Published tribunal order
Tenancy Tribunal case 9061464 — Tenancy dispute in Mount Albert, Auckland
Decided 17 Mar 2025 · Published 17 Mar 2025 · Application 9061464
Landlord favoured
- Costs
- Interest
- Unit Titles
Order
- Shuaib Karim Memon, Noureen Naz must pay Body Corporate 189252 $8,220.91 immediately, calculated as follows: DescriptionsApplicantRespondent Unpaid debt collection charges$97.75 Preparing and filing the application$776.25 Filing Fee$500.00 Attendance at the hearing and disbursements @ $195.00 p/hour +
GST
$224.25 Total Interest to 30/01/2024$6,622.66 Total award$8,220.91 Total payable by Respondent to Applicant $8,220.91
Reasons
- A hearing was held on 22 January 2025 by teleconference. Ms Sinnecker attended for the Body Corporate and Dr Memon attended for the Unit Owner.
- The Body Corporate has applied for recovery of interest, costs and the filing fee from the Unit Owner. Relevant law
- The relevant provisions of the Unit Titles Act 2010 (UTA) support the Body Corporate’s claim. Under section 121, the Body Corporate is responsible for maintaining a fund to cover expenses and levying contributions from unit owners. Section 138 mandates that the Body Corporate must repair and maintain common property, while section 135 requires it to insure buildings to their full insurable value. Further, section 80(1)(f) imposes an obligation on unit owners to pay all levies and other charges related to their unit. Section 124(2) states that any unpaid levies, along with reasonable debt collection costs, are recoverable as a debt. Additionally, section 128 allows the Body Corporate to charge penalty interest at up to 10% per annum on unpaid levies.
- In this case, the Body Corporate validly appointed Boutique Body Corporates Limited (“Boutique”) as its Secretary/Manager and authorised it to collect levies on behalf of the Body Corporate. At the Annual General Meeting in August 2017, the Body Corporate resolved to adopt a structured debt collection policy, which was communicated to all unit owners. This included authorising Boutique and its collection agency, Body Corporate Legal Services Limited (“BCLS”), to recover arrears, including penalty interest and all associated costs. The High Court’s section 74 scheme order on 11 February 2019 further confirmed that unit owners were liable for remedial work levies, which were apportioned based on ownership interest.
Is the Unit Owner liable for interest?
- The UTA imposes a clear obligation on unit owners to pay levies when due. The Body Corporate’s authority to charge interest at 10% per annum is explicitly permitted under section 128, and the Body Corporate properly resolved to do so.
- The Unit Owner faced challenges in making timely payments for remedial work levies, leading to interest accumulating on the unpaid balance. While the Unit Owner has expressed that financial difficulties caused by COVID-19 and caring for a sick father have significantly impacted their ability to pay, the legislation does not provide the flexibility to waive penalty interest in such circumstances. It’s important to acknowledge the personal hardships involved, but ultimately, the responsibility for ensuring timely payment of levies rests with the Unit Owner, even in difficult times.
- Moreover, the Unit Owner had agreed to a payment plan but still accrued significant late fees. The Body Corporate fairly rejected the request to waive penalty interest, as doing so would disadvantage other owners who either paid on time or incurred similar charges. The Tribunal, therefore, finds that the Body Corporate is entitled to the full amount of $6,622.66 in penalty interest.
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.
- The Body Corporate properly adopted a structured debt collection process and communicated it to all unit owners. The costs incurred in pursuing the outstanding levies, including the $97.75 for issuing a notice of intention to issue proceedings and $776.25 in application preparation costs, are reasonable and recoverable under this provision.
- While the Unit Owner believes these costs are excessive, the case law establishes that Unit Owners are liable for reasonable recovery costs. The Tribunal has no discretion to waive or reduce these costs based on financial hardship or payment plans. The fact that the Unit Owner eventually cleared the levies does not negate their obligation to pay the debt collection costs incurred due to their late payments.
- As the Body Corporate has succeeded with the claim, I must order the other party to reimburse the filing fee. Section 176(1) Unit Titles Act 2010 and section 102(4) Residential Tenancies Act 1986.