David Nolan v Executive Director, Land Management Policy,Department of Environment and Primary Industries
[2015] VSCA 301
•13 November 2015
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2014 0120
| DAVID NOLAN | Appellant |
| v | |
| EXECUTIVE DIRECTOR, LAND MANAGEMENT POLICY, DEPARTMENT OF ENVIRONMENT AND PRIMARY INDUSTRIES | Respondent |
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| JUDGES: | WARREN CJ, TATE and KAYE JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 5 May 2015 |
| DATE OF JUDGMENT: | 13 November 2015 |
| MEDIUM NEUTRAL CITATION: | [2015] VSCA 301 |
| JUDGMENT APPEALED FROM: | [2014] VSC 412 (McMillan J) |
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ADMINISTRATIVE LAW – Appellant member of Committee of Management appointed and incorporated under Crown Land (Reserves) Act 1978 – Respondent removed appellant from Committee for breaches of Victorian Public Entity Directors’ Code of Conduct 2006 – Where appellant’s term on Committee would have expired by time of trial – Whether respondent’s decision affected by error of law – Whether declaratory relief available — Appeal dismissed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr P J Hayes Mr R M Smith | --- |
| For the Respondent | Ms K E Foley | Victorian Government Solicitor’s Office |
WARREN CJ:
David Nolan (‘the appellant’) was a member of the Seaspray Reserves Committee of Management (‘the Committee’). Broadly speaking, the Committee is tasked with managing, improving, maintaining and controlling the reserved Crown land known as the Seaspray Foreshore Reserves. The appellant was removed from his position on the Committee by the Executive Director of Land Management Policy at the Department of Environment and Primary Industries (‘the respondent’) as a delegate of the Minister for Environment and Climate Change.
The appellant sought judicial review of the respondent’s decision and relief in the nature of an order for certiorari and a declaration. A judge of the Trial Division dismissed the appellant’s application.[1]
[1]Nolan v Executive Director, Land Management Policy, Department of Environment and Primary Industries [2014] VSC 412 (‘Reasons’).
The appellant appeals the decision and orders of the judge. I would dismiss the appeal, for the following reasons.
Background
The appellant was appointed to the Committee on 20 July 2000, and
re-appointed in 2003, 2006 and 2010. He was chairman of the Committee from 2006 until November 2013, and continued as a Committee member for six months from 27 November 2013. Had the appellant not been removed from the Committee, his term would have ended in May 2014.
The Committee is a State government committee which was appointed under s 14(2) of the Crown Land (Reserves) Act 1978 (‘the Act’) and incorporated by an order of the Governor-in-Council pursuant to s 14A(1) of the Act. Section 14(2) of the Act provides for the appointment of committees of management in respect of reserved Crown land; in this case, the Committee was appointed in respect of the reserved Crown land known as the Seaspray Foreshore Reserves. Section 15 of the Act provides that a committee of management appointed in respect of reserved Crown land has management rights over that land. Section 14B(5) of the Act provides the responsible Minister with the power to remove a member of an incorporated committee from office.
Between 2011–12, the Committee determined to construct a caravan park on the Seaspray Foreshore Reserves with $4 million of public funds. The Committee appointed a Project Superintendent for this purpose.
In January 2012, the appellant placed approximately 10 truckloads (or 100 cubic metres) of vegetation material on a vacant block of unreserved Crown land adjacent to his property which was also adjacent to the caravan park development site. As the vacant block was not reserved Crown land within the Seaspray Foreshore Reserves, it was not under the management of the Committee. According to evidence given by the appellant at trial, the appellant had mowed and generally tended the vacant block for some 20 years.
In or around April 2012, vegetation material was pushed up from the caravan park development site to the vacant block. Unknown persons also placed further vegetation material on the vacant block. These two sets of vegetation material (from the caravan park site and from unknown persons) became intermingled with the appellant’s vegetation material.
The Committee became aware that vegetation material had been moved onto the vacant block on 30 April 2012. On that day, Mr Tate, a representative of the Project Superintendent, emailed the Committee to explain that the vegetation material had been pushed up onto the vacant block as there had been insufficient room within the caravan park site. Mr Tate informed the Committee that he believed the vacant block was able to be used as it was Crown land, and that he intended to mulch the vegetation material.
On 2 May 2012, Mr Bob Sloan, another member of the Committee, responded to Mr Tate’s email (copying in the other members of the Committee) recommending that the Committee’s vegetation material be separated from that belonging to others to avoid the perception that any individuals would benefit from work done with resources from the caravan park development. Mr Sloan wrote:
I do fear however that members of the community could perceive that some individuals in the community were deriving a benefit, financial or otherwise, of hav[ing] work done for them utilizing caravan park construction time and resources and therefore public monies. All we need is for a ‘whistle blower’ to go to the DSE or to the Minister crying ‘misappropriations of tax payer dollars’ and we could all be in some serious strife. Especially after reading this morning[‘s] newspapers!
So, I believe the best solution here is to continue as you were but to create separate piles from piles that were there previously. Letting the residents clean up their own rubbish. If we are totally transparent (and morally correct) then no one can cry ‘foul!’.
At a Committee meeting on 2 November 2012, Mr Tate informed the Committee that he required landfill for the caravan park development. Mr Tate suggested that the vegetation material on the vacant block be mulched and used as fill. On the basis of this discussion, Mr Tate spoke to the appellant in mid-November 2012 to ascertain if the appellant wished for his vegetation material to be mulched with the other material on the vacant block. It was agreed between Mr Tate and the appellant that:
·the appellant’s vegetation material would be mulched along with the other vegetation material on the vacant block; and
·the appellant would pay three-eighths of the mulching cost on the basis that less than half of the vegetation belonged to the appellant.
The vegetation material was ultimately deemed unsuitable for mulching. Between 22 and 28 November 2012, while the appellant was away in Queensland, the Committee determined to have the vegetation material on the vacant block removed and burnt. The appellant had no involvement in the decision. The total cost to the Committee of removing and burning the vegetation material was $4,251, of which the appellant voluntarily paid $381. A dispute then arose between the appellant and the Committee over the appropriate amount he should have paid.
On 9 August 2013, a complaint about the appellant’s conduct was lodged with the Department of Environment and Primary Industries (‘the Department’). An investigation into the complaint commenced. In early October 2013, the appellant learned of rumours circulating about the investigation and he wrote to the Department regarding his right to be heard on the matter. On 22 October 2013, the appellant met with an investigator from the Department. The appellant sought to have access to the complaint and to the ultimate report produced. The Department refused the appellant’s request, although it indicated to the appellant that he was on notice about the nature of the complaints.
On 23 January 2014, the Secretary of the Department wrote a letter to the appellant notifying him that the Secretary believed the appellant’s behaviour may have been in breach of the Victorian Public Entity Directors’ Code of Conduct 2006 (‘the Code’) and inviting the appellant to respond. The appellant wrote to the Department on 28 January, 30 January, 6 February and 14 February 2014. He also wrote to the Public Sector Standards Commissioner, who in turn wrote to the Department on 6 February 2014. The Department did not respond to these letters.
On 19 February 2014, the appellant filed a summons and originating motion against the Secretary of the Department and the other members of the Committee. The appellant sought an interlocutory injunction against his removal from the Committee, and an order in the nature of mandamus requiring that procedural fairness be accorded to him in any decision relating to the investigation into his conduct. The proceeding against the other Committee members was ultimately discontinued.
On 20 February 2014, the respondent provided the appellant with details of the allegations made against the appellant and a copy of the investigation report. The appellant was given the opportunity to provide a response to the complaint and investigation report, which the appellant did on 7 March 2014. On 24 March 2014, the appellant was notified of further matters that the respondent proposed to take into account in determining whether to remove the appellant from membership of the Committee; the appellant provided a response to these matters on 26 March 2014.
On 28 March 2014, the respondent wrote to the appellant advising him that the respondent had decided to exercise his power pursuant to s 14B(5) of the Act to remove the appellant from the Committee effective from 11 April 2014. On 1 April 2014, the appellant sought reasons for the respondent’s decision pursuant to s 8 of the Administrative Law Act 1978.
On 9 April 2014, the appellant’s summons seeking an interlocutory injunction was heard by a judge of the Trial Division. The application was granted and orders were made restraining the respondent from giving effect to his decision to remove the appellant from the Committee until the proceeding was determined. On 10 April 2014, the appellant filed an amended originating motion and summons seeking that the respondent’s decision be quashed. The appellant further amended his originating motion and summons on 2 June 2014 to seek declaratory relief in addition to, or as an alternative to, an order in the nature of certiorari.
The Code
It was accepted by both parties at trial that the Committee is a public entity as defined in ss 4 and 5 of the Public Administration Act 2004 (‘the PAA’), and that the members of the Committee are directors of a public entity as defined in s 4 of the PAA. At the relevant time, s 63 of the PAA empowered the Public Sector Standards Commissioner to prepare and issue codes of conduct based on the public sector values.[2] In 2006, the Public Sector Standards Commissioner issued the Code with the stated purpose of promoting ‘adherence to the public sector values by directors of Victorian public entities.’[3]
[2]The corresponding provision in the current PAA is s 61, which provides that the Victorian Public Sector Commission must prepare and issue codes of conduct based on the public sector values.
[3]Public Sector Standards Commissioner, Directors’ Code of Conduct and Guidance Notes (2006) iii.
The Code sets out a number of requirements for directors. Relevantly, it contains the following principles:
As a director and member of a Board of a Victorian public entity you must:
·Act with honesty and integrity. Be open and transparent in your dealings; use power responsibly; do not place yourself in a position of conflict of interest; strive to earn and sustain public trust of a high level.
·Act in good faith in the best interests of the public entity. Demonstrate accountability for your actions; accept responsibility for your decisions; do not engage in activities that may bring you or the public entity into disrepute.
·Act fairly and impartially. Avoid bias, discrimination, caprice or self-interest; demonstrate respect for others by acting in a professional and courteous manner.
…
·Use your position appropriately. Do not use your position as a director to seek an undue advantage for yourself, family members or associates, or to cause detriment to the public entity; ensure that you decline gifts or favours that may cast doubt on your ability to apply independent judgement as a Board member of the public entity.
…
·Demonstrate leadership and stewardship. Promote and support the application of the Victorian public sector values; act in accordance with the Directors’ Code.
Additionally, the Code contains ‘Guidance Notes’ which purport to clarify the requirements in the Code and which provide examples of behaviour that may breach the Code. The Guidance Notes state that they are ‘provided to assist in interpretation of the Code.’ Pursuant to s 35(b) of the Interpretation of Legislation Act 1984, the Guidance Notes may be used as an aid to interpret the Code.
Reasons of the respondent
The reasons for the decision of the respondent were provided to the appellant on 3 April 2014. Those reasons set out the authority of the respondent to make the decision, the material before the respondent, the applicability of the Code, and the facts, evidence, and material on which the respondent based his decision.
The respondent gave four reasons for his decision. First, the respondent considered that the appellant had breached the Code’s prohibition on a director placing himself or herself in a position of conflict. The respondent noted that the appellant advised he had declared his interest in the vegetation material to the Committee and that he did not participate in any Committee discussions regarding the vegetation material. However, the respondent observed that:
Mr Nolan has admitted that he had a discussion with the Project Superintendent and proposed an amount he was willing to contribute for the overall cost of mulching the material. It is evident that the representative of the Project Superintendent was aware of Mr Nolan’s position as a member of the [Committee] which retained his firm’s services during this discussion. Although Mr Nolan may have believed that he was negotiating with the Project Superintendent in his capacity as a private individual and that mulching of his material would benefit the construction project undertaken by the [Committee], this conduct could give rise to a perceived conflict of interest that Mr Nolan’s material was being mulched on terms that were more favourable to him than if he were a private individual.
It would have been appropriate for other members of the [Committee] to have been informed of the proposed agreement between Mr Nolan and the Project Superintendent so that they could have made an assessment as to whether it was on fair terms. This is particularly so in circumstances where [Committee] member Bob Sloan had already expressed concerns via email about how the public would perceive material from the [Committee’s] caravan park site being mixed with Mr Nolan’s material. …
It is also immaterial that the plan to mulch Mr Nolan’s material did not proceed; by entering into the discussion with the Project Superintendent, Mr Nolan placed himself in the position of having a conflict of interest.
Secondly, the respondent considered that the appellant had failed to act in good faith in the best interests of the public entity, as the appellant had engaged in activities that may bring the Committee into disrepute. The respondent stated:
The requirements of the Code in this regard extend to the activities of committee members as individuals in all aspects of their life. By placing a large amount of his own material on Crown land without the consent of the land manager, (notwithstanding that it was not Crown land under the control of the [Committee]), it is evident that Mr Nolan has engaged in an activity which is without any lawful basis and which therefore may bring him into disrepute.
…
Evidence of actual complaints being made to a responsible authority is not necessary in order to assess that an activity is one that may bring a director or public entity into disrepute.
Furthermore, in entering into a discussion regarding the costs of disposal with the Project Superintendent (with the implication that the [Committee] would be liable for the remainder), it appears likely that this is an activity which may bring the [Committee] into disrepute. This is because, as discussed above, it could give rise to the perception that Mr Nolan is obtaining a personal benefit by having his material removed as part of the caravan park development project.
Thirdly, the respondent stated that the appellant had used his position as a director to seek an undue advantage for himself:
Mr Nolan negotiated with the Project Superintendent to achieve an outcome which was acceptable to him. Although Mr Nolan may not have appreciated that his role as a member of the [Committee] was relevant to his discussion with the Project Superintendent and believed that mulching of his material would benefit the construction project undertaken by the [Committee], it could give rise to the perception that Mr Nolan is obtaining a personal benefit by having his material removed as part of the caravan park development project undertaken by the [Committee].
Finally, the respondent found that the appellant had failed to demonstrate leadership and stewardship:
By placing his own material on Crown land, Mr Nolan has not demonstrated appropriate leadership and stewardship. Notwithstanding that the Crown land was not that which was managed by the [Committee], an implication of Mr Nolan’s role as a member of the [Committee] required him to set an example of behaviour to the wider community with respect to the treatment of Crown land. It is evident from Mr Nolan’s evidence that after Mr Nolan had placed his material on Crown land, other unknown individuals did the same, resulting in greater cost to the [Committee] of removing the material.
In conclusion, the respondent stated:
Having regard to the matters specified in paragraphs [7]–[15], the Executive Director, Land Management Policy made the decision to exercise the power to remove Mr Nolan from office as a member of the [Committee] pursuant to section 14B(5) of the Crown Land (Reserves) Act 1978. The reason for this decision was because Mr Nolan’s conduct was not consistent with the public sector values and expectations of board members, and contravened the Code.
Trial decision
At trial the appellant advanced six grounds upon which he sought to establish that the respondent’s decision was affected by an error of law. The trial judge rejected all six grounds.
The appellant’s first and second grounds were that the concluding sentence of the respondent’s decision[4] referred to the appellant’s conduct as being inconsistent with ‘public sector values’ and ‘expectations of board members’, when neither amounted to binding obligations on the appellant. This, the appellant submitted, disclosed an error of law. The trial judge rejected the appellant’s submissions on these grounds as ‘a semantic point’ that ignored the context in which the impugned sentence appeared. Her Honour held that the respondent’s final statement clearly related to the substantive reasons given earlier in the document. Her Honour observed that the terms ‘public sector values’ and ‘expectations of board members’ were rhetorical flourishes and their use did not disclose that the respondent understood them to impose binding obligations on the appellant.[5]
[4]Set out at [27] above.
[5]Reasons [24]–[35].
The appellant’s third ground was that the Code is intended to be a practical guide; consequently, in the context of small community boards where conflicts are likely to abound, the concept of ‘conflicts’ as used in the Code should be interpreted narrowly so as to exclude perceived (as opposed to actual) conflicts. The trial judge rejected this submission and held that the Code extends to actual and perceived conflicts. Her Honour noted that both the PAA, being the statutory instrument empowering the creation of the Code, and the Guidance Notes attached to the Code provided for a broad definition of conflicts that extended to perceived or apparent conflicts. Further, her Honour stated that in any case she was satisfied that the respondent’s reasons referred, in substance, to an actual conflict of interest on the part of the appellant.[6]
[6]Ibid [36]–[43].
The appellant’s fourth ground was that he had not been afforded procedural fairness: the respondent, in determining that the appellant had placed his vegetation material on the vacant block without permission and without lawful basis, had not made any enquiries as to those matters. The trial judge found that there was no substance to this ground. The appellant had been provided with the opportunity to put his case to the respondent, including an opportunity to explain his supposed authority to place the vegetation material on Crown land; he did not do so and the respondent was free to rely on his lack of an explanation in the reasons.[7]
[7]Ibid [44]–[47].
The appellant’s fifth ground was that the respondent erred in determining that the appellant had received an undue benefit without giving sufficient regard to the word ‘undue’. The trial judge held that an advantage is undue within the meaning of an ‘undue advantage’ referred to in the Code where it is obtained as a result of the director’s position. The respondent’s reasons disclosed no error in this regard.[8]
[8]Ibid [48]–[51].
The appellant’s sixth and final ground was that the respondent had interpreted the leadership and stewardship requirement too broadly, and that directors are only required to demonstrate leadership and stewardship in respect of their role as directors. The trial judge held that while the Code ‘does not require directors to be saints’, it required that they demonstrate leadership and stewardship qualities in their role as directors. Her Honour observed that as the appellant was entrusted with the management of Crown lands, it was appropriate for the respondent to take into account the appellant’s use of Crown lands generally in considering his stewardship.[9]
[9]Ibid [52]–[53].
While not strictly necessary in view of her Honour’s findings, the trial judge went on to consider to what relief, if any, the appellant would have been entitled if an error of law had been established. Her Honour held that if she did find an error of law, certiorari would not be available as the appellant’s term on the Committee had expired.[10]
[10]Ibid [60]–[66].
Her Honour also rejected the submission that a declaration would be appropriate. Her Honour accepted that a reputational interest is sufficient to justify declaratory relief, but found that the evidence led by the appellant was insufficient to establish that interest. Her Honour observed that there was no evidence as to the significance of the Committee or the present dispute in the Seaspray community, and that the appellant had expressed the belief that even if the respondent’s decision was quashed, the community would have a lesser opinion of him as a result of the dispute.[11]
[11]Ibid [67]–[81].
In her Honour’s final remarks she questioned the utility of the appellant’s application:
The lines between the forms of relief granted by a modern court of judicature, unconstrained by archaic forms of action and distinctions between courts of law and of equity, are often blurred. If I had determined that the defendant had made an error of law, it is difficult to see what the consequence of that decision would be in practical terms. The plaintiff is now no longer on the Committee, and would still not be on the Committee even if the decision had been made in error. If I were to grant relief in the nature of certiorari, or a declaration, it is difficult to see how the result would differ from one in which I simply determine that there has been an error of law and record that determination in these reasons. Unlike Lord Brightman [in Chief Constable of North Wales Police v Evans[12]], I find it more regrettable that public resources are consumed in the determination of a decision that is of little to no consequence.[13]
[12][1982] 3 All ER 141.
[13]Reasons [79].
Grounds of appeal
The appellant relied upon three grounds in his Notice of Appeal. First, the appellant submitted that the trial judge erred in finding that the appellant had placed himself in a position of actual or perceived conflict of interest when he entered into negotiations about the price he would pay for the mulching of his vegetation material.
Secondly, the appellant submitted that the trial judge erred in her Honour’s interpretation of the ‘leadership and stewardship’ requirement in the Code.
Thirdly, the appellant submitted that on the weight of the evidence, her Honour should have found that the appellant had established the requisite reputational interest for declaratory relief.
Ground 1 — conflict of interest
The appellant submitted to this Court that his position as a member of the Committee was akin to a fiduciary relationship, so that he owed a duty to not put himself in a position where his own personal interests conflicted with the interests of the Committee.
Having advanced this characterisation of his position, the appellant made two arguments in support of the ground that the trial judge had erred in finding conflict of interest. First, the appellant submitted that he was not in a position of conflict in relation to the use and disposal of the vegetation material because the Committee’s remit did not extend to those activities. The appellant argued that the Committee’s responsibilities only extended to managing the reserved Crown land known as the Seaspray Foreshore Reserves. The vacant block on which the vegetation material was situated was unreserved land over which the Committee had no responsibility or control. Therefore, the appellant submitted, it was difficult to see how the Committee’s endeavours in relation to the vegetation material on the vacant block fell within the Committee’s role.
Secondly, the appellant submitted that the Committee had been fully informed of, and consented to, any conflict of interest on the appellant’s part. The appellant noted that the reasons of the respondent referred to the following facts:
·the Committee knew by May 2012 that a portion of the vegetation material on the vacant block belonged to the appellant;
·on 2 November 2012, the Committee was informed by Mr Tate that additional fill was required for the caravan park development, and was asked by Mr Tate to explore options for obtaining additional fill; and
·during November 2012, Mr Tate, a representative of the Project Superintendent who had been engaged by the Committee, had a discussion with the appellant regarding the use and mulching of the vegetation material on the vacant block, including the appellant’s material.
The appellant submitted that the overwhelming probable inference from these facts is twofold: first, that the Committee was informed of the facts that gave rise to any perceived or actual conflict of interest on the appellant’s part; and secondly, that Mr Tate was acting on behalf of the Committee and with the Committee’s express or tacit agreement in making arrangements with the appellant in relation to the vegetation material on the vacant block. Accordingly, the appellant submitted, any conflict of interest on the appellant’s part as at November 2012 was overcome by the Committee’s informed consent. In making this argument, the appellant relied on a number of authorities in which courts have stated that fully informed consent can cure what would otherwise be a breach of the fiduciary duty to avoid a conflict of interest.[14]
[14]Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165, 199 [78] (McHugh, Gummow, Hayne and Callinan JJ); R v Byrnes (1995) 183 CLR 501, 517 (Brennan, Deane, Toohey and Gaudron JJ); Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 67 (Gibbs CJ); Hurley v B G H Nominees Pty Ltd [No 2] (1984) 37 SASR 499, 506 (Walters J).
The appellant acknowledged that his two arguments on the conflict of interest ground were not run before the trial judge. The appellant accepted the general proposition that a court will not entertain a new point on appeal where the point could have been met by calling evidence at trial, or where raising the point for the first time on appeal would be considered contrary to the overarching purpose of the Civil Procedure Act 2010. However, the appellant submitted that a court may permit a new argument to be raised on appeal where it could not have been met by further evidence at the trial and it is in the interests of justice to do so, or where no unfairness will be occasioned to the other party, and that such circumstances arose here. The appellant characterised the new arguments sought to be raised as ‘dry legal arguments’ based on uncontroversial evidence from the respondent’s reasons; thus, the appellant submitted, it is difficult to comprehend what evidence the respondent would have otherwise presented at trial in response to the arguments. The appellant noted that the broader ‘conflict of interest’ issue to which the arguments went was squarely before the trial judge. The appellant also submitted that the new arguments were reasonably straightforward and could be addressed expediently. In view of these circumstances, the appellant submitted that it was in the interests of justice to permit him to raise the new arguments on appeal.
The respondent contended that both of the appellant’s arguments on this ground were entirely new, and that there were no exceptional circumstances to warrant departure from the general rule that parties are not permitted to raise new arguments on appeal. Further, the respondent submitted that the second proposition advanced by the appellant was not a dry question of law, but was instead a factual matter, being whether the Committee knew about the arrangement between Mr Tate and the appellant and the nature of the authorisation given by the Committee to Mr Tate. The respondent submitted that had the appellant’s second argument on conflict of interest been raised at trial, the respondent could have met the point by calling evidence about the extent of the Committee’s knowledge regarding Mr Tate’s negotiations with the appellant and about the scope of the authority given by the Committee to Mr Tate.
The respondent submitted that even if the appellant’s new arguments were to be entertained in this Court, neither had merit. On the appellant’s first argument, the respondent submitted that the Committee’s obligation to manage the Seaspray Foreshore Reserves included an obligation to dispose of waste generated from the Reserves. Thus, when the Committee discovered that vegetation material from the Reserves had been placed onto the vacant block, it was within the Committee’s remit to take steps to remove the material. Further, the respondent submitted that even if the appellant was correct to argue that the management of vegetation material on the vacant block was outside the Committee’s remit (which the respondent denied), that argument could only remove the existence of an actual conflict of interest; it did not undermine the existence of a perceived conflict of interest, and the appellant did not challenge the trial judge’s finding that the Code extended to perceived as well as actual conflicts of interest.
On the appellant’s second argument, the respondent contended that there was no evidentiary basis for the appellant’s assertion that the Committee gave its informed consent for Mr Tate to deal with the appellant in relation to the disposal of the vegetation material. The respondent submitted that neither the respondent’s reasons nor the documentary evidence regarding the Committee’s work at the relevant time provided a basis for inferring the existence of informed consent. Indeed, the respondent submitted that the evidence tended to point to the opposite conclusion that there was no informed consent. The respondent referred to the fact that in May 2012, a member of the Committee, Mr Bob Sloan, had emailed the Project Superintendent recommending that the Committee’s vegetation material be separated from the appellant’s (a fact that was recorded in the respondent’s reasons). The respondent also noted that:
·the appellant had said in an email to other Committee members that he had no influence over the decisions regarding rubbish management;
·the ‘Project Control Document’ that listed actions agreed between the Committee and the Project Superintendent did not indicate that the Committee had approved Mr Tate’s dealings with the appellant in relation to the vegetation material; and
·the appellant’s own description of the Committee meeting on 2 November 2012 (in an email dated 17 December 2012) did not refer to the Committee having authorised Mr Tate to deal with the appellant in relation to the vegetation material.
New arguments on appeal
As a general rule, a party on appeal cannot raise an argument that was not run at trial. In Metwally v University of Wollongong, the High Court stated:
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.[15]
[15](1985) 60 ALR 68, 71 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ).
The High Court in Coulton v Holcombe described this rule as being key to the proper administration of justice:
It is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish.[16]
[16](1986) 162 CLR 1, 7 (Gibbs CJ, Wilson, Brennan and Dawson JJ).
The High Court further explained the general position in Whisprun Pty Ltd v Dixon:
It would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial. Nothing is more likely to give rise to a sense of injustice in a litigant than to have a verdict taken away on a point that was not taken at the trial and could or might possibly have been met by rebutting evidence or cross-examination. Even when no question of further evidence is admissible, it may not be in the interests of justice to allow a new point to be raised on appeal, particularly if it will require a further trial of the action. Not only is the successful party put to expense that may not be recoverable on a party and party taxation but a new trial inevitably inflicts on the parties worry, inconvenience and an interference with their personal and business affairs.[17]
[17][2003] HCA 48; (2003) 200 ALR 447, 461 [51] (Gleeson CJ, McHugh and Gummow JJ) (citations omitted).
In Setka v Abbott, the Court of Appeal noted that the Civil Procedure Act 2010 poses an added impediment to raising a new argument on appeal:
[T]he over-arching purpose which, by operation of the Civil Procedure Act 2010, applies to both litigants and their advisers, is not simply a pious but toothless statement of the considerations which are to motivate participants, lay and professional, in civil litigation. So much was powerfully emphasised by this Court in Yara Australia P/L and ors v Oswal. The just, efficient, timely and cost effective resolution of the real issues in dispute in a case cannot be facilitated if a party and the party’s advisers do not take adequate steps to identify the issues which require determination early in the life of the proceeding.[18]
[18][2013] VSCA 345 [31] (Warren CJ, Ashley and Whelan JJA) (citations omitted). See also Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 [90] (Warren CJ and Davies AJA).
There are, of course, exceptions to the general rule. In Wallis Nominees (Computing) Pty Ltd v Pickett, the Court of Appeal acknowledged that exceptional circumstances may justify the entertainment of a new point on appeal.[19] Such exceptional circumstances may arise where ‘all the facts have been established beyond controversy or where the point is one of construction or of law’.[20] They may also arise where there would be no prejudice or unfairness to the other party.[21] In either case, it must be in the interests of justice to entertain the point.[22]
[19][2013] VSCA 24 [77] (Warren CJ and Davies AJA) (citations omitted).
[20]Water Board v Moustakas (1988) 180 CLR 491, 497 (Mason CJ, Wilson, Brennan and Dawson JJ).
[21]Ravinder Rohini Pty Ltd v Krizaic (1991) 30 FCR 300, 316 (Wilcox J).
[22]See Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 200 ALR 447, 461 [51] (Gleeson CJ, McHugh and Gummow JJ).
In my view, the appellant has failed to show that exceptional circumstances arise to justify allowing him to raise his new arguments on appeal.
There is merit in the appellant’s submission that the new arguments sought to be raised are analogous to questions of law. As the appellant is effectively seeking judicial review on the basis of error on the face of the record, the examination of whether the respondent erred in law is confined to the material on the record. The record includes the respondent’s reasons for his decision[23] and other material referred to in the respondent’s reasons in such a way so as to bring about their incorporation as an integral part of the record.[24] It does not extend to general evidence about the factual background to the dispute. The relatively narrow confines of the record limits the further relevant evidence that the respondent could have called at trial to meet the appellant’s new arguments.
[23]Administrative Law Act 1978 s 10.
[24]See Craig v South Australia (1995) 184 CLR 163, 181–2 (Brennan, Deane, Toohey, Gaudron and McHugh JJ).
Nevertheless, I do not consider it to be in the interests of justice to entertain the appellant’s new arguments. The appellant was represented at trial by lawyers and counsel. The appellant did not provide any evidence or submissions as to why the arguments were not run before the trial judge. In the absence of proper explanation, to allow the appellant to raise new arguments that he had the opportunity to bring before the trial judge would be inimical to the proper administration of justice. It would also be contrary to the overarching purpose of the Civil Procedure Act 2010 ‘to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute’.[25] Courts in this State are obliged to give effect to this overarching purpose.[26] As observed in Setka v Abbott, the overarching purpose is not simply a ‘pious but toothless statement’; rather, it obligates legal practitioners to take adequate steps to identify the issues which require determination early in the life of the proceeding.[27]
[25]Civil Procedure Act 2010 s 7.
[26]Ibid s 8.
[27][2013] VSCA 345 [31] (Warren CJ, Ashley and Whelan JJA).
Was there error in finding that the appellant was in a position of conflict?
Even if the appellant is permitted to advance the new arguments he now relies upon, those arguments are not made out.
Dealing with the appellant’s first argument, s 15 of the Act gives the Committee the power to manage the land in respect of which it was appointed, in this case the Seaspray Foreshore Reserves. The disposal of waste from that land is part of its official functions. In my view, from the time the Committee knew that vegetation material from the caravan park development site was on the vacant block, it had an obligation to dispose of its vegetation material. From that point in time, there was a potential conflict between the interests of the appellant regarding the disposal of his vegetation material and the obligation of the appellant to act in the best interests of the Committee in arranging the disposal of its vegetation material. At that stage, the obligation in the Code for directors not to place themselves in a position of conflict meant that the appellant should have removed himself from all discussions regarding the removal of the vegetation material.
The appellant’s submissions on his second argument suffered from two fatal errors. First, the appellant mistakenly relied upon the law of equity that allows, in certain circumstances, for a fiduciary to put himself or herself in a position of conflict when the beneficiary gives informed consent. While the appellant may have had a fiduciary duty to the Committee, the respondent’s reasons are based solely on the Code. Thus, in order to assess whether the respondent made an error of law, one must have regard only to the text of the Code and material that assists in the interpretation of that text, such as the Guidance Notes and the PAA. As the respondent submitted, that is the universe in which the Court must make its assessment. Turning to the Code, the requirement that a director of a public entity must not put himself or herself in a position of conflict does not contain a ‘carve out’ for informed consent. Moreover, the Guidance Notes attached to the Code state that where an actual or perceived conflict arises, a director should declare their interest and withdraw from Board deliberations. On the facts, the appellant did not withdraw from the situation; instead, he engaged in negotiations with Mr Tate in the absence of the other Committee members.
Secondly, even if informed consent is an answer to the charge of actual or perceived conflict under the Code, the record does not indicate that there was informed consent. The appellant asked this Court to infer from the respondent’s reasons (and an email the contents of which are discussed in the reasons) that the Committee knew of the appellant’s position of conflict and authorised Mr Tate to negotiate with the appellant about the disposal of the vegetation material on the vacant block. In my view, the record tends to point against the appellant’s position. The reasons of the respondent indicate that Mr Tate informed the Committee of the need for additional fill, and he asked the Committee to explore options for additional fill. There is no indication in the record or in the emails between the Committee members and Mr Tate that the Committee asked Mr Tate to explore options for additional fill or specifically ask the appellant whether his vegetation material could be used for the fill. There is, however, evidence referred to in the record that undermines the inference urged by the appellant that the Committee authorised the discussions between the appellant and Mr Tate. As discussed in the respondent’s reasons, Mr Sloan, a Committee member, sent an email to Mr Tate and the rest of the Committee recommending that the Committee’s vegetation material be separated from that of the appellant to avoid the perception that any individuals would derive a benefit from the Committee’s decision to remove the vegetation material on the vacant block.[28] The email indicates that the Committee was alert to the possibility of a conflict and wanted to avoid such a perception; it does not, in any way, suggest that the Committee consented to or authorised negotiations between Mr Tate and the appellant regarding the removal of the vegetation material.
[28]See [10] above.
There is, therefore, no error of law in the respondent’s finding that the appellant breached the requirement in the Code not to place himself in a position of conflict of interest. Ground 1 is not made out.
Ground 2 — leadership and stewardship
The appellant advanced two arguments in support of this ground. First, he submitted that the respondent erred by extending the appellant’s obligation under the Code to demonstrate leadership and stewardship to the appellant’s treatment of Crown land that was not within the remit of the Committee. In effect, the appellant argued that his obligation under the Code only extended to his actions in relation to land in the Seaspray Foreshore Reserves. Therefore, the appellant’s placement of his vegetation material on the vacant block, which was not part of the Reserves, fell outside his obligation under the Code.
Secondly, the appellant submitted that the trial judge erred in holding that the Code required the appellant to set an example of behaviour to the wider community regarding the use of Crown land, and noted in this regard that her Honour had mischaracterised the vacant block as reserved Crown land as opposed to unreserved Crown land.
The respondent contended that there was a sufficient connection between the appellant’s placement of the vegetation material on the vacant block and the appellant’s role as a director of the Committee, that connection being the treatment of Crown land. The respondent submitted that the connection existed regardless of whether the land was reserved or unreserved Crown land.
In my view, neither the trial judge nor the respondent erred in their conclusion that the appellant’s conduct breached his obligation under the Code to demonstrate leadership and stewardship. I accept, as the trial judge did,[29] that the terms ‘leadership’ and ‘stewardship’ as used in the Code are not at large; directors are not required to constantly demonstrate those qualities in all aspects of their lives. There must be a sufficient connection between the acts that are said to be in breach of the leadership and stewardship requirement and the director’s position on the board of a public entity. In my view, in the appellant’s case that connection is clear. The declaration by the Governor-in-Council to establish the Committee under the Act places great trust in the members of that Committee to manage certain reserved Crown land. The treatment by the appellant of Crown land (reserved or unreserved) as a personal storage space for his vegetation material breached that trust and justified the finding of a breach of the duty of leadership and stewardship.
[29]Reasons [55].
Additionally, the Guidance Notes tend against the appellant’s submissions. In discussing the duty of stewardship, the Guidance Notes state that board members should see their duty as being responsible for the assets of the entity, both intangible and tangible. The Guidance Notes go on to list a number of intangible assets including reputation and goodwill. A public entity’s reputation and goodwill can be affected by conduct of board members that is not strictly confined to dealing with the public entity’s tangible assets; that impact can occur whenever there is a sufficient connection between the board member’s conduct and the public entity’s remit. In exhorting directors to be responsible for intangible assets such as reputation and goodwill, the Guidance Notes belie the appellant’s submission that the duty of leadership and stewardship could only apply to conduct directly affecting the reserved Crown land for which the Committee had management responsibility.
For these reasons, Ground 2 is not made out.
Ground 3 — availability of declaratory relief
The appellant’s third ground of appeal relates only to the trial judge’s finding regarding declaratory relief; it does not seek to impugn her Honour’s decision that certiorari was not available. While it is unnecessary for me to make a finding on this ground of appeal due to my findings on Grounds 1 and 2, in the event it was necessary I will state my views on the matter.
The appellant submitted that the trial judge erred in finding that declaratory relief was not available. The appellant contended that declaratory relief was available for the protection of a reputational interest, and that in his case there is a likelihood of ongoing damage to his personal reputation should the errors of law in the respondent’s reasons remain uncorrected. The appellant argued that the trial judge was in error in holding that he did not produce sufficient evidence of harm to his reputation. The appellant pointed to two of his affidavits[30] which contained a number of matters regarding his reputation:
·his family had lived or owned property in the Seaspray area since 1926;
·he has owned property in the area for the last 20 years;
·he has a deep connection with and enjoyed good standing within the community;
·the Seaspray community is very small, with fewer than 120 people; and
·at a community meeting of the Committee after he had been removed from the Committee, he noted that many friendly acquaintances would not look at or talk to him.
[30]Referred to in ibid [68]–[69].
The respondent first noted that the award of declaratory relief is a discretion in the House v The King sense,[31] and the appellant had not demonstrated error in the judge’s reasoning.[32] The respondent submitted that the appellant simply asserted damage to his reputation and that the only evidence at trial which could support that proposition was evidence given by him. Moreover, the respondent submitted that there was no evidence of the significance of the Committee in the Seaspray community or evidence that the dispute was known to many members of the community.
[31](1936) 55 CLR 499, 504–5 (Dixon, Evatt and McTiernan JJ).
[32]See Yousif v Commonwealth Bank of Australia [2010] FCAFC 8 [121] (Kenny, Tracey and Jagot JJ).
Importantly, the respondent relied on a number of statements from the appellant’s affidavits that indicated that members of the community did not think less of the appellant after his removal, or that members of the community believed the appellant had been treated badly by the Committee. In particular, the respondent noted statements in the appellant’s affidavits to the effect that:
·a friend who had heard the appellant was ‘leaving the Committee’ said to the appellant that ‘these things happen’ and congratulated the appellant on the things he had achieved during his term on the Committee; and
·a person deeply engaged in the Seaspray community told the appellant that he had heard the appellant had been ‘shafted’.
The respondent also observed that the appeal only attacked two of the four breaches of the Code identified in the respondent’s reasons. Therefore, any grant of declaratory relief would leave undisturbed the respondent’s findings on the other two breaches of the Code. In these circumstances, the respondent submitted that declaratory relief could not vindicate the appellant’s reputation and would therefore be without utility.
Plainly, courts are able to grant declaratory relief in order to protect a party’s reputation. In Ainsworth v Criminal Justice Commission, the High Court stated:
declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The person seeking relief must have ‘a real interest’ and relief will not be granted if the question ‘is purely hypothetical’ …
The present case involves no mere hypothetical question. At all stages there has been a controversy as to the Commission’s duty of fairness. A report has been made and delivered … That report has already had practical consequences for the appellants’ reputations. For all that is known, those consequences may extend well into the future. It is appropriate that a declaration be made in terms indicating that the appellants were denied natural justice. That may redress some of the harm done.[33]
[33](1992) 175 CLR 564, 582 (Mason CJ, Dawson, Toohey and Gaudron JJ) (citations omitted). See also Plaintiff M61/2010E v Commonwealth (2010) 243 CLR 319, 359 (French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ).
Here, however, the appellant has not shown that the trial judge made an error in exercising her discretion not to grant declaratory relief. At the trial, the appellant relied solely on his own affidavit evidence to establish harm to his reputation. No evidence was produced from anyone other than the appellant as to his standing in the community, the extent to which the respondent’s decision was known in the community or the effect of the respondent’s decision on the appellant’s reputation. Moreover, some of the evidence produced by the appellant pointed against the conclusion that his reputation had been damaged. As the respondent submitted, it appears from the appellant’s affidavit evidence that at least some of those who knew about the appellant’s removal from the Committee blamed the decision on the respondent or the Committee and continued to view the appellant in a positive light. Given the lack of evidence, no error can be discerned in her Honour’s conclusion as to the unavailability of declaratory relief.
In light of this, I do not consider it necessary to address the respondent’s submission that declaratory relief would be without utility because it would only go to two of the four alleged breaches of the Code set out in the respondent’s reasons.
Ground 3 is not made out.
Conclusion
For the reasons stated above, I would dismiss the appeal.
TATE JA:
I agree with the Chief Justice, for the reasons she gives, that the appeal should be dismissed.
KAYE JA:
For the reasons given by the Chief Justice, I agree that the appeal should be dismissed.
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