Levenstrath Community Association Incorporated v Council of the Shire of Nymboida

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3807/99 LEVENSTRATH COMMUNITY ASSOCIATION INC v COUNCIL OF THE SHIRE OF NYMBOIDA & ANOR

1 The question in this matter is whether, under the Local Government Act 1993 ("the Act"), councillors who have disclosed an interest in a development application and are thereby disqualified from participating in the consideration of or from voting on it, can, if present at the meeting, be counted as part of the quorum. The Legislative Provisions 2 The relevant provisions of the Act are as follows: "368 What is the quorum for a meeting?

The quorum for a meeting of the council is a majority of the councillors of the council who hold office for the time being and are not suspended from office.

370 What are the voting entitlements of councillors?

(2) However, the person presiding at a meeting of the council has, in the event of an equality of votes, a second or casting vote.

A decision supported by a majority of the votes at a meeting of the council at which a quorum is present is a decision of the council.

(1) A councillor or a member of a council committee who has a pecuniary interest in any matter with which the council is concerned and who is present at a meeting of the council or committee at which the matter is being considered must disclose the interest to the meeting as soon as practicable.

(2) The councillor or member must not take part in the consideration or discussion of the matter.

(3) The councillor or member must not vote on any question relating to the matter.

The Minister may, conditionally or unconditionally, allow a councillor or a member of a council committee who has a pecuniary interest in a matter with which the council is concerned and who is present at a meeting of the council or committee to take part in the consideration or discussion of the matter and to vote on the matter if the Minister is of the opinion: (a) that the number of councillors prevented from voting would be so great a proportion of the whole as to impede the transaction of business, or (b) that it is in the interests of the electors for the area to do so." 3 The following provision of the Local Government (Meetings) Regulation 1993 was referred to in argument:

(1) A councillor who is present at a meeting of a council but who fails to vote on a motion put to the meeting is taken to have voted against the motion. This subclause does not apply to a councillor who does not vote because he or she has a pecuniary interest in the subject-matter of the motion.

(2) If a councillor who has voted against a motion put at a council meeting so requests, the general manager must ensure that the councillor's dissenting vote is recorded in the council's minutes.

(3) The decision of the chairperson as to the result of a vote is final, unless the decision is immediately challenged and not fewer than 2 councillors rise and demand a division.

(4) When a division on a motion is demanded, the chairperson must ensure that the division takes place immediately. The general manager must ensure that the names of those who vote for the motion and those who vote against it are respectively recorded in the council's minutes.

(5) Voting at a council meeting, including voting in an election at such a meeting, is to be by open means (such as on the voices or by show of hands). However, the council may resolve that the voting in any election by councillors for mayor or deputy mayor is to be by secret ballot.

Note. The Local Government (Elections) Regulation 1993 provides that a council is to resolve whether an election by the councillors for mayor or deputy mayor is to be by preferential ballot, ordinary ballot or open voting (clause 120 and clause 3 of Schedule 3). Clause 3 of Schedule 3 also makes it clear that 'ballot' has its normal meaning of secret ballot."

The Facts 4 The Nymboida Shire Council has six members. A quorum is four. It is common ground that one councillor is sick and cannot attend meetings. It is equally common ground that two councillors, Peter Williamson and Brenda Constable, have a pecuniary interest in development application 123/99 ("DA 123") within the meaning of ss 442 and 451 of the Act. They have complied with their obligations under s 451(1) and disclosed their interests. Without the presence of at least one of them, the Council cannot in present circumstances have a quorum in respect of DA 123. There has been no delegation by the Council of its powers which would enable the determination of DA 123 under delegated authority. At least one of the disqualified councillors has indicated an intention to be present at a meeting at which DA 123 is to be considered. The Council has indicated an intention to count the disqualified councillors, if present, as part of a quorum for the conduct of the relevant item of business. The plaintiff contends that this cannot in law be done. The plaintiff's standing to bring these proceedings is not challenged.

5 The plaintiff's contention is that persons who cannot consider and vote on a subject matter at a meeting cannot be counted towards the quorum. A quorum must consist of councillors who are capable of taking part in the consideration and discussion of and the voting upon the business at hand. It is said that this is a principle of the common law of meetings, and that nothing in the Act displaces it. Indeed, it is said that the obligations of consideration imposed on councillors in determining development applications by s 79C(1) of the Environmental Planning & Assessment Act 1979 conduce to the conclusion that disqualified councillors should not be counted. 6 The locus classicus relating to the principle propounded is In re Greymouth Point Elizabeth Railway and Coal Company Limited [1904] 1 Ch 32. In that case, article 106 of the articles of association of the company prohibited a director from voting on matters in which he had an interest and, if he did so, his vote was not to be counted. Article 116 provided that in relevant circumstances two directors should be a quorum. Farwell J said (at 34): "I think that … the meaning of art 116 is that the two directors to form the quorum for the despatch of business must be two directors who are capable of voting on the business before the board; otherwise it is idle."

Greymouth has been consistently applied. In Stewart v Oliver (No 2) (1971) 18 FLR 83 Joske J said (at 84-5): "The presence of a quorum means a quorum competent to transact and vote upon the business before the meeting. If some of those present are disqualified from voting and there is not otherwise a quorum no business can be validly done."

See also In re North Eastern Insurance Company Limited [1919] 1 Ch 198 at 205-6 per PO Lawrence J; The People's Prudential Assurance Co Ltd v The Australian Federal Life and General Assurance Co Ltd (1935) 35 SR(NSW) 253 at 267 per Long Innes CJ in Eq; Anaray Pty Ltd v Sydney Futures Exchange Ltd (1982) 6 ACLC 271 at 273-4 per Foster J; Wilson v Permasnow (Australasia) Ltd (1988) 14 ACLR 129 at 149; In re Companies (Western Australia) Code; In re Austplat Minerals NL (1990) 2 WAR 289 at 292-3 per Master White; and see generally Joske's Law and Procedure at Meetings in Australia (8th ed, 1994) 31. Most importantly the principle has received the endorsement of the High Court of Australia in A M Spicer & Son Pty Ltd (In Liquidation) v Spicer & Howie (1931) 47 CLR 151 at 175-6 per Starke J, 186-7 per Dixon J and R v Byrnes (1995) 183 CLR 501 at 517. Attention was also drawn to the decision of Young J in Ball v Pearsall (1987) 10 NSWLR 700 where his Honour pointed out that the stipulation of a quorum was an enabling measure, since in its absence all members of the body would have to participate in a decision. [See also Green v The Queen (1891) 17 VLR 329; Smaill v Alexander (1904) 23 NZLR 745; Rex v Gallant [1945] 1 DLR 471; Cardinal v The Queen [1980] 1 FC 140.]

7 The provision of the former Act corresponding with s 451, s 46C of the Local Government Act 1919, as it stood at the time of its replacement, was similar to s 451. The new provision was therefore enacted in a familiar statutory context and in a context in which the established common law principle in Greymouth was well understood.

8 For these reasons it was submitted that, consistently with the principle in Greymouth, a councillor who is not capable of voting on the business before the council does not form part of the quorum.

9 This result is also conduced to by the need for the public appearance, as well as the actuality, of integrity. One of the purposes of the disclosure of interest provisions was to aid the public to have confidence in councillors and "they must also be seen to act properly": Second Reading Speech, 27 November 1992, Hansard, Legislative Assembly, 10423. The counting of a councillor to found a quorum in respect of an item of business in which the councillor was interested, albeit the interest had been disclosed and there was no participation in consideration or voting, could detract from the public appearance of integrity.

10 As I understand it, the defendant concedes the correctness of the Greymouth principle as a proposition of law, but says that it has no application to the present situation because displaced by the provisions of the Act. That contention is summarised as follows. The Act and the Regulation clearly contemplate: · a quorum formed by the presence of persons; · the disclosure of pecuniary interests; · the continued presence at the meeting of those interested (on condition that they not vote/participate); · the taking of a vote; · the making of a decision (by a majority of the votes at a meeting)and the disregard of an abstaining vote (because of a pecuniary interest) as a vote in the negative. The defendant particularly relies on the words of s 368 itself as indicating that councillors "who hold office" are to be counted not only in establishing the number needed for a quorum but, if present at a meeting, towards those constituting the quorum, albeit disqualified from participating in consideration or voting.

11 The defendant submits that to adopt the plaintiff's construction of quorum by reference to common law principles of disqualification would be to ignore the express terms of the section, and to import words into the section which are not required for the resolution of any ambiguity, for there is none. The legislature clearly chose to exclude certain persons from the calculation of a quorum, and by its silence is to be taken as having chosen to include others (those interested in a pecuniary sense). To read into an Act of Parliament words which do not appear in the enactment (in the absence of necessity) is inappropriate: see Pearce & Geddes' Statutory Interpretation in Australia (4th ed, 1996) [2.16].

12 Furthermore, the defendant claims support for its construction of s 368 in the maxims Expressio unius est exclusio alterius: Pearce & Geddes [4.22], and Expressum facit cessare tacitum: Pearce & Geddes [4.23]. With respect to the former, it is submitted that authorities declining to use the principle as a "bolster" in the interpretation of the clear words of a statute (as here, with respect to s 368) are confined to instances where, traditionally, courts have construed narrowly a claimed intention by Parliament to exclude fundamental rights (such as natural justice) or assumptions of law. The maxims may be used to infer an intention to exclude matters, not specifically dealt with. In this case, express words excluding certain persons from the determination of a quorum may be taken to import the inclusion of all others in that determination. Here: a. Parliament has prescribed a regime for the conduct of the Council's business; b. as a subset of that prescription, Parliament has defined by reference to certain matters what is to be taken as a quorum; c. it has excluded a certain body of persons (namely those suspended from office); d. it has not excluded any other body of persons; and e. (thereby) may be taken not to have excluded those other persons. Conclusion 13 In my view, the defendant's contentions fail. The statement of principle in [6] is correct. Equally, the statement by the defendant that it would be wrong to read words into the statute is correct. However, in my view, it is not correct to say that the legislature clearly chose to include among those to be counted towards a quorum those disqualified by interest from speaking and voting. Section 368 clearly speaks of those to be taken into account in determining the number whose presence is necessary to constitute a quorum; in my view, it does not speak at all of those who are to be counted or not counted towards the number present; certainly it does not speak clearly of them. Nor can I derive from other provisions of the Act the clear indication the defendant seeks that the legislative intent was to include disqualified councillors in the count of the quorum and thus to displace the common law rule. If anything, s 358 indicates to the contrary by providing a mechanism whereby the Minister can solve the problem if it arises and, so far as development applications are concerned, the provision in the Environmental Planning and Assessment Act 1979 for appeal to the Land and Environment Court upon a deemed refusal by Council provides another avenue to avoid stultification of the approval process if the numbers fall short. I do not find the statute ambiguous, but rather enacted upon the assumption of the existence of the common law rule as to the persons to be counted in a quorum. If there were an ambiguity, then, in the absence of clear legislative intention to the contrary, the common law rule should be taken to survive: Potter v Minahan (1908) 7 CLR 277 at 304 per O'Connor J; Hocking v The Western Australian Bank (1909) 9 CLR 738 at 746 per Griffith CJ; American Dairy Queen (Qld) Pty Ltd v Blue Rio Pty Ltd (1981) 147 CLR 677 at 682-3 per Mason J (as his Honour then was); Balog v ICAC (1990) 169 CLR 625 at 635-6 per curiam; and see generally Pearce & Geddes [5.17]. The maxims Expressio unius est exclusio alterius and Expressum facit cessare tacitum must be applied with great caution, as has been repeatedly pointed out (and not only in cases relating to fundamental rights): see Rylands Brothers (Australia) Ltd v Morgan (1927) 27 SR (NSW) 161 at 168-9 per Long Innes J; Houssein v The Under Secretary of Industrial Relations and Technology (NSW) (1982) 148 CLR 88 at 94 per curiam; O'Sullivan v Farrer (1989) 168 CLR 210 at 215 per curiam; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 575 per Mason CJ and Dawson, Toohey and Gaudron JJ; Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 250 per Deane, Dawson, Toohey and Gaudron JJ. The defendant cannot rely on them here as a ''bolster'' for there is no predetermined interpretation in its favour. Their use does not seem to me appropriate in the context of these statutory provisions, and they should not be applied to produce a conclusion different from that which I have come to. 14 The plaintiff is therefore entitled to a declaration as sought. Short minutes may be brought in to that effect, and seeking any other necessary orders. Costs will be dealt with at that time. oOo

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