What happened

Owners Corporation No 1 PS 506584A applied to VCAT for unpaid fees, charges and interest relating to Lot 14 on Plan of Subdivision PS506584A. Sokomoto Pty Ltd was the registered proprietor of the lot by the time of the proceeding. It had purchased the lot from D M Multiboard (Aust) Pty Ltd, with the purchase completed and Sokomoto becoming entitled to possession on 16 September 2007, described in the reasons as “the settlement date” [4].

The owners corporation initially claimed amounts said to have become due both before and after settlement. By the end of the hearing, Sokomoto had paid the post-settlement amounts, leaving only the amounts allegedly due before settlement in dispute [6]. The Tribunal found that the amount of outstanding fees, charges and interest to which the owners corporation was entitled for the pre-settlement period was $7,569.61 [8].

Sokomoto contested whether it was liable for that sum. It had asked for the vendor and the solicitors who acted in its purchase to be joined as interested parties. Sokomoto's stated purpose was to have them bound by the result of its contest, because it might seek reimbursement from the vendor or compensation from the solicitors if held liable and not reimbursed [3, 7]. Neither the vendor nor the solicitors appeared at the hearing [5]. The reasons determined Sokomoto's liability to the owners corporation, not any separate claim against those interested parties.

The Tribunal ordered Sokomoto to pay the owners corporation $7,569.61. The dispute therefore turned on which statutory provision governed liability for amounts that had fallen due before the purchaser became owner.

Why the court decided this way

The owners corporation relied at the hearing on s 28(1) of the Owners Corporations Act 2006. As quoted in the reasons, the provision made the “owners for the time being” and certain other persons liable to pay outstanding fees, charges, contributions or amounts owing to the owners corporation in respect of a lot [9]. The owners corporation's submission was that Sokomoto was liable as the owner for the time being, even though the charges had been imposed before it acquired the lot.

The Tribunal did not use that provision to decide the dispute. It noted that the Owners Corporations Act commenced on 31 December 2007, after the settlement date of 16 September 2007. The Senior Member stated that s 28(1) “could not have and did not have a retrospective operation”. He therefore considered liability by reference to the law in force at settlement. The supplied reasons' numbering resets in this part of the text, so the paragraph number for this passage cannot be reliably identified from the provided extract.

The earlier applicable provision was s 29(9) of the Subdivision Act. The judgment quoted it as providing that the owners for the time being, and specified other persons, were liable for outstanding charges, contributions or amounts owing in respect of each lot. The Senior Member noted that s 29(9) had been inserted into the Subdivision Act and was in force at the settlement date. It was later repealed when the Owners Corporations Act came into operation.

The decisive reasoning was that s 29(9) already provided for liability of the owner for the time being for outstanding amounts in respect of the lot. The Tribunal considered that this rule had applied since s 29(9) was inserted, and concluded that Sokomoto was liable despite not being the owner when the amounts first became due. It then ordered payment of the amount previously found owing, $7,569.61.

The decision does not make the Owners Corporations Act the source of liability for these particular pre-settlement amounts. Its reasoning instead distinguishes the later Act from the earlier provision, and applies the earlier rule because that was the law in force at the relevant settlement date.

Before and after state of the law

As described in the reasons, s 29(9) of the Subdivision Act was in force at the settlement date. The Tribunal read it as placing liability for outstanding amounts on the owner for the time being, including where the amount had become owing before that owner acquired the lot. That reading was the basis for holding Sokomoto liable.

The Owners Corporations Act 2006 commenced on 31 December 2007, after settlement. Section 28(1) contained a provision described by the Tribunal as being in “almost identical terms” to s 29(9) [the judgment's discussion following its quotation of s 28(1) and s 29(9)]. The Tribunal did not apply s 28(1) retrospectively. Instead, it treated the earlier provision as governing the question arising from the 16 September 2007 settlement.

The reasons thus describe continuity in the relevant statutory wording across the change in legislation, while treating the date of the transaction as important to identifying the applicable statute. They do not decide how s 28(1) would apply to transactions or liabilities arising after the Owners Corporations Act commenced. Nor do they set out a general test for retrospectivity beyond the Tribunal's stated conclusion about s 28(1) in this case.

The source extract refers to s 29(9) in the reasons and catchwords that also mention s 29(2). This analysis follows the operative reasons, which quote and rely on s 29(9). The supplied material does not explain that discrepancy.

Key passages with plain-English translation

The Tribunal's quoted s 28(1) refers to the liability of “the owners for the time being” for outstanding amounts in respect of a lot [9]. In plain English, the owners corporation argued that whoever owned the lot at the relevant time could be pursued for the unpaid amounts, even if someone else owned it when the charges fell due. That was the owners corporation's submission, rather than the provision the Tribunal ultimately applied.

The Senior Member's statement that s 28(1) “could not have and did not have a retrospective operation” means the later Act was not used to impose liability for the pre-commencement settlement. The Tribunal looked instead to the law existing on 16 September 2007. The supplied text's numbering resets after the discussion of s 28(1), so the precise paragraph label for this statement is unclear.

The quoted text of s 29(9) says that the owners for the time being and specified other persons “are liable to pay any outstanding charge contribution or amount owing to the body corporate in respect of that lot.” The Tribunal's interpretation was that an amount could remain recoverable from a later owner even if it first became owing before that owner acquired the lot. It applied that interpretation to Sokomoto and the $7,569.61 found owing.

The final reasoning says: “For that reason I determine that Sokomoto is liable to pay the sum of $7,569.61.” In plain English, the Tribunal considered the earlier statutory wording sufficient to establish liability, and made an order for the exact amount it had already found owing. This was a determination of liability to the owners corporation; it did not resolve the possible reimbursement or compensation issues Sokomoto had raised in relation to the vendor or solicitors.

What fact patterns trigger this precedent

The decision is relevant, on its facts, where an owners corporation claims unpaid amounts connected with a lot, the amounts fell due before the current owner acquired the lot, and the applicable statutory text contains a provision like the one the Tribunal applied. The critical sequence here was: fees and charges became due; Sokomoto later completed its purchase; and settlement occurred while s 29(9) of the Subdivision Act was in force.

The statutory timing was also central. Settlement preceded the commencement of the Owners Corporations Act 2006. The Tribunal therefore rejected reliance on that Act as a retrospective source of liability and considered the earlier provision instead. The judgment illustrates why the date relevant to ownership and the commencement dates of the statutes may matter when analysing similar claims.

The decision does not establish, on the material provided, that every later owner is liable for every historical owners corporation debt in all circumstances. Its holding arose from the wording of s 29(9), the Tribunal's account of its operation, the settlement date, and the finding that $7,569.61 was owing in respect of this particular lot. A different statutory provision or different relevant dates could raise a different question.

The judgment also records a purchaser's possible concern about purchase adjustments and recovery from a vendor or solicitors. Those matters explain why Sokomoto sought joinder, but the Tribunal's final order addresses only the owners corporation's claim against Sokomoto.

How later courts have treated it

The supplied judgment contains no later judicial treatment of this decision, and no later cases or citations have been provided. It is therefore not possible from this source alone to say whether later courts or tribunals followed, distinguished, explained, or otherwise treated the decision.

The judgment itself does not refer to earlier cases. Its stated reasoning rests on the two statutory provisions it quotes and compares: s 28(1) of the Owners Corporations Act 2006 and s 29(9) of the Subdivision Act. The case's treatment in subsequent authorities would require sources beyond the material supplied here.

Still-open questions

The reasons resolve whether Sokomoto was liable to the owners corporation for the amount found owing. They do not determine Sokomoto's suggested claim for reimbursement from the vendor, or possible compensation from the solicitors. The interested parties did not appear, and the order contains no determination against either of them.

The decision also does not examine in detail how an unpaid amount should be reflected in settlement adjustments, or whether the purchase documents allocated responsibility between Sokomoto and the vendor. Those subjects arose in Sokomoto's explanation for seeking joinder, but the reasons do not set out findings or a ruling on them.

Finally, the judgment does not address the operation of s 28(1) for a transfer or liability arising after 31 December 2007. Its conclusion is limited to the pre-commencement facts before it and its interpretation of the earlier s 29(9). Any broader application would require the relevant statutory text and facts to be checked.

This is general legal information, not legal advice. Zoe can make mistakes. Before acting on this, relying on it, or using any draft, have it checked by a qualified Australian lawyer.