MATTER : An application for a Writ of Prohibition against Lynton Reynolds, Anna Liscia and Marion Blair as members of the Inquiry Panel conducting an inquiry into the City of South Perth constituted under s 8.16 of the Local Government Act 1995

Practice and procedure - Rules of the Supreme Court 1971 (WA), O 56 r 3

Administrative law - Prerogative writs - Application for a writ of certiorari - Whether Minister of Local Government acted lawfully in suspending local Council - Whether the Minister for Local Government is required to afford procedural fairness to the applicant councillors before suspension under Part 8 of the Local Government Act 1995 (WA)

Administrative law - Prerogative writs - Application for a writ of prohibition to prohibit Inquiry Panel established by Minister of Local Government, pursuant to s 8.20 of Local Government Act 1995 (WA), from proceeding to hear Inquiry - Whether conduct of members of Inquiry Panel gave rise to a reasonable apprehension of bias - Turns on own facts

Local Government Act 1995 (WA), Part 8

B Surinder Singh Kanda v Government of the Federation of Malaya [1962] UKPC 2; (1962) 2 WLR 1153

Bradshaw v Kyle & Anor (1996) 15 WAR 327

Eastman v Somes & Anor (No 2) (1992) 107 FLR 86

Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 176 ALR 644

Edwardes v Kyle (1995) 15 WAR 302

Fencott v Muller (1983) 152 CLR 570

Garrihy v Wyatt (1975) 10 SASR 476

Haldane and Transexecutive Airlines Pty Ltd v Chegwidden (1986) 41 SASR 546

Huddart Parker & Co Pty Ltd v Moorehead [1909] HCA 36; (1908) 8 CLR 330

Laws v The Australian Broadcasting Tribunal [1990] HCA 31; (1990) 170 CLR 70

Minister for Immigration and Multicultural Affairs; Ex Parte Epeabaka (2001) 179 ALR 296

Muguzza v Business Licensing Authority (2001) VSC 5

Murphy v Lush [1986] HCA 37; (1986) 65 ALR 651

Polites, Re; Ex parte Hoyts Corporation Pty Ltd [1991] HCA 25; (1991) 173 CLR 78

R v Judge Leckie; Ex parte Felman 18 ALR 93

R v Masters (1992) 26 NSWLR 450

R v Maurice & Ors; Ex parte Attorney General (Northern Territory) (1987) 17 FLR 422

Re Finance Sector Union of Australia; Ex parte Illaton Pty Ltd [1992] HCA 30; (1992) 107 ALR 581

Renaud, Re; Ex parte CJL [1986] HCA 39; (1986) 161 CLR 342

Shaw, Re; Ex parte Shaw (1980) 55 ALJR 12

Tahmindjis & Ors v Brown [1985] FCA 181; (1985) 7 FCR 277

The City of St Kilda v Evindon Pty Ltd & Ors [1990] VicRp 67; (1990) VR 771

Webb v R [1994] HCA 30; (1994) 181 CLR 41

Xuereb & Anor v Viola & Ors (1988) 18 NSWLR 453

1 TEMPLEMAN J: I have before me two applications for prerogative writs. I should say at the outset that these applications for orders nisi in the first instance usually come before a single Judge who decides whether or not there is a case to answer. If the single Judge is of that opinion, he or she then remits the matter to the Full Court for full argument. However, under O 56 r 3 of the Rules of the Supreme Court, a single judge may deal with urgent matters. An order has been made in these cases that this procedure be followed. I therefore have to decide the applications in their entirety.

2 I will deal first with application number 2194 of 2001. This is an application for a writ of certiorari by the Mayor and Councillors of the City of South Perth. The respondent is the Minister for Local Government. I should say that the Minister who is presently in office is not the Minister who was in office when these events took place, there having been a change of government.

3 The application is for the Minister to show cause why a writ of certiorari should not be issued to quash the Minister's decision made on or about 28 November 2000, to suspend the Mayor and Council of the City of South Perth and appoint three commissioners to govern the City. There is alternative relief claimed, including declarations and injunctions.

4 The matter arises from events surrounding and following the publication of a report by a Mr Gary Kemp Martin who inquired into certain aspects of the City of South Perth, its operations and affairs, in the period 1 January 1999 to 6 July 2000. Mr Martin was appointed and conducted his inquiry pursuant to s 8.3 and s 8.4 of the Local Government Act 1995.

5 On 22 November 2000 Mr Martin gave his report to the executive director of the Department of Local Government. The report was lengthy and detailed. It was very critical of the conduct of several of the applicants and it contained a number of recommendations, including a recommendation that the Minister give serious consideration to suspending the council under the provisions of s 8.19(1) of the Act.

6 Mr Martin recommended also that an inquiry panel with the powers and privileges of a Royal Commission be appointed to complete the inquiry, with reviewed terms of reference. That recommendation was made, no doubt, because Mr Martin acknowledged that it was important to continue and complete his inquiries which were incomplete because of the nature of his appointment.

7 A further recommendation was that an annual audit of the City of South Perth be conducted at an early stage; and that the proposed commissioners take immediate action to dismiss the chief executive officer of the City of South Perth.

8 As I have said, that report was given to the Department of Local Government on 22 November 2000. On 23 November the Minister tabled the report in Parliament. The applicants submit that that action was not authorised by the Act: and they said it caused great harm to their reputation.

9 It is of course true that the tabling of a report such as this is not a matter which is dealt with in the Local Government Act. It was, however, entirely a matter for the Minister. He was perfectly entitled to table the report if he wished to do so. It would be quite inappropriate for me to make any observations at all on the wisdom or otherwise of the Minister in taking that step. I repeat, it was entirely a matter for him.

10 On the same day as the report was tabled in Parliament a copy was given to the City of South Perth. A special Council meeting was convened to consider the report on the following day, 24 November. On that day, but before the meeting had taken place, the solicitors for the City of South Perth wrote to the Minister by way of a preliminary response to the report.

11 The solicitors noted in their letter that there had been media coverage indicating it was likely that the Council would be suspended as early as Monday of the next week, which was then a few days away.

12 The solicitors went on to acknowledge that in normal circumstances, as they put it, provided certain requirements were satisfied, the Minister would have power to appoint an inquiry panel and pursuant to s 8.19(1), to suspend the Council before doing so. That was an acknowledgment of a statutory entitlement which solicitors apparently accepted that the Minister had. The solicitors went on to say that given there had been an inquiry, the processes of which were not yet complete, there were, in the solicitors' view, sound reasons why that course should not be pursued at that time; that course being the suspension of the Council.

13 The solicitors pointed out that under s 8.14(3) of the Act, the City of South Perth had 35 days to provide written advice setting out the things it had done or proposed to do. The solicitors then went on to deal with some of the requirements of the Local Government Act, with particular reference to a period of 35 days provided for in the Act for the Council to respond to the report of an inquiry such as that made by Mr Martin. The solicitors suggested that because of that 35-day period the Council was not in danger of being suspended as a result of matters arising from the recommendations in the report.

14 The solicitors pointed out that if the Council was suspended immediately then the City of South Perth, as an entity would not have any opportunity to respond to the report; and that the statutory requirements for concluding the inquiry would not thus be satisfied. The solicitors went on to say that they expected to be instructed to review the report and to provide advice to the City about those matters.

15 There was then a veiled threat of proceedings to the Supreme Court to uphold claims of this nature, as it was put. The letter concluded with an urgent request to the Minister to clarify his intended action in relation to the report.

16 It appears that there was no response by the Minister to that letter, which was followed by another letter from the solicitors on the same day. That letter was also written before the special meeting of Council had taken place.

17 The second letter informed the Minister that there was to be a meeting and that the report would be considered. The letter reiterated the solicitors' view that it was appropriate that the City of South Perth as presently constituted be given the opportunity to consider fully the findings and recommendations set out in the report rather than have that process prevented, as it was put, by an immediate suspension of the Council. Again, that letter seems to me to contain an acknowledgment that it was within the Minister's rights to prevent the process referred to by an immediate suspension of Council.

18 A third letter was written by the solicitors on 27 November following the meeting. That letter made reference to the resolutions passed by the meeting on that occasion. The essence of the resolution was that the Council would give immediate effect to those recommendations in the report which it was open to them to implement. The solicitors then expressed concern about the manner in which Mr Martin's inquiry had been carried out and about the nature of the findings made in the report. The letter pointed out that the City had not had an opportunity yet to consider fully the findings in his report or the recommendations contained in it.

19 The solicitors said the Council proposed to provide written advice to the Minister within 35 days setting out what further action it had taken or proposed to take in order to give effect of the findings and recommendation of the report as it was entitled and required to do under s 8.14(3) of the Act.

20 The solicitors concluded by saying that, in summary, things had moved considerably since the report was provided and since the initial indication that the Council might be suspended immediately. The solicitors expressed the hope that the matters in the previous letters and the Council's resolutions would be taken into account in considering the matter.

21 Despite the solicitors' requests to the Minister and despite the absence of any response from the Minister to those communications, the Minister did exercise his power to suspend the Council some three working days after it had received the report. It is said on behalf of the applicants that the decision was, as it is put, patently in contravention of the Act and was therefore beyond the Minister's power. It is on that basis that it is sought to quash the decision to suspend the Council.

22 It is submitted that the draconian power, as it is described, to suspend the Council as the Minister did, could not be exercised lawfully unless he complied with the procedures set out in Division I of Part 8 of the Act. If that were not so, it is said, there would be nothing to stop a Minister at any time or for any or no reason, appointing an inquiry panel and then suspending a local government for up to two years. It is against that background that I must review the provisions of the Act to determine whether the applicants' submission is sound in law.

23 Part 8 of the Local Government Act deals with what is described as "Scrutiny of the affairs of local governments". Provision is there made for two types of inquiries which may be conducted into the activities of a local government. Under Division 1 of Part 8, the executive director of the Department of Local Government may authorise a person to inquire into any aspect of a local government or its operations or affairs. That is to be done pursuant to s 8.3(2) and requires a written authorisation.

24 The authorised person then has powers of investigation and is required to compile a report into the outcome of the inquiry. The report is to contain any recommendations considered appropriate by the authorised person. Pausing there, it is that procedure which was followed in the appointment of Mr Martin and in the preparation by him of his report.

25 Division 1 goes on to provide that once the authorised person has provided the report to the executive director, the executive director is to provide a copy to the Minister and also to the local government unless the Minister directs otherwise. Then comes s 8.14(3), on which this application turns to a large extent. It is in the following terms:

"Within 35 days after receiving the report or such longer period as the Minister allows, the local government is to give the Minister written advice setting out the things that it has done or proposes to do to give effect to the recommendations of the authorised person."

26 The Act goes on to say that after receiving the advice from the local government (or in the absence of any such advice within the specified period) the Minister may order that the recommendations be given effect. If that order is not complied with, the Minister may then suspend the Council of the local government.

27 I then turn to Division 2, in s 8.16 which empowers the Minister by written notice to appoint an inquiry panel consisting of one person or three people to inquire into and report on any aspect of a local government or its operations or affairs. It is important to note that by s 8.20 the inquiry panel or person appointed under 8.16 has the powers of a Royal Commission. Thus, the inquiry panel or person appointed to inquire under Division 2 operates at a much higher level than an authorised person who might be appointed to conduct an inquiry under Division 1.

28 Section 8.19 is another important provision in this context. It is in the following terms:

"(1) Before or after appointing an Inquiry Panel to conduct an inquiry and make a report about a local government the Minister may, by order, suspend the council -

(i) the seriousness or duration of a suspected failure of the council to ensure that the local government performs its functions properly; or

(ii) such other factors as the Minister considers relevant,

make it inappropriate for the council to continue to act as the governing body of the local government."

29 The section goes on to provide that if an inquiry panel has not been appointed when the suspension takes place, the Minister is to appoint one within six months after the suspension.

30 Pausing there, that provision I think provides a full answer to the applicants' submission that the Minister could suspend for no reason. Clearly the Minister could not suspend unless those statutory criteria were satisfied, albeit they include such factors as the Minister might consider relevant.

31 However, it is clear that the Minister cannot act in an arbitrary or capricious manner. He must have reasons before suspending. And of course, in relation to any suspension, the Minister is accountable to Parliament and ultimately, no doubt, to the electorate. The important point here, in my view, is that the Minister can suspend on suspicion if he thinks that the seriousness of a suspected failure of a council makes it inappropriate for the council to continue to act as the governing body.

32 The question of construction which has arisen in the present case is whether, once the procedures have been set in place under Division 1 (those procedures including the 35-day period for response to recommendations) the Minister is bound to wait until the end of the 35-day period; or whether he is entitled to exercise his power under s 8.19, even though the 35-day period is still running.

33 It seems to me clear from the provisions of the Act referred to above, that the Minister is entitled to exercise his powers under s 8.19 even though the 35-day period may be running under s 8.14. If that were not so a situation might arise in which a report produced under Division 1 disclosed matters of such seriousness as to warrant the immediate suspension of council, and yet the Minister would have to wait 35 days before ordering a suspension which would otherwise be amply justified on the particular facts of the case. I make it plain that I am not suggesting that is necessarily this case: but the statute must be construed in general rather than by reference to the particular. It seems to me, therefore, that the Minister's decision to suspend the council was a valid exercise of the power notwithstanding that the 35-day period was still running.

34 In reaching that conclusion I note that it is impliedly conceded in the three letters from the Council's solicitors to the Minister that the Minister did then have the statutory right to suspend. The solicitors were attempting to persuade the Minister not to exercise that right.

35 That is not the end of the question however, because it is submitted further on behalf of the applicants that the decision to suspend was taken by the Minister without affording the applicants the procedural fairness.

36 It is accepted on behalf of the Minister that where the making of an administrative decision adversely affects a person's rights, interests or legitimate expectations, there will be an obligation to accord procedural fairness to that person, subject to any clear manifestation of a contrary statutory intention. That submission is supported by the decision of Mason J in Kioa v West [1985] HCA 81; (1985) 159 CLR 550 at p 584 where his Honour said:

"The law has now developed to a point where it may be accepted that there is a common law duty to act fairly in the sense of according procedural fairness in the making of administrative decisions which affect rights, interests and legitimate expectations subject only to the clear manifestation of a contrary statutory intention."

"Where the decision in question is one for which provision is made by statute, the application and content of the doctrine of natural justice or the duty to act fairly depends to a large extent on the construction of the statute."

His Honour then went on to refer to an earlier decision in which Kitto J had said:

"The obligation to give a fair opportunity to parties in controversy to correct or contradict statements prejudicial to their view depends on the particular statutory framework."

37 I therefore have to approach the question of procedural fairness on the basis of the statutory framework to which I have already referred. That framework, as I have said, entitles the Minister to suspend on suspicion. In my view, it is clear that, if the Minister may suspend on suspicion, he is under no obligation first to afford those persons who are under suspicion the opportunity of explaining themselves. That, I think, is because the statutory scheme requires the Minister to appoint an inquiry panel having the powers of a Royal Commission. In other words, any person affected by a decision to suspend, albeit taken on suspicion, is given a statutory right to be heard before what is, in effect, a Royal Commission. That is, in my view, a very important safeguard for a person affected by the decision.

38 The applicants place considerable reliance on the decision of the High Court in Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564. There are statements in that case which appear to support the applicants' position. However, each case must be looked at on its facts: and the facts of Ainsworth's case are very different. That was a case in which a report was prepared by the Criminal Justice Commission in Queensland. The report contained adverse recommendations about certain persons involved in the poker machine industry.

39 The report was furnished, as required, to the Chairman of the Parliamentary Criminal Justice Committee, to the speaker of the Legislative Assembly and to the relevant Minister. The report was tabled in Parliament without any notice having been given to the persons mentioned in the report either of the existence of the report or of its contents.

40 The High Court held that the Commission was required to comply with the rules of procedural fairness in preparing the report; that reputation, whether personal, business or commercial, was an interest which attracted the rules of procedural fairness and that by failing to allow persons whose legal rights or interests were affected to be heard, the Commission was in breach of the rules. That, as I have said, is clearly a very different case from the present because the report was prepared and published under a totally different statutory regime.

41 Brennan J at p 594 referred to the fact that the persons affected by the report would have had an opportunity to defend their reputation in proceedings before the relevant Parliamentary Committee. His Honour said:

"A failure by the commission to accord natural justice to a person whose reputation is damaged by a commission report is not cured by subsequently giving the bearer of the damaged reputation an opportunity to attack the finding and to defend the reputation in proceedings before the Parliamentary Committee.

Indeed, an obvious danger against which the rules of natural justice are designed to protect is the production and publication of a report that might damage a person's reputation leaving that person with no remedy save a prospect of persuading the Parliamentary Committee to re-examine the matter and express for itself a conclusion contradictory to the findings by the commission. Even if the Parliamentary Committee rejects an adverse finding in a commission report, that finding having been published may continue to inflict damage on the reputation."

42 I can see the applicants' argument that the Martin report, having been published, may continue to inflict damage on their reputation notwithstanding the subsequent inquiry in the nature of a Royal Commission. However, that, in my view, is the effect of the statutory provision. And a Royal Commission is a very different creature from the Parliamentary Committee referred to in Ainsworth's case, and has considerably greater powers and status. I am not persuaded, therefore, that there is anything in Ainsworth's case which assists the applicants.

43 There is one further matter to which I should refer. That is the evidence of Ms Clare Louise Allison, one of the applicants, in an affidavit sworn yesterday. Ms Allison deposed to discussions with Mr Martin which preceded his inquiry, when he set out the procedures which would be followed. According to Ms Allison, Mr Martin said that the Council would have a period of 35 days to respond to the final report. There is, I think, a dispute about the accuracy of the affidavit but, for present purposes, I accept it as being entirely accurate.

44 Accepting that Mr Martin did say that the Council would have a period of 35 days to respond to the final report he could not, of course, bind the Minister. Further, if Mr Martin did say that the council would have a period of 35 days to respond, he would have been giving an inaccurate summary of s 8.14. That is because the 35-day period is not given for the purpose of responding generally. The Council is required and obliged to give to the Minister written advice setting out the things it has done or proposes to do to give effect to the recommendations of the authorised person in the report: and that is not, of course, the same thing. So nothing can turn on the fact that Mr Martin gave what may have been regarded as an assurance about those matters.

45 Mr Hammond in support of the applicants' submissions, which were made principally by Mr Utting, said by analogy with a quotation from Shakespeare that the quality of natural justice should not be strained. Mr Hammond is referring to the plea made by Portia in The Merchant of Venice in her attack on Shylock. What Portia said was that the quality of mercy should not be strained. As far as I recall, there was no complaint by Portia about any lack of natural justice.

46 There is a place for mercy in courts' criminal jurisdiction and in the sentencing of offenders. There is not a place for mercy in this jurisdiction. I am required to administer justice according to law: and the law in this case is clearly set out, in my view, in the Local Government Act of 1995.

47 If I am wrong in my conclusion, I would not, in the exercise of my discretion, grant a writ of certiorari or indeed any of the declaratory or injunctive relief sought by the applicants. There are a number of reasons for that. The first is that it is clear in my view that procedural fairness was afforded to a very great extent to the individual councillors by Mr Martin in the preparation of his report. It is clear from the report itself that there are what are referred to as "natural justice responses" which are included in almost every section, if not in every section of the report. In a recent affidavit, Mr Martin deposes to the fact that he received 187 pages of submission from the Mayor and the Councillors, all of which information, he said, was considered and taken into account before finalising the report. Where considered necessary or relevant, the draft report was amended, Mr Martin says, by the addition or deletion of information or by inserting relevant comment. Given the detail of submissions which Mr Martin received, it is difficult to see what more might have been said to the Minister had he asked for a further response before making his decision to suspend.

48 It is true, as Mr Hammond says, that the Council as a body has not had an opportunity to respond in detail to the report, although the 35-day period, as I have said, required the council to respond not to the report generally, but to the recommendations: and the Council did respond. The Council's resolution passed at the special meeting addressed the recommendations and expressed an intention of giving effect to them.

49 Mr Hammond points out that the individual members cannot talk to each other and discuss a concerted response as a Council. But that, I think, is because of the statutory prohibition and not because of any failure to accord natural justice. Further, the fact that there is to be an inquiry in the nature of a Royal Commission is, I think, a powerful factor which would cause me not to exercise my discretion.

50 Finally, there is the question of delay. These events took place in November of last year. The proceedings were commenced in, I think, August of this year, some nearly nine months later.

51 The explanation given for the delay is essentially an assertion that the applicants could not afford to take legal proceedings until recently. That in my view is not a sufficient explanation, certainly without far more detailed information about their respective financial positions. In any event I doubt whether that would be a legitimate explanation, particularly when the delay has been prejudicial in the sense that the Minister has set in train the inquiry process and there is evidence about expenditure of considerable sums of money in relation to these matters. For those reasons I would grant an order nisi because I think the matter is sufficiently arguable, but I would then dismiss the application.

52 I now turn to the second application which is for a writ of prohibition. It is for an order that Lynton Reynolds, Anna Liscia and Marion Blair, who are the members of the Inquiry Panel established by the Minister pursuant to s 8.20 of the Act, show cause why a writ of prohibition should not be issued against them prohibiting them from proceeding to hear the inquiry. There are a number of grounds for the application and I will deal with them in turn.

53 The first is what is said to be a denial of natural justice arising from communications between Mr Reynolds, who is the chairman of the inquiry and the first-named applicant, Mrs Suzanne Pierce, the Mayor of the City of South Perth. This, it is said, is contrary to the fundamental principle that a judicial officer should not hear or receive representations from one party to proceedings unknown to the other.

54 There are said to have been conversations which took place on at least three occasions, including in particular 2 and 6 July 2001. That was a few days after 27 June on which the Inquiry Panel first sat.

55 Particular weight has been placed on conversation which took place on 6 July, about which Mrs Pierce made almost contemporaneous notes which she transcribed subsequently. I will come to the substance of the conversation in due course, but it seems to me that there is no basis for relief on the grounds which are raised because this was not a representation from one party unknown to another.

56 It was not a conversation behind a party's back. It was a conversation with the party. It was a conversation between the chairman of the Inquiry Panel and a person who is, in effect a party to the Inquiry. It does not therefore, in my view, fall foul of the principle relied on.

57 I then turn to the next ground of complaint which is that there was a discussion of the evidence. It is said that the Inquiry denied the applicants natural justice by discussing with one witness matters likely to be the subject of evidence before the inquiry, without availing the other applicants the opportunity to be present with counsel and to be heard.

58 In relation to that ground it is necessary to say something about the conversation as Mrs Pierce recorded it. There is a dispute, which I will come to in a moment, between Mrs Pierce and Mr Reynolds about what was said, but accepting the applicants' case at its highest I accept for the purposes of the argument that what Mrs Pierce said was entirely accurate.

59 The conversation took place at approximately 3.45 pm on 6 July when Mr Reynolds returned Mrs Pierce's telephone call from the previous day. There was a discussion about the processes which were to be undertaken and followed during the inquiry. Mrs Pierce asked about the procedure: and Mr Reynolds explained. Mrs Pierce then raised the issue of a wine purchase which had been referred to in certain allegations made by a Ms Britter.

60 Mrs Pierce said that although the matter appeared trivial, it had been broadcast in the community that the Mayor had purchased the wine but had not paid the bill. Mrs Pierce suggested that investigators look into the matter; the inference being if they did so, the matter would be resolved quite shortly.

61 Mrs Pierce then raised the subject of impartiality. Mr Reynolds said the panel was impartial and he listed his history. I pause to note that Mr Reynolds is the mayor of the City of Armadale and has had very considerable experience in the field of local government.

62 According to Mrs Pierce, Mr Reynolds went on to say that he was aware of comments from some of the councillors expressing a contrary view; in other words, suggesting the panel was not impartial. Mr Reynolds said if that attitude continued during the panel hearings, anybody making the suggestion would be rebuked.

63 A little later, after some further discussion, Mrs Pierce said she was not suggesting the panel was not impartial. Mr Reynolds then said the panel would be looking at the evidence, the main body of which had been provided to elected members; that was the main part of the information to which they would be referring. The panel members would be ploughing through it, as he put it, over the weekend and at the time of the hearing Mrs Pierce's lawyers would be able to cross-examine. Then according to Mrs Pierce, Mr Reynolds went on to say:

"However, the evidence they have at present suggests it would be a negative outcome for you."

64 Mrs Pierce asked whether the panel would be taking into consideration the many good things the council had progressed and Mr Reynolds said:

"Yes, no doubt your lawyer will be pointing that out. However, we also have to consider the consequences of council's decisions and how they have impacted on other people who have been affected by them. The panel only wants to get to the bottom of the sorry events associated with the past two years."

65 It seems to me that that conversation, on the basis of Mrs Pierce's evidence, is largely innocuous. Mrs Pierce put her position in relation to one matter and made a suggestion about it. There was discussion about impartiality. Mrs Pierce said she was not suggesting the panel was not impartial and the remark by Mr Reynolds that the evidence suggested it would be a negative outcome is not, I think, of itself sinister. It seems to be an entirely equivocal remark consistent with a friendly warning to Mrs Pierce that she may have a case to answer.

66 Equally, I think the reference of the sorry events over the past two years is susceptible of an innocent interpretation as much as a sinister one.

67 It seems to me therefore the contention that there was a discussion of evidence is not of any substance.

68 I then turn to the next contention. It is said that the Inquiry has denied the applicants natural justice by reason of Mr Reynolds making statements to Mrs Pierce and to the public at large which have given rise to an apprehension of bias on the grounds that the inquiry, through Mr Reynolds, has predetermined or prejudiced issues and credibility prior to public sittings.

69 I have already referred to the remarks made by Mr Reynolds in the conversation with Mrs Pierce which, as I have said, seems to me to be innocuous. There are other matters complained of, including remarks made by Mr Reynolds at the first sitting of the Inquiry Panel on 27 June. On that occasion Mr Reynolds introduced himself and the other members. He set out the nature of the inquiry, apparently by reading terms of reference. A little later he said:

"We wish to make it clear that whilst we may at the conclusion of our inquiry be in a position to make adverse comments about individuals, we are also equally interested in identifying those who behaved appropriately and who should be recognised as having done so. We understand that merely being associated with the City of South Perth could lead to a form of prejudice against an individual. Where this is not justified we will say so publicly."

"At this point I wish to point out that this panel is independent from the government of the day or indeed from the Department of Local Government. We have been appointed to carry out a task and we intend to do so without fear or favour. Suggestions to the contrary by some of the suspended elected members confused the functions of this panel with their own preconceptions of political persecution or interference."

71 Those remarks are, I think, rather more serious. In particular the suggestion that members are confusing the functions of the panel with their own preconceptions of political persecution or interference seems to me to contain an inference that the claims against the councillors are justified.

72 For that reason it seems to me that the assertion that merely being associated with the City of South Perth could lead to a form of prejudice also may carry an inference of predetermination, because it could not properly be said that being associated with the City could lead to a form of prejudice unless the City had acted improperly in some way.

73 I should then refer to matters complained of in the context of remarks made by Mr Peyton, the Inquiry's executive officer. Mr Peyton is not, of course, a member of the Inquiry Panel so he is not amenable to a writ of prohibition. However, there is complaint about remarks that he made in the course of a conversation with Mrs Pierce about the use of diary notes.

74 The substance of the complaint is that Mr Peyton asserted that diary notes should be regarded as being particularly reliable. However, it seems to me on a fair reading of the conversation, that Mr Peyton was not expressing any concluded view about the reliability of diary notes. The notes in question were those of Ms Britter, to whom I have already referred. Mrs Pierce in the course of the conversation cast doubt upon the veracity or accuracy of those diary notes and said that staff members were well aware of Ms Britter's note-taking practices.

75 According to Mrs Pierce, Mr Peyton then insisted that Mrs Pierce name staff members, which she declined to do.

76 It seems to me that because Mr Peyton apparently expressed interest in pursuing the question of the reliability of Ms Britter's diary notes, it could not be said that he was exhibiting any preconceived view. I therefore consider there is nothing in the complaints insofar as they are made against Mr Peyton.

77 I put on one side for the moment the question whether there has been a predetermination of issues. I come to what in my view is the most important point: whether there has been a predetermination of credibility, that is, Mrs Pierce's credibility. As I have already said, there is a dispute between Mr Reynolds and perhaps Ms Liscia on one hand and Mrs Pierce on the other about what was said during the course of the conversation of 6 July between Mrs Pierce and Mr Reynolds.

78 The conflict emerged during a hearing of the Inquiry on 17 July when counsel for Mrs Pierce raised with the Inquiry Panel the matter of the conversation between Mrs Pierce and Mr Reynolds.

79 Counsel summarised the telephone conversation on the basis of Mrs Pierce's instructions. The summary included the reference to Mr Reynolds saying that the person who appeared most at risk of an adverse finding was the mayor and that the evidence at present suggested that it would be a negative outcome for Mrs Pierce. Counsel referred also to the comment to the effect the panel only wanted to get to the bottom of the sorry events associated with the past two years.

80 It had emerged by then that there was a conflict between Mrs Pierce and Mr Reynolds. Counsel said:

"Now, I'm happy for my client to get into the witness box to corroborate the material in the affidavit if you think that's necessary. I suppose we will be in a very difficult position if there is a conflict as to what my client says and to what you say, Mr Chairman."

"Before we put your client in the witness box perhaps I should inform you that I also took notes and that I have the legal member of the panel hearing my end of the conversation. You might wish to adjourn for a couple of minutes to speak with your client and review what you have just said."

81 Counsel then asked who else had been present and whether his client had known that someone else was present. Ms Liscia, the legal member, then said that she had been present; that she could not hear what Mrs Pierce was saying but that she could hear what Mr Reynolds was saying. A little later Ms Liscia went on to say that Mr Reynolds' responses were simply, as she put it, responsive; that from her recollection of events, evidence was not discussed in the manner that Mr Hammond had suggested.

82 Ms Liscia said she gained the impression from Mr Reynolds' responses that Mrs Pierce had referred to certain documents in the bundle of documents and was quite concerned those documents were in the bundle. That does not accord with Mrs Pierce's notes of the conversation. The chairman then went on a little later to say that Ms Liscia had made notes of the conversation because "fundamentally," as he put it, "she recorded and I spoke."

83 There was then a short adjournment, following which counsel for Mrs Pierce said that he had taken instructions and that Mrs Pierce's recollection of the telephone conversation was at direct odds with that of Mr Reynolds. In those circumstances, counsel said, he did not see what was to be gained by putting Mrs Pierce in the witness box to testify. There was then some further discussion after which counsel said that, in his submission, it put the inquiry in a very difficult position. The chairman responded:

"I don't believe it does. I believe it puts your client in an awkward position."

84 The chairman then went on to dispute the detail of the telephone conversation as contained in Mrs Pierce's notes.

85 At some later stage in the proceedings, on the same day, Mr Reynolds referred to the notes he had made of the conversation. However, it emerged that those notes had been made some nine days after the conversation had taken place. Mr Reynolds said he did not deny that and, as he put it, "I pride myself on my memory."

86 Later still, Ms Liscia was asked by counsel whether she had kept notes of the conversation and she said she had not; that, of course, being quite contrary to Mr Reynolds' assertion earlier on that occasion that Ms Liscia had kept notes.

87 As I have said, Mr Reynolds stated that because there was a conflict between Mrs Pierce and him, it put Mrs Pierce in an awkward position. That can only be, in my view, because Mr Reynolds did not believe what Mrs Pierce had said. Thus the conflict between Mr Reynolds and Mrs Pierce places Mr Reynolds' credibility in issue.

88 The principle which must be applied in this context is that the Inquiry Panel must be free of any bias and must not conduct itself in such a way as to give rise to a reasonable apprehension of bias on its part.

89 That principle is well established. It is set out in a number of places but, in particular, in a unanimous decision of the High Court in Livesey v New South Wales Bar Association [1983] HCA 17; (1983) 151 CLR 288. In that case proceedings had been taken in New South Wales to strike a barrister off the roll of counsel for professional misconduct.

90 The Court had to determine certain matters of fact and hear evidence from a witness. In previous proceedings in which the barrister had neither been a party nor a witness, two members of the Court had expressed adverse opinions about the matters and about the credit of the witness. Objection was taken on behalf of the barrister to those Judges sitting on the case. The Judges refused to withdraw. The Court ultimately found that charges had been made out and ordered that the barrister be struck off.

91 The High Court held that a fair-minded observer might entertain apprehension of bias by reason of the prejudgment of the issues or the credibility of a witness. Hence, the order could not stand. The principle referred to in the joint judgment at p 293 is that a Judge should not sit to hear a case if in all the circumstances the parties or the public might entertain a reasonable apprehension that he might not bring an impartial and unprejudiced mind to the resolution of the question involved in it. Although we are here concerned with an Inquiry Panel, not a court, nevertheless the Panel has a similar obligation to act fairly and in an unbiased manner.

92 The situation in the present case seems to me to be analogous to that which arose before the High Court in Vakauta v Kelly [1989] HCA 44; (1989) 167 CLR 568. There, during the trial of a personal injury action by a Judge sitting without a jury, the Judge made statements critical of evidence given by the defendant's medical witnesses in previous cases.

93 It was held that the Judge's remarks during the hearing did not demonstrate actual bias. However, the majority of the Court held that the remarks would have excited in the minds of the parties and the members of the public, a reasonable apprehension that the Judge might not bring an unprejudiced mind to the resolution of the matter before him. In a passage at p 572 in a joint judgment, Brennan, Deane and Gaudron JJ said this:

"The appearance of impartial justice could be compromised if the words or actions of a trial Judge conveyed the impression that preconceived adverse views about a particular medical witness were influencing the Judge's approach to the case to an extent that the Judge was entering the arena to denigrate the witness or to oppose the witness's views, or that the Judge was biased against the party who called that particular witness."

And this is the passage of particular importance, in my view -

"or that the Judge was likely to be concerned in the judgment actually deciding the case to vindicate the preconceived adverse views about the witness by findings contrary to whatever views that witness might express."

94 That, I think, is the vice to which Mr Reynolds' remarks give rise. In other words, there is, in my view, a risk of a perception that Mr Reynolds, or the Inquiry, may make adverse credibility findings against Mrs Pierce to vindicate his own credibility. I do not say that Mr Reynolds would consciously do it, but it seems to me that in the circumstances of this case, there is a reasonable apprehension that it might happen. And because Mrs Pierce's credibility is obviously going to be a matter of considerable importance in this inquiry, that seems to me to warrant the disqualification of Mr Reynolds from continuing to sit.

95 In reaching that conclusion, I have had regard to two examples which counsel for the Minister posed which may appear to be analogous to this case. Suppose, counsel said, there was a dispute between a witness and a person such as an investigator conducting an inquiry, about what a witness had said on a previous occasion. The situation might well be such in which the inquirer was required to make a finding about what the witness had said: but that would not mean that the inquirer should be disqualified by reason of a possibility of bias.

96 The other example was of a hearing in court, where there was no transcript of the evidence and dispute arose about what a witness had said. Again, the Judge would have to decide the question, perhaps adversely to the witness, but that would not be a reason for a Judge disqualifying himself or herself.

97 That example is, I think, distinguishable on the basis that the Judge would be a professional, who would clearly be impartial. For that reason, any credibility issue would not form a basis for a reasonable apprehension of bias. The example of the inquirer is more difficult but again, I think, the answer is that the inquirer might be expected to be impartial.

98 Here, it seems to me that Mr Reynolds has demonstrated that he may not be impartial. When told that there was a conflict, he said, "There sure as hell is,"; and he saw the conflict as giving rise not to a problem for the Inquiry but to a problem for Mrs Pierce.

99 Ms Liscia's position is more difficult. Ms Liscia gave an account which was inconsistent with Mrs Pierce's to a certain extent, when it is clear that she did not take notes and may well not have had a full recollection of the relevant events. However, Ms Liscia did to a certain extent support Mr Reynolds' stance. I think therefore that it would be appropriate that Ms Liscia not sit either.

100 The third member of the panel was not involved directly in these matters. She was sitting on 17 July when the exchanges took place between Mr Reynolds, Ms Liscia and counsel but appears not to have contributed to the debate.

101 There are some complaints against the third member, Ms Marion Blair, who is the deputy mayor of the City of Belmont. The complaints arise from a newspaper interview which was published on 24 April in which Ms Blair is said to have expressed the view that a councillor's role is to represent ward residents on council and not to interfere with council administration. Ms Blair is said to have expressed also her belief in a clear division between council and management and to have been convinced that a mayor should be elected by the council rather than by popular community vote. I am told that is not the way the Mayor was elected in the City of South Perth.

102 Those remarks do not in my view go as far as to give rise to a reasonable apprehension of bias. Although they may be thought to express a view, they do not lead to the conclusion that it was a concluded view. As was pointed out by the High Court in R v Commonwealth Conciliation and Arbitration Commission & Ors; Ex parte the Angliss Group (1969) 122 CLR 546 at p 553 - 4,

"Those requirements of natural justice are not infringed by a mere lack of nicety and only when it is firmly established that a suspicion may reasonably be engendered in the minds of those who come before the Tribunal or in the minds of the public that the Tribunal or a member or members of it may not bring to the resolution of the questions arising before the Tribunal fair and unprejudiced minds. Such a mind is not necessarily a mind which has not given thought to the subject matter or one which, having thought about it, has not formed any views or inclination of mind upon or with respect to it."

"is not necessarily a mind which has not given thought to the subject matter but is one which has not formed any views or inclination in respect to it."

104 In other words, there is no requirement that a mind should be entirely blank or without any preconceived view. The requirement is that the mind be open or open to persuasion. That, I think, probably represents Ms Blair's position.

105 Having said that, it seems to me in all the circumstances of the case that because Ms Blair is a member of the Inquiry Panel and because it seems to me that I should grant the writ of prohibition against two members, it would be inappropriate to leave Ms Blair. It seems to me to be far more appropriate to prohibit the panel as a whole from sitting so that a fresh start can be made.

106 In making these conclusions, I have accepted the submission of counsel for the Minister that I should approach the matters with a reasonable degree of robustness. However, it does seem to me, even on that approach, that what has been said by Mr Reynolds in this case does give rise to that apprehension of bias.

107 I emphasise that I do not say that Mr Reynolds is or would be biased, nor that Ms Liscia or Ms Blair would be. But it is the perception: and in my view of this case it is a reasonable perception. In those circumstances I am persuaded that I should grant the order nisi and make the order absolute.