Investigative Journalism and Learning Hub - Strata Information Focus Group - Submission on 6 April 2021

From:	SP52948 owner
To:	Strata System Feedback stratasystem@customerservice.nsw.gov.au
Subject:	SUMMARY: Strata Information Focus Group - Submission on 6 April 2021
Date:	6/4/21, 4:06 pm

Action

• In 1961 the Conveyancing (Strata Titles) Act was introduced in NSW. This act created a legal mechanism for the vertical subdivision of multi-unit  housing.

This map shows the historical progression of strata schemes as they were registered across Sydney, and provides a unique snapshot of the development of higher density Sydney. Initially concentrated in a few small pockets on the North Shore and Eastern Suburbs, strata developments have now be come an important feature of the housing landscape in all parts of Sydney:

        https://cityfutures.be.unsw.edu.au/cityviz/strata-schemes-sydney/

• Originally, it was expected that democracy would be the leading avenue for managing complexes. But, democracy requires high level of sense and ethics. When lack of ethics and ignorance of laws are prevalent, how to proceed? One way is to educate public and rise awareness that license to be a strata manager is one of the easiest in any industry:

• Strata Community Australia (SCA) are offering a three-day course on qualifying to be a strata manager with no prior educational requirements (apparently educational requirements are fulfilled by completing the course):

        https://nsw.strata.community/educationprofessional-development/certificate-registration/

        That is pretty weak level of education considering that many of them manage multi-million dollar properties.

• Unhappy customers pushing for royal commission investigations of strata agencies:

        https://www.flat-chat.com.au/topic/royal-commission-into-strata-agents-companies/

• NSW strata survey - information to better inform the New South Wales Government about the things that concern group of more than one million residents in the State:

        https://www.nswstratasurvey.com.au/

• Issues with strata complexes and dubious quality of services provided by those who should enforce laws are common and frequent - examples:
  

        https://www.change.org/p/we-want-royal-commission-into-the-administration-of-civil-law-in-nsw (Royal commission into the administration of civil law in NSW)

        https://www.alexgreenwich.com/strata_committees_pms (Member of Parliament Hon Alex Greenwich submitted Private Member's Statement on 4 June 2019, Legislative Assembly, NSW Parliament)

        https://www.bernardgaynor.com.au/2018/04/30/that-aint-a-court/ (President of the Law Society of New South Wales in relation to New South Wales Civil and Administrative Tribunal (NCAT) in 2018)

        https://www.complaintsboard.com/nsw-civil-and-administrative-tribunal-ncat-corrupt-government-officials-c839011 (NCAT — Corrupt government officials - October 2020)

        https://cogitareaude.wordpress.com/corruption-in-tribunals/  (Corruption in Tribunals)

        https://www.lookupstrata.com.au/nsw-record-keeping-strata-defects/ (NSW record keeping strata defects)

While Owners Corporations are obliged by law to keep records, the law doesn’t say that they have to be complete, accurate or true. Right now, Owners corporations are outsourcing their record keeping to strata managers, and in many cases the record keeping is poor. There are no consistent standards, and records often disappear when they are transferred from one strata manager to another. The industry should be doing something about it, and laws need to be tougher.

When serious corruption happens law enforcement is necessary.

Impact

Our investigations over the years proved, beyond reasonable doubt, that serious misconduct in strata complexes are frequent, repetitive, deliberate, and carefully planned, with evidence that strata laws in NSW are weak, ambiguous, and often unenforceable.

During our talk, it appears some objected to statement that strata managers hide files from owners and inspectors. How about if we can prove it happened SEVEN TIMES in eight years, and even companies as large as BCS Strata Management (part of Pica Group) were involved in it? Classical "defense" by the strata managers is that "they gave access" to person on their computers, but not admitting that the computers had very few files. If Strata Information Focus Group wants evidence of that, just ask.

When serious corruption happens law enforcement is necessary.

There is a simple way to improve and avoid overloading NCAT with legal cases: trust through verification. If crucial data for owners and tenants are published on some web portal in a safe manner, the amount of "abuse" of funds and mismanagement of complexes would significantly decrease. The additional benefit is that in case of suspected fraud or mismanagement, the files are independently kept on web portal which  strata managers and committee members cannot abuse or manipulate, so the need for NSW Fair Trading and NCAT to get involved decreases significantly. 

Public is crying for help.

Desired Outcome

During one hour of session we attended, it appears forum organizers already made up their mind what kind of data they would not publish on website portal. That is wrong in our opinion, because the consultation should help define what customers (owners and tenants) want to access, not what government wants. Government serves the people, not vice versa.

The forum organizers should act as mediators, and not comment about any suggestions that interested parties have during consultation stage.

So, if interested parties what to have detailed financials and other important data on a website portal, it should be made available and strata managers forced to upload it.

First Proposal

There are three areas of importance for owners/tenants in strata complexes:

• Financials (certainly not just balance sheet and short expenses/income statements as they are easily manipulated). We have irrefutable evidence, for example, that two major auditors stayed silent when questioned about errors in their audits and failed to correct the mistakes. Or how about evidence that in our complex in 2020 auditor completed checks 11 days after the general meeting and no owner received a copy of it.
  
• By-Laws.
• Maintenance-related documents.

Based on that, the following type of files make sense to be provided on website portal (the final list is open to discussions). If at least some of those listed below that fall into three major areas above are not included on website portal, that we are afraid to say, that public money might be just wasted on services that are of little use.

* Detailed Income and Expenditure statements, provided as monthly reports and full year before general meetings

* Full details of financial audits by certified practitioners before AGMs

* BAS

* Copies of all contracts

* Full details of warranties

* Strata roll

* Minute Book (containing the minutes of all meetings held and detailed agendas for meetings),

* Full details of calculations for quorum at all meetings

* 10-Year Capital Works Fund

* Payment plans for unpaid levies

* Register of items that changed from common to private property (register of items excluded from common-property - examples: exclusive rights to common property, windows and frames with double-glaze glass, windows and frames with solar heating panels, air-conditioning units on the balconies, modified light fittings in garages, private lattices in front of townhouses, pergola modifications, second gas connections to common gas supply, and others)

* Proxy forms

* Correspondence received and sent by owners corporation

* Full details of insurance claims

* Full details of insurance renewals and insurance policy

* Full details of all tenders and major expenses for contract renewals and repairs/upgrades

* Names and contact details of EC members

* Invoices

* Bank statements, including term deposits

* By-Laws and breaches of by-laws

* Details of all legal cases, including NSW Fair Trading Mediations and NCAT

* GM-approved and signed Standard Costs Agreement for any legal services engagement

* Names of staff working for owners corporation, including details of security and police screening

* House rules

* Fire inspection reports

* Fire Safety certificates

* OH&S audits

* Professional assessments and reports

* Certificate of Title

* Insurance Valuation, Land valuation

* Tax returns

* Building manager monthly reports (including photos of maintenance of strata complex)

* Online Invoice Approvals (OIA)

Second Proposal

Website should be hosted on highly-secured servers, with absolute guarantee that it is hosted in Australia.

Website should have at a minimum 2FA (Two-factor Authentication), or even MFA (Multi-factor Authentication).

Regards and good luck with your project (remember: we are all here to help each other),