Hunter's Hill Council v Minister for Local Government; Lane Cove Council v Minister for Local Government; Mosman Municipal Council v Minister for Local Government; North Sydney Council v Minister for Local...

[2016] NSWLEC 124

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Hunter’s Hill Council v Minister for Local Government;; Lane Cove Council v Minister for Local Government;; Mosman Municipal Council v Minister for Local Government;; North Sydney Council v Minister for Local Government;; Strathfield Municipal Council v Minister for Local Government [2016] NSWLEC 124

Hearing dates:

30, 31 May, 1, 3, 6, 8, 10, 15, 16, 17 June and 4 July 2016; written submissions 10 August 2016

Date of orders:

20 September 2016

Decision date:

20 September 2016

Jurisdiction:

Class 4

Before:

Moore J

Decision:

Orders in Matter No 158774 of 2016 at [524]
Orders in Matter No 161918 of 2016 at [525]
Orders in Matter No 155301 of 2016 at [528]
Orders in Matter No 158919 of 2016 at [527]
Orders in Matter No 158221 of 2016 at [526]

Catchwords:

JUDICIAL REVIEW – proposal for amalgamation of local government areas – Minister’s referral of proposal to Departmental Chief Executive for examination and report– inquiry required to be held – Chief Executive appoints Delegate to conduct inquiry – whether reasonable public notice given of the holding of inquiry – whether identification of locations of public inquiry sessions adequate – whether inquiry sessions needed to be held in each area proposed to be amalgamated – whether inquiry held in accordance with Act – whether examinations and reports on proposals in accordance with Act – whether affected councils denied procedural fairness by Delegate – publicly accessible material in support of proposal represented that KPMG analysis and modelling was independent – whether representations misleading – whether allegedly misleading representations invalidated statutory process of amalgamation – whether failure to provide all KPMG analysis and modelling material meant the council was denied procedural fairness
WORDS AND PHRASES – requirement for local government areas proposed to be amalgamated to be contiguous – term not defined in legislation – meaning of contiguous – requirement of contiguous areas to be touching – statutory provision deeming extension of local government areas below low-water mark in certain circumstances – areas deemed to be extended – areas therefore contiguous

Legislation Cited:

Acts Interpretation Act 1931 (Tasmania), s 46
Civil Procedure Act 2005, s 98
Environmental Planning and Assessment Act 1979
Local Government Act 1906, ss 3 and 15(1)(a)
Local Government Act 1919, ss 4, 16(e) and 18
Local Government Act 1993 ss 46, 47, 204, 205(3), 213, 218, 218A, 218B, 218C, 218D, 218E, 218F, 218F(1), 218F(2), 218F(6), 218F(7), 218F(8), 260, 261, 262, 263, 263(1), 263(2), 263(2A), 263(2B), 263(3), 263(5), 263(7), 264, 265, 702, 705, 706, 713 Pts 1, 2 and 3 of Ch 6, 9, Pt 2 of Ch 17, Sch 2
Local Government (Bayside) Proclamation 2016
Local Government (Council Amalgamations) Proclamation 2016
Interpretation Act 1987, s 34(2)
Prices Regulation Act 1948
Uniform Civil Procedure Rules 2005 Pt 42 r 42.1

Cases Cited:

Ainsworth v Criminal Justice Commission (1991-1992) 175 CLR 564
Albion Insurance Company Limited v Government Insurance Office (NSW) (1969) 121 CLR 342
Anderson v Minister for Infrastructure, Planning and Natural Resources (2006) 151 LGERA 229; [2006] NSWLEC 725
Auckland Lai v Warringah Shire Council (1985) 58 LGRA 276
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; [1990] HCA 33
Botany Bay City Council v Minister for Local Government [2016] NSWCA 74
Botany Bay City Council v The State of New South Wales [2016] NSWCA 243
Botany Bay City Council v The State of New South Wales and Minister for Local Government [2016] NSWSC 583
Castle Constructions Pty Limited v North Sydney Council & Anor [2008] NSWLEC 137
Casuarina Beach Holdings Pty Limited v Tweed Shire Council [2013] NSWLEC 1214
Cave v Horsell [1912] 3 KB 533
Commonwealth of Virginia v Comptroller of the Currency, 333F. Supp. 847 (1971)
Coverdale v West Coast Council (2016) 90 ALJR 562; [2016] HCA 15
First Federal Savings and Loan Association v the State of New Hampshire Board 245 A.2d 835 (1969)
Gardner v Dairy Industry Authority (NSW) (1978) 52 ALJR 180
Geneff v Shire of Perth (1966) 14 LGRA 145
Haynes v King [1893] 3 Ch 439
Hornsby Shire Council v Malcolm (1986) 60 LGRA 429
House of Peace Pty Ltd & Anor v Bankstown City Council (2000) 48 NSWLR 498; 106 LGERA 440; [2000] NSWCA 44
Hoxton Park Residents Action Group Inc v Liverpool City Council (2011) 81 NSWLR 638; [2011] NSWCA 349;
Kioa v West [1985] 159 CLR 550
Ku-ring-gai Council v Mr Garry West in his capacity as delegate of the Acting Director-General of the Office of Local Government & Ors [2016] NSWLEC 62
Ku-ring-gai Council v Mr Garry West in his capacity as Delegate of the Acting Director-General of the Office of Local Government (No 2) [2016] NSWLEC 118
Litevale Pty Ltd v Lismore City Council (1997) 96 LGERA 91
Michael Realty Pty Ltd v Carr (1975) 2 NSWLR 812
Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24
Minister for Immigration and Border Protection v SZSSJ [2016] HCA 29
Minister for Immigration and Citizenship v SZIAI (2009) 259 ALR 429; [2009] HCA 39
Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323; 180 ALR 1; 75 ALJR 1105; [2001] HCA 30
Minister for Local Government v South Sydney City Council (2002) 55 NSWLR 381; [2002] NSWCA 288
Pancho Properties Pty Ltd v Wingecarribbee Shire Council (1999) 110 LGERA 352; [1999] NSWLEC 245
Permanent Trustee Company of New South Wales Limited v Council of the Municipality of Campbelltown and Another [1960] 105 CLR 401
Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355; 153 ALR 490; 72 ALJR 841; [1998] HCA 28
Risk v The Northern Territory of Australia (2002) 210 CLR 392; [2002] HCA 23
Rivers SOS Inc v Minister for Planning (2009) 178 LGERA 347; [2009] NSWLEC 213
Robson v Tweed Council [2000] NSWLEC 170
Ryan v Edna May Junction Gold Mining (1916) 21 CLR 487
Scurr v Brisbane City Council (1973) 133 CLR 242
SZSSJ v Minister for Immigration and Border Protection (No 2) (2015) 234 FCR 1; [2015] FCAFC 125
Sharples v Minister for Local Government (2008) 166 LGERA 302; [2008] NSWLEC 328
Shellharbour City Council v Minister for Local Government (No 2) [2016] NSWLEC 119
TAL Life Ltd v Shuetrim; MetLife Insurance Ltd v Shuetrim [2016] NSWCA 68
Spillers Limited v Cardiff (Borough) Assessment Committee [1931] 2 KB 21
Truth about Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited (2000) 200 CLR 591; [2000] HCA 11
Waihi Grand Junction Gold-Mining Co Ltd v Dudson (1909) 29 NZLR 499
Walcha Council and Ors v Minister for Local Government and Ors [2016] NSWLEC 57
Walsh v Visionstream Pty Limited [2004] NSWCA 104
Waterford v The Commonwealth (1987) 163 CLR 54; [1987] HCA 25
Waterways Authority of New South Wales v Coal and Allied Operations Pty Limited [2005] NSWSC 1285
Woollahra Municipal Council v Minister for Local Government [2016] NSWLEC 44
Woollahra Municipal Council v Minister for Local Government [2016] NSWLEC 86

Category:

Principal judgment

Parties:

Matter No 158774 of 2016
Hunter’s Hill Council (Applicant)
Minister for Local Government (First Respondent)
Dr Robert Lang (Second Respondent)
Chief Executive, Office of Local Government (Third Respondent)
Local Government Boundaries Commission (Fourth Respondent)
Lane Cove Council (Fifth Respondent)
City of Ryde Council (Sixth Respondent)

 

Matter No 161918 of 2016
Lane Cove Council (Applicant)
Minister for Local Government (First Respondent)
Dr Robert Lang (Second Respondent)
Chief Executive, Office of Local Government (Third Respondent)
Local Government Boundaries Commission (Fourth Respondent)
Hunter’s Hill Council (Fifth Respondent)
City of Ryde Council (Sixth Respondent)

 

Matter No 155301 of 2016
Mosman Municipal Council (Applicant)
Minister for Local Government (First Respondent)
Chief Executive of the Office of Local Government (Second Respondent)
Michael Bullen (Third Respondent)
Ian Reynolds (Fourth Respondent)
North Sydney Council (Fifth Respondent)
Willoughby City Council (Sixth Respondent)
Local Government Boundaries Commission (Seventh Respondent)

 

Matter No 158919 of 2016
North Sydney Council (Applicant)
Minister for Local Government (First Respondent)
Ian Reynolds (Second Respondent)
Chief Executive, Office of Local Government (Third Respondent)
Local Government Boundaries Commission (Fourth Respondent)
Willoughby City Council (Fifth Respondent)
Mosman Municipal Council (Sixth Respondent)

  Matter No 158221 of 2016
Strathfield Municipal Council (Applicant)
Minister for Local Government (First Respondent)
Richard Colley (Second Respondent)
Chief Executive, Office of Local Government (Third Respondent)
Local Government Boundaries Commission (Fourth Respondent)
Burwood Council (Fifth Respondent)
City of Canada Bay Council (Sixth Respondent)

Representation:

Advocates’ appearances for the Applicants across the hearing dates:
Mr T F Robertson SC and Mr J E Lazarus and
Ms J Walker, barristers (Hunter’s Hill, Lane Cove, Mosman and Strathfield Councils)

 

Mr A Galasso SC and Mr J E Lazarus, barrister (North Sydney Council)

 

Advocates’ appearances for the Crown Respondents across the hearing dates:
Mr N Hutley SC/Mr N J Williams SC
Ms A Mitchelmore, Mr J Hutton, Ms B Anniwell,
Mr T E O’Brien, Ms F Gordon, Ms M Ellicott and Mr D Birch, barristers

  Solicitors:
HWL Ebsworth Lawyers (Hunter’s Hill Council)
HWL Ebsworth Lawyers (Lane Cove Council)
Pikes & Verekers Lawyers (Mosman Municipal Council)
Matthews Folbigg Pty Ltd (North Sydney Council)
HWL Ebsworth Lawyers (Strathfield Council)
Crown Solicitor’s Office (Respondents)

File Number(s):

158774 of 2016161918 of 2016155301 of 2016158919 of 2016158221 of 2016

Publication restriction:

No

TABLE OF CONTENTS

Summary of findings and outcomes

Introduction

Common complaints

The proposed Hunter’s Hill, Lane Cove and Ryde amalgamation

The proposed Mosman, North Sydney and Willoughby amalgamation

The proposed Burwood, Canada Bay and Strathfield amalgamation

Costs

Local government in New South Wales

The broad government amalgamation policy

The government announcements

The Minister’s amalgamation proposal documents

The amalgamation proposals challenged

Submissions to the Minister on the Delegates’ reports

Other challenges

The Woollahra decision

The Botany Bay City Council decision

Ku-ring-gai and Shellharbour challenges

The country amalgamation challenges

The Minister’s 2016 merger documents

The merger proposals

The remainder of the documents

The various versions of the Minister’s documents

The KPMG material

The Crown immunity determinations

The other KPMG material

The structure of this decision

The Local Government Act framework

The common bases for challenge

Adequacy of public notice

Conduct of the inquiry

The Delegates’ reports

The role of the Boundaries Commission

The KPMG issues

Independence

Access to the full KPMG reports to government

The specific bases for challenge

Introduction

Hunter’s Hill and Lane Cove Councils

The financial analysis issue

The Lane Cove River issue

The Delegate’s taking into account undisclosed information

Mosman Municipal and North Sydney Councils

Splitting of a single delegation concerning two proposals

Failure to consider submissions for other proposals

The adequacy of the Delegate’s report

Mosman Municipal Council

Failure to conduct a poll

North Sydney Council

Failure to hold public sessions in the North Sydney local government area

Strathfield Municipal Council

The common bases for challenge

Adequacy of public notice of the inquiries

Scope of the public notification

Conduct of the inquiry

The Delegates’ reports

The KPMG issues

The independence complaint

The failure to provide all the KPMG material

General

Minister for Immigration and Border Protection v SZSSJ

The specific defect in the KPMG argument for the Mosman, North Sydney and Willoughby merger process

The specific bases for challenge

Introduction

Hunter’s Hill, Lane Cove and Strathfield Municipal Councils

Adequacy of the notice – identification of the inquiry’s location

Hunter’s Hill and Lane Cove Councils

Financial advantages and disadvantages – Ground 4

The Lane Cove River – Ground 7

The opposing positions

Other relevant statutory provisions

Introduction

The potentially relevant legislative history

Submissions on the legislative context

Conclusion on the present legislative context

Extrinsic material

“Contiguous” – an undefined term

Dictionary definitions

The Respondents’ written submissions on contiguity

Potential relevant judicial determinations

Hornsby Shire Council v Malcolm

Conclusion on “contiguous”

The s 205(3) expansionary possibility

Conclusion on s 205(3)(b)

Reliance on undisclosed information – Ground 8

Lane Cove Council

Mosman and North Sydney Councils

The dual delegation and its asserted invalidity

Failure to consider submissions for other proposals

The adequacy of the Delegate’s report

Introduction

Failure to have regard to s 263(3)(a) as required

Provision of adequate, equitable and appropriate services and facilities

Section 263(3)(e5) and what are “each of the diverse communities”?

Mosman Municipal Council

The refusal to hold a poll

North Sydney Council

Failure to hold a meeting in the North Sydney local government area

Strathfield Municipal Council

The adequacy of the Delegate’s report

Introduction

The Boundaries Commission’s general position

Financial matters

Community interest and geographic cohesion

Representation of diverse communities

Conclusion on the adequacy of the Delegate’s report

The appropriate form of relief

Costs

Conclusions

Hunter’s Hill and Lane Cove Councils

Mosman and North Sydney Councils

Strathfield Municipal Council

Orders

Hunter’s Hill Council matter

Lane Cove Council matter

Mosman Municipal Council matter

North Sydney Council matter

Strathfield Municipal Council matter

Judgment

Summary of findings and outcomes

Introduction

1. Given the length and complexity of the issues requiring to be considered in these five proceedings, it is appropriate to commence this judgment with a short summary of the findings and outcomes for each of the five challenges that have been made by Councils to their proposed amalgamation. Although some of the complaints about the process that have been made from individual Councils relating only to the process that concerned them, my findings, and the outcomes that flow from them, can conveniently be dealt with in four groups. What follows is but a very abbreviated summary set out in this fashion.

Common complaints

2. All five Councils raised a number of common complaints about the process. Each of those complaints has been considered and determined on an “all in” basis. I am satisfied that all the common complaints are without foundation and that the various grounds pleaded by each of the Councils concerning them fail.

The proposed Hunter’s Hill, Lane Cove and Ryde amalgamation

3. There were several specific complaints raised about the process involved in the consideration of this proposed amalgamation. I am satisfied that each of those complaints is without foundation. The necessary outcome of this is that the challenges by Hunter’s Hill and Lane Cove Councils are rejected and these two proceedings dismissed.

The proposed Mosman, North Sydney and Willoughby amalgamation

4. I have concluded that only one of the specific complaints raised by the Councils which challenged this amalgamation is valid. This means that the Delegate who had been assigned the task of inquiring into, and reporting on, this proposed amalgamation had failed, adequately, to have regard to one aspect of the elements mandated by s 263(3) of the Local Government Act 1993 (the Local Government Act) as part of his inquiring into and reporting upon this proposed amalgamation.

5. The consequence of this failure is that the report prepared by the Delegate, and provided by him to the Local Government Boundaries Commission (Boundaries Commission) and the Minister, does not constitute a report, in this regard, in satisfaction of the statutory requirements of the Local Government Act.

6. The outcome is that the Delegate has not completed the task for which he was appointed and thus, at the present time, there is no proper statutory foundation for this proposed amalgamation. This means that this proposed amalgamation remains in the hands of the Delegate.

The proposed Burwood, Canada Bay and Strathfield amalgamation

7. With respect to this challenge, the Minister and the other Respondents have conceded that, for one of the mandatory matters in s 263(3) of the Local Government Act, the Delegate failed, adequately, to have regard to that matter as part of his inquiring into and reporting upon this proposed amalgamation. I am satisfied that that concession was appropriately made.

8. I have also concluded that, with respect to a second of the mandatory matters in s 263(3), the Delegate also failed, adequately, to have regard to that matter as part of his inquiring into and reporting upon this proposed amalgamation.

9. The consequence of these failures is that the report prepared by the Delegate, and provided by him to the Boundaries Commission and the Minister, does not constitute a report, in this regard, in satisfaction of the statutory requirements of the Local Government Act.

10. The outcome is that the Delegate has not completed the task for which he was appointed and thus, at the present time, there is no proper statutory foundation for this proposed amalgamation. This means that this proposed amalgamation remains in the hands of the Delegate.

Costs

11. As the presumption is that, in proceedings such as these, costs follow the event (Pt 42 r 42.1 of the Uniform Civil Procedure Rules 2005), I propose to order that the relevant unsuccessful parties (Hunter’s Hill and Lane Cove Councils, in their challenges, and the Minister and the other Crown Respondents in the remaining challenges) pay the costs of the successful parties.

12. However, I do not propose to make these costs orders immediately but to defer their making for two weeks to enable all parties to consider whether they wish to make any application for a different costs order in any of the proceedings.

Local government in New South Wales

The broad government amalgamation policy

13. In 2015, the New South Wales Government took a policy decision to explore options for amalgamations of local government councils throughout the state. As part of that process, the government commissioned external advice from KPMG, a major consulting firm. After consideration of that advice, the government determined to develop a number of amalgamation proposals (including some in the alternative) and commence processes under the Local Government Act that would permit preferred (and proposed for implementation) amalgamation options, were they to eventuate, to be given effect.

14. As the culmination of that process, a process requiring detailed consideration in the instances raised in these proceedings, the government determined to go ahead with a number of amalgamations, but also determined that some other amalgamation proposals that had been investigated were not to go ahead.

15. These abandoned amalgamation proposals included a number of alternatives to amalgamation proposals that the government wishes to proceed and which are being challenged in these proceedings. Details of the proposals that were considered, but not proceeded with, were available on a government website.

The government announcements

16. On 18 December 2015, the Hon Mike Baird MP, the Premier, and the Hon Paul Toole, Minister for Local Government (the Minister), issued a joint press release entitled “Stronger Councils for Sydney and Regional New South Wales”. Relevantly, the press release contained eight paragraphs (non-consecutive ones) that are potentially relevant to these proceedings. Those paragraphs said:

STRONGER COUNCILS FOR SYDNEY AND REGIONAL NEW SOUTH WALES

…

“The community expects a stronger local government system that can deliver the infrastructure and services they deserve, while keeping rates stable”, Mr Baird said.

In Greater Sydney, the NSW Government is proposing 15 new, stronger councils to help the city grow, which would bring the total number of metropolitan councils down from 43 to 25.

…

“Importantly, fewer councils will mean a big reduction in red tape for the NSW community and the businesses that work with councils”, Mr Baird said.

Independent analysis by KPMG of the New South Wales Government's proposed mergers show significant financial benefits for NSW of up to $2 billion that can be invested in new infrastructure, improved services or keeping rates stable.

…

The NSW government is using the existing process set out in the Local Government Act to consider council mergers.

…

Detailed merger proposals are now being finalised and will be referred to the Chief Executive of the Office of Local Government (OLG) for examination and report under the existing process set out in the Local Government Act.

The Chief Executive will appoint qualified Delegates, who will commence a public consultation process for all 35 proposals, including public hearings.

Following this stage, final proposals will be referred to the Boundaries Commission for comment.

…

17. At about the same time (and dated December 2015), the government released a document entitled “Local Government Reform Merger Impacts and Analysis”. The document set out seven findings said to arise from this analysis. The findings were in the following terms:

*   the proposed mergers have the potential to generate a net financial benefit to local councils of around $2.0 billion across NSW over the next 20 years;

*   an estimated $1.3 billion in net financial savings will be generated over a 20 year period;

*   the estimated costs of the mergers are expected to be absorbed by efficiencies generated by the mergers within three years of implementation;

*   the proposed mergers are expected to generate, on average, $100 million in benefits to local councils every year;

*   savings generated by the proposed mergers will be used to improve frontline services, and fund new community amenities and infrastructure – from better local roads and cycleways, to upgraded parks and recreational facilities;

*   savings can also be used to repair and replace council-owned assets, many of which are in poor condition; and

*   the proposed mergers will result in simplified council regulations through the removal of inconsistencies that currently exist between councils. This will benefit local residents and businesses and streamline the way the community interacts with councils. Reduced layers of regulations will make it easier for people to do business, build homes and access services they need.

18. The report noted:

This report has been prepared by KPMG on behalf of the NSW government. Its preparation has relied upon information sourced from annual data returns and long-term financial plans of individual councils, and a variety of other publicly available sources. Neither KPMG nor the NSW government has independently verified such information.

19. This document dealt with matters at a considerable level of generality without dealing with individual councils or groups of councils.

The Minister’s amalgamation proposal documents

20. The Minister effected, publicly at least, commencement of the suite of amalgamation processes (of which these challenges form part) by releasing documents advancing each such proposed amalgamation.

21. Relevantly, on 6 January 2016, the Minister released a document entitled “Merger Proposal: Hunter’s Hill Council, Lane Cove Council, City of Ryde Council”, a document which commenced with a foreword signed by the Minister and which, in its Executive Summary, commenced with the following:

This is a proposal by the Minister for Local Government under section 218E(1) of the Local Government Act (1993) for the merger of Hunter’s Hill, Lane Cove and Ryde local government areas. This merger proposal sets out the impacts, benefits and opportunities of creating a new council.

22. The first sentence of that paragraph from the Introduction was footnoted with the footnote reading:

The end result if the proposal is implemented is that a new local government area will be created. For simplicity throughout this document, we have referred to a new council rather than a new local government area.

23. Second, the document initiating the process for the Mosman Municipal, North Sydney and Willoughby City Councils merger proposal is entitled “Supporting Information for Merger Proposal: Mosman Municipal Council, North Sydney Council, Willoughby City Council” and is dated March 2016, with Exhibit 3 showing it as being dated on or about 9 March 2016.

24. However, it would seem that the proposal referred by the Minister to the Chief Executive, and then delegated to a Delegate, was formulated a little earlier than this (see letter from the Delegate to the General Manager of Willoughby City Council dated 26 February 2016 - a letter that says, inter alia, “a full copy of the proposal is attached” – Exhibit 3, Tab 12, folio 539). Nothing appears to turn on this difference in dates.

25. This proposal follows the same general form of that set out above for Hunter’s Hill, Lane Cove and Ryde Councils, although the first paragraph in the Executive Summary is in different terms:

A merger proposal for the local government areas of Mosman Municipal, North Sydney, and Willoughby City has been referred for examination and report under the Local Government Act (1993), as a consequence of a council initiated proposal to merge the local government areas of Manly, Pittwater and Warringah.

26. An identical footnote reference to that earlier set out was included. There are two differences requiring later consideration between the Hunter’s Hill, Lane Cove and Ryde Councils document, on one hand, and the Mosman Municipal, North Sydney and Willoughby City Council document on the other.

27. First, it is to be observed that, in the Executive Summary for the first document, a paragraph appears in the following terms:

The proposal has been informed by four years of extensive Council and community consultation and is supported by independent analysis and modelling by KPMG.

28. No paragraph in or to the effect of those terms appears in the Mosman Municipal, North Sydney and Willoughby City Councils merger proposal document.

29. Second, although the Mosman Municipal, North Sydney and Willoughby City Councils proposal had arisen as a consequence of a proposal to amalgamate Manly, Pittwater and Warringah local government areas (a proposal subsequently implemented by the Local Government (Council Amalgamations) Proclamation 2016 (the May Proclamation)), this document clearly notes that:

The government's original proposal to merge the local government areas of Manly, Mosman Municipal and part of Warringah remains under consideration.

30. Both these differing aspects of the Mosman Municipal, North Sydney and Willoughby City Councils merger proposal document require further subsequent consideration.

31. The merger proposal for Burwood, City of Canada Bay and Strathfield local government areas is, with respect to the matters set out from the Hunter’s Hill, Lane Cove and Ryde Councils’ proposal, in identical terms, with merely the relevant council names changed. The paragraph set out above concerning independent analysis and modelling by KPMG is in the Burwood, City of Canada Bay and Strathfield Municipal Councils document in identical terms to that set out for the Hunter’s Hill, Lane Cove and Ryde Councils’ document.

32. The characterisation of the remainder of the material in these various documents is discussed later.

The amalgamation proposals challenged

33. This judgment deals with five challenges to proposed amalgamations of local government areas covering suburbs in closer-in northern/western portions of Sydney's metropolitan area. The Councils that have commenced these proceeding are:

• Hunter’s Hill Council;

• Lane Cove Council;

• Mosman Municipal Council;

• North Sydney Council; and

• Strathfield Municipal Council

34. Because of the structure of the relevant amalgamation proposals formulated by the Minister for Local Government, there are only three amalgamation proposals under consideration in these five proceedings. Those proposals are:

• Amalgamation of the Hunter’s Hill, Lane Cove and Ryde local government areas;

• Amalgamation of the Mosman, North Sydney and Willoughby local government areas; and

• Amalgamation of the Burwood, Canada Bay and Strathfield local government areas.

35. All of the Councils carry the burden of proof on matters advanced in their case.

36. All five proceedings were heard together, as there are significant common legal issues involved. However, each Council also raised a limited range of individual issues pressed in that Council’s case as supporting, separately, that Council’s challenge to its proposed amalgamation.

37. In each of these proceedings, the Minister gave an undertaking that he would not provide any recommendation to the Governor proposing amalgamations for any of these Councils until two business days after the handing down of this judgment. This arises as, if the Governor-in-Council were to receive such a recommendation and give effect to it by proclamation involving one or more of these five Councils, the amalgamated councils would, effectively, cease to exist and these proceedings rendered futile (an explanation of the reasons how this would come to pass can be seen in my judgment concerning Gundagai Council, a Council which was amalgamated by the May Proclamation during the course of the proceedings it initiated as part of a group of challenges to amalgamation by rural councils – see Walcha Council v Minister for Local Government [2016] NSWLEC 57).

38. Because of the large volume of documentary material that was tendered as evidence in these five proceedings, with the agreement of the parties I made the formal ruling that evidence and submissions in each set of proceedings would be evidence and submissions in all other sets of the proceedings to the extent relevant.

39. Taking this procedural step had the effect of simplifying, considerably, the management of the materials and reduced the necessity to write individual judgment elements concerning the issues in common to all of these proceedings. This procedurally common approach, undertaken with considerable goodwill by the legal representatives of the Councils and of the Crown Respondents, enabled an efficient running of the hearings and has assisted in shortening the time taken to produce this judgment.

40. For convenience, I refer to the various Crown Respondents collectively as the Respondents unless the context requires some specific identification.

Submissions to the Minister on the Delegates’ reports

41. The Councils have all complained that they had not been given an opportunity to make submissions to the Minister on the matters canvassed by the relevant Delegate in that Delegate’s report that had been provided to the Boundaries Commission and to the Minister.

42. During the course of the proceedings, I was advised that the Minister had now agreed to receive and consider submissions from the Councils about the relevant Delegate’s report. Indeed, during the course the proceedings, the time permitted by the Minister for the making of such submissions was subsequently sufficiently extended to allow reasonable time for such submissions.

43. Whether or not this was a valid basis for complaint in the original circumstances of these challenges is a matter that I do not need to explore in light of the Minister having responded to these complaints in the fashion here noted.

44. I am satisfied, overall, in the context of these proceedings, that the opportunity that had been afforded to the Councils by the Minister’s agreement to receive and consider submissions was not unreasonable and there is, now, no maintainable basis for complaint founded on this premise.

Other challenges

The Woollahra decision

45. Woollahra Council had challenged its proposed amalgamation with Waverley and Randwick Councils in proceedings that were heard and determined by Preston CJ.

46. On 20 July 2016, his Honour handed down a comprehensive decision in Woollahra Municipal Council v Minister for Local Government [2016] NSWLEC 86, rejecting all grounds upon which this proposed amalgamation had been challenged. Whilst there is not complete coincidence between the bases of challenge advanced in those proceedings and those which are engaged in the five matters here being considered, there is a significant degree of similarity in approach taken by the challenging councils.

47. After the Chief Judge had given his decision in Woollahra, the representatives of the Councils sought leave to make further submissions concerning his Honour’s decision (and also concerning a decision of 27 July 2016 of the High Court in Minister for Immigration and Border Protection v SZSSJ [2016] HCA 29 - a decision dealt with in more detail in my consideration of the grounds relating to the KPMG material).

48. I granted leave for such further submissions and adopted the proposed short timetable for the Councils and the Respondents (in reply) to furnish those submissions. When received, the submissions for the Councils noted that, with respect to the Chief Judge's decision:

These submissions respond to that decision to the extent that there are issues in common with these proceedings.

49. With respect to the Chief Judge's decision, the Councils also submitted:

The fact that a decision has been made by another judge at first instance addressing some of the same legal principles does not create a precedent, and does not relieve the Court of the duty to bring its own judgment to bear on the legal questions in issue. However, a judge at first instance usually will follow the decision of another judge at first instance unless convinced that it is wrong.

50. In support of this proposition, three decisions were cited: Michael Realty Pty Ltd v Carr [1975] 2 NSWLR 812, a decision of Holland J in the Supreme Court, and those of the Chief Judge of this Court in Rivers SOS Inc v Minister for Planning (2009) 178 LGERA 347; [2009] NSWLEC 213 and Talbot J in Pancho Properties Pty Ltd v Wingecarribbee Shire Council (1999) 110 LGERA 352; [1999] NSWLEC 245. In Michael Realty, Holland J cited the decision of the High Court in Albion Insurance Company Limited v Government Insurance Office (NSW) (1969) 121 CLR 342, where a first instance judge had adopted the conclusions of another first instance judge as a matter of comity without giving the matter fresh consideration (Kitto J at 349).

51. The Respondents noted, in response, on the issue of the extent to which the Chief Judge's decision was properly engaged in my consideration in these five proceedings:

12.   The Councils’ further submissions dated 5 August 2016 amount to no more than a hopeless attempt to denigrate the Chief Judge’s reasoning as “plainly wrong” or to conjure up distinctions of fact or law which are in truth non-existent.

13.   The Woollahra Judgment should be followed in these proceedings unless it is plainly wrong: Green v The Queen (2011) 244 CLR 462 at [84] (Heydon J); Infomax International Pty Ltd v Clarius Group Pty Ltd (2011) 192 FCR 210 at [53] (Perram J); Infomax International Pty Ltd v Clarius Group Ltd (2012) 207 FCR 298 at [26] (Full Court). To be satisfied that the Woollahra Judgment is plainly wrong, this Court must hold “strong convictions” as to its incorrectness; it is not enough that reasonable judicial minds may differ: Clutha Developments Pty Ltd v Barry (1989) 18 NSWLR 86 at 100 (Gleeson CJ); Queensland v Commonwealth (1977) 139 CLR 585 at 603 (Stephen J).

14.   For the detailed reasons provided in the Woollahra Judgment, it is correct, and should be followed. Nothing that is said in the Councils’ latest set of written submissions demonstrates that it is plainly wrong or that it ought not be applied.

52. I have carefully considered how I should proceed, in these five matters (given the decision of the Chief Judge in Woollahra on the general issues that are in common with these proceedings), to deal with each such issue in a fashion addressing his relevant determination which was based on the material submitted to him in those proceedings.

53. Although, in these five proceedings, the common issues are essentially the same as those dealt with by the Chief Judge, a close reading of his Honour’s judgment discloses that the approach taken in these proceedings has differed, at least to some extent, when compared to the approach taken by the applicant Council in the Woollahra proceedings (the Respondents’ responses in Woollahra, necessarily, addressing the matters raised by the applicant Council in those proceedings).

54. As a consequence, although the framework for analysis in Woollahra is largely replicated in these five proceedings, the supplementary submissions made to me by the Councils in response to his Honour’s decision set out why the Councils in these proceedings say that there are sufficient material differences between the approach by them in these proceedings and that before his Honour in the Woollahra proceedings that I ought not consider myself obliged to follow his Honour on relevant matters.

55. I note, although it plays no part in the approach I set out below, that the decision of the Chief Judge in Woollahra is now subject to appeal (with that appeal having been heard and the decision reserved).

56. I have concluded that the appropriate approach for me to adopt is, under the heading of each relevant general issue, to set out the conclusions that his Honour reached on that point in the Woollahra proceedings (it does not seem to me to be necessary to set out the submissions that led him to reach the conclusion set out in his analysis on each point) and then to set out (and respond to) the further submissions by the Councils and the response to those submissions provided by the Respondents in these proceedings on that general point.

57. In doing so, the course followed by me was for me to consider whether, in light of those submissions and the reply submissions, there was any proper basis, on each relevant general point, for me to depart from the conclusion reached by the Chief Judge in Woollahra on that same point.

58. However, I observe that, although my analysis may differ somewhat, I reached the same conclusions as the Chief Judge on the common points.

The Botany Bay City Council decision

59. Botany Bay City Council had challenged its proposed amalgamation with Rockdale Council. This challenge was mounted in the Supreme Court of New South Wales and was heard, in the first instance, by Garling J (see Botany Bay City Council v The State of New South Wales and Minister for Local Government [2016] NSWSC 583). The bases upon which that challenge was mounted were somewhat different to those which have been pursued in the challenges litigated in this Court. However, in one aspect, that of the role of the Boundaries Commission in the statutory process requiring consideration, the decision of Garling J is relevant and is discussed later.

60. Garling J’s decision, rejecting the challenge to the proposed amalgamation, has been upheld by the New South Wales Court of Appeal (Botany Bay City Council v The State of New South Wales [2016] NSWCA 243). Botany Bay and Rockdale Councils were amalgamated on 9 September 2016 (Local Government (Bayside) Proclamation 2016).

Ku-ring-gai and Shellharbour challenges

61. Ku-ring-gai Council and Shellharbour City Council have each, separately, commenced challenges to their proposed amalgamations. In the case of Ku‑ring-gai Council, the proposed amalgamation is with virtually (but not entirely) all of the Hornsby Shire Council local government area. Shellharbour City Council is proposed to be amalgamated with Wollongong City Council. These two proceedings, although with common legal representation (legal representation differing from that engaged in these five proceedings), have been heard separately by me.

61. Although many of the issues in each of those proceedings also have a deal of commonality with those determined in Woollahra and these proceedings, the bases upon which those common issues were addressed in each of those proceedings also differed, but only in inconsequential aspects, from the approaches taken in these proceedings.

62. In addition, in each of the Ku-ring-gai and Shellharbour proceedings, individual matters arising from the provisions of s 263 of the Local Government Act have been pleaded – with it being said in each proceedings that the matters so pleaded should lead to the conclusion that the process undertaken by the relevant Delegate had failed.

63. My decisions in each of those proceedings were delivered on the same day as this decision (see Ku-ring-Gai Council v Mr Garry West (in his capacity as Delegate of the Acting Director-General, Office of Local Government) (No 2) [2016] NSWLEC 118 and Shellharbour City Council v Minister for Local Government (No 2) [2016] NSWLEC 119)

The country amalgamation challenges

65. Finally, challenges concerning the proposed amalgamation of three country councils (Cabonne, Oberon and Walcha Councils) with what the government considers to be their relevant neighbouring council, have been commenced. A challenge to the amalgamation of Gundagai and Cootamundra Councils (this amalgamation having been effected by the Local Government (Council Amalgamations) Proclamation 2016 on 12 May 2016) has been continued but is so continued by the former Mayor and former Deputy Mayor of the former Gundagai Council (as individual plaintiffs) as a consequence of my decision in Walcha.

66. The Walcha challenge was discontinued but the others remain to be determined.

67. These challenges have been heard together by Preston CJ whose decision remains reserved as at the date of this decision.

The Minister’s 2016 merger documents

The merger proposals

68. I have earlier outlined the broad nature of the documents released by the Minister in early January (for the proposed Hunter’s Hill, Lane Cove and Ryde merger and the proposed Burwood, City of Canada Bay and Strathfield merger) and late February (for the Mosman, North Sydney and Willoughby proposed merger). As also earlier noted, these documents set out the proposal that was referred to each Delegate.

The remainder of the documents

69. Each of the relevant Ministerial documents commenced with a foreword signed by the Minister and which, in its Executive Summary, commenced with the following:

This is a proposal by the Minister for Local Government under section 218E(1) of the Local Government Act (1993) for the merger of …………………… local government areas. This merger proposal sets out the impacts, benefits and opportunities of creating a new council.

70. As earlier noted, the first sentence of that paragraph from the Introduction was footnoted, in each instance, with the footnote reading:

The end result if the proposal is implemented is that a new local government area will be created. For simplicity throughout this document, we have referred to a new council rather than a new local government area.

71. The documents, beyond the terms of the introductory sentence (and its footnote set out above), contain what can only be regarded as material of an advocacy nature that seeks to explain and justify that which is set out, with sufficient precision, in the first sentence earlier described.

72. The terms of the explanatory material, in addition to canvassing a wide range of matters, also set out, with mapped information, a visual explanation of that which is set out at the commencement of the document. There is nothing contained in the document that could be regarded as enlarging the scope of the proposal as set out in that first sentence and as confirmed to be the Minister's proposal by the footnote to it.

73. Finally, it is clear from the recent decision of the Court of Appeal in Botany Bay City Council v Minister for Local Government [2016] NSWCA 74 that this must be the case. The judgment of the Court (Bathurst CJ, Beazley P and Ward JA) said, at [38]:

Section 263(1) requires the Boundaries Commission or the Departmental Chief Executive, as the case may be, "to examine and report on any matter with respect to the boundaries of [councils] which may be referred to it by the Minister". The phrase "any matter" is not defined and of itself may be taken to be of wide import. Likewise, the phrase "with respect to" is of wide import. However, there are two indications in subs (1) itself that its meaning is more confined. First, and most importantly, on the express words of the subsection, "any matter" is controlled by the phrase "which may be referred to it by the Minister". Secondly, any such matter must be "with respect to the boundaries of [councils]". Accordingly, what falls within s 263 for examination and report is any matter with respect to boundaries that is referred by the Minister. In this case, that was the Minister's proposal.

74. This, also, makes it expressly clear that a Ministerial (or any other) proposal for the amalgamation of local government areas, or the alteration of boundaries of local government areas, must be in a form that is of the precision contained in the first sentence of the Minister’s documents described above for it to be referred for consideration by either the Boundaries Commission or the Chief Executive of the Office of Local Government.

75. However, the remainder of the document in each instance, comprising as it did an introductory statement by the Minister and then a range of material that was advanced as providing an outline of what was said to be the advantages of each proposed merger, should be regarded as the Minister's submission to the inquiry process that each Delegate was appointed to undertake pursuant to s 263 of the Local Government Act. Viewed correctly in this fashion, these submissions were required to be considered by each Delegate as part of that Delegate’s process.

76. The Respondents submitted, on the status of the Ministerial documents and his Honour’s analysis in Woollahra:

8.   Third, contrary to the submissions of the Councils in these proceedings, Preston CJ held that the Proposal Document concerning the amalgamation was not the “proposal” for the purposes of section 263 of the Act, so the Delegate was not obliged to examine the claims of the Minister or KPMG contained in the Proposal Document ([160]).

77. Viewed properly, there is no vice in the various Delegates having had regard to the relevant Ministerial submission in each instance.

The various versions of the Minister’s documents

78. Although there were three copies of the Minister’s Mosman Municipal, North Sydney and Willoughby City Councils’ document tendered as part of Exhibit 1, an examination of the documents did not disclose any difference between them. However, for the Burwood, City of Canada Bay and Strathfield Municipal Councils Merger Proposal, there are also three iterations of the Minister’s document in evidence. They are contained in Exhibit 2 behind Tabs 9, 10 and 11.

79. The version which is behind Tab 9 is described in the index to this exhibit as being dated 6 January 2016. On page 8 of this document, under the heading “Benefits, Opportunities and Impacts”, there is a textual analysis based on material prepared by KPMG. In the middle of the page, there appears a graph, figure 4, entitled “Projected Operating Results for the Burwood, City of Canada Bay and Strathfield Municipal Councils - With and Without Merger.” The graph is on a scale from -$10 million to +$60 million and covers the financial years 2017 to 2035.

80. The second and third versions of the document, behind Tabs 10 and 11, are described, in the index to the exhibit, as being dated on or about 20 January 2016 and on or about 19 February 2016, respectively. On page 8 of each of these documents, there is reproduced material that is also under the heading “Benefits, Opportunities and Impacts”. The textual material on the page is in identical terms to that which appeared in the 6 January 2016 document.

81. However, for the latter two documents, the graph that is figure 4 is in different terms. First, the scale of the graph is confined to being from -$10 million to +$25 million, a matter that does not appear to import any material difference to the graph itself. However, for financial years 2017 and 2018, the line in the January graph bears no resemblance to the line at the relevant point in the graph in the latter two publications.

82. An examination of the Delegate’s report inquiring into this proposed merger, dated March 2016, notes that:

In January 2016, the Minister for Local Government, the Hon Paul Toole MP (the Minister) put forward a proposal to merge Burwood, City of Canada Bay and Strathfield Municipal Councils under section 218E of the Local Government Act (1993) (the Act) (see Appendix A).

83. Appendix A to the Delegate’s report is the version of the merger proposal document that is in the latter two versions rather than in the earliest one.

84. Although the second (20 January 2016) version makes no commentary about this alteration, the third (19 February 2016) version does make a distinction by footnoting that figure 4 was corrected on 20 January 2016.

85. Although there is no evidence as to whether or not the correction to the graph was drawn to the attention of the three Councils or disclosed in any public fashion, the correction took place prior to the public inquiry sessions held on 4 February 2016.

86. Whatever the position concerning disclosure, it seems to me that, as is clear from the terms of the Delegate’s discussion in his report, in “6.1 Financial Factors”, where he dealt with the requirement to have regard to the financial advantages or disadvantages (including economies or diseconomies of scale) of any relevant proposals to the residents and ratepayers of the areas concerned (s 263(3)(a) of the Local Government Act), he has paid regard to the corrected version of the document. His considerations of the general KPMG independence issue (pleaded in the same general terms in all proceedings) and the specific question of the adequacy of the s 263(3)(a) analysis for these three Councils are dealt with separately later.

87. Each of the documents referred to work which had been commissioned by the government from KPMG as supporting the relevant merger proposal. In the document for each of the first two clusters of mergers (but not the Mosman, North Sydney and Willoughby proposal), the Minister's submission included, as earlier noted, a paragraph that indicated that the analysis provided by KPMG was independent of the government.

88. Each Delegate's report requiring consideration in these proceedings relied on the material provided by KPMG as set out in each of the Ministerial submissions to their inquiry as appropriate and acceptable information for their consideration of the economic issues to which they were obliged to have regard as a consequence of s 263(3)(a) of the Local Government Act.

89. The Councils’ complaint concerning the role of KPMG was that it did not engage in the government’s amalgamation process as an independent, arm's-length adviser but that it was an inextricably entwined active partner in the development of, and advocacy for, the overall local government amalgamation agenda. In particular, the Councils submit that this lack of independence poisoned the relevant element of the process that each Delegate was obliged to undertake.

90. To the extent that any Delegate had regard to the relevant Ministerial submission, there is no vice in that Delegate doing so in a general sense (matters of specific complaint about content – eg the KPMG material – are dealt with separately).

The KPMG material

The Crown immunity determinations

91. The role of KPMG as consultants to the New South Wales Government concerning the broad amalgamation process has been, both in broad and in specific aspects, the subject of considerable attention during the course of these proceedings. A significant volume of KPMG documentary material has been tendered, by both the Councils and the Respondents, in these proceedings. That material had emerged at differing stages throughout the hearing and has, as a consequence, required the Councils to seek leave to amend their pleadings. For the most part, the amendments were not opposed but it was necessary for me to rule on (and reject) one proposed further ground sought to be relied upon.

92. It is also to be observed that the effect of what has amounted to ongoing disclosure of this KPMG material may have contributed, if only marginally, to the length of the hearing of these proceedings.

93. Two decisions have been given concerning claims for Crown immunity said to attach to a small number of KPMG documents. The first decision, by Preston CJ in Woollahra Municipal Council v Minister for Local Government [2016] NSWLEC 44, upheld the claim of Crown immunity for three documents for which the immunity was sought. The second decision, given by me, (Ku‑ring-gai Council v Mr Garry West in his capacity as delegate of the Acting Director-General of the Office of Local Government [2016] NSWLEC 62), upheld the claim for Crown immunity being attached to two KPMG documents. In light of these decisions, although access to these documents had originally been sought on behalf of the Councils for the purposes of these proceedings, that point was not pressed during the course of the hearing.

The other KPMG material

94. In order to understand the basis of the complaint by the Councils as to the role of KPMG in the development of and giving support to the government’s amalgamation processes, a significant volume of documentary material was tendered. This included, late in the proceedings, the tendering by the Respondents of three lever-arch folders of material relating to KPMG's activities in (and involvement with) various aspects of the amalgamation policy development and implementation processes.

95. It was necessary to some devote additional hearing time, after this material was made available to the legal representatives of the Councils, for submissions to be made as to whether or not I should conclude, based on this material (and on a wide range of earlier tendered material concerning KPMG which I had been taken to in an earlier phase of the hearings), that the ground complaining of KPMG's lack of independence had infected the process was made out.

The structure of this decision

96. Because of the commonality of submissions by the Councils and the Respondents in all five of these proceedings (where identical fundamental issues were pleaded), this decision deals with each of them under a common, relevant, broad heading in all five proceedings.

97. However, as a range of discrete issues were also pleaded, and thus require more specific consideration, each of those discrete issues is separately considered under the heading of the Council (or Councils) that raised it in the context of that Council’s proceedings. Where a more specific matter has arisen in more than one proceedings (but not all), an aggregated decision on it has been given with respect to the topic – with that decision applying to the Council or Councils who pressed it.

The Local Government Act framework

98. As indicated in the press release of the Premier and the Minister of 18 December 2015, the government determined that the process for consideration of these merger proposals would use existing processes set out in the Local Government Act for this purpose. There are two options for the carrying out of the process which can potentially lead to a recommendation from the Minister to the Governor-in-Council for a local government amalgamation.

99. The Chief Judge set out the available statutory processes for amalgamation and how the Minister has utilised them (by selection of the path for referral to the Chief Executive of the Office of Local Government and, hence, a Delegate) in Woollahra from [9] to [32]. The Chief Judge’s analysis is in the following terms:

9. Division 1 of Pt 1 of Ch 9 of the Act provides for the constitution of land as a local government area and Div 1 of Pt 2 of Ch 9 provides for the constitution of a council to manage that area. The Governor may, by proclamation, constitute any part of New South Wales as an area: s 204(1) of the Act. The area is to have the boundaries determined by the Governor in the proclamation constituting the area: s 204(2) of the Act.

10. Division 2A of Pt 1 of Ch 9 of the Act prescribes how areas are amalgamated. The Governor may, by proclamation, amalgamate two or more areas into one or more new areas: s 218A(1) of the Act. On the date specified in the new proclamation as the date on which the areas are to be amalgamated, the areas are dissolved and the new area or areas are constituted: s 218A(2)(a) and (b) of the Act.

11. The proclamation of the Governor may include provisions of the kind referred to in s 213, as are necessary or convenient to give effect to the proclamation. The provisions include those for or with respect to the transfer or apportionment of assets, rights and liabilities; the transfer of staff; the alteration of ward boundaries; the holding of elections; the termination, cessation, dissolution or abolition of anything existing before the proclamation takes effect; the preservation or continuance of anything existing before the proclamation takes effect, amongst other matters: s 213(1) of the Act.

12. Division 2B of Pt 1 of Ch 9 of the Act prescribes the process that must be followed before the Governor can amalgamate areas. A function under s 218A to amalgamate areas may be exercised only after a proposal for the exercise of the function is dealt with under Div 2B: s 218D of the Act.

13. The first step in the process prescribed in Div 2B is the making of a proposal under s 218E of the Act to amalgamate areas. Three classes of persons may make a proposal under s 218E to amalgamate areas: the Minister, a council affected by the proposal, or an appropriate minimum number of electors: s 218E(1). Any one of these three classes of persons may initiate a proposal for amalgamation. The third class of persons is defined in s 218E(2). The appropriate minimum number of electors varies depending upon whether the proposal applies to the whole of one or more areas or only part of an area. In the first case, the minimum number of electors is 250 of the enrolled electors for each area or 10% of them, whichever is the greater, and in the second case, the minimum number of electors is 250 of the enrolled electors for the part of the area or 10% of them, whichever is the lesser: s 218E(2).

14. The second step in the process prescribed by Div 2B is the referral of the proposal for examination and report. On the Minister making a proposal or receiving a proposal from a council affected by the proposal or by an appropriate minimum number of electors, the Minister must refer the proposal for examination and report to either the Boundaries Commission or the Departmental Chief Executive: s 218F(1).

15. The “Boundaries Commission” means the Local Government Boundaries Commission constituted under the Act: see the Dictionary and Pt 3 of Ch 9 of the Act. The Boundaries Commission is a body corporate: s 260. It consists of four commissioners appointed by the Governor, of which one is to be a person nominated by the Minister, one is to be a person employed by the Department (Office of Local Government) nominated by the Departmental Chief Executive and two are to be persons appointed from a panel constituted under s 262(1) of the Act: s 261. This panel consists of eight persons who are councillors nominated by the Local Government and Shires Association of NSW: s 262(1). Schedule 2 of the Act contains further provisions on the membership of the Boundaries Commission and the procedure at meetings of the Boundaries Commission: s 261(5).

16. There are some similarities and some differences in the process of examination of and reporting on a proposal by the Boundaries Commission or the Departmental Chief Executive. The similarities concern the process of examination of a proposal (s 218F(2)) and the principal difference concerns the need for review and comment on a report of the examination of a proposal: s 218F(6).

17. The third step in the process prescribed by Div 2B is the examination of and report on the proposal by the person to whom the proposal has been referred. In this case, the Minister elected to refer the proposal he had made to the Departmental Chief Executive. Section 218F(2) of the Act provides that ss 263, 264 and 265 of the Act apply to the examination of a proposal by the Departmental Chief Executive in the same way as they apply to the examination of a proposal by the Boundaries Commission.

18. Section 263 specifies the functions of examining and reporting in relation to a proposal for the amalgamation of areas that has been referred under s 218F(1) and how these functions are to be exercised.

19. Subsection (1) imposes the functions of examining and reporting: the Boundaries Commission or Departmental Chief Executive “is required to examine and report on any matter with respect to the boundaries of areas … which may be referred to it by the Minister”: s 263(1).

20. Subsections (2) and (2A) specify when an inquiry may, may not, or must be held for the purpose of exercising the functions under s 263 of the Act. Of relevance in this case is subsection (2A): the Boundaries Commission or Departmental Chief Executive “must hold an inquiry for the purpose of exercising its functions in relation to a proposal for the amalgamation of two or more areas that has been referred to it in accordance with section 218F”.

21. Subsection (2B) requires that “[r]easonable public notice must be given of the holding of an inquiry under this section”. Neither s 263 of the Act nor the regulations made under the Act prescribe the form or the content of the public notice required to be given or where or how the public notice is to be given.

22. The concept of “public notice” is referred to in s 705 of the Act, which provides:

a)   If the council or another person is required to give public notice under this Act, the notice must state the place at which, the dates on which, and the times during which the matter publicly notified may be inspected by the public.

b)   The notice is to be in the approved form.

c)   The notice is to be given in a manner determined by the council with the object of bringing the matter notified to the attention of as many people in its area as possible.

23. No form has been approved by the regulations made under the Act for the purposes of s 705(2).

24. However, this public notice referred to in s 705 may not be applicable to the public notice that is required to be given by the Boundaries Commission or the Departmental Chief Executive under s 263(2B) of the Act. The public notice referred to in s 705 is a public notice required to be given under the Act by a council. This is clear from the precondition in the opening words of s 705(1) “[i]f the council or another person is required to give public notice under this Act”, the fact that the manner in which the notice is to be given is to be determined by the council (s 705(3)), the fact that the immediately following statutory provision (s 706) prescribes what must happen if and after public notice is given by a council, and the heading of Div 3 of Pt 2 of Ch 17 in which ss 705 and 706 occur, namely “notices by the council” (which forms part of the statute: see s 35(1) of the Interpretation Act 1987).

25.   There is no express guidance given in the Act or the regulations made under the Act of what constitutes “[r]easonable public notice … of the holding of an inquiry”.

26. The inquiry required to be held by s 263(2A) is an inquiry that is open to the public. Subsection (5) requires the Boundaries Commission or Departmental Chief Executive to “allow members of the public to attend any inquiry held by” it.

27. Section 264 concerns representation in “proceedings before the Boundaries Commission”. Section 264 restricts how a person may be represented in proceedings before the Boundaries Commission. A person is not entitled to be represented by an Australian lawyer or by any person acting for a fee or reward: s 264(1) of the Act. However, there are some exceptions, including certain employees or the mayor of a council: s 264(2). As noted earlier, s 218F(2) states that ss 263, 264 and 265 apply to the examination of a proposal for the amalgamation of areas by the Departmental Chief Executive in the same way as they apply to the examination of a proposal by the Boundaries Commission. The only activity involved in the examination of a proposal for the amalgamation of areas referred to in ss 263-265 that could possibly fall within the description of “proceedings” referred to in s 264 is an inquiry held for the purpose of exercising the functions of examining and reporting on a proposal for the amalgamation of areas. Section 264, therefore, may apply to such an inquiry and prevent a person from being represented at the inquiry by an Australian lawyer or any person acting for a fee or reward.

28. As I have noted, the inquiry is to be held for the purpose of exercising the functions of the Boundaries Commission or the Departmental Chief Executive to examine and report in relation to a proposal for the amalgamation of two or more areas that has been referred to it in accordance with s 218F. Section 263(3) prescribes factors to which the Boundaries Commission or Departmental Chief Executive is required to have regard when considering a proposal for the amalgamation of areas. Subsection (3) provides:

3)   When considering any matter referred to it that relates to the boundaries of areas or the areas of operations of county councils, the Boundaries Commission is required to have regard to the following factors:

(a)   the financial advantages or disadvantages (including the economies or diseconomies of scale) of any relevant proposal to the residents and ratepayers of the areas concerned,

(b)   the community of interest and geographic cohesion in the existing areas and in any proposed new area,

(c)   the existing historical and traditional values in the existing areas and the impact of change on them,

(d)   the attitude of the residents and ratepayers of the areas concerned,

(e)   the requirements of the area concerned in relation to elected representation for residents and ratepayers at the local level, the desirable and appropriate relationship between elected representatives and ratepayers and residents and such other matters as it considers relevant in relation to the past and future patterns of elected representation for that area,

(e1)   the impact of any relevant proposal on the ability of the councils of the areas concerned to provide adequate, equitable and appropriate services and facilities,

(e2)   the impact of any relevant proposal on the employment of the staff by the councils of the areas concerned,

(e3)   the impact of any relevant proposal on rural communities in the areas concerned,

(e4)   in the case of a proposal for the amalgamation of two or more areas, the desirability (or otherwise) of dividing the resulting area or areas into wards,

(e5)   in the case of a proposal for the amalgamation of two or more areas, the need to ensure that the opinions of each of the diverse communities of the resulting area or areas are effectively represented,

(f)   such other factors as it considers relevant to the provision of efficient and effective local government in the existing and proposed new areas.

29. To assist the Boundaries Commission or the Departmental Chief Executive in determining the attitude of the residents and ratepayers of an area or areas for the purposes of s 263(3)(d) of the Act, it may conduct (in such manner as it thinks appropriate) an opinion survey or poll of the residents and ratepayers: s 265(1).

30. The fourth step in the process prescribed by Div 2B is that the Departmental Chief Executive (to whom the Minister has referred a proposal under s 218F) must furnish the Departmental Chief Executive’s report of its examination of the proposal to the Boundaries Commission for review and comment: s 218F(6)(a).

31. The fifth step in the process prescribed by Div 2B is that the Boundaries Commission must review the report of the Departmental Chief Executive and send its comments to the Minister: s 218F(6)(b).

32. The process culminates with the Minister considering the Departmental Chief Executive’s report and, if applicable, the Boundaries Commission’s comments on that report. The Minister may recommend to the Governor that the proposal be implemented with such modifications that arise out of the Departmental Chief Executive’s report and, if applicable, the Boundaries Commission’s comments on that report and with such other modifications as the Minister determines, but may not do so if the Minister is of the opinion that the modifications constitute a new proposal: s 218F(7). Alternatively, the Minister may decline to recommend that the proposal be implemented: s 218F(8).

100. The Chief Judge’s analysis is both concise and comprehensive and I therefore adopt it.

The common bases for challenge

Adequacy of public notice

101. The Councils make a number of complaints about the notice of the inquiry given by the Delegates. These complaints are that the notice that was given did not satisfy the requirement of s 263(2B), a provision which requires that reasonable public notice must be given of the holding of an inquiry under this section. The Councils say that the notice actually given by the Delegate could not be regarded as reasonable as it was inadequate in a number of material respects. The deficiencies that the Councils identify and propose should lead to this conclusion are:

1. The heading of the notices did not adequately describe the proposal that was the subject of the inquiry and thus the nature of that which was to be examined by the inquiry;

2. For the Hunter’s Hill, Lane Cove and Strathfield inquiries, the description of the venues at which the two sessions of the inquiry by the Delegate were to be held did not contain sufficient information to permit a person interested in attending the inquiry to identify with sufficient precision where the inquiry was to be held. The information that was provided concerning the venue at which the sessions of the inquiry were to be held, by not providing a street address, meant that there was a risk that those interested in attending the inquiry might be confused about where the inquiry was to be held;

3. The deficiencies in the terms of the notices given by the Delegates were not amenable to being cured by any supplementary information circulated, in the varying fashions actually utilised, by any of the Councils;

4. The reliance on the ability of a person reading the advertisement to access additional information by being referred to a website or to a local-call-cost telephone number does not provide any assistance in curing of such defects as the Councils submit are contained in the notices; and

5. Although not expressly so stated, the implication of the registration process set out in the two versions of the advertisements had the effect of implying that it was necessary to register as a precondition to attending, or speaking at, a session of the Delegate’s inquiry.

Conduct of the inquiry

102. Each public inquiry was conducted by the Delegate but was assisted by a Facilitator whose role appears to be, in part, a timekeeper and, in part, a marshal ensuring that there was an orderly process for those who wished to make oral submissions to the Delegate. The transcripts of the various public inquiries show that, from time to time, each Facilitator intervened to ensure that these identified roles were carried out smoothly.

103. Unsurprisingly, the conduct of each inquiry has, in very broad general terms, been consistent with the other inquiries, of which there is evidence in this suite of proceedings. The reason for this is comparatively easy to ascertain.

104. Prior to conducting his public inquiry, each Delegate was provided with a manual (a copy of the manual that was provided to each Delegate and, it is reasonable to infer, to each Facilitator is in evidence). As part of the preparation process, Delegates were briefed about the conduct of an inquiry.

105. The complaint is made that that which was, in fact, undertaken by the Delegate did not constitute the holding of a proper inquiry in a fashion that satisfied the mandate in s 263(2). The fundamental deficiency is said to be the failure of the Delegate to answer questions concerning anything other than process issues.

106. As part of the Delegate examining and reporting on the proposal that has been referred to him, the Delegate is required to have regard to the 10 specified matters set out in s 263(3) and may, additionally, have regard to other matters that the Delegate considers are warranted under the circumstances (s 263(3)(e5) contains this catch-all provision). In this context, it is appropriate to note two aspects of what is required of the Delegate by this section.

107. The first is that each of the matters that are set out in it is coequal. That is, the provision itself provides no ranking to which the Delegate is obliged to have regard. The consequence of this is that, as part of the reporting function to be undertaken by the Delegate after his examination of these matters (and after holding the mandated public inquiry), the Delegate is required to have examined and reported upon each of these mandated topics (if relevant). In doing so, the Delegate is required to engage with and consider, in a sufficient and relevant fashion, each relevant topic.

108. Failure by the Delegate to do so with respect to any of the relevant topics will mean that the Delegate has not discharged his statutory obligations and, as a consequence, the Delegate’s function will have miscarried. However, what consequences might flow from such an outcome requires consideration of such factors (if any) requiring consideration in the circumstances.

109. Second, the Delegate is required to have regard to each of those relevant mandatory factors as part of the examination and reporting process. There is no requirement in the statute for the Delegate to be satisfied in some fashion with respect to any of these matters. What is required of the Delegate, after engaging with and examining each of these factors, is to report upon them, individually and collectively. It is clear from the terms of s 263(7)(b) that it is envisaged that the Delegate will contemplate whether or not to make recommendations of a detailed nature in addition to expressing conclusions with respect to the overall proposal.

The Delegates’ reports

110. Fulfilment of the requirements set by the statute for each Delegate is a central matter for consideration in these proceedings. The role of the Delegate is clear and confined. The role is set, by the mandate given by s 263(1) and (2A) of the Local Government Act, namely:

263 Functions of the Boundaries Commission

(1)   [The Delegate] is required to examine and report on any matter with respect to the boundaries of areas.

…

(2A) [The Delegate] must hold an inquiry for the purpose of exercising its [his] functions in relation to a proposal for the amalgamation of two or more areas that has been referred to it [him] in accordance with section 218F.

111. In order to fulfil this role, each Delegate must ensure that reasonable public notice is to be given of the Delegate’s holding of his inquiry (s 263(2B)). The inquiry must be one at which members of the public are able to attend (s 263(5)).

112. Having conducted his inquiry, each Delegate is then required to furnish a report addressing the relevant mandatory matters in s 263(3). As can be seen from the final point in the list set by the section, there is also a general sweep-up provision that enables the Delegate to report on such other matters as the Delegate considers may be appropriate under the circumstances.

113. In preparing his report, each Delegate may make such recommendations as he considers are appropriate arising out of his inquiry but is not to make recommendations, if adopted, which would result in the proposal that had been referred to him becoming what would amount to a fresh proposal.

114. In these proceedings, the Councils point to what they say are a number of significant inadequacies in the discharge by each Delegate of his statutory responsibilities - deficiencies which each Council says the failures by each Delegate are so fundamental that, either individually or in combination, the relevant inquiry process has miscarried and should be set aside. To the extent that these complaints are generic, they are dealt with in common but, to the extent that they are specific to a particular Delegate’s reporting process, they are dealt with as a specific issue under the name of the Council(s) raising the issue.

115. On the general role of the Delegates with respect to their obligation to have regard to the mandatory matters in s 263(3), the Councils submitted:

39. The terms of s.263(3) of the LG Act obliged the Delegate to have regard to certain listed factors as part of his consideration of the Proposal referred by the Minister. Compliance with that obligation requires an “active intellectual engagement” by the Delegate: see Minister for Immigration and Citizenship v Khadgi (2010) 190 FCR 248 at [57], [63]; Bat Advocacy NSW Inc v Minister for Environment Protection, Heritage and the Arts (2011) 180 LGERA 99 at [46]; Manning v Bathurst Regional Council No 2 [2013] NSWLEC 186 at [66]. The relevant matter must be more than adverted to or given mere lip service: Anderson v Director-General Department of Environment and Climate Change (2008) 163 LGERA 400 at [58]. A failure to take matters into consideration may be demonstrated where it can be shown that the decision-maker had inadequate personal acquaintance with the facts and issues, and generally speaking, understanding the scope of a problem is a prerequisite to a lawful decision with respect to it: Centro Properties ltd v Hurstville City Council (2004) 135 LGERA 257 at [37]. To put it another way, there must be consideration of “the salient facts which give shape and substance of a matter, the facts of such importance that, if they are not considered, it could not be said that the matter has been properly considered” (Peko at 61 per Brennan J).

40.   A statutory obligation to address the substance of an applicant’s case will readily be implied, as will an obligation to consider material relied on by an applicant which is, on its face, relevant and significant, and is credible and uncontested, and a failure to do so may involve a constructive failure to exercise the function conferred by the statute: Ali v AAI Ltd [2016] NSWCA 110 at [66]. In addition, an administrative decision-maker is required to make his or her decision on the most current material available to the decision-maker: Peko at [45]; Gales Holdings Pty Ltd v Minister for Infrastructure and Planning (2006) 69 NSWLR 156 at [161]-[176]; Ali at [65].

41. In ascertaining whether the Delegate has failed to comply with his statutory obligation in s.263(3), is to be determined by the Court undertaking a close analysis of the decision-maker’s reasons: Khadgi at [71]. When a statement of reasons has been provided, a failure to refer to particular matters or give other reasons will justify the inference that such matters or reasons were not relied upon or considered: East Melbourne Group Inc v Minister for Planning (2008) 23 VR 605 at [308]-[312]; Khadgi at [65]. A fortiori where, as here, the ultimate product of the Delegate’s examination of the Proposal mandated by the statute is a (written) report, rather than a decision or recommendation.

116. Although the Councils have made these general submissions, I record what I consider to be the appropriate position for me to adopt in my reading of, and giving consideration to, the challenged reports of the various Delegates that require consideration in these proceedings. In Botany Bay City Council v Premier Customs Services Pty Ltd 172 LGERA 338; [2009] NSWCA 226, Macfarlan JA (with whom Ipp JA and Hoeben J agreed) said, at [32]:

The proposal, which relies on the results of KPMG’s modelling, describes a financial advantage of the proposal to the new council as a net financial saving of $60 million over 20 years (including savings of $5 million per year from 2020 onwards).

The proposal states that the savings are expected to be generated by the removal of duplicate back office and administrative functions and senior management roles ($60m), efficiencies generated through increased purchasing power of materials and contracts ($7m) and a reduction in the overall number of elected officials and the related councillor fees and expenditure ($3m).

Other financial advantages in the new council area include a $25m funding package provided to newly merged councils to assist with the costs of the merger.

The proposal suggests that advantages to the council area will arise when savings are reinvested into improved infrastructure, enhanced service delivery from redeployment of staff, and the reduction in pressure to increase rates.

The proposal outlines economies of scale that will arise from a larger entity that covers a wide area and generates operating revenue of $198 million per year by 2025, an asset base of $900 million, and greater capacity to address infrastructure backlogs through increased asset renewal spending.

The proposal document also lists costs relating to the proposed merger. These include investment in information and communications technology, office relocation costs, workforce training, signage and legal costs. KPMG’s modelling forecasts that the accumulated savings arising from the merger will surpass these costs within three years.

Table 6.1.1 Comparison of operating results – 2013-14 and 2014-15 ($m)

Council	Operating result (incl. capital grants) (2014-15)	Operating result (excl. capital grants) (2014-15)	Operating result (incl. capital grants) – proposal document (2013-14)
Burwood Council	3.2	1.7	5.0
Canada Bay Council	26.2	8.1	18.8
Strathfield Municipal Council	10.3	0.7	2.3
Total	39.7	10.5	26.1

Sources: Burwood Council, General Purpose Financial Statements for the financial year ended 30 June 2015, p 4; City of Canada Bay, State of the Bay, Annual Report 2014-15, p 114; Strathfield Municipal Council, General Purpose Financial Statements for the financial year ended 30 June 2015, p 4; NSW Government, Merger Proposal: Burwood Council, City of Canada Bay Council and Strathfield Municipal Council, January 2016, p 7 and calculations.

Table 6.1.1 compares the sum of the affected councils’ operating results for 2014-15 against the sum of the affected councils’ operating results contained in the proposal document for 2013-14. The results show improvement in 2014-15 and that the new council, if approved, can achieve an operating surplus (including capital grants). This supports the conclusion that the financial advantages arising from the proposal are realistic.

Given the ongoing operating results of the affected councils and the financial advantages forecast in the proposal document, the Delegate concludes that, on balance, the proposal would have greater advantages than disadvantages for residents and ratepayers.

477. He concluded that, “This factor supports the proposal”.

478. On this factor, the Boundaries Commission commented:

Section 263(3)(a) of the Act requires the Delegate to have regard to:

“the financial advantages or disadvantages (including the economies or diseconomies of scale) of any relevant proposal to the residents and ratepayers of the areas concerned”.

With regard to this factor, the Report stated that the Delegate considered financial forecasts provided in the proposal document, information provided by councils affected by the proposal, submissions received that addressed this factor and publicly available information. The Report stated that the Delegate has considered and compared this information and has concluded that the proposed new entity would provide greater advantage than disadvantage to the residents and ratepayers of the affected areas.

The Delegate stated:

“The proposal, which relies on the results of KPMG’s modelling, describes a financial advantage of the proposal to the new council as a net financial saving of $60 million over20 years (including savings of $5 million per year from 2020 onwards. Other financial advantages in the new council area include a $25m funding package provided to newly merged councils to assist with the costs of the merger.”

A table is included in the Report to demonstrate the operating results of the three councils. The Delegate stated:

“Table 6.1.1 compares the sum of the affected councils’ operating results for 2014-15 against the sum of the affected councils’ operating results contained in the proposal document for 2013-14. The results show improvement in 2014-15 and that the new council, if approved, can achieve an operating surplus (including capital grants). This supports the conclusion that the financial advantages arising from the proposal are realistic.”

Given regard to the ongoing operating results of the affected councils and the financial advantages forecast in the proposal document, the Delegate concluded that, on balance, the proposal would have greater advantages than disadvantages for residents and ratepayers.

479. As earlier noted, it was the Boundaries Commission’s view that the Delegate did not adequately consider the issues under this factor. There is no analysis in the above passage to explain why that view was reached.

480. The relevant element of the Council’s written submissions on this point were:

17.   The Delegate’s consideration of financial factors (s.263(3)(a)) is remarkable for its brevity and lack of any form of engagement with the issues the Delegate was required to address. His consideration of that factor is at pp. 10-11 of his report. All that he has done is to paraphrase and summarise conclusions which are referred to in the Proposal document, compared the operating results for the previous two financial years for the three councils and then concluded as follows:

“Given the ongoing operating results of the affected councils and the financial advantages forecast in the proposal document, the Delegate concludes that, on balance, the proposal would have greater advantages than disadvantages for residents and ratepayers.”

18.   There is no consideration whatsoever of any of the many submissions made to him concerning the financial impacts of the proposed merger, and in particular there is no consideration at all of the Council’s detailed submission. The Delegate’s consideration of this issue cannot be described as anything other than cursory. Merely to summarise claims made in the Proposal document, and then to draw a bland conclusion, hardly represents an active intellectual engagement with the relevant topic. In those circumstances, it is hardly surprising that the Boundaries Commission concluded that “the delegate did not adequately consider the issues under this factor”.

481. The relevant element of the Respondents’ written submissions on this point were:

19.   In his report, the Delegate referred to 205 submissions that he had received through the Office of Local Government’s Boundary Review Website (including a petition signed by 194 people), by post and email, and the oral submissions made during the Public Inquiry. The Delegate stated that he considered all of the submissions when reaching his conclusions (Ex 2, RTB T21, p 699).

20.   Contrary to the Council/s contention, the Delegate made clear in his report that he had considered the Council’s submission addressing the financial advantages and disadvantages of the proposal (s 263(3)(a)) (Ex 2, RTB T21, p 705). The Delegate was not required to recite all aspects of the Council’s submission in his report to demonstrate that he had engaged with all aspects of the submissions in an intellectual way. Reasons for decision are not required to canvass each item of evidence relevant to an issue that the decision maker treated as material: Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 330-331, 338 and 346.

482. On balance, I am unable to sustain the Council's complaint concerning the Delegate’s consideration of the financial matters to which he was required to have regard by s 263(3)(a). The Delegate observed, in the first paragraph quoted above from his report, the nature of the information that he had considered and the fact that he had done so and compared that information (by implication by considering the tensions between the various submissions made to him on this point) and then drawn the conclusion that he set out at the end of that paragraph.

483. The table at 6.1.1 is not drawn from the Minister’s proposal document but is drawn from the sources set out below it. The paragraph describing that table and the conclusion is that which the Delegate drew from it. As was made clear by Brennan J in Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 at 64, a complaint only has validity if no regard has been had by the Delegate to such submissions, not the issue of whether the Delegate gave sufficient weight to the material advanced on behalf of the Council and others who objected to the proposed amalgamation on financial grounds. In this instance, the Delegate has made it clear that he has considered all relevant submissions; has by implication preferred, in part, the analysis in the Minister's submission but has also turned to other documents in support.

484. In the context that the Delegate’s report could not reasonably be expected to be a lengthy, forensic examination of all of this material, I am satisfied that the Delegate’s consideration of this mandatory matter is, on balance, adequate.

Community interest and geographic cohesion

485. On page 12 of Mr Colley's report, he dealt with the second of the matters about which the Council complains. After quoting s 263(3)(b), Mr Colley’s report set out his consideration of matters he regarded as arising from this provision in the following terms:

Fourteen submissions made to the Delegate during the consultation process raised the issue of community identity and local government areas. These submissions discussed the perceived cultural, identity and values differences and similarities between residents in different areas of the proposed new council area.

The Delegate has chosen to define ‘communities of interest’ as formal, organised communities (eg, schools, religious or sporting organisations) whose members have a common interest that is affected by the proposal.

A small number of submissions (four) raise concerns relating to this factor. One example is the future availability and amenity of facilities for community organisations, particularly where those organisations have made contributions to, or had a long association with, facilities in the past (for example, the availability of the Drummoyne Community Centre building for the Drummoyne Community Centre Inc).

The Delegate acknowledges the concerns raised in the submissions and other examples where communities of interest faced uncertainty arising from the proposal. If the proposal is approved, the Delegate recommends that the newly merged council shows good governance by quickly addressing the concerns of communities of interest in a fair and equitable way.

The Delegate has also considered matters of geographic cohesion. The area covered by the proposal is 41 km square kilometres situated in the inner west of Sydney. Compared to council areas state-wide, the area covered by the proposal is relatively small, and contained within reasonable travel distances. [Footnotes omitted]

486. Mr Colley concluded that, “This factor neither supports nor opposes the proposal”.

487. On this factor, the Boundaries Commission commented:

The Delegate noted that there were 14 submissions discussing the perceived cultural, identity and values differences and similarities between residents in different areas of the proposed new council area.

The Report noted:

"The Delegate has chosen to define 'communities of interest' as formal, organised communities (eg, schools, religious or sporting organisations) whose members have a common interest that is affected by the proposal. A small number of submissions (four) raised concerns relating to this factor. One example is the future availability and amenity of facilities for community organisations, particularly where those organisations have made contributions to, or had a long association with, the facilities in the past ... lf the proposal is approved, the Delegate recommends that the newly merged council shows good governance by quickly addressing the concerns of communities of interest in a fair and equitable way."

The Report also stated that the Delegate considered matters of geographic cohesion. The Report noted that the area covered by the proposal is 41square kilometres situated in the inner west of Sydney. The Delegate stated that the area covered by the proposal is relatively small, and contained within reasonable travel distances.

488. The Council’s written submissions on this point were in the following terms:

19. Another significant error made by the Delegate in his report was his misconstruction of the factor listed in s.263(3)(b), which required him to have regard to “the community of interest and geographic cohesion in the existing areas and in any proposed new are”. “Community of interest” is a compound expression and should be construed as such. “Community of interest” means a closeness of interests that does not necessarily require a perfect correspondence of interest: Papaconstuntinos v Holmes a Court (2012) 249 CLR 534 at [8]. As such, the issue to be addressed is whether people in the proposed new area will share common interests (and geographic cohesion), when compared with the three individual existing areas.

20.   The Delegate has misconstrued this requirement, which is clear from p.12 of his report:

“The Delegate has chosen to define ‘communities of interest’ as formal, organised communities (eg, schools, religious or sporting organisations) whose members have a common interest that is affected by the proposal.”

21. The Delegate erred in limiting his consideration of “communities of interests” (an expression not found in the statute) to “formal, organised communities”. He seems to have proceeded on the basis that he was dealing with matters such as facilities for community organisations, whereas s.263(3)(b) requires a consideration of what interests the residents and ratepayers of Strathfield have in common with Burwood and Canada Bay. This misconstruction was a jurisdictional error in that it caused the Delegate to ask the wrong question. Not only was the Delegate diverted from his statutory function, but the reasoning process is wholly illogical.

22.   In any event, his consideration of this factor is cursory at best, evidencing a failure to engage with the issue in any active intellectual way. The Boundaries Commission correctly concluded that the Delegate had failed to adequately address this factor.

489. The Respondents’ written submissions on this point were in the following terms:

21. The Council submits that the Delegate misconstrued s 263(3)(b) of the LGA and should have considered “what interests the residents and ratepayers of Strathfield have in common with Burwood and Canada Bay” (SS [21]). The Delegate did precisely that. The Delegate considered the 14 submissions that discussed the “perceived cultural, identity and values difference and similarities between residents in different areas” and defined ‘communities of interest’ as “formal, organised communities… whose members are a common interest that is affected by the Proposal” (Ex 2, RTB T21, p 707). There was no misconstruction of s 263(3)(b) of the LGA or jurisdictional error as alleged.

490. However, during the course of his submissions on 16 June, Mr Hutley SC made a concession on behalf of the Respondents concerning the way Mr Colley had approached his consideration of this mandatory relevant matter. In this regard, Mr Hutley said (Transcript of 16 June 2016, page 330, lines 1 to 25):

Can I now turn to the next point, which is the s 263(3)(b). If your Honour goes to 707, the Delegate is dealing with community interests and geographic cohesion. It says, "14 submissions made...to the factor," et cetera. Your Honour, we accept that the Delegate here seems to have construed the provision and constrained its meaning, and we accept that that was an error of law. We accept that that results in - relevantly, there has been a failure to take into account, constructively, a mandatory relevant consideration. What flows from that is, we submit, that the report is not a report mandated by the legislation, and the relief is the relief we discussed yesterday, your Honour, either a declaration to that effect or an injunction restraining, if your Honour is minded, the minister from proceeding on the basis that there is such a report, though we say that's unnecessary once your Honour has determined it's not.

Our learned friends say that they want relief. The consequence of that is that one in effect has to start again. How far back they say one has to go is unclear, but at least, so far as we understand their submissions, there has to be a new public inquiry and a new opportunity to make submissions. We say that doesn't follow at all. The public inquiry was recorded, the submissions were made in writing. There's no basis to say that what should happen is beyond what we say flows, that the Delegate has not yet concluded his function of examining and reporting because he hasn't brought into existence a report. What would flow is a return to him of that exercise, and how he chooses to go about concluding that - of course, acting in accordance with law under the advice consequence on any judgment of this Court - would be a matter for him. That's how we put it.

491. In light of this concession (one correctly made, in my view, on proper consideration of the element of the Delegate's report set out above), it is clear that the process undertaken by Mr Colley with respect to this confined aspect of the matters mandated for the Delegate’s consideration concerning this proposed amalgamation has miscarried.

Representation of diverse communities

492. On page 27 of Mr Colley's report, he dealt with the third of the matters about which the Council complains. After quoting s 263(3)(e5), Mr Colley’s report set out his consideration of matters he regarded as arising from this provision in the following terms:

The area covered by the proposal includes culturally diverse communities. A small number of submissions addressed this factor by affirming this diversity in a positive way.

The Delegate acknowledges the proposal area is comprised of diverse communities and the effective leadership shown within the community by Local Government to date. If the proposal is approved, the Delegate recommends that the newly merged council continues to show good governance and leadership by recognising and respecting the opinions of diverse communities in a fair and equitable way.

493. Mr Colley concluded that, “This factor neither supports nor opposes the proposal”.

494. On this factor, the Boundaries Commission commented:

The Report stated that the area includes culturally diverse communities, and a small number of submissions addressed this factor by "affirming this diversity in a positive way".

The Delegate acknowledged that the proposal area is comprised of diverse communities and the effective leadership shown within the community by Local Government to date. He concluded:

"if the proposal is approved, the Delegate recommends that the newly merged council continues to show good governance and leadership by recognising and respecting the opinions of diverse communities in a fair and equitable way."

495. The relevant element of the Council’s written submissions on this point were:

23.   The third defect in the Delegate’s consideration of mandatory relevant factors related to his consideration of the need to ensure that the opinions of each of the diverse communities of the resulting area or areas are effectively represented (s.263(3)(e5)). The consideration of this factor occupied a sum total of 3 paragraphs (5 sentences). The first paragraph quotes the sub-section. The second paragraph states the obvious proposition that the area covered by the proposal “includes culturally diverse communities”, without even naming them. The third and final paragraph simply contains motherhood statements. In short, there is no consideration whatsoever of the “diverse communities” (let alone each of them), nor is there any attempt to address the issue of effective representation. The Boundaries commission had little difficulty in concluding that the Delegate did not adequately consider the issues under this factor.

496. The Respondents’ written submissions did not specifically address this point.

497. The Council's submissions on this point are to be accepted. It is clear, from the cursory nature of this element of the Delegate’s report that he has not intellectually engaged with this mandatory matter. Indeed, the Delegate, to the extent that he has addressed the provision at all has confined himself to “culturally” diverse communities, when the provision is not so limited. As I have earlier observed in the context of the consideration of this provision in the Mosman, North Sydney and Willoughby proposed merger report, communities can be regarded as being formed for reasons across a much wider spectrum of possibilities than merely cultural affiliation (as the Delegate has here confined himself).

498. In addition, the Delegate’s recommendation is what might be regarded as a downward one to be undertaken by the “newly merged Council” rather than an upward one envisaged by the use of the word “represented” in the provision.

499. I am satisfied that the Delegate’s consideration of this mandatory element in s 263(3) has miscarried in a fashion that means he has not effectively considered this requirement at all.

Conclusion on the adequacy of the Delegate’s report

500. The conclusion to be drawn concerning the Delegate’s inadequate consideration of the matters set out in s 263(3)(b) and s 263(e5) is that the report written by Mr Colley does not satisfy the mandatory statutory requirement for him to have had regard to all relevant matters contained in s 263(3) of the Local Government Act in examining and reporting on this proposed amalgamation.

501. The two identified failures have vitiated his report.

502. However, as I have concluded that these are the sole defects with respect to the process undertaken for this merger proposal, the appropriate outcome in the Strathfield proceedings is the making of a declaration of a limited nature confirming that the Delegate has failed to provide a report that complies with the mandated statutory requirements.

503. As Mr Hutley correctly submitted, it is unnecessary for me to restrain the Minister from proceeding further with this proposed amalgamation as, if he were to purport to do so, there would be no proper statutory foundation for that to occur.

504. The declaration that will be made in the formal orders at the conclusion of this judgment in the Strathfield proceedings will have the effect of leaving the Delegate in the position where he has not fulfilled the task delegated to him but he has not been discharged from so doing.

The appropriate form of relief

505. A subsidiary issue arises, as I understood the differences between the parties, as to what should be the form of the relief to be granted if I were to conclude that some part of the process had miscarried in a fashion so as to vitiate the process with respect to one or more Councils. The position adopted by the Respondents, as I understood it, was that a bare declaration would be sufficient to act as the necessary inhibition on the Minister taking any further steps with respect to any amalgamation proposal with respect to which such a declaration had been made. The position advanced on behalf of the Councils, as I understood that, was that a bare declaration would not be sufficient and that I should restrain the Minister from proceeding further with any such amalgamation proposal.

506. It is settled that the making of a declaration is inappropriate when such a declaration would have no foreseeable consequences for the parties (Gardner v Dairy Industry Authority (NSW) (1978) 52 ALJR 180 per Mason J at 188 and Aickin J at 189). However, the making of a bare declaration in any of these cases would not involve any mere hypothetical question. The making of such a declaration would have functional value of a prophylactic nature without the necessity for the making of restraining orders of the nature proposed by the Councils (Ainsworth v Criminal Justice Commission (1991-1992) 175 CLR 564 per the plurality at 582).

507. As Gaudron J observed, in Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited (2000) 200 CLR 591; [2000] HCA 11 at [52], there may be cases where a bare declaration that that some legal requirement has been contravened will serve to redress some or all of the harm brought about by that contravention. Relevantly in these proceedings, the desired consequence sought by the relevant applicant Council is preventative rather than therapeutic. However, it seems to me that an appropriately framed declaration can operate to have that effect without the necessity for the making of a restraining order against the Minister as the necessary consequence of making such a declaration would be that there would be no foundation for any action by the Minister purporting to be founded on the report of the relevant Delegate as there is, at law, no such report in the relevant instances.

508. I am satisfied in the circumstances of these proceedings, involving significant issues of public policy and the necessary administrative processes underpinning them, that it will be sufficient to make bare declarations in the three sets of proceedings where I have found defects warranting such an outcome. As it is appropriate to assume that the Minister will have proper regard to the consequences of the declarations made, I propose to do so without the necessity to make some further order restraining the Minister.

Costs

509. As each of these matters comprises proceedings in Class 4 of the Court’s jurisdiction, the costs follow the event presumption applies (Uniform Civil Procedure Rules 2005, Pt 42 r 42.1). However, against the eventuality that, in any of the proceedings, a party may wish to seek some costs order other than that which would ordinarily be expected, I propose to provide in the orders in each proceedings that the relevant ordinary position will apply unless some party files a Notice of Motion seeking some different order for costs within 14 days of the date of this decision.

510. In those proceedings where costs orders are proposed against the Respondents, I propose simply to make a single collective order against the Crown Respondents and, where those interests have succeeded, to make a single collective order in their favour.

511. However, in the event that in any of the proceedings the parties are able to come to agreement on a lump sum costs order, I indicate that I would be prepared to make such an order by consent, in chambers, in substitution for the costs order proposed to be made in those proceedings at the end of this decision.

512. Unless a party notifies my Associate by close of business on Tuesday 4 October 2016 that it wishes to be heard further on the question of costs, I will make the relevant proposed costs order on the day after that date.

Conclusions

Hunter’s Hill and Lane Cove Councils

513. As I have concluded that there were no defects at any stage in the framework for or the process undertaken in dealing with the Minister’s proposal for the amalgamation of Hunter’s Hill, Lane Cove and Ryde local government areas, the appropriate order to be made that the proceedings brought by Hunter’s Hill Council and by Lane Cove Council be dismissed.

Mosman and North Sydney Councils

514. I have concluded that none of the general complaints concerning the proposed amalgamation process for these Councils are well founded and those complaints provide no basis to prevent this amalgamation from proceeding.

515. However, for the reasons earlier set out, I have concluded that the Delegate’s functions pursuant to s 263(3) have miscarried in that the Delegate constructively failed to address one of the provision’s mandatory requirements, that being the requirement to have regard “to the need to ensure that the opinions of each of the diverse communities of the resulting area or areas are effectively represented” (s 263(3)(e5)).

516. On the other hand, I am satisfied that the Delegate’s exercise of his functions with respect to any of the other elements of s 263(3) did not miscarry.

517. These findings mean that the Delegate has not yet completed the task delegated to him by the Acting Chief Executive.

518. For the reasons earlier discussed, the appropriate outcome in each of the Mosman Municipal and North Sydney Council proceedings is the making of a bare declaration that the report furnished by the Delegate to the Boundaries Commission is not a valid report in satisfaction of the requirements of s 218F(6)(a) of the Local Government Act.

Strathfield Municipal Council

519. For the reasons earlier set out, I have concluded that none of the general complaints concerning the proposed amalgamation process for this Council are well founded and they provide no basis to prevent this amalgamation from proceeding.

520. However, the Delegate’s function to inquire and report after having had regard to the relevant mandatory matters in s 263(3) has miscarried in that the Delegate constructively failed to address two of those mandatory requirements, being those required by s 263(3)(b) and (e5).

521. It is conceded by the Respondents that the first complaint concerning these claimed defects had proper foundation. I have concluded that this concession concerning s 263(3)(b) was properly made. I have also separately concluded that the Delegate constructively failed adequately to address the mandatory matter set by s 263(3)(e5).

522. I am satisfied that the Delegate’s duty to have regard to these two mandatory elements in s 263(3) has miscarried in a fashion that means he has not yet completed the task delegated to him by the Acting Chief Executive.

523. For the reasons earlier discussed, the appropriate outcome in the Strathfield Municipal Council proceedings is the making of a bare declaration that the report furnished by the Delegate to the Boundaries Commission is not a valid report in satisfaction of the requirements of s 218F(6)(a) of the Local Government Act.

Orders

Hunter’s Hill Council matter

524. In Matter No 158774 of 2016, the Court makes the following orders:

1. The proceedings are dismissed; and

Unless a party files a Notice of Motion proposing an alternative order on the question of costs by the close of business on Tuesday 4 October 2016, I will, on the day after that date, order that the Applicant is to pay the First to Fourth Respondents’ costs as agreed or assessed.

Lane Cove Council matter

525. In Matter No 161918 of 2016, the orders of the Court are:

1. The proceedings are dismissed; and

Unless a party files a Notice of Motion proposing an alternative order on the question of costs by the close of business on Tuesday 4 October 2016, I will, on the day after that date, order that the Applicant is to pay the First to Fourth Respondents’ costs as agreed or assessed.

Mosman Municipal Council matter

526. In Matter No 155301 of 2016, the orders of the Court are:

1. Declares that the report furnished by the Delegate to the Boundaries Commission is not a valid report in satisfaction of the requirements of s 218F(6)(a) of the Act; and

Unless a party files a Notice of Motion proposing an alternative order on the question of costs by the close of business on Tuesday 4 October 2016, I will, on the day after that date, order that the First to Fourth and Seventh Respondents are to pay the Applicant’s costs as agreed or assessed.

North Sydney Council matter

527. In Matter No 158919 of 2016, the orders of the Court are:

1. Declares that the report furnished by the Delegate to the Boundaries Commission is not a valid report in satisfaction of the requirements of s 218F(6)(a) of the Act; and

Unless a party files a Notice of Motion proposing an alternative order on the question of costs by the close of business on Tuseday 4 October 2016, I will, on the day after that date, order that the First to Fourth Respondents are to pay the Applicant’s costs as agreed or assessed.

Strathfield Municipal Council matter

528. In Matter No 158221 of 2016, the orders of the Court are:

1. Declares that the report furnished by the Delegate to the Boundaries Commission is not a valid report in satisfaction of the requirements of s 218F(6)(a) of the Act; and

Unless a party files a Notice of Motion proposing an alternative order on the question of costs by the close of business on Tuesday 4 October 2016, I will, on the day after that date, order that the First to Fourth Respondents are to pay the Applicant’s costs as agreed or assessed.

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Amendments

21 September 2016 - In the orders pertaining to all five Councils, paragraph (2) of the order is now an unnumbered sentence in the order.

20 September 2016 - The matter numbers were transposed for Mosman Municipal Council v Minister for Local Government AND Strathfield Municipal Council v Minister for Local Government. In all incidences of transposition, the error has been corrected.

Decision last updated: 21 September 2016