3 Parkland Boulevard [2007] QBCCMCmr 437 (23 July 2007)

Last Updated: 1 August 2007

REFERENCE: 0370-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	33918
Name of Scheme:	3 Parkland Boulevard
Address of Scheme:	3 Parkland Boulevard BRISBANE QLD 4000

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

Brett David Howell, the owner of lot 3012

I hereby order that the voting rights of the owner of lot 3012, Brett David Howell, are not to be adversely affected merely by reason of the recovery costs claimed by the body corporate to be owed by him. This does not prevent the applicant from losing voting rights by reason of him owing a body corporate debt at the time of any general meeting. I further order that the application is otherwise dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0370-2007

"3 Parkland Boulevard" CTS 33918

Scheme

"3 Parkland Boulevard" Community Titles Scheme 33918 was registered as a building format plan of subdivision comprising 139 lots and common property, on 27 April 2005. It is regulated by the Body Corporate and Community Management Act 1997 (the Act) and its Accommodation Module Regulation (Accommodation Module).

Application

This is an application by the owner of lot 3012, Brett David Howell (the applicant), against the body corporate, seeking an order in relation to debt recovery costs claimed by the body corporate.

The applicant’s grounds are to the effect that the debt recovery costs claimed by the body corporate are outrageous and not "reasonable". Copies of statements included with the application indicate that, for the period ended 28 February 2007, the applicant owed $1,260.19 in unpaid contributions and $1,751.89 in recovery costs, which were, at that time, between 30 and 60 days overdue.

Submissions

A submission by the body corporate committee was to the following effect:

• The applicant wrote to the committee on 1 March 2007 seeking a number of things, but relevantly asking that the statement of charges be reviewed by a reasonable person.
• The committee considered his letter at its meeting of 26 March 2007 which resolved not to approve his request and to suggest that he seek independent financial advice. The committee had before it a copy of a letter of 8 March 2007 from Ernst Body Corporate Management Pty Ltd (EBCM) to the applicant, responding to his letter of 1 March 2007.
• The laxity of payment contributions by the applicant is detailed in the letter of 8 March 2007.
• The payment of levies by the applicant was so erratic that in accordance with the resolution of the body corporate, recovery action commenced after 60 days.
• The fees which the body corporate is entitled to recover are the "recovery costs" referred to in section 97 Accommodation Module. The recovery costs are charged by an independent debt recovery contractor, Strata & Corporate Collections Pty Ltd. The charges are consistent with industry practice. The trouble they had in attempting to contact the applicant is detailed in the affidavits of attempted service dated 20 November 2006 and 26 April 2006. Both those affidavits indicate that there were two lots of five separate attempts to contact the applicant without success. It was not until November 2006 that contact was made with the applicant’s father in an attempt to locate his son, who was in China.
• The committee believes that it is unfair on other owners who pay their levies promptly and in accordance with the arrangements applying to all owners, to have to finance and meet the costs of recovery from a person who does not pay his levies as required. It is unfair for owners to subsidise the cost of recovery from the applicant.
• The committee repeats and relies upon the matters set out in the letter of EBCM dated 8 March 2007.

The applicant exercised his right to inspect the submission and relevantly responded to the following effect:

• He does not believe that any of his concerns (detailed in his letter of 1 March 2007) were addressed by the committee as his original claim was not fully communicated and disclosed to the committee. There was no discussion or debate concerning principals or responsibilities under the Act, rather, the pre-prepared response from the body corporate manager was simply adopted.
• He concedes that his payments were made erratically, but says that he made his best efforts to pay the required instalments when he could. Except for the odd letter, he claims that no direct communication was made to him.
• He concludes by stating that, as far as he can tell, he is 100% up to date with all levies and has made a concerted effort in recent times to ensure that past late payment occurrences are not repeated. He is further of the opinion that the only legal body that can enforce or order debt recovery amounts is one of the state courts or small claims courts of Queensland. As no court action has occurred, he is of the belief that he is not responsible for any debt recovery fees incurred in this particular case.

Jurisdiction

This is a dispute between an owner and a body corporate and comes within the dispute resolution provisions of the Act concerning alleged contraventions of the Act (see sections 226, 227 & 228).

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)).

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. The notice may be served on a lot owner at their address for service, or in the way directed by the lot owner (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 person does not have the right to exercise a vote for a particular lot on a motion (other than a motion for which a resolution without dissent is required), or for choosing a member of the committee, if the owner of the lot owes a body corporate debt at the time of the meeting (Accommodation Module, section 47A(2)).
• 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").

"Reasonableness" of Recovery Costs

The legislation specifically provides that the body corporate can recover as a debt any reasonably incurred recovery costs (Accommodation Module, 97(1)(c)). 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". If the applicant and the body corporate cannot agree on what recovery costs have been reasonably incurred then the body corporate can initiate court action seeking its reasonable recovery costs.

The committee would be mistaken, however, if it considered that section 97 Accommodation Module allowed it to simply turn over debt recovery to a body corporate manager, debt collector, a lawyer or another party and expect to be able to ultimately recover any debt recovery fees from the debtor. Rather, the committee needs to closely monitor all costs associated with recovering contributions from lot owners to ensure that the costs are reasonably incurred.

I therefore 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 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. 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 that those costs are in fact reasonable.

I therefore dismiss the application in this respect.

Effect on Applicant’s Voting Rights

I note that the applicant is particularly concerned about how the current dispute may affect his voting rights, specifically in relation to the annual general meeting scheduled for 24 July 2007 at 5:30pm.

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 body corporate may separately inform an owner that it will be claiming a certain amount of recovery costs but cannot add these amounts to the notice of contributions or offset contributions paid by an owner against these claimed expenses. I note that the body corporate appears to have correctly distinguished the recovery costs from the contributions owed by the applicant, by the issue of two separate statements for each. The applicant’s voting rights will only be adversely affected if he owes a "body corporate debt" at the time of the meeting. A body corporate debt would not include recovery costs but would include unpaid contributions and any penalty interest that has accrued on the unpaid contributions. To put the matter beyond doubt, I have made a declaratory order that the applicant’s voting rights are not adversely affected merely by reason of the recovery costs claimed by the body corporate to be owed by him. This does not preclude the applicant from losing voting rights if contributions or penalty interest on unpaid contributions, are owed at the time of the annual general meeting.