MINISTER FOR LOCAL GOVERNMENT & ANOR v SOUTH SYDNEY CITY COUNCIL

Court of Appeal (NSW)|2002-08-30|Before: Spigelman CJ, Mason P, Talbot J, Commission J

The applicant also refers to the following passage at par 43 of the judgment by Gaudron and Gummow JJ in Minister for Immigration and Multicultural Affairs v Bhardwaj [2001] HCA 11, unreported, for confirmatory authority that a decision arrived at contrary to the common law obligation to provide procedural fairness is to be regarded as a nullity:- The failure of the Tribunal to give Mr Bhardwaj a reasonable opportunity to present evidence and argument had the consequence that it did not reach a decision after considering evidence and argument against the cancellation of his visa. That being so, it follows that the Tribunal did not conduct a review as required by the Act and the September decision was, thus, not a "decision on review" for the purposes of ss 367 and 368 of the Act.

In Miah , the High Court held that a failure to exercise statutory power in accordance with the rules of natural justice involves a jurisdictional error of law (see also McHugh J in Bhardwaj at par 63). 89. The Court agrees with the applicant that as the adverse material remains undisclosed to the council and the time for the making of submissions to the Minister has expired, the breach of the common law obligation has not been cured. Accordingly, the Court has jurisdiction under s 673 of the LGA to make a declaration in respect of the validity of the threatened act of the Minister to exercise power under s 281F(7) in the absence of a valid report (cf South Sydney Council v Local Government Boundaries Commission ). For the Minister to make a recommendation to the Governor pursuant to s218F(7) in the circumstances will be a breach of the LGA.

237 The CSC submission referred to several times in this passage had earlier been identified as the letter of 26 November 2001 from the Lord Mayor of Sydney, with its accompanying submission. The appellants accept that the CSC letter of 26 November 2001 was not disclosed to SSCC prior to the trial before Talbot J. It is also common ground that SSCC had no notice of any proposal for the transfer of land additional to that proposed by the Minister until it received the Commission's Report. 238 SSCC did not see the CSC submission until it was produced in the proceedings in answer to a notice to produce. This was because the two "rival" councils adopted an adversary stance inter se and declined to copy their submissions to each other. This of course could not affect the ultimate content of the Commission's duty. 239 The appellants do not suggest that the obligation to accord procedural fairness can never be engaged in relation to the process culminating in the Governor proclaiming the alteration of a local government area. That process may, they accept, "destroy, defeat or prejudice a person's rights, interests or legitimate expectations" (Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 576), depending on the particular facts. 240 SSCC has not sought to make a case based upon legitimate expectations, so that can be put to one side. So too, can any case stemming from procedural unfairness in the conduct of an inquiry (see s263(2)), because none was held in relation to this proposal. (An application by SSCC to enlarge the issues by challenging the Report because of the absence of an inquiry, or failure to consider holding one, was refused on the first day of the hearing of the appeal.) 241 During argument, the appellants gave examples of situations that might call forth some aspect of the audi alteram partem component of the obligation to accord procedural fairness: these included, for example, a material finding of misconduct against a Council influencing an adverse recommendation. However, the appellants firmly contend that no such case was run at trial and that the appellants would have conducted themselves differently had such case been pleaded or advanced. 242 The appellants also accept that good administration, if not the dictates of natural justice, called forth a duty in the Commission to consult with affected councils about the detailed issues required to be taken into account by s263(3). Once again, this can be put aside, because the Commission undoubtedly gave SSCC a reasonable opportunity in that regard. SSCC's detailed submission to the Commission addressed the paragraphs of s263(3) in great detail. There was also the opportunity for the Mayor and General Manager to address the commissioners on 14 March 2002. What is more, the issues raised by SSCC are addressed in detail in Chapter 4 as the Commission worked its way through s263(3) paragraph by paragraph. 243 I am inclined to the view that the Commission was bound to give directly affected councils a reasonable opportunity to address these statutory issues. But, whether that was so or not, I agree with the appellants that no breach of any such possible duty resting on the Commission was established in the present case. Indeed, no such case was raised, because (as indicated) SSCC advanced its attack upon the Commission's conduct along different lines. These I have labelled the 'access to submissions' point and the (ambiguous) 'enlarged area notice' point. 244 The appellants joined issue on these two fronts. 245 As to the access to submissions point, the appellants submitted that the content of any duty to accord procedural fairness falling upon the Commission could not possibly go so far as to impose an "open file" policy. To conclude, as Talbot J appears to have done on one reading of his judgment, that an affected council is entitled to see and respond to any and every "adverse" submission sent to the Commission is unsupported by principle or precedent and unworkable in practice. For reasons given below I accept these submissions. 246 As to the enlarged area point, the appellants submitted that the Commission's decision to recommend implementation of the Minister's proposal with an enlarged area did not, in the particular circumstances, call forth an obligation upon the Commission to consult with SSCC about that modification, albeit that the Minister accepted in effect that he had such an obligation when considering whether or not to recommend an alteration as per Chapter 5 of the Report to the Governor. 247 I also accept these submissions, although not some of the detailed grounds upon which they were advanced. Thus, I cannot accept that the limited privative clause in s263(7) modifies the content of the Commission's duty. And, as I shall demonstrate, the conclusion is rooted in the particular facts of the case and the way it was run at trial. 248 On appeal, SSCC said nothing in support of an "open file" obligation. However, it pointed to three categories of particular information about which it should have been given reasonable opportunity to comment to the Commission before it reported: (i) the unfavourable things said about it by CSC or others;

(ii) the arguments advanced by CSC and others in support of the Minister's proposal; (iii) the alteration of the Minister's proposed boundary by the addition of the area between the yellow and blue lines in the Map.

It is most unclear whether the case below was run on any such basis. 249 His Honour's remarks at pars [81] and [83] show that he regarded SSCC as entitled to more than notice of the physical parameters of the CSC proposed alteration. He found that SSCC was also entitled to prior access to any CSC submission advanced in support of the Minister's proposal, including, in particular, CSC submissions supporting that proposal or contending for a large transfer of land to the City of Sydney area. By "prior access" (my words) his Honour was referring to a right of access to, and opportunity to respond to, this material before the Commission reached its concluded position as recommended in the final Report. 250 Paragraph [83] of his Honour's reasons expresses itself as a summary of the SSCC submission. But read with the surrounding paragraphs one infers that it was intended to add certain specificity to the broad generality of par [81]. Nothing really turns on this uncertainty, because pars [84], [85] and [89] are quite explicit in stating SSCC's entitlement to a reasonable opportunity prior to the final Report to see and comment upon "adverse material" that included submissions by third parties (not just CSC). "Adverse material" is not defined, and this in itself is a real difficulty with the primary judge's reasons. Because of the generality with which the conclusions are stated it is not possible to discern or accept the principle applied in concluding that the Report was invalid on procedural fairness grounds. I hope I do no injustice to the learned judge when I conclude that my reading of pars [81], [83]-[84] and [89] indicates that he regarded any submission supportive of the Minister's proposal as "adverse" to SSCC's root and branch opposition to it, with the consequence that SSCC was entitled to have a reasonable opportunity to see and respond to it before the Report could be finalised. 251 An obligation with such content cannot be accepted. It effectively converts the examination and report stage of the process into a full-blown adversarial trial (see Kioa v West (1985) 159 CLR 550 at 628-9). 252 The difficulty for this Court is compounded by the lack of clarity as to SSCC's fall back positions advanced at trial and by its failure to propound an alternative defence of the judgment by way of notice of contention. This said, it is incumbent upon this Court to try to get to the substance of the issues. This can best be done by endeavouring to point to the guiding principles, by disposing of the clearly untenable ambit claims and then concentrating upon some particular issues arising out of the leading "adverse or prejudicial" aspects of the CSC submission of 26 November 2001. 253 The process of examination and report may or may not involve an inquiry (see s263(2)) with attendant statutory formalities (see s263(2B) (reasonable notice of holding of inquiry); (5) (members of public entitled to attend inquiry)). The power to hold a formal inquiry was not engaged in the present case. Beyond this, the statute is silent as to direct guidance. 254 Some general propositions are relevant, accepting (as I do) that the obligation to afford procedural fairness is not a priori excluded at the examination and report stage:

The content of the obligation depends on the circumstances of the case, the nature of the inquiry and the subject-matter being dealt with (adopting the passage from Russell v Duke of Norfolk [1949] 1 All ER 109 at 118 that has been frequently cited by the High Court, for example, National Companies & Securities Commission v News Corporation Limited (1984) 156 CLR 296 at 319-320).

The present focus is upon whether SSCC was given a reasonable opportunity to address issues relevant to its interests ( Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 75 ALJR 889 at 906 [99], Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 76 ALJR 598 at 604-5 [40]). 255 These uncontroversial propositions do little more than set the scene for examining the particular issues presented in this appeal. 256 In an article called "Fairness and the Adversarial Paradigm: An Australian Perspective" [1996] PL 508 M C Harris suggested (at pp522-3, footnotes omitted): The true rule, it is therefore submitted, 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.

I respectfully agree. That article cites a number of Australian authorities supporting the conclusion that fairness in administrative processes is not grafted to " the prism of adversarialism " (p527). 257 Harris acknowledges, however, that Mahon v Air New Zealand [1984] AC 808, and cases which follow it, have recognised that sometimes an investigative tribunal will come to a point of decision or recommendation which is so critical or crucial that it enlivens a duty to notify an affected person before reporting. The author writes (at pp516-7, footnotes omitted): The duty to afford natural justice in the process of investigative tribunals is, at one level, no more than the general duty to provide an opportunity to be heard on the matters which pose a potential risk of adverse findings. However, satisfying this duty may be rendered more complex in the investigative context because of the absence of any general duty to provide particularised allegations of wrongdoing or other comparable behaviour. The question, therefore, can be expressed generally as follows: what is required of an investigative tribunal in terms of providing a person or body potentially affected by its finding with an adequate or appropriate opportunity to address the issues upon which those findings will be based? In Mahon v Air New Zealand Lord Diplock suggested that the proper way of resolving that question is to ask whether the person or body being investigated has: … been left in the dark as to the risk of [adverse] finding[s] being made and thus deprived of any opportunity to adduce additional material of probative value which, had it been placed before the decision-maker, might have deterred him from making [those] finding[s] even though it cannot be predicted that it would inevitably have had that result.

258 The passage quoted is from Mahon at 821. See also National Companies and Securities Commission v News Corporation Ltd at 315. 259 It may not be possible to describe or define with precision the type of conclusion about which a particularly affected party should not be "left in the dark". Obviously much depends on the nature of investigation, the specificity and importance of the "adverse" recommendation, the nature of the interest affected and the likelihood of it being anticipated as a matter to be addressed. 260 Very recently justices of the High Court have endorsed Brennan J's statement that "in the ordinary case … an opportunity should be given to deal with adverse information that is credible, relevant and significant to the decision to be made" (Kioa at 629. See Muin v Refugee Review Tribunal [2002] HCA 30 at [123] (McHugh J), [227] (Kirby J).). The facts of Muin were, however, far removed from the present case, having regard to the specific interest of the applicant, the direct impact of the adverse material and the way in which he was misled by a positive misrepresentation about the true position. 261 In Victims Compensation Fund Corporation v Nguyen (2001) 52 NSWLR 213, I said (at 220 [40]): Procedural fairness does not normally require the decision-maker to disclose his or her thinking processes or proposed conclusions: see Telstra Corporation Ltd v Kendall (1995) 55 FCR 221 at 230 and other authorities cited in M Aronson & B Dyer, Judicial Review of Administrative Action , 2nd ed (1996) Sydney, LBC Information Services, at 420-421. However, "it may be that an adverse conclusion of a type that could not reasonably be expected by an applicant might have to be brought to an applicant's attention, as a matter of fairness": per Doyle CJ in Chiropractors Association of Australia (South Australia) Ltd and Naomi Perry v Workcover Corporation Association of South Australia [1997] SASC 120 at [87], citing Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 590-591.

Handley and Powell JJA agreed. 262 Nguyen (like Muin) was a case involving a single applicant for a statutory entitlement. 263 The present case involves examination of a proposal which (even in its unamended form) was capable of affecting a very broad number of persons and institutions in what may broadly be termed a matter of town planning overlaid with political issues. Such tasks do not usually attract the principles of procedural fairness at all, although they may do so as regards particular interests of particularly affected and identifiable persons (see generally Vanmeld at 94-99, Transport Action Group Against Motorways Inc v Roads & Traffic Authority (1999) 46 NSWLR 598 at 622-5, 648). In Vanmeld, the Chief Justice said (at 96): The fact that the exercise of a particular statutory power has effect on a wide range of persons, even in circumstances where the identity of all such persons is difficult to establish, will often impinge, not on the obligation to accord procedural fairness, but on the content of that obligation.

I agree. 264 The subject-matter of the statutory duty was the examination of the Minister's proposal. The range of potentially affected persons and interests is illustrated by the factors to which particular attention is drawn by s263(3). Obviously they include consideration of the impact of the proposal on affected councils, but additional interest groups are also specifically identified. Why is the interest of a council relevantly different from that of landowners or employees? If it is not, presumably the content of any duty of procedural fairness must accommodate all three potentially affected groups. 265 The Act addresses "notification" issues in a number of ways. To be "made", (s218E), the Minister's proposal must, by implication, be announced. The Commission must attend to the s263(3) matters and this will necessarily involve giving genuine regard to submissions from stakeholders, including councils, on a range of specific matters. I have already indicated my tentative view that consultation with the directly affected councils on the s263(3) factors is obligatory. A formal inquiry may be instigated in appropriate cases. 266 The Minister's proposal will remain the proper focus of the examination and report from start to finish. And the Commission's power to propose its own modifications thereof is limited (see s218F(7)). As to "modifications", see North Sydney Council v Michael Standley & Associates Pty Ltd (1998) 43 NSWLR 468 at 474, Transport Action Group at 618, 647.) 267 What more could reasonably be expected within the confines of a workable statutory scheme? The task will inevitably attract a wide range of support and opposition from the proposal, accompanied by proposed modifications of the Minister's proposed modification (as occurred here, including modifications suggested by SSCC). To posit a right for all "affected" parties to see all of the "adverse" submissions of all other persons putting in submissions would be unworkable, because it would lead to an infinite regression of counter-disputation. This is particularly so in a context where (on one branch of its case) SSCC claims entitlement to see all CSC submissions supporting CSC's "case" in favour of the Minister's proposed boundary. 268 The outcome of the Commission's work is the production of a report which the Minister is free to reject or to recommend for implementation to the Governor with modifications that do not in the Minister's opinion constitute a new proposal (s218F(7)). No one suggests that the Minister would act without further consultation. These matters are the basis for the appellants' submission that the Commission has no duty ever to signal its position on the Minister's proposal in advance of its Report. There is much to be said for that proposition, although I find it unnecessary to rule on the matter. What is clear, however, is that these factors severely qualify or attenuate the content of any pre-reporting notification duty falling upon the Commission. 269 At par [83] (point 2) Talbot J records that SSCC identified the prejudicial or adverse material that remained undisclosed included six documents withheld by the CSC in response to a Freedom of Information Act application. This was an application made by SSCC to CSC on 11 January 2002, described in the affidavit of the Mayor of SSCC as an application "for documents concerning the proposal". CSC responded in a detailed letter of 28 March 2002. That letter identifies 17 documents: "concerning Minister's Proposal to the Local Government Boundaries Commission". The letter continues: There are 6 other documents which fall within this description. Access to those documents is refused on the grounds that the documents are exempt documents, under Schedule 1, Part 1 to the FOI Act, clause 7 (documents affecting business affairs) - 3 documents; clause 9 (internal working documents) - 3 documents; and clause 10 (legal professional privilege) - 3 documents. 270 These six documents could not by any stretch of the imagination represent material withheld by the Commission in breach of its duty of procedural fairness because there is no evidence to suggest that the six documents were ever sent by CSC to the Commission. 271 Beyond this category, there are the other identified and unidentified classes of "submissions", "reports" and "information" referred to in pars [81], [83] and [84] of Talbot J's reasons. The content and level of "adverseness" is not identified in the judgment. 272 Absent any findings to the effect that some particular issue was so damaging and so unforeseeable that SSCC should not have been "left in the dark" about it until publication of the Report, the conclusions about denial of natural justice as regards the access to submissions point cannot stand. A fortiori since they were reached after a trial at which SSCC did not point to any particular part of the Report (leaving aside its case based on the Chapter 2 error), and in which the appellants charted their course accordingly (Coulton v Holcombe (1986) 162 CLR 1). 273 In submissions - but not by notice of contention - SSCC pointed to particular parts of the CSC submission of 26 November 2001 that made specific criticisms of SSCC. One SSCC argument was that certain allegations by Lord Mayor Sartor in a letter of 21 February 2002 about the conduct of Leichhardt and South Sydney Councils acting in such a way as to frustrate the examination process were the source of a mild observation in Chapter 3 of the Commission's Report. That submission is noted but rejected on the basis that (1) I would not draw that inference and (2) the comment is so mild that it does not attract any Mahon-type obligation. The same can be said about the material in the Part 4.1.7 of the Report concerning financial issues. 274 The gazettal and notification to SSCC of the Minister's proposal and the invitation to make submissions, including submissions addressing the s263(3) factors gave SSCC an adequate opportunity to address the adverse consequences of the Minister's proposal. 275 I now address the 'enlarged area notice' point. As indicated, its main thrust at trial was the proposition that the Commission had danced to CSC's tune in considering as its prime focus the large additional area sought by CSC over and above that proposed by the Minister. That case founders with the case based upon issue (i). 276 There was, however, an alternative version of the enlarged area notice point. SSCC argued, in effect, that the content of the Commission's duty to accord procedural fairness was such that SSCC was entitled to advance notice from the Commission if the Commission was about to endorse any advance on the Minister's proposed area. I have emphasised the word "any", because I conclude that this was the only way that SSCC pressed its fall-back argument on the 'enlarged area notice' point. 277 In her principal affidavit, Ms Carnegie explained the reasons why the Commission proposed its own modifications to the Minister's proposal, ie the difference between the dotted yellow line and the red line on the Map. When senior counsel representing the appellants at trial sought to read this evidence, objection was taken by senior counsel for SSCC on the basis that the material did not go to any relevant issue. Senior counsel reiterated that SSCC's submission was that the Commission had failed to examine the Minister's proposal and that, in those circumstances, any explanation from the Commission about what was described as the "back lot" principle (see below) was not relevant. 278 There was no detailed exploration at trial, nor findings made, about the true impact on identified interests of SSCC of the Commission's suggested modifications (ie the difference between the blue and yellow lines). SSCC argues that it was entitled to a reasonable opportunity to respond to such a proposal, but the objection discloses it taking something of an all or nothing approach to the question, ie asserting that merely because the Commission was moving towards some adjustment of the Minister's proposed boundary therefore SSCC was entitled to an opportunity to respond to it. 279 It would appear to have been common ground at trial that there were two reasons why the Commission suggested modification of the Minister's proposal as indicated in the Map by the difference between the yellow dotted line and the red line. Ms Carnegie had sought to explain these matters in pars 54-57 of her principal affidavit, but objection was taken by SSCC on the ground of relevance and these paragraphs were not pressed. Nevertheless, senior counsel for the Commission at trial informed his Honour about the reasons, by reference to exhibit 1 (a map prepared by the Land Information Centre to depict the area described by metes and bounds in Chapter 5). 280 The first reason related to those parts of Darlington included in the University of Sydney to the south of Carillon Avenue and the south east of City Road. The Minister's proposal would have divided the University between two council areas because it only left this portion of land with SSCC. The University's suggestion that its land should remain within a single local government area is specifically mentioned in the Report which states: The University of Sydney's submission supports the boundary alteration proposal and requests that the transfer area be extended further into South Sydney local government area, in order to incorporate property holdings in Darlington and Newtown. The Commission notes the logic of the University's submission and considers an extension of the proposed boundary to take in those properties appropriate for future consideration by the Minister.

There is no evidence that this had a negative impact upon SSCC's general rate income (see s556(1)(l)). Indeed there is evidence to the contrary. Certainly no such case was run at trial. 281 The second reason was the "back lot principle". The Minister's proposal involved lines being drawn down the centre of streets. This would have left two adjoining councils sharing duties with respect to a single street, by some application of the medium filum principle. In the era post-Brodie v Singleton Shire Council (2001) 75 ALJR 992 the consequences are almost too painful to contemplate. Following departmental practice, the Commission redrew the boundary between areas to the "title line" of adjacent properties. This was in accordance with the Commission resolution of 30 November 2001 that: As a general principle it was agreed that it was desirable for boundary lines to run along the rear of building lines rather than cutting through roads, however, this issue may need further research. 282 These two adjustments suggested by the Commission are not said to have gone beyond its powers under s218F(7). There was some debate before us about the extent of the Minister's power to recommend to the Governor otherwise than in accordance with the (modified) proposal endorsed by the Commission. I find it unnecessary to address this in circumstances where there is no evidence that the Minister intends to do so, or that he is unwilling to listen to any objections of SSCC about them and act lawfully in light of them. 283 At the end of the day, I conclude that to the uncertain extent that the judgment below is to be construed as holding that the Report is invalid because of want of procedural fairness by the Commission on this account, that conclusion cannot stand. I do not consider SSCC's interest in relation to each square metre of land in its area is of such a nature as to enliven a duty of prior consultation by the Commission in relation to any advance on the Minister's proposal. The possibility of minor adjustments was always on the cards. There are adjustments and adjustments. SSCC has not shown that the materiality of these two types of adjustment was of such an order as to call forth a duty of prior disclosure by the Commission. 284 It is impossible to see anything that SSCC would have put before the Commission in relation to the loss of an additional part of the non-rateable University land that it did not put in relation to the much larger portion to the north east of City Road that it was going to lose under the Minister's proposal. The "back lot" adjustment appears too sensible to require debate. It is hardly surprising that senior counsel for SSCC at trial considered these matters as having no relevance to the matters genuinely at issue. 285 If I were wrong about this I would in any event decline relief on this basis on discretionary grounds. I cannot see any genuine interest of SSCC as having been prejudiced in this matter, a fortiori having regard to the non-prescriptive nature of the Report. In his letter of 28 March 2002 the Minister specifically invited SSCC's comments in relation to the modifications proposed by the Commission.

Did the Commission fail to have real regard to the section 263(3)(e2) factor? 286 By notice of contention SSCC challenges Talbot J's dismissal of its claim that the Commission failed to have regard to s263(3)(e2) which stipulates that it was required to have regard to: the impact of any relevant proposal on the employment of the staff by the councils of the areas concerned. 287 Chapter 4.7 of the Report addressed this in the following terms EMPLOYMENT IMPACTS Section 263 (3) (e2) of the Act requires the Commission to have regard to "the impact of any relevant proposal on the employment of the staff by the councils of the areas concerned." Material presented to the Commission from all three councils as well as the Federated Municipal and Shire Council Employees Union of Australia New South Wales Division ("the MEU"), discussed this factor at some length. There are several ways in which the boundary alteration proposal may impact on employment. Firstly, the current employment practices of the three councils differ. The MEU is particularly concerned about the impact of the City of Sydney Council's competitive tendering practices on council employees and wishes to enter into an agreement with the City about the extent to which these practices would be used, particularly during the transitional period of change introduced by boundary alterations. Secondly, the profile and character of services provided by each council is different. This means that employees transferred as a result of the implementation of the boundary alteration proposal may need to be retrained, especially where the services those employees provided have been outsourced at the City of Sydney Council. Thirdly, there are significant costs associated with the transfer of a workforce for the councils involved. Not the least of these are leave entitlement costs, including superannuation. The General Manager of the City of Sydney Council, Mr Domm, has pointed out that the City would accept all of its responsibilities for the transfer of relevant staff from Leichhardt Municipal Council and South Sydney City Council. However, he indicated that it would take up to 12 months for the City of Sydney to absorb the impact of the transfers. There are some cultural differences between attitudes of staff in the City of Sydney Council and in South Sydney City Council and Leichhardt Municipal Council noted in the submissions, although these have not been so great as to prevent staff from migrating from one council to another. The boundary alteration proposal is not expected to impact on the industrial relations mechanisms and arrangements that apply to the affected councils. CONCLUSION The boundary alteration proposal, if implemented, may impact on the employment of staff by councils in the affected areas. In considering this the Commission recommends the development of transitional arrangements consistent with the Principles on Transfer of Staff, Assets and Liabilities" outlined by the Minister when announcing the boundary alteration proposal on 15 November 2001. These are: · The transfer of boundary areas should not have any adverse impact on transferred staff. That is, forced redundancy or loss of award rights, contributions or entitlements should not arise as a result of a boundary change. · The proclamation of a major boundary change will include such a provision, usually with a sunset period, to enable new employment conditions to be negotiated (eg: three years). · Councils should identify staff directly affected by a transfer. · The next group are those whose employment involves a significant proportion of their activity in the affected area such as those in waste collection, building management and environmental health. · Once staff for transfer have been identified, appropriate transfer of balance sheet items will be required, such as provision for entitlements and matching assets.

Annexed to the Report was a copy of the Minister's Media Release of 15 November 2001 which spelt out various principles on transfer of staff, assets and liabilities. 288 Talbot J held (at pars [26], [67]): 26. Clause 3(e2) refers to the "impact of any relevant proposal on the employment of the staff by the councils of the areas concerned". Relying on a submission made by the CSC (not disclosed to the council) that it would accept all responsibilities for the transfer of relevant staff, the BC recommended that although the boundary alteration proposal may impact on the employment of staff, transitional arrangements should be developed. According to the council the BC appears to have done no more than adopt principles announced by the Minister for implementing transfer of staff assets and liabilities, without identifying the impact on any particular individuals.

By referring to transitional arrangements in regard to the employment of staff, the BC highlighted its apparent understanding of the effect of the interaction between s 218C and s213 of the LGA which recognise the prospect of provision for or with respect to transfer of staff. Although the council may not have been privy to the propositions advanced by the CSC in this regard, which is a separate head of complaint, nevertheless the report of the BC shows that it gave consideration to these matters. 289 Read with s218C, s213 of the Act provides that a proclamation of the Governor may include such provisions as are necessary or convenient for giving effect to the proclamation, including provisions for a written report with respect to the transfer of staff. 290 SSCC cites recent decisions of this Court discussing the nature of a statutory obligation to "have regard to" specified matters. These indicate the need for "proper, genuine and realistic consideration" (Weal v Bathurst City Council (2000) 111 LGERA 181 at 185, Zhang v Canterbury City Council (2001) 51 NSWLR 589 at 601-2 citing inter alia Khan v Minister for Immigration and Ethnic Affairs (1987) 14 ALD 291 at 292 per Gummow J). 291 SSCC submits that the Report does not address impact, but its principal reason is the non-disclosure of the previously undisclosed CSC submission that is referred to in Chapter 4.7. This, of course, is a non sequitur. 292 More to the point is the submission that the Report does not identify the directly affected staff. This, however is more a quibble about the merits of the process, rather than a demonstration that the Commission failed to have regard to the issue. The Report concentrates upon a suggested process, indicating that "Councils should identify staff directly affected". To me this is understandable, given the time likely to elapse between the Report and implementation of the proposal, and the propriety of giving the existing employer a primary role in what is likely to be a sensitive issue. It is of some relevance to look at SSCC's submission on this issue. It placed understandable emphasis upon the negative impact on existing SSCC staff, 95% of whom had indicated opposition to the proposed changes. Little or nothing is advanced on the "what if" proposition. 293 SSCC further submits that the recommendation in 4.7.1 of the Report ignores or defers the Commission's duty by substituting a recommendation of transitional arrangements to examine and deal with future impacts after the boundary change has been made. It cites Weal at 203. This too is a debate about the merits, not the process. The submission also fails to give due weight to ss213 and 218C. 294 The contention point fails. 295 For these reasons I propose the following orders:

Set aside the declaration and orders made on 31 May 2002 in the Land and Environment Court.

In lieu thereof order that the Application Class 4 be dismissed with costs.

Respondent to pay appellants' costs of the appeal. 296 IPP AJA: As regards the procedural fairness issue described as "the enlarged area point", I agree with Spigelman CJ that this should be approached on the basis that it was not a case advanced by the Respondent at trial. In any event, I agree with the reasons expressed by Mason P on this issue. 297 Otherwise I agree with the reasons of Mason P as well as those of Spigelman CJ in regard to the jurisdictional and remaining procedural fairness issues. **********

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CITATION : MINISTER FOR LOCAL GOVERNMENT & ANOR v SOUTH SYDNEY CITY COUNCIL [2002] NSWCA 288 FILE NUMBER(S) : CA CA 40444/02 HEARING DATE(S) : 18/07/02 19/07/02 JUDGMENT DATE : 30 August 2002

COUNSEL : B Walker SC / N Hutley SC / N Perram (Appellant and Second Appellant) S Rares SC / M B Lee (Respondent) SOLICITORS : I V Knight (Appellant and Second Appellant) Marsdens Law Group (Respondent) CATCHWORDS : JURISDICTION - Land and Environment Court - whether issue of procedural fairness within jurisdiction - whether breach of the Act - s672 Local Government Act 1993 - whether within ancillary jurisdiction - s16(1A) Land and Environment Court Act 1979 - ADMINISTRATIVE LAW - Local Government Boundaries Commission - whether report invalid for consideration of wrong proposal - whether reasons of trial judge adequate - whether critical evidence disregarded - ADMINISTRATIVE LAW - delegation of function- whether consultants could be engaged to deal with submissions - ADMINISTRATIVE LAW - procedural fairnes - Local Government Boundaries Commission - content of obligation where no inquiry held - whether obligation breached - whether obliged to notify affected Council of modifications to proposa - whether obliged to give affected Council access to adverse submissions - ADMINISTRATIVE LAW - relevant considerations - whether statutory factor given "proper, genuine and realistic consideration" - s263(3)(e2) Local Government Act 1993 LEGISLATION CITED : Land and Environment Court Act 1979 Local Government Act 1993 Abebe v The Commonwealth (1999) 197 CLR 510 Advance Bank Australia Ltd v FAI Insurances Ltd (1987) 9 NSWLR 464 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Annetts v McCann (1990) 170 CLR 596 Attorney-General (NSW) v Quin (1990) 170 CLR 1 Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 Brettingham-Moore v Municipality of St Leonards (1969) 121 CLR 509 Brodie v Singleton Shire Council (2001) 75 ALJR 992 Calvin v Carr [1980] AC 574 Chiropractors Association of Australia (South Australia) Ltd and Naomi Perry v Workcover Corporation Association of South Australia [1997] SASC 120 Cooper v Wandsworth Board of Works (1863) 14 CB(NS) 180, 143 ER 414 Coulton v Holcombe (1986) 162 CLR 1 Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 FAI Insurance Ltd v Winneke (1982) 151 CLR 342 Forbes v New South Wales Trotting Club Ltd (1979) 143 CLR 242 Haoucher v Minister for Immigration and Ethnic Affairs (1990) 169 CLR 648 Hill v Green (1999) 48 NSWLR 161 Hill v King (1993) 31 NSWLR 654 Hot Holdings Pty Ltd v Creasy (1996) 185 CLR 149 Johns v Australian Securities Commission (1993) 178 CLR 408 Khan v Minister for Immigration and Ethnic Affairs (1987) 14 ALD 291 Kioa v West (1985) 159 CLR 550 Mahon v Air New Zealand [1984] AC 808 Mifsud v Campbell (1991) 21 NSWLR 725 Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 CASES CITED: Minister for Immigration v Bhardwaj (2002) 76 ALJR 598 Muin v Refugee Review Tribunal [2002] HCA 30 National Companies & Securities Commission v News Corporation Limited (1984) 156 CLR 296 North Sydney Council v Michael Standley & Associates Pty Ltd (1998) 43 NSWLR 468 NTL Australia Pty Ltd v Minister for Land and Water Conservation (2001) 112 LGERA 403 R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 R v Panel on Take-overs and Mergers; Ex parte Datafin [1987] QB 815 Re Minister for Immigration and Multicultural Affairs; Ex parte Epeabaka (2001) 206 CLR 128 Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57 Re Refugee Tribunal; Ex parte Aala (2000) 204 CLR 82 Re: Minister for Immigration and Multicultural Affairs; Ex parte "A" [2001] 185 ALR 489 Russell v Duke of Norfolk [1949] 1 All ER 109 Scharer v State of New South Wales (2001) 53 NSWLR 299 South Australia v O'Shea (1987) 163 CLR 378 South Sydney City Council v Minister for Local Government & Anor [2002] NSWLEC 74 South Sydney Council v Local Government Boundaries Commission [2001] NSWLEC 280 State of Victoria v The Master Builders' Association of Victoria [1995] 2 VR 121 Stead v State Government Insurance Commission (1986) 161 CLR 141 Telstra Corporation Ltd v Kendall (1995) 55 FCR 221 Testro Brothers Pty Ltd v Tait (1963) 109 CLR 353 Tickner v Chapman (1995) 57 FCR 451 Transport Action Group Against Motorways Inc v Roads & Traffic Authority (1999) 46 NSWLR 598 Vanmeld Pty Ltd v Fairfield City Council (1999) 46 NSWLR 78 Victims Compensation Fund Corporation v Nguyen (2001) 52 NSWLR 213 Warringah Council v Edmondson [2001] NSWCA 1 Weal v Bathurst City Council (2000) 111 LGERA 181 Zhang v Canterbury City Council (2001) 51 NSWLR 589 DECISION : Appeal allowed

The Land and Environment Court has jurisdiction to decide an issue of procedural fairness with regard to a report of the Boundaries Commission because a failure to accord procedural fairness will result in the nullification of the report. As the report is a precondition to the Governor's power to proclaim a boundary alteration pursuant to s218B, implementation of a proposal subsequent to an invalid report would constitute a breach of the Act within the meaning of s672 of the Local Government Act 1993 . The Court's ancillary jurisdiction pursuant to s16(1A) of the Land and Environment Court Act 1979 was also enlivened because the procedural fairness issue was 'incidental, accessory or auxiliary' to the question of the validity of the Report. Forbes v New South Wales Trotting Club Ltd (1979) 143 CLR 242; Minister for Immigration v Bhardwaj (2002) 76 ALJR 598 applied. Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; South Australia v O'Shea (1987) 163 CLR 378 referred to. Warringah Council v Edmondson [2001] NSWCA 1 distinguished.

The obligation to afford procedural fairness is a common law duty that attaches to the exercise of a statutory power. A failure to accord procedural fairness may therefore constitute a contravention of, or failure to comply with, an Act. Annetts v McCann (1990) 170 CLR 596 applied. Vanmeld Pty Ltd v Fairfield City Council (1999) 46 NSWLR 78; Abebe v The Commonwealth (1999) 197 CLR 510; Re Refugee Tribunal; Ex parte Aala (2000) 204 CLR 82; Re Minister for Immigration and Multicultural Affairs; Ex parte Epeabaka (2001) 206 CLR 128; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57; Muin v Refugee Review Tribunal [2002] HCA 30 referred to. Warringah Council v Edmondson [2001] NSWCA 1 doubted.

The obligation on the Boundaries Commission to afford procedural fairness did not extend to providing SSCC with access to any submission adverse to its interests. Such a requirement would be unworkable. None of the findings of the Commission was so 'personally' adverse to SSCC as to create a duty of disclosure. The SSCC received adequate procedural fairness by being given the opportunity to make a submission addressing the factors in s263(3) of the Local Government Act 1993 . Mahon v Air New Zealand [1984] AC 808; Victims Compensation Fund Corporation v Nguyen (2001) 52 NSWLR 213 applied. Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; Kioa v West (1985) 159 CLR 550; Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 75 ALJR 889; Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 76 ALJR 598; Muin v Refugee Review Tribunal [2002] HCA 30; North Sydney Council v Michael Standley & Associates Pty Ltd (1998) 43 NSWLR 468; Vanmeld Pty Ltd v Fairfield City Council (1999) 46 NSWLR 78 referred to.

(v) the Minister had denied or was threatening to deny procedural fairness to the Council as regards implementation of the Report. 55 Talbot J accepted arguments (i)-(iii), rejected (iv) and found it unnecessary to deal with (v). He declared that the Commission had not examined and reported on the matter referred to it by the Minister with respect to the boundaries of the SSCC's area in accordance with the provisions of the Act (see South Sydney City Council v Minister for Local Government & Anor [2002] NSWLEC 74). 56 In his reasons given on 14 May 2002 Talbot J reserved the question of costs. Formal orders were made on 31 May 2002 and they include an order "by consent" that the respondents in the Land and Environment Court (ie the appellants in this Court) pay the applicant's costs of the proceedings excluding the costs of its notice of motion returnable on 4 June 2002. I infer that this consent involved no more than recognition of the inevitable in light of his Honour's reasons on the substantive issues. 57 The appellants dispute the conclusions on issues (i)-(iii) as well as raising a challenge based on failure to address arguments and absence of necessary findings of fact. They also challenge the Land and Environment Court's jurisdiction to have addressed the procedural fairness claims. The respondent supports the primary judge's reasoning and raises matters by notice of contention, including an argument based on s263(3)(e2) (part of (iv) above). 58 There is no cross appeal and, for that reason alone, it is unnecessary to consider the claim of procedural unfairness as regards the Minister's dealings with the Commission's Report. Many months have now elapsed since the Report was delivered to the Minister and there is no suggestion that he has refused to entertain representations from SSCC about the subject matter. Of course, there is no threat to recommend implementation to the Governor while Talbot J's declaration stands. 59 The two appellants made common cause. In light of the statement in R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 at 35-6 it is possible that the Commission should have adopted a more passive litigious stance as regards some of the issues ventilated in the appeal. Since, however the matter was not raised by the Court during the hearing I do not wish to be seen as making a criticism. I reiterate that the appellants made common cause and shared common counsel and solicitors.

(2003) 123 LGERA 367

(2001) 112 LGERA 403

(2000) 111 LGERA 181

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