDICTION

"Imperial Surf" Community Titles Scheme 9742 is a community titles scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module). There are 165 lots in the scheme created under a Building Unit Plan of subdivision.

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

The Applicants who are brother and sister, say that on 26^th September 2006, they received a notice of their contribution payable in respect of Lot 64 and that it was "double the usual fee." This made them realise that they had not received a notice about the previous contribution period 1^st August – 31^st October 2006. They contacted the body corporate manager and advised that they would promptly pay the outstanding amount, less the penalty fee charged "as we did not feel it was fair to penalise us when we had not received the account." The body corporate manager asked them to put a request seeking exemption of the penalty in writing to the body corporate, which they did on 2^nd October 2006. Joseph Forni (Mr Forni) also owns lot 39, and did not receive a contribution notice in respect of that lot for the same period. He too was charged a penalty for late payment on his next contribution notice.

Following the Applicants’ request, they received no reply from the body corporate, "and assumed the matter closed." When they received the minutes of a committee meeting held on 20^th November 2006 however, they found that their letter had been discussed and the request rejected, whilst another unrelated lot had had their request approved.
The minutes recorded that Mr Forni’s request as owner of Lot 39 had been refused "due to not having a good payment record," and the Applicants’ request was denied "due to not informing the body corporate of an address change."

The Applicants have lived at the same address for 35 years. The Applicants were offended by the manner in which this information was circulated to all without the Applicants having had the courtesy of a reply. They feel publicly humiliated and say that the " poor payment record" in respect of lot 39 relates to " one missed payment some years earlier due to transfer of Lot ownership."

On 11^th December 2006 they received another "arrears notice" with interest compounded. They instructed their solicitor to write to the body corporate, stating that the committee decision not to reverse the penalty was based on wrong information. The body corporate replied to the solicitor on 18^th December 2006 saying that the matter would again be discussed at a committee meeting on 26^th February 2007. Following that meeting, they received an arrears notice dated 2^nd March 2007 with further interest of $270.11 added. As they had not received any communication regarding the outcome of the meeting on 26^th February 2007, they contacted the body corporate manager. They were told that the committee had again rejected their application. Mr Forni ‘s wife chose to pay the outstanding penalty for Lot 39 as she was so humiliated. She feels that she has been bullied.

The Applicants say that they definitely would have paid if they had received the contribution notice as the payment history of Lot 64 demonstrates, and it is an investment. Prompt transactions are vital for their taxation records. They also would not want to miss out on the discount. They put the failure down to Australia Post and believe that the body corporate manager has faulty mailing procedures.

They say further that there is no transparency or equity towards them from the committee when "different rules regarding exemption of discount and late payment fees are applied ad hoc." They were ignored even when they told the committee that it had the wrong information. They do not have faith in the body corporate manager and they attach an undated letter from the chairman to all lot owners stating that the chairman has no confidence in the body corporate manager. The Applicants want an ‘open disclosure’ from the body corporate manager and equitable practices for all, as well as ‘standardised criteria’ about reversing late fees where applicable.

In accordance with section 243(2)(b) Act, submissions were invited from all lot owners.

Margaret Scott owner of Lot 13 supports the application. She says that she too has been publicly humiliated by the body corporate manager’s inefficiency. The committee has also failed to control the body corporate manager and has been inactive. Miriam and Elias Seal owners of lots 125 and 126 also support the Applicants on all counts.

The body corporate did not lodge a submission in the requisite time period. The body corporate manager was not invited to lodge a submission although was aware of the application and the timeframes pertaining to submissions.


DETERMINATION

In this matter the Applicants admit that contributions were paid late relating to the period 1^st August 2006 to 31^st October 2006. They advise that they did not receive a contribution notice for this period in respect of either Lot 39 which Mr Forni owns alone, or in respect of Lot 64 which Mr Forni owns with his sister Toni-Rita Forni. (Ms Forni)

Section 96 Standard Module requires that the body corporate must give to an owner at least 30 days written notice before a contribution is required. The Applicants say that they never received such notices, for either Lot 39 or Lot 64, but have no explanation other than the vagaries of Australia Post or the inefficiency of the body corporate manager.

The body corporate manager, who was at the relevant time Stewart Silver King and Burns, was advised by telephone of the non-receipt of the contributions notice on 26^th September 2006 when the notice for the following quarter was received. On 2^nd October 2006, on the advice of the body corporate manager, the Applicants wrote to the committee by email. They explained that they had not received the relevant notices and there was no deliberate intention not to pay. They emphasised that they were good payers always paying before the due date. They sought a removal of the "debt collection fee" and the late payment penalty, and paid their usual contribution for each lot.

Section 99(6) Standard Module allows the body corporate to waive a penalty or to allow discount wholly or in part if it is satisfied that there are " special reasons."

I sought specific information from the body corporate manager. I asked the body corporate manager on what date it had posted out the notice of contribution in respect of the period 1^st August 2006 to 31^st October 2006 to the Applicants and to provide evidence of posting; the address to which notices were sent and the addresses at which the body corporate manager say the Applicants previously lived; when the change of address was notified to the body corporate; the reason that a "debt collector’s fee" had been imposed on the statement to the Applicants when it did not appear that a debt had been collected; and evidence of Mr Forni not having a " good paying record" prior to September 2006.

On 13^th June 2007, the body corporate manager responded to the above questions. It says that levy notices for 1^st August 2006 – 31^st October 2006 " were generated" on 15^th June 2006. To support this they attach a copy of Mr. Forni’s statement in respect of Lot 39. The statement covers a period 1^st February 2006 to 13^th June 2007, and is clearly an up-to-date copy of Mr Forni’s statement of account with the body corporate. The body corporate manager also provided an up-to-date statement covering the period 1^st February 2006 to 8^th June 2007 in respect of Lot 64.

The fact that on both statements beside the date of 15^th June 2006 carry the words ‘Administrative Fund’ and ‘Sinking Fund’ and the respective amounts required, is no evidence whatsoever that the notice of contributions were posted or sent to the Applicants, or either of them, in respect of either lot. As the body corporate manager says, the required amounts were simply "generated" possibly by a computer, onto the Applicants’ statements.

The body corporate manager says that the contribution notices for the relevant period were sent to 133,Dorington Drive, Ashgrove QLD 4060. This is the same address as given by the Applicants on their application dated 15^th March 2007, save for the fact that the Applicants spell "Doringtion" as "Dorrington" with two "rr"s. In respect of the Applicants previous address, the body corporate manager provides a copy of the Roll of Owners for the scheme in respect of Lot 64 and Lot 39. Lot 39 shows that Mr Forni’s address for service has been ‘133 Dorington Drive Ashgrove QLD 4060’ since notified to the body corporate on 24^th October 2003. It appears it was again recorded by the body corporate on 25^th October 2003. Lot 64 shows that Mr Forni and Ms Forni whose residential address is 133 Dorington Drive Ashgrove QLD 4060 gave notice of that address on 17^th May 2004. For some reason, the same details and address was also recorded on 20^th October 2004 and again on 2^nd October 2006, but there was no change of address in respect of either of the Applicants around June 2006, when the missing notices were ‘generated’ or at all.

The body corporate manager explains in respect of the debt collector’s fee of $72.60 that this is a "2^nd arrears notice fee" sent on 11^th December 2006 " as indicated on the attached statement." The statement attached in respect of Lot 39 as referred to above, show on 11^th December 2006 a fee of $72.60 stated to be a "debt collection fee."

The statement in respect of lot 64 shows a " debt collection fee" of $72.60 on 15^th September 2006, on 11^th December 2006 and again on 5th April 2007.

There does not appear to have been any ‘debt’ collected in as much as the Applicants have paid contributions late and suffered the penalty and loss of discount but the body corporate has not put proceedings for recovery of debt into effect. The fee of $72.60 appears to be the fee for the body corporate manager to send an "arrears notice", but this is not stated on the statement.

In respect of Mr Forni’s "poor payment record", the body corporate manager refers me to an arrears notice dated 15^th September 2006 and a contributions notice, dated 26^th September 2006, both in respect only of Lot 64, which is the lot owned jointly by the Applicants. The documents show an account history from 1^st November 2005. There are no overdue payments shown on those documents until the contribution due on 1^st August 2006 which is the subject of this dispute and which is admitted by the Applicants.

However, the statement from 1^st February 2006 to 13^th June 2007 in respect of Lot 39 shows that Mr Forni was charged overdue interest of $31.30 on 31st May 2006 in respect of a contribution due on 1^st May 2006, for the period 1^st May 2006 to 31^st July 2006. Before that time, he had a nil balance owing. The Applicants together in respect of Lot 64 had a nil balance owing prior to 15^th June 2006.

At the committee meeting on 20^th November 2006 the committee minutes state as follows –

"The Committee acknowledge receipt of correspondence from the Owners of Lot 64 requesting the Committee consider their application for a reversal of lost discount and penalties charged to Lots 39 and 64. The Committee noted that Lot 39 was in arrears in excess of 120 days and further did not have a good paying record, and RESOLVED not to accept the application to reverse discount. The Committee noted that Lot 64 was in arrears in excess of 60 days due to not informing the Body Corporate of an address change and RESOLVED not to accept the application to reverse discount. The Committee further noted that both lots had not paid the gross amount due and were accruing Body Corporate penalty interest. It was FUTHER RESOLVED that the Community Manager correspond to the Owner (sic) of Lots 39 and 64 advising them of the Committee’s decision."

On 20^th November 2006, the date of the committee meeting, Mr Forni’s statement in respect of Lot 39 shows that he owed $603.40 being made up of overdue interest fees, $31.30 of that sum being from 31^st May 2006, and the remainder being triggered by the subject of his application to the committee; and lost discount also being the subject of his application to the committee.

On 20^th November 2006, the Applicants’ statement in respect of Lot 64 shows that they owed $652.72, being made up of $72.60 "debt collection fee" , $64.44 overdue interest fees and the remainder loss of discount, also all the subject of their application to the committee.

I find that the Applicants or either of them have not changed address and that no arrears have accumulated due to the Applicants "not informing the Body Corporate of an address change..."

In my view, it was unfair of the committee to find that either Mr Forni or the Applicants together owed sums which they were asking the committee to "reverse." The committee is hardly astute for "noting" that sums were in arrears when the subject of the application was for the accumulated arrears, made up of loss of discount and penalty interest, to be waived.

I also find that the committee’s handling of the Applicants’ application was insensitive and cavalier. There was no reply to the Applicants’ email of 2^nd October 2006, and the minutes of the committee meeting, no doubt distributed to all lot owners, contained inaccurate and possibly damaging information, as well as information which was simply wrong.

The waiving of fees in respect of another lot owner (Lot 48) at the same committee meeting suggests a lack of transparency and hints at discrimination. The payment record of lot owners needs careful scrutiny of accounts and what is a "good" record and what is "not a good record" is open to criticism if no criteria are set up nor made known to lot owners. A nil balance in respect of Mr Forni prior to 1^st May 2006, and for the Applicants together prior to 15^th June 2006 when the dispute arose, does not fit easily with any criteria to be advanced for "not a good payment record."

Following receipt of the minutes, the Applicants’ solicitor on 14^th December 2006 asked the body corporate to reconsider, having advised the committee that there had been no change of address and that in their view there was no bad payment record. This matter was not discussed again by the committee until 27^th February 2007, over two months later, perhaps owing to the Christmas holidays in the interim. On 27^th February 2007, the day of the committee meeting, the body corporate issued an arrears notice to the Applicants, charging further interest. The body corporate did not advise the Applicants of the outcome of their request to the committee.

This matter has been handled in a poor way by the body corporate and an initial oversight, possibly of the body corporate manager’s making, perhaps the fault of Australia Post, but even if the fault of the Applicants, has escalated quite unnecessarily. Whether or not the contribution notices were sent out on 15^th June 2006, the Applicants did not change address, and there was no reason for mail not to reach them. The body corporate has aggravated the dispute by failing to communicate with the Applicants, and by minuting unreliable information.

The Applicants have never said that they will not pay the contributions. On 2^nd October 2006 they made their "usual" payments incorporating the discount and ignoring any interest. Section 96 Standard Module requires 30 days notice of contributions but it does not excuse the lot owner from paying a contribution if the notice is not sent. However, where such circumstances occur, the body corporate is expressly given the power to waive penalty interest and allow the discount.

The body corporate did not make a submission in this matter. It does not demonstrate to me that the committee went to any effort to check the matter of the Applicants’ address or the sending of the notices by the body corporate manager, in fact, to listen to the Applicants’ side of the story.

Further, I am concerned that lot owners who make late payments for whatever reason, are charged $72.60 as a "debt collection fee" which appears to be a fee which goes to the body corporate manager and not to the body corporate. This appears to be charged quarterly if there are any arrears, even though a quarterly contribution notice sent to lot owners would include any outstanding levies. There was no "debt" collected in this matter. This may be a matter of an extra charge under the contract of the body corporate manager but it is something which the body corporate should authorise in each case. In this matter, as I find that there should have been no debt, then these fees for "arrears notices" or "debt collection" should be refunded to the Applicants.

I note that there is a nil balance on the statement relating to Lot 39 as from 1^st May 2007, and that all interest and fees have been paid. I note that there is the sum of $1,419.25 outstanding on the statement for Lot 64, and that the fees are still accruing.

The body corporate shall credit both the Applicants within 21 days of the date of this order with all "overdue interest", "arrears notice fees" and "debt collection fees" and shall also allow discount for contributions where discount has not been credited on the respective statements of Lot 39 and Lot 64, from 15^th June 2006 to 1^st May 2007 in respect of Lot 39, and from 15^th June 2006 to the date of this order in respect of Lot 64.

I am aware that the Applicants would like the resolution of the committee meeting of 20^th November 2006 "reversed", and whilst they have been successful in that outcome, I am not invalidating the decision of the committee, since the application to this Office was brought more than three months after that committee meeting and takes it outside the time limit specified in section 242 Act.

I have not been provided with a copy of the minutes of the committee meeting of 27^th February 2007 by the Applicants and have decided that I cannot invalidate a decision which I have not read. I am also not ordering that a copy of this decision is circulated to all lot owners as this is a big scheme and the cost would be considerable. However, the Applicants are of course entitled to make copies if they wish and pass a copy of this decision to any lot owners interested in the outcome. All submitters and the body corporate will receive a copy of this order and the decisions for it.