Public Sector Informant: Bizarre case highlights need for government agencies to be model litigants

Nonetheless, public sector employment has several distinguishing features. Public sector employment at the federal level, for example, has a statutory overlay in the Public Service Act 1999. We accept - and enforce via statute - higher obligations on public servants than private sector employees. The application of the APS Code of Conduct "at all times" would be unlawful if implemented by a private employer. Yet this distinction cuts both ways. In its conduct towards employees, and in the enforcement of certain obligations, the government is not just any employer.

As much is instructively underscored by a recent case from the NSW Supreme Court, Wood v Secretary of the Department of Transport. The Wood case provides a helpful opportunity for exploring several issues relating to confidentiality in public sector employment and the obligation of agencies to be model litigants in employment disputes, which we will consider in turn. While there is an obvious overlap between confidentiality and whistleblowing provisions, for example in the Public Interest Disclosure Act 2013, that will not be a focus of this column (it is a topic we have written on before).

Employees owe a contractual and equitable duty of confidence to their employer in relation to confidential information gained during the course of the employment relationship. In many employment contracts, the contractual duty will be explicit. Even when it is not, it will ordinarily be implied. Additionally, the Public Service Act provides a range of statutory confidentiality obligations. For example, under section 13(10) in the APS Code of Conduct, public servants 'must not improperly use inside information' to gain a personal advantage or cause detriment to the agency.

In the present case, Thomas Wood owed confidentiality obligations to his employer Transport NSW, a state government agency. In June 2020, Transport NSW summarily dismissed Wood, a forensics manager, for breaching these obligations. The unfortunate context of the case involved a murder investigation into an ex-Transport NSW employee. After seeing the news on television, Wood, who had conducted two workplace investigations into the accused (including into allegations of sexual harassment and assault), alerted police via Crime Stoppers. He then advised his manager, and suggested steps Transport NSW could take to assist the police.

Instead, the agency terminated his employment. Wood sued. As the trial judge, Acting Justice Monika Schmidt, noted in her introductory remarks: "Mr Wood's dismissal for assisting police in a murder prosecution as he did, seems startling."

In dismissing Wood, Transport NSW had alleged Wood's act of contacting Crime Stoppers and providing information was contrary to his confidentiality obligations. During the hearing, perhaps realising how untenable that position was, it argued it was not the disclosure to Crime Stoppers that was the vice, but the failure to advise Transport NSW first, pursuant to a notification requirement in the confidentiality clause in his contract. On Transport NSW's case, this failure to adhere to an administrative obligation was such serious misconduct it justified summary dismissal.

Acting Justice Schmidt rejected this position. Referring to provisions in the Crimes Act that require someone with information relevant to a serious crime to report it, her Honour held that "an employer and employee cannot contract out of [these] provisions ... Nor can a contractual confidentiality obligation lawfully prevent the provision of information about offending which it might capture, to police. If it purports to do so, the contract will be contrary to public policy and either read down, or not enforced." Ultimately, her Honour found Transport NSW had acted unlawfully, and awarded damages to Wood of about a year's salary.

A related issue, which was raised but not ultimately addressed in Wood, is whether confidentiality can be breached by disclosure to another government agency. The Commonwealth of Australia is an indivisible legal entity - separate federal agencies do not have their own legal personhood. The consequence of this for confidentiality obligations has not been fully explored by courts. For example, say a public servant signs a settlement deed, containing a confidentiality clause, with a department as part of the conclusion of their employment. They might then provide the deed to Comcare as part of a workers' compensation claim. It is our view such an action could not constitute a breach of the confidentiality clause, given in law the agency and Comcare are the same legal entity.

Finally, Wood is a timely reminder government agencies must be model litigants - in employment disputes and other interactions with the court system. Acting Justice Schmidt was critical of Transport NSW's conduct in the case, particularly its failure to promptly disclose Wood's position had been abolished (which was relevant to the proceedings). In relation to the responses of a Transport NSW witness, Schmidt noted "in the circumstances his answer was not as frank as it should have been". Her Honour proceeded to outline the history and development of model litigant guidelines, noting they preclude "the conduct of litigation by ambush or surprise". Schmidt concluded: "It is difficult to see that these obligations have been adhered to by Transport NSW."

These obligations are owed by federal agencies and their lawyers, too. Model litigant requirements have their basis in the common law - over a century ago, High Court Chief Justice Samuel Griffith highlighted "the old-fashioned traditional, and almost instinctive, standard of fair play to be observed by the Crown in dealing with subjects". Today, they find content in the Legal Services Direction 2017. In employment disputes, where the imbalance of power, resources and legal expertise is often acute, the model litigant guidelines take on particular importance.

It is fair to say Wood is a bizarre case. It is remarkable Transport NSW acted as they did - terminating someone for cooperating with police in a murder investigation. The agency has been criticised by the NSW Supreme Court for its conduct - in our view, quite rightly. But from every bizarre case comes useful lessons, which we have sought to outline. We can only hope a federal agency never seeks to follow the same misguided path.