Chesher v Eurobodalla Shire Council
[2006] NSWLEC 132
•04/12/2006
Reported Decision: 145 LGERA 300
Land and Environment Court
of New South Wales
CITATION: Chesher v Eurobodalla Shire Council [2006] NSWLEC 132 PARTIES: APPLICANTS
Peter Ronald Chesher
Deborah Margaret Chesher
RESPONDENT
Eurobodalla Shire CouncilFILE NUMBER(S): 20982 of 2005 CORAM: Pain J KEY ISSUES: Waste Disposal :- whether Court has power to consider s 68 application to dispose of effluent waste if tender under Local Government Act - whether Court in its discretion should approve s 68 application LEGISLATION CITED: Land and Environment Court Act 1979 s39(2)
Local Government Act 1993 s8, s23, s55, s68 Part C, s89, s94
Local Government (General) Regulation 2005 cl 163CASES CITED: Council of Casino v Eljo Pty Ltd & Solo Waste Australia Pty Ltd (trading as Richmond Waste) (unreported, Supreme Court of New South Wales Court of Appeal, Mahoney ACJ, Clarke and Beazley JJA, 19 September 1996) 9040632, ;
Eljo Pty Ltd v Casino Council (1994) 84 LGERA 373;
JR & EG Richards (NSW) Pty Ltd v Scone Shire Council and Brambles Australia Ltd (trading as Cleanaway), (unreported, Land and Environment Court of New South Wales, Stein J, 24 November 1995), BC9506774;
O’Sullivan v Farrer (1989) 168 CLR 210 ;
Parramatta City Council v Hale (1982) 47 LGERA 319;
Patra Holdings Pty Ltd v The Minister for Land and Water Conservation (2002) 119 LGERA 231DATES OF HEARING: 06/02/2006
DATE OF JUDGMENT:
04/12/2006LEGAL REPRESENTATIVES: APPLICANT
Mr G Gleeson (solicitor)
SOLICITORS
Morton & HarrisRESPONDENT
Mr D Baird (solicitor)
SOLICITORS
Maddocks Lawyers
JUDGMENT:
THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALESPain J
12 April 2006
JUDGMENT20982 of 2005 Peter Ronald Chesher and Deborah Margaret Chesher v Eurobodalla Shire Council
1 Her Honour: The Applicants applied to Eurobodalla Shire Council (“the Council”) pursuant to s 68 Part C of the Local Government Act 1993 (NSW) (the “LG Act”) for an approval to dispose of effluent waste at the Council’s three sewage treatment plants. The Council has not formally determined the application and the Applicants have appealed to this Court. The Council now objects to a grant of the approval.
2 The Amended Statement of Issues raised two issues as follows:
(i) Whether the application should be approved having regard to the public interest under s 89 of the LG Act; and
(ii) Whether the Applicants’ application can or should be considered in circumstances where there has been a tender process and an exercise of the power conferred by s 68 of the LG Act being exhausted by the tender evaluation process. Whether, if this tender process is set aside, there remains power or authority to grant the Applicants the relief claimed.
3 The second issue is a question of law and I will deal with this first. If answered in the Council’s favour the first issue about whether the Court in its discretion should grant the s 68 approval does not arise.
- Court’s powers
4 The Court’s powers when hearing a matter in Class 2 proceedings are set out in s 39(2) of the Land and Environment Court Act 1979 (“the Court Act”) as follows:
- In addition to any other functions and discretions that the Court has apart from this subsection, the Court shall, for the purposes of hearing and disposing of an appeal, have all the functions and discretions which the person or body whose decision is the subject of the appeal had in respect of the matter the subject of the appeal.
Background
5 The Applicants have been operating their business of domestic sewage pumpouts, Eurobodalla Coast Pumpouts, within the Eurobodalla Shire for about two years under a s 68 approval granted by the Council on 22 June 2004. This expired on 30 June 2005, but the arrangement is continuing pending the outcome of these proceedings. They seek to have a new approval with the same conditions for a further 12 months, until 30 June 2006.
6 The Council invited tenders for a contract for the provision of waste and recycling services for the whole Shire in August 2004. The Council received two tenders, from Staples Waste (Staples) and Watts Waste. The Applicants in these proceedings, Mr and Mrs Chesher, were subcontractors in the Watts Waste tender. On 21 December 2004 Council entered into negotiations with Staples to execute a contract for the services specified in the tender, and informed Watts Waste that its tender was unsuccessful. The contract has not yet been executed because the Council and Staples are awaiting the outcome of these court proceedings.
7 The customers for the contract services are defined in the preamble to Appendix A of the Contract to mean “residents of and members of the public of Eurobodalla Shire”. Page 80 of Appendix A to the contract also states in relation to customers that:
- The customers for this contract include residents, ratepayers, businesses and holiday makers…customers also include Council staff and elected representatives who are Shire residents.
The contract provides that the contractor has responsibility for all properties which require effluent pumpout by ensuring collections and inspections are carried out at those properties. According to the statement of Ms Krogh, Council officer, there are 4211 registered on-site sewage management systems and 273 on-site holding tanks.
8 The contract includes cl 8.2.2 and cl 8.2.3 of Appendix B, Part B (Liquid Waste Collection) which purport to grant exclusive rights to dispose of human liquid effluent and solid waste into Council’s nominated sewage treatment plants. Clause 8.2.4 of Part B of Appendix B to the contract states that the contractor is not granted exclusive rights in relation to grease trap waste. It reads:
- …The Council’s intention by providing for this service within this contract is to ensure that there is a supplier of these services within the Shire. This does not grant the Contractor exclusive rights to the provision of these services…
9 Clause 52 of the contract provides the following:
52.1 Consent Authority
The parties acknowledge that the Council is a consent authority with statutory rights and obligations pursuant to the terms of the Local Government Act 1993 and the Environmental Planning and Assessment Act 1979.
52.3 Reading down of provisions52.2 Construction of the Contract to fetter powers
No term of this Contract is to be construed, or to operate, so as to fetter, restrict or otherwise interfere with the exercise of the Council’s powers as a consent authority.
If any provision of this Contract would, or could likely, operate so as to fetter, restrict or otherwise interfere with the exercise of the Council’s powers as a consent authority.
Relevant legislation
LG Act – Chapter 3
10 Section 8 of LG Act provides inter alia:
- (1) A council has the following charter:
- • to provide directly or on behalf of other levels of government, after due consultation, adequate, equitable and appropriate services and facilities for the community and to ensure that those services and facilities are managed efficiently and effectively…
- • to properly manage, develop, protect, restore, enhance and conserve the environment of the area for which it is responsible, in a manner that is consistent with and promotes the principles of ecologically sustainable development…
11 Section 21 states that a Council has the functions conferred or imposed on it by or under the LG Act.
12 Section 23 states:
- A council may do all such things as are supplemental or incidental to, or consequential on, the exercise of its functions.
LG Act – Chapter 6The function “waste removal and disposal” appears in the schedule/table to s 23.
13 Section 55 of the LG Act deals with the requirements for tendering and states:
- (1) A council must invite tenders before entering into any of the following contracts:
- (a) a contract to carry out work that, by or under any Act, is directed or authorised to be carried out by the council,
…
(c) a contract to perform a service or to provide facilities that, by or under any Act, is directed or authorised to be performed or provided by the council,
…
(f) a contract for the provision of services to the council
- (other than a contract for the provision of banking borrowing or investment services),
…
- (2) Tenders are to be invited, and invitations to tender are to be made, by public notice and in accordance with any provisions prescribed by the regulations…
- (3) This section does not apply to the following contracts:
- …
· a contract involving an estimated expenditure or receipt of an amount of less than $100,000 or such other amount as may be prescribed by the regulations…
LG Act – Chapter 7
14 Section 68 of the LG Act provides:
(1) A person may carry out an activity specified in the following Table only with the prior approval of the council, except in so far as this Act, the regulations or a local policy adopted under Part 3 allows the activity to be carried out without that approval….
15 Section 89(1) of the LG Act provides:
- In determining an application, the council:
(a) must not approve the application if the activity or the carrying out of the activity for which approval is sought would not comply with the requirements of any relevant regulation, and
(b) must take into consideration any criteria in a local policy adopted under Part 3 by the council which are relevant to the subject-matter of the application, and
16 Section 89(2) of the Act provides:
- (2) If no requirements are prescribed for the purposes of subsection (1) (a), and no criteria are adopted for the purposes of subsection (1) (b), the council in determining an application:
(a) is to take into consideration, in addition to the principles of ecologically sustainable development, all matters relevant to the application, and
(b) is to seek to give effect to the Applicant’s objectives to the extent to which they are compatible with the public interest.
17 Section 94 of the LG Act provides:
(a) by granting approval to the application, either unconditionally or subject to conditions, or
(b) by refusing approval…
18 Council finances are dealt with under Ch 15 of the LG Act. Section 496 provides:
- (1) A council must make and levy an annual charge for the provision of domestic waste management services for each parcel of rateable land for which the service is available.
(2) A council may make an annual charge for the provision of a domestic waste management service for a parcel of land that is exempt from rating if:
- (a) the service is available for that land, and
(b) the owner of that land requests or agrees to the provision of the service to that land, and
(c) the amount of the annual charge is limited to recovering the cost of providing the service to that land.
Local Government Regulations
19 Clause 163 of the Local Government (General) Regulation 2005 provides:
- (1)This Part applies to all contracts for which a council is required by section 55 of the Act to invite tenders.
- Note. This Part does not apply to other kinds of contracts. However, a council may apply provisions of this Part (with any necessary alterations) to other kinds of contracts if it wishes to do so.
- (2)For the purposes of the final bullet point paragraph of section 55 (3) of the Act, section 55 does not apply to a contract involving an estimated expenditure or receipt of an amount of less than $150,000.
- Question of law
Council’s Submissions
20 The question of law raised by the Council asserts that a s 68 approval for an activity specified in the table in that section cannot be approved if a public tendering process under s 55 has already occurred in relation to the activity the subject of the s 68 application. Applying s 89(1)(a), the Court cannot give approval for the s 68 application, because the approval sought would not comply with a “relevant regulation”, namely, cl 163 of the Local Government (General) Regulation 2005.
21 The Council acknowledged that the schedule of council functions set out in s23 of the Act does not confer exclusivity on local councils in the provision of services such as waste collection and disposal. The evidence establishes that the value of the contract relating to waste disposal exceeds $150,000. However, because of the last bullet point in s 55(3) of the Act, whereby contracts more than $100,000 or another amount set in the Regulations must go to public tender, cl 163(2) of the Regulations which specifies $150,000 is triggered by the contract in this case which exceeds $150,000. Section 55 of the LG Act relating to public tendering of contracts for services applies and gives the Council the right to enter into an exclusive contract for the provision of these services. Neither the Council nor the Court has power to grant a s 68 approval to an unsuccessful tenderer in the public tendering process. As s 89(1)(a) applies because the s 68 application does not comply with a relevant regulation, it is not open to the Court to consider it.
Applicants’ submissions
22 The Applicants submitted that the contract between the Council and Staples is not in issue in these proceedings. This is a straightforward s 68 application which should be determined without regard to that contract. Entering into a contract for the provision of services and administering its regulatory functions under the LG Act are two distinct statutory functions which should not be confused by the Council. The Applicants relied on the decision of Bignold J at 379-80 in Eljo Pty Ltd and Solo Waste Australia Pty Ltd (Trading as Richmond Waste) v Casino Council 84 LGERA 373, where his Honour found that s 68 demonstrates a deliberate decision by the legislature to give approval to persons to engage in some services, the general responsibility for which lies with the Council. Section 89(1)(a) does not apply as there is no relevant regulation which falls within it.
Finding – Point of Law
23 Chapter 3 of the LG Act sets out local councils’ broad charter, as identified in s 8, relevantly extracted at par 7. The functions which a council may undertake are set out in the schedule to s 23. The wording of s 23 does not suggest exclusivity for the provision of any of these functions is conferred on a Council under the LG Act. The Council functions are identified in Chapter 5, s 21 and s 23. The schedule to s 23 identifies as a service function “waste removal and disposal”. Non-regulatory service functions are dealt with in Ch 6. Section 55 requires a tender process for specified contracts for services.
24 Section 55(3) specifies this section does not apply if a contract is worth less than $100,000 or another amount set by regulation.
25 Regulatory functions are specified in Ch 7, where s 68 and s 89 are located. The structure of the Act clearly separates the service functions of councils (Ch 6) from their regulatory functions (Ch 7).
26 Eljo was concerned with a s 68 application to dispose of trade waste in similar circumstances to this case. Justice Bignold noted at 377 that:
- …waste removal activity of the type contemplated by the Applicant can, at the same time, be regarded under the Local Government Act as (i) a service function of a council under s23, (ii) an activity that may be carried out with the approval of the council under s 68; and (iii) a service provided by a council for which a ratepayer of land to which the service is provided is liable to an annual charge in terms of s 501.
27 The requirement to undertake a public tendering process for contracts over a certain sum for the provision of services relates to the carrying out of service functions under the LG Act. The wording and structure of the LG Act as set out above clearly separates the service and regulatory functions of local councils. I do not consider that it was intended that a general requirement for a tendering process for contracts for services over a certain amount under s 55 in Ch 6, with the consequent requirement to comply with cl 163 of the Regulations, means that s 68 cannot apply in relation to the regulatory functions which the Council must undertake under Ch 7 of the LG Act. As recognised by Bignold J in Eljo at 379 – 380:
- … the Local Government Act recognises all these facets [see par 25] to waste management and the express inclusion within the ambit of s 68 of many aspects of waste management must be understood as a deliberate decision of the Legislature to allow for persons, such as the Applicant, to obtain approval to engage in some aspects of waste management, notwithstanding that the essential responsibility for such matter [sic] is vested in Councils. Indeed it is the inclusion of the regulatory function in relation to waste management that essentially distinguishes the regime for waste management under the Local Government Act from that operating under the Local Government Act 1919.
28 The Council appears to recognise the different functions it has in the contract with Staples. Clause 52 of the proposed contract with Staples states that the parties to the contract acknowledge that the Council is the consent authority and that no term of the contract is to be construed so as to fetter, restrict or otherwise interfere with the exercise of the Council’s power as a consent authority. The fact that this contract happens to trigger the public tender requirements of the LG Act because of its value is irrelevant to the exercise of the Council’s regulatory functions under Ch 7 given the LG Act’s structure and intent.
29 The Applicants argued that the contract with Staples is an offer to contract exclusively with Staples insofar as the Council is contracted by its residents and other persons to provide a waste service. I do not need to resolve whether Council’s contracting powers are so limited in order to determine this question of law.
30 The Council is unsuccessful on this ground. The Court has power to consider the Applicant’s s 68 application.
Exercise of discretion under s 89(2)
31 The Council relied on a statement of evidence of Ms Krogh, council officer, and an affidavit of Mr Staples, owner of Staples Waste. Ms Krogh’s affidavit explained how the tender and contract for the delivery of waste services in the Shire were formulated to achieve a reasonable pricing structure and consider issues such as public health and the environment. The contract requires Staples to provide a set price structure for its liquid waste collection services. This is intended to guarantee a reasonably priced service to the community regardless of the distance of domestic on-site sewage management systems or grease-trap waste systems to the Council’s sewage treatment plants. The contract also places responsibility on the contractor to track and inspect effluent pumpout systems throughout the entire Shire.
32 The affidavit of Mr Staples was relied on as evidence of the commercial difficulties that he would face if a s 68 application were granted, such as reducing his ability to respond quickly to emergency call-outs as a result of a reduction in labour services due to increased competition.
33 The Applicants relied on an affidavit of Peter Ronald Chesher, to counter the Respondent’s claims that Mr Chesher could undercut the price of his services. Mr Chesher stated that he was prepared to accept the competitive conditions set within the Eurobodalla market as a result of the Council’s contract being awarded to Staples at a set price. The Applicants also relied on a report prepared by Cowman Stoddart Pty Ltd in April 2005 which accompanied their s 68 application. This report stated that the Applicants’ business operations do not involve the collection and disposal of grease-trap waste, only human waste, thus minimising any chances of cross-contamination occurring as a result of having two sewage pump-out services operating in the area. The report also stated that various council officers were of the opinion that the Applicants were reliable and had not created any problems in the past. According to the report, there have been no complaints to the Department of Environment and Conservation relating to the past performance of the Applicants’ business. Finally, the report also referred to the business’ prompt service, satisfied customers, emergency pumpout response capacity and professionalism.
Council’s submissions
34 Applying s 89(2)(b), the Council submitted that the tendering process for waste services for the Shire was done in accordance with its obligations under s55 of the Act, and that process allowed the Council to best assess which service providers could deliver the service required. The contract was structured by considering the provision of waste services to the community, public health and the environment, at the best possible price to the Council and the community it serves.
35 The Council is seeking to put in place an arrangement to meet its statutory charter and if the Applicants’ application is granted this would be inconsistent with the obligations under the charter.
36 If two contractors provide effluent pumpout services, the tracking and inspection systems established in the contract would be compromised, and the possibility of cross-contamination would increase. Applying s89(2)(b) of the Act, and Patra Holdings Pty Ltd v The Minister for Land and Water Conservation (2001) 119 LGERA 231, the public interest outweighs the private commercial interests of the Applicants.
37 The Council further submitted that there is a public interest involved in maintaining the integrity of this tendering process. By allowing other service providers in through s 68 of the Act, the tendering process would be undermined by “back door” entries to a process which was conducted lawfully and fairly by Council, and would allow a bidder to enter the market despite being an unsuccessful tenderer.
38 In Eljo, Bignold J stated at 379, in similar circumstances, that a s 68 application would be granted where a council could not demonstrate that doing so would undermine or prejudice their existing statutory charter or contractual obligations. The Council argued that this prejudice would occur here if the s 68 application were granted. In Council of Casino v Eljo Pty Ltd & Solo Waste Australia Pty Ltd (trading as Richmond Waste), (unreported, Supreme Court of New South Wales Court of Appeal, Mahoney ACJ, Clarke and Beazley JJA, 19 September 1996) 9040632, Clarke JA held (Mahoney ACJ and Beazley JA concurring) at 5 that effect is only to be given to the Applicants’ objectives if they are compatible with the public interest. The Council submitted the Applicants’ objectives are incompatible with the public interest, as outlined above.
Applicants’ submissions
39 The Applicants’ s 68 application only relates to the disposal of human effluent, not grease-trap waste. The Applicants particularly relied on s89(2)(a) and (b) of the Act. These sections direct the Council when determining an application under s 68 to have regard to the Applicants’ objectives to the extent they are compatible with the public interest. No matters adverse to the public interest arise if the s 68 application is granted. The residents of Eurobodalla Shire would have choice in the provision of human waste disposal services, the Applicants are “price-takers” and cannot undercut Staples, and there is no greater risk of environmental harm if the Applicants’ application is granted.
40 In exercising its regulatory functions, the Council is not constrained by s55. Rather it must apply s89(2)(b), under which it must seek to give effect to the Applicants’ objectives to the extent they are compatible with the public interest. However, if s55 works to fetter the Council’s discretion, then the Council has failed to take into consideration the public interest. Therefore, the Council’s decision here is vitiated (Parramatta City Council v Hale (1982) 47 LGERA 319, per Street CJ at 335).
41 The correct test to apply is that set out by Clarke JA in the Court of Appeal in Eljo at 5, which states that the Applicants’ objectives should be given effect so far as they are compatible with the public interest. All that the Respondent has put forward to suggest incompatibility is its contract with Staples. Clause 52 of the contract between the Council and Staples acknowledges that the Council is the consent authority and that no term of the contract is to fetter its power in this regard. The Applicants submitted that contracts which seek to grant exclusivity in a service area are incompatible with the public interest as they prevent competition within the market. Section 68 of the Act is directed towards creating competition. There is no evidence that the s 68 application, if granted, would undermine or prejudice the Council’s existing statutory charter, duties or contractual obligations, and therefore, it should be granted.
Finding on discretion under s 89(2)
42 Waste management is a matter within the Council’s statutory charter (Ch 3 LG Act). Sections 21 and 23 provide that the Council may provide waste disposal services. Section 24 provides that “a Council may provide goods, services and facilities, and carry out activities, appropriate to the current and future needs within its local community…”.
43 Section 68 provides that a person can carry out an activity specified in the accompanying table with Council approval. The Table includes “Part C Management of Waste” including the activity in respect of which the Applicants seek approval. The table states:
It is unclear from the evidence and submissions whether the Applicants seek to apply under point 1 or 2 of the table. Both appear applicable on the facts.
44 The issue that now arises for determination is whether the Court should exercise its discretion in accordance with s 89(1) and (2), and grant the approval under s 68 sought by the Applicants in relation to items 1 or 2 in the Table. Section 89(1)(a) does not apply as there is no relevant regulation with which the application does not comply, a consequence of my finding on the point of law above. There is no relevant local policy adopted under Pt 3 by the Council which is relevant to the application: s 89(1)(b). Section 89(1)(c) requires that the principles of ecologically sustainable development (“ESD”) must be taken into consideration. Under s 89(2) the Court must, in addition to ESD principles, take into account all relevant matters and give effect to the Applicants’ objectives to the extent to which they are compatible with the public interest. The submissions of the parties focussed on s 89(2). Very brief submissions on the application of the ESD principles were made by the Council.
45 There have been few cases where the Court has been called on to consider whether a s 68 approval of the type sought here ought be granted. In Eljo the Court had to consider similar circumstances to those before me. In that case, the applicant made an application to the council under s 68 of the LG Act for approval to transport trade waste. This was rejected by the council on the grounds that the council had already resolved to conduct this business itself, by contracting with other private contractors. Justice Bignold held at 379 that the council had failed to show that the applicant’s proposed activity would undermine or prejudice the council’s existing statutory charter and duties, or its contractual obligations and, therefore concluded the application should be granted. This decision was upheld on appeal. In this case the Council has relied on the terms of the contract and the purpose underlying the tender provisions in its arguments, rather than simply relying on the fact that it has entered into an exclusive contract for some waste services in the Shire.
46 In JR & EG Richards (NSW) Pty Ltd v Scone Shire Council and Brambles Australia Ltd (trading as Cleanaway), (unreported, Land and Environment Court of New South Wales, Stein J, 24 November 1995), BC9506774, the applicant filed a Class 2 application against the refusal of the Scone Shire Council to grant it an approval to transport trade waste over a public place. Again, the council had entered into a waste collection contract for such waste with a third party. It had refused the applicant’s s 68 application stating that “it would not be in the public interest”. The applicant argued that the contract was entered into without power and that the appeal should be determined solely on the merits, having regard to the issue of the public interest under s 89. It argued that a s 68 application was similar to a driver’s license – in that it required no details to be provided by an applicant of its ability to perform the service for which a s 68 approval was necessary. Justice Stein held firstly that it was clearly within the council’s powers to enter into such a contract. Secondly, the contract is a relevant consideration for the purposes of s 89 of the LG Act. Justice Stein held that the contract was entered into by the council generally in accordance with the public interest. For these reasons, and because of a “dearth of merit evidence” on behalf of the applicant before the Court, Stein J dismissed the application. The applicant had argued that there was no need to present evidence dealing with the merits in a s 68 approval. In this case there is material placed before the Court by the Applicants dealing with the “merit” issues relevant to a s 68 approval.
47 In the Court of Appeal in Eljo Clarke JA set out the test which is to be applied by a council when determining a s 68 application at 5-6 that:
- The overriding consideration is the statutory instruction that effect is to be given to the applicant’s objectives insofar as they are compatible with the public interest. What is required is that the Council, and the Court on appeal, identify the objectives of the applicant and the public interest considerations which are adverse to, or favourable to, those objectives. Once the various considerations have been identified it is necessary to weigh them in order to determine whether it would be compatible with the public interest to grant the application, either conditionally or unconditionally, or to refuse it.
48 The contract with Staples is certainly relevant to consider under s 89(2)(a) which requires all matters relevant to the application be taken into account. The Council wants to create through a tendering process a monopoly on the collection of human effluent and waste in the Shire so that, it argued, it can better manage that waste in circumstances where the provisions of the LG Act 1993 do not specifically grant a monopoly power for the provision of these services to the Council, unlike the LG Act 1919. In Eljo the council had argued that it wished to maintain the monopoly because it believed the service it provided was adequate. Justice Bignold observed at 379 that the maintenance of the monopoly was not self-evidently a matter of public interest given the 1993 LG Act removed the statutory monopoly which existed until then.
49 It follows from my finding on the point of law that the Council’s regulatory functions under Ch 7 (s 68, s 69) are to be undertaken separately from its service functions (Ch 6, 21, 23, 25). The existence of a contract with Staples following a public tender process conferring exclusive rights (and obligations) to collect human effluent waste in the Shire is not determinative that to grant the s 68 application is not in the public interest, as found in Eljo.
50 Section 89(2)(b) requires the Court to give effect to the Applicants’ objectives to the extent to which they are compatible with the public interest. The Applicants wish to continue in the Shire with the commercial business they undertake of human effluent waste collection and disposal. There is no definition of “public interest” in the LG Act. It is a wide concept which must be applied under s 89(2)(b) having regard to the scope and purpose of the Act (Pearlman J in Patra Holdings v Minister for Land and Water (2001) 119 LGERA 231 at [9] and [11]), referring also to O’Sullivan v Farrer (1989) 168 CLR 210 at 216).
51 Section 89(3) of the LG Act provides, inter alia:
- Without limiting subsection (2), in considering the public interest the matters the council is to consider include:
(a) protection of the environment, and
(b) protection of public health, safety and convenience, and …
52 The Council’s case here goes further than the council’s arguments in Eljo because it is arguing that the terms of the contract are intended to achieve environmental and public health outcomes which are in the public interest and the Court has been provided with evidence on these matters. In Eljo it appears the council relied simply on the existence of the contract for waste services as self-evidently in the public interest. According to Ms Krogh’s evidence, the Council in this case wishes to achieve a number of outcomes all of which are in the public interest. They can be characterised as matters of environmental protection; s 89(3)(a), the protection of public health, safety and convenience; s 89(3)(b); and the desire to deliver the services at the best possible price to customers. It is necessary to look in detail at each of these benefits to determine if the grant of the application will undermine the Council’s existing statutory charter, its duties, or is not in the public interest.
53 The Council made very brief and broad submissions on the application of the ESD principles without going into any detail about the content and purpose of these principles in this case. The Council’s statutory charter pursuant to s 8 includes the proper management, protection and conservation of the environment and the promotion of the principles of ESD. Section 7 of the LG Act requires councils, councillors and council employees to have regard to the principles of ESD in carrying out their responsibilities. I see no need to go into greater detail on the application of the ESD principles on this occasion given the matters considered in the context of the public interest.
Council’s objectives in the tendering process and contract with Staples
54 The Council’s objectives in the tendering process and contract with Staples are, firstly, to ensure the provision of waste services across the whole Shire at the best possible price for customers.
- (i) Mr Staples gave evidence at par 6 - 10 of his affidavit that:
6. To keep the cost of effluent and waste removal down, the price per kilolitre charged in the contract is a minimal rate. This is because effluent and waste removal is a service to the community. The rate per kilolitre for the removal of effluent and waste has been offset with other components in the contract. Accordingly I have applied costing structures that effectively provide a subsidy for this service.
7. Under the Contract Council still charge a disposal fee to dispose of the effluent and waste at Council’s sewerage [sic] treatment plants. (STPs)
8. Under the terms of the Contract, Staples is locked into a per kilolitre cost, so in effect another operator could undercut the price which would prejudice Staples because under the Contract Staples could not vary the cost per kilolitre it can charge customers.
10. Eurobodalla Shire is a relatively long (distance) Shire, and the contractor can be required to travel long distances to collect effluent and waste from customers. Under the contract the price remains consistent not withstanding the distance travelled for collection.9. Under the Contract customers and Council are guaranteed that the cost of effluent and waste removal will not increase greater than CPI for the life of the Contract (minimum 5 years).
- (iii) The evidence of Mr Chesher is that there is sufficient business for human effluent disposal for two operators, contrary to the view of Mr Staples. Mr Staples argued that the effluent and waste component of the contract would not be profitable if the s 68 approval is granted. His own evidence suggests, as argued by the Applicants, that the profitable parts of the contract are not those parts in relation to which the Applicants intend to operate. I do not consider it is a relevant factor for the Council or this Court to consider whether or not there is sufficient business for two operators. That is ultimately a matter they must determine.
- (iv) There is not conclusive evidence before me that this objective of the Council would not be met if the s 68 approval sought is granted.
55 Secondly, to ensure emergency servicing requests for pumpouts will be met within a guaranteed time frame and at a guaranteed cost to minimise environmental incidents with sewage overflows because the Council is concerned that there will otherwise be sewage overflows if no single contract is in place. The Council’s objective is environmental protection through minimisation of sewage overflows into the environment.
- (i) The evidence from Mr Staples (par 14 of his affidavit) is that if this s 68 application is granted he would be unable to provide the service sought by the Council’s tender because he would not be able to maintain the permanent truck and driver in the Shire to enable the emergency pumpout rates required to be achieved under the contract.
- (ii) There is no direct evidence on this issue from Mr Chesher’s affidavit, although the Cowman Stoddart report which was lodged with the s 68 application refers to the Applicants’ capacity to undertake emergency pumpouts.
56 Thirdly, to impose a requirement for inspection of all properties with septic tank pumpout systems to determine holding tank volume and the frequency of the need for servicing. This is essentially a Shire-wide auditing task, aimed at reducing the likelihood of on-site sewage management system overflows into the wider environment by ensuring regular inspections. It is clearly a measure which is aimed at public health and environmental protection.
- (i) In the contract cl 8.4 to Appendix B provides that in relation to liquid waste services, the contractor shall:
- … provide monthly reports detailing:
· the specific properties serviced together with the date, volume and type of liquid waste collected from each property. A Council-supplied Property Identification Number (PIN) shall be utilised in reporting.
· Date, time, volume and location of liquid waste disposal.
· All properties (including PIN) inspected during the month which are not being serviced together with recommendation as to whether the property is in need of servicing and/or further investigation.
· Any non-compliant or potentially illegal discharges from commercial or residential properties.
- (ii) Part 4 of Appendix A to the contract outlines generally the requirements of the contractor to report to the Superintendent of the Council.
- (iii) Mr Staples’ evidence, par 14 of his affidavit, is that it would be difficult to properly track the human liquid effluent pumpout system inspections required by the contract. He does not say why this is his view. Mr Chesher does not comment directly on this aspect of the contract. It is not self-evident to me why Mr Staples, if he does not ultimately service all domestic pumpout systems in the Shire, would have difficulty tracking the systems he does have a contract for. What is unexplained in the evidence and in submissions is whether or not it is feasible for such a requirement to be imposed on the Applicants under the s 68 approval. If the s 68 approval is granted with a requirement that the Applicants undertake this tracking process, this would result in the Council having to consider returns from two operators, rather than one, advising of the state of the pumpouts for which they are contracted. That does not appear particularly onerous given that the overall number of pumpout systems remains the same.
57 Fourthly, to prevent cross-contamination of different types of waste in the Council sewage treatment plants where there is more than one operator.
- (i) As the Applicants are seeking to collect only one type of waste being human effluent, not grease trap waste, the likelihood of cross-contamination appears remote. There are existing conditions in the s 68 approval which was held by the Applicants which deal with this issue. Condition 4 states:
- Grease trap pump-out shall not be discharged into the sewerage system. To prevent accidental discharge of grease trap waste into the sewerage system, a road tanker should be preferably dedicated to septic tank service only. If this is impractical, the road tanker should be washed after grease trap pump-out.
- (ii) If the Council has concerns about this it would seem appropriate to consider whether additional conditions are warranted, as suggested by the Applicants. For example, there are further conditions in the existing s 68 approval of the Applicants relating to environmental protection such as random sampling which may need to be amended.
58 There was no discussion before the Court about the scope for additional conditions to be imposed on the s 68 approval sought by the Applicants in order to deal with some or all of the issues discussed above. The Applicants were seeking to have the s 68 approval issued subject to the same conditions as previously applied. The Council has simply opposed the application. Given that the Court now has the role of determining if the approval ought be granted and if so, subject to what conditions, further submissions on the scope, if any, for conditions to meet the Council’s environmental and public health objectives as set out at par 54 - 57, particularly par 55 and 56, need to be presented before I finally determine this matter. What needs to be explored in those submissions is the extent to which, if at all, conditions can be imposed on a s 68 approval which relate to the collection of human effluent waste from, and the inspection of, private on-site sewage management systems.
59 The Council also argued that a s 68 application such as this undermines the public tendering process it was required to undertake under s 55 of the LG Act. As set out at par 8, cl 52 of the contract expressly recognises the regulatory role the Council must also fulfil. For the reasons already stated, in relation to the point of law the fact that a tendering process takes place does not mean that no s 68 application in relation to the same activity can be considered. This issue is linked to the nature of the contractual obligations the Council seeks to achieve under the contract. The way the LG Act is intended to operate in this area is difficult to determine as there is potential, theoretically, for a tendering process such as that undertaken here to be undermined if a s 68 application is granted in relation to the same activities for which the tender is undertaken. It is not yet clear that is the actual situation here.
Interference with contractual obligations
60 The Council argued that the grant of the s 68 approval would interfere with its contractual obligations. The contract purports to grant exclusive rights to Staples in relation to collection of sewage from the customers (cl 8.2.2, 8.2.3). The Council is not the customer under the contract. The customers are, inter alia, the owners of on-site sewage management systems and holding tanks requiring pumpout services. The legal basis on which the Council can contract on their behalf in this way was not explored in submissions. If a customer does not wish, for whatever reason, to have their on-site sewage management system pumped out by Staples, does this contract prevent them going to another operator? This was not an issue raised at the hearing before me specifically, but is clearly relevant to consider when testing the Council’s submission that this s 68 approval would interfere with its contractual obligations.
61 Interestingly in relation to the collection of grease trap waste the contract does not purport to confer exclusive rights on Staples. Clause 8.2.4 specifically states that the Contractor is not granted exclusive rights in relation to the provision of that service. I am not able, on the basis of the arguments presented, to reach any conclusive view on whether the grant of this s 68 approval does interfere with the contractual obligations of the Council unless the Council’s legal powers to bind the owners of private on-site sewage management systems (the customers) are clarified in relation to cl 8.2.2 and 8.2.3 of the contract.
62 It is clear from the comments in par 58 and 61 that I require further submissions from the parties before I can deliver a final decision. The parties advice on an appropriate timetable for further submissions is necessary.
4
3