PETROVSKI v Dolling - [2013] SADC 27

DISTRICT COURT OF SOUTH AUSTRALIA
(District Court Administrative and Disciplinary Division: Application)
PETROVSKI v DOLLING
[2013] SADC 27
Reasons for Ruling of His Honour Judge Clayton
5 March 2013
LOCAL GOVERNMENT - REGULATION AND ADMINISTRATION - MEETINGS - RESOLUTIONS
LOCAL GOVERNMENT - REGULATION AND ADMINISTRATION - ALDERMEN AND COUNCILLORS - RIGHTS, DUTIES AND INCIDENTS OF OFFICE - DISQUALIFICATION FROM VOTING - INTEREST IN MATTER OR CONTRACT
Complaint alleging failure to comply with s 74 of Local Government Act 1999 as amended.
Complainant failed to comply with order of master requiring complainant to identify the matter that gives rise to a conflict as per s 73 and 74 of the Local Government Act.
Complaint fails to disclose an offence.
Order dismissing the complaint pursuant to subs 265(3) of Local Government Act 1999.
Local Government Act 1999 s 73, s 74, s 263, s 264, s 265, referred to.

PETROVSKI v DOLLING
[2013] SADC 27

The complainant is a Public Official at the Office for State/Local Government Relations. He has made a complaint against Dean Dolling, the Mayor of the District Council of Barunga West, under s 264 of the Local Government Act 1999 as amended.
The grounds upon which the complaint is made are set out in the summons as follows:
1. On 11 October 2011, the Respondent contravened or failed to comply with section 74 of the Act.
Particulars:
1.1The Respondent has been an elected member of the District Council of Barunga West (“the council”) since 1978, becoming chairperson of the council in 2003, which position later became known as Mayor.
1.2Fishermans Bay is a land area consisting of more than 400 shack sites and is owned by Fishermans Bay Management Pty Ltd (“the company”) which holds the property in trust for Fishermans Bay Proprietors, a partnership. Merle Hosking has been a shareholder of the company and a partner of Fishermans Bay Proprietors since the 1970’s and is the occupier of a shack site at Fishermans Bay. Merle Hosking is the sister of the Respondent.
1.3In 1999 the company lodged an application with the council to subdivide the land for the purpose of offering the occupiers of the shack sites the opportunity to purchase the freehold to the land. This application was approved in February 2000 and over the following years the council considered many matters relating to Fishermans Bay and the company, including extensions and condition of the development approval, sewage treatment issues and an effluent disposal system.
1.4Through her shareholding in the company the Respondent’s sister had a reasonable expectation of receiving an indirect pecuniary benefit as a result of the successful subdivision and consequent sale of the land at Fishermans Bay. As an occupier of a shack site the Respondent’s sister had a reasonable expectation of receiving a non-pecuniary benefit, namely the ability to purchase the freehold to her shack site, from the successful subdivision of the land at Fishermans Bay. These benefits were not shared with a substantial proportion of ratepayers. The Respondent was aware that his sister was a shareholder of the company and the occupier of a shack site.
1.5At an ordinary council meeting on 13 September 2011 (“the first meeting”) the council moved into confidence under section 90(2) of the Act in relation to Item 14.4.3 which dealt with “Fisherman’s Bay Management (FBM) Free-holding application”. The Respondent declared an interest under section 73 of the Local Government Act “as his sister is a Director of Fishermans Bay Management, the applicant for Development DA 344/D006/99 and 344/D007/10” and left the meeting whilst the item was discussed and voted upon.
1.6The following motion was moved by Councillor Kerley, seconded by Councillor Rowlands, and carried at the first meeting.
That the CEO be empowered to work through the Fisherman’s Bay free-holding land division and seawall levee matters with the assistance of the planning consultants, lawyers and staff as required.
1.7At the next council meeting on 11 October 2011 (“the second meeting”) the Respondent put forward two Notices of Motion at Item 11 of the agenda dated 6 October 2011. They read:
11.1 Mayor Dolling
That the following motion from the Council’s meeting of 13^th September 2011 be rescinded:
“That the CEO be empowered to work through the Fisherman’s Bay free holding land division and seawall levee matters with the assistance of the planning consultants, lawyers and staff as required.
11.2 Mayor Dolling
That the Chief Executive officer is accompanied by at least one councillor, at all discussions with Fishermans Bay Management and associated lawyers, regarding the free holding negotiations of Fishermans Bay.”
1.8The Respondent did not declare an interest in relation to Items 11.1 and 11.2.
1.9At the second meeting Councillor Rowlands raised a point of order relating to sections 73 and 74 of the Act that the Respondent had a conflict of interest. The Respondent ruled against the point of order.
1.10The following motion was moved by Councillor Rowlands and seconded by Councillor Kerley:
“That the two motions placed on notice by Mayor Dolling are unacceptable and be withdrawn as they are in breach of the conflict of interest provisions in the Local Government Act Sections 73 and 74.”
1.11The Respondent did not accept the motion.
1.12The Respondent then moved each of the two motions. Each motion was carried four votes to three with the Respondent using his casting vote to ensure that each motion carried.
1.13Notwithstanding his apparent interest in a matter before the Council, the Respondent –
(a)failed to disclose an interest in the matter to the Council, contrary to section 74(1) of the Act;
(b)proposed two motions in relation to the matter, contrary to section 74(4)(a);
(c)took part in discussion by the Council relating to that matter, contrary to section 74(4)(b) of the Act;
(d)while such discussion was taking place, was present in the room at which the matter was being discussed, contrary to section 74(4)(c) of the Act; and
(e)voted in relation to the matter, contrary to section 74(4)(d) of the Act.
1.14The conduct of the Respondent at the second meeting occurred subsequent to him receiving a letter from the Executive Director, Community and Local Government Relations, dated 9 November 2007, placing him on notice that any future contravention of or failure to comply with section 74 of the Act may result in a formal complaint being lodged in the District Court.
The particular conduct which is alleged to establish the failure to comply with s 74 of the Act is Mr Dolling's participation in the two motions which are set out in para 1.7 of the particulars in the complaint. The first resolution rescinded an earlier motion empowering the CEO "to work through the Fishermans Bay freeholding land division and seawall levy matters with the assistance of planning consultants, lawyers and staff as required". The second resolution required the CEO to be accompanied by at least one councillor at all discussions with Fishermans Bay Management.
Mr Dolling has applied to strike out the complaint. The first basis for the application is that the complainant has failed to comply with an order made by Master Rice on 29 October 2012. The master’s fiat reads:
1. Since the last hearing the respondent has commented on the documentary material which the Crown seek to rely upon for the purposes of the complaint. The respondent’s concern is that the complaint did not define the “matter” which is the subject of the alleged conflict. Instead of taking a half day, this matter will now be set down for 2 days as the Crown’s current position is that the “matter” deals with the whole history of the matter from 1999-2011. In my view the Crown needs to specifically define what they assert as being the matter that gives rise to the conflict per s 73 and s 74 of the Local Government Act. The Crown is to advise the respondent defining the relevant “matter” within 4 weeks…
Whether the non-compliance with the master’s direction is a matter which should result in the complaint being struck out or just a stay of proceedings until the complainant does comply is a question which I need only address if I reject the application to have the complaint dismissed. Mr Abbott QC, who appeared with Mr Selley for Mr Dolling, described the application to have the complaint dismissed as the equivalent of a "no case" submission.
The determination of Mr Dolling's application depends upon an understanding of the two motions and the interpretation of the relevant legislation.
The proceedings have been brought pursuant to Part 1 of Chapter 13 of the Local Government Act 1999. Section 263(1) provides:
263 – Grounds of complaint
(1)There are grounds for complaint under this Part against a member of a council if the member has contravened or failed to comply with section 74.
Section 264 deals with complaints and provides in subs (1):
(1) A public official or any other person may lodge with the District Court a complaint setting out the matters that are alleged to constitute the grounds for complaint against a member of the council under this Part. (My underlining)
Section 265 is concerned with hearings by the District Court. Subsection (3) provides that the court may dismiss the complaint if it considers-
(a) that the matter is frivolous or vexatious; or
(b) that the matter raised in the complaint is trivial; or
(c) that the complainant does not have a sufficient interest in the matter to which the complaint relates; or
(d) that there is some other good reason for not allowing the matter to proceed under this Part. (My underlining)
Mr Dolling's application to strike out the complaint relies upon subs (3)(d).
Grounds for complaint under s 263(1) exist if a member of council has contravened or failed to comply with s 74 which provides:
(1) A member of a council who has an interest in a matter before the council must disclose the interest to the council. (My underlining)
It is to be observed that the noun "matter" has different meanings in s 74 and ss 264 and 265 of the Local Government Act in different contexts. The Act does not define "matter".
The order of the master required the complainant to "specifically define what they assert as being the matter that gives rise to the conflict per s 73 and s 74…".
When the parties were before the master on 29 October 2012 Mr Selley, the solicitor for Mr Dolling, was in possession of letters dated 11 October 2012 and 29 October 2012 from the Crown Solicitor in which the following statements were made:
I have spoken to counsel in this matter, and he concurs with the view that I put to the Court on 17 September 2012, that the difference in opinion between our view and yours turns upon the definition of the word "matter" in the Local Government Act 1999. It is the view of counsel for the Complainant that the word "matter" must bear a broader definition than that contended by you. It is entirely artificial to fragment a matter into individual components and then label each as a "matter" in its own right. The "matter" is, in his contention, the development known as Fisherman’s Bay, and should not be confined to an issue or process within the broader matter.[1]
[1] Letter dated 11 October 2012 – Exhibit KAS 4.
And:
…I confirm that it is our contention that the word "matter" in ss 73 and 74 of the Local Government Act 1999 ("the Act"), as it relates to these proceedings, is the development of Fishermans Bay in its entirety, including the seawall levee and any other major items not directly relating to the subdivision of the land. This is not tied to any particular application, but rather any issue in which Fishermans Bay Management Pty Ltd, may be perceived to have an interest in the outcome due to the potential to influence favourably or unfavourably, the development it was seeking to complete.[2]
This definition should provide comfort in relation to the paragraph in your letter immediately preceding point 1 on page 2.
In respect of the first point 2 on page 3 of your letter I trust that the foregoing makes it clear that we do not interpret "matter" as meaning "the approval or rejection of the Fisherman’s Bay subdivision generally"…[3]
[2] Letter dated 29 October 2012 – Exhibit KAS-6.
[3] Letter dated 29 October 2012 – Exhibit KAS-6.
Notwithstanding his knowledge of the Crown’s position the master still required the Crown “to specifically define what they assert as being the matter that gives rise to the conflict per ss 73 and 74 of the Local Government Act". He was aware that the position of the Crown was that the matter "as it relates to these proceedings, is the development of Fishermans Bay in its entirety".
On 20 November 2012 the Crown Solicitor sent by e-mail to Iles Selley a letter dated 7 November 2012 saying amongst other things:
I refer to our mutual attendance at the District Court on 29 October 2012, and to the order of Master Rice directing us to write to you to advise you of the relevant "matter" as it pertains to the current disciplinary action.[4]
In this respect I refer you to my letter dated 29 October 2012 in which I provided you with our contention as to the relevant" matter" as it relates to the current proceedings. I do not feel that I can put the issue any more highly than this. In the end the question as to what constitutes a "matter" is one of statutory construction and is not capable of evidentiary support.[5]
[4] Letter dated 7 November 2012 – Exhibit KAS-8.
[5] Letter dated 7 November 2012 – Exhibit KAS-8.
The Crown solicitor declined to comply with the master’s order.
On this application Mr Keane who represented the complainant argued that the letter of 20 November 2012 referred back to the definition of matter provided in the letter of 29 October 2012 and in so doing reiterated the complainant's contention that the matter is the Fishermans Bay Development. He argued that the letter of 20 November 2012 further informed Mr Dolling that the Fishermans Bay Development included the (proposed) freeholding of the land division and the seawall levee. He said that both the freeholding of land division and the seawall levee were the subject of the relevant agenda item proposed for, and ultimately the motion passed on, 13 September 2011.[6]
[6] Complainant’s Outline of Argument paras 15-19.
The first question which arises for consideration is whether the complainant has complied with the direction of the master. That is has the complainant specifically defined what he asserts as being the matter that gives rise to the conflict as per ss 73 and 74 of the Local Government Act.
Mr Keane reiterated that it was the complainant’s contention that the relevant matter before the council on both 13 September 2011 and 11 October 2011 was the proposed development of Fishermans Bay as identified in paras (1.3) and (1.4) of the Complaint. He referred to exhibit KAS-4.
I make the observation that this is not an appeal against the order of the master, which continues to have effect. The question before the court is whether the complainant has complied with the master’s order.
I mention in passing that when I specifically asked whether the complainant had done what the order required Mr Keane responded "we say we do".[7] He argued that there was compliance with the order of Master Rice by a combination of KAS-6 and KAS-8, letters from the Crown Solicitor dated 29 October 2012 and 20 November 2012. He said that compliance with the master’s order was "difficult given the wording of the legislation".
[7] T30 l9.
In my opinion the complainant has not complied with the order of the master. The complainant has done no more than to repeat a definition of the "matter" which the master had considered to be inadequate. The terms of the master’s order were quite specific. The complainant has elected not to comply. Such non-compliance could result in a stay of proceedings until such time as the complainant does comply. However before considering what relief is appropriate in this case it is necessary to consider Mr Dolling's second argument, that is, whether an offence is disclosed on the complaint.
Mr Keane argued that the question of whether an offence is disclosed in the complaint is a question for trial. He submitted that it is not something that is amenable to determination without recourse to the evidence. I reject that submission.
The situation is similar to striking out a Statement of Claim which does not disclose a cause of action. Such an application can be decided by reference to the terms of the pleading. Evidence is unnecessary. Furthermore if the complaint does not on its face disclose an offence it would not be in the interests of justice to require evidence before the preliminary point is dealt with.
Mr Abbott submitted that regardless of whether there has been compliance with the order of the master, what the complainant has particularised as "the matter" cannot be an interest in a "matter" for the purposes of s 74 of the Act.
I have already referred to s 74. For present purposes s 73(1) defines what amounts to an interest in the following way:
(1)A member of a council has an interest in a matter before the council if –
(a) the member or a person with whom the member is closely associated would, if the matter were decided in a particular manner, receive or have a reasonable expectation of receiving a direct or indirect pecuniary benefit or suffer or have a reasonable expectation of suffering a direct or indirect pecuniary detriment; or
(b) the member or a person with whom the member is closely associated would, if the matter were decided in particular manner, receive or have a reasonable expectation of obtaining a non-pecuniary benefit or suffer or have a reasonable expectation of suffering a non-pecuniary detriment,
(not being a benefit or detriment that would be enjoyed or suffered in common with all or a substantial proportion of the ratepayers, electors or residence of the area or a ward or some other substantial class of persons).
The disclosure requirement in s 74 of the Act is confined to disclosure of the type of interest in a matter described by s 73.
The question therefore becomes whether either of the resolutions which are the subject matter of the complaint would if decided in a particular manner have caused a council member or a close associate of a member (in particular Mr Dolling’s sister) to receive or have an expectation of receiving a benefit or suffering detriment of the type described in s 73.
It was argued by Mr Abbott that the complainant’s contention confused the potential for the respondent to have an interest in some unidentified decision that may be made by the council in respect of some unidentified aspect of the Fishermans Bay development with the actual decision that was being made at the council meeting.
Further he argued that Mr Dolling had no relevant s 73 interest in "the matter" that was the subject of the two resolutions.[8]
[8] Respondent’s Written Submissions paras 36 and 37.
The ultimate decision is whether either of the two resolutions gave rise to a s 73 interest. In my opinion they did not.
The question must be determined by a consideration of the terms of the resolutions.
The first resolution simply rescinded a resolution passed at the meeting of the council on 13 September 2011. In my opinion the rescission of the earlier resolution did not involve a s 73 interest.

The second resolution required that the CEO be accompanied by at least one councillor at the discussions which are referred to. In my opinion the requirement that the CEO be accompanied by at least one councillor did not give rise to a s 73 interest.
Neither resolution could have given either Mr Dolling or any close associate of his any expectation of receiving a benefit or suffering a detriment of the kind which is described in s 73. The effect of the resolutions was to require the CEO to be accompanied by at least one councillor. That did not cause a relevant person to receive a benefit or suffer a detriment.
I do not accept Mr Keane's argument that determining who is going to be part of the negotiating team "may well be beneficial or detrimental to the outcome of negotiations".[9] Whether a matter "may well be beneficial or detrimental" falls short of the test in s 73 which is that the member or person "would" receive or have a reasonable expectation of receiving a direct or indirect pecuniary benefit etc.
[9] T29 l5.
Mr Keane argued "you are influencing one way or the other the negotiating team you have the potential to influence the outcome".[10] He described that as the "crux" of his case. He said that the council members were required to make a decision before the discussion "before there is a motion and before you can work out ultimately whether or not there's going to be a benefit or detriment. It is the potential to benefit or detriment that is the key which as you step out of the room before the debate occurs".[11]
[10] T29 l15.
[11] T35 l11.
In the same vein as Mr Keane argued that the conflict of interest is something which needs to be declared before the debate. I accept that. However he continued to argue that "the fundamentals of (Mr Abbott's) approach are wrong because he comes from the wrong end, he comes from the outcome.[12] I do not accept that analysis. Mr Abbott's argument relies upon an interpretation of the motion which in my opinion is the appropriate approach.
[12] T27 l25.
Mr Keane repeated that "the issue here is, as we identified in 1.3 and 1.4, the issue is the whole Fishermans Bay development".[13] That simplistic approach ignores the framework of the legislation within which the prosecution has been brought. The legislation is confined to contraventions of s 74, not conflicts of interest at large. Section 74 of the Act is confined to the type of interest referred to in s 73.
[13] T28 l24.
Those arguments are not the test prescribed by s 73. Also the submission is based on speculation and has no evidentiary foundation. This approach by the complainant would seem to lie at the heart of the difference between the parties.
I accept the submission of Mr Abbott that one must look at what did happen rather than what might have happened.[14]
[14] T38 l4.
Additionally it was argued that any decision made by the CEO pursuant to the resolution of 13 September 2011 would not be a decision of the Council for the purposes of s 73 of the Act. I accept the argument that "the matter" for the purposes of the complaint is confined to the two motions identified in subpara 1.7 of the complaint and that "the matter" must be linked to an actual or potential decision of the Council.[15]
[15] Respondent’s Written Submissions para 40.
Paragraph 1.8 of the complaint alleges that the respondent did not declare an interest in relation to Items 11.1 and 11.2 (the two resolutions). As I have said the two resolutions did not give rise to an interest which was required to be disclosed pursuant to s 74 because neither resolution involved an interest in a matter of the kind described by s 73.
I accept the defendant’s argument and find the complainant's particularisation of "the Fishermans Bay Development generally" does not adequately identify "the matter" because it does not draw a connection between "a matter before the council" and an actual or potential decision with respect to that matter.[16] More particularly the complaint has not identified a s 73 interest which has not been disclosed.
[16] Respondent’s Written Submissions para 40.
In my opinion the complaint fails to disclose a cause of action. For there to be a breach of s 74 of the Act there must be nondisclosure of an interest in a matter as defined in s 73. On their face neither of the two resolutions (Items 11.1 and 11.2) gives rise to an interest in a matter of the type described in s 73. For that reason the complaint should be struck out.
I have already said it is my opinion that the complainant has not complied with the order of the master. That failure is subsumed by the more fundamental failure of the complaint to disclose a cause of action.
I have considered the arguments advanced by the complainant in paras 21 to 30 of the outline. I do not propose to deal with those arguments separately. I cannot see any merit in them. There is nothing in those paragraphs which causes me to depart from the conclusion reached.
In my opinion there is good reason for not allowing the matter to proceed under Chapter 13 Part 1. The complaint should be dismissed pursuant to s 265(3)(d).
I will hear counsel as to the form of the order and any ancillary matters.