New South Wales’ attempts to shore up ICAC findings in doubt
01.07.2015
In Independent Commission Against Corruption v Cunneen, the High Court held that the range of matters subject to investigation by the New South Wales Independent Commission Against Corruption was narrower than had previously been assumed to be the case. Consequently, doubt arose as to the validity of previous investigations, findings and recommendations of the Commission.
This post considers the New South Wales response to that decision, particularly the attempt to validate ICAC’s previous findings, and explores some of the constitutional arguments raised.
The Government’s response
The New South Wales government responded by launching an inquiry into the future scope of ICAC’s powers, and introducing the Independent Commission Against Corruption Amendment (Validation) Act 2015 (NSW). The Act amended Schedule 4 of the Independent Commission Against Corruption Act 1988 (NSW). The main operative provision is as follows:
Anything done or purporting to have been done by the Commission before 15 April 2015 that would have been validly done if corrupt conduct for the purposes of this Act included relevant conduct is taken to have been, and always to have been, validly done.
“Relevant conduct” is defined so as to refer to conduct which had previously been assumed to be within the remit of the Commission but which the High Court, in the Cunneen decision, held was not within the Commissioner’s jurisdiction to investigate. This included conduct of a private individual that was likely to impair the performance of a public official’s function, but which was not likely to cause that public official to act dishonestly or corruptly.
Operation Jasper
One previous inquiry undertaken by the Commission was known as “Operation Jasper”. That inquiry concerned what the Commission found to be corrupt conduct in relation to the grant of a coal exploration licence in the Bylong Valley near Mudgee. ICAC found that those involved included the then Minister for Primary Industries, Ian Macdonald; a member of the New South Wales Legislative Council, Edward Obeid; a member of Mr Obeid’s family; and several prominent Sydney businessmen.
In 2013, Mr Travers Duncan, together with other individuals and companies, had commenced proceedings in the New South Wales Supreme Court, challenging the validity of the exercise of the Commission’s powers in respect of Operation Jasper. The proceedings were dismissed in respect of all but one of the businessman (Duncan v ICAC) by McDougall J, prior to the High Court’s decision in Cunneen. At the time of the enactment of the Independent Commission Against Corruption Amendment (Validation) Act 2015, Mr Duncan’s appeal to the New South Wales Court of Appeal was pending.
The validating legislation had the capacity to impact upon Mr Duncan’s prospects of success in the pending appeal. Indeed, it appears that, without the validating legislation, Mr Duncan was certain to win his appeal in light of the High Court’s Cunneen decision. Mr Duncan therefore applied to the High Court for removal of that part of the appeal which questioned the validity of the validating legislation, and the High Court has agreed to hear that part of the case.
Changing the law versus interfering in the judicial process
The Commonwealth Parliament and State Parliaments undoubtedly have power to pass laws which attach consequences to conduct and circumstances which have already occurred. Moreover, these Parliaments have power to enact legislation which changes rights, obligations, liabilities and statuses that may be in issue between parties in litigation that is pending before a court.
Preventing the American colonial practice of legislative interference with pending cases was a primary consideration of the American founders in adopting the separation of the judicial from legislative and executive branches. By adopting the separation of the judicial power from the legislative and executive powers, the Australian Constitution incorporated restrictions on the Parliament interfering with or usurping the exercise of judicial power in particular cases. An exercise of power which is, in truth, a direction to a court or courts, otherwise than by way of a change to the law, involves the exercise of a non-legislative power.
The Courts have, therefore, come to recognise a distinction between a change to the law (valid) and an interference with the judicial process (invalid).
In Australian Building Construction Employees’ and Builders Labourers’ Federation v Commonwealth (“the Commonwealth BLF Case”), the High Court thus recognised a distinction between legislation which “affect[s] and alter[s] rights in issue in pending litigation”, on the one hand, and legislation which “interferes with the judicial process itself”, on the other. In the Commonwealth BLF Case, the High Court upheld the validity of the law in question. The law in question in that case had been enacted after the federal branch of the Australian Building Construction Employees’ and Builder’s Labourers Federation (“the BLF”) commenced judicial review proceedings challenging the validity of a decision by a Minister to cancel the registration of the BLF. The law did not purport to “validate” the decision of the Minister but instead operated directly to itself de-register the BLF, as from the date of the Minister’s decision. The High Court held that the law, while affecting the rights in issue in pending litigation, was not a direction to the Court but a change in the law.
The Commonwealth BLF Case may be contrasted with the decision in Building Construction Employees and Builders’ Labourers Federation (NSW) v Minister for Industrial Relations (1986) 7 NSWLR 372 (“the NSW BLF Case”). In that case, the New South Wales Parliament had enacted a provision which purported to “validate” the decision of the State Minister for Industrial Relations to cancel the registration of the State branch of the same union. Distinguishing the Commonwealth BLF Case, Street CJ said of the New South Wales provision:
The [NSW] Act … differed in substance from the Commonwealth Act. At the time it was passed there was pending before this Court a dispute as to whether the registration had been cancelled on 2 January 1985. Section 3(1) does not enact that the registration was cancelled on that day; s 3(1) is a direction that the registration “shall, for all purposes, be taken to have been cancelled” on that day.
There were also other indicators which led the New South Wales Court of Appeal to conclude that the NSW Act involved a direction to the Court rather than merely a change to the law — the most telling being a provision which required the BLF to pay costs in the pending litigation. In the result, the Court in the NSW BLF Case held that, because there was no strict separation of powers in New South Wales, the law, though regrettable, was not constitutionally invalid.
Application of these principles at the State level
While there is no enforceable strict separation of judicial power at the State level, the Kable principle, which was only recognised in 1996, after the NSW BLF Case was decided, now prevents State Parliaments legislating in such a way as to undermine the institutional integrity of courts or to change their fundamental character as courts. A direction by a State Parliament to a court in respect of the exercise of judicial power in a particular case would seem apt to undermine the appearance and reality of the court’s independence. It therefore seems at least strongly arguable that the principle preventing legislative interference in the judicial process, recognised in the Commonwealth BLF Case, should now be applied at the State level.
Mr Duncan’s arguments in the High Court
One of Mr Duncan’s arguments in the High Court is that the New South Wales validating legislation has not changed the law but has, instead, merely issued a direction to the Courts to treat as the law what was not, in reality, the law. The argument seizes on the use of the words “is taken to have been, and always to have been, validly done”, together with the fact that no amendment had been made to the substantive provisions of the Independent Commissioner Against Corruption Act.
Another interesting aspect of Mr Duncan’s case is that the findings of the New South Wales ICAC do not, themselves, have any operative legal effect. Mr Duncan argues that the validating legislation cannot, therefore, simply be understood as “‘curing’ what would otherwise be deficiencies fatal to the validity of administrative action … by declaring the rights and obligations persons to be the same as if such action had been valid” — a technique that has been accepted as involving a change in the law. The only “right or obligation” at issue in Mr Duncan’s case is the right of Mr Duncan to a declaration that ICAC acted beyond its powers.
Form and substance
A major problem facing any court which is asked to declare an Act of Parliament invalid on the basis that it is a legislative interference in the judicial process is that the very distinction between a valid exercise of legislative power and an invalid usurpation of judicial power in relation to pending cases may often depend in large part upon the form of the impugned law. A clear example is provided by the two BLF Cases. Despite Street CJ’s insistence in the NSW BLF Case that the Commonwealth law “differed in substance” from the New South Wales law, the different was, in truth, primarily a matter of form.
Ultimately, the difference between a provision which itself cancels registration with effect from a particular date in the past, and one which declares that registration shall be taken to have been cancelled on that day, is formal.
Nevertheless, formal requirements may serve important ends when the rule of law itself is in issue. For example, the distinction between a legislative provision that expands the jurisdiction of a court or tribunal in a particular way (which is permissible) and a provision that excludes judicial review of a decision of a court or tribunal for exceeding its jurisdiction in a particular way (which is impermissible) is ultimately formal. Yet the distinction is maintained; and it is rightly regarded as fundamental to the maintenance of the rule of law.
The accepted dichotomy between an exercise of substantively legislative power — a change in the law — and an exercise or usurpation of judicial power by the Parliament, draws on the same distinction. In the NSW BLF Case, Street CJ said:
The distinction between interference with the judicial process itself rather than with the substantive rights which are at issue is no idle pedantry. Fundamental to the rule of law and the administration of justice in our society is the convention that the judiciary is the arm of government charged with the responsibility of interpreting and applying the law as between litigants in individual cases. The built-in protections of natural justice, absence of bias, appellate control, and the other concomitants that are the ordinary daily province of the courts, are fundamental safeguards of the democratic rights of individuals. For Parliament, uncontrolled as it is by any of the safeguards that are enshrined in the concept of due process of law, to trespass into this field of judging between parties by interfering with the judicial process is an affront to a society that prides itself on the quality of its justice.
Recent consideration of these principles by the South Australian State Supreme Court
A similar argument was advanced, unsuccessfully, in different circumstances in a case decided by the Supreme Court of South Australia last year, Palace Gallery Pty Ltd v Liquor and Gambling Commissioner. Palace Gallery had commenced proceedings challenging the validity of the Late Night Trading Code of Practice made by the Commissioner pursuant to the Liquor Licensing Act 1997 (SA). The Code of Practice imposed a range of measures on licensed premises, including a requirement that premises not admit any new customers between the hours of 3am and 5am. Palace Gallery contended that the promulgated Code exceeded the scope of the code-making power in the Liquor Licensing Act and was inconsistent with various provisions of the Act.
On the day before Palace Gallery’s case was due to be argued before the Full Court of the Supreme Court, the South Australian Parliament passed a law amending the provision which conferred the code-making power. The amending Act included a transitional provision that stated:
A code of practice, and any provision of a code of practice, that—
(a) was published under section 11A of the Liquor Licensing Act 1997 (as in force before the commencement of this clause); and
(b) is purportedly in force on the commencement of this clause,
will be taken to be valid, and always to have been valid, if the code of practice or provision would have been valid had it been published under section 11A of the Liquor Licensing Act 1997 as amended by this Act.
Palace Gallery accepted that the amending Act had changed the relevant law (the code-making power), but argued that it had only done so prospectively. Despite not changing the law as in force when the Code of Practice was made, the transitional provision, Palace Gallery argued, operated as a direction to the Courts to test the validity of the Code of Practice against the law that only applied after the amendment, that is, against a standard other than the relevant legal standard that governed the validity of the Code.
The Supreme Court held that the transitional provision simply “identifie[d] the legal standard against which proceedings dealing with the validity of codes published before 1 November 2013 are to be determined” and that, in so doing, in substance it merely “change[d] the existing law” and so did not constitute an impermissible direction to the Courts.
Conclusion: Difficulties with Form
An issue that arose in the Palace Gallery case, and which appears to arise in Mr Duncan’s case in the High Court, is whether the rule against legislative usurpation of judicial power should be held to prohibit a legislature from directing a court in general terms (recognising that a generally expressed direction may be determinative of certain individual cases, including pending cases), or whether the rule only prevents the legislature directly requiring the courts to give effect to an outcome in a particular pending case. As noted above, the difficulty is that the distinction may be, in the end, purely a matter of form.
On the one hand, in some respects legislation which is expressed as a direction in general terms operates in a manner that is similar to a change to the law, by providing a general standard against which the Court is to test the validity of certain action. On the other hand, it does not take much ingenuity for a legislature to frame a command in general terms that it knows will determine the outcome of a particular case.
Steve McDonald is a barrister at Hanson Chambers and an Adjunct Senior Lecturer at the University of Adelaide Law School. Steve was junior counsel for the plaintiffs in Palace Gallery Pty Ltd v Liquor and Gambling Commissioner.
Suggested citation: Stephen McDonald, ‘New South Wales’ attempts to shore up ICAC findings in doubt’ on AUSPUBLAW (1 July 2015) <https://auspublaw.org/2015/07/new-south-wales-attempts-to-shore-up-ICAC-findings-in-doubt/>.