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Body Corporate for Pinehaven 1 CTS 31755 v MacKenzie[2021] QMC 8

Body Corporate for Pinehaven 1 CTS 31755 v MacKenzie[2021] QMC 8

MAGISTRATES COURT OF QUEENSLAND

CITATION:

Body Corporate for Pinehaven 1 CTS 31755 v MacKenzie [2021] QMC 8

PARTIES:

BODY CORPORATE FOR PINEHAVEN 1 CTS 31755

(Plaintiff)

v

AMBER ROBYN MACKENZIE 

(Defendant)

FILE NO:

M-1005/21

PROCEEDING:

Request for default judgment listed before Magistrate

DELIVERED ON:

6 December 2021 (on the papers)

DELIVERED AT:

Brisbane

HEARING DATE:

11 November 2021

MAGISTRATE:

Springer (Acting Magistrate)

ORDER:

Judgment to be entered for the sum of $10,060.02 which includes $253.60 filing fee.

Background

  1. This proceeding came before me in a civil applications list because of matters that arose out of a request for default judgment brought by the plaintiff’s solicitors.
  2. The matter was listed before a magistrate to address issues raised by the Registrar as to how the matter should proceed. The plaintiff was represented by Mr Williams, a principal lawyer with MBA Lawyers.  He provided written submissions and affidavits detailing the costs claimed and how they are calculated.
  3. The proceeding, which commenced on 20 May 2021, involves a claim by the plaintiff body corporate for unpaid levies and recovery costs.  The proceeding is of a type commonly filed in the Court.
  4. The Claim does not on its face identify the amount claimed but refers the reader to paragraphs 20(a) and 20(b) of the Statement of Claim.  Paragraph 20(a) includes $4,773.95 for Contributions; paragraph 20(b) includes “$1,384.40 for Recovery Costs”. Those total $6158.35. The Statement of Claim pleads that the plaintiff gave to the defendant prior to the commencement of the proceeding notices of contributions for three periods:
    1. a.
      1 November 2019 to 31 January 2020
    1. b.
      1 February 2020 to 30 April 2021
    1. c.
      1 May 2021 to 31 July 2021.
  1. The Claim also claims relief for “Further recovery costs incurred pursuant to section 156(1)(c) of the Accommodation Module from the date of filing this claim to the date of any judgment”.
  1. Paragraph 22 of the Statement of Claim reads:

“The Defendant is and remains liable to the Plaintiff for future Contributions and Recovery Costs as the (sic) fall due”.

Judgment as now sought

  1. At clause 28 of Mr Williams’ written submissions, he sets out a table which contains the basis for an alleged entitlement to judgment of $15,923.45, markedly in excess of the $6158.35 originally claimed.  That also includes more than $8000.00 sought as recovery costs.
  1. Within the amount for which judgment is now sought is the sum of $1376.82 for contributions issued since the filing of the Statement of Claim and which, if paid, would cover the period up to 31 January 2022. 
  1. The plaintiff had previously rejected a proposal that judgment be entered for the sum of $6158.35 as claimed because of concerns about the ability to claim recovery costs in a later proceeding where those recovery costs relate to an earlier proceeding (see sub-paragraphs 26(a) to (k) of the plaintiff’s written submissions).  This concern arose out of comments by another magistrate.

Are “recovery costs” associated with one proceeding recoverable in a later proceeding?

  1. In my view, “recovery costs”, as distinct from costs of a proceeding recognised under the Uniform Civil Procedure Rules (UCPR), can be claimed in a later proceeding. I take this view because recovery costs (if they are reasonable) are a debt recoverable because of the statutory creation of them as a debt.  Section 156 of the Body Corporate and Community Management (Accommodation Module) Regulation 2020, which apparently relates to the subject community titles scheme, provides:

Payment and recovery of body corporate debts

  1. (1)
    If a contribution or an instalment of a contribution is not paid by the date for payment, the body corporate may recover each of the following amounts as a debt
    1. (a)
      the amount of the contribution or instalment;
    1. (b)
      any penalty for not paying the contribution or instalment;
    1. (c)
      any costs (recovery costs) reasonably incurred by the body corporate in recovering the amount.
  2. (2)
    If the amount of a contribution or an instalment of a contribution has been outstanding for 2 years, the body corporate must, within 2 months after the end of the 2-year period, start proceedings to recover the amount.
  3. (3)
    …  (underlining added)
  1. In Ramzy v Body Corporate for GC3 CTS 38396 & Anor [2012] QDC 397 at [71]-[74] referring to his earlier decision in Body Corporate for Sunseeker Apartments CTS 618 v Jasen [2012] QDC 51), McGill DCJ opined that the entitlement to recover costs under the Regulation “is an entitlement which excludes the ordinary rules in relation to costs, including the power or discretion to award costs on the indemnity basis, and provides a basis of assessment which is different from the indemnity basis”.
  2. Given the nature of contributions to a body corporate levies and the importance of them being paid, the need for a provision allowing recovery costs for pursuing unpaid contributions is understandable.  They are not ‘costs’ in the sense of ‘costs of a proceeding’.  Accordingly, in my view, a plaintiff is not required to have them awarded in the proceeding to which the costs relate.  No issue estoppel arises.

Claim for levies issued after the commencement of proceeding 

  1. Paragraph 22 of the Statement of Claim set out above deals with the issue of “future contributions”.
  2. A defendant is entitled to know the case against her.  It would be procedurally unfair if that were not the case.  In my view, paragraph 22 of the Statement of Claim is insufficient for the defendant to know the case against her as it relates to future contributions.
  3. Further, the amount of the later contributions would fall within the expression “debt or liquidated demand” in Rule 283 so if that were the only Rule under which judgment was to be entered, the amount claimed for judgment under that Rule cannot exceed the amount of the Claim. That would be the result if those future contributions were to be allowed in this proceeding.
  4. The plaintiff referred to Rule 658 of the UCPR as assisting it.  That provides:

658 General 

  1. (1)
    The court may, at any stage of a proceeding, on the application of a party, make any order, including a judgment, that the nature of the case requires. 
  2. (2)
    The court may make the order even if there is no claim for relief extending to the order in the originating process, statement of claim, counterclaim or similar document.
  1. That appears in Chapter 16 with the chapter heading of “Orders”.   It is couched in very wide terms.  However, in my view, that does not over-ride the general position that a party is entitled to know the nature of the case against him or her.  Here, the Claim sought further recovery costs up to the date of judgment (see paragraph 6 of these reasons). Those recovery costs were not for a known amount at the time of filing the proceeding, but they were contemplated within the Claim.
  2. The plaintiff submitted that Rule 288 might assist.  That reads:

288 Judgment by default—other claims

  1. (1)
    This rule applies if a defendant is in default and the plaintiff is not entitled to apply for judgment under rule 283, 284, 285 or 286.
  2. (2)
    The plaintiff may apply to the court for a judgment.
  3. (3)
    On the application, the court may give the judgment it considers is justified on the pleadings even if the judgment was not claimed.
  1. In my view, rule 288 does not assist the plaintiff in this matter.  Sub-rule (1) refers to where the plaintiff “is not entitled to apply for judgment under rule 283, 284, 285 or 286”.  The plaintiff would be entitled to proceed under rule 283 either alone or with rule 284.  Rule 287 dealing with “mixed claims” which allows a combination of claims referred to in rule 283 and 284 (among others).
  2. The limitation in Rule 283 of judgment possibly being entered for “not more than the amount claimed” relates only to where the Claim is for debt or liquidated demand.  Where the default judgment relates to a mixed claim, the limitation on “not exceeding the amount of the claim” does not arise.
  3. I have concluded that judgment should not include that part in the table of figures in paragraph 28 of the written submissions totalling $1376.82 under the heading “Levies accrued since filing the Statement of Claim:”.

Recovery Costs 

  1. There is some ambiguity about whether recovery costs in a body corporate proceeding are, for the purposes of a default judgment, a liquidated amount or unliquidated, even where the amount of them is specifically pleaded.
  2. Rule 283 includes in sub-rule (10) the following:

If the court as constituted by a registrar is considering whether to give judgment, the registrar is not required to consider the merits of the plaintiff’s claim against the defendant. 

Note— Under rule 982, the matter could be referred to a judge or magistrate for disposal, or for consideration and referral back, if the circumstances set out in that rule apply. 

  1. In Bendigo and Adelaide Bank Ltd v Patel & Ors [2018] QDC 84 at paragraph [7], after referring to Rule 283 (10) McGill DCJ said:

On a default judgment under r 283 what matters is whether the relief claimed in the claim and statement of claim amounts to a debt or liquidated claim.  If it does and the claim and statement of claim have been served in accordance with the rules, and no notice of intention to defend has been filed, judgment is to be given under r. 283.  It is not for a registrar to query the merits of the claim, or for that matter for them to be queried by a magistrate on reference from a registrar.  …”

  1. Thus, if recovery costs were a debt or liquidated demand, no consideration of the merits would be required.  However, I regard recovery costs as a form of unliquidated damages. They need to be assessed.   Even though amounts can be specifically pleaded, that does necessarily alter their characterisation as unliquidated: see Robin DCJ in Rollone Pty Ltd v Byrne [2010] QDC 517 (albeit in the context of damages in a motor vehicle collision) and Brabazon DCJ in Day v. Bell [2001] QDC 329 at paragraphs 41 and 42.
  2. Legislative amendment would assist in clarifying whether recovery costs sought pursuant to the relevant body corporate legislation, where specified as to amount and properly pleaded, must be assessed as reasonable before a default judgment could be entered. In such a situation, the reasonableness of them has not been challenged.
  3. The UCPR contemplate a proceeding combining two or more types of relief in a single proceeding (see r. 287) and default judgment being awarded in such a situation. In this matter, the plaintiff has filed affidavits with sufficient information to enable an assessment of the recovery costs sought.  On the state of the current legislation and case law, in my view, the assessment of recovery costs should be performed by a magistrate, despite the delay that may cause to a plaintiff seeking judgment.  Referral to a costs assessor under the UCPR is undesirable in Magistrates Court proceedings due to the additional costs likely to be incurred. In any event, not all “recovery costs” are legal costs; only those would be within the purview of a legal costs assessor.
  4. As requested by me, the plaintiff’s solicitor prepared a further document setting out the proposed orders sought.   That was received by the Court on 19 November 2021. That seeks, in the alternative, default judgment for $16,392.56 or $15,015.74.  The former amount includes contributions accrued since the filing of the Statement of Claim.  For the reasons set out above, I do not accept that is appropriate. In relation to both alternatives, recovery costs accrued up to the application for default judgment and for costs incurred “post filing for default judgment” have been sought. In my view, only costs incurred up to the date of filing the Request for Default Judgment should be incorporated in the Judgment. I address the issue of recovery costs below.
  5. I have adopted the course urged on me to determine the recovery costs incurred by Collect Success and have elected to assess the costs incurred by MBA Lawyers.

Recovery costs paid to Collect Success Pty Ltd 

  1. I have considered the affidavit of Liat Walker, a director of Collect Success Pty Ltd filed 11 November 2021 regarding reasonable costs.  There are included in Ms Walker’s affidavit four invoices from Collect Success to the plaintiff which invoices reflect the hourly rate of $320.00 per hour (exclusive of GST). There is only one invoice not incorporated in the amount specified in the Statement of Claim.  The invoice is for $534.60 dated 9 June 2021.  However, in my view, it is necessary to assess the reasonableness of all of the recovery costs charged by Collect Success, notwithstanding a specific amount is pleaded for some of them.
  2. I note the description of the action taken and the time taken for each action, as set out in the invoices and attachments.  The hourly rate charged is $320 per hour charged in threeminute intervals, so one three-minute interval is charged at $16.00 exclusive of GST.  I note also that for some steps, Collect Success did not charge (see pp 19-20 of exhibits of Ms Walter’s affidavit).
  3. The onus is on a body corporate to prove that the costs and disbursements it claims have been reasonably incurred and reasonable in amount.  The costs and disbursements cannot be made reasonable by agreement between the body corporate and its legal practitioners and, equally in my view, a collection agency: see Body Corporate for Sunseeker Apartments CTS 618 v Jasen [2012] QDC 51 at [36] (adopting Hodgson JA in Owners of Strata Plan 31631 v Dimitrou [2009] NSWCA 27).
  4. In the absence of evidence of other collection agencies in the field pursuing unpaid body corporate debt, in my view, the hourly rate is higher than justified for the level of expertise required for the action undertaken. In my view, while at the upper end of a range of what is reasonable, an hourly rate of $250.00 should be regarded as reasonable.  That is the same rate charged as a paralegal at MBA Lawyers.
  5. My determination requires a reduction of $70.00 per hour on the various tasks performed by Collect Success. On my calculation, that means that $342.65 (4.45 hours @ $70 per hour plus $31.15 GST) needs to be deducted from the total sum claimed for recovery costs associated with Collect Success ($1384.40 in Statement of Claim and $534.60 subsequently) resulting in $1576.35.

Recovery costs charged by MBA Lawyers 

  1. I have had regard to the affidavit of Duane Damman Williams filed 11 November 2021 relating to recovery costs which comprise legal fees.  I note the hourly rate charged by different categories of person within MBA Lawyers.  The rates in paragraph 5 of Mr Williams’ affidavit are, from my knowledge of rates charged by other legal practices not outside the range often charged, although as noted above, costs cannot be made ‘reasonable’ simply because of agreement between the client and the legal service provider. 
  2. I note the description of the steps typically taken for: commencing a proceeding; preparing an application for substituted service; and request for default judgment.  The involvement of a partner is infrequent, commensurate with the level of complexity of this matter. 
  3. I note the amount claimed for professional fees for commencing proceedings is $950.00 exclusive of GST and filing fee.  That is less than the amount allowed in Column C of Schedule 2 of the UCPR for claims of between $5000 to $20,000. The amount of $950 is reasonable.
  4. Despite the fixed rate for an application for substituted service agreed between the plaintiff and its solicitors, I do not regard it as reasonable, given the nature of the application. The UCPR Schedule includes item 12 which allows $502.80 for an application such as substituted service. I have reduced that by 20% ($1750 reduced to $1380 exclusive of GST).
  5. The plaintiff claims $900 for professional fees for seeking default judgment.  The amount for Item 4 Scale C is $254.10.  While acknowledging this matter has occupied more time than might have been expected, and that scale of costs is not general in amount, in my view the reasonable amount is $675.00.

Conclusion 

  1. I am conscious that where a recalcitrant unit holder continues to fail to pay levies, that may result in (possibly) multiple proceedings being brought to attempt to recoup unpaid levies and, on occasions. recovery costs associated with a prior proceeding claimed in a later proceeding.  The need for that is the consequence of the unit holder’s conduct in refusing or being unable to pay the amount claimed.  
  2. Following my consideration of recovery costs, the total of recovery costs incurred up to the date of the Request for default judgment being filed which I have determined as reasonably incurred and reasonable in amount is $5032.47 comprising Collect Success charges of $1576.35 and MBA Lawyers cost of $3709.72 (excluding the filing fee on the Claim).
  3. Based on the reasoning above, in my view in this proceeding the plaintiff is entitled to judgment in this matter in the sum of $10,060.02, calculated as follows:

Amounts for

Amount

(including GST and

Disbursements)

Explanation 

Body corporate contributions claimed in Statement of Claim 

$4773.95

See paragraph 4 above

Collect Success recovery costs

$1576.35

See paragraph 34 above

MBA Lawyers – recovery costs to issue Claim and Statement of Claim

$1313.52

(including filing fee)

See paragraph 37 above

MBA Lawyers – recovery costs to apply for substituted service

$1531.56

See paragraph 38 above

MBA Lawyers – recovery costs to seek default judgment   

$864.64

See paragraph 39 above 

  1. The plaintiff’s most recent submission identifies recovery costs of $3957.21 said to have been incurred post-filing for judgment.  Those are not contemplated within the Claim and therefore have not been included in the assessed recovery costs referred to above.
  2. Paragraph 15 of the Statement of Claim makes no claim for interest which could be claimed at 2.5% per month, pursuant to resolutions passed relating to interest, as pleaded.  No other claim for interest was sought in the submissions made to me.
  3. Judgment to be entered in favour of the plaintiff for amount of $10,060.02 (including filing fees of $253.60.
Close

Editorial Notes

  • Published Case Name:

    Body Corporate for Pinehaven 1 CTS 31755 v MacKenzie

  • Shortened Case Name:

    Body Corporate for Pinehaven 1 CTS 31755 v MacKenzie

  • MNC:

    [2021] QMC 8

  • Court:

    QMC

  • Judge(s):

    Springer (Acting Magistrate)

  • Date:

    06 Dec 2021

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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