Feud Hangs Over Regis Towers

Jacqueline McArthur
Australian Financial Review, 29 January 2003

Apartment owners in the “most untidy building in Sydney”, Regis Towers, are being asked to provide construction giant Meriton Apartments with a $1 million security for their litigation over building defects.

As a tribunal ruled last week, however, the Meriton-built Regis Towers is broke the result of unsatisfactory management by its building managers and voluntary owners corporation.

So Meriton wants to ensure that if the building owners continue litigation against it, there will be plenty of money in the coffers to pay any damages if they fail.

How did the 653-unit resort-style complex, with three pools, a golf driving range, gyms and saunas in the heart of Sydney’s CBD, fall so far, so quickly?

The owners corporation’s executive committee chairman, Stephen Goddard, accused Meriton of being one of the many reasons for the strata title scheme’s downfall.

“For them to ask for $1 million security for legal costs, knowing our insolvency, is very manipulative,” Mr Goddard said.

“This has been a three-year struggle that has chewed up our levies, our time and our capital values, and spat us out as a defective and dysfunctional organisation.”

Meriton told The Australian Financial Review yesterday that the management of the owners corporation by the executive committee had been unsatisfactory.

“Money that should have been spent on the upkeep, maintenance and proper management of the building was being spent on unbudgeted and unchecked legal fees,” a spokesman said.

“Meriton is disappointed that a compulsory agent was appointed.”

There is little dispute over the state of affairs at Regis Towers. A letter from Meriton to former Regis Towers executive committee member Harry Londy reminds him of the “fruitless litigation” against the developer “at a time when your building is the most untidy in Sydney, and you neglect its maintenance and upkeep and attempt to blame others for doing so.”

Mr Goddard said expensive litigation, building consultants and the pursuit of the developer to rectify serious fire safety defects identified by the Sydney City Council but never admitted by Meriton has contributed to the body corporate’s financial dire straits.

But the building’s kitty was always light-on. Meriton set levies at $700 a quarter in 1999, and they now stand at $1500. Many owners believe this is insufficient to maintain facilities or basic safety services. Meriton said the fees were the same as comparable developments at the time.

A $3.2 million budget prepared by the former strata managers showed that the scheme was $443,000 in the red, and dipping into the sinking fund was required to clear cheques.

The owners corporation’s executive committee maintains that the building’s “down at heel” atmosphere came about by the failure to act on resolutions they passed. The restoration of vandalised lifts took more than 12 months.

Mr Goddard said the collapse of a strata title scheme that controls a $400 million asset highlighted inadequate laws governing the construction and administration of high-rise apartment towers in Sydney.

“Regis Towers should be a warning to all apartment owners,” he said.

He said the self-certification process sometimes accused of allowing bad workmanship to slip under government controls had, in this case, amounted to potentially millions of dollars of rectification work.

As for the failed administration of Regis Towers, Mr Goddard said its collapse was aided by a set of statutory rules that do not allow the orderly implementation of decisions.

“The scheme’s so big it has reached a diseconomy of scale, given the governance provided by the Strata Schemes Management Act. When we threw away company title we threw away too much: the desire to give people certificates of title allowed us to throw out corporate governance and the lines of accountability … in the corporations law.”