Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Meineke v Acting Chief Executive, Office of Local Government [2016] NSWCATOD 135 Hearing dates: 14 October 2016 Date of orders: 27 October 2016 Decision date: 27 October 2016 Jurisdiction: Occupational Division Before: Dr J Renwick SC, Senior Member Decision: (1) Within 14 days, the Appellant is to file and serve any further submissions and evidence upon which he relies in relation to the penalty phase of this matter, together with an indication as to whether he seeks a further oral hearing. (2) Within a further 14 days, the Respondent is to file and serve evidence and submissions in reply (if any), together with an indication as to whether he seeks an oral hearing. Catchwords: CIVIL AND ADMINISTRATIVE TRIBUNAL – Local Government Act 1993 – breach of Code of Conduct – definition of 'significant non-pecuniary conflict of interest' – misconduct – councillor retained to assist a client have his land compulsorily acquired by the Council of which he was a councillor – paid a standard fee rather than a success fee – one of a number of preconditions to this was having the Council designated in the Local Environmental Plan as the acquisition authority – appellant did not absent himself from two meetings and in relation to one meeting made no declaration – question of adequacy of declaration in second meeting – misconduct established Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Environmental Planning and Assessment Amendment (Reserved Land Acquisition) Act 2006 Land Acquisition (Just Terms Compensation) Act 1991 Local Government Act 1993 (NSW) Cases Cited: De Luca v Simpson [2012] NSWSC 960 Ebner v The Official Trustee in Bankruptcy [2000] HCA 63 Minister for Immigration v Jia Legeng [2001] HCA 1 Office of Local Government v Ticehurst [2015] NSWCATOD 122 Category: Principal judgment Parties: Graeme Peter Meineke (Applicant) Acting Chief Executive, Office of Local Government (Respondent) Representation: Counsel: K J Grahams (Appellant) B Tronson (Respondent) File Number(s): 1620120 REASONS FOR Decision Introduction 1. This is an appeal by the Appellant, Mr Graeme Peter Meineke, formerly a Councillor with Lismore City Council, as a result of a decision made on 20 April 2016 by the Respondent, the Acting Chief Executive, Office of Local Government that the Appellant: 1. had engaged in misconduct within the meaning of Chapter 14 of the Local Government Act 1993 (the Act); and accordingly; 2. be suspended for a period of three months from any right to be paid a fee or other remuneration for which he would be entitled; and 3. be reprimanded. 1. At all relevant times prior to the lodging of the appeal on 10 May 2016, the Appellant was a councillor of Lismore City Council, but he is no longer a councillor, having chosen not to stand for re-election. 2. Chapter 14 of the Act concerns 'Honesty and Disclosure of Interests'. The notes to that chapter relevantly state in a way that accurately summarises its effect: This Chapter places obligations on councillors…to act honestly and responsibly in carrying out their functions. The Chapter also provides for the adoption of codes of conduct for councillors, staff and other persons associated with the functions of councils and enables the Departmental Chief Executive to investigate and take action against councillors who engage in misconduct. … It also requires that pecuniary interests of councillors… involved in making decisions or giving advice on council matters be publicly recorded and requires councillors … to refrain from taking part in decisions on council matters in which they have a pecuniary interest. 1. The Act has specific provisions concerning 'pecuniary interests' but, as explained, this matter concerns the obligations to disclose, and the consequences of not disclosing, 'non-pecuniary interests', being matters dealt with under the model Code adopted by Lismore City Council on 12 February 2013. The precise provisions are analysed further below. The nature of the proceedings 1. In this matter, the Respondent made the findings and imposed the disciplinary sanctions referred to above. The appeal is brought under s 440L(4) of the Act. It was agreed that it is an appeal de novo. Relevantly, the Tribunal has power to confirm, amend or set aside the decision, and if the last, to substitute a new decision. 2. I have taken my customary approach to the hearing in that, as in my decision in Office of Local Government v Ticehurst [2015] NSWCATOD 122 at [2]- [4]: [2] … As I said in Office of Local Government v Genevieve Campbell of Murray Shire Council [2015] NSWCATOD 129 at [4], the Tribunal's jurisdiction is both disciplinary and protective of the public, and by maintaining appropriately high standards of conduct by local councillors, ensures public confidence in the important civic institution of Local Government: see also, Health Care Complaints Commission v Litchfield [1997] NSWSC 297; (1997) 41 NSWLR 630 at 637-8; NSW Bar Association v Meakes [2006] NSWCA 340 at [114]. [3] Where conduct falls short of the required standard, a finding by the Tribunal to that effect amounts to a public statement as to acceptable standards and conduct which falls short of such standards. [4] The rules of evidence do not apply in the hearing: Civil and Administrative Tribunal Act, s 38(2). Nevertheless, I have applied the rule of 'comfortable satisfaction' stated in Briginshaw v Briginshaw [1938] HCA 34; (1983) 60 CLR 336 at 362-3. See also NEAT Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449 at 450. I have been appropriately cautious in relation to the required strength of evidence as the allegations are serious, as are the potential consequences of my findings. 1. It was asserted that the rules of evidence applied as these are 'civil penalty proceedings' within the meaning of s 4 the Civil and Administrative Tribunal Act, see s 38(3)(a)(ii) of that Act. They do not. The definition of such proceedings in s 4 is as follows: "civil penalty " means a monetary or pecuniary penalty that is imposed on a person (except as punishment for an offence) for a contravention of either a provision of legislation or an order or other decision of a person or body.. 1. The Tribunal is here concerned with disciplinary proceedings: the Appellant has not had a monetary or pecuniary penalty imposed upon him either by the reprimand or the suspension of an entitlement to be paid. 2. The Tribunal therefore admitted into evidence the investigation report prepared pursuant to s 440H of the Act, and the annexures thereto (Exhibit A), although the report and some of the correspondence was tendered for the fact of what was said rather than the truth of what was said, and extracts from the agenda of the two relevant Ordinary Council Meetings - of 9 July and 10 December 2013 (Exhibit B). The Appellant read his affidavit sworn 30 June 2016 and gave evidence and was cross-examined. Relevant provisions of the Act and Code of Conduct 1. The Respondent had jurisdiction to take disciplinary action against the Appellant only if satisfied that the latter had engaged in 'misconduct': s 440I(1) of the Act. The Act defines misconduct to include "failure by [a] councillor to comply with an applicable requirement of a Code of Conduct under s 440": s 440F(1)(b). 2. The Council adopted the relevant Code on 12 February 2013, as authorised by s 440(3) of the Act. The Council's Code is accordingly a Code within the meaning of s 440, breach of which, as noted, constitutes misconduct. 3. Clauses 4.1, 4.2, 4.5, 4.10, 4.12, 4.13, 4.15, 4.16 and 4.17 of the Code of Conduct provide: 4.1 A conflict of interests exists where a reasonable and informed person would perceive that you could be influenced by a private interest when carrying out your public duty. 4.2 You must avoid or appropriately manage any conflict of interests. The onus is on you to identify a conflict of interest s and take t he appropriate act ion t o m an age t he conflict in favour of your public duty. 4.5 A pecuniary interest is an interest that a person has in a matter because of a reasonable likelihood or expectation of appreciable financial gain or loss to the person. (section 442) 4.10 Non-pecuniary interests are private or personal interests the council official has that do not amount to a pecuniary interest as defined in the Act. These commonly arise out of family, or personal relationships, or involvement in sporting, social or other cultural groups and associations and may include an interest of a financial nature. 4.12 Where you have a non-pecuniary interest that conflicts with your public duty, you must disclose the interest fully and in writing, even if the conflict is not significant. You must do this as soon as practicable. 4.13 If a disclosure is made at a council or committee meeting, both the disclosure and the nature of the interest must be recorded in the minutes. This disclosure constitutes disclosure in writing for t he purposes of clause 4.12. 4.15 As a general rule, a non-pecuniary conflict of interests will be significant where a matter does not raise a pecuniary interest but it involves: a) a relationship between a council official and another person that is particularly close, for example, parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the person or of the person's spouse, current or former spouse or partner, de facto or other person living in the same household b) other relationships that are particularly close, such as friendships and business relationships. Closeness is defined by the nature of the friendship or business relationship, the frequency of contact and the duration of the friendship or relationship c) an affiliation between the council official and an organisation, sporting body, club, corporation or association t hat is particularly strong. 4.16 If you are a council official, other than a member of staff of council, and you have disclosed that a significant non-pecuniary conflict of interests exists, you must manage it in one of two ways: a) remove the source of the conflict, by relinquishing or divesting the interest that creates the conflict, or reallocating the conflicting duties to another council official b) have no involvement in the matter, by absenting yourself from and not taking part in any debate or voting on the issue as if the provisions in section 451(2) of the Act apply. 4.17 If you determine that a non-pecuniary conflict of interests is less than significant and does not require further action, you must provide an explanation of why you consider that the conflict does not require further action in the circumstances. 1. Provisions in essentially the same terms were considered by the Supreme Court in De Luca v Simpson [2012] NSWSC 960, where Johnson J said: [143] The concept of non-pecuniary conflict of interest does not lend itself to closed categories. There may be a variety of circumstances in which a non-pecuniary conflict of interest may arise, including associations with family, friends and working associations. Clause 7.16(b) of the Code of Conduct makes this clear (see [98] above) [This is in the same terms as 4.15]. [144] The scheme of the Code of Conduct involves the primary obligation being placed upon the councillor to consider the particular association by reference to specified factors … This obligation appears to extend to a councillor, even if other members of Council may already be aware of some association between the councillor and another person. [145] The obligation lies upon the councillor to declare a conflict of interest, and to either leave the room or explain that the interest is considered to be an insignificant interest for reasons then given to the Council. It may be taken that the purpose of these provisions is to provide a measure of accountability whereby a person with a non-pecuniary conflict of interest either abstains from participation and departs or explains, on the public record, why it is considered not necessary to leave the room in the particular circumstances. 1. Finally, his Honour said, in terms of relevance here: [148] I accept the submission … that the question to be asked in determining whether the Plaintiff had a relevant conflict of interest focuses upon his relationship or association with [F], in the context of the subject matter of the motion before the Council ….. The Evidence 1. This much of the evidence is clear. 2. Mr Brian Larrescy had a long term aim that the Council acquire certain of his land within its boundaries (at Goonellabah) and, in return, that Mr Larrescy be compensated by the Council for that acquisition. The Appellant, in his capacity as a planning consultant, was retained on 24 January 2012 by Mr Larrescy to advance that aim. The Appellant received remuneration as a planning consultant under this retainer. At the time of the two relevant Council meetings in July and December 2013, Mr Larrescy remained the Appellant's client under this retainer. 3. Such acquisition would be as authorised by s 23 of the Land Acquisition (Just Terms Compensation) Act 1991 (as amended by the Environmental Planning and Assessment Amendment (Reserved Land Acquisition) Act 2006), which states: 23 Owner who suffers hardship may require authority of the State to acquire land designated for acquisition (1) The owner of land to whom this Division applies may require an authority of the State, by notice in writing given to that authority, to acquire that land under this Act if: (a) the land is designated for acquisition by that authority for a public purpose, and (b) the owner considers that he or she will suffer hardship if there is any delay in the acquisition of the land under this Act. (2) The authority of the State must (subject to this Division) acquire the land within 90 days after the owner gives that authority notice under this section (or such longer period as that authority and the owner may agree on in writing). (3) If there is more than one owner of the land concerned, the notice under this section must be given by all the owners. It is sufficient if any one of those owners will suffer hardship. (4) An authority of the State is not required to acquire (under this Division) more land than it requires for the public purpose for which the land was designated or more interests in the land than it requires for that purpose. (5) A notice under this section must be in the form prescribed by the regulations or (if no such form is prescribed) in the form approved by the Minister. 1. Relevantly, in order for the precondition in s 23(1)(a) to be met, the land needed to be designated for acquisition by the Council by way of the Land Reservation Acquisition (LRA) map, as part of the Council's Local Environmental Plan (LEP). Amendment of the LEP in this way needed first to be approved by the Department of Planning, after which the Council could make the LEP amendment. Such designation and amendment was a necessary, although not sufficient, precondition for acquisition, but to use some metaphors, it certainly was 'a step in the direction of acquisition', or 'an unfastening of one lock on the gate leading to acquisition'. In other words, it advanced Mr Larrescy's interests. 2. There were two relevant Council resolutions. 3. In July 2013, a report to the Council proposed inclusion of 13 identified properties (including Mr Larrescy's property) in an LRA Map so as to identify the Council as the relevant authority for acquisition. The Appellant, who had read the report prior to the Council meeting on 9 July 2013, voted on and indeed moved a motion that: Council support the first round of general amendments as detailed in Attachment 1 [which included such inclusion of Mr Larrescy's land and identification of the Council] and forward it to the Department… to seek a gateway determination. 1. The Appellant made no declaration of any interest in this resolution. 2. In July and August, there was correspondence between the Appellant and the Council concerning possible acquisition of Mr Larrescy's land. 3. In September 2013, the Appellant was advised that the Council's Conduct Reviewer was inquiring whether the Appellant failed to declare a pecuniary interest in July motion. 4. On 10 December 2013, the Department having approved the amendments, the Council resolved that the Attachment 1 amendments referred to in the July resolution be adopted and the draft LEP made 'in accordance with the Department[s']… written authorisation to exercise the delegation.' 5. On this occasion the Appellant declared: "I have a client who has land in the Amendment however, as per clause 448(g) [sic, s 448(g)], I do not have to leave to debate this interest. As such I will not leave the chamber." He then voted in favour of the resolution. 6. Section 444 provided: 444 What disclosures must be made by a councillor? A councillor: (a) must prepare and submit written returns of interests in accordance with section 449, and (b) must disclose pecuniary interests in accordance with section 451. 1. Generally, s 449 deals with disclosures of pecuniary interests as the Regulations made under the Act make clear. It is possible to make voluntary disclosure of non-pecuniary interests under Regulation 191 but failure to do so will not amount to disclosure. Regulation 191 provided: A person may voluntarily disclose in a return any interest, benefit, advantage or liability, whether pecuniary or not, that is not required to be disclosed under another provision of this Part. 1. Section 448 provided at the time: 448 What interests do not have to be disclosed? The following interests do not have to be disclosed for the purposes of this Part: (g) an interest in a proposal relating to the making, amending, altering or repeal of an environmental planning instrument other than an instrument that effects a change of the permissible uses of: (i) land in which the person or a person, company or body referred to in section 443 (1) (b) or (c) has a proprietary interest (which, for the purposes of this paragraph, includes any entitlement to the land at law or in equity and any other interest or potential interest in the land arising out of any mortgage, lease, trust, option or contract, or otherwise), or (ii) land adjoining, adjacent to or in proximity to land referred to in subparagraph (i), (iii)if the person or the person, company or body referred to in section 443 (1) (b) or (c) would by reason of the proprietary interest have a pecuniary interest in the proposal, 1. It can be seen that these disclosures relate only to pecuniary interests. Consideration 1. The question is whether the Appellant had a 'non pecuniary interest' which was 'significant'. 2. The Code first requires determination of whether there was a conflict of interest. Although, as the High Court said in Ebner v The Official Trustee in Bankruptcy [2000] HCA 63 at [55] in the context of judicial disqualification for apprehended bias, 'the concept of interest is itself vague and uncertain', here what is required is the proper construction and application of Clause 4.1 of the Code which states, sufficiently clearly: "A conflict of interests exists where a reasonable and informed person would perceive that you could be influenced by a private interest when carrying out your public duty." 3. There are nevertheless some analogies to be drawn from the law of bias. 4. Just as '…imputed bias does not require the complainant to establish anything about the subjective motives, attitudes, predilections or purposes of the decision-maker': Minister for Immigration v Jia Legeng [2001] HCA 1 per Kirby J at [111], so it is here. 5. The reasonable and informed person is taken to be aware of the matters set out above under the heading 'the evidence'. They would consider that: 1. The Council resolutions directly benefited Mr Larrescy in the manner described above; 2. There was an ongoing commercial business relationship (that is, one for which the Appellant had, under a continuing retainer, received and might in future receive professional fees, although not a success fee) between one individual who was both Councillor and planning consultant and another who was a landowner in the Council area seeking a benefit from the Council; (together these are the private interests) 1. There was therefore, in my opinion, a perception by the hypothetical reasonable and informed person that the Councillor could (not necessarily would) be influenced by that private interest when carrying out his public duty to vote on the resolutions. It is certainly not an example of a conflict which is to be treated as de minimis. It is neither necessary nor desirable to consider where 'the line' should be drawn, having decided that the conduct falls clearly on one side of that theoretical line. For those reasons there was a conflict of interest. 2. Next, the Code concerns such conflicts which are not 'pecuniary'. Section 442(1) of the Act defines 'pecuniary interest' as: 'an interest that a person has in a matter because of a reasonable likelihood or expectation of appreciable financial gain or loss to the person.' Here, the Respondent contends, and I accept, that there was no such interest, as the retainer with Mr Larrescy contained no provision whereby even the ultimate acquisition of the land by the Council would result in any financial gain to the Appellant, let alone the making of the 2 resolutions. 3. That conclusion brought into consideration Clause 4.10, which provides: Non-pecuniary interests are private or personal interests the council official has that do not amount to a pecuniary interest as defined in the Act. These commonly arise out of family, or personal relationships, or involvement in sporting, social or other cultural groups and associations and may include an interest of a financial nature. 1. By operation of that clause, the private conflict of interest not being pecuniary, it is non-pecuniary. 2. The final question is whether it is 'significant'. Clause 4.15 relevantly states: 4.15 As a general rule, a non-pecuniary conflict of interests will be significant where a matter does not raise a pecuniary interest but it involves: a) a relationship between a council official and another person that is particularly close, for example, parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the person or of the person's spouse, current or former spouse or partner, de facto or other person living in the same household b) other relationships that are particularly close, such as friendships and business relationships. Closeness is defined by the nature of the friendship or business relationship, the frequency of contact and the duration of the friendship or relationship c) an affiliation between the council official and an organisation, sporting body, club, corporation or association t hat is particularly strong. (emphasis added) 1. It is not necessary to exhaustively define 'closeness' and it may not be possible to do so. In my opinion, a current business relationship of the sort in question here is sufficiently close and thus there is a non-pecuniary conflict of interest. 2. That meant that the Appellant should, in relation to both meetings, have complied with the following provisions: 4.12 Where you have a non-pecuniary interest that conflicts with your public duty, you must disclose the interest fully and in writing, even if the conflict is not significant. You must do this as soon as practicable. 4.13 If a disclosure is made at a council or committee meeting, both the disclosure and the nature of the interest must be recorded in the minutes. This disclosure constitutes disclosure in writing for the purposes of clause 4.12. … 4.16 If you are a council official, other than a member of staff of council, and you have disclosed that a significant non-pecuniary conflict of interests exists, you must manage it in one of two ways: a) remove the source of the conflict, by relinquishing or divesting the interest that creates the conflict, or reallocating the conflicting duties to another council official b) have no involvement in the matter, by absenting yourself from and not taking part in any debate or voting on the issue as if the provisions in section 451(2) of the Act apply. 4.17 If you determine that a non-pecuniary conflict of interests is less than significant and does not require further action, you must provide an explanation of why you consider that the conflict does not require further action in the circumstances. 1. In relation to the first meeting, there was no compliance with the Code. Thus there is misconduct being (s 440F(1)(b): 'a failure by the councillor to comply with an applicable requirement of a code of conduct under section 440'. 2. In relation to the second meeting, there was also no compliance with the Code: the Appellant proceeded from the incorrect premise that there was a pecuniary interest as to which there was no requirement to make a disclosure nor to avoid the conflict by, for example, absenting himself from the meeting and not voting. Section 448(g) of the Act as it then read was inapplicable to non-pecuniary conflicts of interest. It is irrelevant, even by analogy. 3. In the result I have found breaches of the Code and thus misconduct. 4. The Respondent contends that in such circumstances I should affirm the decision already made. 5. I should indicate that I would not be minded to impose more severe penalties than already imposed. 6. Although he has put in some submissions already, I indicated at the hearing that if I reached this stage I would consider any further submissions and evidence from the Appellant, and anything in reply from the Respondent before making my final decision. 7. Accordingly, I make the following directions: 1. Within 14 days, the Appellant is to file and serve any further submissions and evidence upon which he relies in relation to the penalty phase of this matter, together with an indication as to whether he seeks a further oral hearing. 2. Within a further 14 days, the Respondent is to file and serve evidence and submissions in reply (if any), together with an indication as to whether he seeks an oral hearing. 1. I will then consider those matters and decide whether there should be a further oral hearing, or whether I can proceed on the basis of written material to determine the matter. 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 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: 27 October 2016