Trindall & Ors v Minister for Aboriginal Affairs

"(1) The Minister may appoint an investigator, from a list of investigators jointly prepared by the Director-General and the New South Wales Aboriginal Land Council, to investigate the affairs, or specified affairs, of an Aboriginal Land Council, including its efficiency and effectiveness. (2) The Minister may appoint an investigator to investigate the affairs of a Local or Regional Aboriginal Land Council only with the approval of the New South Wales Aboriginal Land Council. (3) The Minister must prepare a report in writing of the Minister's reasons for appointing an investigator to investigate the efficiency and effectiveness of the New South Wales Aboriginal Land Council. (4) The Minister is to cause a copy of such a report to be laid before both Houses of Parliament as soon as practicable after the investigator is appointed. (5) The investigator is to be paid out of the funds of the New South Wales Aboriginal Land Council. However, in the case of an investigator appointed to investigate the affairs, or specified affairs, of a Local or Regional Aboriginal Land Council, the New South Wales Aboriginal Land Council may recover that amount from the Council concerned." 8 It is apparent from the terms of s 216(1) that the Minister must consult with the Council in order to prepare the list of persons from which an investigator can be appointed. The Minister is accountable to the Parliament for any decision to appoint an investigator, the relevant report being required to be laid before both Houses of Parliament (s 216(4)). 9 Pursuant to s 219 an investigator is to report on the investigation to the Minister. 10 Section 217 provides for the contents of the investigator's instrument of appointment. Section 217(a) contemplates that the Minister may define whether all or only specified affairs of the Council are to be investigated. Section 217(b) requires the Minister to specify in the instrument of appointment "the time within which the report required to be prepared by the investigator under s 219 is to be delivered to the Minister." Section 217(c) requires the Minister to specify the term of office of the investigator. 11 Section 220 provides that the Minister may extend the term of office of an investigator and, pursuant to s 221, the Minister may remove an investigator. 12 Section 220 is in the following terms: "(1) The Minister may extend the term of office of an investigator appointed under this Division to investigate the affairs, or specified affairs, of the New South Wales Aboriginal Land Council.

(2) The Minister may, with the consent of the New South Wales Aboriginal Land Council, extend the term of office of an investigator appointed under this Division to investigate the affairs, or specified affairs, of a Local or Regional Aboriginal Land Council." 13 Division 2 of Part 11 provides for the appointment of an administrator to Aboriginal land councils. Section 223 provides the power in relation to the New South Wales council. The section is in the following terms: "223 Administrators - New South Wales Aboriginal Land Council

(1) The Minister may appoint an administrator of the New South Wales Aboriginal Land Council. (2) Notice of an appointment of an administrator under this section must be published in the Gazette. (3) The Minister may appoint an administrator under this section only after considering one of the following reports that discloses, in the opinion of the Minister, grounds that justify the making of such an appointment: (a) a report of the Auditor-General, or (b) a report of an investigator appointed in accordance with Division 1. (4) The administrator has, during the period of his or her appointment, all, or such part as is specified in the administrator's instrument of appointment, of the functions of the Council conferred or imposed by or under this Act, to the exclusion of the Council. (5) The administrator is to be paid out of the funds of the Council. (6) The regulations may make provision for or with respect to the functions of the administrator."

The sequence of events 14 The circumstances which gave rise to the appointment of Mr Beauman, although providing background, are not the essence of these proceedings. It is only necessary to understand that concern had been expressed about the financial affairs and management of the Council. The Minister first appointed Mr Beauman as the investigator on 29 May 2003. The appointment was for three calendar months and it is accepted that it expired at midnight on Friday, 29 August 2003. The report was also required to be provided by 29 August 2003. 15 The appointment of an investigator was preceded by an investigation of the Council by the ICAC in April 1998, which was followed by a report by the Auditor-General to Parliament in June 2002. The Ombudsman also carried out an investigation and reported in June 2002. 16 The possibility of the appointment of an investigator was raised in Ministerial briefing papers early in 2003. By April 2003, detailed consideration had been given to the necessary steps to appoint an investigator and the Minister approved a possible process for that appointment. 17 During early May 2003 the Minister wrote to the Council raising concerns that the Council's response to the issues raised by the Auditor-General's Office was not adequate. He requested further material by 21 May 2003. By that date, the Minister had received a report from the Department which recommended that an investigator be appointed. On the same day the Council responded to the Minister's letter in relation to the Audit Office recommendation. 18 There is an email from Mr Kuhn, an officer of the Department of Aboriginal Affairs, to Mr Beauman on 22 May 2003 which states: "Confirming that we have been given the go ahead from the Minister and we are aiming for next week, probably Friday. I will need your feedback by Mon or Tues next week." 19 On 23 May 2003 the Minister had a meeting with members of the Council. During the discussions, the Minister made a request for further information from the Council which he asked to be delivered by 26 May 2003. A letter was forwarded from the Department confirming the matters upon which the Minister required further information. 20 The Council responded with a letter which was accompanied by 6 lever arch folders of information. The letter is dated 25 May 2003 and was apparently delivered to the Minister on the following day. 21 Thereafter, the evidence reveals correspondence between the Minister's office and the Department substantially by email. On 26 May 2003 an officer of the Department indicates that it will take the Department a few days to understand the Council's response. On the same day there is an email from the Minister's office to the Director-General of the Department advising that the Minister is keen to make the appointment on 29 May and before question time in the Parliament on that day. This was followed by the preparation of draft documents to facilitate the appointment of an investigator. By 28 May a brief had been prepared for the Minister recommending Mr Beauman be appointed as the investigator. 22 On 29 May the Council again wrote to the Minister and provided two further lever arch volumes of material. On the same day, the Deputy Director-General approved the brief to the Minister recommending the appointment of Mr Beauman. Later that day the Minister made the appointment and reported to the Parliament outlining his reasons for taking that step. 23 During the investigation Mr Beauman provided interim reports to the Minister. The Council cooperated with the investigation and, on 26 August 2003, asked to be able to review any draft report and comment upon it. As it happens, that request was not met. On 29 August the Minister responded by indicating that the Council would be given an opportunity to comment on the investigator's report once it had been provided to the Minister. 24 I will detail the final steps in the preparation of the report later in these reasons. The report was not delivered to the Minister by 29 August but on 2 September 2003. On the same day the Council, through Mr Trindall who was its Chairman, offered to personally brief the Minister on reform measures which the Council had taken and draft policies which it was inclined to adopt for its future management. The Minister met with Mr Trindall on 12 September 2003, by which time the Council was asserting that it may not have been treated fairly during the investigation process. 25 The Minister tabled the investigator's report in the Parliament on 16 September 2003. On the same day, a copy was provided to the Council seeking a response to the issues raised within 28 days. The Council responded by 15 October 2003. 26 Thereafter there were some meetings and correspondence in which the Council sought to identify concerns of either the Department or the Minister arising from the report. On 3 November the Director-General of the Department advised that she would contact the Council if specific matters in the Council's response to the investigation report "require either clarification or expansion." 27 On 5 November 2003 the Council wrote to the Minister raising a number of issues. In that letter it was suggested that if the report had been delivered out of time, it was not a report under s 219. 28 On 12 November 2003 the Minister acted to extend the term of appointment of the investigator pursuant to s 220 and, on the same day, Mr Beauman delivered a further copy of the report. 29 On 13 November 2003 the Minister again wrote to the Council requesting advice as to any further reasons why the Minister should not appoint an administrator. The Council responded raising legal and factual concerns. An intention to seek relief from the Court was also indicated in the event that the Minister believed he could proceed to appoint an administrator. 30 On 19 November the briefing note for the Minister was finalised. It was received by the Minister on that day and he decided to appoint an administrator. At 4.02 pm that day a letter was faxed from the Minister to the Council advising that the Minister was "currently giving due consideration to the matters raised" in the letter of 18 November 2003. The Council was also told at this time of the previous extension of Mr Beauman's term of office. 31 The appointment of the Administrator was published on 20 November 2003 and Mr Trindall was advised the same day. The present proceedings were commenced on 21 November 2003.

Factual matters relating to the completion of Mr Beauman's report 32 Although considerable work had been done in preparing the report by 29 August 2003, it was not delivered to the Minister until 2 September 2003. The report was dated 29 August, but I am satisfied that it had not been completed by the end of that day. 33 Evidence was tendered of the changes made to the typed version of the report which was last saved on a computer some time on 29 August 2003. It is not clear at what time on that day the document was saved and it could have been early in the day, leaving time for considerable further work to have been completed during the day. 34 However, comparison of the final document with the document saved on 29 August 2003 reveals a number of instances where Mr Beauman has apparently noted the need for further consideration before the final wording could be settled. Some of those references in the draft report take the following form: · Councils policy on rescission motions is not well understood and/or documented????' … · best practice dictates that councillors make additional voluntary disclosures. where does it say this??* … · Is there any evidence Clark supported closure of regional office and redundancy of 2 staff after KK incorporated **** … · is there a resolution accepting these policies … · is it in draft reports PWC … · I am advised it is a registered aboriginal corporation under the registered with ???? … · WHY WHERE do we find reasoning for best practice … · On the Treasurer upon being re elected to the role, advised **** that he had chosen the CFO, Mr Steven Narayen to be his . At this time I am not aware of this delegation having been withdrawn. … · Reference legality of operating a business point above to Deryk's section … · Best practice dictates that Councillors make additional voluntary disclosures. where does it say this? …" 35 It is also apparent that some of the recommendations had not been written, at least in their final form, when the document was saved on 29 August 2003. Importantly, the recommendation that the Minister appoint an administrator was not contained in the saved document. However, although not stated in the saved document, there is evidence (which I accept) that, before the Friday, Mr Beauman had decided to recommend that an administrator be appointed and that this had been communicated to the Minister's staff. 36 There was a suggestion that after 29 August the investigating team was simply formatting the report and no "intellectual" work was done after that date. However, this is not a conclusion which can be drawn from the material before the court. The time sheets of persons engaged in working on the report reveal significant work done on the weekend following Friday 29 August and, having regard to the changes between the saved document and the final document, the only reasonable conclusion is that work of substance was done on that weekend. 37 It is significant that the Minister did not call Mr Beauman or any other person engaged in the investigation or the preparation of the report. In the circumstances, where Mr Beauman was engaged by the Minister to prepare the report and could be expected to give evidence as to the state of its preparation on the Friday, the failure to call him or any of his staff enables the Court to more readily infer that the report was not complete on the Friday (see Jones v Dunkel (1959) 101 CLR 298). I am satisfied that Mr Beauman could have been expected to be available to the Minister, rather than the applicants (see Payne v Parker [1976] 1 NSWLR 191 at 201). 38 On 12 November 2003, after there had been discussion between the parties about the date of the report as I have previously indicated, the Minister acted to extend the term of Mr Beauman's appointment and the time for delivery of his report to 13 November 2003. Mr Beauman then redelivered a copy of the first report - still dated 29 August 2003 - to the Minister on 12 November 2003. 39 Mr Beauman's investigation of the Council was intense and required consideration of, and reporting on, many matters of detail. Mr Beauman did not carry out all the work himself. He was assisted by an "investigation team" which included other members of the accountancy firm Bentleys MRI Sydney Pty Ltd of which Mr Beauman is a director. These persons are acknowledged in the report as having "performed the detailed investigation of the matters covered in this report." 40 Bentleys MRI Sydney Pty Ltd has associated with it a separate firm of Bentleys MRI Business Recovery and Insolvency Partnership. The partnership in fact submitted an application for inclusion on the list of investigators under the signature of Mr Derek Andrew. Mr Beauman is not a partner of the insolvency partnership. 41 Two members of the partnership, Mr Andrew and Mr Brown, were also individually nominated for the list. However, the nominations were rejected by the Land Council and ultimately Mr Beauman was appointed. 42 The evidence makes plain that the investigation task was always expected to be complex. As was inevitable, Mr Beauman did not himself carry out all of the interviews which were necessary and did not personally conduct all of the investigations. Mr Andrew carried out some of the interviews and considerable work seems to have been done by Mr Baxendale and Mr Hollow. 43 When the report was in draft form, there were substantial references to "we". Most were removed from the final report, although some remained. It is also apparent that sections of the report were drafted by different people, including Mr Andrew and Mr Baxendale.

The contents of the report 44 The report is a lengthy document which commences with an Executive Summary in the following terms: "On 29 May 2003 I was appointed to investigate the New South Wales Aboriginal Land Council ("NSWALC") pursuant to Section 216 of the Aboriginal Land Rights Act 1983 ("the Act") for a period of three calendar months. The purpose of the appointment was to investigate all the affairs of the NSWALC. Without limiting the scope of my appointment I was also to specifically investigate a number of identified areas relating to the operation and management of the NSWALC. The Terms of my Appointment did not specify a period of time to be covered by the investigation and it would not be practicable to investigate all of the affairs of NSWALC since its inception, in the time available. Accordingly, emphasis has been given to issues and decisions relevant to the life of the current Council; that is the period since 11 December 1999. Initial interviews were conducted with Councillors and management of NSWALC to gain an appreciation of the functions and activities of the organisation as well as the roles of each. All Councillors have been interviewed by the investigation team with the exception of Clr W Murray. Interviews were also held with various members of the Aboriginal community who came forward and contacted my office on hearing of the investigation. During the course of my investigation I have considered many aspects of the New South Wales Land Council, including its efficiency and effectiveness in fulfilling its functions under the Act. My key recommendations are provided at section 12 of my report and are complimented, where applicable, by specific recommendations at the end of each section. It is my overall recommendation, that under section 223 of the Act that the Minister appoint an Administrator to the New South Wales Aboriginal Land Council to administer all of the functions of the New South Wales Aboriginal Land Council: s The position of Administrator should be filled by an Aboriginal person. s The term of appointment should be for a period of eighteen months. This recommendation should not be construed as a punitive measure against the Councillors as its aim is to provide a period of separation between the Council and the Corporate Body, something the current Council has been unable to achieve, and to provide the Corporate Body an opportunity to re-establish itself. The appointment of a full-time CEO, to commence in early September, provides further opportunity to strengthen the Corporate Body. The position of the CEO My investigations indicated that significant periods have existed in the life of this Council where the CEO role was not permanently filled. The Council has failed to meet its obligations by not appointing an effective CEO with a clear mandate to direct and manage the organisation for substantial periods of time. Inaction by Council has established a culture whereby the duties and functions of the CEO have been impeded by Councillors contrary to the express provisions of the Act and the employment contracts of the CEO.

The Council Meeting Process Proposed Resolutions do not include recommendations and or advice from the Managers of the Corporate Body with respect to legal and financial implications. Resolutions are drafted at the table during the meeting process and are sometimes subject to some further condition. This has resulted in poorly drafted Resolutions that lack clarity. It is clear that the current meeting process is not efficient and it has a detrimental affect on the effectiveness of the decision making process. Council has failed in its governance obligations to ensure adequate policy, as it relates to the elected body, is up to date to facilitate the discharge of their responsibilities in an efficient and effective manner. Councillor Register of Interests and External Representations NSWALC does not maintain a register of general disclosures of interests, a gifts register, or a register of Councillor's external representations. The failure to maintain appropriate registers is a significant failing on the corporate governance of NSWALC. Councillor Discretionary Grants Whilst the concept of Councillor discretionary grants appears well founded the 'discretionary' nature of these grants is not consistent with transparent decision making required of Councillors. Councillors are exposed to allegations of corruption, nepotism and imprudence in their administration of such funds whether or not, there is any substance to such allegations. There is an obvious difference in understanding between Councillors regarding how best to administer and for what purpose grants can be allocated. Councillor Travel Allowances There are a number of matters which suggest a continued disregard for the standards of accountability and probity expected of Councillors in relation to claims by them for travel. Staff Organisation Structure In commencing a review of the organisation in early 2003 without having first appointed a permanent CEO, Council has demonstrated a lack of foresight. The absence of certainty and direction this created has had a deleterious effect on staff morale and motivation. In my view Council's subsequent decision to defer implementation, pending the appointment of a new CEO is correct. The CEO must be fully engaged and committed to this process and should review and manage the transition. At this stage of the development of a robust and effective organisational structure, it is critical that strong and continuing leadership is given by a CEO with the ungrudging support of the Council. Financial Management The current Council has failed to show leadership by not monitoring the progress of strategies identified in the 'Business Plan 2002-2007'. Further, the strategic plans have not been taken to the next stage and expressed in financial terms as part of the development of a Long Term Financial Plan for Council. The 2003/2004 budget has not been prepared within the context of a current management plan and it is not apparent if resources have been allocated efficiently in accordance with stated priorities. The Council is in breach of section 157 of the Act in so far as it has been unable to furnish to the Minister sufficient information to facilitate the approval of the 2002/2003 and 2003/2004 budgets. Complaints Handling The internal complaint handling process within NSWALC is inadequate. As a consequence, complaints of corrupt conduct, maladministration or fraud have the potential to avoid referral to the appropriate authority. Failure to undertake a proper investigation also exposes the Council to potential criticisms of corruption or favouritism regardless of the true position. Statutory Investments Fund ('SIF') More than 90% of funds held in the SIF are with external fund managers. However the internally managed component has been invested in assets that are not publicly listed. NSWALC does not have the internal resources to effectively manage active investments. Whilst only representing 6% of the SIF, the internally managed assets represent 69% of the unrealised losses being carried by NSWALC. The mortgage fund is a component of the internally managed assets forming part of the SIF. The operations of the mortgage fund have been the subject of adverse comment in a number of the reports to Parliament by the Auditor General and a number of independent reviews. There is no control file on the overall conduct of the mortgage fund that includes all legal advice relating to the mortgage fund or that provides an overall review of the losses of the fund over the term of its operation. This represents a failure by the Corporate Body to effectively manage its business.

Support to Local Aboriginal Land Councils The 'Business Plan 2002 to 2007' for NSWALC includes as one of its functions 'to start a process of building equity among our own people, including the distribution of wealth'. It is arguable that this process should commence with a review of NSWALC's approach to LALC funding. At present approx 44% of LALCs are either on conditional or cessation funding. Six of the thirteen RALCs are on cessation of funding. A review of various allocations on a regional basis reveals that funding is not aligned to the number of LALCs in the Region and the total LALC network. Over several years, Rates Debts of LALCs have risen steadily. LALCs have been briefly afforded rates exemption but that exemption has now been withdrawn. In respect of some LALCs the deduction for Rates Debt recovery is less than the amount the Rates Debt is increasing. Further NSWALC has failed to take legal action against the offending LALCs as resolved by Council. Legal Costs Councillors have no role in seeking external advice in respect of the commercial and business affairs of NSWALC. NSWALC has failed to implement the recommendations of its own internal audit review issued in August 1998 that found that external lawyers were engaged without entering into formal engagement letters or obtaining cost agreements and no policy or procedures existed to provide staff and Councillors guidance in this area. Feedlot Beef Venture I have obtained independent legal advice on the power of NSWALC to enter into this venture that is contrary to that provided to Council by its internal advisors. This advice concurs with other external advice obtained by NSWALC that operating an enterprise is outside its functions. NSWALC is not appropriately structured or resourced to effectively operate an enterprise in a commercial environment. Operation of any commercial venture increases the exposure of the statutory fund to unforseen claims and losses that do not sit comfortably with the concept of investments responsibly managed under the Trustee Act. Notwithstanding any legal restrictions there are overriding commercial reasons why NSWALC should not operate any enterprise. Rural Properties In early 2003 NSWALC appears to have seriously damaged its reputation with a number of suppliers to the rural properties due to non-payment of invoices. This appears to have resulted in many inefficiencies and costly delays. The rural properties have attracted a significant amount of NSWALC's resources, both in money and time, which have been diverted from its core functions. Council, in its current plans to transfer the rural properties back to LALC's through a trust arrangement, has not addressed the future viability of the properties, their future funding requirements and the obligation of the LALC's to retain the properties within the Land Council network. Fleet Management Issues raised by the Auditor-General remain outstanding, namely concerns relating to the use of fuel cards the failure of the majority of Councillors to record details related to the use of their motor vehicles on motor vehicle running sheets. Minimart A substantial period of time elapsed between the proposals by Tamworth LALC to take over the Minimart to when it was transferred to the LALC (from 5 December 2000 until 13 June 2003). During this period of time substantial damage occurred to the property while it was under NSWALC's control. There is no indication whether the LALCs in the Northern Region agreed to the transfer of the Minimart to the Tamworth LALC as initially proposed. I have been unable to establish whether the requirements of s 40(1)(a) of the Act have been complied with by NSWALC. This section requires NSWALC to obtain the approval of the respective LALC. NIIS Proposal NSWALC's file in relation to the proposed purchase of the National Insurance Intermediary Services Pty Limited (NIIS) appears to have been created after my appointment. There is no summary of the current position or outstanding issues provided. The file includes no record of the Resolutions of Council. Important documents are missing from this file, including relevant memos from the previous Acting CEO and it is an incomplete record of the nature and conduct of this transaction. The fact that the business did not currently have offices or employees in New South Wales does not appear to have been a concern to the Council in its deliberations. Funeral Benefits Scheme Despite numerous advices both internally and externally Council has continued to follow its own agenda in the establishment of a Funeral Benefit Scheme. In some instances Council has taken control of issues to the exclusion of the Corporate Body. Council have repeatedly failed to consider the obligations under the General Purchasing Delegation in respect of consultancies and services in relation to the Funeral Benefit Scheme. Mungindi LALC and the Glanville Property The files maintained by NSWALC are poorly maintained and incomplete. There is little documentation on files to indicate that NSWALC complied with its own policies and procedures in regard to providing funding to MLALC. Specifically there are no written applications from MLALC and no feasibility assessments for the project. ICAC Issues NSWALC has taken an approach to dealings with ICAC that appears both arrogant and incompetent. Its repeated failure to adequately review the implementation of the recommendations exhibits a clear unwillingness of the Councillors to drive through any significant change in the organisation and an abject failure by the Executive to exhibit any leadership in ensuring the organisation has developed appropriate policies and communicates those throughout the Land Council network. Filing Retention and Structure Throughout my investigation I found the filing structure of NSWALC to be very poor. Repeatedly it was observed that papers were not secured within the file binders and the documents themselves were often not stapled together. This loose paper has made a logical and efficient review of the current position of such files impossible. There are generally no summary records or action sheets that record the current position of the area and actions being taken in respect of each matter. The lack of a central filing system further highlights NSWALC's failure in its document management system. 45 In Chapter 2 Mr Beauman makes acknowledgements of those who helped him with the report in the following terms: "In completing my investigation it is appropriate to acknowledge the contributions made by the individuals of the investigation team. Mr Deryk Andrew, who performed the key role of supporting me in the direction of the investigation process including, liaising with stakeholders and the drafting of this report and related recommendations. Mr Ian Hollow, Mr Guy Baxendale, Ms Nicolette Martuo, all of whom have performed the detailed investigation of the matters covered in this report and Mr Philip Price, Mr Ian MacPherson, Mr Robert Ryn and Ms Jodie Smart who have assisted in my investigation at various times. I would also like to express my appreciation to the Chairman, Clr Les Trindall, and Acting CEO, Ms Kerri Wilkinson, the Councillors and Staff of NSWALC who provided my team with access to the information and records requested for the purpose of our investigation and their courteous assistance during the term of my appointment." 46 Chapter 5 of the report deals with corporate governance. As the applicants submit that problems emerge from this discussion which cannot usefully be summarised or abbreviated I have included the whole of the chapter as an appendix to these reasons.

Invalidity of the appointment of Mr Beauman 47 The applicants allege that when deciding whether to appoint Mr Beauman, the Minister was under a duty to accord procedural fairness to the Council and the applicants. There are four bases pleaded for the claim. They are:

(a) the potential adverse consequences for the Council and the councillors of the investigator's report;

(b) the financial liability of the Council to pay the investigator;

(c) the fact that detailed information was sought of the applicants prior to, and in connection with, the possible appointment of an investigator, thereby creating a reasonable expectation that the material would be considered;

(d) a failure to disclose material prejudicial to the Council before appointing the investigator - in particular the fact that Mr Beauman had already been appointed to undertake and had, in fact, undertaken preliminary investigations. 48 The law now provides that many administrative decisions attract an obligation on the decision-maker's part to afford procedural fairness. A plain statement was provided by Mason J in Kioa v West (1985) 159 CLR 550 at 584: "… there is a common law duty to act fairly … in the making of administrative decisions which affect rights, interests and legitimate expectations subject only to the clear manifestation of a contrary statutory intention." 49 In the present case, Mr Beauman was appointed pursuant to s 216 which provides in sub-section (1) that an investigator may only be appointed from a list jointly prepared by the Director-General and the Council. To that extent, the statute manifests an intention that the Council is to have a role in the appointment of the investigator. 50 The section also provides an accountability mechanism for the Minister, who must prepare a report in writing of the Minister's reasons for appointing an investigator, which report is to be laid before the Houses of Parliament. This unusual step was no doubt required in recognition of the political sensitivity of a decision to appoint an investigator, but also as a means of ensuring the Minister had a basis for any appointment which he or she believed would withstand scrutiny. 51 These provisions, particularly the role given to the Council in determining who the investigator may be, strongly suggest that no other obligation is owed by the Minister to the Council before an investigator is appointed. 52 Because the duty to afford procedural fairness only attaches to a decision which affects "rights, interests or legitimate expectations", it has not, but for an exception in relation to judicial officers, been held to apply to a decision to investigate, as opposed to any findings made by an investigator (see Cornall v A B (A Solicitor) [1995] 1 VR 372; Norwest Holst Ltd v Secretary of State for Trade [1978] Ch 201; Allen Allen & Hemsley v Deputy Federal Commissioner of Taxation (1988) 81 ALR 617; Minosea Pty Ltd v Australia Securities Commission (1994) 35 ALD 493; Re Minister for Immigration & Multicultural Affairs ex parte Miah (2001) 206 CLR 57). 53 In my opinion, the fact that the legislation provides that the Council must pay the cost of the investigation does not alter the position. The obligation to make the payment is found in the statute. Any requirement to expend monies arising from the appointment of the investigator is an incident of the operation of the statute and is not a relevant right or interest. 54 With respect to the applicant's claim that a legitimate expectation was created that the Minister would consider the material provided on 26 May 2003 before deciding whether to appoint an investigator, the respondent submits there are three answers. 55 Firstly, the respondent submits that because the Minister was exercising a significant statutory power, a relevant expectation cannot arise. Secondly, it is submitted that the challenges should have been brought when Mr Beauman was appointed and not after he had reported or the Minister had acted. Finally, it is submitted that in any case, the evidence does not support the applicants' submission that there was a failure to consider the relevant material. 56 The first submission raises significant issues but in my opinion, it is unnecessary to resolve them as I am satisfied that the third submission should be accepted. 57 As I have already indicated, the material provided by the Council comprised six volumes. Although placed on the bar table they were, as a result of an apparently deliberate decision by Senior Counsel, not tendered. However, a summary of the material was provided. 58 I am satisfied that the material was considered by relevant Departmental officers who were familiar with the issues. The evidence includes a memorandum from Ms Braird who at the time was the Assistant Policy Officer in the Heritage and Resources Unit of the Department. In that memorandum she states: "It is apparent that the issues which were dealt with by the material from the Council were by this stage well known. There is nothing in the evidence which could lead to the conclusion that the relevant Departmental officers were not able to adequately consider the response from the Council in the time available." 59 It is asserted by the applicants that any consideration of the material is irrelevant because the Minister and the Department were committed well before 29 May 2003 to appointing an investigator and the consultation was mere window dressing. The inference of prejudgment is said to be derived from documents which refer to timelines and action plans and the likelihood of an appointment. 60 I am not persuaded that the documents can found the applicant's submission. It is plain that problems had been perceived for some time in the functioning of the Council. The Ombudsman had looked at the matter as had the ICAC. Obviously, one method of attempting to resolve the problems was to appoint an investigator. The legislation provided for this approach and, accordingly, it is not surprising that this option was being developed and reported on. 61 It is submitted that the fact of prejudgment is confirmed by the email from Mr Kuhn on 22 May, in which it is said: "Confirming that we have been given the go ahead from the Minister and we are aiming for next week, probably Friday." However, it is not clear what is meant by the memorandum and whether Mr Kuhn understood the Minister to have been indicating that a decision had already been made or would be made in the week commencing 26 May 2003. 62 The latter is most likely when it is appreciated that Mr Kuhn was not present at any meeting with the Minister but Ms Nolan, who was present at the meeting, has denied that the Minister had indicated that he had made a decision. 63 Ms Nolan disagreed with the proposition that, at a meeting with the Minister that she attended on 22 May, the Minister had already decided to appoint an investigator. Ms Nolan pointed, in support of her answer, to the draft briefing note presented to the Minister at that meeting (created on 20 May), which recommended that the Minister sign the attached letters appointing Mr Beauman as investigator. Ms Nolan stated that the word "noted" written on p 69 of that brief "indicates that he [the Minister] hadn't made the approval at that stage or made the decision to make the appointment." This was, Ms Nolan admitted, her opinion, but one based on "many number of meetings with the Minister." I accept Ms Nolan's evidence. 64 Finally, any suggestion of a decision having been made on 22 May is not consistent with the Minister's conversation with Mr Trindall on 23 May, during which the Minister indicated he wanted a further response to a number of matters. A list of matters was forwarded to the Council seeking a response by the following Monday, 26 May. 65 I am not persuaded that the submission that the Minister predetermined the matter should be accepted. The fact that Mr Beauman may have undertaken some preliminary work does not advance the applicants' case. Although it suggests that matters were moving quickly, it does not lead to a conclusion that the Minister had finally determined to appoint him before 29 May 2003. 66 If I had been persuaded that procedural fairness was required and that obligation was breached, significant discretionary considerations would arise. Notwithstanding the fact that the Minister appointed an investigator, the Council and the applicants participated in the inquiry and responded to the report. In my opinion, it is simply too late to challenge the appointment of Mr Beauman. (See R v Magistrate's Court at Lilydale; Ex parte Ciccone [1973] VR 122; Western Television Ltd v Australian Broadcasting Tribunal (1986) 12 FCR 414; Trustees of Christian Brothers v Cardone (1995) 130 ALR 345; Peacock v Human Rights and Equal Opportunity Commission [2003] FCAFC 50).

Failure to report within time and the extension of Mr Beauman's term 67 I am satisfied that although the investigation work was complete, the written report had not been finally completed by the end of Friday, 29 August 2003. (See Freeman v Health Insurance Commissioner (2000) 97 FCR 249). Accordingly, at the time the report was delivered, Mr Beauman's appointment had expired. But does this mean the report is not a report for the purpose of the Act, in particular s 223? 68 In Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355 the High Court, endorsing Tasker v Fulwood (1978) 1 NSWLR 20, confirmed that the validity of an act done pursuant to a statute did not depend upon whether there had been substantial compliance with directory requirements. In the majority of the Court's opinion, a better test for determining the issue of validity is to ask whether it was a purpose of the legislature that an act done in breach of the provision would be invalid. 69 The power to appoint an investigator is given to the Minister by s 216. The instrument of appointment must specify the time within which the report is to be delivered to the Minister (s 217(b)) and the term of office of the investigator (s 217(c)). Accordingly, the time for the report and the term of office of the investigator may not be coincidental. It could not be the case that if there was a failure to deliver the report on time but the term of office had not expired, that the report could not found the appointment of an administrator pursuant to s 223. Accordingly, the issue must be whether a report finalised when the term of the investigator has expired is capable of providing a basis for an appointment of an administrator. 70 In the present case, the submission of the applicants is that because Mr Beauman was four days late in providing his report, the document is not a report for the purpose of s 223. This would be, in my opinion, a surprising result having regard to the terms of the legislation. 71 There can be no doubt that after 29 August Mr Beauman could not have exercised any powers pursuant to s 218 of the Act, which obliges Aboriginal Land Councils to assist investigators by providing them with relevant records and information. However, in finalising his report Mr Beauman was not purporting to exercise any power under s 218. He was merely seeking to fulfil the obligation imposed on him to provide a report. 72 Upon appreciating that Mr Beauman's report had not been received within the time provided for his investigation, the Minister purported to exercise the power to extend the term of office of an investigator given by the Act. Section 220(1) provides as follows: "The Minister may extend the term of office of an investigator appointed under this Division to investigate the affairs, or specified affairs, of the New South Wales Aboriginal Land Council." 73 The applicants challenge the Minister's exercise of this power, submitting that because the original term of the investigator had come to an end and the extension was only made on 12 November 2003, it was not a valid exercise of the power. 74 The Minister responds by submitting, firstly, that the power in s 220 may be exercised even after the original term of appointment of an investigator has expired. It is submitted that the section does not preclude this construction and should be construed to facilitate the Minister's action. Furthermore it is submitted that the Minister's action is supported by two provisions of the Interpretation Act 1987 (NSW). Firstly s 36(3) is submitted as authorising the Minister's actions. If this is not accepted, it is submitted that the Minister's action can be supported pursuant to s 48(1). 75 Section 36(3) is in the following terms: "If in any Act or instrument a period of time is prescribed or allowed for the doing of any thing and a power is conferred on any person or body to extend the period of time:

(a) that power may be exercised, and (b) if the exercise of that power depends on the making of an application for an extension of the period of time - such an application may be made,

after the period of time has expired." 76 Section 48(1) is in the following terms: "If an Act or instrument confers or imposes a function on any person or body, the function may be exercised (or, in the case of a duty, shall be performed) from time to time as occasion requires." 77 Counsel did not refer me to any decision relevant to the construction of s 220(1) and my own research does not reveal any judicial consideration of that section. However, there has been significant judicial consideration, particularly in the context of patents, of the circumstances in which a power to extend may exist. 78 In Parke Davis Pty Ltd v Sanofi (No 2) (1982) 43 ALR 487 the Full Court of the Federal Court considered s 90(1) of the Patents Act 1952 (Cth). That section provided: "A patentee of a standard patent who considers that he has been inadequately remunerated by his patent may, after advertising, as prescribed, his intention to do so, present to a prescribed court, at least 6 months before the expiration of the term of the patent, or within such further period as a prescribed court allows, a petition praying that his patent be extended for a further term." 79 In the joint judgment of Bowen CJ and Ellicott J, consideration was given to the meaning of the word "extended" in this section. 80 Their Honours said (at ALR 488-489): "Counsel for the appellant relied heavily on the last words of the sub-section which describe the petition as one 'praying that his patent be extended for a further term'. The use of the word 'extended', it was argued, supported a construction of the sub-section that required the petition for extension to be lodged, even if the time for lodgment was extended under the section, before the original term had expired so that there was in existence at the time of lodgment an unexpired term which, according to the prima facie meaning of the word, could be 'extended'. Reliance was placed on Brooke v Clarke (1818) 1 B & Ald 396; 106 ER 146 and Esso Research and Engineering Co v Commissioner of Patents (1960) 102 CLR 347. In the latter decision Fullagar J referred to the prima facie meaning of 'extend' but made it clear that the word is capable of being used to described an extension of time where the time has already expired. As his Honour said (supra, at p 351):- 'It is by no means a misuse of language to speak of what is really the prescription of a new period as an 'extension' of the period originally prescribed.' Therefore the use of the word 'extend' in s 90(1) is not conclusive and could, if the context supported it, be used to describe a petition to 'extend' the term of a patent even though lodged after the date of expiry of the letters patent. However, by itself, in that sub-section, the word lends positive, though not conclusive support, to the notion that what the legislature had in mind was that the petition for extension be lodged before the patent expired." 81 In the same matter Deane J, who dissented in relation to the ultimate decision, said of the word "extend" (at ALR 503): "A provision for extending something - be it time or otherwise - should, it is contended, be construed as operating only while the thing to be extended is still current or existing. In support of this contention, reliance was placed upon, inter alia, Esso Research and Engineering Co v Commissioner of Patents (1960) 102 CLR 347 at 351, where Fullagar J accepted that as 'the most natural meaning of the word 'extend'' and Brooke v Clarke (1818) 1 B & Ald 39, at 403; 106 ER 146 at 148, where Lord Ellenborough CJ stated, as the starting point of his judgment, that 'extension imports the continuance of an existing thing' and concluded that the word extension was 'too strong … to grapple with' and precluded a statutory provision for extension of copyright from being construed as reviving a right that had, by lapse of time, become extinct. It is apparent that, as a matter of language, a reference to extending something will commonly involve the inference that what is to be extended must be current or existing. The propriety of such an inference will, however, depend largely upon the nature of what is to be extended. In the case of extending a physical thing, such as a rubber band or one's neck, the inference will ordinarily be irresistible. When non-physical things, such as time or rights, are involved, however, the inference will depend upon whether the concept of 'extending' the particular thing carries with it the implication that what is to be extended must still be current or existing." 82 The case went on appeal to the High Court where, in the joint judgment of Mason ACJ and Wilson and Dawson JJ, the following is said: "Thirdly, the words 'extended' or 'extension' are not defined in the Act. Their meaning may well vary with the nature of the subject matter, as Deane J observed in his judgment. The Shorter Oxford English Dictionary includes among the meanings of 'extension' the phrase 'enlargement in length, duration, area or scope'. It is not an abuse of language to speak of the retrospective enlargement of the term of a monopoly as an extension of such a monopoly. In any event, in our opinion, Pt IX supplies its own dictionary of both 'patentee' and 'extended', as we explain in our next two points." ( Sanofi v Parke Davis Pty Ltd [No 2] (1982-83) 152 CLR 1 at 7-8) 83 It follows from this discussion that when a statute gives to a person or body a power to extend it will not always be the case that that power can only be exercised during the currency of the original authority. Where the statute expressly provides that the power to extend may only be exercised during the currency of the authority, the position will be plain. However, when the statute is silent, it is necessary to consider the nature of the power and the purpose for which it is given in order to determine whether or not an extension may be granted after the original term has expired. 84 In the present case, the purpose for which the power to extend is given is to facilitate the investigation of the affairs of an Aboriginal land council. The appointment of an investigator and the defining of the term of the appointment is a matter entirely within the discretion of the Minister, subject to the matters provided by s 216. Section 217 provides that it is for the Minister to specify the affairs of the Council which are to be investigated, the time within which the investigator's report is to be prepared and the term of office of the investigator. 85 There is no purpose in the appointment of an investigator other than for the preparation of a report on his/her investigations. Accordingly, if the term of the investigator has expired before the report can be provided the purpose for which the appointment was originally made is lost. It was presumably against this eventuality that provision was made for the extension of the term of office of an investigator, so that if the work required of that person could not be completed within the term of the original appointment, it could be extended to enable a report to be prepared. If it happened that the report could not be finalised during the term of office originally provided and through some oversight that term was not extended, unless the power provided by s 220 could be later exercised, all of the work in the original investigation would be lost. Where the purpose of the original power and the capacity to extend the term of office are to facilitate the preparation of a report, it would be surprising if the legislature intended the power to extend to be confined in a manner which had such an inappropriate outcome. Unless the legislation requires this conclusion, in my opinion it should be construed to facilitate the investigation and reporting process. 86 As the discussion in the judgments in Parke Davis Pty Ltd v Sanofi makes plain, the ordinary meaning of the word "extend" or "extension" is not confined so that it can only apply to an existing or current thing or matter. In particular, where non-physical things such as the appointment of an investigator are involved, it is possible to speak of an extension of the term of the investigator even after the original term has expired. 87 In my opinion, a construction of s 220 that facilitates the effective working of the legislation should be adopted. I am satisfied that the extension of the term of office of Mr Beauman provided by the Minister on 12 November 2003 was lawfully made. 88 In these circumstances it is unnecessary to resolve the question of whether, because the report was completed after the term of the investigator had expired, it is a report for the purpose of s 223 and it is unnecessary to resolve issues in relation to s 36(3) or 48(1) of the Interpretation Act.

Report not that of Mr Beauman 89 The applicants submit that because substantive work was undertaken by others, including both primary investigative work and drafting of the report, the report of Mr Beauman should be declared invalid. The submission is founded upon the statement in the report which acknowledges persons who assisted in the following terms: "Mr Ian Hollow, Mr Guy Baxendale, Ms Nicolette Martuo, all of whom have performed the detailed investigation of the matters covered in this report." 90 It is plain that the investigation was a complex task requiring the exploration of many issues. The applicants do not deny that Mr Beauman was entitled to draw upon the assistance of others, but rather submit that Mr Beauman failed to properly consider, or consider at all, their work before adopting it as his own. The applicants draw attention to the statement of Black CJ in Tickner v Chapman (1995) 57 FLR 451 at 462, where his Honour said: "Consideration of a document such as a representation or a submission … involves an active intellectual process directed at that representation or submission." The applicants submitted that the argument could be expressed in terms of impermissible delegation, reference being made to the decision of Gibbs CJ in Dainford Limited v Smith & Anor [1985] 155 CLR 342 at 349: "It is simpler to ask directly whether the power has been exercised by the person upon whom it has been conferred and whether it has been exercised in the manner and within the limits laid down by the statute conferring the power." 91 Having regard to the issues which Mr Beauman was required to consider, it is plain that he could not have concluded the inquiry within a reasonable time frame without considerable assistance. Although interviews were conducted by others and information was collected by them, I am in no doubt that Mr Beauman carefully considered that material before settling the final draft of his report. The evidence indicates that many hours were spent by Mr Beauman considering the issues and that there was intense activity by him in relation to the drafting and settling of the report. 92 The records indicate that, in total, Mr Beauman was engaged for 495.5 hours on the task which, although less than some others who assisted, is a significant period of time. His written comments on the draft report reflect a detailed consideration of appropriate findings and conclusions. Provided the work of others is scrutinised before being adopted, which I am satisfied did occur in the present case, the report remains that of the appointed investigator.

Legal errors in the report? 93 The applicants submit that in making recommendations to the Minister, Mr Beauman misconstrued the Act in critical respects. It is submitted that "[t]he errors are such that the Report is invalid, and could not be said to disclose grounds reasonably open to the Minister that could justify the appointment of an administrator." The submission relates in the main to Chapter 5 of the Report which I have annexed to these reasons and turns upon the discussion of the concept of "separation of powers." 94 The submission is complex and was developed in the following terms: "The principal basis for Mr Beauman recommending that an administrator of NSWALC be appointed, and the only basis on which he recommended an 'all-functions' administrator, was a finding that the elected Council of NSWALC had failed to observe, and were likely to continue to fail to observe, the doctrine of 'separation of powers' in relation to the corporate governance of NSWALC. Although the starting point of Mr Beauman's insistence upon the observance of this doctrine appears to have been a concern for 'the liberty of the individual' it is evident that he understood the doctrine to apply to NSWALC in the sense that it is necessary for the proper governance of NSWALC that there be a well defined and observed separation between the powers and functions of the elected Council on the one hand and the powers and functions of the Chief Executive Officer (the 'CEO') and staff of the NSWALC, which he referred to collectively as the 'Corporate Body', on the other. Mr Beauman's finding was based on a number of instances which were said to evidence the failing by the Council to ensure an effective separation of powers. These instances are all described or referred to in Chapter 5 of the Report. All of these instances, bar two, took place prior to the commencement of significant amendments to the Act on 25 October 2002, which amendments were introduced by the Aboriginal Land Rights Amendment Act 2001, No 118. The majority of these instances relate to the conduct of the Treasurer (the Third Applicant) towards the former CEO. Prior to the commencement of those amendments, all of the functions of NSWALC were, by law, vested in the elected Council. Consistent with this, the position of councillor was (and still is) a full-time salaried position. The Act, prior to the amendments introduced by the 2001 amending Act, did not provide for the delegation of any of these functions to others including any employed CEO. There was no scope for the type of separation of powers and functions that Mr Beauman regarded as essential. Further, special functions were reserved for the Treasurer. NSWALC is constituted by the Act (and regulations and rules made under the Act). As the Act existed prior to commencement of the amendments (the 'Reprint 6 Act'), provisions in relation to the constitution of NSWALC were contained largely in Part 4. Part 4 of the Reprint 6 Act is, notably, brief. Section 22 constituted the Council as consisting of elected 'full-time Aboriginal councillors equal in number to the number of Regional Aboriginal Land Council areas'. Provisions relating to the remuneration of councillors were found in Schedule 5 of the Act. Schedule 6 set out provisions in relation to 'procedure' and included a provision requiring the councillors to elect a Chairperson, a Secretary and Treasurer at its first meeting after each election (cl 2). The functions of the Council were set out in s 23. Section 24 provided for the Council to establish Rules for itself if the Registrar required it, and further provided that until such Rules are established, the Rules of the Council were to be the so-called 'Model Rules' prescribed in the Regulations. The Registrar never did require the Council to submit Rules and so the rules of NSWALC were the Model Rules prescribed by the regulations. Section 27B (inserted into the Act in 1990) empowered the Council to employ staff 'to enable the Council to exercise its functions' (s 27B(a)). The power to delegate functions of the Council to staff was, however, confined by s 55(3) which provided that the 'New South Wales Aboriginal Land Council may delegate to a person prescribed by the regulations any of the functions of the Council prescribed by the regulations …'. No such persons or functions were ever prescribed. The performance of all functions of NSWALC were, under the Reprint 6 Act, therefore, vested by law in the elected Council alone. Specific provisions in relation to the functions of the Treasurer were contained in the Model Rules. Immediately prior to the amendment of the Act in October 2002, the relevant regulations were those in the Aboriginal Land Rights Regulation 1996 (the '1996 Regulation'). The Model Rules were in Schedule 3 to the 1996 Regulation. The functions of the Treasurer were contained in cl 15 and 21. These provisions gave the Treasurer effective responsibility for and control over NSWALC's finances. Specific provisions in relation to the functions of the Chairperson and Secretary were contained in cl 19 and 20 of the Model Rules. This distribution of powers and functions within NSWALC is in contrast to that established by the Act as it is now. The constitution of NSWALC is now dealt with in Part 7 of the Act. The Council is still constituted by full-time elected councillors (s 107(1)) and the executive positions of Chairperson, Secretary and Treasurer are retained (Division 6 of Part 7). The Act now provides, however, for the office of CEO (Division 9 of Part 7). It makes the CEO 'generally responsible for the efficient and effective operation … ' of NSWALC (s 139(1)) and gives the CEO specific enumerated functions which include 'the day-to-day management of the Council's affairs' and 'the exercise of such functions of the Council as are delegated by the Council …' to the CEO (s 139(2)). The power of the Council to delegate to the CEO is no longer restrained by the extent to which this is prescribed by regulation. Section 146 empowers the Council to delegate all functions other than certain specified functions to the CEO. There is therefore a marked difference in the legal constitution of NSWALC pre and post 25 October 2002. After 25 October 2002, NSWALC there might be said to be some separation of powers and functions within NSWALC between the elected Council and the CEO. It is significant, however, that even under the post 25 October 2002 regime, the division of powers and responsibilities established under the Act does not entirely fit within the paradigm urged by Mr Beauman in which 'Council' and 'Corporate Body' are entirely distinct. Section 146 reserved significant functions to the elected Council, including the function of making grants for the payment of the costs and expenses of Local and Regional Aboriginal Land Councils. Mr Beauman expressed unease in his report about the full-time nature of the role of councillor and, indeed, went as far as to say that this compromised the separation of powers doctrine. In supporting his argument that the appointment of an all functions administrator was necessitated by the failure of the elected Council to observe the doctrine of separation of powers, with instances of individual councillors, and notably the Treasurer, 'interfering' in the role of the CEO, Mr Beauman demonstrates that he did not appreciate the significance of the way in which NSWALC was legally constituted. In fact, Mr Beauman makes it clear that to his mind, considerations of law were irrelevant in relation to this issue. On page 37 of his report, for example, he states in relation to an assertion of lawful authority made by the Treasurer: 'Whether this is a correct interpretation of the functions of the Treasurer as set out in the Act or not, it is my view that the Treasurer should have appreciated the need to uphold the division of responsibilities between the Council and the Corporate Body.' Mr Beauman's error was to take an abstract notion of the 'separation of powers', apparently imported from a consideration of corporate governance issues in another context as his standard for the Council's conduct, rather than the law as it stood at relevant times. This is illustrated by his criticism of the current s 146 of the Act as inconsistent with some (abstract) separation of powers doctrine." 95 It is also submitted that Mr Beauman misdirected himself in law as to the proper construction and operation of s 157 of the Act in that he proceeded on the incorrect premise that the Council had been in breach of s 157. This is said to have influenced Mr Beauman's adverse conclusions in relation to financial management by the Council, with the consequence that those conclusions and the report are invalid. 96 Viewed from the perspective of a constitutional lawyer, the discussion in Chapter 5 of the Report of the concept of "separation of powers" is at times confused. However, the fundamental concern of Mr Beauman was that the policy and supervisory role of the Council should be separated from the day-to-day management of the organisation. Mr Beauman expressed concern that this had not occurred. He emphasised that the failure to appoint a Chief Executive Officer or allow that person to manage the organisation had compromised the integrity and effectiveness of the Council. 97 In his report, Mr Beauman found that the Council "does not maintain a register of general disclosures of interests, a gifts register, or a register of Councillor's external representations. The failure to maintain appropriate registers is a significant failing on the corporate governance of NSWALC." 98 In the Parliament, the Minister noted in his statement that the investigator's findings included "a failure to maintain registers of pecuniary and external interests." The Minister described the finding as "extremely serious." 99 The substance of the complaint made by the applicants is that Mr Beauman, although discussing the relevant legislation, has failed to appreciate that the amendments made to the Act in October 2002, which repealed s 56B and in particular subsection (4), had the effect that there was no longer a requirement to keep a register of pecuniary interests. The only statutory obligation was to disclose relevant matters at council meetings and for those matters to be recorded in the minutes. It is suggested that Mr Beauman has misdirected himself as to the statutory requirements or "simply chose to ignore them in reaching his findings and recommendation on the issue by referring instead to abstract concepts of "best practice." 100 Notwithstanding the fact that the description of the relevant principles as "separation of powers" may have been inappropriate, the fundamental point being made by Mr Beauman related to the management structure of the Council. This was a matter he was required to investigate and in relation to which he was required to form a judgment and make his report. 101 I accept that following the Aboriginal Land Rights Amendment Act 2001 (NSW) the relationship between the elected councillors and the management of the Council was clarified. It may be that the administrative arrangements which Mr Beauman believed to be ideal could not have been entirely achieved before those amendments were made. However, one of Mr Beauman's fundamental concerns appears to have been the failure to engage a Chief Executive. He also catalogued a sequence of events which, even if the legislative amendment altered the structure of the organisation, on any view, reflects an ineffective relationship between the Treasurer and the Chief Executive. Mr Beauman records that problems with the actions of the Treasurer continued up to and including the period of the investigation. 102 Mr Beauman's conclusions in Chapter 5 are not dependent on findings in relation only to events before the legislative amendments came into operation. The conclusions relate to contemporary matters which reflect an organisation in serious difficulty with respect to its effective management. Even if some of Mr Beauman's observations are at odds with the original legal structure of the organisation, this would not in my view have the consequence of rendering his report a nullity. 103 In relation to the matter of pecuniary interests, in my opinion the applicants' criticism of Mr Beauman cannot be sustained. The report discusses the relevant legislation at page 46 and, in my opinion, sets it out correctly. In particular, Mr Beauman records the fact that "the requirement to maintain a pecuniary interest register has been replaced by a requirement for the nature of the interest to be recorded in the minutes of the meeting." 104 However, notwithstanding the statutory obligation, Mr Beauman draws attention at p 53 of the Report to the approach which he believes should be taken to be best practice corporate governance. He says in this respect: "Best practice would suggest that a general disclosure of all relevant interests should be made by Councillors upon their election and regularly reviewed during their term of appointment. This register should be available for review by Councillors, NSWALC and the membership. This register should be updated regularly. The failure to maintain an appropriate register of interests is a significant failing on the corporate governance of NSWALC." 105 As I understand the Report, this conclusion is not based upon any statutory obligation. Mr Beauman was discussing matters of best practice. In my opinion, he was not only entitled to discuss those matters, but it was appropriate for him to express conclusions based upon his approach to best practice of an organisation such as the Council. 106 In any event, even if Mr Beauman had misunderstood the law this would not, in my opinion, have the consequence that the Report was not a report "of an investigator appointed in accordance with Division 1" within the meaning of s 222(3). Perhaps if the report was founded upon an understanding of the law which was not reasonably open, with the consequence that the ultimate conclusions were not open, it could be set aside. However, a submission to that effect could not be made in the present case. 107 With respect to the submission in relation to s 157, I am satisfied that it is unnecessary to resolve that matter. Whether or not Mr Beauman's interpretation of the statutory obligation is correct could not, in my opinion, affect the legitimacy of his report for its statutory purpose. As the full discussion at p 85 of the report makes plain, Mr Beauman's concerns extend beyond any alleged failure to comply with the section and were concerned with ensuring that effective budgeting and long-term financial planning processes were put in place. 108 To the extent that budget problems were identified, they extended far beyond any concerns in relation to s 157 and there could be no doubt they were matters which Mr Beauman could and should have raised when reporting to the Minister. Even if the conclusion in relation to s 157 was in error, it could not be said that Mr Beauman's findings on these matters were not open.

Procedural Fairness and Mr Beauman 109 It is accepted by the respondent that Mr Beauman did not give the Council an opportunity to respond to all relevant matters before completing his report. Obviously many concerns were raised with individual members of the Council and, in many respects, the procedures adopted were no doubt fair. However, because the process was a statutory investigation which could not affect the position of the Council without some later action of the Minister, the view was adopted that procedural fairness was not required. The applicants argue that Mr Beauman was under a duty to accord procedural fairness to them during the investigation because of the significance of the adverse findings he was proposing to make against certain applicants and the significant consequences for the Council and the applicants of an adverse report, including harm to their personal reputations. 110 The decision of the Privy Council in Mahon v Air New Zealand Ltd [1984] AC 808 makes plain that any person represented at an inquiry who may be adversely affected by a decision is entitled to procedural fairness. In Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 the High Court confirmed that the reputation of a person is an interest capable of attracting the protection of the law during the conduct of an inquiry. In that case, Mr Ainsworth succeeded in obtaining a declaration that he had been denied procedural fairness, although the report in question was not declared invalid. 111 The applicants submit that any breach of duty by Mr Beauman could not be cured by the Minister later providing a hearing after the Report had been tabled in the Parliament. The tabling of the Report is said to have crystallised the breach. 112 It is submitted that the situation is similar to that considered by the Court of Appeal in Minister for Local Government v South Sydney City Council (2002) 55 NSWLR 381. In that case, the Local Government Boundaries Commission had before it a proposal for the alteration of the boundaries of the local government areas of South Sydney City and the City of Sydney. Section 263 of the Local Government Act 1993 (NSW) provided for the Commission to examine and report on "any matter with respect to the boundaries of areas and the areas of operation of county councils which may be referred to it by the Minister." The relevant proposal having been referred to it and the Commission having prepared a report for the Minister, the question arose as to whether the Commission was required to afford South Sydney City Council procedural fairness before finalising its report. 113 The Court of Appeal held that procedural fairness was required although any decision reflected in the report of the Boundaries Commission would not finally determine the matter. That decision lay with the Minister who, pursuant to s 218F of the Act, could recommend a boundary change to the Governor only after receiving the report of the Commission. 114 Spigelman CJ distinguished the decision of the High Court in Brettingham-Moore v St Leonards Municipality (1969) 121 CLR 599 in which it was held that with respect to the first stage of a two stage process leading to the Boundaries Commission in Tasmania recommending a change in municipal boundaries, natural justice was not required. His Honour pointed out that there are significant and relevant differences between the basic scheme of the Tasmanian legislation and that of the New South Wales Local Government Act. 115 Observing that it was necessary, as Mason CJ said in State of South Australia v O'Shea (1987) 163 CLR 378, to examine the decision-making process in its entirety, Spigelman CJ said of the New South Wales legislation (at NSWLR 391-392): "Relevantly: (i) The Commission may hold an inquiry if the Minister approves and must if the Minister directs (s263(2)). If an inquiry is held "[r]easonable public notice must be given" (s263(2B)). At any inquiry the public must be allowed to attend (s263(5)). There is no reference to any process of inquiry or public consultation in s218F with respect to the Minister's power to recommend that a proposal be implemented.

(ii) The Boundaries Commission is required to have regard to a range of considerations set out in s263(3). There is no specific list of considerations of this character for the Minister either when making a proposal under s218F(1), or when recommending that a proposal be implemented under s218F(7). (iii) One of the matters required to be taken into account by the Commission is the attitude of residents and ratepayers under s263(3)(d), the Commission is empowered to conduct an opinion survey or poll of residents and ratepayers by s265. No such reference occurs with respect to the exercise of the Minister's power whether when formulating the original proposal or when recommending that a proposal be implemented. In my opinion Brettingham-Moore is distinguishable. The statutory scheme indicates that the most detailed consideration of the relevant issues is to occur at the first stage, namely by the Boundaries Commission. It is the Commission and the Commission alone that is empowered to conduct a public inquiry. It is the Commission and the Commission alone that is obliged to take into account a range of relevant considerations. The Local Government Boundaries Commission consists of four commissioners. One is a person nominated by the Minister and one is an officer of the Department nominated by the Director-General of the Department. The other two persons are to be appointed from a panel of eight persons, four of whom are councillors nominated by the executive of the Local Government Association of New South Wales, and four of whom are councillors nominated by the executive of the Shires Association of New South Wales (see s261 and s262). The Commission, accordingly, consists of persons with relevant expertise and persons drawn from the general body of the relevant community of councillors throughout the State of New South Wales. The opportunity that is lost by a council, like South Sydney City Council in the present case, is an opportunity to make submissions to a body so constituted and to convince that body not to recommend to the Minister the modifications which it has in fact recommended. A Minister is subject to political and other considerations, of a character to which the Boundaries Commission is not subject. The Commission has a degree of independence from the political process which may give its recommendations a particular persuasiveness. The partially representative and expert nature of the Commission may have the effect of operating as a constraint on the Minister. It cannot be said that the Minister's decision is equivalent to the consideration by the Boundary Commission." 116 In my opinion the legislative scheme with respect to prospective boundary changes under the Local Government Act is quite different to the statutory regime in the Aboriginal Land Rights Act under consideration in the present case. 117 Although under the Aboriginal Land Rights Act there must be an investigation and report before the Minister may appoint an administrator, the Act does not suggest that the investigation is to be attended by any particular formality involving the receipt of submissions or any other particular hearing process. The investigator is not constrained by the statute to perform the task in any particular manner and could presumably conduct the investigation in secret and without consulting formally with the Council, its officers or members. Indeed it is conceivable that there may be circumstances where the investigation may be hindered or the functioning of the Council impaired if the investigator was required to afford procedural fairness and disclose matters of concern or possible conclusions before reporting to the Minister. 118 Furthermore, it is significant that the report of the investigation is required by s 219 to go only to the Minister. The investigation is not itself a public process and publication of the report is not required by the statute. Upon receiving the report, the Minister may chose to do nothing with it and the matter may come to an end. The report may never be published. In my opinion it would be inappropriate to provide an obligation to afford procedural fairness in respect of an investigation - the report of which need not be published and which may have no further consequence for any person or body. 119 If, however, the Minister determines that the report may be the possible vehicle for the appointment of an administrator, different considerations arise. At that point the Minister (as opposed to the investigator) embarks upon a course which could lead to a decision affecting the rights of the Council or its members. Any decision to appoint an administrator would, in my opinion, attract the obligation to afford the Council procedural fairness. 120 It is also important that, unlike the position with respect to the Boundaries Commission, where the quality of the report could be affected by a failure to afford procedural fairness at the Commission stage and that position could not later be retrieved, this is not likely in relation to the Aboriginal Land Council. If the Minister discharges the obligation to afford a fair hearing effectively, a fact which must be presumed, an opportunity to rebut any allegation or conclusion will be available. I do not believe the opportunity for effective rebuttal would be lost by completion of the report. Indeed, if it contains material which could justify the appointment of an administrator, the crystallisation of relevant allegations in a report is likely to aid a rebuttal. 121 Consideration of the complete statutory process requires a recognition that, although the Minister may appoint an investigator to investigate the affairs of the Council, this could be undertaken in aid of many objectives relating to the good administration of its affairs. The report, although reporting on the affairs of the Council, need not express any opinion in relation to whether an administrator should be appointed. Although, in the alternative to a report of the Auditor-General, the investigator's report is an essential step if the Minister decides to appoint an administrator it is only the decision of the Minister which can affect any relevant rights. 122 The essential complaint in the present case is that the Minister published the report by tabling it in the Parliament before any person had been given the opportunity to respond to it. This was, of course, an action the Minister took when exercising his responsibilities as a Minister of the Crown, but was not a step required by the legislation. The situation is quite different to the position of a report from the ICAC or another similar body, where a report may be required to be laid before the Parliament (see s 74 of Independent Commission Against Corruption Act 1988 (NSW)). The fact that the Minister elected to take this step in the present case does not, in my opinion, have the effect that the investigator was required to provide procedural fairness. 123 When determining the stage at which the obligation to afford procedural fairness arises in an administrative process, it is important to emphasise that the concern of the law is with the quality of the decision making procedures rather than with the character of the decision (see Refugee Review Tribunal, Re: Ex parte Aala (2000) 204 CLR 82). As the Privy Council made plain in Calvin v Carr [1980] AC 574, where there is a multi-stage decision making process, it is not possible to provide a universal statement as to the stage or stages at which procedural fairness is required. Spigelman CJ in Minister for Local Government v South Sydney City Council says of these difficulties (at NSWLR 388): "The better view is that the effect of an appeal will turn on the ability and obligation of the second-tier decision-maker to provide the appellant with the measure of procedural fairness to which he or she is entitled." 124 There may be cases where the obligation to provide procedural fairness can only be fulfilled by providing an opportunity to be heard at the first stage of the process, as was the position in State of South Australia v O'Shea (1987) 163 CLR 378. Equally, there will be many cases where a hearing before the final stage of the decision making process satisfies the common law obligation. 125 In the present case, the statute contemplates that the report of the investigation will inform the Minister. The statute affords it no more significant status and the investigator makes no decision to which the statute gives any force or effect.

Procedural fairness and the second report 126 I have previously indicated that Mr Beauman's term of appointment was extended and his report redelivered. This has been referred to as the second report. The applicants submit that because, since delivery of the first report, the Council had raised "comprehensive and compelling responses to the issues raised in it", Mr Beauman should have had regard to those responses before providing the second report. 127 The fundamental difficulty with the submissions is that the Council's material was provided to the Minister and, as the Council concedes, there is no evidence that it was given to Mr Beauman. This is hardly surprising given the fact that everyone had presumed that Mr Beauman's part in the matter was at an end. Plainly the course of extending the appointment and redelivering the report was undertaken to cure the alleged defect which had been raised by the Council. By that time the focus of the matter had moved to the Minister, who accepted the obligation to provide procedural fairness before making a decision to appoint an administrator. 128 In any event, as I have already stated, I am of the opinion that a proper understanding of the legislation did not oblige Mr Beauman to give the Council procedural fairness before providing either his first or second report to the Minister.

The appointment of an administrator and procedural fairness 129 The Minister accepts that he was under a duty to afford procedural fairness to the Council and the applicants before he appointed an administrator. It is submitted that he failed to do so in four respects, each of which, it is submitted, is sufficient to render his decision a nullity. 130 The first argument advanced arises from the fact that Mr Beauman forwarded a report dated 5 September 2003 to the Minister on or about 10 September 2003. Referred to as the Further Report, it contained additional materials, including a table listing Mr Beauman's recommendations and the reasons for them as well as an extract of Mr Beauman's file relating to the reasons supporting his key recommendations. The submission of the applicants is the Minister should have provided the Further Report to the Council and given it an opportunity to respond to it. 131 The Minister's answer is that although received in the Minister's office, the Further Report played no part in the Minister's decision making process. I am satisfied that this submission should be accepted. 132 The evidence of Ms Nolan was that although the Department received a copy of the Further Report both from Mr Beauman and from the Minister's office (the Minister's copy was forwarded to the Department), by the time the report reached the Department considerable work had been done to prepare the briefing for the Minister. Ms Nolan said that she had no regard to the Further Report and, so far as she was aware, nothing else was done with it. I accept her evidence. 133 This being the case, there was no occasion to put the Further Report before the applicants. It was not amongst the documents which went to the Minister on 19 November and I am satisfied that it played no part in the decision making process. 134 The second argument raised by the Council arises from the fact that the Minister responded to a question in Parliament by referring to the findings made by Mr Beauman, which the Minister indicated were extremely serious. He said: "I have now carefully considered the report and weighed the Council's response. On balance, I now consider the appointment of an administrator, which was the overall recommendation of the investigator, to be a necessary step." 135 The complaint which is made is that the findings referred to by the Minister were not matters which Mr Beauman suggested warranted or required the appointment of an administrator. The submission was expressed in the following terms: "… the Minister never informed NSWALC or the applicants that they were grounds which in his view might warrant such an appointment. NSWALC and the applicants were reasonably entitled to assume that the case they had to meet was the case as put by Mr Beauman. The Minister's reasons indicate that there were other matters taken into account which were never put to NSWALC …. Mr Trindall notes at para 44 of his second affidavit that, had he known that the Minister might rely on such reasoning it could have been drawn to his attention that many of the relevant findings were answered in NSWALC's response. Further, one of the findings referred to by the Minister was 'a failure to maintain registers of pecuniary and external interests'. Mr Trindall notes in para 45 that the Minister's attention could have been drawn to the fact that in fact NSWALC had always maintained a register of pecuniary interests as declared during the course of meetings in relation to particular issues, and Mr Beauman had not suggested to the contrary. Rather, he had criticised NSWALC for failing to maintain a general ongoing register of interest - which measure had since been instituted. The unfairness of the procedure adopted is compounded by what passed between the parties between the provision of the report and the Minister's decision. The concerns of the Applicants were raised when the following exchange took place between Mr Trindall and the Minister in a conversation in late October 2003 …: 'I said: I'm disappointed with the quality of this report. He said: I agree that its not the best report I have ever seen. I said: We believe that you have an obligation to do something about this. This investigator has asked you to act illegally. He said: I may not have to rely on the report - there may be other issues. I said: What other issues? He said: We'll have to see.' " 136 I do not accept this argument. Mr Beauman's report was provided to the Council with a letter from the Minister dated 16 September 2003. In that letter, the Minister stated: "The investigator has made a number of recommendations to improve the efficiency and effectiveness of NSWALC including the recommendation that I appoint an administrator to administer all of NSWALC's functions. In making this recommendation, the investigator has relied upon the issues raised by him in his report. I now provide you with a copy of the investigator's report for your consideration. I am seeking your response to the issues raised in the investigator's report within 28 days of the date of this letter. I will then consider what action should be taken in relation to the recommendations." 137 As it happens, the Council made a detailed response to the report dealing with the matters raised by Mr Beauman. It extends over some 80 pages. The Council also summarised its response in a letter dated 15 October 2003, which analyses Mr Beauman's criticisms and recommendations and responds to them. The Council argued that an administrator should not be appointed. 138 Each of the matters addressed by the Council were issues raised by the investigator's report to which the Council was expressly invited to respond. In my opinion, it cannot now complain that it did not have an opportunity to make submissions to the Minister about matters which may have been relevant to his decision to appoint an administrator. 139 The applicants' third argument turns upon the letter from the Director-General of the Department to the Council dated 3 November 2003 which followed a meeting which took place after the receipt of the Council's response to Mr Beauman's report. The Director-General wrote: "At the present time, I do not see that a further meeting will advance the progress of the Department's consideration of the NSWALC's response though I will certainly contact you if specific matters require either clarification or expansion." 140 It is submitted that the letter contains an assurance of further contact which was not fulfilled. No further contact was made but it is submitted the Department's briefing note reflects uncertainties which, if the Director-General's undertaking had been honoured, should have been taken up with the Council. 141 In my opinion the statement by the Director-General contains no assurance that further contact will be made with the Council. All that the Director-General has said is that if she believes a meeting is necessary, contact will be made. No expectation of relevance arises. Although there may have been matters about which the Department remained uncertain, there was no obligation to raise them with the applicants. 142 The fourth allegation is that the Minister failed to give real and genuine consideration to the material provided to him by the Department of Aboriginal Affairs before making his decision on 19 November 2003. The submission takes the following form: "(a) The material provided in the brief to the Minister was voluminous. (b) The DAA itself made no recommendation as to whether an administrator should be appointed, instead recommending 'That the Minister consider this information to form an opinion as to whether an administrator should be appointed to NSWALC.' Thus it was necessary for the Minister to review all the material himself. (c) The brief was only finalised by the DAA on the morning of 19.11.03 - the brief is dated that day, and approved by the Director General on that day. (d) The evidence shows that it was intended to be couriered to the Minister at about 12.15 pm, though apparently this courier was cancelled and the material was hand-delivered to the Minister around 12.15 pm, perhaps by those in DAA with whom he met. (e) The Minister's diary reveals that he had set aside between 12.00 to 12.30 pm to meet with DAA to discuss the material. (f) The decision must have been taken before 3.27 pm that day, because that was when a fax was sent seeking to organise a special gazettal of the notice of appointment. (g) That is so despite the fact that a fax from the Minister was sent to NSWALC at 4.02 pm in which he stated 'I am currently giving due consideration to the matters raised in your submission.' (h) That day was a parliamentary sitting day. The Minister attended two divisions in the House just before lunchtime. Further, question time took place between just after 2.25 pm and 3.25 pm, and it may be inferred that the Minister - the Deputy Premier - was in attendance, following usual practice."[ document references omitted] The time the Minister had allocated in his diary was between 12.00-12.30 pm. The brief presumably had arrived during that time. It may reasonably be inferred that the decision was made in that allocated time, giving the Minister less than 30 minutes to consider the detailed brief. The Minister simply cannot have given real and substantial consideration to the very extensive material, involving numerous complex issues, in the time available. Once again, the failure of the Minister to give evidence is significant in this regard, and the Court should be more ready to draw an inference that there was a failure properly to consider the material given the Minister's silence. True it is that the Minister told Parliament that he had 'carefully considered the [investigator's] report and weighed the council's response.' But talk of 'weighing' does not mean that he had provided real and genuine consideration to it." 143 In my opinion this submission cannot be accepted. Although the Minister made his final decision on 19 November 2003, the difficulties associated with the Council had been under consideration for many months. The Minister received the original report in September and the detailed response of the Council on 15 October 2002. It is inconceivable that the Minister was not aware of the underlying financial, management and corporate governance issues considered in detail and reported on by Mr Beauman. The fact that he only had the full departmental briefing for a short time before formalising his decision in the matter is not, in my opinion, material. I am not persuaded that the Minister failed to give real and genuine consideration to the material provided to him.

Discretion 144 It is obvious that the facts relevant to the allegation that the appointment of Mr Beauman was invalid, were available at the time of his appointment. At that point, the applicants could have commenced proceedings seeking appropriate relief. With respect to the report itself, the complaint that there was a lack of procedural fairness could have been made when the report was received. At that time, the applicants could have commenced proceedings seeking relevant declarations or other relief. 145 It is submitted that by failing to complain of these breaches, the applicants have waived their rights in relation to them or alternatively should be denied relief as a matter of discretion. Many hundreds of hours and large sums of money have been spent which could have been saved if proceedings had been commenced at an earlier point in time. 146 It is well accepted that a person who, with knowledge of the relevant facts, fails to bring proceedings may, by reason of the delay, lose the right to relief. (See R v Magistrate's Court at Lilydale; Ex parte Ciccone [1973] VR 122; Western Television Limited v Australian Broadcasting Tribunal (1986) 12 FCR 414; Trustees of Christian Brothers v Cardone (1995) 130 ALR 345; Peacock v Human Rights & Equal Opportunity Commission [2003] FCAFC 50). 147 It is submitted by the Minister that, at least in relation to those matters arising with respect to the appointment of Mr Beauman or the alleged invalidity of his report, the facts being well known to the Council, the failure to take proceedings in a timely fashion is sufficient to deny the applicants relief. 148 If I had been otherwise minded to uphold any of the applicants' submissions, serious questions in relation to discretion would have arisen. However, although brief written submissions were made in relation to these matters, they were not explored in a manner which would allow me to reach a final conclusion in relation to them. 149 The present case relates to the administration of a public body representing the interests of a significant number of persons in the community. The dismissal of the elected members of that body and their replacement by an administrator raises serious issues. It may be that in those circumstances the ordinary principles relating to delay and denial of relief on discretionary grounds should be applied with caution. 150 The removal of the elected members of the Council is of such significance that even if a delay has occurred in approaching the court, it may not be appropriate to deny relief if the appointment of the administrator has been made otherwise than in accordance with the law. 151 My findings in relation to the substantial matters, together with the fact that discretionary issues have not been fully argued, render it unnecessary and inappropriate to resolve any discretion issues.

Orders 152 For these reasons I make the following orders:

1. Application dismissed. 2. The applicants are to pay the respondent's costs. **********

"5.1 Definition Corporate Governance is a term commonly associated with management practices in the private corporate sector. A useful definition contained in Australian Standard: 'AS 8000 - Good Governance Principles', as issued by Standards Australia is as follows: 'The system by which entities are directed and controlled. Corporate governance addresses the issues arising from the interrelationships between boards of directors, such as interaction with senior management, and relationships with the owners and others interested in the affairs of the entity, including regulators, auditors, creditors, debt financiers and analysts. There is no one global applicable definition but some useful statements include: 'Corporate Governance is concerned with improving the performance of companies for the benefit of shareholders, stakeholders and economic growth. It focuses on the conduct of and relationships between, the board of directors, managers and the company shareholders. Corporate Governance generally refers to the processes by which organisations are directed, controlled and held to account. It encompasses authority, accountability, stewardship, leadership, direction and control exercised in the organisation.' The above definition and statements have been adopted for use throughout this report when making assessments and comment about attitudes to governance within NSWALC. Good governance requires a clear definition of the roles of the elected body and the corporate body, transparency in decision-making and accountability in the stewardship of the resources of the organisation. The commitment of people at all levels of the organisation is required. This starts with the elected/governing body, the chief executive officer and senior management in the corporate body. Good governance cannot simply be imposed by legislation and regulation. To be effective it needs to be a value shared by people within the organisation such that it is a foundation of the corporate culture. 5.2 The Concept of Separation of Power A main objective underlying the doctrine of Separation of Power is to preserve and maintain the liberty of the individual. A cornerstone of this doctrine is to ensure different powers are divided and distributed to create an appropriate system of checks and balances. The Separation of Powers is a concept that forms a fundamental tenet to our system of government. It is applied to varying degrees in different levels of Government in Australia. The concept of the Separation of Powers has recently been considered in the Public Inquiry into Warringah Council and reference is made to the Inquiry Report at section 5.1. Previous investigations into Aboriginal Land Councils have also commented upon the importance of this concept. ICAC Report 'Corruption Prevention and Research Summary' in April 1998 noted the following: 'The separation of policy decision making from implementation of those decisions administratively is an important way to minimise the opportunities for corruption.' In the context of local government the following concepts of Separation of Power were identified as being fundamental to the efficiency and effectiveness of the governance of the Corporate Body. It is considered that these concepts are equally relevant to NSWALC. 1. that the same person should not form part of both the Elected Body and the Corporate Body. In my opinion the practical effect of this concept is compromised by the provision in Section 107(1) of the Act that states that the role of Councillor is a full-time position. 2. that the Council should not control or interfere with the exercise of functions of the Corporate Body. 3. that the Council should not exercise the functions of the Corporate Body and vice versa. This Separation of Powers was given legislative effect in the 2001 amendments made to the Act. 5.3 The Corporate Body The Corporate Body comprises of the Chief Executive Officer and the employed staff of the organisation. Its role is to support the Council and implement the policies and strategies the Council has adopted.

The Corporate Body presently has 50 staff located in head office and 30 staff located in the branch network. It is organised according to functions as set out in the organisational structure in section 3.5 5.4 The Role of the Chief Executive Officer Reason for Review The concept of Separation of Powers between the Council and the Corporate Body is fundamental to the efficient and effective operation of NSWALC. The Chief Executive Officer ('CEO') provides the link between the Council and the Corporate Body. The terms of my appointment require me to investigate the efficiency and effectiveness of NSWALC. One of the outstanding issues arising from ICAC investigations was the development of best practice corporate governance. At the time of my appointment the position of CEO was being performed in an acting capacity. Due to the importance of this role, I determined to examine this area. Overview In the 60 month period since the appointment of Ms Norma Ingram to the position of Executive Director in September 1998 the position of CEO has only been held by a permanent appointee for thirty-four months as follows: Ms Ingram 16 months Mr Bradford 18 months A consultant, Mr D Rose, was appointed to act in this role for the six months from December 2002 to May 2003. During the life of this Council, the role of the CEO has been held in an acting or temporary replacement capacity for substantial periods. In summary, the position of CEO has only been held on a full time basis for nineteen of the forty-five months, representing 42% of that period. This raises considerable concern about the Council's commitment to good corporate governance and whether it has acted in the interests of NSWALC and its members by having the role of CEO performed in an acting capacity for a significant proportion of the life of the Council. In my opinion the Council has failed to ensure an effective Separation of Powers existed between the Council and the Corporate Body in that: s The Council has neglected to fill the vacant CEO role with a permanent appointee for substantial periods of time. s The Council, when it has filled the CEO role, has failed to permit the appointee to freely perform his or her functions. s The Council through its Executive have promoted an environment of conflict in its relationship with its CEO with the following results: Ø The costly termination of CEO contracts of employment. Ø Difficulties in recruiting new staff at management level. Ø The negative impact on staff generally and the management function specifically. Ø A negative perception of Council within both the indigenous and wider community. The position of CEO has (as at the date of this report) been filled. The position has been offered to Mr William Johnstone and I understand he will commence in this position on 3rd September 2003. Without an appropriate and effective Separation of Powers between the Council and the CEO, the CEO designate will struggle to effectively manage and direct the Corporate Body of NSWALC and to implement the steps that this report recommends and which have been recommended by previous reports on the operations and governance of NSWALC. Relevant Legislation The position of CEO was formalised and defined by the Aboriginal Land Rights Amendment Act 2001. The amendments were effective from 25 October 2002. The Act now provides an obligation on the Council to appoint a CEO immediately if a vacancy arises in the position. Prior to the amendments referred to above, the positions of either CEO or Executive Director have existed in name but without support of a statutory framework. The Act now provides the functions for which the CEO is responsible. Section 139 provides: 1. The CEO is generally responsible for the efficient operation of the New South Wales Aboriginal Land Council's organisation and for ensuring the implementation, without undue delay, of decisions of the Council. 2. The CEO has the following particular functions: (a) the day-to-day management of the Council's affairs, (b) the exercise of such of the functions of the Council as are delegated by the Council to the CEO, (c) the appointment of staff in accordance with staff organisation structure and resources approved by the Council, (d) the direction and dismissal of members of staff. The duties of the Chairman, Secretary and Treasurer of the Council are also specifically set out in the Model Rules for NSWALC. Policy & Procedures The proper functioning of the Council and the CEO relies upon an effective working relationship, a mutual co-operation and a clear definition of the respective roles of the Council, its Executive and the CEO. This requires a clear process for the appointment of the position of CEO, a clear and unambiguous definition of the role and functions of the CEO, and a transparent and equitable process for the termination of the CEO in particular and defined circumstances. Observations & Comment My investigations indicated that significant periods have existed in the life of this Council where the CEO role was not permanently filled. For example, the permanent role was vacant for the entire period from 19 January 2000 to 4 June 2001. The Council has failed to meet is obligations by not appointing an effective CEO with a clear mandate to direct and manage the organisation for substantial periods of time. The results of the recruitment process for the CEO suggests the Acting CEO appointed by the Council may not have had the executive experience and skills necessary to perform the functions required of the CEO. In addition the 'acting' CEO is restricted in their ability to develop, review and to implement policies and programs due to the caretaker nature of the role that they are performing. A consequence of not appointing a permanent CEO is that members of the Executive participate to a greater degree in functions of the Corporate Body. The risk for the Council is the perception that they are seen to be exercising or interfering in the exercise of functions of the Corporate Body, a role they are not necessarily skilled, qualified or capable of doing. Their participation provides increased opportunities for acts of corruption to occur and the potential for deterioration in the accountability and transparency of decision making. The Act and Model Rules contain provisions that separate the positions of Council and the CEO. It may be said however that no statutory provisions or guidelines exist that provide clarity for the interaction of the roles of the Executive, especially the Treasurer, and the CEO. Over the life of this Council, this has resulted in a reduction in the effectiveness of the CEO and the Corporate Body. By not promptly appointing a CEO and interfering in the day-to-day functions of the corporate body, Council has created a situation where they can legitimately be criticised for poor corporate governance and a lack of leadership. My investigations have indicated that the inaction by Council has established, a culture (by Councillors) whereby the duties and functions of the CEO have been impeded contrary to the express provisions of the Act and the employment contracts of the CEO. In restricting particular functions of the CEO, Councillors have undertaken day-to-day decision-making roles that are arguably beyond their capabilities and experience, and beyond their duties as elected Councillors. Immediately after the appointment of Mr Bradford to the role of CEO in June 2001 the relationship between the Executive of the Council and CEO was arguably dysfunctional. It is not unreasonable to assume that the issues between the Treasurer and the CEO in the period from June 2001 were a function of the lack of clarity in the roles of the Treasurer and the CEO and a conflict of personalities of the individuals involved. Examples of appropriate involvement in the day-to-day activities of the organisation abound. During 25-27 July 2001 for example the Treasurer sent five memos to the CEO requesting information relating to management of the Corporate Body. 26 July 2001; the Treasurer advised in a memo to the CEO … 'Please be advised in relation to Councillors travel allowance payments I, as NSWALC Treasurer, am the authorising person and in my absence Mr Shanawany or the Acting Executive Director. Please ensure you observe Council decisions.' This action by the Treasurer is inappropriate. It removed an administrative function from the CEO and compounded the error by the creation of a potential for conflict of interest. 26 July 2001; the Treasurer advised by memo to the CEO … 'Please provide me with copies of all directions you have given to staff in the finance, investment and evaluation areas of NSWALC operations. Further, please ensure that you provide to me on all future occasions copies of any directions you issues (sic) to staff in these areas.' My investigations revealed many further examples that illustrate the breakdown of the relationship between the CEO and the Treasurer. 8 August 2001; Clr Lester raised his concerns at a Council meeting on the Employment Contract entered into by the Chairman with the new CEO. Clr Lester's concerns related to the cross over of the financial functions between the CEO and the Treasurer as set out in Schedule A to the contract of employment of the CEO. This problem was not a new problem to the Council. The contract was affirmed by Resolution of the Council although, it is noted Clr Lester voted against this Resolution. At the same meeting two further Resolutions were proposed and passed with respect to accepting Legal Counsel's advice on the relationship between CEO and functions of the Council and confirming the acting Financial Controller, Mr Talaat Shanawany, be advised that he is directly responsible to the CEO and not the Treasurer. Clr Lester is recorded as voting against these Resolutions. It is not obvious why the second of these Resolutions should be required as the Financial Controllers position would ordinarily report to the CEO and not directly to the Treasurer or any other member of the Council. 21 August 2001; the Council endorsed the CEO's decision to terminate the contract of Boulevarde Connections Pty Ltd, this being the consulting company providing the services of the Financial Controller, Mr Shanawany. Clr Lester also voted against this Resolution. 27 August 2001; Clr Lester sent a memorandum to the CEO addressing a number of issues relating to the CEO and Treasurer roles. The relationship between the two was already confrontational, as was the tone of this memorandum. This memorandum included the following quote from the Treasurers Report to the 181st Meeting of the Council 'Let me make myself perfectly clear, I have no confidence in the CEO to manage the financial affairs of NSWALC, he is not my nominee until I am confident he can.' Later in the memorandum it goes on to advise '… As the elected Treasurer of NSWALC, I now inform you effective as of midday Monday 27th August 2001, within the Head Office of NSWALC no commitment of expenses or payment of expenditure on behalf of the Council are to be made without my written approval.' Whether this is a correct interpretation of the functions of the Treasurer as set out in the Act or not, it is my view that the Treasurer should have appreciated the need to uphold the division of responsibilities between the Council and the Corporate Body. 30 August 2001; the Chairman issued a memorandum to all Councillors and staff confirming that the day-to-day management of NSWALC was the responsibility of the CEO, be they financial or otherwise. 7 September 2001; the Treasurer sent a memo to the Chairman taking objection to the CEO report tabled at the previous Council meeting, in which he regards the contents … 'to be bordering on slander' and … 'I advise you that you and the CEO leave me no option but to seek the relief of the Court'. 7 September 2001; Council advises the Treasurer of a motion to be put to the next Council meeting to remove him as Treasurer for reasons of failing to follow Council instructions and conduct detrimental to NSWALC. 21 September 2001; the Treasurer was removed from office by a majority vote of the Council. Clr Lester then institutes legal action, as is his right, to restore his position. This action was unsuccessful and costs were awarded against Clr Lester. On 2 August 2002; Clr Ardler who had been appointed to replace Clr Lester, resigned as the incumbent Treasurer. This action set in motion a series of events that revived the conflict between the functions of the CEO and the previous Treasurer, Clr Lester. On 26 August 2002 Clr Lester regained the Treasurer's position. The CEO commenced negotiations to obtain payment of costs from Clr Lester related to the legal proceedings referred to above. It is open to question why these recovery proceedings were not commenced earlier. Had they been, this would have negated any notion of political motivation. The conflict between the CEO and Treasurer was further escalated by Clr Lester in memos dated 2 and 5 (x2) September 2002. On September 5 Clr Lester withdrew the CEO's status as nominee for the Treasurer and advised that the Manager of Financial Operations would assume the nominee status of the Treasurer. As this role is subordinate to the CEO, this directive by the Treasurer was entirely inappropriate. The potential Funeral Benefit Scheme had become a matter of conflict between the CEO and the Treasurer. In a memorandum dated 2 December the CEO advised the Chairman of his intention to refer a report to ICAC requesting an investigation into the process and conduct of the proposed Scheme. Mr Bradford was terminated as the CEO of NSWALC by Council Resolution on 4 December 2002. In the course of my investigation I confirmed with the legal advisers to Mr Bradford that due to his dismissal no referral of the matter alluded to was ever made to ICAC. It is also significant to note that during the latter period of my investigation the Treasurer again involved himself in the day-to-day administrative operations of NSWALC. This instance related to the Treasurer giving instructions directly to a member of staff in relation to a payroll processing matter. The matter was also raised with that person's supervisor and then finally raised with the acting CEO. The Treasurers last step should have been his first and only point of contact. Whilst, the level of interference referred to above concerns mainly one Councillor other examples exist. I refer to comments in this report dealing with the Mungindi LALC and the Glanville property development and the NIIS Proposal. It is considered that the other members of the Council have failed to adequately perform their obligations due to their inaction and failure to adequately resolve these issues. Other matters The Council has failed to conclude timely and relevant performance appraisals of the CEO. No protocol exists for the legal, efficient and cost effective termination of an individual in the role of CEO. Over the life of this Council this resulted in legal disputes with both former CEO's. The legal procedure and settlement of costs has been a significant financial burden to NSWALC. One of the two legal matters is yet to be satisfactorily concluded so the total costs are not quantifiable. In light of the preceding comments, a general observation is that certain aspects of the governance difficulties within NSWALC are not amenable to change by decree or legislation. These are: · A culture at Council level that Councillors have a right or even an obligation, to interfere in the day-to-day administration. · A conditioned response from administrative staff that a Councillor is their boss. · Demoralised staff and consequent apathy or resistance to embrace change. · A loss of talented staff capable of implementing change. · Instances of a clear failure by Councillors to understand the basic concepts of conflict of interest. Recommendations An administrator be appointed to administer all the functions of NSWALC. An Aboriginal person should be appointed to the position of administrator. The term of the appointment should be eighteen months. Legislative reform is required to abolish the Executive positions of the Secretary and Treasurer. Council must provide timely and relevant performance appraisals of the CEO. A policy for the appointment of the CEO and other senior positions should be established. A policy for the termination of the CEO position should be established. This must be consistent with the CEO's employment contract. A protocol for formal mediation should be included in the policy."

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