Body Corporate for Victoria Gardens v Kelly [2012] QCAT 426

CITATION: Body Corporate for Victoria Gardens v Kelly [2012] QCAT 426 PARTIES: Body Corporate for Victoria Gardens CTS 19272 (Applicant) v Candida Elaine Kelly (Respondent) APPLICATION NUMBER: MCDO51745-11 MATTER TYPE: Other minor civil dispute matters HEARING DATE: 23 April 2012 HEARD AT: Brisbane DECISION OF: K Buxton, Adjudicator DELIVERED ON: 10 September 2012 DELIVERED AT: Brisbane ORDERS MADE: 1. The Respondent, Ms Kelly, pay to the Applicant, the sum of $707.87 in claim and costs within 14 days of the date of this order. CATCHWORDS: Recovery of unpaid body corporate fees and debt recovery costs – whether debt recovery costs recoverable as a “debt” – entitlement to set off Body Corporate and Community Management Act 1997 APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). REASONS FOR DECISION Introduction [1] The Applicant Body Corporate commenced proceedings to recover from Ms Kelly, as a debt, the sum of $1,255.43 in outstanding body corporate -- 1 of 6 -- 2 fees and debt recovery costs, (plus filing fees and interest, taking the total amount sought to $1,406.90). Both the body corporate fees and the debt recovery fees have been levied by the body corporate to Ms Kelly and the owner of lot 9 for the period 1 April 2010 to 1 September 2011 when these proceedings were filed. [2] Default judgment was obtained in the sum of $864.65 on 29 November 2011. This represented the amounts then outstanding as levied (of $705.43 in contributions and debt recovery fees plus fees and interest) and taking into account payments made by Ms Kelly to reduce the amount owing since commencement of the proceedings. [3] Ms Kelly was granted a reopening and an oral hearing took place in April. The parties then provided further written submissions in relation to the matter. [4] The Body Corporate seeks an order confirming the default decision. It argues that there is no defence to the claims against Ms Kelly and asks that, following the reopened hearing sought by Ms Kelly, her application to set aside the default decision should be refused. [5] Ms Kelly has submitted that she should not have to pay the amount sought, or all of it, because a large portion of the outstanding amounts claimed by the body corporate were for debt collection fees. A significant portion of the oral hearing was taken up with the magnitude of those fees and the amounts that Ms Kelly has been charged over time. The parties have also each addressed this issue in written submissions. Evidence [6] On 14 May 2012 Ms Kelly filed a statement issued by the Body Corporate on 9 May 2012 showing that debt collection fees from 1 April 2011 up to that point continued to accrue and totalled $1,171.28. The statement relied on by the body corporate (produced by Mr Payne (who sought leave to represent the Body Corporate) at the hearing and annexed to the body corporate’s submissions filed 14 May 2012), showed that the level of debt collection fees between 1 April 2010 and 29 November 2011 (overlapping with the 9 May 2012 statement) was $990.75 for that period. Without close analysis, but having regard to the overall quantum of the outstanding amounts ($1,255.43 at the time of commencement of these proceedings, and $2,309.87 as at the time the 9 May statement was issued), these debt collection fees appear disproportionately high. [7] However, in examining the detail of the claim currently before this tribunal, for amounts owing by fees up to the date of filing, and having regard to payments made by Ms Kelly since then, the total amount levied by the Body Corporate and owing at that time was $1,255.43, of which only $199.61 constituted debt recovery fees. [8] In the circumstances, the two questions for this tribunal are whether: -- 2 of 6 -- 3 a) the debt collection fees are recoverable as a debt as claimed by the body corporate; and b) the outstanding levies or contributions other than debt recovery fees are payable now by Ms Kelly. What does Ms Kelly owe the body corporate as a debt? [9] Ms Kelly argued that, if the debt recovery fees are not properly recoverable from her in these proceedings as a debt then all of the sums she has been charged, including for periods after these proceedings were commenced, should be set off against what she owes in this matter. [10] This tribunal cannot accede to this submission. The issues before this tribunal are confined to the claims made by the body corporate for the period 1 April 2010 to 1 September 2011. If subsequent claims are made by the body corporate for subsequent debt recovery fees, Ms Kelly may raise her set off claim in that context. [11] Therefore, the portion of the default decision which does not relate to debt collection fees is recoverable from Ms Kelly as a debt1 and she does not have a defence to this portion of the claim. The sum of $705.43, when reduced by the amount of $199.61 in debt recovery fees, totals $505.82. This amount is payable by Ms Kelly. [12] The debt recovery fees of $199.61 incurred by the body corporate in seeking to recover overdue and outstanding amounts from Ms Kelly were added to her statement and sued upon by the body corporate as a debt. [13] This tribunal has jurisdiction to deal with a “debt or liquidated demand”2. However, the provisions governing bodies corporate indicate that debt recovery fees may be recovered by the body corporate as a debt only in the circumstances described in that statutory scheme. The scheme involves a number of provisions which sit together somewhat uncomfortably. I will do my best to simplify them for present purposes. [14] Both the Standard and Accommodation Module Regulations to the Body Corporate and Community Management Act 1997 (BCCM Act) are enacted in the same terms and apply equally to the relevant scheme. Those regulations deal with the recovery of debt recovery fees and ought to be interpreted in the following way: 1 Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act), s 12(1) and definition of “Minor Civil Dispute” in Schedule 3; Body Corporate and Community Management (Standard Module) Regulation 2008 (SM), s 145(1)(a); Body Corporate and Community Management (Accommodation Module) (AM), s 143. 2 QCAT Act, s 12(1) and definition of “Minor Civil Dispute” in Schedule 3. -- 3 of 6 -- 4 a) The body corporate may recover as a debt unpaid costs (recovery costs) reasonably incurred by the body corporate in recovering any unpaid instalment3; b) A “body corporate debt” mean an amount owed by an owner of a lot to the body corporate for: i) A contribution or instalment of a contribution; ii) A penalty for not paying a contribution or instalment of a contribution by the date for payment; iii) Another amount associated with the ownership of the lot. c) The definition of a body corporate debt does not expressly include, as “owed” “debt recovery costs”. It seems unlikely that they ought be included in what is properly characterised as “another amount associated with ownership of the lot”. Some examples of this kind of debt are included in the regulations: debts for car parking, lawn mowing and the like.4 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”. d) The body corporate’s application assumes that QCAT can determine whether the 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. 3 SM, s 145(1)(c); AM, s 143(1)(c). 4 SM Dictionary definition of “Body Corporate Debt”; see also Body Corporate for Liberty CTS 27241 v Alotier Pty Ltd, Steward Silver King and Burns [2009] QCCTBCCM 2 (11 February 2009) per Mr K Dorney QC at [30] to [33]. -- 4 of 6 -- 5 e) An unliquidated claim cannot be recovered as a debt.5 [15] In this case the body corporate was not entitled to assert, as it did, the debt recovery fees in this Application to recover a minor debt. That element of the claim, being $199.61 in recovery fees, is not allowable in these proceedings. The Outcome [16] For the reasons set out above, the default decision ought to be set aside. The previous (default) decision should be varied by this tribunal. The Body Corporate is entitled to judgment in the amount of $505.82 in claim for outstanding contributions. It is also appropriate to allow the claims for filing and service fees and interest. These total $202.05 being: a) $95.00 Filing fee; b) $56.47 Service and Citec fees; c) $50.58 Interest (10% per annum for one year on $505.82). [17] These amounts should be paid within two weeks of the date of this order. Leave to Represent the Body Corporate [18] Mr Payne, who is a director of “Strata and Corporate Collections”, a licenced commercial agent which has, as part of its business, the ongoing patronage of the body corporate in this application (and presumably in other matters) to undertake debt collection work on its behalf, sought leave to represent the body corporate in this matter. I invited submissions from the body corporate as to why Mr Payne was an appropriate person to represent it and why he should be given leave.6 No substantive submissions were received from the body corporate on this issue. [19] Strata and Corporate Collections is not the body corporate, not is it the committee, nor is it the manager or administrator appointed by the body corporate. It is an entity which has a personal interest in the outcome of this proceeding which may differ from that of the body corporate and, as such, is in a position of potential conflict of interest. It is quite inappropriate, therefore, to grant Mr Payne leave to represent the body corporate in this, or this type of, matter. Leave is therefore refused. Mr Payne should ensure he does not place this or other debt collection clients in a similar position by seeking to represent them in circumstances where he is also seeking to recover fees which are or may be payable to Strata and Corporate Collections. Order 5 Body for Liberty CTS 27241 v Alotier Pty Ltd, Steward Silver King and Burns (supra) at [46] to [48]; either as a Minor Civil Dispute within the QCAT Act or under the BCCM legislation referred to in these reasons. 6 See QCAT Act, s 43(4)(b). -- 5 of 6 -- 6 [1] The Respondent, Ms Kelly, pay to the Applicant, the sum of $707.87 in claim and costs within 14 days of the date of this order. -- 6 of 6 --