‘Dysfunctional’ and dangerous: Report slams island resort turmoil

A new report has slammed “dysfunctional” bodies corporate at a troubled Queensland island resort, warning there is a high fire risk after essential services including water were cut off.

Couran Cove has been shutdown and without services for over a year. Photo: Greg Stolz.

A new report has slammed “dysfunctional” bodies corporate at a troubled Queensland island resort and warned safety is at risk after essential services including water were cut off.

The report, by receiver Bill Karageozis, is scathing about the situation at the once luxurious Couran Cove Island Resort on South Stradbroke Island which has been in the grip of a bitter body corporate feud.

Power, water and sewerage was cut in April last year, with residents who chose to remain forced to live off-grid amid crumbling and rusting infrastructure and ongoing legal battles.

Mr Karageozis was appointed by the Supreme Court as receiver for Couran Cove’s principal body corporate and four sub-bodies corporate that control residential precincts at the resort.

In a report released last month, he warned the current lack of spending on essential services “has raised significant safety issues, particularly concerning fire safety”.

Couran Cove. Picture: Nigel Hallett

“The absence of functional fire hydrants and other safety measures has left the community vulnerable, especially during bushfire season which may imminently have an impact on the ability of elements of the island to remain adequately insured in the future,” he said.

“Many residents have been forced to leave due to uninhabitable conditions, while others remain, relying on alternative substandard means such as generators and portable water supplies.

“Due to the financial and legal conflicts, essential utilities such as electricity, water, septic services and gas have been disconnected (since) April 2023. This has severely impacted the habitability of the resort.”

He said there was insufficient future cashflow to fund insurance premiums which were likely to fall into arrears.

Damage from a fire at Couran Cove Resort. Picture: Supplied

Mr Karageozis said examples of “dysfunctional” behaviour at Couran Cove included body corporate committee members allocating themselves paid jobs “which I understand to be contrary to the intent of the relevant legislation”.

He also alleged an “apparent desire” by many committee members “to keep the resort in a state of disarray … in an unreasonable attempt to purposely cause the (principal) Couran Cove Community Body Corporate to breach the service agreements so that they can take over the service provider contracts”.

He said the CCBC was “significantly dysfunctional” as one of its two members, the Eco body corporate had used majority voting rights to deny the principal body corporate levies to pay for services despite owing it more than $25m in court-ordered judgments.

Mr Karageozis said if the situation involved company directors instead of body corporate committee members, he would have asked corporate watchdog the Australian Securities and Investments Commission to take action for “substantial failures”.

Couran Cove residents Sharon Campione and her partner Mark filling up their generators, back when services were first cut to the island. Many locals have since been forced to leave. Picture: Nigel Hallett

He recommended the urgent appointment of an independent administrator to take over the running of Couran Cove.

“The financial and operational distress experienced by the CCBC has highlighted structural deficiencies that impede its capacity to maintain essential services and secure the safety and habitability of the resort,” he said.

“With the subsidiary debtors unlikely to provide the necessary liquidity and a significant shortfall expected on the judgment debt, the CCBC faces insurmountable challenges in restoring functionality and value to Couran Cove without external intervention.

“An independent Administrator would offer a neutral, structured approach to manage the body corporate managers’ obvious requirements to properly raise funds and deal with ongoing debts not just of an essential nature, but to address the complex service issues, such as interrupted electricity, water, septic, and gas.”

Couran Cove facilities have been left to ruin. Picture: Nigel Hallett