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City council to write off over $100,000 in bad debt

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Over $100,000 in city ratepayer money has been lost to unpaid debts, after the Adelaide City Council conducted business with two companies that fell into liquidation and a third that ended with a contractual dispute.

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It follows a review of the council’s accounts receivable debtor’s ledger, which identified three historical debts dating back to 2004 and totalling $117,645.

City councillors will tomorrow night be asked to approve writing-off the three debts, which staffers argue are either “unrecoverable” or “uneconomical to pursue”.

The first debt – totalling $52,786 – involved a company that leased a Rundle Street property from the council.

The property was subleased to a third party, which operated Urban Asian Street Food.

Council papers state various repayment negotiations were held between the council and its collection agency throughout 2016 “with limited success”.

The company that leased the premises was liquidated in 2017 and deregistered the following year.

“The council has no further avenues to recover the outstanding debt,” council papers state.

The organisers of AirAsia Asia Fest, which took place in Rymill Park in October 2015, owe the second debt – totalling $33,162.

According to the council papers, the debt was incurred following remediation, engineering and “other associated costs” billed by the council.

“Subsequent non-payment by the company resulted in (the council) commencing action to recover the outstanding charges without success,” the papers state.

The event organiser was liquidated in February 2016 and deregistered with ASIC in May last year.

The third debt – totalling $31,699 – involved the former company that managed the Central Market Arcade before the council took over the ground lease in September last year.

That company signed an agreement stating the council would procure the insurance cover for the arcade and recover over 66 per cent.

However, an “oversight” meant the insurance was not charged for six years between 2004 to 2010.

The company owner argued the lease was flawed and “he was prejudiced because it did not provide for a fair calculation based on insurance products available in the open market”.

The council sought legal advice, which determined the lease was “ambiguous and the recovery cost was not economically viable”.

“Although (the council) attempted to resolve the matter through further meetings with (the) company…, its insurers and council’s insurers, a settlement was not achieved,” the council papers state.

“In line with the legal opinion provided, the council has no further avenues to recover this outstanding debt.”

The papers state writing-off the debts will not dent this year’s council operating costs, as a “doubtful debt provision” was factored into last year’s budget.

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