In brief: By a two to one majority, the NSW Court of Appeal has held that the Independent Commission Against Corruption had no power under the ICAC Act to investigate an allegation to the effect that, as a result of conduct involving an alleged intention to pervert the course of justice, a public official had been diverted from performing an investigation of a suspected crime. The decision has potentially wide ramifications and ICAC is seeking special leave to appeal to the High Court as a matter of urgency. Partner John Warde (view CV) and Senior Associate Jonathan Light report.

HOW DOES IT AFFECT YOU?

  • The Court of Appeal's majority decision (Chief Justice Bathurst dissenting), if it is not overturned by the High Court, has the propensity to materially restrict the future scope of the Independent Commission Against Corruption's (ICAC) investigations into business dealings and other conduct, where the impugned conduct could not have led to any alleged dishonest or partial exercise of official functions by a public official or authority.
  • Against a background of recent calls for the establishment of a national version of ICAC to investigate corrupt conduct involving federal government authorities, this decision and the outcome of the pending appeal to the High Court could influence the content of any future 'National ICAC' legislation, which, in turn, would need to be taken into account by corporations in dealing with public officials across Australia.
  • In NSW, the decision will likely delay the finalisation of some of ICAC's current investigations and, if ICAC's appeal is unsuccessful and the ICAC Act is not amended, there may be fewer investigations by ICAC in future and those that are commenced may be narrower in scope.

BACKGROUND

ICAC's high profile and the extent of its powers to conduct investigations – usually involving public hearings and often involving extensive news media coverage and consequent risks of reputational damage – into a wide range of business dealings and other conduct, has been the subject of public controversy in recent times.

In October 2014, ICAC summonsed C, her son W and his de facto partner T to appear and give evidence at a public inquiry for the purpose of investigating an allegation that C and W, with the intention of perverting the course of justice, had counselled T to pretend to have chest pains, and that T, with the same intent, pretended to have chest pains, to prevent investigating police officers from obtaining evidence of her blood alcohol level at the scene of a motor vehicle accident.

C, W and T commenced urgent proceedings1 seeking injunctions to restrain ICAC from continuing its investigation and, if the investigation was to be allowed to continue, restraining ICAC from holding its inquiry in public. C, W and T asserted that ICAC had no power to investigate the allegation, arguing that their alleged conduct was not 'corrupt conduct' within the meaning of section 8(2) of theIndependent Commission Against Corruption Act 1988 (NSW) (the ICAC Act). The trial judge dismissed the proceedings. C, W and T appealed to the NSW Court of Appeal2.

The main issue before the Court of Appeal arose from the fact that there was no suggestion that the police officers – who are 'public officials' under the ICAC Act – had engaged in any dishonest or less than impartial conduct. Rather the allegation was in effect that the police – unbeknownst to them – had allegedly been diverted from obtaining evidence regarding the possible commission of an offence (driving while above the alcohol limit in breach of NSW's Road Transport Act 2013) by T pretending that she was ill. The question was, in circumstances where the police were said to have been so diverted by the alleged conduct of C, W and T, was the alleged conduct of C, W and T 'corrupt conduct' within the meaning of the ICAC Act and therefore a matter that could be investigated by ICAC under the wide power afforded to it to investigate any allegation or complaint that 'corrupt conduct' may have occurred3

WHAT IS 'CORRUPT CONDUCT'?

'Corrupt conduct' is defined broadly in the ICAC Act. Unsurprisingly, it includes under section 8(1) any conduct of any person that could adversely affect the honest or impartial exercise of official functions by any public official4. However, relevantly to the allegations against C, W and T, it also includes under s8(2) any conduct of any person that could both (1) adversely affect the exercise of official functions by any public official and (2) which could involve perverting the course of justice5. Limb (1) of this test reads very broadly – it omits the words 'honest or impartial' and therefore captures conduct that could adversely affect a public official's exercise of her or his official functions, whether or not it affects the honest or impartial exercise of those functions.

All three judges of appeal (Chief Justice Bathurst, and Justices of Appeal Basten and Ward) were of the view, as ICAC contended, that the alleged conduct, if it was found to have occurred, could involve perverting the course of justice within limb (2) of s8(2). 

However, Justices Basten and Ward interpreted limb (1) more narrowly than the interpretation contended for by ICAC. ICAC had contended that the word 'adversely' in limb (1) refers to conduct that affects the exercise of an official function in a way that has an adverse consequence, in the sense that it diverts the official's decision-making function in a way that is adverse to the course of public administration6.

Justice Ward considered that conduct of a person which could cause a function to be exercised differently by a public official but does not have the potential to cause any 'corruption' in the exercise by the public official of his or her functions, is not conduct which could 'adversely' affect the exercise of official functions under limb (1)7.

Justice Basten considered that the reference in limb (1) to conduct which could 'adversely affect' the exercise of an official function should be understood to refer to conduct which has the capacity to compromise the integrity of public administration8 (which we interpret his Honour was distinguishing from its mere course or outcome). In his Honour's view, where the conduct of an individual is unlawful (eg perverting the course of justice) but that conduct does not have the capacity to lead a public official into dishonest, partial or otherwise corrupt conduct, limb (1) will not catch the conduct9

Chief Justice Bathurst took a different view of the scope of limb (1). In his Honour's opinion, if the conduct in question limits or prevents the proper performance of the official's function, then limb (1) will be satisfied.  In his Honour's view, the alleged conduct here had the potential effect of diverting the police officer from the performance of an investigation into a suspected crime10. Furthermore, the alleged conduct could have the tendency to frustrate or deflect the course of possible court proceedings or impair a court's ability to do justice – and judges are 'public officials' under the ICAC Act11

OUTCOME

Having regard to their view as to the meaning and scope of limb (1), the majority judges held that the conduct alleged against C, W and T could not fall within s8(2) of the Act. That is to say, the alleged conduct, even if it could be shown to have involved perverting the course of justice, could not be 'corrupt conduct' under the ICAC Act. It followed that ICAC had no power to investigate the alleged conduct. The Court of Appeal made orders accordingly. If the decision stands, ICAC's investigation into the alleged conduct of C, W and T will cease and the scheduled public hearings into their alleged conduct will not take place. 

ICAC has announced that it is seeking special leave to appeal to the High Court as a matter of urgency12. It has stated that until the proceedings are resolved, it will not complete its reports into Operations Credo and Spicer. Operation Credo concerns certain allegations, involving among other matters persons with an interest in Australian Water Holdings Pty Ltd allegedly adversely affecting the official functions of Sydney Water Corporation. Operation Spicer involves certain allegations regarding donations to certain Members of Parliament.

COMMENT

It is certainly arguable that the words in the ICAC Act at issue in this case (ie limb (1) of s8(2)) on a plain reading are open to being interpreted as applying to conduct which goes beyond conduct that could 'corrupt' the conduct of a public official and extend to conduct that adversely limits or prevents the proper performance of the official's functions. That is not the interpretation that the majority in the Court of Appeal favoured, having regard to their consideration of the ICAC Act as a whole. Given the public importance of ICAC's functions, it will not be surprising to the authors if special leave to appeal is granted by the High Court. However, the outcome of any such appeal is uncertain. If the appeal fails, and noting the popularity of ICAC in some quarters, calls to amend the ICAC Act to reverse the effect of the Court of Appeal's decision can be expected be made.