Norman Waterhouse
   
Norman Waterhouse

 

 

Normans Briefly

In this issue

Welcome to the May edition of our Local Government Briefly.

Upcoming events and training

Please click here to view our June 2014 Event and Training Calendar.

>   Save the Date - Norman Waterhouse Annual Local Government Conference
>   Joint report: Governance and Employment – Managing public integrity risks in human resources
>   Commercial and Property – Procurement tips for driving value for money outcomes
>   Employment — The changing landscape of discrimination law
>   Governance – Upcoming public consultation requirements
>   Contract Negotiation - What does “reasonable endeavours” mean?
>   Town Planning – Fast-track prosecutions underutilised by planning authorities
>   Certificate IV in Local Government (Planning)

Save the Date - Norman Waterhouse Annual Local Government Conference

Friday 8th August
Sanctuary Adelaide Zoo

Norman Waterhouse are celebrating 25 years of the Normans Local Government Conference, South Australia's leading conference for local government.

Click here to view the Save the Date.

Full program available soon on www.normans.com.au.


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Joint report: Governance and Employment – Managing public integrity risks in human resources

Norman Waterhouse has been keeping its readers up to date with all relevant developments in relation to the new public integrity regime in South Australia, as well as providing in-depth analysis of the implication of those developments. Following on from our earlier update regarding the Code of Conduct for Council Employees (the Code), the Governance and Employment teams have prepared this report on some of the key public integrity risks and strategies relevant to human resources practices in local government.

Specific risks and strategies

Recruitment

At the recruitment stage of the employment relationship, the senior management team and human resources professionals are faced with keen and willing candidates, who have everything to gain and nothing to lose. It is imperative that any candidate who is under genuine consideration has their qualifications and references checked (by the council or by an external provider), lest the council end up with a senior engineer who is not actually properly qualified (as has happened interstate). Other, perhaps more obvious dishonest practices by applicants can include the offering of gifts and benefits and, of course, bribes.

Public integrity risks at the recruitment stage don’t just stem from applicants – managers and human resources professionals can also engage in substandard practices, even where there is no dishonesty involved. Failure to apply proper human resources practices, even where it is an honest failure, can result in the council hiring and expending its public money upon the salary of persons who are not the best candidates for the job.

Senior managers and human resources professionals must ensure that adequate interview and other records are kept, that a consistent and transparent process is applied to all applicants, and that decisions are not influenced by irrelevant considerations. A ‘zero-tolerance’ approach to favouritism must be adopted. Depending on the circumstances, getting a ‘job for a mate’ can be considered an abuse of public office.

During employment

The day-to-day administration of an organisation and the interactions between employees both within and outside of the organisation of course presents numerous public integrity challenges. Of those risks, many fall within the realm of human resources.

Foremost, senior managers and human resources professionals hold significant responsibility for setting the overall ‘culture’ within an organisation. Not only must appropriate policies and procedures be developed, but more importantly, they (and of course the Code) must be communicated, applied and enforced fairly and consistently. No room should be left for a workplace culture which disregards policies, procedures and the Code. Such a culture facilitates maladministration, misconduct and corruption.

Other, more specific issues include adherence to record-keeping requirements, and the proper handling (and restriction of access to) sensitive employee information, payroll systems and leave balances.

Deficiencies in delegations are also a public integrity risk. Invalid delegations or misunderstanding one’s own delegation level or the delegation levels of others can result in actions being taken without proper authority. Such unauthorised actions might be taken accidentally, or as an intentional exploitation of other persons’ misunderstandings of delegation levels.

Enterprise bargaining

While an often overlooked point, it is crucial that council bargaining representatives for enterprise bargaining do not have a pecuniary interest in the outcome of the negotiations. In other words, a council’s representative/s must not be covered by the resulting Agreement.

Termination of employment

Adherence to proper, procedurally fair termination processes should ensure that no manager engages in maladministration, misconduct or corruption simply by terminating the employment of an individual. However, public integrity risks extend beyond the event of termination.

Senior managers and human resources professionals must minimise any potential for the post-employment disclosure of confidential information by requiring the return of such information at the time of termination, and by following up any suspicions that such post-employment disclosure may nevertheless occur.

On a related note, councils should ensure that former employees, once engaged in a new enterprise, are not able to inappropriately influence other staff of the council through the familiarity they gained during their time with the council.

General strategies

While all organisations are different, there are nevertheless some general strategies which can be applied within your council to mitigate human resource-related risks of maladministration, misconduct and corruption.

Regular and effective training on standards of conduct, delegations and public integrity systems are essential. Not only will such training sessions raise awareness and educate employees regarding their duties and obligations, it also allows the council to demonstrate that it has taken positive steps to address public integrity issues.

Senior managers and human resources professionals should also consider ‘rotating’ the responsibilities of staff who have contact with external parties in traditionally high public integrity risk areas, such as planning and procurement. This will minimise the risks of staff becoming overly familiar with suppliers, developers and other stakeholders. Rotating internal employee-manager relationships can also be useful, so as to prevent supervisory relationships becoming too interdependent. Furthermore, while it may seem obvious, it is worth noting that no position within a council should be left unsupervised.

Another general strategy is the ongoing review and updating of policies and procedures, and the ongoing communication of those policies and procedures (and the Code) throughout the Council. Requiring all employees with delegations to complete registers of interest under the Local Government Act 1999 (SA) is also advisable.

Staff should be made aware of their reporting obligations under the Independent Commissioner Against Corruption: Directions and Guidelines, and their obligations under the Code to bring certain allegations to the attention of the Chief Executive Officer. Managers must take responsibility to ensure that the proper reporting and complaints handling processes are in place.

Norman Waterhouse regularly presents public integrity training around the State for council members and staff. We are happy to tailor our sessions to our clients’ particular needs.

For more specific information on any of the material contained in this article please contact Sathish Dasan on 8201 1253 or sdasan@normans.com.au, or Felice D’Agostino on 8201 1202 or fdagostino@normans.com.au.



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Commercial and Property – Procurement tips for driving value for money outcomes

Since the introduction of the Independent Commissioner Against Corruption Act, 2012 (SA) it is critical for procurement practitioners to pay adequate attention to their processes to avoid the possibility of any allegation of maladministration being made against the council. In this article, I look at some tips and traps to assist you with conducting best practice public sector procurement that still drives value outcomes.

In the conduct of any procurement involving the use of public funds, it is essential to have a contract that is clear and complete.  Below I make some suggestions about how to negotiate and finalise your contract to ensure that it reflects the outcomes sought by the council, is best placed to help the council deliver value for money and gives both parties to the contract certainty in relation to their rights and obligations.

The things that I see most often that impede achieving a value for money outcome are:

  • the project timeframe is incomplete or unrealistic;
  • the contract schedules are inconsistent with one another;
  • the plans required to support the contract are deficient in key respects;
  • key personnel are not specified and succession planning is not addressed in the contract;
  • the council fails to have its ducks lined up and key approvals and/or delegations are not obtained prior to contract signing;
  • the specification, statement of requirement or service level agreement is incomplete and deliverables are not clearly defined; and
  • what the contractor says it will do in its tender is not appropriately or adequately transferred into specific and measurable requirements in the contract.

All required aspects of the preferred tenderer's tender should be included in the final contract. The basic rule of thumb is if it is not included in the contract the contractor is not required to deliver.  It is for this reason that contract negotiations are so important. This is the council’s opportunity to engage with the contractor and gain specific insight and understanding into the proposed solution to be delivered by the contractor, what that will involve in terms of deliverables and what timetable can be realistically achieved.

While negotiations can pose probity risks, properly conducted negotiations actually offer the council the best opportunity to achieve value for money.  Critical to the success of any negotiation is ensuring the negotiation team or the negotiator appointed by the council have:

  • adequate skills (for example commercial, technical, financial and legal skills); and
  • all the necessary authorisations and delegations to achieve an appropriate result for the council.

In managing the probity risks associated with negotiations you need to ensure in every case that a record is kept of all negotiated outcomes, including the reasons for rejecting a particular position put forward by a potential supplier.  Another key task is ensuring that the resulting contract accurately reflects the parties negotiated and agreed position.

Ultimately, adhering to these common sense strategies will assist councils to drive procurement outcomes which ensure value for money.

For more specific information on any of the material contained in this article please contact Mary-Alice Paton on 08 8217 2357 or mpaton@normans.com.au.



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Employment — The changing landscape of discrimination law

Several high-profile, and quite different, developments in relation to Australian discrimination law have occurred recently, which affect both State and Federal system employers. Here, we set out what these recent occurrences mean for employers.

Proposed changes to the Racial Discrimination Act 1975 (Cth)

Perhaps the most prominent discrimination-related news in recent months has been a particular proposed change to the Racial Discrimination Act 1975 (Cth) (RD Act). The proposals are not yet before Parliament. An initial period of public consultation has closed, and the Government is considering the submissions before progressing the issue further.

The law at present

Currently under the RD Act, it is unlawful to engage in an act (including making a remark) on a racial basis, otherwise than in private, which is ‘likely to offend, insult, humiliate or intimidate’ a person or group of persons. An employer will be vicariously liable for acts of an employee unless all reasonable steps have been taken by the employer to prevent the act of the employee. In the view of the Federal Government, the present provisions infringe too greatly upon (to quote the Attorney-General) the ‘right to be [a] bigot’.

The proposed changes

It is proposed that the current relevant provisions be replaced by a prohibition upon engaging in an act (again, including a remark) on a racial basis, otherwise than in private, which is reasonably likely to ‘vilify or intimidate’ a person or group of persons. This is a higher bar than the existing ‘offend, insult, humiliate or intimidate’ provisions. The proposal also seeks to repeal the vicarious liability provision.

What it means for employers

The Australian Human Rights Commission is of the view that acts carried out in the workplace are not ‘in private’. Thus, the provisions in their current form and, if passed, the replacement provisions will likely apply to workplace conduct. If the change occurs, then certain conduct which previously fell afoul of the ‘insult, offend, humiliate or intimidate provisions might not be captured by the replacement ‘vilify or intimidate’ provision. Furthermore, the repeal of the vicarious liability provision may make it less likely for racially vilifying/intimidating acts of employees to be attributed to employers.

However, many other avenues for complaint would still exist in respect of racially offensive or insulting comments. If the act can be characterised as discriminatory then it will be captured by other provisions of the RD Act. Moreover, jurisdictions concerning equal opportunity and bullying are available to employees. The proposed changes have no effect on these other avenues.

A change in the law is not guaranteed, given the relatively preliminary stage at which the proposal currently sits and the prominent public and political opposition. Even if the change does go ahead, employers must not relax any anti-discrimination standards.

A new definition of “sex”

Norrie was born with male reproductive organs and in 1989 underwent a “sex affirmation procedure” to remove male reproductive organs. The procedure did not identify Norrie as being either male or female. Norrie applied to the NSW Registrar of Births, Deaths and Marriages for registration of sex as “not specified.” The Registrar rejected the application on the basis that it could only change a person’s sex from male to female or vice versa, and did not have the authority to record sex as ‘non-specific’. The argument made its way through the NSW Administrative Decisions Tribunal to the NSW Court of Appeal and finally to the High Court.

In the unanimous decision of NSW Registrar of Births, Deaths and Marriages v Norrie [2014] HCA 11, the High Court of Australia found that it was possible for the NSW Registrar of Births Deaths and Marriages to register a person’s gender as non-specific. The Court affirmed that sex is not a binary characteristic, that it may be ambiguous, and that the Registrar had the power to record Norrie’s sex as ‘non-specific’.

This finding builds on the statutory protections that already exist for gender identity and intersex status. These statutory provisions have been in South Australian legislation for several years, and have been in Federal legislation since August last year. Employers must respect the gender identity of any employee, including a ‘non-specific’ gender identity, as well as physical ‘intersex’ status. These rights are protected in the same way and to the same extent as other characteristics, such as race and pregnancy. The gender identity or intersex status of an employee must be accommodated by employers, regardless of any reservations of other employees.

Higher compensation and penalties – and possible personal liability – for discriminatory conduct

Ms Sagona, a photographer, worked for a portrait photography business for 12 years. When she announced her pregnancy in August 2012, her involvement with photo shoots and sales appointments was significantly curtailed, because her pregnancy would supposedly have a negative impact on the business’s image. After that, she was told to take a pay cut and to work longer hours. Ms Sagona resigned, alleging constructive dismissal. It was found in the Federal Circuit Court (Sagona v R & C Piccoli Investments Pty Ltd & Ors [2014] FCCA 875) that the business owners were going to retire soon, and were worried about the impact of Ms Sagona’s maternity leave. Ms Sagona was successful in her claim.

While this may sound like a reasonably standard discrimination claim, the Federal Circuit Court awarded Ms Sagona over $200,000. This sum consisted partly of compensation and partly of penalties, and is one of the higher monetary awards for discrimination in Australian history. Also of significance is that the husband and wife owners of the business were joined as parties to the claim. They were personally found liable to pay (along with their business) the compensation component of the award to Ms Sagona (which totalled $174,000). They also had penalties ordered against them personally, in the amount of $8000 each.

It is important for business owners, directors, managers and other persons to understand that, regardless of their corporate or other business structure, they can nevertheless be personally joined to a claim. This is in fact a common practice. Where a person is then found to be knowingly involved in breaches of discrimination protections, significant liability can be imposed on those persons. This case is an extreme reflection of a current upward trend towards severity in personal liability in relation not only to discrimination matters, but also employment disputes generally.

All three of the developments set out above are relevant to both State and Federal system employers.

For more specific information on any of the material contained in this article please contact Lincoln Smith on 08 8210 1203 or lsmith@normans.com.au.



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Governance – Upcoming public consultation requirements

As readers will be aware, the end of the financial year brings with it various obligations upon South Australian councils under the Local Government Act 1999 (SA) (the Act) to prepare certain documents, to set new rates and, in connection with those obligations, to conduct consultation in certain prescribed ways.

Annual business plans

Before a council can adopt an annual business plan (which must be adopted no later than 31 August), the council must first develop a draft annual business plan. Consultation on the draft annual business requires at least the following activities:

  • The holding of a public meeting in relation to the draft annual business plan (this can be incorporated as a one hour block in a council meeting) – the meeting must be held, and copies of the draft annual business plan must be made available at the meeting, regardless of whether any members of the public actually attend;
  • At least 21 days before that meeting:
    • The draft annual business plan must be available for inspection and purchase at the principal office of the council (and must be made available on the internet within a reasonable time after this);
    • A notice must be published in a newspaper circulating within the area of the council which:
      • Invites people to attend and make submissions at the public meeting; and
      • Invites written submissions in relation to the draft annual business plan within a certain period (being at least 21 days); and
    • The website of the council must:
      • Have a facility for the asking and answering of questions; and
      • Provide for electronic lodgement of submissions.

As a minimum, a council’s Public Consultation Policy must expressly set out the above requirements, as well as provide for arrangements for the conduct of the required meeting and the consideration by the council of any written submissions and submissions made at the meeting.

Budget

A council can adopt its budget only once the above consultation regarding the draft annual business plan has taken place. The budget must then be considered in conjunction with the annual business plan, and must be consistent with that document. The budget can only be adopted after the annual business plan is adopted.

Rates

General rates for next financial year must not be declared by a council until after the annual business plan and budget have been adopted, but, additionally, must be declared by 31 August.

Simply declaring general rates does not, in itself, require any additional public consultation. After all, the annual business plan must set out the rates structure and policies for the relevant financial year, and thus the public consultation on the draft annual business plan will in effect also be a forum for receiving submissions regarding the proposed rates structure and policies for the relevant financial year.

However, the Act does set out certain specific public consultation requirements in the following circumstances:

  • Changing the basis of the rating of any land (including imposing differential rates where previously they were not imposed, and vice versa);
  • Changing the basis of a differentiating factor which applies to land subject to a differential rate from ‘use of land’, ‘locality of land’ or ‘locality and use of land’ to another of those bases;
  • Changing the basis upon which land is valued for rating purposes; and
  • Declaring or imposing a separate rate, service rate or service charge on any land (this can happen at any time of year, not just at the time a general rate is declared).

Where any of the above occurs, a report must be prepared outlining the reasons for the proposed change, the likely impact of the proposed change on ratepayers, and various other matters.

Public consultation must be carried out in respect of such a report. The required public consultation is substantially similar to that required in respect of the draft annual business plan. In fact, the Act specifically provides that a report outlining relevant rating changes can form part of the annual business plan of a council, and the public consultation on the report can be carried out as part of the consultation on the annual business plan. However, even where this combination of consultation is put into effect, councils must remember when publishing notices and holding meetings that the two streams of consultation are nevertheless distinct.

For more specific information on any of the material contained in this article please contact Felice D'Agostino on 8201 1202 or fdagostino@normans.com.au.



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Contract Negotiation - What does “reasonable endeavours” mean?

The term “reasonable endeavours” is often used in commercial contracts to impose a standard of performance on one or more parties to the contract.

The standard required pursuant to a “reasonable endeavours” provision was recently considered in the case of Woodside Energy Limited v Electricity Generation Corporation.

Facts

Woodside Energy Limited is a gas supplier. Electricity Generation Corporation, which trades as Verve, is a statutory corporation responsible for generating and supplying electricity to a large area of Western Australia.

Woodside Energy and Verve were parties to a Gas Sale Agreement (GSA). Under the GSA, Woodside Energy was obligated to supply Verve with gas up to a maximum daily quantity and to “use reasonable endeavours to make available” a supplemental maximum daily quantity of gas.

In June 2008, there was an explosion at a gas production facility owned by a third party, resulting in a significant increase in the demand and market price for gas in Western Australia.  Following the explosion, Woodside Energy informed Verve it could no longer supply Verve with the supplemental maximum daily quantity gas under the GSA, but could instead supply an equivalent quantity of gas under a different short term agreement at prices higher than that stipulated under the GSA.

Verve commenced proceedings against Woodside Energy in March 2009 in the Supreme Court of Western Australia, arguing that Woodside Energy had breached its obligation to use “reasonable endeavours” to supply supplemental gas in accordance with the GSA.  Woodside Energy, in return, argued that its obligation to use reasonable endeavours was mitigated by another provision in the GSA which provides that Woodside Energy must take into account “all relevant commercial, economic and operation matters” in deciding whether it was able to supply the supplemental gas.

In the first instance, the Supreme Court of Western Australia found that Woodside Energy had not breached its reasonable endeavours obligation by refusing to supply supplemental gas where it was more profitable to supply the gas under the short-term arrangement.

On appeal, the Court of Appeal held that a relevant consideration was Woodside Energy’s capacity to supply supplemental gas, and accordingly, Woodside Energy had breached its “reasonable endeavours” obligation.

Decision of the High Court

The High Court considered the issue of “reasonable endeavours” and held that it is not an absolute or unconditional obligation.

It considered that the primary objective of the GSA was to secure minimum gas supply, with a secondary objective of supplying supplemental gas – it held that Woodside Energy was not obliged to sacrifice its business interest for the secondary purpose of the GSA.

The High Court also held that Woodside Energy was not required to sacrifice its own commercial interests in exercising “reasonable endeavours” – the Court held that Woodside Energy was entitled to rely on the additional provision in the GSA and to take into account its commercial, economic and operational interests. This meant that market conditions caused by the third party gas production explosion was able to be taken into account in considering Woodside Energy’s capacity to supply supplemental gas to Verve. Therefore, the decision not to supply Verve with supplemental gas did not constitute a breach of the GSA.

Lessons Learned

  1. An obligation to use “reasonable endeavours” is not an absolute obligation;
  2. A contract can stipulate its own standard of performance; and
  3. What constitutes “reasonable endeavours” depends on the circumstances, including circumstances which may affect a party’s business.

For more specific information on any of the material contained in this article, please contact Mabel Tam on 8210 1218 or at mtam@normans.com.au.



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Town Planning – Fast-track prosecutions underutilised by planning authorities

Criminal prosecutions have always been fundamental to upholding the laws of modern society.  However, in recent times there has been an increase by regulatory bodies in the use of alternatives, such as civil enforcement proceedings under the Development Act 1993.

Reasons for that rise in popularity include:

  • a lower burden of proof, where the offending conduct need only be proved on the balance of probabilities (ie what is more likely) instead of beyond reasonable doubt;
  • greater flexibility with respect to the remedial orders the court can make; and
  • a general hesitance among planning authorities to attribute criminally responsibility for what are often seen as somewhat victimless regulatory offences.

Nevertheless, criminal prosecutions remain a significant weapon within a planning authority’s enforcement arsenal, and the convenience and practicality of criminal prosecutions in certain situations should not be overlooked. 

The use of criminal proceedings should not be reserved for only the most contumacious offenders, and in many instances is indeed a preferable response to breaches of the planning legislation.  In deciding between criminal or civil proceedings, the following factors should be borne in mind.

Firstly, offences under the Development Act are summary offences; meaning that they are heard by a judge (not a jury), and the stigma attached to the convicted is significantly lower.  While the Act prescribes maximum penalties ranging from $2,000 to $120,000, generally speaking a first time offender will be looking at a penalty of around 10 per cent of the maximum, subject to any aggravating or mitigating circumstances.  In addition to any penalty, the court may order the defendant to take specified action to rectify the offence.

Secondly, particularly for clear-cut instances of offending such as undertaking building work without approval, the legal cost of commencing criminal proceedings is generally lower than for civil enforcement proceedings.  Fines ordered by the court following conviction are collected by the Court’s Fines Enforcement and Recovery Officer, and are paid back to the prosecuting authority.

Thirdly, the Summary Procedure Act 1921, which regulates proceedings for summary offences, provides a fast-track process for criminal proceedings commenced by public authorities such as the police, government agencies, and local councils.  That process permits the prosecuting authority, within four months of the date of the alleged offence, to serve a summons to attend court on an alleged offender by ordinary post to their last known or most usual place of abode or of business.  Upon receiving that summons, the alleged offender may elect to plead guilty in writing without attending court, or may alternatively elect to attend to defend the allegations.  Significantly, if the alleged offender neither returns a plea in writing, nor attends the first court hearing, the court may proceed to find the defendant guilty on the basis of the allegations set out in the summons alone, without the need to consider any evidence or hold a formal hearing in the defendant’s absence.

The fast-track process is especially convenient for offences prescribing lesser maximum penalties, or where the option of issuing an expiation notice is not available.  Examples of offences under the Development Act when fast-track prosecution may be preferable include failures to comply with statutory notices under sections 69, 71, 74 or 84, building offences under sections 66 or 67, swimming pool offences under section 71AA, or any failure to comply with the requirements of the Development Regulations 2008, which fall under the general offence prescribed by Regulation 112.

If considering the option of a fast-track prosecution, it is important to be conscious of the date of the offence, and to contact your legal advisor at the earliest opportunity.

For more specific information on any of the material contained in this article please contact James Nicolson on 8217 1342 or jnicolson@normans.com.au.



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Certificate IV in Local Government (Planning)

Two of the 2014 specialist stream units for Certificate IV in Local Government Planning are scheduled to be delivered here at Norman Waterhouse Lawyers on Friday June 13th 2014.

The subjects, 'Conduct initial assessments of minior planning apllications' and 'Support the planning application, notification and appeals process', address the various stages of the development assessment process and consider other general administration tasks that underpin the smooth operation of the planning function.

"This course is ideal for administrative staff who are working or desire to work with and support the planning and development functions of the council. Participants will gain knowledge, skills and a qualification to assist their careers."

Please click here for a copy of a flyer about the course and the other subjects currently on offer. The presenters for the subjects include David Billington and Jacqui Plant.

If you are not already enrolled, it's not too late to enrol for these subjects or the entire course.

Enrolment cut off for these subjects is fast approaching – 6 June 2014.

To secure your enrolment, please contact Municipal Training on 8210 1260.



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