High Court decision puts the spotlight on procedural fairness obligations arising from adverse findings

The breadth of natural justice obligations owed by decision-making bodies generally, including the rights of affected parties to respond to adverse material, has been a frequent source of new administrative law cases – and confusion for decision-makers. The High Court has again taken up the burden, this time considering procedural fairness in the context of the obligation of the Independent Broad-based Anti-corruption Commission (IBAC) to provide a person or public body with the "relevant material" in relation to any adverse comment or opinion it intends to include about them in a report (AB (a pseudonym) v Independent Broad-based Anti-corruption Commission [2024] HCA 10).

Although specific to the Independent Broad-based Anti-corruption Commission Act 2011 (VIC) (IBAC Act), the High Court's unanimous decision reinforces the breadth of natural justice obligations owed by decision-making bodies generally, including the rights of affected parties to respond to adverse material.

The IBAC investigation

Between 2019 and 2021, IBAC investigated allegations of unauthorised access to and disclosure of internal email accounts of a public body, identified by the pseudonym CD. As part of its investigation IBAC interviewed a senior officer of CD, identified by the pseudonym AB.

IBAC provided AB with a redacted version of its draft report and requested his response to adverse findings it proposed to make against him. In response, AB requested a transcript of his interview with IBAC, transcripts of its interviews with other relevant witnesses and copies of other documentary material relied upon by IBAC to support its proposed adverse findings. However, IBAC only provided to AB a copy of the transcript of his own interview and refused to produce the other documents requested.

AB commenced proceedings against IBAC in the Victorian Supreme Court, contending IBAC failed to comply with section 162(3) of the IBAC Act by failing to afford him with a reasonable opportunity to respond to the adverse findings in the draft report. He sought a declaration, as well as an injunction restraining the transmission of the IBAC report to each House of Parliament. CD was later joined as a second plaintiff.

The High Court's views on procedural fairness and adverse material in the IBAC Act

Section 162(3) of the IBAC Act states:

If the IBAC intends to include in a report under this section a comment or an opinion which is adverse to any person, the IBAC must first provide the person a reasonable opportunity to respond to the adverse material and fairly set out each element of the response in its report [emphasis added].

The High Court granted the appellants special leave on the meaning of "adverse material" in section 162(3): did it mean the adverse comment or opinion, or the actual underlying evidentiary material upon which the adverse comment or opinion is based (as asserted by the Appellants)?

The High Court found in favour of the Appellants, stating that the phrase "adverse material" in section 162(3):

"refers to the evidentiary material said by IBAC to justify a comment or… opinion which is adverse to any person. In most cases, including this one, it would be expected that a reasonable opportunity to respond to that evidentiary material will be afforded by proffering a reasonable opportunity to respond to the substance or gravamen of that material, which will usually involve a fully account of its essential content."

In construing the phrase in question, the High Court began by identifying "some basic propositions about the applicable common law principles of natural justice where a person's interests are likely to be affected by an exercise of power", citing the following principles extrapolated from the leading decision of Kioa v West (1985) 169 CLR 550:

1. A person must be given an opportunity to deal with relevant matters adverse to [their] interests which the repository of the power proposed to take into account in deciding upon its exercise. Whilst the person whose interests are likely to be affected do not have to be given an opportunity to comment on every adverse piece of information, they should be given an opportunity to deal with adverse information that is credible, relevant and significant.
2. The nature of a decision-makers powers and their capacity to affect a person's rights and interests informs the proper construction of statutory provisions that create analogous rights and obligations in that all statutes are construed against a background of common law notions of justice and fairness.

Relevantly, the High Court considered that the IBAC has "broad and intrusive powers" to gather material, which it then marshals in formulating its proposed adverse findings, comments or opinions with potentially grave consequences for the affected public body, public officer or other person.

Within this context of the applicable common law principles of natural justice and the scope and nature of IBAC's powers, the High Court found that for the "reasonable opportunity" provided by section 162(3) to be effective, the person affected must be given the opportunity to respond to the material collected by IBAC which it contends justifies the adverse findings, comments or opinions. Section 162(3) has the effect of modifying the common law obligation to afford procedural fairness so as to require a connection between the "adverse material" and the proposed adverse comment or opinion.

Further, the High Court considered this construction had the benefit of enhancing both the capacity of the affected person to respond to the proposed adverse comment or opinion and the performance of IBAC's functions by ensuring that it identifies the material said to support the adverse comment or opinion.

Despite the above favourable findings, the appellants were not granted the declaratory relief they sought. This is because IBAC gave an undertaking not to transmit to Parliament a report containing the impugned comment or opinion. However, IBAC was ordered to pay the appellants' costs.