Ku-ring-gai Council v Garry West as delegate of the Acting Director-General, Office of Local Government

1. [1]

   BASTEN JA: On 6 January 2016, the Minister for Local Government referred to the Acting Chief Executive, Office of Local Government, a series of proposals for council amalgamations and changes in council boundaries. One such proposal was described as a proposal by the Minister “for the merger of Hornsby Shire and Ku-ring-gai local government areas north of the M2 [Motorway].” The purpose of the referral, made under s 218F(1) of the Local Government Act 1993 (NSW), was “for examination and report” by the Chief Executive.

2. [2]

   On the same day, 6 January 2016, the Acting Chief Executive, by instrument of delegation, purportedly made pursuant to s 745(1) of the Local Government Act, delegated to a number of persons the Chief Executive’s functions in relation to the examination of and reporting on the proposals, including that involving the appellant.

3. [3]

   On 22 March 2016 the delegate, Mr Garry West, forwarded his report to the Minister. Presumably it was also forwarded to the Acting Chief Executive, although the evidence was silent on that point. Because the proposal was “an amalgamation proposal”, and had been referred to the Acting Chief Executive, he was required to furnish his report to the Boundaries Commission “for review and comment”. [1] The Boundaries Commission reviewed the delegate’s report and sent comments to the Minister on 22 April 2016.

4. [4]

   The delegate “recommended that the proposal as submitted proceed to implementation.” [2] The Boundaries Commission assessed that: [3]

5. [5]

   On 22 March 2016 the appellant Council commenced proceedings in the Supreme Court seeking judicial review of the delegate’s report and an order setting aside the report under s 673 of the Local Government Act, which permits a court to make an order “to remedy or restrain a breach of this Act.” [4] A breach of the Act includes a contravention of or failure to comply with the Act and a threatened or apprehended contravention or failure to comply with the Act. [5] Those proceedings were, in due course, transferred to the Land and Environment Court. On 20 September 2016, Moore J dismissed the proceedings. [6] The present appeal seeks to reagitate a number of grounds raised before the primary judge which, the appellant contended, had been wrongly rejected.

6. [6]

   One of the grounds of challenge had in fact been upheld by the primary judge, but relief had been declined. For reasons more fully explained by Sackville AJA, I agree that the appeal should be upheld on this ground and the judgment below set aside.

7. [7]

   The appellant originally sought, in the event of success, that the examination of the proposal be remitted to a delegate (albeit a different person). Such an order would not have been appropriate unless the Court were satisfied that the kind of “delegation” was within power and the delegate being reviewed had been properly appointed. Because, in the course of the hearing, the appellant reformulated the relief, abandoning the proposed order for remittal, the validity of the appointment need not be determined. It will be sufficient to order that the report of the delegate be set aside. It follows that the review and comments of the Boundaries Commission will have no operation and that the steps required to be taken before an amalgamation can proceed remain uncompleted.

8. [8]

   Given the appellant’s success on the first ground, it remains to consider whether the Court should address other grounds. The High Court has remarked that “it is important for intermediate courts of appeal to consider whether to deal with all grounds of appeal, not just with what is identified as the decisive ground.” [7] In a case where a matter of public interest arises, which may give rise to an appeal to the High Court, findings with respect to all the grounds which were argued prevents the need for a further hearing if the determination on the decisive ground were to be reversed. This case involves challenges limited to jurisdictional error on the part of the delegate, which can conveniently be dealt with within a short compass. The issues were fully argued. Further, although the notice of appeal sought to raise 11 grounds, with one exception (which should be rejected) they focused upon a particular consideration required to be examined by the Chief Executive, namely “the financial advantages or disadvantages” of the amalgamation proposal.

9. [9]

   The exception concerned whether reasonable public notice had been given of the inquiry conducted by the delegate. That ground can be addressed briefly. The quashing of the decision of the delegate removes the need to address the challenge to the review conducted by the Boundaries Commission, which was “put only formally, in the light of Botany Bay City Council v The State of New South Wales [2016] NSWCA 243 at [91]-[101] which is not said to be plainly wrong.” [8] The relevant passages in the reasoning of Sackville AJA in Botany Bay rejected a submission that the Commission, in conducting a review under s 218F(6)(b) of the Chief Executive’s report, was “free to re-examine the merits of an amalgamation proposal” [9] and that the Commission could and should “go beyond a review of the Chief Executive’s report and undertake its own independent evaluation of whether the proposal should be recommended for implementation.” [10] There may remain live issues as to the scope of the Commission’s functions, which were not explored in this appeal.

10. [10]

    Before addressing the substantive challenges to the delegate’s report, it is convenient to set out the principal features of the statutory scheme and identify the critical steps in the process of examination by the delegate. (The latter task may be supplemented by reference to the more complete account provided by Sackville AJA.)

Statutory scheme for amalgamation proposals

1. [11]

   Chapter 9 of the Local Government Act provides for the constitution of “any part of New South Wales as an area.” [11] In common parlance, these are referred to as local government areas, but the statutory term, which is not unimportant for present purposes, is “area”. It is a defined term and means “an area as constituted under Division 1 of Part 1 of Chapter 9.” [12] An area is constituted by a proclamation, made by the Governor. [13]

2. [12]

   A council is automatically constituted by the statute for each proclaimed area. [14] The council takes its name from the name of the area which is determined by the Governor’s proclamation. [15] The procedure for creating a local government area is governed by s 204, which appears in Pt 1, Div 1 of Ch 9.

3. [13]

   Part 1, Div 2 sets out the procedural steps which must be undertaken before an area can be constituted. In short, there must be a “proposal” made either by the Minister or to the Minister by a council or a group of electors. [16] Public notice must be given of the proposal and representations entertained. [17] If the Minister wishes to continue with the proposal, it must be referred to the Boundaries Commission “for examination and report”. [18] If the Minister recommends to the Governor that the proposal be implemented, and modifications are made to the original proposal, the matter cannot be recommended to the Governor if the modifications “constitute a new proposal.” [19] The clear implication is that significant modifications will require that a new proposal be prepared and the process will need to be restarted.

4. [14]

   Division 1 of Pt 1 also confers power on the Governor to dissolve an area, by the following procedure:

5. [15]

   The present case concerned land entirely within the areas of Ku-ring-gai and Hornsby Shire, although not the whole of the Hornsby Shire area. The proposal put forward by the government was described as a “merger proposal”. The term “merger” does not appear in the Local Government Act; rather, the Act provides for the “amalgamation of areas” pursuant to s 218A which provides:

6. [16]

   What may be amalgamated under this provision are “two or more areas”: the provision does not expressly allow for the amalgamation of fewer than two areas, or the amalgamation of parts of areas. That would appear to be deliberate, as the result of an amalgamation is that “the areas” are dissolved. Further, the section expressly refers to s 212(2) which deals with the dissolution of “the whole or part of an area”. To amalgamate part only of an area will therefore result in the dissolution of the whole, leaving the unamalgamated part in limbo. On one view, s 218A was not engaged by the terms of the present proposal, involving fewer than two whole areas.

7. [17]

   There is further provision in Pt 1, Div 2A of Ch 9 for the alteration of boundaries of areas. Section 218B is in the following terms:

8. [18]

   To alter a boundary common to two areas will result in land being transferred from one area to the other. To transfer a discrete parcel of land from one area to another would not constitute an amalgamation. As will be seen below, one aspect of the overall set of proposals formulated by the government involved the transfer of part of the Hornsby Shire area to the City of Parramatta, by altering the boundary between the two areas. Two points of difference between the statutory provisions may be noted. First, a boundary alteration does not result in the dissolution of either affected area, let alone the whole of both areas. Secondly, there is no provision with respect to boundary alterations for Divs 1 and 2 to apply, as is the case with amalgamation of areas. Division 1 includes the requirement for a public inquiry before dissolution can occur; Div 2 contains provisions with respect to initiation and formulation of proposals, the giving of public notice and the making of representations. [20]

9. [19]

   Despite the second point of distinction noted above, Div 2B requires that there be a proposal made to or by the Minister, in terms which reflect those in s 215, with respect to the exercise of functions under s 218A and s 218B. [21] More is required, however, than 28 days public notice, the consideration of representations and referral to the Boundaries Commission. The more detailed provisions are contained in s 218F:

10. [20]

    There was no joint proposal of two or more councils, so that subss (3)-(5) were not engaged. The proposal was not supported by the present appellant, (nor by Hornsby Shire Council) with the result that it was required to be referred to the Boundaries Commission under subs (6). As the proposal was in fact referred to the Chief Executive (and not the Boundaries Commission) the terms of subs (2) were also engaged. Sections 264 (dealing with representation) and 265 (dealing with the conduct of a survey or poll) are not presently in issue. The operation of s 263 was, however, central to the case run by the appellant. The relevant provisions are as follows:

11. [21]

    In s 263(1), the obligation to examine and report on any matter “which may be referred to it by the Minister” should be understood, not as identifying a class of matters, all of which may be examined, but rather, in a temporal sense, those matters which are in fact referred to it. Because the function was understood to relate to “a proposal for the amalgamation of two or more areas”, it was assumed that subs (2A) applied, and the Chief Executive (and, it was also assumed, his delegate) was required to hold an inquiry.

12. [22]

    There was an issue raised by the appellant as to whether reasonable public notice had been given, pursuant to subs (2B). As will be briefly explained below, there was no substance in the challenge to the notice in fact given and nothing turns on the nature or extent of the inquiry in fact conducted.

13. [23]

    One major issue on the appeal was whether the delegate complied with the obligation “to have regard to” the matters identified in subs (3)(a), namely the financial advantages or disadvantages of the proposal.

14. [24]

    Although the privative clause in s 263(7) appears to prevent this Court granting relief (a) in the nature of prohibition, which must be based on jurisdictional error, as well as (b) an order setting aside the decision or proceeding of the delegate, which may be on the ground of error of law on the face of the record, it was accepted by the parties that a challenge could be mounted on the basis of jurisdictional error, being within the constitutionally protected supervisory jurisdiction of this Court. [22] There might have been an issue as to whether, in circumstances in which the privative clause was expressed to refer to the Supreme Court, it was to be assumed that the clause did not apply to the Land and Environment Court; that would have been a surprising result. On the other hand, if the provision did apply to the Land and Environment Court, [23] as well as to this Court, there might have been a further question as to whether that Court enjoyed the same constitutionally protected jurisdiction as the Supreme Court. Although proceedings were in fact commenced in the Supreme Court, they were transferred to the Land and Environment Court without reference to these issues. [24]

Relevant factual and procedural circumstances

1. [25]

   The purpose of this outline of the background circumstances is to identify sufficiently the bases of the complaints that the delegate failed to give proper consideration to the effect of excising from the Hornsby Shire area that part located south of the M2 Motorway, and the alleged failure to accord the appellant procedural fairness. The outline will also provide a basis for considering the claim by the appellant for access to certain KPMG studies which were said to underpin the financial assessment of the proposal and in respect of which the government claimed immunity from production on the basis of secrecy or confidentiality (public interest immunity).

(a) relevant parties – delegation

1. [26]

   The proposal the subject of the proceedings was “made by” the Minister. A letter from the Minister to the Acting Chief Executive, dated 6 January 2016, attached a list of proposed amalgamations and boundary changes, which proposals had been initiated by him. He stated:

2. [27]

   The attached list identified 35 “merger proposals” divided into the categories “metropolitan proposals” (of which there were 15) and “regional proposals” (of which there were 20). Several proposals involved parts of particular areas. The present proposal (inaccurately), was not so identified, being described as “Hornsby Shire and Ku-ring-gai councils”.

3. [28]

   Whether the Minister anticipated receiving the reports of the Acting Chief Executive personally is not clear. However, on the same day, the Acting Chief Executive exercised what purported to be an instrument of delegation pursuant to s 745(1) of the Local Government Act. Mr Garry West was identified as the delegate in respect of two proposals, one being “Hornsby Shire (part) and Ku-ring-gai”, the other being “Hawkesbury City and The Hills Shire (part)”. A separate delegate was given functions relating to Parramatta City (part) and Hornsby Shire (part). The evidence did not specifically identify whether the latter proposal involved the part of the Hornsby Shire south of the M2 motorway, although that seems likely.

4. [29]

   While the Departmental Chief Executive has power to delegate “to any person” any of the Chief Executive’s functions “under this Act” (other than the power of delegation) it is by no means clear that the concept of delegation extends to conferring functions on persons outside the government. Section 745(2) permits a delegate to “subdelegate to a person employed in the Department any function delegated by the Departmental Chief Executive if the delegate is authorised in writing to do so by the Departmental Chief Executive.” The concept of delegation, at least in a legal context, is generally understood as a conferral of authority on a subordinate within a hierarchical structure. That meaning is strongly supported by the terms of subs (2), which are not consistent with the delegate being someone outside the department.

5. [30]

   This matter was potentially of importance for three reasons. First, there may be a question as to whether, and if so how, ss 263, 264 and 265 bind a delegate who is not a government officer or employee. Secondly, there may be a question as to the scope of this Court’s exercise of its supervisory jurisdiction. Although the proceedings were brought against the first respondent “in his capacity as delegate of the Acting Director-General [sic] of the Office of Local Government”, it is by no means clear whether those are words of limitation and whether the Court could now make an order directing Mr West to do anything at all, subject to the potential for enforcement by proceedings for contempt, if the order were not complied with. Thirdly, Mr West’s decision was not treated as a decision of the Acting Chief Executive, who was not a party to the proceedings and, in a formal sense, will not be bound by the result.

6. [31]

   These important questions were not addressed, the parties being content to assume both that the relevant provisions of the Local Government Act bound the conduct of Mr West and that any order of this Court would be effective.

(b) nature of the proposal

1. [32]

   Given the disparate nature of the functions conferred on the Chief Executive, it is necessary to identify the specific proposal with respect to which the function of examination and report was given to the delegate. The relevant document, entitled “Merger Proposal” and dated January 2016 contained 18 pages. It ended with an appendix identifying “the factors that a delegate must consider under section 263 of the Local Government Act (1993) when examining a proposal.” It then identified the section references in the proposal itself where each criterion was addressed. The parts of primary importance were to be found in the Executive Summary under the headings “Introduction” and “Impacts, Benefits and Opportunities”. The section headed “Introduction” commenced:

2. [33]

   A footnote to the first sentence of this passage recognised that what was in fact being created was a new local government area, which was to be, for simplicity, referred to as a new council. The introduction concluded with the following statement:

3. [34]

   Beyond the acknowledgment that it was not the whole of the Hornsby Shire area which was to form the new area, there was nothing in the proposal indicating that any examination was required of the excision of the land south of the M2. Indeed, the passages set out above were inconsistent with any such suggestion. Although the Minister argued that there was an implied requirement to examine and report on the alteration to the southern boundary of Hornsby Shire, there was no textual basis for that submission in the proposal. Nor was there any reference to the fact that the amalgamation could not take place until the Hornsby Shire area had been reduced by an alteration to its boundaries. The nature of the proposal was one involving an amalgamation within the terms of s 218A of the Local Government Act.

(c) financial advantages and disadvantages

1. [35]

   The introduction to the proposal referred to the fact that it had been “informed by four years of extensive council and community consultation and is supported by independent analysis and modelling by KPMG.” The summary then noted the “range of benefits and opportunities” that had been identified for the proposed merger. The summary continued:

2. [36]

   The Minister acknowledged that the document referred to in the second footnote, the main title of which was “Merger Impacts and Analysis”, was a “long form document” prepared by KPMG, which had not been made available publicly, or to the delegate or to the appellant. The Minister acknowledged that there was no other apparent source for the information contained in the passage set out in the proposal. Although a short version of the “Merger Impacts and Analysis” document had been publicly released (and was before the Court), the long form of the document had not (and was not). However, the short form document suggests that the long form document addressed, on a case-by-case basis, the “Long-Term Financial Plans” for the councils involved in specific amalgamations. [27]

3. [37]

   The reason for the failure to release the document was the claim for what is sometimes described as “public interest immunity”, which is (relevantly) dealt with in s 130 and s 131A of the Evidence Act 1995 (NSW). One ground of the appeal was directed to the refusal of the primary judge to order production of that document and a related document, entitled “Implementation of Local Government Mergers: Business Case”, also prepared by KPMG and collectively called “the KPMG documents”.

4. [38]

   The passage set out above was relevant in a further respect. It formed the primary basis for the appellant’s complaint that it had been denied procedural fairness in the conduct of the examination and reporting by the delegate. In short, as the underlying material had not been produced, the appellant had been denied an opportunity to respond to the figures and underlying KPMG analysis on which a major aspect of the proposal was founded.

5. [39]

   This point was expressly raised with the delegate. In a written submission dated 28 February 2016, the appellant argued:

6. [40]

   The first of a number of “key points” set out following that statement was a summary of the figures contained in the passage from the merger proposal noted above. The next key point complained that “[t]he forecast savings cannot be verified as there is no detailed business case available to support the Merger Proposal.” The appellant quoted chartered accountants BDO, which it had briefed to advise it, who said that the merger proposal “does not contain sufficient information for us to conclude on the merits of merging the two councils.” [28] The appellant then said that it had “requested the full KPMG report” and had been told that it should rely on the document contained on the government website. The appellant reiterated its position that “there is no detailed business case available to justify the proposed merger” [29] and continued: [30]

7. [41]

   It may be seen that this last submission contained three propositions, one of which was false. The first proposition was that it, Ku-ring-gai Council, was unable to check the accuracy of the underlying data or test the assumptions because it did not have the information. That was, in substance, a claim of procedural unfairness. The second proposition was that the government could not check the data and assumptions, apparently because it did not have the information. Depending on what was encompassed by the term “the NSW Government”, that proposition was apparently wrong and inconsistent with the rest of the appellant’s case, namely that the facts and figures set out in the proposal were based on information available to the government, but not to anyone else. That complaint must be put to one side.

8. [42]

   The third complaint was that the delegate was unable to check the accuracy of the data, test the assumptions or assess the reasonableness of the conclusions. That was, in substance, a complaint that the purported examination undertaken by the delegate did not satisfy the terms of the statute because he was unable to have regard to, in the sense of examining, the financial advantages of the amalgamation as presented by the government in the merger proposal.

9. [43]

   Procedural unfairness was alleged on a further basis. That was described as the availability to the delegate of material provided by KPMG in a private briefing to which neither the appellant, nor its residents and ratepayers, were privy. The briefing took place on 14 January 2016 and was revealed as a result of the production of a document entitled “Local Government Merger Proposals – Overview of assumptions underpinning financial modelling – briefing to delegates”, dated 14 January 2016. That document set out in global form the benefits from the merger proposals, together with the financial costs. The figures were illustrated by reference to one proposed amalgamation (not being that involving the present parties).

10. [44]

    Apart from the long form of the analysis prepared by KPMG and not released, a “technical paper” described as “Outline of Financial Modelling Assumptions for Local Government Merger Proposals”, dated 19 January 2016 and said to be “[p]repared for the NSW Department of Premier and Cabinet”, was released. This document stated that KPMG had been engaged by the Department of Premier and Cabinet “to prepare independent modelling of the potential financial impacts of selected council mergers.” [31] The document indicated the source of the data relied on, parts of which were State-wide, but other parts of which, referred to as “[c]omparator and jurisdictional analysis/merger business cases”, [32] indicated that there was material specific to particular councils.

11. [45]

    At a meeting between the delegate and councillors and officers of the appellant, on 19 January 2016, one issue raised by Council was referred to as “KPMG report.” The “Council Meeting Notes” had the following material in respect of that issue: [33]

(a) case at trial

1. [46]

   Before the primary judge, the appellant submitted that the delegate had erred in failing to take account of a mandatory consideration, identified as “submissions relating to impacts associated with the [excision] of the areas of Hornsby south of the M2 Motorway”, which contained approximately 20,000 ratepayers and was part of the present Hornsby Shire local government area. This factor was said to be relevant to pars (a), (b), (d) and (f) of s 263(3) of the Local Government Act.

2. [47]

   The primary judge accepted, correctly, the premise on which this ground was based, namely that each of the mandatory factors set out in s 263(3) related to “the whole of each of the existing local government areas that are the subject of the proposal, even when, as is here the case, it is proposed to excise an area from one of them.” [34] The primary judge then considered the passages in the report of the delegate which referred to the area south of the M2 concluding, however: [35]

3. [48]

   The judge further concluded: [36]

4. [49]

   The primary judge further noted, correctly on the basis of his reading of the statute, that both this delegate, and the other delegate who was required to consider a merger of the excised portion of Hornsby Shire with the Parramatta City Council area, would have to consider the effects of the two proposals on the excised area. He might have added that, consistently with this conclusion, the other delegate would also have had to consider the effect of the excision on the whole of Hornsby Shire.

5. [50]

   On one view, the element of duplication and the possibility of inconsistent conclusions should have led to the conclusion that these two proposals could not be isolated from each other and given to separate decision-makers for examination. The Minister’s response was that these difficulties could be resolved at a later stage, because the Minister had power to recommend to the Governor that the proposal be implemented or decline to make that recommendation. [37] Whilst that may proffer a practical solution to inconsistent recommendations, it would almost certainly mean that the whole process would have to start again, unless the government abandoned it. More importantly, it does not address the underlying legal premise, namely that “area” means the whole of a local government area and not just part of an area, and that (although the primary judge did not specifically address this point) there cannot be an amalgamation of fewer than two whole local government areas under s 218A. Further, the primary judge, adopting the language of the appellant’s submissions, appears not to have identified what was meant by “excision” in the statutory context of the separate functions of amalgamation and alteration of boundaries.

6. [51]

   Despite identifying jurisdictional error, the primary judge nevertheless declined to grant relief because, by the time the proceedings came on for hearing before him, the Local Government (City of Parramatta and Cumberland Councils) Proclamation 2016 (made on 12 May 2016), had given effect to the “excision”. [38] The assumption appears to have been that, had he set aside the decision of the delegate, the matter would have to be remitted for further consideration, which would have been an exercise in futility because, the excised area having been removed, the current proposal would be approved. That would be because, what should have been considered and was not, no longer could be considered, so that the formerly invalid examination would now be valid.

(b) Minister’s challenge to finding as to delegate’s reasons

1. [52]

   As will be explained below, the reasoning of the primary judge with respect to relief cannot be accepted. It is desirable, however, to deal first with the Minister’s contention challenging the conclusion that the delegate did not properly consider the effects of the proposal on the area of Hornsby Shire south of the M2. Rather, the Minister contended, [39] the delegate did give proper consideration to the area south of the M2, as appeared from his report.

2. [53]

   As the primary judge (and the Minister) correctly noted, there were a number of references in the delegate’s report to the part of Hornsby Shire south of the M2. First, in considering what was described as “background”, the delegate referred to an earlier proposal by Hornsby Council itself, which included an expansion of its existing boundaries, beyond the merger of the whole of its existing area with that of Ku-ring-gai. The delegate then noted that the Hornsby Shire Council was opposed to the current proposal, “particularly given the potential loss of the part of Hornsby south of the M2 Motorway to Parramatta”. [40] Later in the report, when considering an analysis provided by KPMG to Hornsby Shire Council in 2014, the delegate noted that “option 3” considered at that time was equivalent to the current merger proposal. [41] Using that material, the delegate obtained “significant comfort that the projected performance improvements are credible and achievable.”

3. [54]

   However, that was not a rejection of the proposition that the new area would be better off with the inclusion of the area south of the M2; nor did it consider the benefits to the area south of the M2 in giving effect to the current proposal. That is apparent from the further statement in relation to the submission by Hornsby Shire Council to the delegate, summarised in the following terms: [42]

4. [55]

   Secondly, the delegate identified the main submissions from residents within the Ku-ring-gai area, which included concerns regarding the financial impact of the loss of the area south of the M2 on the financial viability of a new council. [43] That material may be dealt with in company with the next point.

5. [56]

   Thirdly, although there were references to the impact of the exclusion of the area south of the M2 in respect of other issues, the underlying point was the financial impact of the so-called “excision”. [44] Accordingly, the clearest indication of how the delegate dealt with that issue derived from his conclusions with respect to the first topic in his report, namely financial advantages and disadvantages. The delegate commenced that section by noting the concerns expressed with respect to the KPMG analysis and modelling, confirming his understanding that it operated at a “broad level”. [45] He accepted statements by KPMG and the government that the estimated benefits were “conservative”. Then, dealing with the financial impact of loss of the area south of the M2, the delegate concluded that “the operating result has already been accounted for in the merger proposal.” [46] As a fact, that conclusion was not challenged and probably was not open to challenge. As a conclusion, it did not indicate examination of the desirability of the excision for the residents and ratepayers of the area south of the M2; nor did it examine the benefits and disadvantages of the excision from the standpoint of the ratepayers and residents north of the M2 and within the Ku-ring-gai area.

6. [57]

   Fourthly, in dealing with the second criterion identified in s 263(3), namely “community of interest and geographic cohesion”, the delegate concluded: [47]

7. [58]

   Reading the report as a whole, that conclusion fairly sums up the delegate’s approach to this issue: it cannot be said that he was inconsistent in that approach. Thus, in summarising the community submissions under the heading “Attitudes of residents and ratepayers” the delegate stated: [48]

8. [59]

   An analysis of the delegate’s reasons demonstrates that the primary judge was correct in concluding that the delegate had eschewed any assessment of the merits of the excision of the area south of the M2 Motorway. It is understandable that he did so: the merger proposal, as described above, neither required nor permitted such an examination. For these reasons, the Minister’s contention to the contrary must be rejected.

9. [60]

   A further way of testing whether the delegate did in fact give consideration to the effect of the merger proposal on the area south of the M2 would be to ask what finding might have been expected had such consideration been given. The short answer is that, acting rationally, the delegate could not have recommended that the proposal proceed. That is because, as the delegate correctly noted, the fate of the area south of the M2 was, at the time of the delegate’s report, the subject of another merger proposal. [49] The outcome of the examination of that proposal was not then known. It could have declined to recommend that the area south of the M2 in Hornsby Shire be incorporated into Parramatta City. Had it done so, and had the Minister accepted that recommendation, approval of the Hornsby/Ku-ring-gai proposal would have left the residents and ratepayers south of the M2, formerly in Hornsby Shire, without a local government area and without a council. That possibility was an unacceptable outcome which could not be excluded. On the other hand, if that possibility were disregarded, a decision approving the Hornsby/Ku-ring-gai proposal might be seen to dictate a result with respect to the Parramatta City proposal regardless of the view of the merits of the incorporation of the area south of the M2 into Parramatta City. That too would be an unacceptable outcome. A third foreseeable possibility would have been that the delegate considering the Parramatta City proposal would do precisely what the present delegate did and presume that the fate of the excised area would be fully considered by the other delegate. That again would be an unacceptable outcome.

10. [61]

    It follows that, had the delegate properly considered the position of the area south of the M2, the only reasonable decisions could have been (a) to defer concluding his examination and report on the Hornsby/Ku-ring-gai proposal until the other proposal had been determined, or (b) to recommend to the government that neither proposal be examined and reported on, otherwise than by one delegate having functions with respect to the alteration of the boundary as well as the two amalgamation proposals. The fact that neither approach, nor anything like them, was referred to in the delegate’s report is powerful evidence for the proposition that he did not consider that the function of examining the boundary alteration had been conferred on him.

(c) whether relief futile

1. [62]

   First, it should be said that this is not a true case of futility. It is not like the case where a person challenges the refusal of his or her application for an appointment to office, in circumstances where another person has been appointed and cannot be removed to make way for the thwarted applicant. [50] The merger proposal has not yet been acted upon, nor, subject to one qualification, has any factual circumstance changed which would prevent the proposal being re-examined and acted upon, if the Minister thought appropriate.

2. [63]

   The qualification is that there may need to be a new proposal, restating the boundaries in the present proposal, but against a background in which the “excision” has already taken place and is, it can be assumed, beyond challenge. That circumstance may require a new amalgamation proposal, with two consequences. First, because it will affect the whole of the Hornsby Shire area (as now defined, following the boundary alteration) with the whole of Ku-ring-gai, the proposal will fit squarely within s 218A. Secondly, because it will no longer be necessary (or appropriate) to have regard to the possible consequences for the area south of the M2 Motorway, which was originally within the Hornsby Shire area, the outcome may not be the same.

3. [64]

   There may be cases in which a decision-maker has come to a conclusion which is unreviewable, but, taking into account an irrelevant consideration has then adopted the reverse position. The court may set the decision aside on the basis that an irrelevant consideration has been taken into account, but remit the matter with a direction that the applicant is entitled to the relief sought. [51] By parity of reasoning, it may be said that where the decision-maker erred by failing to take into account a mandatory consideration, but in circumstances where, if the matter were remitted that consideration would no longer be available, relief should be refused. That would be so on the basis that the decision which was challengeable on a particular ground would be unchallengeable once that ground became immaterial.

4. [65]

   It is not necessary to determine whether that reasoning is valid. It is sufficient to note that the decision made by the delegate in fact took into account effects relevant to the area south of the M2, although not by way of examining the whole of the matter which should have been examined. However, if the decision were to be made again now, that material would not be relevant. It might seem illogical to require the decision to be made again if the material which must now be excluded worked uniformly against acceptance of the proposal. Thus, if the considered effects failed to prevent the proposal being approved, their absence can only strengthen the conclusion already reached. However, to make that assumption is to undertake an assessment of the nature of the material and its necessary effects. While it may seem likely that the same result would be reached on reconsideration by the same delegate, that conclusion does not follow as a matter of law, but rather by making certain assumptions about the assessment of the material, which are not open to a court exercising the supervisory jurisdiction of this Court.

5. [66]

   Finally, if the flawed examination can be redone properly, relief should be granted which would allow that to happen. Once the decision has miscarried, it is not appropriate to remit the matter to the same delegate in order to seek to retain the benefit of findings reached in the course of the earlier flawed assessment. [52] There are a number of reasons for that, two of which have particular pertinence in the present case. First, it cannot be assumed that, if the examination and the inquiry were undertaken again, the material put before the delegate would be the same. That is because the objection based on public interest immunity should have been rejected (as discussed below) and any fresh examination will need to be undertaken by reference to additional material. Secondly, it cannot be assumed that the matter would or could go back to the same delegate for re-examination of the merger proposal. That is in part because it may be assumed that the “delegation” has expired. It is also, in part, because of the doubts raised above as to whether a delegation to a person outside the public service is valid.

(d) conclusions

1. [67]

   For these reasons, as well as those given by Sackville AJA, the primary judge, (a) was correct in concluding that there had been jurisdictional error on the part of the delegate in failing to take account of the effects of the merger proposal for the area south of the M2, but (b) erred in failing to grant relief, namely, setting aside the decision of the delegate.

Access to KPMG documents

1. [68]

   Grounds 5 and 6 in the summons in the Land and Environment Court alleged a denial of procedural fairness in the delegate’s failure to provide it with the KPMG documents and the information supplied by KPMG in the briefing of delegates. Ground 3 alleged procedural unfairness in the failure of the Department of Premier and Cabinet to provide the KPMG documents to either the appellant or the delegate. Ground 4 alleged a constructive failure on the part of the delegate to fulfil his statutory function in circumstances where he did not have access to the KPMG documents, on the basis that he was then unable to examine and report on a critical aspect of the merger proposal, namely the suggested net financial advantages, not having access to the basis of the calculations. The notice of appeal complained that the primary judge had failed to address ground 4. [53]

2. [69]

   The question whether the delegate could properly fulfil his function, absent the KPMG documents, is, in a sense, antecedent to any question of procedural fairness in relation to the appellant. Thus, if the examination function could not properly be undertaken absent those documents, the question of procedural unfairness would not arise. On the other hand, if the inquiry could properly be conducted absent the underlying financial documents, there may nevertheless be a question of procedural unfairness in depriving the appellant of the opportunity to challenge the financial assertions of the government by reference to the underlying calculations. Further, the right of the government to withhold the documents even if they were required, by maintaining public interest immunity, is antecedent to both questions. It is convenient to deal with the issues in the logical order suggested.

Public interest immunity

1. [70]

   On 8 January 2016 the appellant sought access to the KPMG documents under the Government Information (Public Access) Act 2009 (NSW). The KPMG documents [54] were said by the Director of the Department of Premier and Cabinet to have been “prepared for submission to Cabinet and submitted to Cabinet regarding proposed local government reforms.” Access was refused on the basis that they constituted “Cabinet information” for the purposes of cl 2(1)(b) of Sch 1 to the Government Information Act. [55]

2. [71]

   Having failed to obtain the KPMG documents prior to the completion of the delegate’s report, the appellant issued notices to produce in the court proceedings, addressed to “NSW Department of Premier & Cabinet” and to the Minister for Local Government. The first notice was treated as having been directed to the proper officer of the Department, since identified as the Secretary. On 29 April 2016 objection was taken to each notice to produce and orders were sought pursuant to ss 130 and 131A of the Evidence Act for the Secretary and the Minister to be excused from producing the documents on the ground that it would be “injurious to the public interest to produce [them].” The objections were upheld by the Land and Environment Court. [56]

3. [72]

   In the proceedings in the Land and Environment Court, the appellant joined both the “NSW Department of Premier & Cabinet” (not a juristic person) and the Minister for Local Government as the second and third defendants respectively. Grounds 1 and 2 challenged the refusal of the Department to produce the KPMG documents. As noted above, ground 3 alleged procedural unfairness on the part of the proper officer in refusing to provide the KPMG documents to the appellant and to the delegate, and ground 4 alleged a constructive failure on the part of the delegate to carry out his delegated function in the absence of the KPMG documents. In his final judgment, the primary judge stated that the matter had been determined adversely to the appellant and that ground 1 was “without foundation.” [57] These findings were challenged in ground 3 of the notice of appeal.

4. [73]

   In support of the objection, the Secretary relied upon an affidavit of General Counsel for the Department, Mr Paul Miller. Mr Miller stated that the KPMG documents: [58]

5. [74]

   Mr Miller described in some detail the Cabinet process. The affidavit continued:

6. [75]

   The affidavit then identified the two documents now in dispute as having been “prepared by KPMG” and having been “submitted by the relevant Minister to Cabinet.” [59] The affidavit further noted that the long form of the merger impacts and analysis document was substantially longer than a published form of the document and was “a substantially different document”. [60]

7. [76]

   The notice of objection relied on s 130 and s 131A of the Evidence Act. Section 130 relevantly states:

8. [77]

   That section only applies if the appellant could rely upon the KPMG documents at the trial and sought to tender them in evidence. As the appellant did not have the documents, it could not seek to tender them and the occasion for the Court to direct that the documents not be adduced as evidence did not arise. As was noted in the joint reasons of Gleeson CJ, Gaudron and Gummow JJ in Esso Australia Resources Ltd v Commissioner of Taxation, [61] dealing with the analogous provisions relating to legal professional privilege, the provisions do not apply to ancillary process because no question of adducing evidence arises at that stage. [62] It was for this reason that the Secretary called in aid the terms of s 131A of the Evidence Act, which relevantly provides as follows:

9. [78]

   The term “disclosure requirement” is defined to include a notice to produce. [63] Sections 130 and 131A both appear in Pt 3.10. Counsel for the Minister agreed that one “necessary modification” of s 130 must be to place in the scale weighed against the public interest in preserving secrecy or confidentiality, the public interest in the production of the document to the party issuing the notice. That modification is necessary because the basis upon which documents must be produced extends beyond that on which a document may be admitted into evidence. [64]

10. [79]

    As may be seen from the form of the affidavit, and as was affirmed by senior counsel for the Minister, the claim for public interest immunity was a “class” claim, based on the nature of the document and not upon its contents. [65] The distinction is by no means watertight, but one significance of the distinction is that, whereas it may be appropriate for the court to inspect documents where the claim for immunity is based on their contents, there will usually be no cause for inspection where the claim does not rely upon the contents.

11. [80]

    A claim for immunity from production based on the fact that documents were submitted to Cabinet may properly fall within the category of matters of state which involves prejudice to the proper functioning of the government of a State. [66] However, there is an important point of distinction between documents which are submitted to Cabinet and documents which record or reveal the content of Cabinet deliberations. This case fell into the former category, not the latter. The justification for the immunity with respect to that category lies in the proposition that disclosure might prejudice the ability of Ministers and Cabinet (including those advising them) to obtain full and frank advice from other government officers and external experts.

12. [81]

    The appellant submitted that prior limited disclosure should not be disregarded. It relied upon a passage in the judgment of Gibbs ACJ in Sankey v Whitlam [67] in the following terms:

13. [82]

    The Minister took issue with this “so-called principle”. The Minister submitted that the element of “publication” was dealt with in s 130(5)(e) of the Evidence Act and, in any event, this was not a case where either the contents of the document had been published, or one document in a series had been published.

14. [83]

    The Minister’s submission correctly directed attention to the terms of s 130(5); nevertheless, all that it states is that prior publication of the substance of the document is one factor which the court is to take into account, without either limiting the factors the court may take into account, or indicating how it should take the particular factor into account.

15. [84]

    The case law is replete with statements to the effect that s 130 “closely reflects the common law position” [68] or that “what differences exist are of no practical significance” [69] and that common law principles “assist in informing of the content and operation of the Evidence Act, s 130”. [70] (It is not strictly correct, as suggested in Ryan, [71] that this Court held that “the assessment of the claims for public interest immunity was to be undertaken both by reference to common law and statute”; rather, the Court said it was necessary to determine whether the provisions of the Evidence Act were engaged, [72] but having decided that the Act was not engaged, nevertheless proceeded to assess the claims by reference to both the common law and s 130. [73] )

16. [85]

    Two things should be stated about the correct approach to the consideration of objection on the grounds of public interest immunity, in a case where s 130 is engaged. First, the statutory structure should be followed. That requires identification of the scope, content and importance of (a) the public interest in admitting information or a document into evidence, and of (b) the public interest in preserving secrecy or confidentiality in relation to that information or document. It is only when the latter outweighs the former that the court is empowered to direct that the information or document not be adduced in evidence.

17. [86]

    Secondly, in other respects the terms of s 130 are permissive rather than restrictive. That fact engages s 9(1) of the Evidence Act which provides:

18. [87]

    Accordingly, so far as principles or rules can be derived from authorities operating under the common law or equity, which are not inconsistent with ss 130 and 131A, those principles or rules continue to apply. It is for that reason that consideration of common law authority may not only be permissible, but necessary.

19. [88]

    Relevantly to the present exercise, some guidance can be obtained from statements of principle in The Commonwealth v Northern Land Council. [74] Having noted that the claims for immunity in that case were with respect to documents which recorded the actual deliberations of Cabinet, the majority reasons continued: [75]

20. [89]

    As noted in a footnote to the last passage, the likely effect on frankness and candour, at least in the public service, was contrasted with the discussion by Gibbs ACJ in Sankey v Whitlam at 40. The judgments in Sankey v Whitlam and in Northern Land Council, clearly reject a blanket approach to “cabinet papers”. As Gibbs ACJ said in Sankey, the Court “will not treat all such documents as entitled to the same measure of protection – the extent of protection required will depend to some extent on the general subject matter with which the documents are concerned.” [77]

21. [90]

    Such a claim for blanket immunity calls for careful scrutiny of its rationale. To describe the topic of the submission to Cabinet as involving a current controversy may provide a cause for upholding immunity in some cases, but not others. It is necessary to consider the subject matter of the controversy. In this case, the subject matter is the amalgamation of local government areas. The statutory mechanism requires a “proposal” which may be formulated by the government and, in this case, was formulated by the Minister for Local Government. It is not known whether the specific proposals went to Cabinet and senior counsel for the Minister submitted that the Court should make no assumption one way or the other. Importantly, the proposals had to be the subject of examination and report, including public inquiry, in the manner summarised above. It would be incoherent for the Minister to assert that any material presented to Cabinet to support an amalgamation of local government areas, a proposal for which had to be referred for examination by the Departmental Chief Executive or the Boundaries Commission, carrying out statutory functions under the Local Government Act, should not be disclosed. Particularly is that so where the proposal expressly relied on financial information which was derived from an external report submitted to Cabinet.

22. [91]

    Further, there is no reason to assume that when an organisation such as KPMG, applying its own professional expertise, prepares a business case in relation to council amalgamations in the statutory context provided by the Local Government Act, it would do so on an assumption that the government would never disclose the figures and information it supplied. The claim that, in such a case, candour and frankness might be compromised by disclosure borders on the fanciful.

23. [92]

    The factors which militate against immunity in the present case are (a) the identity of the party responsible for preparing the documents, being a large commercial enterprise external to the government; (b) the statutory context, which included the need for a separate examination, including a public inquiry, of each proposal made by the Minister prior to implementation; (c) the fact that figures derived from the documents were relied on by the Minister in preparing the proposal; (d) the fact that such reliance was expressly identified in the merger proposal which was publicly released, and (e) the subject matter of the documents sought to be protected, as revealed in broad terms by their titles and by reference to the matters which were publicly disclosed. The countervailing considerations depend almost entirely upon the broad proposition that disclosure of any document relating to current and controversial matters, which has been presented to Cabinet for its consideration, will tend to undermine the candour and frankness with which such documents are prepared in the future.

24. [93]

    In considering the public interest in the production of the documents for the purposes of the litigation, the following matters are significant:

25. [94]

    Once the specific circumstances relating to the document are articulated, the broad policy based on candour is significantly diminished. The public interest in preserving secrecy or confidentiality must be seen as so qualified that it carries little weight. It is quite inadequate to outweigh the public interest in the production of the documents for the purposes of the litigation.

26. [95]

    It follows that the contrary view adopted by the primary judge cannot stand. The orders made on 30 May 2016, upholding the Secretary’s application to be excused from production, should be set aside.

Constructive failure to conduct examination

1. [96]

   The appellant complained that the primary judge failed to deal with ground 4 in its summons. The judge dismissed grounds 2, 3, 4 and 5 on the basis that they constituted, in part at least, a repetition of ground 1, being a complaint of procedural unfairness flowing from non-production to the appellant of the KPMG documents. [78] Ground 4, as explained above, did not attract that characterisation. The primary judge then stated that, to the extent that there was “a complaint concerning the availability of the full KPMG documents to the Delegate”, [79] he adopted his own reasoning in another case determined at the same time, namely Hunter’s Hill Council v Minister for Local Government. [80] Reference was made to a lengthy passage in that judgment at [218]-[254].

2. [97]

   There is a danger in dealing with several cases together (not by way of a test case) and giving lengthy reasons in each. The cross-reference to the lengthy passage in Hunter’s Hill was inapposite; most of that passage dealt with questions of procedural unfairness and, without much focus on the facts of the particular case, dealt with arguments based on statements made in other cases. Thus, Moore J said: [81]

3. [98]

   There followed a discussion as to whether or not particular evidence had been called in another case, [82] and as to the relevance of a migration case, SZSSJ v Minister for Immigration and Border Protection, both in the Full Court of the Federal Court [83] and in the High Court. [84] This discussion continued from [238]-[254]; it did not address any argument that there was a constructive failure of the delegate to exercise his function of examination by failing to obtain the material upon which the financial figures were based in order to examine the proposal in the light of that material. It follows that, in a formal sense, the ground must be upheld. As this is an appeal by way of rehearing pursuant to s 75A of the Supreme Court Act 1970 (NSW), the ground may be dealt with by this Court.

4. [99]

   No doubt the manner of conducting an examination with respect to an amalgamation proposal may depend upon the circumstances of the case. Thus, s 218E envisages that such a proposal may be made (a) by the Minister, (b) by a council affected by the proposal, or (c) by electors constituting, in broad terms, 10% of those in an affected area. Where the proposal is not made by the Minister, one purpose of the examination will be to allow the government to assess the merit of the proposal. Where the proposal emanates from the responsible Minister, the primary purpose of the examination is unlikely to be the examination of the merit of the proposal by someone within the Minister’s department. Rather, it will be to examine the merit from the perspective of an affected council and from the perspective of the affected public, and will generally call for examination by someone independent of the proponent Minister. In broad terms, the purpose of the examination requires that it extend to the basis for any opinions underlying the proposal.

5. [100]

   In the present case, a critical element in the reasoning in favour of the proposal was the financial advantage which was expected to accrue from the amalgamation of Ku-ring-gai with part of Hornsby Shire. The document containing the proposal indicated that the calculations were undertaken for the government by KPMG. The footnote to the summary of the financial advantages identified the source which, it is accepted by the Minister, was a document not provided to the delegate or publicly released. The Council was right to assert that the delegate could not properly carry out his function of examination without having access to that material. Release of the material was also necessary for public participation in the public inquiry to be meaningful.

6. [101]

   There may be qualifications on the scope of the examination in circumstances where a countervailing public interest in the protection of the information contained in the document is sufficient to override its public disclosure. That public interest may arise independently of provisions in the Evidence Act regarding public interest immunity. One possible ground for non-disclosure may arise from the terms of the Government Information (Public Access) Act. In fact, there is a degree of overlap between the relevant exclusions from disclosure of government information under that legislation and the terms of s 130 of the Evidence Act. Relevantly, the KPMG documents were not disclosed because they were prepared for submission to Cabinet, not for Cabinet’s approval of the documents as such, but for its consideration of the documents in the context of the policy underlying the “merger proposals”.

7. [102]

   The findings with respect to public interest immunity demonstrate that the KPMG documents should have been made publicly available. The fact that the delegate did not have access to such material, in the absence of any legal justification for that situation, and objection to its absence having been squarely and repeatedly raised by the appellant, leads to the conclusion that the delegate constructively failed to fulfil the statutory function of examining the Minister’s proposal.

8. [103]

   It is not necessary to consider whether, had the examination and inquiry been carried out by the Chief Executive himself, or the Boundaries Commission, the KPMG documents would have been available to the party carrying out the examination.

Procedural unfairness

1. [104]

   The claim of procedural unfairness was formulated in a number of different ways in the proceedings brought in the Land and Environment Court. In this Court, the grounds were refined into two elements, namely:

2. [105]

   As the circumstances set out above demonstrate, the appellant repeatedly sought the KPMG documents and presented reasons for treating them as material and necessary to allow the examination to be conducted and for the appellant to have an opportunity to challenge the figures on which the financial advantages proposed by the Minister were based. The Minister did not contend that the KPMG documents were not material to that exercise. Absent any legal justification for withholding the documents, procedural unfairness was established. There is no need to consider the significance of the failure to provide detail of the KPMG briefing of the delegate.

3. [106]

   Once it is accepted that the KPMG documents should have been produced, both so that the delegate could properly carry out his statutory function and so that the appellant could address the basis of the financial advantages asserted by the Minister, the challenges set out in grounds 2(a), 3, 7 and 9 to the final orders made by the primary judge must be upheld.

Adequacy of notice of inquiry

1. [107]

   Pursuant to s 263(2B) of the Local Government Act, “[r]easonable public notice must be given of the holding of an inquiry under this section.” The appellant said that this was not done for a number of reasons. First, it was said that the proposal was not correctly identified because the description of the proposal referred to the local government areas of “Hornsby and Ku-ring-gai”, without indicating that the proposed amalgamation related only to part of Hornsby Shire. Secondly, it was said that the time and location of the public inquiry was inadequately identified because the “venue” was identified as “Pymble Golf Club”, without reference to a street address. Thirdly, it was said that notices were not published in newsletters of sufficiently wide publication and, fourthly, the publication which correctly identified the areas was not in sufficient time to enable an interested person to prepare and make a submission.

2. [108]

   The complaints were, in effect, about the particularity and timing of the notice and the breadth of its circulation. Those elements of particularity were reduced on appeal to three propositions, namely (a) there was no publication in a newspaper with State-wide circulation; (b) the corrected notice was not circulated to the total local government areas, and (c) the corrected notice was published too late. The reference to the “corrected notice” was the reference to a notice which included reference to “part” of Hornsby Shire.

3. [109]

   The appellant submitted that the question as to whether “reasonable” public notice had been given was a jurisdictional fact to be determined by the Court. Absent reasonable notice, it was submitted that the holding of the inquiry was invalid and the examination was therefore not completed.

4. [110]

   As all the notices for various proposals appear to be in a common form, it may be assumed that they were prepared in the Department. The need to refer to “part” of Hornsby Shire and the time before the holding of the public inquiry at which that should have occurred were matters about which reasonable minds could differ. The assumption that reasonable public notice was satisfied by publication in various print outlets might itself have been a matter of opinion. Nor was there any reason to find that the statutory requirement could not have been satisfied by the various activities undertaken by the Council, which had an interest in publicising the inquiry, and did so at the request of the delegate. These publications included flyers, banners in prominent places, media releases, posts on Facebook and Twitter and notices on the Council’s website. There was no legal reason why those matters should not have been taken into account.

5. [111]

   While the appellant focused on aspects of the reasoning of the primary judge which may have been partly inapt, there is no reason to doubt that the statutory requirement was in fact satisfied. Although it does not affect the outcome of the appeal, it is appropriate to reject ground 4.

Conclusions

1. [112]

   The appeal should be upheld on the grounds that:

   1. (1)

      the primary judge erred in failing to grant relief in respect of an identified jurisdictional error;

   2. (2)

      the objection by the Secretary to the production of the KPMG documents was wrongly upheld on the basis of public interest immunity;

   3. (3)

      the delegate failed to exercise fully his statutory function in the absence of material which allowed an examination of the financial advantages asserted in the proposal;

   4. (4)

      the appellant was denied procedural fairness because it was refused access to the material necessary to examine the financial advantages asserted in the proposal, and

   5. (5)

      consequentially, the review of the Boundaries Commission did not relate to a valid examination by the delegate and should be set aside.

2. [113]

   The Secretary and the Minister should pay the costs of the appellant, both in this Court and in the Land and Environment Court. Those costs should include the costs of commencing proceedings in the Common Law Division, in circumstances where it was not clear that the Land and Environment Court had jurisdiction to grant the relief sought.

3. [114]

   The following orders should be made:

   1. (1)

      Allow the appeal.

   2. (2)

      Set aside the orders made in the Land and Environment Court on 30 May 2016 and 20 September 2016, with respect to the proceedings brought by Ku-ring-gai Council.

   3. (3)

      Set aside the examination and report of the delegate, Mr Garry West, in relation to the proposed amalgamation of part of Hornsby Shire and Ku-ring-gai local government areas, the report being sent to the Minister on 22 March 2016.

   4. (4)

      Set aside the review of the Boundaries Commission and the comments sent to the Minister on 22 April 2016.

   5. (5)

      Order that the second and third respondents pay the costs of the appellant, both in this Court and in the Land and Environment Court, including the costs of commencing proceedings in the Common Law Division.

4. [115]

   MACFARLAN JA: I have had the advantage of reading the judgments of Basten JA and Sackville AJA in draft. I agree with Basten JA’s proposed orders and with his Honour’s reasons for judgment. I also agree with Sackville AJA’s reasons for reaching the same conclusion as Basten JA on the Notice of Contention point that the Delegate misapprehended his function under ss 263(1) and (3) of the LG Act in relation to the area proposed to be excised from Hornsby Council’s area.

5. [116]

   I respectfully disagree with Sackville AJA’s conclusions concerning Ground 7 of the Summons, procedural fairness and public interest immunity. I agree with Basten JA in relation to these matters and make the following further observations.

Ground 7 – consideration of the financial advantages or disadvantages of the merger proposal

1. [117]

   As Sackville AJA points out, in Bondelmonte v Bondelmonte [2017] HCA 8 at [43] the High Court recognised that the term “consider” when used in a statute concerned with administrative decision-making imports an obligation to give “proper, genuine and realistic consideration” to the matter required to be considered. As his Honour also points out, there has been controversy about the use of that phrase and concern expressed about its use encouraging courts to slide into impermissible merits reviews on judicial review applications (see [278]). Notwithstanding these cautionary observations, it can at least be concluded that an administrative decision-maker in a position analogous to that of the Delegate, who is required to “examine” a proposal, has a duty to form his or her own view about the matter to be examined and not adopt uncritically the view propounded in the document accompanying the referral of the matter to him or her.

2. [118]

   The Minister’s merger proposal that was embodied in his Merger Proposal Document was founded, so far as the merger’s financial advantages were concerned, upon KPMG’s analysis. For example, under the heading “Financial Benefits of the Proposed Merger”, the proposal highlighted and detailed financial benefits that KPMG’s analysis indicated would flow from the merger. This analysis was contained in a “long form document” over which the Government successfully claimed public interest immunity from production. The document was not therefore available to the Ku-ring-gai Council (see [36] above). Nor was it provided to the Delegate.

3. [119]

   It is evident from the terms of the Merger Proposal Document that the financial consequences of the merger were regarded by its proposer as fundamental to its merit. Indeed, the importance of the financial aspects of proposals for council amalgamation is recognised by s 263(3) of the LG Act which identifies that topic as the first of a number that the Boundaries Commission (in this case, at least initially, the Delegate) is required to consider.

4. [120]

   To perform his duties, the Delegate had two choices open to him. He could have tested the reliability of the KPMG analysis or he could have made an independent assessment of the merger’s financial advantages or disadvantages. In either case he could have obtained expert advice or other assistance to help him fulfil his duty.

5. [121]

   He clearly did not choose to take the latter course. Nor did he choose to take the former. Rather, he accepted the results of the KPMG analysis stated in the Merger Proposal Document as a given and did not attempt to obtain the KPMG long form report containing the analysis from which the results were drawn, much less examine it to test the reliability of the results. Nor, so far as his Report reveals, did he even examine the detail of the assumptions, set out in a publicly available document, upon which KPMG’s analysis was said to have been based.

6. [122]

   In his Report, the Delegate stated that the Merger Proposal Document “relied on the KPMG analysis to support the financial benefits” identified therein. The Delegate then described the benefits of the proposed merger which the analysis identified. He did not question the analysis and indeed concluded as follows:

7. [123]

   The Delegate thus did not consider that it was part of his task to address the “concerns” that had been raised in relation to the “KPMG analysis and modelling”. He appeared to consider it sufficient that KPMG and the NSW State government believed that KPMG’s estimates of projected benefits of the merger were conservative.

8. [124]

   The only step that the Delegate took to assess the financial advantages of the proposal, beyond adopting the results of the KPMG analysis prepared for the Minister, was to refer to a report prepared for Hornsby Shire Council by KPMG and dated 22 May 2014. This concluded that Hornsby Shire Council would receive a net financial benefit from a merger of the type that the Delegate was considering. The Delegate said that he derived “significant comfort” from this report that “the projected performance improvements [identified in the KPMG analysis for the Minister] are credible and achievable”. This observation did not indicate that he conducted a proper examination of the KPMG analysis prepared for the Minister. For one matter, the report for Hornsby Shire Council did not identify financial advantages in the same way or to the same extent as that analysis, or indeed deal at all with the impact of such a merger on Ku-ring-gai Council. Secondly, as KPMG was the author of both the Hornsby report and the ministerial analysis, the former could hardly be taken as an independent verification of the latter, particularly when the Delegate simply referred to the Hornsby report’s conclusions without examining their basis. Thirdly, a proper examination of the ministerial analysis by the Delegate would at least have required him to have knowledge of the detail of that analysis, not simply its conclusions.

9. [125]

   In my view, the Delegate’s Report indicated that he did not form his own judgment about the financial advantages or disadvantages of the proposed merger but instead adopted, uncritically, the results of the undisclosed KPMG analysis. Accordingly, he did not “examine” the merger proposal as s 263(1) (when read in conjunction with s 218F) required him to do. More specifically, and to use the language of Ground 7 in the Summons, the Delegate therefore “failed [properly] to take into consideration a relevant matter, namely the financial advantages or disadvantages of the Merger Proposal”. His consideration of that matter was not “proper, genuine and realistic”.

Procedural fairness

1. [126]

   The corollary of my conclusion concerning Ground 7 is that the appellant was denied procedural fairness as the Delegate chose to rely on the results of the KPMG analysis, rather than conducting his own assessment of the advantages or disadvantages of the merger, when the appellant was not in possession of the document in which the analysis was contained. In the circumstances that I have described, not only did the Delegate have a duty to “examine” the KPMG analysis in order to discharge his statutory functions (unless, which was not the case, he chose to make his own independent assessment of the financial aspects of the merger) but also he was required to “hold an inquiry” which canvassed the merits of the KPMG analysis. It was fundamentally unfair for the Ku-ring-gai Council, and other opponents of the merger proposal, to have to participate in that inquiry without possession of the document which, so far as the financial aspects of the merger were concerned, was at its heart.

2. [127]

   The Ku-ring-gai Council thus did not have a proper opportunity to deal with “the critical issue or factor on which the administrative decision [was] likely to turn” (Kioa v West (1985) 159 CLR 550 at 587; [1985] HCA 81 per Mason J) because a document whose examination was fundamental to that decision was not made available to it. To apply the words adopted by Mason P in Minister for Local Government v South Sydney City Council (2002) 55 NSWLR 381; [2002] NSWCA 288 at [256], the appellant was not “afforded a proper opportunity to be heard in respect of the main issues forming the focus of the [Delegate’s] concern”.

Public interest immunity

1. [128]

   A further corollary of my conclusion concerning Ground 7 is that the claim for public interest immunity must be rejected. For the reasons Basten JA gives, the public interest in the KPMG analysis being produced to the appellant and other opponents of the merger was not outweighed by any public interest in preserving secrecy or confidentiality (see ss 130(1) and 131A(1) of the Evidence Act). The duty that the Minister imposed upon the Delegate to examine the Minister’s merger proposal could not (in the absence of the Delegate deciding to make his own assessment of the financial aspects of the merger) be discharged without production of the KPMG analysis, nor could the inquiry that the Delegate was required to hold be properly held without that production. As a result, there was a powerful public interest in the document being produced which was not outweighed by such public interest as there was in preserving its confidentiality.

2. [129]

   SACKVILLE AJA: This is one of a number of cases in which a Council constituted under the Local Government Act 1993 (NSW) (LG Act) has challenged actions taken in relation to proposals made by the Third Respondent (Minister) for the amalgamation of local government areas (LGAs). [86] In the present case, the Minister has made a written proposal, pursuant to s 218E(1) of the LG Act, for the amalgamation of Ku-ring-gai Council (Ku-ring-gai) and part of Hornsby Shire Council (Hornsby). The part of the Hornsby LGA to be included in the amalgamated LGA is that lying to the north of the M2 Motorway. The area south of the M2 Motorway (for convenience referred to as Hornsby South) is to be excised from the northern area and is not to be included in the amalgamated LGA.

3. [130]

   Ku-ring-gai commenced proceedings in the Class 4 jurisdiction of the Land and Environment Court seeking declarations and orders that, if granted, would have set aside a report prepared by a Delegate of the Acting Director-General of the Office of Local Government (Delegate’s Report). The Delegate’s Report, which was transmitted to the New South Wales Local Government Boundaries Commission (Boundaries Commission) on 22 March 2016, recommended that the Merger Proposal “as submitted”, should proceed to implementation. The primary Judge (Moore J) dismissed the proceedings. [87]

4. [131]

   The Minister’s proposal is contained in a document entitled “Merger Proposal: Hornsby Shire Council (part) Ku-ring-gai Council”, which explains and seeks to justify the proposal (Merger Document). As will be seen, however, it is sometimes necessary to distinguish between the Merger Document and the Minister’s proposal in the narrower sense of the specific proposal to amalgamate Ku-ring-gai and part of Hornsby. The Minister’s proposal in the narrower sense is referred to as the Merger Proposal.

5. [132]

   The primary Judge rejected all of the contentions advanced by Ku-ring-gai, except one. His Honour held that the Delegate misapprehended his statutory duty by failing to have regard to the mandatory considerations set out in s 263(3) of the LG Act, [88] in that he failed to consider the relevant effects of the Merger Proposal on the residents of Hornsby South. [89]

6. [133]

   However, his Honour also held that to grant relief to Ku-ring-gai would be of no practical utility because the Governor had already made a proclamation which effectively excised Hornsby South from the Hornsby LGA and incorporated it into the new City of Parramatta LGA. [90] Accordingly, his Honour, in the exercise of his discretion, declined to grant declaratory or other relief to Ku-ring-gai.

7. [134]

   Ku-ring-gai has appealed against the decision of the primary Judge. The only active respondent is the Minister, who has filed a Notice of Contention. [91]

The issues

1. [135]

   Ku-ring-gai’s Amended Notice of Appeal contends that the primary Judge erred in exercising his discretion to refuse relief, given that his Honour held that the Delegate had misconceived his statutory functions (Grounds 1 and 10). In the course of oral argument Mr Williams SC, who appeared with Ms Gordon and Ms Ellicott for the Minister, very sensibly informed the Court that if it upheld the primary Judge’s conclusion that the Delegate had committed a jurisdictional error, the Minister would not submit that relief should be refused on the ground of futility. In short, the Minister did not seek to support the primary Judge’s exercise of discretion in refusing to grant relief, notwithstanding that the Delegate had fallen into jurisdictional error.

2. [136]

   The Minister filed a Notice of Contention which contends (Ground 4) that:

3. [137]

   The Amended Notice of Appeal includes a number of other grounds. In summary, Ku-ring-gai says that the primary Judge erred:

4. [138]

   In addition, Ku-ring-gai made a “formal” submission that the primary Judge should have found that the Boundaries Commission misconstrued its task. The submission was put this way because Mr Kennett accepted that the decision of this Court in Botany Bay II was inconsistent with the submission.

5. [139]

   Ku-ring-gai’s original Notice of Appeal sought, among other things, a declaration that the Delegate’s Report is invalid, an order setting aside the Delegate’s Report and an order remitting the matter to a different delegate of the Chief Executive for determination according to law. The Amended Notice of Appeal omits any reference to an order remitting the matter for determination according to law.

Statutory scheme [93]

1. [140]

   Chapter 9 of the LG Act is headed “How are councils established?”. Part 1 of Chapter 9 deals with “Areas”, defined in the LG Act to mean areas constituted under Part 1 of Chapter 9. [94]

2. [141]

   Division 1 of Part 1 of Chapter 9 empowers the Governor, by proclamation, to constitute any part of New South Wales as an “area” and to determine the boundaries of the area (ss 204(1), (2)). An area may be constituted as a city (s 206). The power to constitute an area under s 204 can be exercised only after a proposal for the exercise of the power has been formulated and dealt with under Division 2 (s 214).

3. [142]

   The present case does not concern the exercise of a power under Division 1 but under Division 2A, which specifies how areas are amalgamated or their boundaries altered. The power to amalgamate is contained in s 218A of the LG Act:

4. [143]

   Section 218B provides that the Governor may, by proclamation, alter the boundaries of one or more areas.

5. [144]

   Section 218C of the LG Act provides that a proclamation for the purposes of Div 2A may include provisions of the same kind as are referred to in s 213. Accordingly, the proclamation may include provisions with respect to the transfer or apportionment of assets, rights and liabilities, the transfer of staff, the holding of elections and related matters.

6. [145]

   Division 2B of Part 1 of the LG Act sets out what must be done before areas can be amalgamated or their boundaries altered. The relevant provisions in Division 2B are as follows:

7. [146]

   Part 3 of Chapter 9 of the LG Act (ss 260-265) constitutes the Boundaries Commission as a body corporate (s 260). The Boundaries Commission consists of four Commissioners appointed by the Governor (s 261(1)). One Commissioner is to be nominated by the Minister, one is to be a Departmental Officer nominated by the Departmental Chief Executive and two are to be approved from a panel of eight councillors nominated by the Executive of the Local Government and Shires Association of New South Wales (ss 261(2), 262(1)).

8. [147]

   Section 263 of the LG Act (which applies to an examination of a proposal conducted by the Chief Executive) provides as follows:

9. [148]

   Section 263(7) of the LG Act is a privative clause the effect of which is that the Supreme Court cannot exercise its powers of judicial review in respect of any decision by the Boundaries Commission unless it is affected by a “jurisdictional error”. [96]

10. [149]

    Section 264(1)(a) of the LG Act provides that a person is not entitled to be legally represented in proceedings before the Boundaries Commission. However, this does not prevent, among other things, a mayor of an area appearing before the Boundaries Commission or a lawyer assisting in the preparation of documentation (ss 264(2)(b),(c)).

11. [150]

    Section 265 empowers the Boundaries Commission to conduct an opinion poll of residents and ratepayers to assist in determining the attitude of residents and ratepayers of an area for the purposes of s 263(3)(d).

12. [151]

    Section 745(1) of the LG Act confers on the Chief Executive of the OLG power to delegate “to any person any of the … Chief Executive’s functions under this Act, other than [the] power of delegation”. If the Minister refers a proposal for the merger of councils or for the alteration of boundaries to the Chief Executive for examination and report, s 745 authorises the Chief Executive to delegate this function to “any person”. Such a person need not be part of the OLG and no qualifications are prescribed in the legislation.

Events leading to the Merger Proposal

1. [152]

   In 2015 the New South Wales Government made a policy decision to explore options for amalgamation of local government councils throughout the State. [97] As part of the process, the Government commissioned advice from KPMG, a firm providing financial consulting services. After considering the advice, the Government decided to develop a number of “amalgamation proposals”. The Government also set in motion the processes required by the LG Act that would allow the proposals, if approved, to be implemented.

2. [153]

   On 18 December 2015, the then Premier and the then Minister issued a joint press release entitled “Stronger Councils for Sydney and Regional NSW”. The press release included the following:

3. [154]

   On 18 December 2015, the New South Wales Government published a document entitled “Local Government Reform: Merger impacts and analysis” (Impacts Report). The Impacts Report recorded that it:

4. [155]

   The Impacts Report stated as follows:

5. [156]

   KPMG also prepared a “Technical Paper” entitled “Outline of Financial Modelling Assumptions for Local Government Merger Proposals” (Modelling Assumptions). The document records that it was prepared for the NSW Department of Premier and Cabinet and is dated 19 January 2016. It appears that the document was publicly released on that date.

6. [157]

   The introduction to Modelling Assumptions is as follows:

7. [158]

   An example of “merger benefit streams” set out in tabular form in Modelling Assumptions relates to “Savings from materials and contracts expenditure”:

The Merger Document

1. [159]

   On 6 January 2016, the Minister wrote to the Acting Chief Executive of the OLG attaching 35 “proposals to amalgamate [LGAs]” initiated by the Minister pursuant to s 218E(1) of the LG Act. The summary list of 35 proposals included the following:

2. [160]

   The Minister’s letter attached a merger proposal document relating to the amalgamation of Hornsby (part) and Ku-ring-gai. That document was subsequently revised on several occasions. The final version (that is, the Merger Document) was published on the NSW Government Boundary Review website on 19 February 2016. The final version was the focus of submissions and, except in relation to the adequacy of notice of the Delegate’s public inquiry, no issue arises by reason of the revisions to the Merger Document.

3. [161]

   The Minister’s Foreword to the Merger Document includes the following:

4. [162]

   The Executive Summary to the Merger Document states as follows (footnotes as in the original):

5. [163]

   The section of the Executive Summary headed “Impacts, Benefits and Opportunities” summarises a longer section in the body of the Merger Document headed “Benefits, Opportunities and Impacts”. The larger section makes it clear that the projected savings are based on an analysis carried out by KPMG in 2015.

6. [164]

   Mr Williams conceded on behalf of the Minister that the projected savings were based on the KPMG Documents and that these had not been disclosed to Ku-ring-gai. Mr Williams explained that although footnote 15 (footnote 3 in the original) appears to refer to the Impacts Report (a published document), [101] it in fact refers to one of the two KPMG Documents. The same KPMG Document is referred to in footnotes in the body of the Merger Document, indicating that the slightly more detailed analysis there is also based on one of the KPMG Documents.

7. [165]

   The Conclusion to the Merger Document largely restates the “benefits” of the proposed amalgamation already set out in the Minister’s Foreword.

The Delegate’s examination

1. [166]

   The Minister’s letter of 6 January 2016 referred the 35 amalgamation proposals to the Acting Chief Executive for examination and report in accordance with s 218F of the LG Act.

2. [167]

   On the same day the Acting Chief Executive of the OLG, pursuant to s 745(1) of the LG Act, delegated to named persons the following functions in respect of each of the 35 proposals:

3. [168]

   The Instrument of Delegation delegated the specified functions in respect of the Merger Proposal (described as “Hornsby Shire (part) and Ku-ring-gai”) to the Delegate (Mr West). The functions in respect of the proposal relating to the amalgamation of Hornsby South with an enlarged Parramatta Council (the Parramatta Proposal) were delegated to a different delegate, Mr Colley. No issue has arisen in the present case as to the efficacy of the Instrument of Delegation to the Delegate.

4. [169]

   On 14 January 2016, the Department of Premier and Cabinet held a “Delegate Briefing” for the delegates who had been engaged to examine and report on the 35 proposals made by the Minister. The briefing, which was not open to the public, included a presentation by KPMG entitled “Overview of assumptions underpinning financial modelling”. A hard copy of the power point presentation by the KPMG representatives was in evidence.

5. [170]

   The Delegate held a public inquiry on 3 February 2016 at Pymble Golf Club. The inquiry comprised two public sessions, the first at 1.00 pm and the second at 7.00 pm. Transcripts of these sessions were in evidence at the trial.

6. [171]

   On 25 February 2016, Hornsby provided the Delegate with its written submission in respect of the Merger Proposal. Hornsby was not generally opposed to the Merger Proposal, but made some comments concerning Hornsby South:

7. [172]

   The submission pointed out that Hornsby had managed the Hornsby South area for over 100 years and argued that the area:

8. [173]

   The submission also argued that the division of the Epping and North Epping suburbs (at the time included within Hornsby South) into two councils was not “consistent with the intent of maintaining areas with similar historical and traditional values”. If, however, the Delegate considered that North Epping should be included in the:

9. [174]

   Ku-ring-gai lodged its submission with the Delegate on 28 February 2016. The detailed 86 page submission (including appendices) argues “on behalf of the community of the Ku-ring-gai [LGA] … its desire to remain a standalone entity”.

10. [175]

    The submission included a section addressing the financial advantages and disadvantages of the Merger Proposal (s 263(3)(a) of the LG Act), contending that there was no case for the proposed merger on financial grounds. This section argued that the Merger Document and associated material did not support the claimed advantages. The submission continues as follows:

11. [176]

    On 8 January 2016, prior to lodging its submission with the Delegate, Ku-ring-gai applied to the Department of Premier and Cabinet pursuant to the Government Information (Public Access) Act 2009 (NSW) requesting access to a number of documents including the KPMG Documents. The Director of the Department determined the request on 25 February 2016. The Director granted access to some of the requested material but refused access to the KPMG Documents on the ground of “an overriding public interest against disclosure”.

12. [177]

    After lodging its submission, Ku-ring-gai wrote to the Delegate on 10 March 2016 enclosing a copy of the Director’s determination. The letter asserted that the Government’s refusal to release the KPMG Documents made it impossible for the Council to make a fully informed submission about the Merger Proposal. The letter also maintained that the refusal to grant access to the KPMG Documents breached the rules of procedural fairness and claimed that if the Delegate proceeded to finalise his report before Ku-ring-gai had access to the KPMG Documents, the report would be unlawful.

Delegate’s Report

1. [178]

   The Delegate’s Report was forwarded to the Minister and to the Boundaries Commission on 22 March 2016. The Executive Summary (Chapter 1) records that in January 2016 the Minister:

2. [179]

   The Executive Summary states that the Delegate has undertaken an examination of the Merger Proposal having regard to the factors listed in s 263(3) of the LG Act. It summarises the Delegate’s conclusion as follows:

3. [180]

   The Executive Summary records that:

4. [181]

   The Introduction to the Delegate’s Report (Chapter 1) records that the Report addresses each of the relevant factors in s 263(3) of the LG Act under a separate heading. Under the heading “BACKGROUND”, Chapter 1 notes that:

5. [182]

   Chapter 3 of the Delegate’s Report is entitled “THE NATURE OF THE PROPOSAL”. It states that:

6. [183]

   Chapter 5 of the Delegate’s Report contains the Delegate’s examination of the Proposal and deals separately with each factor listed in s 263(3) of the LG Act.

7. [184]

   In this section, the Delegate refers to KPMG’s Modelling Assumptions paper and notes that it is publicly available. The Delegate records that the Merger Proposal relies on an analysis by KPMG to support the claimed financial benefits. These are summarised in terms corresponding to the claims appearing in the Merger Document.

8. [185]

   The Delegate outlines the Hornsby submission in some detail. He notes that in 2013 Hornsby engaged (the rather ubiquitous) KPMG to examine, among other things, an amalgamation of Hornsby and Ku-ring-gai. KPMG had estimated that the financial benefits of a merger would be approximately $50 million over a ten year period. Hornsby’s submission acknowledged that the Merger Document was framed at a “broad level”, but contended that the excision of Hornsby South would result in a net loss to the merged council of at least $5 million to $6.4 million per annum.

9. [186]

   The Ku-ring-gai submission had argued, among many other things, that the financial benefits of the Merger Proposal had been over-estimated and that the Minister’s analysis had failed to take into account the true impact of the excision of Hornsby South on the Merger Proposal. Many submissions had also been received from members of the community:

10. [187]

    The Conclusion to this section of the Delegate’s Report includes the following:

11. [188]

    The Conclusion also includes a summary of the analysis conducted by KPMG on behalf of Hornsby. The Delegate notes that KPMG considered a series of options, including a proposal for the merger of Hornsby and Ku-ring-gai, but adjusting the boundary of Hornsby by deleting Hornsby South. KPMG projected an improvement for the “aggregate entity” of $50.4 million over a ten year period. The Delegate:

12. [189]

    The Delegate summarises once more the advantages of the Merger Proposal, accepting the projected savings claimed in the Merger Document.

13. [190]

    In summarising the submissions addressing this statutory factor, the Delegate notes Hornsby’s submission that it has managed Hornsby South:

14. [191]

    The Delegate also records that:

15. [192]

    The Delegate’s conclusion on this issue is as follows:

16. [193]

    In summarising Hornsby’s submission, the Delegate records Hornsby’s view that allocating the suburbs of Epping and North Epping to different councils (as the Merger Proposal would) “is not consistent with the intent of maintaining areas with similar historical and traditional values in the one council”.

17. [194]

    The Delegate’s conclusion on this issue is as follows:

18. [195]

    The Delegate acknowledges that at the public inquiry a majority of people spoke against the Merger Proposal and that this was reflected in submissions. Approximately a quarter of the submissions were against excising Hornsby South. (It is not clear whether this is a reference to a quarter of all submissions or to a quarter of the submissions opposed to the Merger Proposal.) The Delegate states that as:

19. [196]

    The Delegate concludes this section as follows:

20. [197]

    Under this heading, the Delegate refers to Hornsby’s submission that the excision of Hornsby South would have a major impact on the forecast dwelling supply for Hornsby Shire because Epping was the focus of significant development activity. Hornsby had also stated that if the excision proposal proceeded, the State Government would need to provide guidance to Hornsby and Parramatta Councils on the processes and procedures for the transfer of functions.

21. [198]

    The Delegate concluded this section as follows:

22. [199]

    Chapter 6 of the Delegate’s Report contains the recommendation that the Merger Proposal as submitted should proceed to implementation. The Chapter provides a further summary of what are said to be “the significant benefits of the [Merger] [P]roposal”:

Subsequent developments

1. [200]

   On 22 April 2016, the Boundaries Commission provided the Minister with its comments on the Delegate’s Report into the Merger Proposal pursuant to s 218F(6) of the LG Act. The Boundaries Commission concluded that:

2. [201]

   On 12 May 2016, the Governor made the Local Government (City of Parramatta and Cumberland) Proclamation 2016 (Parramatta Proclamation). The Parramatta Proclamation, among other things, altered the boundaries of the Hornsby LGA to excise Hornsby South, and amalgamated the area of Hornsby South with other areas to form the City of Parramatta Council.

Judicial review proceedings

1. [202]

   Ku-ring-gai commenced proceedings in the Supreme Court of New South Wales on 22 March 2016. As subsequently amended, the summons sought judicial review of the Delegate’s decision. On 15 April 2016, Fullerton J made an order pursuant to s 149B(1) of the Civil Procedure Act 2005 (NSW) transferring the proceedings to the Land and Environment Court. [103]

2. [203]

   Ku-ring-gai issued a notice to produce in the proceedings on 14 April 2016. The notice to produce was directed to the Department of Premier and Cabinet and to the Minister and sought production of a number of documents provided to the Government as a result of KPMG’s work. These included the KPMG Documents.

3. [204]

   The Second Defendant in the Land and Environment Court proceedings (at that stage identified as the NSW Department of Premier and Cabinet) filed a notice of motion on 29 April 2016. The motion as subsequently amended sought orders pursuant to ss 130 and 131A of the Evidence Act 2005 (NSW) and s 23 of the Land and Environment Court Act 1979 (NSW) excusing the Department and the Minister from production of the KPMG Documents on the ground that production would be injurious to the public interest.

4. [205]

   In a judgment delivered on 30 May 2016, the primary Judge made the orders sought in the Notice of Motion. [104] His Honour, among other conclusions:

5. [206]

   Ku-ring-gai’s application for judicial review of the Delegate’s Report was heard in the Land and Environment Court on 2 and 7 June 2016. The primary Judge delivered judgment on 20 September 2016 dismissing the proceedings.

Ground 4 of the Notice of Contention [105]

1. [207]

   The primary Judge construed s 263(3) of the LG Act as requiring the Delegate: [106]

2. [208]

   His Honour found that the Delegate had considered the excision of Hornsby South “in a limited fashion” at various points in the examination. [107] After quoting extracts from the Delegate’s Report, his Honour noted that in Chapter 6 (containing the final recommendation), the Delegate made no comments concerning the area of Hornsby South except to recommend that consideration be given of a further boundary adjustment to transfer an additional area, in the vicinity of the excised area, to the new Parramatta City Council. [108]

3. [209]

   The primary Judge reached the following conclusion: [109]

4. [210]

   The Minister’s written submissions contended that the Delegate’s Report addressed concerns about the excision of Hornsby South from the rest of Hornsby by reference to each of the mandatory factors set out in s 263(3) of the LG Act. In particular, the Delegate had considered the financial consequences of the excision of Hornsby South. While the Delegate focused primarily on the consequences of the excision for the proposed merged council, this reflected the submissions (or lack thereof) to the Delegate on the issue. The Delegate had adverted to each of the relevant factors and thus had given consideration to them. In the absence of more detailed submissions to the Delegate, it was not necessary for the Delegate to go further.

5. [211]

   The Minister’s written submissions acknowledged that the Delegate had not dealt with certain issues because the Delegate expected them to be addressed elsewhere. Nonetheless, when these statements were read in context, it was plain that the Delegate had regard to the excision of Hornsby South, including the attitudes of the residents of that area.

6. [212]

   In his oral submissions, Mr Williams accepted that it was implicit in the Merger Proposal referred to the Delegate for examination and report that it required the excision of Hornsby South from Hornsby to take place. Mr Williams also accepted that the Merger Proposal referred by the Minister for examination and report included the amalgamation of part of Hornsby and the whole of Ku-ring-gai, as well as the alteration to the pre-existing boundaries of Hornsby. The Delegate was therefore required to examine and report on a proposed exercise of the powers conferred by s 218A (amalgamation of areas) and s 218B (alteration of boundaries of areas) of the LG Act.

7. [213]

   Mr Williams did not dispute that the Delegate was required to report on the excision of Hornsby South from Hornsby. Nor did he dispute that the reference in s 263(3)(a) of the LG Act to “the residents and ratepayers of the areas concerned” includes the residents and ratepayers of Hornsby South insofar as they are affected by the Merger Proposal. He submitted, however, that the error of the primary Judge was in finding that the Delegate had failed to have regard to each of the factors in s 263(3), insofar as the Merger Proposal affected Hornsby South or its residents and ratepayers. The Delegate’s Report, so he argued, addressed the consequences of the excision of Hornsby South for the area to be excised and for its residents and ratepayers.

8. [214]

   Mr Williams seemed to accept that the Delegate might have been required to give more detailed consideration to some factors identified in s 263(3) of the LG Act had they been the subject of submissions. But in the absence of evidence that submissions of this kind had been made to the Delegate, he was not obliged to go any further. For example, it had not been put to the Delegate that the residents and ratepayers of Hornsby South would be financially disadvantaged by the Merger Proposal to excise that area from the remainder of Hornsby. The Delegate therefore did not have to address that issue.

9. [215]

   Ku-ring-gai contended that the Delegate had dismissed from consideration the impact of the Merger Proposal on the residents and ratepayers of Hornsby South. The Delegate had made this clear by expressly stating that the Hornsby South area was the subject of another merger proposal and that the concerns of its residents and ratepayers would be primarily addressed in the separate report of another delegate. Thus the Delegate had not “engaged in the intellectual process of considering ‘the residents and ratepayers’ in [Hornsby South] under each factor in s 263(3) of the [LG] Act”. Accordingly, the primary Judge correctly concluded that the Delegate had committed a jurisdictional error justifying the intervention of the Court.

10. [216]

    Division 2A of Part 1 of Chapter 9 of the LG Act confers two distinct powers on the Governor. The first is the power to make a proclamation amalgamating two or more areas into one or more new areas (s 218A(1)). The second is the power to make a proclamation altering the boundaries of one or more areas (s 218B). In either case, the statutory power can be exercised only after a proposal for its exercise has been dealt with under Div 2B (s 218D). A proclamation may include such provisions that are necessary or convenient for giving effect to the proclamation (s 218C, read with s 213).

11. [217]

    Section 218F(1) of the LG Act (which is in Div 2B) requires the Minister, on making a proposal, to refer it for examination and report to the Boundaries Commission or the Chief Executive. In the present case, the Minister referred the Merger Proposal to the Chief Executive who delegated the functions of examination and report to the Delegate. The decision by the Chief Executive to delegate these functions may have reflected the fact that the Merger Proposal emerged after a long process of consideration and analysis within the Government in which the Chief Executive presumably played some part. In any event, the delegation has not been challenged.

12. [218]

    It is important in the present case to identify with precision the “proposal” made by the Minister and referred by him to the Chief Executive for examination and report. For this purpose it is necessary to bear in mind that the Merger Proposal does not involve the amalgamation of two discrete LGAs, but the amalgamation of part of the Hornsby LGA and the whole of the Ku-ring-gai LGA.

13. [219]

    This Court, in Woollahra (CA), [110] was concerned with a proposal by the Minister to amalgamate three discrete LGAs (Woollahra, Randwick and Waverley Councils). The Court rejected a submission by Woollahra Council that a “proposal” for the purposes of ss 218E and 218F(1) of the LG Act comprises the contents of the Minister’s proposal document or at least the substance of the matters set out in the document. The Court held that the “proposal” made by the Minister and referred to the Chief Executive for examination and report in that case was simply the proposal to amalgamate the three LGAs. It did not include the various claims advanced by the Minister or the assumptions underlying KPMG’s analysis, as recorded in the proposal document. [111]

14. [220]

    The Merger Proposal in the present case is different from the merger proposal considered in Woollahra (CA) because the latter did not involve the excision of any part of the three relevant LGAs. Both Mr Williams and Mr Kennett accepted that the excision of Hornsby South from Hornsby was an integral element of the Merger Proposal. They also accepted that if the Merger Proposal was to be implemented, the Governor would have to exercise the powers conferred both by s 218A(1) (amalgamation of two or more areas) and s 218B (alteration of the boundaries of Hornsby LGA). On this basis, the Merger Proposal made by the Minister and referred to the Chief Executive for examination and report comprises the following elements:

15. [221]

    Although the Merger Proposal includes the alteration to the boundaries of Hornsby to excise Hornsby South, it does not address what is to happen to Hornsby South after its excision. The evidence establishes that the Minister referred the Parramatta Proposal (to merge Hornsby South with an enlarged Parramatta Council) to a different delegate. Why the same delegate was not asked to examine and report on both proposals affecting Hornsby South was not explained. In any event, the proposal to merge Hornsby South into an enlarged Parramatta was not before the Delegate and was not considered by him.

16. [222]

    The Delegate was required by s 263(1) of the LG Act “to examine and report on any matter with respect to the boundaries of areas … which may be referred … by the Minister”. In Botany Bay I, this Court held that the expression “any matter” in s 263(1) of the LG Act is controlled by the phrase “which may be referred to it by the Minister”. Accordingly:

17. [223]

    Section 263(3) of the LG Act requires the Chief Executive, “[w]hen considering any matter referred to it that relates to the boundaries of areas” to have regard to a number of specified factors. The Court in Botany Bay I held, consistently with its construction of s 263(1), that the expression “any matter referred to it that relates to the boundaries of areas” means (relevantly) the proposal referred by the Minister to the Chief Executive. [113]

18. [224]

    It follows that s 263(3) of the LG Act requires the Chief Executive (or a delegate) to examine and report on the referred proposal, having regard to each of the factors specified in paras (a)-(f) of s 263(3). As has been seen, the Merger Proposal in the present case incorporated the two elements – the excision of Hornsby South and the proposed amalgamation of the rest of Hornsby with Ku-ring-gai. The Delegate was therefore required to examine and report on each of the elements of the Merger Proposal and to do so giving attention to each of the factors in s 263(3). [114] If the Delegate failed to perform the task mandated by the legislation, the Delegate’s Report would not satisfy the statutory requirements.

19. [225]

    A number of the factors listed in s 263(3) of the LG Act refer to the “areas concerned” or the “existing areas”. Despite accepting that the Merger Proposal contains the two elements I have identified, Mr Williams submitted that it was sufficient for the Delegate to have regard to each of those factors by assessing the impact of the Merger Proposal on the whole of the Hornsby LGA, rather than by assessing the impact on the area to be excised. This may be correct where the proposal is to merge the whole of two or more pre-existing LGAs into one (as in Woollahra (CA)). But the position is different in the present case where the Merger Proposal requires the excision of Hornsby South from Hornsby. In these circumstances, Hornsby South is an “area concerned” and an “existing area” for the purposes of s 263(3) of the LG Act.

20. [226]

    The consequences can be illustrated by reference to s 263(3)(a) of the LG Act, which requires the Delegate to have regard to:

21. [227]

    A similar analysis applies to s 263(3)(b) of the LG Act, which requires regard to be had to the “community of interest and geographic cohesion in the existing areas and in any proposed new area”. This provision requires consideration of the Merger Proposal, insofar as it alters the boundaries of the Hornsby LGA, by reference to its effect on both the existing Hornsby LGA and on Hornsby South. The latter is relevantly a “proposed area” because it is to be excised from Hornsby, although its fate as a separate area is uncertain. A like analysis applies to the language used in paras (c), (d), (e), (e1) and (e2) of s 263(3).

22. [228]

    Mr Williams correctly counselled the Court to avoid construing the Delegate’s Report “minutely and finely with an eye keenly attuned [sic] to the perception of error”. [115] Nonetheless, when the Delegate’s Report is read as a whole and in a “practical and realistic manner”, [116] it is apparent that the Delegate did not regard it as part of his function to consider the Merger Proposal insofar as it proposed to alter the boundaries of Hornsby by excising Hornsby South (as distinct from proposing the merger of part of Hornsby with Ku-ring-gai). The Delegate therefore did not consider the proposal to excise Hornsby South by reference to the factors identified in s 263(3) of the LG Act.

23. [229]

    The Delegate expressly acknowledged that he was required to consider the Merger Proposal by reference to the factors stated in s 263(3) of the LG Act, insofar as it proposes the amalgamation of part of Hornsby and the whole of Ku-ring-gai. But nowhere did the Delegate acknowledge that he was also required to examine and report on the Merger Proposal insofar as it involved the alteration of the boundaries of Hornsby by excising Hornsby South.

24. [230]

    The description of the Merger Proposal in the Executive Summary of the Delegate’s Report referred only to the proposed merger, not to the excision of Hornsby South. The same is true of the description of the Merger Proposal in Chapter 3 of the Delegate’s Report. [117]

25. [231]

    Perhaps of greater significance is the Delegate’s statement that he did not propose to examine issues arising from the proposed excision of Hornsby South from Hornsby. In Section 5.2 of the Delegate’s Report (“Community of Interest and Geographic Cohesion”), for example, the Delegate noted that a small number of submissions addressed the boundary change “effectively moving Epping [including Hornsby South] to Parramatta” and that the opposition primarily came from residents in the “affected area”. However, the Delegate pointed out that Hornsby South was the subject of “another merger proposal” and that the issues would “primarily be considered” in the report relating to that proposal. Despite the use of the word “primarily”, the Delegate did not otherwise respond to the residents’ concerns, except by considering whether the excision of Hornsby South would adversely affect the residents and ratepayers of the merged areas of Hornsby and Ku-ring-gai. Indeed, the Delegate’s reference to Hornsby South being the subject of another merger proposal suggests that he regarded the excision as a fait accompli and not a matter within his remit.

26. [232]

    In Section 5.4 (“Attitudes of Residents and Ratepayers”), the Delegate recorded that a quarter of the submissions at the public inquiry opposed to the merger were against excising Hornsby South from Hornsby. [118] The Delegate stated that it was not necessary to summarise these submissions because Hornsby South was subject to a separate merger proposal. Nor did the Delegate consider it necessary to examine the concerns expressed in these submissions. This approach clearly reflects the Delegate’s view that his role did not include having regard to the attitudes of residents and ratepayers of Hornsby South, as distinct from the residents and ratepayers of the whole of the existing Hornsby LGA.

27. [233]

    The Delegate’s understanding of his task can also be seen in Section 5.1 (“Financial Advantages and Disadvantages”). Mr Williams correctly pointed out that the Delegate closely examined the financial impact of the loss of Hornsby South on the proposed merged LGA. The Delegate’s analysis was a response to community submissions which expressed concerns as to whether the merged council would be financially viable if an affluent area with high rateable land values were to be excised. But the Delegate did not address the financial advantages or disadvantages to the residents and ratepayers of Hornsby South should that area be excised from Hornsby. It may well be the case, as Mr Williams suggested, that the residents and ratepayers of Hornsby South would not be disadvantaged if the area were excised, regardless of whether or not Hornsby South ultimately formed part of an enlarged Parramatta Council. But that possibility does not demonstrate that the Delegate undertook the task mandated by s 263(3)(a) of the LG Act.

28. [234]

    Much the same can be said about Section 5.3 (“Historical and Traditional Values”) of the Delegate’s Report. In this section, the Delegate recorded Hornsby’s submission that the excision of Hornsby South and the division of the Epping and North Epping suburbs was “not consistent with the intent of maintaining areas with similar historical and traditional values in the one council”. The Delegate accepted that the “fragmentation of the Hornsby Council area would impact on the historical and traditional values”, but considered that the issues raised in submissions did not constitute an “impediment to the amalgamation proposal”. The Delegate did not address whether the “fragmentation” militated against the proposal to excise Hornsby South from Hornsby. Indeed, it is difficult to see how the Delegate could have done so without considering what would happen to Hornsby South if the excision proceeded as proposed.

29. [235]

    Section 5.11 of the Delegate’s Report (“Other Matters”) specifically referred to the proposal to excise Hornsby South. But the Delegate’s purpose in doing so was to consider whether the excision would necessitate revised dwelling targets for the part of Hornsby merged with Ku-ring-gai. Section 5.11 also stated that if the excision proceeded, some guidance would have to be provided to the two new Councils for the processes and procedures for the transfer of functions. That statement was also concerned with the impact of the excision on the merged Council, not its impact on the residents and ratepayers of Hornsby South.

30. [236]

    It is no answer to the failure of the Delegate to examine and report on the Merger Proposal to excise Hornsby South from Hornsby by reference to the factors in s 263(3) of the LG Act, to contend that none of the submissions to the Delegate addressed the issue. The Delegate was under a statutory duty to consider the Merger Proposal insofar as it concerned the excision of Hornsby South by reference to the mandatory factors in s 263(3) of the LG Act. The extent to which the Delegate was obliged to consider particular issues connected with the proposed excision might well depend on the content of any submissions made to him. But even the absence of any submissions could not absolve the Delegate from discharging his statutory obligation to have regard to the factors identified in s 263(3).

31. [237]

    In any event, I do not accept the Minister’s contention that submissions to the Delegate did not raise issues relating to the proposed excision of Hornsby South. The Delegate’s Report stated in Section 5.1 that many submissions were received indicating very strong feelings against the excision of Hornsby South from Hornsby. The Delegate recorded in Section 5.2 Hornsby’s belief that Hornsby South should continue to be managed by a merged council rather than an expanded Parramatta Council. He also recorded that a small number of submissions addressed the boundary changes effectively moving Epping to Parramatta. He noted the concerns but said that they would “primarily” be considered elsewhere.

32. [238]

    In Section 5.3 the Delegate referred to Hornsby’s submission that Epping and North Epping should not be allocated to two different councils and to Hornsby’s advocacy on behalf of the residents of Hornsby South. In Section 5.4 the Delegate referred to submissions at the public inquiry objecting to the excision of Hornsby South but did not summarise or address the submissions because they were “subject to another merger proposal”. Further reference was made in Section 5.11 to the impact of the excision of Hornsby and to the need for transitional arrangements.

33. [239]

    For these reasons, I consider that the Delegate misapprehended the function he was to perform under ss 263(1) and (3) of the LG Act. Specifically, the Delegate did not consider the Merger Proposal, insofar as it relates to the alteration of Hornsby’s boundaries by the excision of Hornsby South, having regard to the mandatory factors specified in s 263(3) of the LG Act. Mr Williams did not dispute that if the Court reached this conclusion, the Delegate’s Report was affected by a jurisdictional error.

34. [240]

    As has been noted, Mr Williams did not seek to support the primary Judge’s finding that there would be no utility in granting relief to Ku-ring-gai. While this stance was not a formal concession, in my view Mr Williams was correct not to press the argument.

35. [241]

    Since the Delegate’s Report did not comply with the mandatory statutory requirements, the precondition for the Boundaries Commission to “review the report and send its comments to the Minister” (s 218F(6)) was not satisfied and the staged statutory process miscarried. [119] In these circumstances, it cannot be assumed that the Minister would elect to refer the unchanged Merger Proposal to the Chief Executive for further examination and report. The Minister might, for example, abandon the Merger Proposal or formulate a fresh proposal that addresses concerns expressed in submissions about the position of Hornsby South. If the Minister chooses to refer the same Merger Proposal to the Chief Executive for examination and report, the task would have to be undertaken afresh in accordance with s 263(3) of the LG Act, taking account of information then available. [120] It cannot be assumed that the process would necessarily produce the same recommendation as is contained in the Delegate’s Report.

36. [242]

    No issue has been raised about Ku-ring-gai’s standing to claim relief by reason of the Delegate’s failure to consider the Merger Proposal insofar as it excised Hornsby South from the remainder of Hornsby. Accordingly, Ku-ring-gai is entitled to the relief it seeks.

Procedural fairness and related issues

1. [243]

   In view of the conclusions I have reached, it is not necessary to consider Ku-ring-gai’s other grounds of appeal. However Ku-ring-gai’s contention that it was denied procedural fairness was fully argued. It is therefore appropriate to consider that contention and some closely related submissions advanced by Ku-ring-gai.

2. [244]

   Ku-ring-gai’s Amended Notice of Appeal contends that the primary Judge should have found that it was denied procedural fairness by reason of:

3. [245]

   The Amended Notice of Appeal also contains a number of grounds alleging that the primary Judge erred in law by failing to address complaints about the Delegate’s Report made by Ku-ring-gai in its Second Further Amended Summons (Summons). These complaints rely on the same or similar facts as Ku-ring-gai’s procedural fairness contentions, but characterise the legal consequences rather differently.

4. [246]

   As there is considerable overlap between the various complaints, it is sufficient for present purposes to refer to Ground 7 of the Summons (including relevant particulars):

5. [247]

   The primary Judge rejected Ku-ring-gai’s procedural fairness argument based on its inability to gain access to the KPMG Documents. In doing so, his Honour simply adopted his own reasoning in Hunter’s Hill Council v Minister for Local Government. [121] In that case, his Honour followed the decision of Preston CJ in Woollahra Municipal Council v Minister for Local Government (Woollahra (LEC)). [122]

6. [248]

   In Woollahra (LEC), Preston CJ expressly accepted submissions advanced on behalf of the Minister, which his Honour summarised as follows: [123]

7. [249]

   Preston CJ expressed his conclusions on the question of procedural fairness in Woollahra (LEC) as follows: [124]

8. [250]

   The primary Judge also rejected Ku-ring-gai’s argument based on the information provided at the Delegate Briefing in closed session. [125] His Honour also followed Preston CJ’s reasoning in Woollahra (LEC) on that issue. In substance, Preston CJ held that a delegate was obliged neither to conduct all investigations in public, nor to disclose publicly all information obtained in the course of his or her examination of a proposal. [126]

9. [251]

   The primary Judge appears not to have given separate consideration to other arguments advanced by Ku-ring-gai at the trial, including those in support of Ground 7 of the Summons. It may be that his Honour took the view that the arguments added nothing to the procedural fairness claim.

10. [252]

    Mr Kennett submitted that the question of procedural fairness does not turn on whether the Delegate was at fault in some way. The procedure adopted by the Delegate was “objectively unfair” not by reason of non-disclosure per se, but because he relied on the assessment of financial benefits in the KPMG Documents to reach his own conclusions. These conclusions were adverse to Ku-ring-gai in that they claimed that the Proposal would have substantial financial advantages. Ku-ring-gai could not challenge KPMG’s assessment without knowing the assumptions and methodology on which it was based.

11. [253]

    Mr Kennett submitted that none of the publicly available documents analysed financial data specifically relevant to the Merger Proposal. In the absence of the KPMG Documents, Ku-ring-gai had no ability to make any meaningful submission as to why the Delegate should not adopt the savings claimed in the Merger Document. This was a denial of procedural fairness.

12. [254]

    In the alternative, Mr Kennett submitted that the Delegate’s findings that the Merger Proposal had a number of specific financial advantages were drawn directly from the Merger Document, which in turn relied on the KPMG Documents. The Delegate had declined to engage with criticisms of the assertions in the Proposal. Consequently, the Delegate failed to perform his statutory task of “examining” the Proposal. Another way of characterising the error was to say that the Delegate had failed to give any proper, genuine or realistic consideration to the financial advantages or disadvantages of the Proposal.

13. [255]

    It is common ground that the Delegate was obliged to afford procedural fairness to Ku-ring-gai, notwithstanding that he conducted only the first stage of a three stage statutory process. As Spigelman CJ observed in South Sydney, [127] a council has a “distinct interest in matters associated with its boundaries” (and indeed in its survival) and a report at the first stage has an impact on the entire process. In South Sydney, the Minister referred the proposal to the Boundaries Commission for examination and report and not to the Chief Executive, but Mr Williams did not suggest that this is a material difference for present purposes. [128]

14. [256]

    The content of the obligation to afford procedural fairness depends on the circumstances of the case, the nature of the inquiry and the subject-matter being addressed. [129] It also depends on the terms of the statute under which the decision-maker operates. [130] The duty to afford procedural fairness may be more extensive if the exercise of a statutory power “singles out individuals by affecting their interests in a manner substantially different from the manner in which the interests of the public at large are affected”. [131]

15. [257]

    As a broad principle, a decision-maker ordinarily must give a person individually affected by a decision an opportunity to deal with adverse information that is “credible, relevant and significant to the decision to be made”. [132] Not all potentially unfavourable material before a decision-maker answers this description. [133] Moreover, the nature of the decision-maker’s task may impose limits on the extent of any obligation to afford an opportunity to address adverse information.

16. [258]

    In South Sydney, for example, the Court rejected a submission that the Boundaries Commission was obliged to give the affected council an opportunity to see and comment on all “adverse material” before the report was finalised. Mason P observed that an obligation of this kind would “[convert] the examination and report stage of the process into a full-blown adversarial trial”. [134] His Honour also said that to posit a right for all “affected” persons to see all “adverse” submissions would be unworkable. [135]

17. [259]

    Mason P quoted a passage from an article by MC Harris, which was also quoted with approval by Beazley P in Woollahra (CA). [136] The passage suggests that the “true rule”:

18. [260]

    In South Sydney, [137] Mason P was “inclined to the view that the [Boundaries] Commission was bound to give directly affected councils a reasonable opportunity to address [the] statutory issues” identified in s 263(3) of the LG Act. In Woollahra (CA), Beazley P said that in her view the obligation on the delegate in that case was “no greater” than that identified in South Sydney. [138]

19. [261]

    The Delegate in the present case was required by s 263(3)(a) of the LG Act to consider the Merger Proposal having regard to the financial advantages or disadvantages to the residents and ratepayers of the areas concerned (relevantly Hornsby and Ku-ring-gai). To assess Ku-ring-gai’s procedural fairness argument, it is necessary to explain the role played by the KPMG Documents in the Delegate’s consideration of the financial factors identified in s 263(3)(a).

20. [262]

    The Merger Document asserted that the merged council would have the potential to generate net financial savings of about $70 million over 20 years and would be likely to produce a variety of other efficiencies. The assertions were set out in some detail in the Minister’s Foreword, the Executive Summary and in the body of the Merger Document. [139] The Merger Proposal itself cites the KPMG Documents as the source of the financial projections.

21. [263]

    Ku-ring-gai lodged its submission with the Delegate on 28 February 2016. It had been advised three days earlier by the Director of the Department of Premier and Cabinet that its request for access to the KPMG Documents had been refused on the ground of public interest immunity. [140] Ku-ring-gai’s submission to the Delegate forcefully contended that unless it had access to the “supporting information” compiled by KPMG, it was impossible for it to check the accuracy of the data or the reasonableness of the assumptions underpinning conclusions reached by KPMG and the Minister. [141]

22. [264]

    Ku-ring-gai’s submission was followed by its letter of 10 March 2016 to the Delegate. In this letter, Ku-ring-gai claimed that it was impossible to make a fully informed submission about the Merger Proposal unless it (and presumably the Delegate) had access to the KPMG Documents. As noted earlier, the letter also warned the Delegate that if he proceeded further without the KPMG Documents he would be denying procedural fairness to Ku-ring-gai.

23. [265]

    As Beazley P pointed out in Woollahra (CA), neither the Chief Executive nor his or her delegate has any investigative function or powers that authorise compulsory interrogation or inquiry. [142] However, the LG Act does not prevent a delegate from seeking further information from any source that the delegate considers appropriate. [143]

24. [266]

    Despite receiving Ku-ring-gai’s letter, there is no evidence that the Delegate made any request to the Chief Executive or to the Department of Premier and Cabinet to produce the KPMG Documents over which the claim of public interest immunity had been made. It is common ground that the Delegate, at the time he prepared the Delegate’s Report, did not have access to the KPMG Documents or to the analysis recorded in those Documents. He therefore could not have taken into account any material in the KPMG Documents adverse to Ku-ring-gai’s interests other than the financial projections recorded in the Merger Document. Of course, the Merger Document and other public documents were available to Ku-ring-gai.

25. [267]

    The Delegate’s Report (Section 5.1) in substance restated the potential financial benefits of the Merger Proposal claimed in the Merger Document. The Delegate correctly attributed the source of these projections to the “KPMG analysis”, a reference to the KPMG Documents.

26. [268]

    The Delegate summarised the grounds on which Ku-ring-gai disputed the claims made by the Minister in the Merger Proposal, but made no mention at that point of Ku-ring-gai’s complaint about being denied access to the KPMG Documents. However, the Delegate referred in some detail to the analysis produced by KPMG for Hornsby in May 2014, which considered a number of options including a merger of Hornsby (excluding Hornsby South) and Ku-ring-gai. The Delegate expressed the view that the analysis prepared for Hornsby provided “significant comfort that the projected performance improvements are credible and achievable”.

27. [269]

    In the Conclusion to Section 5.1, the Delegate adverted to “the concerns that particularly relate to the KPMG analysis and modelling”. The Delegate did not address those concerns directly, other than to record an understanding that “analysis and modelling is high level, and the discount rate applied is conservative”. The Delegate added that both KPMG and the State Government believed that the “benefits are conservative estimates”.

28. [270]

    Ku-ring-gai and the Delegate were clearly at odds as to what was required of the Delegate in performing the obligation imposed on him by s 263(3)(a) of the LG Act. Ku-ring-gai’s position was that the Delegate was obliged to examine the KPMG Documents to ascertain whether they supported KPMG’s assessment of projected savings, an assessment that the Minister adopted in the Merger Document. Ku-ring-gai wished to have the opportunity to scrutinise the detailed analysis underpinning KPMG’s published projections in order to make its own assessment of the projections. The Delegate’s view was that access to the KPMG Documents was unnecessary for him to discharge his statutory obligation. He took this view, at least in part because he considered that the KPMG analysis undertaken for Hornsby supported the Minister’s projected financial benefits flowing from the Merger Proposal.

29. [271]

    The critical issue that Ku-ring-gai wished to address – and did address – in its submission and in the letter of 10 March 2016 was whether the Delegate could perform his statutory function without gaining access to the KPMG Documents and without allowing Ku-ring-gai to undertake its own analysis of the reasoning underpinning KPMG’s assumptions and projections. In its submission and in the letter, Ku-ring-gai took the opportunity to put its case forcefully. Ku-ring-gai did so in the knowledge that the Delegate was disposed to take a different view of his role, but argued that it was essential for the KPMG Documents to be produced. There is no suggestion that Ku-ring-gai was denied the opportunity to say everything it wanted on this issue.

30. [272]

    When making its submission to the Delegate, Ku-ring-gai was aware that its request for access to the KPMG Documents had been denied by the Director of the Department of Premier and Cabinet on the ground of public interest immunity. In its submission, Ku-ring-gai put to the Delegate, implicitly if not explicitly, that he should take steps to obtain access to the KPMG Documents. The submission did not identify what steps the Delegate should take, in the absence of powers to compel the production of documents, but Ku-ring-gai could have addressed that question had it wished to do so. It was also implicit in Ku-ring-gai’s submission that if the Delegate did not obtain the KPMG Documents and did not examine KPMG’s analysis of projected benefits, he should not endorse the Minister’s assessment of the projected benefits of the Merger Proposal.

31. [273]

    The Delegate took note of the concerns expressed by Ku-ring-gai. However, he did not take any steps to obtain the KPMG Documents and proceeded on the basis that they were not required for him to perform his task in conformity with the statute. Nor did he accept that he could not endorse the Minister’s claim that the Merger Proposal would lead to substantial financial benefits. In effect, the Delegate rejected Ku-ring-gai’s submission.

32. [274]

    In taking this course, the Delegate did not rely on any material adverse to Ku-ring-gai other than documents in the public domain. [144] The Delegate and Ku-ring-gai had the same material available to them. In rejecting Ku-ring-gai’s submission as to how he should proceed, the Delegate may have put himself at risk of failing to comply with the requirements of s 263(3) of the LG Act, an issue that is addressed later in this judgment. [145] The absence of the KPMG Documents might also have affected the cogency of the Delegate’s analysis of the financial advantages of the Merger Proposal. But in my view, the Delegate’s decision to reject Ku-ring-gai’s submission and to proceed to make his recommendation without having access to the KPMG Documents did not involve a denial of procedural fairness.

33. [275]

    The conclusion does not depend on determining, one way or another, Ku-ring-gai’s challenge to the claim of public interest immunity made in respect of the KPMG Documents. Regardless of the outcome to that challenge, Ku-ring-gai had the opportunity to put its case to the Delegate and was not denied procedural fairness.

Examination and report

1. [276]

   Ku-ring-gai’s argument advanced in the alternative to its procedural fairness claim was not developed in detail. However, it essentially rested on the contention contained in Ground 7 of the Summons that the Delegate did not give proper, genuine or realistic consideration to the financial advantages or disadvantages of the Merger Proposal, as required by s 263(3)(a) of the LG Act. That the Delegate was obliged to give such consideration to the financial advantages or disadvantages of the Merger Proposal receives some support from an observation of the High Court in a very recent case that: [146]

2. [277]

   The Court cited the judgment of Gummow J in Khan v Minister for Immigration and Ethnic Affairs (Khan) [147] in support of this proposition. Khan involved s 5(2)(f) of the Administrative Decisions (Judicial Review) Act 1977 (Cth), which provides a ground of review where a decision involves “an exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case”. In that context, Gummow J said that: [148]

3. [278]

   The High Court in Bondelmonte v Bondelmonte did not refer to the controversy surrounding the meaning and utility of the expression “proper, genuine and realistic consideration”. [149] Nor did their Honours refer to the warning in Minister for Immigration and Citizenship v SZJSS [150] against the formula being used to encourage a court exercising powers of judicial review to slide into impermissible merits review. [151] Nonetheless the observation indicates that a decision-maker obliged by statute to consider a particular aspect of a proposal may have to do more than simply adopt untested assertions made by a proponent of the proposal.

4. [279]

   The obligation of the Chief Executive or a delegate examining and reporting on a Ministerial merger proposal depends on the terms of the governing legislation. In this case, ss 263(1) and (3)(a) of the LG Act required the Delegate:

5. [280]

   It is necessary to construe ss 263(1) and 263(3) of the LG Act taking into account the statutory context. In this respect, it is significant that the Governor’s power to amalgamate two or more areas can be exercised only if a merger proposal has been dealt with in accordance with Div 2B of Part 1 of Chapter 9 (s 218D). The first stage of this process, once the Minister has made a merger proposal, is that it must be referred to the Boundaries Commission or to the Departmental Chief Executive “for examination and report” (s 218F(1)).

6. [281]

   The Minister has a choice whether to refer the merger proposal to the Boundaries Commission or to the Chief Executive for examination and report. But in either case s 263 of the LG Act applies to the examination of the merger proposal (s 218F(2)). Thus the Boundaries Commission or the Chief Executive (as the case may be) must hold a public inquiry for the purpose of exercising the statutory functions in relation to the merger proposal (s 263(2A)). Those statutory functions include considering the merger proposal having regard to the factors identified in s 263(3).

7. [282]

   There are several indicators that when the Boundaries Commission conducts the “examination” of a merger proposal it is to form its own judgment on the factors it is required to take into account and on the merits of the proposal itself. The first is the composition of the Boundaries Commission. It is a statutory body comprising a Ministerial nominee (chairperson with a casting vote), a Departmental nominee of the Chief Executive and two nominees from a panel selected by the Local Government and Shires Association of New South Wales (ss 261(1), (2), (4), 262(1) of the LG Act). The purpose of referring a proposal for “examination and report” to a statutory body which includes members independent of government must be to enable the body to form its own view of the relevant factors and of the proposal itself. This conclusion is supported by the statutory entitlement of a member of the Boundaries Commission to issue a dissenting report. [152]

8. [283]

   Secondly, the requirement that the Boundaries Commission hold a public inquiry indicates that it is required to take into account the views expressed at such an inquiry, insofar as they are relevant to the factors listed in s 263(3) of the LG Act. There would be little point in holding a public inquiry if the views expressed by residents and ratepayers and the councils affected could simply be ignored because they cast doubt on the merits of the merger proposal. The natural meaning of the expression “to examine and report on any matter … referred” (s 263(1)) in this context is that the Boundaries Commission must make its own assessment of the factors it is required to take into account by s 263(3).

9. [284]

   Thirdly, each of the factors identified in s 263(3) of the LG Act is capable of independent evaluation and assessment by the Boundaries Commission. This is the case, for example, with the financial advantages or disadvantages of the merger proposal (s 263(3)(a)) and the attitudes of residents and ratepayers of the areas concerned (s 263(3)(d)). No doubt the Boundaries Commission’s assessment of these factors will be heavily dependent on the information provided to it by way of submissions or otherwise and by the resources available to it. Nonetheless, it is the Boundaries Commission’s own assessment which the legislation requires.

10. [285]

    While the Minister can elect whether to refer a proposal to the Boundaries Commission or to the Chief Executive, the nature of the statutory task cannot vary according to the election made by the Minister. The statutory task to be performed by the Chief Executive is no different to the statutory task to be performed by the Boundaries Commission. The nature of the functions to be performed cannot be changed if the Chief Executive chooses to delegate his or her functions to another person, whether within or outside the Department.

11. [286]

    As it happens, this analysis is consistent with the statement in the joint press release of the Premier and the Minister on 18 December 2015. [153] The press release stated that the process set out in the LG Act “will provide an objective assessment of the merger benefits and impacts”. Of course, a Ministerial press release cannot control the meaning of legislation, but the promise of an objective assessment reflects a natural reading of the statutory language.

12. [287]

    For these reasons, the Delegate in the present case had to exercise his own judgment when considering the advantages or disadvantages of the Merger Proposal to the residents and ratepayers of Hornsby and Ku-ring-gai. If the Delegate simply adopted uncritically the Minister’s claims in the Merger Document as to the financial advantages of the Merger Proposal and ignored submissions and readily available credible information casting doubt on these claims, he would not have complied with his statutory obligations.

13. [288]

    This, however, is not what the Delegate did. He considered whether the savings and efficiencies claimed by the Minister were “credible and achievable” by reference to the analysis conducted by KPMG on behalf of Hornsby. The Delegate concluded that KPMG’s analysis provided “significant comfort” that the projected savings were “credible and achievable” and “realistic although potentially conservative”. Ku-ring-gai has not suggested that it was not open to the Delegate to rely on this material in forming his view or that he denied procedural fairness to Ku-ring-gai by doing so.

14. [289]

    In determining whether the Delegate discharged his statutory functions, the question is not whether the Delegate correctly interpreted KPMG’s analysis or whether the analysis was sound. Nor can this Court be concerned with the merits of the Delegate’s approach. The only issue for present purposes is whether the Delegate, in considering the Merger Proposal, had regard to its financial advantages or disadvantages to the residents and ratepayers of Hornsby and Ku-ring-gai. Since the Delegate formed his own assessment of the financial advantages or disadvantages of the Merger Proposal, he complied with the obligation imposed by s 263(3)(a) of the LG Act.

15. [290]

    It was open to the Delegate to request the Chief Executive or the Minister to produce the KPMG Documents so that the Delegate himself and interested parties could scrutinise the analysis. But the Delegate had no power to compel production, even if the KPMG Documents had not been the subject of a claim for public interest immunity. [154] In my view, the Delegate was not obliged, in order to discharge his statutory functions, to seek production of the KPMG Documents. Nor was he obliged to report that he was unable to fulfil his statutory responsibilities unless the KPMG Documents were made available to him and to Ku-ring-gai.

16. [291]

    The position may have been different if the Delegate had no material before him other than the claims made by the Minister in the Merger Document and if the Delegate had made no attempt to assess the plausibility or accuracy of those claims. The statute required him to do more than merely repeat the Minister’s financial projections, given that they were not substantiated by any published material.

17. [292]

    The Delegate, however, made his own inquiries and obtained material which enabled him to make his own assessment of the reliability of the Minister’s financial projections. No doubt the Delegate’s examination of the financial advantages or disadvantages of the Merger Proposal would have been considerably more thorough and perhaps more convincing had he sought and obtained access to the KPMG Documents. No doubt, too, his task would have been assisted by a critical evaluation of the KPMG Documents by Ku-ring-gai and other interested parties.

18. [293]

    Nevertheless, the question posed by the LG Act is not whether the Delegate conducted a thorough or convincing examination of the Merger Proposal having regard to the financial advantages or disadvantages to the residents and ratepayers of Hornsby and Ku-ring-gai. The question is whether he examined the Merger Proposal and reported on it having regard to the financial advantages or disadvantages. In my view, the Delegate did so.

19. [294]

    I add this observation. The expansion of the boundaries of jurisdictional error has perhaps served on occasion to blur the distinction between judicial review of administrative action as a mechanism for ensuring that the decision-maker operates within “the law which determines the limits and governs the exercise of the repository’s power” [155] and review of the merits of a decision. Nonetheless, the distinction is fundamental to Australian administrative law, not least because if judicial review, in the absence of statutory authority, intrudes into the merits of the exercise of administrative power its own legitimacy is put at risk. [156]

20. [295]

    Earlier in this judgment I concluded that the Delegate misapprehended the function he was to perform under s 263(1) and (3) of the LG Act. This error is sufficient to vitiate his report. However, in my respectful opinion whatever view might be taken of the merits of the Delegate’s investigation, his actions and his report did not otherwise exceed the bounds of legality.

21. [296]

    On the evidence before the primary Judge, the Delegates’ briefing did not address matters specific to the Merger Proposal. Insofar as the briefing related to financial projections, it appears to have been directed to the assumptions made by KPMG in its Modelling Assumptions document. [157] These assumptions supported the benefits of council mergers across the state. While the presentation included the supposed benefits of particular proposed mergers, the illustrations did not include the amalgamation of Hornsby and Ku-ring-gai.

22. [297]

    The LG Act does not require all inquiries and discussions by a delegate to be undertaken publicly. A private briefing of delegates as a group does not of itself deny procedural fairness to a council opposed to a merger. A private briefing which emphasises the benefits of the Government’s program may not necessarily encourage a perception that the delegates in attendance will exercise a judgment independent of the Minister or the Chief Executive. But since the briefing did not disclose anything of particular significance to the Merger Proposal, Ku-ring-gai was not denied procedural fairness.

Reasonable notice

1. [298]

   Ku-ring-gai submitted that the primary Judge should have found that the Delegate failed to give “reasonable public notice” of the inquiry, as required by s 263(2B) of the LG Act. It is enough to say that none of the complaints made by Ku-ring-gai has any substance.

Public interest immunity

1. [299]

   The issues in the present case can be resolved without any occasion for Ku-ring-gai to have access to the KPMG Documents. Ku-ring-gai’s appeal must be allowed on the ground that the Delegate misapprehended his functions. That conclusion does not depend in any way on the contents of the KPMG Documents or the role they played in the formulation of the Merger Proposal and its examination by the Delegate. Similarly, the issue of futility, which was not pressed by the Minister on appeal, does not depend on the contents of the KPMG Documents. This was the position both at first instance and on the appeal.

2. [300]

   For the reasons I have given, the resolution of the other issues in the case does not require the production of the KPMG Documents. Whatever their content, they would not materially affect the grounds on which Ku-ring-gai’s contentions on the other issues have been rejected.

3. [301]

   Accordingly, I do not think it necessary to address Ku-ring-gai’s grounds of appeal challenging the decision of the primary Judge upholding the claim for public interest immunity. If it was necessary to do so, I would uphold the primary Judge’s decision on the ground that there was no substantial public interest in the production of the KPMG Documents to Ku-ring-gai for the purposes of the litigation. This is not to say that in a different forensic context the claim of public interest immunity would necessarily be upheld.

Orders

1. [302]

   The following orders should be made: