Where Do Unpaid OC Levies Get Recovered Now? The Magistrates’ Court is No Longer the Answer

For many years, owners corporations in Victoria regularly recovered unpaid levies through the Magistrates’ Court. It was a familiar and accessible forum, and many managers and committees assumed it was the appropriate place to start proceedings when a lot owner fell behind on fees.

That assumption is no longer correct. A series of decisions handed down by the Magistrates’ Court in 2024 and 2025 has confirmed that the Court does not have jurisdiction to hear levy recovery claims brought by owners corporations against lot owners under the Owners Corporations Act 2006 (Vic) (OC Act). Those claims must now be brought exclusively in VCAT.

For owners corporations, committees and managers still relying on the old approach, this is an important change. Filing in the wrong forum can be costly and cause significant delays.

How the Issue Arose

The jurisdiction question comes from two parts of the OC Act that appear to point in different directions.

Section 30(1) of the OC Act states that an owners corporation may recover money owed to it as a debt in any court of competent jurisdiction. On its face, this appeared to allow levy recovery proceedings to be brought in the Magistrates’ Court.

However, section 30(2) places limits on that general power. It provides that the recovery of money owed by a lot owner is subject to compliance with sections 31 and 32 of the OC Act, as well as Division 1 of Part 11. Division 1 of Part 11 is titled ‘Applications to VCAT’ and sets out the process for bringing owners corporation disputes before the Tribunal.

Importantly, section 32(2)(c) requires a final fee notice to state that the owners corporation intends to take action ‘under Part 11’, meaning action through VCAT.

The key question was whether these provisions meant VCAT had exclusive jurisdiction over levy recovery claims, or whether the Magistrates’ Court could still hear them as well.

The Decisions

The issue was first considered directly in Owners Corporation v Buckley [2024] VMC 12. Magistrate Greenway found that the Magistrates’ Court does not have jurisdiction to hear levy recovery claims brought under sections 31 and 32 of the OC Act.

The decision was significant because owners corporations had long relied on the broad wording of section 30(1). However, the Court found that where the debt is owed by a lot owner, the more specific requirements in sections 31 and 32 and Division 1 of Part 11 of the OC Act apply. Those provisions direct parties to VCAT.

The issue arose again in Owners Corporation v Nguyen & Ors, decided on 8 July 2025. In that case, an owners corporation sought to recover more than $25,000 in unpaid fees from two (2) lot owners through the Magistrates’ Court. The Court again found that it did not have jurisdiction and confirmed that VCAT is the correct and exclusive forum for levy recovery claims.

Subsequent decisions have followed the same reasoning. The position is now settled: levy recovery claims against lot owners under the OC Act must be brought in VCAT, not the Magistrates’ Court.

What This Means in Practice

Starting proceedings in the wrong forum can have serious consequences. An owners corporation that files a levy recovery claim in the Magistrates’ Court risks:

• having the claim dismissed because the Court has no jurisdiction;
• losing legal costs that cannot be recovered;
• delays while proceedings are recommenced in the correct forum; and
• in some cases, being ordered to pay the other party’s costs.

These are not hypothetical risks. They are the direct result of commencing proceedings in a forum that the Court has confirmed cannot hear these claims.

The Prescribed Fee Notice Requirement

Jurisdiction is not the only procedural issue owners corporations need to be aware of.

Since April 2025, owners corporations and their managers have been required to use the updated prescribed fee notices issued by Consumer Affairs Victoria when pursuing unpaid levies. Using an outdated or incorrect notice is not simply an administrative error - claims have already been struck out for that reason.

The process under sections 31 and 32 of the OC Act requires a specific sequence of notices:

• a fee notice;
• a reminder notice once the amount becomes overdue; and
• a final fee notice before proceedings can commence.

Each step must be completed correctly and in the proper order. Errors at any stage may affect the validity of the claim.

Importantly, if the final fee notice does not correctly state that proceedings will be commenced under Part 11 of the OC Act, the basis for any later VCAT application may be challenged.

The Resolution Question

Another issue that remains unresolved is the type of resolution required before legal proceedings can be commenced.

Section 18 of the OC Act provides that where a matter falls within the civil jurisdictional limit of the Magistrates’ Court, an owners corporation may commence legal proceedings authorised by an ordinary resolution. For claims exceeding that limit, or for other proceedings, a special resolution is required.

Because levy recovery claims are now brought exclusively in VCAT rather than the Magistrates’ Court, there is uncertainty about which type of resolution is required to authorise those proceedings.

Until there is clear guidance, the safest approach is to obtain a special resolution before commencing proceedings unless the claim clearly falls within the circumstances where an ordinary resolution is sufficient. Getting this wrong may create another basis on which a claim can be challenged.

What Owners Corporations and Managers Should Do Now

These decisions require owners corporations and managers to adjust their levy recovery practices. In particular:

• all new levy recovery claims against lot owners should be filed in VCAT, not the Magistrates’ Court;
• the updated Consumer Affairs Victoria prescribed fee notices should be used, and current templates should be checked to ensure they reflect the April 2025 versions;
• the notice process required by sections 31 and 32 must be followed carefully before any VCAT application is lodged; and
• consideration should be given to whether an ordinary or special resolution is required before proceedings are commenced.

Any matters already filed in the Magistrates’ Court that have not yet been determined should be reviewed urgently to assess whether they may be vulnerable to dismissal.

A Procedural Shift With Real Consequences

The jurisdictional change confirmed by these decisions may seem technical, but its practical impact is significant.

An owners corporation that files in the wrong forum will not simply be redirected. It may lose time, incur unnecessary costs, and face complications that arise while proceedings are restarted.

For lot owners facing levy recovery action, the change is equally important. Knowing that proceedings must be brought in VCAT, and that strict procedural requirements must be followed before an application can be made, provides a basis for carefully examining whether a claim has been properly prepared.

Levy recovery has always required close attention to procedure. These decisions have made the consequences of getting that procedure wrong much more serious.