How one legal loophole crippled a council
One businessman has exposed a rather unexpected loophole, resulting in five of Hepburn Shire’s seven councillors being stood down, leaving the council unable to hold meetings. Could it happen closer to home?
A rather unexpected loophole has resulted in five of Hepburn Shire’s seven councillors being stood down, leaving the council unable to hold meetings or make major decisions.
The extraordinary disruption has happened because of just one man, who initiated private criminal prosecutions against the five council members.
It’s raised questions about whether the same legal process could incapacitate other Victorian councils, including Bass Coast and South Gippsland Shire Councils.
Rural Councils Victoria chair Robert Amos seems to think it’s a possibility, as he warned that “what is happening in Hepburn today could happen to any council tomorrow.”
Businessman David Penman initiated private prosecutions against five Hepburn councillors, including its mayor, as well as the council’s chief executive.
With just two councillors remaining in office, the council cannot form the four-member quorum required to conduct meetings.
Routine services like bin collection, libraries and road maintenance are continuing under authority delegated to council staff, however, elected representatives cannot meet to approve major contracts, new capital works or other significant decisions.
Legislative changes have already been proposed to close the loophole.
Bass Coast Shire Council CEO Greg Box said the situation would be distressing for Hepburn’s councillors and undermines the democratic process.
“Local government is a democratically elected body, so the thousands of people in the community that voted them in have also had that process undermined,” Mr Box said.
He said councillors acting in good faith should be able to perform their duties without fearing this kind of action.
“For the benefit of all councils across Victoria, we trust that the legislation will address this quickly and put democracy back into the hands of the whole community,” Mr Box said.
South Gippsland Shire Council also supported legislative reform but declined to comment on the Hepburn situation or whether something similar could happen locally.
Acting CEO Lucas Gardiner said the South Gippsland Shire Council would not speculate about potential implications for other municipalities.
“Council will not comment on what is happening at Hepburn Shire Council, nor will it speculate on whether this could occur at other councils,” Mr Gardiner said.
“Council is supportive of any legislative change that protects the integrity of councils across Victoria, providing appropriate consultation takes place across the sector.”
The situation in Hepburn was possible because of section 229 of Victoria’s Local Government Act, which states that councillors charged with certain offences must stand down while the proceedings remain unresolved.
As it currently stands, the legislation doesn’t require those charges to have been brought by police or any other law-enforcement body, and a private individual can initiate a criminal prosecution by filing charges through the Magistrates’ Court and then formally delivering the documents to the accused.
The allegations against the Hepburn councillors remain unproven and haven’t been tested in court, and according to the Hepburn Shire Council, they were not preceded by an investigation or assessment by Victoria Police or another public prosecutorial authority.
Mr Penman alleges that four councillors unlawfully adopted the council’s 2026-27 budget without the required financial documents, and separate charges have also been brought against another councillor and the council’s chief executive.
Hepburn Shire Council has rejected suggestions that its budget was improperly adopted and accused Mr Penman of manipulating the legislation to disrupt its elected representatives.
Mr Penman has defended private prosecutions as an important avenue for citizens seeking accountability from those in power, describing it as “the last line of defence in a democracy.”
“I didn’t write the law, parliament did, they opened the door and I just walked through it,” he told the ABC.
The Victorian Government’s proposed Local Government Legislation Amendment (Stronger Communities) Bill 2026 would restrict automatic stand-downs to cases where proceedings are commenced by or on behalf of a law-enforcement agency.
The bill remains before the Legislative Assembly.
Until the change passes Parliament and takes effect, the existing loophole technically remains a possibility, all because section 229 of the Local Government Act doesn’t distinguish between private and official prosecutions.
