Mehajer v Director-General of the Department of Local Government

On 29 January 2016, the plaintiff, Salim Mehajer, a councillor on the Auburn City Council, was suspended from Civic Office for a period of four months by an order made that day in the Occupational Division of the New South Wales Civil and Administrative Tribunal (“NCAT”). Reasons were given for that order (“NCAT’s decision”).

On 2 February 2016, Mr Mehajer commenced proceedings in this Court in respect of NCAT’s decision naming the Chief Executive of the Office of Local Government as defendant. In its final form, contained in an Amended Summons filed on 4 February 2016, the relief sought by the plaintiff was as follows:

The Chief Executive of the Office of Local Government opposes the relief sought.

No order for costs was sought in the Amended Summons.

Clause 29(1)(f) of Schedule 5 to the Civil and Administrative Tribunal Act 2013, provides that NCAT’s decision is not an internally appellable decision. The effect of this is that NCAT is not able to hear any appeal against the decision.

Clause 29(2) of the Schedule provides that a party to proceedings of this kind in NCAT may appeal against the decision to this Court. Any such appeal is limited by cl 29(4)(b) to a question of law unless the Court grants leave to appeal on any other grounds. No leave has been sought in this case.

Clause 29(8) of the Schedule provides that:

The Chief Executive of the Office of Local Government initiated, pursuant to s 462 of the Local Government Act 1993 (“LGA”), an investigation into a complaint that the plaintiff whilst acting in his capacity as a councillor on Auburn City Council (“the Council”) had, in 2012 and 2013, failed to disclose a pecuniary interest contrary to his obligations under s 451(1) of the LGA, thereby, on those occasions, acting in breach of the provisions of s 451(2) of the LGA.

Consequent upon that investigation, a report was presented to NCAT in accordance with s 468(1) of the LGA. Pursuant to s 469(1) of the LGA, NCAT decided to conduct proceedings into the complaint.

Those proceedings were conducted by a principal member of the Occupational Division on 10 November 2015, who delivered a reasoned decision on 29 January 2016.

The decision found as follows:

The last order was subject to a provision that if the Chief Executive of the Office of Local Government wished to seek an order for costs, an application could be made.

It is against this decision that this appeal is brought.

There was little, if any, dispute as to facts before the Tribunal. To the extent that there was any dispute, the Tribunal made findings of fact which are not in dispute on this appeal.

It is convenient to record the relevant facts in this judgment. They are:

The matter which the Council was considering, of relevance in this appeal, at the three meetings which have earlier been identified, was noted as an item with the following description:

The document was described as a Report from the Director of Planning and Environment, who was the principal planning officer of the Council.

It was introduced in the following way:

After that summary, a recommendation is then made by the Director of Planning and Environment. It is in the following terms:

The Report continues with a background description which indicates that in October 2010, the Council had resolved to prepare a planning proposal

It appears that that resolution led to a Planning Proposal being prepared which was submitted to the Department of Planning on 28 September 2011.

The Report notes that the Department of Planning and Infrastructure, having considered the Planning Proposal, issued a gateway determination on 28 November 2011 which, subject to a number of conditions, allowed Council to proceed with the Proposal. One of the conditions imposed was that Council publicly exhibit the Planning Proposal and, further, that it complete the LEP within 12 months.

The Report records the following:

The Report describes key findings of various studies, and notes that there were two outstanding gateway determination conditions, namely, public consultation and exhibition, and consultation with affected State and Commonwealth agencies. The Report records that each of those latter two conditions would need to be met as required “… during the planning proposal process”.

The Report then sets out some proposed LEP amendments. In so doing it used the following terms:

Relevantly to the Property, what was proposed was shown on Map 1 at reference (i). The Report described what was proposed in the following way:

The justification was described in this way in the table to the Report:

The Report concluded by listing the various attachments to it and the various maps.

The principal issue before NCAT was whether the plaintiff was obliged to disclose his pecuniary interest in the Property and not to take part in the council meetings insofar as they were considering the Report. NCAT held that the plaintiff’s pecuniary interest ought to have been disclosed, and that his continued presence and participation in the meetings constituted a breach of s 451 of the LGA.

This Court is called upon to consider whether there has been any error of law on the part of NCAT in finding that the plaintiff was obliged to disclose his pecuniary interest in the Property. If he was so obliged, his failure to do so constituted a breach of the LGA. If he was not, then NCAT’s finding constituted an error of law.

It will be convenient to refer to and set out the relevant statutory provisions, including the Auburn Local Environmental Plan 2010.

In considering the content of the Report, several of the provisions of the Environmental Planning and Assessment Act 1979 (“EPA Act”) under which the Auburn Local Environment Plan 2010 was made (“Auburn LEP”) are relevant. As earlier indicated, the preparation of LEPs is dealt with by Division 4 of Part 3 of the EPA Act.

Section 53 of the EPA Act gives the Minister the power to make environmental planning instruments for the purpose of environmental planning in each local government area. A council does not have the power to make an LEP.

Section 54 of the EPA Act nominates the council for a local government area as the relevant planning authority in respect of any proposed instrument.

Section 55 of the EPA Act obliges a relevant planning authority, here the Council, prior to the making of any environmental planning instrument, to prepare

Section 55(2) of the EPA Act sets out certain statutory requirements for matters to be dealt with in the planning proposal. Whilst this section requires an explanation of the proposed instrument, its objectives and the justifications for it, together with maps which are to be adopted by the proposed instrument, the legislation does not require submission with the planning proposal of a draft LEP containing the amendments or alterations proposed for an existing instrument.

Section 56 of the EPA Act requires a council to forward the planning proposal to the Minister, who is obliged to review it and determine whether:

Section 57 of the EPA Act provides for community consultation in accordance with the Minister’s requirements. For the purpose of community consultation, a draft LEP or other instrument does not have to be exhibited, but the planning proposal is to be made publicly available. Approved summaries may be used where appropriate.

Section 57 of the EPA Act permits any person to make a written submission to the Council as the relevant planning authority, concerning the planning proposal. Such submissions may lead to a public hearing being undertaken on the issues raised.

Section 58 of the EPA Act then provides that the Council as the relevant planning authority may:

If this oc. The revised proposal is then dealt with by the Minister in accordance with the provisions of s 56. The Minister can give any further directions which are regarded as appropriate.

Section 59 of the EPA Act deals with the making of a local environmental plan by the Minister. It provides:

Section 442 of the LGA defines a “pecuniary interest” as being one which exists because of a reasonable likelihood or expectation of an appreciable and not remote, or insignificant, financial gain.

Section 444 of the LGA requires a councillor to prepare and submit a written return of interests, and to comply with s 451 of the LGA with respect to disclosure of any pecuniary interest.

It is convenient next to consider s 451 of the LGA. Relevantly, it provides as follows:

Section 448 of the LGA provides for a series of exceptions to the general obligation of disclosure. For example, a councillor’s interest as an elector or ratepayer is exempted from disclosure. The relevant exemption in this case is in the following form:

Finally, s 457 of the LGA makes provision for the appropriate state of knowledge of an individual councillor with respect to disclosure. It provides:

The Auburn Local Environmental Plan 2010 was in effect at all relevant times. It applied to, and had effect with respect to, the Property. It commenced on 29 October 2010.

The Auburn LEP was made in accordance with the provisions of Division 4 of Part 3 of the EPA Act. Whilst ever it is in force, it falls within the definition of an “environmental planning instrument” in s 4 of the EPA Act.

Part 1 of the Auburn LEP provides for certain preliminary matters. Clause 1.2 sets out the aims of the plan. Clause 1.4 provides that certain words and expressions are defined by the dictionary at the end of the plan.

Part 2 of the Auburn LEP is entitled “Permitted or prohibited development”.

Clause 2.1, which is entitled “Land use zones”, provides for various land use zones in the Auburn LEP. Relevantly, R4: High Density Residential and B4: Mixed Use are identified as land use zones under the plan.

Clause 2.3 of the Auburn LEP is in the following form:

Clause 2.5 provides for an additional permitted use for particular land described or referred to in Schedule 1. Schedule 1 describes particular land situated on Parramatta Road at Auburn, and makes no reference to the Property or any properties in which the plaintiff has a pecuniary interest.

At the end of Part 2, the Auburn LEP sets out the land use table. The Auburn LEP notes that a type of development referred to in the land use table is “…a reference to that type of development only to the extent it is not regulated by an applicable State Environmental Planning Policy”. It then refers to various State Environmental Planning Policies which may be relevant to a development on land caught by the Auburn LEP.

Zone B4: Mixed Use is referred to in the land use table in the following way:

A similar approach is followed with respect to each of the other zones in the land use table.

Part 3 of the Auburn LEP refers to exempt and complying development. It is of no particular relevance to the issues in these proceedings.

Part 4 of the Auburn LEP is entitled “Principal development standards”.

Relevantly to these proceedings, cl 4.3 deals with height of buildings and cl 4.4 deals with floor space ratio.

Clause 4.3 is in the following form:

Clause 4.4 is in the following form:

Clause 4.5 provides for a definition of floor space ratio, and for the rules enabling the calculation of the site area of development for the purpose of applying permitted floor space ratios.

Clause 4.6 is entitled “Exceptions to development standards” with the objective to provide “… an appropriate degree of flexibility in applying certain development standards to a particular development …”.

The operative sections of cl 4.6 are as follows:

Part 5 of the LEP includes various miscellaneous provisions. Clause 5.4 provides for controls relating to miscellaneous permissible uses. Some of those permissible uses would be permitted with consent in Zone B4.

The principal issue identified earlier in the judgment requires an exercise of the interpretation of legislation, namely the LGA and the EPA, and delegated legislation, namely the Auburn LEP.

In Certain Lloyds Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378 at [23] ff, French CJ and Hayne J (with whom Kiefel J agreed) restated some basic principles of statutory interpretation. These restated principles noted that:

It was pointed out by French CJ and Hayne J in Certain Lloyds Underwriters at [26], that care is necessary when a court seeks to identify a relevant statutory purpose because there is a risk that the court will construct its own idea of a desirable policy, impute it to the legislature and then characterise it as a statutory purpose: see Australian Education Union v Department of Education and Children’s Services [2012] HCA 3; (2012) 248 CLR 1 at [28].

The heart of the statutory provision which requires interpretation is to be found in s 448(g) of the LGA. It can be reduced to the following phrase, eliminating irrelevant matters:

The additional consideration is that the land, to be relevant to this provision, has to be land in which the individual councillor has a pecuniary interest. That was not in issue in these proceedings.

The central question is whether the proposal which was being discussed by the Council, as set out in the Report, was one which related to the amending of an environmental planning instrument, namely the Auburn LEP, which did not effect a change of the permissible use of land.

The central question can only be answered by a consideration of whether the amendment to the Auburn LEP being proposed “effects a change of the permissible uses of land”.

The decision below approached this interpretation question on a more general basis and asked whether, in interpreting the phrase “permissible uses”, such a phrase was limited to the concept of a permitted use in environmental and planning law, which would be understood as being the same as the uses of the land set out in the land uses table, or whether the phrase ought be interpreted more broadly to include any way in which the land might be lawfully used.

The decision below concluded that the broader interpretation was the appropriate one. In so doing, NCAT relied upon an earlier decision of the Local Government Pecuniary Interest Tribunal which came to a similar conclusion. That Tribunal said:

That conclusion was adopted by NCAT in the decision below. In so adopting the decision, NCAT did not return to examine in any detail the contents of the Auburn LEP. In other words, there was no examination of whether the wording and terms of the Auburn LEP, and the proposed amendments, fell within the exemption in s 448(g) of the LGA.

The plaintiff submitted that the adoption of such a conclusion was erroneous because it was too broad, and that, upon a proper construction of the provisions of s 448(g) of the LGA, the phrase “permitted uses” ought be read in a restricted way, so as not to include a development standard.

The defendant argued that NCAT’s decision was correct.

As NCAT’s decision, and the earlier decision of the Local Government Pecuniary Interest Tribunal, demonstrate, on an ordinary grammatical reading of the phrase “permissible uses”, it is possible to conclude that the phrase may extend to and include a development standard.

This conclusion is no different than the decision which is to be seen in the judgments of the members of the Court of Appeal in Agostino v Penrith City Council [2010] NSWCA 20; (2010) 172 LGERA 380. The judgment in Agostino highlight the existence of a debate which has been ongoing in the area of environmental law as to whether there is a rigid division between land use identified by way of zoning in an LEP, and development standards applicable to one zone or another.

The mere fact that in considering the interpretation of the statute, the ordinary and grammatical reading of the words may include a broader description than that contended for, does not provide the answer to the issue posed here.

The question here is whether proposed amendments to the Auburn LEP effected a change of the permissible uses of land.

An examination of the Auburn LEP indicates that the permissible uses of land are contained in Part 2. So much is apparent from the contents of that Part discussed earlier. As well, the terms of clause 5.4, contained in Part 5 of the Auburn LEP, dealing with “controls relating to miscellaneous permissible uses”, support the conclusion that the phrase “permissible uses” as used in the Auburn LEP refers to the uses described in Part 2. As well, clause 5.12 supports a similar conclusion.

The clauses which were proposed to be amended fell under Part 4 which was described as “Principal Development Standards”. Of particular note is that clause 4.6 provides a mechanism whereby the strictures of a development standard can be varied with respect to any particular development. The mechanism involves the making of an application, the consideration of that application by Council, the satisfaction by the Council that the request for a variation of development standards has adequately addressed the matters required by the clause, and that the proposed development would be in the public interest. Finally, the concurrence of the Secretary of the Department needs to be obtained.

There is no similar provision for the variation of the permissible uses of land. The permissible uses are fixed in accordance with the Land Use Tables, and cannot be varied by a development application. Any change to permissible uses has to occur through the LEP variation process.

Putting it differently, had an application been made to the Council as the consent authority to vary the maximum floor space ratio for any one proposed development or another, the Council could have determined that such a variation be granted subject to the concurrence of the Secretary of the Department. However, the Council, as the consent authority, could not give permission for a use of land which was prohibited by the Land Use Table in the Auburn LEP.

In my opinion, the phrase “change of permissible uses of land” in s 448(g) of the LGA, does not include any clause falling within Part 4 of the Auburn LEP. No breach of s 451 of the LGA has occurred in the factual circumstances described in NCAT’s decision.

The absence of a careful consideration of the exemption as it applied to the terms of the Auburn LEP was, in my respectful view, an error of law. Put differently, NCAT did not approach the task of statutory construction in the correct way, as required by the law. In those circumstances, I am satisfied that the decision of NCAT was erroneous in law and that its finding ought be set aside.

The Amended Summons seeks an order that this Court substitute a decision by way of a finding that the plaintiff did not breach s 451 of the LGA. Neither party put before this Court the whole of the evidence which was before NCAT.

Because this Court does not have the full record of the proceedings below, it is not in a position to substitute any finding of fact for that which the Tribunal found. It will be appropriate for the Court to simply make an order setting NCAT’s decision aside.

There was no order for costs in the Tribunal below. The Amended Summons does not seek any order for costs of the proceedings in this Court.

The Court orders: