A Call for Transparency in Body Corporate Levy Recovery

A Call for Transparency in Body Corporate Levy Recovery

As Body Corporate Lawyers, we have the privilege of working with bodies corporate across Queensland – from small schemes, to large commercial schemes.  We must, in good conscience, put it out to our fellow practitioners and the industry generally – that transparency must be improved in the production of records to owners – especially, when the owners are subject to possible levy recovery proceedings.

We know that at least two of our legal competitors, have published papers to body corporate managers that suggest a single ledger combining unpaid contributions, interest and recovery costs can be produced.  We submit the difficulty with this proposal, in that the notice can be confusing for owners to understand and not reflective of an actual liability.

An example of the confusion arises over the question of what constitutes “reasonable recovery costs”.   The decision of Westpac Banking Corporation v The Body Corporate for The Wave CTS 3627 [2014] QCA 73 has been advocated as a decision upholding a recovery by a body corporate of legal costs on a “dollar for dollar” basis.  In fact, the Court concluded:

The advantage given to the body corporate…of being able to recover recovery costs as a debt is qualified by the express statement that it applies only to costs reasonably incurred by the body corporate in recovering the amount of the unpaid contribution and penalty.”  (emphasis added, see paragraph 60)

We remind the industry that Wave was based on the question  of whether a mortgagee, which takes possession, can be held liable for costs incurred in the recovery against an owner.  The Court did not vary the previous decisions that the amounts charged, and the actual conduct undertaken, must be reasonable – accordingly, a singular ledger suggesting an owner as “non-financial” without a finding as to reasonableness (or agreement) of recovery costs – can (and we suggest will) give rise to a legal liability against managers and committees who refuse an owner the right to participate, charge penalty interest and refuse discounts (because, in fact, recovery costs are not liquidated, even though costs are defined as a debt).

We have also been provided with a statement issued by another law firm, advising body corporate managers not to distribute ledgers to owners, where the recovery costs have been recorded on the singular ledger.  The only way an owner can understand the claim is to see the ledger, but this law firm refuses to produce the ledgers to owners – causing an escalation of costs sought as “recoverable” against owners.  This is simply vulgar and unethical, in our opinion.

We ask the industry, how is it that an owner can consider the “reasonableness” of recovery costs – if they are not permitted the opportunity to view the costs from the outset?  Why is that the costs are only disclosed (noting here, we produce our invoices immediately upon an owner seeking copies) when substantial costs are incurred?  Why is not standard practice for the costs and ledgers to be produced to owners on request?  Is this not “reasonable”?

Furthermore, we put it to the industry, how is it that “indemnity” costs can be recoverable, when costs between firms vary?  Are we all permitted to raise our legal fees to the highest of us, and then we stand united as to the bar for what is “reasonable” in the industry?  Who sets what is “reasonable” in the industry?  Which one of us sets the “reasonable” indemnity rate?  Is it Nautilus?  Is it SPG?  Is it Hynes?  Is it MBA?    Is it Success Law?  Is it OMB?

Which one of us sets that “reasonable” industry rate?  It is sufficient for us merely to have a cost service agreement that says our associates charge $350, an hour – or should there be a quantification of what is being done?  Is it appropriate for a senior lawyer, charging $450 an hour, to contact a client with an update – when that same update could be performed by a $110 per hour law clerk?  Is it “reasonable” that the owner is charged $45 for a 1 unit call, versus $11 for the same 1 unit call?

Is it reasonable for mercantile agents to charge at lawyers rates, merely because the mercantile agents obtain a sign off by a Committee?  Who decides if that is reasonable?  I suggest the owner might think differently to a hostile Committee, who might not even care – if they are told the costs will be recoverable “dollar for dollar”.

How can anyone, with a commercial and ethical mind, think that litigation for $3,000, should result in legal costs in excess of $150,000? Yet, it is happening – and we have seen it (not from us, but from a competitor).  The premise, of course, being that the body corporate should not be out of pocket – but at what stage is this industry of ours going to take a logical look at itself?  How often could commercial strategies have been adopted, to prevent the escalation of costs from $1,000 to $150,000+?  If a commercial party tried to withhold evidence, the commercial party would be penalised.  Yet, a number of these ridiculous cases are premised on a lack of transparency – whether it’s a refusal to produce records for an owner’s inspection, or a refusal to produce invoices for an owner’s inspection – or simply, a refusal of the lawyer to try and listen to the owner, and find a solution which is commercially reasonable.

And what of 2.5% interest per month?  That is 30% per annum (simple interest).  Is this a windfall, when indemnity costs (set at who knows what standard) are recovered?  If the managers charge for issuing late notices, and then charges for producing its records and secretarial duties – and these costs are all claimed in the proceeding against the owner, then what is the 30% used for?  We have seen the 30% interest fall in excess of $200,000 in some large developments in which the owners are developers – what is that interest going to?  Most certainly, in smaller debts, the 30% interest is necessary to settle the costs of dealing with committee issues, finance and alike.  However, when we are talking substantial amounts of interest, for example upwards of $40,000, is this not intended, in part, to compensate for costs incurred…so how is it that anyone in our industry would not consider raising the use of interest as a potential negotiation tool (having regard to the costs incurred and ensuring interest is withheld to cover such costs) when dealing with committees to assist in settling matters earlier? Certainly, there is no legislative or court decisions which would suggest the offset is a requirement, but is this not what we do when we deal with our commercial clients?  We try to balance the scales of justice, to deliver an outcome benefiting the whole.

But who really wins, even if a scheme recovers its indemnity costs and interest?  Is no one concerned about the damage to the industry this practice could effect in the long term?  Where will banks and finance institutions stand on lending to acquire body corporate properties?  Will they start to set higher interest rates, to address the risks of lending (because if they end up taking possession, their liability for the bodies corporate lawyers recovering $12K, may exceed $350,000!)?  If they increase interest rates, does anyone think that will be a good outcome for property values in bodies corporate?  If there is less interest in the body corporate market, does anyone not see a problem in the long run for our industry?

And what of the situation when the legal fees charged by a law firm exceed the value of a property?  We are reviewing a case in which the legal fees charged on what started as a $3,000 debt are now in excess of $180,000!  The property is valued at $220,000!  Is it not the lawyer’s duty to advise the owners that even if they win – there may be a substantial shortfall which can only be raised by a special levy charged to all owners  (because not all costs charged are recoverable – as we are seeing in cost assessments and legal proceedings)?  And what happens if that $3,000 debt was actually calculated incorrectly – and the court finds against the body corporate?   In the present case (with $180,000+ in legal costs) – that means every owner is going to wear a percentage of that failed litigation – even the owner who was sued, and won!  How can any of us see this as fair to the industry to which we serve?

We have had our fair share of extraordinarily difficult debtors who have incurred recovery costs of $20-$30K in protracted litigation.  We appreciate this can and does happen.  There are some owners who, no matter what you do, are habitual and defiant debtors, vendetta driven debtors and/or irrational debtors.

Our thought is this:

  1. The industry must make transparency a priority! If an owner asks for a document, produce it! Do not go to lawyers to avoid production, simply produce it.  If an owner wants an invoice, produce it.  If the cost is “reasonably incurred” – what’s the problem?  Why hide anything?
  2. The industry must question legal practices and rates. Lawyers and mercantile agencies need to be held accountable for spending.  The legal and mercantile industry in the body corporate arena must be held to commercial standards, and not “anything goes” standards.  It reflects poorly on our entire industry – although only a handful of firms and agencies are abusing the situation.
  3. The industry need to be problem solvers, not instigators. If there is an easier solution, try it first.  If that does not work, then go the distance.  But at least try the easier solution.  For example, if you have judgment – go back and try and negotiate again – don’t simply go to bankruptcy!  Find out if the owner can raise additional finance, or consider whether superannuation access can be acquired through hardship.   However, the debtor is someone’s parent, sibling or best friend; therefore, start the process by affording each debtor the disclosure and respect you would want provided your family or friend to be granted, if they were in a similar situation. If the debtor nonetheless refuses to act reasonably, then costs necessarily follow.

Respectfully submitted,

KATRINA ELIZABETH BROWN BA ATIA TIA SSA
Senior Lawyer
Katrina@nautiluslaw.com.au

 

NAUTILUS LAW GROUP
Suite 7, 128 Bundall Road
Bundall Queensland 4217
(07) 5574 3560

 

Nautilus’ Top 10 Reasons for Non Payment of Body Corporate Levies

As Body Corporate Lawyers, we’ve heard every excuse imaginable.

Our top 10 favourites are:

  1. “I didn’t pay my levies because no one respects me.” (Sorry – respect has nothing to do with your legal obligations.)
  2. “When I bought the unit 20 years ago the levies were $150 a quarter and now they are $500 a quarter – I’m being robbed!” (Sorry – it’s called inflation.)
  3. “I didn’t approve the budget. I’m only paying what I think is fair and the other owners can pay the rest.” (Sorry – majority wins in strata living.)
  4. “What do you mean I haven’t paid my levies?? I paid them once two years ago!!” (Sorry – levies keep falling due – it’s not a once off expense.)
  5. “The Body Corporate doesn’t cut my grass, so I’m not paying my levies.” (Sorry – the Body Corporate isn’t responsible for cutting your grass.)
  6. “The gardener assaulted me – the weed whipper stirred up the grass and I was hit by the flying grass when I walked to my car. I want compensation, I have gone to the police and I am not paying my levies until I get justice.” (Sorry – but weed whipper incidents do not constitute an offset for levy liability.)
  7. “The letting agent has not paid my rent, so if I am not getting paid – neither is the Body Corporate!” (Sorry – the Body Corporate isn’t your letting agent or tenant, you can’t offset one against the other.)
  8. “I gave my time to the Body Corporate and they didn’t pay me, so I am deducting the value of my time against my levies.” (Sorry – but trimming your bushes does not offset your levies.)
  9. “My spouse and I are going through a divorce – they live there, they have to pay it!” (Sorry – but you both own the property, you are both liable to the Body Corporate.)
  10. “What are levies?” (Seriously?)

Owners must appreciate that it is their legislative duty to pay levies as and when they fall due.  Disputes in respect to the amounts of validly raised levies need to be made at an AGM/EGM level – and not as a separate vendetta by non-payment.  Additionally, an owner is not at liberty to offset from levies, any alleged or real claims the owner may have against the body corporate (such as a claim for payment of damages caused by the body corporate to an owner’s exclusive use area, consequential to a repair made to common property).  Careful consideration has to be made to arguments by owners as  to the responsibilities of the body corporate in relation to maintenance matters, and this is dependent on the scheme type (for example, an owner cannot impose maintenance costs on the body corporate in respect to the owner’s lot – but equally, a body corporate cannot impose a levy in respect to maintenance costs in respect to lot except in a strictly narrow set of circumstances).  Importantly, owners have to appreciate the body corporate is not a charity, bank or financier – and has absolutely no obligation to grant payment plans, abstain from raising levies and/or otherwise provide financial assistance to owners.

At Nautilus Law Group, we work zealously for our bodies corporate to recover unpaid levies in a timely and cost effective manner.  Sometimes, the most effective method of achieving the recovery is spending the time to educate owners.  By no means is it the bodies corporate responsibility to have to “educate” its owners; however, transparency and education achieve results.  When, transparency and education do not work, then the legal system must intervene.

If you have questions about body corporate levy recovery, please do not hesitate to contact our Team to discuss your matter on (07) 5574 3560 – or – by emailing our Team at Info@nautiluslaw.com.au.  We look forward to speaking with you.  Katrina Brown, Senior Lawyer.

Debt Recovery Costs – Liquidated or Something Else in Queensland Levy Recoveries?

Debt Recovery Costs – Liquidated or Something Else in Queensland Levy Recoveries?

Rope over wooden backgroundWe are pleased to report our appeal in the matter of The Body Corporate for 399 Woolcock Street CTS 34770 v Sexton & Ors [2013] QCATA 055 (399 Woolcock) was successful.  Unfortunately, the decision has sparked a new line of dispute in the industry as to whether debt recovery costs are “liquidated,” despite the Regulations granting the right to recovery only those costs which are “reasonably incurred” (See for instance, Section 145 of the Standard Regulations).

The question on appeal in 399 Woolcock was whether subsequent owners of a lot were liable to pay a body corporate debt in circumstances in which the body corporate had obtained a judgment for the outstanding levies and recovery costs against the previous owner.  It was held that the body corporate was entitled to pursue the new owners, and that the recovery of the “body corporate debt” did not “merge with the judgment.”

Importantly, in our opinion, the decision did not deal with the question of what costs are “reasonably incurred” (for instance, Section 145, Standard Regulations).   Whilst 399 Woolcock does settle the position that recovery costs are a “body corporate debt”, it remains the body corporate’s burden to prove the costs are “reasonable” if challenged by a debtor.

In the decision of Body Corporate for Sunseeker Apartments v Jasen [2012] QDC 51, Judge McGill opined at paragraph 36:

“…the mere fact that the body corporate and its lawyers have agreed that costs are to be payable in a particular way, for example at a certain hourly rate for certain partners and staff, is not something which in itself makes those costs reasonable. In determining whether the costs in fact charged on a certain hourly rate are reasonable, it is therefore necessary to consider whether that hourly rate is reasonable. That is an objective matter, and does not depend simply on the fact that parties have agreed to a charge at that rate, subject only to the qualification that the amount payable under s 97(1)(c) could not exceed the amount in fact charged to the body corporate, because of the requirement that the costs be “incurred”.

In this review, Judge McGill determined that not all recovery costs which the body corporate submitted, by way of assessed costs, were reasonable.

In the earlier decision of 3 Parkland Boulevard [2007] QBCCMCmr 437, the Adjudicator stated that:

“The body corporate needs to claim those costs as a debt and await either agreement by the defendant or a court order specifying which recovery costs are “reasonably incurred”. If the applicant and the body corporate cannot agree on what recovery costs have been reasonably incurred then the body corporate can initiate court action seeking its reasonable recovery costs.”

Also, in Body Corporate for Liberty v Alotier Pty Ltd & Stewart Silver King and Burns CCT KA009-08 (11 February 2009), the Commissioner found that a body corporate was entitled to treat recovery costs as debt when those costs were determined as either “reasonable” per agreement between the parties, or when determined by order of the Court. 

The decision of 399 Woolcock does not supersede or reverse the findings of any of these cases, and in fact is consistent with these findings.

We appreciate that some practitioners in the industry (who were not involved in 399 Woolcock) opine that recovery costs, as a “debt” are “liquidated” in nature.   Importantly, however, the Regulations only provide for the recovery of costs which are “reasonably incurred.”  The question of “reasonableness” is, and remains, an objective standard of review – and not one that can be unilaterally determined by a body corporate in isolation.  Certainly, bodies corporate and debtors are at liberty to determine between themselves what costs are “reasonable,” and are encouraged to do so as the quantum of recovery costs can quite quickly exceed the value of the outstanding levies and interest for which the recovery costs are incurred.

We strongly warn Managers and Committees to consider the possible claims which could be waged against the body corporate for “getting it wrong.”  If a body corporate treats all recovery costs as “liquidated” and apply the costs to the OSA (in lieu of a separate unliquidated ledger), and those costs are carried forward on a running total showing a combined debt (arising out of levies, interest and costs), there stands a real and certain risk that the body corporate could interfere with the legal rights of an owner if the body corporate is found to have incurred costs “unreasonably”.

Consider the following two examples as to why Judge McGill espouses the correct interpretation of recovery costs:

Example A:  ABC Mercantile Agency/XYZ Law Firm –

Presume Joe Bloggs owns a Unit and  he owes $5,000 in outstanding arrears, with continuing interest at 2.5% per month.  The Body Corporate Manager (affiliated with DEF Body Corporate Management Company (“DEF”)) recommends to the Body Corporate that they use ABC Mercantile Agency (“ABC”), who carries out legal work under an agency arrangement with XYZ Law Firm who “oversee” the legal work.  The costs of recovering the $5,000 debt exceed $8,000, because the “negotiations” in relation to legal fees and charges are conducted by employees of the sister companies in the same head corporate group without influence of outside competition.   Joe Bloggs, on advice from his lawyer who reviews the charges, pays $5,000 to the Body Corporate  for outstanding arrears and interest, and $5,000 in costs he deems “reasonable” as a debt. He then challenges the Body Corporate to prove the “reasonableness” of the balance.  The Court finds in favour of Joe Bloggs, and finds that $3,000 in claimed recovery costs were “unreasonable” (as the Court agrees with Joe that the prices charged by the mercantile agency and law firm were above market and not reasonable in the circumstances, thereby finding of the $8,000 incurred by the Body Corporate – only $5,000 was in fact reasonably incurred).  As a result of the loss of vote because whilst the Body Corporate deemed him “non-financial” as the Body Corporate treated the outstanding “$4,000” as a debt due and payable, he has been prevented from participating in the voting and administration of the Body Corporate.  End result:  Joe Bloggs has a cause of action against the Body Corporate for interference with his legal rights as an owner, and the Body Corporate is out $3,000 in costs (plus whatever further costs are incurred in trying to prove the outstanding recovery costs).

Example B:  123 Law Firm

Presume the above example of Joe Bloggs, but instead of incurring $8,000, 123 Law Firm takes the same steps, but the fees for that same process cost only $4,000.  Is it reasonable for 123 Law Firm to mark up their fees to $5,000 (which was allowed by the Court as being reasonable in Example A), just because ABC and XYZ do?  Who has standing to decide the question?

In sum, our advices despite 399 Woolcock are as follows:

1.         Separately record debt recovery costs incurred against a debtor (most preferably in a “Debt Recovery Ledger”).  If the costs are agreed as “reasonable,” then apply the debtors payments to the Ledger directly.  Do not intermingle the Ledgers, to ensure transparency is maintained at all times;

2.         Whilst debt recovery costs can be plead as “liquidated” without particularisation in the Claim, the body corporate must bear in mind at all times that the burden of proving those costs as being “reasonably incurred” remain with the body corporate.  Chances are, if charges are at industry standard and strategic rationale can be demonstrated for the costs and charges, all recovery costs will be recovered as a debt;

3.         If a debtor pays an amount of recovery costs the debtor argues is “reasonable” and disputes the balance, the body corporate needs to consider whether to treat the debtor as “financial” if the levies and interest are paid in full, excepting for the disputed amount of “recovery costs.”  The body corporate can proceed against the debtor, the further costs incurred in proving the initial costs as “reasonable” are also recoverable on a finding of the Court; and

4.         Update by-laws to address the manner in which costs and expenses are treated by the body corporate.

If your Body Corporate has questions about levy recoveries, we welcome you to contact our offices on (07) 5574 3560 or email info@nautiluslaw.com.au. We thank you for considering Nautilus Law Group.

Submitted by:  Katrina E. Brown BA JD ATIA TEP SSA

Debt Recovery Costs – Liquidated or Something Else in Queensland Levy Recoveries?

Can a Body Corporate claim costs?

body corporate legal costs A Body Corporate’s legal and mercantile costs associated with recovering outstanding body corporate debts (defined broadly as, outstanding levies, interest and recovery costs) from an owner, are distinct from legal costs incurred in association with a dispute with an owner as to any other matter (such as a property dispute, an application to the Commissioner, etc.).  A successful Body Corporate in levy litigation can recover, as a matter of Law, “reasonable costs” associated with the action.  What constitutes “reasonable”, and how the costs remain associated with a lot (as distinct from an individual owner) is currently on appeal in our appeal in the matter of 399 Woolcock (see the Nautilus Law Group website for further discussion).

Nautilus acts for bodies corporate from Port Douglas to Coolangatta for a broad range of matters, including building disputes, management rights and levy litigation.  We have been asked previously whether legal fees incurred in association with a Body Corporate’s action/defence in matters with specific owners can be claimed as “reasonable costs” in levy litigation pleadings (in circumstances in which the owner has existing levy arrearages).

The answer is the same – no.  Legal fees associated with separate proceedings; need to be recovered in such separate actions.

For example, Section 145 of the Body Corporate and Community Management (Standard Module) Regulation 2008 (“the Regulations”) provides that if a contribution is not paid by an owner, the Body Corporate may recover:

1.       The contribution;

2.       Penalty interest (if any); and

3.       Recovery costs incurred in recovering the contribution and interest (if any).

These three amounts combined are defined as a body corporate debt.

A contribution is an amount to be levied on owners within the Body Corporate which has been fixed on the basis of a budget and passed by ordinary resolution. Penalty interest is the interest which has been resolved by the Committee pursuant to Section 144 of the Regulations or is stipulated within a By-Law. Recovery costs are the costs the Body Corporate incurs when attempting to recover the outstanding body corporate debt.

If a Body Corporate is seeking to recovery an amount that does not fall within the definition of a body corporate debt, this amount would be plead as a separate cause of action and cannot be classified as “recovery costs.”

The legal costs your Body Corporate may incur to make or defend a dispute (other than a debt recovery action) against an owner, must seek those costs to be awarded by the Court or Tribunal hearing the dispute.

If your Body Corporate currently has a dispute with an owner, and is unsure as to how to apply the costs, contact our team on  (07) 5574 3560 or email us info@nautiluslaw.com.au to discuss your questions regarding skip traces.

Our solicitors service Port Douglas, Cairns, Townsville, Mackay, the Sunshine Coast and the Gold Coast and consultations can be arranged personally, by skype or by telephone. We thank you for considering Nautilus Law Group. 

Submitted by:  Katrina E. Brown BA JD ATIA TEP SSA

Debt Recovery Costs – Liquidated or Something Else in Queensland Levy Recoveries?

Can a Body Corporate add 30% interest on overdue strata levies?

strata leviesYes, absolutely.  Body Corporate and Community Management Act 1997 permits Queensland bodies corporate to charge 2.5% interest per month, in other words 30% per annum, on overdue strata levies due by an owner to the bodies corporate.

On occasion, in defense of legal proceedings issued against an owner, our opposing legal colleagues and/or the owners themselves will plead that the right to 30% interest is “unconscionable” and/or “illegal.”  This position is premised on a misunderstanding as to Queensland body corporate law generally, as well as the nature of the compensation intended to be rectified by the claim to 30% interest.

A body corporate, unlike a supplier of credit to a customer, is unable to “reject” an owner based on credit scores or other poor credit history.  The body corporate is not permitted to discriminate against an owner, or even to consider disentitling an owner to access to body corporate assets merely because an owner does not pay his/her/its contributions of body corporate expenses.

Further, unlike a commercial supplier of credit, a body corporate does not have access to investors or funding outside of the body corporate, except in limited circumstances and is legislatively restricted to the level of debt/asset ratio permitted to access in order to fund costs from banks and other lenders.

The 30% interest is intended to not only penalise an owner, but to compensate the body corporate for the costs associated with a default by an owner to service his/her/its obligations.

Purchasers into body corporate properties must consider that the body corporate is not the purchaser’s future personal lender.  The body corporate is under no obligation to finance an owner’s costs associated with membership in the body corporate, and whilst payment plans may be acceptable in many circumstances – the right of the body corporate to reject payment plans is reserved because the body corporate is responsible for all owners, and is not obligated to any one member.

At Nautilus, we often hear of stories of financial distress by owners, and our hearts go out to these owners.  However, we similarly appreciate that the failure of one owner, can threaten the stability of many others, as well as the financial viability of the body corporate as a whole.  We do attempt to negotiate suitable payment arrangements with our body corporate clients, but for regularly delinquent owners and/or owners with longstanding debts – the likelihood of successfully negotiating payment plans (in lieu of other more aggressive collection mechanisms) is often limited.

Our best advice to owners is this – if your bank will extend your mortgage – they will generally do so at rates substantially lesser than 30% per annum – give this a go before falling into arrears.  If you do not, cannot, or refuse to – the body corporate is left with no other option but to commence proceedings, and the right to claim 30% interest follows.

If you have any questions about levy recovery litigation, enforcement of body corporate judgments, mortgagee actions on body corporate properties, please do not hesitate to contact Nautilus to arrange a consultation with one of our team members.

We welcome you to contact our team on  (07) 5574 3560 or email us info@nautiluslaw.com.au. Thank you for considering Nautilus Law Group.

Submitted by:  Katrina Brown, BA JD ATIA TEP SSA, Commercial and Property Lawyer
Katrina@nautiluslaw.com.au

Strata Levies: Can an owner refuse to pay levies?

Can an owner refuse to pay strata levies because the owner has a dispute with the Body Corporate?

Short answer: No!

An owner’s obligation to pay strata levies is independent of any other matter between the owner and the body corporate.  Therefore, if an owner refuses to pay his/her/its strata levies – the owner will become non-financial, and incur interest at 30% (or such lesser rate set by the body corporate).  Following from being a “non-financial” member, the owner will also lose the right to vote at meetings and act on the Committee.
If an owner disputes a decision, action or inaction of a body corporate, he/she/it must lodge the complaint with the body corporate and seek clarification or remedy from the dispute. If not resolved at this level, the owner may seek to gather support from other owners to call an extraordinary general meeting.  If this is not possible (in other words, the owner cannot generate sufficient interest from other owners), the owner may submit an Application for the matter to be decided by the Body Corporate Commissioner, or in limited circumstances, may lodge proceedings in the Magistrates or Supreme Court (depending on the type of complaint and parties involved – such as an insurance dispute over repairs, wherein the dispute relates to an insurer of a body corporate).
Further, even if the owner claims the body corporate owes him/her/it money for something (such as repairs the owner claims to have been made relating to “common property” or damages associated with “common property), the owner must continue to pay strata levies as and when they fall due, and take action against the body corporate separately.
If the owner refuses to settle his/her/its strata levy obligations, the owner will suffer not only the loss of standing as a financial member, but also incur interest and potentially mercantile and/or legal fees associated with recovery proceedings.  Unlike a commercial dispute between creditors and suppliers, there is no right reserved to the owner to “set off” obligations due between the parties.
If you are having problems with mounting body corporate strata levy balances in your Scheme, and are seeking progressive and assertive legal representatives, please contact the team at Nautilus to arrange a no-obligation consultation.  Our solicitors service the Eastern Queensland region, from Port Douglas to Coolangatta.  We invite you to contact our Body Corporate Team by telephone on 07 5574 3560 or by email.
Submitted by:  Katrina Brown, BA JD ATIA TEP SSA, Commercial and Property Lawyer