Duncan v Independent Commission Against Corruption

[2016] NSWCA 143

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Duncan v Independent Commission Against Corruption [2016] NSWCA 143

Hearing dates:

16-18 February 2016

Decision date:

22 June 2016

Before:

Bathurst CJ at [1];
Beazley P at [460];
Basten JA at [534]

Decision:

In matter 2014/239426 – Travers William Duncan v Independent Commission Against Corruption:
(1)   Grant the applicant leave to appeal.
(2)   Direct that the applicant file the draft notice of appeal in the white book within seven days.
(3)   Dismiss the appeal.
(4)   Order the appellant to pay the costs of the Commission of the proceedings in this Court.

 

In matter 2014/249038 – John Vern McGuigan and Richard Jonathon Poole v Independent Commission Against Corruption:
(1)   Grant the applicants leave to appeal.
(2)   Direct that the applicants file the draft notice of appeal in the white book within seven days.
(3)   Dismiss the appeal.
(4)   Order the appellants to pay the costs of the Commission of the proceedings in this Court.

 

In matter 2014/318985 – Cascade Coal Pty Ltd, Mt Penny Coal Pty Ltd and Glendon Brook Coal Pty Ltd v Independent Commission Against Corruption:
(1)   Grant the applicants leave to appeal.
(2)   Direct that the applicants file the draft notice of appeal in the white book within seven days.
(3)   Dismiss the appeal.
(4)   Order the appellants to pay the costs of the Commission of the proceedings in this Court.

 In matter 2014/319803 – John Charles Atkinson v Independent Commission Against Corruption:
(1)   Grant the applicant leave to appeal.
(2)   Direct that the applicant file the draft notice of appeal in the white book within seven days.
(3)   Dismiss the appeal.
(4)   Order the appellant to pay the costs of the Commission of the proceedings in this Court.

Catchwords:

ADMINISTRATIVE LAW – judicial review – Independent Commission Against Corruption – findings of “corrupt conduct” – failure to disclose material facts – whether conduct could “adversely affect” exercise of official functions by a public official – Ministerial discretion in granting of a mining lease – causal connection to exercise of function – whether non-disclosure justified where information could reach the public domain through alternative means

 

ADMINISTRATIVE LAW – judicial review – jurisdiction of Commission – whether the power conferred by statute to make findings and form opinions extended beyond the question of “corrupt conduct” – whether power extended to making recommendations – whether recommendations amenable to review

 

CORPORATIONS – director’s duties – fiduciary duty – duty to act in good faith in the best interests of the company and for proper purpose – whether affirmative duty to disclose information – whether removing oneself from position of conflict sufficient to fulfil duty

 

CRMINAL LAW – whether failure to disclose material facts amounts to deception – whether failure to disclose material facts amounts to fraud, Crimes Act 1900 (NSW), ss 192B, 192E; Corporations Act 2001 (Cth), s 184(1)

 

CRIMINAL LAW – dishonestly obtaining a financial advantage – whether obviating or deferring a financial risk constitutes obtaining a financial advantage – Crimes Act 1900 (NSW), ss 192B, 192D, 192E

 

ENVIRONMENT AND PLANNING – mining lease grant – Ministerial discretion in granting mining lease – relevant considerations – public interest – whether relevant considerations limited to environmental assessment questions – whether considerations of “public interest” limited to environmental and planning matters – Environmental Planning and Assessment Act 1979 (NSW), Part 3A (now repealed); Environmental Planning and Assessment Regulation 2000 (NSW), cl 8B(b)

 

PROCEDURAL FAIRNESS - investigative function of Commission – finding of criminal conduct – whether failure to cross-examine on elements of offences was procedurally fair

WORDS AND PHRASES – “intentionally dishonest”, Corporations Act 2001 (Cth) s184(1)

Legislation Cited:

Companies Act 1961 (Vic), s 124
Companies Code (SA), s 229
Corporations Act 2001 (Cth), ss 181, 184, 191, 193, 674, 1308A
Corporations Law, s 232
Crimes Act 1900 (NSW), ss 4B, 192B, 192D, 192E, 192F, 192G; Pt 4AA
Crimes Act 1958 (Vic), s 82
Criminal Code (Cth), ss 2.2, 5.2, 5.4, 130.3; Ch 2, Ch 7
Criminal Code (Qld), s 408C
Environmental Planning and Assessment Act 1979 (NSW), ss 4, 5, 23B, 75B, 75D, 75E, 75F, 75H, 75I, 75J, 75V, 75Z; Pt 3A; Sch 3, cl 2; Sch 6A, cl 2A
Environmental Planning and Assessment Regulation 2000 (NSW), cl 8B
Independent Commission Against Corruption Act 1988 (NSW), ss 7, 8, 9, 13, 14, 31, 32, 33, 34, 74, 74A, 74B
Independent Commission Against Corruption Amendment (Validation) Act 2015 (NSW), Sch 1
Mining Act 1992 (NSW), ss 13, 51, 63, 65, 72, 121, 380A; Pt 5, Div 4
Independent Commission Against Corruption (Amendment) Act 1990 (NSW), Sch 1(9)
State Environmental Planning Policy (Major Development) 2005 (NSW), cl 6; Sch 1
Trade Practices Act 1974 (Cth), Pt IIIA

Cases Cited:

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564
Adler v Australian Securities and Investments Commission [2003] NSWCA 131; 46 ACSR 504
Allina Pty Ltd v Commissioner of Taxation (1991) 28 FCR 203
Annetts v McCann (1990) 170 CLR 596
Associated Picture Houses Ltd v Wednesbury Corporation (1948) 1 KB 23
Australasian Annuities Pty Ltd (in liq) (recs and mgrs apptd) v Rowley Super Fund Pty Ltd [2015] VSCA 9; 104 ACSR 312
Australian Breeders Co-operative Society Ltd v Jones (1997) 150 ALR 488
Australian Broadcasting Tribunal v Bond [1990] HCA 33; 170 CLR 321
Australian Communications and Media Authority v Today FM (Sydney) Pty Ltd [2015] HCA 7; 89 ALJR 382
Australian Growth Resources Corporation Pty Ltd v Van Reesema (1988) 13 ACLR 261
Australian Securities and Investments Commission v Adler [2002] NSWSC 171; 41 ACSR 72
Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287; 71 ACSR 368
Australian Securities and Investments Commission v Maxwell [2006] NSWSC 1052; 24 ACLC 1308
Australian Securities and Investments Commission v Sydney Investment House Equities Pty Ltd [2008] NSWSC 1224; 69 ACSR 1
Avon Downs Pty Ltd v Federal Commissioner of Taxation [1949] HCA 26; 78 CLR 353
Balog v Independent Commission Against Corruption (1990) 169 CLR 625
Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336
Centofanti v Eekimitor Pty Ltd (1995) 65 SASR 31; 15 ACSR 629
Clarkson v R [1987] VR 962
Coelho v Durbin (Supreme Court (NSW), Badgery-Parker, 29 March 1993, unrep)
Cunneen v Independent Commission Against Corruption [2014] NSWCA 421
Cunneen v Independent Commission Against Corruption [2014] NSWSC 1571
Dainford Ltd v Independent Commission Against Corruption (1990) 19 ALD 207
D’Amore v Independent Commission Against Corruption [2013] NSWCA 187; 303 ALR 342
Digital Cinema Network Pty Ltd v Omnilab Media Pty Limited (No 2) [2011] FCA 509
Director of Public Prosecutions (Cth) v Poniatowska [2011] HCA 43; 244 CLR 408
Director of Public Prosecutions v Ray [1974] AC 370
Downer EDI Ltd v Gillies [2012] NSWCA 333; 91 ACSR 373
Doyle v Australian Securities and Investments Commission [2005] HCA 78; 227 CLR 18
Duke Group Ltd (in liq) v Pilmer (1999) 73 SASR 64; [1999] SASC 97
Duncan v Independent Commissioner Against Corruption (NSW) [2015] HCA 32; 89 ALJR 835
Duncan v Ipp [2013] NSWCA 189
Eaton & Sons v Warringah Shire Council [1972] HCA 33; 129 CLR 270
Flack v R [2011] NSWCCA 167
Fitzsimmons v R (1997) 23 ACSR 355
Forge v Australian Securities & Investments Commission [2004] NSWCA 448; 213 ALR 474
Glynn v Independent Commission Against Corruption (1990) 20 ALD 214
Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125
Ho and Szeto v R (1989) 39 A Crim R 145
House of Peace Pty Ltd v Bankstown City Council [2000] NSWCA 44; 48 NSWLR 498
Howard v The Federal Commissioner of Taxation [2014] HCA 21; 253 CLR 83
Independent Commission Against Corruption v Cunneen [2015] HCA 14; 89 ALJR 475
Independent Commission Against Corruption v Chaffey (1992) 30 NSWLR 21
Independent Commission Against Corruption v Kinghorn [2015] NSWCA 342
Jonah Pty Ltd v Pittwater Council [2006] NSWLEC 99; 144 LGERA 408
Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; 241 CLR 390
Kouflidis and Jenquin Pty Ltd v Corporation of the City of Salisbury (1982) 29 SASR 321
Kwok v R [2007] NSWCCA 281; 64 ACSR 307
Macleod v R [2003] HCA 24; 214 CLR 230
Maguire v Makaronis [1997] HCA 23; 188 CLR 449
Marchesi v Barnes [1970] VR 434
Milne v The Queen [2014] HCA 4; 252 CLR 149
Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24
Minister for Immigration and Border Protection v Singh [2014] FCAFC 1; 231 FCR 437
Minister for Immigration and Border Protection v Stretton [2016] FAFC 11
Minister for Immigration and Citizenship v Li [2013] HCA 18; 249 CLR 332
Minister for Immigration and Citizenship v SZMDS [2010] HCA 16; 240 CLR 611
Minister for Immigration, Multicultural and Indigenous Affairs v SGLB [2004] HCA 32; 207 ALR 12
Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; 185 CLR 259
Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; 197 CLR 611
Minister for Planning v Walker [2008] NSWCA 224; (2008) 161 LGERA
Moylan v Western Australia [2007] WASCA 52; 169 A Crim R 302
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; 67 ALJR 170
Omnilab Media Pty Limited v Digital Cinema Network Pty Ltd [2011] FCAFC 166
O’Sullivan v Farrer (1968) 168 CLR 210
Permanent Building Society (in liq) v McGee (1993) 11 ACSR 260
Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187; 14 ACSR 109
Peters v R [1998] HCA 7; 192 CLR 493
Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal (2012) 246 CLR 379; [2012] HCA 36
Pilmer v Duke Group Ltd (In Liq) (2001) 207 CLR 165; [2001] HCA 31
R v Byrnes [1995] HCA 1; 183 CLR 501
R v Clucas [1949] 2 KB 226
R v Connell; Ex parte The Hetton Bellbird Collieries Ltd [1944] HCA 42; 69 CLR 407
R v Ghosh [1982] QB 1053
R v Iannelli [2003] NSWCCA 1; 56 NSWLR 247
R v Jenkins [2002] VSCA 224; 6 VR 81
R v Saba [2013] QCA 275; 235 A Crim R 144
R v Vasic (2005) 11 VR 380; [2005] VSCA 38
Re London and Globe Finance Corporation Limited [1903] 1 Ch 728
Re Minister for Multicultural Affairs; Ex parte S20 [2003] HCA 30; 198 ALR 59
SAJ v R [2012] VSCA 243; 36 VR 435
The Bell Group Ltd v Westpac Banking Corporation (2008) 39 WAR 1
Walker v Wimborne (1975-76) 137 CLR 1
Warkworth Mining Ltd v Bulga Milbrodale Progress Association Inc (2014) 86 NSWLR 527; [2014] NSWCA 105
Water Conservation and Irrigation Commission (NSW) v Browning [1947] HCA 21; 74 CLR 492

Texts Cited:

M Aronson and M Groves, Judicial Review of Administrative Action (Law Book Co, 5th ed, 2013) at [2.460], [4.730]

 

Austin and Black’s Annotations to the Corporations Act at [2D.181]

 

Austin and Ramsay, Ford’s Principles of Corporations Law (15th ed, LexisNexis, 2013) at [9.100]

 

Austin, Ford and Ramsey Company Directors – Principles of Law and Corporate Governance (LexisNexis, 2005) at [8.25], [8.26], [8.27]

 

Robert P Austin and Ian M Ramsay, Ford, Austin and Ramsay’s Principles of Corporations Law (16th ed 2015, Lexis Nexis Butterworths) at [8.065]

 

RI Barrett, “Resolution of directors’ conflicts” (1997) 71 ALJ 677 at 679

 

J D Heydon, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity – Doctrines and Remedies (5th ed, 2015) at [5-380]-[5-385]

 

Independent Commission Against Corruption Report – Investigation into the Conduct of Ian Macdonald, Edward Obeid Snr, Moses Obeid and Others (July 2013)

  Independent Commission Against Corruption Report – Operations Jasper and Acacia – Addressing Outstanding Questions (December 2013)

Category:

Principal judgment

Parties:

2014/239426
Travers William Duncan (Appellant)
Independent Commission Against Corruption (Respondent)

 

2014/249038
John Vern McGuigan (First Appellant)
Richard Jonathon Poole (Second Appellant)
Independent Commission Against Corruption (Respondent)

 

2014/318985
Cascade Coal Pty Ltd (First Appellant)
Mt Penny Coal Pty Ltd (Second Appellant)
Glendon Brook Coal Pty Ltd (Third Appellant)
Independent Commission Against Corruption (Respondent)

  2014/319803
John Charles Atkinson (Appellant)
Independent Commission Against Corruption (Respondent)

Representation:

Counsel:
Mr N C Hutley SC/Mr G E S Ng (Duncan)
Mr D F Jackson QC/Mr C T Barry QC/ Mr L T Livingston (McGuigan, Poole, Cascade, Mt Penny and Glendon Brook)
Mr A Myers QC/Mr D Robinson SC (Atkinson)
Mr B Walker SC/Mr S Free/Ms Z Heger (ICAC)

  Solicitors:
Yeldham Price O’Brien Lusk (Duncan)
TressCox Lawyers (McGuigan, Poole, Cascade, Mt Penny and Glendon Brook)
Hall & Wilcox (Atkinson)
Crown Solicitor for NSW (ICAC)

File Number(s):

2014/239426; 2014/249038; 2014/318985; 2014/319803

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Common Law Division

Citation:

[2014] NSWSC 1018

Date of Decision:

29 July 2014

Before:

McDougall J

File Number(s):

2013/249678; 2013/325031; 2014/13155; 2013/325031

HEADNOTE

[This headnote is not to be read as part of the judgment]

In February 2011 the Independent Commission Against Corruption (“ICAC”) commenced an investigation into the circumstances in which the NSW State government had come to issue a coal exploration licence to Cascade Coal (“Cascade”) over an area in the Bylong Valley, known as the Mount Penny tenement, in October 2009. A significant proportion of the land within the tenement was owned by interests associated with the Hon Edward Obeid MLC and members of the family, the market value of which increased fourfold as a result of the grant of the exploration licence. A connection was noted between Edward Obeid and the Hon Ian Macdonald MLC, then Minister for Primary Industries and for Mineral Resources, responsible for granting the exploration licence. The Commission conducted a public inquiry during 2012-2013 culminating in a report (Investigation into the conduct of Ian Macdonald, Edward Obeid Snr, Moses Obeid and Others, July 2013), in which it made findings of corrupt conduct against various individuals under the Independent Commission Against Corruption Act 1988 (NSW) (“ICAC Act”). The Commission relevantly found that Cascade had entered into a joint venture agreement with an Obeid-controlled company with respect to the award of the Mount Penny exploration licence. In a related inquiry culminating in a third report (Operations Jasper and Acacia – Addressing Outstanding Questions, December 2013), the Commission considered the fate of exploration licences granted over three identified tenements (Mount Penny, Glendon Brook and Doyle’s Creek), recommending that the licences be expunged by legislation.

The Commission made findings of corrupt conduct on the part of the appellants with respect to the steps they had taken towards a proposed sale of their shares in Cascade to a public company, White Energy Co Ltd (“White Energy”). The Commission found that prior to the proposed sale the appellants had taken steps to remove the Obeid family involvement from the joint venture which was seen to pose a potential risk to the value of the Mount Penny tenement: the risk being that the exploration licence might be cancelled by the government, and that a mining lease might never be granted should the Obeids’ involvement become known. The appellants were all shareholders (indirectly) and directors of Cascade; and all (apart from Mr Poole) were directors of White Energy. As the proposal involved White Energy purchasing a major asset from its own directors, the Australian Stock Exchange was notified and an Independent Board Committee (“IBC”) set up to assess the proposal on behalf of White Energy and its shareholders.

The Commission made findings of corrupt conduct on the part of the appellants, based on their failure to reveal information to the IBC, and their involvement in actions which the Commission found were intended to deceive relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in the Mount Penny tenement. The Commission found that this amounted to:

1.   deliberately misleading the IBC chair as to the Obeid family involvement in the Mount Penny tenement by failing to disclose the involvement when the issue was raised [Duncan];

2.   deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that it was concerned with any such involvement [Duncan; McGuigan, Atkinson, Poole];

3.   telling the IBC that he was not aware of any payments having been made to Edward Obeid Snr or any entities involved with him [Poole];

4.   relieving the Director of Corporate Finance at Mr Poole’s company, from having to answer the IBC chair’s request for information about the Obeid family involvement [Duncan, McGuigan];

5.   authorising Mr Poole to arrange for the Obeids to be extracted from Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments [Duncan, McGuigan, Atkinson, Poole].

In January 2014, Messrs Travers Duncan, John McGuigan, Richard Poole, John Atkinson and John Kinghorn, commenced proceedings in the Supreme Court challenging the Commission’s findings of corrupt conduct against them by way of judicial review. The companies challenged the recommendation that the exploration licences be expunged. In a judgment handed down on 29 July 2014 McDougall J: (i) dismissed the finding of corrupt conduct under the ICAC Act against Mr Kinghorn as not made according to law; (ii) upheld the findings of the Commission against the other four individual applicants, whilst rejecting aspects of the Commission’s reasoning; and (iii) dismissed the proceedings brought by the companies (Cascade Coal Ltd and subsidiaries). Messrs Duncan, McGuigan, Poole and Atkinson and the companies sought and were granted leave to appeal to this Court. The Commission submitted a notice of contention concerning the primary judge’s rejection of the Commission’s findings by the applicants as directors of White Energy, under s 184(1) Corporations Act 2001 (Cth).

The issues to be determined on appeal were:

(i) whether the conduct, the subject of the Commission’s findings, could adversely affect the particular exercises of public functions, and so constitute “corrupt conduct” under s 8(2) ICAC Act;

(ii) whether the conduct, the subject of the Commission’s findings, was capable of constituting criminal offences for the purposes of s 9(1)(a) ICAC Act; specifically,

(a) whether the appellants (other than Mr Poole) could be found to have violated their duties as company directors, in contravention of s 184(1) of the Corporations Act, in satisfaction of s 8(2)(s) ICAC Act; and

(b) whether the findings of fact made by the Commission supported the offence of dishonestly obtaining a financial advantage by deception, as identified in s 192E(1) Crimes Act 1900 (NSW), in satisfaction of s 8(2)(e) ICAC Act;

(iii)   whether the appellants were afforded procedural fairness, in circumstances in which the offences and their particular elements relied on by the Commission were not averted to until closing submissions by counsel assisting the Commission, consequently denying the appellants the opportunity to be questioned or to give evidence as to the elements of those offences;

(iv)   whether the Commission had the jurisdiction to recommend that the company exploration licences be expunged and whether such recommendations were amenable to judicial review.

The Court held, Bathurst CJ (dissenting as to Messrs Atkinson, Poole, and Glendon Brook), Beazley P and Basten JA:.

In relation to (i)

1. “Corrupt conduct” is any conduct which falls within ss 8(1) or (2), and which is not excluded by s 9, ICAC Act: [155]-[165]; [466]-[467]; [585]-[598].

2. The relevant interpretation of “corrupt conduct” pursuant to s 8(2) ICAC Act for these proceedings was not limited by the construction accepted in Independent Commission Against Corruption v Cunneen [2015] HCA 14; 89 ALJR 475, because of the Independent Commission Against Corruption Amendment (Validation) Act 2015 (NSW): [22]-[23]; [460]; [590].

3. The Commission was required to identify a relevant government function in determining whether the appellants’ subject conduct “could adversely affect” the exercise of its function, pursuant to s 8(2) ICAC Act, which was accordingly limited to the body responsible for determining the future granting of a mining lease: [194]; [460]; [613]-[614].

4.   Ministerial discretion in approving a mining lease is only limited by the scope and purpose of the relevant statutory context. Relevant considerations included the public interest. The relevant public interest should not be narrowly construed, and is not limited to environmental considerations, thereby including the conduct subject of the Commission’s findings, Mining Act 1992 (NSW), s 63(2) (now repealed); Environmental Planning and Assessment Act 1979 (NSW), Part 3A (now repealed); Environmental Planning and Assessment Regulation 2000 (NSW), cl 8B(b): [230]-[233]; [460]; [662]-[679].

Minister for Planning v Walker [2008] NSWCA 224; 161 LGERA 423; The Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal (2012) 246 CLR 379 considered.

5. Whether relevant information is already in the public domain, or whether the information in the public domain would inevitably lead to further disclosure of the subject information, does not preclude a finding that the information sought to be concealed satisfies the test of adverse effect postulated by s 8(2) ICAC Act: [303]-[305]; [460]; [682].

In relation to (ii)

6. Sections 8(2), 9(1)(a) and 13(3A) ICAC Act do not require the Commission to be satisfied that a criminal offence has in fact been committed in order to justify a finding of corrupt conduct. Rather, the Commission must be satisfied that the facts found have the capacity to constitute an offence if proved before a court: [164]-[165]; [469]; [598].

In relation to (ii)(a)

7. Director’s duties pursuant to s 184(1) may not be fully satisfied by directors removing themselves from positions of potential conflict. The Corporations Act also imposes positive duties of disclosure on company directors: [473]; [623]-[641].

Centofanti v Eekimitor Pty Ltd (1995) 65 SASR 31, Permanent Building Society (in liq) v Wheeler (1994) 11 WAR 187, Permanent Building Society (in liq) v McGee (1993) 11 ACSR 260, Fitzsimmons v R (1997) 23 ACSR 355, Duke Group Ltd (in liq) v Pilmer (1999) 73 SASR 64, discussed.

8. A contravention of s 184(1) requires intentional dishonesty or recklessness, which involves a finding that the conduct complained of was dishonest according to ordinary community standards, and known by the director to be so: [376]-[378], [430]; [487]; [636].

SAJ v The Queen [2012] VSCA 243, Marchesi v Barnes [1970] VR 434 discussed.

9. A deliberate failure to disclose relevant information in circumstances where there is a duty of disclosure and with full knowledge of the relevant facts could be seen to be “intentionally dishonest”: [487]-[489]; [640].

In relation to (ii)(b)

(per Beazley P)

10. It is necessary to look at the circumstances as a whole. Too narrow a focus on the ultimate knowledge of the person deceived is apt to lead into error: [505].

(per Bathurst CJ and Beazley P)

11.   The offence (s 192E Crimes Act 1900 (NSW)) requires that a financial advantage be obtained by deception, and that the person or entity so deceived be identified. Unless and until such deception actually occurs, the necessary element of the offence has not been made out. A causal connection is required between the deception and financial advantage acquired: [350]-[355], [359]; [502], [517].

(per Bathurst CJ, in dissent)

12. No financial advantage arose from the conduct said to be deceptive. This was because any benefit from concealing the Obeid involvement in the tenement from either the government or the IBC had not crystalised: [364]-[366].

(per Beazley P)

13. Pursuant to s 192D Crimes Act, the retention of financial value may be temporary: [519].

(per Basten JA)

14. Maintaining the unrealised value of an asset constitutes obtaining a financial advantage for the purposes of ss 192E and 192D Crimes Act 1900 (NSW), in satisfaction of s 8(2) ICAC Act: [657]-[658].

In relation to (iii)

(per Basten JA, Bathurst CJ and Beazley P agreeing)

15. To ascertain the scope of the Commission’s obligation to afford procedural fairness, it is necessary to bear in mind the fact-finding and characterisation functions of the Commission, and to have regard to its statutory powers with respect to the conduct of a public inquiry: [453]; [460]; [688].

16. Where a procedural complaint is raised for the first time on judicial review, an appellant faces the heavy burden of attempting to persuade a court of error in circumstances where little assistance is afforded the court as to how the Commission, with its broad discretionary powers, would have dealt with an argument not presented to it: [698].

In relation to (iv)

(per Basten JA, Beazley P agreeing)

17.   Having regard to its functions and jurisdiction the Commission has the power to make findings and form opinions extending beyond the question of “corrupt conduct”. The power to formulate recommendations coupled with such findings and opinions, means that such recommendations are, consequently, not dependent on findings of corrupt conduct. These recommendations are amenable to judicial review: [460]; [714], [717].

Judgment

1. BATHURST CJ: By orders made on 29 July 2014, a judge of the Equity Division of the Court (the primary judge) dismissed summonses filed by John Vern McGuigan (Mr McGuigan), John Charles Atkinson (Mr Atkinson), Richard Jonathan Poole (Mr Poole) and Travers William Duncan (Mr Duncan) (collectively called the individual appellants) seeking orders that the determination by the respondent, the Independent Commission against Corruption (the Commission), that they had engaged in corrupt conduct within the meaning of the Independent Commission Against Corruption Act 1988 (NSW) (ICAC Act) was wrong in law, made in excess of jurisdiction and was a nullity.

2. By orders made on the same day, the primary judge dismissed the summons filed by Cascade Coal Pty Limited (Cascade), Mt Penny Coal Pty Limited (Mt Penny Coal) and Glendon Brook Coal Pty Limited (Glendon Brook Coal) (collectively called the corporate appellants) seeking declarations that the recommendations of the Commission that the granting of exploration authorities for tenements known as Mt Penny and Glendon Brook (the tenements) was so tainted by corruption that the authorities should be expunged or cancelled and that certain steps be taken to give effect to that conclusion or alternatively that the New South Wales Government refuse to grant a mining lease over the tenements were made without, or in excess of, jurisdiction and were a nullity.

3. The appellants have appealed from the dismissal of the respective summonses.

Background

4. In July 2013, the Commissioner of ICAC presented a report to the President of the Legislative Council and to the Speaker of the Legislative Assembly (the report) concerning the circumstances surrounding a decision made in 2008 by the then Minister for Primary Industries and Mineral Resources, the Honourable Ian Macdonald MLC (Mr Macdonald), to grant a coal exploration licence (the Mt Penny exploration licence), referred to as the Mt Penny tenement, including whether that decision was influenced by Mr Edward Obeid (Mr Obeid) or members of his family. For the purposes of this judgment, members of the Obeid family and companies in which they had a controlling interest shall be referred to as “Obeid related entities”.

5. The Mt Penny exploration licence, EL7406, was granted to Mt Penny Coal, a wholly owned subsidiary of Cascade, on 21 October 2009. The individual appellants were directors of the latter company.

6. Prior to the grant of the Mt Penny exploration licence, Cascade, on 5 June 2009, had executed two letter agreements. The first of these agreements was between Cascade and Buffalo Resources Pty Ltd (Buffalo), a company associated with Mr Obeid and his family. That agreement, which was conditional upon Cascade or “an affiliate” being granted the Mt Penny exploration licence, provided for the establishment of a joint venture to explore and develop the licence and pursue the grant of a mining lease. It was provided that Buffalo would have a 25% interest in the joint venture. It also provided that Cascade would use its best endeavours to obtain an exploration licence in respect of areas contiguous to the area the subject of the Mt Penny exploration licence, which would also be dealt with in accordance with the terms of the joint venture. Subsequently, Glendon Brook Coal, another subsidiary of Cascade, acquired exploration licence EL7405 over an area known as the Glendon Brook tenement (the Glendon Brook exploration licence). However, this was not a contiguous area and so was not subject to the agreement.

7. The land the subject of the Mt Penny exploration licence comprised three properties: Cherrydale Park (Cherrydale), Donola and Coggan Creek. Obeid related entities owned the first of these properties and had been granted options to purchase the other two properties. By the second of the letter agreements of 5 June 2009, Cascade agreed, subject to conditions including receipt of mining approval, to purchase the properties at four times their improved value as at 1 June 2009. It will be necessary to refer to these agreements in more detail later in this judgment.

8. The Commission found that prior to 5 June 2009, following discussions with Mr Paul Obeid and Messrs Rocco Triulcio and Rosario Triulcio (the Triulcios), the Triulcios agreed to join in the purchase of Donola using a corporate trustee, Geble Pty Ltd, as the vehicle to complete the purchase. The Commission found that through a series of corporate trusts, 50% of the shares in Donola were beneficially held by Obeid related entities and 50% by entities associated with the Triulcios. The Commission found that this occurred prior to the publication of the government’s intention to call for expressions of interest in respect of the Mt Penny area.

9. The Commission also found that the Obeid family arranged for a family friend, Mr John Lewis, to purchase Coggan Creek. The purchase was completed by a corporate vehicle, Justin Kennedy Lewis Pty Ltd. The Commission found that Mr Lewis had (orally or tacitly) agreed to pay the Obeid family 30% of the profit made from the sale of Coggan Creek. The Commission found these transactions occurred after expressions of interest from the Mt Penny tenement had been called for.

10. Subsequent to the grant of the exploration licences, Cascade began negotiations to enter into an agreement pursuant to which the shareholders in Cascade would sell their shares in that company to White Energy Company Ltd (White Energy), a company listed on the Australian Stock Exchange. The total consideration payable was $486 million, payable partly in cash and partly in shares. The proposed agreement was subject to a number of conditions and it will be necessary to refer to it and ancillary agreements entered into at the same time in more detail later in this judgment. However, three of the vendors were companies associated with the individual appellants who were directors of White Energy. In those circumstances, White Energy established an Independent Board Committee (the IBC) comprising Mr Graham Cubbin, Mr Hans Mende and Mr Vincent O’Rourke to consider whether the transaction was in the interests of White Energy. Ultimately the agreement to sell the shares did not proceed.

11. Prior to the commencement of substantive negotiations with White Energy, steps had been taken by Cascade to buy out the Obeid related entities in the joint venture. It appeared that the rights of Buffalo had been assigned to another company associated with Mr Obeid, Southeast Investments Group Pty Ltd (Southeast), although there was no documentation to support such an assignment. The solicitor retained for the Obeid related entities for the purpose of these negotiations, Mr Sevag Chalabian, stated in evidence at the Commission that the company was a shelf company purchased “to disguise the Obeid interest”.

12. By an agreement dated 20 October 2010, which the parties agreed to keep strictly confidential, Southeast agreed to assign the right conferred on it by the agreement of 5 June 2009 to be issued 25% of the shares in Mt Penny to Coal and Mineral Group Pty Ltd (CMG), a company associated with Mr Poole. It should be noted that the letter agreement of 5 June 2009 did not contain an obligation that Buffalo would be issued 25% of shares in Mt Penny, rather, it provided that Buffalo would have a 25% interest in a joint venture in respect of the tenement. The purchase price for the rights was $60 million, payable in what was described as two tranches. It is unnecessary at this stage to set out details of the proposed method of payment. However, the Commission found that $30 million, being the first tranche, made its way into bank accounts of the Obeid family.

13. On the same day, CMG entered into an agreement with Cascade and Mt Penny Coal by which it agreed that the right to be issued 25% of the shares in Mt Penny Coal be terminated in consideration of a total payment of $62 million, $32 million in cash and $30 million in value of Cascade shares, which was said to be the equivalent of 9.3% of Cascade on a fully diluted basis. It is unnecessary to refer to the agreement in any greater detail at this stage.

14. In that way, the interest of Obeid related entities in the joint venture (the Obeid interest) was effectively terminated.

15. The Commission concluded that what had occurred involved corrupt conduct on the part of the individual appellants within the meaning of s 8(2) of the ICAC Act. The Commission’s findings against Messrs Macdonald, Obeid, Moses Obeid and the individual appellants were summarised by it in the following terms:

“The Commission found that Mr Macdonald engaged in corrupt conduct by:

a)    entering into an agreement with Edward Obeid Sr and Moses Obeid whereby he acted contrary to his public duty as a minister of the Crown by arranging for the creation of the Mount Penny tenement for the purpose of benefiting Edward Obeid Sr, Moses Obeid and other members of the Obeid family

b)   entering into an agreement with Edward Obeid Sr and Moses Obeid whereby he acted contrary to his public duty as a minister of the Crown by providing Moses Obeid or other members of the Obeid family with confidential information for the purpose of benefiting Edward Obeid Sr, Moses Obeid and other members of the Obeid family

c)   deciding to reopen the EOIs process for exploration licences in order to favour Mr Duncan

d)   providing Mr Duncan with confidential information, being the document titled “Proposed NSW Coal Allocations”, and advice that the process for EOIs in coal release areas was to be reopened.

The Commission found that Edward Obeid Sr engaged in corrupt conduct by:

a)   entering into an agreement with Mr Macdonald whereby Mr Macdonald acted contrary to his public duty as a minister of the Crown by arranging for the creation of the Mount Penny tenement for the purpose of benefiting Edward Obeid Sr, Moses Obeid and other members of the Obeid family

b)   entering into an agreement with Mr Macdonald whereby Mr Macdonald acted contrary to his public duty as a minister of the Crown by providing Moses Obeid or other members of the Obeid family with confidential information for the purpose of benefiting Edward Obeid Sr, Moses Obeid and other members of the Obeid family.

The Commission found that Moses Obeid engaged in corrupt conduct by:

a)    entering into an agreement with Mr Macdonald whereby Mr Macdonald acted contrary to his public duty as minister of the Crown by arranging for the creation of the Mount Penny tenement for the purpose of benefiting Edward Obeid Sr, Moses Obeid and other members of the Obeid family

b)   entering into an agreement with Mr Macdonald whereby Mr Macdonald acted contrary to his public duty as a minister of the Crown by providing Moses Obeid or other members of the Obeid family with confidential information for the purpose of benefiting Edward Obeid Sr, Moses Obeid and other members of the Obeid family.

The Commission found that Mr Duncan engaged in corrupt conduct by:

a)   deliberately misleading Graham Cubbin (the chairman of White Energy’s IBC) as to the Obeid family involvement in the Mount Penny tenement by failing to disclose the involvement to Mr Cubbin when Mr Cubbin raised the issue with him,

b)   deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement,

c)   telling Anthony Levi that John McGuigan would directly contact Mr Cubbin and thereby relieving Mr Levi from having to answer Mr Cubbin’s request for information about the Obeid family involvement, and

d)   authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group Pty Ltd (‘Coal & Minerals Group’) and Southeast Investments Group Pty Ltd (‘Southeast Investments’),

with the intention, in each case, of deceiving relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in the Mount Penny tenement.

The Commission found that John McGuigan engaged in corrupt conduct by:

a)    deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement,

b)   telling Mr Levi that he (John McGuigan) would directly contact Mr Cubbin and thereby relieving Mr Levi from having to answer Mr Cubbin’s request for information about the Obeid family involvement, and

c)   authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments,

with the intention, in each case, of deceiving relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in the Mount Penny tenement.    

The Commission found that Mr Atkinson engaged in corrupt conduct by:

a)    deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement,

b)   authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments,

with the intention, in each case, of deceiving relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in the Mount Penny tenement.

…

The Commission found that Mr Poole engaged in corrupt conduct by:

a)   deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement,

b)   telling the IBC that he was not aware of any payments having been made to Edward Obeid Sr or any entities associated with him, and

c)   arranging for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments,   

with the intention, in each case, of deceiving relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in the Mount Penny tenement.”

16. The findings against Messrs Macdonald, Edward Obeid and Moses Obeid are not challenged on the appeal.

17. In a subsequent report, presented in December 2013 (the third report), the Commission recommended that the Mt Penny exploration licence and the Glendon Brook exploration licence be terminated or that a mining lease be refused. It is that recommendation which is the subject of the corporate appellants’ appeal.

Corrupt conduct within the meaning of the ICAC Act

18. Sections 7 and 8 deal with the meaning of corrupt conduct for the purpose of the ICAC Act. At the time of the report, they were in the following terms:

“7 Corrupt conduct

(1) For the purposes of this Act, corrupt conduct is any conduct which falls within the description of corrupt conduct in either or both of subsections (1) and (2) in section 8, but which is not excluded by section 9.

(2) Conduct comprising a conspiracy or attempt to commit or engage in conduct that would be corrupt conduct under section 8 (1) or (2) shall itself be regarded as corrupt conduct under section 8 (1) or (2).

(3) Conduct comprising such a conspiracy or attempt is not excluded by section 9 if, had the conspiracy or attempt been brought to fruition in further conduct, the further conduct could constitute or involve an offence or grounds referred to in that section.

8 General nature of corrupt conduct

(1)   Corrupt conduct is:

(a)   any conduct of any person (whether or not a public official) that adversely affects, or that could adversely affect, either directly or indirectly, the honest or impartial exercise of official functions by any public official, any group or body of public officials or any public authority, or

(b)   any conduct of a public official that constitutes or involves the dishonest or partial exercise of any of his or her official functions, or

(c)   any conduct of a public official or former public official that constitutes or involves a breach of public trust, or

(d)   any conduct of a public official or former public official that involves the misuse of information or material that he or she has acquired in the course of his or her official functions, whether or not for his or her benefit or for the benefit of any other person

(2)    Corrupt conduct is also any conduct of any person (whether or not a public official) that adversely affects, or that could adversely affect, either directly or indirectly, the exercise of official functions by any public official, any group or body of public officials or any public authority and which could involve any of the following matters:

(a)    official misconduct (including breach of trust, fraud in office, nonfeasance, misfeasance, malfeasance, oppression, extortion or imposition),

(b)   bribery,

(c)   blackmail,

(d)   obtaining or offering secret commissions,

(e)   fraud

(f)   theft,

(g)   perverting the course of justice,

(h)   embezzlement,

(i)   election bribery,

(j)   election funding offences,

(k)   election fraud,

(l)   treating,

(m)   tax evasion,

(n)   revenue evasion,

(o)   currency violations,

(p)   illegal drug dealings,

(q)   illegal gambling,

(r)   obtaining financial benefit by vice engaged in by others

(s)   bankruptcy and company violations

(t)   harbouring criminals,

(u)   forgery,

(v)   treason or other offences against the Sovereign,

(w)   homicide or violence,

(x)   matters of the same or a similar nature to any listed above,

(y)   any conspiracy or attempt in relation to any of the above.   

(3)   Conduct may amount to corrupt conduct under this section even though it occurred before the commencement of this subsection, and it does not matter that some or all of the effects or other ingredients necessary to establish such corrupt conduct occurred before that commencement and that any person or persons involved are no longer public officials.

(4)   Conduct committed by or in relation to a person who was not or is not a public official may amount to corrupt conduct under this section with respect to the exercise of his or her official functions after becoming a public official.

(5)   Conduct may amount to corrupt conduct under this section even though it occurred outside the State or outside Australia, and matters listed in subsection refer to:

(a)   matters arising in the State or matters arising under the law of the State, or

(b)   matters arising outside the State or outside Australia or matters arising under the law of the Commonwealth or under any other law.

(6)   The specific mention of a kind of conduct in a provision of this section shall not be regarded as limiting the scope of any other provision of this section.”

19. Section 9 imposes a limitation on Section 8. It provides as follows:

“9 Limitation on nature of corrupt conduct

(1) Despite section 8, conduct does not amount to corrupt conduct unless it could constitute or involve:

(a)   a criminal offence, or

(b)   a disciplinary offence, or

(c)   reasonable grounds for dismissing, dispensing with the services of or otherwise terminating the services of a public official, or

(d)   in the case of conduct of a Minister of the Crown or a member of a House of Parliament – a substantial breach of an applicable code of conduct.

(2)   It does not matter that proceedings or action for such an offence can no longer be brought or continued, or that action for such dismissal, dispensing or other termination can no longer be taken.

(3)   For the purposes of this section:

applicable code of conduct means, in relation to:

(a)    a Minister of the Crown – a ministerial code of conduct prescribed or adopted for the purposes of this section by the regulations, or

(b)    a member of the Legislative Council or of the Legislative Assembly (including a Minister of the Crown) – a code of conduct adopted for the purposes of this section by resolution of the House concerned.

criminal offence means a criminal offence under the law of the State or under any other law relevant to the conduct in question.

disciplinary offence includes any misconduct, irregularity, neglect of duty, breach of discipline or other matter that constitutes or may constitute grounds for disciplinary action under any law.

(4) Subject to subsection (5), conduct of a Minister of the Crown or a member of a House of Parliament which falls within the description of corrupt conduct in section 8 is not excluded by this section if it is conduct that would cause a reasonable person to believe that it would bring the integrity of the office concerned or of Parliament into serious disrepute.

(5) Without otherwise limiting the matters that it can under section 74A (1) include in a report under section 74, the Commission is not authorised to include a finding or opinion that a specified person has, by engaging in conduct of a kind referred to in subsection (4), engaged in corrupt conduct, unless the Commission is satisfied that the conduct constitutes a breach of a law (apart from this Act) and the Commission identifies that law in the report.

(6) A reference to a disciplinary offence in this section and sections 74A and 74B includes a reference to a substantial breach of an applicable requirement of a code of conduct required to be complied with under section 440 (5) of the Local Government Act 1993, but does not include a reference to any other breach of such a requirement.”

20. Section 13(3A) provides for circumstances in which the Commission can find that a person had engaged in conduct falling within s 9(1). It is in the following terms:

“13 Principal functions

(3A) The Commission may make a finding that a person has engaged or is engaging in corrupt conduct of a kind described in paragraph (a), (b), (c) or (d) of section 9 (1) only if satisfied that a person has engaged in or is engaging in conduct that constitutes or involves an offence or thing of the kind described in that paragraph.”

21. Sections 74, 74A and 74B of the ICAC Act deal with the preparation and contents of reports. They provide as follows:

“74 Reports on referred matters etc

(1)   The Commission may prepare reports in relation to any matter that has been or is the subjective of an investigation.

(2)   The Commission shall prepare reports in relation to a matter referred to the Commission by both Houses of Parliament, as directed by those Houses.

(3)   The Commission shall prepare reports in relation to matters as to which the Commission has conducted a public inquiry, unless the Houses of Parliament have given different directions under subsection (2).

(4)   The Commission shall furnish reports prepared under this section to the Presiding Officer of each House of Parliament.

(5), (6) (Repealed)

(7)   A report required under this section shall be furnished as soon as possible after the Commission has concluded its involvement in the matter.

(8)   The Commission may defer making a report under this section if it is satisfied that it is desirable to do so in the public interest, except as regards a matter referred to the Commission by both Houses of Parliament.

(9)   (Repealed)

74A Content of reports to Parliament

(1) The Commission is authorised to include in a report under section 74:

(a)   statements as to any of its findings, opinions and recommendations, and

(b)   statements as to the Commission’s reasons for any of its findings, opinions and recommendations.

(2)   The report must include, in respect of each ‘affected’ person, a statement as to whether or not in all the circumstances the Commission is of the opinion that consideration should be given to the following:

(a)   obtaining the advice of the Director of Public Prosecutions with respect to the prosecution of the person for a specified criminal offence,

(b)   the taking of action against the person for a specified disciplinary offence,

(c)   the taking of action against the person as a public official on specified grounds, with a view to dismissing, dispensing with the services of or otherwise terminating the services of the public official.

(3)   An ‘affected’ person is a person described as such in the reference made by both Houses of Parliament or against whom, in the Commission’s opinion, substantial allegations have been made in the course of or in connection with the investigation concerned.

(4)   Subsection (2) does not limit the kinds of statement that a report can contain concerning any such ‘affected’ person and does not prevent a report from containing a statement described in that subsection in respect of any other person.

74B Report not to include findings etc of guilt or recommending prosecution

(1) The Commission is not authorised to include in a report under section 74 a statement as to:

(a)   a finding or opinion that a specified person is guilty of or has committed, is committing or is about to commit a criminal offence or disciplinary offence (whether or not a specified criminal offence or disciplinary offence), or

(b)   a recommendation that a specified person be, or an opinion that a specified person should be, prosecuted for a criminal offence or disciplinary offence (whether or not a specified criminal offence or disciplinary offence).

(2)   A finding or opinion that a person has engaged, is engaging or is about to engage:

(a)   in corrupt conduct (whether or not specified corrupt conduct), or

(b)   in specified conduct (being conduct that constitutes or involves or could constitute or involve corrupt conduct),

is not a finding or opinion that the person is guilty of or has committed, is committing or is about to commit a criminal offence or disciplinary offence.

(3) In this section and section 74A, criminal offence and disciplinary offence have the same meanings as in section 9.”

22. In Independent Commission Against Corruption (NSW)v Cunneen [2015] HCA 14; 89 ALJR 475 (Cunneen), a majority of the High Court held that the expression “adversely affects” in s 8(2) refers to conduct adversely affecting the probity of the exercise of an official function by a public officer: at [42], [50]. In that case, the majority, at [2], made the following remarks concerning the meaning of adversely affects in s 8(2):

“[2]   ‘Adversely affect’ is a protean expression. In this context, however, there are only two possibilities. Either it means adversely affect or could adversely affect the probity of the exercise of an official function by a public official, or it means adversely affect or could adversely affect the efficacy of the exercise of an official function by a public official in the sense that the official could exercise the function in a different manner or make a different decision from that which would otherwise be the case.”

23. Following the decision of the High Court, the parliament passed the Independent Commission Against Corruption Amendment (Validation) Act 2015 (NSW) (Validation Act). It was common ground that the effect of that Act, so far as is relevant to the present case, was to include, within conduct falling within s 8(2) of the ICAC Act, conduct which could adversely affect the efficacy of the exercise of official functions by a public official. The validity of that Act was upheld by the High Court in Duncan v Independent Commissioner Against Corruption (NSW) [2015] HCA 32; 89 ALJR 835.

24. However, there remain a number of issues of construction relevant to the appeal which are dealt with below.

The Commission Report

25. As I have indicated, the report dealt not only with conduct of the individual appellants but also that of Messrs Macdonald, Obeid, Moses Obeid and other members of Mr Obeid’s family. In the first chapter of the report, the Commission identified the range of matters into which it inquired. They included the following:

“1.    The circumstances surrounding a decision made in 2008 by the then minister for primary industries and minister for mineral resources, the Hon Ian Macdonald MLC, to grant a coal exploration licence, referred to as the Mount Penny tenement, in the Bylong Valley. The circumstances in question include whether that decision was not impartially made and was influenced by the Hon Edward Obeid MLC (‘Edward Obeid Sr’) or members of his family (whether on Edward Obeid Sr’s behalf or otherwise).

2.    Mr Macdonald’s role in the decision of the NSW Department of Primary Industries (DPI), in about September 2008, to call for limited expressions of interest (EOIs) for the awarding of exploration licences in respect of the coalmining allocation areas known as Mount Penny, Glendon Brook and Yarrawa.

3.    The circumstances surrounding the tenders made by Monaro Mining NL (‘Monaro Mining’) for exploration licences in respect of the coalmining allocation areas known as Mount Penny, Glendon Brook and Yarrawa and the awarding of those licences.

4.   The roles of Mr Macdonald and Travers Duncan in the decision in November 2008 to reopen the EOI process for the awarding of exploration licences in 11 coalmining areas and to extend further invitations to additional mining companies, including Cascade Coal Pty Ltd (‘Cascade’).

…

7.    Whether Mr Macdonald, or any member of his personal staff, or any employee of the DPI, improperly provided confidential information relating to the reopening of the EOI process and other confidential information in respect of the Mount Penny exploration licence to Mr Duncan or any other person.

8.   The circumstances under which Voope Pty Ltd (‘Voope’) acquired an interest in Monaro Coal Pty Ltd (‘Monaro Coal’), and under which the Yarrawa exploration licence was awarded to Loyal Coal Pty Ltd (‘Loyal Coal’). The name of Loyal Coal was formerly Monaro Coal.

9.    The circumstances surrounding the bid made by Cascade for the Mount Penny exploration licence and the awarding of that exploration licence to Cascade.

10.   The circumstances relating to the entering into of a joint venture involving Monaro Mining, the Obeid family, or any members of that family or entities associated with that family such as Buffalo Resources Pty Ltd (‘Buffalo Resources’), and Cascade.

…

13.   The circumstances relating to the intended sale of shares in Cascade to White Energy Company Ltd (‘White Energy’).

14.   The roles played by Mr Macdonald, members of the Obeid family, Mr Duncan, Richard Poole, John McGuigan, James McGuigan, John Kinghorn, John Atkinson and Greg Jones in the transactions described in paragraphs 9 to 13 above.”

26. In Appendix 2 to the report, the Commission stated its approach to the inquiry was first, to make relevant findings of fact on the balance of probabilities, then to determine whether these facts came within the terms of s 8(1) or s 8(2) of the ICAC Act. If they did, the Commission stated that it then considered s 9 of the Act and the jurisdictional requirements in s 13(3A).

27. The Commission also said that the civil standard of proof had been applied by it in making factual findings. The Commission stated that because of the seriousness of the findings, it had regard to what was said by Dixon J in Briginshaw v Briginshaw [1938] HCA 34; 60 CLR 336 (Briginshaw) at 362, and by the High Court in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; 67 ALJR 170 at 171.

28. Chapter 2 of the report sets out the background of the investigation, the course of the investigation and the evidence obtained as a result.

29. The Commission recorded in that chapter that in February 2011, it received an allegation from a private individual that confidential information regarding the 2008 public tender for the awarding of the Mt Penny tenement had been “leaked” to members of Mr Obeid’s family.

30. The Commission recorded that the tenement covered Cherrydale, owned by the Obeids, and Donola and Coggan Creek, finding, as I indicated above, that the Obeid family had an interest in each of those properties. The Commission found that the grant of the Mt Penny exploration licence substantially increased the value of the properties.

31. In that chapter, the Commission also indicated that the Minister for Primary Industries and Mineral Resources, Mr Macdonald, determined that the call for expressions of interest (EOIs) for the award of exploration authorities in the area should be confined to junior miners. It indicated that there was evidence that Mr Moses Obeid had come into possession of confidential information identifying the companies to be invited to lodge a tender. The Commission found that a merchant banker acting on behalf of Mr Moses Obeid, Mr Paul Gardner Brook (Mr Brook), had used the information to agree with Monaro Mining NL (Monaro), one of the companies to be invited to lodge EOIs, that in the event of its bid being successful, Voope Pty Ltd (Voope), a company associated with the Obeid family and Mr Brook, would acquire 88% of Monaro. The Obeid family held 80% of the shares in Voope and Mr Brook held 12%.

32. The Commission stated that it discovered that what it described as a series of complex transactions had occurred with respect to Monaro’s rights to the bids it had made. It stated that it discovered that Monaro transferred the benefit of its bids to a subsidiary, Monaro Coal Pty Ltd. That company’s shares were acquired by Voope and its name was changed to Loyal Coal Pty Ltd (Loyal Coal).

33. The Commission found that the EOI process was reopened so that Cascade and other parties could participate. It found that following the agreement of 5 June 2009, to which I have referred above at [6], Loyal Coal withdrew its bids for Mt Penny and Glendon Brook and on 19 June 2009, the licences for those areas were awarded to Cascade.

34. The Commission indicated that it became aware of the transactions referred to above at [12] and [13], and the proposed sale to White Energy referred to above at [10]. It stated that it obtained evidence that investors in Cascade were concerned that the Obeids’ involvement in the creation of the Mt Penny tenement or their involvement in the joint venture may become public. It said the investors feared two risks: first, that the independent shareholders of White Energy might not go through with the purchase and second, that the NSW Government might investigate the creation of the Mt Penny tenement and set it aside or refuse to grant a mining lease. It stated that there was evidence that the Cascade investors took steps to ensure the Obeid involvement remained hidden.

35. Chapter 4 of the report dealt, among other things, with the credibility of Messrs Macdonald, Obeid, Moses Obeid and other members of the Obeid family. The Commission indicated that it regarded all of them as unreliable witnesses.

36. In Chapter 6 of the report, the Commission found that Mr Obeid and members of his family stood to benefit from at least “four avenues” relating to the Mt Penny tenement: first, on the sale of Cherrydale, Donola and Coggan Creek, second, by the $30 million paid by Cascade through CMG under the agreement referred to above at [12], third, through receipt of the balance owing under that agreement and fourth, from a recent acquisition of shares in Cascade.

26. Chapter 7 of the report dealt with the relationship between Messrs Macdonald, Obeid and Moses Obeid. The Commission found that there was a close and long-term relationship between Messrs Macdonald and Obeid and that, as from May 2008, the relationship between Messrs Macdonald and Moses Obeid developed into one of friendship and frequent contact. The Commission summarised its findings, which were dealt with in more detail in subsequent chapters of the report, that Mr Macdonald agreed with Mr Obeid that he would create the Mt Penny tenement over Cherrydale, that Moses Obeid became a party to that agreement and that the agreement extended to Mr Macdonald agreeing to provide confidential information to Mr Moses Obeid relating to the creation of mining tenements in the Bylong Valley, including over Cherrydale and properties in its vicinity. As this finding was not disputed, it is unnecessary to deal with the evidence which led the Commission to that conclusion.

27. In Chapter 9 of the report, the Commission referred to the evidence of Mr Moses Obeid that Mr Macdonald told him, in late May or early June 2008, that the Department of Primary Industries intended to open exploration licences in the Bylong Valley and, as a result, Mr Moses Obeid thought the best course was to “option up”, namely to take options over Donola and Coggan Creek. It noted that Mr Moses Obeid admitted the information was not publicly available and stated that the information was of a highly confidential nature which enabled the Obeid family to make a great deal of money. The Commission also inferred that Mr Macdonald told Mr Moses Obeid that the licence would cover Cherrydale.

28. In Chapter 10, the Commission concluded that when Mr Macdonald called for information on the coal resources in the Mt Penny area, he did so at the instigation of Mr Obeid and in terms of the agreement he reached with him and Mr Moses Obeid to create the tenement over Cherrydale. The Commission found that at the time he did so, he was fully aware of the location of Cherrydale, that there was coal under and around that property and that Messrs Obeid and Moses Obeid had sought information from him with the intent they could profit from it. Although issue was taken on the appeal with the concept of “creating” the tenement, no challenge was made to the factual findings.

29. In Chapter 15, the Commission concluded that it was Mr Macdonald who directed that a Mt Penny tenement be created. It found that the decision was made without notice, without deliberation and without a Department of Primary Industry briefing. It also concluded that Mr Macdonald was responsible for the idea of reducing the tenement in size so that it would fit the criterion of a small to medium sized mine. The Commission concluded that Mr Macdonald gave that instruction with the specific intent that the instruction would result in the Mt Penny tenement being created over Cherrydale. Once again, these findings were not disputed on the appeal.

30. In Chapter 16 of the report, the Commission noted that there were two other aspects of the EOI process that were the subject of particular direction by Mr Macdonald. The first was that participation in the EOI process would be by invitation only. The second was that the invitation would be limited to junior miners. It noted that the limitation on invitees was contrary to NSW Government policy, which called for an open process, and undermined Mr Macdonald’s express desire to create competitive tension. It referred to the evidence of the Chief Executive Officer of the New South Wales Minerals Council that the decision to limit the process to small or medium sized companies was unprecedented and that the decision was contrary to the interests of the State. However, it concluded that it had the effect of Mr Macdonald knowing who was on the list of invitees which, it said, was convenient if Mr Macdonald wished to supply information to a third party. It also concluded that the limitation to junior miners meant that the type of companies on the list were those that might be more amenable to entering into a joint venture, for example, with one of the landowners of the tenement.

31. In Chapter 17 of the report, the Commission asserted that owning land within the boundaries of a newly declared mining tenement can bring large and rapid financial rewards. It stated that coal mining companies are willing to pay multiples of the ordinary value of rural properties. It stated that that made early knowledge of the likely creation of a coal mining tenement extremely valuable information. It concluded that members of the Obeid family were given early information by Mr Macdonald that a new tenement was to be created in the Bylong Valley, which was sufficiently detailed to enable the Obeid family to know where the tenement was to be located.

32. In that chapter, the Commission referred to the fact that the files of the Obeids’ family solicitors, Colin Biggers & Paisley, demonstrated that Mr Moses Obeid and his brothers had advance knowledge of the Mt Penny tenement and were using it as the basis to purchase Donola and Coggan Creek in order to make windfall profits once the creation of the tenement became public knowledge.

33. In relation to the purchase of Donola, the Commission concluded that the adoption of a trust structure was done for the sole purpose of disguising the Obeid involvement and because it may otherwise have surfaced that the Obeids had received confidential information from Mr Macdonald.

34. None of the findings in Chapter 17 were disputed on appeal.

35. In Chapter 19 of the report, the Commission concluded that Mr Moses Obeid sought the list of companies who were to be invited to lodge EOIs because he wanted to provide it to Mr Brook to initiate a mining venture and that Mr Macdonald willingly provided the list. The Commission also found that Mr Moses Obeid provided the list to Mr Brook and that it was used successfully to identify a potential “medium for their introduction into coal mining”, namely Monaro.

36. Chapter 20 of the report dealt with the involvement of Monaro. The Commission recorded that on 20 August 2008, Mr Warwick Grigor, the non-executive Chairman of Monaro, entered into an agreement with Voope on behalf of Monaro entitled “Option Deed Over Shares”, which the Commission described as extraordinarily lopsided. It was said to impose a large number of obligations on Monaro which carried with them substantial financial commitments, whilst entitling Voope to obtain 80% of the benefit of those tenements at no cost. The Commission found that the circumstantial evidence pointed strongly to the conclusion that Mr Grigor was being provided with confidential information. It concluded that the Obeid family was using the information to enable them to enter into the agreement with Monaro, which it said became the key to the Obeid family receiving a massive payout.

37. In Chapter 22 of the report, the Commission noted that Monaro resolved to make bids in respect of nine of the 11 new coal areas, including Mt Penny and Glendon Brook. The Commission stated that it seemed to be Monaro’s intention to seek financial backing if and when it was awarded exploration licences.

38. The EOI process required responses to be made by 24 November 2008. Despite this, the Commission found, in Chapter 24 of the report, that in October 2008 Mr Macdonald began to speak of reopening the EOI process to allow other mining companies to compete. The Commission concluded that it was Mr Macdonald’s decision to reopen the process and that he was motivated to do so as a favour to Mr Duncan. In support of the conclusion that Mr Macdonald reopened the EOI process at the request of Mr Duncan, the Commission pointed to the fact that Messrs Macdonald and Duncan had a close working relationship which, it said, extended beyond an ordinary working relationship.

39. The Commission noted that each of Messrs Macdonald and Duncan denied that Mr Duncan had made a request to reopen the process. However, it concluded that at times, the evidence of Mr Duncan was demonstrably unreliable and as such, it did not accept his evidence on this matter.

40. In support of its conclusion, the Commission relied on an email of 1 October 2008 from Mr Craig Munnings, a Department of Primary Industries liaison officer in Mr Macdonald’s office, to Mr Jamie Gibson, Mr Macdonald’s Deputy Chief of Staff, to the effect that he had been advised that Mr Alan Coutts, the Deputy Director General of Mineral Resources, was not prepared to give EOI packages to four companies: Amerod Resources, White Energy, Real Brand Holdings and Cascade. The email noted that Mr Coutts had already informed Mr Gibson of that fact.

41. The Commission referred to the evidence of Mr Gibson that he made the request of Mr Coutts on the instruction of Mr Macdonald and that prior to that instruction, he had not heard of the four companies. The companies were all companies associated with Mr Duncan and the Commission inferred that Mr Macdonald became aware of these companies as a result of Mr Duncan speaking to him. The Commission also relied on the evidence of Mr Coutts, to the effect that Mr Gibson told him that Mr Duncan wanted to obtain the opportunity for the tenements, and to a note from the Managing Director of Monaro that the Department of Primary Industries had reopened the process to allow the “White Group” to participate.

42. However, the Commission found that there was insufficient evidence to establish that Mr Duncan put any pressure, inappropriate or otherwise, on Mr MacDonald to reopen the EOI process, which it said precluded a finding of corrupt conduct against him in connection with the reopening.

43. In Chapter 25 of the report, the Commission found that Mr Duncan had accessed government information that came directly from Mr Macdonald. The Commission referred to evidence that Mr McGuigan gave a document titled “Proposed NSW Coal Allocation” to his son, Mr James McGuigan, on 29 November 2008, saying at the time that he had heard rumours that the allocation process was going to be reopened. Mr McGuigan said that the likely source of the information was Mr Duncan. The Commission concluded that the information came from Mr Macdonald through Mr Duncan.

44. The Commission concluded that the information was valuable as indicating where the government was considering opening areas for the grant of exploration licences. However, it should be noted that the areas in question did not turn out to be part of the EOI process.

45. In the circumstances, the Commission found that Mr Macdonald made a partial decision to benefit Mr Duncan when he reopened the EOI process and disclosed the confidential information.

46. In Chapter 26, the Commission referred to the fact that the EOI Evaluation Committee decided Monaro should succeed in respect of six of its nine bids, including its bids for Mt Penny and Glendon Brook. However, before these arrangements could be finalised, Monaro withdrew its bids in respect of these tenements. The Commission found that the board of Monaro concluded that with no firm finance facility for the bids, it should seek to get out of its obligations on the best possible terms. As a result, Monaro entered into an agreement with Voope, which provided that the Monaro subsidiary, which was successful in the bid process, was to change its name to Loyal Coal and its shares were to be transferred by Monaro to Voope.

47. The Commission found that following that transaction, a series of meetings took place between Messrs Moses Obeid, McGuigan and Jones, the latter being another investor in Cascade. The Commission found that Messrs McGuigan and Jones had been introduced to Mr Moses Obeid in connection with another unrelated transaction.

48. The Commission found that at the second meeting, Mr McGuigan drew up a form of Heads of Agreement which formed the basis of the agreement of 5 June 2009. The document was described as the “Key Principles” document. The Commission said the second meeting was important because all of the parties were open about the fact that the Obeids were linked to the mining side of the transaction; a fact which it said was quite evident from the Key Principles document.

49. The Commission found that after the second meeting, Mr Poole took over the negotiations on behalf of Cascade. The Commission found that at one of the meetings, agreement was reached that the Obeids would use a “cleanskin” company, Buffalo, to cover their involvement. The Commission also referred to the two agreements of 5 June 2009. In relation to the agreement referred to above at [6], the Commission made the following remarks:

“The key components to the mining venture agreement were that, in the event that an exploration licence were granted to Cascade in respect of Mount Penny, the parties agreed to form a joint venture “to explore and develop” the area with a view to obtaining mining approval. It was further agreed that, as joint venturers, they would, if they could, pursue the development “over the area contiguous to” Mount Penny. The agreement then went on to provide as follows:

In recognition of Buffalo’s intellectual property contribution and in consideration of Buffalo:

●    and its associates or related parties including Gardner Brook and Loyal Coal Pty Ltd withdrawing any existing applications in relation to Mount Penny and Glendon Brook Coal Release Areas and undertaking not to pursue the grant of any mining rights to the Area or any Contiguous Area, or the Glendon Brook EOI Coal Release Area;

●   agreeing to assist Cascade to explore and develop the Exploration Licence and obtain the Mining Approvals;

●    agreeing to make available and provide their expert knowledge of the Area to assist with further exploration and review of the Contiguous Area.

Cascade agrees to:

●    vest 100% of its interest in the Exploration Licence in the JV; and

●    grant to Buffalo a 25% interest in the JV

There are several troubling aspects to the above part of the agreement. Buffalo Resources was receiving a substantial benefit under the agreement – 25% of a potentially extremely valuable coalmining tenement – but what was it giving in return? Part of the consideration is said to be ‘Buffalo’s intellectual property contribution’, but it was readily conceded that nobody behind Buffalo Resources had any experience or knowledge in the area of coalmining or coalmine development. It does not appear that Buffalo Resources truly had any ‘intellectual property’ that it could contribute. Similarly, Buffalo Resources did not have skills that would enable it to ‘assist Cascade to explore and develop the area’ and did not have any ‘expert knowledge’ that could enable exploration of contiguous areas. In short, these items specified as consideration were shams and no consideration at all.

That leaves only one item that Buffalo Resources was providing in return – arranging the withdrawal of the bids made by Loyal Coal in respect of Mount Penny and Glendon Brook.”

61. The Commission rejected Mr Duncan’s denial that he had knowledge of the negotiations which led to the 5 June 2009 agreements. The Commission referred to the fact that Mr Duncan gave evidence that he was critical of a proposal to give the Obeids a 30% interest in the venture and Mr McGuigan subsequently told him he had negotiated a 25% interest.

62. The Commission referred to what it described as the critical feature of the agreement, namely that Loyal Coal would withdraw its bid. The Commission found that Messrs Moses Obeid and Brook ramped up negotiations by telling Cascade that they had inside information that Monaro was going to succeed and Cascade would come second.

63. The Commission found that on 28 May 2009, there was a meeting at the office of Mr Macdonald at which he was informed of the successful bidders. The Commission found that there was no evidence the names of the companies which came second in the evaluation process were read out at that meeting. However, the Commission concluded that Mr Macdonald told Mr Moses Obeid the companies which were successful in the bidding process. This finding was not challenged on the appeal. The Commission also found that Messrs Moses Obeid and Brook were using the information as part of a negotiating strategy. The Commission however declined to find that Mr Macdonald told Mr Moses Obeid who had come second in the bidding process.

64. In Chapter 27, the Commission found that, as at 5 June 2009, each of Messrs McGuigan and Poole knew Cascade was entering into a mining venture backed by the Obeid family and that, as at 5 June 2009, they knew that Buffalo was a corporate entity, majority controlled by that family. The Commission referred to: the evidence of Mr Brook, who participated in the negotiations, that there was no doubt that the Obeids were on the other side of the transaction with Cascade; the evidence of Mr Jones that the Obeids were behind the 25% interest in the joint venture and that he discussed that matter with Messrs McGuigan and Poole; and finally the evidence of Messrs Moses Obeid and James McGuigan to similar effect. The Commission concluded that it was evident from the Key Principles Document, drafted by Mr McGuigan, that Mr McGuigan knew of the involvement of the Obeids both on the mining side and property side of the transaction. It rejected the evidence of Mr McGuigan to the effect that he thought that sometime after 31 May 2009, the Obeids may have dropped out of the mining venture.

65. The Commission also rejected the evidence of Mr Poole that he did not know the Obeids were involved in the mining venture as at 5 June 2009 and did not actually know until after August 2010. It referred to the evidence of Mr Duncan indicating to Mr Poole that he wished to have the Obeids removed from the venture and the negotiations with Mr Chalabian on that issue. It also considered that it was inconceivable that Mr Poole did not know of the Obeids’ involvement by 5 June 2009 having regard to the evidence of Messrs Jones, James McGuigan and McGuigan on this issue. It also stated that its conclusion was supported by an email from Mr Brook on 3 June 2009 sent by Mr Brook to Mr James McGuigan and copied to Mr Poole, which spoke of Mr Brook “consulting with Moses” upon the terms of the mining transaction.

66. In Chapter 29 of the report, the Commission referred to the relationship between the individual appellants and White Energy. It pointed to the fact that each of the individual appellants, together with Messrs Jones, John Kinghorn (Mr Kinghorn) and Brian Flannery, were the investors in Cascade. It also pointed to the fact that White Energy was a major company with an interest in coal technology and that there was a close connection between the management and ownership of White Energy and the circle of investors involved in Cascade. It pointed to the fact that Mr Duncan was the Chairman of Directors of White Energy; Mr Atkinson had been its Managing Director and remained on the board and Mr McGuigan was also a Director of that company. It also pointed out that Mr Poole had a pre-existing connection with White Energy as a financial advisor and as the controller of a “substantial” shareholding in White Energy.

67. The Commission stated that it was not clear who amongst the Cascade investors first had the idea to sell the asset to White Energy, although it noted that Mr Atkinson said that it may have been him. It stated that there were records provided by Arthur Phillip Pty Ltd (a company controlled by Mr Poole) that it was advising on the sale as early as February 2010.

68. The Commission found that the initiation and course of negotiations between Cascade and White Energy remained obscure. It referred to the evidence of Mr Duncan that he, Messrs McGuigan, Kinghorn, Atkinson and Poole arrived at the number of $500 million. However, it pointed out that Mr Duncan could not explain who it was at White Energy who agreed to take out an option at that price.

695. The written submissions of McGuigan and Poole were terse: they were not relevantly expanded upon in oral argument. They did not suggest that any relevant complaint was made before the Commission, but rather submitted that it was a matter for counsel assisting to identify the particular elements of each relevant offence and the evidence which might support them. That submission appeared to be a complaint as to the content of counsel’s submissions, but this Court was not taken to either the written or oral submissions in order to demonstrate that the primary judge had misunderstood the submissions to him or had misconceived the submissions made to the Commission. The proposition that they could have applied to reopen the hearing was met with the submission that “[t]he reality was that by reason of the directions made on 15 October 2012 that was not an option.” [134] However, the document referred to was merely a statement provided by the Commission as to the scope of the proposed public inquiry. Its relevance to the likely response of the Commission to an application to reopen was obscure.

     134.    Combined submissions, at par 191.

696. The submissions contained no express complaint that an opportunity to provide adequate answers by way of written submissions was denied; nor did the submissions before this Court, any more than those before the primary judge, identify any evidence which might have been available and which was not presented to the Commission. In short, the appellants did not condescend to address the detail of their complaints, so as to demonstrate that there was an element of practical unfairness.

697. In circumstances where a procedural complaint is raised for the first time on judicial review, the Court is placed in a difficult position. It will have no assistance from the primary tribunal as to how it would have dealt with an argument which was never presented to it. Given the broad discretionary powers of the Commission, an applicant for judicial review faces a heavy burden of persuading a court of error in these circumstances. That burden was not met in the present case. The grounds relating to procedural unfairness in each appeal must be rejected.

Individual issues

(a)   Mr Atkinson and the IBC

699. As the statement of findings by the Commission set out at [584] above demonstrates, there were variations in the identification of corrupt conduct, as between the appellants. However, one finding was common to each of the appellants, namely:

“a)   deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement.”

700. For the reasons discussed above, the Commission found, on the basis of relevant material, that each of the appellants knew that the Obeid family had been involved with the proposed mining venture and knew that the IBC was not aware at least of the extent of the involvement and wished to discover the extent of the Obeid involvement. The variations in their positions arose from different communications with the IBC. Whether different findings should have been made may be tested by considering the submissions of Mr Atkinson, who had no direct communication with the IBC or any of its members.

701. Mr Atkinson submitted that he was not asked by the IBC to attend, nor was he asked to furnish it with information; he had no duty to volunteer information to the IBC, and he made no false statement to it, nor did he authorise any person to make a false statement on his behalf.

702. In oral submissions, senior counsel for Mr Atkinson relied on the proposition that his conduct could not constitute “deception” for the purposes of s 192E. Although there was no concession that silence in the face of a duty to speak might constitute deception, the submission was put on the premise that there was no such duty. [135] The question of silence in circumstances where there was a duty to speak was addressed in reply to the Commission’s submissions with respect to s 184 of the Corporations Act. Mr Atkinson’s response in that regard was succinct: he reiterated the principle accepted by the primary judge that the fiduciary duty owed by a director, “[g]enerally speaking” did not require one to be “proactive”, meaning that participation in the decision-making process was not required. [136] He sought to distinguish Fitzsimmons on the basis that the director who had a duty to disclose his knowledge of the financial difficulties of the Duke Group was the only person who had that knowledge. [137]

     135.    CA Tcpt, 17/02/16, p 77(46)-(50) and p 78(17)-(37).

     136.    Tcpt, 18/02/16, p 130(25)-(50).

     137.    Tcpt, p 131(15)-(24).

703. While it was true that the applicant in Fitzsimmons had knowledge from his position with the Duke Group which was not known to non-Duke members of the Kia Ora board, [138] the reasoning of the Court depended upon his duty as a member of the board of directors of Kia Ora and not upon his position as the sole member of the Kia Ora board who was also a director of certain Duke companies and an employee of Duke. In principle, it is difficult to see that the distinction relied upon by Mr Atkinson could be material; the fact that two directors had the relevant knowledge could not abrogate the duty of either to speak out.

     138.    Fitzsimmons at 362.

704. Once is it is accepted that Mr Atkinson had a duty as a director of White Energy to reveal the information he had concerning the involvement of the Obeid family, it is apparent that his attempt to distinguish himself from the position of the other appellants must fail.

(b)   reliance on fraud offence

705. There was a curiosity with respect to the formulation of the findings in respect of Messrs McGuigan and Atkinson with respect to the offences. In both cases, the Commission made findings for the purposes of s 9(1)(a) in relation to both fraud and company violations. However, in dealing with s 8(2), the finding referred purely to company violations within s 8(2)(s), omitting reference to fraud and s 8(2)(e).

706. To the extent that the Commission is successful in its contention that findings with respect to s 184(1) of the Corporations Act should stand, the point is of little significance. However, Mr McGuigan and Atkinson relied on the fact that there was no express statement that the second limb of s 8(2) was satisfied by reference to fraud under par (e).

707. The Commission submitted that the failure to refer to s 8(2)(e) with respect to two directors was an oversight. It had no material consequence because the specific findings made for the purposes of s 9(1)(a) were in all relevant respects identical with those required by the second limb of s 8(2). The relevant state of satisfaction was expressed; the only error was to fail to apply a specific statutory label.

708. Although the outcome of the appeals will not turn on this point because the notice of contention is upheld with respect to the Corporations Act violations, the Commission’s submission should be accepted. There was no relevant legal error in failing to note one of two statutory provisions, the relevant state of satisfaction having been recorded. It was not submitted by the appellants that a different test applied to the satisfaction of s 8(2)(e) and s 9(1)(a).

Corporate appellants

709. The corporate appellants were Cascade Coal Pty Ltd and two of its subsidiary companies through which it had an interest in the Mount Penny and Glendon Brook tenements, in circumstances outlined above. Each of those companies, namely Mt Penny Coal Pty Ltd and Glendon Brook Coal Pty Ltd, had held the exploration licences in October 2009, until their cancellation by legislation in January 2014.

710. The proceedings brought by the corporate applicants in the Court below sought review of the findings made by the Commission in a further report published in December 2013 (referred to as the third report). That report made no findings as to corrupt conduct; rather, based on the findings made in its earlier report, it responded to a request from the New South Wales Government for recommendations, which request had been made in January 2013. The relevant recommendations made by the Commission were as follows: [139]

“The Commission is of the view that the granting of the authorities for Doyles Creek, Mount Penny and Glendon Brook was so tainted by corruption that those authorities should be expunged or cancelled and any pending applications regarding them should be refused.

The Commission recommends that the NSW Government considers enacting legislation to expunge the authorities for Doyles Creek, Mount Penny and Glendon Brook. That could be accompanied by a power to compensate any innocent person affected by the expunging … to the extent that that was considered appropriate.

…

In the absence of special legislation, another reasonable option in relation to each of Doyles Creek, Mount Penny and Glendon Brook is to consider cancelling the relevant authorities and refusing pending applications for assessment leases under s 380A of the Mining Act, if the minister formed the view that it is in the public interest to do so.

…

A possible further alternative approach is to allow the current authorities to continue until they expire and then refuse to renew them or refuse to grant a mining lease. The Commission does not favour this approach.”

139.    ICAC Report (December 2013), p 6.

711. On 15 January 2014 the companies filed a summons seeking judicial review of the recommendations and a declaration that they were made in excess of jurisdiction and are a nullity. The gravamen of the challenge appeared to be that there were no findings of corrupt conduct on the part of any of the companies and, in particular, there was no finding that Cascade Coal had obtained the benefit of the Mount Penny and Glendon Brook tenements in circumstances which constituted corrupt conduct on its part. (Doyles Creek is not relevant to the proceedings.)

712. The primary judge dismissed the claims for declaratory relief for what he described as three reasons. The first reason was that there was no decision or finding that was amenable to review, but only “recommendations”. [140] The second reason derived from the submissions before him which depended, at least in part, on the findings made in the Commission’s first report being set aside. The third reason was that the relief sought lacked utility because the grant of the declarations would not undo the legislative response and that any “reputational damage” that the companies had suffered followed “not from the recommendations in the third report, but rather from the relevant findings contained in the first report.”[141]

     140.    Primary judgment at [237]-[239].

     141. Primary judgment at [241].

713. The grounds contained in the draft notice of appeal challenged these. Ground 3 reiterated the entitlement of the appellants to declarations that the recommendations were made without jurisdiction and were nullities. Some further particularisation, in administrative law terms, was provided by an amended draft notice of appeal.

714. The first reason given by the trial judge is not supportable in principle. As explained by Aronson and Groves: [142]

“Many official reports, findings and recommendations contain no orders within them, or effect no immediate alteration of legal rights or obligations. The reports of coroners, royal commissioners, or other formal advisory bodies are good examples. Nevertheless, the common law has long subjected them to judicial review if they are made to a formal legal structure, where they substantially impact on the economic or reputational interests of particular individuals. In this respect, the common law was simply recognising both the de facto importance of some reports, and the common practice of splitting the administrative process into at least two compartments, investigative and decisional.”

142.    M Aronson and M Groves, Judicial Review of Administrative Action (Law Book Co, 5th ed, 2013) at [2.460].

715. The authors further note that judicial review is available even where the report or recommendation does not constitute a legal precondition to the action of others, referring to Annetts v McCann [143] (dealing with the findings of a coroner investigating the death of a farm hand on a station in Western Australia) and Ainsworth v Criminal Justice Commission [144] (permitting review of a report of the CJC which contained adverse recommendations about the applicants, who were involved in the poker machine industry).

     143. (1990) 170 CLR 596.

     144. (1992) 175 CLR 564.

716. The second reason failed to address the possibility that, even if the findings in the first report were upheld, a causal nexus was required between those findings and the recommendations. Thus, in the course of argument on the appeal, senior counsel for the companies took the point that, absent the appropriate nexus, the Commission had taken itself outside the function conferred by s 13(3)(b) of the ICAC Act. [145] The submissions did not expand upon the nature of the constraint imposed by s 13(3)(b). However, it is convenient to address the terms of that subsection, taken in context.

     145.    Tcpt, 16/02/16, p 46(35).

13   Principal functions

…

(3)   The principal functions of the Commission also include:

(a)   the power to make findings and form opinions, on the basis of the results of its investigations, in respect of any conduct, circumstances or events with which its investigations are concerned, whether or not the findings or opinions relate to corrupt conduct, and

(b)   the power to formulate recommendations for the taking of action that the Commission considers should be taken in relation to its findings or opinions or the results of its investigations.

…

(4) The Commission is not to make a finding, form an opinion or formulate a recommendation which section 74B or 74BA prevents the Commission from including in a report, but section 9 (5) and this section are the only restrictions imposed by this Act on the Commission’s powers under subsection (3).

(5)   The following are examples of the findings and opinions permissible under subsection (3) but do not limit the Commission’s power to make findings and form opinions:

(a)   findings that particular persons have engaged, are engaged or are about to engage in corrupt conduct,

(b)   opinions as to:

(i)   whether the advice of the Director of Public Prosecutions should be sought in relation to the commencement of proceedings against particular persons for criminal offences against laws of the State, or

(ii)   whether consideration should or should not be given to the taking of other action against particular persons,

(c)   findings of fact.

717. The Commission itself considered the question of its jurisdiction, in particular with respect to the inquiry into the Doyles Creek tenement, and dealt in its third report with the submission that the powers conferred under s 13(3) were grounded in the results of the investigations, namely whether there had been corrupt conduct. [146] The Commission rejected these submissions noting that no such restrictive approach had been adopted by this Court in Duncan v Ipp. [147] By reference to the statutory language, the Commission expressly noted that the power to make findings and form opinions extended beyond questions of corrupt conduct,[148] and that the power to formulate recommendations for action was coupled with its findings or opinions and therefore decoupled from the need for a relationship with corrupt conduct.

     146.    Third Report, p 9.

     147. [2013] NSWCA 189 at [38] (Bathurst CJ, Barrett and Ward JJ agreeing).

     148. ICAC Act, s 13(3)(a).

718. The Commission further noted the deliberate exclusion of restrictions on the Commission’s powers under subs (3)[149] and the expansive formulation used in s 13(5).

     149. ICAC Act, s 13(4).

719. While it may be correct to say, as the Commission concluded, that “it is crystal clear that s 13 confers power on the Commission to make recommendations concerning matters that do not involve corrupt conduct”, that is not to say there are no limitations on the Commission’s powers. One limitation is to be found in the need to accord procedural fairness before affecting adversely the interests of an individual. (The companies do not complain of a breach of procedural fairness.)

720. At the heart of their submissions, the companies seek to challenge the nexus upon which the Commission relied. However, the submissions in effect sought to impose a further condition on the making of the recommendations, namely that the directors of the companies now holding the tenements should, when the interests were acquired, have had knowledge of the corrupt conduct of the former Minister and Edward and Moses Obeid. It should be added that, in discussing the question of knowledge, the submissions understated the findings made by the Commission.

721. The submissions by the companies in this Court sought to distinguish between the creation of the Mount Penny tenement and the grant of the exploration licence with regard to it and the equivalent steps in relation to the Glendon Brook tenement. Accordingly, it is convenient to deal with the two areas separately.

722. So far as the Mount Penny tenement was concerned, there was no challenge to any of the findings of corrupt conduct involving former Minister Macdonald, Edward Obeid Snr and Moses Obeid. The closest the submissions got to that issue was a suggestion that, because the exploration licence was issued by the Director-General under delegation from the Minister and there was no suggestion of corruption on his part, therefore the licence was not “tainted” by the Minister’s corrupt conduct. The factual premise concerning the non-involvement of the Director-General is correct; it does not follow that the grant of the exploration licence was not tainted, in a relevant sense, by the corrupt conduct, without which the tenement would not have been mapped, nor would the processes which followed have eventuated.

723. There were ample reasons, revealed in the history of the investigation and the findings set out above, to support a recommendation that the exploration licence be cancelled or expunged. (Nothing turns, for present purposes, on the mechanism by which that was to occur.) Certainly it could not be said that such a recommendation was arbitrary or irrational or that no reasonable Commissioner could adopt it.

724. Once that issue is resolved, there may be a further question as to whether the holder of the tenement is, in effect, a bona fide purchaser for value without notice of its tainted origins. On one view, that question did not arise: the recommendation expressly stated that it was for the government to consider the possibility of compensation for any “innocent person” affected by the expungement of the tenement. The recommendation did not refer specifically to the status of the corporate appellants in that regard. Nevertheless, the submissions in this Court disregarded a number of factors which told against the characterisation of the appellants as innocent persons.

725. In short, the following points may be noted. First, the Commission found that Mr Duncan had obtained confidential information from Mr Macdonald prior to the reopening of the bidding process, which resulted in Cascade Coal preparing to make bids for exploration licences at Mount Penny and Glendon Brook, which it ultimately secured. The Commission was satisfied that Mr Macdonald’s conduct was corrupt, although it made no such finding with respect to Mr Duncan’s receipt of the documents.

726. The second point involved the inability of the Commission to find that Macdonald provided Moses Obeid with the information that Cascade Coal had come second to Monaro Mining in the bidding process. However, there was no doubt that Mr Obeid and Mr Brook had confidential information and used it to their advantage.

727. Thirdly, there was a dispute as to what Cascade Coal knew at the time that it entered into the agreement with Buffalo Resources. Although the submissions stated that Cascade Coal did not know that this information was correct, in fact the Commission accepted evidence given by Mr Jones, a director of Cascade Coal, that the information had been provided by Moses Obeid (and Mr Brook) and that the information was “decisive”. The Commission found that “those persons negotiating on behalf of Cascade Coal believed that, if Loyal Coal withdrew its bid, Cascade was guaranteed of success.” [150] That statement appears under the heading “Cascade had inside information”. In its written submissions in this Court, the Commission asserted:

“It is a clear implication from these findings that the Commission was of the view that Cascade knew that the Obeid family was given, and improperly used, confidential information; namely, the rankings of Loyal and Cascade in the EOI process.” [151]

150.    ICAC Report, p 112.

151.    ICAC Submissions, filed 18 February 2015, par 61.

728. In reply, the corporate appellants submitted that this statement should be rejected as “an impermissible attempt, long after its publication, to construct findings not expressed by ICAC in the Report.” [152]

     152.    Appellants’ combined submissions in reply, 18 March 2015, par 82.

729. The Commission’s submissions should be rejected in part. There were three elements, namely: (a) Cascade Coal had inside information, (b) that information came from the Obeid representatives and, (c) the representatives of Cascade Coal knew that it had been improperly obtained.

730. The Commission did not make the last finding and it would be inappropriate to allow it to defend the judicial review proceedings on that basis. However, that conclusion does not provide a basis for setting aside the Commission’s recommendation. The recommendation was based on the objective circumstances, namely the use of confidential information, which had been improperly obtained by the Obeid family, as a result of which it was able to broker the deal which resulted in Cascade Coal obtaining the two mining tenements. That being the basis upon which the recommendation was made, it could not be said that the recommendation was without rational support or was in any other way a manifestly illogical or unreasonable exercise by the Commission of its functions. The precise state of knowledge of the directors of Cascade Coal might be relevant to any claim for compensation, but that was not the issue the Commission was addressing. As already noted, it left that question for the government to determine.

731. Fourthly, there were the findings, noted above, as to the joint venture entered into by Cascade Coal with Buffalo Resources, a company known by Cascade Coal to involve the Obeids. Further, there was the evidence that Cascade Coal, before arranging a sale of its interest in Mount Penny to White Energy determined to remove the Obeids from the joint venture and agreed to pay them $60 million, of which $30 million was paid upfront and in a manner which sought to disguise their involvement.

732. The short propositions, which may be derived from the history more fully recounted above, are: first, the creation of the Mount Penny tenement was a flawed and corrupt process from its initiation. Secondly, if Cascade Coal, the successful bidder for the exploration licence, was, as may be assumed, unaware of the details of the creation of the tenement, the means by which it was successful depended upon the use of confidential information provided to it by Moses Obeid. The valuable nature of that information was reflected in the willingness of Cascade Coal to offer the Obeid interests a 25% share of a potentially extremely valuable coal mining tenement in order to be able to make use of the information provided. Thirdly, whether the directors of Cascade Coal knew of the means by which Moses Obeid had obtained the confidential information was not a critical issue in this analysis. The Commission expressly found that, prior to the announcement of the successful bidder, the directors of Cascade Coal were aware that they were dealing with the Obeid family. The information was confidential in the sense that, prior to release, it should only have been available within the Department; Moses Obeid had access to it and provided it to Cascade Coal, which relied upon it, and thus the process by which Cascade Coal obtained its interests in the two licences was tainted.

733. In these circumstances, it cannot be said that there was any want of statutory power for the Commission to make the recommendation in relation to the Mount Penny tenement.

734. It may be accepted that the underlying circumstances relating to Glendon Brook were, in some respects, different. First, the Obeids had no landholding interest in the area the subject of the tenement. Secondly, there was no finding that the creation of the tenement was tainted by corruption. These matters should be accepted. However, the submissions with respect to Glendon Brook went one step further: there was, it was said, no finding that Cascade Coal had received any confidential information about the exploration licence to be issued with respect to Glendon Brook. [153]

     153.    Tcpt, 16/02/16, p 48(18).

735. The last proposition should not be accepted. The information that Cascade Coal came second to Monaro Mining in the bidding related not only to the Mount Penny tenement, but also to Glendon Brook. The arrangement with Monaro and its nominee Loyal Coal, was that bids for both would be withdrawn with the result that Cascade Coal would be successful in relation to both areas. As the Commission expressly found, following a meeting on 29 November 2008, Cascade Coal commenced making plans to bid for both Mount Penny and Glendon Brook.

736. It is true that Cascade Coal did not enter into an agreement with the Obeid family interests to purchase any land the subject of the Glendon Brook tenement, because the Obeids did not own such land. It is also true that there was no joint venture with respect to the exploitation of the Glendon Brook tenement. Nevertheless, the history of dealings over the Mount Penny tenement demonstrated that Cascade Coal became the successful bidder for the Glendon Brook tenement in the same way that it obtained the Mount Penny tenement, namely by Loyal Coal withdrawing its bid.

737. Returning to the terms of s 13(3)(b), the recommendation of the Commission with respect to Glendon Brook could not be said to be unrelated to the results of its investigations: clearly it was based squarely on those results. The recommendation related to the revocation of the mining tenement, a matter which was not extraneous to those results. Nor was the recommendation in some sense an “irrational” response. The primary judge was, therefore, correct to refuse to intervene in the exercise of the limited supervisory jurisdiction of the Court. There was no want of statutory power for the recommendation in relation to the Glendon Brook tenement..

Conclusions

738. In the result, the individual appellants have been unsuccessful in seeking judicial review of the findings of corrupt conduct made by the Commission with respect to them individually. The corporate appellants have also been unsuccessful, in their case in challenging the recommendation for expungement of the two exploration licences.

739. The Commission has been successful in its notice of contention with respect to the availability of offences under s 184(1) of the Corporations Act, a point upon which the primary judge found against it. As the success of the applicants on this point in the Court below did not result in favourable relief, there is no need to interfere with the orders made by the primary judge.

740. In the result, each appeal must be dismissed; the appellants must pay the respondent’s costs in this Court. The Court should make the following orders:

In matter 2014/239426 – Travers William Duncan v Independent Commission Against Corruption:

(1)   Grant the applicant leave to appeal.

(2)   Direct that the applicant file the draft notice of appeal in the white book within seven days.

(3)   Dismiss the appeal.

(4)   Order the appellant to pay the costs of the Commission of the proceedings in this Court.

In matter 2014/249038 – John Vern McGuigan and Richard Jonathon Poole v Independent Commission Against Corruption:

(1)   Grant the applicants leave to appeal.

(2)   Direct that the applicants file the draft notice of appeal in the white book within seven days.

(3)   Dismiss the appeal.

(4)   Order the appellants to pay the costs of the Commission of the proceedings in this Court.

In matter 2014/318985 – Cascade Coal Pty Ltd, Mt Penny Coal Pty Ltd and Glendon Brook Coal Pty Ltd v Independent Commission Against Corruption:

(1)   Grant the applicants leave to appeal.

(2)   Direct that the applicants file the draft notice of appeal in the white book within seven days.

(3)   Dismiss the appeal.

(4)   Order the appellants to pay the costs of the Commission of the proceedings in this Court.

In matter 2014/319803 – John Charles Atkinson v Independent Commission Against Corruption:

(1)   Grant the applicant leave to appeal.

(2)   Direct that the applicant file the draft notice of appeal in the white book within seven days.

(3)   Dismiss the appeal.

(4)   Order the appellant to pay the costs of the Commission of the proceedings in this Court.

**********

Endnotes

Amendments

29 June 2016 - [226] Amendment to quote.

[289] Amendment to FCAFC citation and typographical error in quote.

[351] Inserting "J" after "Badgery-Parker".

[354] Changing "the creditor may.." to "the debtor may.."

[379] Deleting "indifference" after "reckless".

[417] Inserting 'Owen J' in place of "Ipp J".

23 June 2016 - [628] Correcting typographical error in quote

Decision last updated: 29 June 2016