Update: 6th November 2019
Evidence that the Mess may have been Deliberately Created
Special Dispensation
At SBRC's meeting on 6th April 2011,
SBRC granted a special dispensation to a property developer,
allowing the developer to build and sell houses
in Memerambi Estate
before constructing essential infrastructure.
It is wellknown that property developers can go bust,
for quite a wide variety of reasons.
SBRC's discretionary dispensation created an unnecessary risk.
The fact that the risk was unnecessary
raises a suspicion that something was not right.
It suggests that SBRC may have had a hidden agenda.
In its conditions ,
SBRC specified that no certificates of occupancy
would be issued until
funded plans to complete all necessary infrastructure were in place.
The developer then proceeded to build and sell houses,
without constructing essential infrastructure.
Eventually the developer became insolvent.
Buyers of the new houses were left high and dry
with houses that they could not complete
because they were not permitted to occupy them.
The house owners faced massive bills,
first to pay for infrastructure and then to complete their houses,
even though they had already made
substantial payments to the developer.
Some home buyers were financially ruined in the fiasco.
Bank Guarantee
There is a mystery surrounding
a clause in the amended development approval.
On page 8 of the minutes of SBRC's meeting held on 6th April 2011,
condition GEN6 states:-
"
Provide an unconditional bank guarantee to the value of 1.5 times
the estimated value of the uncompleted works
as certified by a Consulting Engineer.
"
This clause about a bank guarantee
appears to indicate that money
to pay for uncompleted works should have become available
if the property developer
did not complete the required infrastructure works.
If SBRC had obtained a bank guarantee
then the Memerambi Mess would not have happened.
What happened to the bank guarantee?
SBRC stipulated that the bank guarantee had to be supplied before
certificates of occupancy would be issued.
However, as mentioned above,
certificates of occupancy could not be issued anyway
if infrastructure was not substantially completed.
There was therefore no incentive for the developer
to supply a bank guarantee
while substantial amounts of infrastructure work
were still outstanding.
Therefore, the inclusion of a bank guarantee in SBRC's conditions
appears to have been a cynical exercise of deliberate irrelevance.
The way that SBRC's conditions were worded
did not oblige the developer to supply a bank guarantee
until infrastructure was substantially completed.
Of course, by then
a bank guarantee would no longer serve any purpose.
Therefore it appears that, from the outset,
the bank guarantee was an irrelevant nonsense.
There appears to be only two possible reasons for such nonsense:-
-
Either, SBRC's conditions relating to the bank guarantee
were deliberate nonsense, a deliberate trick intended to mislead.
-
Or, SBRC's nonsensical conditions
reflected incomprehensible incompetence of the highest order.
The unusually absurd nature of SBRC's
conditions concerning the bank guarantee
substantially reinforces the suspicion
that the Memerambi Mess was deliberately orchestrated.
* * * * * * *
The bank guarantee has never been mentioned
in any of the many pronouncements
made by SBRC politicians and officials.
Also, no news stories have ever mentioned it.
The silence about the bank guarantee
is as complete as the absence
of logic in SBRC's conditions relating to it.
The silence surrounding the bank guarantee
adds further grounds for suspicion.
* * * * * * *
There is a further twist
to the interpretation of the approval conditions
relating to the bank guarantee.
In the amended development approval,
the clause about the bank guarantee was
bundled together with clauses
relating to the construction of essential infrastructure.
All of these clauses were subject to a specific condition:-
"Prior to the commencement of Building Work on any lot
the following works required to service each lot
where building works are proposed to commence,
shall be completed to the satisfaction of
Council's Director- Infrastructure"
This appears to specify that the developer
was obliged to deliver a bank guarantee to SBRC before
starting to build any houses.
Although a bank guarantee would seem to be out of place
under the category of
"the following works required to service each lot",
it is a fact that the clause about a bank guarantee
was nevertheless
bundled into this category in the approval conditions.
It appears that a literal interpretation of the wording
of SBRC's conditions means
that a bank guarantee to cover the cost of infrastructure
should have been obtained by SBRC from the developer
before the construction of houses commenced.
This literal interpretation of the conditions
means that it would appear that SBRC might be legally liable for
negligence because SBRC did not obtain the bank guarantee
but did allow houses to be built.
Regardless of what the approval conditions actually stated,
the intention of the dispensation granted by SBRC
was clearly to allow the construction of houses
before the construction of infrastructure.
This is confirmed by the undeniable fact
that SBRC did allow houses to be built without infrastructure.
It would be interesting to see how a court of law
would rule on whether
the conditions set by SBRC should have prevented
the construction of houses
until a bank guarantee sufficient
to cover infrastructure had been obtained from the developer.
This issue has never been tested in a court of law.
The circumstances surrounding the non-existent bank guarantee
are of sufficient importance in the public interest
to warrant a full and unbiased investigation
into the whole of the Memerambi debacle.
South Burnett Puppetmasters?
The mention of a bank guarantee
in the development approval conditions
may have given a false impression to home buyers
that they were protected.
In reality, by setting nonsensical conditions
concerning the bank guarantee,
SBRC appears to have deliberately ensured that
there could be no possibility
of there being a bank guarantee
to cover the costs of infrastructure.
If the Memerambi Mess resulted from the work
of puppetmasters,
then what might have been the purpose?
The purpose of the disaster appears to have been
to hinder population growth in the South Burnett.
Analysis of SBRC's black strategies
has led to new insights into many of SBRC's activities,
including the Memerambi Mess.
See
SBRC's Black Strategy 4
for more information about the various ways in which SBRC
hinders population growth in the South Burnett.
The Memerambi Mess had the effect of slowing down
the rate of migration of non-farming non-elderly residents
into the South Burnett.
Increasing numbers of such people
threaten the conservative voting majority in the region.
The Memerambi Mess also destroyed confidence in the South Burnett
as a place for investment in residential development.
From a previous report published in 2015:-
Memerambi - Overview of the Mess
Memerambi, a few kilometres north of Kingaroy on the road to Wondai,
is the location of a housing development
known as the Memerambi Estate
where fifty-three houses were constructed during 2011-12.
However as at July 2015, the houses were still unfinished and unoccupied
because there were a few problems with the development, such as there being no construction
of roads or stormwater drains.
There were plenty of problems.
New houses were not actually required
in the South Burnett which already had an over-supply of houses,
the land was prime agricultural land which only becomes a big issue when it suits politicians,
the people who bought the houses got an extremely raw deal,
the lack of drainage engineering caused runoff problems for existing local residents,
and the owners of some lots adjoining the Memerambi Estate have subsequently been compelled to pay part of the cost
of fixing the mess.
Buyers of properties with houses in the Memerambi Estate were not able to use their houses
which remained uncompleted, empty and unmaintained for years.
Meanwhile, the dudded property owners had to keep paying rates, mortgage repayments and legal bills.
Some of them became bankrupt.
Other losers include SBRC ratepayers,
who have to pay for the enormous amount of time that SBRC officials
have spent and will continue to spend on this project.
Ratepayers have also had to pay undisclosed amounts on SBRC's legal fees in related court cases.
Many questions are unanswered.
SBRC has passed the buck at every step of the way.
The fundamental cause is quite clear.
SBRC gave a special dispensation to the developer to build houses
before essential infrastructure was constructed.
The developer then proceeded to build uncompleted houses
which the developer sold.
Then, as has often happened to property developers,
the developer became insolvent.
It is not clear how the developer became insolvent
considering that the developer had sold many of the houses
but had not completed any of them
and had not spent much on infrastructure for them.
There does not appear to have been any official investigation into
any aspect of the Memerambi mess.
The quality of reporting by local media outlets
of some aspects of the Memerambi saga has been shoddy,
with misinformation that tends to be remarkably similar to SBRC spin.
Planning Approval and a Special Dispensation
The proposed development had originally been approved by SBRC
at its meeting of 19 January 2011
"
subject to reasonable and relevant conditions".
The relevant conditions required that all essential infrastructure
be completed before the construction of houses could commence.
Subsequently, at SBRC's meeting of 6th April 2011, the developer
sought a special dispensation and made a
"Request for Negotiated Decision".
In the "Key Point Summary" in the minutes of the council meeting it is stated:
"The specified conditions of development approval require the completion of works
prior to the commencement of building work on each lot.
The applicant has requested that the conditions be amended to allow Dwelling Houses
to be constructed prior to works being completed."
Accordingly, on 6th April 2011 on the
"Officer's Recommendation",
various clauses that specified that
"Prior to commencement of any building work on each lot"
were deleted from the planning approval conditions.
Also deleted was a clause
"The development herein approved may not start until a Development Permit for
Building Works and Development Permit for Operational Works have been issued and complied with."
Council officers present at SBRC meeting on 6th April 2011 were:
- Tony Hayward (Chief Executive Officer)
- Stan Taylor (Director Built & Natural Environment)
- Eleanor Sharpe (Director Community & Corporate Governance, and wife of Wayne Kratzmann who later became Mayor of SBRC)
- Gary Wall (Director Finance & Business, promoted to CEO of SBRC in 2015)
- John Kersnovski (Director Infrastructure)
Not one elected representative or senior officer of SBRC is on record
as having expressed any doubts about the wisdom of the special dispensation.
On the contrary, risks had unbelievably been assessed as being very low and the decision was made
on the
"Officer's Recommendation".
It is not known to kingaroar which officer(s) made the recommendation.
Following the granting of the special dispensation by SBRC on 6th April 2011,
the developer could now build and sell houses before starting work
on the essential infrastructure that the houses required.
The planning amendment was moved by Mayor David Carter and seconded by Councillor Kathy Duff.
Councillor Cheryl Dalton had declared an interest in the matter and had left the meeting,
stating as the reason that she used the applicants in her private business.
The amendment was passed unanimously by the remaining six councillors, being:
- Mayor David Carter
- Deputy Mayor Keith Campbell
- Councillor Kathy Duff
- Councillor Barry Green
- Councillor Debra Palmer
- Councillor Damien Tessmann
It is not known if elected representatives or council officials
considered the risk that the developer might become insolvent after the
dwellings were constructed but before essential infrastructure was constructed.
If they did not consider this risk then it is reasonable to ask why did they not consider it?
If anybody did consider this type of risk in this type of housing construction project,
then it is reasonable to ask how could such a risk have been assessed as being too low to require provision?
In the opinion of kingaroar, this is the issue where the spearhead of any investigation should be thrust.
SBRC Whitewash
and a Court Case that Nobody Really Won
SBRC spinning machines have repeatedly spun out misinformation about
two aspects of SBRC's Memerambi dealings.
Firstly, SBRC pretends that it was officially exonerated of any blame for the mess.
Secondly, SBRC pretends that in the first place it had no other option but to grant the developer
the special dispensation that led to the mess.
* * * * * * *
Litigation in 2013 in Queensland's Planning and Environment Court,
aimed at compelling SBRC to pay for the completion of essential infrastructure
at the Memerambi Estate,
was dismissed by the court
because the court decided that the court did not
have the jurisdiction to award the relief that the dudded property owners were seeking.
However, on 26th June 2013 the judge refused to award costs to SBRC and stated:
"... I am satisfied that the negotiated decision notice of the respondent
[SBRC]
which enabled building works to commence before operational works had been completed
has been a major contributor to the dispute before the court."
The judge clearly thought that SBRC was a major contributor to the dispute
but the judge did not have the power to do anything about it
except to refuse to award costs to SBRC.
The judge had also stated:
".. although the third respondent
[SBRC]
may well have been negligent it is not the case that
it has acted unlawfully in issuing the development approvals relevant to this proceeding."
Here the judge is indicating that although SBRC did not break the law,
this did not mean that SBRC was not negligent.
After reading the transcript of the 2013 court case,
it is difficult to understand how
any politician, council officer or media reporter
can say that SBRC was cleared of any blame for the Memerambi mess.
Nevertheless, many of them do.
The only thing that was established in SBRC's favour
was that SBRC did not break any law.
The absence of criminal offences does not automatically prove
that there was an absence of civil problems
such as negligence, bad decision-making or preferential dealing.
* * * * * * *
The second pretence of SBRC is that
the Memerambi mess was unavoidable
because the Memerambi historical subdivision,
which was created in 1908,
was exempt from the planning laws of 2011.
In reality, in 2011 SBRC granted the developer a special dispensation.
The special dispensation was granted entirely at the discretion of SBRC.
The developer was not given the special dispensation in the original planning consent.
The judge's comments in the above-mentioned case make it clear
that the judge thought that the dispensation should not have been granted.
SBRC spin has it that SBRC had no choice but to grant the special dispensation,
otherwise the developer would have taken SBRC to court to force SBRC to give way.
The flaw in this spin is that SBRC could easily have rejected the application for the special dispensation.
If SBRC had rejected the developer's request
then It would have been very difficult for the developer to persuade a court to reverse such a decision
because the developer's request was fundamentally highly risky and against the public interest
and against modern standards of good governance.
When the LNP had control of the state government,
they passed a planning law for historical subdivisions.
It was thought by some that the new law was an unnecessary waste of resources
whose real purpose was to
make SBRC look good after the Memerambi mess had unravelled.
The new law seemed to be an attempt to give some credibility to SBRC's actions.
In other words, the new law was little more than elaborate misinformation.
The new law was probably unnecessary because
if a local council refused to grant the type of dispensation that the Memerambi developer had demanded,
then it is extremely unlikely that any court would
force a local council to grant it
because of the risk to the public good.
Also, the state's new law for historical subdivisions is not worth much
because a local council can still issue special dispensations.
In 2014, SBRC amended its planning laws to make it clearer that developers of historical subdivisions
will not be allowed to proceed to build dwellings before all essential infrastructure has been completed.
Some media outlets misleadingly reported this in a way that gives the impression that
SBRC could not have prevented the Memerambi mess.
In reality, all that SBRC's amended planning law does is prevent
a developer in the future from arguing that SBRC had already created a precedent for the Memerambi development.
The law relating to precedents might have forced SBRC to follow its own Memerambi precedent
and issue similar special dispensations to later development projects.
Of course it is all rather irrelevant because SBRC can still make special dispensations if it chooses to do so.
The Eventual Solution
On 3rd June 2015, SBRC decided that the Memerambi Estate
would become a "benefitted area" ,
which means that SBRC will perform the work of constructing essential infrastructure.
SBRC will obtain a loan of $2.1 million from Queensland Treasury to do the work,
and will bill the property owners to repay the loan,
a cost estimated at $30,000 per lot.
(Editor's note: the figure of $30,000 per property had increased to $37,000 by 2017.)
The unfortunate owners of some properties that
adjoin the Memerambi Estate and that
back onto new streets in the estate will also
be legally liable to pay part of the infrastructure costs.
The owners of fifty-three uncompleted houses in the Memerambi Estate
will at last be able to finish and use their houses
when the infrastructure work has been completed towards the end of 2016.
The owners of approximately twenty empty lots have the choice of paying $30,000 per lot,
or walking away and letting SBRC sell each abandoned lot
to recover the $30,000 plus any rates that might also be owing.
It is likely that many of this unfortunate group of lot owners will indeed abandon their lots
because it is debatable whether empty lots in the estate are now worth $30,000 plus outstanding rates.
Winners and Losers
Losers
-
Purchasers of property in the Memerambi Estate, who have each lost a lot of money, sleep, years, hopes and dreams.
-
Owners of some properties adjoining the estate, who are legally liable to contribute a lot of money to fix the mess.
-
South Burnett ratepayers, who have had to pay for the enormous amount of time that SBRC officials
have spent on the mess. Ratepayers have also had to pay undisclosed amounts on SBRC's legal fees in court cases.
For some empty lots that owners may walk away from, ratepayers might also have to pay the difference
between the selling price and what the owners owe to SBRC.
-
The reputation of the South Burnett, because confidence has been lost in the South Burnett as a good place to invest.
-
The reputation of SBRC, according to some people, although some other people spruik that SBRC's reputation is untarnished.
-
Tradespeople and suppliers, if they were still owed money when the property developer became insolvent.
-
Workers who lost their jobs when the property developer became insolvent.
-
The property developer, who became insolvent.
Unless there is eventually a full investigation that concludes otherwise, the developer is officially a loser.
Winners
-
People who performed work on the project, if they got paid for their work.
-
Suppliers of materials for the project, if they got paid.
-
Lawyers who were paid for work on legal matters related to the mess.
-
SBRC councillors and officials, who always get paid,
nomatter what they spend their time on and regardless of the quality of their work.
Unless there is eventually a full investigation that concludes otherwise, SBRC councillors and officials are officially winners.
