Published tribunal order
Tenancy Tribunal case 9047344 — Tenancy dispute in New Lynn, Auckland
Decided 27 Sept 2024 · Published 27 Sept 2024 · Application 9047344
Landlord favoured
- Costs
- Interest
- Unit Titles
Order
- Anthony James Bayer must pay Body Corporate 200191 $22,559.23 immediately, calculated as follows: DescriptionsApplicantRespondent Outstanding levies$4,465.72 Body Corporate Secretary debt collection charges $402.50 Section 124 costs, including GST & disbursements $15,232.54 Appearance at hearing (1 hour @ $256.00 per hour plus GST) $304.75 Appearance at hearing (1 hour @ $270.00 per hour plus GST) $310.50 Filing fee$500.00 Interest to 20 August 2024$1,343.22 Total payable by Respondent to Applicant $22,559.23
Reasons
- Both parties attended the hearing which was held by teleconference on 20 August 2024.
- The Body Corporate has applied for recovery of unpaid levies, interest, costs and the filing fee from the Unit Owner. The application was filed on 2 October 2023.
- A hearing was originally held on 11 March 2024. The matter was adjourned for Mr Bayer to provide a list of the payments he had made from 2020 and the supporting evidence to verify those payments and for him to also set out in writing the questions he wanted the Body Corporate to consider in detail.
- The Body Corporate advised that since filing the application a further levy had fallen due on 31 May 2024 and requested a variation of the application to include this which had been granted.
Does the Unit Owner owe the levies claimed?
- A Unit Owner must pay all body corporate levies and outgoings payable for the unit. See sections 80(1)(f) and 121(1) Unit Titles Act 2010 (“UTA”). This obligation is clear and unequivocal.
- The Body Corporate has duly calculated the levies payable by the Unit Owner based on their utility interest. This calculation follows the proper procedures as determined as the relevant Annual General Meeting (AGM).
- The Body Corporate has fixed the due date for the levies to be paid, and the Unit Owner has not paid the levies by that date. See section 124(1) UTA.
- I have taken into account the Unit Owner’s submissions (including the written submissions) and the documents presented in support.
- The Unit Owner disputes the Body Corporate’s claim.
- The Unit Owner maintains that he has always been willing to pay the levies and had the principal part ready to pay, after there being an AGM and a subsequent invoice for the fees. The root of his dispute was that he did not receive certain notices on time before the matter was referred by the Body Corporate Administration (“BCA”) to its lawyers as an outstanding debt. He considered this unfair and did not justify the additional costs claimed including legal costs.
- The Unit Owner stated he was not a party to the AGM held in March 2023 nor did he receive a copy of the notice of meeting for the AGM. He also noted he was away for a period during May 2023 and August 2023 where he “had virtually no digital connection with the world”. He indicated it was not until the last few days of August, that he had no knowledge of any levy due. He noted that Ms Beaton (for the BCA) had said that “they did track and trace on every letter sent to [him]” and requested to see a copy of the notice of meeting for the March 2023 AGM.
- In response, the Body Corporate submitted that all notices were sent via the PO Box address provided by the Unit Owner as his advised preferred method of contact. While the Unit Owner had requested copies of track and trace documentation to prove that he had been sent the notice of meeting for the March 2023 AGM, the BCA was not able to locate or provide this evidence. The Body Corporate considers in any event it is not required to arrange track and trace items for any of the correspondence as it has already met its obligation by sending notices to the PO Box address.
- The Body Corporate believes it made considerable and reasonable effort to contact the Unit Owner regarding the outstanding levies. However, it observed that the Unit Owner was less than cooperative and appeared to deliberately evade communication. Specifically, the Unit Owner had access to email but choose to complicated communication by using different email addresses and setting emails to expire after a short timeframe. Additionally, the Unit Owner’s email were often difficult to read, and attachments were locked, requiring extra effort to print and access information. This behaviour hindered effective communication and delayed resolution of outstanding levies.
- The Body Corporate notes the Unit Owner’s advice that he was away on holiday but did not consider this relevant or excuse for late payment.
- In addition, the Unit Owner disputed that he had any outstanding levies from 2020 and 2021 as claimed by the Body Corporate. He states that he has continuously been making payments and considered for the most part that he had been up to date with payments and doesn’t believe there are any outstanding levies. In support, he relied on two ledgers. One was a cumulative ledger of all payments made to BCA up to 6 November 2023. The second was a ledger from his bank account showing his payments from his TSB bank account.
- However, the Body Corporate say there is still a balance of $4,465.72 to be paid.
- On the evidence before the Tribunal, I find the Body Corporate has provided sufficient documentation to prove the amount of levies claimed. Despite the Unit Owner’s assertions, the Body Corporate has demonstrated compliance with its notification obligations by sending all relevant notices, including the AGM notice and subsequent levy notices, to the Unit Owner’s registered PO Box Address. The Unit Owner’s claim of not receiving these notices does not negate the Body Corporate’s fulfilment of its legal responsibilities.
- The Unit Owner contends that he was not aware of the outstanding levies due to alleged late receipt of notices and his absence during certain periods. However, the Body Corporate is not required to provide track and trace for correspondence sent to the registered address. The failure to receive communication does not excuse non-payment. I find that the Unit Owner was aware or ought to have been aware of the levies due. Ultimately, the onus remains on the Unit Owner to pay levies when due and to enquire if demand for payment of levies may have gone astray.
- Moreover, the Unit Owner has actively made it difficult for the Body Corporate to communicate effectively, notably by refusing to provide a stable email address despite having access to one (including other deliberate hurdles). This lack of cooperation complicates the Body Corporate’s ability to ensure timely communication.
- The Unit Owner claims to have consistently paid his levies and presents personal ledgers as evidence. However, these self-compiled documents lack the verifiable authenticity of official bank statements. The Body Corporate maintains that there remains an outstanding balance of $4,465.72. which is supported by their records. The evidence presented by the Unit Owner does not satisfactorily counter this claim.
- There is no valid legal basis for the Unit Owner’s resistance to payment, and the Body Corporate is entitled to recover the outstanding amount.
Is the Unit Owner liable for interest?
- If a Unit Owner fails to pay levies by the due date, interest accrues on the unpaid balance. A Body Corporate may charge interest up to 10% per annum. See section 128 UTA.
- The Body Corporate has resolved to charge interest at 10% per annum on unpaid levies. The Body Corporate has proved the amount of interest owing from the due date to the hearing date.
Is the Unit Owner liable for costs?
- Pursuant to section 124 UTA, and as resolved at meetings of the Body Corporate, the Body Corporate is entitled to recover any reasonable costs incurred by it in collecting unpaid levies as a debt due by the owner to the Body Corporate. In accordance with the judgments (of the District Court and Court of Appeal respectively) in Body Corporate 162791 v Cheah DC Auckland, CIV2014-004- 0120, 24 June 2014 and Body Corporate 162791 v Gilbert [2015] NZCA 185, the Tribunal must order that the reasonable costs incurred by the Body Corporate in recovering the levies, objectively assessed, be paid by a defaulting Unit Owner.
- In more recent cases, the District Court in Body Corporate 85928 v Sherry [2022] NZDC 11535, Body Corporate 45131 v 88 Chi Limited [2023] NZDC 9036 and Body Corporate 346799 v Gueirard & Vu [2023] NZDC 19645 has reinforced the Body Corporate’s right to recover full solicitor/client costs under section 124 UTA.
- Since the Unit Owner failed to pay the outstanding levies when they were due, the Body Corporate is entitled is entitled to recover the outstanding levies along with any accrued interest and collection costs are as a debt.
- As established by the aforementioned court judgments, the Tribunal is required to order the payment of reasonable costs incurred by the Body Corporate in recovering the levies.
- It is reasonable to expect full and timely compliance by all Unit Owners on the levies payable when they fall due otherwise failure to do so disproportionately burdens those who pay on time.
- In Gilbert v Body Corporate 162791 [2016] NZSC 61, the Supreme Court affirmed that those who default on levy payments are responsible for collection costs. The Court of Appeal emphasised that “reasonable costs” does not exclude solicitor- client costs but mandates that only reasonable costs, objectively assessed, are recoverable.
- In York Trustees Limited v Body Corporate Number 166208 [2017] NZDC 7961 the District Court, dealing with a cross-appeal on costs from the Tenancy Tribunal, quashed the Tribunal decision awarding only a contribution of 60 percent of the total legal costs claimed by the Body Corporate. DCJ Sharp held that the Tribunal misdirected itself as to the legal position in respect of reasonable solicitor/client costs and the Tribunal should have determined that the Body Corporate was entitled to its actual reasonable costs (on a solicitor/client basis) of $32,563.05. Notably at [22], Judge Sharp stressed that the Court of Appeal judgment in Gilbert is binding on the Tribunal (and on the District Court) in that “there is no discretion” available to the Tribunal to award anything less than the full reasonable legal costs charged by the solicitor to its client, the Body Corporate, when it comes to the concept of “reasonable costs incurred in collecting that levy” under section 124 UTA.
- Section 124 UTA prescribes a statutory debt in favour of the Body Corporate once levies are duly raised and payable. This includes legal and collection costs which the Tribunal has no discretion to waive or reduce.
- Upon reviewing the Body Corporate counsel’s time records and Body Corporate Secretary’s invoices, I am satisfied that the collection and solicitor-client costs ordered are reasonable. They were incurred in respect of the proceedings; all of the legal costs claimed constituted expenses incurred in pursuing the claim for recovery of unpaid levies under section 124. I do not have any discretion to waive any of those costs in favour of defaulting Unit Owner no matter how high they appear in relation to the unpaid levies in question.
- It is unfortunate that the costs that followed the non-payment of the levies due have greatly inflated the total owed. However, I am unable to accept the Unit Owner’s submissions as the basis not to accede to the Body Corporate’s claim for legal fees. The Tribunal has a duty to follow legal authorities set by the higher courts on an award of solicitor-client costs in favour of the Body Corporate.
- As the Body Corporate has succeeded with the claim, I must reimburse the filing fee. Section 176(1) UTA and section 102(4) Residential Tenancies Act 1986.