Smith v Australian Criminal Intelligence Commission

[2019] FCCA 1811

FEDERAL CIRCUIT COURT OF AUSTRALIA

SMITH v AUSTRALIAN CRIMINAL INTELLIGENCE COMMISSION & ANOR

[2019] FCCA 1811

Catchwords:

ADMINISTRATIVE LAW – Review under Administrative Decision (Judicial Review) Act 1977 – review of decision to suspend Australian Public Service employee without pay under the Public Service Act 1999 – allegations of error of law and improper exercise of power – identification of relevant decision – whether the length of the period of no remuneration must be fixed, definite and certain – whether failure to review indefinite suspension without pay invalidates decision to suspend.

PRACTICE & PROCEDURE – Pleadings – matters for specific pleading.

WORDS & PHRASES – “Longer period”.

Legislation:

Administrative Decisions (Judicial Review) Act 1977 (Cth), ss.3, 5.

Public Service Act 1999 (Cth), ss.13, 15, 28, 33, 41B, 50A.

Public Service Regulations 1999 (Cth), reg. 3.10, 5.29, 5.30, 5.31, 5.32.

Federal Court Rules 2011 (Cth), r.16.08.

Federal Circuit Court Rules 2001 (Cth), item 10, pt.2, sch.3.

Cases cited:

Health Care Complaints Commission v Philipiah [2013] NSWCA 342.

Minister for Immigration & Citizenship v SZLSP (2010) 187 FCR 362.

Minister for Immigration & Border Protection v SZVFW (2018) 92 ALJR 713.

Minister for Immigration & Border Protection v Stretton (2016) 237 FCR 1.

Applicant:

BENJAMIN SMITH

First Respondent:

AUSTRALIAN CRIMINAL INTELLIGENCE COMMISSION

Second Respondent:

MERIT PROTECTION COMMISSIONER

File Number:

SYG 479 of 2019

Judgment of:

Judge Cameron

Hearing date:

18 June 2019

Date of Last Submission:

18 June 2019

Delivered at:

Sydney

Delivered on:

28 June 2019

REPRESENTATION

Counsel for the Applicant:

Mr A. Britt of Counsel

Solicitors for the Applicant:

Mr D. Eid of Danny Eid Lawyers

Solicitors for the Respondents:

Mr A. Markus and Ms P. Fusitu’a of Australian Government Solicitor

ORDERS

(1)     The application be dismissed.

1. FEDERAL CIRCUIT COURT

OF AUSTRALIA

AT Sydney

SYG 479 of 2019

Benjamin Smith

Applicant

And

Australian Criminal Intelligence Commission

First Respondent

Merit Protection Commissioner

Second Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. By way of amended application filed 1 April 2019 the applicant, Mr Smith, seeks, pursuant to s.5(1) of the Administrative Decision (Judicial Review) Act 1977 (“ADJR Act”), judicial review of decisions of the first respondent, (“ACIC”) dated 12 October 2018 and 7 February 2019 and what has been characterised as a decision of the second respondent (“MPC”) dated 31 January 2019.  The effect of those decisions were to suspend his employment without remuneration.

2.      Mr Smith seeks orders rescinding the suspension of his employment or, alternatively, remuneration for the duration of the period of suspension.

RELEVANT LEGISLATION

ADJR Act

3. Section 5(1)(e) and (f) of the ADJR Act provides that:

(1)      A person who is aggrieved by a decision to which this Act applies that is made after the commencement of this Act may apply to the Federal Court or the Federal Circuit Court for an order of review in respect of the decision on any one or more of the following grounds:

…

(e)      that the making of the decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made;

(f)       that the decision involved an error of law, whether or not the error appears on the record of the decision;

…

4. Pursuant to s.3 of the ADJR Act, “decision to which this Act” applies means, for the purposes of that Act:

…a decision of an administrative character made, proposed to be made, or required to be made (whether in the exercise of a discretion or not and whether before or after the commencement of this definition):

(a)      under an enactment referred to in paragraph (a), (b), (c) or (d) of the definition of enactment…

…

5.      The Public Service Act1999 (“PS Act”) and the Public Service Regulations 1999 (“PS Regulations”) are enactments for the purposes of s.3 of the ADJR Act.

Public Service Act

6. Section 13 of the PS Act outlines the APS Code of Conduct (“Code of Conduct”) for employees of the Australian Public Service.

7. Section 15(2A) of the PS Act relevantly provides as follows:

15 Breaches of the Code of Conduct

…

(2A)               A person who is, or was, an APS employee is taken to have breached the Code of Conduct if the person is found (under procedures established under subsection (3) of this section or subsection 41B(3) or 50A(2)) to have, before being engaged as an APS employee:

…

(b)      wilfully failed to disclose to another APS employee, or to a person acting on behalf of the Commonwealth, information that the person knew, or ought reasonably to have known, was relevant; or

(c)      otherwise failed to behave honestly and with integrity;

in connection with the person’s engagement as an APS employee.

8. Pursuant to s.28 of the PS Act, the PS Regulations may provide for the suspension of APS employees.

9. Section 33 of the PS Act relevantly provides:

33  Review of actions

(1)      An APS employee is entitled to review, in accordance with the regulations, of any APS action that relates to his or her APS employment. However, an APS employee is not entitled to review under this section of APS action that consists of the termination of the employee’s employment.

…

(3)      Without limiting subsection (1), regulations made for the purposes of that subsection may provide for the powers available to the Merit Protection Commissioner, or any other person or body, when conducting a review under the regulations.

…

(5)      A person or body that has conducted a review under this section may make recommendations in a report on the review but does not have power to make any binding decision as a result of the review, except as provided by the regulations.

…

Public Service Regulations

10. Regulation 3.10 of the PS Regulations relevantly provides as follows:

3.10    Suspension from duties (Act s 28)

(1)      An Agency Head may suspend an APS employee employed in the Agency from duties if the Agency Head believes on reasonable grounds that:

(a)      the employee has, or may have, breached the Code of Conduct; and

(b)      the employee’s suspension is in the public, or the Agency’s, interest.

(2)      The suspension may be with remuneration.

(3)      If the suspension is to be without remuneration, the period without remuneration is to be:

(a)      not more than 30 days; or

(b)      if exceptional circumstances apply—a longer period.

(4)      The Agency Head must review the suspension at reasonable intervals.

…

11.    Regulations 5.29, 5.30 and 5.31 are concerned with MPC merits reviews and provide:

Subdivision 5.3.3—Secondary review

5.29 Application for secondary review

(1)      An affected employee may apply in writing to the Merit Protection Commissioner for secondary review of a reviewable action if:

(a)      the Agency Head has told the employee under regulation 5.26 that the action is not a reviewable action; or

(b)      the employee is dissatisfied with the outcome of the Agency Head’s review of the action under regulation 5.27.

(2)      The application must be made through the Agency Head.

(3)      The application must state briefly why the review is sought.

5.30 Agency Head to give documents to Merit Protection Commissioner

(1)      Within 14 days after receiving the application, the Agency Head must give to the Merit Protection Commissioner:

(a)      the application; and

(b)      any relevant documents relating to the primary review of the action.

(2)      The Agency Head must give to the affected employee a copy of any documents given to the Merit Protection Commissioner under paragraph (1)(b).

5.31 Conduct of review

If the Merit Protection Commissioner considers that the employee is entitled to review under this Division, the Merit Protection Commissioner:

(a)      must review the action; and

(b)      may, subject to the minimum requirements mentioned in subregulation 5.33(1), conduct the review in any manner the Merit Protection Commissioner thinks fit; and

(c)      must make a recommendation about the action; and

(d)      must tell the Agency Head, in writing, the recommendation and reasons for the recommendation; and

(e)      must tell the employee, in writing, of the recommendation and reasons given to the Agency Head.

BACKGROUND

12.    Mr Smith commenced employment with the ACIC in 2012.  After being charged with certain criminal offences (“Alleged Conduct”) on 20 December 2016 (notification of which was provided by Mr Smith to the ACIC in February 2017), Mr Smith took a combination of miscellaneous, personal and annual leave.  While a trial occurred, it resulted in a hung jury and a new trial commences on 1 July 2019.

Notice of intention to suspend

13.    Mr Smith was first notified of the ACIC’s intention to suspend his employment without pay by way of a letter from Mr Williams, Chief Operating Officer, dated 11 September 2019.

14. The letter notified Mr Smith that he was suspected of breaching the Code of Conduct in the manner described in s.15(2A)(b) and/or (c) of the PS Act by failing to disclose the Alleged Conduct in 2012 before commencing employment with the ACIC (“Possible Non-Disclosure”). This letter included the following reasons for Mr Williams’s consideration that suspension without pay was warranted under reg.3.10 of the PS Regulations.

a)        the possibility that Mr Smith had breached the Code of Conduct by reason of the Possible Non-Disclosure.

b)        Mr Williams’s diminished confidence in his ability to trust Mr Smith to perform his duties with “honesty and integrity” in light of the Possible Non-Disclosure, particularly given the serious nature of the Alleged Conduct;

c)        the Possible Non-Disclosure might affect the ACIC’s reputation and the public’s confidence in it;

d)        Mr Williams’s concern for Mr Smith’s colleagues in light of the Possible Non-Disclosure;

e)        Mr Smith would be unable to carry out his duties effectively given that his appointment as a special member of the Australian Federal Police had been revoked and his security clearance suspended.

15.    Mr Williams gave Mr Smith seven days to respond to the notice of intention to suspend his employment without pay.

Mr Smith’s response

16.    On 16 September 2018 Mr Smith’s solicitor, Mr Eid, wrote to Mr Williams denying that a breach of the Code of Conduct had occurred and saying that:

a)        the allegations made in Mr Williams’s letter were baseless;

b)        Mr Smith had never been convicted of any criminal offence and prior to being charged in December 2016 had no knowledge of any allegations against him;

c)        Mr Smith denied the Alleged Conduct; and

d)        the oral evidence of a Crown witness was being examined in light of an admission that they had given false evidence in respect of one of the allegations.

17.    Mr Eid requested that the ACIC reinstate Mr Smith’s leave entitlements and that he be allowed to resume full-time paid work.

Notice of suspension (First Decision)

18.    On 19 September 2018 Mr Williams replied to Mr Eid’s letter and notified Mr Smith of his decision to suspend his employment without remuneration commencing on 20 September 2018.

19.    The reasons provided by Mr Williams in support of his decision to suspend Mr Smith’s employment without remuneration were similar to those outlined in his letter of 11 September 2018 and were as follows:

a)        he was suspected of breaching the Code of Conduct by failing “wilfully” or without “honesty and integrity” to disclose the Alleged Conduct at the time he commenced employment with the ACIC in 2012;

b)        while Mr Williams did not allege that Mr Smith had engaged in criminal behaviour, he had decided to suspend him upon a suspicion that the charges were well founded and that Mr Smith had failed to disclose the Alleged Conduct in 2012.  Mr Smith was suspected of breaching the code because the NSW Director of Public Prosecutions (“NSW DPP”) was prosecuting the charges against him and, according to the NSW DPP guidelines, could only do so if there was a “reasonable prospect of a conviction”.  Mr Williams “inferred” that the NSW DPP must have had a “reasonable evidentiary basis” to do so and by virtue of that inference, concluded that there was:

… reasonable basis to suspect that Mr Smith may have engaged in the Alleged Conduct and failed to disclose those matters to ACIC…; and

c)        in the event that Mr Eid’s letter was intended to respond the notice of intention to suspend, Mr William was not of the view that the matters Mr Smith raised altered his preliminary view.

Application for review to the Chief Executive Officer

20. By letter dated 2 October 2018 addressed to Mr Phelan, the Chief Executive Officer of the ACIC, Mr Smith sought review pursuant to s.33(1) of the PS Act of Mr Williams’s 19 September 2018 decision to suspend his employment without pay on grounds that:

1.        [He] did not breach s15(2A)(b) and/or (c) of the Public Service Act 1999.

2.        The Delegate’s findings are inconsistent with his assertion that [he was] entitled to the presumption of innocence and that he has not made an assessment that [he was] guilty of the alleged conduct

3.        …

4.        The Delegate could not believe on reasonable grounds that [he had] or may have:

(i)            Wilfully failed to disclose to another APS employee, or to a person acting on behalf of the Commonwealth, information that [he] knew was relevant; or

(ii)           Wilfully failed to disclose to another APS employee, or to a person acting on behalf of the Commonwealth, information that [he] ought reasonably to have known, was relevant, or

(iii)       Otherwise failed to behave honestly and with integrity.

5.  [His] suspension is not in the public, or the Agency’s, interest

6.           There is no proper or fair basis that the suspension be without pay.

21.    Mr Smith stated in this letter that it was inconsistent of Mr Williams to find that he had engaged in the Possible Non-Disclosure by “wilfully failing to disclose the Alleged Conduct” whilst simultaneously noting that he was entitled to the presumption of innocence in respect of the Alleged Conduct.  Mr Smith said he could not wilfully fail to disclose the Alleged Conduct if it did not occur.

Decision on Review (Second Decision)

22.    By way of a letter dated 12 October 2018, Mr Phelan affirmed Mr Williams’s decision to suspend Mr Smith’s employment without pay.  His reasons were as follows:

a)        there was a reasonable basis to believe that Mr Smith might in fact have breached the Code of Conduct because if he had engaged in the Alleged Conduct he should have known that this information was relevant to whether or not he would be employed by the ACIC;

b)        there was a reasonable basis to believe that Mr Smith might have breached the Code of Conduct given the prosecution of the charges by the NSW DPP.  While Mr Phelan did not presume that Mr Smith was guilty, he did believe that there was a reasonable basis for believing that he might be guilty and therefore a reasonable basis to believe that he might have breached the Code of Conduct.

c)        if Mr Smith were to return to his duties whilst being suspected for serious misconduct it might undermine the ACIC’s reputation. 

Review by the Merit Protection Commissioner (Third Decision)

23.    On 8 November 2018 Mr Smith applied to the MPC for a review of Mr Phelan’s decision.

24.    On 31 January 2019 Ms Read, the Assistant Director, Review and Casework in the Office of the Merit Protection Commissioner, notified Mr Smith that the MPC had recommended that “the ACIC confirm the decision under review”.  That recommendation was based on the following findings and reasons set out in the MPC’s “Report of review” dated 31 January 2019.

Was the decision procedurally fair?

25.    The MPC’s report recorded that Mr Smith had submitted that the suspension was procedurally unfair, relevantly because:

a)        the decision-maker had not considered the material upon which the NSW DPP based its decision to prosecute and had therefore been unable to form a reasonable belief that he might be guilty of the Alleged Conduct;

b)        the evidence Mr Williams relied on was inexact and indirect; and

c)        it was unreasonable to form a belief that he might have engaged in the Alleged Conduct, as many people are prosecuted by the NSW DPP but found not guilty.

26.    The MPC considered these submissions to be misguided on the basis that the decision-maker did not need to determine if Mr Smith had engaged in the Alleged Conduct.  The decision-maker needed only to consider whether there were reasonable grounds on the civil standard of proof to believe that he might have.

Were there reasonable grounds to believe that Mr Smith might have breached the APS Code of Conduct?

27.    The MPC referred to the NSW DPP’s prosecution guidelines which indicated that a decision to prosecute should be guided, relevantly, by the following considerations:

a)        whether or not the admissible evidence available is capable of establishing each element of the offence;

b)        whether or not it can be said that there is no reasonable prospect of conviction by a reasonable jury properly instructed as to the law.

28.    The MPC was of the view that as the NSW DPP had decided to prosecute the alleged offences, and to pursue a further trial in July 2019, it was reasonable to conclude that he was of the view that there was sufficient admissible evidence to establish the offences and that there existed a reasonable prospect that Mr Smith would be convicted of them.  It was also noted that although the initial trial resulted in a hung jury and some of the evidence might have been fabricated, the NSW DPP had nevertheless determined to retry the matter.

29.    The MPC considered it reasonable to have regard to the NSW DPP's prosecution guidelines as the basis for concluding that Mr Smith might have been guilty of the Alleged Conduct.  The MPC further concluded that there was therefore a reasonable basis to form the view that Mr Smith might have breached the Code of Conduct by not disclosing the Alleged Conduct in 2012.

Were there reasonable grounds to believe that Mr Smith’s suspension was in the public, or the ACIC's, interest?

30.    After citing matters considered relevant to this question, the report concluded that there were reasonable grounds to consider that Mr Smith's suspension was in the ACIC’s interests.   This view was based on the nature and seriousness of the criminal charges that were, according to the NSW DPP, made on evidence sufficient to form a prima facie case against Mr Smith.  In the opinion of the MPC, the continued presence in an integrity agency’s workplace of an employee who had been charged with the Alleged Conduct would be likely to diminish the good reputation of the ACIC and pose a risk to public confidence in it and in the broader public service.  Further, Mr Smith would be unable to perform his normal duties as his security clearance had been suspended and his appointment as a special member of the Australian Federal Police revoked.

Was it appropriate to suspend Mr Smith without remuneration?

31.    Mr Smith submitted that it was not in the public or the ACIC’s interest to suspend him without pay and the decision that the suspension be without pay lacked a fair or proper basis. Mr Smith also made submissions about the negative financial impact of the suspension without remuneration. Mr Smith advised his long service leave (at half pay) was to end on 10 February 2019 and that thereafter he would receive no salary. Mr Smith advised that the financial impact of this matter had been very great.

32.    The MPC then set out other matters which it was considered were relevant to take into account when reaching a view on this submission.

33.    The MPC said that employee hardship was to be balanced with the ACIC’s obligation to promote the proper use and management of resources and that Mr Williams had considered that continuing to pay a salary to an employee who was not working owing to suspension from duties for alleged serious misconduct, would generally be incompatible with promoting the proper use of resources.

34.    Having regard to the available submissions regarding the financial impact on Mr Smith and also to the seriousness of the Alleged Conduct, the MPC concluded that the decision to suspend Mr Smith from duty without remuneration was appropriate.

Were there exceptional circumstances that justified suspension without remuneration for more than 30 days?

35. The MPC noted that reg.3.10(3) of the PS Regulations provides that a period of suspension without remuneration longer than 30 days is permitted only where there are exceptional circumstances. An applicable procedures manual explained that exceptional circumstances could include:

•    where a strong prima facie case of serious misconduct is apparent

•    in order to minimise any delay between a determination of breach and imposing a sanction, where a finding has been made of a serious breach of the Code

•    where an employee has been charged with a criminal offence and is waiting to have the charge heard and determined

•    where an employee has appealed against a criminal conviction and is waiting to have the appeal heard.

36.    In the MPC’s view, the NSW DPP’s decision to start criminal proceedings in respect of the Alleged Conduct was strong grounds to consider that Mr Smith might have engaged in that conduct and to have failed to disclose it to the ACIC in 2012.  Additionally, the criminal proceedings had been pending throughout the review process.  The MPC considered that there remained exceptional circumstances justifying suspension from duty without remuneration for more than 30 days.

Final decision

37.    On 7 February 2019 the ACIC attempted to notify Mr Smith that, in light of the MPC review, it had confirmed the original decision.

38.    In her affidavit affirmed 15 May 2019, the ACIC’s solicitor, Ms Fusitu’a deposed that at the directions hearing on 22 March 2019 it became apparent that the email advising the final decision dated 7 February 2019 had not been received by Mr Smith and she provided a copy of the email to Mr Smith’s solicitor in paper and email form on 22 and 25 May 2019 respectively.

APPLICATION

Grounds

39.    Mr Smith sought, on the following grounds, judicial review of the ACIC’s decisions and what he characterised as the decision of the MPC:

…

8         The Respondents [sic] Decisions involved an error of law for the purpose of s5(1)(f) of the ADJR Act in that the:

(a) the Respondents erred at law when they applied the wrong tests in determining whether the Applicant has, or may have, breached s15(2A)(b) and (c) of the Public Service Act 1999;

(b)      the Respondents erred at law when they failed to consider and determine whether in 2012 that the Applicant was aware of the alleged criminal conduct such that he could report such conduct prior to suspending the Applicant;

(c)      the First Respondent erred at law in suspending the Applicant without pay;

(d)      the First Respondent erred at law in suspending the Applicant without pay for a period of more than 30 days; and

(e)      the First Respondent erred at law in keeping the Applicant suspended when it failed to review the suspension at reasonable intervals.

9.        The Respondents [sic] Decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made for the purpose of s5(1 )(e) of the ADJR Act in that the decision was unreasonable since:

(a)      the Respondents did not have reasonable grounds to believe that the Applicant has, or may have, breached the Code of Conduct for the purposes of Regulation 3.10 of the Public Service Regulation 1999;

(b)      the Respondents did not have reasonable grounds to believe that in 2012 that the Applicant was aware of the alleged criminal conduct such that he could report such conduct;

(c)      The Respondents relied upon the NSW DPP prosecution guidelines.

10.      The Respondents [sic] Decision was an improper exercise of the power for the purposes of s5(1)(e) of the ADJR because the decision maker took into account irrelevant considerations:

(a)      The NSW DPP Guidelines;

(b)      The actions of the NSW DPP;

(c)      The Applicant's leave balances;

11.      The Respondents [sic] Decision was an improper exercise of the power for the purposes of s5(1)(e) of the ADJR because the decision maker failed to take into account relevant considerations:

(a)      The Respondents failed to consider and/or determine whether the Applicant's failure to report historical sex offences in 2012 for which he was charged in 2016 was done or may have been done "wilfully" or a failure to behave honestly and with integrity.

(b)      whether the Applicant given his denials to the criminal charges was aware he had committed historical sex offences at the time he commenced employment with the First Respondent in order that such matters could be reported;

(c)      the Applicant's performance with the First Respondent since 2012;

(d)      the hung jury at the first trial; and

(e)      the strength of the case against the Applicant.

Relief sought

40.    Mr Smith sought orders rescinding the decision to suspend his employment.  Alternatively he sought orders that, should he be suspended from employment, he be suspended with pay.

RESPONSE

41.    Although no response was filed, the ACIC opposed the application.  The MPC submitted to the orders of the Court, save as to costs.

CONSIDERATION

PREFATORY FINDING

Decision under review

42.    The decision relevant to this proceeding was the final decision, being the one which followed the ACIC’s receipt of the MPC’s report.  Although it must be inferred that that decision was informed by the MPC’s “Report of review” dated 31 January 2019, Mr Smith argued that the reasoning properly the subject of this review was that set out in Mr Phelan’s letter to him dated 12 October 2018, being the letter which contained the decision which was ultimately affirmed following the MPC review.  He pointed to the fact that on 7 February 2019 a “Senior Specialist – Workplace Relations” from the ACIC had written to him by email saying:

Following on from the Merit Protection Commissions review the ACIC has confirmed the original decision.

He argued that that advice meant that the ACIC stood by and relied on the decision of 12 October 2018, together with its associated reasoning, and so it was that reasoning which was the proper subject of review in this proceeding, not what was contained in the MPC’s report.

43.    It might be noted at this point that no party suggested that the final decision, being the one following the MPC report, was a decision simpliciter and independent of all of the written reasons which had been put in evidence.  It was agreed that the decision was based on written reasons.  Mr Smith contended that the reasons were those of 12 October 2018 and the ACIC contended that they were the MPC’s reasons for report dated 31 January 2019.

44.    On further consideration of the evidence following the trial, it appears that the final decision in the process may not actually have been included in the material placed before the Court.  The evidence indicates that the MPC’s report was emailed to the ACIC’s workplace relations section on 31 January 2019 and that a week later, on 7 February 2019, the “Senior Specialist – Workplace Relations” wrote to Mr Smith advising him of the confirmation of the original decision.  However, it seems unlikely that the final decision-maker was the “Senior Specialist – Workplace Relations”, as appears to have been silently accepted at the trial of this application. 

45. The MPC report stated on its second page that following Mr Phelan’s review, Mr Smith had sought “secondary review” from the MPC, which appears to reflect the advice that he might do so found in the final paragraph of Mr Phelan’s letter of 12 October 2018. Given that the MPC report stated that it had been prepared under reg.5.31 of the PS Regulations, the reference to “secondary review” is presumably to identify the request in question as having been made under reg.5.29 of those regulations, quoted earlier in these reasons.

46. The MPC report’s reference to reg.5.31 has additional significance. Regulation 5.31 requires the MPC to make a recommendation and to advise the complainant and the “Agency Head” of that recommendation. Presumably the Agency Head was the ACIC’s CEO, Mr Phelan. The PS Regulations go on to provide in a regulation cited in the ACIC’s written submissions and its address to the Court:

Subdivision 5.3.4—Action following recommendation to Agency Head

5.32 Action by Agency Head

(1)         If an Agency Head receives a recommendation under regulation 5.28 or 5.31, the Agency Head must, as soon as possible:

(a)         consider the recommendation; and

(b)         make a decision about the recommendation.

(2)      The Agency Head may:

(a)         confirm the relevant action; or

(b)         vary the action; or

(c)         set the action aside and substitute a new action.

…

(4)         The Agency Head must tell the employee and the Merit Protection Commissioner in writing of:

(a)         the decision; and

(b)         the reasons for the decision.

…

47.    The significance of these prefatory comments lies in Mr Smith’s submission that even if the relevant decision was “the final decision” following the MPC’s report, its “confirmation” of the original decision, namely the Mr Phelan’s decision of 12 October 2018, involved an acceptance of the reasoning underlying that earlier decision. 

48.    I do not think that construction is correct.  There was a series of decisions in this case.  The first two were expressed in letters which also set out the reasons for those decisions but the reasons for a decision should not be confused with the decision itself, as reg.5.32(4) makes clear in relation to the final one.  It is far from unknown that on review an administrative decision will be affirmed for reasons different from those which led to it being made by the primary decision-maker.

49. Regrettably, the Senior Specialist – Workplace Relations’s email to Mr Smith of 7 February 2019 was extremely brief, really referring only to the confirmation of the “original decision”. The relevant task under reg.5.32, presumably undertaken by Mr Phelan, was to consider the MPC recommendation, not to undertake a review of the decision of 12 October 2018. That makes sense as the latter course would involve the Agency Head reviewing his or her previous decision rather than considering pursuant to reg.5.32 another perspective, the provision of which is obviously the role of the MPC under reg.5.31. I infer that a decision to accept a recommendation would, in most cases, be based on an acceptance of the reasons expressed for that recommendation while a rejection of a recommendation would equally usually involve a rejection of that recommendation’s underlying reasoning. Absent any direct evidence of the reasoning which went into the ACIC’s acceptance of the MPC’s recommendation, I infer that it was based on an acceptance of the reasoning upon which that recommendation was expressly based.

50.    For that reason, I find that final decision must be reviewed in light of the reasons for the recommendation set out in the MPC’s 31 January 2019 report, rather than those expressed by Mr Phelan in his 12 October 2018 letter to Mr Smith.

DISCUSSION

Error of law – s.5(1)(f) ADJR Act

No basis to suspend

51. Mr Smith submitted that the ACIC erred in that there was no basis for suspending him under the relevant provisions of the PS Act.

52. Mr Smith submitted that he could only be suspended if the decision-maker held, on reasonable grounds, a belief that he had, or might have, breached the Code of Conduct. However, because he had not commenced employment at the time of the Possible Non-Disclosure and so was not yet a public service employee, the code did not apply to him. Mr Smith further submitted that s.15(2A)(b) and/or (c) only apply if a “finding” of breach were made through the relevant procedures required by ss.15(3), 41B(3) or 50A(2), which he said did not occur. In the circumstances, Mr Smith submitted that there is no basis upon which he could be suspended.

53. This argument does not account for the express terms of s.15(2A) of the PS Act which deals with pre-engagement conduct of persons who are ultimately engaged as members of the public service. It provides that pre-engagement misconduct of the sort described by the sub-section is taken to be a breach of the Code of Conduct regardless of the fact that it occurred before the person joined the public service. Therefore it was not erroneous to ground the decision to suspend Mr Smith on the possibility that such conduct may have occurred.

54. Further, it is to be recalled that no finding was or has yet been made under s.15(2A) that a breach of the Code of Conduct has been committed. Consequently, there was no call to consider the operation of ss.15(3), 41B(3) or 50A(2). Moreover, had those provisions been material to present considerations, reliance on them should have been pleaded expressly and not left to submissions. Satisfaction of those conditions is necessary before the power to make a finding of breach under s.15(2A) arises and so any dispute that they have been satisfied is a matter for specific pleading: rule 16.08 Federal Court Rules 2011 and item 10, pt.2, sch.3 Federal Circuit Court Rules 2001. 

55.    In addresses Mr Smith also submitted that the MPC had applied an incorrect test when stating:

For these reasons, I consider it is reasonable, in the circumstances, to suspect that Mr Smith may have breached the Code of Conduct.

56. It is true that the word “suspect” is not found in reg.3.10 but what that sub-regulation does relevantly speak of is an Agency Head believing on reasonable grounds that a person may have breached the Code of Conduct. I do not understand the MPC’s reasons to say anything different in substance. In context, the word “may” implies doubt and uncertainty regarding whether a breach has actually been committed by a person. That state of uncertainty is colloquially expressed as a suspicion and the MPC’s reasons should be read accordingly.

57. Although Mr Phelan’s decision is not relevant to this review, an argument in relation to it should be mentioned. In addresses Mr Smith submitted that when considering the matter Mr Phelan had erred by saying that there was “a reasonable basis [for him] to believe” that Mr Smith may have breached the Code of Conduct, rather than repeat the words of reg.3.10 and say that he “believe[d] on reasonable grounds” that Mr Smith may have breached the code. That is a distinction without a difference. Moreover, I consider Mr Phelan’s expression to accurately express the relevant test and to put it well and grammatically, which would not have been achieved by simply repeating the regulation’s words.

58. I find that the decision-maker did not misapply s.15(2A) of the PS Act.

Errors in timing

2012 – NSW DPP had no adverse view of Mr Smith

59. Mr Smith submitted that the decision-maker erred in relying upon events in 2017 when considering conduct in 2012 because there was no reasonable evidentiary basis in 2012 to suspect that he had or might have breached the Code of Conduct by acting as described in ss.15(2A)(b) and/or (c). This argument focussed on the fact that the decision to suspend Mr Smith was based on the inferences to be drawn from the further fact that it was only since 2017 that the NSW DPP had been pursuing a prosecution against him. The burden of the argument was that those inferences, even if they were available in 2017, were not available at the time of the Possible Non-Disclosure in 2012 because, it could be inferred, the DPP was not at that time of the view that Mr Smith had engaged in the Alleged Conduct.

60.    This argument distracts from the relevant issue, which concerned the possibility that Mr Smith had breached the Code of Conduct by reason of the Possible Non-Disclosure.  The possibility that he had was a logical inference from the fact of the prosecution, notwithstanding that it commenced, it seems, in 2017. The argument’s reliance on the state of Mr Smith’s actual knowledge in 2012 assumes that the Alleged Conduct did not occur.  For the reasons given in the MPC report, it was open and not unreasonable to postulate the possibility that it had.  Because I have concluded that the final decision was based on an acceptance of the reasoning in the MPC’s report, I find that the final decision was based on that possibility. Consequently, no reviewable error has been demonstrated in connection with the supposition that the NSW DPP had no suspicion of Mr Smith in 2012.

2012 – Mr Smith’s subjective view

61.    The next contention was to the effect the decision-maker erred by focussing upon the conduct of the NSW DPP starting in 2017, and what could be inferred from it, rather than on Mr Smith’s subjective state at the time of the Possible Non-Disclosure in 2012 and whether he had at that time knowingly provided false or misleading information, or had otherwise failed to behave honestly and with integrity.

62.    The reasons just expressed in relation to Mr Smith’s actual knowledge in 2012 apply equally to this contention with the result that no reviewable error has been demonstrated in relation to it.

Presumption of innocence

63.    Referring to Mr Phelan’s letter of 12 October 2018, Mr Smith submitted that an acceptance of the presumption of innocence was inconsistent with a belief in the possibility that there had been Alleged Conduct to report in 2012.  As already noted, the reasoning found in Mr Phelan’s letter is not relevant to the present application, but dealing with the argument nevertheless, it is not one which I accept.  One can recognise that a person is presumed to be innocent of untested charges without foreclosing the possibility that the presumption will be rebutted at a properly conducted criminal trial.  That is the situation in this case.  This argument does not identify a logical inconsistency demonstrative of error.

Suspension without pay

Indefinite period

64. Mr Smith submitted that his suspension without pay for an indefinite period of time was contrary to reg.3.10 of the PS Regulations. He argued that this regulation permitted suspension of employment for a period “not more than 30 days” or, in “exceptional circumstances”, a “longer period”, but not for an indefinite period pending the resolution of criminal proceedings and any subsequent investigation into the Possible Non-Disclosure, as was his situation.

65.    This was not an issue addressed in the MPC report and it has not been suggested that Mr Smith raised it with the MPC’s office in connection with its review.  Consequently, no error attaches to it.

66.    But in any case, I find that the term “longer period” simply means longer than 30 days.  There is no contextual reason to imply a condition that “a longer period” must be a fixed period and no authority to that effect was cited.  The facts of Health Care Complaints Commission v Philipiah [2013] NSWCA 342, cited by Mr Smith, are distinguishable. Relevantly, that case says only that a “period is a portion of time” and that “specified period means a period that is fixed, definite and certain” (at [22]). The fact that reg.3.10 does not purport to require that a period of suspension longer than 30 days be a fixed period indicates that the length of the suspension is an issue left in the discretion of the relevant decision-maker and that the discretion is an unfettered one. Such a conclusion also makes administrative sense given that, as in this case, it may not be practical to fix a period at the outset of the suspension as all the information relevant to determining its length may not be available at that point.

67.    I am not persuaded that the MPC’s reasons on this issue are erroneous.

Exceptional circumstances

68.    Mr Smith submitted that the MPC’s finding that exceptional circumstances existed, because of the seriousness of the Possible Non-Disclosure and because it would be an inappropriate use of public resources to pay him in circumstances where any investigation into the Possible Non-Disclosure would await the outcome of the criminal proceedings, constituted an error of law because neither of those factors were “out of the ordinary course or unusual, or special, or uncommon”.

69.    Those submissions were directed to the terms of Mr Phelan’s letter of 12 October 2018.  The MPC’s reasons did not refer in this context to the use of public money, and were concerned only with Mr Smith’s circumstances and whether they were exceptional in nature, and it is those reasons which will be considered.

70.    As noted earlier, the MPC’s report identified the matters which it took into account, saying:

Regulation 3.10(3) provides that a period of suspension without remuneration longer than 30 days is permitted only where there are exceptional circumstances.  The Handling Misconduct guide explains that exceptional circumstances are not defined in the legislation, but could include:

•    where a strong prima facie case of serious misconduct is apparent

•    in order to minimise any delay between a determination of breach and imposing a sanction, where a finding has been made of a serious breach of the Code

•    where an employee has been charged with a criminal offence and is waiting to have the charge heard and determined

•    where an employee has appealed against a criminal conviction and is waiting to have the appeal heard.

71.    The MPC had regard to the third dot point and concluded by reference to it that exceptional circumstances did exist.  It was not suggested that that was an inappropriate test and it might be noted that Mr Phelan had also had regard to that consideration, amongst others.  Rather, Mr Smith submitted that one regularly, routinely or normally encountered circumstances such as his, specifically, concerns that a serious breach of the Code of Conduct had occurred together with consequential disciplinary proceedings being delayed by a pending prosecution.  Rather than identify legal error, that argument invited the Court to reach a conclusion on the facts of the matter different from that of the MPC.  The Court may not do that.  This argument discloses no relevant error in the MPC’s reasons.

Failure to review suspension

72.    The submission was that the ACIC had not reviewed Mr Smith’s suspension since 20 September 2018. However, after the filing of evidence a review was commenced and, the parties agreed, Mr Smith had provided information for that review which had not, as at the time of this trial, been finalised.

73. A failure to review a decision such as the instant one, as required by the PS Regulations, may provide an affected person with other rights but it does not affect the lawfulness of the decision itself. It is a process which is subsequent to and independent of the making of the decision and so cannot affect it: cf Minister for Immigration & Citizenship v SZLSP (2010) 187 FCR 362 at 379 [54], 387-388 [85] and 396 [116].

Improper exercise of power – s.5(1)(e) ADJR Act

Unreasonable decision

74.    Mr Smith submitted that the ACIC’s decision to suspend him was unreasonable because it could not have believed on reasonable grounds:

a)        that he might have breached the Code of Conduct; or

b)        was aware in 2012 of the Alleged Conduct and so was capable of disclosing it. 

75.    Mr Smith also argued that that it was unreasonable of the ACIC to rely upon the NSW DPP guidelines to support its belief that there was a reasonable basis for the Possible Non-Disclosure, and so suspension without pay was warranted, given that many juries do not convict and in this case one jury had already failed to do so.

76.    The task of the Court, when it is alleged that a decision is legally unreasonable, is to ask whether the exercise of power by the decision-maker was beyond power for that reason.  The improper use of statutory power may:

a)        arise out of specific errors affecting a decision-making process;

b)        be discernible in a decision because no reasonable person could have arrived at it; or

c)        be discernible from the absence of an evident and intelligible justification for a decision: 

Minister for Immigration & Border Protection v SZVFW (2018) 92 ALJR 713 at 732-733 [78]-[82] per Nettle and Gordon JJ.

77.    However, as indicated by Allsop CJ in Minister for Immigration & Border Protection v Stretton (2016) 237 FCR 1 at 5-6 [9]-[11], the concept of legal unreasonableness cannot be minutely, precisely or comprehensively defined. Whether a decision is properly to be considered unreasonable by reference to its outcome, rather than because of specific errors which affect it, will be decided by reference to the terms, scope and policy of the relevant statute and the values drawn from the statute and the common law relevant to the decision. These include fundamental values that attend the proper exercise of power: a rejection of unfairness, of unreasonableness and of arbitrariness; equality; and the humanity and dignity of the individual. The weight and relevance of any relevant values will be approached by reference to the statutory source of the power in question. His Honour went on to state:

The task is not definitional, but one of characterisation: the decision is to be evaluated, and a conclusion reached as to whether it has the character of being unreasonable, in sufficiently lacking rational foundation, or an evident or intelligible justification, or in being plainly unjust, arbitrary, capricious, or lacking common sense having regard to the terms, scope and purpose of the statutory source of the power, such that it cannot be said to be within the range of possible lawful outcomes as an exercise of that power. (at 5-6 [11])

78.    This is not a case of looking at an unexplained decision and querying whether there is an evident or intelligible justification for it.  The MPC’s recommendation was supported by reasons which have been set out above and regard must be had to those reasons when considering whether the decision based on them was unreasonable.  On review, those reasons disclose no logical errors and, given their substance, the decision based on them was not one at which no reasonable person could have arrived.

79.    Additionally, the fact that a prosecution might be unsuccessful is an insufficient basis to find that the MPC’s reliance on the NSW DPP’s prosecution guidelines was unreasonable.  There was an evident and intelligible justification for placing reliance on the guidelines, being that they pointed to the existence of a case to answer which might well be proved, and the effect of the guidelines, namely that cases without such prospects fell outside the guidelines for prosecution. 

Irrelevant considerations

80.    Mr Smith submitted that the ACIC erred by taking irrelevant considerations into account, namely the NSW DPP guidelines, as the basis for deciding that there was a reasonable basis to conclude that he might have engaged in the Possible Non-Disclosure.

81.    Mr Smith also submitted that the ACIC had erred by considering his available leave balances when deciding whether “exceptional circumstances” warranted suspending him without remuneration.

82.    In relation to the first point, Mr Smith did not identify why the legislative context required the decision-maker to not have regard to the practices of the NSW DPP when considering whether the existence of the prosecution in question shed light on the possibility that the Alleged Conduct had occurred and so whether the Possible Non-Disclosure had occurred.  It is not apparent that the legislative context did.  I am not persuaded that reliance on the NSW DPP’s guidelines amounted to taking an irrelevant consideration into account.

83.    As to the leave balances, Mr Smith’s available financial resources were plainly relevant to the degree of hardship he would suffer from being suspended without pay and so also relevant to the decision whether his period of suspension would be unpaid.  So much is made clear by the following paragraphs from the MPC’s report:

I note that the ACIC’s Code of Conduct and Sanctions procedure provides that where an employee claims financial hardship from suspension without remuneration, they must provide information and evidence in support of the claim, including a full statement of financial circumstances for themselves and their partner.  It is not apparent that such information was provided.

At the time of Mr Williams’ [sic] decision I note that Mr Smith had paid leave available to him.  The procedure provides that where paid leave credits are available, it is unlikely that the staff member can make a case on hardship grounds.  Mr Smith remains on paid leave, and advises that this leave will end on 10 February 2019.  I acknowledge that suspension without remuneration, after leave has been exhausted, will have a negative financial impact on Mr Smith.

Employee hardship must be balanced with the ACIC’s obligation to promote the proper use and management of resources. Mr Williams considered that continuing to pay an employee a salary while not working, owing to suspension from duties for alleged serious misconduct, would generally be incompatible with promoting the proper use of resources.  Given the seriousness of the alleged offences, in my view the decision to suspend Mr Smith from duty without remuneration was appropriate.  I have reached this view taking into account the available submissions regarding the financial impact on Mr Smith.

Failing to take into account relevant considerations

84.    Mr Smith submitted that the ACIC erred by failing to take into account a number of particularised matters when concluding that there was a reasonable basis to believe that he might have knowingly provided false or misleading information or have otherwise failed to behave honestly and with integrity in 2012 by reason of the Possible Non-Disclosure.  It is not necessary to rehearse those matters here.  It is sufficient to record that the reasons for the MPC’s recommendation recognised that Mr Smith was contesting the charges laid against him, that his first trial had not resulted in a conviction and that the credit of an important Crown witness had been put in question.  The other matters he raised were not material to the relevant question which was whether there were reasonable grounds for believing that he might have breached the Code of Conduct.

85.    In any event, Mr Smith did not identify why, and again it is not apparent that, the legislative context made consideration of the matters he raised mandatory.

CONCLUSION

86. Mr Smith has not proved that the final decision involved an error of law or an improper exercise of power as referred to in s.5(1)(e) and (f) of the ADJR Act.

87.    Consequently, the application will be dismissed.

I certify that the preceding eighty-seven (87) paragraphs are a true copy of the reasons for judgment of Judge Cameron

Date: 28 June 2019