Levy Recovery – It is time to tighten up the ship!!
Lazy recovery processes should be a thing of the past. Based on some recent decisions, it appears the Courts are becoming increasingly reluctant to allow bodies corporate to recover levies, recovery costs and penalty interest where its solicitors have failed to properly explain the body corporate’s claim in the court documents and/or otherwise failed to comply with the relevant Court Rules.
Take for example:
- The recent comments by Magistrate Sinclair in the decision of BC for Link Portside Wharf v Zheng & Ors [2020] QMC, in relation to whether the court proceedings had been properly served by the body corporate on the levy debtors (so as to allow the body corporate to obtain default judgment - that is judgment because the levy debtor failed to lodge a defence in the matter), in which His Honour said:
“The service matters were argued but ultimately I have made no determination in respect of them. That is because, having heard the plaintiff and allowing time for the filing of submissions, in each case I have determined that default judgment cannot be given because the nearly identical pleadings do not disclose a cause of action.”
And
“I cannot grant default judgment on pleadings where these is no valid cause of action disclosed. Any such judgment would be set aside as irregularly entered“
That is, the body corporate was not entitled to judgment, simply because its claim documents did not comply with the Court Rules.
- In Body Corporate for Koolamara v Bennett [2019] QMC 15 Magistrate Sinclair was more than happy to set aside a default judgment that had been obtained by the Body Corporate against the alleged Levy Debtor (and we say alleged, because in fairness the court documents failed to establish what amount was outstanding (if any).
As Magistrates Sinclair said in that case:
“Unpaid levies are a statutory debt. Pleading and proving them should be a simple matter.”
And
“Fully and properly pleaded, a Body Corporate claim for s.143 levies properly imposed would be difficult to set up a defence to. One possibility is an error in the matters required under s.139 and 140.1 It is not infrequently that person sued for BC fees raise that they cannot understand where the amounts come from or how they are now so high. The UCPR should prevent this.”
It is evident from the depth that Magistrate Sinclair went into in criticising the body corporate’s court documents in this decision, that he:
- Is far from happy with the approach taken in that case; and
- Will not be tolerating such noncompliant recovery processes in the future.
For too long some levy recovery lawyers have managed to get way with a somewhat “tick and flick” approach to levy recovery – by rolling out the same old template and attaching a levy statement, before filing the document in court.
Moving forward, in order to reduce the possibility of wasted time and expense, these lawyers will need to properly understand the amounts being claimed and then properly plead the basis for the body corporate’s claim.
We have previously been briefed to review, for frustrated Committees, levy recovery matters handled by other law firms. In some instances the practices adopted were concerning. In one case, tens of thousands of dollars had been spent fighting about the Recovery Costs, in circumstances where the Committee were unaware what the dispute was actually about and the amount of costs the body corporate could expect to recover.
Handled poorly, levy recovery can be a self-perpetuating cost exercise - that is, the higher the costs, the more the levy debtor argues, the more work needed by the lawyers and therefore the higher the costs.
Levy recovery though can be handled cost effectively AND done properly if proper care is taken from the start – it takes that though, proper care in ensuring that the outstanding amounts are both properly understood and properly detailed in the claim.
Moving forward, bodies corporate must run a much tighter ship, so as to not risk wasting time and money in levy recovery matters, due to their legal documents failing to comply with the Court Rules.
Active Law can assist bodies corporate with their levy recovery matters.
Please contact us for a fee proposal.
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The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.
