ICAC launched an inquiry into Ms Cunneen last year, alleging she advised her son’s girlfriend Sophie Tilley to fake chest pains to avoid a police breathalyser.
After Ms Cunneen won proceedings in the NSW Supreme Court to stop ICAC's investigation, ICAC lodged an appeal in the High Court.
In a joint judgment handed down today, Chief Justice French and Justices Hayne, Keifel and Nettle dismissed the appeal.
ICAC argued Ms Cunneen engaged in ‘corrupt conduct’, as defined by the ICAC Act, because her behaviour could have adversely affected the exercise of official functions by investigating police officers and courts, according to a judgment summary.
However, the majority held “The definition of ‘corrupt conduct’ does not extend to conduct that adversely affects or could adversely affect merely the efficacy of the exercise of an official function by a public official in the sense that the official could exercise the function in a different manner or make a different decision.
“The alleged conduct was not conduct that could adversely affect the probity of the exercise of an official function by a public official. The alleged conduct was therefore not corrupt conduct within the meaning of s 8(2) of the ICAC Act and ICAC has no power to conduct the inquiry.”
Before bringing the case to appeal, ICAC warned a narrow interpretation of the act would "fundamentally affect the scope of its powers".
It announced it would hold off on other investigations, Operations Credo and Spicer, until the appeal verdict was handed down.
In dissent on the appeal, Justice Gageler argued criminal conduct that potentially impaired the efficacy of an official function would be enough to satisfy the legislation.
“I consider it sufficient, to be investigated by ICAC, that criminal conduct has the potential to impair the efficacy of an exercise of an official function by a public official. I do not consider it necessary that the criminal conduct has the potential to affect the probity of an exercise of an official function by a public official,” he wrote in his judgment.