Podcast: Vic, the state of strata chaos

It seems as if every time we look away from Victoria, some thing new and awful happens in that state’s strata system goes seriously wrong.

If it wasn’t the best buildings in Melbourne being handed over wholesale to Airbnb, with no meaningful restrictions, it was the cladding fires, then the cladding remediations revealing buildings that were rotting from the inside and now we have the Aurora shambles.

This week in the Flat Chat Wrap, we pick the bones out of the fiasco surrounding Melbourne’s third-highest apartment block and wonder what, if anything, the state government is going to do about its crumbling strata and tribunal system.

And on a brighter note, Sue has discovered a Melbourne-based initiative to recycle glass as fire-proof cladding. That’s all in this week’s Flat Chat Wrap.

Transcript in full

Jimmy  00:00

Good morning…Well, it’s afternoon where you are.

Sue  00:03

It is, yes. Good afternoon.

Jimmy  00:05

It’s morning here in Hanoi. I’m slowly making my way back to Australia; just stopping over for a couple of days here. It’s interesting; it’s good to be back in Vietnam.

Sue  00:18

I think you’ve had a lot of trouble, haven’t you? Flight delays and strikes in Paris. You’ve kind of encountered every issue you could possibly encounter, on your trip home.

Jimmy  00:30

Oh, no! Poor you! So you couldn’t get to your hotel from the airport? And then, just when I thought that’s it; it can’t get any worse (which is a dangerous thought to ever have about anything), I get to the airport yesterday and arrive in Hanoi… Everything’s fine and I’m waiting and waiting and waiting for the driver that’s been sent to pick me up, thinking it’s really unusual for them to turn up late. It turned out, he’d turned up too early and sat his car outside for too long, and they’d put a wheel clamp on his car. Well, after 20 hours solid of flying, and two weeks of frustration and disappointment, I let rip at this poor guy, who doesn’t understand a word I’m saying and uses the voice translation app on his phone, to try and convert Scottish/Australian fury into words, so he can understand. It was quite funny.

Sue  01:39

Oh, no. So did he get his car back in the end?

Jimmy  01:42

He got his mate to come and pick me up, which was nice.

Sue  01:46

How enterprising.

Jimmy  01:48

Talking about enterprising; today, we’re going to talk about a new way of creating cladding for buildings. And before that, we’re going to talk about (at some length), this building in Melbourne, which just seems to be lurching from one disaster to another. I’m talking about the Aurora.

Sue  02:08

Oh, right. That’s one of the big buildings in Melbourne, isn’t it?

Jimmy  02:11

It’s the third-tallest residential building and it has 1002 apartments. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue  02:22

And I’m Sue Williams and I write about property for Domain.

Jimmy  02:25

And this is the Flat Chat Wrap.

Sue  02:41

So what’s happening at the Aurora?

Jimmy  02:42

It’s hard to tell, because they’ve had a big meeting and as far as I know, they still haven’t counted the votes. But basically, you’ve got a huge building and you’ve got somebody who got themselves elected chair of the committee a couple of years ago (people are saying, using a lot of proxy votes, because the limit of 5% of proxy votes per owner, only came in in Victoria, either last year or the year before)… They’re still living with committees that have been dominated by individuals in some cases. In the case of the Aurora, they had one person who basically dominated the whole building. That’s not necessarily a bad thing in itself; it’s not great for democracy, but it led to quite a few problems there and more to the point, an inability to deal with them. They had a big meeting a couple of weeks ago, at which 200 people turned up on Zoom, to sack the committee and elect a new one. And apparently, the voting was 199 in favour and one vote against. They’re saying that 200 people attending a strata general meeting in Victoria is a record. I’d probably think that’s a record for the whole of Australia actually, to get 200 people in one meeting. But even so, there’s no guarantee that they’ve got this over the line, because if the chairs’ committee members all vote in her favour with their maximum allocation of proxies, then the motion would be overthrown. But the most obvious sign of the problem has been that the chair has sacked two different building management companies and installed somebody, who she obviously prefers, into the job of building manager. Somebody who apparently, is a former Olympic swimmer, but he’s a 70 year-old bloke, earning quite a lot of money, to be building manager and people are saying he’s not a building management company… He doesn’t have any experience at all. There’s been video circulating of him, taking packages; you know, Amazon delivery packages and things like that, from behind the manager’s desk at the front of the building, and putting them outside in the rain. Like, throwing out people’s packages, because they didn’t want to store people’s packages behind the management desk.

Sue  05:34

Oh my god, it sounds awful!

Jimmy  05:36

It gets worse… They’d been imposing fines for people who were collecting their Uber Eats and other food deliveries from the foyer. They were being issued with a $50 fine for breaking some bylaw, or something. All these arbitrary fines and penalties going up everywhere. Somebody got locked out of their flat for three days, because they cancelled the keys; they suspected that they were running an illicit Airbnb operation. They couldn’t get into their flat for three days.

Sue  06:15

Wow, that’s awful!

Jimmy  06:17

Yes,  I mean, part of the problem with reporting this kind of thing is the woman concerned is (let’s just say, she has a large support among overseas investors and she musters her troops using WeChat). Other people just don’t have access to the communications that are going out. Basically, people are being put under pressure (it has been alleged), to support her. Other people just support her because it’s the most natural thing for them to do. They’ve got three cases at the Fair Work Commission, of people who have been summarily dismissed, with her own friends put in place. That’s an allegation (I don’t know if that’s provable.) But we do know that there are three cases at the Fair Work Commission and there are two cases at VCAT, the Victorian Tribunal. That’s a whole other set of problems, because it’s in complete disarray. We might talk about that later… It’s just been alleged, the building management company concerned (that were sacked), have discovered that the meetings at which it was decided to sack them, were not quarried and so the decision was ineffective. The building now effectively, has three building management companies running it.

Sue  07:49

And presumably, they all expect to be paid?

Jimmy  07:51

I think they are all trying to manage the building, plus this 70-year old Australian swimmer (I think he’s in the shot put as well, judging by the way he gets rid of packages from the foyer)…

Sue  08:09

Oh, look, it just shows I suppose, when things start to go wrong, they can just go horrendously wrong when buildings are big, and the legislation is woefully inadequate.

Jimmy  08:21

And the building; they don’t get much bigger than that. So this is still got to be played out. And it could quite possibly be, that the default that was taken the other day, could consolidate the chairs’ position and  they have to deal with that. But the residents, they’re facing huge legal bills. First of all, they’re going to have to find some way of paying out the previous managers, if a tribunal decides that. Then, they’ve got the cost of legal defence, because they are going to defend any cases that are taken against them. All this money mounting up, for no reason. They’re just having to pay ten’s of thousands of dollars, for no reasonable outcome. It’s just crazy. The problem is (despite what anybody in Victoria tells you), the Victorian system is absolutely screwed. It is just not built for the kind of buildings they have in Victoria at the moment. We’ll talk about that later on.

Sue  09:33

Sure. It’s difficult isn’t it, really? I mean, I suppose in New South Wales, we think we are ahead of the eight-ball, don’t we? But there are issues in New South Wales as well, and there are issues in Victoria… Issues in Queensland and Northern Territory, too.

Jimmy  09:48

But I feel like in New South Wales, we’ve been through all this stuff, and we’ve hammered it out and we’ve found ways of dealing with it. It’s not perfect, by any manner of means, but at least we have structures in place. Had this happened in New South Wales, there would already have been a compulsory manager put in place, because our Tribunal has the power. When any kind of case comes before them, it is in their Act that they are allowed to look at the situation and go “well, this is one small issue, but it’s obviously indicative of something seriously wrong in the building.” The Tribunal (without anybody applying for it), can put in a compulsory manager to sort things out. I don’t know if they have that capacity in Victoria, but it’s not effective, if the Tribunal can’t even meet. I was told just the other week, that the Tribunal in Victoria is now issuing hearing dates for 2025.

Sue  11:02

Oh my goodness! It’s not even 2024? Wow!  So people are having to have their lives on hold, presumably, while they’re waiting for judgments in certain cases.

Jimmy  11:15

Okay. Well, we’ll pick that up and see exactly what the problems are in Victoria, after this.

Sue  11:27

Jimmy, what do you see as the fundamental problems in Victoria, with strata?

Jimmy  11:32

Okay, the way the system is built is, it’s kind of built on the old ‘grace and favour’ system of the past. You know, where they kind of trusted people to get along nicely with each other. It’s certainly not designed for buildings that have more than a thousand units in them. I think one of the fundamentals in Victoria is, owners do not have the right to attend strata committee meetings.

Sue  12:00

Wow! Not even to observe?

Jimmy  12:02

Not even to observe. As you know, in New South Wales, any owner can turn up at a strata committee meeting. They have the right to turn up. They don’t have the right to speak, but they do have the right to observe and see what’s going on and hear what decisions are being made. In Queensland, that same right applies, with the proviso that you have to tell the Secretary that you plan to attend. In Victoria, you have to be invited to attend by the Secretary, which is basically a veto. You can say to the Secretary “I want to attend this meeting.” The Secretary can just say “well, that’s not practical. No, you can’t come.” Obviously, there’s a level of transparency there, that doesn’t exist. Committees can make decisions without any comeback from the owners, while the decisions are being made, because nobody knows what those decisions are, if they choose not to have a full accounting of the decisions in their minutes.

Sue  13:13

Everywhere, you’ve got the right to see the people who are governing your life, whether in politics, or with this fourth-tier of government in apartments; you’ve got the right to see what’s being decided and by whom, and why.

Jimmy  13:26

Yes. So that completely undermines any notion of owners having control of their own buildings, because then they elect these people. I mean, the whole thing is so wooly. They changed the law; it used to be that they could have a maximum of twelve people on their strata committees and they decided this was unwieldy. So they changed the law to say you can only have seven people on your committee, except if you decide to have twelve. They changed the law, but didn’t really; it just made it that you had to decide to have more than the statutory seven. I mean, it’s all that kind of wooliness… Quite obviously, the people who are writing strata law in Victoria have never lived in apartment buildings and have never been on strata committees, because they’re designing their laws on some sort of utopian idea, that everybody’s going to get along well with each other and then when they don’t, the law just falls apart. One of the things in Victoria with the Tribunal, is that they’re dealing with the post-COVID effect of rental disputes. The reports say that they are completely consumed with dealing with disputes between landlords and renters. They should be dealing with that stuff; that’s important stuff… The Tribunal system in Victoria is so inadequate, that all it takes is one major problem and everything gets thrown out the window, as evidenced by the fact that they’re now issuing hearing dates for 2025. It’s ridiculous, just absolutely ridiculous. And no sign of any relief (as you pointed out), for people. They’re just having to wait and wait and wait, to get any kind of result.

Sue  15:34

It sounds like a real crisis, doesn’t it? I wonder if the Victorian Government are thinking of stepping in at any point?

Jimmy  15:39

Well, you know how governments work in these things… To step in and fix things would be an admission that they’ve got it wrong and governments do not like admitting that they got things wrong. But this is quite clearly at their door. The reports we’re getting on Flat Chat; people are just riding roughshod over strata law in Victoria, because they know that nobody can do anything. People have been writing to us about a building, where the strata committee is clearly dysfunctional. They’re not repairing their building; the building is falling down, but the people on the committee are not repairing the building, and they’re not letting other owners know that the building is in disrepair. Because presumably, at some point, they want to sell out and make a maximum profit. The owners who do want to repair the building; who do want to do the right thing, have been demanding an AGM for the last two years. And the current committee has sent out a message to owners, saying ‘we’ve decided not to have an AGM, because we fear it’s going to be hijacked by people who want to disrupt things and elect a new committee.’ So the reasoning for not holding the AGM (that they should have held two years ago), is that they might lose at the election. It sounds like a dictatorship. And again, the people in this building, they’ve gone to the Premier, they’ve gone to the Minister for Fair Trading… They’ve gone to the media in Victoria and nobody’s interested. They’re getting zero response; they’re not even getting a reply to their letters. It’s like the bad old days here in New South Wales. Remember when nobody was writing about strata (which left the field wide open for us, it has to be said)? It’s the same in Victoria. Until this story about the Aurora came up, nobody was writing about strata, because they didn’t understand it and they don’t care. Well, maybe the Aurora thing will change that.

Sue  15:59

Oh, let’s hope so. I mean, you always hope that some good comes out of such bad stories, really.

Jimmy  18:00

Absolutely. But you have a good story for us… We’ll talk about a good cladding story, after this. And we’re back… Sue, a good cladding story; how could that possibly be the case?

Sue  18:20

Yes, and this is coming out of Melbourne, as well. As we know, we’ve had so many problems with flammable cladding on apartment buildings, and much of the cladding has been taken off and replaced. Some of the cladding is still there, and people worry about what to do with it and the price and the cost. But there is a new cladding material that’s just coming onto the market now, and that’s just been discovered. It’s just been invented by RMIT. University. It’s a new fire-safe cladding and it uses recycled glass.

Jimmy  18:51

Oh right!

Sue  18:54

They comprise 83% recycled glass. It was developed by RMIT, in conjunction with materials technology company, Live Field. Materials are cheap, and they’re robust and they’re fire-resistant. That provides a really good alternative for a lot of buildings, which are looking at stripping off their flammable cladding, and looking for something good and environmentally sustainable to put back on. But the good thing about this is that there’s so much glass used around the world, and so much is put into recycling. It’s great to find a use for so much of that glass and so hopefully, with the development of this material, glass can be used a lot more than other materials as well, for people that are looking to replace more expensive, or less sustainable technology.

Jimmy  19:46

I mean, I don’t know what the situation with glass recycling is, but you know, when you read these stories about warehouses full of allegedly recycled plastics, that nobody can actually do anything with, because we don’t have the systems in place…. I wonder if there’s a great bottle bank somewhere, that’s looking for uses for their bottles? I’ll tell you what the coming crisis is, that no one has spotted yet… This is it; you’re hearing it for the first time… These fibre reusable shopping bags you get when you buy something these days. They’ve got to be building up there. Somebody’s going to be saying soon “we’ve got  this landfill full of hessian bags.”

Sue  20:36

Well, hopefully that’s very recyclable, isn’t it?

Jimmy  20:40

I don’t know.

Sue  20:42

But then we always thought plastic could be recycled into lots of other things and we don’t seem to be doing so well with that, really.

Jimmy  20:51

Maybe, buildings covered with hessian bags will be a thing of the future. And on that note, Sue, I think it’s time to bring another international version of the Flat Chat Wrap to a close. It’s been interesting doing this. I hope the sound quality’s been okay for our listeners.

Sue  21:12

You’ll be back in Australia for next week, won’t you?

Jimmy  21:16

Well, I will, if the car turns up and the plane turns up and I don’t get another cancellation… I will be back!

Sue  21:26

Excellent, I’m glad to hear it. I look forward to seeing you!

Jimmy  21:29

Thanks for taking part at the other end of this conversation. And thank you all for listening. Talk to you again next week.Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website flatchat.com.au. And if you haven’t already done so, you can subscribe to this podcast completely free, on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favourite pod catcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week, without even trying. Thanks again. Talk to you again next week.