SCEGGS Council Ltd

To: PJ Cornish (Head) 1981/2003.

Now, as you are recording and developing the next Chapter in the history of the SCEGGS Redlands School, Cremorne, NSW, established in 1984, I believe we need to prescribe the story of the true reason of the Diocese Dilemma (1969/1973) of the SCEGGS Corporation. It appears we need to establish the data clearly to recognise why the above corporation became insolvent in the late Sixties/ and early Seventies.

Firstly, it was a short life subsidiary corporation of the Diocese of Sydney, and became insolvent, so too both parties were financially at fault by law, assuming of course the senior partner ”the Diocese” authorised the subsidiary organisation – named above, to commence a development project in the Sydney East Area, consisting of a Forty Storey Building, a Twenty Storey Building, and a new Church, to be constructed on a specific site of East Sydney. This1969 project had been costed at 45 Million Australian Dollars, and was to be erected following the purchase and destruction of a specific church, housing, buildings, or other premises; on the specific site, and in due course, some years later surplus funds of the project would be available for subsidising the existing school named SCEGGS Darlinghurst school. As well it would enable the future school fees of students of the Corporation to be lessened.

Such a project of a subsidiary corporation was a business venture of major undertaking, and surely, needed A MAJOR APPROVAL from the Parent Operation.(and I need to advise here, some 50 years later), that the Parent Body Ownership, claims they were not acquainted with this project, yet, we would have to say that such a project could not have been started and proceeded without adequate backing funds, or without the approval, or even approbation, of the Managers, Owners, and/ or even the civil authorities, be they business owners, professional religious members, or even just close supporters of the Anglican faith. I need to also believe that the backing of a project such as this undertaking by the listed SCEGGS Corporation members would surely have supporters from within the Anglican faith, and so reflects most poorly on their business experience, their propriety, and even their personal relationships within their communities, for not alerting the Diocese about the project.

I should have realised when we at Redlands in 1969 sought the construction of a school canteen, but were not surprized it would be built professionally at $ 14,000, but we had to provide $ 9,500 (68% of the project). Diocese and Council funds were not readily available for this small project. However I was not an approver of the project, I was only a parent to be a family supporter of the Canteen. In fact later, in our delving into the operations of the Council Accounting John Roberts and I were staggered to note that no school, had its operations individually managed or accounted for. Hence were there were no problem schools within this group, and if there were any, who? I could not see who were profitable or unprofitable schools. I should have realised then it was a sloppy and lazy business operation, or just an amateur operator, so why would the Diocese not be similar?

As professionals, both John Roberts and myself were also staggered for in our temporary Trustee roles, apart from the above dilemma wd came to understand the malfeasance of the SCEGGS TREASURER. Yet his robbery was not a large amount of SCEGGS money. However we had been advised that the insolvency at large was due to the Treasurer’s stolen funds. This later proved to be untrue.

I have since learned that a new subsidiary of the Diocese, the SDS Corporation was registered in March 1973,and it was I believe stated to be “a long overdue subsidiary” to help manage the other Subsidiaries of the Diocese. However it was not in place, or EVEN MENTIONED during our 70’s discussions of” WHAT TO DO - TO SETTLE THE DILEMMA OF THE DIOCESE “in 1973 or 1974 OR EVEN IN 1975.

During that time ACCOUNTING CONTRACTORS had been hired to manage the SCEGGS Council out of their immediate difficulty, in addition to THE NEW SCEGGS COUNCIL REPLACEMENT ORGANISATION. We dealt with the “NEW” SCEGGS CORP EXECS (then insolvent), and other members of the Diocese group, Mr R Moore of the Contracting Accountants of SCEGGS. We reviewed all sorts of propositions to solve the DIOCESE DILEMMA. Despite the possible plans and negotiations, we could not find any acceptable way that would solve any of the proposals – recommendations, other than the one we had suggested to our parents. “BUY THE SCHOOL”. Presumably the Diocese had sought out other potential buyers.

The Parents were very much aware of the proposal, because there was a number of schools operating under perilous conditions, as had been apparently the Darlinghurst School. In fact when we learned about the Darlinghurst Development project, John Roberts and I found no joy with them, because they believed the rumour that Darlinghurst would never be closed, but Redlands would be closed and sold off to pay off the Darlinghurst needs or the School project Interestingly, it so happened that in talking with Miss Chisholm (Head) of Darlinghurst, John Roberts and I placed another scenario before her and Archdeacon(now Bishop ) Cameron when we suggested that Redlands being the least financial cash involvement, they sell off the Darlinghurst school, transfer and merge their students into the Redlands School at Cremorne, and ask Miss Chisholm to become the new Head at Redlands under a Parent owned school. No interest in that proposition was shown other than if all fails ‘we could consider it.’

This left us in the winter months of 1975 to try and consolidate the Redlands position. Mr. Moore had asked John and myself could we manage the School, and we were flabbergasted, but we immediately said yes, for we had a staff and students in place, and the problem to fix was a business matter, not an educational matter. John and I had undertaken much earlier in the time frame about the likely income stream of a depleted student stream especially one in the shadow of insolvency, and our analyses showed it would take at least six years to turn the school from a loss maker to a breakeven (small profit maker) with the poor growth stream of students in our area, We told our lawyers we could only undertake the purchase if we could have a purchase including a six year delayed settlement (based on the proposed Income/Expenditure proposal, immediate take over, purchase of all the building assets, and the school name, credo, uniform, song, Records etc of the Redlands Anglican School. So much for our purchase offer, but it would or should, bail out Redlands from the SCEGGS Corporate group, would enable Redlands to be continuous. However we made no offer of Directorships to the Diocese, for we desired to appoint a business experienced Board to manage the new Business Corporation we would have to establish.

Additionally we did not offer any membership of our new corporation to any Diocese corporation members, (and if I state this I do so on the basis) it must not come back to haunt us. Why, because we could not trust in the reliability of inexperienced persons on our Board.

Coincidentally late in about 1998/9 I sought a meeting with the then Archbishop, advising I believed it was time to lower the number of Redlands Board members from 12 down to perhaps 6 to 8 members, including perhaps only two of the Church Nominees out of the Diocese 4 nominees. I still await a reply.

Another strange incident occurred three days after we had mentally tuned in to purchase was a phone call from a neighbouring aged care offering to take Redlands off our hands in three years, but giving us a brand new school built on the Dee Why Drive-In site, plus a Sports oval. I turned it down at once as I already had the community it was to be in, for students in that region at that time were out of focus with the SCEGGS SCHOOL at Cremorne.

We asked nothing of the Diocese in our 1975 proposal. It was to be a clean sale of assets, and Anglican Affiliation rights,. (It was to be a lock stock and Barrel transaction). I never received a response. However our lawyers and the Diocese Lawyers, proposed we prepare and sign a Contract of Sale, and become ready to take over the school under our new Corporation, under a contract of delayed settlement, which we did sign on January 12th, 1976, and which was in place by January 26th,1976, for the start of school 1976 . Needless to say, we had already taken over the school management at the start of fourth term 1975, assumption Redlands Parents were responsible for all expenses of operations, and income from students, as well as meeting the costs of scholarships, and Staff. I imagine this issue became confusing at the Diocese, whom I suggest felt Redlands was not capable or ready to set sail on our 1975 offer and venture, and the Diocese said close the sale – let’s get on with it before it gets lost in discussions. Maybe not but in later years I need to say that we having started with assets of Zero dollars, and having met the whole of the last term 1975 expenses, and other later Bank costs previously owed by the SCEGGS corporation or the Diocese between1975 and 2018, it is noted that the assets are now listed at in excess of $ 100 Million Dollars. No mean feat.

At the time I honestly believed the Diocese perceived their loss and maybe greed entered onto some desks about an ability to intervene; this may have been delayed for a purpose. In the proposal, we had sought a 6 year delayed settlement, then a 10 year period to repay SCEGGS banking costs provided by a GAB mortgage to take the SCEGGS/Diocese out of the loop. Such costs were $1,400,000, delayed salaries LSL coasts, and other minor 1975 costs appropriate to Staff expenses etc, plus the School Sale of $ 1. (See later reference)

I now turn to the Constitution of 1976. It was developed by the legal team based on normal sale terms that applied as at 1976.01.01. It was a constitution that offered the Diocese (rather SCEGGS Council) nothing except a clean bill of sale for a clean reciprocation of asset transfers, including such items as banking obligations which were paid out to the Glebe Administration in 1981 to 1991 as scheduled; this all followed the delayed settlement of 1976 to 1981.

I record for posterity here that prior to 1979, I was invited to address Synod, to discuss our relationship with the Diocese. Rather than such a discussion for which I was prepared I learned that my task was to indicate why the Diocese should sell the SCEGGS school to a parent group and not to the other Independent School System, already in the pipe line. Interesting again to note, no mention of SDS came up in the several dialogues. I spoke of our findings of the Diocese Dilemma, our efforts to solve the matter, and of course my concern about the Diocese being misleading in its identifying the purpose for our visit to the Diocese on this occasion. I am advised my speech was accurate and that it reflected our desire for a relationship with the Diocese. It fell to me on that occasion to recall a request from the North Sydney Council about redrafting assets in the purchase of properties stated in the purchase to be rezoned for a potential sale. I do not believe we were to be the recipients of the sales revenue from that potential opportunity of being sold at that time.

Now to October 1979 when Redlands Board members were invited to meet with (not with SDS, but with a Diocesan Sub-committee, Lawyer Neil Cameron, a new member of SCEGGS Corporation (presumably no longer still Insolvent) and a third member of another Diocesan Subsidiary. Regrettably I was overseas at this time, so Mr John Roberts (then our Secretary and Treasurer) attended with three other Board members. I had not read John’s 30 plus page report of that meeting until 2019. The outcome of the meeting appeared to have been a courteous report with the exception of receiving some demands from the Diocese, not from SCEGGS Council, nor SDS, but THE DIOCESE wanting to be incorporated into our second Constitution of 1982, and of course its consequent entry into the Sale transfer of SCEGGS Redlands to SCEGGS Redlands Ltd.

I must say when I read about it in 2019 I became ashamed of my church, the Anglican Church of Australia. Their demands were about Terms of yesteryear in the Church, and for example they demanded TWO MEMBERSHIP RIGHTS in our SCEGGS REDLANDS REGISTER. Not just one, but two had emerged which was never in our purchase relationship of 1975/6. Again it did not bob up even at this meeting in 1979; SDS was not mentioned. Further, we were advised other items would arise and subsequently the two Memberships demanded were for a) the Diocese and B) the SDS. May I enquire, why did it take from 1975 to 1979 to appear, and want control of our company, and even before the needed payments had been made to the Diocese?

Then next I learned that presumably the voting rights we had to give the SDS, were not required in 1976. Why would Redlands be frustrated by giving the SDS or the Diocese a 50% of each voting right at AGMs or EGMs - plus one vote or 51% generating a no action result of each proposal, or even generating a change of ownership by SDS (who manage the Diocese Business), This was not a term of the sale, and indeed I believe it was illegal.

In effect what has happened is that the Diocese, or the Diocese plus SDS has isolated the school from the transfer of our Independence achieved in 1976, and conceivably could quietly move the school, back to the ownership of the Diocesan Schools System, or from such other bodies as they see fit such as occurred with The Blue Mountains Grammar School disappearance, back in the ‘Seventies’, into the camp of the King’s School. How do I know this so well? The Chairman of Blue Mountains Grammar School, Past District Governor John Patterson DG of Rotary District 979 in the North of Sydney’s Rotary Clubs, and I John Lang OAM as the DG of District 969 on the North Shore of Sydney Rotary Clubs were colleagues in the same year1988/89. I am aware of other schools that have disappeared since my term of office at Redlands back in 1976 to 2000. I have assisted several others to be saved, and I have seen others fail or merge out of the reach of our Anglican Faith: one in Bathurst, another in Queensland, and another in Bendigo, Victoria.

FUNDS. We did take some of the operating costs out of the SCEGGS Corporation in 1975, as must have some of the other schools in the group, thus greatly assisting the Diocese eliminate its Dilemma. Presumably, SCEGGS was able to be wound up without the need of SDS and its management role. We note that the various schools have also moved on, and our only real complaint is we hope the experience gained by the Diocese in their Seventies Dilemma remains as a constant warning about being fully involved in their responsibilities.

As I seem to remember there were several time frames in our Redlands Operations:

Step A: 1976 to 1981. The period in which there were no financial gains of any consequence and a very minor sum was gained towards our planned deposit scheme, despite the factor, it had to be “just a survival period” to change the lapsed period of insolvency, and usage of a changed and interested management.

Step B: 1981 to 1991. The period of restitution of past SCEGGS (DIOCESE) debts. A first debt of $ 1,400,000, was a debt of $ 400,000 Capital borrowings with Westpac on Redlands School and a debt of $ 1,000,000 of Interest. I may be out by a figure of $ 100,000 in this transaction, because I do not have the records to refer to. Some other debts would have applied to GAB Costs in setting up a Mortgage for SCEGGS REDLANDS and SCEGGS COSTS of Sale transfers etc. In the items listed with the exception of $ 1 million of Interest all were paid off to the GBA organisation on annual payments throughout 1981 to 1991, both on time or prior to their due dates. In the case of the Million Dollars though I can remember at a meeting with Mr King of Westpac, being asked at a special Bankers meeting: is the new Redlands Corporation in current terms with their accounts with the Bankers and my reply was ‘Yes’. However, in terms of the Interest item of $ 1,000,000 this was a SCEGGS past item and I believe it was for Unpaid Interest belonging to the SCEGGS corporation. If it was interest unpaid prior to 1976 it ought to be a SCEGGS pre-1976 debt, which SCEGGS had not paid and the Bank cannot and does not expect to get; ‘may I suggest the Bank considers a write off might be granted to solve the matter, and if you do agree to same may I ask you to ensure that the SCEGGS Corporation / Diocese pass the credit on to the new owners – thus saving a major debt that the Redlands Corporation may not have to pay at this time, and which may could flow on to us – if it just credited it to the SCEGGS Corporation’.

I know that Mr King said to the SCEGGS Representative then that the Interest Factor would be forgiven and he hoped that SCEGGS Council would heed the remark and ensure REDLANDS would not be required to meet that cost in the acquisition of Redlands.

Step C: 1991 to 1996. This period of time was the time of the purchase of the second school campus in McPherson Street Cremorne and the time of the purchase of the Woden Valley Hospital, Canberra, ACT, buildings to be used at McPherson Street Campus, to cater for the growing student demand and to us for our new Campus at Jindabyne, NSW for a Country Centre for visitation of SCECGS Redlands’ Sydney students.

It is my opinion that schools today can and will be in trouble, usually due to our trying to make them Anglicans first and students second, instead of setting ourselves to being Educationalists at school and letting Religious matters come second, because of our backgrounds. I need to refer back to Mr Rodney Moore of the Contracting Accountants who used to manage the SCEGGS Schools during the Dilemma of 1974/6. We took him on Board at Redlands for a year because he was then currently managing the schools and knew of their nuances. Regretfully we lost him after one year, and it was purposeful, as we were advised by a Diocesan contact of that time. Rodney was a great help to us in that first year, and it explains the reason we favoured him to be our link and having him because the was the best person for our team at that time.

Following along on that factor and the demand which I purposefully ignored was the fact that our appointment of Mr Peter Cornish in 1981 was a blessed success, for not only did he run a tight ship in Educational matters, he responded to our growth desires and dedicated processes, and it is no wonder that today we have a rare asset base, that only a well-trained financial learner could generate. When we were looking for a new Head of the school, I sought out a person with WORLDLY EDUCATIONAL EXPERIENCE, AND A PERSON WHO HAD INTERNATIONAL EXPERIENCE, for our goal at Redlands was to become a WORLDLY SCHOOL, as well as a FAMILY SCHOOL OF THE TWO SEXES.

WE THE TRUSTEES SET OUT WITH AND IN A PARTNERSHIP OF TRUST WITH THE PARENTS, THE STAFF, AND THE CHILDREN. THUS, I HOPED WE HAVE ACHIEVED THESE GOALS.

Was SCECGS Redlands LTD., a suitable title for the new Corporation ? Yes. As it happened we learned back in 1976 that the current site of the school was named Redlands, and we understand it retained that same name of a residential site as the new name of the School site, in the late nineteenth century. We are also advised that the former owner of the residential block was named Phillips, and in the ‘Seventies’ we had Phillips children as students; it was also known that the father of those children had also been a student in earlier days at the school Redlands.

We were fortunate enough to have several Donors whose donations assisted towards the school purchase in 1976. One was a father of a student – Lynette Fahl - who died age 16 years whilst attending the school. A second donation arose after Redlands offered to purchase three adjacent houses in Winnie Street, Cremorne, but they were not for sale at that time, and I am led to believe we were promised that any money raised in excess of our purchase offer, would be donated to Redlands. As it happened we received funds in due course also which we assigned to the purchase in 1976/78. As well we had donations from current parents during their children’s school lives, via the Redlands Foundation.

I mentioned earlier that in 1976 we had a constitution which was developed from and with our school purchase. Following it we did have a Change of Constitution in 1982, which was demanded by the Diocese following their demands in 1979 at the sub-committee meeting of October 1979 between the Redlands Corporation and three Diocese representatives, one of the new SCEGGS Appointees, a GAB appointee, and solicitor Cameron. After their general discussions, they demanded some new changes, which were confronting and were rejected.

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Despite that they stated they wanted a new Constitution to include some new demands. John Roberts and his team were denied any rejections, and later provided a new constitution with their conditions inclusive. This matter therefore provided the Diocese, (Not SCEGGS nor SDS) (note again SDS was not mentioned) and we did not learn of their nomination until later after the Constitution No 2 appeared on the scene.

I, John Lang was aware of some of the constraints imposed by the Diocese, but as observed earlier having been overseas at the time of the October 1979 meeting was not able to veto the proposal demands of the Diocese to allow purchase to continue. Perhaps that is as well otherwise Redlands’ sale to the Parents may not have occurred, or even continued post 1980 and in the 1982 Constitution.

Now let us turn to 2018, when the present Board put a proposed Constitution to the EGM of 2019, for a name change, leaving the Diocese demands remaining, but asking the SDS Representative, not to introduce his voting entitlement at the meeting. Lo and Behold, THE BOARD’S RECOMMENDATION was strongly rejected to the chagrin of the Chair and her Board, and it was noted by the Corporate Members present as their rejection of the Diocese’s demanded Voting Rites of 1982. I believe it showed the Board members that they had lost their Independence and management control of their company, and guess what: the SDS has now been shown up to us that they do not warrant a place on the SCEGGS REDLANDS COMPANY LTD register.

SCECGS REDLANDS LTD., NEEDS A CONSTITUTION NO 3 to emerge WITHOUT THE DEMANDS OF THE DIOCESE ENTERED INTO THE RULES OF CONSTITUTION NO 2.

SECONDLY WE NEED TO BE SURE THAT ANY POSSIBLE CONSTITUTIONAL ITEMS HAVE NOT CHANGED THE SALE TERMS OF 1976.

THIRDLY WE NEED TO SEEK SOME BOARD AFFILIATIONS THAT ENABLE US TO HAVE A COMFORTABLE FUTURE RELATIONSHIP WITH THE DIOCESE AS WELL AS ONE WITH ST PETERS LOCAL CHURCH ,A HAPPY MUTUALITY. THIS MAY NEED TO EVEN REDUCE THEIR NUMBERS FROM FOUR MEMBERS TO SAY 2 or 1.

WE ALSO NEED TO HAVE ONE OR TWO MEMBERS ON THE CURRENT BOARD WHO UNDERSTAND THE PRICE OF INDEPENDENCE FROM THE NEW SCHOOL OF 1976, REMAIN TO ENSURE THE GOALS OF THE 1976 FOUNDERS ARE NOT LOST DOWN THE TORTUOUS ROUTE SIMILAR TO THAT WHICH REDLANDS HAS TRAVELLED IN THE PAST 50 YEARS. IT IS ESSENTIAL TO ENSURE THAT AT NO TIME IS THE SCHOOL OR COMPANY REQUIRED TO STEP OFF THE RIGHT PATHWAY, DESPITE THE GREAT STRIDES TAKEN IN THE BUSINESS WORLD AND IN TOP ACADEMIC LEVELS OF THE DAY.

John Lang OAM JP KLJ.

Reviewed June 2020.