Office of Local Government v Mehajer

reasons for decision 1In September 2013, the Chief Executive, Office of Local Government, made a complaint against Councillor Salim Mehajer (Clr Mehajer) of Auburn City Council, alleging a breach of s.449(1A) of the Local Government Act 1993 ( " the Act"). The complaint concerned the filing of pecuniary interest disclosure returns in the form required by the Act and the Regulations. 2Clr Mehajer was first elected to civic office when successful in the September 2012 Local Government elections. In mid-September he was provided with a package of information concerning his position as a Councillor on Auburn City Council: that package included a blank pecuniary interest disclosure form. Pursuant to the provisions of s.449 of the Act, Clr Mehajer was required to complete and lodge the form with the General Manager and to do so within three months after becoming a councillor. Sub-Section (1A) prohibited the lodging of a return that the councillor knew or ought reasonably to have known was false or misleading in a material particular. At around the same time he attended a councillor induction. 3By the end of October 2012 Clr Mehajer had completed and lodged his disclosure of interest return. That return raised questions as to its accuracy and completeness: these issues were taken up in June 2013 by the Division of Local Government. When contacted by the Division Clr Mehajer admitted that he had additional sources of income to those disclosed in his return. He was advised that an amended return should be lodged with the Council as soon as possible. He was later emailed a new return to be completed and was directed to an on line "self-help" guide to assist in completing a compliant return. 4On 20th August 2013 the Division wrote to Clr Mehajer having been unable to confirm that an amended return had been lodged by him. He was informed that information had been received indicating that he had breached the provisions of s.449(1A) of the Act by failing to disclose sources of income that he may reasonably expected to have received. An investigation was to be conducted into the matter. In an email forwarded on the following day Clr Mehajer stated that the return was not "intentionally" in breach of the Act and that being a new councillor it was likely that the form was incorrectly completed. An amended form had since been handed to the General Manager that had been completed to "the very best" of his knowledge. 5It appears that on 23 August 2013 Clr Mehajer lodged a further return by email. That return contained much more information than shown in the October 2012 return. In summary, it showed an interest in a large number of properties previously not disclosed as well as additional sources of income. The new return also showed numerous corporate positions and debts that had not been previously identified. The Councillor filed two returns at this time but they appear to be in identical terms: it was suggested that the initial return was not made out on the required colour of form and so the details were submitted again on the correct form. 6When the Tribunal decided to commence proceedings it accepted that not only the original complaint regarding the 2012 return should be dealt with but that the returns filed in 2013 should also be considered. In written submissions filed prior to the hearing Clr Mehajer accepted the essence of each complaint although disagreeing with some particulars. The councillor acknowledged that he was in breach of s.449(1A) of the Act in relation to both sets of returns, in that they did not include all material particulars that were required to be detailed in the disclosure document. These returns were false or misleading in material respects and Clr Mehajer ought to reasonably have known that was the case. It was agreed by the parties that the second returns filed in 2013 were not amendments to the 2012 return but addressed the 2013 requirement to lodge a further return. It was further agreed that only one of the 2013 returns was relevant for the purposes of these proceedings. 7It is convenient at this point to briefly consider the defects in both returns. The October 2012 return identified three sets of properties in the same street in Lidcombe although various street numbers were recorded. The nature of these properties was not identified. The 2013 return nominated possibly fourteen properties mostly by reference to lot numbers only and there were four further lots within this group that were listed. There were also a number of shops listed that were in the same street referred to in the 2012 return but appearing under different street numbers. 8In 2012 the only occupation listed was that of Auburn councillor. In the 2013 return Clr Mehajer added his employment as a builder, his role as a Strata Manager and a Directorship in "Sydney Project Group/Mehajer Bros. P/L". 9The 2012 return listed nothing under the heading of Sources of Other Income. In 2013 three rental properties were listed by reference to lot and DP numbers. This return also identified a Mehajer Bros trust as a potential source of income. 10There were no positions or interests in corporations identified in the 2012 return. In the 2013 return, however, five directorships were identified described as being a development undertaking in four cases and a building undertaking in the other. 11Under the heading of debts, nothing was listed in 2012. In 2013 mortgages with two Banks were listed together with family loans. In the 2013 return, for the first time, Clr Mehajer listed a number of discretionary disclosures. 12In late November 2013 Clr Mehajer agreed to be interviewed by investigative officers attached to the Department. The councillor was not obliged to attend this interview. At the outset he spoke of his education and the nature of the work he had undertaken. The Councillor had completed a degree in Construction Management (Housing), an Advanced Diploma in Structural Engineering and a Graduate Diploma in Environmental Systems in which he was completing a Master's Degree. He had undertaken short courses at UTS in Local Government subjects and had done so in order to obtain information. He stated that his experience was mainly in project management, engineering and building. 13During the course of the interview Clr Mehajer provided a number of explanations for the state of the 2012 disclosure return. He stated that he did not understand how the return worked or how to fill it out: indeed he did not know that he had to fill out a form as he was required to declare any interest at meetings of Council. The disclosure forms had been handed out and he had seen Councillors fill them out. He "assumed" it would be the same for himself but he was rushed and thought he had to submit it right away. 14He had only listed properties or developments in the return that were within the Auburn Council area because he thought that would be where any conflict could arise. Normally he would read the form but this time he had just made an error. He accepted that he lacked knowledge in these matters. 15Regarding the 2013 return, Clr Mehajer said that he was told that there were breaches of the Act arising from the manner in which he had completed the 2012 return. He therefore undertook "more research" as to what was needed to properly complete the return. He read "a bit of the handbooks" and had gone to the Division of Local Government. He also spoke to the General Manager of the Council who told him to declare everything he knew: they went through the form briefly. This had occurred just before he had completed the 2013 return. 16Clr Mehajer said that he would have spoken to his accountant in 2012 about his expected sources of income. At the time of his original return he was working as a builder. He agreed that he should have disclosed in this return the rental income he had received. At that time his website described him as being a Project Engineer, a Construction Manager, and a Builder/Developer working closely in a "vast number of projects". 17The August 2013 return had listed his interest in a number of corporations as being "pecuniary": that was meant to indicate that mostly he had shares in the companies. In the companies he had listed he could have been a shareholder, the secretary or a director, or all three. He was the company secretary in three companies but did not identify those positions. He had received directors fees from Mehajer Bros. but this had not been listed in the correct part of the form-he had missed that detail and that was an error. He agreed that he had not supplied the address for some companies and had not specified the registered address but had inserted the business operating address in the form. Some of the properties he listed he owned but others were owned by a company or other people. 18As already noted, at the hearing before the Tribunal Clr Mehajer accepted the essence of each complaint and that the returns lodged were false and misleading in material particulars and therefore were in breach of the requirements of s.449(1A) of the Act. In written submissions it was accepted that the Councillor should have taken more care to understand what was required of him in lodging the 2012 return but the errors appearing in the 2013 return should be treated as relatively minor breaches. The councillor regretted and apologised for his lack of care in completing the 2012 return and for the "relatively minor deficiencies" appearing in the 2013 return. 19It was further submitted on behalf of Clr Mehajer that his various explanations for filing these returns were not relied upon by way of excuse, for he accepted and appreciated that he had failed to take proper care in understanding his obligations when filing out the form. He blamed no one else for these deficiencies but pointed out that he was only recently elected and had not been provided with any information, support, training or specific assistance from the Council regarding his obligations when completing the return. While he felt under pressure to complete the return he accepted that no one had placed him under such pressure. In any event s.449(1) required a return to be within three months of becoming a councillor. 20While accepting that the 2012 return was false and misleading it was submitted on behalf of the Councillor that a simple and single misunderstanding had caused these errors and therefore little turned on the number of deficiencies relating to properties, sources of income and positions in corporations. These were said to be innocent errors arising from a misunderstanding and were not to be regarded as selective or designed to hide the real position. 21The written submissions for the Chief Executive pointed out the importance of the disclosure provisions of the Act. The Councillor Handbook published in 2012 contained circulars issued to all councils by the Department: one such circular spoke of the need to be careful in completing returns and ensuring that the information and detail was accurate. The circular included the following advice: It is recommended that before completing their returns, councillors and designated persons should take the time and effort to carefully read the pecuniary interest provisions of the General Regulation and the notes to the return form. 22The pecuniary disclosure form makes specific mention of s449 of the Act and the prescriptions laid down by Part 8 of the Regulation. In mid June a Division Investigator sent an email to Clr Mehajer attaching a Word version of a blank return as set out in the Local Government (General) Regulation (1995) and providing a link to the Division website that was designed to assist councillors in completing their returns. Also attached was another part of the website that provided guidance to councillors in completing their returns. 23The self-help guide for councillors set out the statutory framework regarding disclosure returns .In relation to each section of the return a "plain English" explanation was provided and common mistakes were discussed. In dealing with Real Property the guide stated that a councillor must declare any directly owned or leased property "anywhere in Australia": the word "anywhere" appeared in bold type. In dealing with sources of income the guide stated that occupation included any form of payment as an employee or through employment/consulting or through directorships or holding an office in a corporation. In relation to interests and positions in corporations the guide stated that it was necessary to include the full company and full details of the business address or registered office of the corporation. There was also information concerning the nature and level of debts that were required to be disclosed. 24The chief Executive described the 2012 return as being "grossly incomplete", being deficient in a number of significant areas. The particulars omitted were matters that Clr Mehajer was aware of: he had numerous real estate interests that were not disclosed; he knew he had income from rental properties that were not disclosed; he knew he was likely to receive income from his employment that was not disclosed; he knew he was likely to receive consultancy fees that were not disclosed; he knew he was a potential beneficiary of a family trust but this was not disclosed; he knew that he was likely to receive income by way of dividends but this was not disclosed; he knew he held shares in corporations but this was not disclosed; and he knew that he held positions in corporations but they were not disclosed. 25The complaints about the 2013 return were more limited: there was a failure to disclose a Castle Hill property, positions in a number of corporations, the correct address for corporations in which the councillor held a position, and the failure to provide an address for one of the corporations. 26As to the consequences of these breaches it was submitted for Clr Mehajer, that in total they were minor errors although there was a lack of care in competing the returns. The Chief Executive emphasized the importance of the disclosure returns as being essential to the transparency of council business and the integrity of council decisions. A suspension beyond the one month available to the Chief Executive was urged, with a two month suspension suggested as appropriate. 27Some attention was paid in addresses to cases arising under these provisions of the Act. In a number of cases a reprimand was considered appropriate but in the case of Director General, Department of Premier and Cabinet v Councillor Martin Ticehurst (LGPIDT 02/2012) a suspension of two months was imposed. The different facts and issues arising in those cases renders them of little assistance in deciding this matter. In the Ticehurst case, the councillor was long serving but had taken a totally unwarranted and strict approach to the requirement to lodge the disclosure return: he would not complete a return unless he received a form letter used for that purpose. His breach was not an oversight or the result of extenuating circumstances but was due to his obdurate behaviour. All the cases nevertheless emphasised the importance of compliance with the statutory scheme of pecuniary interest disclosure by councillors. 28There are a number of factors that should be taken into account in favour of the Councillor. He was newly elected and apparently unfamiliar with the statutory scheme of disclosure. He consented to being interviewed by Divisional Investigators when not compelled to attend and otherwise co-operated with the investigation. The Chief Executive accepted that he had taken responsibility for his actions by acknowledging the breaches of s.449(1A). In addition, a number of character references were presented to the Tribunal: they spoke of considerable work within his community and for charitable causes and the high esteem in which he was held within the community generally. 29Giving full weight to these favourable factors the Tribunal is, nevertheless, unable to conclude that a mere reprimand is an appropriate outcome. Notwithstanding his newness to the office of councillor, his duty was to familiarise himself with his various obligations. None could be more fundamental than his obligation to make a full and accurate disclosure of his pecuniary interests. There were numerous avenues available to him in completing this task besides the text of the Act and the Regulations. He had the use of the councillor's Handbook, the on line self help guide and access to the General Manager as well as other councillors. This level of assistance was ignored and he was content to undertake this important task on the basis of an assumption about the width of the interests to be disclosed. His carelessness in this regards borders on the reckless. He was a builder and a developer on a significant scale and had to understand that there was a real possibility that he could be placed in a conflict of interest when dealing with council business. He was a man educated to tertiary level and still undergoing higher level education. Thus he was aware of many research tools available to him, not only in his education but also in his business and civic roles. He was also the director of a number of companies and the company secretary in some of them: he was therefore well aware of regulatory regimes and the requirement to make himself award of the extent of his obligations. In his interview with the Investigators he agreed that he could have asked his accountant about possible sources of income for the purpose of completing the disclosure form. Undoubtedly, having regard to the of his business interests, he could have sought legal advice regarding the requirements of the disclosure return. 30In concluding that a suspension is the appropriate outcome in this case, the Tribunal accepts the submission that the 2012 breach is more serious that the 2013 breach for many of the reasons put forward. It is still surprising that Clr Mehajer did not pay much closer attention to this return, having faced the Investigators and having accepted that the first return was totally inadequate. Again, a continuing lack of care and attention to the required detail does not reflect well on him and his acceptance of his obligations under the Act. In all the circumstances, it is appropriate that Clr Mehajer be suspended from civic off office for a period of one month. 31The Tribunal makes the following orders: (a)That pecuniary disclosure returns lodged with the General Manager of Auburn City Council in 2012 and 2013 by Councillor Salim Mehajer were in breach of s.449(1A) of the Local Government Act 1993 in that the Councillor lodged returns that he knew or ought reasonably have known to be false or misleading in a material particular. (b)Councillor Salim Mehajer of Auburn City Council is suspended from civic office for a period of one month, to take effect seven days after the date of publication of this decision. (c)Copies of this decision and the orders of the Tribunal shall be provided to the General Manager of Auburn City Council and shall be made publicly available. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 17 June 2014