Victoria: A shambolic state of strata chaos

How bad are things in Victorian strata? As you will read in this article, the removal of flammable cladding is revealing building structures that are rotting from the inside out.

Why is this happening? Possibly because professional strata managers and strata committees are conspiring to keep owners in the dark even when the law says they must have meetings and must provide their records for all owners to see.

Ordinary owners have no right to attend strata committee meetings in Victoria, the tribunal (VCAT), can’t or won’t enforce strata law and the mediation services decline to address serious issues because they are swamped by post-covid complaints from or about renters.

In short, Victorian strata is where NSW was 20 years ago, including a sense that strata owners won’t complain too loudly in case it affects the values of their homes and journalists won’t write about strata because it’s either too complicated or they think (with some justification) that no one outside of strata cares.

But the culture can be changed and it could all start here with an open letter to Premier Daniel Andrews, the Minister for Consumer Affairs, Gaming and Liquor Regulation Melissa Horne and the Director of Consumer Affairs Victoria Nicole Rich, from three strata residents who’ve had enough of being cheated, lied to, ripped off and dismissed by the people who should be helping them.

Dear Premier Andrews, Minister Horne, and Ms Rich,

We, like 1.6 million Victorians, live in a strata property. Community living is supposed to be easier, more convenient, and sustainable, but for us it’s been hell. Partially because of the issues at our heritage property of over fifty lots, but mostly because once we identified and attempted to rectify them, it became painfully apparent to us that the Owners Corporations Act 2006 (OC Act) is defective and practically unworkable.

It can’t be readily enforced by those it is designed to protect and the institutions, bodies and government departments with oversight or jurisdiction over it aren’t actually doing their job. In fact, we are being prevented from being able to undertake any form of self-help in line with the Act or its spirit.

This is particularly concerning as the strata sector contributes approximately one billion dollars annually to the Victorian economy, that’s a significant figure. So, what are strata owners/residents getting for it? Not much.

Strata Communities Australia (SCA) is the peak body representing the commercial interests of strata managers, it is funded largely by the banking, insurance, and legal sectors. On 27 October 2022, its Victorian chapter released its policy recommendations ahead of this month’s state election. In respect of issues impacting the lives of one quarter of all Victorians, SCA Victoria proposed the establishment of a ‘strata helpline’; a general telephone service costed at 1.52 million (taxpayer) dollars. We don’t believe this will fix any of the problems, it will just cost taxpayers money.

Sadly, this seeming repudiation of any responsibility from strata managers closely aligns with our personal experience. Professional strata managers in Victoria are unwilling or unable to advise and assist owners of strata properties on the important issues affecting them – the roofs over their heads, the walls around them and the various communal areas/amenities that they share daily and pay for, but where the boundaries of ownerships and responsibility are always murky. This must change. 

We believe professional strata managers should assist their clients with strata issues and that Consumer Affairs Victoria should proactively and reactively enforce the OC Act so that OCs and managers are operating and behaving lawfully. Currently ours isn’t. Far from it.

Victorian consumers and strata property owners are at risk when the OC Act is not enforced. Our experience is that it’s being treated (by owners corporations, strata managers and even Consumer Affairs Victoria) as a guide and not as the law. 

Owners have a right to inspect the OC records, but nobody will assure your rights if your OC manager refuses to hand over all records, including all email correspondence and insurance documents. Plus, it can be near impossible to even discover what the OC committee and manager are doing in your name with your OC fees as they apparently have the absolute discretion whether to even circulate committee meeting minutes.

Our repeated experience over the last year with Consumer Affairs Victoria not enforcing the OC Act has affected us personally; beyond financial impacts there are health and safety repercussions when living in apartments with sub-standard (or in our case almost non-existent) maintenance including pest infestations, damp and black mould so voracious it penetrates cupboards, clothes and furniture.

All these issues are highly policed in rental properties, but as an owner, you’re at the mercy of the OC committee and your strata manager in dealing with these issues. And ignoring or downplaying them seems to be the standard response.

When we purchased our apartments, our owners corporation certificates referred to a 15 year maintenance plan being ‘in place’ and a maintenance fund being operative with significant funds held. The reality is that there was never an approved maintenance plan and no statutory maintenance fund.

When we found out that our former strata manager was being paid to manage our site while deregistered, Consumer Affairs Victoria (who we pay to manage and oversee strata manger’s registrations) did nothing more than acknowledge our concerns. That manager is part of a franchise operating one of the largest owners corporation management services in the state.

Further, when we questioned why our manager and Consumer Affairs Victoria had not advised our OC of this deregistration, we were told that it is our responsibility to search the register. But we only came across this information by chance. When we search the register using the name of our former manager, the record showing the deregistration does not even appear. It only appears if you know the corresponding registration number that’s been deregistered and by hiding this from the results of a name search, it’s easy for Victorian consumers to be misled. 

We direct the Premier, Minister, and Consumer Affairs Victoria to section 193 of the OC Act.  It states one direct purpose of the register is ‘to provide the Director and Business Licensing Authority with information in relation to owners corporations managed by a registered manager to enable them to contact the owners corporations in relation to the activities of the manager’.

We urge Consumer Affairs Victoria (1) to ensure owners corporations are directly advised if/when their manager is deregistered, (2) to now advise all other OCs that were managed by our former manager during the period it was deregistered, and (3) to take action against our former manager for operating while deregistered.

On 28 March 2022, we made a complaint to Ms Rich pursuant to section 160 of the OC Act and begged for a referral to a Consumer Affairs Victoria officer to mediate the myriad of issues then being experienced by our OC.

This included record keeping and access issues, financial anomalies and discrepancies from as early as 2015, failures of maintenance, potential damp and water penetration issues, and a failure to follow professional advice regarding both structural issues and health and safety matters such as asbestos management. In a telephone response, an Enquiries Officer requested more information. On 23 May 2022 we responded with a complete package of documents and claims detailing issues of concern and how we say the OC Act is being breached.

Two months later, all this led to was another phone call, this time from an Escalations Officer who simply advised us to address our serious concerns to the Dispute Settlement Centre of Victoria (DSCV) and/or the Victorian Civil and Administrative Tribunal (VCAT).

The DSCV has ‘temporarily [since at least January 2022] closed its general service to focus on assisting renters and rental providers to resolve disputes listed for consideration by VCAT’. So, we applied to VCAT for an urgent injunction. On 1 September 2022 when we advised Consumer Affairs Victoria of this, we were again directed back to DSCV with specific assurance that ‘the DSCV is able to mediate disputes between owners corporation members and managers’.

Clearly, neither VCAT or DSCV have the current capacity to assist us or any struggling owners, and we’ve found that Consumer Affairs Victoria seem to have little idea how to actually help, or little interest in intervening to resolve strata issues. The Andrews Government has taken the active decision to deny strata owners access to these taxpayer funded dispute resolution processes in favour of renters. We can’t understand why our taxpayer funds are unable to be managed effectively to help everyone in need in this sector.  

Ms Rich, you also dismissed our very serious concerns, and flatly rejected our invitation to meet with you to discuss them. In short, we were told in an endorsed letter that ‘CAV does not have the power to intervene’ and to take the issues up with VCAT. Our reading of the Act is different, and we seek a response to our complaint with reference to section 161(3) of the OC Act and again repeat our invitation for you, Ms Rich, and Consumer Affairs Victoria to join our VCAT proceeding as the OC Act allows.

Confidence in strata management in Victoria necessitates good record keeping and the provision of access to those records. The OC Act provides that owners corporation members can access their records free of charge, but OC Managers are acting unfairly, and this law is not being upheld.

We’ve provided Consumer Affairs Victoria with proof of offending under the OC Act in respect of the transfer of records by our former manager and access to our records by our current manager. Consumer Affairs Victoria has not facilitated access to our records. We’re now pursuing access through VCAT.

Our first hurdle was an order from the Tribunal saying that we can’t join a manager to a proceeding if it is in relation to accessing our records, even though the manager is the gatekeeper to these records; so, the alternative is for us to pay for a summons to be issued and then pay for compliance with the summons by the date of our next directions hearing which is scheduled for April 2023 – all to access our records, held on our behalf, at our cost, by our manager!

Another law not being enforced by Consumer Affairs Victoria is that an OC must hold its Annual General Meeting (AGM) within 15 months of the last. Our OC hasn’t held an AGM since March 2021 – how much clearer can a breach be? 

Things are dire. Under our former manager no audits of our financial statements occurred in breach of the OC Act, and this is inherently concerning. Our OC is currently operating without a budget. No budget has been struck since March 2021 and that budget expired in September 2021 – it’s almost 2023. We are being levied and paying fees that have not been set by our OC. There is no tangible oversight of expenditure, and on 23 September 2022 our current Chair advised committee members that the committee is operating in ‘caretaker mode’ – whatever that means in an OC context!

We need help. We need intervention. And we need it now, not in April 2023, or even later whenever VCAT is able to hold a full hearing and make binding decisions that may help us to address the issues on site and with our former and current managers. 

Premier Andrews, Minister Horne, and Ms Rich, what are you going to do to make sure that our horrific experience isn’t also that of the other twenty-five per cent of Victorians whose living situation is subject to this clearly deficient legislation and its woeful enforcement?

If other Victorians living in strata are facing issues like us, please reach out to strataissuesvic@gmail.com – there’s strength in numbers.