The commission had appealed against a majority decision of the NSW Court of Appeal, which shut down its inquiry into allegations Ms Cunneen advised her eldest son's girlfriend to feign chest pains to avoid a police breath test after a car crash. Crown prosecutor Margaret Cunneen. Credit:Nic Walker A four-one majority of the High Court dismissed the appeal, ruling the conduct alleged in the Cunneen case did not amount to "corrupt conduct". It is the first time the nation's highest court has ruled on the scope of the ICAC's powers since the watchdog opened its doors in 1989. The ruling is likely to result in some corruption findings being overturned and future findings and inquiries being killed off.

Under the Act, conduct of a private citizen that could "adversely affect" the exercise of a public official's functions is one type of corruption. The Act says such conduct could involve one of a number of specified criminal offences. The ICAC has long operated on the basis this definition extends to cases in which a person misleads a public official to bring about a corrupt result. But the High Court majority – Chief Justice Robert French and Justices Kenneth Hayne, Susan Kiefel and Geoffrey Nettle – said this was "not an accurate assessment". It said "adversely affect" means conduct which could affect the probity of the exercise of a public official's functions. There was no suggestion Ms Cunneen's alleged conduct resulted in police officers acting dishonestly, and accordingly this was not "corrupt conduct" the ICAC could investigate. Mr Ipp, speaking generally, said the decision was a "terrible result because it gives dishonest people free rein to mislead innocent public officials".

He said the ICAC had been the subject of "considerable litigation" since its inception "with some of the best senior counsel in NSW trying to attack it". "This point that the High Court has found was never contemplated. Everyone until now has accepted that ICAC has this jurisdiction," Mr Ipp said. The High Court said the wider interpretation would allow the ICAC "to exercise its extraordinary coercive powers ... in areas ranging well beyond the ordinary understanding of corruption". It would catch any offence of telling lies to a police officer and any form of state tax evasion. Mr Ipp said "on the strength of this decision" it was likely findings against mining mogul Travers Duncan and others – found to have acted corruptly by concealing from NSW officials the involvement of the Obeids in a coal tenement – "will be set aside and ICAC will have to agree to it being set aside". Other findings are also in doubt and the ICAC will have to radically revise the findings it makes in its inquiries into Obeid-linked company Australian Water Holdings and Liberal Party donations.

High Court Justice Stephen Gageler dissented from the majority. He said the consequence of a narrower reading was "entirely to exclude from the definition of corrupt conduct a case of fraud on a public official or of conspiracy to defraud a public official". Former Liberal premier Nick Greiner, who set up ICAC in 1988, welcomed the High Court decision, saying the ICAC action "failed commonsense". with Matthew Knott and Nicole Hasham