Strata giant faces landmark lawsuit over charges
Owners of flats in the city’s best-known high-rise buildings are set to sue one of Victoria’s largest strata management firms, alleging a systemic and “sophisticated” campaign of overcharging and aggressive debt collection.
A post seen by Age, The OCM against Bluestone, which will soon be lodged in the Supreme Court of Victoria, accuses the firm of misleading conduct, unreasonable conduct and breaching the Owners Corporations Act.
The legal action, taken by Wilbur Tong on behalf of his family’s flat in the 47-storey Marina Tower in Docklands, is being pursued on behalf of all landowners in any Victorian strata scheme managed by Bluestone since 2020 who may have received misleading charge notices on an opt-out basis.
Bluestone claims to have more than 45 apartment buildings in its management portfolio, including the 100-storey Australia 108 in Southbank and the “Beyoncé Building” Premier tower in the CBD.
The article names three defendants: Bluestone OCM Pty Ltd and the two companies that own Marina Tower.
Tong’s family has a flat in Docklands. During COVID-19 the unit sat vacant for approximately 18 months after damage caused by a tenant. The family temporarily fell behind on the owners’ corporate taxes while Tong personally spent $25,000 on repairs and struggled to cover the mortgage.
Tong says his family paid $24,000 in taxes to catch up between late 2022 and mid-2024. Despite this, Tong claims that Bluestone continued to pursue his family for an exaggerated debt of $8000.
The article states that a notice was issued to Tong’s family at the end of November 2024 stating that the family owed more than $13,400, but Tong says there were no taxes outstanding at that time.
When Tong reviewed the disclosures, he said the bulk of that balance consisted of legal costs and “rescue” costs. When he began questioning what he saw as erratic, confusing financial reporting or questionable accusations, Tong said the family had been given a “special fee” of about $5,500 for estimated legal fees — which Tong realized was actually an escrow deposit from Bluestone’s lawyers to fund future legal actions against his family.
Tong said he believed his family’s case was “a clear abuse of their power.”
“The average property owner or the average resident will not be able to understand financial reporting and also their legal rights,” he said.
Lawyer Aarahnan Raguragavan, director of law firm Potentia Litigation, said the action was aimed at addressing widespread lack of transparency and believed many other flat owners may have collected illegal taxes and fees.
“This is a pretty complex operation that the average land owner won’t really pay attention to,” he said. “The culture of managing apartment buildings has been exploited. It appears to be a free-for-all culture.”
Bluestone denied wrongdoing when approached Age In response, it said the business was “guided by ethical, transparent and service-oriented principles.”
“We maintain robust policies and oversight processes that are reviewed regularly to support fair, legal and appropriate practices that are in the best interests of the communities we serve,” a company statement said.
Bluestone is a high-profile and influential strata management company with dozens of urban and suburban buildings in its portfolio.
The class action comes as strata and owners companies laws in Victoria come under greater scrutiny, including over excessive administrative fees and debt collection charges deemed unlawful by VCAT.
With the Labor government making a concerted push for more Victorians to live in strata-managed apartments and units, Consumer Affairs Minister Nick Staikos commissioned an independent review of existing strata laws last year and presented an expert panel’s report and recommendations to the minister in early December.
The three-member expert group, chaired by former Consumer Affairs Minister Marsha Thomson, was tasked with making recommendations on a range of issues including unethical management behaviour, undisclosed commissions, hardship provisions for owners struggling to pay fees and the controversial 100 per cent settlement threshold currently required for bulk sales of strata assets.
The panel also evaluated the effectiveness of short-term stay rules and explored ways to modernize voting structures.
In response to repeated requests for updates on the review, Staikos’ office said: Age The Minister was reviewing the panel’s recommendations and would respond “in due course”. A spokesman said the government would publish the review at the same time as its response to it, but would not confirm when that was expected.
“One in four Victorians live on a property managed by a freehold company – we ensure they are protected and treated fairly,” a spokesperson for the minister said.
Potentia Litigation expects to hear from other affected landowners on Victorian properties managed by Bluestone OCM before litigation is formally filed in late February.
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Rachael Dexter is a journalist working on The Age’s City team. Contact her at rachael.dexter@theage.com.au, rachaeldexter@protonmail.com or via Signal at @rachaeldexter.58.Connect with: Facebook or email.
