Federal Court of Australia

Alexiou v Australia and New Zealand Banking Group Limited [2020] FCA 1777

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 30.01(1) of the Federal Court Rules 2011 (Cth), a question in the following terms be heard and determined separately from any other questions arising in the proceedings:

‘On the proper interpretation of s 1644(2) of the Corporations Act 2001 (Cth), do s 1317AD and s 1317AE apply to detrimental conduct that occurred before the amendments came into effect?’

2.    The separate question be answered ‘No’.

3.    The Applicant’s originating application be dismissed insofar as it relates to the claim under Pt 9.4AAA of the Corporations Act 2001 (Cth).

4.    Costs be reserved.

5.    The matter stand over for a further directions hearing on 15 December 2020.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

PERRAM J:

1    These reasons deal with the proper construction of s 1644(2) of the Corporations Act 2001 (Cth) (‘the Act’). The question arises in the following way: the Applicant, Mr Alexiou, is a former employee of the Respondent (‘ANZ’). On 1 July 2020, he filed an originating application against ANZ and a statement of claim. Relevantly the statement of claim alleges that his employment was terminated on 1 September 2015 (§249) for inappropriate use of work email and instant messaging (via the Bloomberg Chat Platform) (§250). Part of his case turns on the contention that he was dismissed because he had made a number of disclosures to various persons in management positions within ANZ (§294ff). The disclosures all predated his dismissal. The formal allegation Mr Alexiou makes is that he is entitled to compensation under s 1317AE(1) of the Act. This allegation appears at §331. Section 1317AE(1) is part of Part 9.4AAA which establishes a regime providing for the protection of whistleblowers. One of the ways it does this is by conferring upon them a civil remedy for compensation in the event that they suffer detriment as a result of their whistleblowing.

2    So far as is relevant, Part 9.4AAA came into its current form on 1 July 2019 upon the commencement of the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth). Its previous form was less fulsome in its protection and the new form reflects a legislative ambition to give it more teeth: see, eg Revised Explanatory Memorandum, Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 (Cth) (‘Revised Explanatory Memorandum’) [2.12]. It is not in dispute that Mr Alexiou relies upon the amended form of Part 9.4AAA and not its less ferocious forbear. The issue which divides the parties is whether the new form of Part 9.4AAA can apply to his dismissal from employment on 1 September 2015.

3    Mr Alexiou submits that it can because of s 1644(2) of the Act. That provision is a transitional provision which took effect at the same time as the amended form of Part 9.4AAA. Section 1644 relevantly provides:

1644 Application of amendments

(1)    The amendments made by Part 1 of Schedule 1 to the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 apply in relation to disclosures that:

(a)    are made at or after the time that Part commences (the commencement time); and

(b)    relate to matters that occur or occurred before, at or after the commencement time.

(2)    Without limiting subsection (1), sections 1317AC, 1317AD and 1317AE, and any other provision of Part 9.4AAA to the extent that it relates to those sections, as in force immediately after the commencement time, also apply at and after the commencement time in relation to a disclosure that:

(a)    was made before the commencement time; and

(b)     would be a disclosure protected by Part 9.4AAA, if the amendments made by Part 1 of Schedule 1 to the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 had been in force at the time the disclosure was made.

…

4    Mr Alexiou submits that the various disclosures he alleges he made were all made before the ‘commencement time’ (ie 1 July 2019) which satisfied subs (2)(a). He also alleges that the effect of s 1644(2) taken as a whole is to give effect to the new form of Part 9.4AAA, comprising ss 1317AC, 1317AD and 1317AE, as if they had applied prior to 1 July 2019. ANZ denies this is how s 1644(2) operates.

5    The parties agreed that the appropriate way for this issue to be resolved was by the stating of a separate question in the following terms:

On the proper interpretation of s 1644(2) of the Corporations Act 2001 (Cth), do ss 1317AD and 1317AE apply to detrimental conduct that occurred before the amendments came into effect?

6    To make that a little clearer, it is useful to note two matters. First, Mr Alexiou’s dismissal from office is alleged to be ‘detrimental conduct’; secondly, s 1317AD and s 1317AE are essentially a single provision, namely, a provision which entitles a person who has made a protected disclosure to seek a civil remedy when detrimental conduct has occurred. Thus, the separate question asks, relevantly for this case, whether Mr Alexiou’s dismissal from employment can be detrimental conduct to which s 1317AD and s 1317AE can apply.

7    Returning to s 1644(2), it will be seen that it explicitly applies not only s 1317AD and s 1317AE (the civil remedy provisions) but also s 1317AC. Section 1317AC, by operation of s 1311, makes it a crime for a person to cause a whistleblower detriment if the person, relevantly, believes that the whistleblower has made a disclosure ‘that qualifies for protection’: s 1317AC(1)(c). The same requirement appears in the civil remedy provisions s 1317AD and s 1317AE, that is to say, a disclosure to which they apply must be a disclosure ‘that qualifies for protection’: s 1317AD(1)(b).

8    I do not accept that s 1644(2) has the effect for which Mr Alexiou contends. Its effect is relatively straightforward. It is enlivened when the pre-conditions in subs (a) and subs (b) are met. This will occur when a disclosure was made before 1 July 2019 and where the implicit hypothetical question posed by subs (b) is answered ‘yes’. When those two conditions are met it then applies the more muscular form of Part 9.4AAA, comprising the new ss 1317AC, 1317AD and 1317AE, to that disclosure ‘at and after the commencement time’, ie from 1 July 2019. It is clear that on Mr Alexiou’s pleaded case, he would satisfy both subs (a) and subs (b). The relevant disclosures were all made prior to 1 July 2019 and, if the new form of Part 9.4AAA had applied at the time the disclosures were made (which it did not), then they would each have been ‘a disclosure protected by Part 9.4AAA’. Section 1644(2) would therefore be enlivened. Once enlivened, however, it simply means that the civil remedy provisions (s 1317AD and s 1317AE) apply at and from 1 July 2019 to those disclosures.

9    Section 1317AE contains nothing which illuminates the present debate and attention can therefore be confined s 1317AD(1) itself:

1317AD Compensation and other remedies—circumstances in which an order may be made

(1)    A court may make an order under section 1317AE in relation to a person (the first person) if:

(a)    the first person engages in conduct (detrimental conduct) that:

(i)    causes any detriment to another person (the second person); or

(ii)     constitutes the making of a threat to cause any such detriment to another person (the second person); and

(b)    when the first person engages in the detrimental conduct, the first person believes or suspects that the second person or any other person made, may have made, proposes to make or could make a disclosure that qualifies for protection under this Part; and

(c)    the belief or suspicion referred to in paragraph (b) is the reason, or part of the reason, for the detrimental conduct.

10    The effect of s 1644(2) on this provision is that where it refers to a disclosure this can include a disclosure which was made before 1 July 2019. However, I am unable to see how the events referred to in s 1317AD(1)(a) can be read as applying to detrimental conduct which occurred before 1 July 2019. In order for it to do so, it would be necessary to read s 1317AD(1) as applying not only to disclosures which were made before 1 July 2019 (as s 1644(2) provides) but as also allowing a civil remedy for particular conduct which occurred before that date. But there is, subject to another aspect of Mr Alexiou’s argument to which I shall shortly turn, no corresponding transitional provision which applies the new ss 1317AC, 1317AD and 1317AE to detrimental conduct which occurred before 1 July 2019. Section 1317AD(1) is prospective in operation on and from 1 July 2019 except to the extent that s 1644(2) gives it additional effect in relation to disclosures made before that date.

11    Mr Alexiou sought to evade the effect of this argument by submitting that where s 1644(2)(b) referred to ‘a disclosure protected by Part 9.4AAA’ this meant he must have had a civil remedy under the Part so that s 1317AD(1) applied. I am content to assume this is correct. However, it does not solve the problem which he faces. Section 1644(2)(b) is not a provision which applies s 1317AD(1) retrospectively. Rather it is one of two preconditions to the application of s 1644(2). The precondition in s 1644(2)(a) turns on a historical fact: was the disclosure made before 1 July 2019? The precondition in s 1644(2)(b) turns on a hypothetical inquiry: if Part 9.4AAA had been in force when the pre-1 July 2019 disclosure was made (which it was not) then would the disclosure have been a protected one? This is just as much an inquiry as the historical inquiry in s 1644(2)(a) albeit it occurs in the context of a hypothetical state of affairs. So viewed, the provision asks a question but does no more. In particular, it does not make the whole of Part 9.4AAA apply with retrospective effect. The reason for this is that it does not say that.

12    Mr Walker SC, who appeared with Mr Kidd SC, Ms Williams and Mr Rogan for Mr Alexiou, sought to contend that when read as a whole it was clear that s 1644(2) did apply Part 9.4AAA retrospectively although he refused to be drawn on whether this occurred because of the reference to Part 9.4AAA in the body of the provision or the reference to it in subs (2)(b). However, there is no escaping the text and it is clear that the two references do entirely different work. The main part of the provision applies Part 9.4AAA prospectively from 1 July 2019 to disclosures which were made before that time. By contrast, subs (2)(b) does not apply anything; it is a question. One cannot, by seeking to elide the differences in their operation, get from them an operation which neither of them can have: s 1644(2) is not more than the sum of its parts.

13    Mr Sheahan QC, who appeared with Mr Shariff SC and Mr Pietriche for ANZ, submitted that their construction of s 1644(2) was required by the presumption that legislation is not usually construed as retrospective unless otherwise specified and then only to the extent clearly expressed: R S Howard & Sons Ltd v Brunton (1916) 21 CLR 366 at 371 per Griffith CJ. I do not think s 1644(2) gives rise to very much need to apply that principle. Section 1644(2) does have a limited retrospective effect. It applies, relevantly for this case, s 1317AD(1) to disclosures which occurred before 1 July 2019. As a matter of ordinary language it is not susceptible to a construction which makes it apply to conduct prior to that date. Whilst I would not say the principle does not apply, in reality it only serves to demonstrate that the ordinary language here used observes the convention upon which the interpretative principle rests.

14    Mr Sheahan also drew attention to the criminal provision, s 1317AC. He submitted that if Mr Alexiou were correct in his construction, then s 1317AC would retroactively make past conduct which had not been criminal now criminal. Such an outcome would require an even stronger clarity of expression which was said to be wholly absent from s 1644(2): see Director of Public Prosecutions (Cth) v Keating [2013] HCA 20; 248 CLR 459 at 479 [48] per French CJ, Hayne, Crennan, Kiefel, Bell and Keane JJ. It is difficult to assess this submission when it seems clear that the provision does not purport to make Part 9.4AAA apply to any conduct before 1 July 2019. As with the weaker form of the presumption, it is probably best simply to say that the principle confirms what it is that s 1644(2) seems clearly to say.

15    Mr Walker sought to parry this last point by suggesting that it might be that s 1644(2) operated differently in relation to the civil remedy provisions (s 1317AD and s 1317AE) than it did in relation to the criminal provision, s 1317AC. If the principle regarding the retrospective operation of legislation had any real work to do in this case, I would not have been disposed to accept his submission. Giving s 1644(2) an operation whereby s 1317AD and s 1317AE could apply to detrimental conduct prior to 1 July 2019, but where s 1317AC could not, would require interpretative gymnastics which lie beyond my abilities.

16    I am also unpersuaded by Mr Alexiou’s written submission that ANZ’s construction of s 1644(2) would give rise to irrationalities. The first example of these concerned the situation where a disclosure had been made and an employee victimised as a result, both prior to 1 July 2019 but where the requisite detriment did not ‘crystallise’ until after 1 July 2019. An example was proffered in which, as a result of a disclosure made before 1 July 2019, an in-principle decision was made not to pay the employee a bonus in circumstances where the bonus was not due to be awarded until after 1 July 2019. Mr Alexiou submitted that in such a case, on ANZ’s construction, no remedy would be available. I do not agree. At the time the in-principle decision became an actual decision there would be a detriment. By hypothesis, this would be after 1 July 2019 and on ANZ’s construction a remedy would exist under s 1317AD(1). If the facts were altered such that the actual decision occurred before 1 July 2019, then the victimisation would be governed by the former version of Part 9.4AAA. Neither scenario reveals a legislative gap where no remedy would be available to victimised whistleblowers.

17    The second example was that the effect of ANZ’s submission was to make the availability of relief wholly contingent on the timing of the employer’s victimising conduct. Thus an employee who made a disclosure on 1 January 2019 and was victimised on 30 June 2019 would have no remedy under the new regime but the same employee would have a remedy if the victimisation occurred on 1 July 2019. I do not think this is an irrational outcome. Mr Alexiou further submitted that this would reward those who rushed to victimise their employees before 1 July 2019, by potentially relieving them of liability. However, such a point may be made about any legislative cut-off date.

18    The third example concerned the situation where victimising conduct was engaged in prior to 1 July 2019 in anticipation of a disclosure which in fact occurred only after 1 July 2019. (It is helpful to note that anticipatory conduct of this kind is caught by the current s 1317AD(1)(b).) This may well be so, however, it has nothing to do with the construction of s 1644(2). On either party’s construction, s 1644(2) is concerned only with disclosures occurring before 1 July 2019. The irrationality, if sound, would pass wide of s 1644(2).

19    None of these examples, therefore, provides any reason for departing from the construction of s 1644(2) which I favour. Even if I had accepted that these were absurd results, it would not have assisted Mr Alexiou. I am unable to formulate a construction of the actual words of s 1644(2) which could accommodate the position for which he contends.

20    Finally, the extrinsic materials (or ‘extraneous materials’ as Mr Walker perceptively called them in a momentary lapse) do not assist Mr Alexiou. The amendments were introduced by the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 (Cth). The Revised Explanatory Memorandum accompanying it said this at [2.162]:

The amendments will also apply to victimisation of whistleblowers after commencement, and to a whistleblower’s right to compensation and other remedies, in relation to disclosures that have been made prior to this date.

21    This appears to reflect the construction for which ANZ contends. Mr Alexiou drew attention to another portion of the Revised Explanatory Memorandum at p 3 where in a section dealing with ‘General outline and financial impact’ this was said about the ‘Date of effect’:

Date of effect: The amendments also apply to conduct in breach of sections 1317AC, 1317AD and 1317AE, and any other provision of Part 9.4AAA to the extent that it relates to those sections, as in force immediately after the commencement time for a disclosure that:

(a) was made before the commencement time; and

(b) would be a disclosure protected by Part 9.4AAA, if the amendments made by Part 1 of Schedule 1 to the Bill had been in force at the time the disclosure was made.

22    This does not involve any more than a paraphrasing of s 1644(2). It does not advance Mr Alexiou’s argument. He also relied on a passage at [1.10] under the heading ‘Proposals for change’:

In 2014, the Senate Economics References Committee inquiry into the performance of ASIC recommended a review of Australia’s corporate whistleblower framework to bring it closer to Australia’s public sector whistleblower framework under the PID Act, and to introduce a number of amendments to the Corporations Act focusing on:

•    extending the definition of whistleblowers by replicating the PID Act;

•    strengthening protections by expanding the scope of disclosures and victimisation provisions to match the level of protections provided by the PID Act; and

•    including provisions in the Corporations Act that would ensure ASIC and APRA cannot be required to reveal a whistleblower’s identity without a court or tribunal order.

23    Attention was drawn to the second bullet point. However, this is couched at such a level of generality as to throw no useful light on s 1644(2).

24    In those circumstances, I conclude that s 1644(2) does not have the effect of applying s 1317AD or s 1317AE to detrimental conduct occurring before 1 July 2019. Consequently the separate question should be answered ‘No’. The parties agreed that if the question were answered in that way then Mr Alexiou’s proceeding should be dismissed insofar as it related to his claim under Part 9.4AAA of the Act. They also agreed that the question of costs should be reserved. I therefore order that:

(1)    Pursuant to r 30.01(1) of the Federal Court Rules 2011 (Cth), a question in the following terms be heard and determined separately from any other questions arising in the proceedings:

‘On the proper interpretation of s 1644(2) of the Corporations Act 2001 (Cth), do s 1317AD and s 1317AE apply to detrimental conduct that occurred before the amendments came into effect?’

(2)    The separate question be answered ‘No’.

(3)    The Applicant’s originating application be dismissed insofar as it relates to the claim under Pt 9.4AAA of the Corporations Act 2001 (Cth).

(4)    Costs be reserved.

(5)    The matter stand over for a further directions hearing on 15 December 2020.

Associate:

Dated:    11 December 2020