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The official newsletter of Unit Owners Association QLD

AUGUST 2013 MARCH 2011

? Why Owners should automatically

vote NO to the management’s request for an extension

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ASX-listed property company fined for defrauding landlords

Short term renting of apartments will degrade strata values and push up fees:

Just another long weekend away PART 3

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EST. 1978

From the Editor Paul Cassels

Let’s Be Fair Most Managers work hard, and deserve a fair go. And most Owners want to give the Manager a fair go. But what is fair? Unit Owners Assocation QLD 6th Floor. 333 Adelaide St, Brisbane Q 4000 E P 3220 0959


P 3220 0959 or and request to communicate to a particular person Sue Ekert, Bob Boundy, Elle Young, Paul Cassels. Published by Unit Owners Association QLD Editor Paul Cassels

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We appreciate the support of our sponsors to help us do the work we do. To become a sponsor of UOAQ, please contact Paul Cassels on 3220 0959


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Honouring the existing contract is always fair to both the Manager and the Owners. Obtaining Quality Service is fair to Owners. Delivering Quality Service is a fair request of Managers. Updating the Management Rights Contract is fair to both Managers and Owners, especially for the changing requirements of an aging building. Removing the burden of an onerous bank loan is fair to both the Manager and the Owners. Equal Rights under the Management Rights Contract is fair to both Managers and Owners.

Voting NO to Extensions means that Owners are keeping their end of the deal, honouring the existing Contract, making it possible to obtain quality service under a fairer, updated and more balanced Contract which delivers equal rights to both the Manager and the Owners. A vote of NO to Extensions will mean that incoming Managers are not forced to borrow large sums of money. Once the Contract expires, it gives the Owners a chance to have a better, fairer contract, which does not burden the Manger with a big bank loan, is fair to all parties, and best of all, is a fair price for the service of Caretaking and Letting.

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We specialise in insuring buildings over $2million, by providing: An online quoting system that allows you to provide quote information in minutes. Access up to 7 strata insurance companies (including insurers who do not deal with the public). Advice about your existing insurance program and recommendations where we feel your current cover is inadequate. Online quotes get a 25% rebate of commission directly back to your Body Corporate insurance premiums. Professional management of claims.

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Caretaker Duties, Valuations and Tenders

Are you of Creek a body 07 3218 7378 a Pmember Level 7, 127 Street, 0418 190 658 and M concerned Brisbane Q 4000 corporate about E the level of remuneration paid to your resident unit manager? Working for all sector stakeholders Does your body corporate wish to call tenders for the caretaker duties? Our company has prepared numerous valuations of Caretaker Duties for buildings from Port Douglas to Coolangatta. We have experience with large hotel style complexes of three hundred units right down to small boutique developments of less than fifty units for both valuations and a calling of tenders.

Shandit Pty Ltd are proudly corporate authorised representatives of Insurance Advisernet Australia Pty Ltd. Authorised representative number 424246

Unit Owners Association QLD For a fixed fee quotation or to discuss these specialist valuation services call us on 07 3858 8222 or email

Help for Members

Members of the UOAQ are welcome to contact committee members of the association for any help on any body corporate matter.


Articles contributed to this newsletter are published as a service to members and do not necessarily reflect the opinion or policy of this Association. To contact the committee of the UOAQ for assistance with a body corporate matter please e-mail


Paul Cassels

• • • • • •


The Managers and the Banks can make it seem like Owners are being unfair to the Manager, just for wanting to let the existing Contract run its course. But it is only fair

that Owners get a chance to review the contract by going to tender in the last year of the Management Rights contract, and the only way to do that is to vote NO to Extensions, until the Contract expires. Voting YES to Extensions traps the Manager into a large loan, exposes the Manager to ongoing, significant pressure from the Bank, allows bad Managers to get away with misconduct without recourse, lets the odd bad Manager damage the image of the Management Rights industry and forces Owners to pay more for longer periods of time. What’s fair about any of that? Voting NO to Extensions ticks all the right boxes and gives Owners a contemporary, progressive Manager who answers to them, rather than the Bank.

Just another long weekend away I continued riding on the empty highway through the endless, mesmerising space. I was stopping again and again taking photos of the overwhelming space, the ocean of red dust spreading to the horizon and of the stations far afield out there. How different the life is here, how different the people here have to be. I saw the most beautiful sunset in my life and I continued riding west, leaving Noccundra behind. The air was getting hotter and drier. I could feel it going through my nostrils, and it felt as if it would be burning my brain. I passed Jackson Oil fields. The view in front was getting blurry and fuzzy, somehow vague. I was not sure if it were an effect of the hot waving


air, or the harsh climate that is badly affecting my health, and my eyesight is getting worse. I decided to go back. And the way back was actually from one roadhouse to another, from one cool drink to another chilly refreshment. In Eromanga I came across two men – father and son. “Hi mate, is it your BMW [read: bima] over there?” - asked the father “Yes, it is” “We can put it on our tray-top and give you a lift” “I appreciate it, but no thank you. I enjoy riding the bike” - I answered smiling. UOAQ.ORG.AU

Feature Story

Tick All The Boxes: Vote NO to Extensions Vote NO to Extensions

Should Owners automatically vote YES to the Manager’s request for an Extension?


Vote NO to Extension

Vote YES to Extension

On-Site Manager

Manager operates out of established Office

Manager operates out of established Office

Manager lives in building

Manager may rent or buy

Manager forced to borrow money to buy Manager’s unit.

Honour the Existing Contract

Voting NO means honouring the existing Management Rights Contract until it expires

The existing contract is changed with extra years added on the end, which means Owners are required to pay more for Caretaking for a longer period of time than originally agreed to.

Investors get quality service

Manager has an incentive to comply with the contract, and make sure all Investors enjoy the best rents, and convenient on site service. Tenants like on site service too!

Some unscrupulous Managers have been known to allow guests into empty investor’s units without delivering the income and do deals via lease-backs which mean that tenants might not be properly scrutinised.

Fair and Better Contract for the future

New contract is fair to both Owners and Managers, by removing the requirement for the Manager to borrow large sums of money to finance the Rights.

Owners are stuck with outdated, unfair contract which cannot be enforced or terminated for any reason, as long as a Bank is financing the Rights.

Lower Body Corporate Fees

New, fairer Management Rights contracts have been shown to deliver significant savings to Owners who consistently vote NO to granting Extensions.

Owners pay higher fees for longer term, with each extension granted. Extending the Rights just extends the financial pain for Owners.

Fair contract to ALL parties

Manager needs only to perform to the agreed Contract to retain the business.

Owners have extreme difficulty enforcing a Management Rights Contract under the laws in Queensland.

Able to terminate for non performance

Owners may terminate the MR Contract for widely accepted commercial reasons including non performance, misconduct or fraud.

Owners are denied the right to terminate, even for significant misconduct. If the Banks appoint a Receiver, the law says the Contract MUST be kept on foot.

Management Performance & Quality of Service

A new, fairer, shorter term (3 year) performance contract will assure the Manager will perform to agreed expectations

If we humans know we cannot be terminated we tend to under-perform!

Owners have control over Manager

Owners choose the very best Manager for the very best price at a General Meeting.

Owners have very limited rights to say NO to an incoming Manager. The Management Rights sells to the highest bidder, and not necessarily the most qualified Manager.

Lift the Debt Burden for Manager

Managers do not have to borrow anything to be awarded the contract to perform Management Rights services (Caretaking and Letting) to the Owners

Managers are required to borrow large sums of money to purchase the Management Rights.

Manager answers to Owners

Manager answers to the Owners, rather than the Bank.

Manager answers to the Bank. Banks start to put immense financial pressure on Managers to request extensions.

Best Price for Best Service

Only an Open Market Tender will provide the Market Price.

Managers will often cite “Time and Motion” studies to say that Owners are getting a good deal. These “Time and Motion” studies are a poor substitute for an open market tender.




Quick News

1 July 2013 Mr. Jarrod Bleijie Attorney General GPO Box 149 Brisbane QLD 4001

“CARMEL BY THE SEA – BROADBEACH” Dear Jarrod In my briefing notes of our recent meeting I referred to actions being undertaken by the Office of Fair Trading with regard to Carmel By the Sea as under: “CARMEL BY THE SEA – BROADBEACH Several Lot owners in the Carmel By The Sea body corporate lodged complaints with the Office of Fair Trading during 2012 regarding the conduct of their caretaker/ letting agent Staymint. The Committee of Carmel has been advised by the OFT investigating officer Gavin Redfern, that Staymint would be asked to consider “A Resolution of Admission” by admitting conduct that was in breach of PAMDA law, before charges would be considered. For reasons of confidentially, the OFT were unable to formalise this advice, but it would be available directly to your office from the OFT.” This matter was heard in the Brisbane Magistrates Court 21 on Wednesday June 26. A colleague advised as follows: “As you can see the OFT and Staymint agreed settlement prior to today’s Mention was a disastrous injustice for Carmel owners and even more so in that no charges will be recorded and Staymint’s Real Estate License is not under threat. A summary of today’s Mention will be forwarded to the UOAQ Committee in due course.” The UOAQ was also in attendance at this hearing and the following is a report made by a committee member: “Below is a summary of notes taken by attending the above hearing: 4


1. Outcome – OFT/Staymint’s Legal Advisers (SLA) had already negotiated an agreed settlement of a $35,000 fine penalty with OFT, but would not disclose this in discussions with Carmel representatives pre entering the court. 2. The Carmel representatives were not able to obtain a copy of the charge sheet prior to the matter being heard. 3. Staymint pleaded guilty to all 231 charges. 4. The judge was highly critical of the OFT and confirmed the maximum penalties could have been up to $25M, so increased the fine to $50,000, but no conviction recorded against the company so their licence is not at risk and without them even asking, granted them 6 months to pay. 5. SLA confirmed that Staymint was a good corporate citizen, with no prior convictions, so go easy on them – their main sin was their inability to control their staff who were responsible for all the wrong doing. Staymint let the blame be taken by Greg Elix (on site Manager at the time), but not anyone else up the corporate line. 6. The judge was remarkably au fait with Management Rights, and commented on the forgotten party affected, the Body Corporate owners that were not represented in the matter, notwithstanding that one of the complainants (mentioned in the submissions tabled to the court) was present in court. It would have been easy for the OFT to confirm this presence, but he declined to do so. The judge also confirmed that she was aware that Management Rights was a

predominantly Qld issue, with much greater numbers in Qld than other states . 7. The Judge confirmed that there is conflict with Caretakers providing leasebacks, and challenged this issue. This was refuted by SLA that provided it was disclosed that was OK. There was no challenge that there was inadequate disclosure! 8. SLA confirmed that Staymint had not benefitted from the fraud. 9. The Carmel Chairman was furious with the outcome and waiting for the OFT representative to come out of the court and expressed disappointment at the OFT being unprepared to even tell the committee the amount that had been pre-negotiated with Staymint before the hearing. 10.Present were at least 3 Carmel representatives. I purposely involved in discussions with Carmel’s representatives to gauge their reaction. I was interested in their admission that had they all realised just how stressful the whole process would become, they would have voluntarily buckled under and not contested the Caretaker’s longevity! Not worth the monetary value! The above outcome is consistent with the outcome that was determined in The Phoenician matter that was also referred to in the briefing notes. The matters were not determined by the court, but negotiated settlements were reached. The settlements included an admission by the accused and fines, and in the Phoenician’s case recovery of the OFT legal expenses. UOAQ.ORG.AU

Quick News What is so distressing in both cases to the unit owners involved is the amount of fines determined by the Office of Fair Trading compared to the exposure to fines by the accused. In The Phoenician case the exposure was $44 million and the fine was $130,000, and now with Carmel, a fine sought of $35,000 and an exposure to almost $3.5 million. In the Carmel case the Judge claimed the exposure to be $25 million. How can Letting Agents be discouraged from conduct they admit by imposing penalties representing 1% to .3% of that prescribed by law. To add insult to injury, the licence to operate held by the accused was not required to be surrendered enabling the Letting Agent to continue to operate Management Rights and preventing the unit owners who reasonably sought justice, terminating that relationship for failing to hold a licence. I must raise concerns with the process of this outcome and the lack of transparency. Complainants necessarily went to great lengths to establish indisputable documented evidence as required by the OFT before investigation. The owner’s evidence was admitted by the letting agent. Unfortunately the OFT investigation was confined to a 12 month

period, notwithstanding that the owners evidence indicates that the letting agent’s misappropriations extended well before the period of investigation. Had the OFT investigation been more extensive, the indications are, that much more could have been recovered for the owners, but even so, to date, only $74,800 of the $141,466 misappropriated Trust Fund proceeds have been refunded. To my mind, liaison by OFT with the victims of this crime should have included the victim’s acceptance of any negotiated settlement, and failure of the OFT to communicate with the victims indicates lack of transparency repugnant to our justice system. The UOAQ is aware of other buildings that believe that they are subject to similar fraud on the unit owners, but do not have the required evidence to involve OFT. Considering the results obtained by OFT in the Phoenician and Carmel cases, the UOAQ could not recommend that the buildings concerned commit to the financial burden or committee stress required to seek justice within the Queensland system. This is a sad indictment of the Queensland legal system and the protection of Queensland citizens. For whatever reason; lack of staff, lack of funds, overload, or indifference and/ or incompetence, the OFT is not performing

to the standard expected by the general public of Queensland. These two practical outcomes provide you with the clearest evidence as to why Queensland unit owners are so intent in obtaining Management Rights reform, for the perception of the Government and Office of Fair Trading’s consumer protection and observance of law seems so inequitable, that only the removal of long term management rights agreements can sufficiently empower owners to take control of their destinies, their caretakers, their asset and their interests. The UOAQ would ask that you intervene to insure that appropriate penalties are applied for breaches to PAMDA law and that the licence that enables a Letting Agent to operate is withdrawn on a guilty outcome. Wayne Stevens President cc. Member for Mermaid Beach - Ray Stevens Chief Justice of Queensland - Paul de Jersey Director General Department of Justice - David Ford

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Quick News

Tuesday, 02 July 2013. Cara Waters Story Source: SmartCompany on-line.

ASX-listed property company fined for defrauding landlords The property management arm of ASX-listed Ariadne has been fined by the Brisbane Magistrates Court for defrauding landlords, after finding the property and investment group guilty of 231 counts of dishonestly converting trust money for its own use. The Court found StayMint, which trades as Mint Hotels, wrongfully converted $141,466 of money – that should have gone to landlords – into its own trust account. The landlords owned apartments in a Broadbeach complex, Carmel by the Sea. David Stevens, Chairman of the Carmel by the Sea Body Corporate Committee, told SmartCompany that problems began when Mint tendered for management rights, and tried to take over the rentals by offering a “lease back” where the landlords received a fixed amount from the property manager to let their units at prices “far in excess” of anything offered before. “The guests would arrive, and they would put them into other owners’ units which were not on their list of lease backs,” Stevens says. Mint then leased the units regardless of whether they were being rented, ensuring the apartment owners who signed up had a constant income stream. The landlords then discovered people had stayed in their apartments, but the stay was not recorded in the monthly statements to the individual owners, and the rent was not paid. According to BRW, the irregular financial

records were discovered after the Office of Fair Trading commenced an investigation, and raided Mint’s office, seizing a hard drive and trust account records. The court found Mint booked tenants into rooms in Carmel by the Sea, and then, after the guests had checked out, changed the records to indicate that the guests had stayed in a leaseback unit. Ariadne chief executive Murray Boyte told SmartCompany, Ariadne executives did not have any knowledge that the scam was taking place. “This was a flagrant breach of our policies by an employee. They were acting outside of our authority,” he said”. Boyte says the Office of Fair Trading investigation confirmed Ariadne’s directors were unaware of the employee’s actions, which went undetected by the regular and mandatory independent audits of the trust account records. “The directors were shocked to learn of the employee’s conduct,” Boyte said. “As soon as they were made aware of the allegations, they ordered a thorough internal investigation into the matter to determine the



extent of the employee’s unlawful activities.” Boyte says Ariadne has cooperated fully with the Office of Fair Trading, and worked to ensure owners were compensated for the misallocation of funds. Ariadne’s co-operation with the OFT and its unblemished record were taken into account by the Court in imposing a fine of $50,000 after Ariadne repaid $75,000 of the misappropriated money owed to 34 unit owners who were affected. David Stevens, Chairman of the Carmel by the Sea Body Corporate Committee, says the fine is disappointing as the maximum penalty available was in excess of $3 million. “[Ariadne] has pleaded guilty to the charges as a Company but nobody has been charged as an individual,” he says. “But as the Magistrate said, Ariadne will pay a very heavy price in public opinion.” Stevens says the result is a victory for the landlords but the penalty could have and should have been greater. “Ariadne is a big company with deep pockets and it has given us six years of hell,” he said.




Friday, 19 July 2013. By Larry Schlesinger PROPERTY observer (Digital publication) source=po&utm_medium=aida&utm_campaign=newsplus

Quick News

Short term renting of apartments will degrade strata values and push up fees: Owners Corporation Network A recent Victorian Supreme Court decision in favour of a Melbourne apartment owner that operates serviced apartments in a Docklands residential building has been slammed by the Sydney-based Owners Corporation Network (OCN). Stephen Goddard, a Sydney strata lawyer and chair of the OCN, told Property Observer allowing apartment owners to turn their residential units into hotels rooms or serviced apartments would “degrade property values” and result in strata fees rising due to higher maintenance costs. It follows the Victorian Supreme Court overturning an earlier ruling by the Building Appeals Board that prevented Paul Salter from operating his Docklands Executive Apartments at the 350-unit Watergate tower. Salter had lost an appeal to the Building Appeals Board in March this year after he received building notices in April 2011 with respect to three apartments being used as short term serviced apartments that were ruled to have contravened the Building Code of Australia. The City of Melbourne was a defendant alongside the Building Appeals Board in its legal dispute with Salter. The court ruled that the decision of the Building Appeals Board must be quashed and the appeals made by Salter be remitted for re-hearing and determination in accordance with law. Goddard says the OCN is “completely behind the City of Melbourne”. “It’s neither good public policy nor in the public interest to convert residential apartments into boarding houses or hotels on common property rates,” he says. “We are surprised and disappointed at decision of the Supreme Court of Victoria.” Goddard says the decision will have national ramifications with the potential for parts of Docklands to start looking like the Gold Coast. He says short-term letting of apartments is also a problem in Sydney, citing one example of a buck’s night in an apartment building, where windows were broken and the swimming pool had to be drained to remove all the glass. “The allowing of checkerboard short term tenancies results in the overall degrading of amenities and capital values and will result in increases in levies.


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Working for all sector stakeholders

Points from our Australia wide network NSW - Short Stay Apartments In its NSW Planning Review submission OCN joined its interstate counterparts in opposing short stays in long term residential buildings, and requiring separation where mixed use is approved. Interstate efforts continue.

Legislation Updates Strata Law Review. We understand this may be with Cabinet. As part of the review, NSW Fair Trading is considering a ban on strata managers receiving insurance commissions. OCN is in dialogue with Strata Community Australia NSW & National (peak strata manager body) and the Real Estate Institute (NSW) about how this might be transitioned so as not to destabilise the industry or unfairly affect the many managers who currently rely on this income source. OCN has collaborated last year with SCA (NSW) on a more balanced (owner friendly) Model Strata Management Agreement, which we believe can be enhanced to provide managers with certainty, should owners corporations elect to engage a broker to arrange their insurance (which generally results in broader choice, better cover and lower premiums.

“It’s short term profiteering but with a long-term cost,” he says.




Unit News


1300 554 165 |

We specialise in insuring buildings over $2million, by providing: An online quoting system that allows you to provide quote information in minutes. Access up to 7 strata insurance companies (including insurers who do not deal with the public). Advice about your existing insurance program and recommendations where we feel your current cover is inadequate. Online quotes get a 25% rebate of commission directly back to your Body Corporate insurance premiums. Professional management of claims.


Go to to get a quote!

Shandit Pty Ltd are proudly corporate authorised representatives of Insurance Advisernet Australia Pty Ltd. Authorised representative number 424246

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Are you a member of a body corporate and Are you a member of a body concerned about the level of remunera-tion corporate and concerned about paid to your resident unit manager? the level of remuneration paid to your resident manager?wish to call tenders Does your bodyunit corporate for the caretaker duties? Does your body corporate wish

to call tenders has for the caretakernumerous valuations Our company prepared duties? of Caretaker Duties for buildings from Port Our company has preparedWe have experience Douglas to Coolangatta. numerous valuations with large hotel styleofcom-plexes of three Caretaker Duties for hundred units rightbuildings down to small boutique from Port Douglas to than fifty units for both developments of less Coolangatta. Weahave valuations and calling of tenders. experience with large hotel style complexes of three hundred units right down For a fixed fee quotation or toto discuss smallspecialist boutique developments these valuation services of less than fifty units for both call us on 1800 808 991 or valuations and a calling of email tenders. For a fixed fee quotation or to discuss these specialist valuation services call us on 07 3858 8222 or email




5. INDIVIDUAL MEMBERSHIP FEES a. This financial year 2013-2014 to remain at - $50 per annum – discounted - $50 per annum – email - $55 per annum - standard b. Building Membership Fees

The constitution to be amended to allow a “New Class of Membership for Buildings” with fees of $10 per lot per annum or a minimum of $500 per annum. YES / NO / ABSTAIN

6. 6.1

FINANCIAL REPORT by Treasurer Bob Boundy That the membership allow the committee after the AGM to appoint an Auditor for that year. YES / NO / ABSTAIN


ELECTION OF MANAGEMENT COMMITTEE (Nominations received) President Vice President Secretary Treasurer Wayne Stevens Paul Cassels Paul Cassels Bob Boundy Committee Tony Boulden Sue Ekert Roger Dearing Greg Carroll

8. 9.


I/We _____________________________________________ being financial members of the Unit Owners Association of QLD Inc require this voting paper to be recorded as our vote. Signature of Voter/s ___________________________________ Date ____ / _____/ 2013

Unit News Online - August 2013  

The official magazine of Unit Owners Association