Item 9.4 - Attachment 4
EUA Enforcement Procedure
Environmental Upgrade Agreement (NSW)
Environmental Upgrade Agreements
Direct Debit Procedure
Step 1: EUC Billing Notice
Step 2: Reminder Notice 1
Step 3: Reminder Notice 2
Step 4: Demand Letter
Step 5A: Serving the Statement of Liquidated Claim
Step 5B: Issuing a Section 569 Notice
Step 6: Pre-Judgement Letter
Step 7: Judgement
Step 8: Post Judgement Letter
Step 9: Enforcement
Step 10: The Sale of Land
6. Process Flow Diagram
On 18 February 2011, the Local Government Amendment (Environmental Upgrade Agreements) Act 2010 took effect amending the Local Government Act 1993 so as to establish a legislative framework that provided for and authorised Councils to enter into Environmental Upgrade Agreements. (“EUA”). An EUA is a voluntary agreement between a Building Owner, a Finance Provider and a Council where:
· A Building Owner agrees to carry out environmental upgrade works to a building (works to improve the energy, water, or environmental efficiency or sustainability of the building); and
· A Finance Provider agrees to advance funds to the Building Owner to finance those environmental upgrade works; and
· The advance is repaid by means of a charge on the relevant land that is levied by the Council. An EUA may be entered by a Building Owner, a Finance Provider and a Council in relation to either:
a) a non-residential building; or
b) a strata building that is the subject of a multi-residence scheme comprising more than 20 lots.
This document covers the Council’s procedure concerning the waiver, deferral, recovery and enforcement of the Environmental Upgrade Charge and any other charge made under Part 2A of Chapter 6 of the Local Government Act (by any means) as at the date of the Environmental Upgrade Agreement, as set out in Annexure 6 of the agreement.
Building Owner means the person or persons so described in the Details section of the Environment Upgrade Agreement.
Direct Debit Dishonour Letter is a letter sent by the Council to the Building Owner every time a direct debit payment has been reversed or dishonoured.
Direct Debit Dishonour Fee means the processing fee charged to the Building Owner whenever a direct debit payment has been reversed or dishonoured, the amount of which is indicated in section 21 of the Council’s Schedule of Fee and Charges.
Environmental Upgrade Charge (EUC) means the charge payable by the Building Owner to the Council in relation to the Environmental Upgrade Works under the Local Government Act and the Environmental Upgrade Agreement.
EUA Billing Notice is a notice sent by the Council to the Building Owner to levy the EUC on the land on which the Building is situated. This must be prepared not later than 28 days prior to the date on which each relevant payment is required to be made in accordance with the Agreed Repayment Arrangements.
Direct Debit Procedure
The Council will only accept payment of EUCs by direct debit.
In entering an EUA, each Building Owner must provide sufficient details to enable a direct debit to be set up by the Council to debit the Building Owner’s nominated bank account on all due dates.
There are three possible outcomes from a direct debit attempt:
1. Funds cleared;
2. Direct debit rejected (due to invalid bank account for instance); or
3. Direct debit processed but subsequently reversed (the bank has three days to reverse a direct debit). The most common reason for a reversal is a lack of funds in the rate payer’s bank account.
If a direct debit is rejected or reversed, the Council will take this to mean the EUC has not been paid and the enforcement procedure will commence.
The Council relies on both internal and external resources when undertaking debt collection.
Internally, debt collection is the responsibility of Rates Section, as part of the Finance unit.
Externally, the Council also relies on a debt recovery services provider who is selected and appointed by way of tender.
In undertaking enforcement in respect of EUAs, the Council will rely on both its internal and external resources as indicated in the steps that comprise the Council’s enforcement procedure.
Step 1: EUA Billing Notice
Each quarter, an EUA billing notice will be issued to the Building Owner in accordance with the Agreed Repayment Arrangement.
Twenty eight (28) days after issuing an EUA billing notice, the Council will attempt a direct debit on the Building Owner’s account.
Step 2: Reminder Notice 1
The Council will wait three days from the direct debit date (including the day that the funds are received) to determine that the funds debited are cleared funds. If on the 4th day after the direct debit date, the status of the funds is that they are either rejected or withdrawn, then the Council will issue a reminder notice in the form of a Direct Debit Dishonour Letter.
This notice will:
a) notify the Building Owner that the direct debit has been unsuccessful and that another direct debit will be attempted in 7 days; and
b) since the payment of the outstanding balance is not paid on due date, the EUA account has already started to incur penalty interest charge as from the time it became overdue as well as a direct debit dishonour fee.
Step 3: Reminder Notice 2
If the second direct debit is rejected or withdrawn, the Council will:
a) advise the Building Owner through another Direct Debit Dishonour Letter, that a final direct debit for the outstanding EUC will be attempted 7 days from the date the second reminder notice was sent;
b) stipulate the amount that is payable including penalty interest and direct debit dishonour fee; and
c) state that a Demand Letter will be sent if this third direct debit attempt fails.
Step 4: Demand Letter
If the third attempt at direct debit is unsuccessful then the Council will instruct its debt recovery service provider to send a Demand Letter to the Building Owner seeking recovery of the outstanding EUC amount, together with the payment of accrued penalty interest and direct debit dishonour fees.
Step 5A: Serving a Statement of Liquidated Claim (SLC)
If an EUC remains unpaid after the date of payment set out in the Demand Letter, the Council will cause a debt recovery proceeding for a liquidated claim to be commenced no later than twenty-eight (28) days after such date.
Once the SLC has been filed, the Council’s debt recovery service provider will effect service on the Building Owner at the address disclosed in the EUA.
When the SLC is served, the Council will await the statutory 28 days that enable the Building Owner to file a Defence prior to taking Step 7.
In the event that the SLC can not be served on the Building Owner then the Council and its debt recovery service provider will conduct an investigation to attempt to locate the whereabouts of the Building Owner through skip tracing and various searches.
Step 5B: Issuing a Section 569 Notice
Pursuant to Section 569(1) of the Local Government Act 1993 a Council may, in particular circumstances, serve on an occupier of land (the tenant) a notice of the amount of EUC unpaid or of a judgement relating to an unpaid EUC in respect of the land which is being occupied by the tenant.
In the event that the Council’s debt recovery service provider is unable to effect service of an SLC on a Building Owner, then the Council will issue an s569 Notice, through the debt recovery service provider, provided that:
a) the Finance Provider notifies the Council as to the tenant’s name and address; and
b) the Council is provided with a copy of the tenant’s lease.
Any s569 Notice issued by the Council will require that the tenant provide payment of any rent due and payable to the Council in lieu of the Building Owner to be applied to payment of any outstanding EUC. The s569 Notice will advise the tenant that under s569(4) of the Local Government Act 1993 provides that “a payment under this section to the council discharges the payer from any liability to any person to pay the rent.”
In the event that the tenant does not provide payment of rent to the Council, the Council will not take any further action against the tenant.
If there is no response from the Building Owner within 21 days of service of the SLC then a pre-judgement letter will be issued by the Council’s debt recovery service provider seeking payment of the outstanding EUC within 7 days.
Once 28 days has lapsed since service of the Statement of Liquidated Claim, the Council
a) verify with its account systems that the EUC remains outstanding; and
b) instruct its debt recovery service provider to apply to the Court for default
judgement in an amount that includes any recoverable costs of the proceedings.
The Council is ordinarily notified within 14 days by its debt recovery service provider that judgement has been obtained.
Within 7 days of receiving such notification, the Council or its debt recovery service provider will:
a) notify the Building Owner that judgement has been obtained and demand payment of the judgement debt together with any interest that will continue to accrue within 14 days; and
b) notify the Finance Provider that judgement has been obtained.
If the Building Owner fails to:
a) provide payment in full of the judgement debt within 14 days of demand; or
b) make arrangements that are acceptable to the Council and the Finance Provider for payment of the judgement debt within a further agreed period then the Council will, at its discretion, determine which of the following enforcement options will be pursued in the circumstances of a particular unpaid judgement debt.
The options available to the Council to enforce a judgement debt are as follows:
i) Writ of Execution
The Council may instruct its debt recovery service provider to apply for a Writ of Execution so as to enable a Sherriff to attempt seizure of goods owned by the Building Owner which may be sold to satisfy part or all of the judgement debt.
ii) Examination Summons
The Council may instruct its debt recovery service provider to issue an Examination Summons on the Building Owner. The Examination Summons will require the Building Owner to attend Court and produce documents that relate to his/her financial position.
Where the amount of the judgement debt held by an individual is $5,000 or more (or such other amount as is subsequently stipulated in the Bankruptcy Act 1966), the Council can instruct its debt recovery service provider to serve a Bankruptcy Notice. If at the expiration of the Bankruptcy Notice, the judgement debt remains unpaid, then the Council can instruct its debt recovery service provider to make application for bankruptcy. When bankrupt, the trustee in bankruptcy may then seek to liquidate the Building Owner’s assets to pay creditors.
iv) Creditor’s Statutory Demand and Liquidation
Where the amount of the judgement debt owed by a corporation is $2,000 or more, the Council can instruct its debt recovery service provider to serve a Creditor’s Statutory Demand. If at the expiry of the Demand, the judgement debt remains unpaid then the Council can instruct its debt recovery service provider to make application for the Corporation to be wound up. If the Corporation is then placed into liquidation, the Court will appoint a liquidator to liquidate the assets of the Building Owner to pay creditors.
v) Garnishee Summons
Irrespective of the amount of the judgement debt, the Council can instruct its debt recovery service provider to apply for a garnishee of money received by the Building Owner, whether of:
a) a bank account held by the Building Owner;
b) a third party such as an employer of the Building Owner or a managing agent that may be managing a property of the Building Owner, or a tenant
vi) S569 Notice
If investigation measures prove futile in pursuing enforcement of the judgement debt against the Building Owner, then the Council will again consider serving a s569 Notice on the tenant in accordance with Step 5B of this enforcement procedure.
The Council notes that in the event it proves necessary for any of the above enforcement actions to be taken then it is very likely that other third parties such as mortgagees will similarly be involved in enforcement action against the Building Owner. As the Council is unable to exercise any power of sale over the land for a period of 5 years in accordance with s713 of the Local Government Act 1993 it is more likely that a mortgagee in possession will have assumed earlier control of the sale of the land that is the subject of the EUA.
Upon the sale of the land, whether by the Building Owner, Finance Provider, the Council or another third party, the Council will require payment of outstanding rates and charges and any funds received will be applied and distributed in accordance with s568 of the Local Government Act 1993.
In the event that the Council sells the land and the sale proceeds are insufficient to pay all outstanding rates and charges (including EUCs) then the Council notes that clause 136K of the Local Government (General) Regulation 2005 provides that the EUC ceases to be a charge on the land and becomes a debt recoverable against the former building owner.
The Council will be taken to have exhausted its best endeavours to recover outstanding EUCs if as a result of its enforcement actions or those of a third party, the land which is the subject of the EUA is sold. The Council will not take any further recovery action once the EUC ceases to be a charge on the land.
Any outstanding Charge Payment amount remaining after deducting the proceeds from the total outstanding Charge Payment must be paid by the Building Owner directly to its nominated Finance Provider.
Environmental Upgrade Agreement (EUA)
Related Legislation and Standards
Local Government Act 1993
· No 30 – Part 2A Environmental Upgrade Agreements
· Section 712 Special provisions with respect to the recovery of unpaid rates and charges
· Section 713 Sale of land for unpaid rates and charges
Local Government (General) Regulation 2005
· Part 5A Environmental Upgrade Agreements
· 136K Sale of Land
Guidelines for Environmental Upgrade Agreements as published in the Government Gazette of NSW dated 18 February 2011
Related Policies and Procedures
Environmental Upgrade Agreements Policy
Trim Reference Number/ Document Number