A shocking case of alleged abuse of power by a prominent strata management firm has come to light, sparking a landmark lawsuit that could have far-reaching implications.
'A Tale of Misleading Conduct'
In a bold move, apartment owners from some of Victoria's most iconic high-rises are taking on one of the state's largest strata management companies, Bluestone OCM. The lawsuit, led by Wilbur Tong, is a response to what they claim is a systematic campaign of overcharging and aggressive debt recovery tactics.
The legal action, set to be filed in the Supreme Court of Victoria, accuses Bluestone of misleading conduct, unconscionable behavior, and violating the Owners Corporations Act. It's a battle that aims to shed light on a widespread lack of transparency and potentially unlawful practices within the strata management industry.
'The Complex Web of Financial Reporting'
Tong's family, owners of an apartment in the 47-storey Marina Tower in Docklands, found themselves in a financial quagmire during the COVID-19 pandemic. After damage caused by a tenant left their unit vacant for 18 months, they faced a challenging situation. Despite personally investing $25,000 in repairs and catching up on mortgage payments, the family temporarily fell behind on owners corporation levies.
Between 2022 and 2024, Tong's family paid $24,000 in levies to get back on track. However, they allege that Bluestone continued to pursue them for an overstated debt of $8,000. The writ states that in November 2024, the family was issued a statement declaring they owed over $13,400, a figure Tong disputes, claiming no levies were outstanding at the time.
Upon examining the financial statements, Tong discovered that a significant portion of the balance consisted of legal and "recovery" costs. When he began questioning what he deemed to be irregular and confusing financial reporting, the family was hit with a "special fee" of approximately $5,500, which Tong believes was essentially a trust deposit to fund future legal action against his family.
'A Culture of Exploitation'
Solicitor Aarahnan Raguragavan, leading the legal team at Potentia Litigation, emphasizes the aim of the action: to address the widespread lack of transparency and potentially unlawful levies and charges. He believes that the sophisticated nature of Bluestone's operations could easily go unnoticed by the average apartment owner.
"It's quite a sophisticated operation that an average lot owner really wouldn't pay attention to. The culture of managing apartment buildings has been exploited. It seems like a free-for-all," Raguragavan said.
Bluestone, however, denies any wrongdoing, stating that they are "guided by ethical, transparent, and service-focused principles." They maintain robust policies and oversight processes to ensure fair and lawful practices.
'Strata Laws Under Scrutiny'
This lawsuit comes at a time when Victoria's strata and owners corporations laws are under increased scrutiny. Excessive administrative and debt recovery fees, ruled unlawful by VCAT, have sparked concerns. With the Labor government encouraging more Victorians to live in strata-managed apartments, an independent review of current strata laws was commissioned last year.
An expert panel, headed by former consumer affairs minister Marsha Thomson, was tasked with providing recommendations on various issues, including unethical management conduct, undisclosed commissions, and the controversial 100% agreement threshold for the collective sale of strata assets. The panel also evaluated short-stay accommodation rules and ways to modernize voting structures.
'A Call for Action'
Potentia Litigation is reaching out to other affected lot owners in Victorian properties managed by Bluestone OCM before the legal action is officially lodged in late February. The firm aims to gather more evidence and build a strong case against the alleged misconduct.
This lawsuit raises important questions about the balance of power between strata management companies and apartment owners. Are the current laws and regulations sufficient to protect owners from potential exploitation? And how can we ensure a fair and transparent system for all involved?
What are your thoughts on this matter? Do you believe the current strata management system needs an overhaul? Share your opinions in the comments below!
