Ten Years, 3500 Complaints, Zero Prosecutions: Strata in Victoria

There’s a story doing the rounds this week that hasn’t got the attention it deserves, probably because “strata enforcement” is not a phrase that makes anyone’s pulse quicken. But stick with me, because it’s a genuinely infuriating bit of journalism, and it says a lot about how we do regulation in this state.

The Age did a deep dive into Consumer Affairs Victoria’s handling of owners’ corporation complaints. The numbers: 3500 complaints over ten years, four infringement notices, twelve warnings, zero prosecutions. Zero. A retiree in a Carlton apartment building alleges $240,000 of owners’ money was funnelled to a company that three committee members had a financial interest in, hands over receipts and technical reports, and gets told the regulator “does not act on behalf of individuals solely to obtain redress on their behalf.” He’s off to VCAT now, on his own, against people with real estate offices and lawyers on retainer.

I don’t live in a strata building, but I’ve got mates who do, and I’ve sat through enough dinner party stories about committee dysfunction to know this isn’t an isolated Carlton problem. One friend’s building had a car park flooding issue that took four years and three “urgent” engineering reports to get actioned, because nobody wanted to be the one to raise levies. Another spent a year fighting a committee that wouldn’t disclose how a maintenance contract had been awarded to a company owned by, surprise, someone on the committee. Small potatoes compared to $240,000, but the pattern is the same: no real accountability mechanism, and a regulator that treats each case as an individual grievance rather than evidence of a system with a hole in it.

That’s the bit that gets me. A regulator’s whole reason for existing is that individual complaints, in aggregate, tell you something about systemic behaviour. If you get 3500 complaints and prosecute none of them, you’re not being neutral, you’re sending a signal, loud and clear, that there’s no real consequence for owners’ corporation committees who help themselves to other people’s money. Enforcement isn’t just about punishing the guilty party in front of you; it’s about the twenty people watching who decide whether it’s worth trying the same thing. Victoria has apparently decided that lesson isn’t worth teaching.

There’s a bigger context here too, and it’s one that should worry anyone who cares about housing in this city. Melbourne’s growth plan, whichever government is drawing it up, depends on more people living in apartments and townhouses governed by owners’ corporations. Every planning document about the “20-minute neighbourhood” or activity centres near train stations assumes density, and density assumes strata. If people don’t trust that the body running their building will be held to account when it does dodgy things with their money, you’re going to get a generation of buyers who’d rather commute an extra forty minutes from Pakenham than risk their equity in a building with a rotten committee. You can’t build the compact, sustainable city everyone says they want on a foundation nobody trusts.

I don’t have a neat fix for this. VCAT is meant to be the accessible, low-cost alternative to courts, and for plenty of disputes it works fine. But asking an isolated retiree to go up against a committee, its lawyers, and a building manager, alone, at VCAT, while the actual regulator shrugs and says it’s not really in the business of helping individuals, isn’t access to justice. It’s access to a very expensive hobby. The Greens have referred this to the Auditor-General, which is at least something; an audit won’t fix a broken enforcement culture on its own, but it might force someone in government to explain, on the record, why a regulator with statutory powers has decided not to use them for a decade.

I’m generally sympathetic to the idea that not every rule breach needs a prosecution, and that regulators should use judgement about where to spend their limited resources. That’s a reasonable position. Zero prosecutions in ten years against a background of 3500 complaints isn’t judgement, though. It’s an absence.