Same old story as phoenix frauds ‘exposed’ yet again

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Then Fair Trading Minister Anthony Roberts, back when we thought we could change the world.

There’s much less fun than there ought to be in saying “we told you so” – possibly because it implies that the bad thing we told you was going to happen has happened, and that can’t be good.

So it was with mixed feelings this week that I discovered my colleagues in the mainstream media have finally discovered “phoenixing” – the profoundly corrupt system whereby property developers throw up a block of units and then go into liquidation before the purchasers can even check to see if there are defects (of which, you might reasonably assume, there will be many.)

Under curent strata a building laws, it’s the purchasers of the units who will end up paying to have them fixed while their dodgy developer is off building another potential slum elsewhere.

I am told this is a central element of the get-rich-quick property “seminars” that pop up occasionally, where you are encouraged to buy shares in a $2 company that will throw together a Lego block somewhere and then cash out and shut down as soon as the last unit is sold.

Anyway, the Sydney Morning Herald did a big expose on this today.  The article is comprehensive and well-written, but it’s all pretty old news to those of us who’ve been chipping away at the strata coalface for a while.

How old? I did a check on the website and discovered one of my earliest references to phoenixing was back in July 2012, in a piece for my Flat Chat column, then in the Sydney Morning Herald, called Room for Your Views on Building Reforms.

In it, I have a couple of gentle jibes at then Fair Trading Minister Anthony Roberts.

“Considering that red tape trimming has so far seen the window for defect claims reduced, followed by an announcement that strata lawyers are going to be reined in, you’d worry that protecting consumers may be far from Fair Trading’s first priority,” I wrote.

“There are no easy fixes in strata but there’s something fundamentally wrong with a system that allows cowboys to build shoddy home units then disappear into bankruptcy (only to reappear as ‘phoenix’ companies).

“And if the government want to curb lawyers and cut unnecessary costs, [they should] chain up the attack-dog barristers hired to bash ripped-off owners in court, just to prevent them getting what they paid for.”

I like Anthony Roberts, personally, but after Fair Trading, he became Planning Minister before going to Prisons – as in the Minister in charge, I hasten to add, not an inmate.

However, in the week Eddie Obeid was released from jail, it does seem like a natural progression, even if Mr Roberts did not do a lot to herd the crooks in his former bailiwick into his current one.

Maybe if he’s been able todo more, we wouldn’t be facing the defects disasters of today, revealed in the the latest SMH report.

With ordianry home owners left high and dry by corporate crooks, very little has been done to curb the cowboys in the seven-and-a-half years or more since we started bashing our heads on that particular brick wall (tentatively, given its likelihood of collapse).

The problem, as with many issues related to strata, is too many different laws, legislatures and too-hard baskets for any clear-cut solutions to emerge.

There is much hand-wringing and nibbling at the edges of legislations – with developers to be given serial numbers that they will lose if they liquidate too often.  Oooh, scary!

Will their spouses, sons and daughters, cousins, uncles and aunts, cooks and bottle-washers have much trouble getting these magic numbers when the kingpins lose theirs?

Check back in seven years and see if anything has changed.

 

One Reply to “Same old story as phoenix frauds ‘exposed’ yet again”

  1. Avatar Jimmy-T says:

    This is now being discussed in the Flat Chat Forum

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