Supreme Court New South Wales Medium Neutral Citation: Ku-ring-gai Council v Garry West as Acting Director-General of the Office of Local Government [2016] NSWSC 442 Hearing dates: 13 April 2016 Decision date: 15 April 2016 Before: Fullerton J Decision: The proceedings be transferred to the Land and Environment Court. Catchwords: PRACTICE AND PROCEDURE - transfer of proceedings to the Land and Environment Court under s 149B of Civil Procedure Act as the more appropriate court – whether the transfer is in accordance with the overriding purpose in s 56 of the Civil Procedure Act Legislation Cited: Civil Procedure Act 2005 (NSW) Government Information (Public Access) Act 2009 (NSW) Local Government Act 1993 (NSW) Supreme Court Act 1970 (NSW) Cases Cited: Bankinvest AG v Seabrook (1988) 14 NSWLR 711 Botany Bay City Council v Minister for Local Government [2016] NSWCA 74 Category: Principal judgment Parties: Ku-ring-gai Council (Plaintiff) Garry West, in his capacity as delegate of the Acting Director-General of the Office of Local Government (1st Defendant) NSW Department of Premier and Cabinet (2nd Defendant) Minister for Local Government (3rd Defendant) Representation: Counsel: V McWilliam (Plaintiff) N Hutley SC / J Hutton (Defendants) Solicitors: Sparke Helmore Lawyers (Plaintiff) Crown Solicitor NSW (Defendants) File Number(s): 2016/89149 Publication restriction: Nil Judgment 1. HER HONOUR: By an amended summons filed instanter on 13 April 2016, the plaintiff, Kun-ring-gai Council ("the Council"), seeks to invoke the jurisdiction in s 69 of the Supreme Court Act 1970 (NSW) to declare invalid a number of interrelated decisions made by each of the first and second defendants (respectively, the Delegate of the Acting Director-General of the Office of Local Government, and the New South Wales Department of Premier and Cabinet or their delegates) in purported exercise by them (or their delegates) of certain statutory duties or functions under both the Local Government Act 1993 (NSW) and the Government Information (Public Access) Act 2009 (NSW) ("the GIPA Act"). 2. I note that the defendants intend to file an amended response to the amended summons, the response filed on 6 April 2016 to the summons filed 22 March 2016 having been overtaken by the substantial amendments in the amended summons. 3. By notice of motion dated 7 April 2016 (filed with leave on 13 April 2016, the date listed for the hearing of the motion), the defendants seek an order pursuant to s 149B(1) of the Civil Procedure Act 2005 (NSW) that the proceedings be transferred to the Land and Environment Court. The plaintiff opposes the making of that order. 4. The decisions the subject of challenge concern the proposed merger of the Council with part of Hornsby Council, being one of 35 council merger proposals referred by the Minister for Local Government (the third defendant) to the Chief Executive Officer of the Office of Local Government for examination and report under s 218F of the Local Government Act. 5. For present purposes I assume (without any need to decide the question) that certain documents, referred to in the pleadings as "the KPMG documents", were incorporated into, or formed part of, the merger proposal referred under s 218F. 6. By a Notice of Determination dated 25 February 2016, the plaintiff's application under the GIPA Act for access to the KPMG documents was refused. The plaintiff seeks an order declaring the Notice of Determination invalid. 7. Section 218F(2) of the Local Government Act invokes the operation of s 263 of that Act which provides for the process by which the Chief Executive Officer is to examine a merger proposal, including an obligation imposed on him by ss 263(2A), 263(2B) and 263(5), to convene a public inquiry as to which reasonable notice is to be given. Section 263(3) also provides a number of factors to which the Chief Executive Officer is obliged to have regard in the examination of the matter referred under s 218F and for reporting purposes under that section. 8. A report dated March 2016 ("the Report") was prepared by the first defendant as the delegate of the Chief Executive Officer in which he recommends that "the proposal as submitted should proceed to implementation". Under s 218F(7) the Minister may recommend to the Governor that the merger proposal be implemented. The plaintiff seeks an order declaring the Report invalid. 9. The amended summons also seeks injunctive relief restraining the first defendant (or any other delegate of the Chief Executive Officer) from finalising any report prepared pursuant to the referral of the merger proposal until such time as the plaintiff has been given access to the KPMG documents. An order is also sought enjoining the first defendant and the third defendant from exercising the power to recommend the proposed merger to the Governor pending release of the KPMG documents, so as to afford the plaintiff an opportunity to deal with and/or make submissions concerning the documents in the further consideration of the merger proposal. 10. Each of the twelve grounds upon which the case for judicial review of the decisions is based contend jurisdictional error (or error on the face of the decision) constituted, inter alia, by access to the KPMG documents being refused, thereby denying the plaintiff procedural fairness; by both an actual and a constructive failure to discharge statutory functions and/or statutory obligations under s 218F (and s 263) of the Local Government Act, including, in particular, the first defendant's failure to hold a public inquiry into the merger proposal in discharge of his statutory obligations in s 263 of the Act; a failure to take into account relevant considerations in the making of the decisions under challenge; and/or that each of the decisions is legally unreasonable such as to constitute jurisdictional error. 11. In support of the application for the grant of the mandatory injunctions, the plaintiff contends that there is an appreciable threat or apprehension that the first and third defendants will contravene or fail to comply with the Local Government Act such as to render their conduct susceptible to restraint by order of the Court. 12. A number of affidavits affirmed by John McDonnell, the solicitor who has carriage of the proceedings on behalf of the Crown Solicitor, were read on the hearing of the motion. That evidence is conveniently summarised as establishing the following facts: 1. Mr McDonnell has the conduct of two sets of proceedings in the Land and Environment Court in which each of two local councils (namely, Botany Bay City Council and Woollahra Municipal Council) seeks declaratory and injunctive relief concerning merger proposals which were also referred for examination and report under s 218F of the Local Government Act. The grounds for judicial review in each case also concern the proper exercise of the statutory powers and functions of statutory officers or executive officers in ss 218F and 263 of the Local Government Act. While the proceedings are not pleaded in identical terms to each other or in the same terms as the plaintiff pleads its case in the amended summons, they do concern the statutory construction of operating provision of the Local Government Act (including the nature of the scope of the statutory duties imposed under the Act) and the principles of judicial review. 2. The proceedings initiated by Woollahra Municipal Council allege a failure to conduct a public inquiry as required by s 263 of the Local Government Act in derogation of the statutory obligation to conduct an examination of a merger proposal as required by law. The same complaint is made by the plaintiff in the subject proceedings, although, unsurprisingly, the precise terms upon which that obligation is said to be breached by the delegate differs in each case. 3. As with the subject proceedings, the proceedings initiated by Woollahra Municipal Council also seek to restrain the Minister from recommending, or purporting to recommend, the implementation of the merger proposal the subject of the delegate's Report under s 218F before the Council is afforded a reasonable opportunity to deal with what is referred to in the Woollahra proceedings as "the full KPMG Report". Again, without needing to decide the question, it would appear that "the KPMG documents" referred to in the amended summons in the subject proceedings are the same, or the same category of documents to those which comprised the full KPMG Report in the proceedings commenced by Woollahra Municipal Council. Those proceedings are pending in the Land and Environment Court and have been listed for hearing on 20 and 21 April 2016 next week. 4. The proceedings initiated by Botany Bay City Council have been heard and determined by the Land and Environment Court. The summons was dismissed. The Council appealed to this Court. The appeal was dismissed (see Botany Bay City Council v Minister for Local Government [2016] NSWCA 74). It was not submitted on the hearing of the motion that the outcome of the appeal (at that time pending) would determine the issues raised in the amended summons so as to render it more appropriately heard in this Court or the Land and Environment Court. Suffice to note that, on my reading of the judgment, the Court has considered the construction of the relevant sections of the Local Government Act in a way which is likely to have a relevant bearing on those issues in whichever Court the proceedings are heard. 5. Inquiries of the Assistant Registrar of the Land and Environment Court by Mr McDonnell have confirmed that the Court has dates available for a hearing over successive days between 13 and 21 April (and on 26 and 27 April) and single sitting days throughout the month of May. Dates are also available on successive days between 1 June and 9 June (and on 13 and 15 June, with three judges available between 30 May and 3 June and two judges available for the period of 6 to 9 June). 6. The amended summons has not been listed for hearing in this Court. When the matter was last before the Court, Wilson J advised the parties that the earliest provisional date for a one day hearing was 16 May 2016. The matter was not fixed for hearing, there being no certainty as to the availability of a judge to hear the matter on that date, even on an expedited basis. In my view, there is even less likelihood of a fixture for a hearing in excess of a day. Although no amended response has been filed, the extent of the issues raised in the amended summons and the evidence upon which the parties might rely would seem to suggest there is little prospect of this matter resolving in a one day hearing. Neither of the parties sought to persuade me otherwise. 7. In correspondence from the Mayor of Mosman Council and solicitors acting for Hunter's Hill City Council dated 8 April 2016 and 12 April 2016, both Councils raise concerns as to the legality of the examination process under s 218F of the Local Government Act and the discharge of the delegate's duty to report to the Minister under that provision. In the letter from Mosman Council, production of documents prepared by KPMG are sought, together with an undertaking that no final report is prepared until further submissions on the proposed merger can be made. A direct challenge to the legality of the decision the subject of the merger proposal affecting Hunters Hill Council is made in their correspondence. Direct reference is also made to the proceedings in the Land and Environment Court initiated by Woollahra Council, where the breaches of statutory duty particularised in that summons are said by the solicitors for Hunters Hill Council to be "equally relevant to the position of our client". The solicitors notify their intention to commence proceedings without further notice, and to seek declaratory relief and consequential orders unless a full copy of the KPMG documents are provided, together with a complete copy of the Report into the merger proposal as it affects that Council. 8. Finally, the minutes of the meeting of Strathfield Council of 5 April 2016 record a resolution that the Council commence proceedings in the Land and Environment Court in accordance with the proceedings commenced by Woollahra Municipal Council, and that application be made to either join those proceedings or that proceedings mirroring the relief sought in those proceedings be filed without delay. The Civil Procedure Act 1. Section 149B of the Civil Procedure Act is in the following terms: (1) If either the Supreme Court or the Land and Environment Court is satisfied, in relation to proceedings before it, that it is more appropriate for the proceedings to be heard in the other court, it may, on application by a party to the proceedings or of its own motion, order that the proceedings be transferred to the other court. … (3) No appeal lies against a decision of the transferor court to make, or not to make, an order under this section. 1. Section 149C provides: (1) A transfer order takes effect when it is made. (2) A transfer order does not invalidate any order made or other thing done in the proceedings before the order was made. (3) Any order made by the transferor court (other than the transfer order) may be varied or revoked by an order of the transferee court. 1. Section 149D provides: (1) Subject to the rules of court applicable in the transferee court: (a) any proceedings with respect to which a transfer order takes effect continue in the transferee court: (i) as if the proceedings had been duly commenced in the transferee court on the date on which they were commenced in the transferor court, and (ii) as if any cross-claim in the proceedings had been duly made in the transferee court on the date on which it was made in the transferor court, and (b) any proceedings with respect to which a transfer order under section 149B (2) takes effect are to be heard together with, and are taken to form part of, the related proceedings in the transferee court. (2) For the purposes of any proceedings continued in the transferee court: (a) any admission duly made in the transferor court is to be treated as if it had been made in the transferee court, and (b) in the case of proceedings affected by a transfer order under section 149B (2), any process or other documentation before the transferee court may be amended so as to reflect the merger of the proceedings concerned. (3) Subject to the rules of court applicable in the transferee court, the power of the transferee court to make orders as to costs includes a power to make orders with respect to the costs of: (a) the application for, and the making of, the transfer order, and (b) any step taken in the proceedings before the transfer order was made. 1. Section 149E provides: The transferee court has, and may exercise, all of the jurisdiction of the transferor court in relation to any proceedings to which a transfer order relates, including jurisdiction to determine any question arising in any such proceedings. Is it more appropriate for the Land and Environment Court to hear the proceedings? 1. There is no onus on the defendants as the moving parties to the motion to satisfy me that the power under s 149B(1) should be exercised in their favour. Neither is there any evidential onus on the defendants to establish, as a matter of fact, that the Land and Environment Court is the more appropriate Court to hear the proceedings or that they satisfy me that this Court is an inappropriate form. 2. Rather, the exercise of the discretion in s 149B(1) is subject to the Court (whether it be the Land and Environment Court or this Court) being satisfied that the other Court (the Land and Environment Court in this case) is "the more appropriate Court" to hear the proceedings. 3. That enquiry is necessarily predictive. That is not necessarily a straightforward task when, as here, the defendants have not filed a response to the summons, where the evidence upon which the parties might rely has not been assembled and where, by commendable agreement between the parties, there is no current call on a Notice to Produce pending what might transpire to be informal production of some of the documents to which the plaintiff seeks access and upon which it might ultimately rely in its case. That said, those issues are largely procedural and are as well managed in the Land and Environment Court as in this Court. 4. In addition, since the dispute between the parties concerns the construction of legislative provisions in statutes that may be encountered in litigation in either Court (even if the Local Government Act is more commonly encountered in the Land and Environment Court), with the principles of judicial review also encountered in both Courts (even if, perhaps, more commonly in this Court), the forum where the issues might be resolved in exercise of jurisdiction is a neutral consideration on the question of the more appropriate Court to hear the proceedings in this case. 5. Although decided in a different context, in Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 714, Street CJ said of the operation of s 5(2)(b)(iii) in the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW): ... It calls for what I might describe as a "nuts and bolts" management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute… 1. Approaching the issue in that way, and applying the broad discretionary calculus that is engaged in the application of s 149B(1), the question in this case is whether, on the available material, I am satisfied that the Land and Environment Court is the more appropriate forum to resolve the issues raised by the amended summons. The interests of justice, in this case, are not limited to the interests of the parties. They encompass the overriding considerations with which s 56 of the Civil Procedure Act is concerned in the public interest. 2. What cannot be overlooked, in fact, in my assessment, a dominating factor to be taken into account in the exercise of the discretion in this case, is that the merger proposal as it affects the Ku-ring-gai Council, and the decisions made as part of that process or as a corollary to it, was the culmination of an extensive consultation and review process impacting on the future role and function of a large number of local councils in this State. For that reason alone, it is hardly surprising that the review process has not been free of challenge and, in some quarters, loud dissent. So much is evident from the material before me and the public interest that the merger proposals have generated. What is important for present purposes is the clear public interest in any legal challenges to the integrity of the process by which the merger proposals of a number of local councils were examined and reported upon, including the integrity of the public inquiry as part of that process, be resolved without delay by a competent court in the exercise of judicial power and by the most efficient use of judicial resources. This Court and the Land and Environment Court are both courts of competent jurisdiction. However, the fact that litigation in the Land and Environment Court where these issues are squarely raised is both current and pending (with one matter already the subject of an appeal to this Court), and the fact that the Land and Environment Court has the judicial resources to hear the proceedings within weeks, satisfies me that it is the more appropriate Court to hear the amended summons. The fact that other proceedings of a similar kind might be initiated by other Local Councils affected by the merger proposals also in the Land and Environment Court, as the material available to me tends to suggest, is another factor I have taken into account in coming to that conclusion. 3. Accordingly, I order that the proceedings 2016/89149 be transferred to the Land and Environment Court. ********** 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: 15 April 2016