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