Summary
- Important lessons are emerging from the first cases coming before the Courts to test Australia’s whistleblower protection laws. These cases show the contrasting outcomes that can arise under current laws, across both the private and public sector. They also underscore the caution and care that organisations and whistleblowers alike must adopt if they are to successfully navigate these laws.
- ASIC v Terracom Limited & Ors highlights the liability risk and financial and reputational consequences that corporate entities, directors and officers can face where they fail to diligently comply with the strict whistleblower protections. This extends to the need to prevent all whistleblower detriment, in any form.
- Boyle v CDPP highlights that public sector whistleblowers may lack protection for taking preliminary steps, such as collecting evidence, prior to making a disclosure. A lack of immunity can have serious consequences. ATO whistleblower Richard Boyle faces criminal charges of unlawfully accessing and recording information. This first instance decision on the scope of the public sector whistleblower immunity represents the current state of Australian law, subject to any legislative change or successful appeal (Boyle’s appeal is set to be heard on 9 August 2023).
- The crucial importance of clear, compliant and effective whistleblower policies and investigation and handling frameworks cannot be overstated. These measures promote and protect the interests of both employers and their employees, as well as organisational safety, culture, transparency, and accountability. They will also help to avoid the difficult scenarios shown by the recent case examples.
Introduction
Two sets of proceedings, one concerning private sector whistleblowing and the other concerning public sector whistleblowing, mark the first time in which Australia’s whistleblower protection laws have come before the Courts for scrutiny.
Whistleblowers play a significant role in promoting accountability, transparency and lawful behaviour. Their importance in bringing to light misconduct is increasingly recognised across workplaces, board rooms and government bodies. However, as the proceedings involving Terracom Limited and Richard Boyle show, these laws can be used to strikingly different effect, with serious, and contrasting, ramifications for the parties involved. This raises questions as to whether these laws can be considered fair, just and effective across all sectors. It also gives rise to several important lessons.
Australia’s whistleblower laws: private sector vs public sector
Whistleblower protections are contained across a range of different statutory regimes:
Private sector whistleblower protections are predominantly set out in Part 9.4AAA of the Corporations Act 2001 (Cth) (Corporations Act), as well as the Taxation Administration Act 1953 (Cth) and sector-specific legislation.
Public sector whistleblower protections are set out in state and federal public interest disclosure legislation. Public officials who blow the whistle on Commonwealth public sector wrongdoing or maladministration may seek to avail themselves of protections under the Public Interest Disclosure Act 2013 (Cth) (PID Act).
ASIC has been active in publishing guidance for individuals and companies on their expanded rights and obligations under the Corporations Act, since the significant enhancement of Australia’s corporate whistleblower regime in 2019 (see our updates here and here)1
The PID Act has been beset by criticism for its perceived shortcomings, together with calls for better guidance and functionality. Only two years after its commencement, the Moss Review made 33 recommendations for its improvement.2 The vast majority of those recommendations were accepted by the Australian Government, and were recently implemented, in part, though further reforms are still in train.
Two test cases
The subtleties of Australia’s whistleblower laws have been brought into stark relief by two recent cases.
ASIC’s test case to enforce private sector whistleblower protections
In ASIC v Terracom Limited & Ors (NSD176/2023), ASIC commenced its first ever set of proceedings to uphold the whistleblower protection laws prescribed by the Corporations Act (see further details here). In bringing these civil proceedings against a corporation and certain of its directors and officers, the corporate regulator has:
- signalled a strong enforcement stance against companies who fail to comply with their whistleblower protection obligations – particularly, the strict prohibition on conduct causing any detriment to a whistleblower; and
- adopted a broad view of conduct amounting to ‘detriment’.
These proceedings concern a whistleblower disclosure made by Justin Williams asserting that Terracom, his former employer, had falsified its coal quality results. In Federal Court of Australia proceedings, ASIC alleges that Terracom then engaged in conduct causing Mr Williams detriment, in breach of the non-victimisation obligations under s 1317AC of the Corporations Act. ASIC’s case is that the conduct causing this detriment consisted of announcements made by Terracom to the ASX, and in the media, refuting Mr Williams’ assertions. Those announcements are said to have harmed and caused detriment to Mr Williams’ reputation, earning capacity and psychological and emotional state.
Four of Terracom’s current and former directors and officers are also named as defendants. They are alleged to have been involved in the making of the announcements, and to have breached their duties to exercise reasonable care and skill by failing to take reasonable steps upon receiving an independent investigation report.
ASIC is seeking declarations of contravention, pecuniary penalties, disqualification orders and costs. In the context of these enforcement proceedings, ASIC Deputy Chair Sarah Court has indicated, “We take any indication that companies are engaging in conduct that harms or deters whistleblowers very seriously.” 3
Boyle’s test case to enforce public sector whistleblower protections
By contrast, the circumstances faced by former ATO employee and whistleblower, Richard Boyle, reflect:
- a strict approach by the Commonwealth prosecutor against the whistleblower, for carrying out certain preliminary acts at his workplace in advance of making a public interest disclosure asserting ATO wrongdoing; and
- the whistleblower’s inability to enforce the public sector whistleblower protections that he believed would, or should, protect him – with the District Court of South Australia (at first instance) determining that the immunity relied upon is unavailable.
The decision of Boyle v Commonwealth Director of Public Prosecutions [2023] SADC 27 is the first case of its kind to reach judgment. It raises the question of the extent to which Australian law should protect those breaking the law whilst speaking up on misconduct, and represents a test case on the precise scope of whistleblower immunities available under the PID Act.
Mr Boyle, then a debt collection officer at the ATO’s Adelaide office, had made a whistleblower disclosure (internally, and later publicly) asserting that his employer had engaged in aggressive and unethical debt recovery tactics.
Subsequent inquiries found many of Mr Boyle’s assertions to be truthful.
In preparing to make his disclosure through the ATO’s internal whistleblower channel, he used his iPhone to secretly photograph and record evidence from his workplace. He did not specifically refer to that evidence in his disclosure. Mr Boyle was subsequently charged with 24 (reduced from 66) counts of criminal conduct, including photographing taxpayer information and using a listening device to covertly record private conversations with his colleagues. He pleaded not guilty to all charges.
Attempting to block the prosecution of the criminal charges laid against him, Mr Boyle commenced civil proceedings seeking to invoke whistleblower protections under the PID Act. He sought declarations that he was immune from any liability or prosecution by virtue of s 10(1)(a) of the PID Act.
Section 10(1)(a) provides that if an individual makes a public interest disclosure, “the individual is not subject to any civil, criminal or administrative liability (including disciplinary action) for making the public disclosure” (emphasis added). The District Court was tasked with determining whether s 10(1)(a) should be construed as protecting acts undertaken prior to making a disclosure, such as gathering evidence to formulate and substantiate complaints of misconduct. Mr Boyle submitted that the word ‘making’ in s 10(1)(a) should be interpreted liberally with the widest possible scope.4 He contended that public officials who first record information to formulate their disclosure, or collect evidence in support of it, should be protected for those acts, where they reasonably form part of the disclosure-making process.5
In a judgment which was initially suppressed and which has since been released (with certain redactions), Justice Kudelka found that the immunity provided by s 10(1)(a) protects the act of making a whistleblower disclosure, but not preparatory acts. Her Honour noted that disclosures in the public interest were an “important but confined role” and that “[i]f Parliament intended that a public official may engage in criminal conduct when preparing a public interest disclosure (perhaps on the basis that it is a lesser evil for a greater good), then a legislative provision which clearly delineated the boundaries of the conduct would be expected”.6
The effect of this finding is that a whistleblower who breaches laws, regulations, rules or policies in the course of gathering evidence, when preparing to make a disclosure, may face liability for those breaches.
Where to from here?
Those who either seek to make a whistleblower disclosure, or who receive, handle or investigate such disclosures, should tread carefully in this developing area as the Courts begin to interpret the meaning and scope of Australia’s whistleblower protection laws.
While the Terracom and Boyle cases each involve discrete factual circumstances and separate legislative regimes, it is noted that the whistleblower immunity in s 10(1)(a) of the PID Act is near identical to the whistleblower immunity in s 1317AB(1)(a) of the Corporations Act. Subject to any successful appeal or higher judicial consideration, Justice Kudelka’s finding on the limited scope of the public sector immunity provision is likely to be persuasive in any future ruling on the private sector equivalent.
Meanwhile, Mr Boyle’s appeal of Justice Kudelka’s decision has been listed for hearing on 9 August 2023. The Human Rights Law Centre has been granted leave to intervene in the appeal as an interested party. Subject to the outcome of that appeal, Mr Boyle faces a criminal trial, which was listed for October 2023. In similar circumstances, whistleblower David McBride, a former Australian Defence Force lawyer who made allegations of Australian war crimes in Afghanistan, is set to face a criminal trial in November 2023 for his role in leaking confidential government information. The Attorney-General has declined to step in to discontinue either prosecution. In each case, Messrs Boyle and McBride face up to lifetime imprisonment if the charges against them are made out.
The Boyle case, and the considerations of justice and public interest that it entails, are all the more fraught against a backdrop of impending legislative reform. Following its acknowledgment that the PID Act is not fit for purpose, the Australian Government has pledged to, in 2023, implement two rounds of reform to improve and re-write the Act.7 Nevertheless, there is no indication that Mr Boyle is to benefit from these changes (even if they were to be retrospective). The PID Act was subject to a first round of amendments which came into effect in June and July 2023.8 Those amendments were designed to deliver immediate improvements to the operation of the Act, ahead of broader reforms to comprehensively redraft it, address its underlying complexity and provide more effective protections to public sector whistleblowers.9 To date, however, no amendments have been made, or foreshadowed, to alter the scope of the immunity in s 10(1)(a) that Mr Boyle seeks to invoke.
The current Australian position can be contrasted with more generous laws elsewhere. In the European Union, for example, reporting persons can enjoy immunity from liability when acquiring or accessing information on any breaches of Union law.10
The Australian Government has indicated that it will undertake consultation on the concept of an independent Whistleblower Protection Authority or Commissioner, in line with previous recommendations for both the public and private sectors.11 Such an authority may, for example, oversee whistleblowing reports and undertake investigations. This would reduce the likelihood of public officials and other individuals taking evidence-gathering into their own hands, thereby risking criminal sanctions, and encourage whistleblowers to come forward without fear of extreme legal ramifications.
Key takeaways
Clear lessons emerge from these cases:
- While reports of misconduct are to be encouraged, blowing the whistle or handling a whistleblower disclosure in a manner which runs afoul of the law is not.
- All those involved in the process (whistleblowers, organisations and their directors and officers) must pay careful heed to the legislative context in which they are operating. Those who gather evidence unlawfully may not be protected for doing so. When a disclosure is made, particular caution is needed to avoid any form of detriment to the whistleblower, or any breaches of strict confidentiality protections. Given the subtleties and complexities of the statutory regimes, and their emerging interpretation by the Courts, parties should take legal advice as required.
- The importance of easily understood, compliant and effective whistleblowing policies and investigation, handling and oversight frameworks cannot be overstated. A successfully designed and implemented whistleblower program is an opportunity to enhance culture, safety and performance, bring to light concerning risks or trends within an organisation, and avoid harrowing personal, organisational, financial and reputational outcomes, including the potential for civil and criminal liability for those involved.
1 Pursuant to the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth).
2 Phillip Moss AM, Review of the Public Interest Disclosure Act 2013 (Report, 15 July 2016) 13 - 16.
3 ASIC, ‘ASIC sues TerraCom Limited, its managing director, chief commercial officer, former Chair and a former director’ (Media Release 23-045MR, 1 March 2023).
4 Boyle v Commonwealth Director of Public Prosecutions [2023] SADC 27, [215].
5 Boyle v Commonwealth Director of Public Prosecutions [2023] SADC 27, [197].
6 Boyle v Commonwealth Director of Public Prosecutions [2023] SADC 27, [223], [231].
7 Department of Parliamentary Services (Cth), Bills Digest (Digest No 58 of 2022-23, 13 February 2023) 24.
8 The Public Interest Disclosure Amendment (Review) Act 2023 (Cth) was assented to on 19 J8une 2023 and its provisions variously commenced on 19 June and 1 July 2023.
9 Replacement Explanatory Memorandum, Public Interest Disclosure Amendment (Review) Bill 2022, 1.6
10 Parliament and Council Directive EU/2019/1937 of 23 October 2019 on the protection of persons who report breaches of Union Law [2019] OJ L 305/18, art 92.
11 ‘Public sector whistleblowing reforms are on the way’, Australian Public Service Academy (Web Page, 31 March 2023) https://www.apsacademy.gov.au/news-events/news/public-sector-whistleblo…; Parliamentary Joint Committee on Corporations and Financial Services, Whistleblower Protections (September 2017), Chapter 12.