Lake v Municipal Association of Victoria

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

GENERAL LIST

S ECI 2018 01119

GEOFF LAKE	Plaintiff
v
MUNICIPAL ASSOCIATION OF VICTORIA	Defendant

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JUDGE:	Ginnane J
WHERE HELD:	Melbourne
DATE OF HEARING:	10 September 2018
DATE OF JUDGMENT:	24 September 2018
CASE MAY BE CITED AS:	Lake v Municipal Association of Victoria
MEDIUM NEUTRAL CITATION:	[2018] VSC 561

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ASSOCIATIONS — Local government — Municipal Association of Victoria — Interpretation of rules — Extrinsic material — Whether President ceased to hold office — Whether causal vacancy in office of President — Effect of President ceasing to be municipal council’s representative — Effect of President’s municipal council ceasing to be a participating member of Association — No vacancy in office of President — Declarations — Municipal Association of Victoria Act 1907; Interpretation of Legislation Act 1984 s 35.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	In person	-
For the Defendant	Mr M Osborne QC	MinterEllison
For Whittlesea City Council (on evidentiary issues)	Mr D Harrison	Russel Kennedy

HIS HONOUR:

The issue in this proceeding is whether a casual vacancy exists for the office of President of the Municipal Association of Victoria (‘MAV’). That question is answered by the interpretation of the MAV’s rules.

Cr Mary Lalios was elected MAV president for a two-year term on 3 March 2017. At that time she was the appointed representative of Whittlesea City Council (‘Whittlesea’).

The issue is whether Cr Lalios, the last elected President of the MAV, is unable to continue in that position, as a result of Whittlesea revoking her status as its representative on 21 November 2017, or as a result of Whittlesea failing to pay its annual subscription to the MAV by 31 August 2018.

Issues

The issues in the proceeding are:

(a) Is Cr Lalios ineligible to hold the MAV Presidency because of Whittlesea’s decision on 21 November 2017 to revoke her status as its MAV representative?

(b) Is Cr Lalios ineligible to hold the MAV presidency because of Whittlesea’s decision not to not pay its membership dues by 31 August 2018?

The second issue was the primary question which led to the commencement of this proceeding.

The first issue was argued despite the revocation of Cr Lalios’ status as Whittlesea’s MAV representative having occurred 10 months earlier, and the fact that the Board, after having sought legal advice, took no step to prevent her continuing as President. Nonetheless, the MAV submitted that, after the revocation of her appointment as Whittlesea’s representative on 21 November 2017, Cr Lalios had ceased to be eligible to hold the presidency.[1]
[1]Transcript of Proceedings, Geoff Lake v Municipal Association of Victoria (Supreme Court of Victoria, 10 September 2018), 121 (‘T’).

My decision is that Cr Lalios is not ineligible to continue as the MAV President and that no casual vacancy exists in the office of President.

Mr Geoffrey Lake, a current MAV board member and former president of the MAV has brought this proceeding and his standing to do so has not been challenged. He is a councillor and former mayor of Monash City Council. He seeks declarations that:

1. Cr Mary Lalios’s (Lalios) appointment as the Municipal Association of Victoria (MAV) representative for Whittlesea City Council (Whittlesea Council) was revoked on 21 November 2017.
2. Notwithstanding the revocation of Lalios’s appointment as an MAV representative for Whittlesea Council, Lalios continued to be eligible under the Municipal Association Act 1907 (Vic) (the Act), the MAV Rules 2013 (the Rules) (or any other relevant instrument) to hold the position of president of the MAV on 22 November 2017 to 31 August 2018 pursuant to her election to that position on 3 March 2017.
3Notwithstanding the non-payment by Whittlesea Council of its membership subscription to the MAV by 31 August 2018, Cr Lalios continues to be eligible since that date under the Act and the Rules (or any other relevant instrument) to hold the position of president of the MAV pursuant to her election to that position on 3 March 2017.
4.No casual vacancy has arisen under the Act or Rules (or any other relevant instrument) in respect of the position of MAV president.

The Act that incorporated the MAV, the Municipal Association Act 1907 (‘the Act’) states in its preamble that the MAV was established in 1897 for the purpose of:

promoting the efficient carrying out of municipal government throughout the State of Victoria and protecting the interests rights and privileges of municipal corporations.

The plaintiff relied on his own affidavit, as well as the affidavits of Cr Lalios, Mr Robert Spence, the former Chief Executive Officer of the MAV, and Mr Richard Gross, a former president of the MAV. These affidavits set out the structure of the MAV, the history of various rule changes and the circumstances surrounding Cr Lalios’ current position. With the deletion of some parts of affidavits of matters that I ruled to be irrelevant, the contents of the affidavits constituted the evidence in the proceeding.

Legislation and Rules
The Act

The Act states in ss 2 and 3:

2 Association to be a body corporate etc.
(1) The Municipal Association of Victoria (hereinafter called the Association) shall be a body corporate and by that name shall have perpetual succession and a common seal and shall be capable in law of suing and being sued.
(2) Each council in Victoria from time to time may appoint a councillor to be the representative of such council and the representatives so appointed shall constitute the Association.
…

3 Rules
(1)The rules of the Association in force at the commencement of this Act except in so far as the same are inconsistent with any of the provisions of this or any other Act shall be the rules of the Association until revoked or altered by rules made pursuant to this Act.
(2)It shall be competent for the Association with the approval of the Governor in Council to make rules (a) for the management of the association; (b) for the regulation of its proceedings; (c) for fixing the amount of the subscription to be paid annually to the Association by each municipality; (d) for the regulation and management of and for fixing the rate of contributions to the Municipal Officers Fidelity Guarantee Fund and terms and conditions upon which the benefit of such fund shall be available; and (e) generally for all matters whatsoever affecting the management of the Association not inconsistent with the laws of Victoria.

The MAV Rules

The Rules constitute the rules of the Association until revoked or altered by further rules made pursuant to the Act. The Rules were published in the Government Gazette on 7 February 2013.

The relevant provisions in the Rules are as follows:

1 Objectives
1.1 The objectives of the Association are to:
1.1.1promote local government and improve community awareness of the capacity of local government throughout Victoria to act effectively and responsibly;
1.1.2promote through its advocacy role appropriate powers, functions and responsibilities for local government having regard to the individual needs and characteristics of its individual members;
1.1.3act as the representative body of local government for the purpose of promoting effective inter-government co-operation;
1.1.4strengthen the Association’s leadership role in local government in Victoria by focusing on:-
1.1.4.1targeted advocacy to Governments and relevant organisations; and
1.1.4.2continually improving systems for effective member liaison communication and participation.

1.1.5identify the administrative requirements relating to various matters under the Municipal Association Act 1907 including provisions that:
1.1.5.1establish the management of the Association;
1.1.5.2provide mechanisms for participation by members;
1.1.5.3regulate its proceedings;
1.1.5.4fix subscriptions;
1.1.5.5regulate and manage the Municipal Officers’ Fidelity Guarantee Fund; and
1.1.5.6generally provide for all matters affecting the management of the Association.

1.2The Association may exercise all functions and powers which are necessary or convenient for it to carry out its objectives provided it is not inconsistent with the Municipal Association Act 1907 or any other Act.
1.3Revocation
Any previous Rules made under the Municipal Association Act 1907 are revoked.

1.4These rules are made under the Municipal Association Act 1907.

2 Definitions
…
‘Board’ means the Management Board or the Interim Management Board.
…
‘Councillor’ means a person who holds the office of member of Council; and includes a person appointed by Order in Council under section 219 or section 220R of the Local Government Act 1989.
‘Member’ means –
(a) in relation to meetings of the State Council or annual meetings, a representative;
(b)in relation to meetings of the Board, a member of the Board;
(c)in relation to a committee – a person who is a member of that committee.

‘Non participating member council’ means any council which is not a financial member of the Association because it has not complied with clause 4 of the Rules.
…
‘Participating member Council’ means a Council which is a financial member of the Association under clause 4.
…
‘Representative’ means a councillor and includes, in the absence of the representative of the council at a meeting, the substitute representative of that council who exercises a vote on any matter as if he or she were the representative of the council.
‘State Council’ means the body consisting of all the representatives of councils which are financial members of the Association.
…

4 Membership of the Association
4.1 Subject to clause 5.1. a council is a financial member of the Association:
4.1.1if it has paid the amount of the annual subscription and any other monies levied on it by the Association for membership within 2 months of a notice requiring payment being given or by 31 August in every year (whichever is earlier); or
4.1.2 for the period of any financial year subsequent to its payment of its annual subscription; and
4.1.3remains a financial member until 31 August in the financial year after the year for which the payment of the annual subscription is made.

4.2 A council which is a financial member of the Association is entitled to participate in the activities of the Association in the way provided for in these Rules.

5 Non participating member councils
5.1 A council which fails to pay in full its annual subscription or other monies levied on it by the Association in accordance with clause 4.1.1. will become a non participating member council and will remain as a non participating member council until that annual subscription or the next year’s annual subscription is paid.
5.2 A non participating member council is not entitled to avail itself of the privileges and benefits of any of the functions or services performed or carried on by the Association.
5.3 A representative of a non participating member council is not eligible to participate in the activities of the Association or to exercise the powers of a representative to:
5.3.1 vote on any motion or matter under consideration at a meeting of the Association;
5.3.2nominate any person or be nominated for any office or position on a committee of the Association; and
5.3.3 hold the position of President or be a member of the Board of the committee of the Association.

5.4When the annual subscription or any other monies levied on a council remain unpaid for two months after a notice requiring payment has been sent, the Chief Executive Officer of the Association must notify the Chief Executive Officer of the council of the ineligibility of the council and its representative to participate in the matters identified in sub-clauses 5.2. and 5.3.

6 Appointment of representatives
6.1 A council which is a financial member of the Association must appoint a representative and a substitute representative of the council to the Association and must notify the Association in the form specified in Schedule 1 as soon as possible after the Council has made the appointment and, where an Election Day has been appointed by the Chief Executive Officer, no less than four weeks prior to that date.

6.2 Appointments must be made by resolution of council.
6.3The Council from which the President is elected must appoint an additional representative to vote on matters under consideration by the State Council.

7 Obligations of representatives and Board members
7.1A person appointed as a representative of the Association must use his or her reasonable endeavours to attend all meetings of the Association which the person is eligible to attend.

7.2 A representative must:
7.2.1 attend every meeting of the State Council and if he or she is unable to attend a meeting, must encourage the council’s substitute representative to attend;
7.2.2if present, vote on every matter under consideration by the State Council, in accordance with either the resolution of his or her council or the view of the majority of the Councillors where known, unless prohibited from doing so;
7.2.3 provide regular reports to his or her council on matters discussed and considered by the Association and on the decisions made; and have regard to any codes or guidelines published by the Board that relates to his or her functions as a representative.

7.3 A representative elected as a regional member of the Board must liaise with other representatives and councils within the region that he or she represents by meeting with them on a regular basis and by providing written reports and information on the Association’s activities and by any other means which is convenient and satisfies the needs of the regional grouping of councils.

8 The Management Board
8.1 There will be a Municipal Association of Victoria Management Board that is comprised of the President and twelve (12) other members who are the representatives of the twelve regional groupings of councils.
8.2Subject to the provisions of Clause 8, the President and the twelve regional members of the Board go out of office at 6.00 am on the Election Day or 6.00 am on the day of the Local Government General Election.
8.3 Despite the provisions of Clause 8.2. the Management Board may make recommendation to State Council for a longer term of office of the President and the twelve regional members of the Management Board.
8.4 Despite the provisions of Clause 15 of Schedule 3, for the purposes of this clause 8 the State Council may approve such longer term of office for the President and the twelve regional members of the Board where 60% of the representatives of participating member councils vote in favour of the proposed term of office.

11 Election of the President
11.1 The President of the Association will be elected by the representatives that comprise the State Council.
11.2The Chief Executive Officer may after advising the Board, determine whether postal, attendance or electronic voting will apply to the election of the President and must notify the representatives of all participating member councils at least 42 days before Election Day of the voting method to apply.
11.3 An election for the position of President must be conducted in accordance with the provisions in Schedule 2.

14 By elections
14.1 Subject to 14.2 and 14.3, an election must be held to fill a casual vacancy on the Management Board and must be conducted by postal ballot or at a special meeting of the State Council.
14.2If a casual vacancy occurs in the position of President within nine months of the date at which the President goes out of office the Management Board must elect a member of the Board as an Acting President for the remainder of the term.
14.3 If any other casual vacancy occurs on the Management Board within two months of the date at which that member goes out of office the Board may decide that the casual vacancy is not to be filled.
14.4If a casual vacancy occurs on the Interim Management Board it is not to be filled.

15 Vacancies and resignations
15.1 A casual vacancy is created either on the State Council or the Board where a representative:
15.1.1 dies;
15.1.2 resigns in writing to the Chief Executive Officer; or
15.1.3 ceases to be a councillor.
15.2 A casual vacancy on the Board also occurs if the council for which that Board member is a representative ceases to be a participating member of the Association.

16 Revocation of Appointment
The revocation of the appointment of a representative, who has been elected as the representative of a region by a Council, will not affect that Councillor remaining a Board member for the remainder of their term, subject to Rule 14.

28 The Board
28.1The Board has responsibility for the conduct of the affairs of the Association in accordance with the Rules.
28.2 Notice of meetings of the Board must be given to Board members not less than seven days before the meeting, unless the meeting is to deal with business which the President considers to be urgent or requiring immediate resolution by the Board.
28.3 The quorum necessary to transact business at a meeting of the Management Board will be 7 and no business may be transacted at a meeting of the Management Board unless that number of representatives is present.
28.4 The quorum for the Interim Management Board is a majority of the members.
28.5The Interim Management Board may not make a Significant Decision except by unanimous vote by all members of the Interim Management Board.
28.6 Meetings of the Board may be deferred or adjourned at any time by the President, Interim President or member presiding, as the case may be, to a date to be fixed.
28.7 Meetings of the Board must be conducted in open session unless the Association will be prejudiced by the requirement to do so.
28.8 Where the business of the Board requires urgent or immediate resolution by the Board, Board members may participate in a meeting of the Board by phone, closed circuit television or any other means of communication and a member who participates for the duration of the meeting is deemed to be present at the meeting.

30 Functions of the Board
30.1 The functions of the Board will be to:–
30.1.1 determine and classify the regional groupings of councils after consultation on proposals for the regional groupings has been undertaken with councils;
30.1.2define the detail of the broad policies, objectives and strategies determined by the State Council;
30.1.3implement the broad policies, objectives and strategies of the Association;
30.1.4 regularly liaise with representatives of participating member councils and regional groupings of councils;
30.1.5set service standards and priorities and monitor the performance of the Association;
30.1.6publish practice notes, guidelines or codes to be used and applied by representatives when they are acting as representatives of the Association;
30.1.7 determine the budget including the level of subscription to be paid by participating member councils and monitor the financial performance of the Association after consultation with the State Council on the level of subscriptions to be paid.

30.1.8determine the levels of cover, guarantees and other matters associated with the Municipal Officers’ Fidelity Guarantee Fund;
30.1.9 operate and manage liability and workcover insurance schemes;
30.1.10determine issues of policy, legislative and financial significance to local government;
30.1.11appoint a Chief Executive Officer who will be responsible for the day to day management and administration of the Association;
30.1.12annually set performance appraisal objectives for the Chief Executive Officer and regularly monitor the performance of the Chief Executive Officer;
30.1.13determine the allowances (if any) to be paid to representatives;
30.1.14provide appropriate insurance cover for representatives; and

30.1.15 appoint representatives and persons to committees.
30.2 The Board must provide notice to councils of the classification of Metropolitan, interface and rural councils into regional groupings of councils within 14 days of its decision.

Schedule 2 of the Rules provides that:

1 Nomination
1.1 Any representative wanting to nominate as a candidate for election either to the position of President or as a regional representative of the Board must submit to the Returning Officer a nomination in the form specified in Schedule 4.
1.2 A nomination must be received by the Returning Officer no later than 4.00 pm on the twenty first day before Election Day and may be posted, hand delivered or sent by facsimile.
1.3 A representative nominating for election may nominate himself or herself or be nominated by another representative but must be the council’s representative appointed by the council under rule 6.1. and notified to the Association in the form of Schedule 1.

1.4 The Returning Officer must reject the nomination if:
1.4.1 the person nominating is not the representative appointed by a participating member council; or
1.4.2the person nominating has been nominated by a person who is not the representative of a participating member council; or
1.4.3the nomination has not been received by the specified closing time.

The 2004 Rules

In 2004, the MAV Rules in force contained the following provisions:

14.      Vacancies and resignations
(1) A casual vacancy is created either on the State Council or the Board where a representative:
(a)       dies;
(b)       resigns in writing to the Chief Executive Officer;
(c)       ceases to be a councillor; or
(d) has his or her appointment revoked by the council that appointed him or her.

(2) A casual vacancy on the Board also occurs if the council for which that Board member is a representative ceases to be a participating member of the Association.

The MAV’s structure

Each local council can appoint one of its elected councillors as its representative to the MAV.[2] These 79 representatives meet twice a year at State Council, in which policy positions are debated, resolutions are adopted and changes to the Rules can be approved.[3]
[2]Municipal Association of Victoria Rules 2013 r 6.1 (‘MAV rules’).
[3]MAV rules, r 18.

The MAV Board includes the President, who is elected to that position by all 79 MAV representatives.[4] The President does not have a deliberative vote at State Council.[5] Because of this, the local council for which the President is a MAV representative is required to nominate an additional MAV representative.[6]
[4]MAV rules, r 11.
[5]MAV rules, r 27.4.
[6]MAV rules, r 6.2.

The Board also includes representatives who represent one of the 12 regional groupings of local councils. The MAV representatives for each of the local councils in the particular regional grouping elect one of their number to serve on the Board as their regional representative. [7]
[7]MAV rules, r 12.

Councillor Lalios

Cr Lalios was originally appointed to serve as the MAV representative of Whittlesea. She was then elected via postal ballot to serve as the MAV President for a two-year term, commencing on 3 March 2017. Cr Lalios described her election process as President of the MAV by the MAV representatives as follows:

I was elected as president of the MAV on 3 March 2017 by a postal ballot of all the MAV representatives.
…
At the time of the election, I was appointed MAV representative for Whittlesea Council. It was my appointment as the MAV representative for Whittlesea Council which gave me the entitlement to nominate for election as president.
The election process was very competitive with five candidates contesting the position. Over two months, I worked the phones daily, sent letters and emails and visited MAV representatives as part of my campaign to win the election.

She states that she was the first elected female President in the history of the MAV.

Following her election, Whittlesea proceeded on 18 April 2017 to elect an additional representative in accordance with clause 6.

On 21 November 2017, the Whittlesea Council revoked Cr Lalios' appointment as the council's MAV representative and appointed replacement councillors as its representative and substitute representative. Despite some initial suggestions to the contrary, it was eventually agreed between the parties that Cr Lalios’ appointment as MAV representative of Whittlesea had been validly revoked on 21 November 2017. This was achieved via a resolution of the Council to appoint another councillor as their MAV representative. Further, it did not nominate the additional representative under clause 6 that it was entitled to nominate if its representative was the President.

Whittlesea Council has not paid its 2018/19 MAV membership subscription due on 31 August 2018.

The Board sought legal advice regarding Cr Lalios’ continuing eligibility to hold the presidency. Following receipt of that advice, Cr Lalios has continued to serve as President of the MAV in the months following the revocation of her position as Whittlesea’s representative. However, during the hearing, the MAV submitted that she had ceased to be eligible to serve as President when her appointment as Whittlesea representative was revoked on 21 November 2017.

On 26 June 2018, Whittlesea resolved, in effect, not to pay its annual subscription before the deadline of 31 August 2018. In light of this further development, the MAV Board again sought legal advice regarding Cr Lalios’ eligibility to continue as President. Following this advice, the MAV resolved at a Board meeting held on 29 August 2018 that a failure by Whittlesea City Council to pay its annual subscription would result in a casual vacancy in the office of the MAV president.

The first issue: Is Cr Lalios ineligible to hold the MAV Presidency because of Whittlesea’s decision to revoke her status as its MAV representative?
Mr Lake’s Submissions

Mr Lake submitted that the Rules did not require that the MAV President continue to be a council representative after their election. While the Rules require that a candidate for MAV President must be a council representative, i.e. a council that was a member of the MAV,[8] and require that they be nominated by another MAV representative,[9] they do not require that, once elected, the President must remain a council representative. Further, despite providing in clause 15 for several situations in which a casual vacancy in a Board position is created, save for clause 16, the Rules are silent on the consequences of the revocation of a Board member’s status as a council representative.
[8]MAV rules sch 2 cl 1.4.1.
[9]MAV rules sch 2 cl 1.4.2.

Based on the Act,[10] and consistently with the manner in which the term ‘representative’ is used in the Rules, it means the appointed MAV representative for a council.
[10]Section 2 is the only section which refers to a ‘representative’.

Cr Lalios was not a representative of Whittlesea Council when it became non-financial on 1 September 2018 and therefore at the point it ceased to be a participating member of the MAV. Because she was not a representative of Whittlesea Council, neither clause 15.2 nor clause 5.3.3 applied to disqualify her from her office as President of the MAV.

Mr Lake also argued that, if the Court were to depart from the literal reading of the Rules, then their underlying purpose and intention supported his interpretation.[11] The Rules are subordinate legislation made by the Governor in Council, and their interpretation is governed by the Interpretation of Legislation Act 1984. Section s 35(b) of that Act allows the Court in interpreting the Rules to consider any matter or document relevant to that purpose. By s 35(a), the Court must prefer a construction that would promote the purpose of object underlying the Rules.
[11]T 77.

To support his interpretation of the Rules, Mr Lake drew on a considerable amount of extrinsic material concerning amendments to the MAV Rules in 2006, which in relevant respects, led to the Rules taking their current form.

The MAV Rules of 2004 (the 2004 Rules),[12] prior to the changes in 2006, contained an express trigger for a vacancy to occur in the position of a Board member (including the President) if the person ‘has his or her appointment revoked by the council that appointed him or her’.[13] By the changes proposed by the Board in 2006 and supported by State Council on 27 October 2006, this vacancy ‘trigger’ was expressly removed from the Rules.[14]
[12]The MAV Rules 2004 is reproduced at Exhibit ‘GTL-16’ to the affidavit of Geoffrey Travers Lake affirmed on 3 September 2018 (‘Lake affidavit’).
[13]See clause 14(1)(d) of the MAV Rules 2004 at Exhibit ‘GTL-16’ to the Lake affidavit. See also the affidavit of Robert Norman Spence affirmed on 1 September 2018, [16] (‘Spence affidavit’).
[14]See the affidavit of Richard Andrew Landa Gross affirmed on 2 September 2018, [20] and Exhibit ‘RALG-9’(‘Gross affidavit’).

Mr Spence, the Chief Executive Officer of the MAV at the time that these changes were considered and supported, stated that this vacancy ‘trigger’ was removed so that a vacancy on the Board (including the President) would not arise if the council of a Board member revoked that Board member’s appointment as that council’s appointed MAV representative.[15] The two presidents of the MAV in office at the time that these changes were considered and supported, the plaintiff, Mr Lake and Mr Gross gave similar evidence.[16]
[15]Spence affidavit [17]-[19].
[16]Gross affidavit [23], Exhibit ‘RALG-9’; Lake affidavit [37].

The extrinsic materials included:

(a) As previously mentioned, reference was made the 2004 version of the MAV Rules.[17] These contained a provision at clause 14(1)(d) (clause 14 being the equivalent of the present clause 15) which created a casual vacancy where a Board member ‘has his or her appointment revoked by the council that appointed him or her’. Under that clause, Cr Lalios would have become ineligible to hold the MAV presidency upon the revocation of her status as Whittlesea Council representative. Mr Lake submitted that the removal of this rule showed an intention that the President should not be required to remain a current council representative. Additionally, the definition of ‘Board Member’ was changed from ‘a representative who is a member of the board’ to its current wording, which does not define Board members as representatives. Mr Lake submitted that past versions of the rules can be used to interpret its current form.
[17]T 84.

(b) Minutes of an MAV Board meeting on 7 July 2006,[18] which was held in the lead-up to the adoption of the 2006 rules, which for present purposes can be regarded as the current rules. These minutes record various resolutions approving proposals for rule changes to be to be put to State Council. One such proposal that was approved was that:
[18]T 86.

Once elected, the President is able to serve out their term regardless of whether they remain the MAV representative for their council, as long as they remain a councillor.[19]
[19]Lake affidavit Exhibit ‘GTL-10’.

(c) An email to Cr G Lake, who was at that time the president of the MAV, from the MAV’s legal counsel on 2 August 2006.[20] This email discussed the various proposed rule changes, and included the following statement about the change to the then clause 14:
[20]T 87.

Clause 14 of the rule specifies that a vacancy is created on State Council or the Board, if an individual's appointment as representative is revoked by the council that appointed him or her.
Once elected, the President is able to serve out their term regardless of whether they remain the MAV representative for their council, so long as they remain a councillor.
…
This proposal seeks to remove the vulnerability of the President to their council, and to protect the MAV from influence from an individual council due to the exposure of the President.
It recognises that the President is elected at large and all member councils participate in this process. The President of the MAV should therefore not be vulnerable to just one council who can influence and end their term early by changing their MAV representative.
The President must remain a councillor to be eligible to continue in his or her role.[21]
[21]Lake affidavit 9, Exhibit ‘GTL-11’.

(d) A report provided to State Council in October 2006 describing the proposed changes to the Rules[22] as including:
[22]T 89.

A change to the vacancies clause to provide that a Council revocation of the appointment of MAV representative who is a member of the Board will not result in the Councillor being removed from the Board subject to that person remaining a Councillor.[23]
[23]Gross affidavit 1, Exhibit ‘RALG-7’.

(e) Speaking notes of Mr Gross, then President of the MAV, which it was suggested that he used as overhead slides while chairing State Council at the meeting when the 2006 amendments were approved.[24] One section of those speaking notes describes (in identical terms to the report quoted above):
[24]T 91.

A change to the vacancies clause to provide that a Council revocation of the appointment of MAV representative who is a member of the Board will not result in the Councillor being removed from the Board subject to that person remaining a Councillor.[25]

(f) Statements in the affidavits of Robert Spence, the then Chief Executive Officer of the MAV and Mr Gross and the plaintiff, Mr Lake, President at the time the rule changes were proposed.[26] These affidavits state that the intended effect of the deletion of clause 14(1)(d) was that a Board Member would not have their term cut short in circumstances where they were removed as their Council’s MAV representative, but that they would instead serve the full length of their term.

[25]Gross affidavit 18, Exhibit ‘RALG-8’.

[26]T 95.

Mr Lake submitted that the preceding extrinsic material demonstrated an intention that the MAV President need not continue to be a council MAV representative in order to continue to hold the office of President. He contended that such a reading was consistent with an overarching intention to ‘evolve’ the MAV presidency into a role that looked primarily to the MAV as a whole,[27] rather than to the local council of which the President was a councillor. Mr Spence stated:

One of the other key changes also progressed at this time was introducing the ability for the council from which the president is from to appoint an additional representative to represent that council at state council. In this respect, we specifically sought to construct the president's role so the president was not pursuing the interests of their council but rather to ensure that the president was above the fray and focused on the MAV rather than individual council interests.
Prior to this change, the president was representing both the interests of their council while also being expected to assume a leadership position on behalf of the whole sector at state council. By this rule change, it was specifically sought to move away from that position. The change reflected the view that once a president was elected by the sector as a whole, they should not be asserting their council's view at state council but rather they should be acting in the interest of the MAV and the wider sector.[28]

[27]T 103.

[28]Spence affidavit [20]-[21].

Mr Lake submitted that given that the presidency is a role designed to represent the interests of the MAV as a whole, there was no reason to require the President to continue to be an MAV council representative once elected. If that requirement existed, one local council would have the power to end a presidency by revoking the President’s status as their MAV representative, despite the President having been elected at a ballot at which all 79 Councils, or the number of participating councils, voted through their representatives. That would make the President vulnerable to the whims of that council and the President’s ability to represent the interest of the MAV as a whole could be impaired.

Mr Lake submitted that such an interpretation of the Rules best upheld the rights of Cr Lalios to serve out her term as President,[29] and the rights of the ‘constituents’ to maintain the President they had democratically elected.
[29]T 110.

By an alternative submission, Mr Lake contended that if Cr Lalios were prima facie ineligible to remain President because of the revocation of her status as Whittlesea’s MAV representative, clause 16 of the Rules should be interpreted so that it would preserves her position. Clause 16, which was also introduced by the 2006 amendments provides that:

16 Revocation of Appointment
The revocation of the appointment of a representative, who has been elected as the representative of a region by a Council, will not affect that Councillor remaining a Board member for the remainder of their term, subject to Rule 14.

During the course of submissions, it became clear that this clause contained drafting errors. For example, it should read ‘subject to rule 15’. That is does not do so can be explained by the failure to update the numbering referred to as a result of other amendments to the rules. Again, it seems that there should be a comma between the words ‘region’ and ‘by’, in order to make clear that the revocation of appointment contemplated is by the action of a Council, and not that the representative in question was elected as a representative of a particular Council.

Mr Lake submitted that clause 16, on its proper construction, would apply to save the person holding the position of President, if a council revoked their appointment as its representative. He submitted that the word ‘region’ in clause 16 should be interpreted to mean ‘electorate’ or ‘constituency’, rather than a ‘regional grouping of Councils’. On this reading, clause 16 would apply to anyone elected as a councillor, rather than applying only to the regional representatives who comprise 12 of the 13 Board members. As Cr Lalios remains an elected Whittlesea Councillor, clause 16 would apply to her as well, and any effects of the revocation on her eligibility would be prevented.

Mr Lake advanced two arguments in favour of this interpretation. First, clause 16 uses the term ‘region’ rather than the defined term ‘regional grouping of Councils’. Some significance must be given to the different terminology, perhaps that the drafters must have intended the term ‘region’ in clause 16 to mean something other than ‘regional grouping of councils’, perhaps ‘constituency’.

Secondly, Mr Lake submitted that the extrinsic material supported this interpretation of clause 16. The minutes of a September board meeting made clear that clause 16 was merely intended to put beyond doubt what had already been effected by the removal of clause 14(1)(d) of the 2004 Rules. As the removal of clause 14(1)(d) affected the office of President, so clause 16 was clearly intended to apply to that office too. The fact that there was no express reference to the office of President was due to a drafting error.

The MAV’s submissions

The MAV made three general submissions to the following effect. The Act and the Rules establish an association which is fundamentally representative in its character. Secondly, councils participate in the affairs of the MAV via their appointed representatives. Thirdly, the rights and privileges that are accorded to a council with respect to its participation in the affairs of the MAV differ between participating and non-participating members, that is financial and non-financial members. The consequence of these propositions is that only a representative of a participating member council can hold the position of President or be a member of the Board.

The MAV argued that the President must continue to be a council representative in order to hold that office. While the MAV could point to no specific provision in the Rules for such a requirement, it submitted that the requirement was evident once the Rules are read as a whole.[30]The MAV submitted that such a requirement is consistent with its representative character, in which local councils are represented by their MAV representatives.[31]
[30]T 121.
[31]T 111.

The proper approach to statutory construction is to begin with consideration of the text itself. Historical consideration and extrinsic materials cannot be relied upon to replace the clear meaning of the text. An express reference to one matter indicates that other matters are excluded.

The objective intention of the Rules is to give participating councils the right to participate in the activities of the MAV through the appointment of representatives, being predicated on the councils being an up to date financial member of the MAV.

Clause 8 provides that there will be a MAV Management Board that is comprised of the President and twelve (12) other members who are the representatives of the twelve regional groupings of councils.

Clause 11 provides that the President of the MAV is elected by the representatives who comprise the State Council, which is the body consisting of all the representatives of the councils, who are the financial members of the Association.

Accordingly, the objective intention of the Rules is that the President (who is elected through the process prescribed by the Rules) must be a representative appointed to the MAV by his or her council at the time the candidate is elected as the President by the State Council. Further, by the operation of clause 5.3.3, the President must be a representative appointed by his or her council during the term of their presidency.

The MAV pointed to inferences that could be drawn from the rules that supported their interpretation, including:

(a) Clause 5.3, which provides that:

A representative of a non participating member council is not eligible to participate in the activities of the Association or to exercise the powers of a representative to:
5.3.1 vote on any motion or matter under consideration at a meeting of the Association;
5.3.2 nominate any person or be nominated for any office or position on a committee of the Association; and
5.3.3 hold the position of President or be a member of the Board of the committee of the Association.

In the MAV’s interpretation, clause 5.3.3 contemplates that, among other things, it is one of the powers of a representative to hold the position of President. Because of this, the President needs to remain a representative throughout their term of office. Clause 5.3 indicates that one power of a representative is to vote at meetings of the MAV. The meetings referred to were meetings of both the Board and State Council: see clause 27. Therefore, Cr Lalios, who is now no longer a representative, is exercising the power of a representative to attend and vote at the Board meetings.[32]
[32]T 119.

(b) Clause 7, which imposes obligations on representatives to attend all meetings. The MAV submitted that if the President did not need to be a representative, then there would be no obligation on a non-representative President to attend meetings, which they submit is a consequence best avoided.[33]

(c) Clause 6.3, which requires that the Council from which the President is elected must nominate an additional representative.[34] The MAV submitted that the use of the word ’additional’ presupposes that after election as President the councillor remains an MAV representative.

(d) Clause 16, which I discuss in greater detail below, states that the position of Board members ‘elected as the representative of a region by a Council’ will not be affected by the revocation of the appointment as representative. The MAV submitted that the failure of clause 16 to mention the office of President clearly indicated an intention that the office of President be vacated if he or she is no longer a representative of a council. It questioned why clause 16 was included in the MAV rules if, without it, the effect of the rules was that the revocation of a Board member’s status as a representative would have no effect on their Board position. The only reason for the carve-out effected by clause 16 was that without it, a Board member would vacate their position if they ceased to be a representative.

[33]T 129.

[34]T 129.

Although the State Council is empowered to extend the tenure of the President and the Board members, nothing in clause 8 derogates from the core requirement that, for a person to be President, the person must have been appointed by a council as a representative, and remain a representative at the time the extension of tenure is sought.

The MAV drew this interpretation of its representative character from s 2(2) of the Act, which states that ‘Each Council in Victoria from time to time may appoint a councillor to be the representative of such council and the representatives so appointed shall constitute the Association’.[35] The MAV also referred to Clause 1 of Schedule 2 of the Rules, which states that only MAV representatives may be nominated to stand for election as President or as a regional representative.[36] Clause 8 then describes the constitution of the Board from those representatives who are elected to Board positions, and who must be Council representatives to be so elected.[37] The MAV submitted that this clearly identified it as a representative body, which acts through, and in which councils participate by, those representatives.
[35]T 129.
[36]T 129.
[37]T 130.

Because of the fundamental importance of council representation to the MAV, the President should similarly be required to be a representative of a council. The MAV also relied on the effect of clause 28.1, which gives responsibility for the control of the Association to the Board. The MAV submitted that it would be absurd, if the Board members who controlled a representative association were not themselves council representatives.

Principles governing the interpretation of the MAV rules

In paragraphs [53] – [61], I repeat passages from the judgment of Riordan J in Darebin City Council v Municipal Association of Victoria[38], which also concerned the interpretation of the MAV rules.
[38][2017] VSC 51.

The primary object of statutory construction is to construe the relevant provisions so that its legal meaning is consistent with the language and purpose of all of the provisions of the statute.[39] The legal meaning is ‘the meaning that the legislature is taken to have intended [the provision] to have’.[40]
[39]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 381–2 [69] (McHugh, Gummow, Kirby and Hayne JJ).
[40]Ibid 384 [78].

The Court of Appeal recently considered the principles of statutory construction in Colonial Range Pty Ltd v CES-Queen (Vic) Pty Ltd.[41] summarised the approach adopted by the Court of Appeal as follows:
[41][2016] VSCA 328 [47]–[55] (Warren CJ, Whelan JA and Riordan AJA).

(a) First the Court considers the text of the relevant provision in its context, which includes the whole of the instrument, the existing state of the law and the legislative history.

(b) To identify the legislative purpose, consideration may be given to extrinsic material, such as parliamentary debates, only after ‘exhausting the application of the ordinary rules of statutory construction’.[42] However, extrinsic material ‘cannot displace the clear meaning of the text’.[43]

(c) If the literal or grammatical[44] (‘the literal’) meaning of the text is consistent with the legislative purpose, the literal meaning will be accepted as the legal meaning.

(d) A construction that promotes the purpose of the Act is to be preferred to a construction that does not.[45]

[42]Saeed v Minister for Immigration & Citizenship [2010] HCA 23; (2010) 241 CLR 252, 265 [33] (French CJ, Gummow, Hayne, Crennan and Kiefel JJ); quoted in Di Paolo v Salta Constructions Pty Ltd [2015] VSCA 230 [36] (Osborn and Kyrou JJA).

[43]Northern Territory v Collins [2008] HCA 49; (2008) 235 CLR 619, 642 [99] (Crennan J).

[44]In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, McHugh, Gummow, Kirby and Hayne JJ appear to refer to the ‘literal meaning’, ‘the literal and grammatical meaning’ and ‘the literal or grammatical meaning’ interchangeably — see 382 [72], 384 [77], 384 [78], 385 [80].

[45]Interpretation of Legislation Act 1984 (Vic) s 35(a).

If the inconsistency between the literal meaning and the legislative purpose is the result of ‘simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision’, an alternative construction, which is consistent with the legislative purpose, may be more ‘readily’ adopted.[46]
[46]Taylor v Owners—Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531, 548 [38] (French CJ, Crennan and Bell JJ). The unique nature of the power to correct drafting errors was recognised in Inco Europe Ltd v First Choice Distribution (a firm) [2000] UKHL 15; [2000] 1 WLR 586. At 592, Lord Nicholls said ‘It has long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language. The court must be able to correct obvious drafting errors. In suitable cases, in discharging its interpretative function the court will add words, or omit words or substitute words. ... This power is confined to plain cases of drafting mistakes.’

In other circumstances, in ascertaining the legal meaning it is ‘[t]he context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction [that] may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning’ (‘an alternative construction’).[47]
[47]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 384 [78] (McHugh, Gummow, Kirby and Hayne JJ).

The determination of whether the legal meaning is the literal meaning or an alternative construction that better promotes the legislative purpose ‘[q]uite obviously [gives rise to] questions of degree’.[48]
[48]Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297, 321 (Mason and Wilson JJ).

In Colonial Range Pty Ltd v CES-Queen (Vic) Pty Ltd,[49] the Court of Appeal recognised competing considerations as being:
[49][2016] VSCA 328 [47]–[55] (Warren CJ, Whelan JA and Riordan AJA).

(a) On one hand, ‘[r]ecent statements of the High Court have emphasised the primacy of the text in the resolution of any perceived tension between the text and the legislative purpose of the Act’.[50]
[50]Ibid [54] (citations omitted).

(b) On the other hand, instances of inconsistencies, which may justify a departure from the literal meaning, were as follows:

(i) the literal meaning would conflict with other provisions of the statute;

(ii) the literal meaning is inconsistent with the purposes of the statute;

(iii) the literal meaning is incapable of practical application; or

(iv) adoption of the literal meaning would lead to a result which is absurd, unreasonable or anomalous.[51]

[51]Ibid [53] (citations omitted).

Because ‘the task remains the construction of the words the legislature has enacted’, if an alternative construction is to be adopted as the legal meaning, it is necessary that such a construction is ‘reasonably open’[52] and ‘consistent with the language in fact used by the legislature’.[53]
[52]CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 348, 408 (Brennan CJ, Dawson, Toohey and Gummow JJ).
[53]Taylor v Owners—Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531, 549 [39] (French CJ, Crennan and Bell JJ). Although the Court was here referring to a modified meaning as one which added or omitted words, a fortiori, it must be a requirement whenever a court is to infer the legal meaning is other than a literal or grammatical meaning.

Assuming that the Court finds an alternative construction is reasonably open and consistent with the language used in the provision, the legal meaning will be determined by balancing:

(a) the strength of the literal meaning as against the alternative construction; and

(b) the extent to which these meanings are consistent with the promotion of the legislative purpose.

This balancing exercise has been explained by High Court as follows:

(a) ‘If the choice is between two strongly competing interpretations, as we have said, the advantage may lie with that which produces the fairer and more convenient operation so long as it conforms to the legislative intention. If, however, one interpretation has a powerful advantage in ordinary meaning and grammatical sense, it will only be displaced if its operation is perceived to be unintended.’[54]

(b) ‘[I]nconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent’.[55]

(c) An alternative construction will be rejected as the legal meaning if it fills ’gaps disclosed in legislation’ or makes an insertion which is ‘too big, or too much at variance with the language in fact used by the legislature’.[56]

[54]Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297, 321 (Mason and Wilson JJ).

[55]CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 348, 408 (Brennan CJ, Dawson, Toohey and Gummow JJ).

[56]Taylor v Owners—Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531, 548 [38] (French CJ, Crennan and Bell JJ).

I would add the following observations which are relevant to the interpretation of the MAV rules. Caution must be taken in interpreting the rules or drawing great significance from any drafting anomaly, because they appear to have been drafted, or at least amended in a piecemeal fashion, by lay people, although with some legal assistance.

The approach taken by Stanley J in Echunga Football Club Inc v Hills Football League Inc,[57] although dealing with the rules of an incorporated association, is also instructive:

In this regard it is proper to recognise that the by-laws are drafted in an ad hoc and piecemeal fashion by lay-persons rather than lawyers, couched in terms intelligible to them but which often lack the consistency, coherence, form and drafting that would be expected in a statute or commercial contract. Accordingly, in my view, the court must approach the construction of a particular by-law, when read in the context of the by-laws as a whole, with a degree of flexibility. This means that the courts should not make too much of infelicities of expression in the by-laws, nor be too quick to identify absurdity, illogicality or apparent inconsistencies. As French J (as he then was) said in the context of interpreting industrial awards, while fractured and illogical prose may be met by a generous and liberal approach to construction, the instrument must make sense according to its ordinary and grammatical language.[58]

[57][2014] SASC 201 and G E Dal Pont, Law of Associations, (LexisNexis, Butterworths, 2018) 139-140.

[58]Ibid [18].

As Leeming JA stated in Environment Protection Authority v Condon as liquidator for Orchard Holdings (NSW) Pty Ltd (in liq)[59]:

It is legitimate to have regard to the fact that regulations are less carefully drafted, and less keenly scrutinised, than primary legislation.[60]

[59][2014] NSWCA 149.

[60]Ibid [44].

Accordingly, Professor Dennis Pearce and Stephen Argument state in their text Delegated Legislation in Australia that:

… delegated legislation relating to technical activities may not have been drafted by professional drafters. In such cases the courts should be aware that the niceties of style and expression used by parliamentary drafters may not have governed the wording of the legislation. The interpretation of the instruments should therefore not be approached in the way that Acts are examined in the interpretation process.[61]

[61]D C Pearce and S Argument, Delegated Legislation in Australia (Reed International Books, 5^th ed, 2017).491

Mr Lake relied on the statement of Lord Mersey in Thompson v Goold & Co,[62] that:

It is a strong thing to read into an Act of Parliament words which are not there. And in the absence of clear necessity it is a wrong thing to do so.[63]
[62][1910] AC 409, but see Bermingham v Corrective Services Commission of NSW (1988) 15 NSWLR 292 at 302 (per McHugh JA).
[63]Ibid 420.

Analysis of the first issue

There is no express provision in the rules requiring the President to continue to be a council representative throughout his or her term.

While the role of the representative is emphasised in clauses such as 5.3, 7, 15 and 16, I consider that the 2006 rule amendments are of particular importance. They, and documents that explain the changes, are extrinsic material to which regard can be had, to determine the purpose of the instrument. I have found the documents showing the history of the form of the rules of particular assistance. When the extrinsic material is considered, it appears that clause 16 was intended to ensure that a Board member did not become ineligible to continue to complete their term because they ceased to be a representative of a region. That change was a move away from the essential importance of the representative capacity once they had commenced their term. The extrinsic material suggests that the rule change was intended to apply to the President, but for whatever reason the clause, as adopted, did not do so, but that does not indicate any intention to place the Presidency in a different position. Clause 16 must be read in conjunction with the former clause 14(1)(d). Thus, in my opinion, a member of the Board could continue to serve out their term although they had ceased to be a representative.

The deletion of rule 14(1)(d), removed a provision which would have rendered Cr Lalios ineligible had it remained. It goes a considerable way to negating any construction of the Rules that results in her being unable to continue to serve as President. The further extrinsic material provided by Mr Lake, while incapable of supplanting the terms of the Rules themselves, provides further support for the conclusion that the President would not need to remain a council MAV representative. Of course that intention cannot be achieved if the Rules do not achieve that purpose.

The deletion of clause 14(1)(d) in 2006 suggests that the absence of any specific provision requiring the President to remain a council MAV representative is more likely to have not been deliberate.

The MAV is undoubtedly a representative body and its general power is exercised through representatives. But that general representative character is not and need not be reflected in every part of the Association. Clause 16, for example, specifically provides that regional representatives need not remain MAV representatives to retain their board membership. This was a significant change because, in the circumstances with which it deals, it removes the link between the holding of important office in the MAV and being a representative of a council

The office of President has less of a representative character. The President is after all elected by up to 79 MAV representatives, does not have a deliberative vote, and the council of which the President is a representative is given an additional representative. The functions of the MAV Board as detailed in rule 30, are in some instances directed to broad MAV-level goals such as to ‘implement the broad policies, objectives and strategies of the Association’ and to ‘determine issues of policy, legislative and financial significance to local government’. In that context, it might be expected that the President will take into account the interests of all councils, rather than being only the representative of one council.

The fact that clause 16 does not refer to the office of President is, in my opinion, not decisive for the issues requiring determination.

The drafting history of the rules suggests that change was made to some clauses without considering their effect on other clauses. Therefore, inconsistencies flowing from particular parts of the rules are less decisive than they would be in professionally drafted statute or regulations. A significant change was made to clause 14(1) by the deletion of paragraph (d), which would otherwise have applied to the office of President. The fact that the office of President was not also referred to in the new clause 16 is not decisive of the question whether the effect of the revocation of the President’s representative status was to prevent the President continuing in office.

In instruments like the MAV Rules, not every rule needs to be given a separate meaning and purpose. Thus different provisions may be directed at the same result due to an abundance of caution or a lack of precision and their inclusion may be due to the manner in which amendments occurred or to provide clear guidance for lay-people interpreting the rules. With this in mind, it is reasonable to take clause 16 as to put beyond doubt what was already effected by the Rules after clause 14(1)(d) had been deleted.

Despite this, I do not accept the plaintiff’s submission that clause 16 can be read as applying to the office of President. Read literally, clause 16 does not so apply. The word ‘region’ used means ‘regional groupings of Councils’ and not ‘constituency’ or ‘electorate’. Clauses 12.1, 13.2 and 17.2 are other examples of this usage. In each of the examples above,[64] the provision in question clearly uses the word ‘region’ as meaning the ‘regional grouping of councils’. The rules indicate that they have consistently used the word ‘region’ throughout the Rules.
[64]Further examples can be found in rules 30.1.1, 3.2.2 and 8.1 of schedule 2, and in the form contained in schedule 4.

Conclusion on first issue

Although, Cr Lalios was not Whittlesea Council’s MAV representative from 21 November 2017,[65] she was not by reason of that fact ineligible to continue to hold and serve out her term as President without remaining an appointed MAV representative.

The second issue: Is Cr Lalios ineligible to hold the MAV presidency because of Whittlesea’s decision not to pay its annual subscription?

[65]On one view, Cr Lalios ceased to be the representative from 1 January 2018, but the parties submitted that the relevant date was 21 November 2017 and nothing turns on the difference.

I have decided that Cr Lalios remained eligible to hold the MAV presidency despite the revocation of her status as representative; the issue arises whether she became unable to continue in that office because Whittlesea City Council did not pay its annual subscription by 31 August 2018. On 29 August 2018, the MAV Board resolved:

that a casual vacancy would arise in the office of MAV president held by Cr Mary Lalios (Lalios) on 1 September 2018 if Whittlesea City Council’s (Whittlesea Council) membership subscription was not paid by 31 August 2018.[66]

[66]Lake affidavit Exhibit ‘GTL-17’.

That issue led to the commencement of the current proceedings.

Answering this question requires particular consideration of rules 5.3.3 and 15.2, which I will repeat:

5 Non participating member councils
……
5.3 A representative of a non participating member council is not eligible to participate in the activities of the Association or to exercise the powers of a representative to:
………
5.3.3 hold the position of President or be a member of the Board of the committee of the Association.

15 Vacancies and resignations
15.1 A casual vacancy is created either on the State Council or the Board where a representative:
15.1.1 dies;
15.1.2 resigns in writing to the Chief Executive Officer; or
15.1.3 ceases to be a councillor.
15.2 A casual vacancy on the Board also occurs if the council for which that Board member is a representative ceases to be a participating member of the Association.

Mr Lake’s submissions

Mr Lake accepted that the non-payment by Whittlesea City Council of its annual subscription meant that, either on or immediately before 1 September 2018, that Council became a ‘non-participating member council’ in accordance with clause 5. This had a number of consequences. It meant that that Whittlesea Council lost the privileges and benefits of the functions and services of the MAV. It also meant that any representative of Whittlesea became ineligible to participate in the activities of the Association, or to exercise the powers of a representative. As clause 5.3 states, those powers now lost include the power to vote on motions or matters at meetings, the power to nominate or be nominated for various offices and positions and, most relevantly, the power to hold the position of President or to be a member of the Board. Because of clause 15.2, a casual vacancy was created in any position on the Board occupied by the MAV representative of Whittlesea.

Mr Lake conceded that, if Cr Lalios were still the MAV representative for Whittlesea on 31 August 2018, she would have lost the eligibility to hold the office of President because of clause 5.3.3, and a casual vacancy would have been created in the office under clause 15.2. Despite that, Mr Lake submitted that Cr Lalios could continue as President for the following reasons.

Clauses 5.3.3 and 15.2 only apply to ‘a representative’. Cr Lalios is no longer a representative of Whittlesea City Council and has not been since 21 November 2017 when her status as representative was revoked. Therefore, clauses 5.3.3 and 15.2 have no application to her, and the consequences visited on Whittlesea City Council’s MAV representative fall on that representative alone.

Mr Lake argued that this interpretation was consistent with the underlying purpose of the Rules. He contends that the purpose of clause 15.2 and presumably clause 5 was to penalise non-financial councils and to provide ‘a disincentive or a consequence’ for councils that do not pay their annual subscription. Equally, the intention was to provide councils with an incentive to pay that subscription in a timely fashion. As Cr Lalios was not a representative of Whittlesea City Council, her removal as President would not be a penalty to it, and the threat of her presidency ending would not make it any more likely that Whittlesea would pay its subscription. Mr Lake contended that punishing Cr Lalios for the actions of a Council of which she is no longer a representative would go well beyond the purpose for which the Rules were adopted.

Mr Lake also argued that this interpretation of the Rules was consistent with his submissions about the first issue. It would assist in removing the President’s vulnerability to the whims of any particular local Council and facilitate the President representing the whole municipal sector rather than one particular constituency, and guarantee greater leadership stability. These considerations, he submitted, made it more likely that the Rules were not intended to disqualify a President whose former Council had not paid its annual subscription.

The MAV’s submissions

The MAV submitted that, even if Cr Lalios had been eligible to remain as President after the revocation of her representative status, the non-payment by Whittlesea of its subscription triggered a casual vacancy in the office of the President. It submitted that this interpretation was consistent with and reconciled clauses 5.3.3 and 15.2.[67]
[67]T 115.

The objective intention of the Rules supported the construction that a person who is a representative may only remain on the Board while the person represents a council that is 'financial', in the sense of having paid its annual subscription to the MAV.

By reason of Whittlesea not paying its subscription fees to the MAV, it ceased to be a 'participating member', and immediately held the status of a 'non-participating member council' at the time it became non-financial. As a consequence, by the operation of clause 15.2, a casual vacancy was automatically created on the Board at the point in time the Whittlesea Council ceased to be a 'financial member' of the MAV.

Once a council failed to pay its annual subscription no further executive act of the MAV was required to deem that council to be a non-participating member council. The Rules mandate the outcome whereby its representative is ineligible to participate in the activities of the MAV.

The Rules make specific provision in the case of the President. Where the President is a member of the Board and the council that the President represents becomes a non-participating member council, the President may no longer hold office. Similarly, subject to the operation of clause 16, where a representative has been elected to the Board in his or her capacity as "the representative of a Region", and that Board member's appointing council has failed to pay its annual subscription, the representative ceases to be eligible to remain as a member of the Board.

Since midnight on 31 August 2018, Whittlesea has not been a participating member of the MAV and as a consequence is a non-participating member. By force of clause 15.2, in those circumstance, a casual vacancy on the Board arises. Clause 15.2 applies to all members of the Board, being the President, Cr Lalios and the 12 other members.

This is consistent with inter alia rule 5.2 which provides that a non-participating council is not entitled to avail itself of the privileges and benefits of any of the functions or services carried on by the Association and clause 5.3.3 which prevents a representative of a non-participating member council holding the position of President.

The clear, and only sensible interpretation of clause 5.3.3 is that the person holding the office of President of the Association must be a representative of a participating member council. Cr Lalios is not such a representative.

Although it is the case that a council, which has appointed a representative who is elected as President, must appoint an additional representative, the President of the MAV does not occupy the office in any capacity other than as the representative of the appointing council. Once the appointing council has become a non-participating council, the council's representative, whether a State Councillor, a Board member or the President, is thereby ineligible to continue, in accordance with the strict operation of the Rules.

Clause 16 has no bearing on the present case. It provides that the revocation of the appointment of a representative, who has been elected as the representative of a region, will not affect the councillor remaining a Board member for the remainder of their term, subject to clause 14. Clause 16 extends only to the election of the regional board members pursuant to clause 12 not to the election of the President pursuant to clause 11.

The MAV submitted that the Court should read the text in clause 15.2 which reads ‘the council for which that Board member is a representative’ as, if it read instead, ‘the council for which that Board member was a representative’.[68]
[68]T 134.

The MAV argued that anomalous outcomes might occur if this interpretation were not adopted. For example, without this interpretation every member of the Board might be in a similar position to Cr Lalios, i.e. with every Board Member might cease to be a representative of a particular Council, because each such council had become non-participating because it had failed to pay its subscription.[69] To take a second hypothetical example, if a Board member, who had ceased to be an MAV representative died in office, that death would not trigger a casual vacancy, as clause 15.1 also applies only to a ‘representative’.[70]
[69]T 112.
[70]T 116.

The MAV also submitted that, if Cr Lalios did remain eligible to be President after 21 November 2017, that continued eligibility could only be because of the expanded operation of clause 16, which it submitted should not be adopted and which I have not adopted.[71] The MAV submitted that the effect of clause 16 was not that a person who was not a representative could continue on the Board, but that they were treated as if they were still a MAV representative in a limited sense for the purposes of the Rules applying to them.[72]
[71]T 131.
[72]T 133.

The MAV argued that the extrinsic material relied on by Mr Lake was silent on what was intended to happen in cases of a President, who had been, but was no longer, a representative of a Council which did not pay its membership dues.[73]
[73]T 120.

Analysis of the second issue

In my opinion, Cr Lalios is not ineligible to hold the MAV presidency by reason of Whittlesea City Council’s failure to pay subscription on 31 August 2018 for the following reasons.

First, clauses 5.3.3 and 15.2, when read literally, only apply to existing representatives and Cr Lalios ceased to be a representative on 21 November 2017. For the reasons that I gave in determining the first issue, there was no requirement that Cr Lalios remain a representative of Whittlesea to serve the remainder of her term as MAV President.

Secondly, while I accept that the Court should attempt to avoid anomalous, absurd or unreasonable interpretations, the MAV rules may create anomalies which ever interpretation is adopted and which cannot be avoided whichever interpretation is adopted. The MAV pointed to the fact that if Cr Lalios had continued to be the Whittlesea representative, she would have ceased to be the President once Whittlesea ceased to a participating council. On the other hand, on Whittlesea’s interpretation, Cr Lalios, who has been removed as Whittlesea’s MAV representative, became ineligible to continue as President once Whittlesea became a non-participating council because she was formerly, but no longer its representative. I do not see how the MAV’s interpretation would further the purpose of the rules in their post 2006 form under which the Board members, including I consider the President, were given the right to complete their terms even though they were no longer council representatives.

Thirdly and connected to the second point, in my opinion, it is particularly important that the 2006 rule changes by deleting the then clause 14(1)(d) and introducing clause 16, removed the necessary link, in the case of serving Board members, between being a representative of a council and an entitlement to complete their term. It is true that those amendments were not directed at the situation of a council, which the Board member formerly represented becoming a non-participating council, but in my opinion, that does not diminish their importance to interpreting the rules as a whole.

Fourthly and again connected to the second point, the purpose of clauses 5.3.3 and 15.2 appears primarily to be to impose a penalty on councils that do not pay their dues. But it is not apparent that it imposes any penalty on a non-participating council to cut short the term of a President who is no longer their representative. It might be thought anomalous, in context, if Cr Lalios were made ineligible to hold the presidency by the actions of a Council, which has revoked her representative status while she was part way through her Presidency. The purposes of clauses 5.3.3 and 15.2 are unlikely to be furthered by interpreting them as rendering Cr Lalios ineligible to complete her term as President.

Fifthly, reading the words ‘is a representative’ as ‘is or was a representative’ in clause 15.2 is a strained interpretation, supported only by a submission that it would be absurd if every Board Member was the former representative of a now non-financial Council. One of the reasons for that submission is that every Board member might be in Cr Lalios’ position – a former council MAV representative now at large, whose former local council has failed to pay its membership dues. The MAV also submitted that the plaintiff’s interpretation would not trigger a casual vacancy even in the event of Cr Lalios’ death or resignation, as those provisions too apply to a ‘representative’. The MAV’s proposed interpretation of clause 15 does not avoid that consequence. Reading the wording as meaning ‘the council for which that Board member is a representative’ as ‘the council for which that Board member is or was a representative’ affects only clause 15.2, in which that language is used. Clause 15.1, which provides for a casual vacancy upon death, resignation or ceasing to be a councillor does not contain the word ‘is’ for which the words ‘is’ or ‘was’ might be substituted as the MAV contends. The rules do not exhaustively define when a casual vacancy occurs and I do not consider that they would prevent a casual vacancy from being created in the event that a Board member, who was no longer a representative, was to resign or die while in office.

Conclusion on the second issue

Cr Lalios is not ineligible to hold the MAV Presidency by reason of Whittlesea’s City Council’s failure to pay its subscription or membership fees or dues on 31 August 2018.

The above analysis suggests that the MAV Rules have been amended from time to time without regard to the effect of the amendments on other parts of the rules. The Rules might benefit from a revision.

Orders

I declare that no casual vacancy has arisen under the Municipal Association Act 1907 or the MAV Rules (or any other relevant instrument) in respect of the position of the President of the Municipal Association of Victoria.

I will hear the parties about any further orders that may be required.

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Citations

Lake v Municipal Association of Victoria [2018] VSC 561

Most Recent Citation

Lake v Municipal Association of Victoria (No 2) [2018] VSC 660

Cases Citing This Decision

1

Lake v Municipal Association of Victoria (No 2) [2018] VSC 660

Cases Cited

8

Statutory Material Cited

0

Darebin City Council v Municipal Association of Victoria [2017] VSC 51

Amalgamated Society of Engineers v Adelaide Steamship Co Ltd [1920] HCA 54

Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 53

[2018] VSC 561

24 September 2018