2 February 2024
January 2024 – Strata Regulatory Watch
In this edition we cover: NSW: Changes to strata and community titles laws in NSW NSW : The Mascot Towers case Blog Post: Stratum Title – the manna of property title QLD: BUGT and QLD…
An OC can only commence debt recovery proceedings against an Owner once their outstanding levies are due and payable. In seeking payment of these levies, the OC must ensure that it has the authority to charge the Owner for the fees which are being sought.
An owners corporation (OC) has the authority to levy annual fees pursuant to section 23 of the Owners Corporations Act 2006 (Vic) (OCA). These levies must be provided to the Owner in the form of a Fee Notice which complies with the following requirements:
In circumstances where the Fee Notice complies with the OCA’s prescribed requirements and the Owner fails to comply with the Fee Notice within 28 days after it has been issued, the OC should issue a letter of demand.
Generally, it is at this stage of the dispute resolution process that an OC engages legal representation.
The OC should not commence legal proceedings against the Owner without giving them a final opportunity to pay their outstanding fees. This ‘final opportunity’ is often manifested the form of a letter of demand.
Issuing a letter of demand serves the dual purpose of urging the other party to address the issue promptly and demonstrating the OC’s commitment to resolving the dispute without resorting to Court or Tribunal intervention. There is no legal requirement to issue a letter of demand before initiating legal proceedings. However, if you have not taken reasonable steps to resolve the dispute before commencing proceedings, a Court or Tribunal may view your case unfavourably.
If the Owner fails to comply with to the letter of demand before it expires, the OC may commence debt recovery proceedings in VCAT or the Magistrates Court.
Both VCAT and the Magistrates’ Court have jurisdiction to determine monetary disputes. However, the power to award legal costs and enforce monetary orders vary drastically between Courts and Tribunals.
OCs often initiate debt recovery proceedings through in VCAT’s Civil Claims List. Presumably, this is because they believe that VCAT is an ‘easier’ and more cost-efficient jurisdiction to navigate.
While these assumptions common place, they do not accurately reflect the difficulties arising from pursing a debt recover claim in VCAT.
In our experience, it is generally preferable to commence debt recovery proceedings in the Magistrates’ Court for the following reasons:
Consequently, commencing debt recovery proceedings in VCAT may prolong a dispute without any substantial advantage for the OC.
DISCLAIMER: This answer is not intended to be legal advice. You should seek independent legal advice tailored to your specific circumstances. The information in this article is of a general nature and is not intended to address the circumstances of your particular legal issue.
 For example, the OC cannot charge a lot owner for ‘administration fees’ arising from overdue owners corporation fees.
 See section 31 of the OCA.
 VCAT’s jurisdiction to determine monetary disputes involving, inter alia, unpaid levies arises from sections 32 and 162 of the OCA; whereas, the Magistrates’ Court’s jurisdiction arises pursuant to section 100 of the Magistrates’ Court Act 1989 (Vic) and section 30 of the OCA.
 If the OC’s fees have been calculated correctly and provided to the Owner in accordance with section 31 of the OCA, there is no legal defence for an Owner failing to pay levies.
 Default judgement occurs when a Court makes orders without the parties’ attending a hearing as a result of the defendant’s failure to respond to a complaint.
  HCA 15.