Woollahra Municipal Council v Minister for Local Government

BATHURST CJ: I have had the advantage of reading the judgment of the President. I agree with the orders her Honour proposes and with her reasons.

BEAZLEY P: This is an appeal from the decision of Preston CJ LEC, dismissing the application of Woollahra Municipal Council (Woollahra Council) for judicial review in which it challenged the legality of certain steps taken in the process of the proposed amalgamation of the local government areas of Randwick, Waverley and Woollahra pursuant to the provisions of the Local Government Act 1993 (NSW) (the Act).

On 6 January 2016, the first respondent, the Minister for Local Government (the Minister), made a proposal under s 218E(1) of the Act for the amalgamation of the three local government areas. The Minister referred the amalgamation proposal to the third respondent, the Departmental Chief Executive, Office of Local Government (the Departmental Chief Executive), for examination and report pursuant to s 218F(1). The Departmental Chief Executive delegated those functions to the second respondent, Dr Robert Lang (the Delegate): see s 745.

Pursuant to s 263(2A) of the Act, the Delegate was required to hold a public inquiry for the purposes of exercising the functions in relation to the proposal for amalgamation. Public meetings were held at Rose Bay on 4 February 2016 over two sessions, one in the afternoon and one in the evening. At those meetings, the Delegate made an opening statement in which he outlined the process that was required under the Act and his statutory responsibilities. He also stated at the meeting that he would not be answering questions and that he was present “just to listen”. Each of the affected councils made submissions at the meeting, as did members of the public. There is a dispute as to whether those meetings constituted an “inquiry” as required by s 263(2A).

In late March 2016, the Delegate furnished his report, in which he recommended that the proposal be implemented, to the fourth respondent, the Local Government Boundaries Commission (the Boundaries Commission), for review and comment as required by s 218F(6) of the Act. On 22 April 2016, the Boundaries Commission forwarded its comments on the Delegate’s report to the Minister.

In the normal course, following upon this process, the Minister would make a decision to recommend or decline to recommend to the Governor that the amalgamation proposal be implemented. The Minister agreed not to take that step until Woollahra Council’s challenge to the process had been determined. Randwick City Council and Waverley Council, being the other two councils affected by the proposal, support the amalgamation. The Delegate, the Departmental Chief Executive and the Boundaries Commission each filed submitting appearances on the appeal.

Woollahra Council raised the following issues on the appeal:

The following provisions of the Act are relevant:

The primary judge, at [160], held that the proposal was the “proposal for the amalgamation of the [three] local government areas” and “was not all that was said in the proposal document”. His Honour stated:

Woollahra Council contended that his Honour erred in this finding. It contended that the “proposal” for the purposes of, and within the meaning of, ss 218E and 218F was the content, or at least the substance, of the matters set out in the proposal document. It advanced the following reasons in support of that contention.

First, the Governor, when making a proclamation under s 218A, is empowered under s 218C(1) to include provisions of the same kind as are referred to in s 213, as well as for the appointment of an administrator and the continuation in office of councillors of any area dissolved by the proclamation. It followed, therefore, on Woollahra Council’s submission, that the statute assumed that a “proposal” extended beyond the mere notion of amalgamating particular areas and dealt with the issues that an amalgamation raises.

Secondly, the “proposal” within the meaning of s 218E was posited on something that was capable of being implemented with modifications: see s 218F(7); and further, it was implicit in s 218F(7) that some criterion existed to determine whether particular modifications constituted a “new proposal” for the purposes of that provision. It was submitted that the scheme for amalgamation would become unworkable if the “proposal” was something separate from the document in which the proposed amalgamation was contained.

Thirdly, Woollahra Council submitted that the Governor could make a proclamation which could include specific requirements of the amalgamated council or which could, rather than specifying a date upon which the amalgamation was to occur, be made conditional upon some matter or event.

Fourthly, Woollahra Council submitted that the primary judge appeared to have characterised the Delegate’s duty as one to examine and report on boundaries. It was suggested that this was so having regard to his Honour’s reference in [160] to s 263(1). Woollahra Council pointed out that the Act distinguishes between alterations of boundaries of areas: see s 218B; and the amalgamation of local government areas: see s 218A. Woollahra Council also contended that the Delegate himself appeared to treat the “proposal” as the proposal document rather than the proposal to amalgamate the three local government areas: see, for example, the Delegate’s report at pp 9, 13, 14 and 25. For example, on page 13 of the report, the Delegate stated:

On page 14, there was the following statement:

On page 25, the report stated:

Fifthly, the legislation, in its terms, does not confine the making of a proposal to the bare proposition to amalgamate certain local government areas. Accordingly, accepting that the Minister may choose to recommend the proposal but with detailed modifications, including a package of measures, such as financial support, it was erroneous to seek to limit the “proposal” for the purposes of s 218E in the way his Honour did here.

In its oral argument in respect of these matters, and especially the third point referred to above, at [13], Woollahra Council accepted that there were aspects of the contents of the proposal document that were aspirational, such as the benefits that were hoped to be achieved by the amalgamation, but others that were “direct matters of the amalgamation”. It instanced, in the latter respect, the reference in the proposal document to the assumption that there would be 15 councillors for an amalgamated council and contended that it was part of the “proposal” that there be 15 councillors. Woollahra Council also relied upon the reference to a government funding package of $25 million to support the merged entity as part of the proposal. It submitted that if the amalgamation was to proceed, the Governor’s proclamation would need to specify that the amalgamation was conditional upon this money being paid.

The Minister submitted that his Honour had correctly identified the “proposal” as the proposal for the amalgamation of the three local government areas. The Minister submitted that the terms of the statute provide the starting point for the “proposal”: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41 at [47]. The Minister submitted that his Honour’s finding as to what constituted the “proposal” had a sound footing in the legislative language.

In amplification of this submission, the Minister pointed out that a “function” under ss 218A and 218B “may be exercised only after a proposal for the exercise of the function is dealt with under this Division”: s 218D. The effect of these provisions therefore is that a “proposal” must be for the exercise of a function under those sections. The function proposed to be exercised by the Governor in this case was the amalgamation of the local government areas under s 218A.

Another aspect of the Minister’s submission based on the statutory language was that, pursuant to s 218F(7), the Minister may recommend to the Governor that “the proposal be implemented”. However, the Governor could not then “implement” the “benefits, opportunities and impacts” identified in the proposal document. In pointing to the absurdity of the contrary proposition, the Minister noted that if the Governor could, by proclamation, implement the estimated savings over 20 years, the case for amalgamation would be irresistible. The Minister referred to other aspects of the proposal document, including statements as to the benefits and impacts of the amalgamation, and submitted that such statements in the proposal document could not be part of a proposal within the meaning of ss 218E and 218F.

Further, on the Minister’s submission, notwithstanding that the Governor may include in a proclamation provisions for the facilitation of the amalgamation: see s 218C and 213; it is not a function of the Governor to implement the full range of matters contained in the proposal document. The Minister pointed out, for example, that the reference in the proposal document to funding of $25 million did not fall within the facilitation provisions upon which Woollahra Council placed reliance.

The Minister next submitted that the fact that, under s 218E, the Minister, a council or a specified minimum number of electors may make a proposal also told against the construction for which Woollahra Council contended. Given the mandatory requirements of examination of, and reporting on, a proposal, the Minister submitted that if the “proposal” for the purposes of ss 218E and 218F was the content of a document advancing reasons for, and suggesting benefits and impacts of, the proposal, the relevant examination and reporting required to be undertaken by the Delegate or the Boundaries Commission would have to include anything, no matter how irrelevant or impractical, contained in any proposal document.

Finally, the Minister submitted that on the proper understanding of the proposal document itself, the only relevant “proposal” is for the amalgamation of the three local government areas. In this regard, the Minister pointed to the title of the document, the fact that it contained a map of the proposed merger, a direct statement as to what the proposal was, namely, for the merger of the three local government areas, and distinguished between the proposal for the merger and its impacts.

Given the obligations and functions of the Delegate, the Boundaries Commission and the Minister under subss (1), (2), (6) and (7) of s 218F in respect of the “proposal”, the identification of the relevant “proposal” for the purposes of determining the section is of central importance to the resolution of the issues on the appeal.

Pursuant to s 218A(1), the Governor may, by proclamation, amalgamate two or more local government areas into one or more new areas. That function may only be exercised after “a proposal for the exercise of the function” is dealt with in accordance with the provisions of Ch 9, Div 2B of the Act: s 218D. A “proposal” for the purposes of Div 2B may be made, inter alia, by the Minister: s 218E(1).

As noted above, on 6 January 2016, the Minister proposed the amalgamation of the Randwick, Waverley and Woollahra local government areas. The “proposal” was contained in a document dated 6 January 2016 entitled “Merger Proposal: Randwick City Council, Waverley Council, Woollahra Municipal Council” (the proposal document). A map of the proposed merged areas appears on page I of the proposal document. Next was the Minister’s Foreword, followed by an Executive Summary.

In the Minister’s Foreword, the Minister stated that he was “putting forward the proposal to merge the [three] local government areas”. The Foreword further stated that “[t]his document details the benefits the merger will provide to communities”. There was then set out in dot point form various benefits, including financial benefits, improved management in respect of infrastructure and improved strategic planning and economic development. The benefits, opportunities and impacts were addressed in greater detail in the body of the proposal document.

The Executive Summary stated, inter alia:

In the section of the proposal document entitled “Conclusion”, the following statement appears:

The final page of the proposal document (excluding the appendix), under the heading “Next steps”, contained the following statement:

Woollahra Council’s argument that the proclamation could include requirements, such as specifying the number of councillors or making the amalgamation conditional upon the happening of some event such as the allocation of funds for the amalgamation process, exposes the flaw in its submission that the ‘proposal’ was that which was contained in the proposal document and not merely the proposal to merge the three local council areas.

The Governor may, under s 218A, “by proclamation, amalgamate two or more” local government areas into “one or more new areas”. Section 213, in conjunction with s 218C, makes provision for matters that may be included in the proclamation “for the purposes of” Div 2A, which relevantly in this case, is for the purpose of those provisions relating to the amalgamation. The matters that may be included in the proclamation are “such provisions as are necessary or convenient for giving effect to the proclamation”. The matters specified in s 213 are set out above at [8].

Although the matters specified in s 213 are not exhaustive of the matters that may be included in the proclamation, it is apparent, not only from the matters that are specified, but more specifically from the express words of the chapeau, that what may be included in the proclamation are matters that are necessary or convenient to give effect to the proclamation. As the matters specified in s 213 indicate, the section is directed to the facilitation of those things that are necessary to achieve the cessation of the former councils and the establishment of the newly merged council. In other words, the section is directed to the matters that are necessary or convenient to effect an amalgamation.

The specification of, for example, a requisite number of councillors in the newly amalgamated areas, is not necessary or convenient to give effect to a proclamation. Such a specification would relate to the newly amalgamated local government area. In that regard, the Act itself provides for the number of councillors, and for elections, and the like. It is convenient to note that s 224 provides that a council must have at least five and no more than 15 councillors and it is apparent from the report, as I mention below at [38], that the number of councillors specified in it is based on this statutory provision.

In any event, the proposal document does not specify the number of councillors in the proposed merged council. Rather, in the proposal document, in the section, “Benefits, opportunities and impacts”, under the heading “Local Representation”, the following statement is made:

There is then set out “Table 2”, which specifies the number of councillors, the number of residents and the number of residents per councillor in each of the three councils, and then a statement of the position with a merged council. The table is as follows:

There is an asterisked reference to 15 councillors being the maximum number of councillors currently permitted under the Act.

The same may be said of Woollahra Council’s reliance on the funding proposal of $25 million. Reference to that funding is made in the section of the proposal document, that is in the part headed, “Financial benefits of the proposed merger”, as follows:

In the “Conclusion” section of the proposal document, the reference to the funding is also by reference to potential benefits to local communities: see above at [30]. By its terms, this is not a specification of something which is “necessary or convenient for giving effect to the proclamation” to amalgamate the local government areas, as is contemplated by s 213. Rather, it is a statement of the Government’s intention to provide funds to the newly formed council, should the amalgamation proceed. By its express terms, it is a funding package to support the merged council. It is not a provision which is necessary or convenient to give effect to the proclamation of the amalgamation.

Woollahra Council’s own submission recognised that the proclamation would not proclaim that there would be financial benefits. Yet the statement as to the provision of $25 million is one of the financial benefits referred to in the proposal document. It is difficult to see that a proclamation could not include a general reference to a benefit but could, and on Woollahra Council’s case did, include one detail of the proposed or projected financial benefits as being a condition of the amalgamation.

Further, I do not accept that a proclamation may effect an amalgamation by reference to an event or subject to a condition, such as the provision of a financial package, for example, the $25 million referred to in the proposal document. Section 218A provides that the former local government areas are dissolved and the new areas are to be constituted on the date specified in the proclamation as the date on which the amalgamation is to occur and, subject to s 218C, the councillors on that date are to cease to hold office of the former councils. Section 218C is a facilitative provision which permits the inclusion of provisions of the same kind as are referred to in s 213 and may also include provisions relating to the appointment of an administrator of the new council or for the continuation in office of existing councillors.

It would not reflect the ordinary meaning of the word “date” to accord it any meaning other than a specific calendar date. To do so would require s 218A(2) to be read as if to mean “on a date, including on a date when a specific event occurs”. On Woollahra Council’s argument, insofar as it relied on the specification of the funding of $25 million, that could be, for example, a date on which a bill for the allocation of money received the governor’s assent. Not only is there nothing in the context or purpose of the provision as to render any such meaning likely, that construction would introduce uncertainty into a process that, if the amalgamation is to proceed, is intended to conclude with a proclamation of a date for the amalgamation. The position would be even more complicated and unworkable if there was more than one condition to be satisfied, potentially on different dates and which may or may not occur, for example, if the legislature failed to pass the necessary financial allocation bill. As I have said, the proclamation is intended to be the means by which one governmental structure is extinguished and a new one created.

The other suggestion made by Woollahra Council, namely, that there could be a condition, for example, that the Councillors remain in office until an election and that the amalgamation was not to occur until the date of the elections, is also unworkable and does not accord with the requirement in s 213 that any condition be necessary or convenient for giving effect to the proclamation, or with s 218A. First, the submission failed to have regard to the provisions of the Act. Whilst, pursuant to s 218C, a proclamation may provide for the continuation of some or all councillors in office and for the holding of elections, those matters relate to what is to occur in respect of the newly constituted council.

The other submissions advanced by Woollahra Council do not establish that the “proposal” within the meaning of the Act is that which is contained in the proposal document. It is to be noted that Woollahra Council, in oral submissions, modified its argument so that matters that might be considered ‘aspirational’ would not form part of the proposal. This was presumably done in response to the Minister’s submission, referred to at [19] above, an argument that is well based. Even in its modified form, as discussed above, Woollahra Council’s preferred approach would introduce uncertainty into the identification of the “proposal”, as there could always be differences of opinion as to what was merely “aspirational” and what was so integral to the proposal as to be part of it.

The same may be said of the second argument advanced by Woollahra Council. Section 218F(7) operates on the basis that the proposal is in respect of the amalgamation of local government areas or part thereof. The Minister may, after consideration of the Delegate’s report, determine that the amalgamation ought to include different areas to that originally proposed. If the “proposal” were to include all of the matters contained in the proposal document, there again would be room for differences of opinion as to whether a particular matter in the document was part of the proposal, so as to be subject to potential modification by the Minister under s 218F(7).

There is also sense in the argument advanced by the Minister that if Woollahra Council’s submission were correct, given that a proposal may be made, inter alia, by an appropriate minimum number of electors: see s 218E, the matters stated in any proposal document, except to the extent that they might be considered to be “aspirational”, would form part of the proposal and would be required to be the subject of examination pursuant to s 218F, no matter how irrelevant, unachievable or even nonsensical.

Finally, subject to some slippage in his Honour’s language where he referred to “boundaries”, I do not accept the criticism made of the primary judge’s reasons at [160]. Section 263(1) is not limited to boundaries. Rather, on its terms and by the operation of s 218F(2), it requires the Delegate:

Nor do I accept Woollahra Council’s submission that the Delegate appeared to treat the “proposal” as including the contents of the proposal document. In the first place, the Delegate’s view of what constitutes the proposal, is no more than the Delegate’s opinion. If the Delegate misunderstood what the proposal was, that would raise a question as to whether there had been an examination of and report on the proposal.

In any event, contrary to Woollahra Council’s submission, the passages on which it relies do not have the effect for which it contends. This can be illustrated by the reference on page 25 of the report to the 15 councillors: see above at [16]. That passage must be read with the immediately preceding passage so that the entire entry is as follows:

It is apparent from the text of this part of the report that the Delegate is merely providing a numerical analysis of what the position would be if there were 15 councillors.

For these reasons, I am of the opinion that the “proposal” within the meaning of the Act and as made by the Minister, is the proposal to amalgamate the three local government areas.

Woollahra Council submitted that the primary judge erred in finding that the public meetings conducted by the delegate met the statutory description and requirements of an “inquiry” under s 263(2A) of the Act.

There were two aspects of this argument. The first was that the Delegate had conducted consultations with KPMG in private contrary to the public inquiry requirement of the section. The second was that, to the extent that there had been consultations with the public, those had constituted no more than public meetings and did not satisfy the mandatory requirement to hold an “inquiry”.

The primary judge, at [99]-[114], rejected Woollahra Council’s submissions as to whether a public inquiry had been conducted in accordance with the requirements of s 263(2A).

The primary judge, at [99], referred to the distinction in s 263 between the functions of examining and reporting and the holding of an inquiry. His Honour, at [100], pointed out that “the inquiry” is not itself the examination of the proposal. Rather, the inquiry is held for the purpose of exercising the function of the examination. His Honour, at [102], also expressed the view that the Boundaries Commission or Departmental Chief Executive may make enquiries and receive information and submissions in the course of the examination function other than during the public hearing.

His Honour, at [103], observed that there was no prescribed practice or procedure for a public inquiry held under s 263, in contrast with public inquiries held under Pt 8 of Ch 13. Chapter 13 is entitled “How are councils made accountable for their actions?” Part 8 provides detailed provisions for the holding of such an inquiry, including the application of provisions of the Local Court Act 2007 (NSW) in relation to the summonsing of witnesses, as well as the Royal Commission Act 1923 (NSW).

His Honour, found, at [106], that Woollahra Council had not established that the inquiry held by the Delegate did not meet the statutory description of, or the requirements of, an inquiry under s 263 of the Act. His Honour acknowledged, at [107], the distinction in the Act between “advertised public meetings” in s 218F(3)(a)(i) and an “inquiry” in ss 263(2) and 263(2A), but noted that the public meeting and the public inquiry under the respective statutory provisions were directed to different matters. An inquiry under s 263 is held for the purpose of the Departmental Chief Executive (or the Delegate) exercising the function of examining and reporting, whereas a public meeting under s 218F is held for the purpose of obtaining the views of electors where there has been a joint proposal of two or more councils for amalgamation. Notwithstanding these different purposes, his Honour considered, at [108], that a public inquiry and a public meeting could be held in the same manner.

His Honour, at [109], rejected Woollahra Council’s argument that the public inquiry under s 263 entailed “the entire process at which materials are advanced and arguments are made in relation to an amalgamation proposal”. In particular, his Honour held, at [110], that s 263 did not require the Departmental Chief Executive to carry out the function of examination of the proposal in public at an inquiry. His Honour stated, at [111], that it followed that it was not necessary for persons conducting the public inquiry actively to question persons speaking at the inquiry or answer questions. His Honour considered that in circumstances where the procedure for the inquiry was not prescribed, the manner in which it was held was left to the discretion of the person holding the inquiry: Bushell v Secretary of State for the Environment [1981] AC 75 at 94-95. In particular, his Honour held, at [111], that the Delegate did not fail to hold an inquiry under s 263 by stating that he was “here only to listen”.

His Honour, at [112], rejected the submission that it was necessary for all key material relied upon in examining and reporting on a proposal to be publicly accessible in advance of the public inquiry. His Honour also found that Woollahra Council’s reliance on Bread Manufacturers of New South Wales v Evans (1994) 180 CLR 404; [1981] HCA 69 was misplaced.

Woollahra Council submitted that the two meetings at Rose Bay on 4 February 2016 did not satisfy the statutory obligation on the Delegate under s 263(2A) to hold an inquiry. It contended that the “passive receipt” of the views of those attending the meeting amounted to no more than ascertaining the attitude of the residents and ratepayers. Whilst that was a requirement under s 263(3)(d) for the purposes of considering matters with respect to the boundaries of local government areas, it did not constitute an inquiry within the meaning of s 263(2A). Woollahra Council submitted that given the centrality of the financial advantages and disadvantages of the amalgamation proposal, it was necessary that there be a public inquiry into those matters. Woollahra Council submitted that this was both apparent and necessary from the terms of the legislation which required that there be a public inquiry for the purpose of exercising the functions of examination and reporting.

The focus of this submission was two financial reports upon which the Delegate placed substantial reliance. The first was a report prepared by KPMG. The second was a report by SGS submitted by Randwick Council in support of the proposal. Both reports were readily available at the time of the meetings at Rose Bay, although Woollahra Council submitted that the public would not have been aware of the role the reports would play in the formation of the Delegate’s opinion and also complained that the two financial reports were not the subject of any public examination.

Woollahra Council submitted that the purpose of the requirement to hold a public inquiry was to constitute a form of safeguard so as to ensure public confidence in the adequacy and sufficiency of the inquiry, together with the possibility of public participation. It was submitted that the obligation to hold such an inquiry in public could not operate as a safeguard if the Delegate had such a broad discretion that “the part of the examination performed by the public inquiry is narrowed down to a trivial or incidental part of the process undertaken”.

This last submission was central to Woollahra Council’s contention as to the requirement that there be a public inquiry. In brief, it submitted that the substantive process of the examination was intended to be undertaken through the inquiry. It was not open to the Delegate to choose how much or how little was to be inquired into in the presence of the public. Woollahra Council also submitted that the Delegate had “an active role of inquiry” and that meant that he had to conduct his examination in the presence of the public so that the public could understand the way in which the Delegate arrived at the matters he would finally include in his report.

Woollahra Council also contended that the private meetings held between the Delegate and the representatives of KPMG involved a breach of the requirement that there be a public inquiry. Woollahra Council pointed out that the KPMG report was central to the ministerial proposal. The meeting with KPMG had been conducted in a formal manner in which there was a powerpoint presentation by KPMG and a question and answer session. However, the meeting was not open to the public. Woollahra Council submitted that in seeking this meeting, the Delegate was involved in the process of inquiry and had done so in breach of the Act which required any such inquiry to be public.

The Minister submitted that his Honour was correct in finding that the inquiry was a distinct step in the process, for the reasons his Honour gave.

As I have stated, Woollahra Council contended that the process mandated by the Act required that the examination of the proposal be conducted by way of a public inquiry. The answer to this challenge depends upon the proper construction of the Act.

The provisions governing an amalgamation proposal are contained in Ch 9, “How are Councils established?”, Pt 1, “Areas”. Division 1, containing ss 204-213, provides for how local government areas are constituted. Divisions 2A and 2B, containing ss 218A-218CA and ss 218D-218F respectively, govern, relevantly, how areas are amalgamated and what must be done before areas can be amalgamated.

A “function” under s 218A may only be exercised after a proposal for the exercise of the function is dealt with under Div 2B: s 218D. The “function” to which s 218A is directed is the making of a proclamation to amalgamate two or more local government areas.

Division 2B specifies who may initiate a proposal: s 218E. Once a proposal has been made, Div 2B then provides, relevantly, that:

A distinction is made in s 218F, between public meetings, which is one of the alternative processes which must be undertaken where two or more councils propose an amalgamation: s 218F(3), and an inquiry (within the meaning of s 263(2A)), which must be held pursuant to s 218F(2).

There are two interpretative issues in relation to these requirements. The first relates to what, for the purposes of the Act, is an “inquiry”. The second is the proper construction of s 263 which is incorporated into the process by s 218F(2). If s 263(2A) bears the meaning for which Woollahra Council contended, there has been a non-compliance with its terms. It is appropriate, therefore, to have regard, first, to the requirements of the examination and report that must be undertaken by the Chief Executive, or Delegate. This, in accordance with the usual principles of statutory construction, must be done having regard to the text of the provision, its context and purpose.

The starting point, as already stated, is s 218F(1), which provides that an amalgamation proposal must be referred for examination and report. The same requirement is made of the Boundaries Commission in s 263(1) in respect of “any matter with respect to the boundaries of areas”. Section 218F(2) brings into the examination process the provisions of s 263 and, in particular, s 263(2A). That section provides that the Delegate “must hold an inquiry for the purpose of exercising its functions”. The relevant function is the examination of the amalgamation proposal.

Woollahra Council’s construction requires s 218F(2) to be read as follows: “the examination of the proposal must be conducted by way of a public inquiry”. However, when s 218F(2) and s 263(2A) are read together, as they must be, it is apparent that the inquiry is a process that must be undertaken as part of, or, to put it another way, as a compulsory process in aid of, the examination. To return to the words of s 263(2A), the inquiry must be held for the purpose of the Delegate exercising certain functions in relation to a proposal, which, relevantly, are to examine and report. Section 263(2A) does not, on its terms, support a construction that requires the examination to be conducted by way of an inquiry.

Although there is no direct authority on point, this view of the proper operation and interaction of s 218F(2) and s 263(2A) is supported by the observations of Mason P in Minister for Local Government v South Sydney City Council (2002) 55 NSWLR 381; [2002] NSWCA 288. In that case, which concerned the alteration of boundaries, a question arose as to whether the Boundaries Commission had delegated the statutorily mandated task of examination and report to a consultant. It was not disputed that the Boundaries Commission was entitled to obtain and examine a consultant’s report: see at [195].

Whilst an inquiry under s 263(2A) is mandated, the language of the chapeau of subs (2) is the same as the chapeau of subs (2A), namely, “[f]or the purpose of exercising its functions”. The relevant “function” is the requirement to examine and report. As Mason P observed in South Sydney Council, at [211], there was nothing wrong with a consultant being appointed to organise, collate and summarise the submissions that had been received. The Minister points to this observation as supporting its submissions that matters may properly occur as part of the examination function outside the public inquiry process, such as through the receipt of submissions.

There is another textual and contextual consideration that supports the Minister’s submission as to the proper interaction of ss 218F(2) and 263(2A). Section 263(3) provides for the matters to which the Boundaries Commission is required to have regard “when considering any matter referred to it”. Those matters include: the financial advantages or disadvantages of any relevant proposal to the residents and ratepayers: s 263(3)(a); the attitude of the residents and ratepayers: s 263(3)(d); the impact of a proposal on the employment of staff: s 263(3)(e2); and “such other factors as [the Boundaries Commission] considers relevant to the provision of efficient and effective local government in the existing and proposed new areas”: s 263(3)(f).

Two matters may be noticed about this provision. The first is that s 263(3) is directed to the matters that must be considered in the examination of a proposal. It is not directed to the matters that must be the subject of the inquiry. Secondly, the diversity of factors specified in s 263(3) as matters that must be considered indicates it is unlikely that Parliament intended that the examination was to be conducted by means of an inquiry. This is reinforced by the specification in s 263(3)(f) of “such other factors” as the Boundaries Commission considers relevant. If all of the factors in subs (3), including anything that fell within para (f), were to be examined in an inquiry, this would not allow a matter to be examined and raised in the Report that became apparent or even came into existence only after the inquiry process was finished.

That leaves the question whether an inquiry is a different process from a public meeting. There is no definition in the Act of either term, nor is any procedure prescribed for the holding of either a public meeting or an inquiry, other than that in the case of the former there must be a public meeting of which notice must be given, and in the case of the latter, “[r]easonable public notice must be given of the holding of an inquiry under this section”: s 263(2B). Nor does the Act specify at what stage of the examination process the inquiry must be undertaken.

In Bushell v Secretary of State for the Environment, Lord Diplock observed, at 95, in respect of an inquiry for which no procedure was prescribed, that the procedure to be followed was in the discretion of the relevant Minister, but that the inquiry had to be conducted “fairly and honestly”, albeit without the overlay of the procedures “appropriate to the conduct of ordinary civil litigation”. As his Lordship said, at 97, it would be unfair to “overjudicialise” such an inquiry.

Further, Woollahra Council’s submission that what occurred at the meetings at Rose Bay was, at best, an inquiry into the attitude of residents and ratepayers to the proposal is not supported by the evidence. The primary judge reviewed the process that was undertaken at the meetings at [75]ff. That process included the Delegate making an opening statement, including that members of the public could provide their views by speaking about the proposal and/or by making written submissions.

Speakers were given a time limit of three minutes to speak and the councils were given 15 minutes to make an oral presentation. In the case of Woollahra Council, the Mayor, in her presentation, addressed all of the factors in s 263(3), except for para (e3): impact on rural communities, and para (e5): in relation to diverse communities. The Mayor also informed the Delegate that detailed written submissions would be provided to the Delegate. In particular, the Mayor addressed the KPMG report. Likewise, the General Manager of Waverley Council addressed the s 263(3) factors insofar as they were relevant.

The evidence revealed that the KPMG report was raised by various speakers, including in the context of complaints that the report had only been partially released, and that the released portions contained errors. The complaint that the KPMG report had only been partially released was not strictly accurate. As his Honour found at [249], what was not disclosed were KPMG’s internal workings and calculations underpinning the conclusions it expressed in the publicly available documents.

The fact that the Delegate stated that he was not there to answer questions does not mean that the inquiry was not an inquiry within the meaning of s 263(2A). There was no statutory obligation on the Delegate to answer questions and it is not necessarily or even usually part of any inquiry process that the party convening the inquiry do so.

Woollahra Council’s reliance on the Bread Manufacturer’s case was also misplaced. As the primary judge pointed out, at [113], the legislation in that case was different from the legislation in the present case. That case considered the Prices Regulation Act 1948 (NSW), which empowered the Prices Commission to fix maximum prices of declared goods by regulation orders, but required the Commission to hold an inquiry before it made a prices regulation order of its own initiative.

The Prices Regulation Act made extensive provision: as to the persons or entities who were and could be made “parties” to the inquiry: ss 8C(4) and 8E; as to the legal representation of parties: s 8E(3); for evidence to be given on oath and in public and for submissions in the inquiry to be made public: s 8F; and for confidential evidence to be given in private: s 8F(2). The Prices Commission also had power to summons witnesses, require the production of documents and require any person to furnish information and answer questions.

Gibbs CJ held that the Prices Commission was not entitled, in making its inquiry, to have regard to documents that were never made public. As his Honour observed at 413:

The primary judge, at [171], rejected Woollahra Council’s challenge to the Delegate’s examination and report. In coming to that conclusion, his Honour, at [161], stated that the proposal document and the KPMG documents stood in no privileged position compared to the other submissions, information and material that the Delegate received and that the Delegate’s obligation was the same in relation to the consideration to be given to them.

His Honour pointed out that the Delegate had received nearly 500 written and oral submissions from the 100 people who had attended the inquiry, as well as submissions from each of the councils. Included in the various submissions received by the Delegate were representations as to the financial advantages and disadvantages of the proposal and criticism of the KPMG report. His Honour also noted, at [162], that Woollahra Council had not suggested that the Delegate was obliged to “scrutinise, test and interrogate” every claim and conclusion in every submission that was made.

Woollahra Council advanced its argument on this issue on two bases. The first was on the basis that the “proposal” was what was comprised in the proposal document. That matter has been dealt with above and rejected. The “proposal” was the proposal to merge the three councils.

The second basis upon which this issue was argued was premised on the proposal being the proposal to merge the three councils. Woollahra Council contended that the Delegate’s consideration of the financial advantages and disadvantages was deficient in that the Delegate:

The last of these alleged deficiencies was raised as an independent ground of appeal (see grounds 8 and 9) and is considered below.

The challenges raised by the first three alleged deficiencies were based, principally, upon the terms of the Delegate’s report, Chapter 6, and in particular, at para 6.1.2. The report at para 6.1.1 stated that the KPMG analysis and the SGS analysis showed a net financial benefit from an amalgamation of the three councils in excess of what was achievable in the councils operating separately. At para 6.1.2, the report noted that the assumptions upon which KPMG’s analysis was based had been questioned by some councils.

The report pointed out that the SGS analysis, which had been undertaken on behalf of Randwick and Waverley Councils in 2013 and updated in 2015, was based upon assumptions and calculations that had been independently assured by the external auditors of all three councils. The SGS analysis produced higher estimated benefits than those assessed by KPMG. The Delegate’s report observed that despite the different assumptions underlying the KPMG and SGS report, there were clear benefits in the amalgamation, ranging from between $149 million, being the estimate given by KPMG, and $235 million, being SGS’ estimate, compared with the position should the councils remain separate.

Woollahra Council had retained the services of Jeffrey Hall, to provide an independent expert report for the purposes of potential proceedings in the Land and Environment Court. His report is dated 1 April 2016. For the purposes of preparing his report, Mr Hall had available to him, inter alia, the KPMG report dated 19 January 2016 and the summary pages from a spreadsheet prepared by KPMG.

In his report, Mr Hall contended that the documents provided to him contained no more than headline figures and an outline of key assumptions, without any of the calculations or information that would allow the reader to understand how those assumptions translated into the headline figures. He criticised the assumptions as being broad and generic, without any empirical evidence or other reasonable basis to support them and stated that he would have been assisted by access to the detailed modelling that was undertaken by KPMG.

Mr Hall considered that in the absence of disclosure of the detailed calculations and assumptions made in the KPMG report, it was impossible to analyse or verify the reasonableness and achievability of the net saving figures that had been claimed. He stated that:

Mr Hall provided a second report after having been provided with further material including the proposal document and the SGS report. Mr Hall concluded that the SGS report was liable to be misused in the same manner that the KPMG report had in fact been misused.

Woollahra Council submitted, therefore, that the primary judge failed to grapple with the central question which concerned the minimum requirement or content of the Delegate’s obligation to report.

The Minister submitted that it was apparent from the Delegate’s report at 6.1.1 and 6.1.2 that the Delegate had considered that there were financial merits to the proposal, having regard to the predicted savings estimated by KPMG on the one hand and on the other, predicted figures contained in the SGS report, whilst at the same time noting that there had been criticisms of these figures. The Delegate, by reference to those figures, was satisfied that there were financial advantages to the proposal.

The Minister also pointed out that the Delegate had considered the impact on rates should the proposal be implemented. The Delegate had noted that this had been raised as a matter of particular concern in many of the submissions made by Woollahra residents and ratepayers. He noted that the issue arose because of the significantly higher land values in the Woollahra local government area compared to those in Randwick and Waverley. On his analysis, the Delegate estimated that the merger would translate to an increase in rate revenue of 23 per cent for Woollahra as compared to 4 per cent for Waverley and a decrease of 15 per cent for Randwick.

The Delegate referred to two factors that impacted on that analysis: first, that a review of the rating system was being undertaken by IPART and secondly, that there had been a greater increase in land values in Waverley and Randwick compared to Woollahra. The Delegate noted that the rates for all three councils were similar notwithstanding the differences in land value and noted that the question whether this was equitable would be for others to determine. The Delegate suggested harmonisation strategies could be implemented if necessary, if the amalgamation proceeded.

The Minister submitted that it was apparent from the matters to which the Delegate referred in his report that the Delegate had undertaken an examination of the financial advantages or disadvantages of the proposed merger. The Minister resisted any suggestion that the Delegate had an obligation to undertake “some investigation” into the KPMG report, given that the Delegate did not have any investigative powers.

The Minister further submitted that there was, in any event, no reason to direct resources to an investigation of the KPMG figures in circumstances where Randwick and Waverley councils had undertaken their own independent and audited modelling in the form of the SGS report that indicated that the figures in the KPMG analysis were “an underestimation of savings”.

The Minister also submitted that Woollahra Council’s submission to the Delegate did not challenge the KPMG modelling or figures as such, but was rather directed to the economic and social cost to Woollahra Council and its residents should the councils be amalgamated. The Minister referred, for example, to Woollahra Council’s written submissions dated 26 February 2016, in which the Mayor wrote:

This issue may be disposed of in brief terms. Contrary to Woollahra Council’s submissions, the Delegate did examine the financial advantages and disadvantages as required by s 263(3)(a). The obligation imposed by ss 218F and 263(2A) is to examine the proposal. The particular obligation in s 263(3) is, “when considering [a proposal] to have regard to” the matters specified in (a) to (f). The phrase “have regard to” requires the Delegate “to consider” or “to give attention to” the factors that are listed: see Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; [1986] HCA 40.

A question might arise in a given case whether the Delegate has sufficient information to comply with the obligation under s 263(3)(a). Should that occur, there is nothing in the Act which would prevent the Delegate from seeking further information from whatever source the Delegate considered appropriate. However, the Delegate does not have any investigative function or any powers that permit a compulsory interrogation or inquiry. Accordingly, the Delegate could not compel the provision of further information. If the information available remained insufficient, presumably that would have to be the subject of the report to the Boundaries Commission.

The phrase ‘compulsory interrogation or inquiry’ is used in the preceding paragraph to distinguish between the ability of a Delegate to seek further information or clarification in respect of a particular matter should it be considered necessary or desirable and the ability to require the provision of further information or clarification. As has already been explained, the position of the Delegate under the Act is unlike the position in the Bread Manufactures case, where there were extensive compulsory powers and provision for evidence to be given and witnesses to be cross-examined.

The Delegate’s function to examine the proposal requires an examination of all of the material that is provided and, in doing so, to have regard to the matters specified in s 263(3), insofar as they are relevant. In my opinion, it has not been established that the Delegate did not do so: see Industrial Equity Ltd v Deputy Commissioner of Taxation (1990) 170 CLR 649 at 671-672; [1990] HCA 46.

There was detailed financial information provided to the Delegate from two sources and he had regard to it. This is apparent from the Delegate’s reporting as to the different financial savings that were forecast by KPMG and SGS; his pointing out in the report that there were challenges to the KPMG material and that there were concerns in relation to the rating parity between Woollahra Council on the one hand and the other two councils on the other. The Delegate also pointed to the possible need to harmonise the rates after the current IPART report had been finalised.

I should also add that Mr Hall’s criticism, that the publicly available information was insufficient to allow the underlying assumptions and calculations to be tested by a third party, does not alter the view I have formed. It was not suggested that the Delegate did not have access to all of the relevant material. Further, additional material was provided to Mr Hall. Presumably if he had wanted more information to complete his own report he could have asked for it.

The primary judge, [169], held that s 263(3)(a), on its proper construction, did not require the Delegate to consider the financial advantages and disadvantages of the proposal to the residents and ratepayers of each of the individual council areas. His Honour added:

Earlier, at [168], his Honour had observed that the Delegate’s report revealed that there had been a consideration of the financial advantages of the proposal in respect of each of the three councils.

Woollahra Council submitted that his Honour’s findings at [168]-[169] involved a misconstruction of s 263(3)(a) and a misunderstanding of what the Delegate in fact did.

Woollahra Council submitted that s 263(3)(a), read in context, requires that the differential effects of a merger upon the residents and ratepayers in each area proposed to be amalgamated, be examined and reported upon. Woollahra Council submitted that where the legislature intended that consideration be given to the effect on the areas the subject of the proposal collectively this was reflected in the language of the provision.

Reference was made to paras (b), (e), (e4), (e5) and (f) of subs (3), where the language used was “existing areas”: para (b); “the area concerned” and “that area”: para (e); “the resulting area or areas”: paras (e4) and (e5); and “new areas”: para (f). By contrast, the language used in para (a) was “areas concerned”. Woollahra Council submitted that the use of the plural indicated a legislative intention that consideration was to be given to the financial advantages and disadvantages to each area the subject of the proposal individually.

It was further submitted that when regard was had to the purpose of s 263(3) in light of the objects of the Act as a whole: see s 7, it would be extraordinary if the Delegate was permitted to disregard the financial advantages and disadvantages to the individual areas proposed to be amalgamated.

The Minister submitted, first, that the Delegate did have regard, consonant with s 263(3)(a), to the financial advantages and disadvantages of the proposal to the residents and ratepayers of each of the councils subject of the proposal. The Minister also pointed out that a decision maker is not required to canvass each item of evidence relevant to an issue that the decision-maker considers material: Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323; [2001] HCA 30 at 330-331. It is only if the matter is shown to be of great importance that it may be inferred from the absence of reference to a matter in a report that the delegate failed to consider it: Minister for Immigration v Khadgi (2010) 190 FCR 248 at 270 [58]. The Minister pointed out that the reasons of a decision maker are not to be overly scrutinised: Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; [1996] HCA 6.

I consider that, as Woollahra Council submitted, s 263(3)(a) required the Delegate to have regard to the financial advantages and disadvantages of the proposal “to the residents and ratepayers of the areas concerned”, that is, of each of the areas subject of the proposal.

However, notwithstanding that I consider that his Honour erred in his construction of the section, I consider that the Delegate satisfied the obligation under s 263(3)(a). As is apparent from the Delegate’s report, the Delegate had regard to the joint submissions Randwick and Waverley Councils made to IPART for a merger of those two councils, Woollahra Council’s submission to IPART and IPART’s response. The Delegate, at 6.1.1, set out the key comparative financial data of each of the councils, and stated:

The Delegate further stated, within 6.1.2:

These statements only make sense if the Delegate was considering or having regard to the different positions of each of the councils.

The most significant and direct financial impact that a local council has on its ratepayers is via the rates they pay. The Delegate expressly had regard to the impact on rates should the amalgamation proceed. In this regard, the Delegate made specific reference to information as to the existing position of each council, indicated what impact the amalgamation would have on the rates of each area and suggested that there may be a need for strategies to be implemented to harmonise the rates should the amalgamation proceed.

Although the Delegate undertook the s 263(3)(a) aspect of the examination task by way of a comparison with what would or could be achieved if the amalgamation proceeded, that did not mean that there was no consideration of the financial advantages and disadvantages of the proposal for the residents and ratepayers of each council or that it was an impermissible way to proceed. Indeed, it was a, if not the, logical way to proceed. The financial advantages for each individual council are to be found in what can be achieved if there is an amalgamation. Specific reference is made to those advantages in 6.1.2. I do not consider that it is necessary for the purposes of s 263(3)(a) that the Delegate specify the extent to which each council will receive or attain a financial benefit. The financial disadvantages, especially in relation to rates, were also examined.

The primary judge, at [221]-[222], recorded Woollahra Council’s submission that the Delegate was under a duty to accord procedural fairness in the exercise of his functions and that duty required the Delegate to give Woollahra Council a reasonable opportunity to address the factors in s 263(3) to which the Delegate was required to have regard. As his Honour noted, Woollahra Council had submitted, citing Kioa v West (1985) 159 CLR 550 at 587; [1985] HCA 81, that the Delegate was required to give Woollahra Council the opportunity to deal with information that was credible, relevant and significant to the decision being made. Information identified as falling into this category included:

His Honour noted, at [223], that Woollahra Council had argued that there had been a denial of procedural fairness in the Delegate’s failure “to make Woollahra Council aware of his intention to rely upon the SGS Economics and Planning material in preparing his report on the proposal”.

The primary judge concluded, at [241], that Woollahra Council had not established that it was denied procedural fairness by virtue of the Delegate not disclosing the relevant documentary material nor giving it the opportunity to make submissions in relation thereto. The primary judge observed, at [242], that “[t]he duty to accord procedural fairness (where it applies) attaches to the exercise of statutory power” and that the relevant statutory power here was the function under s 263 to examine and report. His Honour continued, at [243], that “[t]he content of the duty … is defined by the statutory power under s 263 and the statutory scheme in which that power is found”.

The primary judge expressed the view, at [244], that in exercising the statutory function to examine and report, s 263 and the scheme of the Act do not require the Departmental Chief Executive or the Boundaries Commission, as the case may be, “to disclose to ‘affected’ persons all of the ‘adverse’ submissions of all other persons”. In support of that view, his Honour noted that this Court did not accept an obligation of procedural fairness to that effect in South Sydney City Council per Mason J at [257], [267] and [268], with whom Spigelman CJ at [1], [44] and Ipp JA at [297] agreed. The primary judge went on to express the view that procedural fairness in the exercise of the s 263 function did not extend to requiring disclosure of “all adverse information that is credible, relevant and significant to the examination and report on the proposal”. His Honour observed, at [247]:

The primary judge, at [245], concluded that there was no denial of procedural fairness in the Delegate not disclosing to Woollahra Council, or giving it an opportunity to respond to, the submissions that Waverley and Randwick Councils had made or the SGS Economics and Planning report on which those councils relied. His Honour, at [248], also concluded that there was no denial of procedural fairness in relation to certain non-public documents described as “KPMG modelling and analysis”.

On the appeal, Woollahra Council confined its challenge under this ground to the SGS report in contending that the primary judge erred in failing to find, as a matter of procedural fairness, that it was entitled “to be notified of key material … upon which the Delegate proposed to rely for the purposes of recommending the proposed merger”.

Woollahra Council did not cavil with the proposition adopted by the primary judge at [244] that “the statutory scheme … [did] not require … [the Delegate] … to disclose to ‘affected’ persons all of the ‘adverse’ submissions of all other persons”. However, it submitted that proposition was not dispositive of the entitlement of Woollahra Council to be put on notice of the Delegate’s proposed reliance on the SGS report. It contended, relying on South Sydney City Council at [39]-[43], [242]-[243] and [263], that Woollahra Council had a “particular interest in the proposal that it be merged with Waverley and Randwick” and that it was in a “special position … as regards the merger proposal” such as to differentiate it from any larger class of affected persons and to have affected the content of the duty of procedural fairness owed by the Delegate.

Woollahra Council did not suggest an “open file” policy or posit a right for an affected person to see all adverse submissions of other persons in relation to a proposal. Rather, the submission was that “in circumstances where the Delegate proposes to place particular reliance upon a given piece of material”, and reliance would be adverse to the interests of a council seeking to resist the proposal, that council “ought to be notified in advance so that the affected council may respond to the relevant material”.

Woollahra Council argued that there is nothing unworkable in a duty which required notification and an opportunity to respond “to material that the Delegate himself determines to stand in a ‘special category’”. In this regard, Woollahra Council cited the following observations of Lord Diplock in Bushell v Secretary of State for the Environment at 96:

The Minister pointed out that the SGS report had been provided in Randwick City Council’s submissions to the Delegate. The Minister submitted, citing South Sydney City Council at [251] and [264]-[268], that the Delegate was not obliged to afford Woollahra Council an opportunity to comment on the submissions of Randwick City Council. On the authority of South Sydney City Council at [272], it was submitted that the Delegate “was only obliged to provide undisclosed information if it was ‘so damaging’ or ‘so unforeseeable’ that the affected person should not have been ‘left in the dark’”. The position of the Minister was that the SGS report was not of that nature.

The Minister also submitted that Woollahra Council knew that Randwick City Council was making its submissions on the basis of the SGS report, officers of Woollahra Council having been present when the Mayor of Randwick referred to the reports during the course of one of the public meetings held at Rose Bay on 4 February 2016. It was submitted that Woollahra Council must have made a deliberate decision not to put its criticisms of the SGS report before the Delegate, and could have submitted its own financial analysis of the savings and costs associated with the proposal.

South Sydney City Council arose in the context of a proposal for the transfer of certain parts of the South Sydney City local government area to the City of Sydney local government area. One of the arguments raised by South Sydney City Council in seeking to impugn the Boundaries Commission’s exercise of its examination function was that there had been a denial of procedural fairness.

There were two strands to the procedural fairness argument in South Sydney City Council. The first strand, the “access to submissions point” in Mason P’s terminology, was an argument that South Sydney City Council should have been afforded the opportunity to see and comment upon all submissions adverse to its interests, or at least those submissions treated as credible by the Commission or adopted in its report: see at [231]. The second strand, the “enlarged area notice point”, was an argument that South Sydney City Council should have been given notice that the Boundaries Commission intended to suggest inclusion in the transfer of an area beyond that indicated in the Minister’s proposal: see at [232].

Before turning to the two strands to South Sydney City Council’s procedural fairness argument, Mason P observed that he was “inclined to the view that the Commission was bound to give directly affected councils a reasonable opportunity to address” the issues required to be taken into account by s 263(3). In relation to the “access to submissions” strand, Mason P went on to reject the existence of any broad obligation on the Boundaries Commission, in the task of examination and report, to give South Sydney City Council an opportunity to see and comment on any submission adverse to its interests. As Mason P observed at [251]:

His Honour went on to express his approval of the following observations in M C Harris, ‘Fairness and the Adversarial Paradigm: An Australian Perspective’ (1996) Public Law 508 at 522-523:

Mason P observed, at [263], that the examination of a proposal is capable of affecting a broad number of people. His Honour, at [264], noted that the range of potentially affected persons was not limited to affected councils, but rather included, for example, landowners and council employees. In this regard, Mason P questioned:

Mason P expressed the view, at [267], that “[t]o posit a right for all ‘affected’ parties to see all of the ‘adverse’ submissions of all other persons putting in submissions would be unworkable”. However, his Honour did qualify these views in his conclusion at [272]:

In Kioa v West, Mason J observed, at 587, that the law attached importance to:

This statement was endorsed by McHugh and Gummow JJ in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 at [81]: see generally the discussion in Warkworth Mining Limited v Bulga Milbrodale Progress Association Inc (2014) 86 NSWLR 527; [2014] NSWCA 105 at [34]-[41]. As was pointed out in that case, there will also be a denial of procedural fairness where a decision maker uses information in a way that could not reasonably be expected and a relevant party is not given an opportunity to respond to the intended use: see Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57; [2001] HCA 22 at [142] per McHugh J and Muin v Refugee Review Tribunal (2002) 190 ALR 601; [2002] HCA 30 at [128]-[134] per McHugh J.

As I have indicated, in its argument on the appeal, Woollahra Council’s complaint was confined to the SGS report. It contended that it was entitled to be put on notice of the Delegate’s proposed reliance on the conclusions in the report. Woollahra Council did not contend that it was required to be notified of the SGS report or of its contents, nor could it in circumstances where, according to the Delegate, the assumptions and calculations in the SGS report had been independently assessed by external auditors of all three councils, and in any event, the report was discussed at the public meeting held at Rose Bay at which Woollahra Council was present.

In order to determine whether Woollahra Council was entitled to procedural fairness with at least that content, it is necessary to consider the function that the Delegate was performing. It should be stated at the outset of the consideration of this discussion that the Minister did not contend that there was no obligation of procedural fairness, notwithstanding that the Delegate is not a decision-maker. The Minister’s position, relying upon the observations of Mason P in South Sydney City Council, was that the obligation to accord procedural fairness did not extend to an obligation on the Delegate to put Woollahra Council on notice of an intention to rely upon the conclusions in the SGS report.

South Sydney City Council concerned the exercise by the Boundaries Commission of its function under s 263(1) to “examine and report” on a proposal to alter boundaries. To that extent, the function being exercised was of the same extent as that exercised by the Delegate here, although the requirement for consultation with the public differs: see s 263(3). That difference is not relevant to the question presently under consideration.

In South Sydney City Council Mason P was “inclined to the view that the Commission was bound to give directly affected councils a reasonable opportunity to address” the issues required to be taken into account by s 263(3). In my opinion, the obligation on the Delegate here was no greater and Woollahra Council did not assert that it had not been given that opportunity. Should the obligation have the content for which Woollahra Council contended, the practical effect would be that the Delegate, once the examination function was completed and the report was in a state of readiness before submission to the Boundaries Commission, would be required to refer any aspect of it that the Delegate might consider or suspect might be of concern to an affected party, presumably to enable further submissions to be made.

There is nothing in the Act that requires the Delegate to engage in that process and to state the practical consequence of the submission demonstrates why the proposition contended for is unworkable and accordingly untenable. In Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam, Gleeson CJ observed, at [37]:

In this case, there was no absence or loss of opportunity to make submissions in relation to the SGS report. Its existence was known and its relevance was obvious on its face. Woollahra Council did not at any stage question its relevance, although the Mayor, both in her submission to the Delegate and in Woollahra Council’s later written submission, contended that the revenue and asset base of each council was stable and that each council was independently capable of delivering the services required for their respective communities, both presently and into the future. The mayor also made apparent that Woollahra Council’s concern was with the particular social and economic detriments to its own small thriving community should it be included in the amalgamation.

It follows that I would reject this ground of appeal. There was no denial of procedural fairness by the Delegate as alleged.

Before the primary judge, Woollahra Council contended that there was a denial of procedural fairness in the Boundaries Commission’s failure to afford it a reasonable opportunity to respond to the Delegate’s report and to have its response considered as part of the Boundaries Commission’s review and comment. Woollahra Council conceded that the requirements of procedural fairness would differ as between the Delegate’s examination and report under s 218F(1) and (2) and the Boundaries Commission’s review and comment under s 218F(6). However, his Honour noted, at [252], that Woollahra Council nonetheless contended that the Act imposed a procedural fairness obligation on the Boundaries Commission and that the Act did not manifest a “legislative intention to exclude natural justice from the Boundaries Commission’s process of reviewing and commenting upon the Delegate’s report”.

The primary judge rejected Woollahra Council’s submissions, stating, at [267], that the scheme of the Act “evinces an intention on the part of the legislature to exclude the application of the principles of procedural fairness at this stage in the statutory process”. His Honour observed that, in this context, “the relevant statutory power is that of the Boundaries Commission under s 218F(6)(b) to review the report … and send its comments to the Minister”. His Honour stated, at [268], that the express provision for the holding of an inquiry, in s 263(2A), for reasonable public notice, in s 263(2B), and for the ability of the public to attend an inquiry, in s 263(5), demonstrated that the legislature had adverted to “the times at which and the manner in which persons affected by a proposal for amalgamation would be given an opportunity to be heard”. The primary judge observed, at [269], that:

The primary judge noted, at [269], that although there is a requirement that the Department Chief Executive furnish the report to the Boundaries Commission, by virtue of s 218F(6)(a), there is no legislative requirement for the Departmental Chief Executive to furnish a copy of the report to affected councils or anyone else. The primary judge expressed the view, at [270], that:

His Honour also expressed concern that if an opportunity for persons other than the Boundaries Commission to review and comment on the Departmental Chief Executive’s report was required, this would alter the functions and duties of the Boundaries Commission. As his Honour observed at [271]:

The primary judge concluded, at [273], that there was no denial of procedural fairness in the Boundaries Commission not giving Woollahra Council an opportunity to review and comment on the Delegate’s report.

On the appeal, Woollahra Council submitted that this Court should find, contrary to the views of the primary judge, that the Boundaries Commission was required to afford Woollahra Council an opportunity to make submissions on the Delegate’s report. Woollahra Council submitted that, in relation to multistaged statutory decision making processes, “the concern is whether that process, viewed in its entirety, can be considered fair”: see South Sydney City Council at [24]-[26], [156]. Woollahra Council further submitted that plain words of necessary intendment are needed to exclude the requirements of natural justice at any one or more of those stages.

Woollahra Council submitted that the presence in the Act of provisions commensurate with aspects of the rules of procedural fairness, such as the requirement of reasonable public notice in s 263(2B), was insufficient to exclude the rules of procedural fairness. In this regard, it argued that:

The Minister sought to uphold the primary judge’s conclusion that the Boundaries Commission did not deny Woollahra Council procedural fairness in conducting its review and comment on the Delegate’s report. The Minister submitted that “[t]he Legislature turned its mind to what opportunity to be heard should be afforded when an amalgamation Proposal was being dealt with” and that “that opportunity is the public inquiry during the examination and reporting phase”.

In support of the primary judge’s conclusion, the Minister noted that Spigelman CJ in South Sydney City Council observed, at [35], that the scheme of the Act is such that “the most detailed consideration of the relevant issues is to occur at the first stage”. That is, in this case, by the Delegate. The Minister also referred to the following passage from the decision of Garling J in Botany Bay City Council v State of New South Wales [2016] NSWSC 583 at [143]:

The Minister submitted that “[t]he provisions concerning the role of the Boundaries Commission are inapt to provide the opportunity to be heard” contended for by Woollahra Council. The Minister contended that there was no requirement for the Delegate’s report to be given to anyone other than the Boundaries Commission, that there is no provision requiring notice of the Boundaries Commission’s review and that the Boundaries Commission is not tasked with hearing and considering the views of the public.

In South Sydney City Council, the Minister had submitted that it was “not possible for the [Boundaries] Commission to deny procedural fairness at the Report stage”: at [157]. Mason P, at [157], refused to accept this proposition, expressing his preference for the submission “that recognises that sometimes the Commission’s report could in itself involve a breach of its own duty to accord procedural fairness”. Relevantly, in the immediately preceding paragraph, Mason P had made the following observations as to the requirements of procedural fairness in multi-stage statutory decision-making processes:

The legislature has established a scheme for the making of proposals for amalgamation, for the examination of these proposals and a report thereon by, relevantly the Delegate, for the examination of that report and comment thereon by the Boundaries Commission and the forwarding of subsequent comments to the Minister and for the Minister to then make a recommendation to the Government.

The process at this stage is specified in the legislation: see Div 2B, ss 218D-218F. The only provisions that require consultation with the public by way of an inquiry is at the first stage of examination and report by the Delegate: s 218F(1), and pursuant to s 218F(2), the provisions of s 263. There are no such requirements in respect of or relating to the Boundaries Commission’s function of review and comment. As is apparent from the discussion above in relation to ground 5, whether procedural fairness is a required aspect of decision-making or administrative action depends upon the proper construction of the statute under which a person’s or entity’s rights are affected, as well as the particular conduct of the decision-maker or administrator in relation to any particular matter.

In the present case, as the primary judge observed at [271], to require that procedural fairness be accorded at the stage of the Boundaries Commission review and comment would alter the functions and duties of the Boundaries Commission.

I consider that ground 6 should be rejected.

Woollahra Council contended at first instance that the Boundaries Commission improperly fettered itself in exercising its statutory functions under s 218F(6): see at [184]. In particular, Woollahra Council submitted that in purported exercise of its statutory functions of reviewing and commenting upon the Delegate’s report under s 218F(6), the Boundaries Commission had improperly constrained the matters to which it had regard by eschewing any re-examination of the advantages and restricting its review and comments to the narrow assessment of whether the Delegate had adequately discussed the factors that he was required to consider in performing his statutory functions: see at [178].

The primary judge concluded, at [205], that it had not been established that the Boundaries Commission misdirected itself or improperly constrained itself in the exercise of its function to review and comment on the Delegate’s report. His Honour expressed the view, at [207], that:

The primary judge placed particular emphasis on the election that lies in the Minister to refer an amalgamation proposal to either the Boundaries Commission or the Departmental Chief Executive for examination and report: s 218F(1). His Honour noted that where an amalgamation proposal has been referred to the Departmental Chief Executive, the Boundaries Commission must review the report of the Departmental Chief Executive and send its comments to the Minister: s 218F(6). His Honour went on to observe, at [207], that:

The primary judge observed that the Act “does not contain any mandatory requirements” for the conduct of the function of review and comment: see Botany Bay City Council at [137] per Garling J. His Honour was of the opinion that the Boundaries Commission’s statements that it had reviewed the Delegate’s report to determine whether the legislative process had been followed and whether the Delegate had taken into account all the factors required under the Act did not involve any misdirection or improper fettering of the Boundaries Commission’s function.

His Honour, at [213], emphasised that the Boundaries Commission had explained in its comments that it sought:

In this regard, his Honour was of the view, at [214], that:

His Honour observed, at [215], that:

Woollahra Council submitted that the broad power conferred upon the Boundaries Commission to review and comment upon the report of the Departmental Chief Executive “should extend to at least a consideration of whether the proposal … ought be acted upon by the Minister”. It was further submitted that a review limited to a consideration of whether or not the report showed that the Delegate had acted in accordance with his statutory obligations “would be an improper fettering of the broad power of review conferred by the Act”. Woollahra Council contended that the Boundaries Commission had conducted “a task akin to judicial review of the Delegate’s report” and did not express any view of its own as to the merits of the proposal. It was submitted that:

The Minister submitted that the primary judge was correct to conclude that the Boundaries Commission had not misconstrued its function. The Minister emphasised that the only person required to make a “recommendation” under the Act is the Minister and that “[t]he Boundaries Commission’s primary task was to ‘comment’ on the Delegate’s Report, not the Proposal”. The Minister submitted that the primary judge’s approach accorded with that adopted in Botany Bay City Council at [133]-[140], in which case Garling J took the view that there was no minimum required content for the comments provided by the Boundaries Commission, so long as it was clear it had reviewed the report and commented on it.

In Botany Bay City Council, Garling J observed that where a proposal has been referred by the Minister to the Departmental Chief Executive, the task of the Boundaries Commission “is not to undertake an inquiry of the kind which it would do had the Minister’s proposal been forwarded to it by the Minister pursuant to s 218F(1)”. Rather, what the Boundaries Commission is required to do is “to review the report of the Departmental Chief Executive (or his delegate) … to comment upon it and send its comments to the Minister”: at [135]. Garling J observed, at [137], that:

An appeal from the decision of Garling J was dismissed in Botany Bay City Council v State of New South Wales [2016] NSWCA 243. As Sackville AJA explained at [94], Bathurst CJ and Ward JA agreeing, the scheme of the Act is such that it is the Departmental Chief Executive or Delegate’s report on the proposal, and not the proposal itself, that is, furnished to the Commission for “review and comment”. In this regard, “[t]he ‘comments’ are clearly intended to be the views of the Commission arising from its review of the Chief Executive’s report”.

Sackville AJA acknowledged that “the Commission’s role is not necessarily limited to commenting whether the Chief Executive’s report complies with the statutory requirements”, noting, at [96], the ability of the Minister, pursuant to s 218F(7), to recommend implementation of the relevant proposal with modifications arising out of the Boundaries Commission’s comments. However, his Honour continued:

Sackville AJA observed, at [99]:

It follows, for the reasons given by Sackville AJA, that this ground of appeal must be rejected. There is no obligation on the Boundaries Commission to consider whether the proposal ought to be acted upon. As Sackville AJA observed, whilst the Boundaries Commission could, if it chose, make additional comments in respect of the proposal it is not required to do so. In particular, it is not required to undertake an independent evaluation of the proposal as it would if Woollahra Council’s contention was correct.

At first instance, Woollahra Council contended that the amalgamation process was invalidated by virtue of the fact that it was conducted on the misleading premise that KPMG had provided an independent analysis of the proposal. As recorded by the primary judge, at [274], there were three steps in this argument:

His Honour observed, at [276], that Woollahra Council’s contention was that certain public statements in relation to the proposal were misleading in that they conveyed that:

The primary judge, at [304], did not accept that the various public statements concerning “independent analysis and modelling by KPMG” conveyed the representations claimed by Woollahra Council. Rather, in line with the submissions of the Minister, his Honour concluded that the public statements conveyed that KPMG had been engaged to give impartial and accurate advice about the impacts of the proposed amalgamation; that KPMG’s modelling and analysis had been undertaken by professional KPMG employees; and that KPMG had exercised its professional judgment in good faith and had not been overborne or dictated to by the Government: see judgment at [292] and [304]. The primary judge considered, at [304], that KPMG had so conducted itself, and that none of the evidence falsified the representations conveyed by the various public statements.

The primary judge, at [305], stated that even had the relevant public statements been false or misleading, that would not have invalidated the amalgamation process. His Honour observed, at [305], that the statements in question “were not in any notice required to be given under the Act or in any document required to be produced or publicly exhibited by the Act”. Acknowledging that the public notice that had been given pursuant to s 263(2B) referred to websites on which two of the documents containing the impugned statements could be accessed, the primary judge held, at [306], that the “statements said nothing misleading about the proposal that was the subject of the inquiry … or about the statutory process for considering that proposal”. His Honour concluded, at [308], that there was nothing that would cause the public notice that was given not to constitute sufficient “public notice” within the meaning of s 263(2B) of the Act. His Honour, at [308], also concluded that it had not been established that the allegedly misleading statements caused the Delegate to fail to consider any mandatory relevant matter (under s 263(3)) or to fail to exercise his duty to examine and report on the proposal (under s 263(1)).

His Honour, in rejecting this challenge, held, at [309], that in any event:

Woollahra Council submitted that the primary judge ought to have found that a misleading representation as to KPMG’s independence “had the capacity to lead to a serious departure from the proper statutory process in the present case”. It was submitted that the analysis conducted by KPMG was not independent of the New South Wales Government and that the primary judge erred in not so finding. On Woollahra Council’s view, the primary judge adopted an “overly technical and strained” approach as to what, as a matter of ordinary usage, would be conveyed to a reasonable interested person by a representation that KPMG was “independent”.

Woollahra Council submitted that to the extent that the representations indicated the existence of neutral evidence in favour of the proposal, they “potentially dissuaded members of the public from making a submission to the Delegate” and thereby undermined the public notice given pursuant to s 263(2B). The decisions of El Cheikh v Hurstville City Council (2002) 121 LGERA 293; [2002] NSWCA 173 and Litevale Pty Ltd v Lismore City Council (1997) 96 LGERA 91 were cited as authority for the proposition that even where a statutory notice provision does not require an explanation of the proposal the subject of the notice, if the notice attempts an explanation it must be accurate and complete. Woollahra Council submitted that certain newspaper advertisements giving notice of the Rose Bay meetings directed readers to the Council Boundary Review website, at which documents containing statements as to KPMG’s independence could be accessed. It was submitted that the notice “had the capacity to lull members of the public into a ‘false sense of security’ as to what was proposed”.

Woollahra Council also contended that the Delegate’s consideration of the mandatory relevant considerations in s 263(3)(a), (d), (e2) and (f) had been undermined “to the extent that the Delegate proceeded on the false assumption that the KPMG financial analysis was ‘independent’”. Woollahra Council contended that the representations as to KPMG’s involvement were invested with a “special juridical character”, distinguishable from any other erroneous representations that might have been made, due to the Delegate’s decision “to elevate the financial material presented to him to a position of importance” and the Delegate ultimately formed the view that “[t]he formation of a single merged council will create a financially stronger and more viable council”.

In relation to the legal effects of a misrepresentation, the Minister submitted that the relevant principle was that a non-fraudulent factual misstatement will only invalidate an administrative decision, as a consequence of the misstatement, if a recognised ground of judicial review is established: see Gold and Copper Resources Pty Ltd v Minister for Resources and Energy (2013) 211 LGERA 196; [2013] NSWLEC 66; Smith v Wyong Shire Council (2003) 132 LGERA 148; El Cheikh v Hurstville City Council; Litevale Pty Ltd v Lismore City Council; Gales Holdings Pty Ltd v Minister for Infrastructure and Planning (2006) 69 NSWLR 156; [2006] NSWCA 388.

The Minister sought to uphold the primary judge’s findings as to the representations conveyed by the various public statements as an approach consistent with the ordinary meaning of “independent” in relation to a professional advisor: see Rexstraw v Johnson [2003] NSWCA 287. The Minister criticised Woollahra Council’s approach relying “on the abstract notion that KPMG was ‘uninfluenced by’ Government policy” on the basis that it would require KPMG to be ignorant of, or agnostic as to, the issues raised by previous modelling and analysis in relation to local government reform, including by KPMG itself.

The Minister also sought to uphold the primary judge’s finding that the representations conveyed by the public statements were not misleading. The Minister emphasised that Woollahra Council had not suggested that “KPMG’s opinions or report had been altered or affected by the alleged lack of independence”.

The Minister submitted that the “high water mark” of the appellant’s case in the court below, that KPMG had described itself as being engaged to “support” the NSW Government’s reforms, did not provide a basis for finding that KPMG failed to exercise its professional judgment and experience.

In like regard, it was submitted that the fact that KPMG described itself as a “reform partner” reflected KPMG’s recognition that it was a consultant that had repeatedly been engaged by the Government in relation to local government reform tasks and in no way evinced a lack of independence. The Minister also submitted that the use of the term “support” merely reflected KPMG’s awareness that its analysis and modelling would assist the government to make a decision.

The Minister disputed the contention that the impugned representations potentially dissuaded members of the public from making submissions thereby invalidating the public notice required by s 263(2B). The Minister submitted that even were there a factual misstatement, it was not in a formal public notice or in any other document by which reasonable public notice of the inquiry was given.

It was submitted that the public statements in question said nothing misleading about the proposal or about the statutory process for the consideration of that proposal, and that there was no evidentiary basis for the suggestion that a misrepresentation about KPMG’s independence would be more likely to dissuade public participation than any other factual error.

In relation to the argument that the impugned representations undermined the Delegate’s consideration of mandatory relevant considerations under s 263(3), the Minister emphasised the primary judge’s finding, at [301], that the Delegate did not uncritically accept the KPMG analysis.

The Minister contended that speculation that the Delegate may have been more critical had he not been informed that the KPMG analysis was independent was insufficient to detract from the primary judge’s finding, and that it is not appropriate for the Court to enter into the merits of a decision maker’s consideration where there has been advertence to the mandatory relevant consideration in question.

The alleged misrepresentations were contained in two Government media releases published on 18 December 2015 and 6 January 2016 and in the proposal document.

The 2015 media release stated that “[i]ndependent analysis by KPMG of the NSW Government’s proposed mergers shows significant financial benefits for NSW of up to $2 billion”. A similar statement was made in the media release of 6 January 2016 issued at the time that the proposal was referred for examination and report.

In the proposal document it was stated that “the proposal … is supported by independent analysis and modelling by KPMG” and that KPMG’s analysis “shows the proposed merger has the potential to generate a net financial saving of more than $124 million to the new council over 20 years”.

In the KPMG Technical Paper, which was also publicly available, a statement was made that:

Woollahra Council contended that these statements were false as demonstrated by evidence summarised by his Honour at [277], namely, that KPMG had on eight separate occasions in 2015 been engaged by the Government to provide services in respect of local government reform; an agreement with the government executed on 29 June 2016; various agreements, proposals and documents in which KPMG was engaged to “[a]ssist the Government to make a decision on optimal council mergers” and “[s]upport the Government to effectively communicate the benefits of proposed mergers to each affected community and the broader population”; and various other documents, papers and communications relating to local government reform in which there was reference to KPMG’s role “supporting” the Government’s local government reform agenda.

Amongst these matters, particular reference should be made to a KPMG paper entitled “Options Analysis, Local Government Reform, Randwick, Waverly [sic] and Woollahra Cluster” dated 12 August 2015. In that paper, as stated by his Honour, at [277]:

In Potato Marketing Board v Merricks [1958] 2 QB 316, Devlin J gave consideration to the meaning of the term “independent” in the context of the Agricultural Marketing Act 1949 (UK). So far as is relevant for present purposes, s 5 of that Act required agricultural marketing schemes under the auspices of the Act to establish a disciplinary committee consisting of between four and six members of the scheme board plus “a chairman who is not a member of the board but is an independent person who is a barrister, advocate or solicitor of not less than seven years’ standing”. The question for consideration before Devlin J was whether the barrister appointed as disciplinary committee chairman was not “independent” in that he was paid a fee by the board. That is, the question was whether the disciplinary committee established by the Potato Marketing Board was not constituted in accordance with the requirements of s 5. Devlin J’s analysis of this issue, at 335, is succinct.

Devlin J acknowledged that although “independence ordinarily denotes financial independence”, that is not the only sense in which the word can be used. It was then observed that independence:

Devlin J referred to this latter sense of independence as “independent in the sense of being detached and not in the sense of being unpaid”. The construction of s 5 ultimately adopted by Devlin J was as contemplating:

In Rexstraw v Johnson, this Court gave consideration to whether, in the context of a contributory mortgage scheme, a statement in promotional material that there would be an “independent valuation of the real property by a qualified Property Valuer” was misleading for the purposes of the Trade Practices Act 1974 (Cth), s 52. The Court dismissed the appeal against the first instance finding of contravention of s 52. It had been submitted on the appeal against the finding of contravention that “an independent judgment was used in the determination of the actual value of the property by the author of the report” and that the report “was free of ‘graft and other such influences’”. It was submitted that the fact that the report “had been prepared on the instructions of the party seeking to depend upon it did not detract from its independent status in the relevant context”: at [63].

Tobias JA observed that the word “independent” appeared in the context of statements as to “valuation of the security proffered by the borrower for the proposed advance”. As his Honour observed, at [69], “[c]learly, the borrower had an interest in obtaining a more robust valuation” whereas “the investors would be looking for a more conservative valuation so as to ensure that their interests were fully protected”. Tobias JA took the view that the statement that there had been an independent valuation “was a representation that it was one obtained independently of the borrower or any person associated with the borrower”: [70]. Accordingly, his Honour concluded that the statement was misleading so as to give rise to a contravention of the Trade Practices Act, s 52.

These grounds should also be dismissed for the reasons given by the primary judge. His Honour’s reasons are set out above and it serves no purpose to restate them either in the same or different language.

It follows for the reasons I have given that the appeal should be dismissed with costs.

WARD JA: I have had the advantage of reading in draft the comprehensive reasons of Beazley P, with which I agree. For those reasons, the appeal should be dismissed.