NSW: Is It In An Owners Corporation’s Interest To Be Diligent?

This article is about strata committee elections in NSW owners corporations.

Is It In An Owners Corporation’s Interest To Be Diligent?

According to the case of Achiam v The Owners – Strata Plan No. 58026 [2022] NSWCATCD 66, it certainly is. This case concerned interest charged to the applicant lot owners for late payment of contributions and the expenses of the owners corporation in recovering such contributions.

The applicants resided overseas and had never lived in the lot. The lot had been managed by a Mr Perez (a licensed real estate agent) since its purchase in 2017, and was being tenanted out.

There were no issues in respect of contribution notices and payment of the same until the first quarter of 2019 when a new strata management agency was appointed for the scheme. Once the new strata management agency took over, the contribution notices were sent to an incorrect email address. In September 2019, Mr Perez realised that he had not received the contribution notice for the July to September 2019 quarter and contacted the old strata management agency to query this. He was informed that a new strata management agency had been appointed.

Mr Perez contacted the new strata management agency several times in an attempt to work out why he was not receiving the contribution notices. He left several messages which were not always returned. When he did manage to speak to someone, he was not given a reason as to why the notices were not being sent to him. The Tribunal accepted Mr Perez’s evidence that the new strata managing agency did not take his concerns seriously, and this was substantiated by the fact that the new strata managing agency continued to send the notices to the wrong email address until late 2020. The reasonable conclusion was that if the new strata managing agency had taken Mr Perez’s concerns seriously, they would have realised they were sending the notices to the wrong email address and corrected this error.

Despite not being provided with the relevant contribution notices, the applicants paid the default judgment to avoid the accumulation of expenses and interest.

At the hearing, a lot of emphasis was placed by the owners corporation on section 83(4) of the Strata Schemes Management Act 2015 (the Act) which provides that regular periodic contributions are taken to have been duly levied on an owner of a lot even though notice levying the contributions was not given to the owner. The Tribunal was of the view that this argument misinterpreted the nature of the relief sought by the applicants. This is because they did not dispute their liability to pay the contributions for which they were not served with notices. Section 83(4) of the Act does not specifically address the issue of interest on late contributions.

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The Tribunal’s power in relation to interest chargeable on late payments of contributions comes from section 85(8) of the Act which states the Tribunal may, on application by an owner, order that no interest is chargeable on a specified contribution if the Tribunal is satisfied that the owners corporation should reasonably have made a determination not to charge interest for the late contribution (Section 83(3) of the Act provides that an owners corporation may determine that a contribution is to bear no interest).

The Tribunal was satisfied that the owners corporation should reasonably have made a determination not to charge interest to the applicants for the late payment of contributions levied for the period from 1 May 2019 to 31 December 2020, and made an order pursuant to section 232(1)(a) of the Act for the owners corporation to pay to the applicant the interest which was charged to the applicants. This was due to the fact that the late payments were caused by the failure of the new strata managing agents to take reasonable steps to discover that they were sending the contribution notices to the incorrect email address, even after Mr Perez continuously made enquiries about this.

The takeaway from this case is that owners corporations and their strata managers should take reasonable steps to ensure that contribution notices are being sent to correct addresses and emails addresses.

Jasmin H.Singh & Allison Benson
Kerin Benson Lawyers
E: allison@kerinbensonlawyers.com.au
P: 02 4032 7990

This is general information and should not be considered to be legal advice. I recommend you obtain legal advice specific to your individual situation.

This post appears in Strata News #657.

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This article has been republished with permission from the author and first appeared on the Kerin Benson Lawyer website.

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