Regional businessman David Penman paints himself as the one man prepared to stand up to a broken system.

A spate of private legal challenges he’s launched has left his local council hamstrung, but Penman has no regrets about throwing local ratepayers into a period of turmoil.

“Enough was enough,” he said. “I did not break the system. In my view, the system has been broken for years.

“I am not proud of disruption for its own sake. I am proud that I was prepared to act when I believed the community’s long-term interests required it.”

Penman has a long history of taking action against those he believes have done the wrong thing, launching criminal and civil proceedings against elected representatives and harassing people who left his business negative reviews. He also asked for a $450,000 settlement from the council to end a series of unrelated civil disputes.

Now Penman, who owns a luxury accommodation venue in Hepburn, has launched independent legal action against five of the seven Hepburn Shire councillors, arguing that they contravened the Local Government Act by failing to follow proper process when adopting the budget earlier this year.

The businessman told The Age in a lengthy statement that while he understood the frustration within his community, the prosecutions were necessary to achieve long-term reform in the area.

“Justice takes as long as justice takes. The better question is how long the community has already suffered under the decisions of this council.”

The five councillors impacted by the private prosecutions were required to step down from their roles until the matters are resolved. The move has left the council effectively powerless, as it cannot form the quorum required to hold a meeting – the next of which is scheduled for July 28.

“I understand why some residents are frustrated, but I ask them to consider a more fundamental question: is this really the kind of elected representation they want?” Penman said.

“The real question is what happened over many years that caused an ordinary resident to conclude that such extraordinary action had become necessary.”

He has previously clashed with the council in separate civil lawsuits – including an application to build a caravan park in the locality of Elevated Plains, which was rejected by the council but eventually approved by the Victorian Civil and Administrative Tribunal.

Another ongoing suit relates to rejected plans for a different glamping venue in Elevated Plains. Penman sought permission to make additions that included two new accommodation units, a shed and seven yurts – domed, round tents used by nomads in central Asia.

Hepburn Shire Council rejected the application because the works were too substantial, saying Penman would need to apply for a separate permit. An appeal of the decision is scheduled to be heard in the Supreme Court in August.

An email sent from Penman’s address to councillors and the CEO on June 29, seen by The Age, requested $450,000 from Hepburn Shire Council in exchange for the settlement of ongoing civil matters – including the proposed glamping venue.

Described in the subject line as “without prejudice save as to cost,” the email claims that the amount is lower than what the council would have to pay if a civil suit were successful, and would therefore save them money.

“Settlement gives Council a coherent institutional explanation: changed executive circumstances; no admissions; commercial resolution; cessation of escalating legal expenditure,” the email states.

“Continued resistance gives Council the opposite: further filings, further costs, further public-law risk.”

Penman told The Age he had not made a public or open offer to settle the matter of the Elevated Plains permit. He emphasised that the civil proceedings were unrelated to the more recent private criminal prosecution matters, and that the two shouldn’t be conflated.

“The real story is the message: a community that has suffered through a long succession of poor decisions,” he said.

Penman now wants the state government to step in and place the council into administration.

Don Henderson was the first Hepburn councillor to stand down when Penman brought private charges against him earlier this year. Henderson said he was keen to get back to representing his community.

“I’ll be defending this vigorously [in court],” he said. “Why wouldn’t I?”

Henderson said he had turned ratepayers away when they approached him to discuss local issues.

“They still think I’m a councillor. I have to be careful to tell them I’m not a councillor and can’t act as a councillor. I can’t even give them advice.”

Penman first came to public attention for sending abusive messages to guests who had left negative reviews of his accommodation venue, Clifftop at Hepburn. The award-winning guesthouse boasts 61,000 followers on Instagram and has reached “superhost” status on Airbnb.

In May 2019, Penman sent a text message to an employee at a major bank, who had left a two-star review of Clifftop at Hepburn on Airbnb’s website. Penman emailed several senior figures at the bank the same month, saying the review would generate a lot of publicity for the bank itself.

In another email exchange, Penman threatened legal action against someone who cancelled her booking because she had been redeployed to Gippsland, saying “we don’t tolerate reviews or social media comments from folks arising from situations like this” and threatening to contact her employer.

In 2021, he was charged with using a carriage device to harass and menace a guest who left a negative review of Clifftop on TripAdvisor after his four-night stay was cancelled at the last minute.

Penman was charged with the same offence in 2022 in relation to a different incident, when he told a guest who had left a mediocre review that she would “burn in hell” in an expletive-laden voicemail, along with sending her a series of threatening emails.

Penman was placed on a diversion order in Melbourne Magistrates’ Court for the 2021 incident, and fined $2500 without conviction for the 2022 incident.

The accommodation owner later took Google and TripAdvisor to the Federal Court in 2023, arguing that the major internet companies should be forced to identify guests that left negative reviews anonymously.

This case was eventually withdrawn by Penman, with a spokesperson for TripAdvisor hailing the decision a “win for the travel community” at the time.

Hepburn Shire Council is still grappling with how to move ahead, with only councillors Brian Hood and Tim Drylie remaining in their roles.

Hood told The Age he was concerned about the time it would take to finalise legal proceedings.

“[The council] can’t survive for very long in this mode where we can’t make decisions. So something needs to give to resolve this stalemate. And the sooner, the better,” Hood said.

While he emphasised that the majority of local services would continue to operate, he said that it was only a matter of time before council’s limited powers had an adverse impact on the community.

He urged the state government to prioritise proposed legislation changes which would prevent private litigation impacting the local government sector.

According to the current local government legislation, legal action that meets a certain threshold forces councillors to immediately step down while the claims are being investigated.

These rules apply even if the challenge is brought forward by a private citizen, rather than through official channels like the police or Office of Public Prosecutions.

“We could face a situation where like-minded individuals anywhere in the state could bring another council to a halt,” Hood said. “[Legislation change] is not going to help Hepburn in the short term. [But] it will give other councils peace of mind.”

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