Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Deputy Secretary of the Department of Local Government, Planning and Policy v Doueihi [2021] NSWCATOD 163 Hearing dates: 7 and 16 June 2021 Date of orders: 24 September 2021 Decision date: 24 September 2021 Jurisdiction: Occupational Division Before: R Titterton OAM, Senior Member Decision: (1) Ground One of the Amended Grounds for Application filed 24 February 2021 is established. (2) Ground Two of the Amended Grounds for Application filed 24 February 2021 is established. (3) Ground Three of the Amended Grounds for Application filed 24 February 2021 is established. (4) Ground Four of the Amended Grounds for Application filed 24 February 2021 is established in so far that the respondent failed to disclose in the 2019 Return the address of the trustee of the LMP Unit Trust and that he was a director, secretary and 50% shareholder of Laley Rosa Pty Ltd. (5) Ground Five of the Amended Grounds for Application filed 24 February 2021 is established. (6) Ground Six of the Amended Grounds for Application filed 24 February 2021 is established. Catchwords: LOCAL GOVERNMENT – whether councillor breached the Local Government Act 1993 (NSW), the Local Government (General) Regulation 2005 and the Council's Code of Conduct Legislation Cited: Local Government Act 1993 (NSW) – ss 7, 8, 439AA to 440AA, 440F, 440H, 440J, 449, 661 Local Government (General) Regulation 2005 Interpretation Act 1987 (NSW) - ss 33 and 34 Cases Cited: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 SZTAL v Minister for Immigration and Border Protection [2017] HCA 34 HRC Hotel Services Pty Ltd v Chief Commissioner of State Revenue [2018] NSWSC 820 Office of Local Government v Councillor Campbell of Murray Shire Council [2015] NSWCATOD 129 Office of Local Government v Councillor Martin Ticehurst of Lithgow City Council [2016] NSWCATOD 122 Hindi v Chief Executive, Office of Local Government [2016] NSWCATOD 134 Texts Cited: None Category: Principal judgment Parties: Deputy Secretary of the Department of Local Government, Planning and Policy (Applicant) Antoine Doueihi (Respondent) Representation: Counsel: M Cobb-Clark (Applicant) G Schipp (Respondent) Solicitors: Office of Local Government (Applicant) Prominent Lawyers (Respondent) File Number(s): 2020/00329805 Publication restriction: Nil REASONS FOR DECISION Introduction 1. The applicant is the Deputy Secretary of the Department of Local Government, Planning and Policy. The respondent is the mayor of Strathfield Municipal Council (Council). 2. On about 16 November 2020, the applicant filed an application with the Tribunal which referred, pursuant to s 440J(2)(b) of the Local Government Act 1993 (NSW) (LGA), a departmental report dated October 2020 (Report) concerning the respondent to the Tribunal. 3. The application enclosed grounds for the application, which alleged various breaches by the respondent of the LGA, the Local Government (General) Regulation 2005 (Regulation), and Strathfield Municipal Council's Code of Conduct (Code). 4. On 24 February 2021, the applicant filed, with the consent of the respondent, amended grounds for the application. Those amended grounds are the subject of these proceedings and allege that the respondent: 1. failed to complete his written return disclosing interests for the period 1 July 2017 to 30 June 2018 by 30 September 2018, in breach of section 449(3) of the LGA (as in force at the time); 2. failed to provide information required by Divisions 1 and 2 of Pt 8 of the Regulation 2005 in: 1. his initial written return disclosing interests dated 13 October 2017, in breach of s 449(1) of the LGA (as in force at the time); and 2. his written return dated 3 October 2018, disclosing interests for the period ending 30 June 2018, in breach of s 449(3) of the LGA (as-in-force-at the time); 1. lodged returns disclosing interests, namely: 1. his initial written return disclosing interests dated 13 October 2017; and 2. his written return dated 3 October 2018, disclosing interests for the period ending 30 June 2018, which he knew, or ought reasonably to have known, were false or misleading in a material particular, in breach of s 449(1A) of the LGA (as in force at that time); 1. failed to provide information required by Sch 1 of the Code in his written return dated 24 September 2019 disclosing interests for the period ending 30 June 2019, in breach of cll 4.21(b) and (c) of the Code; 2. lodged a return disclosing interests, namely his written return dated 24 September 2019, disclosing interests for the period ending 30 June 2019, which he knew, or ought reasonably to have known, was false and misleading in a material particular, in breach of cl 4.23 of the Code; 3. failed to comply with a direction given under s 440H of the LGA, which is a breach of s 661 of the LGA, which in turn constitutes misconduct pursuant to s 440F(1)(a) and s 440F(1)(c) of the LGA. 1. I will refer to these six amended grounds respectively as Grounds One, Two, Three, Four, Five and Six. 2. Also on 24 February 2021, the Tribunal ordered, by consent, pursuant to s 470A of the LGA, that it should conduct proceedings into this matter. Appellant's Evidence 1. The applicant relied on the following documents or bundles of documents: * the Report (Exhibit 1); * an Instrument of Delegation dated 30 June 2019 (Exhibit 2); * an Instrument of Delegation dated 1 July 2019 (Exhibit 3); * an email of the respondent's accountant to the Principal Investigator dated 24 September 2019 and attachments (Exhibit 4); * an email of the respondent's accountant to the Principal Investigator dated 18 November 2019 and attachments (Exhibit 5); * a draft report to the applicant dated March 2020 (Exhibit 6). 1. The tendering of this evidence was uncontroversial save for one issue. The respondent objected to the following parts of the Report (including any annexures referred to) being admitted: 1. par [27]; 2. section 6.3 "Provisions relevantly in force applying with respect to Clr Douehi's return for the period 1 July 2018 to 30 June 2019", being pars [44] to [53]; 3. in par [89] the words "1 July 2018 to 30 June 2019 and as required by clause 4.20(a) & (b) of the Council's Code of Conduct for the period commencing 1 July 2019"; 4. in par [90] the words "and 1 July 2018 to 30 June 2019, and in breach of clause 4.23 of the Council's Code of Conduct for the period commencing 1 July 2019"; 5. pars [90], [91] and [96]. 1. The basis of the objection to the fifth matter can be dealt with immediately. The respondent submitted that these paragraphs were objectionable in that the investigator's conclusions that breaches of Code or the LGA constituted misconduct under the LGA was a matter solely for determination of the Tribunal. 2. I reject this submission. In the first place, only par [96] actually states that there was misconduct. I will treat that paragraph as a submission. As to pars [90] and [91], all the investigator is stating is that "the evidence supports the view" or "suggests" certain conclusions. I see nothing objectionable in this and allow those paragraphs. 3. The substantive objection is in relation to the matters identified in [8](1) to (4). The respondent's critical point was that the investigation was outside the scope of the investigator's delegated authority, that authority being limited to the period of time 16 September 2017 to 3 October 2018. Denial of procedural fairness 1. A secondary point, which it is convenient to deal now, was that the respondent was denied procedural fairness in that. The respondent submitted that without the benefit of the draft report of May 2020, the Tribunal could not know whether or not the respondent had had the opportunity to comment on findings in the Report which related to the period after 3 October 2018. However, that problem was cured by the applicant tendering Exhibit 6. That shows that acts and matters which took place after 3 October 2018 were identified in the draft report and that the respondent had the opportunity of commenting on them. 2. Therefore, I reject the submission that the respondent was denied procedural fairness on these matters. Outside authority 1. The respondent's first, and primary, argument, can be summarised as follows. 2. On 25 July 2019, pursuant to a "Notice of Decision to Conduct An Investigation and Instrument of Authorisation and Delegation Local Government Act 1993" dated 25 July 2019 (Delegation) the applicant authorised Principal Investigator Jennifer Noble and Senior Investigator, Legal, Chris Rowe to: * conduct an investigation pursuant to s 440H(1) of the LGA; and * to prepare a departmental report pursuant to s 440H(5) of the LGA into the following matters: Whether, contrary to Ch 14, Pt 2 of the LGA, (as was in force at the time), the respondent: 1. Failed to complete his written returns of interests in the form prescribed by the regulations in accordance with the provisions of s 449(3) of the LGA (as in force at the time) in the periods 16 September 2017 to 30 June 2018, including his initial return dated 13 October 2017 and annual return for the period ending 30 June 2018 dated 3 October 2018 01 July 2017 to 30 June 2018. 2. Failed to provide information required by Divisions 1 and 2 of Part 8 of the Local Government (General) Regulation 2005 in his written returns of interests lodged pursuant to s 449(3) of the LGA (as in force at the time) in the period 16 September 2017 to 30 June 2018, including his initial return dated 13 October 2017 and annual return for the period ending 30 June 2018 dated 3 October 2018. 3. Lodged a written return of interests as required by the provisions o s 449(3) of the LGA (as in force at the time) in the period 16 September 20178 to 30 June 2018, in that he knew or ought reasonably to have known were false or misleading in a material particular in breach of s 449(1A) of the LGA (as in force at the time) including his initial return dated 13 October 2017 and annual return for the period ending 30 July 2018 dated 3 October 2018 and 4. Any other matters that may be relevant. 1. Further to an amended authorisation, Principal Investigator Day assumed carriage of the investigation on 28 February 2020. 2. The point taken by the respondent was that the findings in those parts of the Report identified in [8](1) to (4) relate to conduct of the respondent after 3 October 2018 and thus were not authorised under the delegation. 3. In response the applicant submitted that the conduct after 3 October 2018 fell within paragraph [4] of the delegation ("any other matters that may be relevant"); that some of the conduct in 2018 "carried over into 2019"; and that the respondent had waived this point by agreeing to the filing of Amended Grounds Four and Five on 24 February 2021. 4. In reply, the respondent submitted that par [4] of the delegation could not be treated as a "catch all", as that would mean that the applicant, effectively, could do whatever it liked once the investigator was seized with authority. The respondent submitted that examining matters after 3 October 2018 would not be relevant. He noted that the letter to him from the OLG of 25 July 2019 which identified possible breaches (commencing at A40 of the attachments to the Report), was limited to the period of authority, and that on A42 there are specific allegations made, none of which related to 2019. In the circumstances, the respondent submits that "any other matter that may be relevant" must be a matter relevant to matters 1, 2 and 3 of the delegation, namely matters in 2017 and 2018. 5. On this point, the applicant relied on an earlier letter from the OLG to the respondent, dated 19 May 2020, (A216) which was the cover letter providing the draft report to the respondent. The letter relevantly stated: This matter concerns the completion by you of returns of interest under section 449 of the Local Government Act 1993 following your election to Council in 2017 and subsequently for the period 1 July 2017 to 30 June 2018, and under clause 4.21 of Council's Code of Conduct for the period 1 July 2018 to 30 June 2019. (emphasis added) 1. The respondent also relied on pages A44 and A45, which is the information provided to persons being interviewed by an Investigator, noting that A45 states that: All persons asked to assist in the investigation will be informed of the terms of reference of the investigation. 1. The respondent further relied on A47, which was the order dated 7 August 2019, issued by the Principal Investigator pursuant to s 440H(3) of the LGA requiring the respondent to produce documents, being tax returns and other financial information in relation to a range of trusts for the 2016 and 2017 financial years. 2. Section 440H(6) provides that: The preparation of a departmental report is a prerequisite to a decision by the Departmental Chief Executive to take disciplinary action against a councillor, unless the disciplinary action is taken on the basis of a report by the Ombudsman or Independent Commission Against Corruption. 1. The respondent submitted that if the investigator was not authorised to investigate the 2019 matters then s 440H(6) was not satisfied and the findings in relation to 2019 in the Report cannot stand. Consideration and ruling 1. It is clear that by the letter of 19 May 2020 the respondent was on notice of allegations about his conduct after 3 October 2018 and the provision to him of the draft report. However, I agree with the respondent, that is not the issue; the issue is whether the Principal Investigator and the Senior Investigator were authorised to conduct an investigation in relation to the period after 3 October 2018. 2. This hinges on the meaning of the words "any other matters that may be relevant". 3. In my view, and by analogy to the principles of statutory interpretation, the starting point is the ordinary and grammatical meaning of the words having regard to their context and purpose: see generally Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28; SZTAL v Minister for Immigration and Border Protection [2017] HCA 34 at [14] per Kiefel CJ, Nettle and Gordon JJ; HRC Hotel Services Pty Ltd v Chief Commissioner of State Revenue [2018] NSWSC 820 at [108] per Ward CJ in Eq. 4. In SZTAL Kiefel CJ, Nettle and Gordon JJ summarised the position as follows (at [14]): The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose [citing Project Blue Sky at [69]-[71]; Alcan at [47]]. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense [citing CIC Insurance at 408]. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected. 1. And, again by way of analogy, ss 33 and 34 of the Interpretation Act 1987 (NSW), provide respectively that a Court is to prefer, in interpreting a provision of an Act, the construction that would promote the purpose or object underlying the Act (whether or not that purpose or object is expressly stated in the Act) over a construction that would not promote that purpose or object. 2. I repeat, I am not interpreting a provision of an Act. However, the context is important. The purposes of the LGA include the provision of a legal framework for the system of local government for New South Wales (LGA, s 7(a)), to set out the responsibilities and powers of councils, councillors and other persons and bodies that constitute the system of local government (LGA, s 7(b)) and to provide for a system of local government that is accountable to the community and that is sustainable, flexible and effective (LGA, s 7(c)). 3. A guiding principle for local councils is that they act fairly, ethically and without bias in the interests of the local community (LGA, s 8A(h)), and that their decision-making be transparent with decision-makers being accountable for decisions and omissions (LGA, s 8A(2)(e)). 4. Given those purposes and principles, Ch 14 relates to "Honesty and disclosure of interests". Div 1 of Ch 14 (ss 439AA to 440AA) deals with "Conduct Generally", Div 2 (ss 440A to 440E) deals with "Serious corrupt conduct") and Div 3 (and relevant to this matter) with "Misconduct". 5. Div 3 contains the machinery for the investigation by or the seeking of reports for the Departmental Chief Executive (s 440H), the Departmental Chief Executive taking disciplinary action (s 440I) and alternatives to the Departmental Chief Executive taking disciplinary action (s 440J). Section 440J(2)(b) contained one such alternative, and which occurred with this application, is a referral to the Tribunal for consideration. Section 440J(3) provides that a matter is referred to the Tribunal under this section by means of a report presented to the Tribunal by the Departmental Chief Executive, and that a report may contain or be accompanied by such material and observations as the Departmental Chief Executive thinks fit. 6. In this instance, the Departmental Chief Executive has authorised the Principal Investigator and the Senior Investigator to investigate and prepare a report on three specific matters (namely those identified in paragraphs 1, 2 and 3 of the Delegation) and "any other matters that may be relevant". 7. The phrase is perhaps ambiguous. But I see no reason to read it down in the way the respondent contends. It is to be anticipated that during an investigation additional facts and matter requiring investigation beyond the original matters the subject of a delegation maybe discovered. In my view it is, as the respondent submitted, a type of "catch all provision", but given the qualifying word "other", paragraph 4 should not be read as matters relevant to those matters in identified in paragraphs 1, 2 and 3. 8. For these reasons I admit the whole of the Report into evidence. Respondent's Evidence 1. The respondent relied on the following documents or bundles of documents: * correspondence to and from the OLG (Exhibit As to D); and * the statement of the respondent dated 31 May 2021 (Exhibit E). 1. The principal evidence relied on by the respondent was his statement, to which was attached a number of documents including emails, a funeral notice of a close friend of the respondent, newspaper articles and a statement of the Hon Mark Latham MLC, undated, but presumably made to the Legislative Council of which Mr Latham is a member. 2. In fact, the statement is partly submissions and partly facts. By way of example of a submission, the respondent states in par [1] of his statement that: I respectfully appeal to the Tribunal to find that taking into considerations all relevant facts; I ought to be excused for inadvertently failing to strictly disclose all relevant pecuniary interest in the initial returns. In the alternative, I respectfully submit that I be warned rather than suffer a harsher penalty. I also seek to be heard on the issue of penalty and/or such action should be taken concerning the matters under consideration. 1. While the applicant did not object to the tender of the statement, I will treat statements such as the above, and others like it, as a submission. 2. The statement commences by the respondent setting out his personal background, and his history as a local councillor. He states that his initial return after being elected as mayor on 9 September 2017 was filed on 3 October 2017, which was within the required three months. The following year, on 3 October 2018, he lodged his return for the period to 30 June 2018. 3. On 12 December 2018, he became aware that the complaint had been made to the Office of Local Government (OLG) where it was alleged that he had failed to complete his written return is closing interest for the period 1 July 2017 to 30 June 2018. 4. He says that he is aware that he has failed to properly disclose the address of each parcel of real property, corporate interests and social interests since the initial return and the nature of such interest. 5. During the course of the investigation the Principal Investigator Jennifer Noble required him to produce information. He appointed Mr Paul Kamper of Kamper Chartered Accountants to act on his behalf, and says that he "wholeheartedly" cooperated with the investigation. He says he takes full responsibility for unintentionally completing his return form incorrectly and with "no hesitation" provided the OLG with the correct information. 6. He says that he is now aware that he had not completely understood his corporate structure and occasionally had not been provided with adequate advice from his advisors at the time he was completing the Section 449 Return Form dated 13 October 2017. 7. He says that one of his previous advisors had an obligation to properly manage his affairs, and that that person ignored his questions and did not act ethically in assisting him. That is why he retained Mr Kamper. He is very grateful for Mr Kamper's services. 8. The respondent's position in relation to the alleged misconduct is best summarised at par [47] as follows: Any claims of false, misleading or undisclosed interests are inaccurate, it was simply my lack of knowledge of my corporate structure and I had relied on the advice of my former accountant and adviser … . In that context, I admit the incorrect return as lodged but deny that it was deliberately false and/or misleading or more importantly to give a return that would be deliberately false to members of the public and/or persons concerned who would rely upon the register of local councillors as to their declarations of personal and/or pecuniary interest. 1. The balance of the statement goes to matters of penalty and will be considered at the Stage Two hearing. 2. For reasons that will be explained in my costs decision, this Stage One hearing took place over 2 days, 2 June and 16 June 2021. On 16 June 2021, the respondent was required for cross-examination. 3. The salient parts of his cross-examination were as follows. 4. The respondent was aware of the Code and knew where to find a copy. He understood that under cl 4.21 that he was required to lodge pecuniary interest form. 5. The respondent was first taken to pp A 208 to A214 of the Report, "Disclosure of Pecuniary Interests and Other Matters Return in accordance with clause 4.21 of Council's Code of Conduct" dated 24 September 2019 (2019 Return). The respondent agreed that: * the first page of the 2019 Return provided that the pecuniary and other matters to be disclosed in the return were prescribed by Schedule 1 of the Code; * the first page of the 2019 Return provided that a councillor must not lodge a return that they know or ought reasonably to know is false misleading in a material particular; * he signed the 2019 Return on 24 September 2019; * when he did so he acknowledged that the "details contained in this Return are true and correct. I will not lodge a Return that I know or ought reasonably to know is false or misleading in a material particular"; * he had signed the boxes on p A211 indicating that he had received NIL gifts at any time since 30 June 2018 and that no person had made a financial or other contribution to any travel undertaken by him at any time since 30 June 2018; * he had signed the boxes on p A212 indicating that he had NIL debts; * he had signed the box on p A213 indicating that he had made NIL dispositions of property at any time since 30 June 2018 and had NIL discretionary disclosures; * he had signed p A214 which was a schedule of his interests and positions in corporations. 1. The respondent said that his accountant Mr Kamper prepared the 2019 Return which he signed after checking it. 2. The respondent agreed that at the time he was a director of Laley Rosa Pty Ltd, and a 2% shareholder. After showing him a document, the applicant's counsel asked him if he wished to change his evidence, and the respondent then agreed that he owned half of the shares in Laley Rosa Pty Ltd. 3. The respondent further agreed that he knew both these matters when the 2019 Return was completed. 4. The respondent was then asked about p A210, and the section headed "Sources of income I reasonably expect to receive from a trust [etc]". He agreed that the reference to Baker Street Pty Ltd should be a reference to Barker Street Pty Ltd. When asked whether he had provided the address of Barker Street Pty Ltd, he said that he did not complete the form as it had been completed by Mr Kamper. The respondent agreed that he had checked the form but did not know why Mr Kamper did not include the address of Barker Street Pty Ltd. 5. The respondent was then asked about the section headed "name and address of settlor". He agreed that the box was blank. He agreed that the name and address of the settlor of the LMP Unit Trust was not stated anywhere in the 2019 Return, although he did not know why. 6. The respondent was then taken to par [30] of his statement, which states that on 7 August 2019 the Principal Investigator required him to produce information. He agreed that the document appearing at A47 ("Order Section 440H(3) Local Government Act 1993") was what he was referring to at par [30]. 7. He agreed that he had authorised Kamper Chartered Accountants to act for him during the course of the investigation, and that Mr Kamper told him that the time for compliance with the order had been extended. It was then to put to him that the reason the deadline was extended was because he had asked Mr Kamper to ask for one. His response was "I wouldn't' know that". 8. When taken to Exhibits 4 and 5, the respondent said that he was not aware of their contents. He agreed however that he did know about an email dated 4 June 2019 attaching a statutory declaration. 9. He agreed that he bore the responsibility of complying with the Principal Investigator's order, but that he was "not that educated" and explained that he left everything to the accountants. 10. He was then taken to his statutory declaration of 4 June 2020 (A221). That declaration relevantly states: There is no other information available to show any payment from a trust apart from what has already been disclosed to the Office of Local Government for the 2016/17 and 2017/18 financial years. 1. He agreed that as at 4 June 2020 he considered that he had provided everything he was required to provide. He was asked whether he had provided the tax return for Barker Street Pty Ltd. He responded that he everything up to Mr Kamper. He said he didn't know whether a copy of final tax return for the 2018 financial year had been provided. 2. It was then put to him that he had not provided the OLG with a signed tax return for the De Greg Unit Trust for the 2017 and 2018 financial years. Again, the respondent said he left everything to his accountant, and then he, that is the respondent, did whatever he was told to do. When asked whether to his knowledge had Mr Kamper had provided those documents to the OLG, he said that he did not know. 3. The respondent was then asked whether he had provided a copy of the tax return for the Laley Rosa Trust to the OLG, again he said he did not know, but that the Trust had a different accountant, and that he, the respondent, did not deal with any accounts. He said that when Mr Kamper gave him documents and told him to sign them, he signed whatever it was told to. He agreed he wasn't checking anything "I never check anything, I leave everything to him", explaining that, with his background, which the Tribunal inferred was a reference to his lack of education, he leaves these matters to someone he can trust. 4. He agreed that ultimately the responsibility to comply the Investigator's order, and that "this was my mistake". 5. The respondent was then asked whether he had provided a signed tax return for the De Douai Sutherland Trust 2017 and 2018 financial years. His response "I wouldn't know … I leave everything to my accountant". 6. The respondent was then asked whether, to his knowledge, by 4 June 2020 (the date of his statutory declaration), had all of his tax returns been filed with the Australian Taxation Office for the 2017 and 2018 financial years. He said that as far as he knew his accountant had finalised everything, and he had in fact paid some tax there previous week. He was sure that the signed the tax returns for those financial years. When asked whether there would be signed copies somewhere, he said "ask the accountant". 7. The respondent was re-examined briefly by his counsel. He was taken to the reference "name and address of settlor" on p A210. He was asked if he knew what a settlor of a trust was. He said that he did not. Submissions 1. The Tribunal had the benefit of oral and written submissions from the applicant, and oral submissions from the respondent. I will consider the relevant submissions during the course of the Consideration section of these reasons. Relevant provisions of the LGA and the Code 1. It is appropriate to set out the Relevant provisions of the LGA and the Code. The LGA 1. Section 440F of LGA provides: 440F Definitions (1) In this Chapter— misconduct of a councillor means any of the following— (a) a contravention by the councillor of this Act or the regulations, (b) a failure by the councillor to comply with an applicable requirement of a code of conduct, (c) a failure by a councillor to comply with an order issued by the Departmental Chief Executive under this Division, (d) an act of disorder committed by the councillor at a meeting of the council or a committee of the council, (e) an act or omission of the councillor intended by the councillor to prevent the proper or effective functioning of the council or a committee of the council. (2) For the purposes of determining whether a person has engaged in misconduct, the person does not breach a provision of a code of conduct that requires the disclosure of a pecuniary interest if the person did not know and could not reasonably be expected to have known that the matter under consideration at a meeting was a matter in which the person had a pecuniary interest. (3) A reference in this Division to misconduct includes a reference to misconduct that consists of an omission or failure to do something. 1. Section 440H of LGA relevantly provides" 440H Departmental Chief Executive may investigate or seek report on misconduct of councillor (1) The Departmental Chief Executive may conduct an investigation for the purpose of determining whether a councillor has engaged in misconduct. (2) The Departmental Chief Executive may conduct such an investigation— (a) on his or her own initiative, or (b) if the general manager of a council refers an allegation of misconduct by a councillor to the Departmental Chief Executive, or (c) if a council, by resolution, refers an allegation of misconduct by a councillor to the Departmental Chief Executive, or (d) if the Ombudsman states in a report that the Ombudsman is satisfied that a councillor has or may have engaged in misconduct, or (e) if the Independent Commission Against Corruption states in a report that the Commission is satisfied that a councillor has or may have engaged in misconduct. (3) For the purpose of an investigation, the Departmental Chief Executive may, by order in writing served on any person, direct the person to do any one or more of the following— (a) provide written information, by the date specified in the order, and to verify the information by statutory declaration, (b) produce, at a time and place specified in the order, any document specified in the order that is in the person's custody or control. 1. Sections 449 of the LGA then in force at the time provided: 449 Returns disclosing interests of councillors and designated persons (1) A councillor or designated person must complete and lodge with the general manager, within 3 months after becoming a councillor or designated person, a return in the form prescribed by the regulations. (1A) A person must not lodge a return that the person knows or ought reasonably to know is false or misleading in a material particular. (2) A person need not lodge a return within the 3-month period after becoming a councillor or designated person if the person lodged a return in that year or the previous year or if the person ceases to be a councillor or designated person within the 3-month period. (3) A councillor or designated person holding that position at 30 June in any year must complete and lodge with the general manager within 3 months after that date a return in the form prescribed by the regulations. (4) A person need not lodge a return within the 3-month period after 30 June in a year if the person lodged a return under subsection (1) within 3 months of 30 June in that year. (5) Nothing in this section prevents a councillor or designated person from lodging more than one return in any year. (6) Nothing in this section or the regulations requires a person to disclose in a return lodged under this section an interest of the person's spouse or de facto partner or a relative of the person. 1. Section 661 of the LGA provides: 661 Failure to comply with certain directions A person who fails, without lawful excuse, to comply with a direction given to the person under Part 3 or 5 of Chapter 13 or section 440H by a person authorised to give the direction is guilty of an offence. Maximum penalty—20 penalty units. The Code 1. The relevant clauses of the Code are cll 4.20(a), 4.21(b) and (c), 4.23, 4.28 and 4.29. Those clauses state: What disclosures must be made by a counsellor? 4.20 A councillor: (a) must prepare and submit written returns of interest in accordance with clause 4.21, and (b) must disclose pecuniary interests in accordance with clause 4.28 and comply with clause 4.29 where is applicable. Disclosure of interests in written returns 4.21 A councillor or designated person must make and lodge with the general manager a return in the form set out in schedule 2 to this code, disclosing the councillor's or designated person's interests as specified in schedule 1 to this code within 3 months after: … (a) 30 June of each year, and (b) the councillor or designated person becoming aware of an interest they are required to disclose under schedule 1 that has not been previously disclosed in a return lodged under paragraphs (a) or (b). … 4.23 A person must not make and lodge a return that the person knows Audrey recently to know is false or misleading and in a material particular. … Disclosure of pecuniary interests at meetings 4.28 A councillor or a council committee member who has a pecuniary interest in any matter with which the council is concerned, and who is present at a meeting of the council or committee at which the matter is being considered, must disclose the nature of the interest to the meeting as soon as practicable. 4.29 The councillor or council committee member must not be present at, or in sight of, the meeting of the council or committee: (a) at any time during which the matter is being considered or discussed by the council or committee, or (b) at any time during which the council or committee is voting on any question in relation to the matter. 1. Also relevant are cll 2 26 and 27(b) of Sch 1 of the Code which provide: 26. A person making a return under clause 4.21 of this code must disclose: a) each source of income that the person reasonably expects to receive in the period commencing on the first day after the return date and ending on the following 30 June, and b) each source of income received by the person in the period since 30 June of the previous financial year. 27. A reference in clause 26 of this schedule to each source of income received, or reasonably expected to be received, by a person is a reference to: a) in relation to income from an occupation of the person: (i) a description of the occupation, and (ii) if the person is employed or the holder of an office, the name and address of their employer, or a description of the office, and (iii) if the person has entered into a partnership with other persons, the name (if any) under which the partnership is conducted, or b) in relation to income from a trust, the name and address of the settlor and the trustee, or c) in relation to any other income, a description sufficient to identify the person from whom, or the circumstances in which, the income was, or is reasonably expected to be, received. Consideration Grounds One, Two and Three. 1. As noted, the respondent admits each of Grounds One, Two and Three. 2. I find therefore that the respondent failed to complete and lodge with the general manager of the Council in the form prescribed by the regulations within 3 months after 30 June 2018 a return disclosing his interests for the period 1 July 2017 to 30 June 2018 in breach of s 449(3) of the LGA (as in force at the time). 3. I find therefore that the respondent failed to provide information required by Divisions 1 and 2 of Part 8 of the Regulation in: * his initial written return disclosing interests dated 13 October 2017, in breach of s 449(1) of the LGA (as in force at the time); and * his written return dated 3 October 2018, disclosing interests for the period ending 30 June 2018, in breach of s 449(3) of the LGA (as-in-force-at the time). 1. I find therefore that the respondent lodged returns disclosing interests, namely: * his initial written return disclosing interests dated 13 October 2017; and * his written return dated 3 October 2018, disclosing interests for the period ending 30 June 2018, which he knew, or ought reasonably to have known, were false or misleading in a material particular, in breach of s 449(1A) of the LGA (as in force at that time). Ground Four 1. Ground Four was that the respondent failed to provide information required by Sch 1 of the Code (as in force at the time) in his written return dated 24 September 2019 (the 2019 Return) disclosing interests for the period ending 30 June 2019, in breach of cll 4.21(b) and (c) of the Code. 2. The applicant makes no complaint in relation to the section of the 2019 Return relating to the disclosure of interest in five pieces of real property and the nature of those interests. 3. The applicant submits that the respondent reached cll 4.21(b) and (c) of the Code in three ways: * by failing to disclose the name and address of the settlor of the LMP Unit Trust; * by failing to disclose the name and address of the trustee of the LMP Unit Trust; and * by failing to disclose that he was a director, secretary and 50% shareholder of Laley Rosa Pty Ltd. 1. I reject the submission that there was any breach of cl 4.21(b). Clause 4.21(b) requires disclosure of interests by 30 September 2019. The receipted copy of the Return contained in Exhibit 1 shows that the 2019 Return was received on 24 September 2019. 2. I turn now to the three ways in which the applicant submits that the respondent has breached cl 4.21(c). 3. The first is by failing to disclose the name and address of the Settlor of the LMP Unit Trust as required by cl 27 (b) of Sch 1 of the Code. The effect of cll 26 and 27 of Schedule 1 is that, in relation to income from a trust, the name and address of the settlor and the trustee must be included in the return. 4. Clause 4.21(c) requires a councillor, when becoming aware of an interest they are required to disclose under Schedule 1 of the Code that has not been previously disclosed in a return lodged under cll 4.21(a) and (b) to disclose the interest by 30 September 2019. 5. "Interest" is defined in Sch 1 of the Code as meaning: in relation to property, an asset, interest, right or power, at law or in equity in or over the property; or in relation to a corporation, a relevant interest (within the meaning of section 9 of the Corporations Act 2001 of the Commonwealth) in securities issued or made by the corporation. 1. A settlor of the trust is the person responsible for setting up the trust and naming the beneficiaries, the trustee and, if there is one, the appointor. Usually, but by no means always, the role and function of the settlor concludes upon the establishment of the trust. That is because, there are tax implications under the Income Tax Assessment Act 1936 (Cth) where a settlor creates a trust and: * has the power to revoke or alter the trust to acquire a beneficial interest in the income derived by the trustee, or take back trust property; or * the income of the trust is payable to the minor children of the settlor. 1. In such a case, the trustee of the trust will be assessed as having to pay income tax on the income of the trust by the Australian Tax Office, rather than income tax being assessed in the hands of the beneficiaries of the trust to whom distributions are made. 2. I am not satisfied that the failure to disclose the name and address of the settlor of the LMP Unit Trust is a breach of cl 4.21(c) of the Code. 3. The second way in which the applicant says that the respondent breached cl 4.21(c) of the Code was by failing to disclose the name and address of the trustee of the LMP Unit Trust. The 2019 Return shows that the name of the trustee (albeit incorrectly spelt) was disclosed. However, and the respondent agreed, the address was not. I find therefore that the respondent breached the Code in this respect. 4. Finally, the applicant says that the respondent failed disclose that he was a director, secretary and 50% shareholder of Laley Rosa Pty Ltd. This is correct, and the shareholding aspect conceded by the respondent in his cross-examination. I find therefore that the respondent breached the Code in this respect. Ground Five 1. Ground Five was that the respondent lodged a return disclosing interests, namely the 2019 Return, disclosing interests for the period ending 30 June 2019, which he knew, or ought reasonably to have known, were false and misleading in a material particular, in breach of cl 4.23 of the Code. 2. The applicant submits that: 1. there can be no dispute that the form was false and misleading, as it failed to disclose a number of key interests that the respondent had in corporations; 2. it is implausible that such omissions occurred as a result of carelessness in preparation of the disclosure form by the respondent. As the Return was prepared by Mr Kamper or his staff, it is open to the Tribunal to infer that the oversights were due the respondent's failure to provide this information to Mr Kamper; and 3. regardless of the reasons why it happened, the respondent should be taken as having ought to have known that his 2019 Return was misleading in a material particular. 1. The applicant submits that these conclusions are available to the Tribunal on the balance of probabilities. 2. I accept that the standard of proof is upon the balance of probabilities. However, the level of persuasion the Tribunal must feel to find a matter proved to that standard increases with the gravity of the matter. As the Tribunal noted in Office of Local Government v Councillor Campbell of Murray Shire Council [2015] NSWCATOD 129 at [5]: The rules of evidence do not apply in this hearing: Civil and Administrative Tribunal Act 2013, s 38(2). Nevertheless, findings have been based on probative evidence, also applying the caution expressed by the High Court in Briginshaw v Briginshaw (1938) 60 CLR 336 at 362-3 and Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66 in relation to the required strength of evidence required in a hearing such as this, where the allegations are serious, as are the potential consequences of adverse findings. 1. See too Office of Local Government v Councillor Martin Ticehurst of Lithgow City Council [2016] NSWCATOD 122 and Hindi v Chief Executive, Office of Local Government [2016] NSWCATOD 134 at [74]. 2. I am not satisfied that the respondent knew that the 2019 Return was misleading in a material particular. After all, he conceded that he did not "check" the document (or any document prepared by his accountant for that matter) and that he had made a mistake. 3. However, I do consider that he ought to have known that it was. He conceded he did not check the 2019 Return, but accepted in cross-examination that he bore the responsibility for the production of documents requested by the Principal Investigator. Ground Six 1. Ground Six was that the respondent failed to comply with a direction given under s 440H of the LGA, which is a breach of s 661 of the LGA, which in turn constitutes misconduct pursuant to s 440F(1)(a), or s 440F(1)(c) of the LGA. Relevant findings 1. On the basis of the evidence before me I make the following primary factual findings in relation to Ground Six: 1. on 7 August 2019, the Principal Investigator issued to the respondent an order pursuant to s 440H(3) of the LGA requiring him to deliver her the information and documents set out in the Schedule to the order within 21 days, that is by 28 August 2019 (the Order). In addition, the information was to be verified by statutory declaration. The Schedule was in the following terms: I direct you to provide the following documents: 1. Tax returns for the financial years 2016-2017 and 2017-2018; 2. Trust tax returns for the financial years 2016- 2017 and 2017-2018; 3. Any document that shows any payment to you from any Trust for the financial years 2016-2017 and 2017-2018; in relation to any Trust of which you were a trustee including but not limited to the following Trusts: • LMP Unit Trust • De Greg Unit Trust • Laley Roser Unit Trust • De Douai Unit Trust • De Douai Sutherland Trust • AL Investments Trust. I direct you to provide the following information, verified by statutory declaration: 4. Any information that shows any payment to you from any Trust for the financial years 2016-2017 and 2017-2018; 5. The whereabouts of any of the mentioned documents or information in the event such documents is not in your custody or control; in relation to any Trust of which you were a trustee including but not limited to the following Trusts: • LMP Unit Trust • De Greg Unit Trust • Laley Roser Unit Trust • De Douai Unit Trust • De Douai Sutherland Trust • AL Investments Trust. 1. on 26 August 2019, the Principal Investigator received a telephone call from Mr Kamper requesting a three week extension for the time in which to provide the documents and information sought under the order. The Principal Investigator approved an extension to 18 September 2019; 2. on 24 September 2019, a member of Mr Kamper's staff sent an email to the Principal Investigator. The email relevantly stated: We are the newly appointed accounts for [the respondent] and we respond to the order issued 7th August 2019. We have attached tax returns (where applicable) for the following entities for the 2017 & 2018 financial years. • De Greg Unit Trust • Laley Roser Unit Trust • De Douai Unit Trust • De Douai Sutherland Trust • AL Investments Trust. 1. on 29 October 2019, the Principal Investigator sent Mr Kamper relevantly stating: I have just spoken with [the respondent] regarding scheduling a suitable time to conduct the formal interview. has requested that you also attend. Can you please provide any suitable dates for the first 2 weeks of October that you have available. Additionally, thank you for the documents provided; however, as per the Order (attached) pursuant to s.429 of the Local Government Act 1993 (LGA) to provide information and documents served on 8 August 2019, [the respondent] has only provided, as per the Schedule, Trust tax returns. Could you please provide the remaining documents as per the Order prior to the interview? 1. on 5 November 2019, the Principal Investigator sent Mr Kamper an email relevantly stating: Further to my email dated 29 October 2019 requesting you provide the remaining documents of the above Order. I have not yet received a response or the documents. I draw your attention to s661 Failure to comply with certain directions of the Local Government Act 1993 (as noted on page 3 of the Order). Please provide remaining documents by 5:00pm Friday 8 November 2019. 1. on 8 November 2019, the Principal Investigator sent Mr Kamper an email relevantly stating: Could you please advise if the documents requested will be provided to the Office of Local Government by COB today as agreed? 1. on 19 November 2019, a member of Mr Kamper's staff sent an email to the Principal Investigator. The email relevantly stated: Attached are draft 2018 for [the respondent] and related groups. Please note we are working on the 2018 file to ensure that the accounts and returns are correct, as we are the newly appointed agents to tbhis matter. 1. attached to the email were the draft tax returns for the 2018 financial year for Barker Street Pty Ltd, the respondent, and a partnership described as "Antoine and Laudi Doueihi". 1. "On the basis on those primary factual findings, I conclude therefore that: 1. The signed trust tax return for the LMP Unit Trust for the 2017 financial year was provided on 24 September 2019; 2. unsigned tax returns for the De Greg Unit Trust, the Laley Roser Unit Trust, the De Douai Unit Trust, the De Douai Sutherland Trust and the AL Investments Trust were provided on 24 September 2019; 3. the draft tax return for the LMP Unit Trust for the 2018 financial year was provided on 18 November 2019; 4. the draft tax returns for the 2018 financial year for Barker Street Pty Ltd, the respondent, and a partnership described as "Antoine and Laudi Doueihi" (which I find fall into the category of documents falling within paragraph 4 of the Schedule to the Order) were provided on 19 November 2019". 1. In the circumstances I find Ground Six established. I find that the respondent failed to comply with a direction given under s 440H of the LGA, which is a breach of s 661 of the LGA, which in turn constitutes misconduct pursuant to s 440F(1)(a) and s 440F(1)(c) of the LGA. Conclusion 1. In conclusion, I find that: 1. the respondent has breached s 449(3) of the Act by reason of the matters set out in Ground One of the Amended Grounds; 2. the respondent has breached s 449(1) of the Act by reason of the matters set out in Ground Two (a) of the Amended Grounds; 3. the respondent has breached s 449(1) of the Act by reason of the matters set out in Ground Two (b) of the Amended Grounds; 4. the respondent has breached s 449(1A) of the Act by reason of the matters set out in Ground Three (a) of the Amended Grounds; 5. the respondent has breached s 449(1A) of the Act by reason of the matters set out in Ground Three (b) of the Amended Grounds; 6. the respondent has breached cll 4.21(c) of the Code by reason of the matters set out in Ground 4 of the Amended Grounds in so far that the respondent: 1. failed to disclose the address of the trustee of the LMP Unit Trust in the 2019 Return; 2. failed to disclose that he was a director, secretary and 50% shareholder of Laley Rosa Pty Ltd; in the 2019 Return 1. the respondent has breached cl 4.23 of the Code by reason of the matters set out in Ground 5 of the Amended Grounds; 2. the respondent failed to comply with a direction given under s 440H of the LGA, which is a breach of s 661 of the LGA, which constitutes misconduct pursuant to s 440F(1)(a) and s 440F(1)(c) of the LGA. Costs 1. I have received submissions in relation to the costs of the hearing on 2 June 2021. On reflection, I have decided to deal with costs at the conclusion of the Stage 2 hearing, but that is not to say that the costs of the hearing on 2 June 2021 are contingent on the outcome of the Stage 2 hearing. I will deal with those costs as a matter separate to other costs of the proceedings. 2. In any event, in his written submissions on costs, the respondent sought the opportunity to make oral submissions. Costs decisions are routinely made "on the papers" and without a hearing. However, as there is to be Stage 2 hearing to be held, any oral submissions either party wishes to make on the costs of the hearing of 2 June 2021 can be made then. Orders 1. The Tribunal orders that: 1. Ground One of the Amended Grounds for Application filed 24 February 2021 is established. 2. Ground Two of the Amended Grounds for Application filed 24 February 2021 is established. 3. Ground Three of the Amended Grounds for Application filed 24 February 2021 is established. 4. Ground Four of the Amended Grounds for Application filed 24 February 2021 is established in so far that the respondent failed to disclose in the 2019 Return the address of the trustee of the LMP Unit Trust and that he was a director, secretary and 50% shareholder of Laley Rosa Pty Ltd. 5. Ground Five of the Amended Grounds for Application filed 24 February 2021 is established. 6. Ground Six of the Amended Grounds for Application filed 24 February 2021 is established. ********** Amendments 1. Paragraph [104] Amended 2. 'L&P Unit Trust' amended to 'LMP Unit Trust' 3. Respondent's surname amended to 'Doueihi' I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar Amendments 09 December 2021 - 1 Paragraph [104] Amended 2 'L&P Unit Trust' amended to 'LMP Unit Trust' 3 Respondent's surname amended to 'Doueihi' DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 December 2021