QLD: Debt disputes – a case study

This case study about debt disputes has been supplied by Michelle Scott, Commissioner for Body Corporate and Community Management.

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The Body Corporate for The Grove CTS9356 v Comerford [2019] QCATA 172

(The Grove)

The Grove appeal decision by the Queensland Civil and Administrative Tribunal (QCAT) is one to consider! In what was in essence a dispute over who should pay a cleaning bill, QCAT decided that the owner who had paid the bill could only be reimbursed if the payment had been made ‘under a mistake’ – and overturned the adjudicator’s decision.

What were the facts?

The owner had done some renovations, causing the release of hazardous silica dust. A Queensland Government inspector issued an improvement notice to the body corporate to clean up the dust.

The body corporate cleaned up the dust and then issued the lot owner with a cleaning bill for over $4000, which he paid, and then later disputed through a Body Corporate and Community Management (BCCM) adjudication application.

In The Grove [2018] QBCCMCmr 157 the adjudicator ordered that the body corporate reimburse the lot owner because it had no basis under the BCCM legislation to charge the lot owner the cost of the cleaning.

What did QCAT decide?

QCAT agreed with the adjudicator that there was no basis under the BCCM legislation for the body corporate to charge the lot owner the cost of the cleaning. However, QCAT further decided that, as the lot owner had not made the payment ‘under a mistake’, the adjudicator’s order for the body corporate to reimburse the owner should be overturned.

QCAT considered the lot owner’s payment of the cleaning bill had been voluntary because he had been prepared to pay the bill either on the assumption that he was obliged to or, regardless of whether this was the case because the body corporate believed it was entitled to the lot owner’s payment. It stated: “A payment which is ‘voluntary’ will not be recoverable on the ground of mistake. This reflects the policy that the law wishes to uphold bargains and enforce compromises freely entered into. A ‘voluntary’ payment is one made in satisfaction of an honest claim.” [para 26, citations removed]

Has the decision been applied since?

In Unison At Waterfront, Newstead [2020] QBCCMCmr 86, the adjudicator dismissed an owner’s dispute application seeking reimbursement for lost discounts, penalty interest and recovery costs for “want of jurisdiction”, on the basis that the application amounted to a debt dispute within the meaning of section 229A of the Body Corporate and Community Management Act 1997. However, the Adjudicator did also comment that even if he had not made that finding, he would have considered The Grove decision and “…likely would have dismissed the application anyway…[as] it appears that Mr Wilson voluntarily paid the disputed amount to the body corporate despite his misgivings about whether the body corporate was truly entitled to it.” [para 7]

What does this mean?

This means that if an owner or occupier voluntarily pays an amount that they do not think the body corporate is entitled to charge them, they may not be entitled to later recover the amount. There is now precedent that even where the amount in dispute could never have been claimed under the BCCM legislation, a payment of the disputed amount made voluntarily and not as a mistake may not be ordered to be reimbursed. It’s worth considering before you pay.

Michelle Scott Information Service Freecall 1800 060 119 Commissioner for the Office of Body Corporate and Community Management

This post appears in Strata News #472.

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This article has been republished with permission from the author and first appeared in the BCCM Common Ground newsletter.

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