Part 5: Other conflict of interest issues

Guidance for members of local authorities about the local authorities (Members' Interests) Act 1968.

Having a pecuniary interest in a matter before the local authority, as discussed in Part 3, is one type of conflict of interest. However, quite apart from the Act, there are legal rules about conflicts of interest more generally, which apply to both pecuniary and non-pecuniary conflicts of interest.

In this Part, we comment on other types of conflicts of interest that may be relevant to local authority members. In particular, we discuss the common law rule about bias as it relates to non-pecuniary conflicts of interest. However, this is not a formal or definitive statement of the law. Nor is it to be treated as legal advice for specific situations.

Although we have a specific formal role with pecuniary conflicts of interest in relation to local authorities under the Local Authorities (Members' Interests) Act, we do not have any special role with conflicts of interest generally. In particular, we have no enforcement role and cannot give formal rulings.

In our experience, most local authority staff are able to provide informed and practical advice to members on these issues. If staff have major concerns about a particular current or potential issue, we encourage the organisation to get specific legal advice rather than to seek general guidance from us. Alternatively, you can consult your own lawyer.

Conflicts of interest generally

A conflict of interest exists where two different interests intersect – in other words, where your responsibilities as a member of the local authority could be affected by some other separate interest or duty that you may have in relation to a particular matter. That other interest or duty might exist because of:

  • your own financial affairs;
  • a relationship or role that you have; or
  • something you have said or done.

The common law requires that public decision-making be procedurally fair. In particular, conflicts of interest are usually dealt with under the rule about bias.The law about bias exists to ensure that people with the power to make decisions affecting the rights and obligations of others carry out their duties fairly and free from bias. It is summed up in the saying "no one may be judge in their own cause".


The law about bias has been developed to achieve two main goals. First, it ensures that the best decision is made based on relevant information and arguments, not ulterior motives or prejudices. Secondly, it ensures that people affected by, or interested in, a decision have trust and confidence in the process – meaning they are more likely to accept a decision once it is made.

This means the rules about bias operate not only to ensure that there is no actual bias, but also so there is no appearance or possibility of bias. The principle is that justice should not only be done, but it should be seen to be done.

If a person challenges a local authority's decision by taking judicial review proceedings, the courts could invalidate the decision because of bias on the part of a member of the decision-making body. The question you need to consider, drawn from case law, is:13

Would a fair-minded observer reasonably think that a member of the decision-making body might not bring an impartial mind to the decision, in the sense that he or she might unfairly regard with favour (or disfavour) the case of a party.

The law about bias does not put you at risk of personal liability. Instead, the validity of the authority's decision could be at risk.

Your focus should be on the nature of the conflicting interest or relationship, and the risk it could pose for the decision-making process.

The need for public confidence in the process is paramount. Perception can be an important factor. Each case must be decided on its own circumstances.

How does the law about bias apply to local authorities?

The courts recognise that local authorities are different in nature from other decision-making bodies. As one judge has said, the fairness of a local authority decision-making process must be assessed "without too quickly importing concepts of administrative law grown from the soil of quite different contexts".14 In particular, the democratic status of a local authority, the representative nature of the members of a local authority's governing body, and the practice where decisions are often made by a committee of members by majority vote must be recognised when applying general principles of administrative law about bias and fairness in the decision-making process. Some care must be taken when drawing principles from cases involving courts and judges, or other public bodies and officials that are required to adopt a court-like procedure.

The courts acknowledge that, where Parliament entrusts a function to an elected or political body (instead of to a tribunal or a court), it is natural to expect that:

  • the members of the authority will bring their own experience and knowledge to the decision-making process;
  • the members may already have views – even strong or publicly stated views – about the matter; and
  • political considerations may play a part in the decision.

As usual, the nature and context of the particular decision will be important too. The courts are likely to take a stricter approach with decisions that directly affect the legal rights, interests, and obligations of an individual or small group of individuals (as opposed to decisions with a large policy or political element).

For instance, the sorts of decisions where a stricter approach may be taken include:

  • licensing applications;
  • decisions under the Resource Management Act 1991;
  • decisions requiring a formal statutory process and hearing (such as road-stopping proposals);
  • dealings in land; or
  • other decisions that have a regulatory or coercive effect.

By contrast, the courts may take a less strict approach to decisions about:

  • high-level policy-making;
  • issues in which the authority has only advocacy or recommendatory powers; or
  • operational or service functions.

Situations where a risk of bias may exist

The most common risks of non-pecuniary bias are where:

  • your statements or conduct indicate that you have predetermined the matter before hearing all relevant information (that is, you have a "closed" mind); or
  • you have a close relationship or involvement with an individual or organisation affected by the matter.

Paragraphs 5.20-5.53 discuss these two types of non-pecuniary bias, and offer our comments on some common scenarios. The examples are a general guide, but each situation needs to be assessed on its own merits. Our suggestions are neither authoritative nor comprehensive.


A claim of bias may be made on the basis of predetermination. An allegation of predetermination is generally based on the expression of a view or conduct that suggests a member might have approached the issue with a closed mind. Accordingly, it is an issue within your control. By exercising care over your statements and behaviour, you should be able to prevent this issue creating problems for you.

For example, predetermination might occur if your public statements indicate that you made up your mind about the matter before it came to be heard and deliberated on. In other words, that you, as decision-maker, had a closed mind and were not prepared to listen fairly to all the arguments.

You are not expected to approach matters without any existing opinions at all. Elected members take office with publicly stated views on a wide variety of policy issues. In local authority decision-making, the courts therefore acknowledge that a degree of local knowledge and pre-existing views – especially where a matter involves wide public policy issues – is both inevitable and desirable.

The critical factor is that you remain, and are seen to remain, open to persuasion. That is, that you do not express views in a way that implies an unwillingness to listen fairly to new arguments or to give the matter further consideration when it comes before the authority.

What is predetermination?

You could create a legal risk for the decision that the local authority is making if you participate in the authority's consideration of a matter and you:

  • make statements that suggest your mind is made up about the particular matter before having heard all views, that your position is so fixed that you are unwilling to fairly consider the views of others, or that you are not prepared to be persuaded by further evidence or argument; or
  • refuse to read or listen to reports or submissions presented to the authority about the matter.

As noted earlier, the nature of the decision is important. There is unlikely to be any legal risk in you commenting about broad policy issues, particularly where your remarks are expressed in general terms. However, the legal risk is likely to be much higher if you comment about specific decisions that are focused on the rights and interests of one individual or a few individuals, and where other people have the right to make a submission to a formal hearing about the matter.

You could also create a legal risk to the authority's decision if you participate in the authority's consideration of a matter and you have made a formal submission to the authority in your personal capacity to support or oppose a particular proposal as part of a public submissions process. There may be rare situations where you may still be able to consider such matters. However, as a potential decision-maker, to avoid creating legal risk for the authority's decision, it is advisable to avoid making submissions on matters that will come before your authority for decision – doing so will usually compromise your ability to participate in the decision-making process.

The level of legal risk will always depend on the facts of the situation. For example, the legal risks may not be great if you make a submission before being elected as a councillor or if some years separate the submission and the decision. The key question is whether you have an open mind at the time you are making the decision.

It seems generally accepted that the common law does not prevent you from:

  • discussing issues and exchanging ideas with members of the public;
  • promoting a particular view during debate around the meeting table; or
  • advocating opinions or policies in public – or campaigning for election – about issues of public interest;

so long as you do not indicate that you have already closed your mind to further consideration of a particular matter.

General personal factors, such as your ethnicity, religion, national origin, age, political or philosophical leanings, wealth, or professional background, will, of themselves, not often constitute predetermination.

Presence at hearings

As noted above, predetermination can also be shown to exist through a member's conduct. For example, lengthy periods of non-attendance at a hearing could suggest that you have predetermined the matter and that your decision is not based on the evidence and submissions presented. Therefore, to avoid the risk of the decision being challenged on this basis, where evidence and submissions are being heard on a particular matter, you should be present for the whole hearing to show a willingness to consider all points of view. Very short absences might be acceptable, but lengthy periods of non-attendance at a hearing create risks.

Relationship with other persons or organisations

A conflict of interest may exist if you have a close relationship with a person or organisation involved in, or affected by, the matter before the local authority – for example, if the matter involves or affects a family member, or an organisation to which you belong, or a business of which you are an employee. Such a connection could affect how other people view your impartiality.

This sort of conflict of interest arises not from something you have said or done, but from a pre-existing state of affairs. Accordingly, no matter how careful you are, this type of conflict sometimes cannot be prevented.

In deciding whether to participate, you should consider:

  • the extent of your personal links or involvement with the other person or group; and
  • the degree to which the matter under discussion directly affects that person or group.

However, it is important to bear in mind that, in politics, the merest perception of impropriety can be extremely damaging, whether or not a court would find your actions to be lawful. To avoid risks to the authority's decision, if you have any relationship with a person or organisation involved in a matter, you should seriously consider the wisdom of whether to participate at all. The safest advice is always "If in doubt, stay out".

Personal relationships

You could create legal risk for the authority's decision if you participate in the authority's consideration of a matter when:

  • the decision directly affects a member of your immediate family or a close friend; or
  • a member of your immediate family has made a submission about the matter.

People can have different views on who is regarded as an immediate family member or close relative. This can make it difficult to assess whether a conflict of interest exists. However, we do not think that a person needs to be regarded as part of your immediate family for these purposes just because they are part of your wider kin group descended from a common ancestor (such as an iwi or hapū).

You may want to consider carefully whether to participate where the matter involves or affects:

  • a personal or professional acquaintance;
  • someone who funded your election campaign; or
  • a more distant relative.

The particular facts will always be important for assessing the legal risks.

Membership of other organisations

There may be increased legal risks to the authority decision if you participate in consideration of a matter before the authority involving or affecting a club or similar organisation that you are involved in if:

  • you are an executive officeholder or trustee, or are otherwise strongly publicly identified with the club; or
  • the matter specifically and significantly involves or affects the club – such as a proposed grant of money to the club, or something else directly affecting the club's finances or property.

On the other hand, the possibility of the decision being challenged is likely to be very low if you participate and:

  • you are a passive or ordinary member of the club, and the organisation is relatively large; or
  • the matter affects the club only indirectly – such as a broad public policy issue in which the club has chosen to take an interest.

Similarly, the legal risks are likely to be low if you participate and you have only a past involvement with the club, or merely have friends who are involved in the club.

Employment with other organisations

If the matter concerns your employer, the legal risks to the decision are likely to be high if you participate in the decision and:

  • you are a senior executive (particularly where the matter directly concerns the organisation); or
  • you are personally involved in the issue as part of your employment.

However, the legal risks to the decision are likely to be lower if you participate in the decision and you are a junior staff member (particularly in a large organisation), and have had no personal involvement in the issue through your employment. However, you will always need to exercise your judgement carefully.

See also paragraph 6.11 for discussion of whether your employment might raise a question of a pecuniary interest.

Membership of committees and community boards

It is common for members of a local authority to also be on committees or subcommittees of the authority, or on a community board. There is normally no legal risk in your participating in the decision at one of these levels and then again when the decision reaches the governing body of the local authority.

However, the legal risks may be greater if your participation at the other level could raise a risk of predetermination to the decision of the governing body. An example is where you are a councillor and also a member of a community board, and the board decides to make a formal submission to the council about a review of representation arrangements for elections. In this situation, you need to decide at which level you can best participate. For example, you might choose to refrain from participating in the board's decision if you want to preserve your ability to participate later at the council level.

Appointment as the local authority's representative on another organisation

You may have been appointed as the authority's representative on the governing body of a council-controlled organisation or another body (for example, a community-based trust).

That role will not usually prevent you from participating in authority matters concerning the other organisation – especially if the role gives you specialised knowledge that it would be valuable to contribute.

However, you could create legal risks to the decision if your participation in that decision raises a conflict between your duty as a member of the local authority and any duty to act in the interests of the other organisation. These situations are not clear cut and will often require careful consideration and specific legal advice.

Similarly, if your involvement with the other organisation raises a risk of predetermination, the legal risks to the decision of the authority as a result of your participation may be higher – for example, if the other organisation has made a formal submission to the authority as part of a public submissions process.

Membership of some other public body

If you have been appointed or elected to the governing body of some other public entity unconnected with your position on the local authority (such as a district health board), we recommend that you consider potential conflicts of interest on a case-by-case basis. You should consider whether your ability to consider a matter before the local authority with an open mind could be affected by:

  • your legal duty to act in the interests of the other body;
  • any involvement you may have had in the matter through the other body; or
  • the degree to which the other body is affected by, or interested in, the local authority's decision on the matter.

It may be wise to seek some specific legal advice on when it will or will not be appropriate to participate.

Other personal involvement with an organisation

Even if you are not formally associated with an organisation affected by a matter before the local authority, if you have a close personal involvement with the organisation, your participation may create legal risks for the decision – for example, if you have helped the organisation prepare its application to the authority, or have been paid to do so in a professional capacity.

What to do?

If you decide you have a non-pecuniary conflict of interest in a matter before the authority, we recommend that you follow the same procedures that you are required to follow in cases of a pecuniary interest – that is:

  • declare that you have a conflict of interest when the matter comes up at the meeting;
  • refrain from discussing or voting on the matter; and
  • ensure that your declaration and abstention is recorded in the minutes.

We consider that it is good practice to also leave the meeting table while discussion and voting on the matter take place.

Non-pecuniary conflicts of interest always involve questions of judgement and degree. In the interests of openness and fairness, we encourage members to take a cautious approach. Authority staff can provide advice, and it can also be useful for you or the authority to seek legal advice. However, if in doubt, it is always safer to declare an interest and abstain from discussing or voting on the matter.

Appendix 3 contains summaries of a number of cases in which the courts have considered non-pecuniary conflicts of interest.

13: Saxmere Company Ltd v Wool Board Disestablishment Company Ltd [2010] 1 NZLR 35; [2010] 1 NZLR 76.

14: Goulden v Wellington City Council [2006] 3 NZLR 244 at [50]. See also Friends of Turitea Reserve Society Inc v Palmerston North City Council [2008] 2 NZLR 661 at [105] and Wakatu Incorporation v Tasman District Council [2008] NZRMA 187 at [22]-[25].

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