Gandangara Local Aboriginal Land Council v New South Wales Aboriginal Land Council

Land and Environment Court (NSW)|2013-07-31|Before: Pain J

Expedited judicial review challenge to appointment of auditor to Local Aboriginal Land Council 1These expedited judicial review proceedings challenge the appointment of an auditor by the New South Wales Aboriginal Land Council (NSWALC), the First Respondent, to audit the financial accounts of the Gandangara Local Aboriginal Land Council (GLALC), the Applicant. The auditor, Mr Hickey, the Second Respondent, has filed a submitting appearance. 2The Further Amended Summons dated 22 July 2013 states: 1. Relief is sought in respect of the following decision: The decision made by the First Respondent to appoint the Second Respondent as auditor for the Applicant in respect of its financial statements for the period ended 30 June 2013 pursuant to s 153(3) of the Aboriginal Land Rights Act 1983 and Regulation 95 thereunder, as evidenced by the letter from the First Respondent to the Second Respondent dated 8 March 2013 which is annexure A to this summons. Relief is claimed in respect of the whole of the decision as follows: 1. Declaration that under the letter dated 8 March 2013, from the First Respondent to the Second Respondent, the First Respondent failed thereby validly to appoint the Second Respondent as the auditor of the financial statements of the Applicant pursuant to sub-s 153(3) of the Aboriginal Land Rights Act 1983 (ALR Act) and Regulation 95 thereunder. 2. Alternatively, a declaration that if made, any appointment had no effect or operation, and/or no longer has any effect or operation, by reason of the Applicant refusing and continuing to refuse to agree to the service agreement required by paragraph (a) of the letter dated 8 March 2013. 3. Costs. 4. Such further or other orders as the Court deems fit.

Background 3A statement of agreed facts (SOAF) attaching relevant documents was tendered. 4Mr Hickey is a partner of a firm of accountants and auditors known as Lawler Partners, and audited the accounts of GLALC for the years ended 30 June 2007 to 2012 (inclusive). 5Between November 2012 and March 2013, NSWALC caused a process of public tendering to take place from which it selected an auditor for appointment to one or more of the Local Aboriginal Land Councils (LALCs). 6On or about 1 February 2013, in the course of the tendering process, Mr Hickey submitted a tender to the NSWALC for appointment as auditor for a number of LALCs including the GLALC. That tender submission included a copy of the NSWALC's standard "Instrument of Appointment" which Mr Hickey signed. 7On 8 March 2013, the NSWALC sent a letter to Mr Hickey advising that NSWALC had appointed him as an auditor to certain LALCs and attached the unsigned instrument of appointment (attachment 2 to the SOAF). 8On 11 March 2013 the NSWALC wrote a letter to the GLALC outlining the steps taken in the public tender process, advising that Mr Hickey had been appointed to audit the GLALC's financial accounts for 2012/2013, attaching the letter to Mr Hickey dated 8 March 2011 and the instrument of appointment. The letter of 11 March 2011 states that the appointment of Mr Hickey is subject to Mr Hickey entering into a written services agreement with the GLALC. 9On 25 March 2013, Lawler Partners wrote a letter to the GLALC outlining the service agreement for the audit. 10On 4 April 2013 the GLALC wrote a letter to the NSWALC stating that the GLALC had not been able to agree to terms with Mr Hickey in relation to an appointment as auditor for the GLALC for the financial year ending 30 June 2013. The GLALC requested the NSWALC to nominate another auditor for the GLALC for the financial year ending 30 June 2013. 11On 4 April 2013, Mr Hickey's firm sent an email to the GLALC seeking to organise dates to perform onsite procedures for the audit. 12On 5 April 2013 the NSWALC sent an email message to the GLALC requesting more information from the GLALC about the nature of its grievance or objection to Mr Hickey. The GLALC replied to this email on 6 April 2013 stating the GLALC Audit Report makes clear that it would be very difficult for both Mr Hickey and the GLALC to continue any form of working relationship. 13On 12 April 2013 the NSWALC wrote a letter to the GLALC stating that in order for the NSWALC to consider the GLALC's request for another auditor the NSWALC is required to revoke the instrument of appointment. The NSWALC requested the GLALC to provide the NSWALC with information relevant to the grounds upon which the instrument could be revoked. 14On 15 April 2013 the NSWALC sent a letter to the GLALC stating that the Council of the NSWALC had resolved on 12 December 2012 to recommend that the Minister for Aboriginal Affairs consider appointing an administrator to the GLALC on the basis of the GLALC's failure to have an approved budget and the results of the GLALC 2011/2012 audit. 15On 16 April 2013 the GLALC sent a letter to the NSWALC reiterating its request for another auditor. 16On 23 April 2013 the GLALC sent a letter to the NSWALC stating that as no written services agreement had been agreed between Mr Hickey and the GLALC no appointment of Mr Hickey had been made as auditor to the GLALC, as it is a precondition to his appointment that had not been satisfied. The GLALC further reiterated its request to the NSWALC to appoint another auditor. 17On 25 May 2013, Mr Hickey's firm sent an email to the GLALC about the progress of the audit. 18On 29 May 2013 the NSWALC sent a letter to the GLALC stating that the NSWALC did not consider the grounds provided by the GLALC sufficient to appoint another auditor and invited the GLALC to provide further submissions as to why Mr Hickey should not be reappointed. 19The GLALC has not signed and will not sign the written service agreement proposed by Mr Hickey. 20The GLALC has not advised the NSWALC or Mr Hickey of any objection it has to any term of the proposed written service agreement, other than, to the extent it is a term of the proposed written agreement, an objection to Mr Hickey and to the firm of which he is a partner. 21These proceedings were instituted in this Court on 1 May 2013. 22The 8 March 2013 letter from the NSWALC to Mr Hickey the subject of the summons states: "I am pleased to advise that NSWALC has appointed you, pursuant to s. 153 of the [Act] and subject to your taking the steps referred to below, as the auditor for the following LALC(s). ... Gandangara ... Your appointment is for the purposes of verification and certification of financial statements and other documents prescribed by the regulations for the LALC(s) in respect of the financial year ending June 2013. The terms governing your appointment are set out in the Instrument of Appointment 2013 - 2015 ("IoA") which formed part of the tender package already provided to you. ... Please note that your appointment as auditor to the above LALC(s) is subject to: (a) You entering into a services agreement with the LALC(s) for the provision of your services as auditor for the financial year ending June 2013. Your services agreement should note that the audit will be conducted in compliance with the IoA as well as the relevant legislation ... 23The instrument of appointment terms include: 7. Auditor's fees 7.1 The auditor shall, no later than 1 week from the commencement of the audit provide the LALC and relevant NSWALC Zone office with an estimate of the time, fees and disbursements of the audit. 7.2 The auditors fees and disbursements extended to the LALCs shall be the rates tendered to the NSWALC in 2013 adjusted to include annual CPI increases for 2014 and 2015. 7.3 The LALC to which the auditor is appointed will pay all of the auditor's fees for undertaking the tasks set out in this Instrument of Appointment and NSWALC will not be liable for the payment of any of these fees. However, where the LALC is unfunded by NSWALC and is otherwise unable to pay the auditor's fees, NSWALC may, in its discretion, pay the auditor's fees for conducting the audit. 7.4 The auditor's original invoice is to be forwarded to the LALC on the completion of the audit and after the Management Letter has been issued. The auditor must forward a copy of the Invoice providing details of time, fees and disbursements incurred in the audit to the relevant NSWALC Zone Office. 7.5 The auditor must immediately notify the relevant NSWALC Zone Office and the LALC in writing if the auditor's estimate of fees, time and disbursements is likely to be exceeded. 11. Revocation of appointment as Auditor to a LALC 11.1 The auditor's appointment may be revoked by NSWALC on 14 day's notice on the occurrence of any of the following events: (a) NSWALC determines in its absolute discretion that: (i) the auditor has failed to comply with any of the terms of this Instrument of Appointment (ii) the estimate provided by the auditor under paragraph 7.1 is unreasonable; (iii) the costs rendered by the auditor from time to time for undertaking the tasks in this Instrument of Appointment exceed the estimate provided by the auditor under paragraph 7.1 to an unreasonable degree; or (iv) the auditor is guilty of neglect or misconduct in respect of carrying out any of the tasks he or she is required to carry out pursuant to this Instrument of Appointment; (b) the auditor's firm or company, a related firm or company or other persons employed by the auditor's firm or company or related firm or company provides professional services to the LALC other than auditing the LALC's Financial Statements throughout the term of the appointment; (c) the auditor: (i) becomes incapacitated by accident or illness from performing his or her duties under this Instrument of Appointment; (ii) is convicted of any criminal offence which in the sole opinion of NSWALC affects his or her position as the auditor to the LALC; or (iii) becomes bankrupt or makes any arrangement of composition with his or her creditor(s); (iv) becomes ineligible for the appointment, including by losing the necessary qualifications for appointment or providing professional services to the LALC other than auditing the LALC's Financial Statements throughout the term of the appointment; (d) any firm or company of which the auditor is an employee: (i) becomes insolvent; (ii) enters into an arrangement or composition with its creditor(s); (iii) has a receiver or receiver/manager appointed to it; or (iv) is wound up. (e) there is an amendment to any applicable legislation which makes it necessary or desirable in NSWALC's discretion to revoke this Instrument of Appointment. 23. Service Agreement 23.1 The Auditor must enter into a service agreement with a LALC for the provision of services as auditor for each financial year. The auditor's service agreement should note that the audit must be conducted in compliance with this Instrument of Appointment, any relevant legislation and must include the terms set out in clause 26 and 27. 24. Time of visit to the LALC 24.1 The auditor shall advise the time of proposed audit visits to the LALC, to the Chairperson and/or to relevant LALC management. Reasonable notice of an audit visit is to be given where practicable. 24The NSWALC also referred to a bundle of documents which included an explanatory memorandum for the Aboriginal Land Rights Amendment Bill and an Independent Commission Against Corruption (ICAC) discussion paper, Preventing Corruption in Aboriginal Land Councils (February 1997).

Aboriginal Land Rights Act 1983 25Under the ALR Act the Minister administering that Act, the NSWALC and LALCs, which includes the GLALC, play a role. The GLALC and the NSWALC are Aboriginal Land Councils constituted by the ALR Act. The GLALC is a LALC constituted by s 50 of the ALR Act for the GLALC area, which includes Liverpool in south west Sydney. The NSWALC is constituted by s 104 of the ALR Act. The GLALC and the NSWALC have the structure, objects, functions and powers given to them by the ALR Act. 26The GLALC's membership is open to Aboriginal people in its area, Aboriginal people accepted as having a sufficient association with its area or people who are Aboriginal owners in relation to land within its area (see Div 2, Pt 5 of the ALR Act). Since 2006, every LALC has a governing board of up to 10 board members elected by the members (s 61). 27Both the NSWALC and the GLALC are public authorities for the purposes of the Ombudsman Act 1974, the Independent Commission Against Corruption Act 1988 and the Government Information (Public Access) Act 2009 (s 248). 28The purposes of the ALR Act in s 3 include: (a) to provide land rights for Aboriginal persons in New South Wales, (b) to provide for representative Aboriginal Land Councils in New South Wales, (c) to vest land in those Councils, (d) to provide for the acquisition of land, and the management of land and other assets and investments, by or for those Councils and the allocation of funds to and by those Councils, (e) to provide for the provision of community benefit schemes by or on behalf of those Councils. 29As defined in s 4: Aboriginal Land Council means the New South Wales Aboriginal Land Council or a Local Aboriginal Land Council. Local Aboriginal Land Council means a Local Aboriginal Land Council constituted under this Act. satisfactory audited financial statements and documents means audited financial statements and documents furnished to the New South Wales Aboriginal Land Council under Division 2 of Part 8 by a Local Aboriginal Land Council that are determined by the New South Wales Aboriginal Land Council to be satisfactory in accordance with the requirements prescribed by the regulations under section 154. [nothing has been prescribed under s 154] 30LALC functions and powers are contained in Pt 5 of the Act. This Part provides for the constitution of LALC areas and LALCs. In Div 1A functions conferred in s 52 including land acquisition, land use and management, protection of aboriginal culture and heritage and financial stewardship. Section 52(5) provides: (5) Financial stewardship A Local Aboriginal Land Council has the following functions in relation to financial management and business planning: (a) to prepare and implement, in accordance with this Act, a community, land and business plan, (b) to manage, in accordance with this Act and consistently with its community, land and business plan, the investment of any assets of the Council, (c) to facilitate business enterprises, in accordance with this Act and the regulations and consistently with its community, land and business plan. 31Division 3 provides for boards of LALCs to be appointed. 32Division 6 provides for the making of community, land and business plans by LALCs in s 82 and s 83. These must be approved by a LALC and submitted to the NSWALC under s 84. 33Part 7 titled New South Wales Aboriginal Land Council provides for the constitution and objects of the NSWALC. Division 2 titled Functions of New South Wales Aboriginal Land Council includes s 106 which provides in part: (3) Oversight of Local Aboriginal Land Councils The New South Wales Aboriginal Land Council has the following functions in relation to Local Aboriginal Land Councils: (a) with the agreement of a Local Aboriginal Land Council, to manage any of the affairs of the Council, (b) to assist Local Aboriginal Land Councils in complying with this Act in respect of the establishment and keeping of accounts and the preparation and submission of budgets and financial reports, (c) to assist Local Aboriginal Land Councils in the preparation and implementation of community, land and business plans, (d) to approve community, land and business plans of Local Aboriginal Land Councils, (e) to assist Local Aboriginal Land Councils in conducting elections in accordance with this Act for Board members, (f) to determine and approve or disapprove of the terms and conditions of agreements proposed by Local Aboriginal Land Councils to allow mining or mineral exploration on land, (g) to mediate, conciliate and arbitrate disputes relating to the operation of this Act or the regulations between Aboriginal Land Councils, between those Councils and individuals and between individual members of those Councils and to refer such disputes to the Registrar or independent mediators, conciliators and arbitrators, (h) to approve land dealings by Local Aboriginal Land Councils. ... (8) Financial stewardship The New South Wales Aboriginal Land Council has the following functions in relation to financial management and business planning: (a) to prepare and implement policies relating to community, land and business plans required to be adopted by Aboriginal Land Councils, (b) to prepare and implement, in accordance with this Act, a community, land and business plan, (c) to manage, in accordance with this Act, the investment of any assets of the Council, (d) to facilitate business enterprises, in accordance with this Act, (e) to grant funds for the payment of the costs and expenses of Local Aboriginal Land Councils (whether under funding agreements with Local Aboriginal Land Councils or otherwise). 34Part 8 titled Finance provides for the establishment and keeping of accounts by the NSWALC and LALCs. Division 1, titled Establishment of Accounts, provides: 149 NSW Aboriginal Land Council Account (1) The New South Wales Aboriginal Land Council is to establish in an authorised deposit-taking institution an account named the "New South Wales Aboriginal Land Council Account" (the Account). (2) The following is to be deposited in the Account: (a) money provided to the New South Wales Aboriginal Land Council by Parliament for the purposes of this Act, (b) any other money received by that Council and not required by or under this or any other Act to be paid into any other account or fund. (3) Subject to section 150, the following is to be paid from the Account: (a) money to be provided to advisory committees and Local Aboriginal Land Councils for the purposes of this Act, (b) amounts required to meet expenditure incurred by the New South Wales Aboriginal Land Council in the execution or administration of this Act, (c) any other payments authorised by or under this or any other Act. (4) Expenditure incurred in the execution or administration of this Act includes: (a) the payment of the salaries of staff of the New South Wales Aboriginal Land Council, and (b) the cost of the election of councillors (including the costs incurred by the Electoral Commissioner for New South Wales), and (c) the payment of amounts for travelling and other allowances to Board members and remuneration and allowances to councillors. ... 35Under s 152 Local Aboriginal Land Council accounts must be established by each LALC and operated in accordance with the section. 36In Div 2 titled Keeping of Accounts, s 153 provides: 153 Local Aboriginal Land Councils to keep accounts (1) Each Local Aboriginal Land Council must cause proper accounts and records to be kept in relation to all its operations. (2) Each such Council must prepare financial statements for each financial year of the Council in accordance with section 41B (1) of the Public Finance and Audit Act 1983. (2A) Section 41BA of the Public Finance and Audit Act 1983 applies to financial statements required to be prepared under this section in the same way that it applies to financial reports required to be prepared under that Act. (3) The financial statements must be submitted for verification and certification to an auditor appointed by the New South Wales Aboriginal Land Council in the manner prescribed by the regulations. (4) The financial statements must be prepared and submitted to the auditor not later than 6 weeks after the end of the financial year to which they relate. (5) Each such Council must furnish to the New South Wales Aboriginal Land Council the audited financial statements and such other documents as are prescribed by the regulations, not later than 4 months after the end of each financial year. (6) For the avoidance of doubt, the audited financial statements prepared and furnished to the New South Wales Aboriginal Land Council under this section must include information relating to all the Council's funding and operations and not merely funding received from, and operations funded by, the New South Wales Aboriginal Land Council. 155 Local Aboriginal Land Councils may request special auditor The New South Wales Aboriginal Land Council must, on the request of a Local Aboriginal Land Council, appoint a special auditor to examine the financial affairs of the Local Aboriginal Land Council. ... 158 Budget of Local Aboriginal Land Councils (1) Each Local Aboriginal Land Council must, not less than 10 weeks before the commencement of each financial year, prepare and submit for the approval of the New South Wales Aboriginal Land Council a detailed budget relating to its proposed operations during that financial year. (2) The New South Wales Aboriginal Land Council may seek information relating to the budget from a Local Aboriginal Land Council at any time. (3) The budget prepared and submitted under this section is to include details of a Council's proposed operations, including operations to be funded by persons or bodies other than the New South Wales Aboriginal Land Council, and is to contain any matters prescribed by the regulations. 159 Quarterly and six monthly reports by New South Wales Aboriginal Land Council (1) The New South Wales Aboriginal Land Council must, if directed to do so by the Minister, prepare and submit to the Minister within 10 weeks after the end of each quarter of each financial year a report specifying: (a) the amounts of funds granted during the quarter by that Council to Local Aboriginal Land Councils and the purposes for which the funds were granted, and (b) whether the Local Aboriginal Land Councils concerned have complied with the financial obligations imposed by this Part in relation to those grants. (2) The New South Wales Aboriginal Land Council must prepare and submit to the Minister within 10 weeks after the end of each 6-month period ending on 30 June and 31 December in each year a report specifying: (a) the amounts of funds granted during the 6-month period by that Council to Local Aboriginal Land Councils and the purposes for which the funds were granted, and (b) whether the Local Aboriginal Land Councils concerned have complied with the financial obligations imposed by this Part in relation to those grants. ... 160 NSW Aboriginal Land Council may give other Councils directions regarding accounting (1) The New South Wales Aboriginal Land Council may give directions, not inconsistent with this Act or the regulations, to Local Aboriginal Land Councils with respect to the following: (a) the establishment and monitoring of a uniform system of accounting by those Aboriginal Land Councils, (b) the form, contents and method of preparation of budgets by those Councils, (c) other matters relating to the keeping of financial records and the making of financial reports by those Councils. (2) A Local Aboriginal Land Council must comply with a direction given under this section.

37Part 8 Finance Div 3, Funding of Local Aboriginal Land Councils provides: 162 Funding agreements (1) The New South Wales Aboriginal Land Council may enter into a funding agreement with a Local Aboriginal Land Council under which the New South Wales Aboriginal Land Council agrees to grant funds to the Local Aboriginal Land Council on certain specified conditions. (2) A funding agreement may provide that if the Local Aboriginal Land Council breaches a provision of the agreement, the New South Wales Aboriginal Land Council is to cease to provide funds to the Local Aboriginal Land Council. (3) A funding agreement is subject to the provisions of section 163. ... 163 Cessation of funding (1) The New South Wales Aboriginal Land Council must cease immediately to provide any funds to a Local Aboriginal Land Council if the Local Aboriginal Land Council: (a) fails to furnish satisfactory audited financial statements and documents to the New South Wales Aboriginal Land Council in accordance with Division 2, or (b) otherwise fails to comply with section 153, 158 or 159, or (c) is the subject of a report by an investigator appointed in accordance with Division 1 of Part 11 recommending that funds should cease to be provided to the Council. (2) The New South Wales Aboriginal Land Council may not resume providing funds to such a Local Aboriginal Land Council until: (a) the Local Aboriginal Land Council furnishes satisfactory audited financial statements and documents to the New South Wales Aboriginal Land Council under Division 2 or otherwise complies with section 153, 158 or 159, or (b) the Minister, after consideration of a report of: (i) an investigator appointed in accordance with Division 1 of Part 11, or (ii) an administrator of the area of the Council, notifies the New South Wales Aboriginal Land Council in writing that the provision of funds may be resumed. (3) Nothing in this section prevents funds from being provided to a Local Aboriginal Land Council for the area for which an administrator has been appointed under Division 2 of Part 11. (4) Despite subsection (1), the New South Wales Aboriginal Land Council may, in its discretion, make payments from the New South Wales Aboriginal Land Council Account to cover expenses incurred by the Local Aboriginal Land Council before or after the cessation of funding. 38Part 11 Investigation and Administration of Aboriginal Land Councils provides for the appointment of an investigator into an Aboriginal Land Council (ALC) by the Minister (s 216) and the appointment of an administrator for an ALC by the Minister in specified circumstances including the failure to provide satisfactory audited financial statements (s 222). Provision to recoup the costs of an administrator by the NSWALC from a LALC is provided in subsection 5. 39Section 252 provides for the making of regulations with respect to the audit of accounts and records of ALCs including regulations for or with respect to the employment of auditors.

Aboriginal Land Rights Regulation 2002 40Clause 95 of the Aboriginal Land Rights Regulation 2002 (the Regulation) provides: 95 Auditors (1) For the purposes of section 153 (3) of the Act, the New South Wales Aboriginal Land Council is to appoint auditors in the manner provided by this clause. (2) The New South Wales Aboriginal Land Council must, after a process of public tendering, appoint an auditor for each Local Aboriginal Land Council. (3) The New South Wales Aboriginal Land Council must not appoint a person to be an auditor for the purposes of section 153 (3) of the Act unless the person is: (a) a registered company auditor, or (b) a member of the Institute of Public Accountants, or (c) a member of CPA Australia, or (d) a member of the Institute of Chartered Accountants in Australia. 41Prior to the 2001 amendments to the ALR Act, a LALC's obligation in relation to keeping accounts was contained in s 32 of the Act, which provided: 32 Aboriginal Land Councils to keep accounts (1) Each Local Aboriginal Land Council and each Regional Aboriginal Land Council must cause proper accounts and records to be kept in relation to all its operations. (2) Each such Council must prepare financial statements for each financial year of the Council in accordance with section 41B (1) of the Public Finance and Audit Act 1983. (3) The financial statements must be submitted for verification and certification to an auditor selected by the Council from a list of auditors compiled in the manner prescribed by the regulations. (4) The financial statements must be prepared and submitted to the auditor not later than 6 weeks after the end of the financial year to which they relate. (5) Each such Council must furnish to the New South Wales Aboriginal Land Council and to the Minister the audited financial statements and a certificate of the auditor, in a form prescribed by the regulations, not later than 4 months after the end of each financial year. 42The Aboriginal Land Rights Regulation 1996 (now repealed) cl 90 stated: 90 List of auditors For the purposes of section 32 (3) of the Act, the New South Wales Aboriginal Land Council is to compile a list of auditors: (a) who are registered company auditors, and (b) who have informed the New South Wales Aboriginal Land Council in writing that they are able and willing to audit the accounts of Local Aboriginal Land Councils, Regional Aboriginal Land Councils or both Local Aboriginal Land Councils and Regional Aboriginal Land Councils, and (c) who have been approved by the New South Wales Aboriginal Land Council. 43The Aboriginal Lands Rights Amendment Act 2001 omitted Pt 5 of the ALR Act which included s 32. It inserted Pt 8 Finance, parts of which are set out above. The Explanatory Notes for the Aboriginal Land Rights Amendment Bill 2001 stated: The object of this Bill is to amend the Aboriginal Land Rights Act 1983 (the Principal Act) in response to the recommendations of the Independent Commission Against Corruption contained in the Report on Investigations into Aboriginal Land Councils in New South Wales: Corruption Prevention and Research and the recommendations arising from the review of the Principal Act. 44The reason expedition for this hearing was granted by Pepper J Gandangara Local Aboriginal Land Council v New South Wales Aboriginal Land Council [2013] NSWLEC 116 is that, as required by s 153 of the ALR Act, the GLALC must prepare and submit financial statements for the year ended 30 June 2013. These must be submitted to an auditor appointed by the NSWALC no later than six weeks after the end of the financial year, meaning no later than 11 August 2013. Audited financial statements must be provided to the NSWALC by 1 November 2013. Failure to do so results in the first instance in the NSWALC withholding funds, as provided in s 163(1), until satisfactory audited financial statements are provided to it. The Minister can appoint an administrator under s 222(1)(b) at any time if a LALC fails to supply satisfactory audited financial statements to the NSWALC as required by Pt 8, Div 2. 45A late application made by the NSWALC during the hearing to tender a statement of reasons was refused.

GLALC's contentions 46The structure of the ALR Act identifies the roles of the Minister, the NSWALC and LALCs. The NSWALC has the function of overseeing LALCs including supervision of the GLALC in relation to its financial affairs as set out in s 106(3) and (8). The ALR Act should be construed as follows. Firstly, the ALR Act permits the NSWALC to appoint an auditor for a particular LALC without consulting the LALC. If the NSWALC does so, it must pay the auditor's fees. Secondly, a conditional appointment is not an appointment under s 153(3) of the Act. 47Concerning the first contention, the auditor is appointed by the NSWALC in the course of fulfilling its duties of oversight over the financial activities of each LALC as provided for by s 106(3)(b) (assistance with accounts), s 158(1) (the NSWALC to approve budget of each LALC), s 158(3) (budget of LALC required to be submitted to NSWALC to include funding details), s 159 (NSWALC quarterly and six months reports to the Minister), s 160 (NSWALC may give directions to LALC regarding accounting). The appointment of an auditor is to assist the NSWALC supervise or monitor the operations of the LALC so that it can properly account to the Minister. 48Section 153(3) suggests that the NSWALC appoints the auditor itself. A power to appoint is not a power to nominate. It requires an agreement between the NSWALC and an auditor selected after a public tendering process. It must involve quantification and arrangements for payment of auditor's fees which must be by the NSWALC. The auditor is the NSWALC's auditor not the LALC's auditor. 49Concerning the second contention, the act of appointment by the NSWALC requires nothing further to be done to result in the appointment of the auditor and the taking up of duties. There is no basis for imposing a condition that makes it conditional on entry into a service agreement by the GLALC and the auditor. There is no requirement express or inferred in the ALR Act or the Regulation enabling the NSWALC to impose a condition requiring entry into a service agreement. The letter dated 8 March 2013 does not fulfil the requirements of s 153(3) of the ALR Act because it is subject to a condition that a service agreement be entered into between the GLALC and the auditor requiring payment of fees by the GLALC. Accordingly the appointment is invalid. 50The amendments to the ALR Act in 2001 did not include placing an obligation on LALCs to pay the auditor. The normal inference is that the NSWALC, the person appointing the auditor, should pay. Other provisions of the ALR Act provide power to the NSWALC to pay for the auditor. Section s 149(3)(b) is permissive, limited to subsections (a), (b) and (c) and allows for the GLALC's construction of the obligation to pay for the auditor under s 153(3). 51Thirdly, and alternatively, if a conditional appointment is an appointment under s 153(3) of the ALR Act, and the condition is not fulfilled, either the appointment has not been made and the NSWALC has not fulfilled its task under s 153(3) of the ALR Act or the appointment is inoperative/ineffective for the purposes of s 153(3) of the Act. The second declaration sought should be made on this alternative basis.

NSWALC's contentions 52The NSWALC oversight functions under the ALR Act include the appointment of an auditor to verify the accounts of each LALC. The audited statements are not for the purpose of NSWALC properly accounting to the Minister. Nor is it the NSWALC's auditor. The ALR Act indicates that LALCs are largely autonomous and the NSWALC has no power over the exercise of GLALC's functions. Reliance on s 159 is misplaced. Under s 159 the NSWALC must submit six monthly reports and quarterly, if directed, specifying the amounts of funds granted during the quarter by the NSWALC to LALCs, the purposes for which the funds were granted and whether LALCs have complied with the obligations in those grants. Receipt of the audited accounts of the LALC does not assist the NSWALC in its reporting obligations to the Minister. The obligation under s 153 falls on the LALC to provide verified and certified financial statements. NSWALC must appoint an auditor to the LALC. The LALC then has the obligation to provide the audited financial statements within the required timeframe to the NSWALC to ensure its funding is not stopped under s 153(4) and s 163(1). The responsibility is for the LALC to engage with the auditor and pay the auditor. 53An implied obligation on NSWALC to pay for LALC audits, which would include where a LALC's funding ceases pursuant to s 163(1) for failing to provide satisfactory audited financial statements, would be inconsistent with: (i)NSWALC having a complete discretion as to whether it would meet any costs and expenses of the LALC in such circumstances: s 163(3); (ii)the specific provision for NSWALC to pay (and be reimbursed for) an administrator appointed by the Minister: subsections 222(2) and (5); and (iii)the legislative history of s 153(3) and its predecessor. 54No provision for funding of the auditor is made in the legislation. The GLALC has relied on the provisions in s 149(3) and, under s 163(4), that once funding ceases under subsection (1) the NSWALC may in its discretion make payments to cover expenses. If an administrator is appointed to a LALC under s 222 because, inter alia, it fails to furnish satisfactory audited financial statements to the NSWALC, under subsection (5) the administrator is paid out of funds of the NSWALC, which may be recovered from the amount paid by the LALC. In the absence of specific provisions dealing with costs the LALC has the responsibility of paying for the auditor which is an obligation that arises by virtue of s 153(5). There is no basis in the ALR Act for inferring a responsibility to pay an auditor falls on the NSWALC. 55The second argument of the GLALC is that the appointment is conditional on a service agreement being entered into. The letter dated 8 March 2013 is not the appointment. The appointment occurred on or around 8 March 2013 and Mr Hickey was notified by the 8 March 2013 letter. The 8 March 2013 letter does not impose conditions on the appointment. The fact that the letter refers to a service agreement being entered into does not undermine the appointment and does not make it a conditional appointment. 56The instrument of appointment document signed by the auditor to show that he accepts its terms contains a requirement for a service agreement which is a functional arrangement to ensure fair payment for the work to be undertaken. This does not mean the appointment is conditional. The terms of the appointment are directed to Mr Hickey, not to the GLALC. Attachment 6 (an email seeking to perform on site procedures) and 11 (emails concerning attending the GLALC's board meeting) demonstrate that he has sought to undertake his appointment. That the GLALC has not entered into the service agreement cannot invalidate an appointment under s 153(3). 57Alternatively, the appointment can be subject to terms which deal with the carrying out of the function and this is implied by s 153(3). 58The third argument of the GLALC is that as it has refused to execute the service agreement there can be no operative appointment of Mr Hickey. To accept that argument allows the GLALC to frustrate the appointment of an independent auditor selected by the NSWALC. Section 153(3) cannot permit a LALC to subvert the appointment process by failing to effect a service agreement. 59The relief sought is futile because it focuses on the letter dated 8 March 2013 which is not the appointment. Further, the NSWALC could write a letter informing Mr Hickey of his appointment with no terms specified.

Appointment of auditor legally effective - no declarations made 60The resolution of the issues raised in this case requires the construction of s 153(3) of the ALR Act. The purposive approach to statutory interpretation requires a construction that would promote the purposes or objects underlying the Act to be preferred to a construction which would not promote that purpose (Interpretation Act 1987 s 33). The often quoted passage from Project Blue Sky Incorporated v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69] (omitting citations) states: 69 The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed. 61Recently the Court of Criminal Appeal in Shannongrove Pty Ltd v Environment Protection Authority [2013] NSWCCA 179 (where the statutory meaning of waste had to be considered in a criminal law context) Basten ACJ (Hall J and Barr AJ concurring) observed in relation to s 33 and s 34 of the Interpretation Act: 19 A difficulty with the application of this provision [s 33], identified in a number of leading authorities, is that it presumes it is possible to identify "the purpose or object underlying the Act", whereas legislation frequently involves conflicting policies and interests which it seeks to balance, one against the other. To identify, at a high level of generality, an underlying purpose or object is unlikely to assist in the construction of a specific provision or even phrase or, as in the present case, word. Furthermore, some provisions may be specifically directed to limiting the effects or consequences of a broad application of the underlying purpose of the legislation, but it does not follow that they should not be given their full effect, in accordance with the language used by the legislature. ... 20 The Interpretation Act also provides for the use of extrinsic material: 34 Use of extrinsic material in the interpretation of Acts and statutory rules (1) In the interpretation of a provision of an Act or statutory rule, if any material not forming part of the Act or statutory rule is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material: (a) ... or (b) to determine the meaning of the provision: (i) if the provision is ambiguous or obscure, or ... 21 As Spigelman CJ has noted, this empowering provision depends upon a somewhat value-laden condition, namely that the extrinsic material is in fact "capable of assisting in the ascertainment of the meaning of the provision": Harrison v Melhem [2008] NSWCA 67; 72 NSWLR 380 at [12]. That language leaves unresolved the question of the manner in which such assistance is to be derived. ... 22 Beyond those principles, and subject to matters of emphasis and priority, it is clear that "the task of statutory construction must begin with a consideration of the text itself", as noted in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27 at [47]. The passage in the joint reasons in Alcan further stated: "The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy." 23 Spigelman CJ, writing extra-judicially, said that that approach is entirely consistent with earlier statements in CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; 187 CLR 384 at 408 and Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [69]: see Spigelman JJ, "The Intolerable Wrestle: Developments in Statutory Interpretation" (2010) 84 ALJ 822 at 828-829; ... 62In this case the word requiring construction is "appoint" in s 153(3) and the observations in Shannongrove at [19] and [21] are particularly apposite. The first contention raised is who pays the auditor appointed by the NSWALC pursuant to s 153(3). GLALC's counsel argued that if the NSWALC paid Mr Hickey's fees it would accept his services and that is an obligation which falls on the NSWALC. GLALC's counsel referred to the overall scheme of the ALR Act. A large number of these provisions are identified in the legislation section above. The purpose of doing so was to support its submission that the NSWALC is required by the ALR Act to undertake important oversight functions of the financial affairs of LALCs, as identified in s 106(3)(b) (assistance with LALC accounts), s 158(1) (the NSWALC to approve budget of each LALC), s 158(3) (budget of LALC required to be submitted to NSWALC to include funding details), s 159 (NSWALC quarterly and six months reports to the Minister) and s 160 (NSWALC may give directions to LALC regarding accounting). This was said to support its argument that the appointment of the auditor by the NSWALC was for the purposes of the NSWALC not the GLALC. The responsibility to pay therefore rested on the NSWALC. 63In contrary submissions, the NSWALC emphasised the provisions of the ALR Act which it submitted demonstrated the autonomous nature of LALCs and their responsibilities in meeting their financial obligations imposed under s 153, inter alia. This was to support its submission that payment of the appointed auditor was the GLALC's responsibility. 64The ALR Act establishes a scheme whereby LALCs are autonomous in their day to day operations with substantial responsibilities to acquire land, hold and manage assets, and ensure financial stewardship of those assets is achieved as specified in s 52. The preparation of community, business and land plans is an important responsibility of LALCs under s 82 and s 83. A LALC must establish an account and ensure its proper management as required by s 152 and prepare a budget to be submitted to the NSWALC for approval under s 158. Oversight of and assistance to LALCs by the NSWALC is also required. The functions of the NSWALC in relation to LALCs identified in s 106(3) include managing the affairs of a LALC with its agreement, assisting with compliance with the ALR Act in relation to account keeping, assisting with the preparation of community land and business plans, approving community land and business plans, and assisting in the conduct of elections, inter alia. Section 106(8) specifies functions of the NSWALC relating to financial stewardship. These functions are a mixture of overseeing of and assistance in the activities of LALCs in various areas in relation to financial management and business planning. 65Part of the statutory responsibility of the NSWALC includes in s 153(3) the appointment of an auditor to audit the financial statements of a LALC. Apart from the requirement in cl 95 of the Regulation that an auditor be appointed after a public tender process, as occurred in this case, the ALR Act is silent on how the appointed auditor is to discharge his or her function. The manner envisaged for payment of the auditor by the NSWALC in the instrument of appointment is through a service agreement to be entered into between the auditor and the relevant LALC (cl 23). Other provisions in that document limit the amount of fees the auditor can charge (cl 7.2). Clause 11 identifies the numerous circumstances in which the auditor's appointment can be revoked and include failing to comply with the instrument of appointment and overcharging. 66All further obligations in s 153 fall on the GLALC. Under subsection (1) proper accounts and records of its operations must be maintained. Financial statements complying with statutory standards are required of the GLALC under subsections (2) and (2A). Financial statements must be sent to the appointed auditor for verification under s 153(3) within the time frame specified in subsection (4). Under subsection (5) audited financial statements must be furnished by the GLALC to the NSWALC within a specified timeframe. The content of the audited financial statements to the NSWALC is further spelled out in subsection (6). The auditing services provided are to the GLALC not the NSWALC in that the auditing work is of the GLALC's financial statements and is necessary in order for it to meet its statutory obligations in subsection (5). As the NSWALC submitted the appointment of the auditor is not to conduct an audit on behalf of the NSWALC. 67Before the amendments to the ALR Act in 2001, the GLALC appointed an auditor as required under s 32(3) to audit its accounts from a list approved by the NSWALC prepared in accordance with (then) cl 90 of the Aboriginal Land Rights Regulation 1996. Section 32 also did not spell out who paid the auditor. I was informed that under s 32 of the ALR Act the LALCs paid their respective auditors. The scheme in s 32 is very similar to s 153 but for the change in the manner of appointment of an auditor in s 153(3). 68The change in the statutory scheme in 2001 results in the NSWALC appointing an auditor to a LALC under s 153(3). The provision of auditing services continues to be to the LALC. That the appointment of the auditor is by the NSWALC does not mean that payment follows that event, contrary to the GLALC submission that this would be what is normally expected. Given the specific statutory arrangements under the ALR Act it is hard to say what is a normal arrangement in that any arrangement must be interpreted in light of the ALR Act. A distinction was sought to be drawn by the GLALC with companies required to provide audited financial accounts under the Corporations Act 2001 (Cth). While it is true that a company appoints an auditor and pays for that service, an important consideration is that it is the company's accounts that are audited. The entity whose accounts are audited pays the auditor. I do not think that in this case the statutory scheme in s 153, which largely imposes requirements on a LALC, breaks that nexus between the auditor and the recipient of the auditing service paying for it. The fact that the audited financial statement must be sent to the NSWALC under s 153(5) also does not give the NSWALC greater ownership of the auditing process suggesting it should pay for a service it does not receive. The obligation to have audited accounts falls squarely on the GLALC under s 153. 69Under s 155 the NSWALC must appoint a special auditor to a LALC upon a request by a LALC. The GLALC submitted that if the LALC is not under an implied duty to pay, this is likely to undermine the request by LALCs that the NSWALC appoint a special auditor. I have to say the purpose of s 155 is not clear to me and I do not find it has any bearing on interpreting the clearly articulated scheme in s 153. 70Nothing in the general oversight functions of the NSWALC in s 106(3) and (8), s 158, s 159 and s 160 suggests a different statutory construction to s 153(3) should be adopted. Section 106 sets out the various functions of the NSWALC and includes financial stewardship in subsection (8). Section 158 concerns the obligation of LALCs to prepare a detailed budget which the NSWALC must approve. The GLALC referred to the quarterly and six monthly reporting obligation of the NSWALC to the Minister under s 159 in relation to grants made to LALCs as supportive of its case. Section 160 provides discretionary power to the NSWALC to give directions to LALCs in relation to accounting, budgeting and the keeping of financial records. These provisions do not suggest at a broad level a greater level of ownership of the NSWALC in the specific function of appointing an auditor under s 153(3) suggesting it should pay the auditor. 71Sections in the ALR Act provide generally for the payment of money by the NSWALC to LALCs usually on a discretionary basis. Under s 106(8)(e) the granting of funds for the payment of costs and expenses of LALCs can be made. Under s 149(3)(b) payments can be made from the NSWALC Account to meet expenditure incurred by the NSWALC in the administration of the ALR Act which could include a payment to a LALC. That there are general powers to grant money to LALCs does not advance the construction of s 153(3). Under s 163(4) despite the NSWALC ceasing to pay funds to a LALC it may in its discretion cover expenses incurred by a LALC. That a specific arrangement for funding by the NSWALC on a discretionary basis exists in s 163 does not support the GLALC's submission that by inference the NSWALC must pay the auditor's fee. If anything, this suggests to the contrary that unless specific provision is made requiring the NSWALC to pay for a particular function the LALC is responsible for its own operations and for the payment of any costs necessarily incurred in the conduct of these. 72A related but separate issue, the second raised by the GLALC, is whether the appointment of Mr Hickey under s 153(3) by the NSWALC can be, and was, conditional. There is nothing expressly to that effect in the section. Different views were expressed about when the appointment occurred and whether the letter of 8 March 2013 and the instrument of appointment constituted the appointment of Mr Hickey in the terms (according to the NSWALC) or conditions (according to the GLALC) identified in the letter. Given the agreement that these documents were sent to Mr Hickey, and in the absence of any other evidence of his appointment, I agree with the GLALC's submissions that this letter and the instrument constitute the appointment of Mr Hickey. Although not strictly necessary to resolve this issue by recourse to authority, I note that GLALC's counsel referred to Minister for Immigration and Citizenship v SZQOY [2012] FCAFC 131; (2012) 206 FCR 25 confirming Finn J at first instance in Semunigus v Minister for Immigration and Multicultural Affairs [1999] FCA 422 that a decision is made when it is communicated to someone. That decision was in the context of a decision of the Refugee Review Tribunal which is likely to have a more formalised system for communicating final decisions than the ALR Act, but supports GLALC's position by analogy. I note that the Interpretation Act Pt 7 titled Exercise of statutory functions identifies in s 46 that appointments may be made by name or office but does not specify a particular form or manner for doing so. Section 47 provides that statutory powers of appointment confer implied powers to remove or suspend an appointed person. 73The letter dated 8 March 2013 states expressly that the appointment is conditional on a services agreement being entered into with the GLALC, as does cl 23 of the instrument of appointment. I consider that these documents were intended to specify how Mr Hickey was to carry out that appointment but do not create a legal precondition to his appointment. This is not mere surplusage contrary to NSWALC's submissions but does not amount to a conditional appointment in the sense identified by the GLALC, namely that the failure to comply with one of the terms of the instrument invalidates the appointment made on 8 March 2013. 74There is no express or implied limit on the appointment power in s 153(3) conferred under the ALR Act. I consider it is within the power of the NSWALC under s 153(3) to appoint an auditor and as part of that process specify how that function is to be discharged through the provision of terms, provided these are consistent with the objects of the ALR Act and the NSWALC's functions. The terms of the statutory appointment sent to Mr Hickey clearly do that as they provide for the exercise of that function in a professional manner. The separate services agreement is functionally necessary to effect the audit of the financial statements as the ALR Act requires of LALCs. 75As a necessary exercise of the appointment function I infer that the ALR Act does permit the NSWALC to appoint an auditor requiring fulfilment of specified terms in the conduct of his or her duties, which the auditor agrees to in accepting an appointment. That agreement is between the NSWALC and the auditor and was effected on 8 March 2013. It does not render the appointment conditional on an event occurring later whether on or after 8 March 2013. 76The NSWALC referred to the previous provision in the ALR Act, s 32, and the recommendations in the ICAC discussion paper "Preventing Corruption in Aboriginal Land Councils" (February 1997) which identified problems with the auditing of finances of LALCs to support its argument that the auditor was not the NSWALC's auditor. The explanatory notes for the Aboriginal Land Rights Amendment Bill 2001 referred to the changes as responding to the recommendations of an ICAC report, which I infer followed this discussion paper as it has a different name. The GLALC identified that there were several concerns expressed in the ICAC discussion paper in relation to auditing arrangements including the quality of auditors appointed from a list required to be kept by the NSWALC. It submitted that the requirement for a public tender process is directed to ensuring the appointment of quality auditors and was directed at problems with the standing list then kept by the NSWALC as required by cl 90 then in force. Assuming I can have regard to such material for the purposes of statutory construction (in the sense recognised in s 34 of the Interpretation Act of determining the meaning of a provision that is ambiguous or obscure), both submissions are supported by the recommendations in the ICAC discussion paper. Although the ICAC discussion paper is capable of assisting in the process of statutory construction, since both submissions are supported by the recommendations in the ICAC discussion paper it did not assist me in determining which of the parties' arguments I should accept. 77From the correspondence and emails attached to the SOAF it is clear that Mr Hickey has attempted to comply with the terms of the instrument of appointment in seeking to enter into a service agreement and attend on the GLALC. There is no evidence or suggestion that any of the bases for revocation of an appointment specified in cl 11 of the instrument of appointment arise. 78I conclude that no basis for making the first declaration sought has been made out by the GLALC. 79That brings me to the alternative (third) argument raised by the GLALC encapsulated in the second declaration sought, that the appointment was ineffective (at the outset) (first part), or no longer has any effect or operation (second part) given that the service agreement has not been executed by the GLALC. It is practically the case that Mr Hickey cannot proceed with carrying out an audit in the absence of the GLALC entering into the services agreement and, indeed, co-operating in the provision of its financial statements to the auditor, inter alia. Declarations can be made in judicial review proceedings where the breach of a statute has been established. The decision to make a declaration is discretionary. Halsbury's Laws of Australia Online, at [10-2497] Declarations states: While the jurisdiction to grant a declaration in judicial review is a wide and beneficial power, a superior court has a discretion to withhold such relief. The exercise of the discretion depends upon the requirements of justice in the particular case. (footnotes omitted) 80The first part of the second declaration asks the Court to declare the appointment of Mr Hickey of no effect when on my earlier reasoning that appointment is otherwise valid. The legal basis for making a declaration has not been established. Further, as the NSWALC submitted, the second declaration supposes that the ability of a LALC to refuse to complete the appointment through refusing to enter the service agreement can displace a once effective appointment, possibly even retrospectively. It is unclear to me how the actions of a LALC, after an appointment has been made by the NSWALC in terms I have held are valid and accepted by Mr Hickey, can in effect legally revoke the appointment. As the NSWALC submitted, no authority or explanation is provided for this proposition and I have not been able to locate any either. The same reasoning also applies to the second part of the declaration sought, that the appointment has become inoperative. 81No basis for making the second declaration sought by the GLALC is established. Accordingly the GLALC is unsuccessful in this application to the Court and the Further Amended Summons will be dismissed. 82Costs generally follow the event in judicial review proceedings, as provided in Uniform Civil Procedure Rules 2005 r 42.1. I have not heard any submissions on costs at this stage. I will make the usual costs order in the NSWALC's favour unless the parties advise me in writing within seven (7) working days of submissions from the parties seeking alternative orders on costs.

Orders 83The Court makes the following orders: (1)The Further Amended Summons dated 22 July 2013 is dismissed. (2)Costs are reserved for seven (7) working days. (3)Exhibits to be returned.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 August 2013

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