At 6am on Wednesday, Sean Howard arrived at the Melbourne retirement village he owns with Trevor Kennedy, accompanied by locksmiths and security guards, to sack Lend Lease Primelife as managers of the village.
Within a few hours, the locks had been changed; the bewildered management staff were on their way home; the chief executive of Lend Lease Primelife, Rod Fehring, and his new boss, Steve McCann, CEO of Lend Lease, were seething in fury; and Howard was addressing the bemused residents of the village, telling them he had summarily taken over the management.
Howard is the founder of Ozemail, with Malcolm Turnbull and Trevor Kennedy. He and Kennedy (but not Turnbull) now own the Cumberland View Retirement Village and Hostel in the Melbourne suburb of Wheelers Hill. Howard owns 66 per cent and Kennedy 33 per cent.
Declaration of interest: my parents and my colleague Stephen Bartholomeusz’s mother happen to live – happily – in this village.
As you’d expect there are two quite different sides to the story. I have now got both of them in detail through a series of off-the-record conversations with all of the parties (including mum and dad).
The first thing that should be said is that the residents of the village are unaffected, so far, by the dispute between Howard and Lend Lease. In fact my parents are quite happy with Wednesday’s dawn coup; their dissatisfaction with the management goes back to well before Lend Lease took control of Primelife from Babcock & Brown last November.
And so does Howard’s. Prime Life has managed this village for ten years under a contract with Howard and Trevor Kennedy’s company, Sue-ellen Pty Ltd, which expired on June 30 – last Tuesday.
Primelife, then owned by Babcock & Brown Communities, had until September 2008 to renew the contract – nine months before it was due to expire – but Howard did not renew it.
Lend Lease says that Babcock & Brown made a mistake in the paperwork and through an oversight only renewed one of two contracts – the management agreement. The contract covering deferred management fees, under which residents have to give the manager a portion of any capital gains, was inadvertently not renewed.
Rod Fehring has been unsuccessfully trying to get a meeting with Howard since he took over management of Lend Lease Primelife at the beginning of this year. It’s understood there were many voice mail messages left and emails and letters written, all to no avail.
Apparently they bumped into each other at a function and had a cordial exchange of words, at which, according to the Lend Lease camp, there was a vague agreement to meet. But no meeting ever took place.
The next event was Wednesday’s dramatic dawn raid in Wheelers Hill and the changing of the locks.
Howard, it seems, had always intended to sack Primelife as manager of the village, whoever owned that company. He was not interested in renegotiating a new deal with Lend Lease as new owners of Primelife, only in taking over management of the village himself.
His complaints about management failures go back ten years, to when Primelife was managed by its founder, Ted Sent, who was sacked amid allegations of cash irregularities and telephone tapping. He subsequently failed in an unfair dismissal case.
It is suggested that Primelife failed to provide proper reporting or budgets for the entire ten years, under both Sent’s and Babcock & Brown’s management, although presumably these things picked up when Lend Lease took over.
The view from the Lend Lease camp is that Howard and Kennedy failed to spend money on capital works as provided in the contracts and that there was a “misalignment of interests”.
Lend Lease’s view now is that Howard’s behaviour was “very shabby”. The company is considering its legal position, but whether the matter ends up in court or not, the word is that Howard and Kennedy can forget about doing business with Lend Lease for the rest of their lives.
Meanwhile, my sources inside Cumberland View report that the Hostel has just been renovated by Howard at a cost of $7 million and they are looking forward to the improvements to the rest of the village that he foreshadowed in his speech on Wednesday.
LLP Price at posting:
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