Whitsunday Terraces [2010] QBCCMCmr 45 (5 February 2010)

Last Updated: 23 March 2010

REFERENCE: 0100-2010

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	28662
Name of Scheme:	Whitsunday Terraces
Address of Scheme:	Golden Orchid Drive AIRLIE BEACH QLD 4802

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

Edward Kelly, the Owner of lot 8

I hereby order that the application for the following orders: That he not be considered a debtor while the dispute resolution process is underway; and that he be allowed to vote at the AGM on 6 February 2010 is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0100-2010

“Whitsunday Terraces” CTS 28662

Whitsunday Terraces community titles scheme (Whitsunday Terraces) consists of 72 lots and common property. The community management statement (CMS) for Whitsunday Terraces indicates that the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module) applies to the scheme. Department of Natural Resources and Water records show the scheme is registered as Building Units Plan 70746 and 70746, and Survey Plans 100384, 124826 and 136120.

APPLICATION

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by Mr. Edward Kelly, the Owner of lot 8, seeking the following interim orders against the body corporate:

1. That he not be considered a debtor while the dispute resolution process is underway; and
2. that he be allowed to vote at the AGM on 6 February 2010.
   

The applicant also seeks the following final outcomes:

1. That the body corporate committee accept that the applicant did not receive the original contribution notice for levies due on 1 August 2009 and allow the discount applicable to the levies;
2. to have all arrears charges to be reversed;
3. To have the amounts in dispute not considered to be a debt owing to the body corporate while the dispute resolution process is undertaken; and
4. to be able to vote at the AGM to be held on 6 February 2010.
   

BACKGROUND

The application relates to the applicant’s claim that the body corporate levies due on 1 December 2009 were paid prior to the due date and therefore the discount for that period should be allowed.

Submissions made by the applicant in support of the application include the following:

• He received a Notice of Overdue Levies on 24 September 2009 for unpaid levies which were due on 1 August 2009;
• On receipt of this Notice on 24 September (which required payment by 23 September), the applicant phoned the body corporate manager and explained that he did not receive the original notice;
• as he had not received the original notice, he paid the discounted levy and was advised by the body corporate manager to send a letter explaining the situation and requesting that the discount be allowed by the committee;
• He subsequently received a further Notice of Contributions 14 October 2009, for the period 1 December 2009 to 31 March 2010. The due date for payment was 1 December and he paid this amount on 16 November 2009;
• He subsequently received a copy of the minutes of committee meeting held on 19 December 2009 at which the committee declined to grant the discount “as payment of this levy was not made by the due date and the committee does not wish to set a precedent for the granting of the levy discount where contributions are not made by the due date”;
• However he has located minutes of committee meetings where the committee has on 2 previous occasions allowed a discount where levy payments were not received by the due date;
• The applicant subsequently received a Notice of Overdue Levies dated 20 January 2010, stating that the amount of $1,208.80 was outstanding even though payments were up to date;
• On 27 January he received a letter dated 21 January advising that the committee had declined his request for the discount “as payment of this levy was not made by the due date and the committee does not wish to set a precedent for the granting of the levy discount where contributions are not made by the due date”;
• Since purchasing the unit in 2003 he has always paid contributions by the due date;
• Once the transfer of funds from his bank to the body corporate was delayed and in that instance the committee allowed him the discount. He believes that in this instance the decision of the committee is unconscionable.
  

The following documents were attached to the application:

• Notice of Overdue Levies of $3,022 dated 23 September, stating that the due date for payment was 23 September 2009. (The applicant states that this document was received by him on 24th September, which appears to be correct given that the document was only issued on 23 September 2009);
• Letter to body corporate manager from applicant pointing out that with one exception caused by a bank delay, he has always paid levies on time and requesting that he be allowed the discount for payment by the due date;
• Notice of Contributions dated 14 October, requesting payment of $3,022 consisting of admin fund levy of $1,416, sinking fund levy of 1,1001.60 and a balance brought forward of $604.40.
• Notice of Overdue Levies of $1,208.80, dated 20 January 2010, stating that the due date for payment was 20 January 2010.
• minutes of the committee meeting held on 19 December 2009 which included the following: “the committee resolved to decline the request from the owner of lot 8 to grant the discount applicable to the early payment of levy contributions as payment of this levy was not made by the due date and the committee does not wish to set a precedent for the granting of the levy discount when contributions are not paid by the due date”.
  

The body corporate committee was invited to make submissions in response to the application although the opportunity to do so was obviously limited because the application was received on 28 January and relates to an AGM scheduled for Saturday 6 February.

The body corporate manager responded on behalf of the committee. Owing to the short time frame available, the committee was unable to prepare a detailed response but the body corporate manager was able to provide the following documents:;

• Communication between the BCM and the Committee stating that levy notices for the period 1 August 2009 to 30 November 2009 were issued on to all owners of lots in this scheme on 19 June 2009 – thus providing all lot owners with the required 30 days written notice of contribution prior to the due date for payment of the contribution;
• Advice from the BCM that the applicant’s contribution payment history includes the following late payments:

Contribution due on 1 December 2007 – receipted on 4 December 2007;
Contribution due on 1 April 2008 – receipted on 5 May 2008;
Contribution due on 1 August 2009 – receipted on 29 September 2009.

• Advice from the resident caretakers/ letting agents, advising the body corporate manager that the applicant had a history of late payments; that the notice of levies due was mailed in mid-June to all owners; and that the committee usually allows the discount if payments are only a week or so late, or if there is an acceptable reason. If there is a history of late payment, with no reasonable excuse, the discount is not allowed.
  

JURISDICTION

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[1]

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)).

DETERMINATION

At this point in time I am considering an application for the following interim orders against the body corporate:

• That the applicant not be considered a debtor while the dispute resolution process is underway; and
• that he be allowed to vote at the AGM on 6 February 2010.
  

The first issue for consideration in this matter is whether the Body Corporate was entitled to charge the amounts in dispute, being interest penalties and debt recovery costs. The second issue for consideration is whether the committee’s refusal to afford the applicant a “timely payment discount” was unreasonable in the circumstances.

In this regard the Body Corporate and Community Management (Accommodation Module) Regulation 2008 includes provisions to the effect that:

• The body corporate may, by ordinary resolution, fix a penalty to be paid by owners for late payment. This penalty must be simple interest at a stated rate of not more than 2.5% for each month the contribution is in arrears (section 142 of the Accommodation Module); and
• The body corporate may, by ordinary resolution, fix a discount to be given to owners if a contribution is received by the due date. This discount cannot be more than 20% of the amount to be paid (section 141 of the Accommodation Module)
  

The body corporate committee has refused to allow the discount on the basis that the levy payment was not made by the due date. The committee states that levy notices for the period 1 August 2009 to 30 November 2009 were issued on to all owners of lots in this scheme on 19 June 2009 – thus providing all lot owners with the required 30 days written notice of contribution prior to the due date for payment.

Further, the body corporate manager indicates that the applicant has a history of late payments. For example the body corporate manager states that contributions due from the applicant on 1 December 2007 were not receipted until 4 December 2007. On the other hand, the applicant states that the late payment can be attributed to a delay within his bank and at most the payment was one or two days late. I also make the observation that having regard to section 38 of the Acts Interpretation Act 1954, it is arguable that the due date for payment was the next business day, i.e. 3 December, so that if in fact the levy was received on 4 December 2007, it was only one day late.

The second example raised by the body corporate relates to a contribution due from the applicant on 1 April 2008 but not receipted until 5 May 2008. Given the short period of time available to consider this interim order, it has not been possible to obtain a response from the application regarding this claim.

Thirdly, while the body corporate claims that the contribution due for payment by the applicant on 1 August 2009 was not receipted until 29 September 2009, the delay in payment was attributable to the non-receipt of the “Notice of Contributions”. Given the non-receipt of the above notice and the willingness of the body corporate to grant a levy discount to other lot owners, the applicant believes that the committee’s refusal to afford the applicant a “timely payment discount” was unreasonable in the circumstances.

Given that the applicant has owned lot 8 since 2003, I believe that he has a relatively good payment history. Nevertheless, I do not believe I am empowered to make the requested interim orders without first making a finding about the reasonableness of the committee’s decision to refuse the discount to the applicant. At this point in time I simply do not have sufficient information to make a final decision regarding the reasonableness of the committee’s decision. While I note that there have been other instances where the committee has afforded the timely payment discount to lot owners notwithstanding the late payment of contributions, I would need to examine the circumstances of those cases to determine whether the decision of the body corporate in this instance is discriminatory and therefore unreasonable. I am therefore unable to make the interim orders requested although I would point out that this should not be taken as an indication of what final orders will be made in this matter

Accordingly, in the absence of a further resolution by the body corporate committee to the contrary, the applicant continues to be a debtor for the disputed amount and is not entitled to vote upon resolutions at the AGM, except those resolutions which require a resolution without dissent.

This determination does not dispose of this dispute in its entirety and this dispute resolution application will be further dealt with in accordance with the usual processes undertaken by this office which may include seeking further information from the applicant and submissions from the respondents and other residential bodies corporate. A final order regarding the application will be made in due course.

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[1] See sections 227, 228, 276 and Schedule 5 of the Act