Ku-ring-gai Council v Garry West as delegate of the Acting Director-General, Office of Local Government - [2017] NSWCA 54 - NSWCA 2017 case summary — Zoe

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Ku-ring-gai Council v Garry West as delegate of the Acting Director-General, Office of Local Government

[2017] NSWCA 54

Court of Appeal (NSW)|2017-02-17|Before: Basten JA, Macfarlan JA

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Source facts

Court

Court of Appeal (NSW)

Decision date

2017-02-17

Before

Basten JA, Macfarlan JA

Source

Original judgment source is linked above.

Judgment (62 paragraphs)

[1]

VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88; [2005] HCA 72 Attorney-General for the State of New South Wales v Quin (1990) 170 CLR 1; [1990] HCA 21 Belmorgan Property Development Pty Ltd v GPT Re Ltd [2007] NSWCA 171; 153 LGERA 450 Bondelmonte v Bondelmonte [2017] HCA 8 Botany Bay City Council v Minister for Local Government [2016] NSWCA 74; (2016) 214 LGERA 173 Botany Bay City Council v State of New South Wales [2016] NSWCA 243 Burmah Oil Co Ltd v Bank of England [1980] AC 1090 Chen Shi Hai v Minister for Immigration and Multicultural Affairs (2000) 201 CLR 293; [2000] HCA 19 Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; [1993] FCA 322 Eastman v The Queen (1997) 76 FCR 9 Esso Australia Resources Ltd v Commissioner of Taxation (1999) 201 CLR 49; [1999] HCA 67 Hunter's Hill Council v Minister for Local Government [2016] NSWLEC 124 Khan v Minister for Immigration and Ethnic Affairs [1987] FCA 457; (1987) 14 ALD 291 Kioa v West (1985) 159 CLR 550; [1985] HCA 81 Kirk v Industrial Court of New South Wales (2010) 239 CLR 531; [2010] HCA 1 Ku-ring-gai Council v Mr Garry West in his capacity as delegate of the Acting Director-General of the Office of Local Government [2016] NSWLEC 62 Ku-ring-gai Council v Garry West as Acting Director-General of the Office of Local Government [2016] NSWSC 442 Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40 Minister for Immigration and Citizenship v SZJSS (2010) 243 CLR 164; [2010] HCA 48 Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; [1996] HCA 6 Minister for Local Government v South Sydney City Council (2002) 55 NSWLR 381; [2002] NSWCA 288 Minister for Immigration and Multicultural Affairs v Wang (2003) 215 CLR 518; [2003] HCA 11 National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296; [1984] HCA 29 Ryan v State of Victoria [2015] VSCA 353 Salahuddin v Minister for Immigration and Border Protection (2013) 229 FCR 290; [2013] FCAFC 141 Sankey v Whitlam (1978) 142 CLR 1 State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60 SZSSJ v Minister for Immigration and Border Protection (2015) 234 FCR 1; [2015] FCAFC 125 Telstra Corporation v Australis Media Holdings [No 1] (1997) 41 NSWLR 277 The Commonwealth v Northern Land Council (1993) 176 CLR 604 The King v The Public Service Commissioner for the Commonwealth of Australia; Ex parte Killeen (1914) 18 CLR 586 Woollahra Municipal Council v Minister for Local Government [2016] NSWCA 380; (2016) 219 LGERA 180 Woollahra Municipal Council v Minister for Local Government [2016] NSWLEC 86; 218 LGERA 65 Texts Cited: A Poukchanski, "Considering 'Proper, Genuine and Realistic'" (2014) 21 AJ Admin L 201

[5]

headnote [This headnote is not to be read as part of the judgment] On 6 January 2016, the Minister for Local Government referred a series of proposals for council amalgamations and boundary alterations to the Acting Chief Executive of the Office of Local Government for the purpose of "examination and report" under s 218F(1) of the Local Government Act 1993 (NSW) ("LGA"). The Acting Chief Executive then delegated his functions of examination and report to a number of persons. One of the proposals was for "the merger of Hornsby Shire and Ku-ring-gai local government areas north of the M2 [motorway]." The task of examining and reporting on this proposal was delegated to Mr Garry West. In composing his report, the delegate placed reliance on certain KPMG studies said to underpin the financial assessment of the proposal. The delegate, and the Council, were given access to only some of these documents, as the remainder were subject to a public interest immunity claim by which the government withheld them on the basis of confidentiality. On 22 March 2016, Mr West forwarded his report to the Minister and to the Boundaries Commission. The delegate recommended that the proposal proceed to implementation. The Boundaries Commission reviewed the delegate's report, and sent comments to the Minister on 22 April 2016 supporting the delegate's recommendation. On 22 March 2016, the appellant Council commenced proceedings in the Supreme Court seeking judicial review of the delegate's report and an order setting the report aside under LGA s 673. Those proceedings were transferred to the Land and Environment Court and, on 20 September 2016, were dismissed by Moore J. The questions on appeal before this Court were whether: (1) the proposal involved the amalgamation of two or more local government areas; (2) the delegate failed to take account of a mandatory consideration under LGA s 263(3), namely the impacts of the excision of Hornsby Shire south of the M2 motorway, and if so, whether the delegate's report should be set aside; (3) the primary judge erred in upholding the government's claim of public interest immunity over the withheld KPMG documents; (4) the delegate failed to fulfil his statutory function under LGA s 263(3)(a), of considering the proposal having regard to the financial advantages and disadvantages to the residents and ratepayers of the areas concerned, without access to the withheld KPMG documents; (5) the appellant was denied procedural fairness in that the delegate had relied in his report on the KPMG documents which were not made available to either the appellant or the delegate; (6) the primary judge erred in finding that the delegate had given "reasonable public notice" of the holding of an inquiry into the proposal, as required by LGA s 263(2B). The Court (Basten JA, Macfarlan JA and Sackville AJA) allowed the appeal and held: In relation to question (1):

(Per Basten JA, Macfarlan JA agreeing): The proposal was to "amalgamate two or more areas" pursuant to s 218A. The provision does not expressly allow for the amalgamation of fewer than two areas, or the amalgamation of parts of areas. On one view, s 218A was not engaged by the terms of the present proposal: [16]. The primary judge was correct in concluding that the delegate did not assess the merits of the excision. The proposal neither required nor permitted such an examination: [59]. In relation to question (2):
(Per Sackville AJA, Macfarlan JA agreeing): The delegate did not consider that the function of examining the boundary alteration had been conferred on him, and thereby misapprehended the function he was to perform: [115], [228], [239].
(Per Sackville AJA): The merger proposal incorporated two elements, namely the excision of Hornsby South and the amalgamation of the rest of Hornsby with Ku-ring-gai. The delegate was required to examine and report on each of the elements having regard to the factors enumerated in LGA s 263(3): [224]. This necessitated an assessment of the impact of the proposed merger on both the excised area of Hornsby South and the remainder of Hornsby Shire, not simply on the whole of the Hornsby local government area: [225]-[227]. Woollahra Municipal Council v Minister for Local Government [2016] NSWCA 380; (2016) 219 LGERA 180, distinguished; Botany Bay City Council v Minister for Local Government [2016] NSWCA 74; (2016) 214 LGERA 173, discussed.
This is not a case where relief would be futile: [62]. Although, if the decision were to be remade by the same delegate, it is likely that the same result would be reached, that conclusion does not follow as a matter of law: [65]. It cannot be assumed that the Minister would elect to refer the unchanged proposal for further examination or, if he did, that the process would necessarily produce the same recommendation: [241]. If the flawed examination can be redone properly, relief allowing that to happen should be granted: [66], [242]. In relation to question (3):
(Per Basten and Macfarlan JJA): in considering a claim of public interest immunity where Evidence Act 1995 (NSW) s 130 is engaged, the statutory structure must be followed, which requires the balancing of the public interest in admitting information into evidence against the public interest in preserving secrecy or confidentiality: [85]. The Commonwealth v Northern Land Council (1993) 176 CLR 604; Sankey v Whitlam (1978) 142 CLR 1, discussed.
(Per Basten and Macfarlan JJA): in this case, the public interest in preserving confidentiality is so qualified as to carry little weight, and is inadequate to outweigh the public interest in the production of the documents. The contrary view adopted by the primary judge cannot stand: [94]-[95], [128].
(Per Sackville AJA, dissenting): the issues in this case can be resolved without the appellant having access to the KPMG documents: [299]-[300]. If it were necessary to address this question, the primary judge's decision should be upheld on the ground that there was no substantial public interest in the production of the KPMG documents to the appellant: [301]. In relation to question (4):

[6]

Judgment

BASTEN JA: On 6 January 2016, the Minister for Local Government referred to the Acting Chief Executive, Office of Local Government, a series of proposals for council amalgamations and changes in council boundaries. One such proposal was described as a proposal by the Minister "for the merger of Hornsby Shire and Ku-ring-gai local government areas north of the M2 [Motorway]." The purpose of the referral, made under s 218F(1) of the Local Government Act 1993 (NSW), was "for examination and report" by the Chief Executive.
On the same day, 6 January 2016, the Acting Chief Executive, by instrument of delegation, purportedly made pursuant to s 745(1) of the Local Government Act, delegated to a number of persons the Chief Executive's functions in relation to the examination of and reporting on the proposals, including that involving the appellant.
On 22 March 2016 the delegate, Mr Garry West, forwarded his report to the Minister. Presumably it was also forwarded to the Acting Chief Executive, although the evidence was silent on that point. Because the proposal was "an amalgamation proposal", and had been referred to the Acting Chief Executive, he was required to furnish his report to the Boundaries Commission "for review and comment". [1] The Boundaries Commission reviewed the delegate's report and sent comments to the Minister on 22 April 2016.
The delegate "recommended that the proposal as submitted proceed to implementation." [2] The Boundaries Commission assessed that: [3] "● the Delegate's Report shows that the Delegate has undertaken all the processes required by section 263 of the Act, ● the Delegate's Report shows that the Delegate has adequately considered all the factors required by section 263(3) of the Act, and ● the Delegate's recommendation in relation to the proposed merger is supported by the Delegate's assessment of the factors."
On 22 March 2016 the appellant Council commenced proceedings in the Supreme Court seeking judicial review of the delegate's report and an order setting aside the report under s 673 of the Local Government Act, which permits a court to make an order "to remedy or restrain a breach of this Act." [4] A breach of the Act includes a contravention of or failure to comply with the Act and a threatened or apprehended contravention or failure to comply with the Act. [5] Those proceedings were, in due course, transferred to the Land and Environment Court. On 20 September 2016, Moore J dismissed the proceedings. [6] The present appeal seeks to reagitate a number of grounds raised before the primary judge which, the appellant contended, had been wrongly rejected.
One of the grounds of challenge had in fact been upheld by the primary judge, but relief had been declined. For reasons more fully explained by Sackville AJA, I agree that the appeal should be upheld on this ground and the judgment below set aside.
The appellant originally sought, in the event of success, that the examination of the proposal be remitted to a delegate (albeit a different person). Such an order would not have been appropriate unless the Court were satisfied that the kind of "delegation" was within power and the delegate being reviewed had been properly appointed. Because, in the course of the hearing, the appellant reformulated the relief, abandoning the proposed order for remittal, the validity of the appointment need not be determined. It will be sufficient to order that the report of the delegate be set aside. It follows that the review and comments of the Boundaries Commission will have no operation and that the steps required to be taken before an amalgamation can proceed remain uncompleted.
Given the appellant's success on the first ground, it remains to consider whether the Court should address other grounds. The High Court has remarked that "it is important for intermediate courts of appeal to consider whether to deal with all grounds of appeal, not just with what is identified as the decisive ground." [7] In a case where a matter of public interest arises, which may give rise to an appeal to the High Court, findings with respect to all the grounds which were argued prevents the need for a further hearing if the determination on the decisive ground were to be reversed. This case involves challenges limited to jurisdictional error on the part of the delegate, which can conveniently be dealt with within a short compass. The issues were fully argued. Further, although the notice of appeal sought to raise 11 grounds, with one exception (which should be rejected) they focused upon a particular consideration required to be examined by the Chief Executive, namely "the financial advantages or disadvantages" of the amalgamation proposal.
The exception concerned whether reasonable public notice had been given of the inquiry conducted by the delegate. That ground can be addressed briefly. The quashing of the decision of the delegate removes the need to address the challenge to the review conducted by the Boundaries Commission, which was "put only formally, in the light of Botany Bay City Council v The State of New South Wales [2016] NSWCA 243 at [91]-[101] which is not said to be plainly wrong." [8] The relevant passages in the reasoning of Sackville AJA in Botany Bay rejected a submission that the Commission, in conducting a review under s 218F(6)(b) of the Chief Executive's report, was "free to re-examine the merits of an amalgamation proposal" [9] and that the Commission could and should "go beyond a review of the Chief Executive's report and undertake its own independent evaluation of whether the proposal should be recommended for implementation." [10] There may remain live issues as to the scope of the Commission's functions, which were not explored in this appeal.
Before addressing the substantive challenges to the delegate's report, it is convenient to set out the principal features of the statutory scheme and identify the critical steps in the process of examination by the delegate. (The latter task may be supplemented by reference to the more complete account provided by Sackville AJA.)

[7]

Statutory scheme for amalgamation proposals

Chapter 9 of the Local Government Act provides for the constitution of "any part of New South Wales as an area." [11] In common parlance, these are referred to as local government areas, but the statutory term, which is not unimportant for present purposes, is "area". It is a defined term and means "an area as constituted under Division 1 of Part 1 of Chapter 9." [12] An area is constituted by a proclamation, made by the Governor. [13]
A council is automatically constituted by the statute for each proclaimed area. [14] The council takes its name from the name of the area which is determined by the Governor's proclamation. [15] The procedure for creating a local government area is governed by s 204, which appears in Pt 1, Div 1 of Ch 9. 204 Constitution of areas (1) The Governor may, by proclamation, constitute any part of New South Wales as an area. (2) The area is to have the boundaries determined by the Governor by proclamation. (3) An area must be a single area of contiguous land.
Part 1, Div 2 sets out the procedural steps which must be undertaken before an area can be constituted. In short, there must be a "proposal" made either by the Minister or to the Minister by a council or a group of electors. [16] Public notice must be given of the proposal and representations entertained. [17] If the Minister wishes to continue with the proposal, it must be referred to the Boundaries Commission "for examination and report". [18] If the Minister recommends to the Governor that the proposal be implemented, and modifications are made to the original proposal, the matter cannot be recommended to the Governor if the modifications "constitute a new proposal." [19] The clear implication is that significant modifications will require that a new proposal be prepared and the process will need to be restarted.
Division 1 of Pt 1 also confers power on the Governor to dissolve an area, by the following procedure: 212 Dissolution of areas (1) The Governor may, by proclamation, dissolve the whole or part of an area. (2) The Minister may not recommend the making of a proclamation to dissolve the whole or part of an area until after a public inquiry has been held and the Minister has considered the report made as a consequence of the inquiry.
The present case concerned land entirely within the areas of Ku-ring-gai and Hornsby Shire, although not the whole of the Hornsby Shire area. The proposal put forward by the government was described as a "merger proposal". The term "merger" does not appear in the Local Government Act; rather, the Act provides for the "amalgamation of areas" pursuant to s 218A which provides: 218A Amalgamation of areas (1) The Governor may, by proclamation, amalgamate two or more areas into one or more new areas. (2) On the date specified in the proclamation as the date on which the areas are to be amalgamated: (a) the areas are dissolved, and (b) the new area or new areas are constituted, and (c) subject to section 218C, the councillors of the former areas cease to hold office. (3) Divisions 1 and 2 apply to a new area constituted by a proclamation under this section in the same way as they apply to an area constituted by a proclamation under section 204. (4) Section 212(2) does not apply to the dissolution of a former area by a proclamation under this section.
What may be amalgamated under this provision are "two or more areas": the provision does not expressly allow for the amalgamation of fewer than two areas, or the amalgamation of parts of areas. That would appear to be deliberate, as the result of an amalgamation is that "the areas" are dissolved. Further, the section expressly refers to s 212(2) which deals with the dissolution of "the whole or part of an area". To amalgamate part only of an area will therefore result in the dissolution of the whole, leaving the unamalgamated part in limbo. On one view, s 218A was not engaged by the terms of the present proposal, involving fewer than two whole areas.
There is further provision in Pt 1, Div 2A of Ch 9 for the alteration of boundaries of areas. Section 218B is in the following terms: 218B Alteration of boundaries of areas The Governor may, by proclamation, alter the boundaries of one or more areas.
To alter a boundary common to two areas will result in land being transferred from one area to the other. To transfer a discrete parcel of land from one area to another would not constitute an amalgamation. As will be seen below, one aspect of the overall set of proposals formulated by the government involved the transfer of part of the Hornsby Shire area to the City of Parramatta, by altering the boundary between the two areas. Two points of difference between the statutory provisions may be noted. First, a boundary alteration does not result in the dissolution of either affected area, let alone the whole of both areas. Secondly, there is no provision with respect to boundary alterations for Divs 1 and 2 to apply, as is the case with amalgamation of areas. Division 1 includes the requirement for a public inquiry before dissolution can occur; Div 2 contains provisions with respect to initiation and formulation of proposals, the giving of public notice and the making of representations. [20]
Despite the second point of distinction noted above, Div 2B requires that there be a proposal made to or by the Minister, in terms which reflect those in s 215, with respect to the exercise of functions under s 218A and s 218B. [21] More is required, however, than 28 days public notice, the consideration of representations and referral to the Boundaries Commission. The more detailed provisions are contained in s 218F: 218F Referral of proposal for examination and report (1) On making or receiving a proposal, the Minister must refer it for examination and report to the Boundaries Commission or to the Departmental Chief Executive. (2) Sections 263, 264 and 265 apply to the examination of a proposal by the Departmental Chief Executive in the same way as they apply to the examination of a proposal by the Boundaries Commission. (3) For the purpose of examining a joint proposal of 2 or more councils for the amalgamation of two or more areas under section 218A, the Boundaries Commission or Departmental Chief Executive, as the case requires, must seek the views of electors of each of those areas: (a) by means of: (i) advertised public meetings, and (ii) invitations for public submissions, and (iii) postal surveys or opinion polls, in which reply-paid questionnaires are distributed to all electors, or (b) by means of formal polls. (4) The period over which the views of electors are to be sought as referred to in subsection (3) must be a period of at least 40 days. (5) Part 3 of Chapter 4 applies to a formal poll taken by the Boundaries Commission or Departmental Chief Executive in the same way as it applies to a council poll referred to in that Part. (6) If a proposal that is not supported by one or more of the councils affected by it, or that is an amalgamation proposal, has been referred to the Departmental Chief Executive under subsection (1): (a) the Departmental Chief Executive must furnish the Departmental Chief Executive's report to the Boundaries Commission for review and comment, and (b) the Boundaries Commission must review the report and send its comments to the Minister. (7) The Minister may recommend to the Governor that the proposal be implemented: (a) with such modifications as arise out of: (i) the Boundaries Commission's report, or (ii) the Departmental Chief Executive's report (and, if applicable, the Boundaries Commission's comments on that report), and (b) with such other modifications as the Minister determines, but may not do so if of the opinion that the modifications constitute a new proposal. (8) The Minister may decline to recommend to the Governor that the proposal be implemented.
There was no joint proposal of two or more councils, so that subss (3)-(5) were not engaged. The proposal was not supported by the present appellant, (nor by Hornsby Shire Council) with the result that it was required to be referred to the Boundaries Commission under subs (6). As the proposal was in fact referred to the Chief Executive (and not the Boundaries Commission) the terms of subs (2) were also engaged. Sections 264 (dealing with representation) and 265 (dealing with the conduct of a survey or poll) are not presently in issue. The operation of s 263 was, however, central to the case run by the appellant. The relevant provisions are as follows: 263 Functions of the Boundaries Commission (1) The Boundaries Commission is required to examine and report on any matter with respect to the boundaries of areas and the areas of operation of county councils which may be referred to it by the Minister. (2) For the purpose of exercising its functions, the Boundaries Commission: (a) may hold an inquiry if the Minister so approves, and (b) must hold an inquiry if the Minister so directs, but may not hold an inquiry otherwise than as referred to in paragraph (a) or (b). (2A) Despite subsection (2), the Boundaries Commission must hold an inquiry for the purpose of exercising its functions in relation to a proposal for the amalgamation of two or more areas that has been referred to it in accordance with section 218F. (2B) Reasonable public notice must be given of the holding of an inquiry under this section. (3) When considering any matter referred to it that relates to the boundaries of areas or the areas of operations of county councils, the Boundaries Commission is required to have regard to the following factors: (a) the financial advantages or disadvantages (including the economies or diseconomies of scale) of any relevant proposal to the residents and ratepayers of the areas concerned, (b) the community of interest and geographic cohesion in the existing areas and in any proposed new area, (c) the existing historical and traditional values in the existing areas and the impact of change on them, (d) the attitude of the residents and ratepayers of the areas concerned, … (e1) the impact of any relevant proposal on the ability of the councils of the areas concerned to provide adequate, equitable and appropriate services and facilities, … (e5) in the case of a proposal for the amalgamation of two or more areas, the need to ensure that the opinions of each of the diverse communities of the resulting area or areas are effectively represented, (f) such other factors as it considers relevant to the provision of efficient and effective local government in the existing and proposed new areas. … (5) The Boundaries Commission must allow members of the public to attend any inquiry held by the Commission under this section. … (7) The Supreme Court may not make an order in the nature of prohibition in respect of, or an order for removing to the Court or quashing, any decision or proceeding made or conducted by the Boundaries Commission in connection with the exercise of its functions.
In s 263(1), the obligation to examine and report on any matter "which may be referred to it by the Minister" should be understood, not as identifying a class of matters, all of which may be examined, but rather, in a temporal sense, those matters which are in fact referred to it. Because the function was understood to relate to "a proposal for the amalgamation of two or more areas", it was assumed that subs (2A) applied, and the Chief Executive (and, it was also assumed, his delegate) was required to hold an inquiry.
There was an issue raised by the appellant as to whether reasonable public notice had been given, pursuant to subs (2B). As will be briefly explained below, there was no substance in the challenge to the notice in fact given and nothing turns on the nature or extent of the inquiry in fact conducted.
One major issue on the appeal was whether the delegate complied with the obligation "to have regard to" the matters identified in subs (3)(a), namely the financial advantages or disadvantages of the proposal.
Although the privative clause in s 263(7) appears to prevent this Court granting relief (a) in the nature of prohibition, which must be based on jurisdictional error, as well as (b) an order setting aside the decision or proceeding of the delegate, which may be on the ground of error of law on the face of the record, it was accepted by the parties that a challenge could be mounted on the basis of jurisdictional error, being within the constitutionally protected supervisory jurisdiction of this Court. [22] There might have been an issue as to whether, in circumstances in which the privative clause was expressed to refer to the Supreme Court, it was to be assumed that the clause did not apply to the Land and Environment Court; that would have been a surprising result. On the other hand, if the provision did apply to the Land and Environment Court, [23] as well as to this Court, there might have been a further question as to whether that Court enjoyed the same constitutionally protected jurisdiction as the Supreme Court. Although proceedings were in fact commenced in the Supreme Court, they were transferred to the Land and Environment Court without reference to these issues. [24]

[9]

(a) relevant parties - delegation

The proposal the subject of the proceedings was "made by" the Minister. A letter from the Minister to the Acting Chief Executive, dated 6 January 2016, attached a list of proposed amalgamations and boundary changes, which proposals had been initiated by him. He stated: "By this letter I am referring these proposals to you pursuant to [s 218F(1)] of the Act for examination and report in accordance with section 218F of the Act, and I look forward to receiving your reports in due course."
The attached list identified 35 "merger proposals" divided into the categories "metropolitan proposals" (of which there were 15) and "regional proposals" (of which there were 20). Several proposals involved parts of particular areas. The present proposal (inaccurately), was not so identified, being described as "Hornsby Shire and Ku-ring-gai councils".
Whether the Minister anticipated receiving the reports of the Acting Chief Executive personally is not clear. However, on the same day, the Acting Chief Executive exercised what purported to be an instrument of delegation pursuant to s 745(1) of the Local Government Act. Mr Garry West was identified as the delegate in respect of two proposals, one being "Hornsby Shire (part) and Ku-ring-gai", the other being "Hawkesbury City and The Hills Shire (part)". A separate delegate was given functions relating to Parramatta City (part) and Hornsby Shire (part). The evidence did not specifically identify whether the latter proposal involved the part of the Hornsby Shire south of the M2 motorway, although that seems likely.
While the Departmental Chief Executive has power to delegate "to any person" any of the Chief Executive's functions "under this Act" (other than the power of delegation) it is by no means clear that the concept of delegation extends to conferring functions on persons outside the government. Section 745(2) permits a delegate to "subdelegate to a person employed in the Department any function delegated by the Departmental Chief Executive if the delegate is authorised in writing to do so by the Departmental Chief Executive." The concept of delegation, at least in a legal context, is generally understood as a conferral of authority on a subordinate within a hierarchical structure. That meaning is strongly supported by the terms of subs (2), which are not consistent with the delegate being someone outside the department.
This matter was potentially of importance for three reasons. First, there may be a question as to whether, and if so how, ss 263, 264 and 265 bind a delegate who is not a government officer or employee. Secondly, there may be a question as to the scope of this Court's exercise of its supervisory jurisdiction. Although the proceedings were brought against the first respondent "in his capacity as delegate of the Acting Director-General [sic] of the Office of Local Government", it is by no means clear whether those are words of limitation and whether the Court could now make an order directing Mr West to do anything at all, subject to the potential for enforcement by proceedings for contempt, if the order were not complied with. Thirdly, Mr West's decision was not treated as a decision of the Acting Chief Executive, who was not a party to the proceedings and, in a formal sense, will not be bound by the result.
These important questions were not addressed, the parties being content to assume both that the relevant provisions of the Local Government Act bound the conduct of Mr West and that any order of this Court would be effective.

[10]

(b) nature of the proposal

Given the disparate nature of the functions conferred on the Chief Executive, it is necessary to identify the specific proposal with respect to which the function of examination and report was given to the delegate. The relevant document, entitled "Merger Proposal" and dated January 2016 contained 18 pages. It ended with an appendix identifying "the factors that a delegate must consider under section 263 of the Local Government Act (1993) when examining a proposal." It then identified the section references in the proposal itself where each criterion was addressed. The parts of primary importance were to be found in the Executive Summary under the headings "Introduction" and "Impacts, Benefits and Opportunities". The section headed "Introduction" commenced: "This is a proposal by the Minister for Local Government under section 218E(1) of the Local Government Act (1993) for the merger of Hornsby Shire and Ku-ring-gai local government areas north of the M2. This merger proposal sets out the impacts, benefits and opportunities of creating a new council."
A footnote to the first sentence of this passage recognised that what was in fact being created was a new local government area, which was to be, for simplicity, referred to as a new council. The introduction concluded with the following statement: "The new council includes only the part of Hornsby Shire north of the M2 Motorway."
Beyond the acknowledgment that it was not the whole of the Hornsby Shire area which was to form the new area, there was nothing in the proposal indicating that any examination was required of the excision of the land south of the M2. Indeed, the passages set out above were inconsistent with any such suggestion. Although the Minister argued that there was an implied requirement to examine and report on the alteration to the southern boundary of Hornsby Shire, there was no textual basis for that submission in the proposal. Nor was there any reference to the fact that the amalgamation could not take place until the Hornsby Shire area had been reduced by an alteration to its boundaries. The nature of the proposal was one involving an amalgamation within the terms of s 218A of the Local Government Act.

[11]

The introduction to the proposal referred to the fact that it had been "informed by four years of extensive council and community consultation and is supported by independent analysis and modelling by KPMG." The summary then noted the "range of benefits and opportunities" that had been identified for the proposed merger. The summary continued: "Analysis by KPMG shows the new council has the potential to generate net savings to council operations. The merger is expected to lead to around $70 million in net financial savings over 20 years. Council performance will also be improved with a projected 34 per cent increase in annual operating results achieved within 10 years. [25] This means that there will be a payback period of three years after which the merger benefits will exceed the expected merger costs. The analysis also shows the proposed merger is expected to generate, on average, around $6 million in savings every year from 2020 onwards. Savings will primarily be from the removal of back office and administrative functions; streamlining of senior management roles; efficiencies from increased purchasing power of materials and contracts; and reduced expenditure on councillor fees. [26] The NSW Government has announced a funding package to support merging councils which would result in $20 million being made available should the proposed merger proceed."
The Minister acknowledged that the document referred to in the second footnote, the main title of which was "Merger Impacts and Analysis", was a "long form document" prepared by KPMG, which had not been made available publicly, or to the delegate or to the appellant. The Minister acknowledged that there was no other apparent source for the information contained in the passage set out in the proposal. Although a short version of the "Merger Impacts and Analysis" document had been publicly released (and was before the Court), the long form of the document had not (and was not). However, the short form document suggests that the long form document addressed, on a case-by-case basis, the "Long-Term Financial Plans" for the councils involved in specific amalgamations. [27]
The reason for the failure to release the document was the claim for what is sometimes described as "public interest immunity", which is (relevantly) dealt with in s 130 and s 131A of the Evidence Act 1995 (NSW). One ground of the appeal was directed to the refusal of the primary judge to order production of that document and a related document, entitled "Implementation of Local Government Mergers: Business Case", also prepared by KPMG and collectively called "the KPMG documents".
The passage set out above was relevant in a further respect. It formed the primary basis for the appellant's complaint that it had been denied procedural fairness in the conduct of the examination and reporting by the delegate. In short, as the underlying material had not been produced, the appellant had been denied an opportunity to respond to the figures and underlying KPMG analysis on which a major aspect of the proposal was founded.
This point was expressly raised with the delegate. In a written submission dated 28 February 2016, the appellant argued: "There is no case for the proposed merger of Ku-ring-gai Council with part of Hornsby Shire Council on financial grounds. Rather, it would be to the detriment of the residents and ratepayers of both council areas."
The first of a number of "key points" set out following that statement was a summary of the figures contained in the passage from the merger proposal noted above. The next key point complained that "[t]he forecast savings cannot be verified as there is no detailed business case available to support the Merger Proposal." The appellant quoted chartered accountants BDO, which it had briefed to advise it, who said that the merger proposal "does not contain sufficient information for us to conclude on the merits of merging the two councils." [28] The appellant then said that it had "requested the full KPMG report" and had been told that it should rely on the document contained on the government website. The appellant reiterated its position that "there is no detailed business case available to justify the proposed merger" [29] and continued: [30] "The absence of detailed supporting information by KPMG, or any other such business case, is entirely unsatisfactory as it is not possible for anyone (including the NSW Government and the Delegate) to check the accuracy of the underlying data, test the assumptions or assess the reasonableness of the conclusions."
It may be seen that this last submission contained three propositions, one of which was false. The first proposition was that it, Ku-ring-gai Council, was unable to check the accuracy of the underlying data or test the assumptions because it did not have the information. That was, in substance, a claim of procedural unfairness. The second proposition was that the government could not check the data and assumptions, apparently because it did not have the information. Depending on what was encompassed by the term "the NSW Government", that proposition was apparently wrong and inconsistent with the rest of the appellant's case, namely that the facts and figures set out in the proposal were based on information available to the government, but not to anyone else. That complaint must be put to one side.
The third complaint was that the delegate was unable to check the accuracy of the data, test the assumptions or assess the reasonableness of the conclusions. That was, in substance, a complaint that the purported examination undertaken by the delegate did not satisfy the terms of the statute because he was unable to have regard to, in the sense of examining, the financial advantages of the amalgamation as presented by the government in the merger proposal.
Procedural unfairness was alleged on a further basis. That was described as the availability to the delegate of material provided by KPMG in a private briefing to which neither the appellant, nor its residents and ratepayers, were privy. The briefing took place on 14 January 2016 and was revealed as a result of the production of a document entitled "Local Government Merger Proposals - Overview of assumptions underpinning financial modelling - briefing to delegates", dated 14 January 2016. That document set out in global form the benefits from the merger proposals, together with the financial costs. The figures were illustrated by reference to one proposed amalgamation (not being that involving the present parties).
Apart from the long form of the analysis prepared by KPMG and not released, a "technical paper" described as "Outline of Financial Modelling Assumptions for Local Government Merger Proposals", dated 19 January 2016 and said to be "[p]repared for the NSW Department of Premier and Cabinet", was released. This document stated that KPMG had been engaged by the Department of Premier and Cabinet "to prepare independent modelling of the potential financial impacts of selected council mergers." [31] The document indicated the source of the data relied on, parts of which were State-wide, but other parts of which, referred to as "[c]omparator and jurisdictional analysis/merger business cases", [32] indicated that there was material specific to particular councils.
At a meeting between the delegate and councillors and officers of the appellant, on 19 January 2016, one issue raised by Council was referred to as "KPMG report." The "Council Meeting Notes" had the following material in respect of that issue: [33] "Mr West explained that the Delegates were briefed on the financial assumptions applied in the KPMG report. He understands that it will be available for Council. … Council re-iterated their request to see the report. Cr Elaine Malicki, conveyed that this was not a fair situation not having the report released?"

[12]

(a) case at trial

Before the primary judge, the appellant submitted that the delegate had erred in failing to take account of a mandatory consideration, identified as "submissions relating to impacts associated with the [excision] of the areas of Hornsby south of the M2 Motorway", which contained approximately 20,000 ratepayers and was part of the present Hornsby Shire local government area. This factor was said to be relevant to pars (a), (b), (d) and (f) of s 263(3) of the Local Government Act.
The primary judge accepted, correctly, the premise on which this ground was based, namely that each of the mandatory factors set out in s 263(3) related to "the whole of each of the existing local government areas that are the subject of the proposal, even when, as is here the case, it is proposed to excise an area from one of them." [34] The primary judge then considered the passages in the report of the delegate which referred to the area south of the M2 concluding, however: [35] "None of these matters dealt with the impact on the residents and ratepayers of the area south of the M2 Motorway and now excised and incorporated in the enlarged Parramatta City Council, except in a tangential fashion. The impact on those residents and ratepayers was mandated to be considered by s 263(3)(a)."
The judge further concluded: [36] "In failing to do so, he misapprehended a significant element of what was required of him by s 263(3). It follows that, in this regard, his examination and reporting process miscarried."
The primary judge further noted, correctly on the basis of his reading of the statute, that both this delegate, and the other delegate who was required to consider a merger of the excised portion of Hornsby Shire with the Parramatta City Council area, would have to consider the effects of the two proposals on the excised area. He might have added that, consistently with this conclusion, the other delegate would also have had to consider the effect of the excision on the whole of Hornsby Shire.
On one view, the element of duplication and the possibility of inconsistent conclusions should have led to the conclusion that these two proposals could not be isolated from each other and given to separate decision-makers for examination. The Minister's response was that these difficulties could be resolved at a later stage, because the Minister had power to recommend to the Governor that the proposal be implemented or decline to make that recommendation. [37] Whilst that may proffer a practical solution to inconsistent recommendations, it would almost certainly mean that the whole process would have to start again, unless the government abandoned it. More importantly, it does not address the underlying legal premise, namely that "area" means the whole of a local government area and not just part of an area, and that (although the primary judge did not specifically address this point) there cannot be an amalgamation of fewer than two whole local government areas under s 218A. Further, the primary judge, adopting the language of the appellant's submissions, appears not to have identified what was meant by "excision" in the statutory context of the separate functions of amalgamation and alteration of boundaries.
Despite identifying jurisdictional error, the primary judge nevertheless declined to grant relief because, by the time the proceedings came on for hearing before him, the Local Government (City of Parramatta and Cumberland Councils) Proclamation 2016 (made on 12 May 2016), had given effect to the "excision". [38] The assumption appears to have been that, had he set aside the decision of the delegate, the matter would have to be remitted for further consideration, which would have been an exercise in futility because, the excised area having been removed, the current proposal would be approved. That would be because, what should have been considered and was not, no longer could be considered, so that the formerly invalid examination would now be valid.

[13]

(b) Minister's challenge to finding as to delegate's reasons

As will be explained below, the reasoning of the primary judge with respect to relief cannot be accepted. It is desirable, however, to deal first with the Minister's contention challenging the conclusion that the delegate did not properly consider the effects of the proposal on the area of Hornsby Shire south of the M2. Rather, the Minister contended, [39] the delegate did give proper consideration to the area south of the M2, as appeared from his report.
As the primary judge (and the Minister) correctly noted, there were a number of references in the delegate's report to the part of Hornsby Shire south of the M2. First, in considering what was described as "background", the delegate referred to an earlier proposal by Hornsby Council itself, which included an expansion of its existing boundaries, beyond the merger of the whole of its existing area with that of Ku-ring-gai. The delegate then noted that the Hornsby Shire Council was opposed to the current proposal, "particularly given the potential loss of the part of Hornsby south of the M2 Motorway to Parramatta". [40] Later in the report, when considering an analysis provided by KPMG to Hornsby Shire Council in 2014, the delegate noted that "option 3" considered at that time was equivalent to the current merger proposal. [41] Using that material, the delegate obtained "significant comfort that the projected performance improvements are credible and achievable."
However, that was not a rejection of the proposition that the new area would be better off with the inclusion of the area south of the M2; nor did it consider the benefits to the area south of the M2 in giving effect to the current proposal. That is apparent from the further statement in relation to the submission by Hornsby Shire Council to the delegate, summarised in the following terms: [42] "The submission shows that the excision of the area south of the M2 Motorway from the proposed Hornsby/Ku-ring-gai council would see the council at least $6.4 million per annum worse off (in years 1-3) or at least $5 million worse off (from year 4 onwards) than if the two whole councils were merged. Such an impact would negate the projected savings in the Government's Hornsby/Ku-ring-gai merger proposal as well as the funding that has been promised by the Government to assist with the merger costs of the councils."
Secondly, the delegate identified the main submissions from residents within the Ku-ring-gai area, which included concerns regarding the financial impact of the loss of the area south of the M2 on the financial viability of a new council. [43] That material may be dealt with in company with the next point.
Thirdly, although there were references to the impact of the exclusion of the area south of the M2 in respect of other issues, the underlying point was the financial impact of the so-called "excision". [44] Accordingly, the clearest indication of how the delegate dealt with that issue derived from his conclusions with respect to the first topic in his report, namely financial advantages and disadvantages. The delegate commenced that section by noting the concerns expressed with respect to the KPMG analysis and modelling, confirming his understanding that it operated at a "broad level". [45] He accepted statements by KPMG and the government that the estimated benefits were "conservative". Then, dealing with the financial impact of loss of the area south of the M2, the delegate concluded that "the operating result has already been accounted for in the merger proposal." [46] As a fact, that conclusion was not challenged and probably was not open to challenge. As a conclusion, it did not indicate examination of the desirability of the excision for the residents and ratepayers of the area south of the M2; nor did it examine the benefits and disadvantages of the excision from the standpoint of the ratepayers and residents north of the M2 and within the Ku-ring-gai area.
Fourthly, in dealing with the second criterion identified in s 263(3), namely "community of interest and geographic cohesion", the delegate concluded: [47] "The area south of the M2 Motorway is the subject of another merger proposal, therefore while the issues and concerns are noted it would be expected they would primarily be considered in that report."
Reading the report as a whole, that conclusion fairly sums up the delegate's approach to this issue: it cannot be said that he was inconsistent in that approach. Thus, in summarising the community submissions under the heading "Attitudes of residents and ratepayers" the delegate stated: [48] "At the public inquiry the majority of people spoke against the merger proposal, this is also reflected in submissions. However, it must be indicated that while the majority of submissions were opposed to Hornsby (part)/Ku-ring-gai merger proposal approximately a quarter were against excising of the areas of Hornsby south of the M2 Motorway. As these are subject to another merger proposal their detail is not summarised below."
An analysis of the delegate's reasons demonstrates that the primary judge was correct in concluding that the delegate had eschewed any assessment of the merits of the excision of the area south of the M2 Motorway. It is understandable that he did so: the merger proposal, as described above, neither required nor permitted such an examination. For these reasons, the Minister's contention to the contrary must be rejected.
A further way of testing whether the delegate did in fact give consideration to the effect of the merger proposal on the area south of the M2 would be to ask what finding might have been expected had such consideration been given. The short answer is that, acting rationally, the delegate could not have recommended that the proposal proceed. That is because, as the delegate correctly noted, the fate of the area south of the M2 was, at the time of the delegate's report, the subject of another merger proposal. [49] The outcome of the examination of that proposal was not then known. It could have declined to recommend that the area south of the M2 in Hornsby Shire be incorporated into Parramatta City. Had it done so, and had the Minister accepted that recommendation, approval of the Hornsby/Ku-ring-gai proposal would have left the residents and ratepayers south of the M2, formerly in Hornsby Shire, without a local government area and without a council. That possibility was an unacceptable outcome which could not be excluded. On the other hand, if that possibility were disregarded, a decision approving the Hornsby/Ku-ring-gai proposal might be seen to dictate a result with respect to the Parramatta City proposal regardless of the view of the merits of the incorporation of the area south of the M2 into Parramatta City. That too would be an unacceptable outcome. A third foreseeable possibility would have been that the delegate considering the Parramatta City proposal would do precisely what the present delegate did and presume that the fate of the excised area would be fully considered by the other delegate. That again would be an unacceptable outcome.
It follows that, had the delegate properly considered the position of the area south of the M2, the only reasonable decisions could have been (a) to defer concluding his examination and report on the Hornsby/Ku-ring-gai proposal until the other proposal had been determined, or (b) to recommend to the government that neither proposal be examined and reported on, otherwise than by one delegate having functions with respect to the alteration of the boundary as well as the two amalgamation proposals. The fact that neither approach, nor anything like them, was referred to in the delegate's report is powerful evidence for the proposition that he did not consider that the function of examining the boundary alteration had been conferred on him.

[14]

First, it should be said that this is not a true case of futility. It is not like the case where a person challenges the refusal of his or her application for an appointment to office, in circumstances where another person has been appointed and cannot be removed to make way for the thwarted applicant. [50] The merger proposal has not yet been acted upon, nor, subject to one qualification, has any factual circumstance changed which would prevent the proposal being re-examined and acted upon, if the Minister thought appropriate.
The qualification is that there may need to be a new proposal, restating the boundaries in the present proposal, but against a background in which the "excision" has already taken place and is, it can be assumed, beyond challenge. That circumstance may require a new amalgamation proposal, with two consequences. First, because it will affect the whole of the Hornsby Shire area (as now defined, following the boundary alteration) with the whole of Ku-ring-gai, the proposal will fit squarely within s 218A. Secondly, because it will no longer be necessary (or appropriate) to have regard to the possible consequences for the area south of the M2 Motorway, which was originally within the Hornsby Shire area, the outcome may not be the same.
There may be cases in which a decision-maker has come to a conclusion which is unreviewable, but, taking into account an irrelevant consideration has then adopted the reverse position. The court may set the decision aside on the basis that an irrelevant consideration has been taken into account, but remit the matter with a direction that the applicant is entitled to the relief sought. [51] By parity of reasoning, it may be said that where the decision-maker erred by failing to take into account a mandatory consideration, but in circumstances where, if the matter were remitted that consideration would no longer be available, relief should be refused. That would be so on the basis that the decision which was challengeable on a particular ground would be unchallengeable once that ground became immaterial.
It is not necessary to determine whether that reasoning is valid. It is sufficient to note that the decision made by the delegate in fact took into account effects relevant to the area south of the M2, although not by way of examining the whole of the matter which should have been examined. However, if the decision were to be made again now, that material would not be relevant. It might seem illogical to require the decision to be made again if the material which must now be excluded worked uniformly against acceptance of the proposal. Thus, if the considered effects failed to prevent the proposal being approved, their absence can only strengthen the conclusion already reached. However, to make that assumption is to undertake an assessment of the nature of the material and its necessary effects. While it may seem likely that the same result would be reached on reconsideration by the same delegate, that conclusion does not follow as a matter of law, but rather by making certain assumptions about the assessment of the material, which are not open to a court exercising the supervisory jurisdiction of this Court.
Finally, if the flawed examination can be redone properly, relief should be granted which would allow that to happen. Once the decision has miscarried, it is not appropriate to remit the matter to the same delegate in order to seek to retain the benefit of findings reached in the course of the earlier flawed assessment. [52] There are a number of reasons for that, two of which have particular pertinence in the present case. First, it cannot be assumed that, if the examination and the inquiry were undertaken again, the material put before the delegate would be the same. That is because the objection based on public interest immunity should have been rejected (as discussed below) and any fresh examination will need to be undertaken by reference to additional material. Secondly, it cannot be assumed that the matter would or could go back to the same delegate for re-examination of the merger proposal. That is in part because it may be assumed that the "delegation" has expired. It is also, in part, because of the doubts raised above as to whether a delegation to a person outside the public service is valid.

[17]

Public interest immunity

On 8 January 2016 the appellant sought access to the KPMG documents under the Government Information (Public Access) Act 2009 (NSW). The KPMG documents [54] were said by the Director of the Department of Premier and Cabinet to have been "prepared for submission to Cabinet and submitted to Cabinet regarding proposed local government reforms." Access was refused on the basis that they constituted "Cabinet information" for the purposes of cl 2(1)(b) of Sch 1 to the Government Information Act. [55]
Having failed to obtain the KPMG documents prior to the completion of the delegate's report, the appellant issued notices to produce in the court proceedings, addressed to "NSW Department of Premier & Cabinet" and to the Minister for Local Government. The first notice was treated as having been directed to the proper officer of the Department, since identified as the Secretary. On 29 April 2016 objection was taken to each notice to produce and orders were sought pursuant to ss 130 and 131A of the Evidence Act for the Secretary and the Minister to be excused from producing the documents on the ground that it would be "injurious to the public interest to produce [them]." The objections were upheld by the Land and Environment Court. [56]
In the proceedings in the Land and Environment Court, the appellant joined both the "NSW Department of Premier & Cabinet" (not a juristic person) and the Minister for Local Government as the second and third defendants respectively. Grounds 1 and 2 challenged the refusal of the Department to produce the KPMG documents. As noted above, ground 3 alleged procedural unfairness on the part of the proper officer in refusing to provide the KPMG documents to the appellant and to the delegate, and ground 4 alleged a constructive failure on the part of the delegate to carry out his delegated function in the absence of the KPMG documents. In his final judgment, the primary judge stated that the matter had been determined adversely to the appellant and that ground 1 was "without foundation." [57] These findings were challenged in ground 3 of the notice of appeal.
In support of the objection, the Secretary relied upon an affidavit of General Counsel for the Department, Mr Paul Miller. Mr Miller stated that the KPMG documents: [58] "can be classed as falling within the following categories: (a) documents brought into existence for the purpose of preparing a submission to Cabinet (including drafts of documents); (b) documents which were provided to Cabinet and which would disclose the substance of matters considered and discussed by Cabinet; (c) documents which relate to the framing of government policy at a high level; and (d) materials on which the decision-making processes of Cabinet were based."
Mr Miller described in some detail the Cabinet process. The affidavit continued: "24 KPMG was engaged by the New South Wales Government in 2015 to provide certain advice on local government reform across the State. Two of the documents over which the public interest immunity claim is made are documents prepared by KPMG as part of this engagement. 25 The matters with which the documents referred to above are concerned are current, controversial matters concerning generally the amalgamation of a number of local government areas in this State. The controversy in relation to the amalgamation of local government areas is ongoing. No final decision has been made concerning the proposed amalgamation of Hornsby [sic] and Ku-ring-gai Councils."
The affidavit then identified the two documents now in dispute as having been "prepared by KPMG" and having been "submitted by the relevant Minister to Cabinet." [59] The affidavit further noted that the long form of the merger impacts and analysis document was substantially longer than a published form of the document and was "a substantially different document". [60]
The notice of objection relied on s 130 and s 131A of the Evidence Act. Section 130 relevantly states: 130 Exclusion of evidence of matters of state (1) If the public interest in admitting into evidence information or a document that relates to matters of state is outweighed by the public interest in preserving secrecy or confidentiality in relation to the information or document, the court may direct that the information or document not be adduced as evidence. … (4) Without limiting the circumstances in which information or a document may be taken for the purposes of subsection (1) to relate to matters of state, the information or document is taken for the purposes of that subsection to relate to matters of state if adducing it as evidence would: (a) prejudice the security, defence or international relations of Australia, or (b) damage relations between the Commonwealth and a State or between 2 or more States, or (c) prejudice the prevention, investigation or prosecution of an offence, or (d) prejudice the prevention or investigation of, or the conduct of proceedings for recovery of civil penalties brought with respect to, other contraventions of the law, or (e) disclose, or enable a person to ascertain, the existence or identity of a confidential source of information relating to the enforcement or administration of a law of the Commonwealth or a State, or (f) prejudice the proper functioning of the government of the Commonwealth or a State. (5) Without limiting the matters that the court may take into account for the purposes of subsection (1), it is to take into account the following matters: (a) the importance of the information or the document in the proceeding, (b) if the proceeding is a criminal proceeding - whether the party seeking to adduce evidence of the information or document is a defendant or the prosecutor, (c) the nature of the offence, cause of action or defence to which the information or document relates, and the nature of the subject matter of the proceeding, (d) the likely effect of adducing evidence of the information or document, and the means available to limit its publication, (e) whether the substance of the information or document has already been published, (f) if the proceeding is a criminal proceeding and the party seeking to adduce evidence of the information or document is a defendant - whether the direction is to be made subject to the condition that the prosecution be stayed.
That section only applies if the appellant could rely upon the KPMG documents at the trial and sought to tender them in evidence. As the appellant did not have the documents, it could not seek to tender them and the occasion for the Court to direct that the documents not be adduced as evidence did not arise. As was noted in the joint reasons of Gleeson CJ, Gaudron and Gummow JJ in Esso Australia Resources Ltd v Commissioner of Taxation, [61] dealing with the analogous provisions relating to legal professional privilege, the provisions do not apply to ancillary process because no question of adducing evidence arises at that stage. [62] It was for this reason that the Secretary called in aid the terms of s 131A of the Evidence Act, which relevantly provides as follows: 131A Application of Part to preliminary proceedings of courts (1) If: (a) a person is required by a disclosure requirement to give information, or to produce a document, which would result in the disclosure of a communication, a document or its contents or other information of a kind referred to in Division 1, 1A, 1C or 3, and (b) the person objects to giving that information or providing that document, the court must determine the objection by applying the provisions of this Part (other than sections 123 and 128) with any necessary modifications as if the objection to giving information or producing the document were an objection to the giving or adducing of evidence.
The term "disclosure requirement" is defined to include a notice to produce. [63] Sections 130 and 131A both appear in Pt 3.10. Counsel for the Minister agreed that one "necessary modification" of s 130 must be to place in the scale weighed against the public interest in preserving secrecy or confidentiality, the public interest in the production of the document to the party issuing the notice. That modification is necessary because the basis upon which documents must be produced extends beyond that on which a document may be admitted into evidence. [64]
As may be seen from the form of the affidavit, and as was affirmed by senior counsel for the Minister, the claim for public interest immunity was a "class" claim, based on the nature of the document and not upon its contents. [65] The distinction is by no means watertight, but one significance of the distinction is that, whereas it may be appropriate for the court to inspect documents where the claim for immunity is based on their contents, there will usually be no cause for inspection where the claim does not rely upon the contents.
A claim for immunity from production based on the fact that documents were submitted to Cabinet may properly fall within the category of matters of state which involves prejudice to the proper functioning of the government of a State. [66] However, there is an important point of distinction between documents which are submitted to Cabinet and documents which record or reveal the content of Cabinet deliberations. This case fell into the former category, not the latter. The justification for the immunity with respect to that category lies in the proposition that disclosure might prejudice the ability of Ministers and Cabinet (including those advising them) to obtain full and frank advice from other government officers and external experts.
The appellant submitted that prior limited disclosure should not be disregarded. It relied upon a passage in the judgment of Gibbs ACJ in Sankey v Whitlam [67] in the following terms: "It was further submitted that if one document forming part of a series of cabinet papers has been published, but others have not, it would be unfair and unjust to produce one document and withhold the rest. That may indeed be so, and where one such document has been published it becomes necessary for the court to consider whether that circumstance strengthens the case for the disclosure of the connected documents."
The Minister took issue with this "so-called principle". The Minister submitted that the element of "publication" was dealt with in s 130(5)(e) of the Evidence Act and, in any event, this was not a case where either the contents of the document had been published, or one document in a series had been published.
The Minister's submission correctly directed attention to the terms of s 130(5); nevertheless, all that it states is that prior publication of the substance of the document is one factor which the court is to take into account, without either limiting the factors the court may take into account, or indicating how it should take the particular factor into account.
The case law is replete with statements to the effect that s 130 "closely reflects the common law position" [68] or that "what differences exist are of no practical significance" [69] and that common law principles "assist in informing of the content and operation of the Evidence Act, s 130". [70] (It is not strictly correct, as suggested in Ryan, [71] that this Court held that "the assessment of the claims for public interest immunity was to be undertaken both by reference to common law and statute"; rather, the Court said it was necessary to determine whether the provisions of the Evidence Act were engaged, [72] but having decided that the Act was not engaged, nevertheless proceeded to assess the claims by reference to both the common law and s 130. [73] )
Two things should be stated about the correct approach to the consideration of objection on the grounds of public interest immunity, in a case where s 130 is engaged. First, the statutory structure should be followed. That requires identification of the scope, content and importance of (a) the public interest in admitting information or a document into evidence, and of (b) the public interest in preserving secrecy or confidentiality in relation to that information or document. It is only when the latter outweighs the former that the court is empowered to direct that the information or document not be adduced in evidence.
Secondly, in other respects the terms of s 130 are permissive rather than restrictive. That fact engages s 9(1) of the Evidence Act which provides: 9 Application of common law and equity (1) This Act does not affect the operation of a principle or rule of common law or equity in relation to evidence in a proceeding to which this Act applies, except so far as this Act provides otherwise expressly or by necessary intendment.
Accordingly, so far as principles or rules can be derived from authorities operating under the common law or equity, which are not inconsistent with ss 130 and 131A, those principles or rules continue to apply. It is for that reason that consideration of common law authority may not only be permissible, but necessary.
Relevantly to the present exercise, some guidance can be obtained from statements of principle in The Commonwealth v Northern Land Council. [74] Having noted that the claims for immunity in that case were with respect to documents which recorded the actual deliberations of Cabinet, the majority reasons continued: [75] "They are not documents prepared outside Cabinet, such as reports or submissions, for the assistance of Cabinet. Documents of that kind are often referred to as Cabinet documents. When immunity is claimed for Cabinet documents as a class and not in reliance upon the particular contents, it is generally upon the basis that disclosure would discourage candour on the part of public officials in their communications with those responsible for making policy decisions and would for that reason be against the public interest. The discouragement of candour on the part of public officials has been questioned as a sufficient, or even valid, basis upon which to claim immunity. On the other hand, Lord Wilberforce has expressed the view that, in recent years, this consideration has 'received an excessive dose of cold water' [76] ."
As noted in a footnote to the last passage, the likely effect on frankness and candour, at least in the public service, was contrasted with the discussion by Gibbs ACJ in Sankey v Whitlam at 40. The judgments in Sankey v Whitlam and in Northern Land Council, clearly reject a blanket approach to "cabinet papers". As Gibbs ACJ said in Sankey, the Court "will not treat all such documents as entitled to the same measure of protection - the extent of protection required will depend to some extent on the general subject matter with which the documents are concerned." [77]
Such a claim for blanket immunity calls for careful scrutiny of its rationale. To describe the topic of the submission to Cabinet as involving a current controversy may provide a cause for upholding immunity in some cases, but not others. It is necessary to consider the subject matter of the controversy. In this case, the subject matter is the amalgamation of local government areas. The statutory mechanism requires a "proposal" which may be formulated by the government and, in this case, was formulated by the Minister for Local Government. It is not known whether the specific proposals went to Cabinet and senior counsel for the Minister submitted that the Court should make no assumption one way or the other. Importantly, the proposals had to be the subject of examination and report, including public inquiry, in the manner summarised above. It would be incoherent for the Minister to assert that any material presented to Cabinet to support an amalgamation of local government areas, a proposal for which had to be referred for examination by the Departmental Chief Executive or the Boundaries Commission, carrying out statutory functions under the Local Government Act, should not be disclosed. Particularly is that so where the proposal expressly relied on financial information which was derived from an external report submitted to Cabinet.
Further, there is no reason to assume that when an organisation such as KPMG, applying its own professional expertise, prepares a business case in relation to council amalgamations in the statutory context provided by the Local Government Act, it would do so on an assumption that the government would never disclose the figures and information it supplied. The claim that, in such a case, candour and frankness might be compromised by disclosure borders on the fanciful.
The factors which militate against immunity in the present case are (a) the identity of the party responsible for preparing the documents, being a large commercial enterprise external to the government; (b) the statutory context, which included the need for a separate examination, including a public inquiry, of each proposal made by the Minister prior to implementation; (c) the fact that figures derived from the documents were relied on by the Minister in preparing the proposal; (d) the fact that such reliance was expressly identified in the merger proposal which was publicly released, and (e) the subject matter of the documents sought to be protected, as revealed in broad terms by their titles and by reference to the matters which were publicly disclosed. The countervailing considerations depend almost entirely upon the broad proposition that disclosure of any document relating to current and controversial matters, which has been presented to Cabinet for its consideration, will tend to undermine the candour and frankness with which such documents are prepared in the future.
In considering the public interest in the production of the documents for the purposes of the litigation, the following matters are significant: 1. the litigation concerns the structure of local government in an area of metropolitan Sydney; 2. the statutory scheme requires an examination and public inquiry into any proposal for changes to the areas for which councils are constituted; 3. the examination is to be conducted by reference to specified mandatory considerations which must be hampered if the body responsible for examining the proposal cannot have access to the written documents upon which the Minister relied in preparing the proposal; 4. the party seeking disclosure is itself a statutory authority which will be dissolved if the proposal is implemented, and 5. the interests and wishes of many thousands of residents and ratepayers will be affected by implementation of the proposal.
Once the specific circumstances relating to the document are articulated, the broad policy based on candour is significantly diminished. The public interest in preserving secrecy or confidentiality must be seen as so qualified that it carries little weight. It is quite inadequate to outweigh the public interest in the production of the documents for the purposes of the litigation.
It follows that the contrary view adopted by the primary judge cannot stand. The orders made on 30 May 2016, upholding the Secretary's application to be excused from production, should be set aside.

[18]

Constructive failure to conduct examination

The appellant complained that the primary judge failed to deal with ground 4 in its summons. The judge dismissed grounds 2, 3, 4 and 5 on the basis that they constituted, in part at least, a repetition of ground 1, being a complaint of procedural unfairness flowing from non-production to the appellant of the KPMG documents. [78] Ground 4, as explained above, did not attract that characterisation. The primary judge then stated that, to the extent that there was "a complaint concerning the availability of the full KPMG documents to the Delegate", [79] he adopted his own reasoning in another case determined at the same time, namely Hunter's Hill Council v Minister for Local Government. [80] Reference was made to a lengthy passage in that judgment at [218]-[254].
There is a danger in dealing with several cases together (not by way of a test case) and giving lengthy reasons in each. The cross-reference to the lengthy passage in Hunter's Hill was inapposite; most of that passage dealt with questions of procedural unfairness and, without much focus on the facts of the particular case, dealt with arguments based on statements made in other cases. Thus, Moore J said: [81] "In any event, the fact that each Delegate did not know the content of the additional KPMG material (even assuming it was significantly adverse to the interests of these Councils) makes it self-evident therefore that he could not have taken it into account in reaching his conclusion."
There followed a discussion as to whether or not particular evidence had been called in another case, [82] and as to the relevance of a migration case, SZSSJ v Minister for Immigration and Border Protection, both in the Full Court of the Federal Court [83] and in the High Court. [84] This discussion continued from [238]-[254]; it did not address any argument that there was a constructive failure of the delegate to exercise his function of examination by failing to obtain the material upon which the financial figures were based in order to examine the proposal in the light of that material. It follows that, in a formal sense, the ground must be upheld. As this is an appeal by way of rehearing pursuant to s 75A of the Supreme Court Act 1970 (NSW), the ground may be dealt with by this Court.
No doubt the manner of conducting an examination with respect to an amalgamation proposal may depend upon the circumstances of the case. Thus, s 218E envisages that such a proposal may be made (a) by the Minister, (b) by a council affected by the proposal, or (c) by electors constituting, in broad terms, 10% of those in an affected area. Where the proposal is not made by the Minister, one purpose of the examination will be to allow the government to assess the merit of the proposal. Where the proposal emanates from the responsible Minister, the primary purpose of the examination is unlikely to be the examination of the merit of the proposal by someone within the Minister's department. Rather, it will be to examine the merit from the perspective of an affected council and from the perspective of the affected public, and will generally call for examination by someone independent of the proponent Minister. In broad terms, the purpose of the examination requires that it extend to the basis for any opinions underlying the proposal.
In the present case, a critical element in the reasoning in favour of the proposal was the financial advantage which was expected to accrue from the amalgamation of Ku-ring-gai with part of Hornsby Shire. The document containing the proposal indicated that the calculations were undertaken for the government by KPMG. The footnote to the summary of the financial advantages identified the source which, it is accepted by the Minister, was a document not provided to the delegate or publicly released. The Council was right to assert that the delegate could not properly carry out his function of examination without having access to that material. Release of the material was also necessary for public participation in the public inquiry to be meaningful.
There may be qualifications on the scope of the examination in circumstances where a countervailing public interest in the protection of the information contained in the document is sufficient to override its public disclosure. That public interest may arise independently of provisions in the Evidence Act regarding public interest immunity. One possible ground for non-disclosure may arise from the terms of the Government Information (Public Access) Act. In fact, there is a degree of overlap between the relevant exclusions from disclosure of government information under that legislation and the terms of s 130 of the Evidence Act. Relevantly, the KPMG documents were not disclosed because they were prepared for submission to Cabinet, not for Cabinet's approval of the documents as such, but for its consideration of the documents in the context of the policy underlying the "merger proposals".
The findings with respect to public interest immunity demonstrate that the KPMG documents should have been made publicly available. The fact that the delegate did not have access to such material, in the absence of any legal justification for that situation, and objection to its absence having been squarely and repeatedly raised by the appellant, leads to the conclusion that the delegate constructively failed to fulfil the statutory function of examining the Minister's proposal.
It is not necessary to consider whether, had the examination and inquiry been carried out by the Chief Executive himself, or the Boundaries Commission, the KPMG documents would have been available to the party carrying out the examination.

[20]

Adequacy of notice of inquiry

Pursuant to s 263(2B) of the Local Government Act, "[r]easonable public notice must be given of the holding of an inquiry under this section." The appellant said that this was not done for a number of reasons. First, it was said that the proposal was not correctly identified because the description of the proposal referred to the local government areas of "Hornsby and Ku-ring-gai", without indicating that the proposed amalgamation related only to part of Hornsby Shire. Secondly, it was said that the time and location of the public inquiry was inadequately identified because the "venue" was identified as "Pymble Golf Club", without reference to a street address. Thirdly, it was said that notices were not published in newsletters of sufficiently wide publication and, fourthly, the publication which correctly identified the areas was not in sufficient time to enable an interested person to prepare and make a submission.
The complaints were, in effect, about the particularity and timing of the notice and the breadth of its circulation. Those elements of particularity were reduced on appeal to three propositions, namely (a) there was no publication in a newspaper with State-wide circulation; (b) the corrected notice was not circulated to the total local government areas, and (c) the corrected notice was published too late. The reference to the "corrected notice" was the reference to a notice which included reference to "part" of Hornsby Shire.
The appellant submitted that the question as to whether "reasonable" public notice had been given was a jurisdictional fact to be determined by the Court. Absent reasonable notice, it was submitted that the holding of the inquiry was invalid and the examination was therefore not completed.
As all the notices for various proposals appear to be in a common form, it may be assumed that they were prepared in the Department. The need to refer to "part" of Hornsby Shire and the time before the holding of the public inquiry at which that should have occurred were matters about which reasonable minds could differ. The assumption that reasonable public notice was satisfied by publication in various print outlets might itself have been a matter of opinion. Nor was there any reason to find that the statutory requirement could not have been satisfied by the various activities undertaken by the Council, which had an interest in publicising the inquiry, and did so at the request of the delegate. These publications included flyers, banners in prominent places, media releases, posts on Facebook and Twitter and notices on the Council's website. There was no legal reason why those matters should not have been taken into account.
While the appellant focused on aspects of the reasoning of the primary judge which may have been partly inapt, there is no reason to doubt that the statutory requirement was in fact satisfied. Although it does not affect the outcome of the appeal, it is appropriate to reject ground 4.

[21]

Conclusions

The appeal should be upheld on the grounds that: 1. the primary judge erred in failing to grant relief in respect of an identified jurisdictional error; 2. the objection by the Secretary to the production of the KPMG documents was wrongly upheld on the basis of public interest immunity; 3. the delegate failed to exercise fully his statutory function in the absence of material which allowed an examination of the financial advantages asserted in the proposal; 4. the appellant was denied procedural fairness because it was refused access to the material necessary to examine the financial advantages asserted in the proposal, and 5. consequentially, the review of the Boundaries Commission did not relate to a valid examination by the delegate and should be set aside.
The Secretary and the Minister should pay the costs of the appellant, both in this Court and in the Land and Environment Court. Those costs should include the costs of commencing proceedings in the Common Law Division, in circumstances where it was not clear that the Land and Environment Court had jurisdiction to grant the relief sought.
The following orders should be made: 1. Allow the appeal. 2. Set aside the orders made in the Land and Environment Court on 30 May 2016 and 20 September 2016, with respect to the proceedings brought by Ku-ring-gai Council. 3. Set aside the examination and report of the delegate, Mr Garry West, in relation to the proposed amalgamation of part of Hornsby Shire and Ku-ring-gai local government areas, the report being sent to the Minister on 22 March 2016. 4. Set aside the review of the Boundaries Commission and the comments sent to the Minister on 22 April 2016. 5. Order that the second and third respondents pay the costs of the appellant, both in this Court and in the Land and Environment Court, including the costs of commencing proceedings in the Common Law Division.
MACFARLAN JA: I have had the advantage of reading the judgments of Basten JA and Sackville AJA in draft. I agree with Basten JA's proposed orders and with his Honour's reasons for judgment. I also agree with Sackville AJA's reasons for reaching the same conclusion as Basten JA on the Notice of Contention point that the Delegate misapprehended his function under ss 263(1) and (3) of the LG Act in relation to the area proposed to be excised from Hornsby Council's area.
I respectfully disagree with Sackville AJA's conclusions concerning Ground 7 of the Summons, procedural fairness and public interest immunity. I agree with Basten JA in relation to these matters and make the following further observations.

[22]

Ground 7 - consideration of the financial advantages or disadvantages of the merger proposal

As Sackville AJA points out, in Bondelmonte v Bondelmonte [2017] HCA 8 at [43] the High Court recognised that the term "consider" when used in a statute concerned with administrative decision-making imports an obligation to give "proper, genuine and realistic consideration" to the matter required to be considered. As his Honour also points out, there has been controversy about the use of that phrase and concern expressed about its use encouraging courts to slide into impermissible merits reviews on judicial review applications (see [278]). Notwithstanding these cautionary observations, it can at least be concluded that an administrative decision-maker in a position analogous to that of the Delegate, who is required to "examine" a proposal, has a duty to form his or her own view about the matter to be examined and not adopt uncritically the view propounded in the document accompanying the referral of the matter to him or her.
The Minister's merger proposal that was embodied in his Merger Proposal Document was founded, so far as the merger's financial advantages were concerned, upon KPMG's analysis. For example, under the heading "Financial Benefits of the Proposed Merger", the proposal highlighted and detailed financial benefits that KPMG's analysis indicated would flow from the merger. This analysis was contained in a "long form document" over which the Government successfully claimed public interest immunity from production. The document was not therefore available to the Ku-ring-gai Council (see [36] above). Nor was it provided to the Delegate.
It is evident from the terms of the Merger Proposal Document that the financial consequences of the merger were regarded by its proposer as fundamental to its merit. Indeed, the importance of the financial aspects of proposals for council amalgamation is recognised by s 263(3) of the LG Act which identifies that topic as the first of a number that the Boundaries Commission (in this case, at least initially, the Delegate) is required to consider.
To perform his duties, the Delegate had two choices open to him. He could have tested the reliability of the KPMG analysis or he could have made an independent assessment of the merger's financial advantages or disadvantages. In either case he could have obtained expert advice or other assistance to help him fulfil his duty.
He clearly did not choose to take the latter course. Nor did he choose to take the former. Rather, he accepted the results of the KPMG analysis stated in the Merger Proposal Document as a given and did not attempt to obtain the KPMG long form report containing the analysis from which the results were drawn, much less examine it to test the reliability of the results. Nor, so far as his Report reveals, did he even examine the detail of the assumptions, set out in a publicly available document, upon which KPMG's analysis was said to have been based.
In his Report, the Delegate stated that the Merger Proposal Document "relied on the KPMG analysis to support the financial benefits" identified therein. The Delegate then described the benefits of the proposed merger which the analysis identified. He did not question the analysis and indeed concluded as follows: "The Delegate notes the detailed submissions by both Councils and the community in regard to the advantages and disadvantages of the merger proposal and the concerns that particularly relate to the KPMG analysis and modelling. It is not appropriate to pursue that further except to express the understanding that [that] analysis and modelling is high level, and the discount rate applied is conservative. KPMG and the NSW State government therefore believe the benefits are conservative estimates."
The Delegate thus did not consider that it was part of his task to address the "concerns" that had been raised in relation to the "KPMG analysis and modelling". He appeared to consider it sufficient that KPMG and the NSW State government believed that KPMG's estimates of projected benefits of the merger were conservative.
The only step that the Delegate took to assess the financial advantages of the proposal, beyond adopting the results of the KPMG analysis prepared for the Minister, was to refer to a report prepared for Hornsby Shire Council by KPMG and dated 22 May 2014. This concluded that Hornsby Shire Council would receive a net financial benefit from a merger of the type that the Delegate was considering. The Delegate said that he derived "significant comfort" from this report that "the projected performance improvements [identified in the KPMG analysis for the Minister] are credible and achievable". This observation did not indicate that he conducted a proper examination of the KPMG analysis prepared for the Minister. For one matter, the report for Hornsby Shire Council did not identify financial advantages in the same way or to the same extent as that analysis, or indeed deal at all with the impact of such a merger on Ku-ring-gai Council. Secondly, as KPMG was the author of both the Hornsby report and the ministerial analysis, the former could hardly be taken as an independent verification of the latter, particularly when the Delegate simply referred to the Hornsby report's conclusions without examining their basis. Thirdly, a proper examination of the ministerial analysis by the Delegate would at least have required him to have knowledge of the detail of that analysis, not simply its conclusions.
In my view, the Delegate's Report indicated that he did not form his own judgment about the financial advantages or disadvantages of the proposed merger but instead adopted, uncritically, the results of the undisclosed KPMG analysis. Accordingly, he did not "examine" the merger proposal as s 263(1) (when read in conjunction with s 218F) required him to do. More specifically, and to use the language of Ground 7 in the Summons, the Delegate therefore "failed [properly] to take into consideration a relevant matter, namely the financial advantages or disadvantages of the Merger Proposal". His consideration of that matter was not "proper, genuine and realistic".

[24]

Public interest immunity

A further corollary of my conclusion concerning Ground 7 is that the claim for public interest immunity must be rejected. For the reasons Basten JA gives, the public interest in the KPMG analysis being produced to the appellant and other opponents of the merger was not outweighed by any public interest in preserving secrecy or confidentiality (see ss 130(1) and 131A(1) of the Evidence Act). The duty that the Minister imposed upon the Delegate to examine the Minister's merger proposal could not (in the absence of the Delegate deciding to make his own assessment of the financial aspects of the merger) be discharged without production of the KPMG analysis, nor could the inquiry that the Delegate was required to hold be properly held without that production. As a result, there was a powerful public interest in the document being produced which was not outweighed by such public interest as there was in preserving its confidentiality.
SACKVILLE AJA: This is one of a number of cases in which a Council constituted under the Local Government Act 1993 (NSW) (LG Act) has challenged actions taken in relation to proposals made by the Third Respondent (Minister) for the amalgamation of local government areas (LGAs). [86] In the present case, the Minister has made a written proposal, pursuant to s 218E(1) of the LG Act, for the amalgamation of Ku-ring-gai Council (Ku-ring-gai) and part of Hornsby Shire Council (Hornsby). The part of the Hornsby LGA to be included in the amalgamated LGA is that lying to the north of the M2 Motorway. The area south of the M2 Motorway (for convenience referred to as Hornsby South) is to be excised from the northern area and is not to be included in the amalgamated LGA.
Ku-ring-gai commenced proceedings in the Class 4 jurisdiction of the Land and Environment Court seeking declarations and orders that, if granted, would have set aside a report prepared by a Delegate of the Acting Director-General of the Office of Local Government (Delegate's Report). The Delegate's Report, which was transmitted to the New South Wales Local Government Boundaries Commission (Boundaries Commission) on 22 March 2016, recommended that the Merger Proposal "as submitted", should proceed to implementation. The primary Judge (Moore J) dismissed the proceedings. [87]
The Minister's proposal is contained in a document entitled "Merger Proposal: Hornsby Shire Council (part) Ku-ring-gai Council", which explains and seeks to justify the proposal (Merger Document). As will be seen, however, it is sometimes necessary to distinguish between the Merger Document and the Minister's proposal in the narrower sense of the specific proposal to amalgamate Ku-ring-gai and part of Hornsby. The Minister's proposal in the narrower sense is referred to as the Merger Proposal.
The primary Judge rejected all of the contentions advanced by Ku-ring-gai, except one. His Honour held that the Delegate misapprehended his statutory duty by failing to have regard to the mandatory considerations set out in s 263(3) of the LG Act, [88] in that he failed to consider the relevant effects of the Merger Proposal on the residents of Hornsby South. [89]
However, his Honour also held that to grant relief to Ku-ring-gai would be of no practical utility because the Governor had already made a proclamation which effectively excised Hornsby South from the Hornsby LGA and incorporated it into the new City of Parramatta LGA. [90] Accordingly, his Honour, in the exercise of his discretion, declined to grant declaratory or other relief to Ku-ring-gai.
Ku-ring-gai has appealed against the decision of the primary Judge. The only active respondent is the Minister, who has filed a Notice of Contention. [91]

[25]

The issues

Ku-ring-gai's Amended Notice of Appeal contends that the primary Judge erred in exercising his discretion to refuse relief, given that his Honour held that the Delegate had misconceived his statutory functions (Grounds 1 and 10). In the course of oral argument Mr Williams SC, who appeared with Ms Gordon and Ms Ellicott for the Minister, very sensibly informed the Court that if it upheld the primary Judge's conclusion that the Delegate had committed a jurisdictional error, the Minister would not submit that relief should be refused on the ground of futility. In short, the Minister did not seek to support the primary Judge's exercise of discretion in refusing to grant relief, notwithstanding that the Delegate had fallen into jurisdictional error.
The Minister filed a Notice of Contention which contends (Ground 4) that: "The primary judge erred in finding … that the [D]elegate failed to have regard to the mandatory relevant considerations in ss. 263(3)(a), (b), (d) and (f) of the [LG] Act with respect to the area south of the M2 motorway and ought instead to have held that there was no such failure, and no reviewable error, by the [D]elegate in that respect, by reason of the consideration given to the area south of the M2 motorway in the submissions made to the [D]elegate and in the [D]elegate's [R]eport." As Mr Kennett SC, who appeared with Ms McWilliam for Ku-ring-gai pointed out, unless the Minister succeeds on Ground 4, the appeal must be upheld. Therefore, although Ground 4 is incorporated in the Minister's Notice of Contention, that issue should be addressed first.
The Amended Notice of Appeal includes a number of other grounds. In summary, Ku-ring-gai says that the primary Judge erred:

in failing to find Ku-ring-gai had been denied procedural fairness in that the Delegate relied for important conclusions on two reports prepared by the consulting firm KPMG (KPMG Documents) which had not been disclosed to Ku-ring-gai and which it therefore had no opportunity to rebut (Ground 2); [92]
in upholding the claim by the Department of Premier and Cabinet to public interest immunity over the KPMG Documents (Ground 3);
in finding that the Delegate had given "reasonable public notice" of the holding of an inquiry, as required by s 263(2B) of the LG Act (Ground 4);
in failing to deal with complaints made by Ku-ring-gai that there was no evidence to support the Delegate's findings; that the findings were manifestly unreasonable; that the Delegate had failed to give proper, genuine and realistic consideration to the financial advantages or disadvantages of the Merger Proposal; that the Delegate had impermissibly deferred consideration of the financial disadvantages raised by Ku-ring-gai to "the new council" and that the Delegate had constructively failed to fulfil his statutory functions under ss 218F(1) and 263(1) of the LG Act (Grounds 5-9).

In addition, Ku-ring-gai made a "formal" submission that the primary Judge should have found that the Boundaries Commission misconstrued its task. The submission was put this way because Mr Kennett accepted that the decision of this Court in Botany Bay II was inconsistent with the submission.
Ku-ring-gai's original Notice of Appeal sought, among other things, a declaration that the Delegate's Report is invalid, an order setting aside the Delegate's Report and an order remitting the matter to a different delegate of the Chief Executive for determination according to law. The Amended Notice of Appeal omits any reference to an order remitting the matter for determination according to law.

[26]

Statutory scheme [93]

Chapter 9 of the LG Act is headed "How are councils established?". Part 1 of Chapter 9 deals with "Areas", defined in the LG Act to mean areas constituted under Part 1 of Chapter 9. [94]
Division 1 of Part 1 of Chapter 9 empowers the Governor, by proclamation, to constitute any part of New South Wales as an "area" and to determine the boundaries of the area (ss 204(1), (2)). An area may be constituted as a city (s 206). The power to constitute an area under s 204 can be exercised only after a proposal for the exercise of the power has been formulated and dealt with under Division 2 (s 214).
The present case does not concern the exercise of a power under Division 1 but under Division 2A, which specifies how areas are amalgamated or their boundaries altered. The power to amalgamate is contained in s 218A of the LG Act: "218A Amalgamation of areas (1) The Governor may, by proclamation, amalgamate two or more areas into one or more new areas. (2) On the date specified in the proclamation as the date on which the areas are to be amalgamated: (a) the areas are dissolved, and (b) the new area or new areas are constituted, and (c) subject to section 218C, the councillors of the former areas cease to hold office. (3) Divisions 1 and 2 apply to a new area constituted by a proclamation under this section in the same way as they apply to an area constituted by a proclamation under section 204. …"
Section 218B provides that the Governor may, by proclamation, alter the boundaries of one or more areas.
Section 218C of the LG Act provides that a proclamation for the purposes of Div 2A may include provisions of the same kind as are referred to in s 213. Accordingly, the proclamation may include provisions with respect to the transfer or apportionment of assets, rights and liabilities, the transfer of staff, the holding of elections and related matters.
Division 2B of Part 1 of the LG Act sets out what must be done before areas can be amalgamated or their boundaries altered. The relevant provisions in Division 2B are as follows: "218D Exercise of functions under secs 218A and 218B A function under section 218A or 218B may be exercised only after a proposal for the exercise of the function is dealt with under this Division. 218E Who may initiate a proposal? (1) A proposal may be made by the Minister or it may be made to the Minister by a council affected by the proposal or by an appropriate minimum number of electors. … 218F Referral of proposal for examination and report (1) On making or receiving a proposal, the Minister must refer it for examination and report to the Boundaries Commission or to the Departmental Chief Executive. [95] (2) Sections 263, 264 and 265 apply to the examination of a proposal by the Departmental Chief Executive in the same way as they apply to the examination of a proposal by the Boundaries Commission. (3) For the purpose of examining a joint proposal of 2 or more councils for the amalgamation of two or more areas under section 218A, the Boundaries Commission or Departmental Chief Executive, as the case requires, must seek the views of electors of each of those areas: … (6) If a proposal that is not supported by one or more of the councils affected by it, or that is an amalgamation proposal, has been referred to the Departmental Chief Executive under subsection (1): (a) the Departmental Chief Executive must furnish the Departmental Chief Executive's report to the Boundaries Commission for review and comment, and (b) the Boundaries Commission must review the report and send its comments to the Minister. (7) The Minister may recommend to the Governor that the proposal be implemented: (a) with such modifications as arise out of: (i) the Boundaries Commission's report, or (ii) the Departmental Chief Executive's report (and, if applicable, the Boundaries Commission's comments on that report), and (b) with such other modifications as the Minister determines, but may not do so if of the opinion that the modifications constitute a new proposal. (8) The Minister may decline to recommend to the Governor that the proposal be implemented." (Emphasis and citations added.)
Part 3 of Chapter 9 of the LG Act (ss 260-265) constitutes the Boundaries Commission as a body corporate (s 260). The Boundaries Commission consists of four Commissioners appointed by the Governor (s 261(1)). One Commissioner is to be nominated by the Minister, one is to be a Departmental Officer nominated by the Departmental Chief Executive and two are to be approved from a panel of eight councillors nominated by the Executive of the Local Government and Shires Association of New South Wales (ss 261(2), 262(1)).
Section 263 of the LG Act (which applies to an examination of a proposal conducted by the Chief Executive) provides as follows: "263 Functions of the Boundaries Commission (1) The Boundaries Commission is required to examine and report on any matter with respect to the boundaries of areas and the areas of operation of county councils which may be referred to it by the Minister. (2) For the purpose of exercising its functions, the Boundaries Commission: (a) may hold an inquiry if the Minister so approves, and (b) must hold an inquiry if the Minister so directs, but may not hold an inquiry otherwise than as referred to in paragraph (a) or (b). (2A) Despite subsection (2), the Boundaries Commission must hold an inquiry for the purpose of exercising its functions in relation to a proposal for the amalgamation of two or more areas that has been referred to it in accordance with section 218F. (2B) Reasonable public notice must be given of the holding of an inquiry under this section. (3) When considering any matter referred to it that relates to the boundaries of areas …, the Boundaries Commission is required to have regard to the following factors: (a) the financial advantages or disadvantages (including the economies or diseconomies of scale) of any relevant proposal to the residents and ratepayers of the areas concerned, (b) the community of interest and geographic cohesion in the existing areas and in any proposed new area, (c) the existing historical and traditional values in the existing areas and the impact of change on them, (d) the attitude of the residents and ratepayers of the areas concerned, (e) the requirements of the area concerned in relation to elected representation for residents and ratepayers at the local level, the desirable and appropriate relationship between elected representatives and ratepayers and residents and such other matters as it considers relevant in relation to the past and future patterns of elected representation for that area, (e1) the impact of any relevant proposal on the ability of the councils of the areas concerned to provide adequate, equitable and appropriate services and facilities, (e2) the impact of any relevant proposal on the employment of the staff by the councils of the areas concerned, … (e5) in the case of a proposal for the amalgamation of two or more areas, the need to ensure that the opinions of each of the diverse communities of the resulting area or areas are effectively represented, (f) such other factors as it considers relevant to the provision of efficient and effective local government in the existing and proposed new areas. … (5) The Boundaries Commission must allow members of the public to attend any inquiry held by the Commission under this section. … (7) The Supreme Court may not make an order in the nature of prohibition in respect of, or an order for removing to the Court or quashing, any decision or proceeding made or conducted by the Boundaries Commission in connection with the exercise of its functions."
Section 263(7) of the LG Act is a privative clause the effect of which is that the Supreme Court cannot exercise its powers of judicial review in respect of any decision by the Boundaries Commission unless it is affected by a "jurisdictional error". [96]
Section 264(1)(a) of the LG Act provides that a person is not entitled to be legally represented in proceedings before the Boundaries Commission. However, this does not prevent, among other things, a mayor of an area appearing before the Boundaries Commission or a lawyer assisting in the preparation of documentation (ss 264(2)(b),(c)).
Section 265 empowers the Boundaries Commission to conduct an opinion poll of residents and ratepayers to assist in determining the attitude of residents and ratepayers of an area for the purposes of s 263(3)(d).
Section 745(1) of the LG Act confers on the Chief Executive of the OLG power to delegate "to any person any of the … Chief Executive's functions under this Act, other than [the] power of delegation". If the Minister refers a proposal for the merger of councils or for the alteration of boundaries to the Chief Executive for examination and report, s 745 authorises the Chief Executive to delegate this function to "any person". Such a person need not be part of the OLG and no qualifications are prescribed in the legislation.

[30]

Modelling Assumptions

KPMG also prepared a "Technical Paper" entitled "Outline of Financial Modelling Assumptions for Local Government Merger Proposals" (Modelling Assumptions). The document records that it was prepared for the NSW Department of Premier and Cabinet and is dated 19 January 2016. It appears that the document was publicly released on that date.
The introduction to Modelling Assumptions is as follows: "KPMG was engaged by the NSW Department of Premier and Cabinet to prepare independent modelling of the potential financial impacts of selected council mergers. The financial modelling undertaken relied on publically [sic] available council data and a financial model developed by KPMG. The financial model drew on a series of assumptions to estimate the potential savings, costs and overall financial impacts of council mergers. This paper provides an outline of the assumptions underpinning KPMG's financial model. The components of the benefits and costs included in the financial analysis are provided in the following tables, including the key data sources used in this analysis. Other parameters, such as the applied discount rate and time period of net financial impacts are also provided in this paper."
An example of "merger benefit streams" set out in tabular form in Modelling Assumptions relates to "Savings from materials and contracts expenditure": "Description: Data source Starting in the first year of a merger, and growing gradually over three years, an annual cost saving is applied to a council's budgeted materials and contracts expenditure. Assumptions • The assumed value of efficiency savings was up to 3 per cent of a council's expenditure on materials and contracts as reported in long term financial plans. Council long term financial plans (from 2013-14; general fund where available)" • This assumption was capped at 2 per cent for regional councils - reflecting the wider geographic dispersion and smaller scale may mean procurement and consolidation of contracts may be more difficult to achieve in some areas. • For all councils, it was assumed that only 80 per cent of items reported under 'materials and contracts' are subject to scale efficiencies. • These efficiency savings are achieved on a scaled basis. For example, it is assumed that the efficiencies achieved in Year 1 of the merger are one-third of total possible efficiencies (i.e. one-third of the 3 per cent savings potential for metropolitan councils). This assumption remains the same in Year Two, increasing to two-thirds of total possible efficiencies in Year Three and then fully realised by Year Four.

[31]

The Merger Document

On 6 January 2016, the Minister wrote to the Acting Chief Executive of the OLG attaching 35 "proposals to amalgamate [LGAs]" initiated by the Minister pursuant to s 218E(1) of the LG Act. The summary list of 35 proposals included the following: "3. Auburn City (part), The Hills Shire (part), Holroyd City (part), Hornsby Shire (part) and Parramatta City (part) councils. … 9. Hornsby Shire and Ku-ring-gai Councils." (Emphasis added.)
The Minister's letter attached a merger proposal document relating to the amalgamation of Hornsby (part) and Ku-ring-gai. That document was subsequently revised on several occasions. The final version (that is, the Merger Document) was published on the NSW Government Boundary Review website on 19 February 2016. The final version was the focus of submissions and, except in relation to the adequacy of notice of the Delegate's public inquiry, no issue arises by reason of the revisions to the Merger Document.
The Minister's Foreword to the Merger Document includes the following: "Four years of extensive consultation, research and analysis have demonstrated that change is needed in local government to strengthen local communities. Independent experts have concluded that NSW cannot sustain 152 councils - twice as many as Queensland and Victoria. After considering the clear need for change, the Independent Local Government Review Panel (ILGRP) research and recommendations, the assessment of councils by the Independent Pricing and Regulatory Tribunal (IPART), council merger preferences, community views and the unique needs and characteristics of each area, I am putting forward the proposal to merge the local government areas of Hornsby and Ku-ring-gai. The proposed merger will create a council better able to meet the needs of the community into the future and will provide significant benefits for the community. This document details the benefits the merger will provide to communities, including: • a total financial benefit of $90 million over a 20 year period that can be reinvested in better services and more infrastructure; • a projected 34 per cent improvement in annual operating results; • reducing the reliance on rate increases through Special Rate Variations (SRVs) to fund local infrastructure; • greater capacity to effectively manage and reduce the infrastructure backlog across the two councils; • improved strategic planning and economic development to better respond to the changing needs of the community; … The merger will provide an opportunity to better allocate future residential development across the new Council area, particularly around the strategic centre of Hornsby and relieve pressure on existing suburban neighbourhoods. This can help to ensure challenges associated with population growth and housing development are not unreasonably concentrated in particular suburban neighbourhoods, and preserve the unique heritage and characteristics across Hornsby and Ku-ring-gai. With the merger savings, NSW Government funding of $20 million - and a stronger voice - the new council will be better able to provide the services and infrastructure that matter to the community … A suitably qualified delegate of the Chief Executive of the Office of Local Government will consider this proposal against criteria set out in the Local Government Act (1993), and undertake public consultation to seek community views."
The Executive Summary to the Merger Document states as follows (footnotes as in the original): "This is a proposal by the Minister for Local Government under section 218E(1) of the Local Government Act (1993) for the merger of Hornsby Shire and Ku-ring-gai local government areas north of the M2. [98] This merger proposal sets out the impacts, benefits and opportunities of creating a new council. The creation of this new council will bring together communities with similar expectations in terms of demands for services, infrastructure and facilities. These communities have many shared interests … The proposal has been informed by four years of extensive council and community consultation and is supported by independent analysis and modelling by KPMG. … The new council for the new local government area will not only oversee an economy that shares many similar residential, workforce and industry characteristics, but will have enhanced scale and capacity to help it deliver on local infrastructure priorities such as carrying out essential roadworks. The new council includes only the part of Hornsby Shire north of the M2 Motorway. Impacts, Benefits and Opportunities … Analysis by KPMG shows the new council has the potential to generate net savings to council operations. The merger is expected to lead to around $70 million in net financial savings over 20 years. Council performance will also be improved with a projected 34 per cent increase in annual operating results achieved within 10 years. [99] This means that there will be a payback period of three years after which the merger benefits will exceed the expected merger costs. The analysis also shows the proposed merger is expected to generate, on average, around $6 million in savings every year from 2020 onwards. Savings will primarily be from the removal of back office and administrative functions; streamlining of senior management roles; efficiencies from increased purchasing power of materials and contracts; and reduced expenditure on councillor fees. [100] "
The section of the Executive Summary headed "Impacts, Benefits and Opportunities" summarises a longer section in the body of the Merger Document headed "Benefits, Opportunities and Impacts". The larger section makes it clear that the projected savings are based on an analysis carried out by KPMG in 2015.
Mr Williams conceded on behalf of the Minister that the projected savings were based on the KPMG Documents and that these had not been disclosed to Ku-ring-gai. Mr Williams explained that although footnote 15 (footnote 3 in the original) appears to refer to the Impacts Report (a published document), [101] it in fact refers to one of the two KPMG Documents. The same KPMG Document is referred to in footnotes in the body of the Merger Document, indicating that the slightly more detailed analysis there is also based on one of the KPMG Documents.
The Conclusion to the Merger Document largely restates the "benefits" of the proposed amalgamation already set out in the Minister's Foreword.

[35]

Hornsby

On 25 February 2016, Hornsby provided the Delegate with its written submission in respect of the Merger Proposal. Hornsby was not generally opposed to the Merger Proposal, but made some comments concerning Hornsby South: "it came as a surprise that the Government's proposal for the amalgamation of Hornsby and Ku-ring-gai Councils announced in December 2015 included the excision of the existing Hornsby Shire Council area south of the M2 Motorway. Whilst the proposed excision was unexpected, it is recognised that the use of the M2 Motorway as a southern boundary of a Hornsby/Ku-ring-gai council had been recommended to the Government by the Independent Local Government Review Panel (ILGRP) a few years earlier but had not been further progressed or discussed publicly by the Government."
The submission pointed out that Hornsby had managed the Hornsby South area for over 100 years and argued that the area: "would continue to be better managed by a merged Hornsby/Ku-ring-gai council rather than an expanded Parramatta City Council. Such a result would also ensure that the suburbs of Epping and North Epping remain in the Hornsby/Ku-ring-gai council area rather than be split as per the Government's proposal. … In respect of the proposal to excise the area south of the M2 Motorway, the division of the Epping and North Epping suburbs into two councils is not consistent with the intent of maintaining areas with similar historical and traditional values in the one council."
The submission also argued that the division of the Epping and North Epping suburbs (at the time included within Hornsby South) into two councils was not "consistent with the intent of maintaining areas with similar historical and traditional values". If, however, the Delegate considered that North Epping should be included in the: "expanded Parramatta City proposal, this would probably need to be put forward by the Government as a new proposal and Hornsby Shire Council and affected residents would again have the chance to make a submission about the new proposal".

[36]

Ku-ring-gai

Ku-ring-gai lodged its submission with the Delegate on 28 February 2016. The detailed 86 page submission (including appendices) argues "on behalf of the community of the Ku-ring-gai [LGA] … its desire to remain a standalone entity".
The submission included a section addressing the financial advantages and disadvantages of the Merger Proposal (s 263(3)(a) of the LG Act), contending that there was no case for the proposed merger on financial grounds. This section argued that the Merger Document and associated material did not support the claimed advantages. The submission continues as follows: "The information that has been made publicly available could at best be considered an executive summary. For example, the forecast net saving of $70 million is not broken down to identify the different components of merger implementation costs. In reference to the unsubstantiated forecast merger savings in the Merger [Document], page 8 includes Footnotes 5 and 6 that refer to [the merger Impacts Report]. However this document only provides information about the consolidated impacts of mergers across NSW as a whole. There is no specific reference to the proposed merger of Ku-ring-gai with Hornsby Council. A subsequent document was released dated 19 January 2016 and titled 'KPMG Outline of Financial Assumptions for Local Government Merger Proposals - Technical Paper'. However this document provides only high level assumptions common across NSW councils not specifically relating to the proposed merger of Ku-ring-gai with Hornsby Council. Ku-ring-gai Council requested the full KPMG report and was informed by the … Delegate, … that 'the reports of KPMG in addition to the material that is contained in the 35 merger proposals, have been released and are available on the website'. However as at the time of finalising this submission, the only reports available on the website … are those referred to in the above paragraph. That being the case, there is no detailed business case available to justify the proposed merger of Ku-ring-gai and Hornsby councils, with a combined revenue of $243 million and assets of $1.3 billion. The absence of detailed supporting information by KPMG, or any other such business case, is entirely unsatisfactory as it is not possible for anyone (including the NSW Government and the Delegate) to check the accuracy of the underlying data, test the assumptions or assess the reasonableness of the conclusions. Ku-ring-gai Council engaged chartered accountants BDO to review and assess the merger proposal and supporting documentation. However, BDO was unable to complete this task due to lack of information and concluded as follows: 'The Merger Proposal does not contain sufficient information for us to conclude on the merits of merging the two councils.' and; 'Without detailed financial forecasts we are unable to quantify the risks associated with achieving the expected costs savings.'" (It should be noted that in this passage Ku-ring-gai appears to assume, incorrectly, that the document referred to in footnotes 5 and 6 of the Merger Document is the published Impacts Report. [102] The error, which seems to have been shared by others, became apparent in the present case when it emerged in argument on appeal, if rather belatedly, that the references in footnotes 5 and 6 were to one of the KPMG Documents.)

[38]

Delegate's Report

The Delegate's Report was forwarded to the Minister and to the Boundaries Commission on 22 March 2016. The Executive Summary (Chapter 1) records that in January 2016 the Minister: "referred a proposal for the merger of Hornsby Shire Council (part) and Ku-ring-gai local government areas to the Chief Executive of the Office of Local Government for examination and report."
The Executive Summary states that the Delegate has undertaken an examination of the Merger Proposal having regard to the factors listed in s 263(3) of the LG Act. It summarises the Delegate's conclusion as follows: "Having considered the merger proposal, previous reviews by the ILGRP [Independent Local Government Review Panel] and IPART [Independent Pricing and Regulatory Tribunal], the submissions by the affected Councils, submissions from members of the public and community groups and other material the Delegate of the Chief Executive of the Office of Local Government is convinced that the proposal as submitted will result in efficient and effective local government, with an enhanced scale and capacity to better plan and coordinate investment in critical infrastructure and services needed for the future. It is therefore recommended that the proposal as submitted proceed to implementation. In examining the submissions, the Delegate is satisfied that significant benefits can be achieved by implementing the merger proposal to strengthen local communities and deliver on community priorities without losing the character of each area." (Emphasis in original.)
The Executive Summary records that: "Several boundary adjustments were raised during the submission process. Such changes are outside the delegation provided and they are therefore referred to the new Council for consideration of their merit and financial implications."
The Introduction to the Delegate's Report (Chapter 1) records that the Report addresses each of the relevant factors in s 263(3) of the LG Act under a separate heading. Under the heading "BACKGROUND", Chapter 1 notes that: "Hornsby Council's submission to the current merger proposal indicates it is contrary to Council's preference (particularly given the potential loss of the part of Hornsby south of the M2 Motorway to Parramatta) and it represents a less effective solution for their area."
Chapter 3 of the Delegate's Report is entitled "THE NATURE OF THE PROPOSAL". It states that: "The proposal is for the amalgamation of the existing Ku-ring-gai Council and part of Hornsby Shire Council north of the M2 Motorway. The proposed Hornsby/Ku-ring-gai local government area comprises: • that part of Hornsby Shire that lies to the north of the M2 Motorway, and • the whole of Ku-ring-gai."
Chapter 5 of the Delegate's Report contains the Delegate's examination of the Proposal and deals separately with each factor listed in s 263(3) of the LG Act.

[39]

Financial Advantages and Disadvantages (Section 5.1)

In this section, the Delegate refers to KPMG's Modelling Assumptions paper and notes that it is publicly available. The Delegate records that the Merger Proposal relies on an analysis by KPMG to support the claimed financial benefits. These are summarised in terms corresponding to the claims appearing in the Merger Document.
The Delegate outlines the Hornsby submission in some detail. He notes that in 2013 Hornsby engaged (the rather ubiquitous) KPMG to examine, among other things, an amalgamation of Hornsby and Ku-ring-gai. KPMG had estimated that the financial benefits of a merger would be approximately $50 million over a ten year period. Hornsby's submission acknowledged that the Merger Document was framed at a "broad level", but contended that the excision of Hornsby South would result in a net loss to the merged council of at least $5 million to $6.4 million per annum.
The Ku-ring-gai submission had argued, among many other things, that the financial benefits of the Merger Proposal had been over-estimated and that the Minister's analysis had failed to take into account the true impact of the excision of Hornsby South on the Merger Proposal. Many submissions had also been received from members of the community: "indicating very strong feelings against … excising [Hornsby South] and the financial impact such a proposal would have on the financial viability of the merger proposal".
The Conclusion to this section of the Delegate's Report includes the following: "The Delegate notes the detailed submissions by both Councils and the community in regard to the advantages and disadvantages of the merger proposal and the concerns that particularly relate to the KPMG analysis and modelling. It is not appropriate to pursue that further except to express the understanding that analysis and modelling is high level, and the discount rate applied is conservative. KPMG and the NSW State government therefore believe the benefits are conservative estimates. Financial Impact of loss of area south of M2 Both Hornsby and Ku-ring-gai Councils have calculated the loss of the area of Hornsby Council south of the M2 Motorway, will reduce the operating result by a further $6.4m. … The Delegate … has come to the conclusion the operating result has already been accounted for in the merger proposal." (Emphasis added.)
The Conclusion also includes a summary of the analysis conducted by KPMG on behalf of Hornsby. The Delegate notes that KPMG considered a series of options, including a proposal for the merger of Hornsby and Ku-ring-gai, but adjusting the boundary of Hornsby by deleting Hornsby South. KPMG projected an improvement for the "aggregate entity" of $50.4 million over a ten year period. The Delegate: "considers this analysis provides significant comfort that the projected performance improvements are credible and achievable. The Delegate having considered the relevant submissions is of the opinion the identified savings are realistic although potentially conservative."
The Delegate summarises once more the advantages of the Merger Proposal, accepting the projected savings claimed in the Merger Document.

[46]

Primary Judgment

The primary Judge construed s 263(3) of the LG Act as requiring the Delegate: [106] "to examine and report upon each of those factors, not merely as they affected the portion of the Hornsby local government area that was proposed to be amalgamated with the Ku-ring-gai local government area into the new, composite local government area, but also to examine and report upon each of those factors with respect to the area south of the M2 Motorway proposed to be excised from the Hornsby local government area and transferred to form part of a new local government area".
His Honour found that the Delegate had considered the excision of Hornsby South "in a limited fashion" at various points in the examination. [107] After quoting extracts from the Delegate's Report, his Honour noted that in Chapter 6 (containing the final recommendation), the Delegate made no comments concerning the area of Hornsby South except to recommend that consideration be given of a further boundary adjustment to transfer an additional area, in the vicinity of the excised area, to the new Parramatta City Council. [108]
The primary Judge reached the following conclusion: [109] "[153] None of these matters dealt with the impact on the residents and ratepayers of the area south of the M2 Motorway and now excised and incorporated in the enlarged Parramatta City Council, except in a tangential fashion. The impact on those residents and ratepayers was mandated to be considered by s 263(3)(a). [154] Whilst it was undoubtedly the position that for the Delegate appointed to consider the proposal for the formation of a new local government area to which the excised area was proposed to be added and that that addition would form part of that Delegate's examination and report, nonetheless the countervailing requirement remained with this Delegate, for the relevant mandated elements of s 263(3) to consider the impact of the excision on the residents and ratepayers of the area proposed to be excised. [155] In this context, I do not have the report of the Delegate who examined and reported on the proposed new local government area to which the excised area has been added, nor would it be appropriate for me to do so. Matters concerning that area, in the context of that Delegate's functions, were properly a matter for that Delegate and did require that Delegate to have appropriate regard to the proposal to include the excised area. However, in the specific context of the residents and ratepayers of the excised area, this Delegate was obliged to have regard to their excision as part of his examination and reporting functions. [156] In failing to do so, he misapprehended a significant element of what was required of him by s 263(3). It follows that, in this regard, his examination and reporting process miscarried."

[47]

Minister's submissions

The Minister's written submissions contended that the Delegate's Report addressed concerns about the excision of Hornsby South from the rest of Hornsby by reference to each of the mandatory factors set out in s 263(3) of the LG Act. In particular, the Delegate had considered the financial consequences of the excision of Hornsby South. While the Delegate focused primarily on the consequences of the excision for the proposed merged council, this reflected the submissions (or lack thereof) to the Delegate on the issue. The Delegate had adverted to each of the relevant factors and thus had given consideration to them. In the absence of more detailed submissions to the Delegate, it was not necessary for the Delegate to go further.
The Minister's written submissions acknowledged that the Delegate had not dealt with certain issues because the Delegate expected them to be addressed elsewhere. Nonetheless, when these statements were read in context, it was plain that the Delegate had regard to the excision of Hornsby South, including the attitudes of the residents of that area.
In his oral submissions, Mr Williams accepted that it was implicit in the Merger Proposal referred to the Delegate for examination and report that it required the excision of Hornsby South from Hornsby to take place. Mr Williams also accepted that the Merger Proposal referred by the Minister for examination and report included the amalgamation of part of Hornsby and the whole of Ku-ring-gai, as well as the alteration to the pre-existing boundaries of Hornsby. The Delegate was therefore required to examine and report on a proposed exercise of the powers conferred by s 218A (amalgamation of areas) and s 218B (alteration of boundaries of areas) of the LG Act.
Mr Williams did not dispute that the Delegate was required to report on the excision of Hornsby South from Hornsby. Nor did he dispute that the reference in s 263(3)(a) of the LG Act to "the residents and ratepayers of the areas concerned" includes the residents and ratepayers of Hornsby South insofar as they are affected by the Merger Proposal. He submitted, however, that the error of the primary Judge was in finding that the Delegate had failed to have regard to each of the factors in s 263(3), insofar as the Merger Proposal affected Hornsby South or its residents and ratepayers. The Delegate's Report, so he argued, addressed the consequences of the excision of Hornsby South for the area to be excised and for its residents and ratepayers.
Mr Williams seemed to accept that the Delegate might have been required to give more detailed consideration to some factors identified in s 263(3) of the LG Act had they been the subject of submissions. But in the absence of evidence that submissions of this kind had been made to the Delegate, he was not obliged to go any further. For example, it had not been put to the Delegate that the residents and ratepayers of Hornsby South would be financially disadvantaged by the Merger Proposal to excise that area from the remainder of Hornsby. The Delegate therefore did not have to address that issue.

[49]

Reasoning

Division 2A of Part 1 of Chapter 9 of the LG Act confers two distinct powers on the Governor. The first is the power to make a proclamation amalgamating two or more areas into one or more new areas (s 218A(1)). The second is the power to make a proclamation altering the boundaries of one or more areas (s 218B). In either case, the statutory power can be exercised only after a proposal for its exercise has been dealt with under Div 2B (s 218D). A proclamation may include such provisions that are necessary or convenient for giving effect to the proclamation (s 218C, read with s 213).
Section 218F(1) of the LG Act (which is in Div 2B) requires the Minister, on making a proposal, to refer it for examination and report to the Boundaries Commission or the Chief Executive. In the present case, the Minister referred the Merger Proposal to the Chief Executive who delegated the functions of examination and report to the Delegate. The decision by the Chief Executive to delegate these functions may have reflected the fact that the Merger Proposal emerged after a long process of consideration and analysis within the Government in which the Chief Executive presumably played some part. In any event, the delegation has not been challenged.
It is important in the present case to identify with precision the "proposal" made by the Minister and referred by him to the Chief Executive for examination and report. For this purpose it is necessary to bear in mind that the Merger Proposal does not involve the amalgamation of two discrete LGAs, but the amalgamation of part of the Hornsby LGA and the whole of the Ku-ring-gai LGA.
This Court, in Woollahra (CA), [110] was concerned with a proposal by the Minister to amalgamate three discrete LGAs (Woollahra, Randwick and Waverley Councils). The Court rejected a submission by Woollahra Council that a "proposal" for the purposes of ss 218E and 218F(1) of the LG Act comprises the contents of the Minister's proposal document or at least the substance of the matters set out in the document. The Court held that the "proposal" made by the Minister and referred to the Chief Executive for examination and report in that case was simply the proposal to amalgamate the three LGAs. It did not include the various claims advanced by the Minister or the assumptions underlying KPMG's analysis, as recorded in the proposal document. [111]
The Merger Proposal in the present case is different from the merger proposal considered in Woollahra (CA) because the latter did not involve the excision of any part of the three relevant LGAs. Both Mr Williams and Mr Kennett accepted that the excision of Hornsby South from Hornsby was an integral element of the Merger Proposal. They also accepted that if the Merger Proposal was to be implemented, the Governor would have to exercise the powers conferred both by s 218A(1) (amalgamation of two or more areas) and s 218B (alteration of the boundaries of Hornsby LGA). On this basis, the Merger Proposal made by the Minister and referred to the Chief Executive for examination and report comprises the following elements:

the alteration of the boundaries of the Hornsby LGA to excise Hornsby South; and
the amalgamation of the remainder of the Hornsby LGA with the whole of the Ku-ring-gai LGA.

Although the Merger Proposal includes the alteration to the boundaries of Hornsby to excise Hornsby South, it does not address what is to happen to Hornsby South after its excision. The evidence establishes that the Minister referred the Parramatta Proposal (to merge Hornsby South with an enlarged Parramatta Council) to a different delegate. Why the same delegate was not asked to examine and report on both proposals affecting Hornsby South was not explained. In any event, the proposal to merge Hornsby South into an enlarged Parramatta was not before the Delegate and was not considered by him.
The Delegate was required by s 263(1) of the LG Act "to examine and report on any matter with respect to the boundaries of areas … which may be referred … by the Minister". In Botany Bay I, this Court held that the expression "any matter" in s 263(1) of the LG Act is controlled by the phrase "which may be referred to it by the Minister". Accordingly: "what falls within s 263 for examination and report is any matter with respect to boundaries that is referred by the Minister". [112] The "matter" referred by the Minister to the Chief Executive for examination and report in that case was the Minister's proposal for the amalgamation of two discrete LGAs. In the present case, the "matter" referred to the Chief Executive was the Merger Proposal that included the alteration of Hornsby's boundaries and the merger of the remainder of Hornsby with the whole of Ku-ring-gai.
Section 263(3) of the LG Act requires the Chief Executive, "[w]hen considering any matter referred to it that relates to the boundaries of areas" to have regard to a number of specified factors. The Court in Botany Bay I held, consistently with its construction of s 263(1), that the expression "any matter referred to it that relates to the boundaries of areas" means (relevantly) the proposal referred by the Minister to the Chief Executive. [113]
It follows that s 263(3) of the LG Act requires the Chief Executive (or a delegate) to examine and report on the referred proposal, having regard to each of the factors specified in paras (a)-(f) of s 263(3). As has been seen, the Merger Proposal in the present case incorporated the two elements - the excision of Hornsby South and the proposed amalgamation of the rest of Hornsby with Ku-ring-gai. The Delegate was therefore required to examine and report on each of the elements of the Merger Proposal and to do so giving attention to each of the factors in s 263(3). [114] If the Delegate failed to perform the task mandated by the legislation, the Delegate's Report would not satisfy the statutory requirements.
A number of the factors listed in s 263(3) of the LG Act refer to the "areas concerned" or the "existing areas". Despite accepting that the Merger Proposal contains the two elements I have identified, Mr Williams submitted that it was sufficient for the Delegate to have regard to each of those factors by assessing the impact of the Merger Proposal on the whole of the Hornsby LGA, rather than by assessing the impact on the area to be excised. This may be correct where the proposal is to merge the whole of two or more pre-existing LGAs into one (as in Woollahra (CA)). But the position is different in the present case where the Merger Proposal requires the excision of Hornsby South from Hornsby. In these circumstances, Hornsby South is an "area concerned" and an "existing area" for the purposes of s 263(3) of the LG Act.

[50]

Relief

For these reasons, I consider that the Delegate misapprehended the function he was to perform under ss 263(1) and (3) of the LG Act. Specifically, the Delegate did not consider the Merger Proposal, insofar as it relates to the alteration of Hornsby's boundaries by the excision of Hornsby South, having regard to the mandatory factors specified in s 263(3) of the LG Act. Mr Williams did not dispute that if the Court reached this conclusion, the Delegate's Report was affected by a jurisdictional error.
As has been noted, Mr Williams did not seek to support the primary Judge's finding that there would be no utility in granting relief to Ku-ring-gai. While this stance was not a formal concession, in my view Mr Williams was correct not to press the argument.
Since the Delegate's Report did not comply with the mandatory statutory requirements, the precondition for the Boundaries Commission to "review the report and send its comments to the Minister" (s 218F(6)) was not satisfied and the staged statutory process miscarried. [119] In these circumstances, it cannot be assumed that the Minister would elect to refer the unchanged Merger Proposal to the Chief Executive for further examination and report. The Minister might, for example, abandon the Merger Proposal or formulate a fresh proposal that addresses concerns expressed in submissions about the position of Hornsby South. If the Minister chooses to refer the same Merger Proposal to the Chief Executive for examination and report, the task would have to be undertaken afresh in accordance with s 263(3) of the LG Act, taking account of information then available. [120] It cannot be assumed that the process would necessarily produce the same recommendation as is contained in the Delegate's Report.
No issue has been raised about Ku-ring-gai's standing to claim relief by reason of the Delegate's failure to consider the Merger Proposal insofar as it excised Hornsby South from the remainder of Hornsby. Accordingly, Ku-ring-gai is entitled to the relief it seeks.

[51]

Procedural fairness and related issues

In view of the conclusions I have reached, it is not necessary to consider Ku-ring-gai's other grounds of appeal. However Ku-ring-gai's contention that it was denied procedural fairness was fully argued. It is therefore appropriate to consider that contention and some closely related submissions advanced by Ku-ring-gai.
Ku-ring-gai's Amended Notice of Appeal contends that the primary Judge should have found that it was denied procedural fairness by reason of:

the Delegate's reliance on the KPMG Documents without Ku-ring-gai having had a proper opportunity to engage with the reasoning or the conclusions; or
the Delegate's reliance on information provided at the private Delegate Briefing held on 14 January 2016.

The Amended Notice of Appeal also contains a number of grounds alleging that the primary Judge erred in law by failing to address complaints about the Delegate's Report made by Ku-ring-gai in its Second Further Amended Summons (Summons). These complaints rely on the same or similar facts as Ku-ring-gai's procedural fairness contentions, but characterise the legal consequences rather differently.
As there is considerable overlap between the various complaints, it is sufficient for present purposes to refer to Ground 7 of the Summons (including relevant particulars): "The [Delegate] failed to take into consideration a relevant matter, namely the financial advantages or disadvantages of the Merger Proposal. Particulars a. Under s 263(3)(a) of the LG Act, the [Delegate] was required to have regard to the financial advantages and disadvantages of any relevant proposal to the residents and ratepayers of the areas concerned. … c. The [Delegate] expressly relied upon: i. the 'KPMG Analysis' and 'independent' 'financial modelling' when purporting to consider the financial advantages and disadvantages under the LG Act: …; ii. KPMG's belief that the benefits are conservative estimates …; and iii. the KPMG Documents in part or whole when purporting to consider the employment impacts of the proposal … . d. However, the [Delegate] did not have access to the KPMG Analysis or independent financial modelling he purported to take into account. e. Accordingly, it was not possible for the [Delegate] to give any proper, genuine or realistic consideration to the financial advantages of the Merger Proposal or the employment impacts as set out in the KPMG Documents, … and the [Delegate] failed to do so. f. Further, and for the same reason, the [Delegate] failed to give any proper, genuine or realistic consideration to the financial disadvantages contained in the KPMG Analysis and/or independent financial modelling."

[52]

Primary Judgment

The primary Judge rejected Ku-ring-gai's procedural fairness argument based on its inability to gain access to the KPMG Documents. In doing so, his Honour simply adopted his own reasoning in Hunter's Hill Council v Minister for Local Government. [121] In that case, his Honour followed the decision of Preston CJ in Woollahra Municipal Council v Minister for Local Government (Woollahra (LEC)). [122]
In Woollahra (LEC), Preston CJ expressly accepted submissions advanced on behalf of the Minister, which his Honour summarised as follows: [123] "[226] The [Minister] submitted that the statutory scheme does not require a council affected by an amalgamation proposal to have access to and an opportunity to comment on submissions made by other persons that are adverse to the affected council's interests. An obligation with such content was rejected in [South Sydney] … [227] The [Minister] also submitted that any obligation on the Delegate to disclose adverse material to an affected council is severely qualified or attenuated. The content of the obligation to afford procedural fairness is not as wide as Woollahra Council submitted it was, namely, to give an opportunity to deal with 'adverse information that is credible, relevant and significant to the decision to be made'. An obligation with that content was also not accepted in [South Sydney] … [228] The [Minister], therefore, submitted that the content of the obligation to accord procedural fairness to Woollahra Council did not require the Delegate to disclose … documents that Woollahra Council described as KPMG modelling or analysis."
Preston CJ expressed his conclusions on the question of procedural fairness in Woollahra (LEC) as follows: [124] "[248] In this case, there was no denial of procedural fairness by the Delegate not disclosing to Woollahra Council and giving it an opportunity to make submissions on the various non-public documents that Woollahra Council described as KPMG modelling and analysis. First, those documents had not been provided to the Delegate; the Delegate cannot disclose documents that he did not have. Second, it has not been established that the documents contained information that 'was so damaging and so unforeseeable' that Woollahra Council 'should not have been "left in the dark" about it' until publication of the Delegate's report: Minister for Local Government v South Sydney City Council at [272]. [249] … the information that the non-public documents were said to contain was the modelling and other material underpinning the KPMG analysis and justifying the assumptions used by KPMG that were disclosed publicly and to Woollahra Council. The information that was 'adverse' to Woollahra Council was contained in the Minister's proposal document and the KPMG analysis and other documents that were made publicly available. This information included the asserted financial benefits of the amalgamation. This adverse information was disclosed. What was not disclosed were KPMG's internal workings and calculations underpinning the conclusions it expressed in the publicly available documents. The duty to disclose 'adverse' material was discharged by disclosure of the publicly available documents containing KPMG's analysis and conclusions; it did not extend to require disclosure of the workings and calculations underpinning those conclusions."
The primary Judge also rejected Ku-ring-gai's argument based on the information provided at the Delegate Briefing in closed session. [125] His Honour also followed Preston CJ's reasoning in Woollahra (LEC) on that issue. In substance, Preston CJ held that a delegate was obliged neither to conduct all investigations in public, nor to disclose publicly all information obtained in the course of his or her examination of a proposal. [126]
The primary Judge appears not to have given separate consideration to other arguments advanced by Ku-ring-gai at the trial, including those in support of Ground 7 of the Summons. It may be that his Honour took the view that the arguments added nothing to the procedural fairness claim.

[54]

Principles

It is common ground that the Delegate was obliged to afford procedural fairness to Ku-ring-gai, notwithstanding that he conducted only the first stage of a three stage statutory process. As Spigelman CJ observed in South Sydney, [127] a council has a "distinct interest in matters associated with its boundaries" (and indeed in its survival) and a report at the first stage has an impact on the entire process. In South Sydney, the Minister referred the proposal to the Boundaries Commission for examination and report and not to the Chief Executive, but Mr Williams did not suggest that this is a material difference for present purposes. [128]
The content of the obligation to afford procedural fairness depends on the circumstances of the case, the nature of the inquiry and the subject-matter being addressed. [129] It also depends on the terms of the statute under which the decision-maker operates. [130] The duty to afford procedural fairness may be more extensive if the exercise of a statutory power "singles out individuals by affecting their interests in a manner substantially different from the manner in which the interests of the public at large are affected". [131]
As a broad principle, a decision-maker ordinarily must give a person individually affected by a decision an opportunity to deal with adverse information that is "credible, relevant and significant to the decision to be made". [132] Not all potentially unfavourable material before a decision-maker answers this description. [133] Moreover, the nature of the decision-maker's task may impose limits on the extent of any obligation to afford an opportunity to address adverse information.
In South Sydney, for example, the Court rejected a submission that the Boundaries Commission was obliged to give the affected council an opportunity to see and comment on all "adverse material" before the report was finalised. Mason P observed that an obligation of this kind would "[convert] the examination and report stage of the process into a full-blown adversarial trial". [134] His Honour also said that to posit a right for all "affected" persons to see all "adverse" submissions would be unworkable. [135]
Mason P quoted a passage from an article by MC Harris, which was also quoted with approval by Beazley P in Woollahra (CA). [136] The passage suggests that the "true rule": "is that generally it will be inappropriate to require an investigative tribunal to inform the subject of the way in which its mind is working or to put to or to inform them of any tentative views it has formed. Provided they have been properly informed as to the nature and subject matter of the investigation or inquiry and have been afforded a proper opportunity to be heard in respect of the main issues forming the focus of the tribunal's concern (the 'critical issues or factors' requirement) then natural justice ought, as a general proposition, to be taken as satisfied. Any other general rule along the lines earlier discussed would make the work of investigative tribunals at least as 'intolerably protracted' as it would if applied to the working of adjudicative bodies."
In South Sydney, [137] Mason P was "inclined to the view that the [Boundaries] Commission was bound to give directly affected councils a reasonable opportunity to address [the] statutory issues" identified in s 263(3) of the LG Act. In Woollahra (CA), Beazley P said that in her view the obligation on the delegate in that case was "no greater" than that identified in South Sydney. [138]

[55]

The present case

The Delegate in the present case was required by s 263(3)(a) of the LG Act to consider the Merger Proposal having regard to the financial advantages or disadvantages to the residents and ratepayers of the areas concerned (relevantly Hornsby and Ku-ring-gai). To assess Ku-ring-gai's procedural fairness argument, it is necessary to explain the role played by the KPMG Documents in the Delegate's consideration of the financial factors identified in s 263(3)(a).
The Merger Document asserted that the merged council would have the potential to generate net financial savings of about $70 million over 20 years and would be likely to produce a variety of other efficiencies. The assertions were set out in some detail in the Minister's Foreword, the Executive Summary and in the body of the Merger Document. [139] The Merger Proposal itself cites the KPMG Documents as the source of the financial projections.
Ku-ring-gai lodged its submission with the Delegate on 28 February 2016. It had been advised three days earlier by the Director of the Department of Premier and Cabinet that its request for access to the KPMG Documents had been refused on the ground of public interest immunity. [140] Ku-ring-gai's submission to the Delegate forcefully contended that unless it had access to the "supporting information" compiled by KPMG, it was impossible for it to check the accuracy of the data or the reasonableness of the assumptions underpinning conclusions reached by KPMG and the Minister. [141]
Ku-ring-gai's submission was followed by its letter of 10 March 2016 to the Delegate. In this letter, Ku-ring-gai claimed that it was impossible to make a fully informed submission about the Merger Proposal unless it (and presumably the Delegate) had access to the KPMG Documents. As noted earlier, the letter also warned the Delegate that if he proceeded further without the KPMG Documents he would be denying procedural fairness to Ku-ring-gai.
As Beazley P pointed out in Woollahra (CA), neither the Chief Executive nor his or her delegate has any investigative function or powers that authorise compulsory interrogation or inquiry. [142] However, the LG Act does not prevent a delegate from seeking further information from any source that the delegate considers appropriate. [143]
Despite receiving Ku-ring-gai's letter, there is no evidence that the Delegate made any request to the Chief Executive or to the Department of Premier and Cabinet to produce the KPMG Documents over which the claim of public interest immunity had been made. It is common ground that the Delegate, at the time he prepared the Delegate's Report, did not have access to the KPMG Documents or to the analysis recorded in those Documents. He therefore could not have taken into account any material in the KPMG Documents adverse to Ku-ring-gai's interests other than the financial projections recorded in the Merger Document. Of course, the Merger Document and other public documents were available to Ku-ring-gai.
The Delegate's Report (Section 5.1) in substance restated the potential financial benefits of the Merger Proposal claimed in the Merger Document. The Delegate correctly attributed the source of these projections to the "KPMG analysis", a reference to the KPMG Documents.
The Delegate summarised the grounds on which Ku-ring-gai disputed the claims made by the Minister in the Merger Proposal, but made no mention at that point of Ku-ring-gai's complaint about being denied access to the KPMG Documents. However, the Delegate referred in some detail to the analysis produced by KPMG for Hornsby in May 2014, which considered a number of options including a merger of Hornsby (excluding Hornsby South) and Ku-ring-gai. The Delegate expressed the view that the analysis prepared for Hornsby provided "significant comfort that the projected performance improvements are credible and achievable".
In the Conclusion to Section 5.1, the Delegate adverted to "the concerns that particularly relate to the KPMG analysis and modelling". The Delegate did not address those concerns directly, other than to record an understanding that "analysis and modelling is high level, and the discount rate applied is conservative". The Delegate added that both KPMG and the State Government believed that the "benefits are conservative estimates".
Ku-ring-gai and the Delegate were clearly at odds as to what was required of the Delegate in performing the obligation imposed on him by s 263(3)(a) of the LG Act. Ku-ring-gai's position was that the Delegate was obliged to examine the KPMG Documents to ascertain whether they supported KPMG's assessment of projected savings, an assessment that the Minister adopted in the Merger Document. Ku-ring-gai wished to have the opportunity to scrutinise the detailed analysis underpinning KPMG's published projections in order to make its own assessment of the projections. The Delegate's view was that access to the KPMG Documents was unnecessary for him to discharge his statutory obligation. He took this view, at least in part because he considered that the KPMG analysis undertaken for Hornsby supported the Minister's projected financial benefits flowing from the Merger Proposal.
The critical issue that Ku-ring-gai wished to address - and did address - in its submission and in the letter of 10 March 2016 was whether the Delegate could perform his statutory function without gaining access to the KPMG Documents and without allowing Ku-ring-gai to undertake its own analysis of the reasoning underpinning KPMG's assumptions and projections. In its submission and in the letter, Ku-ring-gai took the opportunity to put its case forcefully. Ku-ring-gai did so in the knowledge that the Delegate was disposed to take a different view of his role, but argued that it was essential for the KPMG Documents to be produced. There is no suggestion that Ku-ring-gai was denied the opportunity to say everything it wanted on this issue.
When making its submission to the Delegate, Ku-ring-gai was aware that its request for access to the KPMG Documents had been denied by the Director of the Department of Premier and Cabinet on the ground of public interest immunity. In its submission, Ku-ring-gai put to the Delegate, implicitly if not explicitly, that he should take steps to obtain access to the KPMG Documents. The submission did not identify what steps the Delegate should take, in the absence of powers to compel the production of documents, but Ku-ring-gai could have addressed that question had it wished to do so. It was also implicit in Ku-ring-gai's submission that if the Delegate did not obtain the KPMG Documents and did not examine KPMG's analysis of projected benefits, he should not endorse the Minister's assessment of the projected benefits of the Merger Proposal.
The Delegate took note of the concerns expressed by Ku-ring-gai. However, he did not take any steps to obtain the KPMG Documents and proceeded on the basis that they were not required for him to perform his task in conformity with the statute. Nor did he accept that he could not endorse the Minister's claim that the Merger Proposal would lead to substantial financial benefits. In effect, the Delegate rejected Ku-ring-gai's submission.
In taking this course, the Delegate did not rely on any material adverse to Ku-ring-gai other than documents in the public domain. [144] The Delegate and Ku-ring-gai had the same material available to them. In rejecting Ku-ring-gai's submission as to how he should proceed, the Delegate may have put himself at risk of failing to comply with the requirements of s 263(3) of the LG Act, an issue that is addressed later in this judgment. [145] The absence of the KPMG Documents might also have affected the cogency of the Delegate's analysis of the financial advantages of the Merger Proposal. But in my view, the Delegate's decision to reject Ku-ring-gai's submission and to proceed to make his recommendation without having access to the KPMG Documents did not involve a denial of procedural fairness.
The conclusion does not depend on determining, one way or another, Ku-ring-gai's challenge to the claim of public interest immunity made in respect of the KPMG Documents. Regardless of the outcome to that challenge, Ku-ring-gai had the opportunity to put its case to the Delegate and was not denied procedural fairness.

[56]

Examination and report

Ku-ring-gai's argument advanced in the alternative to its procedural fairness claim was not developed in detail. However, it essentially rested on the contention contained in Ground 7 of the Summons that the Delegate did not give proper, genuine or realistic consideration to the financial advantages or disadvantages of the Merger Proposal, as required by s 263(3)(a) of the LG Act. That the Delegate was obliged to give such consideration to the financial advantages or disadvantages of the Merger Proposal receives some support from an observation of the High Court in a very recent case that: [146] "the term 'consider' imports an obligation to give proper, genuine and realistic consideration".
The Court cited the judgment of Gummow J in Khan v Minister for Immigration and Ethnic Affairs (Khan) [147] in support of this proposition. Khan involved s 5(2)(f) of the Administrative Decisions (Judicial Review) Act 1977 (Cth), which provides a ground of review where a decision involves "an exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case". In that context, Gummow J said that: [148] "what was required of the decision maker, in respect of each of the applications, was that in considering all relevant material placed before him, he give proper, genuine and realistic consideration to the merits of the case and be ready in a proper case to depart from any applicable policy."
The High Court in Bondelmonte v Bondelmonte did not refer to the controversy surrounding the meaning and utility of the expression "proper, genuine and realistic consideration". [149] Nor did their Honours refer to the warning in Minister for Immigration and Citizenship v SZJSS [150] against the formula being used to encourage a court exercising powers of judicial review to slide into impermissible merits review. [151] Nonetheless the observation indicates that a decision-maker obliged by statute to consider a particular aspect of a proposal may have to do more than simply adopt untested assertions made by a proponent of the proposal.
The obligation of the Chief Executive or a delegate examining and reporting on a Ministerial merger proposal depends on the terms of the governing legislation. In this case, ss 263(1) and (3)(a) of the LG Act required the Delegate:

to examine and report on the Minister's Merger Proposal; and
when considering the Merger Proposal, to have regard to any financial advantages or disadvantages of the Merger Proposal to the residents and ratepayers of Hornsby and Ku-ring-gai.

It is necessary to construe ss 263(1) and 263(3) of the LG Act taking into account the statutory context. In this respect, it is significant that the Governor's power to amalgamate two or more areas can be exercised only if a merger proposal has been dealt with in accordance with Div 2B of Part 1 of Chapter 9 (s 218D). The first stage of this process, once the Minister has made a merger proposal, is that it must be referred to the Boundaries Commission or to the Departmental Chief Executive "for examination and report" (s 218F(1)).
The Minister has a choice whether to refer the merger proposal to the Boundaries Commission or to the Chief Executive for examination and report. But in either case s 263 of the LG Act applies to the examination of the merger proposal (s 218F(2)). Thus the Boundaries Commission or the Chief Executive (as the case may be) must hold a public inquiry for the purpose of exercising the statutory functions in relation to the merger proposal (s 263(2A)). Those statutory functions include considering the merger proposal having regard to the factors identified in s 263(3).
There are several indicators that when the Boundaries Commission conducts the "examination" of a merger proposal it is to form its own judgment on the factors it is required to take into account and on the merits of the proposal itself. The first is the composition of the Boundaries Commission. It is a statutory body comprising a Ministerial nominee (chairperson with a casting vote), a Departmental nominee of the Chief Executive and two nominees from a panel selected by the Local Government and Shires Association of New South Wales (ss 261(1), (2), (4), 262(1) of the LG Act). The purpose of referring a proposal for "examination and report" to a statutory body which includes members independent of government must be to enable the body to form its own view of the relevant factors and of the proposal itself. This conclusion is supported by the statutory entitlement of a member of the Boundaries Commission to issue a dissenting report. [152]
Secondly, the requirement that the Boundaries Commission hold a public inquiry indicates that it is required to take into account the views expressed at such an inquiry, insofar as they are relevant to the factors listed in s 263(3) of the LG Act. There would be little point in holding a public inquiry if the views expressed by residents and ratepayers and the councils affected could simply be ignored because they cast doubt on the merits of the merger proposal. The natural meaning of the expression "to examine and report on any matter … referred" (s 263(1)) in this context is that the Boundaries Commission must make its own assessment of the factors it is required to take into account by s 263(3).
Thirdly, each of the factors identified in s 263(3) of the LG Act is capable of independent evaluation and assessment by the Boundaries Commission. This is the case, for example, with the financial advantages or disadvantages of the merger proposal (s 263(3)(a)) and the attitudes of residents and ratepayers of the areas concerned (s 263(3)(d)). No doubt the Boundaries Commission's assessment of these factors will be heavily dependent on the information provided to it by way of submissions or otherwise and by the resources available to it. Nonetheless, it is the Boundaries Commission's own assessment which the legislation requires.

[61]

Endnotes

Local Government Act, s 218F(6).
Delegate's report, p 1.
Boundaries Commission Report, p 1.
Local Government Act, s 673(1).
Local Government Act, s 672(a).
Ku-ring-gai Council v Mr Garry West as delegate of the Acting Director-General, Office of Local Government [2016] NSWLEC 118 ("Ku-ring-gai LEC - final"). The name of the officer was mis-stated; he was the Acting Chief Executive.
Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26 at [12] (Gleeson CJ, Gummow, Kirby and Hayne JJ).
Appellant's written submissions, par 129.
Botany Bay at [97].
Botany Bay at [96].
Local Government Act, s 204.
Local Government Act, Dictionary, area. (The definition has been amended since the date of the referral to delete "Division 1 of".)
Local Government Act, s 204(1).
Local Government Act, s 219.
Local Government Act, s 207 and s 221.
Local Government Act, s 215.
Local Government Act, s 216 and s 217.
Local Government Act, s 218(1).
Local Government Act, s 218(2).
Local Government Act, ss 214-218.
Local Government Act, s 218D and s 218E.
Kirk v Industrial Court of New South Wales (2009) 239 CLR 531; [2010] HCA 1 at [98]-[100].
See Land and Environment Court Act 1979 (NSW), s 20(2).
Ku-ring-gai Council v Garry West as Acting Director-General of the Office of Local Government [2016] NSWSC 442. (The description of the defendant was erroneous - see fn (6) above.)
Operating results refer to the net financial position after subtracting total expenditure from total revenue in a given financial year. (Footnote in original.)
NSW Government (2015), Local Government Reform: Merger Impacts and Analysis, December. (Footnote in original.)
Merger Impacts and Analysis, 2015 KPMG, pp 4 and 6.
Submission, p 12.
Submission, p 13.
Submission, p 14.
Technical paper, p 2.
Technical paper, p 3.
Meeting Notes, p 2.
Ku-ring-gai (LEC - final) at [142].
Ku-ring-gai (LEC - final) at [153].
Ku-ring-gai (LEC - final) at [156].
Local Government Act, s 218F(7) and (8).
Ku-ring-gai (LEC - final) at [166].
Amended notice of contention, 9 February 2017, par 4.
Delegate's report, p 5.
Delegate's report, p 17.
Delegate's report, p 10.
Delegate's report, p 12.
See, eg, par 5.6.1, dealing with Hornsby Shire Council's submissions in respect of services and facilities.
Delegate's report, p 9.
Delegate's report, p 14.
Delegate's report, p 20, par 5.2.4.
Delegate's report, p 24, par 5.4.3.
Delegate's report, par 5.2.4.
See, with respect to an application for mandamus, The King v The Public Service Commissioner for the Commonwealth of Australia; Ex parte Killeen (1914) 18 CLR 586 at 590 (Griffiths CJ) and 592 (Isaacs J).
Chen Shi Hai v Minister for Immigration and Multicultural Affairs (2000) 201 CLR 293; [2000] HCA 19 at [42].
Minister for Immigration and Multicultural Affairs v Wang (2003) 215 CLR 518; [2003] HCA 11.
Notice of appeal, ground 9.
Records 4 and 5 in annexure B to the response to the application for access.
Letter, 25 February 2016, Director, Premier & Cabinet, to Ku-ring-gai Council.
Ku-ring-gai (LEC - final) at [78]-[79].
Ku-ring-gai Council v Mr Garry West [2016] NSWLEC 62 (Moore J).
Affidavit of Paul Miller, 29 April 2016, par 8.
Affidavit, par 26.
Affidavit, pars 28 and 29.
(1999) 201 CLR 49; [1999] HCA 67 at [21].
Referring with approval to the judgment of McLelland CJ in Eq in Telstra Corporation v Australis Media Holdings [No 1] (1997) 41 NSWLR 277 at 279.
Evidence Act, s 131A(2)(e).
State of New South Wales v Public Transport Ticketing Corporation [2011] NSWCA 60 at [9] (Allsop P, Hodgson JA and Sackville AJA agreeing).
See, eg, Burmah Oil Co Ltd v Bank of England [1980] AC 1090 at 1111 (Lord Wilberforce).
Evidence Act, s 130(4)(f).
(1978) 142 CLR 1 at 45.
Eastman v The Queen (1997) 76 FCR 9 at 63 (von Doussa, O'Loughlin and Cooper JJ).
Ryan v State of Victoria [2015] VSCA 353 at [58] (Tate JA, Santamaria and Ferguson JJA agreeing).
New South Wales v Public Transport Ticketing at [43].
Ryan at [59] (emphasis added).
New South Wales v Public Transport Ticketing at [24].
New South Wales v Public Transport Ticketing at [41].
(1993) 176 CLR 604 at 614-619 (Mason CJ, Brennan, Deane, Dawson, Gaudron and McHugh JJ).
Northern Land Council at 614-615.
Burmah Oil, (fn (65) above) at p 1112; and Sankey v Whitlam at 62-63 (Stephen J) (part of original footnote).
Sankey at 43, cited with approval in Northern Land Council at 616-617.
Ku-ring-gai (LEC - final) at [80].
Ku-ring-gai (LEC - final) at [81].
[2016] NSWLEC 124.
Hunter's Hill at [232].
Hunter's Hill at [233]-[237].
(2015) 234 FCR 1; [2015] FCAFC 125.
Minister for Immigration and Border Protection v SZSSJ [2016] HCA 29; 90 ALJR 901.
Notice of appeal, ground 2.
Other challenges that have reached this Court are Botany Bay City Council v Minister for Local Government [2016] NSWCA 74; (2016) 214 LGERA 173 (Botany Bay I); Botany Bay City Council v State of New South Wales [2016] NSWCA 243 (Botany Bay II); and Woollahra Municipal Council v Minister for Local Government [2016] NSWCA 380; (2016) 219 LGERA 180 (Woollahra (CA)).
Ku-ring-gai Council v Mr Garry West as delegate of the Acting Director-General, Office of Local Government [2016] NSWLEC 118 (Primary Judgment).
The relevant provisions of the LG Act are set out at [20] above.
Primary Judgment at [156].
Local Government (City of Parramatta and Cumberland) Proclamation 2016, cl 4; Primary Judgment at [172].
The other respondents have filed submitting appearances. They are the Delegate (First Respondent), the Secretary, Department of Premier and Cabinet (Second Respondent) and the Boundaries Commission (Fourth Respondent).
A related complaint was that the Delegate participated, along with other delegates, in a closed meeting with KPMG in which KPMG representatives explained the reasoning in the KPMG Documents.
The following account is largely taken from Botany Bay II at [8]-[17].
The word "area" is defined in the Dictionary to the LG Act.
"Departmental Chief Executive" is defined in the Dictionary of the LG Act to mean the Chief Executive of the Office of Local Government (OLG). The OLG is an Executive Agency related to the Department of Premier and Cabinet and is headed by the Chief Executive Officer: Government Sector Employment Act 2013 (NSW) Sch 1 Part 2 (inserted by the Administrative Arrangements Order 2014 (NSW), s 4).
Kirk v Industrial Relations Court of New South Wales (2010) 239 CLR 531; [2010] HCA 1.
Primary Judgment at [1].
The end result if the proposal is implemented is that a new local government area will be created. For simplicity throughout this document, we have referred to a new council rather than a new local government area. (Footnote 1 in original.)
Operating results refer to the net financial position after subtracting total expenditure from total revenue in a given financial year. (Footnote 2 in original.)
NSW Government (2015), Local Government Reform: Merger Impacts and Analysis, December. (Footnote 3 in original.)
See at [154]-[155] above.
See above at [154]-[155].
Ku-ring-gai Council v Garry West as Acting Director-General of the Office of Local Government [2016] NSWSC 442.
Ku-ring-gai Council v Mr Garry West in his capacity as delegate of the Acting Director-General of the Office of Local Government [2016] NSWLEC 62.
See above at [136].
Primary Judgment at [143].
Primary Judgment at [145].
Primary Judgment at [152].
Primary Judgment at [153]-[156].
[2016] NSWCA 380; 219 LGERA 180.
Woollahra (CA) at [10], [52] (Beazley P, Bathurst CJ and Ward JA agreeing).
Botany Bay I at [38].
Botany Bay I at [40].
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40 at 39-40, 44 (Mason J, Gibbs CJ and Dawson J agreeing; Woollahra (CA) at [106].
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; [1996] HCA 6 at 271-272 (Brennan CJ, Toohey, McHugh and Gummow JJ) citing Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; [1993] FCA 322 at 287 per curiam.
These words were used by the Full Federal Court in Salahuddin v Minister for Immigration and Border Protection (2013) 229 FCR 290; [2013] FCAFC 141 at [22] (Flick J, Katzmann and Wigney JJ agreeing), to which Mr Williams referred the Court. However, Flick J also observed that such an approach should not be construed as a freedom for administrators to fall short of an obligation properly to consider an application (in that case to a tribunal) according to law.
See at [182] above.
See at [195] above.
See Minister for Local Government v South Sydney City Council (2002) 55 NSWLR 381; [2002] NSWCA 288 (South Sydney) at [41]-[42] (Spigelman CJ).
Minister for Aboriginal Affairs v Peko-Wallsend at 44-45 (Mason J).
Primary Judgment at [22]-[81]; [2016] NSWLEC 124 at [219]-[254].
[2016] NSWLEC 86; 218 LGERA 65, affirmed in Woollahra (CA).
Woollahra (LEC) at [226]-[228].
Woollahra (LEC) at [248]-[249].
Primary Judgment at [42]-[45].
Woollahra (LEC) at [112]-[113].
South Sydney at [39]-[41]. See also at [243], [254] (Mason P).
It was accepted in Woollahra (CA) that the rules of procedural fairness applied to a delegate of the Chief Executive: Woollahra (CA) at [136]-[150].
South Sydney at [254] (Mason P, Ipp AJA agreeing), citing National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296; [1984] HCA 29 at 319-320 (Mason, Wilson and Dawson JJ).
Kioa v West (1985) 159 CLR 550; [1985] HCA 81 at 633 (Deane J).
Kioa v West at 620 (Brennan J).
Kioa v West at 629 (Brennan J).
Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88; [2005] HCA 72 at [16]-[17] per curiam.
South Sydney at [251].
South Sydney at [267].
MC Harris, "Fairness and the Adversarial Paradigm: An Australian Perspective" (1996) Public Law 508 at 522-523, quoted in South Sydney at [256] and Woollahra (CA) at [139].
South Sydney at [243].
Woollahra (CA) at [147] (Beazley P, Bathurst CJ and Ward JA agreeing).
See at [161]-[162] above.
See at [70] above.
See at [40]-[41] above.
Woollahra (CA) at [107].
Woollahra (CA) at [107].
I leave to one side the information provided to the Delegate in the Delegate briefing.
See [276]-[293] below.
Bondelmonte v Bondelmonte [2017] HCA 8 at [43] per curiam. The comment was made in relation to a statutory provision requiring the Family Court to consider, in determining the best interests of the child, any views expressed by the child (Family Law Act 1975 (Cth) s 60CC(3)(a)).
[1987] FCA 457; (1987) 14 ALD 291.
Khan at [25].
See, for example, Belmorgan Property Development Pty Ltd v GPT Re Ltd [2007] NSWCA 171; 153 LGERA 450 at [76]-[77] (Basten JA); A Poukchanski, "Considering 'Proper, Genuine and Realistic'" (2014) 21 AJ Admin L 201 at 203-204.
(2010) 243 CLR 164; [2010] HCA 48 at [30], [34] per curiam.
Minister for Immigration and Citizenship v SZJSS at [30], [34] per curiam.
LG Act Sch 2 cl 12.
See above at [153].
Woollahra (CA) at [107].
Attorney-General for the State of New South Wales v Quin (1990) 170 CLR 1; [1990] HCA 21 at 35-36 (Brennan J).
Attorney-General for the State of New South Wales v Quin at 38.
See at [158] above.

Ku-ring-gai Council v Garry West as delegate of the Acting Director-General, Office of Local Government

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