Bridgewater Gardens v Ireland [2022] QCAT 330

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Bridgewater Gardens v Ireland [2022] QCAT 330 PARTIES: BRIDGEWATER GARDENS BODY CORPORATE CTS 17225 (applicant) v EDWARD IRELAND (respondent) APPLICATION NO/S: MCDO1256-21 MATTER TYPE: Minor Debt DELIVERED ON: 13 September 2022 HEARING DATE: 11 July 2022 HEARD AT: Brisbane DECISION OF: Member Dr Collier ORDERS: The Respondent is to pay the Applicant $2,653.50 by 14 October 2022. CATCHWORDS: BODY CORPORATE AND COMMUNITY MANAGEMENT – MANAGEMENT AND CONTROL – BODY CORPORATE: POWERS DUTIES AND LIABILITIES – Body Corporate and Community Management Act 1997 – minor civil dispute – exclusive use of an area of common property – costs reasonably incurred by body corporate – recovery of unpaid body corporate debt and debt recovery costs from lot owner – whether debt recovery costs recoverable as a “minor debt” Body Corporate and Community Management Act 1997 (Qld), s 171(2)(a), s 229A, s 337(3), s 337(3)(a) Body Corporate and Community Management (Accommodation Module) Regulation 2008, s 143, s 152, s 156, s 173(1) Body Corporate and Community Management (Standard Module) Regulation 2008, s 194(1) Building Units and Group Titles Act 1980 (Qld), s 30(7), s 30(7)(a) Body Corporate for Victoria Gardens v Kelly [2012] QCAT 426 -- 1 of 10 -- 2 APPEARANCES & REPRESENTATION: Applicant: Pamela Benton, Body Corporate Chairperson Respondent: Edward Ireland REASONS FOR DECISION [1] Bridgewater Gardens (the complex) is a pleasant medium-density apartment building in the desirable Brisbane suburb of Kangaroo Point. The complex was built about the year 1995 and contains 38 apartments over six levels. [2] Mr Ireland owns and occupies Unit 10 within the complex. Unit 10 is located on the ground floor. [3] The body corporate of Bridgewater Gardens (body corporate) has been seeking payment from Mr Ireland as his contribution to gardening and maintenance work completed at the complex since 2017. [4] Upon its creation, in 1995, the body corporate and the owners (then known as “proprietors”) were subject to By-laws enacted under the Building Units and Group Titles Act 1980 (Qld) (BUGTA)1 (the 1995 By-laws). The 1995 By-laws comprise the by-laws registered on 26 April 1995 and the Allocation of Special Rights over Common Property registered on 27 April 1995. [5] A new Community Management Statement (CMS) was executed on 10 October 2007 by the body corporate under the Body Corporate and Community Management Act 1997 (Qld) (BCCM Act), and registered on 20 July 2007. This CMS contained a new set of By-laws (the 2007 By-laws) that substantially replicate the 1995 By-laws, but with some minor additions and amendments. This CMS also appears to have had the effect of repealing the 1995 By-laws.2 [6] This claim has a convoluted history, having been the subject of an earlier claim started in the Magistrates’ Court that was not pursued. QCAT’s jurisdiction to hear this matter [7] Section 229A of the BCCM Act authorises this Tribunal to hear and determine a claim for a debt between a body corporate and an owner: 229A Disputes about particular debts (1) A claim to recover a debt the subject of a debt dispute that is a claim under the Queensland Civil and Administrative Tribunal Act 2009, schedule 3, definition minor civil dispute, paragraph 1(a) is, under paragraph 2 of that definition, a minor civil dispute. … (7) In this section— 1 BUGTA, s 30(7). 2 BCCM, s 337(3)(a). -- 2 of 10 -- 3 debt dispute means a dispute between a body corporate for a community titles scheme and the owner of a lot included in the scheme about the recovery, by the body corporate from the owner, of a debt under this Act. [8] A monetary liability imposed under an exclusive use by-law on the owner of a lot included in a community titles scheme may be recovered as a debt.3 What the Applicant Seeks [9] The body corporate seeks to have Mr Ireland pay it $7,748.70, comprising: (a) A debt of $7,501.20, itself comprising: (i) $2,406.00 for garden maintenance; and (ii) $4,799.20 for legal fees; and (b) Debt recovery charges of $297.00; (c) Bailiff fees of $120.00; and (d) Filing fee of $127.50. [10] Garden Maintenance costs of $2,406.00 are supported by invoices.4 Where the work involved only Unit 10, these costs have been claimed in total; where the work involved several units, these costs have been claimed on a proportional basis against each involved unit. [11] Under the 1995 By-laws the proprietor of each of Units 1 to 10 was allocated an “… identified or defined area of common property subject to the grant of an exclusive use and enjoyment …”.5 [12] Each proprietor benefiting from the exclusive use of an area of common property was subject to the following provisions:6 (a) The Body Corporate by its contractors or employees shall at all reasonable times have access to the areas of exclusive use for the purposes of gardening, cleaning, maintenance and repair of the common property; (b) The garden in the exclusive area shall be maintained and/or replanted by the Body Corporate at the reasonable cost of the proprietor from time to time; and (c) The proprietor from time to time of each such lot shall be obligated to pay the Body Corporate upon demand sums equal to the reasonable cost to the Body Corporate of any gardening expense incurred by the Body Corporate for the area. 3 Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module), s 173(1); Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module), s 194(1). 4 Tab “B” of the details of claim appended to the Application filed 26 November 2021. 5 By-law 42 of the 1995 By-laws, “… for courtyard and garden purposes only …”. 6 By laws 42 (iii), (iv), and (v) of the 1995 By-laws. -- 3 of 10 -- 4 [13] Unit 10 was allocated a portion of the common property for the exclusive use of the proprietor of that unit, described in the 1995 By-laws as area “J”.7 [14] There is no controversy concerning the fact that gardening work has been performed as claimed by the body corporate on the common property comprising that portion allocated for the exclusive use of Unit 10. [15] Until such time as the body corporate registered its CMS under the BCCM Act, the 1995 By-laws continued to apply.8 As mentioned earlier, the CMS containing the 2007 By-laws was registered on 20 July 2007. [16] The 2007 By-laws make provision for the same exclusive use by Units 1 to 10 of certain common property as contained in the 1995 By-laws, with substantially the same provisos.9 What the Respondent Contends [17] Mr Ireland, through his solicitor, denies that he is liable to pay the amount demanded by the body corporate for garden maintenance on six grounds, which I summarise as follows: (a) The body corporate has not identified its entitlement to the claimed debt; (b) By-law 42 of the 1995 By-laws is invalid; (c) By-law 33 of the 2007 By-laws is invalid; (d) The costs incurred by the body corporate involve improvements to the common property, not maintenance; (e) The body corporate should have allowed Mr Ireland to complete the works himself; and (f) The body corporate should have given Mr Ireland prior notice concerning the costs the body corporate would incur. [18] Mr Ireland, through his solicitor, denies that he is liable to pay all, or certain, debt recovery and legal fees demanded by the body corporate on several grounds, which I summarise as follows: (a) The body corporate is not entitled to recover legal fees arising from maintenance costs; (b) Legal costs incurred in recovering maintenance costs are not a contribution or an instalment of a contribution within the meaning of s 152 of the Accommodation Module,10 and may not be recovered under s 156 of the Accommodation Module; (c) Mr Ireland was not liable for the garden maintenance costs claimed and cannot, therefore, be liable for the legal costs involved in recovering them; 7 The identification given to this portion of the common property is described in the later Community Management Statement dated 10 October 2007 as being “Area ‘L’ on Level ‘B’ Plan”, and is described as “Courtyard and Garden”. 8 BCCM Act s 337(3), for a period not exceeding 3 years after the BCCM Act was proclaimed. 9 By-law 33 of the 2007 By-laws. 10 Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Qld) -- 4 of 10 -- 5 (d) The legal fees claimed are excessive in the circumstances; (e) Some of the legal fees claimed relate to legal costs incurred other than in recovery of the claimed debt; and (f) Debt recovery charges (listed as either “Arrears Fees” or “Arrears Notice Fees”) because these have not been particularised, have not been properly or reasonably incurred, and because the debt recovery process has been mismanaged [19] These contentions are considered below. Liability for the garden maintenance costs [20] First, Mr Ireland says that the body corporate has failed to particularise any entitlement to pass on to him the maintenance costs incurred. The evidence disclosed that the body corporate has incurred and paid the costs claimed, that it has invoiced Mr Ireland for his portion of the costs, and that it has an evident entitlement under the By-laws to demand the debt claimed. [21] Second, Mr Ireland says that By-law 42 of the 1995 By-laws is invalid because it contravenes s 30(7)(a) of BUGTA. [22] s 30(7) of BUGTA said the following: With the written consent of the proprietor or proprietors of the lot or lots concerned, a body corporate may, pursuant to a resolution without dissent make a by-law— (a) conferring on the proprietor of a lot specified in the by-law, or on the proprietors of the several lots so specified— (i) the exclusive use and enjoyment of; or (ii) special privileges in respect of; the whole or any part of the common property, upon conditions (including the payment of money at specified times or as required by the body corporate, by the proprietor or proprietors of the lot or several lots) specified in the by-law [23] Mr Ireland says that By-law 42 is an invalid exercise of this provision because it fails to: (a) Specifically identify the courtyard or garden areas to which exclusive use apply; nor (b) Specify the rights which exist in relation to the courtyard and garden areas. [24] Reference to paragraphs [11] and [13], above, shows that the relevant area comprising exclusive use, and the rights of the proprietor in that regard, were sufficiently identified in the 1995 By-laws. This contention is rejected. [25] Third, Mr Ireland says that By-law 33 of the 2007 By-laws is invalid as contravening s 171(2)(a) of the BCCM Act. [26] Section 171(2)(a) of the BCCM Act provides that: An exclusive use by-law that specifically identifies the common property or body corporate asset to which it applies, other than an exclusive use by-law contained in the first community management statement for the scheme may attach to a lot only if the lot owner agrees in writing before the passing of the resolution without dissent consenting to the -- 5 of 10 -- 6 recording of the new community management statement to incorporate the exclusive use by-law, or the lot owner votes personally in the resolution [27] In this case Mr Ireland says that this provision was breached because: (a) No written agreement in respect of by-law 33 was obtained from the Respondent prior to the 2007 CMS being registered; (b) By-law 33 was not authorised by the Body Corporate by a resolution without dissent; and (c) In the alternative, if the motion was authorised by a resolution without dissent, the Respondent did not personally vote in the resolution. [28] The body corporate contends that the 2007 By-laws did not require a resolution without dissent to be valid because either: (a) The BCCM Act provided that the 1995 By-laws would lapse 3 years after the BCCM Act came into force unless a CMS under the BCCM Act was registered; (b) The body corporate was legally obliged under the BCCM Act to register a CMS, containing by-laws, to supersede the 1995 By-laws; (c) The 2007 By-laws did not materially alter the rights of any Unit owner compared to the 1995 By-laws. [29] Mr Ireland’s arguments cannot apply unless the exclusive use by-laws contained in the 2007 By-laws in the CMS are not “… contained in the first community management statement for the scheme …”. The key question becomes: do the CMS and the 2007 By-laws constitute the first community management statement for the complex? [30] The CMS heading declares that it is a “FIRST NEW COMMUNITY MANAGEMENT STATEMENT”, with the word “FIRST” struck out. But, as found earlier, the 2007 By-laws in the CMS represent, essentially, a continuation of the 1995 By-laws. [31] The word “FIRST” in the official form used for the purpose of registering the CMS is most likely intended to apply when the CMS of a new strata property is being registered. This does not apply to the complex here. In this case, striking out “FIRST” and incorporating the word “NEW” is intended to mean nothing more than this represents a new CMS for the complex. [32] Based on the facts that the body corporate was obliged to register a CMS in accordance with the BCCM Act, and that the terms of the 2007 By-laws were, essentially, a continuation of the 1995 By-laws, that the rights and obligations of owners benefitting from the earlier exclusive use by-laws were not materially affected upon registration of the CMS, and that nothing appears to turn on the heading of the CMS as being a New Community Management Scheme, I conclude that the 2007 By- laws contained in the CMS do not represent the first community management statement for the complex. [33] The further conclusion from this is that the body corporate did not require the consent, a vote by, or the agreement of Mr Ireland to the terms of, or the registration of, the CMS and the 2007 By-laws. Therefore the CMS and 2007 By-laws are valid and -- 6 of 10 -- 7 effective, and Mr Ireland’s contention that by-law 33 of the 2007 By-laws is invalid is rejected. [34] Fourth, Mr Ireland says that the costs incurred by the body corporate are not maintenance but involve improvements to the common property. [35] Documents tendered by the body corporate11 show that the ten claims for maintenance involving Unit 10 were raised over the period from early 2017 until late 2020. Six of these ten claims represent matters such as hedge trimming and weed spraying which are maintenance issues. Three claims involve the removal of trees or similar, and one involves the supply and compaction of road base. Noting that the complex was at least twelve years old when these last four activities were undertaken, that most invoices involved work on several units in the complex and have been fairly back-charged to all relevant owners, and accepting that other owners have paid the charges so levied by the body corporate, I conclude that each of the ten claims represent maintenance and none involve works of a capital nature. This contention, that the works were capital in nature and not maintenance, is rejected. [36] Fifth, Mr Ireland contends that he should have been given the opportunity to complete the works himself. [37] Under by-law 33 of the 2007 By-laws, in respect of exclusive use areas, the body corporate has the following rights: 33.4 The body corporate by its contractors or employees shall have access to the exclusive use areas at all reasonable times for the purposes of gardening, cleaning, maintaining and repairing them. 33.5 The gardens shall be maintained and replanted by the body corporate from time to time at the cost of the owner of the lot. 33.6 The owner of the lot shall pay to the body corporate upon demand the reasonable cost of maintaining the courtyard and garden. [38] There is no requirement in the 2007 By-laws for an owner to be given the opportunity to complete maintenance work of exclusive use common areas. Indeed, there are sound reasons why this is not permitted, principally the objective of maintaining uniformity and consistency in common areas. The contention that Mr Ireland should have been given the opportunity to complete the work is rejected. [39] Sixth, Mr Ireland says that he should have been given prior notice concerning the costs the body corporate would incur. There is no requirement in the 2007 By-laws for the body corporate to provide such detail and, providing the body corporate has acted reasonably, which I find that it has, there is no reason to impose such a duty in this case. I reject this contention. [40] The conclusion from this analysis is that Mr Ireland owes the body corporate the amount claimed for garden and related maintenance associated with his area of exclusive use. 11 Tab “A” of the details of claim appended to the Application filed 26 November 2021 -- 7 of 10 -- 8 Liability for legal costs [41] I will deal first with Mr Ireland’s contention that legal costs incurred in recovering maintenance costs are not a contribution or an instalment of a contribution within the meaning of s 152 of the Accommodation Module12 and may not be recovered under s 156 of the Accommodation Module. S 152 of the Accommodation Module deals with the proper keeping of records and accounts, while s 156 deals with the purpose of Chapter 8 of the Module. The references made in this contention appear incorrect. [42] Allowing that this contention may have been misdescribed, and relates to other provision in the Modules, my perusal of the Accommodation Module and the Standard Module13 suggests that Mr Ireland is referring to s 143 of the Accommodation Module and s 166 of the Standard Module which deal with the payment and recovery of body corporate debts. The Standard Module and the Accommodation Module provisions in this regard are the same, and state: If a contribution or contribution instalment is not paid by the date for payment, the body corporate may recover each of the following amounts as a debt— (a) the amount of the contribution or instalment; (b) any penalty for not paying the contribution or instalment; (c) any costs (recovery costs) reasonably incurred by the body corporate in recovering the amount. [43] A “contribution” as contemplated by the BCCM Act concerns that portion of a lot owner’s debt to the body corporate that relates to costs incurred by the body corporate which must be shared among the lot owners according to a specified formula. It must be distinguished from a debt owed by an individual lot owner to the body corporate arising as a “body corporate debt”. [44] A “body corporate debt” is defined in the Dictionary of each of the Standard Module and Accommodation Module as: body corporate debt means a following amount owed by a lot owner to the body corporate— (a) a contribution or instalment of a contribution; (b) a penalty for not paying a contribution or instalment of a contribution by the date for payment; (c) another amount associated with the ownership of a lot. Examples of another amount— • an annual payment for parking under an exclusive use by-law • an amount owing to the body corporate for lawn mowing services arranged by the body corporate on behalf of the owner [45] The body corporate seeks to recover, as a debt from Mr Ireland, “Arrears Fees” of $297.00 and “Legal Fees” of $4,362.9 under the provisions of by-law 34 of the 2007 By-laws. [46] Insofar as it is relevant here, by-law 34 of the 2007 By-laws provides: If the Body Corporate incurs or is required to pay any costs and expenses (including legal costs calculated on a solicitors and own client basis) in respect of any action taken against 12 Body Corporate and Community Management (Accommodation Module) Regulation 2008 13 Body Corporate and Community Management (Standard Module) Regulation 2020 -- 8 of 10 -- 9 any owner or occupier … for any other reasons then the owner or occupier shall pay on demand to the body corporate the costs and expenses which shall be a liquidated debt …. [47] In the earlier case before this Tribunal of Body Corporate for Victoria Gardens v Kelly, the learned Adjudicator said, in respect of debt recovery fees:14 These are liquidated sums incurred on behalf of the lot owner. It is unlikely that the legislative intent was to include in the scope of this provision any allowance for debt recovery fees, particularly where disputed. There was ample opportunity to expressly include such fees in the section, or even in the included examples, and the conclusion comfortably to be drawn by the absence of reference to debt recovery fees in this provision is that the statutory drafters did not intend them to be caught. Debt recovery fees are not, therefore, an “amount owed” by the owner of the lot as a “body corporate debt”. [48] In the same case, in respect of whether legal fees incurred in recovering the debt owed constitute a body corporate debt, the Tribunal said:15 The body corporate’s application assumes that QCAT can determine whether the [legal] fees have been “reasonably incurred” and therefore whether they are recoverable as a debt. However, this process misses out a step. Those fees have been asserted by the Body Corporate as body corporate debt in a statement issued by them before any determination has been made as to whether they are fair and reasonable, and without any agreement by the lot holder. The body corporate is not able to recover those fees in that way until the determination has been made by a court of competent jurisdiction that they are fair and reasonable and, therefore, owed as a debt. Prior to such an adjudication by a court of competent jurisdiction the claim for these fees remains unliquidated. [49] The conclusions drawn by the Tribunal in Body Corporate for Victoria Gardens v Kelly appear correct and, until the legal fees have been determined by a Court of competent jurisdiction, they remain an unliquidated sum and cannot be claimed as a minor debt before this Tribunal. [50] This conclusion is reinforced by an admission by the body corporate that the legal costs associated with the collection of the debt against Mr Ireland have been mismanaged:16 The mis-management of this debt collection by Strata Dynamics and payment of lawyers invoices without Committee approval has escalated the lawyers costs to $4,799.20 on a debt of $2,405 [in fact, $2,406] for garden maintenance. [51] Further, it appears from the particularised bills prepared by Mathews Hunt Legal, instructed by Strata Dynamics, that they include costs that may not relate to the issue of debt recovery such as detailed letters of advice and a review of some laws. [52] The body corporate is not entitled to recover, from this Tribunal, at this time, either the arrears fees or the legal fees sought. Given that the legal fees likely to be allowed by a Court of competent jurisdiction in this matter would be much less than the amount claimed, the body corporate may find little merit in pursuing them against Mr Ireland. 14 [2012] QCAT 426, par 14(c). 15 Ibid, par 14(d). 16 Par 3, Tab “A” of the details of claim appended to the Application filed 26 November 2021. -- 9 of 10 -- 10 Outcome [53] It is the decision of the Tribunal that the Applicant, the body corporate, is entitled to recover from the Respondent, Mr Ireland, $2,653.50 made up of the following amounts: (a) $2,406.00 for garden maintenance; and (b) $120.00 for bailiff fees; and (c) $127.50 filing fee. Decision [54] The Respondent is to pay the Applicant $2,653.50 by 14 October 2022. -- 10 of 10 --