McKay v Department of Family and Community Services

Background

1. The appellant commenced employment with the Department on 12 November 2007 as a Child Protection Caseworker. The fundamental purpose of her role was to support vulnerable families and to improve children's lives by protecting them from abuse and neglect.
2. The appellant was based in Campbelltown, which is included within the Department's South Western Sydney District.
3. In early 2015, the appellant was offered and accepted a temporary assignment to the role of Acting Manager Casework at the Auburn Community Services Centre.
4. On 12 August 2015, members of the NSW Police Force executed a search warrant at the appellant's home where she lived with her husband, Peter Algie, their four year old daughter and Peter's father, Gary Algie. The police discovered and seized a large amount of synthetic cannabis which, since October 2013, has been a prohibited drug, together with assorted drug-related paraphernalia and a significant amount of cash. This discovery would later lead to the charging, prosecution and imprisonment of Peter and Gary Algie for drug-related offences.
5. On or about 19 August 2015, Ms Donnellan was advised that the police had made a report to the Department's Child Protection Helpline regarding the execution of the search warrant at the appellant's home. The police reported that the appellant's daughter had been exposed to illicit drugs in the family home. In response, the Department conducted a Risk of Significant Harm ("ROSH") assessment of the appellant's daughter.
6. Although no application was made to me by either party, I have decided to not refer to the name of the appellant's daughter this decision and to excise her name from any document referred to herein. I will substitute, in its place, "A".
7. The ROSH assessment was conducted by Ms Tiffany Black and Ms Amy Dunshea of the Department and concluded that: Community Services is of the view that it is improbable but plausible Denise was not aware of Peter's illicit dealings that exposed "A" to serious ROSH, however this danger is now alleviated by the Police shutting down the operation and Peter's current incarceration.
8. On 4 September 2015, Ms Donnellan wrote to the appellant and advised her that she had been suspended without pay (subsequently amended to suspension with pay), pending an investigation by an independent investigator into five allegations against her of misconduct/reportable conduct. Those allegations were: 1. That you have exposed your child "A" to (schedule 1) illegal drugs in your family home, as recently as 12 August 2015. 2. That you have failed to report illegal activity being undertaken by your husband and his father. 3. That you have concealed illegal drugs in your home, as recently as 12 August 2015. 4. That prior to, and after October 2013, you have been knowingly involved in a drug distribution business. 5. That you have engaged in unauthorised secondary employment.
9. On the same day, 4 September 2015, Mr David Madden, of Dbm independent consultants, was engaged by Ms Donnellan to investigate the five allegations against the appellant in accordance with section 69 of the Government Sector Employment Act 2013 ("the GSE Act"), and in line with the procedural requirements of Part 8 of the Government Sector Employment (General) Rules 2014.
10. The appellant denied, and continues to deny, having had any knowledge at all of her husband's illegal activities.
11. Mr Madden's Interim Investigation Report ("the Madden Report") was provided to Ms Donnellan on 21 July 2016. In his report, Mr Madden canvassed numerous pieces of evidence, much of which was provided by the NSW Police Force.
12. In addition, Mr Madden conducted an extensive face to face interview with the appellant. He ultimately found that the appellant did have knowledge of her husband's involvement in a criminal enterprise and of the presence of illicit drugs within their home.
13. Mr Madden's findings were that allegations (1), (2) and (5) were sustained on the balance of probabilities, but that allegations (3) and (4) were not sustained.
14. The Madden Report was reviewed by Ms Nancy Carl, Manager, Professional Conduct Ethics and Performance ("PCEP"), who prepared a briefing note for Ms Donnellan. Ms Carl proposed that Ms Donnellan make a finding that the appellant had engaged in misconduct, and take disciplinary action against her under section 69 of the GSE Act, with "the most appropriate, most severe penalty" to be applied to the appellant being termination of her employment after giving her an opportunity to resign.
15. Ms Donnellan reviewed the Madden Report, together with Ms Carl's briefing note and the relevant evidence, and formed the view that the appellant had engaged in misconduct and that her conduct justified termination of her employment once she had been provided with the opportunity to resign.
16. On 21 July 2016, Ms Donnellan wrote to the appellant and advised her that, in the opinion of Ms Donnellan, she had engaged in misconduct in that allegations (1), (2) and (5) had been found to be sustained. The appellant was also advised that the most severe penalty that Ms Donnellan would conceivably impose was "termination after an opportunity to resign".
17. The appellant was given 14 days to provide Ms Donnellan with a submission and any additional information which she considered should be taken into account in relation to the penalty being considered.
18. From 5 to 30 August 2016, Ms Donnellan was on leave. During that time the Department received a written submission and a number of character references from the solicitor acting on behalf of the appellant. These materials were reviewed by Ms Dunworth, who was acting in Ms Donnellan's role at that time.
19. On 17 August 2016, Ms Dunworth advised the appellant of the decision to terminate her employment after giving her an opportunity to resign.
20. After Ms Donnellan returned from leave on 30 August 2016, she reviewed and considered the material provided by the appellant's solicitor, but was satisfied that this material did not change her decision.
21. In light of the appellant's failure to tender her resignation within the stipulated timeframe, Ms Donnellan's decision to terminate her employment with the Department was put into effect on 1 September 2016.
22. Throughout the disciplinary process, and these appeal proceedings, the appellant has steadfastly denied having had any knowledge of her husband's illegal activities. Clearly, if it is determined on the evidence before the Commission that the appellant was aware that her husband was conducting an illegal drug distribution operation from their family home, then there can be no dispute that the termination of her employment was justified and her appeal must fail. So much was conceded by the appellant herself.
23. A central issue for consideration in this matter is the extent of the appellant's knowledge, or lack of knowledge, of the illegal activities being conducted by her husband in their home and, literally, under her nose.

Allegation (1) That Ms McKay has exposed her child "A" to (schedule 1) illegal drugs in her family home, as recently as 12 August 2015.

Allegation (2) That Ms McKay has failed to report illegal activity being undertaken by her husband and his father.

1. Shortly stated, the Department's case is that the appellant was aware of the illegal drug distribution activities that her husband and his father were conducting from the family home. The appellant knowingly exposed her four year old daughter to illegal drugs in the home and failed to report this illegal activity. Given that the care and protection of vulnerable children was a key aspect of the appellant's role, the Department claims to have lost all trust and confidence in her ability to undertake work for the Department.
2. However, in his opening address on the first day of the hearing, counsel for the Department put the following submission in the alternative: I can only repeat, because obviously there's going to be a focus in this case on the question of misconduct, that it is not irrelevant but it is not the ultimate question to be decided. Ultimately if the tribunal accepts that it was more likely than not that Ms McKay knew what her husband was doing, then I think there would be little doubt, in my submission, that the appeal would not be allowed. But the department's case to be clear, based on the evidence that will be presented to you Commissioner, is that even if for some reason the Commission did not agree or agreed with the proposition that Ms McKay did know what her husband was doing effectively under her nose, then her conduct, particularly as it affected her daughter, amounted to a wilful blindness or negligence of such a profound nature that she is a person entirely unsuited to working as a caseworker or case manager for FACS. That is the nature of the protective jurisdiction and the respondent will be saying to the Commission that it would be entirely inimical to the exercise of that jurisdiction as it is properly understood for the applicant to be allowed to return to employment.
3. The Department, and in particular the decision maker, Ms Donnellan, relied upon the findings in the Madden Report that, on the balance of probabilities, the appellant exposed her child to illegal drugs (allegation (1)) and failed to report her husband's illegal activity (allegation (2)).
4. The Madden Report played a key role in the decision to dismiss the appellant and was relied upon in these proceedings to support that decision. In relation to the appellant's knowledge of the drug-related activities for which her husband and father-in-law were arrested and charged by the police, the following was stated in the Madden Report: The role of Denise McKay in the operation and the degree to which she had knowledge of the operation of her husband and father-in-law is the key to the current inquiry. NSW Police continue to prosecute Peter Algie, Gary Algie and a number of other persons in relation to the illicit synthetic cannabis business. As a FACS employee, Denise McKay has had a number of allegations proffered against her, which principally focus on her knowledge and involvement in that business and the danger that the presence of synthetic cannabis would present to her four-year old daughter "A", given that the drugs were located in the home. Further, after quoting from the ROSH assessment, Mr Madden, referring to the appellant as "the respondent", stated: In effect, FACS came to the view that it was improbable that Denise was not aware but at the same time deemed it plausible that she was not aware of her husband's involvement in the business. As set out within this document, this investigator has come to the same view. Based on the evidence and using the balance of probabilities as the threshold, it is more likely than not that the respondent was aware of her husband's involvement in a criminal enterprise, mainly the distribution of synthetic cannabis, and therefore when that enterprise was conducted from the family home, placed her daughter at risk. The view that the respondent was aware was formed from a number of different pieces of information and the constant consideration by the investigator whether, in a relationship that had lasted some 16 years, 10 of which the respondent was the wife of Peter Algie, was it reasonable that she did not know, particularly given that the operations principally come from her family home.
5. Mr Madden then considered what occurred during the execution by police of the search warrant on the appellant's home on 12 August 2015, in particular: - The discovery, on the dining table located between the lounge room and the kitchen, of pages from a yellow A4 writing pad which set out, in the handwriting of the appellant's husband, details of the distribution of kilograms of synthetic cannabis and amounts of money owed by various persons. These pages were referred to in these proceedings as the "drug register". - The discovery in an unlocked desk drawer in an adjoining room, where there was also some children's play equipment, of a quantity of synthetic cannabis in an uncovered metal bowl, together with other drug-related paraphernalia such as resealable plastic bags and bright pink labels with "XXX Hardcore" printed on them. - Various quantities of synthetic cannabis in plastic resealable bags found in a set of drawers in the bedroom which the appellant shared with her husband, as well as in the pocket of her husband's shorts, which were in a clothes basket in the bedroom. - A significant quantity of synthetic cannabis and other drug-related paraphernalia and a large amount of cash, located in a downstairs area of the home.
6. The Madden Report then stated as follows: The multiple, often unsecured, locations throughout the family home with synthetic cannabis labels and resealable bags would suggest that her husband did not make any attempt to disguise his business activity. The bowl of synthetic cannabis in the office drawer adjacent to the lounge room, had to have been brought there and used by her husband and it is difficult to accept that she had no knowledge of that.
7. Mr Madden then dealt with some of the financial information which had been provided to him by the NSW Police in the following terms: A further issue relates to the financial issues and aspects of the home. since 2012, Denise McKay was on part-time work after returning from maternity leave, receiving a reduced income as a result. She returned to full-time work in May 2015 and commenced acting in a managerial position. By her own admission, her income pays the mortgage on the property and other items were purchased by her husband. However, she never questioned where he was receiving the funds. NSW Police have already indicated that there remains a large amount of unexplained wealth and expenditures, including $28,000 for dental work, $16,000 for Peter Algie's vehicle, some $26,000 for kitchen renovation and appliances, a $7,000 new lounge, $170,000 for the coffee machine business when he only brought $50,000 into the business, loans to various persons and overseas holidays. All of these were paid for in cash but Denise McKay said that she knew nothing about this and was not surprised her husband had cash because he would do that as against putting the money in the bank.
8. In summary, Mr Madden noted the following matters as having significance for his findings in relation to allegations (1) and (2) against the appellant: - The allegations proffered against Ms McKay principally focus on her knowledge and involvement in that business and the danger that the presence of synthetic cannabis would present to her four year daughter given that the drugs were located in the home. - The Department came to the view that it was improbable but plausible that Ms McKay was not aware of her husband's involvement in the drug supply operation. - Based on the evidence obtained during the execution of the search warrant, it is difficult to accept that Ms McKay, at no stage, had any reason to question her husband about synthetic cannabis, resealable bags or even the XXX Hardcore labels. - The bowl of synthetic cannabis, in the office drawer adjacent to the lounge room, had to have been brought there and used by her husband and it is difficult to accept that she had no knowledge of that. - Throughout the execution of the search warrant, Ms McKay had not appeared surprised, did not berate NSW Police protesting her husband's innocence nor even appear surprised at their finding of the various drugs. - The significant amount of cash paid by Ms McKay's husband on a variety of expenditures over the 18 month period prior to his arrest., which the police summarised as follows (as set out in the Madden Report): A total of $350K of unexplained wealth has been spent and not taking into living expenses and mortgage of $280K. The accounts held by ALGIE show EFPOS transactions up until 2013 when there are little to no transactions after that time. Assumed to be using cash for food and other personal items. - According to Ms McKay, in 2012 her husband mentioned that he was thinking about being involved in a synthetic cannabis business and she had told him that she did not want anything to do with this. - According to NSW Police, the business was, in fact, distributing synthetic cannabis during the time it was legal, with a continuation of that practice when it became illegal.
9. The conclusions reached in the Madden Report on allegations (1) and (2) against the appellant were summarised in the following terms: When all of these different pieces are put together, it is difficult to assert that, under the circumstances, Denise McKay did not know what her husband and father-in-law were involved in. Accordingly, it is found that she did have knowledge of her husband's involvement in a criminal enterprise and the presence of drugs within her home. Therefore, Allegation 1 was found sustained, that Ms McKay has exposed her child "A" to (schedule 1) illegal drugs in her family home, as recently as 12 August 2015. The drugs were found within the home, they were accessible to "A" and it is more probable than not that Denise McKay was aware of the drugs' presence. Given her knowledge of the drug operation and the fact that it was illegal as of October 2013, Allegation 2 is also found sustained in that Ms McKay has failed to report illegal activity being undertaken by her husband and his father. The evidence would suggest she was aware of the operation but there is no evidence that she was actively involved in the operation or distribution apart from benefiting from the assets or proceeds derived from the various sales. Accordingly, Allegation 3 and Allegation 4 were found not sustained in that Ms McKay has not concealed illegal drugs in her home, as recently as 12 August 2015 and prior to, and after October 2013, Ms McKay has not been knowingly involved in a drug distribution business. The finding is that the respondent was aware of her husband and father-in-law's operation and was aware that drugs were located within the home but took no active involvement, apart from benefiting from the sale or income derived from such criminal enterprise.
10. In her briefing note to Ms Donnellan of 21 July 2016, Ms Carl stated as follows: Ms McKay is an Acting Manager Casework and has been employed by FACS for a number of years. The investigator is satisfied that Ms McKay did not take appropriate action to ensure that her daughter, "A", was not exposed to drugs in the family home. The video of the NSW Police search warrant has been viewed by both the investigator and Ms Carl of PCEP and it is clear, when viewing that video, that a significant quantity of the drug was located in an unlocked drawer, in a desk in the room used by "A" as a 'play room'. The drawer was within easy access for "A". (There were also quantities of the drug located in other parts of the home). There is considered little doubt that Ms McKay was aware, and failed to action to mitigate against, the risk to "A". The risk was ultimately mitigated after the NSW Police removed the drugs from the home in the course of their investigation and arrest of Mr Peter Algie. From evidence obtained, including Ms McKay's lack of surprise expressed on video at the arrival of police for the execution of the search warrant, a finding has been made that Ms McKay was aware that her husband (and father in law) were involved in illegal activity and failed to report it. Ms McKay's actions are considered to amount to misconduct.
11. Detective Senior Sergeant Patrick Keating was a member of the team of police which executed the search warrant on the appellant's home on 12 August 2015. He gave evidence as to what had occurred during the execution of the search warrant and explained what was happening at various points on the police video of the event, which was tendered into evidence before the Commission.
12. Much of the Detective Senior Sergeant's evidence centred on pages from a yellow A4 writing pad which were found on the dining table in the lounge/dining area of the residence. On a number of pages of this pad there were handwritten entries which set out names of persons, weights and amounts of money. Detective Senior Sergeant Keating concluded that these pages were part of a "drug register".
13. Amongst the pages of the pad which were seized by the police were some which contained entries which were clearly unconnected with any criminal activity. One such page was referred to in the proceedings as the "birthday party list", which comprised a list of names of invitees to "A's" upcoming birthday party. This page was still physically connected to a number of other pages which contained some random scribbling. This bundle of pages was not physically connected to any of the pages which contained the apparent drug-related entries. The handwriting on the "birthday party list" was the appellant's. The handwriting on the other pages, particularly those pages containing apparent drug-related entries, was not the appellant's.
14. Detective Senior Sergeant Keating was cross-examined at some length about the location in the house of the "birthday party list" at the time it was seized by him. He maintained that it was part of the bundle of yellow writing pad pages, which bundle also included the "drug register", which was located on the dining table and placed in the one police exhibit envelope and which became exhibit 7 in these proceedings.
15. The case for the Department was that, due to the amount of synthetic cannabis and other drug-related paraphernalia which was found in various locations throughout the home, including the "drug register" which was found on the dining table in the same bundle of writing pad pages as the "birthday party list", which was in the appellant's handwriting, she must have known about the drug distribution business which her husband was conducting from their home.

Allegation (5) That Ms McKay has engaged in unauthorised secondary employment.

1. Section 10.5 of the NSW Family and Community Services Code of Ethical Conduct contains the following provision: Private work is paid work undertaken for an employer other than FACS, including self-employment, and owning, operating or being a director of a private business. Secondary employment is paid work undertaken in a secondary position within FACS in addition to a staff member's primary employment within FACS. ………………. Therefore, all full time staff and all Home Care staff must seek approval to undertake secondary employment or private work.
2. During her interview with Mr Madden on 8 March 2016, the appellant was asked if she was a director of a company called Mr Kool Beans, which conducted her husband's coffee machine business. She confirmed that she was, but said that she had played no role in the company or the business.
3. It was not in dispute that the appellant had not sought approval to be a director of this company.
4. In relation to this allegation, the Madden Report contained the following finding: Allegation 5 was found sustained in that Ms McKay has engaged in unauthorised secondary employment. At interview, she admitted that she is a Director of the company Kool Beans, part of the franchise arrangement in relation to the coffee business her husband was involved in. She indicated that she took no active role in that business, not even examining financials, however the FACS Code of Conduct indicates that being engaged as a Director in a company is considered secondary employment.
5. In the briefing note to Ms Donnellan of 21 July 2016, Ms Carl stated: In addition to the issue of the drugs themselves, the investigator is satisfied, (and PCEP agrees) that Ms McKay was certainly 'working' in Mr Algie's 'coffee business' and she did so without secondary employment approval.
6. Under cross-examination, Ms Donnellan maintained that the appellant's directorship of the company, which conducted the coffee machine business, and for which she had not sought approval, constituted a breach of the Department's Code of Ethical Conduct.

Allegation (1) That Ms McKay has exposed her child "A" to (schedule 1) illegal drugs in her family home, as recently as 12 August 2015.

Allegation (2) That Ms McKay has failed to report illegal activity being undertaken by her husband and his father.

1. The appellant accepted that, if she had knowingly exposed her daughter to illegal drugs, then her appeal must fail. The following exchange occurred during her cross-examination: Q. All right. Now, you would agree would you not that if it were accepted that you did knowingly expose your daughter to the schedule 1 illegal drugs and/or, sorry I'll start with that proposition, you would agree that if that had occurred you had no place, you shouldn't be working for the department, would you agree with that? A. Sorry, if I had known about it? Q. Yeah? A. Well yes. Q. You agree with that proposition? A. If I knew and was involved in it, then yes. Q. If you knew what your husband was doing? A. Yes. Q. You agree with that proposition? A. Well that goes against ethics but I didn't know, so.
2. However, the appellant denied that she had any knowledge of the presence of illegal drugs in her home. The following exchange also occurred during her cross-examination: Q. All right, you say there, paragraph 3, the first sentence, "I deny that at any point I knowingly exposed my daughter, "A", to schedule 1 illegal drugs in her family home", do you see that? A. Yes. Q. Did you use the term knowingly deliberately? A. Well obviously with the search warrant you can see that there was drugs found in my home, I had no knowledge of them in my home, yes, she was exposed to drugs in my home. Q. Yes, she was-- A. But I did not know that they were there. Q. And do you accept, as her mother, that responsibility for that exposure falls upon you? A. Not if I didn't know about it, no. Q. So you don't accept that? A. How can I be protective and show my protective ability if I have no knowledge that something is there?
3. The appellant further denied having any knowledge of her husband's illegal drug-related activities. She claimed that she paid little attention to his many different business interests and ideas and to the handwritten notes he would make about these ideas in multiple writing pads and notebooks, which would be left around the house.
4. With respect to the "drug register" which was found on the dining table by Detective Senior Sergeant Keating during the execution of the search warrant on 12 August 2015, the appellant claimed that the table often had on it her husband's paperwork, including notebooks, mail and his computer. She stated that she didn't look at these things.
5. In relation to the synthetic cannabis and other drug paraphernalia found in the desk, the appellant gave the following evidence: The desk that is referred to is Peter's desk, it is where Peter keeps all his work documents and items. The filing cabinet next to Peter's desk also contained all of his business documents. The drawers to the desk had a key kept in it and as far as I am aware the drawers were usually locked, the key in the top drawer lock locked all drawers. I did not access the desk or the drawers as they contained Peter's documents and I had no need to access the desk. Peter and I have always taught "A" to have respect for other people's property and that Peter's desk contained important business documents which was not allowed to play with. I have no knowledge of any synthetic cannabis, plastic bags or labels in the desk.
6. The appellant claimed to have had no knowledge of the drugs and other items found by the police in the set of drawers in the main bedroom. She stated that this set of drawers was her husband's and contained his clothing. He had always washed and put away his own clothes. The appellant had no knowledge of what was found by the police in those drawers and had no reason to go through them. She also had no knowledge of any synthetic cannabis in the pocket of his pants.
7. In addition, the appellant claimed that the downstairs area was always locked and that she didn't have a key. She stated that she had no knowledge of any synthetic cannabis in this area.
8. The appellant and her husband operated a number of joint bank accounts. Her husband also operated a number of specific accounts relating to his various business interests. The appellant was also aware that her husband saved large amounts of cash which he kept in the family home.
9. In relation to most of the large cash expenditures and purchases, which were identified in the Madden Report, the appellant claimed to have little knowledge. She gave the following evidence: $16,000 for motor vehicle, I am unaware of how Peter paid for this vehicle. It was a vehicle Peter bought for work and I wasn't aware whether he got a loan through the business. Peter bought this vehicle end of 2013/beginning 2014; $28,000 for dental work, I am aware that Peter had his teeth fixed and I knew that he had the money saved for it but was unaware of how much money he actually spent on his dental work. I believe that Peter had this work done at the end of 2013 or beginning of 2014; $24,000 for airflights, I was aware of the flights and how much they cost. The flights for me, Peter and my sister and her partner and her 2 kids. This money was saved by myself and Peter and my sister and her partner. We purchased the flights at the end of 2013. We had a savings plan to pay for these flights and my grandmother gave both myself and my sister $10,000 each and we began saving in 2010 for this trip; $6,000 and $20,000 for kitchen appliances, I was unaware of the exact amount spent on the kitchen but again we saved the money since we bought the house in 2006 and did the work between 2014-2015; $7,000 for a new lounge, I believe that it was from Plush during their 50% sale. I am unaware of how much it cost but do not believe it was $7,000. I believe it was $3,000-$4,000; $170,000 for coffee machine business, I had no idea how much it cost but Peter told me that he had the money to buy the coffee machine business from the sale of Sky High; $22,000 for the caravan, we had the money saved and Peter had money from the sale of business. We purchased it from a family friend. I wasn't involved in the purchase of the caravan, I just knew they were selling it and it was nice; $10,000 for the race horse, I didn't know that there was a lump sum payment I thought it was just ongoing fees; $16,000 for business venture with… , I knew they (were) discussing a driving school but I didn't know what money was available for this business and nothing was ever established. This was in 2013; $16,000 for a new business venture… , online feminine hygiene, I didn't know that Peter had put this amount of money into it and believe this business was just at the initial research; Running expenses for the business, as far as I am aware the coffee business was meeting its own costs; $10,000 for Hawaii, I don't believe we spent this money on Hawaii. As far as I am aware that the total was $7,000 and we had only paid a deposit as we were due to go in October 2015. I was working fulltime and this was for our 10 year wedding anniversary. $8,000 for a television, I believe we purchased this in 2012/2013. I can't imagine that we spent this amount of money on a television, we always buy things when they are on sale.
10. The appellant was cross-examined at some length as to her knowledge, or lack thereof, of these cash transactions.
11. The appellant also deposed that she was aware that her husband had come into contact with synthetic cannabis when he worked for a tobacconist chain called "King of the Pack". At that time, prior to October 2013, synthetic cannabis was not an illegal drug and was sold over the counter at some tobacconist shops. The appellant was aware that, while her husband was working at King of the Pack, representatives would come to him to attempt to sell the product to King of the Pack for her husband to then distribute it to the tobacconists that he had developed. The appellant claimed that, as far as she was aware, her husband did not sell or distribute the product himself. The appellant recalled that, in 2012, her husband initiated a conversation with her about synthetic cannabis, during which she said: I don't want anything to do with it and I don't want you to have anything to do with it. I don't care that it is legal its still cannabis and people get addicted to it. I have seen people through work taking it because they think they can get around drug testing and I have seen the issues they have because of the substance. The appellant claimed that she and her husband never discussed the substance again.
12. The appellant also claimed that the first time she became aware that synthetic cannabis was, or had become, an illegal substance, was during the execution of the search warrant at her home on 12 August 2015.

Allegation (5) That Ms McKay has engaged in unauthorised secondary employment.

1. The appellant claimed that, because she was not actively involved in the coffee machine business which was conducted by the company of which she was a director, she was unaware that see needed to seek approval to be a director of that company. She gave the following evidence in cross-examination: Q. Are you saying that what you'd done, being a director, as I understand it, of Cool Beans Propriety, becoming a director of Cool Beans Pty Limited, doing that alone you didn't think you were obliged to do anything in relation to that, to report it and so forth? Is that what you're saying? A. My understanding, which obviously - I was under the understanding that if it was a job that had a conflict of interest with my current work-- Q. Yes? A. --you would. But because I wasn't actively doing anything with the business, I didn't think of it as being something I needed to do.

Submissions of the Department

1. The Department accepted that it bore the onus of proof in relation to the three misconduct allegations which it had found to be sustained and which formed the basis for the appellant's dismissal.
2. The Department submitted that the Commission should make a finding that the appellant knew about the illegal drug distribution business which her husband was conducting from their home. The Department relied upon the finding to that effect in the Madden Report and, in its written submissions filed with the Commission on 23 March 2017, submitted as follows: 20. As part of his investigation, Mr Madden considered the DVD of the search undertaken by the Police on 12 August 2015 as well as financial and banking records relating to the affairs of the applicant and her husband. The report of Mr Madden is annexure 'D' to exhibit 8. 21. The report is detailed and contains several factual matters of considerable relevance to the proceedings, many of which came to light after the Police search on 12 August 2015: (i) Documents containing details of customers and amounts of money as they related to Algie's operation were found on the kitchen table in clear view… (ii) Amounts of the synthetic cannabis were found in drawers in an office next to the living room and adjacent to a play area used by "A"… (iii) Amounts of the synthetic cannabis were found in the bedroom shared by the applicant and her husband… (iv) Large amounts of cash, amounting to approximately $350,000 had been spent in the previous 18 months on a range of luxury goods, household items, an overseas holiday and the coffee venture… . Mr Algie had not just commenced this drug distribution business recently. He had considerable funds and supplies, and what appeared to be an established network. The Police had been watching him for some time before his arrest. This is important because it makes it more difficult to accept the appellant's protestations of innocence.
3. In short, the Department's position is that the appellant must have known about her husband's operation, given the amount of incriminating material that was found by the police in her home and the number of large cash transactions made by her husband. If this were the case, then it followed that the appellant was "utterly unsuited to her role as a caseworker or acting case manager in child protection".
4. However, the Department also submitted that, even if the appellant did not know about her husband's activities, her appeal should, nevertheless, still be dismissed. The submission was put in these terms: 31. However, her actual knowledge of his activities is not necessarily pivotal to the decision. The fact that the appellant and her daughter were living in such close proximity to dangerous and criminal activities and the appellant was apparently unaware of this conduct and its potential danger to a child is of overwhelming importance and cannot be overlooked, excused or treated as of merely tangential relevance. 32. Any frontline role in child protection requires, as Ms Donnellan points out, a heightened level of perception and an ability to see past the obvious to what is really happening. If the appellant could not see what was occurring in her own home (or did not want to see it) then she is entirely unsuited to the work she was doing and the Department could simply not have trust in her again. And further: 111. It should be said that even if the appellant either had no knowledge of what her husband was doing or did not appreciate the extent of his involvement in the drug trade this would not, in this case, assist the appellant. 112. Central to her role as a case worker or casework manager in child protection is to have an ability to assess possible dangers to children where parents may not be telling the truth and often where children can't or are unwilling to speak for themselves. If she is telling the truth, then her lack of perception (which amounts to either wilful blindness or extraordinary negligence) makes her utterly unsuited to working in the department and working in child protection. 113. The better view, it is submitted, is that the appellant knew what her husband was doing and regardless of the dangers to her child, was prepared for personal gain to benefit from her husband's illegal activities. 114. Even if, and contrary to the overwhelming inferences to be drawn from the evidence, she did not know what was going on, the appalling situation in which her daughter was living and the appellant's lack of insight in this regard, make her unsuited to work for the respondent in any capacity. Her repeated failure in cross-examination to take any responsibility for the situation her daughter was placed in only magnifies what is a dangerous lack of insight into both her responsibilities and her failings in this case.

Submissions of the appellant

1. In written submissions filed in the Commission on 30 March 2017, it was put on behalf of the appellant that the Department "sees itself as having two strings to its bow". The first was described as the "Misconduct Case". The second was described as the "Unsuitability Case".
2. According to the appellant's submissions, the Department's "Misconduct Case" asserts that the appellant knowingly engaged in the conduct described in allegations (1), (2) and (5). The "Unsuitability Case" asserts that, even if she did not know about the presence of illicit drugs in her home or the operation which was being conducted by her husband, the appellant is still, nevertheless, unsuited to continue in employment in the Department because she failed to detect the illegal activity which was occurring in her own home.
3. The appellant's submission in answer to the "Misconduct Case" was to the effect that, in applying the principles which emerge from cases such as Briginshaw v Briginshaw (1930) 60 CLR 336, Re Pochi and Minister of Immigration and Ethnic Affairs (1979) ALR 247 (affirmed in Minister for Immigration and Ethnic Affairs v Pochi [1980] FCA 85) and cases which adopted those principles, the Department had not established to the requisite standard that the appellant knew about the presence of illicit drugs in her home or knew about her husband's illegal drug activities which were being conducted in the family home.
4. It was submitted that, given the gravity of allegations (1) and (2) and the seriousness of the consequences for the appellant and her daughter if she is not reinstated, the Commission should only dismiss the appeal if it is comfortably satisfied, on the balance of probabilities, but adopting a cautious approach to the assessment of the evidence as was propounded by Dixon J in Briginshaw, that the appellant is guilty of the misconduct as alleged.
5. The submission in answer to the Department's "Unsuitability Case" was that it is "at a factual level, hopeless. It relies on the proposition that there exists an equivalence between the skills a DFCS caseworker deploys entering a house with a child believed to be at risk (armed with the usual reports, information and expectations)… and what one does at home where there is neither an expectation of risk nor any apparent basis for conjugal distrust. According to DFCS, all caseworkers should be on high alert for illegal behaviour by their spouses that may put their children at risk. The difficulties with that proposition are apparent as soon as it is articulated".
6. The appellant submitted that "there is no basis in any legislation for the proposition that the Commission can dismiss an appeal because of findings, (e.g., that Ms MsKay lacked skills of observation) that could not be characterised as findings that could have supported a decision by the original decision-maker to terminate an appellant's employment, that is, which are not findings of misconduct or unsatisfactory performance".
7. There then followed a detailed analysis of the evidence which related to a number of factual assertions made by the Department. Some of the more significant matters canvassed in this part of the appellant's submissions are dealt with below: 1. There is no evidence that the appellant's husband was running a "large" operation. 2. There is no evidence that Mr Madden, himself, reviewed the financial and banking records of the appellant and her husband. 3. There is no evidence that the "drug register" was found on the dining table "in clear view". 4. There is no probative evidence to support, as a "factual matter", the expenditure of $350,000 in the preceding 18 months on a range of luxury goods, household items and other expenditures. 5. There is no evidence to support the proposition that the appellant's husband had not just commenced his drug distribution recently or that he had "considerable funds and supplies and what appeared to be an established network". 6. Nowhere in Ms Donnellan's evidence, or elsewhere, is there any support for the proposition that Ms Donnellan had formed the view that the appellant was "utterly unsuited to her role as casework manager or acting case manager in child protection". 7. Ms Donnellan did not give evidence about "a heightened level of perception and an ability to see past the obvious to what is really happening". Nowhere in her affidavit does Ms Donnellan depose that she concluded that the appellant failed to deploy the observational skills expected of a caseworker. 8. Nowhere in her affidavit does Ms Donnellan give any explanation of her decision to dismiss the appellant that departs from the explanation she gave to the appellant, that is, that the appellant engaged in misconduct. 9. The amounts set out in the "drug register" do not "strongly suggest" that the appellant's husband had an "established network". 10. There is no basis to support the inference that the appellant's husband "had been engaged in the illegal trafficking of drugs for a long period of time and probably continuously since October 2013". 11. There is no basis to support the conclusion that the appellant's husband "was earning large amounts from an illegal business and the funds thereby earned had to be kept in cash, hence the large scale purchases". 12. Another "weak" inference is that the appellant must have known about her husband's activities, because he made no attempt to hide them. 13. There is no reason why the appellant's evidence that she had never seen the "drug register" should be rejected. 14. There is no evidence that the "birthday party list" was found amongst the papers recording drug transactions. 15. Contrary to the proposition put by the Department, it is quite conceivable "that the appellant would not have regularly gone into [the study] to attend to her child or otherwise in normal daily activities and located or seen these things". 16. There is no reason for concluding that "the existence of drugs and associated paraphernalia were so proximate to the living area that it is more likely than not they were known by the appellant". Such a conclusion does not meet "the standard of persuasion in Briginshaw". 17. It might be unusual for a couple to not wash each others' clothes, but there is no basis for concluding that the appellant's evidence to this effect was concocted. 18. There is no basis for the conclusion that the appellant must have known that her husband kept synthetic cannabis in the house, because she did not appear surprised or shocked in the police video of the execution of the search warrant. 19. There is no evidence whatsoever about how long the drugs found at the house on 12 August 2015 had been in the house or in the places they were found. 20. The assertion that "it is simply not believable that [Ms McKay] could not have known what her husband was up to" is problematic (vague, unclear) at several levels. 21. It does not assist the Commission to berate the appellant for allegedly failing to take responsibility. 22. If what the Department is really saying is that the appellant failed to open the drawers where the drugs were kept, that is hardly evidence of a lack of observational skills. If she failed to see, for instance, pink labels in a cabinet, then the most that can be said is that she felt that she had no reason to carefully check and observe her husband's workspace.

The negligence issue

1. At the close of the final address to the Commission by counsel for the appellant, I raised the issue of the allegation of negligence on the part of the appellant which had been made by the Department. I invited the parties to make submissions as to whether or not a finding of negligence on the part of the appellant could form the basis of a finding of misconduct by her. The following exchange occurred: COMMISSIONER: … assume that I'm with you in relation to the allegation concerning secondary employment. And by the same token, don't assume that I'm not with you. But assume I'm also with you in relation to second allegation, that she failed to report illegal activity, which seems to me, at least, to suggest there must have been clear, conscious knowledge of what was going on in order to then fail or deliberately fail to report it. I think that must be implied. CROSSLAND: And I think, with respect, Mr Joseph said as much clearly this morning. COMMISSIONER: And focus on the first allegation, she exposed a child to schedule 1 illegal drugs. Now, the word "knowingly" is not in that allegation. Assume that as far as all the financial stuff is concerned I accept that it is possible Ms McKay just wasn't interested, didn't want to know about it. Assume, as far as things such as washing the clothes or looking in her husband's drawers, I'm with you again, that she - given that there are different relationships, presumably, where people organise their affairs in different ways. She didn't wash his clothes, she didn't look in his drawers, she didn't-- CROSSLAND: She didn't have the knowledge which the - for any reason that the department suggested. COMMISSIONER: She didn't see the drug register on the table, all of those things, which seems to be part of… what you call the misconduct case. CROSSLAND: That's correct. COMMISSIONER: Then what you called - and I think you probably have drawn this from Mr Joseph's submissions - the suitability case, "Well, if she didn't, she should have known of these things" and that renders her unsuitable. And you seem to have clearly divided the two concepts. Now, knowledge, misconduct, lack of knowledge, unsuitability. But isn't there a crossover point, a possible crossover point, which I think Mr Joseph referred to in terms such as "wilful blindness" or "extraordinary negligence" and you responded by saying, "Well, in a sense, that means seeing something but looking away", which I don't see as blindness because you've seen it. What I'm concerned about is knowing that Mr Algie was, at one point in time, involved in the distribution of synthetic cannabis, when it was not illegal, accepting Ms McKay's views that she regarded that as a noxious substance, that's my terms not hers, but she'd seen what that sort of substance had done in her work and she didn't want anything to do with it, didn't want it in the house. Knowing that he'd had that involvement up to 2013. Is there a point where her lack of looking for what was in fact in the house, however long it might be there, and I've heard what you say about inferences can be drawn, on one view, everything might have been put there that morning by Mr Algie. On another view, perhaps a better view, it hadn't all been there that morning, just that morning, it had been there for some time before. But not knowing that it was there, or not looking to see what was there, with a four year old child in the immediate vicinity, accepting, as I think you do, that an exposure of a four year old child to this substance creates a danger, is there a point where that lack of knowing what was there moves from the unsuitability argument to the misconduct argument? Is there a level of misconduct? I know if you look in other jurisdictions, in terms of other matters, you can have deliberate action, you can have reckless indifference, you can have carelessness or negligence may come in there, somewhere in between, but you can have gradations of why you failed in a certain area. Is it all in the unsuitability camp or is there a point where not knowing is so serious that it becomes misconduct itself?
2. Both parties were given leave to file and serve further written submissions in response to the question raised by the Commission.

The Department's further submissions

1. In response to the leave granted to the parties to file further submissions on the matter raised by the Commission concerning the "negligence issue", the Department, on 12 April 2017, filed supplementary submissions expanding upon its earlier submissions going to the appellant's negligence, in the following terms: 4. The respondent submits that, if the appellant did not know of her husband's illegal activities (and by extension the possibility that synthetic cannabis might be in the home), then she should have and her failure to do so amounts to gross negligence. 5. The starting point for assessing the quality or extent of her negligence must be the fact that the appellant is not an ordinary person. The appellant, apart from being a mother with an obligation to her child, was an experienced FACS child protection caseworker who was trained to be aware and alert to dangers that might exist for children in domestic environments. 6. The importance of this proposition cannot be understated. For one thing, putting aside any trust she might have had in her husband, seeing or perceiving dangers that are not necessarily obvious should come as second nature to a person of the appellant's skills and experience. 7. If it is accepted that the appellant did not know what her husband was doing, then she should have known and her failure to acquire that knowledge was grossly negligent for reasons including the following: (i) Her husband had raised with her, in 2012, the prospect of selling synthetic cannabis when it was legal… (ii) Her husband then went on and actually sold synthetic cannabis (legally) after he left King of the Pack in 2012 until October 2013… In that business, called 'Sky High Distributors', he clearly turned over significant revenue. In this period of time the appellant was only working three days a week… She returned to full time work in February 2015. Clearly at some point after October 2013, Mr Algie commenced trafficking synthetic cannabis illegally. The appellant's failure to acquire the knowledge of what her husband was doing has to be seen in the context of all the evidence, although the conversation in 2012 itself should have set off significant alarm bells given the appellant had voiced her opposition to synthetic cannabis… (iii) The drugs and paraphernalia were found (amongst other places) in a room which doubled as a play area for the appellant's daughter. Other than through gross laxness, it is hard to see how the appellant could have missed locating the drug related items found in that room including the 7 gram packaging labels that were located in an open shelf adjacent to her husband's desk and her daughter's piano… Identifying that material in itself would have uncovered her husband's activities or at least led to a line of enquiry that would have uncovered any danger in the house forthwith. (iv) The appellant should have, in any event, looked more closely in that room simply to identify any possible hazards to her daughter. She had not, for example, bothered to check at any time whether the drawers in her husband's desk (where synthetic cannabis was found) were locked or not; (v) The DVD shows that the drugs and paraphernalia found at the home were in places in the play room/office and bedroom that a responsible adult displaying basic protective instincts would have discovered with a modest search. Objectively viewed, there was no attempt to hide those items… Finding any of these items would have led any responsible adult to a line of inquiry that would have uncovered what her husband was doing very quickly. The danger to her child could have been neutralised immediately thereafter. In this context, the respondent repeats its previous submission that it appears that Mr Algie was in fact running his illegal business in part from the home - another matter, if accepted, that would that make the conduct of the appellant even more negligent. (vi) Noting the general state of the house, it should be remembered that the drugs were also found in a back pack on the floor in the bedroom and also in trouser pockets. The appellant displayed an attitude to her parental obligation in the house which suggested that she regarded herself as having discharged that obligation without any proper attempt to seek out and isolate or eliminate any danger in the house…. Two issues arise here. Firstly, the appellant did not exercise in her own home any real pastoral care in relation to identifying or eliminating things of risk to her child. Secondly, she did not accept at any stage that she might have been partly to blame for the exposure of her child to danger. In this context, the Commission would note the apparent rationalisation that her child (being four years of age) had been told not to look in her father's work desk and drawers… Even putting aside the absurdity of that proposition, it would not account for the dangers that existed in the bedroom. (vii) The attitude referred to in the previous two subparagraphs increases the seriousness of the negligence of the appellant because she just wasn't looking for potential dangers in circumstances where she is one of two adults in the house; (viii) The state of the house, being very messy with papers and clothes strewn all over various rooms, allowed for dangers to lurk beneath the surface and the appellant appears to have lacked the sense or will to take any proactive steps to clean up - it appears this was largely left to her husband… (ix) Assuming the appellant had no knowledge of the source of the money seemingly available from late 2013 to fund numerous purchases… that she did know about, it is legitimate to ask why she was not somewhat more inquisitive as to the source of those funds. The appellant's failure to inquire into the family finances is further evidence of her negligence. 8. The respondent notes that the neglect of the child's safety occurred in circumstances where the appellant was present in the house on a daily basis and was off work for two to three days a week. The dangers to the child presented themselves in rooms that the child would have entered regularly and in respect of the play room/office, multiple times a day.
2. The Department submitted that, even if it is accepted that the appellant did not know what her husband was doing, but was grossly negligent in failing to acquire that knowledge, this can still amount to serious misconduct.

The appellant's further submissions

1. On 21 April 2017, the appellant filed a written outline of submissions in reply to the further supplementary submissions of the Department. That outline contained the following contention: 2. …………………. The Commission invited counsel to make submissions on, in effect, the following matter: can the Commission make a finding of misconduct on the basis that, given the conversation between Ms McKay and her husband as set out [at paragraph 60 above], Ms McKay should have looked [the appellant takes that to be a 'figurative' look, at least in the first instance] but did not?
2. The appellant then put the proposition that the Department's supplementary submissions constituted a "new case" which was "…obviously much broader than what was put by the Commission… DFCS has used the Commission's narrow invitation to take another big bite". The appellant then submitted that the Commission should only have reference to those written submissions of the Department that genuinely respond to the "Commission's narrow grant of leave for further written argument…".
3. It was then submitted that "…the Commission's proposed alternative basis for dismissing the appeal does not materially differ from what has been referred to by the parties as the Unsuitability Case. Each case attacks, in effect, Ms McKay's so-called observational or professional skills and both put that, for that reason, she is unsuitable to be an employee of the Department".
4. The appellant then put, as an alternative submission, that "…if there is a material difference between the case proposed by the Commission and the Unsuitability Case, it is only that the new case casts the Unsuitability Case in terms of the conversation…" set out at paragraph 60 above. It was further submitted: 7. ………… If so, the new case misunderstands or gives quite undue emphasis to that conversation. As put orally, there is no reason to think (and it was not put to Ms McKay) that that conversation was a particularly important or memorable one such that rang loudly in her ears, or should have, in two plus years. It was not put to Ms McKay (and there is no reason to conclude) that it should have or did put her on high alert about what her husband might be doing. The reason the conversation is recollected now and appears in an affidavit at all is that it turned out to be, in retrospect, of some relevance to the present proceeding. 8. With great respect, the Commission should be careful not to dismiss the appeal on the basis that Ms McKay did not feel a suspicion which in all the circumstances would be undue, unnatural or unreasonable. 9. The submissions made immediately above takes on special force when one considers that what Ms McKay understood at the time of the conversation was not that Mr Algie been dealing, selling or handling synthetic cannabis, but rather that while he worked at King of the Pack "reps would come to Peter to attempt to sell the product to King of the Pack for Peter then distribute it to the tobacconists that Peter developed"… Ms McKay was never challenged on this evidence - it should be accepted. There is no evidence that Ms McKay believed him to be involved commercially with synthetic cannabis at the time of that conversation (or indeed ever), nor that at the time of that conversation, he was.
5. The appellant then went on to put detailed submissions to the effect that:

• the Department's submission that the drugs and associated paraphernalia had been in the home "for some time" is unclear as to the duration of time being alleged and is unsupported by evidence;
• if it is found that the appellant's conduct made her unsuitable to be a caseworker, it does not follow that she cannot continue to be employed by the Department;
• even if the Commission found that some relevant conduct of the appellant was grossly negligent, it could not, on that basis, dismiss the appeal;
• gross negligence could only afford a basis for the Commission to exercise its protective jurisdiction and dismiss the appeal, if the gross negligence occurred at work or in the performance duties, not in one's home or personal life (Rankin v Marine Power International Limited (2000) 107 IR 117);
• even if a finding of gross negligence outside of the workplace on the part of the appellant were made, such conduct is not incompatible with the appellant's duties as an employee and cannot indicate a rejection or repudiation of the employment contract (Rose v Telstra Corporation Limited - unreported, Print Q9292, Dec 1444/98, 4 December 1998);
• gross negligence by the appellant towards her own child has not been proved to the Briginshaw standard;
• on the case mounted by the Department, it is impossible to determine just how it is said that the appellant was negligent; and
• the various matters alleged by the Department against the appellant, set out at paragraph 7 of its supplementary submissions (reproduced at paragraph 76 above), say very little about what the appellant failed to do and, where they do say something of that nature, say nothing cogent or clear about why such failure might be negligent.

1. In conclusion, the appellant submitted that the supplementary submissions of the Department "in support of its new case (not the matter on which the Commission sought submissions) should be rejected because to bring this case forward at such a late stage is unfair". The allegations of negligence are "vague, based chiefly on suspicion and emotive language. They commence from the premise that attacks on Ms McKay's untidiness, trust of her husband, her unfortunate failure to find items hidden in her home and her reasonable (but irrelevant) refusal to accept in cross-examination a moral responsibility, each supply a basis for dismissing this appeal. Ms McKay does not understand why that might be so".
2. Finally, the appellant submitted as follows: Moreover, the new negligence case is put without proper regard to what the law says on these matters. DFCS is asking the Commission to extend or change what the law says in Rose about the circumstances in which conduct outside of work might be the basis for dismissal. In the end, it is apparent that what DFCS is really submitting is that because Ms McKay is a bad mother (which is completely denied) she can no longer be employed as a caseworker. If that submission were to be put, it would need to be based concretely on the law. Unsurprisingly, DFCS has not been able to take that step.

Determination of the appeal

1. The powers of the Commission in public sector disciplinary appeals, such as the present matter, are set out in subsection 100C(2) of the Act in the following terms: The Commission, in relation to a disciplinary appeal, may decide to allow or disallow the appeal or make such other decision with respect to the appeal as it thinks fit.
2. In matters such as the present appeal, the Commission is required to exercise its discretionary judgement in a disciplinary jurisdiction, the purpose of which is to allow for orders which are protective of the interests of that class of persons to whom the Department has responsibility to protect, namely, in this case, children at risk, and which are protective of the public interest generally (Director-General, Department of Ageing, Disability and Home Care v Lambert [2009] NSWCA 102 per Basten JA at [83]).
3. The Department submits that the dismissal of the appellant was justified on the basis that she had misconducted herself as follows: 1. That she exposed her child "A" to (schedule 1) illegal drugs in her family home, as recently as 12 August 2015. 2. That she has failed to report illegal activity being undertaken by her husband and his father. 3. That she has engaged in unauthorised secondary employment.
4. I propose to deal with these allegations of misconduct in reverse order.

Allegation (5) That Ms McKay has engaged in unauthorised secondary employment

1. The appellant admitted to Mr Madden that she was a director of the company, Mr Kool Beans, which was associated with her husband's coffee machine business. However, she claimed that she played no part in the affairs of the company or in the running of the business. There is no evidence that she received any payment from the company as a consequence of her directorship.
2. Although allegation is framed in terms of the appellant having engaged in "unauthorised secondary employment", it appears from the wording of section 10.5 of the NSW Family and Community Services Code of Ethical Conduct, which is set out at paragraph 44 above, that the allegation should have been more properly framed in terms of the appellant having engaged in "unauthorised private work". The term "private work" is defined as follows: Private work is paid work undertaken for an employer other than FACS, including self-employment, and owning, operating or being a director of a private business.
3. Whilst the words "being a director of a private business" might be construed so as to capture the appellant's directorship of Mr Kool Beans, it is arguable that the words "paid work" qualify all of the words that follow in the definition, including the words "being a director of a private business". On this interpretation, the appellant's directorship would not be captured if the appellant was not paid as a consequence of it, and there is no evidence that she was.
4. I accept the appellant's evidence that, because she played no active part in the company, she was unaware that she needed to obtain approval from the Department to be a director of it.
5. I find that this allegation of misconduct has not been sustained on the evidence before the Commission. If this were the only misconduct allegation against the appellant, I would have no hesitation allowing the appeal.

Allegation (2) That Ms McKay has failed to report illegal activity being undertaken by her husband and his father

1. In order for this allegation to be sustained, there would need to be a finding made that the appellant knew about the illegal activity being undertaken by her husband and his father, and consciously refrained from reporting it. For the reasons discussed below in relation to allegation (1), I am not satisfied, to the requisite standard, that the appellant knew of the illegal activity being undertaken by her husband and his father. It follows that I find that this allegation has not been sustained on the evidence before the Commission.
2. I also note that both Mr Madden and the Department had come to the view that it was "improbable but plausible" that the appellant was not aware of her husband's illegal activities.

Allegation (1) That Ms McKay has exposed her child "A" to (schedule 1) illegal drugs in her family home, as recently as 12 August 2015

1. This is the most serious of the misconduct allegations against the appellant. Given that the Madden Report was the foundation upon which the decision to dismiss the appellant was made, it is convenient to examine the consideration of this allegation contained in that report.
2. With respect to allegation (1), Mr Madden stated as follows: In relation to this specific allegation, there are three elements that need to be considered. 1. It must be shown that there were illegal schedule 1 drugs within the family home. 2. It must be shown that they were exposed to the respondent's four-year-old daughter "A". 3. It must be shown that Denise McKay was aware of the presence of such drugs.
3. There is no dispute as to "element 1" of Mr Madden's three elements. There is, however, conflicting speculation by the parties as to how long, prior to their discovery by the police on 12 August 2015, the drugs and other related paraphernalia had been present in the family home.
4. In relation to "element 2", I am satisfied that the evidence establishes that the drugs were exposed to the appellant's daughter, "A". By way of example only, during the execution of the police search warrant, a substantial quantity of synthetic cannabis was found in an uncovered metal bowl in an unlocked desk drawer in the study, the same room in which some of the child's toys were also located. This bowl, containing loose synthetic cannabis, could have been easily accessed by "A". This posed a real and present danger to the child.
5. The appellant claimed that the desk drawers were usually locked, but this was clearly not the case at the time when the police executed the search warrant on 12 August 2015. I also note the following evidence of the appellant: Peter and I have always taught "A" to have respect for other people's property and that Peter's desk contained important business documents which she was not allowed to play with.
6. I reject the proposition that a normal four year old child can be relied upon to not open a desk drawer to see what's inside, simply because she has been taught to have respect for other people's property and that the drawer in question contained her father's business documents. It is possible, if not likely, that a normally inquisitive four year old will want to open such a drawer, if only to see what's inside, even if she has been taught that she should not. There is no evidence that "A" was, at this time, anything other than a normal four year old little girl. I also note that synthetic cannabis was found in other locations in the home, such as in a backpack and in clothing in a basket on the floor in the bedroom shared by the appellant and her husband. There is no evidence that "A" had been taught not to enter her parents' bedroom.
7. With respect to "element 3" of Mr Madden's three elements, it is unclear to me why it was thought necessary to show that the appellant was aware of the presence of the drugs in her home in order to sustain allegation (1). For the reasons set out below, I do not, on the evidence presented to the Commission in these proceedings, make a positive finding that the appellant was aware of the presence of synthetic cannabis in her home.
8. Given the seriousness of a potential finding that the appellant was aware of the presence of illegal drugs in her home, there must be compelling evidence to sustain such a finding on the balance of probabilities. The Department bears the burden of proof on this disputed factual issue.
9. In the presentation of its case that the appellant exposed her daughter to illegal drugs, the Department argued that the appellant knew about her husband's illegal drug distribution activities and was, therefore, aware of the presence of synthetic cannabis in the family home.
10. I find that the Department has not satisfied the onus which it bears on this issue for the following reasons:
11. The appellant has consistently denied that she was aware that her husband was engaged in the distribution of illicit drugs, or that synthetic cannabis was present in her home.
12. There is no direct evidence that the appellant was aware of these matters.
13. The Department's case on this issue rests on a number of inferences which it seeks to draw from proven facts. I deal with each of these inferences in turn.
14. Her husband made no effort to hide his activities from the appellant because she was aware of his illegal activities and consented to those activities. This inference requires consideration of the state of mind of the appellant's husband. Even if it is accepted that her husband made no effort to hide his activities from the appellant, it does not necessarily follow that he conducted himself in that manner because he believed that the appellant was aware of those activities. It also does not follow that the appellant must have been aware of those activities. I accept the submission, put on behalf of the appellant, that this inference is "weak".
15. Drugs and drug paraphernalia where found in various places in the home - the appellant must have been aware of them. The appellant claims that she had no need to and, in fact, did not look in the areas where the drugs and other paraphernalia were found, including the on the dining table where the "drug register" was found; in her husband's desk drawers and on the shelves in the study; and, in his clothes drawers and clothing in the bedroom. The Department contends that the appellant must have had occasion, during the course of her cohabitation with her husband, to look in those places. The Department also contends that the Commission should reject the appellant's claim that she did not wash and put away her husband's clothes and that she had no need to open or look in his clothes drawers. Married couples do not necessarily conduct their domestic arrangements according to, what might be regarded by some as, conventional norms. I am unable to reject the appellant's evidence in this regard on the basis of the Department's submissions as to the arrangements that exist in a "normal marriage". In relation to the "drug register", even if it is accepted that these pages, which were in her husband's handwriting, were found on the dining table in the same bundle of pages as the "birthday party list", there is an insufficient evidentiary basis for the Commission to reject the appellant's claim that she had not seen the "drug register", let alone read it and understood what it meant. I am not persuaded that the appellant's claim as to her lack of knowledge of her husband's illegal activities should be rejected on the basis that she must have been aware of them, because of the presence of synthetic cannabis and other drug paraphernalia in various locations in her home.
16. On the video recording of the execution of the search warrant, the appellant does not appear to be surprised or shocked in any way because she knew what the police would find. The evidence does not support this inference. The appellant claimed that, during the execution of the search warrant, she was in shock and her biggest concern was keeping calm so that "A" kept calm. It is true that the appellant is not seen on the video to be expressing shock, verbally or physically. However, different people behave differently in stressful situations. I saw nothing in the appellant's demeanour on the video recording which would support the inference that she appeared to be calm because she knew what the police would find.
17. The large amount of cash transactions that occurred over the preceding 18 months supports the inference that the appellant knew that these cash expenditures were made from the proceeds of her husband's illegal activities, The Department contends that it is "simply unbelievable that a spouse, in this case the main wage earner, would not be across the financial situation of the family and would not be aware whether certain expenditure could be afforded or not". Again, it appears that this contention is based on the Department's view as to what constitutes conventional arrangements within a normal marriage. The appellant's contention is that major financial transactions were conducted by her husband with cash that he had saved. I am not persuaded that this contention should be rejected simply on the basis of the Department's concept of what goes on, or what should go on, inside a "normal spousal relationship".
18. Having considered the evidence presented by the Department, and the inferences which the Department seeks to draw from that evidence, I am unable to find, to the requisite standard, that the appellant was aware of the presence of synthetic cannabis in her home prior to the execution of the police search warrant on 12 August 2015. However, that is far from the end of the matter.
19. The questions still to be determined are: 1. Was the appellant negligent in not preventing the exposure of synthetic cannabis to "A"? 2. If so, was the appellant's negligence of such a character as to constitute misconduct of sufficient gravity to justify her dismissal?
20. Clearly, if the answer to both these questions is in the affirmative, then this appeal must be dismissed.
21. At the outset of consideration of these questions, I state that I reject the appellant's submission that the Department's further submissions on the "negligence issue" (set out at paragraphs 76-77 above) constitute a "new case" by the Department against the appellant. As set out at paragraph 30 above, from the outset of these proceedings, counsel for the Department clearly put the submission that, if the Commission did not agree with the proposition that the appellant did, in fact, know what her husband was doing, effectively under her nose, then her conduct, particularly as it affected her daughter, amounted to wilful blindness or negligence of such a profound nature, that she is a person entirely unsuited to working as a caseworker or case manager for the Department.
22. The Department's further submissions on the "negligence issue" did no more than identify the various factual matters which, as the Department contended, amounted to failings on the part of the appellant which constituted wilful blindness or profound negligence. These factual matters had been well canvassed during the proceedings and put to the appellant during cross-examination.
23. In response to a question raised by the Commission with both parties, the Department submitted that, even if it is accepted that the appellant did not know what her husband was doing, but was grossly negligent in failing to acquire that knowledge, this can still amount to serious misconduct. I do not regard the Department's further submissions on the "negligence issue", put, as they were in response to a question raised by the Commission, as constituting a "new case" against the appellant.
24. The starting point for consideration of whether or not the appellant's failure to be aware of the presence of synthetic cannabis in her home, in places accessible to her daughter, constituted negligence, is the position she held with the Department. The appellant's job had as its focus, the protection of children at risk, including the risk of children being exposed to illegal drugs.
25. I accept the following evidence given by Ms Donnellan, which was not disputed: During her employment with FACS, Ms McKay was required to make tough decisions regarding the safety of children, using sound judgement and always acting in the best interests of children. Caseworkers and Managers need to have difficult conversations with parents/carers about the safety of their children. These assessments require keen observation and questioning skills, the ability to assess immediate and long term safety of children.
26. The appellant was engaged in an occupation in which consciousness of the dangers that exposure to illegal drugs posed to children was paramount. It was not a job which could be performed by any air headed individual who is oblivious to what is going on around them, and, in my assessment, the appellant is certainly not such an individual.
27. The appellant was particularly alive to the dangers posed by synthetic cannabis and she made her feelings known to her husband during the conversation she had with him in 2012 (at paragraph 60 above). She was aware that synthetic cannabis was addictive and, through her work, she had seen the "issues" it had caused for its users. She didn't want anything do with the substance and she didn't want her husband to have anything to do with it. Importantly, the appellant did not care, at this time, that synthetic cannabis was not an illegal drug. The fact that synthetic cannabis subsequently became an illegal drug, a matter about which the appellant, surprisingly, claimed to have been unaware, would not have changed her views as to the danger that exposure to this drug could pose to children.
28. The submission was put that what the appellant understood, at the time of this conversation, was not that her husband had been dealing, selling or handling synthetic cannabis, but rather that, while he worked at King of the Pack, representatives would come to him to attempt to sell the product to King of the Pack for him to then distribute it to the tobacconists that he had developed. It was then submitted that there is no evidence that the appellant believed her husband to be involved commercially with synthetic cannabis at the time of this conversation (or indeed ever), or that, at this time, he was involved.
29. During the interview between the appellant and Mr Madden on 8 March 2016, as part of the investigation, the following exchange occurred in relation to one of her husband's business entities, Sky High Distributors: Madden: So the Sky High Distributors, the Police have indicated that that was the sale of synthetic cannabis the time when the sale was legal. Do you know whether that's true or not? Appellant: Don't know. Like I said, he was doing on-line - I mean accessories for cigarettes, so I don't know what exactly that was. Madden: So during the time that you knew him and prior to the legislation changing in 2013, did you ever become aware that he was involved in the sale of synthetic cannabis, this is when it was illegal? Appellant: No. I knew that obviously the King of the Pack, obviously he was exposed to that, but that's all I knew Madden So sorry, so you knew he was exposed to it? Appellant: King of the Pack being tobacconists, they had reps coming to them and things like that, but that's as much as I knew about it. I think I spoke about it in my statement saying that I was aware that was being sold through those stores when it was legal, but that was not something that I was - I was against it, I don't agree with it. Madden: Okay, but what you said is that even when it was legal and he was involved in Sky High Distributors Pty Limited, you were unaware that it was involved in the sale of synthetic cannabis, albeit legal at that time? Appellant: He sold a lot of different things. I don't know exactly everything that he sold from that. Madden: But did he ever discuss that he was selling synthetic cannabis during the time that it was legal? Appellant: He talked about being able to get it and do it if he wanted to, but obviously we had discussions about how I felt about it. Madden: Okay, but specifically - and I'm sorry, I just need to clarify - did he ever actually indicate he was involved in the distribution? Appellant: Can we just stop for a minute? Madden: Yeah, absolutely. Suspend at 10:04.

[SHORT ADJOURNMENT] Madden: Interview resumed at 10:06. So sorry, just to clarify then, in terms of prior to 2013 and the legislation and during the time - changes in the legislation and during the time your husband was involved in Sky High Distributors Pty Limited, did he ever indicate to you that he was involved in the sale of synthetic cannabis? Appellant: He talked about lots of different accessories. I wasn't specific in what he said he was buying.

1. I take it from this extract from the appellant's interview with Mr Madden, that the appellant's husband had discussed with her the possibility of him obtaining and selling synthetic cannabis at a time when this would have not been illegal. However, the appellant's position was that, regardless of its legal status, she was aware of the dangers which synthetic cannabis posed and she didn't want herself or her husband to have anything to do with it. Nevertheless, the appellant was unable to say whether or not her husband was involved in the sale of the drug through his business, Sky High Distributors, at a time when synthetic cannabis was not an illegal drug.
2. Under cross-examination, the appellant gave the following evidence: Q. So, do you agree with the proposition, after he stopped - I understand that he stopped Sky High, which was his business, prior to October 2013. Did you understand him to be selling synthetic cannabis prior to that date? A. No, as I've said previously, he told me he was selling tobacco accessories, so he was doing lighters, cigarette cases, e-cigarettes, things like that, that's what he told me. Q. But you did have conversations with him about selling synthetic cannabis, did you not? A. When he was working for King of the Pack, prior to him leaving that job. Q. And you told him, I understand, that you didn't want him to have anything to do with it? A. Yes. Q. But he didn't take any notice of you, obviously. A. It would appear so.
3. It is apparent that the appellant understood that her husband's interest in, and involvement with, synthetic cannabis extended beyond simply being approached by "reps" to distribute the substance to tobacconists when he worked for King of the Pack. It is apparent that they had a conversation, or conversations, about selling synthetic cannabis when he worked for King of the Pack, and that he later talked about how he could obtain and sell the drug through his own business, Sky High Distributors.
4. Whilst the conversation about synthetic cannabis which the appellant had with her husband in 2012 (set out at paragraph 60 above) might not have "put her on high alert about what her husband was doing", it should have, at the very least, made her aware of her husband's ability to obtain and distribute synthetic cannabis if he wanted to. Accepting the appellant's claim that she was unaware, until 12 August 2015, that to do so would be illegal, she should, nevertheless, have been diligent to ensure that her husband did not bring the substance into the family home even though, in her mind at least, no illegality would be involved if he did. But that is precisely what happened.
5. Whilst the evidence does not disclose how long the synthetic cannabis had been present in the family home, there is enough evidence to support the inference that it had been there for a sufficiently long period of time to have been detected by the appellant had she not been grossly negligent in failing in her duty to protect her child from exposure to what she regarded as a dangerous substance.
6. A document prepared by the Department listing what was seen in the video recording of the execution of the search warrant, shows the discovery of the following items and the locations where they were found around the appellant's home: - A notepad is located on the dining table which contains handwritten notes referring to amounts of synthetic cannabis and money owed by individuals. - Packaged synthetic cannabis located in Mr Algie's desk drawer. - "Hardcore XXX" labels and more packaged synthetic cannabis found in the top drawer of Mr Algie's desk. - Large silver bowl containing synthetic cannabis, scales and a black bag of synthetic cannabis located in a bottom drawer of Mr Algie's desk. - 7 gram labels for synthetic cannabis found in the drawers of Mr Algie's desk. - Packaged synthetic cannabis located in the top drawer of the dresser in the bedroom. - Small resealable bags located in the drawer of the dresser in the bedroom. - Packaged synthetic cannabis located in a side pocket of a bag in the bedroom. Mrs McKay states that Mr Algie was the last to use that bag. - "Hardcore XXX" labels and five packets of synthetic cannabis located in the left pocket of Mr Algie's shorts in the bedroom.
7. A great deal more of the drug and drug paraphernalia was discovered in the downstairs area of the house which, the appellant claimed that she did not access. Nevertheless, in the living area of the home, which was accessible to the appellant and to her daughter, the number and variety of items, and the different locations in which they were found, precludes an inference being drawn that they all spontaneously and simultaneously appeared there in the period immediately prior to the execution of the search warrant on 12 August 2015.
8. Whilst it is not possible to be precise, I do draw the inference that synthetic cannabis had been present in the home for a significant period of time and, certainly, a sufficiently long period of time to have been discovered by the appellant had she bothered to look.
9. In my opinion, the appellant's lack of awareness of the presence of synthetic cannabis in her home, in places which were accessible to her daughter, was the product of her "turning a blind eye" to what her husband was bringing into the home. This constituted a dereliction of her responsibility to be aware of risks in the home to her daughter's health and safety. Even if it be accepted that the appellant was not consciously aware of the presence of synthetic cannabis in her home, her lack of such awareness was the product of gross negligence of such magnitude as to constitute misconduct on her part.
10. Counsel for the appellant submitted that the Department is asking the Commission to extend or change what the law says in Rose about the circumstances in which conduct away from work might constitute the basis for dismissal. I have previously expressed reservations about the extent to which the statements made by Ross VP in Rose might be of assistance in resolving unfair dismissal claims where the dismissal occurred as a result of out-of-hours conduct, but in completely different factual circumstances to those present in Rose (see Hansen v Secretary of the Department of Transport - as head of the Transport Service and exercising the employer function of staff of Roads and Maritime Services [2016] NSWIRComm 1011 at [28]-[72]). I do not repeat those remarks here but simply observe that caution needs to be exercised in applying statements made in a case such as Rose, where the dismissal arose as a consequence of two drunken Telstra technicians getting into a fight in a hotel long after they had both knocked off work, to a case involving completely different facts and circumstances, such as the present matter.
11. Unlike the situation in Rose, the misconduct of the appellant in the present case had a direct connection with her child protection role in the Department. It was conceded by the appellant that, if she had knowingly exposed her daughter to illegal drugs, then her dismissal was justified and her appeal must fail (see paragraph 50 above). I fail to see how exposing her daughter to illegal drugs loses its connection with the appellant's job if it occurs as a consequence of her gross negligence, rather than in her conscious awareness.
12. Allegation (1) of the misconduct allegations against the appellant is sustained on the evidence. Through her own negligence, the appellant did expose her child "A" to (schedule 1) illegal drugs in her family home, as recently as 12 August 2015.
13. The appeal of Denise McKay is dismissed.
14. I so order. John Murphy Commissioner

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