The respondent was the owner of a unit and the applicant was the owners corporation of the units plan. The respondent owed a debt of $18,472.31 in levy arrears.
The applicant took steps to recover the debt and subsequently, levy recovery proceedings were commenced in ACAT. The applicant claimed an amount comprising: (a) levies; (b) legal expenses (including a fee for preparing a letter of demand; preparing and filing the original application; attending compulsory conferences; preparing for and appearing at an interim order application and preparing and filing submissions); (c) administrative expenses related to debt recovery; and (d) interest.
The respondent initially disputed the levy amount claimed and disputed the reasonableness and necessity of the legal and administrative expenses incurred by the applicant. The respondent argued that under section 31 of the Unit Titles (Management) Act (the Act), the initial filing of the application and the cost of the conference were the only lawful costs and the other items were unreasonable and unnecessary.
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.
ACAT applied the principles set out in The Owners – Unit Plan No 3182 v Black and Anor  ACAT 6 which held that 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 proceedings to recover unpaid levies are ‘expenses’ for the purposes of section 31 of the Act. The expenses claimed fell within the type of expenses outlined (with one exception) and satisfied the ‘double reasonableness’ test: the expenses were reasonably incurred in the collection of the unpaid levies and the amounts claimed were reasonable. However, ACAT held that the applicant was not able to recover the costs associated with the interim application to move the hearing date forward or issue subpoenas because these actions were due to the applicants own inefficiency or mistake.