LAST RESORT
A SUPPLIER is threatening to cut the electricity, water and sewerage to more than 350 units at an exclusive Gold Coast resort unless $5.5 million in debts is paid to two infrastructure companies. The bitter stoush is just one of the many taking place between a web of bodies corporate and companies at Couran Cove on South Stradbroke Island.
A SUPPLIER is threatening to cut the electricity, water and sewerage to more than 350 units at an exclusive Gold Coast resort unless $5.5 million in debts is paid to two infrastructure companies.
The bitter stoush is just one of the many taking place between a web of bodies corporate and companies at Couran Cove on South Stradbroke Island.
The messy internal fighting includes:
• A Supreme Court suit between the island’s overarching body corporate and two service providers – seeking a payment of around $5.5 million.
• Allegations by some residents that the overarching body corporate has been “monopolised by business interests” because the secretary of the overarching body corporate committee – Simon Napoli – owns two of the companies contracted to service the island (although as secretary Mr Napoli does not get a vote on the body corporate’s finances).
Residents paying up to $15,000 a year in body corporate fees who are unable to vote on contracts and work, given the resort’s governance structure.
• Residents fear they may face an extreme levy hike from the overarching body corporate to cover outstanding debts.
• Dilapidated resources, including failing power generators leading to power outages earlier this year.
• A $40,000 budget for COVID expenses, but residents say they haven’t seen any hand sanitiser.
However, a key player in the community denied conflict of interest and highlighted the difficulties of providing services on an island.
Couran Cove is made up of a layered, complex body corporate scheme. Four minor bodies corporate – Eco Lodges, Lagoon Lodges, Broadwater Villas and Marine Apartments – all pay annual fees to an overarching body corporate, the Couran Cove Community Body Corporate (CBC).
In total, there are 566 lots on the island, including 360 apartments, and around 100 permanent residents.
Each body corporate is allowed one representative on the CBC.
However, their ability to vote on the CBC is subject to their body corporate’s ability to pay its annual levies.
The CBC also has two commercial representatives.
Currently, two of the minor bodies corporate – Eco Lodges and Lagoon Lodges – are considered unfinancial, which means in effect there are four votes on the committee.
Mr Napoli casts one of the two votes held by the commercial representatives because he represents Lot 3 – the arrivals building.
The island has two major service suppliers, Island Resorts (Facilities and Equipment) Pty Ltd and Island Resorts (Infrastructure) Pty Ltd.
In July, Island Resorts (Infrastructure) Pty Ltd wrote to the CBC and threatened to cut all essential services, including electricity, water and sewerage, because of money owed to it by the CBC.
It lodged a Supreme Court claim against CBC, together with Island Resorts (Facilities and Equipment) Pty Ltd, to get the money owed to both companies.
Island Resorts (Infrastructure) Pty Ltd sought an immediate payment $651,057.84 and weekly payments of $38,500 thereafter.
At the latest CBC annual general meeting in September the committee accepted it owed a total of $5.5 million to both service providers.
Sydney-based EDG Capital bought Lot 3, which is part of Couran Cove, off Onterran in 2018.
The company also purchased the management rights to the units in the letting pool, the marina and its infrastructure.
Mr Napoli is the managing director and CEO of EDG Capital.
He is also secretary of CBC and listed as the sole director of the two utility suppliers suing CBC.
Onterran chairman Lachlan McIntosh is treasurer of CBC and chair of the resort’s largest subsidiary body corporate, Marine Apartments.
He is also sole director of CCH Developments, a small company that owns a number of vacant lots at Couran Cove.
Mr McIntosh said the $5.5 million CBC debt was attributed to bodies corporate Lagoon and Eco Lodges not paying levies to CBC.
However, Eco Lodges residents allege they are hamstrung because CCH Developments, which is in administration, owes Eco Lodges $9.1 million in levies.
Mr McIntosh is suing each of the resort bodies corporate because he alleges he should not have to pay service fees for
undeveloped lots owned by CCH Developments.
He agreed that he should be charged for some levies, but not for power, sewerage and water when there were no houses on the blocks.
He said some other residents “have been blocking any attempt to resolve this issue”.
Mr McIntosh acknowledged that some of the money owed to the utility suppliers stemmed from the fees owed by CCH lots, but said a significant amount of money was outstanding from other Eco Lodges owners.
The CCH Supreme Court case is due to go to trial starting on November 30 for a hearing while the service providers case against CBC is back in court in early December.
A number of the 100 permanent residents who live on the island have told the Bulletin they feel their hands are tied, given Mr Napoli’s role on the committee and his role with the island’s utility suppliers.
“There are a few individuals who control the island and because of the way the system works, it is very difficult to get on the CBC and change things,” long-time resident at Ecolodges Norman Pinto told the Bulletin.
“Money gets paid to the central body corporate, but because some individuals have failed to pay their levies ... no one can do anything.
“We would not have an issue if some people paid up.
“Now we have the owner essentially suing himself (via the case between the utility suppliers and the CBC), and we just sit and watch while the rest has been left in wrack and ruin.
“Our levies are being paid and they are meant to go to our areas but you look around the place and see it is falling apart.”
Mr Pinto said he was also unclear of how the money for the levies was being spent.
Mr Napoli did not respond to multiple requests for comment.
However, Mr McIntosh denied any conflict of interest between Mr Napoli’s different roles because the position of secretary was not a financial one and he did not vote on budget matters.
He said Mr Napoli had no choice but to sit on the CBC because he was owner of one of the community lots – Lot 3 – which meant he was automatically assigned a seat on the committee.
He said the claims of regular power outages were “rubbish”. One generator was not working during February but had been fixed.
However, a letter distributed to all owners in April from then CBC chairman Matthew O’Connor detailed that the power had been off for a total of 60 hours in March.
The letter also claims there was still only one working generator on the island.
Residents say they are also frustrated by soaring levies, but little evidence of spending on the resort’s infrastructure.
One complaint made by residents was the increase in the resort’s cleaning and ground maintenance budget approved last month which went from $133,386 to $361,270 in a year, while rubbish removal soared from $58,638 to $238,694 per annum.
But Mr McIntosh said the jump was simply a result of levies being moved around the bodies corporate.
“In previous years the operator has billed individual bodies corporate directly for caretaking services which make up a portion of the budget,” he said.
“This year those services have been billed directly through the CBC (rather than the subsidiaries).
“The same group has been fighting for eight, nine years essentially,” Mr McIntosh said.
“It is expensive to live on an island. That is one of those things. The operator ... has to create his own water out of a bore and it is a bloody hard thing.
“I have been an operator out there, albeit I am not now, and it is a tough gig.”
The CBC has passed its budget for 2020-21. However, it is understood that the subsidiary bodies corporate are yet to do the same.
Mr McIntosh said it was an “unwieldy system” whereby the operator provided services to the CBC. In turn, it billed the subsidiary bodies corporate who passed on the fees to the owners.
“It would be lovely to have one large body corporate rather than five.”