Each week we will examine a key aspect of the changes. We delve into the changes in more detail so Owners Corporations Managers and Committees can be prepared and understand their rights and obligations. This week we are looking at Owners Corporations issuing legal proceedings and defending them.

Our earlier blog gave a summary of the changes to the Owners Corporations Act 2006 which commence on 1 December 2021 as a result of the passing of The Owners Corporations and Other Acts Amendment Act 2021. It is available on our website.

Current position

Currently, an Owners Corporation may issue legal proceedings by ordinary resolution for:

  • Levy recovery matters (i.e. lot owners not paying their levies when due);
  • Breaches of Owners Corporations rules.

Position after amendments

However, any other type of action must be authorised by a special resolution. From 1 December 2021, the Owners Corporation shall continue to be able to issue proceedings for the issues above, but will also be entitled to issue legal proceedings:

  • for claims up to $100,000 (or otherwise in the Magistrates’ Court of Victoria jurisdiction) by ordinary resolution instead. Such action can be taken to the Magistrates’ Court of Victoria or the Victorian Civil and Administrative Tribunal or other court with appropriate jurisdiction depending on the nature of the matter; and
  • for other claims by the Owners Corporation on application by a lot owner to the Victorian Civil and Administrative Tribunal. In any application:
    • a lot owner has the burden of proving why VCAT should make an order if –
      • the owners corporation has not voted on a special resolution relating to the matter that is the subject of the lot owner’s application; or
      • the owners corporation has unsuccessfully voted on a special resolution relating to the matter that is the subject of the lot owner’s application and an ordinary resolution would not have been passed; and
    • any other party to the application has the burden of proving why VCAT should not make an order if the owners corporation has unsuccessfully voted on a special resolution relating to the matter that is the subject of the lot owner’s application and an ordinary resolution would have been passed.

This means that Owners Corporations who can pass an ordinary resolution to issue legal proceedings will find it much easier to issue legal proceedings as a special resolution may not be necessary.

It should be noted that the amendments allowing for a lot owner to issue proceedings set out above also allow a lot owner to make an application to defend or discontinue any proceedings already on foot.


Are legal costs covered by insurance?

Some Owners Corporations have defence costs in their policy of insurance. What does this mean? This means that if a lot owner or other party issue legal proceedings against the Owners Corporation they will usually be able to get their insurer to pay their legal costs arising from the proceeding up to a cap in their policy and subject to payment of the insurance excess. This means that the Owners Corporation may not be out of pocket much. However, the insurer must first approve the engaging of lawyers before a claim will be approved. We have extensive experience in acting for Owners Corporations who are covered by insurance and can ensure that both clients and the insurer are kept up to date at all stages of the proceedings.


Need Advice ?

Phillip Leaman, principal of the Owners Corporations practice group of Tisher Liner FC Law and his very experienced team can provide assistance to owners corporations, committees, lot owners and managers in a range of owners corporations legal matters. We have substantial experience in prosecuting and defending legal actions for Owners Corporations and lot owners.

We believe Owners Corporations want to maintain peaceful, functional living environments for owners. Our mission is to provide a fresh perspective on resolving legal disputes and to inspire Owners Corporations to achieve outcomes that preserves the value of assets and restores harmony. We are expert Owners Corporations lawyers.

For advice or assistance, please contact Phillip Leaman on 03 8600 9314 or by email.

To see earlier spotlights on the amendments check out our website. Our website also has more information on Owners Corporations as well as a range of helpful blogs and podcasts.