Office of Local Government v Neville

The complaints

1. These proceedings concern two matters.
2. The first is an Application for Disciplinary Findings and Orders filed 16 August 2017. The applicant asks the Tribunal to conduct proceedings into the complaint that forms the subject of the Investigation Report. The complaints the subject of the Investigation Report were that the respondent: 1. Failed to complete returns in the form prescribed by the regulations in accordance with the provisions of s 449(3) of the Act in the period 1 July 2000 to 30 June 2015; 2. Failed to provide information required by Divisions 1 and 2 of Part 8 of the Local Government (General) Regulation 2005 (the Regulation) in the returns lodged pursuant to s 449(8) of the Act in the period 1 July 2000 to 30 June 2015; 3. Failed to provide information required by Divisions 1 and 2 of Part 8 of the Regulation in the returns lodged; 4. Lodged returns as required by provisions of s 449(3) of Act in the period 1 July 2000 to 30 June 2015, that he knew or ought reasonably to have known were false or misleading in a material particular in breach of s 449(1A) of the Act.
3. The second complaint is dated 10 October 2017. The applicant alleges that the respondent contravened Ch 14 of Pt 2 of the Act. That Part concerns the duties of councillors in complying with their obligations to act honestly in the disclosure of their pecuniary interests. The grounds of the second complaint are that the respondent: 1. Failed to complete returns in the form prescribed by the regulations in accordance with the provisions of s 449(3) of the Act in the period 1 July 2015 to 30 June 2016; 2. Failed to provide information required by Divisions 1 and 2 of Part 8 of the Regulation in the returns lodged pursuant to s 449(3) of the Act in the period 1 July 2015 to 30 June 2016; 3. Lodged returns as required by the provisions of s 449(3) of the Act in the period 1 July 2015 to 30 June 2016, that he knew or ought reasonably to have known were false or misleading in a material particular in breach of s 449(1A) of the Act.
4. The applicant alleges that the respondent: 1. Failed to declare that he was an officeholder of MGN during the period 1 July 2015 to 30 June 2016; 2. Failed to declare that he was member of MGN during the period from 1 July 2015 to 30 June 2016; 3. Failed to include a description of the principal objects of MGN during the period 1 July 2015 to 30 June 2016; and 4. Ought reasonably to have known that the returns lodged by him in the period from 1 July 2015 to 30 June 2016 were false or misleading in a material particular.

Evidence

1. The applicant relies on the Investigation Report.
2. The respondent has provided two documents to the Tribunal for its consideration. These are his Reply to Application for Disciplinary Findings dated 31 October 2017 and a letter to the Registrar of the Tribunal dated 24 January 2018.
3. The applicant did not seek to cross-examine Mr Neville. Both parties were content that the matter be determined "on the papers", and without a hearing. This process is provided for in s 50 of the Civil and Administrative Tribunal Act 2013: see ss 50(2) and (3).
4. As noted, the respondent states in his Reply that he does not wish to dispute the findings of the Investigation Report.

The respondent's obligations under the Act

1. The applicant sets out at length the relevant sections of the Act and the Local Government (General) Regulation 2005 (the Regulation) over the period 2000 to 2016. It is not necessary to set those provisions out in these reasons.
2. In the period from 1 September 2005, the relevant clause is cl 186 of the Regulation. Clause 186 of the Regulation relevantly provided: 186 Interests and positions in corporations (1) A person making a return must disclose: (a) the name and address of each corporation in which he or she had an interest or held a position (whether remunerated or not) on the return date (in the case of a return under section 449 (1) of the Act) or at any time since the last return under Part 2 of Chapter 14 of the Act was made (in the case of a return under section 449 (3) of the Act), and (b) the nature of the interest, or the position held, in each of the corporations, and (c) a description of the principal objects (if any) of each of the corporations, except in the case of a listed company.
3. Section 449(1A) currently provides that a person must not lodge a return of interests that the person knows or ought reasonably to know is false or misleading in a material particular. This section was introduced in 2001.
4. In summary, while the legislation has undergone some changes over the period, s 449(1) of the Act requires that a councillor complete, sign, date and lodge with the general manager an initial return of interests, in the form prescribed by the regulations, within 3 months after becoming a Councillor. Thereafter, s 449(3) of the Act requires that a councillor, holding that position at 30 June in any year, complete, sign, date and lodge with the general manager a return of interests, in the form prescribed by the regulations, within 3 months after that date. The previous iterations of the Act and the relevant regulatory requirements contained similar if not identical provisions. Accordingly, there was a common requirement throughout the period considered in the Investigation Report for councillors to disclose their interests in corporations and the nature of the business transacted by the business.
5. In its current form, Division 2 of Part 8 of the Regulation details the interests that must be disclosed. Clause 186 of the Regulation requires that a person making a return disclose details in relation to each corporation in which he or she had an interest or held a position (whether remunerated or not) on the return date. Clause 186(2) of the Regulation provides limited exceptions to the obligation to disclose, principally involving charitable organisations and organisations serving a community purpose, where there can be no return to members.

Findings

1. The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice: Civil and Administrative Tribunal Act 2013 (NCAT Act), s 38(2).
2. Based on the Investigation Report, the annexures to that report and the other materials before me, I make the following findings.

Council service

1. The respondent was first elected to Griffith City Council in 1999 and as Mayor in 2002, being the first popularly elected Mayor. He has been re-elected at each subsequent election. He is presently a Councillor.

MGN

1. The respondent married Mrs Betty Neville in 1990.
2. The only shareholders of MGN are the respondent and Mrs Neville. They each own one ordinary share.
3. MGN was first incorporated as GR & BM Williams Pty Ltd in 1976. The then directors were Mrs Neville (then known as Mrs Williams) and her sister, Ms Francien Harding. The company's purpose was to be the trustee of the Betty Williams Family Trust (the Trust).
4. The Trust carried on a hairdressing business ("Shalom") managed by Mrs Neville. After Mrs Neville's separation from Mr Gary Williams, the company name was changed to B M Williams Pty Ltd.
5. Mrs Williams and her sister continued as directors until 9 December 1994, at which point Mr Neville replaced his sister-in-law. Mr Neville is presently a director.
6. On or about 7 February 1995, the company purchased a hairdressing business in Griffith known as "Enbee for Hair". Save for being a director of the company owning that business, Mr Neville was not involved in the business.
7. On 29 June 1998, the name of the company was changed from B M Williams Pty Ltd to MGN Business Services Pty Ltd. At about that time, Mr Neville had entered into a joint venture agreement with Kevin Bohm and Associates and later Southern Vale Homes for the building of homes in the Griffith area. The change of name of the company was to assist in the establishing of a legal entity which would enable Mr Neville to carry on business in pursuing the joint venture.
8. Mr Neville thought that he had established a new company for this purpose, but now that he has read the papers relied on by the applicant, he accepts that MGN is the company originally incorporated by his wife. However, he has no recollection of MGN remaining as the trustee for his wife's family trust, or that it carried on businesses through the trust of "Enbee for Hair" and later "Betty Boos Wigs and Costumes". Those businesses, he says, were his wife's.
9. The respondent was appointed a director of MGN Business Services Pty Ltd (MGN) on 9 December 1994 and has held that position until the present time.
10. Currently, MGN trades commercially, including as a costume hire service. In 2015, the MGN trading as Betty Boo provided services in the sum of $5,000 to Council in relation to alterations for a theatrical production.

Disclosure of pecuniary interests

1. The respondent appropriately disclosed his interest in MGN between 11 September 1999 and 30 June 2003.
2. He did not disclose any interest thereafter, nor did he at any point disclose the nature of MGN's objectives.
3. The respondent was required to lodge a return under s 449 (Return) within three months of his election (s 449(1)). Thereafter, he was required to lodge an annual return following 30 June each year (s 449(3)).
4. The respondent breached s 449 of the Act by: 1. Failing to disclose his interest in MGN in his returns from 30 June 2004 to 30 June 2016 (Act, s 449(3), Regulation cl 186(1)(a) and (b)); 2. Failing disclose the role of MGN as trustee for Trust or in relation to its businesses in his returns from 7 December 1999 to 30 June 2016 (Act, s 449(1) and (3), Regulation cl 186(1)(c)); and 3. By reason of the foregoing, lodged returns for the period 30 June 2001 to 30 June 2016 that he knew or ought reasonably to have known were false or misleading in a material particular (Act, s 449(1A).

Relevant principles

1. The applicant asks the Tribunal to grant relief pursuant to s 482(1) of the Act. That section provides: 482 Decision of NCAT - pecuniary interest matters (1) The Civil and Administrative Tribunal may, if it finds a complaint against a councillor is proved: (a) counsel the councillor, or (b) reprimand the councillor, or (c) suspend the councillor from civic office for a period not exceeding 6 months, or (d) disqualify the councillor from holding civic office for a period not exceeding 5 years, or (e) suspend the councillor's right to be paid any fee or other remuneration, to which the councillor would otherwise be entitled as the holder of the civic office, in respect of a period not exceeding 6 months (without suspending the councillor from civic office for that period).
2. The following principles are relevant to the Tribunal's determination.
3. First, s 482 appears in Part 3 (Complaints concerning non-disclosure and proceedings before NCAT) of Chapter 14 (Honesty and disclosure of interests) of the Act. Proceedings under Part 3 of Chapter 14 of the Act are disciplinary in nature. As with professional disciplinary matters, the Tribunal's jurisdiction is at least in part protective, both of the public and of the maintenance of high standards in the ranks of the particular occupation, here local councillors: Health Care Complaints Commission v Litchfield (1997) 41 NSWLR 630 at 637-638.
4. In Office of Local Government v Councillor Campbell of Murray Shire Council [2015] NSWCATOD 129, the Tribunal (Dr J Renwick SC) noted at [4] that the jurisdiction is disciplinary and protective in nature, in a similar fashion to the discipline of professionals such as lawyers and medical practitioners. This was written before the remarks of Basten JA in Chen v Health Care Complaints Commission [2017] NSWCA 186 at [4] where his Honour noted: As a preliminary point, one should be cautious in relying upon cases concerned with legal practitioners when dealing with the regulation of the medical profession. First, the institutional structures within which the respective professions operate are, and have been historically, different in significant respects. Secondly, the functions exercised by each profession differ significantly. To take merely an obvious example, an important purpose of regulating lawyers is to ensure that they deal properly with clients' property and money. With respect to doctors, a significant purpose is to protect the physical integrity of patients.
5. Thus, there are likely to be some variations in the applicable principles due to the differences between misconduct in elected office and professional misconduct. Nevertheless, broadly I accept the remarks of Dr Renwick SC.
6. Secondly, there are important but indirect effects of a disciplinary order. These were recognised by Basten JA in NSW Bar Association v Meakes [2006] NSWCA 340 in relation to barristers. These considerations are relevant (by analogy) to orders made in respect of a local councillor and include: 1. The order reminds other councillors of the public interest in the maintenance of high standards; 2. The order may give emphasis to the unacceptability of the conduct involved; and 3. By speaking to the public at large, the order seeks to maintain confidence in the standard of conduct of local councillors.
7. Thirdly, there is a "public interest in having the respondent's conduct denounced as unacceptable", and that orders made by the Tribunal would "make plain that conduct of the kind engaged in is unacceptable": Health Care Complaints Commission v Do [2014] NSWCA 307 at [39].
8. Fourthly, the availability of a range of statutory disciplinary options implies the necessity to consider whether those short of depriving the constituents of their representative can adequately punish the councillor's failure to comply with the statutory obligations and vindicate the public interest in maintaining the honesty of municipal administration: Mehajer v Chief Executive of the Office of Local Government [2014] NSWSC 1804 at [13].
9. Fifthly, whether the proposed orders will prevent the respondent from exercising any functions as a councillor, and the impact of this on constituents: Mehajer at [13], [15] and [21].
10. Sixthly, whether there have been any previous offences: Mehajer at [15]; Phillips v Director-General, Department of Premier and Cabinet [2014] NSWCATOD 48 at [52].
11. Seventhly, the acknowledgement if any, or apology or remorse for, the conduct by a respondent, and the lack of any insight into the conduct on their part.
12. Eighthly, the longer the experience as councillor the greater should be the councillor's understanding and knowledge of their duties and obligations. That is not to say that misconduct of an inexperienced councillor should be excused. All councillors must act honestly and exercise a reasonable degree of care and diligence in carrying out his or her functions under the Act (s 439(1)) and comply with the Council's code of conduct (s 440(5)).

Applicant's submissions

1. The applicant submits that a reprimand alone would insufficiently recognise the gravity of the contraventions the respondent has committed. The applicant submits that, particularly having regard to the continuation of the breach over 16 years, it may be inferred that his knowledge of his obligations grew, and the respondent exhibited reckless disregard for his obligations. This is submitted to be a matter aggravating the breaches.
2. The applicant does not press for the more severe suite of sanctions available to the Tribunal because the respondent: 1. Has made an appropriate acknowledgement of the complaint, has conducted himself in a fashion amendable to its swift resolution; 2. Did not act with deliberate dishonesty; and 3. Received no benefit from the non-disclosures.
3. The applicant submits that It would be open to the Tribunal to suspend the respondent's right to be paid in relation to his office of Councillor for a period of time on the basis that: 1. His breach was ongoing for a period of 16 years in respect of, variously, his holding of corporate office and the business objectives of MGN; 2. The Tribunal's jurisdiction is protective and the respondent's breach involved a pecuniary disclosure obligation, requiring the effect of any sanction to vindicate the public interest in maintaining the honesty of municipal administration; 3. The respondent ought to have known about the information required to be disclosed (and admits he ought to have known), so his failure to comply with s 449 involved recklessness in relation to his obligations in that regard; 4. The breaches were more serious because they occurred at times when the respondent occupied the position of Mayor and Deputy Mayor, being positions of particular propriety and responsibility; and 5. The proposed sanction will not impact on the respondent's functions as a councillor.
4. The applicant accepts that the respondent did not receive any income from the Trust. His evidence is that he ceased carrying on the consulting business of MGN in which was concerned in 2003 (the date of this last complying Return in this respect) and was not actually aware that MGN was a trustee of the Trust. The respondent agrees that he ought to have made himself aware of these matters and disclosed them. The applicant submits that the respondent does not address the one instance of MGN trading with the Council, but that it may be inferred (and the applicant accepts) that he did not receive any direct benefit from the operation by his wife of MGN's businesses.

The respondent's submissions

1. Short submissions were filed by the respondent on 29 January 2018. In summary, he acknowledges that his failure to comply with s 449 of the Act is a serious matter, and assures the Tribunal that he never knowingly failed to comply with his duty of disclosure requirements. He says that he did not receive any financial or political advantage because of his failure to make proper disclosure.
2. He refers to his involvement in an extensive array of community and charitable works, and notes his paraplegia.
3. He submits that, given the public fact findings in the matter, a reprimand is a sufficient deterrent to himself and other councillors. He asks that the Tribunal not suspend his right to be paid as he is currently unemployed and has no other form of income. He says that would be a financial penalty that would impact upon him severely.
4. Here I note that, in reply, the applicant submits that the respondent's personal circumstances should be given little weight, if any. I accept this submission; see Psychology Board v Garcia [2015] VCAT 128 at [30]: personal matters such as shame, personal ordeal, and financial difficulty likely to be occasioned by a determination are of little relevance except insofar as they contribute to the specific deterrence of the practitioner.
5. Finally, the respondent submits that, as this is his first offence, this is a proper basis for not extending "a severe penalty".

Other authorities

1. There are a number of authorities which have considered the appropriateness of disciplinary sanctions.
2. In the circumstances of the particular application, the Tribunal ordered that Councillor Mehajer be suspended from Civic Office for a period of four months after the date of publication its In Office of Local Government v Mehajer [2016] NSWCATOD 10, when considering three failures of Mr Mehajer to declare his pecuniary interests over a period of 13 months, the Tribunal stated at [32] Accepting that Mr Mehajer did not intentionally commit breaches of the Act and, taking into account both the references tendered as to his work in the community, and the fact that he made special disclosures at the meetings of some of, if not all, the properties owned by him, I do not think an order disqualifying him from Civic Office is required. There should, however in my view, be a significant sanction to make clear to Mr Mehajer and other persons who offer themselves for, or are elected to, public office in Local Government, that they have statutory obligations which include obligations to act honestly and transparently in the performance of their responsibilities. These obligations are not to be undertaken casually or lightly. Ignorance is no excuse and each Councillor, upon election is required to acquaint herself or himself with the obligations, comply with them punctiliously and if necessary take advice upon them. In the circumstances I believe that something more than counselling or a reprimand is required in this case.

Decision

1. In Office of Local Government v Petty [2015] NSWCATOD 46, the Tribunal found that the proper and proportionate penalty was that Councillor Petty be reprimanded and suspended and his right to be paid any other fee or remuneration to be suspended for a period of 3 months. The respondent had had a Pecuniary Interest in land the subject of a council meeting. He had in the past acknowledged that, and absented himself from discussion and voting in relation to previous issues regarding zoning of the property. He had a strong interest in the matter, but wished to be involved in the debate by way of opposing the proposal and voting against it. While he had legal advice that he could make a statement, (that advice being based on instructions that he wish to remain in the meeting and participate in the discussion and the decision), the Tribunal considered that it would have been prudent or more ethical for him to refrain from participating in the decision on that matter (see [61]). The Tribunal was satisfied (see [64]) that Councillor Petty did not exercise the level of diligence and care expected by s 439(1) and that the need for diligence and care had been overtaken by his wish to participate in the decision and hopefully defeat the proposal. The Tribunal found that that breach of the Act involved culpability and a breach of public trust by the councillor.
2. In Office of Local Government v Councillor Bagnall [2014] NSWCATOD 122 the Tribunal considered the conduct of Mr Bagnall, who had intimidated the conduct reviewer. The Tribunal decided that despite proved misconduct an order for suspension was not warranted. The order of the Tribunal was that Mr Bagnall be reprimanded.
3. In Office of Local Government v Councillor Smith [2014] NSWCATOD 92, the respondent concealed his pecuniary interest in a matter before the Council, and voted on the application. While the Tribunal found that there were a number of mitigating circumstances, the Tribunal found that the conduct demonstrated a lack of care and diligence in considering the Council papers before participating in the process. The Tribunal concluded at [22]: Having considered all the submissions, one matter stands out and that is the need to enforce the provisions of the Code of Conduct and to reinforce the need for transparency in the conduct of council business. This case shows how simple lack of attention and lack of diligence can lead to serious consequences for a Councillor and jeopardize the processes of Council and suspended the respondent from office for a period of one month.
4. In Acting Chief Executive, Office of Local Government v Passas (No 2) [2017] NSWCATOD 12, the Tribunal disqualified the respondent from holding Civic Office for three months. The respondent had been disruptive or refused to abide by the Mayor's procedural rulings, refused to accept she needed to leave the Council chamber when lawfully directed to do so, had an inappropriate and direct interaction with a Council employee or staff member, refused to give an apology as formally resolved by the Council and refused to undertake training on the Code in accordance with a Council resolution. The Tribunal concluded at [12]: [W]hile there is substantial insight and some imperfect contrition … the found misconduct, and the very limited mitigation, as noted above, is sufficiently serious to require a period of disqualification:- the misconduct went to the heart of the Council's activities, it took place over a long period of time, it was intentional rather than accidental, it is compounded by the refusal to apologise; [A]ny order for disqualification has a normative effect in denouncing the conduct (it may be referred to in the election campaign by the respondent's opponents, for example) and effecting both specific and general deterrence from future conduct along the same lines.
5. It has often been remarked, at least in the health professional disciplinary cases, that each case depends on its own facts and circumstances. To use the words of the Mason P, (with whom Meagher and Stein JJA agreed) in Gayed v Walton [1997] NSWCA 121: [T]here is always a difficulty in getting help from individual cases because of the problem of drawing comparisons between one case and the next. Each must be looked at according to its own facts.
6. See too, Lee v Health Care Complaints Commission [2012] NSWCA 80, where the Court of Appeal has cautioned against the use of comparative cases in the determination of disciplinary orders.
7. Nevertheless, I also note that in Health Care Complaints Commission v Karalasingham [2007] NSWCA 267, Basten JA, with whom Giles JA and Bergin J agreed, accepted (at [70]) that a legitimate consideration "is whether the orders made reveal inconsistency of approach on the part of the Tribunal, when viewed against other decisions revealing similar kinds of misconduct".

Conclusion

1. One of the problems with matters being determined on the papers and without a hearing is the challenge to the Tribunal in determining a respondent's insight and understanding of his misconduct. However, as the respondent did not require the applicant for cross-examination, I should give him the benefit of the doubt, and accept his uncontested evidence on these matters.
2. The respondent was first elected to Griffith City Council in 1999 and as Mayor in 2002, being the first popularly elected Mayor.
3. The respondent accepts that he should be reprimanded. For some 13 years, he failed to complete his returns in an accurate way; on the contrary, he admits that he completed them in a misleading way. The applicant rightly submits that the respondent's conduct is a serious breach of the standards that the public have a right to expect of a councillor. The objective seriousness of the conduct of the respondent, the fact it was recklessly indifferent, the fact it occurred over a period of time and the lack of timely acceptance of responsibility for the conduct on the part of the respondent all militate strongly in favour of an order cancelling or suspending the respondent's registration. It is axiomatic that councillors must complete those returns honestly and diligently: see s 439(1) of the Act (which appears in Division 1 (Conduct generally) of Part 1 (Conduct) which provides: 439 Conduct of councillors, staff, delegates and administrators (1) Every councillor … of a council must act honestly and exercise a reasonable degree of care and diligence in carrying out his or her functions under this or any other Act.
4. In my view, something more than a reprimand is called for. As the Court of Appeal stated in Lee v Health Care Complaints Commission [2012] NSWCA 80 by Barrett JA (with whom McFarlane JA and Tobias A-JA agreed) 20. Essential to a proper assessment of a tribunal's discretionary judgment in a disciplinary jurisdiction in accordance with these criteria is a clear understanding of the nature of the jurisdiction and an appreciation of the purpose of orders made in exercise of it. These matters were explained by Basten JA in Director-General, Department of Ageing, Disability and Home Care v Lambert [2009] NSWCA 102; (2009) 74 NSWLR 523 at [83]. His Honour made several important points: 1. The specific purpose for which orders are made is protective in the public interest and is not punitive with respect to the individual. 2. That is not to deny that such orders may be punitive in effect and that punitive effects may be relevant in formulating a protective order. 3. The punitive effects may be directly relevant to the need for protection so that, in a particular case, there may be a factual finding that the harrowing experience of disciplinary proceedings, together with the real threat of loss of a livelihood, may have opened the eyes of the individual concerned to the seriousness of his or her conduct so as to diminish significantly the likelihood of its repetition and to produce a level of insight into his or her own character or misconduct which did not previously exist. 21. The task of the Tribunal (and of this Court on appeal) centres not on punishment as such but on the protection of the public and the maintenance of proper professional standards.
5. I consider that, in all the circumstances, including his lengthy period as an elected councillor, and the almost equally lengthy period in which he failed to make timely and accurate declarations of his pecuniary interests, that something more than a reprimand is called for. Were it not for the fact that he made no personal gain from the failure, and has apologised, I would also have suspended his right to payment for a period of six months.
6. I place no weight on the fact that the applicant says that his fees are his only source of income. As noted above, personal matters such as shame, personal ordeal, and financial difficulty likely to be occasioned by a determination are of little relevance (except insofar as they contribute to the specific deterrence of the practitioner): Garcia at [30].
7. However, in the circumstances which I have described, I consider that the appropriate orders are that: 1. Councillor Michael Gerard Neville is reprimanded. 2. The right of Councillor Michael Gerard Neville to payment as a councillor is suspended for a period of two months from the date of this decision.

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: 06 March 2018