One man has brought a council to its knees. And there’s nothing to stop it happening everywhere

Lawfare has partially paralysed a rural council, with five councillors caught up in bizarre private prosecutions from a disgruntled local businessman.

The highly unusual legal move prompted the regional council advocacy body to call for the state government to urgently change legislation to prevent further turmoil in the local government sector.

Hepburn Shire Council is unable to form a quorum and therefore cannot hold council meetings after businessman David Penman brought private prosecutions against five out of seven councillors. The five councillors have been forced to step down until the matter is resolved.

He used an obscure law allowing individuals to bring private prosecutions to lay criminal charges against the councillors, which he lodged in the Magistrates’ Court himself. Police have had no involvement in the matter, in which councillors are accused of misuse of position by breaching the Local Government Act.

But the allegations alone have partially paralysed the council. Under local council laws, councillors must stand down when faced with criminal charges that meet certain thresholds.

Services including rubbish collection and library services will continue uninterrupted, but no new matters can be voted on.

In a statement, Hepburn Shire accused Penman of purposefully manipulating local government laws to disrupt the council’s elected representatives and the fulfillment of their responsibilities.

“Council can say that it is bitterly disappointed with the impact that this individual’s actions are having on our community and its right to be represented by its democratically elected representatives,” the statement said.

The council requires a quorum of four councillors to hold council meetings where it votes on major infrastructure projects, large planning decisions and other matters.

Penman also brought private criminal charges against chief executive Bradley Thomas earlier this year. Thomas has resigned from the council, although he is still serving in the role until the resignation takes effect. While he is not required to stand down, the council’s inability to form a quorum means councillors cannot vote if required to appoint his replacement.

Penman defended his legal action, saying he had brought the charges because the council had failed to follow proper process in adopting the budget earlier this year.

“My aim has never been to stand down councillors. It hasn’t been to charge them. It’s to force accountability,” he said.

He told ABC radio most councillors had voted for the budget before they knew the shire’s true financial position.

“Recently, Hepburn Council adopted its budget and when it did so it didn’t have the complete financial statements in front of them.”

Penman told The Age he did not like the idea that the private prosecutions had resulted in the councillors standing down – “they’re not me being malicious” – but it was a consequence of their actions.

He insisted the courts were the appropriate forum to resolve disputes.

Penman confirmed he had two matters against the council before Supreme Court and one in the Victoria Civil and Administrative Tribunal in addition to the private prosecutions.

Hepburn Shire Council rejected Penman’s allegations, saying that during an earlier meeting, concern was raised that the budget might not be compliant, but the chief executive had advised the process had met legal requirements.

It said independent advice “reaffirmed” it had complied with legal requirements in adopting the budget.

In 2022, Penman pleaded guilty in two criminal proceedings for using a carriage device to harass guests who left negative reviews of his award-winning guesthouse. Penman told one guest she would “burn in hell” for describing the guesthouse as “just okay”.

Advocacy group Rural Councils Victoria urged the state government to act immediately on the “untested criminal charges”.

It said under Victorian law, any individual could initiate private criminal proceedings without police involvement, requiring councillors who were charged to step aside until the matter was resolved.

Rural Councils Victoria chair Rob Amos said if people had acted inappropriately, they should face justice, but the law was being weaponised to disrupt councils and undermine democracy.

“We fear that without urgent action, a tidal wave of vexatious nuisance lawfare proceedings could grind local councils to a standstill,” he said.

Councillor Tony Clarke, who was Hepburn Shire mayor until Friday, was among those charged and stood down.

Speaking in a personal capacity, Clarke said he had no doubt he had acted properly.

“I will vigorously defend these charges,” he said.

Clarke wants the Director of Public Prosecutions to take over the case and make an assessment about whether it should proceed.

“There was always a threat that one person could bring down a council, and here we are.”

Clarke is due to appear in the Magistrates’ Court on August 5.

Rural Councils Victoria also urged Local Government Minister Paul Hamer to fast-track planned legislative changes immediately so councillors were no longer required to stand down for private prosecutions. It wants the legislation to be retrospective.

A spokeswoman for the state government said it was very concerned about the situation, and Hepburn Shire residents deserved a council serving them.

She said the government had introduced legislation to ensure councillors could continue performing their roles when facing private prosecutions. However, the legislation has not yet passed both houses of the Victorian parliament.

The spokeswoman confirmed the minister had written to the Director of Public Prosecutions to draw his attention to the matter. She said Hamer would consider what steps could be taken under the Local Government Act.

An Office of Public Prosecutions spokesperson said the Magistrates’ Court had referred private prosecutions against Hepburn Shire councillors and a staff member to the DPP as was the usual course of action.

The spokesperson said the DPP would consider whether to take over the private prosecutions.

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