Minutes 28-03-01 - Shire of Shark Bay

ORDINARY COUNCIL MINUTES - 28 MARCH 2001 Page 16
and Assessment Act is to consider that matter independently of an unimpeded by
considerations of any actionability of its conduct by virtue of a negligent execution of that
duty or other breach of that duty. Indeed, considerations such as appropriate indemnification
are likely to involve a substantial risk of an improper or injudicious execution of statutory
duty or a breach of that duty' (at 350).
The findings in Demco Machinery were cited with approval and have been applied in a number of
subsequent cases. These include Galandon Pty Ltd v Narrabri Shire Council (1983) 51 LGRA5;
Emmanolides & Another v Blacktown City Council (1984) 20 APA 395; Denis Leech &
Associates Pty Ltd and Another v Warringah Shire Council (1988) 35 APA 361; and Dylgrow
Pty Ltd v MacLean Shire Council (1990) 40 APA 199.
Other authorities, preceding Demco Machinery, found on grounds other than public policy, that
the requirements of an indemnity by a local authority is ultra vires. Roberts v City of Mt Gambier
(1979) 23 SASR 466; 42 LGRA 89 is a decision of a single judge of the south Australian Supreme
Court. The appellant in this case sought a permit to alter an existing shop from the local planning
authority. One of the conditions required the applicant to indemnify the 'Council against any future
claim for compensation in the event of roadwidening as a consequence of this approval'. Wells J held
that a requirement of indemnity in regard to a planning decision to widen the road was wholly
opposed to the legislative intention of the town planning legislation and was therefore ultra vires.
Highett Pty Ltd v Noosa Shire Council (1981) 4 APA 69 applied Roberts v City of Mt Gambier
and held that an indemnity sought by Council in regard to planning permission to build on a
possible landslide area was ultra vires.
There have been some cases that support the validity of conditions requiring the provision of an
indemnity. However, in our view, the stronger line of authority is that established by Demco
Machinery which holds that it is ultra vires and contrary to public policy for a public authority to
carry out a statutory duty by reference to considerations of its own indemnification and protection
against the legal consequences of a negligent execution of that duty. It is our opinion that the Shire
could not validly rely on an indemnity from owners of land seeking development approval.
THE DEED OF INDEMNITY
Even if Council was minded to accept the provision of an indemnity in this matter, it is our opinion
that the deed of indemnity, dated 25 January 2001, and signed for an on behalf of Monkey Mia
Dolphin Resort Pty Ltd is not sufficient. As indicated by the floor plan and Council minutes
attached to your letter (dated 6 February 2001), the proposed addition to the Bough Shed Restaurant
includes a new kitchen, new toilets, new café section (notated as 'casual dining' on the floor plan)
and incidentals. The deed of indemnity expressly limits the shire's indemnification to the proposed
new kitchen. It does not seek to indemnify the Shire against any liability arising from any claim
whatsoever for any cost or damage which may be incurred by the Shire should it approve any other
elements of the proposed addition, ie toilets, café and incidentals.
SUMMARY
In the event that Council should approve the proposed additions to the Bough Shed Restaurant with
floor levels below the predicted storm surge level of 3.0 metres AHD, it is our opinion that the Shire's
reliance on an indemnity from the owner would probably not be effective. We there fore advise
against accepting any indemnity in the determination of the application.
If, notwithstanding our advice, Council is prepared to accept indemnification from Monkey Mia
Dolphin Resort Pty ltd, we would advise the Shire to seek further legal advice prior to deciding upon
the development application and issuing an approval.
Legal advice should also be sought regarding the content of any deed of indemnity.
If you wish to discuss any of the matters referred to above, or require any further assistance, please
contact Graham Castledine or Anna Grage.
In summary it is ultra vires and contrary to public policy for a Public Authority to carry out a
statutory duty by reference to considerations of its own indemnification and protection
against the legal consequences of a negligent execution of that duty. It is Council's
Solicitor's opinion that the Shire of Shark Bay could not validly rely on an indemnity from the
owners of the land seeking development approval.