The High Court found in a recent case1 that IBAC had failed to comply with its own statute on the way to finalising a report on corruption. This non-compliance was informed by ‘procedural fairness’ or ‘natural justice’ obligations. The process was not a fair process.
AB (a pseudonym) v IBAC – High Court case
In the case of AB v IBAC, the High Court found that IBAC did not provide the right information to a person in their upcoming report. The report criticised that person. Disclosure of that information would give the person a chance to respond to it before the report was finalised. It was part of the ‘procedural fairness’ or ‘natural justice’ obligation, and required by the statute.
Some government agencies can investigate things like corruption, and make public reports
There are many agencies in Australia are established by legislation (ie Acts of parliament, or statutes) to investigate corruption or other types of wrongdoing. They can make public reports, or report to parliament, about their investigations. Their statutes create the powers to make and publish these reports. These reports contain adverse findings or conclusions about individuals.
These government agency investigations are not necessarily criminal investigations. Sometimes they might lead to criminal charges being laid and dealt with in the courts. However, these investigations are not the same as those the police might conduct; and the wrongdoing these agencies investigate may or may not constitute crimes.
The Independent Broad-based Anti-corruption Commission in Victoria (IBAC) is this type of agency (see their website here). IBAC was established by a statute of the Victorian parliament to investigate public sector corruption and police misconduct. Examples of the things IBAC investigates include:
- allegations of bribery and misconduct by councillors at Moonee Valley City Council, for favourable votes, or for the benefit of the Essendon Royals Soccer Club;
- unauthorised access and disclosure of sensitive information by employees at the Metropolitan Fire Brigade;
- how improper influence compromised the procurement process for a $1.2m contract awarded to a union-established training group;
- whether a former Victorian Government Minister misused his public position on the board of the Victorian Planning Authority (VPA) to favour the Australian Education City (AEC) consortium in their East Werribee project proposal, or attempted to improperly influence public officers.
When government agencies investigate under a statute, they have to comply with it
When government agencies are created by a statute, they have to comply with it. The statute will set out the law regarding what sorts of things they can investigate, how they investigate, and what steps they must take during the course of the investigation.
It is common for these agencies to be required under the statute to give a fair process to people and entities who will be affected by the finalisation and publication of their investigation report. These statutory rights to a fair process have been built upon years of court cases; that is, the ‘common law’.
But a fair process in a statute is based on common law
The law regarding the fair process required has been developed over many years by court cases under the banner of ‘procedural fairness’ or ‘natural justice’. (I write about procedural fairness elsewhere on this site.). This concept requires that specific things be done in certain circumstances. For example, if an ‘adverse finding’ or ‘adverse conclusion’ is likely to be made by the agency, they need to stop and check before finalising the report. And they will have to stop and check with the person about whom the adverse finding is about to be made.
This is a fair thing to do, because the investigating agency may have got it wrong. They may be considering inadequate information. The person affected by their upcoming adverse conclusion may not even realise that there is an issue. If the person affected is given the opportunity to address the issue (‘opportunity to respond’, or ‘opportunity to be heard’), before the report is finalised, they will be given a more ‘fair’ hearing.
And, of course, it is important to note that a fair hearing, or ‘procedural fairness’, is about fairness in the process leading up to the decision or report. It is not about having a ‘fair’ outcome.
This case law, or common law, applies whether or not the statute requires such a ‘fair hearing’ to occur. The common law principle of natural justice or procedural fairness provides that before adverse conclusions are drawn about a person, the person should be given an opportunity to ‘be heard’. That is, an opportunity to say what they might want to say before the adverse conclusions are definitively drawn.
But in many cases the statute adds a clearer step to that common law. In a practical sense, it might be said to replace it (although it doesn’t usually replace it). The statute might say that before a report is finalised, the agency must give an affected person a right to respond to adverse matters. The agency must comply with the statute, and give that right, in order for their finalisation of the report to be lawful.
What sort of adverse material should be disclosed for a fair process?
It is common for government investigators, when tasked under a statute to produce a report, to collect a series of facts and factual allegations. The facts and factual allegations might not amount to anything adverse, or they might be arguable, or they might be strongly adverse towards the interests of a person. Then the report-writer decides what to make of those facts and factual allegations. What conclusions or findings should be drawn?
At common law, the ‘natural justice’ disclosure requirement can be a little bit tricky. Sometimes, factual material might seem benign, but the agency proposes to draw an adverse conclusion from it. And that factual material might be known to the person who is affected by the adverse conclusion. In such a case, it is the conclusion that needs to be disclosed, not the ‘benign’ factual material.
At other times, there might be adverse factual allegations made by a third party, which are not known to the subject of those allegations. In such a case, the decision-maker needs to disclose the factual allegations themselves.
Sometimes, it is enough to disclose the essence of the factual material, or the ‘gravamen’ of it. At other times, full detail of the factual material must be provided.
In the recent IBAC case of AB (a pseudonym) v IBAC, IBAC had to comply with the statute. So the Court was not looking specifically at the common law. However, the Court did use the common law regarding natural justice in order to interpret the requirements of the statute.
The Court found that IBAC needed to show adverse material to certain people affected by the report. Instead, IBAC only showed them proposed adverse findings. That wasn’t enough.
The IBAC statute vs procedural fairness
In the AB v IBAC case, the relevant statute which created IBAC and its powers, was the IBAC Act 2011 (Vic). In section 162(3) of that Act, IBAC had to give people a reasonable opportunity to respond to ‘adverse material’ before an adverse ‘comment’ or ‘opinion’ was finalised in the report.
Section 162(3) provided:
‘If the IBAC intends to include in a report under this section a comment or an opinion which is adverse to any person, the IBAC must first provide the person a reasonable opportunity to respond to the adverse material and fairly set out each element of the response in its report.’
The question was, did IBAC have to set out adverse factual material for a response? Or just their comment or opinion?
The High Court noted that interpreting the Act required looking at the text of the whole statute. It was also important to consider the purpose of it (para 21).
The Court noted that any finding that a person has engaged in ‘corrupt conduct’ was clearly likely to damage the reputation and other interests of that person (para 22). This was something established by the case of Ainsworth in 1992.2
In defining the phrase ‘adverse material’ in the IBAC statute, the High Court reviewed common law principles of natural justice.
Interpreting the statute in the light of the common law
In interpreting the IBAC statute, the High Court started with the common law. They found:
‘In construing that phrase, it is important to begin by identifying some basic propositions about the applicable common law principles of natural justice where a person’s interests are likely to be affected by an exercise of power. First, such a person “must be given an opportunity to deal with relevant matters adverse to [their] interests which the repository of the power proposes to take into account in deciding upon its exercise”. Second, the person whose interests are likely to be affected does not have to be given an opportunity to comment on every adverse piece of information, irrespective of its credibility, relevance or significance. However, “in the ordinary case where no problem of confidentiality arises an opportunity should be given to deal with adverse information that is credible, relevant and significant to the decision to be made”. At least in some contexts, the affected person must be given the opportunity to respond to such information obtained from third parties even if it was not expressly relied on, or proposed to be relied on, by the decision-maker.’ (para 25).
The High Court called the statutory right to a hearing ‘analogous rights and obligations’ to those in the common law, because ‘statutes are construed… against a background of common law notions of justice and fairness’. (quoting Kioa v West [1985] HCA 81; (1985) 159 CLR 550 at para 9) (para 26).
Therefore, the High Court did not accept IBAC’s arguments that only adverse findings ought to be disclosed:
‘For the… reasonable opportunity provided for by s 162(3), to be effective, the person affected must be given the opportunity to respond to the material collected by IBAC which it contends justifies the adverse findings, comments or opinions in the special report’. (para 27)
Fair process rules can require us to look broadly at the statute
In conclusion, the common law requirements of a fair process or natural justice are important context for statutes. The common law can help in the interpretation of statutory requirements for disclosure of adverse information. In essence, the High Court did not agree on a narrow interpretation of the statute. It would not be fair to do so.
Note: in this case the report had not been submitted to Parliament. IBAC undertook not to transmit to Parliament a report containing the part complained about. This dealt with the practical outcome of the matter, rather than the Court having to rule upon it.