The High Court’s decision in Independent Commission Against Corruption v Cunneen [2015] HCA 14 limits the power of the NSW Independent Commission Against Corruption (ICAC), when investigating corruption involving the actions of members of the public, to circumstances where such actions impact on the probity of the exercise of the official function of public servants.

This decision will impact on the scope of both current and future inquiries by ICAC, may result in some previous findings being overturned and is likely to be the catalyst for a discussion around law reform.

Background

In late 2014, the Independent Commission Against Corruption (ICAC) served a summons on Margaret Cunneen SC (the Deputy Senior Crown Prosecutor of the State of NSW) requiring her to appear at a public inquiry. The summons alleged that Ms Cunneen, with the intention to pervert the course of justice, counselled Sophia Tilley (who was at the time the girlfriend of Ms Cunneen’s son) to feign chest pains to avoid a blood alcohol test following a car accident.

Under section 13 of the Independent Commission Against Corruption Act 1988 (NSW) (the ICAC Act), ICAC would have the power to conduct such an investigation provided the allegation involved “corrupt conduct”.

Broadly speaking, under the ICAC Act “corrupt conduct” is defined to include:

  1. certain specified improper conduct on the part of a public official; or
  2. conduct of any person, whether or not they are a public official, where that conduct “adversely affects” the exercise of an official function.

Ms Cunneen brought an application in the Supreme Court of NSW challenging ICAC’s power to conduct the investigation on the basis that the allegation did not involve “corrupt conduct”.

In this case, there was no allegation that a public official (the police officer) had acted in a manner that lacked probity and Ms Cunneen’s conduct was not being investigated for the effect it might have on her official function as a Crown Prosecutor. Rather, the case concerned whether, as a member of the public, Ms Cunneen’s alleged conduct in diverting the investigating police officers from the performance of an investigation, or in deflecting the course of curial proceedings, amounted to corruption anyway.

At first instance, Hoeben J held that the alleged conduct was corrupt conduct within the meaning of s.8 of the ICAC Act and so dismissed the application. On appeal, the majority (Basten and Ward JJA) held that the alleged conduct was not corrupt conduct within the meaning of s.8 and therefore allowed the appeal.

Reasoning

In a decision handed down on 15 April 2015, the High Court upheld the decision of the Court of Appeal on the basis of first principles of statutory interpretation, effectively clipping the wings of ICAC.

The outcome of the High Court’s decision rested on whether, in order to fall within the definition of “corrupt conduct”, it was necessary to prove that the acts of third parties:

  1. needed to meet a lower threshold, and impacted on the efficacy of the exercise of an official function by a public official; or
  2. needed to meet a higher threshold, and impacted on the probity of the exercise of an official function by a public official.

The High Court held that “corrupt conduct”, under section 8(2) of the ICAC Act will be limited to circumstances where the probity of the exercise of an official function by a public servant is impacted. This may include, for example, where there is:

  1. a dishonest or partial exercise of an official power;
  2. a breach of public trust; or
  3. a misuse of information or material acquired in the court of a public official’s official functions.

In this case, given the exercise of the functions of the police officer could not be impugned on the basis of a lack of probity, the majority held that the circumstances did not disclose “corrupt conduct”.

Consequences of the decision

The relevance for corporations, particularly those who contract with or rely on Government licenses, is to remove any doubt that an action by a private party that merely affects the efficacy of the performance of a Government function, is not corruption for the purposes of the ICAC Act.

This decision will result in a change to the way ICAC conducts future inquiries, what inquiries it can commence, and legal action taken by targets of some of its previous findings. For instance, it has been foreshadowed that findings made against Ian Macdonald, Eddie Obeid and various others may be challenged on the basis that it was not open to ICAC to make a finding of “corrupt conduct” in respect of the circumstances surrounding the award of the Mount Penny mining tenement and the grant of an exploration licence.

Further, the decision is likely to result in a restriction of the findings that can be made in a number of current inquiries – ICAC’s written submissions to the High Court foreshadowed potential issues with:

  1. Operation Credo, being the inquiry into the actions of the Obeid linked Australian Water Holdings in submitting bills to Sydney Water for a range of lavish expenses including limousines, dinners and interstate trips;
  2. Operation Spicer, being the inquiry in relation to large donations made to the NSW Liberal Party; and
  3. three other investigations which are not yet the subject of public inquiries.

Given the public interest in the findings of recent ICAC investigations and the popularity of ICAC, it is likely that this decision will form the basis of a discussion around reform. ICAC has recommended retrospective legislation that would effectively reverse the impact of the decision. While opposition leader Luke Foley has come out in support of reform, Premier Baird has suggested that the full ramifications of the decision need to be understood before legislative reform can be considered.

The facts alleged against Ms Cunneen demonstrated a clear issue of over-reach by ICAC and the High Court has found that it is not the role of ICAC to investigate every alleged criminal activity that might affect the Government or its agencies. However, if the consequence of the decision is to prevent ICAC from investigating serious matters, where the community expectation is that ICAC should be involved (such as the Obied related Mt Penny Mining and Australian Water Holdings allegations mentioned above), the NSW Government will need to consider amending the ICAC Act.

In particular we expect the NSW Government will give consideration to whether ICAC should have power to investigate corrupt conduct by private parties that leads to honest officials making incorrect decisions involving the allocation of government monies or licenses to the benefit of those private parties or their associates.