Liverpool City Council v Minister for Local Government and Ors

R 546; [1969] HCA 10 Reid v Commercial Club (Albury) Ltd [2014] NSWCA 98 Tulloh v Chief Executive Officer of the Department of Corrective Services [2018] WASC 105 Water Conservation and Irrigation Commission (New South Wales) v Browning (1947) 74 CLR 492; [1947] HCA 21 Wintawari Guruma Aboriginal Corporation RNTBC v The Hon Benjamin Sana Wyatt [2019] WASC 33 Texts Cited: HWR Wade and CF Forsyth, Administrative Law (11th ed, 2014, Oxford University Press) Category: Principal judgment Parties: Liverpool City Council (Applicant) Minister for Local Government (First Respondent) Brett Whitworth, in his capacity as delegate of the Departmental Chief Executive, Office of Local Government (Second Respondent) Ross Glover, in his capacity as Commissioner of a Public Inquiry into Liverpool City Council (Fourth Respondent) State of New South Wales (Fifth Respondent) Representation: Counsel: T F Robertson SC with H Grace (Applicant) N L Sharp SC with M Harker (First, Second and Fifth Respondents) Submitting appearance (Fourth Respondent)

Solicitors: Lindsay Taylor Lawyers (Applicant) Department of Planning, Housing and Infrastructure (First, Second and Fifth Respondents) MinterEllison (Fourth Respondent) File Number(s): 2024/00272372 Publication restriction: Nil

Introduction and outcome

1. Liverpool City Council ('Council') commenced these Class 4 judicial review proceedings by summons filed 24 July 2024 as a matter of some urgency seeking declaratory and consequential injunctive relief in relation to various decisions made (and to be made) by the Minister for Local Government and a delegate of the Departmental Chief Executive, Office of Local Government, involving an investigation, the making and publishing of a report, and a public inquiry into the conduct of Council.
2. The first respondent is the Minister for Local Government; the second respondent is Brett Whitworth as delegate of the Departmental Chief Executive, Office of Local Government ('OLG'); the third respondent was, until removed by an amended summons filed 15 August 2024, a Departmental Chief Executive, Office of Local Government; the fourth respondent is Ross Glover as Commissioner of a Public Inquiry into Council (who entered a submitting appearance); and the fifth respondent is the State of New South Wales. The active respondents are the first, second and fifth respondents.
3. Although these proceedings involve a number of somewhat cascading questions, the essential issue concerns whether a report prepared by the second respondent during an investigation being undertaken pursuant to s 430 of the Local Government Act 1993 (NSW) ('Act') in circumstances involving an admitted denial of procedural fairness has affected the later decision of the first respondent to appoint a public inquiry under s 438U of the Act into the conduct of Council.
4. As will be seen, the issues raise for consideration the conduct of the first and second respondents relating to the statutory scheme under the Act concerning how councils are made accountable for their conduct.
5. For the reasons that follow, I find that while Council is entitled to some limited declaratory relief, the remaining claims in the amended summons filed 15 August 2024, should be dismissed, and costs of the proceedings should be reserved.

Background

1. The following introductory narrative is largely uncontentious. Further facts will be noted in my consideration of the evidence and the parties' submissions.
2. On 6 May 2024, the second respondent, determined that "there should be an investigation under s.430 of the [Local Government Act 1993 (NSW)]" into certain "aspects" of Council's work and activities as set out in the "Terms of Reference" which, under the heading, "Recruitment and Selection Matters" ('s 430 Investigation') specifically raise, inter alia, whether Council has complied with the statutory obligations and its policies in relation to recruitment and selection for relevant employment positions; whether there were conflicts of interest which may have influenced recruitment for those positions; and whether Council's finances are being adversely affected as a result of staffing decisions.
3. The second respondent, under s 745(2) of the Act, delegated powers and functions under various sections of the Act for the purpose of conducting the s 430 Investigation to Brad Wade and two other "Principal Investigators" from the OLG (collectively, 'investigators') to conduct the s 430 Investigation. Between 10 May and 27 June 2024, various councillors, the Mayor, officers and employees of Council were interviewed by the investigators.
4. Between 19 May 2023 and 9 July 2024, the OLG received no less than 36 complaints in relation to certain conduct within Council and a number of those complaints were made directly to the first respondent.
5. Between 3 June and 28 June 2024, the first respondent received correspondence from various councillors (and a member of Parliament) expressing a number of concerns in relation to the conduct of Council including a request from three councillors to place Council into administration.
6. On 11 July 2024, before the completion of the s 430 Investigation, the second respondent prepared and signed the "Interim Report of the Section 430 Investigation into Liverpool City Council" ('Interim Report'). The Interim Report comprises 50 pages and contains serious allegations (styled "matters of concern") against Council, its councillors, the Mayor, and employees, some of whom are directly named and others who are identifiable by their position within Council. With the exception of one or two individuals, none of the individuals identified or identifiable in the Interim Report were notified of the allegations.

Present claims

1. Given certain admissions made by the respondents, and the differing positions of the parties in relation thereto, it is helpful to record that, in its amended summons filed 15 August 2024, Council seeks the following relief. 1. Declarations that: 1. The second respondent in conducting an investigation under s 430 of the Act had no power to make the Interim Report before the conclusion of the s 430 Investigation; 2. In reporting adversely about Council (and individuals), the second respondent failed to observe the requirements of procedural fairness and exhibited actual or apprehended bias; and 3. In publishing the Interim Report, the first and second respondents exhibited actual or apprehended bias. 1. Orders: 1. Setting aside the Interim Report; 2. Disqualifying the first and second respondents from taking any further steps in reporting on the results of the s 430 Investigation; and 3. Setting aside the first respondent's decision to appoint the fourth respondent as the Commissioner to hold a public inquiry into the conduct of Council under s 438U of the Act. 1. Injunctions restraining: 1. The second respondent from reporting on the s 430 Investigation; 2. The fourth respondent from conducting the public inquiry; 3. The first respondent from: 1. suspending Council under s 438W of the Act; 2. postponing Council elections under s 318B(1) of the Act; and 3. appointing an administrator to Council under s 438Y of the Act. 1. The first, second and fifth respondents from publishing the Interim Report (and any other matter to the same purport or effect thereof). 1. A mandatory injunction requiring the first, second and fifth respondents to delete the Interim Report from all relevant places and depositories within 24 hours of this order, and within 7 days to take down the Interim Report from all websites and servers on which it is displayed.
2. The amended summons lists the decisions to be reviewed as follows: 1. The decision of the first respondent to appoint the fourth respondent to hold a public inquiry into the conduct of Council under s 438U of the Act. 2. The proposed decisions of the first respondent: 1. To postpone the 2024 Council elections under s 318B(1) of the Act; 2. To suspend Council under s 438W of the Act; and 3. To appoint an administrator to Council under s 438Y of the Act. 1. The decision of the second respondent to make the Interim Report. 2. The proposed decision of the second respondent to report on the s 430 Investigation into Council. 3. The decisions of the first and second respondents to publish the Interim Report.

Statutory provisions

1. As the issues in this matter raise the conduct of the first and second respondents as decision-makers pursuant to the Act, some understanding of the relevant provisions which are referred to in the parties' submissions, is appropriate.
2. Chapter 13 of the Act is headed "[h]ow are councils made accountable for their actions?", and relevantly provides as follows: Part 5 Inquiries, reviews and surcharging Division 1 Inquiries and reviews 429A Complaints about councils, councillors, delegates and staff (1) A public official within the meaning of the Public Interest Disclosures Act 2022 may complain to the Departmental Chief Executive about the conduct of any one or more of the following - (a) a council, (b) a delegate of a council, (c) a councillor, (d) a member of staff of a council. (2) A complaint may be made orally or in writing. (3) The Departmental Chief Executive may deal with a complaint made under this section - (a) by means of an investigation under this Division, or (b) in such other manner as the Departmental Chief Executive considers appropriate. 430 Departmental Chief Executive may investigate councils The Departmental Chief Executive may, at the request of the Minister or on the Departmental Chief Executive's own initiative, conduct an investigation into any aspect of a council or of its work and activities. 431 Powers in connection with investigation (1) For the purpose of conducting an investigation under this Division, the Departmental Chief Executive may direct a person to do any one or more of the following - (a) to appear personally before the Departmental Chief Executive at a time and place specified in the direction, (b) to give evidence (including evidence on oath), (c) to produce to the Departmental Chief Executive any document that is in that person's custody or under that person's control, (d) to grant to the Departmental Chief Executive such authorities as may be necessary to enable the Departmental Chief Executive to gain access to any document that is in the custody or under the control of any bank, building society, credit union or other person. … … 433 Report of investigation (1) The Departmental Chief Executive must report to the Minister on the results of an investigation under this Division and must send a copy of the report to the council concerned. (2) The report may comment on any matter that, in the Departmental Chief Executive's opinion, warrants special mention and may contain such recommendations as the Departmental Chief Executive considers appropriate. (3) A report furnished to the council under this section must be presented at the next meeting of the council after the report is received. (4) Section 14B of the Royal Commissions Act 1923 applies in relation to any report that the Minister wishes to lay before both Houses of Parliament in the same way as it applies to a report made by a commission under that Act. 434 Council's response to report (1) A council must, within 28 days after presentation to it of a report made by the Departmental Chief Executive following an investigation under this Division, give written notice to the Minister of the things done or proposed to be done to give effect to any recommendations contained in the report. (2) The Minister may - (a) after receiving the council's notice, or (b) after the 28-day period, whichever is the earlier, order the council to do such things or to refrain from doing such things arising from the recommendations contained in the report as are specified in the order. (3) A council must comply with the Minister's order. (4) An order under this section may state that a failure to comply with the order may lead to legal proceedings being taken to enforce compliance. … Part 8 Public inquiries 438U Public inquiries (1) The Governor or the Minister may appoint a person as commissioner, or two or more persons as commissioners, to hold a public inquiry and to report to the Governor or the Minister with respect to - (a) any matter relating to the carrying out of the provisions of this Act or any other Act conferring or imposing functions on a council, and (b) any act or omission of a member of a council, any employee of a council or any person elected or appointed to any office or position under this or any other Act conferring or imposing functions on a council, being an act or omission relating to the carrying out of the provisions of the Act concerned, or to the office or position held by the member, employee or person under the Act concerned, or to the functions of that office or position. (2) For the purposes of any inquiry under this section, any person appointed to hold the inquiry has the powers, authorities, protections and immunities conferred on a commissioner, as well as the powers, authorities, protections and immunities conferred by Division 1 of Part 2 of the Royal Commissions Act 1923 - (a) on a sole commissioner (if the person is the only person appointed to hold the inquiry), or (b) on a chairperson of a commission (if the person is one of two or more persons appointed to hold the inquiry and has been appointed as chairperson of the inquiry). (3) The provisions of section 24 of the Local Court Act 2007 apply to any witness or person summoned by or appearing before the person so appointed in the same way as it applies to witnesses and persons in proceedings under that Act. (4) The provisions of the Royal Commissions Act 1923 (section 13 and Division 2 of Part 2 excepted) apply, with any necessary adaptations, to and in respect of any inquiry under this section and to and in respect of any witness or person summoned by or appearing before the person or persons holding the inquiry. (5) The Minister is to cause the report of the person or persons who have held an inquiry under this section to be laid before both Houses of Parliament. If neither House of Parliament is sitting, section 14B of the Royal Commissions Act 1923 applies. … 438W Suspension of council during public inquiry (1) The Minister may, by order published in the Gazette, suspend a council if a public inquiry relating to the council is held or to be held and the Minister considers it in the public interest to suspend the council. … … 438Y Appointment of interim administrator (1) The Minister must, in an order suspending a council under this Part or by subsequent order published in the Gazette, appoint an administrator of a council that is suspended. … … Part 6A Postponement of elections 318B Postponement of elections (1) The Minister may, by order published in the Gazette, postpone the election requirements of this Act in relation to a specified council if - (a) the council is the subject of - (i) an investigation under section 430 or any other provision of this Act, or (ii) a public inquiry, or (iii) an investigation by an authority (as defined in the Dictionary at the end of this Act) under any Act, or …

Evidence

1. The Court received extensive documentary evidence including tender bundles from both parties. The applicant's tender bundle included a copy of the Interim Report as well as various correspondence between employees of the OLG relating to the production and publication of the Interim Report.
2. Although not strictly relevant to the outstanding issues, Council read the affidavits of 13 people who were identified or identifiable in the Interim Report, being the affidavits of Tina Bono, Betty Boustani, Jason Breton, Melissa Marie Curran, Anthony Hadchiti, Lina Kakish, Ned Nader Khalil Mannoun, Fiona Michelle Macnaught, Lance Northey, Farooq Portelli, Julie Scott, Haris Strangas and Noelle Warwar all of which were sworn or affirmed on 25 July 2024. Council also relies on the affidavits of Megan Lesley Hawley affirmed 25 July 2024, Craig Knappick affirmed 30 July 2024, and Jason Breton affirmed 26 July 2024.
3. The respondents tender bundle contained correspondence to the first respondent from various Council officers and members of parliament between 2 May and 28 June 2024; briefing notes (and various drafts thereof) including the briefing note dated 6 May 2024 seeking the authority of the Deputy Secretary to conduct the s 430 Investigation; media articles regarding Council and various complaints addressed to, or received by, the Minister's Office or the OLG.
4. The respondents also relied upon correspondence dated 6 August 2024 between the parties' solicitors confirming that Council did not intend to amend their claim to include a specific allegation of "improper purpose", and a letter signed by the first respondent dated 16 July 2024 presenting the Interim Report to the Clerk of the Legislative Council for "tabling and release".
5. The Court also received a "Notice to Admit Facts" filed by Council and a "Notice Disputing Facts" filed by the respondents on 12 August 2024 and an agreed chronology containing background facts.

Issues

1. Despite the concession of the respondents that there was a failure to afford procedural fairness when the Interim Report was published, the parties differ as to what issues remain. Council maintains that it is still necessary for the Court to consider the other bases on which the lawfulness of the Interim Report is challenged (including, whether the Interim Report was made and published without power, unreasonably, or affected by actual or apprehended bias and/or made for an improper purpose).
2. Council contends that these other bases remain relevant to, first, whether the first respondent breached the Act by appointing the Commissioner to hold a s 438U public inquiry into the conduct of Council in reliance on the Interim Report; second, whether the first and second respondents should be restrained from proceeding with the public inquiry and exercising further powers under ss 318B, 438W and 438Y of the Act; third, whether the publication of the Interim Report was an act of partiality that disqualified the respondents from exercising the investigative and decision-making powers under the Act; and finally, the nature, extent and seriousness of such breach which will bear upon the Court's discretion under s 676 of the Act.
3. The respondents maintain that given their concession, there is no utility considering the other jurisdictional challenges to the Interim Report and what remains is simply the challenge to the first respondent's decision to appoint the public inquiry (and it follows, the proposed "adjunct" decisions to suspend Council, postpone Council elections, and appoint an administrator to Council). As such, the outstanding issues are whether the decision of the first respondent to appoint the public inquiry into the conduct of Council under s 438U was wholly or substantially based on the Interim Report; and if so, does that render the appointment of the public inquiry invalid; and, further, whether the first respondent's decision to appoint the public inquiry was vitiated by actual or apprehended bias.
4. It is agreed between the parties that if the first respondent's decision to appoint the public inquiry falls on any of the challenges contended by Council, so do the challenges to the proposed "adjunct" decisions.

Council's position

1. Council submits that the second respondent breached ss 430 to 434 of the Act by conducting an investigation and publishing the Interim Report because there was no power to produce the Interim Report (or any report prior to the completion of the s 430 Investigation). Further, that the carrying out of the investigation and the publishing of the Interim Report breached the requirements of procedural fairness, was unreasonable, or was affected by actual or apprehended bias.
2. Council submits that the Court would not accept the respondents' position that the Interim Report was prepared in the exercise of a "non-statutory executive power" on the part of members of the OLG to brief the Minister. This is because s 433(1) of the Act, although expressed as an obligation, should be properly construed as a grant of power because, first, there is no other statutory source of power to prepare a report "on the results of an investigation under this Division" in the Act; second, Parliament has clearly constrained the powers of a Departmental Chief Executive since s 433(2) of the Act prescribes the matters that the report may comment on; third, the obligation to report "on the results of an investigation" necessarily implies the grant of power; and fourth, s 433(2) limits the matters on which the report may comment (to those which "warrant(s) special mention"), such that these are important checks on the power to report. As such, the Court would be slow to accept the proposition that the Departmental Chief Executive (here, the second respondent) could invoke the broad investigative powers in ss 431 and 432 ostensibly for the purpose of reporting to the Minister under ss 433 and 434 of the Act, when in fact he was using the results of the investigation to exercise "non-statutory power".
3. In addition, Council submits that the Departmental Chief Executive's power to make a report is strictly subject to the provisions of Div 1 of Pt 5 of Ch 13 of the Act, which form part of an "interrelated and coordinated process" as follows. First, it comprises a limited power under s 429 of the Act to direct a council to provide documents or information; second, if the Departmental Chief Executive decides to conduct the investigation under s 430, the Act confers broad powers on the Departmental Chief Executive under ss 431 and 432 for the purpose of conducting the investigation; third, the powers to conduct an investigation are tied to the obligation to report to the Minister (and to provide a copy to the council concerned under s 433(1)), and the report "may comment on any matter … and may contain such recommendations as the Departmental Chief Executive considers appropriate"; fourth, s 434(1) requires the council concerned to "give written notice to the Minister of the things done or proposed to be done to give effect to any recommendations contained in the report"; fifth, s 434(2) empowers the Minister to order the council concerned "to do such things…arising from the recommendations contained in the report"; and sixth, s 433(4) authorises the Minister to lay the report before Parliament. Council contends that each of the above steps is "legally" dependent upon the step that precedes it.

Respondents' position

1. The respondents submit that although the publishing of the Interim Report involved a denial of procedural fairness, the Interim Report never had any legal effect and was not a statutory precondition to the exercise of powers now challenged by Council and, as such, does not "infect" the first respondent's decision to appoint the public inquiry.
2. Prior to appointing the fourth respondent under s 438U of the Act to undertake an urgent public inquiry into Council and issuing the Notice of Intention, the first respondent had been briefed on concerns held by investigators as well as a number of councillors at the Department of Planning, Housing and Infrastructure about potential maladministration within Council. The respondents also point to other evidence in relation to serious concerns that had also been made known to the Minister and his department by Council employees, members of the community, councillors, and members of State and federal parliaments.
3. These concerns included allegations and complaints about bullying and sexual harassment; interference by elected officials in development assessment processes; breaches of the Work Health and Safety Act 2011 (NSW); employment of related persons otherwise than on the basis of merit; wasting of public money; destruction of records; sexual discrimination; bypassing of procurement processes; and pressure to determine development applications resulting in refusal of developmental applications that may otherwise have been approved.
4. The respondents emphasise that the Interim Report was provided as an attachment to a briefing note to the first respondent and although the respondents concede that procedural fairness should have been afforded to those identified or identifiable within the Interim Report, jurisdictional error in the making of the Interim Report does not mean that the first respondent's later decision to appoint the public inquiry, and the proposed "adjunct" decisions, are invalid. This is because, first, the receipt of a "valid" Interim Report is not a statutory precondition to the exercise of the power to hold a public inquiry; second, even if the Interim Report is invalid, the concerns disclosed to the first respondent are still disclosed in fact and could still be relied upon by the first respondent to appoint the public inquiry; third, the Interim Report was part of a briefing to the first respondent, and has no independent legal effect. As such, neither an order quashing the report, nor a declaration of invalidity is (or would have been) appropriate.

Consideration

1. Although it would appear, as the respondents contend, that their concession in relation to the denial of procedural fairness in the making and publication of the Interim Report (hereafter, the 'concession') narrows the remaining issues, Council maintains that the determination of the enduring (if any) status of the Interim Report (despite the concession) are matters which necessarily infect the later challenged decisions.
2. While I accept the respondents' submission that despite the concession there is little utility in considering other grounds of invalidity raised by Council in relation to the Interim Report (being absence of power, unreasonableness and actual and/or apprehended bias), given the manner in which Council developed its submissions, particularly in relation to the subsequent decision of the first respondent to appoint the public inquiry, and the proposed "adjunct" decisions, these grounds require consideration.
3. As such, despite the concession, Council maintains that there was no power to make the Interim Report, and that it was also affected by unreasonableness and actual and/or apprehended bias, and that it follows that the first respondent's decision to appoint the public inquiry is a breach of the Act because the first respondent's decision was, first, based on an extraneous and irrelevant consideration being the Interim Report; and second, the first respondent's decision is itself affected by unreasonableness and actual or apprehended bias.
4. Council further submits that the first respondent's discretions in relation to ss 318B, 438U, 438W and 438Y are also subject to a requirement to afford procedural fairness to individuals who may be affected by their exercise. In the circumstances, I will deal seriatim with Council's submissions summarised above at [33]-[52] which require the status of the Interim Report to be initially considered.
5. I do not accept Council's contention that the Interim Report was prepared "without power". The question is (irrespective of whether the report is styled "interim" or otherwise) whether the second respondent had the power to make (and use) the Interim Report as he has. To the extent that this issue remains relevant given the concession, about which I have some doubt, there is some strength in Council's submission that the statutory procedures in ss 430 to 433 provide for a process leading to a "report" of an investigation pursuant to s 433(1) and provide a code for the conduct and completion of an investigation and that it is only after those procedures have been completed that a report be properly made.

Conclusion

1. My salient findings may be summarised as follows. The first respondent had the power to make and publish the Interim Report. The first and second respondents were neither actually biased nor acted so as to give rise to a reasonable apprehension of bias in relation to the decision to publish the Interim Report. As such, the publication of the Interim Report was not an act of partiality. It follows that I find that the first respondent's decision to appoint the Commissioner to hold the public inquiry is separate to the decision to publish the Interim Report such that any invalidity of the Interim Report does not render unlawful the first respondent's decision to later appoint the public inquiry because, first, I have found that the validity of the Interim Report is not a statutory precondition to the exercise of power under s 438U of the Act; and second, although the Interim Report is, from a legal perspective, a nullity, it continues to exist in fact, when the first respondent made the decision to appoint the public inquiry.
2. Additionally, I find that, first, Council has not discharged its onus to prove that the first respondent relied solely upon the contents of the Interim Report in appointing the public inquiry; second, that the first respondent did not consider any irrelevant considerations in making this decision; and third, that the first respondent's decision was not attended by legal unreasonableness. Further, I do not find that the first respondent was actually biased or acted in a manner to give a reasonable apprehension of bias on the part of the hypothetical reasonable observer.
3. In the circumstances, I consider that Council is entitled to limited relief confined to a declaration that the Interim Report was released without procedural fairness and that the other claims in the amended summons filed 15 August 2024 should be dismissed.

Costs

1. The parties have not addressed the Court in relation to costs. The usual order in judicial review proceedings is that costs follow the event. Council has enjoyed limited success. If there is no agreement between the parties in relation to costs, I direct that the active parties file primary submissions in relation to any application for costs (limited to 5 pages) within 21 days of this judgment, and file, if necessary, any response to primary submissions (also limited to 5 pages) within 14 days thereafter, with the intention that any question of costs will be decided on the papers unless an application is made in submissions for an oral hearing.

Orders

1. The Court makes the following orders: 1. Declares that in reporting adversely about Liverpool City Council in an Interim Report dated 11 July 2024, Brett Whitworth, as delegate of the Departmental Chief Executive, Office of Local Government, failed to observe the requirements of procedural fairness. 2. The amended summons filed 15 August 2024 is otherwise dismissed. 3. Costs are reserved.

Annexure A (1103323, pdf) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 September 2024