Untitled-5 [] · 2015. 3. 26. · Title: Untitled-5 Author: BSmith Created Date: 10/6/2000 12:25:06 PM

WESTERN AUSTRALIA

Report of the Inquiry intothe City of Cockburn

Inquiry under Division 2 of Part 8 of theLocal Government Act 1995

VOLUME 2

April 2000

REPORT - Table of Contents

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Table of Contents

VOLUME 1

CHAPTER 1

Introduction

1.1 Establishment of the Inquiry................................................................................................ 5

1.2 Relevant statutory provisions.............................................................................................. 7

1.3 Conduct of the Inquiry ....................................................................................................... 21

1.4 Attacks on the Inquiry........................................................................................................ 50

1.5 References and terminology............................................................................................. 62

1.6 Administration.................................................................................................................... 64

1.7 Tributes .............................................................................................................................. 65

CHAPTER 2

The City's Cleaning Contracts

2.1 Background........................................................................................................................ 73

2.2 Extension of Contract Nos. 35/91 and 36/91 in 1993...................................................... 88

2.3 Extension of Contract No. 22/93 in 1994 ....................................................................... 100

2.4 Extension of Contract Nos. 35/91 and 36/91 in 1995.................................................... 111

2.5 Awarding of Tender Nos. 21/96, 22/96 and 23/96 in 1996............................................ 126

2.6 Awarding of Tender No. 20/97 in 1997 .......................................................................... 170

Guide to Key Persons and Entities................................................................................................. 183

CHAPTER 3

Lot 1 Berrigan Drive

3.1 Factual background and adverse submissions.............................................................. 191

3.2 The City's employees...................................................................................................... 216

3.3 The elected members ..................................................................................................... 226

3.4 The Allan Erceg allegations ............................................................................................ 237


Inquiry into the City of Cockburn

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CHAPTER 4

The Packham Development Area

4.1 Introduction ...................................................................................................................... 255

4.2 Packham Area details ..................................................................................................... 257

4.3 Early development proposals ......................................................................................... 258

4.4 The Packham Area Structure Plan................................................................................. 265

4.5 The Council's early Packham Area policy...................................................................... 270

4.6 MRS and Zoning Scheme Amendments........................................................................ 272

4.7 Subdivision approvals ..................................................................................................... 279

4.8 The Urban Focus Private Owners' Arrangement........................................................... 291

4.9 Contribution towards infrastructure costs....................................................................... 293

4.10 Equalisation of POS contributions .................................................................................. 300

4.11 POS contributions by non-participants ........................................................................... 306

4.12 The City's role in the collection and payment of POS funds ......................................... 311

4.13 The Lambasa experience ............................................................................................... 331

4.14 Conclusions ..................................................................................................................... 343


VOLUME 2

CHAPTER 5

The City's Refusal to Support the Rezoning of Lot 17

5.1 Introduction ...................................................................................................................... 359

5.2 Deferral of Amendment No. 91 on 5 July 1994.............................................................. 373

5.3 Amendment No. 91 delays: July – October 1994 .......................................................... 398

5.4 Exclusion of Lot 17 from Amendment No. 91 on 6 December 1994 ............................ 405

5.5 Exclusion of Lot 17 – decision reaffirmed on 7 March 1995 ......................................... 432

5.6 Investigation by the Department of Local Government ................................................. 451

5.7 Investigation by the Ombudsman................................................................................... 465



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CHAPTER 6

Attempts by Mayor Grljusich to Obtain Compensation from the City

6.1 Introduction ...................................................................................................................... 501

6.2 Rezoning and subdivision of Lot 17................................................................................ 510

6.3 Early questioning by Mayor Grljusich ............................................................................. 537

6.4 Attempts to avoid the POS requirement after grant of subdivision approval................ 553

6.5 The Council's review of Condition 13 ............................................................................. 583

6.6 Proposals for a deed between the City and Peremate.................................................. 617

6.7 CDC meeting on 9 June 1998 ........................................................................................ 636

6.8 Council meeting on 16 June 1998.................................................................................. 652

6.9 Adjourned Council meeting on 22 June 1998................................................................ 662

6.10 Deed between the City and Peremate ........................................................................... 672

6.11 The Deed fails ................................................................................................................. 683

6.12 Rejection of Lot 17 appeal by Minister for Planning ...................................................... 688

6.13 Mayor Grljusich's improper access to and use of the City's information ...................... 691

6.14 Mayor Grljusich's allegations of a "set up" ..................................................................... 708


VOLUME 3

CHAPTER 7

The Council's Decision to Pay Compensation Unlawfully

7.1 Outline.............................................................................................................................. 729

7.2 Mayor Grljusich's reformulated claim for compensation................................................ 729

7.3 Specific issues relating to the Packham Area................................................................ 738

7.4 Events to the end of 1998 ............................................................................................... 744

7.5 The start of a New Year .................................................................................................. 757

7.6 Council meeting on 19 January 1999............................................................................. 768

7.7 Aftermath of 19 January 1999 decision.......................................................................... 801

7.8 Council meeting on 16 February 1999 ........................................................................... 809



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CHAPTER 8

Conflicts of Interest

8.1 Introduction ...................................................................................................................... 835

8.2 Cr Wheatley's role as Mayor Grljusich's lawyer............................................................. 841

8.3 Cr Wheatley's votes before 30 June 1996 ..................................................................... 846

8.4 Cr Wheatley's votes after 1 July 1996............................................................................ 867

8.5 The City's Code of Conduct ............................................................................................ 888


CHAPTER 9

Lot 14 Progress Drive

9.1 Background...................................................................................................................... 919

9.2 A history of the City's Lot 14 dealings ............................................................................ 920

9.3 Issues investigated.......................................................................................................... 944

9.4 Ice skating rink proposals ............................................................................................... 945

9.5 How the City dealt with Adventure World's interest in Lot 14........................................ 951

9.6 Did the Association receive favourable treatment? ....................................................... 955

9.7 Management of Lot 14 by the City's administration....................................................... 968


CHAPTER 10

Other Investigations

10.1 Introduction ...................................................................................................................... 981

10.2 Matters investigated ........................................................................................................ 984

10.3 Other matters considered ............................................................................................. 1006

10.4 Mr Pecotic's allegations ................................................................................................ 1009

Guide to Key Persons and Entities............................................................................................... 1013


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CHAPTER 11

Should the Council be Dismissed or Reinstated?

11.1 Relevant criteria............................................................................................................. 1021

11.2 Failure to heed advice................................................................................................... 1026

11.3 Conflicts of interest........................................................................................................ 1036

11.4 Resistance to public accountability .............................................................................. 1041

11.5 The interests of the City ................................................................................................ 1049

CHAPTER 12

List of Findings and Recommendations

12.1 Chapter 1 – Introduction ............................................................................................... 1061

12.2 Chapter 2 – The City's Cleaning Contracts.................................................................. 1062

12.3 Chapter 3 – Lot 1 Berrigan Drive.................................................................................. 1076

12.4 Chapter 4 – The Packham Development Area ............................................................ 1079

12.5 Chapter 5 – The City's Refusal to Support the Rezoning of Lot 17 ............................ 1080

12.6 Chapter 6 – Attempts by Mayor Grljusich to Obtain Compensation from the City ..... 1092

12.7 Chapter 7 – The Council's Decision to Pay Compensation Unlawfully ...................... 1104

12.8 Chapter 8 – Conflicts of Interest ................................................................................... 1107

12.9 Chapter 9 – Lot 14 Progress Drive............................................................................... 1114

12.10 Chapter 10 – Other Investigations................................................................................ 1117

12.11 Chapter 11 – Should the Council be Dismissed or Reinstated?................................. 1117


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ANNEXURES

1. Significant Terms and Abbreviations............................................................................ A1.1

2. List of Elected Members - Wards and Terms............................................................... A2.1

3. List of Counsel............................................................................................................... A3.1

4. List of Witnesses ........................................................................................................... A4.1

• First line of inquiry A4.1• Second line of inquiry A4.2• Third line of inquiry A4.3

5. List of Closing Submissions.......................................................................................... A5.1

6. Consolidated Guide to Key Persons and Entities ........................................................ A6.1

7. Document Management................................................................................................ A7.1

8. Recording and Transcription Services ......................................................................... A8.1

9. List of Inquiry Staff......................................................................................................... A9.1

10. McLeod & Co Advice dated 16 February 1998............................................................ A10.1

11. McLeod & Co Advice dated 29 May 1998.................................................................... A11.1

12. McLeod & Co Advice dated 22 June 1998................................................................... A12.1

13. Deed between City of Cockburn & Peremate Holdings Pty Ltddated 29 June 1998....................................................................................................... A13.1

14. Contacts on behalf of Lot 17 Owners ........................................................................... A14.1

CHAPTER 5

THE CITY'S REFUSAL TO SUPPORTTHE REZONING OF LOT 17

CHAPTER 5 - Table of Contents

355

Table of ContentsPage

5.1 Introduction ..................................................................................................359

(a) Outline...................................................................................................................................359

(b) Ownership history of Lot 17 Hamilton Road .......................................................................359

(c) Participation in the Private Owners' Arrangement ..............................................................360

(i) Early discussions with Urban Focus 360(ii) Entry into the Private Owners' Arrangement 361(iii) Rezoning Lot 17 - Amendment No. 91 362

(d) The Grljusich family feud .....................................................................................................365

(i) Introduction 365(ii) Court proceedings against each other 365(iii) Other indicators of the family feud 371

5.2 Deferral of Amendment No. 91 on 5 July 1994.........................................373

(a) Officers' report ......................................................................................................................373

(b) Recommendation of the PBHC on 28 June 1994...............................................................375

(c) Council's decision of 5 July 1994 ........................................................................................377

(d) Deputy Mayor Grljusich's desire to delay Amendment No. 91...........................................379

(e) Need for impartiality .............................................................................................................382

(f) Assessment of the Council's decision .................................................................................383

(i) Council's consideration of a private letter 383(ii) Issue for legal advice 385(iii) Findings 388

(g) Responsibility for the Council's decision .............................................................................390

(i) Introduction 390(ii) Relationship between Deputy Mayor Grljusich and Mr Scharf 390(iii) Responsibility of Deputy Mayor Grljusich and Mr Scharf 393(iv) Responsibility of other elected members 396

5.3 Amendment No. 91 delays from July to October 1994 ...........................398

(a) Legal advice delays..............................................................................................................398

(b) Recommendation to defer Stage 8 subdivision ..................................................................402

(c) Urban Focus letter to the City of 24 August 1994...............................................................404


356

5.4 Exclusion of Lot 17 from Amendment No. 91 on 6 December 1994......405

(a) Events leading to PBHC meeting on 29 November 1994 ................................................. 405

(b) Preparation of Officers' report............................................................................................. 406

(c) Corser & Corser letter of 24 November 1994..................................................................... 407

(d) PBHC meeting on 29 November 1994 ............................................................................... 411

(e) Procedural fairness.............................................................................................................. 412

(f) Telephone advice from McLeod & Co on 6 December 1994 ............................................ 415

(g) Assessment of Mr Scharf's actions..................................................................................... 419

(h) Council's decision on 6 December 1994 ............................................................................ 420

(i) Assessment of Council's decision ...................................................................................... 421

(i) Decision making process 421(ii) Justification for the decision 423(iii) Deputy Mayor Grljusich's role 428

5.5 Exclusion of Lot 17 - decision reaffirmed on 7 March 1995 ..................432

(a) Calls to reconsider the exclusion of Lot 17......................................................................... 432

(i) Durack & Zilko letter of 13 December 1994 432(ii) Urban Focus letter of 15 December 1994 433

(b) Advice from McLeod & Co .................................................................................................. 434

(c) Officers' report to the PBHC................................................................................................ 437

(d) PBHC recommendation and Council decision ................................................................... 439

(e) Involvement of local governments in private disputes ....................................................... 441

(i) Introduction 441(ii) The McLeod & Co advice 441(iii) An alternative approach 443(iv) McCusker opinion 446

(f) Mr Scharf's submission to the Planning Commission........................................................ 447

5.6 Investigation by the Department of Local Government..........................451

(a) Department's request for information ................................................................................. 451

(b) Department's report of 27 June 1995 ................................................................................. 452

(c) Council's response .............................................................................................................. 454


357

(d) Cr Wheatley's role ................................................................................................................457

(e) CEO's response ...................................................................................................................462

5.7 Investigation by the Ombudsman..............................................................465

(a) Ombudsman's letter of 11 June 1996 .................................................................................465

(b) Ombudsman's letter of 16 October 1996 and the City's response ....................................467

(c) Ombudsman's findings.........................................................................................................468

(d) Council's response ...............................................................................................................469

(e) Responsibility of the CEO for the City's responses ............................................................473

(i) Introduction 473(ii) City's responses to invitation to provide details 474(iii) CEO's response to the Ombudsman's findings 479

(f) Findings and recommendations ..........................................................................................484

Guide to Key Persons and Entities .........................................................................487


358

CHAPTER 5 - The City's Refusal to Support the Rezoning of Lot 17

359

5.1 Introduction

(a) Outline

5.1.1 This and the next Chapter deal with aspects of the rezoning, subdivision and development

of Lot 17 Hamilton Road, Spearwood.

5.1.2 The focus of this Chapter is largely on events that occurred in 1994 and 1995. During

that time, the legal owners of Lot 17 Hamilton Road were George and Tom Grljusich in their

capacity as trustees of their father's estate. George and Tom Grljusich wanted Lot 17 rezoned,

subdivided and sold. Other members of the Grljusich family (then being John Grljusich, his two

sisters and his sister-in-law) who, like George and Tom Grljusich were beneficiaries of their father's

will, also wanted the land rezoned, subdivided and sold but they wanted to remove George and

Tom as trustees. Because of this they were very keen, if not desperate, to delay the initiation by

George and Tom Grljusich of the rezoning and subdivision process. Throughout this time there was

a very bitter and well publicised feud between the two sides of the family.

5.1.3 Actions taken by the City's employees and elected members in 1994 and 1995 resulted in

a long delay to the rezoning and subdivision of Lot 17 Hamilton Road. This had the effect of

favouring John Grljusich, who was then the City's Deputy Mayor, over his brothers, George and

Tom Grljusich. The major question before this Inquiry is whether the actions of the City's

employees and elected members, and the City itself, were appropriate and proper. It is also

important to assess the City's response to the investigations and reports of these events by the

Department of Local Government in June 1996 and the Ombudsman in October 1996 and

February 1997.

(b) Ownership history of Lot 17 Hamilton Road

5.1.4 From 17 October 1949 until his death on 31 May 1985, Mate Grljusich was the registered

owner of Lot 17 (No. 266) Hamilton Road. During that period of over 35 years, Mate Grljusich and

his wife, Pera Grljusich, lived on the property. Like many of their neighbours in the Packham Area,

Mate and Pera Grljusich operated a market garden on the property. Their family home was situated

at the western end of the property closest to Hamilton Road.


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5.1.5 There were 6 children of the marriage - George Ned Grljusich, Duje Toma (known as

"Tom") Grljusich, Donald Kevin Grljusich, Frances Nellie Gava, John Peter Grljusich and Ann Mary

Lloyd.

5.1.6 On 16 July 1985 probate of the will of Mate Grljusich was granted to the two eldest

children, George and Tom Grljusich, as executors and trustees. Under the will the trustees were

directed to pay the annual net income arising from the residual estate to Pera Grljusich during her

life as long as she remained his widow, and after her death or remarriage to hold the capital and

income on trust for his 6 children as tenants in common in equal shares absolutely.

5.1.7 Lot 17 Hamilton Road was transferred to George and Tom Grljusich as trustees of the

estate of Mate Grljusich on 12 September 1985. Pera Grljusich continued to live in the family home

on the property. Pera Grljusich died on 3 November 1993. Donald Grljusich died eight days later

on 11 November 1993. His widow is Sheila Patricia Grljusich. Following the death of Donald

Grljusich, the beneficiaries of the estate of Mate Grljusich, including Lot 17 Hamilton Road, were –

(a) George and Tom Grljusich, the trustees; and

(b) John Grljusich, Frances Gava, Ann Lloyd and Sheila Grljusich.

Thus, from 11 November 1993, Sheila Grljusich replaced her late husband as one of the

6 beneficiaries of the estate.

5.1.8 Lot 17 Hamilton Road remained in the legal ownership of George and Tom Grljusich for

almost 11 years until 16 July 1996 when it was transferred to Court appointed trustees. Almost

5 months later, on 7 November 1996, it was transferred to John Grljusich, Frances Gava, Ann Lloyd

and Sheila Grljusich. On 4 September 1998 it was transferred to Peremate Holdings Pty Ltd (a

company controlled by the same 4 members of the Grljusich family). For the purposes of the

events considered in this Chapter, the ownership of Lot 17 was vested in George and Tom Grljusich

at all relevant times.

(c) Participation in the Private Owners' Arrangement

(i) Early discussions with Urban Focus

5.1.9 As indicated in the previous Chapter (at 4.2(d)) Lot 17 was located in the Packham Area.

The beneficiaries of the estate were all no doubt familiar with the development of the Packham

Area. They all lived in the area and were able to witness the progress of the development for


361

themselves. John Grljusich, in particular, was in an excellent position not only to keep abreast of

the latest developments but to understand the issues relating to those developments. From 1983

he had been not only a councillor of the City of Cockburn but also a member of the committee

responsible for planning matters. He was also the chair of that committee from May 1993 until

March 1997. During most of that period it was known as the Planning, Building and Health

Committee. From May 1997 he was a member of the Community Development Committee which

replaced, and took over the planning and development responsibilities of, the Planning, Building

and Health Committee.

5.1.10 Shortly after Mate Grljusich's death in 1985, Lot 17 Hamilton Road had been valued at

$90,000. It was apparent to all that the property would be worth considerably more if it were to be

rezoned (from "Rural" to "Residential" under the City's Zoning Scheme) and subdivided.

5.1.11 John Grljusich, and probably other members of the Grljusich family as well, attended early

meetings between representatives of Urban Focus and Packham Area owners. For reasons that

were not investigated by the Inquiry, the trustees declined to join a majority of Packham Area

landowners in the 1987 Urban Focus proposal. As a result, Lot 17 Hamilton Road remained one of

the minority of lots in the Packham Area zoned "Rural" under the Zoning Scheme after Amendment

No. 240 took effect in January 1989. This is significant because the prevailing view at the time was

that development of Lot 17 could not proceed unless and until rezoning had taken place.

5.1.12 In about October 1991 a meeting was held regarding the possible rezoning, subdivision

and sale of Lot 17 as part of the Urban Focus Private Owners' Arrangement. The meeting was

attended by a representative from Urban Focus, the trustees (George and Tom Grljusich) and each

of the other members of the Grljusich family who were the then beneficiaries of the estate - Donald

and John Grljusich, Frances Gava and Ann Lloyd. It is unclear what occurred at the meeting but in

any event, no action was taken to participate in the Private Owners' Arrangement.

(ii) Entry into the Private Owners' Arrangement

5.1.13 It appears that from at least about mid 1993, if not earlier, George and Tom Grljusich had

fresh discussions with representatives from Urban Focus about their participation, as the legal

owners of Lot 17, in the Private Owners' Arrangement. One indication of this is that in June 1993

George Grljusich paid to Urban Focus about $1,400 to enable Urban Focus to prepare and submit

to the City a proposal to rezone Lot 17 under the Zoning Scheme from "Rural" to "Residential".


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5.1.14 Towards the end of 1993 and early into 1994 there was a growing urgency for George

and Tom Grljusich to decide whether to enter into what was described as an "Owners Deed" with

Urban Focus and, thus, participate in the Private Owners' Arrangement. This urgency arose as a

result of the proposed subdivision of Stage 8 in which Lot 17 was located and the need for Lot 17 to

be rezoned if it was to be subdivided - particularly if it was to be subdivided as part of Stage 8. At

this point, not only the trustees but also the remaining beneficiaries wanted Lot 17 to be rezoned

and subdivided. By letter dated 19 February 1993, lawyers acting for Donald and John Grljusich,

Frances Gava and Ann Lloyd expressly "confirm[ed] that [their] clients would co-operate in the re-

zoning and sub-division of the land".

5.1.15 By way of background, and no doubt as George and Tom Grljusich would have been well

aware in mid 1993, the early stages of the Packham Area were then well advanced. Subdivisional

approval had been granted in respect of 5 stages (Nos. 1A, 1B, 2, 1C and 4). Subdivisional works

had been completed in respect of two stages and the sale of lots in Stages 1A and 1B had been

completed.

5.1.16 Also during 1993 Urban Focus began work on the documentation required to apply for

subdivisional approval for Stage 8 of the Packham Area. Lot 17 was identified, on the Structure

Plan, as part of Stage 8. It was, however, one of only a few lots within Stage 8 that was still zoned

"Rural" under the Zoning Scheme. On the view then held by both Urban Focus and the City, Lot 17

could not be included in the Stage 8 application for subdivision unless it had been rezoned or at

least was in the course of being rezoned. (The implications, in this context, of the decision of the

Supreme Court in Falc Pty Ltd v State Planning Commission (1991) 5 WAR 522 is considered

below at 5.3(b).)

5.1.17 The entry by the trustees as the owners of Lot 17 into the deed with Urban Focus was

one way, and perhaps at the time the only way, to ensure that the rezoning occurred (see above

at 4.5 and 4.6(c)).

(iii) Rezoning Lot 17 - Amendment No. 91

5.1.18 As part of the process of preparing to apply for Stage 8 subdivisional approval, Urban

Focus anticipated the Lot 17 rezoning issue. Lot 17 was not the only property in Stage 8 that

required rezoning from "Rural" to "Residential". Lot 18 Hamilton Road and Pt Lot 5 Mell Road also

required rezoning. As a result, Urban Focus prepared a proposed amendment to the City's Zoning


363

Scheme. Lots 17 and 18 Hamilton Road and Pt Lot 5 Mell Road were included in the proposed

amendment. Also included were other properties that were the subject of later subdivision stages.

Urban Focus forwarded the draft text of this proposed amendment to the City on 9 July 1993.

Shortly afterwards it was identified by the City as proposed "Amendment No. 91".

5.1.19 The amendment report accompanying the proposed Amendment No. 91 included, at

paragraph 3.0, the following –

"A procedure has been established whereby the rezoning of any land within the PackhamDevelopment Area from Rural to Residential will only be implemented when the owners ofthat land agree to become a participating owner[sic] in the overall development.

The majority of landowners have agreed to participate in a coordinated development andthe land of those owners has been rezoned to Residential under Amendment No 240 tothe former District Zoning Scheme No 1 and under Amendment No 61 to District ZoningScheme No 2.

The owners of the various parcels of land contained in this Amendment have now agreedto participate and in light of this agreement, this rezoning amendment has been initiated.Not all the owners have physically signed the Owners Agreement and the Councilwill not adopt this Amendment for the Ministers approval until all landowners havedone so, or will exclude the land of those owners who have declined to so signfrom the final adoption of this Amendment" (emphasis added).

(For similarly worded amendment reports, see previous Chapter at 4.6(c).)

5.1.20 The proposed Amendment No. 91 was considered by the Planning, Building and Health

Committee on 28 September 1993 and by the Council on 5 October 1993. Consistently with the

Officers' reports to it, the Council resolved to adopt the proposed amendment and submit it to

DPUD for consent to advertise –

"Subject to the applicant submitting authorisation of all the owners involved and paying allthe necessary costs."

5.1.21 The meaning and effect of this condition will be considered in some detail later in this

Chapter (see below at 5.2). For the moment, it is sufficient to note that the standard condition was

consistent with those imposed by the City in relation to earlier proposed amendments to the Zoning

Scheme in respect of land in the Packham Area. (For example Amendment No. 59 contained a

condition that "[t]he applicant will be required to contribute to the PDA Owners Scheme".)


364

5.1.22 The Officers' report to the Council included, under the heading of "Comment", the

following –

"The applicant has advised that they[sic] will forward to Council details of the consentingowners as soon as possible.

Apart from this requirement, the documents are considered suitable for adoption byCouncil."

In these circumstances, it was apparent that the owners of Lot 17 were under some pressure to

make a decision. As a result of their discussions with representatives from Urban Focus, George

and Tom Grljusich were left in no doubt that unless they signed the Owner's Deed, the residential

development of Lot 17, as part of the impending Stage 8 subdivision, would not proceed.

5.1.23 On 14 February 1994 George and Tom Grljusich, in their capacity as trustees and legal

owners of Lot 17, entered into a deed with Urban Focus. (They may have signed an earlier deed.

A letter from Urban Focus to John Grljusich dated 19 January 1994 stated that George and Tom

Grljusich "have signed the standard Owners Deed". Nothing, however, appears to turn on whether,

in addition to the 14 February 1994 deed, an earlier deed had been entered into before

19 January 1994.) A further deed, in a slightly different form, was executed by George and Tom

Grljusich on 20 June 1994. The matters covered by deeds of this type are outlined in the previous

Chapter (see above at 4.8). In essence, the deed provided for Urban Focus to arrange for the

rezoning, subdivision and sale of Lot 17 Hamilton Road as part of Stage 8 of the Packham Area.

5.1.24 In other circumstances, the entry into the deed with Urban Focus would have satisfied the

City that the owners of Lot 17 had provided the required "authorisation" and that they had become a

participant in the Private Owners' Arrangement. This, in turn, would have resulted in the referral of

proposed Amendment No. 91 to the Planning Commission and its eventual advertising and

finalisation. In the meantime, Lot 17 would have been included in the Stage 8 residential

subdivision, the subdivided lots sold and the proceeds of sale distributed by Urban Focus to the

beneficiaries of the estate. None of this happened. What did happen will be considered shortly. In

the meantime it is necessary to outline the relationship between, on the one hand, George and Tom

Grljusich and, on the other hand, the remaining beneficiaries of the estate of Mate Grljusich.


365

(d) The Grljusich family feud

(i) Introduction

5.1.25 The Inquiry did not investigate, as a specific line of inquiry, the details of what was

commonly referred to as the "Grljusich family feud". Although significant in providing the context in

which decisions were made and events occurred, I considered at an early stage that this was

probably not an issue in respect of which findings would need to be made, or where it would be

necessary to test the creditability of witnesses.

5.1.26 This preliminary assessment was strengthened when the Inquiry later became aware of

the decision of Kennedy J in Supreme Court Action CIV No. 3031 of 1991 Frances Nellie Gava and

John Peter Grljusich v George Ned Grljusich and Duje Toma Grljusich (unreported, WASC,

22 February 1996, CIV 3031 of 1991). (In this Chapter all page references to Kennedy J's

judgment are to the Supreme Court library report copy of this case.) The circumstances that led to

that judgment will soon become apparent. Justice Kennedy heard much evidence, over 5 days in

August 1995, concerning the relationship between members of the Grljusich family. His 38 page

judgment contains a detailed account of, and his findings relating to, that relationship. That this

issue was dealt with so extensively, and relatively recently, was a telling factor against another

investigation into the same general issue by this Inquiry.

5.1.27 The outline that follows is taken largely from Justice Kennedy's judgment, supplemented

by documentary material provided to the Inquiry, particularly from the numerous files obtained, by

summons, from the solicitors acting for various members of the Grljusich family.

(ii) Court proceedings against each other

5.1.28 Early in his judgment, Kennedy J observed that –

"At the time of the death of [Mate Grljusich], the family appears to have been a unitedone. Gradually thereafter, unfortunately, the relationship between George and Tom onthe one hand, and their brother and sisters on the other, deteriorated and, in particular,their relationship with John and Frances deteriorated" (at page 5).

5.1.29 If they were not evident earlier, the signs of deterioration were unmistakable by mid 1991.

At that stage, each "side" had engaged law firms to act on their behalf. Durack & Zilko acted for the

trustees, George and Tom Grljusich. Corser & Corser, and later Murfett & Co, acted for the

remaining beneficiaries of the estate. The deterioration in the relationship between the two groups


366

of Grljusich siblings is illustrated by the series of legal proceedings instituted against each other.

These proceedings include the following –

1. Supreme Court Action CIV No. 3031 of 1991

On 19 December 1991, John Grljusich and Frances Gava commenced proceedings in the

Supreme Court against George and Tom Grljusich to remove them as trustees of their

father's estate. The case was heard by Kennedy J on 14-18 August 1995. The judgment

dealing with the principal issues was delivered on 19 January 1996. Kennedy J –

"reluctantly reached the conclusion that the removal of the trustees, even at thisrelatively late stage, would be best 'for the welfare of the trust estate as a whole' …the present trustees can no longer be regarded as impartial, their judgment havingbeen clouded by their conflict with the other beneficiaries … I am also satisfied thatthe only way in which the estate will be wound up satisfactorily will be having atrustee or trustees independent of all the beneficiaries to undertake the task"(p. 37).

This conclusion was based heavily on what Kennedy J described as the "animosity which

the trustees in this case obviously now bear toward the other beneficiaries, an animosity

which is reciprocated" (p. 36).

George and Tom Grljusich were replaced with Court-appointed trustees.

2. Supreme Court Action No. 1253 of 1992

On 3 March 1992, George and Tom Grljusich, as trustees, instituted proceedings against

John Grljusich in the Supreme Court, seeking an order for possession of the portion of

Lot 17 Hamilton Road being occupied by John and damages or mesne profits, at the rate

of $5,200 per year from 1 December 1991 until possession.

George and Tom Grljusich later applied for summary judgment but John Grljusich was

granted leave to defend the action, conditionally upon his depositing into a trust account

in the names of the respective solicitors a sum of about $7,500.


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3. Court of Petty Sessions Fremantle No. 959/1994

On 28 January 1994, George Grljusich sought a restraining order against John Grljusich

alleging that on that day John had threatened to cause him personal injury and damage

property at 266 Hamilton Road. An ex parte order was made against John Grljusich

restraining him from, among other things –

(a) contacting or attempting to contact George Grljusich;

(b) behaving in a provocative or offensive manner to George Grljusich; and

(c) entering the premises at 266 Hamilton Road, Spearwood or any premises

occupied by George Grljusich.

When the complaint came on for further hearing on 24 March 1994 it was withdrawn with

each party bearing his own costs.


On 28 January 1994, George Grljusich sought a restraining order against his sister, Ann

Lloyd, alleging that she had caused personal injury and damage to property and had

behaved in an offensive or provocative manner on or about 14 and 21 January 1994 and

unless restrained was likely to behave in a similar manner.

An ex parte order was made against Ann Lloyd in substantially the same terms as the

order made on the same day against John Grljusich. When the complaint came on for

further hearing on 24 March 1994 it was withdrawn with each party bearing his or her own

costs.


On 28 January 1994, George Grljusich also sought a restraining order against his other

sister, Frances Gava, alleging that on 14 and 21 January 1994 at Spearwood, she had

behaved in an offensive and provocative manner and unless restrained was likely to

behave in the same or similar manner.


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The complaint was adjourned for hearing on 17 February 1994 and was further adjourned

to 24 March 1994. When the complaint came on for hearing it was withdrawn with each

party bearing his or her own costs.

6. Supreme Court Action No. 1333 of 1994 - removal of caveat

On 8 April 1994, George and Tom Grljusich issued an originating summons out of the

Supreme Court seeking the removal of a caveat lodged against Lot 17 Hamilton Road,

Spearwood. The caveat had been lodged nearly three years earlier by John Grljusich,

Frances Gava and Ann Lloyd who claimed an interest as residuary beneficiaries in the

estate.

The action was heard on 5 November 1996 and judgment delivered on 8 November 1996.

This was some 10 months after Kennedy J's judgment in CIV No. 3031 of 1991 removing

George and Tom Grljusich as trustees of the estate. Murray J ordered that the plaintiffs

pay the defendants' costs and that the plaintiffs' taxed costs be paid out of the estate.

7. Supreme Court Action No. 1333 of 1994 - interlocutory injunction

On 29 July 1994 John Grljusich, Frances Gava, Ann Lloyd and "the estate of" Donald

Grljusich filed a summons seeking an interlocutory injunction to restrain George and Tom

Grljusich "by[sic] advertising, marketing or selling the property at 266 Hamilton Road,

Spearwood until further order or until 25 August 1994."

In an affidavit in support of the summons, Frances Gava referred to advertisements,

apparently authorised by George and Tom Grljusich, offering to sell Lot 17, as an "urgent

sale" for $880,000 or nearest offer".

The summons was adjourned on 10 August 1994 and there is no evidence of further

action being taken.


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8. Supreme Court Action CIV 1050 of 1995

On 15 January 1995 the Public Trustee, as administrator of the estate of Pera Grljusich,

initiated an action by originating summons seeking directions relating to the estate

including –

(a) whether advances, allegedly made between 2 November 1987 and

2 October 1991, of $4,000 to George Grljusich and of $22,300 to Tom

Grljusich, were gifts or loans; and

(b) whether John Grljusich, Frances Gava and Ann Lloyd removed jewellery,

furniture, other personal effects and cash from 266 Hamilton Road,

Spearwood.

Judgment by Ipp J was delivered on 17 January 1996 making orders that, in effect,

declared that none of the payments in issue were repayable to the estate, and that none

of the chattels alleged to have been unlawfully taken had to be returned.

9. Fremantle Local Court No. 585/1996

On 1 April 1996, John Grljusich, Frances Gava, Ann Lloyd and Sheila Grljusich took

action against Tom Grljusich and his wife (Frances Margaret Grljusich) seeking a

declaration that money given by the plaintiffs to the defendants following a meeting on

5 May 1991 was a loan and not a gift.

On 4 December 1996 His Worship Mr Thobaven S M handed down his reserved decision.

He accepted that the bitterness between the 2 groups of the family had prompted the

action. He decided that the money was paid by way of a loan rather than a gift and

ordered Tom Grljusich and his wife to pay $14,000 to the plaintiffs plus interest from

5 May 1992 to 4 December 1996 at 8% and costs.

10. Bankruptcy proceedings

Arising out of the decision of the Fremantle Court of Petty Sessions on 4 December 1996,

John Grljusich, Frances Gava, Ann Lloyd and Sheila Grljusich issued a demand on Tom

Grljusich and his wife for the immediate payment of $19,133.59.


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On 7 January 1997, they issued bankruptcy notices against Tom Grljusich and his wife.

The money was paid by Tom Grljusich on 8 January 1997.


On 18 April 1996, George Grljusich was charged with being disorderly by using obscene

language in Delphi Place, Coogee in the presence of Marie Ann Grljusich (the wife of

John Grljusich) and her three children.

George Grljusich pleaded not guilty but, following a hearing on 11 October 1996, was

convicted. He was given an order under section 669(1)(b), a good behaviour bond for

12 months and a fine of $300.

12. Supreme Court Action CIV No. 2137 of 1997

On 23 October 1997 the two Court appointed trustees of the estate of Mate Grljusich took

Supreme Court action against –

(a) John Grljusich, Frances Gava, Ann Lloyd and the estate of Donald Grljusich,

as first defendant;

(b) George and Tom Grljusich, as second defendants; and

(c) Brian Wheatley, as third defendant.

The originating summons sought payment to the plaintiffs of $42,000 with interest from

the monies held in the joint account in the names of one of the Court appointed trustees

and Brian Wheatley.

The matter was heard on 22 April 1998. Brian Wheatley appeared on behalf of the first

and third defendants. Justice Parker struck out the summons with costs on 1 May 1998.

In the course of his judgment he expressed his disappointment that the parties were

unable to resolve the question of proper remuneration with the trustees.


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13. Supreme Court Action, Full Court Appeal No. 74 of 1997

This was an appeal to the Full Court of the Western Australian Supreme Court by John

Grljusich and Frances Gava against George and Tom Grljusich. The appeal was from the

decision of the Master of the Supreme Court on certain preliminary issues concerning the

taking of the accounts in CIV No. 3031 of 1991 after Kennedy J ordered the removal of

the executors.

The Full Court (Justices Ipp, Wallwork and Steytler) gave judgment on

18 September 1997. It was held that the Master had no jurisdiction to make the orders

and, therefore, that the appeal should succeed and the orders be set aside. In addition,

the Court ruled, that the question of whether the taking of accounts should be on the basis

that there had been wilful default on the part of the trustees, should be referred back to

Kennedy J.

No order was made as to costs because, in the Court's view, both parties were equally to

blame.

5.1.30 The first 8 of these listed Court proceedings were instituted during the period to which this

Chapter is largely confined. The others were commenced later but all will have a bearing on other

issues dealt with in later Chapters, including the role played by Mr Wheatley as the legal

representative of John Grljusich in many of these actions and also his role as an elected member of

the City.

(iii) Other indicators of the family feud

5.1.31 A summary of the Court proceedings taken against each other by the two sides of the

Grljusich family does little to reveal the depth of the feelings and emotions underlying what Kennedy

J described as the "bitter conflict" between the siblings (p. 24). A truer picture emerges from the

account provided in Kennedy J's judgment, from which the following extract is taken –

"Mrs Grljusich died on 3 November 1993. Don died only eight days later. At a familymeeting held on 18 November 1993, George claimed that John said that he would keepthe present proceedings going for 20 years so that George got nothing and would beeating out of rubbish bins. George also alleged that John has said that he would ratherspend $50,000 to see George nailed to the wall than wind up the estate, and that he didnot care if it took 20 years to finalise the estate so long as Tom and George got nothing.Having regard to the bitterness which exists between the parties it would not be surprising


372

if these statements were made. Their only importance, however, for my purposes,resides in their indicating the depth of feeling which exists between the parties, of whichthe evidence is overwhelming. It can clearly be seen in the letter George wrote toFrances, John and Ann on 24 January 1994, in which he stated, amongst other things,that he did not wish to have anything to do with them socially or intimately as brother andsister. At about this time the plaintiffs, John's wife, Ann and Sheila also claimed to havebeen the recipients of anonymous nuisance telephone calls, suspected by them of havingoriginated from George. The evidence is not sufficient to persuade me that they did.Both Ann and John received anonymous letters. They expressed the belief that theyoriginated from George, but once again the evidence does not warrant a finding to thateffect. It is further claimed that, between approximately March 1994 and June 1995, therewere a number of driving incidents, accompanied by abusive remarks, which involvedcars being driven by Tom and, on one occasion, by George, swerving towards cars beingdriven by John, John's wife and by Ann. On one occasion, Ms K Burton was identified asbeing a passenger in the car driven by Tom. Ms Burton gave evidence, however, anddenied that any such event occurred while she was in a car with Tom. Whilst the weightof the evidence is such that I accept that some incidents occurred, I consider that thedetails have been embellished, and I reject the evidence that Ms Burton was at any timepresent in a vehicle with Tom when an incident occurred. The significance of theincidents, once again, rests upon the insight which they provide into the nature of therelationship between the parties, as does the fact that John himself engaged aninvestigator to check on Tom's betting habits at the Burswood Casino."

5.1.32 It is a human tragedy that the relationship between the Grljusich family members

degenerated to this extent. Pera Grljusich's last years were spent witnessing the disintegration of

her family. Worse still, during these last years, she was pressured by each of the feuding groups to

take sides against the other (see judgment of Kennedy J at p. 23-24).

5.1.33 One might have thought, or at least hoped, that efforts would have been made to ensure

that as few people as possible were provided with the details of this most regrettable episode in the

lives of the Grljusich family members. This was not the case. In fact, the family feud attracted

widespread publicity. It is inconceivable that this occurred without the cooperation, and perhaps at

the instigation, of one or more of the family members who were involved. Even during the public

hearings of this Inquiry, many years after some of the events took place, John Grljusich actively

sought to volunteer, for the public record, details of the feud that he considered would assist his

case.

5.1.34 The significance of this for the purposes of the issues to be dealt with in this Chapter is

that it was abundantly clear to the relevant employees and elected members of the City in 1994 and

1995 that –

(a) there was a very bitter and well publicised feud involving members of the Grljusich

family;


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(b) John Grljusich, the City's then Deputy Mayor, was on one side of this feud and his

brothers, George and Tom Grljusich, were on the other;

(c) one of the subjects of the feud involved the proposed rezoning and subdivision of

the family property being Lot 17 Hamilton Road, Spearwood;

(d) George and Tom Grljusich, the trustees, wanted Lot 17 rezoned and subdivided as

soon as possible and had entered into a deed with Urban Focus to arrange for the

rezoning and subdivision; and

(e) John Grljusich (together with the remaining beneficiaries), while they favoured the

principle of Lot 17 being rezoned and subdivided –

(i) had commenced Supreme Court proceedings to remove George and Tom

Grljusich as trustees; and

(ii) were anxious to prevent any rezoning or subdivision of Lot 17 under the

authority of George and Tom Grljusich.

5.1.35 It is against this background that it is necessary to assess the actions of the City's

employees and elected members in dealing with the matters involving the rezoning and subdivision

of Lot 17 that came before the City in 1994 and 1995.

5.2 Deferral of Amendment No. 91 on 5 July 1994

(a) Officers' report

5.2.1 On 17 May 1994 Urban Focus wrote to the City. The letter referred to the Council's

resolution of 5 October 1993 to adopt proposed Amendment No. 91 –

"Subject only to the applicant submitting authorisation of all the owners involved andpaying all the necessary costs."

5.2.2 Urban Focus informed the City in its letter of 17 May 1994 that –

" … all landowners have signed the Owners Development Deed document or haveexecuted and undertaken to sign the Deed document … ".

As for the costs, the Council's administration fee was enclosed with the letter and Urban Focus

provided the usual undertaking to pay the relevant advertising costs. The letter also requested that

the City's "early consideration" be given to progressing Amendment No. 91.


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5.2.3 What is not apparent from the text of that letter is that Urban Focus had had some

difficulty getting the owners of a few lots to sign the Owner's Deed or execute an undertaking to

sign the deed. Because it was keen to proceed with the next subdivision stage as soon as

possible, Urban Focus sought to omit from the initial version of Amendment No. 91 those lots

whose owners had not provided the authorisation required by the Council's resolution of

5 October 1993. Lot 17 was included as George and Tom Grljusich had signed the Owner's Deed.

The City's planners put Amendment No. 91 back on the agenda of the Planning, Building and

Health Committee for its June 1994 meeting.

5.2.4 Urban Focus later questioned the decision of the City's planners to take Amendment

No. 91 matter back to the Council. Urban Focus argued that since it had complied with the

conditions imposed by the Council, the amendment should have been forwarded directly to the

Planning Commission in accordance with the resolution of 5 October 1993. In my view, having

regard to the changes resulting from the omission of the lots in respect of which a deed had not

been signed, as well as other changes which are not necessary to set out, it was open to the City's

planning department to refer the matter back to the Council.

5.2.5 Considering the request by Urban Focus to have the matter dealt with expeditiously, it

would have been expected that the item involving Amendment No. 91 would have been included in

the agenda for the 31 May 1994 meeting of the Planning, Building and Health Committee. It was

not included. The reasons for its non-inclusion have not been explained satisfactorily. It will be

seen in this and the following Chapter that, with few exceptions, throughout the history of the City's

dealing with Lot 17 Hamilton Road, there was a stark contrast between the invariably expeditious

way in which the City's staff processed requests from, or that were in the interests of, Deputy Mayor

Grljusich and the often slow response time when others were involved.

5.2.6 Amendment No. 91 was dealt with by the Planning, Building and Health Committee at its

meeting on 28 June 1994. The Officers' report included, by way of explanation to the elected

members, the following –

"In the interests of expediency, revised amendment documents have been submitted toCouncil omitting lots that do not yet have the landowners authorisation and Councilowned Lot 23 Rockingham Road.

…

Urban Focus is anxious to get the rezoning initiated as these lots are contained in thenext stages of subdivision and consequent land release."


375

5.2.7 The report recommended that the proposed Amendment No. 91, with the changes sought

by Urban Focus, be adopted and submitted to the Planning Commission for consent to advertise. It

is of some significance that this report was prepared not by Mr John Scharf, the City's Director of

Planning and Development, but by Mr Neil Dowling, one of the City's planning officers.

(b) Recommendation of the PBHC on 28 June 1994

5.2.8 The elected members of the Planning, Building and Health Committee who attended the

meeting on 28 June 1994 were –

Mr Grljusich Deputy Mayor

Mr Battalis Councillor

Mr Elpitelli Councillor

Mr Howlett Councillor

Mr Pecotic Councillor

5.2.9 Cr Wheatley, who was not a member of this Committee, also attended as an observer.

The Inquiry is not aware of any other occasion where Cr Wheatley attended a Planning, Building

and Health Committee meeting as an observer. Cr Wheatley is, and was at the time, a lawyer. At

the time of this meeting he was acting for Deputy Mayor Grljusich (and for his sister, Frances Gava)

in the Supreme Court action against George and Tom Grljusich. Whether Cr Wheatley had a

financial interest or a conflict of interest in matters dealt with at this and other meetings he attended

is considered in Chapter 8.

5.2.10 During the public hearings of the Inquiry, Mr Wheatley was asked why he attended this

Committee meeting. He responded that he was interested in another matter that was to be

considered by the Committee that evening. Despite acting for Deputy Mayor Grljusich (since

December 1991) in the Supreme Court proceedings against George and Tom Grljusich (to remove

them as trustees of Lot 17), Mr Wheatley claimed that the proposal by George and Tom Grljusich to

rezone Lot 17 "had no interest to [him] at all" (Transcript, 3250).

5.2.11 Deputy Mayor Grljusich declared a financial interest and vacated the Chair during the

discussion of the item concerning Amendment No. 91. There is no indication that he left the room

during the discussion. In other Council minutes of meetings held both before and after this meeting,

a record appears of when an elected member leaves, and returns to, a meeting. There was no

requirement under the Local Government Act 1960, which was then in force, for an elected member


376

who had a financial interest in a matter to leave the room during the discussion of that matter. But

the practice of some elected members, notably Cr Battalis, was to leave the room on all such

occasions. Deputy Mayor Grljusich also regularly left the room after declaring a financial interest.

(See, for example, the minutes of the PBHC of 28 September 1993 dealing with clause 26

(Proposed Amendment No. 91 including Lot 17) and the minutes of the same Committee on

28 February 1995 dealing with clause 25 (Exclusion of Lot 17 from Amendment No. 91). On each

of these occasions he is recorded as having left the meeting for the discussion by his fellow elected

members.) Deputy Mayor Grljusich is not recorded as having left the room, during the discussions

involving the Amendment No. 91 issue, at either the Committee meeting on 28 June 1994 or the

Council meeting which considered the same item on 5 July 1994. Despite this, his recollection was

that he was not present during the discussion of this item at either the Committee or the Council

meeting (Transcript, 3368-3369).

5.2.12 The planning staff who attended the Committee meeting were Mr Scharf and Mr Steve

Ryan who held the position of Manager, Plannning. (Mr Dowling, who prepared the Officers' report,

did not attend.) There is no evidence that Mr Ryan had any involvement in this item relating to

Amendment No. 91. Indeed, he appears to have had little to do with any of the events that are

dealt with in this Chapter. Mr Scharf, on the other hand, played a major role in many of these

events.

5.2.13 On the face of the Officers' report dealing with Amendment No. 91, this was an entirely

uncontentious and very straightforward matter. The Council had dealt with the matter substantively

on 5 October 1993 and had agreed to progress Amendment No. 91 subject to two conditions, both

of which had now been met by Urban Focus. There appeared to be no reason why the

recommendation in the Officers' report would not be adopted by the Committee.

5.2.14 In fact, the recommendation in the Officers' report was not adopted. Instead, the

Committee resolved on a motion moved by Cr Elpitelli and seconded by Cr Battalis that –

"(1) Council not proceed with Amendment 91 until Council is satisfied with the advicefrom its Solicitors;

(2) the matter be referred to Council's solicitors requesting that they deal with thismatter immediately; and

(3) a report be presented to the next Planning, Building and Health CommitteeMeeting."


377

5.2.15 Largely because of the passage of time, it has not been possible to ascertain the details

of what took place at that meeting, particularly the roles of, and contributions made by, the elected

members and employees. It appears, however, that the focus of attention at the meeting was not

anything that was contained in the Officers' report but a letter to Deputy Mayor Grljusich, in his

private capacity, from Urban Focus dated 19 January 1994. Specifically, the focus of attention

appeared to be Deputy Mayor Grljusich's interpretation of, and his concerns about, part of a

sentence from that letter.

5.2.16 The letter to Deputy Mayor Grljusich from Urban Focus dealt with a number of matters

concerning the proposed rezoning and subdivision of Lot 17 Hamilton Road. It included a request

for removal of the caveat over Lot 17 that had been lodged by John Grljusich, Frances Gava, Ann

Lloyd and Donald Grljusich. Significantly, for present purposes, the letter contains the following –

"Council has advised that it cannot progress the matter further until such time as itreceives confirmation that the owners of the land areas incorporated in AmendmentNo. 91 have duly executed the Owners Deed … ".

5.2.17 While it is not apparent from the terms of the Committee's recommendation, it was that

quoted extract from the letter to Deputy Mayor Grljusich that was the subject of the Committee's

recommendation to seek legal advice.

(c) Council's decision of 5 July 1994

5.2.18 The matter came before the Council on 5 July 1994. Those recorded as being present

were –

Mr Lees Mayor




Mr Gianoli Councillor

Mr Greengrass Councillor


Mr Lee Councillor

Mr McNair Councillor

Mr Ostojich Councillor


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Mrs Waters Councillor

Mrs Wegner Councillor

Mr Wheatley Councillor

5.2.19 The minutes record that Deputy Mayor Grljusich did not vote but there is no record of him

leaving the room during the discussion. The minutes also indicate that Mr Scharf was the only

member of the City's planning staff who attended the meeting.

5.2.20 Again, the details of the discussion that occurred in the meeting are unclear but the

Council, on a motion moved by Cr Battalis and seconded by Cr Pecotic, rejected the

recommendations of the Planning, Building and Health Committee and, instead resolved, on a

motion having the same mover and seconder, that –

" … Council defer consideration of Amendment 91 pending advice from McLeod &Company as to whether the suggestion in the letter from Urban Focus which stated thatthe:

'….Council has advised that it cannot progress the matter further until such time asit receives confirmation that the owners of the land areas incorporated inAmendment No.91, have duly executed the Owners Deed.';

… is contrary to the Council's Policy which states that it:

'… will not support further subdivision of land within the Packham UrbanDevelopment Area, unless the applicant is a participant in the Owners Scheme forthe area and the subdivision is in accordance with the adopted Structure Plan';

and whether such advice should be rejected by Council as it implies that Council requiresthe landowners to deal only with Urban Focus and whether Council's Policy should bealtered in view of the ruling of the Taxation Department."

5.2.21 The reference in the opening words to "the letter from Urban Focus" is to the letter to

Deputy Mayor Grljusich from Urban Focus dated 19 January 1994.

5.2.22 As result of this resolution, Amendment No. 91 could not proceed further until the City had

received and considered legal advice on this issue.


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(d) Deputy Mayor Grljusich's desire to delay Amendment No. 91

5.2.23 The progress of Amendment No. 91 was at the heart of the dispute among the Grljusich

family members in early 1994. George and Tom Grljusich were anxious for Amendment No. 91 to

proceed. Deputy Mayor Grljusich was at least as anxious to ensure that it did not.

5.2.24 This proposition relating to Deputy Mayor Grljusich, which is fundamental to a proper

understanding and analysis of the issues in this Chapter, has been questioned. In his closing

submissions to this Inquiry, Counsel for Mr Scharf stated –

"It is not accepted that any delay in dealing with Amendment 91 or the exclusion of Lot 17from that amendment was to the benefit of Mr John Grljusich and there appears to be noclear evidence supporting that proposition" (at para. 28).

5.2.25 In fact, there is direct and unambiguous evidence supporting the proposition. That

evidence includes the following response by Deputy Mayor Grljusich to questions asked by Counsel

Assisting –

"COUNSEL ASSISTING: So it was in your interests for this matter, amendment 91, to bedeferred at this time?---MR GRLJUSICH: Yes, in relation to lot 17; yes.

COUNSEL ASSISTING: Because if council had proceeded with the rezoning at that time,you would've sought to enjoin them from doing so?---MR GRLJUSICH: I believe that wewould've taken some action to stop the rezoning" (Transcript, 3371 and see also at 3373and 3389).

5.2.26 For these purposes, it is not necessary to particularise any further the benefit to Deputy

Mayor Grljusich resulting from a deferral or the exclusion of Lot 17 from Amendment No. 91.

Deputy Mayor Grljusich had such a strong desire to ensure that this occurred that he would have

taken legal action against the City, to achieve his wishes - even though he was then its Deputy

Mayor. There could scarcely be any clearer evidence of his determination to prevent Amendment

No. 91 from proceeding, as it otherwise would have proceeded, with Lot 17 included. The mere

satisfaction of Deputy Mayor Grljusich's strong desire in respect of Lot 17 was itself a clear benefit

to him and this was expressly acknowledged by Deputy Mayor Grljusich himself.

5.2.27 In these circumstances it is abundantly clear that any delay in dealing with Amendment

No. 91 (with Lot 17 included) or the exclusion of Lot 17 from Amendment No. 91 was consistent

with Deputy Mayor Grljusich's strong desire and assisted with the achievement of his objectives

and, therefore, was of benefit to him.


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5.2.28 The only reason that was given by Mr Scharf's Counsel for questioning Deputy Mayor

Grljusich's desire to delay Amendment No. 91 was said to be that –

"It is entirely possible that Lot 17 could have been included in Amendment 91 withoutUrban Focus being involved" (para. 28).

This proposition is inconsistent with the City's policy and practice, both before and after June 1994,

in respect of Packham Area rezoning proposals.

5.2.29 Having regard to the fact that the submission was made on behalf of Mr Scharf, perhaps

the most poignant illustration of the Council's practice at that time is set out in the letter from the

City, drafted by Mr Scharf himself, to McLeod & Co dated 25 July 1994. The letter was concerned

with the very issue of the deferral of Amendment No. 91 and states –

"Before the Council is prepared to consider an amendment to the rezoning of land withinthe Packham area, it requires all landowners to participate in the Owners Scheme … ".

The "Owners Scheme" was, of course, the Urban Focus Owners Scheme. Thus the Council would

not have supported the inclusion of Lot 17 in Amendment No. 91 unless the owners of Lot 17 had

agreed with Urban Focus to enter into the Owners Scheme. (For a more detailed discussion of this

issue see previous Chapter at 4.6(c) and 4.14.)

5.2.30 The suggestion, in these circumstances, that it was "entirely possible that Lot 17 could

have been included in Amendment 91 without Urban Focus being involved" is simply fanciful.

5.2.31 The link between the involvement of Urban Focus and the rezoning of Lot 17 as part of

Amendment No. 91 raises the issue of Deputy Mayor Grljusich's reluctance in dealing with, if not

antipathy towards, Urban Focus. As Mr Grljusich's Counsel himself stated in the course of oral

closing submissions –

"Any involvement with Urban Focus … had been tarnished by the mere fact that Georgeand Tom were involved with Urban Focus and that provided a rationale for Peremate,including Mayor Grljusich, not to become involved with them" (Transcript, 3909).

The extent of Deputy Mayor Grljusich's reluctance to deal with Urban Focus is evident from the

following exchange with Counsel Assisting during the course of this Inquiry's public hearings –

"COUNSEL ASSISTING: Does it put it too highly to say that they [that is, Urban Focus]would have been the last people on the earth with the possible exception of George andTom that you would have entered into an agreement to develop the landwith?---MR GRLJUSICH: I think you can say that. I think it would be fair to say that …"(Transcript, 3396).


381

5.2.32 These observations also illustrate the depth of animosity between Deputy Mayor Grljusich

and his brothers. The "mere fact" that George and Tom Grljusich had dealt with Urban Focus was

sufficient reason itself for Deputy Mayor Grljusich not wanting to have anything to do with Urban

Focus. The evidence referred to earlier supports the conclusion that because Amendment No. 91

was a rezoning proposal made by Urban Focus and in which Urban Focus was centrally involved,

Deputy Mayor Grljusich was determined to ensure that Lot 17 was excluded from it or that the

proposal was delayed. The exclusion or any delay was clearly in Deputy Mayor Grljusich's interests

because it gave "breathing space" to the Supreme Court proceedings instituted by him and one of

his sisters, seeking to remove George and Tom Grljusich as trustees and, as a result, remove their

ability to deal with Urban Focus and Lot 17 Hamilton Road.

5.2.33 This link between the progress of the rezoning and subdivision of Lot 17 under the

authority of George and Tom Grljusich and the Supreme Court proceedings by Deputy Mayor

Grljusich, in his private capacity, to remove George and Tom Grljusich as trustees also needs to be

clearly understood.

5.2.34 At least from their own perspective, George and Tom Grljusich's major remaining task, as

trustees of their father's estate, was the rezoning and subdivision of Lot 17, the sale of the

subdivided lots and the distribution of the proceeds of sale among the beneficiaries. Obviously, if

George and Tom Grljusich completed that task before the Supreme Court case was heard, then at

least for all practical purposes, the Supreme Court action seeking their removal became futile.

Further, the more that was done by George and Tom Grljusich as trustees to complete that task,

before the Supreme Court case was heard and determined, the less likely it was that the Court

would rule in favour of the trustees' removal. In short, the greater the delays to the rezoning and

subdivision of Lot 17 while it remained under the authority of George and Tom Grljusich, the greater

were Deputy Mayor Grljusich's prospects of success in removing his brothers as trustees.

5.2.35 Deputy Mayor Grljusich therefore was determined to ensure that any action in relation to

Lot 17 was stalled. One way of achieving this was to stall all of Amendment No. 91 while that

amendment contained Lot 17. Undoubtedly that would disadvantage others, not only his brothers.

On all the evidence, none of Deputy Mayor Grljusich's actions throughout this entire period are

consistent with him paying regard to, or being concerned about, the cost to others of him achieving

his own personal objectives.


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5.2.36 Thus, if it were necessary to identify a particular benefit to Deputy Mayor Grljusich

resulting from the delay in dealing with Amendment No. 91 or the exclusion of Lot 17 from

Amendment No. 91, that benefit may be seen as the satisfaction of a strong personal desire –

(a) to undo a deal entered into by his brothers;

(b) to prevent George and Tom Grljusich taking any further action in relation to the

rezoning, subdivision or development of Lot 17;

(c) to prevent any action taken in the past by George and Tom Grljusich from being

progressed further; and

(d) to achieve his ultimate aim of taking control of the rezoning, subdivision and

development of Lot 17.

(e) Need for impartiality

5.2.37 In the closing submissions made on behalf of Mr Scharf to the Inquiry, reference was

made to the extensive publicity surrounding Lot 17 Hamilton Road. It was submitted that, as part of

that publicity, the Supreme Court action by John Grljusich and Frances Gava against George and

Tom Grljusich was "common knowledge". The submission states that –

"The appropriateness or otherwise of the inclusion of Lot 17 in Amendment 91 must beviewed in the context of the notorious dispute then on foot" (para. 3).

5.2.38 I agree - but would add that there are other very significant elements that form part of the

relevant context. George and Tom Grljusich were anxious for Amendment No. 91 to proceed.

John Grljusich was determined to ensure that it did not proceed. However, the disputing parties

were not, and were not seen to be, equally removed from the City, its decision makers or its

decision making process. One of the parties, John Grljusich, was the Deputy Mayor and the

Chairman of the Planning, Building and Health Committee. He was also a colleague of those

people who were making the decisions.

5.2.39 It is critical for the community's confidence in local government that elected members and

employees act, and be seen to act, impartially. When one of the City's own - in this case its Deputy

Mayor - has an interest in the outcome of a matter, it is essential for great care to be taken in the

decision making process and its outcome. This is accentuated when the interest is highly

publicised. The City's elected members and employees would - or at least should - have been

acutely aware that their actions and decisions would be under close scrutiny because of the


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involvement of the Deputy Mayor in a matter before Council, particularly when that matter had

attracted so much publicity and had become, as Mr Scharf's counsel put it, a "notorious dispute".

5.2.40 There is another aspect to the "relevant context" that appears to have been almost

universally overlooked. It was not only members of the Grljusich family who had an interest in the

issue of delays to the progress of Amendment No. 91 in the subdivision of Stage 8. Urban Focus

and, in particular, other Stage 8 landowners - the neighbours of the Grljusich family - had an

interest, including a financial interest, in ensuring that Amendment No. 91 and the subdivision

process proceeded expeditiously. It was reasonable to expect that those owners would consider

that the longer the delays in commencing the subdivision the longer it would be before they could

receive the proceeds of sale of their subdivided lots.

5.2.41 It follows that the interests and wishes of the Deputy Mayor (and his sisters and sister-in-

law) in delaying the rezoning and subdivision had to be balanced against the interests and wishes

not only of George and Tom Grljusich but also those others, including neighbouring landowners,

who had an interest in expediting the rezoning and subdivision. It is in this wider context that the

actions and decisions of the City's elected members and employees leading to and on 5 July 1994

must be assessed.

(f) Assessment of the Council's decision

(i) Council's consideration of a private letter

5.2.42 The first procedural issues of concern are how and why the letter to Deputy Mayor

Grljusich from Urban Focus dated 19 January 1994 found its way, more than 5 months later, to the

Planning, Building and Health Committee on 28 June 1994 and to the Council meeting on

5 July 1994. As the State Ombudsman has pointed out in his reports to the City on 11 June 1996

and 16 October 1996, it was a private letter.

5.2.43 There was little direct evidence given at the public hearings as to when or how the letter

came to be before the Committee. It is not referred to in the Officers' report and was not included in

the agenda papers provided to Committee members. Mr Scharf agreed in evidence that it was

possible that he may have put it before the Committee after it was handed to him by someone else

(Transcript, 2904). In his closing submissions, Mr Scharf stated that the letter "was handed to [him]

by another person, the identity of whom cannot now be recalled …" and that he "put it before the


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Committee" (para. 10). In all the circumstances, including the nature of the letter, that it was

addressed to Mr Grljusich who had personal interest in having in the matter put before the

Committee at that meeting and that Deputy Mayor Grljusich was chairman of the Committee and

attended this meeting, there is a strong inference that Deputy Mayor Grljusich himself caused the

letter to be put before the Committee.

5.2.44 It was submitted on Mr Scharf's behalf in closing submissions to this Inquiry that –

"As an officer of the Council it was incumbent upon Mr Scharf to put before the Committeeall material which touched upon the agenda item. Having been provided with the letter,Mr Scharf had no choice but to put it before the Committee. The letter deals generallywith Lot 17, Stage 8 of the Packham development area and the proposed rezoning and is,as a consequence, germane" (at para. 10).

5.2.45 I do not accept, as a general proposition or in its present application, that it is incumbent

on a responsible local government employee to put before a committee all material which merely

"touche[s] upon" an agenda item. There are agenda items that may have dozens, even hundreds,

of documents that 'touch upon' them. Every day local government employees properly exercise

their judgments in determining which of the many documents that 'touch upon' an agenda item are

sufficiently relevant and significant to be put before a committee or council.

5.2.46 The point is not, at least in the present context, merely semantic. It does not follow that

merely because the letter to Deputy Mayor Grljusich dealt with Lot 17, Stage 8 and the proposed

rezoning, Mr Scharf had "no choice" but to provide it to the Committee. In this particular instance,

there may well have been other documents touching on the same topics that, as a result of the

proper exercise of discretion by the author of the Officers' report or his supervisor, were not put

before the Committee.

5.2.47 The letter from Urban Focus to Deputy Mayor Grljusich makes reference to Amendment

No. 91 and Lot 17 but, on its face, has no material bearing on the question then before the

Committee - that is, whether the Council should have adopted the recommendation in the Officers'

report and, in effect, reaffirm its earlier commitment to progress Amendment No. 91.

5.2.48 Timing issues are also relevant. Deputy Mayor Grljusich had more than 5 months to

follow up with Urban Focus or to seek his own legal advice on any concerns he may have had

about the letter. He chose not to do so. Instead, the letter appears to have been produced at or


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shortly before the Committee meeting. It was then too late to be included in the Officers' report and

it was too late to be circulated to Committee members with the other agenda papers.

(ii) Issue for legal advice

5.2.49 Those who were disadvantaged, and saw Deputy Mayor Grljusich as advantaged, by the

Council's decision to defer Amendment No. 91 were given only one reason for the decision. In

effect, that reason was that Amendment No. 91 could not or should not be progressed until the

Council had received legal advice on two issues. It is necessary to consider whether that reason

can be substantiated.

5.2.50 The two issues in which the advice was sought related to –

(a) the interpretation and application of the Council's Packham Area policy; and

(e) a ruling from the Australian Taxation Office in relation to the liability for income tax

purposes of the proceeds from the sale of subdivided lots.

5.2.51 There is no evidence as to how the taxation issue arose. It appears to have been raised,

as a side issue during the discussion in Council on 5 July 1994. The judgment of Kennedy J in

Supreme Court CIV 3031 of 1994 refers to evidence that –

"John, in particular, has raised questions about the taxation implications of the proposeddevelopment of Lot 17 Hamilton Road" (at p. 30).

The taxation issue does not appear to have been raised by the Council after the meeting on

5 July 1994. In any event, there is nothing to indicate that it had any bearing on the decision to

defer Amendment No. 91.

5.2.52 The second issue related to the interpretation and application of the City's Packham Area

policy (see previous Chapter at 4.5). The Council purported to apply that policy when it resolved in

October 1993 to adopt Amendment No. 91 subject to Urban Focus "submitting authorisation of all

the owners involved … ". In its terms, that policy required an applicant for subdivision to be "a

participant in the Owners Scheme". As explained earlier, that policy was applied by the City -

before and after Amendment No. 91 - to rezoning proposals as well as to applications for

subdivision (see previous Chapter at 4.5. 4.6(c) and 4.14). As the Director of the City's Planning

Department, Mr Scharf was very well aware of this. For many years he had actively implemented

the policy in this way. It is reasonable to expect that Deputy Mayor Grljusich, as a long standing

elected member, as well as a member and then current chairman of the Planning, Building and


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Health Committee, was also very familiar with the interpretation and application of the Packham

Area policy.

5.2.53 In Mr Scharf's letter seeking advice from the City's solicitors following the Council

resolution on 5 July 1994, Mr Scharf stated, by reference to the policy –

"Before the Council is prepared to consider an amendment to the zoning of land within thePackham area, it requires all landowners to participate in the Owners Scheme … "(emphasis added).

Given this, what was the problem with Urban Focus' letter to Deputy Mayor Grljusich on

19 January 1994? The statement that caused so much apparent concern was –

"Council was advised that it cannot progress the matter further until such time as itreceives confirmation that the owners of the land areas incorporated in AmendmentNo. 91 have duly executed the Owners deed [sic] … " (emphasis added).

5.2.54 The only way to "participate in the Owners Scheme" was to "duly [execute] the Owners

[D]eed". Plainly, the Council's Packham Area policy and the extract from the letter from Urban

Focus to Deputy Mayor Grljusich both required, in effect, that an owner of land must execute the

Owner's Deed before that land could be the subject of a rezoning proposal. It follows that the two

propositions referred to in the Council's resolution were, in material respects, identical. As

Mr Scharf conceded in his evidence to the Inquiry –

"If they executed the deed, they would be participating" (Transcript, 2909).

5.2.55 Looked at in isolation, there is nothing in the two propositions referred to in the Council's

resolution that would justify a legitimate concern about an inconsistency, or in any event, that would

justify the deferral of Amendment No. 91.

5.2.56 Three further factors underscore the spurious nature of the Council resolution.

5.2.57 Firstly, the Council's concern was, or at least was expressed to be, confined to part of a

sentence in a letter from Urban Focus to Deputy Mayor Grljusich. Unless there was a hidden

agenda, one would have expected, instead of - or at least before - seeking legal advice and

deferring Amendment No. 91, that the Council would have sought a response from Urban Focus

itself. As the recipient of the letter, Deputy Mayor Grljusich personally or through others (and

perhaps both) was given the opportunity at both the Committee and Council meeting to express his

views about the matter. Why would the same opportunity not be given to the author of the letter?


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5.2.58 Secondly, the Council's resolution sought legal advice on how its Packham Area policy

should be interpreted. Surely, in the circumstances, the Council could have dealt with this matter

itself. As the State Ombudsman pointed out in his report dealing with this matter –

" … no-one can know better than the Council what it intends to achieve with its ownpolicies … If a Council policy is not adequate to deal with a particular situation it is opento Council not to follow it" (report to the City dated 16 October 1996 at p. 4).

In fact, the evidence strongly supports the conclusion that Mr Scharf knew exactly what the policy

meant. It had been interpreted and applied by the City in the same way for many years. Even after

the Council eventually excluded Lot 17 from Amendment No. 91 later in 1994, the policy continued

to be interpreted and applied in the very same way.

5.2.59 The third additional factor to be taken into account in assessing the merits of the Council

resolution involves an inquiry into the purpose or intended outcome of the resolution. Let it be

assumed for the moment that the Council was genuinely concerned that its policy required

Packham Area landowners to be participants in the Urban Focus Private Owners' Arrangement

before the land could be rezoned or subdivided. Why was it necessary, in dealing with this

concern, to delay Amendment No. 91?

5.2.60 All the owners whose lots were included in Amendment No. 91 had, in accordance with

the Council's resolution of 5 October 1993, given authorisation for the rezoning. In addition, the

owners had, in accordance with the Council's Packham Area policy, become participants in the

Private Owners' Arrangement. These owners wanted their land rezoned (and subdivided). A

review of the Council's policy at this stage after they had already complied with it, could not assist

them. There was never any suggestion that even if that policy were to be changed, that any

change could apply, retrospectively, to the owners of lots within Amendment No. 91. The only

impact that a policy review could or would have on these owners was the adverse impact that

resulted from a delay. Among those who had an interest in the lots that were the subject of

Amendment No. 91, only Deputy Mayor Grljusich (and his sisters and sister-in-law) could be

advantaged by the Council resolution and the delay. Any hidden agenda absent, the obvious

response by the Council to any genuine concern about the policy would have been to progress

Amendment No. 91 independently of any review with the policy and its potential application to other

landowners who might, in the future, have wanted their land rezoned and subdivided.


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(iii) Findings

F26. I find that, in respect of the events relating to and including the Council's decision on

5 July 1994 to defer Amendment No. 91 until it had received legal advice on a matter

referred to in the letter to Deputy Mayor Grljusich from Urban Focus dated

19 January 1994 –

(a) the letter to Deputy Mayor Grljusich from Urban Focus was a private letter

which –

(i) had no material bearing on the Council's consideration of Amendment

No. 91;

(ii) was known by Mr Scharf, and probably Deputy Mayor Grljusich, to have

no material bearing on the Council's consideration of Amendment No. 91;

and

(iii) should not have been put before the Committee;

(b) the Council should have given Urban Focus, the author of the letter, an

opportunity to respond;

(c) the Council's lack of impartiality in this matter is illustrated by its failure to give

Urban Focus, the author of the letter to Deputy Mayor Grljusich, an opportunity

to respond;

(d) the request for legal advice was unnecessary and unjustifiable because –

(i) any concerns that the Council might have had about the letter to Deputy

Mayor Grljusich could and should have been clarified directly with Urban

Focus;

(ii) the Council should have been able to determine for itself what it meant by

its own policy; and

(iii) in any event, it was clear from the material before the Council, and could

have easily been confirmed by Mr Scharf, that there was no basis for the

suggestion that there may have been a conflict between the Council's

Packham Area policy and the letter by Urban Focus to Deputy Mayor

Grljusich on 19 January 1994;


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(e) regardless of its merits, the decision to seek legal advice provided no

justification for the decision to defer Amendment No. 91 because –

(i) any genuine concern that there may have been about the Council's

Packham Area policy could and should have been addressed

independently of, and without any delay to, the progress of Amendment

No. 91; and

(ii) even if the legal advice sought by the Council had resulted in a change to

the City's policy, this change could not have applied, retrospectively, to

the owners of the lots to which Amendment No. 91 applied - at best it

could have had an impact only on future rezoning proposals;

(f) the decision to defer Amendment No. 91 cannot be justified on any proper

basis;

(g) the decision to defer Amendment No. 91 was made unlawfully because –

(i) the Council failed to comply with the principles of procedural fairness;

(ii) the Council failed to take into account relevant considerations;

(iii) the Council took into account irrelevant considerations;

(iv) the decision was so unreasonable that no reasonable person would have

made it;

(v) there was no relevant material to justify the decision; and

(vi) the decision was made for improper purposes;

(h) from among those who had an interest in the lots that were the subject of

Amendment No. 91, only Deputy Mayor Grljusich (and his sisters and sister-in-

law) could have been advantaged by the Council's decision and the

consequential delay to the progress of Amendment No. 91;

(i) the Council's decision advantaged Deputy Mayor Grljusich and disadvantaged

many others including George and Tom Grljusich, all the other owners of the

lots that were the subject of Amendment No. 91 and the owners of the lots in

Stage 8 whose subdivision was delayed; and

(j) the City's actions provided clear evidence for the perception, reflecting the

actual position, that Deputy Mayor Grljusich was able to influence the Council to

defer an amendment that he had a personal interest in deferring and which

would not otherwise have been deferred.


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(g) Responsibility for the Council's decision

(i) Introduction

5.2.61 Two further interrelated questions need to be considered. Firstly, who bears individual

responsibility for the Council's seriously flawed decision making process and outcome? Secondly,

did those individuals intend to advantage Deputy Mayor Grljusich? For the purpose of answering

these questions, it is necessary to consider the relationship between Mr Scharf and Deputy Mayor

Grljusich.

(ii) Relationship between Deputy Mayor Grljusich and Mr Scharf

5.2.62 It was the private letter to Deputy Mayor Grljusich from Urban Focus that was the centre

of the Council's attention and the basis for its decision on 5 July 1994 to defer Amendment No. 91.

That letter was the only obstacle in the way of Amendment No. 91 being adopted and forwarded to

the Planning Commission for consent to advertise in accordance with the recommendation in the

Officers' report.

5.2.63 Deputy Mayor Grljusich ensured that the letter, sent to him in his private capacity, was

given to the Committee. Mr Scharf put that letter before the Committee. For the reasons set out

earlier, I do not accept that Mr Scharf had no choice but to forward the letter to the Committee.

Indeed, if a similar request had been made by someone other than Deputy Mayor Grljusich in

respect of a similar letter that involved another lot within Amendment No. 91, it is doubtful whether

Mr Scharf would have responded in the same way.

5.2.64 This is the first of many events considered in this Chapter that raise the issue of

Mr Scharf's relationship with Deputy Mayor Grljusich.

5.2.65 In closing submissions it was submitted to the Inquiry on Mr Scharf's behalf that –

"There is no evidence whatsoever that Mr Scharf benefited in any way from the manner inwhich Lot 17 was dealt with, whether at the behest of Mr John Grljusich or anyone else.There is no evidence that Mr Scharf was brow-beaten or subjected to any undue or unfairintimidation by Mr Grljusich or anyone else on behalf of Mr Grljusich in relation to thisissue" (at para. 62 and 63).


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5.2.66 I accept the second proposition. Deputy Mayor Grljusich did not intimidate or put

pressure on Mr Scharf to act in a particular way. It is significant in this context that, as will be seen

later, other senior employees of the City were frequently subjected to intimidation and pressure by

Deputy Mayor Grljusich. These senior employees include Mr Scharf's successor as Director of

Planning and Development, Mr Steve Hiller.

5.2.67 As to the first proposition, it is unnecessary to determine, or even consider, whether

Mr Scharf received any financial or other benefit as a result of his decisions and actions in

connection with Lot 17. The issue is whether Mr Scharf acted - and was perceived to act - even

handedly in his dealings with Deputy Mayor Grljusich, particularly in respect of Lot 17 Hamilton

Road.

5.2.68 Mr Scharf had a close relationship with Deputy Mayor Grljusich. Mr Scharf was the City's

Director of Planning and Development and Deputy Mayor Grljusich was the Chairman of the

Planning, Building and Health Committee. The two would meet behind closed doors to discuss the

planning issues for upcoming meetings (see, for example, evidence of Mr Ryan at Transcript, 924-

927 and 952-955). The relationship was considered by some to be too close. Their meetings

behind closed doors were considered by some to be inappropriate. There was concern that Deputy

Mayor Grljusich was able to, and did, unduly influence Mr Scharf's recommendations to the Council.

For example, Mr Brown, the City's CEO, gave evidence to the Inquiry that after a particular Council

meeting –

"MR BROWN: … a councillor appeared to be fairly agitated as a result of - following thecouncil meeting, so I approach the councillor just to find out what was happening and thecouncillor expressed some concern to me as to who was actually making therecommendations. Were they the recommendations of the planner or were they therecommendations of - were they being influenced by a councillor?

COUNSEL ASSISTING: Any particular councillor?---MR BROWN: John Grljusich"(Transcript, 1054).

5.2.69 Mr Brown spoke to Mr Scharf about these matters. He sought and obtained from

Mr Scharf assurances "that the recommendations which were being prepared were not influenced

by John Grljusich" (Transcript, 1055). The matter was not considered to be a serious issue and,

indeed, Mr Scharf's evidence to the Inquiry was that "till today I have never put much credence in it"

(Transcript, 1241). Mr Scharf's disclosure, to Deputy Mayor Grljusich, of what occurred at the


392

meeting between himself and Mr Brown provides a further illustration of Mr Scharf's relationship

with Deputy Mayor Grljusich. Mr Brown told the Inquiry that –

"MR BROWN: At a subsequent council meeting … John Grljusich advised the councilthat he had been subject to investigation by myself and I explained to the council thecircumstances surrounding that.

COUNSEL ASSISTING: Being the conversation with Mr Scharf?---MR BROWN: Beingthe conversation with Mr Scharf and the fact that my inquiry had resulted from a councillorpresence.

COUNSEL ASSISTING: What if anything did you do following that councilmeeting?---MR BROWN: I spoke to Mr Scharf the following day, expressed my concernto him that my questioning of him had gone back to John Grljusich. I told him that Ithought it was quite inappropriate for me to have a discussion with him and it had goneback in the manner which it did, and which he was apologetic for and said that he didn'trealise the consequences of it" (Transcript, 1055).

5.2.70 Mr Scharf was well aware of the Grljusich family feud and, in particular, of the bitterness

which existed between John and George Grljusich. Mr Scharf was not a disinterested or neutral

observer. In his evidence to the Inquiry, his references to George Grljusich indicated some

negativity and disapproval. He testified that, before July 1994 –

"George Grljusich would come along to the council meeting and yell funny things out …both Tom and George used to stand there and utter words of rejection to whatever Johnsaid" (Transcript, 2904).

5.2.71 He also gave evidence that, during one particular Council meeting, the date of which he

could not recall, he felt intimidated and was "concerned about being struck by George or Tom" –

"It was a council meeting and I used to sit at the back with my back towards the public so Ihad my face towards the councillors, and one time I could hear them, you know, and Iturned around and I was sort of concerned that I was going to be physically struck. I hadgenuine concern" (Transcript, 2960).

5.2.72 Mr Scharf did not disagree that he was "more favourably disposed" towards Deputy

Mayor Grljusich. One of the reasons for this disposition appears in the following exchange between

Counsel Assisting and Mr Scharf –

"COUNSEL ASSISTING: The fact that you were being physically threatened by Georgeand Tom, is that why you're more favourably disposed to John Grljusich?---MR SCHARF:I think it has an impact. He never threatened me" (Transcript, 2972).


393

5.2.73 Another reason for Mr Scharf being "more favourably disposed" towards Deputy Mayor

Grljusich may well have been Mr Scharf's view that it was Deputy Mayor Grljusich, rather than his

brothers, who needed assistance. In Mr Scharf's words –

"Well, I just think it's something that you've got to understand, that these people arethreatening, and you've got to understand that if you think that - you know, you're sayingto me all the time that John Grljusich had an upper hand, but I disagree. I really feel thatthe dominance and power of Tom and George was just in excess of what John had"(Transcript, 2971).

5.2.74 What clearly emerges from the evidence is that, in the contest between George and John

Grljusich, including their contest for the control of Lot 17, Mr Scharf's sympathies lay - and were

seen to lay - with John Grljusich.

5.2.75 Mr Scharf's relationship with Deputy Mayor Grljusich and that Mr Scharf was not a

disinterested or neutral observer, are matters that need to be kept in mind in assessing the many

decisions and actions of Mr Scharf throughout this period, that in fact benefited Deputy Mayor

Grljusich at the expense of Mr George Grljusich and others.

(iii) Responsibility of Deputy Mayor Grljusich and Mr Scharf

5.2.76 Mr Scharf knew of Deputy Mayor Grljusich's interest in Lot 17 and of the Supreme Court

action initiated by John Grljusich and his sisters to try to remove George and Tom Grljusich as

trustees and, by doing so, to remove the ability of George and Tom to deal with Lot 17. All this, it

was submitted in closing submissions on Mr Scharf's behalf, was "common knowledge". Despite

Deputy Mayor Grljusich's personal interest in Lot 17, Mr Scharf saw no problem in discussing with

him the matters before Council that involved Lot 17 (Transcript 2899-2900). This gave Deputy

Mayor Grljusich the opportunity to provide Mr Scharf with more information than what was "common

knowledge" about his interests and wishes in relation to Lot 17.

5.2.77 The evidence establishes that Deputy Mayor Grljusich had a strong desire to prevent the

rezoning of Lot 17 as part of Amendment No. 91 (see above at 5.2(d)). He was determined to

ensure either that Amendment No. 91 was delayed or that Lot 17 was excluded from

Amendment No. 91. He was so determined to achieve this that he would have taken injunctive

action against the City itself if the Council had proceeded to adopt Amendment No. 91 with Lot 17

included. I am satisfied that, at least by June 1994, Mr Scharf was well aware of Deputy Mayor

Grljusich's wishes in respect of Lot 17 and Amendment No. 91.


394

5.2.78 When the Amendment No. 91 issue came before the Planning, Building and Health

Committee on 28 June 1994 together with the Officers' recommendation that the amendment be

adopted and progressed, Deputy Mayor Grljusich had a strong desire for it to be stalled. If

considered on its merits, it would not have been stalled. One way to stall it was to sidetrack the

Council by introducing, preferably at a late stage so that there was little time or opportunity for

proper review, an issue or document which, hopefully, would be seen as a complicating factor with

the potential for confusion and uncertainty. This strategy worked particularly well on the under

prepared or misinformed, and if the confusion was widespread and sustained for long enough even

well informed opponents could give up in frustration.

5.2.79 In June 1994, the first part of this strategy could be achieved by having Deputy Mayor

Grljusich's letter of 19 January 1994 brought before the Committee. As indicated earlier this was

done, probably, by Mr Scharf. But Mr Scharf's role did not end there. The issue that Deputy Mayor

Grljusich sought to exploit had no substance at all. Mr Scharf knew this. When he was questioned

about the matter by Counsel Assisting, Mr Scharf conceded that there was no relevant conflict

between the two propositions referred to in the Council's resolution of 5 July 1994

(Transcript, 2909). Reference will be made later to the review of this matter by the State

Ombudsman. In his report, the State Ombudsman concluded that the legal advice which the City

later received on this matter "should have been obvious to Council and its officers" (Report to the

City dated 16 October 1996 at p. 40).

5.2.80 Even if it were true that Mr Scharf had "no choice" but to put Deputy Mayor Grljusich's

letter before the Committee, Mr Scharf should have advised the Committee that the issue raised by

Deputy Mayor Grljusich was spurious. He could have done so simply by informing the Council of

the City's long standing interpretation and application of the Packham Area policy. He was the

City's Director of Planning and Development. The elected members relied on him for information

and advice on planning matters. If he did not have the opportunity to give the matter considered

attention before the Committee meeting on 28 June, he could have produced a written or even an

oral report to the full Council when it met a week later on 5 July 1994. At the least, he could have

briefed individual elected members on an informal basis. Mr Scharf did none of these things.


395

Findings




19 January 1994 –

(a) Mr Scharf failed to comply with his duties as the Director of Planning and

Development, to properly inform the Council at or before its meeting on

5 July 1994 of matters that were of critical importance to its decision and which

were known by Mr Scharf at the time to be of critical importance to its decision;

and

(b) Mr Scharf's failure to inform the Council of those matters was deliberate and was

intended by him to facilitate the deferral of Amendment No. 91 in the knowledge

that this would advantage Deputy Mayor Grljusich and disadvantage George and

Tom Grljusich, Urban Focus and other Packham Area landowners.

5.2.81 There is some evidence that Mr Scharf not only failed to give to the Council the

information that would have established beyond question that the issue raised by Deputy Mayor

Grljusich was spurious, but that at the Committee and Council meetings he indicated his support for

the decision that was taken. This evidence is insufficient to enable me to make a finding to that

effect.

5.2.82 There is little direct evidence of Deputy Mayor Grljusich's role in the Committee meeting

on 28 June 1994 and the Council meeting on 5 July 1994. For the reasons indicated earlier, the

only rational inference from the evidence is that Deputy Mayor Grljusich was responsible for the

letter of 19 January 1994 being put before the Committee and Council.

5.2.83 Given Deputy Mayor Grljusich's experience as an elected member, particularly as a

member and chairman of the Planning, Building and Health Committee and also his interest in the

rezoning and subdivision of Lot 17 which was within the Packham Area, it would be surprising if he

was not fully aware of the City's long standing interpretation and application of its Packham Area

policy. It is not necessary to make a specific finding on that point. What is clear is that it was

Deputy Mayor Grljusich who sowed the seeds of the confusion and uncertainty about the City's

policy. Whether he did so directly, by participating in the debate, or indirectly, by speaking to his

fellow elected members before the debate, is immaterial for these purposes.


396

Findings




19 January 1994 –

(a) Deputy Mayor Grljusich failed to comply with his duties, and abused his

position, as an elected member and as the City's then Deputy Mayor by –

(i) causing a copy of a private letter from Urban Focus to himself dated

19 January 1994 to be put before, and become a subject of discussion at,

the Planning, Building and Health Committee meeting on 28 June 1994

and the Council meeting on 5 July 1994 in circumstances where it was

clear, and should have been clear to him, that the letter had no relevant

bearing on the progress of Amendment No. 91;

(ii) deliberately generating among elected members confusion and

uncertainty about the interpretation and application of the City's Packham

Area policy; and

(iii) fostering a relationship with Mr Scharf so as to encourage, assist and

enable Mr Scharf to act in Deputy Mayor Grljusich's interests; and

(b) in respect of each of these matters Deputy Mayor Grljusich acted as he did for

the purpose of achieving the deferral of Amendment No. 91 to his personal

advantage.

(iv) Responsibility of other elected members

5.2.84 The elected members who were present at the Committee meeting on 28 June 1994 or

the Council meeting 5 July 1994 (or both) were not questioned specifically about these matters

during the public hearings. In part this was because of the lapse of time since the relevant events

and the absence of documents that might assist with an individual's recollection of what happened

and why. Also relevant was the ever present need to restrict the length of the public hearings and

of the Inquiry itself. The elected members were, however, provided by the Inquiry in

November 1999 with details relevant to the Committee and Council meetings and invited to respond

to various matters including the criticisms made in the reports to the City by the State Ombudsman

and a series of possible adverse comments and findings based on the investigative work carried out

by the Inquiry. Only two failed to respond. One was Mr Elpitelli who cited work commitments. The

other was Mr Battalis. Counsel for Mr Battalis acknowledged that he had received the invitation to


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respond and indicated that he would respond (Transcript, 3344-3345). He did not respond, nor did

he give any reasons for not responding.

5.2.85 Perhaps not surprisingly, and only partially due to a lapse of time, the responses were

brief, non-specific and generally self-serving. They provided little information on which to form an

insight into why the elected members voted as they did.

5.2.86 Mr Greengrass was the only elected member who recalled voting against the resolution.

Others, including Mr Ostojich, Mr Pecotic and Mr Wheatley, claimed that the decision was made in

good faith and on the advice of the administration. Mr Gianoli, Mr Lee and Mr Lees each recalled

feelings of confusion. Mr Wheatley, in his response, insisted that the adverse findings made by the

State Ombudsman relating to the Council's decision were not justified, either on procedural or

substantive grounds. This aspect of his response will be dealt with later in this Chapter (see below

at 5.7(d)). On the available evidence, it is not possible to identify with sufficient certainty all of those

who voted for and against the resolutions of 28 June and 5 July 1994.

5.2.87 The Council decision is so devoid of substance and merit that it is difficult to believe that

any properly informed elected member, acting in good faith, could have supported it. Nevertheless,

the evidence does not enable a finding to be made on the balance of probabilities that any of the

elected members who voted for the Committee or Council resolutions voted with the intention of

conferring an advantage on Deputy Mayor Grljusich or otherwise than in good faith.

5.2.88 For those elected members who supported the Committee or Council resolutions, the

most benign view of the evidence is that they were misinformed, confused and misled. This view

sits comfortably with the response to the Inquiry by Mr Lee who stated that he was not familiar at

the time with the relevant facts, but if they had been raised at the time then the outcome of the

meeting may well have been different. A benign view, however, is at odds with the responses from

Mr Wheatley and Mr Pecotic who, despite being given or reminded about the relevant facts, still

insisted that the correct decision had been made.

5.2.89 Even on this most benign view, the elected members cannot be said to have acted

properly. It is not sufficient to act in good faith or to act without the intention of conferring an

advantage on a colleague. Elected members also have an obligation to exercise their decision

making powers with care and diligence and in the interests of the City.


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5.2.90 Decisions of the type made on 5 July 1994, which can have a significant impact on

residents of the City, must not be made lightly. The impact was not limited to those financially or

otherwise directly affected by the decision. In this case, in particular, the community's confidence in

the City's decision making process was at stake. As I pointed out earlier, the Deputy Mayor had a

well-publicised interest in the decision. The need for impartiality, both in fact and as perceived by

the community, was critical. The City's elected members knew that they would be under closer

scrutiny than usual and had a responsibility to act accordingly. Despite the confusion that may

have existed, the elected members could and should have informed themselves sufficiently, even

from the materials supplied to them in the agenda paper and attachments, so as to appreciate that

there was no proper basis for the proposed deferral of Amendment No. 91.

Findings

F29. I find that, in respect of the elected members who voted in favour of the Planning,

Building and Health Committee recommendation of 28 June 1994 or the Council

decision of 5 July 1994 concerning Amendment No. 91, or both, that –

(a) the evidence does not establish to the requisite degree that –

(i) they voted with the intention of conferring an advantage on Deputy Mayor

Grljusich to the detriment of George and Tom Grljusich and to the other

owners of the lots which were the subject of Amendment No. 91; or

(ii) they did not act in good faith; and

(b) the evidence establishes that they failed to exercise the due care and diligence

required to properly inform themselves of material facts that would have shown

that there was no proper basis for the proposed deferral of Amendment No. 91.

5.3 Amendment No. 91 delays from July to October 1994

(a) Legal advice delays

5.3.1 The effect of the Council's resolution of 5 July 1994 was to delay the progress of

Amendment No 91 until the City received and considered the legal advice it sought. Mr Scharf had

taken over direct responsibility for this matter from Mr Dowling. It was Mr Scharf's responsibility to

obtain the legal advice and put the matter back to the Council.


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5.3.2 Mr Scharf knew, as the Officers' report to the Council itself stated, that Urban Focus

(along with George and Tom Grljusich and many others) "was anxious to get a rezoning instituted"

as soon as possible. He also knew that Deputy Mayor Grljusich was anxious for Amendment

No. 91 to be delayed. When faced with these two competing interests, what did Mr Scharf do?

5.3.3 He did not send the request for advice until 25 July 1994 - almost three weeks after the

Council meeting. The request was contained in a short letter to McLeod & Co that did little more

than repeat the terms of the Council resolution. It could and should have been sent within a day or

two of the meeting. Having regard to the history of this matter including, as will be seen later,

Mr Scharf's extremely prompt actions on behalf of Deputy Mayor Grljusich in November 1994, I

have no doubt that if Deputy Mayor Grljusich rather than Urban Focus had wanted the legal advice

quickly, Mr Scharf would have sent the request for the advice within a day or two of the Council

meeting.

5.3.4 The advice from McLeod & Co to the City was dated 31 October 1994. In fact, it is

recorded as having been received for the first time by the City on 9 November 1994. (This was

later confirmed by the City in its formal written response to the State Ombudsman dated

8 August 1996.) More than 17 weeks elapsed between the Council's resolution requesting legal

advice (on 5 July 1994) and the receipt of that legal advice (on 9 November 1994). As a result, the

earliest opportunity that the Council had to reconsider Amendment No. 91 was at its meeting on

6 December 1994 - over 5 months after the Council had sought the advice.

5.3.5 It is essential to appreciate that the advice sought was not difficult. It raised no complex

legal or factual issues. In fact it was so simple that, as I have found, the request for advice itself

was unnecessary and unjustified. After his review of this matter, the State Ombudsman concluded

in his report to the City that –

"The advice that Council ultimately received from its solicitors on this matter (by letterdated 31 October 1994) essentially states what should have been obvious to Council andits officers … " (16 October 1996 at p. 4).

That the advice was indeed obvious is illustrated by Mr Scharf who, after being asked by Counsel

Assisting during the public hearings to compare the two statements on which the advice was

sought, readily conceded that there was no inconsistency (Transcript, 2909).


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5.3.6 Why then did Mr Scharf, as the City's Director for Planning and Development and as the

person directly responsible for pursuing this matter, allow a situation where –

(a) advice that was so obvious that it should never have been sought was not obtained

for more than 17 weeks; and

(b) the delay resulted in the deferral of Amendment No. 91 for at least 5 months?

Was it purely coincidental that Mr Scharf's actions were consistent with Deputy Mayor Grljusich's

strong desire to have Amendment No. 91 delayed?

5.3.7 Mr Scharf gave the Inquiry two explanations for his actions. Firstly, he said that it was his

practice to wait for McLeod & Co rather than ring and hurry up the advice. He told the Inquiry that

he was "well aware" that the delay was "holding up a whole stage" of the Packham Area

development. When asked whether this concerned him he responded –

"Well, it concerned me that I wasn't going to hassle anybody to respond tocorrespondence in … Well, I don’t ring him up and say 'Look Denis, get on with it. Wewant a decision'. That's not my practice" (Transcript, 2912).

5.3.8 As will be seen later, this stance is in stark contrast to Mr Scharf's efforts, in

November 1994 to follow up advice from Corser & Corser, Deputy Mayor Grljusich's solicitors, in

circumstances where the Deputy Mayor wanted the matter dealt with quickly.

5.3.9 The second explanation given by Mr Scharf is that his recollection was that he had sought

advice from McLeod & Co not only about the matter referred to in the Council's resolution but also

about the capacity of George and Tom Grljusich to sign the Owner's Deed as trustees, as well as

the possibility of exposing the Council to additional costs (Transcript, 2906-2907, 2909-2910

and 2916).

5.3.10 This evidence is inconsistent with the terms of the City's written request for advice, drafted

by Mr Scharf himself, on 25 July 1994. It is also inconsistent with the advice given by McLeod & Co

dated 31 October 1994. Nothing in that advice deals at all with the matters mentioned by

Mr Scharf. Indeed, there is no evidence of any additional issue being discussed, orally or in writing,

with McLeod & Co by Mr Scharf or any other City employee.

5.3.11 Mr Scharf gave his sworn evidence on 22 and 23 November 1999. Following this, the

Inquiry obtained access to McLeod & Co's files relating to Lot 17. On one of these files was a file


401

note recording a telephone conversation between Mr McLeod and Mr Scharf on 8 August 1994.

The note states –

"Scharf.We'll arrange meeting to discuss the matter in detailNumber of complications.Hold advice for time being."

5.3.12 Mr Scharf was recalled to give evidence to the Inquiry about this document on

7 December 1999. His evidence was that it may have been either himself or Mr McLeod who

referred to the complications. He did not recall asking McLeod & Co to hold the advice. Mr McLeod

provided evidence to the Inquiry by way of a Written Response dated 10 December 1999.

Mr McLeod was unable to shed any light as to the circumstances resulting in the advice being

delayed (at pp. 2-5 and 7-9).

5.3.13 Three points need to be made about this file note. The first is that, leaving aside Deputy

Mayor Grljusich's desire to delay the matter, it is doubtful whether there were, in fact, any

"complications". The evidence discloses no complications that would have justified the delay in the

advice being provided to the City. Neither Mr Scharf nor Mr McLeod have any recollection of any

relevant complications. Nor is there any reference to any complications in the file note itself, any

other record passing between the City and McLeod & Co or, significantly, in the advice ultimately

provided to the City by McLeod & Co.

5.3.14 Secondly, as the file note anticipates, a meeting was held between Mr Scharf and

Mr McLeod. It was not held until 28 October 1994, three days before the date of the McLeod & Co

advice. The meeting is referred to in the McLeod & Co advice however there is no evidence that

"complications" or matters other than those referred to in the advice were the subject of discussion

at that meeting.

5.3.15 Thirdly, the request or suggestion to "hold the advice" was made either by Mr Scharf or

Mr McLeod. The more likely alternative is that it was made by Mr Scharf. Typically it is a client,

who is generally more familiar with the factual background, rather than the client's legal adviser who

requests that advice be held. Further, in circumstances where the legal adviser made such a

request, one would expect that the reasons for the request would have been documented and, in

this case, included in the advice finally provided to the City. If Mr Scharf requested that the advice

be held, it provides further evidence of his efforts to assist Deputy Mayor Grljusich to achieve his


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personal objective of delaying Amendment No. 91. This alternative would also help to explain why

McLeod & Co took so long to provide the advice.

5.3.16 Alternatively, the request or suggestion to hold the advice may have been made by

Mr McLeod. Even if this, more unlikely, explanation is correct, it would not have relieved Mr Scharf

of his duty, as the officer directly responsible and as the City's Director of Planning and

Development, to ensure that timely advice was provided to the City, particularly knowing as he did

that Urban Focus was anxious for Amendment No. 91 to proceed and that the delay was holding up

an entire subdivision stage. After the phone call with Mr McLeod, almost three months elapsed until

the City received the advice from McLeod & Co.

Findings

F30. I find that, in respect of the legal advice required by the Council under its decision of

5 July 1994 –

(a) Mr Scharf, as the Director of Planning and Development and as the City's

employee directly responsible for implementing the Council's decision of

5 July 1994 had a duty to request the advice promptly and to ensure that timely

advice was provided to the Council;

(b) Mr Scharf failed to request the advice promptly or to ensure that timely advice

was provided to the Council;

(c) Mr Scharf acted as he did knowing that it would be to the advantage of Deputy

Mayor Grljusich and to the disadvantage of George and Tom Grljusich, Urban

Focus and other Packham Area landowners; and

(d) Mr Scharf's behaviour was a gross departure from the standards of conduct

expected of a person occupying that position and, in all the circumstances,

constitutes improper conduct.

(b) Recommendation to defer Stage 8 subdivision

5.3.17 The City had no power to approve or refuse approval for an application for subdivision.

Its recommendations, however, were taken into account by the Planning Commission who had the

decision making power. As a matter of practice Urban Focus, like any other developer, forwarded

subdivision proposals to the City at or about the same time as a formal application was forwarded to

the Planning Commission. This helped to ensure that any concerns the City might have had about

the proposal could be addressed without delaying the progress of the formal application.


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5.3.18 Consistently with this approach, Urban Focus submitted to the City on or about

29 June 1994 a proposed subdivision of Stage 8. The proposal included Lot 17. The Stage 8

subdivision proposal came before the Planning, Building and Health Committee on 26 July 1994.

The Officers' report recommended –

"that the State Planning Commission be advised that Council recommends that theproposed subdivision be deferred, pending the initiation of proposed Amendment No 91 toCouncil's Town Planning Scheme which rezones a number of the subject lots from Ruralto Residential."

Mr Grljusich did not attend this meeting. Mr Scharf did attend. The minutes record that the

Committee's recommendation was in the same terms as the recommendation in the Officers' report.

5.3.19 That recommendation was adopted, apparently without debate, at the Council meeting on

2 August 1994. Mr Scharf also attended the Council meeting.

5.3.20 The consideration of the Stage 8 subdivision proposal provided - or should have provided

- the Council and Mr Scharf with a timely reminder of the consequences of the Council decision to

defer Amendment No. 91 a month earlier. The Stage 8 subdivision was being held up pending the

receipt of legal advice about Amendment No. 91. The opportunity for the Council to review the

subdivision matter should have elicited concerns about the adverse effect of the Council's decision,

at least on the Packham Area landowners. It would have been appropriate for the Council to direct

Mr Scharf to expedite the receipt of legal advice. Regardless of any directive, the Council's review

should have prompted Mr Scharf himself to follow up actions in respect to the legal advice.

5.3.21 None of this occurred. Deputy Mayor Grljusich's interests were being satisfied and there

seems to have been a total absence of any concern for the adverse consequences that the City's

decision was having, and would continue to have, on other residents of the City.

5.3.22 There is another aspect of this matter that needs to be considered. A review of the

Officers' report would suggest that the Council had no choice but to recommend that the Urban

Focus subdivision proposal for Stage 8 be deferred until the initiation of the proposed rezoning to

be brought about by Amendment No. 91. This is not the case.

5.3.23 Almost three years earlier the Full Supreme Court of Western Australia had handed down

its decision in the case of Falc v Planning Commission of Western Australia (1991) 5 WAR 522.

The decision attracted widespread publicity and comment among town planners throughout the


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State. In essence, as a result of the Supreme Court ruling, subdivision approval could be given by

the Planning Commission even when the land in question had not been zoned appropriately for that

subdivision.

5.3.24 Indeed, this in fact occurred later in relation to Lot 17 itself. Early in January 1996, the

Planning Commission, despite the City's earlier expressed wishes to the contrary, granted

subdivision approval for Stage 8 (which then included Lot 17) –

(a) even though Lot 17 was still zoned "Rural" under the City's District Zoning Scheme

and rezoning had not even been initiated; and

(b) before the Supreme Court handed down its decision in the action brought by

Deputy Mayor Grljusich and his sister to remove George and Tom Grljusich as

trustees.

5.3.25 Thus, when the Urban Focus Stage 8 subdivision proposal came before the Council in

August 1994, Mr Scharf could and should have referred to the Falc decision and advised the

Council that it was open to the Planning Commission to proceed with the subdivision application

despite the delays in the initiation of Amendment No. 91. That advice would no doubt have pleased

Urban Focus, George and Tom Grljusich and the Stage 8 landowners. It would not, of course, have

pleased Deputy Mayor Grljusich. No such advice was provided to the Council.

(c) Urban Focus letter to the City of 24 August 1994

5.3.26 On 24 August 1994, Urban Focus wrote a letter to the City about the Council's decision to

defer Amendment No. 91. The letter was marked to the attention of Mr Scharf. It stated that Urban

Focus was "extremely surprised and concerned at Council's decision" and continued –

" … it was specifically delayed pending our Company submitting the appropriate ownerauthorisation to Council. Having complied with this requirement, we are nowdumbfounded that Council should defer the Amendment pending receipt of advice from itsSolicitors in respect to any possible conflict with the Council's policy.

Whilst we respect Council's right to seek such clarification in respect to futureamendments, such advice will in no way change the current position."

5.3.27 These conclusions underscore the spurious nature of the Council's decision to defer

Amendment No. 91. The letter also highlights the point that if, as procedural fairness required,

Urban Focus had been given the opportunity (as Deputy Mayor Grljusich was) to put its view on the


405

matter before the Council made its decision on 5 July 1994, the outcome - as Mr Lee has

suggested - may well have been different.

5.3.28 The letter from Urban Focus again contains a plea for the matter to be expedited. It

states –

"Council delay in deferring progress of Amendment 91 is causing us considerableembarrassment as the landowners concerned (ie Council's ratepayers) are gettingextremely agitated that the rezoning of their land is being held up for what might beconstrued as invalid reasons.

We accordingly again request that consistent with Council's resolution of 5 October 1993,Amendment 91 be now forwarded to DPUD for consent to advertise."

The plea fell on deaf ears. Mr Scharf forwarded a copy of the letter to Mr McLeod. It was not

accompanied by a request to provide an early response - even though, at this stage, the Council's

decision to seek advice had been made about two months earlier. It was to be more than two

months later again before McLeod & Co provided its response.

5.3.29 Mr Scharf did not provide a copy of the letter to the Council or to its elected members. He

considered that he had no choice but to provide to the Council, at very short notice, a private letter

written by Urban Focus to Deputy Mayor Grljusich. Yet it did not appear to occur to him that a

person acting even handedly would also want to bring to the notice of elected members what was in

effect the response by Urban Focus set out in a letter specifically addressed to the City.

5.4 Exclusion of Lot 17 from Amendment No. 91 on6 December 1994

(a) Events leading to PBHC meeting on 29 November 1994

5.4.1 The advice from McLeod & Co was received by the City on 9 November 1994. As

indicated earlier, I agree with the conclusion expressed in the State Ombudsman's report to the City

that the advice from McLeod & Co "essentially states what should have been obvious to the Council

and its officers" - that is, that there was no relevant inconsistency between the City's policy and the

letter to Deputy Mayor Grljusich from Urban Focus. The advice from McLeod & Co also touches,


406

with some understandable sensitivity and diplomacy, on the spurious nature of the request for

advice. It states –

"We should perhaps add that the information supplied to us indicates that all of theowners of land in the area of Amendment No.91 have executed the Owners' Deed. Inthose circumstances, it may be that the question put to us is essentially hypothetical."

5.4.2 None of this advice came as a surprise to Mr Scharf. Nor is it likely to have come as a

surprise to Deputy Mayor Grljusich. What had been successfully achieved by Deputy Mayor

Grljusich, with the considerable assistance of Mr Scharf, was a 5 month delay in progressing

Amendment No. 91.

5.4.3 In that time, more work had been done on behalf of Deputy Mayor Grljusich in the

preparation of his Supreme Court action seeking the removal of George and Tom Grljusich. More

significantly, nothing had happened in relation to the rezoning or subdivision of Lot 17 that might

have reduced the chances of a successful removal of George and Tom Grljusich as trustees. It

does not appear to have occurred to Deputy Mayor Grljusich or Mr Scharf that others, including

other City residents (apart from George and Tom Grljusich), had to suffer as a result of Deputy

Mayor Grljusich's objectives being met.

5.4.4 Once the advice from McLeod & Co had been received by the City on 9 November 1994,

the Amendment No. 91 issue had to be returned to the Council for its reconsideration in the light of

the advice. The advice ruled out any hope of reliance on the conflict that Deputy Mayor Grljusich

claimed existed between his letter from Urban Focus and the City's Packham Area policy.

5.4.5 At this point, therefore, the position was essentially the same as it had been 5 months

earlier in June 1994. There was no reason why, if considered on its merits, Amendment No. 91

should not have proceeded.

(b) Preparation of Officers' report

5.4.6 If Deputy Mayor Grljusich's objective of preventing the rezoning and subdivision of Lot 17

by George and Tom Grljusich through Urban Focus was to be achieved, another obstacle had to be

put in the way. This had to be done quickly - before the Council meeting scheduled for

6 December 1994 and, preferably, before the Planning, Building and Health Committee meeting

due on Tuesday, 29 November 1994 when Amendment No. 91 was back on the agenda.


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5.4.7 At that time, the City's practice was to deliver to elected members, by courier, copies of

the agenda paper, which included the Officers' reports and recommendations. Planning, Building

and Health Committee meetings were held on Tuesdays. The practice was to deliver the agenda

papers to elected members on the preceding Friday. Thus, for the Committee meeting scheduled

for 29 November 1994 to consider, among other matters, Amendment No. 91, the agenda paper

would be delivered to elected members on Friday, 25 November 1994.

(c) Corser & Corser letter of 24 November 1994

5.4.8 As the deadline of Friday, 25 November 1994 grew closer, on the material available at the

time, Mr Scharf would have had to recommend in the Officers' report that Amendment No. 91

should proceed. There was simply no basis for a contrary recommendation.

5.4.9 Records obtained by the Inquiry show that Mr Scharf telephoned Corser & Corser on

Thursday, 24 November 1994 and Friday, 25 November 1994. Corser & Corser were acting for

Deputy Mayor Grljusich and Mrs Gava in the Supreme Court action to remove George and Tom

Grljusich as trustees. Why would the City's Director of Planning and Development telephone

Deputy Mayor Grljusich's solicitors on consecutive days just before the agenda dealing with

Amendment No. 91 was finalised? In his evidence to the Inquiry, Mr Scharf could not give an

explanation.

5.4.10 Evidence of the purpose of Mr Scharf's telephone call is contained in a letter from

Mr Daniel O'Dea, a lawyer with Corser & Corser. The letter is dated 25 January 1996 and

addressed to the Legal Practitioners' Complaints Committee. It states –

"I recall that on or about 24 November 1994 I received an urgent telephone call from JohnGrljusich requesting that I write to the Cockburn City Council as a matter of urgencysetting out the nature of the proceedings in Supreme Court Action No. 3031 of 1991 andindicating that our clients sought to have the property at 266 Hamilton Road transferredinto the names of all the children of Mate Grljusich and the Council should not take anysteps in authorising the redevelopment of the land until such time as the matter has beenresolved in Court.

I had a subsequent telephone discussion with a Mr Scharf, who I believe is an employeeof the Cockburn Shire Council. He wanted to know when a copy of the letter that JohnGrljusich had requested that I draft would be available to the Council.

I also recollect that I had a subsequent telephone conversation with John Grljusich andMr Scharf both further enquiring as the whereabouts of the letter and likely time of itsavailability."


408

5.4.11 The letter referred to by Mr O'Dea was faxed to the City on 25 November 1996 (but dated

24 November) shortly after Mr Scharf's second phone call to Corser & Corser. I am satisfied that

Mr Scharf telephoned Corser & Corser on each occasion because he had been informed, in all

likelihood by Deputy Mayor Grljusich himself, that a letter affecting Mr Scharf's recommendation to

the Planning, Building and Health Committee regarding Amendment No. 91 would be sent by

Corser & Corser. I am also satisfied that Mr Scharf was either asked by Deputy Mayor Grljusich to

follow up the letter or took it upon himself to do so.

5.4.12 This pro-active stance and sense of urgency by Mr Scharf to assist Deputy Mayor

Grljusich can be contrasted with his reactive stance in relation to following up advice sought from

McLeod & Co on 25 July 1994 - when it was in Deputy Mayor Grljusich's interests for the advice to

be delayed. Mr Scharf's explanation to the Inquiry for not following up his request for advice to

McLeod & Co was that it was not his practice "to hassle anybody to respond to correspondence"

(Transcript, 2912). That was clearly untrue in relation to the Corser & Corser correspondence.

5.4.13 The letter from Corser & Corser stated, in accordance with Deputy Mayor Grljusich's

instructions, that –

" … our clients [Mr John Grljusich and Mrs Gava] seek relief including the removal ofGeorge Ned and Duje Toma Gruilsich[sic] as Trustees and any property be transferredinto the names of all the children of Mate Gruilsich[sic].

In consequence of such claim, our clients dispute vigorously the entitlement of theExecutors to deal with the land and believe that the Council should not take any steps indealing with the land until such time as these matters have been resolved."

5.4.14 Having received this letter, Mr Scharf then proceeded to complete the agenda item

relating to Amendment No. 91. His report was brief. It repeated, with minor changes, the terms of

the Council resolution of 5 July 1994 (when the Council last dealt with the matter) and listed the lots

proposed to be rezoned. The list omitted, apparently in error, reference to Lot 17 Hamilton Road.

Then followed, under the heading "COMMENT", the following –

"The response from McLeod and Company is attached. The major issue here is whetheror not the correct landowner has agreed to the rezoning of Lot 17 Hamilton Road. Thesolicitors Corser and Corser have stated in their correspondence (copy attached) thatthere is a dispute as to the owner of the land and that dispute will be settled by a Courthearing to be heard in the near future.

Therefore, it would be prudent to omit Lot 17 Hamilton Road from this amendment andallow the remainder to proceed."


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5.4.15 In three important respects the statements made by Mr Scharf in his advice to the Council

are misleading and, in two cases, false. In each case the misleading statement favours Deputy

Mayor Grljusich.

5.4.16 Firstly, the statements give the clear impression that McLeod & Co, the City's solicitors,

had addressed, in its attached response, the "major issue", that is, "whether the correct landowner

had agreed to the rezoning of Lot 17 Hamilton Road". In fact, there is no reference at all in the

attached advice from McLeod & Co to that issue. What Mr Scharf failed to mention was that the

McLeod & Co's advice was in fact consistent with Amendment No. 91 proceeding with the inclusion

of Lot 17.

5.4.17 Secondly, "[t]he major issue" as described by Mr Scharf was not identified in either the

advice from McLeod & Co or the advice from Corser & Corser. It was certainly the view of Deputy

Mayor Grljusich that the ownership of Lot 17 was the "major issue here". It appeared to be

Mr Scharf's view as well. However Mr Scharf's report is misleading and false in its assertion that –

" … Corser and Corser have stated in their correspondence (copy attached) that there is adispute as to the owner of the land … ".

5.4.18 The Corser & Corser letter did not state that there was a dispute as to the owner of the

land. Nor does it contain any reference to such a dispute.

5.4.19 As trustees, George and Tom Grljusich were the legal owners of Lot 17. The City had

known this since at least 24 October 1985 when it was formally advised in writing by Mr George

Grljusich of the transfer of Lot 17 into the names of the joint executors and trustees, George and

Tom Grljusich. As legal owners, George and Tom Grljusich had been responsible for the payment

of rates to the City in respect of that property for almost 10 years. (Attempts have been made on

behalf of Mr Scharf and others to justify his, and the Council's, actions by reference to later events,

including the outcome of Supreme Court proceedings to remove George and Tom Grljusich as

trustees. This issue will be considered later in this Chapter (see below at 5.4(h)(ii)).

5.4.20 Thirdly, the second of the only two statements that Mr Scharf ascribed to the Corser &

Corser letter is also misleading and false. He informed the Committee that the Corser & Corser

letter stated –

"that [the] dispute [as to the owner of the land] will be settled by way of a Court hearing tobe heard in the near future."


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No doubt this was to provide some comfort to the Committee about the possible impact of a Council

decision to exclude Lot 17 from Amendment No. 91. In fact, the Corser & Corser letter does not

contain any reference to when the action might be heard. If anything, the indications from the letter

are that the action would not be heard in the near future. This is because the letter states that an

amended Statement of Claim had been filed in the matter only a month earlier - despite the fact that

the action had commenced almost three years earlier. Mr Scharf's closing submissions state that

this estimate of time "may have been a fair assessment at the time having regard to the multiplicity

of sources providing information … ". These sources were not identified and his submission does

not take the matter much further.

5.4.21 Of the three misleading and false statements made by Mr Scharf, it has been submitted

on his behalf that one of them was an "understandable" error (para. 51). The submission

acknowledges that there "is a clear legal distinction between ownership on the one hand and the

capacity to deal with it on the other", but states that –

" … in lay terms the distinction is of lesser significance. For a layman to misconstrue thedifference is, with respect, entirely understandable" (para. 51).

5.4.22 There are three responses to that submission. Common to all is the proposition that

Mr Scharf's misconstruction of this aspect of the Corser & Corser letter cannot be assessed in

isolation.

5.4.23 Firstly, if Mr Scharf had adopted a more professional, even handed and arms-length

approach to his relationship with Deputy Mayor Grljusich, particularly when dealing with matters in

which Deputy Mayor Grljusich had a strong financial and personal interest, he would have been in a

better position to realise that there was an important distinction between Deputy Mayor Grljusich's

view of the dispute and the view expressed by Mr Grljusich's solicitors.

5.4.24 Secondly, this particular misconstruction, like each of the misleading and false statements

made by Mr Scharf in his report to the Committee, clearly favoured Deputy Mayor Grljusich. This is

part of a consistent and persistent pattern applying throughout the events considered in this

Chapter. When faced with an exercise of discretion or judgment on a matter affecting Deputy

Mayor Grljusich's interests in Lot 17, Mr Scharf invariably exercised his discretion or judgment in a

way that favoured Deputy Mayor Grljusich - generally to the clear detriment of others, often many

others, who were residents of the City. Having regard to the sheer volume and consistency of


411

these actions, it is difficult to believe that Mr Scharf favoured Deputy Mayor Grljusich without

realising that he was doing so.

5.4.25 Thirdly, in giving his advice to the Committee, it was Mr Scharf's choice to take it upon

himself to construe the content of the letter from Deputy Mayor Grljusich's legal advisers. He could

have quoted directly from the letter rather than rely on his own interpretation of it. In the

circumstances, it should have been obvious to any person in his position that he should have

sought, or recommended that the Council seek, its own legal advice. He told the Inquiry that he

regularly contacted the City's solicitors, by letter and telephone, to seek advice. He did not do so in

this case. Having chosen to rely on his own interpretation and having failed to seek the advice of

the City's solicitors, it is audacious to suggest that he should now be excused for the false

construction he gave to the letter from Corser & Corser.

5.4.26 There is another twist involving Mr Scharf's misleading and false statements to the

Committee. Although they appear in the agenda paper for the Committee meeting, they do not

appear in the minutes of that meeting. There were 62 items considered by the Committee at its

meeting on 29 November 1994. In respect of every one of those items, with the exception of the

Amendment No. 91 item, the comments made in the Officers' report are reproduced, either in full or

with only minor and inconsequential variations, in the minutes of the meeting. This appears to be

the standard, if not invariable practice. Despite this, Mr Scharf's entire commentary was omitted

from the minutes.

(d) PBHC meeting on 29 November 1994

5.4.27 On the basis of these misleading and false statements, Mr Scharf set out his formal

recommendations to the Committee in these terms –

"RECOMMENDATIONthat Council advise Urban Focus:–

(1) Council is not prepared to proceed with Amendment No 91 in its present form as itis not satisfied that Policy PB14.1 requiring the applicants to participate in theOwners Scheme for the area has been satisfactorily fulfilled;

(2) Council has received advice that the matter of the correct owner of Lot 17 HamiltonRoad has not been satisfactorily resolved and is the subject of a Court case todetermine the issue;

(3) Council would be prepared to proceed with the Scheme Amendment in a modifiedform excluding Lot 17 Hamilton Road."


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5.4.28 The minutes of the Planning, Building and Health Committee meeting held on

29 November 1994 record that the elected members who attended were –






Mr Scharf also attended.

5.4.29 Deputy Mayor Grljusich declared the meeting open at 6.33pm. The item dealing with

Amendment No. 91 was not considered until just before 1.00am the following morning. Cr Pecotic

had left two hours earlier. The minutes also record that when the Amendment No. 91 item was

reached, Deputy Mayor Grljusich vacated the Chair and left the meeting. He returned immediately

after the Committee's resolution.

5.4.30 The Committee's resolution was in precisely the same terms as Mr Scharf's

recommendation. Only three elected members were present - Cr Battalis, who chaired the

discussions, and Crs Elpitelli and Howlett. The minutes record that the discussion lasted up to

24 minutes. As indicated earlier (at para. 5.2.84), Mr Battalis and Mr Elpitelli each failed to respond

to the Inquiry's invitation to make submissions or provide details on events and issues relating to

this line of inquiry, including their reasons for voting at this meeting. The only information provided

in Mr Howlett's response that was not already contained in the minutes was his statement that –

"I was not approached by, or influenced by, John Grljusich in respect to Lot 17 HamiltonRoad, Spearwood, nor was I asked by any other Councillor to vote in a particular way inrespect to this matter".

5.4.31 There is no evidence that any of the three elected members opposed the resolution. It is

likely that they each supported the resolution. Nevertheless, the evidence is insufficient for me to

make a finding to that effect.

(e) Procedural fairness

5.4.32 At this point it is appropriate to review the basis for, and merits of, the recommendation by

Mr Scharf, adopted by the Planning, Building and Health Committee on 29 November 1994 that, in

effect, Lot 17 should be excluded from Amendment No. 91. Central to this issue is the application

of the principles of procedural fairness.


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5.4.33 It is important to appreciate that the copy of the McLeod & Co advice which was included

in the agenda papers to elected members did not address or even refer to what Mr Scharf advised

the Committee was the "major issue". The effect of the McLeod & Co advice was to remove what

had been the only obstacle preventing the progress of Amendment No. 91 during the preceding

5 months.

5.4.34 Thus, the only basis for the recommendation by Mr Scharf not to proceed with

Amendment No. 91 was the letter from Corser & Corser, the solicitors for one of the parties involved

in what Mr Scharf's Counsel referred to as the "notorious dispute then on foot". The application of

the principles of procedural fairness can be considered independently of the issue concerning the

false and misleading statements made by Mr Scharf which he represented as being based on the

Corser & Corser letter.

5.4.35 It is a fundamental principle of procedural fairness that a decision maker must not make a

decision that adversely affects the rights of a person without giving that person an opportunity to be

heard. For decision makers in the public sector, including local governments, it is a rule of law. A

decision made in breach of the principles of procedural fairness is open to a Supreme Court

challenge and may be set aside as unlawful.

5.4.36 This issue is more than one of acting lawfully rather than unlawfully - although this should,

on its own, be sufficient to guide the conduct of elected members and employees. The principles of

procedural fairness have been described as no more than 'fair play in action'. The application of the

principles of procedural fairness by decision makers (whether in the public or private sector)

protects individuals from arbitrary decisions. It also enhances the quality of the decision making

process and, as a result, significantly increases the prospects of better decisions. As Professor

Allars has explained –

"If the individuals most vitally affected by a decision are not given an opportunity toprovide information to the decision-maker, or if the decision-maker's personal preferenceswill be advanced by choosing one alternative rather than another, then the decision ismore likely to be a bad one. Conformity with the principles of procedural fairnessprovides the informed and balanced foundation for discretionary choices which are bothjustifiable and just on the merits" (Margaret Allars, Introduction to AustralianAdministrative Law, Butterworths, 1990, p.236).

5.4.37 Another significant consequence of applying procedural fairness principles is that it

enhances the prospect of wider public confidence in the resulting decisions, even - or particularly -

when the outcome is viewed as unfavourable.


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5.4.38 Mr Scharf's recommendation to the Planning, Building and Health Committee was a

recommendation to act in a way that would result in a blatant breach of the principles of procedural

fairness. In this particular situation, it is irrelevant whether Mr Scharf was aware of the content of

the principles of procedural fairness. Even without knowledge of the principles of procedural

fairness it would be obvious to any reasonable person that the process adopted by Mr Scharf in

making the recommendation was unfair. Mr Scharf had been informed of the views and wishes of

one of the parties to a dispute and, without making any further enquiries, he recommended to the

Committee that it should act on that basis. That is instantly recognisable as lacking in impartiality

and, therefore, unfair.

5.4.39 In the context of the "notorious dispute then on foot", Mr Scharf's recommendation clearly

favoured Deputy Mayor Grljusich and it was inevitable that there would be a corresponding public

perception that the Deputy Mayor was being favoured by the City.

5.4.40 Mr Scharf's responsibilities, legally and in a lay sense, were clear. He should not have

made a recommendation to exclude Lot 17 from Amendment No. 91 or any recommendation that

favoured Deputy Mayor Grljusich based on the letter from Deputy Mayor Grljusich's solicitors

without first –

(a) providing Urban Focus and George and Tom Grljusich (who would be the most

affected by any recommendation to exclude Lot 17 from Amendment No. 91) with a

copy of the letter from Corser & Corser and inviting their responses; and

(b) properly considering any responses received from Urban Focus or George and

Tom Grljusich.

5.4.41 Mr Scharf's closing submissions imply that it was unnecessary to contact George and

Tom Grljusich because they "were not relevant applicants in this context [Urban Focus was] and

indeed no other landowners were contacted" (para. 39). This misses the point. Mr Scharf pro-

actively obtained submissions from potential owners which raised the question of George and Tom

Grljusich's ability to deal with the land. They were the very people who could respond to this

issue - Urban Focus did not represent them in relation to this matter.

5.4.42 Leaving aside any notion of fairness towards Urban Focus and George and Tom

Grljusich, the question arises why Mr Scharf made no attempt to seek independent legal advice

from the City's solicitors or elsewhere. When asked this question at the public hearings of the


415

Inquiry, Mr Scharf responded that he "didn't think it was necessary" to seek legal advice

(Transcript, 2926). Indeed, after extensive questioning from Counsel Assisting about these issues,

Mr Scharf insisted that, looking back on the matter, he was "perfectly content" with his conduct

(Transcript, 2930). His closing submissions, however, conceded that "[w]ith the benefit of hindsight,

it may have been appropriate to seek additional advice from council's solicitors in relation to the

Corser & Corser letter" (para. 17).

5.4.43 Not only was the process adopted by Mr Scharf fundamentally unfair, it was readily seen

to be fundamentally unfair. It added further support for the strong perception that the City was

favouring its Deputy Mayor at the expense of others, including other City residents. Even if, in this

instance, the recommendation of Mr Scharf could have been independently supported on its merits,

the unfair process that he adopted would tend to erode the community's confidence in the City's

decision making processes, not only in this case but generally.

5.4.44 Similar reasoning and conclusions apply to the decision making procedures followed by

the Planning, Building and Health Committee on 29 November 1994 and, with some variations, the

Council on 6 December 1994.

(f) Telephone advice from McLeod & Co on 6 December 1994

5.4.45 The Committee's recommendation was, in effect, that the Council should exclude Lot 17

from Amendment No. 91. The recommendation was to be considered by the Council at its meeting

on 6 December 1994. On the same day Mr Scharf discussed aspects of the matter in a telephone

conversation with Mr McLeod from McLeod & Co. Significantly, no advice appears to have been

given on the Corser & Corser letter. Details of the conversation are set out in a letter from McLeod

& Co to the City dated 13 December 1994. The letter records that Mr Scharf asked Mr McLeod to

give him written confirmation of the matters discussed in their telephone conversation.

5.4.46 There are two major criticisms of Mr Scharf's actions in relation to this advice from

McLeod & Co.

5.4.47 The first concerns his tardiness in seeking legal advice. A week earlier, when it was in

Deputy Mayor Grljusich's interest to get advice from Corser & Corser as a matter of urgency,

Mr Scharf responded immediately with telephone calls on successive days to Mr John Grljusich's

solicitors chasing up the advice until it arrived. In contrast, despite receiving the Corser & Corser


416

letter on the morning of 25 November 1994, Mr Scharf made no attempt to get legal advice before

the Committee meeting on 29 November 1994 and waited until the day of the Council meeting on

6 December 1994 to obtain advice from Mr McLeod.

5.4.48 This delay meant that the City's solicitors did not have the opportunity that they would

otherwise have had to give greater consideration to the matter. One consequence of this is that

McLeod & Co had no real opportunity to ensure that it had the necessary facts on which its advice

should be based. Situations arise occasionally when the seeking and giving of urgent oral advice is

unavoidable. This was not one of them. Mr Scharf's actions in waiting until the eleventh hour to

seek legal advice was unjustifiable.

5.4.49 The second major criticism of Mr Scharf's actions concerns the accuracy of the

information he gave to McLeod & Co and on which McLeod & Co gave its advice. Mr Scharf asked

Mr McLeod to give advice on the basis of the following information –

"(a) At a meeting to be held on 6 December, Amendment No. 91 was to be considered.

(b) One of the land ownerships previously proposed to be included in AmendmentNo. 91 was that of the Grljusich family.

(c) Information at that time available to the Council left some doubt as to whether thelawful owners of the Grljusich family land had consented to the land beingincorporated in the Owners' Scheme, and therefore in Amendment No. 91.

(d) The question has arisen as to whether it would be in order for the Council in thecircumstances, to give approval to Amendment No. 91 without the Grljusich land."

5.4.50 For the reasons that follow it was misleading and deceptive, if not false, for Mr Scharf to

assert as he did that "[i]nformation at that time available to the Council left some doubt as to

whether the lawful owners of [Lot 17 had signed the Owners' Deed]".

5.4.51 In the first place, there is no evidence of any such information having been available to

the Council "at that time" - that is, when the Council had previously considered the matter on

5 October 1993 and 5 July 1994.

5.4.52 Secondly, no such information is recorded in Mr Scharf's report to the Committee on

29 November 1994 (or, for that matter, to the Council on the same day as he made this assertion to

Mr McLeod). The letter from Corser & Corser contained the only material put to the Committee or

the Council that questioned the inclusion of Lot 17 in Amendment No. 91. There is nothing in that


417

letter that states or even suggests that George and Tom Grljusich may not have been the lawful

owners of Lot 17 when they "consented [almost 12 months earlier] to the land being incorporated in

the Owners' Scheme". The Corser & Corser letter informed the City that the Supreme Court action

taken by Deputy Mayor Grljusich was an attempt sometime in the future to remove George and

Tom Grljusich as trustees. There was no suggestion that, even if the action was successful, it

would have retrospective effect or that the action put in issue whether George and Tom Grljusich

were the lawful owners of Lot 17 at the time that they entered into the Owners' Scheme. For

example, until the public hearings of the Inquiry, Mr McLeod had assumed that the entry into the

Owner's Deed by George and Tom Grljusich still bound the owners of Lot 17 (Written Response,

p. 29 para 7.15 and p. 51 para. 7.10(b)(ii).3).

5.4.53 Thirdly, Deputy Mayor Grljusich himself may have had doubts about whether his brothers

were the lawful owners of Lot 17 earlier in 1994. It was very likely that he expressed these doubts

to Mr Scharf. This is the only basis on which it might be suggested that the information given to

McLeod & Co by Mr Scharf was not actually false - that is, that it was information "available" to the

Council although it was never discussed in the Officers' report, referred to in any of the agenda

papers, documented on any Council file or indicated as one of the reasons for the Council's

decision. Whatever semantic support that argument may have, it is clear that only in a distorted

and deceptive way would that be regarded as "information available to Council". I have little doubt

that it was not understood by Mr McLeod that "information available to Council" meant "information

informally conveyed to Mr Scharf by Deputy Mayor Grljusich".

5.4.54 Mr Scharf could easily have faxed a copy of the one page Corser & Corser letter to

McLeod & Co. A person in Mr Scharf's position who was impartial and concerned to ensure that

proper advice and information was provided to the elected members, would have faxed the Corser

& Corser letter to McLeod & Co on the morning of 25 November 1994. A less diligent person may

have done so during the following week. The failure of Mr Scharf to do so, even on

6 December 1994 when he finally sought Mr McLeod's advice, provides further support for the

conclusion that Mr Scharf's actions and decision, including his delays and the provision by him of

false and misleading advice to the Council, were deliberate attempts to protect and enhance Deputy

Mayor Grljusich's interests.


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5.4.55 The advice recorded by Mr McLeod as having been given by him to Mr Scharf on

6 December 1994 includes the following –

"1. It is possible to obtain precise details on land ownership involving a deceasedestate. Amongst other things enquiries at the Supreme Court in relation to theGrant of Probate, and at the Office of Titles to ascertain whether any executor oradministrator had become registered as registered proprietor may provide sufficientinformation.

2. If it was intended that a decision would be made on the matter at a meeting to beheld on that day, 6 December, then there may be insufficient time to clarify theownership of the land before the meeting."

5.4.56 Mr McLeod concluded that, if it was necessary to make a decision on the matter that day,

"then one course of action open to the Council would be to allow the decision to be made on

Amendment No. 91 as to all land with the exception of [Lot 17]".

5.4.57 Thus, despite being based on Mr Scharf's misleading instructions, Mr McLeod's advice

made it clear that –

(a) it was "possible to obtain precise details on land ownership";

(b) because of Mr Scharf's delays it may have been too late to clarify who owned

Lot 17; and

(c) despite Mr Scharf's delays, the exclusion of Lot 17 from Amendment No. 91 was

only one course of action open to the Council.

5.4.58 In fact, the City already knew of the "precise details [of] the ownership" of Lot 17.

Mr George Grljusich had informed the City, in writing, of these details on 24 October 1993. If

Mr Scharf had told Mr McLeod of this, it is likely that Mr McLeod's advice would have been different.

5.4.59 If the City (or McLeod & Co) had wanted formal confirmation of the details supplied by

Mr George Grljusich, all that it needed to do was to obtain a copy of the duplicate Certificate of Title

from the Department of Land Administration. This can now be done electronically from the offices

of law firms and others. In 1994, it could have been done simply by visiting the Department of Land

Administration in the Perth central business district and requesting a copy. Even allowing for

waiting times in a queue, it would typically have taken no more than an hour. Had Mr Scharf sought

advice from McLeod & Co earlier, these land ownership details could have been made available to

both McLeod & Co and the Council.


419

5.4.60 In any event, even in the absence of the details of the ownership of Lot 17, Mr McLeod

advised Mr Scharf that the exclusion of Lot 17 from Amendment No. 91 was merely "one course of

action open to it".

5.4.61 There is no evidence that Mr Scharf informed the City of any of this advice from

McLeod & Co.

(g) Assessment of Mr Scharf's actions

Findings

F31. I find that, in respect of the events relating to and including the meetings of the

Planning, Building and Health Committee on 29 November 1994 and of the Council on

6 December 1994 to reconsider whether to support the rezoning of Lot 17 –


employee directly responsible for this matter, failed to comply with his duties

by –

(i) pursuing, plainly for the benefit of Deputy Mayor Grljusich, the receipt of

the letter dated 24 November 1994 from Corser & Corser;

(ii) not attempting to obtain legal advice on the Corser & Corser letter before

the Committee meeting on 29 November 1994;

(iii) basing his recommendations to the Committee solely on the letter from

Corser & Corser, Deputy Mayor Grljusich's private solicitors, without

obtaining independent legal advice;

(iv) providing advice to the Committee and the Council that, if followed, would

have resulted in a failure to comply with the principles of procedural

fairness - by not giving either Urban Focus or George and Tom Grljusich

an opportunity to respond to the letter from Corser & Corser; and

(v) providing to the Committee a report that, in fundamental respects, was

misleading and false;

(vi) not obtaining legal advice until the day of the Council meeting on

6 December 1994; and

(vii) providing instructions to McLeod & Co that were misleading and

deceptive, as well as false;


420

(b) in each of these matters, Mr Scharf acted as he did knowing that it would be to

the advantage of Deputy Mayor Grljusich and to the disadvantage of George

and Tom Grljusich, Urban Focus and other Packham Area landowners; and

(c) Mr Scharf's actions were a gross departure from the standards of conduct

expected of a person occupying that position and, in the circumstances,

constitute improper conduct.

(h) Council's decision on 6 December 1994

5.4.62 The matter came before the Council at its meeting held later that day. Those recorded as

being present were –

Mr Lees Mayor







Mr Lee Councillor

Mr McNair Councillor



Mr Waters Councillor


Mr Scharf is recorded as having attended the meeting.

5.4.63 The minutes also record that the item relating to Amendment No. 91 was considered in a

large block of items. Because of this it is almost certain that there was no discussion. The Council

simply relied on the report and recommendations of Mr Scharf and the recommendations of the

Planning, Building and Health Committee consisting, as it did, only of Crs Battalis, Howlett and

Elpitelli.

5.4.64 According to the minutes, it was Deputy Mayor Grljusich who moved the motion to adopt

the Committee's recommendations, including its recommendation relating to the exclusion of Lot 17

Hamilton Road. There was nothing in the Local Government Act 1960, which applied at the time


421

that prevented an elected member from participating in discussion or even moving a motion, in

respect of a matter in which that elected member had a financial interest. That issue has now been

addressed under the Local Government Act 1995 (at section 5.67). Although not at the time

unlawful, it would have been clearly inappropriate for Deputy Mayor Grljusich to have moved a

motion for a resolution that had the effect of excluding Lot 17 from Amendment No. 91.

5.4.65 Deputy Mayor Grljusich did not vote on the resolution. Neither did Crs Battalis, Gianoli,

Howlett, Lee or McNair. From the information provided in the minutes, those who did vote were

Mayor Lees and Crs Greengrass, Elpitelli, Ostojich, Pecotic, Waters and Wegner. The inclusion of

this item in a large block of items suggest that there was no opposition to it. It is likely, therefore,

that all those who voted would have supported the resolution.

(i) Assessment of Council's decision

(i) Decision making process

5.4.66 When considering the Amendment No. 91 issue, the members of the Planning, Building

and Health Committee, Crs Battalis, Elpitelli and Howlett, had before them –

(a) written advice from McLeod & Co dated 31 October 1994 which removed what had

been the only obstacle preventing the progress of Amendment No. 91 during the

preceding 5 months;

(b) the letter from Corser & Corser dated 24 November 1994; and

(c) Mr Scharf's report including his recommendation.

5.4.67 As I have found, Mr Scharf's recommendation was based on his own false and misleading

statements that he attributed to the Corser & Corser letter. If the elected members had read no

further, they may well have been misled by Mr Scharf. If they had read further, they may have had

some difficulty, as Mr Scharf did, in understanding the letter from McLeod & Co (Transcript, 2912-

2914). It is possible that they may also have misconstrued the letter from Corser & Corser as

indicating that there was a dispute as to the current ownership of Lot 17, rather than an attempt to

remove George and Tom Grljusich as trustees. It might be argued that an elected member should

be excused for having held a mistaken view of the relevant facts - even though, in part at least, it

may have been the result of lack of due care and attention. In other circumstances this might

readily be conceded.


422

5.4.68 One cannot, however, ignore the context. As was the case with the Council's decision on

5 July 1994, the well-publicised financial and personal interests of the Deputy Mayor in Lot 17 made

it essential that the City's elected members and employees exercise great care when considering

the process for making its decisions on these matters, the basis for those decisions, their content

and consequences. The Grljusich family dispute and the Deputy Mayor's interests in Lot 17 were

well known to all elected members and staff. It was in the City's interests to ensure that public

confidence in its decision making processes was not eroded. The members of the Committee on

29 November 1994, along with all elected members, had a responsibility to act impartially - and be

seen to act impartially - in relation to the Amendment No. 91 issues.

5.4.69 In this situation, the evident failure of the Committee members to pay proper attention to

the agenda material dealing with Amendment No. 91 cannot be as readily overlooked as it might in

other cases. Of greater significance, however, is the Committee's failure to recognise that

Mr Scharf's recommendation, if followed, would have resulted in a blatant breach of the principles of

procedural fairness.

5.4.70 The issue of procedural fairness, with a focus on Mr Scharf's actions, has been dealt with

earlier. It is extraordinary that the Committee members would not have recognised the unfairness

of making a decision based solely on a letter from Deputy Mayor Grljusich's own lawyers that set

out the views and wishes of Deputy Mayor Grljusich without –

(a) giving Urban Focus or George and Tom Grljusich or their lawyers the chance to

respond; or

(b) at the least, seeking independent legal advice from the City's solicitors.

5.4.71 The evidence before the Inquiry demonstrates, time and again, that the City's elected

members did not view committee and Council meetings as occasions to merely "rubber stamp"

recommendations from the City's employees. The elected members prided themselves on, and

regularly exercised, their own judgments. In this case, however, like the earlier meetings in June

and July 1994 dealing with Lot 17, proposed decisions that favoured Deputy Mayor Grljusich at the

expense of his brothers, Urban Focus and other City residents were uncritically supported. The

Council's uncritical stance on this issue is evidenced by –

(a) apparently allowing the resolution in question to be moved by Deputy Mayor

Grljusich himself; and

(b) dealing with the matter without discussion, in a block with many other items.


423

5.4.72 In one respect, the decision making process of the Council may be seen as being

somewhat less objectionable than that of the Committee. It is possible that Mr Scharf reported to

elected members the conversation that he had had earlier that day with Mr McLeod and

Mr McLeod's oral advice to the effect that "one course of action open to the Council" would be to

exclude Lot 17 from Amendment No. 91. Nothing relating to Mr McLeod's oral advice appears in

the written materials provided to elected members at or before the meeting on 6 December 1994. If

Mr McLeod's oral advice had been communicated to elected members, it should have been formally

recorded. There has been some evidence, however, of informal gatherings of elected members,

over evening meals, immediately prior to Council meetings. At these gatherings, matters such as

this could have been communicated to many, if not all, elected members.

5.4.73 The fact that this possibility exists is clearly an insufficient basis on which to find that

members of the Council were aware of the context of Mr McLeod's oral advice before they voted on

6 December 1994. Nevertheless, having regard to the possibility, I consider that the evidence is

insufficient to enable me to find that the members of the Council were not aware of that advice.

5.4.74 In any event, even if the Council had been informed of Mr McLeod's oral advice, it

remains the case that its decision making process was unfair and breached the rules of procedural

fairness by failing to give those adversely affected by the decision a chance to respond to the

Corser & Corser letter.

5.4.75 The procedural flaws in the Council's decision to exclude Lot 17 from Amendment No. 91

served only to strengthen the perception that the Council, and the City as a whole, favoured the

Deputy Mayor at the expense of others. What this episode demonstrates is that all Deputy Mayor

Grljusich had to do to change what would have been an uncontroversial and simple decision of the

Council to proceed with Amendment No. 91 was to arrange, with the assistance of Mr Scharf, for

his lawyers to give the City a letter expressing his personal views and wishes - and the City then

unquestioningly accommodated his views and wishes.

(ii) Justification for the decision

5.4.76 The issue that is now to be considered is whether, if the Committee and the Council had

not been misled by Mr Scharf's report, they could nevertheless have made the same decision but

on proper grounds based on the information then available.


424

5.4.77 At the time of its decision, the Committee had before it the written advice from McLeod &

Co dated 31 October 1994, the letter from Corser & Corser dated 24 November 1994 and

Mr Scharf's report.

5.4.78 Nothing in the McLeod & Co advice, and nothing that is not false in the report from

Mr Scharf can support the decision to recommend the exclusion of Lot 17 from Amendment No. 91.

As indicated earlier, the Corser & Corser letter did no more than inform the City –

(a) of the Supreme Court action commenced by its clients, Deputy Mayor Grljusich and

Mrs Gava, seeking to remove George and Tom Grljusich as trustees;

(b) that Deputy Mayor Grljusich and his sister disputed the entitlement of George and

Tom Grljusich to deal with Lot 17; and

(c) that Deputy Mayor Grljusich and his sister believed that the Council should not take

any steps in dealing with Lot 17 until the Supreme Court action had been

determined.

5.4.79 No reasons were given, or information supplied, to support the expressed belief of Deputy

Mayor Grljusich and his sister that the Council should not take any steps to deal with Lot 17. It was

no more than the wish of one of the parties involved in a bitter family dispute.

5.4.80 Whatever erroneous interpretation Mr Scharf may have given to the Corser & Corser

letter, the fact is that the current legal ownership of Lot 17 by George and Tom Grljusich had not

been questioned. Nor had the validity of the deed between Urban Focus and George and Tom

Grljusich been questioned. Under the City's policy and consistent with its decision on

5 October 1993 in relation to Amendment No. 91, if the legal owners of Lot 17 had signed the Urban

Focus deed, then Lot 17 would be included in Amendment No. 91. That had happened.

5.4.81 The Committee did not have any further information that would have justified granting the

wish of one party to the dispute at the obvious expense of the other. The Committee could and

should have obtained its own independent advice on whether there was any basis for granting

Deputy Mayor Grljusich's wish. It did not do so.

5.4.82 Different considerations apply to the resolution of the Council. The Council may have had

before it the oral advice of McLeod & Co. That advice was flawed because it was based on

instructions that were false and misleading. The Council could not easily have discovered that the


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instructions were false and misleading. If it was the case that the Council was informed, before

making its decision, of Mr McLeod's oral advice, then its decision to exclude Lot 17, consistent with

that advice, was justified.

Findings

F32. I find that, in respect of the events relating to and including the Planning, Building and

Health Committee recommendation of 29 November 1994 and the Council decision of

6 December 1994 to exclude Lot 17 from Amendment No. 91 –

(a) the Committee and the Council failed to accord procedural fairness, and in any

event were biased and unfair, in relying on the letter from Corser & Corser

(Deputy Mayor Grljusich's solicitors) without giving either Urban Focus or

George and Tom Grljusich an opportunity to express their views on the matter;

(b) the Committee and the Council acted on the basis of a false and misleading

report by Mr Scharf;

(c) leaving aside Mr Scharf's false and misleading report, there was no material

available to the Committee that could have justified its decision to recommend

the exclusion of Lot 17 from Amendment No. 91;

(d) members of the Committee failed to exercise the due care and diligence

required to properly inform themselves of material facts that would have shown

that there was no proper basis for the exclusion of Lot 17 from Amendment

No. 91;

(e) the Committee failed to act in the City's interests in making a decision to support

the expressed wishes of Deputy Mayor Grljusich without obtaining independent

advice on whether it was lawful or proper to do so;

(f) the Council's decision was unlawful because –

(i) the Council failed to comply with the principles of procedural

fairness; and

(ii) the decision was based on the false and misleading report of Mr Scharf

(and possibly on legal advice which was also based on false and

misleading instructions from Mr Scharf); and

(g) the decision making processes and outcomes of the Committee and the Council

strengthened the perception that Deputy Mayor Grljusich was able to influence

the Council to make a decision in which he had a strong and well-publicised

financial and personal interest and which would not otherwise have been made.


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5.4.83 It was argued before the Inquiry, by both Mr Wheatley and Mr Grljusich, that even if it was

not clear from the Corser & Corser letter of 24 November 1994 or from any other material put

before the Committee or the Council, the outcome of the Supreme Court action to remove George

and Tom Grljusich in fact justified the Council's decisions on both 5 July and 6 December 1994, as

well as its later decision on 7 March 1995.

5.4.84 The argument has no merit. The actions of the City's employees and elected members

must be assessed on the basis of the material before them that they actually took into account, or

failed to take into account. While future events may, and often do, have an impact on the

consequences of a particular decision, in this case future events are not relevant and cannot be

taken into account –

(a) in determining the validity and propriety of an earlier decision; or

(b) in assessing the conduct of those involved in the decision making process.

5.4.85 In any event, it is significant, in respect of issues relating to Cr Wheatley's conflict of

interest (dealt with in Chapter 8 of this Report) that during the trial of the Supreme Court action,

8 months after the Council's decision on 6 December 1994, Justice Kennedy made it very clear to

Cr Wheatley that the action did not challenge and had nothing to do with, the power of George and

Tom Grljusich to enter into the deed with Urban Focus (Supreme Court Transcript, 14/08/95 at 516-

517). In his judgment, delivered on 11 January 1996, Kennedy J confirmed that his reasons and

decisions were made on the basis –

" … that the arrangement with Urban Focus is effective - and there was no challenge to itsvalidity in the statement of claim … " (p. 36).

5.4.86 Further, in relation to the proposal to rezone Lot 17 that had been considered by the

Council on 5 July and 6 December 1994, Kennedy J stated –

"At the time of the hearing, rezoning had still not been granted, apparently by reason ofthe family dispute, although, having regard to the fact that the application was beingmade by or on behalf of the trustees of the estate, the basis for the refusal is notself apparent. There was no suggestion that the rezoning sought did not comply with thelocal authority's own planning" (p. 25) (emphasis added).

5.4.87 Mr Wheatley also sought to rely on an opinion obtained from Mr C L Zelestis QC on

20 June 1996 (the "Zelestis opinion") to argue that the Council was justified in deciding to exclude

Lot 17 from Amendment No. 91. Again, that argument must fail for the simple reason that the

Zelestis opinion was not available to the Council when it made its decision and, therefore, has no

relevance to the question of whether or not the Council acted properly in making those decisions.


427

5.4.88 In any event, contrary to the submissions of Mr Wheatley and his counsel, the Zelestis

opinion does not assist - even as an ex post facto rationalisation of the Council's decisions. The

Zelestis opinion concluded that the Court appointed trustees of Mr Mate Grljusich's estate were not

bound by the Owner's Deed entered into between George and Tom Grljusich and Urban Focus.

Three points are relevant to that conclusion.

5.4.89 Firstly, the Zelestis opinion was expressed to be based "on the instructions contained in

the brief". No evidence was given about these instructions and, therefore, it is not possible to

determine whether Mr Zelestis had access to all the relevant information or whether the information

that he was provided with was accurate.

5.4.90 The second point concerns the conclusions in the Zelestis opinion that George and Tom

Grljusich exceeded their powers by entering into the Owner's Deed with Urban Focus. One of the

reasons for that conclusion was that the Owner's Deed involved "an impermissible delegation of

power, beyond s.54 of the Trustees Act". However, the Zelestis opinion pointed out that, at least

until the death of Mrs Pera Grljusich on 3 November 1993, George and Tom Grljusich could have

themselves arranged for the rezoning, subdivision and sale of Lot 17. It was only by leaving all

these matters to Urban Focus that they exceeded their powers as trustees. This objection could

have been addressed quite simply with appropriate changes to the Owner's Deed that gave more

control over the sale of Lot 17 to George and Tom Grljusich. Mr Zelestis' conclusion on this point is

a far cry from the claims of Mr Grljusich and Mr Wheatley, relied on by the Council, who insisted

that as a result of the Supreme Court action - commenced in December 1991 - to remove them as

trustees, George and Tom Grljusich did not have the power as trustees to rezone or subdivide

Lot 17.

5.4.91 Finally, and most importantly, the Zelestis opinion concluded that the "primary duty" of

George and Tom Grljusich after the death of Pera Grljusich was to sell Lot 17 (in its unrezoned and

unsubdivided state) and distribute the proceeds to the beneficiaries. Again, this is entirely unrelated

to the reasons advanced by Mr Grljusich and Mr Wheatley, and relied on by the Council, to support

the exclusion of Lot 17 from Amendment No. 91. Significantly, George and Tom Grljusich in fact

did try to carry out what the Zelestis opinion concluded was their "primary duty". They attempted to

sell Lot 17 in its unrezoned and unsubdivided state. It was Deputy Mayor Grljusich, together with

his sisters and sister-in-law, who thwarted that attempt by applying to the Supreme Court for an

interlocutory injunction preventing the sale. The application was made on their behalf by


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Cr Wheatley. There is nothing in the Zelestis opinion indicating that he was informed of these

events.

5.4.92 For all these reasons, the attempt by Mr Grljusich and Mr Wheatley to justify the Council's

decisions by reference to the outcome of the Supreme Court proceedings and the Zelestis opinion

has no substance or merit.

(iii) Deputy Mayor Grljusich's role

5.4.93 The pattern of events leading to the Council's decision to exclude Lot 17 from Amendment

No. 91 on 6 December 1994 bears a striking similarity with those leading to the Council's earlier

decision on 5 July 1994 to defer Amendment No. 91. For example –

(a) in each case, what would have been a simple and uncontroversial decision to

progress Amendment No. 91 instead became a decision that had the effect of

advantaging Deputy Mayor Grljusich by preventing Lot 17 from being rezoned;

(b) in each case, Mr Scharf's actions invariably favoured Deputy Mayor Grljusich;

(c) in each case, Deputy Mayor Grljusich, caused or arranged for a letter relating to his

personal interest in Lot 17 to become the focus of the Council's attention;

(d) in each case, the letter arrived at or just before the Committee meeting, thereby

reducing or eliminating the chances of a more considered analysis, if not by

Mr Scharf, then by elected members who may have been more independently

minded and impartial;

(e) in each case, the Council's decision was made not on the basis of the actual

contents of the letter, but apparently on the basis of Deputy Mayor Grljusich's own

erroneous views, implicitly or explicitly supported by Mr Scharf, relating to the letter;

(f) in each case, the Council made a decision that favoured its Deputy Mayor at the

expense of his brothers with whom he was in bitter conflict; and

(g) in each case, the Council acted in a biased and unfair way by relying on the views

expressed by or on behalf of Deputy Mayor Grljusich, but failing to give George and

Tom Grljusich any opportunity to state their own views even though the decision

clearly disadvantaged them.

5.4.94 As with the June and July decisions, Deputy Mayor Grljusich's direct role in the November

and December decisions was limited, albeit significant. He did not need to play a greater direct

role. It was Mr Scharf, rather than Deputy Mayor Grljusich himself, whose actions outlined in this


429

Chapter resulted in Deputy Mayor Grljusich being advantaged. For example, it was Mr Scharf

who –

(a) failed to inform the Council on or before its meeting on 5 July 1994 that the

question on which it was proposed to seek legal advice was spurious;

(b) failed to act promptly in seeking legal advice and was responsible for 'obvious'

advice taking 17 weeks to be given to the City;

(c) provided false and misleading information and advice to the Committee for its

meeting on 28 November 1994 and the Council for its meeting on

6 December 1994;

(d) ensured that the foreshadowed letter from Corser & Corser was received on time

and incorporated in his report to the Committee, when he made no attempt to

follow up the City's own legal advice;

(e) made recommendations to the Committee on the basis of the Corser & Corser

letter without obtaining independent legal advice; and

(f) provided false and misleading statements to the Committee, based on the interests

and wishes of Deputy Mayor Grljusich and the absence of any advice from the

City's solicitors.

5.4.95 It was submitted on Deputy Mayor Grljusich's behalf that, in essence –

(a) Deputy Mayor Grljusich did not direct or instruct Mr Scharf to carry out any of these

actions; and

(b) there is no connection between the actions of Mr Scharf and those of Deputy

Mayor Grljusich (see for example Closing Submissions at para. 12(d), 21(b), 36(b)

and 45(b)).

These submissions suggest that Deputy Mayor Grljusich was merely the fortunate and passive

recipient of Mr Scharf's favours. That is clearly not the case.

5.4.96 Deputy Mayor Grljusich did not need to play a greater direct role throughout this period.

His relationship and regular meetings with Mr Scharf, together with Mr Scharf's own personal

sympathies towards the Deputy Mayor and negative feelings about George Grljusich, went a long

way towards ensuring the success of his personal objective in preventing the rezoning of Lot 17

while the legal ownership of the property was vested in his brothers. I am satisfied that Deputy


430

Mayor Grljusich maintained, if not fostered, his relationship with Mr Scharf in the knowledge that, by

doing so –

(a) he could continue to take advantage of Mr Scharf's partiality; and

(b) Mr Scharf would be encouraged and assisted to continue to act in a way that was

consistent with Mayor Grljusich's interests.

5.4.97 Little more direct action was needed. In relation to the deferral of Amendment No. 91,

Deputy Mayor Grljusich ensured that his private letter of 19 January 1994 was put before the

Committee on 28 June 1994. In relation to the exclusion of Lot 17 from Amendment No. 91, Deputy

Mayor Grljusich, directly or indirectly, informed Mr Scharf of the letter that he was expecting from

Corser & Corser, leaving it to Mr Scharf who was familiar with Deputy Mayor Grljusich's personal

interests and wishes in respect of Lot 17 to ensure that the letter arrived on time for him to

incorporate it in his Officers' report and provide misleading advice, reflecting the Deputy Mayor's

own interests, to the Committee and Council.

5.4.98 Deputy Mayor Grljusich was well aware of what was happening. It was clearly to his

advantage. He could have put an end to it at any time but he continued to act in a way that enabled

Mr Scharf to further the Deputy Mayor's interests.

5.4.99 Under the The Criminal Code, a person –

(a) "who does or omits to do any act for the purpose of enabling or aiding another

person to commit [an] offence";

(b) "who aids another person in committing [an] offence"; and

(c) "who counsels or procures any other person to commit [an] offence",

is deemed to have taken part in committing the offence and to be guilty of the offence and may be

charged with actually committing it (section 7(b),(c) and (d) respectively).

5.4.100 These provisions reflect the common law principles of an accessory 'aiding and abetting'

the commission of an offence. The meaning and practical application of these provisions and

principles have been explained in many decisions of the courts. One that is often quoted and is

particularly significant for present purposes is the following passage from the judgment of

Hawkins J in the R v Coney (1882) 8 QBD 534 at 557-558 –

"In my opinion, to constitute an aider and abettor some active steps must be taken byword, or action, with the intent to instigate the principal, or principals. Encouragementdoes not of necessity amount to aiding and abetting, it may be intentional or unintentional,


431

a man way unwittingly encourage another in fact by his presence, by misinterpretedwords, or gestures, or by his silence, on non-interference, or he may encourageintentionally by expressions, gestures, or actions intended to signify approval. In the lattercase he aids and abets, in the former he does not. It is no criminal offence to stand by, amere passive spectator of a crime, even of a murder. Non-interference to prevent a crimeis not itself a crime. But the fact that a person was voluntarily and purposely presentwitnessing the commission of a crime, and offered no opposition to it, though he mightreasonably be expected to prevent and had the power so to do, or at least to express hisdissent, might under some circumstances, afford cogent evidence upon which a jurywould be justified in finding that he wilfully encouraged and so aided and abetted."

5.4.101 At least by way of analogy, these principles add weight to the conclusion that, because of

his supporting and encouraging role which I have earlier described, Deputy Mayor Grljusich bears

personal responsibility for the actions taken by Mr Scharf in respect of Lot 17 and for the

consequential decisions taken by the Planning, Building and Health Committee and the Council.

5.4.102 There is no evidence of Deputy Mayor Grljusich bringing any direct pressure to bear on

his fellow elected members. Again, he did not need to do so. He had been an elected member for

many years, he was the City's Deputy Mayor and the Chairman of the Planning, Building and

Health Committee and he was more familiar than anyone at the City with issues affecting Lot 17.

He was in a position to know that Mr Scharf's recommendations, if adopted, would result in Council

decisions that were biased in his favour. Again, it would have been a simple matter to intervene,

but he did nothing to prevent the recommendation from being adopted - despite his responsibilities

as an elected member and Deputy Mayor of the City to act in the City's interests and to ensure that

the City's actions were lawful and proper.

Findings

F33. I find that, in respect of the events relating to and including the Planning, Building and

Health Committee recommendation of 29 November 1994 and the Council decision of

6 December 1994 to exclude Lot 17 from Amendment No. 91 –

(a) Deputy Mayor Grljusich failed to comply with his duties, and abused his position,

as an elected member and as the then Deputy Mayor by –

(i) arranging, with Mr Scharf's assistance, for a letter from Corser & Corser

dated 24 November 1994 to be forwarded to the City to enable Mr Scharf

to recommend to the Committee that Lot 17 be excluded from

Amendment No. 91;


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(ii) deliberately generating among elected members misinformation about

the legal ownership of Lot 17; and

(iii) maintaining a relationship with Mr Scharf in the knowledge that by doing

so he could continue to take advantage of Mr Scharf's partiality and that

Mr Scharf would be encouraged and assisted to continue to act in Deputy

Mayor Grljusich's interests; and

(b) in each of these matters, Deputy Mayor Grljusich acted as he did for the purpose

of achieving the exclusion of Lot 17 from Amendment No. 91 to his personal

advantage.

5.5 Exclusion of Lot 17 - decision reaffirmed on7 March 1995

(a) Calls to reconsider the exclusion of Lot 17

(i) Durack & Zilko letter of 13 December 1994

5.5.1 As a result of the Council's decision on 6 December 1994 to exclude Lot 17 from

Amendment No. 91, Durack & Zilko - the solicitors for George and Tom Grljusich - wrote to the City

on 13 December 1994. The letter clearly rejected the proposition, relied on by the Council in

making its decision, that there was a dispute as to the current ownership of Lot 17. The letter

stated –

"Our clients have advised us that on 6 December 1994 the City of Cockburn passed aresolution which included a provision that the Council had received advice from Corser &Corser that the matter of the correct ownership of Lot 17 Hamilton road had not beensatisfactorily resolved and was the subject of a court case to determine the issue.

As the solicitors for Tom and George Grljusich, we are not aware of any suchproceedings. Whilst it is correct that John Grljusich and Frances Gava, the brother andsister of our clients, have taken certain proceedings in respect of our clients' executorshipof their later father's estate, the fact is that Tom and George Grljusich are the registeredproprietors of lot 17 Hamilton Road and have been since the grant of probate of their laterfather's Will."

5.5.2 The letter continued –

"In our view it was most improper of the Council to have acted upon the advice of Corser& Corser when they knew that that firm was acting on behalf of John Grljusich andFrances Gava. If the Council wished to ensure that there was some balance in terms ofthe advice received by it, at the very least it should have taken advice from this firm as thesolicitors of Tom and George Grljusich. Alternatively and preferably, the Council should


433

have sought independent advice from its own solicitors as to the status of the ownershipof the land."

5.5.3 The significance of this letter is twofold. Firstly, it demonstrates that if Mr Scharf, the

Planning, Building and Health Committee and the Council had acted fairly by obtaining the views of

George and Tom Grljusich as well as those of Deputy Mayor Grljusich, before recommending the

exclusion of, or deciding to exclude, Lot 17 from Amendment No. 91, they would have been much

better informed and the City's decision could, and should, have been different.

5.5.4 Secondly, it demonstrates that by at least 13 December 1994 it had been made very clear

to the City that it had acted improperly in relation to the way it made its decision on

6 December 1994 and that there were substantial grounds for concluding that it had made the

wrong decision.

5.5.5 The letter from Durack & Zilko asked the City to "urgently confirm that this matter will be

reconsidered by Council without delay".

5.5.6 Mr Scharf did not respond to Durack & Zilko, even by way of an acknowledgment, until

16 March 1995 - over three months later. I have no doubt that if Deputy Mayor Grljusich's solicitor

had sought urgent confirmation, Mr Scharf would have provided it very promptly.

(ii) Urban Focus letter of 15 December 1994

5.5.7 Urban Focus wrote to the City on 15 December 1994 taking issue with the Council's

decision to exclude Lot 17 from Amendment No. 91. It enclosed a copy of a letter dated

6 December 1994 from its solicitors, Majteles & Salmon. Among the attachments enclosed with the

Majteles & Salmon letter were –

(a) a copy of the Owner's Deed relating to Lot 17;

(b) a copy of the certificate of title relating to Lot 17 (Certificate of Title Volume 331

Folio 147); and

(c) a copy of the Grant of Probate of the will of the late Mate Grljusich, with the will

annexed.

The letter concluded that, as the trustees of their father's estate and as the registered proprietors of

Lot 17, George and Tom Grljusich had the power to enter into the Owner's Deed.


434

5.5.8 One of the most significant aspects of this letter is that it provided the very details that

Mr McLeod, in his oral advice to Mr Scharf on 6 December 1994, considered would constitute

"precise details on land ownership". The details supplied by Majteles & Salmon should have been

highly relevant - if not determinative - if they had been considered by the Council at its meeting on

6 December 1994. It was because of the actions of Mr Scharf and the Committee, which were

biased in favour of Deputy Mayor Grljusich, that this material was not put before the Council.

(b) Advice from McLeod & Co

5.5.9 On 16 December 1994, Mr Scharf sought urgent legal advice from McLeod & Co. He

enclosed a copy of a letter from Durack & Zilko observing, wrongly, that there was a contradiction in

the letter. Mr Scharf also supplied McLeod & Co with a copy of the certificate of title showing that

Lot 17 was registered in the names of George and Tom Grljusich. He asked McLeod & Co to

advise the City whether or not –

"the Council [should] have continued with Amendment No. 91 with Lot 17 included".

5.5.10 A file note of McLeod & Co dated 19 December 1994 indicates that Mr Scharf requested

that the advice be held, as more material was coming. The only additional material given to

McLeod & Co was enclosed with a letter from Mr Scharf dated 9 January 1995. The additional

materials were –

(a) a letter dated 15 December 1994 from Urban Focus (received by the City on

19 December 1994); and

(b) a letter dated 6 December 1994 from Majteles & Salmon with enclosures to that

letter including a copy of the Owner's Deed in relation to Lot 17 (also received by

the City on 19 December 1994 as an attachment to the Urban Focus letter dated

15 December 1994).

No explanation has been provided by Mr Scharf as to why this additional information could not have

been sent on or shortly after 19 December 1994 rather than held until 9 January 1995.

Mr McLeod's Written Response to the Inquiry did not provide any assistance on this point.

5.5.11 By letter dated 3 January 1995, Durack & Zilko referred to its earlier letter of

13 December 1994 to which it had not received a response despite asking for urgent confirmation

of what the City proposed to do. It then stated –

"Our clients have instructed us to commence legal proceedings against the City ofCockburn in relation to the offending resolutions unless we receive your response by5.00 pm on 10 January 1995. No further notice will be given."


435

5.5.12 Again Mr Scharf took no action. At the public hearings of the Inquiry, Mr Scharf was

reminded that even though he wrote to McLeod & Co on 9 January 1995, he did not include a copy

of, or even refer to, this letter from Durack & Zilko. His view of the matter is apparent from his

response and the following exchange with Counsel Assisting –

"MR SCHARF: Yes. So he's threatening to take legal action. If he wishes to, then that'shis business.

COUNSEL ASSISTING: Is that the way you dealt with legal proceedings beingthreatened against the council?---MR SCHARF: We had to sought[sic] out the issuesinvolved.

COUNSEL ASSISTING: Did you think it might be prudent to refer that letter to thecouncil's solicitors? It appears to have been received on the 5th?---MR SCHARF: Yeah,really, there's not a lot in this. It's just a threat. What information would I want from itother than the fact that if we don't respond by 5 pm on 10 January, he's going to takeaction against us.

COUNSEL ASSISTING: So you were sanguine about that?---MR SCHARF: I was what,sorry?

COUNSEL ASSISTING: Sanguine - you were relaxed about it?---MR SCHARF: Yes. Iwasn't particularly concerned about them taking action. If they wanted to take action, thenlet them.

COUNSEL ASSISTING: Not a matter you thought you ought to refer to yoursolicitors?---MR SCHARF: No.

COUNSEL ASSISTING: Is it a matter that looking back on it you think you ought to havereferred to your solicitors?---MR SCHARF: Well, I just look at it, what it says, 'If you don'trespond to us by 5 o'clock, we'll take action.' It really doesn't have a lot of context otherthan that" (Transcript, 2934-2935).

5.5.13 The first Planning, Building and Health Committee meeting to be held after the Council

meeting on 6 December 1994 was scheduled for 31 January 1995. Mr Scharf's letter seeking

urgent legal advice from McLeod & Co was sent on 16 December 1994. Having regard to

Mr Scharf's efforts to ensure that, with less than two days' notice, the Corser & Corser letter from

Deputy Mayor Grljusich's solicitors was received on time for the Committee meeting on

29 November 1994, it might have been expected that there should have been no difficulty in

obtaining advice from McLeod & Co in a period of about 6 weeks.


436

5.5.14 This did not happen. Advice from McLeod & Co was not received by the City until

7 February 1995. In part at least, this was because of the actions of Mr Scharf in requesting that

the advice be held up and his delays in not forwarding the additional materials until 9 January 1995,

despite receiving them on 19 December 1994. Mr Scharf's explanation for not following up a

request for advice to McLeod & Co between July and October 1994 was that it was his practice to

wait for McLeod & Co rather than to ring and hurry up the advice (Transcript, 2911-2912). As a

result, the advice from McLeod & Co (dated 6 February 1995) could not be considered by the

Council until its meeting on 7 March 1995 - three months after its decision on 6 December 1994.

5.5.15 The key question on which advice was sought was whether the Council had acted

properly in deciding, on 6 December 1994, to exclude Lot 17 from Amendment No. 91.

5.5.16 Before dealing with the McLeod & Co response to that question, it is pertinent to reflect on

the circumstances in which the advice was sought, and particularly the timing. (In this respect there

are some similarities with the circumstances in which Mr Scharf sought urgent legal advice from

Mr McLeod just before the Council meeting on 6 December 1994.)

5.5.17 McLeod & Co was asked to advise on whether the Council's decision that had already

been made - in accordance with the recommendations of Mr Scharf himself - was proper. Indeed,

not only had the Council already decided this matter but much had been done to implement its

decision. Amendment No. 91 had been referred by the City to the Planning Commission. The

Planning Commission, on 4 January 1995, consented to it being advertised in its amended form.

The amendment was published in the Government Gazette on 6 January 1995 and advertised on

7 January 1995. Public submissions closed on 17 February 1995. Thus, by 7 March 1995, when

the Council would have had its first opportunity to reconsider its decision to exclude Lot 17 from

Amendment No. 91, it is likely that the approval process for Amendment No. 91 would have been

too far advanced to include Lot 17 at that stage.

5.5.18 Advice from McLeod & Co that the City had not acted properly would have resulted,

particularly in the circumstances involving Lot 17, in at least embarrassment and some humiliation

for Mr Scharf, the Planning, Building and Health Committee, the Council and the City itself. Further,

it was difficult to see how, three months later, the decision could have been 'undone'. In addition,

advice that the City had acted improperly may have become public and encouraged affected parties

to pursue the legal actions for damages that had earlier been threatened. In these circumstances,


437

there may be some pressure on a legal adviser to attempt to support the actions actually taken by

his or her long standing client to a greater extent than would be the case if the advice had been

sought before 'the horse had bolted'.

5.5.19 This is the context in which McLeod & Co addressed the key question on which the City

had sought its advice. That question was whether the Council, on 6 December 1994, should –

(a) have forwarded Amendment No. 91, with Lot 17 included, to the Planning

Commission; or

(b) as it did, in effect have excluded Lot 17 from Amendment No. 91.

5.5.20 McLeod & Co advised the City that –

" … in our opinion it cannot be said that the Council ought to have continued withAmendment No. 91 with Lot 17 included. If the Council had so resolved, in our opinion itprobably could not be said to have acted improperly. However at the same time, for theCouncil to have decided not to include Lot 17 was a decision reasonably open to theCouncil in the exercise of its statutory powers … " (at pp. 3-4).

5.5.21 The Council's decision already having been made, and partly implemented, the advice

from McLeod & Co indicates that, on 6 December 1994 it was open to the Council either to do as it

did or to consent to the progress of Amendment No. 91 with Lot 17 included.

(c) Officers' report to the PBHC

5.5.22 In his report to the Planning, Building and Health Committee meeting for

28 February 1995, Mr Scharf included a detailed summary of the advice from McLeod & Co (a copy

of which was included in the agenda papers). It began with the statement –

"The question 'should the Council have continued with Amendment No 91 with Lot 17[i]ncluded?' has clearly been answered by McLeod and Company … ".

There is no reference in that report to the McLeod & Co advice that it would have been open to the

Council not to have excluded Lot 17 from Amendment No. 91.

5.5.23 In his evidence to the Inquiry Mr Scharf agreed that the advice provided by McLeod & Co

did not support the proposition that he ascribed to it in his report to the Committee

(Transcript, 2935-2937).


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5.5.24 In this instance, Mr Scharf's report and recommendations affected not only the interests of

Deputy Mayor Grljusich, but his own. Mr Scharf had an obvious personal interest in the Council

reaffirming its earlier decision made on 6 December 1994 because it was made as a result of

Mr Scharf's own recommendation and on the basis of information and materials he had provided to

the Council.

5.5.25 There was the added incentive therefore for Mr Scharf to recommend, as he did, that the

Council should "reiterate its previous decision not to include Lot 17 in Amendment No. 91".

5.5.26 During the public hearings of the Inquiry, Mr Scharf testified that he "felt very strongly"

that the rezoning of Lot 17 issue "should not be dealt with until the Supreme Court matter had been

dealt with" (Transcript, 2943-2944). He stated on a number of occasions that his aim was not to

support the Deputy Mayor, but rather based on the proposition that the City should not make a

decision "unless and until there was a clear and unequivocal position capable of being adopted by

persons clearly and unequivocally entitled to deal with this land". This was because "it was prudent

not to take steps which would affect the status or capability of the land" (Closing

Submissions, para. 8).

5.5.27 The merits of that general proposition are dealt with later in this Chapter (at 5.5(e)). As to

whether it was the real reason for Mr Scharf's actions from June 1994, two factors are particularly

relevant. Firstly, the consequences of the proposition coincided exactly with Deputy Mayor

Grljusich's interests and wishes in relation to Lot 17. Mr Scharf's general proposition was

consistent with an uncritical acceptance by Mr Scharf of Deputy Mayor Grljusich's position.

Mr Scharf made no attempt to find out what the arguments were supporting the position held by the

opposing parties - Urban Focus and George and Tom Grljusich. By the time that the arguments

supporting the opposing position were provided to the Council in December 1994, the matter had

already been delayed for 6 months and the Council's decision had been made.

5.5.28 Secondly, there are major inconsistencies with Mr Scharf's claim that he was motivated by

a desire to have the matter dealt with by the Supreme Court, rather than the intention to support the

Deputy Mayor. In particular, the reports Mr Scharf drafted for the Committee and Council meetings

in June and July, and later in November and December 1994, did not suggest that the Council

should act on the proposition articulated by Mr Scharf at the public hearings of the Inquiry. Indeed,

they contain no reference to that proposition. Neither did Mr Scharf seek legal advice about the


439

matter during the period of more than 8 months when it was an issue. All of the written and oral

advices he sought and received during this period were in relation to other aspects of the matter.

(d) PBHC recommendation and Council decision

5.5.29 The minutes of the meeting of the Planning, Building and Health Committee of

28 February 1995 record that, following a discussion of about 10 minutes, a resolution was carried

in the same terms as Mr Scharf's recommendation. At its meeting on 7 March 1995, the Council,

without discussion, adopted the recommendation of the Planning, Building and Health Committee.

5.5.30 Having regard only to Mr Scharf's summary of the McLeod & Co advice, elected members

would have had the clear impression that the decision to affirm the Council's earlier decision was

the only option open to it. It was not. The McLeod & Co advice indicates that the Council could

also have decided to progress the rezoning of Lot 17. If this aspect of the advice needed to be

clarified, then Mr Scharf should have done so.

5.5.31 Lawyers representing Urban Focus and George and Tom Grljusich respectively had

sought a reconsideration by the Council of its 6 December 1994 decision. In addition, Urban Focus

had sought the separate rezoning of Lot 17 because the rezoning of Amendment No. 91 was then

well advanced. The Council purported to reconsider its decision but did not consider one of the two

options open to it. It did not do so because –

(a) Mr Scharf failed to include in his report to the Committee any reference to the

McLeod & Co advice relating to the second option; and

(b) none of the elected members, through their own reading of the agenda papers and

attachments (including the full text of the McLeod & Co advice), recognised that

there was a second option and, having recognised it pursued the matter.

5.5.32 In the context of the "notorious dispute" between members of the Grljusich family and in

the context of being seen to be acting fairly and even handedly, one might have hoped that at least

one of the elected members would have paid more careful attention to the matter having regard to

the interests of those involved, other than the Deputy Mayor. No one did so.

5.5.33 The clear impression left by these events is that as soon as Mr Scharf, the Planning,

Building and Health Committee and the Council were advised that their actions to prevent the

rezoning of Lot 17 could be justified, they regarded that as the end of the matter. There is no


440

indication that any genuine attempt was made to determine whether, in all the circumstances, the

Council should support the rezoning of Lot 17.

5.5.34 Once again the City ignored the interests of Urban Focus and George and Tom Grljusich -

particularly where these were opposed to the interests of the Deputy Mayor. Again, it is pertinent to

consider what the City would have done if the positions held by Deputy Mayor Grljusich and his

brothers had been reversed. In this case the Council failed to follow up McLeod & Co's suggestion

that it was open to the Council to support the rezoning of Lot 17. Nine months earlier the Council

was content not only to delay the rezoning of Lot 17 but to hold up an entire stage of development

for 5 months while it purported to investigate what was clearly a spurious suggestion - in the

interests of Deputy Mayor Grljusich - of a conflict between the City's policy and his private letter

from Urban Focus.

Findings

F34. I find that, in respect of the events relating to and including the Council decision on

7 March 1995 to 'reiterate' its earlier decision to exclude Lot 17 from

Amendment No. 91 –


employee directly responsible for this matter, failed to comply with his duties by

misrepresenting, in his report to the Planning, Building and Health Committee

(for its meeting on 28 February 1995) and the Council, advice given by McLeod

& Co by failing to inform the Committee and the Council that it was open to

them to approve the rezoning of Lot 17;

(b) Mr Scharf acted as he did knowing that it would be to the advantage of Deputy

Mayor Grljusich and to the disadvantage of George and Tom Grljusich;

(c) the Planning, Building and Health Committee and the Council failed to give any

genuine consideration to the option of approving the rezoning of Lot 17 in

accordance with the application from Urban Focus; and

(d) members of the Committee and the Council failed to exercise the due care and

diligence required to properly inform themselves, by reference to the materials

available to them, that it was open to the Council to approve the rezoning of

Lot 17.


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(e) Involvement of local governments in private disputes

(i) Introduction

5.5.35 To the extent that it adopted, and acted in accordance with, the McLeod & Co advice of

6 February 1995, the Council's decision on 7 March 1995 was lawful and proper. There was

nothing at the time to indicate that there was any basis to question the advice. For that reason

alone, it was properly followed by the Council.

5.5.36 In those circumstances, there would be no need to consider the reasoning and

conclusions set out in the McLeod & Co advice. Witnesses before the Inquiry, however, sought to

rely on the advice as a justification, even if retrospective justification, for the Council's earlier

decisions on 5 July and 6 December 1994. For the reasons that I have set out earlier, there is no

basis for that reliance (see above at 5.4(h)(ii)). Nevertheless the advice does raise important legal

and policy issues that have wide ramifications for local governments. For this reason, it is important

that those issues are addressed.

(ii) The McLeod & Co advice

5.5.37 Leaving aside the alternative option, the McLeod & Co advice concluded that it was

reasonable for the Council to exclude Lot 17 from Amendment No. 91. (On the same reasoning,

which was in fact adopted by the Council, it would have been reasonable to prevent the rezoning of

Lot 17 as a separate proposal.) In making its decision on 6 December 1994, the Council relied on

information from Deputy Mayor Grljusich's solicitors that a Supreme Court action had been initiated

by Deputy Mayor Grljusich and Mrs Gava seeking to remove George and Tom Grljusich as

trustees. This was construed by Mr Scharf, and by Deputy Mayor Grljusich himself, as evidence of

a dispute as to the right of the legal owners of Lot 17 to enter into the Owner's Deed or to authorise

the rezoning of Lot 17. It was not. As indicated earlier, Kennedy J made this very plain both during

the course of the trial and in his judgment (see above at paras. 5.4.84 and 5.4.85).

5.5.38 The advice from McLeod & Co of 6 February 1995 does not appear to rely on this

Supreme Court action to conclude that it was reasonable for the Council to exclude Lot 17 from

Amendment No. 91. It adopted a different approach. In his oral advice given on 6 December 1994,

Mr McLeod discussed the need to establish the identity of the legal owners by reference to a

Department of Land Administration search and the grant of probate papers. In the meantime, these

documents were supplied to him as attachments to the letter from Majteles & Salmon. They were


442

not referred to at all in the McLeod & Co advice of 6 February 1995. It appears to have been

conceded, at this stage, that George and Tom Grljusich were the legal owners of Lot 17. At the

heart of the McLeod & Co advice of 6 February 1995 is the proposition that, regardless of the

wishes of the legal owners, if "a number" (in other places expressed as "a majority") of the

potential owners of land, for reasons that may be "purely personal between the brothers and

sisters", are opposed to the rezoning of the land, then the City would be acting properly in blocking

any rezoning proposal. For example, the McLeod & Co advice states –

"The fact that four out of six of the potential owners are opposed presently to the inclusionof Lot 17 in Amendment No. 91 in our opinion is a matter which it was proper for theCouncil to take consideration when deciding whether or not to include Lot 17 inAmendment No. 91. In our opinion it is not necessary for the Council to undertake anexhaustive enquiry to ascertain whether or not the reasons for the four potential ownersbeing opposed are well founded from a planning point of view. In our opinion it issufficient for the Council to know that there is in fact an objection by a number ofthe beneficial owners to the rezoning of the land. Furthermore it is not necessary toknow at this stage the correct answer to the legal question whether the 4 non-executorchildren are absolutely entitled to the estate of the late Mate Grljusich. In our opinion it isenough to know that a majority of the potential future owners are opposed … "(emphasis added, para. 7).

5.5.39 It is important to appreciate that the City's requirement was for "owners" to sign the

Owner's Deed. It said nothing about "potential owners". Indeed "potential owners" had no right or

power to sign the Owner's Deed. The owners of Lot 17 had signed the Owner's Deed early in 1994.

Local governments must be wary of seeking to impose additional requirements, with purported

retrospective effect, after a person has met the existing requirements.

5.5.40 On the reasoning of the McLeod & Co advice –

(a) the Supreme Court proceedings instituted by Deputy Mayor Grljusich and his sister

seeking the removal of George and Tom Grljusich were irrelevant;

(b) all Deputy Mayor Grljusich had to do was to simply inform the City that he, his two

sisters and sister-in-law were "potential future owners" of Lot 17 and that they

objected to the rezoning of Lot 17; and

(c) without any further investigation, the City would have acted properly and

reasonably in blocking the rezoning of Lot 17 - despite the fact that the legal

owners of Lot 17 had complied with the City's requirements by entering into the

Deed with Urban Focus.

Presumably, the objection by the "potential future owners" could have had the effect of preventing

the rezoning of land indefinitely. (It is significant, for other purposes, that this aspect of the McLeod


443

& Co advice appears not to have been relied on by the City's elected members or employees. In all

the documentation that followed this advice, and in all the evidence given at the public hearings of

the Inquiry, the Council's decisions not to support the rezoning or subdivision of Lot 17 were sought

to be justified by reference to the perceived or claimed effect of the Supreme Court proceedings to

remove George and Tom Grljusich as trustees.)

5.5.41 In my view, this approach is fundamentally wrong. What the City faced here was a clear

choice between two options. It had to give precedence either to the wishes of "potential future

owners" or to the wishes of the actual legal owners. In other words –

(a) one option was to block the Lot 17 rezoning proposal and, therefore, satisfy the

wishes of "potential future owners" based on claims that had been merely asserted

and may have been entirely unsubstantiated; and

(b) the second option was to allow the Lot 17 rezoning proposal to proceed and,

therefore, to satisfy the wishes of the actual legal owners who had satisfied all the

requirements that the City had imposed in respect of the rezoning.

5.5.42 On the reasoning adopted in the McLeod & Co opinion, the wishes of a person who

merely claims to be a "potential future owner" is to be given precedence over a person who is the

identifiable registered proprietor of land.

5.5.43 Similar comments apply to the reasoning and approach that was in fact adopted by the

Council on 6 December 1994. In determining which of the two options it should take, the Council

chose to overlook the claims of the legally identifiable registered owners of Lot 17 in favour of the

untested claims of others, simply because it had been informed that Supreme Court proceedings

had been instituted that challenged the powers or status of the registered owners.

(iii) An alternative approach

5.5.44 The particular legal problem as to whether disputes over ownership should preclude

Council from making decisions affecting the land raises a broader question, involving legal and

policy issues. The broader question relates to the extent to which a local government should get

involved in private law disputes between other parties. This is a very important question that has

wide ramifications for local governments. It involves a choice between taking an interventionist

approach and one that is non-interventionist.


444

5.5.45 The situation commonly arises where a local government is asked to withhold a statutory

approval on the basis that there is a private dispute that may be affected if the approval were to be

granted. Frequently, a local government itself becomes enmeshed in the dispute, often unwittingly,

after its initial attempts to assist one or more of the parties. Invariably there are claims, and very

strongly held perceptions, of partisanship by the local government and, once involved, it may be

very difficult for the local government to extract itself from a lengthy and costly dispute.

5.5.46 This is a dangerous course which can and should be avoided. There is often a clear

distinction, in principle and practice, between –

(a) the private law rights which are the subject of the dispute between residents; and

(b) the local government's public law powers and responsibilities involved in the

approval process.

As a general principle, local governments are best advised to attempt to exercise their statutory

powers independently of, and without getting involved in or affected by, private disputes.

5.5.47 The dispute involving Lot 17 provides a good example. The City's requirement was that

the owners of Lot 17 sign the Owner's Deed with Urban Focus. If the City had any doubt about the

identity of the owners, all it needed to do was to arrange for a search of the title to Lot 17 at the

Department of Land Administration. That search would have revealed, as it did, that George and

Tom Grljusich were the registered proprietors of Lot 17. Under the Torrens system that applies in

Western Australia, anyone, including the City, would have been justified in acting on the basis that

George and Tom Grljusich were the owners of Lot 17 (see section 68 of the Transfer of Land

Act 1968 ). In Bahr v Nicolay [No. 2] (1987) 164 CLR 604 at 637 the High Court approved the

statement, made almost 100 years earlier, that –

"The object [of the Torrens system] is to save persons dealing with registered proprietorsfrom the trouble and expense of going behind the register, in order to investigate thehistory of their author's title, and to satisfy themselves of its validity."

In this case, once the Council was satisfied that the legal owners of Lot 17 had signed the Owner's

Deed in accordance with the City's requirement, the Council could and should have supported the

rezoning of Lot 17. It had no need to go behind the register. It could and should have adopted a

non-interventionist approach by not going behind the register and, therefore, not involving itself in

the dispute. By not relying on the register, it involved itself in the dispute and, as an inevitable

consequence, it opened itself to claims of partisanship or bias.


445

5.5.48 Inevitably, even with the most innocent, even-handed and altruistic motives, the action of

going behind the register would have been perceived by at least one of the protagonists as

favouring the other. Unless it deliberately sets out to favour one party at the expense of another, a

local government, by involving itself in a private dispute, adopts a high risk strategy, with low

prospects of success and a potentially disastrous outcome.

5.5.49 It might be argued that the City would have favoured George and Tom Grljusich if it had

supported the Lot 17 rezoning proposal. This argument is misconceived because it ignores the

critical fact that George and Tom Grljusich were the legal owners. It was Deputy Mayor Grljusich

who sought to dispute their legal entitlements and it was he, not George and Tom Grljusich, who

had the onus of establishing that his claim had merit and that his wishes should be accommodated

in preference to those of the legal owners.

5.5.50 Disputes between parties are not uncommon. Local governments should not get involved

in their adjudication. That is the role of the courts. If, despite the evidence of the details on the

relevant Certificate of Title, Deputy Mayor Grljusich wished to question the right of his brothers to

enter into the Owners Deed with Urban Focus, that was not a matter that the Council should have

had anything to do with.

5.5.51 It was open for Deputy Mayor Grljusich to apply to the Supreme Court to prevent the City

forwarding the Amendment No. 91 proposal to the Planning Commission. The Court would then

have determined whether there was any merit to his claim and would have made its decision. As

part of that process, the Court would have taken into account the impact of any delay on others,

including George and Tom Grljusich and Urban Focus. Under this approach, the City would have

been - and, importantly, would have been perceived as being - neutral and unbiased, simply

submitting to whatever decision the Court made.

5.5.52 It is particularly significant in this context that Deputy Mayor Grljusich in fact took

injunctive action in the Supreme Court in July 1994 to prevent George and Tom Grljusich from

attempting to sell Lot 17 (see above at 5.1(d)(ii)). He told the Inquiry that he would also have taken

action against the City if it supported Amendment No. 91 with Lot 17 included (Transcript, 3371 and

see above at para. 5.2.25).


446

5.5.53 By making decisions to defer Amendment No. 91, and then to exclude Lot 17 from

Amendment No. 91, the Council enabled Deputy Mayor Grljusich to achieve his objective without

the need for him to persuade a court, on the basis not only of the merits of his claim but also having

regard to the interests of all others who might be affected, that Lot 17 should not be rezoned before

the Supreme Court handed down its decision in the action seeking to remove George and Tom

Grljusich as trustees.

5.5.54 By adopting the approach that it did in this case, the City took sides - and was seen to

take sides - in the dispute between the warring parties.

(iv) McCusker opinion

5.5.55 As part of his formal Written Response to the Inquiry, Mr McLeod obtained and sought to

rely on an opinion dated 7 December 1999 from Malcolm McCusker QC (the "McCusker opinion")

to justify his firm's earlier advice to the Council of 7 February 1995 and the Council's decisions not

to support the rezoning of Lot 17. For three reasons, the McCusker opinion is of little help in either

respect.

5.5.56 Firstly and most significantly, its conclusions are based, in part, on material that was not

available to, and was not taken into account by, either McLeod & Co or the Council. For example, it

relies on the Zelestis opinion dated 20 June 1996. That opinion was not obtained for more than a

year after the Council's decisions and the McLeod & Co advice. Further, the issues raised by the

Zelestis opinion and on which its conclusions were based were not considered in either the McLeod

& Co advice of 7 February 1995 or by the Council in any of its decisions.

5.5.57 For the reasons set out earlier (at 5.4(h)(ii)), the question whether the Council's elected

members acted properly in refusing to support the rezoning of Lot 17 must be assessed on the

basis of the material before them that they actually took into account. Subsequently obtained legal

opinions that suggest other possible bases for the Council's decisions address a different question.

5.5.58 Secondly, and in any event, the McCusker opinion is based on instructions, which, in a

number of respects, are incorrect. For example, the opinion states that –

"At a meeting held by the Council on 6 December 1994, the Council noted the request ofthe four residual beneficiaries to remove Lot 17 from Amendment 91 so that it would notbe rezoned, as originally proposed."


447

There is no evidence that the Council at its meeting on 6 December 1994 noted, or was even aware

of, "the request of the four residual beneficiaries to remove Lot 17 from Amendment No. 91". It is

likely that the Council had before it and relied only on the letter from Corser & Corser dated

24 November 1994 referring to the Supreme Court action (taken by two of the four residuary

beneficiaries). It is possible that the Council had before it an oral account of the telephone advice

given by Mr McLeod to Mr Scharf on the same day. However, nothing in that advice related to "the

request from the four residual beneficiaries".

5.5.59 Even at the later Council meeting on 7 March 1995, the only specific advice that the

Council had before it in relation to the specific issue of whether George and Tom Grljusich had the

power to enter into the Owner's Deed was the advice (of 6 December 1994) from Majteles &

Salmon, the solicitors for Urban Focus. This advice concluded that the trustees were "clearly

empower[ed] … to enter into the Owners Deed".

5.5.60 Finally, the McCusker opinion does not refer at all to the "non-interventionist option" open

to the City. This is not surprising in the light of the recorded instructions on which the opinion was

based. Apart from factual errors in his instructions, it appears that Mr McCusker QC was not

informed that the City's only relevant requirement was for the owners of Lot 17 to sign the Owner's

Deed. The owners of Lot 17 had signed the Owner's Deed early in 1994. There is no evidence of

any material before the Council at its meetings in July and December 1994 and March 1995 that

would have justified a conclusion that George and Tom Grljusich were not, or even may not have

been, the legal owners of Lot 17 at the time that they signed the Owner's Deed.

(f) Mr Scharf's submission to the Planning Commission

5.5.61 The Planning Commission wrote to the City on 24 March 1995 seeking its response to the

application that had been submitted by Urban Focus, on behalf of George and Tom Grljusich, to

subdivide Lot 17.

5.5.62 It will be recalled that on 2 August 1994 the Council resolved to recommend to the

Planning Commission that the proposed subdivision of Stage 8, which then included Lot 17, should

be deferred pending the initiation of proposed Amendment No. 91. In drafting his report, on which

that decision was based, Mr Scharf failed to inform the Council that it was open for the Planning

Commission to give subdivisional approval even where the land in question had not been zoned

appropriately. The same principle applied here. It was open to the Planning Commission to grant


448

approval for the subdivision of Lot 17 even though Lot 17 was still zoned "Rural" rather than

"Residential" under the District Zoning Scheme.

5.5.63 Mr Scharf drafted the submission to the Planning Commission. The clear purpose of the

letter, dated 13 April 1995, was to convince the Planning Commission not to proceed with the

subdivision. In his evidence to the Inquiry, Mr Scharf agreed that he was deliberately strong in

drafting the letter but said that it was because he felt strongly that the matter should not be

determined before the Supreme Court handed down its decision in the proceedings initiated by

Deputy Mayor Grljusich and his sister to remove George and Tom Grljusich as trustees.

5.5.64 In many respects, Mr Scharf's submission to the Planning Commission is misleading

and false.

5.5.65 The submission stated –

"Amendment 91 to District Zoning Scheme No. 2 was modified to delete the subject lotfrom being rezoned to Residential after receiving advice from the Council's Solicitors,McLeod and Company, that the ownership of the land is a relevant consideration to therezoning of the land.

This advice also took into consideration the correspondence from Majteles and Salmon, acopy of which was forwarded to you by Urban Focus."

Amendment No. 91 was modified before, not after, the Council had received the advice from

McLeod & Co which was referred to by Mr Scharf. The advice that "took into consideration the

correspondence from Majteles and Salmon" was not provided to the City until 7 February 1995.

The decision to modify Amendment No. 91 by deleting Lot 17 was made by the Council on

6 December 1994. Mr Scharf conceded in his evidence before the Inquiry that he would "have a

tendency to agree" that, when it made its decision, the Council could not have had the advice to

which he referred (Transcript, 2940). The submission stated –

"The Supreme Court hearing to determine the issue is imminent."

5.5.66 The Supreme Court hearing was not held until 4 months later. In his evidence to the

Inquiry, Mr Scharf stated that he was led to believe that the hearing was to be within a week or two,

although he could not say who had told him (Transcript, 2940-2941).


449


"The Council's refusal to include Lot 17 Hamilton Road in Amendment 91 was the subjectof investigation by the Department of Local Government. That Department appreciatedCouncil's concern about supporting the rezoning without the executorship / ownershipmatter being resolved."

In fact, the Department of Local Government report had not been provided to the City at that stage.

Mr Scharf's explanation at the public hearings was that he must have received the information in

"discussions with the relevant people" (Transcript, 2941).


"Urban Focus may have an Owners Deed executed by Messrs G. N. & D. T. Grljusich,however, there is Supreme Court action pending to contest the right for them to act asExecutors. In the event that the majority of the Grljusich family are successful with theSupreme Court action, the Owners Deed will not be valid and the Council may berequired to provide funds to cover costs incurred should the new executors not wish toproceed with the Subdivision."

5.5.69 Mr Scharf well knew that Urban Focus had an Owner's Deed executed by George and

Tom Grljusich because he had received a copy of the Deed from Majteles & Salmon on

19 December 1994 and had forwarded it to McLeod & Co on 9 January 1995. Mr Scharf's

reference to the "majority of the Grljusich family [being] successful with the Supreme Court action"

is incorrect. Only two members of the Grljusich family, Deputy Mayor Grljusich and Mrs Gava were

the plaintiffs in that action. Mr Scharf's assertion that if the Supreme Court action was successful

"the Owners[sic] Deed would not be valid" was inconsistent with the advice from McLeod & Co to

the City on 6 February 1995 and, in any event, baseless. Mr Scharf's expressed concern about the

possibility "that the Council may be required to provide funds … should the new executors not wish

to proceed with the Subdivision" is unsubstantiated. No member of the Grljusich family had ever

indicated that he or she would not proceed with the subdivision. The only relevant objection by

Deputy Mayor Grljusich, his sisters and sister-in-law was that they, and not George and Tom,

should control the subdivision and development.

5.5.70 In respect of this letter to the Planning Commission, the closing submissions of Mr Scharf,

in their entirety, are that –

"[t]his letter was not misleading. It was and remains a simple recitation of relevantfactors" (para. 22).

This submission was made notwithstanding that Mr Scharf agreed in his evidence to the Inquiry that

at least part of the letter was probably incorrect (Transcript, 2940).


450

5.5.71 On 26 May 1995, Mr Scharf sent to Deputy Mayor Grljusich's solicitors, Corser & Corser,

a copy of the City's submission to the Planning Commission. During the public hearings of the

Inquiry, before being reminded that he had sent the submission to Corser & Corser, Mr Scharf

agreed that such action would be entirely inappropriate and could be interpreted as partisianship -

"COUNSEL ASSISTING: Can you tell me, did you send that letter to either of theprotagonists?---MR SCHARF: No, I didn't.

…

COUNSEL ASSISTING: Would it have been inappropriate to send it to aprotagonist?---MR SCHARF: Well, it's not - they're not even the applicant.

COUNSEL ASSISTING: No, it would have been none of their business?---MR SCHARF:That's right. I wouldn't have had any desire to send it to them.

…

COUNSEL ASSISTING: Do you think it would have been inappropriate to send it to aprotagonist?---MR SCHARF: It would have been.

COUNSEL ASSISTING: Why?---MR SCHARF: It's not their - well, it's an issue that'sbetween - correspondence between the commission and the council.

COUNSEL ASSISTING: Do you think if you started sending it to one protagonist or theother, it would have given the appearance of partisanship?---MR SCHARF: Well, youwould " (Transcript, 2944).

5.5.72 In his closing submissions, Mr Scharf claimed that the copy was sent after he received

advice from Corser & Corser that the documents was accessible under the Freedom of Information

Act 1992 (para. 23). There is no evidence to support this claim. In particular, there is no record on

the relevant City files of any advice to that effect having been received from Corser & Corser. In

any event, Mr Scharf provided no explanation of why he would have relied on advice from Deputy

Mayor Grljusich's solicitors, without it being confirmed by the City's solicitors, to release the

document.

Findings

F35. I find that, in respect of the City's submission to the Planning Commission on

13 April 1995 dealing with the application by Urban Focus for approval to subdivide

Lot 17 –

(a) Mr Scharf as the Director of Planning and Development and as the City's

employee directly responsible failed to comply with his duties by making false

and misleading statements; and


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(b) Mr Scharf's false and misleading statements were made –

(i) for the purpose of persuading the Planning Commission not to grant

approval or to delay granting approval; and

(ii) in the knowledge and with the expectation that Deputy Mayor Grljusich

would be advantaged and that George and Tom Grljusich, Urban Focus

and other Packham Area landowners would be disadvantaged by a delay

in approval or a refusal to approve.

5.6 Investigation by the Department of Local Government

(a) Department's request for information

5.6.1 On 4 January 1995 the Department of Local Government wrote to the City informing it

that –

"[t]he Minister for Local Government has received a written request to investigate mattersrelating to the decision by Council at its December 6, 1994 meeting not to proceed withamendment No 91 because of the ownership of Lot 17 Hamilton Road."

The Minister directed that the Government Inspector of Municipalities undertake a preliminary

investigation. For that purpose, the City's response was sought in relation to 10 items. Half of the

items simply sought copies of documents.

5.6.2 The City's response, dated 11 January 1995 was drafted by Mr Laurie Cetinic-Dorol and

signed by Mr Don Green, the Acting CEO. With one exception, the substantive responses were

brief, to the point of being cryptic, and in some cases misleading. The exception was an expansive

attempt, occupying 4 paragraphs, to persuade the Department that the copy of the McLeod & Co

advice "made available to the Department of Local Government on the strict understanding that the

letter is confidential" must remain confidential, particularly in the light of attempts by Mr George

Grljusich to obtain a copy.

5.6.3 Two points may be made about this concern that Mr George Grljusich might obtain a copy

of the advice. First, it needs to be considered in the light of the fact that the other party to the

Grljusich family dispute, the Deputy Mayor, had access at all times to all advice and other

documentation held by the City that he was able to use to advance his personal interests against

those of his brothers, including Mr George Grljusich. (The general issue of the Deputy Mayor's


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access to the City's documents for the purpose of advancing his private interests, even at the

expense of the City itself, is taken up in the next Chapter at 6.13.) Secondly, the contrast in

Mr Green's response, between the City's strong emphasis on resisting disclosure of its documents

and its brief responses to the concerns that the City was biased in favour of the Deputy Mayor, is

indicative of the City's general attitude towards the fundamental principles of openness and

accountability.

5.6.4 As an example of one of the misleading responses in the City's letter, the Department's

letter asked –

"(a) Was the letter received from Corser and Corser relating to the disputed ownershipof Lot 17 requested by Council. If not, what action did staff take to verify theinformation in the letter."

In its response the City stated –

"(a) Council did receive correspondence from the legal firm of Corser and Corser.Council did not ask for advice rather sought information regarding the property."

In fact, as has been seen, Mr Scharf on two occasions rang Corser & Corser to ensure that the

letter, sought from Corser & Corser by Deputy Mayor Grljusich, was received by

24 November 1994. The City's response that it had "sought information regarding the property" is,

at best, misleading. It was not the City but Deputy Mayor Grljusich who sought advice (or

"information") regarding the property from Corser & Corser. The City, through Mr Scharf, merely

acted as Deputy Mayor Grljusich's agent in ensuring that the response from Corser & Corser was

expedited. The City did not answer the second part of the question that was asked.

5.6.5 It appears, from the evidence, that Mr Brown was away in January 1995 and was not

involved in the preparation of the City's response (Transcript, 3063). In his evidence, Mr Brown

accepted that the City did not make a full response to the Department's inquiries


(b) Department's report of 27 June 1995

5.6.6 On 10 July 1995 the Minister for Local Government wrote to the City's CEO enclosing a

copy of the Department's report of its investigation dated 27 June 1995. In his covering letter, the

Minister stated –

"Although the inquiry found that the city acted within its powers in dealing with theapplication, it does disturb me that Council would permit actions that can be perceived asgiving preferential treatment to councillors.


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Council must at all times ensure that its actions are beyond reproach and the confidenceof the community in its integrity as a government body is protected."

5.6.7 The Department's report was critical of aspects of the City's decision making process in

relation to the decisions to defer Amendment No. 91 on 5 July 1994 and to exclude Lot 17 from

Amendment No. 91 on 6 December 1994. Criticisms were directed at both elected members and

staff. They dealt with some of the matters that have been covered earlier in this Chapter and

include examples of misleading reports by Mr Scharf and preferential treatment having been given

to Deputy Mayor Grljusich by both elected members and staff.

5.6.8 The Department's conclusions were as follows –

"1. Councillor John Grljusich in relation to Town Planning Scheme Amendment No 91did not breach the pecuniary interest provisions of the Local Government Act.

2. The action of the Cockburn City Council in resolving to proceed with SchemeAmendment No 91 in a modified form excluding Lot 17 Hamilton road is supportedby subsequent legal advice from its solicitor. The solicitor in that advice also statedthat Council would have acted properly if had proceeded with the originalamendment.

3. Council inappropriately accepted the presentation of a letter written in a privatecapacity by Urban Focus to Councillor J Grljusich at its meeting of the 5th ofJuly 1994 and based on its decision to seek legal advice as to whether details inthe letter contravened Council policy PB14.1 on the contents of that letter.

4. Planning staff falsely portrayed a letter written from Urban Focus to CouncillorJ Grljusich in a private capacity to the City solicitors as the standard letter sent byUrban Focus to landowners with the Packham Area.

5. Council by requesting a legal opinion on statements made by Urban Focus in theirletter of the 19 January 1994 to Councillor J Grljusich ignored the fact thatCouncillor Grljusich was not an owner of land within the scheme area and causedundue delays to the proposal and unwarranted expense to the City of Cockburn.

6. Planning staff in compiling the agenda item relating to Amendment No 91 for thePlanning, Building and Health Committee meeting of the 29th November 1994appears to have given preferential treatment to the letter received by the solicitorsrepresenting Councillor J Grljusich in that its contents were taken into account afterthe normal deadline.

7. Planning staff in its comment outlined in agenda item 13.3 of the Planning, Buildingand Health Committee meeting of the 29th November 1994, mislead[sic]Committee members and Council by falsely stating that solicitors representingCouncillor J Grljusich had stated in their correspondence that the dispute as to theowner of Lot 17 would be settled by a Court hearing to be held in the near future.


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8. The inquiry found no instances of Councillors Wheatley and Pecotic failing to showan individual duty of care in relation to Scheme Amendment No 91."

5.6.9 Included in the recommendations of the report were that the City should inform George

and Tom Grljusich of the reasons for its decision to exclude Lot 17 from Amendment No. 91 and

that –

"The Cockburn City Council review its procedures in relation to the preparation of andpresentation of items to its Committee and Council meetings so as to ensure that at alltimes it is acting beyond reproach and with equal consideration for all parties effected [sic]by that item."

(c) Council's response

5.6.10 The Department's report was considered at the next meeting of the Planning, Building and

Health Committee on 25 July 1995. The minutes of that meeting record that –

"Discussion ensued on the investigation undertaken by the Local GovernmentDepartment and those Councillors mentioned in the report expressed concern that theyhad not been informed that the issue and their actions were being investigated.

Committee expressed concern about the fact that they were not advised and felt that anexplanation as to why they were not advised was warranted. They felt that they had beendenied natural justice to defend themselves against accusations levelled at them whichthey believed were incorrect."

5.6.11 In fact, the City had been "informed that the issue and their actions were being

investigated". The letter providing that information, which also asked questions and sought

information that clearly indicated the scope of the investigations, was dated 4 January 1995 and

has been referred to earlier.

5.6.12 The minutes of the Planning, Building and Health Committee meeting on 25 July 1995

also record that –

"Due to the seriousness of the findings in the report [the Committee] recommended that aSpecial Meeting be held as a matter of urgency to discuss the matter and that anyrecommendation the City Manager may have is to be discussed at this meeting."

Deputy Mayor Grljusich and Cr Wheatley declared financial interests in that matter and did not vote.

There is nothing to indicate, however, that either left the room during the discussion.


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5.6.13 At its meeting on 1 August 1995, the Council resolved to adopt the recommendation of

the Planning, Building and Health Committee subject to an amendment that required the City

Manager to provide a full report on the Department's inquiry to the Special Meeting. Deputy Mayor

Grljusich and Cr Wheatley again did not vote.

5.6.14 The Special Meeting of the Council to consider the Department's report was held on

28 August 1995. Along with the Departmental report, the Special Council meeting also had before

it draft letters to the Minister and to George and Tom Grljusich. The letters had been drafted by the

CEO, in accordance with the Council's earlier resolution.

5.6.15 Deputy Mayor Grljusich and Cr Wheatley each declared a financial interest in the matter.

As there were only 5 elected members remaining, the Mayor adjourned the meeting due to a lack of

a quorum. The meeting was rescheduled for 5 September 1995. The minutes record that the

elected members present at the rescheduled meeting were –

Mr Lees Mayor





Mr Lee Councillor




Among the City's employees who attended were Mr Brown (the CEO) and Mr Scharf.

5.6.16 Deputy Mayor Grljusich declared a financial interest. Despite having declared a financial

interest in each of the previous three meetings where this matter was discussed or due to be

discussed, Cr Wheatley did not declare a financial interest on this occasion.

5.6.17 Indeed, Cr Wheatley played a major role in the Council's consideration of the

Department's report. Cr Wheatley was the only lawyer at the meeting. He was also very well

acquainted with the issue of Lot 17 and with the Deputy Mayor's interest in that property. He was

similarly well acquainted with the depth of feeling between the members of the Grljusich family.

Three weeks earlier he had spent a week in the Supreme Court, as Counsel for Deputy Mayor


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Grljusich against George and Tom Grljusich, in the action instituted by John Grljusich and Frances

Gava seeking to remove George and Tom Grljusich as trustees. In that role he was being paid to

advance the interests of John Grljusich against those of George and Tom Grljusich. No doubt he

was well placed to resist any suggestion that the Council had given preferential treatment to his

client, the Deputy Mayor, at the expense of George Grljusich.

5.6.18 It appears that the response of the elected members to the Department's report was one

of outrage. Whether it was feigned or genuine outrage is not readily apparent. The strong

indications are that the elected members adopted the strategy that 'attack is the best means of

defence'. Cr Wheatley led the charge. No attempt was made to answer the substance of what had

earlier been described by the Council as the "serious findings" of the report. Nor was any attempt

made to deal with the Minister's concern that the Council's actions could be perceived as giving

preferential treatment to the City's elected members.

5.6.19 Instead, Cr Wheatley focussed the Council's attention on what he claimed was the failure

of the Department to observe the rules of natural justice (or procedural fairness as they are also

known). Under Cr Wheatley's leadership upon this issue, the Council resolved that the CEO should

add the following to the draft letter to the Minister –

"Council is however, concerned that your view of its actions is based upon a reportcontaining conclusions that Council or its planning staff acted improperly.

Council does not accept conclusions which would appear to have been reachedbecause of a failure to accord natural justice to both Councillors and planning staff.

The Council of the City of Cockburn would be grateful for your assurance that if anyfurther formal complaints are made against the Council, the relevant parties will beaccorded natural justice before any findings are made" (emphasis added).

5.6.20 The irony, if not duplicity, is startling. In the Council decisions that had been reviewed by

the Department, the elected members of the City (as well as Mr Scharf) had acted in flagrant

breach of the rules of natural justice to the advantage of Deputy Mayor Grljusich. The same elected

members now sought to protest at what they saw to be the injustice of being the victims of a similar

approach. In fact, from the limited information available, and particularly because the Council did

not provide any support for or details of its complaint that the rules of natural justice had been

breached, it is impossible to determine whether the protest had any merit. What is clear, however,

is that the Department accorded the City at least some aspects of procedural fairness. In particular,

it informed the City of the investigation and gave it some opportunity to respond. That the City's


457

response was a good deal less than forthcoming was hardly the Department's fault. No such

mitigating factors applied to the City's conduct in respect of George and Tom Grljusich and Urban

Focus. In neither of the decisions that were reviewed by the Department did the City give George

and Tom Grljusich or Urban Focus any opportunity at all to respond.

5.6.21 There is another important difference between the Department's report and the Council's

decisions on 5 July and 6 December 1994. The conclusions of the Department were soundly based

and justifiable. The decisions of the Council were unsubstantiated and unjustifiable.

5.6.22 On the basis of the perceived procedural defects, the Council rejected the conclusions of

the Department's report.

5.6.23 An opportunity to reconsider the Council's earlier decisions, to re-evaluate the actions of

staff and elected members, to accept that serious mistakes had been made and to learn from those

mistakes had been lost. Worse, the self righteous and indignant manner of the City's response

foreshadowed a hardened attitude and, if it were possible, a reduced capacity or willingness to

recognise bias and to act even handedly in matters involving the Deputy Mayor.

(d) Cr Wheatley's role

5.6.24 Cr Wheatley's role at the Special Council meeting on 5 September 1995 in diverting the

Council's attention from the substance of, and therefore the need to reconsider, its earlier decisions

was not limited to what he said and did at that meeting. His role also, and very significantly,

involved him withholding from the Council certain critical information. It is that aspect of his role that

is now considered.

5.6.25 By the time that it met on 5 September 1995, the Council would have been justified, if not

obliged, to reconsider its earlier decisions (on 4 July, 24 August and 6 December 1994 and

7 March 1995) not to support the rezoning of Lot 17 and not to support the grant of subdivision

approval for Stage 8 with Lot 17 included. The Department's report had found that the City's

"planning staff" had misled the Council in respect of its earlier decisions and that Deputy Mayor

Grljusich had been given preferential treatment. This, alone, should have been enough for elected

members to demand that the decisions be reconsidered.


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5.6.26 But there was another crucial matter that should have been put before the Council at its

meeting on 5 September 1995 and that was that the Supreme Court action brought by Deputy

Mayor Grljusich and his sister did not challenge the right of George and Tom Grljusich to enter into

the Owner's Deed. If this information had been put before the Council at that meeting it would have

removed any lingering doubts that there may have been about the need to reconsider, and in fact to

reverse, the Council's earlier decisions. This matter emerged and became public during the trial of

the Supreme Court action seeking to remove George and Tom Grljusich as trustees. The trial had

taken place just three weeks before the Special Council meeting on 5 September 1995.

5.6.27 To appreciate the significance of this matter, it is necessary to keep in mind that the

Council had made its decisions to exclude Lot 17 from Amendment No. 91 (on 6 December 1994)

and to refuse to initiate the rezoning of Lot 17 (on 7 March 1995) on the basis of Mr Scharf's false

and misleading advice that –

(a) Deputy Mayor Grljusich's Supreme Court action seeking the removal of George

and Tom Grljusich as trustees challenged the trustee's ownership of Lot 17 and, in

particular, the right of George and Tom Grljusich to enter into the Owner's Deed

with Urban Focus; and

(b) the ownership dispute would be settled by the judgment given in that case (see

above at 5.4(d) and 5.5(d)).

5.6.28 In essence, the advice given by Mr Scharf to the Council was that the only reason why the

Council should not support the rezoning or subdivision of Lot 17 was that George and Tom

Grljusich may not have been the lawful owners of Lot 17 and, therefore, may not have had the

authority to enter into the Owner's Deed. Mr Scharf informed the Council that Deputy Mayor

Grljusich's Supreme Court action would determine this issue and the Council would then be in a

position to reconsider its support for the rezoning and subdivision of Lot 17. He gave this advice on

the basis of information from Deputy Mayor Grljusich and his lawyers (including Cr Wheatley). It

appears that Cr Wheatley strongly believed - and advised Deputy Mayor Grljusich - that the

Supreme Court action would determine these questions. He was wrong. If not before, he

discovered that he was wrong during the hearing of the case in August 1995. This is apparent from

the following extract from the Supreme Court transcript –

"KENNEDY J: … The remaining question here is the trustees having entered into acontract [the owners deed with Urban Focus], whether that affects the situation.


459

WHEATLEY, MR: Yes. Your honour has previously expressed concern about thediscretion and we would say that given the existence of the contract that has beenentered into and given the matters that remain outstanding in relation to that contract -perhaps I can have a second? Your Honour, I am just trying to locate the marked copy ofthe owner's deed.

Given the nature of the matters that still remain to be done - and your Honour hasalready referred to the house property - and in addition to that the concerns over whethera bare trust can be created even by …

KENNEDY J: That's not an issue.

WHEATLEY MR: Yes. It is something that by allowing the trustees to continue, thecourt will be sanctioning …

KENNEDY J: They have entered into a contract or a deed of trust which hasn'tbeen challenged.

WHEATLEY MR: We would say that that's something that should be taken into account.

KENNEDY J: Why should I? I mean, it is not an issue here. They have entered intoa deed of trust. The only complaint, I think is that it was entered into without the approvalof the beneficiaries.

WHEATLEY MR: Yes, that's correct.

KENNEDY J: That is of no moment. The power of the trustees to enter into itisn't challenged.

WHEATLEY MR: It is something that, we submit, the court should consider whenconsidering whether the trustees should be removed and whether …

KENNEDY J: How should I consider it?

WHEATLEY MR: If the court is considering exercising a discretion to retain the existingtrustees, that is one of the matters, we submit, that should be taken into consideration.

KENNEDY J: What is the matter which should be taken into consideration?

WHEATLEY MR: That the deed itself is beyond the powers of the trustees to enter into.

KENNEDY J: That hasn't been fought out here.

WHEATLEY MR: It is apparent from the document, your Honour.

KENNEDY J: I could find nothing on the pleadings about the matter.

WHEATLEY MR: It is an issue, we submit, that is relevant to the exercise of yourdiscretion.

KENNEDY J: I can only go on the evidence before me and the issues before me.


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WHEATLEY MR: Yes. It is a document before you which …

KENNEDY J: It is not a document which has been challenged.

WHEATLEY MR: Yes, that is correct, but I maintain that position, your Honour"

(CIV 3031 of 1991, Transcript, 18 August 1994 at 516-517, emphasis added).

5.6.29 Justice Kennedy made it clear to Cr Wheatley that the Supreme Court action did not

challenge the right of George and Tom Grljusich to enter into the Owner's Deed with Urban Focus.

At least from this point on, there was no basis for the proposition that the judgment in this Supreme

Court action would determine - or even consider - whether the trustees had the power to enter into

the Owner's Deed. Yet it was on that (now clearly erroneous) proposition that elected members

had relied in deciding that the Council should withhold its support for the rezoning and subdivision

of Lot 17.

5.6.30 It was critical, therefore, that the Council be informed of Justice Kennedy's view, and of

Cr Wheatley's express acknowledgment of the correctness of the view, that "[t]he power of the

trustees to enter into [the Owner's Deed was not] challenged".

5.6.31 It was not, of course, in Deputy Mayor Grljusich's interests (nor, it would seem, in

Cr Wheatley's personal interests) that the Council be informed of this. In his representative and

personal roles Cr Wheatley had every reason to ensure that this information was not provided to the

Council on or before 5 September 1995. However, in his role as an elected member of the City -

particularly as an elected member who participated so prominently in the Council's decision making

process on 5 September 1995 - Cr Wheatley had a public duty to inform the Council of information

that was so critical to the issue under consideration. Cr Wheatley did not provide this information to

the Council during the three weeks that followed the trial before the next Council meeting. No did

he do so on 5 September 1995 when the Council was in a position to reconsider its earlier

decisions. Nor did he do so at any time afterwards.

5.6.32 There are many situations in a solicitor-client relationship where information is provided to

a lawyer in confidence and cannot be disclosed. This highlights one of the general problems where

an elected member acts in a professional capacity for another elected member in a matter that may

come before the Council. The information in question here, however, was not given in confidence.

The Supreme Court hearing was in public. Particularly after being misled for so long, it was critical

that the City's elected members should have been informed of the true position.


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5.6.33 For present purposes, it is not necessary to determine whether, as a general proposition,

an elected member who participates in a council debate on a matter has an obligation to inform the

council of information that is, and is known to the elected member to be, critical to the council's

consideration and determination of the matter. Such an obligation may well be inherent in the

elected member's responsibilities involved in –

(a) representing electors, ratepayers and residents of a district; and

(b) facilitating communication between the community and the council (see

section 2.10(a) and (c) of the Local Government Act 1995).

5.6.34 I am satisfied, however, that in the particular situation that existed on 5 September 1995,

Cr Wheatley had a duty to inform the Council of the true position. His failure to do so was a breach

of the standards of conduct that would be expected of a person in his position by reasonable

persons with knowledge of the duties, powers and authority of the position, and therefore, was

improper (see Chapter 1 at 1.3(m)).

Findings

F36. I find that, in respect of the City's response to the Department of Local Government

report of 31 July 1995 containing criticism of the role of the City's elected members and

employees in relation to the decision to exclude Lot 17 from Amendment No. 91 –

(a) in his role as Deputy Mayor Grljusich's lawyer, Cr Wheatley was responsible,

with others, for the Council's erroneous view that the Supreme Court

proceedings to remove George and Tom Grljusich had challenged, and would

determine, the right of George and Tom Grljusich to enter into the Owner's Deed

with Urban Focus;

(b) that erroneous view was the basis for the Council's earlier decisions on

6 December 1994 and 7 March 1995 not to support the rezoning and subdivision

of Lot 17;

(c) in his role as Deputy Mayor Grljusich's lawyer, Cr Wheatley was aware, at least

from 18 August 1995, that the Supreme Court proceedings did not challenge,

and would not determine, the right of George and Tom Grljusich to enter into the

Owner's Deed;

(d) in his role as an elected member of the City, Cr Wheatley had a duty to inform

the Council that its view was erroneous;


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(e) Cr Wheatley failed to comply with his duties as an elected member by not

informing the Council that its view was erroneous, at least at its meeting on

5 September 1995 when it had the opportunity, in the course of determining its

response to the Department's report, to reconsider its decisions not to support

the rezoning and subdivision of Lot 17;

(f) instead of informing the Council that its view was erroneous, Cr Wheatley

played a major role in diverting the Council's attention from the substance of the

Department's report with the result that the Council did not reconsider and

reverse its earlier decisions; and

(g) Cr Wheatley's failure to inform the Council that the Supreme Court proceedings

did not challenge the right of George and Tom Grljusich to enter the Owner's

Deed was a breach of the standards of conduct expected of an elected member

and, in all the circumstances, constitutes improper conduct.

(e) CEO's response

5.6.35 As the City's CEO, Mr Brown was responsible for the conduct of its employees. The

Department's report identified serious problems with the conduct of those referred to in the report

as "planning staff". The "planning staff" had been found to have –

(a) made false statements to the City's solicitors;

(b) given preferential treatment to the solicitors representing Deputy

Mayor Grljusich; and

(c) misled Committee and Council members with a further false statement.

5.6.36 In fact, the "planning staff" referred to was one person - Mr Scharf. He was the Director of

Planning and Development. As a Director, he had a level of seniority which was immediately below

that of the CEO. In his capacity as the CEO, Mr Brown should have taken the opportunity

presented by the serious findings of the report to audit Mr Scharf's dealings in respect of Lot 17, if

not all of his dealings with Deputy Mayor Grljusich. It may well have been necessary to conduct the

audit personally. Alternatively, he could have arranged for an external person to do so. In any

event, there are compelling reasons why it was imperative that Mr Brown should have taken

personal responsibility - at least by way of very close supervision - of any audit or review. Among

those reasons are that –

(a) the report dealt with issues that were fundamental to the relationship between

elected members and staff;


463

(b) the nature and consequences of those issues were very serious; and

(c) the adverse findings centred on Mr Scharf who was a senior employee and for

whom Mr Brown had direct management and supervisory responsibility.

5.6.37 An audit or review would not have been a lengthy or complex task. Nor was it one that

required any particular planning expertise. At that stage, Mr Brown had been employed by the City

for 27 years. He was more than adequately equipped to conduct, or closely supervise, an

appropriate audit or review. Many of the clearly biased and unjustifiable acts of Mr Scharf would

have been uncovered. For example, the 4 month delay in obtaining advice from McLeod & Co

would have been readily apparent.

5.6.38 Mr Brown did none of these things. Indeed, perhaps inspired by Cr Wheatley's

performance at the Special Council meeting and adopting the strategy of 'attack is the best means

of defence', the CEO added his personal contribution to the City's formal response to the Minister.

Without any direction from the Council, Mr Brown included the following in his letter to the Minister –

"I am able to confirm that Councils administrative staff, involving the most seniorexecutive staff, have reviewed the procedures in relation to the preparation andpresentation of items to its Committee and Council Meetings. Having given considerationalso to the procedures of a cross-section of other Local Governments in the MetropolitanRegion, and further having given objective consideration to the procedures, noinadequacy has been disclosed other than dealing with urgent matters which may notbe subject to staff evaluation" (emphasis added).

5.6.39 In the context of the Department's report, the clear message in this response was that an

appropriate review had been conducted and that there were no problems. In fact, as is readily

apparent, there were serious problems - and at a senior level.

5.6.40 Mr Brown gave evidence to the Inquiry as to what he intended by this paragraph of his

response to the Minister, and in particular the statement that "no inadequacy has been disclosed".

He testified that this paragraph was a response to the Department's specific recommendation that

the City review its procedures in relation to the preparation of and presentation of items to

committee and Council meetings. His response was drafted on the basis that the Department's

recommendation did not relate to the specific matters involving Lot 17 that were the subject of the

report but to the City's general procedures –

"This response was taken in generality, that we should consider all matters is the way thathe - the way we interpreted his letter, not just specifically lot 17, and as you can see, wechecked with other local authorities just to see how they went about their processes andthe method of their agendas that they produced, and reports, and we thought that the way


464

we had gone about it - I'm not talking about the general content of a particular resolutionhere or a particular recommendation. We took it as being the general process by whichall issues go to council. That was the interpretation, rightly or wrongly, which was placedon the minister's letter" (Transcript, 3088).

5.6.41 When asked whether any inadequacy had been disclosed in the procedures for the

December 1994 meeting, Mr Brown stated –

"MR BROWN: I would have to say I think that there were inadequacies back then … Ithink the inadequacy there was that [the problem with the Corser & Corser letter] hadn'tbeen picked up and we hadn't sought legal advice on that letter, and I'd suggest it wasbecause of how - the agenda settlement process which we have in place now wasn't asstrict in those days.

COUNSEL ASSISTING: But you weren't trying to suggest to the minister in this letter thatthere were no problems with what had gone on in December 1994?---MR BROWN: No, Iwasn't trying to suggest that at all.

COUNSEL ASSISTING: And this paragraph shouldn't be read in thatway?---MR BROWN: No. We took it as a broad question and we looked at it as a broadissue" (Transcript, 3088-3089).

5.6.42 I accept that this interpretation, albeit strained and taken out of context, was open.

Nevertheless, it is not an interpretation that would be adopted readily by an organisation that was

committed to principles of public accountability.

5.6.43 Leaving aside his response to the Minister and his responsibility to deal with the actions of

Mr Scharf as a personnel management issue, Mr Brown, as the City's CEO, also had a

responsibility to deal with the effect that Mr Scharf's actions had on the decisions made by the

Council in respect of Lot 17.

5.6.44 On the claimed basis that there had been a failure to observe the principles of procedural

fairness, the Council had rejected the Department's substantive findings relating to its Lot 17

decisions. Yet Mr Brown knew, or should have known, that the Department's criticisms of Mr Scharf

were in fact soundly based and true. Because Mr Scharf had favoured Deputy Mayor Grljusich and

had misled the Council in relation to its Lot 17 decisions, the propriety and appropriateness of those

decisions were brought into question. It was important that the Council review the matter to

determine what action it should take not only in relation to those Lot 17 decisions but also in relation

to a review of its response to the Minister concerning the Department's report.


465

5.6.45 In these circumstances, Mr Brown's responsibility was to ensure that the Council was

properly informed about the nature and extent of Mr Scharf's actions and the effect of those actions

on the Council's Lot 17 decisions. Mr Brown failed to inform the Council about these matters. His

failure to do so was a serious dereliction of his responsibilities as the City's CEO.

Findings

F37. I find that, in respect of the City's response to the Department of Local Government

report of 31 July 1995 containing criticism of the role of the City's elected members and

employees in relation to the decision to exclude Lot 17 from Amendment No. 91 –

(a) the Council, led on this issue by Cr Wheatley, acted irresponsibly and improperly

in failing to address the substance of either the specific conclusions of the report,

or the overriding concern that the City had given preferential treatment to Deputy


(b) Mr Brown failed to comply with his duties as the CEO by –

(i) failing to follow up or address the criticisms that were readily attributable

to Mr Scharf; and

(ii) failing to inform the Council that the adverse comments and findings

relating to Mr Scharf were soundly based and true.

5.7 Investigation by the Ombudsman

(a) Ombudsman's letter of 11 June 1996

5.7.1 On 11 June 1996, the Ombudsman wrote to the City. He enclosed copies of two

complaints made to him by Mr George Grljusich. The complaints related to the Council's decisions

of 5 July and 6 December 1994. The Ombudsman initially took the matter up with the Department

of Local Government which was at that stage carrying out its own investigation into the same

general matters. After reviewing the Department's report, the Ombudsman decided that, although

the Department had "carried out a proper investigation, as far as it was able", it had a limited

jurisdiction that did not enable it to deal sufficiently with the matters raised in Mr George Grljusich's

complaint. The Ombudsman, on the other hand, had a far wider jurisdiction to examine the relevant

issues.


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5.7.2 Before sending the letter on 11 June 1996, the Ombudsman had conducted a preliminary

review of the circumstances relating to the Council's decisions of 5 July and 6 December 1994. His

review included an analysis of all the documentation provided by the City to the Department of

Local Government on 11 January 1995 and the City's response to the Department's report. The

Ombudsman set out in some detail his understanding of the relevant material and his concerns

about aspects of two Council decisions.

5.7.3 As to the decision taken on 5 July 1994, the Ombudsman stated that he could –

" … see no valid reason why Council should have considered that it had reasons to deferthe amendment … ".

He set out his reasons for that view and identified three issues, in particular, that needed to be

addressed.

5.7.4 As to the Council's decision on 6 December 1994, the Ombudsman stated –

"I have concerns about the way in which this matter was handled. It seems to be that theprocedure adopted by Council in this instance could well be open to the inference thatCr Grljusich was able to use his position as a councillor to have Lot 17 excluded from thedevelopment scheme proposal. It is difficult to accept that, if he had not been acouncillor, the letter from his solicitor would have been incorporated into the agenda at thelate stage that it was. In any event, I cannot understand why Urban Focus was not giventhe opportunity to clarify the ownership before Council considered the matter and, whenUrban Focus did clarify ownership, why Council did not reconsider the matter."

5.7.5 The Ombudsman asked for the City's response "as soon as possible". A month later, on

10 July 1996, after having received no response, the Ombudsman again wrote to the City asking for

"a reply as soon as possible". A month later, on 8 August 1996, the Ombudsman again wrote to the

City referring to, and attaching, copies of his two earlier letters and again asked for the City's

response. On the same day as that letter was sent the City's response was formally completed and

posted to the Ombudsman.

5.7.6 Particularly when compared with the Ombudsman's letter which carefully set out his

preliminary view and identified the basis for those views, the City's reply was very brief and

superficial. It failed to address many of the issues raised by the Ombudsman.

5.7.7 No reasons were provided to the Ombudsman to explain why it took the City two months

to respond to the letter. Nor has any subsequent explanation been provided. The brief and

superficial nature of the City's response indicates that it would have taken little time to prepare.


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5.7.8 The City's delay in responding and the nature of the response gives an insight into the

City's attitude to external review. For a public sector agency, external review is an important aspect

of accountability. In turn, accountability is, or at least should be one of the fundamental operating

principles - along with others such as openness, integrity and leadership - underpinning a sound

corporate government framework in the public sector. For the City to respond, as it did in this case,

with such apparent disdain and indifference reflects very poorly on the City's corporate governance.

Sadly, this was not an isolated event. One of the recurring themes common to much of the material

reviewed by the Inquiry has been the City's failure to take responsibility, and hold itself properly

accountable, for its own actions and the actions of its elected members and employees.

(b) Ombudsman's letter of 16 October 1996 and the City'sresponse

5.7.9 On 16 October 1996 the Ombudsman provided the City with a report containing his

proposed findings and his detailed reasons for those proposed findings. He referred to the City's

failure to respond to specific matters set out in his earlier letter, and again sought the City's

response before he reached his final conclusions. He invited the City to arrange a meeting with his

Deputy and Senior Investigating Officer if the City considered that it may be useful. Perhaps with

the City's previous delays in mind, the Ombudsman sought a response by 15 November 1996.

5.7.10 It was abundantly clear that the matters dealt with in the Ombudsman's findings were

serious. The evidence raised questions concerning the impartiality, integrity and professionalism of

elected members and staff in a series of events covering a period of about 10 months. The City

was being given a second opportunity by the Ombudsman to deal with the details referred to in the

report or to provide any material that might have a bearing on the Ombudsman's preliminary

general conclusion that –

" … it seems that Council may well have acted in a way that supported the position of acouncillor who was involved in a family dispute over land, to the detriment of thecomplainant, who was one of the other parties in the family dispute."

5.7.11 The City did not take up the Ombudsman's invitation to meet with his Deputy and Senior

Investigating Officer. On 8 November 1996 the City sent to the Ombudsman its formal response.

The response commenced by advising the Ombudsman that the City had "nothing significant to


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add" to its previous response. The response was unhelpful and evasive. For example, it notes

that –

" … the Director of Planning and Development at the time, Mr John Scharf, resigned fromthe Council 8 months ago, and therefore without his knowledge of events, I have had torely on the Council records to respond further to the concerns that you raise."

5.7.12 No explanation was given as to why it was not possible to meet with or telephone

Mr Scharf to obtain "his knowledge of events". This aspect of the response falls far short of the

accountability standards required of a public agency, particularly in the context of an investigation

by the State Ombudsman.

5.7.13 In any event, many of the issues raised by the Ombudsman were capable of being

assessed by reference to the City's own files, without any explanation from Mr Scharf. This has

been demonstrated on numerous occasions throughout this Chapter where the actions of

Mr Scharf, in particular, have been analysed in detail.

(c) Ombudsman's findings

5.7.14 Following his report of 16 October 1996, Mr Robert Eadie's term as State Ombudsman

expired. He was replaced by Mr Murray Allen. On 4 February 1997, Mr Allen wrote to both the City

and Mr George Grljusich informing them of his findings and conclusions. The Ombudsman's major

finding was that –

" … the Council was not justified in deferring Amendment No. 91 on 5 July 1994 and insubsequently resolving to exclude Lot 17 from the Amendment. I find it very difficult todraw any other conclusion than that the Council allowed itself to be influenced by one ofits councillors to benefit that councillor's personal position. My reasons for saying this areset out in my letter of 16 October to the Mayor, and in summary are –

• The Council has provided no satisfactory explanation as to why it consideredit appropriate to consider a private letter from Urban Focus to CouncillorGrljusich in regard to the deferment of the Amendment.

• The Council has not provided any explanation as to why there was a reasonto make a decision of any kind with regard to the Amendment on5 July 1994.

• The Council's reasons for seeking legal advice on the letter to CouncillorGrljusich, and deferring the Amendment while it did so, are, to my mind,extremely difficult to make any sense of.

• I do not believe that the Council had sufficient justification for resolving toexclude Lot 17 from the Amendment when it did so on 6 December 1994.


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5.7.15 Having regard to these findings, the Ombudsman invited Mr George Grljusich to make a

submission that included a recommendation that the Council compensate Mr Grljusich –

" … for any out-of-pocket expenses that [he] might have incurred as a direct result of theCouncil's deferment of the Amendment and its subsequent exclusion of Lot 17 from theAmendment proposals."

Mr George Grljusich responded to the Ombudsman on 6 February 1997. He thanked the

Ombudsman and observed that the findings –

" … are of considerable consolation to me in spite of the damage caused by the City ofCockburn and which cannot now be undone".

5.7.16 For various reasons which Mr George Grljusich outlined, the compilation of a list of

out-of-pocket expenses would have been difficult and could not have been completed for some

time. He suggested a payment of $4,000 to cover his expenses. On 13 February 1997, the

Ombudsman wrote to the City stating that the amount suggested by Mr George Grljusich "does not

seem to be unreasonable". He asked the Council to consider Mr Grljusich's request and advise him

of its views.

(d) Council's response

5.7.17 The Ombudsman's report came before the Strategic and Policy Committee meeting on

4 March 1997. This was the first meeting of the newly formed Strategic and Policy Committee. It

provided an ideal opportunity to see how the City's restructured decision making processes would

work - in particular, whether it would lead to better decision making and better decisions or whether

it was simply a 'shuffling of the deck chairs'.

5.7.18 The elected members who attended the inaugural Strategic and Policy Committee were –

Mr Lees Mayor



Mr Lee Councillor



Mr Brown and each of the 4 Directors of the City also attended.


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5.7.19 Each of the members of the Committee present at this meeting had voted on the Council's

resolution of 5 July 1994 to defer Amendment No. 91 and, with the exception of Crs Gianoli and

Lee, each of the elected members also voted for the Council's resolution on 6 December 1994 to

exclude Lot 17 from Amendment No. 91. They were, therefore, familiar with at least some of the

issues investigated by the Ombudsman. Further, although they may have been seen to have an

interest in defending the Council's decision, the Ombudsman's report provided some basis for the

conclusion that the Council had been misled by "planning staff".

5.7.20 The minutes of the meeting indicate that the Officers' report for the item concerning the

Ombudsman's report was prepared by Mr Brown himself. Mr Brown's report contained a brief,

largely historical, outline of the matter. He did not recommend how the Council should respond to

the Ombudsman's findings or to the recommended ex gratia payment to Mr George Grljusich.

5.7.21 In relation to these matters, Mr Brown's report stated –

"Council to date has defended its action with regard to Lot 17 Hamilton Road, includingresponses to the Hon. Minister for Local Government and the Local GovernmentDepartment.

When considering whether to make a payment or not, Council should be fully aware of thecontent and conclusion of the Ombudsman's letter which has been forwarded toCouncillors."

5.7.22 The Committee resolved to recommend to the Council that –

" … the Ombudsman be advised that Council does not consider that it has actedimproperly in relation to the rezoning of Lot 17 Hamilton Road and therefore, is notprepared to make an ex gratia payment or any other payment to Mr G N Grljusich, now orin the future."

5.7.23 The Ombudsman's findings and conclusions were set out in a detailed and very carefully

reasoned report that followed a long investigation. Mr Brown, in preparing his report to inform and

advise the Committee, did not provide elected members with any material that addressed the

substantive matters contained in the Ombudsman's report. For example, as was the case with the

Department's report, he did not inform elected members that the adverse findings and comments

relating to Mr Scharf were substantiated. Indeed, even if at this stage he was still not aware of that,

Mr Brown did not inform elected members that, as the person responsible for the management and

supervision of Mr Scharf and other staff, he would need to carry out his own inquiries for the

purpose of determining what corrective action needed to be taken as a result of the Ombudsman's

findings.


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5.7.24 The Local Government Act sets out the specific functions of a CEO. In this context, a

"function" includes a "duty" and "responsibility" (see Interpretation Act 1984, section 5). One of the

CEO's statutory functions is to –

"ensure that advice and information is available to the council so that informed decisionscan be made" (section 5.41(b)).

5.7.25 Mr Brown's failure to provide elected members with material that addressed the

substantive matters contained in the Ombudsman's report constitutes a failure to ensure that advice

and information was available to the Council so that informed decisions could be made. It follows

that Mr Brown failed to carry out his statutory duty as a CEO.

5.7.26 Similarly, the Committee made its recommendation without requiring that it be given a

report dealing with the matter or other information that would have allowed it to assess –

(a) whether there was any proper basis for questioning any of the adverse findings and

conclusions of the Ombudsman; and

(b) what corrective action, including procedural changes, should have been taken in

response to the Ombudsman's report so as to limit the potential for a recurrence of

the conduct in respect of which adverse findings were made.

5.7.27 Indeed, the Committee was prepared to reject summarily the Ombudsman's carefully

considered findings and conclusions. Its dismissive attitude to the matter is exemplified by the

wording of the recommendation that the Ombudsman should be advised that the Council was not

prepared to make any payment to George Grljusich "now or in future" (emphasis added).

5.7.28 The Committee's recommendation was considered by the Council at its meeting on

18 March 1997. The minutes record that the discussion lasted no more than 4 minutes. The

Council resolved unanimously to adopt the Committee's recommendation. The elected members

attending the Council meeting were –

Mr Lees Mayor






Mr Lee Councillor


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Deputy Mayor Grljusich is not recorded as having declared an interest but he left the meeting during

the discussion and vote on the Ombudsman's report. Cr Wheatley is not recorded as having

declared an interest either and he also left the meeting immediately before this item but, unlike

Deputy Mayor Grljusich, did not return.

5.7.29 The comments I have made in respect of the conduct of the members of the Strategic and

Policy Committee apply with equal force to the conduct of the members of the Council in respect of

its decision on 18 March 1997.

5.7.30 There is an interesting comparison between the actions taken by the Council in response

to the Department's report in July 1996 and the actions taken by the Council in response to the

Ombudsman's report in March 1997.

5.7.31 When the Departmental report was first considered by the Planning, Building and Health

Committee, the focus of the discussion, led by Cr Wheatley, related to how unfairly the elected

members and staff of the City perceived that they had been treated by what was claimed to be the

Department's failure to comply with the principles of procedural fairness - that is, the Department

had not given the elected members and staff an appropriate opportunity to respond to the matters

that were taken into account by the Department in making its findings. The Committee seized the

opportunity. It took action to ensure that there would be a Special Meeting of the Council to deal

with the matter. The CEO was asked to prepare draft responses and to provide these draft

responses to elected members before the meeting. The ensuing Council meeting was dominated

by this (perhaps feigned, perhaps genuine) sense of injustice. The Council was determined to, and

did, ensure that the City's response to the Minister reflected its feeling of outrage and grievance and

the opportunity was taken to censure the Department for its handling of the matter. The Minister

was asked to ensure that it did not happen again.

5.7.32 In hindsight, the City's focus on procedural fairness when considering its response to the

Departmental report may be seen as a convenient smokescreen, created and fanned by


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Cr Wheatley, to avoid any discussion of the substance of the Department's findings. It was a very

successful strategy. As Mr Brown reported to the Strategic and Policy Committee on 4 March 1997,

the Council had "to date defended its action[s] with regard to Lot 17". Its entire defence was based

on attacking the procedural aspects of the report without addressing the substance at all.

5.7.33 There was no such defence to the Ombudsman's investigation and report. (In this

respect, it is notable that Cr Wheatley left immediately before this item was discussed at the Council

meeting on 18 March 1997.) The Ombudsman had given the City every opportunity to respond. He

had even provided the City with what was essentially a complete draft report on 16 October 1996

and invited the City to respond to anything contained in the report before he decided whether it

should be adopted by him as his final report. The City, when given the opportunity, failed to

respond other than in the most superficial way - and then only in respect of some matters.

5.7.34 When the Ombudsman's findings were finally sent to the City on 4 February 1997, there

was no move, as there had been in respect of the Department report, to call a Special Meeting of

the Council to consider the matter. Neither was there any move to ask the CEO to prepare a draft

response so that elected members had a greater opportunity to properly inform themselves of the

issues before the meeting. Instead, the Council was content to discard the Ombudsman's report,

without any analysis, in less than 4 minutes.

(e) Responsibility of the CEO for the City's responses

(i) Introduction

5.7.35 The issue of the CEO's responsibility arises in two contexts. The first concerns the delay

in, and content of, the City's response to the Ombudsman's invitation to provide details on

information relating to the matters set out in his letters on 11 June 1996 (see above at 5.7(a)) and

16 October 1996 (see above at 5.7(b)). The second concerns the responses of the CEO to the

formal findings of the Ombudsman as summarised in his letter of 4 February 1997 and set out more

fully in his report of 16 October 1996.


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(ii) City's responses to invitation to provide details

5.7.36 The City's response to the Ombudsman's letter of 11 June 1996 was unjustifiably

delayed. Its responses to the Ombudsman's letters of 11 June 1996 and 16 October 1996 were

brief, superficial and unhelpful.

5.7.37 Perhaps not surprisingly, no one at the City was, or is, willing or prepared to take

responsibility for these and other failures by the City to respond properly to the Ombudsman in

respect of the Lot 17 issues.

5.7.38 In the absence of any analysis, the City's CEO would appear to have the primary

responsibility for responding, or arranging and coordinating the response, to an external review

dealing with the City's administration, including the conduct of its staff, its decision making

procedures and the conduct of elected members.

5.7.39 Mr Brown argued that this was not so. In closing submissions made on his behalf, great

emphasis was placed on the fact that the Ombudsman's letter to the City was addressed not to the

CEO but to the Mayor. This indicated that the Ombudsman regarded the Mayor and not the CEO

as "the principal officer" of the City as that term is defined in section 4 of the Parliamentary

Commissioner Act 1971. Under section 19 of that Act, the Ombudsman is required to notify the

principal officer of a department or organisation of any proposed investigation and to give to the

principal officer "an opportunity to comment on the subject matter of the investigation" (sections

19(1) and (4)).

5.7.40 Once the investigation has been completed, the Ombudsman is required to report his

findings to the principal officer (section 25). It was submitted on Mr Brown's behalf that, as a

consequence of these provisions –

"11. (c) any involvement of Mr Brown was not an involvement contemplated by theAct but, rather at best, constituted an informal acceptance of a limiteddelegation from the Mayor;

(d) there is no evidence of that delegation".

It was also submitted that –

"18. … As the principal officer, it is incumbent upon the Mayor, not the Chief ExecutiveOfficer, to assure himself as to the appropriateness or otherwise of the repliesbeing forwarded."


475

5.7.41 I reject these submissions. The identification of a person as "the principal officer" under

the Parliamentary Commissioner Act is simply for notification purposes. The "principal officer" is

the person identified in the legislation as the appropriate person to receive notice from the

Ombudsman about any investigation and its outcome. There is nothing in the Parliamentary

Commissioner Act that requires the principal officer, rather than some other person, to respond or

to have the responsibility for responding to the Ombudsman. Nor is there anything in that Act that

requires the principal officer, rather than some other person, to address or to be responsible for

addressing any concerns expressed by, or implementing any recommendation of, the Ombudsman.

These matters have been left for each agency concerned to determine for itself.

5.7.42 The Ombudsman's first letter (of 11 June 1996) to the City, although addressed to the

Mayor, was received and processed by Mr Brown. On the day after he received it, Mr Brown

forwarded a copy, under a covering letter signed by himself, to each elected member. This was in

accordance with the City's policy. Mr Brown arranged for a response to be prepared by the

planning staff. The response was drafted by Mr Ryan. Mr Brown told the Inquiry that he was "fairly

sure [that he] saw the response which Steve Ryan sent back" (Transcript, 3075).

5.7.43 None of this should be at all surprising. It was in accordance with the City's management

practices and procedures. The Mayor at this time occupied the position on a part-time basis. He

appears to have had only one staff member, his secretary, to support him. The CEO, not the

Mayor, was and remains responsible for the management, supervision and direction of the City's

employees. It was the CEO, not the Mayor, who had direct access to the information, resources

and staff of the City necessary to prepare a proper response to the Ombudsman.

5.7.44 Of course, the formal response would be signed by the Mayor and the Mayor had a role to

play in ensuring that any response was timely and that, as far as he was able to ascertain, its

contents were adequate. However, any concerns that the Mayor may have had in relation to either

of these matters would have been properly taken up directly with the CEO.

5.7.45 In these circumstances, I am satisfied that Mr Brown had the direct and primary

responsibility for the preparation of a timely and adequate response to the Ombudsman. It was

Mr Brown, more than anyone else, who was responsible for the delays in responding to the

Ombudsman and for the deficiencies in the content of that response.


476

5.7.46 Mr Brown's primary submission was that it was the Mayor, rather than himself, who was

responsible for the City's response to the Ombudsman. His secondary submission, although not

expressed in these terms, was that to the extent that he had any responsibility, he exercised that

responsibility properly by delegating the task. The effect of these submissions was that

responsibililty for the delays and deficiencies in the City's responses rested –

(a) with the Mayor; or

(b) with Mr Ryan and Mr Hiller who prepared the draft responses,

but not with Mr Brown.

5.7.47 In the submissions made on his behalf, Mr Brown sought to deny any personal

responsibility by claiming that –

" … the issue under investigation was referred to those officers within the relevantdepartment of the City who had either or both of the experience and expertise to provideappropriate answers to the inquiries made" (at para. 11(e)).

5.7.48 This notion, that the CEO had appropriately carried out his function and responsibility by

delegating the matter to his staff, was addressed in more detail later in his submissions where it is

stated –

"18. The reality is, however, that the tenor of the inquiries dealt with specific issues of atown planning nature best able to be answered by officers with appropriateexpertise and experience. The 'department' was not, in fact, being investigated.As the principal officer, it is incumbent upon the Mayor, not the Chief ExecutiveOfficer, to assure himself as to the appropriateness or otherwise of the repliesbeing forwarded.

19. As a matter of fact it is difficult to conceive how Mr Brown could have undertaken asupervisory role which would have enhanced the technical nature of the materialrequired to be provided in answer to the Commissioner's requests."

5.7.49 These submissions indicate a fundamental misconception of the matters dealt with in the

Ombudsman's report (as well as in the earlier Departmental report). Mr Brown did not need to be a

planning expert to assess the appropriateness or the propriety of Mr Scharf's conduct. This was

illustrated during the course of his evidence to the Inquiry where Mr Brown had no difficulty in

concluding that various actions of Mr Scharf in relation to this matter were inappropriate and a

cause for concern. These included –

(a) Mr Scharf discussing with Deputy Mayor Grljusich Council matters involving Lot 17

(Transcript, 3065);


477

(b) Mr Scharf's delay in seeking, and his failure to follow up, the advice sought from

McLeod & Co on 25 July 1994 and not delivered until 9 November 1994

(Transcript, 3049-3050);

(c) Mr Scharf's failure to seek the views of Urban Focus and George and Tom

Grljusich on the Corser & Corser letter of 24 November 1994

(Transcript, 2928-2929);

(d) Mr Scharf's failure to seek legal advice from the City's solicitors on the Corser &

Corser letter dated 24 November 1994 (Transcript, 3053-3054); and

(e) Mr Scharf's failure to forward to McLeod & Co the letter from Durack & Zilko

threatening legal action against the City (Transcript, 3062).

5.7.50 Well before Mr Brown received the Ombudsman's report, it should have been obvious to

him that it was the actions, including the management and supervision, of staff for whom he was

responsible that were the subject of concern and criticism in the Department's report as well as in

the Ombudsman's report. For example, on 15 September 1995 Mr George Grljusich wrote to

Mr Brown. That letter was in response to Mr Brown's letter of 7 September 1995 which set out the

City's reaction to the Department's report. Mr George Grljusich's letter should have left Mr Brown in

no doubt about the matters that needed to be addressed as a result of the Department's report.

Leaving aside the formalities, the full text of the letter is as follows –

"Your letter of 7 September is unsatisfactory.

The letter fails to properly address the question of the rezoning of the lot. It also ignoresthe serious criticisms of the Council's staff in the conclusions of the Chief Inspector ofMunicipalities.

As your letter states in the bottom paragraph of Page 2, it would have been legally correctfor the Council to rezone the land.

The report of the Minister for Local Government indicates false portrayal,inappropriateness, preferential treatment and deception by City of Cockburn staff. Itwould not have been necessary for your staff to be involved in such a disgusting processif the question of ownership of the property was in fact in dispute.

Since when has the City of Cockburn concerned itself with the rights of beneficiaries to adistribution? This is not the business of Council. It is simply a matter of accounting asbetween the parties involved.

The advice from your own solicitors, McLeod & Co., indicated that Council could properlyhave approved the rezoning because my brother Tom and I are the owners of the land.

The City of Cockburn's stand on this matter is indefensible. It was involved in aconspiracy orchestrated by Councillors, who were aided and abetted by staff.


478

The integrity of the City of Cockburn has been impugned. A considerable financial losshas been caused.

That there is still no effort to rectify the situation is disgraceful."

5.7.51 Earlier, in relation to the Department's report, I set out the reasons why it was necessary,

in the circumstances, for Mr Brown to be personally involved, or at least exercise very close

supervision, in the preparation of the City's response. The same reasons apply with greater force in

relation to the responses to the Ombudsman –

(a) because it was the second time in a short period that the matter had been raised by

different review bodies which, after separate investigations, expressed similar

concerns about inappropriate and improper conduct by elected members and staff

and a perception of favouritism towards the Deputy Mayor; and

(b) because of the status of the Ombudsman as this State's independent and specialist

public sector review agency with a legislative charter to investigate and report on

complaints of maladministration.

5.7.52 Mr Brown included in his final submissions copies of letters from three people to whom he

had given some extracts from the closing submissions of Counsel Assisting the Inquiry. The three

people were asked to comment on two issues. These related to the answering of correspondence

by a CEO and the role of a CEO in defending a decision of the Council. One of the letters was

written by Mr Tim Shanahan who at the time was the Executive Director of the Western Australian

Municipal Association. Mr Shanahan correctly and properly pointed out that it was "impossible for

[him] to make a detailed analysis of the statements in the extract and the circumstances

surrounding those statements". A person who has not heard the evidence and is not aware of the

context is hardly in a position to offer any meaningful comment other than in a very general way. In

relation to the answering of correspondence issue, Mr Shanahan made the observation, which I

expect would attract little if any argument, that –

"[t]he distribution of matters to well qualified and experienced staff is not unusual in myknowledge and is generally balanced by a system or understanding with senior staff to'flag' especially important issues for their particular attention or for possible referral backto the CEO."

5.7.53 Having regard to my earlier analysis of this issue, it is apparent that, the Ombudsman's

correspondence to the City, in all the circumstances, is appropriately characterised as one of these

"especially important issues" requiring the particular attention of, or at least the referral back to, the

CEO.


479

5.7.54 Mr Brown himself acknowledged the importance of the matters reviewed by the

Ombudsman. This is evident from is responses to the following questions from Counsel Assisting –

"COUNSEL ASSISTING: No, and I understand if it's a matter of cats and dogs, that youmight not want to get yourself involved in it. This is a matter that goes to the conduct ofthe council and whether it has favoured the deputy mayor at the time. It's a seriousmatter of council administration, isn't it?---MR BROWN: Yes.

COUNSEL ASSISTING: If there was any one ombudsman inquiry that one might havethought you'd have got involved in and got across the issues or reminded yourself of theissues, it was this one, wouldn't you think?---MR BROWN: If there was any one, yes.

5.7.55 The fundamental problem with Mr Brown's approach is that he sought, by "delegating" the

matter, to avoid his personal responsibility in respect of this especially important issue which

included evidence that his Director of Planning and Development had misled the Council and, as a

result, the Council had improperly benefited one of its members. Even in circumstances where it is

appropriate to delegate, there is a world of difference between the effective and proper delegation

of a task and an attempted abdication of personal responsibility to ensure that the task is completed

in a timely and proper manner.

(iii) CEO's response to the Ombudsman's findings

5.7.56 The City's response to the formal findings and recommendation of the Ombudsman set

out in his letter of 4 February 1997, with reference to his earlier report of 16 October 1996, has

been reviewed earlier. Clearly there were major deficiencies. The City as the corporate entity, and

the elected members who were responsible for the decisions of the Committee and the Council,

must take responsibility for the City's improper response to the Ombudsman's findings and

recommendation.

5.7.57 As for the CEO, I concluded earlier that Mr Brown must also take responsibility for his

failure to comply with his statutory duty to ensure that "advice and information is available to the

council so that informed decisions can be made".

5.7.58 The submissions made on behalf of Mr Brown to the Inquiry deny any responsibility in this

regard. At the heart of his submissions is the statement that –

"[Mr Brown] readily concedes that his approach is to protect the Council by defending thedecisions of Council" (para. 22).


480

5.7.59 Another statutory function and duty of a CEO is to "cause council decisions to be

implemented" (section 5.41(c) of the Local Government Act ). In one of the letters attached to

Mr Brown's closing submissions, Mr John Watson, the Executive Director of the Institute of

Municipal Management, stated that –

"Implicit in this responsibility to carry into effect the decisions of Council must be theobligation to explain, justify, substantiate and if necessary defend those decisions to theparties affected, the community at large and other interested persons. To do otherwisewould ultimately lead to a deterioration in the public image of the Council and the qualityof government of the municipality and inevitably result in conflict between the Council andthe CEO."

Again, as a general proposition, that would attract little debate. The real issue is whether, and if so

to what extent, the proposition can be applied to this particular Council decision to reject the

Ombudsman's findings.

5.7.60 The Ombudsman's findings questioned the validity and propriety of the Council's

decisions of 5 July and 6 December 1994. Mr Brown's response, based on his approach of

"defending" the decisions of the Council, was to provide the Council with a report that did not deal

at all with the substance of the Ombudsman's findings. He did not provide the Council with any

advice or information that would enable the Council itself to review the validity and propriety of its

earlier decisions having regard to the Ombudsman's report.

5.7.61 The primary, and compelling, objection to Mr Brown's response, as I have already

indicated, is that it was a clear breach of his statutory duty to properly inform and advise the

Council. Whatever merits there may be in adopting a general approach to defend the Council's

decision, that approach cannot override a clear statutory obligation.

5.7.62 It is important to appreciate that there are circumstances, other than a direct conflict with

a statutory obligation, when it may not be appropriate to defend a Council's decision in the way that

has been suggested. Mr Shanahan's letter of 24 December 1999, a copy of which was included

and relied upon in Mr Brown's final submissions, has been referred to earlier in relation to the issue

of delegation. Mr Shanahan also dealt with the role of a CEO in defending a decision of the

Council. He supported the general principle along the lines of the extract quoted earlier from

Mr Watson's letter. However, Mr Shanahan went on to say –

"Of course in making these comments, I would be of the view that it would beinappropriate for the CEO to defend the Council's position through an act or omission thathad a material bearing on the Council's decision."


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5.7.63 This was precisely what Mr Brown did in response to the Ombudsman's findings. His

report and his failure to advise or inform the Council of matters that addressed the substance of the

Ombudsman's findings was an "act or omission that had a material bearing on the Council's

decision" to reject the Ombudsman's findings.

5.7.64 In any event, a general approach of "defending the Council's decision" is an inappropriate

response to investigations by the Ombudsman. These investigations are not adversarial. Leaving

aside the issue of public accountability, one of the primary objectives of the Ombudsman is to

improve the standards of administration of public sector agencies. Standards of public

administration cannot be improved without first acknowledging that there is a deficiency with

existing practices. An agency which has the objective of defending its decisions, even in the face of

an Ombudsman's report that is critical of those decisions, is less likely to acknowledge any

deficiency and, therefore, is less likely to improve its administration standards.

5.7.65 Other submissions made on behalf of Mr Brown appear to have been advanced to

support the impression that Mr Brown was a passive (perhaps even a reluctant or unwilling) party to

the Council's decision on 17 March 1997 to reject the Ombudsman's findings. For example, it was

submitted that –

"23. It is the elected members of the Council of the City who are entrusted with thegovernance of the City.

24. It is incumbent upon the administration of the City to follow the directions given bythe elected members, by way of resolution, and to administer the City inaccordance with the policies adopted by the Council from time to time subjectalways to the proviso that the resolutions (whether as to policy or otherwise) mustbe lawful or otherwise capable of being given effect.

26. It is far from clear why protecting Council by defending Council's decision is ofconcern per se."

5.7.66 The CEO of a local government can, and very often does, play a very important role in its

governance. This is particularly the case where a CEO has had many years of experience.

Mr Brown has been employed by the City for 31 years (Transcript, 122). He was its Deputy CEO

for 19 years and has been the CEO for 7 years (Transcript, 122 and 1047). Elected members can

rely very heavily on experienced CEO's, not only in relation to procedural and general

administrative matters, but for guidance on important decisions that are formally made by the

Council. Indeed, in local governments throughout this State, there are numerous examples of

CEO's having a much greater degree of influence in council decision making.


482

5.7.67 Insofar as the Council's response to the Ombudsman's report is concerned, many elected

members have told the Inquiry that the proposed rejection of the Ombudsman's findings was

supported by 'the administration'. There may be some doubt about the level and nature of that

support, but I have no doubt that it existed. It is clearly evident in the Officers' report to the Council.

Mr Brown was responsible for, and prepared, the report to the Council. The Ombudsman's

findings, like those of the earlier Departmental report, were by no means limited to the actions of the

Council itself. Findings that the City's Director of Planning and Development had misled the

Council and had acted in a way that favoured Deputy Mayor Grljusich clearly reflected adversely

not only on Mr Scharf but on Mr Brown himself. A CEO has statutory responsibility for the

management, supervision and direction of staff including senior staff (section 5.41(g) of the Local

Government Act ). A full report to the Council by Mr Brown addressing the substantive issues may

well have enabled the Council to accept the Ombudsman's findings in respect of the Council's

decisions on 5 July and 6 December 1994 - on the basis that it was 'the administration' that was to

blame.

5.7.68 I am satisfied that Mr Brown supported the proposed rejection of the Ombudsman's

findings and recommendation and that he played a significant role in the Council's decision on

17 March 1997 to reject those findings and that recommendation.

5.7.69 A further insight into the views of the City's senior employees about this issue is apparent

from the City's reconsideration of the Ombudsman's recommendation following the suspension of

the Council in April 1999. On 7 May 1999, the Ombudsman wrote to the Chairman of the City's

Commissioners. He informed the Chairman that he had been approached by Mr George Grljusich

who, having regard to the suspension of the Council and the Martin/Vicary Report, had sought his

help in seeking to have the earlier ex gratia payment recommendation reconsidered by the

Commissioners. The Ombudsman repeated the view that he had expressed to the City in

October 1997 that he –

" … was extremely disappointed with the Council's decision [on 18 March 1997], asacceptance of a recommendation resulting from a totally independent and impartialinvestigation is a vital part of the accountability process for local governments."

He asked the Commissioners to consider his "previous recommendation that Mr Grljusich be

granted an ex-gratia payment of $4,000 for out-of-pocket expenses that he incurred as a direct

result of the way that the matter of Lot 17 was handled by the Council".


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5.7.70 The Ombudsman's letter was the subject of two Officers' reports to the Commissioners.

The first was a very short report prepared by Mr Brown. He advised the Commissioners that it

would be "prudent to revoke the previous decision [of 18 March 1997] and have the matter

reconsidered, taking into account, the comments put forward in the Inquiry Report and also those

made by the Ombudsman in the past". A recommendation to that effect was adopted by the

Commissioners at its meeting on 25 May 1999. The second report was prepared by Mr Green.

After referring to the criticisms in the Martin/Vicary Report of the Council's decision of

18 March 1997, he stated –

"Notwithstanding this opinion, the Council decision in question, was made in defence ofthe propriety of the Council at that time, which appeared to be the focus of theOmbudsman's attention in his final analysis. Accordingly, Council's decision was asmuch about defending its own integrity as it was about not believing it should payexpenses incurred by Mr G. Grljusich in his pursuit against Council's original decisionrelative to the rezoning of Lot 17 Hamilton Road" (emphasis added).

5.7.71 As to the view, clearly supported by the City's senior employees, that the Council's

decision was "about defending its own integrity", it is difficult to ascertain, in relation to that decision,

what integrity the Council had to defend.

5.7.72 Mr Green went on to put the administration's position beyond any doubt. He advised the

Commissioners that –

" … the opportunity should also be taken to advise the Ombudsman, that reference to thedecision of Council as being 'improper', was not the case as the decision had legalstanding and was not considered the result of undue influence."

5.7.73 That is nonsense. It is extraordinary that, even at this stage in May 1999, in the face of

overwhelming evidence to the contrary - including the detailed analysis and criticisms of that

decision contained in the Department's report, the Ombudsman's reports and the Martin/Vicary

report - and after the suspension of the Council, the City's senior employees have persisted in

maintaining that the Council's decision was not improper, "had legal standing" and was not the

result of undue influence. There could scarcely be a clearer illustration of the culture of denial that

prevailed, and appears to still be prevailing, at the City.

5.7.74 Despite this advice, Mr Green recommended that the Council should as "a suitable

gesture" make the payment of $4,000 to Mr Grljusich. Based on that advice, the Commissioners, at

the Council meeting on 25 May 1999 resolved to adopt the Officers' recommendation and –

"[inform] the Ombudsman that, while it reiterates its position that it does not consider thatit has acted improperly in relation to the rezoning of Lot 17 Hamilton Road, it is prepared


484

to make a 'Without Prejudice' payment of $4,000 to Mr G.N. Grljusich for out of pocketexpenses, in line with the Ombudsman's recommendation and after consideration of thecomments made in the Inquiry into the City of Cockburn Report on this matter …".

(f) Findings and recommendations

Findings

F38. I find that, in respect of the events relating to and including the City's response to the

Ombudsman's investigation, findings and recommendations relating to the City's actions,

between June 1994 and March 1995, concerning Lot 17 –

(a) the City's delays in responding to the Ombudsman's letter of 11 June 1996 were

unjustified and irresponsible;

(b) the City's response to the Ombudsman on 8 August 1996 was superficial and

failed to address many of the issues raised by the Ombudsman;

(c) Mr Brown failed to ensure that the City's response (on 8 November 1996) to the

Ombudsman's letter of 16 October 1996 was appropriate, having regard to

proper accountability principles and standards;

(d) the Council's decision on 18 March 1997 to reject the Ombudsman's adverse

findings –

(i) was made without any proper analysis of the evidence;

(ii) was inconsistent with the overwhelming weight of evidence that

supported the findings;

(iii) was made without any evidence to support it;

(iv) was fundamentally inconsistent with its obligations to be publicly

accountable; and

(v) was improper;

(e) the Council's decision on 18 March 1997 to refuse to make an ex gratia or any

other payment to Mr George Grljusich "now or in the future" –

(i) was unjustified and irresponsible;

(ii) demonstrated that, regardless of the facts, the elected members appear

to have had a closed mind on the issue; and

(iii) was improper;


485

(f) Mr Brown's failure to provide the Council with advice or information relating to

any of the substantive issues dealt with in the Ombudsman's report, findings or

recommendation –

(i) was a breach of his statutory obligation to ensure that advice and

information is available to the Council so that informed decisions can be

made; and

(ii) constitutes, in all the circumstances, including his role in supporting the

rejection of the Ombudsman's findings and recommendation, improper

conduct;

(g) Mr Brown's failure to respond appropriately to the significant aspects of the

Ombudsman's report that contained adverse findings or comments against the

City's employees was a failure to exercise properly his statutory responsibility for

the management and supervision of the City's employees; and

(h) the responses of Mr Brown and the Council to the Ombudsman's investigation

and report were indicative of a prevailing culture of denial existing among the

elected members and CEO, illustrated by repeated failures to accept that

wrongdoing had occurred - even in the face of compelling evidence provided by

independent external review bodies.

5.7.75 Leaving aside the additional evidence obtained by this Inquiry, the Ombudsman's findings

and recommendation were, on their face, soundly based. There was no evidence before the City

on 18 March 1997 (or subsequently) that would have justified its rejection of the findings and

recommendation. Even if there was a rational basis for questioning the findings that would not have

justified their rejection by the Council. One of the key conclusions of the Ombudsman, as an

independent review agency, was that there was a public perception that the City had unfairly

favoured Deputy Mayor Grljusich. This view of the public's perception by an independent third party

demanded respect. Even if, on 18 March 1997, the City had a proper basis for disagreeing with the

Ombudsman's findings it could, and should, have formally acknowledged and accepted the

Ombudsman's view of the public perception.

5.7.76 A section of the State Ombudsman's 1994 Annual Report was devoted to the acceptance

by local governments of the Ombudsman's findings and recommendations. Under the heading

"Accepting the Umpire's Decision', the section includes the following passage –

"My general experience in dealing with local authorities in this State is that they areprepared to act on my recommendations, even if there are occasions when they may


486

have reservations about the conclusions I have reached. I think this is a practical andrealistic approach.

In my view, the Ombudsman has a significant part to play in helping to resolve, or at leastalleviate, difficulties and tensions of the sort that inevitably arise in any council's dealingwith members of the community. It seems to me that it can often be very useful for acouncil to have a totally independent and impartial person examine a problem and providea view that is seen to be unbiased. The process can work as a 'safety valve' in relievingtension over a difficult local issue that might otherwise get out of hand. Accepting theunbiased view, and giving effect to it, is a vital part of allowing the process to workeffectively.

Despite what appears to me to be, overall, a good general understanding and acceptanceof my role, there have been a few isolated cases where local authorities have refused togive effect to my recommendations.

…

My concern over these cases is that they tend to undermine my ability to perform my roleeffectively. It should be remembered that, in the majority of cases, I find that the localauthority has acted properly, and my findings serve as an independent testimony to this.In these cases, the complainant rarely has any other option but to accept my conclusionson the matter.

It should also be stressed that my role is not to look at a matter within narrow legalconfines. My role is to take a commonsense approach in considering whether or not adecision or other action can be considered to be fair and reasonable in the particularcircumstances. I think my role is akin to that of an umpire and, if it is seen in this light, Ibelieve it can continue to serve a useful purpose for councils as well as complainants."

Recommendations

R7. I recommend that –

(a) the City develop, establish and implement procedures to ensure that its

responses to –

(i) requests for information from the Ombudsman; and

(ii) findings and recommendations of the Ombudsman,

are consistent with the standards of accountability expected of a public sector

agency; and

(b) the City develop, establish and implement similar procedures to govern its

responses to other reviews, particularly external reviews.

CHAPTER 5 - Guide to Key Persons and Entities

487

Guide to Key Persons and Entities

NAME / TITLE DETAILS

BATTALIS, Terry Elected member of the City from May 1989 untilSeptember 1998. Member of the Planning, Building andHealth Committee from May 1993 until February 1997.

BROWN, Rod Chief Executive Officer of the City. Mr Brown has beenCEO (formerly Town Clerk/City Manager) for the last7 years and served for 19 years before that as DeputyTown Clerk. He has been with the City for 31 years.

CETINIC-DOROL, Laurie The City's Manager of Recreation and Special Projectsbetween September 1996 and September 1998. FromSeptember 1998 - Administrative Support/Research Officer.

COMMISSIONERS OF THE CITY Murray Jorgensen, Julian Donaldson and Jenny Smithson -appointed to perform the functions of the Council of the Cityof Cockburn during its suspension.

COMMUNITY DEVELOPMENTCOMMITTEE

The City's standing committee responsible for planningmatters such as rezoning and subdivision applications.Inaugurated in March 1997 in place of the Planning,Building and Health Committee and the Works and ParksCommittee.

CORSER & CORSER Lawyers for John Grljusich, Frances Gava, Ann Lloyd andSheila Grljusich until January 1993.

DEPARTMENT OF LANDADMINISTRATION

The State government agency responsible for maintainingrecords of, and registering changes in, land ownership.

DEPARTMENT OF LOCALGOVERNMENT

The State government department which administers theLocal Government Act 1995. Responsible for developmentof a framework for the administration and financialmanagement of local governments.

DOWLING, Neil A City employee of the Planning Department.

DURACK & ZILKO Lawyers for George and Tom Grljusich.


488


ELPITELLI, Dino Elected member of the City from May 1993 until theCouncil's suspension. Member of the Planning, Buildingand Health Committee from May 1993 until February 1997and then member of the Community DevelopmentCommittee from March 1997 until the Council's suspension.

GAVA, Frances Daughter of Mate and Pera Grljusich. Residuarybeneficiary under the will of Mate Grljusich.

GIANOLI, Joe Elected member of the City from May 1993 until theCouncil's suspension. Regularly declared a financialinterest in all matters which came before Council relating tothe Packham Area as he was the selling agent for somePackham Area landowners.

GOVERNMENT INSPECTOR OFMUNICIPALITIES

A statutory position under the Local Government Act 1960for investigating and reporting on matters concerning theactions of local governments.

GREEN, Don The City's Director of Administration and CommunityServices.

GREENGRASS, Thomas Elected member of the City from May 1979 to May 1997.

GRLJUSICH, Donald Son of Mate and Pera Grljusich. Married Sheila PatriciaGrljusich. Died 11 Nov 1993.

GRLJUSICH, Duje Toma (Tom) Son of Mate and Pera Grljusich. Executor and trusteeunder the will of Mate Grljusich. As trustee was registeredproprietor of Lot 17 with George Grljusich from12 September 1985 to 16 July 1996.

GRLJUSICH, George Son of Mate and Pera Grljusich. Executor and trusteeunder the will of Mate Grljusich. As trustee was registeredproprietor of Lot 17 with Tom Grljusich from 12 September1985 to 16 July 1996.

GRLJUSICH, John Son of Mate and Pera Grljusich. Elected member of theCity of Cockburn from 1983 until the Council wassuspended. Deputy Mayor from May 1993 to May 1997and reigned as Mayor from May 1997 until the Council wassuspended. Member of the committee responsible forplanning matters, and chair of that committee from May1993 until February 1997, continuing as member thereafter.


489


GRLJUSICH, Mate Husband of Pera Grljusich. Registered owner of Lot 17Hamilton Road, Spearwood. Operated a market garden onthe property with his wife Pera until his death on31 May 1985.

GRLJUSICH, Pera Wife of Mate Grljusich. Operated a market garden withMate Grljusich on Lot 17 Hamilton Road, Spearwood. Died3 November 1993.

GRLJUSICH, Sheila Wife of Donald Grljusich. Was entitled to her husband'sshare in the estate of Mate Grljusich on the death ofDonald.

HOWLETT, Logan Elected member of the City from May 1990 until theCouncil's suspension. Member of the Planning, Buildingand Health Committee from May 1993 until February 1997.

KENNEDY J A judge of the Supreme Court of Western Australia whoheard and decided the main case in which Frances Gavaand John Grljusich sought to have George and TomGrljusich removed as trustees of their father's will.

LEE, Stephen Elected member of the City from May 1991 until the Councilwas suspended. Mr Lee was a member of the CommunityDevelopment Committee from March 1997 until theCouncil's suspension.

LEES, Ray Elected member of the City from 1973 until the Council'ssuspension. Deputy Mayor from May 1988 to May 1989,May 1991 to May 1992. Mayor from May 1993 toMay 1997.

LEGAL PRACTITIONERS'COMPLAINTS COMMITTEE

The statutory body established to receive and investigatecomplaints and take disciplinary action against members ofthe legal profession.

LLOYD, Ann Daughter of Mate and Pera Grljusich. Residuarybeneficiary under the will of Mate Grljusich.

McCUSKER, Malcolm A senior barrister, Queen's Counsel.

McLEOD, Denis The senior partner of McLeod & Co who principally providedadvice to the City.

McLEOD & Co The City's solicitor.


490


McNAIR, John Elected member of the City from May 1989 until the Councilwas suspended. Mr McNair was a member of theCommunity Development Committee from March 1997 untilthe Council's suspension.

MARTIN, Gary An authorised person under Division 1 of Part 8 of the LocalGovernment Act 1995 to conduct an inquiry into the City.Co-investigator and author of the Martin/Vicary Report intothe City dated 29 March 1999.

MATJELES & SALMON Lawyers for Urban Focus.

MURFETT & CO Lawyers for John Grljusich, Frances Gava, Ann Mary Lloydand Sheila Grljusich from May 1995. Brian Wheatleyemployed as solicitor from May 1995.

O'DEA, Daniel Solicitor at Corser & Corser. Acted for John Grljusich,Frances Gava, Ann Mary Lloyd and Sheila Grljusich.

OMBUDSMAN Parliamentary Commissioner for AdministrativeInvestigations. Investigates and makes recommendationsto public agencies, including local government, afterinvestigating complaints about administrative matters.Mr R Eadie was Ombudsman from 10 June 1991 until22 November 1996. Mr M Allen has been Ombudsmansince 25 November 1996.

OSTOJICH, Joe Elected member of the City from May 1992 until the Councilwas suspended. Deputy Mayor from September 1998 toMay 1999.

PECOTIC, Marinko Elected member of the City from May 1993 until theCouncil's suspension. Member of the Planning, Buildingand Health Committee from May 1993 until February 1997.

PEREMATE HOLDINGS PTY LTD The private company incorporated on 18 December 1996 ofwhich John Grljusich, Frances Gava, Ann Lloyd and SheilaGrljusich were the directors and shareholders. It was set upfor the purpose of subdividing Lot 17 Hamilton Road,Spearwood. The company became owner of Lot 17 on27 July 1998.

PLANNING, BUILDING ANDHEALTH COMMITTEE

The City's standing committee responsible for planningrecommendations until September 1993, when thePlanning, Building and Health Committee came intoexistence.


491


PUBLIC TRUSTEE Administrator of the estate of Pera Grljusich.

RYAN, Steve The City's Manager of Planning.

SCHARF, John The City's Director of Planning and Development from 1990to April 1996.

SHANAHAN, Tim Executive Director of the Western Australian MunicipalAssociation until January 2000.

STRATEGIC AND POLICYCOMMITTEE

The City's standing committee responsible for finance,tenders, strategy and major initiatives since its inaugurationin March 1997.

URBAN FOCUS Trading name for Coburg Nominees Pty Ltd (previouslyCMS Urban Consultants). Responsible for bringingtogether the landowners in the Packham Area for thepurpose of developing the land pursuant to a privatearrangement with each landowner. Managed the rezoningand subdivision of much of the Packham Area.

VICARY, Laurie An authorised person under Division 1 of Part 8 of the LocalGovernment Act 1995 to conduct an inquiry into the City.Co-investigator and author of the Martin/Vicary Report intothe City dated 29 March 1999.

WATERS, Nola Elected member of the City from May 1979 to May 1990.Mrs Waters was elected to the City again in May 1992 andserved until the Council was suspended. She was amember of the Community Development Committee fromMarch 1997 until the Council was suspended.

WATSON, John Executive Director of the Institute of Municipal Managementfrom 12 September 1997.

WEGNER, Ev Elected member of the City from May 1988 to May 1997.

WHEATLY, Brian Lawyer acting on behalf of John Grljusich, Frances Gava,Ann Mary Lloyd and Sheila Grljusich. A partner at Corser &Corser before commencing practice in January 1993 at theindependent bar. In May 1995 he commenced work as asolicitor with Murfett & Co. Elected member of the City fromMay 1994 until Council's suspension. Mr Wheatley was amember of the Community Development Committee fromMarch 1997 until Council's suspension.

ZELESTIS, Christopher A senior barrister, Queen's Counsel.


492

CHAPTER 6

ATTEMPTS BY MAYOR GRLJUSICHTO OBTAIN COMPENSATION FROM

THE CITY


495

Table of ContentsPage

6.1 Introduction ..................................................................................................501

(a) Outline...................................................................................................................................501

(b) Background...........................................................................................................................502

(i) Battle for the control of Lot 17 502(ii) Ownership of Lot 17 and Peremate 502(iii) The need for impartiality 504(iv) Need for additional caution 506(v) Link between infrastructure costs and POS compensation 507(vi) The financial stakes for the Lot 17 owners 508

6.2 Rezoning and subdivision of Lot 17..........................................................510

(a) History...................................................................................................................................510

(b) The City's Packham Area policy ..........................................................................................511

(i) Infrastructure cost sharing objectives 511(ii) Changes to Packham Area policy 514(iii) Effect of Lambasa resolution of 25 June 1997 516(iv) Application of policy to rezoning proposals 517

(c) Rezoning proposal ...............................................................................................................519

(i) Infrastructure costs issue 519(ii) Submission of proposal 522(iii) Further infrastructure cost developments 522

(d) Subdivision application.........................................................................................................524

(e) Officers' report ......................................................................................................................525

(i) Inconsistency with policy and practice 525(ii) Mr Hiller's response 528

(f) Intervention by Mayor Grljusich ...........................................................................................532

(g) Council's decisions...............................................................................................................533

(h) Outcome of the rezoning proposal ......................................................................................534

6.3 Early questioning by Mayor Grljusich.......................................................537

(a) Introduction ...........................................................................................................................537


496

(b) Meeting between Mayor Grljusich and Mr Hiller on 8 August 1997.................................. 538

(i) Related meeting on 7 August 1997 538(ii) Mr Hiller's dual file notes 539(iii) Conflict of evidence between Mayor Grljusich and Mr Hiller 541(iv) Mayor Grljusich's direct contact with City employees 542(v) Details of meeting on 8 August 1997 548

(c) Subsequent meetings and correspondence....................................................................... 549

6.4 Attempts to avoid the POS requirement after grant of subdivisionapproval ........................................................................................................553

(a) Grant of subdivision approval subject to Condition 13 ...................................................... 553

(b) Entitlement to compensation............................................................................................... 554

(i) Legal entitlement 554(ii) Infrastructure costs 555(iii) Refusal to accept POS compensation on the usual terms 558

(c) Reconsideration of Condition 13......................................................................................... 559

(d) 1989 Council resolution as a claimed basis for POS compensation ................................ 560

(i) Discussions and correspondence in October 1997 560(ii) Review of the Council's 1989 resolution 562(iii) The City's formal response 564(iv) Peremate's letter of 31 October 1997 and the City's response 564

(e) Meeting between Mayor Grljusich and Mr Hiller on 22 December 1997 .......................... 566

(i) Details of conversation 566(ii) Special deal sought from the City by Mayor Grljusich 569(iii) Continuing pressure by Mayor Grljusich on the City's planners 572(iv) Use of the City's information for private purposes 575

(f) Meeting with Mayor Grljusich on 6 January 1998.............................................................. 577

(i) Events leading to the meeting 577(ii) Increased tension and 'the stare' 578(iii) The meeting 580(iv) Revised plan of subdivision 583

6.5 The Council's review of Condition 13........................................................583

(a) Background.......................................................................................................................... 583

(i) Request for reconsideration 583(ii) Mr Hiller's draft report of 9 January 1998 584(iii) Meeting with Mr McLeod on 13 January 1998 587

(b) Officers' report ..................................................................................................................... 591

(i) Significance of report 591(ii) Outline 591


497

(c) Financial implications for the City ........................................................................................593

(d) Infrastructure costs...............................................................................................................595

(i) Policy PD 14 595(ii) Relevance of infrastructure costs to POS compensation 596(iii) Legal obligation to consider PD 14 599(iv) Relevance of private contractual arrangements 600(v) Objective assessment of infrastructure costs 601(vi) The common sense approach 602

(e) Council decision on 20 January 1998 .................................................................................603

(f) Assessment ..........................................................................................................................605

(g) Mayor Grljusich's response to the Council's decision.........................................................609

(h) Decision of the Planning Commission.................................................................................611

(i) Cr Pecotic's role ...................................................................................................................612

(i) Introduction 612(ii) Response to the Council decision on 20 January 1998 614(iii) Due consideration of agenda papers 616

6.6 Proposals for a deed between the City and Peremate............................617

(a) Mayor Grljusich lobbies other elected members.................................................................617

(b) The deed proposal ...............................................................................................................622

(i) Discussions with Mr Ryan on 21 May 1998 622(ii) Discussions with Mr Hiller on 22 May 1998 625(iii) Peremate's letter to the City 626

(c) McLeod & Co advice of 29 May 1998 .................................................................................628

(i) Introduction 628(ii) Content of advice 629(iii) Analysis of advice 631

(d) Further request by Mayor Grljusich for documents ............................................................634

(e) Peremate's letter of 2 June 1998.........................................................................................634

(f) Ministerial appeal and request for reconsideration.............................................................636

6.7 CDC meeting on 9 June 1998 .....................................................................636

(a) Officers' report ......................................................................................................................636

(i) Content of report 636(ii) Omissions from Report 638(iii) Officers' recommendation 640


498

(b) CDC meeting ....................................................................................................................... 641

(i) Committee's recommendation 641(ii) Cr Ostojich 644(iii) Cr Pecotic 646(iv) Cr Lee 647(v) Cr Elpitelli 647(vi) Cr Wheatley 647(vii) Cr Waters 647(viii) Findings 647

6.8 Council meeting on 16 June 1998..............................................................647

(a) Outline.................................................................................................................................. 647

(b) Mr McLeod's advice............................................................................................................. 647

(i) Mr McLeod's evidence 647(ii) Elected members' evidence 647(iii) Other aspects of the decision 647

(c) Findings................................................................................................................................ 647

6.9 Adjourned Council meeting on 22 June 1998 ..........................................647

(a) Background.......................................................................................................................... 647

(b) McLeod & Co advice and draft deed of 22 June 1998 ...................................................... 647

(i) Advice of 22 June 1998 647(ii) Draft deed 647

(c) Council meeting ................................................................................................................... 647

6.10 Deed between the City and Peremate .......................................................647

(a) Outline.................................................................................................................................. 647

(b) Terms of the Deed............................................................................................................... 647

(i) The basic proposal 647(ii) Anticipation of Planning Commission consent 647(iii) Responses from Ministers 647(iv) Fairness and equity - infrastructure costs 647(v) Valuation of Lot 17 647(vi) Other drafting defects 647(vii) Findings 647

6.11 The Deed fails...............................................................................................647

(a) Responses from Planning Commission and the Minister for Planning ............................. 647

(b) Further advice from McLeod & Co...................................................................................... 647

(c) Further pressure from Mayor Grljusich............................................................................... 647


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6.12 Rejection of Lot 17 appeal by Minister for Planning ...............................647

6.13 Mayor Grljusich's improper access to and use of the City'sinformation ...................................................................................................647

(a) Introduction ...........................................................................................................................647

(b) Demand for information on 10 June 1998...........................................................................647

(i) Background 647(ii) Major issues 647(iii) Mr Brown's evidence 647(iv) Mr Santich's evidence 647(v) Mr Grljusich's evidence 647(vi) Mr Erceg's evidence 647(vii) Assessment 647

6.14 Mayor Grljusich's allegations of a "set up"..............................................647

(a) Introduction ...........................................................................................................................647

(b) Set up allegations.................................................................................................................647

(i) Meeting with Mr Hiller on 8 August 1997 647(ii) File note by Ms Anthony of 9 September 1997 647(iii) Letter to Peremate on 21 October 1997 647(iv) Peremate's letter to the City on 31 October 1997 647(v) Telephone conversation with Mr Hiller on 22 December 1997 647(vi) Family meeting with Mr Hiller on 6 January 1998 647(vii) Council resolution of 20 January 1998 647(viii) Cr Elpitelli's request on 15 May 1998 647(ix) Peremate letter to the City on 2 June 1998 647(x) Telephone conversation with Mr Brown on 10 June 1998 647(xi) Deed with Peremate 647

(c) Assessment ..........................................................................................................................647

Guide to Key Persons and Entities .........................................................................647


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CHAPTER 6 - Attempts by Mayor Grljusich to Obtain Compensation from the City

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6.1 Introduction

(a) Outline

6.1.1 This Chapter concerns events involving Lot 17 Hamilton Road, Spearwood that occurred

from July 1997 until August 1998. Beginning with a review of the rezoning proposal and the

application for subdivision approval in respect of Lot 17, the Chapter's primary focus is on the

attempts by Mayor Grljusich and the other owners of Lot 17 to obtain compensation from the City.

Compensation was sought for what the owners of Lot 17 perceived to be the "excess" POS

contribution that they were required to make under a condition of subdivision approval for Lot 17

imposed by the Planning Commission.

6.1.2 Among the major issues that arise in respect of these events are –

(a) the actions of Mr John Grljusich in his dual roles as the Mayor of the City and as a

private developer determined to obtain compensation from the City;

(b) the access by Mayor Grljusich to, and use by Mayor Grljusich of, the City's

employees, documents and resources in the pursuit of his personal objectives;

(c) the pressure brought to bear by Mayor Grljusich on the City's employees and

elected members in the pursuit of his personal objectives; and

(d) the actions and decisions of the City's employees and elected members when

dealing with matters affecting Lot 17, particularly having regard to the need to be -

and to be seen to be - impartial.

6.1.3 Much of the detailed factual and legal background to the events considered in this

Chapter is contained in Chapter 4, dealing with Packham Development Area. Chapter 5, dealing

with the City's responses to the earlier Lot 17 rezoning proposals and subdivision applications, also

provides an important part of the context in which the events considered in this Chapter need to be

assessed. While the present Chapter includes specific cross-referencing to Chapters 4 and 5, all of

Chapters 4 and 5 are relevant to an appreciation of the matters reviewed in this Chapter.


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(b) Background

(i) Battle for the control of Lot 17

6.1.4 The previous Chapter dealt largely with the attempts by Deputy Mayor Grljusich, together

with his sisters and sister-in-law, to wrest the control of Lot 17 Hamilton Road from George and

Tom Grljusich. As part of that objective, Deputy Mayor Grljusich was also determined to prevent

the rezoning, subdivision and sale of Lot 17 while George and Tom Grljusich remained the legal

owners.

6.1.5 Deputy Mayor Grljusich was successful. With the very considerable assistance of

Mr John Scharf who was the City's Director of Planning and Development, Deputy Mayor Grljusich

managed to ensure that the Council did not initiate the rezoning of Lot 17. He also managed to

ensure that the Council did not support the subdivision application for Lot 17 - resulting in the delay,

of almost 10 months, before it was approved by the Planning Commission. This prevented George

and Tom Grljusich from proceeding with the subdivision and sale of Lot 17. Despite the Council's

continuing opposition, the Planning Commission finally granted approval on 3 January 1996, but

this was only 8 days before the Supreme Court ruled that George and Tom Grljusich should be

removed as trustees and, therefore, as the legal owners of Lot 17. Two court appointed trustees

replaced George and Tom Grljusich as trustees.

(ii) Ownership of Lot 17 and Peremate

6.1.6 George and Tom Grljusich remained the legal owners of Lot 17 until 16 June 1996 when it

was transferred to the court appointed trustees. On 7 November 1996 Lot 17 was transferred to all

6 beneficiaries - George, Tom and John Grljusich, Frances Gava, Ann Lloyd and Sheila Grljusich.

On the same day, the latter 4 beneficiaries purchased George and Tom's interest in Lot 17 for

$226,662. The property was then transferred into their names.

6.1.7 From that date, 7 November 1996, the 4 new owners' previous objective of blocking the

rezoning, subdivision and sale of Lot 17 was replaced with the objective of undertaking and

accelerating its rezoning, subdivision and sale. Not surprisingly, they were keen to complete the

rezoning, subdivision and sale as soon as possible so that they could receive and distribute among

themselves the proceeds. The sale of the subdivided lots was expected to realise a gross return in

excess of $1 million.


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6.1.8 The new owners of Lot 17 arranged for the incorporation of a company to manage the

rezoning, subdivision and sale of Lot 17. The company was known as Peremate Holdings Pty Ltd

("Peremate"). It was incorporated for the new owners of Lot 17 by Cr Pecotic in his role as

accountant and principal of M. Pecotic & Associates on 18 December 1996. The 4 directors of

Peremate, and its only shareholders, were the owners of Lot 17 - John Grljusich, Frances Gava,

Ann Lloyd and Sheila Grljusich. John Grljusich is referred to as the "Chairman of Directors" in

minutes of the meetings of Peremate's directors.

6.1.9 Despite the incorporation of Peremate on 18 December 1996, the ownership of Lot 17

remained with the 4 individual owners - John Grljusich, Frances Gava, Ann Lloyd and Sheila

Grljusich - until 27 July 1998 when it was transferred to Peremate. This was less than two weeks

before the first of the subdivided lots were sold. The significance of this is that, for the purposes of

almost all of the events reviewed in this Chapter, it was not Peremate which owned Lot 17, but

Mayor Grljusich, his sisters and sister-in-law.

6.1.10 If the City had paid POS compensation in respect of Lot 17, Mayor Grljusich would have

benefited financially - either as an owner of Lot 17 or, if the payment was made after the property

was transferred to Peremate, as a shareholder of Peremate of which he was the Chairman of

Directors.

6.1.11 During the period covered by this Chapter, much of the written correspondence from the

owners of Lot 17 to the City appears under Peremate's letterhead. During the course of this Inquiry

Mayor Grljusich, through his Counsel, sought to place great significance on the distinction between

the actions of Peremate and those of Mayor Grljusich. In particular, it was submitted –

" … that communications between Peremate Holdings Pty Ltd and the Council should not,and cannot be sheeted home personally to Mr Grljusich … " (Closing Submissions,para. 130(d)(ii)).

This submission cannot be accepted.

6.1.12 In the first place, to the extent that the "corporate veil" is relevant, it does not assist Mayor

Grljusich in this context. Throughout most of the period reviewed in this Chapter, despite

representing itself to be the owner of Lot 17, Peremate was not the owner. In fact, the

circumstances clearly establish that Peremate was the agent of the owners. Peremate's letters to

the City, therefore, were written on behalf of Mayor Grljusich and his sisters and sister-in-law as the

owners of Lot 17. As principals, they are personally responsible for the actions of their agent,


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Peremate, including the letters from Peremate to the City relating to Lot 17. Thus, there is a direct

connection between Peremate's correspondence and Mayor Grljusich.

6.1.13 The evidence also establishes a stronger and more direct connection between Peremate

and Mayor Grljusich. Mr Grljusich told the Inquiry that each letter sent by Peremate to the City was

preceded by a formal or informal meeting of the 4 directors of Peremate who "would all have a hand

in [drafting] it" (Transcript, 3431, and generally at 3430-3432). Although signed by the company

secretary, each letter was a "joint product" of the 4 directors including himself (Transcript, 3432).

6.1.14 In fact, it is clear that Mayor Grljusich had a significantly greater input than the other

directors (and owners of Lot 17) in relation not only to the content of the letters sent to the City but

also in the attempts to obtain POS compensation. Mayor Grljusich had considerable experience in

planning matters. For 14 years prior to mid-1997, Mayor Grljusich had been a councillor of the City

and a member of its committee responsible for planning and development matters. Since 1993 he

had been chairman of that committee. Further, Mayor Grljusich had frequent access to other

elected members and to the City's staff and resources, which he used to pursue his interests and

those of his fellow owners of Lot 17 and fellow directors and shareholders of Peremate. One

illustration of this can be seen in the many occasions when copies of documents provided by the

City's employees to Mayor Grljusich were referred to in, or even returned as attachments to,

correspondence that the City received a day or two later from Peremate. Indeed, the City's

employees did not provide documents or information to any Peremate director apart from Mayor

Grljusich (Transcript, 1894, 1971 (Hiller) and 2252, 2255 (Ryan)).

6.1.15 The links between Mayor Grljusich and letters to the City from Peremate are not only

strong and direct, they are also obvious. They were certainly obvious to the City's elected members

and employees who dealt with Lot 17 issues throughout this period. Contrary to his Counsel's

submissions, Mayor Grljusich does have a personal responsibility for Peremate's letters to the City.

(iii) The need for impartiality

6.1.16 For the reasons outlined in the previous Chapter, it was very important, in 1994 and 1995,

that the City's elected members and employees acted and were seen to have acted impartially

when dealing with issues involving Lot 17 where the City's Deputy Mayor had a clear financial


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interest. At stake was the community's confidence in the City's decision making procedures and

outcomes and, indeed, the community's confidence in its elected representatives and the City's

employees.

6.1.17 The need for impartiality was even greater during the period considered in this Chapter.

There are two reasons for this. First, in May 1997 Mr Grljusich's position changed from Deputy

Mayor to Mayor. This change and increase in his status and authority brought with it a

corresponding increase in the need for both himself and the City to ensure that he was not given

special treatment when dealing with the City in his private role as a developer of Lot 17.

6.1.18 The second reason concerns the publication of the reports by the Department of Local

Government and the Ombudsman relating to the City's actions and decisions in 1994 and 1995

concerning Lot 17. Both reports detailed instances where the City's elected members and

employees had favoured Deputy Mayor Grljusich. The Ombudsman concluded on

4 February 1997, just before the first of the events considered in this Chapter, that –

"the Council allowed itself to be influenced by one of its councillors to benefit thatcouncillor's personal position."

That councillor was Deputy Mayor Grljusich.

6.1.19 Given the City's earlier bias in favour of Deputy Mayor Grljusich and the criticisms in the

reports of the Department and the Ombudsman, the issues of conflict of interest and improper

influence insofar as they concerned Mayor Grljusich were now squarely before the City. It was

imperative that the mistakes of the past should not be repeated.

6.1.20 The most encouraging sign that things might be different the second time around was the

replacement of Mr Scharf by Mr Steve Hiller. Concerns about the relationship between Mr Scharf

and Mr Grljusich, who was then Deputy Mayor, are referred to in Chapter 5 (at 5.2(g)(ii)). Mr Scharf

left the City in April 1996 (Transcript, 2893). Mr Hiller, who had been the City's Planner from 1984

to 1990, returned to the City in April 1996 as its Director of Planning and Development.

6.1.21 Shortly after his appointment, Mr Hiller –

" … had some representations from [the City's] planning staff about the previousarrangements [involving the relationship between Mr Scharf and Deputy Mayor Grljusich]that caused some concern … The concerns that were expressed to [him were] … the factthat the chairman of committee [Deputy Mayor Grljusich] had regularly met with theprevious director of planning and that a number of these particular meetings were


506

conducted behind closed doors, and that was of concern to some of the staff"(Transcript, 986).

6.1.22 Following these representations, Deputy Mayor Grljusich arranged for a meeting, to be

conducted in Mr Hiller's office, to discuss changes to the Structure Plan involving land south of

Yangebup Road. Mr Hiller was clearly concerned about the manner in which Deputy Mayor

Grljusich had sought "to be involved in the way in which that matter was being dealt with"

(Transcript, 986). Some days later, when Deputy Mayor Grljusich again came to his office for a

meeting, Mr Hiller discussed with him –

" … my approach to my job which was basically to provide recommendations to thecouncil and for the council to make decisions based on those recommendations"(Transcript, 985).

6.1.23 In other words, unlike Mr Scharf, Mr Hiller did not think that it was appropriate for Deputy

Mayor Grljusich, or any other councillor, to be involved in formulating recommendations from the

City's planning staff that were to be considered by the Council. That conversation would have

made it very plain to Deputy Mayor Grljusich that Mr Hiller saw his role, and that of Deputy Mayor

Grljusich as chairman of the Planning, Building and Health Committee, very differently from the way

that they had been seen and practised by Mr Scharf. The conversation clearly achieved its

objective. Mr Hiller testified to the Inquiry that –

"MR HILLER: In terms of the outcome, following that particular conversation I suppose inthe 3 and a half years I have been at the city I would have had Deputy Mayor Grljusich orMayor Grljusich in my office no more than half a dozen times at the most.

COUNSEL ASSISTING: And you haven't felt the need during that time to spend a longtime before the next planning, building and health committee, or later the communitydevelopment committee meeting, briefing him?---MR HILLER: No, I haven't"(Transcript, 987).

6.1.24 Thus, within a very short time of Mr Hiller's arrival, it must have been apparent to Deputy

Mayor Grljusich that he could no longer expect to receive special favours from the Director of

Planning and Development in relation to Lot 17.

(iv) Need for additional caution

6.1.25 The claim for compensation by Mayor Grljusich and the other owners of Lot 17 against

the City was unprecedented. The City had never paid - and there is no evidence that it had ever

received - compensation in respect of land that was required to be given up "free of cost and

without compensation" under a condition of subdivision approval imposed by the Planning


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Commission. Indeed, the City was not aware of any other local government in this State having

paid compensation in similar circumstances.

6.1.26 The claim raised important legal, technical and policy considerations that had not been

addressed previously. The need to obtain and rely on appropriate technical and legal advice was

readily apparent. The issue of whether compensation should be paid had to be considered in a

wider context having regard the precedent value not only for the City, but for other local

governments.

6.1.27 In these circumstances it was critical that the City's employees and elected members take

particular care to ensure that all aspects of the matter were properly identified and thoroughly

investigated and considered before any decision was made.

(v) Link between infrastructure costs and POS compensation

6.1.28 When Mayor Grljusich, his sisters and sister-in-law became the owners of Lot 17 they, like

other Packham Area landowners, had a choice. They could rezone, subdivide and sell their land

through the Urban Focus Private Owners' Arrangement (see Chapter 4 at 4.8) or they could make

their own arrangements.

6.1.29 From a financial perspective, one factor in this choice concerned the payment of

infrastructure costs (see Chapter 4 at 4.9). It will be seen in this Chapter that Lot 17 benefited from

infrastructure services provided as part of Stages 4C and 8 of the Packham Area. These services

were the provision of a sewer line and an electrical transformer. Urban Focus claimed from the

owners of Lot 17 the sum of $35,598 as their share of the cost of providing these services.

Consultants retained by the owners of Lot 17 advised them that the amount sought from them by

Urban Focus was fair and reasonable. In fact, if Urban Focus had not provided these services as

part of the adjoining stages, the owners of Lot 17 would have been required to pay considerably

more than that amount.

6.1.30 If the owners of Lot 17 had been participants in the Urban Focus Private Owners'

Arrangement, they would have been required, under the terms of the deed with Urban Focus, to

pay that sum of $35,598. However, as Mayor Grljusich knew, if the owners of Lot 17 were not

participants in the Private Owners' Arrangement they could not be forced to pay that amount. If


508

they did not pay, Urban Focus would not pay Lot 17's share of the infrastructure costs. It would be,

as it has been, left to the owners of the neighbouring properties to pay not only their own shares but

Lot 17's share as well.

6.1.31 A second financial factor in the choice of whether to rezone, subdivide and sell Lot 17

through Urban Focus concerned compensation for excess POS/Wetlands contribution (see

Chapter 4 at 4.10 and 4.11).

6.1.32 Under the Structure Plan the owners of Lot 17 knew that they would be required by the

Planning Commission's conditions of subdivision approval for Lot 17, to give up 27% of their land as

POS/Wetlands. This was 11% more than the average of 16% required to be given up by all other

Packham Area landowners.

6.1.33 If the owners of Lot 17 had been participants in the Urban Focus Private Owners'

Arrangement, they would have been entitled, under the terms of an Owner's Deed, to be

compensated for their excess POS contributions. Until February 1998 the compensation amount

was $45,893. After February 1998 the compensation amount was $17,941.46. If the owners of

Lot 17 were not participants in the Private Owners' Arrangement, they would have had no legal

entitlement to any excess POS compensation from the City or elsewhere. All they could do was

attempt to obtain an ex gratia payment from the City.

(vi) The financial stakes for the Lot 17 owners

6.1.34 Financially, the position faced by the Lot 17 owners was a simple one. It involved a

choice. Either –

(a) participate in the Private Owners' Arrangement and –

(i) pay infrastructure costs; and

(ii) receive POS compensation; or

(b) do not participate in the Private Owners' Arrangement and –

(i) have no legal obligation to pay infrastructure costs; and

(ii) have no legal right to be paid POS compensation.


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6.1.35 If the first option had been taken before February 1998, it would have resulted in a net

gain to the owners of Lot 17 of $10,295 (POS compensation of $45,893 less infrastructure costs of

$35,598). If taken after February 1998, it would have resulted in a net loss to the owners of Lot 17

of $17,656.54 (POS compensation of $17,941.46 less infrastructure costs of $35,598). The second

option required no payment by the owners of Lot 17. If the owners could avoid, as they have

avoided to date, making the infrastructure payment to their neighbours, then they would - financially

at least - be better off. If they were also able to persuade the City to give them an ex gratia POS

compensation payment, then the second option became even more financially attractive.

6.1.36 Indeed, the owners of Lot 17 wanted a far better financial deal than they were entitled to,

and their neighbours were actually receiving, under the Private Owners' Arrangement. This 'greed

factor' is dealt with later in this Chapter (at 6.4(e)(ii)). The special deal they sought was by way of

an ex gratia payment from the City where Mayor Grljusich held the highest office.

6.1.37 It is important to appreciate that the time, resources and energies of the City over a period

of more than 12 months were taken up in responding to the attempts by Mayor Grljusich and the

other owners of Lot 17 to obtain compensation which, in the end, amounted to $17,941.46.

(Indeed, as will be seen, the land in question, which was under water for much of the year, may

have been worth far less than that amount.) Many hundreds, and more likely thousands, of hours

of time of elected members and employees were devoted to this issue. The City's legal fees alone

on this issue exceeded the amount of the compensation sought by the owners of Lot 17.

6.1.38 Other costs to the City that are more difficult to measure, but are of great significance,

include the divisiveness caused by this issue and the diversion of the City's resources from other

matters. Many of the complaints received by the Inquiry, relating to the City's slow response times

and lack of adequate attention, may at least partly be attributed to the concentration of resources

during this period to deal with Mayor Grljusich's attempts to obtain compensation.

6.1.39 In his Written Response to the Inquiry dated 10 December 1999, Mr McLeod stated –

"I would have paid that $17,971.46 costs myself as a cheap way of avoiding the fargreater expense I personally have suffered as a consequence of the arrangement notbeing accepted" (at pp. 67-68).

Mr Grljusich still sees the matter very differently. Despite the enormous costs to the City and the

considerable costs to himself as a result of his actions, he insisted to the Inquiry that, even with the

benefit of hindsight, he would do it again (Transcript, 3444).


510

6.1.40 The amount at stake was less than $18,000 in total, of which Mayor Grljusich's share

would have been $4,500. This needs to be considered in the context of the value of Lot 17.

Between September 1998 and April 1999, 14 of the 18 subdivided lots were sold for a total of over

$1.3 million.

6.2 Rezoning and subdivision of Lot 17

(a) History

6.2.1 In order for the new owners of Lot 17 to achieve their objective of selling Lot 17 at the

best price and as soon as possible, the property had to be subdivided. The first step was to obtain

subdivision approval from the Planning Commission (see Chapter 4 at 4.7).

6.2.2 By 7 November 1996, when Lot 17 was transferred into the names of John Grljusich,

Frances Gava, Ann Lloyd and Sheila Grljusich, the Planning Commission had already granted

approval for a subdivision application in respect of Lot 17. That application had been lodged with

the Planning Commission by Urban Focus (on behalf of George and Tom Grljusich) on

16 March 1995. Largely as a result of the Council's opposition to its approval, the application

languished with the Planning Commission for 10 months before approval was finally granted on

3 January 1996.

6.2.3 Because of the delay, subdivision could not proceed in accordance with the approved

plans. The reason for this is that, in the meantime, the design for the adjoining Stage 8 subdivision,

immediately to the north of Lot 17 had changed. The original application for subdivision approval

for Lot 17 had been designed on the basis that the only road access to the property would be

through the Stage 8 land. The changes to the Stage 8 design removed road access to Lot 17.

Thus, the Lot 17 subdivision had to be re-designed very substantially to allow direct access to

Garden Road. Rather than submit an amended plan of subdivision, the new owners of Lot 17

decided to submit a fresh application for subdivision.

6.2.4 Different considerations applied to the rezoning of Lot 17. Largely as a result of the

successful attempts by Deputy Mayor Grljusich to block the rezoning proposals submitted by Urban

Focus on behalf of George and Tom Grljusich (see Chapter 5 at 5.2 - 5.5), Lot 17 remained zoned

"Rural" under the City's District Zoning Scheme. Normally the rezoning of land from "Rural" to


511

"Residential" would precede an application for residential subdivision. However, as a result of the

Supreme Court's decision in Falc v State Planning Commission [1991] 5 WAR 522 on

27 September 1991, it was evident that the Planning Commission had power to grant residential

subdivision approval for Lot 17 even if the property retained its "Rural" zoning.

6.2.5 The owners of Lot 17 considered the option of not rezoning the land at all. As

Mr Grljusich explained when giving evidence to the Inquiry –

"We didn't have to rezone the land to lot 17. The only reason we rezoned lot 17 was tohave the 25 per cent multi residential which gave us four units on the land that we wereable to subdivide, not taking into account the POS. That's the only reason we rezonedthe land and that was just a formality really … " (Transcript, 3396-3397).

6.2.6 Having decided, because of the anticipated financial benefits, to proceed with a rezoning

proposal for Lot 17, Mayor Grljusich and the other owners of Lot 17 also decided that it would be in

their best interests if the rezoning proposal and the application for subdivision were to "run in

parallel" (Transcript, 3397). It was anticipated by Mayor Grljusich that the approval process for

each would begin at about the same time, that subdivision approval would be granted quickly and

that, by the time that the longer rezoning process was finalised, all the subdivision work would have

been completed and the subdivided lots would be ready for sale (Transcript, 3397).

6.2.7 The owners of Lot 17 retained Duane Cole of Richard Pawluk & Associates to prepare the

rezoning proposal and John Giudice & Co to prepare the subdivision application. The proposal and

application were considered by the Council at its meeting on 16 September 1997. Aspects of each

are examined below at 6.2(c). The City's Packham Area policy is relevant to both the rezoning

proposal and the subdivision application.

(b) The City's Packham Area policy

(i) Infrastructure cost sharing objectives

6.2.8 One of the fundamental principles underlying the orderly and fair development of the

Packham Area is that all landowners who benefited from subdivision development undertaken by

others would contribute equitably to the cost of that development. It was very much in the City's

interests to ensure that the development of the Packham Area proceeded in an orderly and fair

way. The more orderly and fair it was, the less likely it would be that the City would get involved in

costly and time consuming disputes. The more orderly and fair it was, the quicker the development


512

would be completed and, therefore, the quicker the City would begin to reap the financial returns

from a residential subdivision replacing rural landholdings.

6.2.9 One of the ways, but not the only way, that the City was able to support the infrastructure

costs contribution principle was through its Packham Area policy (see Chapter 4 at 4.5, 4.13(e) and

4.14). The original version of that policy was adopted by the Council more than 12 years ago, on

9 February 1988. One of its primary objectives was –

"to ensure that all owners who subdivide make proper and equitable contributions to theprovision of … infrastructure services" (letter from McLeod & Co to the City dated28 November 1994).

6.2.10 This objective was easily achieved in respect of those owners who were participants in

the Private Owners' Arrangement. Each of these owners was required, under the terms of his or

her Owner's Deed with Urban Focus to contribute towards infrastructure costs. In practice, there

could be no difficulties with payment because participants contributed towards those costs in

accordance with their percentage interest in the relevant stage and that contribution was deducted

from the proceeds of lot sales before distribution to the participants. Thus, the Packham Area

policy achieved the City's infrastructure cost contribution objective by encouraging Packham Area

landowners to participate in the Private Owners' Arrangement.

6.2.11 The City, however, was concerned to ensure that all Packham Area landowners, not just

participants in the Private Owners' Arrangement, contributed their fair share of infrastructure costs.

Following legal advice and a formal Council resolution, the City's considered view was that –

"Council does not require landowners to use the services of Urban Focus, but requires anequitable contribution to the scheme to be made, in order that the Scheme is notsubsidising non-participating private landowners. Cooperation between landowners isimplicit in the successful implementation of the plan for the area" (letter from the City tothe Planning Commission dated 19 December 1994).

6.2.12 The City's role in achieving the objective of an equitable contribution towards

infrastructure costs was critical in respect of the non-participants in the Private Owners'

Arrangement who did not have a contractual obligation (or any other legal obligation) to contribute

to infrastructure costs.


513

6.2.13 Over the period of about 10 years until the infrastructure cost contribution issue arose in

respect of Lot 17, the City had been very successful in achieving its objective. The review in

Chapter 4 (at 4.9) of all relevant non-participants in the Private Owners' Arrangement showed that,

until the issue arose in respect of Lot 17, every Packham Area landowner whose property had

benefited from infrastructure development had contributed to the costs of that infrastructure

development.

6.2.14 As the Lambasa case illustrates (see Chapter 4 at 4.13), the City had some problems at

times in ensuring that its objective was achieved. This should not have been surprising.

6.2.15 There are many examples of Packham Area landowners wanting to do, and doing, the

right thing by their neighbours. When these landowners directly benefited from the infrastructure

services provided or paid for by their neighbours, they were willing to do the right thing and

contribute their share of the costs. Whether or not they were legally obliged to do so was not a

factor. Unfortunately, experience shows that there are those who do not have the same approach.

For these individuals, the philosophy of "doing the right thing" is replaced by "what can I get away

with?"

6.2.16 It was in these cases that the City had an important role to play. If one or two landowners

were seen to avoid paying their share of infrastructure costs, others were more likely to follow and

this threatened the orderly and fair development of the Packham Area. It was in the City's interests

that this did not occur.

6.2.17 It is worth noting that within the Packham Area it was generally Urban Focus which

carried out infrastructure work on behalf of, and paid for by, participating landowners. Applied to

these cases, the City's objective was to ensure that non-participating landowners who benefited

from that work should contribute their share of the costs to the participating landowners. However,

some non-participants also carried out infrastructure work in the Packham Area that benefited

adjoining and nearby landowners who were participants in the Private Owners' Arrangement. In

that case, as occurred with Cockburn Waters, Urban Focus (on behalf of the participating owners in

Stages 16 and 17) contributed towards those development costs. The contribution, amounting to

over $50,000, was paid to Cockburn Waters on 26 September 1997 - at the same time as the

infrastructure and contribution issue in respect of Lot 17 was being dealt with by the City.


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(ii) Changes to Packham Area policy

6.2.18 The original Packham Area policy, known as Policy No. PB 14.1, was adopted by the

Council on 9 February 1988. In the course of dealing with the Lambasa problem, the City obtained

legal advice from McLeod & Co about this policy. McLeod & Co advised that there were

deficiencies with the existing wording of the policy and proposed a substantially amended version.

The proposed version was not intended, however, to depart from the objectives of the original

policy. These objectives were identified by McLeod & Co as being –

"(a) to ensure that subdivision in the area is carried out in accordance with the adoptedStructure Plan; and

(b) to ensure that all owners who subdivide make proper and equitable contributions tothe provision of public open space and engineering and infrastructure services."

6.2.19 The proposed policy drafted by McLeod & Co was in these terms –

"The Council will not support subdivision of land within the Packham Development Areaunless:

(1) the proposed subdivision is in accordance with the adopted Structure Plan; and

(2) either:

(a) the applicant for subdivision approval is a participant in an Owner's [sic]Scheme for the Area in which the applicant's subdivision is situated; or

(b) the applicant has provided or paid the whole of the cost of providing publicopen space, road access, water, sewerage and drainage services, and anyother relevant infrastructure service appropriate for subdivision in that Area;or

(c) the applicant has made arrangements, or proposed arrangements,satisfactory to the Council, for the making of an equitable contribution to theprovision by others of public open space and the other services referred to in(b) in respect of the applicant's subdivision."

6.2.20 This advice was considered by the Council following its decision to exclude Lot 17 from

Amendment No. 91. It was very much an issue before the Council at that stage that the owners of

land which was to be subdivided should clearly be identified and that all the owners should support

the application. No doubt because of this, the first paragraph of the draft from McLeod & Co was

modified accordingly by the Planning, Building and Health Committee at its meeting on


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24 April 1995. Otherwise, there were no changes to the proposed draft. On 2 May 1995, the

Council replaced the existing Policy PB 14.1 with the following (with the additional words in italics) –

"The Council will not support subdivision of land within the Packham Development Areaunless:

(1) the proposed subdivision is in accordance with the adopted Structure Plan and theCouncil has received proof that all owners of all land, the subject to the application,have no objection to the land being subdivided in accordance with the Owners'Scheme;

(2) either:

(a) the applicant for subdivision approval is a participant in an Owners' Schemefor the Area in which the applicant's subdivision is situated; or

(b) the applicant has provided or paid the whole of the cost of providing publicopen space, road access, water, sewerage and drainage services, and anyother relevant infrastructure service appropriate for subdivision in that Area;or

(c) the applicant has made arrangements, or proposed arrangements,satisfactory to the Council, for the making of an equitable contribution to theprovision by others of public open space and the other services referred to in(b) in respect of the applicant's subdivision."

6.2.21 Policy PB 14.1 was readopted by the Council in a new format and with a changed number

- PD 14 - on 19 August 1997. This version, however, omitted the additions to the first paragraph of

the policy which had been adopted by the Council on 2 May 1995. This appears to have been an

oversight. The amended policy was put before the Council for readoption as part of a policy manual

containing all the City's policies relating to planning and development. No indication was given to

the Strategic and Policy Committee (which considered the matter on 5 August 1997) or the Council

that there had been a change to the first paragraph. It is of concern that a formal policy adopted by

the Council should, in effect, be changed without the Council having been given a real opportunity

to consider the change.

6.2.22 For the purposes of the application of the policy to the events considered in this Chapter,

the additional words in the first paragraph are not relevant. References to Policy PD 14 in this

Chapter are to the shortened version (omitting the additional words in the first paragraph). This is

consistent with the version used during this period by the City's elected members and employees.


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(iii) Effect of Lambasa resolution of 25 June 1997

6.2.23 In many of the events involving Lot 17 considered in this Chapter, Mr Hiller's actions and

decisions were based on his belief about the effect of the Council resolution of 25 June 1997

concerning the Lambasa matter. Mr Hiller believed that this resolution had the effect that, despite

the Packham Area policy, the Council would no longer be involved in ensuring that landowners in

the Packham Area contributed to their share of infrastructure costs. In his evidence to the Inquiry

(Transcript, 2180-2182 and 2205) and in his closing submissions Mr Hiller sought to justify this

belief (Closing Submissions, 21, 48-49, 58, 60-61, 75, and 80-81). He was supported by

Mr McLeod (Written Response, 29). For the reasons that follow, I am satisfied that the Lambasa

resolution did not have this effect.

6.2.24 The particular part of the resolution on which Mr Hiller relied was misquoted frequently in

various Officers' reports and in the evidence and submissions to the Inquiry. The resolution of

25 June 1997 was in these terms –

"1. Issue the clearance for the six lots on Husk Parade and forward the monies paid of$36,951 (23%) by the Lambasa's for sewerage, water drainage and roadconstruction, to Urban Focus together with advice of the Lambasa's Letter ofUndertaking.

2. Accept the Lambasa's Letter of Undertaking dated 17th June 1997, which requiresCouncil to receive and hold funds as specified.

3. Distribute funds to Urban Focus on behalf of the Packham Stage 4 landowners onthe sale or agreement to the sale, of pt lot 2004 to the Lambasa's.

4. In the event that part three of this resolution is not achieved, the Council will returnthe funds held in two above, to the Lambasa's.

5. Advise all parties of its decision and that it is not prepared to be further involved infacilitating the arrangements with respect to servicing infrastructure issues,between the landowners."

6.2.25 Mr Hiller's argument was that the paragraph numbered "5" established that the Council

did not intend to concern itself again - not only in this case, but in any future case involving a

Packham Area landowner - with the issue of equitable contribution to infrastructure costs.

However, having regard to the context, the words used by the Council make it clear that "the

landowners" to which reference was made were the Lambasas and their neighbours with whom

they were in conflict. One of the principal objectives of the City's Packham Area policy, which had

been applied consistently for almost 10 years, was to provide that the City would play a major role

in ensuring that landowners in the Packham Area made proper and equitable contributions towards


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infrastructure costs. There was no suggestion in the resolution of 25 June 1997 that one of the two

principal objectives of that policy, which was not even referred to in the resolution, was to be

abandoned. Indeed, it was not abandoned - and still remains in force. While there have been a few

minor changes to the policy since the Lambasa resolution, the objectives of the policy remain intact.

6.2.26 A related matter concerns the claim made by Mayor Grljusich (and apparently accepted

by the City's planners) that the Council's experience in the Lambasa case was a compelling reason

why it should not get involved in any infrastructure cost issues concerning the owners of Lot 17. In

fact, there is a crucial difference between the situation faced by the Council in the Lambasa case

and the Lot 17 case. As has been seen in Chapter 4, the Lambasas formally undertook to pay, and

never questioned their obligation to pay, their share of infrastructure costs. For over three years,

the dispute raged over the amount of their fair share and, in particular, how it should be calculated.

In contrast, as will be seen, Mayor Grljusich and the other owners of Lot 17 refused to commit

themselves to pay or even to acknowledge that they should pay their share of infrastructure costs.

They instructed Mr Cole to remove from his draft report an undertaking to pay these costs

(Transcript, 1845). Furthermore, in the case of Lot 17 there was never any dispute with the

calculation of the only two infrastructure cost items in question namely, the sewer line and the

electrical transformer. The engineers retained by the owners of Lot 17 confirmed at an early stage

that these costs, amounting to $35,598, were fair and reasonable. Neither Mayor Grljusich nor any

of the other owners of Lot 17 have ever suggested that the calculations, or their engineers'

conclusions, are incorrect (see also 6.4(b)(ii)).

(iv) Application of policy to rezoning proposals

6.2.27 In the terms in which it was expressed, the Packham Area policy was limited to the

Council's support for "subdivision of land within the Packham Development Area". During the

Inquiry's public hearings, and in closing submissions, it was argued on behalf of a number of

witnesses that the policy applied only to applications for subdivision approval and not to rezoning

proposals for the Packham Area. That is not so.

6.2.28 A local government has only a limited role in relation to applications for subdivision of land

within its district. It does not have the power to approve or refuse an application. That power

resides with the Planning Commission. Instead, a local government generally has the right to be

consulted by, and to make objections or recommendations to, the Planning Commission about an

application for subdivision (see Chapter 4 at 4.7(a)).


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6.2.29 It follows that, insofar as applications for subdivision were concerned, the City had no

power, on its own, to enforce its Packham Area policy objective "to ensure that all owners who

subdivide make proper and equitable contributions to the provision of … infrastructure services". It

had to rely on the cooperation and support of the Planning Commission. At least after the Lambasa

case, it was apparent that the Planning Commission was unlikely to continue to support the City's

objective. It would not impose a condition of subdivision approval requiring an applicant to

contribute towards infrastructure costs, at least where those costs related to sewerage and

electricity facilities.

6.2.30 The City's role in residential subdivision was not, however, limited to providing

recommendations to the Planning Commission in respect of subdivision applications. It had

considerably more powers in relation to the rezoning process. In particular, it had the power to

prevent a rezoning proposal from being initiated. The comparison between the City's ability to

affect a subdivision application and a rezoning proposal is illustrated by the events in 1994 and

1995 relating to Lot 17. At that time the Council, in accordance with the wishes of Deputy Mayor

Grljusich, wanted to prevent both the rezoning and subdivision of Lot 17. As a result of its lack of

support for the subdivision, it was able to delay subdivision approval for 10 months. In the end,

however, the Planning Commission granted subdivision approval despite the City's objections. In

contrast, the proposals to rezone Lot 17, first as part of Amendment No. 91 and then on its own,

were stymied and could not proceed without the Council's support.

6.2.31 Plainly, therefore, the City's powers in relation to rezoning rather than subdivision

provided it with a greater opportunity to achieve its infrastructure cost contribution objectives for the

Packham Area. At first sight, it may seem that an obstacle to this was that, since its adoption in

1988, the Packham Area policy has always been expressed in terms of "subdivision" not "rezoning".

It is clear, however, that in this context the City interpreted the policy on the basis that "subdivision"

should have a broader meaning and application, extending beyond the City's powers in respect of

subdivision applications. In particular, the City would use its rezoning powers to ensure that all

landowners within the Packham Area - whether or not participants in the Private Owners'

Arrangement - contributed their share of infrastructure costs.


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6.2.32 This approach is clearly reflected in many of the City's reports and letters. For example, a

letter from the CEO to McLeod & Co dated 25 July 1994 stated –

"Before the Council is prepared to consider an amendment to the zoning of land withinthe Packham area, it requires all landowners to participate in the Owners Scheme andagreement that the subdivision will be carried out in accordance with the adoptedStructure Plan" (emphasis added).

Similarly, in a letter from the CEO to the Planning Commission dated 13 April 1995, the City

advised the Planning Commission that –

"The City of Cockburn has a policy not to proceed with any Scheme amendments in thePackham Area [that is, for rezoning of land] unless the owner has entered into an 'OwnersDeed'. Such a Deed outlines the methodology for the distribution of costs common to thatparticular stage of the Subdivision."

6.2.33 Sometimes, even firm statements of policy are not applied in practice. That is not the

case here. Chapter 4 (at 4.6(c)) contains a review of each of the rezoning proposals for the

Packham Area that were made before the proposals submitted by the new owners of Lot 17 in mid

1997. The review shows that, on each of the 12 occasions since 1993 under the current District

Zoning Scheme where land was the subject of a proposal to be rezoned from "Rural" to

"Residential" and was also intended to be the subject of a residential subdivision, the rezoning

proposal was supported by the Council only after –

(a) the owner had become a participant, or had agreed to become a participant, in the

Private Owners' Arrangement; or

(b) the Council had satisfied itself that the owner had made or would make suitable

arrangements with Urban Focus to pay the owner's share of infrastructure costs.

6.2.34 The proposition that is established, therefore, is that at the time when the new owners of

Lot 17 submitted their rezoning proposal in 1997, the City had consistently and without exception

applied its Packham Area policy to ensure, through its rezoning powers, that all owners of land in

the Packham Area, including non-participants in the Private Owners' Arrangement, would "make

proper and equitable contributions to the provision of … infrastructure services".

(c) Rezoning proposal

(i) Infrastructure costs issue

6.2.35 As indicated earlier, the new owners of Lot 17 decided that their financial returns from the

sale of Lot 17 would be increased if the property were to be rezoned to "Residential". In May 1997

Remo Gava who was the husband of Frances Gava, one of the new owners of Lot 17, approached


520

Duane Cole of Richard Pawluk & Associates. On behalf of the owners of Lot 17, Mr Gava engaged

Mr Cole to undertake the Lot 17 rezoning application. Most of the contact with Mr Cole was

conducted on behalf of the owners by Mr Gava, although Mayor Grljusich also had some contact

with Mr Cole.

6.2.36 Mr Cole had worked in the planning department at the City for about 6 months in 1989

and was aware of the development being undertaken in the Packham Area. On behalf of the

owners of Lot 17, he sought from the City documents relevant to the proposed application. The

City's planning staff with whom he had contact were Mr Hiller, Mr David Igglesden and

Ms Rosemary Thuys. Mr Cole was provided with relevant sections from the District Zoning

Scheme, an amendment report for a Packham Area rezoning and the Structure Plan.

6.2.37 Significantly, he was also provided with a copy of the City's Packham Area Policy

No. PD 14. This was consistent with the City's policy and practice concerning the application of

Policy PD 14 (and its predecessors) to rezoning proposals as well as subdivision applications.

6.2.38 Mr Cole's understanding, at that stage, that Policy PD 14 applied to the rezoning of Lot 17

is shown in his facsimile to the Ministry for Planning of 12 June 1997. In that facsimile he noted that

the "landowner's congruence to developments costs associated with this development area is

required on application to Council for the rezoning proposal".

6.2.39 From the time that Mr Cole was engaged by the owners of Lot 17 he actively attempted to

ensure that they complied, or at least were in a position to comply, with the Council's Policy PD 14.

On 10 June 1997 he met with a representative from Urban Focus to ascertain –

(a) what infrastructure services had been, or would be, provided by Urban Focus for

the benefit of Lot 17; and

(b) what the Lot 17 owners' share of the cost of those services would be.

6.2.40 Mr Cole also wrote directly to Urban Focus' engineers, Wood & Grieve, on 26 June 1997

seeking details including the costs of drainage facilities, engineering consultant management fees,

sewerage, water and possible road up-grading. He also sought details of new and existing


521

electrical transformers. Two days earlier, Mr Cole had been informed that Western Power had

recently required –

" … a new electrical transformer and a transformer modification … for the development ofStage 8 of the Packham Development Area" (letter Urban Focus to Richard Pawluk &Associates dated 24 June 1997).

6.2.41 Wood & Grieve responded to Mr Cole on 11 July 1997 informing him that its

understanding of development costs applicable to Lot 17 included the following –

"3. Engineering and management fees would be applicable to any contribution to costsof works benefiting Lot 17. Fees recently adopted by Council for a developmentwest of Hamilton Road were 9% for engineering and 6% for planning andmanagement.

…4. Installation of underground power will be undertaken within Stage 8 that will benefit

Lot 17… Costs applicable to Lot 17 for these items is $12,321 plus $1,848 for feesas per 3 above, totalling $14,169.

5. A cost of approximately $18,000 … is applicable for sewer mains installed to serveLot 17 as has previously been advised to the owners. Again, fees in accordancewith 3 above apply totalling $20,700."

6.2.42 Further information in relation to item 5 was provided to Mr Cole by Wood & Grieve by

letter dated 18 July 1997. Wood & Grieve confirmed that the raw cost of the construction of sewer

mains was $18,634 which was increased to $21,429 when allowing for the fees and charges

specified in item 3. To verify the accuracy and reasonableness of these amounts, Mr Cole sent the

information to Halpern Glick Maunsell, the engineers who had been retained by the owners

of Lot 17.

6.2.43 Thus, the infrastructure cost contributions sought from the owners of Lot 17 were –

(a) construction of sewer mains $21,429

(b) electrical transformer $14,169

TOTAL $35,598

6.2.44 Mr Cole then drafted a report for the proposed rezoning amendment and sent it to

Mr Gava on 25 July 1997. This draft included the following statement for the purposes of complying

with the City's Policy PD 14 –

" … The owners of Lot 17 Hamilton Road are agreeable to a sharing of costs associatedwith the common servicing requirements, in accordance with the PDA Structure Plan,subject to all costs being reasonable and to their satisfaction …"


522

6.2.45 On instructions from Mr Gava this paragraph was deleted on the basis that the owners

wished the question of infrastructure costs to be dealt with in the subdivision application. It was well

known, at this time, that the City had no power to enforce, during the subdivision approval process,

the payment of infrastructure costs by non-participants in the Private Owners' Arrangement. This

had become particularly apparent as a result of the Council's recent attempts to finalise the

Lambasa dispute. I have no doubt that Mayor Grljusich was well aware of this and that it was he

who was responsible for the instructions to Mr Cole through Mr Gava

(ii) Submission of proposal

6.2.46 A proposal to rezone land should contain a report explaining the reasons for the rezoning

and providing details of the land and a plan of the intended use of the land. The plan used for the

rezoning in relation to Lot 17 was obtained by Mr Cole from John Giudice & Associates, the firm

undertaking the application for subdivisional approval on behalf of the owners of Lot 17. It showed

the proposed lot design and layout of Lot 17 with 18 residential lots (one of which was the existing

house lot).

6.2.47 This plan, which was also used for the application for subdivision approval for Lot 17, was

consistent with the Structure Plan. The plan set aside, as a "Reserve for Recreation and Drainage",

an area of 5,672m2 out of the total area of 21,082.6m2. This amounted to 27% of the total area. It

was the area identified in the Structure Plan as POS/drainage and is part of the Market Garden

Swamps (see Chapter 4 at 4.3(b) and 4.4).

6.2.48 The final version of the rezoning proposal was lodged with the City by letter dated

1 August 1997. This proposal became Amendment No. 181 to the City's District Zoning Scheme.

(iii) Further infrastructure cost developments

6.2.49 On 7 August 1997, Mr Cole attended a meeting with Mr Kent Hamilton of Urban Focus

and three of the City's planners - Mr Hiller, Mr Ryan and Mr Igglesden. According to Mr Hiller's file

note of the meeting, the major issue was –

" … how to deal with the equitable distribution of costs, given that the landowners are notsigned up with Urban Focus and the other landowners."

Mr Hiller noted that –

"The matter was discussed at length to ensure that it was dealt with in a proper mannergiven the fact that one of the owners is the Council Mayor."


523

6.2.50 There is a considerable body of uncontradicted evidence that the City planners, led by

Mr Hiller, sought to deal with the Lot 17 issue involving Mayor Grljusich in a professional and

impartial manner. From an early stage they clearly recognised the dangers, including the personal

discomfort and stress that they would have to endure, as a result of the Mayor's personal interest

and intervention in the matter and their attempts to deal with the matter on its merits without

favouring the Mayor. No doubt they understood that the problems would be compounded if, as was

likely, the Mayor did not get what he wanted. The efforts by the City's employees, particularly its

planners, to maintain their impartiality in the face of the enormous pressures applied by the Mayor

is a constantly recurring issue throughout the events reviewed in this Chapter.

6.2.51 Aspects of the meeting of 7 August 1997 dealing with the POS contribution issue will be

considered later. For present purposes, two of the matters recorded in the file note are significant.

First, Mr Cole informed the meeting that –

"The owners will pay what they believe is fair, for any services that they may owe to otherowners."

6.2.52 Secondly, Mr Hiller's file note contains two statements that suggest some confusion about

the City's role in respect of infrastructure costs. The first statement, probably made by Mr Hiller

himself, is that –

"The matter of infrastructure costs is a matter for the owners and the Scheme managersto resolve. It's not a matter for the Council to become involved in. Reference was madeto the Lambasa case."

The second statement, probably made by either Mr Igglesden or Mr Ryan, each of whom (as will be

seen) held a rather different view about the City's role, stated –

"The Council staff sought a letter from the [Grljusich] family advising the Council whattheir reaction was to the infrastructure costs provided by urban [sic] Focus, to attached[sic] to the re-zoning."

6.2.53 If the infrastructure costs issue was so clearly "not a matter for Council to become

involved in", it is not apparent why the "Council staff" would ask the owners of Lot 17, in relation to

this rezoning proposal, to indicate their reaction to the infrastructure cost details provided by Urban

Focus. In fact, Mr Igglesden continued over the next month (until the finalisation of the Officers'

report relating to the rezoning proposal) to attempt to obtain from Mr Cole an undertaking from the

owners of Lot 17 to pay infrastructure costs in relation to their rezoning proposal.


524

6.2.54 Mr Cole's own file note of the meeting on 7 August 1997 states –

"Council staff requested a letter from RPA [Richard Pawluk & Associates] detailing …agreement to development costs (this also requires a letter from Peremate to UrbanFocus) … ".

As a result, Mr Cole attempted to persuade his clients to give an undertaking to pay their share of

infrastructure costs. In a letter addressed to the Chairman of Peremate dated 13 August 1997,

Mr Cole stated –

"We have also commenced our investigations into matters relating to sharing ofdevelopment costs within the Packham Redevelopment Scheme. These investigationsincluded meetings with Urban Focus, Ministry for Planning and, more recently, a meetingwith representatives from the City of Cockburn and Urban Focus.

In your best interests, we advised that these costs should be quantified prior to lodgingthe application and providing Council or Urban Focus with any agreement to honourcontributions toward Scheme Redevelopment costs. We understand that Council willrequire such agreement prior to favourably considering the proposed rezoning. In view ofyour time commitments we submitted, on your instruction, the application prior toconfirming the accuracy of the contributions Council seeks from Peremate Holdings."

6.2.55 The continuing efforts of both Mr Igglesden and Mr Cole to ensure that the owners of

Lot 17 complied with the City's Policy PD 14 are also illustrated in a file note from Mr Cole dated

28 August 1997 which contains the following –

"1. Phone call from David Igglesden this morning. Needs letter of agreement fromGava et al confirming acceptance of development costs urgently. If not receivedtoday - will need to advise Council that agreement not received.

2. Chris Ducasse advised all costs not yet received for Wood & Grieve but currentlyfinalising.

3. Advised Remo Gava of 1 & 2 above."

(d) Subdivision application

6.2.56 The owners of Lot 17 instructed John Giudice & Associates, land and engineering

surveyors, to prepare a fresh application for subdivision approval. A revised plan of subdivision had

been prepared earlier by Urban Focus on behalf of the court appointed trustees of Lot 17,

Mr Featherby and Mr Ansell. The revised subdivision plan had been submitted to and supported by

the Council at its meeting on 3 September 1996 but the approval of the Planning Commission had

not been sought.


525

6.2.57 This revised plan was substantially adopted by John Giudice & Associates. It showed the

proposed lot design and layout of Lot 17 with 18 residential lots (one of which was the existing

house lot). As was the case with the existing subdivision approval for Lot 17, the plan set aside

27% of the eastern part of Lot 17, being all the Market Garden Swamp land to the east of

Garden Road, as a "Reserve for Recreation and Drainage". This is shown below in the pictorial

representation.

6.2.58 The application for subdivision approval was lodged with the Planning Commission on

6 June 1997. The Planning Commission notified the City of the application on 10 June 1997 and

requested the City's comments on the application within the standard 42 days.

(e) Officers' report

(i) Inconsistency with policy and practice

6.2.59 At a meeting on 8 August 1997 between Mayor Grljusich and Mr Hiller, Mayor Grljusich

told Mr Hiller that there was a "need to expedite the approval of the rezoning and subdivision

because of the costs [to the owners of Lot 17] associated with any delay" (file note by Mr Hiller

dated 8 August 1997). This is an important meeting which is considered in detail later in the context

of Mayor Grljusich's claims for POS compensation (at 6.3(b)). As a result of Mr Grljusich's request

to expedite the matter, Mr Hiller instructed Mr Igglesden to –

"� Put the re-zoning of Lot 17 through the September meeting of the Council.

� To also put the subdivision response through the same meeting so that there wouldbe no unnecessary delay. This is a legitimate approach. The subdivision shouldnot be finalised until the re-zoning had been gazetted.


526

� To ensure that all the recent Council decisions relating to the Packham (i.e.Lambasa) together with the Councils' Policy and Scheme provisions be thoroughlyresearched to ensure that the best objective advice may be given to the Council."

6.2.60 As a result, both the rezoning proposal and the application for subdivision approval were

scheduled to be discussed at the Community Development Committee meeting on

9 September 1997 and the Council meeting on 16 September 1997. The Officers' report for these

matters, dealt with in the same agenda item, was prepared by Mr Hiller and Mr Igglesden.

6.2.61 The report outlined the background to the zoning history of Lot 17 and the current

rezoning proposal and subdivision application. In relation to infrastructure costs and other matters it

noted –

"To date the applicant has made no written commitment to contribute to the infrastructurecosts as per Council's Policy PD14. Staff have met with the owners' planning consultantsand have provided them with copies of the Structure Plan, the Scheme provisions andPolicy so that this matter can be attended to.

Given the following resolution of Council relating to the Lambasa subdivision on25 June 1997, it appears that the Council does not want to become involved in any costsharing arrangements between owners. In part the resolution stated:-

'That Council advise all parties of its decision and that it is not prepared to befurther involved in facilitating the arrangements with respect to servicinginfrastructure issues between the landowners.'

However, in accordance with the Council's Policy PD14, the proposed subdivision [sic,Council] should not formally support the subdivision until the applicant has made acommitment to cost sharing arrangements with the other owners. It is understood thatUrban Focus have advised the applicant of the costs relating to the subdivision …

The proposal is subject to Council Policy PD14 Packham Urban Development Area. ThePolicy reads … [the terms of the policy, quoted at 6.2(b)(ii) above, were then set out].

…

The matter of cost sharing for services and the provision of public open space is a matterto be resolved between the owners, unless investigations by the council’s PlanningDepartment determine otherwise in response to the owners' written enquiry."

6.2.62 The Officers' report recommended that –

(a) the Council should initiate the rezoning proposal, without any conditions relating to

Policy PD 14 or to payment of infrastructure costs; and


527

(b) "subject to the owners complying with Council's Policy PD 14", the Council should

support the proposed subdivision, subject to 4 conditions one of which was –

"2. the owner making satisfactory arrangements for the payment of anycosts that may be due to other landowners in the Packham UrbanDevelopment Area."

6.2.63 Given the history of the Packham Area rezoning proposals over the previous 5 years, as

well as the events leading up to this particular rezoning proposal, the most striking aspect of this

Officers' report is that the reference to Policy PD 14 related only to the subdivision application, not

to the rezoning proposal.

6.2.64 In the context of the subdivision application, the reference in the report to Policy PD 14,

like the recommended condition relating to infrastructure costs, can be dismissed quickly. The

City's planning staff who had been involved in the Lambasa dispute over the payment of

infrastructure costs were well aware that the Planning Commission would not adopt the

recommended condition relating to infrastructure costs proposed by the Council. Mayor Grljusich

himself had no doubts about this. In this situation, if there was considered to be any merit in

recommending a condition that was certain to be rejected, the Officers' report should have

explained the situation and avoided what might otherwise have been seen to be misleading, if not

deceptive.

6.2.65 As pointed out earlier (at para. 6.2.33), since the City's District Zoning Scheme No. 2

came into force on 14 February 1992, no Packham Area rezoning proposal, for land that was

intended to be the subject of a residential subdivision, had been initiated by the Council unless –

(a) the owner had become a participant or had agreed to become a participant, in the

Private Owners' Arrangement; or

(b) the Council had satisfied itself that the owner had made, or would make, suitable

arrangements with Urban Focus to pay the owner's share of infrastructure costs.

6.2.66 Further, over the previous three months, the City's planners had dealt with Mr Cole on the

basis that there was a significant link between the rezoning proposal and Policy PD 14. Only a few

days earlier, Mr Igglesden had telephoned Mr Cole urgently seeking "a letter of agreement from [the

owners of Lot 17] confirming acceptance of development costs". For months, Mr Cole had been

pursuing the matter on the basis of his discussions with the City's planning staff.


528

6.2.67 In these circumstances, why didn't the Officers' report recommend that the rezoning

proposal not be initiated unless the City's Policy PD 14 had been complied with? Why, at least,

didn't the report discuss, or even refer to, Policy PD 14 in relation to the rezoning proposal? The

Council would surely have wanted to know that the Officers' recommendation, if accepted –

(a) would have been the first rezoning proposal that did not comply with PD 14 or its

predecessor; and

(b) would have removed the major mechanism available to the City to ensure that the

proponents [that is, the owners of Lot 17] made "proper and equitable contributions

to the provision of … infrastructure services".

6.2.68 That the proposal was in respect of land of which Mayor Grljusich was a joint owner

provided a further reason for the Officers' report to deal with this issue. Otherwise, an

unprecedented decision of this nature could readily be seen as favoured treatment of the City's

Mayor.

(ii) Mr Hiller's response

6.2.69 Three of the arguments put by Mr Hiller during his evidence to the Inquiry and in his

closing submissions have a bearing on this issue.

6.2.70 Firstly, he argued that Policy PD 14 applied only to subdivision applications and not to

rezoning proposals (Transcript, 1880 and Closing Submissions, 47). This is incorrect. It had

consistently and without exception been interpreted and applied by the City to both rezoning

proposals and subdivision applications (see above at 6.2(b)(iv)).

6.2.71 Secondly, he argued that, as a result of its resolution of 25 June 1997 (concerning the

Lambasa matter), the Council did not intend to concern itself any longer with the issue of equitable

contribution to infrastructure costs in the Packham Area (Closing Submissions, 48-50 and 133).

This argument was supported by Mr McLeod (Written Response, 29). This argument relies on a

strained interpretation of the resolution which, in its proper context, applied only to the matter then

before the Council (see above at 6.2(b)(iii)). In any event, the argument is clearly inconsistent with

the recommendation in the Officers' report for the Council meeting on 16 September 1997, three

months after that resolution, that a condition enforcing infrastructure cost contribution should be

imposed on any subdivision approval for Lot 17.


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6.2.72 Thirdly, Mr Hiller argued that, when the Officers' report was prepared, Policy PD 14 was

unenforceable (Transcript, 1898 and 2045 and Closing Submissions, 50, 80 and 112). The reason

for this was because the Planning Commission and the Minister for Planning had made it clear that

they were opposed to local governments becoming involved in the enforcement of infrastructure

cost sharing arrangements through the rezoning or subdivision process. This is supported by the

terms of the Planning Commission's Planning Bulletin No. 18, Developer Contributions for

Infrastructure, published in February 1997 which, in part, states –

" The Minister for Planning and the WAPC are concerned that some local governmentsare levying contributions from developers for services and infrastructure beyond thescope of the Commission's policies. There are further concerns that developercontributions are being levied as a condition or prerequisite of rezoning without any headof power or proper legislative basis for such charges.…Local governments do not have the authority under planning legislation to requiredeveloper contributions except where expressly provided for in town planning schemeswhich have been recommended by the Commission and approved by the Minister" p.1.

"The Commission is responsible for determining the policy and requirements fordeveloper contributions and the rezoning process should not be used to imposeunreasonable demands on land development outside the scope of Commissionpolicy" p.2.

"There have in the past been some inconsistencies in the application of developercontributions which have been due, in part, to local governments seeking additionalcontributions as conditions of rezoning over and above the normal requirements. TheCommission wishes to make it clear that the practice of local governments enforcingcontributions from developers beyond the Commission’s stated policies is notacceptable" p.3.

6.2.73 This argument is far from compelling. If the statements made in the Planning Bulletin

were in fact the reason why there was no reference in the Officers' report to Policy PD 14 in

connection with the Lot 17 rezoning proposal, one would have expected that –

(a) the Officers' report to the Council would have referred to the Bulletin or to the

relevant views of the Planning Commission and the Minister for Planning;

(b) over the preceding three month period during which the Bulletin was in force, the

City's planners would not have acted on the basis that the Council could and would

continue to use its power to initiate a rezoning to enforce Policy PD 14 - in

particular, its infrastructure cost contribution objectives;

(c) since February 1997 when the Planning Bulletin was published, the City's planners

would have recommended to the Council that Policy PD 14 be repealed, or at least

substantially amended, consistently with the Planning Bulletin;


530

(d) if the City's planners did not become aware of the Planning Bulletin until shortly

before their report, they would have foreshadowed in the Officers' report that Policy

PD 14 should be repealed or amended; and

(e) references in the Officers' report to the connection between PD 14 and the Lot 17

subdivision application would also have been deleted, or at least substantially

modified, to reflect the Planning Bulletin statement that "the Commission is

responsible for determining the policy and requirements for developer

contributions", confirming the Commission's previously expressed view that it would

not impose subdivision conditions in relation to infrastructure cost contributions of

the type that were relevant to Lot 17.

None of these things happened.

6.2.74 I am satisfied that the actions of the City's planners in relation to the Lot 17 rezoning

proposal, including their preparation of the Officers' report, were not based on, or taken by

reference to, Planning Bulletin No. 18. However, Mr Hiller's views on this issue, unlike those of the

City's other planning officers, were consistent with those expressed in the Planning Bulletin. He

believed that Policy PD 14 should not apply to rezoning proposals. More generally, he believed that

a local government, when considering whether to initiate a proposed rezoning, should not attempt

to enforce its infrastructure cost contribution objective. He held and expressed those views

consistently in discussions relating to the Lot 17 rezoning proposal. Clearly, the Officers' report

reflects his views rather than the views held, at least until the time that the report was drafted, by

Mr Igglesden.

6.2.75 In contrast to the events of 1994 and 1995, there is no evidence that any of the City's

planners acted as they did with the intention of benefiting Mayor Grljusich. Indeed, I am satisfied

that they were conscious of the need to act impartially and that they intended to act impartially.

6.2.76 In the circumstances, however, an informed and reasonable observer may well have

perceived that Mayor Grljusich was receiving favourable treatment. The very fact that, if the

Officers' recommendation had been accepted, this would have been the only occasion on which the

Council did not attempt to enforce its Packham Area policy at the rezoning stage, should have

alerted the City's planners to the importance of being especially sensitive to the perception of

impartiality.


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6.2.77 Local government employees who prepare reports to Council have a duty to ensure that

advice and information are provided to the elected members so that informed decisions can be

made. Under section 5.41(b) of the Local Government Act this duty is expressed to be one of the

CEO's major functions. It is one that cannot be carried out in all cases directly by the CEO. As a

result, although the CEO retains a supervisory responsibility, other local government employees -

especially senior employees - also have a duty to properly inform and advise the Council,

particularly in the preparation of Officers' reports dealing with matters for which they are primarily

responsible. A formal delegation by the CEO to this effect is unnecessary (section 5.45(2)(b)).

6.2.78 In the circumstances of this case, particularly the Council's consistent application of the

Packham Area policy over many years, and considering that it involved an application in which the

Mayor had a financial interest, the Officers' report should have dealt with Policy PD 14 in the

context of the rezoning proposal. Policy PD 14 was a planning policy. In evidence and

submissions to the Inquiry, attempts were made to play down its significance (for example,

Transcript, 1899, 2046 and 2231, Closing Submissions, 80 (Hiller), Written Response, 26-32, 46-50

and 52-53 (McLeod)). However, as the City's solicitors, McLeod & Co, pointed out in relation to an

earlier version of the same policy –

" … it had been applied regularly in the past, and several million dollars worth of land hadbeen released under the auspices of the Policy. Furthermore, planning policies carryrather more weight than mere administrative policies. The Town Planning AppealTribunal under the Chairmanship of Mr Malcolm QC (now Chief Justice) made the pointon a number of occasions that planning in WA proceeds by flexible instrument of policy.Departure from a planning policy is therefore a matter which might properly be the subjectof legal advice for the reasons:

(a) that Council should be seen to be applying its Planning Policies consistently; and

(b) because Planning Policies are generally applied as statements of planningprinciple, which often guide decision-making.

This does not alter the fact that even Planning Policies can be changed, but that shouldnot happen without careful consideration …" (draft letter to Minister for Planning of23 August 1995).

6.2.79 Unless and until Policy PD 14 was repealed or relevantly amended, it was a relevant

consideration in determining the Council's response to the Lot 17 rezoning proposal. The Officers'

report should have explained why they considered that PD 14 was not relevant to the rezoning

proposal. It should also have given the Council the opportunity to review PD 14, insofar as it had

always been applied to rezonings, having regard to Planning Bulletin No. 18 and the Council's

resolution of 17 June 1997 relating to the Lambasa infrastructure costs issue.


532

Findings

F39. I find that, in respect of the Officers' report dealing with the proposed rezoning and

subdivision of Lot 17 for the Community Development Committee meeting on

9 September 1997 –

(a) the report was deficient in that it –

(i) failed to refer to Policy PD 14 in the context of the rezoning proposal;

(ii) failed to inform the Council that the rezoning proposal for Lot 17 did not

comply with Policy PD 14 in that the owners of Lot 17 had not paid, and

had not made any arrangements to pay, their share of infrastructure costs;

(iii) failed to inform the Council that no other Packham Area rezoning proposal

had not complied with Policy PD 14; and

(iv) failed to inform the Council that it was very likely that the Planning

Commission would not adopt the recommended subdivision conditions

relating to infrastructure costs proposed by the Council; and

(b) although these deficiencies were serious, they were not, in the circumstances,

the result of improper conduct by the authors, Mr Hiller and Mr Igglesden.

(f) Intervention by Mayor Grljusich

6.2.80 On 9 September 1997, the morning of the scheduled Community Development

Committee meeting to consider the Lot 17 rezoning proposal and subdivision application, Mayor

Grljusich rang the City's Planning Department. The call was answered by Ms Anthony. Mayor

Grljusich wanted to speak to Mr Hiller, Mr Ryan or Mr Igglesden to discuss the Officers' report for

that meeting. Ms Anthony recorded in her file note, regarding that telephone call, that she

explained to Mayor Grljusich –

" … that all the above Planning Officers were in meetings and unreachable. However, asthe Mayor would be out of range for the rest of the day, I had to disturb David Igglesdenfrom his front counter query and advise him to return the Mayor's call within five minutesso that the Mayor could speak to him. David Igglesden then contacted the Mayordirectly."

6.2.81 Mr Igglesden's file note of the same day states –

"At 10.30am I returned a call to Mayor Grljusich re item CDC 20.1 9/9/97, Lot 17 HamiltonRoad. Sue Anthony advised the Mayor was demanding to speak to someone within5 minutes and that she had indicated, after asking me, that I would be available soon.(Refer to Sue's file note).


533

He raised the following points:-

1. He queried the ownership shown in the report as he considered it should be in acompany name (Petrici?). I indicated that the WAPC advice was of the fourseparate owners' names and that we presume that was what was shown on theapplication submitted to the WAPC.

2. The rezoning should have been presented to SPC. I explained it was a minorrezoning, consequently CDC was the appropriate committee.

3. Why was the rezoning and subdivision included in the same item. I advised that asthey related to the same property, it was easier to deal with the matters in onecomplete report. I explained that there were separate components to therecommendation and that this would have no effect on the applications runningparallel.

4. Policy PD14 should be deleted if Lambasa's resolution was to be given effect andCouncil would not be involved in equity matters. I advised that any changes toPolicy would have to go through SPC.

5. There was no Council decision to give Urban Focus priority. I made no comment.

6. Packham Stage 8 subdivision cannot proceed without a fresh approval for Lot 17. Idid not understand the point and made no comments.

7. The WAPC would not require any equity payments. I advised that it was a matterfor WAPC to decide."

6.2.82 Neither Ms Anthony nor Mr Igglesden gave evidence at the public hearings of the Inquiry.

For this reason, I have not taken these file notes into account in making my findings. Nevertheless,

given all the other evidence of Mayor Grljusich's direct contacts with the City's employees, it would

not be at all surprising if the events as recorded in these file notes of 9 September 1997 took place

as they are recorded (see for example at 6.3(b)(iv) below). When questioned about the file note

made by Ms Anthony, Mr Grljusich agreed with his Counsel that it was file notes of this sort "that

made [him] feel as though [he] was being set up" (Transcript, 3635). The allegation by Mr Grljusich

that he had been "set up" by the City's employees is dealt with further at 6.14).

(g) Council's decisions

6.2.83 At the Community Development Committee meeting on 9 September 1997, the item

relating to the Lot 17 rezoning proposal and subdivision application was considered, according to

the Council's minutes, for no more than 10 minutes. The recommendations in the Officers' report

were adopted without change.


534

6.2.84 When the matters came before the Council on 16 September 1997, the Committee's

recommendations were adopted without discussion.

(h) Outcome of the rezoning proposal

6.2.85 The remainder of this Chapter deals with the subdivision approval for Lot 17. Very little

attention was given to the Lot 17 rezoning proposal - which was the subject of Amendment No. 181.

Its progress through the Council and its outcome can be dealt with briefly.

6.2.86 On 16 December 1997 the Planning Commission notified the City that it had consented to

the advertising of Amendment No. 181. Notice of this was published in the Government Gazette on

9 January 1998. The advertising period ended on 20 February 1998. Various submissions were

received on the amendment including one from Urban Focus dated 20 February 1998. The others

were of no particular relevance.

6.2.87 The Urban Focus submission argued that the City's support for Amendment No. 181

should be –

"… subject to the applicant agreeing to meet the listed appointed costs of works, carriedout by the Packham Landowner, which have benefited the development of Lot 17.

a) Electrical Transformer ..................................................................................... $14 169b) Existing Sewer Main in Lot 17......................................................................... $21 429c) Contribution to the existing nutrient stripping drainage basins

should drainage from Lot 17 be directed into either/both basins …

The above costs have been agreed between Wood & Grieve Consulting Engineers andthe Applicant's engineer, Mr Chris Ducasse from Halpern Glick Maunsell, and were thesubject of our letter dated 29 July 1997 (copy attached).

…

We understand that the matter of 'over-supply' of public open space from Lot 17 is thesubject of discussion between the Applicant, the Western Australian PlanningCommission and the City of Belmont [sic]. We advise that Urban Focus has no objectionto Lot 17 being included with the other Packham Development Area Landowners in theequitable arrangement agreed by the Packham Landowners, whereby owners providingmore public open space and wetlands than normally required are compensated by theother Landowners.

Should the Applicant wish to be included in that arrangement, he will be treated in thesame manner as the other Landowners and required to wait for payment of thecompensation until Landowners in previously completed stages have been paid …


535

The above offer is made on the condition that the cost contributions listed above are paidat the time of subdivision of Lot 17."

6.2.88 The significance of this submission is that –

(a) it provided a reminder to the City's planners that the owners of Lot 17 should not be

permitted - let alone assisted - by the City to avoid paying their share of

infrastructure costs;

(b) there were only two items of infrastructure costs, and these had been agreed to be

fair and reasonable;

(c) it was open, in February 1998, for Mayor Grljusich and the other owners of Lot 17

to participate in the Private Owners' Arrangement; and

(d) if Mayor Grljusich and the other owners of Lot 17 were to participate in the Private

Owners' Arrangement, they would be treated the same way as other landowners

and, therefore -

(i) required to pay their share of infrastructure costs; and

(ii) wait their turn for payment of POS compensation.

6.2.89 Amendment No. 181 came before the Community Development Committee for final

consideration at the Committee's meeting of 10 March 1998. In a short Officers' report Mr Ryan

noted that 4 submissions had been received. The submissions were not discussed but were

contained in the agenda attachments. The report stated –

"The residential subdivision has been granted conditional approval by the WesternAustralian Planning Commission.

The rezoning is in accordance with the Packham Structure Plan and is required to allowappropriate residential zoning scheme controls to apply [to] the proposed residential lotscreated via the subdivision."

6.2.90 Reference was made in the Officers' report to Policy PD 14. However, as was the case

with the Officers' report for the September Committee and Council meetings, elected members

were not informed that there had been a failure to comply with this policy in that no arrangement

had been reached for the equitable contribution to infrastructure costs.

6.2.91 The agenda attachment for the item contained a table setting out a summary of the 4

submissions received. It also contained a column entitled "Council’s Recommendation". In relation

to the Urban Focus submission this table noted that Council’s Recommendation be that the


536

submission be "[d]ismissed" on the ground that –

"1. The matters referred to are not directly relevant to the rezoning of the land.Contributions to power and sewer infrastructure are commercial matters outside thecontrol of the local authority. A pro rata contribution to the cost of nutrient strippingbasins is required via the subdivision process.

2. Lot 17 is not a participant in the Owners Scheme arrangement. The provision ofpublic open space and wetlands is a subdivision issue currently being reconsideredby the Western Australian Planning Commission."

6.2.92 Mayor Grljusich and Cr Wheatley declared a personal interest in the item on the basis, as

recorded in the minutes, that "Mayor Grljusich is part owner of the Lot concerned - Councilor [sic]

Wheatley legally represents Mayor Grljusich in this dealing". They left the room with Cr Gianoli

prior to the item being discussed. The minutes record that, within two minutes, the Committee

resolved to adopt the recommendation in the Officers' report.

6.2.93 The Committee's recommendation was adopted by the Council at its meeting on

17 March 1998. The minutes record that Mayor Grljusich declared a financial interest in the item on

the basis "that it directly deals with property that he has an interest in". Cr Wheatley declared a

financial interest in the item "arising from his employment, and declared it as a matter of protection

to himself and the Council". Mayor Grljusich, Cr Wheatley and Cr Gianoli left the meeting prior to

the item being discussed. The matter was dealt with by Council in one minute.

6.2.94 By letter dated 23 March 1998, the City informed the Planning Commission of its decision

and submitted Amendment No. 181 for final approval by the Minister for Planning. Along with

copies of the amending documents and Council’s recommendation, the City provided the Planning

Commission with a copy of the table included in the agenda attachment which analysed the

submissions received and Council’s recommendations in respect of those submissions.

6.2.95 The rezoning of Lot 17 to "Residential" was finalised when the relevant notice relating to

Amendment No. 181 was published in the Government Gazette on 26 June 1998.


537

6.3 Early questioning by Mayor Grljusich

(a) Introduction

6.3.1 The application for subdivision approval for Lot 17 was sent to the Planning Commission

on 6 June 1997. Conditional approval was granted on 23 September 1997. Condition 13, which

was at the centre of the controversy, required that the owners of Lot 17 give up 27% of the property

"free of cost and without payment of compensation by the Crown".

6.3.2 This should not have been a surprise to the owners of Lot 17 and was certainly not a

surprise to Mayor Grljusich. The existing subdivision approval for Lot 17, which had been granted

by the Planning Commission on 3 January 1996 to George and Tom Grljusich when they were the

owners of Lot 17, contained a substantially identical condition. Furthermore, Condition 13 was

consistent with the application that had been lodged by the owners of Lot 17 themselves. (In this

respect the application was identical to the application lodged by the previous owners of Lot 17.) It

was no accident that the application for subdivision approval lodged by the new owners of Lot 17

sought approval on the basis, consistently with the Structure Plan, that the 27% portion of their

land, to the east of Garden Road, would be given up as "POS". For the reasons that follow,

approval would not have been given on any other basis.

6.3.3 The application for subdivision approval for Lot 17 showed the eastern part of Lot 17,

comprising 27% of the total area, as a "Reserve for Recreation and Drainage". This area has been

described rather euphemistically as "low lying". It was, in fact, under water for much of the year and

was part of the Market Garden Swamp.

6.3.4 It is doubtful whether, on commercial grounds alone, that that part of Lot 17 could have

been developed for residential subdivision. That was a purely theoretical question, however,

because for legal reasons it could not be developed. As explained in Chapter 4 (at 4.3 and 4.4),

this part of Lot 17 was identified on the Packham Area Structure Plan as land that was required to

be given up for POS purposes. The owners of Lot 17 had known of this since at least 1989.

6.3.5 Other landowners in the Packham Area whose properties included areas within the

Market Garden Swamp were also required to give up those areas (as POS, wetlands or drainage).

One landowner was required to give more than 76%. Three others were required to give up more


538

than 50% (see Chapter 4 at 4.10). These landowners, like the owners of Lot 17, had no legal right

to compensation. They could, however, choose to participate in the Private Owners' Arrangement.

By doing so, they would be legally required to contribute towards infrastructure costs and they

would be legally entitled to compensation for excess POS contributions above (about) 16%. If they

did not participate in the Private Owners' Arrangement, they may be able to avoid paying their

share of infrastructure costs, but they had no entitlement to POS compensation either.

6.3.6 When George and Tom Grljusich were the owners of Lot 17 (as trustees for their father's

estate) they signed an Urban Focus Owner's Deed and, therefore, became participants in the

Private Owners' Arrangement (see Chapter 5 at 5.1(c) and 5.2(a)). After George and Tom Grljusich

were removed as trustees, Mayor Grljusich with his sisters and sister-in-law successfully withdrew

Lot 17 from the Private Owners' Arrangement.

6.3.7 Of all the Packham Area landowners who were required to give up more than 16% of their

land for POS, only the new owners of Lot 17 declined to participate in the Private Owners'

Arrangement. Significantly, as will be seen, this was not a "once off" decision. The owners of

Lot 17 were invited on numerous occasions, before and after conditional approval was granted, to

participate in the Private Owners' Arrangement on the basis that they would be paid POS

compensation if they contributed to their agreed share of infrastructure costs. They rejected all

these invitations. Instead, they decided to attempt to have the City pay them POS compensation.

The remainder of this Chapter reviews these attempts and the City's responses to them.

(b) Meeting between Mayor Grljusich and Mr Hiller on8 August 1997

(i) Related meeting on 7 August 1997

6.3.8 At the meeting held on 7 August 1997, referred to earlier, Mr Kent Hamilton from Urban

Focus, Mr Cole from Richard Pawluk & Associates and three of the City's planning officers -

Mr Hiller, Mr Ryan and Mr Igglesden - discussed the expectations by the owners of Lot 17 that they

should "receive payment for the excess of P.O.S provided (above 10%) for the P.O.S being excised

for the lot". It is not clear whether the owners' view was communicated to the meeting by

Mr Hamilton, Mr Cole or by one of the planners. It is more likely to have come from Mr Cole. Both

Mr Cole and Mr Hiller prepared file notes of the meeting. Three points, as recorded in Mr Hiller's file


539

note of the meeting and which are substantially confirmed in Mr Cole's file note, are particularly

important. These were –

(a) the average provision for POS and drainage in the Packham Area "was 17% not

10%";

(b) the POS area depicted on the plan submitted with the application for subdivision of

Lot 17 "was acceptable and accorded with the Structure Plan for the Packham

Area"; and

(c) "as the owners [of Lot 17] were not part of the owners schemes there did not

appear to be a way of them being recompensed for the over provision of POS".

6.3.9 These propositions, which were fundamental to the question of possible compensation for

the owners of Lot 17, appeared to be clearly understood and accepted not only by the City's

planners but also by Urban Focus and Mr Cole who represented the owners of Lot 17.

6.3.10 Mr Cole's file notes of the meeting also refers to two suggestions for possible payment of

POS compensation for the owners of Lot 17. One, from Mr Cole himself, was that compensation

might be funded from the City's section 20C account. The other, from Mr Hamilton, was that

compensation might be funded from the Lambasa's cash-in-lieu payment. Both suggestions were

rejected.

6.3.11 On the following day, 8 August 1997, Mayor Grljusich telephoned Mr Hiller's office.

Mr Hiller was at a meeting. Mayor Grljusich asked the person who answered the phone to ask

Mr Hiller to see him in his parlour. What followed is the subject of widely varying accounts given by

Mayor Grljusich and Mr Hiller. Before returning to the details of their conversation, it is necessary to

deal with three preliminary issues. These are –

(a) Mr Hiller's dual file notes;

(b) conflict of evidence between Mayor Grljusich and Mr Hiller; and

(c) Mayor Grljusich's direct contacts with the City's employees.

(ii) Mr Hiller's dual file notes

6.3.12 Mr Hiller prepared two separate file notes of the meeting of 8 August 1997. He also

prepared two separate file notes of three other meetings with Mayor Grljusich - on

23 December 1997, 7 January 1998 and 28 January 1998. In each case, one file note was longer

and considered by Mr Hiller to be more "emotive" than the other. In each case, the shorter versions


540

were placed on the relevant City file. The longer versions were left together in a file sleeve in a

drawer in Mr Hiller's office. When asked to explain his reason for keeping separate file notes

relating to the same meetings, Mr Hiller stated –

"I was … concerned about the level of access the mayor may have to council files and Ifelt that if he believed that I was taking comprehensive notes of things every time we met,that it may inflame a situation which I felt didn't need to be aggravated so I thought what Iwould do is keep a copy of the factual matters on the file, to keep it in chronological orderand just keep the more emotive things to one side so if I had to recall in more detail aboutthe meeting, I was able to do that. It's the way I saw it" (Transcript, 2069).

6.3.13 Mr Ryan gave evidence that he thought that Mr Hiller may have wanted "a fuller record of

conversations should the need arise in the future" and suggested that Mr Hiller may have "thought it

may be subject to Ombudsman or certainly some external review at some point" (Transcript, 2303).

6.3.14 I am satisfied that the prospect of an external review was a significant motivating factor in

Mr Hiller's decision to keep a more detailed record of his discussions with Mayor Grljusich than he

would otherwise have kept on the City's files.

6.3.15 On behalf of Mr Grljusich, Mr Hammond cross-examined Mr Hiller extensively about the

two sets of file notes. Mr Hiller agreed under cross-examination that the process of keeping a dual

set of file notes was "unorthodox" and that his expressed concern about Mayor Grljusich having

access to the files was "unfounded" in the sense that Mr Hiller was not aware of any occasion when

Mayor Grljusich in fact had access to the City's files or, in particular, to Mr Hiller's file notes

(Transcript, 2119). In his closing submissions, Mr Hammond was critical of the "unorthodox"

practice and argued that the material on the file notes was unreliable.

6.3.16 It is certainly the case that the practice adopted by Mr Hiller on the 4 occasions in

question was most unusual. It is a practice that could rarely be condoned. The circumstances in

which Mr Hiller found himself, however, were themselves highly unusual and, hopefully, will not be

repeated. I think that, given Mayor Grljusich's personal involvement in the Lot 17 matters,

Mr Hiller's concerns about Mayor Grljusich's possible access to the files were reasonably held. His

response was well intentioned and motivated by a desire not to inflame an already tense situation

created as a result of Mayor Grljusich's failure to recognise the clear conflict of interest between his

role as a Mayor and as a private individual seeking to establish a claim for compensation against

the City.


541

6.3.17 Whatever might be said in general about the practice of making and keeping dual file

notes, I am satisfied in this case that the practice –

(a) has not adversely affected the reliability of the file notes or the weight that would

otherwise have been attached to them; and

(b) has not given rise to any prejudice or unfairness in respect of which Mayor

Grljusich, or anyone else to whom they relate, might properly object.

(iii) Conflict of evidence between Mayor Grljusich and Mr Hiller

6.3.18 In respect of the two file notes prepared by Mr Hiller dealing with his meeting with Mayor

Grljusich on 8 August 1997, Mr Hiller testified that –

(a) he dictated onto a tape his recollections of the meeting soon after the meeting;

(b) after his secretary had typed a document from that tape, he then prepared the two

file notes; and

(c) both file notes were accurate statements of his recollections of the meeting but the

shorter file note was not as full in its details (Transcript, 1886-1887).

Both file notes indicate that a significant part of the meeting was concerned with the issue of POS

compensation for the owners of Lot 17.

6.3.19 Counsel for Mr Grljusich cross-examined Mr Hiller exhaustively about this meeting

(Transcript, 2068-2075 and 2078-2087). Mr Hiller's evidence about the meeting did not change, nor

did anything arise which suggested that his evidence was unreliable. It is significant that although

Mr Grljusich had given his Counsel instructions about this meeting, it was not put to Mr Hiller that

the POS issue was not discussed at the meeting. Nor, in his cross-examination of Mr Hiller, did

Mr Grljusich challenge Mr Hiller's evidence about the accuracy of his file note of the meeting of the

previous day which also dealt extensively with the POS issue.

6.3.20 Mr Grljusich's evidence was to the effect that –

(a) he had an actual recollection of the meeting with Mr Hiller on 8 August 1997;

(b) Mr Hiller's file note and recollection of discussing the POS issue with him were

wrong;

(c) he had no doubt that the POS issue was not discussed at that meeting;

(d) Mr Hiller's file notes of that meeting were fabricated by him; and

(e) Mr Hiller's evidence, on oath, to the Inquiry on this issue was also fabricated



542

6.3.21 The only explanation offered by Mr Grljusich as to why Mr Hiller would fabricate his notes

and his evidence was that "it was obvious that [he, Mr Grljusich] was being set up [b]y officers of

the council" including Mr Hiller and Mr Brown (Transcript, 3407, 3652-3653). (Mr Grljusich's claims

of a "set up" against him are dealt with later in this Chapter at 6.14.)

6.3.22 As I have indicated elsewhere in this Report, I found Mr Grljusich to be an unreliable and,

at times, untruthful witness. I am satisfied that, in respect of a number of events that were the

subject of testimony by him, Mr Grljusich lied to protect or enhance what he perceived to be his own

interests.

6.3.23 In contrast, I found Mr Hiller to be a truthful, reliable witness. His demeanour and

evidence before the Inquiry, together with a large amount of documentary material recording his

actions and decisions, clearly show Mr Hiller to be a man of integrity whose skills, professionalism

and work practices are of a high order. I have no difficulty accepting that Mr Hiller's evidence was

accurate and truthful and that his file notes constitute an accurate record of the events to which they

refer. Where there is any inconsistency between the evidence of Mr Grljusich and that of Mr Hiller, I

prefer and accept the evidence of Mr Hiller.

Findings

F40. I find that, in respect of the meeting between Mr Hiller and Mayor Grljusich on

8 August 1997 –

(a) the version of events given by Mr Hiller is to be preferred to the version given by


(b) Mr Grljusich's evidence that Mr Hiller fabricated his file notes and lied on oath, as

part of an attempt to "set him up", are baseless and demonstrate the

extraordinary measures that Mr Grljusich will take to advance what he perceives

to be his own interests.

(iv) Mayor Grljusich's direct contact with City employees

6.3.24 Mr Hiller's longer file note of his meeting with Mayor Grljusich on 8 August 1997 recorded

that –

"At about 12.15pm on Friday 8 August 1997 the Mayor, Councillor John Grljusich calledme out of a meeting to his parlour to discuss in a private capacity the issue of the familyLot and spelt out in clear terms what the family expected in terms of the relationship toUrban Focus, the sharing of costs and compensation for the over provision of P.O.S."


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6.3.25 Two issues arise from this paragraph. The first relates to Mr Hiller being called out of a

meeting to respond to Mayor Grljusich's concerns about a private matter. The second, more

significant, issue relates to the direct contact between Mayor Grljusich and the City's employees,

particularly its planners, in respect of Mayor Grljusich's private dealings.

6.3.26 As to the first, it was by no means uncommon over the period reviewed in this Chapter for

Mayor Grljusich to demand and receive immediate attention from the City's employees in priority to

work being done for other City residents. During the public hearings, Mr Grljusich sought to give

the impression that he did not demand or receive immediate attention. In respect of this meeting on

8 August 1997, there was a shift in his evidence when he appeared to realise the implications of

conceding that Mr Hiller had responded almost immediately to his request to see him –

"MR GRLJUSICH: Actually I phoned Mr Hiller. He wasn't in his office and I asked theperson who received the phone call if Mr Hiller could come and see me.

… well, he wasn't there. He was at some meeting.

COUNSEL ASSISTING: You were told he was in a meeting?---MR GRLJUSICH: I wastold he was at a meeting and I says, 'Well, could you get Mr Hiller to come and see me inmy office, because I'll be here, before he leaves?' Now, the next thing I know isMr Hiller's come to my office so I thought, 'Well, he must've finished his meeting,' orwhatever and - - -

COUNSEL ASSISTING: Did he come quickly after your telephonecall?---MR GRLJUSICH: I don't know. There might've been some time lapse. I don'tknow. Could've been half an hour afterwards; it could've been 15 minutes afterwards; itcould've been an hour after. I'm not sure" (Transcript, 3404, emphasis added).

6.3.27 It is apparent from Mr Hiller's evidence that he recognised the strong connection between

his prompt responses and Mayor Grljusich's position. His evidence implicitly acknowledges and

helps to explain the preferential treatment that the Mayor received in his dealings with the City's

employees. In relation to this meeting, Mr Hiller responded to a question from Mr Hammond –

"MR HAMMOND: Do you recall what meeting you were in when you were called out ameeting?---MR HILLER: No, I don't and that's why I'm saying I have difficulty recallingwhether the meeting was in my own room or whether it was in another room within thatparticular part of the building; but as I said, most of the phone calls I had with MayorGrljusich were directly to my line and if I'd been in my own room, I would've taken the calland proceeded to his office accordingly. If I'd been out of my room, probably mysecretary would've taken the call and come and got me from the room, saying that MayorGrljusich wanted to see me, and on that basis, given his position within the council, Iwould've excused myself from the meeting and proceeded to his office accordingly.It's unlikely I would've known what the topic was about" (Transcript, 2080, emphasisadded).


544

6.3.28 As to the second issue, up until this point the owners of Lot 17 had been progressing their

rezoning proposal and subdivision application through their agents - Mr Cole of Richard Pawluk &

Associates and John Giudice & Associates respectively. This is the appropriate course of action

where an elected member has a financial interest as a developer that is subject to local government

approval. Mayor Grljusich knew that it was the appropriate course of action. He had been involved,

over a considerable period, with the Council's consideration and determination of matters relating to

the development of Lot 1 Berrigan Drive. That property was being developed by Cr Battalis, who

became Deputy Mayor in 1997. In all his dealings with the City's employees and elected members

that involved Lot 1, Cr Battalis acted through an agent. Cr Battalis counselled Mayor Grljusich to

adopt a similar approach. So did Mr Hiller. Mayor Grljusich ignored them both.

6.3.29 From 8 August 1997, Mayor Grljusich dealt directly with the City's employees (and its

elected members) in respect of Lot 17 issues. For any person holding the position of Mayor this

would have been highly inappropriate. In Mayor Grljusich's case, there were factors that

compounded its inappropriateness. Physically, he is an imposing figure. He also has a forceful and

domineering personality. In a number of his contacts with the City employees in respect of Lot 17

issues, he was aggressive and intimidating. Even when giving evidence during the public hearings

of this Inquiry, especially in respect of the cleaning contracts issue, Mr Grljusich frequently

interrupted, and talked over, both Counsel Assisting and myself.

6.3.30 Towards the end of his evidence before the Inquiry after all other witnesses had given

their evidence, Mr Grljusich testified that, on every occasion when he had made contact, by

telephone or in a face to face conversation with an employee of the City in relation to Lot 17, he –

(a) began by indicating that he was approaching them in his private capacity, not as

Mayor;

(b) sought their approval to do so; and

(c) did not continue unless he obtained their approval (Transcript, 3437-3439).

6.3.31 The overwhelming weight of the evidence is that there were many occasions when Mayor

Grljusich did not take even the first step. For example, Mr Hiller specifically denied that he knew in

what capacity Mayor Grljusich acted during discussions with him on 21 August, 8 October,

22 December 1997 and 22 May 1998 (Transcript, 1892,1904, 1916 and 1962). Apart from his own,

last-minute testimony, there is no evidence that he ever took the second and third steps. These

steps were never put by his Counsel to any of the City's employees with whom he had contact in


545

respect of any of the matters concerning Lot 17. I am satisfied that his evidence on this issue was

fabricated.

6.3.32 Even on those occasions where Mayor Grljusich did indicate to the City's employees that

he was approaching them in his private capacity, it would have been impossible for them to see his

requests, often demands, as coming from anyone other than the Mayor of the City. It is

inconceivable, for example, that a request from a member of the public to see Mr Hiller at 12.15pm

on 8 August 1997 while he was in a meeting would have elicited the same response accorded to

Mayor Grljusich who called Mr Hiller out of his meeting. Similarly, Mayor Grljusich was able to

demand, without any prior notice, Mr Hiller's immediate attendance at a meeting convened - at

8.45pm - for the purpose of getting answers from Mr Hiller about his POS compensation claim

against the City (see below at 6.4(f)(i)).

6.3.33 The difficulties faced by the City's employees are illustrated in the following exchange,

during the course of the public hearings, between Counsel Assisting and Mr Ryan –

"COUNSEL ASSISTING: Was it easy to put aside that he was the mayor and just dealwith him as a director of Peremate?---MR RYAN: You mean in the prior period [prior toJanuary 1999]? …

COUNSEL ASSISTING: Yes?---MR RYAN: I don't believe it was.

COUNSEL ASSISTING: You didn't find it easy to?---MR RYAN: No, I think by virtue ofhaving two different personas it's - for an officer it's just a difficult thing to dismiss theperson as one entity and deal with him on a different level because, you know, by virtue ofhaving the position of the mayor he's entitled to a certain amount of deference orwhatever what [sic] an officer so those sort of issues can become confused"(Transcript, 2269).

6.3.34 Significantly, members of the public do not have the use of the Mayor's parlour to conduct

their private affairs. Mayor Grljusich's use of the mayoral parlour to tell the City's employees what

he expected of them was likely to have a substantially greater impact on how they responded than

commencing the meeting by mouthing the formality that he was conducting the meeting in his

private capacity.

6.3.35 Mayor Grljusich knew that his position as Mayor was influential in determining the

responses of the City's employees to his requests. He abused his position to his personal

advantage and for his personal benefit.


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6.3.36 It is of serious concern that Mr Grljusich claims that he was unaware that there was

anything inappropriate or improper about what he was doing. Of even greater concern is his

testimony that, even with the benefit of hindsight, he considered that he had done nothing wrong -

and would do the same thing again. This is evident from his responses to Counsel Assisting in the

following extract from the Transcript (at 3444-3445) –

"COUNSEL ASSISTING: And it took up a lot of council's time and it became acontroversial issue. Did it at no stage occur to you that you should distance yourself morethan simply saying, 'I'm not the mayor. I'm a director of Peremate'? Did it ever occur toyou?---MR GRLJUSICH: No, I think that I felt what I did in that regard was okay and Ididn't see any reason why I should do anything other.

COUNSEL ASSISTING: When you look back on it now, is that still yourposition?---MR GRLJUSICH: If I had to do it all over again?

COUNSEL ASSISTING: Yes?---MR GRLJUSICH: And I found myself in the samesituation?

COUNSEL ASSISTING: Yes?---MR GRLJUSICH: I think I would've … I would've donethe same thing I think because of the circumstances … I didn't see anything wrong withwhat I was doing. No-one indicated to me that it was wrong and I didn't see anythingwrong with that.

COUNSEL ASSISTING: No, and now that you look back on it, you don't see any problemwith it either?---MR GRLJUSICH: When I look back at it from here? … Yes, well, youknow, all I can say is that I didn't see anything wrong with the matter and if I was to look atit again, I don't thing that anybody would say, 'Well, you're not entitled to ask questions,'or whatever. You know, I felt - I don't think that I should be disadvantaged; I don't think Ishould be advantaged.

COUNSEL ASSISTING: No?---MR GRLJUSICH: I think that I don't see anything wrongwith asking questions. As a matter of fact, we were invited to do so.

COUNSEL ASSISTING: Yes, but you understand - - -?---MR GRLJUSICH: We wereinvited to do so. - - - the point I'm putting to you?---Yes. I understand the point.

COUNSEL ASSISTING: Which is that there were different ways you could have goneabout this where you didn't have any direct dealing with councilofficers?---MR GRLJUSICH: Well, if I think that I'd done something wrong, then Iwould've not done that, but in my mind I hadn't done anything wrong and I didn't seeanything wrong with that.

COUNSEL ASSISTING: And when you look on it now and you can't see that you havedone anything wrong - - -?---MR GRLJUSICH: No, and I would go - do the same thing.

COUNSEL ASSISTING: Yes, if the similar situation arose?---MR GRLJUSICH: Yes."


547

6.3.37 The findings that follow are based on the direct dealings with City employees by Mayor

Grljusich discussed throughout this Chapter. A list of all documented contacts between Mayor

Grljusich and the City employees in respect of the Lot 17 compensation issue is located at

Annexure 14. The list also includes contacts between other elected members and City employees

and contacts between Peremate and the City in respect of the same issue.

Findings

F41. I find that, in relation to Mayor Grljusich's direct contacts with City employees in respect

of matters in which he had direct personal and financial interest –

(a) the contacts occurred frequently over the period from August 1997 to the

suspension of the Council in April 1999;

(b) Mayor Grljusich was often forceful and demanding;

(c) in respect of many of the contacts the City's employees were required to meet

Mayor Grljusich in the mayoral parlour;

(d) Mayor Grljusich demanded and received priority because of his position as

Mayor;

(e) Mayor Grljusich received from the City documents and information in relation to

the matters in which he had a financial interest that he would not otherwise have

received or have been entitled to receive;

(f) Mr Grljusich's evidence on oath that on every occasion when he made contact,

by telephone or in a face to face conversation with an employee of the City in

relation to Lot 17, he –

(i) began by indicating that he was approaching them in his private capacity,

not as Mayor;

(ii) sought their approval to do so; and

(iii) did not continue unless he obtained their approval,

was fabricated;

(g) the overwhelming weight of the evidence is that there were many instances in

which Mayor Grljusich did not indicate to City employees that he was

approaching them in his private capacity;

(h) there is no evidence, apart from Mayor Grljusich's own claim, that he ever

sought the approval, and did not continue unless he obtained the approval, of

City employees before dealing with them in relation to a matter in which he had a

personal or financial interest;


548

(i) Mayor Grljusich used his position as an elected member and Mayor of the City

for his personal benefit - in particular, his attempts to obtain from the City POS

compensation for himself and members of his family; and

(j) in all the circumstances, including the nature, extent and frequency of the

contacts, Mayor Grljusich's behaviour constitutes improper conduct.

(v) Details of meeting on 8 August 1997

6.3.38 At the time of his meeting with Mr Hiller on 8 August 1997, Mayor Grljusich was

concerned to ensure that he and his fellow owners of Lot 17 received compensation for the 27% of

land that he knew would be required to be given up for POS under a condition of subdivision

approval. He knew that he could not get compensation from the Planning Commission or from any

other State agency. The City was the only possibility.

6.3.39 Mayor Grljusich also knew that it would be necessary to establish a basis for the City to

pay compensation. He appeared to have no idea, at this stage, of how the City could justify paying

him compensation. His approach was to tell the Director of Planning and Development that the City

itself should find, or put in place, a basis for payment. On this point, Mr Hiller's file note of the

meeting of 8 August 1997 states –

"The Mayor felt that his families [sic] interests were protected under the Council's Schemeand that I should read the Scheme carefully.

If the Scheme did not provide for the equitable treatment of the family under the Scheme,then something will need to be done about it.

The Mayor felt it was a Council responsibility to ensure that the P.O.S was adequatelycompensated, and if the Council didn't do the right thing he would take the matter further.He didn't want another case like the Lambassas [sic] to be dealt with by the Council if itcould be avoided."

6.3.40 The threat to "take the matter further" was not the last threat against the City by its Mayor

in respect of Lot 17.

6.3.41 In response, Mr Hiller told Mayor Grljusich –

"� That as the Mayor it was necessary that the Lot 17 application was handled in thesame way as any other application.

� The staff would not go out of their way to upset the Mayor and also did not wantany difficulties.

� All decisions relating to this matter would need to go through the Council."


549

6.3.42 Mr Hiller was clearly concerned about the "potential difficulties" with this matter,

particularly now that Mayor Grljusich had decided that he would deal directly with the City's

employees. On the next working day he discussed the matter with the CEO "so that he was aware

of the situation, and the potential difficulties that could arise".

(c) Subsequent meetings and correspondence

6.3.43 On 21 August 1997 Mr Hiller was contacted again by Mayor Grljusich and asked to go to

his parlour to discuss Lot 17. As recorded in Mr Hiller's file note of the meeting, and confirmed in

his evidence before the Inquiry –

"The main concern of the Mayor was the family being compensated for the additionalpublic open space included in the plan of subdivision" (Transcript, 1892).

6.3.44 According to Mr Hiller's evidence, which was not questioned, Mayor Grljusich did not

indicate to Mr Hiller that he was speaking to him in his private capacity. Mr Hiller simply

"presumed" that this was the case (Transcript, 1892).

6.3.45 Not surprisingly, Mr Hiller did not feel comfortable dealing with the Mayor directly on a

matter in which the Mayor had a clear personal and financial interest. Nor did he feel that it was

appropriate that he and his staff should have to deal directly with the Mayor on this matter. He

suggested that the Mayor "should use his consultants to deal with the matter". As he explained to

the Inquiry –

"I felt it was important given the circumstances that the mayor use his consultants to dealwith the staff rather than dealing with the staff directly. It was a difficult situation for us todeal with the mayor in that way and obviously consultants could represent the view ofPeremate, which was the development company for the subdivision" (Transcript, 1893).

6.3.46 Mayor Grljusich was later to receive the same advice from Cr Battalis (Transcript, 3322-

3323). He ignored the advice and continued to act personally in the matter. At the public hearings

Mr Grljusich did not deny that Mr Hiller and Cr Battalis had advised him to act through

representatives, but said that he could not remember the conversations. In any event, his view -

which he retains - was that there was nothing wrong with him having direct contact with the City's

employees and that, if given the opportunity, he would do the same thing again



550

6.3.47 In relation to Mayor Grljusich's concern that the family be compensated for the POS which

they would be giving up under the anticipated subdivision approval, Mr Hiller repeated his earlier

advice to the Mayor that there was no scope for the Council to recompense an owner for giving up

land in this situation. Further, Mr Hiller advised that the family should discuss with Urban Focus the

question of compensation. This advice was entirely consistent with the basis on which every other

Packham Area landowner had been treated over the preceding 8 years.

6.3.48 Not content with this, Mayor Grljusich suggested a "change [to] the Scheme to enable the

Council to deal with such matters so that all landowners would be dealt with equitably". What he

meant, of course, was that the Zoning Scheme should be changed to enable the owners of Lot 17

to be compensated for their POS contribution while at the same time avoiding any legal liability to

pay their share of infrastructure costs. Mr Hiller's advice to Mayor Grljusich was that a change to

the Scheme "could take many months".

6.3.49 On the following day, the City received its first letter from Peremate. Peremate

represented itself as the owner of Lot 17. In fact it was not. It did not become the owner of Lot 17

until 27 July 1998 - when most of the events relating to the initial version of the claim for POS

compensation had been completed. In the meantime, the owners of Lot 17 were Mayor Grljusich,

Mrs Frances Gava, Mrs Ann Lloyd and Mrs Sheila Grljusich.

6.3.50 The letter from Peremate dealt with the POS compensation issue. This was the start of

what became a very consistent pattern. Mayor Grljusich would have a conversation with a City

employee or obtain documents from the City and within a short time, often no more than a day or

two, the City would receive a letter from Peremate based on or referring to the information obtained

by Mayor Grljusich. This underscores the fallacy of the submission (referred to earlier at

para. 6.1.11) that personal responsibility for these letters from Peremate to the City should not be

attributed to Mayor Grljusich. It also highlights, in those cases where Peremate's interests clearly

conflicted with those of the City - such as where Peremate threatened action against the City - that

Mayor Grljusich used his position as Mayor to obtain information which was then used to further his

own personal interests to the detriment of the City. This issue, which raises the question of the

application of section 83 of the Criminal Code (dealing with corruption by a public officer) and

section 5.93 of the Local Government Act (improper use of information), is considered later (at

paras. 6.4.76 - 6.4.77 and para. 6.13.18).


551

6.3.51 The undated letter from Peremate that was received by the City on 22 August 1997

states –

" … we understand from discussions that have taken place between our planningrepresentative and your Mr. Hiller, Mr. Ryan and Mr. Igglesden together with Mr. Ken [sic]Hamilton of Urban Focus that we would not be eligible for compensation from public openspace funds that have been contributed by landowners in the Packham DevelopmentArea for excess of public open space and drainage over and above the statutory 10%which is likely to be imposed by the State Planning Commission.

In view of the this could you please clarify the following points:

A. are we or are we not entitled to the above funds and if not why not?

B. Are we entitled to compensation for our excess public open space & and [sic]drainage from any other funds held by council?…E.G. Funds contributed for public openspace by developments such as Mr. Lambassa [sic] and others?

C. … In the event that we may be ineligible for compensation for whatever reason wesuggest that there may need to be an appropriate alteration to the Packham StructurePlan to incorporate a fairer degree of payment of public open space contributors…..giventhat we are providing public open space in excess for the benefit of those Landownerswithin the Packham Development area.

We would appreciate your reply as soon as possible to the points outlined above or ifappropriate take the necessary steps to amend the Packham Structure Plan accordingly."

The letter was signed by Frances Gava "[f]or and on behalf of all Directors of Peremate Holdings

Pty Ltd".

6.3.52 One of the significant aspects of this letter is that it demonstrates that the owners of

Lot 17 wanted to be paid compensation but they did not know on what basis compensation should

be paid. Instead of seeking and relying on their own advice on this issue, they wanted the City to

identify for them why and how the City should pay compensation to them. The owners persisted

with this audacious approach despite repeated and consistent advice from the City that there was

no basis for the City to pay them compensation.

6.3.53 The Peremate letter also provides a stark contrast with Mayor Grljusich's insistence in his

evidence before the Inquiry that, even before lodging their subdivision application, the owners of

Lot 17 had no doubt that they were entitled to be compensated by the City for their POS

contribution (Transcript, 3403 and 3452).


552

6.3.54 The Peremate letter of 22 August 1997, when discussing the "fairness" issues outlined in

paragraph "C", dealt exclusively with the provision by them of "excess" POS "for the benefit" of

other landowners in the Packham Area. It failed to refer to what is the other side of the coin - that

is, the financial benefits in the form of infrastructure services received by the owners of Lot 17 at the

cost of the other landowners in the Packham Area.

6.3.55 Four days later, on 26 August 1997, Mayor Grljusich telephoned Mr Hiller to discuss the

rezoning and subdivision of Lot 17. He inquired about the Peremate letter received on

22 August 1997 and Mr Hiller told him that the matter was in hand and that a response would be

provided as soon as possible. In the meantime, research was being carried out on "past funding

arrangements" (Mr Hiller's file note of 26 August 1997).

6.3.56 The Mayor raised the Lambasa case and told Mr Hiller that the Lot 17 situation was

different and should not be compared to Lambasa. It was in the Lambasa case that the City

became heavily involved in trying to resolve infrastructure issues between Urban Focus and the

Lambasas. Mayor Grljusich also "indicated that he did not want to deal with Urban Focus and this

should [sic, not] be a matter that the Council should be involved in" (Mr Hiller's file note of

26 August 1997).

6.3.57 The City responded to Peremate's letter on 12 September 1997. This was three days

after the meeting of the Community Development Committee which recommended that the Council

support the Lot 17 rezoning proposal and subdivision application. The City's response informed the

owners of Lot 17 that it was likely that the Planning Commission would require the owners of Lot 17

to give up an area of POS in accordance with the Structure Plan and their own application for

subdivision. It was also likely that the relevant POS condition imposed by the Planning Commission

would "be the same as that imposed on the previous subdivision approval relating to your land".

Significantly, the City's response advised Peremate that –

(a) a public open space condition imposed by the Planning Commission "does not

require involvement or clearance by the local authority";

(b) compensation was only available where an owner became "a participant in a

cooperative landowners scheme such as that administered by Urban Focus,

[where] arrangements exist for offsets between individual landowners to be made";

and


553

(c) if the owners considered that the Planning Commission's public open space

condition was unacceptable, it could appeal to the Minister for Planning or the

Town Planning Appeal Tribunal.

6.3.58 The City's letter makes it plain that, if the owners of Lot 17 had a problem with what they

regarded as "excess POS", they should deal with the Planning Commission or exercise their appeal

rights. The City had no relevant involvement. The City's letter continued –

"As explained above, there is no obligation for the Crown, the Council or other landownersin the Packham Scheme area to compensate or reimburse your company for public openspace. Your company is not entitled to cash-in-lieu funds administered by the Council,although it is open to you to negotiate reimbursement via Urban Focus under theirdistribution scheme. Council Policy PD 14 'Packham Urban Development Area' (copyattached) requires a non-scheme subdivider such as your company to make equitablearrangements with other landowners in respect to the cost of infrastructure services andpublic open space."

6.3.59 This paragraph is particularly significant. It highlights, once again, the connection between

the contribution by landowners towards infrastructure costs and compensation for "excess POS".

The owners of Lot 17 once again had squarely before them a clear choice - contribute to

infrastructure costs and receive compensation or exercise their appeal rights. Either way, the City

had no role in the matter.

6.4 Attempts to avoid the POS requirement after grant ofsubdivision approval

(a) Grant of subdivision approval subject to Condition 13

6.4.1 On 23 September 1997, the Planning Commission granted conditional subdivision

approval for Lot 17 in accordance with the plans submitted by Mayor Grljusich and the other three

owners of Lot 17.

6.4.2 The owners objected to two of the conditions imposed by the Planning Commission.

Condition 2 related to the upgrading of Hamilton Road. The City readily agreed with the owners

that it was an unnecessary condition. The Planning Commission also agreed and later deleted the


554

condition. It is not dealt with further in this Report. The other condition that the owners found

objectionable was Condition 13. It stated –

"The proposed reserve(s) shown on the plan dated 6 June 1997 being shown on theDiagram or Plan of Survey as a 'Reserve for Recreation and Drainage' and vested in theCrown under section 20A of the Town Planning and Development Act, such land to beceded free of cost and without any payment of compensation by the Crown."

The plan dated 6 June 1997 lodged with the subdivision application for Lot 17 showed an area of

5,672m2 being the "Reserve for Recreation and Drainage" in a newly created Lot 189. This area,

comprising 27% of the total area of Lot 17, was required to be given up to the Crown "free of cost

and without compensation".

6.4.3 There was nothing about this condition that was unusual or unexpected. It was –

(a) in all material respects identical to the existing conditions of subdivision approval

for Lot 17 (granted to the former owners of Lot 17 almost two years earlier);

(b) consistent with the Structure Plan (see Chapter 4 at 4.4);

(c) consistent with the standard conditions imposed on all Packham Area landowners

whose land included areas within the Market Garden Swamp (see Chapter 4

at 4.7(e)(ii); and

(d) consistent with the application lodged by the owners of Lot 17 (see above

at 6.2(d)).

(b) Entitlement to compensation

(i) Legal entitlement

6.4.4 The owners of Lot 17 had no legal right to compensation for land that they were required

to give up under Condition 13. As previously discussed (at 6.3(c)), Mr Grljusich insisted during his

evidence before the Inquiry that he and his fellow owners had no doubt, both before and after the

grant of subdivision approval, that they had a right to be compensated by the City. There is no

basis for that view and no rational basis has ever been suggested for it. The matter was the subject

of numerous written and oral advices by the City's planners and the City's solicitors. All these

advices concluded or were consistent with the conclusion, that the owners of Lot 17 had no right to

be paid POS compensation by the City. Despite this, Mr Grljusich continued, even during the public

hearings, to maintain his contrary view (Transcript, 3402-3403). If that view was not honestly held,

Mr Grljusich lied under oath. If it was honestly held, it brings into serious question his capacity to


555

hold any responsible position, let alone one involving the exercise of public power as an elected

member of the City.

6.4.5 The only possible legal entitlement to compensation in this situation would be a private

contractual right under an Owner's Deed. Only a participant in the Private Owners' Arrangement

has this entitlement. It is an entitlement that exists only in conjunction with the corresponding legal

obligation to pay infrastructure costs. The two are inextricably connected.

6.4.6 By the time that Condition 13 came into force on 23 September 1997, Mayor Grljusich

knew that if the owners of Lot 17 became participants in the Private Owners' Arrangement, they

would be entitled to compensation for their excess POS. The amount of compensation at that time

was set out in the 1994 POS Equalisation Schedule. It was $45,893.

6.4.7 Corresponding to this legal entitlement was a legal obligation to contribute Lot 17's share

of infrastructure costs. There were only two infrastructure services provided by the other

participants in the Private Owners' Arrangement that benefited Lot 17. One was a sewer main and

the other was an electrical transformer.

(ii) Infrastructure costs

6.4.8 The sewer line had been constructed by Urban Focus through Lot 17 late in 1994. Urban

Focus was authorised to construct it under the terms of the Owner's Deed signed by George and

Tom Grljusich, who were then the owners of Lot 17. However, Deputy Mayor Grljusich (as he then

was) informed Urban Focus that he and the other three remaining residuary beneficiaries of his

father's estate objected to the construction of the sewer line. This objection held up construction.

The matter became more urgent because the sewer line was needed for the development of

adjoining Stage 4C.

6.4.9 On 23 September 1994, the landowners of Stage 4C, the neighbours of the Grljusich

family, sought the permission of the 4 residuary beneficiaries to undertake the survey, alignment

and installation of the sewer through Lot 17. A consent form to this effect was attached to the letter.

The written response to the Stage 4C landowners dated 6 October 1994 stated that the residuary

beneficiaries would be " … happy to sign confirmation of consent for the installation of a sewer

service through Lot 17 … providing Urban Focus will confirm the cancellation of the deed entered

into between the executors for the estate of Late Mate Grljusich and Urban Focus". The letter


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contended that the deed was entered into without the knowledge or consent of the residuary

beneficiaries.

6.4.10 Based on its legal advice that the existing Owner's Deed authorised the construction, and

to satisfy the wishes of the owners of Stage 4C, Urban Focus went ahead with the construction of

the sewer line through Lot 17.

6.4.11 Mayor Grljusich, his sisters and sister-in-law have never had any substantive objection to

the construction of the sewer through Lot 17. They simply tried to use their neighbours' desire to

avoid further delays in proceeding with their own subdivisions as a bargaining tool in their quest to

remove George and Tom Grljusich as trustees. The cancellation of the Owner's Deed would have

assisted in achieving this objective (see Chapter 5 at 5.2(d)). In the end the Owner's Deed was

effectively cancelled. That was, and remains, the only objection that Mayor Grljusich and the other

owners of Lot 17 ever had to the construction of the sewer line through their property.

6.4.12 Indeed, the construction of the sewer line through Lot 17 was a significant benefit to the

owners of Lot 17. It provided them with access to a sewer line which they required, in any event, as

part of the subdivision of their own property. The sewer line could have been constructed through

an adjoining property thereby increasing the amount that the owners of Lot 17 would have had to

pay to obtain access.

6.4.13 There were no such complications with the second of the two infrastructure services that

benefited Lot 17. In June 1997, Urban Focus informed Richard Pawluk & Associates that Western

Power required a new electrical transformer and transformer modification for the Stage 8

development in the Packham Area. The transformer was to be designed, at the insistence of

Western Power, to be able to service the requirements of Lot 17's 18 proposed lots. This increased

the costs for Stage 8.

6.4.14 It was never doubted that Lot 17 benefited from the construction of the sewer line and the

installation of the electrical transformer. If they had not been provided by Urban Focus - and paid

for by the Grljusich's neighbours - the owners of Lot 17 would have had to outlay considerably more

than their share of the allocated costs (Transcript, 2739 and 2741). Those allocated costs were

assessed by Mr Chris Ducasse of Halpern Glick Maunsell, the engineers retained by the owners of

Lot 17. Mr Ducasse informed Mr Hamilton of Urban Focus on or before 9 September 1997 that the


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costs sought from the owners of Lot 17 by Urban Focus were reasonable. He confirmed this in a

fax dated 2 December 1997 to Wood & Grieve, engineers for Urban Focus, which stated that the

cost sharing proposal for the sewer and electrical transformer were "fair and reasonable". These

costs were –

(a) sewer main $21,429

(b) electrical transformer $14,169

TOTAL $35,598

In his fax, Mr Ducasse also stated that he was "not in a position to confirm that Peremate Holdings

Pty Ltd will pay these costs".

6.4.15 Despite the advice from their own engineers that the costs were "fair and reasonable",

and despite repeated requests by Urban Focus on behalf of Mayor Grljusich's neighbours, the

owners of Lot 17 refused to pay. Even after the sale of all the subdivided lots had been completed

and Mayor Grljusich, his sisters and sister-in-law had received the proceeds, they continued to

resist paying their share of infrastructure costs. To date they have still not paid.

6.4.16 It was put to Mr Grljusich during the public hearings of the Inquiry that it was his own

neighbours, not Urban Focus, who were being forced to pay more as a result of the failure of the

owners of Lot 17 to pay their fair share. Mr Grljusich responded –

" … Peremate expect to pay all their bills. These people you're talking about have beenour lifetime neighbours. We don't want to be in a position where we want to do bad to ourlifetime neighbours and who are going to be our friends and neighbours for the rest of ourlives" (Transcript, 3448).

6.4.17 Many of those "lifetime neighbours" wrote to the Inquiry expressing their view that the

owners of Lot 17 should pay their fair share. Urban Focus on behalf of the Stage 8 landowners,

and in fact over half of the Stage 8 landowners individually, made submissions to the Inquiry in

December 1999. They all acknowledged that there was no statutory or other legal basis to enforce

payment of the outstanding costs, but they submitted that the owners of Lot 17 had a "very real

moral obligation" to do so.

6.4.18 A submission dated 16 December 1999 by Mr P G Brenzi on behalf of and co-signed by

Ms L Correia, Mr D Brenzi, Ms C Goncalves, Ms M Bell and himself being the "Brenzi Family",

landowners in Stage 8 of the Packham Area, reflected the disappointment felt at their treatment by


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a long term neighbour –

"As with most of the land within the Packham Development area, our property was 'old'family land. It was originally purchased by our Grandparents some 80 years ago. We arenot a wealthy corporation or land speculators, with a team of specialist Lawyers to dealwith issues such as this. We are ordinary people, who quite frankly, expected better of along time neighbor [sic]."

6.4.19 Mr Grljusich suggested that his non-payment was Urban Focus' fault because the onus

was on Urban Focus to take up the matter with the owners of Lot 17 (Transcript, 3412). This is

nonsense. There is no doubt that the costs were properly incurred and there is no doubt that the

costs allocated to the owners of Lot 17 are fair and reasonable. Closer to the truth is Mr Grljusich's

earlier explanation –

"You know, I mean, look, we told them not to put the sewer through … It's not a matter ofnot wanting to pay [sic] the sewer. It's a matter of sitting down and saying, 'Look, youknow, you've put the sewer through.' … And we want to know whether we have got anyentitlements back" (Transcript, 3488).

6.4.20 This is also devoid of any merit. It is extraordinary that Mayor Grljusich should be

attempting at this stage to seek compensation from Urban Focus for putting the sewer line through

Lot 17 - to the unquestioned financial benefit of the owners of Lot 17 - even after most of the

subdivided lots have been sold (for more than $1.3 million) and while their neighbours continue to

pay for Lot 17's share of the costs amounting to $35,598.

(iii) Refusal to accept POS compensation on the usual terms

6.4.21 From the time that subdivision approval was granted on 23 September 1997, it was clear

that if the owners of Lot 17 wanted POS compensation all they had to do was to agree to pay for

their share of infrastructure costs. At that stage, under the 1994 POS Equalisation Schedule, they

were entitled to $45,893. Their share of infrastructure costs, certified as fair and reasonable by

their own engineers, was $35,598. They would have been entitled to a balance of more than

$10,000.

6.4.22 Why did Mayor Grljusich and the other owners of Lot 17 not accept this? Part of the

answer appears to lie in Mayor Grljusich's antipathy towards Urban Focus "by the mere fact that

George and Tom were involved with Urban Focus" (Transcript, 3909 and see Chapter 5 at

para 5.2.31). A second part of the answer is the attempt, which has continued to the present day,

by Mayor Grljusich and the other owners of Lot 17 to avoid paying their share of infrastructure

costs. Another part of the answer appears to be that Mayor Grljusich and the other owners of


559

Lot 17 wanted to get more money and a better deal from the City than they would have been

entitled to as an ordinary participant in the Private Owners' Arrangement. This 'greed factor' is

discussed later (at 6.4(e)(ii)).

6.4.23 As a result, the owners of Lot 17 refused to accept POS compensation on the same terms

as other Packham Area landowners. The remainder of this Chapter deals with their attempts to get

a special deal for themselves through the City of which Mayor Grljusich held the highest office.

(c) Reconsideration of Condition 13

6.4.24 Under section 24(5) of the Planning Act, an applicant for subdivision approval who is

dissatisfied with any condition that has been imposed by the Planning Commission –

" … may within 28 days of being notified of that … condition request in writing theCommission to reconsider that … condition."

6.4.25 During the course of their meeting on 8 October 1997, Mr Hiller advised Mayor Grljusich

that if the owners of Lot 17 did not challenge Condition 13, within the specified period, either by way

of reconsideration or appeal (to the Minister for Planning or the Town Planning Appeal Tribunal),

then the conditions would be "deemed to have been accepted".

6.4.26 The owners of Lot 17 instructed John Giudice & Associates to seek a reconsideration of

Condition 13 by the Planning Commission. They also contacted Mr Cole of Richard Pawluk &

Associates about the matter. A request for reconsideration was made in an undated letter faxed to

the Ministry for Planning on 20 October 1997.

6.4.27 The Planning Commission is vested with the power to determine, on a request for

reconsideration of a condition, whether to retain, alter or revoke the condition. However, as in the

case with an application for subdivision approval, the Planning Commission consults with the

relevant local government and seeks its recommendations or objections to the request. When

making its decision, the Planning Commission must take into account the local government's

response but, of course, it is not bound to reach the same conclusion as the local government. In

this case, the Ministry for Planning referred the request for reconsideration to the City on

11 November 1997. No time limit for the City's response was specified in the referral.


560

(d) 1989 Council resolution as a claimed basis for POScompensation

(i) Discussions and correspondence in October 1997

6.4.28 Until this point, Mayor Grljusich and the other owners of Lot 17 had been attempting to

find - or, more accurately, attempting to have the City's employees find - some basis on which the

City could pay POS compensation to them. The City's letter to Peremate of 12 September 1997

contained a reference to a Council decision in 1989. This was seized upon by Mayor Grljusich as

the basis on which compensation should be paid to the owners of Lot 17 by the City. The 1989

Council resolution was referred to by Mayor Grljusich in his meeting with Mr Hiller on

8 October 1997 and his two telephone conversations with Mr Ryan on 16 October 1997 and was

also referred to in Peremate's letter to the City of 16 October 1997. Details of these

communications will be considered before examining the relevance of the 1989 Council resolution.

6.4.29 On 8 October 1997, the Mayor again called Mr Hiller into the mayoral parlour. Mr Hiller's

file note of the meeting records that, after discussing another matter –

"The Mayor then raised the matter of Lot 17 Hamilton Road and advised that the ownerswere not happy with the staff advice on the POS compensation issues. The Mayor felt,that based on the Council resolution of 1988 [sic], that the Council had the responsibilityto compensate owners who contributed a POS in excess of the 10% not Urban Focus."

6.4.30 By making direct contact with Mr Hiller, in the mayoral parlour, and by indicating his

displeasure with the advice of the City planners, the Mayor continued the pressure that he was

applying to the City's planners and to Mr Hiller in particular. Despite their repeated advice to the

contrary, and without any foundation, Mayor Grljusich continued to assert that –

(a) the City had an obligation to compensate the owners of Lot 17; and

(b) compensation should be paid for POS in excess of 10% - despite the fact that

Packham Area landowners who contributed to infrastructure costs as part of the

Private Owners' Arrangement were entitled, under that private scheme, to POS

compensation only where more than 16% of the land had been given up for POS.

6.4.31 In his response to the Mayor Mr Hiller stated –

"1. For the Council to consider the matter of compensation for the POS over-provision,the owners would need to submit a response to the staff's letter on POS, so thatthe issue can be considered further. At this stage the office is unaware of theowners' reaction.


561

2. At this time, I was still of the view that the Council was not liable, but a claim couldbe made against Urban Focus.

3. If the owners did not challenge the conditions within the specified period forreconsideration and by appeal, the conditions were deemed to have beenaccepted.

4. The conditions, as I read at the meeting, did not relate to providing costs forservices, except the Primary School, and did not make reference to compensation.

…

6. The matter of POS recompense, therefore, was a matter to be dealt withseparately, because under the conditions of subdivision approval the POS on thediagram was to be given up free of cost under Section 20A."

6.4.32 Mr Hiller did not record, in his file note, any response made by him to Mayor Grljusich's

claim that the Council's 1989 resolution supported a payment of POS compensation to the owners

of Lot 17.

6.4.33 A week later, on 16 October 1997, Mayor Grljusich telephoned Mr Ryan on two occasions

to discuss the subdivision conditions imposed on Lot 17. Mr Ryan's file note of the conversation

records that Mayor Grljusich informed Mr Ryan that the owners of Lot 17 would be seeking a formal

reconsideration of Condition 13 by the Planning Commission. He again questioned the advice of

the City's planners. In his view, the advice –

" … did not reflect the 1989 Council decision correctly and that staff should review theirprevious interpretation."

6.4.34 Mr Ryan's response was that –

" … it would be difficult for staff to make any different interpretation on the requirements ofthe public open space condition (ie Lot 17 entitlement to Council's cash-in-lieu funds) thanthat already made in our letter. I advised that any reinterpretation would need to be madeby Council or, alternatively via the Western Australian Planning Commissionreconsideration or an Appeal process."

Like Mr Hiller on 8 October 1997, Mr Ryan suggested that the owners of Lot 17 should write to the

City setting out their concerns.

6.4.35 Significantly, Mr Ryan also –

" … asked if an agreement with Urban Focus in respect of services had been made as thePackham Policy indicates a link between services and public open space contributions.He [Mayor Grljusich] advised that this was no concern of the Council and quoted the


562

Lambasa situation as an example."

This reference demonstrates that, even after the Officers' report to the Community Development

Committee on 9 September 1997, Mr Ryan - like Mr Igglesden but unlike Mr Hiller - continued to act

on the basis that the issue of infrastructure cost contributions by Packham Area landowners was of

concern to the City. Further, Mr Ryan correctly understood and pointed out to Mayor Grljusich the

link between contribution to infrastructure costs and POS compensation. This was to become an

important issue. Some of the City's employees later claimed that payment by the owners of Lot 17

of infrastructure costs was irrelevant to the issue of POS compensation. Most elected members

who gave evidence during the public hearings of the Inquiry held the opposite view.

6.4.36 On 16 October 1997, Peremate wrote to the City stating, in part –

"In regard to condition 13 we bring to your attention the decision adopted by council onthe 6th of June 1989 (copy attached)….in view of this we seek your confirmation that wewill be duly compensated of the Public Open Space & Drainage Area over and above the10% contribution."

(ii) Review of the Council's 1989 resolution

6.4.37 At its meeting on 6 June 1989, the City resolved to adopt the recommendation of the

Planning and Building Committee held on 30 May 1989. Insofar as it is relevant for present

purposes, that recommendation stated that –

"(1) in respect to the subdivision and development of the Packham Urban DevelopmentArea, the City of Cockburn is prepared to:–

1. facilitate the endeavours of the landowners in the area to subdivide anddevelop their land in accordance with the agreed structure plan;

2. arrange the valuation of land through the Valuer General's Office in respectto cash-in-lieu contributions by individual land owners for public open spaceand the primary school site at the cost of the subdivider;

3. collect a drainage headworks charge in accordance with its current policy,until such time as the area is declared a Main Drainage Area by the WaterAuthority of W.A.;

4. hold in trust any monies collected in respect to cash-in-lieu of public openspace and as drainage headworks and to use those funds in the acquisitiondevelopment and management of land for those purposes".

The particular part of this resolution relied on by Mayor Grljusich and Peremate was the part

numbered "(1)4".


563

6.4.38 As indicated in Chapter 4 (at 4.12(c)), that part of the Council's resolution, although

loosely expressed, was in all probability intended to do no more than repeat the key requirements of

section 20C of the Planning Act. In other words, monies collected under section 20C as "cash-in-

lieu of public open space" must be held in trust (in the City's section 20C account) and could be

used only for limited purposes including the purchase or development of land in the locality (see

section 20C(2)(a) and (c)).

6.4.39 The only other possible construction of that part of the resolution is that it was intended to

reflect the view that the City would act as a banker, not only for cash-in-lieu payments paid to and

received by the City under section 20C but also for all other cash-in-lieu contributions made by

Packham Area landowners. For the reasons set out in Chapter 4 (at 4.12(c)(ii)), that view is entirely

inconsistent with the arrangements that have been recorded in detail and adopted by the City

since 1992.

6.4.40 Mayor Grljusich and Peremate asserted that the Council's 1989 resolution imposed on the

City an obligation to compensate the owners of Lot 17 for any contributions in excess of 10% that

they were required to give up as POS under a condition of subdivision approval imposed by the

Planning Commission. This assertion is baseless. Plainly, the Council resolution says nothing

about –

(a) the City having an obligation to compensate individual landowners; or

(b) compensation payable in respect of land, in excess of 10% or any other

percentage, required to be given up by an individual landowner under a condition of

subdivision approval.

6.4.41 The resolution is entirely consistent with the fundamental proposition, applied to every

other Packham Area landowner, that landowners were not entitled to be compensated out of public

funds for any land required to be given up under a condition of subdivision approval. Only

landowners who were participants in the Private Owners' Arrangement and who shared the cost of

infrastructure services could also share the benefits of the land pooling and cost equalisation

arrangements to receive compensation for excess POS.


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(iii) The City's formal response

6.4.42 On 21 October 1997 the City responded to Peremate's letter of 16 October 1997. It

confirmed, once again, two clear and simple propositions. These were –

(a) the owners of Lot 17 had "no entitlement to reimbursement from Council cash-in-

lieu funds for any additional public open space provided by the subdivision"; and

(b) Condition 13 was imposed by and was the responsibility of the Planning

Commission - not the City.

6.4.43 If the City, despite the pressures from Mayor Grljusich, had continued to maintain this

position, it would have avoided, or at least substantially reduced, the problems that beset it for

much of the following year. Sadly, this was not the case.

(iv) Peremate's letter of 31 October 1997 and the City's response

6.4.44 Peremate again wrote to the City on 31 October 1997. In relation to Condition 13 it

stated –

" … I would strongly disagree with your assessment in relation to condition number 13.Our rights under this condition should be governed by the original Council decision inrelation to this subdivision made on 30 May 1989.

As I understand it, there has not been any subsequent Council decision that would eitherrevoke or alter the original decision in any way. If my understanding in relation to this isnot correct, I would be grateful if you would please provide me with a copy of asubsequent Council decision. If on the other hand my understanding is correct, I wouldask you to deal with this matter as soon as possible.

Our company has made commercial decisions based on the original Council decision andas you can imagine, these unnecessary delays are causing us considerable concern.

I would not accept your view that the issue needs to be referred back to the Council sothat it may be endorsed. I would be interested to know how many other Council decisionsneed to be referred back to Council for further endorsement for other developers.Nevertheless, if this is still your view, then I would ask you to refer it to Council, throughthe appropriate committee, as a matter of urgency."

6.4.45 This letter continues the pattern of Mayor Grljusich and the other owners of Lot 17 –

(a) refusing to accept the advice of the City's planners;

(b) persisting with the approach that the issue concerned the City; and

(c) persisting with the approach that responsibility for the resolution of the problem lay

with the City, and not with the owners of Lot 17.


565

6.4.46 Given the terms of the letter, particularly the second and fourth quoted paragraphs, there

is little doubt that Mayor Grljusich was the author. None of the other three owners of Lot 17 had

any relevant experience or dealings with the Council's decisions to which reference is made. Mayor

Grljusich, on the other hand, had been an elected member of the City throughout the period.

Indeed he was present at both the Planning and Building Committee meeting on 30 May 1989 and

the Council meeting 6 June 1989. There is no indication in the Council minutes of those meetings

that he did not vote on the matter on each occasion when it arose.

6.4.47 A copy of the Peremate letter was sent to the City's solicitors, McLeod & Co, for advice.

The timing coincided with the City's discovery of the problem with the $222,934 payment to Urban

Focus in 1995 out of the account kept by the City under section 20C of the Planning Act (see

Chapter 4 at 4.12(e)). Central to the review of the lawfulness of that payment was the general issue

of how the City could use the funds in its section 20C account. The claim for POS compensation by

Mayor Grljusich and the other owners of Lot 17 was viewed as a claim for payment out of the City's

section 20C account. For this reason, adopting a draft provided by McLeod & Co, the City wrote to

Peremate on 8 December 1997 in terms that included the following –

"Pending the clarification of those issues, it is important that landowners seeking tosubdivide land in the Packham Urban Development Area delay taking any steps whichmight fix the amount of their contributions to POS and drainage, and that they delayentering into any agreement or arrangement relating to or depending upon theequalisation of contributions for POS or drainage.

The Council presently holds moneys in a cash in lieu trust account, being moneys whichappear to have been received by the Council pursuant to s.20C of the Town Planning andDevelopment Act. Until the issues mentioned above have been fully investigated andclarified, the Council does not consider that it is at liberty to make any further paymentsfrom that account."

6.4.48 With the benefit of hindsight, it is unfortunate that the City did not take the opportunity to

repeat its earlier advice that there was no basis for the claim for compensation by the owners of

Lot 17 and that it was not a matter that concerned the City. Instead, the terms of the letter may well

have given the owners of Lot 17 some comfort that their claim had some merit and was being

considered. This would no doubt have encouraged them in their quest for compensation from the

City.


566

(e) Meeting between Mayor Grljusich and Mr Hiller on22 December 1997

(i) Details of conversation

6.4.49 On 22 December 1997, Mayor Grljusich telephoned Mr Hiller. The Mayor began by

discussing another issue before the Council. He then raised the Lot 17 issue. Mr Hiller's more

detailed file note of this meeting discloses matters that go to the heart of the issue and contribute a

great deal towards an understanding of the reasons for Mayor Grljusich's actions. Although the file

note is lengthy, it is important that, to the extent that it concerns Lot 17, it is set out in full. The file

note records –

" … the Mayor wanted to raise with me the subdivision of Lot 17 Hamilton Road byPeremate Holdings which is a family company in which he has an interest and wasconcerned at the delays that were occurring in dealing with the public open spacecompensation matter relating to the subdivision of this land.

He believed that the situation which is currently being investigated should never havearisen and that the matter now was out of hand an needed to be resolved as quickly aspossible.

He advised that the family company had borrowed money to undertake the works for thesubdivision and that this was costing interest. He was under enormous pressure from hisfamily to resolve this matter as soon as possible so they could proceed with the worksprior to the lot prices decreasing which was one of their primary concerns.

He believed that the family was entitled to compensation in respect to the excess publicopen space provided, as had other people within the Packham Scheme, and that this hadalways been an understanding and should have been part of the Council's Scheme for thearea. It was not the family's fault that this was not part of the Council's Scheme, and thatthey had always expected recompense would be paid and this was the basis on whichthey proceeded with their funding for the project.

It was his view that the 17% public open space was not appropriate to his land and thatthey should only provide 10% public open space including drainage as there was little orno wetland within his property and therefore the recompense that he should receive is thedifference between the 23% shown on the plan of subdivision and the 10% that would beprovided as a matter of course.

He also did not agree with the Urban Focus Matrix on the valuations for the land and feltthat if their land was to be recompensed it should be revalued on a different basis, butwas not accepting the fact that this valuation should be undertaken by the ValuerGeneral's Department.

According to advice he had received about the special meeting of Council, it appearedthat the Council Solicitor, Denis McLeod, had advised that those people who had alreadysubdivided or were about to subdivide could receive an ex gratia payment in respect tothe compensation for public open space.


567

He was concerned that the process that we were going through was far too slow and thatto have the matter considered in February 1998 was too long, and if this was to be thecase then he would seek a special meeting of Council to deal with the matter so it couldbe resolved as soon as possible.

The Mayor had spoken to other Councillors about the matter and to date they had donenothing to resolve it.

The situation that the family found themselves in was certainly not their fault and was thefault of the Council and it was up to the Council to resolve the matter for them.

The Mayor was of the view that the situation was clear by virtue of the fact the Councilhad made a decision in respect to the Packham Area in 1989 which said that the Councilwould collect funds for public open space and apply them by way of acquisition,development and management. Therefore this is the way in which the family could berecompensed for the excess in public open space.

In response to these matters I provided the following advice:

1. The 20A Reserve shown on the plan of subdivision for Lot 17 could not be boughtby way of the 20C cash-in-lieu funds held by the Council.

2. The reasons for the delay in resolving this matter was because we had to receivelegal advice and undertake enquiries with other agencies to determine the situationso that we could provide the Council with the proper advice in respect to decisionstaken in the past and also provide for the way in which Packham public open spacewould be dealt with in the future. This necessarily involved Lot 17 in thesedeliberations.

3. I advised that the earliest this matter could be considered would be February 1998because of the Christmas break and the fact that a number of the enquiries madeby ourselves and Council's solicitors had not been finalised. Therefore it waspremature to proceed with the means by which the future public open space inPackham could be handled without knowing the full details.

4. In respect to raising the funds to proceed with the subdivision, I advised that thefamily could proceed with the development of the land, however this would have tobe done without receiving any recompense for the 20A Reserve which would begiven up as a condition of subdivision.

5. I advised that the typical public open space provision within the Packham area was17% because it included open space and drainage, therefore any compensationthat may be payable for the excess would be the difference between the 17% andthe 23% shown on the plan of subdivision.

6. In the event that the Council decides to pay the difference for public open space inexcess of the normal Packham provision, then the excess land would probably bevalued by way of the Valuer General's Department.


568

7. If the Valuer General's Department was unacceptable as a means of valuing theland, then it may be agreeable to use private valuers which were acceptable toboth the family and the Council.

8. I advised that at this stage there was nothing more that I could do except to try andexpedite the responses in relation to the information that was outstanding and toensure that a full report was available for Council consideration in February 1998.

The telephone discussion concluded at 5.10 pm, following which I had a brief discussionwith Steve Ryan about the issues that had been raised and where we were at in terms ofresponses from Urban Focus and others. Mr Ryan advised that it was planned to preparea progress report to Council for its meeting in January and that the Urban Focusresponses were supposed to be with our solicitors by the 22 December 1997.

On the morning of Tuesday, 23 December I met with the Chief Executive Officer todiscuss the situation in terms of progress of the resolution of the Packham open spaceand it was agreed that this stage all that we could do would be to prepare a progressreport to the full Council meeting in January and that hopefully a final report on thesolution to the outstanding Packham issues could be presented to Council at is Februarymeeting.

The Chief Executive Officer supported the approach that had been taken and felt that thematters that had arisen as a result of the Lot 17 application in relation to the Packhamopen space had to be resolved in a proper way and in the best interests of the Counciland the landowners.

At this stage we were still awaiting legal advice from McLeod & Co, also advice fromUrban Focus in respect to the collection and distribution of funds in the Packham SchemeArea and we had approached the Department of Local Government to undertake aprocess audit of the way in which the Packham Scheme Area and in particular publicopen space contributions had been handled."

6.4.50 Mr Grljusich denied ever having had this conversation with Mr Hiller (Transcript, 3491-

3492). Apart from Mr Hiller's file notes of the conversation there is also evidence, including

documentary evidence, that Mr Hiller followed up aspects discussed at this meeting with both the

CEO and Mr McLeod on the following day. I am satisfied that the meeting between Mayor Grljusich

and Mr Hiller did take place and that Mr Hiller's file notes accurately record the conversation.

6.4.51 The aspects of this conversation that are of particular significance can conveniently be

considered under three headings. They relate to –

(a) the special treatment sought by Mayor Grljusich that would have favoured him over

all other Packham Area landowners;

(b) the continuing pressure by Mayor Grljusich on the City's planners; and

(c) the use by Mayor Grljusich of information given to him as an elected member but

used by him to his own advantage and against the City's interest.


569

(ii) Special deal sought from the City by Mayor Grljusich

6.4.52 Mayor Grljusich and Peremate invariably expressed their claim for POS compensation in

terms of what was "fair" by comparison to other Packham Area landowners. In fact, they wanted to

be treated much more favourably than the other Packham Area landowners. This more favourable

treatment can be demonstrated by reference to three separate issues –

(a) entitlement to POS compensation without payment of infrastructure costs;

(b) compensation for POS contributions above 10% instead of 16% (or 17%); and

(c) compensation based on a more generous formula than the formula which applied

to all Packham Area landowners.

6.4.53 As to the first, the link between payment of infrastructure costs and entitlement to

compensation applied to all other Packham Area landowners. The relevant details have been

discussed earlier (at 6.4(b)). The City's letter of 12 September 1997 to Peremate made it plain that

the only entitlement to POS compensation was under the Private Owners' Arrangement and that

entitlement came with a corresponding obligation to pay infrastructure costs (see from para. 6.3.57).

6.4.54 Secondly, at least 16% of the Packham Area as a whole was required to be given up free

of cost and without compensation as POS/Wetlands. The Urban Focus Land Pooling and Cost

Equalisation Scheme enabled participants to be compensated for excess POS contributions.

Excess contributions were those above 16% (sometimes, as in the case of the meeting on

23 December 1997, referred to as 17% - see Chapter 4 (at para. 4.3.15)). Thus, for example,

Mayor Grljusich's neighbours who agreed to pay their share of infrastructure costs were entitled to

POS compensation only where their POS land exceeded 16%. Mayor Grljusich, on the other hand,

who refused to commit himself to pay, or even to acknowledge that he should pay, his share of

infrastructure costs, claimed (in his conversation with Mr Hiller on 22 December 1997) that –

" … [t]he 17% public open space was not appropriate to his land and that they should onlyprovide 10% of public open space including drainage …".

6.4.55 Mayor Grljusich repeated this claim in his conversation with Mr Hiller on 28 January 1998

when he stated that the owners of Lot 17 "were outside the [Private Owners' Arrangement] and

should be treated individually and that they should only give up 10% public open space …" (see

below at para. 6.5.102).


570

6.4.56 In short, he wanted to give up less than his neighbours (in respect of infrastructure costs)

and to be paid more (in respect of POS compensation above 10%, rather than 16% or 17%).

6.4.57 Thirdly, the Private Owners' Arrangement Land Pooling Cost Equalisation Scheme

operated on the basis that excess POS land would be valued (as at December 1997, the date of

this meeting) at –

(a) POS land $128,662 per hectare; and

(b) Wetlands $30,879 per hectare.

Using those values, the compensation that would have been payable to the owners of Lot 17 if they

had been participants in the Private Owners' Arrangement would have been $45,893. That is the

basis on which Mayor Grljusich's neighbours, who had agreed to pay their share of infrastructure

costs, would have been compensated for excess POS.

6.4.58 That was not good enough for Mayor Grljusich. He wanted more. He told Mr Hiller that –

"[h]e also did not agree with the Urban Focus Matrix on the valuations for the land and feltthat if their land was to be recompensed it should be revalued on a different basis, butwas not accepting the fact that this valuation should be undertaken by the ValuerGeneral's Department."

6.4.59 How much more the owners of Lot 17 wanted became clear a very short time after this

meeting. On behalf of the owners of Lot 17, Mr Remo Gava instructed Mr Cole, of Richard Pawluk

& Associates to claim from the City compensation on the basis that the value of their excess POS -

being the additional 17% and amounting to 3,537m² - should be based on the value of 5 residential

lots. Mr Gava provided Mr Cole with calculations showing that –

(a) the broadacre value of the area was $32.07 per m²;

(b) the "conservative subdivided sell" value was $76,000 per lot;

(c) the development costs were $24,000 per lot;

(d) the profit on each lot was $52,000 ($76,000 - $24,000);

(e) the profit per m² was $77.89; and

(f) the total value of 3,537m² at $77.89 per m² was $275,496.


571

6.4.60 These calculations were endorsed by Mayor Grljusich. Mr Hiller's file notes of a meeting

between Mayor Grljusich, Mr Gava, Mr Lloyd and Mrs Lloyd, representing the owners of Lot 17 and

Mr Hiller on 6 January 1998 state –

"The Mayor also advised that the compensation paid by the Council should be based onresidential values because if the land had not been set aside as public open space then itwould have been developed for 5 building lots."

Mayor Grljusich repeated this claim in two interviews on 9 and 18 November 1998 (see below

at para. 6.10.30).

6.4.61 Clearly the basis for compensation payable to all other Packham Area landowners did not

satisfy Mayor Grljusich and the other owners of Lot 17. They were not content to accept an amount

of $45,893 calculated on that basis. Instead their claim was for $275,496 - over 6 times what their

neighbours would have received.

6.4.62 What this demonstrates is that it was not simply Mayor Grljusich's antipathy towards

Urban Focus that made him reluctant to participate in the Private Owners' Arrangement. Greed

was a major factor. If they had become participants in the Private Owners' Arrangement at this

point, they would have received a little more than $10,000 after paying their share of infrastructure

costs. By not becoming participants in the scheme they could avoid paying any infrastructure costs

and were able to claim more than $275,000.

6.4.63 In all three respects, therefore, Mayor Grljusich and the owners of Lot 17 were not

seeking to be treated equally with their neighbours in the Private Owners' Arrangement. They

sought a special deal that would have given them a huge financial advantage over their neighbours.

6.4.64 It was not enough that Mayor Grljusich had received special treatment from the City in

1994 and 1995 which advantaged him over his brothers in his quest for control over Lot 17. He

now wanted special treatment from the City that would advantage him over his neighbours.

6.4.65 The findings that follow are based on the claims for POS compensation made by Mayor

Grljusich and considered throughout this Chapter.


572

Findings

F42. I find that, in respect of the claim by Mayor Grljusich and the other owners of Lot 17 for

POS compensation from the City –

(a) Mayor Grljusich sought to be treated more favourably than any other Packham

Area landowner in that he insisted on being paid POS compensation from the

City's funds –

(i) without contributing towards infrastructure costs - when all other Packham

Area landowners had contributed, or made arrangements to contribute, to


(ii) in respect of POS land in excess of 10% - when all other Packham Area

landowners (who paid their share of infrastructure costs) were entitled to

POS compensation only in excess of 16%; and

(iii) at a rate that was significantly greater than the rate applying to all other

Packham Area landowners (who paid their share of infrastructure costs);

and

(b) this special deal sought by Mayor Grljusich would have benefited him financially

at the expense of the City of which he held the highest office; and

(c) Mayor Grljusich's behaviour in making these claims and pursuing them against

the City for over 12 months was a breach of the standards of conduct expected

of a person occupying the position of Mayor and, in the circumstances,

constitutes improper conduct.

(iii) Continuing pressure by Mayor Grljusich on the City's planners

6.4.66 In his conversation with Mr Hiller late on the afternoon of 22 December 1997, just three

days before Christmas, Mayor Grljusich continued his relentless pressure on Mr Hiller. He

complained to Mr Hiller that "[h]e was under enormous pressure from his family to resolve this

matter as soon as possible". This is not surprising. One would expect that in the eyes of his

co-owners - his sisters and sister-in-law - Mayor Grljusich was seen as a planning expert who had

been a member of the City's Planning Committee for 14 years and its chairman since 1993. He

was the City's Mayor. They had accepted his advice that it was in their financial interests not to

enter into a deal with Urban Focus. It is likely that they expected him to receive, as he expected to

receive, the same favoured treatment from the City as he had throughout 1994 and 1995 with the

considerable assistance of Mr Scharf. Mayor Grljusich now had to deal with a Director of Planning


573

and Development who was not willing to give him any special favours. The pressure Mayor

Grljusich was under is readily understandable.

6.4.67 His response to that pressure was to deflect it to someone else. He did this by blaming

the City –

"It was not the family's fault that [the right to POS compensation] was not part of theCouncil's Scheme … The situation that the family found themselves in was certainly nottheir fault and was the fault of the Council and it was up to the Council to resolve thematter for them."

For Mayor Grljusich, not only did the City - and Mr Hiller in particular - have the responsibility of

resolving the matter, but it had to be done urgently. The situation, according to Mayor Grljusich,

"should never had arisen", the way that it had been dealt with by Mr Hiller to date "was far too slow"

and it certainly could not wait until the February meeting of Council.

6.4.68 The tone of the meeting also added to the pressure. In his evidence to the Inquiry,

Mr Hiller described the tone in the following way –

" … the mayor was, I think, quite upset about the fact that the situation hadn't beenresolved and something needed to be done quickly.

I would say [the meeting] was civilised but certainly was quite intense and reasonablyaggressive and that's why I took particular note of the sorts of things that were raised andthe sort of responses I gave… Well, he didn't call me names so I would call that beingcivilised" (Transcript, 2121).

When asked the basis on which Mr Hiller concluded that the meeting was aggressive he stated

that –

"Basically from the tone of voice and the way in which the statements are made and justthe pressure to do something about it" (Transcript, 2121-2122).

6.4.69 As he had in the past, Mr Hiller continued to resist the pressure to give in to Mayor

Grljusich's demands. He explained that much work needed to be done to deal with the general

issues affecting the Packham Area, that Lot 17 needed to be considered in this context and,

particularly having regard to the Christmas break, the earliest that the matter could be considered

by the Council was at its February meeting.


574

6.4.70 As with all previous meetings or conversations with the City's planners, Mayor Grljusich

simply ignored all the advice that he received with which he did not agree. He had been told

repeatedly over many months that –

(a) the matters involving POS contribution were the responsibility of the Planning

Commission not the City;

(b) there was no avenue for the City to pay compensation to the owners of Lot 17;

(c) if the owners of Lot 17 wanted POS compensation they should participate in the

Private Owners' Arrangement under which they would have to pay infrastructure

costs; and

(d) in the Packham Area, even for those who were participants in the Private Owners'

Arrangement, no compensation would be paid for POS contributions of less than

16% and in those cases, the valuations adopted were those set out in the POS

Equalisation Schedule.

6.4.71 This strategy by Mayor Grljusich was beginning to show signs of a breakthrough.

Mr Hiller's file notes of this meeting showed that cracks were beginning to appear. Instead of

insisting as he had previously that the Council had no role in the payment of POS compensation,

Mr Hiller –

(a) addressed Mayor Grljusich's claim that excess POS was anything over 10%

instead of 16% (or 17%) by stating that "any compensation that may be payable

would be the difference between the 17% and the 23% [sic] shown in the plan of

subdivision" (emphasis added); and

(b) addressed Mayor Grljusich's claim that POS compensation for Lot 17 should be

valued on a different basis to the other Packham Area landowners by stating that

"[i]n the event that the Council decides to pay the difference for public open

space in excess of the normal Packham provision, then the excess land would

probably be valued by way of the Valuer General's Department" (emphasis added).

6.4.72 Mayor Grljusich's persistent focus on the timing and amount of payment of POS

compensation had the effect of drawing attention away from, and undermining, the City's previously

clear position that it would not pay compensation at all.


575

(iv) Use of the City's information for private purposes

6.4.73 A Special Council meeting was held on 4 December 1997 to discuss issues relating to the

City's role in the administration of the Private Owners' Arrangement and the use of funds from its

section 20C account. Mayor Grljusich opened the meeting, declared that he had a financial interest

in the matter and then left. The meeting then proceeded behind closed doors. The minutes record

that "Mr Denis McLeod of McLeod & Company … address[ed] the meeting and explain[ed] the legal

circumstances of this matter".

6.4.74 Mayor Grljusich was required as a matter of law to declare a financial interest and to

leave the meeting (see sections 5.65 and 5.67 of the Local Government Act 1995). He had a

pending claim for POS compensation against the City. Issues relevant to that decision were to be

dealt with at the meeting, including legal issues relating to the City's rights and obligations in

responding to a claim of that nature. If Mayor Grljusich had access to that information he could

have used it to his own personal advantage - even to the detriment of the City.

6.4.75 On the following day, 5 December 1997, Mayor Grljusich asked the CEO, Mr Brown, for

information about the Council meeting. Mr Brown's file note of the conversation states –

"On today's date, Mayor Grljusich in his capacity as a private owner requested adviceabout the Council decision re Packham Development Scheme. I outlined the Councildecision in broad terms (not word for word).

I advised him that there was no other outcome other than a list of issues which will needto be pursued which will be reported back to Council.

I advised him that he should be careful not to use information which he may be privilegedto because of his position as Mayor/Councillor (he is entitled to know as a Councillor as itis a broad issue).

John stated that the owners were waiting for a response to their letter seeking advice.

He said that they were waiting to let a contract for the development."

6.4.76 Mr Brown was right to warn Mayor Grljusich against using, for personal purposes,

information received in his capacity as a councillor. To do so may constitute a serious offence.

Section 5.93 of the Local Government Act states –

"A person who is a council member, a committee member or an employee must not makeimproper use of any information acquired in the performance by the person of any of his


576

or her functions under this Act or any other written law –

(a) to gain directly or indirectly an advantage for the person or any other person;or

(b) to cause detriment to the local government or any other person.

Penalty: $10 000 or imprisonment for 2 years."

6.4.77 Along similar lines, section 83 of the Criminal Code states –

"Any public officer who, without lawful authority or a reasonable excuse –

(a) acts upon any knowledge or information obtained by reason of his office oremployment;

(b) acts in any matter, in the performance or discharge of the functions of hisoffice or employment, in relation to which he has, directly or indirectly, anypecuniary interest; or

(c) acts corruptly in the performance or discharge of the functions of his office oremployment.

so as to gain a benefit, whether pecuniary or otherwise, for any person, or so as to causea detriment, whether pecuniary or otherwise, to any person, is guilty of a crime and isliable to imprisonment for 3 years."

6.4.78 Under each section it is necessary to establish that the information was used, or the act

done, for the purpose of gaining a benefit or causing a detriment. It is not necessary to prove that a

benefit was in fact obtained or a detriment was in fact caused to another (see Chew (1992) 173

CLR 626 at 632-634 and Willers (1995) 81 A Crim R 219).

6.4.79 By the time that Mayor Grljusich met with Mr Hiller on 22 December 1997, he had

received a good deal more information about the Special Council meeting held on

4 December 1997. Mr Hiller's file note states –

"According to advice he had received about the special meeting of Council, it appearedthat the Council Solicitor, Denis McLeod, had advised that those people who had alreadysubdivided or were about to subdivide could receive an ex gratia payment in respect tothe compensation for public open space."

6.4.80 I am satisfied that Mayor Grljusich used this information relating to the advice given by

Mr McLeod concerning a possible ex gratia POS compensation in order to gain an advantage for

himself and the owners of Lot 17. It would be surprising if Mayor Grljusich did not obtain the

information "in the performance of his functions", or "by reason of his office", as an elected member


577

and Mayor of the City. There is, however, insufficient evidence before the Inquiry to make a formal

finding to that effect. If that link were to be established, there would be a strong prima facie case

that Mayor Grljusich has breached both section 5.93 of the Local Government Act and section 83 of

the Criminal Code.

(f) Meeting with Mayor Grljusich on 6 January 1998

(i) Events leading to the meeting

6.4.81 Another illustration of Mayor Grljusich's abuse of his position as Mayor concerns a

meeting held in the mayoral parlour on the evening of 6 January 1998. Earlier in the evening there

was a meeting of the City's Strategic Planning Committee. Mayor Grljusich was not a member of

the Committee and did not attend. Mr Hiller attended. At about 8.45pm the meeting had finished

and Mr Hiller was at the bar with the elected members and employees who had attended the

meeting. The Mayor arrived abruptly through a side door. He was followed by three people whom

Mr Hiller had never met. Mayor Grljusich walked past Mr Hiller and, as he did so, instructed Mr

Hiller to go with him to the mayoral parlour with the words –

"Steve, in my office now."

6.4.82 There was nothing friendly or proper about Mayor Grljusich's tone or manner. It was

demeaning and insulting for the City's Director of Planning and Development to be treated so rudely

by the Mayor. This was in the presence not only of other elected members and employees of the

City with whom Mr Hiller worked on a daily basis, but also in the presence of three people whom

Mr Hiller had never met but would shortly be facing in the meeting that he was ordered to attend.

6.4.83 Understandably, Mr Hiller felt intimidated. This incident must be seen in its broader

context. For months, Mayor Grljusich had been putting direct, very strong and sustained pressure

on Mr Hiller in relation to Lot 17. Mr Hiller had insisted on dealing with the matter impartially and

professionally, refusing to succumb to Mayor Grljusich's demands for what clearly amounted to

preferential treatment. Inevitably, this resulted in tensions between the two. An indication of the

tension is evident from the following exchange between Counsel Assisting and Mr Hiller during the

public hearings of the Inquiry when dealing with this particular meeting –

"COUNSEL ASSISTING: … there were clearly tensions at the time?---MR HILLER: Verymuch so.


578

COUNSEL ASSISTING: Those tensions that were present at this time, they have beengoing on for some time?---MR HILLER: Yes.

COUNSEL ASSISTING: Have you experienced those in relation to any other matter youhave dealt with?---MR HILLER: No.

COUNSEL ASSISTING: Nothing else you have dealt with on the councils or in thecouncils that you have been involved in for all those years?---MR HILLER: No"(Transcript, 1921-1922).

Mr Hiller explained that part of the intimidation that he felt was as a result of being required to

attend a meeting having been given no advance warning, no notice of what was to be discussed or

who was to attend.

6.4.84 All this clearly impacted adversely on the relationship between Mayor Grljusich and

Mr Hiller. With a measure of understatement that characterised much of his evidence, Mr Hiller

testified that, at this time, his relationship with Mayor Grljusich –

" … was reasonably tenuous. I don't think at the time he held me in very high regard ormy advice to council or to his company and that was the feeling that I had about thesituation" (Transcript, 1936)

6.4.85 Mayor Grljusich's abuse of his position as Mayor is readily apparent. It is inconceivable

that a member of the public could arrive at the Council Chambers at 8.45pm, demand and get the

immediate attention of the City's Director of Planning and Development and conduct a private

meeting in the mayoral parlour.

(ii) Increased tension and 'the stare'

6.4.86 Once in the mayoral parlour, Mayor Grljusich introduced those accompanying him as the

other owners of Lot 17 or their spouses. They were Mr Remo Gava (the husband of Frances

Gava), Mr Lloyd (the husband of Ann Lloyd) and Mrs Sheila Grljusich. At Mayor Grljusich's

invitation, Cr Pecotic was also present.

6.4.87 Cr Pecotic had earlier been approached by Mr Gava to act on behalf of the owners of

Lot 17. He agreed to represent them in their dealings with the City. However it appears never to

have been suggested, nor contemplated, that Cr Pecotic would replace Mayor Grljusich in this role.

Mayor Grljusich has always been of the view that his direct contact with the City's elected members

and employees in relation to Lot 17 was proper and appropriate (see above 6.3(b)(iv)).


579

6.4.88 The tension between Mayor Grljusich and Mr Hiller that existed and was increasing in the

months before the meeting, and which was compounded by Mayor Grljusich's actions immediately

before the meeting, continued at the meeting itself. Mr Hiller testified that –

" … this matter is tense before you get to the meeting; the fact that I'm still dealing withthe mayor, the fact that it's seen as a matter between the mayor and myself, the fact that Ihave a feeling the mayor doesn't particularly like the way I'm handling the matter ordoesn't like my professionalism and so on … I went into the meeting extremelyapprehensive" (Transcript 2134 and 2136).

"At the beginning the tone of the meeting was quite abrupt and, I felt, fairly threatening,but as the questions were asked and the responses given, the meeting I think worked outto be a reasonably agreeable meeting… I think the way in which the meetingcommenced caused me some concern… Yes, to an extent [I felt intimidated by themayor], and also the fact I had no knowledge of really what the meeting was going to be"(Transcript, 1923).

6.4.89 Mr Hiller was asked by Mr Hammond whether the "threshold of the bad behaviour [by the

Mayor] reached its peak" when Mayor Grljusich had said "Steve in my office now". Mr Hiller

responded –

"No, it carried on into the meeting. I think, basically, as I recall, the mayor sat at the topend of the table; I sat at the bottom end of the table … he basically opened the meetingby saying, 'we want answers to questions now,' and, basically, introduced the meeting likethat" (Transcript, 2134-2135).

6.4.90 One particular feature that contributed to, and exacerbated, the tension and the

intimidation was Mayor Grljusich's "intense staring" at Mr Hiller "while [Mr Hiller] was trying to give

an answer" (Transcript, 2135).

6.4.91 Mr Grljusich's Counsel pursued at some length with Mr Hiller (and other witnesses) Mayor

Grljusich's use of 'the stare'. Mr Hiller explained that, on this occasion, as well as others, Mayor

Grljusich had stared intently at him –

" … while I was trying to give responses … It's a technique to make people feeluncomfortable and it's used [by Mayor Grljusich] around the council chamber"(Transcript, 2136).

"I think that he's trying to make sure that you feel like you're on the spot"(Transcript, 2138).

Mr Hiller testified that Mayor Grljusich was the only elected member to use this technique

(Transcript, 2140).


580

6.4.92 Mr Hiller's evidence was corroborated by other witnesses (Transcript, 2327-2328 (Ryan),

2428 (Waters) and 3155-3156 (Brown)). When confronted with this evidence, Mr Hammond sought

to trivialise the issue by suggesting that it was "ridiculous" for any person to be adversely affected,

let alone intimidated, by Mayor Grljusich's stare (Closing Submissions, para. 133(b)(iv)). The

matter cannot be dismissed so lightly. The potential impact of non-verbal communication is well

recognised. For example, in its 1992 report into local government, the NSW Independent

Commission Against Corruption pointed out, in a passage that is particularly relevant to Mayor

Grljusich in this context, that –

"Some people have forceful personalities and considerable presence and can urge aposition without uttering a word, by means of facial or other gestures" (Report onInvestigation into Local Government, Public Duties and Conflicting Interests (March 1992)at p. 39).

(iii) The meeting

6.4.93 Mayor Grljusich began the meeting by stating that he and those who followed him had just

had a meeting of Peremate about Lot 17 "and he wanted answers to questions now".

6.4.94 The first question related to the reduced advertising period that had been recommended

by the Council for the rezoning of Lot 17. Mr Hiller explained that, as a result of an administrative

oversight, the Council's request for a reduced advertising period was not forwarded as part of the

City's initial advice to the Ministry for Planning. A later advice sent to the Planning Commission

informing it that the reduced advertising period was acceptable was received too late. In any event,

however, as the Planning Commission had already issued its approval for subdivision, the length of

the advertising period was now immaterial because subdivision could be commenced at any time

and it was highly unlikely that the lots would be available for sale before the final gazettal of the

rezoning amendment. Mr Hiller noted that "[t]his explanation seemed to be acceptable to those

present".

6.4.95 The major question on which the owners of Lot 17 wanted answers related to POS

compensation. Mr Lloyd informed Mr Hiller that until this issue was resolved, the owners could not

proceed with the subdivision and –

" … this delay was causing them to incur holding costs and if this was not resolvedquickly, then they would seek to make the Council liable for any damages incurredbecause of the delays."


581

6.4.96 This was the second threat made by the owners of Lot 17 against the City. Mayor

Grljusich, one of the owners of Lot 17 in whose presence and on whose behalf the threat was

made, did not refute or resile from it. In his conversation with Mr Hiller on 8 August 1997, Mayor

Grljusich himself had threatened that "if the Council did not do the right thing he would take the

matter further".

6.4.97 Mayor Grljusich, once again, raised the question of the amount of POS land which ought

to be given up free of cost by the owners of Lot 17. He told Mr Hiller "that he believed that they

should only give up 10% of the land". Mr Hiller advised the meeting, as he had advised

Mr Grljusich and Peremate on numerous previous occasions, that the development of the Packham

Area had "been based on a provision of 17% of the land … for public open space and drainage

purposes and not 10%".

6.4.98 Mayor Grljusich then restated his claim that the Council should compensate the owners of

Lot 17 for "excess" POS land. Consistently with his earlier advice, Mr Hiller advised the meeting

that the Council could not acquire land given up as a condition of subdivision with funds from its

section 20C account. To do so would be unlawful. This was now readily apparent to the City as a

result of the recent discovery that the payment of $222,934 to Urban Focus some years earlier had

been unlawfully made (see Chapter 4 at 4.12(e)). Mr Hiller, however, went on to suggest a

possible avenue for the City to pay compensation to the owners of Lot 17. He stated –

"� The only way the Council can use its 20C funds to acquire land for public openspace is by the 20A Reserve shown on the plan of subdivision being subdividedinto 3 distinct lots, one for drainage, one for public open space and a balance lot.The reason for suggesting a separate lot for the public open space is so that the10% can be clearly identified from the drainage, and also the creation of theresidue lot would be the one that the Council may be prepared to purchase with its20C funds, if it is not reserved under 20A.

� I advised that this approach to the way in which the over-supply of public openspace within a subdivision is compensated could have implications for the district,where other subdividers provide more than the minimum 10%, such as the GoldEstate and Landcorp development at Atwell, where a significant over-supply ofpublic open space has been provided.

� At this stage the Council can do no more until either a new application is receivedor a submission is received for it to consider in some other form, because theapplication which has been approved by the WAPC is acceptable to the Council."


582

6.4.99 At this meeting Mr Hiller set out a possible mechanism for payment - a revised subdivision

plan showing the 27% of Lot 17 divided into three lots, one of which could be purchased by the

City. As to the question whether the City should purchase one of those lots, Mr Hiller referred to a

factor that would need to be taken into account - the financial implications for the City if such a

decision were to be used as a precedent. This question, which was of paramount importance to the

City's interests, did not concern the owners of Lot 17. It should have concerned the Mayor of the

City, but he had a clear conflict of interest. Mr Hiller left the meeting with the understanding that the

owners would engage their surveyor to survey the existing POS identified area and create three lots

as discussed, probably –

"submitting a fresh application for subdivision and a request for council to purchase theresidue of the land in accordance with the discussions contained in [Mr Hiller's file notes]".

6.4.100 The other parties to the meeting appear to have left with a different understanding of

Mr Hiller's suggestion. Mayor Grljusich and Cr Pecotic believed that they had persuaded Mr Hiller

that the owners of Lot 17 should be required to give up only 10% of their land free of cost for POS

purposes and that the balance of the 27% would be purchased by the City using the funds from its

section 20C account.

Findings

F43. I find that, in respect of the meeting conducted by Mayor Grljusich in the mayoral

parlour from about 8.45pm on 6 January 1998 –

(a) Mayor Grljusich abused his position as Mayor of the City by –

(i) demanding, in a rude and insulting manner, that Mr Hiller, without any

advance notice, attend the meeting;

(ii) using the mayoral parlour for his own private purposes in pursuing his

claim against the City for POS compensation;

(iii) demanding that Mr Hiller give him and the other owners of Lot 17 (or their

spouses or representatives) immediate answers to their questions;

(iv) adopting intimidating tactics, including intense staring at Mr Hiller, to

increase the pressure on Mr Hiller to succumb to the persistent POS

compensation demands by Mayor Grljusich and the other owners of

Lot 17; and

(v) being a party to the threat of legal action by the owners of Lot 17 against

the City if the Council did not quickly resolve the POS compensation

issue; and


583

(b) Mayor Grljusich's behaviour was a gross departure from the standards of

conduct expected of a person occupying the position of Mayor and, in the

circumstances, constitutes improper conduct.

(iv) Revised plan of subdivision

6.4.101 A revised plan of Lot 17 was prepared by John Giudice & Associates in line with

Mr Hiller's suggestion to divide the 27% into three lots. This plan showed the portion of land

previously identified as being given up as the reserve for recreation and drainage (amounting to

27%), divided into three segments: 2,107m2 for POS, 28m2 for drainage, and a balance lot of

3,537m2 for recreation. It was intended by the owners that the balance lot would be acquired by the

City.

6.4.102 This plan was later modified so that the amount for drainage was deleted. It was lodged

with the Planning Commission by Mr Cole in relation to the reconsideration of Condition 13 by letter

dated 3 February 1998. The City planners did not see this map before the completion of the

Officers' report for the Council meeting on 20 January 1998 which dealt with the reconsideration of

Condition 13.

6.5 The Council's review of Condition 13

(a) Background

(i) Request for reconsideration

6.5.1 The owners of Lot 17 formally made their request to the Planning Commission for

reconsideration of Condition 13 on 20 October 1997. A copy of the request was forwarded to the

City for its recommendation on 11 November 1997. During his conversation with Mayor Grljusich

on 22 December 1997, Mr Hiller was adamant that the earliest occasion for the Council to consider

its response to the Planning Commission would be at its February 1998 meeting. There were

important and wide ranging issues that needed serious consideration and the matters involving

Lot 17 had to be reviewed in that wider context.


584

6.5.2 On the following day, Mr Hiller discussed the matter with Mr McLeod. As recorded in his

file note of that discussion (dated 23 December 1997), Mr Hiller wanted to know –

" … if the matter of recompense for excess of public open space provided in the plan ofsubdivision could be dealt with more expeditiously than currently appeared to be the caseto the landowners."

Mr McLeod advised that "it would not be proper" to deal with the concerns of the owners of Lot 17

until the POS issue was resolved for the whole Packham Area, "the outcome of which would apply

to the future of the Lot 17 subdivision". This confirmed the advice that Mr Hiller had given to Mayor

Grljusich at their meeting on the previous day.

6.5.3 Mr Mcleod also advised Mr Hiller –

" … that the Council should not be seen to be providing special arrangements with theowners of Lot 17 because of the implications which may arise for the owners and otherPackham participants."

This warning from Mr McLeod about the impropriety of making what might seem to be special

arrangements with the owners of Lot 17 was to be repeated on a number of occasions during the

following 6 months.

6.5.4 Significantly, Mr McLeod also warned of the financial risks to the City if it were to pay

compensation for land that would otherwise be given up free of cost under a condition of

subdivision approval. As for the Packham Area itself, he stated that –

"[t]here was a risk that if there was a change in arrangements based on circumstancessurrounding Lot 17 that the Council could end up being a major funder of the PackhamDevelopment Area in terms of public open space. Currently most of the funds, arecollected and distributed by way of the landowners through the Urban Focus agreement."

Further, he warned that the financial risk extended to future claims outside the Packham Area. As

has been seen, Mr Hiller repeated this warning to Mayor Grljusich and those attending the meeting

in the mayoral parlour on 6 January 1998.

(ii) Mr Hiller's draft report of 9 January 1998

6.5.5 For the purpose of preparing his report and recommendation to the Council on the

request for reconsideration of Condition 13, Mr Hiller researched the background and context of the

claim in December 1997 and January 1998 and prepared a report which was later dated

9 January 1998. Although headed "Background Notes", it adopted the form of an Officers' report to

the Council. It dealt with the issues in a detailed and comprehensive way and comprised 7 pages.

The content of the draft report was consistent with Mr Hiller's account of the meeting of


585

6 January 1998 and was prepared shortly after that meeting. It maintained the initial approach

taken by Mr Hiller in relation to the Lot 17 owners' claim for POS compensation.

6.5.6 As to the current terms of Condition 13, the draft report pointed out that –

(a) the conclusion of the City's Planning Department, confirmed by the City's legal

advice, was that "the Council was unable to pay compensation with 20C funds for

any land given up for public open space as a 20A Reserve in excess of the normal

minimum of 10%";

(b) the 1989 Council resolution, relied on by Mayor Grljusich as the basis for his POS

compensation claim, "does not provide for the payment of compensation for the

provision of excess public open space"; and

(c) had the owners of Lot 17 been participants in the Private Owners' Arrangement,

"then it is likely that the issues surrounding the payment of cost and any POS

reimbursements could have been dealt with through Urban Focus, in accordance

with the landowners [sic] cost sharing arrangements".

6.5.7 On this issue, the draft report concluded that –

" … Condition 13 … should be retained, unless some other arrangement can be made forthe provision of drainage and POS, satisfactory to both the Council and the WAPC. Inany event this condition can be determined by an appeal."

It was pointed out that, as a result of the meeting on 6 January 1998, the owners of Lot 17 would

"be intending to make a fresh application for the subdivision" and, because of that, "it would be

premature to respond to the [Planning Commission] letter, as the current approved subdivision

could be superseded".

6.5.8 The draft report also identified and discussed two critical issues relating to the question

whether the Council should pay POS compensation to the owners of Lot 17. One related to the

payment of infrastructure costs and the other related to the financial ramifications of such a claim

for the City.

6.5.9 As for the payment of infrastructure costs, the draft report set out the full text of the

Council's Planning Policy PD 14. It then noted that –

"No evidence has been received by the Council that the applicants have provided or paidfor relevant infrastructure, nor has any evidence been received to date that otherarrangements have been made for the payment of servicing costs."


586

On this basis, the draft report concluded that –

"The approved subdivision does not comply with the Council's Policy PD 14 for Packham,because the sharing of costs with other owners has not yet been resolved."

The draft report also quoted the following part of the Council's resolution on 25 June 1997 in

respect of the Lambasa matter –

"(5) That Council advise all parties of its decision and that it is not prepared to befurther involved in facilitating the arrangements with respect to servicinginfrastructure issues between the landowners."

The draft report concluded that the resolution had the effect that the Council would "not be further

involved in facilitating cost sharing arrangements between owners". For the reasons set out earlier,

this conclusion is misconceived and wrong (see above at 6.2(b)(iii)).

6.5.10 Nevertheless, the report went on to draw the crucial connection between payment of

infrastructure costs and POS compensation and to highlight the comparison between the owners of

Lot 17 and the other Packham Area landowners –

"Had the owners been participants in the Owners Agreement, then it is likely that theissues surrounding the payment of cost and any POS reimbursements could have beendealt with through Urban Focus, in accordance with the landowners cost sharingarrangements.

It has been made clear by the owners of Lot 17, that they do not accept the Urban Focusformula for cost sharing, nor the valuations used as the basis for POS compensation.Also they are of the view that they should be able to subdivide their land independently ofthe other landowners."

6.5.11 The second critical issue relating to the question whether the Council should pay POS

compensation to the owners of Lot 17 concerned the financial ramifications, for the City, of such a

decision. The draft report dealt extensively with this issue under the heading of "Budget

implications". In part, it states –

"The approach being pursued to resolve the compensation problem for the provision ofexcess POS could have significant implications for not only this Council but all other localgovernments where subdivision is taking place.

There are many subdivisions where excess POS provision occurs due to topographiccircumstances, cadastra, environmental constraints and other factors. This can result insay 10.5% POS being provided through to say 18 to 22% in the case of the ThomsonsLake Estate because of the overhead powerlines and Twin Bartram Swamp and odourbuffers.

This approach to the provision of POS in excess of the 10% (minimum) traditionallyrequired could lead to POS being divided into lots of 10% plus the balance, with thebalance to be purchased by the local government.


587

Although the Council could refuse to purchase the excess open space, it could be difficultnot to do so if the provision was in accordance with an adopted development plan orbecause of public pressure about the lack of maintenance of any public open spacecreated which is left in the subdividers ownership and control.

The financial implications for the Council could be quite profound. As the POS is local, itwould be the local governments that would be responsible for any payments, not theState."

6.5.12 If, in relation to the reconsideration of Condition 13, the Officers' report that was provided

to the Council had been based on, and included the material contained in, this draft report, the

Council would have had a very powerful case to conclude that –

(a) it should recommend to the Planning Commission that Condition 13 not be

changed; and

(b) the City should not pay compensation to the owners of Lot 17.

6.5.13 In fact, the final version of Mr Hiller's Officers' report - completed a few days later - was

fundamentally different from this draft. One of the questions before the Inquiry is what caused

Mr Hiller to substantially change his position in such a short time.

(iii) Meeting with Mr McLeod on 13 January 1998

6.5.14 On 13 January 1998 a meeting was held between Mr Hiller, Mr Ryan and Mr McLeod.

The meeting discussed the issues involving Lot 17 and the general POS issues in the Packham

Area.

6.5.15 This meeting is referred to in the chronology for Lot 17 that Mr Hiller prepared as an

attachment to the Officers' report for the 20 January 1998 meeting and in his closing submissions

(pp. 7, 39, 74 and 81) but it is not otherwise documented on the City's files. It is a significant

omission from the City's files. Whether the absence of any record of the meeting is another

example of the City's poor file management or has another explanation is unknown. The Inquiry did

however obtain some documentation from the files of McLeod & Co which appears to relate to this

meeting.


588

6.5.16 A revised draft Officers' report was presented to Mr McLeod. This draft contained, in part,

the following recommendation –

"(3) advise the Western Australian Planning Commission that in response to its letterdated 11 November 1997 that in respect to the subdivision approval for Lot 17Hamilton Road, Spearwood (Ref: 104081) that:-1. …2. The Council recommends that Condition 13 be retained unless:-

• another substitute condition is put in place which is satisfactory to boththe Council and the Commission; or

• an alternative condition is determined by an appeal to either theMinister for Planning or the Town Planning Appeals Tribunal."

6.5.17 The revised draft Officers' report noted that –

"…• Council is unable to pay 20C funds for the acquisition of a 20A reserve, according

to the Council's legal advice, there is nothing the Council can do to satisfy theapplicants' need for compensation as requested in their letter to the Commission.

Until such time as the application is revised or the condition is changed to the satisfactionof the Commission, there is no further action that the Council can take to resolve thematter… [it] is therefore a matter to be resolved between the applicants and theCommission… Should the applicants continue to be aggrieved by the imposition ofCondition 13, then an appeal to either the Minister or the Tribunal is open to them."

6.5.18 Both the recommendation and the advice contained in this draft Officers' report, as with

the advice in the earlier draft, were soundly based and consistent with the responses that had been

given to Mayor Grljusich and Peremate by the City's planners over the preceding months.

6.5.19 However, Mr McLeod's notes of the meeting state –

"Given Lot 17 has a current approval of subdivision which requires all land shown onsubdivision plan as s20A reserve be vested in Crown free of costs, it is open to theCouncil to advise the WAPC to amend Condition 13 of the subdiv. approval.

Perhaps yes. – to the extent equity is maintained. i.e. Council will agree to a conditionwhich would require only 16% or 17% (whichever is the standard) being vested in Crownfree of cost under s.20A and balance being purchased by Council under s.20C."

This is the first indication of any support by the City for the amendment of Condition 13. It is also

the first mention of "equity" in the context of whether the Council should pay POS compensation to

the owners of Lot 17. The issue of what was "fair and equitable" was to play a major role in the

Council's actions and decisions over the following 6 months.


589

6.5.20 Mr McLeod's brief notes foreshadowed a major turnaround in Mr Hiller's position. Firstly,

instead of recommending that Condition 13 not be changed, he now proposed to recommend that it

should be changed. Secondly, instead of maintaining the City's firmly expressed view that POS

compensation not be paid to the owners of Lot 17, it was now proposed to advise the elected

members that compensation should and would be paid "to the extent equity is maintained". Thirdly,

the financial ramifications for the City in making a payment to the owners of Lot 17 - which had

been identified earlier by both Mr Hiller and Mr McLeod as a major issue - appeared to vanish, even

as a relevant factor, from this point.

6.5.21 There was another very significant change in Mr Hiller's position. Three weeks earlier,

Mr McLeod had advised Mr Hiller that "it would not be proper" to deal with the question of POS

compensation for the owners of Lot 17 until the POS issues for the whole Packham Area had been

resolved. These issues required "serious consideration" because, among other reasons, they had

potentially major financial implications for the City. Mr McLeod also warned against the City being

"seen to be providing special arrangements with the owners of Lot 17".

6.5.22 For all these reasons, Mr Hiller held the view that those issues could not properly be dealt

with before the February meeting of the Council. He expressed this view firmly to Mayor Grljusich

on 22 December 1997 and did not express any change to this view at the meeting with the owners

of Lot 17 on 6 January 1998. Within a matter of days, however, Mr Hiller arranged for the Lot 17

issues to be considered at the Council's January meeting. The agenda paper, including the

Officers' report, was completed on 14 January 1998.

6.5.23 Mr Hiller's explanation for his about-face on this point was that the request for

reconsideration had been before the City since 11 November 1997 and needed to be dealt with

promptly. I accept that the length of time since the City had been given notice by the Planning

Commission of the request for reconsideration was a factor in Mr Hiller wanting to avoid

unnecessary delays. On the other hand –

(a) the Planning Commission did not set a time limit on the City's response;

(b) there is no indication from the City's files, nor is there any other evidence, that the

Planning Commission asked the City to expedite its response;

(c) there is nothing to suggest that Mr Hiller was not as aware on 22 December 1997

and 6 January 1998, as he was a few days afterwards, of the date when the City

had been given notice of the request for reconsideration;


590

(d) the proposed solution regarding the splitting of the 27% POS lot into three separate

lots had been discussed for the first time with the owners of Lot 17 only a few days

earlier, on 6 January 1998 and the owners of Lot 17 needed time to pursue this

solution; and

(e) the issue of payment of POS compensation was unprecedented and raised a

number of serious issues having ramifications beyond the concerns of the owners

of Lot 17.

6.5.24 It should have been readily apparent to Mr Hiller that it was in the City's interests for these

issues and ramifications to be considered carefully and properly. Mr Hiller was under intense

pressure, as he had been for some time, from Mayor Grljusich not only to expedite the matter but to

produce a solution that satisfied the demands of Mayor Grljusich and the other owners of Lot 17.

Mr Hiller's advice and the advice of his fellow planners had been repeatedly and consistently

ignored by Mayor Grljusich, his professionalism and integrity had been questioned, he had been

blamed by Mayor Grljusich for the problems faced by the owners of Lot 17 and he had been treated

offensively by Mayor Grljusich at the meeting on 6 January 1998 (Transcript, 1943-1944, 1960,

2105, 2122, 2134, 2136, 2152, 3406-3407, 3510, 3519 and 3652).

6.5.25 In his evidence to the Inquiry and in his closing submissions, Mr Hiller sought to downplay

the impact of this pressure on his decisions and actions with respect to Lot 17 issues

(Transcript, 1934 and 2097 and Closing Submissions, 4, 7, 9, 14-15, 102 and 136). I have no doubt

that Mr Hiller conscientiously sought not only to resist the pressure that was being applied but also

to act impartially at all times. Nevertheless, I am satisfied that the pressure that was applied to him,

and his staff, by Mayor Grljusich in fact had a significant effect on his actions and decisions. In this

particular case, I am satisfied that in the absence of that pressure Mr Hiller would have maintained

his initial view that the reconsideration of Condition 13 should properly have been dealt with at the

February Council meeting.

6.5.26 As will be seen, Mr Hiller's decision to expedite the completion of his Officers' report in

time for the Council's January meeting was a major contributing factor to the report's failure to

properly inform the Council of the matters that it should have considered when determining its

response to the request for reconsideration of Condition 13.


591

(b) Officers' report

(i) Significance of report

6.5.27 It is necessary to bear in mind that this was a report to the Council. It was Mr Hiller's duty

to ensure that sufficient advice and information was provided to the elected members so that they

could make an informed decision.

6.5.28 For three reasons, that duty assumed a even greater importance in this case. First, there

was no preceding Committee meeting to consider the matter. Because of this, the Council was

more heavily reliant than normal on the advice and information provided in the Officers' report.

Secondly, the matter involved Mayor Grljusich. Having regard to the City's earlier biased decisions

that favoured Mayor Grljusich, it was imperative that the City act and be seen to act impartially (see

above at 6.1(b)(iii)). Thirdly, the City had never before paid POS compensation in respect of land

which would otherwise have been given up "free of cost and without compensation".

(ii) Outline

6.5.29 The final version of Mr Hiller's report which was circulated to the elected members was

very brief compared to his first draft. Much had been omitted. It was not simply a case of the

relevant issues being dealt with more concisely. The report contained no reference at all to issues

that were not only relevant, but of critical importance, to the issue before the Council.

6.5.30 The report on Condition 13 began by reiterating the view that, under the existing terms of

the condition –

" … there is nothing the Council can do to satisfy the applicants' need for compensationas requested in their letter to the [Planning] Commission."

6.5.31 The report then dealt with the question whether the Council should support the

modification of Condition 13 so that the City could - and would - compensate the owners of Lot 17.

6.5.32 At the outset it is important to appreciate that, although not expressed in the report in

these terms, there were in fact two distinct, although overlapping, issues before the Council. The

first concerned the proposed modification to Condition 13 as a possible mechanism for the City to

pay POS compensation to the owners of Lot 17. The second concerned the question whether

compensation should be paid. The formal and immediate outcome of the Council's decision would

be reflected in its response to the Planning Commission. It was simply a recommendation from the


592

City to the Planning Commission. The Planning Commission, not the City, would determine

whether the condition was to be modified.

6.5.33 In these circumstances, the Officers' report could have been drafted on the basis that a

modification along the line suggested should be supported, so as to allow for the possibility of

POS compensation, but that the question whether compensation should in fact be paid to the

owners of Lot 17 raised wider issues that would need to be considered in more detail at a later

stage.

6.5.34 The Officers' report was not drafted in this way. It merged the two issues and dealt with

them together. In other words, the report sought to advise the Council not only how compensation

might be paid, but whether it should be paid. The two key passages in the report state –

"The Council should, however, advise the Commission that it supports the modification ofCondition 13 so that it reflects the arrangements applied to other landowners in thePackham Development Area by Urban Focus in accordance with an owner's agreement.This is considered to be appropriate because it is fair and equitable.

…

Condition 13 should be revised so that it reflects the setting aside of 16% of the grosssubdivisible area of Lot 17 for Recreation and Drainage reserve purposes to be vested inthe Crown free of cost. The balance of the public land required from Lot 17 under thePackham Development Area Structure Plan should be set aside in a separate lot forfuture purchase by the Council under the provisions of section 20C of the Act."

6.5.35 Mr Hiller's clear advice to the Council was that POS compensation should be paid to

Mayor Grljusich and the other owners of Lot 17 because it was "fair and equitable" to do so.

6.5.36 The Officers' report formally recommended, in effect, that –

(a) as for the existing subdivision approval, there was no action that the City could take

(presumably, to pay POS compensation to the owners of Lot 17) "as this is a matter

between the Commission and the [owners of Lot 17]"; and

(b) the Council support the proposed modification to Condition 13 which would allow

the POS land in excess of 16% to be set aside as a separate Lot "for future

purchase by the [City]".


593

6.5.37 As has been seen, Mr Hiller's first draft report identified and discussed two issues relating

to the question whether the Council should pay POS compensation to the owners of Lot 17. One

related to the financial implications of the proposed payment. The other related to the application of

Policy PD 14 and, in particular, the payment of infrastructure costs.

6.5.38 It is important to consider the extent to which each of these are dealt with in the final

version of the Officers' report.

(c) Financial implications for the City

6.5.39 As has been seen, in his first draft Officers' report of 9 January 1998, Mr Hiller dealt

extensively with the financial implications for the City of making a POS compensation payment to

the owners of Lot 17. His concerns were soundly based. The City had never before paid POS

compensation to an owner of land who had been required by the Planning Commission to give up

the land "free of cost and without compensation". Mr Hiller was not aware of any other local

government in this State having paid POS compensation in that situation. Thus, he concluded in

his draft report that the proposal before the Council –

" … could have significant implications not only for this Council but for all other localgovernments where subdivision is taking place."

6.5.40 In his draft report Mr Hiller identified two particular subdivisions in other parts of the City's

district where "excess POS provision" would be required. Any POS payment by the City to the

owners of Lot 17 could be properly used by landowners in these subdivisions to support their own

claims for compensation.

6.5.41 A similar warning had been given to Mr Hiller by Mr McLeod on 23 December 1997.

Mr McLeod was concerned about "other areas outside Packham" as well as the Packham Area

itself.

6.5.42 However, in the final version of his Officers' report to the Council, less than a week after

the first draft report, Mr Hiller's only comments to the Council in relation to this matter were as

follows –

"Budget/Financial Implications

Under the currently approved subdivision plan there are no cost implications for theCouncil.


594

Should Condition 13 be amended, the subdivision revised or a decision taken by theMinister or the Tribunal to change the condition, then the Council may be required toapply its 20C funds to purchase portion of the public open space reserve contained in theproposed subdivision."

6.5.43 Thus, Mr Hiller restricted his comments to the financial implications for the City only in

respect of this particular transaction. His report contained nothing that would have alerted the

Council to the possible financial consequences –

(a) for the City, in respect of other owners in the Packham Area;

(b) for the City, in respect of other subdivisions within in its district; and

(c) for other local governments.

6.5.44 Mr Hiller's explanation for this fundamental change in his position was that he was

convinced by others that he was being alarmist (Closing Submissions, 76). In his evidence

Mr Hiller noted –

"The point I'd make though is that that was a very single-based view. It wasn't a view thatwas shared by my colleagues, the Ministry for Planning or by others. So people felt that Iwas being a bit alarmist in the way in which I was considering the matter"(Transcript, 1937 - see also Transcript, 1939 and 1957).

The view that he accepted was that the precedent value of the claim was limited to non-participants

in the Packham Area.

6.5.45 There is no logical reason why the payment of POS compensation to Mayor Grljusich and

the owners of Lot 17 would not have set a precedent having a far wider application. This is clearly

illustrated by the way that the Council later dealt with the issue at its meetings in June 1998 and in

January and February 1999. However, the prospect that a POS compensation payment, once

made for the first time, would be used as a precedent, should have been readily apparent from the

time that it was first considered.

6.5.46 In rejecting the later appeal lodged by the owners of Lot 17 against Condition 13, the

Minister for Planning was concerned about the precedent that would be established. This appeal is

discussed in more detail later in this Chapter (at 6.12). Its significance for present purposes is that

one of the Minister's reasons for rejecting the appeal was that –

"In relevant circumstances, the Commission does request the provision of more than 10%of public open space, especially where land fronts on to waterways or wetland areas andrequires the land to be given up free of cost to the Crown. To single out this lot, therefore,[for POS compensation] would be to treat the land separately from others who have beenrequired to surrender more than 10% of public open space without any form of


595

compensation. The principle would, by force of the same argument, suggest that thereshould be payments to Local Government for land less than 10% in some circumstanceswhere a lesser amount of land is actually required. … It would, therefore, be inappropriateto introduce the concept of a payment for land in excess of 10% when requested by theCommission in appropriate circumstances"

The Minister specifically endorsed the view of the Planning Commission that a POS compensation

payment in this case "would establish a precedent for similar recompense in other circumstances"

(letter from the Minister for Planning to Mr J Grljusich dated 24 August 1998).

6.5.47 The key point is that, to Mr Hiller's knowledge at the time, the proposal was

unprecedented. Mr Hiller referred in his draft report to two specific subdivisions in the district where

the issue could arise. There was no relevant basis for ruling out the possibility of other subdivisions

taking place where the issue might also arise.

6.5.48 In these circumstances, at the very least, Mr Hiller should have put the issue squarely

before the Council so that the City's elected members could have determined for themselves

whether payment of POS compensation to the owners of Lot 17 could have wider financial

implications for the City, if not other local governments.

(d) Infrastructure costs

(i) Policy PD 14

6.5.49 Mr Hiller's first draft report set out Policy PD 14 in full. In then concluded under the

heading of "Policy implications", that –

"The approved subdivision does not comply with the Council's Policy PD 14 for Packham,because the sharing of costs with the other owners has not yet been resolved."

6.5.50 In the final version of the Officers' report that was seen by the elected members there was

only one reference to Policy PD 14 –

"Council Policy PD 14 relates to the subdivision of the land."

6.5.51 As a threshold point, it seems, in the form that it took, that the report may as well have

omitted all reference to Policy PD 14. The City had dozens of planning policies. When giving

evidence to the Inquiry, few elected members recognised "Policy PD 14" from its title. No elected

member had a good recollection or understanding of its terms. In any event, to indicate to the

Council that this policy "relates to the subdivision of the land", without giving any indication of how it


596

related, or what effect the relationship had on the issues being considered by the Council, was

uninformative and unhelpful.

6.5.52 Mr Hiller's view was that it was not necessary to include in the Officers' report a statement

that the subdivision did not comply with PD 14 because it was irrelevant to the POS compensation

issue (Transcript, 1939).

6.5.53 Insofar as the reconsideration of Condition 13 is concerned, Mr Hiller had very good

reasons for not recommending to the Council that it should have sought to persuade the Planning

Commission to impose an infrastructure cost contribution condition on the owners of Lot 17 as part

of a modified Condition 13. The Council had recommended a condition of that type in September

1997, the last occasion on which it considered the subdivision of Lot 17. However, having regard to

Planning Bulletin No. 18 (see above at para. 6.2.72) and to the fact that the Planning Commission

had made it clear, both in this case and in others, that it would not impose a condition of that type,

there was no realistic prospect of such a recommendation being adopted. Nevertheless, it would

have been helpful if the Officers' report had informed the elected members of the situation.

6.5.54 It does not follow, however, that - as Mr Hiller has argued - Policy PD 14 was not relevant

to the POS compensation issue. Nor, in any event, does it follow that the refusal or failure of the

owners of Lot 17 to pay their share of infrastructure costs was not relevant when considering

whether the City should pay them POS compensation.

(ii) Relevance of infrastructure costs to POS compensation

6.5.55 The issue in relation to the payment of POS compensation was whether the City should

make a payment to the owners of Lot 17. The owners of Lot 17 had no legal right to be paid and

the City had no legal obligation to make a payment. Any payment by the City would have been an

ex gratia payment. In this situation, the Council was entitled, if not required, to have regard to a

broader range of considerations in determining what was appropriate - or "fair and equitable" - in all

the circumstances.

6.5.56 The argument, therefore, that Policy PD 14 had become "unenforceable" in 1997 because

the Planning Commission would not support it at the subdivision approval stage (see

above 6.2(e)(ii)), had little, if any, bearing on the question whether the policy, or the infrastructure


597

cost sharing objective underlying the policy, could and should be taken into account by the Council

in deciding whether to make an ex gratia payment to the owners of Lot 17.

6.5.57 The analysis earlier in this Chapter (at 6.2(b)) showed that one of the fundamental

principles underlying not only Policy PD 14 but the development of the Packham Area over the

preceding decade was that all landowners who benefited from infrastructure development

undertaken by others would contribute equitably to the costs of that development. Regardless of

the unenforceability of Policy PD 14 at the subdivision approval stage by the Planning Commission,

its objectives remained intact.

6.5.58 For present purposes, the most important consequences of the infrastructure cost sharing

objective was the connection between POS compensation and contribution to infrastructure costs.

The relevance, and even the existence, of this connection has been denied by Mr Hiller and

Mr McLeod during the course of the public hearings and in their closing submissions (Transcript,

1939, 1941, 1946, 1948, 1952, 1977, 2186, 2191-2192, Closing Submissions, 23 and 52-53 (Hiller),

Written Response, 29 and 49 (McLeod)).

6.5.59 Mr Hiller was aware at all relevant times that the owners of Lot 17 had not paid, and had

made no agreement nor given any undertaking to pay, their share of infrastructure costs.

Mr McLeod did not know this. In his Written Response to the Inquiry dated 10 December 1999,

which he referred to in his covering letter as his "evidence", he stated –

"I have no record or recollection (prior to this Inquiry) of being informed that theagreement binding the Grljusich family to contribute to infrastructure costs associated withthe Urban Focus arrangement had been set aside or cancelled … so far as I wasconcerned, the matter of contribution by Lot 17 owners to Urban Focus infrastructurecosts other than POS was a dead issue. It was not in my mind, and not brought to mymind in this context" (Written Response, 29-30 and see also Transcript, 2284-2285).

6.5.60 Mr McLeod claimed that, just as it was a "dead issue" for him, it was also a dead issue for

"officers Hiller, Ryan and Brown" (Written Response, 29-30). Clearly this does not follow. For Mr

McLeod, it had never been a "live" issue. In contrast, Mr Hiller and Mr Ryan not only knew, but

were reminded repeatedly by Urban Focus, that the owners of Lot 17 had not paid, and had made

no arrangements to pay, their share of infrastructure costs. They were also reminded on a number

of occasions by Urban Focus that it would be inequitable, by comparison to other Packham Area

landowners, for the owners of Lot 17 to receive POS compensation without paying their share of

infrastructure costs. For them it was not a dead issue, it was very much alive and kicking.


598

6.5.61 One of the significant consequences of Mr McLeod's evidence is that Mr Hiller and

Mr Ryan never sought Mr McLeod's advice on the connection between POS compensation for the

owners of Lot 17 and payment of infrastructure costs. They did not even inform Mr McLeod of the

position relating to the payment of infrastructure costs by the owners of Lot 17. It follows that

Mr McLeod was left in the dark on this issue and that all his later advices to the City relating to the

POS compensation claim by the owners of Lot 17 were provided on that basis.

6.5.62 Mr Hiller's argument, reflected in his Officers' report to the Council, is that in determining

whether it was "fair and equitable" for the owners of Lot 17 to be paid POS compensation by the

City, it was appropriate to ignore the fact that the owners of Lot 17 had not paid, and had made no

arrangements to pay, their share of infrastructure costs. This argument is fundamentally

misconceived and wrong.

6.5.63 The true position is clearly set out by the City itself in its letter to Peremate less than 4

months earlier. This letter, dated 12 September 1997 and drafted by Mr Hiller himself, advised

Peremate that –

(a) "there is no obligation for the Crown, the Council or other landowners in the

Packham Scheme Area to compensate or reimburse [the owners of Lot 17] for

public open space.";

(b) the owners of Lot 17 were not entitled to POS reimbursement from the City's

section 20C account;

(c) it was open for the owners of Lot 17 to negotiate a POS reimbursement as

reimbursement under the Private Owners' Arrangement, but as part of that

arrangement the owners of Lot 17 would be required to contribute to

infrastructure costs; and

(d) Policy PD 14, a copy of which was attached, "requires a non-scheme subdivider

such as [the owners of Lot 17] to make equitable arrangements with other

landowners in respect to the cost of infrastructure services and public open

space" (emphasis added).

6.5.64 The same principles are apparent from the terms of a formal submission in respect of the

Lot 17 rezoning proposal made to the City by Urban Focus on 20 February 1998. Urban Focus

identified the costs, amounting to $35,598, which had been agreed as fair and reasonable by the

engineers for the Lot 17 owners. It stated that it had "no objection" to the owners of Lot 17


599

receiving POS compensation as part of the Private Owners' Arrangement provided that, like all

other Packham Area landowners –

(a) they paid for their agreed share of infrastructure costs; and

(b) they were "treated in the same manner as the other Landowners and required to

wait for payment of the compensation until Landowners in previously completed

stages have been paid".

6.5.65 Contrary to Mr Hiller's argument, in determining whether it was "fair and equitable" for the

owners of Lot 17 to be paid POS compensation, it was not appropriate to ignore the fact that the

owners of Lot 17 had not paid, and had made no arrangements to pay, their share of infrastructure

costs. That factor was critical to the fairness and equity issue.

(iii) Legal obligation to consider PD 14

6.5.66 Four months after the City's letter to Peremate on 12 September 1997, when Mr Hiller

was preparing the Officers' report for the Council meeting of 20 January 1998, Policy PD 14

remained one of the City's planning policies. Indeed, it still does. Mr McLeod had earlier pointed

out, in relation to this particular policy, that –

(a) as a planning policy it carried more weight than a "mere administrative polic[y]";

(b) the "Council should be seen to be applying its Planning Policies consistently"; and

(c) if Policy PD 14 were to be changed "that should not happen without careful

consideration" (draft letter to Minister for Planning dated 23 August 1995 and see

above at para. 6.2.78).

6.5.67 It was not merely appropriate that Mr Hiller deal with the question of what was "fair and

equitable" by reference to Policy PD 14 and the principles embodied in that policy - particularly the

principle "that all owners who subdivide [should] make proper and equitable contributions to the

provision of … infrastructure services" (see above at 6.2(b)(i)). As a matter of law, the Council was

required to do so.

6.5.68 The relevant principles are clearly set out by Justice Wilcox in Nikac v Minister for

Immigration, Local Government and Ethnic Affairs (1988) 16 ALD 611 at 625 –

"Although a non-statutory policy is not binding upon a decision-maker, in the sense thathe or she may decide in the particular case not to act in accordance with that policy, apolicy applicable to the case is always a relevant consideration in the making of adecision. Unless it can be said that the policy is so insignificant that it could not havematerially affected the decision (see per Mason J. in Minister for Aboriginal Affairs v.Peko-Wallsend Ltd at 40) any failure to take that policy into account will lead to invalidity."


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6.5.69 This policy was not "so insignificant that it could not have materially affected the decision".

It was central to the decision. One indication of this is the evidence from the majority of the City's

elected members who testified that the issue would have either changed, or at least influenced,

their decisions in January and June 1998 when the POS compensation matters were before the

Council.

(iv) Relevance of private contractual arrangements

6.5.70 Mr Hiller and Mr McLeod also argued that it was inappropriate for the City to have regard

to the issue of infrastructure costs because that issue was part of a private arrangement between

Packham Area landowners (Transcript, 1985 and 2181 (Hiller), 28-29, 49 (McLeod)). This

argument is not only logically flawed but it also reveals a lack of understanding of the Council's role

in the development of the Packham Area.

6.5.71 Mr Hiller concluded in his Officers' report that the payment of POS compensation to the

owners of Lot 17 would be "fair and equitable" because –

" … it reflects the arrangements applied to other landowners in the PackhamDevelopment Area by Urban Focus in accordance with an owner's agreement. This isconsidered to be appropriate because it is fair and equitable."

6.5.72 Thus, Mr Hiller was prepared to, and did, look at the Private Owners' Arrangement to see

what entitlements (in the form of POS compensation) it gave to a participant. He was not prepared

to look at the Private Owners' Arrangement to see what obligations (in the form of infrastructure

cost contributions) it imposed on participants.

6.5.73 In any contract, entitlements are given at the cost of obligations. The two are inextricably

connected. For any Packham Area landowner –

(a) the only entitlement to POS compensation was a private, contractual entitlement

under the Private Owners' Arrangement; and

(b) the only obligation to pay infrastructure costs was a private, contractual obligation

under the Private Owners' Arrangement.

6.5.74 If the City were to be asked to pay POS compensation to the owners of Lot 17 so that

they would be treated fairly in comparison with their neighbours in the Private Owners' Arrangement

it followed, as a matter of logic and fairness, that the payment of infrastructure costs was not only a

relevant factor, but one that was central.


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6.5.75 If the owners of Lot 17 were to be given POS compensation, without any obligation to pay

infrastructure costs, they would not be treated "fairly and equitably" with their neighbours. They

would be treated much more favourably.

(v) Objective assessment of infrastructure costs

6.5.76 Another argument advanced by Mr Hiller was that contributions to infrastructure costs

were not susceptible to objective assessment (Closing Submissions, 22). If the City were to have

considered the infrastructure costs issue, then it would have required an analysis of the detailed

arrangements made by Urban Focus to determine what would have been a fair and equitable share

of infrastructure costs allocated to the owners of Lot 17 (see for example Closing Submissions, 22-

23 (Hiller) and Preliminary Submissions, 6 (Hardy on behalf of Brown, Green, Hiller and Ryan dated

29/11/99)). In support of this argument, reference was made to the difficulties encountered by the

City in dealing with the Lambasa case.

6.5.77 In a different context, this argument may have had some merit. It can be easily dismissed

having regard to the situation that existed in January 1998. For the reasons set out earlier (at

6.2(b)(iii)), there are fundamental differences between the present case and the Lambasa case. In

particular, the Lambasas, unlike the owners of Lot 17, agreed to pay their share of infrastructure

costs. The only issue was the amount of their share. By January 1998, there were no such

difficulties with the amount of the share of infrastructure costs owed by the owners of Lot 17. The

engineers retained by the owners of Lot 17 had assessed the amounts claimed by Urban Focus

and had certified that these costs, amounting to $35,598, were "fair and reasonable".

6.5.78 A month earlier, on 2 December 1997, Urban Focus wrote to the City referring to previous

discussions with Mr Hiller and Mr Ryan and stated –

"The value of the [infrastructure costs] contributions [in respect of Lot 17] have now beenagreed between Wood & Grieve, the Packham Development Area Engineers and HalpernGlick Maunsell, the Engineers for Lot 17.

The items and their values are listed below and are the same as indicated in our letter of23 July 1997.

a) Sewers $21 429b) Western Power $14 169

We are advised that Halpern Glick Maunsell have advised their clients of the aboveagreed values [amounting to $35,598]."


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On the same day, Mr Ducasse from Halpern Glick Maunsell confirmed in writing that he advised

Peremate that he had –

" … checked the quantities and rates as supplied [by Urban Focus] for sewers and thetransformer and advised Peremate Holdings Pty Ltd that the costs are fair andreasonable" (fax from Chris Ducasse to Wood & Grieve Engineers dated2 December 1997).

6.5.79 In these circumstances, there was no need for the City to undertake a review of the

internal arrangements of the Private Owners' Arrangement to determine what was the fair and

reasonable infrastructure cost contribution from the owners of Lot 17. That had been determined.

6.5.80 It is important to bear in mind that no Packham Area landowner could receive POS

compensation unless he or she had paid or had become contractually obliged to pay, infrastructure

costs as agreed with Urban Focus. If agreement could not be reached, then no POS

compensation was payable. If Mayor Grljusich and the other owners of Lot 17 were not to be given

more favourable treatment than their neighbours, then there was no reason, in the circumstances,

why they should not have been subjected to the same principle. The fact that engineers engaged

by the Lot 17 owners had certified that the costs were fair and reasonable provided a further reason

for the Council to refuse to pay POS compensation to the owners of Lot 17 until they had paid, or

had become contractually obliged to pay, infrastructure costs as agreed with Urban Focus.

(vi) The common sense approach

6.5.81 As may be apparent from the analysis to this point, there are some legal and planning

issues involved in the question of what the Council should have taken into account, or was required

to take into account, in determining whether it was "fair and equitable" to pay POS compensation to

the owners of Lot 17. Essentially, however, the correct outcome would have been reached as a

matter of common sense. The majority of the elected members who participated in the decision on

20 January 1998 testified to the Inquiry that they considered that Policy PD 14 and the non-

payment of infrastructure costs by the owners of Lot 17 would have been relevant to their decision.

For many it would have been determinative (Transcript, 2447-2448 (Lee), 2485-2488 (Lees), 2507-

2508 (Humphreys), 2527-2528 (Hunt), 2552 (Elpitelli), 2609 (McNair) and 3202 (Howlett)).


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6.5.82 Several testified that, if they had been given the information, they would not have

supported the recommendation to amend Condition 13 so that the City could compensate Mayor

Grljusich and the other owners of Lot 17. For example, Mr Lee gave the following evidence in

response to questions from Counsel Assisting –

"COUNSEL ASSISTING: Can I ask you this: when you read the words about it being fairand equitable, would it have changed your mind about the morality or the ethics of it if youhad known that the owners of lot 17 were not paying all of their share of the subdivisioncosts?---MR LEE: Most definitely. If I was aware - if somebody said, 'Well, you've got tobe fair and equitable,' then I would've said, 'Well, yes, you're right. It has to be written inthere. It has got to be part of the deal and nothing should go ahead without the other.'That seems reasonable to me.

COUNSEL ASSISTING: The evidence from Mr Hiller has been that when he wrote thewords here about it reflecting the arrangements to the other Urban Focus land ownersand it being fair and equitable, he was only talking about public open space. He wasn'ttalking about subdivision costs as well. Did you know that at the time?---MR LEE: No.

COUNSEL ASSISTING: Would that have made a difference to you?---MR LEE: Well,yes. If you're going to make a deal based on certain facts, then the deal is no good - theequation doesn't balance if it's not all there, does it?" (Transcript, 2447).

6.5.83 The reasoning of these elected members was simple and sound. In considering what

was fair and equitable for Mayor Grljusich and the other owners of Lot 17, it was necessary to

consider the position of the other Packham Area landowners. None of those landowners received

POS compensation unless they contributed to infrastructure costs. This, the elected members

considered, was an important factor that should have been put to them so that they would have

been properly informed when making their decisions.

6.5.84 Even the staunchest supporter of the Lot 17 owners, Mr Pecotic, agreed that the owners

should pay infrastructure costs. In his closing submissions he states –

"It was not the intention of Mr Pecotic that Premate [sic] Holdings avoid payment ofinfrastructure costs. Mr Pecotic had always maintained that infrastructure costs be paidand this was evidenced by his stance on the Lambasa issue …" (ClosingSubmissions, 12)

(e) Council decision on 20 January 1998

6.5.85 At the Council meeting on 20 January 1998 the Council considered not only the question

of Condition 13, but also the general Packham POS problem arising out of the payment of

$222,934. Both of these items were considered by the meeting behind closed doors. Mayor

Grljusich left the meeting having declared a financial interest in respect of each item.


604

6.5.86 Within 8 minutes, both items had been dealt with. Mr Hiller was not asked any questions

by elected members in relation to his recommendation concerning the reconsideration of

Condition 13. Mr Hiller had expected that there would be debate and questions because he knew

that the owners of Lot 17 were seeking compensation for POS over 10% whereas his

recommendation proposed the City paying compensation for POS over 16%. No one raised

the issue.

6.5.87 The recommendation was adopted by the Council on a motion moved by Cr Humphreys

and seconded by Cr Hunt. The remaining elected members, all of whom supported the

recommendation in Mr Hiller's report, were Crs Elpitelli, Howlett, Lee, Lees, McNair, Ostojich,

Pecotic and Waters.

6.5.88 The recommendation in full stated –

"That the Council resolve to:-

(1) receive the report;

(2) advise Peremate Holdings Pty Ltd in respect to the subdivision approval (Ref:104081) issued of Lot 17 Hamilton Road, Spearwood by the Western AustralianPlanning Commission on 23 September 1997, that:-

1. Apart from (3) below, there is no action that the Council can take in respectto the currently approved subdivision as this is a matter between theCommission and the applicant;

2. Should the applicant feel aggrieved by any of the conditions applying to thesubdivision (Ref: 104081) and the WAPC is not prepared to vary theconditions satisfactory to the applicant, then an appeal should be lodged witheither the Minister for Planning or the Town Planning Appeals Tribunal;

(3) advise the Western Australian Planning Commission in response to its letter dated11 November 1997 that in respect to the subdivision approval for Lot 17 HamiltonRoad, Spearwood (Ref: 104081) the Council recommends that:-

1. Condition 2 be deleted from the approval;

2. Condition 13 be modified by dividing it into two parts, namely:-

13(a) The plan of subdivision be modified to set aside 16% of the grosssubdivisible area of the lot (3369m²) which is to be a 'Reserve forRecreation and Drainage' in a location which is satisfactory to theCommission, and the balance of the public land be set aside in aseparate lot consistent with the Structure Plan for the PackhamDevelopment Area designated as public open space for futurepurchase by the local government.


605

13(b) The proposed reserve(s) shown on the modified plan being shown onthe Diagram or Plan of survey as a 'Reserve for Recreation andDrainage' and vested in the Crown under section 20A of the TP & DAct, such land to be ceded free of cost and without payment ofcompensation by the Crown."

6.5.89 It is not surprising that the Council dealt with the matter so summarily. The elected

members expected that they would be provided with sufficient information and advice to allow them

to make an informed decision. They relied on the Officers' report. For the reasons that I have

given, that report, in several major respects, was deficient and misleading.

(f) Assessment

6.5.90 As mentioned earlier, an assessment of Mr Hiller's report to the Council must have regard

to the circumstances that then prevailed. Among these were that –

(a) the Council was more heavily reliant than usual on the Officers' report because

there was no preceding Committee review of the matter;

(b) the matter was one which involved the prospects, then considered to be very high,

of a substantial payment by the City to the City's Mayor; and

(c) the need to ensure that the City did not repeat its past mistakes in giving Mayor

Grljusich preferential treatment in respect of Lot 17.

6.5.91 The report also needs to be assessed having regard to the pressure exerted by Mayor

Grljusich on Mr Hiller and his colleagues.

Findings

F44. I find that Mr Hiller's report to the Council for its meeting on 20 January 1998 was

seriously deficient and misleading in that it should have informed, but did not inform,

the Council that –

(a) the proposal before the Council was unprecedented - to Mr Hiller's knowledge,

neither the City nor any other local government in this State had previously paid

POS compensation in respect of land which would otherwise have been given

up "free of cost and without compensation";

(b) there was no legal entitlement for Packham Area landowners to receive POS

compensation from a State agency or from the City;


606

(c) there were, at least potentially, very significant financial implications in respect of

other subdivisions within the City (and for other local governments) if the City

were to pay POS compensation to Mayor Grljusich and the other owners of

Lot 17;

(d) as the City correctly advised Peremate on 12 September 1997 –

"Council Policy PD 14 'Packham Urban Development Area' … requires a non-scheme subdivider such as [the owners of Lot 17] to make equitablearrangements with other landowners in respect to the cost of infrastructureservices and public open space";

(e) all other Packham Area landowners who had received or were due to receive

POS compensation had paid, or were contractually required to pay, their share

of infrastructure costs as agreed with Urban Focus;

(f) with the exception of Mayor Grljusich and the other owners of Lot 17, no

Packham Area landowner had refused to undertake to pay his or her share of

infrastructure costs - either as agreed or at all;

(g) the infrastructure services from which Mayor Grljusich and the other owners of

Lot 17 had benefited related to the provision of a sewer line and an electrical

transformer;

(h) the amount to be contributed by Mayor Grljusich and the other owners of Lot 17

for these services had been assessed by Urban Focus at $35,598;

(i) the engineers retained by the owners of Lot 17 had certified that this amount

was "fair and reasonable";

(j) Mayor Grljusich and the other owners of Lot 17 had not paid, and had refused to

undertake to pay, these costs; and

(k) it would not have been fair and equitable if Mayor Grljusich and the other owners

of Lot 17 were to be paid POS compensation unless they also paid, or became

contractually bound to pay, their share of infrastructure costs as agreed with

Urban Focus.

F45. I find that, based on Mr Hiller's report, the Council's decision to support the proposed

payment of POS compensation to Mayor Grljusich and the other owners of Lot 17 –

(a) favoured Mayor Grljusich and the other owners of Lot 17 over all other Packham

Area landowners;

(b) was inconsistent with, and was made unlawfully without any reference to,

Council Policy PD 14;


607

(c) was made without reference to factors that were not only relevant but crucial to a

proper consideration of the issue; and

(d) was misconceived and wrong.

6.5.92 The question arises whether Mr Hiller's actions constitute misconduct. The relevant test

is whether the deficiencies in his report to the Council, when considered as a whole, constitute a

breach of the standards of conduct that would be expected of a person in his position by reasonable

persons with knowledge of the duties, powers and authority of the Director of Planning and

Development.

6.5.93 In the circumstances, there are only two factors that stand in the way of a finding of

misconduct against Mr Hiller. The first is that Mr Hiller sought and obtained advice before finalising

his report. As he explained, the final version of his report to the Council was a result of –

" … extensive enquiries and discussions with others between 12th November 1997 and13th January 1998. This included planning staff, Mr McLeod, Ministry officers and UrbanFocus.

There is nothing untoward or unacceptable about an officer of Council being prepared tochange position on a matter, in response to additional information and advice from others.On the contrary, this is a quality to be encouraged in a statutory working environment"(Closing Submissions, 81).

6.5.94 In this case Mr Hiller was persuaded, apparently by his own planning staff, Ministry

officers and Mr McLeod, to abandon the correct and principled approach to the issue that he set out

in his first draft report dated 9 January 1998. Although it is important to obtain and listen to advice

and to be "prepared to change position on a matter", the position that a senior employee ultimately

adopts should be an improvement on his or her initial position and, in any event, must be justifiable.

In this case Mr Hiller's report to the Council fell far short of the standards set by his earlier drafts.

Mr Hiller's advisers appeared to have had a poor understanding of the relevant issues.

6.5.95 One explanation for this may be that they were not provided with sufficient details to give

informed and proper advice. If Mr McLeod had not been told that the owners of Lot 17 had refused

to pay, or to undertake to pay, their share of infrastructure costs that would, for him, have been a

"dead issue", as he put it. Understandably, he would have had no reason to proffer advice about

the matter or to take the issue into account in forming his view on the matter. The quality of any

advice depends very much on the quality of instructions that are given. To the extent that the


608

advice given to Mr Hiller was deficient as a result of his own instructions, his reliance on that advice

cannot be a mitigating factor.

6.5.96 The remaining factor standing in the way of a finding of misconduct against Mr Hiller

relates to the pressure applied to him, and members of his staff, by Mayor Grljusich. Some details

of the pressure leading up to the Council meeting on 20 January 1998 were discussed earlier

(at 6.4 and 6.5(a)(iii)).

6.5.97 Mr Hiller was under great pressure from Mayor Grljusich to find, very quickly, a solution to

the problem faced by Mayor Grljusich and the other owners of Lot 17. In his evidence to the

Inquiry, Mr Hiller testified that the issue raised by the owners of Lot 17 should never have been

seen as the City's problem but that it became the City's problem because of the actions of Mayor

Grljusich and the other owners of Lot 17 (Transcript, 1934). Mr Hiller viewed the situation at that

time as at an impasse. He had advised Mayor Grljusich repeatedly that the owners of Lot 17 had

no entitlement to compensation, other than through the Private Owners' Arrangement. It had

become clear that Mayor Grljusich would never accept that advice. As Mayor of the City, Mayor

Grljusich was in a position to - and did - make life very difficult for Mr Hiller. Unless Mr Hiller found

a solution to the impasse, the pressure on him and his staff would continue. As a result, Mr Hiller

had "[t]o find a possible solution which was legal and … could be supported" (Transcript, 1930).

6.5.98 Against this background, when asked by Counsel Assisting whether he was influenced by

any factors other than the best interests of the City in making his recommendation to the Council,

Mr Hiller stated –

"I suppose the answer would be yes in the sense that I was looking for a solution to whatwas seen as an impasse within Council … I think one of the important things was to makesure that the reconsideration got back to the Commission as soon as possible so that itbecame of their determination" (Transcript, 2149).

6.5.99 Mr Hiller agreed that his recommendation "was not in the best interests of the City" and

that the decision on 20 January 1998 may "not have resulted in the best deal" for the City

(Transcript, 1930 and 1935). This was later qualified by him to mean not the best "financial deal".

Mr Hiller pointed out that local governments must take into account factors other than financial ones

- for example, community, social, political and environmental factors (Transcript, 2031 and 2053,

Closing Submissions, 19 and 25).


609

6.5.100 I am satisfied that, although Mr Hiller appears to have been unaware of its effect, the

pressure applied to Mr Hiller and his staff by Mayor Grljusich had a significant effect both on the

timing and the content of Mr Hiller's report to the Council for its meeting on 20 January 1998. As I

mentioned earlier, I am satisfied that, without that pressure, Mr Hiller would have maintained his

initial view that the reconsideration of Condition 13 should have been dealt with at the February,

rather than the January, meeting of the Council. This would have provided Mr Hiller with the

necessary time to assess properly the merits of the advice that he had been given. If he had

insisted on having that opportunity it is likely that Mr Hiller's report to the Council would have

followed more closely his initial view set out in his draft report of 9 January 1998.

Findings

F46. I find that, in respect of the serious deficiencies in Mr Hiller's report to the Council for its

meeting on 20 January 1998 –

(a) they would not have occurred without the pressure improperly exerted by Mayor

Grljusich on Mr Hiller and his staff to find a solution to the financial and other

problems of Mayor Grljusich and the other owners of Lot 17; and

(b) for this reason, they were not the result of improper conduct by Mr Hiller.

(g) Mayor Grljusich's response to the Council's decision

6.5.101 On 23 January 1998 the City advised both the Planning Commission and Peremate of the

Council's decision to recommend that Condition 13 be modified by reserving 16% of Lot 17 as POS

and drainage with the balance of the previously allocated POS land in a separate lot to be

purchased by the Council.

6.5.102 On 28 January 1998, Mayor Grljusich telephoned the City. He wanted to speak to

Mr Hiller about the Council's decision. At the time, Mr Hiller was speaking to Mr Ryan in Mr Ryan's

room. Mayor Grljusich spoke to Mr Ryan for about 5 minutes. Mr Hiller then took over the call.

Mayor Grljusich was "very angry, upset and speaking loudly" (Transcript, 2152). Mr Hiller's long file

note of the conversation includes the following –

"The Mayor was angry that the decision had been taken which was contrary to thediscussions that he had with myself, members of the family and Councillor Pecotich [sic] afortnight or so ago where the family expressed their view that they should only give up10% of the public open space.


610

He felt that this was a deliberate attempt by the officers of the Planning Department, inparticular myself, to make it difficult for the members of the family to achieve the 10%, andin fact was contrary to the advice I had given at that meeting.

…

The Mayor complained that he was under enormous pressure from the other owners [ofLot 17] to have this matter resolved quickly …

The Mayor had spoken to a number of Councillors and they had indicated to him that theyhad not realised what decision had been taken that involved 16% of the site and then heimplied that I had deliberately not presented the report properly and in fact had hidden thisinformation in the attachment to the Agenda."

6.5.103 This telephone conversation continued the pattern that began on 8 August 1997 - the

Mayor refusing to accept, or even acknowledge, the City's position put by Mr Hiller and the other

City planners, his attempts to make Mr Hiller responsible for the pressure that he was under from

his sisters and sister-in-law, and his disparaging comments about Mr Hiller's role in putting the

matter before the Council.

6.5.104 All this was in response to a Council decision that was already demonstrably biased in

favour of Mayor Grljusich and the other owners of Lot 17.

6.5.105 Mr Hiller responded by explaining, once again, the City's position in respect of the area of

land to be given up for POS purposes. He explained that other Packham Area landowners were

compensated under the Private Owners' Arrangement only if they "gave up more than 16%". Mayor

Grljusich's response was that the owners of Lot 17 "were outside the owners agreement and should

be treated individually and that they should only give up 10% public open space …". At this stage,

Mayor Grljusich appeared to make no attempt to disguise his intention of being treated more

favourably than his neighbours.

6.5.106 Mr Hiller also outlined again the prohibition on using the City's section 20C funds to

purchase land that had been reserved under section 20A for POS purposes. Mayor Grljusich's

response was that "there are other legal opinions that would indicate that the approach [the City

planners] were taking was very narrow and may not in fact be correct". Mayor Grljusich never

sought his own legal advice in this matter. He seems to have expected that the City would do that

for him.


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6.5.107 It appears that one of Mr Hiller's objectives, at least over the preceding month, had been

to distance himself from decisions in respect of Lot 17 that would leave him open to continuing

personal criticism and pressure from Mayor Grljusich. In part, this is evidenced by Mr Hiller's

greater reliance on the advice of others, in preference to his own views, in respect of the content of

the Officers' report prepared for the Council meeting on 20 January 1998. It is also evidenced by

Mr Hiller's determination to ensure that decisions in respect of Lot 17 would be made by the

Council, rather than himself.

6.5.108 In his telephone conversation with Mayor Grljusich on 28 January 1998, Mr Hiller stated

that he "had used Council's solicitors for all the advice that [he] had given to [Mayor Grljusich] and

to Council in this matter". He continued –

"I advised that the matter over Lot 17 was now not a matter between the Mayor andmyself but was a matter between the Mayor and the Council decision and that it wouldhave to be dealt with in a formal way and this would mean either approaching theCommission in respect to the reconsiderations or lodging an appeal with the Minister orthe Tribunal to have the matter sorted out by a third party."

Later, he repeated "that this was really nothing to do with me" and "I could do nothing else in my

position but to advise Council …".

6.5.109 For the next two months, until Mayor Grljusich was notified of the Planning Commission's

decision on the request for reconsideration of Condition 13, Mr Hiller had little direct contact from

Mayor Grljusich in respect of Lot 17.

(h) Decision of the Planning Commission

6.5.110 Based on the documents that are on the City's files and the Richard Pawluk & Associates

file, it is evident that officers of the Ministry for Planning not only supported the Council's decision in

respect of the modification of Condition 13 but were prepared to go further. Mr Cole was advised

by Ministry officers that the Officers' report to the Committee for Statutory Procedures would

recommend that the owners of Lot 17 should be required to give up only 10% of their land for POS

purposes - with the balance to be purchased by the City.

6.5.111 This would have placed Mayor Grljusich and the other owners of Lot 17 in an even more

advantageous position compared to other Packham Area landowners. Not only would the owners

of Lot 17 have been able to avoid paying their share of infrastructure costs, but they would also


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have received substantially more POS compensation than their neighbours who were participants in

the Private Owners' Arrangement.

6.5.112 The officers from the Ministry for Planning who were responsible for that recommendation

were not interviewed by the Inquiry. While their evidence would have been relevant, it fell outside

the primary focus of the terms of reference and, given the Inquiry's time constraints, the matter was

not pursued.

6.5.113 On 9 April 1998, the Planning Commission notified Mr Cole that it had resolved to retain

Condition 13. As a result, the owners of Lot 17 were still required, as a condition of subdivision

approval, to give up free of cost and without compensation 27% of their property for POS purposes.

6.5.114 Any applicant for subdivision approval who, following a reconsideration by the Planning

Commission, is unhappy with a condition to which the approval is subject has 4 options. These

are –

(a) appeal, within 60 days, to the Town Planning Appeal Tribunal or to the Minister for

Planning;

(b) do not proceed with the subdivision;

(c) make a fresh application for subdivision; or

(d) accept the condition and proceed with the subdivision.

6.5.115 Almost two months later, on 3 June 1998, Mayor Grljusich lodged an appeal to the

Minister against the Planning Commission's refusal to modify Condition 13. In the meantime, he

recommenced his direct contact with, and pressure on, the City's planners.

(i) Cr Pecotic's role

(i) Introduction

6.5.116 Of all the City's elected members, Cr Pecotic had a unique role in the events relating to

Lot 17. As indicated earlier (at para. 6.4.100), in late 1997 Cr Pecotic agreed to a request by the

owners of Lot 17 to represent them in their dealings with the City. As their representative, he

contacted Mr Brown, Mr Hiller and Mr Ryan on numerous occasions during 1998 (see for example,

Transcript, 3005, 3033 and 3144). Many of the oral and and written contacts are discussed later in

this Chapter and in Chapter 7.


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6.5.117 Cr Pecotic did not replace Mayor Grljusich as the Lot 17 owners' representative in

dealings with the City. In fact, his engagement did not diminish at all the frequency, duration or

intensity of direct contacts by Mayor Grljusich with the City's employees or elected members in

relation to Lot 17 issues. Cr Pecotic's involvement substantially increased the pressure on the

City's employees. They had to deal with two elected members over the same issue. More

significantly, Cr Pecotic - like Mayor Grljusich had a forceful, and at times aggressive and

confrontational, personality. He held and expressed very firm opinions on matters involving Lot 17.

His manner in dealing with City employees itself caused an increase in pressure and tension

(Transcript, 1958-1959, 2158-2160, 2265-2266, 2272 and 2339).

6.5.118 Also like Mayor Grljusich, Cr Pecotic's approach to the issues affecting Lot 17 was

characterised by a reluctance to accept, or even to take account of, advice - including technical and

legal advice - that was not consistent with his own opinions. This is most apparent in respect of his

role in the Council's decisions taken in January and February 1999 which are reviewed in

Chapter 7.

6.5.119 Cr Pecotic's approach is also apparent from his opinion about the City's payment of

$222,934 to Urban Focus in 1995. That payment was the subject of various advices including one

from McLeod & Co on 16 February 1998. Contrary to all the advice given to the City, Cr Pecotic's

view was that the only problem with the $222,934 payment was that it was made to Urban Focus.

He refused to accept that the problem with the payment was that it was made in respect of land that

had already been ceded to the Crown. During the public hearings of the Inquiry, Mr Pecotic was

referred to the City's advice and, in particular, was given a lengthy period to read the McLeod & Co

advice. Despite being referred to specific passages in that advice which directly conflicted with his

views, Mr Pecotic refused to change his stance –

"COUNSEL ASSISTING: Even reading this advice now, that is yourunderstanding?---MR PECOTIC: That's my understanding, yes; money shouldn't havebeen paid to Urban Focus …

COUNSEL ASSISTING: What I'm asking you is notwithstanding reading this, you're stillof the view that the problem with the payment of $222,000 is that it was made to UrbanFocus?---MR PECOTIC: Yes.

COUNSEL ASSISTING: That is the only problem?---MR PECOTIC: That's what I cansee as the only problem.

COUNSEL ASSISTING: And nothing in this advice, to your mind, is contrary to that?---MR PECOTIC: I can't see any.


614

…

COUNSEL ASSISTING: No mention of Urban Focus there?---MR PECOTIC: Yes.

COUNSEL ASSISTING: And doesn't that suggest to you that the problem was that thepayment was made in respect of land already given up?---MR PECOTIC: Yes.

COUNSEL ASSISTING: So the problem wasn't that the payment was made to UrbanFocus. The problem was that it was made in respect of land already given up?---MR PECOTIC: No, that's not the way I see it.

COUNSEL ASSISTING: I understand that but having read that and the other passagesI've taken you to, you're view remains the same?---MR PECOTIC: It remains the same,yes.

COUNSEL ASSISTING: And you would say that if I read this advice to be directlycontradictory of that proposition you're putting, that I'm reading it the wrong way?---MR PECOTIC: Well, you put it that way but I disagree with your view of this …

INQUIRER: … does that change your current view about the effect of section20C?---MR PECOTIC: My understanding is the same. I can't change it because in theframe of mind in which I am, I can't change this. I read something different to what youread there" (Transcript, 2775-2776 and 2777).

(ii) Response to the Council decision on 20 January 1998

6.5.120 As indicated earlier (at para. 6.4.100), Cr Pecotic left the meeting on 6 January 1998

believing that Mr Hiller had been persuaded that the owners of Lot 17 should be required to give up

only 10% of their land for POS purposes and the balance of the 27% would be purchased by the

City.

6.5.121 Cr Pecotic attended the Council meeting on 20 January 1998 when the matter relating to

the reconsideration of Condition 13 was considered and determined by the Council. He was

present at the discussion and voted to adopt Mr Hiller's recommendation.

6.5.122 Three months later, he discovered that the recommendation in question provided for the

owners of Lot 17 to be compensated for POS above 16%, not 10%. He telephoned the City late on

the afternoon of 30 April 1998 and left a message for Mr Hiller to call him back. Mr Hiller returned

the call early the following morning. His file note of the conversation (dated 2 May 1998) records

that Cr Pecotic told him that –

"[h]e believed that the Council resolution of 20 January 1998 was only to receive thereport and it did not include any recommendations in relation to the 16% public openspace and drainage and that this was a matter that was undertaken by the officers, not bythe Council.


615

Councillor Pecotic said that he had been highly embarrassed by the situation that hefound himself in because he had given an undertaking to represent the interests of [theowners of Lot 17]."

6.5.123 Mr Hiller disagreed and referred to the recommendation from which it was obvious that

Cr Pecotic's understanding was incorrect. Then –

"Councillor Pecotic responded by saying 'was this the way I go about stabbing Councillorsin the back?' "

6.5.124 Mr Hiller immediately asked for an apology. Cr Pecotic repeated that Mr Hiller was

"stabbing Councillors in the back". Later in the conversation, Mr Hiller again asked for an apology.

Cr Pecotic's response was to repeat the allegation.

6.5.125 It is readily apparent, even from a cursory review of the recommendation, that Cr Pecotic

was mistaken. The Officers' report, which was not lengthy, provided further confirmation of this.

Cr Pecotic had attended the Council meeting without reading the agenda papers for the item.

Worse still, he had voted to support a recommendation that he had not read (Transcript, 2764). It is

little wonder that he felt "highly embarrassed" and "very upset" (Transcript, 2766). He had failed in

his duty as an elected member. Instead of acknowledging his error, he sought to blame Mr Hiller.

He accused Mr Hiller of being deceitful.

6.5.126 Cr Pecotic was present on 6 January 1998 when Mayor Grljusich acted unprofessionally

and abused his position by treating Mr Hiller so offensively. In this instance, Cr Pecotic's behaviour,

while not as public, was at least as offensive because it constituted an unprovoked and baseless

attack on Mr Hiller's integrity and professionalism.

6.5.127 Following his conversation with Mr Hiller, Cr Pecotic made no attempt to reassess the

matter. He was convinced that Mr Hiller had deliberately sought to deceive him and the other

elected members by the way that he had framed the recommendation to the Council. Eighteen

months later, when giving evidence before the Inquiry, Cr Pecotic testified that he had never seen -

either before the meeting on 20 January 1998 or since - a substantive recommendation that began

by noting that the Council should "receive the report" (Transcript, 2766). In his view, the form of the

recommendation was "unique" and it was adopted by Mr Hiller to disguise the true nature of the

resolution and, therefore, to deceive Cr Pecotic and to "stab him in the back" (Transcript, 2766

and 2781).


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6.5.128 Mr Pecotic was then shown three other substantive resolutions, all relating to Lot 17 or

the Packham Area, which were in a very similar form. Faced with this evidence, Mr Pecotic was

forced to retract his allegation of deceit –

"COUNSEL ASSISTING: So do you still feel that the officers were deceiving you inputting up the recommendation in January 1998?---MR PECOTIC: Maybe they were not.I have to say that, you know, based on what you are telling me; maybe they were nottrying to deceive me … " (Transcript, 2791).

Findings

F47. I find that, in respect of the resolution concerning Condition 13 adopted by the Council

on 20 January 1998 –

(a) Cr Pecotic failed to comply with his duties as an elected member in that he –

(i) voted to support a recommendation that he had not read;

(ii) sought, without any justification, to blame Mr Hiller for his own error;

(iii) accused Mr Hiller of "stabbing Councillors in the back" and of deceit in

circumstances where the accusations were baseless and made with

reckless disregard for the truth; and

(iv) failed to apologise for his allegations; and

(b) Cr Pecotic's behaviour was a gross departure from the standards of conduct

expected of a person occupying the position of an elected member and, in all the

circumstances, constitutes improper conduct.

(iii) Due consideration of agenda papers

6.5.129 There are many other examples of the City's elected members making decisions,

including decisions that were contrary to the recommendations of an Officers' report, without

reading any of the relevant agenda papers.

6.5.130 Over a 6 month period beginning on 18 September 1996, the members of some of the

City's committees made a declaration that was recorded in the meetings in these terms –

"All Councillors present, declared that they had given due consideration to all matterscontained in the Agenda presently before the meeting accept for those matters listed asadditions."


617

This declaration seems to have been made at only one Council meeting - on 18 March 1997.

Immediately after the declaration, the following motion was carried –

"Moved Clr Ostojich seconded Deputy Mayor Grljusich, that the reference in Council andCommittee Agenda's [sic] to Councillors having to declare that they have given dueconsideration to all matters contained in the Agenda presently before the meeting, bedeleted from all future Council and Committee Agenda's [sic]."

6.5.131 Given the problems that have been encountered with City's elected members making

decisions without giving due consideration to the agenda papers, the City should reconsider the

introduction of a declaration of that type - at least to focus the attention of elected members on the

importance of being properly informed before making decisions.

6.6 Proposals for a deed between the City and Peremate

(a) Mayor Grljusich lobbies other elected members

6.6.1 The period between the Council's decision on 20 January 1998 and April 1998, while the

reconsideration decision was with the Planning Commission, saw a decline in the pressure placed

on the City's employees in respect of the Lot 17 POS compensation claim.

6.6.2 The concerted efforts by Mayor Grljusich and the other owners of Lot 17 to obtain POS

compensation for the difference between 10% and the 27% required to be given up under

Condition 13 intensified however, following the Planning Commission's decision, on 9 April 1998, to

retain that condition.

6.6.3 On 20 April 1998, Peremate wrote to the City objecting to the Council's decision on

20 January 1998 "to seek a 16 per cent contribution for public open space". It claimed that the

company was not "liable to contribute the amount of land sought by Council". Peremate sought to

have the matter of POS compensation for Lot 17 referred back to the Council "at the earliest

possible opportunity" for further consideration.

6.6.4 At this stage, Peremate was still making representations that it owned Lot 17. In fact, the

ownership of Lot 17 remained with Mayor Grljusich and his sisters and sister-in-law until

27 July 1998. Peremate's claim that the owners of Lot 17 were not liable to contribute 16% of the


618

property for POS was correct. They were liable to contribute 27%. They were prepared to

contribute only 10%.

6.6.5 On 22 April 1998 Mr Hiller responded to Peremate's letter. He pointed out, as he had

previously, that the Council's decision on 20 January 1998 constituted a recommendation to the

Planning Commission. It was the Planning Commission who made the final decision. If the owners

of Lot 17 were aggrieved by the Commission's decision, they could appeal. He concluded –

"Given this, re-consideration by the Council is not only inappropriate but have [sic] noaffect [sic] on the decision already made by the Commission."

To emphasise the point that that matter did not involve the City but the Planning Commission,

Mr Hiller provided Peremate with appeal forms and the name and telephone number of the person

at the Ministry for Planning who could respond to any queries that the owners of Lot 17 may have

had.

6.6.6 Mr Hiller's advice did not deter the efforts of Mayor Grljusich and the other owners of

Lot 17 to continue to involve the City in the matter - with the objective of having the POS

compensation issue brought back before the Council. Indeed, Mayor Grljusich was not content with

making personal direct contact with the City's employees. He sought to enlist the support of his

colleagues to assist him in achieving his personal objective of securing the best possible financial

deal for himself. For this purpose he approached a number of elected members to "acquaint" them

with the Peremate "file" (Transcript, 3548). Mayor Grljusich listed these elected members as

Crs Elpitelli, Howlett, Humphreys, Lee, McNair, Pecotic and Ostojich (Transcript, 3548-3549). Later

he also showed the file and discussed the position of Lot 17 with Cr Separovich (Transcript, 3549).

6.6.7 On 28 April 1998, Mayor Grljusich telephoned Mr Brown. According to Mr Brown's file

note of the conversation –

"[Mayor Grljusich] wanted to know what Council was going to do to protect the owners[sic] interest in the subdivision of the lot once the land required for POS and drainage hadbeen transferred to the Crown."

Mr Brown reiterated the City's position that Mayor Grljusich and the other owners of Lot 17 should

exercise their appeal rights if they were unhappy with the Commission's decision. Mayor Grljusich

was not satisfied with this. He wanted the problem resolved "urgently" as the owners of Lot 17 had

already appointed selling agents.


619

6.6.8 On the following day, 29 April 1998, a meeting which had been arranged at short notice

by Deputy Mayor Battalis was attended by Mayor Grljusich and Mr and Mrs Gava representing the

Lot 17 owners, Cr Ostojich, Mr Brown, Mr Hiller and Mr Ryan. In answer to questions asked at the

public hearing as to how the meeting came about Mr Battalis replied –

"There seemed to be some friction between the company [Peremate] and the officers. Iwas concerned that we had a – you know, that that position was clarified or solved, if youlike, or any problems solved, and I think the best way to do that was to bring the partiestogether. As I've often done when I was on council, requested them if they'd attend ameeting"(Transcript, 3321-22).

6.6.9 File notes of the meeting were made by Mr Brown, Mr Hiller and Mr Ryan. All three gave

evidence to the Inquiry about their file notes and recollections of the meeting (Transcript, 3003-3004

(Brown), 1955-1957 and 2156-2158 (Hiller) and 2250-2251 (Ryan)). Mr Hiller and Mr Brown

testified that Mayor Grljusich told the meeting that the owners of Lot 17 –

" ' … require[d] the council to advise how their interests will be protected in regard torecovering funds of [sic] the excess land' " (Transcript,1955 (Hiller) and 3003 (Brown)).

Cr Battalis had no difficulty with the advice of the City's employees. He is recorded in Mr Brown's

file note as having stated, and confirmed in his evidence to the Inquiry that he did state, that –

"WAPC is [the] decision maker. Council only makes recommendations. Only WAPC hasmade decision. [N]o scope for Council to overturn" (Transcript, 3323).

6.6.10 At the meeting, Mr Hiller set out 4 options open to the owners of Lot 17 –

"accept, appeal, negotiate on diagrams, or re-apply."

Mayor Grljusich's response was –

"None would suit us - this is a problem for the Council to sort out."

6.6.11 Contact with the City's employees over the issue continued to gather momentum. On

1 May 1998, Cr Pecotic sought from Mr Hiller "advice about the implications of the WAPC decision

of 9 April 1998 in respect to Lot 17 Hamilton Road". In particular, "[h]e wanted to know what was

going on with Lot 17 and why couldn't we [the Council or the City] help the owners?" Mr Hiller

responded, on the same day, in a detailed three page letter to Cr Pecotic. This was the same day

that Cr Pecotic accused Mr Hiller of "stabbing Councillors in the back" (see above at para. 6.5.123).

6.6.12 On the following day, 2 May 1998, Cr Battalis rang Mr Hiller. Cr Battalis was aware that

Cr Pecotic had spoken to Mr Hiller. Mr Hiller's file note records that, at the end of the half hour

discussion –

"Although Councillor Battalis could see the owners' concern, he also understood thetechnical position and believed that there was nothing more that Council could do. It was


620

a matter between the applicants and the Commission. Councillor Battalis believed thatthe matter should be dealt with by the applicants in conjunction with their consultants."

6.6.13 A similar telephone conversation took place on 4 May 1998 between Cr Ostojich and

Mr Hiller. Cr Ostojich also expressed his understanding of the position to the effect that "it was the

Commission that was responsible for the final decision in respect to subdivision conditions" but

added that "he was not sure how the current misunderstanding can be resolved with some of the

owners [of Lot 17]".

6.6.14 On 11 May 1998, Cr Pecotic again telephoned the City to discuss the possibility of the

Council reconsidering its decision of 20 January 1998. This time he spoke to Mr Brown. Mr Brown

repeated the substance of the advice that Mr Hiller had set out in his detailed letter to Cr Pecotic

only 10 days earlier. Mr Brown confirmed his oral advice in a letter to Cr Pecotic which he sent later

on the same day.

6.6.15 On 14 May 1998, Cr Elpitelli telephoned Mr Hiller "to discuss Lot 17 and what the current

circumstances were surrounding the matter of public open space". On the same day Cr Waters

telephoned Mr Hiller. She wanted to make an appointment to see him about Lot 17. However, after

discussing the matter with Mr Hiller, she was satisfied that "there was no role for the Council in this

process".

6.6.16 On the next day, 15 May 1998, Cr Elpitelli sent a fax to Mr Brown seeking to have the

Lot 17 issue brought before the next Council meeting.

6.6.17 Mr Brown responded to this request by sending a letter dated 15 May 1998 to all elected

members. He set out the advice that he and Mr Hiller had repeatedly given over the past month to

individual elected members. He concluded that there was "no reason for the administration to put

this matter back to Council" and that elected members would need to consider whether to support

Cr Elpitelli's request for the matter to be added to the agenda.

6.6.18 In his evidence to the Inquiry, Mr Grljusich agreed that he "argued Peremate's position"

with the elected members in order "to persuade them to the view that [he] was putting about

Peremate" but that he "did not tell them what they should do" (Transcript, 3548, 3550). Plainly,

Mayor Grljusich was engaged in lobbying elected members to support his claim. The support that

he particularly wanted was their votes when the issue came before the Council. In the meantime,


621

they could, as many did, support him by raising the issue with the City's employees in that way

giving the issue a higher priority and importance than it would otherwise have had.

6.6.19 Lobbying is an accepted part of the democratic process. It is common for developers to

lobby elected members. The dynamics of the usual situation changes markedly, however, when

instead of an arms-length relationship between a developer and an elected member, the developer

is not only a colleague but also the titular head of the decision making body. The situation then

becomes one where undue influence issues need to be considered.

6.6.20 In Mayor Grljusich's case, he was clearly in a position to influence the City's elected

members in a way that was not open to an ordinary lobbying developer. Whether he actually

influenced them is beside the point. He would properly been seen as exercising undue influence.

As with most conflict of interest issues, perceptions are very important. It was not in the City's

interests, nor in the interests of its elected members, that its Mayor was seen to lobby his

colleagues to advance his own personal financial interests and objectives.

6.6.21 For about 12 months, the City's Code of Conduct contained an undue influence

proscription in these terms –

"Councillors will not take advantage of their position to improperly influence otherCouncillors or staff in the performance of their duties or functions, in order to gain undueor improper (direct or indirect) advantage or gain for themselves or for any other person orbody."

The Council deleted this provision from the City's Code on 21 April 1998 (see Chapter 8 at

para. 8.5.36). The reasons for its deletion remains largely unexplained. In any event, the absence

of a specific undue influence provision in the City's Code does not free the City's elected members

of their obligations to comply with the standards of behaviour reflected in the deleted provision.

Findings

F48. I find that, in respect of Mayor Grljusich's personal lobbying of the City's elected

members in respect of his claim for POS compensation –

(a) the purpose of the lobbying was to persuade his colleagues to assist him in

securing the best financial deal for himself in respect of his POS compensation

claim;

(b) the lobbying increased the pressure on the City's employees to support the POS

compensation claim; and


622

(c) in the circumstances, particularly –

(i) Mayor Grljusich's position as Mayor of the City;

(ii) Mayor Grljusich's relationship with the elected members; and

(iii) that his claim was against the City itself,

the lobbying constituted undue influence and was clearly inappropriate.

(b) The deed proposal

(i) Discussions with Mr Ryan on 21 May 1998

6.6.22 For a period of about 6 weeks beginning in late May 1998, one issue dominated the City's

attention. It concerned a proposed deed between the City and Peremate under which the City

would provide POS compensation to the owners of Lot 17 by purchasing that part of Lot 17 which,

in the absence of the deed, would have been required to be given up "free of cost and without

compensation" under Condition 13.

6.6.23 The initiation of the deed proposal can be traced to a request by Mayor Grljusich on

18 May 1998 for copies of –

(a) the Urban Focus Packham Status Report dated 4 December 1992;

(b) the City's letter to Urban Focus dated 8 December 1997; and

(c) the Packham Area Structure Plan and Report (Amendment No. 240 to the City's

Zoning Scheme No. 1).

The request was made by Mayor Grljusich at 4.30pm. The copies were provided to him by Mr Ryan

at 5pm. Many City residents who complained to the Inquiry that they waited for weeks or even

months for a relatively simple response by the City would need little convincing that the Mayor was

able to use, and frequently used, his position for his own private purposes to receive advantageous

treatment from the City's employees.

6.6.24 Having obtained these documents, Mayor Grljusich then sought advice from Mr Ryan.

During their discussion on 21 May 1998, as recorded in Mr Ryan's file note of the same date, Mayor

Grljusich expressed his –

"[c]oncern about Council's lack of assistance to Peremate's situation."

Mayor Grljusich consistently acted on the basis that the City's employees were obliged to act as

though they were employed by him for his own private purposes. This was largely the result of his


623

failure to distinguish between his role as the Mayor and his role as a developer who had dealings,

and was frequently in contact, with the City.

6.6.25 Mr Ryan provided Mayor Grljusich with advice about the nature and status of the report to

Amendment No. 240 (a copy of which he had given to Mayor Grljusich three days earlier). He also

advised Mayor Grljusich about the impact of the City's District Zoning Scheme No. 2 on

arrangements made while Scheme No. 1 was in force. It is apparent from Mr Ryan's file notes of

the meeting that the advice sought from Mr Ryan was to help Mayor Grljusich prepare his claim for

compensation against the City.

6.6.26 Mayor Grljusich informed Mr Ryan –

"that Peremate would be approaching the Council re a Deed to purchase POS."

Mr Ryan then provided Mayor Grljusich with a copy of the agenda and attachments for the Special

Council meeting of 24 February 1998. Included among the attachments was a copy of the detailed

advice from the City's solicitors dated 16 February 1998 dealing with the City's rights and

obligations in respect of POS compensation. One of the specific matters dealt with in McLeod &

Co's 12 page advice was the possibility of the City making an agreement to purchase "land in

excess of that which would be required to be vested free of cost on subdivision". The relevant

paragraphs from the McLeod & Co advice state –

"(g) A final possibility would be for the Council to use money remaining in the s.20Caccount to purchase open space within Stages 7, 8 and 14 of the Packham localitywhich will be required for open space purposes under the Structure Plan. This island in excess of that which would be required to be vested free of cost onsubdivision. It is land which the Council could legally use s.20C moneys topurchase under the authority of s.20C(2)(a), being 'for the purchase of land by thelocal government for parks, recreation grounds or open spaces generally, in thelocality'. Then as further land is subdivided by Urban Focus over the next 2 or 3years Urban Focus would repay the $222,934 as they receive cash-in-lieu fundsthrough their co-operative arrangement.

The Council could make the payment for the Stage 7, 8 and 14 owners pursuant toan agreement under which the repayment of the $222,934 would be covenanted.Consideration would need to be given to the form of documentation to ensure that itgives the greatest possible security to the Council."

6.6.27 The Stage 8 land adjoined Lot 17. Indeed, in an earlier application for subdivision, Lot 17

was included as part of Stage 8. Later in the same opinion, McLeod & Co advised the City that –

"3.5 We mentioned above the possibility of an agreement being made in regard tothe purchase of open space land in Stages 7, 8 and 14. We are instructed thatland within Stages 7 and 14 has not yet been subdivided, and while land within


624

Stage 8 has been subdivided, we are instructed that it is likely that the open spaceland to be contributed from that stage has not yet been vested pursuant to s.20A ofthe Planning Act. Those circumstances permit the possibility of the Councilacquiring the open space land from those stages from its s.20C funds within theauthority of the present provisions of s.20C(2)(a). We are instructed that the totalvalue of the land in Stages 7, 8 and 14, over and above the value of the landrequired to be vested free of cost, is $403,483.

3.6 We are instructed that the estate of M. Grljusich owns land identified as Lot 17which is not the subject of an agreement with Urban Focus. We are instructed thatwhile subdivision approval has been given, subject to conditions, for Lot 17, thecondition relating to the vesting of land for recreation and drainage is beingreassessed by the WAPC, and the situation may be created where a portion ofthe land which would otherwise be required to be vested pursuant to s.20A ofthe Planning Act free of cost may be set aside in a separate lot for acquisitionby the Council, which acquisition might be achieved legally within theauthority of s.20C(2)(a)" (emphasis added).

6.6.28 This advice was the genesis for the deed proposal. It was given to the City a month after

the reconsideration of Condition 13 had been determined by the Council. Until this point, the City's

actions and decisions in relation to Lot 17, and its advice to Mayor Grljusich and the other owners of

Lot 17, were based on the proposition that if a condition of subdivision approval required that 27%

of Lot 17 be given up for POS purposes, there was nothing that the City could, or would, do in

respect of POS compensation. The matter was between the Planning Commission and the owners

of Lot 17.

6.6.29 This advice from McLeod & Co represented a fundamental change to the position. It was

now suggested that "the situation may be created" where, in the same circumstances, the City

could have a role and could pay POS compensation to the owners of Lot 17.

6.6.30 The primary purpose of the Special Council meeting on 24 February 1998 was to consider

the City's legal position in relation to the administration of its 20C funds in the Packham Area. At

the Council's invitation, Mr McLeod attended the meeting to discuss his advice. Mayor Grljusich

declared a financial interest, vacated the Chair and left the meeting. Deputy Mayor Battalis

assumed the presiding member's position.

6.6.31 Mayor Grljusich was able to obtain a copy of the McLeod & Co advice of

16 February 1998 only because he was an elected member. A developer who was preparing a

claim against the City or, indeed, any member of the public could not have obtained a copy of the

advice. Under the Freedom of Information Act 1992, legal advice given to the City is exempt from


625

disclosure (cl. 7(1), Sch. 1). Earlier examples have been given where the City strongly resisted

attempts to provide copies of its legal advice to members of the public - in particular, to George

Grljusich when he was in conflict with Deputy Mayor Grljusich (as he then was) (see Chapter 5

at 5.6(a)). The City's Policy A.1.14 applied to the "Obtaining Legal Advice" and provided at

paragraph (3) that where copies of legal advice were made available to Councillors, the content of

the advice was not permitted to be disclosed to third parties without a resolution of Council.

Findings

F49. I find that, in respect of the McLeod & Co advice to the City dated 16 February 1998 –

(a) Mayor Grljusich obtained a copy of the advice in his capacity as an elected

member of the City;

(b) Mayor Grljusich would not otherwise have been entitled to a copy of the advice;

and

(c) the advice related to, and had a significant bearing on, Mayor Grljusich's claim

for compensation against the City.

(ii) Discussions with Mr Hiller on 22 May 1998

6.6.32 On the following morning, Mayor Grljusich telephoned Mr Hiller from the mayoral parlour.

He asked Mr Hiller to come and see him. Mr Hiller's file note of the discussion records that when he

arrived Mayor Grljusich told him that he wanted to discuss –

" … the subdivision of Lot 17 and his understanding of what could be done to enable theowners of the lot to be recompensed by the Council for the giving up of the public openspace."

Mayor Grljusich then indicated to Mr Hiller –

" … that as a result of investigations that he had undertaken he had found thatAmendment 240 to District Zoning Scheme No. 1 provided the opportunity for the Councilto enter into a deed between land owners and the Council as a means of making paymentfor public open space and presumably drainage that is given up in excess of the 10%within the Packham Development Area."

6.6.33 Mr Hiller responded to a number of questions asked by Mayor Grljusich about the

proposal and agreed to review, in consultation with the City's solicitors, the provisions of

Amendment No. 240. Mr Hiller also noted that –

"The Mayor appeared to be expecting that I would pursue the matter of the deed, howeverI made it clear that it will be necessary for Peremate Holdings to write to Councilindicating what they are expecting and at the same time to indicate what they want to doabout the clearances of the subdivision."


626

6.6.34 At the conclusion of the meeting which lasted about an hour, Mr Hiller obtained from the

Ministry for Planning a signed copy of Amendment No. 240. He returned to the mayoral parlour

about an hour later and gave the copy of Amendment No. 240 to Mayor Grljusich. At that stage,

Mr Hiller pointed out to Mayor Grljusich that –

(a) it was the accompanying report, not the amendment itself, that referred to a

deed; and

(b) the reference to the deed suggested that it was to be between Packham Area

landowners and Urban Focus, not between Packham Area landowners and the

City.

6.6.35 Shortly afterwards, Mr Hiller arranged an appointment to discuss the matter with the City's

solicitors. The appointment was scheduled by Mr Hiller to allow time for Peremate to write to the

City about the deed and to request that clearances of the subdivision conditions for Lot 17 be

delayed while the deed proposal was being considered.

(iii) Peremate's letter to the City

6.6.36 Peremate's letter to the City dated 24 May 1998 requested the City to withhold the

clearances for its subdivision conditions "until further notice". It sought to establish a POS

compensation claim on three bases.

6.6.37 Firstly, it stated that the City –

" … has approved and sanctioned arrangements with the State Planning Commission andlandowners within the area, that they give up an amount of 10% of their land for publicopen space as a condition for the subdivision of their land."

This is wrong. All land given up for POS and drainage in the Packham Area is determined by

reference to the Structure Plan not the usual 10% figure adopted in other circumstances (see

Chapter 4 at 4.3(b) and 4.4(b)). A total of 16%, not 10%, of the Packham Area was required to be

given up "free of cost and without compensation" for POS.

6.6.38 Secondly, the Peremate letter stated that –

" … the City holds funds which have been used to compensate landowners who havebeen required to contribute more than 10% of their land."

As Mayor Grljusich was well aware, the City had on only one occasion used its section 20C funds to

compensate landowners who contributed more than 16% (not 10%) of their land for POS purposes.


627

It had recently been discovered that the payment in question amounting to $222,934, was made

unlawfully.

6.6.39 Thirdly, Peremate purported to rely on –

" … clause [sic] 6.2 and 7 of the District Zoning Scheme No; 1 Amendment No: 240 of theCity of Cockburn dated 13th May [sic] 1987."

As Mr Hiller had pointed out to Mayor Grljusich two days earlier, the provisions relied on by Mayor

Grljusich did not appear in the amendment, but in the accompanying amendment report. A report

accompanying an amendment has no statutory force. In any event, however, paragraphs 6.2 and 7

of the report provided no assistance to Peremate's case for POS compensation. Paragraph 6.2

states –

"The land shown on the Structure Plan for the purposes of P.O.S. and drainage,comprises an area of approximately 32.7 hectares, or 16% of the gross subdivisiblearea of approximately 204 hectares … Such P.O.S. provision will result in an excesscontribution of approximately 12.3 hectares above the normal 10% of the grosssubdivisible land" (emphasis added).

The provisions relied on by Peremate simply underscore the fallacy of its claim that the owners of

Lot 17 should be compensated for POS provision in excess of 10%. For 10 years, without

exception, the development of Packham Area had proceeded on the basis that about 16% of the

Packham Area was to be given up as POS/drainage free of cost and without compensation. The

only way that a landowner who gave up more than 16% POS would be entitled to compensation

would be under the Private Owners' Arrangement, pursuant to which the landowner would also be

bound to contribute to infrastructure costs.

6.6.40 Peremate also relied on paragraph 7 of the accompanying report to Amendment No. 240.

That paragraph referred to the establishment by the City of a "Packham Development Drainage

Trust Fund" funded from cash contributions from owners of subdivisible land within the drainage

catchment area that extended beyond the Packham Area. It was then noted that –

"A similar arrangement will be set in place to co-ordinate the acquisition of required publicopen space land. Details of such arrangement will be outlined in the Development Deedthat will be executed by each participating landowner."

Central to the Private Owners' Arrangement were, and still are, individual agreements, known as

Owner's Deeds, between Urban Focus and individual landowners within the Packham Area. There

has been no relevant deed between the City and a Packham Area landowner.


628

6.6.41 In short, therefore, there was nothing in the Peremate letter to substantiate its claim that

the owners of Lot 17 should be paid POS compensation by the City for land in excess of either 10%

or 16% given up for POS purposes.

6.6.42 The letter concluded, consistently with Mayor Grljusich's approach that this should be the

City's problem, not the problem of the owners of Lot 17, by stating –

"Please would you advise what arrangements you propose to make with us for thecontribution above 10%" (emphasis added).

6.6.43 The City's administration took the appropriate action to ensure that the Lot 17 POS

compensation matter would be dealt with by the Community Development Committee at its meeting

on 9 June 1998 and the Council at its meeting on 16 June 1998. Peremate was given notice of this

in a letter from the City dated 28 May 1998.

(c) McLeod & Co advice of 29 May 1998

(i) Introduction

6.6.44 McLeod & Co has provided legal services to the City for many years. It is referred to by

the City's elected members and employees as the "Council's Solicitor". The senior partner in

McLeod & Co, Mr Denis McLeod, has personally provided most of the legal services obtained by

the City in respect of the matters dealt with in this Report.

6.6.45 Mr McLeod was very concerned about the prospect that his advice to the City may be

reviewed by this Inquiry. He retained Senior Counsel to represent him and his firm and brought a

halt to the Inquiry's proceedings for two days as a result of his foreshadowed bias application (see

Chapter 1 at 1.4(b)(ii)). He was particularly concerned that, as a member of a legal firm that was in

competition with McLeod & Co, I may not be able to bring a fair and impartial mind to the

correctness of the advice that he gave the City (Transcript, 1040-1041).

6.6.46 Through his Counsel he later acknowledged that "there was no justification for an

apprehension of the perception of bias" (Transcript, 1044-1045). Nevertheless, as a result of these

concerns, I have avoided as far as possible a review of the advices given by Mr McLeod to the City.

Over 50 written advices were provided to the City by Mr McLeod relating to matters investigated by

the Inquiry. Most of these are not mentioned in this Report. Almost a dozen are referred to only in

passing. There are a few advices, however, which have played a major role in the actions and


629

decisions of the City's elected members and employees. In relation to these advices, it has not

been possible, consistently with my obligations under the terms of reference, to avoid a detailed

review. Mr McLeod's advice of 29 May 1998 is one of these. Because of its importance in this

context, and to ensure that readers of this Report have an opportunity to make their own evaluation,

the full text of the advice is reproduced at Annexure 11.

(ii) Content of advice

6.6.47 Following his meeting with Mayor Grljusich on 22 May 1998, Mr Hiller sought legal advice

from Mr McLeod. That advice was provided in a letter dated 29 May 1998, which was received by

the City on 2 June 1998. The advice contains strong warnings against the City entering into the

deed. The warnings extended to the City as an entity, to individual elected members and to Mayor

Grljusich himself.

6.6.48 The significant points in the advice include the following –

"3. For the Council to be able to lawfully use funds in its s.20C account for equalisationof POS, it would be necessary for the Council to bring the payment strictly withinthe terms of one of the paragraphs of subs.(2) of s.20C, and the paragraph mostlikely to be useable in this context would be paragraph (a) which allows for thepurchase of land by the local government for parks, recreation grounds or openspaces generally. For the Council to be able to make a purchase pursuant tos.20C(2)(a), in our opinion it would be necessary for the land purchased to bestill in the name of the subdivider, and not vested in the Crown pursuant tos.20A of the Planning Act. There may even be complications if the landpurchased pursuant to s.20C(2)(a) is subject to a condition of subdivisionapproval requiring that the land be vested in the Crown free of cost.

4. If there was no current condition of subdivision approval affecting the portion ofLot 17 which is required under the approved Structure Plan to be set aside for POSand drainage, then in our opinion it may well be open to the Council to enter into anagreement with the owners of Lot 17 for the purchase of part of that land, andfurthermore in our opinion it would be open to the Council to use funds in its s.20Caccount for the purchase of any part of Lot 17 set aside in the approved StructurePlan for POS.

5. While we can understand the desire for the Council and the relevant officers to takea pragmatic and helpful approach to the resolution of the POS problems associatedwith Lot 17, we consider that the spirit of helpfulness should be tempered bycaution to ensure that neither the Council, nor its employees, nor any individualCouncillor, is open to criticism or future action for alleged impropriety.

…

7. The point that concerns us here is the fact that the Council knows that thereis a possibility of part or all of the portion of Lot 17 required for POS anddrainage being vested free of cost. The Council knows of the determination


630

made by the WAPC on a reconsideration of condition 13 of the approval ofsubdivision of Lot 17, that would require the full 27% of the area of Lot 17, requiredor POS and drainage, to be vested in the Crown free of cost.

8. In the circumstances, it would be a course fraught with great risk to theCouncillor who is a part beneficial owner of Lot 17, and it would be fraughtwith risk to the Council generally, for the Council to purport to purchase any ofthe land required under the condition of subdivision approval to be vested free ofcost, or to pay any compensation for it.

…

10. … it may seem to an independent observer, in the light of the WAPCdetermination requiring 27% to be vested free of cost, that the Council ismaking a gift to the owners of Lot 17 …

11. … it is likely to seem to an independent observer that the holding back of theclearances pending the purchase of portion of the 27% area, is an artificial deviceaimed at enabling a purchase to take place prior to the final approval of thesubdivision and the endorsement of approval by the Inspector of Plans andSurveys which would result in the automatic vesting of the 27% in the Crown underthe provisions of s.20A of the Planning Act.

12. It is important in our opinion for the WAPC determination…to be challenged onappeal, or for the present approval to be abandoned … Success in an appealagainst the condition would then free the Council to enter into an agreement forpurchase of the excess portion without the risk of challenge for alleged impropriety.Of course the owners of Lot 17 should take their own legal advice as to the propercourse for them to adopt" (emphasis added).

6.6.49 The McLeod & Co advice then referred to the adverse criticisms of the City contained in

the report by the Department of Local Government of 27 June 1995 (see Chapter 5 at 5.6(b)) and

the discovery of the unlawful payment of $222,934 to Urban Focus (see Chapter 4 at 4.12(e)) and

suggested that –

"[a]ny further payment by the Council from the s.20C account in circumstances which maybe thought to involve favour, is likely to come under close and critical scrutiny by theDepartment" (para. 13.3).

In this case –

"[p]alpably one of the Councillors of the City would stand to gain if the Council enteredinto an agreement which by-passed the clear intention of the WAPC in regard to thevesting of the 27%" (para. 13.5).

6.6.50 McLeod & Co warned the City that "a complaint concerning alleged special treatment

given to Lot 17 owners" may enable the Department of Local Government to conclude that the

Council should be suspended by the Minister for Local Government or dismissed by the Governor


631

(paras. 13.6 and 13.7). The advice also warned of individual personal liability for elected members

if it were later found that –

(a) the City's funds had been misapplied; or

(b) elected members had not acted in good faith (paras. 13.8-13.10 and 13.15).

(iii) Analysis of advice

6.6.51 The City had before it a claim for POS compensation by Mayor Grljusich and the other

owners of Lot 17 and a proposal that the City should bind itself to pay compensation under a deed

with Peremate. The critical factor, identified in the McLeod & Co advice, was that there was an

existing condition of subdivision approval, affirmed after a formal reconsideration by the Planning

Commission, that required the entire 27% of the POS allocated land to be given up "free of cost and

without compensation". In this situation, there were two questions on which the City needed advice

in respect of the deed proposal –

(a) Was it lawful?

(b) If lawful, was it proper?

6.6.52 While it was not specifically addressed, McLeod & Co's answer to the first question

appears to be "yes". The answer to the second question is not easily ascertained.

6.6.53 Early in the advice it is stated that –

"[t]here may even be complications if the land purchased pursuant to s.20C(2)(a) issubject to a condition of subdivision approval requiring that the land be vested in theCrown free of cost" (para. 3, emphasis added).

Those "complications" appear later in the advice to concern the risk of action being taken against

the City and its elected members. Throughout the advice, however, there are strong indications

that the proposed deed may be entered into by the City provided that the elected members have

had the risks explained to them. For example, the advice states –

(a) "[i]n our opinion, it would be wrong for the Council to put one of its Councillors in

that position of risk, certainly unless the risk had been explained to the

Councillor clearly and cogently" (para. 9, emphasis added);

(b) "[f]urthermore, it would be unreasonable to subject the remaining Councillors to that

risk without giving a similar explanation of the risk to them" (para. 9, emphasis

added); and


632

In what appears to be its conclusion, the advice states –

"Having regard to the matters set out above, we strongly recommend that no arrangement

be made to reach the requested agreement with the owners of Lot 17 until the concerns

expressed above have been fully explained to all members of the Council, and in

particular to the Councillor who is a part beneficial owner of Lot 17. All of the Councillors

are entitled to know the circumstances which might appear to place them at risk"

(para. 14, emphasis added).

6.6.54 It was not until the last numbered paragraph (on p. 6) of the advice that the issue of

propriety is specifically addressed. This paragraph states –

"16. We should perhaps add that in a previous opinion, we have mentioned thepossibility that money remaining in the Council's s.20C account might be used topurchase open space within Stages 7, 8 and 14 of the Packham locality which willbe required for open space purposes under the Structure Plan. If any land withinthose stages is subject to a current subdivision approval under which a portion ofthat land is required to be vested free of cost, if that condition goes unchallenged,in our opinion it would be improper for the Council to use s.20C moneys to acquireany portion of the land which is required under the condition to be vested free ofcost."

6.6.55 The proposition contained in the second sentence of this paragraph was expressed to

apply only to land within Stages 7, 8 and 14. Lot 17 was not within Stages 7, 8 or 14. For this

reason, and also having regard to the opening words of the paragraph, a reader may well have

assumed that the proposition was not relevant to the deed proposal which concerned Lot 17. In

fact, it may be the most critical part of the entire opinion. Until this point, the opinion had focussed

on "complications", "risks", "dangers", "perceptions" and "alleged special treatment". For the first

and only time, the opinion deals expressly with what is "proper". In the particular circumstances

described, it concludes clearly and without qualification that the payment of POS compensation by

the City "would be improper".

6.6.56 Although this conclusion is expressed to apply only to land within Stages 7, 8 and 14,

there is no apparent reason why it would not apply to the specific issue on which the advice was

sought - that is, the proposal to pay compensation to the owners of Lot 17. The conclusion that "it

would be improper for the Council to use s.20C moneys to acquire any portion of the land which is

required under the condition to be vested free of cost" was expressed to apply where –

(a) the land was "subject to a current subdivision approval under which a portion of

that land is required to be vested free of cost"; and


633

(b) "that condition goes unchallenged".

6.6.57 The first condition was clearly satisfied in the case of Lot 17. As for the second, the

differences with the Lot 17 situation are immaterial. Condition 13 had been challenged by way of a

request for reconsideration but the Planning Commission had decided to retain it. As the McLeod &

Co opinion noted earlier –

"[t]he requirement in the circumstances can only be regarded as one which has been fullyconsidered by the [Planning Commission], and the retention of which therefore iscalculated and deliberate" (para. 13.4).

Condition 13 was also challenged by way of an appeal to the Minister for Planning. However, the

deed proposal was being considered by the Council independently of that challenge.

6.6.58 On this basis, therefore, the advice from McLeod & Co can be construed as concluding

that the proposal to pay POS compensation to Mayor Grljusich and the other owners of Lot 17

would have been improper.

6.6.59 It would not be reasonable, however, to expect a lay person (by whom the advice was

intended to be read) to construe it in that way. Indeed, none of the City's elected members or

employees who gave evidence at the Inquiry construed the advice in that way. What the advice

emphasised, and the way it was interpreted by at least one elected member, was that the City could

proceed with the deed proposal but it was essential that the "risks" and "complications" were "fully

explained to all members of the Council".

6.6.60 The emphasis in this advice on the "risks", "dangers" and other possible adverse

consequences of the Council adopting a particular course of action is unfortunate. Particularly as a

public sector agency, the City should be concerned primarily, if not exclusively, with what is lawful

and proper. The question should not be "What action might be taken against the City?" but "Is the

proposal lawful and proper?" A similar point was made earlier in this Report in respect of the advice

given in relation to the payment of $222,934 (see above 4.12(f)).

6.6.61 The difficulties experienced, not only by the City's elected members but also by lawyers

during the public hearings of this Inquiry, in trying to ascertain what were the conclusions of the

advice illustrates the benefits in specifically recording clear and concise conclusions. In this case, it

would have been of considerable help to have had a "yes" or "no" answer, qualified if necessary, to

each of the two questions on which the City required advice.


634

(d) Further request by Mayor Grljusich for documents

6.6.62 On 29 May 1998, Mayor Grljusich asked Mr Ryan for copies of –

(a) the Packham Structure Plan Report; and

(b) the Packham Stage 7 subdivision approval.

Mr Ryan's file note of the conversation states that he questioned the Mayor's need for a copy of the

second document. Mayor Grljusich replied that he was responding to a ratepayer's inquiry.

Mr Ryan knew that the CEO had previously expressed concern about Mayor Grljusich's access to

the City's documents that were being used, or were suspected of being used, by Mayor Grljusich for

the purpose of his compensation claim against the City. Mr Ryan discussed this particular request

with Mr Brown who authorised their release to the Mayor and, on this basis, the documents were

provided to him.

6.6.63 The significance of Mayor Grljusich's request for a copy of the Stage 7 subdivision

approval is that the request was made only 8 days after Mayor Grljusich obtained a copy of the

agenda and attachments for the Special Council meeting of 24 February 1998. Included among

those attachments was McLeod & Co's advice to the City dated 16 February 1998. That advice

discussed the City's rights and obligations in respect of the payment of POS compensation to the

owners of Lot 17. The discussion was in the context of the situation applying to Stages 7, 8 and 14.

McLeod & Co advised the City that there was a "possibility of the Council acquiring the open space

land from those stages from its s.20C funds" (at para. 3.5). Clearly it would have been of

assistance to the owners of Lot 17, in pursuing their POS compensation claim against the City, to

compare the conditions of subdivision approval that applied in Stage 7 with their own conditions of

subdivision approval. This issue was not dealt with during the public hearings of the Inquiry.

(e) Peremate's letter of 2 June 1998

6.6.64 Despite being informed that its POS compensation claim would be dealt with by the

Council at its June meeting, Peremate wrote to the City on 2 June 1998 demanding an "immediate

resolution to this problem". It also threatened legal action against the City.

6.6.65 This letter, addressed to Mr Brown, repeated the view consistently expressed by Mayor

Grljusich that it was the City's responsibility to solve the problems seen by the owners of Lot 17 and


635

that the City's planners had failed to comply with their responsibilities –

"As you know, we also asked you to outline the arrangements you propose to make forthe contribution we are making beyond the 10 per cent that ought to be required of us.The answer we received in Mr Ryan's letter is inappropriate and totally unsatisfactory."

6.6.66 Peremate claimed that, based on the "structure planning report dated August, 1987" - a

copy of which had been sought by and given to Mayor Grljusich three days earlier - it was "the

Council's responsibility, as the holder of 'cash-in-lieu' funds, to acquire land that has been

contributed above and beyond the normal 10 per cent requirement". Like all its earlier claims, this

one was also baseless.

6.6.67 Peremate's letter concluded by criticising Mr Brown and his staff and threatening legal

action against the City –

"Our company has been attempting to resolve our Public Open Space issue, through youroffice, for a considerable amount of time. We have yet to site any evidence that wouldsuggest that a resolution to our problem is close at hand. This is in spite of the fact thatwe have written letters to you and made personal representation to both you and yourstaff.

Our company requires immediate resolution to this problem. We have commercialinterests that are being jeopardised as a direct result of the way that both you and yourAdministration have been dealing with this matter. Unless you act to resolve this matterbefore our land needs to be ceded to the Crown, in accordance with the Structure Plan,our company will have no choice but seek damages for any commercial losses that wesuffer."

6.6.68 This was the third threat of action by the owners of Lot 17 against the City. The first was

made by Mayor Grljusich during his meeting with Mr Hiller on 8 August 1997. The second was

made at the meeting in the mayoral parlour on 6 January 1998 (see above at paras. 6.3.39 - 6.3.40

and 6.4.95 - 6.4.96)

6.6.69 A handwritten note at the foot of the Peremate letter stated –

"Please forward courtesy copy to all Councilors [sic]."

A copy of the letter was circulated to all elected members as an attachment to the agenda for the

Community Development Committee meeting on 9 June 1998.

6.6.70 On 2 June 1998, the same day as the City received Peremate's letter, Mr Ryan forwarded

a copy of it to McLeod & Co seeking urgent advice on the possible damages claim. In his Written

Response to the Inquiry (at p. 38), Mr McLeod stated that he provided advice on this issue to the


636

City. There is no record on the City's files or on McLeod & Co's file of any written or oral advice in

respect of Peremate's letter of 2 June 1998. Once again, the Inquiry was unable to determine

whether this was another example of poor record keeping by the City or whether there was another

explanation.

(f) Ministerial appeal and request for reconsideration

6.6.71 On 2 June 1998 Peremate wrote to the Ministry for Planning requesting a further

reconsideration of Condition 13. The letter was signed not only by Frances Gava, the company

secretary who signed all Peremate's letters to the City, but also by "John P Grljusich Chairman".

6.6.72 On the following day, a notice of appeal by "John Grljusich, Director of Peremate Holdings

Pty Ltd" was lodged with the Minister for Planning. The appeal sought to overturn –

"[the Planning Commission's] decision not to reduce the public open space commitment inthe subdivision of lot 17 Hamilton Street [sic], Spearwood to 10%."

6.6.73 Peremate's request for a further reconsideration of Condition 13 was refused on

2 July 1998 on the basis that the Planning Commission had no power to reconsider a condition

more than once. (A similar view of the Planning Commission's power was expressed by Mr Hiller in

the Officers' report to the Community Development Committee meeting on 9 June 1998, referred to

below at 6.7(a).) The merits of that view are considered below at 6.10(b)(i). Mayor Grljusich's

appeal to the Minister was dismissed on 24 August 1998. The Minister's reasons for rejecting the

appeal are dealt with below (at 6.12).

6.7 CDC meeting on 9 June 1998

(a) Officers' report

(i) Content of report

6.7.1 In contrast to the Officers' report that was prepared hurriedly for the Council meeting on

20 January 1998, the Officers' report for the Community Development Committee meeting on

9 June 1998 was very detailed. It advised elected members, in unequivocal terms, that the City

should not enter into a deed with Peremate.


637

6.7.2 The Officers' report –

(a) outlined the relevant background, including the Council's decision on

20 January 1998 relating to the request for reconsideration of Condition 13 and the

Planning Commission's decision to retain that condition;

(b) repeated the 4 options available to the owners of Lot 17; and

(c) confirmed, and explained the bases for, the major propositions that –

(i) the City had no role in the matter;

(ii) 16%, not 10%, of the Packham Area was set aside for POS; and

(iii) there was no basis for Peremate's claim that the report accompanying

Amendment No. 240 required or allowed the City to enter into a deed with, or

pay POS compensation to, the owners of Lot 17.

The report also noted that a copy of the McLeod & Co advice of 29 May 1998 had "already been

circulated separately to Councillors as confidential information".

6.7.3 The Officers' report concluded that, based on the City's legal advice –

(a) "no alternative arrangements appear open to Council to provide for the owners [sic]

request in relation to their contribution above 10%, based on the current

subdivision approval"; and

(b) "it is recommended that the Council not enter into a deed to purchase all or part of

proposed Lot 189, which is to be reserved as a Section 20A 'public open space and

drainage' reserve as a condition of the WAPC subdivision approval for Lot 17".

6.7.4 It is apparent that the conclusions and recommendations of the Officers' report are not

only a good deal clearer and less equivocal, but also stronger, than those in the McLeod & Co

advice. The City's planners forwarded a copy of the report to Mr McLeod and sought his

comments. Mr McLeod telephoned Mr Hiller on the afternoon of 9 June 1998, before the

Community Development Committee meeting, advising that he "could see no need for any

amendment to the report". His advice was confirmed in his letter to the City dated 10 June 1998.

6.7.5 There is, in fact, a major difference between the McLeod & Co advice of 29 May 1998 and

the Officers' report, each of which was provided to the members of the Community Development

Committee for its meeting on 9 June 1998. The McLeod & Co advice appears to accept and be

based on the proposition that the City could lawfully give effect to the deed proposal. In other


638

words, it would be lawful for the City to pay POS compensation to the owners of Lot 17, by way of

purchase of POS required land, from the funds in its section 20C account.

6.7.6 In his Written Response to the Inquiry dated 10 December 1999 (at pp. 36, 37 and 39),

Mr McLeod indicated that he intended the advice to be construed in that way. This is hardly

surprising. The deed proposal was, after all, Mr McLeod's idea in the first place. In his advice to

the City dated 16 February 1998 Mr McLeod first suggested the possibility that, despite the existing

condition of subdivision approval requiring that 27% of Lot 17 be given up free of cost and without

compensation for POS purposes –

" … the situation may be created where a portion of the land which would otherwise berequired to be vested pursuant to s.20A of the Planning Act free of cost may be set asidein a separate lot for acquisition by the Council, which acquisition might be achieved legallywithin the authority of s.20C(2)(a)".

6.7.7 Yet the Officers' report to the Community Development Committee, endorsed by

Mr McLeod, concluded that the deed proposal was unlawful. It stated –

"The plan of subdivision for Lot 17 shows approximately 27% of the land to be set asideas a Section 20A reserve for public open space and drainage. Therefore, based on theadvice received by the Council it cannot lawfully use the funds in its trust accountto purchase this land" (emphasis added)."

6.7.8 Therefore, on the fundamental question on whether it was lawful for the City to be a party

to the proposed deed, the members of the Community Development Committee had two conflicting

pieces of advice –

(a) the advice from McLeod & Co dated 29 May 1998 which appeared to accept that it

would be lawful; and

(b) the Officers' report which concluded that, on the basis of Mr McLeod's advice, it

would not be lawful.

6.7.9 As to the second question, whether the City should be a party to the proposed deed –

(a) the advice from McLeod & Co recommended that the deed should not be entered

into until the risks had been fully explained to all elected members; and

(b) the Officers' report recommended, without qualification, that the City should not

enter into the deed.

(ii) Omissions from Report

6.7.10 Three significant issues were not dealt with in the Officers' report.


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6.7.11 The first concerns the continuing refusal or failure by the owners of Lot 17 to pay, or to

agree to pay, their share of infrastructure costs. On this point, the report noted merely that –

"Council Policy PD 14 'Packham Urban Development Area' applies to this application,together with the Special Council Meeting resolution relating to the Lambasa subdivisiondated 25 June 1997."

For the reasons set out earlier in relation to the Council's decision on 20 January 1998 (see above

at 6.5(d)-(f)), the link between contributions to infrastructure costs and payment of POS

compensation is of paramount importance.

6.7.12 Since the Council's decision on 20 January 1998, Urban Focus had written to the City

expressing its objection to any proposal that Mayor Grljusich and the other owners of Lot 17 should

receive POS compensation without paying their share of infrastructure costs (Urban Focus

submission on the rezoning application of Lot 17 - Amendment No. 181 dated 20 February 1998).

Not only was the infrastructure contribution issue relevant, but it would have enabled elected

members who were concerned about the broader equity issues to evaluate properly Mayor

Grljusich's claim that he and his fellow owners of Lot 17 were being treated unfairly compared to

their neighbours who were participants in the Private Owners' Arrangement.

6.7.13 The second issue not dealt with in the Officers' report concerned the broader financial

implications for the City if it were to pay POS compensation to Mayor Grljusich and the other

owners of Lot 17. The relevance and significance of this issue was also considered earlier in the

context of the Council's decision on 20 January 1998 (see above at 6.5(c)). It was a relevant factor

that should have been put before the Community Development Committee and the Council in

June 1998.

6.7.14 The third issue not dealt with in the Officers' report was the timing advantage that would

have been given to the owners of Lot 17 if the deed proposal were to have been adopted. Mayor

Grljusich was well aware of this issue. This is apparent from an earlier file note made by Mayor

Grljusich. It is dated 15 May 1998 but was made after that date. It states –

"On the weekend of 16th and 17th May, 1998, attention was brought to me, the Mayor ofthe City of Cockburn, to a meeting which was held amongst owners of the PackhamDevelopment Area Stage 2, and an Agenda of that meeting which I have in mypossession. Also that I the Mayor was told on that weekend that certain comments byMr Colin Evans of Urban Focus were made by him that I, as the Mayor of the City ofCockburn had stuffed up the whole of Urban Focus arrangements made with the City ofCockburn, because I was trying to get earlier payment for my public open space in myown development, and trying to jump the queue. And that I was using my position for myown benefit ahead of anybody else's.


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…

As Mayor of the City of Cockburn I believe that the problem in which Council finds itself inrelation to the affairs of the owners within the P.U.D.A. is now being transpired in theoffice of the Mayor of the City of Cockburn. The perception is that I, the Mayor, am usingmy Office for my own financial benefit as a priority. I believe, as the Mayor, that I musttake certain steps to protect not only accusations that have been made against me, butalso to protect the Office of the Mayor itself. I intend to take reasonable actions to protectmy Office."

6.7.15 The City's planners were, or should have been, aware of this timing issue. On

20 February 1998 Urban Focus sent to the City a formal submission dealing with the rezoning

proposal for Lot 17. It stated that it had no objection to the owners of Lot 17 being compensated for

their excess POS provision provided that they were –

" … treated in the same manner as the other Landowners and required to wait forpayment of the compensation until Landowners in previously completed stages havebeen paid."

6.7.16 Like the infrastructure cost contribution issue and financial implications issue, this timing

advantage was also relevant to the Council's consideration of the deed proposal and should have

been included in the Officers' report.

6.7.17 In relation to all three issues, Mr Hiller had more time in June 1998 than he did in

January 1998 to consider including appropriate information and advice in the Officers' report to the

Council. Nevertheless the focus in his June 1998 report was very much on the lawfulness of the

City entering into the deed, rather than on equity and fairness factors (which were of particular

importance to the reasoning in the January 1998 Officers' report). Significantly, the June 1998

report recommended very strongly against the City's entry into the deed. Mr Hiller was justified in

assuming that, having been advised that it was unlawful, the Council would not have entered into

the deed.

6.7.18 For these reasons, I regard the omission of these three issues from the June 1998

Officers' report as being a good deal less serious than the omission of the first two issues from the

earlier Officers' report.

(iii) Officers' recommendation

6.7.19 The recommendation contained in the Officers' report was as clear and unequivocal as


641

the accompanying technical advice. It stated –

"That Council resolve to:

(1) receive the report from the Council's Planning Department and the advice from theCouncil's Solicitor, McLeod & Co;

(2) advise Peremate Holdings Pty Ltd that:-

1. The Council is not prepared to enter into a deed to purchase all or part ofproposed Lot 189 which has been set aside as a Section 20A Reserve underthe WAPC approval to subdivide Lot 17 Hamilton Road, Spearwood, basedon the advice of Council's Solicitor, McLeod & Co;

2. Should the Company be aggrieved by the WAPC decision in respect to theconditions of approval for Lot 17, then the Company should lodge an appealwith either the Minister for Planning or the Town Planning Appeal Tribunal tohave the matter determined by an independent arbitrator."

(b) CDC meeting

(i) Committee's recommendation

6.7.20 The members of the Community Development Committee who were present at its

meeting on 9 June 1998 were –

Mrs Waters Councillor (Deputy Presiding Member)

Mr Grljusich Mayor


Mr Lee Councillor




Crs Ostojich and Pecotic attended as deputies in place of Crs Lees and McNair. The meeting

began at 7.30pm. The Lot 17 deed proposal was the last item to be considered. The minutes

record that at 10pm, before the discussion began, Mayor Grljusich declared a financial interest and

left the meeting. He returned to the meeting at 11.43pm just before the Committee resolution was

read out. The meeting closed at 11.45pm.

6.7.21 Three amendments to the recommendation in the Officers' report were put. The first,

moved by Cr Ostojich and seconded by Cr Pecotic, was that the Council resolve to –

"(1) enter into a Deed of Agreement between the City of Cockburn and PeremateHoldings Pty Ltd to acquire public open space area over and above the 10%


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normally required as indicated in Amendment No. 240 of the City of Cockburn'sDistrict Zoning Scheme No. 1 report for Lot 17 Hamilton Road, Spearwood;

(2) prepare the Deed of Agreement immediately so that the matter can be expeditedand not cause any undue delays to Peremate Holdings Pty Ltd;

(3) foreshadow that the Council will deal with the other landowners that have alreadycontributed land for public open space on an ex gratia basis;

(4) advise the Department of Local Government, the Minister for Local Government,the Ministry for Planning and the Minister for Planning of Council's actions."

This amendment was lost.

6.7.22 A second amendment, moved by Cr Wheatley and seconded by Cr Elpitelli was also lost.

It proposed that the –

"Council prepare a submission to the Minister for Local Government to ensure that all landowners in the Packham area be treated equally in respect to POS contributions includingthe payment of cash contributions to owners who have been required to give up morethan 10% of their land and the administration prepare a report to give effect to the abovesubmission."

6.7.23 The third amendment, moved by Cr Ostojich and seconded by Cr Lee, was that the

Council resolve –

"(1) to receive the report from the Council's Planning Department and the advice fromthe Council's Solicitor, McLeod & Co;

(2) that subject to the agreement of the Department of Local Government, the Ministerfor Local Government, the Ministry for Planning and the Minister for Planning;

(a) the City of Cockburn enter into a Deed of Agreement with PeremateHoldings Pty Ltd to acquire public open space area over and above 10%normally required as indicated in Amendment No. 240 of the City ofCockburn's District Zoning Scheme No. 1 report for Lot 17 Hamilton Road,Spearwood;

(b) the Deed of Agreement be drawn up immediately so that the matter can beexpedited and not cause any undue delays to Peremate Holdings Pty Ltd;

(c) it be foreshadowed that the Council will deal with the other landowners thathave already contributed land for public open space on an ex gratia basis."

This amendment, and the amended motion, were carried.

6.7.24 The minutes record that Cr Wheatley wished his vote against the motion to be recorded.

Although the minutes do not record which way the other elected members voted, I am satisfied on


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the evidence that –

(a) Crs Lee, Ostojich and Pecotic voted in favour; and

(b) Crs Elpitelli and Wheatley voted against.

I am not able to determine whether Cr Waters voted in favour or did not vote.

6.7.25 There are 4 major features of the Committee's recommendation.

6.7.26 Firstly, it was made despite, and contrary to, the conclusions in the Officers' report,

reviewed without dissent by Mr McLeod, that the City "cannot lawfully use the funds in its trust

account to purchase this land".

6.7.27 Secondly, the proposal, if implemented, would have given Mayor Grljusich and the other

owners of Lot 17 an advantage in three major respects over the other Packham Area landowners –

(a) no other landowners received POS compensation without paying or agreeing to

pay their share of infrastructure costs;

(b) all other landowners who received POS compensation did so under the Private

Owners' Arrangement and on the basis of land given up in excess of 16%, not

10%; and

(c) all other landowners had to wait for a considerable time, in some cases more than

three years, for their POS compensation payments whereas, in respect of Mayor

Grljusich and the other owners of Lot 17, the Committee's requirement that the

deed "be drawn up immediately so that the matter can be expedited and not cause

undue delays to Peremate", would have resulted in a very early payment.

6.7.28 Thirdly, the entire proposal was expressed to be "subject to the agreement of the

Department of Local Government, the Minister for Local Government, the Ministry for Planning and

the Minister for Planning". In other words, unless all 4 agreed to the proposal it would not go

ahead. It is apparent that this condition was the major difference between the first amendment

(moved by Cr Ostojich and seconded by Cr Pecotic), which was lost, and the third amendment

(moved by Cr Pecotic and seconded by Cr Lee) which succeeded. Without this condition, Cr Lee

would not have supported the deed proposal. Without his support, it would probably have been

rejected.


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6.7.29 Fourthly, little thought appears to have been given to the "foreshadowed" proposal "that

the Council will deal with the other landowners that have already contributed land for public open

space on an ex gratia basis". The Committee did not have before it any information about the

number of landowners who matched that description, the amount of land involved or the cost to the

City of implementing the proposal. If implemented, the proposal would have required the City to

compensate every Packham Area landowner who had contributed more than 10% of his or her land

for POS purposes. Over 32 hectares of land had been, or was to be, given up POS purposes in the

Packham Area. Of this, 12.3 hectares was in excess of the standard 10% contribution requirement.

Under the 1998 POS Equalisation Schedule, POS land was valued at $136,237 per hectare and

wetlands at $32,697 per hectare. This proposal may well have committed the City to over $1 million

in POS compensation payments. The money could not have come from its section 20C account

because, even if the account had been in credit to that extent (which it was not), most of the

"excess POS land" had already been vested in the Crown and it was clear that section 20C funds

could not be used in those circumstances.

6.7.30 The Committee's adoption of this proposal, apparently in an attempt to avoid the

perception of a special deal for Mayor Grljusich and the other owners of Lot 17, was ill-conceived

and irresponsible.

6.7.31 As is evident from the terms of their first amendment which was lost, Crs Ostojich and

Pecotic were the strongest supporters of the deed proposal.

(ii) Cr Ostojich

6.7.32 Mr Ostojich testified that he had "read the advice that we'd received from Denis McLeod

and took it very seriously, obviously …" (Transcript, 2663). As he understood it, Mr McLeod's

advice which he "couldn't fault" concluded that the Council "couldn't enter into the sort of

arrangement that we were proposing to enter into" (Transcript, 2663-2664). However, he did not

think that Mr McLeod had been referred to Amendment No. 240 "which in some parts speaks of

10 per cent" or other documents that may have affected his conclusion (Transcript, 2664).

Mr Ostojich thought that "all of those documents … could be tested to see if the result was the

same" (Transcript, 2664).


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6.7.33 Counsel Assisting pointed out to Mr Ostojich that the Committee did not recommend that

the matter be referred "back to McLeod & Co to consider in that broader light". Mr Ostojich

responded –

"Yes, I accept that, that that's the resolution, but there's no question - there was noquestion in my mind - there's no question that that would've happened. You just wouldn'tdraw up something like this and nor would you enter into something like this withoutreferring it - I mean, we'd referred everything to Denis McLeod thus far and there was noway that this would've happened without doing that, and in fact that's what did happen asI recall anyway" (Transcript, 2665).

6.7.34 This explanation is unconvincing. Mr Ostojich is a very experienced administrator. He

occupies a senior position in a Federal Government agency. His evidence to the Inquiry, at times

under testing conditions, showed him to be thoughtful, articulate and intelligent. I am satisfied that,

if Cr Ostojich had intended that the deed proposal not be progressed unless and until McLeod & Co

had been given another opportunity to review its opinion of 29 May 1998 having regard to the

further documentation referred to by Cr Ostojich, then Cr Ostojich would have ensured that that

intention was reflected in the terms of the Committee's recommendation. Instead, the

recommendation expressly stated that the Council should resolve "to receive the report from the

Council's Planning Department and the advice from the Council's Solicitor, McLeod & Co" and,

subject to Minsiterial and Departmental approval, require that the deed of agreement be drawn up

immediately.

6.7.35 It is also significant that, although Amendment No. 240 was not referred to in the McLeod

& Co advice of 29 May 1998, it is dealt with extensively in the Officers' report to the Committee.

While it is true, as Mr Ostojich noted, that the report accompanying Amendment No. 240 "in some

parts speaks of 10 per cent", it does so only for the purposes of distinguishing between the usual

situation where 10% POS is required and the situation in the Packham Area where 16% was

required. The Officers' report correctly makes it quite clear that Amendment No. 240 provides no

basis for either –

(a) giving Mayor Grljusich and the other owners of Lot 17 POS compensation in

excess of 10% (pp. 60-63); or

(b) the City entering into a deed with a "non-participating landowner such as the

owners of Lot 17" (pp. 63-65).

6.7.36 Two other aspects of Mr Ostojich's evidence are relevant. Firstly, he testified that he and

Cr Lee had structured the condition that required the agreement of the two Ministers and their


646

Departments. It was an important safeguard. The original amendment moved by Cr Ostojich

proposed that the Ministers and Departments merely be advised of the City's actions. Under the

amendment that was adopted, the proposal first required the "actual … approval" of the Ministers

and their Departments (Transcript, 2665). Cr Ostojich did not think this safeguard was necessary.

The first amendment, which he drafted and moved, did not include the safeguard. Seven days

later, when the matter was considered by the full Council, Cr Ostojich again moved an amendment

(this time to the Committee's recommendation) to exclude the safeguard.

6.7.37 Secondly, Mr Ostojich anticipated that if the deed proposal had been implemented then

the owners of Lot 17 would have been paid very quickly (Transcript, 2667). He claimed to have no

intention, however, of conferring a benefit on the owners of Lot 17 –

"My intention was to make it the same" (Transcript, 2668).

6.7.38 Throughout this period, he believed that the Council had "a moral obligation to make [the]

equalisation payment" (Transcript, 2667) so that the owners of Lot 17 would be treated the same as

other Packham Area landowners. If he had been informed that the other Packham Area

landowners had to wait for their POS compensation payments, he may have "introduced some form

of time trigger … or event trigger" into the deed proposal to ensure that the owners of Lot 17 were

not advantaged (Transcript, 2668).

(iii) Cr Pecotic

6.7.39 Cr Pecotic had a firm, indeed unshakeable, opinion that the owners of Lot 17 were

entitled to be compensated from the City's section 20C account for any land in excess of 10% of the

total area that they were required to give up for POS purposes. He claimed that he believed that

the same principle should apply to all Packham Area landowners, regardless of whether the land

that they had given up for POS purposes had already been vested in the Crown. I am satisfied that

he held these opinions genuinely and that he was motivated by a desire to address the grievances

expressed not only by the owners of Lot 17 but by other landowners in the Packham Area.

6.7.40 Unfortunately, Cr Pecotic was so determined to achieve his objectives and so convinced

that his opinions were correct that he would not (and perhaps could not) accept any advice, or take

into account any information, that was inconsistent with his own opinions. During the course of his

evidence to the Inquiry in relation to the Committee meeting on 9 June 1998, Cr Pecotic was

referred to numerous key passages from the Officers' report and the advice from McLeod & Co, all


647

of which conflicted with his opinions on the POS compensation issue. His response on each

occasion was that he had a different understanding of the position or that the advice or information

was wrong (Transcript, 2787-2800).

6.7.41 There was no rational basis for Cr Pecotic's beliefs that –

(a) the owners of Lot 17 were entitled to be paid POS compensation;

(b) the compensation to which they were entitled was in respect of any POS land given

up in excess of 10%; and

(c) owners of land within the Packham Area were entitled to be paid compensation by

the City out of its section 20C account for any POS land given up in excess of 10%

regardless of whether the land had already been vested in the Crown.

On each of these matters, Cr Pecotic had repeatedly been given advice to the contrary by the City's

planners and the City's legal advisers. He had little expertise or experience in planning or legal

matters but, in making his decisions, he preferred his own beliefs to the considered and consistent

opinions of the City's specialist planners and legal adviser.

6.7.42 Despite being advised that the City should not enter into the deed, he supported - on the

basis only of his own intuitive feeling that he was right and the City's advisers were wrong - the

proposal that the City should enter into the deed as a matter of urgency.

6.7.43 As an individual, making private decisions, Mr Pecotic was free to ignore advice given by

others. As a holder of a public office, exercising public power and particularly in relation to the

expenditure of public funds, Cr Pecotic had no such freedom. In the circumstances, without any

rational basis for questioning the advice before the Committee he was obliged to act in accordance

with it.

(iv) Cr Lee

6.7.44 Cr Lee voted against the first amendment that had been moved by Cr Ostojich and

seconded by Cr Pecotic. In his evidence to the Inquiry, he testified that he had read Mr McLeod's

advice and was "very scared" even "fearful" (Transcript, 2456) about the risks, particularly the risk

of personal liability referred to in that advice. He explained to the Inquiry that –

" … so that to me is a terribly scary thing to put in front of me and not something that Iwould treat lightly. I do remember being amazed if this is that particular advice"(Transcript, 2452).


648

6.7.45 Despite that, he did not consider that McLeod & Co had advised the Council that it could

not, or should not, enter into the deed. He pointed out that what appeared to be the conclusion to

that advice recommended only that there should first be a full explanation to all elected members.

The particular passage in the advice to which Mr Lee referred stated –

"Having regard to the matters set out above, we strongly recommend that no arrangementbe made to reach the requested agreement with the owners of Lot 17 until the concernsexpressed above have been fully explained to all members of the Council, and inparticular to the Councillor who is a part beneficial owner of Lot 17" (emphasis added, seeTranscript, 2452-2453).

6.7.46 Mr Lee firmly rejected the proposition that the McLeod & Co opinion contained

"unequivocal advice against council entering into a deed with the owners of lot 17". He

responded –

"No, I think it is unequivocal advice of being very careful and watch what you do and don'tdo anything until everybody fully understands what is going on and don't do anythingcontrary to legal advice. That's what I take that to be saying. It's not unequivocal fullstop" (Transcript, 2453).

6.7.47 Compared with Crs Ostojich and Pecotic, Cr Lee not only had a very different

understanding of the City's legal advice, but he also had a very different response to it. His

response was not to ignore the advice but to act in accordance with it. Thus, he was prepared to

support the deed proposal only on the basis that it had the prior approval of the two Ministers and

their Departments. He reasoned that –

" … if it was okay for those people, then it's certainly okay with me" (Transcript, 2454).

6.7.48 This is entirely consistent with the thrust of Mr McLeod's advice. The advice did not deal,

other than obliquely, with what was proper. Instead, its focus was on –

(a) how the City's actions might be perceived by others; and

(b) the risk of legal action being taken against the City and elected members.

If, as proposed by Cr Lee, the City's entry into the deed required the prior approval of the Minister

for Local Government, the Minister for Planning, the Ministry for Planning and the Department of

Local Government, then the risk of adverse perceptions and legal action against the City would

have been greatly diminished, if not eliminated.

6.7.49 Mr Lee was also concerned to ensure that the owners of Lot 17 were treated fairly

compared to the other Packham Area landowners. He was not aware that the deed proposal would

have enabled the owners of Lot 17 –

(a) to "jump the queue" in terms of the timing of their POS compensation payment; and


649

(b) to receive POS compensation without being required to pay their share of

infrastructure costs (Transcript, 2455).

He testified that if he had been given this information, his "conscience would not have allowed" him

to support the proposal (Transcript, 2455).

6.7.50 Mr Lee's evidence, which I accept, underscores the relevance and importance of the

infrastructure cost contribution issue in the context of whether it was "fair and equitable" for the

owners of Lot 17 to be paid POS compensation. His evidence also underscores the significance of

the McLeod & Co advice not dealing clearly with the basic questions concerning the lawfulness and

propriety of the City entering into the deed. On the available evidence, without Cr Lee's support,

the Committee would not have recommended that the Council adopt the deed proposal.

(v) Cr Elpitelli

6.7.51 Mr Elpitelli testified that he would have voted against the Committee's recommendation

because he believed that the reference, in paragraph 2(a) of the motion, to "10%" should have been

to "16%". He understood that other Packham Area landowners would not be compensated unless

they gave up more than 16% of their land for POS purposes. His primary concern was that, on

equity grounds, the owners of Lot 17 should be compensated on the same basis so that they were

not disadvantaged.

6.7.52 On equity grounds, like Cr Lee, he considered that the infrastructure cost contribution

issue was a critical factor in determining whether the City should pay POS compensation to the

owners of Lot 17. This is evident from the following exchange between Counsel Assisting and

Mr Elpitelli –

"COUNSEL ASSISTING: If you had known in June of 1998 that they were under no legalobligation to contribute to those subdivision costs - let's talk just about Western Powerand sewerage - - -?---MR ELPITELLI: I would've had different views; yes, I would have.

COUNSEL ASSISTING: That would have made a big difference to your thinking?---MR ELPITELLI: We would've discussed the issue and the issue would've been broughtup and addressed in the best possible way, but until it was addressed, I would not havesupported anything that could've allowed anybody to subdivide without paying their fees,and that is 100 per cent of the costs, not one left out or the other.

COUNSEL ASSISTING: No, and you certainly wouldn't have been agreeing to councilfunds being paid in compensation?---MR ELPITELLI: No, definitely not; definitely not;definitely not" (Transcript, 2560).


650

(vi) Cr Wheatley

6.7.53 Cr Wheatley voted against the motion and felt strongly enough about the matter to ask

that his vote be recorded –

" … because I was firmly of the view that the matter shouldn't proceed unless we wereassured that we were treating Councillor Grljusich equally with all other owners and thatwe weren't favouring him over other landowners in the area …" (Transcript, 3271).

" … I was against that proposal because it appeared to give some favouritism or somebenefit to Peremate that the other landowners didn't enjoy" (Transcript, 3273).

6.7.54 As to the relevance of the issue of infrastructure cost contributions, Mr Wheatley's

testimony was that it was "[c]ertainly" a matter that should have been brought to the Council's

attention. To ensure whether the owners of Lot 17 were being treated fairly compared to the other

Packham Area landowners, it was necessary to consider whether they had paid, or agreed to pay,

their share of infrastructure costs (Transcript, 3275).

(vii) Cr Waters

6.7.55 Mrs Waters testified that she had no independent recollection of the Committee meeting

(Transcript, 2404-2405). She chaired the meeting and her practice as chair was not to vote if her

vote would not have affected the outcome (Transcript, 2405). In this case the vote was split, 3-2,

among the other elected members. I am unable to determine, on the evidence, whether Cr Waters

voted in favour or did not vote at all.

6.7.56 If Cr Waters had voted against the motion, the votes would have been tied at 3-3. In that

case, under section 5.21(3) of the Local Government Act, Cr Waters would have been entitled to

exercise a casting vote. Had she voted in the same way, the motion would not have been carried.

Thus, her vote may very well have affected the outcome.

6.7.57 Cr Waters seemed to be unaware of the voting obligations of an elected member. Under

section 5.21(2) of the Local Government Act, an elected member who is present at a committee or

council meeting "is to vote". This is not expressed in the same mandatory terms applying to other

provisions of the Act where non-compliance attracts sanctions. For example, the financial interest

provisions of the Act require that an elected member "must" or "must not" do what is prescribed.

Nor are the current provisions of section 5.21(2) as strongly expressed as the corresponding

provisions of the Local Government Act 1960 which required that a councillor "shall vote".


651

6.7.58 Despite this, the provisions of the current act cannot be ignored. It is wrong for an elected

member - regardless of whether he or she is also the presiding member at a council or committee

meeting - to adopt a practice of not voting, even if he or she perceives that the outcome would not

be affected.

(viii) Findings

F50. I find that, in respect of the Committee's recommendation on 9 June 1998 to support

the proposal that the City enter into a deed with Peremate to enable the owners of

Lot 17 to be paid POS compensation –

(a) the recommendation was contrary to the clear advice in the Officers' report that

the proposed payment was unlawful and that the City should not enter into the

deed;

(b) the recommendation was consistent with the advice of McLeod & Co that the

deed should not be entered into until the risks had been explained to the elected

members;

(c) the recommendation, if implemented, would have advantaged Mayor Grljusich

and the other owners of Lot 17 over all other Packham Area landowners in three

major respects –

(i) no other landowner had received POS compensation without first paying

for his or her share of infrastructure costs;

(ii) all other landowners who received POS compensation did so on the basis

of land given up in excess of 16%, not 10%; and

(iii) all other landowners had to wait for a considerable time, in some cases for

more than three years, for their POS compensation payments whereas, in

the normal course of events, the owners of Lot 17 would be paid very

quickly;

(d) the elected members were not informed, and could not reasonably have been

expected to know, of the issues referred to in paragraph (c)(i) and (iii);

(e) the elected members were adequately informed, and should have rejected the

recommendation on the basis, that the other Packham Area landowners

received no POS compensation for giving up less than 16% of their land for POS

purposes;


652

(f) that part of the recommendation that proposed that the Council would "deal with

the other landowners that have already contributed land for public open space

on an ex gratia basis" was ill-conceived and irresponsible;

(g) Crs Ostojich and Pecotic supported the recommendation, and also supported

and advocated the City's entry into a deed with Peremate without prior

Ministerial approval - despite their belief that the City's uncontradicted legal

advice was that the City could not lawfully enter into the deed with Peremate;

(h) in the circumstances, the conduct of Crs Ostojich and Pecotic was improper; and

(i) although Cr Lee also supported the recommendation, but only with specific

safeguards, he understood and had reasonable grounds for his understanding

that the McLeod & Co advice did not conclude that it was unlawful or improper to

enter into the deed.

6.8 Council meeting on 16 June 1998

(a) Outline

6.8.1 The Community Development Committee's recommendation concerning the Lot 17 POS

compensation matter was considered by the Council at its meeting on 16 June 1998. Mayor

Grljusich, the presiding member, declared the meeting open at 7.30pm. Most of the first two hours

of the meeting were taken up with other agenda items. The Council minutes record that during the

public address session –

"Ms Cheryl [sic] Grljusich as a part owner of Lot 17 Hamilton Road and a Director ofPeremate … stated that her letter dated 2nd June 1998 had not been responded to as yetand requested that Council deal with this matter as quickly as possible as they havebeen waiting long enough" (emphasis added).

6.8.2 At 9.25pm Mayor Grljusich, who had earlier declared a financial interest in the matter, left

the meeting. Deputy Mayor Battalis assumed the presiding member's position and invited

Mr McLeod to join the meeting.

6.8.3 Cr Ostojich then moved a motion, seconded by Cr Pecotic to set aside the


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recommendation of the Committee and substitute the following –

"That Council:-

(1) enter into a Deed of Agreement between the City of Cockburn and PeremateHoldings Pty Ltd to acquire public open space area over and above the 10%normally required as indicated in Amendment No. 240 of the City of Cockburn'sDistrict Zoning Scheme No. 1 report for Lot 17 Hamilton Road, Spearwood;

(2) prepare the Deed of Agreement immediately so that the matter can be expeditedand not cause any undue delays to Peremate Holdings Pty Ltd;

(3) foreshadow that the Council will deal with the other landowners that have alreadycontributed land for public open space on an ex gratia basis;

(4) advise the Department of Local Government, the Minister for Local Government,the Ministry for Planning and the Minister for Planning of Council's actions."

6.8.4 This motion was in identical terms to the motion, also moved by Cr Ostojich and

seconded by Cr Pecotic, that failed to attract the support of the Committee, and Cr Lee in particular,

a week earlier. It removed what Cr Ostojich agreed in his evidence before the Inquiry was the

"important safeguard" of requiring that the City did not enter into the deed without the prior approval

of the two Ministers and their Departments. It demonstrated that Crs Ostojich and Pecotic wanted

the Council to proceed with the deed proposal without the "important safeguard" and despite their

belief that the City's legal advice was that the entry into the deed would have been unlawful.

6.8.5 The Council minutes record that –

"Clr Howlett requested that before voting on this item, Council receive a briefing from itssolicitor, Mr McLeod, so that Councillors are informed of their individual rights and theimpacts if decisions are made tonight.A briefing and question session followed."

6.8.6 At the conclusion of the briefing and question session, which took about 30 minutes,

Cr Ostojich moved an amendment to paragraph (4) of his earlier motion. Instead of merely advising

the relevant Ministers and their Departments of the City's actions, it was proposed that the City

should –

"seek the advice of the Department of Local Government, the Minister for LocalGovernment, the Ministry for Planning and the Minister for Planning, before entering into aDeed of Agreement and that this action be taken immediately."


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6.8.7 No vote was taken. Instead, a motion was carried that the meeting proceed behind

closed doors. About an hour later, the meeting resumed in public. The Council then resolved, on a

motion moved by Cr Ostojich and seconded by Cr Humphreys, that –

"(1) Council receives the report from Council's Planning Department and advice fromCouncil's Solicitor, McLeod & Co;

(2) subject to the agreement of the Minister for Local Government and the Minister forPlanning, and their respective departments:-

(a) the City of Cockburn enter into a Deed of Agreement with PeremateHoldings Pty Ltd to acquire public open space area for Lot 17 Hamilton RoadSpearwood, over and above the 10% normally required as indicated inAmendment No.240 of the City of Cockburn's District Zoning Scheme No.1report for the Packham Development Area;

(b) the Deed of Agreement be drawn up immediately so that the matter can beexpedited and not cause any undue delays to Peremate Holdings Pty Ltd;

(3) it be noted that it is the intention of this Council to deal with all owners equally andfairly;

(4) Council instructs Council's Solicitor to investigate entry into a Deed of Agreementpursuant to the report attached to Amendment No.240, irrespective of anyagreement referred to in (2) above."

6.8.8 The first two paragraphs were substantially the same as the Community Development

Committee's recommendation. Paragraph (3) replaced the Committee's recommendation which –

"foreshadow[ed] that the Council will deal with the other landowners that have alreadycontributed land … on an ex gratia basis."

6.8.9 Paragraph (4) did not correspond to any part of the Committee's recommendation. It is

unclear why it was included. The deed proposal referred to in paragraph (2) was purportedly based

on the report attached to Amendment No. 240. None of the elected members who gave evidence

to the Inquiry was able to explain why paragraph (4) was necessary or its purpose.

6.8.10 The major issues considered by the Inquiry in respect of this resolution were –

(a) the reasons for the Council's decision to support the deed proposal; and

(b) the extent to which elected members were aware that the proposal would

advantage the owners of Lot 17 over other Packham Area landowners.

The advice, particularly the legal advice, that elected members were given is central to an

assessment of their reasons for voting as they did.


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(b) Mr McLeod's advice

(i) Mr McLeod's evidence

6.8.11 In his Written Response to the Inquiry, Mr McLeod emphasised the importance of certain

background factors which, he stated, "provide a context and partial explanation for the comments

[he] made to the Council" at this meeting. These factors included "the attitude of some Councillors,

and the atmosphere in the Council Chamber at the relevant time". Mr McLeod stated –

"7.19 … I had been informed by one of the Council officers, and at this time I cannotrecall who, that some of the Councillors had expressed a hostile response to theadvice which I had given in my letter of 29/5/98 drawing attention to problems ofconflict of interest. Prior to and at the meeting, I sensed from the manner and bodylanguage of some of the Councillors that they were not happy with the advice I hadgiven. Furthermore, during the meeting, Cr. Pecotic made a comment to the effectthat I was threatening the Council by the advice I had given.

In addition to that attitude of some of the Councillors, there were present in theCouncil Chamber just behind the chair where I was sitting, a number of members ofwhat I understood to be the Grljusich extended family, who were reasonably vocalin what seemed to me, with my back to them, to be expressions of discontent withthe comments I was making concerning conflict of interest and the care which theCouncillors needed to take in connection with the proposal to enter into anagreement with the Lot 17 owners.

The meeting of 16 June was a watershed between warnings of risk on the onehand, and speedy making of an agreement on the other. The Council's decision toproceed notwithstanding the risk, was the watershed. As a lawyer, I can wellunderstand that process of "drawing a line in the sand", but possibly non-lawyerCouncillors had difficulty with it, and thought that if I moved from warning of risk tomaking comments and recommendations on a deed, then I was in support of thedeed. That should not have been the case, as Cr. Battalis on one occasion askedme if I was recommending the deed, to which I responded that I was not, but if thatwas the way the Councillors wanted to go, then I could assist them.

7.20 To understand my comments at the meeting of 16/6/98 and subsequently, it isnecessary to understand that the mid-point of the meeting was a watershed. Up toand for part way through the meeting of 16/6/98, I took particular care to emphasizethe concerns which I personally had about conflict of interest. I should say that atthat time the conflict of interest issue loomed very large in my mind, and seemed tome to be an area of future potential problems for local governments. Yet the LocalGovernment Department had not come to grips with the problem, and I believe hadtended to ignore it, as had been made clear to me by comments by Mr. Gilfellonand Mr. Cole of the Local Government. They did not see conflict of interest short ofthe statutory financial interest being a matter of specific concern under the LocalGovernment Act, or at least that was my understanding of their comments to meand to Councillors at meetings which I jointly addressed with them. At the meetingof 16/6/98, I re-emphasized what I had said in my letter of 29/5/98 about conflict ofinterest, and felt that having made the point as clearly as I could, I should thenconcentrate on the business in hand. If the Councillors had been warned, but still


656

wished to go on with an agreement which it seemed to me was quite appropriateapart from the conflict of interest issue, then I should concentrate on theagreement. That is what for all intents and purposes I did."

6.8.12 In his Written Response, Mr McLeod explained that the warnings contained in his advice

of 29 May 1998 were made "to a large extent [in] response to the concerns that the officers Hiller

and Ryan expressed to [him] about the pressure they felt as a result of the Mayor pursuing his own

family interests" (para. 7.21). His preferred view was that the City should not proceed with the

proposed deed. He stated that he put this view to the Council meeting on 16 June 1998. His

description of what occurred at that meeting includes the following –

"7.2 The thrust of the comments was to highlight the risk to the Councillor with a conflict,and to the Council generally, if the Council was seen to be making a specialarrangement for the particular benefit of the Councillor with an interest. The riskwas not a risk of illegality, but rather a risk of the Council appearing to act in a waywhich gave a special benefit to a Councillor which the Council would not havegiven to other persons. … I also attempted to explain the intolerable burdensassociated with action against the Councillors, or an investigation ordered by theLocal Government Department (para. 1.5 of my 29 May letter) and that at least isone part of the advice given to the Council which is unchallengeably correct. I didnot suspect when preparing my letter of 29 May, 1998 that the intolerable burden ofan investigation would fall upon me personally more than most of the Councillors.

7.3 Having explained and emphasized the risk I then pointed out that if the Councillors,and particularly the Councillor with an interest I Lot 17, wished to pursue the matterof a s.20C payment with the knowledge of the risk and regardless of it, then wecould concentrate on that. That was the watershed I mentioned previously. If theCouncillors understood and accepted the risks involved, then I believed anagreement could be prepared for the purchase of excess POS land using s.20Cfunds."

6.8.13 In short, Mr McLeod's view was that the proposed deed "was quite appropriate apart from

the conflict of interest issue". His recollection of what he told the elected members at the Council

meeting on 16 June 1998 is that he –

(a) repeated the conflict of interest risks of entering into the deed that he had identified

in his advice of 29 May 1998;

(b) stated that his preferred view was that the City should not enter into the deed; and

(c) following the "watershed", concentrated on the agreement itself.

6.8.14 However, at least from the perspective of many of the elected members who attended the

Council meeting on 16 June 1998, the advice may not have been as simple or clear. Even from the

terms of Mr McLeod's own considered Written Response to the Inquiry, it is apparent that there is

scope for much potential confusion.


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6.8.15 Mr McLeod's only difficulty with the proposed deed was the "appearance of conflict of

interest". Without that, the deed proposal was "quite appropriate". Mr McLeod recalled that, at the

meeting, one of the elected members –

" … asked whether, after you consider all of the questions of possible conflict and risk,whether the Council had an obligation to act fairly to the Lot 17 owners. That was a verysignificant question, and presented the other side of the coin. I feel quite strongly that fora Council to act to the disadvantage of landowners because one of the owners might beperceived as having a conflict of interest, would be an improper use of local governmentpower under the law as it presently stands" (para. 7.6).

6.8.16 Confronted with this advice, elected members may well have understood that –

(a) to proceed with the deed would result in the "appearance of conflict of interest";

and

(b) not to proceed with the deed - Mr McLeod's preferred view - "would be an improper

use of local government power".

6.8.17 Compounding the level of potential confusion was the conflicting advice contained in the

written materials provided to the elected members. These were –

(a) the McLeod & Co advice of 29 May 1998 which appears to conclude that the

Council could enter into the deed after the risks had been explained to all elected

members; and

(b) the Officers' report, the contents of which were reviewed by Mr McLeod who saw

no reason to amend them, which concluded - clearly and without qualification - that

the deed proposal was unlawful and that the Council should not enter into it.

6.8.18 Given the difficulties experienced by lawyers during the course of the Inquiry in

determining how the written advice to the Council should be interpreted, it is not surprising that the

City's elected members may have been uncertain and confused about the written and oral advice.

(ii) Elected members' evidence

6.8.19 Cr Elpitelli voted against the deed proposal at the Community Development Committee

meeting on 9 June 1998 - but not on the basis of the City's legal advice. His testimony in respect of

the Council meeting on 16 June 1998 illustrates his confusion and frustration in attempting to


658

determine whether or not the Council should proceed with the deed proposal. Questioned by

Counsel Assisting, Mr Elpitelli stated –

"MR ELPITELLI: … we did have a special meeting in council where Mr McLeod actuallyaddressed the whole council for something like 2 hours. Seriously, at the end of themeeting we came out not wiser, didn't know where to go.

COUNSEL ASSISTING: Mr McLeod - when he addressed you - didn't tell you not to enterinto the deed?---MR ELPITELLI: No, he said - over the 2 hours, I must admit the thingthat really stuck in my mind at the end of the meeting was a question put to him byStephen Lee saying, 'What are you telling us? Damned if we do and damned if we don't?'and he basically replied, 'Yes, that's about it.'

COUNSEL ASSISTING: What did you understand that to mean?---MR ELPITELLI: Tomean that it was open to interpretation depending who you were speaking to.

COUNSEL ASSISTING: Why were you damned if you entered into the deed?---MR ELPITELLI: We were trying to get a straight reply from him to say, 'Look, if you weresitting here, would you pay or would you not pay? Would you enter or would you notenter?' and that is the answer, so basically I can say to you now that everything that wasdiscussed that night I put it behind me because - - -

COUNSEL ASSISTING: But didn't he say, 'You're damned if you enter into the deedbecause - - -'?---MR ELPITELLI: No, 'Damned if you do and damned if you don't.'

COUNSEL ASSISTING: But that has two things in it, doesn't it?---MR ELPITELLI: Yes, itleaves you up in the air.

COUNSEL ASSISTING: Let me take you to the first of the, 'damned if you do'. Didn't hetell you you were damned if you entered into the deed because - - -?---MR ELPITELLI: Itwas the wrong thing to do.

COUNSEL ASSISTING: Yes, he told you?---MR ELPITELLI: Yes, yes.

COUNSEL ASSISTING: And he told you, 'You're damned if you don't enter into the deedbecause you're going to have the owners of lot 17 - - -'?---MR ELPITELLI: 'You could beprosecuted by the owners.'

COUNSEL ASSISTING: Or sued?---MR ELPITELLI: Yes, same thing.

COUNSEL ASSISTING: In the end council resolved to do something that Mr McLeodsaid was the wrong thing?---MR ELPITELLI: I think we asked Mr McLeod to try and puttogether some recommendations that could cover us, could put us in a better light orbetter understanding of a more positive direction and in fairness I don't think we got it atthe end of the day. I think the man probably went away saying, 'A bunch of kids here,' butwe didn't get anything at the end of the day that I can recall that was constructive …

COUNSEL ASSISTING: Mr McLeod told you it was his recommendation not to enter intothe deed?---MR ELPITELLI: No. Mr McLeod was never clear with his direction. As Isaid, at the end of the day - at the end of the night we had two answers from him and


659

neither of them were, 'Do this or the other.' He should've given us an answer, oneanswer.

COUNSEL ASSISTING: And the two answers were you're damned if you do and you'redamned if you don't?---MR ELPITELLI: Yes, basically. It leaves you inlimbo"(Transcript, 2561-2562 and 2564).

6.8.20 Mr Elpitelli was the only elected member who gave evidence about the matter who did not

construe Mr McLeod's oral advice as indicating that the City would be acting properly in entering

into the deed and that it should do so.

6.8.21 Mr Lee, whose evidence in relation to the Committee meeting on 9 June 1998 indicated

that he had considered very carefully the McLeod & Co advice of 29 May 1998, was "very, very

scared of the fact that [the City and its elected members] could be sued by one side or the other"

(Transcript, 2459). He was particularly concerned about the matter because he "didn't want to

inadvertently do something improper or illegal when [he] was trying to act in good faith" (Transcript,

2459). He testified that Mr McLeod had not advised the Council not to enter into the deed –

"COUNSEL ASSISTING: You didn't take away from Mr McLeod's briefing the clearimpression that he was advising council not to enter into this deed?---MR LEE: Definitelynot" (Transcript, 2459).

6.8.22 Mr Ostojich's recollection of the meeting was that Mr McLeod's "verbal advice" to the

elected members was "certainly different" from his written advice of 29 May 1998. His verbal

advice was "positive" in dealing with the issue of entry into the deed by the City


6.8.23 Mr Humphreys also testified that Mr McLeod's oral advice seem to change from his

written advice (Transcript, 2511). Mr Humphreys' recollection was that –

"On that particular meeting the question I put to him was, 'Were we acting illegally orimproperly by getting into this deed?' and he said, 'No'" (Transcript, 2510).

6.8.24 Mr Battalis, who chaired this part of the meeting, recalled that he asked Mr McLeod "a

couple of questions" (Transcript, 3327). Essentially, he wanted to know whether the Council "could

enter into the deed" and whether it would be "acting properly" if it did (Transcript, 3326-3327). He

understood that Mr McLeod's advice in respect of each question to be "Yes".


660

6.8.25 Mr Howlett and Mr Pecotic also gave evidence that Mr McLeod, in his oral advice to the

elected members, left it open to the Council to enter into the deed (Transcript, 3200 (Howlett),

2809 (Pecotic)).

(iii) Other aspects of the decision

6.8.26 As the presiding member, Deputy Mayor Battalis was of the view that the Council would

not have voted to enter into the deed if it was not subject to the prior agreement of the two Ministers

and their Departments. Without this condition he would have reconsidered his own position. Other

elected members were more definite and regarded the condition as essential for their support

(Transcript, 2459-2460 (Lee) and 2512 (Humphreys)).

6.8.27 Elected members also gave evidence about the potential advantage that the deed would

give the owners of Lot 17 over other Packham Area landowners. As indicated earlier, the deed

proposal, if implemented, would have advantaged Mayor Grljusich and the other owners of Lot 17 in

that they would have received POS compensation –

(a) without paying infrastructure costs;

(b) on the basis of land given up in excess of 10%, not 16%; and

(c) before other Packham Area landowners.

6.8.28 The Officers' report dealt only with the second of these matters. Why it was proposed that

the owners of Lot 17 should be compensated for land given up in excess of 10% rather than 16%

does not appear to have been the subject of any discussion at the meeting. In this respect, the

resolution that was carried was clearly inconsistent with the Officers' report and the City's clear and

long standing position on the matter. Only Cr Elpitelli, who voted against the resolution because of

this issue, appears to have appreciated its significance.

6.8.29 The Officers' report did not deal with the infrastructure costs issue or the timing of

payment issue. Neither appears to have been the subject of any discussion at the meeting. In his

evidence to the Inquiry, Mr Lee repeated his view that the Council should have been told that the

owners of Lot 17 had not paid, or made arrangements to pay, their share of infrastructure costs. He

thought that this "makes a mockery" of the third part of the resolution that it was Council's intention

to deal with all owners equally and fairly (Transcript, 2459). Mr Howlett and Mr Humphreys agreed

that if infrastructure cost contributions were not taken into account then the agreement between the

City and Peremate would no longer be fair and equitable (Transcript, 2512 (Humphreys) and 3202


661

(Howlett)). Mr Elpitelli had expressed a similar view in respect of the Community Development

Committee meeting on 9 June 1998 (Transcript, 2560).

6.8.30 Mr Ostojich, on the other hand, did not think that the infrastructure cost issue, if brought to

his attention, would have concerned him at the time. Mr Battalis and Mr Pecotic testified that they

would have been concerned about the matter but considered that the Council should not have been

involved in any dispute about payment (Transcript, 3330 (Battalis), 2697 (Ostojich) and 2805-

2806 (Pecotic)).

6.8.31 With the exception of Mr Pecotic, all other elected members who gave evidence on the

point considered that the owners of Lot 17 should not have been paid POS compensation any

earlier than if they had been participants in the Private Owners' Arrangement (Transcript, 2570

(Elpitelli), 3203 (Howlett), 2455 (Lee) and 2488 (Lees)).

6.8.32 Mr Pecotic understood that, as proposed, the deed would allow the owners of Lot 17 to be

paid "sooner rather than later" but stated that "two wrongs don't make one right" and that the other

Packham Area landowners should have been paid earlier and he expected that they would be

(Transcript, 2807).

(c) Findings

F51. I find that, in respect of the Council decision on 16 June 1998 to support the proposal

that the City enter into a deed with Peremate to allow the owners of Lot 17 to be paid

POS compensation –

(a) the decision was consistent with the elected members' understanding of the

City's legal advice;

(b) that understanding was reasonably held;

(c) the decision, if implemented, would have advantaged Mayor Grljusich and the

other owners of Lot 17 over all other Packham Area landowners in three major

respects –

(i) no other landowner had received POS compensation without first paying

for his or her share of infrastructure costs;

(ii) all other landowners who received POS compensation did so on the basis

of land given up in excess of 16%, not 10%; and


662

(iii) all other landowners had to wait for a considerable time, in some cases

more than 3 years, for their POS compensation payments, whereas, in the

normal course of events, the owners of Lot 17 would be paid very quickly;

(d) the elected members were not informed, and could not reasonably have been

expected to know, of the issues referred to in (c)(i) and (iii);

(e) the elected members were adequately informed, and should have rejected or

appropriately amended the resolution on the basis, that other Packham Area

landowners received no POS compensation for giving up less than 16% of their

land for POS purposes; and

(f) the threat by Peremate, on behalf of Mayor Grljusich and the other owners of

Lot 17, to take legal action against the City was an important factor in the

Council's decision to enter into the deed.

6.9 Adjourned Council meeting on 22 June 1998

(a) Background

6.9.1 On 17 June 1998, the day after the Council meeting, Mr Brown wrote letters to the

Minister for Planning, the Minister for Local Government, the Department of Local Government and

the Ministry for Planning seeking, in accordance with the terms of the Council's resolution, the

agreement of each, to the proposed deed between the City and Peremate.

6.9.2 Mr Brown and Mr Hiller met with Mr Gary Prattley and Mr Kohn from the Ministry for

Planning on 19 June 1998 to discuss the proposed deed. Mr Hiller's file note of the meeting

recorded that –

"It was their view that the matter was before the Minister as an appeal and therefore wasnot something that the Ministry would want to get involved in. Gary [Prattley] wouldrespond to our letter in due course."

6.9.3 The Minister for Local Government responded to the City by letter dated 22 June 1998

with a notation that it was faxed that day. The letter advised that the Department of Local

Government had been consulted and held the same view of the matter as the Minister. The

Minister pointed out that it was not his role to give an opinion on the deed proposed but continued –

"However, I urge Council to give strong consideration to the potential public perceptionthat Council will be giving an advantage over and above the other landholders in the


663

Packham Development Area to the owners of Peremate Holdings by entering into thisagreement.

I suggest that if Council does resolve to enter into the Deed of Agreement with PeremateHoldings that as a sign of good faith to the other land owners the funds be placed in truststo be paid when the other equalisation payments for the Packham Development Area areresolved."

6.9.4 Thus, before the adjourned Council meeting on 22 June 1998, it was clear, at least to

Mr Brown and Mr Hiller, that the Council's precondition for the City's entry into the deed could not

be satisfied. There was to be no agreement by the Ministers for Planning and Local Government

and their Departments to the deed proposal.

(b) McLeod & Co advice and draft deed of 22 June 1998

(i) Advice of 22 June 1998

6.9.5 In accordance with the Council's request contained in paragraph (4) of its decision on

16 June 1998, Mr McLeod prepared written advice to the City on the possibility of the City entering

into a deed with Peremate based on the report accompanying Amendment No. 240. A draft version

of the advice was faxed to the City on the afternoon of 22 June 1998. This draft version was

circulated to all elected members at the meeting. Because of its importance, a copy is reproduced

at Annexure 12.

6.9.6 Mr McLeod stated that the final version of the advice was handed to Mr Hiller at the

Council meeting that evening (Written Response, 48). There is no record on the City's files of this.

However, the City's files indicate that a final version was faxed to the City by McLeod & Co on

11 January 1999. There were only minor changes between the January 1999 version and the draft

version that was circulated to the elected members.

6.9.7 The McLeod & Co advice began by referring to the Council's instructions to consider the

possibility of the City entering into the deed with Peremate "independently of the Council's

resolution of 16 June" that, subject to Ministerial and Departmental agreement, the City should

enter into a deed with Peremate. However, under the heading of "Advice", the first paragraph

stated –

"For the reasons set out below, it is not apparent that either Amendment No. 240 or theReport attached to Amendment No. 240 provides the clear basis for an agreementbetween Peremate and the City, but also for reasons set out below, the net effect of the


664

documents is to give some support to the approach which the Council adopted by itsresolution of 16 June, 1998."

The advice was, in fact, a good deal more positive than the first paragraph suggests. The key

passages are in the final 5 paragraphs which state –

"15. In our opinion, the Amendment No. 240 Report and the Council resolution of30/5/89 can be relied upon as giving an indication of the intent that contributions ofland within the Packham Urban Development Area were to be made on a fair andequitable basis, and that the details of the arrangement were to be left to beworked out in the Development Deed that was to be executed by each participatingowner in the Amendment No. 240 area (see Report cl.7).

16. In the circumstances, we are able to confirm that the Report does indicate a basisupon which the Council could enter into an arrangement with other owners withinthe Packham Urban Development Area who are not parties to the DevelopmentDeed. In our opinion, it would be open to the Council to enter into a separatedeed with any other owner, such as Peremate as owner of Lot 17, which reflectsthe land contribution arrangements made under the Development Deed.

17. We note that item (2)C of the resolution of the Council passed at the meeting of 16June, 1998 states that it is the intention of the Council to deal with all ownersequally and fairly. That expression of intention appears to be consistent with theCouncil entering into a Deed with Peremate for a contribution of land free of cost byPeremate which reflects the arrangements for contribution made in theDevelopment Deed between Urban Focus and the owners of land to whomAmendment No. 240 applied.

18. In a previous advice we expressed concern that the Council ensure that there wasno appearance that a special arrangement had been made between the Counciland the owners of Lot 17. If the Council was now to enter into a Deed whichapplied the same arrangements for free of cost land contributions to Perematewhich were applied to other owners under the Development Deed then in ouropinion the Council would not be open to any reasonable criticism, and on the factsprovided to us, we can see no basis for a challenge to such an arrangementbased on conflict of interest.

19. While as a general principle it would be highly desirable for any arrangementproposed to be made by the Council to be approved by the Minister for LocalGovernment, or by the Local Government Department, we can conceive of thepossibility that the Minister and the Department will treat the matter as involving adecision to be made by the Council. If that is the case, then in our opinion theCouncil should be prepared to go ahead with a Deed with Peremate withoutany of the approvals contemplated, provided that it can be said without doubtthat the arrangement entered into by the City is fair and equal to the arrangementsentered into by other owners. Even if the Council is not able to obtain approvalsfrom the Ministers or their Ministries, the fact of having placed the proposedarrangement before them in our opinion will be of benefit to the Council and theowners of Lot 17 if at a later time any allegation is raised against them that theyhave attempted to act improperly" (emphasis added).


665

6.9.8 Insofar as the matters before the Council on 22 June 1998 are concerned, there are a

number of significant features of this advice.

6.9.9 Firstly, Mr McLeod informed the Inquiry that he had not been told by the City's employees

that Mayor Grljusich and the other owners of Lot 17 had not paid, and had not made any

arrangements or given any undertaking to pay, their share of infrastructure costs (see above

at para. 6.5.59). He assumed that they were required, under the earlier Owner's Deed entered into

by George and Tom Grljusich, to pay these costs. For this reason, Mr McLeod's discussion of what

was "fair and equitable" for the owners of Lot 17, compared with other Packham Area landowners

who were participants in the Private Owners' Arrangement, was limited to the issue of POS

contributions and compensation (see para. 15). He did not take into account, and appears to have

been unaware, that Packham Area landowners who received POS compensation under the Private

Owners' Arrangement did so only because they also paid, or were contractually bound to pay, their

share of infrastructure costs. It appears to be on this basis that Mr McLeod's advice was given.

6.9.10 There is some difficulty with this evidence. Mr McLeod stated that he was never informed

"that the agreement binding the Grljusich family to contribute to infrastructure costs associated with

the Urban Focus arrangement had been set aside or cancelled". (Written Response, 29). He had

given the City advice about the "agreement binding the Grljusich family", known as the Owner's

Deed. For this purpose, McLeod & Co had been provided by the City with a copy of the Owner's

Deed (see Chapter 5 at para. 5.5.10).

6.9.11 The Owner's Deed also provided for the payment of POS compensation. If Mr McLeod

thought that the Owner's Deed was still effective in respect of infrastructure cost contributions by

the owners of Lot 17, it is not apparent why he did not also consider that it was still effective in

respect of POS compensation for the owners of Lot 17. This would have negated any need for the

proposed deed between the City and Peremate.

6.9.12 Secondly, having regard as he did only to the issue of POS contributions and

compensation, it appears that any lingering doubts that Mr McLeod may have had earlier about

whether the City should enter into the deed had vanished. In his Written Response to the Inquiry,

Mr McLeod stated that, apart from the possible conflict of interest problem, it would have been

"quite appropriate" for the City to enter into the deed" (p. 33). (In fact, even with the conflict of

interest problem, he felt "quite strongly" that it would have been "an improper use of local


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government power" not to enter into the deed (at p. 37)). In his opinion of 22 June 1998, after

reviewing the matter in the light of the Amendment No. 240 documents, he concluded that there

was "no basis for a challenge to such an arrangement based on conflict of interest". Hence, the

only remaining difficulty, if it had ever been a difficulty, had been removed.

6.9.13 The significance of this is that, unlike all the City's elected members, Mr Ryan and to

some extent Mr Brown gave evidence that their understanding of Mr McLeod's written and oral

advice was that he was always opposed to the City entering into the deed, and that he pursued the

matter reluctantly only as a result of the Council's instructions which conflicted with his own

personal views and his advice to the elected members. For example, Mr Ryan (who like Mr Brown

attended both of the Council meetings in June) testified that Mr McLeod's advice was always clear,

that he was unequivocally against the deed and that in respect of the Council meeting on

22 June 1998, Mr McLeod –

" … [had] been instructed to jump over the cliff, so to speak. He was trying to safeguardor implement that Council resolution as he saw fit" (Transcript, 2257 and see also at 2277,2284, and 3014-3016 and 3143-3144 (Brown)).

The overwhelming weight of evidence is to the contrary.

6.9.14 Once the conflict of interest issue had been dealt with, Mr McLeod's own evidence was

that he considered that it was "quite appropriate" that the City enter into the deed. This was taken a

step further in the final paragraph of his advice to the City on 22 June 1998. Less than a week

earlier, the Council had agreed to enter into the deed only on the basis that approval to the deed

had first been obtained from each of the two Ministers and their Departments. The evidence

supports Mr Battalis' assessment of the Council meeting on 16 June 1998 that the deed proposal

would not have been supported at all without this "important safeguard". In his advice of

22 June 1998, Mr McLeod advised the Council that it –

" … should be prepared to go ahead with a Deed with Peremate without any of theapprovals contemplated, provided that it can be said without doubt that the arrangemententered into by the City is fair and equal to the arrangements entered into by the otherowners."

As to the proviso to his advice, he had already concluded, based on the information available to

him, that if the deed reflected "the land contribution arrangements" made under the Private Owners'

Arrangement then it would be fair and equal (at para. 16).


667

6.9.15 The issue of how much the City should have been prepared to pay Mayor Grljusich and

the other owners of Lot 17 was very important. To this point it had not been considered by the

Council. The McLeod & Co advice appears to assume that the City should have paid the owners of

Lot 17 the same POS compensation amount they would have received had they been participants

in the Private Owners' Arrangement. No other valuation options are mentioned. This issue is dealt

with below in the context of the terms of the final version of the deed.

6.9.16 Whatever Mr McLeod's personal views of the wisdom and propriety of the City's entry into

the deed with Peremate, his written advice on 22 June 1998, considered in the context of the

history of the matter reviewed earlier, would have been reasonably construed by an elected

member as advice that –

(a) the payment of POS compensation to the owners of Lot 17 by the City was fair and

equal;

(b) the amount of POS compensation should be the same as a participant in the

Private Owners' Arrangement (but without taking into account any other element of

that arrangement);

(c) the City should enter into the deed with Peremate; and

(d) there was no need to make the agreement conditional on Ministerial and

Departmental approval.

(ii) Draft deed

6.9.17 Mr McLeod also provided to the City on 22 June 1998 a draft deed of agreement between

the City and Peremate. There were some significant changes to the draft deed before it was

executed by the parties. It is unnecessary to review in any detail the draft version of the deed. In

broad terms, however, the draft (like the final version) was based on a proposed recommendation

to the Planning Commission by the City that the Commission treat Condition 13 as satisfied by the

terms of the deed. Under the draft deed –

(a) the 27% portion of Lot 17 that was required to be given up for POS purposes would

become a new Lot 189;

(b) the City would, under section 20C of the Planning Act, purchase Lot 189 from the

owners of Lot 17; and

(c) the purchase price would be the amount set out in the 1998 POS Equalisation

Schedule that applied to participants or prospective participants in the Private

Owners' Arrangement.


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(c) Council meeting

6.9.18 Mayor Grljusich did not attend the adjourned Council meeting at 7.30pm on

22 June 1998. There were only two substantive issues on the agenda. The first dealt largely with a

report that had been received by the City from the Department of Local Government in relation to

the payment of money from the City's section 20C account. Consideration of this item was

completed at about 8.30pm.

6.9.19 The second item dealt with the proposed deed and the payment of POS compensation to

the owners of Lot 17. In response to the Council's invitation, Mr McLeod again attended the

meeting. A motion, moved by Cr Wheatley and seconded by Cr Waters, proposed that the "matter

be referred back to the next Strategic and Policy Committee meeting and be dealt with as further

information comes to hand". There was no vote on the motion. Instead, the meeting adjourned for

10 minutes to allow elected members to read the materials that had been circulated to them. This

material included the McLeod & Co draft deed and draft advice of 22 June 1998. It has also been

suggested that it may have included a copy of the letter from the Minister for Local Government

which had also been received that day (Transcript, 3305 (Wheatley) and 2679 (Ostojich)) but

evidence to the contrary was given by Mr Battalis (Transcript, 3336), Mr Elpitelli (Transcript, 2577),

Mr Humphreys (Transcript, 2516-2517) and Mr Lee (Transcript, 2468). In any event, Mr Brown

testified that he gave the Council an oral report about the letter and also informed the Council that

the Minister for Planning would not respond until the appeal by the owners of Lot 17 against

Condition 13 had been determined (Transcript, 3019-3020 and 3027).

6.9.20 For the next two hours, the Council considered the proposed deed issue. Finally, it

resolved, on a motion moved by Cr Ostojich and seconded by Cr Pecotic, that –

"Subject to:

(i) the recitals including references to responses from the Minister for LocalGovernment and Minister for Planning, which do not prohibit the entry intothe agreement referred to herein;

(ii) approval of Peremate Holdings Pty Ltd;

(iii) that the funds be held by Council in trust for payment when the otherequalisation payments for the Packham Development Area are resolved;and

(iv) all monies only to be paid from Account 20C held by the Council;


669

(1) Council enter into a Deed of Agreement substantially in the form of the Deedprovided to Council under cover of the letter from McLeod & Company dated22 June 1998;

(2) Council provides the Chief Executive Officer with the authority to progress thematter within the scope of the above decision; and

(3) It be Council's intent to use the land for Public Open Space, however, it is preparedto be guided by the Western Australian Planning Commission in this regard."

The minutes record that the motion was carried unanimously.

6.9.21 One of the major differences between the resolution of 16 June 1998 and this resolution

concerned the Ministerial approval issue. Instead of requiring, as it had earlier, that the City would

not enter into the deed without the prior approval of the two Ministers and their Departments, the

Council now proposed only that the two Ministers' responses "do not prohibit the entry into the

agreement".

6.9.22 In their evidence to the Inquiry, elected members expressed a wide range of views about

this matter. Mr Lee, who had been responsible for the inclusion of this condition at the Community

Development Committee meeting on 9 June 1998, did not see the letter from the Minister for Local

Government dated 22 June 1998. He testified that if he had seen the letter, it would have made a

difference to the way he voted. He remained strongly of the view that if the two Ministers did not

positively agree to the City entering into the deed, then the deed should not proceed.

6.9.23 When Mr Lee was referred to the diluted version of the condition and the Council's

resolution of 22 June 1998, he responded that he had thought that the resolution "had been

reworded to make it more grammatical or to make it more legally correct" (Transcript, 2464). If he

was mistaken and the result of the change had been to water down its substance, then –

" … it was done very cleverly and I would resent that fact.

… they could be engaging in skulduggery then if that was the case … I never took that tobe the case and it's very disappointing if people were trying to do that because it'smisleading and tricking.

… So, you know, it makes me angry to think that and this is the first time I've heard this,and I'd be surprised if that was the case and extremely disappointed" (Transcript, 2463-2465).


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6.9.24 Mr Battalis also considered that the Council intended that unless the deed was approved

by the Ministers then it would not proceed. This is evident from his following exchange with

Counsel Assisting –

"COUNSEL ASSISTING: If you have a look at [the first paragraph of the resolution] it'snot asking of their agreement now, is it? It's simply asking for them not to prohibit theentry. Do you understand the difference?---MR BATTALIS: Yeah, but I thought that wasbecause - I just have this recollection that there was some debate on, 'We haven't got adefinitive answer as to whether they'll agree to this deed as presented now and we needto give it to them; if they do, they do and if they don't, they don't.'

COUNSEL ASSISTING: What was to happen if they don't?---MR BATTALIS: Then thedeed wouldn't proceed.

COUNSEL ASSISTING: That was your understanding?---MR BATTALIS: That's what Ithought was going to happen, yes" (Transcript, 3337).

6.9.25 Indeed, a number of elected members were not aware, when giving evidence to the

Inquiry 18 months later, that the deed was in fact executed shortly afterwards. For example,

Mr Lee's responses to Counsel Assisting included the following –

"MR LEE: … we weren't entering into the deed unless certain conditions were met so Iwould see the deed as being separate and I've never been aware that we entered into thedeed. People keep saying that we entered into the deed. The Vickery-Martin report saida number of times we entered into the deed and I am not aware to this day that we didenter into the deed.

COUNSEL ASSISTING: Okay?---MR LEE: If we did enter into the deed, what happenedto it and did we - were all these conditions met before we entered into the deed and if so,why weren't we informed? I assumed that the deed just - well, just died because itcouldn't get the support of the ministers …

COUNSEL ASSISTING: Did you ever get to see the responses from theministers?---MR LEE: No; no, that's why I was amazed when people keep saying weentered into the deed, because I don't know that we did enter into a deed and if we didenter into the deed, why did the thing continue going on? Why in fact did Mrs SheilaGrljusich, I think it was, stand up and in a facetious way, I guess, say, 'And who was theexpert who made my husband's inheritance subject to two ministers' approvals and theirdepartments?' which to me - it's hard to have that sort of thing. You never ever want tomake anybody's inheritance subject to approvals of ministers and their departments, butyou want to make sure that you're acting in good faith and properly. You don't want to doanything illegally or improperly. So that was my motivation at all times and I'm sure itmust have been everybody else's, unless, of course, you're saying to me that somebodysneakily changed the wording" (Transcript, 2462-2464 and see also at 2518(Humphreys)).


671

6.9.26 In contrast, Mr Elpitelli was content with any response from the Ministers that did not

prohibit the City from entering into the deed. He referred to Mr McLeod's earlier advice of

29 May 1998 which he understood to mean that –

" … to some degree we were not allowed to enter into [the] agreement, but this tells usnow that we can enter into an agreement" (Transcript, 2574).

6.9.27 Mr Ostojich was satisfied, as he had been since the Committee meeting on 9 June 1998,

with the deed proposal merely being referred to the Ministers, regardless of their responses

(Transcript, 2678).

6.9.28 As to Mr McLeod's advice to the Council, Cr Wheatley - who voted against the deed

proposal on 9 June 1998 on the basis of his understanding of Mr McLeod's advice of 29 May 1998 -

asked Mr McLeod a number of questions relating to the issue. Mr Wheatley testified that –

" … at that meeting Mr McLeod spoke to his advice and he specifically advised us that wecould enter into that proposed deed in good faith … [and] certainly there was noimpediment or favouritism … "(Transcript, 3305).

With the exception of Mr Elpitelli who thought that Mr McLeod's advice was equivocal at this

meeting also (Transcript, 2561-2562), the evidence of all the other elected members is consistent

with Mr Wheatley's testimony.

6.9.29 As far as the issue of infrastructure costs is concerned, most of the elected members

testified once again that it was at least relevant to take into account, when considering the deed

proposal, that the owners of Lot 17 had not paid or made arrangements to pay their share of

infrastructure costs (Transcript, 3334 (Battalis), 2560, 2589 (Elpitelli), 3202 (Howlett), 2513

(Humphreys), 2453, 2455, 2459 and 2461 (Lee), 2615 (McNair) and 3275 (Wheatley)). This issue

was now particularly significant because the Council was dealing specifically with the question of

what was fair and equitable for the owners of Lot 17 compared to participants in the Private

Owners' Arrangement. The draft deed stated, in Recital F, that –

"The parties agree that Peremate should be treated on a fair and equitable basis andequally with other owners …"

In the context of this Recital, the evidence of Mr Lee appears from the following passage –

"COUNSEL ASSISTING: Did you understand that council was only acting fairly andequitably on the issue of public open space or did you think it was broader thanthat?---MR LEE: I would have said it was everything. You can't say, 'We're going to befair on public open space but on everything else we're not going to be fair.' It doesn'tmake sense and it wouldn't hold any water, so, no, it would have to be in everything andI'm sure Mr McLeod must have felt the same way and we must have indicated that to


672

Mr McLeod because it's in here, isn't it? I don't understand contracts but I assume that'ssaying that everybody must be treated fairly and equitably" (Transcript, 2462).

6.10 Deed between the City and Peremate

(a) Outline

6.10.1 Following the Council meeting on 22 June 1998, Mr Hiller set out the full text of the

Council's resolution in letters, dated either 23 or 24 June 1998, to the Minister for Local

Government, the Minister for Planning, the Ministry for Planning, Peremate and McLeod & Co.

6.10.2 On 23 June 1998, Mr McLeod faxed a letter to Mr Hiller stating –

"We recommend that urgent contact be made with the Minister for Planning requesting anurgent response to the request for the Minister's approval so that we can be more certainof the words to be included in the new recital."

As noted earlier, Mr Hiller and Mr Brown had already met with Ministry officials (on 19 June 1998).

They had been told by Mr Prattley and Mr Kohn before the Council meeting of 22 June 1998 that

the matter "was not something that the Ministry would want to get involved in". There is no record

of Mr Hiller's response to Mr McLeod on this point. However, they appear to have had a telephone

conversation about other aspects of the proposed deed later on 23 June 1998.

6.10.3 On 24 June 1998, Mayor Grljusich asked both Mr Brown and Mr Hiller to come into the

mayoral parlour to discuss the proposed deed and Mr Hiller's letter to the Ministry for Planning. Mr

Hiller's file note of this meeting states –

"The Mayor, only had a few questions and proposed some minor modifications whichappeared OK. He was on his way to a meeting with the other members of PeremateHoldings.

He was keen to have the Deed signed before he left for Croatia on Friday 26/6/98."

Mayor Grljusich's trip to Split, Croatia was an official sister City visit. Cr Ostojich also attended, but

made the trip at his own expense. Mr Brown was also a member of the City's delegation, but he left

a few days later.

6.10.4 On the following day, 25 June 1998, McLeod & Co forwarded to the City the final version

of the Deed. It was in duplicate, but unbound. McLeod & Co advised the City that, before it was

bound, the two annexures comprising the Plan of Survey setting out Lot 189 and a copy of the POS

Equalisation Schedule needed to be included.


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6.10.5 The Deed was executed on 29 June 1998. The City's common seal was affixed under the

signature of Mr Brown and Cr Battalis who, as Deputy Mayor, signed the Deed in the absence of

Mayor Grljusich who was by then overseas.

(b) Terms of the Deed

(i) The basic proposal

6.10.6 A copy of the Deed is reproduced at Annexure 13. (Due to its size and poor quality of the

copy, Annexure B of the Deed - a copy of the POS Equalisation Schedule - has not been included.)

To understand the Deed's major objective, it is necessary to begin with a review of Condition 13 of

the Planning Commission's subdivision conditions. This condition had been reaffirmed by the

Planning Commission after considering Peremate's formal request for a reconsideration and the

City's support for a major modification to the condition. Condition 13, which is reproduced in

Recital B of the Deed, states –

"(13) The proposed reserve (s) shown on the plan dated 6 June 1997 being shown onthe diagram or plan of survey as a 'reserve for recreation and drainage' and vestedin the Crown under section 20A of the Town Planning and Development Act, suchland to be ceded free of cost and without any payment of compensation by theCrown."

6.10.7 When considered in conjunction with the Plan of Survey included by the owners of Lot 17

in their application for approval, this condition required that 27% of Lot 17 –

(a) be ceded to the Crown; and

(b) be ceded "free of cost and without any payment of compensation".

6.10.8 Under the Deed, it was proposed that the same 27% of Lot 17 –

(a) be transferred to the City; and

(b) that upon the transfer the City would pay $17,941.46 to the owners of Lot 17.

6.10.9 One of the major consequences of the Deed is that the City, and not the Crown, would

own the land. (The City is not an agency of the Crown: Local Government Act 1995, section 1.6.)

It appears to have been intended that, at some stage, the City would transfer the land, free of cost,

to the Crown. However, there was nothing in the Deed about this. If the Deed had been

implemented, the Commission may well have been powerless to prevent the City retaining the land.

It may also have been powerless to require, as Condition 13 requires, that the land be used as a

reserve for recreation and drainage. Just as there was nothing in the Deed about the transfer of the


674

land to the Crown, neither was there anything in the Deed that purported to restrict the City's use of

the land.

6.10.10 It seems to me that what was proposed in the Deed would have required fundamental

changes to Condition 13. Mr McLeod's view, however, was that the Deed could be implemented

without any changes to Condition 13 (see his letter of 16 July 1998 to the City, considered below

at 6.11(b)).

6.10.11 In the circumstances, it is questionable whether it would have been open, as a matter of

law, for the Planning Commission to make any substantial changes to Condition 13. It had already

reviewed Condition 13, on a formal request for reconsideration under section 24(5) of the Planning

Act, and decided that it should be retained. An appeal against that decision was currently before

the Minister and due to be determined shortly.

6.10.12 Neither the City nor Peremate had any right to request a reconsideration. The view of the

Planning Commission is that it has power to reconsider a condition only once. Mr Hiller expressed

the same view to the Council (see above at 6.7(a)). In practice, it may well be the case that the

Commission is unable to exercise its power of reconsideration more than once. The legal position,

however, is that after being notified of the subdivision conditions imposed by the Planning

Commission, an applicant has only 28 days in which to request a reconsideration of a condition

(section 24(5) of the Planning Act). Once that 28 day period has expired, the right to request a

reconsideration is extinguished. One would expect that, as a matter of practice, it would be unlikely

that the Commission's response to a request would occur in time to allow an applicant to make a

second request within the initial 28 day period. In any event, insofar as the Deed was concerned,

the 28 day period prescribed by section 24(5) had long expired.

6.10.13 Perhaps as a result of the realisation that the Planning Commission was unable to

reconsider or change Condition 13, the Deed proposed that –

" … the City will recommend to the WAPC that Condition 13 could be treated as satisfiedby the terms of this Deed" (Recital H.).

(The transfer of Lot 189 was expressed to be conditional on the Planning Commission's specific

approval to the amended plan of survey - clause 1.1.)


675

6.10.14 There are two major objections to this recommendation. Firstly, there appears to be no

proper basis for the City, particularly as a public sector agency, to recommend to the Planning

Commission that a condition requiring land to be ceded free of cost to the Crown could be satisfied

by having the land transferred for about $18,000 to the City and, therefore, outside the control of the

Crown. If the Planning Commission had acted on the City's recommendation, there would have

been very strong grounds on which its decision could have been challenged in the Supreme Court

and set aside as unlawful.

6.10.15 The second objection is that the City had no statutory role in making a recommendation of

that type to the Planning Commission. As Mr Hiller had been at pains to point out repeatedly to

Mayor Grljusich, planning conditions were imposed by and were the responsibility of the Planning

Commission, not the City. Under the Planning Act, the City has a very specific and strictly limited

role. It has the power to make recommendations or objections before approval is granted and it has

the power to make recommendations or objections if a request for reconsideration of the condition

has been sought (section 24(1)). It may also be involved as the clearing authority for specified

conditions. None of these scenarios applied in this case. The City's proper statutory role was to

stay out of a dispute that involved the Planning Commission and the owners of Lot 17. By

becoming involved, it exceeded its powers.

6.10.16 The same point is made in the Planning Commission's response to the Council's

resolution of 16 June 1998. Unfortunately the letter, dated 29 June 1998, arrived on 1 July 1998 -

two days after the Deed was signed. It states –

"The Commission [not the City] has statutory responsibility for subdivision. It approvedthe above subdivision [of Lot 17] on the basis of conditions including the ceding of portionof Lot 17 being given up free of cost as a s20A Reserve in accordance with the submittedplan. There is no basis for the Commission to endorse the arrangement which you seekonce the avenue of reconsideration has been exhausted.

The matter is before the Minister for Planning on appeal and I understand that you haveapproached him directly. The matter is now in his hands."

(ii) Anticipation of Planning Commission consent

6.10.17 Recital C of the Deed states –

"To satisfy Condition 13, the WAPC has consented to that portion of the Peremate Landshown as Lot 189 on the Proposed Plan ('Lot 189') being acquired by the City pursuant toits powers under Section 20C of the Town Planning and Development Act 1928 ('the Act')by way of transfer to the City subject to the provisions of this Deed."


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6.10.18 In the signed version of the Deed, the words in the first line "the WAPC has consented"

were crossed out and replaced with the words "it is anticipated that the WAPC will consent".

Despite this change, it was still a necessary condition precedent for the Deed to become effective

that the Planning Commission would give its consent. Under clause 1.1 of the Deed, the transfer of

the land from Peremate to the City could not take place unless and until the Planning Commission

had given its approval.

6.10.19 It appears that Mr Brown signed the Deed knowing that there was no basis for anticipating

that the WAPC would consent to the Deed (Transcript, 3022).

6.10.20 It is understandable that Mr Brown was keen to have the Deed signed. That would have

effectively ensured that the matter was out of the City's hands and with the Planning Commission.

Mr Brown was shortly to join Mayor Grljusich on the Croatian trip and the prospect of doing so

without the Deed in place could not have been appealing.

6.10.21 In a file note that appears on the McLeod & Co files, Ms Payne who drafted the Deed,

stated –

"On 26 June 1998 I spoke to both Rod Brown and Steve Hiller who indicated that RogerKohn of the WAPC were [sic] not prepared to accept an arrangement whereby Lot 189 istransferred to the City in satisfaction of condition 13 which requires the land to be givenup as a section 20A reserve.

…

Both the Mayor and Rod Brown are shortly to go to Europe and it appears that the mattercannot be resolved any earlier."

6.10.22 No record of this discussion appears on the City's files. Once again, the Inquiry has been

unable to determine whether this is a result of poor record management by the City or whether

there is another explanation.

6.10.23 In his evidence to the Inquiry, Mr Brown acknowledged that he had no reason to believe

that the Planning Commission would consent to the Deed –

"MR BROWN: Well, the council anticipated that they would consent, otherwise it wouldn'thave gone to the stage of preparing the deed.

COUNSEL ASSISTING: But was there any basis for council to anticipatethat?---MR BROWN: No.


677

COUNSEL ASSISTING: Did it concern you at the time when you put those words on thedeed?---MR BROWN: No, I knew the other words were wrong and I was looking forsomething which would continue to facilitate the deed.

COUNSEL ASSISTING: These words are wrong too though, aren't they?---MR BROWN:It was an endeavour to reflect the views of both parties, being that of council and ofPackham.COUNSEL ASSISTING: Yes?---MR BROWN: Obviously if the council didn't think theWAPC would agree and Peremate didn't, well, why have we got the deed?

COUNSEL ASSISTING: Yes. You had no anticipation that the planning commissionwould consent?---MR BROWN: No, I had no reason to believe they would"(Transcript, 3022).

In these circumstances, it was inappropriate for Mr Brown to sign the Deed.

(iii) Responses from Ministers

6.10.24 As noted earlier, on 23 June 1998, Mr McLeod faxed to the City a letter stating –

"We recommend that urgent contact be made with the Minister for Planning requesting anurgent response to the request for the Ministers' approval so that we can be more certainof the words to be included in the new recital."

6.10.25 Recital I of the Deed stated –

"The proposal has been referred to the Ministers for Planning and Local Governmentrespectively and their responses are not inconsistent with the entry by the City into thisdeed."

6.10.26 The Minister for Local Government had written to the City on 22 June 1998 stating that

the decision whether to enter into the Deed had to be made by the City. The Ministry for Planning

officers, to whom Mr Brown and Mr Hiller had spoken on 19 June 1998, indicated that "the Ministry

would not want to get involved" in the matter while it was on appeal before the Minister. However,

the Minister for Planning had not responded at all.

6.10.27 Because the Minister for Planning did not respond at all, Recital I was false and

misleading. There was simply no basis for asserting, in effect, that –

(a) the Minister for Planning had responded; and

(b) his response was "not inconsistent with the entry by the City into [this] deed".


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(iv) Fairness and equity - infrastructure costs

6.10.28 The Deed repeated the mantra that "Peremate should be treated on a fair and equitable

basis and equally with other owners [of the Packham Area]" (Recital F). For the reasons set out

earlier and acknowledged by most of the City's elected members in their evidence to the Inquiry,

the payment of POS compensation to the owners of Lot 17, without a requirement that they also

pay their share of infrastructure costs was not fair and equitable as it favoured the owners of Lot 17

(see above at 6.5(d)).

6.10.29 In particular, it was not fair and equitable –

(a) to look to the Private Owners' Arrangement to see what entitlements in the form of

POS compensation it gave to a participant - and give the owners of Lot 17 the

same entitlements; but

(b) to refuse to look to the Private Owners' Arrangement to see what obligations in the

form of infrastructure cost contributions it imposed on participants as the price for

their POS entitlements - and not require the owners of Lot 17 to pay those costs

(see above at 6.5(d)(ii)).

(v) Valuation of Lot 17

6.10.30 As mentioned earlier, Mayor Grljusich and the other owners of Lot 17 claimed that their

POS compensation payment should be about $250,000 (see above at para. 6.4.59). This was on

the basis that "if the land had not been set aside as public open space then it would have been

developed for 5 building lots" (Mr Hiller's file note of Mayor Grljusich's comments at the meeting of

6 January 1998, and similar instructions by Mr Gava to Mr Cole on 2 January 1998). Mayor

Grljusich maintained his unjustifiable claim to the 27% having a value of 5 residential blocks,

amounting to $250,000, when interviewed by Mr Martin and Mr Vicary on 9 and 18 November 1998

for the purposes of their inquiry under Division 1 of Part 8 of the Local Government Act.

6.10.31 Until February 1998, the owners of Lot 17 would have been entitled, as participants in the

Private Owners' Arrangement, to POS compensation of $45,893. After February 1998, their

entitlement on the new formula adopted by Urban Focus for all Private Owners' Arrangement

participants was reduced to $17,941.46. (The reduction, reflected in changes to the 1998 POS

Equalisation Schedule, was largely as a result of the Watsons' buffer zone area no longer being

available for residential subdivision - see Chapter 7 at para. 7.3.11).


679

6.10.32 The claim by the owners of Lot 17 that their POS land should be valued on the basis that

it would otherwise have been used for 5 building lots is ridiculous.

6.10.33 When Mr Cole was instructed by Mr Gava to make a claim for compensation on this

basis, he considered that the claim had no merit. Mr Cole visited the site on 11 August 1997 and

recorded that almost the entire 27% was under water –

"I conducted a site inspection and noted that the water mark of Market Garden SwampNo. 1 is very high and encroaches close to the proposed alignment of Garden Road. Thiswill cause problems for the siting of a nutrient stripping basin and may be the calculationof public open space."

6.10.34 A similar situation was found many years earlier when Mr Evans of Urban Focus visited

Lot 17 with Mr Tom Grljusich, then one of the owners of Lot 17 –

"On the 9 October 1991, we inspected your land with Mr Tom Grljusich. The area of landcurrently under water and the perimeter of Paper bark and Rushes was measured. Thelake area in respect to development proposals is shown on the enclosed plan. It is seenthat it would not be feasible to relocate the proposed Garden Road extension any closerto the lake" (letter from Urban Focus to T & G Grljusich dated 11 October 1991).

6.10.35 Mr Hiller testified at the public hearings of the Inquiry that –

"My understanding is that the majority of that land is wet and it had been defined as beingwet by Wood and Grieve when the Packham structure plan was prepared where all theland below RL2.5 was deemed to be wetlands, part of the system 6 market garden chain"(Transcript, 1917).

6.10.36 Mr Cole who was employed as an independent consultant by the owners of Lot 17, gave

evidence at the public hearings that –

"MR COLE: … I didn't pay a lot of attention to these [claims for compensation based onthe value of 5 residential lots]. These notes were given to me [by Mr Gava] as a basis toforming a reconsideration request or adding further information to a reconsiderationrequest and these were issues which I could not take into consideration.

COUNSEL ASSISTING: Why was that?---MR COLE: Because he's talking aboutdevelopment costs in respect to what land was available and what wasn't and I felt thatthat was irrelevant to the issue.

COUNSEL ASSISTING: Did you communicate that to the client perhaps in a delicateway?---MR COLE: Yes. I handled that by providing him with a draft response to thecommission, to the Ministry for Planning, so he had opportunity to realise that I didn't takethose issues into consideration" (Transcript, 1859).


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6.10.37 In response to Mayor Grljusich's claim on 6 January 1998 that his POS land should be

valued on the basis that it would have been developed for 5 building lots, Mr Hiller stated –

"Urban Focus has determined the values and contribution through a matrix which theyhave determined and have applied to all other owners within the Packham Area. Thevalues and techniques used by Urban Focus should apply to Lot 17."

6.10.38 Having regard to the pressure on him, and the confrontational nature of the meeting on

6 January 1998, it is understandable that Mr Hiller would not have wanted to inflame the situation

any further. While it is understandable in that context, his response on this issue contained an

important concession that substantially favoured the owners of Lot 17.

6.10.39 The POS compensation paid under the "Urban Focus matrix" did not apply "to all other

owners within the Packham Area". It is fundamental that only those landowners who agreed to

participate in the Private Owners' Arrangement and, therefore, agreed to be bound to pay

infrastructure costs, were entitled to receive POS compensation. As the City had previously pointed

out in its letter to Peremate on 12 September 1997, no one other than a participant in the Private

Owners' Arrangement was entitled to POS compensation. Even if the City were to consider giving

the owners of Lot 17 an ex gratia POS compensation payment, there was no reason why that

compensation should be determined by reference to the "Urban Focus matrix".

6.10.40 Typical of Mr Hiller's earlier responses to Mayor Grljusich's claim for compensation based

on the value of 5 residential lots, was the response provided by him at his meeting with Mayor

Grljusich on 22 December 1997 when he stated –

"In the event that the Council decides to pay the difference for public open space inexcess of the normal Packham provision, then the excess land would probably be valuedby way of the Valuer General's Department."

This response has added significance in the light of a discussion about a month later, between

Mr Hiller, Mr Brown and Mr Prattley. In his evidence to the Inquiry, Mr Hiller testified that –

"I thought that the amount of money that may have been involved would be very minimal.I had discussions, I can recall, with Gary Pratley [sic] who is the CEO in the ministry [forPlanning] and he gave me some advice on the fact that he had seen circumstances likethis before where in actual fact the land may have a negative value because of the costinvolved in filling it, making it suitable for building lots or getting access to services. Ididn't have any clear view on what the value would be but I thought it would bereasonably minimal if it was valued as a separate piece of land" (Transcript, 2205).

6.10.41 In the end, the City did not seek a valuation of the land that it bound itself to purchase.

Having made the decision to acquire the land, it should have sought an independent valuation.


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(vi) Other drafting defects

6.10.42 The Deed stated, and was entered into on the basis, that Peremate was the registered

proprietor of Lot 17 (Recital A). In fact it was not. The City should not have entered into the Deed

to purchase Lot 17 unless it had confirmed who was the actual owner of Lot 17.

6.10.43 Clause 3.2 of the Deed stated –

"Payments made to the Subdivider from the s.20C account shall be madecontemporaneously with payments made to the other owners participating in subdivisionof their land utilising the Urban Focus Schedule."

6.10.44 This clause was apparently inserted to comply with the request of the Minister for Local

Government that the owners of Lot 17 should not be advantaged over other Packham Area

landowners in the timing of their payment. As clause 3.2 is expressed, it is difficult to attribute any

meaning to it. There were more than 100 "other owners participating in subdivision of their land

utilising the Urban Focus Schedule". These owners were paid at different times, many years apart.

It makes no sense to say that the payment to Peremate should be made "contemporaneously with"

all those other payments.

6.10.45 A similar issue is dealt with in Recital "G" which states –

"Condition 13 requires the Subdivider to surrender more than 10% of the Peremate Landand the City has agreed to pay the Subdivider for the value of that portion of thePeremate Land required for contribution under recital F pursuant to its powers undersection 20C of the Act utilising moneys held for such purposes ('the s.20C account') onthe basis that such payment shall be made contemporaneously with payments madeby the City to other subdividers in the PUDA" (emphasis added).

This suffers not only from the same defects as clause 3.2 but has the additional problem that there

were no "payments made by the City to the other subdividers in the PUDA".

6.10.46 If the Planning Commission had agreed to support the Deed proposal, the City would

have faced major problems. Under the Deed it had agreed to purchase land from a company that

did not own the land, and to pay the purchase price at a time that was incapable of being

ascertained. In all likelihood, had it been challenged, the Deed would have been rejected by a court

as unenforceable.


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(vii) Findings

F52. I find that, in respect of the Deed entered into between the City and Peremate on

29 June 1998 –

(a) the Deed was fundamentally flawed in that –

(i) the City had no role to play, and should never have been involved, in

determining how Condition 13 was to be fulfilled by the owners of Lot 17;

and

(ii) there was no proper basis for the City's recommendation to the Planning

Commission that a condition requiring land to be vested free of cost to the

Crown "should be treated as satisfied" by the transfer, at a cost of about

$18,000, of the same land to the City - with the result that the land was

outside the control of the Crown;

(b) the Deed, if implemented, would have advantaged Mayor Grljusich and the other

owners of Lot 17 over all other Packham Area landowners because no other

landowner received POS compensation without first paying his or her share of


(c) it was inappropriate for Mr Brown to sign the Deed, which could not take effect

without the Planning Commission's approval and which stated that it was

"anticipated that the WAPC will consent", when Mr Brown knew that the

Planning Commission would not consent;

(d) it was inappropriate for Mr Brown to sign the Deed knowing to be untrue its

terms that –

(i) the Minister for Planning had responded to the Deed proposal; and

(ii) the Minister for Planning's response was consistent with the entry by the

City into the Deed;

(e) having made the flawed decision to enter the Deed, the City acted

inappropriately in not obtaining an independent valuation of the land it bound

itself to purchase from the owners of Lot 17;

(f) the Deed had major drafting defects in that the City agreed –

(i) to purchase Lot 17 from a company that did not own the land; and

(ii) agreed to pay the purchase price at a time that could not be ascertained;

(g) the urgency given by the City's employees and the Council to –

(i) the decision making process;


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(ii) obtaining legal advice;

(iii) corresponding with relevant parties; and

(iv) other steps necessary to complete the Deed,

was unwarranted and occurred only as a result of Mayor Grljusich's position, the

undue influence he exerted and the pressure he applied; and

(h) the Deed would not have been entered into had it not been for the abuse by

Mayor Grljusich of his position as Mayor by –

(i) repeatedly insisting that the City had to become involved in a matter that

should have involved only the Planning Commission and the owners of

Lot 17;

(ii) applying enormous pressure on the City's employees and elected

members, over a long period of time, to find a way for Mayor Grljusich and

the other Lot 17 owners to avoid their obligations in complying with a

subdivision condition imposed by the Planning Commission;

(iii) using the City's information that was provided to him in his capacity as an

elected member to pursue his claim for compensation against the City;

and

(iv) using the City's resources, including its personnel, documents, equipment

and the mayoral office, to pursue his claim for compensation against the

City.

6.11 The Deed fails

(a) Responses from Planning Commission and the Minister forPlanning

6.11.1 The Planning Commission's response to the City, received on 1 July 1998, advising that

there was "no basis for the Commission to endorse the arrangement" effectively ended the Deed.

Without the Planning Commission's approval, the land could not be transferred to the City and the

owners of Lot 17 could not be paid POS compensation from the City's section 20C account.

6.11.2 On 2 July 1998, the Planning Commission informed Peremate that its request for a

reconsideration of Condition 13 had been rejected because "[t]he Commission can only exercise its

power of reconsideration of a subdivision condition once". The Planning Commission also


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effectively rejected Peremate's claim that it was entitled to POS compensation on the basis of the

report accompanying Amendment No. 240.

6.11.3 On 8 July 1998, the Minister for Planning responded to the City's letter seeking his

agreement to the proposed Deed. He declined the request on the basis that "[t]o express an

opinion on the City's resolutions would pre-empt an outcome for the appeal" which was presently

before him.

(b) Further advice from McLeod & Co

6.11.4 At this point, therefore, the issue of the appropriate POS compensation required from the

owners of Lot 17 was to be determined by the Minister for Planning on the appeal against

Condition 13. It seemed that the City's role in the matter had finally come to an end.

6.11.5 That was not to be. On 16 July 1998 McLeod & Co wrote to the City. Earlier that day Mr

McLeod had been informed by Mr Brown of the Planning Commission's response to the Deed. Mr

McLeod first indicated that the City's approach to the Planning Commission in respect of the Deed

could have been different –

"The writer had not anticipated asking the Commission to amend condition 13 of thesubdivision approval. It had been the writer's view that the Commission could accept thearrangement made between the landowner and the City as satisfying the intent ofcondition 13."

It was on the basis of these sentences that Mayor Grljusich believed - and still believes - that when

Mr Hiller wrote to the Planning Commission about the Deed on 24 June 1998, he acted contrary to

the advice of Mr McLeod and, as a result, "scuttled the deed" (Transcript, 3583).

6.11.6 Mr McLeod then suggested that there might be another way for the City to be involved in

an attempt to pay POS compensation to the owners of Lot 17 –

" … the intention of the City and the landowner expressed in the Deed might still besatisfied if the landowner was to sell the subject land to the City under an agreementwhich is expressed to be conditional upon the WAPC approval, as the land to bepurchased would not be in the form of a separate lot. In that case the agreement forpurchase would go forward to the WAPC for the endorsement of its approval at the sametime as the diagram of survey is lodged for WAPC approval. The land would be shown inthe diagram of survey as land to be vested under s.20A as a reserve for recreation, andupon the WAPC endorsing its approval on the purchase agreement and the diagram ofsurvey, the whole of the POS land would be vested pursuant to s.20A …


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Although it may not be appropriate for the City at this time to initiate any action along thelines suggested above, you may wish to advise the owners of Lot 17 of the possibilityraised above, and in that event we have no objection to you sending a copy of this letterto them."

6.11.7 Mr Brown sent Peremate a copy of the McLeod & Co advice on 22 July 1998. He

emphasised that Peremate should seek its own legal advice "to ascertain the merits of the

suggested alternative". This letter was the catalyst for another round of pressure applied by Mayor

Grljusich on the City's employees and elected members to pay POS compensation. If there was

one lesson that the City's employees should have learned over the preceding 12 months it was that

if Mayor Grljusich was given any information that had any relevance, real or imagined, to his claim

for POS compensation, then –

(a) he would pursue the matter relentlessly, particularly with the City's employees,

despite repeated and consistent advice to the contrary; and

(b) he would expect and demand that the City, particularly through its employees, deal

with the matter as though it was the City's problem rather than his own personal

problem.

(c) Further pressure from Mayor Grljusich

6.11.8 Mayor Grljusich arrived back in Perth from Split in the last week of July 1998

(Transcript, 3590). He discovered that –

(a) the deed was unable to be effected;

(b) Mr McLeod's letter of 16 July 1998 to the City indicated that the City's approach to

the Planning Commission in respect of the Deed could have been different; and

(c) in the same letter Mr McLeod had suggested another way that the City may be able

to pay POS compensation to the owners of Lot 17.

This was the catalyst for Mayor Grljusich to undertake another round of contacts with the City's

elected members and employees in respect of his claim for POS compensation.

6.11.9 He began with a telephone call to Mr Brown on 30 July 1998. Mr Brown's file note of the

conversation states –

"Mr Grljusich sought advice what we were doing about the McLeod advice and I informedhim it was a matter for Peremate to pursue. He did not see it that way and said hisunderstanding was that Council wanted to have the matter resolved and it was up toCouncil to attend to it.


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I said that the McLeod advice was still subject to WAPC approval and that the ownersneeded to pursue it.

Mr Grljusich disagreed and raised issues about the Deed, implying that it was Council'sintention to find the solution to the problem. He said that, as an owner, he would need totake the matter up with Councillors."

6.11.10 Mayor Grljusich also compiled a file note of his conversation with Mr Brown, as well as

other contacts he made over the following days. His undated note, in full, states –

"PEREMATE HOLDINGS DEED ARRANGEMENTS WITH THE CITY OF COCKBURN

Shortly after my return from Croatia on 25th July 1998, I received a fax from the Council inregard to comments that were made between Council's solicitors, Mr Dennis [sic] McLeodand the Chief Executive Officer of the City of Cockburn, Mr Rod Brown, which stated thatwhile the deed that was entered into between Peremate Holdings Pty Ltd and the City ofCockburn was not successful with the State Planning Commission, Mr McLeod wasinforming Council that there was a way in which the successful purchase of public openspace from Peremate Holdings Pty Ltd by the Council may be achieved.

I rang Mr Brown and asked him, as Director of Peremate Holdings Pty Ltd, what he wasgoing to do in relation to the letter he received from McLeod & Co pertaining to thepurchase of our land as Council had directed.

His answer to me was that Council had directed him to draw up a deed, that deed hadbeen drawn up and that was all that he was required to do. I disagreed with that opinionand informed him that I was under the impression that Council had given direction that adeed for the purchase of public open space of Peremate Holdings Pty Ltd be entered intoat no detriment to Peremate Holdings Pty Ltd and that it was acceptable to go down thelines indicated by the solicitors in order to facilitate the purchrs. [sic] the P.O.S. portion ofPeremate Holdings Pty Ltd's land. However, he felt that he could not move in thatdirection.

I then contacted a number of Councillors, first on my list was the Deputy Mayor who wasalso the Chairman of the SPC committee. I asked him if he would look into the matter ofwhich I discussed with Mr Brown. No satisfaction was gained by Peremate Holdings PtyLtd in relation to the Deputy Mayor's involvement, as a matter of fact I believe the DeputyMayor made no inquiries.

As Director of Peremate Holdings Pty Ltd, I also contacted Clr Ostojich to look into thematter that a deed be drawn up in line with the solicitors communiqué being on the16th July 1998. As well, I contacted Councillor Pecotic on 4th August 1998 about thismatter and asked him if he could look into the matter in relation to Peremate Holdings PtyLtd in which I understand he had done, with no success as to the outcome whichPeremate Holdings Pty Ltd had expected from Council.

As director and on behalf of Peremate Holdings Pty Ltd I also contacted Clr S Lee inrelation to Peremate Holdings Pty Ltd's public open space contribution on 4 August 1998.Clr Lee informed me that evening before the meeting of Council that Mr Brown indicatedto him that nothing could be done as the appeal which Peremate Holdings Pty Ltd hadbefore the Minister for Planning was going to be decided that Friday."


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6.11.11 A handwritten addition following that last sentence reads –

"How did Brown know this as it was expected on the Tuesday 4 Aug before. And I onlyfound out that Tuesday afternoon. From appeals Gordon Smith."

Another handwritten addition at the top of file note states –

"This was the case before Peremate asked Council for all clearances for Lot 17 whichresorted [sic] in the POS being ceded to the Crown automatic."

6.11.12 Five days after Mr Brown's telephone conversation with Mayor Grljusich, Cr Pecotic

telephoned Mr Brown. Cr Pecotic said that he had been contacted by "Peremate" with regard to

their subdivision. He wanted to know "what the administration was doing". Mr Brown explained the

situation and pointed out that nothing could be done without Planning Commission approval.

Mr Brown's file note also records that –

"After terminating the call, I rang back Clr Pecotic and advised that I would come back tohim tomorrow (5/8/98) after considering the implications of the deed and the suggestionby McLeods, my intention being to again conclude that WAPC approval was required."

6.11.13 On the following day, Mr Brown had separate discussions with Mr Ryan and Mr Hiller.

Mr Ryan volunteered to approach the Planning Commission to determine what it thought of

Mr McLeod's suggestion. Mr Hiller's view was that "it was up to the owners to ascertain the legality

of the proposal and then take action they considered appropriate". Mr Hiller later advised Mr Brown

that he heard that the Minister for Planning –

"was expected to determine the appeal next week and that a copy of the McLeod letterhad been faxed to the Commission for their view on the merit of the suggestion."

6.11.14 Mr Brown telephoned Cr Pecotic later that day informing him about the appeal. His file

note adds –

"I also mentioned that should the appeal be successful, the method of purchase shouldCouncil determine to buy the land not required to be vested as a result of the appeal, mayneed to be by resolution and not as per the Urban Focus method.

He said that sworn valuation would be fair, however his further comments indicated thathe expected the valuation to be on the same basis of the higher situated property."

6.11.15 On 7 August 1998, the Ministry for Planning responded to the City's inquiry as to the

merits of Mr McLeod's suggestion. Mr Hiller's file note of his conversation states –

"Mr Trevor advised that he could not really understand the proposal offered byMr McLeod, and in any event did not see how it differed greatly from the previousproposal considered by the WAPC and rejected.

Moreover, the matter was before the Minister as an appeal, with a decision likely in thenear future and that this should be how it is resolved."


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6.11.16 On 11 August 1998, Cr Pecotic telephoned Mr Brown wanting to know what was

happening with Lot 17. Mr Brown repeated what he had told Cr Pecotic the previous week and

ended his file note with the observation that Cr Pecotic "obviously had not taken in what I had told

him".

6.11.17 Peremate faxed to the City a letter dated 19 August 1998 requesting that "all the

necessary clearances [for Lot 17 be] issued as a matter of urgency". The letter concluded –

"This request for clearance however, does not signal the end of our discussions andnegotiations relating to the public open space within the Packham Development Area.We do not, in any way, relinquish our right to an appropriate share of the public openspace money held in trust by the City of Cockburn."

6.11.18 At the public hearings of the Inquiry, Mr Grljusich's evidence was that he believed that

certain employees in the City's administration were responsible for the failure of his attempts to

receive POS compensation from the City. In particular, he viewed the letter from McLeod & Co of

16 July 1996 as supporting the proposition that Mr Hiller had "scuttled the deed" (Transcript, 3583).

He maintained this view throughout the public hearings as the following exchange with Counsel

Assisting illustrates –

"COUNSEL ASSISTING: I'm just trying to understand whether your position is that thedeed failed because of things the officers did?---MR GRLJUSICH: Yes. That was myview.

COUNSEL ASSISTING: Is it still your view?---MR GRLJUSICH: Up till now, yes.

…

COUNSEL ASSISTING: And it was the officers' fault it didn't work and so you weren'tgiving up your right to pursue your entitlement? ---MR GRLJUSICH: Well, that's right.

COUNSEL ASSISTING: That's right, isn't it?---MR GRLJUSICH: Yes" (Transcript, 3590).

There is no evidence to support Mayor Grljusich's views.

6.12 Rejection of Lot 17 appeal by Minister for Planning

6.12.1 On 24 August 1998, the Minister for Planning wrote to Mayor Grljusich in relation to his

appeal against Condition 13. The appeal was not upheld.


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6.12.2 The Minister's reasons for rejecting Mayor Grljusich's appeal are particularly significant.

They echo the basic principles that Mr Hiller relied on in his initial responses to Mayor Grljusich's

claims for POS compensation 12 months earlier. Unfortunately and largely because of the intense

and sustained pressure exerted on the City's employees and elected members over that period by

Mayor Grljusich, with the assistance of Cr Pecotic in particular, these principles were relinquished in

the attempt to satisfy Mayor Grljusich's relentlessly pursued claim against the City for POS

compensation.

6.12.3 The Minister noted that –

" … the plan of subdivision submitted to, and approved by the Commission, actuallynominated that the land should vest as a Reserve for Recreation and Drainage. In otherwords, the Commission approved the subdivision as it had been promoted by you."

6.12.4 Three major issues were addressed by the Minister –

(a) the claim that the owners of Lot 17 should be compensated because they were

required to give up more than the usual 10% POS;

(b) the relevance of the Private Owners' Arrangement and, in particular, the link

between infrastructure cost contributions and POS compensation; and

(c) the proposal that the City purchase part of Lot 17.

6.12.5 As to the claim - persistently made by Mayor Grljusich over the preceding 12 months -

that landowners should be compensated for any POS land required to be given up in excess of the

normal 10% policy requirement, the Minister stated –

"In relevant circumstances, the Commission does request the provision of more than 10%of public open space, especially where land fronts onto waterways or wetland areas andrequires the land to be given up free of cost to the Crown. To single out this lot, therefore,would be to treat the land separately from others who have been required to surrendermore than 10% of public open space without any form of compensation. The principlewould, by force of the same argument, suggest that there should be payments to LocalGovernment for land less than 10% in some circumstances where a lesser amount of landis actually required. The surrender of 10% of land suitable for subdivision is only a policyof the Commission and is variable according to the assessment of the circumstances ofeach case. It is not a statutory requirement and the need for public open space anddrainage will differ from site to site, depending on the characteristics of the land, theavailability of open space already existing within the locality and a number of otherconsiderations. It would, therefore, be inappropriate to introduce the concept of apayment for land in excess of 10% when requested by the Commission in appropriatecircumstances."


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6.12.6 Later in his reasons, the Minister expressly endorsed the view of the Planning

Commission that a POS compensation payment in this case "would establish a precedent for

similar recompense in other circumstances". This was one of the two major concerns of Mr Hiller

when considering the claim for the purposes of his report for the Council meeting on

20 January 1998. It was never put to the elected members, either at that meeting or any

subsequent meeting including the three critical meetings in June 1998, because Mr Hiller was

persuaded by the advice he received from his colleagues and legal adviser that he was being

"alarmist" (see above at para. 6.5.44).

6.12.7 The second major issue considered by the Minister –

" … relates to the principles upon which the Packham Development Area has beensubdivided and developed as part of the land pooling and cost equalisation scheme. Inthat Development Area it has already been identified, as I understand the situation, that16% of the land is required for public open space and drainage and this principle hasbeen applied to all land surrounding the appeal site. Those landowners have alsoundertaken, with each other, to defray the costs of headworks as well as localinfrastructure and other subdivisional pre-requisites so as to provide for the developmentof each lot. The cost equalisation for public open space and drainage in the area forms apart of the overall arrangement for costs to be shared. You have chosen to stand apartfrom that arrangement and it is not appropriate, therefore, to seek to invoke parts of thatagreement to apply to your land without recognition of the total basis for the agreement."

6.12.8 Almost a year earlier, the City relied on a similar principle in its letter to Peremate on

12 September 1997 when rejecting the claim by the owners of Lot 17 for POS compensation.

Three months later, in considering the claim for the purposes of his draft report to the Council

meeting on 20 January 1998, Mr Hiller had identified the infrastructure cost contribution issue as an

important factor in dealing with the POS compensation claim. The final report omitted all references

to infrastructure cost contribution. It was never put before the Council either at that meeting or in

any subsequent meeting.

6.12.9 A related point concerning the application of the Private Owners' Arrangement to the

owners of Lot 17 was made later in the Minister's reasons. He accepted the view of the Planning

Commission that the Private Owners' Arrangement –

" … is one applied to the land as a private landowner agreement which does not involvethe Commission and which, by extension, does not involve me either and that it would beinappropriate for me to seek to apply the standards appropriate to the PackhamDevelopment Area when dealing with your subdivision which does not form a part of thelandowner agreements in that Development Area."


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6.12.10 This supports the conclusion that it would have been wrong for the owners of Lot 17 to be

paid POS compensation by the City without paying their share of infrastructure costs. The point

made by the Minister also demonstrates that there was no basis for the City's assumption that, if

POS compensation was to be paid, then it should be paid in accordance with the POS Equalisation

Schedule which applied to participants in the Private Owners' Arrangement.

6.12.11 The third major issue addressed by the Minister's reasons concerned the proposed

purchase of part of Lot 17 by the City under the Deed. The Minister pointed out that –

" … if land is set aside as you suggest for purchase by the City of Cockburn from moniesheld in Trust under the provisions of Section 20C of the Town Planning and DevelopmentAct, there is no condition of subdivision which could require the City to surrender thatland, once bought, to the Crown for a Crown Reserve for Recreation and Drainage. WhileI acknowledge that the City has indicated its willingness to deal with the land in that way,a condition of subdivision cannot be devised to require the City (which is a third party inthis matter) to act in a given manner."

This is one of the fatal flaws with the Deed which was discussed earlier (at 6.10(b)(i)).

6.12.12 The Minister's decision should have finally put an end to Mayor Grljusich's attempts to

obtain POS compensation against the City. It did not. His attempts continued until Council's

suspension in April 1999. The next Chapter deals with the actions taken by Mayor Grljusich to

pursue his claim for POS compensation on a different basis.

6.13 Mayor Grljusich's improper access to and use of theCity's information

(a) Introduction

6.13.1 One of the most striking features of Mayor Grljusich's conduct throughout the events

considered in this Chapter is his failure to distinguish between his role as Mayor of the City and his

role as a private individual seeking to establish a claim for POS compensation against the City.

Closely linked to this is his apparent failure to understand, and his failure to act on the basis, that

the problem of how the owners of Lot 17 could be paid POS compensation was not the City's

problem, but was the owners' problem.


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6.13.2 As a result, in respect of his claim for POS compensation, Mayor Grljusich –

(a) in requiring assistance from the City's employees, treated them as though they

were either his private employees or as though his claim for compensation was by

the City instead of against the City;

(b) used the facilities, such as the mayoral parlour, provided to him for City purposes,

to conduct his own personal affairs as though the facilities were his own private

facilities or as though his personal affairs were the City's affairs; and

(c) obtained access to the City's information, including its own legal advice in respect

of his claim against it, as though the information were his own personal information

or as though his POS compensation claim was a claim by the City and not by

himself and the other owners of Lot 17.

6.13.3 These and other conflict of interest issues relating to Mayor Grljusich are dealt with in

more detail in Chapter 8. For present purposes, one particular matter that requires further analysis

is Mayor Grljusich's improper access to, and use of, the City's documents and other information to

pursue his claim against the City for POS compensation.

6.13.4 Earlier in this Report, three specific instances are discussed where Mayor Grljusich

sought and obtained access to information held by the City. In each case it is likely that the

information would not have been provided to him had he not been an elected member. It is also

likely, in each case, that the information was used by Mayor Grljusich for his personal purposes - in

particular, in pursuing his claim against the City for POS compensation.

6.13.5 On the first occasion, 5 December 1997, Mayor Grljusich was warned by Mr Brown not to

use information to which he had access as the Mayor or as an elected member for private

purposes. Mayor Grljusich obtained details of the advice given to the City by McLeod & Co at the

Council meeting on 4 December 1997. It is likely that he used this information to pursue his claim

against the City. The earlier discussion of this incident includes the text of section 5.93 of the Local

Government Act, under which it is an offence punishable by a fine of $10,000 or imprisonment for

two years to use information obtained as an elected member to gain a benefit for any person or to

cause detriment to a local government. Under section 8.3 of the Criminal Code, similar behaviour

constitutes a crime punishable by imprisonment for three years (see above at para. 6.4.77).


693

6.13.6 In relation to the second matter, Mayor Grljusich sought and obtained from Mr Ryan on 18

and 21 May 1998 a number of documents including a copy of the McLeod & Co advice dated

16 February 1998 which contained advice relating to payment of POS compensation by the City to

Mayor Grljusich and the other owners of Lot 17 by means of the purchase by the City of part of

Lot 17. I have found that Mayor Grljusich obtained the information as an elected member and

would not otherwise have been entitled to it (see above at para. 6.6.31).

6.13.7 On the third occasion, Mayor Grljusich sought and obtained from Mr Ryan on

29 May 1998 copies of two documents, at least one of which would not have been provided to him

had he not been an elected member. Both documents were relevant to his claim for POS

compensation against the City. There was insufficient evidence to make a formal finding of

impropriety.

6.13.8 One incident which was not dealt with earlier occurred on 10 June 1998.

(b) Demand for information on 10 June 1998

(i) Background

6.13.9 On 9 June 1998, the Community Development Committee considered the deed proposal

which, if implemented, would have resulted in the City paying POS compensation to Mayor

Grljusich and the other owners of Lot 17. Elected members had before them a very detailed

Officers' report and written advice from McLeod & Co. The matter was discussed from 10pm until

11.45pm. Mayor Grljusich, as he was legally required to do, declared a financial interest and left

the meeting during the discussion and vote. He returned to hear the Committee's recommendation

being read out before the meeting closed.

6.13.10 On the following day, Mayor Grljusich rang Mr Ryan asking him for a copy of the

Community Development Committee recommendation relating to the item concerning the deed

proposal for Lot 17. Mr Ryan contacted the CEO's secretary Ms Sue Ellis, who described herself in

a file note as the " 'unofficial' coordinator of the minutes". Ms Ellis checked the matter with

Mr Brown. She knew that it was the City's practice not to provide a printed copy of a Committee's

recommendation until the minutes had been checked by the responsible director. Usually a printed

copy was available for distribution within 5 working days of the meeting. In the meantime, a person


694

could be advised orally of the terms of the recommendation, but warned that it would be subject to

minor changes.

6.13.11 Mr Brown instructed Ms Ellis that, in relation to this matter in which Mayor Grljusich had a

financial interest, the Mayor should not be treated any differently from anyone else who sought the

information. Ms Ellis relayed these instructions to Mr Ryan.

6.13.12 Mr Ryan telephoned Mayor Grljusich and explained that he was unable to give him a

printed copy of the resolution as it was against the City's protocol but that it would be available later

in the week. Mayor Grljusich asked Mr Ryan to ask Mr Brown to provide him [the Mayor] with the

document.

6.13.13 A little later Mayor Grljusich telephoned Mr Brown's office. The call was taken by Ms Ellis.

At this stage Mr Brown was in his office, with his door closed, conducting an annual performance

appraisal review with Mr Robert Santich, the City's Administrative Support Officer. Despite Ms Ellis'

reluctance to interrupt Mr Brown, Mayor Grljusich insisted on speaking to Mr Brown immediately,

even though he was told that Mr Brown was in a meeting. Ms Ellis opened Mr Brown's door and

told him that the Mayor was on the phone and wanted to speak with him. After initially suggesting

to Ms Ellis that she should ask the Mayor to call him back, Mr Brown changed his mind and agreed

to take the call.

6.13.14 What followed was the subject of much evidence. File notes of the events were made by

Ms Ellis, Mr Santich and Mayor Grljusich. There was also an exchange of correspondence

between the Mayor and the CEO. Following the publication of the Martin/Vicary Report, a statutory

declaration was made by Mr Ray Erceg. These written materials indicate some disparities in the

accounts of what took place during the telephone conversation. During the public hearings of the

Inquiry, these disparities assumed a much greater significance and came to be seen as a major test

of credibility - particularly between Mayor Grljusich and Mr Brown. For example, towards the end of

his evidence, Mr Brown was asked by Counsel for Mr Grljusich whether he "could point to anything

which [Mayor Grljusich] did that wasn't honest in his capacity as mayor". Mr Brown responded –

"MR BROWN: Well, it's yet to be [known] but I may do at the end of this inquiry; dependswhat he says about the 10 June meeting or discussion.

MR HAMMOND: So a lot hinges - his honesty, according to you, will hinge on what hesays about 10 June?---MR BROWN: Yes" (Transcript, 3152).


695

6.13.15 Counsel Assisting had not intended to call either Mr Santich or Mr Erceg to give evidence

at the public hearings. However, Counsel for Mr Grljusich indicated that if Mr Santich was not

called he would submit that Mr Santich's file note of the incident could not be relied on by the

Inquiry. As a result, both Mr Santich and Mr Erceg gave sworn testimony. After all the evidence

had been heard, however, Counsel for Mr Grljusich submitted that –

" … the inconsequential nature of the event and its irrelevance to whether there was goodgovernment in the City of Cockburn does not justify the Inquiry spending any timeinvestigating this issue" (Closing Submissions, 21).

(ii) Major issues

6.13.16 It was not in dispute that Mayor Grljusich telephoned Mr Brown on 10 June 1998 to obtain

a copy of a recommendation of the Community Development Committee that had been made the

previous evening. The recommendation related only to the proposed deed between the City and

Peremate under which the City would pay POS compensation to Mayor Grljusich and the other

owners of Lot 17. The terms of the recommendation are quoted and discussed earlier in this

Chapter (at 6.7(b)(i)).

6.13.17 It is also not in dispute that, during the course of the telephone conversation, Mr Brown

told Mayor Grljusich that he should not be given a copy of the recommendation and that Mr Brown

was protecting Mayor Grljusich by not giving him the document. Mr Brown was concerned about

Mayor Grljusich, in his capacity as an elected member of the City, being given access to information

that might be used for Mayor Grljusich's private purposes. He had warned Mayor Grljusich about

the dangers (to Mayor Grljusich himself) of this on 5 December 1997 when the Mayor had sought

details of a Council resolution also relating to Lot 17. That Council resolution had been made the

previous evening and Mr Brown gave Mayor Grljusich only an oral account of the resolution (see

above at para. 6.4.75).

6.13.18 On 10 June 1998 Mr Brown did not want to provide Mayor Grljusich with a copy of the

Committee resolution. The recommendation related only to Lot 17. Mayor Grljusich had declared a

financial interest in the matter and, in accordance with his legal obligations, he had left the meeting

during the discussion and the vote. From the time that his discussion with Mayor Grljusich began,

Mr Brown was "under the distinct impression that [Mayor Grljusich] was chasing information for

himself" (Transcript, 3135). It is improper for an elected member to obtain, in his capacity as an

elected member, information that he or she then uses for his or her personal benefit. Action of this

type can also constitute a serious criminal offence (see above at paras. 6.4.76 - 6.4.77).


696

6.13.19 The three major issues that arose in relation to Mayor Grljusich's telephone conversation

with Mr Brown were –

(a) whether Mayor Grljusich sought the document by way of a "forceful demand" and,

in particular, whether he raised his voice;

(b) whether Mayor Grljusich sought the document for his own purposes or on behalf of

a ratepayer, identified by Mayor Grljusich as Mr Ray Erceg; and

(c) whether Mr Erceg was with Mayor Grljusich when he made the telephone call.

6.13.20 On the first two of these issues there is a conflict between the evidence of Mayor Grljusich

and that of Mr Brown. Mr Erceg gave evidence corroborating Mayor Grljusich's version of events.

Mr Robert Santich gave evidence corroborating Mr Brown's version of events.

(iii) Mr Brown's evidence

6.13.21 Mr Brown was the first of the 4 witnesses to give evidence to the Inquiry on this matter.

As to the first issue, he testified that during the course of the telephone conversation he was forced

to –

" … hold the phone out from [his] ear. You couldn't hold it close to your ear because hewas quite angry and aggressive … it was a pretty one-sided conversation … " (Transcript,3011, 3130).

Mr Brown testified that, in these circumstances, he did not get the opportunity, to either ask Mayor

Grljusich why he wanted the document, or to explain to him why it was in Mayor Grljusich's own

interests not to be given the document.

6.13.22 Under cross examination from Counsel for Mr Grljusich, Mr Brown agreed that he was

"not someone who's afraid to stand up to people when they're out of order" (Transcript, 3130).

Mr Grljusich gave similar evidence about his impression of Mr Brown (Transcript, 3626). Despite

this, Mr Brown told the Inquiry that, following the telephone conversation, he was too distressed to

continue with his interview with Mr Santich.

6.13.23 Shortly after the phone call, Mr Brown provided the document to Mayor Grljusich under

cover of a letter which read –

"Further to your forceful demand of 3pm today's date to be immediately provided with acopy of the decision taken by the Community Development Committee at its meeting onthe 9th June 1998 in regard to Lot 17 Hamilton Road, under duress I provide same (seeattached)."


697

When asked why he gave the document to Mayor Grljusich, Mr Brown explained –

"MR BROWN: I came to the conclusion that in a couple of days' time he would get it,regardless; when it was sent out to council it would become available for the public. Ithought that, with his demeanour at the time, that - at the end of the day I do work for thecouncil and he is the mayor and I do have to make sure that the right thing is done as faras issues before council, and I wanted to just place it on record that I was under somepressure, for the first time in this exercise, to give him information.

COUNSEL ASSISTING: And was that the first time that you had felt underpressure?---MR BROWN: Yes; and it certainly was the first time he'd come to me as themayor, requiring this information.

COUNSEL ASSISTING: If another developer had called you in those circumstanceswould you have given them the document?---MR BROWN: No.

COUNSEL ASSISTING: But in any event the mayor would have received the documentafter a couple of days. Did you decide that discretion was the better part of valour andyou would hand the document over?---MR BROWN: Yes" (Transcript, 3011).

6.13.24 The "duress" and "pressure" to which Mr Brown referred did not relate only to Mayor

Grljusich's loud, aggressive and angry demands for the document. Mr Brown also testified that "the

words which [stood out] in [his] mind" were that Mayor Grljusich told him –

" … to go to the minister if [Mr Brown] didn't like it. He was the mayor, he was entitled tothe information" (Transcript, 3129).

6.13.25 On the day after the telephone conversation, Mr Brown received a letter from Mayor

Grljusich. It stated –

"Thank you for finally providing the information I was seeking from both you and one ofyour senior officers yesterday.

My request of you was entirely appropriate and the information that I sought was materialI was entitled to. Your behaviour, on the other hand, was not only inappropriate, it wasoffensive.

I take exception to your description of my request of you as a 'forceful demand' and thatyou gave the information to me 'under duress'. As it was information I was entitled to, Ifind your position on this inexplicable.

You [sic] letter of 10th June 1998, has now been placed on my file as an example of theprevailing atmosphere in this Council

I would be grateful if you could please take steps to remedy this situation."


698

6.13.26 As a result of receiving this letter, Mr Brown asked Mr Santich to make a file note of his

recollection of events that occurred while he was in Mr Brown's office on 10 June 1998 (Transcript,

3013). This request followed the completion of Mr Santich's performance appraisal which resumed,

and was completed, on 11 June 1998.

(iv) Mr Santich's evidence

6.13.27 Mr Santich also gave evidence at the Inquiry's public hearings. At the time that he gave

his evidence, Mr Santich was self employed. Before joining the City in June 1997, his career

included 30 years as a Westrail employee. Mr Santich worked for the City for just under two and a

half years (Transcript, 3220). He reported directly to Mr Brown and had a very good relationship

with him (Transcript, 3221). He also worked directly with Mayor Grljusich, providing administrative

support to the Sister City Committee (Transcript, 3221). Mr Santich described his relationship with

Mayor Grljusich as –

"Very good. I'd even regard him as a friend" (Transcript, 3221).

Mr Santich was on first name terms with Mayor Grljusich and spoke very favourably about his work

as Mayor and the way in which he represented the City (Transcript, 3222).

6.13.28 Mr Santich testified that on 10 June 1998 he was having his annual performance

appraisal review with Mr Brown. He was seated with Mr Brown at a circular table at the far corner

of Mr Brown's office, near the door. The meeting was interrupted by Ms Ellis who said that Mayor

Grljusich wanted to speak with Mr Brown. Mr Brown left the discussion table and went to his desk

about 5 metres away. Mr Brown picked up the handset of the telephone.

6.13.29 Mr Santich recalled that, from 5 metres away –

"I was aware that I could hear the voice on the other end of the phone coming through theear speaker and the tone of the voice was becoming angrier and becoming louder andthat is what caught my attention. Prior to that I was simply going over my appraisal notesand wasn't paying any particular attention to what Mr Brown was saying but once I couldstart hearing the voice of the person on the other end coming through the ear piece overthat distance, I realised that this was not a normal telephone conversation that the mayorand the CEO would have" (Transcript, 3223).

6.13.30 When asked about Mr Brown's responses, Mr Santich testified that –

"He was trying to explain that certain documents were not available, that John Grljusichwasn't going to get any special preference or privilege because of his position. There wasa protocol when minutes of meetings would become available and he would be entitled toreceive them at that time and not before" (Transcript, 3224).


699

Mr Santich's recollection was that the telephone call lasted about 10 minutes. At the end of the

telephone call –

"Rod said that he couldn't continue with my appraisal; we would have to do that thefollowing day. He looked in a state of shock and was fairly dumbstruck"(Transcript, 3224).

6.13.31 Mr Santich's file note of the incident, which he completed without reference to Mr Brown

(Transcript, 3224-3225, 3228), states that –

"Although I could not distinguish what the Mayor was actually saying, nor was Iconsciously listening to what was being said, I was acutely aware of the tone of theMayor's voice and of his increasing volume. He sounded very angry and very demandingin his tone, quite unlike any conversation that I have had with the Mayor.

On the contrary, I was quite surprised by your calmness and the rational explanations youwere attempting to give the Mayor in response to his situation."

6.13.32 Mr Santich's evidence was not challenged in cross-examination by Counsel for

Mr Grljusich. This is not surprising. He is no longer a City employee and was at the City for a

comparatively short period. He clearly enjoyed a good personal and professional relationship with

Mayor Grljusich and spoke very highly of the Mayor's work. There was no basis to suggest that

Mr Santich would give other than unbiased and truthful evidence. Mr Santich gave his evidence in

a mature, careful and credible way. Having regard to his background, including his relationship with

Mayor Grljusich, his demeanour and the substance of his evidence, I am satisfied that he was a

truthful and reliable witness.

(v) Mr Grljusich's evidence

6.13.33 Mr Grljusich gave evidence to the Inquiry after hearing the evidence of both Mr Brown and

Mr Santich. Mr Grljusich had a very different account of his telephone conversation with Mr Brown.

Before considering his sworn testimony, it is useful to refer to two documents authored by him

shortly after the telephone conversation.

6.13.34 The first was a letter from Mayor Grljusich to Mr Brown dated 11 June 1998, the day after

the telephone conversation. The terms of the letter were set out earlier in the discussion of

Mr Brown's evidence.


700

6.13.35 The second is a file note, headed "Action File" and dated 10 June 1998. This states –

"In the early afternoon of the 10th June, I rang Steve Ryan, Manager of Planning, andasked if I could have a copy of the decision and recommendation to Council from theCDC meeting held on the 9th June 1998. [Mr] Ryan phoned my office and indicated to methat he was unable to at this stage, as it was against protocol and that no informationcould be issued until Thursday or Friday of this week. I asked Mr Ryan to ask Mr Brownto provide me with a copy of the information I had sought.

As I had heard nothing for some time, I rang Mr Brown and through Mr Brown's secretary,I made contact with Mr Brown, who informed me that I could not have this information ashe was wanting to protect me. I have no idea as to what he wanted to protect me from.All I wanted was information about a certain matter that a committee had maderecommendation on, at an open meeting of that committee. I find Mr Brown's attitudetowards this matter to be totally unacceptable.

It is my belief that in relation to certain matters dealing with development in the Packhamarea, that our Council's administration have been making incorrect decisions and notfollowing the course that has been set by previous Council's, which is still in force.

I believe that there are officers who are simply trying to protect their own backs and areincapable of giving Councillors the necessary information they require in regard to mattersdealing with the Packham Development Area, so as those Councillors can make anappropriate and informed decision."

6.13.36 According to his file note, dated on the same day as the telephone conversation, Mayor

Grljusich –

(a) "asked Mr Ryan to ask Mr Brown to provide" the document; and

(b) rang Mr Brown himself only as he "had heard nothing for some time".

In his evidence to the Inquiry, Mr Grljusich testified that Mr Ryan suggested that Mr Grljusich should

telephone Mr Brown –

"MR GRLJUSICH: Yeah, he said to me, 'Well, you should ring up Mr Brown in relation tothat.'

COUNSEL ASSISTING: Sorry, he said?---MR GRLJUSICH: If I wanted the matter, that Ishould ring up Mr Brown.

COUNSEL ASSISTING: Right?---MR GRLJUSICH: And so I did.

COUNSEL ASSISTING: You didn't ask Mr Ryan to ring Mr Brown?---MR GRLJUSICH:No, I rang. He told me to ring up Mr Brown so I did" (Transcript, 3564).

6.13.37 Later, when Mr Grljusich was referred to his file note, he stated that his earlier evidence

was inaccurate and that he did in fact ask Mr Ryan to speak to Mr Brown. As for his evidence of

the delay, namely that he had "heard nothing for some time", Mr Grljusich suggested that a delay of

5 minutes would satisfy that description (Transcript, 3573).


701

6.13.38 The first of the two major issues on which Mayor Grljusich's evidence was in conflict with

the evidence of Mr Brown and Mr Santich concerns the manner in which he sought a copy of the

Committee resolution from Mr Brown. Mr Grljusich's testimony is that the telephone conversation

was at all times polite and amicable (Transcript, 3566). When asked whether he raised his voice,

Mr Grljusich responded –

"MR GRLJUSICH: … Well, I wasn't screaming.

COUNSEL ASSISTING: Well, did you raise your voice?---MR GRLJUSICH: I was beingrather firm with Rod as to the type of discussion - - -

COUNSEL ASSISTING: Let's not play on words. Did you raise your voice ornot?---MR GRLJUSICH: No, I was not.

COUNSEL ASSISTING: Not one bit?---MR GRLJUSICH: No.

COUNSEL ASSISTING: You didn't raise your voice?---MR GRLJUSICH: No, I didn't.

COUNSEL ASSISTING: If Mr Brown says you raised your voice,that's - - -?---MR GRLJUSICH: But I was - - -

COUNSEL ASSISTING: No; if Mr Brown says you raised your voice, that's alie?---MR GRLJUSICH: Yes.

COUNSEL ASSISTING: And if Mr Santich says - - -?---MR GRLJUSICH: Well, raisedthe level of my voice in which way? I mean - - -

COUNSEL ASSISTING: Well, no, let's not play at these words. Did you raise your voiceor not?---MR GRLJUSICH: No, I didn't; no.

COUNSEL ASSISTING: Not at all?---MR GRLJUSICH: No

…

COUNSEL ASSISTING: Mr Santich said in evidence he could hear you in an angry toneacross the room through Mr Brown's earpiece?---MR GRLJUSICH: I wasn't in the roomwhere Mr Santich was. I don't know where he was to the phone.

COUNSEL ASSISTING: I'm saying that that's Mr Santich's evidence. Is that a lie aswell?---MR GRLJUSICH: If he heard the conversation, he certainly didn't hear it from thepoint of view that there was a raised voice and therefore it could be heard from a far awaydistance.

COUNSEL ASSISTING: He said he was sitting from that chair to there away and hecould hear your tone?---MR GRLJUSICH: Well, unless Mr Brown had the speaker on.

COUNSEL ASSISTING: No, he didn't. That's not Mr Santich's evidence, so is that alie?---MR GRLJUSICH: Yes, because my voice wasn't raised" (Transcript, 3566-3567).


702

6.13.39 On this issue, the differences in the evidence could hardly be further apart. On the one

hand is Mr Grljusich's evidence that the conversation was polite and amicable and that he did not

raise his voice at all. On the other hand, Mr Santich's evidence is that, from a distance of 5 metres

away, he could hear Mayor Grljusich's voice through the ear piece of the telephone and that his

tone was angry and demanding. Both Mr Brown and Mr Santich testified that Mr Brown was so

distressed as a result of the conversation that he could not continue with the performance appraisal.

6.13.40 In his testimony, Mr Grljusich also denied telling Mr Brown that if Mr Brown didn't like his

request for the document, he could go to the Minister (Transcript, 3569).

6.13.41 As for the second and third major issues, Mr Grljusich testified at the Inquiry's public

hearings that he wanted a copy of the Committee's recommendation about the deed proposal with

Peremate not for himself but for a ratepayer, Mr Erceg, who was present with him at the time of the

telephone call with Mr Brown.

6.13.42 In his file note of this telephone conversation with Mr Brown, Mayor Grljusich noted that –

"Mr Brown … informed me that I could not have the information as he was wanting toprotect me. I have no idea as to what he wanted to protect me from."

He repeated this in his evidence to the Inquiry (Transcript, 3566).

6.13.43 In almost identical circumstances 6 months earlier, Mayor Grljusich had sought details of

a Council resolution made the previous evening. The resolution concerned POS compensation for

Lot 17. Mr Brown had warned Mr Grljusich that, in his own interests, he should not obtain access to

documents as an elected member where the documents related to a matter in which he had a

financial interest. Despite this, and despite Mayor Grljusich's own evidence that his conversation

with Mr Brown on 10 June 1998 was "focused on" the issue of him being protected (Transcript,

3569), Mayor Grljusich made no attempt to inform Mr Brown that he wanted the document not for

himself but for Mr Erceg or that Mr Erceg was with him at the time.

(vi) Mr Erceg's evidence

6.13.44 Mr Ray Erceg gave evidence at the public hearings of the Inquiry. He had earlier made a

statutory declaration dated 22 March 1999 - over 9 months after the telephone conversation on

10 June 1998. His statutory declaration was made, at Mayor Grljusich's request after Mayor

Grljusich was given a draft copy of part of the Martin/Vicary Report which was critical of the Mayor's


703

conduct during his telephone conversation with Mr Brown on 10 June 1998. Mayor Grljusich had

told Mr Martin and Mr Vicary in an interview with them on 30 October 1998 that Mr Erceg had been

in his office at the time of the telephone call.

6.13.45 The key aspects of Mr Erceg's statutory declaration are that –

(a) he met with Mayor Grljusich on 10 June 1998 (paras. 3 and 6);

(b) he asked Mayor Grljusich about the latest thinking of Councillors in relation to POS

contributions (para. 4);

(c) Mayor Grljusich sought information about a Committee decision from the previous

day (paras. 7 and 8);

(d) Mayor Grljusich sought the information as a result of Mr Erceg's request (para. 11);

(e) Mayor Grljusich had a telephone conversation with Mr Brown (para. 8); and

(f) during the course of the telephone conversation Mayor Grljusich –

(i) stated "I'm a councillor and I am entitled to the information" (para. 9(i));

(ii) stated "why are you protecting me?" (para. 9(ii)); and

(iii) did not raise his voice or act in an aggressive manner towards Mr Brown

(para. 10)).

6.13.46 Mr Erceg was a most unconvincing witness. He claimed to have a very good recollection

of the specific matters that were described in his statutory declaration but had great difficulty

recalling anything else relating to his meeting with Mayor Grljusich or the telephone conversation

between Mayor Grljusich and Mr Brown. The initial explanation that he gave as to why he knew

that it was on 10 June 1998 that he met with Mayor Grljusich was shown to be implausible

(Transcript, 3668-3679). I am satisfied that Mr Erceg had no independent recollection of when he

met with Mayor Grljusich.

6.13.47 After a short adjournment, Mr Erceg gave most of his evidence, particularly under

questioning by Counsel for Mayor Grljusich, without any difficulty. On a few occasions, however,

when pressed on a point to which he did not appear to have a ready answer, Mr Erceg claimed that

he was being affected by some common pain killers supplied to him at his request by Inquiry staff

during the break (Transcript, 3686, 3695). This reinforced the impression that Mr Erceg had

prepared his responses to cover the narrow range of matters dealt with in his statutory declaration

and was most reluctant to respond to matters outside that range.


704

6.13.48 Mr Erceg testified that at his meeting with Mayor Grljusich in the mayoral parlour, Mayor

Grljusich did not tell him what the Committee decision was "because he couldn't get the

information" (Transcript, 3683). However, the minutes of the Committee meeting record that Mayor

Grljusich returned to the meeting in time to hear the Committee's recommendation relating to the

deed proposal read out. Mr Grljusich's own evidence was that "he knew at the time [of his

discussion with Mr Erceg] what the [recommendation] was" (Transcript, 3575). He simply wanted to

know more about the details.

6.13.49 The details of the Committee's recommendation were of no assistance or relevance to

Mr Erceg. There was no suggestion that Mr Erceg would be required to contribute more than the

standard amount of POS. Thus, the question of POS compensation, which is what the Committee's

recommendation was all about, was of no relevance to Mr Erceg. Mr Erceg confirmed that he did

not discuss with Mayor Grljusich the City paying him for POS (Transcript, 3689, 3703). The

Committee's recommendation did not touch on any of the matters concerning POS which either

Mr Erceg or Mayor Grljusich claimed to have discussed.

6.13.50 Mr Erceg gave evidence that Mayor Grljusich came to see him a couple of days after this

meeting. Mayor Grljusich did not bring with him a copy of the Committee's recommendation. The

information which Mayor Grljusich claimed to have been so important to Mr Erceg on 10 June 1998

was of no interest to Mr Erceg at their meeting a couple of days later (Transcript, 3678, 3688).

6.13.51 Mr Erceg also testified that Mayor Grljusich was not angry or upset, and did not speak

loudly, during his telephone conversation with Mr Brown (Transcript, 3691).

6.13.52 Mr Erceg gave evidence as to how his statutory declaration was prepared. His evidence

was that –

(a) Mayor Grljusich came to see him during the early part of 1999 and asked him to

prepare a statutory declaration (Transcript, 3668-3669);

(b) Mayor Grljusich asked Mr Erceg whether he remembered coming to Mayor

Grljusich's office and talking about POS (Transcript, 3669-3670);

(c) Mayor Grljusich did not tell Mr Erceg what he [Mayor Grljusich] remembered of the

meeting (Transcript, 3670-3671);


705

(d) Mr Erceg and Mayor Grljusich travelled to Mayor Grljusich's solicitors' office

together in the one car but did not discuss the meeting in June 1998

(Transcript, 3671-3672); and

(e) Mr Erceg prepared the statutory declaration in a room with Mayor Grljusich's

solicitor but not Mayor Grljusich (Transcript, 3689).

6.13.53 Mr Erceg's evidence that the two of them drove to the solicitors' office together and did

not discuss any of the background to which the statutory declaration was to relate - such as the

proposed adverse finding against Mayor Grljusich in the Martin/Vicary Report or any of the details

of their meeting on 10 June 1998 or the telephone discussion between Mayor Grljusich and

Mr Brown - simply defies belief. Mr Erceg's evidence about whether or not Mayor Grljusich was in

the room when the statutory declaration was prepared is inconsistent with the statements made by

Mr Grljusich's Counsel (Transcript, 3673, 3675).

(vii) Assessment

6.13.54 As to the second and third major issues identified earlier, if Mr Erceg had been with Mayor

Grljusich during the telephone conversation with Mr Brown on 10 June 1998 and if the Committee's

recommendation had been required for Mr Erceg's purposes rather than Mayor Grljusich's

purposes, then it would have been reasonable to expect that Mayor Grljusich would have told

Mr Brown. This is particularly the case given that –

(a) the telephone conversation "focused on" the issue of Mayor Grljusich being

protected; and

(b) Mr Brown had previously warned Mayor Grljusich, in very similar circumstances,

about the dangers Mayor Grljusich faced in obtaining and using for his private

purposes a Council resolution relating to Lot 17.

6.13.55 Mayor Grljusich himself agreed in his evidence with the proposition that –

"It's a bizarre situation because you want the information for a ratepayer and he's talkingabout protecting you, and if you had said, 'Look, I don't want it for me. I want it for aratepayer,' it would have all been clear … " (Transcript, 3569).

6.13.56 If Mayor Grljusich had wanted a copy of the Committee's recommendation for Mr Erceg

and if Mr Erceg had been in his office at the time, one would have expected Mayor Grljusich to

inform Mr Brown of this during their telephone conversation. There were at least three other


706

occasions when Mr Grljusich would have been expected to refer to Mr Erceg, but he failed to do so.

These occasions were –

(a) when speaking to Mr Ryan, in their two telephone conversations on 10 June 1998,

despite later claiming that he wanted the information urgently for Mr Erceg;

(b) in his letter to Mr Brown on the following day, 11 June 1998, despite claiming at two

points in the letter that he "was entitled to" the information; and

(c) in his file note dated 10 June 1998 when he discussed in some detail the

circumstances of his request but omitted any reference to Mr Erceg.

6.13.57 I am satisfied that Mayor Grljusich sought a copy of the Committee's recommendation for

his own purposes, not for those of Mr Erceg.

6.13.58 In addition, the evidence strongly supports the conclusions that –

(a) Mr Erceg was not in Mayor Grljusich's room at the time when the call was made;

(b) Mayor Grljusich's evidence about Mr Erceg's presence was fabricated by him after

he was provided with a copy of the proposed adverse findings of the Martin/Vicary

report; and

(c) Mayor Grljusich enlisted Mr Erceg to give false evidence, by way of his statutory

declaration, to support his own false account of the conversation.

For the purposes of this Report, it is unnecessary to make formal findings to this effect.

6.13.59 As to the first issue, whether Mayor Grljusich sought a copy of the Committee

recommendation by way of a "forceful demand" and whether he raised his voice, I accept the

evidence of Mr Brown and Mr Santich. In giving evidence on this issue, Mayor Grljusich did not

claim to have any difficulty with his recollection. It is not evidence about which he could be

mistaken. Instead, he accused Mr Brown and, after some hesitation, Mr Santich of lying

(Transcript, 3567).

6.13.60 As indicated earlier, Mr Brown told the Inquiry, in response to a question from Counsel for

Mayor Grljusich, that his assessment of Mayor Grljusich's honesty would depend on the evidence of

Mayor Grljusich in respect of this telephone conversation. Mayor Grljusich had a choice. He had

plenty of time to consider the matter carefully. Knowing the evidence given against him by

Mr Brown and Mr Santich, he could have admitted to raising his voice and demanding the

document. Instead he might have admitted that there was a possibility that he did so. Compared


707

with many of his other actions reviewed in this Inquiry, the fact that he raised his voice and

demanded a document is unlikely to have resulted in much additional consternation. However, in a

deliberate and calculated attempt to portray himself in a better light, he chose to insist that he did

not raise his voice and that the conversation was polite and amicable. As a result, he not only lied

but, for his own perceived advantage, was prepared to allege that both Mr Brown and Mr Santich

had lied on oath. As if this was not enough, Mayor Grljusich alleged that Mr Brown's evidence

about the telephone conversation was "part of an attempt to set [him] up" (Transcript, 3653).

6.13.61 Far from being the trivial matter that Counsel for Mr Grljusich suggested that it was,

Mr Grljusich's evidence on this issue is of great significance. It demonstrates, not for the first time,

that even when only a relatively small personal advantage is at stake, the City's Mayor was

prepared –

(a) to lie under oath;

(b) to accuse the City's CEO and a former City employee of lying under oath; and

(c) to allege that the City's CEO fabricated evidence in an attempt to set up the City's

Mayor.

6.13.62 This evidence reinforces the general conclusion that Mr Grljusich was not a reliable or

truthful witness. Throughout this Report, I have not accepted his evidence where it conflicts with

another witness' evidence or is inconsistent with a natural inference that may be drawn from other

evidence.

Findings

F53. I find that, in respect of the telephone conversation between Mayor Grljusich and

Mr Brown on 10 June 1998 –

(a) Mayor Grljusich demanded a copy of the Committee's recommendation relating

to the deed proposal between Peremate and the City;

(b) Mayor Grljusich's demand was expressed in a loud, aggressive and angry

manner;

(c) Mayor Grljusich's demand was made knowing that, as a result of his personal

interest in the matter dealt with by the Committee, he was not entitled to obtain

access to the document;

(d) Mayor Grljusich sought the document for his own purposes - in particular, for the

purpose of pursuing his claim for POS compensation against the City;


708

(e) Mr Brown supplied the document to Mayor Grljusich under duress;

(f) the document would not have been given to Mayor Grljusich if he had not been

an elected member of the City;

(g) Mayor Grljusich's account of the events was deliberately false;

(h) Mayor Grljusich's claims that both Mr Brown and Mr Santich gave false evidence

and that Mr Brown's evidence was part of an attempt to "set him up" are

baseless; and

(i) Mayor Grljusich's actions during the telephone conversation with Mr Brown, and

his subsequent claims against Mr Brown and Mr Santich, are a gross departure

from the standards of conduct expected of a person occupying the position of an

elected member and, in all the circumstances, constitute improper conduct.

6.14 Mayor Grljusich's allegations of a "set up"

(a) Introduction

6.14.1 On many occasions during his evidence to the Inquiry, Mr Grljusich alleged that he had

been "set up" by the City's employees, particularly Mr Hiller and Mr Brown. This set up allegation

was used to counter evidence by Mr Hiller and Mr Brown, both in the form of their file notes and

their sworn testimony about a number of events that occurred during 1997 and 1998.

6.14.2 It is obviously a most serious allegation for the Mayor of a City to allege that, over a

lengthy period, the City's CEO and one of its Directors had fabricated evidence for the purpose of

causing harm to him.

(b) Set up allegations

(i) Meeting with Mr Hiller on 8 August 1997

6.14.3 The set up allegation was Mr Grljusich's response to the file notes prepared by Mr Hiller,

and Mr Hiller's evidence to the Inquiry, in respect of his meeting with the Mayor on 8 August 1997

(see above at para. 6.3.21). Mr Grljusich claimed to have an actual recollection of that meeting

which was substantially different to Mr Hiller's file notes and evidence. As a result, Mr Grljusich

considered that Mr Hiller's file notes of that meeting were fabricated and that Mr Hiller's evidence on


709

oath was also fabricated (Transcript, 3406-3407). When asked why Mr Hiller would have fabricated

his notes and evidence, Mr Grljusich responded –

"MR GRLJUSICH: … since this inquiry - since I've looked at the whole of the file notes, itwas obvious that I was being set up.

COUNSEL ASSISTING: Set up by whom?---MR GRLJUSICH: By officers of the council.

COUNSEL ASSISTING: Why?---MR GRLJUSICH: Why? Because I think overall thatthere was a problem that emerged in relation to Packham, in relation to public open spacefunds, and I believe that the officers have taken the view to justify their decision as towhat they had done" (Transcript, 3407).

(ii) File note by Ms Anthony of 9 September 1997

6.14.4 When referred to the file notes made by Ms Anthony, another City planner, about an

incident that occurred on 9 September 1997 (see above at 6.2(f)) Mr Grljusich agreed with his

Counsel's suggestion that it was file notes of this sort "that made [him] feel as though [he was]

being set up" (Transcript, 3635).

(iii) Letter to Peremate on 21 October 1997

6.14.5 On 21 October 1997 the City wrote to Peremate confirming that the owners of Lot 17 had

no entitlement to POS compensation from the City and that if they were unhappy with Condition 13

they should take up the matter with the Planning Commission and not the City (see above at

para 6.4.42). Mayor Grljusich did not accept that position. At the Inquiry's public hearings, the

following exchange took place between Counsel Assisting and Mr Grljusich in relation to this letter –

"COUNSEL ASSISTING: Did you think the officers were acting in bad faith when theykept asserting this position?---MR GRLJUSICH: It may have been a view that I'd come toat that time, but I can't recall.

COUNSEL ASSISTING: But you did come to that view at somestage?---MR GRLJUSICH: I did, yeah.

COUNSEL ASSISTING: Could it have been as early as October1997?---MR GRLJUSICH: It may not have been, but it was certainly - did after 98.

…

COUNSEL ASSISTING: You may have had that view?---MR GRLJUSICH: I may havehad tinglings of that view but I can't say straightforward right now unless I'm prompted, butI can't say straightforward right now that I had an absolute but I think - - -

COUNSEL ASSISTING: You had the start of a feeling then?---MR GRLJUSICH: Yeah,well, I had a start of a feeling for that little while there and it just kept - - -

COUNSEL ASSISTING: Growing?---MR GRLJUSICH: The feeling just kept growing.


710

COUNSEL ASSISTING: Because you thought the matter was crystalclear?---MR GRLJUSICH: Yes.

COUNSEL ASSISTING: And the officers were not agreeing with you?---MR GRLJUSICH:And the documentation that I was seeing didn't seem to portray a stand as to what Ibelieve was the situation.

…

COUNSEL ASSISTING: So you're starting to get the feeling that the officers aren't actingin good faith because you can't get them to agree with your position which is crystalclear?---MR GRLJUSICH: Yes.

COUNSEL ASSISTING: Did you have thoughts about what it was that was motivating theofficers?---MR GRLJUSICH: I thought that there was a problem but what the motivationwas, I'm not sure.

COUNSEL ASSISTING: You didn't give it any thought?---MR GRLJUSICH: Motivation -perhaps not at that point.

COUNSEL ASSISTING: Did you think it was them acting in bad faith just where you wereconcerned?---MR GRLJUSICH: I think I formed that opinion later but then there was theearly tinglings of matters" (Transcript, 3472-3473).

(iv) Peremate's letter to the City on 31 October 1997

6.14.6 Peremate wrote to the City on 31 October 1997 repeating the views of the Lot 17 owners

that the 1989 Council resolution gave them an entitlement to POS compensation (see above

at para. 6.4.44). Mayor Grljusich could not persuade the City's planners to construe the resolution

as he had. As a result, he considered that they were acting in bad faith –

"COUNSEL ASSISTING: … so why was it that there was bad faith on the part of theofficers when they didn't read it the same way as you did?---MR GRLJUSICH: That's myview.

COUNSEL ASSISTING: But they're words that we could disagree about, aren't they -honestly, reasonably disagree about?---MR GRLJUSICH: Well, we could disagree withthem, yes.

COUNSEL ASSISTING: So why weren't the officers acting honestly and reasonablywhen they didn't accept your construction of the words?---MR GRLJUSICH: I believe thatthat particular motion and resolution of council was affecting the direction in which thecouncil would act and I think that what the outcome of these matters were was somethingtotally different in relation to an agreement between administration and Urban Focus"(Transcript, 3476).

The mere fact that the City's employees held a different view to Mayor Grljusich was sufficient to

"started the alarm bells ringing" that the employees were not acting in good faith (Transcript, 3477).


711

(v) Telephone conversation with Mr Hiller on 22 December 1997

6.14.7 Mr Hiller prepared two file notes of a lengthy telephone conversation with Mayor Grljusich

on 22 December 1997. He also gave evidence about the conversation (see above at 6.4(e)(i) and

6.4(e)(iii)). Mayor Grljusich denied ever having had this conversation with Mr Hiller (Transcript,

3491-3492). He agreed with the proposition put to him by Counsel Assisting, that it was possible

that Mr Hiller recorded the conversation as having taken place with Mayor Grljusich, either out of a

sense of malice or that it was just a mistake. Mr Grljusich did not resile from either proposition

(Transcript, 3495).

(vi) Family meeting with Mr Hiller on 6 January 1998

6.14.8 This was the meeting held in the mayoral parlour from about 8.45pm on 6 January 1998

when Mayor Grljusich ordered Mr Hiller to attend with the words "Steve, in my office now" (see

above at 6.4(f)). Mr Grljusich testified that significant parts of the file note made by Mr Hiller were

not true (Transcript, 3508 and 3510). Mr Grljusich agreed with Counsel Assisting that Mr Hiller had

made up those aspects of the file note for the purpose of "trying to set [him] up" (Transcript, 3510).

When asked why Mr Hiller would want to do that, Mr Grljusich responded –

"As I said, I might have mentioned it before in this line of inquiry that I think the officerswere wanting to justify their position overall and I think that became a hindrance in thecouncil being in the position to resolve the matter" (Transcript, 3510).

(vii) Council resolution of 20 January 1998

6.14.9 On 20 January 1998 the Council resolved to recommend to the Planning Commission that

Condition 13 be modified to enable the owners of Lot 17 to be paid compensation for land given up

in excess of 16% (see above at 6.5(e)). Mayor Grljusich was disappointed that Mr Hiller's report to

the Council had recommended compensation for land given up in excess of 16%, rather than 10%.

He believed that Mr Hiller had told him that it was to be 10% at the meeting on 6 January 1998 and

then changed it when preparing the Officers' report. This confirmed his feelings that Mr Hiller was

acting in bad faith –

"COUNSEL ASSISTING: In January of 1998 those feelings, those tinglings, about theofficers acting in bad faith - they were growing, weren't they?---MR GRLJUSICH: In?

COUNSEL ASSISTING: January 1998. You started to have them in September orOctober. They were growing?---MR GRLJUSICH: Well, you know, if you're talking alsoabout that decision on the 20th, there was a chronology that came out to the council inrelation to what they requested in relation to the public open space and I guess readingthe Urban Focus letter in that chronology certainly sounded - those alarm bells were reallytingling along, from my view, as to what was happening between administration and


712

Urban Focus where I didn't believe that - well, I know that we never had any input aselected members from what they were saying" (Transcript, 3518).

Mr Grljusich confirmed his view that at that time the City's employees were not dealing with him in

good faith (Transcript, 3523).

(viii) Cr Elpitelli's request on 15 May 1998

6.14.10 Late in April 1998 Mayor Grljusich had gone to considerable trouble to lobby a number of

the City's elected members in respect of the POS compensation in issue. One of these was

Cr Elpitelli. Cr Elpitelli sought to have the Lot 17 issue brought before the next Council meeting.

Mr Brown responded to this request by sending a letter to all elected members in which he repeated

the advice that the City had no role to play in the matter and concluded that there was "no reason

for the administration to put this matter back to council" (see above at para. 6.6.17). Mr Grljusich's

view of Mr Brown's response to the request by Cr Elpitelli is evident from the following exchange

with Counsel Assisting –

"COUNSEL ASSISTING: Did you think Mr Brown was trying to stifle the debate or stiflethat issue being ventilated?---MR GRLJUSICH: I don't think I thought about it in thoseterms but I thought that - - -

COUNSEL ASSISTING: Well, it's just the meeting at the end of April - you're feeling thatthe officers aren't dealing with you properly and in good faith. Isn't this another exampleof it?---MR GRLJUSICH: Well, I had the view that I couldn't see why he couldn't adhereto Councillor Elpitelli's request I thought that was a bit strange and if you could say spiteful… " (Transcript, 3547).

(ix) Peremate letter to the City on 2 June 1998

6.14.11 On 2 June 1998 Peremate wrote to the City stating that Mr Ryan's earlier response was

"inappropriate and totally unsatisfactory". It concluded by threatening legal action against the City

(see above 6.6(e)). In relation to that letter, Mr Grljusich was asked by Counsel Assisting –

"COUNSEL ASSISTING: … you don't think they're dealing with you in goodfaith?---MR GRLJUSICH: That's right … "(Transcript, 3557).

"COUNSEL ASSISTING: Now, you had started to make some file notes byJune?---MR GRLJUSICH: Mm.

…

COUNSEL ASSISTING: You have got a concern that the officers may be trying to setyou up?---MR GRLJUSICH: Yes. I'm going in that direction.

…

COUNSEL ASSISTING: Yes, but your concerns were well developed by May of [sic]June 1998?---MR GRLJUSICH: Yes. I certainly had very strong concerns both - - -


713

COUNSEL ASSISTING: That the officers weren't acting in goodfaith?---MR GRLJUSICH: Both as a director of Peremate and also as the mayor.

COUNSEL ASSISTING: And that's why you have started to keep some file notes [which]… were designed to put down your version of events?---MR GRLJUSICH: Just to recordmeetings that I had in my office.

COUNSEL ASSISTING: Because now you're starting to be concerned that you have gotto protect your position?---MR GRLJUSICH: Yes" (Transcript, 3560).

(x) Telephone conversation with Mr Brown on 10 June 1998

6.14.12 Mr Grljusich did not agree with Mr Brown's version of their telephone conversation on

10 June 1998. As indicated earlier (at 6.13(b)(vii)), having first heard the evidence of Mr Brown and

Mr Santich and being fully aware of the significance of his own evidence, Mr Grljusich claimed that

Mr Brown and Mr Santich had lied under oath and that Mr Brown's evidence was "part of an attempt

to set [him] up" (Transcript, 3653). Mr Grljusich did not suggest how Mr Santich, who was no longer

employed at the City and was someone who regarded the Mayor as a friend, might have been

involved in this set up.

(xi) Deed with Peremate

6.14.13 When Mayor Grljusich returned from his trip to Croatia in late July 1998 and found out that

the Deed had not been effected and that McLeod & Co had suggested that an amendment to

Condition 13 was unnecessary, Mayor Grljusich believed that Mr Hiller had deliberately "scuttled the

deed" (Transcript, 3583).

6.14.14 Even when it was explained to Mr Grljusich at the public hearings that the Deed did not

fail because of the actions of the City's employees but rather because the Planning Commission did

not agree to it, Mr Grljusich persisted with his view –

"COUNSEL ASSISTING: But are you suggesting that somehow Mr Hiller scuttled thedeed?---MR GRLJUSICH: Yes, I do.

COUNSEL ASSISTING: That's what you're suggesting?---MR GRLJUSICH: That's whatI'm suggesting and nothing has changed my mind since" (Transcript, 3583).

(c) Assessment

6.14.15 There is no rational basis for any of the bad faith or "set up" allegations made by Mayor

Grljusich. Insofar as they relate to bad faith, the allegations appear to have been made as a result

of Mr Grljusich's inability to accept that, in resisting his claims and demands for POS compensation,


714

the City's employees were acting in the interests of the City - which in significant respects were in

direct conflict with the interests of Mayor Grljusich and the other owners of Lot 17. Mr Grljusich's

claims of a set up were no more than a deliberate and calculated attempt to counter evidence given

by the City's employees which was not to his liking.

6.14.16 From a broader prospective, Mayor Grljusich's readiness to impugn the honesty and

integrity of others, even those such as Mr Santich who spoke so highly of him, demonstrates the

lengths to which he will go to achieve his personal objectives. The events considered in this

Chapter are replete with similar illustrations of the same approach. In his pursuit of a relatively

small financial gain, Mayor Grljusich waged a campaign lasting more than 12 months which

resulted in enormous costs for the City, its elected members and particularly its employees. None

of this appeared to worry Mayor Grljusich. Certainly it did not deter him (as will be seen in

Chapter 7) from continuing the campaign for another 8 months until the Council was suspended in

April 1999. Yet, even with the benefit of hindsight, Mayor Grljusich testified that he would do the

same things again (Transcript, 3445). This brings into serious question his suitability for public

office and particularly his suitability as Mayor, or an elected member of the City.

Findings

F54. I find that, in respect of Mr Grljusich's allegations that the City's senior employees -

particularly Mr Brown and Mr Hiller - had fabricated evidence in attempt to "set him up"

and had acted in bad faith –

(a) the allegations are baseless;

(b) the set up allegations were part of a deliberate and calculated attempt by Mr

Grljusich to counter evidence given by the City's employees which was not to his

liking;

(c) the bad faith allegations resulted from Mayor Grljusich's failure to accept - or, it

appears, even to recognise - that, in resisting his claims and demands for POS

compensation, the City's employees were acting in the interests of the City

rather than in the interests of himself and the other owners of Lot 17; and

(d) Mr Grljusich's allegations of a set up and bad faith by the City's senior

employees are a gross departure from the standards of conduct expected of a

person occupying the position of an elected member and Mayor and, in all the

circumstances, constitute improper conduct.


715

Guide to Key Persons and Entities


ANSELL, Campbell Court appointed trustee for the estate of Mate Grljusichfrom January 1996.

ANTHONY, Sue City employee in the Planning Department.

BATTALIS, Terry Elected member of the City from May 1989 until September1998. Member of the Planning, Building and HealthCommittee from May 1993 until February 1997. DeputyMayor from May 1997 to September 1998.

BROWN, Rod Chief Executive Officer of the City. Mr Brown has beenCEO (formerly Town Clerk/City Manager) for the last7 years and served for 19 years before that as DeputyTown Clerk. He has been with the City for 31 years.

COCKBURN WATERS PTY LTD A landowner in the Packham Area. Cockburn Waters PtyLtd undertook the subdivision of its land, independently andoutside the Private Owners' Arrangement.

COLE, Duane Planner employed by Richard Pawluk & Associates (nowMasterplan Consultants WA Pty Ltd) from 1995 to date.Was employed by the City for 6 months in the late 1980's.

COMMUNITY DEVELOPMENTCOMMITTEE

The City's standing committee responsible for planningmatters such as rezoning and subdivision applications, aswell as for awarding and extending cleaning contracts.Inaugurated in March 1997 in place of the Planning,Building and Health Committee and the Works and ParksCommittee.

DEPARTMENT OF LOCALGOVERNMENT

The State government department which administers theLocal Government Act 1995. Responsible for developmentof a framework for the administration and financialmanagement of local governments.

DUCASSE, Chris Engineer employed by Halpern Glick Maunsell theconsulting engineers on the subdivision of Lot 17.


716


ELLIS, Sue Secretary to the City's Chief Executive Officer.

ELPITELLI, Dino Elected member of the City from May 1993 until theCouncil's suspension. Member of the Planning, Building andHealth Committee from May 1993 until February 1997 andthen a member of the Community Development Committeefrom March 1997 until the Council's suspension.

ERCEG, Ray Market gardener in the Spearwood area.

EVANS, Colin Managing Director of Urban Focus.

FEATHERBY, Glenn Court appointed trustee from January 1996for the estate ofMate Grljusich.

GAVA, Frances Daughter of Mate and Pera Grljusich. Residuarybeneficiary under the will of Mate Grljusich. Shareholderand Secretary of Peremate Holdings Pty Ltd. Part owner ofLot 17 Hamilton Road, Spearwood from 7 November 1996to 27 July 1998.

GAVA, Remo Husband of Frances Gava.

GIANOLI, Joe Elected member of the City from May 1993 until theCouncil's suspension. Regularly declared a financialinterest in all matters which came before Council relating tothe Packham Area as he was the selling agent for somePackham Area landowners.

GRLJUSICH, Duje Toma (Tom) Son of Mate and Pera Grljusich. Executor and trusteeunder the will of Mate Grljusich. As trustee was registeredproprietor of Lot 17 with George Grljusich from12 September 1985 to 16 July 1996.

GRLJUSICH, George Son of Mate and Pera Grljusich. Executor and trusteeunder the will of Mate Grljusich. As trustee was registeredproprietor of Lot 17 with Tom Grljusich from 12 September1985 to 16 July 1996.


717


GRLJUSICH, John Elected member of the City from 1983 until the Council wassuspended. Mr Grljusich was Deputy Mayor between May1993 and May 1997 and reigned as Mayor from May 1997until the Council was suspended. He was a member of theCommittee responsible for planning matters and chair ofthat Committee from May 1993 until February 1997,continuing as a member thereafter. He was part owner ofLot 17 Hamilton Road, Spearwood from 7 November 1996to 27 July 1998. He was Chairman of Directors and ashareholder of Peremate Holdings Pty Ltd.

GRLJUSICH, Sheila Wife of Donald Grljusich. Was entitled to her husband'sshare in the estate of Mate Grljusich on the death ofDonald. Shareholder and director of Peremate HoldingsPty Ltd. Part owner of Lot 17 Hamilton Road, Spearwoodfrom 7 November 1996 to 27 July 1998.

HALPERN GLICK MAUNSELL Engineers retained by the owners of Lot 17 for thesubdivision of the land.

HAMILTON, Kent Engineer employed by Urban Focus on the Packham Areadevelopment.

HILLER, Steve The City's Director of Planning and Development from 1984to 1990 and again from April 1996.

HOWLETT, Logan Elected member of the City from May 1990 until theCouncil's suspension. Member of the Planning, Buildingand Health Committee from May 1993 until February 1997

HUMPHREYS, Laurie Elected member of the City from 1976 until May 1992 andfrom May 1997 until the Council's suspension.

HUNT, Sarah Elected member of the City from May 1997 until theCouncil's suspension.

IGGLESDEN, David City employee in the Planning Department.

JOHN GIUDICE & ASSOCIATES Licensed land and engineering surveyors retained by UrbanFocus and later by the owners of Lot 17 Hamilton Road,Spearwood.


718


KOHN, Roger Senior Project Planner at the Ministry for Planning.

LAMBASA, Zdravko and Doreen Owners of land Lot 5 Hamilton Road, Spearwood (in thePackham Area). Mr and Mrs Lambasa chose not toparticipate in the Private Owners' Arrangement but toundertake the subdivision of their land privately.

LEE, Stephen Elected member of the City from May 1991 until the Councilwas suspended. Mr Lee was a member of the CommunityDevelopment Committee from March 1997 until theCouncil's suspension.

LEES, Ray Elected member of the City from 1973 until the Council'ssuspension. Deputy Mayor from May 1988 to May 1989,May 1991 to May 1992. Mayor from May 1993 toMay 1997.

LLOYD, Ann Daughter of Mate and Pera Grljusich. Residuarybeneficiary under the will of Mate Grljusich. Shareholderand director of Peremate Holdings Pty Ltd. Part owner ofLot 17 Hamilton Road, Spearwood from 7 November 1996to 27 July 1998.

LLOYD, Paul Husband of Ann Lloyd.

M. PECOTIC & ASSOCIATES The accounting firm of which Mr Pecotic is the principalpartner.

McLEOD, Denis The senior partner of McLeod & Co who principally providedadvice to the City.

McLEOD & Co The City's solicitor.

McNAIR, John Elected member of the City from May 1989 until theCouncil's suspension. Mr McNair was a member of theCommunity Development Committee from March 1997 untilthe Council's suspension.

MARTIN, Gary An authorised person under Division 1 of Part 8 of the LocalGovernment Act 1995 to conduct an inquiry into the City.Co-investigator and author of the Martin/Vicary Report intothe City dated 29 March 1999.


719


MINISTER OF LOCALGOVERNMENT

Minister responsible for the operation of the LocalGovernment Act 1995. Has the power to decide tocommence investigations into local government activity.

MINISTER FOR PLANNING Minister responsible for the operation of the Town Planningand Development Act 1928. Has the power to hear appealsfrom decisions of the Planning Commission and localgovernments.

MINISTRY FOR PLANNING The government agency which administers the TownPlanning and Development Act 1928. Provides advice andsupport to the Minister for Planning and the PlanningCommission.

OMBUDSMAN Parliamentary Commissioner for AdministrativeInvestigations. Investigates and makes recommendationsto public agencies, including local government, afterinvestigating complaints about administrative matters.Mr R Eadie was Ombudsman from 10 June 1991 until22 November 1996. Mr M Allen has been Ombudsmansince 25 November 1996.

OSTOJICH, Joe Elected member of the City from May 1992 until the Councilwas suspended. Deputy Mayor from September 1998 untilthe Council's suspension.

PAYNE, Michele A partner at McLeod & Co until June 1999.

PECOTIC, Marinko Elected member of the City from May 1993 until theCouncil's suspension. Member of the Planning, Buildingand Health Committee from May 1993 until March 1997.Mr Pecotic represented the Lot 17 owners from late 1997until early in 1999 in some of their dealings with the City.

PEREMATE HOLDINGS PTY LTD The private company incorporated on 18 December 1996 ofwhich John Grljusich, Frances Gava, Ann Lloyd and SheilaGrljusich were the directors and shareholders. It was set upfor the purpose of subdividing Lot 17 Hamilton Road,Spearwood. The company became owner of Lot 17 on27 July 1998.


720


PLANNING AND BUILDINGCOMMITTEE

The City's standing committee responsible for planningrecommendations until September 1993, when thePlanning, Building and Health Committee came intoexistence.

PLANNING BUILDING AND HEALTHCOMMITTEE

The City's standing committee responsible for planningmatters such as rezoning and subdivision applications untilFebruary 1997. Became the Community DevelopmentCommittee from March 1997.

PRATTLEY, Gary Chief Executive Officer of the Ministry for Planning.

RICHARD PAWLUK & ASSOCIATESPTY LTD

Town Planning Consultants retained by the owners ofLot 17 Hamilton Road, Spearwood. Now MasterplanConsultants WA Pty Ltd.

RYAN, Steve The City's Manager of Planning (now known asDevelopment Services).

SANTICH, Robert The City's Administrative Support Officer from June 1997 tothe end of 1999.

STRATEGIC AND POLICYCOMMITTEE

The City's standing committee responsible for finance,tenders, strategy and major initiatives since its inaugurationin March 1997.

THUYS, Rosemary City employee in the Planning Department.

TOWN PLANNING APPEALTRIBUNAL

A statutory tribunal with jurisdiction to hear appeals againstdecisions made by local governments and the PlanningCommission, relating to planning matters.

URBAN FOCUS Trading name for Coburg Nominees Pty Ltd (previouslyCMS Urban Consultants). Responsible for bringingtogether the landowners in the Packham Area for thepurpose of developing the land pursuant to a privatearrangement with each landowner. Managed the rezoningand subdivision of much of the Packham Area.

VALUER GENERAL The Valuer General is an independent valuation serviceorganisation of the State government providing governmentwith a valuation service for the purchase, sale or lease ofland and property.


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VICARY, Laurie An authorised person under Division 1 of Part 8 of the LocalGovernment Act 1995 to conduct an inquiry into the City.Co-investigator and author of the Martin/Vicary Report intothe City dated 29 March 1999.

WATERS, Nola Elected member of the City between May 1979 andMay 1990. Mrs Waters was elected to the City again inMay 1992 and served until the Council's suspension. Shewas a member of the Community Development Committeefrom March 1997 until the Council was suspended.

WATSONS The name by which the Watsonia smallgoods factory inSpearwood was known.

WHEATLEY, Brian Elected member of the City from May 1994 until Council'ssuspension. Mr Wheatley was a member of theAdministration, Health and Community Service Committeebetween May 1994 and May 1995 and the CommunityDevelopment Committee from March 1997 until the Councilwas suspended. Also a lawyer who acted on behalf of JohnGrljusich, Frances Gava, Ann Lloyd and Sheila Grljusich formany years.

WOOD & GRIEVE Engineers used by Urban Focus in the subdivision of thePackham Area.


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Untitled-5 [] · 2015. 3. 26. · Title: Untitled-5 Author: BSmith Created Date: 10/6/2000 12:25:06 PM