Case Notes ~ The Real Cost of Levy Arrears

THE OWNERS – UNITS PLAN NO 1447 v CARROLL (Civil Dispute) [2022] ACAT 1

The respondent had a history of being in arrears with levy contributions. The owners corporation (OC) charged interest and other fees on those arrears and the debt had been accumulating despite the fact the respondent had been making regular payments.

The OC commenced a debt application in the ACAT in relation to unpaid levies, interest and legal expenses. Legal expenses continued to rise throughout the proceedings. Although the respondent cleared the arrears in levies, the OC sought to recover legal costs and disbursements incurred in pursuing the respondent.

The Tribunal referred to a previous ruling of the ACT Civil and Administrative Ruling Tribunal in In the matter of the Ruling Tribunal Section 31 of the Unit Titles (Management) Act 2011 [2017] ACAT 56, where it was determined that legal professional costs and disbursements, company title and similar searches, filing and hearing fees and administrative costs (for example, charges for the owners corporation managing agent and the collections agency) incurred in bringing Tribunal proceedings to recover unpaid unit title levies are ‘expenses’ for the purposes of section 31 of the Unit Titles (Management) Act 2011 (UTM Act) if:

…it was reasonable for the owners corporation to incur expenses of the type described … and the amount of each component of the expenses sought is reasonable.

This was a “double reasonableness test.”

The Ruling Tribunal also determined that legal and administrative costs subsequently incurred in enforcement proceedings against the same owner in relation to the enforcement of the debt were recoverable in subsequent tribunal proceedings as ‘expenses’ under section 31 of the Unit Titles (Management) Act 2011 (UTMA). 

The applicant was entitled to interest on unpaid levies from the date of filing its claim to the date the debt was paid in full. In considering what were reasonable legal and administrative expenses the Tribunal rejected only the costs associated with allocating past payments made by the respondent to the prior ACAT debt and to the current claim, stating this information should have been readily available and retrievable from the account keeping system.

The Tribunal noted also that:

ACAT is, generally speaking, a no cost jurisdiction … had the respondent been represented by a lawyer and had she been successful in defending the claim, then she would not have been able to have claimed those legal costs against the OC.