When the recovery of s80 expenses goes south

Local Court of New South Wales slams owners corporation trying to recover s80 expenses when levies had been paid: The Owners – Strata Plan No 52098 v Khalil [2014] NSWLC 2

The Court held:

“53 Firstly, expenses are only recoverable “to the extent that such costs and disbursements are reasonably incurred and reasonable in amount; and such costs and disbursements would have to prove this in order to obtain a judgement for them” (Hodgson JA at 382, Handley AJA at 130). Costs should be assessed on a party/party basis rather than on a solicitor/client basis (Hodgson JA at 384).

54 Secondly, expenses “must be truly characterised as having been incurred in recovering arrears of contributions” (Hodgson JA at 384). That is, there must be a clear connection between the expense incurred and the recovery of the levy.

55 Thirdly, “the words “together with” in section 80(1) do mean that the claim for expenses, including legal costs and disbursements, must be made in the same proceedings as the claim for the contribution” (Hodgson JA at 385, Handley AJA at 402). Furthermore, the right to recover expenses is ancillary to the right to recover unpaid contributions. It is not open for an owners corporation to initiate proceedings with respect to expenses only. At the commencement of legal proceedings there must be a claim for unpaid contributions. Proceedings may be maintained to recover expenses associated with recovering outstanding contributions.”

Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice before you take any action or otherwise rely upon the contents of this article.