ACAT Ruling Tribunal Decision: Recovering Costs in Levy Recovery Matters

On 2 August 2017, the ACT Civil and Administrative Tribunal (ACAT) handed down its decision In the Matter of Ruling Tribunal, section 31 of the Unit Titles (Management) Act 2011 (Civil Dispute) [2017] ACAT 56.

This is a long awaited decision which indicates what expenses an owners corporations can recover after suing a lot owner who fails to pay levies. It answers the issues raised by the decision in The Owners – Units Plan No 840 v Richardson [2015] ACAT 77.

In the Ruling Tribunal decision, ACAT held that if it was reasonable for an owners corporation to incur the following expenses (legal professional costs and disbursements incurred in bringing the Tribunal proceedings (e.g. lawyers fees, lawyers photocopying); company title and similar searches incurred in bringing the Tribunal proceedings; filing and hearing fees incurred in bringing the Tribunal proceedings; and administrative costs or disbursements incurred in bringing the Tribunal proceedings (e.g. charges by owners corporation managing agent, collections agency)), and each component of those expenses were reasonable in quantum then an owners corporation could recover those expenses under section 31 of the Unit Titles (Management) Act 2011 (UTMA). Further, the Ruling Tribunal held that legal professional costs and disbursements and administrative costs and disbursements in bringing enforcement proceedings in the ACT Magistrates Court were also costs that could be recovered by an owners corporation in later proceedings under section 31 of the UTMA.

This Ruling Tribunal decision also held that an owners corporation could only recover the following expenses (company title and similar searches incurred in bringing the Tribunal proceedings; filing and hearing fees incurred in bringing the Tribunal proceedings) under section 48 of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act). That is, the following expenses (legal professional costs and disbursements incurred in bringing the Tribunal proceedings (e.g. lawyers fees, lawyers photocopying); administrative costs or disbursements incurred in bringing the Tribunal proceedings (e.g. charges by owners corporation managing agent, collections agency)) are not recoverable under section 48 of the ACAT Act.

The full decision can be read here.

Call Kerin Benson Lawyers on 02 6140 3270 or email allison@kerinbensonlawyers.com.au or enquiries@kerinbensonlawyers.com.au

Increase in ACAT’s Civil Jurisdiction

From 15 December 2016 the civil dispute jurisdiction of the ACT Civil and Administrative Tribunal (ACAT) has increased from $10,000 to $25,000. This means that owners corporations seeking debt recovery of up to $25,000 may proceed in ACAT rather than in the ACT Magistrates Court, unless a request is made by either party to proceedings to transfer the claim.

The increase in jurisdiction has also ushered in some procedural changes in ACAT.

For claims of $3,000 or less a conference and immediate determination process will be adopted.  This will apply where there is no counterclaim and a contested response has been received.   If there is no resolution at the listed conference, the matter will usually proceed to a hearing on the same day.  It is anticipated that the conference and the determination process will be scheduled weekly on a Friday.

For claims of $15,000 or more, in some circumstances a conference and evaluation process will be utilised.  The process will involve asking parties to submit a case summary and position statement before the preliminary conference.  The preliminary conference will be listed for 2 -3 hours, after a contested response has been received. If the matter does not settle, it will proceed to hearing.

From 15 December 2016, civil disputes where between $10,000 and $25,000 is claimed may be transferred to ACAT from the Magistrates Court.  These matters may be transferred if the court considers the transfer just and makes an order to transfer the matter.  In making an order the Magistrates Court must consider whether there is another proceeding associated with the existing proceeding before the Magistrates Court.  A matter can only be transferred if the hearing has not started and one of the parties applies to have the matter transferred.

The conference and determination approach, and the conference and evaluation approach, appear to be an attempt to streamline complicated or vexed claims. For owners corporations seeking debt recovery, the changes mean that claims under $10,000 will proceed in NCAT, whereas claims between $10,000 and $25,000 may proceed in the Magistrates Court if the appropriate order is made.

Any questions about recovering strata levies?

Call Kerin Benson Lawyers on 02 6140 3270 or email allison@kerinbensonlawyers.com.au or enquiries@kerinbensonlawyers.com.au

ACAT Ruling Tribunal: Section 31 Costs and Expenses

The following article provides an update on our article published 21 March 2016 titled ‘ACT Case note: Recovering costs in levy recovery matters’.

In The Owners – 840 v Richardson [2015] ACAT 77 Member Daniels determined that awarding legal costs in levy recovery proceedings was contrary to the provisions in the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act). Pursuant to section 48 of the ACAT Act the Tribunal can only award costs in limited circumstances. Since Richardson the situation on whether legal costs can be awarded in levy recovery proceedings has been uncertain.

Due to pressure from ourselves and another legal services provider and to resolve the uncertainty the Tribunal established a Ruling Tribunal to determine the question. The hearing, where we appeared through Counsel on behalf of our Owners Corporation clients, was held on Friday 17 February 2017 before Presidential Member McCarthy, President Neate and Senior Member Fergusson.

At the hearing there were no appearances or submissions from any respondent. The Tribunal directed a series of focused questions to Counsel relating to the Tribunal’s power to award legal costs as an expense pursuant to section 31 of the Unit Titles (Management) Act 2011, when expenses are deemed to be incurred and therefore recoverable and the reasonableness of such expenses

Any questions about recovering strata levies?

Call Kerin Benson Lawyers on 02 6140 3270 or email allison@kerinbensonlawyers.com.au or enquiries@kerinbensonlawyers.com.au

What are the potential cost consequences of refusing to participate in Alternative Dispute Resolution processes?

 Many commercial contracts, including those between building managers, facilities managers, caretakers, strata managers and Owners Corporations, have a clause buried towards the end of the contract that sets out a process for resolving disputes.

In my experience it is all too common for parties to ignore the contractual dispute resolution processes set out in their contract and to rush to litigation whether due to heightened emotions, a misunderstanding or lack of knowledge about the process or incomplete legal advice. This can be expensive and lead to unexpected costs consequences. Continue reading