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Oberon Council v Minister for Local Government; Cabonne Shire Council v Minister for Local Government; McAlister and Graham v Minister for Local Government [2016] NSWLEC 131 (7 October 2016)

Last Updated: 7 October 2016



Land and Environment Court
New South Wales

Case Name:
Oberon Council v Minister for Local Government; Cabonne Shire Council v Minister for Local Government; McAlister and Graham v Minister for Local Government
Medium Neutral Citation:
Hearing Date(s):
25, 26, 27, 31 May and 1, 3, 6 June 2016
Date of Orders:
7 October 2016
Decision Date:
7 October 2016
Jurisdiction:
Class 4
Before:
Preston CJ
Decision:
The Court orders in each of the proceedings:

(1) The proceedings are dismissed.

(2) The applicant is to pay the respondents’ costs of the proceedings.
Catchwords:
JUDICIAL REVIEW – proposals for amalgamation of local government areas – whether proposals made in accordance with Local Government Act 1993 – whether proposals made by Minister – whether decision to make proposals manifestly unreasonable – referral of proposals to Departmental Chief Executive for examination and report – whether referral of proposals manifestly unreasonable – inquiries required to be held – whether reasonable public notice given of the holding of inquiries – whether inquiries held in accordance with Act – whether examination and report on proposals in accordance with Act – whether Departmental Chief Executive had regard to relevant considerations in s 263(3) of Act – whether affected councils denied procedural fairness by Departmental Chief Executive – review and comment on Departmental Chief Executive’s reports by Boundaries Commission – whether review conducted in accordance with Act – whether affected councils denied procedural fairness by Boundaries Commission – publicly accessible material in support of proposals represented that analysis and modelling of consultant was independent – whether representations misleading – whether allegedly misleading representations invalidated statutory process of amalgamation – whether Minister made decisions under Act to recommend implementation of proposals to Governor – whether Minister’s decision to recommend to Governor that a proposal be implemented was invalid
Legislation Cited:
Interpretation Act 1987 ss 31, 32
Local Government Act 1993 ss 204, 213, 218A, 218B, 218C, 218CA, 218D, 218E, 218F, 218F(1), 218F(2), 218F(6), 218F(7), 218F(8), 260, 261, 262, 263, 263(2A), 263(2B), 263(3), 264, 265, 354B, 438U, Pts 1, 2 and 3 of Ch 9, Pt 8 of Ch 13, Sch 2
Cases Cited:
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; [1992] HCA 10
Anderson v Minister for Infrastructure Planning and Natural Resources (2006) 151 LGERA 229; [2006] NSWLEC 725
Annetts v McCann (1990) 170 CLR 596; [1990] HCA 57
Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88; [2005] HCA 72
Assistant Commissioner Condon v Pompano Pty Ltd (2013) 252 CLR 38; [2013] HCA 7
Attorney-General for the State of Victoria v City of Geelong [1989] VicRp 58; [1989] VR 641
Baba v Parole Board of New South Wales (1986) 5 NSWLR 338
Bartzios v Leichhardt Municipal Council [1978] 1 NSWLR 7
Betfair Pty Ltd v Western Australia (2008) 234 CLR 418; [2008] HCA 11
Botany Bay City Council v Minister for Local Government (2016) 214 LGERA 173; [2016] NSWCA 74
Botany Bay City Council v Minister for Local Government [2016] NSWLEC 35
Botany Bay City Council v The State of New South Wales [2016] NSWCA 243
Bruce v Cole (1998) 45 NSWLR 163
Brunetto v Collector of Customs [1984] FCA 383; (1984) 4 FCR 92
Bushell v Repatriation Commission (1992) 175 CLR 408; [1992] HCA 47
Bushell v Secretary of State for the Environment [1980] UKHL 1; [1981] AC 75
Castle v Director General, State Emergency Service [2008] NSWCA 231
Director General, Department of Trade and Investment, Regional Infrastructure and Services v Lewis (2012) 301 ALR 420; [2012] NSWCA 436
Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd  [2014] NSWCA 158 
Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (2011) 195 FCR 318; [2011] FCAFC 88
Elias v Federal Commissioner of Taxation (2002) 123 FCR 499; [2002] FCA 845
Esber v The Commonwealth of Australia (1992) 174 CLR 430; [1992] HCA 20
Foster v Minister for Customs and Justice (2000) 200 CLR 442; [2000] HCA 38
Hot Holdings Pty Ltd v Creasy (1996) 185 CLR 149; [1996] HCA 44
Insurance Australia Ltd v Motor Accidents Authority (NSW) [2007] NSWCA 314
Jacob v Save Beeliar Wetlands (Inc) (2016) 216 LGERA 201; [2016] WASCA 126
Jarratt v Commissioner for Police for New South Wales (2005) 224 CLR 44; [2005] HCA 50
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Kindimindi Investments Pty Ltd v Lane Cove Council (2006) 143 LGERA 277; [2006] NSWCA 23
Kioa v West (1985) 159 CLR 550; [1985] HCA 81
Lindemans Wines Pty Ltd v Woodward (1981) 46 LGRA 14
Minister for Immigration and Border Protection v MZYTS (2013) 230 FCR 431; [2013] FCAFC 114
Minister for Immigration and Border Protection v SZSSJ (2016) 90 ALJR 901; [2016] HCA 29
Minister for Immigration and Citizenship v Khadgi (2010) 190 FCR 248; [2010] FCAFC 145
Minister for Immigration and Citizenship v Maman (2012) 200 FCR 30; [2012] FCAFC 13
Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323; [2001] HCA 30
Minister for Local Government v South Sydney City Council (2002) 55 NSWLR 381; [2002] NSWCA 288
Muin v Refugee Review Tribunal (2002) 76 ALJR 966; [2002] HCA 30
Notaras v Waverley Council (2007) 161 LGERA 230; [2007] NSWCA 333
Ogawa v Minister for Immigration and Citizenship (2011) 199 FCR 51; [2011] FCA 1358
P J Magennis Pty Ltd v The Commonwealth (1949) 80 CLR 382; [1949] HCA 66
Parramatta City Council v Hale (1982) 47 LGRA 319
Parramatta City Council v Pestell (1972) 128 CLR 305; [1972] HCA 59
R (on the application of Forest Care Home Ltd) v Pembrokeshire County Council (2011) 14 CCLR 103; [2010] EWHC 3514 (Admin)
Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57; [2001] HCA 22
Scurr v Brisbane City Council (1973) 133 CLR 242; [1973] HCA 39
Singh v Minister for Immigration and Multicultural Affairs (2001) 109 FCR 152; [2001] FCA 389
Sutherland Shire Council v Finch (1970) 123 CLR 657; [1970] HCA 49
Vanmeld Pty Ltd v Fairfield City Council (1999) 46 NSWLR 78; [1999] NSWCA 6
Waitemata County v Local Government Commission [1964] NZLR 689
Walsh v Parramatta City Council (2007) 161 LGERA 118; [2007] NSWLEC 255
Wei v Minister for Immigration and Border Protection (2015) 90 ALJR 213; [2015] HCA 51
Woollahra Municipal Council v Minister for Local Government [2016] NSWLEC 86
Zhang v Canterbury City Council (2001) 51 NSWLR 589; [2001] NSWCA 167
Category:
Principal judgment
Parties:
Oberon Council v Minister for Local Government

Oberon Council (Applicant)
Minister for Local Government (First Respondent)
Chief Executive, Office of Local Government (Second Respondent)
Ms Renata Brooks (Third Respondent)
State of New South Wales (Fourth Respondent)

Cabonne Shire Council v Minister for Local Government

Cabonne Shire Council (Applicant)
Minister for Local Government (First Respondent)
Chief Executive, Office of Local Government (Second Respondent)
Mr Richard Pearson (Third Respondent)
State of New South Wales (Fourth Respondent)

McAlister and Graham v Minister for Local Government

Mr Albert McAlister (First Applicant)
Mr David Graham (Second Applicant)
Minister for Local Government (First Respondent)
Chief Executive, Office of Local Government (Second Respondent)
Mr John Turner (Third Respondent)
State of New South Wales (Fourth Respondent)
The Administrator, Gundagai Shire Council (Fifth Respondent)
Representation:
Counsel:
Mr P E King with Ms F A Sinclair (Applicants)
Mr N J Williams SC with Mr J J Hutton, Mr T E O’Brien and Ms B E M Anniwell (Respondents)

Solicitors:
Patterson, Byfield & Bryen (Applicants)
Crown Solicitor’s Office (Respondents)
File Number(s):
2016/00161513, 2016/00161537, 2016/00161546
Publication Restriction:
No

JUDGMENT

Three councils challenge proposals for amalgamation

  1. The Minister for Local Government (‘the Minister’) on 6 January 2016 made proposals, under s 218E(1) of the Local Government Act 1993 (‘the Act’), for the amalgamation of various local government areas in rural New South Wales. One proposal was the amalgamation of the areas of Oberon with Bathurst (‘the Oberon proposal’); a second was the amalgamation of the areas of Cabonne with Blayney and Orange City (‘the Cabonne proposal’); and a third was the amalgamation of the areas of Gundagai with Cootamundra (‘the Gundagai proposal’).
  2. Also on 6 January 2016, the Minister referred the proposals under s 218F(1) of the Act to the Acting Chief Executive of the Office of Local Government (‘the Departmental Chief Executive’) for examination and report. The Departmental Chief Executive delegated those functions to Ms Renata Brooks (for the Oberon proposal), Mr Richard Pearson (for the Cabonne proposal) and Mr John Turner (for the Gundagai proposal). I will refer to each of these people as the Delegate.
  3. The Delegate was required, under s 263(2A) of the Act, to hold an inquiry for the purpose of exercising the functions in relation to each proposal for amalgamation. Each Delegate gave notice of the holding of an inquiry, including by placing advertisements in various State, regional and local newspapers. Each Delegate held an inquiry. The inquiry was held, for the Oberon proposal, on 4 February 2016 at Oberon and Bathurst; for the Cabonne proposal, on 4 February 2016 at Blayney and Orange and on 5 February 2016 at Molong; and for the Gundagai proposal, on 4 February 2016 at Cootamundra and Gundagai.
  4. Between mid-March and early April 2016, each Delegate completed her or his examination, and provided a report to the Minister and furnished a copy of the report to the Local Government Boundaries Commission (‘Boundaries Commission’) for review and comment. Delegate Pearson provided his report on the Cabonne proposal on 18 March 2016; Delegate Turner provided his report on the Gundagai proposal on 24 March 2016; and Delegate Brooks provided her report on the Oberon proposal on 5 April 2016. In each case, the Delegate recommended that the proposal for the amalgamation of the areas concerned be implemented.
  5. The Boundaries Commission was required, under s 218F(6) of the Act, to review each Delegate’s report and send its comments to the Minister. The Boundaries Commission sent to the Minister its comments on the report on the Cabonne proposal on 22 April 2016 and its comments on the reports on the Oberon proposal and the Gundagai proposal on 29 April 2016.
  6. The Minister, under s 218F(7) of the Act, may recommend to the Governor that a proposal be implemented, with or without modifications or, under s 218F(8), may decline to recommend to the Governor that a proposal be implemented. On 3 May 2016, the Minister decided to recommend to the Governor that the Gundagai proposal be implemented and on 12 May 2016, by proclamation under s 218A(1), the Governor amalgamated the areas of Gundagai and Cootamundra and constituted a new area named Gundagai (Local Government (Council Amalgamation) Proclamation 2016, 12 May 2016).
  7. On 4 May 2016, the Minister decided that the Oberon proposal and the Cabonne proposal be implemented, but subject to the outcome of the current proceedings in this Court affecting these proposals. However, the Minister has not yet made a recommendation under s 218F(7) of the Act to the Governor that either the Oberon proposal or the Cabonne proposal be implemented.
  8. Three of the councils affected by the proposals for amalgamation oppose the proposal. Oberon Council opposes the Oberon proposal but Bathurst Regional Council supports it. Cabonne Shire Council (‘Cabonne Council’) opposes the Cabonne proposal but Blayney Shire Council and Orange City Council support it. Gundagai Shire Council opposed the Gundagai proposal but Cootamundra Shire Council supported it.
  9. On 18 April 2016, Oberon Council and Cabonne Council and on 12 May 2016, Gundagai Shire Council commenced judicial review proceedings challenging the legality of various steps in the statutory process for the amalgamation of the areas concerned. As Gundagai Shire Council was dissolved once the Governor’s proclamation took effect, the former Mayor and Deputy Mayor of Gundagai Shire Council, Mr McAlister and Mr Graham, were substituted as applicants in the proceedings challenging the Gundagai proposal. For court administration purposes, the proceedings were separated into three proceedings. Nevertheless, the three proceedings were heard together. The grounds of challenge substantially overlap. The only different grounds concern the Gundagai proposal, because there were two proposals for amalgamation considered and the Governor has actually made a proclamation which has had the effect of amalgamating the Gundagai and Cootamundra local government areas.
  10. The grounds of challenge are:

Overview of the statutory process for amalgamation

  1. Division 1 of Pt 1 of Ch 9 of the Act provides for the constitution of land as a local government area and Div 1 of Pt 2 of Ch 9 provides for the constitution of a council to manage that area. The Governor may, by proclamation, constitute any part of New South Wales as an area: s 204(1) of the Act. The area is to have the boundaries determined by the Governor in the proclamation constituting the area: s 204(2) of the Act.
  2. Division 2A of Pt 1 of Ch 9 of the Act prescribes how areas are amalgamated. The Governor may, by proclamation, amalgamate two or more areas into one or more new areas: s 218A(1) of the Act. On the date specified in the new proclamation as the date on which the areas are to be amalgamated, the areas are dissolved and the new area or areas are constituted: s 218A(2)(a) and (b) of the Act.
  3. The proclamation of the Governor may include provisions of the kind referred to in s 213, as are necessary or convenient to give effect to the proclamation: s 218C(1). The provisions include those for or with respect to the transfer of staff.
  4. Where a new council is constituted as a result of the amalgamation of two or more areas and the council of one of those areas employed regular staff at a rural centre in the area of the new council, the new council must ensure that the number of regular staff of the new council employed at the rural centre is, as far as reasonably practicable, maintained at not less than the same level of regular staff as were employed by the previous council at the rural centre immediately before the amalgamation took effect: s 218CA(1) and (2). A “rural centre” means a centre of population of 5,000 people or fewer: s 354B and s 218CA(4).
  5. Division 2B of Pt 1 of Ch 9 of the Act prescribes the process that must be followed before the Governor can, by proclamation, amalgamate areas. A function under s 218A to amalgamate areas may be exercised only after a proposal for the exercise of the function is dealt with under Div 2B: s 218D of the Act.

The making of a proposal

  1. The first step in the process prescribed by Div 2B is the making of a proposal under s 218E of the Act to amalgamate areas. A “proposal” that may be made under s 218E is simply a proposal for the exercise of the function under s 218A(1) to amalgamate two or more areas into one or more new areas.
  2. Three classes of persons may make a proposal under s 218E to amalgamate areas: the Minister, a council affected by the proposal, or an appropriate minimum number of electors: s 218E(1). Any one of these three classes of persons may initiate a proposal for amalgamation. The third class of persons is defined in s 218E(2). The appropriate minimum number of electors varies depending upon whether the proposal applies to the whole of one or more areas or only part of an area. In the first case, the minimum number of electors is 250 of the enrolled electors for each area or 10% of them, whichever is the greater, and in the second case, the minimum number of electors is 250 of the enrolled electors for the part of the area or 10% of them, whichever is the lesser: s 218E(2).
  3. There is no statutory restriction on any member of these classes of persons initiating a proposal, including a person initiating a proposal after another person has initiated a proposal for the amalgamation of areas. Once initiated, each proposal for amalgamation must be dealt with under the process prescribed by Div 2B. There is no express statutory restriction on proposals being dealt with concurrently; there is no express statutory requirement that they can only be dealt with consecutively in a staged process.

The referral of the proposal

  1. The second step in the process prescribed by Div 2B is the referral of the proposal for examination and report. On the Minister making a proposal or receiving a proposal from a council affected by the proposal or by an appropriate minimum number of electors, the Minister must refer the proposal for examination and report to either the Boundaries Commission or the Departmental Chief Executive: s 218F(1).
  2. The “Boundaries Commission” means the Local Government Boundaries Commission constituted under the Act: see the Dictionary and Pt 3 of Ch 9 of the Act. The Boundaries Commission is a body corporate: s 260. It consists of four commissioners appointed by the Governor, of which one is to be a person nominated by the Minister, one is to be a person employed by the Department (Office of Local Government) nominated by the Departmental Chief Executive and two are to be persons appointed from a panel constituted under s 262(1) of the Act: s 261. This panel consists of eight persons who are councillors nominated by the Local Government and Shires Association of NSW: s 262(1). Schedule 2 of the Act contains further provisions on the membership of the Boundaries Commission and the procedure at meetings of the Boundaries Commission: s 261(5).
  3. There are some similarities and some differences in the process of examination of and reporting on a proposal by the Boundaries Commission or the Departmental Chief Executive. The similarities concern the process of examination of a proposal (s 218F(2)) and the principal difference concerns the need for review and comment on a report of the examination of a proposal: s 218F(6).

The examination and report

  1. The third step in the process prescribed by Div 2B is the examination of and report on the proposal by the person to whom the proposal has been referred under s 218F(1). The duty to examine and report on the proposal is imposed by s 263(1):
The Boundaries Commission [or Departmental Chief Executive] is required to examine and report on any matter with respect to the boundaries of areas ... which may be referred to it by the Minister.
  1. In Botany Bay City Council v Minister for Local Government (2016) 214 LGERA 173; [2016] NSWCA 74 at [38], the Court of Appeal said of the phrase "any matter with respect to" in s 263(1):
... The phrase 'any matter' is not defined and of itself may be taken to be of wide import. Likewise, the phrase 'with respect to' is of wide import. However, there are two indications in subs (1) itself that its meaning is more confined. First, and most importantly, on the express words of the subsection, 'any matter' is controlled by the phrase 'which may be referred to it by the Minister'. Secondly, any such matter must be 'with respect to the boundaries of [councils]'. Accordingly, what falls within s 263 for examination and report is any matter with respect to boundaries that is referred by the Minister. In this case, that was the Minister's proposal.
(See also at [43])
  1. So too in this case, the matters with respect to the boundaries of local government areas that were referred by the Minister were the Oberon proposal, the Cabonne proposal and the Gundagai proposal for the amalgamation of the respective local government areas. The Minister elected to refer these proposals to the Departmental Chief Executive, who in turn delegated the functions of examining and reporting on the proposals to the respective Delegate.
  2. Section 218F(2) of the Act provides that ss 263, 264 and 265 of the Act apply to the examination of a proposal by the Departmental Chief Executive in the same way as they apply to the examination of a proposal by the Boundaries Commission.
  3. Section 263 specifies the functions of examining and reporting in relation to a proposal for the amalgamation of areas that has been referred under s 218F(1) and how these functions are to be exercised.
  4. Subsection (1) imposes the functions of examining and reporting: the Boundaries Commission or Departmental Chief Executive “is required to examine and report on any matter with respect to the boundaries of areas ... which may be referred to it by the Minister”: s 263(1).
  5. In exercising the functions of examining and reporting on a proposal referred by the Minister, the Boundaries Commission or Departmental Chief Executive may or must do the following things.
  6. Where the proposal referred by the Minister is a joint proposal made by two or more councils for the amalgamation of two or more areas under s 218A, the Boundaries Commission or Departmental Chief Executive is required, for the purpose of examining the joint proposal, to seek the views of electors of each of those areas by at least one of two means: first, by means of advertised public meetings, invitations for public submissions and postal surveys or opinion polls, in which reply-paid questionnaires are distributed to all electors, or, secondly, by means of formal polls: s 218F(3). This requirement to seek the views of electors only applies where the initiators of the proposal for amalgamation are two or more councils; it does not apply where the Minister initiates the proposal for amalgamation.

The holding of an inquiry

  1. The Boundaries Commission or Departmental Chief Executive may be required to (if the Minister so approves) or must (if the Minister so directs or if the proposal is for the amalgamation of two or more areas) hold an inquiry for the purpose of exercising the functions of examining and reporting on the proposal: s 263(2) and (2A). Of relevance in this case is subs (2A): the Boundaries Commission or Departmental Chief Executive “must hold an inquiry for the purpose of exercising its functions in relation to a proposal for the amalgamation of two or more areas that has been referred to it in accordance with section 218F”.
  2. Subsection (2B) requires that “[r]easonable public notice must be given of the holding of an inquiry under this section”. Neither s 263 of the Act nor the regulations made under the Act prescribe the form or the content of the public notice required to be given or where or how the public notice is to be given. There is no express guidance given in the Act or the regulations made under the Act of what constitutes “[r]easonable public notice ... of the holding of an inquiry”. In Woollahra Municipal Council v Minister for Local Government [2016] NSWLEC 86 at [47]- [56], I held that a proper construction of s 263 reveals the following requirements.
  3. First, s 263(2B) imposes a duty to give reasonable public notice of the holding of an inquiry under s 263. The subsection does not expressly identify the person on whom this duty to give public notice is imposed. But the implication is that the person who is to hold the inquiry, the Boundaries Commission or the Departmental Chief Executive, must give or cause to be given the public notice of the holding of that inquiry. The person need not give the public notice personally but nevertheless needs to arrange for the public notice to be given of the inquiry that the person is to hold. A common way that the person may give public notice is to arrange for a notice to be published in newspapers circulating in the areas concerned.
  4. Second, the public notice that is to be given under s 263(2B) has three content requirements. The first content requirement is to state when and where the inquiry is to be held. The notice must specify the date and time of day at which the hearing of the inquiry will commence. The notice must specify the place at which the inquiry will be held. The degree of specificity of description of the place that will be required will depend on the facts and circumstances regarding the proposal, the local government area in which the inquiry is to be held and public knowledge of and familiarity with the place concerned.
  5. The second content requirement is to state what is the particular inquiry that is to be held. Subsection (2B) refers to the holding of “an inquiry under this section”. An inquiry under s 263 may be held in certain circumstances (under s 263(2)(a)) and must be held in other circumstances (under s 263(2)(b) and s 263(2A)). However, irrespective of whether an inquiry may or must be held, it is to be held in relation to “any matter with respect to the boundaries of areas and the areas of operation of county councils which may be referred” to the Boundaries Commission or Departmental Chief Executive by the Minister for examination and report (see s 263(1) of the Act). The matters with respect to the boundaries of areas that the Minister may refer for examination and report are a proposal for the amalgamation of two or more areas (see ss 218A and 218D-218F) and a proposal for the alteration of the boundaries of areas (see ss 218B and 218D-218F). The public notice that must be given under s 263(2B) needs to specify the matter that the Minister has referred for examination and report and in relation to which the inquiry is to be held.
  6. In this case, the matters in respect to the boundaries of areas which the Minister had referred to the Departmental Chief Executive for examination and report were the Oberon proposal, the Cabonne proposal and the Gundagai proposal for the amalgamation of the respective local government areas that had been referred in accordance with s 218F. The public notice required to be given under s 263(2B) needed to specify that the inquiry was to be held in relation to each proposal for the amalgamation of those areas.
  7. The third content requirement is to state what is the purpose of holding the inquiry. Both subsections (2) and (2A) of s 263, which permit or mandate the holding of an inquiry, specify that the inquiry is to be held “for the purpose of” the Boundaries Commission or Departmental Chief Executive “exercising its functions”. In the case of the proposal for the amalgamation of areas, the functions in relation to that proposal are the functions under s 218F(1) and s 263(1) of examining and reporting on the proposal.
  8. In this case, the public notice that was required to be given under s 263(2B) needed to state that the inquiry that was to be held was for the purpose of exercising the functions of the Departmental Chief Executive of examining and reporting in relation to each of the Oberon proposal, the Cabonne proposal and the Gundagai proposal for the amalgamation of the respective local government areas that have been referred by the Minister to the Departmental Chief Executive in accordance with s 218F.
  9. Third, the public notice that must be given under s 263(2B) is to be “reasonable”. The adjective “reasonable” qualifies both the content and timing of the public notice. The content and timing of the public notice that is required to be given might vary considerably depending on the nature and complexity of the matter (or proposal) in relation to which the inquiry is to be held: see Attorney-General for the State of Victoria v City of Geelong [1989] VicRp 58; [1989] VR 641 at 649, Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (2011) 195 FCR 318; [2011] FCAFC 88 at [85]- [87] and Ogawa v Minister for Immigration and Citizenship (2011) 199 FCR 51; [2011] FCA 1358 at [36], [37].
  10. A minor adjustment of a boundary of a local government area might only require that brief notice be given shortly before any inquiry is held (an inquiry in relation to the alteration of boundaries may be held if the Minister so approves and must be held if the Minister directs: s 263(2) of the Act). On the other hand, a more complex proposal for the amalgamation of two or more areas might require that more detailed notice be given at a time significantly before the inquiry is held (an inquiry in relation to a proposal for amalgamation of areas must be held: s 263(2A) of the Act).
  11. A person should know from reading the public notice what is the subject matter and purpose of the inquiry to be held and the person should be given sufficient time to prepare and make a submission to the inquiry.
  12. The reasonableness of the length of time between the giving of the notice and the holding of the inquiry is to be assessed not only by reference to the nature and complexity of the proposal but also to the time of year at which the notice is given. For example, if the period of time between giving the notice and holding the inquiry corresponds with the Christmas/New Year holiday break, reasonable public notice might not be able to be given. The notice might not come to the attention of people interested in making submissions to the inquiry but, even if it did, they may be unable to do so due to the difficulty of researching and preparing a submission in the holiday period, when resources and services are likely to be less available.
  13. Fourth, the form of public notice that is given should be appropriate to achieve the purpose for which notice is to be given of notifying the public of the holding of the inquiry. The form of public notice should reach the audience for which it is intended. Public notice by newspaper advertisement in newspapers circulating in the local government areas affected by the proposal is fair and reasonable notice to the public: Waitemata County v Local Government Commission [1964] NZLR 689 at 699.
  14. Section 263 of the Act distinguishes between the functions of examining and reporting on any matter with respect to the boundaries of areas, including a proposal for the amalgamation of areas referred by the Minister under s 218F, and the holding of an inquiry under s 263. An inquiry under s 263 is to be held for the purpose of the Boundaries Commission or Departmental Chief Executive, to whom a matter with respect to the boundaries of areas, including a proposal for the amalgamation of areas, has been referred, exercising its functions to examine and report on the matter.
  15. The inquiry is not itself the examination of the matter or proposal that is required to be undertaken; rather, it is held for the purpose of exercising the function of such an examination.
  16. The importance of this distinction is that it means that the inquiry that is to be held under s 263 is not itself required to be conducted as an examination of the matter or proposal that has been referred by the Minister. The obligation under s 263 is to hold an inquiry, not to inquire in the sense of examine.
  17. Section 263 identifies that an inquiry under the section is to be conducted in public. The obligation is to “hold” an inquiry: s 263(2) and (2A). Reasonable public notice is to be given of the “holding” of the inquiry: s 263(2B). Members of the public must be allowed “to attend any inquiry held” under the section: s 263(5). This means that an inquiry under the section is only that process that is held in public. The Boundaries Commission or Departmental Chief Executive holding an inquiry under the section may make other inquiries and receive information and submissions other than during the public hearing of the inquiry, as part of its examination of the matter or proposal referred to it under s 218F. However, such examination is not part of the inquiry held under s 263.
  18. Section 263 does not prescribe the practice or procedure by which an inquiry under the section is to be held. This stands in contrast to public inquiries held under Pt 8 of Ch 13 of the Act.
  19. Section 264 does prevent a person attending proceedings before the Boundaries Commission from being represented by an Australian lawyer or any other person acting for a fee or reward (s 264(1)) except in certain circumstances (s 264(2)). A lawyer may, however, prepare any documents or submissions or tender any legal advice in connection with any proceedings before the Boundaries Commission: s 264(2)(c). The reference to “proceedings before the Boundaries Commission” may include an inquiry under s 263 held by the Boundaries Commission or the Departmental Chief Executive: see s 218F(2).
  20. These restrictions on representation in proceedings (including an inquiry) before the Boundaries Commission (or the Departmental Chief Executive) do not prescribe positively the procedure that must be followed in the hearing of the proceedings, but rather proscribe certain people from representing others in proceedings.

Having regard to relevant considerations

  1. When considering “any matter referred to it that relates to the boundaries of areas ...”, the Boundaries Commission or Departmental Chief Executive is required “to have regard” to the factors in s 263(3) of the Act.
  2. As the Court of Appeal noted in Botany Bay City Council v Minister for Local Government at [39]: “[t]he reference in subs (3) to any ‘matter referred’ is a reference to that which was referred pursuant to subs (1)”. The role of the Departmental Chief Executive to whom a proposal has been referred by the Minister is to examine and report on that proposal: Botany Bay City Council v The State of New South Wales [2016] NSWCA 243 at [92], [93]. In this case, the matters referred were the Oberon proposal, the Cabonne proposal and the Gundagai proposal, which were made by the Minister to amalgamate the respective local government areas.
  3. The factors prescribed by s 263(3) are:
(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.
  1. To assist the Boundaries Commission or the Departmental Chief Executive in determining the attitude of the residents and ratepayers of an area or areas for the purposes of s 263(3)(d) of the Act, it may conduct (in such manner as it thinks appropriate) an opinion survey or poll of the residents and ratepayers: s 265(1).
  2. The actions of holding an inquiry in relation to the proposal and having regard to the factors in s 263(3) in considering a proposal are not themselves an “examination” of the proposal; rather they are done by the Boundaries Commission or Departmental Chief Executive “for the purpose of exercising its functions” of examining and reporting on the proposal (in the case of an inquiry) or “considering” the proposal (in the case of having regard to the factors in s 263(3)).
  3. This distinction is important. It means that there is no statutory obligation under s 263 on the Boundaries Commission or the Departmental Chief Executive to hold the inquiry or to have regard to the factors in s 263(3) by way of an “examination”. This is particularly evident from the words used by the legislature in s 263(3). The obligation is to “have regard to” the factors when “considering” the matter referred, not to “examine” the factors when “examining” the matter referred.

Undertaking the examination of the proposal

  1. Apart from the holding of an inquiry and having regard to the factors in s 263(3), the Act does not prescribe what is required by the examination of the proposal or how the examination should be undertaken. These matters are left to the judgment of the Boundaries Commission or the Departmental Chief Executive to whom the matter has been referred.
  2. The Boundaries Commission or Departmental Chief Executive may invite submissions from affected councils and members of the public on the proposal generally and on the factors in s 263(3) in particular. This was done by each Delegate in this case. The call for and consideration of written submissions was undertaken for the purpose of examining the proposal.
  3. The Boundaries Commission or Departmental Chief Executive may engage a consultant or any other person to provide information or advice on particular aspects of that proposal or factors in s 263(3). This was done by the Boundaries Commission in Minister for Local Government v South Sydney City Council (2002) 55 NSWLR 381; [2002] NSWCA 288.
  4. The Boundaries Commission or Departmental Chief Executive may assign “to an agent the task of recording, collating, organising and summarising a mass of submissions covering a range of discordant issues”: Minister for Local Government v South Sydney City Council at [211].
  5. These are some of the ways in which the Boundaries Commission or Departmental Chief Executive may undertake the functions of examining and reporting on the proposal referred to it. But it is not obliged to do these things by the terms of s 263 of the Act or the nature of the functions of examining and reporting on the proposal.

Furnishing the report of the examination

  1. The fourth step in the process prescribed by Div 2B is that the Departmental Chief Executive (to whom the Minister has referred a proposal under s 218F) must furnish the Departmental Chief Executive’s report of the examination of the proposal to the Boundaries Commission for review and comment: s 218F(6)(a).

Reviewing and commenting on the report

  1. The fifth step in the process prescribed by Div 2B is that the Boundaries Commission must review the report of the Departmental Chief Executive and send its comments to the Minister: s 218F(6)(b).
  2. This function of the Boundaries Commission to review and comment on the Departmental Chief Executive’s report is more confined than the Departmental Chief Executive’s function of examining and reporting on the proposal referred by the Minister. As the Court of Appeal has recently held in Botany Bay City Council v The State of New South Wales at [93] and [94]:
It follows from the reasoning of the Court in Botany Council, that the functions of the Chief Executive on the referral of a proposal by the Minister are not at large, but are constrained by the purpose of the referral. The stark contrast between the language of ss 218F(1) and 263(1) on the one hand, and s 218F(6) on the other, demonstrates that the functions of the Commission in conducting a review of a report of the Chief Executive are substantially more confined than the functions of the Chief Executive in preparing a report on a proposal by the Minister. Under s 218F(6) the Commission is not to examine and report on the Minister’s proposal. Instead, the Commission is directed to review the Chief Executive’s report and send its comments to the Minister.
It is no doubt true, as Mr Robinson submitted, that the word “review”, considered in isolation, is capable of describing a reconsideration of the merits of the decision or a proposal. But s 218F(6) must be construed in context. The provision applies to an amalgamation proposal or a proposal that is not supported by at least one of the councils affected. It is the Chief Executive’s report on the proposal, not the proposal itself, that is to be furnished to the Commission for “review and comment”. The Commission is then required to “review the report and send its comments to the Minister”. The “comments” are clearly intended to be the views of the Commission arising from its review of the Chief Executive’s report.
  1. The Boundaries Commission’s role in reviewing and commenting on the Departmental Chief Executive’s report does not extend to re-examining the merits of the Minister’s proposal for amalgamation that has already been examined by the Departmental Chief Executive. The Court of Appeal dismissed an argument to this effect in Botany Bay City Council v The State of New South Wales at [95]-[98] for the following reasons. First, the Court held that the Boundaries Commission’s expertise in local government issues and independence from the Minister does not demonstrate that the Boundaries Commission’s role extends to re-examining the merits of a proposal. Rather, the Act is structured so that this expertise and independence is utilised for the purpose of reviewing and commenting on the Departmental Chief Executive’s report. Second, while the statutory language of ss 218F(6) and (7) permits the Boundaries Commission to identify matters that may warrant modification of a proposal in its comments to the Minister, it does not require the Boundaries Commission to “...undertake its own independent evaluation of whether the proposal should be recommended for implementation”. Third, the Court held that if the Boundaries Commission were to be entitled to re-examine the merits of the Minister’s proposal under the Act, the statutory procedures governing the Departmental Chief Executive’s examination of the merits of the proposal would not apply. The result would be that, contrary to the intention of the Act, the initial examination of the proposal would be set at nought and the public would not be entitled to participate in the decision making process.

Deciding whether or not to recommend implementation of the proposal

  1. The sixth step under Div 2B is the Minister considering the Departmental Chief Executive’s report and, if applicable, the Boundaries Commission’s comments on that report. The Minister may recommend to the Governor that the proposal be implemented with such modifications that arise out of the Departmental Chief Executive’s report and, if applicable, the Boundaries Commission’s comments on that report and with such other modifications as the Minister determines, but may not do so if the Minister is of the opinion that the modifications constitute a new proposal: s 218F(7). Alternatively, the Minister may decline to recommend that the proposal be implemented: s 218F(8).

The proclamation

  1. If the Minister recommends to the Governor that the proposal be implemented, the process under Divs 2A and 2B culminates with the Governor making the proclamation amalgamating the areas. As I have noted earlier, a proclamation by the Governor may include provisions of the same kind as are referred to in s 213. The provisions include those “for or with respect to”: the transfer or apportionment of assets, rights and liabilities; the transfer of staff; the alteration of ward boundaries; the holding of elections; the termination, cessation, dissolution or abolition of anything existing before the proclamation takes effect; the preservation or continuance of anything existing before the proclamation takes effect, amongst other matters: s 213(1) of the Act. The proclamation may also “authorise any matter or thing to be from time to time determined, applied or regulated by any specified person or body”: s 213(2) of the Act.

The making of the proposal

The applicants’ challenges

  1. The applicants’ first grounds of challenge concern the making of each of the Oberon proposal, the Cabonne proposal and the Gundagai proposal. The grounds of challenge are expressed in the alternative:

I will elaborate on each of these arguments.

  1. The applicants firstly argued that “there was no decision by [the Minister] under s 218E(1), because on the balance of probabilities [the Minister] was after June [2015] and until April 2016 a bystander in the statutory process of forced Council amalgamations under sections 218F and 263” (par 5(a), p 2, submissions of applicants, 3 June 2016). The applicants noted that the Minister did not produce, in response to various notices to produce issued by the applicants, “the usual Decision Memorandum or file or document evidencing or referring such a decision [under s 218E(1)] to him”. The applicants noted that such documents do exist in respect of the Minister’s decision in May 2016 under s 218F(7) to recommend to the Governor that the proposals be implemented (par 5(e), p 3, submissions of applicants, 3 June 2016 and see also par 4(f), p 2, outline submissions of applicants in closing, 31 May 2016).
  2. The applicants referred to the absence of evidence from the Minister or any officer of his staff or department to explain what happened in relation to making the proposals under s 218E(1), referring to Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 (par 4(g), p 2, outline submissions of applicants in closing, 31 May 2016 and T 26/5/16, p 181).
  3. The applicants drew the inference from the absence of decision memoranda in respect of a decision under s 218E(1) to make the proposals for amalgamation and the absence of evidence of the Minister about making the decision that the Minister did not make any such decision at all (T 26/5/16, p 184).
  4. The applicants secondly argued that the decision to make the proposals was made by others, either Cabinet or by KPMG and the Department of Premier and Cabinet (‘DPC’) in an informal arrangement which they called a partnership. The applicants submitted that the decision to make the proposals was made by Cabinet on 17 or 18 December 2015, as announced by the Premier on 18 December 2015 and evidenced in the press release of that date (par 4(a), p 2, outline submissions of applicants in closing, 31 May 2016; par 5(f), p 3, submissions of applicants, 3 June 2016 and T 26/5/16, p 176).
  5. Alternatively, the applicants submitted that the decision was made by KPMG/DPC who were in “a joint venture to amalgamate selected NSW councils including the Applicants”. The applicants argued that the Minister “was a mere bystander, after June [2015], as was his Department in the NSW Local Government Reform Process. KPMG/DPC assumed their roles. For example, the Minister did not place his signature on the Proposal Documents, nor even on the draft documents which was simply used at will by KPMG/DPC for the purposes of their enterprise” (par 5(i), p 3, submissions of applicants, 3 June 2016). The applicants argued that the Minister “had no role in the core public process under sections 218F and 263 other than as an amanuensis as directed by KMPG/DPC” (par 5(k), p 4, submissions of applicants, 3 June 2016).
  6. The applicants thirdly argued that if the Minister did in fact make the decision to make the proposals for amalgamation, his decision was “illusory and predetermined by others” (par 5(l), p 4, submissions of applicants, 3 June 2016 and par 4(h), p 2, outline submissions of applicants in closing, 31 May 2016). Presumably, the “others” are either Cabinet or KPMG/DPC. The applicants argued that the only decision the Minister made was “a decision to progress amalgamations, not a decision to propose them” (T 26/5/16, pp 176, 180 and 182). The decision to make the proposals was made by others and the Minister only decided to progress the proposals for amalgamation made by others.
  7. The applicants fourthly argued that if the Minister did make a decision to make the proposals for amalgamation, his decision was manifestly unreasonable. The applicants submitted that the grounds of manifest unreasonableness were threefold.
  8. First, it was manifestly unreasonable to make the decision based on a KPMG report or KPMG material, which the Minister knew was not publicly available and would not be made available to the Delegate, the applicant councils or members of the public to assist them in undertaking the statutory processes of examination, inquiry and review. The applicants argued that the undisclosed KPMG report or material explained and demonstrated the basis of the proposals. Without access to the information in the undisclosed KPMG report or material, the participants could not perform their functions fully under the statutory processes. Further, it was manifestly unreasonable of the Minister to make and refer the proposals but to frustrate the processes of examination, inquiry, report and review by holding back the undisclosed KPMG report or material which justified his decision (pars 6(a)-(c), pp 3-4, outline submissions of applicants in closing, 31 May 2016 and T 26/5/16, pp 186-187; T 31/5/16, p 55).
  9. Second, the applicants argued that it was manifestly unreasonable for the Minister to make a decision based on the disclosed KPMG documents, which allegedly proceeded upon flawed modelling. The applicants referred in particular to the modelling disclosed in the KPMG “Outline of Financial Modelling Assumptions for Local Government Merger Proposals Technical Paper” dated 19 January 2016 (‘KPMG Technical Paper’). The applicants argued that it was illogical to construct a model which proceeds under the misapprehension that amalgamations only result in financial benefits but not to consider or make provision for the possibilities of diseconomies of scale and financial disadvantages to the areas to be amalgamated (especially when these are requirements under s 263(3) of the Act) (pars 1(a) and (b), p 2, applicants’ supplementary reply points, 6 June 2016).
  10. The applicants also argued that it was illogical to construct a model that does not consider the specific local circumstances of each of the areas to be amalgamated. The model inappropriately adopted as a reference point a generic rural council, rather than focussing on the particular local circumstances, and used long term financial plan data rather than the most current audited accounts of each council. The applicants cited R (on the application of Forest Care Home Ltd) v Pembrokeshire County Council (2011) 14 CCLR 103; [2010] EWHC 3514 (Admin) at [131] and [136] where the council, in making a decision based on modelling that failed to consider local factors, was held to have erred in law (par 2, p 2, applicants’ supplementary reply points, 6 June 2016 and T 31/5/16, pp 42-44).
  11. Third, the applicants argued that it was manifestly unreasonable to model the net financial benefits of the proposals without having regard to the “unique status and circumstances of farming community rural centre based councils”. The applicants submitted that in the areas to be amalgamated are rural centres as defined in s 354B of the Act. Under s 218CA, staff numbers in these rural centres must, as far as is reasonably practicable, be maintained after the amalgamation. The applicants argued that the model failed to take into account this requirement in calculating the wage benefits from the amalgamation. The modelling assumptions in the KPMG Technical Paper assumed wage benefits for regional councils, which are different to rural centres (par 3, pp 2-3, applicants’ supplementary reply points, 6 June 2016 and par 5(b), p 3, outline submissions of applicants in closing, 31 May 2016).

The respondents’ rebuttal

  1. The respondents rebutted the applicants’ arguments, put in the alternative, that the Minister did not make any decision to make the proposals for amalgamation but that instead, the decision was made by others, whether Cabinet or KPMG/DPC. The respondents submitted that there was ample evidence on which the Court can infer that the Minister decided to make the proposals under s 218E(1) of the Act.
  2. The Minister’s letter dated 6 January 2016 referring the proposals under s 218F(1) stated that “[a] list of proposals initiated by me pursuant to section 218E(1) of the [Act] is attached and marked Attachment A”. Attachment A included each of the Oberon proposal, the Cabonne proposal and the Gundagai proposal.
  3. The Minister’s letter also attached, as Attachment B, the proposal documents for each proposal being “Merger Proposal: Bathurst Regional Council, Oberon Council, January 2016”, “Merger Proposal: Blayney Shire Council, Cabonne Council, Orange City Council, January 2016” and “Merger Proposal: Cootamundra Shire Council, Gundagai Shire Council, January 2016”. Each proposal document contained a foreword headed “Minister’s Foreword” and bore the signature of the Minister above his name. In the Minister’s Foreword to the proposal documents for Cabonne and Gundagai, the Minister said “I am putting forward the proposal to merge the local government areas of [the named councils]”. The Minister’s Foreword to the proposal document for Oberon is expressed in the passive voice, “... the proposal to merge the local government areas of Bathurst and Oberon is being put forward”, but there is no reason to think that the Minister was not the person putting forward the proposal as he said he was doing for Cabonne and Gundagai (par 32, p 10, respondents’ further submissions, 31 May 2016).
  4. The respondents submitted that the applicants’ reliance on Jones v Dunkel is misplaced. The documents referred to above provided ample evidence that a decision to make the proposals under s 218E was made by the Minister. There was no basis for an adverse inference (to the effect that the Minister made no decision) that the Minister needed to be called in order to displace: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd  [2014] NSWCA 158  at  [14]  and [81]. The rule in Jones v Dunkel has no operation (par 33, p 10, respondents’ further submissions, 31 May 2016).
  5. The respondents rejected the applicants’ allegation of predetermination, namely that the decision to implement the amalgamations was predetermined by Cabinet on or about 18 December 2015 or by KPMG/DPC and that the Minister’s decision and referral of the proposals on 6 January 2016 was illusory or a charade. The respondents submitted that this ground of challenge should be rejected for at least three reasons.
  6. First, no inference of predetermination can be drawn from the media release of 18 December 2015 of the Premier and the Minister. The press release refers only to “proposed mergers” in general terms not any specific proposal. The media release stated that “[t]he NSW Government is using the existing process set out in the Local Government Act to consider council mergers”. The Minister is quoted as stating that “[o]ur process will provide an objective assessment of the merger benefits and impacts, and give the community a chance to have a say before a final decision is made”. The media release said that “[d]etailed merger proposals are now being finalised and will be referred to the Chief Executive of the Office of Local Government (OLG) for examination and report under the existing process set out in the Local Government Act”. No inference of “predetermination” can be drawn from this document: it clearly states that the proposals will be dealt with under the existing process in the Act and that no final decision has been made (par 34(a), p 11, respondents’ further submissions, 31 May 2016 and T 31/5/16, p 91).
  7. Second, as a matter of fact, the Minister declined to recommend the implementation of some proposals for amalgamation, including the Walcha proposal (involving the amalgamation of Walcha Council and Tamworth Regional Council). This evidences that the Minister was making the decisions and had not predetermined the outcome (par 34(b), p 11, respondents’ further submissions, 31 May 2016 and T 31/5/16, p 92).
  8. Third, the letter sent by the Minister to the mayors and councillors of the councils affected by the amalgamations seeking expressions of interest to serve on any new council expressly said that “no decision has been made on any merger proposal” (an example of the letter was attached to Mr Wallace’s affidavit sworn 23 May 2016). This statement is evidence against predetermination and certainly is not supportive of it (par 34(c), p 11, respondents’ further submissions, 31 May 2016).
  9. The respondents rejected the applicants’ various arguments that the Minister’s decision to make the proposals for amalgamations was manifestly unreasonable.
  10. At the outset, the respondents submitted that the ground of manifest unreasonableness is inapplicable to the making of a proposal under s 218E(1) of the Act. There is no requirement for the making of a “valid” proposal, other than that it must be a proposal of a kind that falls within the terms of the Act (a proposal for amalgamation of two or more areas referred to in s 218A or a proposal to alter the boundaries of one or more areas referred to in s 218B) (T 31/5/16, p 82). The applicants noted that a proposal may be made under s 218E(1) not only by the Minister but also by a council affected by the proposal or by an appropriate minimum number of electors. There is no “minimum agenda” in respect of making a proposal, such as relevant matters that must be considered (T 31/5/16, pp 82 and 93). Persons of the three classes of persons who may initiate a proposal may decide to make a proposal for diverse motives and after having regard to diverse considerations. There is no warrant in the statutory step in s 218E(1) of making a proposal to judicially review the matters taken into account in making a decision or the reasonableness or unreasonableness of a decision to make a proposal. This is equally true for the Minister making a proposal. The Minister’s decision to make a proposal cannot be reviewed on the ground of manifest unreasonableness (T 31/5/16, pp 92-93).
  11. However, if the ground of manifest unreasonableness is available, the respondents submitted that the applicants have not established that the Minister’s decision was manifestly unreasonable in any of the three ways argued.
  12. The applicants’ first argument was that it was manifestly unreasonable to make the decision without making the undisclosed KPMG report or material available to the Delegates, the affected councils and members of the public. The respondents submitted that this argument fails at multiple levels.
  13. First, on a proper construction of the Act, the Minister, in making a proposal and referring it for examination and report, was under no obligation to disclose his motivations or the basis for his motivations. The making of the proposal stands outside the examination, inquiry and reporting stage of the administrative process, and can be made without evidence of the matters in s 263 of the Act, or for a range of motives or purposes, including conflicting ones. So much is clear from the fact that a proposal can be made “by an appropriate minimum number of electors”, some of whom for example might actively oppose the proposal, but want to see the matter put to rest by an examination and inquiry (par 37, p 13, respondents’ further submissions, 31 May 2016).
  14. Second, the examination, inquiry and reporting stage of the administrative process, for each proposal, demonstrated that a reasonable opportunity was in fact given to the Delegates, the affected councils and members of the public to participate in the process. The KPMG reports and material that were publicly disclosed contained sufficient information to enable the participants to participate meaningfully in the statutory process. The respondents, in their submissions to the Court, analysed the KPMG Technical Paper, the list of council data sources used by KPMG (which set out the long-term financial plans from which data for the modelling was taken), a spreadsheet summarising outputs from KPMG’s modelling and other documents. The respondents submitted that the information disclosed in these documents was sufficient to enable a detailed critique of KPMG’s analysis to be put forward. Each applicant council made use of experts on public financing to criticise KPMG’s work and the Delegates addressed those criticisms. Oberon, Cabonne and Gundagai Councils made submissions to the Delegates relying on expert reports on public financing, including reports by Dr Drew and Professor Dollery (pars 38-49, respondents’ further submissions, 31 May 2016).
  15. Third, although KPMG’s actual modelling (that is the mathematical formulas KPMG used and the application of those formulas to the publicly available data) was not made publicly available, it was not manifestly unreasonable to not make that actual modelling publicly available and it was not manifestly unreasonable for the Minister to make a decision to make the proposals without making the actual modelling publicly available (par 50, p 16, respondents’ further submissions, 31 May 2016).
  16. The applicants’ second argument was that it was manifestly unreasonable to decide to make the proposals based on the KPMG Technical Paper in circumstances where the modelling and assumptions in the KPMG Technical Paper were so flawed that no reasonable decision maker could have made use of them. The respondents rejected this argument for two reasons.
  17. First, it is well established that the ground of review of manifest unreasonableness must be established on the material before the decision maker (in this case the Minister). There was nothing before the Minister when he made the proposals to suggest that the modelling and assumptions in the KPMG Technical Paper were so flawed that they could not be relied upon (par 37, respondents’ summary of argument, 23 May 2016). The criticisms of the KPMG modelling made by the experts called by the applicants, Dr Drew and Professor Dollery in their evidence before the Court, was not before the Minister and he cannot have acted manifestly unreasonably by not considering criticisms of which he was unaware.
  18. Second, the respondents noted that the criticisms made by Dr Drew and Professor Dollery in their evidence before the Court were the same criticisms that were made in the submissions of the applicant councils and some members of the public to the Delegates during the examination and inquiry process. The submissions were based, apparently, on the views of the same experts. The criticisms in the submissions were considered and addressed by the Delegates in their respective reports (par 60, p 17, respondents’ further submissions, 31 May 2016). The respondents submitted that it was not manifestly unreasonable for the Minister to make a decision based on the KPMG Technical Paper that was publicly disclosed and able to be, and was in fact, criticised by the applicant councils and some members of the public in the statutory process of examination and inquiry on the proposals.
  19. The applicants’ third argument of manifest unreasonableness was that the KPMG Technical Paper was flawed because it failed to take into account the special measures for maintenance of staff numbers and rural centres under s 218CA and s 354B of the Act. The problem with this argument, the respondents submitted, is that the KPMG assumptions plainly did take those statutory provisions into account. The KPMG Technical Paper stated (at p 3) that “[n]o net staffing reductions were assumed for regional councils”, but “efficiencies are generated by a merger that allows a regional council to re-allocate duplicated back-office, administration and corporate support roles to frontline service positions”. Hence, maintenance of staff in the rural centres in the areas of regional councils was assumed (par 62, respondents’ further submissions, 31 May 2016 and T 31/5/16, p 96).

The making of the proposal was not invalid

  1. The applicants have not established any of their grounds of challenge to the Minister’s decision to make the proposals under s 218E(1) of the Act. My reasons accord with the respondents’ submissions.
  2. The applicants have not established that the Minister did not make the decision under s 218E(1) to make the Oberon proposal, the Cabonne proposal and the Gundagai proposal. The Minister’s letter of 6 January 2016 referring the proposals for examination and report and the proposal documents are evidence that the Minister did in fact make the decision. The Minister referred to the media release of 18 December 2015 where he announced “my intention to prepare proposals to amalgamate or change the boundaries of a number of local government areas across the State”. The Minister then stated that “[a] list of the proposals initiated by me pursuant to section 218E(1) of the Local Government Act 1993 ... is attached”. The list included the Oberon proposal, the Cabonne proposal and the Gundagai proposal. The Minister said to the Departmental Chief Executive: “By this letter I am referring these proposals to you pursuant to section 218F(1) of the Act for examination and report ...”. The Minister signed the letter above his name. The proposal documents for the Oberon proposal, the Cabonne proposal and the Gundagai proposal (attached to the Minister’s letter of 6 January 2016) contained a Minister’s Foreword stating that the Minister was putting forward the proposals.
  3. The media release of 18 December 2015 of the Premier and the Minister does not prove to the contrary. Cabinet may well have adopted a range of proposed reforms to the local government sector, including a policy in favour of amalgamations of local government areas as a matter of principle. The media release refers to that policy in general and contingent terms. It says that 35 new councils are being “proposed” in NSW, that the Government “is using the existing process set out in the Local Government Act to consider council mergers”, that the Minister had stated that “[o]ur process will provide an objective assessment of the merger benefits and impacts, and give the community a chance to have a say before a final decision is made” and that “[d]etailed merger proposals are now being finalised and will be referred to the Chief Executive ... for examination and report ...”.
  4. These statements affirm that any proposal for amalgamations (once finalised) will follow the process set out in the Act. This process includes the Minister deciding under s 218E(1) to make the proposals and referring the proposals under s 218F(1) for examination and report, and the examination, inquiry and report on the proposals under s 263, during which process the community would have a chance to have their say on the proposals. The media release affirms that a final decision on any proposal for amalgamations has not been made and will not be made until the process set out in the Act has been followed.
  5. No inference can be drawn from these statements that the Minister had not made and would not make a decision under s 218E(1) to make the proposals, or that instead Cabinet had made or would make the decisions to make the proposals. No inference can also be drawn from these statements that any decision that the Minister did make on 6 January 2016 to make the proposals was “predetermined” by Cabinet on or about 18 December 2015.
  6. The alternative argument that KPMG and DPC were in some form of joint venture to force amalgamations of local government areas and that they made the decisions under s 218E(1) to make the proposals is without foundation. No doubt KPMG as the consultant employed by the NSW Government to assist in the design and implementation of local government reform, including amalgamations, and DPC as one of the key government departments involved in the implementation of that policy, did provide material assistance. This assistance included preparing the KPMG Technical Paper and the proposal documents, both as to the substantive content (such as the modelling assumptions and the model outcomes, including financial benefits of amalgamations) and the form (such as typing, typesetting, layout and application of the Minister’s signature to printed copies of the proposal documents). But provision of this assistance does not establish that KPMG and/or DPC actually made the decision under s 218E(1) to make the proposals or that they actually referred the proposals under s 218F(1) for examination and report or that the Minister did not actually make that decision under s 218E(1) or refer the proposals under s 218F(1).
  7. The applicants’ challenge to the Minister’s decision to make the proposals on the ground of manifest unreasonableness was misconceived. As the respondents submitted, the Act does not set any decision making agenda on a person, including the Minister, making a proposal under s 218E(1). Persons of one of the three classes of persons who may initiate a proposal under s 218E(1) may make a proposal for diverse and potentially conflicting motives and after having regard to diverse considerations, not all of which may be relevant to the Act. There is no warrant in the Act to evaluate the motives of or matters considered by the persons who make a proposal. Take for example the class of a minimum number of electors. How could the motives of or the matters considered by the minimum number of electors (at least 250) sensibly be evaluated? The Act only requires that one of the classes of persons who may initiate a proposal under s 218E(1) in fact makes a proposal that meets the description of a proposal under ss 218A or 218B of the Act. That is sufficient to initiate the process under Div 2B. There is no scope to judicially review the decision to make the proposal on the grounds of failure to consider relevant matters or consideration of irrelevant matters or manifest unreasonableness. This conclusion is sufficient to dispose of, at the threshold, the applicants’ challenge to the Minister’s decision to make the proposals on the ground of manifest unreasonableness.
  8. In any event, however, the applicants have not established that the Minister’s decision under s 218E(1) to make the proposals was manifestly unreasonable in any of the ways argued by the applicants. It was not manifestly unreasonable to make the decision without releasing the undisclosed KPMG material. Whilst there might be some limitations on the purpose for which a decision under s 218E(1) may be made and the considerations to which regard may be had in making a decision under s 218E(1) flowing from the subject matter, scope and purpose of the Act, not making publicly available the undisclosed KPMG material is not one such limitation.
  9. The applicants also have not established that the contents of any undisclosed KPMG material was of such a nature that not to disclose publicly that material would frustrate the statutory process of examination, inquiry, report and review of the proposal. The Minister did disclose publicly other material, including the KPMG Technical Paper containing the modelling assumptions, the input sources of data used in the modelling, and the outputs of the modelling included in the proposal documents. The applicants have not established that, in circumstances where this other material was proposed to be and was in fact made publicly available by the Minister, it was manifestly unreasonable for the Minister to decide to make the proposals but not make the undisclosed KPMG material publicly available.
  10. The applicants have not established that it was manifestly unreasonable to decide to make the proposals based on the publicly disclosed KPMG material, including the KPMG Technical Paper. Even if that material were to have contained factual errors or be based on erroneous assumptions or flawed methodologies, that would not cause the Minister’s decision, which considered or was based on that material, necessarily to be manifestly unreasonable. It has long been established that a decision is not manifestly unreasonable simply because it might be factually wrong. The validity of a decision does not depend on the soundness of the decision: see, for example, Parramatta City Council v Pestell (1972) 128 CLR 305; [1972] HCA 59 at 318, 323, 327 and the cases cited in Walsh v Parramatta City Council (2007) 161 LGERA 118; [2007] NSWLEC 255 at [62], [63].
  11. In any event, however, the applicants have not established that the KPMG material considered by the Minister was so flawed that no reasonable Minister could have made a decision under s 218E(1) after considering that material.
  12. Finally, the applicants have not established that the publicly disclosed KPMG material, including the KPMG Technical Paper, was factually flawed in its assumptions about the staff numbers to be maintained in the rural centres in the areas to be amalgamated under the Oberon proposal, the Cabonne proposal or the Gundagai proposal. The KPMG Technical Paper stated that no net staffing reductions were assumed. The reallocation of staff from duplicated back-office, administrative and corporate support roles to frontline service positions involves the maintenance of staff numbers, not a reduction.
  13. Again, however, even if the KPMG Technical Paper had made a mistake of fact about staff numbers, this would not necessarily result in the Minister’s decision which considered that Technical Paper being manifestly unreasonable.
  14. I reject the challenge to the Minister’s decision under s 218E(1) to make the proposals.

The referral of the proposals

The applicants’ challenges

  1. The applicants’ challenges to the Minister’s referral of the proposals for amalgamation under s 218F(1) to the Departmental Chief Executive for examination and report were based on similar grounds to their challenge to the decision under s 218E(1) to make the proposal. The applicants argued that “the referral was as a matter of probability a step on the predetermined path to the amalgamations”, citing Betfair Pty Ltd v Western Australia (2008) 234 CLR 418; [2008] HCA 11 at [119] (par 4(h), p 2, outline submissions of applicants in closing, 31 May 2016).
  2. The applicants argued that the Minister had no power under s 218F(1) to refer a decision made by others, including Cabinet. Under s 218F(1), the Minister may only refer a proposal that the Minister made or that the Minister received from one or other of the classes of persons who can initiate a proposal under s 218E(1), namely, a council affected by the proposal or an appropriate minimum number of electors. The applicants submitted that neither Cabinet nor KPMG and DPC acting in a joint venture fall within these classes of persons who can initiate a proposal under s 218E(1). Hence, any proposal initiated by them and received by the Minister could not be referred by the Minister under s 218F(1) for examination and report (T 26/5/16, p 176).
  3. The applicants also relied on the ground of manifest unreasonableness. The applicants argued that it was manifestly unreasonable to refer the proposals without making available the undisclosed KMPG material. It was manifestly unreasonable to refer a proposal for examination and report where such functions were “impossible to undertake and futile” because all of the KPMG material which explained and demonstrated the basis of the proposal was withheld (pars 6(a), (b) and (c), pp 3-4, outline submissions of applicants in closing, 31 May 2016 and par 7(a), p 5, submissions of applicants, 3 June 2016).
  4. The applicants also argued that it was manifestly unreasonable to refer the proposals for amalgamation of areas with rural centres that were founded upon a stated net financial benefit over 20 years which paid no regard to the requirement to maintain staff numbers in the rural centres under s 218CA and s 354B (par 6(d), p 4, outline submissions of applicants in closing, 31 May 2016).

The respondents’ rebuttal

  1. The respondents rejected the applicants’ arguments for the same reasons they gave in response to the applicants’ challenge to the decision to make the proposals. The applicants submitted that the evidence established that the Minister decided under s 218E(1) to make the proposals and he referred the proposals under s 218F(1) for examination and report. There was no predetermination.
  2. The respondents submitted that the ground of manifest unreasonableness is inapplicable to the referral of the proposals under s 218F(1). The Minister does not have a discretionary power under s 218F(1) but rather a mandatory duty to refer a proposal that the Minister has made or has received under s 218E(1). Hence, the Minister was bound to refer the proposals he had made for examination and report, regardless of whether to do so was unreasonable in the circumstances or not (T 31/5/16, p 95).
  3. The respondents submitted that, in any event, there was no manifest unreasonableness in referring the proposals without making available the undisclosed KPMG material or based on the KMPG Technical Paper’s and proposal documents’ consideration of the net financial of the proposals, for the reasons they gave earlier.
  4. The proposal that is referred is simply the “single sentence” proposing that two or more areas are amalgamated into one or more new areas. The proposal is not the proposal document in which the statement of the proposal is included. There is nothing in the Act that requires the Minister to provide any supplementary information when the Minister refers the proposal. There is no statutory basis to review the reasonableness or unreasonableness of any information provided that was not required to be disclosed under the Act (T 31/5/16, p 95).

The referral of the proposals was valid

  1. The applicants have not established any of their grounds of challenge to the Minister’s referral of the proposals under s 218F(1). I agree with the respondents’ submissions.
  2. For the reasons I have given in relation to the first challenge, the Minister made the decision under s 218E(1) to make the proposals and he referred the proposals he had made, as he was bound to do under s 218F(1), for examination and report. The applicants have not established that other persons, including Cabinet or KPMG and DPC acting in a joint venture, decided to make the proposals or that there was any predetermination.
  3. The applicants also have not established manifest unreasonableness in the ways argued, for the reasons I have explained in relation to the applicants’ challenge to the Minister’s decision to make the proposals.
  4. In any event, however, even if the referral of the proposals were to have been, to use the applicants’ wording, “a step on the predetermined path to the amalgamations” or were to be unreasonable in any of the ways argued by the applicants, this would have no legal consequence. The Minister was under a duty, imposed by s 218F(1), to refer the proposals that had been made; he did not have a discretion to refer or not refer the proposals or to refer them in any particular way, such as with or without making available certain material or based on certain modelling or assumptions. The Minister had a duty to refer the proposals that had been made, regardless of such circumstances.
  5. I reject the challenge to the referral of the proposal under s 218F(1).

The giving of reasonable public notice

The applicants’ challenges

  1. The applicants challenged the public notice that was given by the Delegates of the holding of the inquiries. The applicants argued that “reasonable public notice” was not given of the holding of each inquiry, in contravention of s 263(2B) of the Act. The applicants challenged both the content and the reasonableness of the notices that were given by the Delegates.
  2. As to the content of the notice, the applicants referred to the heading of the notice: “Notification of public inquiry into the proposal to amalgamate or alter the boundaries of local government areas”. The notice then stated: “Pursuant to section 218F of the Local Government Act 1993 the Minister for Local Government has referred a proposal in relation to the following local government areas [the applicable areas were specified] to the Acting Chief Executive of the Office of Local Government for examination and report”. The applicants argued that it was not possible from reading each notice to know whether the proposal was for the amalgamation of the areas specified (under s 218A) or the alteration of the boundaries of the areas specified (under s 218B). The applicants noted that each proposal had very different consequences, both for the content of the proclamation and the continued existence of each council of the areas as an entity (referring to s 213). The applicants argued that the notice refers ambiguously to the inquiry to be held and does not specify whether the inquiry is in relation to a proposal for amalgamation of areas under s 218A or alteration of the boundaries of areas under s 218B. This omission is of substance and renders the notice invalid: Scurr v Brisbane City Council (1973) 133 CLR 242; [1973] HCA 39; Lindemans Wines Pty Ltd v Woodward (1981) 46 LGRA 14 and Bartzios v Leichhardt Municipal Council [1978] 1 NSWLR 7 at 10-11 (the notice must “draw the attention of the public ... to the council’s proposal” – here the notice did not.) (pp 6-7, submissions of applicants, 3 June 2016 and T 31/5/16, pp 77-78).
  3. As to the reasonableness of the notice, the applicants argued that the requirement of s 263(2B) to give “reasonable public notice” of the holding of the inquiry assumes that there will be a reasonable opportunity for the public to participate in the inquiry, by written submission or attendance. First, as to making written submissions, the applicants argued that the notice given did not call for written submissions to be made to the inquiry. Accordingly, members of the public were unaware, should they follow the announcements of the inquiry made in the notice, that it was possible to make a written submission in the alternative to attending the public inquiry. Second, the applicants argued that the notice did not state that members of the public who made a written submission would be given the opportunity to attend and participate in the oral inquiry. Section 263(5) requires (“must allow”) that members of the public be given the opportunity to attend any inquiry held. This means that even those who made written submissions must be given the opportunity to attend and participate in the oral inquiry (pp 7-8, submissions of applicants, 3 June 2016).

The respondents’ rebuttal

  1. The respondents submitted that the public notice given by each Delegate of the holding of the inquiry did satisfy the requirements of s 263(2B) of the Act.
  2. The respondents submitted that s 263(2B) does not prescribe that notice must be given of anything more than the fact of the holding of the inquiry under the section; it does not require advice to be given of the documents in which the proposal was contained or the documents relied upon in making the proposal. The notices that were given did provide further information, such as inviting submissions from members of the public and referring to the Council Boundary Review website, but this further information was not required by s 263(2B) (par 81, respondents’ summary of argument, 23 May 2016).
  3. In relation to the content of the notices given, the respondents submitted that the notice advised of the holding of an inquiry, at the specified times and venues, and sufficiently identified the subject matter of the inquiry. True the notice said that the proposal involved the amalgamation or alteration of the boundaries of the areas but that was enough to alert anyone who was concerned to become better informed about the proposal by looking, for example, at the Council Boundary Review website identified in the notice or by asking for information by telephoning the free call number given in the notice (T 31/5/16, pp 108-109 and T 6/6/16, p 213). Information was available on the website identified. For example, the proposal documents describing the proposals were published on the website from 6 January 2016 (T 31/5/16, p 109).
  4. In further answer to the issue of the notice stating that the inquiry is into the proposal to amalgamate or alter the boundaries of areas, the respondents submitted that a description in those terms is adequate because “it defines the entirety of the possibilities that might be under consideration”. The notice gives notice to “anyone who might be interested in any proposal of that kind, be it complete amalgamation, amalgamation of some areas only or alteration. Anyone who’s interested in any of those subjects has, by that notice, with a clear identification of the two local government areas, and the inquiry and the referral of the proposal, been put on notice that this is something that they should pursue further.” (T 6/6/16, p 209).
  5. The respondents submitted that, if the inclusion of reference to alteration of boundaries of the areas went beyond what the notice should have included, “it was no more than surplusage, which did not ... mislead anyone” (T 6/6/16, p 210). Anyone concerned about amalgamation but unconcerned about alteration would have attended the inquiry or made further inquiries as to the details of the proposal. They would not have been misled into doing nothing (T 6/6/16, p 211).
  6. In relation to the reasonableness of the public notice given, the respondents submitted that what is required is “a holistic analysis of all of the forms of public notice that were provided” (T 6/6/16, p 207). The respondents referred to the various ways in which public notice of the holding of the inquiry was given, including by placing notices in various newspapers, placing notices on the Council Boundary Review website and writing to each of the affected councils notifying them of the inquiry to be held and requesting their assistance in promoting details of the inquiry, including by bringing the attached public notice to the attention of as many people in the council’s area as possible. The councils acceded to the Delegate’s request in various ways, including by mailing pamphlets to their residents and placing the notice provided by the Delegates on their websites and Facebook pages (pars 84-97, pp 29-32, respondents’ summary of argument).
  7. The respondents pointed out that the reason the notice did not expressly call for written submissions to be made to the inquiry is that the notice was directed to the narrower purpose of giving notice of the holding of the inquiry. The inquiry is an adjunct to the examination of the proposal. Written submissions might be invited to assist in that examination, but they are not made to the inquiry itself (T 31/5/16, pp 110-111).

Reasonable public notice was given

  1. The applicants have not established that reasonable public notice was not given in any of the ways that they argued.
  2. As to the content of the notice, the first criticism was that the notice was ambiguous as to whether the proposal the subject of the inquiry was for the amalgamation of the areas specified in the notice or the alteration of the boundaries of those areas. This ambiguity arose from the heading and the first paragraph of the notice.
  3. I find that each notice did give sufficient information or warning to readers of the inquiry to be held. Each notice was expressed in very similar terms. An example is the notice for the Oberon proposal which stated:
Notification of public inquiry into the proposal to amalgamate or alter the boundaries of local government areas
Pursuant to section 218F of the Local Government Act 1993 the Minister for Local Government has referred a proposal in relation to the following local government areas:
Bathurst Regional and Oberon
to the Acting Chief Executive of the Office of Local Government for examination and report.
Pursuant to section 745 of the Local Government Act 1993 the Acting Chief Executive of the Office of Local Government has delegated to me the examination and reporting functions under section 218F of the Local Government Act.
The examination into the proposal has now commenced and submissions are invited from members of the public. The closing date for submissions is 5pm EST, Sunday 28 February 2016.
Submissions can be made online at
www.councilboundaryreview.nsw.gov.au
or by mail to:
GPO Box 5341
Sydney NSW 2001
A public inquiry in relation to the proposal will be held under section 263 of the Local Government Act 1993 at the following time(s) and venue(s):
Oberon Showground:
Thursday, 4 February 2016
1:00pm – 4:00pm
Panthers Bathurst:
Thursday, 4 February 2016
7:00pm – 10:00pm
Members of the public who would like to attend are requested to register at
www.councilboundaryreview.nsw.gov.au or by contacting 1300 813 020.
Members of the public who would like to speak at the public inquiry are requested to indicate that they wish to do so when they register to attend.
For more information contact 1300 813 020 or visit www.councilboundaryreview.nsw.gov.au
Renata Brooks
Delegate
  1. Persons reading the notice were alerted that:
  2. The content of a notice in these terms satisfies the three content requirements for a public notice arising from s 263(1), (2A) and (2B) of the Act.
  3. First, notice was given of when and where the inquiry was to be held. The notice specified the date and time of the inquiry and the venue in which the inquiry was to be held.
  4. Second, the notice sufficiently specified the proposal in relation to which the inquiry was to be held. The proposals that the Minister had referred under s 218F to the Departmental Chief Executive for examination and report were the Oberon proposal, the Cabonne proposal and the Gundagai proposal for the amalgamation of the local government areas identified in those proposals. As I have noted, the notice alerted the reader that an inquiry was to be held, the subject matter of the inquiry was a proposal, which had been referred by the Minister pursuant to s 218F for examination and report, and the proposal was to amalgamate or alter the boundaries of the local government areas specified.
  5. The only mistake in this description of the proposal was the addition of the words “or alter the boundaries of” in the heading of the notice. The proposals that the Minister had in fact referred under s 218F were only for the amalgamation of the local government areas specified in the notice (the function under s 218A); there was no proposal to alter the boundaries of those areas (the function under s 218B). The notice described the proposal as being either the amalgamation of the areas identified (which was the proposal that the Minister had referred for examination and report) or the alteration of boundaries of the areas (which was not part of the Minister’s proposal).
  6. I do not consider that this surplus reference to a matter that was not part of the Minister’s proposal meant that the notice did not alert the reader to the proposal in relation to which the inquiry was to be held and in respect of which members of the public wishing to speak at the inquiry were to address. Notwithstanding the surplus reference to alteration of boundaries, the notice still identified that the Minister may have referred a proposal to amalgamate the local government areas specified in the notice, which was to be the subject of the inquiry that was to be held.
  7. Persons who were concerned about the amalgamation of these areas would have been alerted to this fact and the opportunity for them to attend and speak at the inquiry in relation to this proposal to amalgamate these areas. Persons would not be dissuaded from doing so because the notice also referred to a proposal to alter the boundaries of those areas.
  8. Third, the notice specified the purpose of holding the inquiry. The notice stated that, pursuant to s 218F of the Act, the Minister had referred the proposal in relation to the local government areas specified to the Acting Departmental Chief Executive for examination and report and that the Departmental Chief Executive had delegated to the Delegate the examination and reporting functions under s 218F. The notice stated that a public inquiry in relation to the proposal would be held under s 263 of the Act at the times and venues specified in the notice. Together, these statements alerted the reader that the Delegate was holding the inquiry for the purpose of exercising the functions of examining and reporting on the proposal that had been referred by the Minister in accordance with s 218F.
  9. As to the reasonableness of the notice given, I do not consider that either of the matters raised by the applicants caused the notice not to be reasonable public notice. The invitation to make a written submission and the invitation to attend and speak at the inquiry were separate, notwithstanding that they were contained in the one notice. Any written submission made was not a submission to the inquiry itself, but rather a submission to assist the Delegate in the examination of the proposal. This is evident from the terms of the notice: “The examination into the proposal has now commenced and submissions are invited from members of the public”. In contrast, the notice referred to the holding of a public inquiry at the times and venues stated and invited members of the public to attend the inquiry and indicate whether they wished to speak at the public inquiry. Members of the public were not invited to make written submissions to the inquiry itself. It is also evident from the closing date for lodging written submissions which was three weeks or so after the date on which the inquiry was to be held. The consequence of these matters is that there was no error in the notice by it not calling for written submissions to be made to the inquiry.
  10. The applicants were also incorrect in arguing that the notice did not state that members of that public who had made a written submission could also attend and speak at the inquiry. The notice clearly made both invitations, one to make a written submission to assist in the examination of the proposal and another to attend and speak at the inquiry. The invitations were not mutually exclusive. It was evident that persons could take up both invitations so as to make a written submission as well as attend and speak at the inquiry.
  11. I reject the challenge to the giving of reasonable public notice under s 263(2B).

The holding of the inquiry

The applicants’ challenges

  1. The applicants argued that the inquiry held by each Delegate was not an inquiry under s 263(2A) of the Act on two grounds.
  2. The first ground of challenge was that the process adopted was not an informed or genuine inquiry, citing Sutherland Shire Council v Finch (1970) 123 CLR 657; [1970] HCA 49 at 662 (par 10, p 7, outline submissions of applicants in closing, 31 May 2016). The applicants put this ground in a number of ways.
  3. The applicants firstly submitted that the concept of an inquiry is “an investigation as into a matter; the act of inquiring, or seeking information by questioning; interrogation”: Macquarie Dictionary (4th ed, 2005). In the inquiries held by the Delegates, the applicants submitted that the evidence established that “there was no seeking of information or questioning or any act of inquiring, but merely the provision of a restricted opportunity for some member of the public to speak, on conditions such as registration and finishing within 3 hours, and not speaking for more than 3 or 2 minutes etc. Many who intended or who wished to speak did not, or could not. No provision was made for those who were away, or at work, or with other commitments in the narrow window allowed” (pp 12-13, submissions of applicants, 3 June 2016 and T 31/5/16, p 74).
  4. The applicants secondly submitted that the Delegates were obliged to find out what the response of those affected by the proposals (including the affected councils) was to the proposals and to the reasons and basis of the proposals considered by the Minister. The Delegates had to make their own inquiries and form their own views upon the Minister’s proposals, citing amongst other decisions, Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88; [2005] HCA 72 at [26] (par 10(a) and (c), pp 7-8, outline submissions of applicants in closing, 31 May 2016).
  5. The applicants thirdly submitted that it is impossible to inquire into a proposal unless the reasons for and the evidentiary basis of it is at least disclosed to the persons affected, so as to give such persons an opportunity to comment on the proposal (p 13, submissions of applicants, 3 June 2016). The applicants submitted that the Minister did not provide the affected councils or members of the public with the undisclosed KPMG material, which explained and demonstrated the basis of the proposal.
  6. The applicants fourthly submitted that the Delegates were prevented from making informed inquiry by the Minister failing to make available to the Delegates the undisclosed KPMG material (par 10(a), p 7, outline submissions of applicants in closing, 31 May 2016).
  7. The second ground of challenge was that each meeting convened by each Delegate was not an inquiry at all but a restricted meeting with those members of the public who were able to register and allowed to speak. A restricted opportunity to speak at which many people were unable to speak or were limited from speaking or were excluded is not an “inquiry” according to law (par 10, p 7, outline submissions of applicants in closing, 31 May 2016). The applicants summarised the evidence of the arrangements for registration of speakers before the inquiries and the arrangements for speaking at the inquiries held by the Delegates (pp 13-15, submissions of applicants, 3 June 2016).
  8. In relation to Oberon, the only inquiry meeting was held at Oberon Showground on 4 February 2016 from 1.00pm to 4.00pm. The Delegate said “this inquiry is going to be very structured”. There was a schedule of registered speakers, with time limits and warning bells after 2 minutes. They were told that they could speak for 3 to 5 minutes and then the time was reduced to 3 minutes to maximise the opportunity to speak. There were 84 registered speakers who were told that “[t]he process requires that we complete by the advertised time”. Intending speakers were encouraged not to speak if someone else had said what they were going to say. If an intending speaker had written material but was unable to “cover” the topic in a speech, the person was asked to submit it online or by post. Throughout the meeting the facilitator interrupted speakers urging them to finish, to give up their spot or not to take up valuable time. The inquiry ended peremptorily at 4.00pm “for that process reason” even though at least two more speakers intended to speak, and these were dealt with by “alternative” means. The Delegate acknowledged that everyone “has done the hard job of cutting back their speeches” and thanked those who “decided not to speak”.
  9. In relation to Cabonne, the only inquiry meeting was held in Molong on 5 February 2016 at 9.00am until 12 noon. The facilitator of the inquiry stated “[w]e’ve got an official 3 hour window”. There were 106 speakers registered to speak, with 3 minutes each. Registration was by the website or by the 1300 telephone number. The allocated time was substantially less than 3 minutes and many missed out at the “request” of the facilitator or were asked to withdraw. The Council Boundary Review website under the heading “public inquiry registration for Cabonne” stated that as at 1 February 2016 “registrations to speak ... have now closed”. Further, halfway through the inquiry at the Molong RSL Club at 10.30am, the intending speakers were told “for legislative reasons we have to finish this meeting officially at the advertised time [12 noon]”. It also apparent that others who sought registration were prevented from doing so as registration was cut off. The Delegate at the end apologised for not allowing all persons wishing to speak to do so.
  10. In relation to Gundagai, the only inquiry meeting was held in Gundagai District Services Club on 4 February 2016 between 2.00pm and 5.00pm. Government officials at Gundagai required intending speakers to register again. The Delegate said that “your community ... [has] topped the State as far as registered speakers”. There were over 140 registered speakers. The applicants submitted that many would have missed out. The Delegate said, “on legal advice”, that the minimum time to speak is 3 minutes. He acknowledged that some would be “disappointed”. Gundagai registrations to speak closed on 1 February 2016. The Council Boundary Review website stated that “registrations to speak ... have now closed ...”. The applicants submitted that many who chose to register in the last three days before the meeting would have missed out. Part way through the program the Delegate said “I’m also mindful that I’m under legal obligation ... I cannot extend over five o’clock”. At least four registered speakers missed out on speaking. The Delegate then said that they could speak with him if they wished “but it would not be part of the public inquiry” but only “a conversation with me”. The Delegate then stated the names and said “I’m sorry”.
  11. The applicants submitted that these limitations on members of the public speaking at the inquiry caused each inquiry not to be an inquiry under s 263(2A) at all.

The respondents’ rebuttal

  1. The respondent rejected both grounds on which the applicants submitted that there were no inquiries held under s 263(2B) of the Act.
  2. As to the first ground, that the process adopted was not an informed or genuine inquiry into the proposal, the respondents submitted that the nature of the “inquiry” to be held by the Delegate is not prescribed by the Act (in contrast to a “public inquiry” in Pt 8 of Ch 13 of the Act). In Bushell v Secretary of State for the Environment [1980] UKHL 1; [1981] AC 75, the House of Lords held that, in the absence of statutory rules as to the conduct of a “local inquiry” to be held in accordance with a statute, in relation to a proposed motorway, the procedure to be followed was a matter of discretion for the executive officer empowered to hold that inquiry. In that case, Lord Diplock warned against “over-judicialising” such inquiries by insisting on the observance of the procedures of a court of justice (at 95, 97) and suggested that such inquiries ought to be as informal as was consistent with achieving the objects of the inquiry (cited with approval in Kioa v West (1985) 159 CLR 550; [1985] HCA 81 at 629).
  3. The respondents submitted that various features of the Act make clear that the inquiry required by ss 218F(2) and 263(2A) is not a formal inquiry in the nature of a coronial inquiry or royal commission, involving summonsing of witnesses, compulsory productions of documents, cross-examination, admission or rejection of evidence and so forth. First, the Boundaries Commission and Departmental Chief Executive do not have the powers needed to conduct a formal inquiry of that kind. Secondly, the Act does confer such powers on commissioners charged with undertaking what the Act describes as “public inquiries” (see s 438U and generally Pt 8 of Ch 13 of the Act). The distinction must be taken to be a conscious one by the drafters. Thirdly, s 264 provides that a person is not to be represented by an Australian lawyer or a person acting for a reward in proceedings before the Boundaries Commission or Departmental Chief Executive. The procedures typically engaged in a coronial inquiry or royal commission would be completely inappropriate, and in many cases unjust, in those circumstances. The present statutory context is one where Lord Diplock’s observations in Bushell v Secretary of State for the Environment are apposite. The manner in which the Delegates went about their task did not fall short of meeting the statutory description of “inquiry” (pars 67-69, pp 24-25, respondents’ summary of argument, 23 May 2016).
  4. The respondents next submitted that the inquiries were conducted by the Delegates in a genuine and appropriate manner. The respondents also summarised how each inquiry was conducted (pars 70-80, pp 25-28, respondents’ summary of argument, 23 May 2016).
  5. In relation to Oberon, two public meetings were held on 4 February 2016: one at Oberon Showground from 1.00pm to 4.00pm and another at Panthers Bathurst, from 7.00pm to 10.00pm. Eighty four people registered to speak and 313 registered to attend at the Oberon meeting. Of those, 54 spoke and 242 attended. The Delegate noted various reasons why a person registered to speak or attend might not speak or attend. The organisations who spoke at the meeting included Oberon Council.
  6. Twenty one people spoke and 59 people attended the Bathurst meeting. A large number of Oberon residents, as well as the Oberon Mayor attended the Bathurst meeting. The Oberon Anti-Amalgamation Committee spoke at the Bathurst meeting.
  7. The transcript of the Oberon meeting establishes that:
  8. In relation to the Cabonne proposal, two public meetings were held on 4 February 2016: one at Blayney Bowling Club from 9.00am until 12 noon and another at Orange Ex-Services Club from 4.00pm until 7.00pm. A third meeting was held on 5 February 2016 at Molong RSL Club from 9.00am until 12 noon (the Cabonne meeting).
  9. At the Cabonne meeting, 62 people spoke and the Delegate observed that the speakers almost unanimously opposed the merger proposals. In addition to the Mayor of Cabonne Council, the organisations who spoke at the meeting included the Cabonne Anti-Amalgamation Committee.
  10. At the beginning of the Cabonne meeting, the Delegate explained the nature and purpose of the meeting as follows:
The main purpose of today is for you to provide your views to me on the merger proposal. I’d very much like that to be done based on the facts and the evidence that you want to bring to the table. It’s not a question and answer session. It is your opportunity today to give me the views of your community regarding the proposal ...
So what’s my role? My role is to examine and report on the proposal and it is an impartial one. I am not an advocate for the proposal. It’s been put forward by the Minister for Local Government. I’m not against it. I’m not for it. I’m here to hear your views. Ultimately I need to prepare a report. I need to make recommendations on the proposal but right now I’m in inquiry mode. I’m finding out what people think about it. I’m finding out what the facts and the evidence are.
  1. The transcript of the Cabonne meeting also establishes that:
  2. In relation to the Gundagai proposal, two public meetings were held on 4 February 2016. One at the Coota Club, from 9.00am to 12 noon and another at Gundagai District Services Club from 2.00pm to 5.00pm (‘the Gundagai meeting’).
  3. At the Gundagai meeting, 147 people registered to speak and 244 registered to attend. On the day, the total attendance was 281 people and 71 speakers addressed the Delegate. The organisations who spoke at the meeting included various Gundagai community organisations.
  4. The transcript of the Gundagai meeting establishes that:
  5. The respondents rejected the applicants’ argument that any limitations on speaking at each inquiry caused the inquiry not to be an inquiry under s 263(2A) of the Act. There is nothing in the concept of an inquiry that requires persons be given an unlimited opportunity to make oral submissions. Limiting the time available to persons to make submissions did not deprive what would otherwise be an “inquiry” of that character. The evidence established that the attendees at the inquiries were treated fairly, notwithstanding the imposition of time limits, because it was made clear that written submissions could also be submitted and would be considered by the Delegates in their examination of the proposals (par 88, p 25, respondents’ further submissions, 31 May 2016).

Valid inquiries were held

  1. The applicants have not established that the inquiry held by each Delegate did not meet the statutory description or the requirements of the inquiry required to be held under s 263(2A) of the Act on either of the two grounds argued by the applicants.
  2. I do not agree with the applicants’ interpretation that an inquiry under s 263(2A) demands the investigation and interrogation by the Delegates contended for by the applicants. As I held in Woollahra Municipal Council v Minister for Local Government at [99]-[102], the inquiry required to be held under s 263(2A) is not itself the examination of the proposal that is required to be undertaken under s 263(1); rather, the inquiry is held for the purpose of exercising the function of such an examination. This means that the inquiry that is held under s 263(2A) is not itself required to be conducted as an examination of the proposal that has been referred. The obligation under s 263(2A) is to hold an inquiry, not to inquire in the sense of examine.
  3. Section 263 does not prescribe the procedure by which an inquiry under s 263(2A) is to be held. Where the section is silent as to the procedure to be followed at the inquiry, that procedure, within such limits that are necessarily imposed by its qualifying for the description “inquiry”, is left to the discretion of the person holding the inquiry: Bushell v Secretary of State for the Environment at 94-95.
  4. The Delegates exercised that discretion to adopt a procedure for the orderly and efficient conduct of the inquires that they held, including requesting persons wishing to speak at the inquiry to register beforehand, imposing time limits on each speaker, allowing speakers to speak without interruption, and listening to rather than questioning the speakers. The adoption of such a procedure for the conduct of each inquiry did not cause the inquiry to not qualify as an inquiry under s 263. Furthermore, I do not accept that the restrictions actually imposed by each Delegate at the inquiries were so great an impingement on peoples’ ability to speak at the inquiry as to cause the inquiry not to be an inquiry under s 263(2A).
  5. I do not accept that the Delegates were obliged by s 263 to find out what the responses of all persons affected by the proposals were to the proposals. No doubt, the Delegates did find out what were the responses to the proposals by those persons who chose to speak at the inquiry. However, the Delegates did not fail to hold an inquiry under s 263(2A) by not finding out what were the responses to the proposals of those persons who did not attend or did not speak at each inquiry.
  6. I also reject the applicants’ argument that the inquiries held by the Delegates could not meet the description of an inquiry under s 263(2A) because the Minister had failed to make available his reasons or evidentiary basis for each proposal he made, including making available certain KPMG materials.
  7. Sections 218F and 263 of the Act do not require the Minister to provide reasons or the evidentiary basis for the Minister’s decision to make a proposal under s 218E(1) or to refer a proposal under s 218F(1) for examination and report. The Minister’s only obligation is to refer the proposal, on the making or receiving of the proposal, to the Boundaries Commission or the Departmental Chief Executive for examination and report. The Boundaries Commission or Departmental Chief Executive is obliged, in the circumstances stated in s 263(2A), to hold an inquiry in relation to the proposal referred by the Minister. There is no obligation on the Minister to direct or to cause an inquiry to be held. There is no obligation on the Minister to provide the reasons for or the evidentiary basis of the making of the proposal to the Boundaries Commission or Departmental Chief Executive who is to hold the inquiry.
  8. Section 263 did not require that all key material relied on by the Minister in making the proposals that were referred for examination and report be made available to the Delegates holding the inquiries or to persons attending or speaking at the inquiries.
  9. Hence, any non-provision by the Minister of his reasons or evidentiary basis for making the proposals or any other material, including KPMG material, cannot cause the inquiry held by the Delegates not to be an inquiry under s 263(2A).
  10. I reject the challenge to the holding of the inquiry under s 263(2A) of the Act.

The examination of the proposals

The applicants’ challenges

  1. The applicants argued that there was no examination of the proposals in accordance with s 263(1) of the Act because the Delegates did not “examine” each of the 11 factors specified in s 263(3) with regard to each proposal.
  2. The applicants submitted that the Delegates were required to examine and report on each proposal “rigorously, fairly and in a manner which indicates that they understand and have evaluated each factor and have weighed up arguments presented to them” (par 9, p 5, outline submissions in closing, 31 May 2016).
  3. The applicants argued that the Act, and s 263(3) in particular, imposes a requirement to examine each and every factor in s 263(3); it is not sufficient to consider one or several (T 27/5/16, pp 11 and 14). The Act “unusually imposes a requirement to make a finding on every question of fact after examining and reporting on each such factor and which the Parliament has stipulated is material” (p 3, applicants’ supplementary reply points, 6 June 2016). The applicants cited Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323; [2001] HCA 30 at 330-331, 346.
  4. The applicants argued that, notwithstanding the language used in s 263(3) that the Boundaries Commission or Departmental Chief Executive is to “have regard to” the factors when “considering” the matter referred (the proposal), the obligation is to “examine” each of the factors. The applicants submitted that the opening words of s 263(3) (“[w]hen considering any matter referred to it ...”) refers back to the matter referred for examination and report under s 263(1). Hence, what is required is not consideration but examination (T 27/5/16, pp 13-14).
  5. The applicants submitted that the obligation in s 263(3) requires all factors in s 263(3) to be given “heightened consideration sufficient to be an adequate examination”. The applicants cited Insurance Australia Ltd v Motor Accidents Authority (NSW) [2007] NSWCA 314 at [40]; Elias v Federal Commissioner of Taxation (2002) 123 FCR 499; [2002] FCA 845 at 512; Parramatta City Council v Hale (1982) 47 LGRA 319 at 339; Zhang v Canterbury City Council (2001) 51 NSWLR 589; [2001] NSWCA 167 at 601 (par 9(a), p 5, outline submissions of applicants in closing, 31 May 2016).
  6. The applicants submitted that the Delegates were required to treat each factor as a fundamental element in or focal point of the examination process, invoking the language in Zhang v Canterbury City Council at [75]. (The applicants did, however, also cite Minister for Immigration and Citizenship v Khadgi (2010) 190 FCR 248; [2010] FCAFC 145 at [61] where a full Federal Court agreed with Sackville J in Singh v Minister for Immigration and Multicultural Affairs (2001) 109 FCR 152; [2001] FCA 389 at [54] that the expression “have regard to” is capable of different meanings depending on the context: it may require the decision maker merely to consider specified matters rather than treat them as fundamental elements in the decision making process) (par 9(d), p 6, outline submissions of applicants in closing, 31 May 2016).
  7. The applicants argued that examination of each factor as a fundamental element or focal point requires a “proper, genuine and realistic” evaluation of the merits, including the reasons and evidence supporting each factor with respect to the proposal. The examination cannot be “a tick a box exercise of consideration” (par 9(c), pp 5-6, outline submissions of applicants in closing, 31 May 2016 and T 27/5/16, pp 18 and 20).
  8. The applicants noted that, in relation to the Oberon proposal, the Boundaries Commission identified at least one factor that was not adequately examined by the Delegate (namely factor (e5): the “need to ensure that the opinions of each of the diverse communities of the resulting area or areas are effectively represented”).
  9. Because on the applicants’ argument there must be examination of each factor in s 263(3), the applicants submitted that this failure to examine one factor in s 263(3) meant that there was no examination according to law of the Oberon proposal (par 9(f), p 6, outline submissions of applicants in closing, 31 May 2016 and T 31/5/16, p 62).
  10. The applicants submitted that other factors in s 263(3) were not examined adequately by the Delegates in their reports:
  11. In elaboration, the applicants provided with their written submissions three tables commenting on each Delegate’s examination of the s 263(3) factors for the Oberon proposal, the Cabonne proposal and the Gundagai proposal.

The particular challenges to the examination of the Oberon proposal

  1. In relation to the Oberon proposal, the applicants argued that the Delegate failed to examine the factors in s 263(3) in the following respects.
  2. For s 263(3)(a), the applicants submitted that the Delegate “did not conduct an adequate examination” in three ways. First, the Delegate did not examine either the financial disadvantages or the diseconomies of scale. The applicants referred to the Delegate’s discussion in her report of economies and diseconomies of scale at pp 19-20:
‘Economies of scale’ is an economic term proposing that there is a linear correlation (relationship) between increasing scale and decreasing unit costs of production up to a point where costs start to increase and diseconomies of scale arise.
Efficiencies from economies of scale are one potential source of financial benefit arising from a merger scenario. Because of the diversity of functions undertaken by local government, economies of scale are best considered in relation to specific functions rather than across the whole organisation. An example might be governance, where economies of scale might apply on the basis that a large council servicing many ratepayers is likely to have lower costs per ratepayer than a small council servicing fewer ratepayers.
Conversely, diseconomies of scale may arise if a geographically large merged council with an extensive road network centralises road maintenance and the maintenance cost per kilometre of road becomes higher because of the time and fuel costs of transporting equipment and personnel from a central location.
In general, lower population densities and a large geographical area may impede economies of scale but may not create diseconomies of scale.
  1. The applicants argued that this discussion showed that the Delegate misunderstood and misdirected herself as to the question she was examining in relation to diseconomies of scale. The applicants argued that the Delegate wrongly conflated “economies of density with economies of scale and ... geographical scale with economic scale” (pp 2-3, applicants’ table of Oberon Delegate’s consideration of s 263(3) factors (‘Oberon table’) and T 31/5/16, p 63).
  2. Second, the applicants argued that the Delegate did not adequately consider the factor in s 263(3)(a) because she made numerous wrong findings of fact. The applicants submitted that the Delegate erroneously found that savings in materials and contracts might exist through an amalgamated council procuring through the Central Region Organisation of Councils (‘CENTROC’) despite acknowledging that Oberon Council already procured through CENTROC. The Delegate ought to have found, therefore, that there were no savings in materials and contracts arising from the Oberon proposal (p 3, Oberon table and T 31/5/16, p 63). (This submission does not adequately summarise what the Delegate found. In fact, the Delegate found that direct potential merger benefits may arise from “[e]fficiencies in procurement from increased scale in procuring goods and services may allow a more favourable unit cost to be negotiated” (p 17, Oberon Delegate’s report). The Delegate responded to submitters’ comments on KPMG’s financial modelling by stating that “[t]he assumption in relation to modelling efficiencies from materials and contracts expenditure appears conservative, notwithstanding statements that Council efficiency already benefits from bulk procurement through [CENTROC]. Even if no efficiencies were to be achieved through this route (which is unlikely) this represents a relatively minor component of overall savings” (Attachment G, p 1, Oberon Delegate’s report)).
  3. The applicants submitted that the Delegate factually erred in accepting “KPMG modelled efficiencies of 5% for staff redeployment” as a saving. The Delegate considered that this represented “an opportunity for resources to be used for another purpose rather than translating to a reduction in staff numbers” (Attachment G, p 1, Oberon Delegate’s report). The applicants argued that “efficiencies redeployed (spent) are not savings at all” (p 3, Oberon table).
  4. The applicants submitted that the Delegate was factually incorrect in dismissing the data envelopment analysis in Oberon Council’s submission to the Delegate on the basis that “[i]nsufficient background information on methodology or assumptions was provided on the Data Envelopment Analysis” (Attachment G, p 2, Oberon Delegate’s report). The applicants argued that Oberon Council had referred the Delegate to “evidence based analysis” and literature on Data Envelopment Analysis (p 3, Oberon table).
  5. The applicants were critical of the Delegate’s comment that “[a] merged council with a larger revenue base and more financial flexibility should be financially sustainable within its current rate base” (p 22, Oberon Delegate’s report). The applicants argued that this was factually wrong because “in fact, a larger revenue base is likely to reduce the financial sustainability of a merged council if it: (i) came with responsibilities greater than the increase in revenue; or (ii) had a higher concentration of revenue thus making the council more susceptible to economic shock. There was no such examination.” (p 4, Oberon table).
  6. The applicants submitted that the Delegate was factually in error in stating that “[g]iven the financial positions of both Councils, there should be no financial disadvantage to residents and ratepayers from combining balance sheets” (p 23, Oberon Delegate’s report). However, the applicants argued that the analysis contained in Oberon Council’s submission to the Delegate showed that the Oberon proposal would result in a transfer of wealth which would see Bathurst residents better off and Oberon residents worse off (p 4, Oberon table and T 31/5/16, pp 66-67).
  7. The applicants argued that, notwithstanding the Delegate acknowledging that submitters had criticised aspects of KPMG’s financial modelling that underpinned the estimates of benefits of the Oberon proposal (see Attachment G, p 1, Oberon Delegate’s report), the Delegate erroneously relied on and referred to the merger benefits set out in the proposal document as the basis for her analysis of this factor (p 5, Oberon table).
  8. Third, the applicants argued that the Delegate failed to undertake inquiries or analysis of certain matters. The applicants were critical of the Delegate’s comment that “it is considered reasonable to rely on the KPMG analysis of a net benefit over 20 years. It is likely that costs have been somewhat underestimated and benefits somewhat overestimated as a result of the use of assumptions (p 22, Oberon Delegate’s report). The applicants argue that an “adequate examination would have quantified the amounts in doubt” (p 4, Oberon table).
  9. The applicants referred to the Delegate’s comment that “Oberon Council’s special rate variation further complicates comparisons and may create inequities towards the end of the rate path freeze period, however this cannot be predicted without undertaking a detailed ‘like with like’ comparison” (p 22, Oberon Delegate’s report) and submitted that the Delegate should have undertaken that detailed ‘like with like’ comparison (p 4, Oberon table).
  10. For s 263(3)(b), the applicants argued that the Delegate “did not conduct an adequate examination” in four ways. First, despite the Delegate noting that “[t]here are clearly demographic and geographic differences between the two local government areas driven by the predominately urban focus of Bathurst and the predominately rural focus of Oberon”, the Delegate stated that “these differences need to be considered in the context of differences within existing LGAs and with the rest of NSW” (p 29, Oberon Delegate’s report). The applicants submitted that the latter statement was not a correct reading of the legislation, adding to what the legislation states (p 5, Oberon table; T 31/5/16, p 67).
  11. Second, the applicants referred to the Delegate’s comment that “[i]n the absence of detailed information for each LGA, it is not possible to determine whether the differences between the two LGAs are comparable to differences which already exist within each LGA” (pp 29-30, Oberon Delegate’s report). The applicants submitted that if there was inadequate information, the Delegate should have sought out adequate information, such as statistical area data available from the Australian Bureau of Statistics (pp 5-6, Oberon table; T 31/5/16, p 67).
  12. Third, the applicants criticised the Delegate’s explanation that “[t]he different key drivers of education and health care in Bathurst LGA and the agriculture/forestry and transport/warehousing in Oberon LGA reflect the difference in service centre size” (p 30, Oberon Delegate’s report). The applicants argued that this was not an adequate examination “because the legislation simply asks the [Delegate] to assess the cohesion in the communities not to attempt to explain differences away” (p 6, Oberon table). The applicants also criticised the Delegate’s conclusion that, although both local government areas “have settlements with unique characteristics and a sense of identity”, “[t]his is not necessarily an impediment to shared communities of interest in a merged council and may enhance the opportunity to build social capital across the region by increasing exposure of residents to new ideas and partnership opportunities” (p 31, Oberon Delegate’s report). The applicants submitted that “[t]his is a trivialisation of the differences not an adequate investigation or conclusion – in effect, it is submitted that what the [Delegate] is attempting to argue is that differences, should they exist, will always be of no account as they present new opportunities. This arguably is a perverse interpretation of s 263(3)(b)” (p 6, Oberon table).
  13. Fourth, the applicants submitted that the Delegate made a factual error in stating that Bathurst would be the transport and service hub with key arterial roads, including the Tablelands Way (p 26, Oberon Delegate’s report), when the Tablelands Way does not in fact travel through Bathurst (p 6, Oberon table; T 31/5/16, p 67).
  14. For s 263(3)(d), the applicants submitted that the Delegate “did not conduct an adequate examination” because of various factually erroneous findings and conclusions. First, the applicants criticised the Delegate’s statement that “[i]n the presence of widespread publicity for the opportunity to comment, the fact that a significant majority of the population of both areas chose not to comment may reflect indifference to the proposed merger” (p 35, Oberon Delegate’s report). The applicants argued that this was factually erroneous because Oberon Council had provided in its submission to the Delegate “a scientific randomised survey citing 85.8% of [Oberon] residents wished to continue as a stand-alone council”. The applicants also submitted that the Delegate’s conclusions about the number of people who had made submissions was misleading – Oberon LGA had a higher proportion of its population providing submissions than Bathurst LGA had (p 7, Oberon table).
  15. Second, the applicants criticised the Delegate’s conclusion that “[t]he strong opposition to a merger demonstrated in submissions primarily by residents of Oberon LGA should not be seen as a threshold impediment to a merger, but is important to consider in the context of a decision on whether or not to proceed with a merger” (p 36, Oberon Delegate’s report). The applicants argued that “[t]his is arguably a perverse interpretation of s 263(3)(d) given that the [Delegate] in attempting to argue that should differences exist, then they do not need to be taken into account, which defeats the entire purpose of the examination of this factor” (p 7, Oberon table).
  16. Third, the applicants argued that the Delegate’s statement that “[a]ttitudes of residents and ratepayers to the proposed merger are polarised” (p 36, Oberon Delegate’s report) was factually incorrect given that only a small number of submitters from Oberon (i.e. 2%) supported the merger (p 8, Oberon table).
  17. Fourth, the applicants criticised the Delegate’s evaluation of the results of a telephone poll of Oberon residents commissioned by Oberon Council and included in its submission to the Delegate. The Delegate referred in her report to one of the questions asked and the responses given to that question, but did not refer to other questions and responses (see p 35, Oberon Delegate’s report). The applicants criticised the Delegate’s selectivity and downplaying of the integrity of the telephone poll. The applicants argued that the Delegate should have included in her report the other questions and responses (p 8, Oberon table).
  18. Fifth, the applicants criticised the failure of the Delegate to consider in her report the fact raised by Oberon Council in its submission to the Delegate that an overwhelming majority of the 600 people who attended a public meeting in Oberon on 9 November 2015 opposed any forced merger (p 8, Oberon table).
  19. For s 263(3)(e), the applicants argued that the Delegate “did not conduct an adequate examination” in four ways. First, the applicant submitted that the Delegate’s conclusions that “it would be up to the community to ensure that appropriate representatives are elected” and “[i]t would be important for a merged council to implement supporting mechanisms to ensure that all communities are able to have their views heard, particularly to address the concerns of smaller and more isolated communities” (p 40, Oberon Delegate’s report), revealed an inadequate examination of this factor. The applicants argued that this was “arguably a perverse reading of the legislation which seeks to explain away any differences noted, which defeats the whole purpose of examining the factor” (p 9, Oberon table; T 31/5/16, p 69).
  20. Second, the applicants criticised the Delegate’s conclusion that: “It would be important for a merged council to implement supporting mechanisms to ensure that all communities are able to have their views heard, particularly to address the concerns of smaller and more isolated communities. These could include delegation to properly resourced and supported s 355 committees and the rotation of council meetings around the area”. (p 40, Oberon Delegate’s report). The applicants argued that this was not an adequate examination because “the legislation clearly asks the Delegate to assess ‘the elected representation’ not delegated committees of unelected representatives” (p 9, Oberon table).
  21. Third, the applicants noted that the Delegate recommended that “9 councillors could be considered appropriate in a merged council” (p 40, Oberon Delegate’s report) but the Delegate did not identify how many of these should represent the former Oberon local government area (p 9, Oberon table). The applicants argued that the Delegate also did not consider if, on the basis of the enrolled voters in the last local government elections, only one councillor will represent the whole Oberon local government area, how the Oberon residents and ratepayers could be adequately represented (p 9, Oberon table).
  22. Fourth, the applicants criticised the Delegate’s finding that “[t]he ratio of representation in a merged council would be comparable to other local government areas of similar population size and geographic spread such as Clarence Valley Council (p 40, Oberon Delegate’s report) despite being provided with a critique by Oberon Council in its submission to the Delegate that such a comparison was inappropriate (pp 9-10, Oberon table).
  23. For s 263(3)(e1), the applicants argued that the Delegate “did not conduct an adequate examination” in three ways. First, the applicants referred to the Delegate’s summary of Oberon Council’s submission that there was “[i]nconsistency of planning controls between the two councils” (p 43, Oberon Delegate’s report). The applicants submitted that the Delegate failed to consider “the consequences and difficulties for the merged councils with alternate codes in operation for different parts of the new LGA”. The applicants submitted that “there will be no regulatory efficiency for the [Oberon-Bathurst] merged council where two contrasting planning codes are in operation and where [Bathurst Council] is unlikely to agree to relinquish its current development controls” (p 10, Oberon table; T 31/5/16, p 70).
  24. Second, the applicants submitted that the Delegate “failed to refer to the participation of [Oberon Council] in regional groups (such as the Central Western Planners Group) which work proactively in developing consistency with regard to regional planning guidelines” (pp 10-11, Oberon table).
  25. Third, the applicants criticised the Delegate’s failure to give reasons for her conclusion. The Delegate concluded that “[a] merger is likely to have a positive impact on the ability to provide adequate, equitable and appropriate services and facilities, provided that there are effective mechanisms for community input to prioritisation which address the needs of small communities ...” (p 44, Oberon Delegate’s report) but, the applicants submitted, the Delegate gave no indication as to how this could be provided (p 11, Oberon table).
  26. For s 263(3)(e2), the applicants argued that the Delegate “did not conduct an adequate examination” in four respects. First, the applicants submitted that the Delegate’s comment that “[d]ecisions on the new organisational structure and approach to change would be a matter for a new council ...” (p 46, Oberon Delegate’s report) revealed an inadequate examination. The applicants submitted that the Delegate was required to have regard to the factors in s 263(3), “not to simply fob the decision off to the new council entity” (p 11, Oberon table).
  27. Second, the applicants criticised the Delegate’s conclusion that “[s]hould a merger proceed, statutory protections are likely to ameliorate short term negative impacts, as would a well-designed and managed organisational and change strategy” (p 47, Oberon Delegate’s report). The applicants submitted that such a strategy may or may not be forthcoming. The onus was on the Delegate “to articulate the practices which she felt would mitigate the impact on the employment of the staff” (p 11, Oberon table; T 31/5/16, p 70).
  28. Third, the applicants argued that the Delegate failed to address in her report the “major error” that Oberon Council had identified in its submission to the Delegate regarding the use by the NSW Government and KPMG of the incorrect staff award for staff redundancies i.e. the model used the Federal award and not the State award. The Delegate did not address this error in her report and did not bring it to the attention of the Boundaries Commission (p 11, Oberon table).
  29. Fourth, the applicants repeated their earlier argument that the monetary benefits relating to savings derived from staff change is a false saving as in rural centres there can be no reduction in staff numbers (p 12, Oberon table; T 31/5/16, p 71).
  30. For s 263(3)(e3), the applicants argued that the Delegate “did not conduct an adequate examination” in two ways. First, the Delegate’s conclusion that “[r]isks of decreased representation and servicing of Oberon LGA’s rural areas in a merged council are balanced by opportunities for improved representation and services in rural parts of Bathurst LGA” (p 48, Oberon Delegate’s report) revealed an inadequate examination. The applicants submitted that “[t]his weighing up of benefits for one rural community against losses of another rural community is not what the legislation directs the Delegate to have regard to. Rather the [Delegate] is adding to the text of s 263(3)(e3) in carrying out her examination thus” (p 12, Oberon table).
  31. Second, the applicants argued that the Delegate failed to acknowledge in her report that “the rural hub of [Oberon] will be subsumed by a city centric council which is 40 km away and geographically isolated from it” (p 12, Oberon table).
  32. For s 263(3)(e4), the applicants argued that the Delegate “did not conduct an adequate examination” in two ways. First, the Delegate failed to address in her report the point made by Oberon Council in its submission to the Delegate that “ward structures only make sense when geographically defined areas of similar voter population can be identified and where there is proposed to be a merged council of 9 councillors [and] in the case of [Oberon] this will probably mean on the basis of enrolled voters in the last [local government] elections that only one councillor will represent the whole [Oberon] LGA” (p 12, Oberon table; T 31/5/16, p 71).
  33. Second, the applicants submitted that the Delegate “merely hypothesises” that “[w]ard boundaries could be drawn in such a way that there are two predominately urban wards and one predominately rural, with three Councillors elected from each ward” (p 50, Oberon Delegate’s report). The applicants submitted that, first, “it is not at all obvious that the suggested boundaries could be drawn up in such a manner”; second, “the suggestion shows a clear ignorance of s 211(2) and s 224A(1) of the Act” and third, the Delegate’s “proposal would give rural voters just half of the representation afforded to the urban residents and this disenfranchisement could in no way be considered ‘desirable’” (p 13, Oberon table).
  34. For s 263(3)(e5), the applicants submitted that the Delegate failed to adequately consider this factor, as the Boundaries Commission had found in its review of the Delegate’s report (p 13, Oberon table; T 31/5/16, p 73).
  35. For s 263(3)(f), the applicants referred to the Delegate’s statement that “[c]omments were received on a variety of matters which were considered not to be relevant to examination and reporting on the Proposal” (p 56, Oberon Delegate’s report). The applicants submitted, however, that there were two matters, being “(i) the potential for subsequent de-amalgamation and (ii) absence of a determination by IPART on exactly how the government might be able to keep its promise of a four year rate freeze”, that “were, in fact, most salient to the Delegate’s deliberations” (pp 13-14, Oberon table). As to de-amalgamation, the applicants referred to Oberon Council’s submission to the Delegate arguing that the Oberon proposal carried a high risk of subsequent de-amalgamation, in which event none of the proposed benefits of the merger would eventuate. As to the second matter, the applicants argued that “without being in possession of at least the interim IPART report it was not possible for the Delegate to adequately investigate the matters [to] which she was ‘required to have regard’” (p 15, Oberon table).
  36. The applicants also submitted that the Delegate failed to examine or refer to in her report the UTS Business Case for Oberon Council, which was attached to Oberon Council’s submission to the Delegate.

The particular challenges to the examination of the Cabonne proposal

  1. In relation to the Cabonne proposal, the applicants argued that the Delegate failed to examine the factors in s 263(3) in the following respects.
  2. For s 263(3)(a), the applicants made similar submissions to those made with respect to the Oberon Delegate’s examination of this factor. There was no adequate examination because the Delegate did not examine the financial disadvantages or the diseconomies of scale, in the respects previously submitted (p 3, applicants’ table of Cabonne Delegate’s consideration of s 263(3) factors (‘the Cabonne table’)).
  3. The applicants also argued that the Delegate focussed on the financial benefits of the new council and did not examine the financial disadvantages to the transferor council area (in this case, the Cabonne local government area) (p 3, Cabonne table).
  4. The applicants argued that the Delegate did not address in his report a number of matters. The first matter was the opportunities for improved services and infrastructure. The proposal document had given as an example of local infrastructure that could be funded by merger-generated savings, the upgrading of water and sewerage systems. However, Cabonne Council had noted in its submission to the Delegate that it had already completed two sewerage systems for two towns and had secured funding to provide potable water to those towns. The applicant argued that “this is not a credible opportunity” for improved infrastructure and “was not considered by the [Delegate] at all even though it was raised in the [Cabonne submission]” (p 3, Cabonne table).
  5. The second matter that the applicants argued that the Delegate did not address in his report was that the proposal document had used “incorrect revenues and incorrect asset valuations as identified in the [Cabonne submission]” (p 3, Cabonne table).
  6. The third matter that the applicants argued had not been addressed by the Delegate in his report was that the asset value identified for Cabonne Council in the proposal document was $211m less than the amount identified in Cabonne Council’s financial reports (p 4, Cabonne table).
  7. The fourth matter that the applicants argued was not addressed by the Delegate in his report was an issue raised by Cabonne Council in its submission to the Delegate that there was “confusion around the assumptions of the dollar values of potential savings or benefits and the composition of the future operating revenue and surpluses of the new council” (p 4, Cabonne table).
  8. The fifth matter that the applicants argued was not addressed by the Delegate in his report was the issue raised by Cabonne Council in its submission to the Delegate that the proposal document did not make provision for a facility to house the new council. The applicant submitted that efficiencies can only be gained by creating a single organisation in one place but none of the current office facilities are capable of housing the new council (p 6, Cabonne table).
  9. The sixth matter that the applicants argued that had not been addressed by the Delegate in his report was the issue raised by Cabonne Council in its submission to the Delegate of compensation for travel for staff whose place of work is changed (p 6, Cabonne table).
  10. The applicants also argued that the Delegate failed to examine the claim made in the proposal document that there would be gross savings over 20 years of over $19 million in respect of redeployment of back office and administrative functions. A limited list of assumptions had been made available to the Delegate, including in the KPMG Technical Paper, for this claim. “However, there is no empirical justification, data or evidence upon which these assumptions are based. Even though details about these claimed savings were provided to the [Delegate] in the [Cabonne submission], the [Delegate] failed to adequately examine them” (p 5, Cabonne table). The applicants argued that the Delegate also failed to examine the issue of the cost of wage harmonisation, even though it was raised by Cabonne Council in its submission to the Delegate (p 6, Cabonne table).
  11. The applicants argued that the Delegate failed to consider in his report the potential impact upon rates for residents and ratepayers in the Cabonne local government area beyond the four year NSW Government freeze on rate increases. Each council had a different rating structure but the Delegate failed to examine the impact and detriment to the Cabonne local government area of bringing the rates on par. Cabonne Council in its submission to the Delegate had addressed the potential impacts upon rate changes (pp 6-7, Cabonne table).
  12. For s 263(3)(b), the applicants argued that the Delegate did not conduct an adequate examination because he did not examine “the rural centre focus of the [Cabonne] LGA”, in particular, that the “community of interest for the residents of [Cabonne] is the rural/agricultural focus of the shire and its extensions into surrounding shires” (pp 7-8, Cabonne table).
  13. For s 263(3)(c), the applicants argued that the Delegate did not conduct an adequate examination because he failed to consider Cabonne Council’s submission to the Delegate that the growth of regional centres attracts businesses away from smaller villages and that many of the villages within the Cabonne local government area have an engaged community which is supported and partially funded by Cabonne Council (p 8, Cabonne table).
  14. For s 263(3)(d), the applicant submitted that the Delegate did not conduct an adequate examination in four ways. First, the applicants argued that the Delegate “discounts opposition to a merger in a way that demonstrates [that] the community attitudes of the [Cabonne] LGA at the time of the proposal were disregarded even though the [Delegate] acknowledges [at p 27 of the Cabonne Delegate’s report] that resident and ratepayer attitudes are an important factor” (p 8, Cabonne table).
  15. Second, the applicants noted that the Delegate referred to the survey conducted by Cabonne Council of its residents, 80% of whom voted to remain as Cabonne Shire, but the Delegate noted that “70% of households in the Cabonne survey did not return surveys – indicating perhaps that they do not hold strong views one way or the other on the matter” (p 26, Cabonne Delegate’s report). The applicants submitted that, notwithstanding that the Delegate “disparages” the Cabonne survey, he “does not conduct his own survey” (p 8, Cabonne table).
  16. Third, the applicants criticised the Delegate’s view that he did not consider “it necessary to conduct a plebiscite or poll on the merged proposal myself, as allowed by section 265 of the Local Government Act, as I consider that I have become sufficiently informed of resident and ratepayer views as a result of this public inquiry and its processes. I am also concerned that conducting any such poll would be seen as determinative, when in fact it is not” (p 27, Cabonne Delegate’s report).
  17. Fourth, the applicants criticised the Delegate’s failure to mention in his report the results of the snap poll conducted by the Central Western Daily newspaper on 29 December 2015 in which, of the 500 votes received in 24 hours, 74% voted for Cabonne Council to stay alone (p 9, Cabonne table).
  18. For s 263(e), the applicants submitted that the Delegate did not conduct an adequate examination in two ways. First, although the Delegate referred to the inevitable consequence of the merger proposal that there would be less councillors per residents and ratepayers across the bigger area (p 27, Cabonne Delegate’s report), the applicants argued that “[t]he suggestions and recommendations of the [Delegate] under “Consideration” on pp 28-29 do not provide an adequate or legislatively enforceable mechanism whereby this loss of representation can be addressed” (p 9, Cabonne table).
  19. Second, although the Delegate conceded that there was a risk that community committees and their activities will be “de-funded” and the services that they provide will “fold” once the council gets bigger and more remote (p 28, Cabonne Delegate’s report), the Delegate did not address in his report the impact of this de-funding and closure of services (pp 9-10, Cabonne table).
  20. For s 263(3)(e1), the applicants argued that the Delegate did not conduct an adequate examination in four respects. First, the Delegate’s discussion in his report “displays an ignorance of the uniqueness of each of the village areas in Cabonne and even miss spells [sic] Yeoval as ‘Yeovil’ (p 10, Cabonne table). Second, the Delegate failed to address in his report the view put by Cabonne Council in its submission to the Delegate that “the business of running the city component of a merged council would dominate the attention of the Council”. Third, the Delegate failed to examine in his report, “the planning regime which governs key services”. Fourth, the Delegate failed to address in his report the concern raised in submissions that many of the community facilities in the Cabonne local government area, which are run by volunteer groups and community organisations, may under a merged council require administration by paid staff or cease to operate altogether. The applicants argued that the Delegate failed to examine the impact the additional costs or closure of these facilities will have on the residents and ratepayers of Cabonne local government area (p 10, Cabonne table).
  21. For s 263(3)(e2), the applicants argued that the Delegate did not conduct an adequate examination because the Delegate failed to examine the number of staff employed in each rural centre that would need to be maintained (under s 218CA) and the impact their ongoing employment would have on the ability to manage a new council with four separate permanent office bases and depot locations (p 11, Cabonne table).
  22. For s 263(3)(e3), the applicants argued that the Delegate did not conduct an adequate examination because he failed to adequately address the impact the proposal would have in reducing representation and disenfranchising rural communities and on the current social and volunteer network in the rural centres, especially if they close down (pp 12-13, Cabonne table).
  23. For s 263(3)(e4), the applicants argued that the Delegate did not conduct an adequate examination for the reasons they gave with respect to s 263(3)(e) and because the Delegate did not adequately consider “the impact of the representation issue for [Cabonne] LGA in a merged council pursuant to the Proposal other than to conclude that the new council area not be divided into wards” (p 14, Cabonne table).
  24. For s 263(3)(e5), the applicants argued that the Delegate did not conduct an adequate examination of this factor “but made some motherhood statements dismissing it by saying ‘it is considered that there is nothing in the merger proposal that is inimical to representation of diverse communities and that in fact the opportunity to create a regional scale council has considerable potential to be of benefit’” [p 37, Cabonne Delegate’s report]. Other than disparaging this statement as a “motherhood statement”, the applicants did not say why it was it was in error (p 14, Cabonne table). The applicants criticised the Delegate’s finding that: “This was not a significant issue raised in the submissions, with only about 4% of written submissions raising the issue ... There was little discussion of diversity of culture or ethnicity, perhaps reflecting the comparatively limited non-English speaking background in the area (Cabonne Council submission, p 20)” (p 37, Cabonne Delegate’s report). The basis of the applicants’ criticism of this finding was not given (p 14, Cabonne table).
  25. For s 263(3)(f), the applicants submitted that the Delegate did not conduct an adequate examination in three ways. First, the applicants referred to the Delegate’s statement that: “As the new council will represent a regionally significant population of 62,616 people, with an asset base of $1.2bn (Merger Proposal, p 7), it is only logical that state and federal governments will be more receptive to the role a merged council can play in determining regional priorities. In my view, it is therefore unquestionably the case that a merger will be of immense benefit to the residents of Blayney, Cabonne and Orange from a strategic capacity viewpoint” (p 37, Cabonne Delegate’s report). The applicants disagreed with this finding. They said that it “disregards the actual interests of Cabonne in a merged council. It also assumes that Cabonne cannot have strategic capacity or is not currently a strategically capable council whereas there is no evidence to support that assumption. On the contrary, [Cabonne Council] in its submission [to the Delegate] provides empirical evidence of its current strategic capability and capacity” (p 15, Cabonne Council).
  26. Second, the applicants referred to the recommendation of the Delegate that “the new council carefully consider the existing cash holdings brought to the new council by the constituent councils and seek equity in expenditure of those holdings” (p 39, Cabonne Delegate’s report). The applicants submitted that the Delegate failed to outline in his report what those cash holdings were and clarify what the disadvantages will be to Cabonne residents and ratepayers if this does not happen (p 15, Cabonne table).
  27. Third, the applicants referred to the Delegate’s recommendation that “the new council ensure some geographic equity in the expenditure of the Stronger Communities funding of $15m to be provided by the NSW Government, possibly proportionate to the relative population share of the constituent councils” (p 39, Cabonne Delegate’s report). The applicants argued that the Delegate failed to address in his report the minimal benefit to ratepayers and residents of Cabonne local government area if this occurs since its population is rural and much smaller than the population of the Orange local government area (p 16, Cabonne table).

The particular challenges to the examination of the Gundagai proposal

  1. In relation to the Gundagai proposal, the applicants argued that the Delegate failed to examine the factors in s 263(3) in the following respects.
  2. For s 263(3)(a), the applicants argued that the Delegate did not conduct an adequate examination of this factor for similar reasons to those given in relation to the Oberon Delegate’s examination of this factor. In particular, the applicants argued that the Delegate failed to properly analyse the economies of scale and diseconomies of scale of the proposal. The applicants gave examples of where they said the Delegate had failed to examine economies of scale and diseconomies of scale.
  3. One example of a failure to examine economies of scale was that the Delegate stated that there would be “[n]et financial savings of $3 million to the new council over 20 years (approx. $150,000 per annum)” (p 9, Gundagai Delegate’s report), but, the applicants argued, the Delegate failed to address Gundagai Shire Council’s 10 year strategic plan which showed that infrastructure improvements and cash reserves will deliver $2.05m annually (p 3, applicants’ table of Gundagai Delegate’s consideration of s 263(3) factors (‘Gundagai table’)).
  4. A second example given by the applicants was the Delegate’s failure to address Gundagai Shire Council’s submission to the Delegate questioning “the spurious alleged financial benefits of the [Gundagai proposal]” (p 3, Gundagai table).
  5. A third example given by the applicants was that the Delegate mentioned the term “economies of scale” only once in his consideration of the factor in s 263(3)(a) (on p 18 of the Gundagai Delegate’s report) and this was only in the context of allowing “economies of scale in service delivery”. The applicants argued that the Delegate’s “use of the term is not made in any sense which might suggest the [Delegate] was aware of what the term meant or, had in any sense, engaged with the term” (p 13, Gundagai table).
  6. With respect to diseconomies of scale, the applicants submitted that the Delegate did not make “a single mention of ‘diseconomies of scale’ in his entire report outside of direct citations from s 263(3)(a) of [the Act]. It can only be concluded that the [Delegate] did not know what diseconomies of scale were and therefore disregarded this factor, an essential part of (3)(a)” (p 3, Gundagai table).
  7. The applicants submitted that the Delegate’s inadequate examination of the factor in s 263(3)(a) was also evidenced by the alleged failure of the Delegate to refer to or examine various matters in his report. First, the applicants argued that the Delegate failed to refer to “the empirical analysis of financial benefits” or employ “data envelopment analysis” in his report. The applicants asserted that “[i]t is not rational conduct to ignore robust empirical analysis in favour of mere untested assertion” (pp 3-4, Gundagai table).
  8. Second, the applicants referred to the Delegate’s statement that “Cootamundra Shire and Gundagai Shire have both questioned the validity of the assumptions and noted that the savings alone do not provide a strong case for merging. Gundagai Shire states that the information in the merger proposal relating to their financial situation is incorrect” (p 16, Gundagai Delegate’s report). The applicants submitted that “[d]espite making this note the Delegate makes no effort to investigate the financial benefits further or to examine the evidence put in the [Gundagai Shire Council’s submission to the Delegate] on this point but relies on the modelling and assumptions of KPMG, IPART & TCorp” (p 14, Gundagai table).
  9. Third, the applicant submitted that the Delegate failed to address in his report “the financial disadvantage to [Gundagai] LGA which will be burdened by the [Cootamundra] annual deficit which is much higher than [Gundagai] balanced position” (p 5, Gundagai table).
  10. Fourth, the applicant submitted that the Delegate failed to acknowledge that “5 natural disasters in [Gundagai] LGA put a significant strain on [Gundagai] financial resources and results of [Cootamundra]” (p 5, Gundagai table).
  11. Fifth, the applicants criticised the Delegate’s failure to acknowledge in his report the nature and purpose of one of the KPMG data source documents used by the Delegate (pp 5-6, Gundagai table).
  12. The applicants submitted that the Delegate’s examination of the factor in s 263(3)(a) also was inadequate because it was based on factually incorrect findings of fact and incorrect, out of date or unreliable information and data. First, the applicant submitted that the Delegate did not base his decision on the most relevant and up to date financial data for Gundagai Shire Council. The applicant submitted the Delegate’s statement on p 16 of his report that the data in the table was “current financial status and outlook” was factually incorrect, as there was more recent data, specifically the audited financial statements dated 30 June 2015 (p 4, Gundagai table).
  13. Second, the applicants argued that the Delegate erred factually in saying that “[d]ata obtained from the Office of Local Government shows only minor differences between the average rates of Cootamundra Shire and Gundagai Shire for farming and residential, but significant difference in business rates” (p 18, Gundagai Delegate’s report) when, the applicants argued, “the actual rate differentials show major differences” (p 5, Gundagai table).
  14. Third, the applicants argued that the Delegate erred factually by mentioning a comment from TCorp that Gundagai expected operating deficits every year until 2022 (p 14, Gundagai Delegate’s report) but failed to examine the actual 2015 results which showed a surplus (p 5, Gundagai table).
  15. Fourth, the applicants criticised the Delegate’s reliance on earlier work by KPMG, TCorp and IPART “in view [of] ... the criticisms of these organisations found in academic literature, the General Purpose Standing Committee No 6 (Upper House) Report and the popular press as raised in the [Gundagai Shire Council’s submission]” and “the caveats made in the TCorp report dated 28/3/13, pp 66-67, Auditor General Report (2012) and various scholarly works going back to at least 2002 as raised in the [Gundagai submission] (p 6, Gundagai table).
  16. For s 263(3)(b), the applicants argued that the Delegate did not conduct an adequate examination because the Delegate’s analysis was based on incorrect or out of date data. First, the applicants argued that “[m]uch of the data cited on this matter was based on 2011 census data. For instance, the SEIFA data is at 2011 as is much of the other data. A rational Delegate would not form a judgment on the basis of almost five year old out-of-date data when other data was freely available and had been provided to him by [Gundagai Shire Council]” (p 6, Gundagai table).
  17. Second, the applicants criticised the Delegate’s use of raw SEIFA scores “which do not give an adequate assessment for the relative difference in socio-economic conditions in the constituent councils. The state rankings were provided in the Gundagai Council submissions. The relative position in these SEIFA ratings (32 for Cootamundra and 64 for Gundagai) clearly show great differences between the communities as at 2011. Therefore it is not reasonable to cite SEIFA raw index numbers in support of the assertion ‘a number of similarities in the demographic and economic profiles of Cootamundra Shire and Gundagai Shire’ as the Delegate attempts to do” (pp 6-7, Gundagai table).
  18. For s 263(3)(d), the applicants submitted that the Delegate did not conduct an adequate examination in three ways. First, the applicants criticised the Delegate’s use of the written submissions made to the Delegate and the views expressed at the public meetings to assess the attitudes of the residents and ratepayers of the areas concerned to the proposal. The applicants submitted that the Delegate should have used “a scientific randomised survey” which was put to him at Appendix 5.8 of Gundagai Shire Council’s submission: “To put greater weight on a strata of the submissions made to the [Delegate] rather than to the clear attitude indicated in the randomised statistical survey cited above is not an adequate examination” (p 7, Gundagai table).
  19. Second, the applicants referred to the Delegate’s statement that “there could be some uncertainty regarding whether these sentiments [expressed at public meetings and in written submissions] truly represent the views of the broader community” (p 31, Gundagai Delegate’s report). The applicants submitted that the Delegate ought to have used the power available under s 265 of the Act to conduct an opinion survey or poll of the residents and ratepayers to deal with such uncertainty (pp 7-8, Gundagai table).
  20. Third, the applicants submitted that the Delegate made a wrong finding of fact when he concluded that:
Although the attitude of most residents who made submissions from Gundagai Shire was against the merger proposal, and those from Cootamundra Shire expressed concerns about its potential success, they represented only a small percentage of the overall population. Whilst it cannot be said that by not making a submission the larger sector of the population is in favour of the merger, the fact that given ample opportunity to make a submission, and submissions were not made one way or the other, the majority of the population did not have a strong attitude one way or the other concerning the merger proposal. (p 32, Gundagai Delegate’s report).

The applicants did not say why that conclusion was factually erroneous (p 8, Gundagai table).

  1. For s 263(3)(e), the applicants submitted that the Delegate did not conduct an adequate examination in three respects. First, the applicants argued that the Delegate erred factually in finding that the representation ratio that might result with a merged council “is not excessive, especially in sparsely populated regional areas” (p 34, Gundagai Delegate’s report). The applicants submitted that the Delegate was presented with evidence in Gundagai Shire Council’s submission on representation ratios “in direct contradiction to the claim made by the [Delegate]” (p 8, Gundagai table).
  2. Second, the applicants referred to the Delegate’s statement that “the merger proposal does not dictate the overall structure and make-up of any new entity and so such claims [by Gundagai Shire Council and residents] cannot be ratified at this stage” (p 33, Gundagai Delegate’s report). The applicants argued that the Delegate “then proceeded to make judgments on the structure and make-up of the new entity”. The applicants argued that “it is not rational to make judgments on something which the Delegate said is not known” (p 8, Gundagai table).
  3. Third, the applicants criticised what they said the Delegate did which was “to state that the number of representatives arising from each of the former council areas is irrelevant in view of the Council Charter which states that Councillors must represent the interests of all constituents” (p 8, Gundagai table). (In fact, the Delegate never stated that the number of representatives was “irrelevant”, although he did note that “a new council will represent the whole of the new local government area and councillors elected to the new council have the responsibility under the Council Charter as outlined in section 8 of the Act ...” (p 33, Gundagai Delegate’s report)). Nevertheless, the applicants argued that the Delegate was incorrect because, in practice, the councillors voted according to their geographic fragment of origin, which the operation of a ward structure encourages (pp 8-9, Gundagai table).
  4. For s 263(3)(e1), the applicants submitted that the Delegate did not conduct an adequate examination in three respects. First, the applicants noted that the Delegate had acknowledged the submissions of Gundagai residents about the potential for a merger to impact negatively on Council’s services and support for community groups and activities (p 37, Gundagai Delegate’s report). The applicants submitted, however, that the Delegate failed to “examine the effect of the type of volunteer support disappearing which is expected with the merger” (p 9, Gundagai table).
  5. Second, the applicants criticised the Delegate for referring to only one of three items of service harmonisation cited in Gundagai Shire Council’s submission to the Delegate, being that of waste services (pp 36-37, Gundagai Delegate’s report). The applicants submitted that “[i]t is irrational and inadequate to give no comment on other service harmonisation requirements after having acknowledged one item. In point of fact, the three exemplars of service harmonisation cited in the Gundagai submission eliminate almost all of the proposed financial benefits” (pp 9-10, Gundagai table).
  6. Third, the applicants submitted that the Delegate should have used the information about the item of service harmonisation of waste services that the Delegate did discuss to adjust the proposed financial advantages of the amalgamation: “[i]t is irrational and inadequate to admit to a service harmonisation cost and not use it to adjust the supposed financial benefits” (p 9, Gundagai table).
  7. For s 263(3)(e2), the applicants submitted that the Delegate did not conduct an adequate examination in two respects. First, the applicants criticised the Delegate’s statement that the majority of staff employed in senior staff positions by Gundagai and Cootamundra Councils “are already approaching retirement age” when discussing senior staff terminations (p 40, Gundagai Delegate’s report). The applicants submitted that “it is the position which will or will not be terminated, not the specific individual” (p 10, Gundagai table).
  8. Second, the applicants criticised the Delegate’s conclusion that:
There is no reason to believe that Gundagai Shire’s fears about job losses and the subsequent negative impact on the town’s economy and viability will come to pass in the event that the merger proposal goes ahead. There is ample protection for non-senior staff under the Act, and as Cootamundra Shire’s submission makes clear, the distance and travel time between the two towns means that the new council is likely to have to run two offices, two depots and two operation teams. This is not unlike other rural council areas. Accordingly, the Delegate does not consider that the merger proposal will have an adverse impact on the employment of non-senior council staff.
(pp 41-42, Gundagai Delegate’s report)

The applicants submitted that it was irrational for the Delegate to so conclude, “yet still cling obstinately to the KPMG projected savings for the proposed amalgamation” (p 10, Gundagai table).

  1. For s 263(3)(e3), the applicants submitted that the Delegate did not conduct an adequate examination because he did not address the point raised in Gundagai Shire Council’s submission to the Delegate “that loss of representation will mean that the small rural villages surrounding [Gundagai] will suffer with less services” (p 10, Gundagai table).
  2. For s 263(3)(e4), the applicants submitted that the Delegate did not conduct an adequate examination in two ways. First, the applicants argued that the Delegate’s conclusion did not logically follow from his earlier discussion. The applicants argued that it was not adequate for the Delegate to state in his discussion that “given the concerns raised about proportional electoral representation and a new merged entity, there may be scope for wards to ensure that no one community is disenfranchised or another given undue influence” but then to conclude that: “The issue of wards would be a matter for the new council in the event that the merger goes ahead. However, given the strongly agreed preference against wards of Cootamundra Shire and Gundagai Shire and the difficulty in determining equitable representation on a geographic basis, it would seem unnecessary and potential divisive to require them” (p 44, Gundagai Delegate’s report).
  3. Second, the applicants inferred from the lack of reference to s 211(2) and s 224A(1) of the Act in the Delegate’s report that the Delegate was ignorant of those statutory provisions and did not consider them (p 11, Gundagai table).
  4. For s 263(3)(e5), the applicants submitted that the Delegate did not conduct an adequate examination in two ways. First, the applicants criticised as factually incorrect the Delegate’s finding that “[n]one of the submissions made reference to these groups [indigenous groups or non-English speaking groups] – the only reference to diverse communities was in the context of the perceived lack of community of interest between Cootamundra Shire and Gundagai Shire” (p 45, Gundagai Delegate’s report). The applicants submitted “this is not correct and shows that the [Delegate] did not read the submissions carefully” (p 11, Gundagai table).
  5. Second, the applicants criticised the Delegate’s statement that “[t]he definition of ‘diverse communities’ is open to interpretation but is generally assumed to mean culturally or ethnically diverse communities, or groups with special needs” (p 45, Gundagai Delegate’s report). The applicants submitted that this interpretation is “very narrow and at odds with a reasonable interpretation of the legislation”. The applicant did not elucidate on what was a reasonable interpretation of the legislation (pp 11-12, Gundagai table).
  6. For s 263(3)(f), the applicant submitted that the Delegate did not conduct an adequate examination because he failed to address three issues that had been raised in Gundagai Shire Council’s submission to the Delegate, being “rationalising resources”, “financial statements comparison” and “previous merger experience” (p 12, Gundagai table).

The respondents’ rebuttal

  1. The respondents rejected both the applicants’ construction of the duty under s 263(3) of the Act to have regard to the specified factors and the applicants’ factual argument that the Delegates failed to have regard to certain factors.
  2. The respondents submitted that the duty under s 263(3) is not, as the applicants argued, to “examine” each of the factors in s 263(3), but rather to “have regard to” the factors when examining the proposal that has been referred by the Minister. Accordingly, the issue is correctly framed as being whether the Delegates “had regard to” the s 263(3) factors in examining each proposal (par 72, p 20, respondents’ further submissions, 31 May 2016).
  3. The respondents disputed the applicants’ argument that the Delegates were required to treat each factor in s 263(3) as a fundamental element in or a focal point of the examination process. The respondents submitted that the phrase “have regard to” in s 263(3) merely required the Boundaries Commission or the Departmental Chief Executive to whom a proposal has been referred for examination and report to consider the factors, rather than treat them as fundamental elements or focal points: Minister for Immigration and Citizenship v Khadgi at [61]. There are 11 factors listed in s 263(3). Although the Boundaries Commission or Departmental Chief Executive was required to “have regard to” each factor, not all of them will be central or fundamental to every proposal the Boundaries Commission or Departmental Chief Executive is called upon to examine: see Minister for Immigration and Citizenship v Khadgi at [62] (pars 79-80, pp 21-22, respondents’ further submissions, 31 May 2016).
  4. The respondents submitted that the applicants’ arguments that the Delegates failed to have regard to certain factors depended on the applicants reformulating the factors at a greater level of factual specificity than they are expressed by the legislature in s 263(3). In order for the applicants to succeed on the ground of failure to consider a relevant matter, “the statute must expressly or impliedly oblige the decision maker to enquire and consider the subject matter at the level of particularity involved in the applicants’ submission”: Walsh v Parramatta City Council at [60] applying Foster v Minister for Customs and Justice (2000) 200 CLR 442; [2000] HCA 38 at [23] and adopted in Notaras v Waverley Council (2007) 161 LGERA 230; [2007] NSWCA 333 at [120]. The respondents submitted that it is not legitimate for the applicants to reformulate the factors in s 263(3) at a greater level of factual specificity and then allege that the Delegates failed to have regard to the specific matters so identified. Yet that is exactly what the applicants seek to do in the tables they provided with their written submissions commenting on each Delegate’s examination of the s 263(3) factors. The applicants’ ground of challenge can be dismissed on this basis (par 74, p 20, respondents’ further submissions, 31 May 2016).
  5. The respondents submitted that having regard to the factors in s 263(3) does not involve a proper, genuine and realistic evaluation of the merits of each factor, including the reasons and evidence supporting each factor, as argued by the applicants. Too ready an employment of the formulation of “proper, genuine and realistic” evaluation has been criticised by the courts as risking an impermissible review of the merits of an administrative decision: Bruce v Cole (1998) 45 NSWLR 163 at 186; Kindimindi Investments Pty Ltd v Lane Cove Council (2006) 143 LGERA 277; [2006] NSWCA 23 at [73], [75] and [79]; (par 81, p 22, respondents’ further submissions, 31 May 2016).
  6. The respondents noted that the only factor that the applicants alleged was not considered at all was the factor in s 263(e5). The applicants relied on the Boundaries Commission’s conclusion that the consideration of factor (e5) by the Delegate in the report on the Oberon proposal was inadequate. The respondents submitted that the Boundaries Commission’s conclusion did not establish that the Delegate failed to have regard to factor (e5) or that any inadequate consideration of that factor caused the Delegate’s examination of the proposal to be invalid.
  7. First, the Boundaries Commission was not expressing an opinion on whether the Delegate’s consideration of factor (e5) was such as to render the examination and report legally invalid. That was not the Boundaries Commission’s remit. Even if it did, the Court would properly ignore its opinion. The Boundaries Commission’s opinion, while no doubt an important matter for the Minister to consider in deciding on his recommendation, is of no particular relevance to the Court in determining whether there has been, in fact, a failure to have regard to factor (e5) so as to invalidate the Delegate’s exercise of power (par 83, pp 22-23, respondents’ further submissions, 31 May 2016).
  8. Second, the approach taken by the Boundaries Commission is apparent from the Boundaries Commission’s comments on the Oberon Delegate’s report, where it was stated at p 10:
The Delegate noted that nine submissions (3%) provided comment on the effective representation of diverse communities, with one referring to Council support for people with disabilities.
The Delegate concluded that as each Council already has mechanisms in place to engage with diversity within the broader community, resources committed to this engagement will continue to be available in a merged council. However the Delegate stated that there will be an opportunity to examine whether engagement with identified community groups can be carried out more effectively across current council boundaries.
The Commission’s view is that the Delegate did not adequately consider the issues under this factor.
  1. The respondents submitted that it was apparent from that comment that the Boundaries Commission was not expressing a view that the Delegate had failed to engage at all with factor (e5). Rather, the Boundaries Commission did not consider that the Delegate had given sufficient attention to this issue. That is a different matter altogether (pars 84-85, p 23, respondents’ further written submissions, 31 May 2016).
  2. Third, applying the authorities such as Kindimindi Investments Pty Ltd v Lane Cove Council, and thus being careful not to slip into impermissible merits review, the respondents submitted that it is clear that regard was had to factor (e5) by the Delegate examining the Oberon proposal. The Delegate identified and summarised the submissions relating to representation of diverse communities (there is no allegation that any submission was overlooked or not properly characterised) and then observed that while “[e]lected representatives are one way of ensuring the needs of diverse communities are represented ... none of the existing councils relies on representation to satisfy the need to engage with diverse communities” (p 52 of Delegate’s report; Exhibit 2, p 656). The Delegate then made the observation the subject of the Boundaries Commission’s comments set out above. Importantly, so far as representation was concerned, the Delegate observed that “elected representation issues” were raised by Oberon Council and were dealt with under a different heading (being factor (e)). There were further comments in that section on representation of diverse communities (for example, “[t]he opportunity for farming communities to be represented may be diminished for Oberon LGA residents but may be enhanced for Bathurst LGA residents”: p 39 of Delegate’s report; Exhibit 2, p 643). Overall, the respondents submitted, it is apparent that the Delegate considered that there was merit in Bathurst Council’s submission that a greater range of skills would be available to a merged council to communicate and engage with diverse communities. That was a view that was well open to the Delegate and displayed no failure to address the statutory criterion (par 86, p 24, respondents’ written submissions, 31 May 2016).
  3. Accordingly, the respondents submitted, the consideration of factor (e5) in the Delegate’s reports goes well beyond “mere advertence”. That is all the Court needs to be satisfied of in this regard to reject the applicants’ challenge that there has been a failure to have regard to factor (e5) (par 87, p 25, respondents’ further submissions, 31 May 2016).
  4. The respondents submitted that the applicants’ arguments that other factors in s 263(3) were not considered adequately by the Delegates were flawed for at least two reasons. First, the particular aspects focused on by the applicants were not the relevant factors in s 263(3) themselves, but rather facts, matters or circumstances said to be relevant to those factors. This involved impermissibly reformulating the level of particularity at which the factors are to be considered. Any failure to consider the particular facts, matters or circumstances identified by the applicants does not establish that the Delegates failed to consider the factors in s 263(3) that are the relevant matters to be considered. Second, the applicants’ arguments as illustrated in the tables attached to the written submissions and in the oral submissions are really just “a factual quibble” with the Delegate’s consideration of the relevant matters (T 31/5/16, p 103). Proper consideration of a relevant matter does not demand factual correctness. A wrong assessment of a relevant matter is not a reviewable error of law: Walsh v Parramatta City Council at [61]-[63].

The Delegates had regard to the s 263(3) factors

  1. The applicants have not established that each Delegate’s examination and report on the proposal fell short of what was required in any of the ways argued by the applicants. I agree with the respondents’ submissions.
  2. First, the applicants’ argument that there was a failure to examine the factors in s 263(3) depended on an incorrect construction of the Act. The statutory obligation in s 263(3) is to “have regard to” the factors specified when “considering” the matter referred (being the proposals for amalgamation), but not to “examine” the factors when “examining” the matter referred: see Woollahra Municipal Council v Minister for Local Government at [149]-[152]. I reject the applicants’ construction that the Delegates were required to “examine” the factors in s 263(3).
  3. I also reject the applicants’ argument that the Delegates were required to examine “each” factor and to make a finding on every question of fact relevant to each factor. This argument was founded on the decision in Minister for Immigration and Multicultural Affairs v Yusuf. However, the decision turned on the terms of the particular federal statute concerned. The Act imposed no obligation on the Delegates when considering the proposals referred by the Minister to make a finding on every question of fact relevant to each factor in s 263(3).
  4. The applicants are also incorrect in arguing that the phrase “have regard to” in s 263(3) demands that each factor in s 263(3) be treated as a fundamental element or focal point; it is sufficient in this statutory context for the Delegates to consider them: Minister for Immigration and Citizenship v Khadgi at [61]. Different factors will take on different importance depending on the proposal being considered.
  5. The applicants’ invocation of the formulation “proper, genuine and realistic consideration” as the standard against which the Delegates’ consideration must be evaluated was also problematic. What the applicants argued was necessary in order for there to be proper, genuine and realistic consideration of the factors by the Delegates was, at base, a disagreement with the merits, including the correctness of the findings and conclusions and the sufficiency of the supporting evidence. Such disagreement does not establish a failure to consider the relevant factors.
  6. Second, the applicants have not established on the evidence that each Delegate failed to have regard to any factor in s 263(3). I reject the applicants’ argument that the Oberon Delegate failed to have regard to the factor in s 263(3)(e5), for the reasons given by the respondents. The applicants also have not established that each of the Delegates failed to have regard to the other factors identified by the applicants.
  7. On the face of each report, each Delegate did consider each factor in s 263(3) of the Act. Each report has a chapter headed “Examination of the proposal”, within which are sections addressing each factor in s 263(3). In each section, although the form varies, the substance of the discussion includes a quotation of the factor, a discussion of the submissions commenting on the factor, a consideration of the issues and a conclusion about the factor.
  8. The discussion by the Delegate of each factor might not descend to the level of particularity argued by the applicants. However, s 263(3) does not demand that this be done. Section 263(3) did not, expressly or impliedly, oblige the Delegates to inquire and consider the subject matter of each factor at the level of particularity argued by the applicants: see Foster v Minister for Customs and Justice at [23] and Walsh v Parramatta City Council at [60]. The degree of discussion undertaken by each Delegate is sufficient to evidence that the Delegate had regard to the factors at the level of particularity stated in s 263(3).
  9. The applicants’ arguments depended to a large extent on the content of the reports by the Delegates. The applicants seized on what was said but more often on what was not said in the reports. The applicants referred, for example, to the evidence of Dr Drew and Professor Dollery and the submissions made by the applicants to the Delegates to establish what would need to be done in order to consider adequately certain matters, such as the financial disadvantages, including the diseconomies of scale (under the factor in s 263(3)(a)). The applicant inferred from the fact that the reports of the Delegates did not set out a discussion of the type or in the terms advocated by these people or these submissions that the Delegates must not have considered these matters.
  10. However, the failure of a decision maker to refer in the decision maker’s reasons or report to some facts, matters or circumstances or some form of analysis said to be pertinent to a relevant consideration is not determinative that the relevant consideration was not taken into account by the decision maker. As the Court of Appeal of Western Australia said in Jacob v Save Beeliar Wetlands (Inc) (2016) 216 LGERA 201; [2016] WASCA 126 at [53]:
The duty to take into account relevant considerations is confined to the decision-making process. It does not extend to the content of the reasons for the decision or recommendation, although the reasons are inevitably relied upon as evidence of a claim that the decision-maker failed to take into account a relevant consideration. However, as decision-makers who are required to give reasons are not obliged to canvass all matters or evidence that have been taken into account, the failure to refer to a relevant consideration in the reasons (or report) is necessary, but not determinative.
  1. Hence, the failure of the Delegates to canvass in their reports all the matters referred to by the applicants does not establish that the Delegates did not consider these matters.
  2. The applicants’ various arguments, set out in the tables to their written submissions, as to the ways in which each Delegate did not conduct an adequate examination of each factor fell into similar categories:
  3. Arguments in the first category might establish an error of law if the Delegates did actually misinterpret the legislation. However, the ways in which the applicants argued that the Delegates misunderstood some factor in s 263(3) were, at base, really a disagreement about the application of the factor to the facts, not the interpretation of the factor. For example, I do not agree that the Delegates’ discussions of the factor in s 263(3)(a) reveals that they misunderstood or misdirected themselves as to the economies or diseconomies of scale (being part of the consideration in s 263(3)(a)). The applicants might say that there could have been more or different discussion of the economies or diseconomies of scale than the Delegates actually undertook, but this does not establish that the Delegates misunderstood the factor or asked themselves the wrong question.
  4. Another example given by the applicants was the Oberon Delegate’s discussion of the factors in s 263(3)(d) and (e). The applicants construed the Oberon Delegate’s statement that strong opposition to a merger, while an important matter to consider in deciding whether or not to proceed with a merger, is not a threshold impediment to the merger, as revealing a “perverse interpretation” of s 263(3)(d). I disagree. The statements reveal no misinterpretation. Similarly, the Oberon Delegate’s discussion of the factor in s 263(3)(e) of the importance for the merged council to implement mechanisms to ensure appropriate elected representation does not establish that the Delegate misinterpreted s 263(3)(e).
  5. I do not agree that any of the other ways in which the applicants argued the Delegates misinterpreted the legislation have been established.
  6. Arguments in the second to fifth categories do not establish that each Delegate’s consideration of the factors in s 263(3) was inadequate in law. Proper consideration of a relevant matter does not demand factual correctness. Establishing the judicial review ground of failure to consider a relevant matter does not involve reviewing the correctness of the decision, or the sufficiency of the evidence supporting it, or the weight of the evidence against it, or the regularity of the manner in which the decision maker has proceeded: Walsh v Parramatta City Council at [62]-[63] and cases cited therein. The applicants’ complaints that there was a wrong assessment of considerations which the applicants say might reasonably be regarded as relevant, or a failure to rely on information, data or submissions that the applicants say ought to have been relied upon, or a failure to give certain considerations or information, data or submissions the weight which the applicants contend they should have been given, are not reviewable errors: see, for example, Brunetto v Collector of Customs [1984] FCA 383; (1984) 4 FCR 92 at 97-98. This deals with the vast majority of the applicants’ arguments about the ways in which the applicants contended the Delegates did not conduct an adequate examination of the factors in s 263(3). The applicants might disagree with the Delegates’ assessments of the factors in s 263(3), but even if it were to be assumed that the assessments were wrong (and I do not so find), such wrong assessments would not establish a failure to have regard to the factors in s 263(3). It is not necessary, therefore, to deal with the detail of each of the applicants’ arguments as to how the Delegates’ assessments might have miscarried.
  7. Arguments in the final category also cannot establish reviewable error. There was no statutory duty on the Delegates to give reasons in the ways argued by the applicants. The duty to provide a report of the Delegate’s examination of each proposal did not require the Delegate to canvass all matters or evidence that had been taken into account by the Delegate or to refer to every submission and every point made in every submission to the Delegate. The failure of the Delegates to refer in the reports to the matters raised by the applicants is not a reviewable error in itself and is also not determinative of a failure to have regard to those matters.
  8. I reject the challenge to the Delegates’ examination of and report on the proposals.

Procedural fairness by the Delegates

The applicants’ challenges

  1. The applicants alleged that the inquiry by each Delegate was conducted without affording procedural fairness to the applicant councils and to the ratepayers and residents of each area proposed to be amalgamated. The applicants alleged that procedural unfairness arose by reason of:

The respondents’ rebuttal

  1. The respondents did not dispute in principle that a duty to afford procedural fairness may attach to the exercise of the statutory power under s 263 to examine and report on a proposal for amalgamation. The respondents did, however, contest that the content of the duty to accord procedural fairness was as contended by the applicants or that there was any denial of procedural fairness to the applicants.
  2. The respondents noted that the leading decision on the content of the duty to accord procedural fairness under the statutory scheme for examination and report on a proposal is the Court of Appeal’s decision in Minister for Local Government v South Sydney City Council. The respondents noted that the Court of Appeal:
  3. The respondents submitted that decisions of the Court of Appeal since Minister for Local Government v South Sydney City Council confirm the attenuated nature of the content of the obligation to afford procedural fairness where the decision affects a wide range of persons and involves “policy” or high level “political” considerations: Castle v Director General, State Emergency Service [2008] NSWCA 231 at [6]- [7]; Director General, Department of Trade and Investment, Regional Infrastructure and Services v Lewis (2012) 301 ALR 420; [2012] NSWCA 436 at [55]- [62]; see also Vanmeld Pty Ltd v Fairfield City Council (1999) 46 NSWLR 78; [1999] NSWCA 6 at [61].
  4. The respondents submitted that the notices given of the holding of the inquiries were reasonable and in accordance with the statutory requirements (referring to their submissions on the applicants’ ground of challenge to the notice under s 263(2B)). Procedural fairness did not require any notice to be given to the applicants that was different in content or timing to the reasonable public notice required to be given under s 263(2B) (par 92, p 26, respondents’ further submissions, 31 May 2016).
  5. The respondents submitted that the inquiry held by each Delegate was in accordance with the statutory requirements for an inquiry under s 263(2A) (referring to their submissions on the applicants’ ground of challenge to the inquiry under s 263(2A)). Procedural fairness did not impose any greater requirement. The Delegates did not deny the applicants’ procedural fairness by the way in which they organised and conducted each inquiry.

No denial of procedural fairness by the Delegates

  1. The applicants have not established that the Delegates denied them, or their ratepayers and residents, procedural fairness in any of the ways argued by the applicants.
  2. The first way was the insufficiency of the notice given of the holding of the inquiry. The applicants argued that the notice given, by reason of its inadequate content and not being reasonable notice, did not satisfy the statutory requirements in s 263(2B) of the Act so as to be reasonable public notice of the holding of the inquiry. The applicants argued that the inadequacy of the notice also impeded the applicants, residents and ratepayers, and members of the public from participating fully in the inquiry. For the reasons I have given in relation to the applicants’ challenge to the notice, I do not accept that the public notice given of the holding of the inquiry was inadequate. The public notice given was not only the advertisement placed in newspapers, but also the notice given on the Council Boundaries Review website, attached to the Delegate’s letters to the applicant councils and placed on the applicant councils’ websites at the Delegates’ request. Considering all of the forms of public notice given, the applicants, residents and ratepayers and members of the public were given adequate notice of the holding of the inquiry and had sufficient opportunity to participate in the inquiry, if they chose to do so.
  3. The second way was based on the limitations imposed by the Delegates on the applicants and members of the public participating in the inquiry, including requiring speakers to register and imposing short time limits on speakers at the inquiry. The applicants argued that these limitations caused the inquiries held by the Delegates not to satisfy the statutory requirement in s 263(2A) of the Act of an inquiry in relation to the proposals. The applicants argued that these limitations on the inquiries also impeded the applicants, residents and ratepayers, and members of the public from participating fully at the inquiries. For the reasons I have given in relation to the applicants’ challenge to the inquiries, I do not accept that the limitations on how the applicants, residents and ratepayers, and the members of the public were able to participate at the inquiries denied them procedural fairness. The Delegates had a discretion to formulate the procedure to be followed at the inquiry. The requirements for registration of speakers and restrictions on time for speakers were within the discretion of the Delegates to facilitate the orderly and efficient conduct of the inquiries. Imposition of these requirements did not cause the inquiries not to answer the statutory description of “inquiry”. But they also did not deny the applicants, residents and ratepayers or members of the public the opportunity to participate in the inquiry.
  4. The adequacy of the opportunity to participate also needs to be viewed in context. The inquiry was held for the purpose of the Delegates exercising their functions of examining and reporting on the proposals for amalgamation referred by the Minister. The opportunity for the applicants, residents and ratepayers, and members of the public to express their views on these proposals was not limited to the actual inquiries themselves. They also had the opportunity to make written submissions on the proposals. The public notices given of the holding of the inquiries also invited written submissions. The Council Boundary Review website, referred to in the notices, also called for written submissions and provided the opportunity to lodge written submissions through that website. The Delegates at the inquiries repeatedly invited written submissions, including from those persons who were restricted in the time available for them to speak at the inquiry. Viewed holistically, there was an adequate opportunity for the applicants, residents and ratepayers, and members of the public to express their views on the proposals to the Delegates.
  5. The third way was that the inquiry was neither informed nor inquiring, but rather was “blinkered” in its approach. The applicants argued that the Delegates and persons wishing to make submissions or to speak at the inquiry were not provided with sufficient information about the reasons for and evidentiary basis of the Minister’s decision to make the proposals, which were the subject of the inquiries, to enable the Delegates and such persons to adequately examine the proposals and make submissions or speak about the proposals. The Delegates did not actively inquire into the proposals or seek out the responses of persons affected by the proposals, such as the applicant councils and residents and ratepayers, including by questioning people at the inquiries. The applicants argued that these failures to investigate and interrogate caused the inquiries not to satisfy the statutory description of an “inquiry”. The applicants argued that these failures also caused a denial of procedural fairness by impeding the applicants and other persons in making submissions or speaking at the inquiries about the proposals.
  6. For the reasons I have given in relation to the challenge to the inquiry, I do not agree that the Delegates were uninformed or blinkered in their approach to examining the proposal, including in their conduct of the inquiry. The Delegates did not, by their actions, deny or impede the opportunity for the applicants, residents and ratepayers or members of the public to make submissions to the Delegates or speak at the inquiries. The Delegates made publicly available the material about the proposal that they had been provided by the Minister, including by making the material available on the Council Boundary Review website.
  7. Insofar as the applicants criticised the unavailability of the undisclosed KPMG documents, the Delegates did not deny the applicants procedural fairness by not disclosing those documents and giving the applicants an opportunity to make submissions on them. First, those documents had not been provided to the Delegates; they cannot disclose documents that they did not have. Second, it has not been established that the documents contained information that “was so damaging and so unforeseeable” that the applicants “should not have been ‘left in the dark’ about it” until publication of each Delegate’s report: Minister for Local Government v South Sydney City Council at [272]. Third, the information that the undisclosed documents were said to contain was the modelling and other material underpinning the KPMG analysis in the proposal documents and KPMG Technical Paper. The information that was “adverse” to the applicants was contained in those proposal documents, the KPMG Technical Paper, the Impacts Document and other documents that were made publicly available. This information included the asserted financial advantages of the proposals. This adverse information was disclosed. What was not disclosed were KPMG’s internal workings and calculations underpinning the conclusions expressed in the publicly available documents. The duty to disclose “adverse” material was discharged by disclosure of the publicly available documents containing KPMG’s modelling assumptions, analysis and conclusions; it did not extend to require disclosure of the workings and calculations underpinning those conclusions. It was sufficient in the circumstances to disclose “the gist of any adverse information”: Minister for Immigration and Citizenship v Maman (2012) 200 FCR 30; [2012] FCAFC 13 at [37]; Minister for Immigration and Border Protection v SZSSJ (2016) 90 ALJR 901; [2016] HCA 29.
  8. Any duty of procedural fairness also did not require the Delegates to disclose to the applicants, and give them the opportunity to respond to, submissions of other persons that might be seen to be adverse to the applicants. An obligation of procedural fairness with such content was not accepted in Minister for Local Government v South Sydney City Council at [257], [267] and [268] per Mason P with whom Spigelman CJ agreed at [1], [44] and Ipp JA agreed at [297]: see also Woollahra Municipal Council v Minister for Local Government at [244].
  9. I reject this ground of challenge that the Delegates failed to accord procedural fairness to the applicants.

The reviews of the Delegates’ reports

The applicants’ challenges

  1. The applicants argued that the Boundaries Commission did not conduct a proper and informed review of and comment on each of the Delegate’s reports, as required by s 218F(6)(b) of the Act. The applicants submitted that “there was no ‘review’ in law by the Boundaries Commission of the factors in the comments upon each Delegate’s report into his or her examination of each amalgamation proposal of [the Minister], save for factor (e5) in respect of Oberon ... and even then the review was perfunctory” (par 11, p 8, outline submission of the applicants in closing, 31 May 2016).
  2. First, the applicants submitted that the functions of review and comment are more demanding than merely checking that the report of the Departmental Chief Executive complies with the statutory requirements of examination and report. The applicants submitted that the verb to “review” involves “to view, look at, or look over again” or “to inspect, especially formally or officially” and that the noun of “comment” involves “a note in explanation, expansion, criticism of a passage in a writing, book etc; an annotation” and the verb to “comment” involves “to write explanatory or critical notes upon a text” (Macquarie Dictionary (4th ed, 2005)). The applicants submitted that the Boundaries Commission’s actions fell short of such a review and comment on each Delegate’s report.
  3. The applicants submitted that the action of review “does not infer reference only, or mere consideration of the function performed, but rather a detailed, proper and genuine review to determine if the task, in this case an examination and report, has been attended to. This requires consideration of at least what modification if any is appropriate to be recommended by the Boundaries Commission which has an expert role to play with respect to the proposal” (p 16, submissions of applicants, 3 June 2016).
  4. The applicants referred to the character of the Boundaries Commission as a specialist entity whose members have expertise in local government governance. Having regard to this character, the applicants submitted, the review the Boundaries Commission undertakes “involves arriving at the ‘correct or preferable decision’ as upon the merits”, akin to the merits review undertaken by the Administrative Appeals Tribunal, citing Esber v The Commonwealth of Australia (1992) 174 CLR 430; [1992] HCA 20 at 440 and 448; Bushell v Repatriation Commission (1992) 175 CLR 408; [1992] HCA 47 at 425.
  5. The applicants submitted that “the opening words of s 218F(6) make it clear that the [Boundaries Commission] is required to review more than the report, but is to have regard to the nature and terms of the amalgamation ‘proposal’” (p 16, submissions of applicants, 3 June 2016).
  6. Second, the applicants noted that the Boundaries Commission’s comments on the report of the Departmental Chief Executive may provide the basis for the Minister to determine that the proposal should be modified. Section 218F(7)(a)(ii) of the Act allows the Minister to recommend to the Governor that the proposal be implemented with such modifications as arise out of the Boundaries Commission’s comments on the Departmental Chief Executive’s report. The applicants submitted that the Minister is bound to take into account the Boundaries Commission’s comments, citing Hot Holdings Pty Ltd v Creasy (1996) 185 CLR 149; [1996] HCA 44 at 165, 170-171 and Minister for Local Government v South Sydney City Council at [42] (par 11, pp 8-9, outline submissions of applicants in closing, 31 May 2016).
  7. In these circumstances, the applicants submitted, the Boundaries Commission has power to consider and propose modifications to the proposal in the course of its review to assist the Minister (par 11, pp 8-9, submissions of applicants, 3 June 2016).
  8. Third, the applicants referred to the statutory structure of staged consideration of the proposal. The Minister has a choice at which stage he or she will involve the Boundaries Commission. The Minister can refer the proposal directly to the Boundaries Commission for examination and report or refer the proposal to the Departmental Chief Executive for examination and report, in which event the Boundaries Commission will review and comment on the Departmental Chief Executive’s report of his or her examination of the proposal. The applicants submitted that in the first scenario, the Boundaries Commission would examine and report on the proposal, bringing its expertise to bear. If the function of review and comment in the second scenario were to be constrained as the respondents submitted it should be, the expert Boundaries Commission would “merely be a cypher”. However, if the function of review and comment were to be more expansive and demanding, as the applicants argued it should be, the Boundaries Commission would act as “an expert check of the administrative functions” exercised by the Departmental Chief Executive (pp 16-17, submissions of applicants, 3 June 2016).
  9. The applicants submitted that if the function of review and comment did not involve more rigorous reviewing and commenting on the correct and preferable decision, then the Boundaries Commission would fail to perform this function.

The respondents’ rebuttal

  1. The respondents rejected the applicants’ construction of the statutory function of the Boundaries Commission under s 218F(6)(b) of reviewing and commenting on the report of the Departmental Chief Executive. The respondents summarised the statutory function of various persons under s 218F of the Act, in circumstances where an amalgamation proposal is opposed by one or more of the councils affected, as follows:
  2. The respondents noted that two points are apparent from this statutory scheme. First, the only person required to make (or decline to make) a “recommendation” is the Minister. Second, while the object of the Departmental Chief Executive’s “examination” and the Minister’s “recommendation” is the “proposal”, the object of the Boundaries Commission’s review and comment is the “report” of the Delegate.
  3. The respondents noted that the only document that the Act requires be “furnished” to the Boundaries Commission for the purposes of its review and comment is the Delegate’s report (s 218F(6)(a)). The Boundaries Commission does not have any power to compel the production of documents and it is not required to be provided with the submissions made to the Delegate or the other material relied upon by him or her. That is consistent with its task being to review the “report” rather than the “proposal”.
  4. The respondents noted that the Boundaries Commission is charged with reviewing and commenting upon the Delegate’s report. It does not refer the proposal and does not conduct an examination or hold a public inquiry (contrast the duties of the Departmental Chief Executive pursuant to ss 218F(1) and (2) and s 263). The purpose of the Boundaries Commission’s “review” and “comment” function is evidently to assist the Minister in carrying out his or her recommendatory function under ss 218F(7) and (8). The Boundaries Commission, as an expert body, provides a checking or “quality assurance” role in relation to the report of the Departmental Chief Executive (pars 19-22, pp 6-7, respondents’ further submissions, 31 May 2016).
  5. The respondents submitted that, so understood, the function of review and comment does not involve, contrary to the applicants’ submissions, a review of the proposal itself, or arriving at the correct or preferable decision as to whether the proposal should be implemented, or making any recommendations as to whether the proposal should be implemented.
  6. The respondents submitted that, on a proper understanding of the function of review and comment, the applicants have not established that the Boundaries Commission failed to exercise that function of reviewing and commenting on each Delegate’s report.

The Boundaries Commission’s reviews and comments were valid

  1. The applicants have not established that the Boundaries Commission’s review and comment on each Delegate’s report did not satisfy the statutory requirements in s 218F(6)(b) of the Act. I agree with and adopt the respondents’ submissions.
  2. The applicants’ arguments depended on construing the statutory requirements of review and comment as involving a re-examination of the merits of the proposals, including a re-examination of each of the factors in s 263(3) of the Act. That construction is incorrect. First, the object of the review and comment of the Boundaries Commission under s 218F(6)(b) is the report of the Departmental Chief Executive, not the proposal referred by the Minister. In contrast, the object of the Departmental Chief Executive’s report is the proposal referred by the Minister.
  3. Second, the functions of the Boundaries Commission under s 218F(6)(b) are to “review and comment”, not “examine and report,” which are the functions of the Departmental Chief Executive. The functions of the Boundaries Commission under s 218F(6)(b) “are substantially more confined” than the functions of the Departmental Chief Executive: Botany Bay City Council v The State of New South Wales at [93].
  4. Third, the Boundaries Commission’s role in reviewing and commenting on the Departmental Chief Executive’s report does not involve re-examining the merits of the proposal referred by the Minister: Botany Bay City Council v The State of New South Wales at [97] and [98]. The Boundaries Commission does not undertake merits review to arrive at the correct or preferable decision about the proposal.
  5. On a proper understanding of the role of the Boundaries Commission, the review of and comments on each Delegate’s report did not fall short of what was required under s 218F(6)(b) of the Act. I reject this challenge.

Procedural fairness by the Boundaries Commission

The applicants’ challenges

  1. The applicants argued that the Boundaries Commission failed to afford procedural fairness to the applicants and to the ratepayers and residents of each area proposed to be amalgamated, by failing to give them a reasonable opportunity to be heard or to make submissions with respect to the reviews of the Delegates’ reports by the Boundaries Commission.
  2. The applicants submitted that the Boundaries Commission was under a duty to afford procedural fairness. A duty of procedural fairness will apply to the exercise of a statutory power unless excluded expressly or by necessary implication. The intention of the legislature to exclude natural justice requires “clear manifestation” and upon the face of the statute “plain words of necessary intendment”: Kioa v West at 584; Annetts v McCann at 598; Jarratt v Commissioner for Police for New South Wales (2005) 224 CLR 44; [2005] HCA 50 at [24], [51], [138] and [150].
  3. The applicants submitted that no such plain words appear in s 218F(6)(b) of the Act. The fact that certain hearing requirements have been expressly imposed elsewhere in the Act (such as in s 263(2B) in relation to the conduct of an inquiry) has been held not to exclude the operation of the rules of natural justice: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; [1992] HCA 10 at 575. This is because, even in respect of bodies whose role it is to report or comment to another, or to research and generate proposals for law reform, “it is improbable that, though it did not say so, the legislature would intend that a body of that kind should not act unfairly”: Ainsworth v Criminal Justice Commission at 575-576.
  4. In the present case, the applicants submitted, the Boundaries Commission not only receives the Departmental Chief Executive’s report and must review that report, it must comment on the report. Those comments, together with the report, must be considered by the Minister under s 218F(7)(a)(ii) of the Act. Further, the Boundaries Commission’s comments may recommend or form the basis for any modification of the proposal by the Minister, including a proposal’s terms under s 213 and further boundary changes, limited only by the requirement that the modifications do not constitute a new proposal (p 9, submissions of applicants, 3 June 2016).
  5. The applicants submitted that the silence of the legislature in s 218F(6)(b) of the Act rather indicates an intention to allow the common law principles of procedural fairness to determine what procedures are appropriate for the Boundaries Commission’s review of and comment on the Departmental Chief Executive’s report, citing Baba v Parole Board of New South Wales (1986) 5 NSWLR 338 at 347 and 349 and Re Minister for Immigration and Multicultural Affairs; Ex parte Miah (2001) 206 CLR 57; [2001] HCA 22 at 93 and 115. The applicants submitted that there is no provision in s 218F(6)(b) for any express statutory procedure for fairness in respect of the Boundaries Commission conducting its review, and none is excluded by express words or necessary implication. There is, therefore, no conceptual difficulty in reading the rules of procedural fairness into the words of the statute (p 10, submissions of applicants, 3 June 2016).
  6. The applicants submitted that there are other indications that procedural fairness should be implied for a review by the Boundaries Commission under s 218F(6)(b) of the report of the Departmental Chief Executive’s examination of a proposal. The first stage, being an examination of prescribed factors by the Departmental Chief Executive, is more inquisitorial in character involving an examination of the amalgamation proposal, whereas the review of the report arising from the first stage is more responsive and akin to the adversarial paradigm, inviting responses to the report by way of review, and is more suited to the proposition that the Boundaries Commission should hear the affected party before referring the proposal for amalgamation. Each stage involves different considerations of procedural fairness and with different content of the rules of procedural fairness (pp 10-11, submissions of applicants, 3 June 2016).
  7. Accordingly, the applicants submitted, the principles of procedural fairness applied to the Boundaries Commission’s review and comment on each Delegate’s report.
  8. The applicants submitted that the evidence establishes that the Boundaries Commission denied the applicants procedural fairness.
  9. First, the applicants submitted that each of the applicant councils had a distinct interest in their boundaries because the alteration of the boundaries of an area involving an amalgamation under s 218A brings with it the total dissolution of the council as a recognised entity: Minister for Local Government v South Sydney City Council at [39]-[40] and Muin v Refugee Review Tribunal. Cases such as Castle v Director General, State Emergency Service at [6] and Vanmeld Pty Ltd v Fairfield City Council at [61] are distinguishable because, here, the Minister’s political decision takes place at the next stage of the statutory process.
  10. Second, the applicants submitted that the existence of the Boundaries Commission’s review and comments upon each proposal was not known and each was not available to the applicants until posted on the NSW Government “Stronger Councils” website on or after the day of the proclamation of 12 May 2016.
  11. Third, the applicants submitted that the Boundaries Commission, prior to the making of the Minister’s decisions on 4 May 2016 regarding whether to implement the proposals, gave to the applicants no opportunity whatsoever to respond to the Delegates’ reports or to be heard on its review of the Delegates’ reports or to respond to draft proposed comments by the Boundaries Commission affecting the Minister’s adoption, rejection or modification of the proposal in light of the examination and report by the Delegate and the review of it by the Boundaries Commission under ss 218F(7)(a)(ii) and (8).
  12. Fourth, the applicants submitted that there was a duty to afford procedural fairness to the applicant councils at least with respect to the process followed by the Boundaries Commission prior to forming its final review with comments to the Minister: Minister for Local Government v South Sydney City Council at 388 and 416, especially at [36]-[37]; Annetts v McCann at 598; Kioa v West at 609; Assistant Commissioner Condon v Pompano Pty Ltd at [156] (par 13, p 10, outline submissions of applicants in closing, 31 May 2016).

The respondents’ rebuttal

  1. The respondents disputed that the Boundaries Commission had a duty to afford procedural fairness as alleged by the applicants. The respondents submitted that the Boundaries Commission was not required to provide the applicant councils or their residents and ratepayers reasonable public notice of the relevant Delegate’s report, the Boundaries Commission’s review of the Delegate’s report or its comments on that report, or give the applicant councils or their residents or ratepayers an opportunity to make submissions on the Delegate’s report. The respondents gave three reasons.
  2. First, the respondents noted that the applicant councils and their residents and ratepayers had already been afforded an opportunity to make both oral and written submissions in relation to the proposal. The applicant councils took advantage of each such opportunity. The statutory scheme in respect to amalgamations is a clear example of Parliament having decided what opportunity to be heard should be afforded, namely a public inquiry held during the examination and report phase, pursuant to s 263(2A). The respondents cited Minister for Local Government v South Sydney City Council at [35] and [267].
  3. Second, the respondents submitted that, unlike a public inquiry concerning the proposal, the Act does not require public notice to be given of the Delegate’s report being furnished to the Boundaries Commission or that the Boundaries Commission will commence reviewing the Delegate’s report and commenting on it. Further, the Boundaries Commission is only charged with providing its comments on the report to the Minister. This indicates that this stage of the amalgamation process is not intended to be public. Rather, the Boundaries Commission’s review and comments, which are limited to the report of the Delegate who held the public inquiry, are for the benefit of the Minister.
  4. Furthermore, there is no basis for inferring an obligation to afford procedural fairness in circumstances where the Boundaries Commission is only required to be given one document, that is the report, and has no powers of gathering information. It is not the function of the Boundaries Commission, in undertaking the review of the Departmental Chief Executive’s report, to conduct any inquiry or gather any information. The extent of the Boundaries Commission’s statutory function is limited and there is no room within the statutory scheme for implying a duty of procedural fairness within that process (T 31/5/16, p 85).
  5. Third, the respondents submitted that the applicants’ contention that the affected councils should have a second opportunity to make submissions is unworkable because, logically, such a contention would have to extend further. There would be no reason to confine the duty so as to permit comment by the affected councils only; it would extend also to permit residents and ratepayers to comment. Further, if the Boundaries Commission was required to allow affected persons to make submissions, why would not the Minister also be so required? Thus, if the applicants’ construction were to be accepted, all affected councils, residents and ratepayers would be given the opportunity, first, to be heard at the public inquiry before the Delegate; second, to make written submissions to the Delegate; third, to make written submissions to the Boundaries Commission; and fourth, to make written submissions to the Minister. This would be entirely unworkable. For this reason, it is unsurprising that Parliament turned its mind to the manner in which affected persons would have an opportunity to be heard in respect of amalgamation proposals, by mandating that a public inquiry must be held during the first stage of the statutory process, and not at all three stages (pars 24-28, pp 7-9, respondents’ further submissions, 31 May 2016).

No denial of procedural fairness by the Boundaries Commission

  1. The applicants have not established that they were denied procedural fairness by the Boundaries Commission. The Boundaries Commission was not obliged to furnish the applicants with a copy of each Delegate’s report, give the applicants an opportunity to comment on that report or consider any comments of the applicants in reviewing each Delegate’s report and sending its comments to the Minister.
  2. I agree with and adopt the respondents’ submissions summarised above that the Boundaries Commission did not have a duty to afford procedural fairness, as alleged by the applicants. I also repeat the reasons I gave in Woollahra Municipal Council v Minister for Local Government at [267]-[272]:
The common law duty to accord procedural fairness, when applicable, attaches to the exercise of a statutory power: Minister for Local Government v South Sydney City Council at [15]. For this claim of denial of procedural fairness, the relevant statutory power is that of the Boundaries Commission under s 218F(6)(b) to review the report of the Departmental Chief Executive (or his or her delegate) and send its comments to the Minister. Does a duty to accord procedural fairness attach to the exercise of this statutory power? In my view, it does not. The statutory scheme evinces an intention on the part of the legislature to exclude the application of the principles of procedural fairness at this stage in the statutory process in relation to the proposal for amalgamation of local government areas.
The legislature has turned its mind to the times at which and the manner in which persons affected by a proposal for amalgamation would be given an opportunity to be heard. The legislature expressly required the holding of an inquiry in relation to an amalgamation proposal (s 263(2A)). Reasonable public notice must be given of the holding of the inquiry (s 263(2B)). Members of the public must be allowed to attend the inquiry (s 263(5)). The factors to which regard must be had in considering the amalgamation proposal are prescribed (s 263(3)).
The legislature made no equivalent prescription for participation of the public or affected councils at the following stages in the statutory process in relation to the amalgamation proposal. The legislature required the Departmental Chief Executive (or his or her delegate) to “furnish the Departmental Chief Executive’s report to the Boundaries Commission for review and comment” (s 218F(6)(a)). The legislature did not require the Departmental Chief Executive to furnish a copy of his or her report to anyone else, including the councils, affected by the amalgamation proposal, or prescribe the process by which anyone other than the Boundaries Commission, including affected councils, might be given an opportunity to review and comment on the Departmental Chief Executive’s report.
Specification of the persons and the process for providing persons with the opportunity to review and comment on the Departmental Chief Executive’s report would be critical to ensure the workability of any scheme for review and comment by persons other than the Boundaries Commission. Who are the persons or classes of persons who are to be given a copy of the Departmental Chief Executive’s report? By what criteria are the persons or classes of persons to be selected? Who decides which particular persons or classes of persons satisfy the criteria? How is the Departmental Chief Executive’s report to be furnished to the selected persons or classes of persons? What is the content of the opportunity to be heard? Is it the same as the duty on the Boundaries Commission under s 218F(6)(b) to review and comment on the Departmental Chief Executive’s report or is it different? Can persons provide further comments on the amalgamation proposal that is the subject of the report? Does any other information have to be provided apart from the Departmental Chief Executive’s report to enable the person to be able to review and comment on the report? How long should the person have to provide their comments? These questions would need to be answered in order to provide a workable scheme for persons other than the Boundaries Commission to review and comment on the Departmental Chief Executive’s report.
Providing an opportunity to persons to review and comment on the Departmental Chief Executive’s report also changes the duty of the Boundaries Commission. Under s 218F(6)(b), the sole focus of the Boundaries Commission’s duty is to review and comment on the Departmental Chief Executive’s report. If persons are to be provided with an opportunity to review and comment on the Departmental Chief Executive’s report, the Boundaries Commission would need to consider these comments in its review and comment on the report. Does the Boundaries Commission need to include in its comments to the Minister a summary of the comments made by other persons and explain how the Boundaries Commission dealt with those comments? If so, the object of the review and comment expands beyond merely being the Departmental Chief Executive’s report to also include the comments of other persons on that report. However, the legislature has not provided for this to be done.
The exercise of the statutory power in question, s 218F(6)(b), also is not apt to affect adversely a council affected by an amalgamation proposal. Woollahra Council relied on the stark consequence that once a recommendation for the implementation of an amalgamation proposal is adopted by the Governor, the affected councils are immediately dissolved. However, the Boundaries Commission’s action in reviewing the Departmental Chief Executive’s Report, and sending its comments to the Minister, although a step in the statutory process, does not itself have any consequence for an affected council. The focus of the Boundaries Commission’s comments is the Departmental Chief Executive’s Report and not the amalgamation proposal itself. The Boundaries Commission’s comments on that report are not apt to adversely affect the councils affected by the amalgamation proposal.
  1. For these reasons, the Boundaries Commission did not deny the applicants procedural fairness by not giving them an opportunity to review and comment on each Delegate’s report on the proposals. I reject this ground of challenge.

The claim of misleading statements

The applicants’ challenges

  1. The applicants argued that various statements were made concerning the independence of KPMG, but that these were misleading and affected the legal validity of various steps in the statutory process for amalgamation.
  2. The statements relied on by the applicants were made in various documents, including the “merger proposal” documents for the Oberon proposal, Cabonne proposal and Gundagai proposal, published on or after 6 January 2016. The proposal documents stated that:
  3. The applicants pleaded that the references in the proposal documents to “independent analysis and modelling by KPMG” and “independent analysis” and the description of KPMG’s role as “independent” in the amalgamation process under ss 218F and 263 of the Act were “misleading and deceptive” in that “as from at least June 2015 to March 2016, the preparation and making of the amalgamation proposals and the said other publicly available documents pursuant to Divs 2A and 2B of Pt 1 of Ch 9 of the Act has been a joint venture and/or partnership and/or collaboration between the [State of New South Wales] and KPMG and the analysis and modelling of KPMG was not independent and impartial, there was no independent assessment of the process, and KPMG’s role as a consultant to the [State of New South Wales] in the amalgamation process under the Act was not independent and impartial” (par 11A of second further amended statement of claim of Oberon Council, the other statements of claim being in similar terms).
  4. The applicants pleaded that this alleged misrepresentation was relied upon, and believed to be true and correct, by the Departmental Chief Executive and the Delegates, the Boundaries Commission and the ratepayers and residents of the affected councils in respect of their participation in the amalgamation process under ss 218F and 263 of the Act (par 11B of second further amended statement of claim of Oberon Council and equivalent paragraphs in the other statements of claim).
  5. The applicants pleaded that, as a result of the misrepresentation, the Departmental Chief Executive and Delegates, the Boundaries Commission and the ratepayers and residents of the affected councils proceeded in their respective roles and functions under ss 218F and 263 “upon a fundamental misapprehension of fact, namely that the analysis and modelling by KPMG in respect of each proposal including that concerning the applicant council was independent, impartial and reliable, and that there had been an independent assessment of the proposal, and that the role of KPMG in the amalgamation process was independent and impartial when that was not the case” (par 11C second further amended statement of claim of Oberon Council and equivalent paragraphs in the other statements of claim).
  6. The applicants pleaded that the misrepresentation was also contained in other documents published by the New South Wales Government, including:

● a financial appraisal of how a merger impacts a council’s Long Term Financial Plan (‘LTFP’) based on the potential savings and costs generated by the merger;

● an assessment of state-wide merger impacts, including net financial benefits and the overall benefit cost ratio (BCR) of the proposed local government reforms...”;

(ii) contained information about the asserted costs and benefits of the proposal, which information was said to be sourced from “KPMG” and “KPMG analysis” (pp 4-6 of the Impacts document) (par 20 of second further amended statement of claim of Oberon Council).
(b) The KPMG Technical Paper published on or about 20 January 2016 which stated that: “KPMG was engaged by the NSW Department of Premier and Cabinet to prepare independent modelling of the potential financial impacts of selected council mergers. The financial modelling undertaken relied on publicly available council data and a financial model developed by KPMG...” (p 2 of the KPMG Technical Paper) (par 21 of second further amended statement of claim of Oberon Council).

386 The applicants argued that KPMG was not independent:

a. It is apparent from the further disclosure of documents and material that KPMG was in its own words in partnership with DPC from as early as July [2015] in respect of the amalgamation process and latest by the date of relevant agreements between KPMG and the NSW [Government] made on or after 27 August 2015.
b. KPMG was not independent of the NSW [Government] in any relevant sense and in the ordinary meaning of that word having regard to its context from that date at least until May 2016 assuming then that the joint venture with the [State of NSW] concluded.
c. Copy contracts between KPMG and [the State of NSW] from 22 June [2015] to date demonstrate that KPMG was not appointed to provide an independent analysis and modelling of the proposals for amalgamation made by the Respondents announced by [the Minister] on 6 January 2016 and that it was not, as represented to the [Departmental Chief Executive] and his Delegates, the public and the Boundaries Commission, independent of the process but on the contrary was an essential partner in it.
(par 6, p 4, submissions of applicants, 3 June 2016)
  1. The applicants referred to a number of documents that they said established that KPMG was in partnership with DPC and was not independent. These included various agreements between KPMG and the NSW Government for KPMG to assist in the NSW Government’s local government reform project. They also included various proposals that KPMG put to the NSW Government bidding to be awarded contracts to do further work. One of these proposals was the “Local Government Reform - Merger Proposals” dated 1 November 2015.
  2. In the letter enclosing this proposal, KPMG said: “Having supported the Department of Premier and Cabinet (‘DPC’) and the Office of Local Government (‘OLG’) as a reform partner over an extended period, we have a strong appreciation of the importance of this next phase of work”. The applicants submitted that the concept of a “reform partner” is inconsistent with the notion of impartiality and independence (T 3/6/16, p 176).
  3. In the proposal itself, KPMG set out its understanding of the NSW Government’s local government reform agenda. KPMG said:
There is a strong case for change to support mergers as part of a comprehensive local government reform agenda.
Through our long-standing role as DPC and OLG’s strategic adviser throughout the reform process, we have developed a deep understanding of the unique challenges you face ...
... we appreciate that the next phase will be the most challenging to the achievement of the reform’s objectives.
  1. KPMG referred to the process in the Act for referring merger proposals for examination and report and continued:
A sensitive and agile approach is required to support this process – and KPMG is uniquely placed to provide the rigour and flexibility to support you in achieving the reform objectives ... KPMG is uniquely credentialed to provide the knowledge, experience, collaboration and – importantly – the flexibility required to support DPC and OLG in successfully delivering the Merger Proposals and driving the success of the local government reforms.
  1. KPMG set out the methodology it would use if awarded the work:
Our methodology has been developed to support you in meeting your objectives, and will leverage the substantial base of evidence and knowledge that our team has built and refined in collaboration with you over the past 18 months.
● [w]e can ‘hit the ground running’ – we are able to rapidly leverage the evidence base we have developed with you previously to deliver this Engagement within the required timeframes ...
● we have the evidence to-hand and the expertise within our team to tailor each Merger Proposal to capture local level insights ...
  1. KPMG elaborated on its proposed methodology in each of four phases. For phase 1 – project initiation and governance, KPMG said that: “[w]e will hold a Project Initiation Meeting at the commencement of the project to ensure understanding and agreement on project scope and critical timing. Specifically, during this meeting we will ... [agree] on the format and schedule of the weekly project status updates between KPMG and the DPC Project Team”. KPMG said that outputs of phase 1 would include “[u]nderstanding and agreement on the project scope and timing” and “[s]takeholder management agreed”.
  2. For phase 2 – template design, KPMG said that it would develop a draft merger proposal template, suitable to inform key aspects of the Boundaries Commission public consultation process. It said “[f]ollowing the completion of the draft template, we will hold a workshop with you to outline the elements of the draft and seek input and agreement on the final Proposal”. The applicants observed that this evidences “a stake of the partnership in the proposal” (T 3/6/16, p 177).
  3. For phase 4 – merger proposal testing and finalisation, KPMG said that “[p]hase 4 involves three key tasks” including “incorporating feedback received on merger Proposals from DPC, Premier’s Office and the Minister’s Office”. The applicants submitted that this shows that KPMG and the NSW Government are “working hand in glove” (T 3/6/16, p 177).
  4. KPMG continued that “[i]t is understood that the Government is likely to consider Merger Proposals in the near future. KPMG has a thorough understanding of the sensitivity of the Local Government Reform which requires a flexible and agile approach. We will fully utilise our recent experience in supporting DPC to anticipate and plan for potential revisions. KPMG will need to work in close partnership with DPC to ensure any changes are processed in a timely manner, to support Government’s decisions”. The applicants submitted that there is nothing wrong with the Government entering into contracts of this type, but they should not represent it as being an independent process (T 3/6/16, p 177).
  5. In the section on “Our Experience”, KPMG said:
The success of our collaboration with you has most recently been exemplified by the endorsement of the Business Case for the merger reforms by the NSW Expenditure Review Committee.
  1. In the section on “Our Team”, KPMG said:
We offer a team that is known to you, is available for the duration of the project, has a track record of delivering high quality products for you and offers a breadth of expertise to meet your needs in full ...
● our project leadership team has worked with DPC and OLG on the Local Government Reform Agenda for more than 18 months and has a deep understanding of the NSW Government’s reform strategy and how best to meet your needs.
  1. The applicants submitted that these statements of KPMG refer to “the notion of an informal arrangement or collaboration or partnership being a joint venture to amalgamate selected councils, including the applicants”. The applicants submitted it was akin to the joint venture entered into between the Commonwealth and the State referred to in P J Magennis Pty Ltd v The Commonwealth (1949) 80 CLR 382; [1949] HCA 66 at 424 (T 3/6/16, pp 177-178).
  2. The applicants argued that the misrepresentation affected the validity of various steps in the statutory process for the amalgamations.
  3. First, the misrepresentation was incorporated into and infected the public notices given under s 263(2B) of the Act. The applicants alleged that people reading the notices would have been guided to the Council Boundary Review website referred to in the notice and to the relevant proposal document, Impacts document and KPMG Technical Paper posted on that website. Those documents contained the misrepresentation as to KPMG’s independent role in the whole process of amalgamation of the areas. The public notice, by “incorporating by reference information ... which [was] misleading and deceptive,” was rendered “inadequate and void” (T 3/6/16, p 182).
  4. The applicants argued that, in this way, the notice “misrepresented the public process to the Delegates, the Boundaries Commission and the ratepayers and residents of each area and the councils” (par 6(f), p 5, submissions of applicants, 3 June 2016). The applicants submitted:
All the participants then proceeded upon a fundamental misapprehension of fact in that regard sufficient to vitiate the process and the Minister’s later decision based upon the integrity and lawfulness of it, such that the whole purpose of the notice which is to assist the Delegate, the Boundaries Commission and the public and ultimately the Minister as a responsible decision-making authority to fulfil their respective functions, and providing those affected by the process to exercise their rights in relation to later stages in the process: Scurr v Brisbane City Council at 252.
(p 7, submissions of applicants, 3 June 2016)
  1. The applicants submitted that residents and ratepayers of the affected councils or members of the public might have been “deflected” from making a submission or qualifying their submission or attending the inquiry and speaking at it, as they had been invited to do by the notice, by the misrepresentation in the documents referred to in the notice. The applicants submitted that “those who have heard of KPMG know that it’s a multinational accountancy firm with a professed skill in the sort of area that it was professing to be involved with, may be disinclined to question its modelling and assumptions or feel that they’re unable to do so because they don’t have the resources of KPMG” (T 3/6/16, pp 185-186).
  2. The applicants secondly argued that the misrepresentation, incorporated by reference in the notice and contained in the material posted on the Council Boundary Review website, and relied on as integral by the key participants in the process, caused the inquiry under s 263(2A) to be a “misinformed inquiry”, the examination under s 263(1) to be a “misinformed examination” and the review under s 218F(6)(b) to be a “misinformed review” (par 6(g), p 5, submissions of applicants, 3 June 2016). The applicants argued that the misrepresentation deflected the Delegates from carrying out an informed inquiry and examination and the Boundaries Commission from carrying out an informed review of the Delegate’s report. For example, they might have been deflected from examining the assumptions in the KPMG Technical Paper. As a consequence, the Minister was denied the opportunity of fulfilling his decision making authority on the basis of an inquiry, examination and review which were informed (T 3/6/16, pp 185-187).
  3. The applicants also argued that the misrepresentation infected various decisions of the Minister. The misrepresentations made the Minister’s decision to make each proposal under s 218E(1) and to refer the proposal under s 218F(1) manifestly unreasonable. The applicants argued that it was manifestly unreasonable for the Minister to make or refer a proposal “where the stated ‘independent’ KPMG material (being the disclosed material, including the Proposal Document and the Technical Paper) is not impartial or independent, but is the result of a long standing collaboration in partnership with the NSW [Government]/DPC regarding forced amalgamations in NSW” (p 1, submissions of applicants, 6 June 2016).
  4. The applicants argued that the misrepresentation also infected the decision of the Minister under s 218F(7) to recommend implementation of the proposals for amalgamation. The applicants argued that it was manifestly unreasonable for the Minister to recommend implementation of the proposals “after the statutory amalgamation process has [been] completed upon an erroneous basis which he caused to happen ie by his own representations that the KPMG information is ‘independent’ in the Proposal Documents and Technical Paper which is both erroneous and likely to mislead participants in the process and which makes no mention of the inaccuracy of that assertion he had made but rather on the contrary assumes it to be correct” (p 1, submissions of applicants, 6 June 2016).

The respondents’ rebuttal

  1. The respondents disputed that the evidence showed that KPMG did not carry out its work, including its modelling and analysis, independently or that it was dictated to by the NSW Government. The respondents referred to the KPMG documents tendered by the applicants, which the applicants said showed the joint venture between KPMG and the NSW Government. One of these documents was the “Options Analysis Local Government Reform Project Plan” dated 7 July 2015. This project plan noted that the purpose of the engagement of KPMG was:
to develop an appropriate evidence base that:
1. provides the necessary information to the NSW Government on the full range of financial, economic, social and community impacts of reform options and support optimal reform decisions; and
2. underpins the communication of reform outcomes to each affected community and the broader population, cognisant of local priorities and concerns about local government reform. (p 3)
  1. The respondents submitted that this showed that the first purpose was to collect material in a form that provided an appropriate evidence base for decision making (T 6/6/16, p 204).
  2. The second document to which the respondents referred was the “Local Government Reform Merger Proposals” document of 1 November 2015. In the section “Appendices – Template Designs”, KPMG referred to work that it had done previously for the NSW Government. KPMG said that it was “engaged in October 2015 to prepare a public report on the impacts of local government reform in NSW” and that that report drew heavily on “the analysis undertaken for the comprehensive merger business case KPMG had previously prepared for DPC” (p A13). The respondents said that this analysis of KPMG involved independent modelling. The respondents noted that there is nothing wrong in these statements or previous work to support an inference of want of independence but instead they are completely consistent with KPMG having performed its role in the manner described in the documentation (T 6/6/16, p 205).
  3. The respondents referred to the various agreements between KPMG and the NSW Government tendered by the applicants. The agreement of 22 June 2015 between KPMG and the OLG, for example, described the services to be provided by KPMG as being to:
● Assist the Government to make a decision on optimal council mergers, based on a combination of qualitative and quantitative analysis; and
● Support the Government to effectively communicate the benefits of proposed mergers to each affected community and the broader population.
  1. The respondents submitted that there was nothing wrong with the second aspect and nothing in the first aspect to suggest that the modelling was to be anything other than independent, based on the application of KPMG’s undoubted expertise and experience in this area (T 6/6/16, p 205).
  2. The respondents referred to a request for quotation by the OLG on “Local Government Reform – Options Analysis” (T 6/6/16, p 206). This document stated that:
The objective of this RFQ is to:
● [a]ssist the Government to make a decision on optimal council mergers, based on a combination of qualitative and quantitative analysis; and
● [s]upport the Government to effectively communicate the benefits of proposed mergers to each affected community and the broader population. (p 3)
  1. The request for quotation set out what the contractor was being invited to do. This included developing a model that:
(a) [s]upports the development and consideration of options for optimal local government mergers, with the following characteristics:
● [u]tilises the recommendations and maps of the Independent Local Government Review Panel as a starting point for analysis;
● key demographic and financial data for all councils eg population, population growth, rates, electors per councillor, revenue, assets, debt, administration expenditure;
● performance against each of the Fit for the Future benchmarks;
● Priorities and challenges for the council/community/region, based on relevant State and regional plans and council’s strategic plans (and other available material eg publicly available FFTF proposals ...
(b) [e]nables aggregation and dissemination of this information to analyse and compare possible merger options ...
  1. The contractor was also invited to “[d]esign a template/narrative that can be populated with requisite analysis to present preferred options for local government reform in all councils in an easy to understand format including:
(d) [p]referred structural change option, including councils where mergers are not proposed – description and map;
(e) [c]omparison of new and previous local governments, based on key quantitative and qualitative material;
(f) [r]ationale for, against key criteria (improved value for ratepayers’ dollars, better services, better infrastructure) using quantitative and qualitative information. (p 4)
  1. In the section on assessment of quotations, the OLG said that it would assess: “[q]ualifications and CVs held by individuals in the project team”, “[r]elevant experience, proven capability and successful outcomes in other projects by both the tenderer and the personnel who will be involved in the project”, “[d]emonstrated competency and experience to project manage the engagement” and “[v]alue for money” (p 6).
  2. The respondents submitted that the Government was requesting the contractor to undertake and develop a model of a particular kind for the local government reform project.
  3. The respondents submitted that the subsequent documents and work done by KPMG supported the inference that KPMG did what they were engaged to do. KPMG developed the independent modelling, using its skills and experience that allowed it to win the bid and as they were called upon to do by the contract documents. Moreover, they did this independently.
  4. The respondents rebutted the applicants’ suggestion that the modelling and assumptions set out in the KPMG Technical Paper and used to derive the financial benefits described in the proposal documents were developed by DPC or by DPC in a joint venture with KPMG. The respondents referred to an email from one DPC officer to another that candidly noted that the key assumptions and data sources for the model were KPMG’s work, but that she had removed KPMG’s branding in producing a version for publication. Nevertheless, the published version was an accurate reflection of KPMG’s work. This established that the modelling assumptions and data sources were KPMG’s work (T 6/6/16, p 203).
  5. The respondents next submitted that, even if contrary to the evidence, the applicants established that KPMG did not model independently, this would not invalidate any step in the statutory process (T 6/6/16, p 207). Any misleading representation about the independence of KPMG in undertaking the modelling and analysis did not cause the notice given, the inquiry held, the examination and report undertaken or the review and comment on the report to not satisfy the statutory requirements. The respondents submitted that a holistic analysis of what was done at each stage in the statutory process needs to be undertaken and any misleading representation must be considered in the whole context. For example, in assessing whether reasonable public notice was given, there needed to be a holistic analysis of all of the forms of public notice that were provided and an assessment of whether the misleading representation had the consequence of causing the public notice that had been provided not to be “reasonable public notice” for the purposes of s 363(2B) (T 6/6/16, pp 207-208 and 217).
  6. The respondents submitted further that any misrepresentation in the documents made available on the Council Boundary Review website and referred to in the public notice could not cause the notice itself to be misleading or legally inadequate. There would have to be in the notice itself something that was misleading and deceptive about the subject matter of the notice before the notice was misleading and adequate. Cases such as Scurr v Brisbane City Council all concern inadequacy in the notice itself. (T 6/6/16, p 218).
  7. The respondents submitted that any misrepresentation in the publicly available documents could not vitiate the examination and report by the Delegates, including the inquiries held. The mere fact that statements or figures in the documents are misleading or deceptive, or even wrong, cannot invalidate public decision making. The respondents submitted that all sorts of statements are made to those who exercise statutory power with varying degrees of accuracy. Public submissions may contain misleading or deceptive or even plainly wrong statements or information. The making of such submissions to a public decision maker cannot invalidate the exercise of power by the decision maker, even if the misleading or deceptive or wrong statements are accepted or acted upon by the decision maker. There is no error of law by a decision maker making a wrong finding of fact or an unsound decision. Misleading conduct, which is not characterised by fraud, bad faith or the like is, at least generally, insufficient to vitiate an administrative decision: Anderson v Minister for Infrastructure Planning and Natural Resources (2006) 151 LGERA 229; [2006] NSWLEC 725 at [79] (T 6/6/16, p 218).

Statements were not misleading and did not invalidate the amalgamation process

  1. The applicants have not established that the statements concerning the independence of KPMG were misleading or, even if they were to be, that this invalidated any step in the statutory process in respect of each proposal. I agree with and adopt the respondents’ submissions.
  2. First, I do not accept that the statements relied on by the applicants were misleading. KPMG was engaged as a contractor to provide financial consulting services to the NSW Government over an extended period of time in relation to local government reform. The various agreements tendered described the nature of the services to be provided. KPMG bid for and was successful in being awarded contracts to perform these services. KPMG used its knowledge, expertise and experience, which enabled it to be awarded the contracts, to perform the services. That knowledge, expertise and experience continued to develop with each contract performed; there were cumulative benefits over time, both for KPMG and the NSW Government. KPMG developed a special understanding of and insights into the Government’s local government reform project, which enabled KPMG to better provide the contracted services to the Government. The nature of the services to be provided, and the repeated engagements over an extended period of time, necessitated consultation, collaboration and co-operation between KPMG as the contractor and the Government as the client.
  3. None of these matters concerning the working relationship between KPMG and the Government caused KPMG not to be an independent contractor providing independent advice and services. They certainly did not cause KPMG and the Government to be in any form of “joint venture” to amalgamate local government areas, including the applicants’ areas. The advice and services provided by KPMG, including the modelling assumptions and analysis, remained KPMG’s work. The fact that there was dialogue and discussion between KPMG and the Government, including on KPMG’s modelling assumptions and analysis, did not cause the relevant materials and documents to cease to be KPMG’s work.
  4. In these circumstances, the statements relied on by the applicants concerning the independence of KPMG and of KPMG’s work were not misrepresentations. This conclusion is sufficient to dispose of this challenge.
  5. In any event, however, any misrepresentation that might have been made in the documents did not vitiate any step in the statutory process for the amalgamation proposals.
  6. The misrepresentations were not contained in the public notices required to be given under s 263(2B) of the Act. It is not sufficient that the misrepresentations were in documents made available on a website referred to in the public notices. That cannot cause the notices to be legally inadequate.
  7. The documents in which the misrepresentations were contained were not documents required to be produced or publicly exhibited by the Act. The documents had no statutory status. Hence, any misrepresentation in the documents could not cause them not to be documents required by statute: see Woollahra Municipal Council v Minister for Local Government at [305]-[307].
  8. The applicants have not established that any misrepresentation caused each Delegate to fail to have regard to any mandatory relevant matter (under s 263(3)) or to fail to exercise the duty to examine and report on the proposal (under s 263(1)). The mere fact that a repository of administrative power (the Delegates in this case) might consider a factually false or misleading statement (that is not fraudulent) does not, by that fact alone, cause any exercise of power to miscarry in law. It will only do so if, as a consequence of the false or misleading statement, a recognised ground of judicial review is established or a mandatory statutory requirement is not complied with: Woollahra Municipal Council v Minister for Local Government at [308].
  9. In this case, the applicants have not established that the Delegates even took into account the statements alleged by the applicants as being misrepresentations, let alone that any such consideration was material in the Delegates exercising the functions of examining and reporting on the proposal. The applicants do not refer to any statement in each Delegate’s report establishing that the Delegate had regard to the misrepresentation or that the misrepresentation affected the Delegate’s examination of the proposal in any way.
  10. The applicants also have not established that the misrepresentation affected in any way the Boundaries Commission’s review of and comment on each Delegate’s report. The sole focus of the Boundaries Commission’s review was each Delegate’s report; it did not consider any of the documents in which the misrepresentation was contained. The Delegate’s report contained no reference to the misrepresentation contained in the documents. Hence, the Boundaries Commission could not have considered the misrepresentation.
  11. The allegedly misleading statements, therefore, have not had the legal consequence of invalidating any step in the statutory amalgamation process for the proposal. I reject this ground of challenge.

The recommendation to the Governor

The applicants’ challenges

  1. The applicants’ final grounds of challenge concern the Minister’s exercise or purported exercise of power under s 218F(7) of the Act to recommend to the Governor that the proposals for amalgamation be implemented. The grounds of challenge differ for the Oberon and Cabonne proposals and for the Gundagai proposal.
  2. For the Oberon and Cabonne proposals, the applicants argued that the Minister had no power to make conditional recommendations to the Governor for implementation of the proposals. In both cases, the Minister received a briefing recommending that the Minister make a decision to amalgamate the relevant local government areas. In both cases, the Minister made a decision on 4 May 2016 in these terms:
Subject to the outcome of the current legal proceedings affecting this proposal, my decision is for this proposal to be implemented.
  1. The applicants submitted that this purports to be a decision under s 218F(7) recommending that the proposal be implemented but conditioned on the outcome of the proceedings in this Court. Such a decision is “ultra vires the power conferred because each is impermissibly conditioned” (par 1, p 18, submissions of applicants, 3 June 2016).
  2. In relation to the Gundagai proposal, the Minister made a decision on 3 May 2016 “to recommend to the Governor that the proposal be implemented”. The Governor made a proclamation on 12 May 2016 to amalgamate many different local government areas to become new areas, including to amalgamate the former areas of Cootamundra and Gundagai to constitute a new area named Gundagai: cl 4(1) of Local Government (Council Amalgamations) Proclamation 2016 (‘the Proclamation’). The councils of the areas amalgamated were dissolved: cl 4(2) of the Proclamation. Schedule 7 of the Proclamation contained provisions relating to the new Gundagai area and the council of that area. One of these concerned the ward structure, that “the new council is not to be divided into wards for the first election”: cl 7 of Sch 7 to the Proclamation.
  3. The Proclamation also gave the Minister power to determine any matter or thing for the purpose of giving effect to the Proclamation. Clause 5(1) of the Proclamation provided:
For the purposes of giving effect to this Proclamation, the Minister may from time to time determine any matter or thing at the Minister’s discretion or if a new council or an Administrator refers any matter or thing requiring determination to the Minister for that purpose.
  1. The applicants challenged this Proclamation, insofar as it applied to the Gundagai proposal, on two grounds. First, the applicants argued that the Minister had no power to recommend to the Governor and the Governor had no power to make a proclamation for the implementation of the Gundagai proposal because, the applicants believed, there was already another proposal for the amalgamation of the areas of Harden, Cootamundra and Gundagai (‘the Harden proposal’). The applicants argued that the statutory scheme does not permit there to be concurrent proposals but rather requires a “staged process” whereby proposals are dealt with consecutively (par 8, p 4, outline submissions of applicants in closing, 31 May 2016 and p 18, submissions of applicants, 3 June 2016; T 27/5/16, pp 6-8).
  2. The applicants argued that once the Harden proposal was received by the Minister, it had to be dealt with under Div 2B of Pt 1 of Ch 9 of the Act and the Minister could not deal with the Gundagai proposal that he had made until he had finished dealing with the Harden proposal. The Minister therefore had no power to make the decision he purported to make on 3 May 2016 to recommend the implementation of the Gundagai proposal because he had not finished dealing with the Harden proposal (T 27/5/16, pp 6-8).
  3. Alternatively, the applicants argued, if the Minister’s decision to recommend the Gundagai proposal could be seen to be a modification of the Harden proposal, it was ultra vires the power in s 218F(7) because the modification would constitute a new proposal.
  4. On the converse factual assumption that the making and referral of the Gundagai proposal preceded the Harden proposal, the applicants contended that the Minister had no power to recommend the implementation of the Gundagai proposal because this proposal had been superseded by the Harden proposal. The superseded Gundagai proposal could not be recommended for implementation because only the Harden proposal, with or without modifications, could be recommended for implementation. If the Minister purported to recommend the superseded Gundagai proposal, this could only be lawful if it constituted a modification of the Harden proposal. Given the significant differences between the two proposals, the applicants submitted that the superseded Gundagai proposal was a new proposal and not a modification of the operative Harden proposal. The Minister had no power under s 218F(7) to recommend the implementation of a new proposal (T 31/05/16, pp 59-60).
  5. Second, the applicants argued that the Proclamation impermissibly conferred power on the Minister by cl 5(1) allowing the Minister to determine any matter or thing at the Minister’s discretion (par 2, p 18, submissions of applicants, 3 June 2016 and T 31/5/16, p 59).
  6. The applicants noted that a proclamation may include facilitating provisions of the kind referred to in s 213 and s 218C(1) of the Act as are necessary and convenient for giving effect to the Proclamation. In this case, the Proclamation did include such provisions, both generally in the body of the Proclamation and specifically for the new Gundagai area and council in Sch 7 of the Proclamation. However, the applicants argued, cl 5(1) of the Proclamation also gave power to the Minister to determine any matter or thing at the Minister’s discretion for the purpose of giving effect to the Proclamation. The applicants submitted that this was an impermissible conferral of power.
  7. The applicants submitted that it is not possible to sever “the unauthorised power of the Minister from the Proclamation [under ss 31 and 32 of the Interpretation Act 1987] because without such [a power] the Proclamation fails to address the necessary requirements in the legal and practical sense: see ss 213 and 218CA” (par 2, p 18, submissions of applicants, 3 June 2016).

The respondents’ rebuttal

  1. The respondents rejected the applicants’ challenges to the Minister’s decisions concerning implementation of the Oberon and Cabonne proposals and the Gundagai proposal.
  2. In relation to the Oberon and Cabonne proposals, the respondents submitted that the Minister has not yet made, under s 218F(7) of the Act, a recommendation to the Governor that either proposal be implemented. The Minister’s decision of 4 May 2016 (“[s]ubject to the outcome of the current legal proceedings affecting this proposal, my decision is for this proposal to be implemented”) was not a decision under s 218F(7) of the Act. In terms, it does not state that it is a decision to make a recommendation to the Governor, which is what s 218F(7) requires, and there is no evidence that the Minister has made a recommendation to the Governor (T 31/5/16, pp 96-97). Each decision of the Minister of 4 May 2016 is not a “self-executing decision”; it cannot come into force once this Court determines the outcome of these proceedings. The Minister will still have to exercise the power under s 218F(7) to recommend to the Governor that the proposals be implemented (T 31/5/16, p 97).
  3. In relation to the Gundagai proposal, the respondents submitted that the applicants’ argument that there cannot be concurrent proposals is factually and legally erroneous.
  4. Factually, the applicants have reversed the order in which the proposals were made and dealt with. The Minister made the Gundagai proposal on 6 January 2016 and referred it on the same day to the Departmental Chief Executive for examination and report. On the same day, the Departmental Chief Executive delegated the function of examining and reporting to Mr Turner. The Delegate held the required inquiry on 4 February 2016. The Delegate furnished his report on 24 March 2016 to the Boundaries Commission and the Minister. The Boundaries Commission reviewed and sent its comments on the Delegate’s report to the Minister on 29 April 2016. The Minister made his decision on 3 May 2016 “to recommend to the Governor that the [Gundagai] proposal be implemented”.
  5. The Harden proposal was received and dealt with later. Following resolutions of Harden Council on 20 January and 17 February 2016, Harden Council forwarded to the Minister on 28 February 2016 the Harden proposal and requested the Minister to refer the Harden proposal for examination and report. In early March 2016, the Minister referred the Harden proposal that he had received to the Departmental Chief Executive for examination and report. On 3 March 2016, the Departmental Chief Executive delegated the function of examination and report to Mr Turner. The Delegate held the required inquiry on 5 and 6 April 2016. The Delegate furnished his report on 22 April 2016 to the Boundaries Commission and the Minister. The Boundaries Commission reviewed and sent its comments on the Delegate’s report on the Harden proposal to the Minister on 3 May 2016. The Minister decided on 5 May 2016 “to decline to recommend to the Governor that the [Harden] proposal be implemented”.
  6. The respondents noted, therefore, that the applicants’ argument that the Minister had no power to refer the Gundagai proposal he had made because he had already received the Harden proposal had an incorrect factual basis. The applicants’ argument cannot succeed on the correct facts. On the applicants’ argument, if the Gundagai proposal was first in time, the Minister had power to refer it and have it dealt with before referring the Harden proposal and having that proposal dealt with. The Minister would have had power to make a decision under s 218F(7) in relation to the Gundagai proposal before he decided the Harden proposal.
  7. Legally, the respondents submitted that the statutory scheme does not prohibit proposals being dealt with concurrently. Indeed, the statutory scheme mandates that the Minister refer each proposal made or received by the Minister on making or receiving the proposal (s 218F(1)) and that each proposal must be dealt with separately according to the statutory procedures in ss 218F and 263 of the Act. It is not until the stage of the Minister’s decision under s 218F(7) that the statutory scheme moves from the mandatory “must” to the discretionary “may” (T 31/5/16, p 102).
  8. The approach that was adopted of processing the Gundagai proposal and the Harden proposal separately but concurrently was consistent with the Court of Appeal’s recent decision in Botany Bay City Council v Minister for Local Government at [43]-[44] upholding the Land and Environment Court’s decision in Botany Bay City Council v Minister for Local Government [2016] NSWLEC 35 at [31] (par 69, p 19, respondents’ further submissions, 31 May 2016). The respondents submitted that two or more proposals, once made or received, can be dealt with in parallel processes that are conducted in effect together (T 31/5/16, p 101).
  9. In relation to the applicants’ challenge to the Proclamation leaving matters to the Minister’s discretion, the respondents submitted that cl 5(1) of the Proclamation was within power. Section 218C(1) enables a proclamation for the amalgamation of areas to include provisions of the same kind as are referred to in s 213. Section 213(1) enables a proclamation to include “such provisions as are necessary or convenient for giving effect to the proclamation, including provisions for or with respect to” various specified matters. Section 213(2) provides that such a proclamation may, amongst other things, “(c) authorise any matter or thing to be from time to time determined, applied or regulated by any specified person or body”.
  10. The respondents submitted that cl 5(1) of the Proclamation was authorised by these provisions in s 213. The power in s 213 “is wide enough to cover a provision of the kind made in [clause 5(1)] which is no more than a sensible administrative provision to deal with a myriad of small matters as they arise” (T 31/5/16, p 98). In particular, the closing words of the chapeau of s 213(1), “for or with respect to”, are wide and authorise a provision of the kind made in cl 5(1) (T 31/5/16, p 99).
  11. The respondents submitted that cl 5(1) of the Proclamation would not be read as allowing the Minister to use the power in cl 5 to vary the Proclamation itself; the Minister could only deal with residual matters that have not been dealt with by the Proclamation (T 31/5/16, p 100). So construed, cl 5(1) of the Proclamation is within the power to make a proclamation.
  12. In the alternative, the respondents submitted that cl 5(1) is severable: “[t]he blue pencil merely need go through one clause” of the Proclamation (T 31/5/16, pp 99-100).

The recommendations and Proclamation are valid

  1. The applicants have not established any of their challenges to the Minister’s decisions concerning the Oberon proposal and the Cabonne proposal or the Minister’s decision and the Governor’s Proclamation concerning the Gundagai proposal. My reasons accord with the respondents’ submissions.
  2. In relation to the Oberon and Cabonne proposals, although the Minister made a decision in relation to each proposal, it was not a decision to exercise the power under s 218F(7) to recommend to the Governor that the proposal be implemented. The terms of the decision in each case do not invoke the language of the power in s 218F(7). The Minister does not state that he has decided to “recommend to the Governor that the proposal be implemented”. The Minister’s decision is recorded at the end of a briefing that reminded the Minister that he had “provided an undertaking to the Court that he will not make a recommendation to the Governor in respect of this proposal” and accordingly, he “will not be able to recommend the proposal to the Governor until any undertakings affecting this proposal expire (which is not likely to occur until the resolution of legal proceedings)”. Finally, there is no evidence that the Minister has recommended to the Governor that either proposal be implemented. In these circumstances, I would not draw the inference that the Minister has made a decision under s 218F(7) to recommend to the Governor that the Oberon and Cabonne proposals be implemented.
  3. In relation to the Gundagai proposal, I reject the applicants’ argument that there was no power to deal with the Gundagai proposal and the Harden proposal concurrently.
  4. Factually, the Gundagai proposal was made and referred before the Harden proposal was received and referred. Even on the applicants’ argument, there was no bar to referring and dealing with the Gundagai proposal if it was made first. I also reject the applicants’ alternative argument based on the correct factual assumption that the Gundagai proposal preceded the Harden proposal. The receipt by the Minister of the Harden proposal did not, as a matter of fact, supersede the earlier made Gundagai proposal. Each proposal was separately referred by the Minister for examination and report, examined and reported on by the Delegate, and reviewed and commented on by the Boundaries Commission.
  5. Legally, the applicants’ argument is erroneous. There is nothing in the statutory scheme that prevents proposals being dealt with concurrently. Indeed, the mandatory language used in the provisions concerning the referral of proposals made or received by the Minister (s 218F(1)), the examination and report on the matter referred (s 263(1)), the holding of an inquiry in relation to a proposal for the amalgamation of two or more areas that has been referred (s 263(2A)), the furnishing of the report on the examination of the proposal to the Boundaries Commission for review and comment (s 218F(6)(a)) and the review and comment by the Boundaries Commission on that report (s 218F(6)(b)) all are indicators that proposals are to be dealt with under ss 218F and 263 once they are made or referred and cannot be held in abeyance while a proposal that has been made or received at an earlier time is dealt with. Rather, each proposal must be dealt with separately and, if they are contemporaneous, concurrently.
  6. Similarly, a new proposal which concerns similar local government areas to an existing proposal does not have the effect of superseding the existing proposal or modifying the terms of the existing proposal. There is no legal basis in the Act to support the applicants’ claim that the Harden proposal superseded or modified the existing Gundagai proposal. The exercise of the Minister’s power under s 218F(7) to recommend the implementation of the Gundagai proposal did not involve a modification of the Harden proposal.
  7. Accordingly, in this case, there was no bar to the Minister referring the Gundagai proposal and having it dealt with under Div 2B and he had power under s 218F(7) to recommend to the Governor that the Gundagai proposal be implemented.
  8. I also reject the applicants’ argument that cl 5(1) of the Proclamation was ultra vires by impermissibly conferring power on the Minister. Clause 5(1) was authorised by s 218C(1) which permitted the Proclamation to include provisions of the same kind as are referred to in s 213. Section 213(2)(c) expressly provides that a proclamation may “authorise any matter or thing to be from time to time determined, applied or regulated by any specified person or body”. This is precisely what cl 5(1) does. It is authorised by s 213(2). Furthermore, cl 5(1) of the Proclamation would authorise the Minister to determine matters or things for or with respect to the matters listed in s 213(1). A provision of this kind is itself a provision for or with respect to the matters in s 213(1) and hence is authorised by s 213(1).

Conclusion and orders

  1. The applicants have not established any of the grounds of challenge to the administrative decisions and actions in relation to the Oberon proposal, the Cabonne proposal or the Gundagai proposal. Each of the proceedings should be dismissed. The usual order for costs in judicial review proceedings, namely that costs follow the event, should apply.
  2. The Court orders in each of the proceedings:

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