Published tribunal order
Tenancy Tribunal case 9057484 — Tenancy dispute in Grafton, Auckland
Decided 21 Feb 2025 · Published 21 Feb 2025 · Application 9057484
Landlord favoured
- Unit Titles
Order
- Turnstone Limited James Peters, James Ryan must pay Body Corporate 490569 $85,263.99 immediately, calculated as follows: DescriptionsApplicantRespondent Overdue Levies $75,185.84 Body Corporate Manager's debt collection charges $920.00 Section 124 costs, including GST &disbursements $6,266.25 Appearance at hearing (adjusted to 1 hour @ $300 per hour plus GST) $345.00 Interest from 15 February 2024 to 19 February 2025 $2,046.90 Filing fee$500.00 Total award$85,263.99 Total payable by Respondent to Applicant $85,263.99
Reasons
- The hearing was held by teleconference on 19 February 2025. Ms Fenton attended the hearing for the applicant. Mr Peters and legal counsel, Mr Ryan, attended the hearing for the respondent.
- The Body Corporate has applied for recovery of unpaid levies, interest, costs and the filing fee from the Unit Owner. Preliminary matter
- The respondent opposes the application and seeks to have the matter transferred to the High Court, arguing that they have counterclaims or set-offs exceeding the Tribunal’s jurisdiction, including a claim for damages of more than $400,000 due to alleged unlawful possession of the unit by the Body Corporate. The respondent also suggests that if the proceedings are not transferred, they should be struck out.
- The applicant opposes the transfer and seeks to proceed with the Tribunal hearing as scheduled.
- The Tribunal determines that the respondent’s liability for unpaid levies remains independent of any counterclaims they may wish to pursue. Under the Unit Titles Act 2010, levies imposed by a Body Corporate are statutory obligations that must be paid when due. The respondent’s alleged counterclaims and set-offs, even if ultimately proven, do not extinguish the Unit Owner’s primary liability for these levies.
- The respondent argues that an equitable set-off applies and that their claims are inextricably linked to those of the Body Corporate. However, equitable set-off is only available where the respondent’s claims directly undermine the applicant’s right to enforce its claim. In this case, the Body Corporate’s right to recover levies exists irrespective of any claim for damages the respondent may have. A set-off must be closely connected to the primary claim, and while the respondent’s claims may relate to the same unit, they do not negate or diminish the applicant’s statutory right to recover levies. The respondent is free to pursue their claims in the High Court, but this does not prevent the Tribunal from hearing the levy claim.
- The respondent further contends that their claims exceed the Tribunal’s jurisdictional threshold of $100,000 under section 171(4) of the Act, and that the Body Corporate having issued a recent special levy could increase its claim beyond this threshold. While it is true that the Tribunal does not have jurisdiction over claims exceeding $100,000, this does not apply to the applicant’s claim, which is solely for levies well within the Tribunal’s jurisdiction. The respondent’s claims are unquantified and remain speculative pending expert evidence. The fact that they estimate their losses to exceed $400,000 does not automatically require the Tribunal to transfer the matter to the High Court.
- The Tribunal also does not accept the argument that the proceedings should be struck out. The Body Corporate has a clear statutory entitlement to recover levies, and the Tribunal has the necessary jurisdiction to hear the claim. The existence of a potential counterclaim does not justify striking out proceedings, as this would effectively allow the respondent to delay or avoid their levy obligations while pursuing separate claims.
- The respondent raises broader concerns about fairness, arguing that the Body Corporate has compensated other tenants for temporary relocation but refuses to compensate them. While this may be relevant to the respondent’s counterclaim, it does not impact the Body Corporate’s right to recover levies. If the respondent believes they are entitled to compensation, they have the option to pursue this separately in an appropriate forum. The Tribunal is not required to determine broader claims that go beyond its statutory mandate.
- For these reasons, the Tribunal declined the respondent’s request to transfer the matter to the High Court. The Tribunal also rejected the alternative request to strike out the proceedings, as the Body Corporate’s claim for levies is valid and enforceable. The matter proceeded as scheduled.
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 levies to be paid, and the Unit Owner has not paid the levies by that date. See section 124(1) Unit Titles Act 2010. The Body Corporate has provided records to prove the amount claimed.
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 proved the amount of interest owing from the due date to the hearing date.
Is the Unit Owner liable for costs?
- Pursuant to section 124 UTA, and as resolved at meetings of the Body Corporate, the Body Corporate is entitled to recover any reasonable costs incurred by it in collecting unpaid levies as a debt due by the owner to the Body Corporate. In accordance with the judgments (of the District Court and Court of Appeal respectively) in Body Corporate 162791 v Cheah DC Auckland, CIV2014-004- 0120, 24 June 2014 and Body Corporate 162791 v Gilbert [2015] NZCA 185, 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.
- I am satisfied that the costs ordered above are reasonable.
- As the Body Corporate has succeeded with the claim, I have ordered the other party to reimburse the filing fee. Section 176(1) Unit Titles Act 2010 and section 102(4) Residential Tenancies Act 1986.