A win for bodies corporate recovering outstanding levies

By |2022-06-28T15:07:11+10:0030-5-22|

Are you a body corporate manager or do you sit on a committee? Have you been frustrated by lot owners claiming damages alleging the body corporate has somehow breached a duty in an attempt to frustrate or delay paying levies?

In a decision published last week (Body Corporate for Anchorage v Huang), there is some useful direction by Barlow QC DCJ for bodies corporate and their advisors in those circumstances. As was the case in Anchorage, lot owners sometimes allege that a body corporate has breached a statutory duty (e.g. duty of maintenance) in support of a counterclaim for damages for, say, repair costs or other loss, which invariably (and sometimes conveniently) far exceeds the amount of outstanding levies.

Sound familiar?

In Anchorage, the Court concluded that claims for breaches of statutory duty may only be resolved by application under chapter 6 of the Body Corporate and Community Management Act 1997 (i.e. exclusivity of dispute resolution process – QCAT or adjudicator). In forming that view, Barlow QC DCJ said:

“It is clear, in my view, that the subject matter of the counterclaim – concerning as it does allegations of damage caused to the defendant’s lot by the actions or inaction of the plaintiff – is not related in any way to the plaintiff’s claim for recovery of the contributions that it alleges are a debt owed to it by the defendant.”

The decision also highlights the need for any lot owner to first have the commissioner agree that the counterclaim and the levy claim by the body corporate ‘are connected in a way that makes it inappropriate for the dispute to be dealt with under the exclusive dispute resolution process’. A failure to do that is likely fatal to the counterclaim and could result in it being struck out.

In my view, in light of Barlow QC DCJ ‘s comments, when considering levy recovery actions, the circumstances where it is inappropriate for the dispute to be dealt with under the exclusive dispute resolution process will limit counterclaims for breach of statutory duty that truly concern the levy recovery process. This is good news for bodies corporate.

As for counterclaims by lot owners relying on a breach of a common law duty (i.e. negligence/nuisance etc), nothing has changed unfortunately. His Honour said that those remained within the district court’s jurisdiction. Indeed, His Honour foresaw situations where complaints by lot owners relying on the same or similar conduct were advanced in both forums (i.e. the commissioner’s office for breach of statutory duty and the court for breach of common law duty) but balanced those comments by saying that any claimant could only recover actual loss once.

Troy leads our Commercial Litigation and Dispute Resolution team and can be contacted on (07) 3226 3933 or trh@nicholsons.com.au.

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