THE WAVE BODY CORPORATE LEVY RECOVERY SAGA

Posted by John Reid  /   May 07, 2014  /   Posted in Articles, BC Fees and Charges, Body Corporate News, Headline News, Headlines  /   1 Comments

Many owners in Body Corporate Communities have been watching The Wave Body Corporate Levy recovery saga with great interest. The latest news is that Westpac is reportedly facing a payout of $450,000.00 although there is no guarantee that the matter will end there. All this as a result of the relentless pursuit of an owners’ unpaid levies of $5500.00.

The Wave Body Corporate Levy

Background

Dr and Mrs Prins, the owners of a luxury apartment at The Wave on the Gold Coast, fell behind with their levies owing approximately $5500.00. It has been reported that they wanted to enter into a payment plan but no agreement was reached and the Body Corporate commenced legal action to recover the debt.

The owners defended the legal action and were self represented. It appears that the matter continued for some time and the legal costs and associated fees ballooned to extraordinary amounts. Owners at The Wave were quite rightly concerned at the consequences of possibly losing the battle. The Prins declared bankruptcy in April 2013 by which time the recovery costs had risen to close to $350,000.00.

In mid 2013, Westpac took over the possession of the Unit and they apparently took the view that the responsibility for the recovery costs was not their responsibility. Westpac certainly had a good moral argument. Why should they be saddled with the costs that they had no control over?

The matter continued to escalate which was of great concern to owners bearing in mind that they were up against a giant bank with huge resources. Some owners became so nervous about the possible outcome that they favoured a negotiated settlement of the recovery costs.

The Latest News

The most recent development in the long running saga is that Westpac’s appeal was dismissed on 11 April 2014. See the Supreme Court ruling. The Court ruled that recovery costs associated with pursuing outstanding levies are a debt that attaches to the Lot.

SSKB (Stewart Silver King and Burns) has sent out a newsletter welcoming the decision and congratulating the Body Corporate for the Wave. However, there are surely no winners here.

Approximately $450,000.00 spent to recover a debt of approximately $5500.00???? Onlookers can be excused for thinking that something must be seriously wrong with the legal system particularly bearing in mind that there may still be avenues of appeal for Westpac and there could be more twists to the tale.

I can certainly understand the Body Corporate for the Wave taking legal action to recover a debt but if it takes 450,000.00 to get to this stage in attempting to recover a small debt then you would have to wonder about the way in which this was handled.

The recovery of Body Corporate Levies is a big problem for Bodies Corporate. The process can be time consuming for Committee members who are unpaid and some lawyers are getting plenty of business as a result.

I am currently dealing with a levy recovery issue at another Body Corporate. The matter will be going to conciliation soon and I will be reporting on the outcome. However one thing is certain. There is no way we will be spending $450,000.00 to recover the outstanding debt (I hope!).

One Comment

  1. Tim Sheehan May 16, 2014 9:18 am Reply

    When I went to University and studied law, which I admit is about 25 years ago, one thing I remember from reading cases is a statement by one of the Judges of the Australian High Court in a Case about the damming the Franklin River in Tasmania (I think). What I remember to be the essence of the judge’s statement is that an applicant / plaintiff in a court case will very rarely recognize the issues being argued by the lawyers by the time it reaches the appeal stage.

    This statement might ring true in the recent decision between an owner, Mr. Prins, the Westpac Bank and the Body Corporate for the Wave.

    In that matter, the owner in question did not pay to the body corporate the money which was owed, and then went to extraordinary lengths in Tribunals and Courts to avoid paying the debt. In the process this owner forced the Body Corporate to expend huge amounts of money to respond to these legal proceedings.

    There has been comment about the Wave Case. But if you cut the matter down to its real issues then without a doubt it is an excellent decision and the judges should be congratulated for coming to a common sense conclusion.

    This is what I believe to be the common sense which has come from the Wave Case:

    1. Every owner has an obligation to pay their body corporate contributions.

    2. In the event an owner is unable to pay, which forces the committee to make the decision to commence recovery action, the reasonable costs of the recovery action are entitled to be added to the amount which the owner pays. (This makes sense – the body corporate would not have had to spend the money if the contributions were paid)

    3. All of the outstanding amounts “run with the lot”, and must be paid out of the sale proceeds if the lot is sold. This ensures the other owners do not end up “out of pocket”.

    I believe this to be common sense because I believe in the principle that each owner should pay their fair share.

    The other underlying issue, which is not evident in reading a legal transcript, and which is easily missed by legal commentators is the impact upon the committee when an owner elects to drag their body corporate through the Courts. The committee is made up of volunteers. They join the committee to make a positive difference for the body corporate. They want to devote their time to improving their homes and investments, in a spirit of harmony. They do not wish to spend hours in Courts and Tribunals listening to lawyers. However, the alternative is to write off a legitimate debt – which is essentially unfair to all owners.

    Again, we congratulate the committee for their commitment.

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