CORR and LOCAL GOVERNMENT STANDARDS PANEL
[2014] WASAT 86
•7 JULY 2014
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: DEVELOPMENT & RESOURCES
ACT: LOCAL GOVERNMENT ACT 1995 (WA)
CITATION: CORR and LOCAL GOVERNMENT STANDARDS PANEL [2014] WASAT 86
MEMBER: MR P McNAB (SENIOR MEMBER)
HEARD: 20 MARCH 2014
DELIVERED : 7 APRIL 2014
PUBLISHED : 7 JULY 2014
FILE NO/S: DR 242 of 2013
BETWEEN: BRIAN THOMAS CORR
Applicant
AND
LOCAL GOVERNMENT STANDARDS PANEL
Respondent
Catchwords:
Local government Regulation of councillors Local Government Standards Panel Rules of Conduct Minor breach - Impartiality disclosure - Conflict of interest - Councillor an executive member of an incorporated local business association - Item before Council in officers' report in Council agenda papers impacting on financial affairs of business association - Failure to declare interest - Councillor yet to attend first executive meeting of business association - Councillor had no actual knowledge of financial matters set out in officers' report in Council agenda papers - Councillor failed to sufficiently acquaint himself with Council agenda papers - Whether actual knowledge of potential conflict of interest required - Tribunal holding constructive knowledge is sufficient - State of actual knowledge may be relevant for purposes of any sanction - Tribunal deciding that responsibilities of Councillor in relation to membership of the executive of the association in effect run from time of appointment - Duty on Councillor to read agenda papers - Minor breach of rules of conduct decision of Local Government Standards Panel upheld - Sanction of Local Government Standards Panel varied by imposition of public apology to be given at Council meeting in lieu of public censure to be published in newspaper - Words and Phrases: 'interest'; 'conflict of interest'
Legislation:
Local Government (Rules of Conduct) Regulations 2007 (WA), reg 11
Local Government Act 1995 (WA), s 5.60, s 5.105(1)(a), s 5.110(6), s 5.110(6)(b)(i), s 5.110(6)(b)(ii)
Result:
Application for review successful in part; minor breach confirmed and sanction varied
Summary of Tribunal's decision:
Councillor Brian Corr is an elected Councillor of the City of Joondalup. He was also appointed or elected to the executive committee of an incorporated local business organisation and formally took office in that body by attending an executive meeting in December 2012. Prior to that date he had been a nonexecutive member of this organisation.
On 20 November 2012, an item of Council business dealt with a significant financial matter relating to the business affairs of the organisation. Councillor Corr participated in the debate but did not declare any interest in the item before Council. Any interest would be one arising out of his association with the organisation.
The Rules of Conduct applicable to Councillors required Councillor Corr to declare any interest that could, or could reasonably be perceived to, adversely affect his impartiality in decision-making on Council. Under the Rules of Conduct an interest could include membership of an association.
It was clear that Councillor Corr did not have direct knowledge of the matters to be discussed at Council. Although the item was set out in the Council's agenda papers, the entire document ran to about 950 pages. Councillor Corr received and reviewed those papers but he did not read about the item in sufficient detail or he otherwise failed to notice the full item.
The State accepted that Councillor Corr did not otherwise have independent knowledge of the matters canvassed in the agenda papers arising out of his non-executive membership of the organisation.
Thus, a question arose as to the state of knowledge of these matters in order for a breach of the Rules of Conduct to be established.
The Local Government Standards Panel found that by failing to declare his interest in the matter Councillor Corr had committed a 'minor breach' of the Rules of Conduct.
The Tribunal agreed with this finding noting that it was not necessary to prove that Councillor Corr had direct or actual knowledge of the conflict of interest. Such matters could be relevant, however, in respect of any sanction to be imposed upon a Councillor.
It was sufficient that, as at 20 November 2012, Councillor Corr was an office bearer in the organisation (notwithstanding that his first executive meeting was yet to take place) and that he had in his possession the agenda papers which showed details of a significant financial matter that he had a clear interest in as an office bearer of the organisation.
Thus constructive knowledge was enough for the duty to declare an interest to be triggered.
The Tribunal also found that it was Councillor Corr's duty to properly acquaint himself with the content of the agenda papers, and that had he done so he would have or should have noticed a matter that would require him to disclose a conflict of interest.
Notwithstanding that Councillor Corr had been found by the Panel to have breached the Rules of Conduct by reason of an unrelated incident in 2010 and that this matter was a second 'minor breach', the Tribunal, having regard to the state of Councillor Corr's actual knowledge (and that his first executive meeting of the association took place after the November 2012 Council meeting), concluded that a public apology given at a meeting of Council would be a sufficient sanction.
This was ordered by the Tribunal in lieu of the Panel's original decision to publicly censure Councillor Corr.
Category: B
Representation:
Counsel:
Applicant: In Person
Respondent: Mr CS Bydder
Solicitors:
Applicant: N/A
Respondent: State Solicitor's Office
Case(s) referred to in decision(s):
Bradley v Local Government Standards Panel [2012] WASAT 44; (2012) 80 SR (WA) 69
Corr and Local Government Standards Panel [2012] WASAT 14
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
On 20 February 2013, the respondent, the Local Government Standards Panel (Panel), found that the applicant, Councillor Brian Corr, had committed a 'minor breach' (as that term is defined in s 5.105(1)(a) of the Local Government Act 1995 (WA) in respect of a breach by him of reg 11(2) of the Local Government (Rules of Conduct) Regulations 2007 (WA) (Regulations).
The particulars of the complaint that led to the adverse finding against Councillor Corr were that he failed to disclose the nature of an interest that he had in respect of a matter considered by the City of Joondalup (City) at a Council meeting on 20 November 2012.
Councillor Corr was at that date, and continues to be, an elected member of the Council of the City.
The interest alleged was that he was a member of the Executive Committee of the Joondalup Business Association Inc (JBA). In short, it was decided by the Panel that, in effect, an item of Council business affected, or may have been perceived to have affected, a material, relevant interest of the JBA leading to potential loss of impartiality on the part of Councillor Corr, which conflict of interest was required to be disclosed. It was not so disclosed by Councillor Corr.
Further details of the relationship between Councillor Corr, the JBA and the item of business before Council are set out below.
The Tribunal has upheld the Panel's decision, but varied the form of the apology required to be given by Councillor Corr. The Tribunal gave its reasons for decision orally. What follows is taken from the transcript of those reasons and has been formally revised and edited for publication.
Relevant legislation
I noted in Bradley v Local Government Standards Panel [2012] WASAT 44; (2012) 80 SR (WA) 69 (Bradley), at [42], that in these types of matters we are:
… concerned with an allegation of undeclared conflict or bias (apparent or real) clouding the exercise of public duty, and the mechanism imposed by law for ameliorating that conflict.
Regulation 11 of the Regulations is the mechanism imposed by law in this State for ameliorating such conflicts. The regulation provides as follows:
Disclosure of interest
(1)In this regulation ‑
interest means an interest that could, or could reasonably be perceived to, adversely affect the impartiality of the person having the interest and includes an interest arising from kinship, friendship or membership of an association.
(2)A person who is a council member and who has an interest in any matter to be discussed at a council or committee meeting attended by the member must disclose the nature of the interest ‑
(a) in a written notice given to the CEO before the meeting; or
(b) at the meeting immediately before the matter is discussed.
(3)Subregulation (2) does not apply to an interest referred to in section 5.60 of the [Local Government Act 1995 (WA) (LG Act) dealing with certain financial and 'proximity' interests].
(4)Subregulation (2) does not apply if ‑
(a)a person who is a council member fails to disclose an interest because the person did not know he or she had an interest in the matter; or
(b)a person who is a council member fails to disclose an interest because the person did not know the matter in which he or she had an interest would be discussed at the meeting and the person disclosed the interest as soon as possible after the discussion began.
(5)If, under subregulation (2)(a), a person who is a council member discloses an interest in a written notice given to the CEO before a meeting then ‑
(a)before the meeting the CEO is to cause the notice to be given to the person who is to preside at the meeting; and
(b)at the meeting the person presiding is to bring the notice and its contents to the attention of the persons present immediately before a matter to which the disclosure relates is discussed.
(6)If ‑
(a)under subregulation (2)(b) or (4)(b) a person's interest in a matter is disclosed at a meeting; or
(b)under subregulation (5)(b) notice of a person's interest in a matter is brought to the attention of the persons present at a meeting, the nature of the interest is to be recorded in the minutes of the meeting.
As appears above, reg 11(4) of the Regulations provides, in effect, two types of 'did not know' defences to any complaint: one appears to be a straightforward 'did not know at all' defence (in reg 11(4)(a)); the other, in reg 11(4)(b), is a defence that the Councillor did not know that the relevant matter would be discussed at a Council meeting. I will return to these matters below.
In Bradley at [26] to [31], I also set out some background to reg 11 of the Regulations and its counterparts elsewhere in Australia:
Most States and Territories have, broadly speaking, statutory provisions similar to reg 11 aimed at managing non‑pecuniary conflicts of interests in local government: see, for example, Halsbury's Laws of Australia, at [265‑645] to [265‑675].
In the Encyclopaedic Australian Legal Dictionary (Butterworths, 2010), 'conflict of interest' is defined as:
(1) A situation where a person has a personal interest in a matter the subject of a decision or duty of the person.
(2) A situation where the interest, principal [sic], right, advantage or position of one individual or business entity, whether directly or in being represented by another, comes into discord, challenge, dispute or harm with those of another.
The NSW Independent Commission Against Corruption's Conflicts of interest and local government: discussion paper (ICAC, 1991: Sydney) (ICAC Discussion Paper) said, at para 3.1:
A conflict of interest arises when council members and employees, in doing their jobs, are influenced or seen to be influenced by their personal interests.
However, as the ICAC Discussion Paper acknowledged, at para 3.7:
... the mere fact that someone has a personal interest in a matter before a council is not necessarily wrong. It is how the conflict is dealt with which can give rise to problems.
Conflicts of interest are discussed in the local government context in New South Wales in Local Government Planning and Environment NSW Vol C (Butterworths loose‑leaf). Relevant to this case, the learned commentators added these observations, at [420,185]:
A 'conflict of interest' does not necessarily exist simply because a person has both a public duty and a private interest in relation to a particular matter before a council meeting or a meeting of the council. For example, the existence of a non‑pecuniary interest such as heritage conservation may be completely aligned with the person's public duty as that person sees it. Indeed, the interest may be the very reason, or one of the reasons, why the person was elected to the council or appointed to the committee.
The Model Code of Conduct for Local Councils in NSW (NSW Department of Local Government, June 2008) (Model Code) includes the following, at 7.10:
What is a non‑pecuniary conflict of interests?
Non‑pecuniary interests are private or personal interests that the council official has that do not amount to a pecuniary interest as defined in the Act. These commonly arise out of family, or personal relationships, or involvement in sporting, social or other cultural groups and associations and may include an interest of a financial nature.
Material facts
Apart from some minor qualifications, the applicant admits to the facts alleged in the respondent's statement of issues, facts and contentions. Those facts are as follows:
1.The Applicant was elected as a councillor on the council of the City of Joondalup (the City) on 15 October 2011 for a term expiring during October 2015.
2.The Applicant was a councillor on the City's council on 20 November 2012.
3.The Applicant continues to be a councillor on the City's council.
4.The Applicant attended an ordinary meeting of the City's council held on 20 November 2012 (the meeting).
5.At the meeting, the City's council considered and debated item CJ231‑11/12 on 'Small Business Centre North West Metro ‑ Funding Support 2012/13 and Update on Relocation Report' (the matter).
6.The matter related to the merits of the City providing funding, in the sum of $60,000, to a local incorporated association known as the 'Small Business Centre (North West Metro) Inc' (SBC).
7.The members of the SBC were the City, the City of Wanneroo, the Wanneroo Business Association and the Joondalup Business Association (JBA).
8.The SBC operated from premises (premises) it occupied under a lease or licence, on commercial terms, from the JBA.
9.The Applicant was a member of the Executive Committee of the JBA, having been elected to that position on 24 October 2012.
10.The City officer's report to the council on the matter recommended a resolution comprising 6 paragraphs (the recommendation).
11.Paragraph 5 of the recommendation read as follows:
'That Council:
5.ADVISES the Small Business Centre (North West Metro) Inc that future funding from the City will be conditional on relocation of the Centre to the Edith Cowan University Business Innovation Centre unless the Small Business Centre (North West Metro) Inc can demonstrate significant disadvantages (financial or otherwise) in doing so; and'.
12.The Applicant requested that paragraph 5 of the recommendation be considered separately from the other paragraphs.
13.A motion was then put in terms of the recommendation (excluding paragraph 5) and the Applicant voted in favour of that motion, which was carried.
14.A motion was then put in terms of a modified version of paragraph 5, which deleted the words 'unless the Small Business Centre (North West Metro) Inc can demonstrate significant disadvantages (financial or otherwise) in doing so' and substituted the words 'and […] the City will contribute $5000 towards relocation costs'.
15.This motion was carried, although the Applicant and two other councillors voted against it.
16.The Applicant did not disclose that he was a member of the Executive Committee of the JBA before the matter was discussed.
Councillor Corr's minor qualifications to these matters relate to paragraph 6 (and to the precise term of the funding arrangement); paragraph 7 (dealing with certain additional members of the Small Business Centre); and importantly, paragraph 9 dealing with the commencement of meetings of the executive committee to which Councillor Corr had been elected or appointed.
In this regard (that is, in relation to paragraph 9) it is significant that Councillor Corr contended ‑ and this has been accepted by Mr CS Bydder, representing the intervenor in the proceedings ‑ that although the applicant was indeed a member of the JBA's Executive Committee, in fact, his very first executive meeting was held in December 2012 ‑ that is, after the Council meeting of 20 November 2012.
With those minor qualifications or clarifications, the critical facts as alleged by the State have been accepted by Councillor Corr.
Relevant principles
As a general proposition, in local government law and practice, an executive member of an incorporated association (such as the JBA) who is also a Council member must declare their association with that body where an item of business arises at a Council meeting that may, or does indirectly or directly materially, affect the financial, commercial or property interests of that body. In other words, such a case constitutes a relevant 'interest', being an interest 'that could, or could reasonably be perceived to, adversely affect the impartiality of the person having the interest'.
Here, the Officers' report to the Council meeting of 20 November 2012 (pages 78 and 79 of the Minutes of the Council meeting of 20 November 2012) sets out in some detail substantial financial matters relating to, and directly affecting, the JBA by reason of the decisions to be made by Council. See also paragraphs 6 to 8 and paragraph 11 of the material facts set out above.
Councillor Corr admits that the Officers' report containing this material was delivered into his possession prior to the Council meeting and that, although he 'glanced' at it and read the executive summary relating to the relevant item, he did not read of, or absorb, these precise details concerning the JBA.
In addition, Councillor Corr says that, in effect, he was also neither consciously nor otherwise actually aware of the details or arrangements disclosed in the Officers' report to Council.
A summary of Councillor Corr's actual and limited involvement, and understanding of his duties is, for example, set out at paragraph 18 of the Panel's findings and reasons, based on what Councillor Corr submitted to them. So far as is relevant, that summary reads as follows:
(a)[h]e had been a member of the JBA since 21 January 2011;
(b)[t]he JBA is a not‑for‑profit organization;
(c)[h]e was appointed as the Council's representative to the SBC during November 2011;
(d)[w]hen he was appointed to the SBC it was well know[n] that he was a member of the JBA;
(e)the Department of Local Government publication, 'Disclosure of Interests Affecting Impartiality …' indicates that disclosure of an interest is not required unless the JBA was, by its own action, seeking a decision from the Council of the City;
(f)the Matter concerned an application by the SBC, not the JBA;
(g)as there was no application by the JBA by its own action to seek a decision from the Council of the City, there could be no perception of partiality and the Complaint must be dismissed; [and]
(h)prior to 11 December 2012, when he became a member of [the] JBA's [executive], he had no involvement in the decision making of the JBA and was 'simply a social member, attending occasional events, and not involved in any decision making'[.]
Analysis
These matters as alleged by Councillor Corr may be generally accepted as regards Councillor Corr's involvement with the JBA and his own understanding of the limited role that such involvement might trigger as regards any conflict of interest concern.
Notwithstanding my acceptance of Councillor Corr's general position, a Councillor nevertheless has an overriding duty to sufficiently acquaint themselves with the actual material presented to him or her in their office of Councillor, if for no other reason than to look for and to avoid the type of conflicts of interest that we are presently concerned with.
Likewise, and with great respect to Councillor Corr, taking office in an incorporated association requires, in itself, an assumption to be made that the office bearer will, from the time of his appointment or election, take responsibility for matters in his executive portfolio.
After the hearing, Councillor Corr supplied certain additional material to the State and, as a consequence (and quite properly), the State has withdrawn any suggestion that Councillor Corr had, or must be taken to have had, actual knowledge of these commercial and financial arrangements because of his past association with the JBA.
However, in my view, the standard required in conflict of interest matters is generally an objective standard ‑ one that can be satisfied without the need for proof that Councillor Corr had any direct, conscious or actual knowledge of the relevant conflict. The conflict arises from objective or constructive circumstances, not from the subjective knowledge of the particular Councillor.
This is not to say, however, that such matters are irrelevant to the question of any sanction to be imposed should a breach occur. This is a matter that I will return to below.
Other 'defences'
As to the 'defences' found in the Regulations, reg 11(3) (which was relied upon by Councillor Corr) is, in my view, irrelevant to these proceedings, as it relates to s 5.60 of the LG Act which deals with direct or indirect financial interests and proximity interests of a Councillor, both of which interests are not germane to these proceedings.
Regulation 11(4) of the Regulations provides, in my view, no defences, as Councillor Corr had Council material in his possession that it was his duty to read or to be appraised of and which, had he discharged that duty, he would have ‑ or should have ‑ noticed a potential conflict of interest. This is so, as I noted above, even if he had not yet formally taken up his duties of office with the JBA executive.
Councillor Corr also seeks to rely on certain published material of the Department of Local Government to show why no conflict exists.
Such material is only a general guide to the statutory provisions and cannot, of course, displace them. In any event, in my view, the material correctly notes the general position in an example given in its document entitled Disclosure of Interests Affecting Impartiality (January 2011). The commentary, at paragraph 45, says (emphasis added):
Subject to the person considering the extent of their involvement in an association or organisation, disclosure is warranted when matters are discussed at council or committee meetings which directly relate to groups with which members and employees are affiliated. These include sporting clubs, resident groups and associations, business groups and associations, professional associations and so on.
The example given at paragraphs 46 to 48 is of a sporting group that has a request before Council seeking a donation or other financial contribution. The scenario is that the elected member is an office bearer in the sporting club. The advice given in the document is that the Councillor should make an impartiality disclosure at the meeting. The contrasting example given is where the Councillor is 'a member of a sporting club but the extent of involvement is occasional attendance at meetings and events'. The advice is that disclosure in the second case 'would probably not be required'. The former situation more closely resembles the circumstances here.
Conclusion
In conclusion, I find that, on the admitted facts and circumstances, there was an interest which could, or could have reasonably been perceived to, have adversely affected the impartiality of Councillor Corr. That interest was required to be disclosed and it was not. Thus, the decision of the Panel below must be affirmed as to the findings of a minor breach of the prescribed Rules of Conduct.
Appropriate sanction
The Panel, in its reasons and findings in relation to an appropriate sanction (dated 20 May 2013), noted that Councillor Corr had been publicly censured once before in respect of a separate minor breach of the Rules of Conduct when, at a special meeting of Council in 2010, 'he disclosed confidential information concerning particular litigation' from a document marked showing that such information was not to be disclosed. See Corr and Local Government Standards Panel [2012] WASAT 14.
In the present case, the Panel proposed that Councillor Corr be publicly censured by the Panel and that a notice to that effect be published in certain newspapers.
With respect to any sanction, the LG Act provides, in s 5.110(6), as follows:
The breach is to be dealt with by ‑
(a)dismissing the complaint; or
(b)ordering that ‑
(i)the person against whom the complaint was made be publicly censured as specified in the order; or
(ii)the person against whom the complaint was made apologise publicly as specified in the order; or
(iii)the person against whom the complaint was made undertake training as specified in the order; or
(c)ordering 2 or more of the sanctions described in paragraph (b).
I agree with the Panel that a breach of reg 11(2) 'is a serious matter'. Generally speaking, the Panel is correct to observe that this situation 'will in almost all occasions deserve the sanction of a public censure' (Panel's reasons at paragraph 6.5). However, given that Councillor Corr only had constructive knowledge of the matters before Council (including the fact that the matters arose from details contained in a nearly 950 page Council agenda, and given the fact that his first executive meeting of the JBA took place after the November 2012 meeting of Council), some leniency is, I think, called for. This is so, notwithstanding that this was a second breach by Councillor Corr of the Rules of Conduct. This second breach occurred, however, in quite different circumstances.
With respect to the Panel, in my view, an appropriate sanction in this case is a public apology to be delivered at a Council meeting.
I acknowledge Mr Bydder's assistance in formulating the precise terms of that apology, and for liaising with Councillor Corr and the appropriate authorities as to its timing and delivery.
Orders
For the reasons given above, the orders of the Tribunal are:
1. The application for review is granted.
2. The respondent's finding that the applicant committed a breach of regulation 11(2) of the Local Government (Rules of Conduct) Regulations 2007 (WA) is affirmed.
3. In lieu of the respondent's order under section 5.110(6)(b)(i) of the Local Government Act 1995 (WA) that the applicant be publicly censured, there is substituted an order under section 5.110(6)(b)(ii) that the applicant apologise publicly in the following terms (public apology):
The State Administrative Tribunal has found that it is more likely than not that on 20 November 2012, during an Ordinary Council Meeting of the City of Joondalup, I had an interest that could, or could reasonably be perceived to adversely affect my partiality when determining a matter before the Council, but failed to disclose that interest in either of the ways required by regulation 11(2) of the Local Government (Rules of Conduct) Regulations 2007 and thereby breached regulation 11(2) of the Regulations. The Tribunal accepted that I did not have actual knowledge of that interest at the time, but found that there was material in the agenda papers (comprising 947 pages) relating to the item which identified that interest. I accept the Tribunal's findings and apologise for my failure to identify and disclose that interest.
4. The applicant must:
(a)make the public apology at the Ordinary Council Meeting of the City of Joondalup to be held on Tuesday, 15 April 2014 (Ordinary Council Meeting); and
(b)refrain from otherwise commenting during the Ordinary Council Meeting on the matters that are the subject of the public apology.
5. The intervener has liberty to apply in relation to any non‑compliance by the applicant with these orders.
I certify that this and the preceding [38] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR P McNAB, SENIOR MEMBER
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