Tips Federal Court decision a wake up call for investigators- Part 1 | WISE Workplace

Our September 2009 newsletter featured an article about the importance of applying the principles of procedural fairness during workplace investigations to avoid subsequent legal challenges

Since then, the Federal Court of Australia has delivered a judgment that has broad ramifications for workplace investigators.

The case (Lohse v Arthur) concerns an employee’s challenge to an APS Code of Conduct determination and the subsequent sanction.

The employee contended that the investigation was procedurally flawed for several reasons including a lack of procedural fairness.

Given the importance of this case to workplace investigators and the many issues it raises, our discussion of Lohse v Arthur appears in two parts.

Part One of our discussion provides an overview of the case and its key issues.

Part Two will consider the many lessons to be learned from the Lohse v Arthur to help keep your workplace investigation on track, particularly in relation to properly organising and conducting misconduct investigations and determinations.

Lohse v Arthur - Part One

Part One is an overview of key issues in Lohse v Arthur handed down last October.

The Federal Court had to determine whether the investigator:

  • Complied with internal mandatory investigation procedures; and
  • Applied principles of procedural fairness.

The facts

The key facts in Lohse v Arthur concern the investigation procedures adopted in making a Code of Conduct determination. Some key facts surrounding the alleged misconduct are briefly discussed in reference to the issues decided by the Court.


The investigation arose after a senior employee with the Therapeutic Goods Authority (TGA) and three other colleagues dined together in a hotel while working interstate. Allegedly they all consumed alcohol during the dinner. The colleagues claimed the senior employee was “mucking up” during the dinner.

The alleged misconduct included:

  • unsolicited rubbing of a female colleague’s hand and leg;
  • making inappropriate gestures and comments to other passing females;
  • sending inappropriate and unsolicited text messages from his work mobile phone to his female colleague’s work mobile phone after the dinner.

Five days later, a male colleague at the dinner reported the employee’s alleged misconduct to the relevant unit Executive Manager.

A further nine days later, the female colleague made a written complaint to her HR Manager. In that document, she outlined her version of events during the dinner and the text messages the employee sent her afterwards. She also referred to information about another female work colleague regarding alleged misconduct by the same employee. It was claimed the employee had also sent her work colleague an inappropriate text message and made advances. The employee allegedly contacted the woman’s 14-yr-old daughter on the computer site, facebook. The female colleague at the dinner, however, was unable to provide further details.

During the investigation, the female colleague further alleged that the employee had previously behaved towards her in a manner that would amount to misconduct. For instance, she alleged that the employee had looked at her inappropriately in a sleazy manner and looked at her breasts.

The investigation

Almost a month after the alleged incidents, the TGA selected an external investigator to determine whether the employee breached the APS Code of Conduct.

Three days later, the investigator entered into a Contract For Services with the Commonwealth of Australia, requiring the investigator to comply with all relevant Commonwealth legislation and policies notified to him in writing.

The Terms of Reference provided the scope of the investigation and stated that the investigator:

  • must conduct the investigation in a manner consistent with the ‘Secretary’s Procedures for Determining Breaches of the Code of Conduct;’and
  • ensure that procedural fairness applies and that natural justice is provided’ to the employee.

The investigation was conducted informally.

Almost six weeks after his appointment, the investigator sent the employee a letter outlining the allegations against him. Importantly, the TGA had not previously advised the employee of the suspected breaches of the Code of Conduct.

The employee advised the investigator that he would prefer to provide a written statement, rather than participate in a tape-recorded interview.

A further six weeks later, the investigator sent the employee a further letter containing more detailed particulars of the allegations. Importantly, this letter described the relevant dinner as “a meal and debriefing of the day’s activities”.

The employee provided a written response to the investigator’s initial letter of allegations. However, the employee was not given the opportunity to make an oral statement after providing his written statement. Nor was he able to sit in on any other interviews or cross examine those colleagues who had raised the allegations against him.

The investigator provided a written report to the TGA, which found that on the balance of probabilities, the employee did breach the APS Code of Conduct.

The TGA agreed with and made its determination based on these findings. Accordingly, the TGA reduced the employee’s classification from Executive Level 2 to Executive Level 1.

The employee was given the opportunity to respond to the determination. His request for a copy of all the material (including statements), which the investigator relied upon in reaching his decision, was refused.

He was only provided with a summary of this material and not the underlying statements, transcripts of interviews and other documents relied on by the investigator.

Notwithstanding the employee’s complaints that he had been denied natural justice, the relevant TGA delegate upheld the sanction.

The issues

This article considers two of the main issues arising from the Court decision:

1. Did the investigator comply with the TGA’s mandatory procedures?

The employee contended that the investigator failed to comply with certain steps of the Secretary’s “Procedures for Determining Breaches of the Code of Conduct” namely:

Step 1 which required that the employee be informed of the details of the suspected breach(es) of the Code of Conduct (including any variation of those details).

The Court held that the employee was never informed of the suspected breaches of the Code of Conduct which led to the investigator’s appointment.

These details were contained in the Terms of Reference, which formed part of the investigator’s Contract For Services. The TGA, however, failed to disclose these details to the employee. The Court held that the investigator’s initial letter to the employee was a variation of the details of the suspected breach and it was not sufficient to simply inform the employee of those varied details.

Step 3 which required that the employee be given the opportunity to make an oral statement after he had provided his written statement. The Court held that although the employee was given opportunities to make an oral statement at certain points during the investigation, he was denied the opportunity to make an oral statement after he made his written statement. Even though he had declined to be interviewed on tape, this was offered to him as an alternative to making a written statement. His refusal to partake in a taped interview at this point was not relevant to and had no effect on the obligation to offer him the opportunity to make an oral statement following submission of his written statement.

2. Was the employee afforded procedural fairness?

The employee claimed he was not afforded procedural fairness during the investigation on several grounds as outlined below:

  • The investigator failed to disclose information about additional allegations

During the course of the investigation interviews, the employee’s female colleague made additional allegations dealing with matters beyond those under investigation. The investigator did not provide the employee with any information relating to these other allegations.

The Court noted that procedural fairness is a flexible and practical obligation to adopt fair procedures appropriate to and adapted to the circumstances of the case. It requires that the employee be given ‘a fair go’.

As this case concerned an informal investigation in which the employee was unable to cross examine witnesses or otherwise test the information provided to the investigator by others, the court held that it was essential that he knew what the complainant was putting to the investigator.

The Court held that the test to be applied in determining whether the employee should have the opportunity to deal with additional adverse information, is whether that information is credible, relevant and significant to the determination to be made by the decision-maker, such that there is a real risk of prejudice, albeit subconscious, arising from the decision maker’s possession of that information.

The Court held that it was unnecessary for the investigator to disclose the allegations concerning the other female colleague and her daughter, as it was evident that the witness raising these matters did not actually know any of the details. Given that these further allegations were “devoid of content” it was held that they could not have subconsciously affected the investigator’s decision-making process.

However, it was held that the female witness’s further allegations that the employee had previously looked at her inappropriately in a sleazy manner and had looked at her breasts should have been disclosed to the employee. This was information that could have prejudiced the investigator’s findings in relation to the misconduct allegations, albeit subconsciously. Accordingly, it should have been disclosed to the employee to allow him to respond to it.

  • The investigator failed to make inquiries

The employee claimed that he was not afforded procedural fairness because the investigator failed to make inquiries in relation to a number of matters including: his prior good character; the unreliability of his colleagues’ evidence about the night in question due to the state of their intoxication; that the allegations against him were raised to conceal misconduct on the part of his colleagues; and the fact that two of his colleagues bore him ill will.

The Court held that investigators engaged to determine APS Code of Conduct breaches do not have a general obligation to make inquiries or make out a case for the employee under investigation. In this case, procedural fairness did not require the investigator to make the inquiries contended by the employee as, ‘There was no matter that obviously required further inquiry in relation to a critical fact or facts’.

The Court noted that it was a matter for the employee to provide information to support those matters upon which he relied. This was not a case involving rare and exceptional circumstances, where the decision-maker’s failure to make inquiries would lead to a manifestly unreasonable decision.

  • The investigator did not conduct the investigation with an open mind and was not open to persuasion

The Court held that there was evidence supporting an inference that the investigator did not bring an open mind to determining the matters the subject of the investigation

This was evident by the language used by the investigator. For example:

  • in determining whether the alleged matters occurred whilst the employee was ‘acting in the course of employment’. During interviews with key witnesses, the investigator used the word ‘debriefing’ to describe the purpose of the dinner in question. However this word was not used by any witness in their respective statements or interviews. One witness did assent to the investigator’s suggestion that the dinner could be characterised as a ‘debriefing’. The Court held that the investigator’s characterisation of the dinner even before the employee had been informed of the allegations against him demonstrated prejudgment on a material issue;
  • during interviews with witnesses when the investigator made remarks such as ‘Yes, I can understand that’, ‘I’m not doubting that’, ‘… yes, I agree’

The Court held that even if the evidence was not strong enough to establish that the investigator was actually biased, it was sufficient to ‘draw a conclusion of apprehended bias sufficient to constitute a denial of natural justice…