BODY CORPORATE UNPAID LEVIES – THE CONCILIATION PROCESS

An owner recently lodged an Application to the Commissioner, disputing the amount owing in Body Corporate Unpaid Levies and recovery costs. The matter was referred to a Conciliation Hearing but the end result left the owner and the Body Corporate back at square one.

Background

The owner has Body Corporate Unpaid Levies plus recovery costs amounting to over $3000.00. They cited various reasons why the amount has not been paid. However, the Body Corporate Committee believe that the entire debt should be paid in full and commenced recovery action about six months ago.
In the meantime, the owner, through her Real Estate Agent, lodged an Application with the Commissioner disputing the amount owing.
It is unlikely that the owner would have been aware that the Application had virtually no chance of getting a ruling unless she paid the entire amount owing. Had she done that, then she could have sought adjudication on the debt including recovery costs.
The fact is that the Commissioner has no jurisdiction to make a ruling where Body Corporate Unpaid Levies are still owing. The matter could only proceed to Conciliation where the facilitator could try and broker some sort of agreement between the parties but there is no obligation on either side to agree on anything.
In this case, the parties simply agreed that the owner would make a formal offer to the Body Corporate. The Application was then closed without any further action.
The Body Corporate was not obliged to accept the offer. They were only required to consider it and respond accordingly. Following the conciliation, an offer was made and subsequently rejected.
The overall process took over three months to reach its conclusion. The Committee members were forced to spend their own time in participating when there was never really any chance of resolving the matter.
In the meantime, the Body Corporate Unpaid Levies plus interest and costs increased and the owner was no better off apart from receiving some advice, which could be construed as legal advice, from the facilitator.

The Next Step

The Body Corporate now has no option but to proceed with legal action. The Facilitator seemed keen to push the Body Corporate towards referring the matter to QCAT for resolution but legal advice has indicated that they would be better off going through the courts.
The costs of the legal action will be significant and the owner will have to either pay the amount in full or get her own legal representation which will only add to the costs.
The lesson from this exercise is that owners should pay their levies on time. If, for some reason, they miss payments and are charged interest and even recovery costs, then they should pay the full amount and then refer the matter to the Commissioner who has the jurisdiction to decide on whether the additional costs are justified.
If you do not pay the outstanding amount you are setting yourself up for a potentially escalating amount in recovery costs and legal fees.
Watch this space for future developments.

THE WAVE BODY CORPORATE LEVY RECOVERY SAGA

Many owners in Body Corporate Communities have been watching The Wave Body Corporate Levy recovery saga with great interest. The latest news is that Westpac is reportedly facing a payout of $450,000.00 although there is no guarantee that the matter will end there. All this as a result of the relentless pursuit of an owners' unpaid levies of $5500.00.

Background

Dr and Mrs Prins, the owners of a luxury apartment at The Wave on the Gold Coast, fell behind with their levies owing approximately $5500.00. It has been reported that they wanted to enter into a payment plan but no agreement was reached and the Body Corporate commenced legal action to recover the debt.
The owners defended the legal action and were self represented. It appears that the matter continued for some time and the legal costs and associated fees ballooned to extraordinary amounts. Owners at The Wave were quite rightly concerned at the consequences of possibly losing the battle. The Prins declared bankruptcy in April 2013 by which time the recovery costs had risen to close to $350,000.00.
In mid 2013, Westpac took over the possession of the Unit and they apparently took the view that the responsibility for the recovery costs was not their responsibility. Westpac certainly had a good moral argument. Why should they be saddled with the costs that they had no control over?
The matter continued to escalate which was of great concern to owners bearing in mind that they were up against a giant bank with huge resources. Some owners became so nervous about the possible outcome that they favoured a negotiated settlement of the recovery costs.

The Latest News

The most recent development in the long running saga is that Westpac’s appeal was dismissed on 11 April 2014. See the Supreme Court ruling. The Court ruled that recovery costs associated with pursuing outstanding levies are a debt that attaches to the Lot.
SSKB (Stewart Silver King and Burns) has sent out a newsletter welcoming the decision and congratulating the Body Corporate for the Wave. However, there are surely no winners here.
Approximately $450,000.00 spent to recover a debt of approximately $5500.00???? Onlookers can be excused for thinking that something must be seriously wrong with the legal system particularly bearing in mind that there may still be avenues of appeal for Westpac and there could be more twists to the tale.
I can certainly understand the Body Corporate for the Wave taking legal action to recover a debt but if it takes 450,000.00 to get to this stage in attempting to recover a small debt then you would have to wonder about the way in which this was handled.
The recovery of Body Corporate Levies is a big problem for Bodies Corporate. The process can be time consuming for Committee members who are unpaid and some lawyers are getting plenty of business as a result.
I am currently dealing with a levy recovery issue at another Body Corporate. The matter will be going to conciliation soon and I will be reporting on the outcome. However one thing is certain. There is no way we will be spending $450,000.00 to recover the outstanding debt (I hope!).