Mosman Municipal Council v Minister for Local Government; North Sydney Council v Minister for Local Government

Court of Appeal (NSW)|2017-10-12|Before: Basten JA, Macfarlan JA, Moore J

A Galasso SC/J Lazarus/D Robertson (North Sydney Council) N C Hutley SC/J J Hutton/T E O'Brien (Minister for Local Government)

Solicitors: Pikes & Verekers Lawyers (Mosman Municipal Council) Matthews Folbigg Lawyers (North Sydney Council) Crown Solicitors Office (Minister for Local Government) File Number(s): 2016/289039; 2016/305665 Decision under appeal Court or tribunal: Land and Environment Court Jurisdiction: Class 4 Citation: [2016] NSWLEC 124 Date of Decision: 20 September 2016 Before: Moore J File Number(s): 2016/155301; 2016/158919

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment

BASTEN JA: On 31 July 2017 the Court handed down judgment in five appeals challenging determinations of several delegates of the Minister with respect to proposals to amalgamate certain local government areas. Three of the appellant councils were successful; two, namely Mosman Municipal Council and North Sydney Council, were, by majority, unsuccessful.
On 10 August 2017 (North Sydney Council) and 14 August 2017 (Mosman Municipal Council), the unsuccessful appellants filed notices of motion seeking to reopen the judgments and orders given in their appeals on 31 July. The basis for the motions was the alleged failure of the Court to address two grounds of appeal on which they said they were entitled to succeed, accepting that they had been unsuccessful on all other grounds. The issue, briefly stated, was that in each case the trial judge had identified error in the determination made by the delegate, but had failed to provide the appropriate relief. The error resulted in the delegate failing to carry out his statutory function, so that both his report and the consequent recommendation of the Boundaries Commission based on his report should have been set aside.
The motions seek to have the respective appeals upheld on that basis. However, there is a practical aspect to the present applications which needs to be acknowledged. It arises from the fact that the Minister publicly announced that the proposed amalgamations (including that involving the present applicants) were to be abandoned. As a result, the judgment and orders made in this Court had limited practical utility for the appellant Councils. Indeed, the only remaining practical consequence of the Court's orders is to be found in the allocation of the costs of the proceedings, particularly in this Court. That gives rise to a significant issue, namely whether, assuming that the Court did overlook a ground upon which the applicants were entitled to succeed, the Court should now reopen its decision, not in order to provide utile substantive relief, but in order to determine the appropriate disposition of costs as between two bodies politic, each acting in the public interest.
I am satisfied that the basis on which the re-opening is sought is made good. Unattractive as it may be to devote further public resources to proceedings which have now, through a change in political direction, achieved their purpose, the error being that of the Court should be rectified. The consequence in relation to the costs of the appeals should be addressed.

Adequacy of relief granted by trial judge

The substantive order made by the trial judge in respect of each appeal (each being directed to the same report) was that the Court: "(1) Declares that the report furnished by the Delegate to the Boundaries Commission is not a valid report in satisfaction of the requirements of s 218F(6)(a) of the [Local Government Act]".
The Councils challenged this order as involving limited relief, which revealed that "the primary judge acted on a misunderstanding of the law, by treating s 263(3) [or particularly subs (3)(e5)] as if it applied only to the delegate's function of reporting on the [North Sydney/Willoughby/Mosman] proposal, whereas this breach applied to the whole process of examination and report, by virtue of s 218F(2) and caused that whole process to miscarry."
The second limb to the challenge was directed to the failure of the primary judge to require that the proposal be reconsidered afresh by a different delegate.
The form of the orders made by the primary judge do not readily reveal their underlying purpose. In order to explain the outcome it is necessary to have regard to two provisions in the Local Government Act 1993 (NSW) and a passage in the reasons given by the primary judge, albeit in disposing of a different appeal which gave rise to the same issue, namely the Strathfield Council appeal.
The relevant statutory provisions commence with the requirement that the Minister who made the proposal must refer it for examination and report. The obligation imposed on the Minister is set out in s 218F in the following terms: 218F Referral of proposal for examination and report (1) On making or receiving a proposal, the Minister must refer it for examination and report to the Boundaries Commission or to the Departmental Chief Executive. (2) Sections 263, 264 and 265 apply to the examination of a proposal by the Departmental Chief Executive in the same way as they apply to the examination of a proposal by the Boundaries Commission. … (6) If a proposal that is not supported by one or more of the councils affected by it, or that is an amalgamation proposal, has been referred to the Departmental Chief Executive under subsection (1): (a) the Departmental Chief Executive must furnish the Departmental Chief Executive's report to the Boundaries Commission for review and comment, and (b) the Boundaries Commission must review the report and send its comments to the Minister. (7) The Minister may recommend to the Governor that the proposal be implemented: (a) with such modifications as arise out of: (i) the Boundaries Commission's report, or (ii) the Departmental Chief Executive's report (and, if applicable, the Boundaries Commission's comments on that report), and (b) with such other modifications as the Minister determines, but may not do so if of the opinion that the modifications constitute a new proposal.
The structure of s 218F is to impose a series of sequential steps which must be taken before the Minister may recommend implementation of the proposal to the Governor. Relevantly for present purposes, these include: 1. referral by the Minister to the Departmental Chief Executive; 2. examination of the proposal by the Departmental Chief Executive; 3. preparation by the Departmental Chief Executive of a report; 4. referral of the Departmental Chief Executive's report to the Boundaries Commission; 5. review of the report and preparation of comment by the Boundaries Commission; 6. despatch of the comments to the Minister. Each of these steps was followed in the present case. There was an additional step, namely referral of each proposal by the Departmental Chief Executive to a delegate to carry out the functions of the Departmental Chief Executive.
The second element of the statutory scheme was to be found in the identification of the functions of the Boundaries Commission (and, by virtue of s 218F(2), the delegate) with respect to the examination and report on the proposal. Those requirements are set out in s 263, which relevantly provides as follows: 263 Functions of the Boundaries Commission (1) The Boundaries Commission is required to examine and report on any matter with respect to the boundaries of areas and the areas of operation of county councils which may be referred to it by the Minister. … (2A) Despite subsection (2), the Boundaries Commission must hold an inquiry for the purpose of exercising its functions in relation to a proposal for the amalgamation of two or more areas that has been referred to it in accordance with section 218F. … (3) When considering any matter referred to it that relates to the boundaries of areas or the areas of operations of county councils, the Boundaries Commission is required to have regard to the following factors: (a) the financial advantages or disadvantages (including the economies or diseconomies of scale) of any relevant proposal to the residents and ratepayers of the areas concerned, … (e5) in the case of a proposal for the amalgamation of two or more areas, the need to ensure that the opinions of each of the diverse communities of the resulting area or areas are effectively represented, …
Each of the "factors" set out in s 263(3) was accepted as being a mandatory consideration. Failure to comply with the obligation to consider a mandatory factor meant that the resultant report did not constitute a report capable of referral to the Boundaries Commission for comment. The declaration made by the primary judge was designed to reflect that consequence.
Finally, it is necessary to refer to a passage in the reasons of the primary judge dealing expressly with the Strathfield appeal, in which an order in similar terms was made: [1] "The declaration that will be made in the formal orders at the conclusion of this judgment in the Strathfield proceedings will have the effect of leaving the Delegate in the position where he has not fulfilled the task delegated to him but he has not been discharged from so doing."
The judge later stated: [2] "I am satisfied in the circumstances of these proceedings, involving significant issues of public policy and the necessary administrative processes underpinning them, that it will be sufficient to make bare declarations in the three sets of proceedings where I have found defects warranting such an outcome."
Then noting that none of the "general complaints" concerning the process had been made out, but noting that there had been failure to address one of the mandatory requirements, the judge stated: "[516] On the other hand, I am satisfied that the Delegate's exercise of his functions with respect to any of the other elements of s 263(3) did not miscarry. [517] These findings mean that the Delegate has not yet completed the task delegated to him by the Acting Chief Executive."
Although it was true to say that the delegate had not completed "the task" delegated to him, it was misleading to state that the "exercise of his functions with respect to any of the other elements of s 263(3) did not miscarry." Yet it appears to have been the last statement which was instrumental in the formulation of the order. The difficulty is that the delegate was not required to exercise a number of "functions" in considering each of the mandatory "factors"; rather, he exercised a single function of examination and report of the matter referred to him and, in doing so, was required to have regard to the identified factors.
To treat the function as partly completed, and therefore still capable of completion, without revisiting the whole exercise, was to misunderstand the nature of the function. The function of examination and report required a consideration of potentially conflicting factors, requiring them to be weighed and their conflicting tendencies resolved. Thus, whilst financial considerations might favour amalgamation into larger local government areas, the relationship between elected representatives and ratepayers might be diminished by amalgamation and thus pull in a different direction.
An analogy, albeit an imprecise analogy, may be found in sentencing principles. Thus, if the Court of Criminal Appeal determines that a sentencing judge has failed to take into account some material consideration, it must carry out the sentencing exercise afresh, having regard to all relevant factors. [3]
The same error in approach appears to have led the primary judge to reject the suggestion that the function should be carried out by another delegate. Yet it is precisely where a fact finding exercise has miscarried and must be repeated that a reasonable apprehension of pre-judgment may arise. In other words, an officer who has come to one decision on an inadequate basis might be thought to favour the same outcome, regardless of the results of reconsideration.
It follows that the Councils' challenges to the form and limitations of the orders made by the primary judge should have been accepted by this Court on the appeal.

Judgment in this Court

The following passages in my judgment accepted, in principle, the reasoning set out above. First, the following observations were made in setting out the background to the appeals and, in particular, certain proposed amendments. One aspect of the amendments sought relief in the nature of certiorari, quashing or setting aside the reports of the delegates and the comments of the Boundaries Commission. After referring to the circumstances in which such reports could be set aside, I said: "[51] By parity of reasoning, in the present case, if the appellants are correct in submitting that a delegate erred in law in some material respect, which either appears 'on the face of the record' or constitutes jurisdictional error, they are entitled to have the delegate's report set aside. There will, in that circumstance, be a further question as to the terms of the order and whether, as the appellants submitted, the function of 'examination and report' is a single function, not appropriately dissected into separate parts. The alternative view is that only the report can properly be set aside, even though the vitiating error occurred in the course of conducting the examination."
Secondly, in dealing with the background to the Mosman and North Sydney appeals, I set out the error identified by the primary judge, the orders made and referred to the subsequent preparation by the same delegate of a "revised report" which had been furnished to the Boundaries Commission for comment. My reasons continued: "[135] These events, subsequent to the judgment now under appeal, are relevant for two reasons. The first is that, if the grounds of appeal (or any one of them) were to succeed, there would be an issue as to the current status of both the original report and the 'revised report' prepared by the delegate. Secondly, because the Chief Executive and the delegate (and presumably the Boundaries Commission) concluded that all that was required as a result of the order made by the Land and Environment Court was for the delegate to complete his task by having regard to that factor which had not been the subject of proper consideration, the Councils contended that the order made by the Land and Environment Court was defective. That contention was raised separately from the further challenges to the original report which had been rejected by the Land and Environment Court. [136] The separate challenge to the nature of the relief in the Land and Environment Court raises a question as to whether the relief granted was inadequate, or the action taken thereafter was inadequate, to cure the error identified in the declaration. The former matter might be addressed in this appeal, but the latter was a matter to be determined in the separate proceedings now pending in the Land and Environment Court. [137] There was discussion in the course of the hearing of the appeals as to whether, if the Councils were successful, the declaratory relief sought, together with an order restraining the Minister from recommending the implementation of the proposals, would be adequate. In particular, it was noted that no order was sought setting aside or quashing either the report of the delegate, or the comments of the Boundaries Commission. … [140] In the terms in which it was presented, the Minister's objection to these two further proposed orders was sound on both bases. However, there was a separate question as to whether acceptance of a ground alleging error in the first examination and report may nevertheless require relief quashing the second report because that report had superseded the earlier invalid report. Put negatively, any relief directed to the first report would arguably lack utility."
Although I identified grounds 9 and 10 at [142] I did not return to accept or reject them specifically, having found that the function of examination and report had miscarried for other reasons. In formulating orders, my main concern was to identify whether the challenged report had in some way been superseded by the revised report so that it was the revised report to which relief should be directed. Nothing turns on that aspect of my reasoning for present purposes.
Had I not identified other and arguably more fundamental errors, I would in any event have allowed the appeal and granted relevant consequential relief required by grounds 9 and 10.

Order for costs

As noted at the outset, except with respect to the costs of the appeal, all these matters have been overtaken by subsequent political events; only the question of costs remains outstanding.
Had the appellant Councils succeeded only on the basis of grounds 9 and 10, and failed on all other grounds, they would not necessarily have obtained a costs order on the basis of their ultimate success. That success would need to be weighed against the circumstances in which the Minister had been put to considerable expense in resisting other far broader grounds which covered the bulk of the hearing of the two appeals. An appropriate order, based on that outcome, would have been that each party bear her and its own costs of the appeals.
MACFARLAN JA AND SACKVILLE AJA: This Court delivered judgment on 31 July 2017 in five appeals by councils constituted under the Local Government Act 1993 (NSW) (LG Act). [4] By a majority decision, [5] the Court dismissed the appeals by North Sydney Council (North Sydney) and Mosman Municipal Council (Mosman).
North Sydney and Mosman (together the Councils) have each filed a notice of motion pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 36.17 or alternatively r 36.16(3A), seeking to set aside the Court's orders dismissing the Councils' appeals and requiring the Councils to pay the respondents' costs of the appeal. In lieu of those orders the Councils seek the following orders in each appeal: "(a) Allow the appeal. (b) Set aside the report of the delegate furnished to the Boundaries Commission on or about 30 September 2016. (c) Set aside the comments of the Boundaries Commission sent to the Minister on or about 5 October 2016. (d) Direct that any further examination of the proposal be undertaken by a person other than the respondent delegate. (e) Order that the Minister pay the Council's costs of the hearing before the Land and Environment Court. [6] (f) Order that the Minister pay the appellant's costs of this Court."
The first respondent (the Minister) opposes the applications by the Councils and has filed written submissions in response to the Councils' written submissions.
UCPR r 36.16(1) provides that the Court may set aside or vary a judgment or order if the notice of motion for the setting aside or variation is filed before entry of the judgment or order. If, however, the notice of motion is filed within fourteen days after the judgment order is entered, the Court may determine the matter and, if appropriate, set aside the judgment or order under subrule (1) as if the judgment or order had not been entered (r 36.16(3A)). The Councils' notices of motion were filed within the time allowed.
UCPR r 36.17 is the slip rule. It relevantly provides that if there is an accidental slip or omission in a judgment or order the Court, on the application of any party, may at any time correct the mistake or error.
The basis for the Councils' applications is that the majority of the Court failed to address two grounds in each of their notices of appeal. The relevant grounds in Mosman's Further Amended Notice of Appeal are as follows: "9 Having found that there had been a breach of s.263(3)(e5) of the [Local Government Act 1993 (NSW) (LG Act) [7] ], the primary judge erred in the exercise of his discretion by limiting relief to a declaration that the Delegate's report was not a report within the meaning of s.218F(6)(a) of the LG Act. In particular, the primary judge acted on a misunderstanding of the law, by treating s.263(3)(e5) as if it applied only to the Delegate's function of reporting on the North Sydney/Willoughby/Mosman Proposal, whereas this breach applied to the whole process of examination and report, by virtue of s.218F(2), and caused that whole process to miscarry (Judgment, [505]-[508]). 10 The primary judge erred in failing to find that the Delegate should be precluded from taking any further step as part of the examination and report on the North Sydney/Willoughby/Mosman Proposal, in light of his having taken an active role in the proceedings below in opposing the relief sought by the appellant, in breach of the Hardiman principle." Virtually identical grounds (with different numbering) were contained in North Sydney's Second Further Amended Notice of Appeal. The Councils' submissions refer to Ground 9 as the "Relief Ground" and Ground 10 as the "Hardiman Ground".
The "Hardiman principle" is derived from The Queen v Australian Broadcasting Tribunal; Ex parte Hardiman (Ex parte Hardiman). [8] In that case the High Court criticised the Tribunal for taking the "unusual course of contesting the prosecutors' case for relief" and observed that: [9] "If a tribunal becomes a protagonist in this Court there is the risk that by so doing it endangers the impartiality which it is expected to maintain in subsequent proceedings which take place if and when relief is granted."

Principles

The Minister expressly agreed with the following statement of principle in the Councils' written submissions: "10. …The principles relevant to [the exercise of the power to reopen] were discussed Smith v New South Wales Bar Association (1992) 176 CLR 256 at 265-267, and may be summarised as follows: (a) the power is discretionary, and is exercised having regard to the public interest in maintaining the finality of litigation; (b) whether there is a relevant avenue of appeal; (c) the importance of the matter calling for review; (d) if the application involves an application to adduce further evidence the reasons the evidence was not previously tendered; and (e) embarrassment or prejudice to the other party. 11. The Court may re-open its judgment if it has proceeded on a misapprehension as to the facts or the law, where there is some matter calling for review or where the interests of justice so require: De L v Director-General, NSW Department of Community Services (No.2) (1997) 190 CLR 207 at 215 (and the cases there cited). The jurisdiction to recall a judgment or orders extends beyond cases where a party is not given an opportunity to be heard on an issue held to be determinative: Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd (No.2) (2013) 87 ALJR 1159 at [15]. 12. A paradigm example of where the power should be exercised is where the Court does not determine a centrally relevant issue, or fails to consider submissions which, if accepted, could materially affect the outcome of the case..." The Councils' reply submissions accepted a qualification to this statement proposed by the Minister, namely that there is a heavy burden on a party seeking to reopen orders pursuant to UCPR r 36.16. This Court has recently emphasised that it is well established that the jurisdiction to set aside orders should be exercised sparingly and with caution, having due regard to the importance of the finality of litigation. [10]

Submissions on reopening

The Councils submitted that the failure of the majority to address in the Principal Judgment either the Relief Ground or the Hardiman Ground made this a "clear case" for reopening the orders in the interests of justice. The Councils recognised that if their applications succeeded, "the subject matter of the proceedings" would not be affected. This followed from the actions of the Minister who notified the parties on 28 July 2017, shortly before the Principal Judgment was delivered, that she had decided not to recommend that the merger proposal affecting the Councils should proceed. [11] Nonetheless, the Councils contended that this Court should reopen the orders made in the Principal Judgment because it would be unjust to require the Councils to pay the Minister's costs if success on the Relief Ground or the Hardiman Ground would have led the Court to make different costs orders. The Councils also submitted that the outcome of their applications to reopen the Court's orders might affect the incidence of costs in further proceedings between the parties in the Land and Environment Court.
The Minister submitted that the discretionary power to reopen should not be exercised in the present case because the grounds which the Councils wish to agitate have been rendered moot by the Minister's decision not to proceed with the merger. Since the Minister had decided not to proceed there was no utility in ordering that any further examination of the North Sydney Merger Proposal [12] should be undertaken by a different Delegate or in expanding the relief to extend to the whole of the examination process. The Minister further submitted that the Court should be reluctant to try an action only for the purpose of determining an issue as to costs.

Should the orders be reopened?

The Relief Ground arose out of the primary Judge's finding that the Delegate failed to comply with s 263(3)(e5) of the LG Act in that he did not have regard to "the need to ensure that the opinions of each of the diverse communities of the [amalgamated area or areas] are effectively represented". [13] By reason of this finding the primary Judge made a declaration in each appeal that: [14] "the report furnished by the Delegate to the Boundaries Commission is not a valid report in satisfaction of the requirements of s 218F(6)(a) of the [LG] Act".
The Minister did not file a cross-appeal or otherwise challenge the primary Judge's finding that the Delegate did not comply with s 263(3)(e5) of the LG Act. Nor did the Minister seek to disturb the declaratory relief granted by his Honour. However, the Relief Ground in the Councils' notices of appeal (as amended) contended that the primary Judge erred in not granting broader relief on the basis of the Delegate's failure to comply with s 263(3)(e5) of the LG Act. This contention was independent of the other grounds in the notices of appeal.
The Councils are correct to point out that the majority did not address either the Relief Ground or the Hardiman Ground. Even so, there is some force in the Minister's submission that the orders should not be reopened.
The Councils' main arguments on the appeals were that they had been denied procedural fairness by the Minister's refusal to grant access to the so-called KPMG Documents and that the Delegate contravened s 263(3)(a) of the LG Act by failing to have regard to the financial advantages and disadvantages of the North Sydney Merger Proposal. [15] Contrary to the Councils' submissions in support of their applications to reopen the orders, the Relief Ground and the Hardiman Ground were not "centrally relevant issue[s]" on the appeals. The Relief Ground played a minor role in the argument while the submissions on the Hardiman Ground proceeded for the most part on the assumption that the Councils' principal arguments would succeed. Moreover, as the Councils accepted, the only purpose of the reopening applications is to enable them to vary the costs orders made by the Court.
Against these considerations is the fact that the Councils advanced arguments in the appeals in support of the Relief Ground and the Hardiman Ground. They are not responsible for the Court's failure to address these arguments in the Principal Judgment. In these circumstances, notwithstanding that the Councils' arguments are now relevant only to the question of costs, it is appropriate that the Court address the issues that were overlooked in the Principal Judgment.

The Relief Ground

The primary Judge considered that it was sufficient to grant declaratory relief to the Councils in respect of the Delegate's failure to comply with s 263(3)(e5) of the LG Act. [16] His Honour said that it was appropriate to assume that the Minister would have proper regard to the consequences of the declaration and that, accordingly, a restraining order was not necessary. [17]
The Councils submitted that the primary Judge overlooked their contention that a declaration should be made that the entire function of examining and reporting on the North Sydney Merger Proposal had miscarried. They argued on the appeals that the primary Judge erred by not making a declaration to this effect. The Councils also submitted that the function of "examination and report" entrusted by ss 218F(1) and 263(1) of the LG Act to the Chief Executive (or a Delegate) is "indivisible" and that therefore the Delegate's failure to prepare a report that fully complied with the LG Act rendered invalid the entire process of examination of and reporting on the North Sydney Merger Proposal.
The Councils' submissions, if accepted, would require the Delegate (or another decision-maker) to conduct the whole examination afresh regardless of the nature of the defect in the report. For example, the Delegate would be required to hold a fresh public inquiry [18] even if the defect is unrelated to any issue that had been raised at the public inquiry or indeed could reasonably be expected to be raised at such an inquiry. To determine whether this submission should be accepted it is necessary to refer to the legislation governing the proceedings in the Land and Environment Court (L&E Court).
The Councils brought the proceedings in the L&E Court pursuant to ss 673 and 674 of the LG Act. [19] Section 673(1) provides that a council (among others) may bring proceedings in the L&E Court for an order to remedy or restrain a breach of the LG Act. Section 674(1) provides that any person may bring proceedings in the L&E Court for an order to remedy or restrain a breach of the LG Act.
Section 676 deals with the functions of the L&E Court and relevantly provides as follows: "(1) If the Land and Environment Court is satisfied that a breach of this Act has been committed or that a breach of this Act will, unless restrained by order of the Court, be committed, it may make such order as it thinks fit to remedy or restrain the breach. … (3) The functions of the Court under this section are in addition to and not in derogation of any other functions of the Court." (Emphasis added.)
Brief reference was made in oral submissions in the L&E Court to s 676 of the LG Act, but little attention seems to have been paid to the nature and scope of the powers conferred by that provision. The Councils' written submissions to this Court do not refer to s 676 of the LG Act. It is, however, important to appreciate that s 676(1) empowers the L&E Court, if satisfied that a breach of the LG Act has been committed, to make such order as it thinks fit "to remedy or restrain the breach".
The primary Judge found that there were two "fundamental defects" in the Delegate's examination and reporting process in relation to the mandatory consideration specified in s 263(3)(e5) of the LG Act. [20] His Honour reasoned as follows: [21] "[441] The first defect is that, although [the Delegate] sets out an analysis of the ethno-cultural heritage derivations of each of the three local government areas on the basis of data derived from Australian Bureau of Statistics census figures, there is no analysis undertaken from any sources that the various ethno-cultural heritage derivations identified from those figures self-identify in any fashion as a community rather than simply being a leavening element, amongst others that might be present, in the demographic mix of each local government area. [442] Second, and more importantly, the Delegate has not set out any analysis of what might be a community and how it might be appropriate to establish some degree of cohesion (whether of a social or geographic or some other nature) in order to establish that there is such a community falling within the concept of "diverse communities" set by the statutory provision. [443] Viewed correctly on this basis, it is not merely the position that the Delegate has failed to address this relevant mandatory requirement in an adequate fashion, it is that the Delegate has failed to undertake any constructive examination of the relevant mandatory matter at all."
When considering the relief that should be granted in respect of the Delegate's contravention of s 263(3)(e5) of the LG Act, the primary Judge noted that the Councils' position was that a bare declaration would not be enough and that the Minister should be restrained from proceeding further with the amalgamation proposal. [22] His Honour rejected this contention on the ground that the Minister would have proper regard to the declarations made and that therefore a restraining order was unnecessary. [23]
It is true, as the Councils submitted in this Court, that they invited the primary Judge to set aside the examination and report of the Delegate. [24] However the invitation was extended in the context of the Councils' contention that the process of examination and report involved multiple breaches of the LG Act. It is not apparent, at least in the passages cited in the Councils' submissions to this Court, that his Honour was asked to make such an order on the assumption that the only contravention of the LG Act concerned the Delegate's failure to have regard to s 263(3)(e5).
In any event, there are difficulties with the Councils' submission that the functions of examination and report are "indivisible". One difficulty is that the LG Act itself distinguishes between the two functions. Section 281F(1) requires the Minister to refer a proposal for examination and report (relevantly) to the Chief Executive. Section 263(1) requires the Chief Executive to examine and report on the relevant matters. Section 218F(2) states (inter alia) that s 264, which deals with representation of interested parties in proceedings before the Chief Executive, applies to the examination of a proposal.
A second difficulty is created by the terms of s 676(1) of the LG Act. What is needed or appropriate to remedy or restrain a particular breach (or breaches) of the LG Act will depend on the circumstances. These include the nature of the breach, whether the breach is remediable by the decision-maker and, if so, the measures that are appropriate to ensure that the breach is remedied.
Although the LG Act distinguishes between the functions of examination and report, the two are clearly related. The contents of a report by a Delegate may reveal breaches of the LG Act that can be remedied only by orders requiring the process of examination and report to be undertaken afresh. However, not all contraventions of the LG Act necessarily require orders of such breadth. The breach may be capable of remedy by requiring the decision-maker (in this case the Delegate) to reconsider a particular matter, rather than restart the process of examination and report from the very beginning.
The primary Judge made a declaration that the Delegate's report was not a valid report in satisfaction of the requirements of s 218F(6)(a) of the LG Act. [25] His Honour considered a declaration in this form sufficient to remedy the breach of s 263(3)(e5) of the LG Act that he was satisfied had occurred.
The Councils did not advance cogent reasons in this Court as to why a declaration in this form was not sufficient to remedy the only breach of the LG Act the primary Judge found had occurred. At the very least the declaration had the effect of requiring the Delegate to reconsider the North Sydney Merger Proposal having regard to the need to ensure that the opinions of each of the diverse communities of the resulting area or areas would be effectively represented. Subject to the question of an apprehension of bias (referred to below), it is not apparent why requiring the Delegate to undertake the particular inquiry mandated by s 263(3)(e5) of the LG Act will not remedy the Delegate's failure to do so.
There may be some doubt as to precisely what the Delegate must do in order to produce a report that conforms to s 263(3)(e5) of the LG Act. There also may be some doubt as to whether the effect of the declaration is to require the Delegate to reconsider aspects of the report other than his treatment of the criteria identified in s 263(3)(e5). The Councils did not rely on these possible difficulties in their submissions to this Court and the respondents did not seek any modification of the terms of the declaration. Since the precise effect of the declaration is an issue that has been rendered moot by the Minister's decision not to proceed with the North Sydney Merger Proposal, it is not necessary to carry it further.
The Councils have not established that the primary Judge erred in not granting additional relief to the Councils on the basis of the Delegate's contravention of s 263(3)(e5) of the LG Act.

The Hardiman Ground

The Councils submitted to the primary Judge that he should exercise his discretion not to remit the matter to the same Delegate who prepared the report. This submission was based on the contention that the Delegate had played an active role in resisting the Councils' claims for relief and thus "chose to enter the affray". The Councils argued in the L&E Court that the fundamental object to be served by adherence to the Hardiman principle is to avoid the perception that the Delegate might not bring an impartial and unprejudiced mind to the resolution of the remaining issues. The Delegate's conduct, so the Councils contended, created a reasonable apprehension of bias and justified an "exclusionary remitter order" (that is, one remitting the matter to someone other than the original decision-maker).
The Councils submitted in this Court that the primary Judge erred in failing to address the Hardiman Ground. Their submissions recognised that a breach of the Hardiman principle may lead only to an order depriving the decision-maker of costs even if the decision-maker is "successful" in the proceedings. However, the Councils cited authority suggesting that in an appropriate case the Court may regard a person or body who flouts the Hardiman principle as disqualified from further participation in the decision-making process. [26]
The Delegate, the Chief Executive, the Boundaries Commission and the Minister were all respondents to the Councils' applications in the L&E Court. In contrast to Ex parte Hardiman, the decision-maker in this case (the Delegate) was not separately represented in the proceedings. Instead all four respondents had common representation and submissions were made on behalf of all of them. Nonetheless, the Delegate, consistently with the Hardiman principle, should have entered a submitting appearance in the L&E Court and should not have actively resisted the relief sought by the applicants. But the approach taken on behalf of the Delegate in the L&E Court is partly explained by the fact that all four respondents had played or were to play a part in the decision-making process leading to the implementation of the North Sydney Merger Proposal. This raised a question as to which of these parties should have been the active contradictor in the L&E Court proceedings, an issue that seems not to have attracted close attention until the parties filed their final written submissions in that Court.
The Councils' submissions in the L&E Court supporting an exclusionary remitter order did not clearly distinguish between two situations. The first involved the primary Judge finding (as the Councils had submitted) that the Delegate and the Minister breached the LG Act in a number of significant respects, not limited to a breach of s 263(3)(e5). The second involved the Court rejecting (as it ultimately did) the Councils' contentions, except for their claim that the Delegate breached s 263(3)(e5). The case for an exclusionary remitter order would be considerably stronger if this Court had upheld the Councils' arguments on procedural fairness and a contravention of s 263(3)(e5) of the LG Act.
In Laws v Australian Broadcasting Tribunal, [27] Gaudron and McHugh JJ emphasised the need for careful scrutiny of claims of bias based on prior findings by a decision-maker. Their Honours said that: "When suspected prejudgment of an issue is relied upon to ground the disqualification of a decision-maker, what must be firmly established is a reasonable fear that the decision-maker's mind is so prejudiced in favour of a conclusion already formed that he or she will not alter that conclusion irrespective of the evidence or arguments presented to him or her." (Emphasis added.)
The claim of apprehended bias in the present case does not stem from a claim of pre-judgment arising from a previous decision of the Delegate but from his role in the L&E Court proceedings. Nonetheless, the observations in Laws v Australian Broadcasting Tribunal demonstrate that a finding of apprehended bias is not to be made lightly. In the particular circumstances of this case, the Delegate's contravention of the Hardiman principle does not give rise to a reasonable apprehension that the Delegate, if the matter was to be remitted, would be unable to bring an unprejudiced and impartial mind to the resolution of the one issue which, on the Court's reasoning, remains to be determined.

Orders

The Councils' motions should be dismissed. The Councils should pay the Minister's costs of the motions.

Endnotes

Hunter's Hill v Minister for Local Government [2016] NSWLEC 124 at [504].
Ibid at [508].
Kentwell v The Queen (2014) 252 CLR 601; [2014] HCA 37 at [42] (French CJ, Hayne, Bell and Keane JJ).
Hunter's Hill Council v Minister for Local Government [2017] NSWCA 188 (Principal Judgment).
Macfarlan JA and Sackville AJA, Basten JA dissenting.
Mosman's notice of motion does not include Order (e).
Section 263(3)(e5) is reproduced in the judgment of Basten JA at [11] above.
(1980) 144 CLR 13; [1980] HCA 13.
Ex parte Hardiman at 35-36.
Majak v Rose (No 5) [2017] NSWCA 238 at [13] per curiam and authorities cited there.
Such a recommendation would be made pursuant to s 218F(7) of the LG Act.
That is, the Minister's proposal dated 6 January 2016 to amalgamate the local government areas of North Sydney, Willoughby and Mosman.
Hunter's Hill Council v Minister for Local Government [2016] NSWLEC 124 (Primary Judgment) at [429]-[444].
Primary Judgment at [527].
Section 263(3)(a) is reproduced in the judgment of Basten JA at [11] above.
Primary Judgment at [518].
Primary Judgment at [508].
See LG Act, s 263(2A).
The Councils' respective summonses (as amended) stated only that the proceedings were brought pursuant to Chapter 17 of the LG Act. The written submissions in the L&E Court stated that the proceedings were brought pursuant to ss 673 and 674 of the LG Act.
Primary Judgment at [440].
Primary Judgment at [441]-[443]
Primary Judgment at [505].
Primary Judgment at [508].
The invitation is at Black, 456.
Primary Judgment at [518].
See, for example, Commonwealth v Human Rights and Equal Opportunity Commission (1998) 76 FCR 513 at 527 (Burchett J); but compare at 537-539 (Mansfield J, Drummond J agreeing).
(1990) 170 CLR 70 at 100; [1990] HCA 31. The passage, with the emphasis added, was quoted by French CJ in British American Tobacco v Laurie (2011) 242 CLR 283 at 305; [2011] HCA 2.

Amendments 12 October 2017 - Coversheet - Order 3 amending date to read 2017. 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: 12 October 2017

Government Act 1993(NSW)

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