Over the coming months, we intend on outlining key legal issues in amalgamations, as well as to provide you with some case studies.

Whilst we offer no opinion as to whether amalgamations are necessary or good, councils need to be actively engaged in the process. Failure to engage can result in key decisions being made without your input and without your point of view being heard.

This Update provides a general outline of the process. Highlighting some key issues and answering the following questions.

  • What should you understand about the amalgamation process?
  • What can the proclamation/vesting order do?
  • If my council is amalgamated with another, or other councils, who will be the Mayor? Who will be the General Manager? Which councillors will continue in office?

What are some things you should understand about the process of amalgamations?

Amalgamations are given effect under the Local Government Act 1993 which generally provides that:

  • amalgamations occur by proclamation made by the Governor on recommendation of the Executive Committee and the Minister for Local Government
  • the Minister or a Council involved, or a prescribed minimum number of electors, may initiate a proposal to amalgamate
  • the Minister is to refer the proposal to the Boundaries Commission or the Director General for examination under s 218F of the Local Government Act 1993, but upon receiving the report may modify the proposal as the Minister determines
  • the proclamation can substantially change the operations, policies and structure of the council.

What can the proclamation/vesting order do?

A proclamation may include such provisions as are necessary or convenient for giving effect to the proclamation, including:

  • the transfer or apportionment of assets, rights and liabilities
  • the transfer of staff
  • the application of regulations
  • the alteration of ward boundaries
  • the holding of elections
  • the delivery or retention of records
  • the termination, cessation, dissolution or abolition of anything existing before the proclamation takes effect
  • the preservation or continuance of anything existing before the proclamation takes effect
  • the making of appointments
  • the inclusion or exclusion, as a constituent council of any related county council, of the council of any area constituted or dissolved by the proclamation
  • the appointment of administrators for any area constituted by the proclamation
  • the continuation in office, as councillors of any area constituted by the proclamation, of any or all of the councillors of any area dissolved by the proclamation.

Typically the proclamation will include vesting orders. These vest assets, contracts, rights, liabilities etc from the former councils to the newly constituted council. The drafting of vesting orders is complex and there are many traps around the vesting of contractual liabilities in particular. For example, is the vesting effective to transfer to the new council the right to proceed against a contractor for defective work where the defective work has not yet become manifest? In this situation, no liability has accrued. The acts giving rise to the liability have occurred while the old council was a party, but the damage occurs to the new council.

Undoubtedly the dynamics of an amalgamation are much simpler for amalgamating two councils into one council than if one council is split between its two neighbours (for example the amalgamation of three councils into two councils). The three into two amalgamations particularly give rise to significant scope for dispute on:

  • allocation of assets
  • allocation  of  land  within  different  rate categories
  • cross servicing and subsidy arrangements
  • allocation of people
  • survival of wards and elected representatives.

If my council is amalgamated with another, or other councils, who will be the Mayor? Who will be the GM? Which councillors will continue in office?

The proclamation needs to make a determination as to how the Council will be administered until the first council meeting, who will exercise the powers of Mayor and GM in the interim and which policies will apply.  Section 218C of the Local Government Act 1993 allows the proclamation to include provisions with respect to:

  • the appointment of administrators for any area constituted by the proclamation
  • the continuation in office, as councillors of any area constituted by the proclamation, of any or all of the councillors of any area dissolved by the proclamation.

The proclamation probably overrides any constitutional referendum to popularly elect the mayor of an area.

What’s next?

In the coming weeks we intend providing you with:

  • an outline of some key staffing issues that need to be front of mind
  • a case study featuring legal issues to consider in an amalgamation.