Shellharbour City Council v Stewart - [2008] NSWLEC 151

No judgment structure available for this case.

Land and Environment Court

of New South Wales

CITATION: Shellharbour City Council v Stewart [2008] NSWLEC 151
This decision has been amended. Please see the end of the judgment for a list of the amendments.

PARTIES:
APPLICANT:
Shellharbour City Council
FIRST RESPONDENT:
Helen Stewart
SECOND RESPONDENT:
Geoff Rose

FILE NUMBER(S): 41097 of 2004

CORAM: Biscoe J

KEY ISSUES: Civil Enforcement :- Whether local government councillors disclosed information obtained in connection with the administration or execution of the Local Government Act 1993 in breach of s 664(1) and (1A) - Standard of proof taking into account the gravity of the matters alleged - Nature of circumstantial evidence.

LEGISLATION CITED: Evidence Act 1995 (NSW), s 140
Local Government Act 1993 (NSW), ss 10A, 428, 664, 666, 673(1), 676(1)

CASES CITED: Briginshaw v Briginshaw (1938) 60 CLR 336
City of Canada Bay Council v Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57
F & D Bonaccorso Pty Ltd v City of Canada Bay Council (No 3) [2007] NSWLEC 569
Gianoutsos v Glykis (2006) 65 NSWLR 539
Jones v Dunkel (1959) 101 CLR 298
Martin v Osborne (1936) 55 CLR 367
R v Buckland [1977] 2 NSWLR 452
Shepherd v The Queen (1990) 170 CLR 573
Vines v Australian Securities and Investments Commission (2007) 62 ACSR 1

DATES OF HEARING: 31/7/07, 1-2/8/07, 2/10/07, 11-14/2/08, 25-26/3/08

DATE OF JUDGMENT:
23 April 2008

LEGAL REPRESENTATIVES:
APPLICANT:
Mr B. McClintock SC (until 2/10/07) and Mr K. Connor SC
Mr F. Douglas QC (from 11/2/08)
SOLICITORS:
Maddocks
FIRST RESPONDENT:
Mr P. Clay (until 2/10/07) and Mr N. Eastman (until 2/8/07)
Mr W. Moss (from 11/2/08)
SOLICITORS:
Russell McLelland Brown (until 11/2/08)
Robert Watson Solicitor (from 11/2/08)
SECOND RESPONDENT:
Mr P. Clay (until 2/10/07) and Mr N. Eastman (until 2/8/07)
Mr P. Maiden SC (from 11/2/08)
SOLICITORS:
Russell McLelland Brown

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

BISCOE J

23 April 2008

41097 of 2006

SHELLHARBOUR CITY COUNCIL v STEWART & ANOR
JUDGMENT

1 HIS HONOUR: These unprecedented proceedings concern alleged unauthorised disclosures of information by local government councillors. The applicant, Shellharbour City Council, claims a declaration that two of its councillors, the respondents Helen Stewart and Geoff Rose, disclosed information obtained in connection with the administration or execution of the Local Government Act 1993 (NSW) (LG Act) in breach of s 664(1) and (1A). The council also claims consequential orders, including that the respondents be restrained from any further disclosures of information in breach of s 664 and that they deliver up any documents that have been or might be utilised by them.

2 The council alleges that the disclosure of information occurred as follows:

(a) on about 29 March 2006, Councillor Stewart telephoned and offered to fax, and then did fax, to Mr Peter Holstein, business papers and a confidential agenda for a closed committee meeting of council to be held on 29 March 2006, intending or knowing that they were likely to be posted on an internet website called the South Coast Councils Community Forum ( Forum ) on which the public could post materials and comments. This information concerned renewal of the employment contract of the council’s General Manager, Mr Brian Weir. On the night of 29 March 2006 and again on 30 March 2006 Mr Holstein posted this information on the Forum.
(b) on about 16 May 2006, Councillor Stewart offered to make a draft confidential report on the council by the Department of Local Government ( draft DLG Report ) available to Mr Holstein for copying by providing a copy to Mrs Shirley Hollis, with the intention, or knowing it was likely, that it would be posted on the Forum. Mrs Hollis provided the copy to Mr Holstein and, in the period from about 20 May 2006 to about 11 June 2006, Mr Holstein posted extracts of it on the Forum;
(c) on about 15 June 2006, Councillor Stewart recorded confidential information concerning the General Manager’s remuneration figures on a piece of paper during a closed council committee meeting and she and/or Councillor Rose provided the figures to Mrs Hollis and/or Mr Holstein with the intention, or knowing it was likely, that they would be published on the Forum. On the night of 15 June 2006 Mr Holstein posted the figures on the Forum.

3 It is not in issue that the alleged leaks occurred. The respondents deny that they were responsible. They also dispute that the information posted on the Forum on 15 June 2006 was confidential and therefore contend that it could be lawfully disclosed. All other councillors as well as relevant council officers gave evidence that they did not disclose the information.

4 Section 664(1) and (1A) of the LG Act provide as follows:

664 Disclosure and misuse of information

Ombudsman Act 1974

Freedom of Information Act 1989

5 Section 10A relevantly provides:

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

6 In the present case there was no suggestion that there was any “lawful excuse” for any of the disclosures. That may be subject to one qualification, for it is part of the defence case that the information disclosed in June 2006 was not confidential and therefore could be lawfully disclosed, which could be viewed as a submission that there was a lawful excuse for disclosing it.

7 A council may bring proceedings to remedy or restrain alleged breaches of the LG Act: s 673(1). If satisfied that a breach has been committed or that a breach will, unless restrained by order, be committed, the Court may make such order as it thinks fit to remedy or restrain the breach: s 676(1).

8 Section 140 of the Evidence Act 1995 (NSW) relevantly provides:

140 Civil proceedings: standard of proof

(c) the gravity of the matters alleged.

9 Section 140(2)(c) reflects the test in Briginshaw v Briginshaw (1938) 60 CLR 336, which was addressed as follows in Gianoutsos v Glykis (2006) 65 NSWLR 539 (CCA) at [46] – [51] (CCA) by McClellan CJ at CL (with whom Sully and Hislop JJ agreed):

46. [The primary judge’s] use of the expression comfortable satisfaction does not explain the task which his Honour set for himself. Briginshaw is concerned with the circumstances when the obligation falling upon a moving party requires proof to the reasonable satisfaction of the judicial decision maker. That question will be informed by the seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description or the gravity of the consequences flowing from a particular finding ( Briginshaw (at 362)).

Briginshaw test

Briginshaw

Family Law Act

G v H

Briginshaw v Briginshaw

[t]he seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal

importance and gravity

Briginshaw v Briginshaw

48. As their Honours point out the approach to the making of conclusions considered by Dixon J in Briginshaw , in the well known passage to which their Honours refer, should not be understood as imposing a test in civil litigation other than the balance of probabilities. However, what is required is that when loading the scales appropriate weight is given to the matters to which Dixon J referred.

49. The Briginshaw standard is often spoken of quite loosely and as if it is a third standard of proof sitting somewhere between the balance of probabilities and beyond reasonable doubt. This is wrong. As Dixon J points out, the civil standard of proof is proof on the balance of probabilities requiring the relevant party to prove the elements of its case to that standard.

Kantor v Vosahlo

heavy onus

heavy

reasonably satisfied

Briginshaw

affirmatively satisfied

Kantor

comfortably satisfied

10 In Vines v Australian Securities and Investments Commission (2007) 62 ACSR 1, [2007] NSWCA 75 at [808] – [813] Ipp JA addressed the Briginshaw test as follows:

Briginshaw v Briginshaw

Briginshaw

reasonable

satisfaction

Briginshaw

circumstantial evidentiary facts

inference and circumstance

Neat Holdings Pty Limited v Karajan Holdings Pty Limited

where so serious a matter as fraud is to be found

Palmer v Dolman

Evidence Act 1995

Neat Holdings Pty Limited v Karajan Holdings Pty Limited

11 It became common ground (at least as between the council and Councillor Rose) that the alleged breaches of s 664(1) and (1A) of the LG Act are serious but do not give rise to a criminal penalty. That was said to be because a maximum penalty is prescribed for a breach of subsection 664(3) but not for the preceding subsections, as is demonstrated by a comparison with s 666 where the legislature has prescribed a maximum penalty immediately after each of its individual subsections. On that basis, in deciding whether the case has been proved on the balance of probabilities, there should be taken into account the gravity of the matters alleged on the basis that they are serious but not as serious as they would be if they attracted criminal penalties. I propose to approach the matter in that way initially in relation to each of the three leaks. However, it is unnecessary to express a concluded view as to the correctness of that approach because my decision in relation to each of the leaks will be the same whether or not a contravention attracts a criminal penalty.

12 In a democracy there is a tension between the need to protect confidential information and the public’s right to know. The legislature has addressed the line between the two by prohibiting disclosure of certain information in s 664 of the LG Act and by authorising a council to close meetings to the public in s 10A. Leaking information in contravention of s 664 defies the legislative will in a sensitive area. It is a breach of an obligation of confidence. It can deter, impede or inhibit the supply and discussion of, and decisions on, confidential information. It can undermine trust between councillors, between councillors and council management, and between the council and the public or third parties who provide confidential information on the basis that their confidences will be respected unless there is lawful excuse for disclosure. Those are some of the reasons, I think, why a breach of s 664(1) or (1A) may be regarded as serious in a case such as the present.

Background to the present application

13 On 11 April 2006, following the March 2006 publication on the Forum, the council unanimously authorised the General Manager to commence an investigation into the source of the unauthorised disclosures. The General Manager retained KPMG Forensic and Maddocks, solicitors, to assist with the investigation. Following an investigation, in late 2006 the council commenced proceedings against Mrs Shirley Hollis and another person seeking orders that, among other things, they provide affidavits setting out what they knew about the matter. In early 2007 two more persons were added as respondents.

14 When the council advised Mr Holstein that it intended to join him to the proceedings, he offered to provide the council (inter alia) with the names of the persons who had provided him with the information. On 4 April 2007 he provided the council with a statutory declaration after first entering into a deed of that date with the council in which, as required by him, it promised (inter alia) not to join him to the proceedings. His primary objective in naming the sources, he testified, was to have the council discontinue proceedings against the then respondents, in particular Mrs Hollis. In the statutory declaration, Mr Holstein generally referred to Mrs Hollis as “the Third Party”, in order to protect her identity.

15 The council thereafter discontinued the proceedings against all the then respondents and joined Councillors Stewart and Rose and a former councillor, Leon Cicolini, as respondents. After the hearing began, the council discontinued against Mr Ciccolini.

Mr Holstein and Mrs Hollis

16 Two central characters in the story are Mr Peter Holstein and Mrs Shirley Hollis. Mr Holstein gave evidence but Mrs Hollis did not. At all material times Mrs Hollis was a proprietor of the Forum, which she and others established in December 2005. The logo of Mr Holstein’s business appeared on the Forum website. Mrs Hollis and Mr Holstein are very good friends. She is a person for whom he has a very high regard and he strongly disapproved of the council suing her. They were in regular contact throughout 2006 and up to the present time.

17 On 2 April 2007 Mr Holstein sent an email to Mr Stan Gallo of KPMG Forensic proposing the following:

Stan, just so we are clear on the points discussed, Maddocks need be informed to have the deal sewn up. We are happy to meet Wednesday PM but that will be my last chance for a while due work commitments and I really want that whole lot over then and there anyway. I will be bringing the third party and as I said on the phone; they will only answer ONE question about the wages deal that night from council. Please, do not ask anything else or else we will have to walk out. They are very very concerned about doing that much. Anyhow, MADDOCKS needs to draft up the agreement along the lines that I have enclosed below and they will be getting no information whatsoevever until this is signed by all parties and witnessed.

Cheers

Peter

DEAL BETWEEN PETER HOLSTEIN and BRIAN WEIR/SHELLHARBOUR COUNCIL

With reference to item 4 directly above, concerning confidentiality, should council or Brian Weir wish to pursue actions on these matters at some later date against the sources named as leakers in this matter, then they are at liberty to seek written permission from Peter Holstein or any other third party mentioned, to expose such disclosure. This clause is not negotiable and will be reviewed at a later date as discussed with KPMG.

18 On 4 April 2007 Mr Holstein met with Mr Gallo and Mr Robin Tarr of KPMG Forensic for some 10 hours during which he and the council executed a deed and he executed a statutory declaration, discussed above at [14]. The “third party”, Mrs Hollis, did not attend. His statutory declaration, if accepted, would inculpate Councillor Stewart in the March and May 2006 disclosures and Mrs Hollis in the May and June 2006 disclosures. In summary, according to his statutory declaration:

19 The precise relevant contents of the statutory declaration are set out later in these reasons for judgment when I consider each of the March, May and June leaks.

20 The deed dated 4 April 2007 between the council and Mr Holstein included the following provisions:

Statutory Declaration

4. Council acknowledges that, for the purpose of executing this Deed, Holstein is not required to identify the Third Party mentioned in the Statutory Declaration.

Delivery up of documents

5. Holstein agrees to deliver up to Council within seven (7) days of the date of this Deed all copies of documents in his possession which contain s664 Information, including but not limited to:

Proceedings

6. Subject to clause 7, Council:

6.2 Undertakes not to use the information obtained in the course of the Proceedings to commence or maintain defamation proceedings against Holstein.

6.3 Undertakes not to release information obtained in the course of the Proceedings to individuals who were the subject of potentially defamatory comment on the Forum for the purpose of defamation proceedings against Holstein unless Council is required to release the information by law.

…

Confidentiality

…

11. Council will not, unless compelled to do so by law, at any time hereafter, divulge to any person or body the identity of Holstein as the maker of the Statutory Declaration, except where the disclosure is made to the Department of Local Government, the Independent Commission Against Corruption or any other similar statutory or State authority, the Land and Environment Court of NSW or if the disclosure is essential having regard to the principles of natural justice.

12. In the event of any proceedings ensuing in the Land and Environment Court in relation to facts or circumstances relevant to the subject matter of the Statutory Declaration, Council undertakes to apply for a suppression order in regard to the identity of Holstein as the maker of the Statutory Declaration.

21 Although Mr Holstein’s statutory declaration was initially admitted only as a document produced between him and KPMG Forensic, it later came to be evidence of the truth of its contents. Initially Mr Holstein said in evidence that he had recanted the entire document. Subsequent questioning established that he did not by any means recant the entire document. On the contrary, Mr Holstein testified that he was reasonably confident that the information in it was correct when he made it and confirmed the accuracy of most of its contents. Some parts he corrected or qualified. He also indicated that he believed that parts of it were incorrect. He propounded a theory that the person who rang him to provide the March and May 2006 information might not have been Councillor Stewart but an impostor pretending to be her.

22 In cl 3 of the deed Mr Holstein warranted that the information in the statutory declaration was a complete record of what he saw and heard. In a letter to the council’s solicitors dated 30 May 2007, Mr Holstein stated that he considered the information in his statutory declaration to be factual and accurate when he signed it. Mr Holstein conceded in cross-examination that the information he provided was reflected in his statutory declaration and that at the time he believed it to be true. I reject any suggestion elsewhere in Mr Holstein’s evidence or in submissions that Mr Holstein’s will was overborne. It was alternatively submitted on behalf of Councillor Stewart that Mr Holstein lied in his statutory declaration, and in particular plucked Councillor Stewart’s name out of the air, in order to get the release of Mrs Hollis (and perhaps other of the then respondents) from the proceedings and to protect himself from being sued. It is difficult to rationalise that theory with the fact that he named Mrs Hollis as the source of his information in relation to the June 2006 disclosure. Mr Holstein was cross-examined at length and impressed me as a strong-minded person well able to attend to the making of such a statutory declaration to the best of his recollection, even allowing for the length of time that it took. Mr Gallo was cross-examined and I accept his evidence. I consider that the statutory declaration probably reflected Mr Holstein’s recollection at the time that he made it.

23 Nevertheless, the fact that in evidence he departed from his statutory declaration in significant respects after he had warranted that it was a complete record of what he saw and heard, leads me to exercise particular caution in accepting his contested evidence.

24 The council submitted that as Councillors Stewart and Rose filed an affidavit from Mrs Hollis, she was a witness who might have been expected to be called to give evidence in their case yet they did not call her. As I understand it, the council’s proposition was that the Court should draw an inference against the respondents that Mrs Hollis could have said nothing to assist their case: Jones v Dunkel (1959) 101 CLR 298 at 321; R v Buckland [1977] 2 NSWLR 452 at 457. However, the council gave notice during the hearing that it intended to call Mrs Hollis in its case. Being unable to obtain an affidavit from her, the council served a subpoena on her to attend to give evidence at the hearing. She did not comply with the subpoena. Although the council could have, but did not, apply for a bench warrant to have her brought before the Court, in all the circumstances I consider that her absence as a witness has been sufficiently explained and that the proposed inference ought not be drawn against any of the parties over her absence. Nevertheless, her absence bears on the question whether the council has discharged its burden of proof given her central role in at least two of the disclosure allegations.

Circumstantial evidence: telephone records

25 Apart from Mr Holstein’s evidence, the council relied on circumstantial evidence including telephone records, communications between Councillor Stewart and Mr Holstein during the hearing and alleged deficiencies in the respondents’ evidence. The case against Councillor Rose, which is limited to the June 2006 disclosure, is entirely circumstantial. The telephone records in evidence are extensive but do not include Councillor Stewart’s private mobile phone records, as distinct from her mobile phone and landline provided by the council and her private landline.

26 From September/October 2005 there were numerous, regular telephone calls between Councillor Stewart and Mrs Hollis. After Mrs Hollis established the Forum in December 2005, Councillor Stewart and she were in almost daily telephone contact. At the end of February 2006, Councillor Stewart and Councillor Rose commenced to use for internet access the landlines provided to them by the council. The telephone records in evidence do not show that Councillor Stewart was in communication directly with Mr Holstein until 15 June 2006 and they do not show any communication between Councillor Rose and Mr Holstein. The council invited the inference that their main point of contact in relation to matters concerning the Forum was Mrs Hollis.

27 Councillor Stewart was cross-examined about the numerous telephone calls between Mrs Hollis and her in the period to August 2007. She was generally unable to recall their content except in a general way. She said they could have been about issues in the Albion Park area. She said she believed a lot of the calls were in regard to the city’s dog pound, which was extremely important to her, and that there were calls about fundraising to help a diabetic person purchase an insulin pump. She acknowledged that it was possible that she spoke to Mrs Hollis about the Forum but claimed that she was not interested in the Forum. She denied communicating with Mrs Hollis about what appeared on the Forum or that she collaborated with her to leak information from the council to be posted on the Forum. She denied knowing that Mrs Hollis was actively involved on the Forum website.

28 At the end of the second day of the trial (1 August 2007) there was discussion concerning when Mr Holstein would be called to give evidence. Councillor Stewart was present in court. Mr Holstein commenced giving evidence next morning. Just before Mr Holstein commenced to give evidence, Councillor Stewart’s counsel made a point of openly asking her to leave the Court – which she did – as counsel for the council had indicated that otherwise comment might be made about her presence during his evidence. During Mr Holstein’s cross-examination that day it came out that he had a telephone conversation with Councillor Stewart on the preceding night which he said was “about the Mayor’s testimony and the stuff that had been during the day” and that he had probably received an SMS message or messages from her, but he did not speak to her at court on 2 August because he was under oath and had been told not to speak to her. His mobile phone was then called for and opened to reveal SMS messages to him from Councillor Stewart the previous night and the times and duration of telephone calls from her. It also revealed that he had stored her phone number on that mobile phone. The SMS messages and calls on 1 August were as follows:

(a) at 7.39 pm Councillor Stewart sent the following SMS to Mr Holstein: “ Ring home ”;
(b) at 7.40 pm Mr Holstein called Councillor Stewart on her private mobile number. The call lasted 23 seconds;
(c) at 7.41 pm Mr Holstein telephoned Councillor Stewart’s land line. The call lasted 16 minutes;
(d) at 8.10 pm Councillor Stewart sent a second SMS to Mr Holstein stating:

why call all councillors to be questioned on the dlg report something not right hope it is not a trap get a copy have a look put your thinging [sic] cap on come up with something;

(e) at 8.19 pm Councillor Stewart sent a third SMS to Mr Holstein:

They had nothing till you made a connection to councillors what do think were they up too

(f) at 8.32 pm Mr Holstein called Councillor Stewart on her land line. The call lasted nearly nine minutes;
(g) at 8.59 pm Mr Holstein called Councillor Stewart again on her land line. The call lasted 53 minutes and 35 seconds.

29 Although Councillor Stewart did not say anything about those conversations in her subsequent evidence in chief, her cross-examination revealed that she had read the transcript of Mr Holstein’s evidence and confirmed that she had been in communication with him on the evening of 1 August 2007 and discussed his evidence. In cross-examination, Mr Holstein and Councillor Stewart claimed to have remarkably little recollection of what they talked about during those conversations. However, when it was put to Councillor Stewart in cross-examination that she never remonstrated with Mr Holstein for having said what he said about her (in his statutory declaration), she said that she did so on the night of 1 August 2007. In re-examination she claimed rather fulsomely that she told him that she was shocked that he had made those allegations and that she had not rung him and made any arrangements to fax or provide documents to use through another person; and that he said that he knew that.

30 The council submitted that the second and third SMS messages were not the communications of a truthful and honest person in the circumstances and were attempts to influence his evidence, and that her oral evidence in re-examination should not be accepted.

31 On 28 February 2006 Mr Weir wrote the following letter to the Mayor applying for re-appointment to the position of General Manager as his employment contract was due for renewal on 31 August 2006:

In accordance with the provisions of Clause 4 of my Contract, I hereby formally seek reappointment to the position of General Manager of Shellharbour City Council.

I believe the Council’s performance over the past four years (the term of the current contract) warrants Council’s favourable consideration of my application.

32 On 16 March 2006 Mr Bob Howe on behalf of Strategic Consulting Solutions Pty Ltd wrote to the Mayor, who had retained him for that purpose, with a review of the General Manager’s salary package. The letter stated:

General Managers Salary Package

Following the review of the General Manager’s performance held on 9th November 2005 I was asked to review the salary package for the General Manager’s position. This review would need to be based on comparable General Manager’s packages in the market.

Currently the General Manager is on a fixed package of $178,392 from 01 September 2003 through to 31 August 2006. In addition he is also paid a fixed supplementary annual payment of $30,000 to cover his role as Chairman of the Shell Cove Project for the same period.

Ross McLelland from Pacific Consulting and I reviewed comparable salaries for mid sized growing councils. The mid point for a General Manager’s salary package at October 2005 was $195,000 with a range from $185,000 to $210,000. Based on this data and the past assessments of the GM’s performance as being around 105% of the midpoint, his market salary would be $205,000.

Since that time there has been a market movement of approximately 4% at the upper end of the Local Government market, partially due to the Local Government Award increase of 3.5% effective November 2005 which would make his salary at $207,500 on 01 March 2006.

33 On 24 March 2006, the General Manager wrote to the councillors to notify them of an extraordinary meeting on 29 March to consider his contract. Enclosed were a copy of the agenda and business papers, which included a confidential agenda and a minute from the Mayor, Councillor David Hamilton. The Mayor’s minute recommended that the council offer Mr Weir a four-year contract and that the council and Mr Weir enter into negotiations in regard to the remuneration and other terms and conditions. Councillor Stewart admits that she received these documents. The business papers were marked to indicate that they were confidential under the provisions of s 10A(2) of the LG Act. The council followed its practice of printing business papers and minutes of closed meetings on yellow paper to signify their confidential nature.

34 The extraordinary meeting of council was held on Wednesday, 29 March 2006 from 5.45 pm until 6.35 pm. Those present were all councillors except Councillors Mifsud and Jeffreys, the Mayor’s executive assistant Ms Flora MastroDomenico, and Mr Howe. Mr Weir attended part of the meeting, leaving at 5.50 pm and returning at 6.15 pm. The remuneration details in Mr Howe’s letter of 16 March 2006 were not disclosed to the meeting. The council determined to resolve into a committee of the whole to consider the contract in closed session under s 10A(2)(a) of the LG Act. The committee resolved to recommend that the council offer Mr Weir a four year contract and that council and Mr Weir enter into negotiations in regard to remuneration and other terms and conditions over the next three months. The motion was carried by nine votes in favour. Councillors Stewart and Bailey abstained and were counted in the negative. Mr Weir was called in and consented to the committee’s recommendations. Although not apparent from the minutes, Mr Weir’s unchallenged evidence, which I accept, was that after the closed committee meeting concluded and the council returned to open session, the council resolved to make the offer and to enter into negotiations as the committee had recommended.

35 At 9.55 pm (server time) that night Mr Holstein posted Mr Weir’s letter and the Mayor’s minute on the Forum. The posting commenced:

I pass no judgement on the following two letters however, in view of everything written on this site thus far, I think they are essential reading for the community!

36 Mr Weir’s letter of 28 February 2006 and the Mayor’s minute of 29 March 2006 were then set out. The two documents had been retyped by Mr Holstein and contained some differences from the originals. On 30 March at 8.31 am he posted them again on the Forum.

37 The council claims that Councillor Stewart leaked the content of Mr Weir’s letter and the mayoral minute to Mr Holstein. The other councillors have given sworn evidence denying leaking the documents, as have relevant council officers.

38 In Mr Holstein’s statutory declaration of 4 April 2007, he stated:

General Managers Contract of Employment

Extraordinary council meeting – Wednesday 29th March 2006

Brian Weir’s Contract Renewal

Peake

Ipaska

39 On 30 May 2007 Mr Holstein wrote a letter to the council’s solicitors in which he stated that his statutory declaration was factual and accurate. The trial of this matter commenced on 31 July 2007 and Mr Holstein’s evidence commenced on 2 August 2007. In oral evidence he confirmed that what he said in paragraphs 17 and 18 of his statutory declaration about speaking to Councillor Stewart in relation to the March leak was still his recollection, but that he now believed it was a “distinct possibility” or “a very real possibility” that it was not Councillor Stewart to whom he spoke but someone pretending to be her. He also held that theory in relation to his May 2006 leak conversation with Councillor Stewart referred to in paragraph 13 of his statutory declaration, which I consider later in these reasons. However, in later cross-examination he volunteered that as he did not have a facsimile machine at his home, he realised after he had made the statutory declaration that paragraph 17 could not be true and that to the best of his present recollection it was incorrect to say in paragraph 17 “by a person supposedly being Councillor Stewart”.

40 Before reaching a conclusion as to the March 2006 leak, it is convenient to consider the May and June 2006 leaks.

The May 2006 leak

41 From December 2005 the Department of Local Government conducted a review of the council's practices as part of its “Local Government Reform Program - Promoting Better Practice” program.

42 On 10 May 2006 Mr Weir received a draft report from the Department of Local Government entitled “Local Government Reform Program – Promoting Better Practice – Review Report Shellharbour City Council May 2006” (draft DLG Report). Each page of the document was prominently stamped with the words “Draft and confidential”. The Department of Local Government invited the council to comment on the draft and encouraged Mr Weir to seek the input of councillors and senior staff into the council’s response. The original document was locked in the General Manager’s drawer.

43 On Monday, 15 May 2006 Mr Weir sent a fax to all councillors informing them of a confidential briefing to be held on the draft DLG Report at 5pm next day. Mr Weir's fax was headed “Strictly Confidential'” and stated:

I wish to advise that I have received a DRAFT Review Report (Local Government Reform Program - Promoting Better Practice) carried out by the Department of Local Government with respect to Shellharbour City Council’s operations in December 2005.

This draft document has been forwarded to me in the last few days on a strictly confidential basis. The Director General of the Department has requested that I seek input from Councillors and senior staff before I formally respond within 28 days.

I have sought further advice from the Department as to how to respond given that this document is strictly confidential. As a result of these discussions I have decided to hold a confidential briefing of Councillors tomorrow, Tuesday 16 May 2006 at 5.00 pm in the Ground Floor Function Room at Lamerton House.

At this briefing I will provide each councillor with a copy of the report. I will be seeking your written response by 4pm on Friday 26 May 2006. I would stress to Councillors that their response may be forwarded to the Department of Local Government by myself as part of Council's formal response and thus it may be included in the final report from the department.

I anticipate tomorrow evenings briefing will conclude by 5.30pm to enable a number of Councillors to attend the volunteers movie night.

It should be noted that any breach of confidentially [sic] will be dealt with most severely in accordance with the disciplinary provisions of the Local Government Act and Council's Code of Conduct.

44 Only thirteen copies of the draft DLG Report were made, for the Mayor and the twelve councillors. Each councillor's name was printed on the bottom of the front page of that councillor’s copy before it was stapled. Each copy was then placed in a sealed envelope with the councillor’s name on it.

45 On Tuesday, 16 May 2006 at a confidential briefing of councillors at 5 pm, Mr Weir gave each councillor a copy of the draft DLG Report. Councillor Greig was not present and received her copy later. At the meeting, Mr Weir stressed to the councillors that the document must be treated as confidential and told them to review it, provide their comments and return them so they could be shredded. Over the next days or a week the councillors provided the General Manager with their comments and returned their copies of the document.

46 On Saturday, 20 May 2006 Mr Holstein posted on the Forum the contents of Mr Weir's facsimile of 15 May 2006, which he had retyped before posting. He also posted the extracts from the draft DLG Report on the Forum on 21, 24, 25, 26 and 27 May and on 1, 3, 4 and 11 June 2006.

47 In his statutory declaration of 4 April 2007 Mr Holstein inculpated Councillor Stewart and Mrs Hollis in this leak as follows (“Third Party” refers to Mrs Hollis):

yes.

48 In cross-examination, Mr Holstein indicated that paragraphs 13 to 16 were correct except that:

Third Party

49 As discussed earlier, he had also developed a theory that it may not have been Councillor Stewart to whom he spoke but an impostor.

50 The first question is whether the draft DLG Report in evidence (Exhibit D), which he gave to the council’s solicitors or investigators, KPMG Forensic, was Councillor Stewart’s copy. The bottom part of the front page was cut off before Mr Holstein gave it to them. Mr Holstein was asked in evidence:

51 Some months later (after an adjournment of the hearing) Mr Holstein was cross-examined on behalf of Councillor Stewart. He indicated that he had a clear recollection of her name on the document under the preamble on the front page. He agreed that he copied the entire report including the front page which mentioned Councillor Stewart's name. He confirmed that the copy he gave to Mr Gallo or the council’s solicitors following the meeting of 4 April 2007 had the bottom section of the front page cut off. He confirmed that he removed this section because it said “this copy issued to Councillor Helen Stewart”. He indicated that her name appeared underneath the heading Shellharbour City Council in the middle of the page “or very close to that”. The bottom part has been cut off just beneath the words “May 2006”, which are just below the words “Shellharbour City Council”. He was led into agreeing with the proposition that he said in his statutory declaration that her name was written in biro on the document. In fact his statutory declaration did not say that.

52 There is a dispute over spilt tea. Councillor Stewart gave evidence that at home on the evening of 16 May 2006, after the confidential briefing, she put her copy of the draft DLG Report on the desk in her office and whilst she was working at the desk her cat jumped up and knocked her cup of tea over. Thus, her draft DLG Report had tea stains on it. Her husband, Mr Eric Stewart, gave evidence that that evening she called out from the study and asked him to bring a cloth as their cat had jumped on the desk, spilling her tea. He said that the tea had spilled on a document, which he wiped, but the tea stains remained. The object of this evidence was to show that the draft DLG report in Mr Holstein’s possession was not Councillor Stewart’s copy because the one in evidence received by Mr Holstein did not have tea stains.

53 In my view, the draft DLG Report received by Mr Holstein via Mrs Hollis came from Councillor Stewart. First, there were only 13 copies of the DLG report, one for each councillor. I accept the evidence of the councillors other than Councillor Stewart that they did not leak their copies. Secondly, I believe Mr Holstein’s evidence that Councillor Stewart’s name was on the bottom part of the front page of the document that he cut off. It was an aspect of his evidence on which he was repeatedly and convincingly firm. His evidence is consistent with independent, unchallenged evidence, which I accept, that each councillor’s name was printed on the bottom part of the front page of each councillor’s copy. The fact that he was led at one point in cross-examination into agreeing that he had said in his statutory declaration (contrary to the fact) that her name was written in biro was, at most, a defect in recollection on a matter of detail. Thirdly, it is unlikely that his good friend Mrs Hollis would not have told him that someone had given her the document during their meeting when they copied the document, or even subsequently. There is no suggestion that she did nor that he doubted for a moment that the source was Councillor Stewart until after his statutory declaration of 4 April 2007. Fourthly, I am doubtful, to say the least, about the reliability of the tea-stain evidence. If there was an occasion when the cat knocked over a cup of tea and stained a document in Councillor Stewart’s study, given that she was not joined to the proceedings until March 2007 it is a remarkable feat of memory for both her husband and her to recall that it occurred on the night of 16 May 2006 and, in her case, to recall that the document was the draft DLG Report. She gave evidence that the tea was spilt on the draft DLG Report at about 9.30 pm. If that is so, it was late enough for the document in the meantime to have been given to Mrs Hollis to give to Mr Holstein, copied and returned. Indeed, if Councillor Stewart’s draft DLG Report was tea-stained, as she alleged, it is conceivable that the stain could have been on that part of the front page of the document which Mr Holstein cut off. Her husband did not corroborate that the document he observed to be tea-stained was the draft DLG Report. I was not favourably impressed by their tea-stain evidence when it was tested in cross-examination.

54 On the evidence, I conclude that on the evening of 16 May 2006 Mr Holstein received Councillor Stewart’s draft DLG Report from Mrs Hollis.

55 The next question is whether Mr Holstein in fact spoke to Councillor Stewart on the night of 16 May 2006 as alleged in his statutory declaration. He was convincingly and repeatedly firm in evidence that he spoke to a woman who purported to be her. However, he testified that he now believed it might not have been her but an impostor to whom he spoke that night and in March 2006.

56 Records of telephone calls between Councillor Stewart and Mrs Hollis and between Mrs Hollis and Mr Holstein prior to and after the confidential briefing on 16 May 2006 provide a measure of support (although insufficient of themselves) for the conclusion that Councillor Stewart used Mrs Hollis as a conduit to provide Mr Holstein with her draft DLG Report. In the two days prior to the confidential briefing, there were calls between Councillor Stewart and Mrs Hollis and between Mrs Hollis and Mr Holstein, as follows:

57 Some of these communications could have been facsimiles where they were from landline to landline.

58 After the confidential briefing on 16 May 2006 the telephone records show that Councillor Stewart and Mrs Hollis communicated with each other, and Mrs Hollis communicated with Mr Holstein, as follows:

(a) at 6.04 pm Mrs Hollis sent a text message to Councillor Stewart.
(b) at 9.07 pm Mrs Hollis sent a text message to Councillor Stewart.
(c) at 9.09 pm Councillor Stewart's mobile called Mrs Hollis' landline. The call lasted one hour and ten minutes.
(d) at 10.21 pm, Mrs Hollis' landline called Mr Holstein's mobile. The call lasted for 8 minutes and 7 seconds.

59 These records do not show a call from Councillor Stewart to Mr Holstein on the evening of 16 May. However the records are incomplete in that they do not relate to her private mobile phone. She could also have made a call outside her home.

60 In evidence Mr Holstein explained why he now believed that the person to whom he spoke may not have been Councillor Stewart but an impostor. His initial explanation was that he started having doubts because “other people were telling me that this did not occur” so he rang Councillor Stewart and spoke to her on the pretext of something totally different and paid particular attention to how she spoke, in order to satisfy himself that it had been her. As a result, he could not say that it was her. He said that there was nothing very distinctive about the voice of the person to whom he spoke on 29 March 2006 whereas Councillor Stewart has an ockerism, a snappy manner of talking. The reliability of that explanation was clouded when his cross-examination resumed in February 2008 (after an adjournment of the hearing for some months) because he then indicated that that was not really the reason and that what convinced him more than anything else was that he did not believe that she gave him the information. The latter explanation was not expressed to be founded on any objective facts.

61 Mr Holstein’s theory that he spoke not to Councillor Stewart but to an impostor was apparently developed after he had executed the deed of 4 April 2007 and written his letter of 30 May 2007 to the council’s solicitors because in both those documents he verified that the statutory declaration was accurate

62 I do not accept his theory for the following reasons. First, as concluded earlier in these reasons, he received Councillor Stewart’s copy of the draft DLG Report from Mrs Hollis later that night. It is unlikely, if not impossible, for anyone other than Councillor Stewart to have provided it to Mrs Hollis. I accept the evidence of the other councillors that they did not leak this information. Secondly, if it was not Councillor Stewart from whom his good friend Mrs Hollis received the draft DLG Report, it is likely that Mrs Hollis would have told him so during their meeting when they copied it, or even later. There is no suggestion that she did nor that he had the slightest doubt that it was Councillor Stewart to whom he spoke until after he made his statutory declaration on 4 April 2007. Thirdly, impersonating Councillor Stewart is an inherently unlikely thing for anyone to have done. Fourthly, Councillor Stewart said that she was unaware of anyone going around Shellharbour claiming to be her. Fifthly, Mr Holstein was familiar with Councillor Stewart’s voice because, as he conceded, he had heard her speak on a number of occasions, including at a council meeting of 2 November 2005 which he attended when she spoke on a significant matter. Sixthly, according to the phone records in evidence, Councillor Stewart called Mr Holstein for the first time on 15 June 2006 at 9.33 am, then on 16 June 2006 at 10.59 am and then on 2 August 2007. In cross-examination Mr Holstein indicated that he may have been talking to her on these occasions about a charity race day, and conceded that he did not notice anything different in her voice on those occasions from the voice of the person who said she was Councillor Stewart and who had spoken to him on the night of 15 June 2006 to provide him with information. Seventhly, the records of telephone and SMS communications on the night of 16 May after the meeting show that Councillor Stewart and Mrs Hollis were in communication, as were Mrs Hollis and Mr Holstein. Eighthly, while there is no telephone record in evidence of a call by Councillor Stewart to Mr Holstein on the evening of 16 May, her private mobile phone records are not in evidence for the relevant time and the call could have been from that phone or from outside her home. Ninthly, as stated earlier, at a later point of his cross-examination he appeared to downplay the “different accent” explanation of his doubt that it was Councill Stewart to whom he spoke.

63 Finally, the SMS messages Councillor Stewart sent to Mr Holstein on 1 August 2007 said “why call all councillors to be questioned on the dlg report something not right hope it is not a trap get a copy have a look put your thinging [sic] cap on come up with something” and “they had nothing till you made a connection to councillors what do think were they up too”: see [28] above. The suggestion appears to be that the council had no evidence against her until Mr Holstein made a connection to her. That statement applied to the other councillors as well, but her evidence indicates that it was her concerns in relation to her own position that led her to contact Mr Holstein both by SMS and by telephone on the night of 1 August. The matter which goes against her credit is the fact that both SMS addressed to Mr Holstein that night tend to suggest attempts by her to prevent him from inculpating her, as she knew his statutory declaration had done. In re-examination Councillor Stewart suggested that on the night of 1 August 2007 she remonstrated with Mr Holstein for having implicated her in the release of confidential information including the DLG Report. There may well have been strong words said but I am doubtful that the conversation was in the terms she claimed in re-examination or that it necessarily related to all the allegations against her.

64 I accept Mr Holstein’s evidence in paragraphs 13 to 16 of his statutory declaration, subject to his corrections or qualifications in oral evidence that (a) he also copied the title page - which is consistent with the copy in evidence; (b) he made three copies not two; and (c) he cut off the bottom part of the front page because Councillor Stewart’s name was on it before he gave it to Mr Gallo or the council’s solicitors. Whether he met Mrs Hollis at the airport or in a car park is a matter of detail and is not significant. His recollection in evidence that he did not think it was indicated to him how he was going to get the document is improbable given that he in fact received it that night from Mrs Hollis who appears to have received it from the person to whom he spoke.

65 Consequently, I am of the opinion that Councillor Stewart breached s 664(1) of the LG Act by disclosing the draft DLG Report. That would be my decision even if it were to be assumed that the contravention was a criminal offence thus increasing the gravity of the matters which have to be taken into account under s 140 of the Evidence Act 1995: see [11] of these reasons.

The June 2006 leak

66 On 15 June 2006 an extraordinary meeting of the council was held to consider the General Manager’s contract. The confidential agenda for the meeting stated that, in the opinion of the General Manager, the business was of a kind referred to in s 10A(2) of the LG Act and should be dealt with in a confidential session of a council meeting closed to the press and public. A minute from the Mayor in the confidential business papers accompanying the confidential agenda recommended that the council enter into a further contract with Mr Weir for four years on the terms contained within the employment contract negotiated between the parties. After recounting the resolution of 29 March 2006 that negotiations be entered into over the next three months, the minute indicated that due to advice to the Mayor during that period from Mr Howe of Strategic Consulting Solutions, the terms and conditions of the contract were unchanged; and that Mr Howe had also provided the Mayor with details of the appropriate remuneration package.

67 The minutes of the council meeting of 15 June 2006 record that the meeting of the committee of the whole council commenced at 5.14 pm, that all councillors were present except Councillors Briggs and Jeffreys, and that Ms MastroDomenico and Mr Howe were also in attendance. The minutes record that the proposed contract was tabled and discussed and that “Mr Howe advised of his recommended remuneration package, which was outlined in Schedule 3 of the Contract”. Mr Howe gave the remuneration figures verbally. The only copy of the contract was passed around and councillors examined it. Apart from Mr Howe, the only person present with a copy of Mr Howe’s remuneration figures was the Mayor, Councillor Hamilton. The Committee recommended, with 4 abstentions, that the council enter into a further contract for four years from 16 June 2006 on the terms contained in the employment contract negotiated with him (with amendment relating to the period of notice of termination). The minutes record that the council then resolved into ordinary council, after which “all Councillors handed back their Business Papers”. The meeting concluded at 6.35 pm.

68 Approximately an hour after the commencement of the meeting Mr Weir was summoned by the Mayor into the meeting and informed of the proposed remuneration. Prior to the meeting ending, he and the Mayor signed the contract. When the council returned to open meeting, it resolved to accept the recommendations of the closed committee meeting. The council’s resolutions did not disclose the amount of remuneration.

69 At 10.39 pm on 15 June 2006 Mr Holstein posted the details of Mr Weir’s remuneration on the Forum as follows:

Here it is! No wonder we need a rate increase in Shellharbour?

Mr Weir had his contract renewed tonight for 4 years starting the 16 June 2006 until 15 June 2010.

Salary will be 1st year $237,500.00
2nd year. $247,000.00
3rd year $256,888.00
4th year $267,155.00

This is what Shellharbour Rate Payers are paying for incompetent (mis)managers. Could you imaging what we could expect to pay for someone who is actually qualified and capable of doing the job properly? The Mind Boggles.

70 At 10.42 pm the following appeared on the Forum under the heading "Top stuff”:

I know someone who is only too happy with Weir's disgusting wages package seeing he intends to get his hands on about 2/3rds of it shortly!

71 At 10.45 pm the following appeared on the Forum under the heading “You would have to be jokeing [sic]”:

72 Next morning at 7.02 am another comment was posted under the heading “Weir”:

Weir has so much dirt on the Labor councilors [sic] and the Labour councilors [sic] have so much dirt on Weir, we have a mexican stand off.

We know who voted for this and if any of the idependants [sic] did they should bow their heads in shame.

73 Mr Holstein’s statutory declaration of 4 April 2007 stated:

Brian Weir’s Contract Renewal

WEIR’s PAY PACKET

74 The material in paragraph 22 of the statutory declaration is hearsay and inadmissible and I give it no weight. I understand that to have been accepted by the council and that no reliance was placed on it in the council’s submissions. Mrs Hollis did not give evidence.

75 In cross-examination Mr Holstein accepted the accuracy of paragraphs 19 to 21 but said that he did not believe that Mrs Hollis told him what appears in paragraph 20 and 21. When asked to explain why he had made the statement in paragraph 20, he said because “that’s what I was sort of convinced of at the session with Gallo”. If by this he meant that Mr Gallo made the statement in paragraph 20 and got him to agree with it, I reject the explanation. I consider that paragraphs 19-21 represented his recollection at the time he made the statutory declaration.

76 The June 2006 disclosure case against the respondents is entirely circumstantial. Circumstantial evidence is evidence of a basic fact or facts from which the court is asked to infer a further fact or facts. It is contrasted with direct or testimonial evidence, which is the evidence of a person who witnessed the event sought to be proved. In a circumstantial evidence case, inculpation must not only be a rational inference but must be the only rational inference that could be drawn from the circumstances: Martin v Osborne (1936) 55 CLR 367 at 375 per Dixon J; Shepherd v The Queen (1990) 170 CLR 573 at 578, 579 per Dawson J.

77 The council submitted that there is circumstantial evidence against the respondents in the telephone records of communications on 15 June before and after the meeting that evening. Before the meeting, which commenced at 5.15 pm, there were the following communications between Councillor Stewart and Mrs Hollis, Councillor Stewart and Mr Holstein, and Mrs Hollis and Mr Holstein:

(a) at 9.29 am Councillor Stewart phoned Mrs Hollis' landline for 28 seconds;
(b) at 9.30 am Councillor Stewart phoned Mrs Hollis' landline for 21 seconds;
(c) at 9.33 am Councillor Stewart called Mr Holstein's mobile for 48 seconds;
(d) at 4.44.26 pm Councillor Stewart faxed or phoned Mrs Hollis. The call lasted 1 minute, 10 seconds;
(e) at 4.44.45 pm Mrs Hollis' mobile called Mr Holstein's mobile for 2 seconds;
(f) at 4.45.14 pm Mrs Hollis' mobile called Mr Holstein's mobile for 38 seconds
(g) at 4.47.54 pm Mrs Hollis' landline called Mr Holstein's fax number for 2 minutes 15 seconds;
(h) at 4.52 pm Mrs Hollis' mobile called Mr Holstein's mobile for 2 minutes, 14 seconds.

78 The meeting on 15 June 2006 concluded at 6.35 pm. Afterwards there were the following calls between Councillor Stewart and Mrs Hollis and between Mrs Hollis and Mr Holstein:

79 After the meeting of 15 June 2006 there were also the following calls from Councillor Rose’s phone or home computer:

80 I do not find these telephone calls to be of much assistance given the absence of any direct evidence that the respondents provided Mrs Hollis with the information that Mr Holstein says he received from her or that either of them gave the information directly to him. There was no telephone call by Councillor Rose to Mr Holstein.

81 The council submitted that the principal evidence against Councillor Rose is (a) the fact that his home internet was switched on to the Forum at 10.40 pm; (b) he has falsely denied being home at that time; (c) he was in regular contact with Mrs Hollis and Councillor Stewart; and (d) he can give no acceptable explanation for the number of those calls that he and Mrs Hollis made to each other. His explanation was that the telephone calls concerned the health of his wife. The council submitted that was hardly a truthful explanation bearing in mind that neither he nor his wife knew Mrs Hollis socially. The council also submitted that as Councillor Rose's daughter was not called by him to give evidence, the Court would draw the inference her evidence would not have assisted Councillor Rose.

82 I doubt that the case against Councillor Rose would be established even if the council submissions were to be accepted. However, I reject its submissions. I believe Councillor Rose’s explanation that the telephone calls related to his wife’s health and that Mrs Hollis was a helpful person in that regard. Councillor Mifsud corroborated that Councillor Rose’s wife suffered from an illness. As to the false denial submission, Councillors Rose and Mifsud testified that after the meeting on 15 June, in accordance with their usual practice, they went to a club together and remained there until just before 11 pm during which time they made no telephone calls and spoke to no-one regarding the remuneration figures. However, the evidence shows that there was a call at 8.14 pm from Councillor Mifsud’s home landline to Councillor Rose’s home landline (both supplied by the council). Councillor Mifsud agreed that he was the only person that used that line. In cross-examination both of them were mystified by the record of that call. The final submissions of Councillor Rose did not rely on their evidence about being at the club. Although that call during the time they were supposed to have been at the club casts some doubt on the reliability of their evidence, I do not believe that he and Councillor Mifsud were being deliberately untruthful as to where they were that night or how long they were there. Rather, I accept that they were probably mistaken in their recollection. Councillor Rose said, and I accept, that when he got home on the night of 15 June his daughter was on the computer and after she finished he looked up the Forum website and saw the figures on it. I do not think that I should draw the suggested inference against Councillor Rose for not calling his daughter to give evidence. Even if I did, it would be insufficient to establish the council’s case.

83 In my opinion, in addition to the above considerations, there are three reasons why it should not be concluded that Councillor Stewart or Councillor Rose disclosed the remuneration figures to Mrs Hollis after the meeting of 15 June. First, there is no evidence from the person who (according to Mr Holstein’s statutory declaration) would know – Mrs Hollis – that either of them did so. She was not called as a witness.

84 Secondly, the evidence does not establish that either Councillor Stewart or Councillor Rose took a note of the remuneration figures from the meeting on 15 June. The remuneration figures were so detailed that it is highly unlikely that they could have been committed to memory and communicated to Mrs Hollis without the assistance of a note. There is no suggestion that Councillor Rose left the meeting with a note. Councillors Stewart and Rose both testified, and I accept, that Stewart did not communicate the figures to Rose after the meeting. Several councillors observed that Councillor Stewart wrote on her notepad during the meeting and, in particular, when the wage figures were read out. All other councillors who took notes wrote on their business papers. They were collected at the end of the meeting at the suggestion of another councillor. Councillor Stewart made a point of tearing up her business papers, and then left the meeting with her notepad containing her notes of the meeting. Councillor Stewart was the only councillor who could have left the meeting with a written record of the wage figures. In an answer to a later council questionnaire to all councillors, Councillor Stewart acknowledged that the information discussed at the 15 June 2006 meeting was confidential, stated that she took notes which she attached, and denied that she disclosed any confidential information to any person not present at the meeting. Her attached notes relevantly recorded the following in her handwriting:

Confidential

15th June Briefing Mr Weir’s contract.

Absent. Briggs & Jeffreys

Standard contract. 4 yr term. 4% next 4 yrs

(Shellcove)

Terminate 1 mth notice – balance of contract

85 These notes do not contain any of the remuneration figures posted on the Forum on the night of 15 June. Unless Councillor Stewart had another note of the figures which she did not disclose when answering the questionnaire, then the notes that she did disclose are unlikely to have enabled her to communicate the figures. Her notes occupy one page and the part that I have quoted occupies the bottom section of the page, under which there are several vacant lines. If there was further note, one would expect these lines to have been written on, rather than commencing on a further page. I am not satisfied that she had a further note.

86 The third reason for declining to conclude that either of the respondents communicated the figures to Mrs Hollis (or Mr Holstein) is the revelation in Mr Holstein’s cross-examination that he had received the remuneration figures prior to the 15 June 2006 meeting in an unsigned note. In cross-examination on 2 August 2007 Mr Holstein said that he believed Mr Weir’s remuneration figures were faxed to him by a person supposedly being Councillor Stewart. He said he did not have the fax any longer because he thought it was in a box that had been destroyed by floods. When his cross-examination resumed on 11 February 2008 (after the hearing had been adjourned), he said that he received the remuneration figures in a note two or three days before the council meeting and not from the council meeting and that he had found the note prior to the last court session. He said that the note was received by post and that his previous evidence that he had received it by fax was incorrect. He now agreed that paragraph 21 of his statutory declaration was untrue. The council called for the note and Mr Holstein was ordered to produce it. Next day he produced the note. It became Exhibit K. It is typed, unsigned and undated. It states:

Weir is about to get a wages increase if it is approved. Mudguts is pushing for it to be approved but he says he is appalled that he has to approve it.

Write it to the web sight [sic] when council meets for there [sic] special meeting which is either Tuesday or Thursday night.

87 It may be that “Mudguts” was the Mayor, Councillor Hamilton, but that is unclear. The note has the ring of authenticity. Although there was no reference to the note in Mr Holstein’s statutory declaration, I accept that it is authentic. The note on its face appears to have been written before Tuesday 13 June 2006 because the meeting was held on Thursday 15 June and the note refers to the council meeting to be held on either the Tuesday or Thursday. On the evidence, Councillors Stewart or Rose could not have been the author of the note nor the source of the author’s information in the note because there is no evidence that they knew the figures before the meeting of 15 June. The council’s case was conducted on the basis that very few people indeed knew of the figures prior to that meeting.

88 The receipt by Mr Holstein of this note or the remuneration figures prior to the meeting on 15 June 2006 is consistent with a posting to the Forum on 29 January 2007 at 5.18 pm, in respect of which he conceded in cross-examination that he could well have been the author. I hold that he was the author. The posting was as follows:

Wxxxxx’s Disgustingly Excessive Pay Packet

I hear a rumour that Wxxxxx is trying desperately to nail me for leaking his pay packet details last year!

Simply put; I was given the details of Brian’s Pay Rise 4-5 hours before the council meeting where it was discussed/approved with instructions to post the information at or around a certain time – which I did. The information included his past wages package for comparison with the new one being agreed upon.

I maintain and will continue to maintain that the public has/had a right to know the details of his wages package. He is a public servant paid by the community out of our rates. He is accountable to the community for his performance (something that seems to be sadly overlooked by himself and the council). It is in the community’s interest to know what we pay him and what other bonuses he is receiving as well. We, the community, have every right to know the details of such deals and we, the community, have every right to object when such deals are considered excessive and unacceptable.

89 However, another email posted by Mr Holstein a few hours later said that he was provided with “information via telephone”.

90 Production of the note during the trial has, to say the least, considerably muddied the waters. Armed with the information in the note before the meeting of 15 June, there are a number of theoretical possibilities as to what Mr Holstein did. He may have proceeded to post the figures to the Forum once he knew the 15 June meeting had been held, on the assumption that the council had approved the figures at the meeting. The note might be construed as telling him to do that. Another possibility is that he awaited confirmation after the meeting that the figures had been approved, presumably from the author of the note or someone who knew he already had the figures, before posting them. A third possibility is that Mr Holstein received the figures not only in the note but also after the meeting from Mrs Hollis, as he said in his statutory declaration.

91 Who was the author of the note and (if different) the source of the information in it? It was the council’s case that before the 15 June 2006 meeting the remuneration figures were tightly held. They were in Mr Weir’s letter. Only Councillor Hamilton appears to have had a copy of the letter. A council officer may have been shown the figures before the 15 June meeting in order to type them into a schedule to the agreement executed during the meeting, but that is not clear: the agreement is not in evidence. There was cross-examination as to whether Councillor Hamilton disclosed the figures during a caucus of Australian Labour Party councillors held prior to the 15 June meeting. There were eight ALP councillors. It appears that they tended to form two broad political alliances. One alliance comprised Councillors Hamilton (the Mayor), Hore, Bird and Gillette. The other comprised Councillors Greig (the Deputy Mayor), Briggs, Hawker and Leedham. Councillor Hamilton was cross-examined on the minutes of an ALP caucus prior to the 15 June meeting. The minutes were not tendered, although they were marked for identification as minutes of a meeting of 11 June 2006. There was some confusion in the evidence as to whether the caucus prior to the council meeting was on 11 or 15 June or on both dates. Some of the contents of the minutes of 11 June 2006 (marked for identification but not tendered) came to be in evidence because they were put to, and confirmed by, Councillor Hamilton. The minutes recorded a resolution that “council enter into a further contract with B Weir for a period of four years from 13 June 2006 until 15 June 2010 as per conditions and salary proposed by Mayor”. In cross-examination, Councillor Hamilton denied relaying Mr Howe’s proposed remuneration figures to the caucus and said that all he told the caucus was that he had been advised by Mr Howe that the remuneration should be mid-range. Councillor Hamilton was subsequently cross-examined further and again denied that he revealed the actual remuneration figures to the caucus. He indicated that what he told the caucus was that Mr Howe had come back with a mid-point figure and that they would go for a 4 percent increase over the next four years based on Mr Howe’s figures and conditions. Other Labour councillors were cross-examined as to whether specific remuneration figures were discussed at a caucus prior to 15 June 2006 but they could not recall or their evidence was unclear as to whether or not they were discussed. If the actual remuneration figures were disclosed at the caucus on 11 June 2006, that might provide an explanation as to why Mr Holstein received a note written prior to the meeting of 15 June 2006 (Exhibit K) which set out those figures, either from someone at the caucus or from someone who obtained the information from someone at the caucus. However, the state of the evidence is such that I am unable to make any finding in that regard.

92 In my opinion, for the reasons that I have expressed, it has not been established that Councillor Stewart and/or Councillor Rose leaked the information.

93 Two points of law raised by the respondents may be mentioned although it is unnecessary to decide them because I have found for the respondents on the facts. First, the respondents submitted that as the circumstantial evidence case against them was that either or both disclosed the June 2006 information, that case must fail because circumstantial evidence must inculpate one to the exclusion of the other. The principles relating to circumstantial evidence have been discussed at [76] of these reasons. In principle, I think, circumstantial evidence can inculpate more than one person. It may be logically difficult, however, to maintain the argument that the only rational inference that can be drawn is that A is liable whilst arguing in the alternative that the only rational inference is that B is liable. It is unnecessary to consider the point further because I have found that the evidence does not inculpate either respondent.

94 The second point of law is whether, if either respondent leaked the information, the leak would have been a breach of s 664(1) or (1A) of the LG Act (set out at [4] of these reasons). The respondents submitted that the question should be answered in the negative because the General Manager’s remuneration figures ceased to be confidential once the closed committee meeting of 15 June 2006 had concluded. The submission emphasised a legislative requirement that his remuneration figures for a particular year had to be published in the council’s annual report and the fact that they were published in the council’s annual reports for the 2005/2006 and 2006/2007 financial years.

95 Section 428 of the LG Act requires a council within five months of the end of each financial year to prepare a report which includes “2(a) a copy of the council’s audited financial reports” and “2(g) a statement of the number of senior staff employed by the council during that year, together with a statement of the total amount of money payable in respect of the employment of senior staff, including money payable for salary, for the provision of fringe benefits and for all other on-costs connected with their employment”. In preparing the annual report, the council followed instructions to councils provided by the Department of Local Government Circular Number 07-41 Annual Reporting, Social/Community Planning and SOE Reporting Requirements of Local Councils. The reporting requirement is detailed in the Checklist for Annual Reports under point 16, as follows:

· Total value of salary component of package.

· Total amount of any bonus payments, performance or other payments that do not form part of salary component.

· Total employers’ contribution to superannuation (salary sacrifice or employer’s contribution).

· Total value non-cash benefits.

· Total fringe benefits tax for non-cash benefits.

96 The following statement appeared in the council’s 2005/2006 annual report:

During the 2005-2006 financial year, Shellharbour City Council employed one Senior Staff member, this being the
General Manager, at a total remuneration of $237,500.00. This cost includes salary, superannuation and fringe
benefits.

The salary component includes a Shell Cove allowance of $30,000, financed from the Shell Cove project.

97 A very similar statement appeared in the council’s 2006/2007 annual report.

98 The Mayor, Councillor Hamilton, said in cross-examination that after the contract had been agreed to by council and signed it was general knowledge and agreed that, if anyone asked him what Mr Weir’s remuneration was he would tell them if he chose to do so. The respondents drew attention to that evidence, but it seems to me to be no more than a personal view. Mr Weir stated in his affidavit evidence:

I do not object to having my remuneration made public. I note that this information is ultimately published in Council’s annual report in any event. What concerns me is the fact that information which was discussed in Closed Committee meeting was posted onto the Forum within hours of the Closed Committee meeting ending contrary to the expressed intention of the Council (since the Councillors had agreed to hand in their confidential business papers at the conclusion of the meeting and indeed did so). I am informed and verily believe that my remuneration was verbally reported to the Council by Council’s consultant.

99 It appears that the remuneration figures were disclosed at the closed committee meeting on 15 June 2006 and not at the open meeting that followed nor at any time thereafter with the consent of the council. That being so, if I had to decide this legal point, my opinion would be that the disclosure of that information was a breach of s 664(1A) of the LG Act. However, it is unnecessary to express a concluded opinion because of my decision on the facts that it has not been proved that either respondent leaked the information as alleged.

The March 2006 leak revisited

100 I now return to the March 2006 leak analysed at [31] – [40] of these reasons. The council alleges that Councillor Stewart leaked this information to Mr Holstein.

101 In addition to the evidence in paragraph 17 of Mr Holstein’s statutory declaration, the council at one point submitted that circumstantial evidence inculpating Councillor Stewart in the March 2006 leak was to be found in the great number of telephone communications between her and Mrs Hollis over a long period; and in the close relationship and communications between Mrs Hollis and Mr Holstein, particularly the telephone communications between Mrs Hollis and Mr Holstein between 24 and 29 March 2006. The council also drew attention to the fact that there were seven calls from Councillor Stewart’s mobile to Mrs Hollis on 24 March, a 47 minute call on 25 March, a 52 minute call on 26 March, five calls on 27 March, two calls on 28 March and a call on 29 March at 9.52 am for about six minutes. Some of the calls were made to Mrs Hollis’ landline and some to her mobile. The records for Councillor Stewart’s landline show calls to Mrs Hollis on 8, 24, 29 and 30 March. On 29 March Councillor Stewart’s landline telephoned Mrs Hollis at about 4.17 pm for about four and a half minutes.

102 There are a number of difficulties with the case against Councillor Stewart in relation to the March 2006 leak. First, Mr Holstein’s evidence in evidence was that he received the fax almost immediately after speaking on the telephone to the person whom he thought was Councillor Stewart. Yet the telephone records in evidence relating to her mobile phone and home land line show no telephone or fax communication between her home and Mr Holstein at the relevant time. The first communication from Councillor Stewart on those lines to Mr Holstein was not until 15 June 2006. However her private mobile telephone records are not in evidence. The person to whom Mr Holstein spoke must have had immediate access to a fax machine. Since the records in evidence do not show any fax communication from Councillor Stewart’s home to Mr Holstein, if she sent the fax she must have done so and spoken to him by telephone outside her home. That is possible, but the absence of any communication from her home raises a doubt. Secondly, Mr Holstein testified that his recollection in paragraph 17 of his statutory declaration when he made it, must have been wrong because he did not have a fax machine at home. He did have a fax machine at work. However, as the council meeting ended at 6.35 pm and he ran a helicopter joy flight service, it was submitted for Councillor Stewart that he would not still have been at work when he received the fax. One cannot be sure of that but it has some weight and raises a doubt. Thirdly, Councillor Stewart denied it was her and I was unable to form any impression from her demeanour as to whether or not she was telling the truth. Fourthly, I am not assisted by the telephone communications between Councillor Stewart and Mrs Hollis and between Mrs Hollis and Mr Holstein. That is because there is no evidence to connect Mrs Hollis with this disclosure, any such connection is contrary to Mr Holstein’s evidence, Mrs Hollis did not give evidence, and there was a prior history of numerous and regular telephone communications between Councillor Stewart and Mrs Hollis and between Mrs Hollis and Mr Holstein. It is not a reasonable inference to suggest that Mrs Hollis was a conduit between Councillor Stewart and Mr Holstein in relation to this incident simply because of their telephone communications. Indeed, the council’s ultimate oral submission was that I would decide this part of the case on the basis of Councillor Stewart’s direct involvement with Mr Holstein. Fifthly, while the specificity of paragraph 17 of Mr Holstein’s statutory declaration is difficult to fathom if it is wrong, his departures in evidence from some aspects of his statutory declaration prompt me to be particularly cautious about its reliability generally where it is not otherwise supported. There is no firm evidentiary support for Mr Holstein’s evidence, unlike the May 2006 leak where Councillor Stewart’s own copy of the confidential document was handed over to Mr Holstein and tendered in the case.

103 In the end there is sufficient doubt about the matter that I am not satisfied to the required standard that the council has discharged its onus of proof in relation to the March 2006 leak.

Orders

104 It seems to me to be sufficient for the substantive relief to be a declaration that Councillor Stewart breached s 664(1) of the LG Act by reason of the May 2006 leak.

105 The council has been unsuccessful against Councillor Rose and should pay his costs. The council has succeeded against Councillor Stewart in relation to one of the three alleged leaks. That issue was relevantly separable from the issues concerning the other two leaks such as to justify a special order for costs: F & D Bonaccorso Pty Ltd v City of Canada Bay Council (No 3) [2007] NSWLEC 569 at [15] – [17]; City of Canada Bay Council v Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57. In the circumstances, I consider that there should be an apportionment of costs such that there should be no order for costs as between the council and Councillor Stewart.

106 I propose that the orders of the Court should be as follows:

1. Declaration that on or about 16 May 2006 the first respondent breached s 664(1) of the Local Government Act 1993 in that, without lawful excuse, she disclosed information obtained in connection with the administration and execution of that Act by providing to Peter Holstein and Shirley Hollis a copy of a draft confidential report on the applicant by the Department of Local Government.
2. Save as aforesaid, the application is dismissed.
3. No order as to costs as between the applicant and the first respondent.
4. The applicant is to pay the second respondent’s costs.

107 The matter will be listed tomorrow to make final orders. If any party wishes to submit that the orders should be otherwise than as proposed above, they are to bring in short minutes. The exhibits may be returned except for Exhibit Y.

24/04/2008 - Date error - Paragraph(s) 106 (1)

Citations

Shellharbour City Council v Stewart [2008] NSWLEC 151

Most Recent Citation

Cases Citing This Decision

2

Landini v State of New South Wales [2008] NSWSC 1280

Shellharbour City Council v Stewart [2008] NSWLEC 216

Cases Cited

17

Statutory Material Cited

2

Briginshaw v Briginshaw [1938] HCA 34

Gianoutsos v Glykis [2006] NSWCCA 137

Briginshaw v Briginshaw [1938] HCA 34

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CITATION:	Shellharbour City Council v Stewart [2008] NSWLEC 151 This decision has been amended. Please see the end of the judgment for a list of the amendments.
PARTIES:	APPLICANT: Shellharbour City Council FIRST RESPONDENT: Helen Stewart SECOND RESPONDENT: Geoff Rose
FILE NUMBER(S):	41097 of 2004
CORAM:	Biscoe J
KEY ISSUES:	Civil Enforcement :- Whether local government councillors disclosed information obtained in connection with the administration or execution of the Local Government Act 1993 in breach of s 664(1) and (1A) - Standard of proof taking into account the gravity of the matters alleged - Nature of circumstantial evidence.
LEGISLATION CITED:	Evidence Act 1995 (NSW), s 140 Local Government Act 1993 (NSW), ss 10A, 428, 664, 666, 673(1), 676(1)
CASES CITED:	Briginshaw v Briginshaw (1938) 60 CLR 336 City of Canada Bay Council v Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57 F & D Bonaccorso Pty Ltd v City of Canada Bay Council (No 3) [2007] NSWLEC 569 Gianoutsos v Glykis (2006) 65 NSWLR 539 Jones v Dunkel (1959) 101 CLR 298 Martin v Osborne (1936) 55 CLR 367 R v Buckland [1977] 2 NSWLR 452 Shepherd v The Queen (1990) 170 CLR 573 Vines v Australian Securities and Investments Commission (2007) 62 ACSR 1
DATES OF HEARING:	31/7/07, 1-2/8/07, 2/10/07, 11-14/2/08, 25-26/3/08
DATE OF JUDGMENT:	23 April 2008
LEGAL REPRESENTATIVES:	APPLICANT: Mr B. McClintock SC (until 2/10/07) and Mr K. Connor SC Mr F. Douglas QC (from 11/2/08) SOLICITORS: Maddocks FIRST RESPONDENT: Mr P. Clay (until 2/10/07) and Mr N. Eastman (until 2/8/07) Mr W. Moss (from 11/2/08) SOLICITORS: Russell McLelland Brown (until 11/2/08) Robert Watson Solicitor (from 11/2/08) SECOND RESPONDENT: Mr P. Clay (until 2/10/07) and Mr N. Eastman (until 2/8/07) Mr P. Maiden SC (from 11/2/08) SOLICITORS: Russell McLelland Brown