Shellharbour City Council v Minister for Local Government (No 2)

[2016] NSWLEC 119

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Shellharbour City Council v Minister for Local Government (No 2) [2016] NSWLEC 119
Hearing dates:	2 and 9 June 2016, further written submissions filed 24 June 2016
Date of orders:	20 September 2016
Decision date:	20 September 2016
Jurisdiction:	Class 4
Before:	Moore J
Decision:	See orders at [120]
Catchwords:	JUDICIAL REVIEW – proposal for amalgamation of local government areas – Minister’s referral of proposal to Departmental Chief Executive for examination and report– inquiry required to be held – Chief Executive appoints Delegate to conduct inquiry – whether reasonable public notice given of the holding of inquiry – whether identification of locations of public inquiry sessions adequate – whether inquiry held in accordance with Act – whether examination and report on proposal in accordance with Act – whether an affected council denied procedural fairness by Delegate – review and comment on Delegate’s report by Boundaries Commission – whether review conducted in accordance with Act – whether affected council denied procedural fairness by Boundaries Commission – publicly accessible material in support of proposal represented that KPMG analysis and modelling was independent – whether representations misleading – whether allegedly misleading representations invalidated statutory process of amalgamation – whether failure to provide all KPMG analysis and modelling material meant the council was denied procedural fairness
Legislation Cited:	Local Government Act 1993 ss 204, 213, 218, 218A, 218B, 218C, 218D, 218E, 218F, 218F(1), 218F(2), 218F(6), 218F(7), 218F(8), 260, 261, 262, 263, 263(1), 263(2), 263(2A), 263(2B), 263(3), 263(5), 263(7), 264, 265, 705, 706, Pts 1, 2 and 3 of Ch 9, Pt 2 of Ch 17, Sch 2 Prices Regulation Act 1948
Cases Cited:	Bread Manufacturers of New South Wales v Evans (1981) 180 CLR 404; [1981] HCA 69 Botany Bay City Council v Premier Customs Services Pty Ltd (2009) 172 LGERA 338; [2009] NSWCA 226 Botany Bay City Council v The State of New South Wales [2016] NSWCA 243 Botany Bay City Council v The State of New South Wales [2016] NSWSC 583 Hunter’s Hill Council v Minister for Local Government; Lane Cove Council v Minister for Local Government; Mosman Municipal Council v Minister for Local Government; North Sydney Council v Minister for Local Government; Strathfield Municipal Council v Minister for Local Government [2016] NSWLEC 124 Khan v the Minister of Immigration and Ethnic Affairs [1987] FCA 457 Ku-ring-gai Council v Mr Garry West in his capacity as delegate of the Acting Director-General of the Office of Local Government [2016] NSWLEC 62 Ku-ring-gai Council v Mr Garry West in his capacity as delegate of the Acting Director-General of the Office of Local Government (No 2) [2016] NSWLEC 118 Minister for Aboriginal Affairs v Peko -Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40 Shellharbour City Council v Minister for Local Government [2016] NSWLEC 54 Walcha Council v Minister for Local Government [2016] NSWLEC 57 Woollahra Municipal Council v Minister for Local Government [2016] NSWLEC 44 Woollahra Municipal Council v Minister for Local Government [2016] NSWLEC 86
Category:	Principal judgment
Parties:	Shellharbour City Council (Applicant) Minister for Local Government (First Respondent) NSW Department of Premier and Cabinet (Second Respondent) Mr Mike Allen in his capacity as delegate of the Acting Director-General of the Office of Local Government (Third Respondent) NSW Local Government Boundaries Commission (Fourth Respondent)
Representation:	Counsel: Mr G Kennett SC/Mr C McMeniman, barrister (Applicant) Mr N Hutley SC/Ms F Gordon, Mr J Hutton, Dr J Lucy and Ms M Kumar, barristers (Respondents)   Solicitors: Sparke Helmore (Applicant) Crown Solicitor’s Office (Respondents)
File Number(s):	154342 of 2016
Publication restriction:	No

TABLE OF CONTENTS

Introduction

Local government in New South Wales

The amalgamation proposals challenged

Other challenges

The Local Government Act framework

Common complaints with the Hunter’s Hill and other councils proceedings

Introduction

Adequacy of public notice

Conduct of the inquiry

The KPMG issues

The role of the Delegate

Introduction

The Delegate’s reporting role

Consideration of the Delegate’s report

The Council’s complaints concerning the Delegate’s report

The Council’s specific complaints

Introduction

Refusal to make the full KPMG documents available

Denial of procedural fairness – undisclosed information

Notice of the inquiry

The Delegate’s report

The role of the Boundaries Commission

Conclusion

Orders

Judgment

Introduction

Local government in New South Wales

The broad government amalgamation policy

1. In 2015, the New South Wales Government took a policy decision to explore options for amalgamations of local government councils throughout the state. As part of that process, the government commissioned external advice from KPMG, a major consulting firm. After consideration of that advice, the government determined to develop a number of amalgamation proposals (including some in the alternative) and commenced processes under the Local Government Act 1993 (the Local Government Act) that would permit preferred (and proposed for implementation) amalgamation options, were they to eventuate, to be given effect.

2. As the culmination of that process, a process requiring detailed consideration in the instances raised in these proceedings, the government determined to go ahead with a number of amalgamations, but also determined that some other amalgamation proposals that had been investigated were not to go ahead. These abandoned amalgamation proposals included a number of alternatives to amalgamation proposals that the government wishes to proceed and which are being challenged in these proceedings.

The government announcements

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

STRONGER COUNCILS FOR SYDNEY AND REGIONAL NEW SOUTH WALES

…

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

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

…

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

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

…

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

…

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

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

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

…

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

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

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

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

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

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

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

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

5. The report noted:

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

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

The Minister’s amalgamation proposal documents

7. The Minister effected, publicly at least, commencement of the suite of amalgamation processes (of which this challenge forms part) by releasing documents advancing each such proposed amalgamation.

8. Relevantly, on 6 January 2016, the Minister released a document entitled “Merger Proposal: Shellharbour City Council and Wollongong City Council”, a document which commenced with a foreword signed by the Minister and which, in its Executive Summary, commenced with the following:

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

9. The first sentence of that paragraph from the introduction was footnoted with the footnote reading:

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

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

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

11. The nature of the remainder of the material in this document is discussed later.

The amalgamation proposals challenged

12. In these proceedings, Shellharbour City Council (the Council) has challenged the process undertaken by Mr Mike Allen (the Delegate), as the Delegate of the Acting Chief Executive of the Office of Local Government. The Delegate has been appointed, by an Instrument of Delegation from Mr Tim Hurst, the Acting Chief Executive, to inquire into, and report upon, the proposed merger of this Council with its northern neighbour, Wollongong City Council.

13. The Council raises a number of matters concerning this process, from its commencement through to the possibility that the Minister may give effect to a recommendation of the Delegate that:

… the proposal warrants proceeding to implementation.

and recommend to the Governor that the proposed amalgamation be given effect.

14. This judgment deals with the challenge to this proposed amalgamation by the Council. Wollongong City Council has played no part in the proceedings.

15. On 12 May 2016, I granted the Council an interim injunction restraining the Minister from giving effect to this proposed merger (see Shellharbour City Council v Minister for Local Government and Ors [2016] NSWLEC 54). Although that restraining order has expired, the Minister’s undertaking described below remains on foot to prevent the merger until that undertaking itself expires.

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

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

Other challenges

18. There are three other pending proceedings dealing with proposed amalgamations that have been challenged by one or more of the Councils proposed to be amalgamated. At the same time that I have handed down the decision concerning this challenge by Shellharbour City Council, I also handed down my decision in Hunter’s Hill Council v Minister for Local Government; Lane Cove Council v Minister for Local Government; Mosman Municipal Council v Minister for Local Government; North Sydney Council v Minister for Local Government; Strathfield Municipal Council v Minister for Local Government [2016] NSWLEC 124 (the Hunter’s Hill and other councils decision). In the Hunter’s Hill and other councils decision, I set out a short summary of those other proceedings at [1] to [12].

19. In addition to my decision in Hunter’s Hill and other councils, today I have also handed down my decision in Ku-ring-gai Council’s challenge (see Ku-ring-gai Council v Mr Garry West as delegate of the Acting Director-General, Office of Local Government [2016] NSWLEC 118).

20. The Court of Appeal has recently handed down its decision in Botany Bay City Council v The State of New South Wales [2016] NSWCA 243 (Botany Bay), an appeal from the decision of Garling J (Botany Bay City Council v The State of New South Wales [2016] NSWSC 583).

21. The decision of the Chief Judge concerning the proposed amalgamation of Woollahra Council in Woollahra Municipal Council v Minister for Local Government [2016] NSWLEC 86 (Woollahra) is also subject to appeal, an appeal which has been heard and the decision reserved.

22. It is to be observed that the case advanced by the Council in Botany Bay, both at first instance and on appeal, differed in one relevant general respect from that pleaded in the Hunter’s Hill and other councils proceedings before me. The Botany Bay case did, however, have that differing element in common with the matters pleaded by this Council. That concerns what should be the proper understanding of the function of the Boundaries Commission in the statutory processes for amalgamation proposals referred to the Acting Chief Executive.

The Local Government Act framework

23. A comprehensive outline of those statutory processes were set out by Preston CJ in Woollahra at [9] - [32] in the following terms:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Common complaints with the Hunter’s Hill and other councils proceedings

Introduction

24. Many of the general issues pleaded by the Council were also pleaded in Woollahra and in Hunter’s Hill and other councils. Although the precise wording of the pleading and the supporting particulars in the Further Amended Summons of the Council in these proceedings differs in some respects in the wording, the issues engaged and the matters pressed in support of these issues are, in effect, identical.

25. After the Chief Judge handed down his decision in Woollahra, all five councils involved in the Hunter’s Hill and other councils proceedings sought leave to make further written submissions to me to explain why I ought not reach the same conclusion as had been reached by the Chief Judge in Woollahra on the various general matters that were in common.

26. Leave was granted and such written submissions (and written submissions in reply from the Respondents) were provided to me. In Hunter’s Hill and other councils, I dealt with those common, general issues in light of the Chief Judge's findings on each of them and my consideration of the additional submissions made by the Councils and by the Respondents in those proceedings. With respect to each of those general issues, I endorsed the conclusion reached by the Chief Judge that none of those bases of complaint had validity.

27. It is unnecessary for me to repeat, in this judgment, the full detail of my analysis supporting those conclusions in each instance. It is sufficient, in my view, to provide a very brief summary of each of those issues; then to indicate that, in these proceedings, I also adopt the conclusions reached by the Chief Judge in Woollahra and by me in Hunter’s Hill and other councils. The language used in the pleadings in these proceedings differs in only minor aspects, as earlier noted, and does not require different detailed consideration.

Adequacy of public notice

28. The Council pleaded a number of alleged defects in the notice of the inquiry given by the Delegate. Those alleged defects where the complaints were on general grounds that the notice that was given did not satisfy the requirement of s 263(2B) for the giving of reasonable notice were dealt with in Hunter’s Hill and other councils at [152] to [175] as the alleged defects (although the wording in the pleadings may have varied) were to the same effect as in those other proceedings. The discussion and conclusions there set out are equally applicable in these proceedings.

29. These complaints are without foundation.

30. This Council also raised specific, individual matters concerning the notice. Those matters are dealt with in the later section of this judgment dealing with the range of complaints specific to this Council.

Conduct of the inquiry

31. The Council pleads a number of alleged defects in the conduct of the inquiry by the Delegate. Those alleged defects where the complaints were on general grounds were dealt with in Hunter’s Hill and other councils at [176] to [188] as the alleged defects (although the wording in the pleadings may have varied) were to the same effect as in those other proceedings. The discussion and conclusions there set out are equally applicable in these proceedings.

32. These complaints are without foundation.

The KPMG issues

33. As in Hunter’s Hill and other councils, the Council pleads that KPMG was not independent, that the Delegate relied on the assertion that it was; and that the basis for the KPMG economic assertions was not disclosed. These defects are said to have denied the Council procedural fairness and to have caused the Delegate’s discharging of his functions to have miscarried in a material respect – thus vitiating his reporting process.

34. These alleged defects were dealt with in Hunter’s Hill and other councils at [196] to [258] as the alleged defects (although the wording in the pleadings may have varied) were to the same effect as in those other proceedings. The discussion and conclusions there set out are equally applicable in these proceedings.

35. These complaints are without foundation.

The role of the Delegate

Introduction

36. Fulfilling the requirements set by the statute for the Delegate is a central matter for consideration in these proceedings. The role of the Delegate is clear and confined. The role is set by the mandate given by s 263(2A) of the Local Government Act - hold an inquiry for the purpose of exercising its functions in relation to a proposal for the amalgamation of two or more areas that has been referred to it in accordance with section 218F. Although this provision speaks of the role of the Boundaries Commission, it applies to the Delegate by virtue of s 218F(2).

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

The Delegate’s reporting role

38. During the course of the Delegate’s inquiry, there are 11 matters specifically set out in the Local Government Act to which the Delegate is to have regard for his examination and report in the context of the proposal that has been referred to him. These 11 matters are set out in s 263(3) and were set out in the earlier extract from Woollahra.

39. Having conducted his inquiry, the Delegate is then required to furnish a report that addresses these mandatory matters. As can be seen from the final point in the list set by the section, there is also a general sweep-up provision that enables the Delegate to report on such other matters as the Delegate considers may be appropriate under the circumstances.

Consideration of the Delegate’s report

40. In Botany Bay City Council v Premier Customs Services Pty Ltd (2009) 172 LGERA 338; [2009] NSWCA 226, Macfarlan JA (with whom Ipp JA and Hoeben J agreed) said, at [32]:

I appreciate that it is not appropriate to approach reasons of a Commissioner with a “fine-tooth comb”, but the Court must nonetheless attempt to ascertain as best it can what were the essential reasons for a decision.

41. I consider it is appropriate to apply that comment in the context of considering a report, pursuant to s 263(1), of a delegate to whom an amalgamation proposal has been referred. Such reports should not be subject to the same degree of forensic dissection as would be the case of a decision made by a judge.

The Council’s complaints concerning the Delegate’s report

42. In these proceedings, the Council points to what it says are a number of significant inadequacies in the discharge by the Delegate of his statutory responsibilities - deficiencies that the Council says are so fundamental that it is appropriate to conclude that the failures by the Delegate, either individually or in combination, caused the inquiry process to have miscarried and it should be set aside.

The Council’s specific complaints

Introduction

43. In addition to the issues common to the various council proceedings that have been determined, to date, in this Court, the Council has raised separate, more detailed issues requiring consideration in these proceedings. That which follows deals with those separate issues.

Refusal to make the full KPMG documents available

44. Ku-ring-gai Council’s complaints that the full KPMG documents were not made available were dealt with by me when I upheld a claim for public interest immunity – see Ku-ring-gai Council v Mr Garry West in his capacity as delegate of the Acting Director-General of the Office of Local Government [2016] NSWLEC 62. The Chief Judge also dealt with and upheld a similar claim for public interest immunity in Woollahra Municipal Council v Minister for Local Government [2016] NSWLEC 44.

45. Although this Council did not take part in either of those preliminary proceedings, the outcomes are applicable to the Council’s claims in these proceedings that the full KPMG documents should have been made available to it.

46. As a consequence of these determinations and what was dealt with in the section of this judgment dealing with KPMG (and its involvement and its documents), this complaint is without foundation.

47. However, the Council also complains (Grounds 1 and 2) that the refusal to provide the full KPMG documents was a denial of procedural fairness by the Department of Premier and Cabinet and that these documents should have been taken into account by the Delegate. To the extent that these grounds merely constitute a re-pleading of what is dealt with at [44], it was dealt with as there discussed.

48. To the extent that there is embodied in these grounds, a complaint concerning the availability of the full KPMG documents to the Delegate, this is dealt with in Hunter’s Hill and other councils at [218] to [254]. The reasoning there set out is equally applicable in these proceedings.

Denial of procedural fairness – undisclosed information

49. The Council complains (Ground 3) of what it says is a specific denial of procedural fairness caused by the nondisclosure to the Council of material which had been provided (whether in writing or orally) to the delegate thus denying the Council the opportunity to respond to it. This ground was pleaded in the following terms:

The Delegate further denied the applicant (and any other affected member of the community) procedural fairness in taking into account material provided to him without disclosing the substance of the information before him, or providing access to the information or an opportunity to comment on the information.

Particulars

The Delegate received briefings from the Second Respondent and KPMG staff.

The applicant was not aware of the substance of the briefings, nor was the fact that the briefings had occurred disclosed to the applicant.

The applicant did not have an opportunity to make submissions on any material or information provided to the Delegate during the said briefings.

50. The starting point for dealing with this complaint is what was said by Preston CJ in Woollahra at [111] to [113] ([111] being included for context). These paragraphs read:

It follows from this conclusion that s 263 did not mandate that the person holding the inquiry (in this case the Delegate of the Departmental Chief Executive) actively question persons speaking at the inquiry or answer questions asked of the Delegate at the inquiry. Where the section is silent as to the procedure to be followed at the inquiry, that procedure within such limits as are necessarily imposed by its qualifying for the description “inquiry”, is left to the discretion of the person holding the inquiry: Bushell v Secretary of State for the Environment at 94-95. The Delegate did not fail to hold an inquiry under the section by stating that he was “here only to listen”.

Fourth, it also follows from the previous point that s 263 does not require that all key material relied upon by the Boundaries Commission or Departmental Chief Executive in examining and reporting on a proposal referred to it by the Minister under s 218F must be publicly accessible in advance of the holding of the inquiry. This argument of Woollahra Council is predicated on its mistaken contention that the entire process of examination and report must be carried out in public at the inquiry.

The citation of Bread Manufacturers of New South Wales v Evans (at 413) is misplaced. The inquiry required to be conducted in the circumstances and under the legislation considered in that case was quite different to the inquiry required to be held under s 263 of the Act. There, the High Court held that, because legislation in that case conferred investigative powers on the Prices Commission for the purposes of a public inquiry, where an inquiry was held, the Prices Commission was precluded either from using information obtained privately for the purposes of the inquiry without disclosing it to the parties (per Gibbs CJ and Aickin J) or from obtaining information for the purposes of the inquiry except in public and on oath (per Wilson and Mason JJ). Here, s 263 does not so require that information obtained by the Boundaries Commission or Departmental Chief Executive must be publicly disclosed and publicly adduced at an inquiry held under the section. So too, the inquiries held under the legislation considered in Bushell v Secretary of State for the Environment and B Johnson & Co (Builders) Ltd v Minister of Health were quite different to the inquiry required to be held under s 263 of the Act.

51. Although, in [112], His Honour was dealing with accessibility of material in advance of the holding of the enquiry, an examination of Bread Manufacturers of New South Wales v Evans (1981) 180 CLR 404; [1981] HCA 69 shows that this position is equally applicable at any stage during a Delegate’s examination and reporting process. The joint judgement of Mason and Wilson JJ set out, at [11] the relevant provisions applicable at that time in the Prices Regulation Act 1948. Their Honours noted, at [13], the powers of the Prices Commission:

The investigative powers of the Commission are contained within a group of sections numbered from 9-17. They include the power to summon witnesses and take evidence on oath (s. 9), require information to be given and questions answered (s. 13), require the production of balance sheets and other accounts (s. 14), enter upon and search any premises and inspect any documents or goods taking copies or samples thereof as the case may be (s. 15), and require a return to be furnished by any person or class of persons containing particulars of the quantity and cost of any goods in possession and of prices charged or proposed to be charged in respect of them (s. 17).

52. It is clear that the functions being undertaken by the Prices Commission were, subject to a power of intervention by the Minister, of a determinative nature but, most relevantly applicable, of deriving a conclusion from an enquiry conducted in a fashion significantly akin to that conducted by a court. The position here, mandated by ss 218F and 263 is quite radically different. The conclusion of His Honour in [113] that “s 263 does not so require that information obtained by the Boundaries Commission or Departmental Chief Executive must be publicly disclosed and publicly adduced at enquiry under the section” is clearly applicable to this complaint in these proceedings.

53. This complaint fails.

Notice of the inquiry

Introduction

54. The Council makes a number of complaints about the notice of the inquiry given by the Delegate. These complaints are that the notice that was given did not satisfy the requirement of s 263(2B), a provision which requires that reasonable public notice must be given of the holding of an inquiry under this section. The Council says that the notice actually given by the Delegate could not be regarded as reasonable as it was inadequate in a number of material respects and that these errors were jurisdictional.

55. The deficiencies that the Council identifies and proposes should lead to this conclusion were pleaded in the following terms:

7.   The Delegate erred at law, and the error was jurisdictional, in failing to provide reasonable public notice of the holding of an inquiry as required under section 236(2B) [sic] of the LG Act.

Particulars

(a)   The Delegate gave notice of a public inquiry on 20 January 2016.

(b)   The notice was defective as to location in that it failed to provide the address of where the inquiry was being held.

(c)   The notice was defective in that it did not give sufficient details of the merger proposal subject of the public inquiry including, but not limited to, insufficient information is as to whether the proposal was for amalgamation or an alteration of the boundaries with respect to Shellharbour City Council and Wollongong City Council local government areas.

(d)   Further the notice did not constitute reasonable notice in accordance with section 236(2B) [sic] of the LG Act in the circumstances of this case, namely:

(i)   The time of the year;

(ii)   The lack of postal notification to residents of affected areas;

(iii)   The contents of the Proposal and, in particular, the information that was required to be comprehended in order for an interested resident or ratepayer to meaningfully participate in the inquiry; and

(iv)   The process of registration which the notice implied was required (but which in fact was not required under the LG Act) in order for a person to be heard at the inquiry.

Alleged deficiencies (c), (d)(iii) and (d)(iv)

56. These complaints are in common with those pleaded in Hunter’s Hill and other councils and are dealt with at [28] to [30] above.

Alleged deficiency (b) – location of the inquiry

57. The Council complains that the locations of the Delegate’s inquiry to which interested people or organisations were invited is insufficient. This complaint can be dealt with comparatively briefly.

58. As earlier observed, the notice given by the Delegate of the holding of his inquiry was published in both metropolitan and local newspapers. The two locations were described in those notices in the following terms:

The Shellharbour Club

and

Sage Hotel Wollongong

59. The Council makes the same complaint about the description of each venue. The complaint is that each does not provide sufficient specificity – in that the street address of each venue (Corner Wattle and Shellharbour Roads, Shellharbour and 60-62 Harbour Street, Wollongong respectively) was not provided.

60. I am satisfied that this complaint is without foundation. I have so concluded for the following reasons. First, the identifiers contained in the Delegate’s notice were capitalised. Each was clearly the title of a specific place rather than some generic descriptor. For those who might, of their own knowledge, know where The Shellharbour Club or the Sage Hotel Wollongong was located, such a descriptor would be sufficient, in itself. For those who did not know where that institution was located, it would be necessary to make some further enquiry as to where it was and, if the person seeking the information proposed to attend the Delegate’s inquiry, obtain information on how to reach either venue.

61. Even if the notice had said:

The Shellharbour Club, Corner Wattle and Shellharbour Roads, Shellharbour

and

Sage Hotel Wollongong, 60-62 Harbour Street, Wollongong

it is also reasonable to assume that, for a very significant element (if not the vast majority) of those resident in these two local government areas (or anybody else who might be interested in attending this inquiry who was resident outside those areas), those persons would not have precise knowledge of how to reach either of the above set out addresses and would need to make some subsequent enquiry of how to get the venue.

62. The notice, itself, provides two sources for further information: they being a website, and a local-call-cost telephone number. There is no suggestion that visiting the website would not have provided sufficient information on how to access the venue, or that any person making a telephone enquiry seeking such information would not so have been given information in sufficient detail to permit them to find either venue.

63. In any event, it is likely that anybody with other than an immediate and sufficient knowledge of how to get to either of the above set out addresses would need to resort to some other way of obtaining directions for this purpose.

64. Whether that information would be, in this ubiquitous electronic information age, by consulting Google maps or some form of GPS system or by old-fashioned paper street directory or, even more primitively, by taking handwritten notes during a telephone enquiry (whether to the advertised number or to either nominated venue), I am satisfied that the identification given in the notice was of sufficient particularity so as to provide an adequate description of the venues in a fashion that would enable anybody wishing to attend the inquiry to be able to inform themselves sufficiently to get to the venue.

65. I am also satisfied that the pool of potential participants whose knowledge would have been such that further enquiry would have been unnecessary (had the street addresses been given) would not have been so significantly large as to obviate any reasonable likelihood of further information needing to be sought to enable a potential participant to get to either of the venues.

66. The suggestion that capitalised identifiers used in the fashion included in this notification could only be regarded as sufficient if that which was identified was iconic (for example the Opera House) cannot succeed for the reasons earlier described.

67. The capitalisation of the venue names is of sufficient specificity under the circumstances to permit a person desiring to attend the inquiry to be held by the Delegate to be able to find either venue without there being any realistic risk of not being able to do so or going to the wrong place.

68. This ground fails.

Alleged deficiency (d)(i) – the time of the year of the inquiry

69. Notice of the two sets of public inquiry sessions was given in the Sydney Morning Herald and the Daily Telegraph on 13 January 2016. Notice was also given in the Illawarra Mercury on 18 and 25 January 2016 and in The Advertiser (a publication also incorporating The Lakes Times). Notice was given in The Advertiser on 20 and 27 January 2016.

70. New South Wales’ public school holidays, it was agreed, finished with pupils returning to school on 28 January 2016.

71. The public inquiry sessions were scheduled to be held on Tuesday 2 February 2016 at 9.00 am to noon at The Shellharbour Club, whilst those to be held at the Sage Hotel Wollongong were scheduled to be held in two sessions on the same day between 3.00 pm to 5.00 pm and 7.00 pm to 10.00 pm.

72. There is no dispute that, in summary form, this notice can be described as being in two newspapers of statewide circulation and two newspapers of local circulation. With respect to the latter point, I have evidence of the distribution areas of the Illawarra Mercury and The Advertiser, with these showing that the local newspaper distribution appears to cover the totality of the Wollongong City and Shellharbour City local government areas.

73. There is not, as I understand the position, any dispute as to the geographic reasonableness of the notice concerning this proposal; the complaint is as to the temporal reasonableness of the notice, given its juxtaposition with the school holidays and the comparative shortness of the period of time between the second phase of the local notices and the public inquiry sessions themselves.

74. Whilst prudence might well have suggested that the public inquiry sessions might have potentially benefited from greater participation had they been held later and had further local notice been given after the end of the school holidays, this is mere speculation.

75. Although, in this instance, a matter of finer balance than arises in other matters requiring consideration in these proceedings, I am satisfied that the notice actually given should be regarded as reasonable as required by s 263(2B) of the Local Government Act.

76. I have reached this conclusion for two reasons.

77. First, the period between the various statewide-circulating advertisements and the date of the public inquiry sessions, and the period of time between the first of the local-circulating advertisements and the public inquiry sessions, was quite generous and it would be appropriate to regard the later local-circulating advertisements as reasonable reminders.

78. Second, the statewide-circulating advertisements would have been available to all potentially interested residents and ratepayers who may have been holidaying elsewhere within New South Wales at the time of those statewide notices, as well as had they been remaining at home in either local government areas at those advertisement dates. I do not understand there to be any complaint that there was the need, for the purposes of the statutory requirement of reasonable notice, to give notice outside the boundaries of the state of New South Wales.

79. In Woollahra, Preston CJ said, at [72], on a similarly argued point:

Fifth, the fact the public notice was given progressively throughout January, when people might be on vacation, did not cause the public notice that was given to be unreasonable. The earliest that public notice was given was on 12 January 2016. This was after the Christmas/New Year period and the first week of January, being the periods when the greatest number of people are on vacation. The last two weeks of January and the first week of February do not fall into the same category. The evidence of a few people that they did not become aware of and did not attend the inquiry does not establish that the public notice that was given was ineffective in alerting people to the holding of the inquiry. Indeed, the sizeable number of people who did make submissions (449) and attended the two sessions of the inquiry that was held on 4 February 2016 points to the contrary.

80. The same approach is to be taken here.

81. In addition, as his Honour noted at [56]:

Public notice by newspaper advertisement in newspapers circulating in the local government areas affected by the proposal is fair and reasonable notice to the public: Waitemata County v Local Government Commission [1964] NZLR 689 at 699.

82. As a consequence, the mere giving of these notices, in circumstances where a sufficiently long period of notice was given, does not in these circumstances cause a notice given to be regarded as not being reasonable. It is not as if the complaint made is that the public inquiry sessions, themselves, were held during the school holiday period.

83. The test of the reasonableness of the notice is an objective one, having regard to how and when the notice was given, rather than a subjective one in the mind of any person to whom such notice was required to be given.

84. This complaint fails.

Alleged deficiency (d)(ii) – failure to give postal notification to residents

85. As earlier observed, the requirement for notice is contained in s 263(2B) of the Local Government Act. This reads:

(2B) Reasonable public notice must be given of the holding of an inquiry under this section.

86. Preston CJ in Woollahra explained, at [22] to [24] why s 705 of the Local Government Act was unlikely to apply. He also observed, at [25]:

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

87. As noted at [81], “Public notice by newspaper advertisement in newspapers circulating in the local government areas affected by the proposal is fair and reasonable notice”.

88. Preston CJ concluded on this point, at [73], that:

Public notice by newspaper advertisements of the holding of the inquiry was fair and reasonable notice to the public, which was the audience to whom notice was intended to be given

89. The same position applies in these proceedings. I am satisfied that reasonable public notice was given. This complaint fails.

Conclusion on the notice of the inquiry

90. For the reasons set out above, there is no validity in any of these complaints.

The Delegate’s report

Introduction

91. The Council makes one substantive complaint concerning the Delegate’s report. Although not specifically particularised in the Council’s pleadings in its Further Amended Summons, Mr Kennett SC, in his oral submissions, specifically raised issues put by the Council, in its written submission to the Delegate, concerning what it considered would be the inequitable redistribution of development benefits being (and, in the future, to be) reaped from a development known as Shell Cove, a development being undertaken by the Council as a public-private partnership venture. The Council also complained that the significant capital expenditure on the new Shellharbour Civic Centre would not provide the anticipated benefits to residents of the Shellharbour City local government area.

The requirements of s 263(3)

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

93. In this context, it is appropriate to note two aspects of what is required of the Delegate by this section.

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

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

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

The Delegate’s s 263(3)(a) analysis of financial issues

97. The Delegate set out his analysis of general matters falling within the scope of s 263(3)(a) on pages 16 to 22 of his report. The Delegate observed, at page 19 of his report, that:

Shellharbour City Council commented at great length in their submission in regard to their concerns under this factor and engaged Morrison Low and Professor Brian Dollery to undertake additional financial analysis.

98. The Delegate set out the Council's overview (from Table 8) of the financial advantages or disadvantages of the merger. The eight points so submitted included:

The merger proposal creates significant and disproportional disadvantage for the Shellharbour community including through loss of investment returns, liability for infrastructure funding shortfalls in Wollongong, and “sunk cost” of recent financial investments made in the Shellharbour Civic Centre and IT upgrades

99. The first and third of the matters noted in the extract above reflect the two concerns noted earlier in [84].

100. The Delegate also set out extracts from the Morrison Low study commissioned by Shellharbour City Council and from that prepared on the Council's behalf by Professor Brian Dollery. The material submitted by the Council (including the Morrison Low and Dollery material) comprised over 120 pages.

101. The Delegate’s overall conclusion on the general financial matters under s 263(3)(a) was in the following terms:

There are differences between time periods, the methodological approaches, assumptions, and therefore financial estimates undertaken in the various analyses carried out by KPMG, Morrison Low, and Professor Dollery.

It is very difficult in this context away up and appropriately balance out all differing expert and professional views, arguments and counterarguments.

Professor Dollery is the most strident in his criticism of the KPMG report and was quite emotive and some of the language he used. KPMG are the most optimistic in their projections, although they do use a reasonably conservative discount rate and if a lower discount rate were to be used, then the model benefits would be greater.

In their analysis Morrison Low took a very cautious approach and modelled both potential positive financial benefits as well is the negative financial outcomes and risks if the claimed deficiencies were not achieved.

Further to this Wollongong City Council said in its submission “while stating overall some concerns the KPMG assumptions and resulting savings estimates do not withstand rigourous scrutiny at a detailed level, it would appear that there was the potential for financial benefits to be achieved over the longer term as a result of the merger”.

The key questions here are does the proposed merger have sufficient potential to generate financial efficiencies and/or beneficial economies and are these achievable across both of the councils in the long term?

On balance and overall, in the view of the Delegate, the creation of the new council under this proposal does have the potential to bring about a number of long-term benefits and opportunities. The formation of a single merged council will generate economies of scale and financial efficiencies that if effectively managed will allow the establishment of a more financially robust entity that will have a stronger balance sheet and a greater capacity to deliver more efficient management, infrastructure, and services across a range of critical local government functions into the long term.

Therefore this factor is not considered to be an impediment to the merger proposal proceeding.

102. On 8 April, the Delegate forwarded his report to the Chairperson of the Boundaries Commission. The Boundaries Commission considered the Delegate's report (the next section of this judgment deals with the Council's complaint about the role of the Boundaries Commission). The Boundaries Commission’s general conclusions concerning the Delegate's report were:

Overall, the Commission’s view is that the Report shows the Delegate adequately considered all the factors.

103. With respect to the aspect of the Delegate's report dealing with s 263(3)(a), the Boundaries Commission said:

The Commission’s view is that the Delegate adequately considered this factor.

104. Mr Kennett's oral submissions (Transcript 9 June 2016, page 8, line 1 to 22) on this point were:

…I wanted to note the council makes a couple of other points under the general heading of financial advantages and disadvantages. On p 268, it argues that the merger proposal imposes and inequitable disadvantage on the Shellharbour community and it refers to an investment that the council had made - or it says, "Shellharbour community," but it really means the council - in a development known as Shell Cove. It says "Council and its...the merger proposal," I'm not at about point 6 "the merger proposal...of the income." Then there's a table to illustrate that. Over the next page, again in bold, there's suggestion that infrastructure funding shortfalls in Wollongong would create a liability for Shellharbour rate payers that doesn't currently exist. There's reference to some other financial returns on investments of Shellharbour. Further down on p 269, then at p 270, a new point, "Shellharbour rate payers...councils are merged." And it talks about funding that has been committed to the Shellharbour civic centre. So submission went a bit beyond a direct response to KPMG and financial pluses or minuses for the merged council.

The submission also went into issues of financial equity for want of a better word or fairness as between Shellharbour and its residents and Wollongong and its residents.

105. It is unnecessary to set out the Respondents’ submissions on this point.

106. As Preston CJ observed in Woollahra, at [167]:

At the outset, it should be noted that the financial factors in s 263(3)(a) are expressed at a high level of generality. Woollahra Council’s argument is that the Delegate failed to make some inquiry about facts at the level of particularity set out in its submissions. But in order for that argument to succeed, s 263 must expressly or impliedly oblige the Delegate to inquire into and consider the financial factors in s 263(3)(a) at that level of particularity: see Walsh v Parramatta City Council [2007] NSWLEC 255; (2007) 161 LGERA 118 at [60], adopted in Notaras v Waverley Council [2007] NSWCA 333; (2007) 161 LGERA 230 at [120].

107. In effect, the Council’s complaint is that, for these two matters, of specific concern to it, the Delegate has not given “proper, genuine and realistic consideration” to their merits (see decision of Gummow J in Khan v The Minister of Immigration and Ethnic Affairs [1987] FCA 457 at [25]).

108. However, in Minister for Aboriginal Affairs v Peko -Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40, Mason J said, at [15(d)]:

… in the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision-maker and not the court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power [citations omitted]. I say "generally" because both principle and authority indicate that in some circumstances a court may set aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to a relevant factor of no great importance. The preferred ground on which this is done, however, is not the failure to take into account relevant considerations or the taking into account of irrelevant considerations, but that the decision is "manifestly unreasonable".

109. In this instance, there is no weighting requirement or any relevant specificity mandated by s 263(3)(a). As earlier noted, the Delegate addressed the matters raised by this provision over more than six pages of his report. It is clear from the above extracted material that he was well aware of the matters raised by the Council. That he did not feel the need to address them at the level of specificity that the Council felt was necessary does not mean that he did not consider the matters raised.

110. There is no manifest unreasonableness in the Delegates’ consideration of the s 263(3)(a) material submitted to him by the Council. This complaint fails.

The role of the Boundaries Commission

111. When the Minister elects to adopt the option of referring a proposal to the Chief Executive of the Office of Local Government and, thence, by delegation by the Chief Executive to a person specifically tasked to consider the proposal as described above, the role of the Boundaries Commission is a much more constrained one than that which would have arisen had the Minister elected to refer the matter directly to the Boundaries Commission. This constrained role set by the Boundaries Commission in these circumstances is set out in s 218F(6)(b) of the Local Government Act. The role of the Boundaries Commission is confined to reviewing and commenting upon the report of the Delegate.

112. In these proceedings, the Council submits that this role is a broad one, mandating the Boundaries Commission to comment on the merits of matters contained in the Delegate’s report rather than confining itself, as is here the case, to an assessment of whether the Delegate met the statutory inquiring and reporting responsibilities mandated for him by the Local Government Act.

113. In this respect, the Council says that the process undertaken by the Boundaries Commission, as shown from its report to the Minister, did not fulfil the statutory tasks set for it. As a consequence, the Council submits that this is a fundamental failure and that this failure caused this element to miscarry and to do so in such a fashion as to vitiate the process.

114. The Delegate provided, as required by s 218F(6)(a), his report to the Boundaries Commission. Following the provision of his report to the Boundaries Commission, the Boundaries Commission undertook a review of his report and provided its own report to the Minister, commenting on that which had been provided to it by the Delegate. The Council submits that the Boundaries Commission process miscarried. A copy of the Boundaries Commission’s report is in evidence.

115. The Council pleaded its concerns about the role of the Boundaries Commission in Ground 11 of its Further Amended Summons in the following terms:

The Boundaries Commission, in making its Comments, misunderstood its statutory task, improperly fettered its discretion and thus failed to complete its jurisdictional task.

Particulars

(a) On 26 April 2016, the Boundaries Commission prepared Comments on the Report, in purported compliance with s 218F(6) of the Act.

(b) The Comments were directed to whether the Delegate adequately considered the factors required by section 263(3) of the Act.

(c)   The Comments expressly stated that the Boundaries Commission’s role does not involve re-examining the advantages and disadvantages of the proposed mergers, accepting submissions or holding public inquiries.

(d)   Contrary to the Boundaries Commission’s finding, as part of its function of review and comment, the Boundaries Commission:

i.   May re-examine the advantages and disadvantages of the proposed merger, accept submissions or conduct a further inquiry; and

ii.   Was implicitly required to review the merits of the Report as opposed to merely whether the Report complied with the requirements of the Act.

116. A broadly similar complaint had been heard and determined by Garling J in Botany Bay City Council v State of New South Wales [2016] NSWSC 583. Garling J had rejected that complaint concerning the role of the Boundaries Commission. Garling J's decision was appealed.

117. On 2 September 2016, the Court of Appeal dismissed the appeal against Garling J's decision (see Botany Bay City Council v The State of New South Wales [2016] NSWCA 243). The judgment in those proceedings was written by Sackville AJA (with whom Bathurst CJ and Ward JA concurred). His Honour dealt with the complaint raised by Botany Bay City Council concerning the role of the Boundaries Commission at [91]-[101], saying:

91. In addressing Botany’s submissions, it is convenient to start with the construction of s 263(1) of the LG Act. It will be recalled that s 263(1) requires the Commission (or, in the present case, the Chief Executive) to “examine and report on any matter with respect to the boundaries of areas…which may be referred to it by the Minister”.

92. This language appears to be very broad. However, in Botany Bay City Council v Minister for Local Government, this Court held that the Chief Executive’s role, where the Minister refers a proposal for examination pursuant to s 218F(1), is constrained by the proposal that is the subject of the referral. The role of the Chief Executive in such a case is to examine and report on the proposal that has been referred by the Minister. Accordingly, the Court upheld the trial Judge’s conclusion that Botany’s separate proposal for the alteration of its boundaries was irrelevant to the Chief Executive’s examination of the Minister’s Proposal.

93.   It follows from the reasoning of the Court in BotanyCouncil,that the functions of the Chief Executive on the referral of a proposal by the Minister are not at large, but are constrained by the purpose of the referral. The stark contrast between the language of ss 218F(1) and 263(1) on the one hand, and s 218F(6) on the other, demonstrates that the functions of the Commission in conducting a review of a report of the Chief Executive are substantially more confined than the functions of the Chief Executive in preparing a report on a proposal by the Minister. Under s 218F(6) the Commission is not to examine and report onthe Minister’sproposal.Instead, the Commission is directed toreview the Chief Executive’s report and send its comments to the Minister.

94. It is no doubt true, as Mr Robinson submitted, that the word “review”, considered in isolation, is capable of describing a reconsideration of the merits of the decision or a proposal. But s 218F(6) must be construed in context. The provision applies to an amalgamation proposal or a proposal that is not supported by at least one of the councils affected. It is the Chief Executive’s report on the proposal, not the proposal itself,that is to be furnished to the Commission for “review and comment”. The Commission is then required to “review the report and send its comments to the Minister”. The “comments” are clearly intended to be the views of the Commission arising from its review of the Chief Executive’s report.

95. Mr Robinson emphasised that, as pointed out by Spigelman CJ in South Sydney, the Commission has expertise in local government issues and enjoys a degree of independence from the Minister. However, these characteristics do not compel the conclusion that the Commission’s role under ss 218F(1) and 263(1) extends to re-examining the merits of a Minister’s proposal that has already been examined by the Chief Executive. The contrast in statutory language to which I have referred demonstrates that the Commission’s expertise and independence are to be utilised for a different purpose. The Commission’s primary function is to review the report already prepared by the Chief Executive and comment whether the Chief Executive has performed his or her functions in accordance with the legislation. If not, the Commission is to make such comments as it considers appropriate in order to assist the Minister in determining whether or not that the Governor implement the proposal, with or without modifications.

96. It is implicit in the language of s 218F(6) that the Commission’s role is not necessarily limited to commenting whether the Chief Executive’s report complies with the statutory requirements. Section 218F(7) contemplates that the Minister may recommend that the Governor implement the relevant proposal with such modifications as arise, inter alia, out of the Commission’s comments on the Chief Executive’s report. This language implies that the Commission, on the basis of its review of the Chief Executive’s report, may draw the Minister’s attention to matters that may warrant modification of the proposal. However, the statutory language does not imply that the Commission must go beyond a review of the Chief Executive’s report and undertake its own independent evaluation of whether the proposal should be recommended for implementation.

97. If Botany’s construction of s 218F(6) of the LG Act were to be accepted, the Commission would be entitled and perhaps bound to re-examine afresh the merits of the Minister’s proposal. Yet, in doing so, it would not be required to observe the statutory procedures that govern the Chief Executive’s examination of the merits of the proposal. For example, the Commission would be free to re-examine the merits of an amalgamation proposal without conducting an inquiry of the kind that the Chief Executive must undertake when examining the proposal on a referral under s 218F (see s 263(2A)). Not only would this set the Chief Executive’s examination of the proposal at nought, it would effectively negate the right of the public to participate in the decision-making process, contrary to the evident intention of the legislation.

98.   Mr Robinson submitted that the Commission’s error was revealed in its statement that:

“the Commission’s role does not involve re-examining the advantages and disadvantages of the proposed merger, accepting submissions and holding inquiries.”

Putting aside the reference to “accepting submissions”, as to which no issue arises in the present case, this statement is unobjectionable. For the reasons I have given, the Commission’s role did not involve re-examining the merits of the Minister’s Proposal. Nor was the Commission empowered by the legislation to conduct inquiries when discharging its function of reviewing the Delegate’s Report.

99.   Mr Robinson did not suggest that the Commission lacked power to make the comments on the Delegate’s Report summarised in Section 1 of the Commission Review. His complaint was that the Commission did not go further. It is, however, one thing to recognise the Commission as having the power to make additional comments on the Delegate’s Report; it is quite another to contend that by choosing not to make additional comments the Commission committed an error of law, let alone a jurisdictional error that might invalidate its report.

100.   It follows from the foregoing that the Commission did not commit any legal error by observing that the name of the new council and the Delegate’s suggestion of a boundary realignment were matters for the Minister. There is nothing in the legislation that obliged the Commission to go any further than to draw these matters to the Minister’s attention with a view to considering whether the merger proposal should be modified.

101.   For these reasons I reject Botany’s challenge to the validity of the Commission Review. It is not necessary to consider whether, if the challenge had been made good, any relief could be granted in respect of the Minister’s public announcement on 12 May 2016.

118. That which Sackville AJA wrote is equally applicable to the complaint by the Council in these proceedings. As a consequence, this ground fails.

Conclusion

119. I have concluded that there was no defect in the process for this proposed amalgamation in either that which was required of the Delegate or that which was required of the Boundaries Commission. It therefore follows that the proceedings are to be dismissed. The Council is to pay the Respondents’ costs.

Orders

120. Therefore, the orders of the Court are:

1. The proceedings are dismissed; and

2. The Applicant is to pay the Respondents’ costs as agreed or assessed.

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Amendments

21 September 2016 - Amendment to appearances for the Respondent on the cover sheet.

Decision last updated: 21 September 2016