Jenolan Story

The most beautiful caves in the world filled with deception, lies and dishonesty

Jenolan Story

Jenolan Caves House - Photo by WikipediaThis is our story, a group of 25 people who have been collateral damage as a result of ambitious politicians and public servants within the NSW Government.

In this section we will be posting Chapters of the Jenolan Story.


"Dear Professor Harper,[1]

The bank contracts that have been sold to businesses in our area by the major banks have caused significant distress to families. I have set out below how they affected many people in the area that we respect and work with.

The phrase 'collateral damage' often conjures images of war and civilian deaths in violent actions. Yet, the term has become synonymous with any unintended damage, injuries, or deaths caused by an action. When my business, Lithgow Industrial Cleaning Supplies, began providing cleaning products for use in the businesses at Jenolan Caves, I did not consider there was any way my business, nor the other businesses of my family, would become collateral damage in an action perpetrated by someone else's bank. More significantly, I never imagined it would be possible that I actually hoped to have been nothing more than financial collateral damage in a single act of banking dishonesty, as the alternative is that I was caught up in an act of widespread corruption that would disillusion the citizens of this nation beyond description, and disgusts myself and my family beyond expression. It also makes me question the real power the banks of this nation have over the lives of ordinary people whilst remaining devoid of regulation or answerable to the citizens it adversely effects.

The Human Cost of Financial Corruption

Community is fundamental to my existence and is an important reality for my family. Being one of 18 siblings, my family is a community within itself. However, many of us have remained in the Lithgow area and raised our own children here. There are many ways we give back to this community, but one of the ways is that many of us still work for or own businesses in the area.

Thus, giving back to the economy and livelihoods of others in my hometown. In particular, my business, Lithgow Industrial Cleaning Supplies, provided cleaning materials used by my brother and his family's cleaning business, B and M Cleaning Supplies, which had been employed to clean buildings for the Jenolan businesses and Jenolan Caves Trust. Both my brother's and my business lost money as soon as Jenolan Caves Resort's bank sent in its Receivers and Managers to manage the businesses.

The owners had been unable to pay all my bills prior to the involvement by the bank, and while I had an expectation my unpaid accounts would be paid once the property and businesses were sold, the bank is reported to have sold the entire package for 10 cents in the dollar. As a result, the bank was reported to have made a loss on the sale and pursued the guarantors vigorously for the difference of the loan. As a result my brother did not get paid in full for his cleaning services and I did not get paid in full for supplying my cleaning products.

At the time, I believed the property and the business had considerable value and had they sold for a fair value there would have been enough money to pay for all the goods and services supplied to Jenolan businesses in full. More importantly, the bank's choice to sell to the government at such as massive and apparently inexplicable discount saw my industrial cleaning supply accounts remain unpaid, becoming collateral damage to the bank's decision. Others who were affected by the selling of the business at a staggering loss include:

  1. Individuals who invested in the considerable refurbishment of the Caves House property such as Archer Field who was evidently being pursued by the bank in court for failing to stand by a personal guarantee.
  2. Staff employed by the businesses, including some staff employed by the various businesses at the Jenolan property.
  3. A number of small businesses, such as my own. Significantly, most small businesses are dependent on cash flow for success. Being forced to write off creditor's accounts, when they could have been paid many years earlier, was, in these circumstances, unconscionable. The bank selling the property and businesses for such a meagre amount is, to my belief, criminal.
  4. Farmers in the local area providing services and produce. Farms are a category of small business unto themselves, as they tend to pay tens of thousands through to millions of dollars to produce their goods, where small businesses, like ours and my family's usually outlay much smaller amounts. Thus a failure to receive money owing to them for services and produce would also have a great

Engaging in Business with Knowledge

With a belief that the bank involved in the sale of the property and businesses adversely affected so many people in my community, I am submitting this information because I do not think it is appropriate that a bank can simply dismiss people's livelihoods for their own purpose, agenda's and gains. More specifically, destroying livelihoods in such a small area has a substantial effect on a community as the destruction affects so many people living in areas such as Lithgow and the Blue Mountains.

While we were aware of some of the problems at Jenolan Caves, we were very willing to interact with businesses that had partnerships with government, providing services, and a major bank providing its finance. Such support from Australia's conservative banks seemed to suggest that the business model at Jenolan had a very real chance of success as a bank would not invest in a product they were not likely to make a profit from. Particularly, since my brother's business entered into the cleaning contract in 1996, the family watched the substantial upgrading of the hotel and businesses, which meant that the hotel received a much higher rating.

Likewise, while we understood there were many water problems, we did not believe the government would knowingly provide contaminated water to the public when it knew it had the potential to damage public health and ruin the businesses. We also knew the main road entry into the caves had been declared totally unsafe as this had received significant local media coverage. The media explained that the government was apparently making major administrative changes so the infrastructure problems could be fixed. Knowing all this, we continued to provide product and services at Jenolan, informed that the government was intent on fixing all of the problems. Since we were aware of the problems at Jenolan Caves simply by living in the area, we assumed that the bank invested in the business would also be well aware of the problems and would be willing to find a solution to them, as they continued to provide financial support for the business.

Unfortunately, what we had no way of knowing at the time was that all of Australia's major banks had an arrangement in place that meant any of them could breach contracts and act corruptly. This meant the bank could assist government in retrieving the Jenolan property and businesses for 10 cents in the dollar. Through research, I have now become aware that the major banks were all members of a secretive group called the `CCMCA', and the private group kept from the public a secret constitution that ensured they would never have to investigate any complaints made by customers and subscribers to their loans. As a result, the bank did not have to support the Jenolan businesses in their disputes with the government and could sell the property and businesses at an apparently unbelievable price.

International Standards

Such covert behavior by banks to ensure their own wealth is not a circumstance confined to Australian banks. The exact same behavior was evidently reported to have happened in United States some months ago. In a media release from the US Department of Justice on 21 August 2014, it is explained that Bank of America will pay a $16.65 Billion settlement for financial fraud. In this case, its subsidiary companies, Countrywide, "typically represented to investors that it originated loans based on underwriting standards that were designed to ensure borrowers could repay their loans, although Countrywide had information that certain borrowers had :a high probability of defaulting on their loans. Countrywide also concealed from RMBS [Residential Mortgage-Backed Securities] investors its use of "shadow guidelines" that permitted loans to riskier borrowers than Countrywide's underwriting guidelines would permit."

The difference between the American example and the Australian circumstance is that the government was adversely effected by actions of Countrywide, the Bank of America subsidiary. Acting U.S Attorney Stephanie Yonekura explained that, "Countrywide's improper securitization practices resulted in billions of dollars of losses to federally-insured financial institutions. We are pleased that this investigation has resulted in a multibillion-dollar recovery to compensate the United States for losses caused by Countrywide's misconduct."

Of course, inthe Australian example, the NSW State Government in2006 was the beneficiary of covert banking practices. They took control of a former government owned asset, which had been improved to a very high standard with private money, for a fraction of its actual worth. The bank was the only power in the nation financially supported enough and powerful enough to allow this to occur. What is most disappointing is that the bank in this case was unconscionable enough for this to occur.


This submission is a narrative about choices. The NSW State Government made choices in failing to cooperate with private enterprise and causing the privately owned businesses at Jenolan to fail. With this, the business bank found itself in the position of Solomon. It had the ability to end the dispute between the two parties. Any choice the bank made was supported by its own CCMCA and their secret constitution, and financial reserves that enabled it to endure what a major bank might refer to as a minor financial loss. However, rather than assisting to end all disputes, or even to sever relations with its customer and regain the cost of the investment, it decided to side with the government by selling them the property and businesses at a drastically reduced price.

In the story of Solomon, his choice to order the baby split in two in order to reveal its real mother spread throughout the land as evidence of great wisdom. In Lithgow and the Blue Mountains, the story of the bank and government spread also. But this story was recalled for it was based on corruption by our government and the unconscionable behaviour of banks and their disinterest in justice and ethics when dealing with local people and small businesses in a remote area, as noted in a Priestley's submission published recently by the Access to Justice Review and the Competition Policy Review.

In this one action at Jenolan, the bank adversely affected the lives and businesses of possibly hundreds of people. It certainly affected my family's businesses and me. The story of Solomon shows he was interested in the baby. I seek an investigation into this matter to see if the banks of this nation even consider its clients or the communities it benefits from when it makes significant financial decisions that are clearly only in the interests of banks. I would like to see this nation prosper as a result of local enterprises, small businesses and the farming sector being able to succeed by working with honest and a properly regulated banking system.

The question remains as to the reason for the bank in this case to sell a financially sound business at a loss, is one I simply cannot answer as I am not privy to the conspiring involved in banking policy and practice. However, it is worth noting that in NSW there is no government legislation that would make the bank contracts, which include the Code of Banking Practice, written by the banks assured under law.

Should you require any further details please contact the writer.

Yours sincerely,




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[1] This letter was previously submitted by the JMA Parties to the Harper Competition Policy Review in October 2014.


Since it was first constructed in 1896, Jenolan Caves House has been an icon of the Blue Mountains.

Caves House in the 1990s

In 1994, Jenolan Caves Resort (JCR), a company owned by Rosecharm Pty Ltd purchased the 99-year lease from the Peppers Hotel Group. [1]

Before JCR took possession of the hotel from the Peppers Group In December 1994, many Caves House buildings were completely run down and uninhabitable due to decades of neglect, according to Mr John Dwyer, the full time Maintenance Supervisor at the Hotel. Specifically, he stated in a declaration as to the standard of the hotel, there were many asbestos risks, dilapidated water infrastructure, fire hazards, insects and vermin, extensive flood damage, and structural damage. He also said many of the bedrooms at Caves House were so dilapidated and old they could not be repaired: “I stayed in one of these rooms when I started working for Peppers and was unable to sleep the [w]hole night because the room was so uncomfortable and so I slept in the car”.[2]

Mr William Coghlan was the acting manager of the company and took the delivery of the hotel from the Peppers Hotel Group. He inspected the buildings at the resort during the first two weeks.[3] He said that at that time of his inspection Caves House and surrounding buildings were quite obviously old and had only been superficially renovated. The hotel was of a one to two stars rating at best.[4] He also noted serious structural problems with the buildings including problems related to water movements, roofing and guttering and uncontained asbestos.[5] Of the attached staff quarters, Coghlan said, “I have seen better staff quarters in third world countries”. The rooms of Caves House were inspected, they varied from “superficial renovation through to uninhabitable”[6].

After the JCR took over the hotel, Mr Dwyer said he saw extensive refurbishment and repair works to the structure and amenities of the hotel. He said the hotel was in substantially better condition when he left the hotel in 1997 after over the 5 ½ years employment as a Maintenance Supervisor [7]. Coghlan said he visited the site again in 2002. He stated that “the huge amount of work that had been completed was obvious”[8]. Coghlan said he believed that the only thing that saved these buildings from being closed down completely was the renovations done from 1994 to 2004.[9]

Changes to the Trust

In 1996 the National Parks and Wildlife Act was amended without consultation with the lessee or the businesses in the village.[10] The Trust Board would no longer represent an equal number of environmental and business stakeholders. Instead the board would now be made up of environmental and heritage experts. The government assured concerned stakeholders that this board would remain independent. Then Attorney General Jeff Shaw stated:

“The independence of the Trust is guaranteed by the Act…[it] is the most effective management body and should remain independent from National Parks”.[11]

The Trust was to be financially independent and rely on ticket sales.[12] However, the government stated the Trust would be able to seek additional funds from the Public Reserve Management Fund for major capital works.[13] It would quickly become evident in the subsequent few years that the government would not provide any of the additional funds that were urgently needed to repair and maintain infrastructure and the caves.

Infrastructure Collapsing

By 2002 the hotel has been rerated by AAA Tourism. It was now 4.5 stars, however, the water pipes were often breaking and having a devastating impact on the Caves House businesses.[14] The Trust was still not able to obtain emergency funding from Treasury. The Trust Board was unable meet its obligations to the lessee and the businesses, being unable to obtain funds from the government to comply with its contractual obligations to the Caves House lessee. At times, there was no water available to hundreds of guests staying at the 4 ½ star heritage hotel.

Administrator Arrives

In 2003, an urgent review was conducted of the Trust.[15] It concluded that the Trust was not able to effectively govern without additional funds for capital works.[16] On 3 December 2003, the government approved the review’s recommendations for additional funding and an administrator who would replace the Trust board.[17] Removing the Trust Board was only an emergency power under the Act, it could not be done for longer than six months and only in circumstances where the Trust had not achieved their duties.[18] Despite the fact these circumstances did not exist the government approved the appointment of an administrator for two years.[19]

When the Trust Board was replaced by an administrator, the government finally funded the vital safety upgrades required at the Caves and road leading into the precinct. However, this was not the end of the saga but the start of one for the Caves House businesses. By 2004, water at Caves House was often contaminated. Multiple independent water tests confirmed the presence of E. coli and other bacteria in the water that was supplied to the hotel and bistro by the Trust.[20]

The Trust denied any responsibility and refused to install a water filter.[21] The lessee volunteered to install a water filter at their own cost, however they were not allowed to do so.[22] Understandably, customers were unimpressed with the level of water services at the hotel. The hotel was not able to deliver service to the 4 ½ star standard it had been awarded in 2004.[23] The Trust’s actions had severely impacted the historic site’s reputation and the government was aware that this damaged the businesses hugely.

Caves House 4.5 Stars (2004)

By 2004 Caves House and the other buildings within the Jenolan Caves Karst Reserve had received much needed maintenance and were placed on the State Heritage Register.

Caves House was placed on the State Heritage register because it is an instantly recognisable and unique building with significant educational and recreational values. The 100 years old hotel has significant historical value as one of the earliest destinations for tourists to a natural reserve in Australia.


Floor Lounge Area Caves House  LibraryMain Bar  21 11 303 bedroomReception Lobby Main Staircase  Retail Shop

In 2004, a government administrator replaced the independent Trust board in managing the reserve, to the detriment of the property. Despite the significance of the site for New South Wales, the condition of Caves House has been allowed to deteriorate rapidly in the last decade. Recent photos show the deplorable conditions of the building and surrounding area and a chronic lack of maintenance.

Government Approves New Hotel Plans (2004)

040330 JCR DA S6 plans 2040330 JCR DA S6 plans 3

10 Years Later (2014)

Annual Trust reports from 2004-2005 to 2010-2011 suggest that the government has spent up to $26.5 million on the Jenolan Caves site.[24] Yet they have not maintained the historic Caves House to an acceptable standard. Photos from 2014 and 2015 demonstrate the government’s lack of regard for the historic hotel.

Hotel Guest Entry1Hotel Guest Entry2Hotel Walkway1Hotel Walkway3Gatehouse ServicesHotel Footpath1Hotel ServicesKitchen Entry PathKitchen Entry RoofWallaby HallWallaby Hall Exposed WiresWallaby Hall Gutter

This does not look like a site which has had $26.5 million spent on it, or even the more conservative $11 million stated by former Environment Minister Robyn Parker.[25] This is not the standard a customer expects from a resort. But more importantly, this is not the standard that NSW expects from its state heritage icons. Tax payers have seen their funds spent recklessly in order to operate a hotel obtained by the government unlawfully, whilst the quality of accommodation has fallen to shamefully low standard. 

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[2] Statutory Dwyer declaration p5.

[3] Statutory Declaration William Coghlan, 21 January 2005.

[4] Ibid.

[5] Ibid.

[6] Ibid

[7] Statutory Dwyer declaration p?.


[9] Ibid.

[10] National Parks and Wildlife Amendment (Abercrombie, Jenolan and Wombeyan Karst Conservation Reserves) Act 1997

[11] Hansard LC 17 Oct 1996

[12] Hansard 19 June 1996

[13] Ibid.

[14] List of occasions with no water

[15] 3 September 2003, Cabinet Minutes

[16] CCQG Recommendations, 31 October 2003

[17] 3 Dec 2003, Cabinet Minutes

[18] Section 58ZE, NPWA

[19] 3 Dec 2003, Cabinet Minutes

[20] Ecolab report, Sonic Healthcare report, Medland Mitropolous.

[21] Trust correspondence

[22] Hansard 2004

[23] National Accommodation Classification Scheme, Jenolan Caves Resort, 27 January 2004.

[24] JCRT Annual Reports 2004-2005 to 2010-2011.

[25] ABC News Article, Dec 2012, EOI process


On 30 June 2006, the NSW government acquired the lease to Caves House from St George Bank.[1] The Deed was signed by the Administrator of the Jenolan Caves Trust. It has been stated that the appointment of the administrator was unlawful.[2] Yet the government authorised him to sign the Jenolan Deed and subsequently attempted to sell the property in 2006, 2010, and 2013 without investigating the allegations of unlawful appointment. Since 2006 the lease has not been successfully sold.


Part 1: The Labor Period 2003-2010

Starving the Businesses

Throughout 2002 and 2003, pipes at Jenolan Caves were breaking often and this had a devastating effect on the hotel businesses.[3] In July 2003, the Trust formulated an internal report.[4] This report stated that without a continuous supply of potable water the hotel could not operate. The Trust, having managed the hotel prior to the lease being sold to the private business, was aware that the lack of service provision was incredibly damaging to the businesses.

On 8 August 2003, the Trust Chair wrote to the lessee noting that the Trust had applied to Treasury for funding to address these issues but it had not been forthcoming.[5]

The following month, the government decided not to repair water services. On 3 September 2003, the Cabinet Standing Committee on the Budget approved a Special Review of the Jenolan Caves Trust.[6] Cabinet stated it would not support any funding recommendations that would benefit the current lessee of Jenolan Caves House.[7] This committee included Premier Carr and Treasurer Egan.[8] These members of parliament knew that the government would not be repairing the ageing infrastructure or installing filtration to the detriment of the businesses.

On 31 October 2003, the Special Review panel released their recommendations to the government.[9] These were later supported by the CCQG Chair, Professor Percy Allan in November.[10] The recommendations included appointing an administrator to the Trust, allocating up to $7.5 million for the buyout of the lease and amending the relevant legislation. The $7.5 million buy-out was included in the Review recommendations and potential costings.[11] However, details of this buy-out recommendation are redacted from copies of the documents obtained by the JMA Parties under the GIPA Act.[12]

On 2 December 2003, the Premier was briefed on the Special Review.[13] The briefing made no mention of the potential buy-out of the lease that the CCQG had recommended or amending the legislation. The next day the Cabinet Standing Committee on the Budget approved the appointment of the administrator but again made no mention of amending the legislation in order to do this or purchasing the lease.[14]

Replacing of the Trust Board

On 6 December 2006, the Minister for Environment Bob Debus met with the Trust Board.[15] Debus stated that when the Trust Board’s term ended they would be replaced with an administrator.

Minister Debus did not mention that according to the National Parks and Wildlife Act the Trust Board should only be removed and replaced with an administrator if they had not fulfilled their duties. Instead, Minister Debus made sure not to criticise the Board at all. The Board members were not removed at that time and were instead allowed to serve for the remainder of their term without being informed of what basis the administrator could be appointed.[16]

While the Board members that were present at the meeting apparently agreed to being replaced by an administrator, not all members of the Board were present and the whole Trust could not be bound by this decision. There is also no evidence that the Minister consulted with the major stakeholders (specified in 58ZA of the NPW Act) who elect representatives to the Trust Board prior to his decision to not reappoint the Trust Board.

Later the government stated that it relied on section 58ZE of the NPW Act to appoint the administrator. References to 58ZE of the Act do not appear in the transcript of the Trust Board meeting on 6 December 2003. However, it does appear later in the ‘Draft Minutes’ of the meeting that were created after the event. These Draft Minutes were never confirmed as correct by the Trust Board.

Ongoing Water Problems

Throughout 2005, the government was notified of the ongoing water problems at Jenolan Caves. On 27 January 2005, the government received a report from Ecolab which recommended that an alternate water source be found for the hotel.[17]

Shortly after the Ecolab recommendations, the Trust released an internal memorandum which claimed that Trust water complied with the Australian Drinking Water guidelines.[18] However, the memorandum also made it clear that ADW guidelines were not legally enforceable standards. This allowed the government to continue not to repair the water system, on the understanding that they could not be prosecuted for damaging the businesses and risking the health of visitors and staff by not providing a safe water supply.

First Attempt to Sell the Property – 2006

On 30 June 2006, the government acquired the lease from the bank at a significant discount. The property was valued at $11.5 million[19] and $13.5 million had been spent on upgrades at the site since 1990. The government was able to secure the property for $1.3 million.[20] The unlawfully appointed administrator was approved by the government to sign the Jenolan Deed.[21] This brings into question the validity of the government’s acquisition of the lease in 2006.

At this stage the government had access to the Robertson advice.[22] This advice stated that the appointment of the administrator was unlawful and did not comply with the National Parks and Wildlife Act. The government immediately went ahead with attempts to lease the property.

In September 2006, the Trust released a ‘Call for Expressions of Interest for the management and operation of the commercial businesses at Jenolan Karst Conservation Reserve comprising visitor accommodation, hospitality and cave tours’.[23] This would involve the 21-year lease of Jenolan Caves property and cave tour operations.[24] Expressions of Interest would close on 31 October 2006.[25]

The lessee contacted the Premier, outlining that the Trust had not complied with its statutory or contractual obligations and that issues with the Jenolan Deed must be resolved before Caves House could be re-leased.[26] The property failed to sell.

Another Attempt to Sell the Property – 2010

In 2010, the Labor government once again attempted to sell the lease of the Jenolan Caves property.[27] By this time the government had received a copy of advice by Garnsey J, QC.[28] This stated that the appointment of the administrator was invalid and could not act to bind the Trust. This supported the earlier Robertson advice.

The government was attempting to sell the lease of the property. Between 2004 and 2011, the Jenolan Caves Karst management had cost the NSW tax payers somewhere in the order of $22 million.[29]

By this time the JMA Parties had been formed. They began corresponding with the Department of Environment, Climate Change and Water; the Jenolan Caves Trust; and the Department of Premier and Cabinet regarding the invalid Jenolan Deed. The JMA Parties asserted that the government could not go ahead with plans to sell the lease to the property when the property had not been obtained lawfully.[30]

Once again, the attempts to sell the property were unsuccessful.

Part 2: The Liberal Period 2011-2015


The O’Farrell Government attempts to sell the property

The Liberal Party had strongly opposed the way the Jenolan Caves were being managed whilst they were in Opposition. In 2005, Shadow Environment Minister Michael Richardson had referred advice by Robertson T,SC to the parliament.[31] Richardson did not identify himself as the author on this advice, but stated the appointment of the administrator at Jenolan Caves was unlawful.[32]

Later, Barry O’Farrell referred the Jenolan matter to his Shadow Minister for the Environment, Catherine Cusack. Cusack assured the JMA Parties she would research the matter further after the election.[33] Despite O’Farrell’s promise that his Shadow Ministry would be maintained, following the election Robyn Parker was installed as Minister for Environment. Parker refused to investigate the Jenolan matters at all.[34]

On 6 December 2012, Parker announced that the government would once again be offering the property for a long-term lease.[35] An expert tender evaluation panel would be used to assess proposals.[36] Parker stated the property had cost tax payers $11 million since 2003, although the JMA Parties suggest that this figure is significantly higher.[37]

Cabinet approved the marketing of the EOI process and a media release was issued by Minister Parker that opened the Jenolan EOI process on 27 June 2013. [38] [39] Proposals would close on Friday 26 July 2013. The government was prepared to sell the property without investigating how they could do so lawfully. A senior member of DPC stated that the release of the EOI for Jenolan precinct was a whole of Government decision in accordance with a decision made by the NSW Cabinet.[40]

Trust Administrator Diane Leeson told Jenolan Caves Trust staff that a shortlist of proponents would be assessed in September and a proponent would be chosen in late 2013 or early 2014.[41]

As of 15 March 2015, the property remains unsold.[42] Reportedly, the favoured tender applicant withdrew interest from the property.[43]

To Sum up…

Successive NSW governments have repeatedly shown that they are willing to ignore the unlawful appointment of the administrator to Jenolan Caves Trust and the invalid Jenolan Deed in order to sell the property to private investors.

On the three occasions the property has been put up for sale, the government has had access to documents which show the appointment of the administrator was unlawful. Legal advice by Robertson[44] and Garnsey[45] confirms this. Despite not having good title to the property, the Labor government attempted to sell the property twice in 2006 and 2010.

The Liberal and National Parties strongly opposed the government’s management of the Caves whilst they were in Opposition. However, in 2013 the O’Farrell government also attempted to sell the property.

No attempts to sell the property have been successful. Without good title to the property it will not be possible for the government to sell the lease to the Jenolan Caves commercial precinct. No business would be interested in investing in a public-private partnership at Jenolan Caves when the government is willing to damage its partners and act unlawfully. 

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[1] Jenolan Deed

[2] The Jenolan Story, Chapter 14.

[3] List of occasions when water supply was interrupted

[4] July 2003, Trust internal report

[5] 8 August 2003 letter, Mackay to Field.

[6] 3 September 2003, Cabinet Minutes

[7] Ibid.

[8] Ibid.

[9] A14

[10] A14

[11] A16

[12] Ibid.

[13] A13

[14] 3 Dec 2003, Cabinet Minutes.

[15] 6 Dec 2003, Board meeting minutes.

[16] Draft Minutes 6 December 2003; transcript of meeting; Debus’ notes.

[17] 23 July 2013, Letter to Sarah Johnson, document 2.

[18] 15 February 2005, JCRT

[19] Valuation

[20] 27 June 2006 Jenolan Deed and $1.3 m payment.

[21] Jenolan Deed

[22] Tabled in parliament by Michael Richardson MP, 12 October 2005.

[23] EOI public notice, 31 October 2006.

[24] 2006 EOI (Binder 22)

[25] EOI public notice, 31 October 2006.

[26] 18 Dec 2006, Field to Iemma.

[27] EOI, close date 20 May 2010.

[28] Garnsey advice, 4 Dec 2008.

[29] 9 February 2012 Email, Funke to O’Farrell, attachment: Statement of Events.

[30] 25 February 2011, JMA to Sartor.

[31] 12 October 2005 Hansard Leg. Assembly

[32] Robertson advice

[33] Catherine Cusack meeting

[34] Questions on Notice.

[35] ABC News 6 Dec 2012, The Australian 6 Dec 2012.

[36] The Australian 6 Dec 2012.

[37] Statement of Events

[38] Extract from: Cabinet Standing Committee on Expenditure Review Decision Paper, 25 June 2013.

[39] Government email correspondence, 27 June 2013, Jill Morris (DPC) to Jenolan Steering and Working Group Members.

[40] Email, 20 May 2014, Jill Pattison (Director, Urban Productivity, DPC) to JMA Parties.

[41] JCRT memo to Staff, 27 June 2013.

[42] 15 March 2015, The Sun-Herald, ‘Iconic caves still for sale’, Kristen Ochs.

[43] Ibid.

[44] Robertson advice

[45] Garnsey advice


In 2014, members of the JMA Parties attended the Caves House site and saw a potentially hazardous material that looked similar to asbestos.[1] They photographed the substance and sent a copy to the Department of Premier and Cabinet, care of the Crown Solicitor’s Office.[2] No response was received. Early in 2015, members of the JMA Parties once again went to Caves House where they again took photographs of potentially hazardous substances.[3]

While the government stated in 2012 that it had spent in excess of $11 million refurbishing Caves House since 2003,[4] there were still instances of potentially hazardous materials in 2015. This health threat to staff and visitors was not a government priority. While the correspondence of 2015 actually did receive a response, it is still unclear whether the Trust complied with Work Health and Safety legislation when it collected samples of the material for testing.

Potentially Hazardous Substances

In January 2014, members of the JMA Parties saw these potentially hazardous substances whilst at Caves House:


The JMA Parties reported this to government agencies, yet they received no response.[5] On 2 March 2015, members of the JMA Parties travelled to Caves House where they once again photographed potentially hazardous substances, many of the same hazards still existed.

The JMA Parties alerted both Terry Bailey, Chief Executive of the Office of Environment and Heritage and Minister for Environment Rob Stokes, of the substance on 4 March 2015.[6] This correspondence was then sent to Premier Baird and various other Ministers and members of parliament.[7]

Misleading Statements

On 14 March 2015 and again on 23 March 2015, the JMA Parties received a response from Jenolan Caves Trust Administrator Bob Conroy on behalf of the Office of Environment and Heritage (OEH).[8] He thanked the JMA Parties for their report and stated that the substance had been tested by specialists contracted by the Trust. It did not contain asbestos and was not hazardous. Conroy stated:

“Jenolan Caves Trust takes its maintenance and hazardous material responsibilities very seriously and regularly inspects assets and updates its hazardous materials register as necessary”.[9]

This statement was greatly at odds with the lack of response to the JMA Parties earlier warnings of potentially hazardous substances. The JMA Parties consider this statement to be misleading and intending to mislead.[10] The government had failed to respond to previous reports from the JMA Parties in 2014. In 2015, OEH refused to note the location of any other current unsafe materials at the property and denied that its management practices had been substandard the previous year.[11]

It was still unclear whether the potentially hazardous substance that was referred to the Trust’s contractor was collected safely. They made a request for an informal release of this information under section 8 of the GIPA Act 2009. However, this was denied by OEH and Mr Conroy, stating a formal GIPA application was necessary for this information.[12]

Information Requests

On 24 March 2015, Mrs Rosemarie Bayne of the JMA Parties submitted a GIPA application which stated:


“I require all documents in relation to the OEH letter of 14 March 2015 and on what basis it was identified as not hazardous, as well as a copy of all entries in your hazardous material register between 1 January 2014 and now.”

On 30 April 2015, the JMA Parties were given access to these documents in part but they would only be provided on receipt of an additional $130 processing charge.[13] While the JMA Parties received the documents, they were substantially incomplete. On 11 June 2015, the application was referred to the NSW Civil and Administrative Tribunal (NCAT) by the JMA Parties.[14]

The respondent had not complied with their obligations under the GIPA Act.[15] The JMA Parties informed NCAT that they had not received all the documents they were entitled to under the scope of the GIPA application. The application was referred to a third party despite the fact OEH were the legal owner of all documents provided, this led to unnecessary processing charges which the agency did not justify. OEH failed to produce the asbestos register for the Caves House property, in breach of Work Health and Safety Regulation 2011 (NSW).[16] The Minister for Health[17], Administrator of Jenolan Caves Trust[18], Minister for Local Government[19], Minister for Environment[20], Minister for Planning[21], Secretary of Department of Premier and Cabinet[22], Premier Mike Baird and Chief Executive of OEH were all alerted to the situation and asked to address these issues immediately.[23]

The JMA Parties also requested documents that the Trust administrator relied on when he stated the Trust takes its “hazardous materials responsibilities very seriously” [24][25]. The JMA Parties suggest this statement is at odds with the fact that a photo of potentially hazardous substance on the site sent to the DPC and the Trust in April 2014 received no response. The statement was misleading and intending to mislead.[26]

OEH Chief Executive, Terry Bailey stated that the Trust had no knowledge of any photograph supplied to DPC and the Trust in April 2014. [27]

A second GIPA application is presently being processed by OEH.[28] This application requests all information on the procedures that are taken by OEH and the Jenolan Caves Trust in regards to potentially hazardous substances. It was not clear, from the documents that the JMA Parties were provided, if the government is complying with Work Health and Safety legislation. This legislation requires a person with adequate training to take any samples of potential asbestos.

To Sum Up…

The presence of exposed materials that are potentially hazardous on the Caves House site demonstrates the negligent manner in which the government treated staff and guests at Jenolan Caves and also demonstrates the deterioration of the property under the management of the government. A coming chapter, Heritage Vandals will show the decline of an iconic heritage landmark hotel whilst in the hands of the NSW government. 

JMA Parties would appreciate feedback on this Chapter, including information that should be corrected

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[1] 13 January 2014, ‘Staff entry Chisolms Restaurant’ photograph.

[2] 4 April 2014, JMA to Brad Row (Crown Solicitor’s Office)

[3] 2 March 2015 photos, 5 March 2015 Stat Dec by Archer Field.

[4] 6 December 2012, ABC News article

[5] 4 April 2014, JMA to Brad Row (Crown Solicitor’s Office)

[6] Letters 4 March 2015, Funke to Bailey and Funke to Stokes.

[7] Letter 6-11 March 2015, JMA to Baird, JMA to MPs

[8] 14 March 2015, Conroy to Funke

[9] Conroy to Funke, 14 March 2015.

[10] 28 July 2015 letters: Funke to Comley (Secretary, DPC), Funke to Bailey (Chief Executive, OEH)

[11] Ibid.

[12] 23 March 2015, Conroy to Funke

[13] Documents given in part

[14] 11 June 2015, NCAT referral

[15] 3 July 2015, Funke to Bayne, Briefing on NCAT meeting

[16] Ibid.

[17] 3 July 2015, Funke to Skinner

[18] 3 July 2015, Funke to Conroy

[19] 3 July 2015, Funke to Paul Toole

[20] 3 July 2015, Funke to Speakman

[21] 3 July 2015, Funke to Rob Stokes

[22] 3 July 2015, Funke to Comley

[23] 3 July 2015, Funke to Bailey

[24] 6 July 2015, Funke to Bailey

[25] 14 March Conroy to Funke, 23 March Conroy to Funke.

[26] 28 July 2015, Funke to Comley, and Funke to Bailey.

[27] 10 August 2015, Bailey to Funke.

[28] 23 September 2015.


Part 2 Missing Water Investigations

Whilst the appointment of the Administrator was problematic, the chronic water problems were of much greater concern to the JMA Parties. The failure by the Government to fund the replacement of aging pipes and install filtration at Jenolan Caves meant the businesses could not survive. It was a danger to the health of staff and the public.              


Part 2         

  • Without a regular supply of potable water, the businesses could not survive.     Throughout 2004 and 2005 the government ignored the businesses’ pleas for     something to be done.      
  • In 2005 the businesses’ obtained the Meagher advice. It stated the Trust was in breach of its water supply obligations     under the Services Agreement.      
  • When a new Liberal government was elected in 2011the JMA Parties requested an investigation. The government stated that the water issues had been adequately investigated at the time.      
  • The JMA Parties lodged a GIPA applications but received few documents in return and referred the matter to the Administrative Decisions Tribunal. While many documents were provided an investigation had never taken place.                

 Water Problems Ignored

On 12 October 2004, the hotel management had a meeting with the Trust.[1] The Trust believed that the water was not an issue and did not agree that establishing a water filter would be the solution to the businesses’ problems. Throughout 2005 multiple independent water tests showed that the water that the government was suppling to the businesses contained bacteria and E. coli and was a health hazard. It should not be drunk until filtered.[2]

Mr Templeton, a director of the JMA food and beverage business at Jenolan Caves, on 17 January 2005 wrote to Dr. Col Gellatly, the Director-General of the Department of Premier and Cabinet.[3] Templeton stated that the businesses would not be able to continue providing the service if the chronic water problems continued.

On 15 June 2005, Mr Templeton again wrote to the government, this time to Premier Carr.[4] He included independent water tests which found bacteria and E. coli in the water the government was supplying to the property. He also highlighted the fact that dated asbestos water pipes were breaking, interrupting water supply frequently and this should have been repaired years before. At this stage the administrator had been appointed, but the situation at Jenolan Caves had not improved, in fact it had worsened.

Attached to the letter to the Premier was a Petition which had been signed by the staff of Jenolan Village.[5] Staff believed that the water was a threat to their health. The petition also stated “there is a concern that the infrastructure of Jenolan Caves is being consciously run down”.

In November 2005, the lessee obtained legal advice from RP Meagher AO QC in relation to the water problems.[6] The advice stated that the Lease Services Agreement reinforces “the Trust’s obligations to supply, and keep supplied, potable water”. The advice stated that the lessee had the right to sue the Trust as it had broken its contract with them.

The lessee offered to install a water filter at their own cost, however the Trust would not allow this. The water situation did not improve until the government came into possession of the lease on 30 June 2006 when it immediately installed a water filter.[7]

Request for an Investigation

On 10 October 2011 Mr Templeton wrote to the Minister for Justice Greg Smith seeking an investigation into the water issues that had made it impossible for the food businesses to operate successfully. A copy of the letter was forwarded to the Health Minister, Jillian Skinner; Environment Minister, Robyn Parker; Member for Bathurst, Paul Toole and Premier O’Farrell.[8] Both Parker and O’Farrell had also been given access to the Meagher advice in 2005. This advice stated that the Trust was in breach of its obligation to supply potable water. Premier O’Farrell responded to Templeton’s letter, stating that the Minister for Justice was the appropriate Minister to investigate such allegations.[9]

On 28 March 2012, General Counsel for the DPC, Paul Miller, responded on behalf of the Premier and the Minister for Justice.[10] He stated that the ‘issue of water quality at Jenolan Caves had been the subject of considerable investigation … during the years 2004 to 2006 the outcome of which confirmed [it] complied with Australian Drinking Water Guidelines… The Government is satisfied [it] … was adequately addressed at the time.’

All relevant parties had been briefed by the JMA Parties. The Jenolan Caves Trust, the Department of Premier and Cabinet, Minister Parker and Premier O’Farrell all had access to the Robertson advice, which stated the administrator had been appointed unlawfully; the Meagher advice, which stated the Trust was in breach of its water supply obligations; a statement of events relating to water between 2004 and 2006; and a multitude of independent water tests. Despite overwhelming evidence, the government refused to consider investigating the water issues at Jenolan Caves.

The Tribunal

On 10 May 2012 five GIPA applications were lodged by Ms Bayne, on behalf of the JMA Parties, with various government departments. One of these GIPA applications involved Mr Miller’s letter to Mr Templeton. This letter had stated the water issues had been adequately investigated at the time. The JMA Parties requested copies of this water investigation report. They also required any other documents that Mr Miller relied on when he stated the water issues had been adequately addressed.

In response to this GIPA application the JMA Parties received very few documents and none which provided evidence of investigation. Ms Bayne referred the matter for independent review and then on to the Administrative Decisions Tribunal.

Missing Water Documents

On 10 May 2013, following an appeal to the Tribunal, the government was ordered to provide the JMA Parties with copies of:

all water quality investigation reports held by the Jenolan Caves Reserve Trust, the government and its agencies, and correspondence in relation thereto, during the years 2004-2006.”[11]

The documents that were provided to JMA were piecemeal with explicit references to documents that were not provided and implicit reference to missing correspondence. The missing documents included: Any investigations carried out by the Trust as referred to in Mr Miller’s letter of 28 March 2012; intra-office communications; and third party reports such as those carried out by the Department of Health on water quality.[12]

The government had either not provided all of the relevant documents as ordered by the Tribunal, or an investigation had never taken place.

Recently, on 12 November 2015 the JMA Parties received documents from a later GIPA application.[13] The documents released included file notes from the GIPA officer involved in processing GIPA applications from the JMA Parties in 2012 which were not provided to the Tribunal in 2014.[14] On multiple occasions GIPA officer, Melissa Watt met with Ray Donovan from the Department of Premier and Cabinet to discuss the JMA Parties’ applications.

These documents reveal that at no time did any government party investigate the discrepancies between government water tests and independent water tests.[15] Because the only complaints about water quality at the time were by the lessee and the hotel businesses (and staff) they would not investigate the matter. On 22 August 2012, Donovan (DPC) confirmed that neither DPC nor the Jenolan Caves Trust had carried out any investigation and there was no investigation report to provide.[16]

To Sum up…

The JMA Parties find it highly unusual that the government would suggest that no further testing or investigation was required when no water tests were ever carried out from within Caves House. Instead water samples were taken from an unused outdoor tap at the hotel. The government also suggested that they did not have to investigate if the only complaints had come from the lessee and those associated with the businesses. As a hotel, all complaints the public had about water quality would have gone to the hotel and its management. No one would expect that members of the public should have to make a complaint to the government about the poor quality of water at their hotel.

The government has made a decision to conceal the misleading statement made by Paul Miller, General Counsel for more than three and a half years.  

JMA Parties would appreciate feedback on this Chapter, including information that should be corrected

Please contact us by This email address is being protected from spambots. You need JavaScript enabled to view it.


The supporting documents will be uploaded shortly... 

[1] 12 Oct 2004, JCR and Trust meeting minutes

[2] Ecolab, Sonic Healthcare, Medland Mitropoulus, Humphreys.

[3] 17 Jan 2005, Templeton to Col Gellatly

[4] 15 June 2005, Templeton to Carr

[5] 2005 Staff petition

[6] Meagher advice

[7] 21 August 2006, Absolute Filters quote

[8]Templeton Letter of 10 October 2011

[9]Premier responded to Templeton of 11 November 2011.

[10] Paul Miller to Templeton 28 March 2012

[11] 18 June 2014, Funke to Bayne

[12] Funke to Bayne, 18 June 2014

[13] Matt Richards (DPC) to R Bayne 12 November 2015.

[14] File Notes 8 August 2012, 15 August 2012, 22 August 2012 by Melissa Watt.

[15] File Note Melissa Watt 15 August 2012.

[16] File Note Melissa Watt 22 August 2012.

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