Jenolan Story

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

CHAPTER 2 - A TRUST WITHOUT A BOARD

Removing the Board

In July 2003, based on documents the government received from the Trust[1], an opportunity arose for the government to acquire the 99 year lease to Caves House without paying for it.

Chapter 2 is the story of how a government misled the Trust Board members in order to ensure they did not seek reappointment on the expiry of their term, as was the usual practice. In this way administrator could be appointed that reported directly to the Minister following the departure of the Board.

At the request of the Minister, the Premier agreed to commission a Special Review into the operations of the Trust[2]. The review was expected to investigate the major issues and structural options facing the Trust.[3]

There was no dispute that the government had powers under the Act to appoint an administrator in the event the Trust Board failed to care, control and manage karst lands effectively.[4] However, there had never been any suggestion that the board had not properly performed its functions.[5]  

Trust Board’s Responsibilities

The Trust Board administered the karst areas at Jenolan Caves under National Parks and Wildlife Act (1974). The board was made up of environmentalists and people with commercial experience. The latter was essential as the Trust was intended to be financially self-sufficient, earning revenue from cave tours.

The commercial interests were also necessary because Jenolan Caves was furnished with a famous hotel known as Caves House. It had been providing accommodation at the caves for more than 100 years. By 1990, the hotel was in dire condition. The government leased the hotel to a private owner, which was later named Jenolan Caves Resort (JCR).

Government Amends NPWS Act

The relationship between the Trust and the hotel operator worked effective and resulted increased interest in the caves and patronage. This changed, with amendments to the Act and the restructuring of the Trust Board in 1996. Trust board members with environmental and heritage expertise were appointed to the board in place of commercial members.[6] The changed composition of the board narrowed its focus.

Amendments to the Act included section 58ZA, which set out the changed structure of the board[7] and section 58ZE, required the reappointment of a board as soon as possible if an Administrator was appointed. The amendments to the Act noted that if the Minister removed the board members, new members had to be appointed to fill their positions within six months.[8]

While debating amendments to the Act in the Legislative Council on 5 December 1996, Treasurer Michael Egan states:

“Section 58ZE of the Bill will make it clear the appointment by the Minister of an administrator would be a stop-gap measure, pending the early appointment of a new trust board…Therefore the amended section 58ZE more closely reflects the intention of the Government." [9]

When the amendments to the Act were being debated, the public was also told that the trust would be able to obtain government grants for major infrastructure development.[10]

A Special Review

In 2003, Jenolan Caves infrastructure was reported to be 50 years old and had been breaking during the past few years.[11]This fractured the relationship between the Trust and the businesses. Following a report by the Trust, regarding water systems failures in the village,[12] the government, at the request of the Minister, commissioned a Special Review by the Council on Cost and Quality of Government (CCQG)[13]. The review would comment on the “appropriateness, efficiency, effectiveness and prudence” of Trust operations.[14]

The Special Review compiled 56 slides, which were intended to be used by the CCQG to make recommendations to the government. On 31 October 2003, the Special Review[15] was completed and presented to the Budget Committee, along with recommendations by the CCQG[16].

The Special Review analysed:

  • The relationship between the Trust’s conservation and commercial objectives,
  • Transport access to Jenolan Caves, and
  • The relationship between the Caves House lessee and the Trust. [17]

These issues were discussed in Chapter 1, as they were the major issues which impacted on the Trust Board. A Special Review found that the trust board was “not meeting its statutory conservation obligations effectively”.[18] This was, in large part, due to an estimated $14 million deficit in funding for infrastructure.[19]

The review stated that the current lease arrangement of Jenolan Caves House could not be sustained.[20] The “relationship between the Trust and lessee appears to have broken down...There is a need to develop an Exit Strategy”.[21] The review went further claiming that the parties were in dispute over refurbishment and maintenance, the level tourist visitation and its impact on Caves House occupancy, and partnership opportunities between the businesses and the Trust which had not been utilized.[22]

Special Review Lease Options

The Special Review: Jenolan Caves Reserve Trust included a number of lease options.[23] These were discussed in detail and included: varying the lease, a commercial buy-out or the government purchasing the hotel, compulsory acquisition and termination of the lease due to default.[24]  The review also outlined 5 structural options, of which none included the appointment of an Administrator to replace the Trust Board.[25]

CCQG Recommendations

The presentation by the CCQG to the Budget Committee[26], on 31 October 2003, was not considered by the Special Review members. The unnamed author of the CCQG presentation[27] recommended the appointment of an administrator to manage strategic, operational and legislative changes needed for the trust.[28] This was supported three weeks later by the CCQG Chair, Professor Percy Allan. Like the earlier recommendation it failed to justify the removal of the trust board, as required under the Act.[29]

Therefore, on 6 December 2003, the Minister met the Trust Board at Wombeyan Caves and told them that the government would not be reappointing them when their term expired. The Minister did not mention any particular clause in the Act.[30] He stated that an administrator would be appointed under the Act, “who will have all the powers, responsibilities, duties and functions of the Board”.[31] The Minutes note that the government did not remove the Board.

Board Minutes Altered

Draft Minutes prepared following the meeting recorded what was said at the final Trust Board meeting. The board did not approve the Draft Minutes, which stated that the government would appoint an administrator under section 58ZE.[32] According to the full transcript of the Wombeyan Caves meeting[33] and the Minister’s own notes [34] section 58ZE of the Act was not discussed.[35] The Minister’s briefing notes to trust staff[36] and his press statement of 8 December 2003[37] also made no reference to this section.

If the full transcript provided under FOI is accurate then section 58ZE was not discussed at the meeting. It was not mentioned in any documents apart from the Draft Minutes prepared following the meeting. The only other reference to this section was a letter from the Trust’s General Manger to the Minister on 8 December 2003. It claimed the Trust Board recommended the use of section 58ZE when it agreed to the appointing of an Administrator.[38]

Given the legal expertise of certain Trust Board members it would seem unlikely that they would have supported a decision by the government to appoint an administrator in breach of the Act, when it was not discussed by them at the meeting.[39]

The minutes had been altered.

To sum up …

The administrator’s appointment was an essential part of the government’s case that it acquired the Caves House property legally. The documents under FOI explain how the trust allowed an administrator to be appointed under section 58ZE, “Removal of Trust Board members”. [40] The Minister did not discuss removing the Trust Board when he met with them on 6 December 2003.[41] The appointment of an administrator without removing the Trust Board was invalid.

In 2003, the government had choices to appoint an administrator lawfully or unlawfully under the Act but it chose the latter. Chapter 3 will make reference to the benefits which flowed to the government by appointing an administrator.

 

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.

Bibliography


 

[1] Review of the Jenolan Caves Water Supply System, 3 July 2003, JCRT Board Internal Report, Steve Reilly; Letter to Greg Smith (copy to Barry O’Farrell) from JMA Parties, dated 14 October 2011.

[2] Request made to Premier by Minister for Environment in 3 July 2003, Review began in August 2003.

[3]Letter from Bob Carr to Bob Debus date 15 August 2003 obtained through FOI-DPC14/05302 (A5) on 12 February 2015.

[4] Jenolan Caves Reserve Trust- Appointment of Administrator, Memorandum of Advice, T.F. Robertson SC, Fredrick Jordan Chambers, 7 September 2003, p3.

[5] Briefing to Board, Official minutes of the Board meeting of the JCRT, Saturday 6 Dec 2003, Wombeyan Caves, commencing at 1.30pm.

[6] National Parks and Wildlife Act, Section 58ZA.

[7] Ibid.

[8] National Parks and Wildlife Act, Section 58ZE.

[9] National Parks and Wildlife Amendment (Abercrombie, Jenolan and Wombeyan Karst Conservation Reserves) Bill, Second Reading, 5 December 1996, page7040

[10] Statement of events Jenolan Caves 2004-2006, Part 2, NSW Government and Jenolan Caves Reserve Trust Management 2004-2006, JMA Parties, 9 February 2012.

[11] Draft plan of management 2003.

[12] Review of the Jenolan Caves Water Supply System, 3 July 2003, JCRT Board Internal Report, Steve Reilly.

[13]Letter from Bob Carr to Bob Debus date 15 August 2003 obtained through FOI-DPC14/05302 (A5) on 12 February 2015.

[14] Ibid.

[15] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust. obtained through FOI-DPC14/05302 on 12 February 2015.DPC14/05302 (A15).

[16] “Special Review: Jenolan Caves Reserve Trust” conducted by the Council on the Cost and Quality of Government, TAB A JCRT Review: CCQG Recommendations, dated 31 October 2003, accessed at 15 February 2015.

[17] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 2.

[18] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 28.

[19] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 29.

[20] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 52.

[21] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 18.

[22] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 38.

[23] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 52.

[24] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 53.

[25] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust, page 41.

[26] “Special Review: Jenolan Caves Reserve Trust” conducted by the Council on the Cost and Quality of Government, TAB A JCRT Review: CCQG Recommendations, dated 31 October 2003, accessed at 15 February 2015.

[27] Ibid.

[28] For the CCQG to rely on s58ZE of the Act, titled ‘Removal of Trust Board’ to appoint an Administrator, they would have to show reason why the Trust Board had not cared, controlled and managed karst lands. It would also be a stop-gap measure. 

[29] National Parks and Wildlife Amendment (Abercrombie, Jenolan and Wombeyan Karst Conservation Reserves) Bill, Second Reading, 5 December 1996, page7040

[30] Briefing to Board, Official minutes of the Board meeting of the JCRT, Saturday 6 Dec 2003, Wombeyan Caves, commencing at 1.30pm.

[31] Ibid, page 1.

[32] The following people were present in cabinet when it was decided that no funding would be allowed to benefit the lessee on 3 September 2003: Premier Carr; S Miller, Premier’s Office; C Gellatly, Premier’s Department; Michael Egan, Treasurer; M Coutts-Trotter, Treasurer’s Office; J Pearce, Treasury; K Cosgriff, Treasury; I Neale, Treasury; M Ronsisvalle, Treasury. Amongst the matters agreed at the meeting was that “the government would not support any recommendations that involve public moneys being used to benefit the current lessee of Jenolan Caves House. Cabinet Standing Committee on the Budget: Minutes of the meeting held on 3 September 2003.

[33] Briefing to Board, Official minutes of the Board meeting of the JCRT, Saturday 6 Dec 2003, Wombeyan Caves, commencing at 1.30pm.

[34] Ibid.

[35] Council on the Cost and Quality of Government, CCQG Special Review on the Jenolan Caves Reserve Trust.

[36] Briefing to Board, Official minutes of the Board meeting of the JCRT, Saturday 6 Dec 2003, Wombeyan Caves, commencing at 1.30pm.

[37] “New Lease of Life for Caves,” NSW Attorney General, Minister for the Environment, News Release, 8 December 2003.

[38]Letter from Andrew Fletcher to Minister for the Envrionment The Hon. Bob Debus dated 8 December 2003.

[39] Jenolan Caves Reserve Trust- Appointment of Administrator, Memorandum of Advice, T.F. Robertson SC, Fredrick Jordan Chambers, 7 September 2003, p3.

[40] Ibid.

[41] Briefing to Board, Official minutes of the Board meeting of the JCRT, Saturday 6 Dec 2003, Wombeyan Caves, commencing at 1.30pm.

Login Form

Follow Us!

Find Us on Facebook