Mr Russell Daly
Regulation and Complaints
Legal Services Board of Victoria
GPO Box 4937 Melbourne VIC 3000
Friday, 21 March 2014
Dear Mr Daly,
GOSTENCNIK, Val – Report alleging serious misconduct as a legal practitioner
I refer to the Legal Profession Act 2004.
The name Val GOSTENCNIK appears on Victoria's Register of Legal Practitioners here.
I say Mr Gostencnik has engaged in a protracted course of Professional Misconduct as defined in The Legal Profession Act 2004 Section 4.4.3.
Mr Gostencnik is a former union official whose employment background includes these roles.
- · 1982 - 1986 Union Official HEF which became the Health Services Union
- · 1986- 1990 Union Official Australian Nursing Federation
- · 1990- 1992 Adviser to Labor Health Minister Maureen Lyster in the Kirner Government
- · 1992 - 1994 Union official Australian Nursing Federation
In 2004 the partnership Corrs Chambers Westgarth published this biography regarding Mr Gostencnik.
GOSTENCNIK'S ROLE IN THE CRAIG THOMSON INVESTIGATION
On 26 March 2010 Fair Work Australia commenced an investigation under Section 331 of the Registered Organisations Act into certain conduct involving the former National Secretary of the Health Services Union Craig Thomson.
When FWA gave formal Notice of Investigation the Registered Organisations Act conferred on FWA certain powers to compel witnesses to attend for interview, to produce documents and to provide evidence under threat of serious penalties for non-compliance.
The Report of the Delegate who conducted the Investigation, Terry Nassios is here. It is lengthy, substantial and includes hundreds of pages of evidence given to Fair Work Australia in the exercise of its powers of compulsion which were available to it only for the purposes of its Investigation and any prosecution that followed.
As evidence was adduced during the Investigation, the Delegate formed the view that Thomson appeared to have a prima facie case to answer in relation to significant breaches of various laws and duties he owed the union. As a consequence of the Investigation process Mr Thomson was referred for prosecution. The evidence contained in the Report and its Annexures was gathered, compiled and transmitted to the prosecuting authority for the purpose of bringing legal proceedings.
The HSU first reported the Thomson allegations to the Industrial Registrar (as Fair Work Australia was previously known) in early 2009. By late 2011 the FWA investigation had delivered little progress while fresh evidence of Thomson's criminality had come to light.
On 24 August 2011 the Health Services Union of Australia through its National Executive formed the view that it was the victim of criminal fraud and theft by the offender Thomson. The HSU formally resolved to report its allegations of fraud and theft to NSW Police. Kathy Jackson of the HSU attended on NSW Police and reported the alleged offences that afternoon. That day Detective Superintendent John Watson of the NSW Police Fraud and Cybercrime Squad wrote to the General Manager of Fair Work Australia seeking a meeting to discuss the Thomson allegations. Superintendent Watson’s letter is here.
On 25 August 2011 the General Manager of Fair Work Australia conducted an internal meeting of record titled HSU Strategy Meeting. The meeting was attended by FWA’s General Manager Tim Lee, and his staff Terry Nassios and Ailsa Carruthers. A senior lawyer from the Australian Government Solicitor’s office Mr Craig Rawson was also present. Rawson had been the legal adviser to the FWA investigation team from the time the Thomson allegations were first reported in 2009.
At the meeting a letter from Kathy Jackson to NSW Police Commissioner Scipione was tabled. The letter told police commissioner Scipione that his detectives could take custody of certain original documents and other evidentiary material that the HSU believed would assist police in their investigation of the criminal allegations against Thomson. Jackson explained that she had lodged the documents with Fair Work Australia and that the documents were the property of the HSU. She authorised NSW Police to collect the HSU's material. The AGS Solicitor Craig Rawson gave legal advice to Fair Work Australia at the meeting - he advised that the letter from Ms Jackson constituted a good and valid legal authority for Fair Work Australia to hand over to NSW Police the evidence lodged with FWA by the HSU.
In addition to the Jackson letter, the meeting heard that NSW Police had written to FWA's general manager and had made clear that it was investigating Thomson’s conduct and that it sought Fair Work Australia's cooperation. FWA is essentially an industrial relations organisation, not set up for the purpose of conducting criminal enquiries. Its role was certainly not to frustrate and hinder police as they pursued the criminal case against Thomson. Yet that is what FWA did using highly contentious legal "advice" provided to order by the former HSU official turned lawyer GOSTENCNIK.
The FWA General Manager Mr Lee did not accept or act on the AGS solicitor’s advice that it had before it the proper authority to hand the evidence to police. On the contrary, Lee directed the Australian Government Solicitor's senior lawyer Craig Rawson to “settle” a letter to the Fraud Squad with the lawyer Val Gostencnik. Rawson provided great detail in the billing records associated with the AGS advice to FWA. Here is his entry for 24 August, the day that Jackson reported Thomson to NSW Police.
He then delivered his considered advice at the 25 August meeting, that is that FWA had authority to hand over the HSU’s evidence.
As a result of Lee's direction, Rawson spent 6 hours 30 minutes at a cost of $3,120 the next day "Preparing correspondence to NSW Police responding to request for information and meeting - discussing draft correspondence with Val Gostencnik of Corrs and Tim Lee (two attendances) and making revisions to same".
The letter that was “settled” by Val Gostencnik to NSW Police did not contain any trace of the AGS advice that FWA had authority in the Jackson letter to release the HSU evidence to police. The GOSTENCNIK letter was lengthy and it gave police the opposite message – Fair Work Australia would withhold its cooperation. Fair Work Australia did not cooperate with the police in circumstances where its officers knew that it held relevant evidence of the commission of serious indictable offences which police were actively investigating..
GOSTENCNIK's letter is here.
The effect of the Gostencnik letter was to deny the HSU the right to send evidence which it owned to the police. The HSU leadership believed the documents were material evidence in a criminal investigation then underway by police. The HSU was the complainant to the police, it seems to have acted properly and reasonably in advising police where they could find the files and documents that supported the crime report. The Australian Government Solicitor agreed, but was directed to settle a letter to police that expressed the opposite view.
It is disturbing that Fair Work Australia did not accept the Australian Government Solicitor's advice on the issue and that the FWA general manager Tim Lee, himself a former union leader, directed the AGS to seek out the former HSU official turned lawyer GOSTENCNIK to settle the letter to police.
GOSTENCNIK's advice does not appear to make a convincing case to justify FWA's refusal to help police investigate a serious crime, particularly in circumstances where Fair Work Australia knew that the complainant, the HSU had expressly told police where to find the evidence. FWA used the legal advice set out in the GOSTENCNIK letter to justify its decision not to cooperate with police. The police investigation was delayed for some months as police dealt with FWA's resistance to handing over the evidence, pursuant to the wishes of its owner, the HSU. The nett effect was to delay, if not pervert the course of justice in response to Thomson's criminal offending. The crook enjoyed continued liberty, parliamentary salary and the benefits of public office while the aggrieved complainant and victim of his theft had its express wishes countermanded through the use of GOSTENCNIK's special advice.
A decision to withhold evidence from police who are investigating serious offences is a weighty decision, particularly so when the complainant had given instructions to police to come and pick it up. The HSU owned those files. FWA's decision to reject the AGS advice and to rely on advice crafted to order by GOSTENCNIK might invite the suspicion that it was acting to hinder or delay the police in their criminal investigation. That suspicion can only be heightened when the express wishes of the owner of the evidence and victim of the crime were ignored by FWA.
The general manager of FWA issued a direct instruction that the AGS must seek out the external solicitor, named by the FWA general manager as Val GOSTENCNIK. The inference that GOSTENCNIK's advice was tailored to suit some particular desired outcome is a logical and potentially disturbing conclusion. His course of conduct in the matter of the police advice is worthy of close scrutiny but it is presented here as background to the substantial event that I say discloses GOSTENCNIK's professional misconduct.
Here are the source documents which describe the 25 August meeting and Lee's directions.
ALLEGATION OF PROFESSIONAL MISCONDUCT
On 3 April 2012 Fair Work Australia transmitted an electronic digital copy of the entire Report of the Delegate into the HSU/Thomson investigation, the Annexures to the report and all of the transcripts and database documents to Val GOSTENCNIK. The report was at that stage highly confidential. Its contents were not to be disclosed to the government or any other party outside of the FWA investigation team and respondents.
GOSTENCNIK received his copy of the confidential report and its annexures and other material in his role as a lawyer providing advice to the FWA investigation. Much of the material in the confidential reports was produced to FWA in the exercise of its coercive powers compelling witnesses to give evidence and provide documents. That power was FWA's to use only for the purpose of the nominated investigation and any prosecution that followed.
GOSTENCNIK owed a duty to maintain the confidentiality of that information to FWA and not to use it in any way. The main report was not made public until 7 May 2012. The Annexures to the report contain direct evidence relating to the HSU and Thomson and were not made public at all. That material was maintained in strict confidentiality in the anticipation that any disclosure might prejudice court proceedings that were envisaged at the time. Given that FWA acquired that information through its powers of compulsion and various witnesses and other parties provided material under threat of penalty, it would appear prima facie that GOSTENCNIK owed an implied undertaking not only to maintain the confidentiality of the FWA investigation material, but also to ensure the material was used only for the purposes for which the law had compelled its production.
Gostencnik received the report and annexures on 3 April, 2012.
On 12 April 2012 Gostencnik commenced to act for the Minister for Employment and Workplace Relations Bill Shorten in Shorten's bid to have an external administrator appointed to run the HSU. Observers of the highly politicised HSU have pointed out that the HSU President Michael Williamson was at the time facing prosecution on corruption charges. Williamson was an ALP powerbroker and the loss of his influence on the HSU and the transfer of control of the HSU to Kathy Jackson would arguably adversely affect the interests of sitting members of the ALP. Some say that effect of Shorten's Administrator appointment was to maintain the status quo so far as control of "the numbers" in the HSU. While that is an opinion, it is unarguable that Kathy Jackson had at least a claim to lead the HSU through the management of the corruption disclosures that she had reported to authorities. Shorten's application to appoint an Administrator could be seen as disadvantaging Jackson. Any disadvantage she suffered could only be amplified by GOSTENCNIK's conduct in accepting Shorten's brief while he was the legal adviser to the investigating authority FWA and was in possession of its confidential information about the HSU's governance arrangements. That those details were not disclosed to other parties to the proceedings is alarming.
Shorten publicly stated that he did not know what was in the Fair Work Australia report until its public release on 7 May, 2012.
On 16 April 2012 the then Federal Attorney General Nicola Roxon told the ABC QandA program that the Fair Work Australia report was confidential, it was independent of the government and no one within the government knew what was in the report. Her relevant statements are reproduced here:
Don't forget all of us have been frustrated about how long the Fair Work Australia process has taken. It has become a highly politicised situation in a Parliament where the numbers are very tight. That's why it has been played so hard, I think, by the Opposition. Fair enough, that's how the numbers are. But we haven't had actually any content. There has been swirling allegations, no one has the report, no one actually is aware what is being alleged in detail. So I think...
TONY JONES: One of the reasons for that is the Prime Minister refuses to look at the report.
NICOLA ROXON: That's not right. The reason for that is Fair Work Australia has not provided that information. It is not public. It is not released.
TONY JONES: But it is going to be released to a Senate committee so it begs the question why the Prime Minister couldn't look at it in advance of that?
NICOLA ROXON: You can't have it both ways. You can't say you should let a process run and it shouldn't be politically interfered with and then say she should interfere and take this particular action.
On 26 April 2012, Minister Shorten announced that he would be making a “very rare’ application to the Federal Court of Australia seeking the appointment of an Administrator to control the affairs of the HSU. Minister Shorten’s media announcement is here.
On 30 April 2012 Minister Bill Shorten made this Application to the Federal Court of Australia. Val Gostencnik of Corrs acted for him and provided detailed affidavit evidence on behalf of Minister Shorten in the originating application. GOSTENCNIK stated that he was authorised to make the affidavit on the Minister's behalf and that he based the affidavit on matters that were within his personal knowledge at the time.
Keep in mind the FWA report was tightly held and strictly confidential until 7 May, 2012. The expense and powers of the state in the FWA Investigation were provided for the singular purposes described in the Registered Organisations Act, that is for the investigation and prosecution of breaches of the law. The investigation was not conducted for the purpose of providing Minister Shorten with confidential information in an application to appoint an Administrator to the HSU. At the time Shorten brought that application, no one outside the FWA investigation team knew what was in the FWA Report and no one therefore could have publicly acted on it. It was confidential to FWA, to the affected persons who were given time to respond and to their legal advisers. Police were not given access to the report.
In his affidavit, sworn on 30 April on behalf of Minister Shorten, Gostencnik states at para 13
The Minister’s application (wholly prepared by GOSTENCNIK) could only succeed if he could prove that the HSU had “ceased to function effectively”. It is in the nature of unions and the factions and divisions within the Labor Party and its parent the unions that internal conflicts and disputes over governance issues will be a normal part of life. The burden of proving that a particular union had "ceased to function effectively" because of internal divisions and governance problems would ordinarily be a difficult threshhold issue to satisfy a court, particularly when the effect was to remove incumbents from their elected jobs.
In his media release and other material Shorten said he was forced to act because of the HSU’s dysfunction. On 29 May 2012 The Senate Standing Committee on Education, Employment and Workplace Relations held an enquiry in which it asked questions of the Minister’s staff and sought answers in the form of evidence on oath. The Committee heard the following evidence:
Senator Abetz, “Please also take on notice asking the minister to respond to this: on what basis did he find that the HSU had fallen into 'dysfunctionality', the term he used in talking to the media; when did he find that 'dysfunctionality'; and was it related to Ms Jackson taking court proceedings, seeking to remove certain individuals from the HSU national executive?
The Minister’s department furnished the following answer:
The dysfunctionality in the HSU was evident from the findings of the reports of FWA and ongoing internal disputation that was the subject of widespread public comment. The Minister’s concerns regarding the dysfunctionality in the HSU were in no way related to Ms Jackson’s application.
Section 323(1)(a) of the Fair Work (Registered Organisations) Act 2009 (the Act) provides that an application may be made to the Federal Court for a declaration that part of the organisation (which may include a branch):
has ceased to function effectively and there are no effective means under the rules of the organisation or branch by which it can be reconstituted or enabled to function effectively.
The Minister sought legal advice about whether the requirements of Section 323(1)(a) of the Act were satisfied prior to making his application to the Federal Court.
Ms Jackson was the person who first reported Thomson’s offending to police. She was a party to the proceedings in which Minister Shorten sought the appointment of an Administrator to control the HSU. She was entitled to pursue a claim to lead the HSU itself in circumstances where she had blown the whistle on the corrupt behaviour within the organisation. She was materially disadvantaged when the Court acquiesced to Shorten’s application.
At no time in those proceedings did GOSTENCNIK disclose to the Court that he was in possession of thousands of pages of material that described in exquisite detail the inner workings of the HSU and the problems the union had in its internal governance. Those matters were fundamental to the Minister’s application for the Administrator. I say that GOSTENCNIK had an irreconcilable conflict of interest in acting for FWA as a legal adviser in its investigation and receiving in that role a large amount of confidential material produced by witnesses under the coercive powers of the FWA authority for the purposes of prosecuting the offences the investigation disclosed.
The Minister’s department gave sworn evidence to the Senate Committee that Shorten’s application was based on “the dysfunctionality in the HSU (which) was evident from the findings of the reports of FWA.....”
GOSTENCNIK did not disclose to the Federal Court or to the other parties to those proceedings that he was also the legal adviser to FWA and that he was in possession of the FWA material that Shorten’s staff say formed the basis of his application.
GOSTENCNIK would have been aware of the duty he owed the court not to use material produced for court proceedings arising from the FWA investigation and the exercise of FWA’s coercive powers in other proceedings. The Implied Undertaking principles in Harman v Secretary of State for the Home Department would seem to me to apply to Mr GOSTENCNIK who knew that a prosecution of Thomson was in the offing, indeed it was he GOSTENCNIK who produced the prosecution material. That GOSTENCNIK would simultaneously act for another party, SHORTEN, while owing a duty to the FWA investigation and in circumstances where he was in possession of confidential material produced by witnesses under threat of penalty simply beggars belief. It may be open to the court in those circumstances to find GOSTENCNIK in contempt. GOSTENCNIK would have been aware of the Riddick principle:
“Compulsion to disclose is an invasion of a private right to keep one’s documents to oneself. The public interest in privacy and confidence demands that this compulsion should not be pressed further than the course of justice requires. The courts should, therefore, not allow the other party – or anyone else – to use the documents for any ulterior or alien purpose. Otherwise the courts themselves would be doing injustice.”
I say his GOSTENCNIK’s actions amounted to professional misconduct and I request that the Legal Services Board causes an enquiry to be made into his behaviour.
FURTHER RELEVANT PARTICULARS
Gostencnik was a former HSU union official. He was involved in drafting the Fair Work legislation for the Gillard Government. The Federal Opposition pursued the Gillard Government over allegations that the FWA enquiry into Thomson was unnecessarily prolonged and its findings delayed to protect Thomson’s seat in the hung parliament.
On 15 February 2012 the General Manager of Fair Work Australia Bernadette O’Neil appeared before a Senate enquiry which took evidence from her on oath. A link to the Hansard record is here.
Relevantly, Ms O’Neill said,
‘The HSU investigations are unprecedented in terms of size and complexity, with the national office investigation significantly bigger than the branch investigation. Given this, there is little doubt in my mind that there are significant lessons to be learned and improvements to be made as to the conduct of inquiries and investigations under the Registered Organisations Act. Accordingly, I have decided to undertake an independent review of the conduct of the investigations. The review will be undertaken by KPMG and I will make the outcome of the review public.
I am aware of the allegations that there has been political interference in the investigations. I take them very seriously. I have absolutely no reason to conclude that there has been any such interference in the investigations.
O’Neill and FWA presented the KPMG enquiry into its investigation as independent of FWA and conducted at arm’s length. GOSTENCNIK’s role in the appointment of the allegedly independent inquiry team is disturbing, as set out in these email exchanges:
Mr Gostencnik's recommendation came back a few minutes later.
Having nominated the independent mates to enquire into allegations that there may have been political interference in the enquiry into the conduct of the former HSU official Thomson, the other former HSU official GOSTENCNIK went on to draft the originating application that brought the Thomson civil law breaches before the Federal Court on 15 October, 2012.
Those proceedings appear to be headed for settlement by mediation, which Mr Thomson will no doubt find a little more accommodating than the effect of the convictions he suffered in the criminal cases Victoria Police brought against him.
GOSTENCNIK's pleasant exchanges with Minister Shorten continued beyond his actions in the Federal Court in 2012.
On 28 March 2013 Bill Shorten appointed Mr Gostencnik as a Fair Work Commissioner with the rank of a Federal Court Judge.
Mr Gostencnik is a highly experienced workplace relations lawyer. He has been a Partner at Corrs Chambers Westgarth since 2001 and was earlier a Partner at Ryan Carlisle Thomas. He leads the Workplace Relations practice group at Corrs as its National Practice Group Leader and has also been the National Pro Bono Partner since 2003.
On 12 July 2013 Shorten promoted him to Director of Fair Work Building and Construction.
Minister for Workplace Relations Bill Shorten appointed me to the position on 12 July 2013 and I started work last week.
By way of background, I come to this role with 30 years’ workplace relations experience in both government and private practice. As partner and Leader of Corrs Chambers Westgarth’s National Workplace Practice Group, I have acted for major construction companies including Multiplex, Downer EDI, Theiss and Transfield Services. I also spent time as Head of Legal and Employee Relations for a national construction company and was chair of the Victorian Government’s Building Industry Consultative Council.
I advised the Government on the drafting and implementation of the Fair Work Act 2009, and before that on aspects of the Building and Construction Industry Improvement Act 2005. At Corrs I was particularly passionate about its Pro Bono and social responsibility program.
Any suspicion that Gostencnik may have been rewarded for his assistance to Shorten is disturbing.
Please treat this letter as an open letter to the Legal Services Board which I intend to publish.
Thank you for your service to a community which cherishes and benefits from our fine legal traditions and the rule of law. Incorruptibility of the officers of our courts is a very important safeguard that protects us from being abused by governments that might be so inclined. Conduct like that which I allege against GOSTENCNIK left unchecked could easily give rise to the disturbing notion that a favoured few might be able to access the rails run through the improper influence of their mates. Please let us know that our system seeks out, rejects and punishes that sort of behaviour.