BODY CORPORATE UNPAID LEVIES – THE CONCILIATION PROCESS

An owner recently lodged an Application to the Commissioner, disputing the amount owing in Body Corporate Unpaid Levies and recovery costs. The matter was referred to a Conciliation Hearing but the end result left the owner and the Body Corporate back at square one.

Background

The owner has Body Corporate Unpaid Levies plus recovery costs amounting to over $3000.00. They cited various reasons why the amount has not been paid. However, the Body Corporate Committee believe that the entire debt should be paid in full and commenced recovery action about six months ago.
In the meantime, the owner, through her Real Estate Agent, lodged an Application with the Commissioner disputing the amount owing.
It is unlikely that the owner would have been aware that the Application had virtually no chance of getting a ruling unless she paid the entire amount owing. Had she done that, then she could have sought adjudication on the debt including recovery costs.
The fact is that the Commissioner has no jurisdiction to make a ruling where Body Corporate Unpaid Levies are still owing. The matter could only proceed to Conciliation where the facilitator could try and broker some sort of agreement between the parties but there is no obligation on either side to agree on anything.
In this case, the parties simply agreed that the owner would make a formal offer to the Body Corporate. The Application was then closed without any further action.
The Body Corporate was not obliged to accept the offer. They were only required to consider it and respond accordingly. Following the conciliation, an offer was made and subsequently rejected.
The overall process took over three months to reach its conclusion. The Committee members were forced to spend their own time in participating when there was never really any chance of resolving the matter.
In the meantime, the Body Corporate Unpaid Levies plus interest and costs increased and the owner was no better off apart from receiving some advice, which could be construed as legal advice, from the facilitator.

The Next Step

The Body Corporate now has no option but to proceed with legal action. The Facilitator seemed keen to push the Body Corporate towards referring the matter to QCAT for resolution but legal advice has indicated that they would be better off going through the courts.
The costs of the legal action will be significant and the owner will have to either pay the amount in full or get her own legal representation which will only add to the costs.
The lesson from this exercise is that owners should pay their levies on time. If, for some reason, they miss payments and are charged interest and even recovery costs, then they should pay the full amount and then refer the matter to the Commissioner who has the jurisdiction to decide on whether the additional costs are justified.
If you do not pay the outstanding amount you are setting yourself up for a potentially escalating amount in recovery costs and legal fees.
Watch this space for future developments.

The Clayton's Body Corporate Dispute - owners kept in the dark!

In a recent Body Corporate Dispute owners were never provided with copies of the Application. Consequently, orders were made without a single submission from any owner.

The Applicant in Body Corporate Dispute Number 0394-2013 (yet to be published), contacted me to express her concern.

The Commissioner had asked that the Application be circulated to all owners but the person they asked to do this was the subject of part of the dispute.

The fact that there were no responses or submissions should have at least raised questions about whether owners had actually seen the Application.

In fact, the Applicant phoned the Commissioner's Office to alert them of the problem.
The Applicant told me "When I contacted the Commissioner's Office to let them know that owners had not received copies of the dispute, they said that they take the word of the person they sent them to. If he says he has sent them then that is good enough."

The Applicant went on to say "The Commissioner's Office said that I should provide stat decs to prove that owners did not receive the dispute. I did not feel that it was my responsibility to do the work of the Commissioner so left it up to them to decide whether to pursue the matter or not."

The Adjudicator ruled on the Application in due course. "The orders were basically what I had sought but I did think it was strange that an Application like this could be lodged and ruled upon without owners knowing about it. I'm sure that they would have made submissions had they known."

When the orders were made, it was the Applicant who actually distributed copies to owners.
This does raise some questions about the procedures of the Commissioner. Not all Bodies Corporate employ a Body Corporate Manager. I don't think it is good enough that they send a hard copy to someone who they think might be responsible and then expect that person to distribute copies to owners.

When the Applicant in this Body Corporate Dispute took the trouble to phone the Commissioners office to alert them to the problem the Commissioner's staff should have taken the time to verify the claim rather than expect the Applicant to do the work.

Footnote: The reference to the "Claytons Body Corporate Dispute" comes from a very popular advertising campaign. In the 1970s a company produced a non alcoholic drink that was marketed as a good alternative to drinking alcohol. The brand name was Claytons and the slogan "Claytons - the drink you have when you are not having a drink!" In this case, the Dispute you have when you are not having a Dispute!

Body Corporate Disputes – frivolous vexatious misconceived or without substance.

Adjudicators in Body Corporate Disputes can consider awarding costs against the applicant when those disputes are considered frivolous vexatious misconceived or without substance.

This doesn't happen very often but I received an email at Body Corporate News suggesting that some Body Corporate Managers and legal advisors have been ponting out the very real possibility of an award for costs against the Applicant to discourage owners from lodging disputes.

The process for lodging disputes is time consuming and can be fairly complex. Although the Dispute Resolution is designed to allow people without legal representation to make an application to the Commissioner, the applicant still needs to ensure that the arguments being put forward are in accordance with the Act.

When the respondent is the Body Corporate, there are many examples where their responses are written by solicitors.

It is interesting that in recent cases, Adjudicators have addressed the matter of whether to award costs against the Applicant based on whether a Body Corporate Dispute is considered to be frivolous vexatious misconceived or without substance. One consideration appears to be whether the Applicant has a history of lodging disputes and having them dismissed.

The problem with the system is that many owners in Body Corporate Communities have little understanding of the Act or legal processes. When they face an issue with their Body Corporate, they often find the prospect of lodging a dispute too daunting and end up putting up with problems.

Prior to lodging Body Corporate Disputes, the Applicant should make every effort to communicate with the Body Corporate preferably in writing, detailing their concerns. The Dispute application should be a last resort when the respondent fails to adequately address the applicants concerns.

I would also highly recommend that anyone considering lodging a Body Corporate Dispute should first contact the Commissioner for Body Corporate help line 1800 060 119.

The advisors are knowledgable and they can point out relevant sections of the Act that may help in an Application. They might also be able to give an indication of whether a potential dispute application has merit.

Another thing to consider is that there appears to be a growing trend towards cutting Committee's some slack. There have been rulings that indicate that Committee's cannot be expected to be word perfect in the Act.

In summary, my recommendation to anyone considering lodging a Dispute would be:

1. Do everything possible to resolve the dispute prior to lodging an application. Try and put everything in writing and keep a record of responses.
2. Use the Commissioners help line as much as possible prior to lodging an Application.
3. Ensure that any Application that is made is supported by relevant sections of the Act.
4. Be aware of section 242 of the Act which specifies time limits in lodging disputes.

My feeling is that Adjudicators will be asked by respondents to rule that Body Corporate Disputes are frivolous, vexatious, misconceived or without substance. The penalty can be up to $2000.00 so it is well worth doing as much research as possible prior to lodging an application.

Holiday letting - another nail in the coffin

Many investors have been finding that the return from holiday letting their apartments does not match the return that they would achieve from long term rentals.

Whilst there are times when the returns for holiday rentals are high eg Christmas and holiday periods, the net return over a full year is often a disappointment to owners. Fees and charges associated with holiday letting are high and the upcoming hike in electricity charges will be the final straw for many investors.

Owners who use holiday letting pay for all electricity charges. However, if they rent their apartments out with a long term lease, the tenants pay for the electricity.

Electricity providers are writing to owners advising of the increases in charges. One such provider clearly blames "the impact of the Federal Government's carbon price" as one of the factors influencing the increases.

Astute owners will be doing their sums and many will be making the decision to take their units out of the holiday pool and rent them out on a long term basis. This will be a huge blow to Caretakers who rely on holiday lettings in Body Corporate Communities.

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The opinions expressed in this blog are personal and not intended in to be advice in any way. I have spent many years participating on a number of different Body Corporate Committees. I am the owner of http://www.moviemem.com/

Access to BC records for all owners? Not necessarily.

As a general principle owners should be able to expect to have access to BC records after paying a prescribed fee. However, recent rulings by Adjudicators indicate that it is not that simple. If a BC believes that certain records are subject to "legal privilege" then they have the right to refuse access to any owner who may be involved in either actual or threatened legal action against the BC or presumably anyone who claims to be affected by the records.

There are times when it might be prudent to withhold certain documents from an owner on the basis of legal privilege but anyone with an ounce of imagination should be able to see how this ruling could be abused.

It would be very easy for a Committee to deny access to records based on "legal privilege". The owner would then have to decide whether to lodge a dispute. If the records were needed urgently, the process of waiting for the dispute to be heard could prove costly for the owner.

An Adjudicator recently ruled that a dispute with QCAT constitutes legal action. Presumably any dispute that has been initiated or implied also comes under the banner of "legal privilege".

There are other considerations that could lead to abuse of this process. Who decides whether records are subject to legal privilege or not? What if the person who is actually seeking the records is the Chairman, Secretary or another Committee member?

There have been disputes between the BC and the BC Manager in the past. The BC Manager is the custodian of the records. What would happen if the BC decided that the BC Manager could not access records because of legal privilege?

I feel that all BC records should be available for access by owners irrespective of any implied or actual legal privilege.

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The opinions expressed in this blog are personal and not intended in to be advice in any way. I have spent many years participating on a number of different Body Corporate Committees.

No Smoking on Balconies for Unit Owners - coming soon!

Proposed changes to NSW strata laws could result in legislation to ban unit owners from smoking on their balconies.
Smoking Ban on balconies for unit owners


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The opinions expressed in this blog are personal and not intended in to be advice in any way. I have spent many years participating on a number of different Body Corporate Committees.

Commisioner for Body Corporate & BCCM Act. Irrelevant to BC Communities?

The Commissioner for Body Corporate and Community Management Queensland and The BCCM Act are rapidly becoming irrelevant to Body Corporate Communities.

The reality is that many Bodies Corporate ignore the regulations often through lack of knowledge of the legislation but occasionally through indifference. When owners raise concerns they often find that the process of lodging disputes is too cumbersome and costly and in many cases they are forced to accept that their Body Corporate operates by its own rules.

The function of the Commissioner is largely to hear and adjudicate on disputes that are lodged. I have always found it strange that the only way that the legislation might be enforced if a dispute is lodged.

I know of Bodies Corporate who do not hold AGM's. I know of others who don't keep proper records and do not communicate with owners. However, the only way that a Body Corporate would ever be accountable would be if someone lodged a dispute. In many cases, the BC know that there is little possibility of a dispute even if they knowingly ignore the legislation.

The fact is that many owners are intimidated by the entire process and The Commissioner has done little to help make the process user friendly. I think it is fair to say that the process is designed to generally discourage owners from lodging disputes in the hope that they will sort out problems "in house".

In the recent adjudication of Dispute Number 0010-2012 Palm Springs Residences, the Adjudicator made two interpretations of the Act that only accentuate the fact that the Act is becoming irrelevant.

1. The Adjudicator, M.A.Schmidt stated: "as a general proposition, a body corporate may validly resolve to ratify past irregular conduct".

This comment sets an  extraordinary precedent. Firstly there is no time limit specified by M.A.Schmidt so presumably, the comment which is part of the overall ruling allows a BC to come back and "ratify irregular conduct" any time after the event. The implications of how this could be manipulated and applied make a mockery of the Act.

M.A Schmidt goes on to say that there could be legal implications for the BC in doing this but they would be outside the jurisdiction of the Act and, once again, owners would find the process of taking legal action against a BC daunting.

2. The Adjudicator, M.A.Schmidt stated that the applicants did not "complain of any detriment suffered as a result of having received notification 7 days after when they thought they should have been notified". The implication is that if a Body Corporate does not comply with time limits in notification of meetings, etc anyone who lodges a dispute would have to show that they suffered a "detriment" or some form of hardship.

These "rulings" only continue to demonstrate why so many Body Corporate Communities ignore the Act. The likelihood of an owner lodging a dispute is small. If an owner does happen to decide that there is no alternative but to lodge a dispute the chances of having the application upheld are a lottery.

It is time that the BCCM Act and the Office of the Commissioner for Body Corporate and Community Management were completely overhauled by the Government.

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The opinions expressed in this blog are personal and not intended in to be advice in any way. I have spent many years participating on a number of different Body Corporate Committees.

Body Corporate Levy Equalisation Farce

On February 19th Peter Lawlor announced changes in the legislation so that "millionaire penthouse owners" would no longer be able to exploit a loophole to have their Body Corporate Levies slashed at the expense of smaller unit owners.

In recent years there have been a number of applications for equalisation of levies in Bodies Corporate based on the premise that the levies go towards the maintenance of the common property. As every owner has an equal share of common property the theory was that every owner should pay the same amount irrespective of the value of the unit.

The original calculation of levies set by the Developer is often based on the size of the unit and the floor level ie the units on higher floors usually pay higher levies.

I interviewed Peter Lawlor on my radio programme on Jazz Radio 94.1fm shortly after he made the announcement. He argues that owners should be able to rely on the levies that were set by the Developer and an owner of a penthouse should pay more than an owner of small ground floor apartments.

There are obviously good arguments on both sides but there are currently applications to equalise the levies before QCAT formerly CCT that have been left in the "too hard basket" for more than a year.

Since Peter Lawlor's announcement, QCAT has not communicated the progress of at least one application, presumably waiting for the legislation to go through. This is a farsical situation. One applicant has argued that a court can not and should not hold off making a legal decision because the legislation "might" change. He argues that the current law applies and that a ruling should be made on that basis.

Of course, others argue that it would be ridiculous for QCAT to rule on the current law only to have their ruling overturned months later when the legislation changes.

Either way, QCAT should communicate the current status to all owners who are embroiled in these expensive and ongoing applications.

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The opinions expressed in this blog are personal and not intended in to be advice in any way. I have spent many years participating on a number of different Body Corporate Committees. I am a dealer in Vintage Movie Memorabilia specialising in original movie posters and movie art. http://www.moviemem.com/I also present a radio programme on Jazz Radio 94.1fm Monday - Friday afternoons on the Gold Coast.

Schoolies Ban!

Interesting to hear that the committee of Q1 in Surfers Paradise are looking at ways to prevent schoolies from staying in the states tallest highrise. The Courier Mail reports that up to 500 students may have already been booked for the week. Apparently, the committee at Q1 are investigating legal avenues and possible changes to the by laws to prevent schoolies from staying in their building.

Perhaps the committee at Q1 might take their cue from Palm Springs Residences who recently voted to restrict all letting to a minimum of 42 days in their building. No doubt this will be open to challenge but it is an example of how residents and holiday rentals do not always mix.

It will be interesting to see how the committee for Q1 deals with this situation.

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The opinions expressed in this blog are personal and not intended in to be advice in any way. I have spent many years participating on a number of different Body Corporate Committees. I am a dealer in Vintage Movie Memorabilia specialising in original movie posters and movie art. http://www.moviemem.com/I also present a radio programme on Jazz Radio 94.1fm Monday - Friday afternoons on the Gold Coast.

Why would you holiday let your apartment?

A large resort complex is currently advertising a special on luxury one bedroom apartments with beach views, separate lounge and kitchen, spa, etc etc, for $115.00 per night - no minimum stay. The complex is obvioulsy managed with hefty Body Corporate levies to go towards maintaining the extensive grounds, pools, gyms, tennis courts, etc.

The units were sold as "investments" with a "guaranteed return" for a set time frame. If you do your calculations, $115.00 a night will not leave very much at all for the owner of the unit after deducting cleaning and linen fees (often at $80.00 per clean), management fees/commission, Body Corporate levies, rates, etc etc. By the time all that is taken into account there is no possible way an owner can make a viable return.

The managers of the complex argue that they have to compete with other resorts but all they really care about is having high occupancy.

Many owners have had to liquidate their investments for far less than their purchase price because they were misled into believing that the holiday rentals would cover their repayments.

Bottom line is that you should think very carefully about purchasing an apartment for holiday letting.
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The opinions expressed in this blog are personal and not intended in to be advice in any way. I have spent many years participating on a number of different Body Corporate Committees. I am a dealer in Vintage Movie Memorabilia specialising in original movie posters and movie art. http://www.moviemem.com/I also present a radio programme on Jazz Radio 94.1fm Monday - Friday afternoons on the Gold Coast.

Illegal Parking or a free for all?

Bodies Corporate often have to deal with vehicles that have been illegally parked and they usually go through a combination of the following steps:

• notify the owner of the vehicle
• place a notice on the vehicle requesting that it be moved.
• give a further notice if the vehicle is not moved within a set time frame
• have the vehicle towed if it is not moved within a reasonable time frame

Well, it seems that a recent decision might prevent Bodies Corporate from taking these steps without:

• issuing a formal contravention notice
• obtaining an order from the commissioners office which might take months to receive

There has been a report that one Body Corporate was ordered to retrieve a car that had been towed away and pay expenses to the owner.

Many committees will feel that it is not worth the aggravation of going to the trouble of lodging applications to the commissioner and issuing contravention notices over a perceived illegally parked vehicle.

This is another example of how the system fails owners by being unnecessarily complicated.

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The opinions expressed in this blog are personal and not intended in to be advice in any way. I have spent many years participating on a number of different Body Corporate Committees. I am a dealer in Vintage Movie Memorabilia specialising in original movie posters and movie art. http://www.moviemem.com/I also present a radio programme on Jazz Radio 94.1fm Monday - Friday afternoons on the Gold Coast.

Queensland Body Corporate - A system out of control

In the last twenty years or so there has been an explosion of communal developments in Queensland. These include gated communities, high rise unit complexes, townhouse developments and various other complexes where owners coexist in an environment that is managed by a Body Corporate.

The Body Corporate is usually controlled by owners and is intended to ensure that the common property is maintained, a set of by laws are in place and finances are managed.

So far, so good. The problem with all of this is that each Body Corporate is governed by a complex set of rules and regulations known as the BCCM Act.

Many owners who make the courageous decision to become involved in Committees find themselves embroiled in the tangled web of The Act that can make the smallest decision unnecessarily complicated.

Many Bodies Corporate find that they cannot survive without a Body Corporate Manager who provides a secretarial and accounting service to ensure that they comply with the regulations.

Others rountinely enlist the help of lawyers to unravel the complexities of The Act in dealing with disputes or contractual issues that plague Bodies Corporate.

Perhaps the greatest problem with the system is that the legislation is not properly enforced.

A Government department fronted by The Commissioner for Body Corporate hears and rules on disputes but no one actually polices the regulations unless a formal dispute has been lodged. The result is that many Bodies Corporate simply ignore the legislation usually through apathy and ignorance of the regulations.

Take the case of one complex of six units. Each owner shows no interest in the Body Corporate. They have no Body Corporate Manager. They do not hold meetings or keep records of any substance. One owner banks the levies and organises lawn mowing but little else is done.

This is all fine until something goes wrong. An insurance policy allowed to lapse, structural problems with the building, a dispute about use of the common property, etc etc can all result in a major problem for a Body Corporate who ignores the legislation and yet many Bodies Corporate meander along like an accident waiting to happen.

Other Bodies Corporate, with owners who take more interest in ensuring that their building functions within the law, struggle to cope with the endless amount of work that can result from simply looking after the best interests of the owners.

In many cases, developers install Caretakers into complexes with lengthy contracts to maintain the property. However there are little or no checks and balances as to whether the Caretakers have the ability, experience or desire to actually fulfill their obligations. If Bodies Corporate are not satisfied with the performance of the Caretakers they have to jump through hoops to resolve the issues due to the complexities of The Act.

As is so often the case, the Body Corporate Managers and the Lawyers thrive on all of this, lining their pockets as The Act becomes more complex.

In the coming months I will be highlighting some of the major issues that confront Bodies Corporate, including some Adjudications that can make living in a Community Title Scheme with a Body Corporate a nightmare and threaten to destroy a lifelong investment.

Watch this space

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I have spent many years participating on a number of different Body Corporate Committees. I am a dealer in Vintage Movie Memorabilia specialising in original movie posters and movie art. http://www.moviemem.com/I also present a radio programme on Jazz Radio 94.1fm Monday - Friday afternoons on the Gold Coast.