One of the requirements of living in a Community Titles Scheme is that all owners are required to contribute to the maintenance and management of the building that they live in. The responsibilities vary depending on the type of complex but, basically, all owners have to pay a contribution levy on a regular basis.
Occasionally, an owner will fall behind with their levies. There are times when the Body Corporate has no alternative but to take legal action to recover the outstanding debt. That is where things get complicated.
Up until recently, the Body Corporate would add any legal costs and charges to the outstanding amount. They would then have a number of enforcement options open to them.
On 11th Feb 2009, the Commercial and Consumer Tribunal handed down an adjudication on the treatment of recovery costs associated with the collection of outstanding levies. Whilst the decision may be a fair interpretation of the Act and Law, the end result is that there is now massive confusion as to how to go about recovering a debt.
Perhaps the key phrase in this order was that "such recovery costs are the subject of a judgement in a court of competant jurisdiction."
Legal advisors, Body Corporate Managers and Committees are scratching their collective heads about how to interpret the decision. One legal advisor has suggested that the only way to fairly claim back recovery costs is to lodge a Dispute. Guess what! This process is so complex that a lawyer needs to compile the dispute thus creating a further cost.
Of course that is only one lawyers opinion. The fact is that we are in unchartered waters. Who knows what an Adjudicator might rule. Lodging a Dispute can be time consuming and costly and there is never a guarantee of success. Other Body Corporate Managers and Lawyers have other ideas about how recovery costs should be claimed.
The bottom line is a long drawn out process that will inevitably take up the time of committee members who are unpaid and who dont need the aggravation.
An important part of the ruling is that Body Corporate Managers should separate recovery costs from outstanding levies. This means a separate ledger will need to be kept. Many Body Corporate Managers are unclear about how to calculate outstanding levies. One Body Corporate Manager has had to enlist the aid of a lawyer to actually calculate the amount owing and, surprise, surprise there is a dispute about that.
A Body Corporate Manager recently told me that she has at least 30 cases of unpaid levies at the present time. There may well be hundreds more cases.
Another Body Corporate Manager has said that the ruling now means that owners can get away with not paying their levies. This may well be true because if Committees are not prepared to spend their own time and energy in pursuing the outstanding levies and legal costs then the debt will remain unpaid.
Bear in mind that Committee members are not paid. Many will decide that it is just not worth their time in wading through the legal minefield to collect outstanding levies.
This is another example of a system that is out of control.
I have spent many years participating on a number of different Body Corporate Committees. I am a dealer in Vintage Movie Memorabilia specialising in original movie posters and movie art. http://www.moviemem.com/I also present a radio programme on Jazz Radio 94.1fm Monday - Friday afternoons on the Gold Coast.