Chicken or egg? Whistleblower protections and detrimental conduct prior to 1 July 2019

In December 2020, the Federal Court of Australia handed down, Alexiou v Australia and New Zealand Banking Group Limited [2020] FCA 1777, which was the first decision to consider the whistleblower provisions under Part 9.4AAA of the Corporations Act 2001 (Cth) (Corps Act).

Part 9.4AAA of the Corps Act came into operation on 1 July 2019[1] and introduced greater protections for whistleblowers and broadened the ambit of the national whistleblower regime.

The ‘new’ whistleblower laws expanded the:

  • whistleblower definition;
  • private sector coverage;
  • definition of what constitutes a protected disclosure;
  • protections available to eligible whistleblowers; and
  • penalty provisions for breaches.

What did this case consider?

The Federal Court was required to determine whether detrimental conduct that occurred prior to the amendments commencing on 1 July 2019, could be subject to the civil penalty provisions of ss 1317AD and 1317AE of the Corps Act. These provisions entitle a person who has made a protected disclosure to seek a civil remedy when ‘detrimental conduct’ has occurred.

The Applicant, Mr Alexiou, relied on s 1644(2) of the Corps Act which states that Part 9.4AAA applies to a disclosure that:

  • was made before the commencement time; and
  • would have been a disclosure protected by Part 9.4AAA, if the amendments made had been in force at the time the disclosure was made.

The ‘detrimental conduct’ occurred on 1 September 2015 when the Applicant’s employment was terminated. The Applicant asserted that the whistleblower disclosures he made during his employment (all prior to 1 July 2019), could be considered for the purposes of ss 1317AD and 1317AE, allowing him to pursue the whistleblower civil remedies in relation to the termination of his employment.

What did the Court decide?

The Federal Court stated that if the pre-conditions in s 1644(2)(a) and (b) are met then the disclosure is protected by Part 9.4AAA. Once enlivened, it simply means that the civil remedy provisions in ss 1317AD and 1317AE apply ‘to and from’ 1 July 2019 to those protected disclosures. However, there are no provisions in the Corps Act which apply the civil penalty provisions to ‘detrimental conduct’ that occurred prior to 1 July 2019.

The Federal Court found that because the Applicant’s dismissal took place in 2015, the civil penalty provisions could not apply because the detrimental conduct took place before 1 July 2019. This was so, even though the disclosures made prior to 1 July 2019 were protected by Part 9.4AAA.

Key takeaways

So, which came first, the chicken or the egg?

In a nutshell (or eggshell as it were), if a disclosure is made prior to 1 July 2019 that qualifies as a protected disclosure, a civil remedy can only be sought by the person if they suffered the detrimental conduct, the result of that protected disclosure, on or after 1 July 2019.

The key takeaways from this decision are:

  • if the person suffered the detrimental conduct prior to 1 July 2019, then regardless of whether they made protected disclosures pre or post-1 July 2019, they cannot seek a civil remedy for those protected disclosures;
  • if the person suffered the detrimental conduct on or after 1 July 2019, and if the disclosures are protected, whether made pre or post-1 July 2019, then the person can seek a civil remedy for those protected disclosures.

The decision dealt with a discrete question and did not consider the application of the whistleblower provisions more broadly. There are currently cases before the Federal Courts and therefore, the enigma that is the national whistleblower regime, will continue to develop in 2021.

Alice DeBoos
Managing Partner
+61 2 9169 8444
[email protected]

Shelley Williams
Senior Associate
+61 9169 8412
[email protected]

[1] Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth).