Law change - Body Corporate debts

Some time ago we wrote an article relevant to the operation of bodies corporate, regarding recovery of contributions by lot owners.

In BC for Mount Saint John Industrial Park CTS v Superior Stairs & Joinery Pty Ltd [2017] QDC 245 the District Court interpreted the Body Corporate and Community Management Act (‘the Act’) as barring bodies corporate from commencing proceedings to recover an amount of a contribution that had been outstanding for two years, after a further 2 months. 

The effect was extremely concerning for bodies corporate as the decision meant:

• a body corporate was required to enter the potentially expensive world of litigation 26 months after a debt became outstanding to enforce an outstanding debt; and

• the onus was placed on bodies corporate and body corporate managers to be extremely vigilant to ensure they pounced upon any late payments and exhausted less costly avenues to obtain payment before this deadline.

The good news for bodies corporate and body corporate managers is the Queensland Court of Appeal has overturned the previous ruling.

The court ruled that the Act aimed to “give greater clarity and accountability on administrative matters including ... financial management” and did not impose a time limit for starting proceedings (although a time limit of 6 years is in place due to other legislation).

The ruling does not suggest the body corporate should avoid its duty to manage its accounts prudently, but it does allow bodies corporate to start proceedings to recover an amount up to 6 years from the time a contribution is outstanding. 

It is also worth remembering that if the body corporate does not discharge its duty as specified in the Act, a lot owner can enforce the duty through the dispute resolution provisions of the Act.

If your body corporate has contributions that remain unpaid, and you require assistance interpreting the Act and the remedies available, we suggest you seek legal advice from a law firm with experience in this area. 

If you or someone you know wants more information or needs help or advice, please contact us on (07) 5443 4866 or email kwaddington@gwlaw.com.au.

       Ken Waddington                                                 Nicole Downs                                                                   

       Partner                                                                       Solicitor                                                                      

       (07) 5443 4866                                                     (07) 5443 4866                                                     

       kwaddington@gwlaw.com.au                       ndowns@gwlaw.com.au