PART 5: HEALTH SERVICES UNION

CHAPTER 5.1

THE PETER MAC SETTLEMENT

Subject Paragraph

A – OUTLINE 1

B – RESOLUTION OF THE INDUSTRIAL DISPUTE RELATING TO UNDERPAYMENT

6

HSU and Peter Mac enter into a Memorandum of

Understanding

6

HSU seeks ‘compensation’ from Peter Mac 7

Peter Mac employees told about payment to HSU? 10

HSU and Peter Mac enter into a Deed of Release 12

HSU itemised statement of expenses 16

Peter Mac pays HSU $250,000 49

C – LEGAL ISSUES ARISING FROM THE SETTLEMENT BETWEEN THE HSU AND PETER MAC

51

Subject Paragraph

Obtaining property or a financial advantage by deception 51

Are the elements of s 81 and s 82 satisfied? 57

D – CONCLUSION 65

A – OUTLINE

1. The Peter MacCallum Cancer Centre (Peter Mac), as its name

suggests, is an institute which conducts research into cancer. It fell

into industrial disputation with its employees (the industrial dispute).

The industrial dispute arose from alleged breaches of various industrial

instruments leading to a substantial underpayment of research

technologists (or researchers) employed by Peter Mac (the affected

employees). The claim in the dispute was described by Katherine

Jackson, correctly, as having a twin character – a claim on behalf of

employees for unpaid wages, and a claim on behalf of the union for

penalties in respect of breaches of the industrial instruments.1 In 2003

the industrial dispute was settled.

2. Katherine Jackson was at the time of the Secretary of the HSU Victoria

No 3 Branch (the Victoria No 3 Branch). She played a key role in the

settlement of the industrial dispute. As part of that settlement, in a

Deed of Release, she negotiated a payment to the HSU of up to

$250,000 to cover legal and ‘other’ expenses the HSU had supposedly

1 Submissions of Katherine Jackson, 14/11/14, paras 115, 159.

incurred in the course of resolving the dispute, and ‘future expenses’ it

supposedly expected to incur in connection with implementing the

settlement. Peter Mac agreed to pay up to that amount upon

presentation of an ‘itemised statement’.

3. Katherine Jackson fraudulently misrepresented the expenses the HSU

had incurred to procure payment of the maximum amount of $250,000

from Peter Mac. To the same end she fraudulently misrepresented the

expenses which the HSU expected to incur in future.

4. The Committee of Management of the Victoria No 3 Branch (the

BCOM), of which Katherine Jackson was a member, then apparently

earmarked the ‘Peter Mac money’, as some within the Branch referred

to it, for expenditure principally on activities to ‘advance the interests

of the union’. How those funds were dealt with is the subject of

Chapter 5.2.

5. This Chapter deals with the circumstances leading to the payment of

the Peter Mac money.

B – RESOLUTION OF THE INDUSTRIAL DISPUTE RELATING TO

UNDERPAYMENT

HSU and Peter Mac enter into a Memorandum of Understanding

6. Counsel assisting put the following submissions about events up to the

Deed of Release. On 21 March 2003, the HSU and Peter Mac entered

into a Memorandum of Understanding (MoU) relating to the resolution

of the industrial dispute.2 They agreed to negotiate an enterprise

agreement that would ‘provide a new and agreed classification

structure and rates of pay and conditions for Peter MacCallum Cancer

Centre Research Technologists’. The agreement was to be put to Peter

Mac staff ‘for consideration and, if approved by vote of the staff,

would become a registered Agreement’.3 The parties to the MoU also

agreed ‘not to instigate any claims for retrospective payment for pay

and conditions’.4

HSU seeks ‘compensation’ from Peter Mac

7. Around June 2003, the HSU Victoria No 3 Branch ‘raised the matter of

compensation being paid directly to the union as part of the overall

settlement of the compliance issue’.5 On 8 July 2003, Dr David Hillis

(Chief Executive Officer of Peter Mac), Brian Cook (a human relations

consultant) and Rohan Millar (a barrister) provided an update to the

Peter Mac Board on ‘initiatives to finalise the acceptance of the Single

Employer Certified Agreement (SECA) relating to the payment issues

of Research staff’.6 The minutes of the Board meeting note that the

HSU Victoria No 3 Branch had ‘raised several key concerns the

majority of which have been responded to at a senior management

level’.7 An issue which remained ‘outstanding’ was ‘the Deed of

2 Jackson MFI, 30/7/14, Vol 3, p 895. See also Katherine Jackson, 30/7/14, T:376.39-42.3 Jackson MFI, 30/7/14, Vol 3, p 895.4 Jackson MFI, 30/7/14, Vol 3, p 896.5 Brian Cook, witness statement, 27/8/14, para 12. See also statutory declaration of David Hillis, 27/8/14, attached transcript T:11.42-12.5.6 Jackson MFI, 30/7/14, Vol 3, p 831. See also statutory declaration of David Hillis, 27/8/14, T:12.35-14.23.7 Jackson MFI, 30/7/14, Vol 3, p 831.

Release and a payment to the HSUA #3 in respect of their legal costs

and time impost on union officials’.8

8. On 22 July 2003, there was a ‘special meeting’ of the Peter Mac

Board.9 The meeting had been called to ‘consider a proposed Deed of

Release’ between Peter Mac and the HSU Victoria No 3 Branch

‘relating to payment issues of Research staff’.10 In a memorandum to

the Board, dated 22 July 2003, Dr David Hillis said: ‘HSUA #3 are

now agitated over delays in the process and have indicated

commencement of Federal Court action [to pursue penalties for

beaches of industrial instruments] by Thursday 24 July unless the Deed

issues are resolved.’11

9. At the 22 July meeting, the Board was ‘unanimous in its view that

should there be a payment made to the HSUA #3 that there is

transparency and disclosure of information and that staff are to be

advised of this fact prior to a vote on the SECA.’12 The Board

relevantly resolved:13

Negotiations to continue with the HSUA #3 on the option of Peter Mac paying HSUA #3 expenses up to a maximum of $250,000[.]

In the event of a payment being made to the HSUA #3 that staff will be advised of the payment.

8 Jackson MFI, 30/7/14, Vol 3, p 831.9 Jackson MFI, 30/7/14, Vol 3, p 833. See also statutory declaration of David Hillis, 27/8/14, T:14.30. 10 Jackson MFI, 30/7/14, Vol 3, p 833.11 Jackson MFI, 30/7/14, Vol 3, p 874.12 Jackson MFI, 30/7/14, Vol 3, p 834.13 Jackson MFI, 30/7/14, Vol 3, p 834.

An itemised statement is to be provided by the HSUA #3 outlining the expenses associated with the payment of up to $250,000.

…

Any payment to the HSUA #3 is conditional on the successful voting on of the SECA by Peter Mac staff and the successful certification of the SECA in the AIRC.

…

An updated Deed of Release to be prepared incorporating confidentiality between Peter Mac and the HSUA #3 save that Peter Mac will make disclosure of the amount and purpose of the payment of up to $250,000 to its staff.

Peter Mac employees told about payment to HSU?

10. On 9 September 2003, Dr David Hillis, Dr Heather Wellington,

Katherine Jackson and Erryn Cresshull attended a meeting with

research staff at which ‘staff were advised of initiatives to progress the

SECA and the resolution of the underpayment of Research staff.’14 At

the meeting, the ‘staff were advised that agreement was required to

three (3) key documents in order to resolve this issue’:15

1. SECA

2. Deed of Release (Peter Mac and Research Staff)

3. Deed of Release (Peter Mac and HSUA #3)

14 Jackson MFI, 30/7/14, Vol 3, p 836. See also statutory declaration of David Hillis, 27/8/14, T:20.27-21.13.15 Jackson MFI, 30/7/14, Vol 3, p 836.

11. The fact that Peter Mac proposed to reimburse the HSU for its costs

was discussed at the 4 September meeting, according to Dr David

Hillis’s evidence. However, Dr Hillis could not recall whether the

‘specifics’ of the proposed payment to the union were disclosed.16 Dr

Heather Wellington had a ‘very strong sense that there was discussion’

of the payment at the 4 September meeting.17 Katherine Jackson also

recalled that the payment was disclosed at the meeting.18

HSU and Peter Mac enter into a Deed of Release

12. On 9 September 2003, the Board agreed to affix the Peter Mac seal to a

Deed of Release between Peter Mac and the HSU.19 On that day, the

HSU and Peter Mac executed a Deed of Release. It relevantly recited

that the HSU alleged Peter Mac had breached various industrial

instruments. It recited that Peter Mac denied those allegations. And it

recited that in ‘negotiating’ a proposed single employer certified

agreement, the ‘HSUA has incurred, and will continue to incur,

significant expenses, both internally and externally, for which the

HSUA seeks payment from the Peter Mac.’20

13. Within seven days of certification of the single employer certified

agreement – the SECA – the HSU agreed to provide to Peter Mac an

‘itemised statement of its legal expenses and other expenses and

expected future expenses incurred in relation to the matters referred to

16 Statutory declaration of David Hillis, 27/8/14, T:22.28-30.17 Heather Wellington, 28/8/14, T:855.30-31.18 Katherine Jackson, 30/7/14, T:386.3.19 Jackson MFI, 30/7/14, Vol 3, p 837.20 Jackson MFI, 30/7/14, Vol 1, p 37.

in the Recitals and the preparation of the Certified Agreement’. Peter

Mac agreed to pay the ‘total sum disclosed in the statement’ provided

the sum did not exceed $250,000.21 In Dr Heather Wellington’s view,

the $250,000 maximum payment the Board agreed to pay the HSU was

not ‘an unrealistic estimate for the sort of effort that was put into the

negotiation process’ by the HSU.22

14. In consideration of that payment, the HSU released and discharged

Peter Mac:23

from all suits, demands, losses and causes of action in relation to or arising from the alleged breaches [of the industrial instruments], including (but not limited to) any claims for alleged underpayment of wages, and any claims for alleged underpayment of wages, and any claims for breach of any award or certified agreement that allegedly occurred prior to that date of certification of the proposed certified agreement.

15. Further, the HSU agreed not to ‘encourage or assist its members to take

up any cause of action in relation to or arising from the alleged

breaches [of the industrial instruments]’ and agreed also not to assist

‘in any such action, if brought.’24

HSU itemised statement of expenses

16. On 22 October 2003, Katherine Jackson wrote to Dr David Hillis,

enclosing an itemised statement of the HSU’s legal expenses, other

21 Jackson MFI, 30/7/14, Vol 1, p 38.22 Heather Wellington, witness statement, 28/8/14, para 76.23 Jackson MFI, 30/7/14, Vol 1, p 38.24 Jackson MFI, 30/7/14, Vol 1, p 38.

expenses and expected future expenses.25 One of the itemised ‘Legal

Expenses’ was ‘Solicitors Costs’ in the amount of $65,740.26 Katherine

Jackson admitted that the HSU had not in fact incurred solicitors’ costs

in that amount.27 The actual costs the HSU incurred were $1,122.28

Katherine Jackson admitted that she inflated the figure of $1,122 to

$65,740 because she wished to claim a total in excess of $250,000.29

Doing that would secure the HSU’s entitlement to $250,000 under the

Deed of Release.

17. The total given in Katherine Jackson’s letter for ‘expected future costs’

was $89,460.30 Katherine Jackson admitted that these ‘expected future

costs … did not reflect a true claim for expected future costs’.31 She

had ‘picked that figure of $89,460 to bring the total of the amount

claimed to an amount in excess of … $250,000’.32

18. Dr David Hillis did not ask Katherine Jackson to provide materials to

substantiate the expenses which she represented the HSU had incurred

or to provide a breakdown for expected future expenses.33 He gave

evidence that he was ‘confident’ at the time that the HSU’s expenses

were ‘real’.34 In particular, the figures relating to the expenses the HSU

25 Jackson MFI, 30/7/14, Vol 1, pp 97-98.26 Jackson MFI, 30/7/14, Vol 1, p 98.27 Katherine Jackson, 28/8/14, T:786.36-787.6.28 Toby Borgeest, witness statement 27/8/14, para 16 and Annexure C. See also Toby Borgeest, 27/8/14, T:690.36-45.29 Katherine Jackson, 28/8/14, T:787.8-11.30 Jackson MFI, 30/7/14, Vol 2, p 98.31 Katherine Jackson, 28/8/14, T:788.3-6.32 Katherine Jackson, 28/8/14, T:788.8-11.33 Statutory declaration of David Hillis, 27/8/14, T:27.47-28.24.34 Statutory declaration of David Hillis, 27/8/14, T:29.6.

had already incurred did not appear to him to be ‘disproportionate’;

they seemed ‘reasonable’.35 Dr Heather Wellington also gave evidence

that she had considered that the $250,000 maximum amount the Peter

Mac Board agreed to pay the HSU was a ‘reasonable estimate of what

was likely to have been incurred’ by the HSU, particularly having

regard to the length of the dispute and the costs that Peter Mac had

itself incurred in its resolution.36

19. Despite the recitals in the Deed of Release, the Peter Mac Board

considered the payment to the HSU a ‘settlement of a valid claim that

the union had against’ it for alleged breaches of various industrial

instruments.37 But Dr Heather Wellington did not accept that the

amount included a component ‘notional or otherwise’ for the union not

pursuing penalties38 (or, as they were sometimes described, ‘fines’).

20. Katherine Jackson said that the settlement between Peter Mac and the

HSU was expressed to cover legal, other and expected future expenses

to render the settlement of the industrial dispute more ‘palatable’ to the

Peter Mac Board.39 She said the HSU gave Peter Mac a ‘dressed-up’

letter for ‘comfort and cover’.40 By that she meant her letter of 22

October 2003. Katherine Jackson added that Peter Mac did not ‘want

to be exposed to penalties, and the union at that time did give Peter

35 Statutory declaration of David Hillis, 27/8/14, T:27.34-45.36 Heather Wellington, 28/8/14, T:856.40-857.5.37 Heather Wellington, 28/8/14, T:856.42-43, 858.5-12.38 Heather Wellington, 28/8/14, T:856.40-45, 857.12-16; 857.38-40.39 Katherine Jackson, 30/7/14, T:397.13-14, 398.5-8.40 Katherine Jackson, 30/7/14, T:416.33-35.

Mac cover and comfort that they weren’t going to go back to their

board to say they’d stuffed it up, and that is how it all settled’.41

21. Katherine Jackson recounted a conversation with Brian Cook during

which she claims he said words to the effect:42

We understand that if this dispute isn’t settled we have to deal with both the employees[’] claims for outstanding entitlements and the union’s claim for penalties. However, the Board does not want the reputation of Peter Mac damaged by any public acknowledgment of its breaches or acknowledgment that it would have been liable to pay fines. That is not a good look with the donors. We are happy to negotiate a settlement with the union for its claims over and above whatever is agreed with the employees, but we would like to characterise the payment as reimbursement of expenses.

If this was said, Brian Cook was making the point that the income of

Peter Mac depended heavily on the generosity of donors.

22. According to Katherine Jackson, she replied to Brian Cook in the

following words:43

You can call it what you like. But don’t think that the members won’t understand what has happened. We have explained the situation to them and they realise that if the dispute isn’t settled we will be going for fines as well as their entitlements.

41 Katherine Jackson, 30/7/14, T:416.9-13.42 Katherine Jackson, witness statement, 28/8/14, para 144.43 Katherine Jackson, witness statement, 28/8/14, para 144.

23. Brian Cook denied saying words to the effect attributed to him by

Katherine Jackson. When asked if she replied to him in the terms just

set out, he said: ‘No, I don’t recall that.’44

24. Katherine Jackson also gave evidence that she recalled having ‘similar

discussion with other members of Peter Mac management and the

BCOM about this request’.45 Further, she said that near the ‘end of the

negotiating period Mr Cook said words to the effect: “Could you

please send us a list of expenses [so] that we can pay you the agreed

settlement figure.”’46 Brian Cook recalled having a conversation with

Katherine Jackson about the HSU’s ‘expenses’, but said that the

conversation would have been ‘back in June when Peter Mac had

asked for details’ of the expenses.47

25. Finally, Katherine Jackson said:48

The Peter Mac Institute paid the union $250,000 as it was a fair and moderate estimate of a possible fine the court may have imposed on Peter Mac for its negligence in breaching its awards. In exchange the Union did not pursue the claim for which there was no defence. The union’s expenses were real, the Deed was a legal agreement and it contains statements of truth – but underlying the way the payment was styled was the knowledge both parties had that should the matter not be settled by negotiation, the Act provided for significant potential penalties to be levied on … Peter Mac and paid to the union.

44 Brian Cook, 27/8/14, T:695.19-696.18.45 Katherine Jackson, witness statement, 28/8/14, para 145.46 Katherine Jackson, witness statement, 28/8/14, para 147.47 Brian Cook, 27/8/14, T:697.2-5 and see earlier T:696.28-36. See also Brian Cook, witness statement, 27/8/14, para 18.48 Katherine Jackson, witness statement, 28/8/14, para 149.

26. Katherine Jackson’s evidence was thus that those representing Peter

Mac in fact knew that the amount claimed was not a genuine

reimbursement of costs that the union had incurred, and reasonably

expected to incur. If accepted, the evidence would negate any

deception of the Peter Mac officers, because they would have known

that the true position was as Katherine Jackson said, and that the Deed

of Release did not correspond with the truth. However, Katherine

Jackson’s evidence cannot be accepted. It is inconsistent with the

available documentary evidence, Dr David Hillis’s evidence,49

Dr Heather Wellington’s evidence,50 and Brian Cook’s evidence.51

27. So much for the submissions of counsel assisting on events up to the

Deed of Release.52

28. Those submissions are fortified by the following considerations. There

is no reason to disbelieve Brian Cook’s evidence that he never met

Katherine Jackson alone.53 As Brian Cook’s counsel pointed out,54

senior counsel for Katherine Jackson did not cross-examine Brian

49 Statutory declaration of David Hillis, 27/8/14, T:30.29-32.38.50 Heather Wellington, 28/8/14, T:856.40-857.40.51 Brian Cook, 27/8/14, T:695.19-696.18, 697.2-5 and see earlier T:696.28-36. See also Brian Cook, witness statement, 27/8/14, para 18.52 A submission was received from a person who did not seek any authorisation to appear and who gave no evidence. The submission states that it draws no conclusions, but merely asks questions. In fact it does draw some conclusions as well as asking questions. Much of the submission depended on evidentiary material not before the Commission. The submission is hostile to Katherine Jackson, but also makes serious allegations against various people who were not given the opportunity to deal with them in the witness box. As the writer of the submission accepts, the submission is contrary to sworn evidence. That evidence is accepted in this Report. In these circumstances the Report will not deal with the submission.53 Brian Cook, witness statement, 27/8/14, para 32.54 Submissions of Brian Cook, 21/11/14, para 3.

Cook.55 It may be that that was not necessary as a matter of fairness,

but it is harder to reject the evidence of someone on whom no damage

has been inflicted in cross-examination. In contrast to the position

with Brian Cook, senior counsel for Katherine Jackson did cross-

examine Dr Heather Wellington. He did so with skill and firmness.

But he did not achieve success.

29. Dr David Hillis gave evidence by statutory declaration because he was

overseas.56 It was indicated that if anyone wished to cross-examine

him and gave notice of that desire, an arrangement would be made for

that to happen.57 No notice was given. It might also be pointed out

that Katherine Jackson gave no date or place or context for the

conversation she alleges she had with Brian Cook. She gave no date or

place or context for the ‘similar discussions with other members of

Peter Mac management and the BCOM’.

30. What submissions were put to the contrary of those advocated by

counsel assisting?

31. Katherine Jackson contended58 that the ‘Commission should seek to

obtain a copy of [a draft Deed of Release] with comments before any

adverse finding could fairly be made against’ her. That submission

was made on 14 November 2014. Two notices to produce dated 22

July 2014 addressed respectively to the Peter MacCallum Institute and

to Service Industry Advisory Group had already been served. No

55 Brian Cook, 27/8/14, T:697.30-32.56 Statutory declaration of David Hillis, 27/8/14.57 Statutory declaration of David Hillis, 27/8/14;27/8/14, T:744.14-34.58 Submissions of Katherine Jackson, 14/11/14, para 130.

document answering the description in Katherine Jackson’s submission

was produced.59 It does not appear to exist.

32. Katherine Jackson’s arguments against counsel assisting are lengthy.

But they boil down to one proposition. The Deed of Release conferred

on the HSU an entitlement of up to $250,000 for legal expenses, other

expenses, and expected future expenses. But Katherine Jackson

submitted that that was not the actual agreement. The actual

agreement was that Peter Mac would pay the HSU up to $250,000 in

consideration for the HSU not pursuing a claim against Peter Mac for

penalties as a result of Peter Mac’s alleged breaches of industrial

agreements which had led to a substantial underpayment of Peter Mac

employees. According to Katherine Jackson, her version of the actual

agreement is the only plausible explanation.

33. The heart of her submission was put thus:60

(a) the Union’s causes of action against Peter Mac in relation to the Award Breaches – both on behalf of employees in respect of the Employee Back-Pay, and on its own behalf in respect of the Union Penalties Claim – were causes of action under s. 178 of RAO Schedule to the Workplace Relations Act 1996 (WR Act);

(b) any penalties were likely payable to the Union as a moity (cf s. 357 WR Act);

(c) there was no prospect that the union could recover legal costs against Peter Mac in any such proceedings because the relevant jurisdiction is effectively a “no costs” jurisdiction: see the limitation on the ordering of costs in s 347 of the WR Act;

(d) there is no cause of action known to the law pursuant to which a union can sue to recover from an employer the costs associated with time

59 Submissions of Counsel Assisting, 25/11/14, paras 51-53.60 Submissions of Katherine Jackson, 14/11/14, paras 159-161.

spent by Union officials in relation to an industrial dispute or the negotiation or implementation of a statutory enterprise agreement;

(e) in particular, there was no cause of action by which the Union could have recovered from Peter Mac the expenses referred [to] in clause 1 of the Deed of Release;

(f) it follows that the only legal exposure Peter Mac had to the Union in its own right was in respect of the Union Penalties Claim;

(g) the Deed of Release provided a release in respect of the Union Penalties Claim. On any view, the payment to the Union provided for in the Deed of Release was part of the consideration given by Peter Mac to the Union in return for that release; and

(h) the settlement amount paid was not more than 10% of the value of the Award Breaches – a realistic and commercial amount if the payment was in truth referrable to the Union Penalties Claim that was being settled.

(i) [a]t all material times Peter Mac engaged professional industrial law advisors.

Neither Ms Jackson nor the Vic 3 Branch had any reason to seek or insist upon a payment characterised as a reimbursement of expenses as opposed to a simple payment of a specific amount made in consideration of granting a release to Peter Mac in respect of the Union Penalties Claim.

Crucially, there was no advantage that accrued to Ms Jackson or the Vic 3 Branch from characterising the settlement payment to the Union as referable to the Union’s expenses in the manner done in clause 1 of the Deed of Release – other than because Peter Mac, through its lead negotiator, wanted the agreed “quantum” characterised in that way and because agreeing to that request would assist in achieving the settlement. (emphasis in original)

34. These submissions must be rejected for the following reasons.

35. The mere fact that the legal and other expenses of the HSU were not

recoverable, or were very difficult to recover, at law does not negate

the possibility that they were the subject of the settlement. Litigation is

often settled by giving to parties advantages they could not have

obtained from a court or tribunal order in the proceedings themselves.

36. The fact that Peter Mac could have reached agreement with the HSU

on different terms does not refute the submissions of counsel assisting.

No doubt Peter Mac and the HSU could have entered into an

agreement that provided for Peter Mac to pay the HSU a specified

amount not calculated by reference to legal expenses and without

admission of liability in consideration for the HSU not pursuing its

claim. The fact that the parties did not execute a deed in those terms

does not provide any reason for doubting the proposition that the

agreement that was actually reached corresponded with the terms of

the Deed of Release. Peter Mac and the HSU could have settled their

dispute in several ways. They chose to settle it in one particular way.

The best evidence of the agreement they in fact reached is the Deed of

Release itself. Solemn documents of that kind are only to be set aside

or called in question by the clearest evidence. The only evidence

which could be used as a basis for doing that is that of Katherine

Jackson. It is not convincing evidence.

37. Contrary to what Katherine Jackson submitted, Peter Mac was not the

only party that was ‘advantaged by [the] characterisation’ of the Deed

of Release as a reimbursement of expenses rather than as a payment of

an amount in settlement of a legal claim. The background to the

agreement between Peter Mac and the HSU is that the Peter Mac

employees who had been underpaid received no back pay. An ex

gratia payment to the HSU of a general kind not made referable to

legal and other expenses may well have been likely to generate

resentment amongst the underpaid employees who had received no

monetary recompense in the settlement.

38. One other argument of Katherine Jackson was put thus:61

It is odd that, approaching the settlement commercially, the upper limit of the settlement amount could have been agreed and paid before there was any provision of the supporting information to justify the amounts claimed by the Union.

39. But is this odd? A party acting commercially might well wish to be

certain about its potential liability. Setting an upper limit achieved

certainty. There is no reason to doubt Dr Heather Wellington’s

evidence that the $250,000 maximum amount was understood by Peter

Mac as a reasonable estimate of what as likely to have been incurred

by the HSU. The whole point of selecting an upper limit is that it

forestalled the need to supply supporting information.

40. Katherine Jackson’s submissions proceed in part by reference to

seemingly close documentary analysis coupled with various dark

suggestions. But the documents actually do nothing to support

Katherine Jackson’s essential thesis – that the agreement as recorded in

the Deed of Release was totally different from the actual agreement.

There is no satisfactory basis for concluding that the Peter Mac officers

knew that the actual costs and expenses could not possibly have

reached $250,000.

41. Katherine Jackson submitted that the union’s actual costs and expenses

could not possibly have reached $250,000. If so, the Deed of Release

61 Submissions of Katherine Jackson, 14/11/14, para 175.

must be characterised as, to the union’s knowledge but not Peter

Mac’s, one which involved a bogus element. It highlights the deceit

Katherine Jackson perpetrated when she made the false claims for

payment.

42. Katherine Jackson also submitted that the ‘dressing up’ of settlement

agreements is ‘commonplace in the real world’. Even if that is so,

there is no convincing evidence that the Deed of Release involved

dressing up.

43. Katherine Jackson’s submissions made a brief passing reference to the

evidence of Dr Heather Wellington. As indicated earlier, she, unlike

Dr David Hillis and Brian Cook, was cross-examined by senior counsel

for Katherine Jackson, but not successfully. Dr Heather Wellington

had given evidence that neither she nor the Board would have

approved an attempt to present the arrangement as something it was

not, ie by the idea that the $250,000, paid for something else, should be

‘packaged up’ or ‘dressed up’ as legal expenses.62 The cross-examiner

did not attempt any direct assault on that evidence. Instead the

evidence elicited in cross-examination proceeded as follows. Dr

Heather Wellington said the figure of $250,000 was seen by the Board

as reflecting ‘legal costs plus staff costs from the union’s perspective,

plus future, reasonable future costs in the certification and

implementation of the certified employer agreement’.63 She adhered to

that answer more than once.64 She did accept that the claims against

Peter Mac involved both the employee claims for outstanding

62 Heather Wellington, witness statement, 28/8/14, paras 73-74.63 Heather Wellington, 28/8/14, T:856.33-36. 64 Heather Wellington, 28/8/14, T:856.40-857.16, 857.37-858.1.

entitlements and the union claims for penalties.65 She said that the

Board was concerned about the potential size of these two exposures,

but that the settlement itself was structured by reference to costs.66

We were concerned that as an organisation, we were exposed to substantial penalties. The actual settlement, from our perspective, was past costs, legal and staff, and future expenses on behalf of the union. So it was intended to be a cost settlement to the union, not directly, as I understand it now, to cover any potential future penalties which from my recollection were actually potentially very large. So I don’t think it was intended – I mean I don’t know how we could have foreseen what those were because my understanding of what we were exposed to is that there was a potential exposure for continuing breach of the agreement. (emphasis added)

44. To some extent the cross-examination of Dr Heather Wellington

included the cross-examination that was not carried out of Brian Cook.

Dr Heather Wellington emphatically denied any concern, of the kind

which Katherine Jackson said had been expressed by Brian Cook to

her, that the Board did not want to damage its reputation by admitting

its breaches and acknowledging its liability to pay penalties.67

45. The most favourable answer the witness gave from Katherine

Jackson’s point of view was late in her cross-examination:68

Q. And as you understood it, the board could see that $250,000, all things considered, was a fair and reasonable settlement of costs and penalty issues in respect of this aspect of the claim?

A. I thought so, and I still think so.

65 Heather Wellington, 28/8/14, T:856.16-21.66 Heather Wellington, 28/8/14, T:857.37-858.1.67 Heather Wellington, 28/8/14, T:858.32-859.35.68 Heather Wellington, 28/8/14, T:859.42-46.

(emphasis added)

But her last answer clarified the matter:69

Q. So the amount, as it were, or at least the maximum amount was fixed by reference to entitlements and potential union penalty claim; is that right?

A. It was fixed in relation to union staff costs, union legal costs, and potential – the costs of certification and implementation of the SECA but it was fixed in the context of an understanding that we potentially were exposed to significant penalties.

(emphasis added)

46. That is, although the overall dispute involved an exposure to penalties

(and to the employees’ back entitlements) the actual fixing of a

$250,000 figure was carried out by reference to actual and expected

legal costs and actual and expected union staff costs.

47. Katherine Jackson cited Dr Heather Wellington’s evidence to establish

‘the very real concern that Peter Mac had at being “exposed to

substantial penalties”.’70 But Katherine Jackson’s submissions did not

face up to the consequences of analysing all of Dr Heather

Wellington’s evidence.

48. The submissions of counsel assisting are correct for the reasons they

state and the other reason set out above.

69 Heather Wellington, 28/8/14, T:860.15-22.70 Submissions of Katherine Jackson, 14/11/14, para 187, citing Heather Wellington, 28/8/14, T:857.

Peter Mac pays HSU $250,000

49. On 11 November 2003, Dr David Hillis wrote to Katherine Jackson,

enclosing a cheque in the amount of $250,000.71 The cheque was

deposited into a Commonwealth bank account that was maintained by

the HSU Victoria No 3 Branch under the control of the union’s Branch

Committee of Management.72

50. Katherine Jackson regarded the payment as a ‘windfall’ in the sense

that it was not ‘general revenue received by the Vic 3 Branch which

would be budgeted income’.73 Katharine Wilkinson also described the

payment as a windfall.74 Katharine Wilkinson was the Vice President

of the Victoria No 3 Branch and a member of the BCOM until the

Victoria No 3 Branch merged with the Victoria No 1 Branch and the

NSW Branch to form the HSU East Branch.75 She said the money was

‘above and beyond [the branch’s] normal income’.76

71 Jackson MFI, 30/7/14, Vol 1, p 99.72 Katherine Jackson, 30/7/14, T:400.21-25, 401.14-15.73 Katherine Jackson, witness statement, 28/8/14, para 9.74 Katharine Wilkinson, witness statement, 17/6/14, para 31.75 Katharine Wilkinson, witness statement, 17/6/14, paras 4-5.76 Katharine Wilkinson, 17/6/14, T:659.11-12.

C – LEGAL ISSUES ARISING FROM THE SETTLEMENT BETWEEN

THE HSU AND PETER MAC

Obtaining property or a financial advantage by deception

51. It will be remembered that Katherine Jackson admitted that the

statement she issued to Peter Mac on 22 October 2003 misrepresented

the ‘Solicitors Costs’ the HSU had incurred and the ‘future costs’ the

HSU expected to incur. Relying on that itemised statement, Peter Mac

paid the HSU $250,000 in November 2003 in the form of a cheque.

52. As at October and November 2003, it was an indictable offence against

s 81 and s 82 of the Crimes Act 1958 (Vic) to obtain either property or

a financial advantage by deception.77 At the relevant time, the

elements of obtaining property by deception were: (1) a person by any

deception; (2) dishonestly obtains property belonging to another; (3)

with the intention of permanently depriving the other of it.

53. ‘Property’ includes money78 and has been held to include a cheque.79

By s 81(2) a ‘person is to be treated as obtaining property if he obtains

ownership, possession or control of it, and ‘obtain’ includes obtaining

for another or enabling another to obtain or to retain.’ (emphasis in

original)

77 See version 170 of the Crimes Act 1958 (Vic). The word ‘deception’ in s 82 has the same meaning as in s 81 of the Act: see s 82(2).78 Section 71 of the Crimes Act 1958 (Vic).79 Parsons v The Queen (1999) 195 CLR 619 at [35]-[36].

54. A person ‘dishonestly’ obtains property belonging to another (or a

‘financial advantage’) if he or she knows he or she had no legal right to

the property or financial advantage.80

55. The elements of obtaining a financial advantage by deception generally

overlap with the elements of obtaining property by deception. At the

relevant time, they were: (1) a person by any deception; (2)

dishonestly obtains for himself (or herself) or another; a financial

advantage.

56. ‘Financial advantage’ is undefined. The words carry their ‘plain

meaning’.81

Are the elements of s 81 and s 82 satisfied?

57. Was there deception? On 22 October 2003 Katherine Jackson falsely

represented to Peter Mac that the HSU had incurred, or would incur,

costs that she knew it had not, and would not, incur. That false

representation constitutes the relevant deception. For the reasons given

above, Ms Jackson’s evidence that Peter Mac in fact knew that the

itemised statement of expenses she presented was not genuine is to be

rejected. Had Peter Mac known that the expenses which Katherine

Jackson represented the HSU had incurred or would incur were not

genuine, it would have followed that there was no deception or, put

differently, that the property or financial advantage the HSU obtained

was not ‘by any deception’.

80 R v Todo [2004] VSCA 177 at [24] and [26], following R v Salvo [1980] VR 401 (Charles JA with whom Winneke P ([1]) and Ormiston JA ([2]) relevantly agreed).81 R v Walsh (1990) 52 A Crim R 80 at 81.

58. Was property or a financial advantage obtained ‘by’ deception?

Katherine Jackson’s deception caused Peter Mac to draw a cheque in

the HSU’s favour for $250,000, and send it to her. Thus, by82 her

deception the HSU obtained property – the cheque – of Peter Mac or a

financial advantage since, once the HSU received the cheque, it

conferred on the HSU an entitlement to be paid the amount shown on

its face.83

59. Was the property or financial advantage obtained dishonestly?

Katherine Jackson made the false representation knowing that under

the Deed of Release executed by the HSU and Peter Mac the only legal

right the HSU had was to payment of its ‘legal expenses and other

expenses and expected future expenses’ up to a maximum of $250,000.

In other words, she knew that the HSU only had a right to payment of

up to $250,000 for expenses that the HSU in fact had incurred or

would incur. Therefore, the property or financial advantage the HSU

obtained was obtained dishonestly.

60. Was Peter Mac permanently deprived of its property? Once banked,

the cheque had been put to a use which left it ‘spent and deprived of

[the] characteristics which led or significantly contributed to [its]

classification as property’.84 That satisfies the third element of

obtaining property by deception.

82 See, for example, R v Clarkson (1987) 25 A Crim R 277 at 297. Also, for a helpful discussion of the element of causation, see CR Williams, Property Offences (3rd ed, 1999) at pp 158-16, 172.83 See the observations of the High Court in Parsons v The Queen (1999) 195 CLR 619 at [29].84 Parsons v The Queen (1999) 195 CLR 619 at [41], the High Court rejecting an argument that the appellant did not intend permanently to deprive the drawer of various cheques because, once paid, they would be returned to the drawer.

61. Those were the submissions of counsel assisting. Katherine Jackson

submitted that even if Brian Cook’s evidence is preferred to hers, she

could not have committed an offence, because she had an honest belief

that a genuine claim to penalties was what was being settled. To that

factual submission there are two answers.

62. First, in the circumstances of this case study, to prefer Brian Cook’s

evidence to hers is to reject hers. Rejection of hers involves radically

diminishing the possibility of accepting that she honestly believed that

the settlement fixed a figure referable to the claimed penalties.

63. The second answer is as follows. Even though the Deed of Release

effected a settlement of a claim for penalties which the HSU could

have pursued against Peter Mac, that does not negate the fact that

Katherine Jackson negotiated a specific legal settlement that entitled

the union to a payment limited as to possible quantum and limited also

by terms constraining the circumstances in which any amount would

be paid by Peter Mac to the union. Katherine Jackson submitted that

she genuinely believed that the payment of the full $250,000 by Peter

Mac was the quid pro quo negotiated by the HSU in return for

abandonment of its claim for a penalty against Peter Mac. A bona fide

claim of legal right certainly negates the existence of ‘dishonesty’ for

the purpose of s 81 and s 82. But Katherine Jackson did not negotiate

an unqualified legal right in the Deed of Release for payment of

$250,000 to the HSU. She negotiated a much more limited

entitlement. It depended on making representations of fact to Peter

Mac. Her submission was that she believed that the HSU had a ‘legal

right’ to whatever financial benefit accrued from the settlement of the

claim for penalties. That submission entails a belief that the union was

entitled to whatever benefit in fact flowed from the settlement. If her

belief was that the union was entitled to something different from that

which the Deed of Release provide for, it derives no support from the

documentary evidence. And it is not corroborated by any other witness

on the point. For reasons given earlier, her evidence of that belief

cannot be accepted.

64. For the reasons given by counsel assisting, and those further reasons, it

is necessary to reject the submissions of Katherine Jackson that no

offence against s 81 or s 82 could be made out because she did not

‘dishonestly’ obtain the relevant property or financial advantage.

D – CONCLUSION

65. There is an ongoing investigation by the Victorian Police Taskforce of

matters referred to it by the HSU. These correspond with the

allegations dealt with by Tracey J in Health Services Union v Jackson

(No 4).85 The question whether it is desirable or appropriate to make

findings of possible criminal conduct in a situation in which there is an

ongoing criminal investigation depends on all the circumstances of the

particular case. Here, among other things, the Commission’s

investigations into the Peter Mac issue were concluded, and the subject

of detailed submissions, in 2014, well before the Taskforce was

established and any investigation by it began. The issues relating to

the Peter Mac matter are in a narrow factual compass. And many of

the conclusions recorded in this Chapter derive from admissions made

by Katherine Jackson in oral or other evidence. In all the

85 [2015] FCA 865.

circumstances of the case there is no obstacle to making appropriate

findings.

66. Accordingly, it is found that Katherine Jackson may have committed a

contravention of s 81 and s 82 of the Crimes Act 1958 (Vic). Pursuant

to s 6P of the Royal Commissions Act 1902 (Cth) and every other

enabling power, this Report and all relevant materials have been

referred to the Victorian Commissioner of Police and the Director of

Public Prosecutions of Victoria for consideration of whether she should

be prosecuted for those possible offences.