Horror stories of body corporate bullies
Is abuse of power from bullying, self-serving committees one of the biggest threats to the management rights industry?
This article was originally published in Resort News
One of the biggest threats to the management rights industry is bullying by self-serving committees. That’s the stark assessment from one of the most respected industry professionals, Paul Shih, who has revealed some horror stories about committees serving their own interests, to the detriment of unit owners.
He says, he knows one resident manager who blames her breast cancer on the stress caused by her wayward committee, and in another case, a disgruntled committee chairman used a car to try and mow down the husband of a whistle-blower at their building.
Mr Shih says the best way to prevent committees from abusing their power is long-term contracts for onsite managers.
“The Queensland management rights model actually protects the interests of the majority of owners and is a safeguard against self-serving committees with their own agendas,” Mr Shih said.
“A resident manager can act as a safeguard for all the lot owners, especially if they see a committee abusing its power and taking a self-serving course that is detrimental to the majority.”
Mr Shih wears multiple hats in the property industry, with a diverse portfolio of investment units across South-East Queensland.
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He started in the property industry in 2004 and has served as a body corporate secretary, treasurer, and ordinary committee member for two bodies corporates since 2006. He became a real estate trainer in 2010 and bought his first management rights business in 2018. He is now invested in seven.
“I frequently hear terrible cases of bodies corporate abusing their power,” he said.
“I was one of the investors who bought off the plan at Southport Central Residential in 2005. I paid $516,000 for a unit and sold it at a loss for $400,000 last year.
“The body corporate was such a mess and at one stage the levy was as high as $9000. I was glad to get out.”
In September last year, The Gold Coast Bulletin reported that residents at the complex (one of Australia’s biggest bodies corporate) were rebelling against its committee.
It followed an extraordinary dispute when almost $1.5 million of the sinking fund was used for property investment!
The paper noted: “A damning judgment from the Office of the Commissioner for Body Corporate and Community Management (BCCM) found the committee had acted contrary to the Body Corporate Act in transferring $1,488,200 to a company that purchased units at the scheme.
“At its AGM in October 2020, the body corporate passed a motion authorising the committee to invest funds in accordance with advice from a licenced financial adviser and the Trusts Act.
“The BCCM judgment states a company, CTS 35751 Investments Pty Ltd, was subsequently established on April 1, 2021.
Part of the 23-page report on the investigation carried out into this investment scheme stated that “The director, secretary and sole shareholder at the time was Colin Buckley, the then body corporate chairperson, secretary and treasurer”.
Following the company’s establishment, it moved quickly to make purchases, scooping up four units within Southport Central in just over one month.
The adjudicator found that resolutions passed by the committee in May and June 2021, authorising the investment in the company, were “not valid”.
The Bulletin reported that: “The buying spree came to a halt when some scheme members objected and were granted an interim order by the BCCM adjudicator on June 28, 2021. The interim order prevented the body corporate from investing any further funds in the company.”
Mr Shih said the present proposals by some committees to reduce the terms for an onsite manager from 25 years to three would only magnify the possibility of committees running their own race in opposition to the majority of owners.
“If onsite managers have their term shortened to three years, then who will be a whistle-blower and expose abuses of power?” he asked.
Mr Shih said resident managers with 25-year contracts created a “separation of power” as in a democratic government.
He said the fact that resident managers owned a unit in the complex as part of their contract ensured “skin in the game” and that they were always working to benefit the whole scheme because they have a financial interest in its success.
“If the action of a body corporate committee devalues the property, then the onsite manager loses out as well, so they are constantly watching out for anything that might harm their own investment. That includes committees abusing their power.”
Mr Shih said in his native Taiwan, body corporate committees have absolute power to terminate all contractors, and this led to much corruption.
“The Taiwan Institute of Property Management (the industry peak body) sent delegates to Queensland to learn about our systems and they shared some of their stories…
“One committee in Taiwan wanted to use a business for a project that was owned by one of their relatives. was rejected by the building manager due to unreasonable pricing and lack of qualifications. So the committee terminated that building manager and changed to another one. This happened six times within one year until the committee got their way.”
One of the students in Mr Shih’s property classes took on a role as an onsite manager on the Gold Coast about eight years ago.
“She discovered that the previous onsite manager was forced to use an overpriced gardening service by the chairperson, which cost the body corporate much more money than it should,” Mr Shih said.
“The body corporate manager kept silent about the whole arrangement but my student exposed what was happening. The owners voted the existing committee out but the chairperson was so angry he drove his car at my student’s husband while he was working at the complex.”
At another complex, the body corporate chairperson turned some visitor parking into his own private parking, and authorised a ‘mate’ to carry out expensive pool repairs in excess of $100,000, ignoring the onsite manager’s quotes which were much cheaper.”
He adds that he knows another resident manager on the Gold Coast who blames the stress of dealing with her committee for giving her breast cancer.
“The secretary of her complex wanted to take over the management,” Mr Shih said.
“The chair, secretary and treasurer are now in full control of the committee by having their family members as ordinary committee members and blocking anyone else from getting a say. They called and harassed all the unit owners so that no one else would want to get involved with the body corporate.
“Self-serving committee members don’t like long-term managers who can expose their corruption.”
ARAMA (Australian Resident Accommodation Managers Association) CEO Trevor Rawnsley says a tiny vocal minority is making a lot of noise trying to persuade the Queensland Government to cut the term of management and letting rights agreements.
Mr Rawnsley said a major reason for their attacks was that it would give some unit owners a chance to push their “power agenda” and feed their appetite for control over others.
“Some of these people want to exert their power and influence over a scheme and they don’t care who they run over in the process,” he said.
“When they have a resident manager with a long-term agreement in the way they feel that their power is threatened.”
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Grantlee Kieza OAM has won three Queensland Media Awards, two Australian Sports Commission Awards and has been a finalist for the Walkley and News Awards and for the Harry Gordon Award for Australian sports journalist of the year. In 2019 he received the Medal of the Order of Australia for his writing. You can find more of his work in our AccomNews & Resort News print magazines.
He has written 22 acclaimed books, including bestsellers Hudson Fysh, The Kelly Hunters, Lawson, Banks, Macquarie, Banjo, Mrs Kelly, Monash, Sons of the Southern Cross and Bert Hinkler.
