Published tribunal order
Tenancy Tribunal case 9057124 — Tenancy dispute in Auckland Central, Auckland
Decided 22 Jan 2025 · Published 22 Jan 2025 · Application 9057124
Landlord favoured
- Unit Titles
Order
- Maree-Mereaira Sutherland must pay Body Corporate 525692 $11,623.73 immediately, calculated as follows: DescriptionsApplicantRespondent Levies$8,603.19 Interest as at 2 January 2025$562.51 Legal costs Body Corporate costs Filing fee $1332.53 $625.50 $500.00 Total payable by Respondent to Applicant $11,623.73
Reasons
- Only the Body Corporate attended the hearing.
- The Body Corporate has applied for recovery of unpaid levies, interest, costs and the filing fee from the unit owner.
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.
- The Body Corporate has determined the levies payable and unit owner's share has been calculated according to their utility interest.
- 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) Unit Titles Act 2010. The body corporate has provided records to prove the amount claimed and ordered above.
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 Unit Titles Act 2010.
- The Body Corporate has resolved to charge interest at 10% per annum on unpaid levies. The Body Corporate has proved the amount of interest as ordered above owing from the due date to 2 January 2025.
Is the unit owner liable for costs?
- The Body Corporate claims $1332.53 for legal costs. This is comprised of an invoice already rendered to the Body Corporate for $1108.28 plus one hour of Counsel’s time dealing with the hearing today at $195 plus GST. The Body Corporate also claims $625.50 by way of Body Corporate debt collection charges and the time of the Body Corporate manager who appeared at the hearing today.
- Pursuant to section 124 UTA, and as resolved at meetings of the Body Corporate, the Body Corporate is entitled to recover debt collection costs relating to the collection of unpaid levies as a debt due by the owner to the Body Corporate. In accordance with judgments (of the District Court and Court of Appeal respectively) in Body Corporate 162791 v Cheah 1 and Body Corporate 162791 v Gilbert, 2 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.
- The assessment of reasonableness of costs in connection with a contractual indemnity for reasonable solicitor and client costs was recently discussed in Exuberant 1 DC Auckland, CIV2014-004-0120, 24 June 2014. 2 [2015] NZCA 185. Ltd v Quinovic Management Limited 3 and, in the context of s 124 of the UTA, in Body Corporate 45131 v 88 CHI Ltd, where the approach taken in Exuberant was adopted and applied. 4
- The District Court in Body Corporate 45131 v 88 CHI Ltd summarised the basics of the relevant legal framework as: 5 a) the relevant test is as set out in section 124(2) of the Unit Titles Act – the body corporate is entitled to recover “any reasonable costs incurred in collecting the levy”; and b) solicitor and client costs are a category of costs that can be recovered under this provision; and c) the task is to assess the reasonableness of the solicitor and client costs that are claimed. d) levies, objectively assessed, be paid by a defaulting unit owner.
- Having set out that framework, the Court reviewed the relevant method to be applied in assessing the reasonableness of the solicitor and client costs, concluding: 6 ... the essential method is as follows: a) first, ask whether the work that was done was reasonably necessary; b) second, ask whether the amount charged for the reasonably necessary work was reasonable; c) in both instances the NZLS Rules and Rule 9 in particular are prime reference points when assessing reasonableness; d) third, test the analysis against other available reference points.
- At para [8], the Court observed: 7 I make the following observations from the discussions on the cases and having regard to the way in which the methodology has been applied in the cases: (a) the exercise the adjudicator or the judge is engaged in is an objective one. The adjudicator or the judge must make a principled assessment of reasonableness against stated criteria; (b) the adjudicator or the judge must do the work required by the methodology, and in particular grapple with the available information on the specific tasks that were undertaken by the lawyers, and the amounts that were charged for them; 3 [2021] NZ HC 3533. 4 CIV 2022 – 096 – 000494 [2023] NZDC 9036, at paragraph [5]. 5 Body Corporate 45131 v 88 CHI Ltd CIV 2022 – 096 – 000494 [2023] NZDC 9036, at paragraph [5]. 6 At [6], citing Exuberant Ltd v Quinovic Property Management Limited [2021] NZHC 3533 and other authorities. 7 Footnotes from the quote omitted. (c) when doing that, the adjudicator or the judge must test the work and the invoicing against the realities of the legal market that we have, not an idealised or hypothetical standard; (d) the Rule 9 considerations are helpful in providing some structure to this assessment. Time expended is one of these factors but it is not the only factor; (e) if an adjustment to actual solicitor client costs is made, this should be explained with some specificity by identifying tasks that were seen to be unnecessary, or the necessary steps that were seen to have been overcharged in some way. Analysis and application of the law The legal costs
- I deal first with the legal costs that are claimed and then with the Body Corporate costs.
- Applying the methodology endorsed by the District Court and set out above, I heard from Ms Toebeck, Counsel for the Body Corporate, as to the work undertaken to prepare the letters of demand and drafting and finalise the application. She would also have had incidental work in terms of dealing with her client.
- She advised me that the invoice that has already been rendered has not been paid but that there is no conditional fee agreement in place regarding that invoice and that the Body Corporate will pay it regardless of whether it is ordered by the Tribunal.
- She did not provide the time sheets or terms of engagement but the costs sought are modest and so I allow them. I also allow her one hour of time for attending the hearing today at $195 plus GST.
- I note further that the incurring of these costs by a unit holder only arises following letters of demand and follow-ups first by the Body Corporate and then by the Solicitors acting. The unit holder is therefore given every opportunity to pay. These costs are all avoidable.
- For the foregoing reasons, I find that the actual solicitor and client costs are, in the circumstances of this case, reasonable costs incurred in collecting the levies and can therefore be recovered from the unit owner. The Body Corporate costs 24In relation to the Body Corporate charges of $625.50, the Body Corporate submits that it charges a set fee for every stage of the debt collection process. These costs are approved by the unit holders and displayed on its website.
- There were four letters that were sent by the Body Corporate to the unit holder. I am satisfied, based on the submissions made, that they are reasonable and appropriate in the circumstances. Had payment been made following these reminders then it would have avoided the need to instruct solicitors.
- I am not however prepared to allow the additional time claimed for the Body Corporate manager to also appear today as I consider that was note a necessary expense.
- Because the Body Corporate has succeeded with the claim I have reimbursed the filing fee. Section 176(1) Unit Titles Act 2010 and section 102(4) Residential Tenancies Act 1986.