Secretary to the Department of Planning and Community Development v Muto (General) (Correction) [2011] VCAT 328

1. Pursuant to s 81K(1)(a) of the Local Government Act 1989 ('the Act'), the Tribunal finds that the Respondent engaged in 13 instances of conduct constituting misconduct in the circumstances contained in the Further Amended Notice of Allegations dated 3 March 2011.
2. Pursuant to s 81K(2) of the Act the Tribunal makes the following determinations in respect of the totality of those 13 findings of misconduct:
   • (a) The Respondent is reprimanded for the misconduct in which he has engaged as a Councillor;
   • (b) The Respondent must make a public apology at the April 2011 public Council meeting in the terms set out in the reasons for decision in respect of these orders; and
   • (c) The Respondent must take leave of absence (as defined by section 66B of the Act) for a period of one month commencing on 4 March 2011 and ending on 3 April 2011.
3. Pursuant to section 81M of the Act a record of the Tribunal's decision must be tabled at the March 2011 meeting of the Greater Shepparton City Council and recorded in the minutes of that meeting.
4. No orders as to costs.

For the Secretary to the Department of Planning and Community Development:

Dr I. Freckleton of Senior Counsel and Ms R. Ellyard of Counsel

1. The Respondent Mr Milvan Muto is a Councillor of the Greater Shepparton City Council ('the Council'). He was elected to that position in November 2008. The Applicant, the Secretary to the Department of Planning and Community Development ('the Secretary'), has made an application to the Tribunal under s 81E of the Local Government Act 1989 ('the Act') alleging gross misconduct by Mr Muto.
2. The particulars of the allegations cover the period from December 2008 to July 2010. A further Amended Notice of Allegations, dated 3 March 2011, was tendered during the course of the proceedings (Exhibit A1). That document details alleged conduct by Mr Muto which is said to constitute some 13 instances of misconduct within the meaning of the Act.
3. Misconduct by a Councillor is defined in s 81A of the Act to mean:
   • (a) conduct by a Councillor that is in breach of the Councillor Code of Conduct; or
   • (b) the failure of a Councillor to comply with a direction of a Councillor Conduct Panel where the Panel has not made a finding of misconduct against the Councillor.
4. Only s 81A(a) of the definition is relevant in the context of this case. It is alleged that Mr Muto has breached the Greater Shepparton City Council Code of Conduct which was adopted in November 2009. In accordance with section 76C(3)(a) of the Act the Council's Code of Conduct includes the Councillor Conduct Principles contained in section 76B and 76BA of the Act such that a breach of those Principles constitutes a breach of the Councillor Code of Conduct.
5. Mr Muto admits that he has engaged in the conduct set out in particulars 1 to 13 of the Further Amended Notice of Allegations. Mr Muto also admits that this conduct constitutes misconduct within the meaning of the Act.
6. Section 81K provides that in dealing with an application under s 81E VCAT may make any of the following findings:
   • (a) that a Councillor has engaged in conduct that constitutes misconduct;
   • (b) that a Councillor has engaged in conduct that constitutes serious misconduct;
   • (c) that a Councillor has engaged in conduct that constitutes gross misconduct.
7. On the basis of the admissions made I find that on 13 separate occasions Mr Muto has engaged in conduct that constitutes misconduct within the meaning of the Act.
8. The types of orders which the Tribunal may make depends upon the type of finding made. For example, in relation to a finding of gross misconduct VCAT may order that the Councillor be disqualified for a specified period not exceeding 4 years and that his or her office be vacated (s 81K(4)(a)).
9. The orders that may be made consequent on a finding of misconduct are less severe. In such circumstances VCAT may reprimand the Councillor or make any or all of the following orders:
   • - that the Councillor must make an apology in the form and manner determined by VCAT;
   • - that the Councillor must take leave of absence from a specified date for a period specified by VCAT not exceeding 2 months (s 81K(2)(b)).
10. In this matter the parties have consented to the making of orders in the following terms:

"Pursuant to section 81K(2) of the LG Act and section 130(2)(d) of the Victorian Civil and Administrative Tribunal Act the Tribunal makes the following determinations in respect of the totality of those 13 findings of misconduct:

(a) The Respondent is reprimanded for the misconduct in which he has engaged as a Councillor;

(b) The Respondent must make a public apology at the April 2011 public Council meeting in the terms attached to these orders;

(c) The Respondent must take leave of absence (as defined by section 66B of the LG Act) for a period of one month commencing on 4 March 2011 and ending on 3 April 2011."

1. As to the apology referred to in paragraph (b) of the proposed orders, it is to be made by Mr Muto at the first public Council meeting he attends following his period of full leave of absence; namely, the April 2011 meeting. The apology is to be in the following terms:

"In 2010 proceedings were commenced against me by the Secretary to the Department of Local Government alleging gross misconduct.

Those proceedings against me have now been resolved. As part of that resolution the Secretary has agreed not to pursue the allegations of gross misconduct and I have admitted 13 counts of misconduct as set out in a further amended notice of allegations dated 3 March 2011. The remaining allegations from earlier notices have not been proceeded with.

I wish to publicly acknowledge any disruption and damage which my conduct has caused to the proper functioning of the Council and to its standing in the Greater Shepparton community.

I apologise to all affected by my conduct, including my fellow Councillors, the CEO and general managers, other Council staff, and to the Greater Shepparton community. To the extent that any words I used which might be considered as racist, that was never my intention."

1. In addition to the orders proposed Mr Muto has proffered an undertaking to the Tribunal that for a period of five months commencing on 5 April 2011 and concluding on 5 September 2011 he will not perform any duties as a Councillor save for attendance at -
   • (i) the monthly public Council meeting held on the third Tuesday of the month;
   • (ii) a meeting of 30 minutes duration with the Chief Executive Officer of the City of Greater Shepparton immediately prior to the monthly public Council meeting in which the Agenda Items (which had been previously forwarded electronically) will be discussed; and
   • (iii) meetings of the "Shepp Show Me" committee.

2. I have had regard to this undertaking in considering the appropriateness of the penalties proposed.
3. Ultimately the question of the appropriate penalty in a particular case is a matter for the Tribunal, though the consent of the parties is clearly a significant consideration.
4. A general principle of judicial restraint in the scrutiny of proposed settlements was enunciated early in the history of the Trade Practices Act. This approach was extended to the submission of agreed pecuniary penalties. In NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission,[1] Burchett and Kiefel JJ observed in their joint judgment:

"There is an important public policy involved. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the Australian Competition and Consumer Commission to turn to other areas of the economy that await their attention. At the same time, a negotiated resolution in the instant case may be expected to include measures designed to promote, for the future, vigorous competition in the particular market concerned. These beneficial consequences would be jeopardised if corporations were to conclude that proper settlements were clouded by unpredictable risks. A proper figure is one within the permissible range in all the circumstances. The court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case."[2]

1. In proceedings in respect of civil penalties there is now a well established line of authority in support of the proposition that where a regulatory body and a respondent have reached a negotiated settlement and the penalty proposed is, broadly speaking, within the 'permissible range' (having regard to all the circumstances) the court (or in this case the Tribunal) should not depart from the agreed sanction.[3] I propose to adopt the same approach to the matter before me. The question then becomes whether the sanction proposed is within the permissible range.
2. Having regard to the nature of the misconduct, the undertaking proferred by Mr Muto and the types of orders which the Tribunal may make pursuant to s 81K(2), I am satisfied that the orders proposed are within the permissible range and I will make the orders in the term sought.
3. There is one aspect of the proposed disposition which is not agreed, namely the commencement date of the one month leave of absence. The Secretary proposes that Mr Muto's leave of absence commence immediately, whereas Mr Muto seeks a commencement date after the next Council meeting on 15 March 2011. In support of the later commencement date Mr Pane, counsel for Mr Muto, submitted that Mr Muto was the proponent of a resolution that was due to be discussed at the Council meeting on 15 March 2011. The resolution in question concerned the introduction of free parking within Shepparton, for a one month trial period. Mr Muto wished to attend the next Council meeting to put the case in support of the resolution.
4. During the course of argument I inquired of counsel whether the discussion in respect of Mr Muto's resolution could be deferred until the April Council meeting. After inquiries were made I was informed that another Councillor was willing to move a motion at the March Council meeting that discussion on Mr Muto's resolution be considered at the April meeting.
5. It was not suggested that the resolution that Mr Muto was proposing was particularly urgent and the real issue was that he wished to be present when the matter was discussed. This will now occur, albeit at the April Council meeting.
6. In these circumstances I am not persuaded that there should be any deferral in the commencement date of Mr Muto's leave of absence.
7. I propose to make the orders in the terms sought and they will commence operation from today's date.

[1] [1996] FCA 1134; (1996) 71 FCR 285.

[3] Australian Competition and Consumer Commission v Real Estate Institute of Western Australia (1999) 161 ALR 79; Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd [2002] FCA 619; Australian Securities and Investments Commission v Vizard [2005] FCA 1037