Office of Local Government v Petty [2015] NSWCATOD 46

A recent decision of the New South Wales Civil and Administrative Tribunal (NCAT) highlights the importance of councillors’ obligations when they have a ‘pecuniary interest’ in the making or amendment of an environmental planning instrument (EPI) pursuant to s451(4) of the Local Government Act 1993 (LG Act).

In particular, it highlights that:

• any legal advice obtained by a councillor in relation to a pecuniary interest cannot be used by the councillor as a shield to prevent a future complaint of a breach of obligations; and
• disclosure requirements laid out in the LG Act must be strictly followed.

Facts

Wollongong City Council (Council) held an extraordinary meeting to consider a number of rezoning proposals for land at Helensburgh and Stanwell Tops.

One of the proposals related to a property known as ‘the Blackwells’. The proposal was to rezone part of the Blackwells property from E2 Environmental Conservation to IN2 Light Industrial. One of the Councillors, Councillor Petty, lived across the road from the Blackwells property. Evidence in front of the Tribunal suggested that the rezoning proposal would have a detrimental impact on Councillor Petty’s property and would decrease the value of his land by some $175,000.

Councillor Petty attended the council meeting at which the proposal was considered. At the council meeting, Councillor Petty acknowledged that he owned some land that would affected by the proposal and that he may suffer a substantial financial gain or loss depending on the decision. However, Councillor Petty also said that because the proposal was part of a much larger rezoning proposal of a significant part of the Council area, he was making a special disclosure under s451(4) of the LG Act and would still take part in the council meeting.

During the meeting, Councillor Petty argued against, and voted against, the proposal.

Statutory provisions

Section 451(1) and 451(2) of the LG Act state that when a Councillor has a pecuniary interest, the Councillor is required to:

• disclose the nature of the interest to any meeting of the Council or committee at which the matter is being considered; and
• not be present at, or in sight of the meeting at any time during which the matter is being considered or discussed or voted on.

Section 451(4) of the LG Act states that s451(1) and s451(2) of the LG Act do not apply if:

• the matter is a proposal relating to the making or amendment of an EPI applying to the whole or a significant part of Council’s area; and
• the councillor makes a special disclosure in relation to the interest before the commencement of the meeting.

Issues

The issues before the Tribunal were:

1. Could Councillor Petty rely on s451(4) of the LG Act in these circumstances?
2. Could Councillor Petty rely upon the legal advice that he had obtained?

Arguments

The following arguments were put forward by Councillor Petty:

1. He was not required to excuse himself from the council meeting because the matter being considered fell within the exception contained in s451(4) of the LG Act, namely that the proposal was part of a much larger rezoning proposal for a significant part of Council’s area.
2. He had obtained legal advice from a solicitor who was an accredited local government and planning law specialist. He had relied on that advice in dealing with the pecuniary interest, which was to rely on the exception contained in s454(4) of the LG Act as the proposal was part of a larger rezoning proposal for a significant part of Council’s areas.

Decision

NCAT found that Councillor Petty did have a pecuniary interest and was required to excuse himself from the council meeting. He was ordered to be reprimanded and suspended, including suspension for 3 months on his right to be paid a fee or remuneration.

NCAT stated the following in regards to Councillor Petty’s arguments:

1. The proposal concerning the Blackwells property was a specific agenda item (Agenda Item 8) at the Council meeting. The proposal only made up 2.33% of the Council’s area and this was not to be considered a ‘significant’ part of Council’s area for the purposes of s451(4) of the LG Act.
2. The specific agenda item and not the whole business before the Council meeting that gave rise to Councillor Petty’s pecuniary interest. Therefore, s451(4) did not arise in these circumstances because the rezoning proposal in which Councillor Petty had a pecuniary interest in was a separate agenda item, requiring separate consideration and to be voted upon separately.
3. Councillor Petty was not bound by the legal advice that he had obtained and it was up to him to decide whether he should rely upon that advice. He should have given careful consideration to the legal advice before adopting it. In this case, it appeared to the NCAT that he adopted the legal advice as an ‘unqualified shield.’
4. The special disclosure was not signed by Councillor Petty in accordance with the s451(4) of the LG Act and Regulation 195A of the Local Government (General) Regulation 2005. NCAT concluded that even if the rezoning proposal had applied to a significant part of the Council’s area, Councillor Petty would not have been able to rely on the special disclosure as it was not signed.

Take home message

NCAT’s decision acts as a timely reminder to Councillors that section 451(4) only provides an exception to the usual obligations to pecuniary interests where the EPI applies to a whole or significant part of the Council’s area.  NCAT’s decision gives valuable guidance as to what comprises ‘a significant part of council’s area’ for the purposes of the exception contained in section 451(4) of the LG Act

Relevant to a councillor’s personal obligations, NCAT’s decision also highlights that any legal advice obtained in relation to pecuniary interests does not act as a shield to a complaint that a councillor has breached his or her obligations. Rather, it is noted that councillors should rely on their own judgment and exercise reasonable care and diligence when deciding to adopt any legal advice.