In December 2000, a body corporate disrupted the electrical supplies to the sections of owners who disputed the method of calculation, and failed to pay a special levy raised to pay for improvements to common property. The affected owners made a joint and urgent application to the High Court, as a result of which the Court ordered the immediate restoration of the electrical supplies to the sections. The Court also ordered the managing agent and body corporate to jointly pay the costs of the application.
The case above deal with non-payment of a special levy that was not in any way connected to the supply or consumption of electricity. Would the situation have been different if the body corporate had switched-off the electrical supply to an owner who failed to pay for electricity or a monthly levy? The answer is "no". Unlike a local authority, a body corporate is not considered to be a supplier of electricity and therefore can not terminate the supply to one of its members. A body corporate purchases electricity from the suppliers and re-distributes it to sections within the scheme. In fact, neither the Act nor the rules make it compulsory for sectional schemes to be supplied with individual electric meters. Neverheless, levies and costs must be paid.
Owners who continue to enjoy the benefits and services provided to them while in arrears with their levies may be considered as parasites that are doing so at the expense of their neighbors. However, irrespective of how justified it may seem, a body corporate can not interfere with either the electrical or water supply, and a body corporate that sanction disconnection must be aware of the risks of so doing. Lost data on a computer, a missed fax or telephone message or spoiled supplies in a refrigerator may well give rise to a claim for damages against the body corporate. Along with many property practitioners and sectional owners, we would welcome a change in the law to make it possible, under strictly controlled circumstances, to terminate supplies to owners who fail to pay for the electricity that they consume. However, if permission should ever be granted there would be a risk of abuse.
We know of a scheme at which the electricity is switched-off if owners fail to pay their levy and electrical accounts by the fifth day of the month. At others, supplies are interrupted for "offences" such as "illegal" parking or failure to comply with conduct rules. There is even a scheme at which the chairman denies that electricity is disconnected. He claims that supplies "trip-out." What a coincidence that this should only happen to non-payers. Clearly such tactics, loved by the bullies and power-junkies, are punitive, unacceptable and against the spirit of Sectional Title. The reason most often given by trustees who disconnect electrical supplies is that "it works". Of course it works! So would tarring and feathering defaulters, or throwing a rotten egg at them but that does not make it acceptable! There are legal and effective ways that a body corporate can and should employ to recover debts.
If the sectional community is granted the right to switch-off electrical supplies, it will need to do so fairly and to all defaulters. There can be no exceptions or selective application. The switch-off would have to be restricted to non-payment of the electricity portion of the levy and could not be used for arrears of either the monthly levy or a special levy. If sanctioned, interruption of supplies would have to be on terms similar to those used by local authorities. Sectional owners must pay their share of expenses, but the power to punish late payers and nonpayers should not and must not, be put in the hands of a lay person.
Ryan R Rudman