The NSW government is calling for Auburn deputy mayor Salim Mehajer to be suspended or disqualified from council for failing to disclose his financial interest in a commercial building when he voted on changes adding $1 million to its value.
In June last year the Office of Local Government (OLG) launched an investigation into whether the 29-year-old developer had breached pecuniary interest laws by failing to declare the interest.
Counsel for the OLG, Anna Mitchelmore, told the NSW Civil and Administrative Tribunal on Tuesday that Cr Mehajer was present when the council voted to increase floor space ratios and building height for a property at 3 Mary Street, Auburn.
The property is owned by Cr Mehajer's family company, Mehajer Bros, in which he holds 90 per cent of the shares.
An independent valuer found the changes increased the value of the property "in the vicinity of" $1 million.
Ms Mitchelmore said the circumstances called for "at least a suspension if not a disqualification [from holding civic office] for a period of time". It is now up to the tribunal to decide if there has been a breach of disclosure laws and any penalty that should be applied.
Cr Mehajer admits he did not disclose the interest at three meetings between November 2012 and December 2013, when he voted in favour of the proposal, but his lawyers contend he did not breach pecuniary interest laws because an exemption applied.
Councillors are permitted to participate in meetings and vote on some planning matters in which they have a pecuniary interest if a "special disclosure" is made.
Cr Mehajer's barrister, Stephen Free, said his client "fell short" by failing to disclose his interest in the Mary Street property but he did make a special disclosure of his interest in other properties in John and Ann Streets in Lidcombe.
Principal Member David Patten said it would be relevant to any penalty applied that Cr Mehajer did disclose these other properties, which "were also going to benefit financially" and "to much the same extent".
Mr Free urged the tribunal to accept Cr Mehajer's "full and frank explanation and apology". Cr Mehajer had "mistakenly thought" he did not have to disclose the interest because he did not intend to develop the property, which had a long-standing government tenant.
Mr Free said "a reprimand and/or a suspension of pay" was an appropriate penalty. He said suspensions had "significant adverse consequences for the community as well as the councillor" by depriving constituents of their elected representative.
Mr Free tendered three letters from character witnesses in support of his client.
The dispute centres on the technical meaning of an exemption in the Local Government Act, which says councillors do not have to disclose their interest in proposals relating to changes to environmental planning instruments such as the Auburn Local Environmental Plan.
However, the exemption does not apply to planning instruments changing the "permissible uses of the land". The OLG contended the words include alterations or additions to a building while Mr Free said it was "clear" the changes didn't alter the use of the property.
This is Cr Mehajer's second run-in with the OLG. He was reprimanded and his monthly fees as a councillor suspended for three months after the tribunal found Cr Mehajer filed pecuniary interest returns in 2012 and 2013 that were "false or misleading".
The tribunal took into account the fact that Cr Mehajer was then newly elected but said his "carelessness ... borders on the reckless".
The OLG contacted Cr Mehajer five times about its current investigation before he replied in a July 2014 email: "I have no issues with attending any interview...Please work with me to allocate a time that suits my busy schedule."
He did not attend an interview, but said in an affidavit sworn last month that he "may have misunderstood the arrangements" and thought documents would be sent to him first.
