Walworth v Merit Protection Commissioner

[2007] FMCA 24

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WALWORTH v MERIT PROTECTION COMMISSIONER & ANOR [2007] FMCA 24

ADMINISTRATIVE LAW – Review under Administrative Decisions (Judicial Review) Act 1977 – determination of breach of Australian Public Service Code of Conduct – apprehended bias in relation to original decision-maker – whether defects cured by review by Merit Protection Commissioner – whether Merit Protection Commissioner obliged to consider defects in decision-making process as well as issue of breach.

Administrative Decisions (Judicial Review) Act 1977 (Cth), ss.5, 8, 10 & 11
Migration Act 1958 (Cth), ss.348, 349 & 415
Telecommunications Act 1975 (Cth)
Public Service Act 1999 (Cth), ss.7, 13, 15, 20, 33 & 35

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Australian Telecommunications Commission v Colpitts (1986) 12 FCR 395
Baker v University of Ballarat [2005] FCA 99
Baker v University of Ballarat (2005) 225 ALR 218
Calvin v Carr [1980] AC 574
Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 24 ALR 307
Colpitts v Australian Telecommunications Commission v (1986) 9 FCR 52
Commonwealth v Human Rights & Equal Opportunity Commission (1998) 76 FCR 513
Htun v Minister for Immigration & Multicultural & Indigenous Affairs (2001) 194 ALR 244
Hyundai Automotive Distributors Australia v Australian Customs Service (1998) 81 FCR 590
Inglis v Bateson (1990) 99 ALR 149
Laws v Australian Broadcasting Tribunal (1991) 170 CLR 70
Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259
Minister for Immigration & Multicultural & Indigenous Affairs v Ahmed (2005) 143 FCR 314
Minister for Immigration & Multicultural Affairs v Jia  (2001) 205 CLR 507
Mostyn v Deputy Commissioner of Taxation (NSW) (1987) 73 ALR 396
Paul v Minister for Immigration & Multicultural Affairs (2001) 113 FCR 396
Phillips v Disciplinary Appeal Committee of the Merit Protection & Review Agency (1994) 48 FCR 57
Pillai v Singapore City Council [1968] 1 WLR 1278
Preston v Carmody (1993) 44 FCR 1
R v Marks (1981) 35 ALR 241
Re Coldham; ex parte Brideson (1991) 70 CLR 267
Re Minister for Immigration & Multicultural Affairs; ex parte Miah (2001) 206 CLR 57
Re Refugee Review Tribunal; Ex parte H (2001) 179 ALR 425
Reid v Australian Telecommunications Commission (1988) 14 ALD 554
Ridge v Baldwin [1965] 4 AC 79
Stollery v Greyhound Racing Control Board (1972) 128 CLR 509
Strange-Muir v Corrective Services Commission (NSW) [1986] 5 NSWLR 234
Turnbull v New South Wales Medical Board [1976] 2 NSWLR 281
Twist v Randwick Municipal Council (1976) 136 CLR 106
Vakauta v Kelly (1989) 167 CLR 568
Yilmaz v Minister for Immigration & Multicultural Affairs (2000) 100 FCR 495
Zubair v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 211 ALR 561

Applicant: BRIAN WALWORTH

First Respondent: MERIT PROTECTION COMMISSIONER

Second Respondent: COMMISSIONER OF TAXATION

File Number: SYG3532 of 2005

Judgment of: Barnes FM

Hearing dates: 26 May & 23 June 2006

Date of Last Submission: 26 June 2006

Delivered at: Sydney

Delivered on: 23 February 2007

REPRESENTATION

Applicant: In person

Counsel for the Respondent: Mr G Kennett

Solicitors for the Respondent: Australian Government Solicitor

ORDERS

1. That the parties jointly file consent orders to give effect to the attached reasons within 21 days of today’s date or, in the absence of agreement, that each party file and serve a draft of the orders sought by that party together with written submissions within 30 days of today’s date.    

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG3532 of 2005

BRIAN WALWORTH

Applicant

And

MERIT PROTECTION COMMISSIONER

First Respondent

COMMISSIONER OF TAXATION

Second Respondent

REASONS FOR JUDGMENT

1. The Applicant, Brian Walworth, is an Australian Public Service employee in the Australian Taxation Office (the ATO).  He commenced proceedings in this Court by application filed on 1 December 2005.  He relies on a second further amended application filed on 26 June 2006 and seeks review under the Administrative Decisions (Judicial Review) Act 1977 (the ADJR Act) of three decisions:

   (1)The determination of a sub-delegate of the Second Respondent (the Commissioner of Taxation) of 10 May 2005 that the Applicant breached the Australian Public Service (the “APS”) Code of Conduct (the “McMaster determination”);

   (2)The decision of the First Respondent (the Merit Protection Commissioner, referred to as “the MPC”) of 11 November 2005 to recommend to the Commissioner of Taxation that the determination dated 10 May 2005 that the Applicant breached the APS Code of Conduct be confirmed (the “MPC decision”);

   (3)The decision of the Second Respondent of 21 November 2005 to accept the MPC’s recommendation that the determination that the Applicant breached the APS Code of Conduct be confirmed (the “Diment decision”).

2. The Applicant raised four grounds of review in relation to the McMaster determination: breach of natural justice, apprehended bias on the basis of predetermination, apprehended bias based on association between the delegate and the sub-delegate and a failure to observe ATO procedures. 

3. Mr Walworth submitted that the errors he complained of in relation to the McMaster decision were not “cured” by the review by the MPC, as a review by the MPC could not cure such procedural defects and the MPC review was itself affected by reviewable error. The grounds relied on in relation to the application to review the MPC decision are: that the MPC made an error of law in failing to consider aspects of the applicant’s claims about breach of natural justice in relation to the McMaster decision; that the MPC asked itself the wrong question and ignored relevant considerations; that the MPC review could not cure procedural defects; and that the MPC did not carry out a review and hence failed to observe relevant procedures under the Public Service Regulations.

4. It was also claimed that the decision of the Commissioner of Taxation (referred to as the ‘Diment’ decision) of 21 November 2005 involved a failure to observe procedures under the Public Service Regulations and did not cure the claimed invalidity of the McMaster decision.

5. On this basis the Applicant sought orders that the McMaster, MPC and Diment decisions be set aside and that various other orders be made in relation to each decision.  He relied on affidavits sworn by him and filed on 1 December 2005 and 10 March 2006. 

6. The First Respondent entered a submitting appearance save as to costs.  The Second Respondent filed a response on 9 February 2006 and relied on an affidavit of Terry De Ste Croix affirmed and filed on 7 February 2006 and an affidavit of Deborah Rebecca Janice Bennett affirmed and filed on 9 May 2006.  Both the Applicant and the Second Respondent filed extensive written submissions. 

7. In the course of these proceedings the Second Respondent conceded that the McMaster determination was vitiated by a reasonable apprehension of bias (so constituting a breach of natural justice within s.5(1)(a) of the ADJR Act), but submitted that, for reasons addressed below, none of the decisions in issue should be set aside. I note that no issue was taken by the Second Respondent as to the application of the ADJR Act or the jurisdiction of this court under that Act (and see ss.5, 8 and 11 of the ADJR Act).

8. Before considering the grounds of review and the implications of the acknowledged defect in relation to the McMaster decision, it is convenient to set out the statutory framework in relation to determination of breaches of APS Code of Conduct by ATO employees and a chronology of relevant events. 

The Statutory Framework

1. Section 13 of the Public Service Act 1999 (Cth) sets out certain rules which (under s.7) constitute the APS Code of Conduct applicable to APS employees. Relevantly, s.13(3) is as follows:

   An APS employee, when acting in the course of APS employment, must treat everyone with respect and courtesy, and without harassment.

   Under ss.7 and 20 of the Public Service Act the Commissioner of Taxation, as the Agency Head of the Australian Taxation Office, has on behalf of the Commonwealth, all the rights, duties and powers of an employer in respect of APS employees in the ATO.

2. Section 15 of the Act is as follows:

   (1) An Agency Head may impose the following sanctions on an APS employee in the Agency who is found (under procedures established under subsection (3)) to have breached the Code of Conduct:

   (a) termination of employment;

   (b) reduction in classification;

   (c) re‑assignment of duties;

   (d) reduction in salary;

   (e) deductions from salary, by way of fine;

   (f) a reprimand.

   (2) The regulations may prescribe limitations on the power of an Agency Head to impose sanctions under subsection (1).

   (3) An Agency Head must establish procedures for determining whether an APS employee in the Agency has breached the Code of Conduct. The procedures:

   (a)  must comply with basic procedural requirements set out in Commissioner’s Directions; and

   (b)  must have due regard to procedural fairness; and

   (c)  may be different for different categories of APS employees.

   (4)  The Commissioner must issue directions in writing for the purposes of subsection (3).

   (5) An Agency Head must take reasonable steps to ensure that every APS employee in the Agency has ready access to the documents that set out the procedures referred to in subsection (3).

3. Thus, under s.15(1) an Agency Head is empowered to impose the listed sanctions upon an APS employee who is found (under the procedures established under s.15(3)) to have breached the Code of Conduct. The Agency procedures must comply with basic procedural requirements set out in the Public Service Commissioner’s Directions made under the Act (s.15(3)(a)), and must have “due regard to procedural fairness” (s.15(3)(b)). 

4. Chapter 5 of the Public Service Commissioner’s Directions 1999 sets out the basic procedural requirements, including, in clause 5.2, that the employee must be informed of the details of the suspected breach of the Code of Conduct and given a reasonable opportunity to make a statement. Clause 5.4 is headed “Person making determination to be independent and unbiased” and provides:

   An Agency Head must take reasonable steps to ensure that the person who determines whether an APS employee has breached the Code of Conduct is, and appears to be, independent and unbiased.

5. The Commissioner of Taxation has established procedures for the purposes of s.15(3) of the Public Service Act. They are contained in a document entitled “Managing Misconduct – ATO Procedures for Determining Breaches of the Code of Conduct” which took effect from 1 January 2001. The ATO Procedures specify (para 1.1) that all determinations of suspected breaches of the APS Code of Conduct by Tax Office employees “must be made in accordance with the procedures”.  Paragraph 1.3 acknowledges that it is “important” that suspected breaches are addressed without undue delay and with a minimum of formality “while ensuring adherence to the principles of procedural fairness”. 

6. Under the heading “Who Can Make Decisions About Misconduct Matters?” the document states first (paras 1.5 to 1.7) that the powers to determine a suspected breach of the Code and to impose a sanction have been delegated to various persons assigned specific duties in the Tax Office and that these persons have the power to sub-delegate their powers (see s.78 of the Public Service Act). The term “Delegate” refers both to a delegate of the Commissioner and a sub-delegate. Paragraph 1.8 then provides:

   Reasonable steps must have been taken to ensure that the Delegate is, and appears to be, independent and unbiased.  A person who has previously provided a report in respect of any of the matters involved in the suspected breach of the Code of Conduct shall not determine whether a breach of the Code of Conduct has occurred.

7. The ATO procedures require written notification to the employee of a suspected breach of a Code of Conduct to include “the details of the suspected breach” and other specified matters (para 1.28).  Paragraph 1.30 provides that the employee who is the subject of a suspected breach must be provided with a “reasonable opportunity” to make a statement, which includes a reasonable period of time to provide the statement and access to the material which will be considered in determining the matter. 

8. Under para. 1.37 a determination of the suspected breach is to be made with as little formality and as quickly as “proper consideration of the matter allows”.  A formal hearing is not required.

9. Paragraph 1.38 provides that where a provision of the Code contains more than one element it is not necessary for the employee to have breached all elements in order for the breach of the Code to be determined.  Under para 1.39 the standard of proof to be applied by the Delegate is the balance of probabilities. 

10. Paragraph 1.41 provides:

    The decision as to whether an employee has breached the Code of Conduct must be based on the application of the principles of procedural fairness, including the proper consideration of all the relevant facts (including the employee’s statement) not, for example, issues such as the employee’s previous misconduct history.

11. “Supporting information” annexed to the ATO Procedures document includes a glossary setting out the APS Code of Conduct and the “APS values” contained in s.10 of the PSA (including, relevantly, the ‘value’ that the APS provides a fair system of review of decisions taken in respect of APS employees (s.10(1)(o) of the Act)).  Under the heading “procedural fairness” it is stated that the application of procedural fairness is governed by three key rules, summarised as the hearing rule, the no bias rule and the evidence rule. 

12. It is also relevant to note that with effect from 28 September 2004 the ATO issued a Corporate Management Practice Statement on Workplace Harassment (PS CM 2004/09(P) as “endorsed corporate policy” to be followed by tax office employees. Among other things, this statement sets out that all employees have the right to have the principles of natural justice applied where appropriate (para 2) and that directors, team leaders and managers are expected to adhere to the principles of natural justice where appropriate (para. 23).  Attachment D to the Practice Statement summarises the principles of natural justice.  This practice statement was included in documents provided by the ATO to the MPC as material that had been relied upon in the determination that Mr Walworth had breached the APS Code of Conduct and was included in the list of material relied on by the MPC in its reasons for recommendation. 

13. Section 35(1) of the Public Service Act provides that an APS employee is entitled to review, in accordance with the Public Service Regulations, of any “APS action that relates to his or her APS employment”. This includes a determination that the employee has breached the APS Code of Conduct. Part 6 of the Act provides for the appointment of a Merit Protection Commissioner (the MPC) with functions including those prescribed by Regulations made for the purposes of s.33 (s.50(1)(d)). Section 33(3) provides that the Regulations may provide for the powers available to the MPC, or any other person or body, when conducting a review under the Regulations.

14. By s.33(5) of the Act, a person or body that has conducted a review under s.33 may make recommendations in a report on the review but does not have any power to make any binding decision as a result of the review, except as provided by the Regulations. Under s.33(6) if the MPC is not satisfied with the response to recommendations contained in a report on a review, after consultation with the Public Service Minister, he or she may report to the Minister for the responsible Agency and to either or both of the Prime Minister and Parliament.

15. Part 5 of the Public Service Regulations 1999 deals with review of APS actions. Regulation 5.1 sets out the “general policy” about review including that Part 5 should provide for a “fair system of review of APS actions” and that employees’ concerns “are intended to be dealt with quickly, impartially, and fairly”. Under Regulation 5.24(2)(a) the MPC is the review body for the purposes of s.33 of the Public Service Act in relation to a determination (described in Regulations 5.22 and 5.23 as a “reviewable action”) that an employee has breached the APS Code of Conduct (and see s.33(4)(b) of the Act). By Regulation 5.23(2)(b) an APS action ceases to be a reviewable action if the affected person applies to have the action reviewed by a Court or Tribunal and the action may be reviewed by that Court or Tribunal.

16. Where an application is made to the MPC under Regulation 5.24(2) the MPC is required (Regulation 5.28) to nominate a person (who may be the MPC) or constitute a committee to conduct the review. 

17. Regulation 5.33 specifies “minimum requirements” for the procedures to be used for a review, including that the procedures “must have due regard to procedural fairness” and that the review must be conducted in private and finished as quickly and with as little formality as a proper consideration of the matter allows.

18. The MPC is required to issue instructions about the procedures to be followed by a person or committee conducting a review. These must not be inconsistent with the Public Service Act, the Regulations or the Commissioner’s Directions. A person conducting the review must comply with the instructions (Regulation 5.34). No formal MPC “instructions” are in evidence before the Court. Evidence in the form of a document entitled “Reviews of breaches of APS Code of Conduct. Five basic questions for reviewers” outlining issues to be addressed by the MPC is considered further below.

19. Where the MPC conducts the review, he or she must “review the action” and make a written recommendation to the Agency Head about the APS action (with reasons) and must tell the employee in writing of the recommendation and reasons given to the Agency Head (Regulation 5.28(3) and cf Regulation 5.28(5)). 

20. The Regulations do not make provision for the MPC to make a binding decision as a result of the review (see s.33(5)). Instead, Regulation 5.32(1) requires the Agency Head to “consider” and “make a decision about the recommendation”.  Under Regulation 5.32(2) the Agency Head may confirm, vary or set aside and substitute a new action for the action that was under review.  This Regulation does not limit the powers the Agency Head otherwise has as an employer.  Regulation 5.32(4) requires the Agency Head to notify the employee and the MPC in writing of the Agency Head’s “decision” and “the reasons for the decision”. 

Chronology

1. On 6 July 2004 Michael Freedman, an officer in the ATO, lodged a formal complaint against the Applicant. Assistant Deputy Commissioner Stephen Howlin, the delegate of the Commissioner of Taxation under s.78 of the Public Service Act with power to determine whether an employee had breached the Code of Conduct, issued a notice of suspected breach dated 17 September 2005. It stated that the Applicant was suspected of breaching the APS Code of Conduct, that the details of the “suspected breaches” were events on five dates between 4 June 2003 and 5 July 2004 and that Mr Howlin had authorised another ATO officer, Desmond McMaster (the sub-delegate) to determine the suspected breaches.

2. Mr Walworth’s unchallenged affidavit evidence, which I accept, is that at a meeting on 17 September 2004 Mr Howlin informed him of the formal complaint and attempted to hand him the notice of suspected breach dated 17 September 2004.  Mr Walworth refused to accept the notice, alleging that it was defective.  The notice was then attached to an email sent to Mr Walworth. 

1. There was an exchange of emails between Mr Walworth and Mr Howlin and also between Mr Walworth and Mr McMaster.  Mr Walworth elaborated on his submission that the notice of suspected breach dated 17 September 2004 was defective.  In particular he took issue with the fact while the notice stated that he was suspected of breaching two provisions in the APS Code of Conduct, it referred to the alleged incidents as “details of suspected breaches” without stating which incident was alleged to breach which part of the APS Code of Conduct.  Mr Walworth also took issue with the lack of identification of witnesses to the alleged incidents and the fact that he had not received a copy of the preliminary report which would have been given to the delegate under ATO Procedures. 

2. On 25 November 2004 the notice of suspected breach dated

   
   

   17 September 2004 was withdrawn by Mr Howlin, who issued a revised notice of suspected breach. That notice stated that Mr Walworth was suspected of breaching that part of the APS Code of Conduct contained in s.13(3) of the Public Service Act. It stated that “The suspected breach relates to a pattern of behaviour identified in the incidents detailed below”.  Five “incidents” between 4 June 2003 and 5 July 2004 were then listed as “particulars of the suspected breach” as follows: 

   Incident 1

   On or about 4 June 2003, you approached Michael Freedman at his work point because of a need to brief [person named] on the status of the [named] case.  You alleged that Michael Freedman had done no work on the case.  You were rude and used a tone of voice that has been described by Michael Freedman as shouting.  You demanded Michael Freedman access his e-mails and show you details of all the correspondence connected with the case – in doing so you kept stating to Michael Freedman that he was “not quick enough” and eventually pushed him away from his laptop and started going through Michael Freedman’s e-mails yourself.  Other ATO employees witnessed these events. 

   Incident 2

   On or about 4 February 2004, in a conversation between you and Michael Freedman to discuss the results of a telephone conversation between Michael Freedman and a client, you refused to listen to him and demanded that Mr Freedman again call the client and demand that he attend the ATO immediately to give reasons why the client had not complied with the ATO deadline.  During this conversation with Michael Freedman your tone towards him was exceptionally aggressive, you were shouting and your behaviour towards him was offensive, demeaning and embarrassing and occurred in front of other ATO employees. 

   Incident 3

   On or about 12 February 2004, in a meeting to discuss a particular case, you referred to the client’s representatives as “shits”.  You also stated that you had been given a sales tax expert to assist with the case but that person had been of no use.  This was a reference to Michael Freedman and was a demeaning comment made in the course of a discussion at which Michael Freedman and other ATO employees were present. 

   Incident 4

   On or about 17 May 2004 in relation to an ongoing issue where Mr Freedman had sought feedback from you in relation to his work performance, you stated to Paul Bowmer words to the effect “that if he (Michael Freedman) wanted feedback then his work was crap and he is too slow”. 

   Incident 5

   On or about 5 July 2004, in an outburst at approximately 8.40am, you directed comments at Michael Freedman during which you referred to Michael Freedman as a “fuckwit”.  This outburst was witnessed by a number of other ATO employees. 

3. It was alleged that in each of the incidents Mr Walworth’s behaviour was such that he failed to treat Mr Freedman “with respect and courtesy and without harassment” and that he therefore breached s.13(3) of the Public Service Act. The notice of suspected breach also stated that Mr Howlin had authorised Desmond McMaster to determine the suspected breach. Mr Walworth was given the opportunity to provide a statement in response.

4. By a delegation dated 25 November 2004 Mr Howlin delegated powers and functions to Mr McMaster as follows:

   As first delegate in accordance with sub-section 78(7) of the Public Service Act 1999, I delegate to you the following powers and functions regarding a suspected breach of the APS Code of Conduct by Brian Walworth … relating to a pattern of behaviour wherein it is alleged that he failed to treat Michael Freedman with respect and courtesy and without harassment between 4 June 2003 and 5 July 2004.

   ● Determine whether the employee breached the APS Code of Conduct.

   These responsibilities must be carried out in accordance with the “ATO Procedures for Determining Suspected Breaches of the APS Code of Conduct” and the relevant legislation.

5. Mr McMaster conducted interviews with a number of witnesses and took written notes of the interviews.  Mr Walworth provided a statement in response to the revised notice of suspected breach by email dated 9 December 2004 addressed to Mr McMaster. 

6. On 17 February 2005 Mr Walworth met with Mr Howlin for the purpose of his mid-year performance review.  It is not in dispute that Mr Howlin gave Mr Walworth a copy of a report of Mr McMaster dated 17 February 2005 determining that Mr Walworth had breached the APS Code of Conduct. 

7. That determination report referred to statements from named witnesses.  Mr Walworth’s unchallenged affidavit evidence is that he told Mr Howlin that he had neither seen these witness statements nor been given any opportunity to comment on them and that this was contrary to Mr Howlin’s email of 21 September 2004 in which he agreed that Mr Walworth should be given access to any additional material or any information used in determining the matter. 

8. Mr Howlin withdrew Mr McMaster’s report dated 17 February 2005.  He later gave a copy of that report to Mr Walworth under cover of a letter dated 21 June 2005 (which described it as a determination which was not “issued” and was not the final report). 

9. Subsequently, copies of witness statements were provided to Mr Walworth.  He provided comments and a written response on 18 March 2005.  In particular, Mr Walworth claimed in his comments that any reconsideration by the sub-delegate (Mr McMaster) would breach the “no bias” rule enshrined in ATO Procedures because, as the sub-delegate had previously reached a decision that there had been a breach of the Code, there would be a perception that in any reconsideration the sub-delegate would be biased towards confirming his original decision.  He referred to the ATO Procedures in relation to bias and the statement in the Practice Statement PS CM 2004/09(P) that decision-makers must act fairly and without actual or perceived bias.  Mr Walworth also suggested that there would be a perception of bias because the sub-delegate had previously reported to the delegate as part of his employment within the ATO.  Further, Mr Walworth claimed that there had been a lack of procedural fairness in the sense referred to in the ATO Procedures consisting of a breach of the ‘no evidence rule’, in that the sub-delegate had allegedly taken into account irrelevant considerations (in particular in seeking evidence from witnesses that was unrelated to the five alleged incidents) and that he had acted on the basis of insufficient evidence. 

10. However by letter dated 10 May 2005 Mr Howlin advised Mr Walworth that Mr McMaster had determined (as set out in a written determination provided to Mr Walworth) that Mr Walworth had committed the breach identified in the notice of suspected breach of the Code of Conduct and that Mr Howlin was of the view that a sanction was warranted.  Mr Walworth was given an opportunity to address the appropriate sanction. 

The McMaster determination

1. The determination as to breach of 10 May 2005 is the first of the decisions challenged by Mr Walworth in these proceedings (the McMaster determination).  In the course of the proceedings in this Court it was conceded for the Second Respondent that this determination was made by Mr McMaster, not by Mr Howlin. 

2. The McMaster determination did not address Mr Walworth’s submissions in relation to a lack of procedural fairness (including on the basis of apprehended bias), although it listed Mr Walworth’s written statements as part of the evidence considered.  The determination addressed “facts not in contention”, “evidence” and “analysis of evidence” in relation to each of the five incidents listed in the notice of suspected breach. 

3. In relation to Incident 1 (an allegation by Mr Freedman that on or about 4 June 2003 Mr Walworth approached him at his work station, went through his emails, shouted at him and pushed him), Mr McMaster found “sufficient evidence to conclude” that Mr Walworth had shouted at Mr Freedman and was rude and demeaning to him, but that no conclusion could be reached as to whether Mr Walworth had pushed Mr Freedman.  The determination noted that Mr Walworth had admitted that he had positioned himself so as to view and print out Mr Freedman’s emails. 

4. As to alleged Incident 2 during a conversation between Mr Walworth and Mr Freedman on or about 4 February 2004, Mr McMaster found “on the balance of probabilities … that Brian Walworth shouted at, or raised his voice to, Michael Freedman and treated him in a demeaning way”.  Mr McMaster also found in relation to Incident 3 that Mr Walworth “made a demeaning comment about Michael Freedman in the presence of other ATO officers” on or about 12 February 2004.  Mr McMaster found, in the face of conflicting evidence from Mr Walworth and Mr Freedman, that the evidence as to alleged Incident 4 on or about 17 May 2004 was such that he “could not arrive at a conclusion confirming or denying the allegation” but that “on the balance of probabilities the incident on or about 5 July 2004 (Incident 5 which was said to involve comments directed at or made about Mr Freedman) had occurred as described by Michael Freedman.”

5. After referring to s.13(3) of the Public Service Act and addressing the meaning of “harassment” (including a reference Mr Walworth’s submission on the concept and PS CM 2004/09), Mr McMaster stated that (excluding the alleged Incident 4, in relation to which there was insufficient evidence):

   On examination of the remaining four incidents and in consideration of the evidence and statements provided to me I find that there is sufficient evidence to establish that Brian Walworth has engaged in a pattern of behaviour where he has failed to demonstrate respect and courtesy to Michael Freedman and that his behaviour constitutes harassment.

6. Mr McMaster concluded that accordingly Mr Walworth had breached the APS Code of Conduct, specifically subsection 13(3) of the Public Service Act.

The MPC review

1. By letter dated 21 June 2005 Mr Walworth requested a review by the MPC of the determination of 10 May 2005 pursuant to Division 5.3 of the Public Service Regulations 1999.  He stated that the review was sought based on a lack of procedural fairness in relation to the sub-delegate’s determination (for reasons including perceived bias, breach of ATO procedures, actual bias and no reasonable evidence).  He made further submissions on 12 July 2005 elaborating on his concerns and alleging a denial of natural justice.  He sought that the determination be set aside and the matter discontinued on the basis that there had been unacceptable delay by the ATO from the time of the formal complaint of 6 July 2004, that the suspected breach (dating back to June 2003) was too old to be validly determined afresh, that the interests of justice required finality and that, for reasons given, there was no reasonable evidence to support the finding of breach. 

2. By letter of 11 November 2005 a delegate of the MPC advised the ATO that the office of the MPC had considered Mr Walworth’s application and recommended that the ATO “confirm the decisions under review”.  The reasons for this recommendation were said to be as set out in a letter to Mr Walworth of 11 November 2005 advising him of the MPC recommendation, which is considered below.  This is the second decision challenged in these proceedings. 

The ATO decision

1. By letter to the MPC of 21 November 2005, David Diment, an Assistant Commissioner of the ATO, noted and accepted the MPC recommendation that the decision be confirmed (the Diment decision).  This is the third decision challenged in these proceedings.  Mr Walworth was advised by email that the MPC recommendation had been accepted and that the “practical effect” of these developments was that the decision of 10 May 2005 “must stand”. 

2. Meanwhile, on 19 July 2005 Mr Howlin had advised Mr Walworth that the sanction to be imposed for his breach of the APS Code of Conduct was to be a reprimand and a deduction from his salary of a fine of $1,739.54 representing the maximum fine of 2% of his then current salary.  The decision in relation to sanction is not the subject of the present proceedings, but the Second Respondent conceded that it cannot stand if the Applicant succeeds. 

3. I also note that in his appraisal for 2004-2005 Mr Walworth was rated as 3 (“fully effective”) and that it was recommended that he receive an increase in base pay plus performance pay of 5% of annual salary.  However an internal Remuneration Committee considered the ratings in the review and “based on the misconduct finding” (which, it appears, is a reference to the determination as to breach of the APS Code of Conduct) found that Mr Walworth’s performance was not fully effective as to the “how” category.  The Committee requested the relevant manager to review and reconsider the performance and base pay rating.  On 28 October 2005 Mr Walworth was informed that his rating for “how” for 2004-2005 had been reassessed from 3 to 2 and hence that he would receive neither an increase in base pay nor any increase in performance pay.    

These proceedings

1. The Applicant commenced proceedings in this Court on 1 December 2005 seeking review of the determination of the ATO (through its sub-delegate Mr McMaster) of 10 May 2005, the MPC recommendation of 11 November 2005 and the ATO confirmation of the McMaster determination of 21 November 2005. 

2. The hearing in the present proceedings commenced on 26 May 2006.  Each of the parties had filed extensive written submissions.  The Second Respondent’s submissions proceeded on the basis that the initial determination of breach had been made by Mr Howlin (not Mr McMaster).  However, after Mr Walworth’s oral submissions, which made it clear that his contention was that the determination as to breach was made by Mr McMaster, the Second Respondent sought an adjournment, which was granted.  The Second Respondent subsequently accepted for the purposes of this case that the determination of 10 May 2005 in respect of which the applicant sought review by the MPC was a determination by Mr McMaster (not by Mr Howlin). 

3. It was conceded for the Second Respondent that the decision of 10 May 2005 was vitiated by a reasonable apprehension of bias on the basis that Mr McMaster’s initial conclusions adverse to the applicant in the withdrawn determination of 17 February 2005 would lead an objective bystander reasonably to apprehend that Mr McMaster had predetermined the question of whether the Applicant had breached the APS Code of Conduct.  (See Laws v Australian Broadcasting Tribunal (1991) 170 CLR 70 at 100 per Gaudron and McHugh JJ and Re Refugee Review Tribunal; Ex parte H (2001) 179 ALR 425 at [27] – [28] per Gleeson CJ, Gaudron and Gummow JJ).

4. It was acknowledged for the Second Respondent that if the matter ended there, the decision of 10 May 2005 would be set aside as sought by the Applicant.  It was also conceded for the Second Respondent that if both the McMaster and MPC decisions were set aside there would be no power in Regulation 5.32 to sustain the Diment decision on behalf of the Commissioner of Taxation.   

5. However it was submitted for the Second Respondent that the McMaster decision had to be viewed in the context of the review by the MPC and that the acknowledged defect in relation to the McMaster decision was ‘cured’ by the proceedings before the MPC.  Counsel for the Second Respondent also contended that it was unnecessary to determine whether there was any other lack of procedural fairness in the McMaster decision (such as was alleged on the basis of a failure to provide particulars, the alleged relationship or association between Mr McMaster and Mr Howlin, Mr Howlin’s input into the 10 May 2005 determination report and on the basis of the principle in Stollery v Greyhound Racing Control Board (1972) 28 CLR 509)) because any breach of the principles of natural justice, whether in the form of apprehended bias, other lack of procedural fairness or a failure to provide particulars as alleged would be cured by the proceedings before the MPC.  Thus it was submitted for the Second Respondent that the McMaster decision should not be set aside. 

6. The Applicant submitted that the MPC review could not and did not cure the lack of procedural fairness in relation to the McMaster determination or any of the other alleged defects and that it was of itself affected by error.  In these circumstances it is convenient to consider first the arguments in relation to the MPC decision. 

Decision of the MPC dated 11 November 2005

1. As indicated, on 21 June 2005 Mr Walworth sought review of the McMaster determination by the MPC on a number of grounds which involved allegations of a lack of procedural fairness and breach of ATO procedures in connection with the McMaster decision. 

2. In that context I note that the sub-delegation to Mr McMaster of 25 November 2004 stated that his responsibilities must be carried out in accordance with the ATO Procedures and the relevant legislation, consistent with s.15(3) of the Public Service Act. Mr McMaster subsequently conducted interviews with ATO employees in relation to the alleged incidents in the notice of suspected breach. His notes of interview indicate that witnesses were also asked if they recalled witnessing any other incidents between Mr Walworth and Mr Freedman.

3. On 17 February 2005 Mr Walworth was informed by Mr Howlin that Mr McMaster had finished his review of the evidence and determined that he had breached the APS Code of Conduct.  After Mr Walworth raised the fact that he had not been given an opportunity to see and respond to the evidence relied on, he was told that the information would be provided for comment and Mr McMaster asked to reconsider his decision. 

4. In his subsequent written comments to Mr McMaster, Mr Walworth made a detailed submission that there would be a perception of bias on the part of Mr McMaster, given that he had previously reached a decision that there had been a breach of the Code.  Mr Walworth referred to the ‘no bias’ rule as incorporated in the ATO Procedures and in Attachment D to PS CM 2004/09.

5. Mr Walworth also submitted at that time that a perception of bias on the part of Mr McMaster tainted all that he had done as a sub-delegate, including gathering evidence and interviewing witnesses.  He referred to para 1.8 of the ATO Procedures and the requirement that reasonable steps be taken “to ensure that the delegate is, and appears to be, independent and unbiased” (albeit in the context of addressing a claim of perceived bias because of the association between Mr Howlin and Mr McMaster).  None of these issues were addressed in the McMaster determination of 10 May 2005. 

6. The documents that had been before Mr McMaster, including Mr Walworth’s submissions, were provided to the MPC (as stated in the affidavit of Terry de Ste Croix affirmed and filed on 7 February 2006).  Mr Walworth also made detailed written submissions to the MPC in which he elaborated on his concerns about the procedures in relation to the McMaster decision and also the decision itself. 

7. On 11 November 2005 a delegate of the MPC wrote to Mr Walworth advising that, for the reasons detailed in the letter, he had recommended to the Second Respondent that the determination of 10 May 2005 that Mr Walworth had breached the APS Code of Conduct be confirmed.  The MPC summarised Mr Walworth’s concerns as follows:

   You requested that the ATO decision be set aside and the matter be discontinued for the following reasons –  the delay by the ATO in handling this matter, the incidents under consideration date back over some two years, the interests of justice require finality and there is no reasonable evidence to support the finding that it was more probable than not that you breached the Code.  You also suggest that there was bias by the decision-maker; defects in the process and that you were not afforded procedural fairness.

1. The MPC referred to the formal complaint by Mr Freedman concerning Mr Walworth’s behaviour towards him in a series of incidents between 4 June 2003 and 5 July 2004.  The letter to Mr Walworth described the McMaster determination as a determination that there was “sufficient evidence to establish that you had engaged in a pattern of behaviour where you failed to demonstrate respect and courtesy to Mr Freedman and that your behaviour constituted harassment.”

2. The MPC listed the material to which regard had been had, including the application for review and submissions from Mr Walworth, documents provided by the ATO, relevant legislation and the APS Commission publications Managing Breaches of the APS Code of Conduct and Maintaining a Harassment-free Workplace.  The MPC then discussed each of the incidents of 4 June 2003, 4 February 2004, 12 February 2004 and 5 July 2004 that the McMaster determination had found had occurred, referring to the evidence gathered by Mr McMaster. 

3. The MPC concluded in relation to Incident 1 of 4 June 2003 that “based on the available evidence it is not unreasonable for the ATO to have concluded that, on the balance of probabilities, you shouted at Mr Freedman.”  In relation to Incident 2 of 4 February 2004 it found that “as with the previous incident there is available evidence, that on the balance of probabilities, you shouted at Mr Freedman.”  In relation to Incident 3 of 12 February 2004 the MPC found:

   Given Mr Bowmer’s clear recollection of the meeting and the comments he attributes to you, which are consistent with the allegation made by Mr Freedman it is not unreasonable to conclude that, on the balance of probabilities, you made a demeaning comment in respect of Mr Freedman.

4. In relation to Incident 5 of 5 July 2004 the MPC concluded:

   While there are no witnesses to the specific incident on this day, Mr Bowmer provided evidence that Mr Freedman was very upset and relayed his concerns about his behaviour and Mr Thomas provided evidence that Mr Freedman had responded to the effect he knew what you said.  In these circumstances it is not unreasonable to conclude, that on the balance of probabilities, the events as described by Mr Freedman occurred.

5. The MPC then addressed a number of issues under the heading “Defects in the process”.  First, under the sub-heading “Alleged Bias” the MPC considered but rejected Mr Walworth’s allegation of bias on the part of Mr McMaster based on the fact that prior to 1 July 2004 he had reported directly to the primary delegate Mr Howlin.  The MPC noted that Mr Walworth’s claims of bias had not been addressed specifically by either Mr McMaster or Mr Howlin although the determination of 10 May 2005 made general reference to “consideration of the evidence and statements provided”.  The MPC was, however, of the view that there was no evidence to support the “claims of bias by Mr Howlin and Mr McMaster.” 

6. Under the sub-heading “Lack of procedural fairness” the MPC referred to the statement in the APS Commission’s booklet on Managing Breaches of the APS Code of Conduct that procedural fairness requires that people be informed of allegations in as much detail as possible and have an opportunity to put their case. It addressed Mr Walworth’s claim that there had been a breach of natural justice and a denial of the opportunity to be heard on the basis that the original and replacement notices of suspected breach did not specify with sufficient particularity the part of s.13 of the Public Service Act he was suspected of having breached. The MPC found that the 25 November 2004 notice of suspected breach informed Mr Walworth that the suspected breach related to s.13(3) of the Act and that he was given “reasonably specific details in regard to the particulars of the four incidents”. 

7. The MPC noted that the original notice of suspected breach had been withdrawn and that Mr Walworth’s subsequent statement had been taken into account in the determination.  It also noted that the ATO had accepted Mr Walworth’s objection to the proposed issuing on

   
   

   17 February 2005 of the first determination and that he had been given the opportunity to respond to the report.  The MPC found that Mr Walworth’s further submission of 18 March 2005 had been taken into account by the delegate who had referred to the content of that statement in his analysis of the evidence.  The MPC then “noted” that “the approach taken by the ATO appears reasonable and without bias”. 

8. The MPC also addressed Mr Walworth’s submission that there had been a breach of section “13(5)(b)” of the Public Service Act, suggesting that this was perhaps intended to be a reference to section 15(3)(b) concerning breaches of the Code of Conduct and the requirement that agency procedures have regard to procedural fairness. In this regard the MPC stated “Noting that the ATO has comprehensive Procedures for Determining Breaches for the Code of Conduct, I advise that, overall, it is our view that these appear to have been followed in your case”.

9. The MPC then addressed Mr Walworth’s claim that there was “no reasonable evidence” to support the findings of the delegate that he breached the Code of Conduct in his treatment of Mr Freedman and stated:

   Having considered the documentation in this matter, and for the reasons provided in this advice it is the view of this office that there was sufficient evidence, in regard to each of the four incidents in question, for the ATO to conclude that on the balance of probabilities you failed to treat Mr Freedman with respect and courtesy, and without harassment.

10. It was also stated generally, without further elaboration, that the evidence did not support Mr Walworth’s claim that he had suffered a breach of natural justice and did not have an opportunity to be heard.  The MPC concluded that the delays in the process and time span of the incidents were not such as to warrant the matter being discontinued and found that, in any event, “any perceived procedural defects have in effect been ‘cured’ by this review”.

11. The MPC letter concluded that for the reasons detailed in the advice, the delegate of the MPC had recommended to the ATO that the “decisions” (sic) under review be confirmed.  The recommendation was made in a letter to a First Assistant Commissioner of the ATO of 11 November 2005.  That letter stated that the office of the MPC had completed its consideration of Mr Walworth’s application and that for the reasons set out in the letter to Mr Walworth the delegate of the MPC recommended that the ATO confirm the decisions under review.

Jurisdiction of the MPC

1. As indicated above, it was conceded by counsel for the Second Respondent that the McMaster decision was vitiated by a reasonable apprehension of bias based on predetermination, but submitted that such breach of the principles of procedural fairness in relation to the McMaster determination did not mean that there was no decision capable of being reviewed by the MPC and that the provision of a proper hearing in the MPC meant that its decision and that of Mr Diment were not vulnerable to attack, because any lack of procedural fairness in relation to the McMaster decision would be cured by the review process.

2. It was first contended for the Second Respondent that the expression “determination” in Regulation 5.24 was not limited to a “valid” determination, consistent with the view that a statutory power conferred on a body such as the MPC to review a decision under a particular enactment must be read as including the power to review a “purported” decision under that enactment.  (See Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 24 ALR 307; Yilmaz v MIMA (2000) 100 FCR 495; MIMIA v Ahmed (2005) 143 FCR 314 at 322 – 323 [33] – [39]). It was pointed out that it has been held that even where a primary decision is flawed because of a failure to meet a basic procedural prerequisite (such as the absence of particulars in a notice to the affected person), such a decision will nonetheless amount to a “decision in fact” that is capable of being affirmed or varied by a review body. (See Zubair v MIMIA (2004) 211 ALR 261). Similarly, it was contended that where a primary decision was affected by a failure to comply with principles of procedural fairness, once the person affected by that decision applied for review, the jurisdiction of the appellate body to conduct a review would be engaged.

3. On this basis it was submitted that even if the McMaster decision was affected by error in any or all of the ways contended for by the Applicant, the MPC would have had jurisdiction under the Public Service Act and Regulations to carry out the review and hence to make a recommendation to the Commissioner of Taxation.

4. The Applicant did not maintain that the MPC lacked jurisdiction to review a purported determination as an issue distinct from the question of whether the review could or did cure any defect in relation to the original determination. Thus for present purposes I accept that, consistent with the authorities cited for the Second Respondent, in the absence of any provision to the contrary in the Public Service Act and Regulations, the MPC power of review extended to review of an “APS action”, including an action that was a determination that was not authorised by law or by the statute (and which, in that sense, could be described as a ‘purported determination’) (see Yilmaz at [33] – [36]). It is not necessary in this context to consider the distinction between a “decision” and a “determination” or “APS action”. As the Privy Council found in Calvin v Carr [1980] AC 574, a review body (in that instance an appeal committee) may have jurisdiction to entertain an appeal or review notwithstanding that the decision appealed from may have been reached in breach of the rules of natural justice and might for certain purposes be void.

5. On this basis the MPC had jurisdiction to entertain the application for review even though the McMaster determination was affected by a denial of natural justice on the ground of apprehended bias.  However the fact that a review body has jurisdiction does not of itself resolve the separate issue of whether the review proceedings in issue could and would cure a defect due to a lack of natural justice or failure to follow applicable procedures in connection with the original proceedings (see Calvin v Carr at 590-591).

6. Nor does the fact that the review body has jurisdiction of itself mean that any review would necessarily be limited to the question of breach. As discussed further below, in addressing this issue the subject matter of a review by the MPC of an ‘APS action’ under the Public Service Act and Regulations may be distinguished from the subject matter of a review by a Tribunal under the Migration Act 1958 (Cth) of a ‘decision’ (and see s.348 of the Migration Act).

Whether the availability of MPC review would cure a defect in relation to the original determination

1. The main ground of review relied on by the Applicant in these proceedings in relation to the MPC decision is that the MPC erred in finding that any procedural defects in the sub-delegate’s determination were “cured” by the review.  It was submitted that the MPC’s conclusion that a breach of the fair hearing rule could be cured by a review by the MPC was a misunderstanding of the MPC’s power, which amounted to a constructive failure to consider and determine the Applicant’s application for review and hence an error of law (Mostyn v Deputy Commissioner of Taxation (NSW) (1987) 73 ALR 396 of 404 per Beaumont J).

2. More generally, the Applicant argued that the MPC review could not cure defects of the kind contended for, including in particular the apprehended bias by predetermination in relation to the McMaster determination, because of the nature of the review (which was not a de novo merits review) and the fact that the power of the MPC was limited to the making of a recommendation to the Commissioner of Taxation as head of the agency (the ATO) which made the initial determination of breach and also because the review carried out was itself affected by reviewable error.  It was submitted that even if an MPC review (or the combination of the MPC review and the Diment decision) was capable of curing a defect in the original decision, if the MPC review that was carried out was affected by error in any of the ways contended for it would not cure the admitted defect in the primary determination.     

3. The Applicant referred to the statement in Calvin v Carr at 593 that the issue was whether at the end of the day there had been “a fair result reached by fair methods”.  In that case the Privy Council was considering, relevantly, whether defects in a steward’s enquiry into the running of a horse race would be cured by the decision of the Committee of the Australian Jockey Club to which there had been an appeal.  At first instance it had been held that, although the stewards might have failed to observe the rules of natural justice in certain specified respects, the proceedings before the Committee constituted a hearing de novo and cured any defects in the stewards’ enquiry.  It was not disputed that the proceedings before the Committee were correctly and fairly conducted. 

4. On appeal, the Privy Council held first that notwithstanding any alleged failure of natural justice in the stewards’ enquiry, the Committee had jurisdiction to entertain the plaintiff’s appeal from the stewards’ decision to disqualify him.  It then held that in the particular circumstances of the case any lack of natural justice by the stewards at the enquiry stage was irrelevant and there was no basis on which a court could interfere. 

5. However, as the Applicant contended, it is important to have regard to what was said by their Lordships in relation to the issue of whether review proceedings could cure a defect due to a lack of natural justice in original proceedings.

6. The judgment of their Lordships was delivered by Lord Wilberforce who stated (at 592):

   … their Lordships recognise and indeed assert that no clear and absolute rule can be laid down on the question whether defects in natural justice appearing at an original hearing, whether administrative or quasi-judicial, can be ‘cured’ through appeal proceedings.  The situations in which this issue arises are too diverse, and the rules by which they are governed so various, that this must be so.

7. Nonetheless their Lordships went on to suggest that there were a number of “typical situations” as to which some general principle could be stated as follows:

   First there are cases where the rules provide for a rehearing by the original body or some fuller or enlarged form of it.  This situation may be found in relation to social clubs.  It is not difficult in such cases to reach the conclusion that the first hearing is superseded by the second, or, putting it in contractual terms, the parties are taken to have agreed to accept the decision of the hearing body, whether original or adjourned.

   … at the other extreme are cases, after examination of the whole hearing structure, in the context of the particular activity to which it relates (trade union membership, planning, employment, etcetera) the conclusion is reached that a complainant has the right to nothing less than a fair hearing both at the original and at the appeal stage.

8. It was also suggested (at 592) that there were intermediate cases in relation to which it was:

   … for the Court, in the light of the agreements made, and in addition having regard to the course of proceedings, to decide whether, at the end of the day, there has been a fair result, reached by fair methods, such that the parties should fairly be taken to have accepted when they joined the association.  Naturally there may be instances when the defect is so flagrant, the consequences so severe, that the most perfect of appeals or rehearings will not be sufficient to produce a just result.  Many rules (including those now in question) anticipate that such a situation may arise by giving power to remit for a new hearing.  There may also be cases when the appeal process is itself less than perfect:  it may be vitiated by the same defect as the original proceedings:  or short of that there may be doubts whether the appeal body embarked on its task without predisposition or whether it had the means to make a fair and full enquiry, for example where it has no material but a transcript of what was before the original body.  In such cases it would no doubt be right to quash the original decision.  These are all matters (and no doubt there are others) which the Court must consider.  Whether these intermediate cases are to be regarded as exceptions from a general rule, as stated by Megarry J [at first instance] or as a parallel category covered by a rule of equal status, it is not in their Lordships judgment necessary to state, or indeed a matter of great importance.  What is important is the recognition that such cases exist, and that it is undesirable in many cases of domestic disputes, particularly in which an enquiry and appeal process has been established, to introduce too great a measure of formal judicialisation.  While flagrant cases of injustice, including corruption or bias, must always be firmly dealt with by the courts, the tendency in their Lordships’ opinion in matters of domestic disputes should be to leave these to be settled by the aggrieved methods without requiring the formalities of judicial processes to be introduced.

9. The Applicant suggested that in the particular circumstances of this case, the review by the MPC fell within the “intermediate” category in Calvin v Carr (although as Burchett J observed in Australian Telecommunication Commission v Colpitts (1986) 9 FCR 52 at 66 employment cases were expressly mentioned as “possibly demanding a fair hearing at both stages”).  On this basis it was submitted that it was relevant in considering whether the availability of the review could cure any procedural defect to have regard to the course of proceedings, the flagrancy of the procedural defect and (given that the appeal process had been undertaken) whether the applicant had had a fair deal of the kind for which he had bargained.  It was contended that in light of these factors there could not be said to have been “a fair result reached by fair methods” in this instance.  It was pointed out that while Calvin v Carr took into account the voluntary consensual nature of club membership in determining whether the particular appeal would cure a defect consisting of a failure of natural justice in the context in which it had occurred, in Preston v Carmody (1993) 44 FCR 1 Wilcox J had suggested (at 15) that nothing turned on the particular context of Calvin v Carr and observed that the Privy Council had made no distinction between decisions pursuant to contractual jurisdiction and those stemming from a statute. 

10. It was contended by the Applicant that Australian court decisions which have applied Calvin v Carr have held that for a review to cure a procedural defect the review must be either a rehearing or a rehearing de novo (see Baker v University of Ballarat (2005) 225 ALR 218) and that the body undertaking the rehearing must be authorised itself to dispose finally of the matter (see Twist v Randwick Municipal Council (1976) 136 CLR 106; Colpitts v Australian Telecommunications Commission v (1986) 9 FCR 52; Australian Telecommunications Commission v Colpitts (1986) 12 FCR 395; Reid v Australian Telecommunications Commission (1988) 14 ALD 554; Inglis v Bateson (1990) 99 ALR 149 and Preston v Carmody (1993) 44 FCR 1) and that the MPC review was not such as to satisfy these requirements.

11. It was acknowledged that in Baker v University of Ballarat it was held by Ryan J that a lack of procedural fairness may be cured not only by a rehearing de novo but also by a rehearing within the fifth category of appeals identified in Turnbull v NSW Medical Board [1976] 2 NSWLR 281 (see Ryan J in Baker v University of Ballarat at [52]), but contended that for a review to cure a procedural defect it must be undertaken by a body authorised itself to finally dispose of the matter. The Applicant referred to the fact that in Calvin v Carr the wide powers as to disposition of an appeal conferred on the AJC Committee by the Rules of Racing (which extended to permit the Committee to make such order as in its opinion ought to have been made by the stewards or as may be necessary to ensure the determination of the merits of the real question in issue) had been taken into account (at 595).  Similarly, in Twist Mason J had regard to the comprehensive nature of appeal to a District Court against a local court demolition order. 

1. Reliance was placed on the statement by Burchett J at first instance in Colpitts to the effect that even if the regulations in issue (which provided for a right of review by a Tribunal) were valid, the review could not cure a breach of natural justice by the primary decision-maker given the insufficiency of the remedy open to the applicant in circumstances where the Tribunal merely had the power to make a recommendation back to the original decision-maker.  Although the order made by Burchett J was varied by the Full Court of the Federal Court (see Australian Telecommunications Commission v Colpitts (1986) 12 FCR 395), the appeal related only to the question of the validity of the regulations and Burchett J’s reasoning was approved in Reid v Australian Telecommunications Commission (1988) 14 ALD 554. Further, it was pointed out that the reasoning in both Colpitts and Reid was referred to with approval in Inglis v Bateson (1990) 99 ALR 149 and that in Reid and also in Preston v Carmody Wilcox J had stated that a right of appeal to an appellate body that had a mere power of recommendation would not “cure” a breach of natural justice. 

2. The Applicant contended that the review by the MPC was not comparable to review by the bodies in Calvin v Carr and Twist and that the existence of a right to such a review could not “cure” a defect such as a lack of procedural fairness in relation to the original determination, as the MPC was not authorised itself to finally dispose of the matter (s.33(5) of the Public Service Act and Regulation 5.28(5)).

3. It was also contended that in the present case the process was less than perfect in the sense considered in Calvin v Carr at 592. It was contended that the MPC had misunderstood the burden of proof and had been under the misapprehension that a review by the MPC could cure any procedural defect. Moreover it was submitted that the MPC fell into error and that the procedures adopted by the MPC resulted in a failure to carry out a “review” such as to cure the defects associated with the McMaster determination.

4. In response to the initial application the Second Respondent had contended that the MPC review could cure any alleged procedural defect in the decision of the delegate on the basis that there had been a fair result reached by fair methods as described by the Privy Council in Calvin v Carr.  The submission in relation to curing any procedural defect in the primary decision, in particular lack of procedural fairness, was maintained despite the concession for the Second Respondent that the initial decision was made by Mr McMaster (not Mr Howlin) and was vitiated by a reasonable apprehension of bias. 

5. It was pointed out for the Second Respondent that in Calvin v Carr their Lordships considered (at 594) that in a disciplinary context justice could be held to be done if after all the proceedings had been gone through the person had had a fair hearing and put his case. Similarly, in Twist v Randwick Municipal Council, Mason J stated at 116:

   The existence of an appeal does not demonstrate in itself that the inferior Tribunal is at liberty to deny a hearing.  But if the right of appeal is exercised in the appellate authority acts fairly and does not depart from natural justice the appeal may then be said to have cured a defect in natural justice or fairness which occurred at first instance.

6. It was acknowledged that such reasoning depended on the review process being one that could re-open all issues of fact and overturn the primary decision, but contended that these criteria were satisfied by the review process in the present case. It was submitted that the MPC’s power to review the relevant action (Regulation 5.28) was not limited by the original decision-maker’s findings of fact or the material before the original decision-maker and that the recommendation of the MPC to the Agency Head gave rise to an enforceable duty to consider the recommendation (which was subject also to Ministerial and Parliamentary scrutiny) which may be to vary or set aside the original decision (see s.33(6) of the PSA).

7. In this context it was submitted for the Second Respondent that it mattered not that the power to overturn the primary decision did not rest with the MPC him or herself (cf Baker v University of Ballarat at [4] and [23] – [24]). In written submissions it was contended that the MPC review process required a de novo reconsideration of the primary decision based on the MPC’s findings and recommendation and that assessment of the legal effect of such reconsideration must proceed on the basis that it was carried out conscientiously in accordance with law (although it was subsequently clarified that it was accepted that the MPC review was not a de novo merits review.)   

8. It was also contended that by making his application to the MPC the Applicant had elected to treat the McMaster decision as valid and re-argue his case on the merits (cf Preston v Carmody (1993) 44 FCR 1 at 16 and 18) so that the outcome of the case must depend on whether the MPC dealt properly with the case.

9. Despite the concession that the original determination was affected by apprehended bias and the fact that it was also conceded that the MPC was wrong in its conclusion (if it did so conclude) that the McMaster decision was not affected by apprehended bias, it was submitted for the Second Respondent that this did not provide a basis on which the MPC decision should be set aside, as it said was not to be necessary to the MPC’s jurisdiction or to the proper disposition of any issue before it that it should reach a legally correct conclusion as to whether the process before the original decision-maker had miscarried in some way.  The Second Respondent submitted that there was no error in the MPC approach and that it carried out a review and dealt properly with the case. 

10. In oral submissions counsel for the Second Respondent elaborated on the issue of whether it was significant that the MPC did not itself have power to make a binding decision of its own and that the outcome of the review was a recommendation to the Agency Head and then an obligation on the Agency Head under the regulations to consider the recommendation.

11. In relation to the decision of the Full Court of the Federal Court in Baker v University of Ballarat it was acknowledged first that Finkelstein J (in dissent) was in no doubt that the appeal committee in Baker had itself fallen into error and said nothing about the effects of his conclusion on the primary decision, although it was conceded that his Honour’s approach may have been that the review decision could not cure anything if it was invalid itself.

12. It was also accepted for the Second Respondent that the decision of Marshall J was, for different reasons, in the same category, as his Honour reached the view (at [75] – [80]) that the question did not arise and so did not express a concluded view about whether the appeal process in Baker was one which could cure a defect in relation to the primary decision-making process.

13. Ryan J did deal with this issue in Baker.  His Honour commenced by outlining the provisions that governed the review process under the University’s certified enterprise agreement, in particular the requirement that the appeal committee was to prepare a written report to the Vice Chancellor, make a recommendation to dismiss or uphold the appeal or determine that a probationary period be extended, that the Vice Chancellor was empowered to approve or not approve the recommendation of the appeal committee and that his or her decision was final.  It was noted that these provisions did not provide, at least expressly, that the Vice Chancellor was under an obligation to consider the appeal committee’s report, although there had apparently been no argument in relation to whether or not there was a discretion in the Vice Chancellor.  It was also noted that both the original decision-maker and the Vice Chancellor were officers of the University which was the employer and the respondent in the proceedings and was the body which had terminated Mr Baker’s employment, the decision being made on its behalf first by his supervisor and secondly on review by the Vice Chancellor. 

14. On the assumption that the University was bound to accord Mr Baker a measure of procedural fairness in relation to the primary decision, Ryan J concluded at [23] that this obligation “became academic” on Mr Baker exercising his right to appeal to the appeal committee, on the basis that any want of procedural fairness could be cured by an appeal to a body “which does accord procedural fairness and exercises the power according to its own view of the merits, not being bound by the decision of the first repository of the power” (Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 593 per Brennan J). His Honour cited Twist and Calvin v Carr and concluded at [24] that the power conferred on the appeal committee by the relevant provisions “was one to confirm or set aside Mr Baker’s probationary appointment according to the appeal committee’s own view of the merits.  It was to conduct a rehearing and was not bound by the supervisor’s recommendation or decision that the appointment be terminated.” 

15. The Second Respondent submitted that in this case, as in Baker, the power of the review body was sufficient, both in terms of the issues it could look at and the remedy it could provide, to cure a defect in the primary decision consisting of a denial of natural justice (at least provided the review committee conducted its own processes properly as Ryan J found had occurred in Baker). 

16. It was also suggested that at first instance in Baker v University of Ballarat [2005] FCA 99 (at [19]) Sundberg J had taken substantially the same view as Ryan J. His Honour indicated that had he been of the view that the applicant was entitled to a hearing before the initial decision was made, he would nonetheless have concluded that the appeal to the committee “cured” that defect consistent with the principle that a “properly conducted internal appeal may cure a lack of procedural fairness at first instance”.  On this basis it was submitted that two judges of the Federal Court who addressed the issue had found that a review in the nature of a rehearing could cure a breach of natural justice in relation to a primary decision. 

17. It was further submitted for the Second Respondent that the approach in Baker indicated that “curing” could occur even if the review process was only recommendatory.  There was said to be no statement to the contrary in either Calvin v Carr and Twist.  It was contended that insofar as decisions suggested to the contrary, they did so by inference from the authorities of Calvin v Carr and Twist, rather than from anything directly said in these cases.  Thus it was submitted that while Mason J in Twist emphasised the comprehensiveness of the appeal, this did not say anything one way or the other about whether it was essential that the appeal be final.  Rather it addressed the concern that no issues should be foreclosed in the appeal.  It was, however, acknowledged for the Second Respondent that in Twist the appeal in issue was an appeal to the District Court so that no question of a right of appeal to a body with limited powers of recommendation arose.  It was also acknowledged that in Calvin v Carr the review body had the power to impose its own decision.

18. Counsel for the Second Respondent also submitted that the authorities relied on by the Applicant could be distinguished.  It was pointed out that in Colpitts Burchett J had held that the review procedure provided by the regulations in question did not meet the requirements of the relevant Act.  Hence everything else said on the issue of “curing” was obiter dictum.  However, as was acknowledged for the Respondent, his Honour went on to consider that issue on the basis that he may be wrong in relation to the preliminary point and the Full Court in Colpitts was only asked to revisit his Honour’s conclusion on the issue of whether the regulations were valid and did not address the other issues considered by Burchett J. 

19. Counsel for the Second Respondent submitted that when Burchett J addressed what he described as the “insufficiency of the remedy open to the applicant” he was referring, presumably, to the fact that the review tribunal could not substitute its own decision, and that his Honour found this to be a very inadequate substitute for a full hearing so that there was a “less than perfect appeal process”.  However it was suggested that in Calvin v Carr the Privy Council had referred to a “less than perfect” process in the sense of a process that involved errors. 

20. It was also contended for the Second Respondent that the regulations under consideration in Colpitts were rather more “wishy washy” than those under consideration in the present case, as the MPC was obliged to review the decision and must make a recommendation about it and then the Agency Head must consider the recommendation.  In contrast the review tribunal in Colpitts was empowered (and not required) to recommend to the Commission if it thought that any action should receive further consideration and to advise the Commission of action which, in its opinion, should be taken in order to do justice.  It was suggested that this form of words provided at least the possibility of something less than a clear recommendation to the effect that all the issues had been considered and that it was thought the decision was not wrong or that it was correct.  Hence it was suggested that the present case was not on all fours with the facts in Colpitts, although acknowledged that the express reasoning of Burchett J would seem to be to the contrary to the views put for the Second Respondent.

21. While it was conceded that the decision in Reid was “probably” against the Second Respondent, it was submitted that it could also be distinguished on the facts because the review process considered there was rather less like an appeal than the review process in issue in this instance.  Moreover it was pointed out that the MPC had the weapon of parliamentary reporting to ensure that the decision made about his or her recommendation was a proper decision or had received proper attention. 

22. Counsel for the Second Respondent contended that if the court did not accept the distinction suggested, then one would have to look at the reasons Wilcox J gave in Reid why a review by a body with a mere power of recommendation was not enough.  In that context it was pointed out that Wilcox J had suggested that if the matter had to go back to the same body that made the primary decision it might be rejected for reasons affected by the initial defect.  It was submitted that, with respect to his Honour, it was difficult to see why that should be so, if the defect in the original decision was a lack of procedural fairness because, ex hypothesi, there would have been, by that time, a full hearing.  It was also pointed out that the matter would not be going back to the person who had already reached a concluded view.  In those circumstances it was submitted that it was hard to see why the process was not “fair” in the sense considered in Calvin v Carr if the organisation that made the first decision was required by statute to revisit it in the light of a full hearing of all the issues and a recommendation flowing from that hearing.  It was suggested that this was consistent with what was said in Calvin v Carr at 592 referring to a situation where the rules provided for rehearing by the original body or some fuller or enlarged form of it. While it was acknowledged that Wilberforce LJ was referring (at least mainly) to contractual situations, it was suggested that it was contemplated that a rehearing by the original decision-making body could overcome flaws in what had been done.

23. Reference was also made to Ridge v Baldwin [1965] 4 AC 79 in which, as Mason J pointed out in Twist, Lord Reid had observed that if a body under a duty to hear a person failed to hear him it may rectify a breach of natural justice by giving him a full and fair hearing de novo.  While it was accepted that this observation related to a different situation to that in issue in this instance, it was contended that it added weight to the argument that the identity of the ultimate decision-maker was not critical to the issue of whether the applicant at the end of the day had received a fair hearing. 

24. In relation to Inglis v Bateson it was pointed out that the matter was before the court in that case by virtue of a notice of motion seeking dismissal of proceedings pursuant to s.10 of the ADJR Act on the basis that there was adequate provision made by another law under which the applicant was entitled to seek a review by a court, tribunal or person. It was in that context that Neaves J found that the available appeal was not at large, but was confined to a stated ground and decided not to exercise the power to dismiss the proceedings under s.10(3)(b)(ii) of the ADJR Act.

25. While it was stated in Inglis v Bateson  that the decisions in Colpitts and Reid did not assist those seeking the dismissal, it was suggested for the Second Respondent that Inglis v Bateson was dealing with quite a different point.  This was said to be made clear by the reasoning of Wilcox J in Preston v Carmody indicating that what had been said in Inglis v Bateson was confined to the issue under s.10 of the ADJR Act. In particular Wilcox J at [18] in Preston v Carmody stated that if it was being suggested in Inglis v Bateson that the appeal in issue was not an effective appeal on the merits he would disagree. It was also noted that Wilcox J was prepared to find (at [14] – [15]) that the appeal in issue in Preston v Carmody (which was under the same provision as dealt with in Inglis), was curative in the sense that it would overcome a lack of procedural fairness in the primary decision. 

26. In conclusion, counsel for the Second Respondent conceded that while there were two admittedly “forceful” statements in Colpitts and in Reid which supported the contentions of the applicant, such cases should be distinguished and the reasoning of two judges (Sundberg J at first instance and Ryan J on appeal) in Baker should be followed. 

27. In reply the Applicant submitted that the circumstances of this case were more analogous to Colpitts than to Preston because the MPC had a mere power of recommendation and pointed out that in Preston at [17] Wilcox J had referred to the fact that in Colpitts and in Reid it had been held that the doctrine of “curing” did not apply to an appeal to a body that had no power to make a binding decision but merely made a recommendation to the original decision-maker. 

28. The Applicant also submitted that Baker did not support the proposition that a hearing by an appeal committee with a mere power of recommendation could cure any procedural defect in the manner contended for by the Second Respondent, because the majority of the Federal Court in Baker (Ryan and Marshall JJ) did not have to determine that issue, because no earlier breach of natural justice was established.  (See Ryan J at [50] and Marshall J at [71] – [74]).  It was pointed out that Ryan J did not consider the implications of the appeal committee’s mere power of recommendation, except to state (at [27]) that its powers were essentially the same as the power of the initial decision-maker and that that indicated that the appeal committee “was intended to exercise for itself, and without limitation, the powers reposed in the primary supervisor”.  Further, it was said that Mr Baker had not raised the issue of the appeal committee’s mere power of recommendation, instead submitting that the appeal was not a full appeal as it was conducted under an academic probation procedure which gave staff the right to appeal against termination of probation only on the ground that a miscarriage of process and/or a denial of justice had occurred (see Baker at [5]).  It was submitted that as Ryan J had held that there had not been any breach of natural justice, whether or not the fact of an appeal to the appeal committee of itself “cured” any procedural defect was not essential to his judgment.  (Also see Marshall J at [80] pointing out that strictly speaking the ground concerning the nature of the hearing did not arise). 

1. In contrast, if the MPC’s role was limited to a consideration of breach (but not by de novo merits review) the possibility of a lack of procedural fairness consisting of actual or apprehended bias on the part of the original decision-maker would not be addressed at all in the review process, even if such lack of procedural fairness meant that there had been a failure to comply with an agency procedure such as para 1.8 of the ATO Procedures so that the whole process could be seen as infected by the defect affecting the original determination. 

2. In all the circumstances, on the material before the Court, including the provisions in the Public Service Act and Regulations as to the constitution and powers of the MPC, I am of the view that the MPC’s obligation on review of an “APS action”, in particular a determination as to whether an APS employee breached the APS Code of Conduct, is not confined to a consideration of the question of whether or not the employee breached the Code of Conduct, but extends to a consideration of the procedures in force in the relevant agency and whether there was compliance with such procedures. As indicated, this is consistent with the fact that the MPC cannot itself “redress” any such non-compliance by a full merits review, but can make a recommendation to the Head of the Agency that made the original decision to take action which would address such a defect in the original process.

3. Indeed, it is apparent from the document “Five Basic Questions” and from the MPC letter of 11 November 2005 that the MPC proceeded on the basis that on review the MPC should consider not only breaches of the APS Code of Conduct but also whether there were any defects in the process.  It was appropriate and necessary for the MPC to proceed in this way. 

The MPC consideration of defects in the process

1. The next issue is whether in addressing defects in the process in relation to the McMaster determination the MPC was required and failed to consider the issue of whether there was a particular defect in the process consisting of non-compliance with ATO Procedures in relation to the (now acknowledged) apprehended bias on the part of Mr McMaster based on pre-determination. 

2. It is the case that, as pointed out by counsel for the Second Respondent, the Applicant did not express any of the grounds for review in these proceedings as a claim that the MPC did not accord him a proper hearing.  However, while the fairness of the “hearing” accorded by the MPC is not in issue as such, the Applicant did raise the issue of whether the MPC  erred in failing to consider (or if it did consider it, erred in the manner in which it did so) the issue of apprehended bias by pre-determination on the part of the sub-delegate. 

3. It is relevant to consider the extent to which issues about the process, ATO Procedures and the particular question of apprehended bias were before the MPC.  In his application to the MPC of 21 June 2005, Mr Walworth sought review on the grounds that in making the determination the sub-delegate breached the principles of procedural fairness and ATO Procedures in a number of ways, including perceived bias based on the fact of the sub-delegate’s previous determination (as well as perceived bias based on association).  He also claimed that there was actual bias on the part of the sub-delegate, that the decision was not based on reasonable evidence and that there was a breach of para 1.8 of the ATO Procedures, which requires that reasonable steps be taken to ensure that the delegate is and appears to be unbiased.  Each of these submissions to the MPC was elaborated on in some detail.  The Applicant’s submission to the MPC also referred to the requirement of procedural fairness in the ATO Procedures, the glossary description of the ‘no bias’ rule as a rule governing the application of procedural fairness and the reference in Attachment D to PS CM 2004/09 to the requirement that decision-makers must act fairly and without actual or perceived bias. 

4. In his letter to the MPC of 12 July 2005 Mr Walworth reiterated his earlier submission that the McMaster determination involved perceived bias based on pre-determination and the fact that the sub-delegate had previously reported to the delegate and hence that the determination breached the principles of procedural fairness and para 1.8 of ATO Procedures which requires reasonable steps be taken to ensure that the delegate is, and appears to be, unbiased. 

5. In support of the submission to the MPC as to perceived bias based on pre-determination, Mr Walworth drew the MPC’s attention to the differences between the 17 February 2005 and 10 May 2005 reports (submitting that almost all of the changes were adverse to him), claimed that none of his submissions of 18 March 2005 had been accepted by Mr McMaster and, in particular, drew the MPCs attention to the fact that his submissions as to perceived bias and that a named witness’ evidence should be given no weight had not been referred to in the 10 May 2005 determination.  He also took issue with Mr McMaster’s response to his submission that the evidence of persons alleged by Mr Freedman to have witnessed Incidents 1 and 5 in fact contradicted Mr Freedman’s allegation, in that the determination was said to have treated such evidence as “inconclusive” or of “no weight”. 

6. The submission to the MPC also elaborated on Mr Walworth’s concerns about inadequacies in the particulars of the alleged breach in the notice of suspected breach.  Specific reference was made to para 1.39 of the ATO Procedures.  Mr Walworth made clear claims to the MPC about (in particular) perceived bias based on pre-determination and, in this context, a lack of procedural fairness and also a breach of para 1.8 of the ATO Procedures in relation to the McMaster determination.  Moreover, the MPC also had before it Mr Walworth’s letter of 18 March 2005 in which he had raised apprehended bias and other issues with the sub-delegate and delegate after the first determination had been withdrawn. 

7. I am satisfied that the material and submissions before the MPC raised not only the issue of apprehended bias as such but also the question of whether the circumstances were such that there had been a failure to comply with the ATO Procedures. 

8. In my opinion the MPC was required to review the “action” constituted by the “determination” and, in so doing to consider not only the issue of breach of the APS Code of Conduct but also whether there had been compliance with ATO Procedures in relation to the primary determination.  In the particular circumstances of this case, it was necessary for the MPC to address the issue of whether there had been a failure to accord procedural fairness contrary to the ATO Procedures arising from the claim of apprehended bias based on pre-determination and whether there had been a breach of any specific ATO Procedures (such as para 1.8). 

9. The MPC letter of 11 November 2005 (which set out the reasons for the MPC decision to recommend that the McMaster determination be confirmed) should be read fairly and as a whole and with an eye not too finely attuned to error (see MIEA v Wu Shan Liang (1996) 185 CLR 259). However, while the MPC reasons for recommendation listed Mr Walworth’s application for review and additional papers as material to which consideration was given, for the following reasons I am nonetheless satisfied that the MPC did not address the Applicant’s contention that the McMaster decision was affected by apprehended bias based on predetermination or the question of whether there had been any failure to comply with ATO Procedures arising out of those circumstances.

10. First, while the MPC addressed the issue of “defects in the process”, it did not refer expressly to Mr Walworth’s claims about the issue of apprehended bias based on pre-determination or, indeed, to that issue.  In considering defects and the particular issue of “alleged bias”, the MPC expressly considered only the allegation of bias on the part of Mr McMaster because of association with Mr Howlin.  It referred to bias and not apprehended or perceived bias in that context.  However the allegation of bias based on association was quite distinct from the allegation of apprehended bias based on pre-determination and raised quite different issues, both of procedural fairness and under ATO Procedures.  There was no mention by the MPC under the heading of “alleged bias” of bias or apprehended bias based on pre-determination, of factors relevant to such an issue or of relevant ATO Procedures.  Read in that context, the conclusion that “This office is of the view that there is no evidence to support your claims of bias by Mr Howlin and Mr McMaster” is clearly confined to the issues arising out of the former relationship between Mr Howlin and Mr McMaster. 

11. Nor was the issue of apprehended bias based on pre-determination addressed under the heading “lack of procedural fairness”, although the MPC did consider the Applicant’s claim that there was a breach of natural justice and denial of the opportunity to be heard because the original and the replacement notices of suspected breach allegedly failed to specify with sufficient particularity the part of s.13 of the Public Service Act said to have been breached. The MPC also addressed the Applicant’s contention that he did not have an opportunity to respond to the evidence. It was in that context that the MPC concluded that the “approach” taken by the ATO “appeared reasonable and without bias”.  Again this conclusion was clearly confined to the matters referred to by the MPC.  Further, such conclusion dealt only with reasonableness and actual bias, but not the distinct notion of apprehended bias (see MIMA v Jia (2001) 205 CLR 507).

12. In any event, even if the MPC conclusion that the ATO’s approach was “without bias” is seen as a general conclusion (not limited to the issues discussed and extending to apprehended bias), as Mr Walworth contended, such finding did not address the issue of the relevance of the withdrawn determination of 17 February 2005, para 1.8 of the ATO Procedures and the continued involvement of Mr McMaster as primary decision-maker. 

13. The MPC’s generally expressed conclusion that the evidence “also does not support” the Applicant’s claim that he suffered a breach of natural justice and did not have the opportunity to be heard must also be seen in light of the actual discussion by the MPC of defects in the process.  It that context it cannot be taken to include a consideration of the claim in relation to apprehended bias based on pre-determination. 

14. Moreover, while the MPC concluded that overall the ATO procedures for determining breaches of the Code of Conduct “appear” to have been followed in the Applicant’s case, again this must be seen in the context of what the MPC understood the concerns to be.  Had the MPC addressed the issue of apprehended bias based on pre-determination (in addition to the natural justice hearing rule) then, as contended for by the Applicant, one of the issues to which it should have had regard was whether the circumstances which were said to constitute apprehended bias also constituted a breach of specific ATO Procedures to be applied in determining breaches of the Code of Conduct. 

15. As indicated above, Mr Walworth made it clear in his submission to the MPC that he sought review of the McMaster determination not only on the ground that the determination involved a breach of the principles of procedural fairness but also on the ground that there had been a failure to comply with ATO Procedures.  The nexus between the claim of perceived bias based on pre-determination and ATO Procedure para 1.8 was made clear to the MPC in Mr Walworth’s submission of 12 July 2005.  If the MPC had considered whether the ATO had complied with its own procedures in relation to the circumstances giving rise to the apprehended bias based on pre-determination claim, one would have expected some reference, not simply to the generally worded requirements of procedural fairness in paragraphs 1.3 and 1.41 of the ATO Procedures (which states that the decision as to breach “must be based on the application of the principles of procedural fairness), but also to paragraph 1.8 of the ATO Procedures.

16. In the alternative, if the MPC erroneously treated the Applicant’s submission in relation to apprehended bias based on predetermination as a submission that the “hearing rule” (as opposed to the “no bias” rule) had been breached and hence rejected that submission on the basis that he had been given the opportunity to be heard, this would indicate a misunderstanding of the claims made by the Applicant.  Had the MPC understood and considered the Applicant’s submission (which was in fact expressed quite clearly) this would have raised rather different issues to those raised by the contention that the hearing rule had been breached. 

17. The MPC did not address the issue of whether the fact that Mr McMaster prepared the withdrawn determination as well as the determination of 10 May 2005 involved a failure to comply with ATO Procedures.  If it did so it misunderstood the applicant’s claims in that respect and failed to deal with all of the “integers” of Mr Walworth’s claims.  (See Htun v MIMA (2001) 194 ALR 244 and Paul v MIMA (2001) 113 FCR 396 in relation to a failure to have regard to relevant considerations). Hence the MPC fell into error. This can be seen as an error of law (in that the MPC was obliged to consider the issue of compliance with ATO Procedures) or a failure to carry out the review in accordance with its obligations under the Public Service Act and Regulations. (See s.5 of the ADJR Act).

18. Hence the Applicant did not have the impact of this issue addressed at any stage of the review process. Even if a review by the MPC could cure a defect in the original determination if such review was carried out properly and without error, in this case the MPC failed to carry out the review as provided for under the Public Service Act and Regulations. Whether such failure is analysed as an error of law, or a failure to have regard to relevant considerations or a failure to carry out the review, the result is that the MPC decision should be set aside. The review could not cure the conceded procedural defect of apprehended bias based on pre-determination in the McMaster decision in circumstances where the review was itself affected by error. It cannot be said that at the end of the day there has been a fair result reached by fair methods (see Calvin v Carr (1980) AC 574 at 593).

19. Moreover as indicated above, if I am wrong about the extent of the MPC’s obligation on review and it was not obliged to consider defects in the process (as the Second Respondent submitted), then even if its review of the issue of breach of the Code of Conduct was not affected by reviewable error, the nature of the review would not be such as to enable a lack of procedural fairness or failure to comply with procedures on the part of the original decision-maker to be addressed on review.  In particular, if the MPC’s role on review was limited to considering the issue of breach, such a review would not address and, not being de novo and such as to finally determine the matter, would not cure a defect consisting of a denial of natural justice by reason of a perception of bias in the original decision-maker. 

20. On this basis, even if (as submitted by the Second Respondent) no error was established in the conduct of the review by the MPC, I would be satisfied that the nature of the review and the MPC’s limited powers would be such that the review could not be said to have cured any of the defects in relation to the original decision contended for by the Applicant. 

Materiality

1. The Second Respondent submitted that even if the MPC fell into error, such error was not material and would not lead to a grant of relief by the Court.  However, in all the circumstances of this case it cannot be said that the MPC’s failure to address (or to understand the claim about) the issue of apprehended bias based on pre-determination was not material or that the nature of the review was such as to mean that relief should be withheld in relation to the MPC decision.  Given the scope of the MPC’s obligations in carrying out a review, the error that it made cannot be said not to have been material to its decision to recommend to the ATO Agency Head that the decision of the ATO sub-delegate be confirmed. 

2. The ATO Procedures acknowledge that decision-making processes which breach natural justice principles may not withstand requests for review of actions.  The fact that the MPC did not consider (or if it did so, misunderstood) the claim about apprehended bias based on pre-determination and non-compliance with ATO Procedures meant that it did not take into account the impact of what is (now) an acknowledged lack of procedural fairness in the process in making its recommendation to the ATO.  Had it done so this may have involved consideration not only of whether there should be a recommendation that there be a fresh determination by a different decision-maker but also of whether any issues arose from the fact that the evidence from witnesses was obtained in interviews conducted by Mr McMaster in light of para 1.8 and the general requirement of procedural fairness in the ATO Procedures.  In these circumstances the decision may have been different (Hyundai v Australian Customs Service (1998) 81 FCR 590 at 599 – 560) as it cannot be said that the MPC would have made its findings and recommendations in the terms in which they were made (Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 353 per Mason CJ) particularly as the MPC has a broadly expressed power to make a recommendation “about the action” (Regulation 5.28(3)(b)) and is not limited to making a recommendation that a decision or determination be set aside, varied or confirmed. Thus it can address defects in process in its recommendation to the Agency Head. On this basis, the error “could have affected the outcome of the case” (see Commonwealth v HREOC (1998) 76 FCR 513 at 519 per Burchett J and authorities cited therein).

Other grounds of review

1. My conclusion that the MPC review could not and did not cure the acknowledged defect in relation to the McMaster determination and that it was itself affected by error means that it is not necessary to determine whether any of the other aspects of the grounds of review relied on by the Applicant in relation to the MPC decision are made out. 

2. The second further amended application also raised several grounds in relation to the McMaster decision in addition to the ground of apprehended bias based on pre-determination. In particular the Applicant claimed that there was a breach of natural justice on the basis that he was not given proper particulars of the specific acts or omissions relied on and as to which part of s.13(3) of the Public Service Act was in issue in each instance; that there was apprehended bias based on association based on the former workplace relationship between Mr McMaster and Mr Howlin and Mr Howlin’s alleged input into the determination report, the principles in Phillips v Disciplinary Committee of the Merit Protection & Review Agency (1994) 48 FCR 57 and Stollery v Greyhound Racing Control Board (1972) 128 ALR 509. It was also claimed that there was a failure to observe ATO Procedures in relation to the McMaster decision, in particular para 1.8 of the ATO Procedures, on the basis that Mr McMaster was not and did not appear to be independent and unbiased in relation to the determination of 10 May 2005 because of the involvement of Mr Howlin. The grounds relating to a failure to comply with procedures raised in the further amended application are alternative means of describing issues which, if established, would constitute a denial of procedural fairness.

3. In light of the Second Respondent’s concession that there was a breach of the principles of natural justice in relation to the McMaster determination constituted by apprehended bias based on pre-determination and my conclusions in relation to whether MPC review could or did cure defects in relation to the McMaster determination it is not necessary to determine whether the other grounds in relation to the McMaster determination are made out.  The alternative grounds do not provide a basis for any additional orders on review.  Nor do they alter my conclusions in relation to whether the MPC review “cured” defects in the original decision-making process. 

Conclusion

1. In these circumstances both the McMaster determination and the MPC decision should be set aside because the review could not and did not cure the acknowledged defect consisting of a lack of procedural fairness because of apprehended bias based on pre-determination in relation to the McMaster determination and on the basis that the MPC erred in its review of the McMaster determination.  

2. In written submissions counsel for the Second Respondent conceded that if the McMaster decision was set aside for want of procedural fairness it would not be open to the Commissioner of Taxation as Agency Head to confirm that decision in the exercise of his general powers of employer (as that would be a new determination).  It was also conceded that if both the McMaster decision and the MPC decision were set aside there would be no recommendation for the purposes of Regulation 5.32 and no power to sustain the Diment decision.  Thus it is not necessary to consider whether the Diment decision was otherwise affected by error.  It should also be set aside.

3. On this basis it would appear to be conceded for the Second Respondent that the appropriate relief would be (at least) orders setting aside the decisions in issue.  However, the Applicant seeks not only orders declaring invalid and quashing or setting aside the determinations of the sub-delegate, MPC and ATO, but also orders directing the First Respondent to refrain from further enquiring into or determining whether the Applicant breached the APS Code of Conduct. There is also an issue in relation to the sanction imposed on the Applicant. 

4. The parties indicated that should the Applicant succeed they wished to be heard further on the issue of the appropriate relief.  In these circumstances the parties should be given an opportunity to consider and to propose draft orders to give effect to these reasons and, in the absence of agreement, an opportunity to make submissions as to the orders to be made. 

I certify that the preceding two hundred and thirty-nine (239) paragraphs are a true copy of the reasons for judgment of Barnes FM

Associate: 

Date:  23 February 2007