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Are your delegations up to date and ready by December?

September 2022

NSW councils must review their delegations during the first 12 months of each term of office. This is a requirement of section 380 of the NSW Local Government Act 1993 (LGA), which means councils must review their delegations by 4 December 2022.

NSW local councils must also review their organisation structure by 4 December 2022, within 12 months of the held election, in order to meet the requirement of section 333 of the LGA.

The timely review of a council’s delegations of functions and authority is critical to council’s effective and efficient governance.

The NSW Local Government Act 1993 (LGA) establishes the statutory framework for the delegation of council’s authority. Guidance is further given in the NSW Interpretation Act 1987 (Interpretation Act).

In general, section 377 of the LGA provides councils with the power to delegate certain functions to the General Manager or to any other person or body (not including another employee of the council). There are limits to the scope of the power to delegate.

What are the risks of not updating delegations?

If a proper delegation of the function had not been made, and the delegate was not authorised, their subsequent decision could be challenged in court and be held ineffective or invalid.

Getting delegations right is of critical importance to councils. Without the necessary and appropriate delegations in place, councils would not be able to perform their functions efficiently, effectively or lawfully.

The right framework of delegations could mean good performance and good governance; otherwise, the risks could be unfettered control and substantial financial damage.

Any position with a high level of discretion could result in entire control of a process, which may also lead to an unacceptable risk of bias, conflict of interest, bribery or other corruption.

Who can a council delegate to?

A council may delegate functions to the General Manager and to other persons or bodies. However, a council cannot delegate any of its functions directly to an employee of the council, other than to the General Manager. [Section 377(1) of LGA]

The delegation must be made to a specified person or body (by name) or to a particular officer or the holder of a particular office. [Section 49 of the Interpretation Act]

Where a function has been delegated to the holder of a particular office or position, the delegation does not cease to have effect if the person in the particular office or position no longer holds that office or position. In those circumstances, the person occupying or acting in the office or position is taken to be the delegate. [Section 49(8) of Interpretation Act].

How to make a valid delegation?

There are steps that must be done to validly delegate council functions. Delegation by a council to the General Manager (or to any other person or body other than directly to an employee of council), must be done by resolution. [Section 377(1) of LGA]

The delegation must be in writing or be evidenced in writing. [Section 49(2)(b) of Interpretation Act]

A function could only be delegated to an office or position that is already in existence at the time that the delegation has been made.

Delegations may be limited by conditions. [Section 49(3) of Interpretation Act]

If the conditions had not been met, the delegate would have no power to exercise the function and with any resulting decision liable to be set aside. This means councils need to take care when drafting conditional delegations in order to make sure that any conditions are clearly expressed and where possible, avoid subjective elements which may be open to challenge or misinterpretation.

What is the scope of delegation?

A delegation could cover a broad range of council functions both under the LGA and under other relevant legislation.

General Managers may delegate any of their functions, as well as sub-delegate any functions that have been delegated to the General Manager by the council. [section 378 of LGA]

However, a council and the General Manager cannot delegate their power of delegation. [Sections 377(1)(t) and 378(1) of LGA].

A council also cannot delegate a function that comprises of the matters listed in subsections 377(1)(a) to (u) of the LGA. For example, those matters include (but are not limited to):

•             making rates, charges and fees

•             borrowing money

•             voting of money for expenditure on council works, services or operations

•             compulsory acquisition, purchase, sale, exchange or surrender of land

•             any function that is required to be specifically undertaken by resolution of the council.

The delegate may exercise other functions that are incidental to the specific delegated function when exercising the function. [Section 49(4) of Interpretation Act]

Where there is discretion in the exercise of a function, a delegation of that function cannot limit or eliminate the discretion. For example, the function of the determination of a development application under section 4.16(1) of the NSW Environmental Planning and Assessment Act 1979, involves exercising discretion on whether or not to approve an application unconditionally, to approve it subject to conditions or to refuse the application. A council (or General Manager) cannot delegate the power to approve a development application without also delegating the power to impose conditions or to refuse it.

A function, however, cannot be delegated if the function did not exist at the time the delegation was made.

Once a council or General Manager had delegated a function, the council or General Manager could still exercise that function at any time before the delegate does. [Section 49(9) of Interpretation Act]

A delegation may also be revoked (partly or wholly). [Section 49(2)(c) of Interpretation Act]

Is your council ready?

Are your delegations up to date? If your council’s delegations have not been reviewed, or if your organisation structure will be undergoing a change, Morrison Low is here to assist. Please contact: Carrie Chan