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[2024] QCA 31
This case was about the proper construction of s 229A Body Corporate and Community Management Act 1997 and, inter alia, whether it precluded a defence of set-off being pleaded and pursued in defence of a claim by a body corporate (the respondent) for unpaid levies and recovery costs incurred in seeking recovery of body corporate levies owed by the applicant (the lot owner). The appeal was allowed, with the Court finding that the applicant had established an error of law by the primary judge in dismissing his appeal from summary judgment, which involved “a plain miscarriage of justice”.
Bond and Boddice JJA and Fraser AJA
8 March 2024
The dispute between the parties arose from the issuance of levy notices by the respondent pursuant to the Body Corporate and Community Management (Accommodation Module) Regulation 2008. At the time the applicant purchased a lot in the community title scheme, the levy notices provided for a 20 per cent discount if paid by their due date. [7]. For a period of time, the applicant duly paid the notices as they fell due, albeit he alleged that the respondent failed to honour the discount. [8]. Thereafter, he ceased paying the levies and in response the respondent issued notices containing penalty interest charges and recovery costs. [9]. After some time elapsed, a substantial sum was owed by the applicant. The respondent brought proceedings in the Magistrates Court of Queensland. [10]. Ultimately the applicant sold his lot and at settlement he discharged the outstanding sum. [11].
At first instance, the applicant contended that the levy notices issued by the respondent were defective due to the fact that a 20 per cent discount applied to all levy periods and since he had not benefitted from that discount, he had overpaid levies, rendering the quantum claimed inaccurate. He claimed, by way of set-off, the amount paid by him on settlement of the lot together with sums owing due to the overpayment of levies and adjustments for the claimed penalty interest and recovery costs. [14]. The magistrate held that in actual fact the applicant had no entitlement to a discount for payment of levies on time in any of the periods the subject of the respondent’s claim, granting summary judgment. [18],[19]. The applicant unsuccessfully appealed that decision, with the primary judge forming the view that his claim for the overpayment of levies was not a claim within the relevant proceeding, did not arise in the appeal, and “if there is a claim, it is a claim to be pursued in another forum”. [23].
The applicable legislation
The two provisions primarily examined by the court in this matter were ss 229 and 229A of the Act.
Section 229(1) of the Act provides that subsections (2) and (3) apply to a dispute if it may be resolved under Chapter 6 by a dispute resolution process. Section 229(3) states:
(3)Subject to section 229A, the only remedy for a dispute that is not a complex dispute is –
(a)the resolution of the dispute by a dispute resolution process; or
(b)an order of the appeal tribunal on appeal from an adjudicator on a question of law.
Section 229A provides:
(1)A claim to recover a debt the subject of a debt dispute that is a claim under the Queensland Civil and Administrative Tribunal Act 2009, schedule 3, definition minor civil dispute, paragraph 1(a) is, under paragraph 2 of that definition, a minor civil dispute.
(2)Subsection (1) does not affect a body corporate’s right to start proceedings in a court of competent jurisdiction to recover a debt the subject of a debt dispute.
(3)To remove any doubt, it is declared that an adjudicator does not have jurisdiction in a debt dispute.
(4)A dispute resolution process does not apply to a debt dispute or a related dispute to a debt dispute once a proceeding to recover the debt the subject of the debt dispute is started before QCAT or in a court of competent jurisdiction.
(5)If—
(a)a dispute resolution process has started for a debt dispute or a related dispute to a debt dispute; and
(b)a proceeding to recover the debt the subject of the debt dispute is subsequently started before QCAT or in a court of competent jurisdiction;
the dispute resolution process is at an end.
(6)A dispute is a related dispute to a debt dispute if—
(a)the subject matter of the dispute is related to the subject matter of the debt dispute; and
(b)there are proceedings in a court or before QCAT to recover the debt the subject of the debt dispute; and
(c)the commissioner considers that the dispute and the debt dispute are connected in a way that makes it inappropriate for the dispute to be dealt with by a dispute resolution process.
(7)In this section –
debt dispute means a dispute between a body corporate for a community titles scheme and the owner of a lot included in the scheme about the recovery, by the body corporate from the owner, of a debt under this Act.
Did the primary judge err in concluding that the defence of set-off could not be brought in the respondent’s proceeding?
The Court held that the applicant was not precluded from relying upon his pleaded defence of set-off, and it set aside the summary judgment given in favour of the body corporate. Justice Fraser and Justice Boddice gave separate reasons. They each had a slightly different view about one aspect, namely the application of s 229A.
In his reasons, Fraser AJA (with Bond JA agreeing), stated that the “broad and unambiguous language” in the definition of the term “debt dispute” in s 229A(7) comprises any dispute regarding the recovery by a body corporate from a lot owner of a debt under the Act. Here, that plainly included the applicant’s pleaded defence by way of set-off since it directly related to the respondent’s right to recover the debt which it claimed was owed by the applicant. That defence was “one of the inseparable aspects of the ‘debt dispute’ that arose between the respondent body corporate and the applicant whilst he owned a lot in the scheme”. [55]. Further, Fraser AJA (with Bond JA agreeing) noted that since sub-sections (2) – (5) of s 229A make it “pellucidly clear” that once a body corporate has commenced a recovery proceeding about a debt the subject of a “debt dispute”, that dispute is not able to be determined under the dispute resolution provisions in Ch 6 of the Act. As such, the logical result was that s 229(3) did not operate to prevent the applicant from relying upon his pleaded defence of set-off for two independent but related reasons: firstly, it had no application since the dispute was not one that “may be resolved under this chapter by a dispute resolution process” and secondly, given it “renders the exclusivity of the dispute resolution process for which it provides subject to s 229A, and for a debt dispute that section allows litigation and excludes dispute resolution under Chapter 6”. [56]–[57].
In Boddice JA’s view, s 229A did not apply. He reasoned that its operation is broad, and noted the definition of debt dispute in s 229A(7). He held that, having regard to the scope of s 229A, there is no basis to limit a related dispute to only claims which fall within the same levy period. He observed that s 229A(6) enables the determination of claims by the lot owners for monies said to be owed to them by the body corporate. It was not the case that s 229A excluded from consideration, in the relevant proceeding, the applicant’s claim to recoup overpayments, and accordingly it was erroneous for the primary judge to find that claim was a dispute for another forum. [36]–[38]. Any overpayment ought to have been properly a subject of a dispute requiring a hearing. [40].
Disposition
Leave to appeal was granted and the appeal was allowed. The orders of the primary judge were set aside.
A Jarro