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| From: | SP52948 owner |
|---|---|
| To: | info@hayesknight.com.au, Mario Raciti Bamfield Accountants |
| CC: | Russell Young BCS Strata Management, Billy Cheung BCS Strata Management |
| Subject: | NEXT STEP Lack of responses and actions by Hayes Knight as of 24Feb2015 |
| Date: | 24/2/15, 7:52 pm |
Hello,
Thank you for not responding for the fifth time to a customer's inquiry with serious consequences. Your customer support is exemplary, albeit not in positive terms.
As I, one of the owners in the complex, pay for your bills, I have right and duty to question your actions, especially if they are wrong.
I enclose chapter from the forthcoming book which includes some details about your conduct. More actions will follow.
If you have proofs that can counter my claims, you are welcome to show them to me, all owners in my complex, and the relevant authorities.
Note that BCS Strata Management (and Raine & Horne Strata Sydney as their branch for the last four years) engaged in long-term mismanagement of the complex, including false Statutory Declaration to court.
I am not the only one that says bad words about BCS. BCS is rated as one of the worst strata managers at:
http://www.productreview.com.au/p/bcs-strata-management.html
More comprehensive summary:
http://www.nswstratasleuth.info/
OUR investigations show numerous breaches of law in many complexes. BCS wrongly assumes that their indemnity can protect them from legal cases.
BCS Strata Management vs Robertson, 2004:
In the 2004 case of BCS Strata Management vs Robertson, the strata manager attempted to defend their actions by claiming protection under indemnity. The facts of the case are as follows:
Mrs. Robertson had injured herself in a lift,
The floor of the lift did not settle level with the floor of the building. It dropped down some 18cm,
When Mrs. Robertson stepped into the lift, she fell and injured her leg,
Mrs. Robertson sued the Owners Corporation and BCS Strata,
Mrs. Robertson won her case in the lower court and it was appealed in the Supreme Court,
Mrs. Robertson claimed that the Owners Corporation and the Strata Manager had breached their duty under section 62 of the Strata Schemes Management Act 1996,
The Owners Corporation and BCS cross claimed against each other. One of the claims by BCS was that they were indemnified under their managing agent’s agreement.
The Court of Appeal found that there was no breach of statutory duty.
The Court held that a strata manager could not claim protection under indemnity where the strata manager was sued in their own capacity for their own negligence.
Two important outcomes:
No indemnity will protect a strata managing agent from their own negligence,
The protection is only relevant where an Owners Corporation is sued by an injured party and the Owners Corporation makes a claim on the strata manager under a cross claim. In other words, Owners Corporations are prevented from blaming their strata manager where only the Owners Corporation is sued.
Indemnities are almost of little relevance. They provide no protection to the strata manager if sued directly and the strata manager has done something wrong.
Take care of your customers at all times, that is a simple message from me. BCS is not your customer, but all 218 owners in this complex.
On 16/11/14 19:26, SP52948 owner wrote in email "Audited accounts for SP52948 incorrect and some even illegal by BCS on 15Nov2014":
One more thing to make it clearer.
On 4 December 2013, without giving owners any details, BCS (then Raine & Horne Strata Sydney) and the EC members got some proxy votes to "approve" motions justifying 13 years of huge financial mismanagement. Just for illegal water and gas reimbursements, owners corporation lost around $160,000 since 1999.
Many of proxy votes at that meeting were from townhouse owners who were recipients of illegal water and gas reimbursements for 13-14 years! The other owners had no information about how large the losses in common funds were over the years.
Motions 5 and 6 at the urgent Extraordinary General Meeting on 4 December 2013 show the scope of "retrospective" approvals. They were specifically proposed by members of the EC Mr. Moses Levitt and Mr. Stan Pogorelsky, in full support of the Strata Manager and the rest of EC. Unfortunate for them, such decisions have no legal grounds as they fail the basic legal test. Here is the powerful rule that was applied in courts many times:
A decision by the Owners Corporation could be seen as reasonable if there is on the material before the Owners Corporation a sound basis for making that decision. Conversely, if there was no such sound basis it would be unreasonable.
It is obvious that what you "approved" in audits for few years prior to this EGM in December 2013 had serious financial errors.
Your problem is that, as an auditor for last several years, you directly signed off significant illegal expenses and balance sheets were "cooked" to a degree that can cause serious consequences (including criminal investigations as the Strata Manager issued false Statutory Declaration to court last year, and few members of the EC provided false statements to CTTT).
On 15/11/14 21:28, SP52948 owner wrote:
Hello,
To whom it may concern
On 10 October 2014, Raine & Horne Strata (now BCS) sent you a letter confirming the responsibility for Annual Audit 2014. Among the other statements, BCS claimed that there were no instances of non-compliance with laws and regulations that could have a material effect on the financial report and no fraud or suspected fraud affecting the entity involving management and employees.
The facts are quite different.
1. Firstly, apart from numerous emails to BCS and members of the Executive Committee, Bamfield was notified about wrong accounting summary for FY 20013 on the following date:
13 November 2013
In it, I highlighted numerous accounting errors and even expenditures against the By-Laws of Strata Plan 52948 (refer to attachment with original inquiry)
Reply was never received.
I resent another one during this year to Bamfield and again received no response.
Very "professional" attitude.
2. One of the illegal payments were reimbursements for gas to selective townhouse owners.
In fact, water and gas reimbursements to selective townhouse owners were applied (and then hidden in accounting books) for 14 years without Special Resolution or By-Law.
Based on my investigations, Raine & Horne Strata Sydney and EC rushed to "approve" Special By-Law, which was registered in May 2013, but continued to be applied in illegal way until October 2014.
3. In our phone conversation on 30 September 2014 at 14:43 hours, Raine & Horne Strata Sydney confirmed that all townhouse owners would be issued with notices of repayments of excessive and illegal water and gas reimbursements since Special By-Law 13 was registered on 6 May 2013. That was just the starting point for repayments that have been illegal, unauthorised, excessive, and unreported for 15 years to all owners.
4. The audited errors for FY 2013 are still unchanged and incorrect.
But, to make things worse, they are wrong for FY 2014 too.
Three examples:
* Total expenses for gas usage was for the common property $24,598.68 (1 September 2013 to 31 August 2014). To it, add $5,112.01 for gas usage reimbursements paid for private usage to 18 out of 26 townhouses (as per Special By-Law 13), which makes the final figure of $29,710.69. To make things worse, SP52948 claimed seemingly claimed ATO GST tax for paying owners from common funds to which they contribute.
In your audited account, the total gas usage in FY 2014 is listed as $23,404.00, making it the error rate for real expenses in the balance sheet of around 26%. Not only there is an error, more critical is an issue that the reimbursements were applied against the Special By-Law 13, which is confirmed in frantic Motion 18 and 19 for the AGM 2014, in attempt to "ratify" the illegal activities retrospectively, without giving owners information about the nature of the deliberate errors (see attachment with applicable Motions).
I am sure you are smart enough to question why would anyone rush with some urgent Motions if "everything was in order". That now questions your responsibility to act.
* Real electricity usage expenses amounted to $83,730.83 (GST exclusive) but in the audited balance sheet it shows $80,371.69.
* Real water usage expenses were $91,252.70 (GST does not apply). Add to it the water usage reimbursements to selective townhouse owners in amount of $6,922.46 (but number of them were applied illegally - see my document), making it total of $98,175.16. In your audited balance sheet, they show up as $111,951.04. This is er error margin of around 14%.
I am not going to provide you with details of other accounting errors in the balance sheet that were provided to owners for the AGM 2013 and 2014 because it is your job to ensure they are correct (or rather, job of Strata Manager and the EC). I have them ready for the AGM 2014.
5. Raine & Horne Strata Sydney (now BCS) and the EC members engaged in numerous financial and facilities management actions agains the laws. For example, it is a fact that in 2005, without the approval of the owners corporation and the official EC decision, more than $43,000 dollars disappeared from the common funds for alleged building painting. The accounting details and evidence that anybody approved such expense have been declined for 10 years now.
We all have to live with our decisions and, eventually, everybody gets what they deserve.
As an auditor who charged more than $2,000 dollars for the AGM 2014, I expect and request that Hayes Knight urgently takes action before the meeting on 26 November 2014. I also expect a response with details what you intend to do to investigate my claims and recheck all accounts.
Not responding or ignoring my email (like Bamfield did last year) is not an option any longer. I will take actions in accordance with law promptly. Relevant bodies will investigate whether there are any financial mismanagement issues.
I am Cc-ing the Strata Manager and the members of the EC because there is nothing I need to hide.
Sincerely,
