Sharples v Minister for Local Government [2010] NSWCA 36 | Case summary

Sharples v Minister for Local Government [2010] NSWCA 36 | Case summary | Zoe

[15]

Wednesday 17 March 2010 TERRY PATRICK SHARPLES v MINISTER FOR LOCAL GOVERNMENT & ORS Judgment 1 BEAZLEY JA: I agree with Tobias JA. 2 TOBIAS JA: On 10 July 2006 the first respondent (the Minister) determined pursuant to s 508A(1) of the Local Government Act 1993 (the Act) an application made by the third respondent (the Council) that its general income for the 2006/07 and the 2007/08 years be varied by a specified percentage (the 2006 determination). On 15 August 2007 the Minister determined a further application by the Council that its general income for the years 2008/09 to 2012/13 be varied by a specified percentage (the 2007 determination) (together the Determinations). 3 By his further amended Class 4 application filed in the Land and Environment Court on 3 November 2008, the appellant, Mr Terry Sharples (a council ratepayer) sought amongst other things, declarations that the Determinations were void and of no effect upon the grounds that first, the Council's applications to the Minister for the variations were made in contravention of s 508A(3) of the Act and, second, the applications upon which the Determinations were made had misled the Minister and thus vitiated his decisions to determine the applications in the Council's favour. 4 The proceedings were heard by Biscoe J who, on 30 December 2008, rejected the appellant's challenges to the validity of the Determinations, ordered that his further amended application be dismissed and reserved the question of costs: Sharples v MemberMinister for Local Government [2008] NSWLEC 328; (2008) 166 LGERA 302. In a separate judgment on 29 April 2009 the primary judge ordered that the appellant pay one third of the Council's costs of the proceedings: Sharples v Minister for Local Government (No 2) [2009] NSWLEC 62. 5 The hearing before the primary judge commenced on 3 November 2008. On 7 November 2008 the appellant applied to his Honour, after the evidence had concluded, to further amend his points of claim - an application which was rejected by his Honour on that date: Sharples v Minister for Local Government [2008] NSWLEC 308. On the same day an application was made by the appellant to read an affidavit of a Miss Pamela Margieson that had been served two days previously, on the third day of the hearing. His Honour delivered an ex tempore judgment in which he refused to exercise his discretion to permit Miss Margieson's affidavit to be read and accordingly it was rejected. 6 The appellant appeals to this Court against all four decisions of the primary judge, namely, his refusal on 7 November 2008 to permit the appellant to further amend his points of claim; his rejection on 7 November 2008 of Miss Margieson's affidavit; his dismissal on 30 December 2008 of the substantive proceedings and his decision on 29 April 2009 with respect to the payment by the appellant of one third of the Council's costs of those proceedings. On 4 May 2009, the Council filed a Notice of Contention in which it submitted that the substantive decision of the primary judge on 30 December 2008 should be affirmed on a ground other than that relied upon by the primary judge. 7 Although the first respondent, the Minister, and the second respondent, the Department of Local Government, were represented and took an active part in the proceedings before the primary judge, neither of those respondents took part in the hearing of the appeal. Each filed a submitting appearance except as to costs. 8 So far as the two interlocutory decisions of the primary judge are concerned, the appellant indicated at the commencement of the hearing of the appeal that he did not propose to supplement his written submissions with any oral submissions. At this point it is necessary to note that the appellant only has an appeal as of right to this Court with respect to the primary judge's decision dismissing his further amended application: Land and Environment Court Act 1979, s 58(1). His appeal against his Honour's interlocutory decisions and his costs order is only by leave: s 58(3). However, no summons for leave has been filed and no mention of this requirement for leave was made either in the parties' written or oral submissions. Nevertheless, this Court is bound by s 58(3) and, therefore, must consider whether to grant leave with respect to the three decisions requiring leave or any of them. In this respect it is both appropriate and convenient to deal with the question of leave and the appeals with respect to those decisions concurrently.

[16]

The interlocutory appeals 9 The primary judge's interlocutory judgments of 7 November 2008 in respect of both the application by the appellant to further amend his points of claim on the one hand and to read the affidavit of Ms Margieson on the other, pre-dated the decision of the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175. That decision was handed down on 5 August 2009. Nevertheless, it is apparent that his Honour essentially applied the principles later articulated by the High Court in that case. 10 With respect to the application by the appellant to further amend his points of claim, his Honour in his ex tempore judgment stated the applicable principles and referred to the relevant provisions of the Civil Procedure Act 2005, noting that the decision of the High Court in State of Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146 was not decided on legislation such as now controls the power of amendment of documents in civil proceedings in New South Wales. Nevertheless, his Honour remarked that even in J L Holdings significant prejudice to an opposing party was likely to defeat an application to amend. 11 The primary judge then noted that the motion for leave to amend was made on the fifth day of the hearing (originally fixed for two days but which had extended to five days) at a time when the evidence had just concluded. Because the original hearing time had been extended to five days, no doubt to enable the evidence to be concluded in one hit, his Honour acknowledged that it would be necessary to adjourn the hearing for some weeks for the purpose of hearing submissions. It was in fact adjourned to 2 December. 12 His Honour then stated the nature of the proposed amendment and summarised the parties' submissions with respect thereto. In this respect it is to be noted that both the Minister and the Department opposed the amendment on three grounds, of which his Honour upheld two. 13 The proposed amendments went to the issue of a survey by the Council of its ratepayers seeking their approval of the proposed variance of the Council's general income which would increase the rates made and levied during the years in respect of which the variance was sought. At [17] his Honour indicated that the proposed amendments raised a new issue as to whether there was a better way of conducting the Council's survey and which was the subject of criticism in the appellant's existing points of claim. 14 His Honour therefore accepted that if the amendment was to be allowed, the respondents would be prejudiced due to the lateness in seeking it. Had it been sought out in a timely way, it was likely that the Council would have called other or additional evidence and conducted its cross-examination differently. Further, if the amendment was to be allowed, the respondents would need to be afforded the opportunity to call further evidence and to recall two expert witnesses for further questioning. 15 His Honour thus held that to allow the amendment would disrupt and extend the further hearing of the case and adversely affect its timely disposal. He also considered that there had been insufficient explanation of the delay in seeking leave to amend the points of claim until the fifth day of the hearing when the evidence had concluded. 16 In his written submissions the appellant acknowledged that J L Holdings was no longer good law in view of the decision of the High Court in Aon Risk. Nevertheless, he submitted that the matter, the subject of the amendment, had been foreshadowed in the appellant's opening submissions on the Friday before the trial and had arisen out of the statement made in an expert report by a Mr Sargeant (who was called by the Council) and which had been served shortly before trial. It was noted that although opposed to the amendment, the Minister and the Department did not suggest that they would be prejudiced if it were to be allowed. It was only the Council that asserted such prejudice. 17 It was submitted that his Honour erred in finding that the Council would be prejudiced or that there would be any prejudice to the administration of the Court's lists. Even if the Council considered it necessary to call further evidence (which the appellant denied), as the proceedings were to be adjourned in any event for several weeks, any such prejudice in relation to the calling of further evidence or the recalling of expert witnesses would be ameliorated. 18 The foregoing submissions overlook the fact that at the time the application for amendment was made the evidence had concluded; the hearing of the evidence had taken five rather than the two days allotted and the reason for the adjournment (which was purely for the purpose of addresses) was due to the fact that the hearing of the evidence had overrun its allotted time. 19 His Honour accepted, as in my view he was entitled to do, that in the event that the amendment was allowed, any further evidence would need to be called by the Council on at least the first of the two days set aside for the hearing of submissions. This may well have caused those two days to be extended and to potentially take up time that might have been allotted to the hearing of other litigants' cases. 20 In Aon Risk all the Justices were at one in emphasising the importance of case management considerations and proper use of court resources when dealing with an amendment such as that proposed in the present case as well as the prejudice to the opposing party or parties and the lack of any proper explanation for the delay in making the relevant application. 21 Furthermore, ss 57 and 58 of the Civil Procedure Act 2005, which applies to the Land and Environment Court as it is a court referred to in Schedule 1 to that Act, required that court, in deciding whether to make an order for the amendment of a document, to "seek to act in accordance with the dictates of justice" and, for this purpose, to have regard to, inter alia, "the efficient disposal of the business of the court", "the efficient use of available judicial and administrative resources" and "the timely disposal of the proceedings … at a cost affordable by the respective parties". 22 The observation of Allsop P in Bi v Mourad [2010] NSWCA 17 at [47] is also instructive: 'Delay is a feature of litigation intended to be eliminated as far as possible by the statutory enactment of the regime in the Civil Procedure Act . … The reforms that have taken place under the Civil Procedure Act and the evident attempt by courts to ensure efficiency can be seen not merely to reflect worthy efforts for efficiency but also to be steps vital for the provision of timely individual justice ' . 23 In the present case the primary judge found that there was prejudice and, importantly, considered that allowing the amendment would disrupt and extend the hearing of the case and thus adversely affect its timely disposal. That problem would not have been alleviated by the fact that due to the overrun of the hearing of the evidence it was necessary to adjourn the proceedings for some weeks for the purpose of hearing submissions. 24 Accordingly, in my view the appellant has not demonstrated that his Honour's exercise of discretion to refuse the amendment has miscarried with the consequence that the appeal against that refusal should be dismissed. 25 So far as his Honour's rejection of Ms Margieson's affidavit is concerned, it is to be noted that that affidavit was sworn on 3 November 2008 (the first day of the trial) but not served until 5 November. Again, the Council asserted that it was prejudiced by the late serving of that affidavit, a submission which his Honour accepted. In it Ms Margieson, a ratepayer, deposed to a conversation she had had with a person conducting a telephone survey on behalf of the Council with respect to a matter that was allegedly relevant to the issues in the substantive proceedings. 26 The matter of concern to the Council by the late service of the affidavit was that it wished to find and speak to the person who undertook the survey and with whom allegedly Ms Margieson had spoken, in order to confirm the accuracy of the conversation to which she had deposed. It also wished to ascertain whether Ms Margieson had objected to the extra rates she would have to pay over the next seven years if that was necessary to advance the projects in respect of which the Council had sought a variance of its general income. 27 It appeared that the person who had conducted the survey had left the employ of the marketing firm engaged by Council to conduct the survey. Its prejudice, which his Honour accepted, was its inability to make enquiries as to the whereabouts of the person who conducted the survey and with whom Ms Margieson asserted she had had the conversation. 28 The appellant submitted that his Honour erred in finding prejudice given that the marketing company had destroyed its worksheets, making it impossible to check whether the person conducting the survey had actually telephoned Ms Margieson notwithstanding that her number was on a list of numbers to be called during the survey. His Honour accepted the Council's submission that had the affidavit been served in a timely way instead of on the third day of the hearing, there would have been a reasonable opportunity for it to make further enquiries as to the whereabouts of the person who conducted the survey. 29 Finally, his Honour gave weight to the fact that there had been no satisfactory explanation provided by the appellant for the late service of Ms Margieson's affidavit. 30 The appellant submitted that even if the Council was initially prejudiced by the lack of time within which it could investigate the whereabouts of the person who conducted the survey, nevertheless his Honour had erred in failing to take into account the fact that that prejudice would be mitigated given the necessity for there to be an adjournment for some weeks between the conclusion of the evidence on 7 November and the commencement of submissions on 2 December. 31 The Council submitted that his Honour was entitled to reject Ms Margieson's evidence merely by virtue of the appellant's delay in seeking to adduce her evidence well after directions had been made to serve all evidence prior to the trial commencing - a delay which remained unexplained. That was sufficient of itself for the Court to reject the appellant's submissions: Aon Risk at [103]. 32 In my view the appellant's submissions should be rejected. Although his Honour did not expressly take into account the fact that the hearing was to be adjourned for the purpose of submissions as a consequence of the overrun of the evidence, nevertheless the late service of Ms Margieson's affidavit of itself deprived the Council of the opportunity to ascertain the whereabouts of the person who conducted the survey, an opportunity it would have had had the affidavit been filed in accordance with the directions for the filing of evidence. 33 Again, in my view the failure to explain that delay is fatal to the appellant's application. Accordingly, I see no proper basis upon which it can be suggested that his Honour's discretion to reject Ms Margieson's affidavit miscarried. 34 For the foregoing reasons I would grant leave to appeal against the interlocutory decisions of 7 November 2008, but dismiss each appeal. I now turn to the substantive appeal.

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(9) The determination may be varied or revoked only: (a) on the application of the council made in accordance with any applicable guidelines issued by the Director-General under this Act, or (b) on the Minister's own initiative if the Minister is satisfied that the council has contravened any conditions of the determination or any applicable guidelines issued by the Director-General under this Act." (Emphasis added) 36 The appellant also relied upon ss 509(1) and 512 which relevantly provide: "509(1) A council must not make rates and charges for a year so as to produce general income of an amount that exceeds the notional general income of the council for the previous year as varied by the percentage (if any) applicable to the council under section 506, 508 (2) or 508A for the year for which the rates and charges are made, except as provided by section 511 or 511A." "512(1) If a council contravenes section 509, 510, 510A, 511 or 511A in making a rate or charge for a year: (a) the contravention does not affect the validity of the rate or charge, but (b) rates and charges made for the following year by the council are invalid for all purposes unless: (i) before the rates and charges were made the council submitted to the Minister such information respecting the rates and charges proposed to be made for that following year as the Minister may require and the Minister, by order published in the Gazette, approved of their being made, and (ii) the rates and charges conform with the Minister's approval. (iii) (Repealed) (2) The Minister may, by order published in the Gazette, exempt a specified council from the operation of subsection (1) (b) for a specified year." 37 The provision critical to the appellant's case was s 508A(3) which refers to a council making the relevant application "in accordance with any applicable guidelines issued by the Director-General under this Act". 38 The power of the Director-General to issue such guidelines is to be found in s 23A, the relevant provisions of which are as follows: " 23A Director-General's guidelines (1) For the purposes of this Act, the Director-General may from time to time prepare, adopt or vary guidelines relating to the exercise by a council of any of its functions. … (3) A council must take any relevant guidelines issued under this section into consideration before exercising any of its functions." 39 It was common ground that the applicable guidelines referred to in s 508A(3) were issued by the Director-General on 28 February 2006 (the Guidelines). The document issued by the Director-General was headed "SPECIAL VARIATION GUIDELINES". Under the sub-heading "Applications made under Section 508A" the following relevantly appeared: "Prior to preparing an application, the council should refer to Council Circular 05-04 to determine that an application under section 508A is the most appropriate application to meet the council's needs. The council should contact the department to signal its intention to apply. Due to the comprehensive planning and financial reporting requirements supporting the application , preparation (including consultation with the department) leading to the lodgement of the application may require a period of between one and two years. It should be noted that section 508A(9)(b) enables the Minister for Local Government to vary or revoke a determination if the council has contravened any conditions or guidelines applicable to the determination . Conditions will include rigorous reporting requirements. As the application is to include a detailed assessment of council's financial and planning operations, the use of a standard form is not considered to be suitable for this type of application. Applications under this section should be made by way of a written submission covering the following minimum requirements ." (Emphasis added) 40 The "Minimum Requirements" were divided into three sections under the headings "General", "Financial" and "Rating". Altogether there were 20 "Minimum Requirements", of which only the third under the heading "General" is relevant to the present case. It is in the following terms: " Evidence of community support for the proposal and how the community was consulted (eg., use of meetings, surveys, etc). ● A council should consider conducting a public meeting (or meetings) to discuss the proposal and any other submissions concerning the draft management plan." (Emphasis added)

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There then followed the responses to the paper survey to which I have referred above, together with the following further comments: "Major criticism to date has come from the president of the Tweed Heads Chamber of Commerce and dismissed Councillor John Murray, who claims the special edition is misleading. To counter any such claims another article titled 'Various factors influence rating' was published in the next Tweed Link after the special edition, which stated in part 'Residents should remember that what is proposed is 6 per cent a year increase above CPI and this of course compounds'. Responses received indicate this was not necessary because of the large number of responses that indicated they were very aware that the increases were for each year of the 7 year plan and that the increases compounded." 51 In fact prior to making his determination with respect to the 2006 application, the Minister received some 19 letters or emails including four from the appellant dated 26, 28, 29 June 2006 and 3 July 2006 respectively. 52 The primary judge set out extracts from a deal of this correspondence at [39]-[49] of his judgment. He summarised the material at [38] noting that the Minister had received a good number of letters in opposition to the proposal from ratepayers, including the appellant, and other associations. Some understood the actual effect of the proposed rate increase including that it was to be cumulative, compounding and above the CPI. Some alleged that there had been a misrepresentation to the public. It was not apparent from the letters, his Honour observed, that all the correspondents understood the actual effect of the proposed increase. 53 Nevertheless, there was no doubt that at the very least the appellant asserted to the Minister, particularly in his letter of 3 July 2006 (which his Honour extracted at [48]), that there was a huge variation between the telephone survey and the paper survey results with the result that, so the appellant contended to the Minister, no data existed that could satisfy him that there was evidence of community support to the proposed rate increases. 54 A further application under s 508A was made by the Council to the Minister on or about 20 July 2007 (the 2007 application). According to his Honour (at [51]) that application illustrated the impact on ratepayers in a series of tables that showed the cumulative and compounding effect of rate increases in each of the seven years the subject of that application. It then repeated the section on community consultation which had appeared in the 2006 application and which referred to the 20 page special edition of Tweed Link and to the special article in the following edition. The 2007 application then summarised the community consultation that reportedly occurred in 2007 and which his Honour recorded at [52] of his judgment. 55 Subsequent to the 2006 determination and prior to the 2007 determination a number of submissions were made to the Minister, particularly by the appellant, who wrote that the Minister had been seriously misled and had consequently fallen into jurisdictional error by failing to take into account a mandatory consideration, being "evidence of community support for the proposal" - the latter being a reference to the relevant requirement of the Guidelines upon which the appellant relied in the proceedings. 56 By letter dated 26 July 2006 the appellant also forwarded to the Minister a submission dated 25 July 2006 that he had made to the Council to the effect that it should resolve not to adopt the Minister's 2006 determination. That submission set out the result of the appellant's own audit of the paper and telephone survey results as follows: Positive Negative Unquantifiable Paper survey 29.1% 59.3% 11.6% Telephone survey 29.7% 58.3% 12%

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57 As his Honour noted at [56], the appellant did not attempt to support these figures in the proceedings. Their relevance is that they conveyed to the Minister the appellant's view as to the inaccuracy of the survey results provided to him by the Council. 58 On 27 September 2006 the Minister replied to the appellant's letter of 26 July 2006 saying, amongst other things, that evidence of community support for a special variation was just one of the factors taken into consideration during the assessment process. The Minister made a similar response to a further letter from the appellant to him dated 31 October 2006 which alleged "falsification" of the paper survey results by the Council and the telephone survey results by Market Facts. 59 Each of the 2006 and 2007 determinations was preceded by a departmental submission to the Minister. With respect to the 2006 application, the Department relevantly stated the following on the issue of community consultation: "Feedback from the community consultation on the Seven Year Plan raised issues of affordability for ratepayers on pensions either government funded or those who are self-funding retirees on fixed incomes. … Following the consultation period a number of projects were deleted from the Seven Year Plan which was scaled back by $16 million. Since then the community feedback as part of the Management Plan exhibition has been generally positive, although not without some negative feedback." 60 The departmental submission with respect to the 2007 application stated under the heading "Community Consultation": "● The main community consultation process was undertaken in March-May 2006, at the time of the original application. Details are provided in A50455. ● Council's original 7-year plan was also included in the 2007/08 Management Plan, which went on public exhibition from 10 May-8 June 2007. ● A special edition of the Tweed Link (local paper) on the 7-year Infrastructure & Services Plan was published on Wednesday 15 May 2007 and was distributed to 35,500 households in the Shire. According to council, 18 written responses were received." 61 The departmental submission also referred to complaints received by the Minister and the Department, stating: "A submission was received from Mr T Sharples of 45 Charles Street Tweed Heads. Mr Sharples had provided the department with a range of information, which has been reviewed in light of this assessment, however it was not considered to have any adverse effect on the assessment." 62 Pursuant to an order of the primary judge made under r 4.3(b) of the Land and Environment Court Rules 2007 (LECR), the Minister was required to state his reasons for each of the 2006 and 2007 determinations. By this time the 2006 incumbent Minister had changed and the 2007 incumbent provided the Statement of Reasons for the 2006 determination. Relevantly with respect to the latter, the Minister in his Reasons noted that he had been advised that the 2006 Minister had received correspondence regarding the 2006 application from a number of interested parties prior to his determination of 10 July 2006. He then listed the 19 letters to which I have referred at [51] above. The Statement of Reasons also sets out the other material provided with the 2006 application to the Minister in support thereof. 63 Under the heading "Reasoning processes leading to the decision", the Minister stated: "Following consideration of material before him, the Minister at that time made a determination in accordance with the recommendations contains in the 2006/07 Submission."

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(b) both Determinations were invalid because in the 2006 and 2007 applications the Council misleadingly overstated the extent of community support or understated to the Minister the extent of community opposition in the paper and telephone surveys. The appellant called this limb of his case " misleading the Minister ". 68 The legal underpinning of the first limb was the allegation that as the evidence of community support for the proposal was flawed due to the fact that the responses to both the paper and telephone surveys were based on false information, it followed that the requirement of the Guidelines that the applications provide evidence of community support for the proposal was contravened. Determinations were made by the Minister on applications which had not been made by the Council in accordance with the Guidelines, thus resulting in a breach of s 508A(3). 69 The second limb was stated by the primary judge at [95] to have four legal bases, namely, "(a) simply because the Applications contained misleading survey representations. Although the heading to this part of the pleading was " The Minister was materially misled by " the Applications, that was not thereunder pleaded, nor did I understand the applicant to seek to prove that the Minister was actually misled, nor would the evidence justify that conclusion; (b) in breach of the Guidelines, the council failed to provide valid evidence of community support; (c) the Minister failed to give proper consideration to whether there was community support for the proposal. The applicant submits that this is evidenced by the absence of a " finding " by the Minister with respect to the question of whether the proposal enjoyed community support; (d) by reason of (a) to (c) above, the Minister's determinations were manifestly unreasonable." 70 On the hearing of the appeal the appellant expressly abandoned his assertion (rejected by the primary judge at [127]) that the Determinations were manifestly unreasonable in the Wednesbury sense. In essence it was submitted that the Determinations were invalid as the Minister failed to take into consideration a relevant matter, namely, that the survey results as notified to the Minister by the Council were misleading in the respects alleged by the appellant in reliance upon the evidence of his expert, Mr Elliott. That is to say, the appellant submitted that the results of the paper survey provided by the Council to the Minister, and to which I have referred at [47] above, were incorrect so that the Minister was misled into believing that a lesser number of respondents had provided a negative response than was in fact the case.

[36]

(c) accordingly, the 2006 and 2007 applications were not made " in accordance with " the Guidelines as required by s 508A(3). 72 Having discussed the evidence, his Honour's conclusion with respect to the evidence was relevantly as follows: "72. The council's submission is that the representation in the special edition of Tweed Link conveyed the meaning that rates would increase at around $1 per week each year compared with the immediately preceding year. It could be understood in that way, I think, by those who read and absorbed the qualifying article in the next edition of Tweed Link , which referred to compounding, and who did the sums. However, in my opinion, reasonable persons who did not do this were likely to understand the representation as meaning that the 83% of ratepayers would only pay around an extra $1 per week for each of the seven years compared with the base year of 2005/2006 current at the time of the representation. … Thus, the council's community consultation was significantly flawed. As the 2006 and 2007 Applications relied on evidence of community support which flowed from the materially misleading representation, I accept the applicant's submission that the 2006 and 2007 Applications were not in accordance with the Guidelines because they did not satisfy the minimum requirement of "Evidence of community support for the proposal" based on community consultation ." (Emphasis added) 73 Although the relevant guideline does not directly state that the community must be consulted to a particular extent or at all, his Honour found (at [75]), and it was not challenged, that a requirement of consultation with the community and the obtaining of evidence of community support to a proposal was "embedded in the Guidelines". 74 Having found that there was a material misrepresentation with a consequential flawed community consultation, the primary judge then turned to the question of the legal effect of those findings upon the validity of the Determinations. 75 At [77] his Honour accepted that materially misleading statements have the capacity to vitiate a decision in some statutory contexts. Something that is materially misleading may not constitute what the statute requires for validity. He then exemplified a notice mandated by s 66(1)(a) of the Environmental Planning and Assessment Act 1979 (the EP&A Act) as part of the exhibition process for a draft local environmental plan which had been held to be invalid if it was materially misleading: see, for example, Gales Holdings Pty Ltd v Minister for Infrastructure and Planning [2006] NSWCA 388; (2006) 69 NSWLR 156 at [110]. In the present case there was no mandatory requirement in the Act itself to consult. That requirement was to be found only in the Guidelines that formed part of the statutory process under ss 23A and 508A. 76 His Honour then noted that although s 23A(3) mandated councils to take any applicable guidelines into consideration, the Act did not mandate compliance with the Guidelines. Nevertheless failure to comply carried the risk that a s 508A application might be refused by the Minister pursuant to s 508A(1) or a determination might be revoked or varied by the Minister pursuant to the combined operation of ss 508A(8) and (9)(b). 77 At [79] his Honour referred to and accepted the appellant's submission that under s 508A(3) it was a condition precedent to the Minister's power to make a determination under s 508A(1) for the Council's application to be made in accordance with the Guidelines. Accordingly, if an application that is in accordance with the Guidelines is a precondition on which the power depended, the exercise of the power in the present case was invalid. However, if a "Guidelines discordant application" did not affect the existence of the power, the purported exercise thereof was valid. 78 At [80] his Honour noted that the issue was one of construction. Relevantly, having found there to be a breach of s 508A(3), the test as to whether that breach resulted in invalidity was whether "it was a purpose of the legislation that an act done in breach of the provision should be invalid"

[37]

citing Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [93]. 79 His Honour then continued in the following terms (omitting citations): "… Strictly, this test may not apply to the present case if I am correct in the conclusion that I have expressed that a council is not under a statutory obligation to comply with (as distinct from giving consideration to) applicable guidelines referred to in s 508A(3): … The defect of which the applicant complains is more fundamental, namely, that, regardless of any breach by the council, the power to make a s 508A determination only arises if a council application is in accordance with the applicable guidelines . Here, in my opinion, the test must be similar, whether it was a purpose of the legislation that a determination made on a Guidelines discordant application should be invalid." 80 His Honour then cited a passage from [91] of the joint judgment of McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky which I set out in full: "An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. Unfortunately, a finding of purpose or no purpose in this context often reflects a contestable judgment. The cases show various factors that have proved decisive in various contexts, but they do no more than provide guidance in analogous circumstances. There is no decisive rule that can be applied; there is not even a ranking of relevant factors or categories to give guidance on the issue." 81 It is convenient here to note that the joint judgment in Project Blue Sky (at [93]) approved the decision of this Court in Tasker v Fullwood [1978] 1 NSWLR 20 at 23-24 criticising the continued use of the distinction between directory and mandatory requirements. Their Honours said: "A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid … In determining the question of purpose, regard must be had to 'the language of the relevant provision and the scope and object of the whole statute'." 82 Returning to his Honour's reasons, at [82] he noted that the contestable judgment referred to at [91] of Project Blue Sky often involved in finding the legislative purpose could be illustrated by reference to cases concerning a statutory requirement being disregarded that have fallen on either side of the invalidity line. Reference was then made to the decisions of this Court in Helman v Byron Shire Council (1995) 87 LGERA 349 and Timbarra Protection Coalition Inc v Ross Mining NL [1999] NSWCA 8; (1999) 46 NSWLR 55 at [106]. Each of those cases involved the requirement of the then s 77(3) of the EP&A Act that an application in respect of a development which was likely to significantly affect the environment of protected fauna be accompanied by a fauna impact statement in accordance with s 92D of the National Parks &and Wildlife Act 1974 (in the case of Helman) and in accordance with the provisions of the Threatened Species Conservation Act 1995 (in respect of Timbarra). 83 In Helman a fauna impact statement had been made available to the council but only after the public consultation process had taken place. The issue before this Court concerned the effect of the failure to make the statement available to the public. It was held to be fatal to the validity of the development application. In Timbarra no species impact statement was provided. It was also held to be fatal to the validity of the application. It is noteworthy that in both cases the relevant requirement to provide a fauna impact statement was a specific requirement of the statute. In the present case, as the primary judge observed at [78], the requirement to consult and to provide evidence of community support for the proposal was a requirement of the Guidelines and not of s 508A(3). 84 His Honour (at [87]) placed particular reliance upon the decision of this Court in Smith v Wyong Shire Council [2003] NSWCA 322; (2003) 132 LGERA 148 which he regarded as "helpful in the present context". The case concerned the failure of the council to comply with a direction made by the Minister under s 117 of the EP&A Act with respect to the preparation of a draft local environmental plan. Section 117(3) mandated that a council to whom such a direction was given shall comply with the direction in accordance with its terms. The majority of this Court (Spigelman CJ, Sheller JA agreeing) decided that a failure to comply with such a direction did not, of itself, invalidate the resultant local environmental plan. On the other hand, the whole Court (which included myself) decided that a breach of s 66(1) of the EP&A Act, which required the council to publicly exhibit a copy of any relevant s 117 direction, did result in invalidity. 85 In holding that failure to comply with the s 117 direction did not result in invalidity the majority, referring to the terminology at [95] of Project Blue Sky, considered that s 117(2), where it used the term "principles", did not have a "rule-like quality which can be easily identified and applied". Their Honours further held that a finding of invalidity would have serious consequences and cause serious public inconvenience so that such a finding was neither necessary nor desirable to ensure compliance with the direction. 86 As to the last-mentioned factor, which his Honour considered relevant in the present case, he cited the following passage from the judgment of the Chief Justice in Smith at [43]: "A failure to comply with a Direction that a council should prepare local environmental plans in a particular way may cover a wide range of defaults. Such failures may be major or minor, deliberate or inadvertent, fundamental or marginal. Indeed, in the present case, the failure appears to have arisen from an error of interpretation as to whether 'any land' involved each parcel of land, a matter on which reasonable minds may differ. Furthermore, the failure meant that certain specific areas of land were down-zoned, contrary to the policy reflected in the Direction, in a context where the Amendment, considered as a whole, implemented the policy behind the Direction by increasing the permitted densities in the LEP area to a substantial degree." 87 At [89] his Honour considered that the statutory direction specifying "principles" considered in Smith was analogous to the statutory "guidelines" under s 508A(3). 88 The primary judge then considered the factors that he regarded as pointing both towards validity and invalidity of the Determinations. With respect to the former, he referred to three considerations. First, the use of the word "only" in s 508A(3); second, that the process of public consultation for which the Guidelines were relevantly directed was consistent with one of the important purposes of the Act "to encourage and assist the effective participation of local communities in the affairs of local government": s 7(c); and third, that s 508A was a gateway to the imposition of rates and charges - that is, taxes - and it was a fundamental right of a citizen not to be taxed except in accordance with parliamentary authority. 89 At [92] his Honour considered a number of factors pointing to the opposite conclusion, some of which the Chief Justice had identified as also being present in Smith. Relevantly those factors were:

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98 His Honour then observed in respect of that summary that "the differences seem to me to be relatively minor, particularly in relation to the positive responses. If Mr Elliott's figures were to be accepted, they would constitute 'evidence of community support for the proposal' as required by the Guidelines. …" 99 Apparently there was a deal of cross-examination of the analyses adopted by each of the relevant experts. His Honour concluded (at [104]) that a "correct" summary probably lay somewhere between the Council's summary and Mr Elliott's summary and that it was both unnecessary and difficult, if not impossible, to be more precise. He thus concluded that he was not satisfied that the Council's representations of the paper survey results were materially misleading. 100 At [105] his Honour set out the appellant's summary of the paper and telephone responses which he disclosed to the Minister before the 2007 determination. At [106] he noted, however, that the Council did not disclose the telephone survey results to the Minister and that this could reasonably be understood as not conveying any information as to the results of the telephone survey. On the other hand, it could also be reasonably understood to indicate that the telephone survey results were reasonably consistent with the paper survey results. His Honour noted that that would be correct concerning the positive responses but incorrect concerning the negative responses. 101 His Honour then continued in the following terms (at [107]): "To the extent, if any, that the paper survey representation and the telephone survey representation were materially misleading, their alleged misleading content was brought home to the Minister and countered, in my view, by the submissions the Minister received from Mr Sharples before he made the 2006 Determination: see [45]-[49] above. Mr Sharples informed the Minister of the results of his audit of the survey results and submitted that the council had misrepresented the survey results. Before the Minister made the 2007 Determination he was fully informed by Mr Sharples as to the actual telephone survey results." 102 The effect of his Honour's summary of the information at [45]-[49] of his judgment provided by the appellant to the Minister with respect to both the paper and telephone survey responses and, in particular, the former's letter of 3 July 2006, was that the appellant was alleging that no data existed to satisfy anyone that there was evidence of community support for the proposal. 103 Having made the finding referred to at [107] of his judgment, the primary judge observed (at [108]) that the appellant sought to avoid the conclusion that he had come to by submitting that the Minister, at most, had merely "adverted" to the correspondence from the appellant and had not considered it. After referring to the authorities with respect to the content of the obligation to "consider" addressed by this Court in numerous decisions that his Honour then identified (and which it is unnecessary to cite), he then concluded (at [112]) that he did not accept the appellant's submission that the Minister did not consider but, rather, merely adverted to the correspondence that he had received from the appellant. That correspondence was before the Minister and the Statement of Reasons for the Determinations indicated that the respective Ministers who made the 2006 and 2007 determinations did consider that correspondence: see [63] and [65] above. I interpolate that that was a finding of fact which, in his written submissions to this Court, the appellant challenged upon the basis that it was a finding not reasonably open to his Honour. However, in his oral submissions that challenge was abandoned. 104 In the paragraphs following that finding his Honour proceeded on the assumption that he was in error in finding that the Council's misleading representation as to the results of the surveys was not "countered" by the appellant's correspondence to the Minister. However, having found that the Minister had considered the correspondence and was thus aware of the appellant's assertions as to the misleading nature of the survey results, what followed in his Honour's judgment on the assumption that that finding was incorrect now falls away. This must be so as the appellant's submission that simply because the survey results were misleading the Determinations were invalid, is dependent upon a finding that the Minister was materially misled when he made those determinations. If he was not and what was asserted to be the true position was brought to his notice, then it must follow that the Minister was no longer affected by the initially misleading misrepresentation. 105 As I have already noted, the third of the four legal bases advanced by the appellant with respect to the misleading of the Minister was that as a consequence of the misleading representation regarding the survey results conveyed to him by the Council, he failed to give proper consideration as to whether there was community support for the proposal. His Honour's answer to that submission at [126] was that the Minister was not bound to find that there was community support for the proposal and its absence was insufficient to demonstrate that he did not consider whether there was such community support. 106 As his Honour noted, the Guidelines required "evidence" of community support. Neither the Guidelines nor s 508A(3) mandated the Minister to accept that evidence or to give it any particular weight. As he had already noted at [8] of his judgment, and which he now repeated (at [126]), the Guidelines did not require any particular level of community support. It was thus within the Minister's discretion to accept or reject a guidelines discordant application. 107 His Honour's conclusion was in the following terms (at [126]): "In any event, in my opinion, the Minister did consider the issue of community consultation, or at least it has not been established that the Minister did not do so. The Minister's tendered statement of reasons evidences that the Minister took into consideration a range of material which went to the very issue of whether there was community support for the proposal."

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The appeal with regard to the second limb 108 The appellant's submissions on the appeal with respect to the second limb were truncated by the abandonment of his written submissions challenging the primary judge's finding that the Minister had considered, as distinct from merely adverted to, the correspondence received by him from the appellant. Further, no reliance was placed on his written submissions that it was not necessary, for an administrative decision to be vitiated by a misleading representation, that that representation be characterised as fraudulent or made in bad faith. 109 In his oral submissions the appellant therefore accepted that his challenge to the primary judge's decision with respect to the second limb could only succeed if it was established that the Minister failed to take into account a relevant consideration, namely, that the survey results as notified to him by the Council were misleading in the respects alleged by the appellant. His Honour's finding (no longer challenged) that he was not so misled because he did take into consideration the survey results as asserted by the appellant, mandated the rejection of the appellant's second limb of his case. 110 I would add that there was some debate during the course of the hearing of the appeal as to what his Honour meant by "countered" at [107] of his judgment when he found that the alleged misleading content of the survey results was brought home to the Minister "and countered" by the submissions received by him from the appellant before he made the 2006 determination. 111 In my opinion his Honour was using that expression in the sense that whereas in the absence of the appellant's correspondence the survey results as conveyed to him by the Council may have been misleading, their misleading nature was negatived by the submissions received from the appellant. 112 It follows from the foregoing that in my view the appellant's appeal against his Honour's conclusion with respect to the second limb of the appellant's case should be rejected.

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The costs appeal 114 On 29 April 2009 his Honour delivered his judgment in respect of the application by the Council as the successful respondent, that the appellant pay its costs of the proceedings. Although costs normally follow the event in Class 4 proceedings, the appellant resisted a costs order on the basis of r 4.2(1) of the LECR which provides as follows: "(1) The Court may decide not to make an order for the payment of costs against an unsuccessful applicant in any proceedings if it is satisfied that the proceedings have been brought in the public interest." 115 After referring at [5] to the decision of Lloyd J in Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434; (2004) 136 LGERA 365 at [15] where his Honour identified five matters that may be considered in determining whether proceedings can be categorised as having been brought in the public interest, the primary judge noted at [13] the concession of the Council at an interlocutory stage of the proceedings on a security for costs application that the proceedings did concern a matter of public interest: Sharples v Minister for Local Government [2008] NSWLEC 67 at [20]-[21]. 116 With respect to the five matters identified by Lloyd J in Engadine his Honour found that each of those matters was satisfied and so supported the conclusion that the proceedings had been brought by the appellant in the public interest within the meaning of r 4.2(1). 117 At [20] his Honour considered that in the circumstances of the present case more was necessary for the exercise of the discretion under r 4.2(1) than the fact that the proceedings had been brought in the public interest. He said: "… This was, I think, recognised by the applicant who submits that the finding that the council misled the public is a special factor justifying the exercise of the discretion under r 4.2, and is also a factor relevant to the Court's general discretion on costs. I accept that that factor has significant weight in relation to the first limb of the applicant's case. However, on the second limb, the applicant failed completely. The second limb was fairly weak." 118 His Honour then dealt with the issues of novelty and importance. Relevantly, he considered that the first limb of the appellant's case raised a novel issue (the effect of s 508A). He accepted that the raising of novel legal issues of general importance could be a sufficient reason for not ordering costs against an unsuccessful applicant under the general law, even apart from r 4.2(1): Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [20] and [49]. At [23] his Honour concluded that the first limb of the appellant's case did raise questions of novelty and general significance but the second did not. 119 In the foregoing circumstances, his Honour concluded (at [24]) that under r 4.2(1) there should be no order as to costs in relation to the first limb of the appellant's case but that in relation to the second limb, he was not persuaded that he should depart from the usual order that costs follow the event. His Honour then apportioned the costs between the two limbs and concluded that one third of the costs of the proceedings related to the second limb which the appellant should be ordered to pay. The order was limited to the costs of the Council. 120 In this Court the appellant did not challenge the proposition that even where the Land and Environment Court was satisfied that the proceedings had been brought in the public interest, it was still invested with a discretion by r 4.2(1) whether or not to make an order for the payment of costs against an unsuccessful applicant. Nor did the appellant challenge the proposition that considerations of novelty and general significance were relevant considerations in the exercise of that discretion. 121 The appellant nevertheless submitted that his Honour's discretion had miscarried for the following reasons:

Sharples v Minister for Local Government

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Judgment (97 paragraphs)

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Cases Cited (31)

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