Kazal v Independent Commission Against Corruption

[2019] NSWSC 556

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Kazal v Independent Commission Against Corruption [2019] NSWSC 556

Hearing dates:

8 February 2019

Decision date:

24 May 2019

Jurisdiction:

Common Law

Before:

N Adams J

Decision:

(1) The proceedings are dismissed summarily under Uniform Civil Procedure Rules 2005 (NSW) r 13.4.

 

(2) The plaintiff is to pay the defendants’ costs.

 (3) The question of whether the costs are to be paid on an indemnity basis is reserved.

Catchwords:

CIVIL PROCEDURE – summary dismissal – striking out of statement of claim – where Independent Commission Against Corruption made findings plaintiff acted corruptly – where findings were referred to Director of Public Prosecutions but no charges laid – where plaintiff brought judicial review proceedings against those findings and lost – whether Independent Commission Against Corruption’s report ultra vires – whether statement possessed by the Independent Commission Against Commission when it made findings exculpatory and/or improperly withheld – whether proceedings have no prospect of success – whether claim improperly pleaded and inadequately particularised – Uniform Civil Procedure Rules 2005 (NSW) rr 13. 4, 14.28

  TORTS – misfeasance in public office – where plaintiff seeks declaration that defendants engaged in misfeasance in public office – whether Independent Commission Against Corruption’s correspondence with the DPP malicious, or reckless with intent to cause injury, reputational and financial harm – whether conduct beyond power – whether foreseeable risk of harm

Legislation Cited:

Civil Procedure Act 2005 (NSW)
Crimes Act 1900 (NSW)
Crown Proceedings Act 1988 (NSW)
Independent Commission Against Corruption Act 1988 (NSW)
Place Management NSW Act 1998 (NSW)
Sydney Harbour Foreshore Act 1998 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41
Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146; [2008] HCA 32
Cudgegong Australia Pty Ltd v Transport for New South Wales [2018] NSWSC 929
Dainford Ltd v ICAC (1990) 20 ALD 207
Dainford Ltd v Independent Commission Against Corruption (ICAC) (1990) 20 ALD 233
Dey v Victorian Railway Commissioners (1949) 78 CLR 62; [1949] HCA 1
Duncan v Independent Commission Against Corruption [2014] NSWSC 1018; (2014) 311 ALR 750
Edward Moses Obeid Snr v David Andrew Ipp [2016] NSWSC 1376; (2016) 338 ALR 234
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69
Glynn v ICAC (1990) 20 ALD 214
Kazal v Independent Commission Against Corruption [2013] NSWSC 53
Kazal v Independent Commission Against Corruption [2018] NSWSC 1370
Obeid v Lockley [2018] NSWCA 71; (2018) 355 ALR 615
O’Brien v Bank of Western Australia Ltd [2013] NSWCA 71
Spencer v The Commonwealth (2010) 241 CLR 118; [2010] HCA 28

Category:

Principal judgment

Parties:

Charif Kazal (Plaintiff)
Independent Commission Against Corruption (First Defendant)
The Honourable David Ipp QC (Second Defendant)

Representation:

Counsel:
In person (Plaintiff)
Zelie Heger (First Defendant)
Stephen Free SC with Perry Herzfeld (Second Defendant)

  Solicitors:
In person (Plaintiff)
Crown Solicitors Office (First Defendant)
Corrs Chambers Westgarth (Second Defendant)

File Number(s):

2017/377875

Publication restriction:

Nil

Judgment

Introductory matters

1. In 2011 the Independent Commission Against Corruption (“ICAC”) conducted an investigation, known as “Operation Vesta”, into the undisclosed conflict of interest of a senior executive of the Sydney Harbour Foreshore Authority (“SHFA”), Mr Andrew Kelly, given his relationship with Mr Charif Kazal and the Kazal family business interests. A public hearing was held before the Hon David Ipp AO QC. He was also the commissioner who prepared the final report.

2. The final ICAC report found both Mr Kazal and Mr Kelly had acted corruptly. Although their matters were referred to the Director of Public Prosecutions (“DPP”) for possible prosecution, no charges were ever laid.

3. By summons filed in this court on 26 March 2012, Mr Kazal sought judicial review of the ICAC Report alleging that ICAC had acted without jurisdiction, or exceeded its jurisdiction, having regard to the terms of the enabling Act. His summons was dismissed with costs: Kazal v Independent Commission Against Corruption [2013] NSWSC 53.

4. On 14 December 2017 Mr Kazal filed a statement of claim commencing proceedings against ICAC (the first defendant), the Hon David Ipp QC (the second defendant) and the State of New South Wales (the third defendant) (see s 5 of the Crown Proceedings Act 1988 (NSW)). Mr Kazal’s claims arise from the defendants’ respective roles in the public inquiry held as part of Operation Vesta. Mr Kazal, who is self-represented, seeks the following relief:

1. A declaration that each of the defendants engaged in misfeasance in public office.

2. A declaration that the Operation Vesta Report was:

1. ultra vires;

2. to the extent that it concerned the plaintiff, ultra vires;

3. to the extent that it made findings of corruption against the Plaintiff, not made according to law and is a nullity; and

4. to the extent that it made findings that the plaintiff gave false or misleading evidence to the ICAC, not made according to law and it's a nullity.

5. Mr Kazal also seeks general damages, aggravated damages, special damages, exemplary damages, interest and costs.

Application for summary dismissal

6. By notices of motion each filed on 20 March 2018, ICAC and Mr Ipp seek orders that the proceedings brought by Mr Kazal against them be summarily dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). In the alternative, the defendants seek that Mr Kazal’s statement of claim, filed on 14 December 2017, be struck out either wholly or in part pursuant to UCPR r 14.28.

7. Both ICAC and Mr Ipp submit that Mr Kazal’s claims against them have no prospect of success. Further, they submit that the serious allegations made in the statement of claim are improperly pleaded and, despite requests, inadequately particularised.

8. The hearing of the motions came on before me on 8 February 2019. Mr Kazal appeared in person. Andrew Kelly was granted leave to sit with him at the bar table. Ms Heger appeared for ICAC and Mr Free SC appeared with Mr Herzfeld for Mr Ipp.

9. Mr Kazal relied upon his affidavit sworn 19 November 2018 and the Report of the Acting Inspector of the ICAC into Operation “Vesta” dated 29 June 2017.

10. ICAC relied on the affidavit of Sasha Lowes affirmed on 20 March 2018 and exhibit SJL-1. A number of documents were exhibited including a statement of “Mr Neilsen” dated 8 July 2011, the ICAC Report published in December 2011, correspondence between ICAC and the Director of Public Prosecutions (“DPP”) dated 19 March 2012, 28 August 2012, 6 September 2012, 2 November 2012, 4 December 2012, 17 December 2012 and 20 February 2012, correspondence between ICAC and Mr Kazal regarding a request for particulars dated 15 February 2018 and Mr Kazal’s responses dated 21 February 2018 and 9 March 2018, the Report of the ICAC Inspector into Operation “Vesta” dated 29 June 2017 and the ICAC Code of Conduct published in February 2007. Mr Ipp relied upon the affidavit of Brian James Whittaker affirmed 20 March 2018 with the exhibit BJW-1. There was a degree of duplication in relation to some of the documents relied upon by all of the parties.

Factual background

11. The SHFA was created pursuant to the Sydney Harbour Foreshore Act 1998 (NSW). It was the “owner” of approximately 500 properties in The Rocks, Darling Harbour and Circular Quay which were either leased to or available to be leased to private enterprise. Part of its function was to grant consents to leases in those areas. (The SHFA is now known as Place Management NSW: see Place Management NSW Act 1998 (NSW) s 10; Sch 5, cll 2 and 19.)

12. Mr Kazal is a property developer and businessman who, with his brother France Dion commenced to acquire businesses in The Rocks area from about 1994. As at 2007 the Kazal family (consisting of eight brothers and two sisters) controlled a number of companies through which they leased a number of properties from the SHFA in The Rocks precinct. Mr Kazal was not a director of any of these companies but from about 2005 he was the person who primarily dealt with the SHFA regarding lease matters arising from the Kazal company leases at The Rocks.

13. In 2010 ICAC received a complaint alleging corrupt conduct arising from the relationship between an officer of the SHFA, Mr Andrew Kelly, and Mr Kazal. This led to the commencement of Operation Vesta. The details of that complaint are described in ICAC’s report under the heading “How the investigation came about” (at p 8) as follows:

“On 14 July 2010, the Commission received a complaint alleging that Mr Kelly was involved in a business relationship with Charif Kazal and a Kazal family business at a time when, in his capacity as a SHFA officer, Mr Kelly was dealing with a number of issues arising from the leasing of SHFA properties to Kazal companies. A number of articles also appeared in the Sydney Morning Herald alleging Mr Kelly favoured the Kazals when dealing with their leases at the SHFA, and that Charif Kazal repaid Mr Kelly by favouring him with trips to the UAE and a high paying position of employment in a company in which Charif Kazal exercised some control.”

14. The Sydney Morning Herald articles referred to in the ICAC Report were written by investigatory journalist Linton Besser. In those articles it was alleged, inter alia, that Mr Kazal “took control” over the property at 100 George Street “while secretly providing incentives to Andrew Kelly, the second-most senior official at the Sydney Harbour Foreshore Authority”. Mr Kazal annexed a number of these articles published by the Sydney Morning Herald to his affidavit sworn on 17 April 2018.

15. On 30 June 2011, ICAC served Mr Kazal with a summons to appear and give evidence at the public inquiry in Operation Vesta. The summons explained the inquiry as follows:

“The public inquiry is being conducted for the purposes of an investigation of an allegation that Andrew Kelly (Mr Kelly) in his capacity as an officer of the Sydney Harbour Foreshore Authority (SHFA) acted in conflict with his official duties when dealing with Charif Kazal and members of the Kazal family in relation to properties which were owned by SHFA at 91, 99, 100 and 135 George Sheet, The Rocks and leased by SHFA to Charif Kazal and members of the Kazal family at a time when Mr Kelly was or anticipated being, involved with Charif Kazal and members of the Kazal family, in private business.

The Commission is also investigating an allegation that Charif Kazal sought to improperly influence the exercise of Mr Kelly’s official functions by holding out the prospect of Mr Kelly being involved with him and members of the Kazal family in private business.

The general scope and purpose of this public inquiry is to gather evidence relevant to the allegations being investigated for the purposes of determining the matters referred to in section 13(2) of the Independent Commission Against Corruption Act, 1988 (‘ICAC Act’).”

16. The ICAC issued a public notice of the inquiry describing the investigation in similar terms to the summons.

17. By way of further background, in early 2007, Mr Kazal, Mr Kelly and Rodric David, the owner of a property development business, the Parkview Property Group (Australia) Pty Ltd (“Parkview Group”), agreed to explore business opportunities in the United Arab Emirates (“UAE”), including building and property management and facilities management. Subsequent to that, there was a plan for them to travel to UAE and look for business opportunities for the Parkview group.

18. In mid-2007, six people, including Mr Kelly, Mr Kazal and Mr David, travelled to the UAE. On that trip, those employed with the Parkview Group travelled together and had their flights and accommodation expenses paid for by the Parkview Group. Mr Kazal and Mr Kelly, who travelled separately, were also reimbursed for their expenses. Mr Kazal’s expenses were initially met by the Parkview Group and subsequently by Australian World Trading Pty Ltd (“AWT”) (a company that was owned by his brother Karl). Mr Kelly was reimbursed in cash in mid-June 2007 by way of two payments into his credit card account.

19. The ICAC conducted its inquiry pursuant to s 31(1) of the Independent Commission Against Corruption Act1988 (NSW) (“ICAC Act”). The inquiry was conducted in public over eight days from 25 July to 3 August 2011. Mr Kelly, Mr Kazal and 11 other witnesses gave evidence: see ICAC’s report at 9–10.

20. Mr Kazal gave evidence at the Public Inquiry that he never had any intention to pay for Mr Kelly’s travelling expenses and denied having done so. He was then presented with an email sent by him to the relevant hotel when making the booking in which he stated that he would settle Mr Kelly’s account as well as his own and that the invoice should be sent to AWT of which his brother (Karl) was a director and he was the operations manager.

21. The same group of people made a second trip to the UAE in January 2008 and both Mr Kazal’s and Mr Kelly’s expenses were paid for by Mr David. In March 2008 Mr Kelly accepted a job offer with an entity that was controlled by Mr David and partly owned by Mr Kazal and his brother Tony. Subsequent to his acceptance of the job he resigned his position with SHFA.

22. The Final Report was published on 16 December 2011. ICAC’s report made findings of corrupt conduct on the part of Mr Kelly which I need not recount. In respect of Mr Kazal the report concluded:

“In holding out the prospect of employment in the UAE to Mr Kelly and paying him $11,170 for his May 2007 flight and accommodation expenses, with the intention that these would tend to influence Mr Kelly to exercise his official SHFA functions in a manner favourable to Kazal business interests, Charif Kazal’s conduct is corrupt. This is because such conduct could adversely affect, either directly or indirectly, Mr Kelly’s impartial exercise of his official functions (in his dealings with Kazal tenancy matters) and therefore come within section 8(1)(a) of the ICAC Act. His conduct falls within section 9(1)(a) of the ICAC Act because it could constitute or involve an offence under section 249B(2)(b) of the Crimes Act of corruptly giving an agent (Mr Kelly) a reward, the receipt or expectation of which would tend to influence the agent to show favour to any person in relation to the affairs or business of the agent's principal (SHFA).”

23. It was the conclusion of ICAC that there was insufficient admissible evidence against Mr Kazal to make out an offence of offering a corrupt commission or reward contrary to s 249B(2)(b) of the Crimes Act 1900 (NSW) but that he may have committed an offence contrary to s 87 of the ICAC Act. Section 87(1) of the ICAC Act provides:

“(1) A person who, at a compulsory examination or public inquiry cond ucted by the Commission, gives evidence that is false or misleading in a material particular knowing it to be false or misleading, or not believing it to be true, is guilty of an indictable offence.

Maximum penalty: 200 penalty units or imprisonment for 5 years, or both.”

Correspondence between ICAC and the DPP

24. On 19 March 2012, Ms Vivienne Pastor, the Principal Lawyer at the ICAC, wrote to Ms Lisa Viney, a Managing Lawyer at the Office of the DPP. Ms Pastor noted the conclusion in the Operation Vesta ICAC report that the advice of the DPP should be obtained with respect to the prosecution of Mr Kelly for the common law offence of misconduct in public office and also the prosecution of Mr Kazal for an offence under s 87 of the ICAC Act. The basis for this latter prosecution was that Mr Kazal had given evidence that he “never intended to settle Mr Kelly’s accommodation account for the May 2007 UAE trip” and the email to the contrary Mr Kazal sent on 23 May 2007 referred to above at [20].

25. On 28 August 2012, an Office of the DPP solicitor, Mr Malcolm Gibson, wrote to the ICAC and advised that the ODPP considered there to be “insufficient evidence against both Andrew Kelly and Charif Kazal to commence proceedings for any criminal offences.”

26. On 6 September 2012, Ms Pastor sent Mr Ipp a memorandum referring to the 28 August 2012 letter and stating that with respect to “the DPP’s decision not to recommend charges against Mr Charif [sic] I do not agree”. She again referred to Mr Kazal’s email of 23 May 2007 as evidencing his intention to settle the account for Mr Kelly’s accommodation in the UAE. She submitted that “at a minimum, Mr Kazal’s testimony, that it was never his intention to settle Mr Kelly’s accommodation account, was given by Mr Kazal not believing it to be true.” Accordingly, Ms Pastor recommended ICAC accept the DPP’s advice concerning Mr Kelly but asked the DPP to reconsider its decision not to prosecute Mr Kazal.

27. Mr Ipp signed and approved the memorandum on 12 October 2012 subject to the following handwritten comment:

“Our MOU with the DPP provides that if they decline to prosecute because witnesses refuse to testify, they will say so formally. Their letter to us does not comply with this. The DPP should be asked to send a new letter which does comply.

When we ask the DPP to reconsider, we should give our reasons for this request.”

28. On 2 November 2012, Ms Pastor wrote to Mr Gibson in the terms Mr Ipp advised seeking reasons why the DPP considered that there was insufficient evidence to commence proceedings, in particular against Mr Kazal.

29. On 4 December 2012, Keith Alder, Deputy DPP, replied to Ms Pastor. In respect of Mr Kazal, he expressed the view that “the available evidence falls short of being able to prove beyond reasonable doubt that Kazal reimbursed Kelly for his travel expenses.”

30. On 17 December 2012, Mr Ipp wrote to the DPP, Mr Lloyd Babb SC. He referred to the evidence Mr Kazal gave at the public inquiry and stated, “Mr Kazal was not able to offer any rational explanation for making the offer in the email”. Mr Ipp wrote, “Mr Alder considered it significant that there is no admissible evidence that Mr Kazal did in fact pay for Mr Kelly. However the false evidence is not Mr Kazal’s denial that he paid for Mr Kelly, but rather that he never had any intention of so doing.” He sought review of the matters and that the DPP reconsider the advice it had provided. In Mr Ipp’s view, the email was prima facie evidence of an intention to pay for Mr Kelly. He argued that,

“[T]he relevant DPP lawyer has taken an unduly conservative approach to whether there is no reasonable prospect of conviction by a reasonable tribunal of fact …”

(Emphasis added.)

31. On 20 February 2013, Mr Babb wrote to Mr Ipp. He advised him that the requested review had taken place and he was of the view that there was no basis to come to a different conclusion than that reached by Mr Alder. He reiterated Mr Alder’s advice that:

“It is very difficult to accept that a jury will be satisfied beyond reasonable doubt that at the time Kazal was giving evidence on 26 July 2011 about a subject matter that relates to an email over 4 years earlier in time, that he must have been knowingly giving false or misleading evidence. Clearly the passage of time, and the subject matter itself, is capable of raising other reasonable possibilities.”

2012 proceedings to challenge findings

32. As stated above, on 26 March 2012, prior to the above correspondence, Mr Kazal sought judicial review of the ICAC Report: Kazal v Independent Commission Against Corruption [2013] NSWSC 53. In his Honour’s reasons for dismissing the summons, published on 7 February 2013, Harrison J held:

“[25] Even though some of the Commission’s powers are analogous to those exercised by courts, the Commission is possessed of an investigative role with fewer constraints than ordinarily attend the conduct of court proceedings. For example, the Commission is not bound by the rules or practice of evidence and can inform itself in such manner as it considers appropriate: compare Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; (2010) 241 CLR 390 at [15]. The Commission shall exercise its functions with as little formality and technicality as possible, with compulsory examinations and public inquiries de-emphasising the adversarial approach. The Act contains a statutory abrogation of the privilege against self-incrimination and other grounds of privilege that might otherwise be claimed by witnesses giving evidence to the Commission.

[26] The existence and scope of these extra powers demonstrate that the legislature did not intend to constrain the Commission by reference to the rules and procedures that apply in courts. The absence of those constraints is consistent with the Commission's role as ‘primarily an investigative body and not a body the purpose of which is to make determinations ... as part of the criminal process’: Balog at 633. It is also consistent with that role that the Act makes provision to ensure that the conduct or outcome of its investigations should not bind or otherwise prejudice subsequent legal proceedings …”

The Neilsen statement

33. On a date after the hearing before Harrison J, Mr Kazal became aware of a statement made by an employee of the SHFA concerning events in 2005. The relevant statement is dated 8 July 2011. It was suggested by counsel for ICAC that I provide a pseudonym to the maker of that statement, Mr Paul Neilsen, so as to comply with ss 111 and 112 of the ICAC Act. I am satisfied that his name is already in the public arena as it is mentioned in Mr Nicholson’s report. Accordingly, I do not consider it to be a breach of the secrecy provisions of the ICAC Act to make reference to this witness.

34. Mr Neilsen was formerly the Group Manager Property Services at the SHFA.

35. Mr Kazal submitted that his statement ought to have been disclosed by the ICAC as it is materially relevant to ICAC’s finding that he had engaged in corrupt conduct.

36. As described in his statement, Mr Neilsen worked on the lease of 100 George Street in 2005. Mr Kelly was his manager. Mr Neilsen worked at the SHFA, in his words, “effectively oversee[ing] all of the property management, asset management function of the SHFA property portfolio”.

37. Prior to October 2005, Mr Kazal was apparently the sublessee of the downstairs area of 100 George Street, which backs onto the Overseas Passenger Terminal, where his family ran a restaurant called La Mela. The sub-lessor was an art gallery, the Billich Gallery, whose premises were upstairs. Apparently there were, inconveniently, shared toilet facilities. Mr Neilsen recalls that each sought direct leases on the existing spaces (so presumably they could establish separate facilities). The SHFA responded requesting separate lease proposals.

38. Mr Neilsen recommended an EOI process for the 100 George Street site. The CEO of the SHFA told him however that Mr Kazal was to be offered a new lease for the existing La Mela site. Mr Kazal and other Rocks’ tenants were apparently not interested in an EOI process.

39. A [26]–[27] of his statement, Mr Neilsen states that, although Mr Kelly was copied into emails and provided with updates about the leasing of 100 George Street, it was Mr Neilsen who took the lead in seeking tenants for the property. Mr Neilsen claims he “possessed a stronger commercial background than Andrew and … could get better rent”. He claims that at no time did Mr Kelly suggest Mr Kazal should lease the entire property and at no time did he suggest 100 George Street should become an upmarket hotel restaurant; he commenced negotiations without the approval of the board because he did not believe it was required; and although Mr Kelly signed an Executive Summary recommending 20-year lease to Mr Kazal for the whole of 100 George Street, he had no direct involvement in preparing it.

40. Mr Neilsen ceased his employment with the SHFA in 2006.

Complaint to Acting Inspector of ICAC

41. On 4 May 2015, Mr Kazal complained to the Acting Inspector of ICAC, Mr John Nicholson SC, about the investigation into him. Mr Kazal identified his complaints as follows (as summarised at [25] of the report):

“(a) The failure in the conduct of the investigation compromising Operation Vesta (inquiry) to consider the submission made at the outset that Mr David, who was a key ICAC witness against Charif Kazal had been involved in a substantial commercial dispute with Charif Kazal (and his brother Tony) that resulted in the Kazals commencing litigation against Mr Roderic David (David) in both the Cayman Islands and Abu Dhabi prior to the ICAC inquiry being called;

(b) The matters complained of regarding Kazal leases were investigated by ICAC early in 2010, and cleared, so on what basis did ICAC decide its own powers of investigation were so flawed as to warrant a formal public inquiry on the same matter?

(c) The use, in the context of the legal dispute between the Kazals and David in the Cayman Islands, of a document by David's lawyers to threaten Charif Kazal and his co-accused, Kelly. This information could only have been obtained during the course of the ICAC complaint process (being a confidential Sydney Harbour Foreshore Authority document) – the implication here being, that the document was leaked outside of the investigation (prior to public hearings in the Inquiry) in breach of the ICAC Act; and

(d) The fact that the ICAC ignored a clearly exculpatory witness statement (of Mr Neilsen) in its possession, that it refused to disclose, and proceeded to public hearings when that statement (which indicated that the Kazal family leases in The Rocks precinct had all been obtained lawfully and without involvement from Andrew Kelly, who was testifying in the litigation brought against David by the Kazals) would have cleared Charif Kazal in accordance with the initial Terms of Reference of the Inquiry.”

42. The Nicholson report was delivered to parliament pursuant to ss 57B and 77A of the ICAC Act on 29 June 2017. As Mr Nicholson correctly noted in his report, the powers of the Inspector following a complaint such as that made by Mr Kazal are limited to the statutory functions provided in s 57B of the ICAC Act. That section is in these terms:

“57B   Principal functions of Inspector

(1)  The principal functions of the Inspector are:

(a)  to audit the operations of the Commission for the purpose of monitoring compliance with the law of the State, and

(b)  to deal with (by reports and recommendations) complaints of abuse of power, impropriety and other forms of misconduct on the part of the Commission or officers of the Commission, and

(c)  to deal with (by reports and recommendations) conduct amounting to maladministration (including, without limitation, delay in the conduct of investigations and unreasonable invasions of privacy) by the Commission or officers of the Commission, and

(d)  to assess the effectiveness and appropriateness of the procedures of the Commission relating to the legality or propriety of its activities.

(2)  The functions of the Inspector may be exercised on the Inspector’s own initiative, at the request of the Minister, in response to a complaint made to the Inspector or in response to a reference by the Joint Committee or any public authority or public official.

(3)  The Inspector is not subject to the Commission in any respect.

(4)  For the purposes of this section, conduct is of a kind that amounts to maladministration if it involves action or inaction of a serious nature that is:

(a)  contrary to law, or

(b)  unreasonable, unjust, oppressive or improperly discriminatory, or

(c)  based wholly or partly on improper motives.

(5)  Without affecting the power of the Inspector to make a report under Part 8, the Inspector may, at any time:

(a)  make a recommendation or report concerning any matter relating to the functions of the Inspector under this section that the Inspector considers may effectively be dealt with by recommendation or report under this section, and

(b)  provide the report or recommendation (or any relevant part of it) to the Commission, an officer of the Commission, a person who made a complaint or any other affected person.”

(Emphasis added.)

43. As the Executive Summary in the report indicates, Acting Inspector Nicholson found “no finding of maladministration or abuse of power or improper conduct by the ICAC”. The Executive Summary goes on to record the following:

“However, the issues raised by Charif Kazal and Andrew Kelly’s complaints have caused me to question whether there are effectiveness and appropriateness issues that need addressing as a consequence of provisions of the ICAC Act.

I have also argued that elements of the offence of Misconduct in Public Office may not have been correctly understood by the Commission and have thought to examine it in some detail an offence that appears to be gaining favour with the ICAC.

The Report looks at five areas, in respect of each of those areas it makes recommendations for considerations of the Joint Committee. The Recommendations are: …”

44. The report then sets out five proposed recommendations made by the Acting Inspector. Those five recommendations are:

“Recommendation 1

It is recommended that steps be taken to amend sections 8 and 9 of the ICAC Act to remove the “could” test from each section, so that findings of corrupt conduct are available only in circumstances where it was reasonable for the Commission to expect a properly instructed reasonable tribunal of fact would come to a conclusion on admissible evidence that the opinion or finding of the Commission underpinning the correct conduct finding would be sustained …

Recommendation 2

It is recommended that through hearings conducted by the Joint Committee, Parliamentary consideration be given as to whether or not the common law offence of Misconduct in Public Office should be incorporated into Statute law the purpose of better defining its elements and its sentencing range …

Recommendation 3(a)

That section 9(1)(b) and (c) be repealed on the basis that existing disciplinary tribunals of the Fair Work Commission [sic] are capable of dealing with matters to which those sections relate …

Recommendation 3(b)

Alternatively: that section 9(1)(b) and (c) be amended so that any ICAC finding that misconduct of a kind it has been considering as conduct falling within the description of “corrupt conduct” as identified in s.8, but which did not qualify as conduct to which s.9(1)(a) – criminal conduct – applied, but did qualify as conduct to which s.9(1)(b) and/or s.9(1)(c) applied should be described as “employment based misconduct” and can no longer qualify as “corrupt conduct” …

Recommendation 4

It is recommended that through hearings of the Joint Committee Parliamentary consideration should be given to whether or not the addition of a ‘”closed enquiry” as described in this Report would serve to advance the investigation capacity and effectiveness of the ICAC …

Recommendation 5

It is recommended that through hearings conducted by the Joint Committee, Parliamentary consideration be given to whether or not it is in the public interest that access to an exoneration protocol should be introduced into the provisions of the ICAC Act; and if so, in what circumstances and by what means could an “affected” person pursue exoneration …”

45. Although Acting Inspector Nicholson found that there was no maladministration or abuse of power or improper conduct by the ICAC in this investigation, he made a number of observations throughout his report relied upon by Mr Kazal in these proceedings. For example, he wrote that the consequence of Mr Kazal not being charged is that he “will never have the opportunity to clear his name”. He also expressed the view at [156] that “the prosecution case [against Mr Kazal] was not a strong one.” He wrote that ICAC’s finding has impacted upon Mr Kazal’s presumption of innocence. “To the extent that it interferes with his interest in retaining his presumption of innocence,” Mr Nicholson also argued that, this “may be in breach of Articles 11 and/or 12 of the Universal Declaration of Human Rights”.

46. The Acting Inspector’s conclusion regarding the specific complaint that Mr Neilsen’s Statement should have been disclosed (at [331]) was that:

“There was no impropriety or maladministration in the ICAC conducting its investigation through the public inquiry process the way it did. It was not obliged to reveal or evidence all information it held. Rarely do investigators do that. This was not a trial that was being conducted, but an investigation. As was explained by Justice Harrison and as provided in s 17 of the ICAC Act, the Commission is entitled to conduct its investigation in the way it did.”

47. As for the correspondence with the DPP, at [238], Mr Nicholson referred to the letter from Mr Ipp extracted above at [30] and at [255] observed that:

“It is concerning when challenging legal advice in respect of the prosecution of Kelly, offered by the second most senior officer at the DPP, in respect of a charge as problematic as ‘Misconduct in Public Office’ that the Commission would seek to advance that task by predicating – even if only as partial criticism – that the Deputy’s approach is ‘conservative’. Such a criticism borders on the personal attack rather than an analysis of the legal flaws or weaknesses claimed in the advice under review.”

Report concerning federal ICAC

48. The present proceedings were commenced on 14 December 2017. In September 2018, Mr Ipp joined in a report entitled “Implementation Plan for a National Integrity Commission” in his capacity as a member of the National Integrity Committee (“NIC”). The NIC was established by The Australia Institute to advise policy makers on specific accountability reforms, including the implementation of the National Integrity Commission design. Mr Ipp’s fellow committee members were Margaret McMurdo AC, Stephen Charles AO QC, David Harper AM QC, Paul Stein AM QC and Anthony Whealy QC.

49. In making its case for its conclusion that “[e]stablishing the National Integrity Commission will be the first step in rebuilding public trust in federal government”, the report referred to the “common argument used by those opposed to the work of state anticorruption bodies, especially in New South Wales, that they unfairly trash reputations.” The report continued: “Given the large number of thoroughly deserved corruption findings in New South Wales over the last 20 years, it is surprising that the critics of ICAC commonly concern themselves with two cases only”. In briefly noting the two matters, one being Mr Kazal’s, the report argued (at 8) that:

“these two matters reveals [sic] that the criticism is largely unjustified. It proceeds essentially from a misunderstanding of the role of ICAC and the appropriateness of the methods for uncovering corruption the parliament has placed in the hands of ICAC.”

50. The NIC referred to the Nicholson report (at 9) and noted that the Acting Inspector’s principal task was to determine whether there had been any misconduct or maladministration by ICAC. He found there had not been. The NIC Report went on to be critical of the Acting Inspector’s overreach, stating that he had reached a number of conclusions which were “curious in the extreme and simply beyond his jurisdiction”. The NIC argued that, “[t]he principal criticisms raised by the Acting Inspector display a complete misunderstanding of the ICAC legislation, it’s purposes and methods. In particular, the criticisms ignore the fact that ICAC investigations are entirely separate from criminal proceedings.”

51. The NIC added (at 10), that it was “important to note that Acting Inspector Nicholson was replaced by the greatly experienced senior counsel Bruce McLintock [sic] and that he has acted as full time inspector since 2017. The government has not embraced any of the Nicholson recommendations and neither they nor his general conclusions on factual matters have been adopted by Inspector McLintock [sic].”

Present proceedings

52. The present proceedings were commenced by statement of claim on 14 December 2017.

53. In paragraphs [6]–[13] of his statement of claim Mr Kazal stated that at the commencement of ICAC’s Inquiry there was no identification of any allegation being a reimbursement of Mr Kelly as falling within its terms of reference. He claimed that there was no suggestion made to him during the Inquiry that he was dishonest, corrupt or acted with the specific intent to obtain improperly from Mr Kelly partial decisions. He claimed the defendants were obliged by reason of their duty under the ICAC Act and Code of Conduct, and as a matter of procedural fairness and natural justice, to disclose the parameters of the investigation from the outset, and to make a specific allegation within those parameters of dishonesty and corruption, which they did not. He also claimed that the defendants did not take into consideration that Mr David was involved at that time in litigation with him and, therefore, was conflicted in the evidence he gave to the Inquiry.

54. Mr Kazal did not press [6]–[13] of his SOC at the hearing. That leaves his remaining claims as being based on “improper withholding of exculpatory evidence” (statement of Mr Neilsen) (SOC [14]–[16]) and “Improper submission to the DPP that the plaintiff should be prosecuted” (SOC [17]–[24]). Mr Kazal relies on these matters to allege that the defendants’ acts were ultra vires (SOC [25]–[26]) and in bad faith (SOC [27]–[28]).

55. In relation to both allegations Mr Kazal pleaded (at [16] and [24]) that their conduct was:

“(a) malicious, or reckless with intent to cause injury, reputational and financial harm to the Plaintiff;

(b) conduct which the First and Second Defendants knew or ought to have known was beyond their power; and

(c) had a foreseeable risk of harm.”

56. In relation only to the latter claim, ICAC and Mr Ipp’s correspondence with the DPP, Mr Kazal pleaded (at [24]) that their conduct:

“(d) evinced a clear intention to maximise harm to the Plaintiff as a result of the Inquiry notwithstanding advice contrary to the Defendants’ stated position.”

Legislative context

57. UCPR r 13.4 provides:

“13.4 Frivolous and vexatious proceedings (cf SCR Part 13, rule 5; DCR Part 11A, rule 3; LCR Part 10A, rule 3)

(1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:

(a) the proceedings are frivolous or vexatious, or

(b) no reasonable cause of action is disclosed, or

(c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim.

(2) The court may receive evidence on the hearing of an application for an order under subrule (1).”

58. UCPR r 14.28 provides:

“14.28 Circumstances in which court may strike out pleadings (cf SCR Part 15, rule 26; DCR Part 9, rule 17; LCR Part 8, rule 3)

(1) The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading:

(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or

(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or

(c) is otherwise an abuse of the process of the court.

(2) The court may receive evidence on the hearing of an application for an order under subrule (1).”

59. Section 91 of the Civil Procedure Act 2005 (NSW) provides:

“91   Effect of dismissal of proceedings (cf SCR Part 40, rule 8)

(1)  Dismissal of:

(a)  any proceedings, either generally or in relation to any cause of action, or

(b)  the whole or any part of a claim for relief in any proceedings,

does not, subject to the terms on which any order for dismissal was made, prevent the plaintiff from bringing fresh proceedings or claiming the same relief in fresh proceedings.

(2)  Despite subsection (1), if, following a determination on the merits in any proceedings, the court dismisses the proceedings, or any claim for relief in the proceedings, the plaintiff is not entitled to claim any relief in respect of the same cause of action in any subsequent proceedings commenced in that or any other court.”

60. Section 31 of the ICAC Act provides:

“31   Public inquiries

(1)  For the purposes of an investigation, the Commission may, if it is satisfied that it is in the public interest to do so, conduct a public inquiry.

(2)  Without limiting the factors that it may take into account in determining whether or not it is in the public interest to conduct a public inquiry, the Commission is to consider the following:

(a)  the benefit of exposing to the public, and making it aware, of corrupt conduct,

(b)  the seriousness of the allegation or complaint being investigated,

(c)  any risk of undue prejudice to a person’s reputation (including prejudice that might arise from not holding an inquiry),

(d)  whether the public interest in exposing the matter is outweighed by the public interest in preserving the privacy of the persons concerned.

…”

Plaintiff’s submissions

The Neilsen Statement

61. Mr Kazal submitted that he should have had the opportunity to respond to the statement of Mr Neilsen which, he claims, “rebuffed completely the false allegations in the ‘Sydney Morning Herald’”. Mr Kazal submitted several times during the hearing that the statement “completely torpedoed” the allegations made against him in the Sydney Morning Herald. He claims he was denied natural justice and procedural fairness by not having been provided with the statement. He submitted at the hearing:

“I would have had a different course [sic, cause] of action to make sure there were no enquiry to be continued and denying me natural justice, procedural fairness by not providing an important statement which again, because you need to look at one of the causes that ICAC based its enquiry.”

62. Mr Kazal submitted the Neilsen Statement suggests that no improper influence was brought by him, and that decisions leading to the granting of the impugned leases were made in the ordinary way, involving the input of individuals other than Mr Kelly (including Mr Neilsen himself). He submitted that because the lease for 100 George Street was approved by the SHFA in October 2005, more than 18 months before Mr Kelly’s flight to the UAE which formed the basis of ICAC’s corruption finding, his conduct could not have been intended to influence the outcome in respect of that lease.

Correspondence between ICAC and the DPP

63. Mr Kazal submitted that ICAC’s correspondence with the DPP evidences a “prejudgment” on ICAC’s part. He submitted that repeatedly pressing the DPP to prosecute him, notwithstanding advice against it (from the ODPP) could demonstrate apprehension of bias. He submitted that procedural fairness should not be “watered down” in the context of the ICAC Act where persons are investigated publically and where serious consequences may follow. Further, he submitted that ICAC’s and Mr Ipp’s conduct was malicious or reckless with intent to cause injury; that they ought to have known their conduct was beyond power; and that there was a foreseeable risk of harm and a clear intention to maximise that harm.

64. Mr Kazal also submitted that ICAC failed to consider whether it was in the public interest to hold the Operation Vesta inquiry.

65. In addition to these submissions, which I will address below, Mr Kazal also submitted, on a number of occasions, that he as a private citizen should not have been a target of ICAC, that the ICAC should not have accepted the evidence of Mr David and that there should not have been an enquiry into Mr Kazal in the first place.

First defendant’s submissions

The Neilsen Statement

66. ICAC submitted that Mr Kazal’s position that his conduct could not have been intended to influence the George Street lease proceeds on a misunderstanding of what ICAC actually found in its Report. It was argued that the Report did not find that Mr Kazal’s conduct in fact adversely affected Mr Kelly’s decisions in relation to the lease. Rather, the finding was that his conduct could have affected his impartial exercise of his official functions within the meaning of s 8(1)(a) of the ICAC Act. ICAC submitted that its “corrupt conduct” finding focussed on the potential for his conduct to affect Mr Kelly’s future decision making in relation to the Kazal leases.

67. ICAC pointed to the Report’s findings that, within a few days of returning from the UAE, Mr Kazal sent a letter to the SHFA requesting the SHFA’s consent to change of use and extension of the lease period amongst other relief. ICAC submitted Mr Kazal knew Mr Kelly’s opinion “would carry weight within the SHFA”. Accordingly, ICAC submitted the Neilsen Statement was irrelevant, or was of little, or so little significance, to the “corrupt conduct” finding made against Mr Kazal and that there was therefore no obligation to disclose it as a matter of procedural fairness. In the alternative, ICAC submitted that even if failure to disclose constituted denial of procedural fairness, Mr Kazal has not demonstrated his allegation (in [16] of his SOC) that the non-disclosure was done maliciously or recklessly.

68. To the extent that Mr Kazal seeks judicial review of the ICAC Report, it was submitted that he was required to commence those proceedings within 3 months of those findings being published in December 2011: UCPR r 59.10(1). The rule provides:

“59.10   Time for commencing proceedings

(1)  Proceedings for judicial review of a decision must be commenced within 3 months of the date of the decision.

(2)  The court may, at any time, extend the time for commencing proceedings fixed by subrule (1).

(3)  In considering whether to extend time under subrule (2), the court should take account of such factors as are relevant in the circumstances of the particular case, including the following:

(a)  any particular interest of the plaintiff in challenging the decision,

(b)  possible prejudice to other persons caused by the passage of time, if the relief were to be granted, including but not limited to prejudice to parties to the proceedings,

(c)  the time at which the plaintiff became or, by exercising reasonable diligence, should have become aware of the decision,

(d)  any relevant public interest.

(4)  This rule does not apply to proceedings in which there is a statutory limitation period for commencing the proceedings.

(5)  This rule does not apply to any proceedings in which the setting aside of a decision is not required.”

69. ICAC submitted that authorities to the effect that r 59.10 does not apply to decisions made prior to the commencement of that rule (15 March 2013) should not be followed: see Cudgegong Australia Pty Ltd v Transport for New South Wales [2018] NSWSC 929 at [75]–[93] per Davies J. It was further submitted that an extension of time should not be granted having regard to Mr Kazal’s poor prospects of success, as well as the fact that Mr Kazal has provided no explanation for the very long delay in commencing proceedings despite being aware of the existence of the Neilsen Statement by early 2015 at the latest.

70. In response, Mr Kazal submitted that the provision does not operate retrospectively and that this should be the case in light of the strongly emphasised principle that a statute should not be given retrospective operation.

Correspondence between ICAC and the DPP

71. ICAC submitted that Mr Kazaal has not pleaded any reasonable apprehension of bias. Further, he has failed to demonstrate ICAC’s conduct was malicious or reckless with intent to cause harm.

Second defendant’s submissions

72. Mr Ipp adopted the submissions of ICAC and further submitted that the defects that are the focus of this application go to the heart of Mr Kazal’s case, not merely the form in which it is articulated. Mr Ipp submitted that there are also serious defects in the form in which the case is articulated which, of themselves, would warrant the statement of claim being struck out. He submitted that because the claims have no prospect of success as a matter of substance, leave to re-plead should not be given here.

The Neilsen Statement

73. Mr Ipp submitted that the Neilsen Statement was not exculpatory of Mr Kazal in relation to the corrupt conduct findings made against him by ICAC.

74. Mr Ipp submitted that the hearing rule does not require decision-makers to disclose any information which is credible, relevant and significant. It requires only that decision-makes disclose any adverse information which is credible, reliable and significant. Further, he submitted that, even if non-disclosure of the Neilsen Statement did involve a denial of procedural fairness, that provides no satisfactory foundation for Mr Kazal’s allegation that he engaged in misfeasance in public office.

Correspondence between ICAC and the DPP

75. It was noted that paragraphs [17] to [20] of the statement of claim plead the contents of the correspondence between the DPP and Senior Lawyer at ICAC followed by a pleading of maliciousness. Mr Ipp submitted that Mr Kazal’s statement of claim contains no allegation of apprehension of bias. He submitted that it is difficult to see how correspondence, entered into 11 months and longer after the delivery of the Report (in December 2011), could evidence pre-judgment. At most, he submitted, it reflected judgment, i.e. a conclusion reached after a proper hearing for the reasons set out in the Report.

76. Mr Ipp submitted that reasonable apprehension of bias goes no way to establishing the state of mind necessary to found a misfeasance in public office claim. He submitted that the absence of any basis for the allegation is even starker now that Mr Kazal has abandoned paragraphs [6]–[13] of his statement of claim.

77. Mr Ipp submitted that Mr Kazal’s allegation that he acted maliciously depends solely on non-disclosure of the Neilsen Statement and that no such inference could be sensibly drawn.

Consideration

78. Mr Kazal brings a claim for damages arising out of his allegation that the intentional tort of misfeasance in public office can be established. He also brings proceedings for judicial review in the same statement of claim. Given the way he has brought his claim, I am satisfied that I should first examine the basis for his claim of misfeasance in public office. Given the way Mr Kazal has brought his claim, if the tort proceedings must fail so too must the proceedings for judicial review.

79. The legal principles relevant to a damages claim for the tort of misfeasance in public office were conveniently set out by Hammerschlag J in Edward Moses Obeid Snr v David Andrew Ipp [2016] NSWSC 1376; (2016) 338 ALR 234 (“Obeid Snr v Ipp”) at [236]–[236] as follows:

“Misfeasance in public office is an intentional tort, committed when damage is suffered as a result of an act done by a public officer in excess of authority, with the intention of causing harm to a plaintiff, or which the officer knows, or ought to know is beyond power, and which involves a foreseeable risk of harm. The mental element in the tort is satisfied when the public officer engages in the impugned conduct with the intention of inflicting injury, or with the knowledge that there is no power to engage in that conduct and it is calculated to produce injury, or where the officer acts with reckless indifference as to the existence of power to support the impugned conduct: Northern Territory v Mengel (1995) 185 CLR 307 (“Mengel”) at 345–348 (Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ), 356–360 (Brennan J) and 370–371 (Deane J).

The essence of the tort is bad faith in the exercise of public powers: Three Rivers District Council v Governor and Company of the Bank of England(No 3) [2003] 2 AC 1 at 137 (Auld LJ citing Steyn LJ in Elguzouli-Daf v Commissioner of Police of the Metropolis [1995] QB 335 at 347B).”

80. At [239] and [238], Hammerschlag J noted the difference in the authorities as to whether it is sufficient that there be a foreseeable risk of harm. That issue was raised on appeal to the Court of Appeal: Obeid v Lockley [2018] NSWCA 71; (2018) 355 ALR 615. That question was resolved by the Court concluding that it is necessary to prove that an officer is aware that a plaintiff is likely to suffer harm or that they were recklessly indifferent to that fact. It is not sufficient to establish that it was reasonably foreseeable that the plaintiff was likely to suffer harm: per Bathurst CJ at [153]–[175] and Leeming JA at [222].

81. In bringing his claim for misfeasance in public office Mr Kazal needs to establish that ICAC and/or Mr Ipp:

1. Engaged in the impugned conduct (not providing the statement of Mr Neilsen to Mr Kazal and/or writing to the DPP about possible charges)

2. Either:

1. with the intention of inflicting injury, or

2. with the knowledge that there was no power to do so and it was calculated to produce injury, or

3. with reckless indifference to the existence of any power to do so.

4. AND

3. Mr Kazal suffered injury/damages as a result.

82. Damage is an essential element of the action. It needs to be established that the relevant act or acts were done with the intention of causing harm.

83. Both ICAC and Mr Ipp contend that the proceedings should be summarily dismissed because, even taking the evidence at its highest, the necessary elements could never be established. The applicants relied upon the principle that any allegations that a statutory power has been exercised corruptly, or with deliberate disregard to the scope of those powers, are not likely to be made or upheld: Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146; [2008] HCA 32 at [60].

84. It was further submitted that in the event that I struck out the statement of claim, rather than summarily dismissed the proceedings, Mr Kazal ought not to be given leave to re-plead his case given that the proceedings have no prospect of success.

85. The test to be applied by a court when considering summary dismissal is clear. It has been variously expressed as a claim being “so obviously untenable that it cannot possibly succeed”, “manifestly groundless”, or “so manifestly faulty that it does not admit of argument”: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128–129; [1964] HCA 69. In Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91; [1949] HCA 1 Dixon J observed that before summary intervention can be justified, the case must be a very clear one and there must be no real question of fact or law to be determined.

86. In Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 Gaudron, McHugh, Gummow and Hayne JJ stated the following at [57]:

“Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways [footnote reference: General Steel Industriesand Dey], but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.”

87. In O’Brien v Bank of Western Australia Ltd [2013] NSWCA 71 the Court of Appeal (Beazley P with whom Macfarlan and Ward JJA agreed) observed at [3]:

“The High Court decision in Spencer v The Commonwealth [2010] HCA 28; 241 CLR 118 was concerned with s 31A(2) of the Federal Court Act 1976 (Cth) but the following principles stated in it are of general application:

(a) On a summary judgment application, the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded (at [23]).

(b) The critical question can be expressed as whether there is more than a ‘fanciful’ prospect of success (at [25]) per French CJ and Gummow J) or whether the outcome is so certain that it would be an abuse of the process of the Court to allow the action to go forward (at [54] in the judgment of the plurality). Demonstration of the outcome of the litigation is required, not an assessment of the prospect of its success (ibid).

(c) Powers to summarily terminate proceedings must be exercised with exceptional caution (ibid at [55]; see also French CJ and Gummow J at [24]).”

88. As a general proposition, a matter will be a more appropriate vehicle for summary dismissal if all of the evidence to be relied upon is already before the court. I am satisfied that on the way Mr Kazal has brought his case, there could be no further useful evidence obtained by him through interlocutory processes prior to any final hearing. Although Mr Kazal filed notices to produce on the parties on 26 February 2016, the motions to set them aside were successful: Kazal v Independent Commission Against Corruption [2018] NSWSC 1370. Davies J was satisfied that the court already had all of the relevant evidence that it would have at any final hearing to determine the claim as brought.

89. Not only am I satisfied that all of the necessary evidence to determine the matter is already before the court, I am also satisfied that there is no real factual dispute. The central controversies between the parties concern the relevance of Mr Neilsen’s statement to the issues to be considered by ICAC in 2012 and the inferences to be drawn from matters contained in, inter alia, the Final Report, the Acting Inspector’s Report and the Correspondence with the DPP

90. I turn then to consider the two specific complaints upon which Mr Kazal relies.

The Neilsen Statement

91. Mr Kazal contends that the principles of procedural fairness required the disclosure of Mr Neilsen’s statement to him at the start of the inquiry. Correspondence between Mr Ipp and ICAC’s legal representatives confirmed that the allegation of maliciousness is solely based upon this alleged denial of procedural fairness in not providing this statement. Given the nature of the intentional tort pleaded, even if I were satisfied that Mr Kazal had been denied procedural fairness in respect of the non-disclosure of the statement, there still needs to be evidence before the court to establish maliciousness in that regard as well as damage.

92. It was common ground that Mr Kazal was not provided with a copy of the statement of Mr Neilsen until 2017. Where the parties joined issue was as to the significance of the statement and the reason why it had not been provided. Mr Kazal contended that ICAC and Mr Ipp deliberately concealed the statement of Mr Neilsen whereas ICAC and Mr Ipp contended that there had been no unlawfulness because the statement was not relevant to the findings of ICAC.

93. The non-disclosure of Mr Neilsen’s statement could only be said to be in excess of authority if it was done in breach of ICAC’s obligation to afford procedural fairness to Mr Kazal. The scope of ICAC’s obligation to afford procedural fairness is to be determined in light of the provisions of the ICAC Act and the nature of ICAC’s functions. Those functions have been considered in a number of decisions of this court.

94. In Obeid Snr v Ipp at [87] Hammerschlag J stated that: the functions of ICAC bear “no relation to a civil or criminal trial before a court with jurisdiction to resolve factual and legal issues in dispute between contending parties”. Earlier, in Glynn v ICAC (1990) 20 ALD 214 at 218 Wood J stated that the ICAC is not obliged to “formulate and notify the precise but tentative conclusions at the commencement of the enquiry or even at the beginning of submissions.” It was also held in Glynn v ICAC that an enquiry will inevitably expand and move into new and different areas and that what is necessary “is that by the end of the hearing a party potentially affected by an adverse finding has the opportunity to meet it by submissions, and if necessary, evidence (at 218). In Dainford Ltd v ICAC (1990) 20 ALD 207 at 209 Young J held (at 209) that ICAC is not required to specify how the hearing will proceed. (An appeal against this decision was dismissed by Priestley, Meagher and Handley JJA in Dainford Ltd v Independent Commission Against Corruption (ICAC) (1990) 20 ALD 233.)

95. In Duncan v Independent Commission Against Corruption [2014] NSWSC 1018; (2014) 311 ALR 750 McDougall J concluded that procedural fairness had been afforded to the plaintiffs in that matter because they had been informed of the proposed findings for the purpose of s 9 of the ICAC Act in the written submissions of counsel-assisting, and that they had been cross-examined on the underlying facts extensively (at [216]–[219]).

96. These decisions were all concerned with the content of the requirement for procedural fairness in relation to any prospective finding of corrupt conduct, the principles derived from them apply, a fortiori, to any requirement of procedural fairness regarding disclosure of material held by ICAC.

91. The question of the relevance of Mr Neilsen’s statement can be assessed as against the findings ultimately made by ICAC. Those findings are set out above at [22]. The finding of “corrupt conduct” against Mr Kazal was that in 2007 he held out the prospect of employment in the UAE to Mr Kelly and paid $11,170 for his flight in May 2007 as well as his accommodation expenses. ICAC’s finding was that this was done with the intention to influence Mr Kelly to exercise his official SHFA functions in a manner favourable to Mr Kazal’s business interests.

92. The ICAC accepted in its Final Report that there was insufficient evidence to establish whether any of Mr Kelly’s actions in relation to the relevant leases were in fact adversely affected by his conflict of interest with Mr Kazal. That is, ICAC disavowed any finding that there was any actual corrupt conduct in the grant of any of the leases. Rather, the finding was that Mr Kazal’s conduct could adversely affect, either directly or indirectly, Mr Kelly’s impartial exercise of his official functions; not that it in fact did so. The capacity for such conduct to adversely affect the impartial exercise of official functions falls within the terms of s 8(1)(a) of the ICAC Act.

93. Although Mr Neilsen’s statement provides some background material to events in 2005 and 2006, he ceased to work at the SHFA in 2006 and the findings by ICAC pertained to two events in 2007. There is nothing in Mr Neilsen’s statement which is inconsistent with the findings of the ICAC. This makes Mr Kazal’s case that the non-disclosure of Mr Neilsen’s statement was unlawful and done with malice one that cannot be sustained. Even if I were satisfied that there had been some denial of procedural fairness, and I am not, there is no evidence capable of establishing an intention to cause any injury to Mr Kazal by not providing the statement.

94. Although the ICAC findings did not refer to any alleged corrupt conduct during the time period when Mr Neilsen was working at the SHFA, the articles in the Sydney Morning Herald (which appear to have led to the ICAC investigation) did. Mr Kazal’s oral submissions focussed on the differences between Mr Neilsen’s statement and the Sydney Morning Herald articles. The difficulty for Mr Kazal is that his complaint is one of misfeasance in public office against ICAC. Any criticism Mr Kazal now makes of the publications in the Sydney Morning Herald is not relevant to the matter before me. The fact remains that the ICAC investigation and findings were into events in 2007.

95. In response to this obvious difficulty for his case, Mr Kazal contended that ICAC’s inquiry was based on false reports in the Sydney Morning Herald claiming actual corruption on his part. Had he been in possession of Mr Neilsen’s statement, Mr Kazal contends, he would have been able to prove the Sydney Morning Herald allegation was wrong at an earlier time and this may have influenced how the ICAC enquiry was conducted in the first place. That is, if Mr Kazal had been given the opportunity to establish that the particular allegation in the Sydney Morning Herald was unfounded, then the whole investigation could have been prevented. Further, Mr Kazal contended that he could have obtained legal advice in relation to the statement and the enquiry would never have commenced.

96. Again, the difficulty for Mr Kazal’s argument is that there is no obligation for a person to be given an opportunity to be heard at every step of the investigation. If Mr Kazal’s complaint were accepted it would mean that in every ICAC investigation when a particular line of enquiry is closed off, the person being investigated should have the opportunity to argue that there should be no further investigation at all, even though other aspects of the investigation are ongoing.

97. As to the need to establish maliciousness, Mr Kazal submitted that ICAC pursued him after no evidence of actual corruption could be found so as to “satisfy the millions of taxpayers money that was wasted on a baseless enquiry and of course they wanted my head.” The ICAC had signed the summonses and determined to have a public enquiry before they had the statement of Mr Neilsen. Mr Kazal submitted that after they got his statement they had to “go with the flow go” to “let something stick” on him which had no basis. I was asked to infer that ICAC changed the focus of its investigation after getting the statement of Mr Neilsen. He also submitted that the subject of the inquiry was an “unusual” case for ICAC to take and is further evidence of a personal pursuit of him.

98. I have considered Mr Kazal’s submissions. Although I am satisfied that he genuinely feels aggrieved by ICAC’s failure to provide Mr Neilsen’s statement to him in 2012, there is simply no evidence before me to make out a case of misfeasance in public office in failing to do so.

99. As Harrison J observed in his judgment dismissing Mr Kazal’s 2012 proceedings for judicial review, the extra powers provided to ICAC demonstrate that “the legislature did not intend to constrain the Commission by reference to the rules and procedures that apply in courts.” I am not satisfied that Mr Neilsen’s statement was relevant to any of the findings ultimately made by ICAC. It follows, given the scope of the ICAC Act, that I am not satisfied that it was a breach of procedural fairness for ICAC not to have provided a copy of the statement to Mr Kazal at the time of the hearing and his case fails at the first hurdle.

100. I am satisfied that the part of Mr Kazal’s claim that relies upon non-disclosure of Mr Neilsen’s statement is manifestly groundless.

Correspondence between ICAC and the DPP

107. The second aspect of Mr Kazal’s action for public misfeasance turns on the submissions made by ICAC to the DPP as to why Mr Kazal should be prosecuted for an offence contrary to s 87(1) of the ICAC Act.

108. Section 74A(2) of the ICAC Act requires the report to Parliament to include a statement as to whether or not on all the circumstances ICAC is of the opinion that consideration should be given to obtaining the advice of the DPP. ICAC was statutorily obliged to consider the question of whether or not it was of the opinion that such advice should be sought.

109. I have set out the relevant correspondence above at [24]–[30]. The onus is on Mr Kazal to establish that this correspondence was entered into with a malicious state of mind. I have closely examined the correspondence and can find nothing in it that could suggest that it was entered into by officers of ICAC, including Mr Ipp, with the intention of inflicting injury on Mr Kazal. The correspondence clearly indicates that Mr Ipp did not agree with the conclusion of the DPP that there was no reasonable prospect of conviction of Mr Kazal for an offence under s 87(1) of the ICAC Act. He expressed that view forcefully and described the attitude of the relevant solicitor as “unduly conservative”. But expressing that view falls far short of any act of impropriety.

110. It is tolerably clear that the purpose of the letter sent on 2 November 2012 by the principal lawyer at ICAC to the Office of the DPP was to seek reasons for the position taken by the DPP. It was this request for reasons which led to the matter being referred up to the Deputy DPP and then to the DPP. After Mr Ipp wrote to the DPP it was the DPP who subsequently wrote back to Mr Ipp confirming the decision not to prosecute.

111. Significantly, it is unclear how the exchange of correspondence between the ICAC and the DPP could lead to any damage given that no prosecution resulted from the correspondence in any event. The correspondence was not conducted in a public forum. It only became public because Mr Kazal made a complaint to the ICAC inspector and some of this correspondence was subsequently set out in that report. Not only has the question of damage been insufficiently pleaded, there was no identification by the plaintiff as to how he could ever establish damage in circumstances where no charges were brought against him.

112. I am satisfied that that part of Mr Kazal’s claim relying upon this correspondence is manifestly groundless as well.

Other matters relied upon by Mr Kazal

113. Although the statement of claim only pleads the two acts of not providing Mr Neilsen’s statement and corresponding with the DPP in support of his claim, Mr Kazal relied upon two other pieces of evidence during the hearing to establish malice: the Nicholson Report and the NIC Report

The Nicholson report

114. Mr Kazal placed considerable reliance upon the report of ICAC Acting Inspector, Mr Nicholson. I have set out pertinent parts of that report above at [43]–[47]. Significantly, Mr Nicholson concluded that ICAC “was not obliged to reveal any evidence or information it had held”, that the statement of Mr Neilsen was “not relevant to the purpose the ICAC was seeking to draw from the past Kazal lease history” and that there was no “impropriety or maladministration in the ICAC conducting its investigation through the public enquiry process the way it did”.

115. The main criticism by Mr Nicholson of ICAC’s conduct of this investigation is that there is no mechanism within the ICAC Act for a person to clear their name unless they are charged. Mr Kazal also relied upon a number of specific paragraphs in the Acting Inspector’s report said to be findings favourable to him. But closer inspection reveals those passages to be references to submissions made by Mr Kazal himself to the Acting Inspector.

116. In short, the findings in the report which were within the power of the Acting Inspector to investigate do not assist Mr Kazal. Mr Nicholson’s opinions as refelected in the recommendations made by him are not relevant to the question of whether Mr Kazal can establish the intentional tort of public misfeasance.

NIC Report

117. As stated above, Mr Ipp co-authored (with five others) a policy statement in relation to whether there should be a federal ICAC. That report was published in September 2018, by which time these proceedings brought against him by Mr Kazal were on foot. I have set out the relevant passages from that report above at [49]–[51].

118. Mr Kazal submitted at the hearing that the NIC produced its report “to quash the inspector’s report so the inspector’s report is void”. He relied upon the report as an example of Mr Ipp defaming him publicly. He submitted that it was ironic that Mr Ipp was one of six members of this community who took the opportunity to attack him and mislead the public in portraying the information. He submitted that he should not have been publicly cited in a case study by Mr Ipp at a time when he was suing him.

119. The NIC report was prepared by a committee of jurists to address the question of whether a national integrity commission should be established. Two case studies are referred to in the report, that of Mr Kazal and that of another man, Murray Kear. In referring to the ICAC Acting Inspector’s report in relation to Mr Kazal, the NIC report states:

“The Acting Inspector’s principal task was to determine whether there have been any misconduct or maladministration by ICAC. He found they had not. This was a clear and unequivocal conclusion”.

120. The NIC report goes on to be critical of the way that Acting Inspector Nicholson approached his statutory task stating that Mr Nicholson misunderstood, inter alia, the ICAC Act, and (at 9):

“The principal criticisms raised by the Acting Inspector display a complete misunderstanding of the ICAC legislation, it’s purposes and methods. In particular, the criticisms ignore the fact that ICAC investigations are entirely separate from criminal proceedings.”

121. It seems to me that the timing of the publication of the NIC report was most unfortunate. Mr Kazal had already commenced these proceedings alleging specifically that Mr Ipp acted maliciously in relation to him and relying heavily on the recommendations made in the Nicholson Report. The extracts from the NIC report show the authors’ rejection of any criticism of the Kazal inquiry. Despite this unfortunate timing, the fact remains that there is nothing in the report that supports Mr Kazal’s case that Mr Ipp acted maliciously back in 2012–2013. It does not advance the claim he has brought any further.

122. Mr Kazal also complained that either ICAC or Mr Ipp had given Mr David the NIC report in order to assist him in proceedings he and his company, Thunder Road Studios Inc, had brought against Mr Kazal and his brothers Tony and Adam Kazal in the United States District Court for the Central District of California.

123. Mr David gave evidence at the ICAC hearing and Mr Kazal described him in this court as a “star witness” for ICAC “with adverse interest” to him. Mr David is not referred to anywhere in Mr Kazal’s statement of claim (once [6]–[13] were not relied upon) but Mr Kazal complained at the hearing that Mr David got hold of the NIC report and was using it “to advance his interest” in the proceedings in the United States. Mr Kazal also alleged that Mr David was a source for the Sydney Morning Herald articles.

124. On 24 October 2018, Mr David gave a deposition in the Californian proceedings during which a reference was made to the NIC report, which had been published the previous month in September 2018. Mr Kazal submitted that that the only inference was that either someone at ICAC or Mr Ipp had provided it to Mr David to assist him in his litigation against the Kazals.

125. I was provided with a copy of the deposition. In it Mr David was asked about the Nicholson report and said, “I believe the review was seeking to challenge whether there was a conflict of interest between what the DPP has in terms of its parliamentary lawful rights and what the ICAC has of its independent lawful rights.” He added: “So it’s a complex legal mater, is my understanding.”

126. I have considered Mr Kazal’s submission that the material in the NIC report, as well as Mr David’s reference to it in the Californian litigation so soon after it was published, is evidence of malice on the part of ICAC and Mr Ipp and thus supports his claim. The difficulty, again, is that the claim brought by Mr Kazal relies on specific events in 2012–2013 whereas the NIC report was not published until 2018. Nor can I accept Mr Kazal’s contention that either Mr Ipp or someone at ICAC must have provided the report to Mr David to assist him in his litigation against Mr Kazal. The report was publicly available online and Mr David’s deposition gives rise to the inference his legal representatives had obtained it given that, although Mr David said he had not seen the report, he also said, “I can have my attorney send you a link to it.”

Conclusion

127. I have had regard to the principle that “ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way (Agar v Hyde) and that powers to summarily terminate proceedings must be exercised with exceptional caution (Spencer v The Commonwealth (2010) 241 CLR 118; [2010] HCA 28). Despite this, I am satisfied that Mr Kazal’s claim cannot succeed. This is one of those clear cases where summary intervention can be justified.

128. The real issue in summary dismissal proceedings is whether there is an underlying cause of action, not simply whether one is pleaded. I am simply not satisfied that there is any underlying cause of action for the intentional tort of misfeasance in public office in this matter arising out of the facts relied upon by Mr Kazal. I am satisfied that the proceedings should be summarily dismissed. This means that I do not need to address the inadequacies in the way the tort was pleaded, as identified by ICAC and Mr Ipp.

129. Turning to the proceedings for judicial review. The declaration sought in prayer 1 relied upon a finding of misfeasance in public office and cannot be made on the same basis. The declaration sought in prayer 2 was that ICAC’s report was ultra vires and any adverse findings against Mr Kazal were not made according to law and a nullity. Following Mr Kazal’s disavowal of any reliance on [6]–[13] of the statement of claim (which pertained to “Improper Conduct in Maintaining the Inquiry”) the declarations in prayer 2 could only be made on the basis of the allegations made in the SOC of “Improper Withholding of Exculpatory Evidence” and “Improper Submission to the DPP that the Plaintiff Should be Prosecuted”.

130. Given my conclusions concerning any tort claim based on these two assertions, that part of the proceedings seeking declaratory relief must also fail as it is predicated on the same arguments. On this basis I do not need to consider the inadequacies in the way the judicial review proceedings were commenced or pleaded, whether UCPR 59.11 acts retrospectively, or the question of whether an extension of time should be granted. For the reasons I have already given, there is no basis for this court to exercise its supervisory jurisdiction to declare the ICAC findings to be ultra vires, not according to law and/or a nullity.

Costs

131. ICAC seeks that it costs be paid on an ordinary basis until 12 March 2018 and thereafter on an indemnity basis. In support of this submission three matters were relied upon: that Mr Kazal should have known that the proceedings were hopeless; that the statement of claim involves baseless allegations of bad faith, malice and dishonesty; and that Mr Kazal rejected an offer on 12 March 2018 to discontinue the proceedings on the basis that each party bear its own costs.

132. It was agreed during the hearing of this matter that the question of costs would be reserved until after I had published my judgment in this matter

Orders

133. I make the following orders:

1. The proceedings are dismissed summarily under Uniform Civil Procedure Rules 2005 (NSW) r 13.4.

2. The plaintiff is to pay the defendants’ costs.

3. The question of whether the costs are to be paid on an indemnity basis is reserved.

**********

Amendments

03 February 2020 - Cover sheet correction

Decision last updated: 03 February 2020