In the winter of 2009, then shadow treasurer Joe Hockey climbed Mount Kilimanjaro with Seven Network celebrity David Koch, tennis entrepreneur Paul Francis and others. The trip was to raise money for Paul Francis’s charity, the Humpty Dumpty Foundation.
Hockey was sponsored by adman John Singleton to the tune of $50,000 and the expedition was accompanied with the customary gushing media. The Kilimanjaro trip was also scrutinised in other quarters, though with not quite the same enthusiasm. Humpty Dumpty is at the epicentre of what may be Australia’s greatest local government stoush, a stoush which has waxed and waned for two decades, wreaking sporadic feuds among Willoughby councillors and fuelling angst in the local community.
At its essence it is a stoush about private operators making big profits from Crown land and related party transactions.
Across the nation, restaurateurs and recreation operators turn a profit from running their businesses on public land. If they deliver the public a benefit and bring themselves a profit, all good. The question is, when is a deal with a government or council too favourable a deal for business?
Such issues are epitomised in the battle for Talus Reserve, 15,000 square metres of land on Talus Street on Sydney’s inner North Shore.
Since 1992, Humpty Dumpty’s founder Paul Francis has operated one of Australia’s most successful tennis businesses, Love ‘N Deuce, out of Talus. It has never had to pay rent to Council.
Things hotted up however around 1999/2000 when it came to renegotiating the original lease of 1978 and some in the community felt Francis was getting too good a deal.
Willoughby Council actually leases Talus to the Northern Suburbs Tennis Association (NSTA). The lease renewal signed in 2000 set a peppercorn rent of $20,000 a year – bear in mind this is $70 million worth of prime land in one of Sydney’s leafier suburbs. A further discount of $6,000 a year was granted to NSTA when it agreed with Council to allow Humpty to stay at Talus rent free.
Around 2013, however, local resident activist John Owens, Willoughby councillors Stuart Coppock and John Hooper and others scrutinising Talus discovered Humpty was actually paying rent to Love ‘N Deuce.
Love ‘N Deuce manages the courts for NSTA and charges rent of around $28,000 to Humpty for around 15 square metres of space, more than Willoughby Council receives from NSTA for the entire park.
Love ‘N Deuce, which runs tennis and other sporting clinics for kids, has received around $400,000 in rent from Humpty since 1998. In contrast, Council has received only $230,000 from NSTA for the entire park since 1978, about $6,500 a year.
John Owens, formerly a partner at a major law firm, reckons Love ‘N Deuce may turnover more than $1 million a year from Talus and that it is not appropriate for it to be charging anything to Humpty.
“If Humpty has a right to stay at Talus – we say it doesn’t for technical reasons – but if you assume it has a right to be at Talus, it comes from the deal struck in 1999/2000 between it, Council and NSTA: it can stay there for free.” He cannot understand why the government, controlling all charities in NSW, would allow Humpty in such a case to pay rent to the chairman’s private company.
Paul Francis said he had “no input in relation to the amount to be paid by Humpty to Love ‘N Deuce”.
“All establishment costs for Humpty were paid by Love ‘N Deuce. Consistent with the intention of operating Humpty on a professional basis, the Humpty board, not including Mr Francis, considered it appropriate that Humpty pay a licence fee to Love ‘N Deuce for the use of part of its premises”.
Paul Francis has powerful allies. Besides Liberal party royalty in Joe Hockey and local tennis player and former NSW Liberal leader Kerry Chikarovski, celebrity Ray Martin is Humpty’s patron. Another associate President of Tennis Australia, Steve Healy, sees no issue in Humpty paying rent to Love ‘N Deuce, or of the use of the Talus Reserve. He points to Northbridge Golf Club “set up in identical fashion” and a number of other recreation facilities on public land in the same council area.
John Owens says Talus is unique, the lease covers the entire park and the private profits are totally out of whack with the rent paid to the public.
In 2013, a group of residents represented by Owens was repeatedly denied access to Talus (signposted “PRIVATE PROPERTY”). They then challenged Council in court and the Council has since gone to the NSW Supreme Court, as trustee for Talus, seeking approval for new arrangements including a sub-lease from NSTA to Love ‘N Deuce and a licence from Love ‘N Deuce to Humpty.
“They are trying to rewrite history and make it legal,” says Owens. Concerned residents have been effectively locked out of the proceedings because the trustee application is ex parte.
As with most such things, there has been a failure of transparency and disclosure by government, in this case the local council, and if these sorts of deals were better disclosed, government might avert years of community angst and opposition.