B v Lines [No 2]

[2019] SASC 196

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

B v LINES [NO 2]

[2019] SASC 196

Judgment of The Honourable Justice Hinton

15 November 2019

ADMINISTRATIVE LAW - JUDICIAL REVIEW - GENERALLY

Application for judicial review.

The plaintiff was a member of the TAFE SA Board. In February 2015 the Independent Commissioner Against Corruption advised the Ombudsman that he had received a report raising allegations that the plaintiff had been using a State government purchase card to pay for entertainment, and that [redacted] had commissioned KPMG to provide superannuation advice, a copy of which was provided to [redacted] in return for payment. The allegations raised potential issues of misconduct and maladministration in public administration within the meaning of the Independent Commissioner Against Corruption Act 2012 (SA) (ICAC Act). The Ombudsman considered it appropriate that he investigate the allegations made. Accordingly, the matter was referred to the Ombudsman pursuant to s 24(2)(a) of the ICAC Act.

In the course of the Ombudsman’s investigation he became aware of other matters raising issues of misconduct and maladministration in the public service on the part of the plaintiff. The Ombudsman’s investigation was expanded to include these matters.

The investigation into the plaintiff’s alleged conduct led the Ombudsman to make a number of findings in his final report, which included four determinations subject of these proceedings:

1. In purchasing the KPMG advice and the further KPMG advice on behalf of TAFE SA, the plaintiff committed an act of maladministration in public administration within the meaning of s 5(4) of the ICAC Act. (Decision 1)

2. In offering and providing, on behalf of TAFE SA, a copy of superannuation advice to [redacted] in return for payment, the plaintiff committed misconduct in public administration within the meaning of s 5(3)(b) of the ICAC Act. (Decision 2)

3. In misusing a State Government Purchase Card, the plaintiff committed misconduct in public administration within the meaning of s 5(3)(b) of the ICAC Act. (Decision 3)

4. In misusing a State Government Purchase Card, the plaintiff committed maladministration in public administration within the s 5(4) of the ICAC Act. (Decision 4)

The plaintiff filed a summons in this Court seeking review of the four decisions of the Ombudsman contained in his final report. The plaintiff contends that the decisions are infected by jurisdictional error, unreasonableness and that there was a failure to afford procedural fairness. More particularly, the plaintiff submits that in making the decisions, the Ombudsman identified the wrong issues or asked the wrong question, he ignored or dismissed relevant material and/or relied on irrelevant material and that there was legal unreasonableness.

Held, dismissing the application; the Ombudsman’s decisions are not infected by jurisdictional error and have an evident and intelligible justification. Procedure fairness was adequately afforded.

Independent Commissioner Against Corruption Act 2012 (SA) ss 5, 23, 24, 37; Ombudsman Act 1974 (NSW) s 35; Ombudsman Act 1972 (SA) ss 3, 7, 14, 18, 25, 35; Public Corporations Act 1993 (SA) s 15; TAFE SA Act 2012 (SA) ss 9, 11; Superannuation Guarantee Charge Act 1992 (Cth), referred to.
Foster v Minister for Customs and Justice (2000) 200 CLR 442; Kaldas v Barbour [2017] NSWCA 275; Kioa v West (1985) 159 CLR 550; Minister for Immigration v Yusuf (2001) 206 CLR 323; SZBEL v Minister for Immigration and Multicultural and indigenous Affairs and Anor (2006) 228 CLR 152, considered.

B v LINES [NO 2]
[2019] SASC 196

Judicial Review

HINTON J:

Introduction

1. This is an application for judicial review. The plaintiff seeks orders in the nature of certiorari quashing determinations made by the Ombudsman after undertaking an investigation upon a referral made under s 24(2)(a) of the Independent Commissioner Against Corruption Act 2012 (the ICAC Act). The plaintiff contends that the determinations are infected by jurisdictional error, unreasonableness and the failure to afford [redacted] procedural fairness. [Redacted] also seeks a series of declarations the effect of which is to nullify the determinations made by the Ombudsman, in addition to an injunction to prevent the publication of the report produced by the Ombudsman consequent upon completing his investigation.

2. I would dismiss the application. My reasons follow.

   Background

3. In a letter dated 23 February 2015 addressed to the Ombudsman, the Independent Commissioner Against Corruption (the Commissioner) advised that the Office of Public Integrity had received a report alleging that the plaintiff had commissioned a consulting firm to provide TAFE SA Board members with financial advice and that [redacted] had been using TAFE SA credit cards to pay for entertainment. The Commissioner further advised that he had assessed the report as raising potential issues of maladministration in public administration that should be dealt with by the Ombudsman pursuant to s 24(2)(a) of the ICAC Act. The Commissioner then invited the Ombudsman to advise him of his view regarding the referral as required by s 37(1) of the ICAC Act.

4. The plaintiff was a member of the TAFE SA Board.

5. By letter dated 11 March 2015 the Ombudsman advised the Commissioner that he considered it appropriate for him to investigate the allegations made by the whistle-blower.

6. In a letter dated 16 March 2015 the Acting Commissioner referred the matter to the Ombudsman pursuant to s 24(2)(a) of the ICAC Act. Under s 37(2) of the ICAC Act the Commissioner is empowered to issue directions to an inquiry agency, such as the Ombudsman, in relation to a matter referred under s 24(2)(a). Here the Acting Commissioner directed the Ombudsman to proceed in accordance with section 13 of the ICAC Directions and Guidelines. At the relevant time section 13 provided:

   … an inquiry agency must comply with the following directions:

   (1)Identify all issues of misconduct and/or maladministration which are to be assessed.

   (2)Take appropriate action, or alternately determine not to take action; and

   (3)Report to the Commissioner within 56 days of the referral or such extended time as may be directed by the Commissioner:

   (i)The issues addressed; and

   (ii)The action taken and the resources for that action, or, if no action is taken, the reason why no action was taken.

   (4)Where directed by the Commissioner, report to the complainant or reporting agency the matters referred to in (3).

7. Misconduct in public administration and maladministration in public administration are defined in s 5 of the ICAC Act. It will be necessary to deal with these definitions in some detail later in these reasons.

8. In the course of the investigation that followed the Ombudsman became aware of other potential misconduct and maladministration in public administration committed by the plaintiff, namely, that [redacted] had provided a copy of the superannuation advice to a senior executive of the [redacted] Corporation of South Australia ([redacted]), and that, in addition to the networking expenditure referred to, the plaintiff had incurred significant expenditure using a State government purchase card on the cost of lunches and other meals with TAFE SA staff, executives [redacted]. Accordingly, the Ombudsman’s investigation was expanded to include these matters.

9. On 13 May 2015 the plaintiff received a letter from the Ombudsman advising [redacted] of the original allegations that had been made against [redacted]. The Ombudsman requested that the plaintiff provide certain documents and attend an interview in relation to the allegations. The plaintiff instructed solicitors.

10. In July 2015 the plaintiff’s solicitors caused a book of documents to be delivered to the Ombudsman in response to his 13 May 2015 request. Included in that book of documents were draft TAFE SA Board minutes, a letter of engagement from KPMG, two advices from KPMG, and copy of the Department of Further Education, Employment, Science and Technology’s (DFEEST) “Financial Management — Purchase Cards Policy” (the DFEEST purchase cards policy).

11. On 29 July 2015 the plaintiff was interviewed by legal officers employed within the Ombudsman’s office.

12. Some months after the interview the Ombudsman requested that the plaintiff provide him with further documents. The plaintiff did so. The documents were provided included Treasurer’s Instruction 12, Government Purchase Cards (TI 12) and the DFEEST “Policy Management Framework — Travel Meals and Entertainment Policy” (the DFEEST TME Policy).

13. On 16 December 2015 the plaintiff received a letter from the Ombudsman in which the further allegations referred to above were raised. The letter also contained a further request for certain documents. Again, the plaintiff acceded to the request and provided the documents requested, including a copy of an invoice from KPMG and related payment authorisation, email correspondence concerning the use of TAFE SA purchase card advice passing between the TAFE SA Board Secretariat and the Department of Treasury and Finance (DTF) in November 2012, an application form for a State government purchase card and an acknowledgement form signed by the plaintiff upon receiving a government purchase card, and a notification form indicating which member of the TAFE SA Board was to be responsible for supervising the plaintiff’s use of the TAFE SA credit card issued to [redacted].

14. On 29 February 2016 the plaintiff was interviewed a second time at the Ombudsman’s office by legal advisors employed by the Ombudsman. A third interview followed on 5 April 2016.

15. On 28 October 2016 the plaintiff received a letter from the Ombudsman enclosing a provisional report in which the Ombudsman set out his preliminary findings. Those findings included the determinations subject of these proceedings. The plaintiff was invited to provide the Ombudsman with any comment regarding the content of the provisional report by 25 November 2016.

16. Under cover of a letter dated 31 January 2017 the plaintiff through [redacted] solicitors responded to the Ombudsman’s provisional report.

17. On 31 May 2017 the Ombudsman forwarded to the plaintiff a copy of his final report. The Ombudsman concluded:

    1. In purchasing the KPMG advice and the further KPMG advice on behalf of TAFE SA, [the plaintiff] committed an act of maladministration in public administration within the meaning of s 5(4) of the ICAC Act. [Decision 1]

    2. In offering and providing, on behalf of TAFE SA, a copy of superannuation advice to [redacted] in return for payment, [the plaintiff] committed misconduct in public administration within the meaning of section 5(3)(b) of the ICAC Act. [Decision 2]

    3. In misusing a State Government Purchase Card, [the plaintiff] committed misconduct in public administration within the meaning of section 5(3)(b) of the ICAC Act. [Decision 3]

    4. In misusing a State Government Purchase Card, [the plaintiff] committed maladministration in public administration within the section 5(4) of the ICAC Act. [Decision 4]

18. The Ombudsman advised that he intended to provide a copy of the final report to the Chief Executive Officer of TAFE SA as required by s 18(5) of the Ombudsman Act 1972 (SA) (the Ombudsman Act). He also intended to provide a copy of the final report to the Minister for Higher Education and Skills.

    The Ombudsman’s final report and the four decisions

    a.      The first decision

19. The TAFE SA Board was appointed in October 2012. However, the remuneration level for board members was not determined until some time later. As a consequence, Board members did not receive their first salary payment until 9 May 2012 (with back-pay to October 2012 to be provided). A question arose as to whether Board members could enter into arrangements to salary sacrifice their fee in exchange for superannuation contributions and, if so, the attendant taxation implications. Responsibility for obtaining advice on the issue was delegated by the Board to the plaintiff. The plaintiff retained KPMG to provide advice on the issue. The letter retaining KPMG was signed by the then Acting Chief Executive Office of TAFE SA.

20. Under cover of a letter dated 29 April 2013 KPMG provided the requested advice. That advice was shared with all members of the Board. There was a request for some follow-up advice which was provided (the further TAFE advice). Ultimately, TAFE SA paid $11,660 to KPMG for the advice, inclusive of GST.

21. In September 2011 the Department of the Premier and Cabinet issued a Circular entitled, “PCO16 – Remuneration for Government Appointed Part-Time Boards and Committees” (PCO16). PCO16 advised that the Australian Taxation Office regarded members of government Boards and committees to be employees in relation to whom superannuation contributions under the Superannuation Guarantee Charge Act 1992 (Cth) had to be paid. Relevantly, PCO16 advised:

    9.3Board members who are not employees of the South Australian Government may nominate any complying superannuation fund to receive their SG charge. Details of the fund must be provided to the executive officer of the board and the responsible payroll area before the first payment is made to the member. Failure to nominate a preferred superannuation fund will result in the SG charge being paid to a new account established for the member by Super SA (Triple S Scheme). At present, it is not possible for funds accumulated in a Triple S account to be rolled into another superannuation scheme until the member’s term on the board or committee has ended.

    …

    10.7As there are caps that apply to the level of concessionally taxed employer financed superannuation contributions paid into a nominated complying superannuation scheme, including salary sacrificed contributions, it is the responsibility of the board or committee member to determine the taxation implications of funds salary sacrificed into a nominated superannuation scheme. 

22. The Ombudsman considered that the superannuation advice was obtained for the benefit of the TAFE SA Board members as individuals and was of no benefit to TAFE SA as an organisation or to the Board as a governing entity. He considered that he was fortified in this conclusion by the content of paragraph 10.7 of PCO16 and the direction that responsibility for determining the taxation implications of funds salary sacrificed into a nominated superannuation scheme lay with the individual Board or committee member. The Ombudsman rejected the contention that it was the responsibility of TAFE SA management to provide each new Board member with an induction pack that ensured there were no uncertainties regarding superannuation, salary sacrificing and taxation.

23. Further, and in any event, the Ombudsman considered that even if it could be said that the advice was of some benefit to TAFE SA, he did not consider that the nature and substance of the advice and any benefit it might confer justified the cost incurred in obtaining it. In arriving at this conclusion the Ombudsman took into account the fact that in providing the advice to [redacted], TAFE SA had recovered 50% of the cost of obtaining the advice.

24. Inquiries undertaken by the Ombudsman revealed that the advice provided by KPMG was freely and publicly available in a factsheet featured on the Super SA website. The Ombudsman was satisfied that the plaintiff knew that the default superannuation scheme for Board members was the Super SA Triple S Scheme. He determined that it was incumbent upon the plaintiff, at least, to have made inquiries of TAFE SA management about the superannuation issue. It was also incumbent upon the plaintiff to review the TAFE Procurement Process Policy which required that [redacted] be able to demonstrate value for money in procuring the advice.

25. The Ombudsman concluded:

    156.As required by the Commissioner’s referral of the issue pursuant to s 24(2)(a) of the ICAC Act, I have considered whether there is any issue of maladministration in public administration under the ICAC Act in relation [the plaintiff’s] decision to purchase the KPMG advice and the further KPMG advice.

    157.In this instance, to be satisfied that the definition of maladministration has been met, I would need to be satisfied that the conduct of [the plaintiff] resulted in an irregular and unauthorised use of public money or the substantial mismanagement of public resources.

    158.On the evidence before me and in all the circumstances, it is my view that conduct of [the plaintiff] in purchasing the KPMG advice and the further KPMG advice resulted in the substantial mismanagement of public resources. In reaching this view, I have had regard to the following:

    ·    My finding that the advice predominantly benefited individual members of the board (or the collective interests of these members), rather than the board as a governing entity (and, by extension, TAFE SA)

    ·    That PCO16 suggests that it is the responsibility of individual board members to determine the taxation implications of funds salary sacrificed into a nominated superannuation scheme

    ·    my finding that any benefit conferred to the board was substantially disproportionate to the amount spent in obtaining the advice

    ·    that much of the information within the KPMG advice and the further KPMG advice was freely available and easily accessible to members of the public

    ·    that [the plaintiff] failed to consider alternate means through which to obtain the information

    ·    that [the plaintiff] failed to give adequate consideration to the requirement to demonstrate value for money

    ·    the total amount spent on the advice, the TAFE SA operating budget during the relevant period and the nominal (if any) benefit to TAFE SA and the public at large in [the plaintiff] obtaining the advice.

    Opinion

    In the light of the above, my view is that in purchasing the KPMG advice and the further KPMG advice on behalf of TAFE SA, [ the plaintiff] committed an act of maladministration in public administration within the meaning of section 5(4) of the ICAC Act.

    [footnotes omitted]

    b.      The second decision

26. The KPMG advice had a relevance to members of government Boards and committees other than the TAFE SA Board. In a discussion with the Chief Executive Officer of [redacted] the plaintiff revealed that [redacted] was seeking advice from KPMG on salary sacrificing board fees and the superannuation and taxation implications. [Redacted] was interested in the advice. It was agreed that the advice would be shared and the cost of the advice shared. All came to pass and on 23 July 2013 TAFE SA invoiced [redacted] $5,830.

27. The terms upon which KPMG was retained by the plaintiff to provide the advice to TAFESA included:

    3.6Any advice, recommendation, information or Deliverable provided by us to you is for your sole use and benefit. Unless required by law to do so, you shall not provide or make it available to any third party or use our name in any marketing or promotional material without our prior written consent.

28. The plaintiff did not read the fine print. When [redacted] received the engagement letter [redacted] provided it to TAFE SA staff and did not retain a copy for [redacted] own records.

29. The Ombudsman considered:

    163.I have no trouble in accepting that [the plaintiff] did not closely review the terms and conditions of the engagement letter. [Redacted] was nevertheless aware of the engagement letter, had seen and handled it and, in my view, should have turned [redacted] mind to it when considering [redacted] arrangement with Mr [redacted].

    164. In any case, I consider that a reasonable person in [the plaintiff’s] position and with [the plaintiff’s] knowledge, skills and acumen, even if he or she had not directly sighted the engagement letter or its terms, would have turned his or her mind to the possibility that the provision of the sort of product provided by KPMG would likely have been subject to terms and conditions limiting that product’s distribution and further sale.

    165. In my view, in offering and providing, on behalf of TAFE SA, a copy of the KPMG advice to [redacted], [the plaintiff] exposed TAFE SA to the possibility of a claim for damages from KPMG. That such a claim may not yet have eventuated does not diminish [the plaintiff’s] responsibility for exposing TAFE SA to risk of this kind;[the plaintiff], after all, cannot have known at the time what KPMG was likely to do if it became aware of [redacted] actions, and to the extent that KPMG may still be unaware, the threat of legal action remains.

    …

    174.For the reasons outlined above, and taking into account [the plaintiff’s] skills knowledge and acumen and the overall degree of risk involved in the transaction, I am of the view that in on-selling the KPMG advice to [redacted], [the plaintiff] failed to exercise a reasonable degree of care and diligence in the performance of [redacted] functions within the meaning of section 15(1) of the Public Corporations Act.

1. Mr [redacted] was the Chief Executive Officer of [redacted] at the time.

2. The Ombudsman did not consider that the plaintiff’s conduct could be characterised simply as being wrong and not constitute misconduct within the meaning of s 5(3)(b) of the ICAC Act. He concluded:

   183.In my view, a director’s failure to exercise a reasonable degree of care and diligence in the performance of his or her functions within the meaning of section 15(1) of the Public Corporations Act may inform a finding as to whether that director has committed misconduct in his or her capacity as a public officer.

   184.I have already expressed the view that [the plaintiff], in on-selling the KPMG advice, failed to exercise a reasonable degree of care and diligence in [redacted] functions. Having considered this finding, the risk to which TAFE SA has been exposed by … [the plaintiff’s] breach of the terms and conditions of the engagement letter and the lack of any reasonable excuse or justification for [redacted] failure to abide by these terms and conditions, I am of the view that [the plaintiff’s] conduct constitutes misconduct committed in [redacted] capacity as a public officer.

   Opinion

   In light of the above, my view is that offering and providing, on behalf of TAFE SA, a copy of the KPMG advice to [redacted] in return for payment [the plaintiff] committed misconduct in public administration within the meaning of section 5(3)(b) of the ICAC Act.

   c.      The third decision

3. Upon appointment to the TAFE SA Board the plaintiff requested that [redacted] be provided with a State government purchase card. After some communication between TAFE SA, the Department of the Premier and Cabinet and the DTF, the plaintiff was provided with a card but not before signing the DFEEST FIN 2 “State Government Purchase Card Agreement and Acknowledgement — Cardholder” Form (the Agreement and Acknowledgement Form).

4. The Agreement and Acknowledgement Form contained a number of conditions governing the use of the card including that it must only be used “in accordance with the DFEEST Purchase Card Policy and local management instructions”. The Agreement and Acknowledgement Form also contained a warning that misuse of the card may result in disciplinary action or proceedings instituted under law. Further, it contained an acknowledgement that the recipient of the card had read and understood TI 12 and had received a copy of the DFEEST Purchase Card Policy in addition to a promise to observe any other local management instructions.

5. The plaintiff informed the Ombudsman that contrary to the Agreement and Acknowledgement Form which [redacted] did sign, [redacted] was not given a copy of either TI 12 or the DFEEST Purchase Card Policy.

6. Between 4 March 2013 and 17 March 2015 the plaintiff used the purchase card with which [redacted] had been issued on 26 occasions to buy meals and drinks totalling $4,227.10. It is accepted that the expenditure was incurred in the course of the plaintiff meeting “internal and external stakeholders”. 

7. Clause 6.6.1 of the DFEEST Purchase Card Policy permitted the use of the card for catering and entertainment in accordance with the DFEEST TME policy. Clause 6.6.2 prohibited the purchase of alcohol using a card unless approved by a level 1, 2 or 3 delegate or for teaching purposes.

8. Clause 7.1.1 of the DFEEST TME policy permitted the extension of hospitality to interstate or overseas visitors where the Department had an interest in, or some obligation towards, facilitating the visit. Clause 7.1.3 allowed for expenditure on meals and light refreshments to departmental officers “in order to facilitate DFEEST business”. Clause 7.3 provided for “official Hospitality expenditure” provided prior written approval was obtained and clause 7.4 provided for expenditure for “Special Events” being circumstances not covered by the policy.

9. The plaintiff did not consider that the policies applied to [redacted] and [redacted] use of the card issued to [redacted]. [Redacted] considered all expenditures [redacted] made authorised and appropriate. With respect to authorisation, [redacted] claimed to have obtained approval to use the purchase card as [redacted] had. All transactions were approved by the plaintiff’s credit card supervisor, Mr [redacted]. The plaintiff justified the expenditure on various grounds all essentially reducible to the proposition that in the circumstances the expenditure facilitated TAFE business.

10. The Ombudsman accepted that the DFEEST Purchase Card Policy did not in its terms apply to a board member as opposed to an employee. The policy was drafted at a time before TAFE was corporatised, when it did not have a Board but only employees. In fact, the Ombudsman considered that the plaintiff had been issued the card on the erroneous understanding that [redacted] was a State government employee. Nonetheless, the Ombudsman did not think that the plaintiff was entitled to ignore the policy because [redacted] signed the Agreement and Acknowledgement Form, agreeing, amongst other things, that [redacted] would “only use the card in accordance with the DFEEST Purchase Card Policy and local management instructions”. The Ombudsman considered:

    197.[The plaintiff] must surely have been aware that [redacted] use of the purchase card was subject to reasonable limits. In my view a reasonable person seeking to ascertain the exact nature of these limits would have consulted the documents prepared in connection with the issuance of the card, together with the agency’s policies and procedures.

    198.I am not persuaded that [the plaintiff’s] submission that [redacted] was ‘merely asked to sign the card acknowledgement as a pure formality’ in some way absolves [redacted] of any obligation to comply with its terms. Indeed I consider, it somewhat remarkable that a person in … [the plaintiff’s] position and possessing [redacted] skills, knowledge and acumen could have come to the conclusion that signing an agreement to abide by certain terms could have had any other effect.

    199.I similarly do not consider that [the plaintiff] is absolved from an obligation to comply with the Purchase Card Policy or Treasurer’s Instruction 12 by virtue of the fact that [redacted] was not provided with a copy of the policy and did not read the instruction when asked to sign the acknowledgement form. In fact, this causes me some concern as to why [redacted] then proceeded to sign the acknowledgment form indicating the contrary.

11. The Ombudsman referred to the plaintiff’s role as carrying with it responsibilities and expectations exceeding that of the ordinary employee. He considered that if the DFEEST Purchase Card Policy did not apply to the plaintiff, it would have been appropriate for the plaintiff to comply with the spirit of the policy nonetheless in [redacted] use of public funds.

12. The Ombudsman did not consider the expenditure made by the plaintiff permissible under either the Purchase Card Policy or the DFEEST TME policy. It did not amount to official hospitality, was not necessary to facilitate the visit of interstate or overseas visitors and was not necessary in order to facilitate TAFE SA business. The Ombudsman added:

    213.Even if I were of the belief that the expenditure relating to the meetings (both with external stakeholders and TAFE SA staff [redacted]) was authorised by a broad construction of the Travel, Meals and Entertainment Policy, I do not believe the expenditure to have been authorised by the Purchase Card Policy or the Procurement Policy. Specifically, I am of the view that the level of expenditure incurred in relation to the vast majority of the meetings made the purchases ‘disproportionate to their worth’ to TAFE SA within the meaning of the Purchase Card Policy and not ‘value for money’ within the meaning of the Procurement Policy.

13. The Ombudsman was not persuaded that some form of meeting involving less expenditure, such as over coffee, would not have sufficed. Nor was he not persuaded that the plaintiff’s purchase of alcohol was compliant. The Ombudsman accepted that the plaintiff had approval in principle [redacted] for some of the expenditure, though he doubted that the form in which the approval was given was compliant with the Purchase Card Policy. The Ombudsman considered:

    234.I can see nothing in the Purchase Card Policy or Travel, Meals and Entertainment Policy to suggest that the Chief Executive Officer possesses the authority to waive compliance with either policy.

    235.I accept, however, that it was not unreasonable for [the plaintiff] to assign significant weight to the views of the Acting Chief Executive Officer. In my view this did not absolve [the plaintiff], upon being presented with the acknowledgment form, from satisfying [redacted] that [redacted] (then anticipated) use of the purchase card would comply with the terms and conditions attached to that card. I simply cannot accept that the [redacted] board of a public authority such as TAFE SA, with all the responsibilities that such a position entails, could have formed the view that no further enquiries were necessary in the circumstances.

14. The Ombudsman did not consider that the plaintiff could take comfort in the fact that audit processes had not resulted in the plaintiff’s expenditure being questioned. He concluded:

    238.As required by the Commissioner’s referral of the issue pursuant to section 24(2)(a) of the ICAC Act, I have considered whether there is any issue of misconduct in public administration under the ICAC Act in relation to [the plaintiff’s] purchase card expenditure.

    239.In this instance, to be satisfied that the definition of misconduct has been met, I would need to be satisfied that [the plaintiff], through [redacted] actions, committed misconduct while acting in [redacted] capacity as a public officer.

    240.On the evidence before me and in all the circumstances, it is my view that [the plaintiff’s] conduct in incurring the purchase card expenditure constitutes misconduct committed in [redacted] capacity as a public officer. In reaching this conclusion, I have had specific regard to:

    ·    [the plaintiff’s] failure to properly apprise [redacted] of the terms of the acknowledgment form and, in turn, the Purchase Card Policy, the Travel, Meals and Entertainment Policy and the Procurement Policy

    ·    [the plaintiff’s] failure to comply with the terms of the acknowledgement form and, in turn, the Purchase Card Policy, the Travel, Meals and Entertainment Policy and the Procurement Policy.

    Opinion

    In light of the above, my view is that in misusing a State Government Purchase Card, [the plaintiff] committed misconduct in public administration within the meaning of section 5(3)(b) of the ICAC Act.

    d.      The fourth decision

15. The fourth decision was a flow on from the third in that the Ombudsman considered whether the plaintiff’s misuse of the State government purchase card with which [redacted] was issued also amounted to maladministration in public administration. The Ombudsman directed himself that to be satisfied that the plaintiff had engaged in maladministration he had to be satisfied that the plaintiff’s conduct resulted in an irregular and unauthorised use of public money or the substantial mismanagement of public resources. He said:

    243.I am of the view that [the plaintiff’s] conduct, insofar as it failed to comply with the Purchase Card Policy, the Travel, Meals and Entertainment Policy and the Procurement Policy as outlined above, resulted in the unauthorised use of public money. In this regard, I make it clear that I consider the purchase card expenditure, notwithstanding Mr [redacted] approval, was contrary to the Purchase Card Policy and the Procurement Police and, in turn, ‘unauthorised’ within the meaning of section 5(4)(a)(i) of the ICAC Act.

16. However, the Ombudsman did not consider the expenditure irregular within the meaning of s 5(4)(a)(i) because there was some connection between the expenditure and Board business in that the Ombudsman accepted that the plaintiff genuinely believed that the expenditure was necessary for conducting TAFE SA business.

17. The question remained, did the expenditure constitute the substantial mismanagement of public funds? The Ombudsman concluded:

    248.I observe that section 5(4)(a)(i) of the ICAC Act is so worded that I need be satisfied that conduct resulted in ‘substantial mismanagement of public resources’, as opposed to ‘mismanagement of substantial public resources’. That is, this definition of maladministration requires, inter alia, a consideration as to whether public resources have been managed properly and, where I am satisfied that they have not been, the relative seriousness or significance of the mismanagement. The latter consideration may be assessed in part by reference to any loss incurred by the public authority; however this is not the only relevant consideration. It may even be the case that no loss can be conclusively demonstrated.

    249.I am of the view that the purchase card expenditure resulted in the substantial mismanagement of public resources. In this regard, and in addition to my findings above, I have considered:

    ·    the amount expended, individually and cumulatively

    ·    the period of time to which the expenditure relates

    ·    the ostensible purpose of the expenditure

    ·    the ostensible outcomes achieved through the expenditure

    ·    the alternatives available to achieve the same or substantially similar ends

    ·    the overall budget of TAFE SA during the relevant period

    250.I make it clear that in reaching this conclusion I have considered [the plaintiff’s] submissions as to the average monthly expenditure incurred during the relevant period. These submissions have not persuaded me to reach a different conclusion. In my view, focusing on the average monthly expenditure (which taken in isolation may not appear substantial) fails to acknowledge the cumulative effect of each transaction, the significant period of time over which the transactions were incurred and the likelihood that, absent my investigation, expenditure of this kind would still be accumulating today.

    Opinion

    In the light of the above, my view is that in misusing a State Government Purchase Card, [the plaintiff] committed maladministration in public administration within the meaning of the section 5(4) of the ICAC Act.

    Did the Ombudsman err in conducting an investigation into maladministration and misconduct in public administration?

18. The plaintiff contends that in relation to each of the four decisions the Ombudsman acted beyond power in that he purported to conduct an investigation into maladministration and misconduct in public administration under the ICAC Act rather than into an administrative act under the Ombudsman Act.

19. The crux of the plaintiff’s argument is that a referral under s 24(2)(a) of the ICAC Act did not have to consequence of enlivening in the Ombudsman power to investigate allegations of maladministration or misconduct in public administration under the ICAC Act. A referral only enlivened power in the Ombudsman to investigate administrative acts within the meaning of the Ombudsman Act.

20. Earlier in these reasons I have set out the history that resulted in the Commissioner referring the matter to the Ombudsman. As mentioned, the referral was made under s 24(2)(a) of the ICAC Act. Section 24(2) provided:

    (2)   If a matter is assessed as raising a potential issue of misconduct or maladministration in public administration, the matter must be dealt with in 1 or more of the following ways:

    (a)the matter may be referred to an inquiry agency and, if the Commissioner considers it appropriate, the Commissioner may give directions or guidance to the agency in respect of the matter;

    (ab)the Commissioner may exercise the powers of an inquiry agency in respect of the matter;

    (b)the matter may be referred to the public authority concerned and, if the Commissioner considers it appropriate, the Commissioner may give directions or guidance to the authority in respect of the matter.

21. Inquiry agency is defined in s 4 of the ICAC Act. The Ombudsman was an inquiry agency.

22. The plaintiff submits that a referral under s 24(2)(a) of the ICAC Act does not vest power in an inquiry agency nor confer functions on an inquiry agency under the ICAC Act. Implicitly, s 24(2)(a) contemplates that the referred matter be dealt with by the inquiry agency within the statutory framework under which the agency ordinarily functions and exercising whatever powers it may possess under that framework. In the Ombudsman’s case that meant dealing with the referral under the Ombudsman Act. Consistent with this submission, the plaintiff submits that s 14B of the Ombudsman Act, which was inserted into that Act in 2016, merely confirmed what was implicit. Section 14B provides:

    14B—Referral of matter by OPI or ICAC

    (1) If a matter is referred to the Ombudsman under the ICAC Act, the matter—

    (a)will be taken to relate to administrative acts for the purposes of this Act; and

    (b)must be dealt with under this Act as if a complaint had been made under this Act and—

    (i)if the matter was the subject of a complaint or report under the ICAC Act—as if the person who made the complaint or report under that Act was the complainant under this Act; or

    (ii)if the matter was assessed under that Act after being identified by the Commissioner acting on the Commissioner's own initiative or by the Commissioner or the Office in the course of performing functions under any Act—as if the Commissioner was the complainant under this Act.

    (2)   In this section—

    Commissioner means the person holding or acting in the office of the Independent Commissioner Against Corruption under the ICAC Act;

    ICAC Act means Independent Commissioner Against Corruption Act 2012;

    Office means the Office for Public Integrity under the ICAC Act.

23. The defendant concedes that s 24(2)(a) does not confer powers under the ICAC Act incidental to a referral being made that may then be exercised in any ensuing investigation, but by analogy to the distinction between power and jurisdiction, contends that the section confers jurisdiction on the Ombudsman.

24. The “matter” subject of s 24(2)(a) is one assessed as raising a potential issue of misconduct or maladministration in public administration. Only a matter answering that description may be referred and it is in relation to such matter that the Commissioner may give directions or guidance. Importantly, the Commissioner does not give directions or guidance in relation to the investigation of an administrative act under the Ombudsman Act. The power to give directions or guidance is confined to the matter. It follows that any direction or guidance given must reflect the nature of the matter and the purpose of the referral. Here reference should be made to the functions of the Commissioner and, in particular, ss 7(1)(b) and (c).

25. Under s 7(1)(b) the Commissioner is charged with the responsibility of assisting inquiry agencies and public authorities to identify and deal with misconduct and maladministration in public administration, and, under s 7(1)(c), to give directions and guidance to inquiry agencies and public authorities, and to exercise the powers of inquiry agencies in dealing with misconduct and maladministration in public administration, as the Commissioner considers appropriate. Sections 7(1)(b) and (c), taken with s 24(2)(a) of the ICAC Act, indicate that the Commissioner is empowered to co-opt and assist inquiry agencies in dealing with allegations of misconduct and maladministration in public administration. In my view, a referral under s 24(2)(a) is made for the purpose of the inquiry agency dealing with the potential issue of misconduct or maladministration in public administration that the matter referred has been assessed to have.

26. I am fortified in this conclusion by s 37(2) of the ICAC Act which provides:

    (2)   If a matter raising potential issues of misconduct or maladministration in public administration is referred to an inquiry agency, the directions or guidance that may be given to the agency by the Commissioner include (without limitation)—

    (a)requirement that the agency submit a report or reports on action taken in respect of the matter as set out in the directions; and

    (b)a recommendation as to the action that should be taken by the agency and the period within which it should be taken.

1. Section 24(2)(a) read with s 37(2) makes plain that the inquiry agency to which a referral is made is expected to take action in respect of the matter referred and may be directed to report on the same. Section 37(7) points to the same conclusion.

2. I also place significance on the implication to be drawn from s 24(2)(ab) of the ICAC Act. The implication is that the Commissioner is to enjoy the same powers in relation to a matter raising a potential issue of misconduct or maladministration in public administration as an inquiry agency would if such matter were referred. Accepting this, implicitly, it is contemplated that if a referral is made to an inquiry agency the powers that the agency has may be exercised in relation to the referral.

3. At this juncture it is convenient to refer to the definitions of misconduct in public administration and maladministration in public administration. Those definitions are to be found in s 5 of the ICAC Act and provide:

   (3)     Misconduct in public administration means—

   (a)   contravention of a code of conduct by a public officer while acting in his or her capacity as a public officer that constitutes a ground for disciplinary action against the officer; or

   (b)   other misconduct of a public officer while acting in his or her capacity as a public officer.

   (4)     Maladministration in public administration—

   (a)   means—

   (i)conduct of a public officer, or a practice, policy or procedure of a public authority, that results in an irregular and unauthorised use of public money or substantial mismanagement of public resources; or

   (ii)conduct of a public officer involving substantial mismanagement in or in relation to the performance of official functions; and

   (b)   includes conduct resulting from impropriety, incompetence or negligence; and

   (c)   is to be assessed having regard to relevant statutory provisions and administrative instructions and directions.

   (5)Without limiting or extending the conduct that may comprise corruption, misconduct or maladministration in public administration, this Act applies to conduct that—

   (a)   occurred before the commencement of this Act; or

   (b)   occurs outside this State; or

   (c)   comprises a failure to act; or

   (d)   is conduct of a person who was a public officer at the time of its occurrence but who has since ceased to be a public officer; or

   (e)   is conduct of a person who was not a public officer at the time of its occurrence but who has since become a public officer.

4. In the case of both misconduct in public administration and maladministration in public administration as they apply to individuals, the focus is upon conduct. In order to determine whether misconduct in public administration or maladministration in public administration has occurred one must look at the conduct of the individual public officer. Further, one must determine whether the evidence of that conduct satisfies the statutory definition. Thus, if a referral is made under s 24(2)(a) in relation to a matter concerning an individual to be dealt with by an inquiry agency, the inquiry agency must conduct an investigation and form a view as to whether the potential issue is an actual issue. Only then can the agency determine what action shall be taken if any. Put slightly differently, in relation to a matter concerning an individual, the potential issue will invariably involve an allegation about particular conduct. That conduct must be investigated and a determination made as to whether it amounts to misconduct in public administration or maladministration in public administration within the meaning of s 5 ICAC Act. If it is determined that misconduct in public administration or maladministration in public administration has occurred, the agency is then to determine what action to take. That an investigation may lead to action taken by the inquiry agency is necessarily contemplated by the fact that the matter is referred to the agency to be dealt with and the agency may be required to report to the Commissioner on action taken with respect to the matter. The function is not offensive to principle and not unusual.[1]

   [1]    Australian Communications and Media Authority v Today FM (Sydney) Pty Ltd (2015) 255 CLR 352 at [33] (French CJ, Hayne, Kiefel Bell and Keane JJ).

5. The plaintiff points to section 13 of the Commissioner’s Directions and Guidelines as supportive of [redacted] argument.[2] Unlike section 14 of the Directions and Guidelines, which applied to referrals made to public authorities under s 24(2)(b), nowhere in section 13 does the Commissioner direct the inquiry agency to obtain all information from the witnesses who can give information relevant to the issues to be assessed, obtain all documentation relevant to the issue and make relevant findings in relations to the issues, as his direction to a public authority explains.[3] The plaintiff’s point is that such things are absent from section 13 because they are not to be undertaken in the case of an inquiry agency. I disagree. I think it more likely that section 14 spells out for public authorities the steps to be taken in investigating a matter referred due to the fact that such authorities do not investigate matters routinely. The same cannot be said for inquiry agencies, at least the Ombudsman and the Police Commissioner. In any event, obtaining all information from the witnesses who can give information relevant to the issues to be assessed, obtaining all documentation relevant to the issue and making relevant findings in relation to the issues, are steps that must be taken if a determination is to be made as to the appropriate action to be taken or whether any action be taken, as section 13 requires.

   [2]    Independent Commissioner Against Corruption, Directions and Guidelines (November 2014).

   [3]    Independent Commissioner Against Corruption, Directions and Guidelines (November 2014), section 14.

6. What I have written does not mean that all powers possessed by an inquiry agency can be exercised in relation to a referral or that constraints in the exercise of powers imposed by an agency’s creation Act necessarily apply in relation to a referral. There remains a construction exercise to be undertaken in attempting to read the ICAC Act harmoniously, relevantly, with the Ombudsman Act. That is to say, whilst implicitly Parliament has empowered the Ombudsman to exercise the powers conferred on him by the Ombudsman Act in dealing with a matter referred under the ICAC Act, that implication would bow to a contrary indication.

7. Turning to s 18 of the Ombudsman Act. It provides:

   18—Procedure on investigations

   (1)   Notwithstanding any other provision of this Part, the Ombudsman may make a preliminary investigation of an administrative act to determine whether to proceed with a full investigation of that act.

   (1a) The Ombudsman must, before proceeding with a full investigation of an administrative act, inform the principal officer of the relevant agency of the decision to proceed with such an investigation.

   (2)   Every investigation under this Act must be conducted in private.

   (3)   The Ombudsman—

   (a)is not required to hold a hearing for the purposes of an investigation;

   (b)may obtain information from such persons and in such manner as the Ombudsman thinks fit;

   (c)may determine whether any person to whom an investigation relates may have legal or other representation.

   (4)   Before making a report affecting an agency to which this Act applies the Ombudsman must allow the principal officer of the agency a reasonable opportunity to comment on the subject matter of the report.

   (5)   The Ombudsman must report any evidence of breach of duty or misconduct on the part of a member, officer or employee of an agency to which this Act applies to the principal officer of the agency.

   (6)   Subject to this Act, the procedure to be adopted in relation to an investigation will be as determined by the Ombudsman.

8. Nothing in the ICAC Act requires that wherever the expression administrative act appears in the Ombudsman Act it must be understood as including a matter referred under s 24(2) of the ICAC Act. It must be remembered that the Ombudsman’s power in the present case was not derived from s 13 of the Ombudsman Act.

9. In the present case it is contended that the Ombudsman did not comply with s 18(1a) and has therefore acted in excess of power. In my view none of ss 18(1), (1a), (4) or (5) apply to a matter referred under s 24(2)(a) of the ICAC Act. Similarly, ss 15A, 16, 17 and 19A do not apply. To apply those sections to a referral would be inconsistent with the source of jurisdiction (i.e. s 24(2)(a)), the subject matter of the jurisdiction (i.e. individual conduct not extending to organisational conduct) and the purpose of the jurisdiction. The subsequent enactment of s 14B of the ICAC Act does not cause me to think differently. Most of the provisions to which I have referred will only apply notionally to a referral in relation to the conduct of an individual under the ICAC Act as now amended.

10. If I am wrong in this regard, I would hold in any event that the failure to comply with s 18(1a) does not invalidate the exercise of the power to investigate a referral.[4] First, no right, entitlement or interest is contingent upon notice being given, nor any obligation enlivened. Secondly, under s 18(4) procedural fairness is guaranteed. Thirdly, no report may be made before the opportunity to comment is provided. Fourthly, it would be an odd outcome to hold that a report prepared after an investigation in which s 18(4) was complied with was nonetheless invalid for want of compliance with s 18(1a). Fifthly, to the extent that the section is intended to facilitate the investigative function, to hold that its breach renders the investigation unlawful is self-defeating.[5]

    [4]    The question is whether it was a purpose of the Ombudsman Act 1972 (SA) that an investigation conducted in breach of s 18(1a) be invalid; Project Blue Sky Inc v Australian BroadcastingAuthority (1998) 194 CLR 355 at [93] (McHugh, Gummow, Kirby and Hayne JJ).

    [5]    South Australia, Parliamentary Debates, Legislative Council, 29 March 1984 at p 2995.

11. To the extent that the plaintiff attempts to invoke the non-compliance with s 18(1a) and the resultant failure to afford TAFE SA procedural fairness as amounting to jurisdictional error justifying the quashing of the decision, [redacted] has no standing.

12. For these reasons I dismiss the first ground of review.[6]

    [6]    Ground 3A.

    Did the Ombudsman misunderstand the task under ss 5(3)(a) and (b) of the ICAC Act?

13. In the alternative to the first ground of review, the plaintiff contends that in making Decisions 3 and 4, the Ombudsman misdirected himself:

    i.in applying ss 5(3)(a) and (b) of the ICAC Act as if they were “equal alternatives” and not as “cascading alternatives” with the consequence that he could only proceed to s 5(3)(b) if satisfied that s 5(3)(a) was not made out (ground 3.1.1.1);

    ii.in any event, failed to consider s 5(3)(a) and thereby failed to consider whether the conduct in question constituted “a ground for disciplinary action”, and failed to consider the relevance of clause 8.1 of the DFEEST Purchase Card Policy (ground 3.1.1.2);

    iii.in considering s 5(3)(b) failed to consider whether the conduct in question constituted “a ground for disciplinary action” and, failed to consider the relevance of clause 8.1 of the DFEEST Purchase Card Policy (ground 3.1.1.3).

14. Further, in relation to Decision 3, the Ombudsman considered whether the plaintiff had engaged in misconduct with respect to networking or external meetings despite this matter not being referred under s 24(2)(a) of the ICAC Act for determination (Ground 3.1.1.4). The corollary of this was that the Ombudsman then went on to make Decision 4 on the erroneous and prejudicial premise that the plaintiff had engaged in misconduct under s 5(3)(a) ICAC Act and/or misconduct with respect to networking or external meetings (Ground 3.1.1.5).

15. I deal with each sub-ground in turn.

16. It may well be that ss 5(3)(a) and (b) of the ICAC Act can be described as “cascading alternatives”. However, that does not give rise to an implication to the effect that the Commissioner or an inquiry agency are bound in adjudicating upon an investigation and arriving at a conclusion to consider those sections in any particular order, or, indeed to consider both ss 5(3)(a) and (b) and all limbs of both.

17. Accepting this, the Ombudsman cannot be said to have misunderstood the task he was required to undertake by failing to consider s 5(3)(a) before arriving at his conclusion subject of Decision 3.

18. I turn to the argument that the Ombudsman failed to take into account the possibility of lesser alternative conclusions. My understanding of this argument was that the Ombudsman failed to take into account on Decision 3 the possibility that a finding under s 5(3)(a) or lesser disciplinary action such as contemplated by clause 8.1 of the DFEEST’s Purchase Cards Policy would suffice, and in relation to Decision 4, the possibility that lesser disciplinary action as contemplated by clause 8.1 would suffice.

19. In Foster v Minister for Customs and Justice Gleeson CJ and McHugh J said:[7]

    In Minister for Aboriginal Affairs v Peko-Wallsend Ltd, Brennan J said:

    “The Court has no jurisdiction to visit the exercise of a statutory power with invalidity for failure to have regard to a particular matter unless some statute expressly or by implication requires the repository of the power to have regard to that matter or to matters of that kind as a condition of exercising the power.”

    The level of particularity with which a matter is identified for the purpose of applying this principle may be significant. A related question arises where the failure complained of is not a complete failure to address a certain subject, but a failure to make some inquiry about facts said to be relevant to that subject … For the appellant’s argument to succeed, there must be found in the legislation an implied obligation on the Minister to examine and investigate the contention at the level of particularity involved in the submission.

    [footnotes omitted]

    [7] (2000) 200 CLR 442 at [22]-[23]; see also Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39-41 (Mason J).

20. And in Minister for Immigration and Multicultural Affairs v Yusuf McHugh, Gummow and Hayne JJ observed:[8]

    … The considerations that are, or are not, relevant to the Tribunal's task are to be identified primarily, perhaps even entirely, by reference to the Act rather than the particular facts of the case that the Tribunal is called on to consider. In that regard it is important to recall, as Brennan J said in Attorney-General (NSW) v Quin:

    “The duty and the jurisdiction of the courts are expressed in the memorable words of Marshall CJ in Marbury v Madison: ‘It is, emphatically, the province and duty of the judicial department to say what the law is.’ The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone.”

    This does not deny that considerations advanced by the parties can have some importance in deciding what is or is not a relevant consideration. It may be, for example, that a particular statute makes the matters which are advanced in the course of a process of decision-making relevant considerations for the decision-maker. What is important, however, is that the grounds of judicial review that fasten upon the use made of relevant and irrelevant considerations are concerned essentially with whether the decision-maker has properly applied the law. They are not grounds that are centrally concerned with the process of making the particular findings of fact upon which the decision-maker acts.

    [footnotes omitted]

    [8] (2001) 206 CLR 323 at [73]-[74].

21. The question for the Ombudsman was, having conducted his investigation was he satisfied that the plaintiff had engaged in misconduct or maladministration in public administration. Nothing in the ICAC Act required that he consider, if he was satisfied that the plaintiff had engaged in maladministration in public administration, whether, nonetheless, he should make a lesser finding of misconduct in public administration or simply that the conduct merited disciplinary action. And nothing in the ICAC Act required that he consider, if he was satisfied that the plaintiff had engaged in misconduct in public administration, whether nonetheless he should make a lesser finding that the conduct merited disciplinary action. Put slightly differently, the availability of the alternative findings does not mean that the Ombudsman exceeded power in making the findings that he did in relation to Decisions 3 and 4.

22. My reasons so far dispose of grounds 3.1.1.1 – 3.1.1.3.

23. With respect to ground 3.1.1.4 the referral made on 16 March 2015 must be understood in the light of the preceding correspondence. The Commissioner first wrote to the Ombudsman on 23 February 2015 ostensibly in order to comply with s 37(1) of the ICAC Act. In that letter the Commissioner described the matter as, relevantly, that the plaintiff “has been using TAFE SA credit cards to pay for entertainment” and referred to further detail exported by electronic communication. The further detail referred to the plaintiff’s use of “TAFE SA money for “networking” lunches/dinners”. In a letter dated 11 March 2015 the Ombudsman replied to the Commissioner providing his view for the purposes of s 37 ICAC Act. In that letter the Ombudsman described the relevant aspect of the matter as the “use of TAFE SA money for extravagant ‘networking’ expenses”.

24. The referral letter of 16 March 2015 simply “refers this matter” to the Ombudsman, but does so in the light of recording the exchange of letters between the Commissioner and the Ombudsman for s 37 purposes. It seems to me plain that the Commissioner referred the matter of the plaintiff’s use of TAFE SA monies for networking purposes. In my view the 26 items of expenditure set out in the Ombudsman’s report and subject of decisions 3 and 4 all fall within the tenor of the referral.

25. I would dismiss grounds 3.1.1.1 – 3.1.1.5.

    Did the Ombudsman take into account irrelevant considerations?

26. The contention is that in relation to Decisions 3 and 4 the Ombudsman considered the question of whether the plaintiff’s use of the TAFE SA purchase card complied with the Purchase Cards Policy and the DFEEST TME Policy in circumstances where those policies did not apply to the plaintiff as an officeholder. Further, the Ombudsman considered whether the expenditure was “necessary”, which was not a relevant test if the policies applied.

27. Upon being issued with a TAFE SA purchase card the plaintiff signed the Agreement and Acknowledgement Form. That document opens with the following:

    I understand and agree that a State Government Purchase Card is issued to me on the express conditions that I will, at all times comply with the following:

    …

    3.    I may only use the card in accordance with the DFEEST Purchase Card Policy and local management instructions.

    …

    6.    If I misuse the State Government Purchase Card I understand that DFEEST may take disciplinary action and proceedings may be instituted against me under law.

    …

    9.    I may only use the State Government Purchase Card in accordance with DFEEST established procurement policies and local management instructions.

    I acknowledge that I have read and understood Treasurer’s Instruction 12, and have received a copy of the DFEEST Purchase Cards Policy, and I will observe any other local management instructions and conditions in my use of a State Government Purchase Card in my name.

1. The plaintiff signed the Agreement and Acknowledgement Form. Bearing in mind the content of the Agreement and Acknowledgement Form, by signing it [redacted] made its terms relevant to any consideration of whether [redacted] had misused the card issued to [redacted]. [Redacted] agreed [redacted] would only use the purchase card in accordance with the DFEEST Purchase Card Policy. Clause 6.6 of the DFEEST Purchase Cards Policy picks up and applies TI 12 and the DFEEST TME Policy to cardholders to whom the DFEEST Purchase Cards Policy applied.

2. Plainly each of the DFEEST Purchase Cards Policy, TI 12 and the DFEEST TME Policy were relevant to assessing whether or not the plaintiff had misused the TAFE SA card issued to [redacted]. It does not matter that the policies construed independent of the Acknowledgement and Agreement Form may not purport to apply to the plaintiff. By signing the Acknowledgement and Agreement Form [redacted] agreed to be bound by those policies. I reject the submission that the policies were irrelevant considerations.

3. The Ombudsman’s reasons reveal that in reasoning to his conclusion on Decision 3 he considered the explanations given by the plaintiff for why [redacted] considered it appropriate to conduct meetings from time to time over coffee, breakfast, lunch and dinner. It is in evaluating the plaintiff’s explanations that the Ombudsman considered whether the expenditure was necessary to achieve the purpose identified and provided value for money. The inquiry was into whether there were feasible alternatives that provided the same value for less money. That was relevant to an assessment of whether the expenditure was reasonable and publicly defensible.

4. I would dismiss grounds 3.1.2.1 and 3.1.2.2.

   A failure to take into account or give adequate weight?

5. In ground 3.1.3 the plaintiff complains that, in relation to Decision 3 and 4, the Ombudsman failed to take into account, or give any weight to, the following relevant considerations:

   a.the fact that the staff policies were applicable only to public sector employees;

   b.the fact that the staff policies (even if applicable) permitted use of the purchase card for expenditure incurred solely in the interests of TAFE SA and that was reasonable, publicly defensible and justifiable to the Chief Executive;

   c.the fact that the Agreement and Acknowledgement Form permitted expenditure incurred in accordance with local management instructions;

   d.the plaintiff’s evidence regarding the circumstances of [redacted] execution of the Agreement and Acknowledgement Form, and specifically the fact that [redacted] was not provided with copies of the staff policies;

   e.the plaintiff’s use of the purchase card was in accordance with local management instructions;

   f.the plaintiff’s use of the purchase card was in every case authorised after being incurred through an established process involving review by the designated Responsible Officer appointed by TAFE SA who had the authority to refuse to approve expenditure;

   g.the plaintiff’s use of the purchase card accorded with a course of conduct established prior to the card being issued and which the Ombudsman subsequently found did not constitute misconduct or maladministration;

   h.the plaintiff and the Chief Executive genuinely considered all expenditure in question to have tended to advance TAFE SA’s interests.

6. This ground cannot succeed unless the Ombudsman was bound in the sense explained above to take into account the enumerated factors. Nothing in the ICAC Act suggests he was and the plaintiff has not pointed to anything. An argument that inadequate weight was attributed to a factor blurs an application for judicial review with a merit review proceeding.

7. In any event for the reasons given above paragraph (a) is incorrect. The Ombudsman did take into account the plaintiff’s explanations for the expenditure and did turn his mind to the question of whether the expenditure was reasonable, publicly defensible and justifiable. The Ombudsman had regard to Chief Executive’s opinion and had regard to the history of the transactions being authorised. Further, he accepted the plaintiff’s evidence that the meetings to which the purchase card expenditure related tended to advance TAFE SA’s interests and accepted the Chief Executive’s evidence that any consideration of “value” could not be confined to the express outcomes of the meetings. Still he was not satisfied. His conclusion on decisions 3 and 4 does not lack an evident and intelligible justification.[9]

   [9]    Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at [76] (Hayne, Kiefel and Bell JJ).

8. I would dismiss ground 3.1.3.

   A failure to provide procedural fairness?

9. This complaint concerns the alleged failure on the part of the Ombudsman to provide the plaintiff with a copy of the statement taken from Mr [redacted] or a transcript of the interview conducted with Mr [redacted].

10. Earlier in these reasons, I made mention of the fact that the Ombudsman provided the plaintiff with a copy of his provisional report and invited the plaintiff to make whatever submission [redacted] wished as to the content which would be considered before the report was finalised. In the provisional report 11 paragraphs are devoted to the evidence of Mr [redacted]. The same 11 paragraphs appear in the Ombudsman’s final report.

11. In Kioa v West Mason J stated:[10]

    The law has now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of adminis­trative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention. It seems that as early as 1911 Lord Lore­burn L.C. understood that this was the law when he spoke of the obligation to “fairly listen to both sides” being “a duty lying upon everyone who decides anything”: Board of Education v. Rice …

    [10] (1985) 159 CLR 550 at 584.

12. Whilst the Ombudsman’s decision has no immediate consequence for any right, entitlement or interest it can affect reputation. That is sufficient to require that procedural fairness be afforded a person about whom a report is prepared.[11]

    [11]   Annetts v McCann (1990) 170 CLR 596; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564.

13. In SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs Gleeson CJ, Kirby, Hayne, Callinan and Heydon JJ said:[12]

    It has long been established that the statutory framework within which a decision-maker exercises statutory power is of critical importance when considering what procedural fairness requires. It is also clear that the particular content to be given to the requirement to accord procedural fairness will depend upon the facts and circumstances of the particular case. As Kitto J said in Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation:

    “[T]he books are full of cases which illustrate both the impossibility of laying down a universally valid test by which to ascertain what may constitute such an opportunity [‘to correct or contradict any relevant statement prejudicial to their view’] in the infinite variety of circumstances that may exist, and the necessity of allowing full effect in every case to the particular statutory framework within which the proceeding takes place.”

    (Emphasis added.)

    In the present case, attention in argument, both in this Court and in the courts below, was directed more to the particular circumstances of the case than to the relevant statutory framework, but it is necessary to notice some aspects of that framework. Unless that is done, the argument proceeds at too high a level of abstraction and may proceed upon assumptions that are ill founded.

    [footnotes omitted]

    [12] (2006) 228 CLR 152 at [26].

14. Section 18(4) of the Ombudsman Act requires that before making a report affecting an agency to which the Ombudsman Act applies the Ombudsman must allow the principal officer of the agency a reasonable opportunity to comment on the subject matter of the report. A difficult question of construction arises as to whether s 18(4) applies to a referral under s 24(2)(a) of the ICAC Act in relation to an individual. It is unnecessary to answer that question in this case.

15. It seems clear that in providing the plaintiff with a copy of his provisional report, the Ombudsman purported to act under s 18(4). Section 18(4) may be considered an example of the statutory modification of the common law rule requiring procedural fairness. Procedural fairness is essentially a practical concept concerned with avoiding practical injustice.[13] Irrespective of whether s 18(4) applies, it has not been shown that the extent of the disclosure made in the provisional report has resulted in any practical injustice. In what respect can it be said that the plaintiff has been unable to put [redacted] case to the Ombudsman?

    [13] Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at [37] (Gleeson CJ).

16. I would dismiss ground 3.1.4.

    A false finding of a jurisdictional fact?

17. In ground 3.1.5 the plaintiff contends that the Ombudsman has relied upon a false finding of a jurisdictional fact, being the failure by the plaintiff to appraise [redacted] of, and comply with, the terms of the applicable policies. This ground is dependent upon accepting that DFEEST Purchases Card Policy, TI 12 and the DFEEST TME Policy did not apply to the plaintiff. It is also said to rely upon the Ombudsman having misconstrued the plaintiff’s execution of the Agreement and Acknowledgement Form.

18. I can deal with this ground shortly. First, the Ombudsman’s reliance upon the fact that the plaintiff did not inform [redacted] of the applicable policies is not a finding of a jurisdictional fact.[14] It was no more than a factor in the Ombudsman’s process of reasoning. Secondly, I have already given my reasons for concluding that the policies were relevant to the Ombudsman’s task. Thirdly, the Ombudsman has not misconstrued the plaintiff’s execution of the Agreement and Acknowledgement Form. The execution had a consequence. The Ombudsman has had regard to that consequence (the application of the DFEEST Purchases Card Policy, TI 12 and the DFEEST TME Policy) in addition to the explanation provided for the plaintiff as to why the policies did not apply and the evidence of the local management instruction. 

    [14] Plaintiff M70/2011 v Minister for Immigration and Citizenship (2011) 244 CLR 144 at [57]-[58] (French CJ), [107] (Gummow, Hayne, Crennan and Bell JJ).

19. The Ombudsman’s conclusion that the plaintiff’s use of the TAFE SA purchase card amounted to substantial mismanagement of public resources was not a finding of a jurisdictional fact. In my view, the Ombudsman correctly identified that the concept of substantial mismanagement required a consideration of the nature and degree of departure of the plaintiff’s usage of the purchase card from the appropriate use of the purchase card and TAFE SA funds and the frequency of such departure.

20. I would dismiss ground 3.1.5.

    Wednesbury unreasonableness?

21. In relation to Decisions 3 and 4 the plaintiff contends that the Ombudsman’s findings were unreasonable and not supported by the facts. The relevant question is whether the decisions lack an evident and intelligible justification. Once it is considered that the policies were relevant to the Ombudsman’s task, the plaintiff’s contentions really devolve to issues of weight. I have rejected the plaintiff’s arguments regarding relevant and irrelevant considerations. The Ombudsman’s reasons disclose his reasoning process. They disclose an evident and intelligible justification.

22. I would dismiss ground 3.1.6.

    Did the Ombudsman take into account irrelevant considerations in relation to Decision 1?

23. The plaintiff contends that PCO16, the fact that the advice could be obtained freely from publicly available sources and the consideration of whether it was necessary to obtain the KPMG advice were irrelevant considerations.

24. Earlier in these reasons I have referred to the relevant principles governing the question of when a decision maker exceeds the limits of a power conferred by having regard to irrelevant considerations.

25. The Ombudsman referred to PCO16 as an objective indicator reinforcing his conclusion that the issue upon which advice was sought was a personal matter for the individual to seek advice on and not an organisational matter. I do not think that there is anything wrong, and can see every reason why, the Ombudsman would search for objective indicators of government expectations in broadly comparable situations for guidance. PCO16 was also resorted to by the Ombudsman as a measure of what was to be expected of TAFE SA management in the light of the plaintiff’s submission that TAFE SA bore some responsibility for providing the relevant advice to employees and officeholders. That use was, in effect, the corollary of the first use and equally understandable. 

26. The Ombudsman referred to whether it was “necessary or proper” to use public money to enable TAFE SA board members to structure their superannuation arrangements having regard to taxation implications. I do not understand his reasons to impose a standard of necessity that must be met before expenditure could be incurred. The Ombudsman was concerned to determine whether the KPMG advice provided any benefit for TAFE SA. In the end his conclusion was that the KPMG advice predominantly benefited the individual members of the board. As a step in his process of reasoning I see no irrelevant consideration taken into account.

27. The fact that the necessary advice was freely and publicly available highlights the irregularity of the plaintiff’s use of public funds when taken with the amount spent and the benefit to be gained by TAFE SA. I consider the use relevant and not indicative of any failure on the part of the Ombudsman to make a decision within power.

28. I would dismiss ground 3.2.1.

    Did the Ombudsman fail to take into account relevant considerations in relation to Decision 1?

29. The plaintiff contends that the Ombudsman failed to take into account or give any weight to the following:

    a.the plaintiff’s evidence regarding [redacted] bona fides in obtaining the advice in the belief that [redacted] was doing so for the benefit of TAFE SA;

    b.the plaintiff’s evidence regarding the limited knowledge that board members had regarding the subject matter of the advice;

    c.the Board’s instruction that the plaintiff take steps to clarify matters to which the KPMG advice pertained;

    d.whether there was any relevant “conduct” on the part of the applicant given ss 9 and 12 of the TAFE SA Act 2012 (SA) and the authorisation the plaintiff had to engage KPMG and pay KPMG

    e.the value attributed to the advice by [redacted];

    f.that the plaintiff’s conduct was a business judgment made in good faith;

30. As with ground 3.1.3 the plaintiff has not referred to any indication in the ICAC Act or Ombudsman Act that each of these factors is a relevant consideration that the Ombudsman was bound to take into account. In any event, it is plain that the Ombudsman accepted that the plaintiff obtained the advice for the benefit of the board as a whole and that [redacted] was tasked with the responsibility of looking into the issue by the board. It is also plain from the Ombudsman’s reasons that the board members benefitted from the advice. None of these things however could attract significant weight.

31. The Ombudsman took into account Mr [redacted] view regarding the utility of the advice to [redacted].

32. The Ombudsman makes no reference to ss 9 and 11 of the TAFE SA Act 2012 (SA). I expect that is because they were irrelevant to his inquiry. Those sections have no bearing on the meaning of conduct for the purposes of the ICAC Act and the definitions of misconduct and maladministration in public administration. The relevant conduct for the purposes of Decision 1 was the plaintiff’s act of retaining KPMG. That was not a decision made at the board level and the fact that the board tasked the plaintiff with looking into the superannuation issue cannot be construed as amounting to its approval of [redacted] incurring significant expenditure in retaining external experts.

33. The last factor in the list is a statement of conclusion having its own normative content. In part it begs the very question that the Ombudsman was required to consider — was this just a business judgment? Relevant to that question was the extent to which the plaintiff informed [redacted] of the statutory and regulatory context in which, as a member of the TAFE SA board, [redacted] was to operate. The thrust of the Ombudsman’s reasons is that this could not be treated simply as a business judgment as if it occurred in a purely commercial setting. The plaintiff was a public officer responsible for the expenditure of public funds.

34. This ground of review fails.

35. Within ground 3.2.3 it is contended that the Ombudsman misunderstood the task he was required to undertake in that he did not identify the relevant conduct subject of decision 1. It is not clear to me what the argument is here. It seems to me that the Ombudsman clearly identified the relevant conduct; the plaintiff’s decision to retain KPMG to provide advice on the superannuation issue.

36. Grounds 3.2.4 and 3.3.3 complain of a failure to provide procedural fairness in that the plaintiff was not provided with copies of statements made by Mr [redacted] or written responses Mr [redacted] may have made to questions asked of him by the Ombudsman. Mr [redacted] was the Chief Executive of [redacted] at the relevant time.

37. In his provisional report the Ombudsman sets out in some detail the circumstances that resulted in TAFE SA sharing the KPMG advice with [redacted]. In short the advice was shared after Mr [redacted] and the plaintiff discussed the issue and arrived at an agreement. There is no dispute about that. The balance of the use made of Mr [redacted] evidence was in determining the value of the KPMG advice to [redacted].

38. The paragraphs dealing with Mr [redacted] involvement with the plaintiff, the agreement to share the KPMG advice and the payment made by [redacted] for the advice are reproduced in the Ombudsman’s final report as is the paragraph dealing with Mr [redacted] assessment of the value of the advice. The plaintiff has not shown why the disclosure made in the provisional report about what Mr [redacted] said to the Ombudsman and his officers has nonetheless resulted in [redacted] suffering an injustice. The question is in what respect can it be said that the plaintiff has been unable to put [redacted] case to the Ombudsman? If anything Mr [redacted] evidence merely corroborated the plaintiff’s as to the circumstances surrounding the sharing of the advice and supported the plaintiff regarding the value to be attributed to the obtaining of the advice.

39. [Redacted].

    Did the Ombudsman fail to take into account relevant considerations in relation to Decision 2?

40. The plaintiff contends that the Ombudsman failed to take into account or give any weight to the following:

    a.the costs savings achieved to the benefit of TAFE SA by the on-selling of the advice;

    b.the plaintiff’s assessment of the risk to TAFE SA associated with the on-selling of the advice;

    c.the fact that the substance of the advice was, in any event, freely available;

    d.in determining the degree of care and diligence required to be exercised by the plaintiff, regard should be had to the skills, knowledge or acumen possessed by the director and to the degree of risk involved in any particular circumstances;

    e.that the plaintiff’s conduct was a business judgment made in good faith;

    f.there was no concluded contract between TAFE SA and KPMG incorporating the term that would prohibit the on-selling of the advice.

1. Again the plaintiff has not pointed to anything in the ICAC Act or the Ombudsman Act requiring the Ombudsman to take into account these factors.

2. In any event, the Ombudsman did take the costs saving into account as part of his cost/benefit analysis. Further, the Ombudsman did have regard to the plaintiff’s assessment of the risk to TAFE SA associated with the on-selling of the advice, but concluded that it was an assessment undertaken in hindsight, and not before potentially exposing TAFE SA to a risk of litigation which the Ombudsman accepted was remote.

3. The fact that the substance of the advice was, in any event, freely available does not mitigate the plaintiff’s conduct. As I have said it highlights the impropriety or negligence and is relevant to the assessment of mismanagement.

4. The Ombudsman did not have regard to s 15(3) of the Public Corporations Act 1993 (SA). He said:

   In any case, I consider that a reasonable person in [the plaintiff’s] position and with [the plaintiff’s] knowledge, skills and acumen, even if he or she had not directly sighted the engagement letter or its terms, would have turned his or her mind to the possibility that the provision of the sort of product provided by KPMG would likely have been subject to terms and conditions limiting that product’s distribution and further sale.

5. I refer to my earlier reasons on the assertion that the decision was a matter of business judgment made in good faith without repeating them.

6. Whether or not there was a concluded contract including clause 3.6 of the letter of retainer as a term may be arguable. However, that is neither here nor there. For the Ombudsman it was a question of risk and the exercise of reasonable care and diligence to avoid or minimise the exposure of the organisation to risk that was important.

7. I would dismiss ground 3.3.1.

   Did the Ombudsman fall into jurisdiction error in relation to Decision 2?

8. The plaintiff contends that the Ombudsman’s finding as to the plaintiff’s failure to exercise a reasonable degree of care and diligence evidenced a misapplication of s 15(1) of the Public Corporations Act 1993 (SA). Further, because the Ombudsman’s finding of misconduct was dependent upon his finding under s 15(1), the error in the application of s 15(1) constitutes a jurisdictional error.

9. Section 15 of the Public Corporations Act 1993 (SA) provided:

   15—Directors’ duties of care etc

   (1)   A director of a public corporation must at all times exercise a reasonable degree of care and diligence in the performance of his or her functions, and (without limiting the effect of the foregoing) for that purpose—

   (a)must take reasonable steps to inform himself or herself about the corporation and its subsidiaries, their businesses and activities and the circumstances in which they operate; and

   (b)must take reasonable steps through the processes of the board to obtain sufficient information and advice about all matters to be decided by the board or pursuant to a delegation to enable him or her to make conscientious and informed decisions; and

   (c)must exercise an active discretion with respect to all matters to be decided by the board or pursuant to a delegation.

   (2)   A director is not bound to give continuous attention to the affairs of the corporation but is required to exercise reasonable diligence in attendance at and preparation for board meetings.

   (3)   In determining the degree of care and diligence required to be exercised by a director, regard must be had to the skills, knowledge or acumen possessed by the director and to the degree of risk involved in any particular circumstances.

10. The first observation to make is that ss 15(1)(a), (b) and (c) do not limit the general duty that a director of a public corporation has to exercise a reasonable degree of care and diligence in the performance of his or her functions at all times. Section 15(2), however, does qualify the general duty. Section 15(3) constitutes a direction on the approach to be adopted in determining whether a director of a public corporation has exercised the requisite degree of care and diligence required.

11. The question for the Ombudsman was whether the plaintiff had engaged in misconduct in public administration. Whilst a finding that the plaintiff had engaged in misconduct in public administration would result in [redacted] having breached the general duty, consideration of s 15(1) in accordance with s 15(3) forms no necessary step in the process of determining whether a director of a public corporation has engaged in misconduct in public administration. In my view the Ombudsman was correct in his observation that a breach of s 15(1) may inform a finding as to whether the director has engaged in misconduct in public administration.

12. In this case the Ombudsman considered that the plaintiff had failed to exercise a reasonable degree of care and diligence in the performance of his or her functions in that a reasonable person in [redacted] position, possessing [redacted] knowledge, skills and acumen, would have turned their mind to the possibility that the retainer letter contained a clause constraining the use of any advice provided. The plaintiff did not do so and consequently exposed TAFE SA to the risk identified without reasonable excuse.

13. Whether I agree with the Ombudsman’s assessment is not the question, the fact is, he has not misdirected himself on the applicable legal principles and has arrived at a decision within the realm of decisional freedom afforded him by the legislature.

14. I would dismiss ground 3.3.2.

    A failure to afford procedural fairness?

15. The plaintiff contends that the Ombudsman has failed to afford [redacted] procedural fairness in that:

    a.he did not comply with s 18(1a) of the Ombudsman Act;

    b.he ran multiple investigations in relation to the plaintiff concurrently;

    c.he required the plaintiff to respond to each investigation simultaneously and failed to afford a reasonable period of time in which to do so;

    d.he failed to run the investigations in a structured manner which enabled:

    i.       the plaintiff to understand the totality of the allegations made and the nature of the charge against [redacted] and which evidence would be considered in relation to each charge;

    ii.      the Ombudsman to take account of all relevant evidence, whilst avoiding any prejudicial impact as a result of irrelevant evidence, in preparing his reports;

    e.failing to separate out the process of investigation from the process of deliberating on, reaching, and reporting on findings, in that he continued to seek out and take account of additional evidence from other parties after seeking final comment from the plaintiff on the provisional decisions.

16. I have dealt with the plaintiff’s attempt to invoke s 18(1a) above. With respect to the Ombudsman requiring the plaintiff to respond to each investigation simultaneously and failing to afford a reasonable period of time in which to do so, it not clear to me how in relation to this particular matter this meant that [redacted] was unable to put [redacted] case. From very early on the plaintiff was represented by solicitors. To [redacted] credit [redacted] appears to have cooperated fully with the Ombudsman. I see nothing in the affidavit material suggesting that there was additional material that the plaintiff was unable to place before the Ombudsman because of time limits imposed by the Ombudsman.

17. The remaining complaints focus upon the way in which the Ombudsman chose to go about his investigations. The plaintiff has no right or entitlement to a perfect investigation. The Ombudsman Act states that subject to that Act it is for the Ombudsman to determine how an investigation will proceed.[15] No doubt the Ombudsman has many investigations ongoing at any one time and has to choose how and where to deploy his resources. It is not for the Court to tell him how or where to deploy his resources and how he should go about his investigations. I repeat procedural fairness is a practical concept. How then has the Ombudsman’s chosen approach to investigating the complaints made against the plaintiff prevented the plaintiff from being able to answer the allegations made against [redacted] in this matter? That has not been explained.

    [15] Ombudsman Act 1972 (SA), s 18(6).

18. I would dismiss ground 3.5.

    Conclusion

19. I dismiss the application.