Debt Disputes – The Grove Decision Case Study
May 13, 2021
A ‘debt dispute’ is a dispute about the recovery of a debt under the Act by a body corporate from an owner. Generally speaking, a body corporate may commence QCAT or court proceedings to recover debts owed by an owner and, while a debt dispute may be brought to our office for conciliation, our adjudicators do not have jurisdiction to deal with debt disputes.
This gives rise to a relatively common question about whether a dispute can proceed to adjudication if the owner has already paid an amount to the body corporate and the owner is seeking reimbursement? Adjudicators’ decisions generally indicate that disputes about reimbursement of an amount that has already been paid by an owner to a body corporate may fall within an adjudicator’s jurisdiction.
However, a 2019 QCAT decision held that an amount paid by an owner to a body corporate may not be recoverable if it was paid voluntarily despite the owner believing they did not owe the amount, or without regard to whether they had a legal obligation to pay the amount. The QCAT decision related to a 2017 adjudication application by a lot owner at The Grove seeking reimbursement of an amount paid to the body corporate for cleaning. The application was considered by the adjudicator and an order made in favour of the owner for the reimbursement. However, this decision was subsequently overturned in QCAT because the owner had paid the amount to the body corporate voluntarily, and not as a mistake.
Read about an adjudicator’s order which was successfully appealed at QCAT regarding an owners request to seek reimbursement for a cleaning bill.
You can also read more about debt recovery and debt disputes on our website:
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 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  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  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.
If you have further body corporate questions you can submit an enquiry or phone the information service on 1800 060 119 (freecall).
This article was contributed by Michelle Scott – Commissioner for Body Corporate and Community Management