Time to Pay the Piper: A Win for Bodies Corporate (And Their Members) on Levy Recovery

A decision by Queensland’s District Court relating to the recovery of outstanding body corporate levies has been overturned by the Queensland Court of Appeal.  The original decision (Body Corporate for Mount Saint John Industrial Park CTS v Superior Stairs & Joinery Pty Ltd) had a wide spread effect on the strata industry because its practical effect was to change the way bodies corporate (and their committees and managers) dealt with the recovery of outstanding body corporate levies.

The matter involved a special levy that was struck by a body corporate in 2009 but was never paid by a lot owner.  The body corporate commenced litigation to obtain payment of the levy some 3 ½ years after the levy was struck.  The District Court originally decided that the levy was not recoverable because the litigation was commenced out of time.  Section 145(2) of the Body Corporate and Community Management (Standard Module) Regulation states:

“If the amount of a contribution or contribution instalment has been outstanding for 2 years, the body corporate must, within 2 months from the end of the 2 year period start a proceeding to recover the amount.”

The Court determined that this section over rode the Limitations of Actions Act 1974 which provides that proceedings of this nature are generally barred unless commenced within 6 years.

The good news for bodies corporate (and their members who do the right thing by paying their levies when due) is that the decision was overturned on the 31st July 2018.   The Queensland Court of Appeal based its decision on the fact that s145(2) does not specifically preclude bodies corporate from commencing court proceedings outside of 2 years and 2 months and there is nothing unique about a claim for outstanding levies that would indicate that the government intended that the time limit in s145(2) be less than allowed under the Limitations of Actions Act.

From a practical perspective, this now means that the limitation period of 6 years in the Limitation of Actions Act 1974 does apply and a body corporate can commence proceedings for recovery of an outstanding levy anytime up to this date.

We would however still recommend that body corporate committees and managers remain proactive in recovery of levies within the 2 year and 2 month period.  Section 145(2) is designed to impose a duty on a body corporate to recover levies within this period. Failure to do so may expose the body corporate to criticism by lot owners leading to commencement of dispute resolution for orders that the body corporate commence action promptly.

If you own a unit or other type of lot in, or are a committee member of, a community titles scheme (strata development), are a body corporate manager or are otherwise impacted by this decision, we invite you to contact a Property Lawyer at our Townsville or Sunshine Coast Office if you would like any further information.