Investigative Journalism and Learning Hub - Waratah Strata Management in Large Strata Complex SP52948, NSW, Australia

From:	SP52948 owner
To:	Thomas Karolewski SP52948 committee member
CC:	Robert Crosbie Waratah Strata Management
Subject:	FW: Polite note to SP52948 Treasurer for 2018 - NSW Strata - Members of the Executive Committee personally liable
Date:	10/5/19, 1:22 pm

Thanks

Please kindly send all correspondence to the office of Waratah Strata.

This is the right address to manage inquiries and concerns of all owners.

Thank you

Thomas

From: SP52948 owner

Sent: Thursday, 9 May 2019 7:37 PM

To: Thomas Karolewski Tresurer

Subject: Polite note to SP52948 Treasurer for 2018 - NSW Strata - Members of the Executive Committee personally liable

For SP52948 Treasurer 2018 attention. Please let us know if you wish not to be notified about this.

No reply was received on the previous email below. Nor reply was received on previous inquiry and complaint on 22 April 2018. That one was related to the famous USB that Waratah Strata Management allegedly "lost" (of which we have four copies).

Mr. Karolewski is kindly asked, in good faith, to respond and refute these statements promptly.

Note that the admission of "lost" strata files and allegedly not having financials for period prior to 1 February 2017 (the date USB was sent by BCS Strata Management) is now also reported to Australian Taxation Office. It is a horrific statement by Waratah Strata Management and EC members that the files can be missing, protection of strata files was not appropriate, and that the lost USB was kept secret from owners for 12 months. Whatever hacking attack happen at Waratah Strata Management does not relieve them from duty of care and common sense to have proper backups of data.

The note written in the Minutes of the EC meeting held on 2 May 2019 that the 2018 Treasurer was not responsible for financial actions was misleading, misconstrued, and false.

SSMA 2015 and applicable laws still attach personal liability for each and every member of the Executive Committee in NSW (refer to the attachment):

Mr. Karolewski was officially elected to be Treasurer at the EC meeting on 15 February 2018 and seemingly none of the Minutes of EC meetings in 2018 contained valid reference of Treasurer's duties being delegated to the Strata Manager:

12 April 2018

21 June 2018

13 September 2018

Based on public documents sent to owners and published on notice boards, Strata Manager was not the Treasurer for SP52948 in FY2018.

This is very important because, in that case, SSMA 2015 Section 57(1) does not apply:

If a strata managing agent has been delegated a function by an owners corporation and a breach of the duty by the owners corporation would constitute an offence under a provision of this Act, the agent is guilty of an offence under that provision (instead of the owners corporation) for any breach of the duty by the agent occurring while the delegation remains in force.

In September 2017 in the case of McElwaine v The Owners – SP 75975 [2017] NSWCA 2 the NSW Supreme Court of Appeal decided that in addition to the rights of the Lot owner to obtain appropriate orders that the Owners Corporation maintain the common property in accordance with Section 62 of the SSMA 1996 [which is similar to Section 106 of the SSMA 2015] a Lot owner who suffers damages as a result the default by the Owners Corporation is entitled to common law damages.

In that case McElwaine was entitled to damages in nuisance. Similarly damages will be awarded against an Owners Corporation due to the negligence of the Owners Corporation in the appropriate case.

Prior to the appeal case in McElwaine there were always difficulties when issues arose as to whether there was a right by a Lot owner to recover common law damages. Accordingly prior to that decision (in September 2017) most Lot owners who had suffered losses as a result of the negligence or other common law breach by an Owners Corporation have not pursued their entitlement under that remedy.

Executive Committee members may not be personally liable ONLY if they acted in good faith, which, with evidence of mismanagement in this complex would be difficult for them to deny.

As a member of an Executive Committee, each individual member assumes personal liability for any action or decision taken outside its authority.

Put plainly, this means that a member of an Executive Committee is responsible for any or all decisions made by an Executive Committee that are not sanctioned by the Act.

A member of an Executive Committee there is a clear guideline outlining their governance responsibilities.

A member of an Executive Committee is legally required to adhere to and undertake a clear scope of duties as outset in the SSMA 2015.

The Treasurer is the chief financial officer of the Owners Corporation. The Treasurers duties are listed in Section 44(1) of the Act.

(1) The functions of a treasurer of an owners corporation include the following:
(a) to notify owners of any contributions levied in accordance with this Act;
(b) to receive, acknowledge, bank and account for any money paid to the owners corporation;
(c) to prepare any strata information certificate;
(d) to keep the accounting records and prepare the financial statements.

It is now very clear that the quorum for AGM 2016, 2017, and 2018 was not satisfied because we have public admission by Waratah Strata Management that the levies for second gas connection were not applied (which contradicts the allegedly approved financials for FY 2018). As well, massive collection of levies for gas connections, including 10% simple interest were not implemented.

Waratah Strata Management and EC members failed to provide evidence of full financial owners at AGM 2016, 2017, 2018, failed to disclose costs and warranties, work not completed in complex painting project in 2017, unexplained alleged costs for townhouses in amount of $92,950.00, and much more.

Regards,

On 1/5/19 9:15 pm, SP52948 owner wrote:

Hi,
For SP52948 Treasurer 2018 attention. Please let us know if you wish not to be notified about this.
This information is too important to be hidden from owners.
For eight years now, upon finding that the levies for second gas connection were not applied correctly, Lot 158 has been determined to help owners corporation recover lost income and force owners to pay for their own expenses.

BCS Strata Management and Waratah Strata Management made every possible effort to avoid doing it. One of the latest reports was sent to Waratah Strata management on 6 January 2019 and they, acting as Treasurer, Secretary, Chairperson, and strata manager, failed to respond.
Lot 158 has full copies of the audited strata accounting data for 2003, 2004, 2007, 2008, 2009, 2011, 2012, 2013, and 2016.

Even more, Lot 158 is in the process of uncovering paper copies of several other financial years.
Lot 158 paid for these documents in period 2011-2017.
Based on evidence of unpaid full levies (including 10% simple interest per year) for second gas connection, two current member of the Executive Committee could not have been and cannot be valid.
    Quorum at AGM 2016, 2017, and 2018 was not satisfied.
    Lot 158 Motions that were excluded without any reasonable explanation or merits were determined by legal advice to be solely decision by the EC on 1 March 2019.
    The alleged loss of files and their partial manual recovery as per Waratah's reports and the fact that access to Waratah web site is not properly operational for TWO MONTHS causes serious concerns and losses to owners corporation.
    As an example, a group of 11 owners (they are not the only ones owing money to SP52948) is estimated to own around $40,000.00 in unpaid levies for gas connection (including compulsory 10% simple interest per year). There are a few more owners who we do not provide details herewith because their debt is smaller. Figures for 2017 and 2018 are not included but it has been confirmed back-payments were not done so these figures are even larger in 2019. Lot 158 estimates that for the years for which they do not have full accounting data (2000, 2001, 2002, 2005, 2006, 2010, 2014, 2015) those owners paid $55.00 per year. If it turns out that the owners did not pay in those years, the debt to owners corporation is much higher:
        Lot 3 undeclared unpaid levies $6,991.50 for second gas connection – 1999 to 2016
        Lot 62 undeclared unpaid levies $5,572.50 for second gas connection – 1999 to 2016 (ex Treasurer)
        Lot 68 undeclared unpaid levies $973.50 for second gas connection – 2012 to 2016
        Lot 102 undeclared unpaid levies $4,015.00 for second gas connection – 2003 to 2016
        Lot 147 undeclared unpaid levies $4,746.50 for second gas connection – 2001 to 2016 (long-term EC member)
        Lot 167 undeclared unpaid levies $973.50 for second gas connections – 2012 to 2016
        Lot 175 undeclared unpaid levies $4,317.50 for second gas connections – 2003 to 2016
        Lot 181 undeclared unpaid levies $5,644.00 for second gas connections – 1999 to 2016 (long-term EC Member and occasional Chairperson)
        Lot 182 undeclared unpaid levies $2,156.00 for second gas connections – 2009 to 2016
        Lot 192 undeclared unpaid levies $2,475.00 for second gas connections – 2007 to 2016 (part of debt belongs to previous EC member)
        Lot 148 undeclared unpaid levies $2,475.00 for second gas connections – 2007 to 2016
            Each of these owners was personally contacted with detailed report of their debt in November 2018 and none of them offered any evidence to refute or correct the above statements.
            Executive Committee member from Lot 151, Mrs. Maureen McDonald, contacted Lot 158 and the short summary with the above figures was given to her on 25 January 2019. She never replied.
As regulated by Fair Trading and strata act:
Each owner and/or property manager needs to be aware of their owners corporation levy cycle.
Regular periodic contributions to the administrative fund and sinking fund of an owners corporation are taken to have been duly levied on an owner of a lot even though notice levying the contributions was not served on the owner.
If money is not received to the trust account at the end of one month after it is due and payable, it bears interest at the rate of 10% per year (as prescribed by the regulations) from the due date until it is paid.
Owners corporation may, by special resolution at general meeting, determine (either generally or in particular case) that a contribution is to bear no interest.
Strata manager does not have authority to waive the interest as it is not money owing to the strata manager.
The Courts have determined that non-receipt of a levy notice is not a sufficient reason for non-payment.
If a lot is sold and there are unpaid levies, then both the owner at the time the contributions were levied and the new owner are jointly and severally liable for the payment of the contribution and the interest payable.
Action
By now, owners probably read Minutes of the Executive Committee meeting dated 21 March 2019. In it, the following was said:
BEGIN QUOTE,
The strata manager advises that due to a complaint lodged with the police by owners of Lot 158 the USB containing the BCS Strata Management records was taken by the NSW Police for examination.

The USB was subsequently lost by the Police.

Both the Police and Waratah Strata Management have attempted to obtain replacement USB from BCS, but that has not been provided.

As a result of the missing USB, it will be impossible to determine the history of the gas point fee charges during BCS' management period.
END QUOTE
Impact
a) In the two attachments it is shown that Waratah Strata Management refused to deal with "old issues" ("Robert-Crosbie-intention-not-to-deal-with-old-strata-issues-for-SP52948-11Jan2017.pdf" and "Robert-Crosbie-repeated-intention-not-to-deal-with-old-strata-issues-for-SP52948-29Mar2017.pdf").
b) After document search on 13 June 2017, Lot 158 sent a message to Waratah Strata Management about missing strata files, including concerns about levies for the second gas connection. Refer to attachment "Lot-158-confirmed-to-Robert-Crosbie-missing-SP52948-strata-files-during-document-search-16Jun2017.pdf". This was ignored by Waratah Strata Management.
c) EC member from Lot 181 confirmed the missing charges in the email to BCS Strata Management on 10 June 2015 (part of the subject of the email was "Gas charges paid from 1998 to 2015"). In it, Lot 181 clearly stated:
BEGIN QUOTE
BCS neglected to raise these charges on invoices...
END QUOTE
The same day, in another email, Lot 181 confirmed that Lot 3 did not pay any gas levies since they moved in.
d) Waratah Strata Management in email to EC members from Lot 147 and 181 on 26 April 2017 confirmed they looked at the Cash Receipts for the FY 2016 to 31/8/2016 and from 1/9/2016 to 1/02/2017 (handover date from BCS Strata Management) and could not see any receipts identified as gas payments.
e) EC member, Lot 181, wrote to Waratah Strata Management on 27 April 2017 and confirmed that no owner was charged $220.00 per year for second gas levy until 2016:
BEGIN QUOTE
The first time that we charged $220.00 per annum.
I suppose it should be followed up...
I have a feeling that we may have difficulty from some of them...
END QUOTE
f) In spite of two requests for self-reporting in 2014, BCS Strata Management recorded only three Lot owners for having second gas connection on 13 May 2014:
62, 147, 181
The three were or are members of EC at one time or another, where Lot 62 failed to declare the date of gas installation. The evidence of the approval to Lot 62 to install second gas connection was listed in minutes of EC meeting on 26 May 1999. All three of them were paying $55.00 per year in some years whilst the prescribed levy was $220.00 per year (figures include GST).
g) BCS Strata Management admitted in secret invoicing exercise in 2015 that no owner paid any levies for second gas connection for FY 2012 and 2013.
h) Two other owners admitted having second gas connection but BCS Strata Management, Waratah Strata Management, and maintenance staff failed to report it:

Lot 192 – signed PDF and emailed to BCS Strata Management on 5 July 2014 (accounting data from 2007 shows that the previous owner, EC member at the time, paid $55.00 for gas levy)
Lot 213 - signed PDF and emailed to BCS Strata Management on 7 July 2014
So far, it seems they have never been invoiced. These owners were honest but BCS Strata Management and Waratah Strata Management failed to properly invoice them and, as a consequence, they have higher financial liabilities, including 10% simple interest per year.
i) Lot 209 claimed reimbursements for private gas usage whilst having second gas connection and stopped doing it when new tenant moved in on 25 September 2014. They were claiming gas reimbursements for private gas usage, effectively double-dipping from owners corporation. Lot 158 personally approached Lot 209 for comments and no valid response was ever received.
j) Maintenance staff conducted incomplete audit of the second gas levies on 21 March 2016 and listed the following Lot owners as having such connection:
3, 59, 62, 68, 102, 127, 144, 147, 148, 163, 167, 181, 182
k) There seems to be evidence in accounting data from year 2003 that Lot 175 also had second gas connection (Cash Receipts Journal Account 170: Lot 175), and then continued in some other years (more clearly shown in years 2009 and 2010). Owner was approached by Lot 158 for comments and no valid response was ever received.
l) Waratah Strata Management reported (still the incomplete) list for $220.00 levies for second gas connection at the EC meeting on 16 March 2017:
3, 8, 59, 62, 68, 102, 127, 144, 147, 148, 163, 167, 181, 182, 194, 206, 209
m) EC member from Lot 181 confirmed to Waratah Strata Management on 27 April 2017 that the first time owners were charged $220.00 per annum for second gas connection was in 2016! (the levies apply from year 1999, in amount of $200.00 per year, with GST added in year 2000 to make it $220.00 per year).
n) Waratah Strata Management reported this (still incomplete) list for $220.00 levies for second gas connection at the EC meeting on 21 March 2019 that need to be charged for FY 2018 and onwards (if these owners paid on time, the banking statements would confirm it even if all strata files at Waratah Strata Management were lost due to alleged hacking attack on 1 February 2019):

3, 8, 59, 62, 68, 102, 127, 147, 148, 163, 181, 182
o) Waratah Strata Management claimed that $3,600.00 was earned from owners with second gas connection in FY 2017 and $2,537.54 in FY 2018.
The figure of $3,600.00 in FY 2017 matches exactly 18 owners who were reported in Minutes of EC meeting on 16 March 2017.
p) Current Income and Expenditure reports during March and April 2019 on Waratah Strata Management website show that no levies were collected for second gas collection in FY 2018. Refer to attachment "SP52948-dubious-utility-expenses-and-financial-accounting-data-generated-by-Waratah-Strata-Management-for-FY2018-28Apr2019.pdf".
q) Waratah Strata Management ignored the repeated requests to apply the levies and only in March 2019, under Lot 158 persistent pressure, they appeared to want to apply it but "allegedly lost all strata files due to hacker attack".

What they forgot is that Lot 158 has full copy of the allegedly lost USB (they claim Police lost it and Lot 158 already contacted them to find out the factual information). Even if the USB were lost, it did not decrease the liabilities and responsibilities by Waratah Strata Management to keep backups to protect strata files. The shocking admission they had backups only from mid-2018 needs no further comments (refer to updated attachment "SP52948-dubious-utility-expenses-and-financial-accounting-data-generated-by-Waratah-Strata-Management-for-FY2018-28Apr2019.pdf").

If they really had some backups from mid-2018, they should have copies of the USB provided by BCS Strata Management in February 2017 as well.

r) Director Robert Crosbie confirmed that SP52948 were loaded into Waratah computer systems on 9 February 2017 (refer to attachment "Robert-Crosbie-confirmed-SP52948-strata-records-loaded-into-Waratah-computer-system-9Feb2017.pdf").

s) Director Robert Crosbie received numerous warnings from Lot 158 about unpaid levies for second gas connection and other risks to our strata plan. One of them is enclosed herewith (refer to attachment "Robert-Crosbie-received-warnings-about-unresolved-SP52948-strata-issues-including-levies-for-second-gas-connections-4May2017.pdf").

t) From 1 February 2017, when Waratah Strata Management took office, till Police allegedly lost the USB in March/April 2018 (strata files provided by BCS Strata Management), 13 months passed and there was plenty of opportunities to deal with recovery of unpaid levies in that period. Waratah Strata Management chose not to deal with it.

u) From alleged loss of the USB in March/April 2018 (strata files provided by BCS Strata Management), till Waratah Strata Management notified owners on 14 March 2019, 12 months passed. One whole year of hiding the fact that they lost all strata files for period prior to 2017.

v) The sudden commitment in the Minutes of the EC meeting on 21 March 2019 to try to recover unpaid levies is only forced by Lot 158 actions and persistence. However, Waratah Strata Management is trying to shift blame on the Police and BCS Strata Management for lost files. In reality, Waratah Strata Management never had intention to deal with unpaid levies and only Lot 158 forced them to do so in March 2019.

Waratah Strata Management even carried seven proxy votes approving their own contract and undeclared base salary increase of 11.5% at AGM 2017.0
Desired Outcome
a) The owners who are in debt for second gas connection levies must pay in full, in the same manner like other owners who were late with their payments.
All overdue levies attract 10% simple interest per year. They apply even if the invoice was never sent by strata managers, or the invoice stated incorrect value. An illustrative example with the equation:

A = P(1 + rt)

P is the Principal,
r is the interest rate (here 10% per year),
t is how many years to apply it.

If an owner (and we have at least three of them) failed to pay $200.00 in levies in 1999, and OVERDUE UNTIL year 2016 (17 years):

The total amount accrued, principal plus interest, from simple interest on a principal of $200.00 at a rate of 10% per year for 17 years is $540.00.
b) High-priority full audit of all properties for second gas connections be done in the complex immediately.
If that second gas inlet had been disconnected and sealed, it would have been done by a certified and licensed staff. A license is required before any plumbing, draining or gasfitting (including LP gasfitting) work can be undertaken in NSW, regardless of the cost of the work and regardless of whether the work is residential, commercial or industrial.
Details of when the second gas inlet was disconnected or sealed must be recorded and provided to all owners. If an owner cannot provide such data, it has to be recorded as well.
c) Official request be sent to BCS Strata Management to resend all SP52948 files due to allegedly lost USB that Waratah Strata Management does not have any longer. Any cost for this exercise will be born by Waratah Strata Management.
If BCS Strata Management refuses to co-operate, a process is simple and no costs involved: Fair Trading NSW and NCAT.
d) Notify owners that Waratah Strata Management declined to declare to owners that Lot 158 has copies of the famous USB BCS gave them at the change of the strata agency contract (Lot 158 got it during PAID document search on 13 June 2017).

Lot 158 also has full copies of the audited strata accounting data for 2003, 2004, 2007, 2008, 2009, 2011, 2012, 2013, and 2016.

Even more, Lot 158 is in the process of uncovering paper copies of several other financial years.
There is more than enough evidence now that not only significant losses have been incurred for unpaid levies for second gas connection but also that none of the general meetings satisfied quorums (especially now that we are dealing with the last three years).
e) Waratah Strata Management must, with full transparency, ensure that their web portal contains all invoices, quotes, tenders, contracts, agendas and minutes for meetings, payments, and other applicable strata files for all owners.
f) Waratah Strata Management must ensure that all owners receive agenda for meetings on time. Lot 158, including the pending meeting on 2 May 2019, did not receive seven notices of meetings in last two years alone.
g) Waratah Strata Management must comply with SSMA 2015 to keep last seven years for all strata files. How they do it is their problem. Non-compliance with this requirement has to be enforced or penalties applied.
h) Due to the currently available evidence that two current EC members are unfinancial, Lot 158 offers to become a member of the Executive Committee (as submitted at AGM 2014, 2016, 2017, and 2018) and act in role of the Treasurer. The financial affairs in the complex are in dire straights and before the complex becomes broke and special levies are introduced, we must make every effort to avoid it (pending major works: elevator upgrades in four buildings, overdue replacements for two and a half roof membranes, health issues with ventilation in bathrooms and laundry, further repairs for garden beds, replacement of expired smoke alarms, and more).
i) Information to be published about how many things Lot 158 helped resolve or is in the process to resolve to benefit owners corporation in last six months alone (prevented illegal parking on Ryde Council land without owners corporation knowledge or Ryde Council approval Lot 202 DP848752 440 Lane Cove Road classified as Public Recreation Space, enforced window cleaning on the buildings as approved at AGM 2014, fire safety issues and smoking problem in the basement behind Fire Door 2, smoke detector replacements, elevator upgrades - EC members and Waratah Strata Management originally planned it year 2026, and much more).
j) Extraordinary General Meeting is urgently required (with Lot 158 Motions from 2017 reintroduced) and the new committee members which never had conflicts of interest be voted in.
k) As a side note, Lot 158 needs a guarantee that no intimidation, harassment, and attempts to cause fear must occur ever in the future. During 2018, three Police events were raised by Lot 158 for stalking, attempts to intimidate, and bullying by maintenance staff due to Lot 158 actions to bring to justice the parties responsible for financial and strata mismanagement:

E244XXX on 26 March 2018
E698XXX on 26 October 2018
E265XXX on 14 November 2018
Regards,
Lot 158