Class Action Urged Against Double Dipping

There is hope for unit owners in buildings that were previously managed by S8 Limited – they are being urged to launch a civil class action against the company for wrongly claimed commissions.

Unit Owners Association of Queensland president Wayne Stevens is suggesting that owners may be able to recover a “significant amount of money”.

In December, the Office of Fair Trading settled almost 3000 charges against S8 subsidiary Driftcove P/L for double handling holiday bookings. Without admitting liability, Driftcove was forced to pay OFT’s costs and pay unit owners at a Gold Coast complex, The Phoenician, more than $25,000. The company’s director, Chris Scott, was fined $130,000. OFT executive director Brian Bauer stated that it was illegal to charge booking fees or direct bookings to another company for the purpose of charging a fee.

Mr Stevens’ has fought an eight-year battle to recover what he says is hundreds of millions of dollars in “double dipping” of commissions – a practice that he claims is rife in Queensland and a major hindrance to investor confidence.

“Having regard to the seriousness and scale of the problem for unit owners and the corresponding unearned profits retained by Driftcove-S8, they got off very lightly to the obvious convenience of OFT,” Mr Stevens said in a letter to The Phoenician units owners in which he urged them to join the class action.

Mr Stevens, a past chairman of the Phoenician body corporate, said “We want to recover the money that was unlawfully deducted from owners’ rental income and to clarify the conduct that continues to allow letting agents to withhold undisclosed commissions,” he said.

But Mr Stevens said deducting undisclosed booking fees of up to 30% of rental income continued unabated. He claimed S8’s property management structure allowed it to take an undisclosed commission for bookings before passing the reservations on to Driftcove P/L to subtract a second commission.

S8 is now part of travel and hospitality company Stella Group and is now known as Stella Travel Services Group.

And, in another legal action, the liquidator of collapsed Gold Coast property developer MFS is to file against former company officials and advisers and has told unsecured creditors they are set to receive a dividend.

Kate Barnet of Bentleys Corporate Recovery, liquidator of the company – now known as Octaviar – has told creditors that ”legal actions were likely to involve a series of potential defendants including auditors, advisers as well as directors and officers of the failed group”.

It is believed that special counsel Adam Bell is preparing his final report to deliver to the liquidator.

Corporate regulator ASIC has launched civil action against former MFS executives while a class action has also been filed on behalf of investors in MFS’s Premium Income Fund against auditor KPMG.

Octaviar collapsed in January 2008 owing creditors about $2.5 billion.