OC in legal war with developer and manager

In a case that will be viewed with interest around Australia, The Guild owners’ corporation (OC) is involved in a bitter legal dispute with its developer and building management over long-term contracts.

The case is heading for the Supreme Court with claim and counter-claim over what are fair and reasonable rates and contract periods.

Also in dispute is the process used when the OC was first established and contracts were awarded.

The OC is alleging improper practice when establishing the contracts but the developer and contracted management companies are denying any impropriety.

The dispute started when OC manager Luckman Associates Pty Ltd and Guild Management Pty Ltd took the owners’ corporation to court late last year over unpaid fees.

The OC has responded with a counter-claim attacking the legitimacy of the original contracts and the roles played by developer Les Smith and OC manager Prince Luckman.

The OC’s case questions whether Mr Smith and Mr Luckman had the right to establish contracts, which the OC says are excessive and onerous.

The OC says under the contracts, it is facing rises in management fees from $275,000 plus GST in 2012 to more than $1.3 million plus GST over 55 years (a minimum of 3 per cent increase per annum).

It is understood Mr Smith believes all dealings were transparent and legitimate.

He told Southbank Local News there was no factual basis for the OC’s allegations and he was taking them extremely seriously.

The case was expected to start in the Supreme Court on September 28 but has been postponed until November 9, due to a change of barrister by the OC.

The new court dates for the hearing are Monday, November 9 to Thursday November 12 and Monday, November 16 to Thursday, November 19.

The Guild OC chairman John Anderton said the outcome of the case could have lasting ramifications for other OCs around Australia.  

“With so many high density developments going on in Australia, it’s important that the long-term interests of the owners are protected,” he said.

“Off-the-plan purchasers do not have much power against developers, especially for inexperienced first home buyers or where English is not their first language.”

The OC alleges that at its inaugural general meeting in October 2012, the minutes record that Mr Smith attended in his capacity as the owner of all lots and on behalf of another company he controls called 152 Sturt St Pty Ltd, which is also a defendant in the counter-claim.  

In a letter to residents, the OC alleges Mr Smith retains a number of links to the building including ownership of some empty shops and art spaces at the bottom of the building via 152 Sturt St Pty Ltd.

The empty arts and commercial space is private property owned by 152 Sturt St Pty Ltd, but the costs of lighting and cleaning the art spaces are allegedly being paid for by common funds from the OC.

It is alleged that one of Mr Smith’s companies is also paid $22,000 in annual rent from the OC for the use of a small office used by the caretaker in the building’s east tower.

The OC took Mr Smith to VCAT last year for unpaid fees, which resulted in Mr Smith being ordered to pay $103,000.