13 May 2011
The Lobbying of Government Officials Bill 2011 has been passed by the Parliament, but is not yet in force. The object of this bill is “to prohibit the giving or receipt of success fees for lobbying by lobbyists who lobby Ministers, Parliamentary Secretaries and other Government officials”.
Key provisions of the bill relate to the payments made to lobbyists. However, section 5(3) goes further than the government’s stated objective. It applies to any person who is not a lobbyist. This is the provision that will be of particular interest to property developers.
Once it comes into effect, section 5(3) criminalises any person who receives, or agrees to receive, “a success fee” for the “lobbying” of a Government official. The phrase “success fee” and the word “lobbying”, used in section 5(3) have been given special definitions by the bill.
A “success fee” is not just a cash payment, it includes any “valuable consideration”. This extends to any right, interest, profit, or benefit that may accrue to a party. This might include, for example, a developer’s right to purchase or develop land under a call option agreement. If the exercise of a right or receipt of a benefit by a developer is contingent on the developer seeking and securing a rezoning or development approval, then the benefits to a developer under the option agreement may be deemed to be a “success fee”.
Under the bill “lobbying” of a government official means communicating with an official for the purpose of representing the interests of another person. While developers clearly lobby for their own interests, if an option agreement is in place, someone may argue that a developer is also lobbying for the benefit of the land owner. If this argument holds up, an option agreement that involves a “success fee” may be subject this new law.
In short, it is possible that this new law will:
- invalidate some option agreements already entered into, in good faith, by developers and land owners; and
- criminalise a practices that present no probity concerns.
We have raised these concerns with the government, but it has elected to proceed with bill nonetheless. Developers may wish to review, and seek legal advice, in the light of this bill, any option agreements which confer rights or benefits that are contingent upon rezoning or an approval.
We are interested in any specific examples members may have where this bill may create problems. Please contact us if you have any examples.