FEDERAL COURT OF AUSTRALIA Henzell v Centrelink [2006] FCA 1844 MARJORIE HENZELL v CENTRELINK AND JEFF WHALAN NSD2498 OF 2006 ALLSOP J 22 DECEMBER 2006 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD2498 OF 2006 BETWEEN: MARJORIE HENZELL Applicant AND: CENTRELINK First Respondent JEFF WHALAN Second Respondent JUDGE: ALLSOP J DATE OF ORDER: 22 DECEMBER 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The respondent not take any further steps before 15 January 2007 by way of disciplinary action in pursuance of the investigation of the matter referred to in the draft report tendered in these proceedings. 2. The costs of each party be costs in the cause. 3. The applicant on or before 29 January 2007 file and serve a fully particularised statement of claim setting out the allegations. 4. The parties at a date that is mutually convenient approach the Duty Registrar for a docket judge allocation and for the fixing of the first directions before that docket judge. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD2498 OF 2006 BETWEEN: MARJORIE HENZELL Applicant AND: CENTRELINK First Respondent JEFF WHALAN Second Respondent JUDGE: ALLSOP J DATE: 22 DECEMBER 2006 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant is a social worker in the Armidale area administered by Centrelink. She has worked there since 2002. She complains, in substance, that she has been denied procedural fairness in connection with disciplinary measures threatened to be taken about her conduct at work. She seeks the following interlocutory orders: (1) That until further order of the Court the respondents or either of them be restrained from dismissing, demoting, transferring, fining or otherwise prejudicing the applicant in her employment. (2) That until further order of the Court the respondents or either of them be restrained from making any "finding" adverse to the applicant. 2 In late 2005, three social workers supervised by the applicant are said to have "raised concerns regarding (the applicant's) supervision" with a Ms Peasley, the "Business Manager, Social Work" of Centrelink in "Area Hunter". This is taken from paragraph 3.4 of the draft report which is in evidence. The nature of that document will become clear later in these reasons. This matter was raised with the applicant who, in December 2005, conducted "supervision sessions" with the three persons, see the report paragraph 3.5. 3 Later in December 2005, social workers from the Tamworth Armidale area met with a Ms Scarfi who was the "Professional Standards Officer, Area Hunter" who prepared a report that recommended counselling of the applicant about issues in Ms Scarfi's report. Ms Scarfi's report contained a recommendation that there be no so-called "Code of Conduct investigation". The meaning of this latter phrase will become clear in due course. Early in 2006, a fourth social worker who was supervised by the applicant lodged a complaint. Formal counselling of the applicant was to occur with the "Business Manager, Social Work". The applicant apparently indicated that this process denied her natural justice. That counselling did not go ahead. 4 I should add, at this point, that the above is taken as background material from the draft report to which I will make reference in due course. I should also indicate that the evidence does not reveal what took place at these various meetings in any great detail other than through the statements of the participants made in the context to which I will come. 5 An officer of Centrelink later noticed that the applicant was wearing a lanyard, other than a Centrelink lanyard. This appeared to be the genesis of the next steps that were taken. 6 In May 2006 a decision appears to have been taken to undertake a code of conduct investigation in respect of the applicant. A Mr Beisty was appointed to undertake the investigation. The applicant was given some reassigned duties during the investigation relieving her of supervision of the various persons who had been raising matters with the people in Centrelink to whom I have referred. 7 On 15 May 2006, Mr Beisty, who is described in the letter as a "decision-maker", sent a letter to the applicant which contained the following: "It is suspected that you have failed to treat fellow staff with courtesy and respect. It is further alleged that you have failed to comply with a direction in relation to the wearing of an inappropriate lanyard. … You are advised that this matter is considered quite serious and until such time as the investigation into the suspected breach of the Code of Conduct is concluded, you should not make contact with your current subordinates and/or any potential witnesses in relation to this matter." 8 On or about 15 May 2006 the applicant received a letter from a Mr Graham (also described as a "decision-maker"). The letter contained the following: "I am writing to advise you that you are suspected of having breached the Code of Conduct and of my role in this matter. In accordance with paragraph 2 of the Procedures for Determining Breaches of the Code of Conduct I have been selected by John Dorian, Area Manager, Area Hunter to: · investigate the suspected breach of the Code of Conduct; · determine whether the Code of Conduct has been breached; and · if I find that a breach has occurred, determine what, if any, sanction will be imposed. It is suspected that you have failed to treat fellow staff with courtesy and respect and that you have failed to comply with a direction in relation to the wearing of an inappropriate lanyard." 9 The letter enclosed all the evidence upon which he said he would rely and called for written comments "in relation to the suspected breach of the Code of Conduct". The letter also stated that if a written statement was provided, the applicant would also be given an opportunity to make an oral statement. On 22 May 2006, the applicant objected to anyone in Area Hunter dealing with the investigation. It would appear that this was the basis of the replacement of Mr Graham, or Mr Beisty and Mr Graham, with Mr Van Woerden. 10 Neither party provided me with a copy of all the evidence provided to the applicant by the above letter of 15 May 2006 sent by Mr Graham. I am left to infer the contents of this material from the 31 page reply of the applicant provided to Mr Van Woerden on 4 June 2006. The arrangement and content of this document, that is the 31 page reply of the applicant, lead me to conclude that as a matter of substance the applicant understood that a series of tolerably precise allegations were being made against her. 11 The first was contained on the first page of her response document. It read as follows: "Item 1: Allegation that I failed to respond to a management directive relating to the wearing of a non-Centrelink lanyard." This was followed by over one page of consideration, the detail of which I do not propose to descend to. 12 There followed the following: "Item 2: Complaint from Armidale customer regarding a breach of privacy. PIRS investigation closed 11/5/05. Customer interviewed by John Graham and statements signed 17/5/2006." This was followed by a page of discussion reflecting a clear understanding of the nature of that complaint. 13 The third matter was as follows: "Item 3: Complaint from a young customer and her mother at the Inverell office of Centrelink regarding a written complaint lodged 16/4/06, 18/4/06 with statements taken by John Graham on 17/5/06." This was followed by nearly two pages of discussion revealing an apparently clear understanding of the subject matter. 14 The next item was as follows: "Item 4: Brenda Scarfi's investigation of a privacy complaint and other matters on 14/12/05 and report on 20/12/05." There followed three-quarters of a page of discussion which indicated that in this respect there was still a lack of awareness of some aspects of the complaint, but then the applicant deals with Ms Scarfi's report followed by material over four and a half pages. 15 The next item was as follows: "Item 5: Letter of complaint (not dated) lodged by SWCP1, Ruth Kreamer with investigating officer John Graham & presented to me at interview on 18/5/06." At this point I would simply say that I infer that on 18 May 2006 Mr Graham gave to the applicant his letter of 15 May 2006. Thereafter, there followed two pages of discussion dealing with that matter which appears to indicate an understanding of the complaint which I read out. 16 The next matter was described as follows: "Item 5 (sic): Letter of complaint by Kathleen Coleman 9/5/2006." There followed thereafter a three and a half page discussion which appears on its face to indicate an understanding of the complaint. 17 The next item was as follows: "Item 6: Letter of complaint by Ms Toni Walters 8/5/2006." There followed a two and a half page discussion which again appears to disclose clear understanding of what is being dealt with. There then follows a two page summary of those matters and thereafter, there is a detailed 14 page time line from August 2002 to May 2006. 18 Within that response document there does not appear to be any substantial statement of a lack of any understanding as to what the applicant was dealing with. I would infer, if I may put it respectfully, that the applicant from what she has written is an intelligent and articulate person well able to express herself in writing. 19 From July to August 2006 the applicant took annual leave. 20 On 22 August 2006 Mr Van Woerden wrote to the applicant stating that the applicant was suspected of having breached the Australian Public Service Code of Conduct (the APS Code of Conduct). The letter stated the following: "It is alleged that you may have dealt with Centrelink customers in an appropriate manner and that you failed to treat fellow staff with respect and courtesy and that you failed to comply with a direction in relation to the wearing of an inappropriate lanyard." 21 The letter describes the process to be followed. It included a copy of Centrelink's procedures for determining breaches of the Code of Conduct which include clause 4 which was in the following terms: "Information to be given to employee before determination is made (1) Before a determination is made in relation to a suspected breach of the Code of Conduct by an APS employee, the employee must: (a) be informed in writing of: (i) the details of the suspected breach of the Code of Conduct (including any variation of those details); and (ii) the sanctions that may be imposed on the employee under subsection 15(1) of the Act (including any limitations on that power contained in regulations made for the purposes of subsection 15(2) of the Act); and (2) Before a determination is made in relation to a suspected breach of the Code of Conduct by an APS employee, the employee should unless exceptional circumstances apply, be provided with a copy of all evidence upon which the decision maker will rely in making a determination. (3) The employee must be given reasonable opportunity to make a statement, in writing, in relation to the suspected breach within 7 days or any longer period as is allowed. If the employee makes a written statement within 7 days (or, if allowed, any longer period) of being given the opportunity to do so, the employee must also be given the opportunity to make an oral statement in relation to the suspected breach. (4) An employee who does not make a written statement in relation to the suspected breach is not, only for that reason, to be taken to have admitted committing the suspected breach." 22 At this point it is appropriate to explain the procedural framework. The Public Service Act 1999 (Cth) in s 13 provides for a so-called Code of Conduct described as the APS Code of Conduct, the Australian Public Service Code of Conduct. It is appropriate to set out s 13 in full although only subsections (2), (3), (5), and (11) are directly relevant to the issue at hand. Section 13 states: "The APS Code of Conduct (1) An APS employee must behave honestly and with integrity in the course of APS employment. (2) An APS employee must act with care and diligence in the course of APS employment. (3) An APS employee, when acting in the course of APS employment, must treat everyone with respect and courtesy, and without harassment. (4) An APS employee, when acting in the course of APS employment, must comply with all applicable Australian laws. For this purpose, Australian lawmeans: (a) any Act (including this Act), or any instrument made under an Act; or (b) any law of a State or Territory, including any instrument made under such a law. (5) An APS employee must comply with any lawful and reasonable direction given by someone in the employee's Agency who has authority to give the direction. (6) An APS employee must maintain appropriate confidentiality about dealings that the employee has with any Minister or Minister's member of staff. (7) An APS employee must disclose, and take reasonable steps to avoid, any conflict of interest (real or apparent) in connection with APS employment. (8) An APS employee must use Commonwealth resources in a proper manner. (9) An APS employee must not provide false or misleading information in response to a request for information that is made for official purposes in connection with the employee's APS employment. (10) An APS employee must not make improper use of: (a) inside information; or (b) the employee's duties, status, power or authority; in order to gain, or seek to gain, a benefit or advantage for the employee or for any other person. (11) An APS employee must at all times behave in a way that upholds the APS Values and the integrity and good reputation of the APS. (12) An APS employee on duty overseas must at all times behave in a way that upholds the good reputation of Australia. (13) An APS employee must comply with any other conduct requirement that is prescribed by the regulations." 23 There is no dispute that Centrelink is an agency relevantly for the Public Service Act. Agency heads are bound by their Code of Conduct: see s 14. Section 11 of the Public Service Act provides as follows: "Commissioner's Directions about APS Values (1) The Commissioner must issue directions in writing in relation to each of the APS Values for the purpose of: (a) ensuring that the APS incorporates and upholds the APS Values; and (b) determining where necessary the scope or application of the APS Values. (2) For the purposes of this Act other than this section, the APS Values have effect subject to the restrictions (if any) in directions made under subsection (1)." 24 APS Values referred to in s 11 are described in s 10 of the Public Service Act. Section 11 is in the following terms: "APS Values (1) The APS Values are as follows: (a) the APS is apolitical, performing its functions in an impartial and professional manner; (b) the APS is a public service in which employment decisions are based on merit; (c) the APS provides a workplace that is free from discrimination and recognises and utilises the diversity of the Australian community it serves; (d) the APS has the highest ethical standards; (e) the APS is openly accountable for its actions, within the framework of Ministerial responsibility to the Government, the Parliament and the Australian public; (f) the APS is responsive to the Government in providing frank, honest, comprehensive, accurate and timely advice and in implementing the Government's policies and programs; (g) the APS delivers services fairly, effectively, impartially and courteously to the Australian public and is sensitive to the diversity of the Australian public; (h) the APS has leadership of the highest quality; (i) the APS establishes workplace relations that value communication, consultation, co‑operation and input from employees on matters that affect their workplace; (j) the APS provides a fair, flexible, safe and rewarding workplace; (k) the APS focuses on achieving results and managing performance; (l) the APS promotes equity in employment; (m) the APS provides a reasonable opportunity to all eligible members of the community to apply for APS employment; (n) the APS is a career‑based service to enhance the effectiveness and cohesion of Australia's democratic system of government; (o) the APS provides a fair system of review of decisions taken in respect of APS employees. (2) For the purposes of paragraph (1)(b), a decision relating to engagement or promotion is based on merit if: (a) an assessment is made of the relative suitability of the candidates for the duties, using a competitive selection process; and (b) the assessment is based on the relationship between the candidates' work‑related qualities and the work‑related qualities genuinely required for the duties; and (c) the assessment focuses on the relative capacity of the candidates to achieve outcomes related to the duties; and (d) the assessment is the primary consideration in making the decision." 25 Section 15 of the Public Service Act provides for relevant sanctions on an APS employee who is found to have breached the Code of Conduct. Section 15(1) sets out those possible sanctions as follows: "Breaches of the Code of Conduct (1) An Agency Head may impose the following sanctions on an APS employee in the Agency who is found (under procedures established under subsection (3)) to have breached the Code of Conduct: (a) termination of employment; (b) reduction in classification; (c) re‑assignment of duties; (d) reduction in salary; (e) deductions from salary, by way of fine; (f) a reprimand." 26 Section 15(3) provides that an agency head must establish procedures for determining whether an employee has breached the Code of Conduct. It states as follows: " (3) An Agency Head must establish procedures for determining whether an APS employee in the Agency has breached the Code of Conduct. The procedures: (a) must comply with basic procedural requirements set out in Commissioner's Direction; and (b) must have due regard to procedural fairness; and (c) may be different for different categories of APS employees." 27 Section 15(4) states: "The Commissioner must issue directions in writing for the purposes of subsection (3)." 28 On 3 September 2004 the Chief Executive Officer of Centrelink established procedures under the Public Service Act relevantly in the form to which I have referred. These were, for present purposes, the procedures referred to in s 15(3) as made by the agency head. There is no suggestion that they are in conflict in any way with any directions of the Commissioner. The Commissioner under the Act is the Public Service Commissioner appointed under the Public Service Act. 29 There is also in evidence guidelines created within Centrelink for 'Leading and Managing Suspected Breaches of the Code of Conduct'. In step 4 in that document entitled 'Notifying the employee and conducting the investigation', the following appears: "Advising the employee of the conduct under investigation The employee must be informed of the suspected breach of the Code of Conduct in as much detail as possible. For example, where possible, dates, times, and names should be supplied. Example: 'It is suspected that you used cabcharge for a private purpose.' In the above example, the allegation has been insufficiently detailed. Information that should be added includes the date the suspected breach occurred, the name of the taxi service, details of the trip undertaken and the section of the Code of Conduct the behaviour would breach. Outlined below is an example of how the above example should be notified to the employee. 'It is suspected that on Sunday, 27 June 2004, at or about 3.45 am, you used a Centrelink cabcharge to pay Austis Taxi Service for a journey from the Oasis nightclub at 1 Morsel Street, Canberra City to your residence at 12 Downs Place, Woden. If proven, this would be a breach of section 13(8) of the Public Service Act 1999 which states 'An APS employee must use Commonwealth resources in a proper manner.' In some cases it may not be possible for the decision maker to provide this level of detail to the employee until they have conducted interviews with witnesses, gathered available evidence. In these cases it is sufficient to initially advise the employee of the general nature of the suspected breach of the Code of Conduct, and to then provide specific details prior to, or when providing them with an opportunity to provide comments. Note: Employees have seven days to provide comments, unless a longer period is allowed." 30 It is also appropriate to say at this point that the applicant's submissions are that no details of the suspected breach were ever given and so there has been a failure to comply with the agency procedures and the guidelines created by Centrelink and with the principles of natural justice. 31 I was not taken to the Commissioner's directions. As I said, it was not suggested that the agency procedures or guidelines were relevantly inconsistent with the Commissioner's directions. Agency procedures and guidelines are not codes of law, but they are, in all the circumstances, indicative of what one would expect prima facie to be followed by way of procedural fairness. They are not a law or codification of procedural fairness but, if not followed, would tend to create a presumption or at least a strong question as to whether there had been a denial of procedural fairness. 32 It is necessary now to return to the chronology. On 1 September 2006 the applicant sent in two supplementary rebuttal statements dated 27 August 2006 with annexures. These were documents in total, together with annexures, of over 54 pages. The documents dealt with the substance of the issues which I infer were contained in the evidence that had been provided under Mr Graham's letter of May. No complaint was made in the rebuttal statements that there was any perceived lack of specificity of what was being dealt with or any lack of understand of what was being dealt with. The documents contained references of support from persons including clients with whom the applicant had dealt. 33 On 11 October 2006 there was an oral hearing before the officer investigating the matter. Before the hearing, that is, presented at the hearing, were speaking notes of some seven pages presented by the applicant. The transcript of the hearing itself on 11 October is seven pages long. No complaint appears to have been made at the hearing about any particular lack of understanding of the nature of the complaint being dealt with. In fact, there is still no evidence by the applicant that there is a lack of understanding in her mind as to what she was being asked to deal with. 34 The issue of procedural fairness is ultimately one to be gauged by looking at what has happened and asking whether or not in all the circumstances a person in the position of the subject of the decision can be said to have had a fair opportunity of dealing with the material. It is not to be looked at mechanically or mechanistically. This is not a pleading of a District Court running down a case. This is a case about whether someone has had adequately disclosed to her of the nature of the complaints being made to which she needs to address herself. 35 On the material that I have described up to this point, I do not see a basis revealed to conclude that there has been such a failure to identify the relevant subject to which the applicant needs to address herself. However, it is necessary to continue with the factual material. On 28 November 2006 a draft report of 70 pages was provided to the applicant. It is clear from that document at paragraph 8.2 that there are some nine allegations. 36 As I have said, I have not been provided with the evidence that the applicant was given in May. There is no evidence before me of a satisfactory kind which would allow me to conclude that the draft report went in substance beyond the evidence provided which I infer, for the reasons I have given, gave the applicant sufficient detail of the material to be dealt with for her to understand the matters being put. In any event, the applicant has had the draft report for over three weeks. She has had that time to deal with the draft report and to identify any issues in it which come as some surprise to her. 37 In substance there is no identification of such matters. Submissions were made yesterday by counsel to the effect that there may be matters dealt with in the draft report that go beyond the material previously provided. I am not in a position, for the reasons I have expressed, to conclude that and the matter was not pressed with any detail. The respondent has indicated that it is prepared to provide a further week for the applicant to examine this material. Given the time of year and all that has passed, that is probably, in all the circumstances, a course of action which would ensure the adequacy of time for the applicant to put any further material. 38 However, bearing in mind the submission of counsel and the time of year, I propose to make an order in a moment that would give a slightly more generous period to the applicant because I do not think, ultimately, that there would be any prejudice. The relevant test that I need to address myself to in an injunction of this character was recently made clear by the High Court in the Australian Broadcasting Corporation v O'Neill (2006) 229 ALR 457 and, in particular, at [19] and [65] to [72]. 39 The relevant principles in Australia are those explained in Beecham Group Limited v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 in which the High Court said, that the court addresses itself to two main inquiries and continued: "The first is whether the plaintiff has made out a prima face case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief ... The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted." 40 The High Court in O'Neill's case and, in particularly, Gummow and Hayne JJ in [65] to [72], elucidate what is to be understood by these notions. Applying these principles I do not consider that there has been demonstrated on the evidence taken as a whole that there is a serious question to be tried. On balance, on the material that has been presented, there has been in my view an ample opportunity to deal with what I infer from the material given to me was an adequate detailing in writing of the suspected breach of the Code. 41 As I said earlier, this is not required to be in some formal set of pleading or particulars. I infer from all of the evidence, in particular the manner in which the applicant has been able to deal with the matter without substantive complaint as to what she was dealing with, that the material provided to her in May was the provision in writing of details of the suspected breach of the Code of Conduct. 42 Lest I be wrong about this and bearing in mind the matters which are contained in the affidavit of Mr McArdle as to balance of convenience, what I propose to do is to nevertheless extend for a period of three weeks from today the opportunity of the applicant to deal with the draft report. 43 I have had regard to the question of the balance of convenience set out in the affidavit of Mr McArdle, but given the view that I have taken in relation to the serious question beyond the period of three weeks, which I am prepared to allow, I need not deal with those matters as put forward by him. 44 I should also add that the question of the substantive lack of identification by the applicant on any particular difficulty is one which could have been made during the course of 2006 and does not appear to have been. That might only assist me in concluding as a matter of fact that clause 4 of the procedures has been substantively complied with, but also that as a matter of discretion even if there had been a technical failure that would be a powerful reason for not injuncting the respondent from acting generally until the resolution of the final hearing of this matter. 45 Therefore, subject to hearing the parties in relation to the precise form of the orders which I will do in a moment, if there is anything further to add I make the following orders. If the usual undertaking as to damages is provided, I will order that the respondents not take any further step in the investigation or dealing with the matters contained in the draft report before 15 January 2007. 46 Noting that the applicant through her legal representative proffers the usual undertaking as to damages, I order that the respondents not take any step under the Public Service Act or otherwise to discipline or deal with the applicant by reference to the matters contained in the draft report prior to Monday 15 January 2007. 47 As to the question of costs, they are always difficult in an interlocutory matter because one does not necessarily have the totality of the evidence for final hearing. The respondent seeks costs of the interlocutory application. There is some significant force in that submission given how I have approached the matter. 48 However, notwithstanding that and in particular by reference to the identity of the parties and the subject of the proceeding and the capacity of further evidence potentially, although I do not understand precisely how at the moment, to impinge on a natural justice issue, I am not prepared to other than make an order that the respondents costs be costs in the cause. 49 If the matter remains in the way that it presently appears to me there would appear to be a significant prospect, or the likelihood is overwhelming, that they will get those costs in due course. 50 The question of the applicant's costs of this application are more difficult. I think on balance and given the nature of the underlying relationship and the identity of the parties I should simply order that the costs of each party be costs in the cause. 51 What I would also do by way of programming is to order that the applicant on or before 29 January 2007 file and serve a fully particularised statement of claim setting out her allegations. I direct the parties at a mutually convenient date to approach the duty Registrar in January for the allocation of a docket judge and for the fixing of first directions before a docket judge. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate: Dated: 25 January 2007 Counsel for the Applicant: Mr P Coleman Solicitor for the Applicant: McArdle Legal Counsel for the First & Second Respondent: Mr R Goot SC Solicitor for the First & Second Respondent: Minter Ellison Date of Hearing: 21 December 2006 Date of Judgment: 22 December 2006