Green Meadows [2007] QBCCMCmr 486 (14 August 2007)

Last Updated: 3 September 2007

REFERENCE: 0208-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	19448
Name of Scheme:	Green Meadows
Address of Scheme:	118 Highfield Drive MERRIMAC QLD 4226

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

Talaat Christophi, the Owner(s) of lot 36

I hereby order that the body corporate must not claim any recovery costs in contribution notices issued under section 96 of the Body Corporate and Community Management (Standard Module) Regulation. This does not, however, prevent the body corporate seeking a court order for payment of recovery costs where it can establish to the court’s satisfaction that those costs are reasonable. I further order that the application is otherwise dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0208-2007

"Green Meadows" CTS 19448

Application

Green Meadows Community Titles Scheme (Green Meadows) is a 41 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Standard Module Regulation (Standard Module).

This application is by Talaat Christophi, owner of lot 36 (applicant) seeking orders against the body corporate for Green Meadows (respondent). The applicant is seeking orders that debt recovery costs claimed by the body corporate are excessive and says that the body corporate should discontinue proceedings being taken against him in the Magistrates Court.

Submissions

The applicant’s main submissions were to the effect that:

• The costs claimed in Magistrates Court proceedings are excessive;

• The commencement of the proceedings was motivated by malice; and

• The body corporate manager has acted in a discriminatory manner in refusing to accept the applicant's nomination for the committee.

The body corporate’s main submissions were to the effect that:

• The costs claimed by the body corporate are not excessive. The applicant failed to pay his levy on time and his actions are creating extra costs, not only for himself but for all property owners; and

• The body corporate manager has acted in a professional manner. It is the applicant who has abused, intimidated and threatened committee members.

Other owners have also provided submissions. These are all to the effect that the applicant should be forced to pay his debts. The body corporate manager has also made a submission to the effect that no owner is entitled to vote or stand for the committee when they owe a body corporate debt and there is no discrimination against the applicant. Specifically, the manager specifies that at the time of the 2007 annual general meeting the applicant still owed a debt of $902.13, being the collection costs passed on to him pursuant to by-law 27.

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 (Standard Module, 96);

• 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 (Standard Module, 99(1));

• If a contribution has been outstanding for two years the body corporate must start proceedings to recover the amount (Standard Module, 99(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 (Standard Module, definition "body corporate debt");

• A person is not eligible to be a voting member of the committee, or nominate someone for committee membership, if they owe a body corporate debt at the relevant time (Standard Module, 10(3)); and

• A person does not have a right to exercise a vote for a lot if the owner of the lot owes a body corporate debt at the time of the meeting (Standard Module, 49A(2)).

Recovery of costs as a debt

The legislation specifically provides that the body corporate can recover as a debt any reasonably incurred recovery costs (Standard Module, 99(1)(c)). However, the body corporate cannot simply 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 right under section 99 of the Standard Module to recover reasonable costs as a debt provides a broader basis for recovery than the standard court scale of costs. However, by-law 27 purports to allow the body corporate to recover the whole of the body corporate's debt recovery expenses by entering those costs against an owner's levy account. This by-law therefore appears to be invalid to the extent that it is inconsistent with the legislative provision and purports to impose a monetary liability on owners (Act 180(1), 180(6)).

The legislation is very specific about what constitutes a "body corporate debt" and what should be listed on a notice of contribution payable. "Body corporate debt" means a contribution or instalment, a penalty and another amount associated with the ownership of a lot. These other amounts, in the context of the examples provided and section 96(2) of the Standard Module, would be limited to amounts the owner has agreed to pay associated with services provided to their lot or related to an exclusive use by-law. Recovery costs incurred by the body corporate are not amounts associated with an owner's ownership of their lot and do not constitute a body corporate debt.

Should have been able to vote

Having concluded that recovery costs are not a body corporate debt, the applicant should have been allowed to vote and nominate himself for the committee (Standard Module, definition "body corporate debt"). However, the applicant has not sought any specific orders to rectify a denial of his rights to vote or nominate for the committee or to invalidate by-law 27.

Cannot stop debt recovery proceedings

The applicant has sought an order to require the body corporate to discontinue debt recovery proceedings against him. However, there is no evidence that the body corporate is motivated by malice or discriminating against the applicant. It would be expected that at least some of the recovery costs claimed are reasonable and the body corporate is entitled to take proceedings to recover any such reasonable costs (Standard Module, 99).

Order

In the circumstances, it appears that both parties are partly in the wrong. The applicant failed to pay his levies on time and should pay recovery costs reasonably incurred by the body corporate. However, the body corporate cannot necessarily recover every single cent on a solicitor and own client basis and the body corporate cannot simply add claimed amounts to the applicants' levy statement and expect them to be paid.

Ultimately the question of what further recovery costs are reasonably incurred is a question that may need to be determined by the Magistrates Court through the body corporate pursing its debt recovery action. 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 through further debt recovery proceedings. For present purposes I am satisfied it is just and equitable to order that the body corporate must not claim any recovery costs in contribution notices issued to the applicant. However, I will not make any order stopping the body corporate from pursuing reasonable recovery costs through a debt recovery action.