Legislation cited: Unit Titles Management Act 2011 s 31

Cases Cited: The Owners-Units Plan No 840 v Richardson [2015] ACAT 77

Tribunal: Presidential Member G McCarthy (Presiding)

CIVIL & ADMINISTRATIVE TRIBUNAL ) AA 5/2016 (XD 1080/2014)

TRIBUNAL: Presidential Member G McCarthy (Presiding)

1. The respondent pay the appellant $1,938.39 by 11 July 2016 in full and final discharge of all the moneys owed by the respondent to the appellant as at 17 June 2016.
2. The appeal is otherwise dismissed.

1. On 23 June 2016, the Appeal Tribunal heard an appeal from a decision of the tribunal in The Owners-Units Plan 840 v Richardson.[1] The appellant alleged the tribunal erred in its construction of section 31 of the Unit Titles Management Act 2011.
2. In its decision, the tribunal found, among other things, that section 31 of the Unit Titles Management Act 2011 (the UTMA) allows for expenses of an owners corporation to be recovered from a unit holder as a debt, subject to the following limitations:
   • (a) Expenses incurred in bringing proceedings in the Tribunal are not recoverable under section 31 as an expense but in certain circumstances may be sought by way of an order for costs under section 48 of the ACAT Act.
   • (b) Legal professional costs incurred in proceedings in the Magistrates Court may be recovered as section 31 expenses, despite no order for costs having been made, provided that those costs are 'assessed costs' under Part 2.7 of the Rules.[2]
3. The tribunal ordered that the unit holder pay the owners corporation's expenses, but limited to $631.24 comprised of $297 for expenses of the owners corporation, $64.24 for interest and $270 for the tribunal filing fee.
4. On 19 January 2016, the owners corporation appealed from the tribunal's decision.
5. At the appeal hearing Mr Frankcom, solicitor, appeared for the appellant. The respondent, Mr Richardson, appeared on his own behalf. At the conclusion of the hearing, the Appeal Tribunal ordered that the respondent pay the appellant $1,938.39 in full and final discharge of all moneys owed. The appeal was otherwise dismissed. The Appeal Tribunal gave short oral reasons at the conclusion of the hearing and stated that more detailed reasons would be published in due course. These are those reasons.
6. At the commencement of the appeal, Mr Richardson said that the appeal should not proceed because he had reached an agreement with Ms Sally Shaw, an employee of the managing agent of the owners corporation, in full and final settlement of the dispute.
7. Mr Richardson relied upon a document dated 17 June 2016 signed by him and Ms Shaw which, he said, recorded the agreement. An issue arose as to whether or not the document did in fact reflect an agreement, which led to the tendering of email correspondence between Mr Richardson and Ms Shaw and between Ms Shaw and Mr Frankcom in connection with the (alleged) agreement.
8. The Appeal Tribunal stood the matter down in order to give Mr Frankom the opportunity to call Ms Shaw, who then attended the hearing and gave evidence on the issue as to whether an agreement was reached.
9. Ms Shaw accepted that when speaking with Mr Richardson she had full authority to speak on behalf of the owners corporation and to deal with Mr Richardson in relation to possible resolution of the matter.
10. In broad terms, Ms Shaw gave evidence that she did not reach an agreement with Mr Richardson. Ms Shaw said that she tried to resolve the question of levies and interests with Mr Richardson in an endeavour 'to move forward', but there was no agreement regarding legal costs. She said that that remained an issue for the tribunal to decide.
11. Mr Richardson gave evidence to the contrary, stating that there was an agreement, including an agreement as to legal costs. He relied on the email correspondence in support.
12. The conflicting evidence obliged the Appeal Tribunal to determine on the balance of probabilities whether or not an agreement was reached between Mr Richardson and Ms Shaw (on behalf of the owners corporation), particularly in relation to legal costs.
13. The Appeal Tribunal concluded, for the following reasons, that an agreement was reached essentially in the terms put forward by Mr Richardson.
14. First, the document dated 17 June 2016 signed by Mr Richardson and Ms Shaw noted Mr Richardson's agreement to pay $1,938.39 to the owners corporation's managing agent "on or before to (sic) 30 days from the above date for levies and interest outstanding for the aforesaid unit." The subsequent paragraph stated:

Mr Richardson notes that costs applicable to legal proceedings for debt recovery have been deducted from the total amount annotated on the statement of account as at today's date being $7,570.39.

1. The Appeal Tribunal concluded that this paragraph recorded, as best as could be done, the basis upon which Mr Richardson had agreed to pay the amount of levies and interest, and the timeframe within which he had agreed to do it.
2. Second, the Appeal Tribunal took into account that if the document were construed otherwise, it would contradict Mr Richardson's actions from the beginning. Mr Richardson had always agreed to pay the outstanding levies and interest. The issue in dispute had always been his alleged additional liability to pay the owners corporation's legal costs. The agreement would be meaningless if it were construed such that his liability for legal costs remained outstanding. Such a construction would also contradict his email sent on 31 May 2016, which stated:

Please confirm this agreement via email so I can contact the tribunal to bring this action to an end.

1. Mr Richardson would not have been giving up anything by agreeing to pay the levies and interest if the words in the second paragraph, namely that "the costs applicable to the legal processes have been deducted" were not given effect. The Appeal Tribunal concluded that Mr Richardson was, by that phrase, noting a fact and circumstance that existed and upon which he relied when agreeing to pay the amount payable and within 30 days.
2. Third, that an agreement was reached on 31 May, drawn from the phrase in Ms Shaw's email "Please confirm this agreement", is materially confirmed by the email sent from Ms Shaw to him the following day (1 June) where she states:

Sorry for the delay in responding. We accept your terms to make payment of outstanding levies and applied interest to the date of receipt of this payment. All other legal costs will be addressed apart from yourself. (emphasis added)

1. In our view, on a fair reading of the final sentence in Ms Shaw's email, it is clear that the legal costs were to be met by persons unknown but not Mr Richardson.
2. At the appeal hearing, Ms Shaw gave evidence regarding this sentence stating the choice of word was a mistake and that she meant 'myself' rather than 'yourself'. The Appeal Tribunal was not persuaded that Ms Shaw made this error. As agent for the owners corporation, it is illogical that Ms Shaw meant to use the word 'myself', especially where she used the word 'we' in the previous sentence. The Appeal Tribunal concluded that the words Ms Shaw stated were the words she meant, meaning her acceptance on behalf of the owners corporation that if Mr Richardson paid all the levies and interest by the due date then legal costs would be dealt by others and the matter would be brought to an end.
3. The fourth factor that persuaded the Appeal Tribunal that an agreement was reached was that if the document signed on 17 June 2016 recorded only Mr Richardson's agreement to pay the levies and interest in the amount stated by the due date, and that the question of legal costs remained to be determined in the future, i.e. in the tribunal proceedings, it is illogical that the owners corporation would have rejected the offer.
4. Nevertheless, Mr Frankcom's earlier position was that the owners corporation did just that. By email dated 21 June 2016, Mr Frankcom wrote to Ms Shaw as follows:

Can you send us an email advising that the witnessed statement was not acceptance of any offer. Include the sample words below.

AA5 of 2016 [XD 1080 of 2014] The Owners- Units Plan no 840 - v - Mr Kevin Richardson

I wish to advise that the witnessed statement dated 17th June 2016 from Mr Kevin Richardson advising he will pay$1938-39 which was witnessed by myself, was not accepted by the Owners Corporation.

The statement simply represents the intentions of Kevin Richardson.

1. Quite apart from the Appeal Tribunal's concerns about the somewhat directive character of the communication that Mr Frankcom wished to receive from Ms Shaw, it is illogical that the owners corporation would have rejected the offer if all it entailed, according to Mr Frankcom in his later submissions, was that Mr Richardson was agreeing to pay the levies and interest (which was uncontroversial), and that legal costs would remain to be decided.
2. For these reasons, the Appeal Tribunal was persuaded on the balance of probabilities that an agreement as claimed by Mr Richardson was reached.
3. In relation to the appeal proceedings, the Appeal Tribunal concluded that the owner's corporation should be held to the agreement but so too should Mr Richardson. Accordingly, in circumstances where Ms Shaw gave evidence that the total debt owing to the owners corporation as at 17 June 2016 for levies and interests would be reduced to $0 if Mr Richardson paid the agreed sum of $1938.39, the Appeal Tribunal ordered Mr Richardson to pay that sum by 11 July 2016 in full settlement of all money owed by him to the owners corporation as at 17 June 2016.
4. The Appeal Tribunal made no comment about any levies or interest that might have been incurred after 17 June 2016 because such possible debt was outside the terms of the agreement.
5. The Appeal Tribunal appreciated that the appeal was a 'test case' concerning the operation of section 31 of the UTMA, but that did not enable the appeal to proceed. There was no longer an appellable issue in circumstances where an agreement had been reached between the parties. Pursuant to the agreement, money could not be recovered from Mr Richardson by way of legal expenses regardless of our views concerning the operation of section 31 of the UTMA in the decision under review.
6. Accordingly, subject to an order that Mr Richardson pay the owners corporation $1,938.39 by 11 July 2016, we determined that the appeal should be dismissed and so ordered.

Presidential Member G McCarthy Presidential Member E Symons

[1] The Owners-Units Plan 840 v Richardson [2015] ACAT 77

[2] The Owners-Units Plan 840 v Richardson at [118]