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.

Body Corporate Levy increase Magic Mountain owner loses appeal to QCAT

The implications of The Body Corporate and Community Management Amendment Bill 2012, which was passed on March 19th 2013, have started to affect many owners who now face a significant Body Corporate Levy increase.

Owners have had to cope with the changes to legislation and various QCAT challenges over the last 10 years leaving many confused and upset over Body Corporate Levy increases that they cannot afford.

When the recent legislation was passed, some angry owners vowed to fight Body Corporate Levy increases with legal challenges.

It is important to note that the new legislation is not automatically applied. There is a process that owners must follow to ensure that changes to the Lot Entitlements are implemented. The first step is for an owner to ask the Body Corporate Committee to revert the levies in accordance with the legislation.

Some owners have already commenced the process. In one case, former 60 Minutes reporter, Ian Leslie successfully applied to have the levies at Magic Mountain Two reverted in accordance with the new legislation. Although this was a formality, many owners were obviously upset that they faced a Body Corporate Levy increase.

Mr Phillip Williams, another owner at Magic Mountain, challenged the reversion in an application to QCAT. (An interesting aside is that the QCAT judgment refers to the applicant as Phillip Williams in one reference and Paul Williams in another - probably an unfortunate error but it should be corrected!).

In the QCAT decision, Dr J.R.Forbes commented:
"Naturally, the applicant strongly opposes the effective reversal of the restoration of pre-July 2003 contributions that he secured in 2012. Plainly he regards the recently amended law as arbitrary and unfair. No doubt other unit holders felt the same when the former section 379 enabled one owner (perhaps among hundreds) to upset the existing scale of contributions. But these considerations do not entitle the Tribunal to disregard the present law."

The Application from Mr Williams was dismissed and the comments that were made suggested that the Application had little merit...
"The Tribunal has no jurisdiction to entertain the application for leave to appeal filed on 15 May 2013. Furthermore, the Tribunal has no jurisdiction to give advisory opinions or answer hypothetical questions, or to substitute its own policies for those of the legislature, or to anticipate changes that may or may not be made to the Act "later this year"."
"The applicant's case is not advanced by such extravagant rhetoric as "indefensible hypocrisy", "a conflicted ambiguous Act", "Iegislative thuggery" or vague and misconceived allusions to fair trading laws. I note that the Body Corporate does not press for costs on this occasion, but that is a future possibility that the applicant could usefully bear in mind."

There are indeed many owners who are horrified at the Body Corporate Levy increase while a smaller percentage of owners are delighted at the decrease in their levies.

Owners who are aggrieved at the changes to the legislation need to understand that the changes are now Law irrespective of how unfair they are perceived to be. Any challenge in regards to the levies must be in accordance with the Law and on very specific and limited grounds.

However, one owner pointed out that when he purchased his apartment the contract specified the Lot Entitlements. He feels that the new Law has not considered that original contracts may be breached by changing the Lot Entitlements.  Although he does raise an interesting point, I doubt that anyone would be able to use that to challenge the change in the Law.

Those who feel that the levies should revert to the original levies that were set by the Developers would be better off directing their feelings to the Queensland Government rather than QCAT.

There are probably more than enough owners who have been adversly affected by the new legislation and the Body Corporate Levy increase to have a real influence on the Goverment but they will not get anywhere unless they voice their opinions in large numbers.

Adjudicator Decides! ONE CENT UNDERPAYMENT OF Body Corporate LEVIES

Natalie Green unwittingly paid her levies one cent short. As a result, she was denied voting rights at an EGM. A dispute was lodged and an Adjudicator was required to rule on a one cent underpayment of Body Corporate levies.

Yes, it is hard to believe but I suppose that rules are rules. In his findings the BCCM Adjudicator, D.Toohey stated "It seems harsh for someone to be deprived of their vote just because they unwittingly underpaid their levies by a tiny amount. However, there is no discretion for a returning officer or an adjudicator to allow a vote to be counted when a body corporate debt is owing." (see decision here)

Well, I guess that must be right. The Act has to be followed to the letter of the law. The Adjudicator's hands are tied. After all the law is the law and there cannot be any flexibility.

But wait!

Wasn't there a ruling recently that dealt with how the Act should be interpreted? I'm sure I heard something about that. Ah yes, the QCAT decision in the appeal of Application Number APL 157-12 (29th January 2013).

Dr J.R.Forbes said that the Act could be taken "liberally" which means that the Act should not be taken "strictly". In other words, some flexibility should be shown.

He states that “if the legislation were at all times and in all circumstances applied with utmost rigour and most precious attention to detail, its objects and policy would be retarded by endemic disputation, rather than advanced.”

You really could be excused for thinking that D.Toohey, in ruling on this dispute has applied "utmost rigour and most precious attention to detail".  All over a One Cent underpayment of Body Corporate levies!

Well, I guess the Adjudicators will attempt to rationalise all of this. I know all of the arguments that they will use (like whether there was a material loss or gain at stake) but the fact is that one ruling says that the Act should be interpreted liberally while another says that it must be followed to the letter of the law.

Ultimately, I would actually prefer to see that the Act is interpreted to the letter of the Law. That way, everyone knows where they stand.

If you think this is an isolated case of a seemingly contradictory ruling then I'm afraid you are mistaken. I will look at more contradictions in Adjudicator's rulings in future articles.

The opinions expressed in this article are personal commentaries and not intended in to be legal advice in any way. I have spent many years participating on a number of different Body Corporate Committees and provide an owner’s perspective on Body Corporate issues.

If you have any concerns or comments about any of the issues that are raised in these articles please use the form below to contact me.