‘Abuse of power’: Strata giant faces landmark lawsuit over charges

Apartment owners in the city’s best known high-rises are preparing to sue one of Victoria’s largest strata management firms, alleging a systemic and “sophisticated” campaign of overcharging and aggressive debt recovery.

A writ, seen by The Age, soon to be lodged in the Supreme Court of Victoria against Bluestone OCM accuses the firm of misleading conduct, unconscionable behaviour and breaching the Owners Corporations Act.

he legal action, led by Wilbur Tong on behalf of his family’s apartment at the 47-storey Marina Tower in Docklands, is being fought on behalf of all lot owners in any Victorian strata scheme managed by Bluestone since 2020 who may have received misleading fee notices on an opt-out basis.

Bluestone claims it has more than 45 apartment buildings in its management portfolio, including the 100-storey Australia 108 in Southbank and “Beyoncé Building” Premier tower in the CBD.

The writ identifies three defendants: Bluestone OCM Pty Ltd and the two owners corporations for the Marina Tower.

Between late 2022 to mid-2024, Tong says, his family paid $24,000 in levies to catch up. Despite this, Tong alleges Bluestone continued to pursue his family for what they say was an overstated debt of $8000.

The writ states Tong’s family was issued a statement at the end of November 2024 declaring the family owed more than $13,400, though Tong says no levies were outstanding at the time.

When Tong examined the statements, he says much of that balance was made up of legal and “recovery” costs. When he started questioning what he saw as irregular, confusing financial reporting or questionable charges, Tong says the family was issued a “special fee” of about $5500 in anticipated legal costs – which Tong understood to be essentially a trust deposit for Bluestone’s lawyers to fund future legal action against his family.

Tong said he believed his family’s case was “clearly an abuse of their power”.

“The average owner or average resident will not be able to understand the financial reporting and also their legal rights,” he said.

Solicitor Aarahnan Raguragavan, principal of law firm Potentia Litigation, said the action aimed to address a widespread lack of transparency, and believes many other apartment owners could have received unlawful levies and charges.

“It’s quite a sophisticated operation that an average lot owner really wouldn’t pay attention to,” he said. “The culture of managing apartment buildings has been exploited. It seems like a free‑for‑all.”

Bluestone denied wrongdoing when approached by The Age for response, saying the business was “guided by ethical, transparent and service-focused principles”.

“We maintain robust policies and oversight processes, which are regularly reviewed, to support fair, lawful and appropriate practices in the best interests of the communities we serve,” a company statement read.

Bluestone is a high-profile and influential strata management company with dozens of buildings in its portfolio across the inner city and suburbs.

The class action comes as strata and owners corporations laws in Victoria are attracting increased scrutiny, including for excessive administrative and debt recovery fees ruled unlawful by VCAT.

With the Labor government making a concerted push for more Victorians to live in strata managed apartments and units, Minister for Consumer Affairs Nick Staikos last year commissioned an independent review of current strata laws, with an expert panel delivering its report and recommendations to the minister in early December.

The three-person expert group – headed by former consumer affairs minister Marsha Thomson —were tasked with giving recommendations on a range of issues including unethical management conduct, undisclosed commissions, hardship provisions for owners struggling to pay fees, and the controversial 100 per cent agreement threshold currently required for the collective sale of strata assets.

The panel also evaluated the effectiveness of short-stay accommodation rules and investigated ways to modernise voting structures.

In repeated requests for an update on the review, Staikos’ office has told The Age the minister was reviewing the panel’s recommendations and would respond “in due course”. A spokesman said the government would release the review at the same time as its own response to the review, but would not confirm when that was expected.