Woodman v State of Victoria & Anor
[2024] VSC 124
•20 March 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2023 02105
| JOHN WOODMAN | Plaintiff |
| v | |
| STATE OF VICTORIA | First Defendant |
| and | |
| INDEPENDENT BROAD-BASED ANTI-CORRUPTION COMMISSION | Second Defendant |
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JUDGE: | Forbes J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 30 January 2024 |
DATE OF JUDGMENT: | 20 March 2024 |
CASE MAY BE CITED AS: | Woodman v State of Victoria & Anor |
MEDIUM NEUTRAL CITATION: | [2024] VSC 124 |
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ADMINISTRATIVE LAW – Judicial review and appeals – Decision by statutory investigative body to conduct examination of witness in public - Application for leave to file notice of discontinuance in respect of decisionmaker – Application for summary dismissal.
NEGLIGENCE – Whether power to conduct examination in public during an investigation gives rise to either common law or statutory duty of care to person examined – Novel duty of care when duty is owed by statutory authority – Damages sought for reputational damage and pure economic loss – Sullivan v Moody (2001) 207 CLR 562 – Electricity Networks Corporation v Herridge Parties (2022) 406 ALR 1 – AIX20 v Director-General of Security [2023] FCA 1344 – Independent Broad-based Anti-corruption Commission Act 2011 (Vic) s 117.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | G Nash KC | Gleeson & Co Lawyers |
| For the First Defendant | L Brown SC | VGSO |
| For the Second Defendant | P Hanks KC and J Maxwell | IBAC |
HER HONOUR:
Introduction
This proceeding arises out of a decision by the Independent Broad-based Anti-corruption Commission (IBAC) in October 2019 to conduct an examination of Mr John Woodman in public. Mr Woodman alleges this decision led to unreasonable damage to his reputation, safety and wellbeing. He challenges the decision, invoking the supervisory jurisdiction of this Court on the basis that the decision was made with a lack of procedural fairness to him and in breach of s 117(1)(c) of the Independent Broad-based Anti-corruption Commission Act 2011 (Vic) (the IBAC Act). The parties described this ground as the ‘public law’ claim and I will do the same. Mr Woodman also alleges that IBAC’s decision was made in breach of a common law duty of care owed to him which entitles him to damages for reputational damage and economic loss. In oral submissions Mr Woodman identified an alternative basis for an entitlement to damages, that arising from a breach of a statutory duty contained in s 117(1)(c) of the IBAC Act.[1] I will refer to this as the ‘damages’ claim.
[1]Transcript of Proceedings, Woodman v State of Vicotria & Anor (Supreme Court of Victoria, S ECI 2023 02105, Justice Forbes, 30 January 2024), 62.8 (‘T’).
IBAC and the State of Victoria (the State) seek summary dismissal of Mr Woodman’s claims against them.
Background
In November 2017, IBAC authorised a preliminary inquiry into alleged corrupt conduct by councillors of the City of Casey in planning and development matters. The inquiry was called Operation Sandon.[2] The scope of that investigation was expanded to include conduct of the plaintiff and others. In October 2019, as part of its investigation, IBAC determined that it would conduct an examination of Mr Woodman. Pursuant to s 117 of the IBAC Act, the IBAC Commissioner determined that the examination would be conducted in public and issued Mr Woodman with a witness summons on or around 17 October 2019.
[2]Second Defendant, ‘Affidavit of Amelia Jane Macknay’ affirmed 22 May 2023 in Woodman v State of Victoria & Anor S ECI 2023 02105 [4].
The public examination of Mr Woodman was conducted over six days in November 2019 and the examination was reported in the media.
Following the public hearing, IBAC prepared a draft report intended to be transmitted to Parliament.[3] In accordance with s 162 of the IBAC Act, the draft report was provided to Mr Woodman for comment.[4]
[3]Independent Broad-based Anti-corruption Commission Act 2011 (Vic) s 162 (‘IBAC Act’).
[4]Amended Defence of Second Defendant dated 22 August 2023 in Woodman v State of Victoria & Anor S ECI 2023 02105 [42](a)–(b).
On provision of the draft report Mr Woodman commenced a proceeding in this Court pursuant to r 56 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (the Rules) seeking relief against IBAC. Ginnane J delivered reasons on 10 November 2022[5] upholding the claim in part, ruling that a limited number of additional documents should be disclosed to Mr Woodman for his response.
[5]Woodman v Independent Broad-Based Anti-Corruption Commission (IBAC) [2022] VSC 684.
Following receipt of the additional documents Mr Woodman provided a response to the draft report on 20 January 2023.
On 18 May 2023, in circumstances of some urgency because of Mr Woodman’s belief that IBAC’s report to Parliament was to be transmitted in the immediate future, this proceeding was commenced. Initially Mr Woodman sought an urgent interim injunction restraining the transmission of the Operation Sandon report to Parliament. Interlocutory relief was refused, with Moore J providing reasons on 1 June 2023.[6]
[6]Woodman v State of Victoria [2023] VSC 285.
In October 2023, Mr Woodman purported to file a Notice of Discontinuance against IBAC, reflecting an intention to abandon the public law claim and confine this proceeding to the damages claim.
Issues to be determined
Three issues were argued before me on 30 January 2024:
(a) whether the plaintiff should have leave to file a notice of discontinuance against IBAC;
(b) whether the claims against the first and second defendants should be summarily dismissed; and
(c) in the alternative, if not summarily dismissed, whether the pleadings as they currently stand should be struck out.
In the course of oral argument, particularly in light of the submissions on behalf of Mr Woodman, the dispute was significantly narrowed and its focus shifted. The public law claim was explicitly abandoned.[7] The plaintiff accepted that the tabling of the report of the investigation in Parliament now made any injunctive relief futile. The plaintiff had named IBAC as a party primarily for the purpose of the public law claim and Mr Woodman either required consent of the parties or leave of the Court to discontinue against IBAC.[8] Consent of the parties was not forthcoming. The argument also proceeded with Mr Woodman accepting the present pleadings were deficient regarding the damages claim.
[7]T 60.1–2; 60.10–19.
[8]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 25.02 (‘Rules’).
The State is a party to the damages claim by reason of s 193 of the IBAC Act which provides:
(1) The IBAC or an IBAC Officer is not personally liable for anything necessarily or reasonably done or omitted to be done in good faith –
(a) in the performance of a duty or a function or the exercise of a power under this Act or the regulations made under this Act; or
(b) in the reasonable belief that the act or omission was in the performance of a duty or function or the exercise of a power under this Act or the regulations made under this Act.
(2) Any liability resulting from an act or omission that would, but for subsection (1), attach to the IBAC or an IBAC Officer attaches instead to the State.
For the purpose of the application and in support of its summons filed 21 August 2023, IBAC relied on two affidavits. The first affidavit was affirmed by A J Macknay on 21 August 2023 and the second was affirmed by H I Myers on 20 September 2023. In support of its opposition to the filing of a notice of discontinuance, IBAC relied on an additional affidavit affirmed by A J Macknay on 27 October 2023. Neither the State nor Mr Woodman relied on any affidavit material in support of the submissions that they made.
The present pleading
Although the plaintiff concedes deficiency in the present pleading, it is necessary to have regard to those aspects of it identified as being relevant to the damages claim.
The statutory duty to be relied on is contained in s 117 of the IBAC Act. That provision sets out the source of IBAC’s power to conduct a public investigation.[9] At the time of IBAC’s decision to examine Mr Woodman it provided:[10]
[9]Taken from Plaintiff’s Statement of Claim dated 18 May 2023 in Woodman v State of Victoria & Anor S ECI 2023 02105 [9].
[10]IBAC Act s 117 (version as at October 2019).
(1) Subject to subsection (2), an examination is not open to the public unless the IBAC considers on reasonable grounds –
(a) there are exceptional circumstances; and
(b) it is in the public interest to hold a public examination; and
(c) a public examination can be held without causing unreasonable damage to a person’s reputation, safety or wellbeing.
…
(4) For the purposes of subsection 1(b), the factors the IBAC may take into account in determining whether or not it is in the public interest to hold a public examination include, but are not limited to –
(a) whether the corrupt conduct or the police personnel conduct being investigated is related to an individual and was an isolated incident or systemic in nature;
(b) the benefit of exposing to the public, and making it aware of, corrupt conduct or police personnel misconduct;
(c) in the case of police personnel conduct investigations, the seriousness of the matter being investigated.
(5) Not less than 7 days before a public examination is held, the IBAC must–
(a) inform the Victorian Inspectorate that the IBAC intends to hold the public examination; and
(b) provide a written report to the Victorian Inspectorate giving the reasons the IBAC decided to hold a public examination in accordance with subsection (1).
In the statement of claim filed on 18 May 2023, duty and breach are pleaded simply and compendiously:
23.Further, in the premises, the IBAC has acted negligently in breach of its common law duties to the plaintiff.
Particulars of IBAC’s negligent acts and breach of its common law duties
Particulars of IBAC acting negligently and in breach of its common law duties will be provided prior to trial.
The preceding matters in the statement of claim include:
The steps that IBAC failed to take
10.The IBAC did not, prior to determining to hold the examinations in public:
(a)invite the plaintiff to make submissions as to whether holding the examinations in public would, or might, cause unreasonable damage to his reputation, safety or wellbeing;
(b)disclose and has not disclosed, to the plaintiff nor given the plaintiff notice of, the materials upon which it was considering holding the examinations in public or examining the plaintiff in public;
(c)give the plaintiff any opportunity to be heard or to make submissions as to whether the IBAC should hold the examinations in public or should examine the plaintiff in public.
The pleading also sets out a number of extracts from the transcript of the public examination including opening remarks of Counsel Assisting and what is described as a ‘caution’ by the Commissioner of IBAC to Mr Woodman.[11] These extracts are relevant to a plea that the Commissioner knew and appreciated the restrictions on his power to hold a public examination of witnesses imposed by s 117 of the IBAC Act.
[11]Statement of Claim [12]–[19].
The knowledge of IBAC that holding an examination in public was likely to, or might, cause unreasonable damage to the plaintiff’s reputation, safety or wellbeing, is particularised as:
24. …
Particulars
(a) the IBAC knew that Operation Sandon concerned possible corruption on the part of a number of Casey Municipal Council councillors,
(b) the IBAC considered that the plaintiff was heavily involved in that possible corruption, and –
(c) the holding of the examination of the plaintiff in public was likely to result in the public regarding the plaintiff as a person who was involved in the corruption of public officials, and was likely thereby to tarnish his reputation.
(d) the public examination was likely to result in serious economic harm and damage to the plaintiff, and to the corporate bodies with which he was associated.
Under the heading ‘Breach of s 117(1)(c) of the IBAC Act’, the plaintiff pleads:
30.Section 117(1) of the IBAC Act was enacted for the protection of witnesses appearing before the IBAC.
At paragraph [31] the plaintiff then pleads, because of the extracted comments of the Commissioner and Counsel Assisting, and the conduct of the public examination, that:[12]
(a)The IBAC knew or ought to have known that a public examination of the plaintiff could not be held without causing unreasonable damage to the plaintiff’s reputation, safety or wellbeing;
(b)it was not open to the IBAC to consider, on reasonable grounds, that a public examination of the plaintiff could be held without causing unreasonable damage to the plaintiff’s reputation, safety or wellbeing;
(c)the IBAC ought not have decided to hold the examination of the plaintiff in public;
(d)alternatively to (c), IBAC ought not have continued to hold the examination of the plaintiff in public after Counsel Assisting had made his opening address;
[12]Statement of Claim [12]–[19].
The potential for damage is pleaded immediately prior to the plea of acting negligently:
Damage to plaintiff’s reputation, safety and well-being
22. In the plaintiff’s case:
(a)it is self-evident from what the Commissioner knew of the evidence which counsel assisting would lead (as may be inferred from his caution to Mr Woodman) and from the opening remarks of counsel assisting, that unreasonable damage to the plaintiff’s reputation, safety and well-being was almost certain to result from conducting the examination in public; and –
(b)such unreasonable damage could have been avoided if the IBAC had not conducted the examinations in public.
The effect of the public examination, and the consequential media reporting of that examination, are identified as producing damage to reputation and economic loss.
In oral submissions the plaintiff limited any claim for damages in the proposed pleading, if permitted, to the period of time between the public examination in November 2019 and the transmission to Parliament of the report into Operation Sandon in May 2023.
IBAC’s defence pleads that when it served the summons on 23 October 2019 it notified Mr Woodman that IBAC was satisfied on the matters prescribed by s 117 and that his examination would be held in public. It provided standard directions for a public examination that would apply subject to any submissions seeking variation. Further on 8 November 2019 Mr Woodman was notified of proposed directions regarding questioning during the public examination and invited to make submissions. On 12 November 2019 IBAC was notified that Mr Woodman did not object to the proposed directions.
Both defences deny the existence of a duty of care and object to the pleading as it properly identified neither the duty nor the breach.
Legal principles
The principles for summary judgment under s 63 of the Civil Procedure Act2010 (Vic) (the Civil Procedure Act) and r 22.16 of the Rules were not in dispute. A court may give summary judgment in respect of a claim in a civil proceeding if it is satisfied that the claim has ‘no real prospect of success’.[13] It is a test applied by reference to its own language – whether a respondent has a ‘real’ as opposed to ‘fanciful’ chance of success.[14] This is a more liberal test that the ‘hopeless’ or ‘bound to fail’ test applied under the court rules.[15] The power to dispose of an action summarily is to be exercised with caution only where it is clear that there is no real question to be tried as it deprives a party of an opportunity to pursue a claim or defence.[16]
[13]Civil Procedure Act 2010 (Vic) s 63(1).
[14]Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27, 40 [35].
[15]Ibid 39 [29].
[16]Ibid 42 [42] (Neave JA).
In determining whether the claim has a real prospect of success the court takes the pleaded case as capable of proof at trial.
The alternative remedy sought by IBAC is to strike out the pleading in its entirety or in respect of particular paragraphs pursuant to r 23.02 of the Rules. In a strike out application the court considers the sufficiency and clarity of the pleading in fulfilling its function of setting out the material facts relied on to both establish the cause of action and define the issues for determination so that the parties know the case they have to meet.[17]
[17]Wheelahan v City of Casey (No 12) [2013] VSC 316; 5 Boroughs NY Pty Ltd v Victoria [2021] VSC 785.
As the proceeding has been commenced by writ, r 25.02(2) of the Rules provides that the plaintiff wishing to discontinue after the close of pleadings requires either the consent of all other parties or leave of the Court.[18] Leave will generally be granted where no utility remains in a proceeding or where it would compel a plaintiff to continue litigating against their will. However, leave permits the terms of discontinuance to be addressed, in particular issues of costs, but also to ensure that no advantage is lost nor disadvantage imposed. Where, as here, discontinuance is against one of two defendants but the proceeding continues against the remaining defendant, the court considers whether discontinuance would work an injustice on the remaining defendant.
[18]Rules r 25.02(2)(a) or (b).
Submissions
The plaintiff
Notice of Discontinuance
The plaintiff submits that there is no utility in maintaining IBAC as a party now that the public law claim is not pressed. He says that IBAC is no longer a necessary party because damages are not recoverable against it. Under the Civil Procedure Act, the plaintiff took steps to identify and confine the proceeding to the necessary parties to that remaining claim. The plaintiff submits that the language of s 193 of the IBAC Act is silent about IBAC being a party to a proceeding. The plaintiff submits that were IBAC to remain as a party, their continued involvement would be non-essential to the dispute. The plaintiff concedes that if the Court formed the view that IBAC was a necessary party it would not be appropriate to grant leave to discontinue.
Public law claim
As outlined above, in oral submissions the plaintiff abandoned the public law claim.
Damages claim
The written submissions relied on by the plaintiff at the hearing were those dated 6 December 2023 and titled ‘Replacement Submissions of the Plaintiff’.[19] As to the negligence claim the submissions contained two points: first that at no time did IBAC determine, define or know the precise meaning of ‘unreasonable damage’ in s 117(1), and second to reach a decision that a public examination would not cause unreasonable damage without first determining what constitutes unreasonable damage is on its face negligent.
[19]T 67.16–18.
The plaintiff submits while the duty is novel it is an arguable claim that ought be considered fully at trial. This argument was supported by reference to AIX20 v Director-General of Security (‘AIX20’).[20]
[20][2023] FCA 1344, [38].
In summary the plaintiff’s submissions as to the damages claim contend:
(a) section 117(1)(c) of the IBAC Act was enacted for the benefit of witnesses who might be subject to a decision to examine them in public, and therefore Mr Woodman is a member of an identifiable class of persons to whom a statutory duty is owed;[21]
[21]T 64.27.
(b) the duty, either at common law or pursuant to s 117(1)(c), required IBAC to determine what constitutes unreasonable damage;[22]
(c) compliance with s 117(1)(c) is not inconsistent with the other obligations imposed upon the IBAC in the way it conducts examinations, because s 117 is specifically designed for the protection of witnesses.[23] With reference to AIX20 Mr Woodman argued a requirement to act in the public interest does not preclude a duty of care being owed to the individual who is affected by the exercise of power under an Act.[24]
(d) The power to conduct public examinations conferred by s 117 is a discretionary power. Relevantly the third criteria requires IBAC to have knowledge of the personal, social and business circumstances of the examinee in order to form the opinion as to whether those activities would suffer unreasonable damage of the kind contemplated by the legislation. In other words, how can one form a satisfaction on reasonable grounds unless the likely effects on an individual are known?[25]
[22]Plaintiff, ‘Replacement Submissions‘, Submissions in Woodman v State of Victoria & Anor S ECI 2023 02105, 6 December 2023, [34].
[23]T 64.26–30.
[24]T 65.30–66.19.
[25]T 70.10–12.
The plaintiff submits the exercise of power conferred by s 117 to hold a public hearing was conditional upon IBAC reaching the opinion that each of the criteria in s 117(1) were satisfied. He relies on a number of cases where a decision maker is granted a discretionary power or is required to form an opinion. Those cases dealt with public law remedies against decision-makers whose decisions are not made as required by law.[26] The plaintiff contends that these observations, in a public law context, are consistent with a duty arising from s 117 to make proper inquiries before IBAC could reach the conclusion that no unreasonable damage would be caused.[27] He submitted that the duty imposed by s 117(1)(c) was to make proper inquiries as to the affairs of the person you are intending to examine in order to reach the conclusion that no unreasonable damage would be caused by holding that examination in public.[28]
[26]R v Connell; Ex parte Hetton Bellbird Collieries Ltd (1944) 69 CLR 407; Mann v Medical Practitioner’s Board of Victoria (2004) 21 VAR 429.
[27]T 68.29-69.8.
[28]T 69.1–8.
IBAC
Notice of discontinuance
IBAC’s position, supported by the submissions of the State, is that it is a necessary party to the damages claim. It submits that the duty alleged is owed by IBAC and the decision said to breach that duty is one made by IBAC. The fact that damages are recoverable from the State, in both IBAC and the State’s submission, does not lead to the conclusion that IBAC is not a necessary party. The submission emphasises the independent nature of IBAC, which does not represent the Crown,[29] and is an independent office of the Parliament and a body corporate not subject to ministerial oversight or control.
Public law claim
[29]IBAC Act s 13(1).
IBAC’s written submissions in support of summary judgment dealt comprehensively with both the public law claims and the damages claim. Given the public law claims are not pursued it is not necessary to do more than briefly record the defendants’ submissions.
IBAC submits that the public law claim has no real prospect of success because a challenge to IBAC’s decision to examine Mr Woodman in public is precluded by an Anshun estoppel. IBAC submits any challenge could and should have formed part of the earlier judicial review proceeding heard by Ginnane J. That earlier proceeding alleged a lack of procedural fairness that focused on the last step in the process, being the transmission of the report to Parliament and the opportunity for Mr Woodman to address adverse comment and opinion in that report. Procedural unfairness or unlawfulness in the anterior steps of the investigation – including the decision to examine Mr Woodman in public – were capable of being raised in that proceeding and were not. The existence of an Anshun estoppel was admitted in Mr Woodman’s reply.[30]
[30]Plaintiff’s Reply to Second Defendant’s Defence dated 7 August 2023 in Woodman v State of Victoria & Anor S ECI 2023 02105, [13].
Secondly, IBAC submits that the declaratory relief would almost certainly be refused on discretionary grounds given the lengthy and unexplained delay between the decision in 2019 and the commencement of this proceeding on 18 May 2023.
Damages claim
As to the damages claim IBAC submits that the common law duty of care owed to Mr Woodman as pleaded does not exist. It submits that a claim for damages similarly based upon statutory duty sourced in s 117 of the IBAC Act would have no real prospect of success.
IBAC submits that the duty of care alleged, whether at common law or based in statute, is novel. It highlights that neither the features of the relationship giving rise to the purported duty, nor the content of the duty, are articulated in the present pleading. It says the proper formulation of a duty of care is critical.
IBAC submits that the duty should not be found to exist for three reasons:
(a) it would be inconsistent with the terms, scope and purpose of the IBAC Act and IBAC’s statutory functions and powers;
(b) it would be inconsistent with the established principles of the law of defamation which determine liability for communications about another party to a third person; and
(c) insofar as the claim seeks damages for pure economic loss, damages for such loss are not recoverable unless it can be shown that the vulnerability of the plaintiff and his inability to protect himself from the economic consequences arise from a lack of reasonable care on IBAC’s behalf. IBAC submits such a vulnerability cannot be demonstrated in this case.[31]
[31]Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515, 529-31 (‘Woolcock Street Investments’).
IBAC points to the objects of the IBAC Act,[32] and the function of IBAC,[33] including to identify, investigate and expose corrupt conduct, to prioritise systemic or serious corrupt conduct, as well as to facilitate the education of the public sector and the community about the effects of corrupt conduct and submits that all are inconsistent with the duty alleged. Examinations are one of the investigative powers given for these purposes. The IBAC Act provides a discretionary power to conduct a public hearing in furthering these statutory objects. IBAC submits that the exposure of corrupt conduct will by its nature create a foreseeable risk of harm to reputation and economic interests of a person under investigation with respect to such conduct. That is not an insignificant risk, and imposing a duty of care would oblige IBAC to take the precautions that a reasonable person in its position would take to protect from that risk.[34]
[32]IBAC Act s 8.
[33]IBAC Act s 15.
[34]Wrongs Act 1958 (Vic) s 48(1).
In determining whether a duty of care is imposed arising in a novel context, an analysis is needed of the relationship between the parties and identification of the ‘salient features’ of that relationship that make it appropriate to impose a duty of care on one to avoid harm to the other. IBAC submits that the salient features of the relationship do not make it appropriate to impose a duty of care.
Second, IBAC submits that the imposition of a duty of care would lead to inconsistency with the law of defamation. It highlights the observation in Sullivan v Moody that such a development in the law of tort would permit recovery of damages ‘for publishing statements to the discredit of a person where the law of defamation would not’.[35] In particular, s 27 of the Defamation Act 2005 (Vic) provides a defence of absolute privilege in relation to any matter published in the course of proceedings before an Australian Tribunal, the definition of which would include IBAC.
[35]Sullivan v Moody (2001) 207 CLR 562, 580-1 [54] (‘Sullivan’).
Third, IBAC submits that finding a duty in this case would extend a liability for pure economic loss to a new and novel context. IBAC submits that courts are cautious about such expansion. Two features of relationships giving rise to such an extension are the knowledge of damage of a kind inherently likely to produce economic loss and the vulnerability or inability of the plaintiff to protect oneself from a want of reasonable care.
Finally IBAC highlights a proceeding against the Independent Commission Against Corruption (ICAC) in NSW – a statutory body with a similar function and purpose – where a claim based upon a duty of care owed in the manner in which ICAC conducted its investigations was summarily dismissed.[36]
[36]Lazarus v Independent Commission Against Corruption [2018] NSWSC 997 (‘Lazarus’).
It follows, in IBAC’s submission, that the plaintiff has no real prospect of establishing a common law duty of care nor could the statute be construed as intending to provide a remedy in damages for non-compliance with s 117(1), and therefore the plaintiff’s claim ought be summarily dismissed.
The State
Notice of discontinuance
The State highlights the onerous task were it to assume responsibility for defending the proceeding on behalf of IBAC, in circumstances where it has only a contingent liability but no responsibility for any conduct. IBAC is a wholly independent actor. The State submits that IBAC, in defending its conduct and the exercise of its discretion, is and remains a necessary party to any damages claim notwithstanding the abandonment of the public law claims against it.
Damages claim
The State adopted the submissions of IBAC in support of summary dismissal generally. It made four points.
(a) First, if a duty of care exists it is found in the statutory framework. If such a duty exists, it must operate alongside the other rights, duties and liabilities created by statute.
(b) Second, the statutory purpose of IBAC is inconsistent or incompatible with a duty to protect reputational or financial interests of those being investigated.
(c) Third, the power to conduct a public examination was given to IBAC, cognisant of its potential to have an adverse impact upon a witness. IBAC is given the function of balancing the competing interests in s 117(1)(a), (b) and (c) without the imposition of a duty of care to the witness which would distort that role.
(d) Fourth, a duty of care would create an incoherence in the law, distorting administrative law principles in addition to the incoherence with defamation law and the principles of liability for pure economic loss.
Consideration
Notice of Discontinuance
Given the independent status of IBAC, I accept the submission of both defendants that IBAC is a necessary party to the damages claim. The duty alleged is owed by IBAC and whether the duty is discharged or has been breached would involve an assessment of the conduct of IBAC and its processes. IBAC’s interest is not necessarily protected by the State, nor is the State in a position to advance all arguments available to IBAC. Therefore it would not be not appropriate to give leave to the plaintiff to file a notice of discontinuance were the claim to proceed.
Damages claim
For the reasons that follow, I have concluded that the plaintiff’s remaining claim for damages has no real prospect of success and so will grant the application for summary judgment in favour of the defendants.
The circumstances are somewhat unusual in that the plaintiff has conceded the present pleading is largely obsolete and argues a cause of action based upon the existence of a statutory duty that is not well articulated in the present pleading. Ordinarily I would anticipate that the proposed pleading would be available so that the nature of the duty and the material facts that support the argument as to its existence can be properly articulated. However, the plaintiff submits that any statutory duty imposed by s 117 would arise in principle on the same factual basis as a common law duty of care, so the prospects of success whether the duty arises at common law or from the statute are also closely related.
There is no analogous duty owed by an investigating body to a person under investigation at common law that has been identified.
When considering the existence of a duty of care in novel circumstances the question of foreseeability of harm alone is not sufficient to determine whether a duty exists. The question is also constrained by the particular circumstances of the relationship between a proposed tortfeasor and plaintiff. The phrase ‘salient features’ comes from Caltex Refineries (Qld) Pty Ltd v Stavar,[37] where Allsop P said a close analysis of the facts bearing on the relationship is needed to operate as a control measure where foreseeability of harm exists:
[37](2009) 75 NSWLR 649.
These salient features include:
(a) the foreseeability of harm;
(b) the nature of the harm alleged;
(c) the degree and nature of control able to be exercised by the defendant to avoid harm;
(d) the degree of vulnerability of the plaintiff to harm from the defendant’s conduct, including the capacity and reasonable expectation of a plaintiff to take steps to protect itself;
(e) the degree of reliance by the plaintiff upon the defendant;
(f) any assumption of responsibility by the defendant;
(g) the proximity or nearness in a physical, temporal or relational sense of the plaintiff to the defendant;
(h) the existence or otherwise of a category of relationship between the defendant and the plaintiff or a person closely connected with the plaintiff;
(i) the nature of the activity undertaken by the defendant;
(j) the nature or the degree of the hazard or danger liable to be caused by the defendant’s conduct or the activity or substance controlled by the defendant;
(k) knowledge (either actual or constructive) by the defendant that the conduct will cause harm to the plaintiff;
(l) any potential indeterminacy of liability;
(m) the nature and consequences of any action that can be taken to avoid harm to the plaintiff;
(n) the extent of imposition on the autonomy of freedom of individuals, including the right to pursue one’s own interests;
(o) the existence of conflicting duties arising from other principles of law or statute;
(p) consistency with the terms, scope and purpose of any statute relevant to the existence of a duty; and
(q) the desirability of, and in some circumstances, need for conformance and coherence in the structure and fabric of the common law.[38]
[38]Ibid [103].
This list is not exhaustive, nor do all the matters identified necessarily require consideration in each case. They are factors relevant to an evaluative task in identifying the existence of a duty and, where it exists, its scope and content.
The first three of the listed salient features, and (k), would point here to the imposition of a duty. An examination is conducted as part of the investigative tools available to IBAC. The chance of harm resulting from an examination in public not only foreseeable, it is in some circumstances likely or even inevitable given IBAC’s function to identify, investigate and expose corrupt conduct.[39] The content of an examination and of allegations aired during it may well impact on a person’s reputation, safety or wellbeing, and may affect their economic interests. A public airing of those allegations is likely to magnify the impact. The statute recognises the potential for harm to persons during this process by providing that examinations are ordinarily conducted in private. There is no doubt that in granting a discretion to depart from the position that an examination is not ordinarily open to the public, IBAC has a significant degree of control that it can exercise to avoid harm. It is this feature, identified as (k) in Allsop P’s list, that underpins the plaintiff’s argument that a duty includes the need to make inquiries about a proposed witness.
[39]IBAC Act s 5.
However, few if any of the other salient features support the imposition of a duty of care. The relationship is one between witness and investigating body. It is not a legal relationship analogous to others where a duty is imposed. Persons examined are entitled to be represented and to have their interests protected in compulsory processes of IBAC. There is no vulnerability arising from an inability to protect oneself during an examination process. Nor is there an assumption of responsibility by IBAC for the welfare of examinees. The harm has come from publication of the nature of the plaintiff’s questioning and evidence rather than the fact of the examination itself.
IBAC is tasked with investigating the conduct of those in the police and public service. In other contexts the law has not extended a common law duty of care owed by investigatory bodies to persons under investigation. The reason for this, as explained in Sullivan v Moody, is that:
The circumstance that a defendant owes a duty of care to a third party, or is subject to statutory obligations which constrain the manner in which powers or discretions may be exercised, does not of itself rule out the possibility that a duty of care is owed to a plaintiff. People may be subject to a number of duties, at least provided they are not irreconcilable. A medical practitioner who examines, and reports upon the condition of, an individual, might owe a duty of care to more than one person. But if a suggested duty of care would give rise to inconsistent obligations, that would ordinarily be a reason for denying that the duty exists. Similarly, when public authorities, or their officers, are charged with the responsibility of conducting investigations, or exercising powers, in the public interest, or in the interests of a specified class of persons, the law would not ordinarily subject them to a duty to have regard to the interests of another class of persons where that would impose upon them conflicting claims or obligations.[40]
[40]Sullivan (n 35) 582 [60].
Consideration of the existence of a duty of care also must take account of the nature of the proposed tortfeasor who is a statutory authority.
There is no universal common law rule applicable to the imposition of a duty of care on statutory bodies. The particular statutory framework of the authority holds the key – its terms, scope and purpose. The preliminary question then is, as articulated in Electricity Networks Corporation v Herridge Parties (‘Electricity Networks’):
whether that regime erects or facilitates a relationship between the authority and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence.[41]
[41]Electricity Networks Corporation v Herridge Parties (2022) 406 ALR 1, 7 [20] (‘Herridge Parties’), citing Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 (‘Graham Barkly Oysters Pty Ltd’), 596-7 [146] (Gummow and Hayne JJ).
Where the relationship has these characteristics, then:
the common law imposes a duty in tort which operates alongside the rights duties and liabilities created by statute.[42]
[42]Ibid, 9 [27], citing Graham Barclay Oysters Pty Ltd (n 41) 597 [147].
As was also said in Electricity Networks:
These reasons speak of the common law imposing a duty of care on a statutory authority. That language recognises that the common law and statute interact and operate concurrently…Holding that the statutory authority in this case owed a common law duty to exercise those powers in the discharge of its functions with reasonable care is consistent with and required by the principles of negligence that apply more generally, whether to natural persons, bodies corporate or other commercial enterprises.[43]
[43]Ibid, 10-11 [32].
A central question is also whether the statutory framework intends to give a private right to damages for breach. Byrne v Australian Airlines Ltd concerned the question of whether the Industrial Relations Act 1998 (Cth) gave employees a private right of action for breach of an award by an employer.[44] Even in circumstances of a well-established legal relationship giving rise to a common law duty, difficulties arise when imposing a tortious liability alongside:
A cause of action for damages for breach of statutory duty arises where a statute which imposes an obligation for the protection or benefit of a particular class of persons is, upon its proper construction, intended to provide a ground of civil liability when the breach of the obligation causes injury or damage of a kind against which the statute was designed to afford protection. The question is one of the construction of the statute, although as Dixon J pointed out in O'Connor v S P Bray Ltd, an examination of the statute "will rarely yield a necessary implication positively giving a civil remedy". One generalisation that can be made is that where the persons upon whom the statutory obligation is imposed are under an existing common law duty of care towards the persons whom the statute is intended to benefit or protect, the statutory prescription of a higher or more specific standard of care may, in the absence of any indication of a contrary intention, properly be construed as creating a private right.[45]
[44](1995) 185 CLR 410.
[45]Ibid 424 (citations omitted).
The difficulties that plague the identification of a duty of care at common law are the same difficulties that face the claim for a breach of a statutory duty. Mr Woodman must show that the statute intends that he have a private action for damages for non-compliance, and do so in the face of no recognised entitlement at common law.
I was referred to Lazarus v Independent Commission Against Corruption (‘Lazarus’),[46] where a claim for a breach of a statutory duty was summarily dismissed. Lazarus concerned an alleged statutory duty to investigate which it breached by failing to fully investigate. The case was summarily decided on the basis that ICAC was exercising a statutory power to investigate which did not impose a duty to take the step alleged. Walton J also accepted the alternate submission that if such a duty was imposed by the statute, it conferred no private right actionable by persons concerned that ICAC had breached that duty.
[46]Lazarus (n 36).
Whilst there may be differences in the statutory framework that distinguish ICAC’s framework from the IBAC Act, including a statutory function that the protection of the public interest is ‘paramount’,[47] there is nothing in Lazarus that assists the plaintiff’s argument as a matter of principle.
[47]Independent Commission Against Corruption Act 1988 (NSW) s 12; see Lazarus (n 36) [77].
There is no doubt that one purpose in enacting s 117(1) of the IBAC Act is for the protection of witnesses called before IBAC. But the terms of the statute do not confine the consideration of the impact of a public examination to examinees or witnesses. The statute requires IBAC to consider whether a public examination can be held without causing unreasonable damage to a person. The imposition of a duty owed only to witnesses would read into the legislation a limit that is narrower than the express words. Conversely, the prospect of a duty of care owed by IBAC to any person when holding an examination in public is problematic regarding indeterminacy of liability.
I do not accept that a duty to consider the interests of a particular witness, either reputational or economic, would not conflict with other obligations of IBAC. The statutory scheme itself, by providing that examination ordinarily be in private, makes clear there are conflicting public and private interests to be managed. The statutory scheme recognises that a public examination in its very nature is capable of causing harm to a witness by qualifying the damage as ‘unreasonable’. The three criteria of which the Commissioner is to be satisfied in order to hold an examination in public requires a satisfaction about public and private interests that are ultimately irreconcilable if a public examination is to be held. The qualification of damage as ‘unreasonable’ in s 117(1)(c) and the ‘exceptional circumstances’ in s 117(1)(a) recognises this conflict. The concept of ‘unreasonable damage’ causes great difficulty in imposing a duty to take reasonable care to avoid harm, because the decision is one that expressly contemplates a level of damage to reputation, safety or wellbeing to a person, including a witness. Neither the pleading nor the submissions grappled with the identification of qualities that made damage ‘unreasonable’.
It is also wrong in my view to construe subsection (1)(c) in isolation or to ignore the statute’s other criteria that must be satisfied in order to conduct a public examination. The statutory obligation to consider the effect on the person examined is not a standalone consideration. It is one of three independent criteria to be met. The public interest criteria will frequently be irreconcilable with the impact upon an individual. The expectation of a proportionate amount of harm to an individual together with a judgment about other matters not concerning the individual impact in order to arrive at a decision militates against the identification of a duty of care at common law.
Even if the statute imposes a duty or power to act in protection of a potential witness, the plaintiff’s submissions have not grappled with the question of whether the statute confers a private right to damages for breach. In New South Wales v Paige (‘Paige’),[48] a novel duty of care was alleged within the accepted employer/employee relationship – that being an employer’s duty to conduct disciplinary procedures so as to avoid psychiatric harm to the employee. The employee alleged the disciplinary process breached the duty in a number of respects including by a denial of procedural fairness. The court said:
The application of the law of negligence to the current relationship would intersect with two other areas of the law; judicial review of administrative action and the law of contract as modified by statute with respect to wrongful dismissal.[49]
[48](2002) 60 NSWLR 371.
[49]Ibid 388 [86].
In Paige, Spigelman CJ observed that issues of incoherence may arise even without direct inconsistency. He said where the imposition of a duty of care may distort the focus of the statutory decision making process, this may be sufficient to demonstrate an incompatibility between statutory function and a duty of care.[50] Paige, like the present case, was concerned with how the statutory power was exercised and cautioned against the inhibitory effect of imposing a duty of care to protect the person being investigated from harm.
[50]Ibid 390 [99].
The availability of other remedies, in particular judicial review for the legality of administrative decisions, is an important factor for issues of incoherence. In Paige, the Spiegelman CJ said:
The effect of extending the law of tort to permit recovery of damages for errors subject to judicial review will therefore often be, in substance, to remove to the courts the determination of matters that a statute reposes in another. In my opinion, the courts should be very slow to extend the law of negligence to a new category that has such a consequence.[51]
[51]Ibid 403 [176].
Similarly, in Polar Aviation Pty Ltd v Civil Aviation Safety Authority(No 4),[52] Kenny J concluded that the defendant’s statutory obligation to act in the public interest of air safety was inconsistent with the imposition of a common law or statutory duty to act in the interest of those operators that it regulated. The availability of various other remedies for the wrongful exercise of power to the applicants – including statutory protections, merits and judicial review and, in an appropriate case, the tort of misfeasance in public office – told against the imposition of a duty either at common law or statute. I accept the submission of IBAC that to extend tortious liability would remove to the Court assessing duty and breach, matters that the legislature has placed within the discretion of IBAC.
[52](2011) 203 FCR 293.
Mr Woodman relied on AIX20 to support his argument that the claim ought be permitted to go forward to trial properly pleaded. I am mindful of the caution needed in determining a matter on a summary basis and the situation that novel claims ought be determined with the benefit of hearing and determination of the relevant factual matrix. In my view however, AIX20 does not assist the plaintiff to withstand a summary judgment application as that case turned on its own particular facts. AIX20 had been the subject of a number of adverse security assessments under the Australian Security Intelligence Organisation Act 1979 (Cth). There were particular factual circumstances, described in the judgment as including that the applicant had been granted and held a temporary protection visa, and that the likely effect of furnishing an adverse security assessment was the cancellation of the visa and being placed in immigration detention. The factual matters were capable of distinguishing that situation from an analogous relationship between investigating police and suspects and the line of authority that affirmed the police do not owe a duty to people suspected of criminal offences. The possible effect that this factual scenario had on the question of whether that particular statutory authority owed a duty of care was therefore one not appropriate to determine summarily.
Finally the plaintiff seeks a remedy for breach in damages for loss of reputation and pure (not consequential) economic loss. In both types of damages, imposition of a duty would create incoherence with the law of defamation and with the law governing the limitations on recovery of damages for pure economic harm.
Mr Woodman’s pleading identifies many publications by media of his examination. It is those publications that he says have had the effect of harming his reputation and economic interests. There is a clear inconsistency with the law of defamation which has been developed to address competing interests of parties. The issue of intersection between defamation and the law of negligence was also addressed in Sullivan v Moody where it was said:
The core of the complaint by each appellant was that he was injured as a result of what he and others were told. At once it can be seen that there is an intersection with the law of defamation which resolves competing interests of the parties through well developed principles about privilege and the like. To apply the law of negligence in the present case would resolve that competition on an altogether different basis. It would allow recovery of damages for publishing statements to the discredit of a person where the law of defamation would not.[53]
[53]Sullivan (n 35) 581 [54].
Relationships where a duty to avoid pure economic loss has been established have been described as:
exceptions to a general rule that even if the loss was foreseeable, damages were not recoverable for economic loss that was not consequential upon injury to person or property.[54]
[54]Woolcock Street Investments (n 31) 530 [22].
Bearing in mind that a liability for pure economic loss is the exception rather than the rule, the plaintiff’s submissions did not address his vulnerability to economic harm. The availability and presence of legal representation through the process and the availability of judicial review to remedy any deficiency in the process are powerful indicia against a vulnerability to economic harm from the examination process. Nor could it be said that IBAC assumes some responsibility to act in the interest of witnesses or perform some task for their benefit. Examinations, whether held in public or in private, are for the purpose of investigating corrupt conduct. The parliament accepts that there will be circumstances in which the public interest requires examinations held in public. It provides statutory guidance as to that public interest in s 117(4) and provides IBAC with the power to consider when statutory criteria are satisfied. The statute also accepts that a degree of harm is likely to be caused by an examination in public. It is therefore explicitly inconsistent with a duty to protect from economic harm.
For these reasons I grant the defendants’ application for summary dismissal of the proceeding.
Costs
The parties argued the question of the appropriate costs orders upon the possible outcomes. Each provided an affidavit in support which I gave leave to the parties to file at the conclusion of the hearing. The defendants seek an order for costs if, as they have been, they are successful in the application. They seek costs on an indemnity basis arising from offers made in accordance with the principles set out in Calderbank v Calderbank.[55]
[55][1976] Fam 93.
The application of the State is supported by the affidavit of Sarah McKellar-White, affirmed on 30 January 2024. In that affidavit she deposes to three Calderbank letters and on the basis of those letters the State seeks indemnity costs from 9 June 2023.
IBAC rely on an affidavit of Amelia Macknay also affirmed on 30 January 2024, in which she deposes to two Calderbank offers and seeks indemnity costs also from 9 June 2023.
Both defendants separately sent correspondence to Mr Woodman dated 9 June 2023 offering that the proceeding be dismissed with the defendant and plaintiff to bear their own costs to that date. Both offers remained open until 23 June 2023. IBAC’s offer made clear that the offer included that IBAC would bear its own costs including the costs which Moore J had ordered the plaintiff to pay in the interlocutory injunction application. The letters set out the basis upon which each defendant identified the claims were likely to fail, including by reference to the reasons of Moore J in refusing interlocutory relief. The State did not receive a response to the 9 June 2023 letter and the offer lapsed. IBAC’s offer was rejected by letter of 19 June 2023.
On 22 September 2023 a further Calderbank offer was jointly made by both defendants again offering that the proceeding be dismissed with the parties to bear their own costs, this time excluding the two prior costs orders of 23 May 2023 and 24 July 2023. The offer was open to 6 October 2023. On 28 September 2023 the plaintiff advised the defendants that he intended to file a notice of discontinuance in respect of IBAC. He did not otherwise respond to the joint offer.
In the absence of any submission resisting an order for indemnity costs, in my view it is appropriate to order that the plaintiff pay the costs of the defendants, on a standard basis to 9 June 2023 and thereafter on an indemnity basis.
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