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  • #8803
    adeze
    Flatchatter

      Hi, I have a tricky situation.

      approx. 20 months ago, I feel in arrears on my levies,partially due to the fact I was out of work, and could not pay it all.

      I received a letter of demand to pay the ‘full amount within 7 days, or legal action will commence’–the full amount was approx. 3000, and I made a partial payment of $1400, only a few days after that due date.

      In the levy statement, I was now charged approx $850 as part of the legal costs-(negating nearly half of my partial payment), for the legal action that commenced against me.

      I complained to the strata manager, rejecting liability for this ‘debt recovery cost’ given I had just made a partial payment. I was also annoyed that members of the OC knew I was unemployed and going through a hard time.

      I did not get a response.

      A few weeks later( it seems), I was served with a statement of claim as I was threatened with. From negligence on my part, I did not notice this at all- I could argue, that I wasn’t served directly, and it was placed in my letter box simply as ‘documents from the strata management company, where it got placed in a pile of other mail.

      (This statement of claim had slight errors and made no mention of the partial payment, but this is minor)

       A few months passed, and it seems I received a default judgement for the amount, with another quarterly levy charge and including their claim for legal costs of (approx. $950–  the maximum claimable amount )for a total  of approx 6850

      I only realised all this happened, when i was (this time properly) served a ‘Bankruptcy notice’ against me. this time the amount was for a total of $7750, including additional file fees, and costs etc. I also had now received a default against my credit rating too.

      my (costly) legal advice to this situation suggested I was better to pay up rather than to fight the default judgement, explain how i missed the statement of claim, etc. It could be more costly to me if I lost, so it was suggested to pay the full amount, and accept the mistake I made, but i really wanted ‘a motion to set aside the default judgement’ so as to not affect my credit rating.

      I finally scrounged up the $7750 (redrawing on my mortgage etc.) and paid it off by the due date. I received an email from their solicitor saying ‘ no further action would be taken’ (this was in February 2012)

      I do accept the responsibility for being negligent and the extra costs incurred– which have been around (at this stage) at least $2500 of money down the drain.

      this is not where the story ends though!

      a month or so later, I then received a new charge on my levy notice for approx $2000 FOR the strata management’s ADDITIONAL legal cost on this matter.

      At NO time was it disclosed there were any additional costs to be incurred– what included in the statement of claim, and what was on the bankruptcy notice, was what I understood was required to pay in regards to this matter–penalties et. al.

      (and had I of known, my course of action would have been different)

      I requested a line item breakdown of those costs– that was in April 2012- I received a response in AUGUST 2012– 4 months later!

      Furthermore, I also noticed that in July 2012, I was also charged another $975 in ‘debt collection commission fees’ to the same matter.

      So now, I have incurred approx.$2800 of ‘undisclosed’ costs, post settlement. I found this very unfair and told the strata manager i would dispute these charges: and wanted a separate statement on my levies– any monies paid WOULD be directly to quarterly levies– not these claimed costs, or for them to ‘roll up’ these costs into my levies (and charge interest). (I can not be ‘financial’ as I cannot/will not pay everything to be up-to-date,to bring this up at a strata meeting)

      The strata manager never responded to my claim disputing liability, or the request to separate the charges into another statement. This was in October 2012.

      Now, I’ve fallen on hard times again, being unemployed for the first 4 months of the year, and so i fell in arrears, but made partial payments– pro actively paying an amount that I could afford to avoid what happened a year earlier.

      So, just this week, 6 months after I raised my objections, and without warning I’ve received a new letter of demand to pay $5700 within 7 days or face legal action (again)— without any breakdown of what this comprises that amount–

      of which I can argue, there’s the $2800, plus a new round of debt collection/legal costs.

      I have contacted the lawyer explaining my situation– no response (yet)

      I have contacted the strata manager– no response (yet)

      I am clearly not happy about any of this. It seems that a strata manager-debt collection-laywer relationship can just pass any arbitrary cost they feel like at any time under the guise of section 80, and I am effectively powerless.

       “costs involved in recovery of strata levies” means that they can just tack on whatever they want beyond what they were awarded by the court.

      I did not contest anything and just ‘sucked it up’, but now I am paying 80-90% of my original debt as additional ‘legal costs’. Surely this can’t be fair or just? are they any limits to my liability– i don’t seem to have any protection. This just seems like an exploitation of the law in order to fuel an industry– so what are my real legal options? A counter-claim? A cost-assessment?

      In any other area, costs awarded are limited when it comes to small claims for entirely this reason,and there are laws regarding passing on ‘third party costs’ without disclosure or agreement (from what i’ve read)- so how can section 80 simply override any other legislation unchallenged?

      On top of that, The “Owners of Strata Plan 36131 v Dimitriou [2009] NSW CA27 (25 Feb 2009)” case argument rarely wins (it seems) but likely my only real argument, and there’s this too

      https://www.francescoandreone.com/uploads/4/0/0/6/4006916/casewatch_2007-001_-_sp_63800_v_wolfe__ors.pdf

       

      Help please…Confused

       

       

       

       

       

       

       

       

       

       

    Viewing 8 replies - 1 through 8 (of 8 total)
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    • #18321

      Hi Adeze

      There are appropriate and nationally legislated steps that need to be taken by all parties during a debt recovery processes.

      From what you have described, no parties (including yourself) appear to have taken these steps.

      Irrespective of the provisions of S.80, there are over-arching principles of debt recovery which seem to have been reaffirmed in that case law example you provided. 

      In addition to engaging a lawyer, I would strongly suggest you approach a consumer advocacy group that specialises in dealing with individuals in debt; if for no other reason than to document and assist with the process of attempting to negotiate payment terms and the like with the strata agent. From what I have read, that seems to be a crucial piece that is missing in this saga.

      #18324
      Jimmy-T
      Keymaster

        Mattb is right. Clearly Adeze should have started talking to the strata manager and the executive committee as soon as problems started to appear. Anyone else in this situation would be well advised to do that now.

        There is an excellent government website called Moneysmart that offers excellent advice on this kind of problem.

        Beware however, of debt consolidation, high-interest lenders masquerading as ‘financial counsellors’. As the Moneysmart website explains that can be a short-term fix that can lead to long term problems.

        Meanwhile Adeze should also contact Fair Trading on 13 32 20 and ask for advice and help in dealing with this latest bill.

        The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
        #18339
        Bennifer
        Flatchatter

          Whilst I sympathise with adeze, we have a similar situation in our building with a number of owners in arrears, 2 in particular. We have commenced legal action against one (and had a successful judgement, we are waiting for the  sheriff to obtain property to clear the debt) and will be reviewing the situation next week to determine whether to commence an additional action (and therefore bankruptcy proceedings) against the same owner, as well as some action against the second owner, who seems happy to pay to renovate their unit but not pay their levies…

          This is not a decision that we (the EC)  take lightly but I fail to understand why owners think that they should be able to rack up thousands of dollars of debt without any action from their co-owners. The bills still need to be paid and the services don’t stop just because someone has fallen on hard times. Why didn’t adeze speak to his strata manager or EC prior to things getting so out of hand and why didn’t he extend his mortgage earlier and pay his debts? Did he think that it would just go away or he shouldn’t have to pay because he was out of work? 

          I also don’t understand why the additional costs from the strata manager should be worn by his co-owners, when they are a direct result of his non-payment of levies. To be honest, I had not thought of these charges prior to his post, so I will be contacting our strata manager to ensure that our owners who are in arrears in my building are charged for any and all additional costs (not just the legal fees). The charges mentioned do seem excessive but if he had paid on time, there would be no problem…

          I am not unsympathetic with his situation and I have also had difficulty paying levies in the past, as I am sure that most owners have. The difference is that I sold some personal items to ensure that my levies were paid by the due date.

          Hopefully the strata review will create clear legislation that makes payments of levies a priority and heavier interest rates will apply for late payments. Changes like this may hopefully reduce the number of cases that need to be sorted out through legal measures.

          #18349
          scotlandx
          Strataguru

            Adeze’s situation is pretty awful, it does sound like he/she should have initiated communication at a much earlier stage, but to be fair the actions of the strata manager/OC seem pretty extreme.

            There is a fine balance in managing this type of issue – the OC needs to keep its finances in good order, and owners should pay their way.  However, there are times when an owner may find themselves in financial difficulty.  You need to draw a distinction between those who for a range of reasons are not able to meet their obligations for a time, and those who take a cavalier view towards paying the levies, and/or put them as a low priority.

            In the latter category you have people who just don’t care, and can mount up substantial arrears.  Particularly annoying are those who choose to go on overseas trips or renovate their apartments, and then cry poor.  Then there are the absentee landlords.  They are the ones who should be dealt with via a proper debt collection process.

            I believe that if someone is in genuine financial hardship, and is proactive about managing the debt, there is little to be gained from penalising them and hitting them with ever-mounting fees and charges, it only makes the situation worse.

            On the other side of the coin I have seen a number of cases where the strata manager has told the EC/OC they will take care of it, and they then proceed to gouge the hapless owner for any fees and charges they can think of.  On the face of it, I would say that Adeze has been subjected to this, and I have a pretty fair idea who the strata manager is.  There are a number of large operators who run a very lucrative sideline in strata debt collection, and in my view their practices are very dubious.  The “legal fees” they charge for what are very straightforward matters, usually generated via pro forma, are exorbitant and cannot be justified.  

            We had an owner who some time ago owed $6000 in back levies.  I found out that the EC had taken it upon themselves to progress legal action that at the time I found out had already cost $9000.  That raised alarm bells because the person they were pursuing is a lawyer, and he could have easily challenged those costs as being excessive relative to the debt.  

            Bennifer – I agree with you that everyone should pay their way, but strata managers play the game for all its worth, they see this as a great way to make money, because they know that under the strata legislation the hapless owner will be liable for the costs, provided they are characterised as legal costs, therefore the EC/OC won’t question the costs.  And in Adeze’s case, he/she has made genuine attempts to deal with the debt, there has been no suggestion that Adeze feels they shouldn’t pay.

            The interest rate that currently applies to unpaid levies is 10%, this is well above any rate you would get if you invested money anywhere, so I think it is high enough.

            Adeze – I suggest you contact the Law Society in NSW and also seek advice from either Legal Aid or a community legal centre.  I would be seeking a very detailed breakdown of the costs incurred, including whether all of the charges can properly be characterised as legal fees.

             

            #18353
            Bennifer
            Flatchatter

              It is disappointing to read (but not surprising really) that some strata managers take advantage of the situation and pass on ridiculous additional fees to owners in financial distress. Obviously early communication is the key and owners that are struggling should discuss their issues with the relevant people as soon as possible to avoid situations getting out of hand…

              In my building, we have tried (for an extended period of time) to establish a number of very reasonable payment plans for our owners in arrears, but unfortunately they have not adhered to any of them and they have ignored all communication and requests for meetings, so legal action was commenced as a last resort.

               

              In adeze’s post he mentions that he made a partial payment a few days AFTER the due date and that he missed (and therefore did not respond to) the statement of claim. This may have given the impression that he was not prepared to clear the debt or engage in negotiations with the EC/strata manager. Once again, communication seems to be the key in these situations. It really should be up to the owner in arrears to initiate the communication, not the EC or strata manager to chase people for late/no payments.

               

              Unfortunately non-payment of levies seems to be a choice for some and they are the ones that really need to understand the stress that it puts their fellow owners under. As hard as it is to discuss money issues (especially when you are having difficulties), I think that most people would be understanding and allow a regular payment plan until the debt is cleared for owners who indicate they are under financial hardship.

              #18421
              adeze
              Flatchatter
              Chat-starter

                Hello,

                wow, thanks for the interest (I didn’t think this would become an article in the smh)

                so, this is what has occurred…and there’s a twist.

                I contacted the strata and debt collector/solicitor, whilst in the 7 day deadline, to negotiate and requested more details of these ‘charges’.

                1 week after the deadline, I finally received contact from both of them, and they are willing to negotiate.

                however, upon inspection of my account, i’ve noticed a bunch of odd discrepancies which i am now querying.

                The statements show that

                1. the allocation/distribution of payments was first directed to all the “costs”, whether they were claimed/awarded (non-disputed) or unclaimed/not awarded. Several ‘charges’ were never fully detailed or came several months after ‘settlement’ with no opportunity to challenge them in a timely manner.

                I am contentious on the allocation of payments because:

                2. the rest of my payments were now scattered amongst the outstanding levy notices.. racking up interest against all overdue levys –and never actually paying off any single one,because the monies were never allocated in any significant amount. I have only been accumulating and paying off the interest !!

                there must be some aspect of the law (which I cannot seem to find) that suggests that this is wrong . Shouldn’t be allocated cumulatively, not in parallel, and at the distribution as directed of the lot owner?

                How can a strata manager simply decide to pay arbitrary charges from my account without any justification?

                If these disputed charges are reallocated, and interest recalculated, it now shows that i’m actually not so much in arrears as what has been claimed.

                i am still awaiting on further details and i have some legal advice coming my way next week, so i shouldn’t say much more at this stage… but any suggestions on where i’m protected, or misconduct is appreciated!

                 

                 

                without prejudice (just in case) 

                #18514

                Too many owners do not fully understand or choose not to understand the communal living nature of strata.  Owners that do not pay their levies place a burden on the other owners in a strata scheme.In my case it is a particularly heavy burden.

                By way of example, I live in a two unit scheme.  I have been successful in obtaining a CTTT order against the OC to undertake water ingress and urgent OH&S repairs. I was also successful in obtaining a s.162 compulsory manager for two years to manage the scheme with all the powers of the OC and EC.  That was the only way that the repairs could be undertaken.  The other owner who had more UE’s consistently voted against the repairs. The problem is so bad that the OC’s insurer has refused to insure the OC for public liability in the areas of the common property that need repair.  The CTTT ordered the SM to raise a special levy to undertake the repairs. The other owner who consistently blocked my attempts to get the repairs undertaken is now not surprisingly substantially in arrears to a five figure sum. 

                I have paid my five figure share of the special levy.  However, this means I am in effect carrying the strata scheme.  It is only my money that is allowing the strata scheme to function.

                Fortunately we have a very good SM who is diligent in pursuing the other owner.  However, the legal fees for doing so are mounting up. 

                It is absolutely right that the miscreant owner should pay for the legal costs of pursuing him.   

                 

                 

                 

                 

                 

                 

                #19906
                adeze
                Flatchatter
                Chat-starter

                  So, after many months, and a lot of stress, I can announce that I have had somewhat of a pyrrhic victory in this matter, and had the costs refunded back to the strata management from the law firm engaged to recover the debt (effectively eliminating my outstanding levies)

                  The issue that still stands is that SSMA s80 is a cash cow for debt collectors: There is no incentive by the client (strata management) to AVOID excess costs, whilst there is an incentive for law firms to incur costs, and a disincentive for a lot owner to dispute them.

                  I am quite lucky, and this may be an exceptional case, but it was the result of reasoning and deduction on the internal processes and workflows conducted by the debt collection agency / law firm that, after investigation by the appropriate investigation body, turned out to be accurate.

                  What does frustrate me is the apparently unwillingness of the strata manager to even help or provide information that may have been favourable to me, beyond the absolute minimum, or to even pursue the questions on my behalf.

                  Fortunately, there are ways to allow an owner who is in arrears to challenge s.80 costs, without the fear that the penalty for doing could outweigh the amount in dispute.

                   

                   

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