Ryde City Council v Ivan Petch

JUDGMENT - EX TEMPORE 1HER HONOUR: This is an application under s 20B of the Public Interest Disclosures Act 1994. The object of that Act is to encourage and facilitate the disclosure, in the public interest, of certain kinds of conduct, including corrupt conduct. The means by which the Act seeks to achieve that object include enhancing procedures for disclosure and protecting those who make them from reprisals. One of the protections conferred by the Act is contained in s 20, which makes it an offence for a person to take detrimental action against another person that is substantially in reprisal for the other person making a public interest disclosure. In aid of that protection, two remedies are provided. Section 20A creates an entitlement to claim damages for any loss suffered as a result of the detrimental action. Section 20B creates a statutory right to seek an injunction to prevent a contravention of s 20. The present application is brought under s 20B. 2The circumstances in which the application is brought are as follows. Mr John Neish is the general manager of Ryde City Council. Events earlier this year prompted Mr Neish to make what he regarded as a protected disclosure under the Act. The content of his disclosure is the subject of a nonpublication order in the proceedings and it is not appropriate for me to state that information in this judgment, save to observe that in my view it is open to infer that Mr Neish's view that the relevant events should be reported to ICAC may well have become known to others. I will return to that issue. 3The events were disclosed in the first instance to the Mayor of Ryde City Council on 18 April 2012. Mr Neish had evidently determined at that point also to disclose the matter to ICAC but wanted, presumably for his own protection, to have confirmation from the person who first approached him as to what had been said. Despite several requests he did not receive that confirmation until 16 July 2012. The confirmation was received by email and that document was in evidence before me. 4On 9 July 2012 two of the councillors on Ryde City Council requested an extraordinary meeting to consider a resolution that Mr Neish's contract of employment be terminated. On 11 July 2012 Mr Neish made the protected disclosure to ICAC. On 23 July 2012 the motion to terminate Mr Neish's employment was passed at the extraordinary meeting by six votes to five. The composition of the vote is confidential to Council and was not put in evidence before me. A rescission motion was lodged before the conclusion of the meeting, with the effect that the resolution is stayed in accordance with s 372 (2) of the Local Government Act 1993. That section operates to stay the implementation of the resolution terminating Mr Neish's employment "until the motion of rescission has been dealt with". 5The urgency of the present application is that the next general meeting of the Council is tonight at 7.30 pm and the rescission motion is due to be determined at that meeting. Ordinarily, good governance would require that to occur. However, a complication in the present case is that Council is now in caretaker mode, since local Council elections in this State have been fixed for 8 September 2012. In those circumstances, the Council sought guidance from the Office of Premier and Cabinet as to its ability to consider the rescission motion during the caretaker period. 6The department's response to that request appears at annexure G to the affidavit of Michael Lim sworn 10 August 2012. In summary, the letter noted that clause 393B(1)(c) of the Local Government (General) Regulation 2005 prevents a Council from removing a general manager during caretaker mode. However, since removal turns on the fate of the rescission motion, the letter noted that different views might be taken as to whether the determination of that motion constituted termination of the general manager's employment during the caretaker period (which is prohibited) or merely allowing a determination to that effect made before the caretaker period to proceed (which is not prohibited). The department noted in those circumstances that Council would need to be guided by its own legal advice. 7What follows from those matters is that Mr Neish is vulnerable to the outcome of the rescission motion, notwithstanding the fact that Council is now in caretaker mode. Separately, the letter from the Office of Premier and Cabinet advises the Council to defer determination of the rescission motion until after the election. It may well be that that is the prudent approach but that is a matter for Council. 8The significance of those events for present purposes is that Mr Neish seeks protection against the existing risk that the rescission motion will be put and not carried. 9A threshold issue arises as to the plaintiff's authority to commence the proceedings. The proceedings were issued purportedly on behalf of Ryde City Council on instructions from the Mayor. In accordance with s 20B of the Public Interest Disclosures Act an injunction can be sought by a Council with the approval of the Attorney General. That section provides that an application may be brought by an investigating authority "or any other public authority with the approval of the Attorney General". The definition of a public authority includes a Council. 10The approval of the Attorney General was sought and was given. However, in giving his approval, the Attorney General noted the existence of an issue relating to the authority of the Mayor to make the request on behalf of the Council and requested that that issue be drawn to the attention of the Court. It follows from those events, in my view, that the application is brought with the approval of the Attorney General as required by s 20B. However, the approval is subject to my being satisfied as to the authority of the Mayor to commence the proceedings in the name of the Council without a resolution of Council authorising him to do so. On that issue the plaintiff relied upon the provisions of s 226 of the Local Government Act, which provides that the role of the mayor includes "to exercise, in cases of necessity, the policy-making functions of the governing body of the Council between meetings of the Council". 11I was informed that in earlier proceedings raising a similar difficulty, Hislop J was satisfied that the proceedings were properly brought. Unfortunately, however, his Honour gave oral reasons on that occasion and those reasons have not been published. It is difficult to place any precedential value on the decision in those circumstances. The requirement that the authority be exercised in a case of necessity I think is met in the present case by the fact, as I have outlined, that there exists at least a risk that the rescission motion will be put and not carried at the meeting tonight. The question of the governance of Council and the individual role of councillors in making that decision is considered separately below. It is enough for present purposes to say that, given that the issue has arisen between meetings and may, of its nature, be determined at the next meeting, the circumstances appear to me to have given rise to a case of necessity within the meaning of s 226. 12A separate question is whether, in commencing the proceeding, the Mayor may properly be regarded as having exercised "the policy-making functions of the governing body of the Council". There may be no doubt that the Public Interest Disclosures Act raises questions as to the policy of a Council. Indeed, the Act is expressly directed to enhancing procedures for making public interest disclosures. In aid of the enhancement of such procedures, Ryde City Council has a written policy for internal disclosures. That document is annexure C to the affidavit of Mr Neish sworn 13 August 2012. It states a detailed policy for internal reporting of public interest disclosures. It is clear from the terms of that policy that Ryde City Council intends to give effect to the objects of the Act. 13A question then is whether a decision to commence proceedings is an exercise of the policy-making functions of the Council. It seems to me that where an occasion arose between meetings for concern as to the need to protect a "whistleblower" (to adopt the vernacular) there is a proper basis for concluding that the Mayor had within his role the task of exercising the function of deciding to commence a proceeding, consistently with Council's policy to give effect to the objects of the Act. For those reasons I am not persuaded that it was beyond the Mayor's authority to commence the present proceedings in the name of the Council. 14I turn to the principles for granting an injunction. Section 20B is a species of statutory injunction. The starting point is to have regard to its terms. The section says: 20B Injunctions to prevent reprisals (1) An investigating authority, or any other public authority with the approval of the Attorney General, may apply to the Supreme Court for an injunction to prevent a contravention of section 20 (Protection against reprisals). (2) The Supreme Court may, on application under this section, grant an injunction restraining a person from engaging in conduct in which the person has engaged, is engaged or is proposing to engage and that constituted, constitutes or would constitute a contravention of section 20, and, if in the opinion of the Supreme Court it is desirable to do so, requiring that person to do any act or thing to remedy such a contravention. (3) The Court may grant an interim injunction pending determination of an application under this section if the Court thinks it is desirable to do so. (4) The Court may discharge or vary an injunction granted under this section. (5) The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised: (a) whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind, and (b) whether or not the person has previously engaged in conduct of that kind, and (c) whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind. (6) The Court must not require an applicant for an injunction under this section or any other person, as a condition of granting an interim injunction, to give an undertaking as to damages. 15It is clear from subs (3) that the court may grant an interim injunction if the court thinks "it is desirable to do so". The construction of the section must, however, be undertaken by reference to well-established common law provisions as to the granting of interlocutory injunctions. I do not think the section evinces any intention to set aside those long-standing principles. As submitted on behalf of the plaintiff, the first requirement is for the plaintiff to identify a legal right to be determined at trial and in respect of which final relief is sought, in accordance with the principles stated by the High Court in ABC v Lenah Game Meats Pty Ltd [2001] HCA 63. In the present case the existence of that right is established by the statute. 16Separately the plaintiff must make out a prima facie case. It is important in the heated context of the present application to state what that does not entail. I am not required on the present application to make any determination as to whether the conduct the subject of Mr Neish's public interest disclosure was in fact corrupt. The Public Interest Disclosures Act is careful to suspend determination of that issue. 17Secondly, I am not required on the present application to determine whether any person has in fact contravened s 20. The requirement is, as I have already stated, to establish a prima facie case and then, if that is established, to turn to consider the balance of convenience. As noted in the plaintiff's written submissions, reference is often made to the alternative test propounded by Lord Diplock in American Cyanamid Co v Ethicon Ltd [1975] AC 396 at 406 of the need to establish a serious question to be tried but it is established that, to the extent that there is any difference between that test and the prima facie case test stated in Beecham, the test in Beecham is the one that applies in Australia: see ABC v O'Neill [2006] HCA 46 at [65] to [72]. 18A further well-established principle in that context is that the court should not attempt to resolve disputed questions of fact or a difficult question of law on an application for interlocutory relief. 19Turning then to the issue whether a prima facie case is established in the present proceeding, s 20 of the Public Interest Disclosures Act has three elements. It must be borne in mind that the power to grant an interlocutory injunction rests on a prima facie case for apprehending a contravention of that section. 20The three elements are, first, the existence of a public interest disclosure. It must be observed in that context that s 20(1C) extends the application of the section to a case where the person alleged to have taken the detrimental action does so on the strength of a belief or suspicion as to a public interest disclosure, whether or not a public interest disclosure was in fact made. In the present case Mr Oliver, who appears for the defendants, conceded at the outset of the proceedings that the application could properly be determined on the strength of an assumption that Mr Neish has made a public interest disclosure within the meaning of the Act, both to the Mayor on 18 April 2012 in accordance with s 14 of the Act and to ICAC on 11 July 2012 in accordance with section 10 of the Act. Accordingly, it is not necessary to consider that element further. 21The second element of s 20 is that there be "detrimental action". That term is defined in subs 2 of s 20 as follows: (2) In this Act, "detrimental action" means action causing, comprising or involving any of the following: (a) injury, damage or loss, (b) intimidation or harassment, (c) discrimination, disadvantage or adverse treatment in relation to employment, (d) dismissal from, or prejudice in, employment, (e) disciplinary proceeding. 22Mr Oliver submitted, with some force, that there is a potential difficulty in establishing that element in the present case. He noted that the steps required to terminate the employment of Mr Neish entail, in the context of the present case, the passing of a resolution which turns on the individual votes of a number of counsellors. In that circumstance it is difficult to conclude that any individual defendant may properly be said to have undertaken action "causing, comprising or involving dismissal" of Mr Neish from his employment. Dismissal follows from the combination of events culminating in the carriage of the motion. 23In determining that issue I am mindful of the caution against attempting to determine difficult legal questions in an interlocutory application. I have reached the conclusion, after giving careful consideration to the issue, that it is fairly arguable that in bringing forward the motion and voting on it, some of the defendants may be said to have engaged in action involving at least prejudicing Mr Neish's employment within the meaning of subs (2). I also think it is possible that, construed in context, "action causing dismissal" from employment could include voting in favour of a motion to dismiss a person, even though no single vote is determinative. However, that is a question for another day. 24The issue is further complicated by the fact that Mr Neish's employment contract provides that the Council can terminate his employment without cause. However it does not follow that the timing of a motion to determine whether that should occur is irrelevant. The circumstances of the present case in my view give rise to a reasonable inference that, regardless of whether the contract could have been terminated at any point without cause, the motion brought forward in the extraordinary meeting may well have been precipitated by events relating to the public interest disclosures. Although I have not found these issues easy to resolve I think on balance, having regard to the principles that apply to the determination of interlocutory applications, I should be satisfied that there is a prima facie case for the satisfaction of that element of the statutory cause of action. 25The third element of s 20 is that the detrimental action be taken substantially in reprisal for the public interest disclosure. As I have already noted, s 20 (1C) extends the application of the section to a case where a person believes or suspects that the other person may have made a public interest disclosure, whether or not that in fact occurred. Mr Oliver submitted, again with cogency and some force, that the evidence in the present case does not establish that any individual defendant knew of the disclosures in question or acted in response to them. 26Against those contentions regard must be had to two matters. One is the undisputed evidence that Mr Neish has what may fairly be described as an outstanding record as an employee of the Council. The absence of any other explanation for consideration of a decision to terminate his employment points inexorably to the public interest disclosure as the motivation, at least on the part of some of those who voted at the meeting, for deciding to terminate his employment. 27The second consideration must be dealt with carefully in these reasons because it arises from the material the subject of the nondisclosure order to which I said I would return. Without descending to the detail or content of that material it is enough for present purposes to say that in my view it sustains the inference that the word may well have got around that Mr Neish was proposing to report the events of earlier this year to ICAC. I am perhaps, in making that observation, relying on something akin to the grapevine effect which is often relied upon in the context of defamation proceedings. It is well-established in that context that the principle, if it can be called a principle, is no substitute for proof but rather an acknowledgement of the realities of communication between people in our society. However, when I have regard to the terms of the Public Interest Disclosures Act I am pressed to the conclusion that the Act was not intended to require these matters to be the subject of exact proof. The Act confers broad powers for the purpose of protecting whistleblowers. The events giving rise to the need for such protection are, of their nature, often difficult to discern. 28I am satisfied that the inference to which I have referred is fairly available even on the limited evidence before me, particularly having regard to the principles to which I have referred as to the determination of interlocutory applications. 29A difficulty arises from what I have just said which is that my conclusion on the third element does not relate to each of the defendants in the proceedings. I will hear the parties as to how to address that difficulty in the present context at the conclusion of this judgment. Accepting the plaintiff's evidence at its highest, as I should for present purposes, I am satisfied that there is a prima facie case as to some of the defendants that there may have been a contravention of s 20. 30It is necessary then to turn to the question of the balance of convenience. Plainly so far as Mr Neish is concerned the balance tips strongly in his favour to the extent that, if Council sees fit to put the rescission motion tonight and if it is not passed, his employment will be terminated. As I have said, that issue is complicated by the fact that Mr Neisgh's employment can be terminated without cause in accordance with the terms of the agreement put before me in exhibit 1 at clause 10.3.5. 31A further complication is the submission put by Mr Oliver on behalf of the defendants that the nature of the relief sought would effectively force specific performance of an employment agreement on the Council. However, I think that submission is answered by the terms of the Act, which clearly contemplates that the termination of employment may be restrained in an appropriate case. The effect of the statute must be brought to the common law's reluctance to order specific performance of an employment contract. From Council's point of view or, rather, the point of view of the individual defendants there is another important consideration in the balance of convenience. This again, if I may say so with respect, was addressed cogently and with some force by Mr Oliver. The form of the relief sought seeks to restrain individual councillors from exercising what would otherwise be their plain entitlement to participate in a decision on the motion put forward. Mr Oliver submitted that one could see this application as being effectively in reverse and one in which the Council ought more properly to be the defendant. 32I have considered that submission with some care against the specific protections sought to be conferred by the Public Interest Disclosures Act. I think the resolution of it may be found in the Act's object of drilling down into the decisions of individuals where such decisions may have been taken in reprisal for public interest disclosures. It is after all ultimately only by the conduct of individuals that such detrimental action may be taken. It is difficult to imagine a Council as a whole being found to be "a person who takes detrimental action" within the meaning of s 20, although I would not exclude the possibility of that being established in another case. 33In any event, whilst I have some reservations about the convenience (if I can put it that way) of restraining individual councillors from doing what they otherwise are perfectly entitled to do in their role as councillors, I think I can only conclude upon examination of the Act as a whole that that is its intention. 34In all the circumstances, for those reasons, I am satisfied that relief should be granted to the plaintiff but not in the form sought. It remains to hear the parties further as to an issue which raises the difficulty I have already adverted to, namely, the need not to disclose the contents of the material the subject of the non-publication order. It is going to be difficult to hear from the parties on that issue in those circumstances but I will do my best.