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Supreme Court 20 December 2022

R v Macdonald; R v Maitland (No 10 – verdict)

[2022] NSWSC 1765

Fraud & dishonestyPublic order & justice offences
CRIME TRIAL JUDGE ALONE WILFUL MISCONDUCT IN PUBLIC OFFICE REASONS FOR VERDICT GRANT OF EXPLORATION LICENCE

Citation: R v Macdonald; R v Maitland (No 10 – verdict) [2022] NSWSC 1765
Court: Supreme Court of New South Wales
Date: 20 December 2022
Judge(s): Dhanji J

Background

The accused, a former NSW Labor Minister for Mineral Resources, held the power to grant consent to apply for coal exploration licences and to grant those licences under the Mining Act 1992 (NSW). A company called Doyles Creek Mining Pty Ltd (DCM), formed by a mining services company, applied for a direct allocation of an exploration licence over an area in the Hunter Valley near Jerrys Plains. The application was built around a proposal to establish an underground training mine alongside a commercial coal mining operation.

The second accused was a former senior union official in the mining industry who, after retiring as National Secretary of the CFMEU, became chair of DCM. His background in the sector and his access to the Minister made him an attractive appointment to the DCM board. The Minister granted DCM consent to apply for an exploration licence in August 2008 and granted the licence itself in December 2008, contrary to his Department's consistent advice that the resource should be allocated by competitive tender.

The Minister faced two counts of wilful misconduct in public office; the former union official faced two corresponding counts of being an accessory before the fact to those offences. Both accused had been tried before Adamson J with a jury, which led to an appeal and retrial. This decision constitutes the verdict of the retrial, conducted as a judge-alone trial before Dhanji J.

Legal Issues

  • Whether the Minister wilfully misconducted himself in public office by granting DCM consent to apply for an exploration licence and by subsequently granting the licence, when the driving force behind those decisions was to benefit DCM and its chair rather than the public interest
  • Whether the former union official, as accessory before the fact, knew that the Minister was engaging in misconduct on each occasion and intended that he do so
  • Whether the Crown proved its circumstantial case, including any relevant motive, beyond reasonable doubt against each accused separately

Decision

Issue 1 – Wilful misconduct (Minister, counts 1 and 3)

The Crown accepted that the Minister had the power to directly allocate the resource and that it was open to him to disagree with his Department's advice. The central question was whether the driving force behind both grants was improper, specifically whether Mr Macdonald would not have made those decisions but for his purpose of favouring DCM and its chair (at [179]). The Department of Primary Industries consistently advised against a direct allocation and in favour of competitive tender, pointing among other things to the relative insignificance of the proposed 150,000-tonne training component against a projected 91-million-tonne commercial operation (at [346]-[365]). Dhanji J found that the Minister failed to engage adequately with the disproportion between the training and commercial components of the proposal, that he applied pressure on the NSW Minerals Council to support the mine in a manner consistent with a predetermined intention to grant the application, and that he bypassed independent advisory bodies including the Mine Safety Advisory Council despite their capacity to assess the very training issues he relied upon (at [391]-[413]). The context established by the Caroona and Watermark competitive allocations, which had produced unexpected windfalls of over $91 million and $300 million respectively, meant the Minister could not have been unaware of the potential value being forgone in a direct allocation signed only a week after the Watermark announcement (at [237]-[241]). Dhanji J was satisfied beyond reasonable doubt that Mr Macdonald was guilty on both counts (at [99]).

Issue 2 – Accessory before the fact (former union official, counts 2 and 4)

The Crown was required to prove not only that the Minister misconducted himself but that the former union official knew this and intended it. Dhanji J found that the former official had a long-standing and genuine commitment to underground mining safety and honestly believed in the merits of a training mine (at [158]-[166]). While he was aware throughout the process that the Department opposed a direct allocation, that knowledge alone did not establish that he understood the Minister was engaging in misconduct rather than simply exercising his discretion contrary to departmental advice in a way that was lawfully open to him (at [693]-[694]). The Court found that it could not exclude the reasonable possibility that the former official unquestioningly accepted the process the Minister put in place and genuinely believed the proposal was sufficient to justify the direct allocation (at [698]). No strategy of the nature alleged by the Crown was established to have been formed between the two accused around the time of the Prime Restaurant lunch (at [691]). The former official's decisions not to purchase additional shares around the time the consent was granted undermined the proposition that he was then certain the approval was a gift of obvious large value (at [665]-[668]). A reasonable doubt remained as to whether he intended that the Minister's driving force would be to favour him rather than to act on a genuine assessment of merit (at [699]-[702]).

Issue 3 – Consistency of the divergent verdicts

Dhanji J expressly addressed the apparent tension between convicting the principal offender and acquitting the alleged accessory, observing that the evidence admitted against each accused was not identical and that each occupied a fundamentally different position (at [703]). The decision not to grant the licences on merit was the Minister's responsibility; it was more difficult to be satisfied that matters which should have alerted the former official necessarily did alert him (at [698]).

Orders Made

  • The Minister (Ian Michael Macdonald) is found guilty of count 1 (granting DCM consent to apply for an exploration licence on or about 21 August 2008) and count 3 (granting Exploration Licence No. 7270 on or about 15 December 2008); convictions are to be entered accordingly.
  • The former union official (John William Maitland) is found not guilty of count 2 (accessory before the fact to count 1) and count 4 (accessory before the fact to count 3); he is discharged on the indictment.

Key Takeaways

  • A minister who exercises a statutory discretion to grant a direct allocation of a valuable public resource, contrary to consistent departmental advice and without engaging independent advisory bodies whose function was to assess the very matters relied upon, may be found to have misconducted himself in public office even where the minister had a genuine personal interest in the subject matter of the application (at [346]-[413]).

  • Liability as an accessory before the fact to wilful ministerial misconduct requires proof that the accessory both knew the minister was engaging in misconduct and intended that he do so; awareness that departmental opposition existed throughout the process, and awareness that a direct allocation was commercially advantageous, do not alone establish that mental element (at [692]-[699]).

  • The Supreme Court confirmed that, on a circumstantial case, the Crown must prove guilt beyond reasonable doubt and must exclude all reasonable alternatives inconsistent with guilt; where it remained reasonably possible that the alleged accessory believed the minister was genuinely exercising his discretion on the merits, acquittal is required (at [7]-[8], [699]-[702]).

  • Divergent verdicts as between a principal offender and an alleged accessory are not inherently inconsistent where the evidence admitted against each differs and the nature of their respective responsibilities in relation to the impugned decision is different (at [703]).

  • Proof that a proposed approval would have been commercially valuable to the applicant, and that the applicant was aware of that value, does not by itself establish that the applicant intended the decision-maker to act improperly; the court must consider the full range of inferences available from all the evidence, including evidence of the accused's own genuine beliefs (at [695]-[698]).

Legislation and Cases Referenced

Legislation
- Coal Industry Act 2001 (NSW)
- Coal Mine Health and Safety Act 2002 (NSW)
- Criminal Procedure Act 1986 (NSW), ss 132, 133
- Evidence Act 1995 (NSW), s 69(2)
- Independent Commission Against Corruption Act 1988 (NSW) , s 87
- Mining Act 1992 (NSW), s 13(4)
- Protection of the Environment Operations Act 1997 (NSW)

Cases
- Edwards v The Queen (1993) 178 CLR 193; [1993] HCA 63
- Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
- Hofer v The Queen (2021) 95 ALJR 937; [2021] HCA 36
- M v The Queen (1994) 181 CLR 487; [1994] HCA 63
- Maitland v R; Macdonald v R (2019) 99 NSWLR 376; [2019] NSWCCA 32
- Orreal v The Queen (2021) 96 ALJR 78; [2021] HCA 44
- R v Janceski (2005) 64 NSWLR 10; [2005] NSWCCA 281
- R v Macdonald; R v Maitland (No 2) [2022] NSWSC 1208
- R v Macdonald; R v Maitland (No 8) [2022] NSWSC 1421
- Stephens v The Queen (2022) 96 ALJR 871; [2022] HCA 31
- Weiss v The Queen (2005) 224 CLR 300; [2005] HCA 81