Published tribunal order
Tenancy Tribunal case 9055744 — Tenancy dispute in Auckland Central, Auckland
Decided 6 Dec 2024 · Published 6 Dec 2024 · Application 9055744
Landlord favoured
- Unit Titles
Order
1
- Zhi Shan Jason Chui must pay Body Corporate 497469 the sum of $25,036.71 immediately, as per the table below. DescriptionsApplicant Levies$18,240.20 Costs: Legal Body Corporate debt collection $4,151.79 $920.00 Interest to 6 November 2024 Filing fee $1,224.72 $500.00 Total payable by Respondent to Applicant $25,036.71 1 This order replaces the order dated 6.11.24 where the incorrect Body Corporate number was recorded in error.
Reasons
- Both parties attended the hearing. Submissions were provided by the applicant in advance.
- Mr Chui does not oppose any of the orders that are sought. He said that the reason for non-payment has arisen out of the ending of his relationship with his ex- partner. He said he has finally been able to secure agreement for the property to be sold and that it sold last week at auction. Settlement of the property will take place on 24 January 2025 and he will make payment in full on that date.
- He will keep in contact with Ms Dobson, the lawyer acting for the applicant, in relation to the final amount to be paid because it will by then have accrued additional interest. She will also be able to give him the bank account number for the payment to be made.
- In the meantime, I explained to Mr Chui at the hearing that I would enter judgment today for the amounts that are sought, given they are not opposed.
Does the Unit Owner owe the levies claimed?
- A unit owner must pay all body corporate levies and outgoings payable for the unit. See sections 80(1)(f) and 121(1) Unit Titles Act 2010.
- The Body Corporate has determined the levies payable and unit owner's share has been calculated according to their utility interest.
- The Body Corporate has fixed the due date for the levy to be paid, and the unit owner has not paid by that date. The Body Corporate has provided records to prove the amount claimed and ordered above for the levy. The levy amount is accepted by the unit owner.
Is the unit owner liable for interest?
- If a unit owner fails to pay levies by the due date, interest accrues on the unpaid balance. A Body Corporate may charge interest up to 10% per annum. See section 128 Unit Titles Act 2010.
- The Body Corporate has resolved to charge interest at 10% per annum on unpaid levies. The Body Corporate has proven the amount of interest owing from the due date to the hearing date, as ordered above..
Is the unit owner liable for costs?
- The Body Corporate claims legal costs as well as $920 for the Body Corporate debt recovery costs.
- Body Corporate administration charges are approved by way of resolution recorded in minutes of the Body Corporate. Further, in any event, these costs are recoverable as a debt due pursuant to s 124 of the UTA if they amount to “reasonable costs”.
- In accordance with judgments (of the District Court and Court of Appeal respectively) in Body Corporate 162791 v Cheah 2 and Body Corporate 162791 v Gilbert, 3 the Tribunal must order that the reasonable costs incurred by the Body Corporate in recovering the levies, objectively assessed, be paid by a defaulting unit owner.
- The assessment of reasonableness of costs in connection with a contractual indemnity for reasonable solicitor and client costs was discussed in Exuberant Ltd v Quinovic Management Limited 4 and, in the context of s 124 of the UTA, in Body Corporate 45131 v 88 CHI Ltd, where the approach taken in Exuberant was adopted and applied. 5
- The District Court in Body Corporate 45131 v 88 CHI Ltd summarised the relevant legal framework as: 6 a) the relevant test is as set out in section 124(2) of the Unit Titles Act – the body corporate is entitled to recover “any reasonable costs incurred in collecting the levy”; and b) solicitor and client costs are a category of costs that can be recovered under this provision; and c) the task is to assess the reasonableness of the solicitor and client costs that are claimed.
- Having set out that framework, the Court reviewed the relevant method to be applied in assessing the reasonableness of the costs, concluding: 7 ... the essential method is as follows: a) first, ask whether the work that was done was reasonably necessary; b) second, ask whether the amount charged for the reasonably necessary work was reasonable; c) in both instances the NZLS Rules and Rule 9 in particular are prime reference points when assessing reasonableness; 2 DC Auckland, CIV2014-004-0120, 24 June 2014. 3 [2015] NZCA 185. 4 [2021] NZ HC 3533. 5 CIV 2022 – 096 – 000494 [2023] NZDC 9036, at paragraph [5]. 6 Body Corporate 45131 v 88 CHI Ltd CIV 2022 – 096 – 000494 [2023] NZDC 9036, at paragraph [5]. 7 At [6], citing Exuberant Ltd v Quinovic Property Management Limited [2021] NZHC 3533 and other authorities. d) third, test the analysis against other available reference points.
- At para [8], the Court observed: 8 I make the following observations from the discussions on the cases and having regard to the way in which the methodology has been applied in the cases: (a) the exercise the adjudicator or the judge is engaged in is an objective one. The adjudicator or the judge must make a principled assessment of reasonableness against stated criteria; (b) the adjudicator or the judge must do the work required by the methodology, and in particular grapple with the available information on the specific tasks that were undertaken by the lawyers, and the amounts that were charged for them; (c) when doing that, the adjudicator or the judge must test the work and the invoicing against the realities of the legal market that we have, not an idealised or hypothetical standard; (d) the Rule 9 considerations are helpful in providing some structure to this assessment. Time expended is one of these factors but it is not the only factor; (e) if an adjustment to actual solicitor client costs is made, this should be explained with some specificity by identifying tasks that were seen to be unnecessary, or the necessary steps that were seen to have been overcharged in some way. 17I have viewed the time records associated with the legal costs. 18I am satisfied that the material I have been provided with shows that: a) the work undertaken was likely similar to other applications of this nature, but still need to be checked and completed carefully, b) the work has been undertaken and charged out by a staff member with a reasonable hourly rate, c) there appeared to be no double up with other matters evident, and d) there were no unnecessary attendances. 19Even although the work might be regarded as somewhat formulaic and consistent with similar applications of this nature made before the Tribunal, I am satisfied that all of these steps that were undertaken are required to ensure the information is correct and the relevant material completed correctly with respect to this particular case. Just because the application might be regarded as generic does not mean a rigorous approach should not be taken to ensuring that the documentation is completed correctly.
- I find that the billing records disclose no inefficiencies or any inappropriate recording of time. 8 Footnotes from the quote omitted. 21Taking a “standing back assessment”, I am of the view that the legal costs that have been charged would, in this case, be within the standard commercial range for this sort of work. 22I find that the actual solicitor and client costs are, in the circumstances of this case, reasonable costs incurred in collecting the levies and can therefore be recovered from the unit owner. The Body Corporate charges 23In relation to the Body Corporate charges I also find these to be reasonable. The applicant submits that the work done by the Body Corporate comprises: The work completed by STA in respect to the charges referred to at paragraph 9 includes monitoring payment of levies, noting and checking default by the Respondent, and drafting and sending reminder notices to provide the Respondents with ample opportunity to pay the overdue amounts. Each reminder sent requires the same monitoring process. The charges include all incidental communications with the Respondent, processing, and monitoring payments made. 24In the light of that information I consider the costs to be reasonable in this case. And in any event, they are not opposed.
- I note that the filing fee is recoverable under s 176(1) Unit Titles Act 2010 and s 102(4) Residential Tenancies Act 1986 but I do not need to make any further orders about that because it is already included in the Body Corporates invoices for legal costs.