New South Wales Supreme Court CITATION : Leichhardt Municipal Council v Minister for Local Government & anor. [2002] NSWSC 4 FILE NUMBER(S) : SC 30073/01 HEARING DATE(S) : 17 December 2001 JUDGMENT DATE : 20 December 2001 Leichhardt Municipal Council PARTIES : Minister for Local Government Local Government Boundaries Commission JUDGMENT OF : Sully J at 1 COUNSEL : B. J. Preston SC/Dr. S. Pritchard - Plaintiff J. Griffiths SC/S. Lloyd - Defendants SOLICITORS : Pike Pike and Fenwick - Plaintiff Crown Solicitor's Office - Defendants LEGISLATION CITED : Local Government Act 1993 NSW Commerce Act 1986 of New Zealand CASES CITED : Commerce Commission v Fletcher Challenge Limited (1989) 2 NZLR 554 DECISION : Amended summons dismissed; Costs reserved; Exhibits to remain in Court pending further order IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION 30073/01 SULLY J Thursday 20 December, 2001 LEICHHARDT MUNICIPAL COUNCIL v MINISTER FOR LOCAL GOVERNMENT & 1 OR. JUDGMENT 1 HIS HONOUR: By a summons filed on 4 December 2001, the Leichhardt Municipal Council as plaintiff seeks various declarations, orders and injunctions against two defendants: the first of them being the Minister for Local Government; and the second of them being the Local Government Boundaries Commission. I shall refer in what follows to these parties as, respectively, "the Council", "the Minister" and "the Commission". 2 The Council is a local governing authority for the purposes of the Local Government Act 1993 NSW, ("the Act"). It is a body corporate by statute section 220 of the Act. It has a wide range of functions, some of which are prescribed for it by the Act, and others of which are prescribed for it by other statutes. It performs those statutory functions in relation to a particular Local Government area constituted by a proclamation made by the Governor pursuant to power conferred by section 204 of the Act. 3 The Minister is the Minister of the Crown who is charged with the administration of the Act. The Commission is a body corporate so constituted by section 260 of the Act. Its functions are prescribed by section 263 of the Act. The provisions now relevant of section 263 are: "(2) For the purpose of exercising its functions, the Boundaries Commission: (a) may hold an inquiry if the Minister so approves, and (b) must hold an inquiry if the minister so directs, but may not hold an inquiry otherwise than as referred to in paragraph (a) or (b). (3) When considering any matter referred to it that relates to the boundaries of areas or the areas of operations of county councils, the Boundaries Commission is required to have regard to the following factors: (a) the financial advantages or disadvantages (including the economies or diseconomies of scale) of any relevant proposal to the residents and ratepayers of the areas concerned, (b) the community of interest and geographic cohesion in the existing areas and in any proposed new area, (c) the existing historical and traditional values in the existing areas and the impact of change on them, (d) the attitude of the residents and ratepayers of the areas concerned, (e) the requirements of the area concerned in relation to elected representation for residents and ratepayers at the local level, the desirable and appropriate relationship between elected representatives and ratepayers and residents and such other matters as it considers relevant in relation to the past and future patterns of elected representation for that area, (e1) the impact of any relevant proposal on the ability of the councils of the areas concerned to provide adequate, equitable and appropriate services and facilities, (e2) the impact of any relevant proposal on the employment of the staff by the Councils of the areas concerned, (e3) the impact of any relevant proposal on rural communities in the areas concerned, (e4) in the case of a proposal for the amalgamation of two or more areas, the desirability (or otherwise) of dividing the resulting area or areas into wards, (e5) in the case of a proposal for the amalgamation of two or more areas, the need to ensure that the opinions of each of the diverse communities of the resulting area or areas are effectively represented, (f) such other factors as it considers relevant to the provision of efficient and effective local government in the existing and proposed new areas. (5) The Boundaries Commission must allow members of the public to attend any inquiry held by the Commission under this section." 4 On 20 November 2001 the Minister signed an instrument bearing that date and expresses as follows: "LOCAL GOVERNMENT ACT 1993 ORDER REFERRAL OF BOUNDARY ALTERATION PROPOSAL TO THE LOCAL GOVERNMENT BOUNDARIES COMMISSION I, Harry Woods, Minister for Local Government, acting under sections 218E(1) and 218F(1) of the Local Government Act 1993, hereby order the referral of my boundary alteration proposal to transfer that portion of the suburbs of Chippendale, Camperdown, Ultimo and the suburbs of Forest Lodge and Glebe currently within Leichhardt local government area and South Sydney local government area to Sydney local government area to the Local Government Boundaries Commission. • The area proposed to be transferred from Leichhardt and South Sydney local government areas to Sydney local government area commences at the boundary of the Sydney and South Sydney local government areas at the intersection of Cleveland Street and Regent Street; • thence proceeding generally west to the intersection of City Road; • thence proceeding generally south-west along City Road to the intersection with Carillon Avenue; • thence west along Carillon Avenue to the intersection with Mallett Street; • thence generally north-west along Mallett Street to the intersection of Pyrmont Bridge Road, then continuing north-west along Booth Street to the intersection of Wigram Road; • thence north-east along Wigram Road to the commencement of the stormwater channel along Johnstons Creek; • thence following the Johnstons Creek Stormwater Channel north to its crossing with The Crescent; • thence north along The Crescent to the intersection of Chapman Road, then east along Chapman Road to the boundary with Bicentennial Park and Federal Park; • thence north-east along that boundary to the foreshore of Rozelle Bay; • recommencing at the boundary of Sydney and Leichhardt local government areas at the foreshore of Blackwattle Bay at the junction of Wattle Street and Pyrmont Bridge Road; • thence proceeding along that boundary as last described to commencement. I request the Local Government Boundaries Commission to examine and report on the proposal in accordance with the Act, having regard to the following factors as required by section 263(3): (a) the financial advantages or disadvantages (including the economies or diseconomies of scale) of any relevant proposal to the residents and ratepayers of the areas concerned, (b) the community of interest and geographic cohesion in the existing areas and in any proposed new area, (c) the existing historical and traditional values in the existing areas and the impact of change on them, (d) the attitude of the residents and ratepayers of the areas concerned, (e) the requirements of the area concerned in relation to elected representation for residents and ratepayers at the local level, the desirable and appropriate relationship between elected representatives and ratepayers and residents and such other matters as it considers relevant in relation to the past and future patterns of elected representation for that area, (e1) the impact of any relevant proposal on the ability of the councils of the areas concerned to provide adequate, equitable and appropriate services and facilities, (e2) the impact of any relevant proposal on the employment of the staff by the Councils of the areas concerned, (e3) the impact of any relevant proposal on rural communities in the areas concerned, (e4) in the case of a proposal for the amalgamation of two or more areas, the desirability (or otherwise) of dividing the resulting area or areas into wards, (e5) in the case of a proposal for the amalgamation of two or more areas, the need to ensure that the opinions of each of the diverse communities of the resulting area or areas are effectively represented, (f) such other factors as it considers relevant to the provision of efficient and effective local government in the existing and proposed new areas. The Local Government Boundaries Commission may not hold an inquiry on this proposal." 5 Sections 218E(1) and 218F(1) of the Act, to which the Minister's orders refers, provide relevantly: "218E(1) A proposal may be made by the Minister … 218F(1) On making ... a proposal the Minister must refer it for examination and report to ... (the Commission)." 6 The reference in each of those two sections to a proposal relates back, relevantly, to section 218B which provides: "218B The Governor may by proclamation alter the boundaries of one or more areas." 7 The Council's summons claims various forms of substantive relief which are expressed in twenty-one separate paragraphs. 8 In crystallising the real issues calling for present decision, it is, I think, useful to use, not the prayers for relief as set out in the summons, but the issues as defined in the written submissions put in by learned counsel for the council. Those issues are said to be: "(a) The failure of the Minister to refer to the Commission a "proposal" in the sense required by section 218E(1) and section 218F(1) of the LG Act. (b) The absence of jurisdiction in the Commission to examine and report on the proposal. (c) The failure by the Commission to afford procedural fairness to the Council. (d) The absence of any obligation on the part of the Council to comply with the transitional arrangements." 9 It is convenient to deal in the stated order with those four issues. Issue (a) 10 The Council's essential contention is put clearly and succinctly, and as follows, in paragraph 31 of the written submissions: "The purported proposal fails to define the matter completely and clearly so that those affected and those interested in making submissions know with sufficient certainty what is proposed and are armed with the capacity to make an informed judgment." 11 The submissions which are advanced by the Council in support of that basal proposition point, in particular, to what is said to be a virtually total absence of such a degree of "certainty and particularity" as would enable the Commission to carry out properly its relevant functions as defined in section 263(3) of the Act. 12 Part of the Act takes the form of a Dictionary, so described, that is intended to operate in the same way as a conventional definition section in a statute. The Dictionary does not contain a definition of the word "proposal". It is, therefore, necessary to inquire, first, into the ordinary grammatical meaning in ordinary English speech of that word. 13 Assistance to that end can be found in the decision of McGechan J of the High Court of New Zealand in Commerce Commission v Fletcher Challenge Limited (1989) 2 NZLR 554. That decision deals, relevantly, with a certain provision of the Commerce Act 1986 of New Zealand. The particular provision enacts that no person shall implement a merger or takeover proposal unless it has previously been given a clearance by the Commerce Commission. The term "merger or takeover proposal" is defined in the statute, but only in terms which define the relevant objectives of a "proposal", leaving at large, as in the present proceedings, the definition of quite what is required in order to stamp nominated dealings with the character of a "proposal". 14 Mr Justice McGechan considers the extent to which detail is necessary; and the extent to which there is a likelihood that the nominated dealings will proceed to complete commercial fruition. Against that background, McGechan J says this at page 608(5): "However, notwithstanding these qualifications as to detail and likelihood, to amount to "proposal", things must have gone some significant distance. The statute enacts a concept of "proposal". It is something which is put forward. It need not be a concluded enforceable contract. It may not yet be fully detailed, and it may still be in the balance or worse. However, it is something sufficiently formulated and determined to be put up for clearance and ultimately implemented. It is not something still a vague and unsettled notion. It is not something which is still merely under discussion, undecided. It has moved on past the discussion stage to a stage of formulation and acceptance." 15 That discussion can be supplemented usefully by a consideration of a collection of cases, most of them from Victoria, that are discussed in paragraphs [22.12], [22.14], both inclusive of the second edition of Pearce and Argument: Delegated Legislation in Australia. The discussion pertains to the proposition stated as follows by the learned authors: "The Courts have shown readiness to hold regulations invalid that impose obligations upon persons by reference to a specified area where the area is not described in terms that are certain." 16 I will not make a detailed canvass of those collected decisions because, having read all of them, I do not think that they derogate from the applicability to the notion of a "proposal" for the purpose of the Act, of the concepts discussed by McGechan J in the passage previously quoted. 17 The question now to be decided comes down, then, to the question whether the area defined in the eleven bullet-pointed sections of the Minister's order is sufficiently formulated to be put up to the Commission for its consideration as required by section 263 of the Act. 18 In that connection, I reason as follows. 1. It can be allowed at once that the definition of the relevant area could easily have been established with a greater and more helpful degree of precision. A precise metes and bounds description, a method well entrenched in the drawing of conveyances and the like documents, is one obvious way in which that could have been done. The use of a map is another. 2. It does not follow, however, that because the work could have been done better, it has not been, in the requisite legal sense, done at all. 3. The taking of that further step in reasoning calls for the making of findings of fact and degree. In so far as the proper findings thus to be made are in dispute, then it is the Council that bears in these proceedings the onus of proof on the probabilities. 4. In that connection, I refer first to paragraph 21 of an affidavit sworn in these proceedings by Mr Foster, the Council's general manager. Mr Foster there deposes: "21. Based on the description of the proposed boundary changes contained in the Minister's letter of 21 November 2001, Council has caused to be prepared two maps showing the area proposed to be transferred from Leichhardt and South Sydney councils to Sydney City Council. Exhibited to me at the time of swearing this affidavit and marked 'GTF 21' are copies of the two maps showing suburb boundaries and ward boundaries respectively." The letter of which Mr Foster there speaks contains the same description as that in the actual ministerial order. 5. There is a frustrating lack of evidence about these maps. Indeed, Mr Foster's own evidence apart, there is no evidence of which I am aware as to the preparation of these maps. There is not, for example, any evidence from the draftsman of the maps that he had to do his best with the Minister's description, filling by intuition topographical gaps identified by him during the course of his drafting work. In the absence of evidence of that character, it seems to me to be a fair inference that the Council's draftsman was able to produce, on the basis of the description in the Minister's order, not some pedantically ideal map illustration, but a map giving the Council a practical overview of the location of the area intended for transfer. 6. The greater part of Mr Foster's evidence, as given both on affidavit and orally, concentrated on the heavy demands that would be made upon the Council's available resources in the event that the Council were to adhere to the Commission's suggested timetable. Indeed, the greater part of the entirety of the evidence in the proceedings seems to me to be directed to this aspect of the proceedings. I shall say later something particular to this aspect. My present point is simply that the Council does not appear to me ever to have taken the stance that, even if it were allowed as much time as it might seek, it could nevertheless not do its public duty because of invincible uncertainty and imprecision in the definition in the ministerial order of the actual area being contemplated for transfer. 7. It is obviously the case that the area defined in the ministerial order refers to some named streets, and to a named creek, without specifying whether the proposed boundary is to run along one rather than the other side of the street or creek or, indeed, down the mid line or some other arbitrary division. It is possible, as a matter of strict logic, to argue that these lacunae in the definition entail that the definition is simply beyond reasonable construction. It seems to me, however, that such an approach frustrates rather than assists the way in which the Act is intended to operate. The Act is intended to achieve practical outcomes in the real world. There must be, of course, a point at which the definition of an area is so vague that no prudent and sensible interpretation of its terms can make practical and fair sense out of it. In my opinion, the present case falls very far short of that point. The course of the dealings between the Council and the Commission, and between the Council and the Minister, as disclosed by the evidence adduced in support of the Council's case, leaves me unpersuaded on the probabilities either that the definition in the order is invincibly obtuse, or that either the Council or the Commission has taken the stance that the definition is invincibly obtuse. 8. It was submitted that the imprecision of the definition in the order was such that the Commission itself could not do properly its own statutory duty in connection with the Minister's reference. I do not accept that submission. I think that sensible recourse to the Council's own two maps makes that submission untenable in fact. I am strengthened in that view by what appears to me to be an absence of any protestation by the Commission that it sees any such insuperable problem. 19 For the foregoing reasons I am of the opinion that the ministerial order is not so vague or uncertain in its relevant terms as to be in law and in fact no real exercise at all of the relevant ministerial power. Issue (b) 20 It is convenient once again to begin by noting the primary proposition advanced by the Council: "38. Further, properly characterised, the Minister's proposal is not a proposal for the exercise of the function to alter the boundaries of the local government area of Leichhardt under s.218B of the LG Act. Rather, it is a proposal for the exercise of the function to dissolve the whole or part of the local government area of Leichhardt, and to reconstitute a new local government area of Leichhardt with the suburbs of Glebe and Forest Lodge excluded, and a new local government area of the City of Sydney with the suburbs of Glebe and Forest Lodge included (plus suburbs of South Sydney) under s.212(1) and s.204(1) of the LG Act. Accordingly, there is no matter with respect to the boundaries of areas under section 263(1) which has been referred by the Minister to the Commission and in respect of which the Commission is required to examine and report. Accordingly, the Commission has no jurisdiction to examine and report upon the proposal." 21 In order to consider that submission in a proper context, it is necessary to look more closely than hitherto at chapter 9 of the Act. 22 Chapter 9 is headed "How are councils established?". The chapter is divided into three Parts of which Part I is now relevant. Part I is headed simply "Areas" and is divided into five divisions of which Division 1 is headed "How are areas constituted and dissolved?". Put simply and relevantly, the scheme of Division 1 is as follows: 1. Any part of the State, provided only that it is "a single area of continuous land", may be constituted as an area for the purposes of the Act. The defining act of constitution is proclamation by the Governor. 2. Any such area may be dissolved. Once again, the defining act is proclamation by the Governor. 3. Any such dissolution may be of the whole of an area or of part only of an area. 4. The Minister may not recommend a dissolution to the Governor until after a public inquiry has been held and its report has been considered by the Minister. 23 Division 2A of Part I deals with the amalgamation of existing areas; and with the alteration of the existing boundaries of one or more areas. As has been previously noted, section 218B empowers the Governor to proclaim boundary alterations after the alterations have been processed through a prescribed statutory scheme. 24 Section 218A empowers the Governor to proclaim the amalgamation of two or more areas into one or more new areas, but again only after compliance with a similar prescribed statutory procedure. 25 There is, as between sections 218A and 218B, one significant difference. Section 218A(2) provides: "On the date specified in the proclamation as the date on which the areas are to be amalgamated: (a) the areas are dissolved, and (b) the new area or new areas are constituted, and (c) subject to section 218C, the councillors of the former areas cease to hold office." 26 There is no corresponding provision in the case of a boundary alteration. 27 Division 2A was inserted into the Act by an amending Act: No 38 of 1999. The Act in its original form did not deal in terms with amalgamations of areas; or with the alterations of the boundaries of existing areas. 28 The Act in its original form contained a chapter 9 headed, as now, "How are councils established?". Part I of that original chapter 9 was headed, as now, simply "Areas". Division 1 of Part I was headed differently from its present heading: "How are areas constituted, altered and dissolved?". Section 204 was in its present form, and dealt with constitution. Section 209 was in precisely the same terms as the present section 218B, and dealt with alteration. Section 212 was in its present form, and dealt with dissolution. 29 Division 2 of Part I was headed differently from the current Division 2: "What must be done before areas can be constituted or altered?". Division 2 in its original form provided, in respect of both constitution and alteration, a statutory procedure that is applicable under the current Division 2 only to constitution. 30 Section 218(1) as it appeared in the original Division 2 provided, as it continues to do in the current Division 2, as follows: "(1) If the Minister decides to continue with the proposal, the Minister must refer it for examination and report to the Boundaries Commission, or if the Minister is of the opinion that the proposal involves a minor alteration or variation only, to the Director-General." 31 The original Division 2, and the original section 218(1) within it, did not provide at all for boundary alterations as something distinct from the acts of constitution and of dissolution of a Local Government area. If it was desired to alter the boundaries of an area, then a proposal had to be formulated and referred to the Commission for examination and report, unless what was being proposed involved "a minor alteration or variation only", in which case the reference might be made to the Director-General. 32 Thereafter, and if it was desired to implement the proposal, it was necessary to dissolve the existing areas which would be affected by the proposed boundary changes, and thereupon to reconstitute them with their amended boundaries. 33 The provision made by section 212(1) for the partial dissolution of an area seems to me to have been intended to cover a case in which the proposed boundary alterations did not warrant the comprehensive dissolution of the pre-existing areas, with the necessary concomitant dissolution of the pre-existing councils. In such a case the Governor could, by proclamation under section 209, alter by expansion the boundaries of the area which was to be enlarged, and effect by a concomitant proclamation under section 212(1) the necessary formal dissolution of that part of the donor area. Such a procedure would enable boundary alterations to be made without recourse to the formal comprehensive dissolution or reconstitution of the entire existing donor and donee areas. 34 The 1999 amendments disturb significantly the original statutory symmetry. The second reading speech of the Minister, (Hansard 22 June 1999, 1093-4), and the Minister's concluding speech in the second reading debate, (Hansard 29 June 1999, 1656-7), are notable for their concentration upon the issue of amalgamation of areas, to the exclusion, with one minor exception, of any reference to boundary changes as distinct from amalgamations. The exception is this glancing reference in the second reading speech at 1093: "The Minister will be able to recommend for the Governor's approval a proposal that has been modified as a result of examination by the Boundaries Commission or the Director-General. This may include incidental changes such as boundary adjustments. Again, as a matter of policy, councils have the final say on any changes relating to voluntary amalgamation ...". 35 In the end result there has emerged, in my opinion, this statutory scheme: 1. A Local Government area can be constituted in a wholly new configuration by proclamation pursuant to section 204. 2. Such a proclamation may not be recommended to the Governor unless and until the requirements of the current Division 2 of Part I have been satisfied. 3. The retained reference in section 218(1) to a referral to the Director-General in the case of "a minor alteration or variation only" is otiose. 4. The headnote to Division 2, as printed in the February 2000 reprint of the Act, is erroneous in that Division 2 no longer deals with alteration, as distinct from the constitution, of areas. 5. Two or more Local Government areas may be amalgamated into one or more new areas by proclamation pursuant to section 218A(1). 6. Such a proclamation may not be recommended to the Governor unless and until the requirements of the current Division 2B of Part I have been satisfied. 7. The fundamental realignment that is established by an amalgamation proclaimed pursuant to section 218A(1) is such as to entail ipso facto the dissolution of the pre-amalgamation areas; the constitution of the post-amalgamation area or areas; and the cessation of the offices of the Councillors of the pre-amalgamation areas, subject to the limited exception permitted by section 218C(2)(b). 8. The boundaries of one or more areas may be altered by proclamation pursuant to section 218B. 9. Such a proclamation may not be recommended to the Governor unless and until the requirements of the current Division 2B of Part I have been satisfied. 10. It is no longer necessary, as part of the process covered by 8 and 9 above, to proclaim, pursuant to section 212(1), a partial dissolution of a donor area. The boundaries of a donor area and of a correlative donee area may now be altered simply by the use of the machinery newly provided by Divisions 2A and 2B culminating in a section 218B proclamation. 36 If, as I believe, the foregoing analysis is correct, then it must follow that the proposal notified in the Minister's order dated 20 November 2001 is a proposal to alter area boundaries in the manner contemplated by Divisions 2A and 2B; and as such does not entail either overtly or covertly the use of the method of partial dissolution to which section 212(1) refers. 37 The proposition advanced in paragraph 38 of the Council's written submissions is, in my opinion, erroneous. Issue (c) 38 At the hearing of the summons this issue occupied by far the most time. The issue came down essentially to the question whether the Commission was denying procedural fairness to the Council by refusing to give the Council until 28 February 2002, rather than 13 February 2002, for the completion and formal submission of the representations that the Council wishes to make to the Commission in connection with the Minister's reference to the Commission. 39 Towards the end of the taking of evidence at the hearing, the Council and the Commission agreed that, provided the Minister did not change his current proposal, the Commission would allow, and the Council would accept as procedurally fair, an extension of time to 28 February 2002. In those circumstances, I need say no more upon this particular issue. I do commend, however, what seems to me to be the good sense of the agreement thus reached. Issue (d) 40 This issue, too, has been overtaken by events. An open letter was written on 10 December 2001 by the Crown Solicitor on behalf of the Minister and of the Commission to the Council's solicitor. 41 The letter is part of exhibit 2. It says, relevantly: "I advise that I am instructed that the transitional arrangements were not intended to, and do not, legally bind your client, at least not before the making of a proclamation by the Governor under section 218F(7) of the Act. ..." 42 In these circumstances, I see no utility in making formal declarations respecting issue (d). Orders 43 I have reconsidered, in the light of my conclusions in respect of the substantive issues actually argued at the hearing, the particular prayers for relief in the Council's amended summons. Leaving aside for the moment the question of costs, in my opinion the Council has not established an entitlement to any of that relief. The amended summons is accordingly dismissed. 44 Both sets of written submissions put various propositions and proposals as to costs. Given the conclusions to which I have come, I think that the fair approach as to costs would be to give the parties liberty to apply for a date upon which I can hear submissions on that aspect of these proceedings. Order accordingly. Arrangements may be made with my Associate on or after 14 January 2002. 45 The exhibits will remain in Court pending further order. ********** Last Modified: 01/21/2002 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.