Could Hawkesbury ratepayers challenge the Council's decision to pay its former General Manager the equivalent of 38 weeks' salary following her resignation?
It is a question increasingly being asked by residents following Hawkesbury City Council's approval earlier this year of a Deed of Agreement under which former General Manager Elizabeth Richardson received an estimated $340,000 after leaving the organisation and commencing employment with the NSW Office of Sport.
The issue is not simply whether the payment was generous.
The more fundamental legal question is whether the Council had the legal authority to make the payment if the General Manager resigned rather than having her employment terminated.
The Hawkesbury debate comes as a Victorian ratepayer has demonstrated how residents can use the courts to challenge council decision-making in the public interest.
Daylesford resident David Penman has commenced private criminal prosecutions against five Hepburn Shire councillors and the council's chief executive, alleging legal failures in the adoption of the council's budget.
Mr Penman says his actions are aimed at improving public administration and ensuring elected representatives comply with the law, arguing that "democracy requires elected representatives to obey it."
While the allegations remain before the Victorian courts and have not been determined, the proceedings have drawn national attention to the role citizens can play in holding local government accountable and have prompted the Victorian Government to move to amend its legislation governing councillor stand-downs.
Returning to Hawkesbury
The standard employment contract for NSW Council General Managers provides for compensation where a General Manager's employment is terminated without cause.
However, legal observers say an important distinction exists between a council terminating a contract and an employee resigning from the position.
If a resignation occurred voluntarily, the question becomes whether the contract, or some other legal authority, permitted the Council to make a payment equivalent to 38 weeks' remuneration.
That issue has never been tested in court in relation to the Hawkesbury decision.
Could residents challenge the decision?
Administrative law experts say there are legal mechanisms through which council decisions may be challenged if it is alleged they were made without legal authority.
One possible avenue is an application to the NSW Supreme Court seeking judicial review.
Such proceedings would not ask the Court whether the payment was fair or politically wise.
Instead, the Court would consider a narrower question:
Did Hawkesbury City Council have the legal power to approve the payment?
If a court concluded the payment was authorised under the contract or another lawful power, the challenge would fail.
If, however, the court found the Council exceeded its legal authority, it could declare the decision invalid and determine what consequences should follow which may include the General Manager repayment of the funds or some alternative that saw the money returned to ratepayers.
Questions remain
The Gazette understands that the Office of Local Government advised Council that acceptance of a Deed of Agreement permitted the payment to be made.
Whether that advice correctly interpreted the contract has not been tested by any court.
The legal question would likely require consideration of:
- the General Manager's employment contract;
- the terms of the Deed of Agreement;
- the confidential Council resolution approving the payment;
- relevant provisions of the Local Government Act 1993; and
- applicable Office of Local Government guidelines.
Without those documents being examined together, legal experts say it is difficult to reach a definitive conclusion.
More than a political issue
The issue raises broader questions about accountability in local government.
Unlike a political disagreement over spending priorities, the legality of a council expenditure can ultimately be determined by a court if there is a genuine legal dispute about whether the council acted within its powers.
Any such challenge would focus on the lawfulness of the decision-making process rather than the merits of the payment itself.
Public interest
The payment attracted significant public attention because it followed Council's announcement that the General Manager had resigned.
Residents have questioned why compensation commonly associated with termination of employment would be paid following a resignation.
Council has maintained the payment was made lawfully.
To date, no court has been asked to determine whether the Deed of Agreement and the Council's resolution were authorised under the General Manager's contract or the Local Government Act.
Seeking clarification
The Hawkesbury Gazette has asked Hawkesbury City Council and the Office of Local Government to clarify:
- whether the 38-week payment was made under the termination provisions of the General Manager's contract or under another legal power;
- whether a resignation can lawfully attract the same compensation as a termination without cause;
- whether legal advice was obtained before approving the payment; and
- whether the Office of Local Government considers the payment to be consistent with the standard NSW General Manager contract.
The Office of Local Government replied stating:
"Councils are an independent, democratically elected tier of government, and are ultimately accountable to their communities for their decisions, including those relating to employment of their General Manager.
Councils are expected to make decisions regarding their staff’s employment at their discretion, in accordance with the Local Government Act 1993 (LG Act).
The Office of Local Government (OLG) and the Minister for Local Government have no role in council employment matters, including the General Manager, and did not provide advice to Council about the termination of the general manager’s employment."
Hawkesbury City Council has not responded.
Until those questions are answered, or a court rules on the issue, the legality of the payment is likely to remain a matter of public interest and legal debate.
Editorial note: This article discusses legal questions surrounding the Council's authority to make the payment. It does not suggest that any councillor, the former General Manager or any other persons engaged in unlawful or improper conduct. No court has found the payment to have been unlawful, and the Council has maintained that it acted within its legal powers.
