Supreme Court New South Wales

• Medium Neutral Citation: Duncan v ICAC McGuigan v ICAC Kinghorn v ICAC Cascade Coal v ICAC [2014] NSWSC 1018
• Hearing dates: 23/06/2014, 24/06/2014 and 25/06/2014
• Decision date: 29 July 2014
• Jurisdiction: Common Law - Administrative Law
• Before: McDougall J

Decision

In proceedings 2013/249678: order that the further amended summons be dismissed. In proceedings 2013/325031: order that the amended summons be dismissed with costs. In proceedings 2013/326066: (a) declare that the determination by the defendant, in the report entitled "investigation into the conduct into Ian Macdonald, Edward Obeid Snr, Moses Obeid and others" dated July 2013, that the plaintiff had engaged in corrupt conduct within the meaning of the Independent Commission Against Corruption Act 1988 (NSW) was not made according to law and is a nullity. (b) order the defendant to pay the plaintiff's costs. In proceedings 2014/13155: order that the summons be dismissed with costs.

• Catchwords: ADMINISTRATIVE LAW - judicial review - Independent Commission Against Corruption - appeal against finding of corrupt conduct under s 8 of the Independent Commission Against Corruption Act 1988 (NSW) - whether conduct could "adversely affect" the exercise of "official functions" by "public officials" - meaning of the expression "official functions" - meaning of the term "could" - degree of probability or certainty required for conduct to fall into category of conduct which "could" adversely affect the exercise of official functions - whether it is necessary to identify the public officials or authorities and the official functions in order to determine whether those functions could be adversely affected by the conduct - whether an official function identified by the Commission was actually a function that the Minister could exercise - Whether conduct would actually have had an adverse effect on the exercise of official functions - whether non-disclosure of information could have adversely affected official function of granting a mining lease - application of the Independent Commission Against Corruption Act 1988 (NSW), s 8.; ADMINISTRATIVE LAW - judicial review - Independent Commission Against Corruption - whether findings of corrupt conduct made by the Independent Commission Against Corruption in relation to three issues or categories can be separated - whether each separate issue or category which is part of the finding of corrupt conduct must have been proved for the finding of corrupt conduct to stand; ADMINISTRATIVE LAW - judicial review - Independent Commission Against Corruption - appeal against finding of corrupt conduct on ground that s 9 of the Independent Commission Against Corruption Act 1988 (NSW) not satisfied - criminality of corrupt conduct -whether plaintiffs had gained any financial advantage from alleged corrupt conduct - whether obligations on directors requires them to do any positive act, including a duty of proactive disclosure - whether prevention of loss in value of shares is a financial advantage - whether removal or reduction of risk to Company is a financial advantage - whether information already in the public arena need not be disclosed - whether in breach of s 184(1) Corporations Act 2001 (Cth) where not acting in capacity as a director - application of the Independent Commission Against Corruption Act 1988 (NSW), s 9(1)(a).; ADMINISTRATIVE LAW - judicial review - Independent Commission Against Corruption - Appeal against finding of corrupt conduct on ground of denial of natural justice - whether denial of natural justice where parties not given notice of the way in which they are said to have acted corruptly - whether denial of natural justice where parties not cross-examined on elements of alleged offences underpinning finding of corrupt conduct - where written submissions given before the end of the Independent Commission Against Corruption hearing identifying the alleged criminality involved in the findings and no application to reopen public hearing to adduce further evidence; ADMINISTRATIVE LAW - judicial review - Independent Commission Against Corruption - Appeal against finding of corrupt conduct - whether findings of corrupt conduct not supported by evidence; ADMINISTRATIVE LAW - judicial review - Independent Commission Against Corruption - application by corporations for declarations that recommendations made by the Independent Commission Against Corruption are nullities - whether to grant declaratory relief where finding not amenable to review, where other claims have failed and where no utility in granting relief sought; PROCEDURE - costs - general rule as to costs - where costs follow the event
• Legislation Cited: Corporations Act 2001 (Cth); Crimes Act 1900 (NSW); Criminal Code 1995 (Cth); Environmental Planning and Assessment Act 1979 (NSW); Environmental Planning and Assessment Regulation 2000 (NSW); Independent Commission Against Corruption Act 1988 (NSW); Mining Act 1992 (NSW); State Environmental Planning Policy (Major Development) 2005 (NSW); Supreme Court Act 1970 (NSW)
• Cases Cited: Briginshaw v Briginshaw (1938) 60 CLR 336; D'Amore v Independent Commission Against Corruption (2013) 303 ALR 242; Eaton & Sons Pty Limited v The Council of the Shire of Warringah (1972) 129 CLR 270; Glynn v Independent Commission Against Corruption (1990) 20 ALD 214; Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125; House of Peace Pty Ltd v Bankstown City Council (2000) 48 NSWLR 498; Howard v Federal Commissioner of Taxation (2014) 88 ALJR 667; Milne v The Queen (2014) 305 ALR 477; R v Vasic (2005) 11 VR 380; Steinberg v The Commissioner of Taxation of the Commonwealth of Australia (1975) 134 CLR 640
• Category: Principal judgment
• Parties: Travers William Duncan (Plaintiff) (2013/249678); John Vern McGuigan (First Plaintiff) (2013/325031); John Charles Atkinson (Second Plaintiff); Richard Jonathan Poole (Third Plaintiff); John Alan Kinghorn (Plaintiff) (2013/326066); Cascade Coal Pty Limited (First Plaintiff) (2014/13155); Mt Penny Coal Pty Ltd (Second Plaintiff); Glendon Brook Coal Pty Limited (Third Plaintiff); Independent Commission Against Corruption (Defendant in each matter)
• Representation: Counsel: NC Hutley SC / GES Ng (Plaintiff) (2013/249678); DF Jackson QC / CT Barry QC / LT Livingston (Plaintiff) (2013/325031 and 2014/13155); AC Archibald QC / M Thangaraj SC / DFC Thomas (Plaintiff) (2013/326066); GM Watson SC / SJ Free / Z Heger (Defendant in each matter); Solicitors: Yeldham Price O'Brien Lusk (Plaintiff) (2013/249678); TressCox Lawyers (Plaintiff) (2013/325031) and (2014/13155); King & Wood Mallesons (Plaintiff) (2013/326066); Crown Solicitor's Office (NSW) (Defendants in each matter)
• File Number(s): 2013/249678, 2013/325031, 2013/326066, 2014/13155

Judgment

1 HIS HONOUR: Between November 2012 and May 2013, the Independent Commission Against Corruption (the Commission) conducted a public inquiry into what was known as "Operation Jasper". The inquiry concerned what the Commission found, in its first report, to be corrupt conduct in and around the creation of the Mount Penny mining tenement, and the grant of an exploration licence over the tenement. That tenement is situated in the Bylong Valley near Mudgee. Those involved in the corrupt conduct were found to include a then Minister of the Crown, Mr Ian Macdonald (who was then the Minister for Primary Industries for the State of New South Wales); a member of the Legislative Council of New South Wales, Mr Edward Obeid; members of Mr Obeid's family. A number of prominent Sydney businessmen were also found to have engaged in corrupt conduct.

2 In a third report, written in response to a request from the then Premier of New South Wales, the Commission recommended that, as a result of its findings in the first report, the NSW Government should consider procuring the enactment of legislation to expunge authorities granted pursuant to the Mining Act 1992 (NSW) over the Mount Penny tenement and a nearby tenement known as Glendon Brook. Those authorities had been issued to subsidiaries of a company, Cascade Coal Pty Ltd, that is associated with the prominent businessmen to whom I have referred.

3 Five of the businessmen named have commenced proceedings. They claim declaratory relief to the effect that the findings made in respect of them are nullities. Cascade Coal and its subsidiaries have commenced proceedings in which they claim declaratory relief to the effect that the recommendations made in respect of the authorities granted to them under the Mining Act are nullities.

4 This judgment deals with the four sets of proceedings by which those various claims are advanced.

The impugned findings

5 The individual plaintiffs who challenge the findings made against them are Mr Travers Duncan, Mr John McGuigan, Mr John Atkinson, Mr Richard Poole and Mr John Kinghorn.

6 The findings made against each of them relate to negotiations which they conducted between Cascade Coal on the one side and White Energy Company Ltd (a listed public company) on the other. Pursuant to those negotiations, White Energy obtained an option to acquire all the issued shares in Cascade Coal for the sum of $500,000,000.00. Because Messrs Duncan, McGuigan and Kinghorn were directors of White Energy as well as directors of and shareholders (directly or indirectly) in Cascade Coal, White Energy set up an "Independent Board Committee" (IBC) to consider whether to enter into the option agreement and, in due course, whether to proceed to exercise it. The IBC was chaired by Mr Graham Cubbin.

The findings against the individual plaintiffs

7 Against that background, the corrupt conduct findings made by the Commission against each of the individual plaintiffs are as follows:

Mr Duncan

The Commission found that Mr Duncan engaged in corrupt conduct by:

a) deliberately misleading Graham Cubbin (the chairman of White Energy's IBC) as to the Obeid family involvement in the Mount Penny tenement by failing to disclose the involvement to Mr Cubbin when Mr Cubbin raised the issue with him,

b) deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement,

c) telling Anthony Levi that John McGuigan would directly contract Mr Cubbin and thereby relieving Mr Levi from having to answer Mr Cubbin's request for information about the Obeid family involvement, and

d) authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group Pty Ltd ("Coal & Minerals Group") and Southeast Investments Group Pty Ltd ("Southeast Investments"),

with the intention, in each case, of deceiving relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in the Mount Penny tenement.

Mr McGuigan

The Commission found that John McGuigan engaged in corrupt conduct by:

a) deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement,

b) telling Mr Levi that he (John McGuigan) would directly contact Mr Cubbin and thereby relieving Mr Levi from having to answer Mr Cubbin's request for information about the Obeid family involvement, and

c) authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments,

with the intention, in each case, of deceiving relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in the Mount Penny tenement.

Mr Atkinson

The Commission found that Mr Atkinson engaged in corrupt conduct by:

a) deliberately failing to disclose the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement, and

b) authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments,

with the intention, in each case, of deceiving relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in the Mount Penny tenement.

Mr Kinghorn

The Commission found that Mr Kinghorn engaged in corrupt conduct by deliberately failing to disclose information to the IBC about the Obeid family involvement in the Mount Penny Tenement, with the intention of deceiving relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in that tenement.

Mr Poole

The Commission found that Mr Poole engaged in corrupt conduct by:

a) deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement,

b) telling the IBC that he was not aware of any payments having been made to Edward Obeid Sr or any entities associated with him, and

c) arranging for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments,

with the intention, in each case, of deceiving relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in the Mount Penny tenement.

8 By way of explanation:

(1) Mr Levi was an employee of an advisory firm known as Arthur Phillip Pty Ltd. The Commission found that Arthur Phillip, through its principal Mr Poole, was involved in the "extraction" of the Obeid family interests;

(2) Coal and Minerals Group (CMG) was an "inactive" company controlled by Mr Poole and his family; and

(3) Southeast Investments Group (SIG) was a shelf company that, the Commission found, was acquired on behalf of the Obeid family to hold the proceeds of their "extraction".

9 To make those findings, it was necessary for the Commission to consider, among other things, whether the conduct that it found to be proved "could constitute or involve... a criminal offence" (see s 9(1)(a) of the Independent Commission Against Corruption Act 1988 (NSW) (the ICAC Act)). I shall set out the relevant sections of the ICAC Act, and other legislation, in the next section of these reasons.

10 The Commission made findings of "criminality" (to use a convenient term) in respect of each of the individual plaintiffs.

11 As to Mr Duncan, the Commission found that his conduct could involve the offence of obtaining a financial advantage by deception, contrary to s 192E(1)(b) of the Crimes Act 1900 (NSW), and the offence of dishonestly or recklessly failing to discharge his duties as a director of White Energy in good faith or for a proper purpose, contrary to s 184(1) of the Corporations Act 2001 (Cth).

12 As to Mr McGuigan, the Commission found that his conduct could involve both the s 192E(1)(b) offence and the s 184(1) offence.

13 As to Mr Atkinson, the Commission found that his conduct could involve both the s 192E(1)(b) offence and the s 184(1) offence.

14 As to Mr Poole, the Commission found that his conduct could involve the s 192E(1)(b) offence.

15 As to Mr Kinghorn, the Commission found that his conduct could involve the section 184(1) offence.

The recommendation concerning Cascade Coal

16 In respect of Cascade Coal, the recommendation made by the Commission, so far as it is relevant, is as follows:

The Commission recommends that the NSW Government considers enacting legislation to expunge the authorities for ... Mount Penny and Glendon Brook. That could be accompanied by a power to compensate any innocent person affected by the expunging (and, if the NSW Government deems it appropriate, any refusal to grant relevant pending applications) to the extent that was considered appropriate.

The Commission is of the view that special legislation of this kind is the preferable method of expunging or cancelling the relevant authorities.

In the absence of special legislation, another reasonable option in relation to each of ... Mount Penny and Glendon Brook, is to consider cancelling the relevant authorities and refusing pending applications for assessment leases under s 380A of the Mining Act, if the minister formed the view that it is in the public interest to do so.

Furthermore, in the absence of special legislation, the authority in relation to ... could be cancelled by exercising power under s 125(1)(b2) of the Mining Act.

A possible further alternative approach is to allow the current authorities to continue until they expire and then refuse to renew them or refuse to grant a mining lease. The Commission does not favour this approach...

Relevant provisions of the ICAC Act and other legislation

17 The Commission is constituted by the ICAC Act (see s 4). By s 5, there may be appointed a Commissioner, who has and may exercise the functions conferred on him or her by or under the ICAC or any other Act. It is not necessary to set out those sections.

18 The principal objects of the Act are described in s 2A:

2A Principal objects of Act

The principal objects of this Act are:

(a) to promote the integrity and accountability of public administration by constituting an Independent Commission Against Corruption as an independent and accountable body:

(i) to investigate, expose and prevent corruption involving or affecting public authorities and public officials, and

(ii) to educate public authorities, public officials and members of the public about corruption and its detrimental effects on public administration and on the community, and

(b) to confer on the Commission special powers to inquire into allegations of corruption.

19 It is necessary to note some of the definitions in s 3(1):

corrupt conduct has the meaning given by Part 3.

public authority includes the following:

(a) a Government Department or the Teaching Service,

(b) a statutory body representing the Crown,

(c) a declared authority under the Public Service Act 1979,

(d) a person or body in relation to whom or to whose functions an account is kept of administration or working expenses, where the account:

(i) is part of the accounts prepared under the Public Finance and Audit Act 1983, or

(ii) is required by or under any Act to be audited by the Auditor-General, or

(iii) is an account with respect to which the Auditor-General has powers under any law, or

(iv) is an account with respect to which the Auditor-General may exercise powers under a law relating to the audit of accounts if requested to do so by a Minister of the Crown,

(e) a local government authority,

(f) the NSW Police Force,

(g) a body, or the holder of an office, declared by the regulations to be a body or office within this definition.

public official means an individual having public official functions or acting in a public official capacity, and includes any of the following:

(a) the Governor (whether or not acting with the advice of the Executive Council),

(b) a person appointed to an office by the Governor,

(c) a Minister of the Crown, a member of the Executive Council or a Parliamentary Secretary,

(d) a member of the Legislative Council or of the Legislative Assembly,

(e) a person employed by the President of the Legislative Council or the Speaker of the Legislative Assembly or both,

(e1) a person employed under the Members of Parliament Staff Act 2013,

(f) a judge, a magistrate or the holder of any other judicial office (whether exercising judicial, ministerial or other functions),

(g) an officer or temporary employee of the Public Service or the Teaching Service,

(h) an individual who constitutes or is a member of a public authority,

(i) a person in the service of the Crown or of a public authority,

(j) an individual entitled to be reimbursed expenses, from a fund of which an account mentioned in paragraph (d) of the definition of public authority is kept, of attending meetings or carrying out the business of any body constituted by an Act,

(k) a member of the NSW Police Force,

(k1) an accredited certifier within the meaning of the Environmental Planning and Assessment Act 1979,

(l) the holder of an office declared by the regulations to be an office within this definition,

(m) an employee of or any person otherwise engaged by or acting for or on behalf of, or in the place of, or as deputy or delegate of, a public authority or any person or body described in any of the foregoing paragraphs.

20 Part 3 of the Act concerns "corrupt conduct". That is both defined and limited by ss 7 to 9. I set them out:

7 Corrupt conduct

(1) For the purposes of this Act, corrupt conduct is any conduct which falls within the description of corrupt conduct in either or both of subsections (1) and (2) of section 8, but which is not excluded by section 9.

(2) Conduct comprising a conspiracy or attempt to commit or engage in conduct that would be corrupt conduct under section 8 (1) or (2) shall itself be regarded as corrupt conduct under section 8 (1) or (2).

(3) Conduct comprising such a conspiracy or attempt is not excluded by section 9 if, had the conspiracy or attempt been brought to fruition in further conduct, the further conduct could constitute or involve an offence or grounds referred to in that section.

8 General nature of corrupt conduct

(1) Corrupt conduct is:

(a) any conduct of any person (whether or not a public official) that adversely affects, or that could adversely affect, either directly or indirectly, the honest or impartial exercise of official functions by any public official, any group or body of public officials or any public authority, or

(b) any conduct of a public official that constitutes or involves the dishonest or partial exercise of any of his or her official functions, or

(c) any conduct of a public official or former public official that constitutes or involves a breach of public trust, or

(d) any conduct of a public official or former public official that involves the misuse of information or material that he or she has acquired in the course of his or her official functions, whether or not for his or her benefit or for the benefit of any other person.

(2) Corrupt conduct is also any conduct of any person (whether or not a public official) that adversely affects, or that could adversely affect, either directly or indirectly, the exercise of official functions by any public official, any group or body of public officials or any public authority and which could involve any of the following matters:

(a) official misconduct (including breach of trust, fraud in office, nonfeasance, misfeasance, malfeasance, oppression, extortion or imposition),

(b) bribery,

(c) blackmail,

(d) obtaining or offering secret commissions,

(e) fraud,

(f) theft,

(g) perverting the course of justice,

(h) embezzlement,

(i) election bribery,

(j) election funding offences,

(k) election fraud,

(l) treating,

(m) tax evasion,

(n) revenue evasion,

(o) currency violations,

(p) illegal drug dealings,

(q) illegal gambling,

(r) obtaining financial benefit by vice engaged in by others,

(s) bankruptcy and company violations,

(t) harbouring criminals,

(u) forgery,

(v) treason or other offences against the Sovereign,

(w) homicide or violence,

(x) matters of the same or a similar nature to any listed above,

(y) any conspiracy or attempt in relation to any of the above.

(3) Conduct may amount to corrupt conduct under this section even though it occurred before the commencement of this subsection, and it does not matter that some or all of the effects or other ingredients necessary to establish such corrupt conduct occurred before that commencement and that any person or persons involved are no longer public officials.

(4) Conduct committed by or in relation to a person who was not or is not a public official may amount to corrupt conduct under this section with respect to the exercise of his or her official functions after becoming a public official.

(5) Conduct may amount to corrupt conduct under this section even though it occurred outside the State or outside Australia, and matters listed in subsection (2) refer to:

(a) matters arising in the State or matters arising under the law of the State, or

(b) matters arising outside the State or outside Australia or matters arising under the law of the Commonwealth or under any other law.

(6) The specific mention of a kind of conduct in a provision of this section shall not be regarded as limiting the scope of any other provision of this section.

9 Limitation on nature of corrupt conduct

(1) Despite section 8, conduct does not amount to corrupt conduct unless it could constitute or involve:

(a) a criminal offence, or

(b) a disciplinary offence, or

(c) reasonable grounds for dismissing, dispensing with the services of or otherwise terminating the services of a public official, or

(d) in the case of conduct of a Minister of the Crown or a member of a House of Parliament-a substantial breach of an applicable code of conduct.

(2) It does not matter that proceedings or action for such an offence can no longer be brought or continued, or that action for such dismissal, dispensing or other termination can no longer be taken.

(3) For the purposes of this section:

applicable code of conduct means, in relation to:

(a) a Minister of the Crown-a ministerial code of conduct prescribed or adopted for the purposes of this section by the regulations, or

(b) a member of the Legislative Council or of the Legislative Assembly (including a Minister of the Crown)-a code of conduct adopted for the purposes of this section by resolution of the House concerned.

criminal offence means a criminal offence under the law of the State or under any other law relevant to the conduct in question.

disciplinary offence includes any misconduct, irregularity, neglect of duty, breach of discipline or other matter that constitutes or may constitute grounds for disciplinary action under any law.

(4) Subject to subsection (5), conduct of a Minister of the Crown or a member of a House of Parliament which falls within the description of corrupt conduct in section 8 is not excluded by this section if it is conduct that would cause a reasonable person to believe that it would bring the integrity of the office concerned or of Parliament into serious disrepute.

(5) Without otherwise limiting the matters that it can under section 74A (1) include in a report under section 74, the Commission is not authorised to include a finding or opinion that a specified person has, by engaging in conduct of a kind referred to in subsection (4), engaged in corrupt conduct, unless the Commission is satisfied that the conduct constitutes a breach of a law (apart from this Act) and the Commission identifies that law in the report.

(6) A reference to a disciplinary offence in this section and sections 74A and 74B includes a reference to a substantial breach of an applicable requirement of a code of conduct required to be complied with under section 440 (5) of the Local Government Act 1993, but does not include a reference to any other breach of such a requirement.

21 Part 4 of the Act deals with the functions of the Commission. The principal functions are set out in s 13:

13 Principal functions

(1) The principal functions of the Commission are as follows:

(a) to investigate any allegation or complaint that, or any circumstances which in the Commission's opinion imply that:

(i) corrupt conduct, or

(ii) conduct liable to allow, encourage or cause the occurrence of corrupt conduct, or

(iii) conduct connected with corrupt conduct,

may have occurred, may be occurring or may be about to occur,

(b) to investigate any matter referred to the Commission by both Houses of Parliament,

(c) to communicate to appropriate authorities the results of its investigations,

(d) to examine the laws governing, and the practices and procedures of, public authorities and public officials, in order to facilitate the discovery of corrupt conduct and to secure the revision of methods of work or procedures which, in the opinion of the Commission, may be conducive to corrupt conduct,

(e) to instruct, advise and assist any public authority, public official or other person (on the request of the authority, official or person) on ways in which corrupt conduct may be eliminated,

(f) to advise public authorities or public officials of changes in practices or procedures compatible with the effective exercise of their functions which the Commission thinks necessary to reduce the likelihood of the occurrence of corrupt conduct,

(g) to co-operate with public authorities and public officials in reviewing laws, practices and procedures with a view to reducing the likelihood of the occurrence of corrupt conduct,

(h) to educate and advise public authorities, public officials and the community on strategies to combat corrupt conduct,

(i) to educate and disseminate information to the public on the detrimental effects of corrupt conduct and on the importance of maintaining the integrity of public administration,

(j) to enlist and foster public support in combating corrupt conduct,

(k) to develop, arrange, supervise, participate in or conduct such educational or advisory programs as may be described in a reference made to the Commission by both Houses of Parliament.

(1A) Subsection (1) (d) and (f)-(h) do not extend to the conduct of police officers, Crime Commission officers or administrative officers within the meaning of the Police Integrity Commission Act 1996.

(2) The Commission is to conduct its investigations with a view to determining:

(a) whether any corrupt conduct, or any other conduct referred to in subsection (1) (a), has occurred, is occurring or is about to occur, and

(b) whether any laws governing any public authority or public official need to be changed for the purpose of reducing the likelihood of the occurrence of corrupt conduct, and

(c) whether any methods of work, practices or procedures of any public authority or public official did or could allow, encourage or cause the occurrence of corrupt conduct.

(2A) Subsection (2) (a) does not require the Commission to make a finding, on the basis of any investigation, that corrupt conduct, or other conduct, has occurred, is occurring or is about to occur.

(3) The principal functions of the Commission also include:

(a) the power to make findings and form opinions, on the basis of the results of its investigations, in respect of any conduct, circumstances or events with which its investigations are concerned, whether or not the findings or opinions relate to corrupt conduct, and

(b) the power to formulate recommendations for the taking of action that the Commission considers should be taken in relation to its findings or opinions or the results of its investigations.

(3A) The Commission may make a finding that a person has engaged or is engaging in corrupt conduct of a kind described in paragraph (a), (b), (c) or (d) of section 9 (1) only if satisfied that a person has engaged in or is engaging in conduct that constitutes or involves an offence or thing of the kind described in that paragraph.

(4) The Commission is not to make a finding, form an opinion or formulate a recommendation which section 74B (Report not to include findings etc of guilt or recommending prosecution) prevents the Commission from including in a report, but section 9 (5) and this section are the only restrictions imposed by this Act on the Commission's powers under subsection (3).

(5) The following are examples of the findings and opinions permissible under subsection (3) but do not limit the Commission's power to make findings and form opinions:

(a) findings that particular persons have engaged, are engaged or are about to engage in corrupt conduct,

(b) opinions as to:

(i) whether the advice of the Director of Public Prosecutions should be sought in relation to the commencement of proceedings against particular persons for criminal offences against laws of the State, or

(ii) whether consideration should or should not be given to the taking of other action against particular persons,

(c) findings of fact.

22 In this case, attention focused on sub-ss (3), (5).

23 The topic of reports is dealt with in Part 8 of the ICAC Act. Sections 73, 74 and 74B are relevant. In this case, the reference to the Commission was by both Houses of Parliament (s 73(1)) and thus the Commission was required to prepare a report (s 74(2)). In those circumstances, the limitations contained in s 74B apply.

24 I set out those sections:

73 References by Parliament

(1) Both Houses of Parliament may, by resolution of each House, refer to the Commission any matter as referred to in section 13.

(2) It is the duty of the Commission to fully investigate a matter so referred to it for investigation.

(3) It is the duty of the Commission to comply as fully as possible with any directions contained in a reference of a matter referred to in section 13 (1) (k).

(4) Both Houses of Parliament may, by resolution of each House, amend or revoke a reference made under this section.

74 Reports on referred matters etc

(1) The Commission may prepare reports in relation to any matter that has been or is the subject of an investigation.

(2) The Commission shall prepare reports in relation to a matter referred to the Commission by both Houses of Parliament, as directed by those Houses.

(3) The Commission shall prepare reports in relation to matters as to which the Commission has conducted a public inquiry, unless the Houses of Parliament have given different directions under subsection (2).

(4) The Commission shall furnish reports prepared under this section to the Presiding Officer of each House of Parliament.

(5), (6) (Repealed)

(7) A report required under this section shall be furnished as soon as possible after the Commission has concluded its involvement in the matter.

(8) The Commission may defer making a report under this section if it is satisfied that it is desirable to do so in the public interest, except as regards a matter referred to the Commission by both Houses of Parliament.

(9) (Repealed)

74B Report not to include findings etc of guilt or recommending prosecution

(1) The Commission is not authorised to include in a report under section 74 a statement as to:

(a) a finding or opinion that a specified person is guilty of or has committed, is committing or is about to commit a criminal offence or disciplinary offence (whether or not a specified criminal offence or disciplinary offence), or

(b) a recommendation that a specified person be, or an opinion that a specified person should be, prosecuted for a criminal offence or disciplinary offence (whether or not a specified criminal offence or disciplinary offence).

(2) A finding or opinion that a person has engaged, is engaging or is about to engage:

(a) in corrupt conduct (whether or not specified corrupt conduct), or

(b) in specified conduct (being conduct that constitutes or involves or could constitute or involve corrupt conduct),

is not a finding or opinion that the person is guilty of or has committed, is committing or is about to commit a criminal offence or disciplinary offence.

(3) In this section and section 74A, criminal offence and disciplinary offence have the same meanings as in section 9.

25 I have described, although briefly, the offences to which the Commission referred under s 184(1) of the Corporations Act and s 192E(1)(b) of the Crimes Act. I set out those sections:

184 Good faith, use of position and use of information-criminal offences

Good faith-directors and other officers

(1) A director or other officer of a corporation commits an offence if they:

(a) are reckless; or

(b) are intentionally dishonest;

and fail to exercise their powers and discharge their duties:

(c) in good faith in the best interests of the corporation; or

(d) for a proper purpose.

Note: Section 187 deals with the situation of directors of wholly-owned subsidiaries.

192E Fraud

(1) A person who, by any deception, dishonestly:

(a) obtains property belonging to another, or

(b) obtains any financial advantage or causes any financial disadvantage, is guilty of the offence of fraud.

Maximum penalty: Imprisonment for 10 years.

26 Section 184(1) refers to "reckless" or "intentionally dishonest" behaviour. That calls up relevant provisions of the Criminal Code 1995 (Cth). In Division 5 of Part 2.2, intention and recklessness are described, respectively, by ss 5.2 and 5.4:

5.2 Intention

(1) A person has intention with respect to conduct if he or she means to engage in that conduct.

(2) A person has intention with respect to a circumstance if he or she believes that it exists or will exist.

(3) A person has intention with respect to a result if he or she means to bring it about or is aware that it will occur in the ordinary course of events.

5.4 Recklessness

(1) A person is reckless with respect to a circumstance if:

(a) he or she is aware of a substantial risk that the circumstance exists or will exist; and

(b) having regard to the circumstances known to him or her, it is unjustifiable to take the risk.

(2) A person is reckless with respect to a result if:

(a) he or she is aware of a substantial risk that the result will occur; and

(b) having regard to the circumstances known to him or her, it is unjustifiable to take the risk.

(3) The question whether taking a risk is unjustifiable is one of fact.

(4) If recklessness is a fault element for a physical element of an offence, proof of intention, knowledge or recklessness will satisfy that fault element.

27 In relation to s 192E(1)(b) of the Crimes Act, it is necessary to note two things. The first is the definition of dishonesty in s 4B of that Act:

4B Dishonesty

(1) In this Act:

dishonest means dishonest according to the standards of ordinary people and known by the defendant to be dishonest according to the standards of ordinary people.

(2) In a prosecution for an offence, dishonesty is a matter for the trier of fact.

28 The second thing to note is that the operation of s 192E is in some respects modified, and in others extended, by s 192D:

192D Obtaining financial advantage or causing financial disadvantage

(1) In this Part, obtain a financial advantage includes:

(a) obtain a financial advantage for oneself or for another person, and

(b) induce a third person to do something that results in oneself or another person obtaining a financial advantage, and

(c) keep a financial advantage that one has,

whether the financial advantage is permanent or temporary.

(2) In this Part, cause a financial disadvantage means:

(a) cause a financial disadvantage to another person, or

(b) induce a third person to do something that results in another person suffering a financial disadvantage,

whether the financial disadvantage is permanent or temporary.

29 I shall set out relevant provisions of the Mining Act, the Environmental Planning and Assessment Act 1979 (NSW), and other legislation or legislative instruments later in these reasons, where their operation requires consideration.

The Court's power to grant relief

30 It was common ground that the power of the Court to intervene, and the manner in which it may do so, were described in cases such as Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125 and D'Amore v Independent Commission Against Corruption (2013) 303 ALR 242.

31 In Greiner, Gleeson CJ pointed out at 130 that although there was no right of appeal from a finding of corruption:

.... the Supreme Court has both an inherent and a statutory jurisdiction to supervise the functioning of administrative tribunals, to ensure that they carry out their functions and perform their duties in accordance with law.

32 At 148, Gleeson CJ stated that the Commission was amenable to declaratory relief but that an order in the nature of certiorari was not available. That was so, his Honour said:

... because, technically, determinations of the Commission, although they may be extremely damaging to the reputations of individuals, do not have legal consequences. A determination of the Commission does not create or affect legal rights or obligations. The function of an order of certiorari is "to quash the legal effect or the legal consequences of the decision or order under review"... However, declaratory relief is available...

33 Priestley JA, who with Gleeson CJ formed the majority in Greiner, agreed with the orders proposed by Gleeson CJ.

34 The decision in D'Amore establishes that the Commission is required to give reasons for the decisions or recommendations that it makes. Beazley P, with whom Bathurst CJ agreed, said as much at [100]. Her Honour said at [105] that those reasons should record the steps taken in reaching the stated decision or recommendation. That is so because, as her Honour had noted at [103], there is a requirement "that a decision of the kind that may be made under the [ICAC] Act must be in conformity with the law and be reasonable...". However, her Honour said at [106], the Commission's decisions should not be too closely scrutinised so as to equate infelicity of expression with legal inadequacy, and its reasons "must be read fairly and without a requirement that every piece of evidence be reproduced".

35 Against that background, the authorities to which I have referred (and others) suggest that declaratory relief, of the type prayed by the plaintiffs in the proceedings with which I am dealing, may be granted where:

(1) there is a material error of law on the face of the record (which includes the reasons given for the decision - see s 69(4) of the Supreme Court Act 1970 (NSW));

(2) the reasoning is not objectively reasonable, in the sense that the decision was not one that could have been reached by a reasonable person acquainted with all material facts and having a proper understanding of the statutory function, or was not based on a process of logical reasoning from proven facts or proper inferences therefrom;

(3) there is a finding that is not supported by any evidence whatsoever - that is to say, there is no evidence that could rationally support the impugned finding;

(4) relevant matters have not been taken into account, or irrelevant matters have been taken into account; and

(5) there has been a material denial of natural justice.

36 As the last point indicates, the requirements of natural justice are applicable. They should be applied flexibly in the circumstances of each individual inquiry. See Glynn v Independent Commission Against Corruption (1990) 20 ALD 214 at 215, where Wood J said:

There can be no doubt that the Commissioner was bound to observe the rules of natural justice, the content of which is variable according to the requirements of each case, but hinges on the notion of fairness... .

37 Mr Jackson of Queens Counsel, who appeared with Mr Barry of Queens Counsel and Mr Livingston of Counsel for Messrs McGuigan, Atkinson and Poole and for the corporate plaintiffs, submitted that the state of satisfaction, as to whether a person is "corrupt" within the meaning of s 8(2) of the ICAC Act, is a jurisdictional fact: a precondition to the exercise of the statutory power to make a finding that a person has engaged in corrupt conduct. That was said to be so because the power to make such a finding is conditioned by ss 9(5) and 13(3A). It followed, Mr Jackson submitted, that if the Commission reached the conclusion that a person was corrupt, on the basis of an incorrect construction of the language of the statute, the jurisdictional fact could not exist.

38 The concept of "jurisdictional fact" is relevant to findings to be made by the Commission (see, for example Beazley P in D'Amore at [51]). The jurisdictional facts include those identified, as Mr Jackson correctly submitted, by ss 9(5) and 13(3A). It is only if those jurisdictional facts exist that the Commission may take the step of finding that a specified person has engaged in corrupt conduct (s 9(5)), or has engaged or is engaging in corrupt conduct of the specified kind (s 13(3A)). And it is only if those jurisdictional facts exist that the Commission is authorised to report, in accordance with s 74, that a person has engaged in corrupt conduct.

39 The requirement to identify jurisdictional facts directs attention to the need to find a breach of the law (s 9(5)) or an offence of the kind referred to in s 9(1) (s 13(3A)). If the Commission's conclusions on those jurisdictional facts are not soundly based, the Court may intervene.

The issues for decision

40 Against the background that I have stated, I turn to the real issues for decision, as they appear in particular from the parties' written submissions. There was a considerable overlap, in the sense that each of the individual plaintiffs raised most of the issues that I shall set out. Where that has happened, I have attempted to rationalise the differing language in which those issues were expressed in their written submissions.

41 The first group of issues relates to the construction and application of the requirement, in s 8(2) of the ICAC Act, that the conduct must be such that it "could adversely affect, either directly or indirectly, the exercise of official functions by any public official... [etc]". The individual plaintiffs contended that the Commission was required to, but did not:

(1) identify with some precision the "official functions", the exercise of which might be adversely affected by the conduct in question;

(2) identify the "public official" (etc.) by whom those official functions were exercisable; and

(3) address how it was that the conduct found to have occurred could adversely affect the exercise of those identified official functions by those identified public officials.

42 The plaintiffs submitted, additionally and alternatively, that in any event there were no official functions that could have been engaged having regard to the nature of the conduct and other matters that had been found. Mr Hutley of Senior Counsel, who appeared with Mr Ng of Counsel for Mr Duncan, submitted that there was only an "invocation of hypothetical functions, hypothetical officials and hypothetical authorities".

43 The next group of issues relates to the requirements of s 9(1)(a) of the ICAC Act. The individual plaintiffs contended that the Commission had misconstrued ss 184(1) of the Corporations Act and 192E(1)(b) of the Crimes Act, because:

(1) as to s 184(1) (to the extent that it is relevant to any individual plaintiff), the Commission's conclusion that the elements of the offence had been made out was based on the proposition (said to be wrong in law) that the fiduciary duty which each relevant plaintiff owed to White Energy by virtue of his being a director of that company required, in the circumstances, "proactive disclosure"; and

(2) as to s 192E(1)(b) (again, to the extent that it is relevant to any individual plaintiff), the evidence did not establish, and it was not open to the Commission to find, that any individual plaintiff obtained any financial advantage, nor that he had acted dishonestly.

44 The issues in respect of denial of natural justice are not susceptible of brief summary. In some cases, it was submitted (in the alternative to the contentions summarised at [41] above), that the failure to identify, during the course of the hearing, the relevant official functions or public official meant that the plaintiffs were denied natural justice, because they were unable to respond to the cases against them.

45 Other plaintiffs (specifically, Messrs McGuigan, Poole and Atkinson; but their submissions on this point were adopted by Mr Kinghorn and also, I think, by Mr Duncan) submitted that the failure to identify, in the course of evidence, the offences that it was to be alleged they had committed, and the failure to put to them specifically the elements of those offences, amounted to denial of natural justice.

46 The issues as to absence of evidence are even more difficult to summarise. The starting point of those submissions, undoubtedly correct on the authorities (see, for example, Beazley P in D'Amore at [6]), was that although any finding of corrupt conduct that the Commission makes is to be supported not on the criminal onus but on the balance of probabilities, nonetheless the "Briginshaw" test applies (Briginshaw v Briginshaw (1938) 60 CLR 336 at 361 - 362). That is to say, the finding must take into account the serious nature of the conduct that is alleged and the grave consequences of making the finding; and the finding is not to be made without clear or cogent evidence, assessed on the balance of probabilities, that the conduct occurred.

47 The next step was to identify specific findings that were said to be unsupported by any evidence. The plaintiffs recognised that if there were evidence to support a finding, the Commission's decision to accept and rely on that evidence was not something that could be reviewed in this Court. (It seems to me that there may be a degree of tension between this statement of principle, and the insistence in some cases that the Briginshaw requirement had not been met.) However, it was submitted, in many cases there was simply no evidence to support the finding, or none that was referred to in the Commission's reasons.

48 The issues as to inadequacy of reasons are somewhat disparate. In some cases, it was submitted that the failure to identify with the asserted requisite degree of specificity the official functions or public officials in question could be characterised, in the further alternative, as a failure to give adequate reasons. In other cases, it was submitted that, to the extent that there was some factual basis for the conclusions reached, the asserted failure to identify those matters in the reasons was likewise able to be characterised as inadequacy of reasons.

49 When I deal with the various groups of issues, I shall include a brief outline of the competing submissions. Those submissions were extremely lengthy and complex. I shall not attempt to reproduce the detail and variety of the ways in which the competing cases were put. Instead, I shall outline the fundamental points made, so as to enable the reader to understand what were the contests and why it is that I have reached the conclusions set out. I might add that the complexity of the submissions has made it difficult to achieve even the overly verbose statement of the issues that has been set out in the preceding paragraphs.

First group of issues: the requirements of s 8(2)

The Commission's findings

50 It is convenient to introduce this topic by setting out the way in which the Commission expressed its conclusions on s 8(2) in the first report. It is sufficient to set out the relevant findings in respect of Mr Duncan:

The Commission is satisfied that Mr Duncan knew that, if the NSW Government found out that the Obeids had been involved in the creation of the Mount Penny tenement or in the allocation of the Mount Penny exploration licence or had a beneficial interest in the Mount Penny tenement, the NSW Government might take action to set aside the Mount Penny exploration licence or not grant a mining lease in which case the assets of Cascade, of which Mr Duncan was an investor, would be jeopardised. He therefore intended to hide from the NSW Government and relevant public officials the Obeid family involvement. The Commission is satisfied that the steps he took to do this included:

(a) deliberately misleading Mr Cubbin as to the Obeid family involvement in the Mount Penny tenement by failing to disclose the involvement to Mr Cubbin when Mr Cubbin raised the issue with him

(b) deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement

(c) telling Mr Levi that John McGuigan would directly contact Mr Cubbin and thereby relieving Mr Levi from having to answer Mr Cubbin's request for information about the Obeid family involvement

(d) authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments.

The Commission is satisfied that a substantial purpose in taking these steps was to prevent public officials and public authorities from learning of the Obeid family involvement in the Mount Penny tenement and that Mr Duncan thereby intended to deceive relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in that tenement.

Mr Duncan's conduct as set out in a) to d) above with the intention, in each case, of deceiving relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in the Mount Penny tenement, is corrupt conduct for the purpose of s 8(2) of the ICAC Act. This is because his conduct could have adversely affected, either directly or indirectly, the exercise of official functions by any public official or public authority reviewing the creation of the Mount Penny tenement or the grant of exploration licences over the Mount Penny tenement (including the circumstances surrounding the granting of such licences) or the official functions of any public official or public authority considering whether to grant a mining lease over the Mount Penny tenement and could also involve fraud or company violations and therefore comes within s 8(2)(e) and s 8(2)(s) of the ICAC Act.

51 The report then turned to consider why it was that the conduct the subject of those conclusions could constitute or involve a criminal offence. Having done that, it set out the findings of corrupt conduct in the form that I have stated already in these reasons.

52 The same process was followed for each other individual plaintiff, although of course the "steps" were different in each case, as were the consideration of the criminality of the conduct and the actual findings of corrupt conduct. Since the individual findings of corrupt conduct have been set out already, it is not necessary to do more than set out the "steps" that each other individual plaintiff is said to have taken.

53 As to Mr McGuigan, those steps were:

...

a) deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement

b) telling Mr Levi that he (John McGuigan) would directly contact Mr Cubbin and thereby relieving Mr Levi from having to answer Mr Cubbin's request for information about the Obeid family involvement

c) authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments.

...

54 As to Mr Poole, those steps were:

...

a) deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement,

b) telling the IBC that he was not aware of any payments having been made to Edward Obeid Sr or any entities associated with him, and

c) arranging for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments,

...

55 As to Mr Atkinson, those steps were:

...

a) deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement

b) authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture through Coal & Minerals Group and Southeast Investments.

...

56 As to Mr Kinghorn, those steps were:

... deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement.

57 As one would expect, there was individual treatment of the significance of the "steps" in each case, and as to the criminality said to be involved in the conduct that had been found.

Public officials and official functions: the first two suggested categories

The parties' submissions

58 The submissions for the individual plaintiffs emphasised, one way or another, that the conduct found (the "steps") fell into two groups. The first group related to misleading Mr Cubbin or the IBC, or withholding, or causing to be withheld, information from Mr Cubbin or the IBC. The second group related to the "extraction" of the Obeids from the Mount Penny joint venture.

59 As to the first group of steps, the plaintiffs submitted that neither Mr Cubbin nor the IBC was a "public official" or that he or it exercised "official functions". Those propositions are correct.

60 The next step in the submissions was to identify the three categories of public officials, or the three categories of official functions, nominated in the report (I paraphrase):

(1) a public official reviewing the creation of the Mount Penny tenement;

(2) a public official reviewing the grant of exploration licences over the Mount Penny tenement; and

(3) a public official considering whether to grant a mining lease of the Mount Penny tenement.

61 Next, it was submitted, there was no "official function" to be found in the Mining Act or the Regulations made under it that created any official function of reviewing the creation of the Mount Penny tenement or the grant of exploration licences over it.

62 Mr Hutley (who took the lead on this issue) accepted, I think, that consideration of an application for the grant of a mining lease was an official function, and to that extent was identified in the report. Further, although the officials who might perform that function were not specifically identified, Mr Hutley appeared to accept that identification of the function itself, being undoubtedly one to be performed by public officials, was sufficient. However, he submitted, the conduct found to have occurred was incapable of affecting, let alone of affecting adversely, the exercise of that function. He submitted that this was so because, in effect, the identified conduct was irrelevant to the elements of the statutory discretion.

63 Mr Watson of Senior Counsel, who appeared with Mr Free and Ms Heger of Counsel for the Commission, submitted that the plaintiffs' approach to construction of s 8(2) was unduly restrictive. He emphasised the objects of the ICAC Act, both as set out in s 2A and as discernable from its provisions, the obvious public importance attending the achievement of those objects and, more generally, the public beneficial nature of the legislation.

64 Mr Watson submitted that it was not necessary to identify specific functions described in the Mining Act or the Regulations. He submitted that official functions would include the day to day business of government, and extended beyond the exercise of particular described powers. I set out, so far as it is relevant, para 33 of the written submissions for the Commission:

33. First, the phrase "official functions", in its ordinary meaning, is not limited to the exercise of particular powers (statutory or otherwise). Official functions include the day-to-day business of government. They include the process of investigating a policy issue, consulting with relevant stakeholders, assessing merits, formulating potential options, briefing the relevant decision-makers and then implementing the preferred option. The option may involve the exercise of a particular power. But it may involve a range of other conduct including developing guidelines, policies or the drafting of legislation.

65 Mr Watson relied on the fact that s 8(2) catches both "conduct... that adversely affects" and "conduct... that could adversely affect" the exercise of official functions. He submitted that the word "could" meant no more than "has the capacity to". It followed, as I understood the submission, that it was not necessary that the Commission should find a definite and precise link between specified conduct and specified functions. It would be sufficient, for the purposes of s 8(2), that conduct might affect adversely the exercise of functions that could be described as official.

66 Mr Hutley submitted, in response, that the word "could" should be taken to indicate something more than mere possibility. There must be more then a "bare theoretical possibility of an adverse effect", he submitted, it must be said "that the finding of an adverse effect is reasonably open".

Decision

67 The starting point seems to me to be that although the expression "official functions" is not defined, those functions, in context, must be functions lawfully exercisable by public officials, or public authorities, acting in their official capacity. That is plain enough, in the case of public officials, from the definition of "public official" in s 3(1). There is no reason to think that any different approach should be taken to the functions of public authorities. That view of s 8(1), (2) is supported by reference to the principal objects of the ICAC Act set in s 2A, which focus on "public administration", "public authorities" and "public officials".

68 The next point to note is that for either of sub-ss (1) or (2) of s 8 to be satisfied, it must be possible to say that the conduct suggested to be corrupt adversely affects, or could adversely affect, the exercise of official functions so understood. For that to be said, there must be identified both conduct and official functions, and a rational basis on which it can be said that the former does or could adversely affect the latter.

69 Of course, the conduct itself must be identified. But identification of the conduct is the first step, not the conclusion. Before the conduct, clearly identified, can be characterised as corrupt, its effect on the exercise of official functions must be analysed.

70 Analysis of the effect of possibly corrupt conduct is not undertaken in a vacuum. The conduct cannot be corrupt, for the purposes of the ICAC Act, unless (among other things) it has, or could have, the adverse effect, on the exercise of official functions, stated in s 8(1) or (2).

71 In my view, as a matter of language, conduct could not be characterised as conduct that has, or could have, an adverse effect on the exercise of official functions unless those functions themselves are identified with some degree of precision. That is clear enough in the case of conduct that is said to have had an actual, rather than a possible, effect. Why should the analysis be any different in the case of conduct, of which it is said that it might have that effect?

72 Mr Watson appeared to suggest that the formulation "could adversely affect" introduced a degree of, for want of a better word, imprecision into the required analysis. That is correct, at a level of some generality. But, at that level of generality, the proposition is not particularly illuminating (and that is not a criticism of the submission, which was more sophisticated than my summary of it).

73 The statutory juxtaposition of "conduct that [does] adversely affect" with "conduct that could adversely affect" indicates that something less than the degree of certainty required to conclude that conduct falls into the former category is required to justify a conclusion that it falls into the latter category. That, I think, is the function of the modal verb "could" in this context. But putting the matter in those terms does not answer the question. It leaves for consideration the degree of probability, or certainty, that is required, before it can be said that conduct falls into the latter category.

74 Mr Hutley relied on the analyses undertaken by Gleeson CJ and Priestley JA in Greiner, at 136 and 187 respectively. Their Honours were dealing with s 9(1)(a). Priestley JA said at 187 that, in the context of that provision, the word "could" meant "would, if proved".

75 I do not think that the same meaning can be given to "could" in s 8(1),(2). As I have said, those provisions appear to contrast, on the one hand, conduct that does adversely affect the exercise of official functions and, on the other, conduct that could have that effect. That contrast to my mind suggests that the modal verb is intended to refer to possibility rather than (as at one point Mr Watson appeared to submit) futurity. But again, saying this does no more than leave open the question: what is the necessary degree of possibility?

76 The inquiry required by s 8(1), (2), is fact-driven. It requires (as Gleeson CJ said in Greiner at 136, of the inquiry under s 9(1)(a)) that the facts be found. But the ascription of the statutory character or consequences to those facts (that they do, or could, adversely affect the exercise of official functions) requires more than the establishment of the facts. It requires, also, some understanding of the functions, the exercise of which might be adversely affected. If it were otherwise, it would not be possible to say that some link existed between the conduct and those functions. And if that link could not be described, there would be no rational basis for characterising it in the terms that the subsections require.

77 The first two categories of functions suggested - reviewing the creation of the tenement and reviewing the grant of the exploration licenses - do not seem to have any statutory foundation. That is to say, there does not appear to be any statutory power to undertake those functions, at least in a way that might lead to some consequence adverse to the holder of the licences (in this case, the corporate plaintiffs).

78 I do not think that the s 8(1) or (2) inquiry requires the identification, by reference to specific legislative or regulatory provisions, of the official functions, the exercise of which might be adversely affected. Nor do I think that the inquiry requires the precise identification, by position or otherwise, of the very officials, or authorities, who exercise those functions. The plaintiffs did not put the matter so high. As I have noted, Mr Hutley appeared to accept that the third category of adverse effect identified by the Commission - the official functions involved in the grant of a mining lease - did sufficiently describe the functions and, by implication, the officials who exercised them.

79 The next step in the statutory analysis requires consideration of the way in which conduct that is found to have occurred has or could have an adverse effect on the officials and functions that are identified. That requires, as I have said, that there be some rational link between the two.

80 In many cases, it will not be difficult to see the rational link; and in such cases, it might not be necessary to do a great deal by way of identification of the functions. An obvious example is the payment of bribes, or the provision of other favours, in return for the proverbial blind eye. But, in respect of the first two categories suggested by the Commission, this is not such a case.

81 Mr Watson sought to deal with this by identifying particular kinds of official function that might fall within the first two categories. There are difficulties with this approach. The first is that the analysis was not one undertaken by the Commission. Thus, it cannot be said to be an analysis that underpins the Commission's reasons on this point. (In this context, the general proposition that where a decision-maker is required to state reasons, the reasons given record the steps that were taken, is apposite: see Beazley P in D'Amore at [101] to [104].)

82 Mr Watson referred to s 114 of the Mining Act. That section deals with renewal applications. It reads as follows:

114 Power of decision-maker in relation to renewal applications

(1) After considering an application for the renewal of an authority, the decision-maker:

(a) may renew the authority, or

(b) may refuse the application.

(2) Without limiting the generality of subsection (1) or any other provision of this Act, an application may be refused on any one or more of the following grounds:

(a) that the decision-maker is satisfied that the applicant (or, in the case of an applicant that is a corporation, a director of the corporation) has contravened this Act or the regulations or a condition of the authority (whether or not the person has been prosecuted or convicted of any offence arising from the contravention) or has been convicted of any other offence relating to mining or minerals,

(b) that the decision-maker is satisfied that a person has contravened a condition of the authority (whether or not the person has been prosecuted or convicted of any offence arising from the contravention),

(c) that the decision-maker is satisfied that the holder of the authority provided false or misleading information in or in connection with the application or any report provided under this Act for or with respect to the authority.

(3) The period for which an authority is renewed may not on any one occasion exceed:

(a) 5 years in the case of an exploration licence or assessment lease, or

(b) 21 years (or such longer period as the decision-maker may, with the concurrence of the Premier, determine) in the case of a mining lease.

(4) On renewing an authority, the decision-maker may amend any of the conditions of the authority and may include further conditions in the authority.

(5) The area of land over which an authority is renewed may differ from the area of land over which the renewal of the authority is sought, but not so as to include any land that was not subject to the authority immediately before the renewal.

(6) The area of land over which an exploration licence may be renewed is not to exceed half the area over which the licence was in force when the application for renewal was made unless the decision-maker is satisfied that special circumstances exist that justify renewal of the licence over a larger area.

(7) The decision-maker may defer dealing with an application for the renewal of a mining lease over any land if the mining lease is the subject of action being taken under Part 6 in connection with the granting of a consolidated mining lease over that land.

83 There does not seem to be anything in s 114 which would enable the decision-maker to take into account, in dealing with a hypothetical application for renewal of the exploration licences, the conduct found by the Commission. Thus, it is not possible to say that any rational link might exist between that conduct and the exercise of official functions in respect of any renewal application.

84 Another problem with this aspect of Mr Watson's submissions is that, because the suggested functions and particular legislative provision were not referred to in the course of the public hearing or in closing submissions, the individual plaintiffs were not given any opportunity to adduce evidence or to put submissions in respect of those matters. Thus, now to accept Mr Watson's submissions would entail a real denial of natural justice.

85 In respect of the first and second categories of official functions identified in the Commission's findings (and in respect of the first and second categories of public officials or authorities by whom those functions might be exercisable), I conclude that the first report does not comply with the requirements of the ICAC Act, because it does not identify, in the way that s 8(2) on its proper construction requires, either the official functions that could have been affected adversely or the public officials or authorities by whom those functions were exercisable.

Third category of functions: the grant of a mining lease

86 I turn to the third category: official functions relating to the grant of a mining lease, and start by giving a little more detail of the parties' positions.

The parties' submissions

87 It appeared to be common ground that a mining lease could not be granted over the Mount Penny tenement unless there were in place "an appropriate development consent" (see s 65(2) of the Mining Act). It appeared also to be common ground that by virtue of Schedule 1 to State Environmental Planning Policy (Major Development) 2005, development consent would be necessary under what was Part 3A of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act). In very broad terms, the relevant effect of Part 3A (since repealed) was that if the responsible minister (the Planning Minister) had given approval under Part 3A, a mining lease could not be refused. In deciding whether or not to grant approval under Part 3A, the Planning Minister was required to consider a report that the Director-General of the Department of Planning and Infrastructure was required to prepare.

88 The Director-General was required, by cl 8B of the Environmental Planning and Assessment Regulation 2000 (the EPA Regulation) to consider, among other things, "any aspect of the public interest that the Director-General considers relevant to the project".

89 As I have said, the Planning Minister was required to consider the Director-General's report. It seems to have been common ground that it would have been open to the Planning Minister to take (and act on) a different view to that taken by the Director-General of public interest considerations. In any event, that must be so. Performance of the requirement to "consider" a report involves the application of rational analysis to it. Such analysis may raise at least the possibility of disagreement with some or all of the report. The Minister must be able to give effect to any such disagreement. Any other approach would make the Director-General the real decision-maker, and the Minister a mere cipher.

90 The essential controversy between the parties was whether "the public interest", for the purposes of cl 8B of the EPA Regulation, extended beyond what might be called environmental concerns to more general concerns, such as (on the Commission's findings) the corrupt process by which the Mount Penny tenement had been created and the circumstances of corruption leading to the grant of the exploration licence.

91 The plaintiffs submitted that planning law was concerned with the use of land, not with the identity of those who use it. Thus, they submitted, the identity or character of the applicant was not a relevant factor to which it was permissible to have regard in deciding whether to consent to a development application.

92 Mr Watson submitted that it was open to the Director-General and the Planning Minster to consider, as a relevant aspect of "public interest", the corrupt circumstances surrounding the creation of the tenement and the corrupt processes leading to the grant of the exploration licence. Mr Watson referred to what he called "the exceptional nature of the power to determine a Part 3A project approval". He pointed to the consequence that an approval, once given under Part 3A, had automatic effect for the administration of other Acts. In this case, as s 75V(1)(c) of the EPA Act made clear at the relevant time, once approval had been given under Part 3A, an authorisation for a mining lease could not be refused.

The legislative scheme

93 Section 63 of the Mining Act sets out, without limitation, some bases on which an application for a mining lease may be refused:

(1) After considering an application for a mining lease, the decision-maker:

(a) may grant to the applicant a mining lease over all or part of the land over which a lease was sought, or

(b) may refuse the application.

(2) Without limiting the generality of subsection (1) or any other provision of this Act, an application may be refused on any one or more of the following grounds:

(a) that the decision-maker is satisfied that the applicant (or, in the case of an applicant that is a corporation, a director of the corporation) has contravened this Act or the regulations (whether or not the person has been prosecuted or convicted of any offence arising from the contravention) or has been convicted of any other offence relating to mining or minerals,

(b) that the decision-maker is satisfied that the applicant provided false or misleading information in or in connection with the application or any report provided under this Act for or with respect to the lease.

(3) The decision-maker may grant a single mining lease in respect of more than one application.

(3A) A mining lease may not be granted until the mining lease fee prescribed by the regulations has been paid for the grant of the lease.

(4) A mining lease may not be granted under this section otherwise than in accordance with Part 2 of Schedule 1.

(5) A mining lease may not be granted, in respect of a mining purpose or mining purposes only, unless the decision-maker is satisfied that the mining purpose or mining purposes is or are to be carried out in connection with and in the immediate vicinity of:

(a) a mining lease in respect of a mineral or minerals, or

(b) a mineral claim,

being a mining lease or mineral claim that has been or is proposed to be granted.

(6) A mining lease may not be granted over land in respect of a mining purpose or mining purposes relating only to mining under a mining (mineral owner) lease if the land is not owned by the holder of the mining (mineral owner) lease.

94 I have referred already to s 65. That section reads:

Development consents under Environmental Planning and Assessment Act 1979

(1) The Minister must not grant a mining lease over land if development consent is required for activities to be carried out under the lease unless an appropriate development consent is in force in respect of the carrying out of those activities on the land.

Note. Section 380AA prevents an application for development consent to mine coal from being made or granted unless the applicant is the holder of an authority that is in force in respect of coal and the land concerned.

(2) Nothing in this Act permits an activity, for which development consent is required, to be carried out without the consent being obtained in accordance with the Environmental Planning and Assessment Act 1979.

(3) If a mining lease is granted over land for which an appropriate development consent has been given (being a mining lease granted and a development consent given before the commencement of Schedule 7.11 to the Environmental Planning and Assessment Amendment (Infrastructure and Other Planning Reform) Act 2005):

(a) any condition (being a special purpose condition within the meaning of Division 2 of Part 2 of Schedule 1, as in force immediately before that commencement) imposed on the development consent by a consent authority, or by a body hearing an appeal from a consent authority, is void, and

(b) the development consent (to the extent only to which it relates to the use of the land concerned for the purpose of obtaining minerals) is taken to have been given free of the condition.

95 Section 75D of the EPA Act (as it stood at the time) provided for ministerial approval of projects (such as that presently under consideration) to which the Part applied:

75D Minister's approval required for projects

(1) A person is not to carry out development that is a project to which this Part applies unless the Minister has approved of the carrying out of the project under this Part.

(2) The person is to comply with any conditions to which such an approval is subject.

96 Sections 75H, 75I and 75J provided for assessment and public consultation, a report and the ministerial decision:

75H Environmental assessment and public consultation

(1) The proponent is to submit to the Director-General the environmental assessment required under this Division for approval to carry out the project.

(2) If the Director-General considers that the environmental assessment does not adequately address the environmental assessment requirements, the Director-General may require the proponent to submit a revised environmental assessment to address the matters notified to the proponent.

(3) After the environmental assessment has been accepted by the Director-General, the Director-General must, in accordance with any guidelines published by the Minister in the Gazette, make the environmental assessment publicly available for at least 30 days.

(4) During that period, any person (including a public authority) may make a written submission to the Director-General concerning the matter.

(5) The Director-General is to provide copies of submissions received by the Director-General or a report of the issues raised in those submissions to:

(a) the proponent, and

(b) if the project will require an environment protection licence under Chapter 3 of the Protection of the Environment Operations Act 1997-the Department of Environment, Climate Change and Water, and

(c) any other public authority the Director-General considers appropriate.

(6) The Director-General may require the proponent to submit to the Director-General:

(a) a response to the issues raised in those submissions, and

(b) a preferred project report that outlines any proposed changes to the project to minimise its environmental impact, and

(c) any revised statement of commitments.

(7) If the Director-General considers that significant changes are proposed to the nature of the project, the Director-General may require the proponent to make the preferred project report available to the public.

75I Director-General's environmental assessment report

(1) The Director-General is to give a report on a project to the Minister for the purposes of the Minister's consideration of the application for approval to carry out the project.

(2) The Director-General's report is to include:

(a) a copy of the proponent's environmental assessment and any preferred project report, and

(b) any advice provided by public authorities on the project, and

(c) a copy of any report of the Planning Assessment Commission in respect of the project, and

(d) a copy of or reference to the provisions of any State Environmental Planning Policy that substantially govern the carrying out of the project, and

(e) except in the case of a critical infrastructure project-a copy of or reference to the provisions of any environmental planning instrument that would (but for this Part) substantially govern the carrying out of the project and that have been taken into consideration in the environmental assessment of the project under this Division, and

(f) any environmental assessment undertaken by the Director-General or other matter the Director-General considers appropriate, and

(g) a statement relating to compliance with the environmental assessment requirements under this Division with respect to the project.

75J Giving of approval by Minister to carry out project

(1) If:

(a) the proponent makes an application for the approval of the Minister under this Part to carry out a project, and

(b) the Director-General has given his or her report on the project to the Minister,

the Minister may approve or disapprove of the carrying out of the project.

(2) The Minister, when deciding whether or not to approve the carrying out of a project, is to consider:

(a) the Director-General's report on the project and the reports, advice and recommendations (and the statement relating to compliance with environmental assessment requirements) contained in the report, and

(b) if the proponent is a public authority-any advice provided by the Minister having portfolio responsibility for the proponent, and

(c) any findings or recommendations of the Planning Assessment Commission following a review in respect of the project.

(3) In deciding whether or not to approve the carrying out of a project, the Minister may (but is not required to) take into account the provisions of any environmental planning instrument that would not (because of section 75R) apply to the project if approved. However, the regulations may preclude approval for the carrying out of a class of project (other than a critical infrastructure project) that such an instrument would otherwise prohibit.

(4) A project may be approved under this Part with such modifications of the project or on such conditions as the Minister may determine.

(5) The conditions of approval for the carrying out of a project may require the proponent to comply with any obligations in a statement of commitments made by the proponent (including by entering into a planning agreement referred to in section 93F).

97 Section 75V(1) provided:

75V Approvals etc legislation that must be applied consistently

(1) An authorisation of the following kind cannot be refused if it is necessary for carrying out an approved project and is to be substantially consistent with the approval under this Part:

(a) an aquaculture permit under section 144 of the Fisheries Management Act 1994,

(b) an approval under section 15 of the Mine Subsidence Compensation Act 1961,

(c) a mining lease under the Mining Act 1992,

(d) a production lease under the Petroleum (Onshore) Act 1991,

(e) an environment protection licence under Chapter 3 of the Protection of the Environment Operations Act 1997 (for any of the purposes referred to in section 43 of that Act),

(f) a consent under section 138 of the Roads Act 1993,

(g) a licence under the Pipelines Act 1967.

98 The requirement to consult the public interest came from cl 8B of the EPA Regulation:

8B Matters for environmental assessment and Ministerial consideration

The Director-General's report under section 75I of the Act in relation to a project is to include the following matters (to the extent that those matters are not otherwise included in that report in accordance with the requirements of that section):

(a) an assessment of the environmental impact of the project,

(b) any aspect of the public interest that the Director-General considers relevant to the project,

(c) the suitability of the site for the project,

(d) copies of submissions received by the Director-General in connection with public consultation under section 75H or a summary of the issues raised in those submissions.

Note. Section 75J (2) of the Act requires the Minister to consider the Director-General's report (and the reports, advice and recommendations contained in it) when deciding whether or not to approve the carrying out of a project.

Decision

99 At the level of basic principle, it is correct to say, as the plaintiffs submitted, that the focus of planning approval is on the proposed use to be made of the land rather than on the identity or character of the applicant for approval. Stephen J said in Eaton and Sons Pty Limited v The Council of the Shire of Warringah (1972) 129 CLR 270 at 293:

... a consent... is essentially impersonal in the sense that it does not concern itself with and is not limited to the applicant but is a consent to the world at large in relation to the land which is its subject. Once granted it makes lawful, in a town planning context, what would otherwise be unlawful but does so by reference to the acts done and not to the identity of the actor...

100 His Honour's observation was picked up and applied by Mason P in House of Peace Pty Ltd v Bankstown City Council (2000) 48 NSWLR 498 at [23]. At [24], Mason P said that the proposition:

... that planning law is concerned with the use of land, not with the identity of the user also focuses attention upon the functions of environmental planning instruments and consents. They are concerned with physical use, environmental impact and amenity.

101 Important as those reminders are, the present issue is concerned not with planning consents in general, but with the process of assessment and (where appropriate) approval under Part 3A of the EPA Act: specifically, by reference to the procedures that were laid down in Division 2 (being the division in which the sections that I have set out above are to be found).

102 Section 75H required that the necessary environmental assessment (see s 75F) be submitted to the Director-General. Once the Director-General accepted the environmental assessment (that is to say, taking into account subss (1) and (2)), the Director-General was required to make it publicly available for at least 30 days. There was a process for interested parties to make submissions, for the proponent to be given those submissions, and for the proponent to respond.

103 Once that process was complete, the Director-General was required to report to the Minister. That report was to deal with at least the matters set out in s 75I(2).

104 In general terms, the matters to which s 75I(2) directed attention could be said to relate to the environmental aspects of the proposal and the Director-General's assessment of it. Paragraph (f) refers to any environmental assessment undertaken by the Director-General or other matter that the Director-General considers appropriate.

105 It might be thought that, in the context of s 75I, the words "other matter" ought be read as limited to the environmental aspects of the proposal and its assessment. However, cl 8B of the EPA Regulation specifically required the Director-General to address the four topics stated in it unless those matters have been included in the report in any event.

106 That regulation seems to have been made pursuant to s 75Z of the EPA Act, which read as follows:

75Z Regulations for purposes of Part

The regulations may make provision for or with respect to the approval of projects (and concept plans for projects) under this Part and to approved projects (and concept plans), including:

(a) prescribing time limits for dealing with applications or other matters under this Part and deeming acceptance or rejection of applications or other matters if those time limits are not complied with, and

(b) requiring owners of land on which projects are proposed to be carried out to consent to applications for approvals under this Part, and

(c) providing for public exhibition, notification and public registers of applications for approvals under this Part (or for the modification of approvals) and of the determination of those applications, and

(d) the fees for applications and the exercise of functions under this Part, and

(e) requiring the New South Wales Aboriginal Land Council to consent to applications for approvals under this Part on land owned by Local Aboriginal Land Councils, if the consent of the Local Aboriginal Land Council concerned is required as owner of the land.

107 In the ordinary way, one would think that public interest considerations related to what might be called the environmental aspects, or environmental assessment, of the proposal would have been raised in the environmental assessment required by s 75F and during the public consultation process for which s 75H provided. One would also think that public authorities might have been expected to comment on the public interest aspects of a proposal (at least from their perspective), and to have included that in any advice that they might provide (s 75H(4), s 75I(2)(b)).

108 In short, if the concept of "public interest" were limited to "public interest to or arising out of environmental concerns", one would expect it to have been canvassed in the process leading up to the preparation of the Director-General's report. One would also expect it to have been discussed in the Director-General's report.

109 Those considerations suggest that, when cl 8B of the Regulation referred to "the public interest", it was not referring only to public interest issues relating to the environmental aspects of the proposal. That approach is supported by the fact that it is not just "the public interest" that the Director-General may consider but, rather, "any aspect of the public interest that the Director-General considers relevant to the project".

110 The processes governing the submission, consideration, reporting on and decision upon proposals to which Part 3A applied, set out in Division 2 of that Part, are detailed and prescriptive in nature. Presumably, the exercise of the power to make regulations given by s 75Z, leading to the making of cl 8B of the EPA Regulation, was thought to add something to those detailed and prescriptive processes. Those considerations, too, suggest that for the purposes of cl 8B, the concept of public interest is not to be limited in the way for which the plaintiffs contended.

111 In essence, the plaintiffs' submissions on this point must embrace the proposition that even if clear and cogent evidence of corruption in the process of creation of the tenement or grant of an earlier exploration licence were put before the Director-General, the Director-General could not consider that, or take it into account, in preparing his or her report. They must embrace too the proposition that in the same circumstances the Minister, in considering whether or not to grant approval, could not take into account such evidence.

112 The idea that a senior public servant and a Minister of the Crown must shut their eyes even to clear evidence of corruption, and must (in the case of the former) recommend and (in the case of the latter) decide, only on the basis of environmental considerations, would come as a surprise to many citizens of this State.

113 Further, and as Mr Watson submitted, the effect of 75V of the EPA Act was that, for the various kinds of projects referred to in paras (a) to (g) of subs (1), the grant of ministerial approval under s 75J essentially required that whatever approvals might be required otherwise under the legislation referred to in those paragraphs could not be withheld.

114 Thus, an approval under s 75J did not decide only, by way of approval, environmental and related considerations. It also decided, by way of approval, any other questions that otherwise might have arisen under other legislation.

115 In those circumstances, it is difficult to see how public interest concerns that could be relevant to approval (or refusal) under that other legislation could not be taken into account under the Part 3A process. Approval under that Part operated, after all, as a statutorily delegated or deemed approval under that other legislation. Relevant public interest concerns should extend, one might think, to those otherwise relevant to the project for which Part 3A approval was sought.

116 In this context, it is instructive to return to the language of s 63 of the Mining Act. For convenience, I repeat subs (2):

63 Power of decision-maker in relation to applications

...

(2) Without limiting the generality of subsection (1) or any other provision of this Act, an application may be refused on any one or more of the following grounds:

(a) that the decision-maker is satisfied that the applicant (or, in the case of an applicant that is a corporation, a director of the corporation) has contravened this Act or the regulations (whether or not the person has been prosecuted or convicted of any offence arising from the contravention) or has been convicted of any other offence relating to mining or minerals,

(b) that the decision-maker is satisfied that the applicant provided false or misleading information in or in connection with the application or any report provided under this Act for or with respect to the lease.

117 The subsection does not limit the matters that the decision-maker may take into account in deciding whether to grant or refuse an application for a mining lease. But it does draw particular attention to what might be called circumstances of dishonesty attending, preceding or surrounding the application. Again, many citizens of this State would find it strange that the specific kinds of dishonesty referred to in subs (2) could be taken into account, but clear evidence of another form of dishonesty - corruption in relation to the creation of the tenement or the grant of an antecedent exploration licence - must be ignored.

118 One of the effects of the grant of a mining lease is to give the lessee the right to extract and deal with, on its own account, mineral wealth that, otherwise, would have been the property of, and exploitable by, the State. There is a clear public interest in ensuring, so far as possible, that rights to exploit what otherwise was public property are given in accordance with the law, and by open and transparent processes; and that they are not given as a result of or consequential upon, corrupt dealings.

119 In my view, had it come to the attention of the Director-General, in connection with an application for a mining lease, that the corrupt dealings that the Commission found to have occurred in this case had been associated with the creation of the tenement and the grant of the exploration licence, it would have been open to the Director-General to take those matters into account, as an aspect of the public interest. In the language of cl 8B(b), it would have been open to the Director-General to consider those matters as aspects of the public interest that were relevant to the project.

120 Equally, assuming that the Director-General had considered those matters and dealt with them in the report furnished to the Minister, it would have been open to the Minister to take those matters into account in deciding whether or not to grant approval to the application for a mining lease.

121 Thus, I conclude, the Commission did not err, at the level of principle at least, in taking into account, as relevant, the official functions of any public official or public authority considering whether to grant a mining lease over the Mount Penny tenement.

122 That leads to the next head of challenge to this aspect of the first report. The plaintiffs submitted, one way or another, that it was not open to the Commission to conclude that the conduct that it had found could have affected, either directly or indirectly, the exercise of those official functions.

Adverse effect on the exercise of official functions?

The parties' submissions

123 The plaintiffs referred to the fact that the matter of the Obeid family's involvement in the creation of the Mount Penny tenement was in the public domain by May 2010. They referred to an article in the Australian Financial Review published on 19 December 2009 and to a question asked in the Legislative Council of this State on 19 May 2010.

124 The AFR article (as for convenience I shall call it) suggested in no uncertain terms that there were, to put it neutrally, suspicious circumstances, indicative of collusion between Mr Macdonald and Mr Obeid, relating to the Obeid family's interests in the Cherrydale and other nearby properties.

125 The question in the Legislative Council raised the issue of dealings between Mr Macdonald and Mr Obeid in relation to the licence or the preferred tenderer and other matters. Mr Macdonald's reply denied that there were any such discussions, and asserted that his first knowledge of the various matters came from reading the AFR article.

126 More generally, the submissions for the plaintiffs challenged the proposition that disclosure to Mr Cubbin or the IBC would have resulted in greater publicity for, or knowledge of, the dealings in question. The plaintiffs submitted (and it is enough to take Mr Hutley's written submissions at para 87) that:

ICAC failed to consider how the facts allegedly concealed by [Mr Duncan] could have assisted any further than the known circumstances of the Obeid's property holdings in exposing the corrupt conduct of Mr Macdonald, operating in connection with the Obeids.

127 Mr Watson submitted, in substance, that revelation of the facts to Mr Cubbin or the IBC would have been likely to lead White Energy to withdraw immediately from the proposal. That was Mr Cubbin's evidence, which was accepted. Mr Watson submitted that this would have increased the risk of the information being "disclosed to the world at large including the NSW Government".

128 Further, Mr Watson submitted, it was quite obvious that the individual plaintiffs themselves had feared that disclosure to Mr Cubbin or the IBC was likely to have had an adverse impact on their prospects of obtaining a mining lease.

The AFR article and the question

129 I set out (without Mr McDonald's photograph) the AFR article:

There are years when working out who gets the Christmas goodies, and how Santa's little helpers keep track of who's been naughty and nice, seems an overwhelming task.

With some folk it's easy. Travis Davis has just picked up some $500 million from Yanzhoiu Coal's $3.5 billion takeover of Felix Resources and its coal deposits. Then for a stocking stuffer his new venture, Cascade Coal, picked up a highly prospective exploration licence near Bylong in the NSW Hunter Valley.

That might be good news as well for the family of Labor powerbroker Eddie Obeid, if Cascade ends up having to buy out Cherrydale Park, the $3.65 million holiday home the Obeids bought two years ago.

Other winners are harder to track down - like the $1 company that picked up approval for three NSW coal exploration licences at the same time as Cascade. A nice surprise, but where does Santa go on Christmas Eve to drop off the little prezzies?

Back in August last year, Minister Ian Macdonald's Department of Mineral and Forest Resources invited some small to medium mining companies to tender for 11 "smaller remnant coal areas" in NSW. After several extensions - Xstrata, Rio Tinto and Centennial Coal all wanted to tender for areas close to their existing operations - the offer closed last February.

A Request for Papers by the Liberal opposition shows that after applying set criteria, the government's Industry and Investment NSW decided to award six of the 11 exploration licence applications (ELAs) to Monaro Mining and its financial partner Voope Ltd.

Almost all the winners were substantial listed companies except Voope, which has one $1 share owned non-beneficially by a Sydney lawyer, Greg Skehan, who helps run the Dubai arm of Colin Biggers & Paisley.

However, after a board dispute Monaro decided to pull out of the ELAs. On June 1 it changed the name of its bidding vehicle, Monaro Coal, to Loyal Coal, and on June 4 it sold its shares in Loyal to Voope. Sydney finance consultant Andrew Caidbay became Loyal's sole director.

Loyal and Voope then wrote to Macdonald's department to say it was relinquishing three of the tenements but would keep the three smaller ones at Yarrawa, Long Mountain and Ben Bullen. The letter from Voope and Loyal was signed by former Lehman Brothers investment banker Gardner Brook, who says after originally trying to get Lehman to fund Monaro he found a new investor whom he could not name.

An internal email by a department executive states that "we have been told to fast track the ELAs". Davis's Cascade Coal picked up two of the areas Voope didn't want, including Bylong. An independent auditor signed off on a probity review.

Which is how a $1 company ended up with approval to pick up three of the 11 ELAs.

It was a busy time for Brook and Caidbay. On June 3, the day before the change of control at Loyal, they set up three new companies: Buffalo energy, Buffalo Resources and Buffalo Coal. Brook owned 12 per cent of each of them, with the other 88 per cent owned by Equitexx, a nominee company owned by accountant Sid Sassine, but Brook says they were unconnected with Loyal's coal applications.

Sassine's best known client is the Obeid family - he hails from Eddie Obeid's home village in Lebanon, Metrit, and his website includes a glowing testimonial for Eddie's sons Paul and Moses.

But they're just one of many clients. There are no clues to who was Brook's partner in the Buffalo companies, or who is behind Voope. And while the department says "Monaro Mining" is one of those holding ELAs, Brooks says it's news to him.

130 I set out also the question and answer, in the Legislative Council:

Ms LEE RHIANNON: I direct my question to the Minister for Mineral and Forest Resources. Following the call for tenders for the exploration licence at Mount Penny near Bylong, did the Minister have any conversations with Mr Eddie Obeid in relation to the Mount Penny licence or the preferred tenderer, a company called Monaro Mining? Is the Minister aware that Locaway, a company owned by members of Mr Obeid's family, had bought property in the Bylong area immediately prior to the tender process for Mount Penny and that a childhood friend of Mr Obeid's son Moses, Mr Justin Lewis, has bought property adjacent to the Locaway property at Bylong?

The Hon. IAN MACDONALD: These questions are clearly the questions for which the Sydney Morning Herald has been seeking some answers. Let us make it clear: I had no discussions about who owned land in the Mount Penny area. The first I learnt of it was when I read an article in the Australian Financial Review late last year in terms of the other issues, if anyone believes there is anything untoward, they can take it to the appropriate forum.

Decision

131 In principle, I think, Mr Watson's submissions are correct. I do accept, as was submitted for the plaintiffs, that there had been references in public to a relationship between Mr Macdonald and Mr Obeid that was suggestive of corrupt dealings in relation to what became the Mount Penny tenement. Likewise, what was in the public domain suggested that the Obeid family's purchase of land in the Bylong Valley was referable to those dealings and not to the innocent reason that the Obeid family gave. It is, however, necessary to look at the detail of what was then public.

132 As Mr Watson submitted, the thrust of the AFR article and the question related to the property investments so fortunately made by the Obeid family. Mr Cubbin knew of that. He was concerned to find out the details of the joint venture agreement that Cascade Coal had made (with the Obeid family, through Buffalo Resources Pty Ltd, a corporate vehicle controlled by them), and about the details of the first instalment of payments made to another corporate vehicle. We now know that the payee was controlled by the Obeid family, and that the payments were made to "extract" the Obeids from the joint venture.

133 If the detail of those further matters had come into the public domain, both the store of public knowledge and its explosive quality would have increased very substantially indeed. The information that would have been revealed was qualitatively different, and (it might be thought) far more damning in terms of pointing towards corruption, than that which was suggested by the AFR article and Ms Rhiannon's question.

134 In my view, it was open to the Commission to conclude, as in essence it did, that the disclosure, to Mr Cubbin or the IBC, of information as to the Obeid family involvement and the extraction of the Obeids could have affected adversely the exercise of official functions: being the official functions relating to the grant of a mining lease. That is because it was likely (in reality, I would have thought, inevitable) that if the facts now known had come out at the relevant time, no mining lease would have been granted.

135 Mr Cubbin, whose evidence the Commission "generally" accepted, and who was regarded as "a careful and reliable witness", gave evidence of what he would have done had he been told "of an involvement by the Obeid family in the mining venture". He said he would have "become very worried" and "that probably would have been the end of the transaction". He said that he "would be required to inform Deloittes who [were] doing the independent assessment of the deal and it would have to go into the notice of meeting to the shareholders... there would have been a lot of adverse publicity and I think that would have meant the end of the transaction". The Commission specifically referred to this evidence in chapter 31 of its report. That evidence provides strong support for the proposition that revelation of the full truth to the IBC would have put what was revealed into the public domain.

136 The findings of fact made by the Commission established that Mr Duncan, Mr McGuigan, Mr Poole, and Mr Atkinson knew of the Obeid family's interest in the joint venture at the relevant time. It was that knowledge which, on the Commission's findings, they sought to ensure would not go to Mr Cubbin or the IBC.

137 As Mr Watson submitted, those men feared that, if the information as to the Obeid family's involvement became public (in the sense that the IBC got hold of it), there was an increased risk that their venture would fall apart. That was why they took the steps they did. And their action in taking those steps poses an obstacle to acceptance of this aspect of the submissions put on their behalf.

138 The position as to Mr Kinghorn is somewhat different. The Commission directed a section of its first report to the question "What did Mr Kinghorn know?". As the report stated, Mr Kinghorn's position was that "he did not know until November 2010 that the payments being made [to buy out the Obeid interests]... had anything to do with the Obeid family".

139 The Commission rejected Mr Kinghorn's evidence on this point, finding that in some respects he "was plainly dissembling".

140 However, the only relevant express conclusion stated was:

The Commission finds that Mr Kinghorn was giving false evidence about his lack of knowledge concerning Buffalo Resources.

141 In contrast to the position of the other four individual plaintiffs, the Commission did not make a positive finding that Mr Kinghorn knew of the joint venture with the Obeids, through Buffalo Resources.

142 There are circumstances in which a finding that someone has lied on a particular issue does not establish the contrary position. See, for example, Steinberg v The Commissioner of Taxation of the Commonwealth of Australia (1975) 134 CLR 640 at 694. However, as Gibbs J recognised at 694, "if the truth must lie between two alternative states of fact, disbelief in evidence that one of the state of facts exists may support the existence of the alternative state of facts".

143 In the present case, the "fact" in issue is the state or extent of Mr Kinghorn's knowledge of the Obeid family's involvement. There were, no doubt, many reasons to think that he did have such knowledge. For example, he was one of five investors; the Commission found that the other four did; it is unlikely that Mr Kinghorn alone was innocent of knowledge. Again, the evidence recounted by the Commission in this part of its report could support the conclusion that Mr Kinghorn had the relevant knowledge at the relevant time.

144 It is necessary to be careful. This is not an appeal from the Commission's report. The Court is not able to make findings of fact based on the evidence that was before the Commission. The question is: what is conveyed by the Commission's conclusion that Mr Kinghorn gave false evidence about his lack of knowledge concerning Buffalo Resources, when that conclusion is read in context with other relevant findings made by the Commission?

145 Mr Kinghorn did not suggest in his evidence to the Commission (so far as it has been put before the Court) that there were more than two alternatives, as to his state of knowledge (for example, that he might once have known, but had forgotten). His position was, categorically, that he did not know of the Obeid family's involvement in the joint venture until an irrelevantly late date. When this section of the Commission's report is read with that in mind, and in context, it seems to me to be appropriate to treat the finding, that Mr Kinghorn's evidence of non-knowledge at any relevant time was false, as amounting to a finding that the did have that knowledge.

146 Thus, what I have said in relation to the other four plaintiffs should be taken to apply to Mr Kinghorn also.

147 The Commission concluded that the steps taken by the individual plaintiffs (to the extent to which those steps were proved against them individually) were taken in an attempt to prevent knowledge of the Obeid family's involvement from becoming public, or more public; and that they were taken because the individual plaintiffs feared, otherwise, that the mining lease might not be granted. In my view, those conclusions were available, as rational inferences from the evidence before the Commission.

148 Further, in my view, it was open to the Commission to conclude, as in substance it did, that the public (or more public) revelation and detailing of those facts could well have affected the exercise of official functions in relation to the grant of a mining lease.

149 Accordingly, in relation to this aspect of "official functions", I conclude that the challenge to the first report fails.

Severable findings?

150 The plaintiffs submitted that the findings of corruption were based on all the matters set out in the first report, and that it was not possible to deal with them distributively, or to separate them. Mr Watson submitted that the relevant official functions were described distributively ("reviewing the creation of the Mount Penny tenement or the grant of exploration licences over the Mount Penny tenement... or ... considering whether to grant a mining lease over the Mount Penny tenement").

151 To my mind, the Commission's disjunctive statement of its conclusions is deliberate, and should be read as written. For example, in relation to the findings as to hiding the Obeid family's involvement, the Commission referred to three matters. The first is that "the Obeids had been involved in the creation of the Mount Penny tenement". The second is that they had been involved "in the allocation of the Mount Penny exploration licence". The third is that they "had a beneficial interest in the Mount Penny tenement".

152 As was submitted for the plaintiffs, those matters were referred to collectively as "the Obeid family involvement", and that phrase is then used repeatedly in describing (for example) the steps taken by each of the individual plaintiffs "to hide... the Obeid family involvement". But when it is said, of any particular plaintiff, that, for example, he "deliberately [failed] to disclose to the IBC the fact of the Obeid family involvement", that should be read as a finding that the particular plaintiff took that step to the extent that he had knowledge of one or more of the three separate elements that are comprised within the concept of "Obeid family involvement".

153 In my view, it is not correct to read such findings as saying that the individual concerned knew of, and deliberately failed to disclose to the IBC, each of those three elements comprised within "the Obeid family involvement".

154 Likewise, in relation to the finding of adverse effect, the Commission posited three categories of official functions. The first was reviewing the creation of the tenement. The second was reviewing the grant of exploration licences. The third was consideration of the grant of a mining lease. Again, it is not necessary to find that each of those official functions existed, and could have been affected adversely by the conduct attributed to the individual plaintiffs. It is sufficient, to support the finding of corruption (I do not intend to overlook the need to find criminality as well), that at least one of the three suggested categories of official functions existed, and was sufficiently identified (as were the public officials by whom those functions could be exercised), and could have been adversely affected by that conduct.

Conclusion on first group of issues

155 Thus, as to the group of issues with which I am at present concerned, the conclusions to which I have come mean that:

(1) there are identifiable official functions, and by implication at least identifiable public officials or public authorities; and

(2) the Commission's finding, that the exercise of those official functions could have been affected adversely by the conduct attributed to the individual plaintiffs, must stand.

156 It follows that the limited nature of the plaintiffs' success on the first group of issues is not sufficient, of itself, to support their claims to declaratory relief.

157 In other words, in my view, it was necessary for the plaintiffs to sustain their challenges in respect of all three classes of official functions if they were to succeed on the first group of issues, to the extent that the declarations sought should be made.

Second group of issues: s 9(1)(a), criminality

The Commission's reasoning and findings

158 The Commission's reasoning, in respect of the requirements of s 9(1)(a) may be illustrated once more by reference to Mr Duncan. I have set out at [50] above the "steps" that, the Commission found, Mr Duncan had taken "to hide from the NSW Government and relevant public officials the Obeid family involvement".

159 The first report, having set out the relevant provisions of s 192E(1) of the Crimes Act and s 184(1) of the Corporations Act, said:

The concept of "good faith" in this area of company law has been defined to include at least four aspects: an exercise of powers or duties in the interests of the company, in the sense of not misusing or abusing those powers, avoidance of conflicts between personal interests and those of the company, a prohibition on taking advantage of the position to make secret profits, and a prohibition on the appropriation of the company's assets for their own benefit.

The concept of "a proper purpose" in this part of company law has been understood to mean much the same thing as "good faith."

The Commission is satisfied for the purposes of s 9(1)(a) of the ICAC Act that, if the facts it has found relating to the deliberate misleading of Mr Cubbin, were to be proved on admissible evidence to the criminal standard of beyond reasonable doubt and accepted by an appropriate tribunal, they would be grounds on which such a tribunal would find that Mr Duncan committed a criminal offence of obtaining a financial advantage by deception contrary to s 192E(1)(b) of the Crimes Act 1900. The advantage was to prevent the loss in the value of his holding in Cascade should the sale to White Energy not proceed or if the NSW Government found out about the Obeid involvement and took steps to cancel the exploration licence or announced that it would not grant a mining lease.

The Commission is satisfied for the purposes of s 9(1)(a) of the ICAC Act that, if the facts it has found, relating to authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture so that the NSW Government would not become aware of their involvement in that tenement, were to be proved on admissible evidence to the criminal standard of beyond reasonable doubt and accepted by an appropriate tribunal, they would be grounds on which such a tribunal would find that Mr Duncan committed a criminal offence of obtaining a financial advantage by deception contrary to s 192E(1)(b) of the Crimes Act 1900. The advantage was the removal of the risk to the retention of the exploration licence and the reduction in the risk that a mining licence might not be granted over the Mount Penny tenement.

The commission is also satisfied for the purposes of s 9(1)(a) of the ICAC Act that, if the facts it has found in relation to deliberately misleading Mr Cubbin, deliberately failing to disclose to the IBC the Obeid family involvement in the Mount Penny tenement and relieving Mr Levi from having to answer Mr Cubbin's request for information about the Obeid family involvement in that tenement, were to be proved on admissible evidence to the criminal standard of beyond reasonable doubt and accepted by an appropriate tribunal, they would be ground on which such a tribunal would find that Mr Duncan committed a criminal offences of obtaining a financial advantage by deception contrary to s 192E(1)(b) of the Crimes Act 1900. The advantage was the removal of the risk to the retention of the exploration licence and the reduction in the risk that a mining licence might not be granted over the Mount Penny tenement.

The commission is also satisfied for the purposes of s 9(1)(a) of the ICAC Act that, if the facts it has found in relation to deliberately misleading Mr Cubbin, deliberately failing to disclose to the IBC the Obeid family involvement in the Mount Penny tenement and relieving Mr Levi from having to answer Mr Cubbin's request for information about the Obeid family involvement in that tenement, were to be proved on admissible evidence to the criminal standard of beyond reasonable doubt and accepted by an appropriate tribunal, they would be ground on which such a tribunal would find that Mr Duncan committed a criminal offence obtaining a financial advantage by deception contrary to s 192E(1)(b) of the Crimes Act 1900. The advantage was the removal of the risk to the retention of the exploration licence and the reduction in the risk that a mining licence might not be granted over the Mount Penny tenement.

The commission is also satisfied for the purposes of s 9(1)(a) of the ICAC Act that, if the facts it has found in relation to deliberately misleading Mr Cubbin, deliberately failing to disclose to the IBC the Obeid family involvement in the Mount Penny tenement and relieving Mr Levi from having to answer Mr Cubbin's request for information about the Obeid family involvement in that tenement, were to be proved on admissible evidence to the criminal standard of beyond reasonable doubt and accepted by an appropriate tribunal, they would be ground on which such a tribunal would find that Mr Duncan committed criminal offences under s 184(1) of the Corporations Act 2001. This is because, as a director of White Energy, he was intentionally dishonest or, alternatively, reckless and failed to discharge his duties in good faith and in the best interests of that company or for a proper purpose by withholding information about the Obeid family involvement so that the value of his holding in Cascade Coal would not be adversely affected.

160 The reasoning process was similar in respect of each of the other individual plaintiffs, although in each case, the reasoning was adapted to the particular "steps" that, the Commission had found, each of those plaintiffs had taken. As I have noted at [11] to [15] above, the findings as to criminality varied according to what, in the Commission's view, the evidence revealed for each of the individual plaintiffs.

The parties' submissions

161 The individual plaintiffs attacked the findings as to criminality at a number of different levels. At the factual level, they emphasised that:

(1) the IBC had some knowledge of the Obeid family's involvement in the Mount Penny tenement;

(2) information on that topic was also in the public domain at the time (though the AFR article and through Ms Rhiannon's question of Mr Macdonald in the Legislative Council); and

(3) thus, it had not been shown that revelation of the full details to Mr Cubbin or the IBC (assuming some obligation to reveal those details) might have had any adverse impact on the interests of the individual plaintiffs.

162 As to s 192E(1)(b), the individual plaintiffs (except for Mr Kinghorn) submitted that it had not been shown that they had gained any financial advantage. That was so, they submitted:

(1) as to the financial advantage in pursuing the sale to White Energy: because that sale did not in fact proceed; and

(2) as to preservation of the value of their interest in Cascade Coal: it had not been shown that revelation of the truth could have caused any adverse impact on that company's interests (existing or potential) in relation to the Mount Penny tenement; alternatively, given the matters that were public knowledge, it had not been shown how any further revelation might have had that impact.

163 As to Mr Poole, it was submitted that, as the shares in Cascade Coal were held not by him but by his wife, he could not have gained any financial advantage in any event. It is sufficient to note that when attention was drawn to s 192D(1)(a) of the Crimes Act, this submission was not pressed in that form.

164 Mr Jackson drew attention to the mental element in s 192E. He submitted that the requirement that the action be "dishonest" meant "dishonest by the standards of ordinary and honest people" and "known by [the actor] to be dishonest according to the standards of ordinary people". Mr Jackson submitted that the mental element could not be made out in circumstances where none of his clients (Messrs McGuigan, Atkinson and Poole) had any knowledge of the corrupt arrangements between members of the Obeid family and Mr Macdonald. Mr Jackson referred to s 4B(1) of the Crimes Act, and to R v Ghosh [1982] 1 QB 1053 at 1064.

165 As to s 184(1) of the Corporations Act, it was submitted, for those of the individual plaintiffs who were directors of White Energy, that:

(1) none of them had exercised any power as a director in relation to the transaction between Cascade Coal and White Energy;

(2) on the contrary, each of them had disclosed his interest in the transaction, and thereafter had taken no part in White Energy's investigations or deliberations;

(3) in the circumstances, performance of the proscriptive obligations imposed on directors as fiduciaries did not require the doing of any further positive act; and

(4) the law did not recognise any duty of "proactive disclosure"; alternatively, there was no positive duty of disclosure in all the circumstances.

166 Mr Jackson submitted that there could only be a breach of s 184 if a director engaged deliberately in the relevant conduct, knowing that it was not in the best interests of the company. This I understood to be a particular development of the submission that none of the directors had acted as a director, nor exercised a power as a director, in relation to the transaction between Cascade Coal and White Energy.

167 The submissions for the Commission proceeded on the following lines. Mr Cubbin and the IBC had some knowledge that the Obeid family had, or might have had, some involvement in the Mount Penny tenement. That, after all, was the very reason why Mr Cubbin was trying to find out what that involvement was. What the IBC did not know, and what Mr Cubbin was trying to find out, were:

(1) the nature and details of the joint venture interest that the Obeid family had; and

(2) the purpose of the payment of some $28 million of Cascade Coal's money to CMG, which was intended to be paid on to SIG (see at [8] above).

168 It was those matters, Mr Watson submitted, that the individual plaintiffs had done their best to keep from Mr Cubbin and the IBC.

169 As to the submission that the Obeid family's interests were already matters of public knowledge, Mr Watson submitted that:

(1) that public knowledge was limited to their landholdings in the Bylong Valley; and

(2) in any event, further and more extensive revelation may well have led, as the Commission thought (and the plaintiffs feared) it would lead, to inquiry and action.

170 Mr Watson submitted that had the truth been disclosed to Mr Cubbin and the IBC, the likelihood that the further, detailed, information as to the extent and nature of the Obeid family's involvement was likely to have become public knowledge. That might happen (for example) if White Energy relied on those matters in making a decision not to exercise the option, and notified the ASX accordingly. Mr Watson submitted that detailed information of that kind would be more likely to have had an adverse influence on the exercise of official functions than the rumours that were already in the public domain.

171 In this context, Mr Watson relied on acknowledgments that he said had been given in the course of evidence by each of the directors as to their understanding that public revelation of the detail of the Obeid family's involvement may well have had adverse impacts on Cascade Coal's interests in relation to the Mount Penny tenement.

172 As to "gain a financial advantage", Mr Watson submitted that each of the individuals concerned (i.e., all but Mr Kinghorn) gained an advantage because he averted a loss or detriment; namely, the loss of value of his shareholding in Cascade Coal that would have arisen had the information become public. (I am not quite sure how this could be so in relation to the transaction with White Energy, which did not proceed despite the non-disclosures.) More generally, Mr Watson submitted that each of the plaintiffs gained a financial advantage by preserving the value of his interest in Cascade Coal through maintaining that company's interests (both the exploration licence and the prospect of gaining a mining lease) in the Mount Penny tenement.

173 In this context, Mr Watson submitted that:

(1) each of the plaintiffs knew and understood that if knowledge of the Obeid family's involvement became public, there was a real likelihood that the Government would take action to strip Cascade Coal of its interests in the Mount Penny tenement; and

(2) as a matter of factual demonstration, the actions in fact taken by the Government to strip Cascade Coal of its mining leases showed that their fear was well-founded.

174 As to s 184(1), Mr Watson submitted that in the particular circumstances shown, each of the directors was under a duty to make disclosure of the true state of affairs. That submission appeared to break down the elements of s 184(1) of the Corporations Act so that it made "failure to exercise powers" a separate head of criminality, and "acting in good faith for the best interests of the corporation" a separate head of duty, in each case divorced from any notion of the actual exercise of powers and duties as directors.

Decision - s 192E(1)(b)

175 The submissions for the individual plaintiffs did not in terms attack the proposition that, for the purposes of s 192E(1)(b), someone might obtain a financial advantage by averting a financial loss. Mr Watson submitted that averting a loss could amount to gaining a financial advantage. He relied on the decision of the High Court in Milne v The Queen (2014) 305 ALR 477 and the decision of the Court of Appeal of the Supreme Court of Victoria in R v Vasic (2005) 11 VR 380.

176 In Milne, the question was whether the appellant had dealt with property intending that it would become an instrument of crime. The suggested "crime" was that a company controlled by the appellant would dispose of shares (the "property" in question) for a substantial capital gain, but would not declare that gain as part of its assessable income for the year in question. The court (French CJ, Hayne, Bell, Gageler and Keane JJ) said at [15] that a deliberate failure to make the declaration would result in the company's gaining a financial advantage from the Commonwealth.

177 Vasic was a case where a debtor gave a cheque, which he knew to be worthless, in purported satisfaction of a creditor's claim. The Court (Nettle JA, with whom on this point Vincent JA and Cummins AJA agreed) said that the debtor obtained a financial advantage in effect equivalent to the time value of the money in question for the period of the deferral, because, by tendering the cheque, he had put the creditor off for a while.

178 It is easy to see why, on the facts of each of those cases, a financial advantage was or would be gained. In Milne, the company would gain the financial advantage of not paying a substantial sum in tax. In Vasic, the debtor gained the financial advantage of deferring the obligation to pay. As Nettle J pointed out, had the debtor paid from his own resources, he would have lost the use of the money; if he had paid from borrowed resources, he would have had to pay the borrowing cost.

179 The present case is different. Mr Watson submitted that the suggested advantage was prevention of loss in value of shares. That was one of the findings made against Mr Duncan. The Commission found financial advantage in prevention of "the loss in value of his holding in Cascade should the sale to White Energy not proceed or if the NSW Government found out about the Obeid involvement and took steps to cancel the exploration licence or announced that it would not grant a mining lease".

180 In this context, and contrary to the submission for the individual plaintiffs, it does not matter that, ultimately, the advantage was not held. Section 192D(1) makes it clear that the financial advantage may be permanent or temporary.

181 However, no equivalent finding was made in respect of the other individual plaintiffs. The only finding made against them, in respect of s 192E(1)(b), was made in terms of the second finding under that section against Mr Duncan:

The removal of the risk to the retention of the exploration licence and the reduction in the risk that a mining licence might not be granted over the Mount Penny tenement.

182 The report did not in terms characterise the advantage as being the averting of loss in value of the holding in Cascade Coal by removal or reduction of the risks contemplated. The submissions for the Commission seem to assume that this characterisation should be given to both aspects of the s 192E(1)(b) findings against Mr Duncan, and to the only findings (in the latter terms) made against Mr McGuigan, Mr Atkinson and Mr Poole.

183 On reflection, I think, the relevant sections of the report should be read in the way just indicated. The Commission was dealing with the topic of obtaining financial advantage. The advantage was identified by reference to removal or reduction of risk relating to the Mount Penny tenement. The risk in each case was one to which Cascade Coal or its subsidiaries were exposed: cancellation of the exploration licence, or refusal to grant a mining lease. The crystallisation of either of those risks would have had an obvious financial impact on Cascade Coal, because (as the evidence before the Commission, referred to in the first report, showed) the value of its assets would be wiped out. That would be a financial detriment not only to Cascade Coal but also to its shareholders.

184 In this section of the report, the Commission is considering the question of the financial advantage obtained by the relevant individual. It should be understood, in the case of Mr Duncan, Mr McGuigan and Mr Atkinson, to be his (or his controlled entity's) financial advantage in the value of his (or its) shareholding in Cascade Coal. In Mr Poole's case, his wife was the shareholder; but the same analysis applies. Section 192D(1)(a) recognises that the offence may be committed by obtaining a financial advantage for another person.

185 Thus, in principle, I think that Mr Watson's analysis, and his submissions based on it, are correct.

186 That preliminary or threshold conclusion directs attention to the factual issues. I accept, as was put for the individual plaintiffs, that neither Mr Cubbin nor the IBC was a public official. However, they were considering whether or not to commit White Energy to a very substantial transaction: the acquisition of the issued shares in Cascade Coal for the sum of $500,000,000.00. It seems to me that it was open to the Commission to conclude, as it did, that if in the course of what was effectively a due diligence investigation, the IBC had learned that the Obeid family had been joint venturers in the proposal to exploit the Mount Penny tenement, and had been bought out for a substantial sum of money, that would have been a very suspicious circumstance. Mr Cubbins' evidence was clear that, in those circumstances, he would have recommended against the acquisition: see at [135] above.

187 The information would have been of considerable significance to the IBC. After all, as I have said, the very issues that it was investigating included the details of the joint venture and the purpose of the $28 million payment. Revelation of the purpose of the payment would have exposed details of the joint venture.

188 Further, it was likely, in those circumstances, that whatever was revealed to the IBC would find its way into the public domain. Quite apart from anything else, White Energy, as a listed public company, would be required, through the continuous disclosure regime, to keep the ASX informed of what was happening.

189 I do not accept the submission put for the individual plaintiffs, to the effect that the matter was sufficiently in the public domain to make any further disclosure irrelevant. I have dealt with this to some extent at [132] to [137] above. The AFR article revealed that "labour power broker Eddie Obeid" had bought "Cherrydale Park, [a] $3.65 million holiday home... two years ago". It did not reveal the existence or terms of any joint venture between the Obeid family and Cascade Coal.

190 Ms Rhiannon's question to Mr Macdonald raised the question of dealings between Mr Macdonald and Mr Obeid in relation to the Mount Penny licence and the preferred tenderer. It referred also to the Obeid family's purchase of property in the Bylong Valley.

191 No doubt the question hinted, as indeed had the AFR article, at corrupt dealings between Mr Macdonald and Mr Obeid. However, neither the question nor the article exposed the nature and extent of the Obeid family's interest in the proposed exploitation of the Mount Penny coal resource. It was the revelation of that interest that the individual plaintiffs sought to prevent. That revelation would have made clearer what was only suspected: the corrupt circumstances underlying the creation of the tenement and the grant of the exploration licence.

192 Looking at s 192E(1)(b) in conjunction with s 192D(1)(c), the individual plaintiffs (except Mr Poole) had a financial advantage through their ownership (or the ownership of entities on their behalf) of valuable shares in Cascade Coal. The value of those shares reflected entirely Cascade Coal's interests (including the exploration licence and the prospect of obtaining a mining lease) in the Mount Penny tenement. If the truth, as to the circumstances in which the tenement was created, had been revealed, it was likely that Cascade Coal would lose that interest. Its shares would become worthless.

193 Had the information sought by the IBC been given to it, it is likely that the truth would have come out, with the consequences I have just mentioned. By concealing the information, and seeking through an absurdly complex scheme to extricate the Obeid family from the joint venture, the relevant individual plaintiffs (apart from Mr Poole) kept, at least on a temporary basis, the financial advantage that they had. I should note that the Commission rejected Mr Poole's explanation for the complexity of the scheme. Although Mr Jackson sought to revive the explanation, there is no reason to take any different view to the Commission's.

194 In Mr Poole's case, the analysis is the same except that his wife was the beneficiary: a circumstance contemplated by s 192D(1)(a).

195 I turn to Mr Jackson's submission as to the mental element in s 192E (see at [164] above). It may be correct to say that none of the individual plaintiffs (or at least, none of those for whom Mr Jackson appeared) had direct knowledge of the corrupt arrangements made between members of the Obeid family and Mr Macdonald. However, each of them knew of the Obeid family's involvement in the joint venture, and each of them appreciated that public knowledge of the Obeid family's involvement was likely to imperil his investment. See at [136], [137] above. The Commission found that it was this fear that prompted each of them to take the steps that he took or caused to be taken to seek to prevent knowledge of that involvement from becoming public. To my mind, it would be open to a jury, acting on admissible evidence and properly instructed, to find that their conduct in each case, as found by the Commission, was dishonest in the light of the understanding that each of them had at the relevant time.

196 In my view, the relevant individual plaintiffs' challenges to the Commission's reasoning and conclusions concerning s 192E(1)(b) fail.

Decision - s 184(1)

197 The essential reasoning in the Commission's report is that each of the directors (that is, each of the individual plaintiffs apart from Mr Poole):

... was intentionally dishonest or, alternatively, reckless and failed to discharge his duties in good faith and in the best interests of the company or for a proper purpose by withholding information about the Obeid family involvement so that the value of his holding in Cascade Coal would not be adversely affected.

198 Accordingly, it is necessary to understand how it was that each of those men could be said to have been exercising his powers or discharging his duties as a director of White Energy at the relevant time.

199 Mr Watson recognised, in my view correctly, that none of the directors was acting in his capacity as a director in connection with the transaction between White Energy and Cascade Coal. Each of the directors had given notice to White Energy of his interest in the transaction. Thereafter, none of them had been involved, on White Energy's side, in the process of investigation. That was why the IBC was set up. It was the IBC that carried out such investigation as occurred.

200 Thus, the duty on which the Commission fastened was the fiduciary duty that, undoubtedly, each of the directors owed to White Energy. This is apparent from the following passage of the first report:

This is a clear area where there was a direct conflict of interest. As earlier identified, each of Mr Duncan, John McGuigan, Mr Atkinson and Mr Kinghorn, knew of the Obeid involvement, and had arranged for the removal of the Obeids from the joint venture upon the basis that it jeopardised the assets of Cascade. At the same time, each of those men was a director of White Energy and owed a fiduciary duty to White Energy.

Each of those men must have been aware of the interest that Mr Cubbin and the IBC had in the question of any historical involvement of the Obeid family at Mount Penny. Each must have been aware that Mr Cubbin and the IBC were trying to ascertain whether there had been any Obeid involvement in the Mount Penny tenement (and the joint venture relating to it) and to understand why Cascade had paid $28 million to Coal & Minerals Group. Each must have understood that this information was vital to White Energy.

This raises the following question: what did those men to in respect of sharing this information? Put another way: what did those men do to discharge their fiduciary duty owed to White Energy?

201 It was in relation to that question that the Commission stated, as to Mr McGuigan, that his failure to disclose to the IBC the Obeid family's involvement "would be a breach of a fiduciary duty to White Energy because the discharge of such a duty required proactive disclosure".

202 Although the reference to "proactive disclosure" occurs only in Mr McGuigan's case, the Commission seems to have taken the same view of the other directors. In the case of Mr Duncan, Mr Atkinson and Mr Kinghorn, it referred to what it regarded to as their deliberate concealment, from White Energy, of the Obeid family's involvement.

203 That leads to the fundamental question: how can fiduciary duties, which are proscriptive in nature, include a duty of "proactive disclosure"?

204 In essence, fiduciary duties have two components: the obligation not to put the fiduciary's interests in conflict with the interests of the person or entity to whom the duty is owed, and the obligation not to make a profit at the expense of that person or entity. As Hayne and Crennan JJ said very recently, in Howard v Federal Commissioner of Taxation (2014) 88 ALJR 667 at [56], the director of a company is "bound not to obtain any unauthorised benefit from the relationship and not to be in a position of conflict". Further, as their Honours also said, those obligations are proscriptive, not prescriptive.

205 No doubt, there may be situations where, to observe the proscriptive obligations imposed on fiduciaries, it may be necessary for a fiduciary to perform some positive act. But that does not mean that there is a prescriptive element to the fiduciary duty. It means that, to avoid a conflict of interest (or to avoid profiting at the expense of the beneficiary), it is necessary for the fiduciary to take some positive step.

206 This is not such a case. The directors were in a position of conflict. They stood to profit if White Energy exercised the option to acquire their shares in Cascade Coal. But they had removed themselves from the conflict, and left to others the question of whether the option should be exercised. And as I have pointed out, they were not acting in any way as directors of White Energy in relation to the transaction.

207 In those circumstances, it seems to me, the elements of s 184(1) of the Corporations Act have not been satisfied. Even accepting, for the moment, that the directors were "intentionally dishonest" in their dealings with Mr Cubbin and the IBC, that did not occur in the exercise of any of their powers as directors, nor in the discharge of any of those duties.

208 I should add that each of the directors challenged the finding of intentional dishonesty. On the view to which I have come, it is not necessary to deal with that challenge.

209 Accordingly, in my view, the Commission's conclusion, as to s 184(1), cannot be sustained.

Denial of natural justice

210 To some extent, the individual plaintiffs' complaints of denial of natural justice have been dealt with already. For example, it was said that the failure to identify "official functions" or "public officials" was, in the alternative, a denial of natural justice, because it did not enable the plaintiffs to know the case they had to meet. My conclusion that in one respect, the functions and officials were sufficiently identified makes it unnecessary to deal with this alternative formulation of the challenge.

The parties' submissions

211 The individual plaintiffs (apart from Mr Kinghorn) submitted, one way or another, that they had been denied natural justice because:

(1) they had not been given notice, prior to receiving closing written submissions from Counsel assisting the Commission, spelling out in detail the way in which they were said to have acted corruptly or the nature of the alleged criminality involved; and

(2) they had not been cross-examined on the elements of the alleged offences.

212 Those propositions were addressed, in some detail, by the submissions for Mr McGuigan, Mr Atkinson and Mr Poole.

213 For the Commission, Mr Watson, whilst accepting that there was a duty to provide natural justice (within the scheme of the ICAC Act), submitted that enough had been done. He submitted that there was no requirement to specify in detail at the commencement of the hearing how it would proceed and what conclusions were under consideration.

Decision

214 To my mind, the correct approach is that stated by Wood J in Glynn at 218 - 219:

Inevitably such an inquiry will expand and move into new or different areas, within its terms of reference, as it progresses. What is necessary is that by the end of the hearing, a party potentially affected by an adverse finding have the opportunity to meet it by submission, and if necessary, by evidence. The argument of the plaintiff in this regard seems to proceed on a misconception that after the evidence is received, the nature of the inquiry changes and it ceases to be investigative. I can see no basis for such a view.

If in the course of submissions, it becomes apparent that there is an area not previously raised for consideration, which does call for investigation, then it may be necessary for the Commission to stop and permit its further investigation by evidence and addresses. To take any other view would be to fail the purpose for which the Commission was created, but the cost may be an interruption and delay to ensure that natural justice is done.

215 In the present case, the public hearing took evidence over many days. Counsel assisting the Commission then prepared written closing submissions which were distributed to all interested parties. In those submissions, Counsel assisting identified in detail the corrupt conduct findings that, in their submission, the Commission should make. As a necessary part of that process, they identified the criminality said to have been involved.

216 At that point, those against whom findings were sought knew what the case against them was. They were in a position to answer it, by submissions on the evidence. If they believed that they had been denied the opportunity to lead (or to test) evidence on a particular topic or topics, because their significance had not been apparent at the time, they could have made application to reopen the public hearing. As Wood J said, they were entitled to the opportunity to meet the case put against them "by submission, and if necessary, by evidence".

217 There were complaints made to the Commission of denial of natural justice. However, none of the plaintiffs now complaining of a denial of natural justice made any application to the Commission to reopen the public hearing so that they could adduce further evidence. None of them identified, in submissions before me, the further evidence that might have been available.

218 Mr Jackson submitted that it was not for his clients to take some step to cure what he characterised as a denial of natural justice. That submission does not seem to me to take account of what Wood J said in Glynn. If any of his clients had thought, upon consideration of the written closing submissions by Counsel assisting, that he had been denied the opportunity to cross-examine or to adduce evidence on a particular topic or topics, that was the time to raise the matter.

219 It is correct to say that it was not put to any of the individual plaintiffs, in terms, that he had committed the offences that, in the Commission's view, could be made out. Nor was any of them cross-examined in detail on the elements of those offences. Nonetheless, each of them was cross-examined at length, in particular on all the relevant facts that underlaid the Commission's findings. Each of them had the opportunity, both through his own counsel and in cross-examination, to deal with the facts.

220 In those circumstances, I conclude, it was not necessary to do more. In particular, to require the preliminary formulation of views as to possible criminality, and to require the elements of the suspected criminality to be put in detail, would seem to me to be inconsistent with the investigative nature of hearings in the Commission.

221 The complaints of denial of natural justice have not been made good.

Findings not supported by evidence

222 From time to time, the plaintiffs in their submissions identified what they said were findings made against them that were not supported by evidence. On analysis, the suggested "findings" fall into two categories.

223 The first category consists of suggested "findings" which were not in fact made. That is to say, in some cases, the submissions for the individual plaintiffs characterised, as findings of fact against them, passages in the report that were not.

224 An example of what was said to be a "finding" in this category is the formulation used by the Commission to introduce its findings of corrupt conduct. To quote again from the findings regarding Mr Duncan:

The Commission is satisfied that Mr Duncan knew that, if the NSW Government found out that the Obeids had been involved in the creation of the Mount Penny tenement or in the allocation of the Mount Penny exploration licence or had a beneficial interest in the Mount Penny tenement, the NSW Government might take action to set aside the Mount Penny exploration licence or not grant a mining lease in which case the assets of Cascade, of which Mr Duncan was an investor, would be jeopardised. He therefore intended to hide from the NSW Government and relevant public officials the Obeid family involvement. The Commission is satisfied that the steps he took to do this included:

...

225 Some of the submissions suggested that there was wrapped up in this formulation a finding that the relevant individual knew that the Obeids had been involved in the creation of the Mount Penny tenement or in the allocation of the Mount Penny exploration licence. I do not read the relevant passages as embodying such findings. Certainly, if they are to be treated as findings of knowledge, the report gives no reason for saying why it is that the Commission was satisfied that the individuals knew that the Obeids had been involved in the creation of the Mount Penny tenement or in the allocation of the Mount Penny exploration licence.

226 By contrast, the Commission made it plain, elsewhere in the report, that Mr Duncan did know that the Obeids had a beneficial interest in the Mount Penny tenement, and gave detailed reasons for finding that. The position is the same for Messrs Poole, Atkinson and McGuigan, where direct findings were made. For Mr Kinghorn, the position (as to his knowledge of this) is as I have stated it at [138] to [146] above.

227 The second category consists of the findings of knowledge that were made against the individual plaintiffs. However, when one restricts this category to what are properly to be regarded as findings, it is apparent that in all cases save one, the Commission made clear and direct findings, after reciting in some detail the evidence said to justify them. The exception relates to the finding of knowledge on the part of Mr Kinghorn.

228 In short, to the extent that the challenge has focused on what are properly to be regarded as findings of fact, those challenges fail.

Alleged inadequacy of reasons

229 One way or another, these complaints (as summarised at [48] above) have been dealt with already. I mean by this that when the reasons are understood properly and examined, they are adequate to explain the impugned findings.

The case for the corporate plaintiffs

The Commission's reasons

230 I have set out at [16] the recommendation made in respect of Cascade Coal and its subsidiaries. The reasons for that conclusion were as follows:

In the First Jasper Report, the Commission found that the Mount Penny tenement was created by Mr Macdonald in accordance with a corrupt agreement with Edward Obeid Senior and Moses Obeid.

Mr Macdonald did so contrary to his public duty as an officer of the Crown. The decision to create the tenement was not justified by reference to proper planning, mining, environmental, local, or economic considerations.

The Commission does not accept that Cascade Coal Pty Ltd has any valid argument capable of justifying the continued existence of the Mount Penny tenement in its present form. As Counsel Assisting submitted:

At the time Cascade Coal Pty Ltd entered into its agreement with Buffalo Resources Pty Ltd, its management knew that the Obeid family was involved in the mining venture and [it] was given and [improperly] used confidential information.

On these grounds, the Commission considers, as Counsel Assisting submitted, "the Government [should] take all those measures which are necessary to make certain that the Mount Penny tenement [as presently constituted] is not developed into a mine".

With regard to the Glendon Brook tenement, Counsel Assisting submitted:

Cascade Coal has acquired the benefit of the Glendon Brook tenement because it entered into the agreement with Monaro Coal, Moses Obeid, Paul Obeid and Gardner Brook in respect of the Mount Penny tenement. That... was a corrupt agreement... [For] the same considerations that would apply in respect of the Mount Penny tenement, it would be inappropriate to permit Cascade Coal to retain the benefits of the Glendon Brook treatment.

The Commission agrees with the submissions above.

231 I pause to note that, in the first report, the Commission found that Cascade Coal knew (through its directors) that:

(1) the Obeid family was involved in the mining venture; and

(2) the Obeid family was given, and improperly used, confidential information.

The parties' submissions

232 The corporate plaintiffs submitted that if the relevant findings in the first report were declared to be nullities, then it followed that they should have the declaratory relief sought in respect of the recommendations contained in the third report.

233 Further, they submitted, the grant of that relief would have utility, including the vindication of their reputations.

234 The Commission submitted that, since the third report contained no new findings, it was not amenable to declaratory relief in the way that the first report was. For the same reason, it was submitted, the third report could not have any reputational impact.

235 Further, it was submitted, since the report made only "recommendations" for the "consideration" of the NSW Government, there was nothing to review. Of course, the recommendations were considered and were acted upon. But to the extent that the corporate plaintiffs suffered detriment, that followed, the Commission submitted, from the Government's action. It was open to the Government to act in the way that it did regardless of the Commission's recommendations.

Decision

236 In my view, the corporate plaintiffs' claims to declaratory relief must fail. There are in essence three reasons.

237 The first reason is that there is no decision or finding that is amenable to review. What the third report states are recommendations, based on the findings in the first report that are referred to and summarised in the third report. To the extent that the findings in the first report stand, the factual basis for the Commission's recommendations was available.

238 The relevant views expressed by the Commission in the third report are expressed in terms of "recommendations", and that is exactly what they are. It was for the Government to consider those recommendations, and, as it saw fit, to act upon them or to reject them.

239 In those circumstances, there is not in my view any decision that is susceptible of review.

240 The second reason why the corporate plaintiffs fail is that the only individual plaintiff who has succeeded in his challenge to the Commission's findings is Mr Kinghorn. For the reasons that I have given, the challenges by the other plaintiffs fail.

241 The third reason is that in my view, even if the corporate plaintiffs had made out a basis for the grant of declaratory relief, that relief would lack utility. The grant of the declarations sought would not undo the legislative response to the first report. Any reputational damage that they have suffered follows, in my view, not from the recommendations in the third report but, rather, from the relevant findings contained in the first report.

Conclusions and orders

242 Mr Kinghorn has made good his claim to declaratory relief. He is entitled to that relief because, in my view, the findings made against him did not support the conclusion that his conduct could involve a criminal offence. Thus, an essential jurisdictional fact, necessary to exist before there can be a finding of corrupt conduct, is lacking.

243 The case brought by each of the other individual plaintiffs fails, as does the case brought by the corporate plaintiffs.

244 I make the following orders:

(1) In proceedings 2013/249678: order that the further amended summons be dismissed with costs.

(2) In proceedings 2013/325031: order that the amended summons be dismissed with costs.

(3) In proceedings 2013/326066:

(a) declare that the determination by the defendant, in the report entitled "Investigation into the conduct of Ian Macdonald, Edward Obeid Snr, Moses Obeid and others" dated July 2013, that the plaintiff had engaged in corrupt conduct within the meaning of the Independent Commission Against Corruption Act 1988 (NSW), was not made according to law and is a nullity.

(b) order the defendant to pay the plaintiff's costs.

(4) In proceedings 2014/13155:

(a) order that the summons be dismissed with costs.

(5) In all proceedings: order that the exhibits be returned.

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Decision last updated: 29 July 2014