Macdonald v R

Citation: [2022] NSWSC 1765; [2023] NSWSC 270 Date of Decision: 20 December 2022; 24 March 2023 Before: Dhanji J File Number(s): 2015/59940

HEADNOTE [This headnote is not to be read as part of the judgment] In a judge-alone trial in 2022, the applicant, Mr Ian Macdonald, was convicted of two counts of wilful misconduct in public office. The convictions concerned Mr Macdonald's conduct as Minister for Mineral Resources in exercising powers under the Mining Act 1992 (NSW) to grant an exploration licence in 2008 to Doyles Creek Mining Pty Ltd (DCM) over coalfields in Jerrys Plains, NSW. Mr Macdonald gave a direct allocation to DCM, without opening to tender. The primary judge found that the "driving force" behind that decision was the improper purpose of benefitting DCM and its director, Mr Maitland, and imposed a sentence of imprisonment for eight years, with a non-parole period of four years and six months. Mr Macdonald raised seven grounds of appeal. Ground 1 was that the primary judge erred in directing himself that the test is whether the improper purpose was the "driving force" behind the exercise of the statutory powers. Ground 2 was that the primary judge erred in conflating "purpose" and "motive" and therefore in directing himself to consider whether the improper "motivation" was the driving force behind the decisions. Grounds 3 and 4 impugned the findings by the primary judge that Mr Macdonald's failure to consult other bodies before making a determination, and Mr Macdonald's preference for a "training mine" over an open competitive tender process, indicated guilt. Ground 5 alleged that the verdict was unreasonable. Grounds 6 and 7 sought leave to appeal from the sentence on the respective bases that the primary judge erred in his assessment of objective seriousness and that the sentence was manifestly excessive. The Court (Leeming JA, Mitchelmore JA and Garling J) held, dismissing the appeal: As to Ground 1: In circumstances where counsel for Mr Macdonald at trial submitted that the test is whether the improper purpose was the "driving force", leave was required for that direction to be impugned on appeal. Leave should be refused as there was no substantial miscarriage of justice; the alternative test proffered on appeal - merely that the decision would not have occurred but for the improper purpose - was less favourable to Mr Macdonald: at [25]-[44]. As to Ground 2: The natural reading of the primary judge's reasons is that the primary judge accepted that the Crown had not made out Mr Macdonald's motive, but acknowledged that motive and motivation were distinct concepts, and that motivation and purpose were used interchangeably: at [45]-[55]. As to Grounds 3-4: Although there was no legal requirement for the Minister to obtain advice from various bodies before granting consent or granting an exploration licence, that did not detract from the force of the primary judge's observation that the failure to obtain such advice was one of many considerations contributing to the conclusion that the purpose was improper. Further, the submission that a tender process did not form part of the departmental briefing note was not to the point; the availability of that option to Mr Macdonald could be relied on as part of the Crown's circumstantial case: at [56]-[71]. In any event, it does not follow from a conclusion that one of a number of factors relied upon are erroneous that the conclusion is to be set aside. It is necessary also to show that the erroneous finding deprived Mr Macdonald of a reasonable possibility of acquittal. In truth, Grounds 3 and 4 were merely particulars of Ground 5: at [61]. Filippou v The Queen (2015) 256 CLR 47; [2015] HCA 29; EE v The King, applied. As to Ground 5: The verdict was not unreasonable in circumstances where the Department advised against the proposal, the terms on which the licence was granted were considerably more unfavourable to the State of New South Wales than comparable licences in the same region, Mr Macdonald knew there was competing interest in exploring the Jerrys Plains area, and there was evidence that Mr Macdonald had acted with unusual haste in granting the licence: at [72]-[107]. Dansie v The Queen (2022) 274 CLR 651; [2022] HCA 25, applied. As to Ground 6: Although there was no evidence that Mr Macdonald received a benefit from the decision, the primary judge expressly had regard to that fact. Other matters to which the primary judge referred, namely, the senior position held by Mr Macdonald as a minister of the Crown, the deliberate and sustained conduct over a period of some months, and the quantum of the benefit all point squarely in support of the characterisation of objective seriousness given by the primary judge: at [163]-[168]. As to Ground 7: While the sentence was not a lenient one, especially given Mr Macdonald's age, it was not so far "out of the range" as to warrant the conclusion that some error of principle must have occurred: at [169]-[173].

JUDGMENT

1. THE COURT: Mr Ian Michael Macdonald and Mr John William Maitland each stood trial before the Supreme Court constituted by the primary judge (Dhanji J), sitting without a jury pursuant to s 132 of the Criminal Procedure Act 1986 (NSW), on a single indictment dated 6 February 2017. Mr Macdonald was charged with two counts of wilful misconduct in public office (counts 1 and 3) and Mr Maitland was charged with two counts of being an accessory before the fact to those offences (counts 2 and 4). The trial occupied some five weeks in September, October and November 2022, and the primary judge produced a very substantial judgment of 705 paragraphs, with commendable promptness, on 20 December 2022: R v Macdonald; R v Maitland (No 10 - verdict) [2022] NSWSC 1765. Mr Macdonald was represented by counsel; Mr Maitland represented himself.
2. Mr Macdonald was found to be guilty of both offences, and Mr Maitland was found not guilty of both offences. The findings of guilt have, by reason of s 133(1) of the Criminal Procedure Act, the same effect as a jury's guilty verdict for all purposes, including the right of appeal under s 5 of the Criminal Appeal Act 1912 (NSW).
3. Mr Macdonald's notice of appeal was filed on 5 April 2024, and contains the following five grounds raised against his convictions. 1. The trial judge erred in his determination that in order to prove the element of misconduct in the offences against the appellant that the Crown must prove that the improper purpose was the 'driving force' behind the decision such that the decision would not have been made but for the improper purpose. 2. The trial judge erred in his determination that in order to prove the element of misconduct in the offences against the appellant that the Crown must prove that but for the improper motivation, the conduct would not have occurred. Rather, the trial judge should have found that but for the improper purpose the conduct would not have occurred. 3. The trial judge erred in finding that the failure to seek advice from various bodies regarding the proposal was significant because the appellant determined the proposal without being fully informed in circumstances where the trial judge conceded that the appellant minister had complete discretion. 4. The trial judge erred in finding that the training mine and tender process were not mutually exclusive in circumstances where the departmental recommendation did not include that as an option. 5. The verdicts of the trial judge were unreasonable and cannot be supported having regard to the evidence.

Procedural background

1. Messrs Macdonald and Maitland had previously stood trial, on the same indictment, in the Supreme Court constituted by a different judge sitting with a jury. Both men were convicted, but this Court (differently constituted) allowed an appeal and quashed the convictions: Maitland v R; Macdonald v R (2019) 99 NSWLR 376; [2019] NSWCCA 32.
2. That history is relevant for two reasons. The first is that in large measure testimonial evidence was adduced at the second trial by the tender of the transcript of each witness's evidence at the first trial. That included the transcript of Mr Macdonald's evidence in chief and cross-examination at the first trial. He did not give evidence at the second trial. Thus, the judge who found him guilty had not seen Mr Macdonald giving evidence on oath that the two decisions which gave rise to the prosecution were made for a proper purpose, nor had he seen Mr Macdonald being cross-examined on that evidence.
3. The second reason is that this Court overturned the convictions because of a misdirection as to the elements of the offence. The first and second grounds of the present appeal likewise complain of the direction the primary judge gave himself, which had been the subject of argument at trial, and his Honour's reasons naturally turned in part upon the reasons given by this Court. We shall return, shortly, to the reasoning of his Honour and the earlier Court of Criminal Appeal.
4. The procedural history also explains why Mr Macdonald's sentence was back-dated to 21 January 2020 (the details do not presently matter and are explained in R v Macdonald [2023] NSWSC 270 at [112]-[119]). However, to be quite clear about it, the fact that a jury found Mr Macdonald guilty of the same offences at a different trial, with different evidence and different directions, is irrelevant to all of the grounds of appeal.
5. In order to resolve the third, fourth and, especially, the fifth, grounds of appeal, it will be necessary to review in some detail the evidence adduced at trial and the reasons of the primary judge determining a circumstantial case. However, it is convenient first to provide the following overview, which is uncontroversial, of the background to this proceedings.

Factual overview

1. Mr Macdonald held office as the Minister for Mineral Resources in the State of New South Wales. He was also a member of Cabinet. His office included responsibility for decisions under the Mining Act 1992 (NSW).
2. The Mining Act defines "mineral" to include coal. In December 2007, the whole of the State was designated as a "mineral allocation area" with respect to coal. That had the consequence that before a person could apply for an exploration licence for coal, it was necessary first to obtain the consent of the Minister pursuant to s 13(4) of the Act (as it then stood). The power to grant an exploration licence was also conferred on the Minister, by s 22(1) of the Act. The grant of an exploration licence did not permit an applicant to mine; it only permitted the licensee to prospect the land for the specified mineral or groups of minerals. However, as a practical matter, the grant of an exploration licence, and the subsequent prospecting so as to confirm the nature and viability of a mineral resource, were the ordinary steps preceding the grant of a mining lease and the obtaining of development consent or project approval for a mine.
3. Mr Maitland had been a senior union official in the mining industry, ultimately as the National Secretary of the Construction, Forestry, Mining and Energy Union (CFMEU). After he retired in 2006, Mr Macdonald appointed him as Chair of the Coal Competence Board, a body which oversaw the development of competence standards as well as advising the Minister. Mr Maitland also accepted a position as chair of a company, known as ResCo Services Pty Ltd (ResCo). Although ResCo was a labour hire company providing services to the mining industry, and provided engineering services for mine development, it had also identified an area of land at Doyles Creek in the Hunter Valley, near the small settlement of Jerrys Plains, with a resource of thermal and soft coking coal which had been the subject of some earlier exploration.
4. ResCo propounded a plan to obtain access to the area in order to establish a commercial mine together with a training mine. Mr Maitland had long had an interest in establishing an underground training mine based on a genuine belief that such training would enhance safety in the industry. The training mine was also to be promoted on the basis that it would address a serious skills shortage in the industry.

The elements of the offence

1. The common law offence of wilful misconduct in public office involves the following elements: (1) a public official; (2) in the course of or connected to his public office; (3) wilfully misconducts himself, by act or omission, for example, by wilfully neglecting or failing to perform his duty; (4) without reasonable excuse or justification; and (5) where such misconduct is serious and meriting criminal punishment having regard to the responsibilities of the office and the officeholder, the importance of the public objects which they serve and the nature and extent of the departure from those objects.
2. That formulation was given by the Victorian Court of Appeal in R v Quach (2010) 27 VR 310; [2010] VSCA 106 at [46] and was confirmed by this Court in Obeid v R (2015) 91 NSWLR 226; [2015] NSWCCA 309 at [133]-[142]. The formulation was not controversial either at trial or on appeal, although as will be seen below the content of the third element of wilful misconduct was in issue.
3. There was no issue that Mr Macdonald held a public office, and granted the consent and the exploration licence in the course of that office. Nor was there any issue that Mr Macdonald knew that he was obliged not to use his position to favour Mr Maitland, such that if he did so, his conduct was wilful. The primary judge described at [15] as the "central issue" whether Mr Macdonald engaged in misconduct.
4. Enough has been said to turn to grounds 1 and 2, noting that in order to address the other grounds impugning the convictions it will be necessary to return in much greater detail to the evidence.

Ground 1 - the direction as to "misconduct"

1. In order to understand this ground, it is necessary to return to the first trial.
2. The trial judge presiding over the first trial had directed the jury that in order to prove that Mr Macdonald had misconducted himself: the Crown must prove beyond reasonable doubt, that in granting such consent: (a) the accused was substantially motivated by the desire to confer a benefit on John Maitland and Doyles Creek Mining Pty Ltd; and (b) the accused was not motivated to any significant degree by the object of furthering the interests of the State of New South Wales.
3. That direction was found to be erroneous. The central paragraphs of this Court's decision allowing Mr Macdonald's appeal are as follows: 84 Having regard to these authorities, it seems to us that the direction as to the mental element of the offence should have been that Mr Macdonald could only be found to have committed the crime (subject to the other elements being made out) if the power would not have been exercised, except for the illegitimate purpose of conferring a benefit on Mr Maitland and DCM. 85 Each of the appellants criticised the use of the word motivation in the written direction. As we have pointed out the expression "improper purpose" is commonly used in cases of abuse of fiduciary powers, see Mills v Mills; Whitehouse v Carlton Hotel Pty Ltd, as well as in cases involving criminal offences of improper use of position by an officer of a corporation, see, for example, Chew v R (1992) 173 CLR 626; [1992] HCA 18 at 630, 633 and 635, where the direction was criticised for failing to isolate the element of purpose before the jury could bring in a verdict of guilty. Further, the difficulty with the expression "improper purpose" identified by the trial judge is in our opinion answered by the formulation of the direction which we have set at [84] above. 86 Notwithstanding, we do not think that the use of the word motivation had the potential to divert the jury. Motivation has the same meaning as purpose when used in this particular context. However, there is more difficulty in the use by the trial judge of the expressions "substantially motivated" in par 4(a) and "not motivated to any significant degree" in 4(b) of her written directions. 87 The difficulty with the direction is that it had the potential to cause the jury to reach a verdict by weighing up the significance of any proper purpose they considered Mr Macdonald had and the improper purpose in the decision-making, rather than focusing on the proper question, namely, whether but for the improper purpose the consent and licence would not have been granted.

Ground 2: motivation as opposed to purpose

1. This ground impugns the passages in the reasons of the primary judge in which his Honour found that there was misconduct. On the first count, his Honour said at [543]: Mr Macdonald gave evidence on oath that there was no improper motivation behind his decision to grant DCM consent to apply. I have considered that evidence. I remind myself that I did not have the benefit of seeing Mr Macdonald give evidence in person. Nonetheless, when I have regard to the totality of the evidence I find there is no reasonable possibility that Mr Macdonald's denial of an improper purpose was true. I have, consequently, put that part of the evidence to one side. When I have regard to the various circumstances discussed above, in combination, they are compelling. I am satisfied beyond reasonable doubt that the driving force behind Mr Macdonald's conduct in granting DCM consent to apply on 21 August 2008 was to benefit Mr Maitland and DCM such that, but for that motivation, the conduct would not have occurred. Put another way, the combination of circumstances is such as to exclude any reasonable possibility that the decision to grant DCM consent to apply was motivated by a proper purpose to an extent inconsistent with guilt (emphasis added).
2. In relation to the third count, his Honour said at [561]: The evidence of events following the granting of consent to apply and leading up to and including the grant of the exploration licence are consistent with a motivation on Mr Macdonald's part to benefit DCM and Mr Maitland. That evidence adds to the evidence in relation to the grant of consent to apply, the basis of count 1. I am satisfied, beyond reasonable doubt, that the driving force behind the grant of the exploration licence to DCM on 15 December 2008 was to provide a benefit to DCM and Mr Maitland, such that, but for that motivation, the decision would not have been made (emphasis added).
3. The references to "driving force" and "motivation" were said to be erroneous, because they were distinct from the correct test, which was Mr Macdonald's purpose.
4. Mr Macdonald submitted that: "purpose" is what matters as determined by the Court of Criminal Appeal, that is, Mr Macdonald could only have been found to have committed the crime (subject to the other elements being made out) if the power would not have been exercised, except for the illegitimate purpose of conferring a benefit on Mr Maitland and DCM. In opening the case, the Crown twice used the word motivation and thereby contributed to the trial judge's error. The use of the word "motivation" as the test in the reasoning and final determination of the trial judge in relation to Count 1 and 3 in the appellant's submissions means that there has been a substantial miscarriage of justice which can only be cured by a new trial (original emphasis).

Grounds 3 and 4 - errors in fact finding

1. Separately from his complaint that the findings of guilt were unreasonable in ground 5, Mr Macdonald identified two particular findings that were said to be flawed. The first emerged from [517], which provided: I have discussed above the various organisations, which were available and capable of advising Mr Macdonald with respect to the proposal. The failure to seek advice from these bodies is significant in the light of the fact that a direct allocation was outside the guidelines together with the Department's clear and continued opposition to the proposal. The result was that, apart from the negative advice from the Department, Mr Macdonald was essentially left with the proposal itself, letters provided by the proponent, which were necessarily selective, and, if accepted, a personal view as to the desirability of a training mine.
2. Ground 3 contended that the primary judge erred in finding that the failure to seek advice from various bodies regarding the proposal was significant because Mr Macdonald determined the proposal without being fully informed in circumstances where the trial judge conceded that the Minister had complete discretion.
3. The second emerged from [527]-[528], which are as follows: It may be recalled that, in its briefing note of 27 May 2008, the Department advised Mr Macdonald with respect to three options: a direct allocation to DCM, an allocation on a competitive basis with the requirement to establish a "training program", or an allocation on a competitive basis with a requirement to provide a payment directed towards "the establishment of broader industry training programs". It can be accepted, as was stressed by Mr Macdonald in his evidence, that neither of options two or three guaranteed an underground training mine. A proposal with a training program may or may not have included an underground training mine. However, the merits of any training program could have been assessed as part of any proposal, and in turn compared to other training programs as promoted in rival proposals. For all Mr Macdonald knew, a proposal with a training program (not involving an underground training mine) may have been assessed as superior to the DCM proposal. Even if contrary to the above, it was considered essential that there be an underground training mine, the establishment of an underground training mine could have been made a prerequisite in any competitive tender process. I do not accept the suggestion that the Department's failure to provide this alternative option ruled it out, or that Mr Macdonald would have believed it was ruled out. Mr Macdonald knew that, as Minister, he was the decision-maker and the Department did no more than provide advice to assist him. If the concern with a competitive tender was the paucity of information available with respect to the site, it was otherwise open to Mr Macdonald to simply defer any decision and inform DCM that they would go onto the register of interests with respect to the area.

Ground 5 - unreasonable verdict

1. Mr Macdonald accepted that in order to establish that the findings of guilt (which by reason of s 133(2) of the Criminal Procedure Act were deemed to be guilty verdicts) were unreasonable, he had to satisfy what had been said in Dansie v The Queen (2022) 274 CLR 651; [2022] HCA 25 at [15]-[16]: Filippou confirmed that the function of a court of criminal appeal determining an appeal on the unreasonable verdict ground is to be performed under the guidance of M in exactly the same way where the trial has been by judge alone as where the trial has been by jury. In each case, the court must conduct an independent assessment of the whole of the evidence to ask itself the question of fact whether it thinks it was open to the tribunal of fact to be satisfied beyond reasonable doubt that the accused was guilty. In each case, the court "will conclude that it was not open to the tribunal of fact to be satisfied beyond reasonable doubt that the accused was guilty if its own [assessment] of the evidence leads it to have a reasonable doubt that the accused was guilty, unless that tribunal's advantage in seeing and hearing the evidence is capable of resolving that doubt". Where the trial has been by judge alone, the reasons of the trial judge must be approached by the court of criminal appeal performing that function with circumspection lest the findings of fact made by the trial judge divert the court from undertaking the requisite independent assessment of the evidence. The court will be required to consider the arguments of the parties in the appeal and will be entitled to treat findings of fact made by the trial judge about which no issue is taken in the appeal as an accurate reflection of so much of the evidence as bore on those findings. But the question for the court in every case will remain whether the court's assessment of the totality of the evidence leaves the court with a reasonable doubt as to guilt which the court cannot assuage by having regard to such advantage as the trial judge can be taken to have had by reason of having seen and heard the evidence at trial.
2. An appellate court's review of the totality of the evidence is informed by the submissions made by the appellant in support of his or her appeal. In the present case, Mr Macdonald's attack was confined to a single issue - which was, to be fair, the main issue at trial - namely, whether it should have been found to the criminal standard of proof that the driving force behind both decisions, without which neither decision would have been made, was an improper purpose of benefiting Mr Maitland or DCM. Our reasons are much shorter than those of the primary judge because there was little challenge to the findings of the primary judge. Instead, Mr Macdonald contended that the primary judge should not have inferred, to the criminal standard, that his granting of consent and granting of an exploration licence had constituted misconduct.

Uncontroversial documentary background

1. In June 2005, the Minister for Mineral Resources at the time (Mr Hickey) announced plans for the release of a new coal area in the Gunnedah Basin in northwestern NSW, known as Caroona. Expressions of interest were lodged and evaluated, following which the Department recommended that consent be given to Coal Mines Australia Ltd, a wholly-owned subsidiary of BHP Billiton, to apply for an exploration licence. That company had offered an additional amount of some $91 million payable on the grant of an exploration licence. Later, on 12 April 2006, Mr Macdonald who by then had become Minister, granted an exploration licence in respect of Caroona to Coal Mines Australia, on terms which included an obligation to make payment of $91 million.
2. On 3 May 2006, Mr Macdonald approved the "Coal Allocation Guidelines" applicable to the grant of exploration licences, which provided that: Normally allocations are made on a competitive basis, however there may be circumstances where coal allocations are made subject to certain conditions and including a financial contribution.
3. The guidelines also provided that standalone mines would be allocated by tender or expressions of interest. The guidelines also made provision for "minimum financial contributions" and "additional financial contributions", with the latter being paid at the time of the grant of an exploration licence or shortly thereafter.
4. In December 2006, Mr Macdonald appointed Mr Maitland to chair the Coal Competence Board. The following month, on 19 January 2007, Mr Maitland went to Mr Macdonald's ministerial office. Ms Tan, who was Mr Macdonald's Department Liaison Officer, gave evidence that she recalled Mr Maitland raising the idea of a training mine in the Hunter Valley. The following Monday 22 January 2007, Mr Maitland sent a two-page letter to one of Mr Macdonald's staff (Mr Hewson). The letter said that there was a lack of semi-skilled and skilled workers, that a training mine would be financially supported by industry and the federal government and would receive union support, that it should be in a new area, rather than in an existing mine, and that training would commence in a few years.
5. Later in January, Ms Tan corresponded and spoke with Mr Coutts, the Deputy Director-General of the Department, who told her that the training mine had been canvassed before but did not go ahead for various reasons. However, around this time, Mr Macdonald instructed his staff to write to Mr Maitland to say that the proposal was being considered, as long as it was going ahead on a commercial basis.

Mr Macdonald's submissions

1. Mr Macdonald's oral submissions were concise (they occupied pages 23-28 of the transcript) and are incorporated below, with the summary of his comprehensive written submissions.
2. It was submitted that there was no doubt that Mr Macdonald genuinely believed in the training mine and that it had real public benefits, based on his testimonial evidence at the first trial, and the background of earlier mining disasters such as Gretley in 1996 and Beaconsfield in 2006, and evidence of his staff who confirmed that he was motivated by furthering the interests of New South Wales and that DCM had to demonstrate significant public good. It was submitted that this Court could not, based on the totality of the evidence, exclude the possibility that Mr Macdonald had a proper purpose and therefore there must be reasonable doubt that the power would not have been exercised except for the illegitimate purpose of conferring a benefit.
3. Mr Macdonald submitted that the first decision did not follow his Department's recommendations, but the second decision did. The first option on the briefing paper (a direct allocation to ResCo with strong conditions on title) was the option which led to a training mine. Mr Macdonald pointed to the evidence of former Premier Iemma that if the Minister wanted an underground training mine, option 1 was a way forward.
4. Although the Coal Allocation Guidelines disfavoured direct allocations, Mr Mullard had admitted in cross-examination that direct allocation was not inconsistent with those guidelines.
5. Against the force of the submission that the proposal should have gone to tender or some other competitive process, Mr Macdonald submitted that there were major stand-alone areas which proceeded by way of direct allocation, including Cobbora, Mount Pleasant, Narrabri and Oaklands Basin. In response to the Crown's submission that each of those was allocated directly because of special circumstances, Mr Macdonald noted that the training mine for a public good was a special circumstance in the case of DCM.
6. Against the likelihood of a substantial additional financial contribution, Mr Macdonald said that this was inherently uncertain. Mr Mullard's evidence that the State might expect to receive $50,000,000 to $100,000,000 was based on hindsight. In the expression of interest process in 2008/2009 for eleven areas, which was limited to smaller players, four of the areas resulted in no additional financial contribution and the maximum amount was $2,125,000. One of the areas, Spur Hill, was a larger resource than Jerrys Plains, and received no additional financial contribution.

Consideration

1. We are persuaded beyond reasonable doubt that the driving force behind both of Mr Macdonald's decisions was to benefit Mr Maitland and DCM, without which neither decision would have been made. That is so notwithstanding that (a) Mr Macdonald denied on his oath that he had any such illegitimate purpose and (b) no differently from the primary judge, we are unable to make any finding, on the criminal standard, as to Mr Macdonald's motive.
2. We start with matters which were plain on the face of the material before Mr Macdonald when he granted consent pursuant to s 13(4) of the Mining Act.
3. First, Mr Macdonald knew that his Department advised against the proposal.
4. Secondly, Mr Macdonald knew that the only persons who favoured the proposal, at least at the time Mr Macdonald chose to grant consent to an application being made, were those selected and put forward by DCM. The timing of Mr Macdonald's decision was up to him, and he did so without following his Department's advice and obtaining independent advice on a training mine from bodies well placed to provide such advice.
5. Thirdly, Mr Macdonald knew that there was existing interest in exploring the Jerrys Plains area. "Interest in the area has been expressed by other mining companies" appeared in the second paragraph of the briefing note, and this was the very first point made in the comments in the departmental brief: [t]he area in question is quite attractive and a number of companies apart from ResCo have expressed interest in the area, these companies include Atlas Coal, Simitar [sic] Resources and Independent Coal. The current policy would suggest that where there is strong interest expressed by a number of companies in a coal area then a competitive allocation process should be considered.
6. The departmental recommendation was: Given the level of industry interest in the area, that the Minister considers a competitive allocation process with a requirement to either establish a training facility or establish a broader industry training fund.
7. Fourthly, Mr Macdonald must have known that there was at least a real possibility that if the process went to tender or expressions of interest, the State would receive an additional financial benefit which DCM was not offering. Conversely, Mr Macdonald must also have known - for it is the converse of the same proposition - that it would be difficult to award DCM the consent and the exploration licence if a competitor offered an additional financial benefit and DCM did not. It is striking that the Minister adopted the course which denied the State of all opportunity to enjoy a substantial financial benefit, and gave to DCM the opportunity to secure a valuable resource uncompetitively, despite the fact that a competitive allocation process was at the forefront of the matters put forward by the Department.

Leave to appeal against sentence

1. Against the possibility that the appeal against conviction failed, Mr Macdonald also sought leave to appeal against the sentence imposed for both counts. The effective sentence was a term of imprisonment for eight years with a non-parole period of five years and six months. There were two proposed grounds of appeal: that the primary judge had erred in his assessment of objective seriousness, and that the sentence was manifestly excessive. Mr Macdonald and the Crown exchanged written submissions on these grounds which were not sought to be developed in oral address. Both grounds may be addressed relatively concisely.
2. In relation to ground 6, the primary judge regarded both counts as extremely serious examples of the offence of wilful misconduct in public office. In reaching that conclusion, his Honour relied upon: 1. the fact that as a Minister and Member of Cabinet, Mr Macdonald occupied a very senior public office; 2. the misconduct was deliberate and extended over a period of at least some months (in the case of the first count, from no earlier than the Department's Briefing Note of 27 May 2008 until the decision on 21 August 2008, and in the case of the second count, a similar period of time); 3. the significance of the resource (estimated to be 91 million tonnes of soft and semi-coking coal with a value of $9.1 billion); 4. the loss of an additional financial contribution, valued at somewhere between $50 million and $100 million, which would have been realised had the exploration licence gone to competitive tender, all of which was fully known by Mr Macdonald; 5. the consequences to NSW in terms of the damage to confidence of potential investors as a place where business can be transacted fairly and without political interference, and 6. the fact that the misconduct occurred at a time when State finances were under considerable strain.
3. Mr Macdonald emphasised that he did not receive any financial benefit from his conduct, did not act in secret, and did not commit any explicit acts of deceit or dishonesty. He submitted that it was an error of judgment to confer a benefit upon DCM which could not be classified as being in the worst category. He submitted that if the proceedings were for judicial review then it would be doubtful that the Court could find that the decision was Wednesbury unreasonable. Moreover, subsequently the exploration licence was cancelled by the NSW Government, with the consequence that there was no real loss to State revenue (because the licence could be granted to a third party subsequently). Mr Macdonald also drew attention to the maximum penalty for the statutory analogue under Part 4A of the Crimes Act 1900 (NSW), being seven years, and the maximum penalty for the Commonwealth offence of misconduct in public office under s 142.2 of the Criminal Code Act 1995 (Cth) was five years. Mr Macdonald submitted that the sentence imposed had the effect of determining "that Mr Macdonald's conduct in relation to the two [offences] was the worst of cases and therefore the appellant should receive the maximum".

Conclusion and orders

1. For those reasons, there should be a grant of leave to appeal, confined to grounds 3-7, but the appeal must be dismissed. Proposed grounds 1 and 2, which not only lack merit but which are also diametrically opposed to the submissions advanced on behalf of Mr Macdonald at trial, do not warrant a grant of leave.
2. This Court's orders are: 1. Grant leave to appeal, confined to grounds 3-7, and refuse leave to appeal in respect of grounds 1 and 2. 2. Appeal dismissed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 November 2024