The fate of North Sydney Council will be decided next week when NSW Local Government Minister Paul Toole decides whether to proceed with plans to suspend it and appoint an administrator.

The suspension move has exposed deep divisions and acrimony within the council and Mr Toole said he was looking to take action because of poor working relationships, reputational risks and alleged procedural breaches from an undisclosed incident which was tabled before the council on September 1.

At that meeting, the majority of councillors over-ruled Mayor Jilly Gibson to introduce a "staff-related workplace incident" as an urgent item.

Cr Gibson told 7.30 NSW she could not provide an explanation of the matter because it was staff-related and she did not want to do "further damage".

In his show cause notice to the council, Mr Toole said:

"Matters relating to the conduct of individual councillors should not be raised at a council meeting. Instead they should be dealt with in accordance with the regulated processes under the Model Code of Conduct. "As such, all councillors who participated in the discussion of this matter have done so contrary to their obligations under the code of conduct and arguably in breach of the integrity provisions of part 8 of the Code. I view this conduct as serious."

At a special meeting this week, the council carried a resolution urging the Minister not to suspend.

The motion was passed eight votes to two, with Cr Gibson in the minority.

Sorry, this video has expired North Sydney Council faces Ministerial intervention ( Quentin Dempster )

"It's quite extraordinary for a mayor to be supporting a short suspension but the council is now, it's not just dysfunctional, it's unwholesome," Cr Gibson said.

Mr Toole also said other factors played a part in his decision to issue the notice, including the resignation of the general manager in early December 2013, a string of code of conduct complaints, the resignation of two councillors in May this year and an apprehended violence order (AVO) taken out by Cr Gibson against councillor Jeff Morris.

The AVO and a bullying claim were later withdrawn.

Councillor says North Sydney witnessing 'political power struggle'

When 7.30 NSW asked Cr Morris about his alleged behaviour he denied he was a bully, and councillors Melissa Clare, Zoe Baker and Maryann Beregi all vouched for Cr Morris's integrity.

He said the AVO was a "political stunt" designed to hamper his ability to vote on council matters.

"It came down to numbers as it was done at a time when we were facing a critical decision on the appointment of a general manager, when the numbers were seven-six against [Cr Gibson]," Cr Morris said.

"If she could have removed my vote from council she would have got through six-all on the casting vote and part of the [AVO] was to keep me from 200 metres of the council chamber.

"It was a 100 per cent political stunt."

Cr Gibson rejected this motivated the AVO application.

North Sydney Councillor Jeff Morris had an AVO taken out against him by Jilly Gibson, which was later withdrawn. ( Suppled: North Sydney Council )

Cr Morris said the council's divisions were political, and caused by a power struggle in a council that had been run by strong community-based independents since the 1980s, and the rise of then-mayor Ted Mack.

Cr Morris is a former Liberal Party member and he said he believed the party wanted to destabilise the independent council.

"The Liberal Party has always wanted control of North Sydney Council," Cr Morris said.

"This is basically an attempt to seize control by administrative action in bad faith to achieve what they couldn't achieve at the ballot box."

Cr Michael Reymond, an experienced and respected property lawyer who has served on North Sydney Council for 20 years, said his fear was that the council under an administrator would succumb to heavy pressure from developers.

Developers on a North Sydney CBD advisory body had drawn up a wish list to have current commercial floor space zoning changed to mixed use, including residential.

"You make more money, more quickly, in residential than you do in commercial," Cr Reymond said.

Mayor says she is not working for CBD developers

The council has already approved residential conversion of commercial office buildings in Milson's Point.

NSW Local Government Minister Paul Toole will decide next week whether to suspend North Sydney Council. ( Supplied )

The extension of mixed-use zoning to the North Sydney CBD would contradict a long-standing State Government planning policy that aims to make North Sydney a major hub in Sydney's "global city" strategy.

Cr Gibson, elected in 2012, said she was independent and not a member of, or financially supported by, the Liberal Party.

She said she voted Liberal at state and federal elections but she rejected any suggestion that she was helping CBD developers or the Liberal Party.

With reforms called 'Fit for Future', underway to effectively amalgamate 152 councils across NSW, there is a lot at stake for the ratepayers of North Sydney, which occupies prime harbourside real estate.

The council's response to Mr Toole said:

"The Minister will effectively disenfranchise the people of North Sydney from the 'Fit For Future' reform submissions. "It is not for council officers or an administrator to guide our community response to these important reforms. It is essential that democratically elected local representatives are here to guide the process."

Ominously, at the end of its resolution urging the Minister to refrain from suspension, the council by majority warned: "Should the Minister decide to suspend Council, proceedings challenging the decision [would] be commenced immediately."

Editor's note 30/9/2114: An earlier version of this story reported North Sydney deputy mayor Stephen Barbour as saying that "Liberal Party councillors" on Ryde City Council had been found to have "engaged in corrupt conduct". In fact only one Liberal councillor was named in ICAC's Operation Cavill investigation.