Recent changes to time limits to recover outstanding body corporate contributions
The Queensland District Court has decided a body corporate has only 2 years and 2 months to start legal recovery proceedings for outstanding body corporate contributions, or the process will be prohibited by statute.
Section 145 of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (‘the BCCMR’) provides that a Body Corporate must “start proceedings to recover the amount” within 2 years and 2 months from the time the contribution became outstanding (‘the Time Limit’). Until recently, the industry has interpreted this as requiring the Body Corporate to take some step to recover outstanding moneys within that period, but permitting legal proceedings to be instigated after the Time Limit has expired, and action to recover unpaid contributions was interpreted as being prohibited by statute after 6 years, as provided in section 10 of the Limitations of Actions Act 1974 (‘the LAA’).
The recent decision in Body Corporate for Mount Saint John Industrial Park v Superior Stairs & Joinery Pty Ltd  QDC 245 has interpreted the Time Limit provided by the more specific BCCMR as overriding the more general LAA limitation provisions. This means Body Corporate Managers must do more than negotiate payment terms with an indebted lot owner before the Time Limit period expires. Court proceedings must be provided, otherwise the BCCMR prohibits recovery of the contribution.
Bodies Corporate will now be required to decide whether to proceed to Court earlier to recover outstanding contributions. With Court action resulting in significant increases to penalties and recovery costs, lot owners who may be liable for such costs should be wary of delaying payment of contributions, and should seek appropriate legal advice as soon as a situation arises.
We recommend Body Corporate Managers diligently monitor any outstanding amounts to ensure they take the appropriate action prior to the 2 years and 2 months deadline, and suggest urgently obtaining legal advice if outstanding contributions are approaching the Time Limit. By implementing regular reminder systems to remind committees of outstanding contributions, establishing strictly regimented debt management polices and reviewing current and future payment plans, bodies corporate can manage the risks that flow from the shorter time limits imposed.
As yet there is no word as to whether the District Court Decision will be appealed, so currently the above decision is the law in Queensland.
Garland Waddington has particular experience and expertise in assisting clients 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 email@example.com.