Supreme Court of WA|2011-11-29|Before: Edelman J

First Respondent : State Solicitor for Western Australia

1 This application concerns whether a writ of prohibition should be issued to prohibit the Local Government Advisory Board (LGAB) from proceeding with an inquiry into the merger of the Councils of Subiaco and Nedlands. Neither council currently desires a merger. But the LGAB wishes to conduct the inquiry.

2 The LGAB only has jurisdiction to conduct an inquiry if a 'proposal' has been made to the LGAB. There are a number of different persons who can make a proposal. These include the Minister for Local Government; or an affected local government; or 250 or more electors.

3 In this application the first question is whether the City of Nedlands made a proposal to the LGAB on 12 July 2011 in the manner required by the Local Government Act 1995 (WA). If it did, the second question is whether the Local Government Act permits that proposal to be revoked, thus removing the jurisdiction of the LGAB to conduct an inquiry.

4 I conclude in these reasons that the City of Nedlands did not make a proposal to the LGAB as required by the terms of the Local Government Act. However, if (contrary to these reasons) it had made a proposal then an attempt to revoke the proposal after it has been considered by the LGAB does not remove the jurisdiction of the LGAB to conduct an inquiry under the Local Government Act.

5 These reasons are divided into the following sections:

(a) The Proposal process under the Local Government Act.

(b) What constitutes the purported proposal made by the City of Nedlands?

(d) The textual reasons why the City of Nedlands did not authorise, or make, a Proposal.

(e) Extrinsic evidence provides a further reason why the City of Nedlands did not authorise, or make, a Proposal.

(6) The second issue: Can a Proposal be revoked after it has been considered?

6 The evidence in this application was uncontroversial. It is set out in the section of these reasons below dealing with the factual background. The evidence was set out in four affidavits.

(1) An affidavit of Mr Mark Van Brakel sworn on 15 September 2011.

(2) An affidavit of Mr Stephen Tindale sworn on 27 September 2011.

(3) A supplementary affidavit of Mr Mark Van Brakel sworn on 21 October 2011.

(4) An affidavit of Mr Matthew Hudson sworn on 14 November 2011.

7 In February 2009, the Minister for Local Government of Western Australia announced wideranging strategies for the reform of local government in Western Australia.

8 A consequence of this announcement was that the City of Subiaco and the City of Nedlands began to investigate the possibility of a merger between their local governments.

9 On 2 February 2010, the Minister for Local Government wrote to the Mayor of the City of Subiaco proposing options which would assist local governments such as the City of Subiaco to amalgamate with their neighbours. One of those options was the creation of a Regional Transition Group (RTG).

10 In June 2010, the Council of the City of Subiaco decided to enter into an RTG with the City of Nedlands. The decision by the Council of the City of Subiaco was in response to an approach from the City of Nedlands.

11 On 17 May 2011 a draft Merger Feasibility Study, or regional business plan, was published and accepted by the Department of Local Government. The draft Merger Feasibility Study was the consequence of the activities of the RTG.

12 The City of Subiaco did not endorse the draft Merger Feasibility Study.

13 The Premier and Minister for Local Government subsequently announced a comprehensive review of local government boundaries and of government models in the Perth metropolitan area.

14 On 7 July 2011, the Council of the City of Subiaco unanimously voted to reject the proposed merger with the City of Nedlands. This ended the possibility of any voluntary merger.

15 Also on 7 July 2011, the Council of the City of Nedlands resolved to 'refer a proposal to the [LGAB] to assess the viability of a merger between the Cities of Nedlands and Subiaco under clause 2 of Schedule 2.1 of the Local Government Act 1995'. The words used in that resolution are central to this application. The resolution is set out in full below. I refer to the resolution in these reasons as the 7 July 2011 Resolution.

16 On 12 July 2011 the Chief Executive Officer of the City of Nedlands wrote to the LGAB. In his letter, which bears the title 'Proposal to Merge the Cities of Nedlands and Subiaco', the Chief Executive Officer set out the terms of the resolution in full. The letter enclosed the draft Merger Feasibility Study and a plan showing the existing boundaries of the Cities of Nedlands and Subiaco.

17 On 2 August 2011, the Chief Executive Officer of the City of Subiaco, Mr Tindale, wrote to the LGAB. In his letter, Mr Tindale asserted that the City of Nedlands had not complied with the requirements for a proposal under cl 2 of sch 2.1 of the Local Government Act. The asserted reason for noncompliance was that the City of Nedlands had

not specifically resolved to submit a proposal to amalgamate the two local governments to the LGAB. Rather it has simply asked the [LGAB] to assess the viability of such a merger, which as far as we can ascertain, is outside the remit of the LGAB in the absence of a specific proposal to merge.

18 Mr Tindale said that the City of Subiaco had obtained legal advice which confirmed its view that on the evidence available to it, the City of Nedlands had not complied with the requirements for a proposal in cl 2 of sch 2.1 of the Local Government Act.

19 In his 2 August 2011 letter, Mr Tindale also referred to, and enclosed, a copy of a recent letter to the editor of the Post newspaper. The letter to the Post newspaper was written by Councillor Max Hipkins who had been present at the 7 July 2011 meeting of the Council of the City of Nedlands. Mr Tindale quoted from the words of Cr Hipkins in that letter, that the City of Nedlands had decided simply to ' "refer the proposal to the LGAB to assess the viability of the merger", without indicating whether it supported it or not'.

20 Mr Tindale also said in his 2 August 2011 letter that 'this disclosure by Cr Hipkins provides further evidence that amongst the members of the Nedlands Council, the City of Nedlands has not proposed a merger of the two local governments to the LGAB'.

21 The letter to the Post newspaper from Cr Hipkins, which Mr Tindale enclosed with his letter to the LGAB, was unfortunately omitted from the affidavit evidence before the court. However, the letter to the Post newspaper was tendered, by consent, as evidence that it had been sent by Mr Tindale with his letter on 2 August 2011. There was no objection to its use for this purpose.

22 In the letter to the Post newspaper, which had been enclosed in the 2 August 2011 letter to the LGAB, Cr Hipkins also said the following:

My amendment to support the merger was defeated and councillor Bronwen Tyson's subsequent amendment to reject the merger was not accepted by mayor Sheryl Froese.

23 On 3 August 2011 the LGAB met to consider whether to conduct a formal inquiry into what it described as 'the proposal to amalgamate the City of Nedlands and [the] City of Subiaco'. It considered the 2 August 2011 letter from Mr Tindale. But the LGAB was satisfied that 'the proposal meets the requirements as outlined in clause 2 of Schedule 2.1 of the [Local Government Act]'. It 'resolved to conduct a formal inquiry into the proposal in accordance with the provisions of Schedule 2.1 of the Local Government Act 1995'.

24 On 4 August 2011, the LGAB wrote to the City of Subiaco and explained these matters arising at its meeting of 3 August 2011.

25 On 23 August 2011, the City of Nedlands resolved as follows:

[The City of Nedlands] reaffirms to the Local Government Advisory Board and the Community that Council has requested the Board to

investigate the viability of a merger of the Cities of Nedlands and Subiaco
afford all opportunity for full public participation, involvement and submissions, by the electors of the districts directly affected by the said investigation, as part of that process and
that Council supports a poll of the electors to ensure the final outcome of this investigation lies in the hands of each City's electors.

26 On 25 October 2011, the Council of the City of Nedlands resolved to advise the LGAB, with a copy to the Minister for Local Government, that the City of Nedlands did not wish to amalgamate with the City of Subiaco and that the City of Nedlands requested that inquiries into the matter be terminated.

27 On 7 October 2011, upon the application of the City of Subiaco, Kenneth Martin J made an order that the LGAB show cause why a writ of prohibition should not be issued. The writ of prohibition was to prohibit the LGAB from conducting a formal inquiry into the purported proposal put to it by the City of Nedlands on 12 July 2011.

28 An undertaking was given by the LGAB that it would not give notice of, or take any step to conduct, the formal inquiry until the final determination of the writ of prohibition.

29 The City of Subiaco's notice of motion for the LGAB to show cause why a writ of prohibition should not be issued raised one issue. In summary: had a proposal been presented by the City of Nedlands to the LGAB which met the requirements of cl 2 of sch 2.1 of the Local Government Act and conferred jurisdiction on the LGAB to consider the proposal?

30 At the commencement of the hearing I permitted the City of Subiaco to amend its notice of motion to raise a second issue. The second issue arose from the 25 October 2011 resolution by the City of Nedlands, made after the hearing before Kenneth Martin J. In summary: if the City of Nedlands had made a proposal, could the City of Nedlands revoke the proposal prior to the commencement of a formal inquiry by the LGAB, and thus deprive the LGAB of jurisdiction?

31 At the hearing before me, submissions were made by the City of Subiaco and the LGAB. The City of Nedlands appeared but did not make any submissions in support of, or in opposition to, the application.

32 A considerable number of concessions were properly made, and facts uncontested, by counsel for the City of Subiaco and counsel for the LGAB. This allowed the hearing to proceed very efficiently, focusing upon the two clear issues in dispute.

33 The matters which were, or became, common ground were as follows:

(1) The existence of a proposal (Proposal) which met the requirements of cl 2 of sch 2.1 of the Local Government Act was a jurisdictional fact. In other words, a Proposal was an essential precondition to the exercise of jurisdiction by the LGAB: written submissions of the LGAB, par 2.

(2) If the 7 July 2011 Resolution by the City of Nedlands was only a resolution that the LGAB should assess the viability of a merger of the two cities, and not a resolution proposing a merger of the two cities, then the LGAB did not have jurisdiction to conduct a formal inquiry (ts 61 62).

(3) The City of Nedlands had the power to make a Proposal to the LGAB under cl 2(1)(b) of sch 2.1 of the Local Government Act.

(4) If a Proposal had been made by the City of Nedlands, then the City of Subiaco did not deny that the Proposal contained the information required by cl 2(2) of sch 2.1 of the Local Government Act (ts 13).

(a) The Proposal process under the Local Government Act

34 Section 2.1 of the Local Government Act provides that the Governor, on the recommendation of the Minister, may make orders:

(a) declaring an area of the State to be a district;

(b) changing the boundaries of a district;

(c) abolishing a district; or

(d) as to a combination of any of those matters.

35 But s 2.1(3) provides that the Minister can only make one of the recommendations in s 2.1(a) (d) above if the LGAB (established by s 2.44(1)) has recommended that the order in question should be made. Schedule 2.1 establishes the process required before such matters can be considered by the LGAB.

36 Schedule 2.1, cl 2 of the Local Government Act provides that:

(1) A proposal may be made to the Advisory Board by -

(a) the Minister;

(b) an affected local government;

(c) 2 or more affected local governments, jointly; or

(d) affected electors who -

(ii) are at least 10% of the total number of affected electors.

(a) set out clearly the nature of the proposal, the reasons for making the proposal and the effects of the proposal on local governments;

(b) be accompanied by a plan illustrating any proposed changes to the boundaries of a district; and

(c) comply with any regulations about proposals.

37 The word 'proposal' is defined in sch 2.1, cl 1. The definition is, in part, circular. Proposal is defined, in part, by reference to a proposal. The definition is 'a proposal made under clause 2 that an order be made as to any or all of the matters referred to in section 2.1'.

38 Section 2.45(1) provides that the functions of the LGAB include:

(a) considering and, if required by this Act, inquiring into any proposal made to it under this Act that an order be made to do any or all of the matters in section 2.1 ... ;

(b) making recommendations to the Minister on those proposals;

...

(d) considering whether as a consequence of any recommendation the [LGAB] proposes to make to the Minister, the making of an order to do any or any other of the matters in section 2.1 ... in respect of a relevant district is or may be necessary.

(1) recommends that the Minister reject the proposal; or

(2) is of the opinion that the proposal is of a minor nature, or is not one which the LGAB considers to be one in relation which public submissions need be invited,

then the LGAB must formally inquire into the proposal: sch 2.1, cl 3(2) (4) discussed in detail below.

40 In making inquiries under the Local Government Act, the LGAB has various powers of inquiry: s 2.44(2); sch 2.5, cl 12.

(b) What constitutes the purported proposal made by the City of Nedlands?

41 The primary document relied upon by the City of Nedlands as constituting the Proposal was the 12 July 2011 letter.

42 The LGAB relied exclusively on the terms of that letter and its enclosures. The LGAB submitted that the City of Nedlands as 'an affected local government' had made a Proposal to the LGAB: sch 2.1(2)(b).

43 The 12 July 2011 letter was written by Mr Foster, the Chief Executive Officer of the City of Nedlands.

44 Mr Foster is not a member of the Council of the City of Nedlands. The Minutes of the 7 July 2011 meeting of the Council of the City of Nedlands show that he was present at that meeting. As Chief Executive Officer he has functions which including causing council decisions to be implemented: s 5.41(c).

45 In the 12 July 2011 letter, Mr Foster sets out the full terms of the 7 July 2011 Resolution by the Council of the City of Nedlands. His letter was implementing that resolution. Although Mr Foster's letter uses headings such as 'Proposal to Merge the Cities of Nedlands and Subiaco', his letter does not purport to make any proposal to the LGAB beyond that which, as he set out, the Council of the City of Nedlands had resolved should be made.

46 Since Mr Foster's function in communicating with the LGAB is to cause the Council's decisions to be implemented he could not, in any event, have been authorised to put a proposal which was different from that which the Council had resolved. This was properly accepted by counsel for the LGAB (ts 61 62).

47 The essential question, therefore, is whether the resolution of the Council of the City of Nedlands was that a Proposal (as defined in the Local Government Act) should be presented to the LGAB.

48 The full text of the 7 July 2011 Resolution of the Council of the City of Nedlands, as set out in the Minutes and the verbatim reproduction in the 12 July 2011 letter, was as follows:

The Minister for Local Government be advised that the City of Nedlands resolves to refer a proposal to the Local Government Advisory Board to assess the viability of a merger between the Cities of Nedlands and Subiaco under clause 2 of Schedule 2.1 of the Local Government Act 1995;
The Local Government Advisory Board be advised that any amalgamation with the City of Subiaco should be subject to the following conditions:

full public consultation and engagement and an ensuing poll of the Electors; 2. That, in developing the full business plan for the merged entity, there being no major errors or deviation from the substantive findings of the regional business plan prepared by KPMG;

Financial Assistance Grants being maintained to at least the minimum level of their existing combined levels for a period of 5 years;

The amalgamation process commences on 1st July 2012; 2. The costs of transitioning to a merged local government entity (not including capital expenditure) being met in a large part by the State Government; 3. The Minister being encouraged to appoint three commissioners following consultation with Council together with the establishment of a local advisory panel to the Commissioners consisting of one existing Councillor from each ward; 4. The Minister being encouraged to defer Council elections until such time as the Commissioners and panel are appointed and have established a business case for the amalgamated Cities; 5. The two local governments being quarantined from the recently announced Review of Perth Metropolitan Boundaries and Governance Models and the implementation of any recommendations arising from it; 6. The undergrounding of power be expedited and the funding arrangements for the maintenance of the City's River wall continue; 7. The State Government being encouraged to prepare an implementation plan for the provision of light rail for the area, and, in the interim, provide a high frequency shuttle bus link to service the UWA and QEII sites; and
The Local Government Advisory Board forwards all work undertaken and recommendations made to date by the City of Nedlands relating to structural reform, to the recently created Panel (and any subsequent panels) tasked with reviewing the structure of local government, for their information and due consideration.

(c) The approach to construction of the 7 July 2011 Resolution

49 The starting point for the question of construction in this case is that, generally speaking, the approach to the meaning of words does not differ according to the medium or dealing within which the words are communicated. 'Matched' approaches generally apply whether the words being construed are contained in a constitution, a statute, a contract, or a deed of trust: Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253, 282 286 [95] [102] (Heydon & Crennan JJ).

50 The same is true where the words are contained in a will, or a unilateral deed: Wilson v Anderson [2002] HCA 29; (2002) 213 CLR 401, 418 [8] (Gleeson CJ). Or if the words are contained in a resolution, such as a resolution of a strata company: Benstead v Clark [2007] WASC 219 [61] (Beech J).

51 This general approach to construction also applies to the words of the 7 July 2011 Resolution of the Council of the City of Nedlands. It is an objective approach.

52 In each case involving the construction of the meaning of written words, the objective approach directs attention to the meaning which the words convey to the reasonable reader of the text. The subjective views of legislators, contracting parties, settlors or, in this case, councillors, are irrelevant to the construction of the meaning of the words.

53 Difficult questions may arise concerning the construct of the reasonable reader of the text. Is the reasonable reader an ordinary person? Or is he or she a person in the position of one or both of the parties? And what knowledge of surrounding circumstances should be attributed to the reasonable reader? I address these issues separately below in relation to the question of extrinsic evidence.

(d) The textual reasons why the City of Nedlands did not authorise, or make, a Proposal

54 The LGAB submitted that the 7 July 2011 Resolution, properly construed, was a resolution that an order be made 'that would amalgamate or merge [the City of Subiaco] and [the City of Nedlands]': written submissions LGAB, par 23.

55 The City of Subiaco submitted that the 7 July 2011 Resolution, properly construed, was a resolution that the LGAB 'assess the viability of a merger': written submissions City of Subiaco, par 3.

56 The submission of the City of Subiaco should be accepted for four reasons.

57 First, although the definition of Proposal in sch 2.1, cl 1 is, in part, circular (the definition of 'proposal' requiring a 'proposal'), this circularity invites attention to the ordinary and natural meaning of proposal. The ordinary meaning of 'proposal' involves positive support for a course of action or plan.

58 The relevant meaning of 'proposal' in the Macquarie Dictionary (4th ed) is 'the act of proposing for acceptance, adoption, or performance' (page 1140). The relevant meaning in the New Shorter Oxford English Dictionary is the act of propounding something or proposing something (page 2381). The transitive verb 'propose' has primary definitions of '[p]ut forward as a scheme or plan, suggest (a thing)' (page 2381).

59 What is the subject matter, then, that must be put forward as a scheme or plan? The definition of Proposal in sch 2.1, cl 1 requires that the proposal be 'that an order be made as to any or all of the matters referred to in section 2.1'.

60 The matters set out in s 2.1 are as follows: declaring an area of the State to be a district; changing the boundaries of a district; abolishing a district; or a combination of any of those matters. The 7 July 2011 Resolution specifically mentioned the making of a proposal under sch 2.1, cl 2, but it did not suggest or put forward any of these matters referred to in s 2.1, either expressly or impliedly. In other words, the 7 July 2011 Resolution did not seek orders, or authorise the Chief Executive Officer to seek orders, about any of the matters contained in s 2.1.

61 Mr Foster's letter contained documents including a plan of the new proposed boundary, consistent with s 2.1(b), and the draft Merger Feasibility Plan. The latter document made no positive suggestion of merger. In the 7 July 2011 Resolution there is no positive suggestion of merger either.

62 Secondly, and related to the first point, the contrasting interpretations of the 7 July 2011 Resolution involved a contrast between the express words used and a suggested implication from the words used. The construction of the City of Subiaco relied upon the express words of the resolution. The construction of the LGAB relied upon an implication of words into the resolution.

63 The natural reading of cl 1 of the resolution is as the resolution expressly provided: 'to refer a proposal to the Local Government Advisory Board to assess the viability of a merger'. The natural meaning of the resolution is not the implied meaning, which would require the following words in italics to be inserted: 'to refer a proposal for the City of Subiaco and the City of Nedlands to merge so that the Local Government Advisory Board to could assess the viability of a merger'.

64 Thirdly, the second paragraph of the 7 July 2011 Resolution referred to 'any' amalgamation rather than 'the' amalgamation or 'the proposed amalgamation'. By itself, this point is not particularly significant. The reference to 'any' could simply be an acknowledgement that the LGAB might not recommend an order under s 2.1 for a merger. But, the reference to 'any' amalgamation, coupled with the conditions which followed that reference, strengthens the conclusion that the City of Nedlands was not resolving to propose an amalgamation; rather it was resolving only that the LGAB assess the viability of such a course of action, and that if an amalgamation were to occur then it should occur only on the conditions sought by the City of Nedlands.

65 Fourthly, in the second paragraph of the 7 July 2011 Resolution, the City of Nedlands purported to impose ten 'conditions' upon 'any' amalgamation. As I have mentioned, the imposition of these conditions follows the reference to 'any' amalgamation in that paragraph. The imposition of conditions is a strong indicator that the Council of the City of Nedlands was not resolving that the cities should merge. Rather, it was resolving that the LGAB should assess the viability of a merger and if the LGAB concluded that a merger should occur it should do so subject to the conditions imposed by the City of Nedlands.

66 The LGAB properly conceded that the use of the word 'conditions' is infelicitous for its submission that the City of Nedlands was proposing that the cities should merge: written submissions LGAB, par 27.

67 However, the LGAB argued that each condition imposed is a matter which either (i) the LGAB is entitled to consider in conducting a formal inquiry; or (ii) is a matter which can be accommodated in the statutory process (conducting a poll of electors); or (iii) is a matter which the Minister can consider in the exercise of his powers under the Local Government Act. This is correct. But simply because there is power for the conditions demanded by the City of Nedlands to be imposed does not detract from the fact that the City of Nedlands was seeking to impose conditions on any merger which might occur. At the least, the conditions indicate that the City of Nedlands would only consent to a merger if those conditions were satisfied.

68 Against these four reasons, one submission made by the LGAB in favour of its construction was that, like statutory provisions conferring jurisdiction, the 7 July 2011 Resolution should not be construed in an unduly restrictive or pedantic manner: Nestle Australia Ltd v The President and Members of the Equal Opportunity Board [1990] VicRp 71; [1990] VR 805, 812 (Vincent J).

69 A more common way of expressing this canon of construction of jurisdiction-conferring provisions is that courts should not imply limitations on a provision which confers jurisdiction where such a limitation does not appear in the express words of the grant: Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178, 185 (Mason CJ & Deane J), 202 203 (Dawson J), 205 (Gaudron J); The Owners of the Ship 'Shin Kobe Maru' v Empire Shipping Company Inc [1994] HCA 54; (1994) 181 CLR 404, 420 421 (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron & McHugh JJ).

70 However, even if the same approach to construction were applied to jurisdictional facts as to jurisdictionconferring provisions, the City of Subiaco's construction of the 7 July 2011 Resolution does not imply any restrictions into the express words in the Resolution. Rather, it relies upon those express words.

71 For the four reasons I have given, the best construction of the 7 July 2011 Resolution as a whole, is that the words of the 7 July 2011 Resolution meant that the City of Nedlands was proposing only that the LGAB assess the viability of a merger. Objectively, the resolution of the City of Nedlands was not a proposal for a merger or for any of the matters in s 2.1.

(e) Extrinsic evidence provides a further reason why the City of Nedlands did not authorise, or make, a Proposal

72 The City of Subiaco relied on a further matter in support of its submission that the 7 July 2011 Resolution had not authorised any proposal that an order be made which would merge the City of Subiaco and the City of Nedlands. This was evidence which was extrinsic to the 7 July 2011 Resolution. The main extrinsic evidence was a proposed, and rejected, amendment to the 7 July 2011 Resolution.

73 I was not taken to any other evidence which was extrinsic to the 7 July 2011 Resolution in any considerable detail. However, one other matter to which some reference was made in submissions was the draft Merger Feasibility Study. In Mr Foster's 12 July 2011 letter to the LGAB, he described that draft Merger Feasibility Study as the 'proposal' (page 2).

74 It was not in dispute that the draft Merger Feasibility Study was admissible material for the construction of the words used in the 7 July 2011 Resolution. The draft Merger Feasibility Study was information which the City of Nedlands had at the time of the 7 July 2011 Resolution and it was also in the possession of the LGAB when the LGAB determined its jurisdiction.

75 It is pertinent that the draft Merger Feasibility Study does not suggest that a merger should take place. It was designed 'to inform the community and assist councillors in deciding whether or not to proceed with a merger' (pages 2 and 4). It was expressed to be 'subject to, and dependent on, the development of a full business case confirming the general findings' (page 2). It was designed to 'deliver an objective, comparative overview of both organisations and the relative strengths and weaknesses in a range of key areas' (page 4).

76 The equivocal nature of the draft Merger Feasibility Study is admissible extrinsic evidence which supports the construction of the 7 July 2011 Resolution that the City of Nedlands was not making a proposal, or authorising that a proposal be made, concerning any of the matters in s 2.1 of the Local Government Act.

77 There was a further matter of extrinsic evidence relied upon by the City of Subiaco. This was a proposed amendment to the 7 July 2011 Resolution, which was defeated.

78 The amendment was moved by Cr Hipkins and seconded by Cr Argyle. It proposed the following amendment to the original resolution:

That clause 1 be amended with the words 'refer a proposal to the Local Government Advisory Board to access [sic: assess] the viability of a merger between the Cities of Nedlands and Subiaco' deleted and the words 'support the proposal to amalgamate the Cities of Nedlands and Subiaco and refer it to the Local Government Advisory Board to progress' substituted as follows:

The Minister for Local Government be advised that the City of Nedlands resolves to support the proposal to amalgamate the Cities of Nedlands and Subiaco and refer it to the Local Government Advisory Board to progress under clause 2 of Schedule 2.1 of the Local Government Act 1995.

The effect of the extrinsic evidence of the amendment

79 The importance of the amendment as a matter of construction is plain. The amendment is in very similar terms to the LGAB's construction of the 7 July 2011 Resolution. If it had passed, the amendment would have expressly provided for a proposal to amalgamate the Cities of Nedlands and Subiaco. But it was resoundingly defeated. If the amendment is read together with the 7 July 2011 Resolution there is a strong inference to be drawn that the 7 July 2011 Resolution was not in support of a proposal to amalgamate the Cities of Nedlands and Subiaco.

80 The LGAB submitted that evidence of the amendment is inadmissible. I deal with this point separately in the next section of my reasons.

81 The LGAB also submitted that the reference to 'support' should be understood as a reference to the subjective support of the councillors. In other words, the LGAB said that the proposed amendment to the 7 July 2011 Resolution was simply to show that the councillors provided subjective support for the proposed merger. It said that the defeat of the amendment merely demonstrated that a merger was proposed perhaps for reasons of political expediency even though it was not subjectively supported.

82 I do not accept this construction of the amendment. The reference to 'support' was in the context of advising the Minister about a matter which had been resolved by the City of Nedlands. The reference was to the objective support of the City of Nedlands, not to the subjective views of the councillors, individually or collectively. Further, the amendment was for a proposal for merger to be referred to the LGAB. This also shows that the reference to 'support' is to the objective support of the City of Nedlands for that proposal.

83 Therefore, if evidence of the amendment is admissible it is a significant matter in support of the City of Subiaco's construction of the 7 July 2011 Resolution. The contemporaneous, rejected amendment shows that the Council of the City of Nedlands was not proposing in the 7 July 2011 Resolution that the two cities should merge.

Is the extrinsic evidence of the amendment admissible?

84 At a high level of generality, the role of extrinsic evidence in the interpretation of the meaning of words is the same, whether the words being construed were contained in a statute, a contract, a will, a unilateral deed of trust or a council resolution.

85 In relation to construction of ambiguous words in a contract, extrinsic evidence will be admissible if it 'casts light on the genesis of the contract, its objective aim, or the meaning of any descriptive term': Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153, 163 [24] (Heydon JA; citing Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337, 347 352 (Mason J)).

86 If the parties rejected a particular construction of ambiguous words in a contract then evidence of that rejection is generally admissible: MCA International BV v Northern Star Holdings Ltd (1991) 4 ACSR 719, 727 (Rogers CJ); Darin Nominees Pty Ltd v Franklin's SelfServe Pty Ltd [1999] NSWCA 209 [35] (Powell JA); Lodge Partners Pty Ltd v Pegum [2009] FCA 519; (2009) 255 ALR 516, 521 [31] (Lindgren J).

87 The same is true of a rejection by Parliament, or even a committee of Parliament, of words which were proposed for a statute: Interpretation Act 1984 (WA) s 19(2)(c), s 19(2)(h).

88 Equally, the rejection of the words proposed in the amendment to the 7 July 2011 Resolution is evidence which can shed light on the meaning of the words used in the 7 July 2011 Resolution.

89 However, in different contexts a different threshold exists for the admissibility of this relevant, contextual extrinsic evidence. Three examples can be given.

90 In the construction of statutory words it is 'erroneous to look at extrinsic materials before exhausting the ordinary rules of statutory construction': Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252, 265 [33] (French CJ, Gummow, Hayne Crennan & Kiefel JJ).

91 However, it is necessary that 'context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise': CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey & Gummow JJ).

92 In contrast, in the construction of words of a contract, 'evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning': Codelfa Construction v State Rail Authority (NSW) (352) (Mason J).

93 It is not necessary here to consider difficult questions concerning (1) what is meant by 'ambiguous'; (2) what is meant by 'susceptible of more than one meaning'; and (3) the extrinsic evidence which is permissible in order to identify an ambiguity.

94 An even more restrictive approach applies to the admissibility of extrinsic evidence when construing words contained in instruments registered under the Torrens system of title. In that context, the statutory purpose generally excludes the admissibility of extrinsic evidence. 'The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing': Westfield Management Ltd v Perpetual Trustee Company Ltd [2007] HCA 45; (2007) 233 CLR 528, 539 [39] (Gleeson CJ, Gummow, Kirby, Hayne & Heydon JJ).

95 The LGAB submitted that an exclusionary approach applied to extrinsic evidence in situations involving the construction of jurisdictional facts. Only evidence of the matters provided for in cl 2(2) of sch 2.1 can be considered. If this were correct then extrinsic evidence would be inadmissible for the construction of jurisdictional facts in the same way that it is inadmissible in the construction of registered instruments under a Torrens system.

96 At first impression, such a conclusion would be surprising. There is nothing in the Local Government Act, either in its text or purpose, which suggests that the jurisdiction of the LGAB should be confined only to those documents immediately before it.

97 Further, as I explain below, whether a matter is a jurisdictional fact is a question of statutory construction for which extrinsic evidence is admissible. It would be surprising if extrinsic evidence were admissible to determine if a matter was a jurisdictional fact but not to determine whether the jurisdictional fact existed.

98 To put this point in simpler terms, if the LGAB's argument against admissibility were correct, then extrinsic evidence such as parliamentary debates would be admissible in construing the Local Government Act to determine whether a Proposal was a jurisdictional fact, ie a prerequisite to a formal inquiry (above [33](1)). But extrinsic evidence would not be admissible to determine whether or not the 7 July 2011 Resolution was a Proposal.

99 In Timbarra Protection Coalition Inc v Ross Mining NL [1999] NSWCA 8; (1999) 46 NSWLR 55, 63 64 [37], Spigelman CJ (Mason P & Meagher JA concurring) explained that a jurisdictional fact could be any fact whose objective existence is, as a matter of statutory construction, a precondition to action being taken under the relevant statute. Spigelman CJ simply said that evidence of the existence or nonexistence of a jurisdictional fact is admissible evidence (63) [36]. There was no suggestion that extrinsic evidence was excluded from consideration.

100 The LGAB relied upon two decisions in support of its submission about inadmissibility: R v Gray [1985] HCA 67; (1985) 157 CLR 351; and Nestle Australia. Neither of these decisions requires the exclusion of extrinsic evidence for the construction of jurisdictional facts.

101 In Gray (363), one question was whether the Federal Court had jurisdiction to hold an inquiry into irregularities in the election of a National Organiser of the Amalgamated Metal Workers Union. Section 159(1) of the Conciliation and Arbitration Act 1904 (Cth) provided as follows:

Where a member of an organization, or a person who, within the preceding period of twelve months, has been a member of an organization, claims that there has been an irregularity in or in connection with an election for an office in the organization, or in a branch of the organisation, he may lodge an application for an inquiry by the Court into the matter.

102 The relevant jurisdictional fact in Gray which was a prerequisite to the exercise of jurisdiction by the court was 'whether an applicant claims the occurrence of what amounts to an irregularity' (381) (Brennan J).

103 The LGAB relied upon the judgment of Brennan J (as the former Chief Justice was then), and emphasised a passage of his Honour's judgment which included the following:

A defect in jurisdiction appearing on the face of the application does not require evidence to establish it ... nor can evidence cure it. ... Nothing turns on the evidence that might be adduced in the inquiry; the jurisdiction to inquire turns solely on the terms of the application and the documents annexed thereto and on the true construction of [the Act]' (381 382).

There are several points to make about Gray and about this passage.

104 First, the relevant jurisdictional fact was that a person must claim that there had been an irregularity in or in connection with an election. The relevant claim would appear on the face of the application for an inquiry. The question was whether the claim concerned an irregularity in or in connection with an election.

105 Secondly, the point that Brennan J was making in the passage quoted was to distinguish between a claim of an irregularity and whether an irregularity actually occurred. Evidence would be led at an inquiry about the latter, but that evidence was not relevant to whether the jurisdictional fact of a claim had been established.

106 Thirdly, none of the judgments in Gray was concerned with the use of extrinsic evidence to construe the meaning of particular words used in the application for an inquiry.

107 The second case relied upon by the LGAB, Nestle Australia, does not require the exclusion of extrinsic evidence for the construction of jurisdictional facts either.

108 One issue in that case was whether the Equal Opportunity Board had jurisdiction to hear and determine a complaint by the applicant alleging discrimination. The Board had jurisdiction to hear and determine a 'claim that some other person has discriminated' against the claimant, on various grounds: s 44 of the Equal Opportunity Act 1984 (Vic). A question arose whether a claim of discrimination had been made by the original complaint which had been filed.

109 In the Supreme Court of Victoria, Vincent J concluded that the original written complaint had not identified the nature of the discrimination with a sufficient degree of precision. Relying upon the decision in Gray, his Honour concluded that the Board could not look to another statement of particulars, filed subsequently to the original complaint, in order to provide it with jurisdiction to determine the complaint (813). His Honour emphasised that the question of jurisdiction turned on the terms of the application document making the claim and not upon evidence which subsequently might be adduced, or subsequently filed documents (812).

110 Like the decision in Gray, the decision in Nestle Australia was concerned with the question of which facts were jurisdictional facts: see also State Electricity Commission of Victoria v Rabel [1998] 1 VR 102, 116 117 (Phillips JA). In other words, those cases emphasised that the only relevant jurisdictional facts were the written claims of an irregularity or the claim of discrimination. If jurisdiction was not conferred by those claim documents then it could not be conferred by other documents. But nothing was said in those cases about how the claim documents should be construed, or which materials could be relied upon in order to understand the words in the claim documents.

111 For these reasons, neither statutory purpose, nor these cases, supports a bar to the admissibility of extrinsic evidence of jurisdictional facts which would prevent the use of the rejected amendment as relevant material for the construction of the 7 July 2011 Resolution.

112 In oral submissions, the LGAB relied upon another reason for the exclusion of the extrinsic evidence. Counsel submitted that where there is material before a decisionmaking body which must satisfy itself of its own jurisdiction, then the body is entitled to have regard only to that material (ts 60). A parallel was drawn, but disputed by the City of Subiaco, with construction of words in a written contract.

113 It was conceded by counsel for the City of Subiaco that there was no evidence that the 7 July 2011 proposed amendment was material which the LGAB had at the time it purported to determine its jurisdiction (ts 12).

114 Although the LGAB might not have seen the text of the 7 July 2011 proposed amendment, it was material which was reasonably available to the LGAB and which the City of Subiaco might reasonably have expected that the LGAB would consider before determining whether it had jurisdiction. The LGAB had been provided with a letter to the Post newspaper which referred to an amendment to the 7 July 2011 Resolution. Further, s 5.94(n) of the Local Government Act provides, subject to exceptions which are not relevant, that a person can attend the office of a local government during office hours and inspect 'any confirmed minutes of council or committee meetings'.

115 This raises a vexed question of construction which has not conclusively been resolved in relation to the law of contract and has rarely been considered in the context of construction of words in other contexts. In the context of contractual construction, the question has been described as one of 'considerable controversy': Byrnes v Kendle (284) [98] (fn 152) (Heydon & Crennan JJ).

116 The question of construction is whether extrinsic evidence can be relied upon where the evidence was not known to one of the parties but was reasonably available to him or her. As I explain below, on the state of the law at the moment, reasonably available evidence which is unknown to one party would not be admissible for the construction of a contract.

117 In Codelfa Construction v State Rail Authority (NSW), Mason J said that

[g]enerally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed (352).

118 On the other hand, it has been said that in the construction of words of a contract, the relevant background materials to which regard may be had are those which 'would reasonably have been available to the parties in the situation in which they were at the time of the contract': Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181, 188 [11] (Gleeson CJ, Gummow & Hayne JJ, quoting Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896, 912).

119 These statements have been reconciled by an emphasis upon the objective approach to interpretation of words. The objective approach requires the court to consider the words from the perspective of a reasonable reader with the relevant attributes. In the case of a contract, where the words are ambiguous, the reasonable reader is attributed with the knowledge of matters and circumstances which have been brought to the attention of both of the parties in the sense of them having seen or been informed of those matters, whatever the state of their subjective consciousness of them: QBE Insurance Australia Ltd v Vasic [2010] NSWCA 166 [26] (Allsop P).

120 This means that the reference by Mason J to circumstances 'known to the parties' is a reference to the circumstances which are brought to the attention of the parties rather than circumstances which are subjectively known by the contracting parties or either of them. This approach explains why facts which are notorious will also be attributed to the parties. It is also confirmed by the earlier quotation by Mason J (351) of Lord Wilberforce in Reardon Smith Line Ltd v HansenTangen [1976] 1 WLR 989, 997 that there may be facts which the parties did not have in the forefront of their minds, or about which one or both '[took] no particular interest ... but that will not prevent those facts from forming part of an objective setting in which the contract is to be construed'.

121 In QBE Insurance Australia [32], Allsop P also explained that this approach is consistent with the passage quoted above from Maggbury, saying:

That Gleeson CJ, Gummow and Hayne JJ were not intending to permit extrinsic material or surrounding facts wider than as described in Codelfa and Reardon Smith can be taken by their reference, in the same footnote as contained the reference to Investors Compensation, to Codelfa at 350352 and to the speech of Lord Bingham of Cornhill in Bank of Credit and Commerce International SA v Ali [2001] UKHL 8; [2002] 1 AC 251 at 259 [8] where Lord Bingham said:

'8. I consider first the proper construction of this release. In construing this provision, as any other contractual provision, the object of the court is to give effect to what the contracting parties intended. To ascertain the intention of the parties the court reads the terms of the contract as a whole, giving the words used their natural and ordinary meaning in the context of the agreement, the parties' relationship and all the relevant facts surrounding the transaction so far as known to the parties. To ascertain the parties' intentions the court does not of course inquire into the parties' subjective states of mind but makes an objective judgment based on the materials already identified. The general principles summarised by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896, 912913 apply in a case such as this.'

122 If this approach to construction were applied, then it would exclude the evidence of the proposed amendment to the 7 July 2011 Resolution for the purpose of construing that resolution, although the 2 August 2011 letter to the LGAB and the attached letter to the Post would remain relevant.

123 However, although I accept that the construction of the 7 July 2011 Resolution should proceed by reference to the construct of a reasonable reader in the position of the LGAB, I do not consider that this contractual approach should be taken to the construction of the jurisdictional fact in this case. The information available to the reasonable reader in the position of the LGAB should not be confined only to those details brought to the attention of the LGAB.

124 The rules for construing whether a jurisdictional fact exists must, at least, be influenced by the statute which creates the jurisdictional fact. In oral submissions, this was acknowledged by counsel for the LGAB. For instance, it is possible that a statute could provide for the existence of a jurisdictional fact to be determined only by reference to material which is before the decisionmaker. In other words, the Local Government Act could have provided that the question of whether a Proposal had been made was to be determined only by reference to particular material which was in the possession of the LGAB or which had been brought to its attention. The Local Government Act did not do so.

125 The Local Government Act provides in sch 2.1 for the orders which must be sought by a Proposal (cl 1), the persons who can make a Proposal (cl 2(1)), the matters which a Proposal should contain (cl 2(2)(a)), the matters which must accompany a Proposal (cl 2(2)(b)) and the requirement that the Proposal must comply with regulations (cl 2(2)(c)). It says nothing expressly about the material to which the LGAB is to have regard in determining whether a Proposal has been made.

126 Instead, the implication of these provisions in the Local Government Act is that extrinsic material should be admissible when the LGAB determines whether a Proposal has been made. For instance, the LGAB is required to locate any relevant regulations to determine whether the Proposal complies with those regulations (cl 2(2)(c)). If the words in the regulations are unclear then those words might need to be construed by further extrinsic material. The LGAB might also be required to inquire about extrinsic material concerning the number of 'affected electors' to determine whether the Proposal has been made (as required) by at least 10% of the total number of affected electors (sch 2.1, cl 2(1)(d)(ii)). The same must be true of extrinsic material which elucidates the meaning of a resolution by which an affected local government purports to make, or empower, a Proposal, and about which the affected local government should reasonably be aware.

127 For these reasons, the rejected amendment to the 7 July 2011 Resolution is admissible evidence for the construction of the 7 July 2011 Resolution. It is a further reason to reject the submission of the LGAB that the Council of the City of Nedlands was proposing in the 7 July 2011 Resolution that the two cities should merge.

(6) The second issue: Can a Proposal be revoked after it has been considered?

128 I have concluded that no Proposal was authorised by the 7 July 2011 Resolution of the Council of the City of Nedlands. Nor was a Proposal made by the City of Nedlands through its Chief Executive Officer's communications with the LGAB. The second issue would only arise if a Proposal had been made.

129 My conclusion on the second issue is that if a Proposal had been made by the City of Nedlands then the City of Nedlands could not revoke it after it had been considered by the LGAB.

130 The provisions of the Local Government Act relevant to this issue are sch 2.1, cl 3 and cl 4. Those clauses provide as follows:

(1) The Advisory Board is to consider any proposal.

(2) The Advisory Board may, in a written report to the Minister, recommend* that the Minister reject a proposal if, in the Board's opinion -

(a) the proposal is substantially similar in effect to a proposal on which the Board has made a recommendation to the Minister within the period of 2 years immediately before the proposal is made;

(aa) where the proposal was made by affected electors under clause 2(1)(d), that the majority of those electors no longer support the proposal; or

(b) the proposal is frivolous or otherwise not in the interests of good government.

(3) If, in the Advisory Board's opinion, the proposal is -

(a) one of a minor nature; and

(b) not one about which public submissions need be invited,

the Board may, in a written report to the Minister, recommend* that the Minister reject the proposal or that an order be made in accordance with the proposal.

(4) Unless it makes a recommendation under subclause (2) or (3), the Advisory Board is to formally inquire into the proposal.

(1) Where a formal inquiry is required the Advisory Board is to give -

(a) notice to affected local governments, affected electors and the other electors of districts directly affected by the proposal; and

(b) a report to the Minister.

(2) The notice and report under subclause (1) are to -

(a) advise that there will be a formal inquiry into the proposal;

(b) set out details of the inquiry and its proposed scope; and

(c) advise that submissions may be made to the Board not later than 6 weeks after the date the notice is first given about -

(3) If, after considering submissions made under subclause (2)(c), the Advisory Board decides* that the scope of the formal inquiry is to be significantly different from that set out in the notice and report under subclause (1), it is to give -

(a) another notice to affected local governments, affected electors and the other electors of districts directly affected by the proposal; and

(b) another report to the Minister.

(4) The notice and report under subclause (3) are to -

(a) set out the revised scope of the inquiry; and

(b) advise that further submissions about the proposal, or submissions about matters relevant to the revised scope of the inquiry, may be made to the Board within the time set out in the notice.

131 At its meeting on 3 August 2011, the LGAB considered the 12 July 2011 letter from the Chief Executive Officer of the City of Nedlands and the enclosed draft Merger Feasibility Study and plan showing the existing boundaries of the Cities of Nedlands and Subiaco. The LGAB resolved to conduct a formal inquiry.

132 No notice of a formal inquiry has yet been given by the LGAB. The LGAB undertook not to issue notices prior to the conclusion of these proceedings.

133 This second issue concerns the 25 October 2011 resolution of the Council of the City of Nedlands that 'the City of Nedlands does not wish to amalgamate with the City of Subiaco and requests that inquiries into the matter be terminated'.

134 The City of Subiaco submitted that the effect of this resolution, and its communication to the LGAB, was to revoke any Proposal which had been made by the City of Nedlands. I do not accept this submission.

135 There is no express power in sch 2.1, cl 3 for an affected local government which has made a Proposal to revoke that Proposal. If any power to revoke a Proposal were to exist, it would need to be implied.

136 The City of Subiaco submitted that such an implication should be made because, without it, considerable time and expense could be incurred in responding to a formal inquiry which was not desired by the person proposing it. I accept that this is an important factor to consider in the construction of sch 2.1. The consideration of the context of any statutory provision 'includes the general purpose and policy of a provision': Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27, 47 [47] (Hayne, Heydon, Crennan & Kiefel JJ). It can be readily accepted that the purpose and policy of the provisions in sch 2.1 were not to allow time and money to be wasted unnecessarily.

137 Nevertheless, there are four insurmountable textual difficulties with the implication suggested by the City of Subiaco.

138 First, to imply a power by a local government to revoke a Proposal which has been considered by the LGAB, and about which the LGAB has resolved formally to inquire, would create an implication in relation to 'affected local governments' which is significantly different from an express term in relation to a Proposal made by 'affected electors'.

139 In relation to affected electors, the LGAB has a specific power not to inquire formally into a Proposal by affected electors if 'the majority of those electors no longer support the proposal': sch 2.1, cl 3(2)(aa). This power can only be exercised by an absolute majority view of the LGAB. It can only be exercised if the LGAB recommends to the Minister that the Proposal be rejected: sch 2.1, cl 3(2)(aa).

THE CITY OF SUBIACO -v- LOCAL GOVERNMENT ADVISORY BOARD [2011] WASC 322 (29 November 2011)

At a glance

Court

Decision date

Before

Source

Judgment (209 paragraphs)

(a) The Proposal process under the Local Government Act

(b) What constitutes the purported proposal made by the City of Nedlands?

(c) The approach to construction of the 7 July 2011 Resolution

(d) The textual reasons why the City of Nedlands did not authorise, or make, a Proposal

(e) Extrinsic evidence provides a further reason why the City of Nedlands did not authorise, or make, a Proposal

The effect of the extrinsic evidence of the amendment

Is the extrinsic evidence of the amendment admissible?

(6) The second issue: Can a Proposal be revoked after it has been considered?

Legislation Cited (3)

Cases Cited (14)