Arrears can sometimes be a huge burden on the effective operation of an Owners Corporation. Turnbull Cook have designed a new system around debt collection where in most instances there is no or minimal cost to the Owners Corporation. Like any dispute, our philosophy is to collect the arrears as efficiently as possible and to significantly reduce the need for VCAT or Magistrates Court proceedings. However, the steps outlined in the process below ensure that when debtors are deliberately avoiding payment, the system we have adopted provides the best possible recovery chances when dealing with the courts and or VCAT.
A quick outline of this process is below:
Step 1. (28 days before due date)
A fee notice is issued 28 days prior to the due date (ie 28 days prior to the start of the quarter)
Step 2. (14 days after due date)
A reminder is sent approximately 14 days after the due date expires.
Step 3. (30 days after due date)
A final fee notice is issued approximately 30 days after the due date expires – this gives the Owners Corporation the right to take further action should it be needed after the expiry of another 28 days.
Step 4. (from 30 to 60 days after due date)
As step 3 above provides the right to initiate VCAT proceedings at the expiry of another 28 days (therefore expiring at approximately day 60) each Owners Corporation Manager is tasked with making contact with the outstanding debtors in their portfolio by telephone and or email between day 30 and day 60. (Please note there is no additional charge for this).
The purpose of the contact is as follows:
- Communicate with the debtor in a practical common sense approach to arrange payment of the outstanding amount.
- If unsuccessful there will be at least 2 attempts during this 30 day period.
- The final attempt will warn the debtor that the next step will be to refer the matter to solicitors and should there be no arrangement or payment before the expiry of the 28 days from the final fee notice (approximately day 60) then next step will be a VCAT application for the entire amount which will include an additional cost to the debtor of $430 (solicitors costs).
Step 5. (after day 60)
Effective communication through the above approach and timeframes has significantly reduced the requirement to initiate anything further beyond day 60 and up until this stage the only cost to the Owners Corporation is standard notice charges.
We are however sometimes required to go further in debtor recovery attempts and when this is the case, we have an arrangement with our solicitors where in most cases there won’t be any cost to the Owners Corporation.
Upon the instructions of the Owners Corporation, our solicitors will prepare and file the application and serve an Affidavit in support, attend the hearing on our behalf and obtain judgment. All this is done at a set cost of $430 and as the costs ordered by VCAT in the Owners Corporation List is normally similar to this, the Owners Corporation is not charged directly and the costs are borne by the lot owner.
Step 6 (after VCAT)
Once judgment is obtained above and should the debtor still refuse to pay, upon the agreement of the committee our solicitors would be instructed to register the matter in the Magistrates Court or any such court as the jurisdiction requires. The fees charged by our solicitors for all work done in this court and beyond are done at Court Scale only and are properly recoverable from the lot owner. So again this is cost neutral to the Owners Corporation.
The Owners Corporation Manager maintains control of the file up until day 60 where he or she is required to undergo a number of systematic procedures such as making contact with the debtor and documenting this contact to assist in the subsequent formal collection process if required. After Day 60 the file is handed over to our Business Services team who collates the necessary information and engages the solicitors. The Business Services team provide updates to the manager to inform the committee as to the status.
