Norman Waterhouse
   
Norman Waterhouse

Normans Briefly

In this issue

Welcome to the October edition of the Normans Local Government Briefly.

>   Local Government Governance and Regulatory Services – A Fruitful Result
>   Proposed Water Industry Regulations - Some Key Issues for Councils
>   Local Government Governance and Regulatory Services -Keeping PANdora's Box Closed: New Record Keeping Obligations Regarding Credit Cards
>   Heritage and Town Planning – Bell’s Plumbers Shop and the Panama Connection
>   Procurement – The Courts Give us a ‘How-to’ Guide – A Look at Ipex

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Local Government Governance and Regulatory Services – A Fruitful Result

The proper management of council roads plays an important part in ensuring the safety and wellbeing of road users.  Both the Local Government Act 1999 (the Act) and council by-laws provide valuable assistance to councils in managing these public spaces.

Under Section 222 of the Act a person must not use a public road for a business purpose, unless authorised to do so by a permit issued by the council.  Most councils also have by-laws regulating the use of moveable signs.

Between March and July 2012, a metropolitan council had been experiencing difficulties for an extended period of time with an individual (S) selling fruit (mostly oranges) on a busy council road. Photographic evidence gathered by officers showed the public footpath obstructed with tables, a pop-up gazebo and the fruit and that S had erected an ‘A-Frame’ sign on the verge adjacent to his sale activities.

The Council had not authorised the erection of the stall on its land, nor the placement of the A-Frame sign.

Council officers gave S numerous verbal warnings and issued expiation notices. Correspondence between the council and S required the unauthorised activities to cease. S continued to engage in the selling fruit without obtaining a permit.

The council was left with little choice but to take prosecutorial action against S. Norman Waterhouse represented the council in the prosecution.

This matter was heard in the Adelaide Magistrates Court.  S pled guilty to one count of breaching both the Act and the council’s movable signs by-law. S was found guilty by Special Justice McRae and was ordered to pay a fine, Court fees and counsel fees to the council, as well as the victims of crime levy.  In total, the unlawful fruit sales cost S almost $900 in fines, costs and levies.

This scenario is not an atypical example of the situation often faced by councils around South Australia.  The case of S demonstrates what can be achieved by a council that gathers evidence and is prepared to act on it.  If S had complied with the initial warnings he would not have faced any great financial burden. However, given the significant costs awarded to the council in this case it is clear that Courts take these types of offences seriously.

For more specific information on any of the material contained in this article please contact Paul Kelly on 8210 1248 or pkelly@normans.com.au or Dale Mazzachi on 8210 1221 or dmazzachi@normans.com.au.


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Proposed Water Industry Regulations - Some Key Issues for Councils

The Water Industry Regulations 2012 (Regulations) have recently been circulated for consultation. The Regulations are set to apply from 1 January 2013 when the majority of the provisions of the Water Industry Act 2012 (Act) come into force.

Although all the Regulations will impact on councils to various degrees, the following are some of the key issues for councils arising in the Regulations.

Regulation 4 – definition of “customer”

Regulation 4 would extend the Act’s definition of “customer” to include a consumer of retail services in specific circumstances, including a tenant or lessee. This means that these “customers” enjoy key protections that the Act would otherwise only afford to land owners. A “customer” of this class will not have grounds to raise a complaint about matters that relate to the contract, such as billing issues.

Regulation 7 – carrying out certain work on land

Regulation 7 would allow maintenance, repairs or minor works on existing water or sewerage infrastructure on public land to be carried out without requiring the authorised entity to provide at least 12 hours notice and secure agreement of the public land authority, which will often be a council.
This Regulation affects councils in two ways. First, a council will have the ability to repair existing infrastructure on public land without providing 12 hour’s notice. This would assist the efficiency of the council in carrying out the works. Secondly, a water industry entity will be able to maintain their infrastructure located on a council’s land without providing notice to the council.

Regulation 8 – encroachments

Regulation 8 provides the form and content for notices issued where a person encroaches over any water or sewerage infrastructure in contravention of Section 49 of the Act. Councils should note the provisions of this Regulation as it provides the requirements for notices it may wish to issue in its capacity as a water industry entity.

Regulation 9 – costs in relation to paving a road

Councils will note that Section 52 of the Act is quite restrictive on councils where there is water or sewerage infrastructure below the road. Notice must be provided to the water industry entity before undertaking such works. In addition, there is a provision for the costs of any alterations required to the infrastructure to be shared equally by the council and the water industry entity. Regulation 9 provides that as an alternative to the default cost sharing formula provided in the Act, the council and the water industry entity may enter into a cost sharing agreement.

In practice councils should have an authorisation (under Section 221 of the Local Government Act) in place for the infrastructure which should also deal with costs. This Regulation confirms that any cost sharing provisions in that authorisation (or other agreement) would prevail.

Regulations 13-15 – protecting infrastructure from trees and shrubs

These Regulations set out a scheme whereby councils are at significant risk where there is water or sewerage infrastructure under their road reserves.

Regulation 13 sets out that trees and shrubs must not be planted within certain proximities to water/sewerage infrastructure, except as provided in the draft regulation. Different requirements apply depending on whether the infrastructure is water or sewerage infrastructure, the species of trees or shrubs, and whether the trees or shrubs are to be planted in a public street or road or on other public land.

This is very important to councils because they are generally responsible for planting trees on public land, including roads.

Regulations 14 and 15 would allow for a water industry entity to require the council to take action in relation to a tree or shrub that has been planted in contravention of Regulation 13 or in relation to a tree or shrub that is causing or is likely to cause damage to the entity’s infrastructure or reduce the efficiency of the operation of the infrastructure. If the council didn’t comply with the notice, then the water industry entity can take the action itself, at the cost of the council.

Regulation 23 – fittings etc to be flush with road surface

Regulation 23 would require all water and sewerage infrastructure fittings which are contained in roads to be flush with the road surface. It goes on to require a council, if it changes the surface height of the road, to notify the relevant water industry entity and then pay their costs for adjusting the surface height of the infrastructure.

As you can see, there are a variety of issues in the proposed Regulations which have an impact on councils. Consultation is open until 2 November 2012 and we strongly recommend councils to do so.

If you would like any further information on any of the issues raised in this article, or would like assistance with preparing a response to the consultation, please contact Mark Henderson on 8210 1220 or mhenderson@normans.com.au, Yari McCall on 8210 1265 or ymccall@normans.com.au or Jennifer Wong on 8210 1260 or jwong@normans.com.au.


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Local Government Governance and Regulatory Services -Keeping PANdora's Box Closed: New Record Keeping Obligations Regarding Credit Cards

As Norman Waterhouse has previously highlighted, the management of information by councils has emerged as a prominent topic in recent years. One aspect within the broad topic of information management is compliance by councils with the State Records Act 1997 (SA) (the State Records Act). You will already be aware of the obligation to keep ‘official records’ (a term which extends to virtually any information received by a council in the conduct of its business) and the prohibition against disposing of records other than in accordance with a determination by the Manager of State Records.

General Disposal Schedule 20 (GDS 20) is a determination of the Manager of State Records which prescribes the retention obligations for local government records. It also contains requirements as to the manner in which certain types of information must be kept. Two provisions were recently inserted into GDS 20 which increase and clarify the obligations placed on councils regarding the maintenance of credit card information.

New Credit Card Obligations

Councils retain credit card details for a number of reasons. For example, such details are kept to assist staff in tracing payments made via credit card, such as rate payments. Most privacy policies stipulate that the practice of keeping such information should be limited. However once the information is collected, it must be kept in accordance with the State Records Act and GDS 20.

The recently incorporated Item 7.1.13 of GDS 20 relates to cardholder data. It provides that wherever a cardholder’s Primary Account Number (PAN) is displayed, it must be masked such that the maximum number of digits which can be shown are the first six and last four digits of the PAN (this requirement does not apply to authorised persons with a legitimate business need to see the full PAN).

When a PAN is stored, it must be rendered unreadable. Methods of rendering a PAN unreadable can be found in the Payment Card Industry Data Security Standard (PCI DSS). The PCI DSS is an extensive and technical set of security requirements and processes supported by the payment card industry (including Visa and MasterCard). It is likely that upon entering into contractual arrangements with their payment system providers, councils have agreed to observe the PCI DSS.

Certain other types of cardholder data (specifically cardholder name, service code and/or expiry date) must, when stored in conjunction with the PAN, be protected as per the PCI DSS.

PANs and other protected cardholder data must, pursuant to Item 7.1.13 of GDS 20, be retained for a minimum period of six months after last action and are to be destroyed thereafter.

The new Item 7.1.14 of GDS 20 requires that certain sensitive cardholder authentication data must be destroyed immediately after authorisation. The specific types of sensitive cardholder authentication data are as follows:

  • full magnetic stripe data;
  • CVV2/CAV2/CVC2/CID (ie three-digit or four-digit verification code);
  • PIN/PIN block.

Composite Records

A record may contain cardholder data as well as other information. Applying GDS 20, it may be that such a record is subject to a longer minimum retention period than a record consisting solely of cardholder data. The record must be managed in its entirety, and so the entire record (including the cardholder data) must be retained for the longer minimum period. However in such cases the measures to protect cardholder data must still be complied with and the requirements in PCI DSS implemented.

The Message

Councils must know their record-keeping obligations and adhere to them. It is recommended that councils review their relevant practices, policies and procedures in light of the new credit card obligations and also in light of their general obligations under the State Records Act and GDS 20.

Defective record-keeping has always been a potential matter for investigation by the Ombudsman, and with the concept of ‘maladministration’ (which is grounded in carelessness rather than criminality) soon to be codified as set out in the Independent Commissioner Against Corruption Bill - it is prudent to ensure that your council is compliant.

For more specific information on any of the material contained in this article please contact Felice D'Agostino on 8210 1202 or fdagostino@normans.com.au.


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Heritage and Town Planning – Bell’s Plumbers Shop and the Panama Connection

The former Bell’s Plumbers Shop at 15 Payneham Road, College Park is falling into disrepair.  The shop was established around 1883, and used for a plumbing business for about 100 years.  It was listed as a State Heritage Place in November 1985 but, despite the listing, has continued to slide toward ruin.

In September 2010 the Minister for Environment and Conservation issued a protection order under Section 39A of the Heritage Places Act 1993 (SA).  Section 39A was inserted into that Act in 2005 because:

There are other buildings around the place where people [have] deliberately bought properties with the intention of letting them decay over time so that their heritage value is gone and they can then take advantage of a site that is no longer able to be heritage listed and make a good return from it. This will give us powers to cause repairs to occur.

Hon. J D Hill, Minister for Environment and Conservation, Hansard, 7 April 2005

The protection order in this case was issued to the then-owner of the property, Hamilton Hill Pty Ltd.  About 18 months later, in a move labelled “deliberate and dishonourable” by the Court, Hamilton Hill transferred the property to Omega Exploration Inc, a company registered in Panama.

Shortly after receiving the protection order, Hamilton Hill had appealed to the Environment, Resources and Development Court.  The requirements of the protection order were suspended.  A number of conciliation conferences occurred.  The transfer of the property to Omega Exploration then occurred, and the appellants (Hamilton Hill and its sole director Mr March) subsequently contended that the protection order could no longer be met, and sought orders to quash it.

The Court was asked to determine whether the protection order should be quashed (overturned) because the appellants no longer had legal access to, or control over, the land or buildings: Hamilton Hill Pty Ltd v Minister for Environment & Conservation [2012] SAERDC 56

The appellants relied on the business records evidencing the transfer of the property to Omega Exploration.  They also relied upon enquires made by a junior solicitor employed by their chosen firm.  No evidence was given by Mr March, nor anyone else, as to the transfer, nor whether there were any means by which Hamilton Hill could carry out the requirements of the protection order despite the transfer.

The Minister urged the Court to find that the transfer was a sham. The Minister pointed to the following matters:

  • there was no explanation of why the transfer took place;
  • the property was not advertised;
  • no sales agent was engaged;
  • there was no evidence of any negotiations;
  • no money appears to have changed hands;
  • the transfer was registered on the same day that the transfer agreement was signed; and
  • the transfer appeared to amount to a giving away of a property with a valuation of $840,000, together with a promise also to pay all outstanding rates, taxes, conveyancing fees, and costs, without any apparent benefit to the appellants.

Whether or not the transfer was a sham, the Minister argued that the Court should not accept the evidence as sufficient to establish that the appellants could not lawfully comply with the protection order.  The Minister argued that, because the appellants alone had the entire knowledge of the transfer and any basis upon which the protection order could be complied with (for example, a reservation of rights to enter the property), the Court should find that they had not proved their case.

The Court relied upon Frederick v South Australia (2006) 94 SASR 545 and the cases cited therein to find that the appellants’ failure to call Mr March meant that Mr March’s evidence could not have helped their case.  Put another way, the evidence before the Court was “as good as it got” for the appellants (those are my words; not a quote from the judgment).

The Court agreed with the Minister’s submissions, although it is not clear whether it did, in fact, find that the transfer was a sham.  The appellants failed to prove that they could no longer comply with the protection order.

The protection order was not rendered invalid by the subsequent transfer of the property.  The Court said:

A protection order which is valid when it is served cannot somehow be rendered invalid subsequently by virtue of the deliberate actions of the persons to whom it is issued.

The same reasoning is likely to apply to enforcement notices under Section 84 of the Development Act 1993.

The Court accepted that, even if it were the case that the appellants could no longer lawfully affect the subject property, the Minister’s powers under Section 39A(5) to take action himself in default of compliance (and recover the costs of so doing) would still be enlivened by a failure to comply with the protection order.  Further, failure to comply with the protection order would remain as a criminal offence under Section 39A(4).

The protection order was not overturned, and the proceedings remain on foot in relation to other challenges to the protection order.

For more specific information on any of the material contained in this article please contact David Billington on 8210 1263 or dbillington@normans.com.au.


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Procurement – The Courts Give us a ‘How-to’ Guide – A Look at Ipex

Although much of the coverage of procurement is around how procuring authorities get it wrong, the recent decision of Ipex ITG Pty Ltd (in liq) & Takapana Investments Pty Ltd v State of Victoria [2012] VSCA 201 (Ipex Case) is a good illustration of how a tender process was correctly conducted.

Ipex ITG Pty Ltd (in liq) (Ipex) claimed damages against the State of Victoria (State) for breach of contract in relation to a tender. Ipex tendered for a contract for the provision of “system integration services” for the State in response to a request for tender (RFT).

The RFT was prepared for the State and a tender evaluation plan reflecting the terms of the RFT was also prepared for internal use.  The evaluation plan set out the criteria which provided for the weighting of scores and set out a scoring system.  A project evaluation team was also formed. 

In this case, Ipex alleged breaches of contract, together with breaches of implied terms, including the failure of the State and its agents to act in good faith. Ipex also claimed that the State failed to assess tenders in accordance with the tender process agreement. 

The Ipex Case provides some helpful guidance on some questions we often come across in discussions with procurement practitioners. In particular:

  • Confirmation that councils can weight their evaluation criteria so that cost is not determinative and can be quite insignificant
  • Even when a list of criteria is released to tenderers, councils will not be required to give any specific weight to any of the listed criteria
  • It is not necessary to provide evaluation criteria to tenderers
  • Departing from the tender conditions can occur, if it is allowed for in the tender conditions
  • The State engaged in negotiations and information gathering with the tenderers and this was endorsed by the court

It is important to note that this decision was made in the context of a procurement that was well mapped out, and had evaluation criteria and methodology set in advance of the release of the RFT. This was a key factor in allowing the State to argue that it had complied with the RFT conditions, even though they were not released to tenderers.

Ultimately the RFT provides the “rules” for tender processes. The State reserved many rights for itself under the RFT which the Ipex Case upheld.

The lesson for councils is to ensure that you are prepared when you approach the market. The majority of issues that we see in procurement processes come because the relevant council was under-prepared before releasing their request, or they have changed the parameters of the request during the process in a way which is not allowed for.

For more specific information on any of the material contained in this article please contact Mark Henderson on 8210 1220 or mhenderson@normans.com.au or Lisa Hubbard on 8217 1369 or lhubbard@normans.com.au.


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