Body Corporate for SL8 v Falzon and Anor [2012] QCAT 556

CITATION: Body Corporate for SL8 v Falzon and Anor [2012] QCAT 556 PARTIES: Body Corporate for SL8 CTS 40021 v Michelle Louise Falzon Roslyn Mary Swadling APPLICATION NUMBER: MCDT51837-11 MATTER TYPE: Other minor civil disputes matters HEARING DATE: 25 May 2012 HEARD AT: Southport DECISION OF: Michael Howe, Adjudicator DELIVERED ON: 26 October 2012 DELIVERED AT: Southport ORDERS MADE: The Respondents pay the Applicant the sum of $1,044.76 for claim and costs and interest on claim of $84 by 23 November 2012. CATCHWORDS: Minor civil dispute – body corporate levies – recovery costs – costs reasonably incurred – QCAT jurisdiction for recovery of body corporate levies – requirement of notice of change of ownership to body corporate – compromise of action Queensland Civil and Administrative Tribunal Act 2009, s 150 Body Corporate and Community Management Act 1997, s 229A Body Corporate and Community Management (Accommodation Module) Regulation 2008, ss 143(3), 191, 192 APPEARANCES and REPRESENTATION (if any): APPLICANT: William Payne RESPONDENT: Michelle Falzon -- 1 of 5 -- 2 REASONS FOR DECISION Background [1] Body Corporate for SL86 seeks $1,470.12 representing costs it has paid pursuing the respondents for outstanding corporate levies. [2] The respondents became registered owners of unit 136 in the body corporate development on 10 September, 2009. Apparently the original purchaser of the unit was intended to be a company associated with the respondents, Paradigm Communications Pty Ltd. Mrs Falzon was a shareholder of that company together with her husband who is the director. Mrs Falzon and her mother, Mrs Swalding, ended up buying the unit however. [3] A Form 8 notice to the body corporate concerning change of ownership, and dated 4 September 2009, was lodged with the body corporate on or about that day. The name of the registered owner on that form however was the company, Paradigm. The address for service noted was 10 Edna Street, Willoughby, New South Wales. [4] The body corporate sent out levy notices and other notices to Paradigm at the Edna Street address. They weren't paid. Somehow there was contact however with the respondents at which stage the levies had been outstanding for some time. [5] Mr Falzon, the first respondent's husband, told the body corporate that the company was not responsible for the charges, because it wasn't the owner of the unit. [6] The body corporate commenced proceedings to recover the levy notices and penalties associated from Paradigm. Those proceedings were brought to conclusion without a result in respect of the body corporate fees and penalties, apparently because the body corporate accepted Paradigm’s stand that it could not be charged with the claim because it was never the owner of the unit. [7] Another Form 8 showing Mrs Falzon and her mother as owners of the unit was lodged with the body corporate on 8 September, 2010 with the notation on the document that those individuals acquired the unit "around” 15 September, 2010. [8] Mrs Falzon and her mother paid the outstanding levies but the recovery costs to that time remained outstanding and forms the basis of the claim now before me. Mrs Falzon maintains there was agreement reached between the parties that the recovery costs would be forgone upon payment of the levies. The body corporate says there was never any such compromise. Notice [9] The respondents say they shouldn't be responsible for the recovery costs because Paradigm was noted on body corporate records, and they were never personally given notice of the levies. [10] Put simply that argument can't be right. It was their error in lodging an incorrect document in the first place that has caused all the problems. -- 2 of 5 -- 3 [11] By s 191 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 a new owner of a unit is obliged to give notice to the body corporate of the change of ownership. There is a penalty associated with failure to do so. Part of the obligation is to give an address for service for documents. By s 192 it is clear there must always be an address for service because the regulation provides that if no address for service is notified the last address for service notified applies. [12] The last address for service was 10 Edna Street, Willoughby, and though that was the address of Paradigm apparently, the body corporate did nothing wrong in sending notices to that address. The respondents cannot now rely on their breach of the provisions of s 191 to escape responsibility for payment of levies. [13] As to Paradigm being recorded on the body corporate records, by s 143(3) of the Regulation, a body corporate debt may be claimed against a person who was the owner of the lot when the debt became payable. That is Mrs Falzon and her mother. That capacity to claim is not contingent on the owners filing correct notices of transfer. It is dependent on the actuality of ownership as recorded in the Office of the Registrar of Land Titles. That showed the respondents as and from 10 September, 2009. [14] Given the connection between Paradigm and Mrs Falzon, there is certainly nothing unfair in this conclusion. I hold that notice of the levies was given to Mrs Falzon and her mother when the notices were given to Paradigm at the address notified to the body corporate in the first Form 8 document. Debt [15] QCAT has jurisdiction in respect of body corporate debts pursuant to section 229A(1) of the Body Corporate and Community Management Act 1997. A claim to recover a debt the subject of a debt dispute is a minor civil dispute claim in QCAT. In that provision a debt dispute is defined as a dispute between a body corporate and the owner of a lot about the recovery of debt under the Act. [16] By s 143 of the Regulation the body corporate may recover the amounts of a contribution, and the penalty for not paying the contribution and any costs, called recovery costs, reasonably incurred by the body corporate in recovering the amount. It is the last item, recovery costs, which is usually in dispute between parties in proceedings before QCAT. Compromise [17] The respondents say it was agreed with the recovery agents acting for the body corporate that if the respondents paid the levies no other costs would be claimed from them. Mr Falzon sent an e-mail to the agent on 24 February 2011 saying "we would have to dispute the liquidated claim costs as the original dispute was not with Michelle Falzon and Ros Swadling but with Paradigm Communications Pty Ltd. I can settle the outstanding ledger balance today if this can be agreed upon." [18] He received the following reply from the agents "as long (sic) you make full payment for the Body Corporate Fees that should be fine. However you must notify the Body Corporate Committee of your issues regarding the -- 3 of 5 -- 4 Un-Liquidated Claims. If the matter is unresolved in the future, the matter may be referred back to us." [19] If one accepts Mr Falzon's submission that the matter of penalties and recovery costs were thereby compromised, the latter part of the agent’s e- mail must be ignored, not that the first line of the email was particularly clear. Mr Falzon said in his e-mail he would have to dispute the liquidated claim costs. I take it that the message conveyed, and was understood by the agents to be, simply an expression of intention to dispute recovery costs with the body corporate. On that basis there was no compromise agreed. Both parties should have taken more care in their communications. The communications were not such as to clearly show a consensus was reached on settling all monies outstanding. Recovery Costs [20] In so far as I have concluded that effective notice was given to the respondents the only matter outstanding now is to conclude whether the recovery costs sought were reasonably incurred. [21] The body corporate has filed statements of account and copy tax invoices in support of their claim. I find it hard to understand however how their claim of $1,470.12 is made up. They don’t make that clear. [22] I gave both parties the opportunity to file statements of evidence. [23] The body corporate filed a document entitled "Unliquidated Claims Statement" but there is no real detail noted there as to the work involved, and in any case that statement only totals $1,234.04. [24] There are copies of tax invoices from the recovery agents to the body corporate in respect of the period 13 April, 2010 to 15 November, 2011 totalling $1,001.49. Given the applicant in this minor civil dispute bears the onus of showing that its claim for recovery costs involve costs which were reasonably incurred, some detail concerning the actions taken associated with the costs must be given. There is no such detail available from a perusal of the document entitled Unliquidated Claims Statement. Accordingly the only costs in my opinion which are appropriate to consider are the costs totalling $1,001.49 set out in the copy tax invoices. [25] Whether a cost is reasonably incurred will depend on what was done, whether it was appropriate to incur the cost, when it was done and the amount of the cost involved. It is not so very different to the process performed in QCAT on a regular basis in respect of solicitors’ costs claimed against clients. [26] Invoice 84509 for the period ending 13 April, 2010 covers the agents receiving instructions to recover the outstanding levies, conducting searches, sending a letter of demand to the owner and a confirmation letter to the body corporate. There are outgoings involved. The invoice is for $133.61. That cost seems reasonable to me and should be allowed. [27] Invoice 85420 for the period ending 27 April, 2010 involves additional searches on the "owner" in the letter of demand sent to an alternate address. The cost claimed of $52.80 again seems reasonable given the -- 4 of 5 -- 5 problem with location of the respondents and the true identity of the owner of the unit. [28] Invoice 86235 for the period ending 12 May 2010 talks about further ASIC searches and obtaining details of one company the owner is director of. There is also a telephone call to the registered office of the company. That cost is $50.46. I allow that cost though I have some hesitation in respect of the associated company search, but on the basis of that hesitation take comfort in disallowing the next invoice of 86623 in the sum of $35.20 which seems to me to involve unnecessary extra work. [29] In respect of invoices 90154 and 96504, this appears to cover the same work done twice but done because nothing happened on the file for over 6 months. There is no indication as to why that delay occurred. It was up to the applicant to explain away the delay before me, or at least to explain the basis of the claim. I allow one amount of $44. [30] Invoice 96785 is concerned with the institution of proceedings against Paradigm. Given that unnecessary proceeding resulted from the failure of the owners of the unit, Mrs Falzon and her mother, to ensure the correct details of ownership and address for service were provided to the body corporate, in my opinion these costs are reasonably to be recovered from the owners. Perhaps they should have been the subject of a claim in the earlier proceeding, but in my opinion I should allow the costs of $407.54 as claimed because they are directly attributable to the error in identity through incorrect notice caused by or to be sheeted home to the respondents. Certainly the respondents have refused to pay those expenses incurred by the body corporate. [31] Invoice 97152 for $99 also seem reasonable costs associated with incorrect ownership and address for service. I allow it. [32] Finally, invoice 107431 involves instructions associated with the present proceedings. They seem reasonable to force recovery in the circumstances and they are allowed in the sum of $134.88. [33] Accordingly the body corporate is successful to the extent of $922.29. [34] The body corporate is also entitled to its costs as claimed save the amount of claim awarded falls under $1,000 and the recoverable filing fee is therefore currently $55 (as it currently stands). [35] Interest at 10% on the amount of $922.29 from commencement of the current proceedings amounts to $84. -- 5 of 5 --