Achiam: unpaid levy interest and expenses

Achiam v The Owners – Strata Plan No. 58026 [2022] NSWCATCD 66

In short

• The payment of interest on unpaid levied contributions is an aspect of the ‘operation, administration or management’ of a strata scheme and subject to relief under s 232(1)(a).

• Relief granted where strata managing agent failed to take reasonable steps in responding to applicants’ agent’s enquiries about non-receipt of levy notices.

• The Tribunal does not have jurisdiction to order that an owners corporation’s levy recovery expenses are not recoverable against a lot owner.

Background

The applicants are non-resident owners of a lot in the strata scheme. Between 2017 and 2019, the respondent owners corporation emailed levy notices to the applicants’ property agent and were subsequently paid. Upon the respondent changing strata managing agents, levy notices were emailed to an email address containing a typographical error, causing the applicants’ agent not to receive those notices.

The respondent initiated debt recovery proceedings and incurred costs and expenses in doing so. In 2020, the respondent obtained default judgment in the Local Court and a garnishee order.

The applicants’ agent made persistent enquiries with the strata managing agent to determine why those notices were not being received, but was not met with cooperation.

The applicants, although disputing the respondent’s course of action, paid the amounts owing under the default judgment to prevent the debt further accruing. The amounts the subject of the default judgment were evidently in the form of levies, interest and s 86 expenses.

The law

Subsection 85(8) of the Strata Schemes Management Act 2015 provides that the Tribunal may order that no interest is chargeable on a specified contribution if satisfied that a determination should reasonably have been made not to charge interest.

Decision

Of the three categories of debt (levies, interest and expenses), the Tribunal:

• noted that the levies were not disputed;

• dealt with interest under s 85(8); and

• found that jurisdiction did not arise to deal with those expenses.

The Tribunal found that the respondent should have determined to charge no interest on the basis that the late payments were a product of the strata managing agent’s failure to take reasonable steps to ascertain that the levies were being emailed to the correct address.

The Tribunal made an order under s 232(1)(a) that the respondent pay to the applicants the interest charged during the relevant period.