108. Can strata managers accept cash at meetings for levy payments?
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This week, Reena and I provide our guidance when it comes to the common question: can owners turn up to a meeting and pay their overdue levies on the spot? Reena also shares a hot tip for how to save your building a few dollars.
Great topic , is one that interests me and a situation that I have often encountered. Who is able to accept the payments? SSMA s44 1(b) states that one of the functions of the treasurer is “to receive, acknowledge, bank and account for any money paid to the owners corporation”. I have previously been told that the Strata Committee is dissolved at the start of the AGM, and that the Strata Manager hold the functions of the Chairperson , Treasurer and Secretary – is this correct?
Hi singaustralia, thanks for the question. I note you’re a member inside our online community. Would you mind posting your comment in our members-only Q&A Forum (under the topic ‘podcasts’ and where this week’s episode is posted) so that we can share our answer with all members. Thank you!
MUST PERSONAL CHEQUES BE ACCEPTED AT MEETINGS TO PAY OUTSTANDING LEVIES AND WHAT ARE THE CONSEQUENCES OF ACCEPTANCE?
What do you do when an unfinancial lot owner wants to pay levy arrears with a personal cheque just before the general meeting opens?
Owners who are in arrears in their levies will sometimes try to make themselves financial just before a general meeting opens in order to vote. They may try and do this by paying by personal cheque.
Do you have to accept a personal cheque tendered before a meeting in payment of levy arrears?
The practice of giving and accepting personal cheques is widespread and there is a general expectation that a personal cheque given in payment of a debt will be accepted but a personal cheque does not constitute legal tender and may be objected to either before or at the time the cheque is offered in payment on the basis that it does not constitute legal tender.
You may refuse to accept the cheque.
What are the consequences if you accept the cheque? Is the owner financial and is the owner entitled to vote?
A personal cheque, though not legal tender, is a sufficient payment if not objected to on that basis (Wexelman v Dale (1917) 35 DLR 557; Laidlaw v Rehill [1943] 4 DLR 429; George v Cluning (1979) 28 ALR 47; 53 ALJR 767).
In Tilley v Official Receiver in Bankruptcy [1960] HCA 86 the High Court held where a cheque is accepted as tender for a debt, the debt is discharged conditional on the cheque being met on presentation. In National Australia Bank Limited v KDS Construction Services Pty Ltd [1987] HCA 65 the High Court confirmed Tilley and emphasised that the payment is complete at the time when the tendered cheque is accepted by the creditor.
In Bottomley The Younger v Robert Nuttall (1858) 5 CB(NS) 122; [1858] ENGR 1197; Cockburn CJ said that the acceptance of a bill of exchange operates as a suspension of the drawer’s remedies until the maturity of the bill. This is the case even if the bill is unpaid and thereby becomes worthless at that time.
The courts have held that payment required by a deadline is met if a cheque is tendered and accepted before the deadline in spite of the fact that the cheque could not be presented for payment before the deadline. In Holmes v Smith [2000] Lloyds REP Bank 139 a cheque tendered late in the morning for a payment deadline of 2.00pm was held to be proper payment. In Petroleo Brasileiro SA v ENE Kos 1 Limited [2009] EWCA Civ 1127 a cheque handed in at 4.30pm was held to be timely payment for a deadline of 5.00pm.
All of this means that if you accept a personal cheque which is tendered in payment of outstanding levies and debts a person is financial for the purpose of any vote taken before presentation of the cheque.
If the owners corporation does not wish to be placed in that position it is fully entitled to reject the tender of the personal cheque but only on the grounds that the cheque is not legal tender.
In Tilley’s case Dixon CJ said:
“Prima facie when a cheque is taken for the price of goods, or for that matter in respect of any other debt contracted, it operates as conditional payment. The condition is that the cheque be paid on presentation; if it is dishonoured the debt upon the original consideration revives ………”
In Bottomley v Nuttel Williams J described it as “the true doctrine upon which this branch of the law is founded, viz that, in the case of a money demand, if the creditor accepts a bill or note for and on account of the debt, that operates as a conditional payment …….”
In the well known judgment delivered by Lusch J for the Exchequer Chamber in Currie v Misa (1875) LR 10 Ex 153 this passage occurs; “the title of a creditor to a bill given on account of a pre-existing debt, and payable at a future debt, does not rest upon the implied agreement to suspend his remedies. The true reason is that given by the Court of Common Pleas in Belshaw v Bush (1858) 11 CB 191; 22 J (CP) 24 as the foundation of the judgment in that case, namely, that a negotiable security given for such a purpose is a conditional payment of the debt, the condition being that the debt revised that the security is not realised.” (1875) LR 10 Ex at P163. In the present case therefore once the cheque was taken by or on behalf of a seller of the goods the debt was conditionally satisfied.”
In National Australia Bank the High Court said:
“Generally speaking, when a cheque is given in payment of a debt, it operates as a conditional payment. The payment is subject to a condition that the cheque be paid on presentation. If it is dishonoured the debt revives. Although it is sometimes said that the remedy for the primary debt is suspended, the suspension is no more than a consequence of the conditional nature of the payment; Tilley v Official Receiver in Bankruptcy (1960) 103 CLR 529 at 532-3, 535-6, 537. The condition is a condition subsequent so that, if the cheque is met, it ranks as an actual payment from the time it was given. Subject to non-fulfilment of the condition subsequent, the payment is complete at the time when the cheque is accepted by the creditor; Thomson v Moyse [1961] AC 967 at 1004.”
From these cases it is clear that if a cheque is accepted and subsequently honoured the owner is financial and entitled to vote.
What happens if the cheque is not honoured on presentation?
Schedule 2 Clause 10(8) of the Strata Schemes Management Act states as follows:
“Voting rights may not be exercised if contributions not paid A vote at a general meeting (other than a vote on a motion requiring a unanimous resolution) by an owner of a lot or a person with a priority vote in respect of the lot does not count unless payment has been made before the meeting of all contributions levied on the owner, and any other amounts recoverable from the owner, in relation to the lot that are owing at the date of the notice for the meeting.”
The requirement in the schedule is that payment be made before the meeting.Tilley’s case and the National Australia Bank case indicate that the acceptance of the cheque does represent payment even though that payment is conditional upon the cheque being honoured. If the meeting takes place before the presentation and honour of the cheque the payment has been made at the time of the acceptance of the personal cheque. On this basis the lot owner is entitled to vote even if the cheque is subsequently dishonoured.