R v Macdonald; R v Maitland - [2017] NSWSC 638 - NSWSC 2017 case summary — Zoe

NSWNSWSC

R v Macdonald; R v Maitland

[2017] NSWSC 638

Supreme Court of NSW|2017-05-26|Before: Adamson J, Gleeson CJ

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2017-05-26

Before

Adamson J, Gleeson CJ

Source

Original judgment source is linked above.

Judgment (76 paragraphs)

[1]

Jaturawong v R [2011] NSWCCA 168 Markarian v The Queen (2005) 228 CLR 357; [2008] HCA 25 O'Sullivan v Farrer (1989) 168 CLR 210 Obeid v R (2015) 91 NSWLR 226; [2015] NSWCCA 309 Palmer v The Queen (1998) 193 CLR 1; [1998] HCA 2 R v Donald [2013] NSWCCA 238 R v Edwards (1996) 90 A Crim R 510 R v El Rashid (Court of Criminal Appeal (NSW), Gleeson CJ, 7 April 1995, unrep) R v Girard [2004] NSWCCA 170 R v Macdonald; R v Maitland [2017] NSWSC 337 R v Nuttall; ex parte Attorney-General [2011] 2 Qd R 328; [2011] QCA 120 R v Obeid (No. 12) [2016] NSWSC 1815 R v Obeid (No. 2) [2015] NSWSC 1380 R v Rivkin (2004) 59 NSWLR 284; [2004] NSWCCA 7 R v Tuhakaraina [2016] NSWCCA 81 R v Qutami (2001) 127 A Crim R 369; [2001] NSWCCA 353 R v Hokin, Burton and Peisley (1922) 22 SR (NSW) 280 Ryan v The Queen (2001) 206 CLR 267; [2001] HCA 21 The Queen v Olbrich (1999) 199 CLR 270; [1999] HCA 54 Weininger v The Queen (2003) 212 CLR 629; [2003] HCA 14 Texts Cited: PD Finn, "Public Officers: Some Personal Liabilities" (1977) 51 ALJ 313 Category: Sentence Parties: Regina Ian Macdonald (Offender) John Maitland (Offender) Representation: Counsel: M McHugh SC/ P English (Crown) M Johnston SC (Offender Macdonald) D Jordan SC/ES Kerkyasharian (Offender Maitland)

[2]

Solicitors: Director of Public Prosecutions (Crown) Horton Rhodes Lawyers (Offender Macdonald) Bob Whyman Solicitor (Offender Maitland) File Number(s): 2015/59940; 2015/59990 Publication restriction: Nil

[4]

The facts

As sentencing judge, I may not take facts into account in a way that is adverse to the interests of each offender unless the facts have been established beyond reasonable doubt. However, if there are circumstances which I propose to take into account in favour of each offender, it is sufficient that they be proved on the balance of probabilities: The Queen v Olbrich (1999) 199 CLR 270; [1999] HCA 54 at [27], per Gleeson CJ, Gaudron, Hayne and Callinan JJ. There are other matters which can be taken into account in sentencing, or which form part of the narrative, which do not fall into either category: Weininger v The Queen (2003) 212 CLR 629; [2003] HCA 14 at [19]-[24]. I have satisfied myself beyond reasonable doubt of any matter which I have taken into account which is adverse to either offender that is not compelled by the jury's verdict. Matters taken into account in favour of either offender have been established to the balance of probabilities, or conceded by the Crown.
I have addressed the elements of the offences of which the offenders were convicted in a separate judgment: R v Macdonald; R v Maitland [2017] NSWSC 337. The verdicts indicate that the jury was satisfied beyond reasonable doubt of the following matters. Mr Macdonald was a public official who acted in the course of or in connection with his public office as Minister of Mineral Resources when he granted consent to Doyles Creek Mining Pty Ltd (Doyles Creek Mining) on 21 August 2008 to apply for an exploration licence and when he granted the Exploration Licence No. 7270 (the Licence) on 15 December 2008. When he granted the consent and the Licence, Mr Macdonald was substantially motivated by the desire to confer a benefit on Mr Maitland and Doyles Creek Mining and was not motivated to any significant degree by the object of furthering the public interest. He knew either that he was obliged not to use his position in that way or that it was possible that he was not to use his position in that way but chose to do so anyway. He granted consent and the Licence without reasonable cause or justification. His conduct in granting consent and granting the Licence to Doyles Creek Mining was serious and merits criminal publishment having regard to his responsibilities as a Minister and the nature and extent of his departure from the public objects which those responsibilities serve.
The verdicts indicate that the jury was satisfied beyond reasonable doubt that Mr Maitland intentionally encouraged and assisted Mr Macdonald to commit the two principal offences, knowing that Mr Macdonald was wilfully misconducting himself in public office and intending that Mr Macdonald do so. The verdicts also indicate that the jury was satisfied that, on the basis of what Mr Maitland knew at the time of Mr Macdonald's wrongdoing, Mr Macdonald's conduct merits criminal punishment.
The evidence at the trial included evidence which was admissible against both Mr Macdonald and Mr Maitland as well as evidence which was only admissible against one of them. For the purposes of this sentencing judgment, I do not propose to identify into which category the evidence of each finding of fact fell. It is sufficient for the purposes of these reasons to note that, by and large, the evidence of matters that concerned the Department and the Minister's Officer were admissible only against Mr Macdonald (except where Mr Maitland was shown to be aware of them); and the evidence of matters that concerned the internal operations and meetings of Doyles Creek Mining were admissible only against Mr Maitland. Evidence of admissions made by Mr Macdonald at the Noble House lunch (referred to below), which he disputed, were admissible only against him and not against Mr Maitland.
The documentary evidence in the trial comprised over a thousand pages. Thirty witnesses, including Mr Macdonald, gave evidence. The criminality of the offenders' conduct can only be appreciated by contrast with the proper processes of Government and public service administration. Accordingly, findings will not only be made about the offending conduct, but also about the orthodox method of allocating coal resources at the time.
Mr Macdonald was elected to Parliament as a Member of the Legislative Council on 19 March 1988. When visiting the Upper Hunter, as the Member of the Legislative Council assigned to that region, he met Mr Maitland who was then an official of a union in that area which later merged into what became the Mining and Energy Division of the Construction, Forestry, Mining and Energy Union (CFMEU). By 1998 Mr Maitland was the National Secretary of the CFMEU, a position which he held until his retirement in 2006.
The CFMEU and its predecessor mining unions were generally supportive of the left faction of the Labor Party, to which Mr Macdonald belonged. The offenders encountered each other at party political, union and mining functions. They appeared to have an amicable professional relationship, but were not close personal friends. Tony Maher, who had been the General President of the Mining and Energy Division of the CFMEU since 1998, observed the two offenders together at a number of functions and said: "[their] [l]unches and dinners were long and that's why I think that they enjoyed each other's company."
Alan Coutts, the Deputy Director-General of the Department of Primary Industries, described Mr Maitland as having unfettered access to Mr Macdonald and immediate access to the Minister's office. His recollection was: "They had what I would describe as a close professional relationship, often Mr Macdonald would take Mr Maitland aside and have private conversations with him at functions and forums at which Mr Maitland was in attendance. He would seek Mr Maitland's advice on matters relating to the mining industry."
In my view, the relationship between the offenders from 2007 onwards was a friendly, but strategic, alliance based on mutual regard and interest.
Mr Macdonald became a Minister, and therefore a member of Cabinet, on 2 April 2003. He first became Minister for Mineral Resources on 3 August 2005. Apart from a hiatus on 6 and 7 September 2008 when Nathan Rees replaced Morris Iemma as Premier, Mr Macdonald held that portfolio until 5 June 2010. He took an affirmation of office on several occasions, including on 2 April 2007 following the State election on 24 March 2007. Although the name of the Department responsible for mineral resources changed from time to time, I shall refer to it as the Department.
Throughout the period Mr Macdonald was a Minister he received multiple versions of the Ministerial Code of Conduct, each of which provided that Ministers must perform their duties honestly and in the best interests of the people of NSW. The Code not only prohibited Ministers from using their position for private gain or for the improper gain of any other person but it also advised Ministers to avoid situations in which it might reasonably be thought that his or her Ministerial position was being used for such improper gain. Mr Iemma explained in his evidence that Ministers were encouraged, particularly when they travelled overseas on trade missions, to make a point of emphasising to potential investors that one of the attractions of investing in NSW was its "robust framework" based on three principles: first, that business transactions with Government would not be subject to political influence; secondly, that there would be oversight by probity bodies; and thirdly, that there would be market-testing through competitive processes.
As the Minister for Mineral Resources, Mr Macdonald had significant powers under the Mining Act 1992 (NSW). These powers were subject to the obligation implied by law that they must be exercised for public purposes. He was responsible for granting exploration licences under s 22. Where consent to apply for an exploration licence was required under s 13(4) because the mineral was within a mineral allocation area, he was the person who had the power to grant such consent. In December 2007, the whole of NSW was declared a mineral allocation area for coal. This meant that no one could apply for an exploration licence for coal without the consent of the Minister. As the Mining Act bound the Crown (s 3), the Department, too, was obliged to seek the Minister's consent to conduct borehole drilling of any area in NSW it wished to explore to ascertain the type and quantity of coal there.
An exploration licence for coal, and the anterior consent, had commercial value. In 2007 and 2008, the value of such statutory permissions increased with the coal price during the boom. The value of coal is determined by its quality, its depth and the availability of infrastructure, and, if it is to be exported, the proximity of a port. Coking coal is more valuable because it is used in steel manufacturing; thermal coal is used in power stations. Thermal coal was classified as being either domestic or export quality, export being of a higher quality. Open cut mining is cheaper than underground mining but it creates greater environmental disturbance and therefore cannot usually be conducted near towns. Hunter Valley coal is generally more sought after than coal mined in the Gunnedah Basin because of the infrastructure available in the region, including rail lines and the proximity to the port of Newcastle.

[5]

Departmental procedures and the Coal Allocation Guidelines

The evidence of some of the witnesses at trial who had been employed as public servants in the Mineral Resources area of the Department properly indicated that they tended to regard themselves as the stewards of the State's resources. Their focus was the sustainable development of mineral resources across NSW to get the maximum value for the community.
In about 2000 the Department developed Coal Allocation Guidelines, which were updated from time to time. The guidelines had no regulatory force as they were not specifically provided for by the Mining Act or regulations. The guidelines documented the policy for the allocation of coal resources, both to inform industry how allocations would generally be made; and to provide a framework for the Minister's discretion to promote consistent decision-making. The default position under the guidelines was that coal would be allocated (first, by the giving of consent and then the grant of an exploration licence) on a competitive basis. Direct allocations could, however, be made when a competitive process was unsuitable.
There were several steps between an initial expression of interest in a mining area and the grant of a mining lease. Commonly, the first step was that an applicant would seek consent to apply for an exploration licence. The Coal Allocation Committee, an internal Departmental committee, would assess the application and decide whether to simply record the interest on the Coal Register or to recommend to the Minister that the coal resource be allocated, either by competitive process or direct allocation. The Committee would seek advice from the Coal Geology Group as to the nature and quantity of the resource. The Committee would also check the Coal Register, the Department's record of all past expressions of interest, to see whether other companies had expressed interest in the same area or an overlapping area. After having considered these matters the Committee would then make a recommendation to the Minister as to whether merely to register the interest or to allocate the resource.
For example, on 5 September 2007 Atlas Coal wrote to the Department to express interest in the Jerrys Plains area. On 18 September 2007 Julie Moloney, who kept the Coal Register, informed Atlas Coal that its interest had been registered and that the Department: ". . . intends to undertake a review of the geology and coal resource potential of the area before proceeding with any recommendation for an exploration licence allocation in the area."
When the Coal Allocation Committee was considering an allocation, it would apply the criteria in the Coal Allocation Guidelines to determine whether to recommend a competitive process or direct allocation to the Minister. If the Minister gave consent to apply, the applicant would apply for an exploration licence which would be assessed by the Department. This assessment was largely administrative. The applicant would lodge financial security and furnish information and, provided it was all in order, the applicant would be granted an exploration licence, which would usually be signed under delegation by the Manager of Coal Titles Administration. Of the exploration licences granted between 1 January 1998 and 17 September 2009 most were signed under delegation. Once the exploration licence had been granted, the holder would need to apply to the Minister for Planning for development consent. If development consent was given, the Minister for Mineral Resources would grant a mining lease.
The Committee would not advise the Minister to give consent to an applicant to apply for an exploration licence unless it was reasonably confident that the proposal would be approved through all the processes of Government, including the Department of Planning. Thus, there was an emphasis on environmental and community concerns from the early stage of an application for consent to apply for an exploration licence, since such concerns could lead to refusal of development consent, which would prevent the grant of a mining lease.

[7]

The Caroona allocation

The allocation of an exploration licence for a new coal mining area in the Gunnedah Basin in north western NSW, known as Caroona, is of particular significance, both as an illustration of the usual processes adopted by the Department as compared with the grant of the exploration licence for Doyles Creek, and also for what it shows about the prices applicants were willing to pay for such grants at that time. Caroona was a resource which contained large quantities of underground export quality thermal coal. A later allocation, the Watermark resource, which contained open cut and underground thermal coal of domestic and export quality, is also important for the same reasons. Although the Doyles Creek resource was much smaller than Caroona and Watermark and had not been explored to any significant extent, it was nonetheless valuable as it largely comprised coking coal, had access to infrastructure and was significantly closer to the port of Newcastle which made export more cost effective.
On 21 June 2005 the then Minister for Mineral Resources, Kerry Hickey, announced plans for the release of the Caroona area. As the area had been explored by the Department over a number of years, there was significant data about the resource, including the results of borehole drilling. The Expression of Interest Information was released by the Department on 1 August 2005. It provided that a minimum payment of $15 million was to be made by the successful applicant but financial contributions in excess of that amount could be offered. Applicants were also invited to indicate what they proposed for infrastructure in the following terms: "The proponent should provide details of any proposed infrastructure development based on the current constraints of the existing rail infrastructure and at the Port of Newcastle. Cost and timing of any proposal should be included."
When Mr Macdonald became Minister for Mineral Resources on 3 August 2005 he became the Minister responsible for the Caroona release. At the end of 2005, a committee was constituted to evaluate expressions of interest. The committee comprised three senior officers from the Department, including, as Chair, Garth Holmes, Manager of Minerals Development; and Brad Mullard, Director of Minerals, who was located at the Department's office in Maitland; and a Project Director from Premier's Department. Each member of the committee was required to make a declaration that he had no conflict of interest. A probity auditor was also appointed.
Several expressions of interest were received, including from BHP Billiton (through a wholly-owned subsidiary, Coal Mines Australia Ltd), Mitsubishi Development, White Mining and Xstrata Coal. In January 2006, after evaluating the expressions of interest, the committee recommended that the Minister give consent to Coal Mines Australia Ltd to apply for an exploration licence. That company had offered an additional amount of $91 million, which was payable within 28 days of the grant of the exploration licence. Mr Coutts, who said that he was "blown away" by the size of the amount, described Mr Macdonald as being "very excited" about the news. Mr Macdonald wrote on the briefing note: "Excellent result for the State". In accordance with the Department's advice, on 17 February 2006, Mr Macdonald gave consent to Coal Mines Australia Ltd to apply for an exploration licence for the Caroona area, which was granted on 12 April 2006.
One of the special conditions required the licence holder to contribute to upgrading the rail track, which reflected Coal Mines Australia Ltd's offer in its expression of interest. There was also a requirement to establish a Community Consultative Committee; and to reimburse the Department for its costs of the process and public expenditure in the exploration of the area. There was also a condition that the Minister could cancel the title in certain circumstances, if the licence holder did not substantially meet its commitments. Mr Macdonald's knowledge of special conditions such as this one is relevant to his appreciation of the extent to which infrastructure or other public projects, including, in the case of Doyles Creek, the establishment of a training mine, could be achieved by an expression of interest process and by the imposition of conditions on the exploration licence granted to the successful applicant.
After the Caroona allocation the Coal Allocation Guidelines were changed to provide for Minimum, and Additional, Financial Contributions. The purpose of the amendment was to take advantage of the additional monies that might be available from applicants, particularly during the coal boom. The Department's budget had been cut due to amalgamation and Mr Macdonald hoped that Treasury might permit the Department to retain a percentage of these payments. In May 2006 he approved the revised Coal Allocation Guidelines which incorporated these changes.

[9]

The Noble House lunch

On 20 February 2006, Luke Foley, who was then an Assistant General Secretary of the NSW Labor Party, arranged a lunch at the Noble House Restaurant. The purpose of the lunch was to gauge support for Mr Macdonald ahead of the Party conference in June 2006 at which the ticket for the March 2007 election was to be finalised. The lunch was attended by Mr Foley and Mr Macdonald, as well as Doug Cameron and Paul Bastian, who were senior figures in the Australian Metal Workers Union. George Campbell, who was then a Senator, and Anthony Albanese, federal member for Grayndler, attended as leading figures in the left of the ALP.
Mr Foley and Mr Campbell suggested that Mr Macdonald had been in Parliament long enough and should not get pre-selected for another eight-year term in the Legislative Council. Others supported Mr Macdonald's pre-selection for reasons which included that he was a Minister. There was also a discussion about how long Mr Macdonald, if pre-selected, would remain in Parliament until he retired.
Mr Macdonald told the group that there was more he wanted to do as a Minister. He expressed a wish to go to the Beijing Olympics in 2008 as a Minister. He also said that he wanted to continue as a Minister throughout 2009 when his daughter would be doing the HSC and mentioned financial considerations in this context. Mr Campbell's evidence about the substance of what Mr Macdonald said accords with the facts as appear from the material before me on sentence. Mr Campbell's evidence was that Mr Macdonald told him: "that he had just got married, or was about to get married, and his partner, future partner, had several children and one of those children had a disability and he needed the money to assist to fund that child's education and to look after it into the future."
Ultimately it was agreed that Mr Macdonald would be pre-selected for another term but that he would retire at around the end of 2009 when one of his step- daughters had completed the HSC.

[11]

Mr Maitland's approaches to Mr Macdonald on behalf of ResCo

On Monday 15 January 2007, Mr Maitland attended a meeting of ResCo to discuss the possibility of mining at Doyles Creek, which was said to be capable of yielding 3 million tonnes of coal per annum from the Redbank and Whybrow seams. Mr Maitland, Craig Ransley and two others attended on behalf of ResCo. Two geologists from Comet Coal, including Colin Randall, also attended, as did representatives from Eastern Mining and Construction, a company with which ResCo hoped to merge.
Those present discussed the procedure for applying for an exploration licence in NSW, by comparison with Queensland. The view was expressed that any submission made in NSW had to be in-depth and contain elements that would be attractive to the Government.
At about this time ResCo prepared an Information Memorandum dated January 2007 which set out the quantities of coal to be expected in two areas at Doyles Creek. ELA1 (the larger area) was said to contain 125.3 million tonnes and ELA2 (the smaller area) was said to contain 69.9 million tonnes. The Executive Summary listed the advantages of Doyles Creek: first, it was one of the very few areas still with vacant title with sufficient coal resources to enable a medium- to large-sized mining operation; secondly, it had good quality, coal resources, which were not difficult to market and known to be well regarded by Japanese companies; and, thirdly, it was close to coal infrastructure and services.
On Tuesday 16 January 2007, Mr Maitland sent an email to Mr Ransley confirming his remuneration package which included a "sitting fee" as Chair; an international travel allowance; reimbursement of all expenses and a grant of 5% equity in the company. Mr Maitland also listed the arguments which he intended to put to Mr Macdonald at their forthcoming meeting: "2. In my meeting with Minister Ian McDonald on Thursday the 18th January I will make a presentation in support of RESCO being granted an exploration licence over ELA 1 and/or ELA 2 as the case may be. Arguments in support will include (a) Lack of skilled workers for the industry (b) RESCO wants to develop a training mine (c) RESCO will receive support from industry, federal government and unions, (d) RESCO needs new lease to establish a training mine (e) Old mines have their own particular problems (f) New mine can be specifically designed (g) RESCO would start training at unused mine until new mine is established, possible 2-3 years with fast track. (h) ELA 1 and /or ELA 2 have been, to date, unwanted by operators because of perceived faults and intrusions. (i) RESCO wants invitation by Minister for expression of interest."
On Friday 19 January 2007, the offenders met in Mr Macdonald's Ministerial office in Governor Macquarie Tower. The Department had prepared a brief on the Coal Competence Board (to which Mr Maitland had just been appointed) in response to a request from the Minister's office. However there was little, if any, mention of the Coal Competence Board at the meeting. Mr Maitland took the opportunity to raise the issue of a training mine in the Hunter Valley, which he said would address the skills shortage and be supported by TAFE. He told Mr Macdonald that it would be run as a small- to medium-sized commercial mine so that issues of funding which had prevented a training mine going ahead in the past would not arise. After this meeting Mr Macdonald told his staff that he thought that a training mine was a good idea.
Sue-Ern Tan, a Departmental Liaison Officer (DLO) in the Minister's office, informed Mr Coutts what had been discussed. He told her that a training mine had previously been suggested and rejected. Mr Coutts asked Mr Holmes to research earlier proposals for a training mine.
The following Monday, 22 January 2007 Mr Maitland sent a two-page letter, which he entitled "briefing note", to Tony Hewson who was then Mr Macdonald's Chief of Staff. In the document, Mr Maitland developed the arguments which he had listed in his email to Mr Ransley of 16 January 2007: namely that there was a lack of skilled workers; a training mine would be financially supported by industry and the Federal Government and also receive union support; that it should be in a new area, rather than in an existing mine; and that training would start in a few years. He wrote that the proposed project only needed a coal resource that would allow the development of a small to medium sized mine. Mr Maitland asserted, in accordance with item 2(h) of his list to Mr Ransley, that the area in question (ELA 1) had not been wanted by other companies because of geological faults: "The complexity of the local geology has discouraged larger coal producers from carrying out coal exploration."
This sentence was incorrect because, as Mr Mullard explained in his evidence, no exploration was possible as no consent had been granted. I regard the inclusion of this sentence as no more than a tactic to disparage a resource, which Mr Maitland knew to be valuable, and to which he wanted ResCo to have access, without having to compete for it.
On 1 February 2007 Mr Coutts received an email from Mr Holmes which he forwarded to the Minister's office. The email tracked the history of the idea of a training mine, including previous consideration by the Mine Safety Council (the predecessor of the Mine Safety Advisory Council) in 1999 and 2000 and the feasibility study which was carried out. Mr Holmes summarised, the position as follows: "Following a consultant's study in 2000 into the feasibility of a Training Mine- which indicated many problems, the (then) Mine Safety Council agreed that the Training Mine concept no longer be pursued. The CFMEU (at that time) supported the cessation of the underground Training Mine study in favour of the use of simulation training."
At some stage in the first quarter of 2007, Mr Maitland and others from ResCo met representatives from UGM (an underground mining contractor) with a view to a merger between the businesses. In the hope that it would make ResCo more attractive to potential partners, they told UGM that ResCo was looking to secure an exploration licence for Doyles Creek.

[12]

The first Departmental briefing: 9 February 2007

On Tuesday 6 February 2007 Mr Maitland wrote to Mr Coutts setting out further information about the proposal and referred to BHP's announcement that it was recruiting foreign mine workers, which Mr Maitland described as "overwhelming evidence of the skills shortage crisis across all areas of the mining industry and the need to urgently address this issue".
When Mr Coutts received the email from Mr Maitland, he asked Mr Mullard to prepare a quick response. Mr Mullard consulted the Coal Register to see whether there had been interest in the Jerrys Plains area, where Doyles Creek was located. He noted that there were prior expressions of interest from Simitar Resources, Wambo Coal and Independent Coal Pty Ltd but they had not been progressed due to the proximity of the Jerrys Plains township, alluvial areas and the Wollemi National Park. As the Departmental drilling was insufficient to enable Mr Mullard to estimate the amount of coal at Doyles Creek, he used an estimate of coal reserves of 62 million tonnes made by Bayswater Colliery Company Pty Ltd, to which an exploration licence in a nearby area had been granted in 1989. That licence had been allowed to lapse as coal prices at that time made it uneconomic to proceed. Mr Mullard noted in the briefing note that, on the basis of this estimate, Doyles Creek would be classified as a major stand-alone area under the Coal Allocation Guidelines, meaning that it would be allocated by tender or expression of interest and that Additional Financial Contributions would be called for.
By Friday 9 February 2007, Mr Mullard had prepared a draft brief and a map of the area which was sent to Mr Coutts. The draft brief warned that any new mining development in the area would raise significant environmental and community concerns. He also said: "If the area were to be tendered it is expected that there would be a number of interested parties seeking access to this resource."
Ms Tan asked Mr Coutts to send the brief up formally so that she could talk to the Minister about it. In an email to Mr Hewson, she summarised the "things to note" in the draft briefing note as follows: "1. Estimated 62MT resource 2. Ultra sensitive nature of the resource- close to Jerrys Plains' township, alluvial areas and Wollemi National Park 3. There are other companies who have expressed an interest in the resource 4. We will have to put the area out to tender (for rights to explore)"

[14]

Briefing note of 22 February 2007

In response to Ms Tan's request for a formal brief, the Department prepared a further brief, which included content from the earlier draft of 9 February 2007 with some additional sections headed "Comment", "Options" and "Recommendation". The Department did not have ResCo's letter of 15 February 2007 when it prepared the formal briefing note dated 22 February 2007. As a result, the area proposed by Mr Maitland, which was identified with precision in the letter of 15 February 2007, was only referred to in general terms in the formal briefing note.
The briefing note of 22 February 2007 became one of the most significant documents in the Crown case because it informed Mr Macdonald of the reasons why direct allocation of the Doyles Creek resource, without competitive processes, to ResCo would be inappropriate. For the reasons which follow I am satisfied that Mr Maitland was privy to that briefing note and, accordingly, was aware of those matters. The briefing note reflected the concerns of Mr Coutts and Mr Mullard that Mr Maitland was proposing to float the idea of a training mine to get access to a substantial coal resource. As Mr Coutts explained in evidence: "The Department formed a view it didn't make a lot of sense at a time when this was a booming coal industry, to be allocating what was seen by the Department as a significant resource for a training mine without at the very least going out for some competitive process to see if there was the best proposal on offer or whether there were other proposals out there that we weren't aware of."
In the "Comment" section of the briefing note, there was a summary of the previous consideration of a training mine, which had been the subject of the email from Mr Holmes which had been forwarded to the Minister's office.
One of the paragraphs which Mr Mullard drafted for inclusion in the "Comment" section was, because of its significance, discussed with Mr Coutts as well as with Barry Buffier, the Director-General of the Department, before the briefing note was sent. The paragraph included the following sentence: "There would be major policy difficulties, potential probity issues and environmental sensitivities involved in considering a proposed direct resource allocation for this purpose."
The force of the reference in a Departmental briefing note to a Minister to "potential probity issues" ought not be underestimated. None of the witnesses who gave evidence in the trial, including Mr Macdonald, could recall ever having seen or used the words in any other briefing note. Mr Mullard explained in his evidence what he meant by those words as follows: "I was particularly concerned that a direct allocation to a former head of the mining unions by a Labor Minister would raise questions regarding the probity of that allocation."
Mr Macdonald did not ever ask Mr Mullard what he meant by the words "potential probity issues". I infer he did not need to ask because he already knew that the phrase was a reference to the fact that the proponent was Mr Maitland. I do not accept either of the two explanations Mr Macdonald gave for his understanding of what the Department meant by the phrase "potential probity issues": that it referred to the thinness of the proposal which he described as "lacking flesh on the bones"; or that it was a reference to the fact that the election was imminent and it was inappropriate to make such decisions in the period going into an election.
Mr Macdonald admitted that he appreciated that Doyles Creek was a major stand-alone area within the guidelines and that he realised that the interest shown by other parties would tend to increase the price in an expression of interest or tender process. I am satisfied that Mr Macdonald understood that to directly allocate a major stand-alone resource when other companies had expressed interest in the resource would cause "major policy difficulties" since a competitive process was called for by the Coal Allocation Guidelines.
The briefing note concluded with three options: "1. The Minister reject the current proposal because the Government is not prepared to allocate the proposed area at this time and there is no demonstrated support from the coal industry in general for a proposed training mine. 2. The Minister agree to seeking competitive Expressions of Interest for the proposed area under the current Guidelines for Allocation of Future Coal Exploration Areas (March 2006) which includes a financial contribution. 3. The Minister refer the proposal to the Mine Safety Advisory Council (which as the former Mine Safety Council had previously considered a similar training mine proposal) and seek the Council's advice on the current training mine proposal to inform the Minister's further consideration of this matter."
The Department concluded with the following "Recommendation": "Option 3 is recommended as appropriate initial action."
The Minister's office never responded to this briefing note. Mr Coutts later told Ms Tan that the proposal could also be referred to the Ministerial Minerals Advisory Council (MMAC), which, like the Mine Safety Advisory Council (MSAC), comprised key industry and union representatives.

[16]

Post-election (24 March 2007 onwards)

The Labor Party was returned to Government at the election on 24 March 2007. Ms Tan became a Policy Adviser in the Minister's office and Craig Munnings became a DLO.
On the following Monday, 26 March 2007, Mr Maitland sent an email to Mr Stevenson, Mr Ransley and others from ResCo reporting on his meeting with the Minister's staff on 8 March 2007. It read: "Dear All now that the election is out of the way we can concentrate a little more in progressing the ELA [Exploration Licence Application] for Doyles Creek hopefully."
Mr Maitland attached to his email a note which contained four points from his meeting with the Minister's staff on 8 March 2007: first, that a similar proposal for a training mine had been made before which was considered by the Mine Safety Council, which became the MSAC. At that time the CFMEU supported the cessation of the training mine proposal in favour of simulation training. He also noted, adopting the language of the briefing note, that Doyles Creek had been the subject of interest previously and would be classified as a major stand-alone area, which should go to competitive tender; that the area was environmentally sensitive and near a town; and that the Department suggested referral to the MSAC. The text in the attachment was very similar, and at certain points, there was an almost word for word copy of the Department's briefing note of 22 February 2007. For example, the briefing note said: "These expressions of interest have not been progressed at this stage due to the sensitive nature of the area. This was due to the proximity of the Jerry's Plains township, the alluvial areas and proximity to the Wolemi National Park. It is reasonable to expect that any new mining development in this area would raise significant environmental and local community concerns."
The corresponding passage in Mr Maitland's email was: "The area is considered to have environmental and publicly [sic] sensitivities. This is due to its proximity to the Jerry's Plans township, the alluvial areas of the Hunter River and the proximity to the Wollombi [sic] national park."
The briefing note said: "If the area were to be tendered it is expected that there would be a number of interested parties seeking access to this resource."
The corresponding passage in Mr Maitland's email was: "It would seem that a number of interested parties would seek access to the reserves if the area were to be tendered."
I infer from the similarities in the language between the briefing note and the document attached to the email that Mr Maitland had access to copy of the Department's briefing note when he prepared this document. In all the circumstances, I infer that Mr Hewson gave it to Mr Maitland at around the time of the meeting, although probably not in the presence of Ms Tan, who said she would not have given such a document to a proponent. Mr Hewson did not see any difficulty doing so, although he had no particular recollection of whether he did on this occasion. It was suggested on behalf of Mr Maitland that the fact that Mr Maitland did not refer to those parts of the briefing note that set out the Department's opinion that a direct allocation would give rise to major policy difficulties and potential probity issues meant that he did not have a copy of the whole briefing note. I am not persuaded by this submission. It would not have been in Mr Maitland's interests to pass on these parts of the briefing note to Mr Stevenson or others at ResCo, who might have been concerned by the terms of the Department's objections and might have regarded Mr Maitland's involvement in ResCo's bid for the licence as more of a liability than an asset.
Mr Maitland's email to the ResCo board concluded: "A major issue is the suggestion that there may be an open tender for the area, which could result in unrealistic bids for the resource. My suggestion is that we conclude the MOU's with HVTC [Hunter Valley Training Corporation], CSPL [Coal Services] and the CFMEU and then meet with the new Minister as soon as possible."
In accordance with his own suggestion Mr Maitland visited Mr Maher at the CFMEU's offices in Sussex Street to try to gain support for his training mine proposal. Mr Maher asked Mr Maitland whether there had been any discussions with mining companies about their willingness to supply trainees to the training mine or to employ trainees from the proposed training mine. Mr Maher regarded Mr Maitland's answers as unsatisfactory and concluded that the training mine proposal had no merit. After Mr Maher refused to support the idea, or sign the draft letter which Mr Maitland gave to him, Mr Maitland then approached Peter Murray, the General Secretary of the Mining and Energy Division of the CFMEU, whom he persuaded to put the training mine on the agenda for the June 2007 meeting of the Executive Committee of the CFMEU. As referred to below, Mr Murray signed various letters of support in different capacities at Mr Maitland's request.
On 3 April 2007 Mr Maitland reported to the ResCo board that the Department was suggesting a tender process for Doyles Creek and that it was important that he continue discussions with Hunter Valley Training Company, Coal Services and the CFMEU with a view to concluding memoranda of understanding for the establishment of a training mine.
The Minutes of that meeting recorded that Mr Ransley responded: "My thoughts are that if we are able to bypass the tendering process and have the minister grant us the ELA we should go for it, however if this lease was to go to tender I believe we should drop it and move on to something more beneficial. I will be guided by the board."
On 4 May 2007, in response to a query from the Department, the Minister's office confirmed that no decision had been made on options listed in the Department's briefing of 22 February 2007.
On Friday 18 May 2007 Ms Tan sent an email to the Minister's secretary which said: "The Minister agreed to meet with John for a meal. The hope is to do it before we go to Japan/ China. . . If we can't fit in before the trip then just whenever. Thanks, Sue."
I infer that there was at least some discussion between the offenders at around the time of the email. I do not accept Mr Macdonald's evidence that he did not recall any discussion between himself and Mr Maitland between the election period (March 2007) and the lunch at Prime Restaurant on 26 July 2007 to which reference will be made below.

[18]

The lunch at Prime Restaurant on Thursday 26 July 2007

On Thursday 26 July 2007, Mr Macdonald, Ms Tan, Mr Maitland and Mr Ransley had lunch at GPO Prime Restaurant to discuss the training mine proposal. Mr Maitland raised the skills shortage and told Mr Macdonald that he was discussing the training mine with Newcastle University, Hunter Valley Training Company and the Hunter Region SLSA Helicopter Rescue Service Ltd (the Helicopter Service), which were all Non-Government Organisations (NGOs) in the Hunter Valley. At that stage, there was no discussion about the number of trainees who would be trained in the training mine if it went ahead. Mr Macdonald said that he was interested in the concept of a training mine and that groups who supported the proposal should indicate their support in correspondence which should be sent to his office. Following the lunch Mr Macdonald instructed Ms Tan to obtain a briefing from the Department on the skills shortage in the NSW mining industry.
I am satisfied that, at or around the time of the lunch at Prime Restaurant, the offenders conceived a plan to make the training mine look good, because they knew, or suspected, that it would not have the general support of industry or the Central Executive of the CFMEU and would, accordingly, not gain the support of any of the tripartite committees (MSAC or MMAC), or the Minerals Council. The initial plan was that so-called "letters of support" would be sent to Mr Macdonald from persons to whom Mr Maitland had provided drafts, in which the authors would refer to the skills shortage and the need for training. There would be no reference to the training mine in these letters.
I am satisfied that Mr Macdonald was involved in the plan. The evidence revealed that from time to time he instructed his staff, including Ms Tan, to liaise with Mr Maitland about the letters from the institutions that they discussed at the Prime lunch. For example, on 31 August 2007 Ms Tan, who knew Mr Macdonald was waiting for letters of support for the training mine, emailed Mr Munnings asking him to keep an eye out for letters regarding training or skills shortage in the mining industry and print out a copy for her before TRIM-ing it to the Department to avoid any delay in their receipt by the Minister. Mr Macdonald admitted that, when he saw the letters, he understood that they related to his discussion with Mr Maitland at the Prime lunch. From time to time, Mr Maitland travelled to Sydney to discuss the proposal with Mr Macdonald's staff. On 26 September 2007 he discussed the letters from NGOs with them and, on Friday 23 May 2008, he met with them again.
In 2008, as the time for the grant of consent to apply for the exploration licence drew near, the plan involved a second tranche of letters. These letters were, once again, based on drafts supplied to their authors by Mr Maitland. This time they made specific reference to the training mine.
The plan was a cynical one. The ultimate audience for the letters was not Mr Macdonald, who needed no persuasion that consent should be given to Doyles Creek Mining since he was not relevantly motivated by the public interest. Nor was it the Department, who could hardly expect to be taken in by such a device. Rather, the letters were designed to forestall the criticism which the offenders anticipated, once the public and the industry eventually became aware of the allocation of a substantial coal resource without a competitive process.
Mr Jordan accepted on behalf of Mr Maitland that the jury's verdicts necessarily imply that the letters of support ought be described as a means of "political cover", notwithstanding that it was agreed that their authors genuinely believed what they wrote. Mr Jordan also accepted that obtaining the letters assisted Mr Macdonald to commit the offences and that Mr Maitland aided and abetted the commission of the offences by obtaining the letters. The evidence established that Mr Maitland used the authors to implement the plan referred to above by getting them to indicate their support, with wording which he influenced by providing them with drafts.
The evidence for these findings is largely circumstantial. The inferences which I have drawn are based on the content, timing and source of the letters, as well as the evidence of Richard Jones to which reference will be made below. Other letters sent in 2007 followed a similar pattern of referring to skills shortage as a problem (which the evidence established it was, although to a lesser extent in the Hunter than in other regions) but not identifying a solution. This is particularly noteworthy as many of the authors (including from the Helicopter Service, the Hunter Valley Training Corporation and Newcastle University) were discussing the training mine with Mr Maitland at the time but did not refer to it in their letters.
On 8 August 2007 Mr Macdonald received a letter from the CFMEU Mining and Energy Division, signed by Mr Murray, as General Secretary, which Ms Tan identified as a "letter of support". Notwithstanding the resolution of the CFMEU's Central Executive referred to above, Mr Murray took his own course and, in his capacity as General Secretary of the CFMEU, provided letters of support to Mr Maitland for provision to Mr Macdonald, as well as sending them directly to Mr Macdonald.
The letter from Mr Murray reflected the strategy referred to above in that it raised the issue of skills shortage affecting mine safety; expressed support for on-site facilities; and mentioned the need for an appropriate plan and the benefits of a skilled workforce. What it did not mention was the proposal for a training mine, although Mr Murray knew that this was what Mr Maitland was actually proposing. Like many of the letters belonging to this category, the sender was not disinterested but did not disclose the potential conflict of interest.
In Mr Macdonald's letter dated 6 September 2007 responding to the CFMEU's letter, he said: "I am always open to proposals to new strategies which would enhance the supply of skilled labour and take advantage of opportunities for expansion in the mining industry."
His reply is consistent with the strategy referred to above in so far as it put on the record Mr Macdonald's preparedness to consider ways of dealing with the skills shortage but withheld the training mine as a possible solution.

[21]

The continued implementation of the strategy

Mr Maitland was still trying to obtain support from NGOs for a training mine. On 5 September 2007, he sent an email to Mr Ransley, attaching a draft letter which he had sent to Richard Jones, the Chief Executive Officer of the Helicopter Service. He told him that he had arranged to meet for lunch that day with Mr Jones and Cliff Marsh, the Chair of the Helicopter Service, to finalise a Memorandum of Understanding and a letter. Mr Maitland made representations to the Helicopter Service that, if the training mine went ahead, each NGO would get 5% of the mine's profits. The Helicopter Service slightly amended the draft and sent a letter of support dated 7 September 2007 to Mr Macdonald. The actual agreement, which was concluded on 20 September 2010, made no provision for any percentage of profits to be paid to the Service.
On 20 September 2007 Mr Jones reported to the board of the Helicopter Service on his meetings with Doyles Creek Mining as follows: "We also were asked to send a letter to the Minister in support of training as we have special needs ourselves and anything that can be done to assist we would support. Our letter mentions nothing of the mine but the strategy is that all NGO's will provide similar letters, and when the Minister receives an application for a new mine, with a specific purpose, he will already have letters which will support the concept. The big final news is that all the NGO's involved will, for their support, receive 5% of profits, annually, which on projected tonnages will be anywhere between $2.0m and $5.0m, for EACH NGO per year."
Mr Jones was not sure of the provenance of the word "strategy" and, in particular, could not be sure that Mr Maitland had ever used the word. However, in my view, the word is apt to describe the plan referred to above.
In September 2007 Mr Macdonald received letters of support from Hunter Valley Training Corporation, the Helicopter Service and the University of Newcastle. All referred to a skills shortage; none referred to the training mine although each NGO was discussing it with Mr Maitland at the time.
Although Mr Macdonald never responded to the Department's briefing note of 22 February 2007, Mr Coutts knew as at October 2007 that the idea of the training mine had not gone away. On 23 October 2007, he reported to the other members of the Executive of the Mineral Resources area in the Department, including Mr Mullard, that: "The issue of skills shortage in the mining industry has been mentioned again by John Maitland. The concept of a training mine has gained the support of the Newcastle University and Hunter Valley Training Company. Possible way forward is to go to tender with a business plan as part of the tender."
This report indicates that Mr Coutts was trying to accommodate what Mr Macdonald apparently wanted, a training mine at Doyles Creek, with the policy for major stand-alone mines as set out in the Coal Allocation Guidelines, which required a competitive process. A tender with a business plan was ultimately what the Department recommended to Mr Macdonald in May 2008.

[22]

The involvement of Newcastle University

At the same time as Newcastle University was talking with Mr Maitland about the training mine in 2007, it was also having discussions with the Department about a proposal that the NSW Government would establish a Chair of Geoscience at the University of Newcastle. Mr Macdonald suggested a meeting in his office with Professor Plimer, then Professor of Geology at the University of Adelaide, and representatives of the University of Newcastle to discuss the Chair proposal. As far as Mr Coutts knew, the meeting had been arranged because Mr Macdonald wanted to encourage the University to establish a Chair of Geoscience and hoped to persuade Professor Plimer, whom Mr Coutts described as "a well-known climate [change] sceptic", to take up that position.
Mr Macdonald's staff communicated with Mr Maitland about the proposed meeting. On 25 October 2007 in an email to Ms Tan confirming the date for the meeting, Mr Maitland made the following request: "What I need is a little more information about what we are proposing so can you send me a few lines which will be kept confidential."
Ms Tan's draft formulation was: "I think the general idea is to set up a chair (and a Department) geology department. There may also be a potential to link it in with training/ skills issues currently facing the industry."
This form of words reflected Ms Tan's understanding that, although initially the Chair at the University was entirely separate from the proposal for a training mine, they became linked. On 26 October 2007, Ms Tan, at the request of Mr Macdonald, sent an email to Professor Plimer to confirm a meeting on 5 November 2007 with the University of Newcastle and to let him know that Mr Macdonald had suggested that Mr Maitland, who had been working on a "training project", attend. She also informed him that Mr Maitland had asked her to provide some general lines (to be kept in confidence) about the proposal and asked him about her formulation. Professor Plimer responded by email a couple of hours later proposing the following narrative as an alternative: "The skills shortage in NSW is extreme. The industrial base of Newcastle, The University of Newcastle and the proximity of the NSW Geological Survey at Maitland suggest that there may be synergy for the building of a School of Mines in Newcastle funded by industry and DPI funds and to integrate with other training programs."
I infer that, by the time Professor Plimer sent this email, he was aware of the potential link between Mr Maitland's training mine proposal and the establishment of the new Chair at Newcastle University. Ms Tan sent Professor Plimer's version to Mr Maitland. I infer that the offenders wanted the University of Newcastle to support the training mine to make it appear to have broader acceptance, which was lacking from industry. The University was encouraged to give its support by the promise of a new Chair which was to be, at least partly, funded by Doyles Creek Mining. For this reason Mr Macdonald involved Mr Maitland in meetings with the University of Newcastle and instructed his staff to include Mr Maitland in communications on the topic of the new Chair.

[24]

The preparation of Doyles Creek Mining's application for consent

On 21 November 2007, representatives of Doyles Creek Mining (including Mr Maitland and Mr Ransley) met with Mr Stevenson; Lawrie Ireland and others from Eastern Mining & Construction; and Mike Chester from Opes Prime, financiers. Mr Stevenson recorded the following in a file note of the meeting: "2. Need bankable document to present to Dept. . . . 4. Considering capital raise of 250K in CR- don't want to spend $1M -don't want to have to go to tender . . . 5. So we xx 'pre-feasibility' study with 'spin' for training mine." 6. So we sell as benefit to state but can stand alone commercially ie pre feasibility is that it can stand alone."
Mr Stevenson recorded against Mr Maitland's initials various matters including the following: "1. Background in proposals for training mine � tried in 2000 but no financial backing - proposed closed mine. 2. Training mine will operate with producing mine Training facility� UNI/HVTC� will have to operate financially independent. 3. Minister (Ian McDonald [sic]) supportive � UNI/HVTC involvement Alan Coutts - was a sceptic � . . . . . . 7. Minister - want him to exercise discretion � not tender or EOI 8. Need to show commercially sustainable mine with training facility. . . . 10. Minister wants assistance to establish chair of mining at Newcastle University"
On 19 December 2007 there was a meeting between Mr Maitland and Peter Demura, of PwC, the firm engaged by Doyles Creek Mining to help prepare the submission in support of its application for consent, which was eventually sent on 18 March 2008. Mr Demura's notes recorded: "Meeting held at EMC to use unexploited coal for training mine - reserves are scarce as hen's teeth. . . . need for innovation for gvt support as industry opposition"
He also noted: "Government: Minister supportive and PS [public service] not so enthusiastic due to prior history and came down to economics and who is going to pay for it." � DC� need for financially sustainable model � Centre of excellence for mining and training for industry� community and State benefits "- Need to demonstrate benefits and not a goldmine for entrepreneurs. Options - General tender - Expressions of interest - Discretion"
Mr Demura also wrote: "Minister requirements - Minister- commitments sought From: HVT ) Uni N/C ) Letter on shortages Westpac )"
Mr Demura noted "shouldn't be seen as a privilege from entrepreneurs" and "transparency". He also wrote: "Not about personal gain - about a concern for the industry safety & the development of a 'professional mine'".
He recorded: "Minister risk - Incorrect discretion [therefore] need for compelling argument"
The notes Mr Demura took provide an insight into Mr Maitland's knowledge of the considerable obstacles to direct allocation. Mr Maitland already knew that direct allocation was the only available avenue for Doyles Creek Mining to gain access to the resource because the company had neither the wherewithal nor the will to compete for the resource. He had long been aware of the Department's opposition to direct allocation, having had access to the briefing note of 22 February 2007 as referred to above.

[26]

The need for exploration by the Department before further areas could be released

On 5 March 2008 Mr Macdonald wrote to the then Premier, Mr Iemma, requesting that Cabinet urgently consider extending the so-called "New Frontiers Exploration Initiative" for a further three years, from July 2008 until June 2011, at a cost of $5.5 million per annum. A Cabinet Minute was attached to the letter which explained: "[4.1.4] The Department of Primary Industries (DPI) creates the geoscientific framework that assists the mineral and petroleum exploration industries in discovering new deposits. This framework generates new exploration investment by providing new geoscientific information to better enable industry to understand the under-explored prospective frontier regions of NSW. This reduces the risk of exploring in NSW compared with other jurisdictions."
The Cabinet Minute covered coal, as well as other minerals and petroleum. It cited the Caroona allocation as evidence of the value of having sufficient geological data on which companies could base their tender proposals. It referred to various areas, including Jerrys Plains, where Doyles Creek is located, as similar to Caroona and said: "These allocations may be at risk if funding is not maintained for the New Frontiers initiative."
It also contained the following: "In summary, the long term risks to NSW of not proceeding with the New Frontiers initiative are forfeiture of revenue streams from mining royalties; forfeiture of revenue streams for the tendering for coal resources. . ."
Mr Macdonald was aware, from Departmental briefing and the contents of the Cabinet minute, that it was not in the State's interest to release areas for exploration prematurely since, in the absence of borehole data, the State could not confirm the true value of the allocation or obtain the best result that competitive processes could deliver. He knew that, by directly allocating Doyles Creek, he was potentially forfeiting Additional Financial Contributions, as well as other benefits to the community, including contributions to public infrastructure.

[27]

Application by Doyles Creek Mining dated 18 March 2008 for consent to apply for an exploration licence

By letter dated 18 March 2008 signed by Mr Maitland, Doyles Creek Mining wrote to Mr Coutts to seek the Minister's consent to apply for an exploration licence under s 13(4) of the Mining Act. The attachments contained the letter from ResCo to Mr Macdonald of 15 February 2007; a letter from Opes Prime Group dated 26 February 2008 confirming its support for a capital raising; and a document entitled "Training Mine Facility Submission".
The covering letter referred to the establishment of a small- to medium-sized mining operation which incorporated a "training initiative". The Executive Summary for the "Training Mine Facility Submission" said that the proposal sought to address "the current and expected shortage of skilled labour" in the industry. It described the mineable resource of 91 million tonnes as capable of supporting coal mining operations over 35 years.
Details of the proposed training positions were given. From the fourth year of the mine's operation the proposal was for 104 trainees comprising 72 trade positions (fitters and electricians) and 32 mining positions. The submission stated: "only a small to medium sized mining operation would be required for the Submission to be economically viable."
The submission listed "Strategic Alliances", including with the University of Newcastle, the Helicopter Service and the Hunter Valley Training Corporation. The advantages of granting the project in this area were said to include: "the area is with vacant title with sufficient coal resources to enable a small to medium sized mining operation"
The proximity of Doyles Creek to rail and washery facilities was noted. The initial capital required was said to be $209 million for the underground mine, of which $7 million was for the "training facility". This amount was to be funded by $125 million of equity funding and $84 million of debt funding. The total royalty payments for the 35 year life of the mine were said to be $546 million (calculated as the product of 91 million tonnes at A$100 per tonne at the current rate of 6%). Profits were projected to be $54.8 million in the fifth year. Partners who would buy the coal pursuant to off-take agreements were said to have been identified although they were not named.
Mr Maitland's background, experience and qualifications were listed under the heading "Ownership structure" but no details were given as to his shareholding. A diagram showed that Jonca Investments Pty Ltd (Jonca), which, though not identified as such, was Mr Maitland's family company, and owned over 20% (62,475) of the shares in Doyles Creek Mining.
A map showed that the training panel, which had 150,000 tonnes of coal, was to be mined using the bord and pillar method. This method involves developing tunnels in the coal seam and is much less profitable than the longwall method, which is fully mechanised. The location and physical characteristics of the training panel made it unsuitable for longwall mining. The balance of 91 million tonnes was to be mined by the longwall method and had no practical connection to the training operation. The training component was trivial compared with the size of the mine and represented less than 0.165% of the total mineable resource. The map also depicted the neighbouring land, which was referred to as providing infrastructure including washery facilities, which was owned by United Collieries, which Mr Macdonald knew to be a joint venture between Xstrata and the CFMEU.
Mr Macdonald read the production forecasts and the financial overview, including the projected net profit after tax for the commercial mine. He appreciated that the proponent's projections in its application were that the training mine would be cost neutral by 2014. He knew, having regard to the proponent's assessment of royalties over the life of the mine, that the proposal was worth one billion dollars (undiscounted) over the life of the mine. Although Mr Macdonald did not accept in cross-examination that a direct allocation of that resource, without any competitive process, would be a "gift", I am satisfied that he not only knew that it was but intended it to be so.
At about this time Mr Macdonald told Jamie Gibson, one of his staffers, that, as the Minister, he had the legislative authority to allocate the Doyles Creek resource to Mr Maitland's company. In this context, Mr Macdonald told Mr Gibson that he and Mr Maitland were not friends. On at least two separate occasions he also informed Mr Gibson that at some point the CFMEU had not supported his pre-selection. I infer that this was a reference to an incident in 1998 when Mr Maitland had supported Jeff Shaw, the then Attorney-General, for pre-selection over Mr Macdonald, who was still a back-bencher. I regard these statements to Mr Gibson as incriminating. Mr Macdonald knew that the direct allocation looked bad and was bad. He sought to cloak his misconduct by reference to an irrelevant event in the distant past to give it a semblance of probity.
Mr Coutts found nothing in Doyles Creek Mining's application to counter his view that the training mine was not a particularly good use of the State's resources and that it was not appropriate that there be a direct allocation of the resource. He referred the application to Mr Mullard. Mr Mullard regarded the estimates for the resource in the submission as reasonable and confirmed that it would be classified as a major stand-alone mine under the Coal Allocation Guidelines which ought to be allocated by competitive process.

[29]

The fourth Ministerial briefing on 27 May 2008

On 27 May 2008, the Department sent its brief to Mr Macdonald in response to the application by Doyles Creek Mining dated 18 March 2008. Mr Macdonald read the briefing note. There is no evidence that Mr Maitland saw it.
In the "Background" section the Department noted that other mining companies had expressed interest in the area and that the proposal suggested that 91 million tonnes of coal (3.3 million tonnes per annum) would be removed from the mine, of which only 150,000 would be from the training panel portion.
In the "Comment" section, the Department raised the following nine issues for the Minister's consideration: 1. the attractiveness of the area and that the current policy would suggest that the resource should be allocated after a competitive process; 2. the limited information provided by the proponent; 3. the proposal did not demonstrate broad industry support; 4. any connection between this proposal and other training programs was not clear; 5. the nature of training at the mine which would tend to be site specific and therefore may not be directly transferable to other mines; 6. a major mine was proposed with only a small training component; 7. the training mine would not be operational for some years into the future; 8. the proximity of the Jerrys Plains township and the likelihood of considerable community opposition; 9. a competitive allocation could result in a higher return.
At the conclusion of the briefing note the Department said: "There are a number of options for the allocation of this resource which could be considered. 1. A direct allocation to ResCo with strong conditions on the title regarding the requirement to establish and maintain a training mine component with penalty provisions should the company not achieve the stated outcomes. 2. An allocation of the area on a competitive basis with a requirement to establish a training program as part of any allocation of the area. 3. Allocation of the area on a competitive basis with the requirement for a cash component (in the order of $5m per annum) either as an upfront payment or as an annual fee over the life of the mine being directed towards the establishment of broader industry training programs.
Under the heading "Recommendations", the Department said as follows: "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."
In his oral evidence, Mr Mullard said that he included option 1 because it was legally an option and he considered that it would be misleading to leave it out. Mr Mullard explained that: "part of my role is to give the Minister advice and my advice was that, whilst it was within his power to do a direct allocation, I think there were potential problems if you did a direct allocation."
As to the ninth point in the briefing, I note that Minimum Financial Contributions would have been payable under the Coal Allocation Guidelines even if the resource was directly allocated. However they were only payable if development consent was granted and were proportional to the amount of coal mined. A direct allocation would result in the loss of opportunity to obtain an Additional Financial Contribution.
I record for completeness that the Labor Government's policy of seeking Additional Financial Contributions was controversial, in part because it created an expectation that a mining lease would be granted and also because it rendered many small collieries unable to compete. It was abolished when the Government changed in 2010. However, while Mr Macdonald was Minister, the State received significant funds by way of Additional Financial Contributions from successful applicants, including for Caroona and Watermark. With the notable exception of the Doyles Creek resource, Mr Macdonald was in favour of obtaining Additional Financial Contributions wherever possible.
After Mr Macdonald read the briefing note, he asked Mr Mullard, who was acting as Deputy Director-General while Mr Coutts was on leave, why the Department did not support the training mine proposal. Mr Mullard responded that the Department was concerned that it was not a "fair dinkum" proposal; that the training component was quite small; and that it did not have broad industry support. Mr Mullard also advised Mr Macdonald that a direct allocation of the area was not consistent with the Coal Allocation Guidelines which would suggest a competitive process. Mr Mullard's advice prompted the following exchange: Mr Macdonald: "Whose guidelines are these?" Mr Mullard: "They're your guidelines, Minister." Mr Macdonald: "Well, then I could change them."
Mr Macdonald said that when he read the briefing note he inclined towards option 1, the direct allocation, because he thought the training mine was a good idea and option 1 was the only one that guaranteed a training mine. I do not accept that this was his reason at all. Mr Macdonald knew full well that he could have had a training mine if he had chosen either options 2 or 3 since he could have placed any potential conditions on applications in an expression of interest process, as was demonstrated by the special conditions on the Caroona exploration licence.
Notwithstanding that Mr Macdonald, on his own admission, was "desperate" to get another "good" Additional Financial Contribution in about June 2008 when he received the briefing note, he applied a double standard when it came to the Doyles Creek resource, which he knew from the application for consent was regarded as a large and valuable resource by the proponent.

[31]

The dinner at the Strangers' Dining room on 17 June 2008 and its aftermath

On 17 June 2008, Mr Macdonald hosted a dinner in the Strangers Dining Room at Parliament House to brief Mr Maitland and Mr Ransley about the issues raised by the Department in its briefing note of 27 May 2008. According to Mr Macdonald, he did not recall having spoken to Mr Maitland at any time between November 2007 (the meeting at the Minister's office with the University of Newcastle) and 17 June 2008. Although there is no evidence of any particular communication between the two offenders during this period it is, in my view, inconceivable that they did not speak, having regard to what occurred during that period, including the application for consent and the Department's response, as well as the Leura conference, the number of visits paid by Mr Maitland to Mr Macdonald's staff and their evident familiarity. This is another instance of Mr Macdonald's giving self-serving, implausible evidence, which I do not accept. His preparedness to admit only that which could be independently established by the Crown tells against him. I do not accept Mr Macdonald's evidence except where it is against interest, not in issue or corroborated.
On the morning of 18 June 2008, Mr Gibson, who also attended the dinner at the Strangers Dining Room, sent his contact details by email to Mr Ransley and said: "Great to meet with you last night and we look forward to working with you." That day, a proposed guest list came to the Minister's office from Delta Electricity, a State-owned corporation, for the commissioning ceremony at the Munmorah Power Station. Mr Macdonald, who wanted to help Mr Maitland and Mr Ransley get industry support for the training mine proposal, told his staff to make sure that they were added to the list. I am satisfied that Mr Macdonald had decided to grant consent and that Mr Maitland knew of this. The only outstanding matter was that Mr Macdonald wanted more letters of support to make the proposal look good.
On 20 June 2008 Professor Glover from University of Newcastle attended a ResCo meeting at which he was told that "Ministerial approval likely in the short term - 2-3 months".
To that end, Mr Ransley sent an email to Michael Buffier of Xstrata on 24 June 2008 which he copied to Mr Maitland which said: "We should have an invitation within the next two-three weeks from the Minister. I have had to submit some letters of support from the industry as the final hurdle. Five other mining companies such as yourselves are sending in letters of support for a 'training mine' directly to Ian's office via his Deputy Chief of Staff. I would appreciate if you could find the time to put a couple of lines together as well, the letter simply needs to state that you support the concept of the Doyles Creek training mine as a much needed ingredient for the future of the mining industry in general and that you wholeheartedly support the concept etc etc. The letter needs to be emailed or posted via the Minister's Deputy Chief of Staff [whose details were set out]."
On 25 June 2008, Mr Maitland's family company, Jonca, acquired a further 103,148 shares in Doyles Creek Mining. This was its final acquisition. On about 28 July 2008 Jonca declined an offer to acquire a further 64,838 one dollar shares in Doyles Creek Mining. On about 29 September 2008 Jonca forfeited the right to acquire 112,519 $1 shares in Doyles Creek Mining that Jonca had applied for but for which it had not paid the purchase price. I do not accept the submission made on Mr Maitland's behalf that I should infer that he did not act to maximise his financial return when he had the opportunity to do so. The evidence does not reveal why the offer was declined, which leaves open the possibility that Jonca lacked the funds to pay for the further shares.

[32]

The need for exploration by the Department before further areas could be released

In about June 2008, the Department again raised the need for funding to engage in exploration so that more areas could be allocated. On 31 July 2008 Ms Madden sent an email to Mr Gibson at the Minister's office, which attached a table which she had prepared with Mr Mullard of areas in NSW where coal was expected to be found. The table also indicated the type of coal that was expected in the identified areas, thermal coal or coking coal; how it could be mined, open cut or underground; and whether there had been any borehole drilling.
Jerrys Plains, known as Area 42, which included Doyles Creek, was included in the table. The table indicated that there had been no borehole drilling there. The area was described in an associated document as follows: "Contains some open cut and a major underground resource in excess of 250MT in the Redbank Creek, Abby Creek, Whybrow and whynot coal seams. The coal is considered a soft coking coal resource. The proximity to Jerrys plains Township [sic] may preclude open cut mining. Alluvial floodplains of the Hunter River cover part of the area."
The table also contained a reference to the Benelabri area of the Gunnedah Basin which was said to have over 1,000 million tonnes of open cut and underground coal of export thermal and possibly coking quality at depths between 0 and 600m. As with Area 42, there was no borehole drilling data. On 22 July 2008 the Department sent a briefing note to the Minister asking for consent to an application being lodged by the Director-General of the Department on behalf of the Crown for an exploration licence to authorise the Department to explore the area with a view to its eventual release. The briefing note also said: "With dramatically increased coal prices, interest in allocation areas for coal has risen sharply, necessitating further exploration by the Department to identify available resources."
Mr Macdonald, who was aware from the table of the potential size of the Benelabri resource, accepted the advice of the Department to grant consent. An exploration licence was granted to the Crown on 5 November 2008. The evidence revealed that exploration licences had been granted to the Crown over other areas on four occasions between 2001 and 2006 presumably to permit borehole drilling.

[34]

The relevance of Mr Macdonald not bringing the decisions to grant consent and the exploration licence to Cabinet

By August 2008 Mr Macdonald was an experienced parliamentarian as well as a relatively experienced Minister. He had, as a Minister, received several iterations of the Code of Conduct as well as a detailed paper about Cabinet conventions. I am satisfied that, as a result of his experience as a Minister and his familiarity with the Code of Conduct, he knew that he was obliged not to use his position for the purpose of benefitting himself or third parties. He knew that Ministers, by convention, were required to bring decisions with a significant financial impact to Cabinet. He was well aware of the amounts paid by the successful bidders for the Caroona and Watermark exploration licences, which reflected the demand engendered by the coal boom. He also knew that Doyles Creek was a significant resource. He appreciated that, by directly allocating it to Doyles Creek Mining, the State of NSW was foregoing the opportunity to obtain a potentially significant Additional Financial Contribution. In addition, he realised that his various requests to Cabinet for funding for further exploration were not supported by Treasury.
By early September 2008 Government revenues were, for reasons unknown, down almost $100 million per month. On 15 September 2008 Lehmann Brothers collapsed as part of what was termed the Global Financial Crisis.
I am satisfied that Mr Macdonald realised that, even if he were not obliged to take the grant of consent to Cabinet, he could have taken it to Cabinet to obtain the endorsement of the Government to his proposal to make a direct allocation to Doyles Creek Mining and forego any Additional Financial Contributions that might have been offered if Doyles Creek had been allocated following a competitive process. He chose not to bring the proposed consent to apply and grant of the exploration licence to Doyles Creek to Cabinet because he did not want to subject the direct allocation to scrutiny. I infer that he recognised that there was no real prospect that he would obtain Cabinet approval, given the contemporaneous demands on public funds and the fact that his own Department did not support a direct allocation.

[35]

The continuing quest for support

Mr Maitland continued to obtain letters of support for the training mine, many of which came from those whom he had persuaded to write to Mr Macdonald in 2007 about the skills shortage. On 29 June 2008 Mr Maitland sent an email to Mr Murray attaching a suggested draft letter of support for the training mine to the Minister to be signed by him as Chair of United Collieries, having already sent one to him in his capacity as General Secretary of the CFMEU. Mr Murray complied with Mr Maitland's request and sent a letter on 7 July 2008. As referred to above, United Collieries was a joint venture between Xstrata and the CFMEU, which operated on land next to the area sought by Doyles Creek Mining. United Collieries had a vested interest in Doyles Creek Mining being granted an exploration licence because it stood to gain financially from providing mining infrastructure to Doyles Creek Mining, including washery facilities.
Mr Maitland also obtained a letter of support dated 26 June 2008 from Xstrata. In addition to its interest in a grant to Doyles Creek Mining which arose from its part-ownership of United Collieries, Xstrata had been approached by Mr Maitland and invited to be part of a joint venture with Doyles Creek Mining if the exploration licence was granted. Ultimately, Xstrata did not proceed with the joint venture. Mr Maitland's counsel relied on Xstrata's decision not to engage in a joint venture with Doyles Creek Mining as evidence that the Doyles Creek resource was not commercially attractive. I reject that submission. It does not follow from the fact that the joint venture was not proceeded with that Xstrata would not have been interested in submitting an expression of interest had the resource been allocated through a competitive process.
On 1 July 2008, Mr Maitland sent a draft letter to Mr Randall, a geologist who had attended an early meeting with ResCo in January 2007 by reason of his association with Comet Coal. Mr Maitland asked Mr Randall to consider sending a letter of support addressed to Mr Macdonald. Mr Maitland instructed Mr Randall to send the final letter to Mr Gibson, Mr Macdonald's Deputy Chief of Staff, and to provide a copy to him. On 9 July 2008 Mr Randall responded by email and said in part: "Look forward to a formal proposal from Resco on the consideration to be paid once Resco invited by the Minister to apply for an Exploration Licence over Doyle's Creek. . . As to the letter of support I will send letter on Hydromining Coal Australia Pty Ltd letter head, since this is the company that will be looking for underground workers in NSW in the near future."
On 1 August 2008 Mr Randall signed the letter of support as Chair of Hydromining Coal Australia, which was included in the further letters of support which Mr Maitland sent to the Minister. In accordance with the strategy, it specifically referred to the skills shortage and the training mine.
Both offenders knew that the support of the Minerals Council could give a direct allocation the appearance of legitimacy. They both separately approached Dr Nicole Williams, the Chief Executive Officer of the NSW Minerals Council, to obtain such support. At a meeting with Mr Maitland on 23 July 2008, Dr Williams told him that the matter would have to be put to the Council's Executive Committee. Mr Macdonald telephoned her directly on a Sunday and also at 7.30am one morning pressing her for an indication whether the Minerals Council was going to support the Doyles Creek training mine proposal. Dr Williams inferred from these out-of-hours approaches that the matter, which did not seem to her to be urgent, was close to the Minister's heart. She had the unusual feeling that she was being lobbied by the Minister rather than the other way around.

[36]

The grant of consent to Doyles Creek Mining

On 14 August 2008, Mr Maitland met Mr Macdonald and his staff to discuss the letters of support that had been received for the training mine. At that meeting, or shortly afterwards, Mr Macdonald let Mr Maitland know that he would give consent to Doyles Creek Mining to apply for an exploration licence without going to competitive tender. Mr Maitland travelled to Sydney, expecting to receive the letter on 19 August 2008, but had to wait until 21 August 2008.
In mid-August Mr Macdonald told Mr Gibson that he needed the letter of consent as soon as possible and instructed him to get the necessary documentation from the Department to prepare the letter. He also told Mr Gibson that he was not concerned if the Department was against a direct allocation because he had the legal authority to give consent. Mr Gibson spoke to Mr Munnings who told him that he could get a draft or template out of the Department but that they would have to settle the letter in the Minister's office. The evidence is not sufficient to establish why there was such a hurry for the letter of consent. One possibility was that Mr Macdonald was concerned that there would be a Cabinet reshuffle since, if he were not Minister for Mineral Resources, he would have no power to grant the consent to Doyles Creek Mining. Mr Macdonald's evidence was that there had been a newspaper article about the possibility of a reshuffle prior to 21 August 2008, although, as far as he was concerned, it only arose as a real prospect in early September 2008 when he heard that there was to be a change in Premier.
Whatever the reason for the haste, the evidence shows that Mr Macdonald's staff tried to get a template from the Department so that the letter of consent could be drafted in the Minister's office.
On 19 August 2008, Mr Agnew, who worked in the Department's office in Maitland, emailed a template for a mining lease to Graham Hawkes, the Departmental Ministerial Correspondence Co-ordinator, who was based in Sydney. The covering email read: "Attached is the template you require. Please note it is the full submission with the letter at the end. Also, it is for mining lease application and not EL but the wording is essentially the same. Currently there is some maintenance being undertaken on the EL templates and they are unavailable. Whoever uses it will just have to proof read the letter and make sure it says exploration licence and not mining lease in the second paragraph."
The document he sent was a template which contained the draft Ministerial briefing, including sections on "Issue", "Background", "Comment" and "Recommendations", a copy of s 51(4) of the Mining Act, which related to mining leases, and a draft letter of consent to apply for a mining lease. Mr Coutts did not know that Mr Agnew had done this. Ms Madden knew that a template had been sent and agreed that there was speculation at the time that Mr Macdonald was going to grant consent, notwithstanding the Department's recommendation.
Mr Hawkes forwarded the email to Mr Munnings with a covering email which said: "Craig, Hope you understand this. Graham." I infer from the terms of Mr Agnew's and Mr Hawkes' emails that Mr Munnings had contacted Mr Agnew to obtain the template and that Mr Agnew had sent it to Mr Hawkes for him to send it to the Minister's office.
Mr Munnings used the template as a precedent for the grant of consent under s 13(4), which Mr Macdonald wanted to give to Mr Maitland. At 11.52am on 21 August 2008, Mr Munnings emailed his draft letter of consent to Mr Gibson, together with the copy of s 51(4) of the Mining Act, which had come from Mr Agnew and which related to mining leases. Mr Gibson took Mr Munnings' draft to Mr Macdonald who told him that he wanted to know what the Minerals Council's position was because he wanted to put something in the letter about it. Mr Gibson rang Mr Maitland from his own office to tell him that they were settling the invitation to apply but that Mr Macdonald wanted to know whether the Minerals Council supported the training mine proposal. Mr Maitland told Mr Gibson that the Minerals Council had not yet made a decision. Mr Macdonald amended the draft consent letter to include the following sentence: "I'm also advised that the NSW Minerals Council is currently considering the proposal and I expect their advice shortly."
Mr Gibson appears to have made a parallel inquiry to Mr Coutts for a template before he found out that Mr Munnings had obtained a template from Mr Agnew. Mr Coutts instructed Anita Gylseth, who was working in the Ministerial Executive Support area of the Department, to send documents to Mr Gibson. Mr Coutts understood Mr Gibson to be asking for the Department's acknowledgement of receipt of Doyles Creek Mining's application for consent. At 1.07pm on 21 August 2008 Ms Gylseth emailed this document to Mr Gibson. At 1.09pm Ms Gylseth sent another email to Mr Gibson attaching the Doyles Creek Mining letter of 18 March 2008 applying for consent to apply for an exploration licence.
The misunderstanding seems to have arisen because although Mr Gibson's evidence was that, around August 2008, he had told Mr Coutts that Mr Macdonald was proposing to do a direct allocation, he did not tell either Mr Coutts or Mr Mullard that the letter would be prepared in the Minister's office. It did not occur to either of them that the Minister would arrange for his own office to draft the letter of consent since the Department had always drafted such correspondence in the past and they did not regard the personnel in the Minister's office as having the appropriate expertise to draft such a letter.
The letter of consent to Doyles Creek Mining, which Mr Munnings, Mr Gibson and Mr Macdonald had amended from Mr Agnew's draft, was given to Mr Maitland on 21 August 2008. It read: "Thank you for your letter and submission of 18 March 2008 concerning the proposed Doyles Creek Training mine located near Jerry's Plains. I am advised that the University of Newcastle, the Australian Council of Trade Unions, the Westpac Rescue Helicopter Service along with several mining companies have given their support to your proposal. I'm also advised that the NSW Minerals Council is currently considering the proposal and I expect their advice shortly. I am aware that a number of their members have already indicated their support, and that the Minerals Council of Australia has recently renewed their call for safer work environments in the mining industry and has forecast a significant shortfall in skilled mining industry workers over the next 12 years at a time when Australia is experiencing strong growth in the mining sector. Therefore a proposal such as yours provides a real opportunity to address any potential skill shortages in this area while continuing to strengthen and boost our important regional economies. In order to progress your proposal I am pleased to invite Doyle's Creek Mining Pty Ltd to apply for an exploration license over the area outlined in the submission subject to the provision of a supplementary submission outlining in detail the industry and wider community support for such a proposal. Any consent that is finally given will be made under the Government's Guidelines for Allocation of Future Coal Exploration Areas (copy attached) and any future mining development will be subject to a financial contribution as per the table in the Guidelines. The NSW Government recognises the importance of the mining industry to our state, both in generating employment and in being the single largest export income contributor."
It can be seen from the wording of the letter that it was largely promotional. Some of the paragraphs are little more than propaganda. The letter referred to the training mine, as if that was the matter of significance, and tied it to the skills shortage. It mentioned the support of the University of Newcastle and the Helicopter Service but did not disclose that each had a potential financial interest in the release of the area to Doyles Creek Mining. It purported to make the consent conditional on further support being provided, although the wording of the condition was such as to make it almost meaningless. It referred to the Minerals Council's imminent consideration as if there were grounds to believe that it would support the proposal.
I am satisfied that Mr Macdonald's evidence as to his state of mind, which must be taken to have been rejected by the jury, was false and was no more than a desperate attempt to justify the unjustifiable. He said: "I only acted in the public interest. I believed that this [the training mine] would have been a good extra measure to help address the level of fatalities and address some to some degree injuries in what is a very dangerous occupation, and I think that was the most important factor in the end, that this would be a centre of excellence that could assist in training skilled underground miners, because I believed that underground, skilled underground miners were safer miners and therefore safer not only to themselves but to their fellow workers."
Mr Macdonald's apparent concern for the safety of miners was completely irrelevant. He knew that he could have made it a condition of any allocation through a competitive process that the small mine of 150,000 tonnes be used as a training mine. For a coal resource the size of Doyles Creek, this area was miniscule and was, in any event, unsuited for the more profitable longwall mining. The training mine was little more than a device to make the whole proposal appear to be in the public interest and conceal Mr Macdonald's real motivation.
It was submitted on behalf of Mr Macdonald that I ought not infer that he was trying to hide the consent letter from the Department since Mr Gibson and Mr Munnings had told the Department that he was proposing to do a direct allocation and that at least some Departmental officers knew that a template had been provided. It was also submitted that Mr Macdonald could not be expected to tell the Department himself since this was for his staff to arrange. I reject these submissions. There is a distinction between the Minister's staff telling the Departmental officers that Mr Macdonald was thinking of giving consent and their telling them that it had actually been granted. Although the mechanics of putting the consent letter on the TRIM system were not for Mr Macdonald to attend to personally, I infer that it was not put on the system by his staff because he had directed them not to.
I do not accept Mr Macdonald's evidence that he was not trying to conceal from the Department the production and despatch of the consent letter, or that he did not think that there was any problem in issuing the letter. He knew that the practice was that such documents were drafted by the Department and accepted that he had no reason to believe that the Department would not do as he asked. He realised that, although he had some hope of fooling his ministerial and parliamentary colleagues, who were not privy to all the information, into believing that he had given consent for the right reasons, he had no chance of taking in either Mr Coutts or Mr Mullard who, from the outset, appreciated that the training mine was simply a device to mask the direct allocation of a substantial commercial mine to confer a benefit on Mr Maitland and Doyles Creek Mining.
I am satisfied that when Mr Macdonald gave the consent, he was not just reckless as to his obligations. He was sufficiently experienced as a Minister and sufficiently familiar with the Code of Conduct to know that he was obliged not to use his position as a Minister to confer a benefit on Mr Maitland and Doyles Creek Mining and to appreciate that that was what he was doing.
Of course any attempt by Mr Macdonald to hide the fact of consent from his Department was necessarily short-lived since the exploration licence itself could only be prepared by the Department.

[37]

Mr Macdonald's motive

Although it was not incumbent on the Crown to prove a motive, as opposed to motivation, for Mr Macdonald's conduct several possibilities were raised. The Crown's suggestion that Mr Macdonald owed Mr Maitland a political debt for the CFMEU's support for his pre-selection was not borne out by the evidence. The votes of the CFMEU were relatively unimportant compared with those of the Australian Metal Workers Union. Moreover, Mr Foley said that when he wanted to speak to someone from the CFMEU, he spoke to Mr Maher, and did not recall any discussion with Mr Maitland on the topic of Mr Macdonald's pre-selection. The Crown postulated the motive of friendship but there was no indication that the offenders' relationship involved any element of the altruism that characterises true friendship.
There was also some suggestion in the evidence that Mr Macdonald and Mr Maitland were "mates" and that the offending conduct involved "doing a mate a favour". This may have been part of Mr Mullard's concern about the direct allocation which he expressed in the phrase "potential probity issues". "Mateship" in this context has nothing to do with friendship; it is the preference accorded to an associate on the basis of the relationship. If Mr Macdonald's motive was to "do a mate a favour", this would, in my view, have been no less harmful than a financial or other motive. The idea that it is acceptable, if not desirable, to "look after your mates" when exercising public power, or indeed any power which is required to be exercised for the benefit of others, is wrong. A motive of this sort is entirely antithetical to the proper exercise of that power and damages the system from within in a particularly corrosive way. If acted upon it would be a breach of the Minister's obligation to act without fear or favour.
The Crown also suggested that Mr Macdonald granted consent so that Mr Maitland would help his daughter, Sasha. I do not accept this explanation. The Crown also submitted that Mr Macdonald committed the offences for financial gain or some other future benefit. This matter will be addressed below in the context of aggravating factors.

[38]

When the Department learned of the consent

Nobody from the Minister's office told the Department that consent had been granted or posted a copy of the letter of consent on the TRIM system. Because the Department had not drafted the letter of consent, had not been given a copy of the letter and did not envisage that the Minister would get his own staff to prepare such a document, the Department did not know that any such consent had been granted. Mr Coutts and Mr Mullard did not find out about it until 25 September 2008, five weeks after the letter of consent had been given to Mr Maitland, when someone went to the Singleton office of the Department, wanting to lodge an application for an exploration licence for the Doyles Creek area. Gary Walker, the Departmental officer, was not aware that consent to apply had been granted as the Department had not been notified and a copy of the letter of consent had not been TRIM-ed. He sent an email to Mr Ireland of ResCo and asked for a copy of the Minister's consent letter and diagram, which was provided.
Between 21 August 2008 and the Department's learning of the grant of consent on 25 September 2008, the Department had acted on the basis that no consent had been given. For example, on 1 September 2008, Ms Madden, who was preparing briefs for the Budget Estimates Committee, sent an email to Mr Hawkes to find out what was happening with the Doyles Creek training mine proposal so that she could include details in the brief in case the Minister was asked a question about it. Mr Hawkes responded on 2 September 2008 by email as follows: "Good question. . . . So maybe just say what the proposal is and that the government is considering the proposal?"
On 2 September 2008 Mr Kirkwood, from the Newcastle Herald, sent an email to Lyndall Derrig, a media adviser in the Minister's office, asking for confirmation of what Mr Maitland had told him that day: that the Minister had granted consent to apply to Doyles Creek Mining. Ms Derrig forwarded the email to Ms Ward in the Department, who forwarded the email to Mr Mullard, who forwarded the email to Mr Coutts, none of whom was aware that consent had been given. The Department's understanding was reflected in the following passage from Ms Ward's email to Ms Derrig: "To date DPI [Department of Primary Industries] has no record of Mr Maitland being invited to apply."
I infer from these communications that not only was the Department unaware that consent had been given but the media staff in the Minister's office was also unaware.

[40]

Consideration of the training mine proposal by the Minerals Council

On 11 September 2008 the Executive Committee of the NSW Minerals Council met. One of the agenda items was the training mine proposed by Doyles Creek Mining. The meeting papers, which were settled by Dr Williams, said: "The decision on whether NSWMC [NSW Minerals Council] should publicly support the proposal for a training mine in the Hunter Valley is politically sensitive, as the issue concerns the skills shortage and is a Ministerial pet project. The issue may also have implications with respect to the public perceptions of the industry's commitment to worker safety."
Dr Williams said in oral evidence: "The Minister had the capacity, the legal capacity to issue exploration leases but having the power and having the authority I think I felt were quite different. In other words, the support of the industry as a whole via the NSW Minerals Council added legitimacy to the project and it meant that instead of the project - when I say "project", a training mine being imposed on the industry, if we supported it it meant that it was something that we would embrace."
When asked to explain the term "politically sensitive" in the context of the agenda papers Dr Williams said: "The project was something that the Minister was very keen to see proceed. There is always a risk that if the industry did not support anything that could be painted as a safety initiative that that might suggest the industry was not fully supportive of safety initiatives, which was very far from the truth. So the issue of our support was also, I suppose, a case of the ability of the Minister to respond more or less in a timely manner or more or less supportively in relation to other matters with which we might deal."
The extract from the minutes of the meeting of the Minerals Council on 11 September 2008 recorded in part: "It was the general consensus that if the Government wanted to grant Doyles Creek Mining Pty Ltd with an exploration licence, it was entirely their business and if a company wanted to start a training mine, this was their affair."

[44]

Briefing note regarding offer of exploration licence

In order to implement Mr Macdonald's decision to grant the exploration licence to Doyles Creek Mining, the Department prepared a briefing note to accompany the letter offering the licence. Mr Mullard reviewed the draft briefing note, which had been prepared for him by a more junior officer, and made the following changes.
The original provided: "The Department is now satisfied with the supplementary submission and has prepared special conditions which would apply to any licence granted as a result of this application."
This portion was deleted and the following paragraph inserted in its place in the final version: "Special conditions have been included in the exploration licence to cover particular aspects pertaining to the training mine and area."
Mr Mullard said in his oral evidence that he and the Department wanted to ensure that, given that Mr Macdonald was intent on granting the licence, the proponent would be obliged to do what it had proposed. This was to be achieved by special conditions on the exploration licence, which gave power to the Minister to terminate the licence if the training mine was not established and maintained throughout the term of the exploration licence.
The original version contained the following recommendations: "1. The Minister, in accordance with Section 13(4) of the Mining Act 1992, consent to Doyles Creek Mining Pty Limited lodging an exploration licence application for Group 9 minerals within a mineral allocation area over the area as described on the diagram dated 3 December 2008. 2. The Minister sign the attached letter and forward it to the applicant."
The letter attached was the offer of the exploration licence. The first recommendation was deleted. The Department had never recommended the giving of consent, which had nonetheless already been given on 21 August 2008. The second recommendation was reworded such that the final version contained only the following: "The Minister sign the attached letter and forward it to the applicant, in accordance with the previous consent given to apply for an exploration licence."
I regard these amendments as reflecting Mr Mullard's concern that the Department not be seen to be recommending the grant of the exploration licence, to which it was opposed. However, Mr Mullard, as a public servant, was bound to implement Mr Macdonald's decisions and did so, by forwarding the relevant documentation to the Minister's office for his signature. To the extent to which he could, he protected the State's position by the drafting of conditions.
The final version of the briefing note was sent by Ms Madden to Mr Gibson on 5 December 2008 by email with a draft letter for Mr Macdonald to sign; a copy of the exploration licence and the conditions; and a copy of the January 2008 Coal Allocation Guidelines, which provided for Mininum Financial Contributions. The letter attaching the draft licence with special conditions was signed by Mr Macdonald and provided to Mr Maitland on 5 December 2008. The letter in terms allowed Doyles Creek Mining to execute the exploration licence document and return it to the Titles Branch of the Department for registration.
Mr Mullard's evidence was that, although normally more junior officers in the Department could sign exploration licences, the Department's view, as expressed in the original draft briefing note was that it was appropriate for the exploration licence to be signed by the Minister as it was a "special case that the Minister had been involved in". The only exploration licences Mr Macdonald had signed himself other than where the grant was to the Crown, were the ones for Caroona, Watermark and Doyles Creek. The Caroona and Watermark allocations were accompanied by substantial publicity. Press conferences were held in advance of the grant of the licences to announce the selection of the successful applications and the amounts of the Additional Financial Contributions.
There was no press release to announce that the exploration licence had been offered to Doyles Creek Mining.

[47]

The timing of the press release

There was no press release announcing the grant of the exploration licence either on Monday 15 December 2008 or at any time during that week.
On Friday 19 December 2008 Mr Bartlett emailed a draft press statement to Mr Barns, a director of Doyles Creek Mining, which was to be released to the Newcastle Herald and the Australian Financial Review for publication on Tuesday (23 December 2008). As Mr Bartlett was about to go on leave he asked Mr Barns to let Mr Gibson or Ms Derrig know on Monday (22 December 2008) whether he wanted any changes.
According to Mr Bartlett, there was a media item about Mr Macdonald which was published on Sunday 21 December 2008, which Mr Macdonald described in his evidence as a "negative story". On Monday 22 December 2008 Mr Barns sent some changes to the draft release. There was a suggestion on 23 December 2008 that the release could be deferred until the following week (because of the negative story on Sunday) to which Mr Bartlett responded: "I thought they wanted it out when it wouldn't run?"
In accordance with usual practice, the press statement was sent to the Premier's office, which was referred to as "upstairs" before it was released. At 3.30pm on 23 December 2008. Mr Gibson sent an email to Mr Hawkes which said: "Geez mate I am sorry but could we please get a page or 2 of dot points on Doyles Creek training mine- ie how good it will be, how it will address the skills shortage as pointed out by the ACA, how it will be state of the art, that $250K goes to Newcastle Uni each year for research and that they are subject to all normal royalty payments etc. Upstairs have seen it and are having a bit of a panic. If we could get it asap that's another one on my tab!"
The request was forwarded to Mr Mullard, who, together with Ms Madden, prepared a response in accordance with their obligations as public servants which addressed the concerns which they understood to have been raised by the Premier's office. At 5.34pm on the same day, 23 December 2008, Mr Mullard forwarded dot points via email to Mr Hawkes to defend the grant of the exploration licence by Mr Macdonald.
The content of the press statement, which was approved by Mr Macdonald before it was released, was both selective and misleading. There were several references to the training mine but none to a commercial mine, except to the extent that the facility would be funded by a coal mine which was "projected to generate sufficient financial returns to support [it]". There was no mention in the press release of Mr Maitland.
Eventually, the press statement was released with an embargo until 5am on Christmas Eve. Mr Johnston SC, who appeared on behalf of Mr Macdonald, submitted that I could not be satisfied that Mr Macdonald was responsible for the timing of the press release since this was a matter over which he had no particular control. While I accept that some aspects of the timing and content were matters for others, including his staff, I am satisfied that, had Mr Macdonald actually wanted the public to know about the allocation, the press statement would not have been released on Christmas Eve and it would have revealed the size of the commercial mine. After all, the Watermark announcement was made at a joint press conference held on the day the Minister invited Watermark to apply for an exploration licence. I am satisfied that the timing of the press release announcing the Doyles Creek allocation betrayed Mr Macdonald's hope that the direct allocation would pass relatively unnoticed since he knew that, if it were picked up by an investigative journalist or detractor, questions would be asked about the probity of the grant and his motivation for giving away such a substantial resource to a known ally. I do not regard the timing of the press release as aggravating the offending conduct; rather, I regard it as consistent with and confirmatory of the jury's verdicts as to his guilt on charges 1 and 3.
Before Christmas Eve, Mr Macdonald saw Mr Rees and told him that there was a significant announcement about a training mine which was to be supported by the Helicopter Service, Newcastle University and "the union", which I take to be a reference to the CFMEU. Mr Macdonald also told him that there was "negligible commercial value" in the mine. Mr Rees responded: "Well, that sounds reasonable. It's a training mine, no commercial value of the coal, all the players support this. But there hasn't been a tender process. You'll need to be prepared to stand up and outline why this stacks up without a tender process." I am satisfied that Mr Macdonald was lying when he told Mr Rees that there was negligible commercial value in the mine. I am satisfied that he lied to cover up the fact that his motivation for granting the licence was to confer a benefit on Mr Maitland.

[48]

Questions raised about the probity of the grant

Despite Mr Macdonald's attempt to bury the story, enquiries were made about the grant of the exploration licence to Doyles Creek Mining which were forwarded to the Department, which was responsible for explaining and defending Mr Macdonald's decision. In one such response in January 2009 Mr Mullard wrote that "no financial favours [were] granted to John Maitland". I am satisfied that, as far as Mr Mullard knew, this statement was correct, since he did not understand the financial structure of Doyles Creek Mining or what Mr Maitland's interest was.
Around early February 2009 Alan Jones, radio broadcaster, wrote to Mr Macdonald about Doyles Creek Mining. Mr Macdonald amended the draft prepared by his Department. His amendments were as follows: "Alan, I notice you mentioned John Maitland in your letter. I have met John several times in a professional capacity over the last few years and I can assure you he is an industry leader and expert in his field. That said, his involvement is a minor factor. The key element is the strength of this proposal that was devised over many years with the Department of Mineral Resources - a proposal that has gained significant support from industry and educational sectors alike. There is a real need for this training mine in NSW- Alan, as you know, mining is not something that can be gleaned from a book sitting at a desk, it can only be learnt at the coalface so to speak."
The final version of Mr Macdonald's response to Mr Jones contained the following statement, which he knew to be false: "The company [Doyles Creek Mining] has been involved in lengthy negotiations with the Department of Primary Industries for several years now."
The Sydney Morning Herald raised queries about the allocation in July 2009. Mr Macdonald included the following paragraph in his response, which I am satisfied was deliberately false: "This application is no different to any other application for exploration. There were absolutely no concessions given. The company has been involved in lengthy negotiations with the Department of Primary Industries for several years now." [Emphasis in original.]

[53]

The seriousness of the offences and the harm caused

The offence of wilful misconduct in public office covers a wide range of behaviour from minor acts by petty officials to, as here, a substantial breach of the public trust vested by Parliament in a Minister of the Crown. The "kernel" of the offence was identified by PD Finn in "Public Officers: Some Personal Liabilities" (1977) 51 ALJ 313, 315 as follows: "[a]n officer, having been entrusted with powers and duties for the public benefit, has in some way abused them, or has abused his official position."
The office of Minister has been described as "an office at the pinnacle of the structure of government": R v Nuttall; ex parte Attorney-General [2011] 2 Qd R 328; [2011] QCA 120 at [52]; see also Jackson v R; Hakim v R (1988) 33 A Crim R 413 at 435-436. Parliament, when it passed the Mining Act, conferred on the person who held the office of Minister significant power over the State's resources. That the powers conferred on Mr Macdonald, as Minister for Mineral Resources, were expressed in broad terms did not make them absolute. An unfettered grant of power in these circumstances is always subject to the rider that it be exercised for a proper purpose: O'Sullivan v Farrer (1989) 168 CLR 210 at 216-217.
By granting consent to Doyles Creek Mining to apply for an exploration licence and by granting the exploration licence to confer a benefit on Mr Maitland and Doyles Creek Mining Mr Macdonald was guilty of gross breaches of the trust that Parliament placed in him. His offending conduct is extremely serious.
Abuses of ministerial power are not easily remedied. The very public servants whose courage and independence was reflected in the advice given in the 22 February 2007 briefing note were required to implement and defend Mr Macdonald's decisions, even though they had consistently advised against them and suspected them to be tainted by improper motivation. While a decision in the exercise of a power conferred by a statute which is made for an improper purpose can be set aside by a court as being ultra vires, or outside the scope of the power, those with an interest and standing to bring such proceedings do not necessarily know of the improper purpose and may not be in a position to prove it. The similarity in the resolutions of the CFMEU and the Minerals Council shows that both organisations suspected that something was amiss. However, neither could stop or impede the exercise of Ministerial power.
The coal resources of NSW, which should have been used for the benefit of the whole society, were squandered by the criminal conduct of the very person who was trusted to safeguard them. In the middle of a coal boom when the financial situation of the State was made even more parlous by the Global Financial Crisis, Mr Macdonald was prepared to give away an exploration licence, which Mr Mullard thought would potentially attract a $50-$100 million Additional Financial Contribution. It is no wonder that Mr Macdonald did not bring the decision to Cabinet or disclose the true facts to either Premier, Mr Iemma or Mr Rees. Although the State lost the opportunity of receiving an Additional Financial Contribution or a better training mine or facility through a competitive process, the harm to the community is not to be measured in material terms.
The offenders' conduct damaged the institutions of government and public confidence in them, which resulted in widespread harm to the community. It tainted the State's reputation for proper dealing and probity. It tended to engender public cynicism such as might deter those considering standing for Parliament for fear that their motives will be misunderstood. Junior public officials might be more inclined to misconduct themselves in the belief that such conduct is normal or accepted. Conscientious public servants whose duty it is to give independent advice might be hesitant about speaking out, lest their careers be shortened or their prospects of promotion stymied by Ministers who regard an independent public service as an obstruction, rather than an essential part of a working democracy. Departmental officers might have asked themselves why they should take such care to administer the State's mineral resources if Mr Macdonald, the man who had the ultimate say as decision-maker, could be so cavalier about his responsibilities and so vain about the exercise of his power.
There are no isolated victims of crimes such as these since the harm was done to the community as a whole. The people of NSW were betrayed by Mr Macdonald's conduct: R v Obeid (No. 12) at [84]; Jackson v R; Hakim v R at 435 per Lee J.
Mr Macdonald, himself and through his staff, performed many of the acts that were required of him to bring about the grant of consent and the grant of the exploration licence openly. Apart from the preparation and settling of the letter of consent, the Departmental officers were generally aware of what Mr Macdonald was doing at the time. The public servants in the Department were required to defer to Ministerial authority. The Westminster system expects, and depends on, individual Ministers to do the right thing. Mr Macdonald did the wrong thing. He was brazen about it. He bragged to his staff about the authority the legislature had given him. He boasted to Mr Mullard that, because he was the Minister, he could change the Guidelines and to Mr Gibson that he had the legislative authority to grant consent despite the Department's opposition. He became secretive only when, in August 2008, he apparently needed to act with undue haste from the privacy of his office.

[55]

Maximum penalty: statutory analogies

As referred to above, there is no maximum penalty for this offence. The usual approach is to have regard to statutory analogies and to use them as a reference point: R v Hokin, Burton and Peisley (1922) 22 SR (NSW) 280 at 292; Jaturawong v R [2011] NSWCCA 168 at [6]-[7] per Beazley JA, Hall and Harrison JJ agreeing. There is no rule that the sentence imposed for the common law offence cannot, as a matter of law, exceed the maximum imposed for the statutory analogy: Blackstock v R [2013] NSWCCA 172 at [10] per Campbell J, Macfarlan JA and Barr AJ agreeing.
As Beech-Jones J said in R v Obeid (No. 12) at [64]-[65], the particular circumstances of the wilful misconduct in public office are to be taken into account in determining the appropriate statutory analogy. In that case, the relevant statutory analogy was held to be bribery (s 249B of the Crimes Act), which carries a maximum penalty of 7 years. However, at [68]-[69] Beech-Jones J noted important differences between the offence under consideration and offences under s 249B, including that those who have committed wilful misconduct in public office generally hold more senior positions; and that there is no separate requirement for the statutory offence that the relevant misconduct was serious and merited criminal punishment. His Honour found that these differences bore out the justification for the Court's not being limited by the statutory maximum of 7 years for a s 249B offence.
In the present case, the parties accepted that there were no close statutory analogies. Public officers are not regarded as fiduciaries under Australian law: IW v City of Perth (1997) 191 CLR 1 at 49 per Gummow J. However, some aspects of the duties owed by holders of public office are analogous to those owed by fiduciaries: Hot Holdings Pty Ltd v Creasy (2002) 210 CLR 438; [2002] HCA 51 per Kirby J; R v Obeid (No. 2) [2015] NSWSC 1380 at [73]-[85] per Beech-Jones J; Obeid v R (2015) 91 NSWLR 226 at [144]-[148] per Bathurst CJ, Beazley P and Leeming JA; R v Obeid (No. 12) at [66] per Beech-Jones J. Those occupying positions as directors, agents or trustees on the one hand and Ministers of the Crown on the other are obliged to use their positions for the benefit of others. A director who dishonestly misuses the position to obtain a benefit can be sentenced to a term of imprisonment of up to 5 years: s 184(2)(a) of the Corporations Act 2001 (Cth). As referred to above by reference to R v Obeid (No. 12), an agent who corruptly receives or solicits any benefit as an inducement or reward can be sentenced to a term of imprisonment of up to 7 years. A person who offers or gives a benefit to a person entrusted with property, or any person entrusted with property who receives or solicits any benefit for anyone without relevant consent, is liable to imprisonment for up to 7 years: s 249E of the Crimes Act. These analogies are imperfect. None incorporates the gravity of the present offences. The importance of the public office of Minister of the Crown is unparalleled in the statutory examples from the private sphere set out above.
Examples that relate to the administration of justice bear some resemblance to the present offences. An offender who is convicted of the crime of intending to pervert the course of justice is liable to imprisonment for 14 years: s 319 of the Crimes Act. Damage to public institutions is a common consequence of perversion of the course of justice and the crime of wilful misconduct in public office. However, this otherwise is not a close analogy.
The Crown has relied on the maximum penalties imposed in other Australian jurisdictions for statutory offences which are broadly equivalent to wilful misconduct in public office. I am not persuaded that it is appropriate to have regard to the choices made by legislatures other than the NSW Parliament or the Commonwealth Parliament. For example, one might wonder what one is to make of the circumstance that s 92A of the Criminal Code 1899 (Qld) provides that for the offence of misconduct in relation to public office the maximum penalty is 7 years' imprisonment and the common law offence of wilful misconduct in public office has a maximum penalty of 10 years' imprisonment in Victoria: s 320 of the Crimes Act 1958 (Vic).
Accordingly, of the maximum penalties identified by the Crown for equivalent offences, I consider only the offence of abuse of public office contrary to Criminal Code (Cth), s 142.2, which carries a maximum penalty of 5 years imprisonment, to be a reference point of any arguable relevance, since it is the only one that applies in NSW. It would appear to correspond to the conduct proscribed by the common law offence. For the reasons given above this does not impose a maximum on the common law offence in NSW, which has been left at large.

[57]

Aggravating factors

For reasons given above, I am satisfied that Mr Macdonald abused the trust and authority placed in him by Parliament on behalf of the community and that the offences involved multiple victims. I have not, however, taken these into account as aggravating factors (s 21A(2)(k) and s 21A(2)(m) of the Act) as they are both features of the offences of wilful misconduct of which Mr Macdonald has been convicted. The two offences for which Mr Macdonald is to be sentenced were planned, although not in the sense referred to in s 21A(2)(n) of the Act. I have already taken this feature into account in determining the objective seriousness of the offences.
The Crown contended that I should take into account as an aggravating factor that Mr Macdonald committed the offences for financial gain: s 21A(2)(o). The jury's verdicts (that, when giving the consent on 21 August 2008 and granting the licence on 15 December 2008, Mr Macdonald was substantially motivated to benefit Mr Maitland and Doyles Creek Mining) do not determine why Mr Macdonald wanted to benefit Mr Maitland and Doyles Creek Mining. I have already referred to the motives suggested by the Crown in the trial (political debt, friendship and benefit to Sasha) which, apart from financial gain and "mateship", have been excluded.
I infer from Mr Campbell's evidence of Mr Macdonald's statements at the Noble House lunch that the amount of any superannuation pension would be less than a Ministerial salary. The material tendered on Mr Macdonald's behalf at the sentence hearing indicated that Mr Macdonald married Anita Gylseth (now Macdonald) in Spring 2007, just over a year after the Noble House lunch. Ms Gylseth has three daughters, one of whom is disabled and will require care for the rest of her life and another who was of an age to sit her HSC in 2009. As referred to above, the financial concerns which Mr Macdonald raised at the Noble House lunch were likely to remain pressing.
Mr Johnston contended that I could not find beyond reasonable doubt that Mr Macdonald committed the offences for financial gain. First, he submitted that, in the absence of any evidence of an agreement between the offenders, I could not infer that there was any understanding that Mr Macdonald would be paid any amount or given any other financial benefit in return for his wilful misconduct. Secondly, he submitted that, even if Mr Macdonald wanted to augment his superannuation pension, he would have been in a good position to obtain further employment on his merits after leaving Parliament and would not have been reliant on Mr Maitland for future income. Thirdly, he submitted that Mr Macdonald was not required to exclude every other hypothesis as to his motive before it could be concluded that he committed the offences for financial gain. He relied on Palmer v The Queen (1998) 193 CLR 1; [1998] HCA 2, which arose in a different context, concerning cross-examination of an accused as to a complainant's motive, which was held to be inappropriate.
In my view, there are hypotheses to explain why Mr Macdonald misconducted himself, other than the motive of financial gain, which have not been excluded beyond reasonable doubt. The offending conduct might have been no more than a grandiose gesture to an ally borne of hubris; or an arbitrary exercise of power to demonstrate to his Department that he could confer a benefit on an associate if he wanted to because he was the Minister. These hypotheses are consistent with Mr Macdonald's misplaced sense of entitlement, which he seemed to believe came with the office of Minister and which was exhibited in some of his exchanges with Departmental officers and his own staff to which I have made reference.
I cannot, on the state of the evidence, be satisfied to the requisite standard that Mr Macdonald committed the offences for financial gain. The evidence is not sufficient to come to any conclusion as to why Mr Macdonald misconducted himself to confer a benefit on Doyles Creek Mining and John Maitland. The lack of established motive does not lessen the gravity of the offences.

[59]

Subjective circumstances

Mr Macdonald was born in 1949, the third of five children. His father was absent during his childhood but the family was otherwise close. Mr Macdonald was university educated and worked in the public service until his election to Parliament in 1998. He was convicted of a minor summary offence many years ago of no present relevance. His referees wrote of his good works but as none came to give evidence I do not place any particular weight on these. He has a child, Sasha, from an earlier marriage and, until bail was revoked, he lived with his current wife, Anita whom he married in 2007. She has three daughters aged between 25 and 30 years, the youngest of whom has a moderate to severe intellectual disability which means that she has to be supervised all the time.
Until the revocation of bail Mr Macdonald was working in his wife's business cleaning and servicing bed and breakfast accommodation. He was also consulting on projects for cancer and coronary artery disease for which he was not paid a salary although would be entitled to a commission if they were successful. According to the pre-sentence report, he receives a parliamentary pension, of an undisclosed amount.
Mr Johnston contended that the sentence ought take into account the hardship to Mr Macdonald's family by reason of the needs of his disabled step-daughter who is in her late twenties and requires constant supervision because of her mental disability and consequential disinhibitions. I accept that Mr Macdonald has, in recent times, played a substantial role in the care of his youngest step-daughter and that his wife and step-daughter will suffer hardship as a result of his incarceration. Mr Johnston submitted that, even if this consideration were not taken into account in mitigation of the sentence, it ought to be taken into account in a finding of special circumstances: Dipangkear v R [2010] NSWCCA 156 at [34]. I infer that, while Mr Macdonald was a Minister, the demands on the role limited the hours he could have spent caring for his step-daughter and that other arrangements were made for her care during this and other periods when he was not available. I note that Mrs Macdonald said in her reference that she and the offender are "making ends meet by working as cleaners every day of the week". The evidence does not permit an assessment to be made of the family's financial position or the extent to which it will be compromised by Mr Macdonald's incarceration, although I accept that it will have an adverse effect.
Hardship to third parties is an almost invariable consequence of incarceration since many offenders will be breadwinners, carers of children or the disabled and otherwise integral to the lives of others: R v Edwards (1996) 90 A Crim R 510 at 515 per Gleeson CJ. I do not regard the hardship to Mr Macdonald's wife and step-daughter that will be occasioned by his incarceration as being sufficiently extreme to affect the length of the sentence, having regard to the seriousness of the offences and the need for general deterrence: Dipangkear v R at [34]. However I take it into account as part of Mr Macdonald's subjective case and as being relevant to special circumstances: R v Tuhakaraina [2016] NSWCCA 81 at [86]-[87] per Wilson J, R A Hulme J agreeing, approving R v Girard [2004] NSWCCA 170 at [21].
In the present context, Mr Macdonald's character is of lesser significance since it provided him with the opportunity to commit the offences: R v Rivkin (2004) 59 NSWLR 284; [2004] NSWCCA 7 at [410], Mason P, Wood CJ at CL and Sully J, citing R v El Rashid (Court of Criminal Appeal (NSW), Gleeson CJ, 7 April 1995, unrep) at 3. There are statutory constraints which apply to Members of Parliament which mean that those with a criminal history cannot necessarily attain, or retain, that office. For example, the seat of a person who has been made bankrupt or convicted of an offence of particular gravity while a sitting member, becomes vacant: s 13A, Constitution Act 1902 (NSW).
On 1 June 2017 the Parliamentary Contributory Superannuation Amendment (Criminal Charges and Convictions) Act 2017 (NSW) commenced, which disqualified Mr Macdonald from receiving his parliamentary pension and will oblige him to repay past amounts received. By reason of s 24C of the Act, I may not take into account as a mitigating factor in sentencing the loss of Mr Macdonald's parliamentary pension. I note, in any event, the evidence is not sufficient to establish the value of Mr Macdonald's present pension entitlements or past payments.

[63]

The seriousness of the offending conduct and the harm caused

Mr Maitland's conduct must be viewed from a different perspective from that of Mr Macdonald. No public trust was vested in him. He had no public power. What duties he owed were owed to ResCo and Doyles Creek Mining. He was entitled to make a profit. I accept the Crown's submission that Mr Maitland's conduct is less serious than that of Mr Macdonald.
The liability of an offender who is convicted of intentional participation in a crime by lending assistance or encouragement is central to the sentencing exercise, both in terms of assigning culpability and finding facts: GAS v The Queen; SJK v The Queen (2004) 217 CLR 198; [2004] HCA 22 at [19].
Having regard to the requisite standard, the evidence does not permit findings to be made about many aspects of the offenders' conduct, including: which of the offenders instigated the idea of the direct allocation; who conceived of the idea of the training mine as a cloak for Mr Macdonald's misconduct; who initiated the strategy which resulted in the two tranches of letters; and what each knew about the other's financial means or future prospects.
The verdicts indicate that the jury was satisfied that Mr Maitland encouraged and assisted Mr Macdonald to commit the principal offences, knowing that Mr Macdonald's motivation was improper and intending that Mr Macdonald breach the duties he owed to the public by reason of his office. Mr Maitland liaised and communicated in person and by email, phone and letter with Mr Macdonald and his staff throughout the period up to the granting of consent and the grant of the licence. Mr Maitland was party to, at least, the implementation of the strategy using letters of support at about the time of the Prime Restaurant lunch. Mr Maitland drafted and obtained letters of support for Mr Macdonald. Mr Maitland approached NGOs to get them to commit to the training mine proposal because he knew Mr Macdonald wanted such commitments before he would grant the consent and the licence. Mr Maitland was both central and instrumental to Mr Macdonald's criminality. His provision of information about the Minerals Council's position so that it could be inserted into the letter of consent on 21 August 2008 to insinuate the prospect of support shows how closely he was involved in helping and encouraging Mr Macdonald to commit the principal offences.
I reject the Crown's submission that Mr Maitland's offending was aggravated by his role as Chair of the Coal Competence Board. I am bound by the agreed fact that he was suitably qualified for that position.
But for Mr Maitland's intervention, the Doyles Creek resource would have been allocated, if at all, only after a competitive process, involving the kind of evaluation that took place with Caroona and Watermark. Mr Maitland's offending conduct was a contributing cause of Mr Macdonald's offences, with the attendant consequences for the community. The harm caused by Mr Maitland's offending was substantial since he actively encouraged and assisted Mr Macdonald to wilfully misconduct himself in a significant way, to the detriment of the community. Mr Maitland's conduct as an accessory is serious.
Although Mr Maitland has not been shown to be aware of all of the details of Mr Macdonald's culpability, he knew enough to know how improper Mr Macdonald's motivation was. He knew from the 22 February 2007 briefing note that a direct allocation of the Doyles Creek resource to Doyles Creek Mining would give rise to major policy difficulties and potential probity issues. He also knew of the potential value of the exploration licence. He knew that any mining company interested in the resource would have been prepared to establish a training mine to get access to it and that there would have been competition for the resource which would have increased the Additional Financial Contributions which would have been offered for it. He knew that he and Doyles Creek Mining were being given a gift, although he has not been shown to have known why they were favoured.

[65]

The offence was committed for financial gain

Mr Maitland's motive (as distinct from his intention or knowledge) is relevant only to the question whether he committed the offences for financial gain, which is an aggravating factor (s 21A(2)(o)), and which therefore must be established beyond reasonable doubt. As there was no admission or direct evidence to that effect, the question must be resolved by considering the circumstantial evidence.
Mr Maitland was Chair of Doyles Creek Mining, having been appointed as a director on 15 February 2007, which was the day he signed the first letter seeking Mr Macdonald's consent to apply for an exploration licence. I infer from the evidence that Mr Maitland's utility to Doyles Creek Mining was his access to, and relationship with, Mr Macdonald and his staff. As referred to above, Mr Maitland knew, at least from about April 2007, that Doyles Creek Mining would not engage in any competitive process with respect to the Doyles Creek resource.
Jonca, Mr Maitland's family company, had an interest in ResCo which was slightly greater than 20% as at 27 February 2008 (immediately prior to the application for consent being lodged). A further 103,148 shares were acquired by Jonca on 25 June 2008, just over a week after the dinner at the Strangers Dining room. There was no evidence that, after it changed its name from ResCo on 7 May 2007, Doyles Creek Mining had any purpose other than to obtain rights to the resource at Doyles Creek. The investment Mr Maitland had made in the company, both in terms of time and money, would pay off only if consent was given and the exploration licence granted. Mr Maitland knew that once the consent was granted the value of Doyles Creek Mining would increase substantially, as would his shares, and that if an exploration licence was granted, the company could be floated on the stock exchange, to the benefit of its shareholders. These matters are sufficient to raise for consideration the hypothesis that Mr Maitland's motive for actively encouraging and assisting Mr Macdonald to commit the principal offences (and thereby committing the offences of being an accessory before the fact) was financial gain.
Mr Jordan contended that Mr Maitland's motive for the commission of the offences, which arose from his lifelong dedication to mine safety issues, was to establish a training mine. Mr Jordan emphasised that there was no evidence that Mr Maitland realised that the resource would ordinarily be allocated after a competitive process when he suggested the training mine proposal and submitted that this tended to prove that his true motive was the establishment of a training mine. Mr Jordan submitted that: "Mr Maitland encouraged and assisted the Minister to do what in his view was the right thing (an underground training mine), but for the wrong reason (his desire to establish a training mine, rather than the State's interest in the opportunity to test the value of the resource by competitive tender process)."
I reject this submission, which I regard as a considerable understatement of Mr Maitland's criminality. Had Mr Maitland been interested in the establishment of the training mine for its own sake to the exclusion of material benefit for himself, he could have lobbied Mr Macdonald to invite expressions of interest for Doyles Creek with a requirement that each applicant include a training mine proposal as part of the bid. Alternatively, he could have used his considerable expertise in the mining industry to approach a mining company with the wherewithal to engage in a competitive process for Doyles Creek and assist it to submit a proposal that included a training mine. He did neither.
Mr Maher was also an experienced union leader who can be taken to have been concerned with issues that affected the workers, including mine safety. His reaction to the training mine proposal was telling. Mr Maher found Mr Maitland incapable of answering basic questions about the benefits to trainees from the training mine. When Mr Maher realised that no commitments had been obtained from mining companies to employ the trainees or otherwise recognise their qualifications, he refused to support it and was instrumental in passing the resolution recording that the CFMEU did not support it. Mr Maitland never approached Mr Maher again to obtain the support of the CFMEU. Mr Maitland was always sceptical about his chances of obtaining the support of the Minerals Council, which meant that the commitments Mr Maher regarded as important were unlikely to be forthcoming. As referred to above, the views of the Department, the Minerals Council and the Central Executive of the CFMEU were, in substance, the same.
Although I accept that Mr Maitland might have wanted to bring about the training mine at Doyles Creek, I am satisfied that, when he encouraged and assisted Mr Macdonald to commit the principal offences, Mr Maitland also did so for financial gain.
That Mr Maitland has effectively lost all that he gained from the offending conduct is not a matter of particular weight although it will be taken into account on subjective circumstances. It is a not uncommon consequence of crime that the profits made from it are not retained. Mr Maitland's current financial position is largely a result of the tax liabilities he incurred as a consequence of the profits made from the increase in value of NuCoal shares as well as the legal fees he incurred in the investigation conducted by the Independent Commission Against Corruption (ICAC).
For the same reasons as given above with respect to Mr Macdonald, I do not regard the harm caused by Mr Maitland's offending able to be assessed by reference to any potential Additional Financial Contribution which might have been earned by the State, or with the profit made by Jonca on the shares at any particular time.
I do not propose to take the element of planning into account as an aggravating factor since I regard it as integral to the elements of the offence of accessory before the fact in the present case.

[67]