Section 139 of Division 5 requires Councils to develop a Councillor Code of Conduct (Code) in accordance with the relevant Local Government (Governance and Integrity) Regulations 2020 (Regulations).

Section 139(2) of Division 5 provides that the purpose of the Code is to include the standards of conduct expected to be observed by Councillor in the course of performing their duties and functions as Councillors under the LG Act, including: prohibiting discrimination; harassment (including sexual harassment); and vilification.

The Code must include the standards of conduct prescribed by the Regulation 12 and contained at Schedule 1 of the Regulations. Those standards include treatment of others, performing the role of Councillor, compliance with good governance measures, not to discredit or mislead Council or the public and standards are not to limit robust political debate.

A Code may also include other matters the Council considers appropriate with regard to Councillor conduct.

A breach of the Code can lead to an allegation of misconduct against a Councillor which might be referred for internal arbitration.

What type of misconduct allegations can be referred to internal arbitration?

Under Division 5, a complaint of misconduct can be referred to internal arbitration.

‘Misconduct’ is defined under the LG Act as any breach by a Councillor of the standards.

Section 141(1) establishes that the internal arbitration process applies to any breach of the standards of Councillor conduct.

The process for making applications for internal arbitration and the assessment of same and the limited sanctions available to the arbiter upon a finding of misconduct suggests that the internal arbitration process is designed to consider and determine only minor allegations of misconduct.

This view is supported in Lew v Harvey & Anor [2023] VSC 477 (Lew) wherein Justice Tsalamandris considered the nature of the misconduct which falls within section 141 of the LG.  His Honour concluded, at paragraph 124, that the types of complaints referred to internal arbitration under Division 5 of the LG Act involve the lowest level of alleged misconduct against a Councillor.

Who can refer alleged misconduct to internal arbitration?

Section 143 establishes that an arbiter can hear an application alleging misconduct by a Councillor and that such an application may be made by the Council (following a resolution) or a Councillor or group of Councillors.

Any application must be made within 3 months of the alleged misconduct.

Where allegations of misconduct fall outside of the 3 month window, they should not be included in an application as the internal arbiter will not have jurisdiction to determine the allegations.

What must an application for internal arbitration contain?

Regulation 11(1) of the Regulations prescribed what the application for internal arbitration must specify.  Those requirements are:

• the name of Councillor alleged to have breached the Code; and
• the clause of the Code or standards of Conduct which the Councillor is alleged to have breached; and
• the misconduct the Councillor is alleged to have engaged in that resulted in the breach.

What happens once an application is made?

Pursuant to section 144 of the LG Act, the Principal Councillor Conduct Registrar (PCCR) must examine an application made under section 143 and if he or she satisfied that the application is not frivolous, vexatious misconceived or lacking substance and there is sufficient evidence to support an allegation of a breach of the Code, then the PCCR must appoint an arbiter to the Council to hear the matter.

The PCCR appoints the arbiter from a panel list.

It is clear from the terms of section 143 that the regime contemplates that the allegations must be assessed by the PCCR as being suitable for referral to an arbiter for determination at the application stage.  As such, no further allegations can be added to the application by way of later submissions, because they have not benefited from the legislated mandated process of review and consideration by the PCCR.

What is the role of the arbiter in internal arbitration?

Section 141(2) establishes the role of the arbiter which is:

• to ensure the parties involved are given an opportunity to be heard;
• to ensure that a Councillor who is a party to an internal arbitration process does not have a right to representation unless the arbiter considers that representation is necessary to ensure the process is conducted fairly; and
• to ensure that the rules of natural justice are observed.

In Lew, the nature and role of the arbiter in the internal arbitration process was considered by Justice Tsalamandris in the context of a judicial review of the adequacy reasons given by an arbiter in his determination of an application for serious misconduct brought by Councillor Scott against Councillor Lew.

The grounds for judicial review included inadequate reasons and that Mr. Harvey’s decision was ultra vires because it directed Mr. Lew to apologise for misconduct which was not the subject of Councillor Scott’s application, and it was unclear what behaviour Councillor Lew was required to apologise for.  Justice Tsalamndaris ultimately determined that Mr. Harvey’s reasons were inadequate because Mr. Harvey failed to clearly identify the conduct, which in Mr. Harvey’s view demonstrated that Cr. Lew was “generally offensive” towards Cr Scott, and which was not an allegation contained in Cr Scott’s application, nor was an allegation of being “generally offensive” a breach of any part of the Code as identified by Cr Scott in his application.

In so determining, Justice Tsalamndaris concluded, at paragraphs 91-102 that:

• in order to advance the purpose of the LG Act to ensure good governance, it can be inferred that arbiters are required to give reasons for their decisions and it can be further inferred that the purpose of the arbiter being required to give reasons is to hold Councillors to account for a breach of standards and to promote integrity and accountability for Councillors for the benefit of all within the municipality;
• Given there are similarities between the role of a medical panel under workers compensation legislation and an arbiter under the LG Act in that: both statutory bodies are obliged to give reasons, both must act informally, neither are bound by the rules of evidence, both are obliged to observe procedural fairness, attendance before each entity is private and there is no automatic entitlement to appear with legal representation; the standard of reasons required of an arbiter under the LG Act lies somewhere between that of a medical panel and a court of law;
• The purpose of the Act cannot be advanced if the reasons for the decision are so opaque that the offending conduct is not apparent and that the effect is that any person reading the decision cannot be guided as to what to do, or rather, what not to do in the future (at paragraph 100); and
• It is necessary for a path of reasoning to be of sufficient detail to enable a court to identify any error of law by the decision maker in forming its opinion (at paragraph 102).

Will there be a hearing?

There will be a hearing of the allegations the subject of the application.

The arbiter has the power to determine how the hearing will be conducted, that is, the hearing may be conducted in person, or solely by written or electronic means of communication pursuant to Regulation 11(3)(a) of the Regulations.

An arbiter is not bound by the rules of evidence and may be informed in any matter the arbiter sees fit (see Regulation 11(3)(b)).

An arbiter must conduct the hearing with as little formality and technicality as the proper consideration of the matter permits and ensure the hearing is not open to the public (see Regulation 11(2)(a) and (b)).

What type of sanctions can an arbiter impose?

Section 147 provides for the sanctions which may be imposed by an arbiter following a finding of misconduct.  Those sanctions are:

• directing the Councillor to make an apology;
• suspending the Councillor from office for a period no greater than 1 month;
• removing from position as Councillor, and or any board appointment;
• directing the Councillor to undergo training or counselling specified by the arbiter.

The arbiter must also provide a written copy of decision and statement of reasons to Council, the applicant, the respondent and the PCCR, suitably redacted to remove confidential information.

If you require any advice with regard to the internal arbitration process, please do not hesitate to contact us.