Brell quits top SCA roles as Netstrata saga rolls on

I would suggest that the SCA may be incapable of cleaning up its act so the need for an independent review of the sector has never been more important than now.  A necessary outcome would be the development of a balanced Strata Management Contract perhaps with annual reporting of KPI’s.  The number of Strata that individual Managers are required to manage by the larger corporates guarantees that a reasonable level of service is most likely impossible.

The Consolidation of the industry appears to be driven by maximising the returns to shareholders rather than servicing the client (Even in meeting the terms of the SCA contract ,which is not a high bar for the providers)

Consideration could also be given to a model where the Strata owns the licence for a management platform and so retains all its records for a seamless transfer to another management agency.   At this time the lack of portability in changing Strata Managers is used as an anchor to retain clients.  The Building Management sector now has the option for Strata to own the licence and delegate to the contracted building manager.  Perhaps the time has come that all the reasons as to why this cannot be done for Strata Management need to be solved rather than being used as an excuse.

I expect any independent review will need to employ more staff than anticipated to deal with all the submissions from Flat Chat, Owners Corporation Network and the many Strata that have been disadvantaged by the SCA model over many years.

Perhaps the time has come for the Government to fund the Owners Corporation Network via the Strata Commission? so it is not dependent on funding from commercial organisations with vested interest.  The Tenants Union receives funding from the Government so it can be done for a not for profit organisation.

Regards Stephen.

• This reply was modified 4 months, 1 week ago by .

I would like to understand this…

According to the ACCC website:

• When businesses communicate and cooperate, they risk damaging competition and breaking the law.
• Businesses that want to join together to negotiate with a supplier or customer through collective bargaining first need permission. This is known as an exemption.
• It’s not illegal to have market power. However, businesses must not misuse this power to stop other businesses competing on their merits.
• When the misuse of market power substantially lessens competition, it is illegal.
• A business risks breaching competition law when it engages in exclusive dealing by restricting how its customers or suppliers do business.

In the case of Netstrata and the building I live in, which you are familiar with, Jimmy,  it seems that there is certainly communication and cooperation between them and the developer, and possibly with the supplier of the Embedded Energy system. The question is whether that leads to a misuse of market power.

However, when I think back to the FAGM and the way that the motions were put to the owners, most of us being newbies to strata, my recollection is that there was no critical comment from the newly appointed strata managers as to the alternatives, if any. If that had been a presentation to potential uninformed investors into a public company, there would have had to be a risk disclosure to ensure that investors were suitably educated, I believe.

The question that follows this is, given that embedded network agreements provide benefits to developers while committing the downstream owners to paying for the equipment that is provided to the developer in order for the building to meet BASIX requirements and/or to be certified, shouldn’t the strata manager – Netstrata – inform the unit owners of this.

After all, minutes before at the FAGM, the owners voted to appoint Netstrata as the strata manager, and in doing so, Netstrata took on the role of a fiduciary with the relevant duty of care.

Interested to hear some views on this. It seems to me that it is the FAGM that is the nexus point for behaviours that put owners at a disadvantage. What do other strata management companies do in these circumstances? What is best practice?

Further to Colombo’s post

When we moved into our new building 12 years ago, (residential and commercial) the conditions of a BMC – Building Management Committee were not fully explained by Netstrata.  In spite of a meeting with Steven Brell and 3 lot owners to seek an explanation of a management fee hidden under the title of community funds in the BMC financial report.

We later learned that the management contract proposed by Netstrata at the first AGM did not reveal the contractual agreement that Netstrata had signed with the developer for 5 years in respect of the BMC. Being “innocents” the ramifications of this situation was not apparent until much later.

At that stage Netstrata’s action was considered lawful as the formation of a BMC in a multiple strata scheme required that a strata manager must be appointed.

In spite of the lengthy review of the strata act 2015/17 this aspect of the BMC has never been addressed and I have a friend who lives in a building that has a BMC with management rights contracted to Netstrata for 7 years as well as embedded contracts for electricity and communications.

Is anyone aware of any action on the part of the government to address this situation?

Watch out for their senior managers too.  The rot doesn’t stop at Brell.  Especially the ones like [name redacted] who feign innocence and jump ship to  [another strata company].

This post has been edited because it named an individual and the company to which they moved, both of which are against our policies. The general point, however, is valid.  Brell can be named in this context because  he is a public figure and what he has said and done is a matter of public record. – JT