(e) Interest to 26 April 2019 calculated at the statutory rate - $194.07.
The applicant also claimed $400.00 per hour for legal expenses including attendance at the hearing.
The application attached a number of annexures, including:
(a) title search for the unit;
(b) levy notice dated 11 January 2019 issued to the respondent;
(c) levy notice dated 19 February 2019 issued to the respondent; and
(d) legal letter of demand dated 13 March 2019 issued to the respondent.
Mr Silvano filed his response on 4 July 2019, to the effect that:
(a) the ACAT filing fee of $1,118.00 claimed by the applicant for filing the application is inaccurate and unexplained;
(b) the amounts of legal and administrative expenses claimed by the applicant are unreasonable and unnecessary; and
(c) the amount of unpaid levies claimed by the applicant is inaccurate and disputed.
The respondent attached several annexures to his response, including:
(a) email correspondence dated 28 January to 24 June 2019 relating to the intended sale of the unit;
(b) filtered bank debit transaction histories dated for periods between 2015 to 2019;
(c) a partial copy of the "Notice of the 2018 Annual General Meeting of The Owners - Units Plan No. 2983";
(d) an email exchange dated 13 to 17 March 2019 between Tisher Liner FC Law (Tisher Liner) and the respondent to the effect the respondent will not accept the applicant's legal costs;
(e) email correspondence dated 24 June to 3 November 2018 between Capital Strata Management Services (Capital Strata) and the respondent to the effect of the respondent alleging Whittle Stratas Partners (Whittles Strata) had received unaccounted levy payments;
(f) an email dated 28 November 2017 from Whittles Strata to the respondent stating no levy payments have been made since 2015;
(g) a document dated 12 December 2017 titled "Gungahlin Body Corporate Payments" listing a number of transactions totalling $1,030.
On 13 August 2019, the parties attended a compulsory conference where the matter failed to settle. The Tribunal made timetabling and other orders, including:
(a) the respondent supply the applicant with his bank statements for the period 1 July 2015 to 16 May 2018 by 27 August 2019; and
(b) the applicant issue subpoenas to provide documents by 3 September 2019.
The matter was set down for hearing on 9 December 2019.
On 15 August 2019, the applicant filed an application for interim orders to the effect orders made on 13 August 2019 be vacated, timetabling orders be revised and the matter to be set down for trial at the earliest date in October 2019 as the subpoenas were no longer necessary and the applicant required the money owed for necessary repairs.
The parties attended an interim orders hearing on 10 September 2019 whereupon the matter was set down for hearing 6 November 2019.
On 21 September 2019, the respondent advised the Tribunal he was withdrawing his dispute of the full amount of unpaid levies claimed by the applicant.
On 15 October 2019, the applicant filed costs submissions claimed pursuant to section 31 of the Act_._ The applicant claimed:
(a) an outstanding balance of the original claim - $17,372.31;
(b) legal expenses related to debt recovery totalling $6,026.35 comprising:
(i) preparation of letter of demand - $440 (inclusive of GST);
(ii) preparation and filing of the costs application - $770 (inclusive of GST);
(iii) ACAT filing fee for the costs application - $1,118;
(iv) preparation for and appearance at the compulsory conference on 13 August 2019 - $419.27 (inclusive of GST);
(v) preparation for and appearance at the interim order application hearing on 10 September 2019 - $1,473.76 (inclusive of GST),
(vi) Preparation, filing and serving of the costs submissions - $501.27 (inclusive of GST); and
(c) administrative expenses related to debt recovery - $844 (inclusive of GST).
The submission attached several documents, including:
(a) a copy of the original application and documents;
(b) a copy of the respondent's response;
(c) a copy of the ledger dated 16 May 2018 to 3 October 2019 maintained by Capital Strata;
(d) invoices issued in relation to legal expenses;
(e) a copy of section 31 of the Act, the decision of In the matter of the Ruling Tribunal Section 31 of the Unit Titles (Management) Act 2011 (the Ruling Tribunal decision);[3] and The Owners - Units Plan No 3182 v Black & Anor (the Expenses decision);[4]
(f) an email dated 12 August from the applicant to the respondent with the Whittles Strata ledger attached;
(g) a spreadsheet dated 7 October 2019 provided to the respondent by the applicant detailing how the unpaid levies, and legal and administrative expenses claimed by the applicant are calculated; and
(h) an email dated 21 September 2019 from the respondent to the Tribunal withdrawing his dispute of the full amount of unpaid levies claimed by the applicant.
On 22 October 2019, the respondent filed his response to the applicant's costs submissions, to the effect under section 31 of the Act, the initial filing of the application and the cost of the conference were the only lawful costs, and alleging the applicant's representative abused the court process to increase costs.
The respondent's response included several annexures relating to specific grievances in relation to the applicant's representative's conduct:
(a) email correspondence dated 23 October 2018 to 24 June 2019 between the respondent and Maria Mansfield, principal of Capital Strata, concerning the respondent's lack of an accurate record of levies owed due to the actions of previous management, Whittles Strata;
(b) the Whittles Strata ledger;
(c) an application to ACAT for a default judgment filed by the applicant, dated 5 July 2019;
(d) an email dated 9 October 2019 from Maria Mansfield to the respondent to the effect Ms Mansfield had not made an affidavit in relation to the matter nor had instructed the applicant's representative;
(e) the applicant's application to ACAT for interim orders filed 15 August 2019; and
(f) "Minutes of the 2018 - 19 Annual General Meeting of the Owners - Units Plan No. 2983."
The Tribunal heard the matter on 6 November 2019. The respondent appeared in person whilst the applicant's representative, Ms Yvonne Lin from Tisher Liner, appeared via telephone.
The Tribunal confirmed with the parties the substantive claim concerning outstanding levies had been resolved. The parties agreed the respondent had accepted the amount claimed by the applicant was correct and the hearing was concerned with the dispute over the administration and legal fees.
The applicant asked the Tribunal to correct the balance of the original claim due to payments received from the respondent, with the current balance being $15,822.31.
The applicant requested the Tribunal adjust the total of the legal expenses as the costs claim in the submission did not include preparation and appearance at the hearing. The applicant requested $734.36 for legal work for the hearing, being one hour of preparation time and one hour appearance at the hearing, charged as per Schedule 4 of the Court Procedures Rules 2006 (Court Procedures Rules). The total legal expenses claimed by the applicant was $6760.71.
The applicant also requested the total administrative costs claimed be adjusted to reflect further costs incurred in pursuit of recovering the debt. The administrative costs were increased by $88, bringing the total administrative costs claimed to $932.
The respondent said he accepted the law provided that the applicant was legally entitled to recover certain expenses related to the debt recovery process, but was disputing the reasonableness and necessity of some of the items.
The Tribunal raised the issue of which relevant scale of costs should be applied, noting the Court Procedure Rules used by the applicant to calculate legal costs was not formally the scale applied by the Tribunal.[5]
The applicant's representative relied upon the Expenses Decision as an example of an authority in relation to use of the Court Procedures Rules' costs scale.[6] The applicant's representative explained she had referred to Schedule 4 of the Court Procedure Rules to calculate costs, noting she had spent more time than she claimed for on the matter. The applicant's representative guided the Tribunal through how she had calculated some listed expenses in accordance with that scale.
The Tribunal put forward the suggestion the parties settle without proceeding to a judgment by agreeing on a mutually acceptable compromise figure the respondent could pay in full, but this was rejected.
The Tribunal proceeded to ask the respondent to go through the allegations he made in his submission one-by-one. The respondent's submissions are detailed below.
The respondent alleged he had to wait "fifteen months" for a "key document", being the total amount owed, from the applicant. The respondent asserted if he was presented with an accurate total of what he owed, he "could simply admit liability and negotiate a settlement".
The respondent told the Tribunal he had received the Whittles Strata ledger the morning of the compulsory conference,[7] leaving him no time to examine it.[8] The respondent stated once he had the opportunity to go through the ledger some days later, he was able to "say yes, I admit the amounts".
The respondent was not receptive to the Tribunal's suggestion he could have paid the amount the respondent knew he owed in levies minus the disputed amount, adhering to his assertion "I have a legal right to know how much I owe." The Tribunal rejected this claim and asked whether the respondent was unable to pay due to financial difficulties, and whether his arguments were merely a disingenuous justification for his actions. The Tribunal said it was only persuaded by the argument in relation to the relatively small amount genuinely in dispute.
The respondent submitted the applicant had erroneously stated the respondent had not made payments towards his levy debt in the applicant's original application of 26 April 2019, whereas in fact he had made nine payments. The applicant conceded the error, noting the error had since been corrected. The respondent also alleged the applicant sought a default judgment on 5 July 2019, despite the respondent submitting his response within the timeframe ordered on 3 July 2019. The applicant acknowledged the mistake, noting they had not claimed costs in respect of the default judgment application.
The respondent reported the applicant's representative left the compulsory conference on 13 August 2019 stating she needed "to seek instructions from my client". The respondent challenged the applicant's representative on her reason for leaving the conference, noting he had an email dated 9 October 2019 from the applicant's representative's client, Ms Mansfield of Capital Strata, stating "I am not providing any instructions to the lawyers". The respondent did not want to pay the applicant's representative's costs for the 30 minutes she was absent from the conference if she was absent for reasons unrelated to the matter.
The applicant's representative maintained she left the conference to seek instructions from her client. The Tribunal was informed the applicant's representative had two clients she was instructed by in relation to the matter - Mark and Maria Mansfield. Ms Lim adhered to her position she had left the 13 August 2019 conference to seek her client's advice upon further questioning. The Tribunal had no reason not to believe Ms Lim.
The respondent alleged the applicant's representative sought orders for subpoenas and bank records from the respondent at the compulsory conference on 13 August 2019. The orders were granted and the hearing date set for 9 December 2019. On 15 August 2019, the applicant's representative applied for these interim orders to be vacated, noting "we are now able to verify the respondent's payments" and requesting the hearing date be moved forward to the earliest date in October 2019. The matter was set down for hearing on 6 November 2019.
The respondent argued the interim application and interim hearing costs were unnecessary, being that, one, it appeared the applicant's representative may already have acquired the records prior to requesting the issuing of subpoenas at the compulsory conference on 13 August; and, two, since the request for the subpoenas was illegitimate in the first place, the interim hearing was an unnecessary product resulting from this illegitimacy. The respondent alleged the subpoenas were requested solely to "milk the legal process" and drive up costs.
The applicant's representative admitted they had received relevant information from Whittles Strata verifying the respondent's claim he had made payments to Whittles Strata - and hence negating the need for the subpoenas - on the morning of 13 August 2019, but had not had time to examine it before the conference. Ms Lim stated once they had time to examine the information, the subpoenas were rendered unnecessary and in the interests of efficiency and reducing costs for both parties, they applied to the ACAT to have the timetable remade and the hearing brought forward.
The Tribunal questioned this account by the applicant's representative, noting the application for interim orders did not mention reasons of efficiency or cost, but rather argued the applicant's urgent need for money for urgent repairs. The Tribunal stated it was putting the issue of whether the request for subpoenas was legitimate to one side and questioned the need to bring the hearing forward by a relatively short time.
The applicant's representative maintained the application for the subpoena and to bring forward the hearing date arose from the legal duty owed to her client and the other party to minimise costs. The Tribunal pointed out the interim application and hearing did not save costs for the parties but in fact drove up costs and it appeared there was no truly urgent reason to bring the hearing forward.
The Tribunal put to the applicant that the applicant's inefficiency or mistake (the apparent inability of the applicant to access outgoing management records) should not be borne by the respondent and the applicant had an obligation at law to correctly record payments. The applicant's representative explained to the Tribunal the respondent had correctly credited the respondent with the amounts the respondent claimed he had paid, and so there was no change to the amount the applicant submitted the respondent owed.
The Tribunal moved on to the respondent's capacity to pay the levies. The respondent had put forward no evidence as to incapacity to pay but stated he was currently making payments towards the debt of $225 to $250 per week and this capacity would not change. The respondent noted he was attempting to sell the property to settle the debt.
The applicant's representative advised her client instructed they would not accept small payments over time, as levies would continue to accumulate and the client could not afford to carry the debt. The applicant had instructed the representative to seek the full amount owed.
The parties had no further submissions to make on the issues in question and the Tribunal advised it would reserve its decision.
[2]
The respondent contends "[t]he only legitimate costs ... are the initial filing of documents and the cost of the conference, less the time Ms Lim left for 30 mins". The respondent's claim amounts to a claim the amounts of legal expenses and administrative expenses are not reasonable and are unnecessary.
The applicant submits the legal and administrative expenses were reasonable for the applicant to incur in the recovery of the respondent's debt and furthermore the amounts of the expenses are reasonable pursuant to section 31 of the Act.
Section 31 of the Act provides if an owners corporation for a units plan has incurred an expense necessary in carrying out its functions because of a breach of the rules by a member of the corporation, the amount spent is recoverable by the owners corporation from the member as a debt. 'Expense' includes a reasonable legal expense reasonably incurred, including those related to a proceeding in ACAT.
The Expenses Decision held reasonable legal professional costs and disbursements, company title and similar searches, filing and hearing fees, and administrative costs (such as charges for the managing agent) suffered in bringing Tribunal proceedings to recover unpaid unit title levies, are 'expenses' for the purposes of section 31 of the Act.
The expenses claimed by the applicant fall within the type of expenses outlined by the Ruling Tribunal, being legal professional costs and disbursements, filing and hearing fees, and administrative costs incurred in bringing Tribunal proceedings to recover unpaid levies. The costs associated with the interim application and hearing were ultimately incurred through the respondent's insistence he could not pay levies owed without documentation from the former management, despite the applicant's having credit of that amount. In accordance with the principles laid down in the Expenses Decision and with one exception, the type of expenses claimed were reasonably incurred by the applicant in collecting the unpaid levies.
The applicant's representative gave evidence as to the amount of legal work she had undertaken, describing how she calculated costs in accordance with the Court Procedures Rules scale of costs. The applicant's representative submitted she had worked in excess of the hours charged but had been careful to claim reasonable hours. The quantum of expenses claimed is in accordance with the principles established in the Expenses Decision. It is also apparent administrative costs incurred by the managing agent in seeking to recover the unpaid levies are consistently minimal.
The claim by the applicant satisfies the 'double reasonableness' test: the expenses are reasonably incurred in the collection of the unpaid levies and the amounts claimed are reasonable.
The exception referred to in [55] above are the costs from the issue of the subpoena and the application to bring forward the hearing date [45] to [47]. From paragraph [22] the costs claimed for this appear to be $1,473.76. These costs are not allowed.
The total amount allowed are the sums in paragraph [22(a),(b) and (c)] but not [22(b)(v)] and the $734.36 at paragraph [29].
[6] The applicant cited the Expenses Decision [67], [69]
[8]
[8] In his response of 4 July 2019, the respondent contended he had made payments of "approx. $5,500 from Jan 2015 to April 2018" in levies to Whittles Strata that had not been credited by the applicant. The applicant subsequently obtained the Whittles Strata ledger and reconciled the respondent's account, providing the ledger to the respondent on 12 August 2019.
Parties
Applicant/Plaintiff:
THE OWNERS - UNITS PLAN NO 2983
Respondent/Defendant:
SILVANO
Legislation Cited (3)
Titles (Management) Act 2011
Procedure Rules 2006
Procedures Rules 2006
Cases Cited (3)
THE OWNERS - UNITS PLAN NO 2983 v SILVANO (Civil Dispute) [2020] ACAT 4 (20 January 2020)