As most of you would know, the law imposes strict time limits within which actions must be commenced in court, known as limitation periods. For the recovery of contractual debts, such as body corporate levies, this limitation period is capped by the Limitation of Actions Act 1974 (QLD) at six years.
However, confusion over the limitation period for recovering body corporate debts arose from recent judicial interpretation of Section 145(2) of the Body Corporate and Community Management (Standard Module) Regulation 2008, which provides that:
If the amount of a contribution or contribution instalment has been outstanding for 2 years, the body corporate must, within 2 months from the end of the 2-year period, start proceedings to recover the amount.
At first glance, one could be forgiven for thinking that this section limited the period for recovery of body corporate levies to two years and two months. And at first instance, a Judge of Queensland’s District Court interpreted that section to mean exactly that i.e. the body corporate was statute barred from commencing recovery proceedings if it did not do so within two years and two months.
The case was appealed and the Court of Appeal held that, while a body corporate is obliged to commence proceedings within that two years and two months, it does not lose the right to commence proceedings in future if it fails to do so within that timeframe. Rather, s 145 exists to provide greater accountability on the Body Corporate regarding administrative and financial matters, so as not to place the burden of unpaid levies on the paid-up lot owners.
The Court of Appeal further commented that limitation periods are constructed for a purpose, including to address delay and inequities, and there is no reason why a claim for outstanding contributions under s 145 should have to be settled more quickly than any other dispute about a debt.
The decision confirms that the right of recovery is capped only by the Limitation of Actions Act 1974 (QLD), being, for a contractual debt, six years from the date on which the cause of action arose.
If you require any assistance with debt recovery or any other matters concerning bodies corporate, please contact our office.
This article was written by Frances Kelly, Graduate, and Sharon O'Toole, Special Counsel.
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