By Julius Ewudo, ASEAN Region Representative
Sterling First tenants Beryl and Ray Taylor were in WA’s Supreme Court in Perth last Tuesday and Wednesday fighting to stay in their home for which they have pre-paid many years of rent.
Like the more than 100 other elderly Sterling First tenants who have lost everything and face eviction and homelessness, the Taylors are forced to legally fend for themselves because they have been abandoned by the two government agencies most responsible for their plight.
The report of the 2021-22 Senate inquiry into Sterling Income Trust slammed the failures of both the Australian Securities and Investments Commission (ASIC) and WA’s Department of Mines, Industry Regulation and Safety (DMIRS) Consumer Protection, which share responsibility for the Sterling First disaster.
Soon after the Sterling New Life rent-for-life scheme started in 2015, ASIC began receiving complaints about the scheme but took no action, not even to inform the existing customers that it knew the Sterling First directors had misrepresented the scheme. ASIC also knew the directors were serial Ponzi offenders associated with previous collapsed schemes and hundreds of millions of dollars of investor losses.
DMIRS Consumer Protection actually helped Sterling First design the scheme’s leases to conform with WA law, but ignored several other components of the leases that contravene WA’s Residential Tenancies Act, which should have stopped the scheme from proceeding.
Due diligence
Beryl and Ray Taylor first inquired into Sterling First in 2016, interested in its rent-for-life model that would allow them to downsize, but paused before signing in order to fully assess the scheme.
Beryl made many inquiries about Sterling First, including one phone call to ASIC to ask if there were any red flags about Sterling First.
ASIC assured her there were none, even though the regulator had already ignored numerous complaints about Sterling First that it had marked NFA–No Further Action.
It’s important to stress that when Ray and Beryl signed up in 2017 weren’t making an investment, as they had no wish to be investors—Beryl was so uninterested in being an investor that she had even rejected an offer of shares from her longtime employer when she worked.
The couple did not enter into the Sterling First scheme to strike it rich; they simply wanted to pay their rent in advance so they could downsize for retirement.
They did their due diligence, but now that they and the other tenants have lost everything the government’s response is caveat emptor—let the buyer beware, namely consumers are responsible for informing themselves to protect themselves from scams.
Research Director of the Australian Citizens Party which helped to fight for the Sterling First tenants, Robert Barwick said: “The government’s caveat emptor doctrine is callous, dishonest, and a legal form of victim blaming.
“Beryl and Ray did all that anyone could do under the circumstances, but they weren’t to know that the relevant government regulators weren’t doing their job.
“The elderly Sterling First victims are languishing, many are sick and dying, and more than 20 have died, waiting for a resolution of this mess.
“Beryl is battlng cancer, and has hurt her arm, and is desperate to keep her home: ‘I can’t couch surf’, she pleads.
“The only just resolution is for the two responsible government agencies—ASIC and DMIRS—to own up and arrange immediate compensation to keep the tenants in their homes.”
Barwick added that the Sterling First fiasco proved the importance of the current Senate inquiry into ASIC, which he criticised as lacklustre.
“The Senators must step up”, he said. “Financial victims want to see they are serious about fixing this dysfunctional regulator.”
