Recovery Costs and requests for default judgment

September 15, 2022

A Magistrate sitting in the Brisbane Magistrates Court recently published decisions on two requests for default judgment (Requests) made on behalf of two bodies corporate. As most of you would be aware a Request can be filed where a Defendant (debtor/owner) fails to defend the body corporates claim. Requests are usually decided by the Registrar of the Court rather than a Magistrate. However, in these two decisions the matters were referred to a Magistrate to determine the issue of the recovery costs, even though the owners chose not to defend either of the claims of the bodies corporate. The key takeaways from these decisions are:

1. when a Request is made which seeks an order as to costs, the Registrar is only permitted to order the body corporate’s costs pursuant to the Magistrates Court Scale of Costs. In other words, gone are the days that a body corporate can seek costs for the amount its lawyers have charged. The costs being claimed must be in line with or as close to the scale costs.

2. accordingly, if the body corporate’s costs are higher than the scale (which in most cases they are as the scale does not include steps such as arrears notices, letters of demand and payment plans etc) then the body corporate can either:

a. absorb the additional higher costs;

b. list the matter for a hearing before a Magistrate (which will result in more costs being incurred, perplexing).

3. the Magistrate considered that a body corporate’s claim for its reasonable recovery costs is an unliquidated debt, which had to be assessed by a Magistrate, in a similar way to damages, to determine what was reasonable in the circumstances;

4. there is provision for higher costs to be ordered however, ultimately it must be assessed by the Magistrate and scrutinised as to:

a. whether the amount is reasonable;

b. whether the solicitor or debt recovery agents charges, more relevantly hourly rates are reasonable.

5. amounts for recovery costs that are not specifically included (namely, pleaded) in a claim and statement of claim (1st proceeding) cannot be claimed in a Request but can be included in further proceedings (2nd proceeding) commenced by a body corporate at a later date.

Particularly, the registry of the Brisbane Magistrates Court has now adopted a new process for processing Requests of this nature. A Registrar will process a Request for a body corporate’s claim for outstanding contributions and interest and make a determination on that portion of the claim.

However, if the body corporate claims over the Magistrates Court scale for recovery costs or the claim includes such items as arrears notices and letter of demand costs that portion of the Claim will be referred to a Magistrate for determination on what is reasonable. Judgment will then be awarded for the contributions, interest and the portion of the recovery costs that are determined to be reasonable.

Our experience with recent requests

The new procedure for processing the requests for default judgment has now been in place for approximately 8 months. To date, each of our clients that have been through this process have been awarded all of their costs in the judgments awarded.

Accordingly, the Magistrates presiding in these matters have determined that the costs the bodies corporate have incurred (and the amounts we have charged) are reasonable in the amount and reasonably incurred. The Magistrates have recognised that the fees we charge are all close to the scale costs allowed by the Court. Similarly, the hourly rates we charge for these matters are well below the amounts allowed by the Court in these decisions.

Grace Lawyers are experts in recovering debts owed to bodies corporate. Our fee structures and approach to these matters is that the body corporate should expect to receive and recover any costs it expends in an undefended recovery proceeding

If you would like assistance in recovering any debts owed to your body corporate, please contact us.

This article was contributed by Jessica Cannon, Partner Grace Lawyers.

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