Body Corporate Feuds

Body Corporate Feuds

Body corporate disputes are nothing new but Juliette Nairn from OMB Solicitors has the ability to steer you through what can be a minefield of litigation.

Are you frustrated by your Body Corporate neighbour’s failing to pay their contributions, leaving you to pick up the difference? The good news is you can take steps to recover your money. The Court of Appeal of Queensland recently made a landmark decision in the area of Body Corporate Law regarding the ability of bodies corporate to recover contributions, penalty interest and all reasonable recovery costs from a lot owner who fails to pay their contributions on time.

The decision was made with respect to a Body Corporate feud which began in 2011 relating to a prestigious unit in Surfers Paradise worth over $1m. The unpaid amount in question was around $5,500 and the owners of the lot claimed they had no capacity to pay their debts, despite owning several other units in Surfers Paradise of similar value. This resulted in the remaining lot owners having to cover the shortfall in contributions to cover the daily expenditure of the body corporate.

When this matter was brought before the Queensland Court of Appeal, OMB Solicitors as legal representatives for the body corporate, successfully argued that if a single lot owner fails to pay their body corporate levies, this places an unfair burden on the other lot owners who have always abided by their responsibilities. As the saying goes, it only takes one bad apple to spoil the barrel.

In the lead up to this matter being brought before the Court of Appeal, over $400,000 in recovery costs were incurred due to the unreasonable pursuit of litigation through five different Courts over a number of years. The Body Corporate for The Wave has been forced to expend these costs as part of the lengthy proceedings, which resulted in each lot owner being forced to make further contributions to the body corporate administration fund. These costs were incurred as a result of the non-contributing lot owners continually pursuing the matter to a higher Court, despite them being unsuccessful at all five levels of the Court proceedings.

This ever-ballooning debt owed to the Body Corporate, and essentially the remaining contributing owners, resulted in the bank repossessing the property in mid-2013. It should be noted that the bank, Westpac, failed to take steps to protect its interest throughout
the court proceedings. The Court agreed that ultimately it is the contributing lot owners who are meeting their share of the expenditures and who are disadvantaged by the non-payment of one lot owner. This cannot be, and was not, the intention of the legislation protecting everyday owners within a body corporate. The body corporate’s success in this matter ultimately resulted in a Court order that Westpac pay the body corporate debt including all contributions, interest and recovery costs.

The Court of Appeal is sending a very clear message to lot owners and mortgagees through this judgment to ensure they look carefully at non-payment of body corporate contributions. OMB Solicitors has handled over 2,000 body corporate levy recovery proceedings in the past five years, and the average costs incurred in recovering contributions from defaulting lot owners is less than $5,000. These types of matters also usually resolve with full payment being made to the body corporate within a period of about 3 months. However, this case highlights a rare example of just how expensive and time consuming body corporate matters can become if expert legal advice is not sought in the early stages of such matters to resolve them quickly.

If your body corporate requires expert legal advice on this type of matter, or any other Body Corporate matters, consider contacting the Body Corporate team at OMB Solicitors on 07 5555 0000.

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