Nichols v Singleton Council (No 2) - [2011] NSWSC 1517

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Nichols v Singleton Council (No 2) [2011] NSWSC 1517
Hearing dates: 22 August 2011, 23 August 2011, 24 August 2011
Decision date: 09 December 2011
Jurisdiction: Common Law - Administrative Law
Before: Schmidt J
Decision:
The usual order as to costs is that they should follow the event. If the parties wish to be heard on costs, they should approach.
For the reasons given, I propose to order that:
1. Mr Smiths' report be quashed.
2. The Council be restrained from giving any consideration to Mr Smith's report.
I will hear the parties on the final form of the orders to be made.

Catchwords:
LOCAL GOVERNMENT - complaint against councillor - review of complaint - conduct of review - the Local Government Act 1993 - the Council's Code of Conduct - construction of the Code - whether the reviewer failed to adhere to the Act and the Code - whether general manager and /or delegate acted contrary to their obligations under the Act and the Code - whether report into the complaint should be quashed
ADMINISTRATIVE LAW - construction of Local Government Act 1993 - construction of Council's Code of Conduct - particulars of complaint - investigator's obligations - procedural fairness - failure to give reasons - whether Council should be restrained from dealing with complaint - the Hardiman principle - whether Council breached Hardiman principle in its approach taken in these proceedings
Legislation Cited: Interpretation Act 1987
Local Government Act 1993
Local Government (General) Regulation 2005
Protected Disclosures Act 1994
Public Interest Disclosures Act 1994
Cases Cited: Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72; (2005) 225 CLR 88
Fagan v Crimes Compensation Tribunal [1982] HCA 49; (1982) 150 CLR 666
Greyhound Racing NSW v Cessnock & District Agricultural Association [2006] NSWCA 333
Hot Holdings Pty Ltd v Creasy [1996] HCA 44; (1996) 185 CLR 149
Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564
Jones v Dunkel (1959) 101 CLR 298
Kioa v West [1985] HCA 81; (1985) 159 CLR 550
The Medical Board of Queensland v Byrne [1958] HCA 40; (1958) 100 CLR 582
McGovern v Ku-ring-gai Council [2008] NSWCA 209; (2008) 72 NSWLR 504
Minister for Aboriginal Affairs v Peko-Wallsend [1986] HCA 40; (1986) 162 CLR 24
Muin v Refugee Review Tribunal [2002] HCA 30; (2002) 190 ALR 601
Murlan Consulting Pty Ltd v Ku-ring-gai Municipal Council [2009] NSWCA 300
National Companies & Securities Commission v News Corporation Ltd [1984] HCA 29; (1984) 156 CLR 296
Nichols v Singleton Council [2011] NSWSC 946
Nichols v Singleton Council (unreported, 5 April 2011)
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Public Service Board of New South Wales v Osmond [1986] HCA 7; (1986) 159 CLR 656
The Queen v The Australian Broadcasting Tribunal; ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13
Category: Principal judgment
Parties: Paul Nichols (Plaintiff)
Singleton Council (First Defendant)
Bernard Smith (Second Defendant)
Scott Greensill (Third Defendant)
Gary Thomson (Fourth Defendant)
Representation: Counsel:
Mr R Lovas (Plaintiff)
Mr J Griffiths SC with Ms M Allars (Defendants)
Solicitors:
Alex Irving Solicitor (Plaintiff)
Sparke Helmore Lawyers (Defendants)

File Number(s): 2010/376603
Publication restriction: None

Judgment

By amended summons filed in July 2011 the plaintiff, Mr Paul Nichols, a councillor of the first defendant, Singleton Council ('the Council'), seeks orders against the four defendants in relation to a complaint made about him under the Council's Code of Conduct ('the Code'). The proceedings had their genesis in the publication of a report about the complaint on the Council's website.

Mr Bernard Smith, the second defendant, was the person appointed to review the complaint under the Code. It was his report which was published when an agenda for a Council meeting was placed on the website. Mr Scott Greensill, the third defendant, was at the relevant time the Council's General Manager. Amongst other things, he was involved in Mr Smith's enquiry and placed the report on the Council's agenda. Mr Gary Thomson, the fourth defendant was the Council's Director - Assets and Facilities. He appointed Mr Smith and forwarded his report to the Council for its consideration.

The Council has not yet considered the complaint or Mr Smith's report. Mr Nichols seeks to preclude any further consideration of the complaint. By their pleadings, all defendants defended the case on similar bases, but finally at the hearing, the Council advanced submissions only in relation to two matters. Firstly, a motion by which the Council and Mr Greensill sought orders suppressing the identity of the complainant (see Nichols v Singleton Council [2011] NSWSC 946 ). Secondly, the case advanced against it on the Hardiman principle (see R v The Australian Broadcasting Tribunal; ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13).

Mr Nichols had also brought four motions seeking to have each of the defendants dealt with for alleged contempt. The allegations advanced in those motions concerned the defendants' alleged failure to comply with orders made by the Registrar in April 2011, in relation to discovery of certain documents. Those motions were finally not pressed.

The parties were not otherwise able to resolve the matters lying between them. During the course of the hearing it was announced that Mr Greensill had resigned his employment with the Council.

The evidence in the case was given by way of affidavit and documents. No witnesses were required for cross-examination. Various orders were pressed. What was in issue between the parties included:

How the Local Government Act 1993 ('the Act') and the Code operated and whether their requirements had been adhered to.
The consequences of any failures identified.
Whether Mr Smith had failed to adhere to the requirements of the Code in his conduct of the review.
Whether Mr Greensill had acted contrary to his obligations under the Code.
Whether Mr Thomson had acted contrary to his obligations under the Code.
Whether the Council had breached the Hardiman principle in the approach which it had taken in these proceedings.

The complaint against Mr Nichols

The complaint against Mr Nichols was made in writing. The allegations concerned the resolution of certain litigation in which the Council had been involved. They raised matters of a serious kind. They included that Mr Nichols had:

"1. Acted in a manner which is detrimental to the charter of Council and is unethical and as such likely to bring Council into disrepute (Code of Conduct Clause 6.1).

2. Failed to act lawfully and honestly when dealing with the Jones matter when before Council (Code of Conduct Clause 6.2 & s439 Local Government Act 1993).

3. Failed to act respectfully with fellow Councillors, the General Manager and other senior officers of Council by knowingly engaging with the Jones when specifically advised not to due to the legal implications and potential for interference that such actions would have (Code of Conduct - Clause 6.3)

4. As a result of his close association with the Jones, failed to identify and take appropriate action to manage the conflict of interest, and, as such, compromise the probity requirements of Council when undertaking decision making processes in relation to the Jones matter (Code of Conduct - Section 7).

5. As a result of his association and subsequent communications with the Jones, failed to declare a non-pecuniary interest (Code of Conduct - Clause 7.13).

6. Through his role as a Councillor been privy to information which he provided to the Jones subsequently giving them an advantage when undertaking negotiations with Council (Code of Conduct - Clause 10.8 (c)).

7. Released information to the Jones which was not in accordance which established Council Policies and procedures and not compliant with the applicable legislation (Code of (sic) Code - Clause 10.8)d)).

8. Not maintained the integrity and security of confidential information in his possession by knowingly engaging and communicating with the Jones (Code of Conduct - Clause 10.9).

9. Breached his general obligations in relation to the security of information by:

a. Not protecting confidential information

b. Not seeking authority for the release of information to the Jones

c. Not using confidential information for the purpose that it was intended

d. Not using confidential information that was gained thorough(sic) his official position which resulted in a private benefit being secured by the Jones

e. Using information available to him in a manner which was to the financial detriment of Council

f. Disclosing information discussed in a confidential session of Council to the Jones

(Code of Conduct - Clause 10.10).

10. Released information which was only known to those present during a closed session of Council.

11. Breached Council's Code of Conduct (Clause 11.8 (c) - Use of Certain Information) by communicating information to the Jones which provided an improper advantage to the Jones in relation to negotiations between Council and the Jones

12. Failed to comply with the Council's administrative requirements by knowingly engaging with the Jones when Council by resolution had delegated authority to the General Manager to the (sic) resolve the issues relating to the Jones."

A copy of the complaint was not provided to Mr Nichols in the review process, but the substance of the allegations were conveyed to him in a letter sent to him by Mr Smith in July 2010. Mr Nichols accepted that thereby, he was properly informed of the allegations, but complains that the identity of the complainant was not disclosed to him and that he was not given particulars about the complaint, which he ought to have been given as a matter of procedural fairness.

It was not in dispute that there had been certain concerns about the litigation to which the complaint related. In January 2010, Mr Greensill wrote to councillors to advise them of his concerns and their obligations under the Act. Mr Greensill advised that the Council's Executive Manager - Strategy and Governance, Mr Henry Wilson, had been involved in mediation of the ongoing Supreme Court proceedings with the Jones brothers, the plaintiffs in those proceedings. The matter had not been resolved. Mr Greensill advised that while in his view the offers which had been made by Council were 'more than reasonable', they had not been accepted. He said:

"My professional experience also tells me that in such instances the most effective remedy is to proceed to an appropriate court so as an independent arbitrator can conclude the matter once and for all. Failing such an approach does nothing but prolong the matter and result in continuous "going around in circle" frustration occurring. All this understandably comes at extensive financial cost and unnecessarily utilises valuable time and resources."

Mr Greensill also observed that it had come to his attention that the Jones brothers had approached individual councillors about the litigation. He said '[o]f particular concern is that some councillors have actively engaged with them and now appear to be taking up their issues'.

Mr Greensill advised councillors that it was imperative that all communications be made through the parties' legal representatives. He reminded them of their obligations under the Act and the Code and the consequences of any breach, including referral to the Independent Commission Against Corruption. He concluded:

"The direct and knowing engagement by a councillor with a party in which Council is engaged in legal proceedings may result in the Council incurring additional cost (ie unnecessary expenditure of public/ratepayer funds) and may prejudice the Council's ability to resolve the matter. In my opinion such conduct is contrary to the Code of Conduct in so far as it may tend to bring the Council into disrepute or cause the public to lose confidence in the integrity of local government.

I am more than aware that a Question Without Notice , seeking a detailed review of the Jones matter has been made at Council. Arrangements for this briefing are currently being put in place. Further advice in this regard will be forthcoming in the near future. In the interim however, I respectfully request, that in the interests of Council and your responsibilities as elected members that should you be directly contacted by the Jones you politely refrain for(sic) discussing any aspects of the matter before the Courts with them and advise them that you cannot directly assist. Furthermore you should encourage them to talk directly to their legal representative in relation to their concerns."

At a closed meeting of the Council, on 15 March 2010, at which Mr Nichols was present, the Council did not accept Mr Greensill's views, but determined to pursue a settlement. It was resolved that Mr Greensill would be given authority to settle the matter, up to a maximum specified amount.

The Council was represented in the litigation by its solicitor, Mr Alan McKelvey of Sparke Helmore Lawyers. Mr Greensill and Mr McKelvey were both involved in the settlement negotiations which followed the Council's decision. The matter was settled for the maximum amount Mr Greensill had been authorised to negotiate to.

From the statement which Mr Greensill later made to Mr Smith, it appears that Mr McKelvey told Mr Greensill in March 2010, that he had formed the opinion that the other parties were aware of what the Council had resolved at its meeting. Mr Greensill had received other information from Mr McKelvey, about other apparent communication between Mr Nichols and the other parties. Mr Greensill conducted an investigation into telephone communications between Mr Nichols and the other parties, between 17 January and 16 May 2010. The evidence does not reveal what other steps, if any, Mr Greensill took to deal with this information, before the complaint about Mr Nichols was received in June.

The review of the complaint

When the complaint was received, Mr Greensill determined that he would not deal with it himself, as the Code envisaged. Instead, he delegated his functions to Mr Thomson, advising him in writing that:

"I was directly involved in the negotiation of the Deed of Settlement & Release between Council and the Jones and as such possess an intimate knowledge of the matter. I therefore consider that it would not be appropriate for me as General Manager of Council to deal with the complaint as normally required to do so in accordance with Council's Code of Conduct.

Therefore, in the interests of ensuring due process and the avoidance of any claim or inferred claim of conflict of interest, I hereby delegate all my responsibilities as General Manager as detailed in the Code of Conduct to yourself in relation to the handling of the complaint."

It was thus Mr Thomson who appointed Mr Smith to review the complaint in accordance with the Code. Mr Smith was provided with guidance as to how to conduct his review, by Guidelines produced by the Ombudsman, in accordance with s 6D of the Public Interest Disclosures Act 1994 ('the PID Act').

Mr Smith interviewed various people, including Mr Greensill. Despite Mr Greensill's advice that Mr McKelvey was the source of the concern that Council confidentiality had been breached, Mr Smith did not make any enquiries of Mr McKelvey. Mr Smith obtained written statements from Mr Greensill and others, of whom he did make enquiries. He also obtained various documents, including the results of Mr Greensill's investigations into telephone records. Mr Smith then wrote to Mr Nichols, advising him of the complaint, the substance of the allegations made and asked to meet with him. Mr Smith said:

"You are now invited to respond to the allegation and as discussed I will contact you later this week to discuss the arrangements for this to occur."

Mr Nichols responded by asking for a copy of the complaint, as well as answers to a series of particulars. At the hearing it was his case that those particulars could easily have been provided, by the provision of Mr Greensill's and other statements, for example. Mr Smith refused to provide the particulars sought and did not reveal to Mr Nichols that he had obtained those statements. Instead, he said:

"With regard to the matter of the provision of further and better particulars, I will not be providing any further detailed information regarding the complaint until we meet to discuss the matter. At that meeting I will be discussing with you a range of information I have gathered from interviews with other parties as well as Council records."

There then followed an exchange of correspondence in which Mr Smith persisted in his offer to meet and Mr Nichols persisted in being provided with answers to his questions, refusing to meet with Mr Smith unless they were provided. What information Mr Smith would have provided Mr Nichols, had they met, is not known. The result of their respective approaches was that they never met and Mr Smith eventually pursued his review, without receiving any information from Mr Nichols.

Mr Smith did later provide Mr Nichols with a draft of his proposed report and invited him to comment on it, but Mr Nichols made no reply. In his report, Mr Smith made adverse findings against Mr Nichols, albeit the conclusions which he reached were somewhat contradictory and did not provide reasons for certain views which he formed. In the result, however, Mr Nichols was never supplied with a copy of any of the statements or other factual material on which Mr Smith's report rested.

Mr Nichol's legal advisers later wrote to Mr Smith and individual councillors about the complaint and the course taken by Mr Smith, after Mr Smith made his report to the Council. These proceedings were commenced before the Council considered the report or this correspondence.

Despite having delegated his functions under the Code to Mr Thomson, it was Mr Greensill who twice sought and obtained legal advice from Mr McKelvey. Firstly, in relation to Mr Smith's investigation into the complaint and his report. This advice was provided in a letter of 3 November 2010. Secondly, in relation to the Council's consideration of the report. That advice was also provided by a letter of 3 November, revised on 5 November. It was advice settled by the Honourable Angus Talbot QC, a consultant for Sparke Helmore. Mr Smith appears to have received and acted on the advice Mr Greensill received, but the advice provided in relation to the Council's considerations, was not put before it with the other agenda papers. Nor was the correspondence received from Mr Greensill's legal advisors. The result was that although individual councillors had received the correspondence, it was not made public when Mr Smith's report was put on the Council's website.

Mr Smith provided his final report to Mr Thomson. Mr Greensill put the report on the agenda for the Council's meeting, under cover of a memo signed by Mr Thomson. The memo did not disclose that it had been authored by Mr Greensill and settled by Mr McKelvey. Those two documents became public when published on the Council's website.

In these proceedings it became apparent that Mr Smith's report reflected findings which in large part rested on matters put to him in Mr Greensill's statement; that it did not make any reference to Mr McKelvey's involvement; that it was Mr Greensill, not Mr Thomson who twice obtained legal advice about the complaint; and that it was Mr Greensill, not Mr Thomson who drafted Mr Thomson's memo to Council and had it settled by the Council's legal advisers. This was not evident from the report or the memo and was not otherwise disclosed to the Council.

Mr Smith's report

After quoting the complaint made, Mr Smith outlined certain observations made to him by the complainant. After referring to decisions which he had made in his initial review of the complaint under cl 13.3 of the Code, which led to the decision to proceed with enquiries into the complaint, Mr Smith noted that Mr Nichols had been advised of the complaint.

Mr Smith then summarised the complaint as raising matters of two kinds. Firstly, that in spite of Mr Greensill's January 2010 memo to councillors, Mr Nichols continued to be in contact with the Jones brothers, 'thereby compromising the Council's position and not being in accordance with the requirements of the Local Government Act'. Secondly, that Mr Nichols had divulged confidential information to the Jones brothers, with the result that the Council's negotiating position had been compromised, with potentially disadvantageous consequences.

Mr Smith reported that he had considered Council records, phone records and had interviewed the Mayor, the complainant, Mr Smith, Mr Thomson and the Assistant General Manager. Mr Smith did not disclose to Council that he had obtained various written statements from some of those interviewed, including Mr Greensill.

Mr Smith summarised the result of the enquiries which he had made. That summary was largely taken from Mr Greensill's statement, but did not reveal that Mr McKelvey was the source of certain relevant information or that Mr Smith had not made any enquiries of Mr McKelvey about those matters; or that it was Mr Greensill who had undertaken a review of Mr Nichols' phone calls.

Mr Smith came to a number of conclusions, which included that the written advice given by the General Manager to councillors in January had been 'totally appropriate given the circumstances'; it was inappropriate for councillors to become involved in negotiations; that council records indicated that Mr Nichols was aware of the nature of the ongoing negotiations; that Mr Nichols had confirmed to the Mayor that he had been in contact with the Jones brothers; and that he had use of a Council telephone, with records showing 25 calls to the phone number identified as that of the Jones brothers between 17 January and 16 May. Mr Smith concluded that Mr Nichols was in regular contact with the Jones brothers regarding the matter, despite the General Manager's advice.

Mr Smith observed that 'Council representatives formed the view that the Jones were fully aware of the position the Council was prepared to negotiate up to'. He did not identify who those representatives were. He concluded that the phone records of 29 March and the events of that day, led to no other conclusion than that Mr Nichols was in contact with the Jones brothers. Later comments made by Mr Nichols confirmed that contact.

Mr Smith's conclusions included, however:

"i. During the negotiations with the Jones, following the Council meeting on the 15 th March 2010, Council representatives formed the view that the Jones were fully aware of the position the Council was prepared to negotiate up to. What cannot be ascertained is whether this reflected a knowledge by the Jones of the confidential Council resolution which had been divulged to them by Cr Nichols or whether their negotiating position reflected their offer of the 5 th March 2010 to Council.

....

m. There is no definitive evidence which demonstrates that Cr Nichols divulged confidential information to the Jones. There are a range of observations and actions which strongly suggest it could have occurred however the refusal of Cr Nichols to be interviewed prevents him from providing any form of clarification.

n. The conclusions drawn in this report are based on Council records and interviews. The reviewer has confidence in the information gained from the interviews however it is disappointing that Councillor Nichols has not availed himself of the opportunity to respond to the extensive allegations against him which were provided in full detail, in writing, to him."

Mr Smith also explained Mr Nichols' position. He said that he had corresponded with Mr Nichols about the particulars which he had sought. He took the view that Mr Nichols had been provided with procedural fairness in the circumstances which had arisen and that Mr Nichols was provided with 'extensive information regarding the complaint'. In fact Mr Nichols was only provided with an outline of the complaint and the draft report.

Mr Smith's findings were:

"1. Councillor Nichols was in ongoing contact with the Jones after the circulation of the memo of the 13 th January 2010 by the General Manager advising Councillors of the inappropriateness of such an action and hence, in the view of the Sole Reviewer, was in breach of Singleton Council's Code of Conduct, Clauses 6.1(c) and 6.2.

2. It cannot be concluded that Councillor Nichols divulged confidential Council information to the Jones after the Council meeting of the 15 th March 2010."

Clauses 6.1(c) and 6.2 of the Code provided:

"6.1 You must not conduct yourself in carrying out your functions in a manner that is likely to bring the Council or holders of civic office into disrepute.

Specifically, you must not act in a way that:

...

(c) Is improper or unethical;

...

6.2 You must act lawfully, honestly and exercise a reasonable degree of care and diligence in carrying out your functions under the Act or any other Act (section 439)."

The reasons Mr Smith gave for those findings were:

"With regard to the breach of Clause 6.1(c) of the Councils' Code of Conduct, despite the clearly stated memo of the 13 th January 2010 from the General Manager advising of the inappropriateness of the Councill contact with the Jones, Cr Nichols continued to engage in such contact which was improper, unethical, and potentially compromised Council's ability to conclude the matter in a manner which was in the best interests of the broader community.

With regard to the breach of Clause 6.2 of the Councils Code of Conduct, Cr Nichols did not exercise care and diligence in his actions, did not respect the advice of the General Manager, and compromised the ability of the General Manger to implement the decisions of the Council in the best interests of the community. The contact by individual Councillors with a party with which Council is engaged in legal proceedings severely prejudices the ability of the Council to reach a satisfactory outcome and does not respect or reflect the roles and responsibilities of Councillors or the General Manager."

The Local Government Act 1993

The issues which must be resolved in this case arise for determination in the context of various provisions of the A ct.

The legal status of a Council is that specified in s 220 of the Act. The elected councillors comprise its governing body (s 222). Its role is to 'direct and control' the affairs of the Council in accordance with the Act (s 223). The role of councillors is also specified, as is that of the Mayor:

"232 What is the role of a councillor?

(1) The role of a councillor is, as a member of the governing body of the council:

to provide a civic leadership role in guiding the development of the community strategic plan for the area and to be responsible for monitoring the implementation of the council's delivery program
to direct and control the affairs of the council in accordance with this Act
to participate in the optimum allocation of the council's resources for the benefit of the area
to play a key role in the creation and review of the council's policies and objectives and criteria relating to the exercise of the council's regulatory functions
to review the performance of the council and its delivery of services, and the delivery program and revenue policies of the council.

(2) The role of a councillor is, as an elected person:

to represent the interests of the residents and ratepayers
to provide leadership and guidance to the community
to facilitate communication between the community and the council

226 What is the role of the mayor?

The role of the mayor is:

to exercise, in cases of necessity, the policy-making functions of the governing body of the council between meetings of the council
to exercise such other functions of the council as the council determines
to preside at meetings of the council
to carry out the civic and ceremonial functions of the mayoral office."

Chapter 11 of the Act provides for the employment of staff to assist councils to exercise their functions. Independence of staff is provided for in specified circumstances:

"352 Independence of staff for certain purposes

(1) A member of staff of a council is not subject to direction by the council or by a councillor as to the content of any advice or recommendation made by the member.

(2) This section does not prevent the council or the mayor from directing the general manager of the council to provide advice or a recommendation."

The role of a general manager is specified in s 335:

"335 Functions of general manager

(1) The general manager is generally responsible for the efficient and effective operation of the council's organisation and for ensuring the implementation, without undue delay, of decisions of the council.

(2) The general manager has the following particular functions:

to assist the council in connection with the development and implementation of the community strategic plan and the council's resourcing strategy, delivery program and operational plan and the preparation of its annual report and state of the environment report
the day-to-day management of the council
to exercise such of the functions of the council as are delegated by the council to the general manager
to appoint staff in accordance with an organisation structure and resources approved by the council
to direct and dismiss staff
to implement the council's equal employment opportunity management plan.

(3) The general manager has such other functions as may be conferred or imposed on the general manager by or under this or any other Act."

While a general manager may give advice or make recommendations to Council, he or she is not, however, given any authority to direct councillors in the performance of their functions. The general manager may, however, delegate his functions (s 378).

The exercise of a Council's functions is specified:

"355 How does a council exercise its functions?

A function of a council may, subject to this Chapter, be exercised:

(a) by the council by means of the councillors or employees, by its agents or contractors, by financial provision, by the provision of goods, equipment, services, amenities or facilities or by any other means, or

(b) by a committee of the council, or

(c) partly or jointly by the council and another person or persons, or

(d) jointly by the council and another council or councils (including by means of a Voluntary Regional Organisation of Councils of which the councils concerned are members), or

(e) by a delegate of the council (which may, for example, be a Voluntary Regional Organisation of Councils of which the council is a member)."

The conduct of Council meetings is dealt with in Chapter 4. Section 9 requires that notice be given to the public of the time and place of Council meetings and that the agenda and associated meeting papers be made available to the public. Such papers are to be made 'available to the public as nearly as possible to the time they are available to councillors' (s 9(3)) and may be made available electriconically (s 9(5)). S ection 9(2A) deals with notice which must be given of matters to be discussed at closed meetings of the Council. Councils are also obliged to have a code of meeting practice (s 360).

Councils must have public meetings and must make 'the agenda and the associated business papers (such as correspondence and reports) for the meeting' available to the public (s 9(2)). The Act does not generally provide for Councils to deal with complaints made about councillors or staff in private, at meetings which are closed to the public. Closed Council meetings are expressly provided for, but only in prescribed circumstances:

"10A Which parts of a meeting can be closed to the public?

(1) A council, or a committee of the council of which all the members are councillors, may close to the public so much of its meeting as comprises:

(a) the discussion of any of the matters listed in subclause (2), or

(b) the receipt or discussion of any of the information so listed.

(2) The matters and information are the following:

(a) personnel matters concerning particular individuals (other than councillors),

(b) the personal hardship of any resident or ratepayer,

(c) information that would, if disclosed, confer a commercial advantage on a person with whom the council is conducting (or proposes to conduct) business,

(d) commercial information of a confidential nature that would, if disclosed:

(i) prejudice the commercial position of the person who supplied it, or

(ii) confer a commercial advantage on a competitor of the council, or

(iii) reveal a trade secret,

(e) information that would, if disclosed, prejudice the maintenance of law,

(f) matters affecting the security of the council, councillors, council staff or council property,

(g) advice concerning litigation, or advice that would otherwise be privileged from production in legal proceedings on the ground of legal professional privilege,

(h) information concerning the nature and location of a place or an item of Aboriginal significance on community land.

(3) A council, or a committee of the council of which all the members are councillors, may also close to the public so much of its meeting as comprises a motion to close another part of the meeting to the public.

(4) A council, or a committee of a council, may allow members of the public to make representations to or at a meeting, before any part of the meeting is closed to the public, as to whether that part of the meeting should be closed.

(5) (6) (Repealed)

10B Further limitations relating to closure of parts of meetings to public

(1) A meeting is not to remain closed during the discussion of anything referred to in section 10A (2):

(a) except for so much of the discussion as is necessary to preserve the relevant confidentiality, privilege or security, and

(b) if the matter concerned is a matter other than a personnel matter concerning particular individuals, the personal hardship of a resident or ratepayer or a trade secret-unless the council or committee concerned is satisfied that discussion of the matter in an open meeting would, on balance, be contrary to the public interest.

(2) A meeting is not to be closed during the receipt and consideration of information or advice referred to in section 10A (2) (g) unless the advice concerns legal matters that:

(a) are substantial issues relating to a matter in which the council or committee is involved, and

(b) are clearly identified in the advice, and

(c) are fully discussed in that advice.

(3) If a meeting is closed during the discussion of a motion to close another part of the meeting to the public (as referred to in section 10A (3)), the consideration of the motion must not include any consideration of the matter or information to be discussed in that other part of the meeting (other than consideration of whether the matter concerned is a matter referred to in section 10A (2)).

(4) For the purpose of determining whether the discussion of a matter in an open meeting would be contrary to the public interest, it is irrelevant that:

(a) a person may misinterpret or misunderstand the discussion, or

(b) the discussion of the matter may:

(i) cause embarrassment to the council or committee concerned, or to councillors or to employees of the council, or

(ii) cause a loss of confidence in the council or committee.

(5) In deciding whether part of a meeting is to be closed to the public, the council or committee concerned must have regard to any relevant guidelines issued by the Director-General."

Documents considered at Council meetings must also be made public:

"11 Public access to correspondence and reports

(1) A council and a committee of which all the members are councillors must, during or at the close of a meeting, or during the business day following the meeting, give reasonable access to any person to inspect correspondence and reports laid on the table at, or submitted to, the meeting.

(2) This section does not apply if the correspondence or reports:

(a) relate to a matter that was received or discussed, or

(b) were laid on the table at, or submitted to, the meeting,

when the meeting was closed to the public.

(3) T his section does not apply if the council or committee resolves at the meeting, when open to the public, that the correspondence or reports, because they relate to a matter specified in section 10A (2), are to be treated as confidential."

In Chapter 14, provision is made for how serious corrupt conduct or misbehaviour is to be dealt with. Councillors and staff are obliged to 'act honestly and exercise a reasonable degree of care and diligence in carrying out his or her functions under this or any other Act' (s 439(1)). Councils are obliged to have a code of conduct, which councillors and staff must comply with, s 440 providing:

"440 Codes of conduct

(1) The regulations may prescribe a model code of conduct (the model code ) applicable to councillors, members of staff of councils and delegates of councils.

(2) Without limiting what may be included in the model code, the model code may:

(a) relate to any conduct (whether by way of act or omission) of a councillor, member of staff or delegate in carrying out his or her functions that is likely to bring the council or holders of civic office into disrepute, and

(b) in particular, contain provisions for or with respect to conduct specified in Schedule 6A.

(3) A council must adopt a code of conduct (the adopted code ) that incorporates the provisions of the model code. The adopted code may include provisions that supplement the model code.

(4) A council's adopted code has no effect to the extent that it is inconsistent with the model code as in force for the time being.

(5) Councillors, members of staff and delegates of a council must comply with the applicable provisions of:

(a) the council's adopted code, except to the extent of any inconsistency with the model code as in force for the time being, and

(b) the model code as in force for the time being, to the extent that:

(i) the council has not adopted a code of conduct, or

(ii) the adopted code is inconsistent with the model code, or

(iii) the model code contains provisions or requirements not included in the adopted code.

(6) A provision of a council's adopted code is not inconsistent with the model code merely because the provision makes a requirement of the model code more onerous for persons required to observe the requirement.

(7) A council must, within 12 months after each ordinary election, review its adopted code and make such adjustments as it considers appropriate and as are consistent with this section.

(8) Nothing in this section or such a code gives rise to, or can be taken into account in, any civil cause of action, but nothing in this section affects rights or liabilities arising apart from this section."

'Misbehaviour' is defined in s 440F as:

" misbehaviour of a councillor means any of the following:

(a) a contravention by the councillor of this Act or the regulations,

(b) a failure by the councillor to comply with an applicable requirement of a code of conduct as required under section 440 (5),

(c) an act of disorder committed by the councillor at a meeting of the council or a committee of the council,

but does not include a contravention of the disclosure requirements of Part 2."

Section 664 deals with disclosure and misuse of information, providing:

"664 Disclosure and misuse of information

(1) A person must not disclose any information obtained in connection with the administration or execution of this Act unless that disclosure is made:

(a) with the consent of the person from whom the information was obtained, or

(b) in connection with the administration or execution of this Act, or

(c) for the purposes of any legal proceedings arising out of this Act or of any report of any such proceedings, or

(d) in accordance with a requirement imposed under the Ombudsman Act 1974 or the Government Information (Public Access) Act 2009, or

(e) with other lawful excuse.

(1A) In particular, if part of a meeting of a council or a committee of a council is closed to the public in accordance with section 10A (1), a person must not, without the authority of the council or the committee, disclose (otherwise than to the council or a councillor of the council) information with respect to the discussion at, or the business of, the meeting.

(1B) Subsection (1A) does not apply to:

(a) the report of a committee of a council after it has been presented to the council, or

(b) disclosure made in any of the circumstances referred to in subsection (1) (a)-(e), or

(c) disclosure made in circumstances prescribed by the regulations, or

(d) any agenda, resolution or recommendation of a meeting that a person is entitled to inspect in accordance with section 12.

(2) A person acting in the administration or execution of this Act must not use, either directly or indirectly, information acquired by the person in that capacity, being information that is not generally known, for the purpose of gaining either directly or indirectly a financial advantage for the person, the person's spouse or de facto partner or a relative of the person.

(3) A person acting in the administration or execution of this Act, and being in a position to do so, must not, for the purpose of gaining either directly or indirectly an advantage for the person, the person's spouse or de facto partner or a relative of the person, influence:

(a) the determination of an application for an approval, or

(b) the giving of an order.

Maximum penalty: 50 penalty units."

It is convenient to observe that under this statutory scheme, the councillors were all bound by the Act to maintain confidentiality in relation to deliberations such as those which occurred at the closed meeting on 15 March 2010 which followed Mr Greensill's January 2010 advice. The advice Mr Greensill had given Council was a matter to be considered by the councillors at that meeting, but it did not bind them. They were entitled to reject that advice, as they did, and to resolve to attempt to settle the litigation, despite Mr Greensill's views that the matter should go to trial. Nor could Mr Greensill forbid the councillor's communications with the Jones brothers. They were not, however, entitled to disclose the negotiating position which the Council resolved to have Mr Greensill pursue.

As members of the governing body, the Council, the councillors' function was to direct and control the affairs of the Council. One of the specific roles which the councillors were given under s 232(2) was to 'represent the interests of residents and ratepayers'.

For their part, the Jones brothers were certainly entitled to make representations to councillors, if they wished. They were not bound only to communicate with the Council through their lawyers, nor was the Council so bound. That is not a surprising position. It is commonplace for litigants to deal directly with each other, particularly when settlement of a matter is being pursued. Such communication was also encouraged by the Code, which urges openness about Council's decisions and actions.

Councillors were certainly entitled to receive representations from the Jones brothers about the ongoing litigation, and to put such representations forward, for the Council to consider, including at the meeting at which it reviewed its ongoing approach to the litigation.

At the closed Council meeting at which the litigation was considered, the Council, as a whole, determined how it would respond, having had advice from Mr Greensill. It was a matter for the councillors to determine whether settlement of the ongoing litigation with the Jones brothers would be pursued. It is not suggested that they resolved that individual councillors should refrain from any discussion with the Jones brothers, other than through the Council's lawyers. That the councillors resolved, contrary to Mr Greensill's advice, to further pursue the question of settlement, was a matter for them to determine, having heard and considered what was put forward at the meeting. That decision, while made at a closed meeting, was obviously not intended to be kept secret from the Jones brothers. Indeed, it was necessarily disclosed as soon as the steps authorised by the Council were pursued by Mr Greensill.

What individual councillors were plainly not entitled to do, however, was to disclose to the Jones brothers in any further discussions after the meeting, what the Council had resolved to do in order to achieve the settlement it wished to pursue, by the directions it had given Mr Greensill.

The Code of Conduct

Section 440(8) of the Act expressly provides that the Code does not affect other rights and liabilities provided by the Act. It was modelled on the model code of conduct, prescribed by s 193 of the Local Government (General) Regulation 2005 (s 440(1) of the Act). In Part 1, the Code provides various information, as well as exhorting those to whom it applies, to conduct themselves in accordance with specified 'key principles', which do not themselves constitute separate enforceable standards of conduct. The Code itself applied to Mr Smith as the appointed reviewer (see cl 14.1).

The specified principles include matters such as 'openness'. It is noted that there is a duty to be as open as possible about decisions and actions; giving reasons for decisions; and restricting information only when the wider public interest clearly demands (cl 4.6). Conflict is dealt with at cl 5.2, which provides:

"5.2 Conflict of Interests

If you are unsure as to whether or not you have a conflict of interests in relation to a matter, you should consider these six points:

Do you have a personal interest in a matter you are officially involved with?

Is it likely you could be influenced by a personal interest in carrying out your public duty?

Would a reasonable person believe you could be so influenced?

What would be the public perception of whether or not you have a conflict of interests?

Do your personal interests conflict with your official role?

What steps do you need to take and that a reasonable person would expect you to take to appropriately manage any conflict of interests?"

So far as councillors are concerned, it is noted that that they must also comply with the Code and that failure to comply with Part 2, constitutes misbehaviour, which can result in suspension from civic office for up to six months under the Act.

Part 2 of the Code specifies general conduct requirements in cl 6.1:

"6.1 You must not conduct yourself in carrying out your functions in a manner that is likely to bring the Council or holders of civic office into disrepute.

Specifically, you must not act in a way that:

(a) Contravenes the Act, associated regulations, Council's relevant administrative requirements and policies;

(b) Is detrimental to the pursuit of the charter of a Council;

(c) Is improper or unethical;

(d) Is an abuse of power of otherwise amounts to misconduct;

(e) Causes, comprises or involves intimidation, harassment or verbal abuse;

(f) Causes, comprises or involves discrimination, disadvantage or adverse treatment in relation to employment; and

(g) Causes, comprises or involves prejudice in the provision of a service to the community."

Conflict of interest is further dealt with in cl 7 of the Code, which deals with both pecuniary and non-pecuniary interests, which in cl 7.10 are defined as 'private or personal interests the Council official has that do not amount to a pecuniary interest as defined in the Act'. Clauses 7.1 - 7.4 provide:

"7.1 A conflict of interests exists where a reasonable and informed person would perceive that you could be influenced by a private interest when carrying out your public duty.

7.2 You must avoid or appropriately manage any conflict of interests. The onus is on you to identify a conflict of interests and take the appropriate action to manage the conflict in favour of your public duty.

7.3 Any conflict of interests must be managed to uphold the probity of Council decision-making. When considering whether or not you have a conflict of interests, it is always important to think about how others would view your situation.

7.4 Private interests can be of two types: pecuniary or non-pecuniary."

Written disclosure of non-pecuniary conflict is required by cl 7.13 and cl 7.17 deals with how such conflict is to be managed by staff, by re-allocating the conflicting duties to another Council official, or in the case of a councillor, 'by absenting yourself from and not taking part in any debate or vote' (cl 7.17(b)). In the case of a member of staff, the decision is to be made in consultation with a manager (cl 7.19). Undue influence is dealt with in cl 8.7. The use and security of confidential information is dealt with in cl 10.9 and cl 10.10, which requires that confidential information be protected and that it only be released with authority and that information discussed during confidential session of a Council meeting not be disclosed.

Complaints about breaches of conduct may be made by any person (cl 11.1). Protected disclosures are dealt with in cl 11.3 of the Code, which notes that disclosure of corrupt conduct, maladministration and serious and substantial waste in the public secure are encouraged by the PID Act. Section 22 of that Act is quoted in cl 11.5. It governs the disclosure of the identity of a person making a complaint. Complaints are to be made to the general manager or the mayor, if the allegation concerns the general manager.

The procedures for handling such complaints are specified in Part 3 of the Code. Clause 12.8 deals with the initial assessment of complaints brought against councillors. In the case of the complaint brought against Mr Nichols, this was delegated by Mr Greensill to Mr Thomson. It was thus Mr Thomson who had to initially determine whether the complaint should be referred for review (cl 12.16). Clauses 12.9 and 13.1 provide:

"12.9 The General Manager must determine either to:

(a) take no further action and give the complainant the reasons/s in writing as provided in clause 13.3 of this Code, and those reasons may include, but are not limited to, the fact that the complaint is trivial, frivolous, vexatious or not made in good faith; or

(b) resolve the complaint by use of alternative and appropriate strategies such as, but not limited to, mediation, informal discussion or negotiation and give the complainant advice on the resolution of the matter in writing; or

(c) discontinue the assessment in the circumstances where it becomes evident that the matter should be referred to another body or person, and refer the matter to that body or person as well as advising the complainant in writing; or

(d) refer the matter to the conduct review committee/reviewer.

13.1 The General Manager or Mayor, in the case of a complaint about the General Manager, will assess a complaint alleging a breach of the Code of Conduct to determine if the matter should be referred to the conduct review committee/reviewer. In assessing the complaint, the General Manager and Mayor will have regard to the following grounds:

(a) whether there is any prima facie evidence of a breach of the Code of Conduct;

(b) whether the subject matter of the complaint relates to conduct that is associated with the carrying out of the functions of civic office or duties as General Manager;

(c) whether the complaint is trivial, frivolous, vexatious or not made in good faith;

(d) whether the conduct the subject of the complaint could reasonably constitute a breach of the Code of Conduct;

(e) whether the complaint raises issues that require investigation by another person or body, such as referring the matter to the Department of Local Government, the NSW Ombudsman, the Independent Commission Against Corruption or the NSW Police;

(f) whether there is an alternative and satisfactory means of redress;

(g) how much time has elapsed since the events the subject of the complaint took place;

(h) how serious the complaint is and the significance it has for council, and

(i) whether the complaint is one of a series indicating a pattern of conduct."

Once a complaint is referred to a reviewer, the general manager, but in this case, Mr Thomson, was given further roles to play. Clause 12.15 provides, for example:

"12.15 The General Manager, or in the case of complaints about the General Manager, the Mayor, will undertake the following functions in relation to the conduct review committee/reviewer:

Provide procedural advice when requested;
Ensure adequate resources are provided, including providing secretarial support;
Attend meetings of the conduct review committee if so requested by the committee, and then in an advisory capacity only;
Provide advice about Council processes if requested to do so but not so as to take part in the decision making process, and
If attending the conduct review committee meeting to provide advice, must not be present at, or in sight of, the meeting when a decision is taken."

Clause 12.18 specifies the 'minimum requirements' for the reviewer are those provided in cl 14 of the Code. Under cl 12.19, initially Mr Smith, had to determine either to:

"(a) not make enquiries into the complaint and give the complainant the reason/s in writing as provided in clause 13.1 of this Code, and those reasons may include, but are not limited to, the fact that the complaint is trivial, frivolous, vexatious or not made in good faith; or

(b) resolve the complaint by use of alternative and appropriate strategies such as, but not limited to, mediation, making recommendations to the General Manager, informal discussion or negotiation and give the complainant advice on the solution of the matter in writing, or

(c) make enquiries into the complaint; or

(d) engage another appropriately qualified person to make enquiries into the complaint, or

(e) not make enquiries or discontinue making enquiries where it becomes evident that the matter should be referred to another body or person, and refer the matter to that body or person as well as advising the complainant in writing. Despite any other provision of this Code, this will constitute finalisation of such matters and no further action is required. "

If Mr Smith determined to make enquiries, then cl 12.20 obliged him to make findings on whether, in his view, the conduct referred to comprised a breach of the Code.

As a reviewer, Mr Smith's 'jurisdiction' was limited to complaints about councillors and the general manager, which did not include pecuniary interest matters (cl 14.1). That clause provided 'operating guidelines'. Mr Smith was obliged to conduct his business in the absence of the public and had to adopt procedures consistent with the 'operating guidelines' specified (cl 14.6). He also had to observe the requirements of cl 12 (see cl 14.8). In undertaking his task Mr Smith was also bound by the assessment criteria specified in cl 13.1. Again, the general manager (but in this case Mr Thomson), had a role in relation to the conduct of the enquiry Mr Smith pursued, as provided by cl 14.2:

"14.2 Role of the General Manager and Mayor

The General Manager, or in the case of complaints about the General Manager, the Mayor, will undertake the following functions in relation to the conduct review committee/reviewer:

Provide procedural advice when requested;
Ensure adequate resources are provided, including providing secretariat support;
Attend meetings of the conduct review committee if so requested by the committee, and then in an advisory capacity only;
Provide advice about Council processes if requested to do so but not so as to take part in the decision making process, and
If attending the conduct review committee meeting to provide advice, must not be present at, or in sight to, the meeting when a decision is taken.
Where the General Manager, or in the case of complaints about the General Manager, the Mayor, is unable to act as advisor to the conduct review committee/reviewer due to a conflict of interests in relation to a complaint, they are to nominate a senior Council officer or Councillor (in the case of complaints about the General Manager) to perform this role."

It was this provision of the Code which presumably led Mr Greensill to delegate his functions to Mr Thomson.

Clause 14.7 obliged Mr Smith to act in accordance with the rules of procedural fairness:

" 14.7 Procedural Fairness

In conducting enquiries, the conduct review committee/reviewer or the person engaged to do so should follow the rules of procedural fairness and must:

(a) provide the person the subject of the complaint with a reasonable opportunity to respond to the substance of the allegation;

(b) provide the person the subject of the complaint with an opportunity to place before the conduct review committee/reviewer or person undertaking the enquiry any information the person considers relevant to the enquiry;

(c) provide the person the subject of the complaint with an opportunity to address the conduct review committee/reviewer in person;

(d) hear all parties to a matter and consider submissions before deciding the substance of any complaint;

(e) make reasonable enquiries before making any recommendations;

(f) act fairly and without prejudice or bias;

(g) ensure that no person decides a case in which they have a conflict of interests, and

(h) conduct the enquiries without undue delay.

Where the person the subject of the complaint declines or fails to take the opportunity provided to respond to the substance of the allegation against them, the conduct review committtee/reviewer should proceed to finalise the matter."

Mr Smith was obliged to provide written information about the process being undertaken (cl 14.8). That clause also envisaged that Mr Smith would meet with Mr Nichols, who was entitled to bring a support person or legal adviser.

Clause 12.21 permitted Mr Smith to 'recommend that Council take any actions provided' for in the Code, which he considered reasonable in the circumstances. The findings and the reasons for any recommendations made, had to be reported in writing to the Council when Mr Smith completed his deliberations (cl 12.22 and cl 12.23). Clause 14.9 specified the recommendations which could be made. It provided:

"(a) censure the Councillor for misbehaviour;

(b) require the Councillor or General Manager to apologise to any person adversely affected by the breach;

(c) counsel the Councillor or General Manager;

(d) make public findings of inappropriate conduct;

(e) prosecute for any beach of the law, and

(f) revise any of Council's policies, procedures and/or the Code of Conduct."

It is convenient to observe that one of the recommendations which Mr Smith made, was that Mr Nichols undertake certain training. That is not a recommendation provided for in cl 14.9.

The sanctions which the Council can impose are specified in cl 12.25. Before they are imposed, it must make a determination that the Code has been breached (cl 12.24). The Code is silent as to how the Council is to conduct itself in making such a determination. The Code does not provide for the Council to give reasons for any decision which it reaches, although in Part 1 of the Code, cl 4.6 urges decision makers to give reasons. How that could occur in the case of a body such as the Council, which is a body which makes its decision by vote, is a matter for the Council to consider.

In the memo from Mr Thomson, by which Mr Smith's report was put before Council, the Council was advised that it 'is now required to consider whether Cr Nichols, as a result of his actions, has breached the Council's Code of Conduct'. Advice obtained from the Council's solicitor about that exercise, was not put before the Council, nor were the submissions which had been made on Mr Nichols' behalf by his legal advisers, which the Council had been advised to consider. Those submissions raised for the Council's consideration Mr Nichols' inability to respond to Mr Smith, because of his failure to provide him with the particulars he had sought. It was Mr Greensill who determined what material would be put before the Council.

In these proceedings, the Council accepted that it was bound to apply the common law principles of procedural fairness when it came to consider the complaint, but took the view that otherwise, its discretions were unfettered. This meant, for example, that it could call for further information from Mr Smith; that it could receive submissions and information from Mr Nichols; or that it could require that further investigations be conducted.

On Mr Nichols' approach, the Council had more circumscribed powers. While it could call for information and receive submissions, it could not itself investigate anything, even if dissatisfied with Mr Smith's review. It was bound by the factual findings which he had made. It could for example, call for the material on which his findings were based, to determine whether or not the Code had been breached, but it could not itself make any further enquiries, or require a reviewer to do so, even if dissatisfied with the way in which the review had been conducted.

The construction of the Code

The approach to the construction of the Code urged for Mr Nichols in these proceedings is one which may not be accepted. The Code did not purport to constrain the Council in any way, in the exercise of its statutory powers, once a complaint came before it for consideration. It was the parties' common position that the Council is obliged to abide by common law principles of procedural fairness in its consideration of the report. That would require Mr Nichols being given an opportunity to be heard by the Council and it considering the matters which he raised, before it determined whether the complaint that there had been a breach of the Code, had been established and if so, what sanctions should be imposed upon him. In such a case, if the Council took the view that such a consideration required some further factual enquiry to be undertaken, before it could come to any conclusions, that is a matter entirely within the Council's statutory powers to require.

The construction of the Code advanced for Mr Nichols is one which flies in the face of provisions of the Act and the Code. The Code does not prescribe at all how the Council might act, when considering a complaint and the report which it has received about the complaint from a reviewer. The Act empowers the governing body of the Council, comprised by the councillors, 'to direct and control the affairs of the council'. In doing so, a Council must certainly comply with express provisions of the Act, but any construction of the Code which would inhibit the Council's governing body in the proper performance of its fundamental statutory task of directing and controlling the affairs of the Council, must be rejected. The Code does not purport to oblige the Council to adhere to the outcome of a review conducted under the Code. It must satisfy itself as to the nature and adequacy of the enquiry undertaken by the reviewer and must itself come to a view about the matters raised by the complaint the subject of the review, once satisfied that an adequate enquiry has been undertaken.

There is nothing in the scheme of the Code or the Act which would prevent Mr Nichols submitting to the Council that further enquiries should be made, or which would preclude the Council from having such enquiries pursued. It is entitled to consider any representations which Mr Nichols wishes to make to it about any matter, including the adequacy of the factual material gathered in the review Mr Smith undertook. If it determines that the enquiries were deficient in some respect, it can determine that further enquiries ought to be undertaken.

The Code does not purport to bind the Council to accept the views of a reviewer such as Mr Smith, especially if the Council is not satisfied that they provided a proper basis upon which it could reach a view about whether or not the complaint that the Code had been breached could be determined. It was accepted for Mr Nichols that the Council could call for all the material on which his report rested. In my view, if it was thereupon dissatisfied with the adequacy of the enquiries made, or if it disagreed with the conclusions he had reached on that material, in accordance with its statutory powers, the Council would be entitled to decide whether any recommendations made to it by the reviewer should be accepted or rejected; or whether further enquiry should be made.

All such steps fall within the Council's broad discretion as to the direction and control of the affairs of the Council. The Code is subservient to that statutory obligation and must be implemented consistently with the Council's proper exercise of its statutory powers.

Mr Greensill

Mr Greensill is no longer employed by the Council, having resigned his position as General Manager. Mr Nichols' case was essentially that the evidence revealed that Mr Greensill had manipulated the enquiry process, in order to achieve Mr Smith's acceptance of the complaint and that he ought not to have made public Mr Smith's report, by placing it on the Council agenda and publishing it on the website. He sought an order that Mr Greensill be restrained from performing any further official function, or exercising any power in respect of the complaint.

As well as the complaints about his ongoing role in the consideration of the complaint, despite his delegation of his functions to Mr Thomson, it was also complained that Mr Greensill was untruthful in what he told Mr Smith and that he had withheld from the Council information which its solicitors had advised should be placed before it, including their advice and the submissions which had been made on behalf of Mr Nichols by his legal advisers. That he instructed Mr McKelvey to give that advice, was also a matter of complaint. Amongst other things, the advice raised the need for individual councillors to give consideration to the necessity of recusing themselves from a consideration of the complaint and dealt with the requirements of procedural fairness.

It was Mr Nichols' case that the evidence suggested that the maker of the complaint may have been beholden to Mr Greensill and also may have had a collateral purpose in pursuing the conduct of an enquiry into Mr Nichols. In the result, Mr Greensill had acted contrary to his acknowledged conflict; that he ought not to have selected the officer to whom he delegated his functions; and that he and Mr Thomson both later acted contrary to that delegation.

This attack was defended on the basis that Mr Greensill's delegation power had been properly exercised and that even if some of Mr Greensill's later actions were inconsistent with the delegation of his functions under the Code to Mr Thomson, the provision of s 49(9) of the Interpretation Act 1987 were relevant to consider. It provides:

"49 Delegation of functions

(1) If an Act or instrument confers a power on any person or body to delegate a function, the person or body may, in accordance with the Act or instrument, delegate the function to a person or body by name or to a particular officer or the holder of a particular office by reference to the title of the office concerned.

(2) A delegation:

(a) may be general or limited,

(b) shall be in, or be evidenced by, writing signed by the delegator or, if the delegator is a body, by a person authorised by the body for that purpose, and

(c) may be revoked, wholly or partly, by the delegator.

(3) A delegated function may be exercised only in accordance with any conditions to which the delegation is subject.

(4) A delegate may, in the exercise of a delegated function, exercise any other function that is incidental to the delegated function.

(5) A delegated function that purports to have been exercised by a delegate shall, until the contrary is proved, be taken to have been duly exercised by the delegate.

(6) A delegated function that is duly exercised by a delegate shall be taken to have been exercised by the delegator.

(7) If:

(a) the exercise of a function by a person or body is, by virtue of an Act or instrument, dependent on the opinion, belief or state of mind of the person or body in relation to any matter, and

(b) the person or body has delegated the function to some other person or body,

the function may be exercised by the delegate on the opinion, belief or state of mind of the delegate in relation to any such matter.

(8) If a function is delegated to a particular officer or the holder of a particular office:

(a) the delegation does not cease to have effect merely because the person who was the particular officer or the holder of the particular office when the function was delegated ceases to be that officer or the holder of that office, and

(b) the function may be exercised (or, in the case of a duty, shall be performed) by the person for the time being occupying or acting in the office concerned.

(9) A function that has been delegated may, notwithstanding the delegation, be exercised by the delegator.

(10) This section applies to a sub-delegation of a function in the same way as it applies to a delegation of a function, but only in so far as the Act or instrument that authorises the delegation of the function also authorises the sub-delegation of the function."

The section clearly envisages that Mr Greensill could revoke the delegation of his functions to Mr Thomson, either in whole or in part. There is no written revocation of any part of the delegation, but Mr Greensill certainly acted inconsistently with it, given his various involvement in functions Mr Thomson ought to have undertaken, such as obtaining legal advice for Mr Smith and the preparation and settlement of Mr Thomson's memo. The legislative power to revoke a part of his delegation does not answer the complaint that Mr Greensill did so, contrary to what the Code envisaged and inconsistently with the advice given to the Council, in Mr Thomson's memo, which Mr Greensill authored.

Under cl 7.2 of the Code, Mr Greensill was obliged not to deal with the complaint which had been made about Mr Nichols, in the event that he perceived that he had a conflict. It required him to nominate another senior officer to perform his functions in respect of the complaint, in that event (cl 7.17 - cl 7.19).

Mr Greensill gave no evidence. His letter to Mr Thomson does not expressly state that he regarded himself to have a conflict, but it does suggest that he thought he might be perceived to have one and so the better course was to delegate his functions in relation to the complaint to Mr Thomson. Light is cast on the reasons why he took that approach, by the information which he later provided to Mr Smith in the review, as to his involvement in the matters the subject of the complaint.

It was argued that having in mind Mr Greensill's involvement in those matters; the information which he later provided to Mr Smith in his investigation, both by the written statement he provided and at an interview; and the understanding which he must have arrived at, when he read Mr Smith's report that Mr Smith's findings had rested in large part upon the information he had provided; Mr Greensill ought not to have stepped back in. Taking over from Mr Thomson's aspects of the general manager's role under the Code, in relation to the handling of the complaint was inconsistent with the obligations which the Code imposed.

It is apparent that Mr Greensill took steps under the Code which he ought not to have, given the delegation of his functions to Mr Thomson. It was he who sought and obtained advice from the Council's solicitor about Mr Smith's report; he authored the memo by which Mr Thomson put the report before the Council; he obtained further legal advice about that memo and the approach which the Council should take to its consideration; advice which he did not put before the Council, together with the report.

The memo Mr Greensill drafted for Mr Thomson advised the Council that:

"On the 31 st May 2010 a Code of Conduct complaint was received by Council. The complaint related to allegations against Councillor Paul Nichols regarding interactions with an external party with whom Council had been in lengthy legal dispute and negotiations.

As the General Manager had been directly involved in the negotiating of a Deed of Settlement & Release with the external party, the General Manager's functions in accordance with Council's Code of Conduct were delegated to myself.

Following my consideration of the complaint I determined that the matter should be referred to an approved conduct reviewer for further consideration.

Mr. Bernard Smith of Vestion Consulting was subsequently engaged as the Sole Reviewer to undertake the review of the complaint.

The review undertaken by Mr. Smith is now complete and is attached to this report as Attachment 1 for consideration by Council.

Council is now required to consider whether Cr. Nichols, as a result of his actions, has breached Council's Code of Conduct (Clause 12.24).

If Council does determine that Cr. Nichols has breached the Code of Conduct, then Council is required to determine what sanctions (if any) are to be imposed on Cr. Nichols. The sanctions which Council can impose in accordance with Clause 12.25 of the Code of Conduct are:

(a) censure the Councillor for misbehaviour in accordance with section 440G of the Act;

(b) require the Councillor to apologise to any person adversely affected by the breach;

(c) counsel the Councillor;

(d) make public findings of inappropriate conduct, and

(e) prosecute for any breach of law.

As per the legal advice provided by Council's legal advisors Sparke Helmore, before the making of any determination Council should, in the interests of procedural fairness, afford Cr. Nichols the opportunity to address Council about any issue he has with (sic) reviewer's report and to provide any additional material he wishes the Council to consider.

As a result of the nature of this report no recommendation is made.

Submitted for Council determination."

On the evidence, Mr Greensill acted inconsistently with his delegation. The various functions which he performed in relation to Mr Smith's review, despite the delegation, were not disclosed to the Council in the material put before it. Nor was Mr McKelvey's involvement, an involvement which Mr Greensill was aware had not been disclosed in Mr Smith's report.

Mr Nichols urged the view that the approach Mr Greensill adopted departed both from a compliance with the key principles specified in Part 1 of the Code, as well as with the express provisions made in cl 7.2, once Mr Greensill had recognised that he had conflict which had to be dealt with by a delegation, as the Code envisaged.

The defendants pressed the view that Mr Greensill's delegation to Mr Thomson did not, in reality, reflect Mr Greensill's concluded view that he had a conflict. It seems to me that does not reflect a fair reading of his written delegation to Mr Thomson, or the memo which he authored under which the report was referred to the Council. There was no evidence led from Mr Greensill that he did not consider that he had a conflict. Nor did Mr Thomson give evidence that he had not understood that the entirety of the general managers' functions under the Code in relation to the complaint had been delegated to him. Had such views existed, no doubt evidence about those matters would have been led from Mr Greensill or Mr Thomson.

It is unnecessary to consider these complaints further. Even if the complainant had other motives for making the complaint advanced against Mr Nichols, as he argued, given the nature of the complaint itself and the circumstances in which it was made, the possible existence of other motives for making the complaint, could not be a basis upon which the orders sought could properly rest. Matters of that kind would have to be considered by the Council, if advanced by Mr Nichols.

Nor can the complaint about the publication of Mr Smith's report on the Council's website be accepted, given the statutory scheme and Mr Greensill's responsibilities for preparation of the agenda and materials for meetings of the Council, under the Council's Code of Meeting practice. Even if Mr Greensill ought not to have stepped back into the review process, there was no reason for him not to perform his ordinary function in relation to the preparation of the agenda for Council meetings. What he put before the Council, or failed to put before it, is a different matter which need not be explored further.

It was accepted that the circumstances raised for consideration the question of apprehended bias, in circumstances where it might be thought that Mr Greensill had taken steps to influence the decision makers in the process undertaken, albeit, it was argued that a reasonable and informed bystander, knowing all of the facts, would not come to that view. I have some difficulty with the submissions advanced, in the circumstances which arise for consideration, but do not need to deal with them further, in the circumstances.

The necessity for considering the making of any order in respect of Mr Greensill has disappeared. It is accepted that if there was to be further consideration of the complaint by the Council, Mr Greensill should not be prevented from cooperating with any further enquiries, which are made as a result. There is now no suggestion that Mr Greensill otherwise will have any other further involvement in the consideration of the complaint, given that he is no longer in the Council's employ. But for his resignation, it seems to me that some relief would have been warranted to guard against that possibility.

Finally, I also note that there were Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 submissions advanced about Mr Greensill's failure to call Mr McKelvey to give evidence about the two separate advices he had provided. In the circumstances, I also do not need to deal with these submissions.

The delegation to Mr Thomson

Mr Nichols seeks a declaration that Mr Greensill's delegation of his functions under the Code to Mr Thomson was void, as well as orders that it be quashed. I am satisfied that such relief may not be granted.

The delegation made was to Mr Thomson. There was no suggestion that he did not have the necessary seniority for the delegation to be made to him, the concern was that he had been overborne by Mr Greensill, who had continued to carry out his functions under the Code, despite the delegation. It was submitted that the course which Mr Thomson followed revealed his ostensible bias, reflective of his position as Mr Greensill's subordinate.

In the circumstances, if there was a conflict, as Mr Greensill seemingly believed there was, consistently with the requirements of the Code, he was obliged to deal with the conflict, by delegating his functions in respect of the complaint to a senior officer such as Mr Thomson. Mr Nichols does not dispute that such a delegation ought have been made in the circumstances. His complaint was that Mr Greensill ought not to have selected the officer to whom the delegation was made and ought not to have acted inconsistently with the delegation, after it was made.

The first complaint may not be accepted. Mr Greensill not only had a statutory power of delegation under the Act, but the Code itself expressly required the general manager to nominate another senior officer to take over his functions, if a conflict was recognised. Under the Code he should have consulted the Mayor, but the Code envisaged that if a conflict existed, the general manager would select the senior officer who would step into his place. Given the general manager's responsibilities for the day-to-day operation of the Council, that does not seem to be an inappropriate procedure.

The evidence does not establish any basis for concluding that Mr Greensill ought not to have appointed Mr Thomson. He was a senior member of staff and like all other members of the Council's staff, was subject to Mr Greensill's direct supervision. Anyone else to whom the delegation was made would have been in a similar position. It is not suggested that Mr Thomson had any conflict, but rather that he was later overborne by Mr Greensill.

"6.1 You must not conduct yourself in carrying out your functions in a manner that is likely to bring the Council or holders of civic office into disrepute.

Specifically, you must not act in a way that:

(a) Contravenes the Act, associated regulations, Council's relevant administrative requirements and policies;

(b) Is detrimental to the pursuit of the charter of a Council;

(c) Is improper or unethical;

(d) Is an abuse of power or otherwise amounts to misconduct;

(e) Causes, comprises or involves intimidation, harassment or verbal abuse;

(f) Causes, comprises or involves discrimination, disadvantage or adverse treatment in relation to employment; and

(g) Causes, comprises or involves prejudice in the provision of a service to the community.

6.2 You must act lawfully, honestly and exercise a reasonable degree of care and diligence in carrying out your functions under the Act or any other Act (section 439)."

The reasons Mr Smith gave for the conclusion that cl 6.1(c) had been breached were:

"With regard to the breach of Clause 6.1(c) of the Councils' Code of Conduct, despite the clearly stated memo of the 13 th January 2010 from the General Manager advising of the inappropriateness of the Councill contact with the Jones, Cr Nichols continued to engage in such contact which was improper, unethical, and potentially compromised Council's ability to conclude the matter in a manner which was in the best interests of the broader community."

Mr Smith gave no explanation, either by reference to the statutory scheme or what his enquiries had uncovered, as to why Mr Nichols' conduct, even if it did not accord with the request which Mr Greensill had made, breached the Act or the Code, or was improper, unethical or potentially compromised the Council's position. Given that Mr Smith found no evidence that any confidential information had been disclosed by Mr Nichols, these conclusions are difficult to understand. They have no disclosed basis.

The breach of cl 6.2 was explained by the conclusion that:

"With regard to the breach of Clause 6.2 of the Councils Code of Conduct, Cr Nichols did not exercise care and diligence in his actions, did not respect the advice of the General Manager, and compromised the ability of the General Manager to implement the decisions of the Council in the best interests of the community. The contact by individual Councillors with a party with which Council is engaged in legal proceedings severely prejudices the ability of the Council to reach a satisfactory outcome and does not respect or reflect the roles and responsibilities of Councillors or the General Manager."

Again, Mr Smith did not explain why he considered that Mr Nichols did not 'exercise care and diligence', why not 'respecting' the General Manager's advice, involved a breach of cl 6.2; or his view that contact between a councillor and a litigant 'severely' prejudices the ability of the Council to reach a satisfactory outcome.

In Public Service Board of New South Wales v Osmond [1986] HCA 7; (1986) 159 CLR 656, Gibbs CJ observed at 662 - 664 that:

"...There is no general rule of the common law, or principle of natural justice, that requires reasons to be given for administrative decisions, even decisions which have been made in the exercise of a statutory discretion and which may adversely affect the interests, or defeat the legitimate or reasonable expectations, of other persons.....

...Where the rules of natural justice require that a body making a decision should give the person affected an opportunity to be heard before the decision is made, the circumstances of the case will often be such that the hearing will be a fair one only if the person affected is told the case made against him. That is quite a different thing from saying that once a decision has been fairly reached the reasons for the decision must be communicated to the party affected. As the judgments in Padfield v. Minister of Agriculture, Fisheries and Food show, the fact that no reasons are given for a decision does not mean that it cannot be questioned; indeed, if the decision maker does not give any reason for his decision, the court may be able to infer that he had no good reason. That, again, is quite a different question from that which now concerns us."

Gibbs CJ also recognised, however, that the position is different, where there is a duty imposed upon the decision maker to give reasons, referring at 664 to two decisions of Sir John Donaldson, which:

"... were considered by the Court of Appeal in Reg. v. Immigration Appeal Tribunal, Ex parte Khan (Mahmud) (1983) QB 790, where Lord Lane C.J. said, at p 794:

"Speaking for myself, I would not go so far as to endorse the proposition set forth by Sir John Donaldson that any failure to give reasons means a denial of justice and is itself an error of law.

The important matter which must be borne in mind by tribunals in the present type of circumstances is that it must be apparent from what they state by way of reasons first of all that they have considered the point which is at issue between the parties, and they should indicate the evidence upon which they have come to their conclusions.""

Deane J, who agreed with Gibbs CJ, also observed at 676:

"On the other hand, it is trite law that the common law rules of natural justice or procedural fair play are neither standardized nor immutable. The procedural consequences of their application depend upon the particular statutory framework within which they apply and upon the exigencies of the particular case. Their content may vary with changes in contemporary practice and standards. That being so, the statutory developments referred to in the judgments of Kirby P. and Priestley J.A. in the Court of Appeal in the present case are conducive to an environment within which the courts should be less reluctant than they would have been in times past to discern in statutory provisions a legislative intent that the particular decision maker should be under a duty to give reasons or to accept that special circumstances might arise in which contemporary standards of natural justice or procedural fair play demand that an administrative decision maker provide reasons for a decision to a person whose property, rights or legitimate expectations are adversely affected by it. Where such circumstances exist, statutory provisions conferring the relevant decision-making power should, in the absence of a clear intent to the contrary, be construed so as to impose upon the decision maker an implied statutory duty to provide such reasons. As has been said however, the circumstances in which natural justice or procedural fair play requires that an administrative decision maker give reasons for his decision are special, that is to say, exceptional."

In this case, having determined to conduct an enquiry into the complaint, Mr Smith made a number of findings, which he set out in his report. In those circumstances cl 12.22 of the Code expressly required Mr Smith not only to report his findings, but also to report 'the reasons for those findings, in writing to the Council, the complainant and the person subject of the complaint'. This was a requirement imposed by the Code, consistent with the model code provided for by s 440 of the Act.

It follows that in the circumstances of this legislative scheme, Mr Smith's failure to provide any reasons for conclusions such as that Mr Nichols engaged in improper, unethical conduct, which potentially compromised the Council's ability to conduct the litigation; that he did not exercise diligence and care in his actions; and did not respect the advice of the general manager by reference to what his enquiries had revealed, involved a denial of natural justice. His report did not show, as it ought to have done, the basis upon which he came to his adverse conclusions, as to the two aspects of the complaint which he found had been sustained.

Conclusion

In the result, I am satisfied that Mr Smith's findings must be quashed. Despite the provision of his draft report, Mr Smith failed to adequately inform Mr Nichols of the substance of the adverse information he had obtained during the course of his enquiries, as the Council's Code envisaged and the rules of procedural fairness required. The result was that Mr Nichols was given no opportunity to respond to that information, before adverse conclusions were reached about him. Mr Nichols refusal to meet with Mr Smith did not relieve him of the obligation to provide Mr Nichols with that information, nor did Mr Nichols' decision to have his legal advisers make a submission to the Council about the draft report and the procedural unfairness he believed he had been subjected to, remove Mr Smith's obligation to inform Mr Nichols of what had been uncovered in his enquiries, on which his draft report rested. In his final report, Mr Smith gave no reasons for the adverse findings which he made, having in mind his factual findings and the requirements of the Act and the Code.

The submission that Mr Nichols could have asked the Council to itself consider the statements and the material which Mr Smith had uncovered in his enquiries, did not overcome the difficulty that the draft report itself, did not disclose information that Mr Smith had obtained and thus gave Mr Nichols no opportunity to respond. The provision of the draft report did not convey the information which Mr Nichols ought to have been provided with. He was denied a proper opportunity to respond to that information.

This is a situation where the deficiencies in Mr Smith's conduct of the enquiries and his report, could not be cured by Mr Nichols being given the opportunity to put forward anything which he wanted to raise before the Council.

In the circumstances, the orders sought in relation to Mr Smith must be made.

The case against the Council

By an amended summons, orders were sought against the Council, restraining it and its servants and agents from dealing any further with the complaint. In the alternative, that it be restrained from taking any account of Mr Smith's report. While I have concluded that orders restraining the Council from taking account of Mr Smith's report must be made, I am not able to conclude that it should be restrained from dealing further with the complaint, in the circumstances which have arisen.

True it is that the Council has not restricted its involvement in the proceedings to a purely submitting appearance. Its pleadings were not initially considered by Mr Nichols to be a basis upon which the orders now sought could rest, notwithstanding that they supported the position of the other defendants. All of the defendants were represented by the same legal representatives and the Council instructed Mr McKelvey as its solicitor in the proceedings, notwithstanding that it had come to light that he had had a critical involvement in the subject matter of the complaint. The change in Mr Nichols' position was explained to have arisen out of the Council's later conduct of these proceedings, in which it had actively pursued various matters in issue, when there were other sufficient contradicters, contrary to the Hardiman principle.

Mr Nichols' complaints rested on the Council's resistance to the production of its documents and the motion pursued in relation to disclosure of the complainant's name. It was argued to be relevant that Mr Greensill and Mr Smith knew the identity of the complainant, the Council did not and that they were entitled to argue the public interest immunity point. In the circumstances, the Council was an unnecessary contradicter in relation to both matters. It certainly ought not to have resisted any production of documents. It was accepted however, that it was entitled to resist the contempt motion brought against it.

It was argued that the result was that even though the Council had not as yet considered the complaint, the way in which it had conducted this litigation as a protagonist, meant that it ought now to be precluded from doing so.

It was also submitted to be relevant that the Court had no power to make orders as to the constitution of the Council, when it came to consider the complaint, it being an elected body constituted in accordance with s 222 of the Act. The case pressed was that in these circumstances, a 'fair minded observer, knowing the litigation history, would conclude that the Council might not bring a fair and unprejudiced mind to determining the complaint', even though it was accepted that it could be assumed that any individual councillors who are duty bound to recuse themselves from consideration of the complaint, would do so, if the complaint came before the Council for consideration.

This issue has to be determined, having in mind the Council's role under this statutory scheme. Day-to-day conduct of its affairs lies in the hands of the general manager. There was no evidence as to who made particular decisions as to the Council's conduct of the litigation, about which complaint was made. Under this statutory scheme, it is unlikely that they were decisions which the Council made itself. While the evidence does not suggest that the litigation was conducted on a basis with which the Council was not content, the course which the litigation took certainly suggests that there came to be a real appreciation, albeit belated, that the Council ought to have taken a more limited role, than it had initially pursued.

The Council thus accepted that it had taken a more active part in the proceedings than a submitting appearance would have permitted. Its case was that even so, the orders sought would not be made, given what it had done in the litigation, in circumstances where it had as yet made no decisions in relation to the complaint, which was yet to come before it.

As submitted for the Council, the effect of these proceedings was a 'pre-emptive strike' on a multi-stage decision-making process, to preclude the Council from giving any consideration at all to the complaint made against Mr Nichols. The Council accepted that if and when it came to consider that complaint, it is bound to afford him his common law rights to procedural fairness, the Code being silent as to how the Council is to consider a complaint.

In resolving this issue, on the Council's approach, consideration had to be given to three matters, namely whether there was another proper contravener in the proceedings; the extent to which it had presented a case by way of evidence and submissions; and the extent to which its arguments were presented or limited to matters relating to its powers and procedures. The Hardiman principle was a statement by the High Court of the need for decision makers like the Council to ensure by that by defending proceedings such as this, they did not taint their capacity to apply an independent and impartial mind to the resolution of the matter. It was relevant that in Hardiman, the difficulty lay with the Tribunal's cross-examination of witnesses. There was no problem of that kind in this case.

It was also argued that there was no other proper contradicter in the case so far as Mr Nichols' Hardiman submission was concerned, other than the Council, it being the decision maker alleged to have inappropriately conducted the proceedings as a protagonist. The Council had presented no substantive argument as to the legal principles or evidence going to the grounds of review raised against the other three defendants. Its submissions as to the Hardiman complaint and in relation to the public interest immunity considerations relating to the disclosure of the identity of the complainant, were submitted to be entirely consistent with Hardiman .

As to the complaints about its role in relation to Mr Nichols' claim for verified discovery of documents, the position was that an affidavit verifying the discovery given was sworn by the Assistant General Manager, after the Registrar's orders were made. That resulted in a motion for contempt. There could be no suggestion that Council was not entitled to take the position it did, in relation to that motion. The position was that after it was advanced, it had jointly filed a points of defence document, which dealt with its powers and the facts which necessarily bore on a consideration of its exercise of those powers.

It was also argued to be relevant that apprehended bias was not alleged against it. In Hardiman by way of contrast, the Tribunal, which had conducted a part heard inquiry, had made a ruling the validity of which was under consideration and which it sought to defend in judicial proceedings. By way of contrast, in this case the Council has made no decision and has embarked on no consideration of the complaint. It was also relevant to consider that the Hardiman observations related to questions of costs, not to grounds of review.

In my assessment these submissions have force. The Council comprises 12 elected councillors. They each have an obvious interest in ensuring proper adherence to all of the relevant requirements of the Act and the Code. It was accepted by Mr Nichols that any of them obliged to excuse themselves at a meeting at which the complaint arises to be considered, will do so, in accordance with their obligations. In those circumstances there is in my view no basis on which a fair minded observer might reasonably apprehend that councillors who did not recuse themselves, would bring an unfair or prejudiced mind to the questions which arise for them to consider, when the complaint comes before it, notwithstanding what has transpired in these proceedings.

In Hardiman it was observed at 306:

"There is one final matter. Mr Hughes was instructed by the Tribunal to take the unusual course of contesting the prosecutors' case for relief and this he did by presenting a substantive argument. In cases of this kind the usual course is for a tribunal to submit to such order as the court may make. The course which was adopted by the Tribunal in this Court is not one which we would wish to encourage. If a tribunal becomes a protagonist in this Court there is the risk that by so doing it endangers the impartiality which it is expected to maintain in subsequent proceedings which take place if and when relief is granted. The presentation of a case in this Court by a tribunal should be regarded as exceptional and, where it occurs should, in general, be limited to submissions going to the powers and procedures of the Tribunal.

In the result, we would make absolute the order nisi for mandamus."

The course which the Council finally adopted was not of this kind. Situations such as those which arose in Hardiman have arisen for consideration in other contexts, albeit usually when the question of costs arose for consideration. That is still a live issue on which the parties are yet to be heard in this case.

In Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [12] it was observed:

"... The Council is the authority which had granted the consent upon which the developer relied. In those circumstances, and also having regard to the earlier litigation, it might have been expected that the Council would submit to such order as the Court might make and that it would not become a protagonist, lest by doing so it endanger the impartiality it would be expected to maintain upon any subsequent applications to it which might ensue were relief granted to the appellant."

In Fagan v Crimes Compensation Tribunal [1982] HCA 49; (1982) 150 CLR 666, Brennan J observed at 681 - 682:

"In this case the Tribunal appeared by counsel as respondent to contest the appellant's case. Where curial proceedings arise out of a matter which is contested between parties appearing before a tribunal, it is not ordinarily appropriate for the tribunal to appear to contest the curial proceedings brought by one of the parties before it ( Reg. v. Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13, at pp 35-36 ). But where the proceedings before the tribunal are not inter partes, and where the Attorney-General cannot or does not intervene to represent the public interest (cf. Corporate Affairs Commission v. Bradley (1974) 1 NSWLR 391 ) and neither a law officer nor a public official is heard by the court (cf. Reg. v. Cook; Ex parte Twig [1980] HCA 36; (1980) 147 CLR 15 ), it may be desirable that the tribunal should appear by counsel to make such submissions as it thinks calculated to assist the court and, in an appropriate case, to argue against the applicant's case. That is what was done in this case. Here, the Tribunal's function was to determine whether and to what extent a claimant was entitled under statute to a payment out of public moneys. Though the Tribunal was bound to act impartially, it was in a sense the guardian of the moneys appropriated by Parliament to answer the proper claims for compensation under the Act. In proceedings to review its decision, the Tribunal properly represents the public purse, and it was right that the Tribunal should appear by counsel as a party to respond substantially to the application. It follows that the Tribunal should then be treated as an ordinary party in the matter of costs. Therefore I would make an order awarding the applicant his costs against the Tribunal both here and in the Supreme Court."

The observation in Oshlack was referred to in Murlan Consulting Pty Ltd v Ku-ring-gai Municipal Council [2009] NSWCA 300, where the Court of Appeal observed:

"80 It is sometimes said that the Hardiman principle involves an exception in respect of submissions which are limited to the powers and procedures of the tribunal. However, that is not strictly so: the High Court in Hardiman said that the presentation of a case by a tribunal should be regarded as "exceptional" and that where it occurs the presentation should be limited to submissions going to the powers and practices of the tribunal: at 36. The scope of possible exceptional cases was not explored, but must clearly be governed by the degree of inconsistency with the underlying principle, namely that the tribunal should not endanger its impartiality. On that basis, it is true that impartiality will be less endangered by submissions unrelated to the substance of the issues which might come back before it, and will be less endangered in circumstances where the matter is unlikely to go back before the tribunal in any event. It may also be appropriate to grant some weight to the practical consideration that, without any appearance by the tribunal, the Court may be left without the valuable assistance which might be obtained from a contravener.

81 In relation to matters arising in the Land and Environment Court, it will usually be a local council which, as consent authority, is required to determine whether it will take an active part in proceedings, and if so in what manner. However, where there is an issue as to the regularity of the administration of justice in a court or tribunal, the appropriate contravener may well be the Attorney-General and not the consent authority. If the Attorney does not wish to intervene, the Court may be left without a contravener. That, however, is not an obvious reason why the consent authority should take up that role in the absence of the Attorney-General.

82 There was an additional complicating factor in the present case. The role of the Council was in substance to defend the conduct of the Acting Commissioner, in circumstances where his conduct was allegedly compromised by his involvement with the Council itself. The appearance of impartiality on the part of the Acting Commissioner was, at least retrospectively, not enhanced by the Council participating actively in defence of his decision-making role."

In McGovern v Ku-ring-gai Council [2008] NSWCA 209; (2008) 72 NSWLR 504 at 551 - 552 it was observed:

"There is a separate issue, however, as to whether the appellants should pay the costs of both respondents in the Land and Environment Court (and in this Court). There is no doubt that both parties were properly joined in the proceedings; however, they had a community of interest on the primary point, which was maintaining the validity of the second consent. As noted above, comments in the joint judgment in Oshlack raise a question as to whether it is appropriate for the Council to be an active opponent of proceedings, where it is the consent authority and may need to reconsider a decision under challenge. A possible result is that, if it plays an inappropriate role, even on the successful side of the record, it may not obtain its costs of the proceedings. However, this was not a usual case. The major part of the challenge mounted by the appellants was to the conduct of two councillors and at least one Council officer. Although a complaint of reasonable apprehension of bias does not necessarily involve any suggestion of improper conduct on the part of a decision-maker, it is clear that the manner in which the claims were formulated in the present case did. Accordingly, this was a case in which it was appropriate for the Council to take an active role in defence of its councillors and officers.

The Council further argued that the Hardiman principle could not properly apply because the need to maintain the appearance of impartiality could not arise where the proceedings themselves alleged partiality. A submission in those terms should not be accepted: it could equally be argued that the Council should not, in successfully defending its officers, create an apprehension of partiality in circumstances where it successfully demonstrated that there had been none. It is preferable to consider the appropriate role of Council by reference to the specific circumstances, as noted above."

The circumstances in this case were admittedly unusual. The Act and the Code provide a scheme whereby the Council is given an important role in relation to complaints made about individual councillors. In this case, the complaint made about Mr Nichols was dealt with under the Code by appointment of a reviewer. That process went seriously awry. Mr Smith's report has, however, not been considered by the Council. It has not as yet taken any steps at all to consider the complaint or the report. Initially, no orders were sought to preclude it considering the complaint. There were other parties appearing in the proceedings, including its general manager. Given the nature of the complaints advanced against him, however, that the Council had a separate concern as to its powers, duties and obligations under the Act and the Code must be accepted.

It did not file a submitting appearance and, it seems to me, initially, involved itself inappropriately in a question of discovery. That this was the result of any decision made by the Council itself, is not apparent. Given the nature of this statutory scheme, the day-to-day conduct of litigation appears to fall within the general manager's responsibility. The Registrar made orders that verified discovery be given, after a contested hearing (see Nichols v Singleton Council v Others, unreported, 5 April 2011). It also claimed, but later abandoned legal professional privilege in relation to legal advice which its solicitors had given it, in relation to the complaint. It is difficult to see that this accorded with the Hardiman principle.

All of this was, however, eventually resolved, albeit it generated a motion alleging that the Council was in contempt, which was finally not pressed. At the hearing it did not seek to defend any steps thus far taken in respect of the conduct of the investigation into the complaint, nor did it seek to defend any decision made by the other defendants about the complaint. It was, however, concerned to resist orders pressed on a Hardiman basis, which would preclude it from dealing with the complaint, given the obligations imposed upon it by the Code and the Act. It seems to me that given this statutory scheme, that approach is not one which should lead to the orders pressed.

The Act obliges the Council to consider the complaint and any report properly put before it, to determine whether Mr Nichols has breached the Code and whether any of the sanctions specified in cl 12.25 of the Code should be imposed, including censure for misbehaviour, in accordance with s 440G of the Act. That section provides:

"440G Formal censure of councillor for misbehaviour

(1) A council may by resolution at a meeting formally censure a councillor for misbehaviour.

(2) A formal censure resolution may not be passed except by a motion to that effect of which notice has been duly given in accordance with regulations made under section 360 and, if applicable, the council's code of meeting practice.

(3) A council may pass a formal censure resolution only if it is satisfied that the councillor has misbehaved on one or more occasions.

(4) The council must specify in the formal censure resolution the grounds on which it is satisfied that the councillor should be censured.

(5) A motion for a formal censure resolution may, without limitation, be moved on the report of a committee of the council and any such report must be recorded in the minutes of the meeting of the council."

'Misbehaviour' is defined in s 440F to include 'a failure by the councillor to comply with an applicable requirement of a code of conduct as required under section 440(5)'. Section 440 provides:

" 440 Codes of conduct

(1) The regulations may prescribe a model code of conduct (the model code) applicable to councillors, members of staff of councils and delegates of councils.

(2) Without limiting what may be included in the model code, the model code may:

(a) relate to any conduct (whether by way of act or omission) of a councillor, member of staff or delegate in carrying out his or her functions that is likely to bring the council or holders of civic office into disrepute, and

(b) in particular, contain provisions for or with respect to conduct specified in Schedule 6A.

(3) A council must adopt a code of conduct (the adopted code) that incorporates the provisions of the model code. The adopted code may include provisions that supplement the model code.

(4) A council's adopted code has no effect to the extent that it is inconsistent with the model code as in force for the time being.

(5) Councillors, members of staff and delegates of a council must comply with the applicable provisions of:

(a) the council's adopted code, except to the extent of any inconsistency with the model code as in force for the time being, and

(b) the model code as in force for the time being, to the extent that:

(i) the council has not adopted a code of conduct, or

(ii) the adopted code is inconsistent with the model code, or

(iii) the model code contains provisions or requirements not included in the adopted code.

(6) A provision of a council's adopted code is not inconsistent with the model code merely because the provision makes a requirement of the model code more onerous for persons required to observe the requirement.

(7) A council must, within 12 months after each ordinary election, review its adopted code and make such adjustments as it considers appropriate and as are consistent with this section.

(8) Nothing in this section or such a code gives rise to, or can be taken into account in, any civil cause of action, but nothing in this section affects rights or liabilities arising apart from this section."

Council was represented in the proceedings by the same firm of solicitors which represented the other three defendants. Their interests in the proceedings were not identical to those of the Council, given the complaints advanced and the relief sought in the original summons, in relation to their respective involvement in the consideration of the complaint received. The Council came to recognise this with the result that at the hearing it only advanced submissions as to the Hardiman principle, given its statutory obligations to deal with the complaint, and resisted disclosure of the complainant's name. It does seem the submission that Mr Greensill was in a position to advance the latter argument, given his position as the Council's General Manager, without the Council also putting that case, has some force.

In the event, the approach finally adopted by the Council was argued for Mr Nichols to have been adopted too late, to overcome the consequences of its conduct of the proceedings to that point, with the result that orders precluding it considering the complaint must be made.

It seems to me that in the circumstances, the preferable course would have been for the Council, from the outset, to have confined itself as it finally did at the hearing. Even so, while the parties must be heard on the question of costs, the circumstances are in my assessment not such that orders restraining the Council from dealing with the complaint at all, may be made, given the Council's statutory role in relation to the complaint, how the Council is constituted, that it is not in issue that individual councillors who should recuse themselves, will do so and that the Council has as yet not considered the complaint at all. It did ultimately not defend the case advanced against the other defendants. The case finally put in relation to the Hardiman case, was appropriate for it to advance. The case in relation to the disclosure of the complainant's name is, in my view, not an appropriate basis for the orders now ought.

The alternative order pressed, that Council be restrained from giving any consideration to Mr Smith's report, should be made, given the conclusions I have reached in relation to that report.

Orders

The usual order as to costs is that they should follow the event. If the parties wish to be heard on costs, they should approach.

For the reasons given, I propose to order that:

1. Mr Smiths' report be quashed.

2. The Council be restrained from giving any consideration to Mr Smith's report.

I will hear the parties on the final form of the orders to be made.

**********

Amendments

10 April 2012 - typographical error - the word 'raised' amended to 'reached'

Amended paragraphs: 205

Decision last updated: 11 April 2012

Medium Neutral Citation:	Nichols v Singleton Council (No 2) [2011] NSWSC 1517
Hearing dates:	22 August 2011, 23 August 2011, 24 August 2011
Decision date:	09 December 2011
Jurisdiction:	Common Law - Administrative Law
Before:	Schmidt J
Decision:	The usual order as to costs is that they should follow the event. If the parties wish to be heard on costs, they should approach. For the reasons given, I propose to order that: 1. Mr Smiths' report be quashed. 2. The Council be restrained from giving any consideration to Mr Smith's report. I will hear the parties on the final form of the orders to be made.
Catchwords:	LOCAL GOVERNMENT - complaint against councillor - review of complaint - conduct of review - the Local Government Act 1993 - the Council's Code of Conduct - construction of the Code - whether the reviewer failed to adhere to the Act and the Code - whether general manager and /or delegate acted contrary to their obligations under the Act and the Code - whether report into the complaint should be quashed ADMINISTRATIVE LAW - construction of Local Government Act 1993 - construction of Council's Code of Conduct - particulars of complaint - investigator's obligations - procedural fairness - failure to give reasons - whether Council should be restrained from dealing with complaint - the Hardiman principle - whether Council breached Hardiman principle in its approach taken in these proceedings
Legislation Cited:	Interpretation Act 1987 Local Government Act 1993 Local Government (General) Regulation 2005 Protected Disclosures Act 1994 Public Interest Disclosures Act 1994
Cases Cited:	Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72; (2005) 225 CLR 88 Fagan v Crimes Compensation Tribunal [1982] HCA 49; (1982) 150 CLR 666 Greyhound Racing NSW v Cessnock & District Agricultural Association [2006] NSWCA 333 Hot Holdings Pty Ltd v Creasy [1996] HCA 44; (1996) 185 CLR 149 Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564 Jones v Dunkel (1959) 101 CLR 298 Kioa v West [1985] HCA 81; (1985) 159 CLR 550 The Medical Board of Queensland v Byrne [1958] HCA 40; (1958) 100 CLR 582 McGovern v Ku-ring-gai Council [2008] NSWCA 209; (2008) 72 NSWLR 504 Minister for Aboriginal Affairs v Peko-Wallsend [1986] HCA 40; (1986) 162 CLR 24 Muin v Refugee Review Tribunal [2002] HCA 30; (2002) 190 ALR 601 Murlan Consulting Pty Ltd v Ku-ring-gai Municipal Council [2009] NSWCA 300 National Companies & Securities Commission v News Corporation Ltd [1984] HCA 29; (1984) 156 CLR 296 Nichols v Singleton Council [2011] NSWSC 946 Nichols v Singleton Council (unreported, 5 April 2011) Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Public Service Board of New South Wales v Osmond [1986] HCA 7; (1986) 159 CLR 656 The Queen v The Australian Broadcasting Tribunal; ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13
Category:	Principal judgment
Parties:	Paul Nichols (Plaintiff) Singleton Council (First Defendant) Bernard Smith (Second Defendant) Scott Greensill (Third Defendant) Gary Thomson (Fourth Defendant)
Representation:	Counsel: Mr R Lovas (Plaintiff) Mr J Griffiths SC with Ms M Allars (Defendants) Solicitors: Alex Irving Solicitor (Plaintiff) Sparke Helmore Lawyers (Defendants)
File Number(s):	2010/376603
Publication restriction:	None