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Definition of ‘adverse material’ under the microscope – Case Summary of John Charles Woodman v IBAC [2022] VSC 684

10 January 2023

#Dispute Resolution & Litigation

Published by:

Susan Guo

Definition of ‘adverse material’ under the microscope – Case Summary of John Charles Woodman v IBAC [2022] VSC 684

On 23 December 2022, the Supreme Court of Victoria Court of Appeal published its decision in the case of John Charles Woodman v IBAC, emphasising the fundamental legal principle of procedural fairness.

This judgment has been long awaited, especially considering its relevance to IBAC’s long-running investigation of allegedly corrupt land deals in Melbourne’s south-east (Operation Sandon).

Background and the court’s decision

Mr Woodman was one of the subjects of the draft special report (Draft Report) arising out of Operation Sandon. Mr Woodman claimed that he was not provided with a reasonable opportunity to respond to the adverse material contained in the Draft Report provided to him, thereby denying him procedural fairness. This opportunity arises by virtue of section 162(3) which 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.”

The case turned on the interesting question of whether footnotes to the Draft Report constituted ‘adverse material’. On 23 December 2021, when IBAC provided the Draft Report for Mr Woodman’s review and response, the footnotes to the body text were redacted. By the time the matter was heard, the IBAC had disclosed to Mr Woodman the details of all but 15 footnotes. The Court considered these two questions in turn:

  1. out of the 400 page Draft Report and nearly all the footnotes that were eventually provided, why do these 15 footnotes matter?
  2. is IBAC required to provide underlying source materials such as footnotes in order to comply with the legal principle of procedural fairness?

In respect of the first question, Mr Woodman argued that he required access to the redacted footnotes because they might contain the ‘sum total’ of the adverse material, pointing the readers to the source of the adverse opinion. He put forward the following arguments in his submissions:

  1. the definition of ‘adverse material’ extended to all of the evidence or information on which IBAC intends to rely on;
  2. the use of the phrase ‘adverse material’ extends beyond just ‘adverse findings’, but a ‘wider class of evidence or information’; and
  3. the interpretation should be the same compared to other sections where ‘adverse material’ is understood.

On the other hand, IBAC argued that the words ‘adverse material’ follows the ordinary meaning of the words, i.e. specific adverse comments or opinions. IBAC argued that the ‘adverse comments or opinion’ formed are ‘evaluative’ and it had formed a view by examining ‘factual building blocks’ which are the footnotes. In other words, the footnotes themselves contain no adverse comments or opinions.

IBAC sought to have Mr Woodman’s arguments rejected for the following reasons:

  1. it goes against the plain reading of the subsection, its context and purpose;
  2. it fails to consider relevant extrinsic materials in understanding legislative intent; and
  3. it was used as a distraction to the correct application of section 162(3) as footnotes are not required to be disclosed under section 162(3) nor under common law principles of procedural fairness.

His Honour’s following statements help articulate the distinction, as well as answer the IBAC’s obligation to provide procedural fairness. Ginnane J stated that:

“The Draft Report contains many adverse comments or opinions about Mr Woodman. But it also contains many footnotes which provide the references to sources of information, which appear to be the basis for many such comments or opinions. The fact that IBAC may have intended the footnotes for internal use only and removed them from the copy of the Draft Report provided to Mr Woodman does not alter the fact that many of them are likely to have recorded the basis of the comments and opinions. I do not consider that IBAC’s obligations under s 162(3), or in providing procedural fairness, are discharged because it has provided Mr Woodman with a Draft Report containing many findings and adverse comments and opinions. Those obligations require that he be provided with a reasonable opportunity to respond to the adverse material on which they are based.”

The judgment then went into great detail about each footnote in question and both parties presented submissions for and against them being disclosed. Finally, Ginnane J held that IBAC has not complied with the requirements under section 162(3) and of procedural fairness by not granting him access to some of the footnotes. This is because the footnotes were the basis of the adverse comments or opinions articulated in the Draft Report. 

Implications of the decision

The implications of this decision are potentially far-reaching considering the recent establishment and soon-to-operate National Anti-Corruption Commission (NACC) in mid-2023. This decision has come shortly after the ascension of the National Anti-Corruption Commission Act 2022 in which section 157 outlines a similar rule relating to procedural fairness. Section 157 provides, at subsection (2):

The investigation report must not include an opinion, finding or recommendation that is critical (either expressly or impliedly) of a Commonwealth agency, a State or Territory government entity or any other person, unless the Commissioner has given the head of the agency, the head of the entity or the other person concerned:

 (a)  a statement setting out the opinion, finding or recommendation; and

 (b)  a reasonable opportunity to respond to:

       (i)  the opinion, finding or recommendation; and

       (ii)  the proposed publication of the opinion, finding or recommendation.

This decision may well influence how NACC carries out its investigations and shape the interpretation of ‘critical opinion, finding or recommendation’ under the Act.

Holding Redlich has substantive experience working with anti-corruption agencies, including IBAC, ICAC and CCC. We are well-placed to assist your organisation in responding to any investigation that the NACC may institute in time. If you require any assistance, please contact us using the details below.

The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Susan Guo

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