Dale v Clayton Utz (a firm) [No 2]
[2014] VSC 517
•22 October 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
ARBITRATION LIST
S CI 2011 04655
| CHRISTOPHER ANTONY DALE | Plaintiff |
| v | |
| CLAYTON UTZ | Defendant |
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JUDGE: | CROFT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 and 30 September and 6 October 2014 |
DATE OF JUDGMENT: | 22 October 2014 |
CASE MAY BE CITED AS: | Dale v Clayton Utz (a firm) (No 2) |
MEDIUM NEUTRAL CITATION: | [2014] VSC 517 |
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PRACTICE AND PROCEDURE – Partnership – Removal of partner – Whether removed partner entitled to split case – Applicable principles – Protean (Holdings) Ltd (Receivers and Managers Appointed) v American Home Assurance Co [1985] VR 187 (FC) – Wong v Carter [2000] VSCA 53 – French v Triple M Melbourne Pty Ltd Ruling (No 2) [2008] VSC 548 – Privileges against self-incrimination – Re Australian Property Custodian Holdings (In Liquidation) (Receivers and Managers Appointed) (Controllers Appointed) (No 2) (2012) 93 ACSR 130 – Gemmell v Le Roi Homestyle Cookies Pty Ltd (In Liquidation) [2014] VSCA 182 – Evidence Act 2008, ss 128, 135 and 136.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S. Wilson QC with Mr P. Ehrlich | O’Donnell Salzano Lawyers |
| For the Defendant | Mr J. Karkar QC with Mr N. De Young | Minter Ellison |
TABLE OF CONTENTS
Introduction......................................................................................................................................... 1
Application.......................................................................................................................................... 1
Nature of the application.................................................................................................................. 2
Particular issues with respect to the application........................................................................ 11
Principles applicable to a Protean Holdings “split”................................................................... 17
Application of the Protean Holdings principles......................................................................... 23
Privileges against self-incrimination............................................................................................ 40
Availability of the privileges........................................................................................... 42
Waiver of the privileges................................................................................................... 54
Reasonable likelihood of criminal or civil penalty proceedings............................... 68
A further matter................................................................................................................. 77
Objections to defendant’s evidence.............................................................................................. 78
Conclusions and orders.................................................................................................................. 78
HIS HONOUR:
Introduction
The plaintiff in these proceedings is a former partner of the defendant firm. In these proceedings, he seeks to challenge a decision made by the Board of the defendant firm (“the Board”) on 7 September 2007 to require the plaintiff to leave the partnership (“the Decision”).[1]
[1]Statement of Claim (2 September 2011), [33].
The plaintiff’s claim is for breach of contract, the relevant contract being the Partnership Agreement, a contract which is admitted.[2] In order to succeed in this claim, the plaintiff must establish, the onus being on him, that the making of the decision constituted a breach of the Partnership Agreement and that the breach caused him to suffer the loss and damage claimed.[3]
[2]Statement of Claim, [2]; Defendant’s Amended Defence (3 October 2013), [2].
[3]Statement of Claim, [38] to [44] and [48].
Application
By summons dated 10 July 2014, the plaintiff seeks – in addition to costs and directions for trial, including directions for the making of discovery, the filing of witness statements and mediation – the following substantive orders:
3. The trial of the proceeding be split on the basis that:
(a)in the plaintiff’s case:
(i)the plaintiff not be required to lead evidence directed to any issue on which the defendant has the onus of proof, being the issues pleaded in paragraphs 49 to 145 of the Amended Defence;
(ii)unless the plaintiff has led evidence on the issue, there be no cross-examination of the plaintiff or any of his witnesses in relation to any issues pleaded in paragraphs 49 to 145 of the Amended Defence dated 3 October 2013;
(b)unless the plaintiff has led evidence on the issue, the plaintiff may have a case in rebuttal on any issue on which the defendant has the onus of proof, being the issues pleaded in paragraphs 49 to 145 of the Amended Defence;
(c)the plaintiff have leave to file a Further Amended Reply at the conclusion of the defendant’s case in relation to any issue on which the defendant has the burden of proof, being the issues pleaded in paragraphs 49 to 145 of the Amended Defence.
4.The plaintiff be excused from compliance with the requirements of Supreme Court (General Civil Procedure) Rules 13.07, 13.10, 13.12 and 29 to the extent that compliance with those Rules may have a tendency to expose the plaintiff directly or indirectly to a civil penalty or a criminal proceeding in respect of the subject matter of this proceeding.
The orders sought by the plaintiff to “split” the trial of the proceeding are based on the rule of practice explained by Marks J in Protean (Holdings) Limited v American Home Assurance Co;[4] a case and principle conveniently referred to as Protean Holdings. The defendant, on the other hand, submits that the plaintiff’s claim in this proceeding is not appropriate for a Protean Holdings “split”. For the reasons which follow, I am of the opinion that this is not the correct view and that the orders sought by the plaintiff in this respect should be granted.
[4][1985] VR 157.
Nature of the application
In order to assess the appropriateness or otherwise of a Protean Holdings “split” it is first necessary to understand the nature and extent of the plaintiff’s claim.
It is common ground that the Decision was purportedly made pursuant to clause 16.1 of the Partnership Agreement; a provision which relevantly reads:[5]
Subject to this clause and without limiting the terms of appointment of any Fixed Income Partner, the Board has the power to make a Decision requiring a Partner to leave the Partnership if:
(a)(i)in the opinion of the Board she or he wilfully or persistently acts in a manner contrary to her or his obligations under this agreement or the Partnership Handbook or is guilty of any serious professional misconduct;
(ii)she or he is convicted (unless quashed on appeal) of any criminal offence involving dishonesty or if she or he acts in a manner which has caused, or is likely to cause, serious prejudice to the reputation of the Partnership;
…
[5]Statement of Claim at [3(m)]; see also Defence, [3A].
It is also common ground that the information before the Board at the time of the Decision included a memorandum prepared by David Fagan (the then Chief Executive Partner of the defendant) dated 26 August 2005, together with annexures (“the Fagan Memorandum”).[6]
[6]Statement of Claim, [9] to [13] and [20]; Defence, [9] to [13] and [20]. The Fagan Memorandum is exhibit GJC-1 to the Carfoot Affidavit.
The plaintiff alleges in his statement of claim that the Decision was unlawful and in breach of the Partnership Agreement on the following grounds,[7] and seeks damages for being deprived of membership of the defendant firm as a result:[8]
(a)first, the plaintiff alleges that no Board acting in utmost good faith could have reasonably formed the opinion required by clause 16.1(a)(i) and (ii) on the information provided to and considered by the Board in the absence of an explanation by the plaintiff;[9]
(b)secondly, the plaintiff alleges that the powers conferred by clause 16.1(a)(i) and (ii) could only be lawfully relied on by the Board if the plaintiff was first afforded a full opportunity to understand the details of the matters, facts and circumstances relied on by the Board and to state his case and explain his conduct in accordance with alleged requirements of natural justice and procedural fairness which requirements were denied to the plaintiff by the defendant;[10]
(c)thirdly, the plaintiff alleges that the Board was not entitled to rely on the power contained in the second limb of clause 16.1(a)(i) absent a finding of actual guilt of professional misconduct (or its equivalent) by a regulatory authority or a court;[11]
(d)fourthly, the plaintiff alleges that the Board acted for an improper purpose, being the removal of the plaintiff from the partnership prior to the facts, matters, circumstances and things referred to in the Fagan Memorandum becoming public;[12] and
(e)fifthly, the plaintiff alleges that the Board acted with actual bias against the plaintiff and, or alternatively, the circumstances give rise to a reasonable apprehension of bias against the plaintiff in making the Decision.[13]
[7]Statement of Claim, [38] and [42] to [46].
[8]Statement of Claim, [48].
[9]Statement of Claim, [42].
[10]Statement of Claim, [14], [15] and [43].
[11]Statement of Claim, [44].
[12]Statement of Claim, [45].
[13]Statement of Claim, [46].
The particulars to each of these claims by the plaintiff refer on numerous occasions to matters contained in the Fagan Memorandum. By way of example, the particulars to the bias claim (also relied on in the bad faith claim) allege that actual or apprehended bias is to be inferred from, inter alia:[14]
[14]Statement of Claim, particulars to [46], [A] to [C] and [K].
(a)the sustained reference in the Fagan Memorandum to the effect that the principal acts, facts, matters, circumstances and things set out in the Fagan Memorandum were proved to a standard necessary to permit the passage of a resolution requiring the plaintiff to leave the partnership when in fact each and every such principal act, fact, matter and circumstance was an unproved and untested allegation only;
(b)partisanship and hostility as evidenced in the totality of the Fagan Memorandum such as to show that Mr Fagan and the Board who voted in favour of the Decision had pre-judged the case against the plaintiff and were not open to persuasion in favour of the plaintiff;
(c)by proceeding on the statements of conclusion, set out in the Fagan Memorandum, to the effect that the plaintiff was guilty of criminal and unlawful conduct and breaches of fiduciary duties owed to the defendant firm when facts necessary to establish such conclusion had not been proved and were asserted as if proved, including:
(i)the statement at paragraph 15(b) of the Fagan Memorandum that the plaintiff received, retained and made use of a confidential document of Victoria Police that had been “leaked” to him i.e. obtained unlawfully;
(ii)the statement at paragraph 15(c) of the Fagan Memorandum that the plaintiff requested Milte to conduct unauthorised searches of Won and knowing that the searches so made were unlawful, nonetheless used the material obtained;
(iii)the statement at paragraph 15(d) of the Fagan Memorandum that the plaintiff was involved with Milte in retaining “rogue” police officers in Victoria and New South Wales and others to intimidate Won so that he would settle with Schmidt;
(iv)the statement at paragraph 15(e) of the Fagan Memorandum that the plaintiff had given Milte the amount of $50,000 of his personal funds on 19 April 2002 in an attempt to prevent Schmidt from raising complaints against the plaintiff and Milte with the police, the media and the firm;
(v)the statement at paragraph 15(f) of the Fagan Memorandum that the plaintiff had failed to record in the firm’s transit register 6 cheques which he had received from Schmidt which has exposed the firm to the risk of prosecution;
(vi)the statement at paragraph 15(i) of the Fagan Memorandum that the plaintiff had received an amount of $180,000 from the client in contravention of Rule 8 of the Professional Conduct and Practice Rules then in force; and
(d)the failure of the Board to extend to the plaintiff a further 30 days in which to make responses to the Fagan Memorandum and the other material relied on by the Board in determining to expel the plaintiff.
The defendant submits that in pleading his case in this way, the plaintiff has assumed the burden of proving that the acts, facts, matters and circumstances referred to in the Fagan Memorandum were so unsubstantiated or uncertain that no Board acting in good faith could have formed the opinion that the requirements of clause 16.1(a)(i) or (ii) of the Partnership Agreement had been satisfied with respect to the plaintiff. Moreover, the defendant submits that it is inconceivable that the plaintiff could demonstrate that the Decision was in breach of the Partnership Agreement in this way without proving the acts, facts, and circumstances referred to in the Fagan Memorandum were not correct or reliable or were capable of innocent explanation.[15]
[15]See Defendant’s Submissions (19 September 2014), [9]; cf ASIC v Mining Projects Group Ltd (2007) 164 FCR 32 at 39, [20] (Finkelstein J).
The plaintiff submits, however, that this is not his case. Rather, the plaintiff says that he pleads, and will seek to prove at trial, that he was denied natural justice and procedural fairness and that the defendant firm acted unlawfully and in breach of the Partnership Agreement, in bad faith, with bias, and for improper purposes, in expelling him.[16] On this basis, the plaintiff pleads repudiation and acceptance of repudiation and, by paragraph 48 of the Statement of Claim, pleads loss and damage.
[16]Making reference to Statement of Claim, [14], [15], [38], [42], [43], [44], [45] and [46].
On this basis, the plaintiff says that whilst no final decision has yet been made, he will, in his case, likely call only the plaintiff’s then medical advisers (who will give factual evidence of his then psychiatric condition, hospitalisation and inability to assist in his defence) and his then legal advisers (who will give evidence of their inability to obtain instructions). At this point, the plaintiff would not necessarily be called.[17]
[17]As submitted by the plaintiff, it should be noted that the defendant’s plea to paragraph 16 of the Statement of Claim is a non-admission. The defendant does not deny that “[a]t all times between 26 August 2005 and 4 September 2005 the plaintiff was confined in the Albert Clinic, a psychiatric hospital, for psychiatric care and was unable to provide proper instructions to his legal advisors.”
In any event, the plaintiff stressed that if he did give evidence, it would be confined to evidence necessary to establish his own case. This, it was said, would not require or involve evidence with respect to any of the matters which are sought to justify[18] his expulsion from the firm or the defendant firm’s plea of no damage. Otherwise the plaintiff says he will rely upon the:
[18]See Defence, [49] to [145].
(a)incontrovertible objective facts;
(b)significant admissions made by the defendant in its Defence, including admissions that the plaintiff’s legal advisers requested adjournments (including on the basis of Mr Dale’s then psychiatric condition and hospitalisation) and an appropriate time to prepare and put on Mr Dale’s defence and which requests were denied;
(c)Fagan Memorandum (as a record);
(d)Annetta Memorandum (as a record); and
(e)expulsion decision (as a record),
in proving his case.
The plaintiff emphasised in oral submissions that his case is a relatively simple and confined case. In essence, he says, it is a claim for damages for repudiation of the Partnership Agreement – namely the expulsion of the plaintiff from the partnership on the basis of the Decision which was a nullity as a result of a denial of natural justice and procedural fairness. Thus it is said it matters not that the plaintiff might, as the defendant says, have appealed the Decision to a meeting of the full partnership of the defendant firm. Why, the plaintiff says rhetorically, should he have appealed a decision which is a nullity – even assuming he was at the relevant time in a physical or mental state which would have enabled him to do so.
Before turning to the specific aspects of the application and the party contentions with respect to it, this discussion of the nature of the application is, in my view, helpfully illuminated by the following aspects of the plaintiff’s oral reply submissions:[19]
[19]Transcript, pp 149-160 (Mr S. Wilson QC), (extracts, with further [bracketed] references).
We’re seeking a Protean order about the order of evidence in relation to the trial. We’re not splitting the trial and all the authorities he referred to about splitting the case we would agree with, if it was the fact that we were in a position where we were caught by our pleadings to be put in a position where you were going to have to embark on the merits of the Fagan Memorandum in the sense of the underlying truth or otherwise of the allegations to prove your damages or something of that nature, but that’s not our case.
First of all he said the question ought to be determined at trial. Well the first thing is that this is a managed list, Your Honour will be the trial judge and in that context we say now is the appropriate time and before Your Honour makes the relevant directions that will proceed the matter to trial because how the evidence is to come out will determine the order in which witness statements are to be delivered and so forth.[20]
[20]Transcript, p 149.
…
“The older case law indicates that there is no such entitlement absent mala fides”.[21] Of course in our case there’s an expressed contractual term and there’s a couple of older cases. “However in Kerr v Morris [[1987] Ch 90], a case relating to a national health service medical practice, Lord Justice Dillon evidently regarded it as arguable that since a power of expulsion must be exercised in good faith”, and in our case an expressed term to that effect, “a partner cannot be expelled unheard”.
[21]Quoting from Variety Video v Jones [2001] NSWSC 5, [163] (Austin J).
It may be that there is a right to a hearing where the partnership is set up under or reinforced by a statutory scheme and so forth”. Then in His Honour’s conclusions at Paragraph 3 [Variety Video [2001] NSWSC 5, [185]] he says, “Each of the defendant’s [sic] was guilty on or prior to 27th of serious misconduct which prejudiced the partnership business”.[22]
[22]Transcript, p 153.
…
We deal with that matter and we say it just leaves the matter as a matter of law, but what it does is it highlights in the pleading the fact that we could obtain a result in this case on that point simply as a matter of construction of the contract. It also highlights arguably indirectly why there’s a strong [argument not] to decide anything without hearing from us which is most of the paragraphs in the statement of claim, is a lack of good faith and therefore we would win on that basis.
My learned friend then went on … by saying that the memorandum starts and he talks about that and he talks about those matters. Then he says well so if I may say so, admitted from my learned friend, saying well we haven’t been convicted and they tossed us out you don’t have to be convicted of a criminal offence involving dishonesty for the Board. What is necessary is the formation of the opinion.
Well we dispute that but at the end of the day it’s not a matter that invokes a review of all of the facts of the case in the sense of the underlying facts that are rehearsed in the memorandum or indeed the other matters.[23]
[23]Transcript, pp 153-4.
…
He [Mr Karkar QC] then says effectively if one reads from Line 5 of 42 of our statement of claim, “It is alleged the expulsion decision was unlawful and in breach of the partnership agreement because”, and he then cited, “No director acting in the utmost good faith could reasonably”, and Your Honour will recall I said or good faith, “could reasonably have formed that opinion on the information provided to and considered by the board in the absence of an explanation by the plaintiff”.
They’re the key words in all of this. You have to set the stage because each time the Board is doing this they’re doing it on the face of what is contained in the Fagan Memorandum and that’s not to say of course we’ve got a tender that, it’s admitted in the pleadings that they sent it to us and that was what they acted on.
It would be absurd to suggest that by tendering it as part of our case we’re admitting to the underlying facts or matters that give rise to the conclusions and statements. It would be like saying if I may, it would be like saying in a defamation case that when the plaintiff proves publication of the article in the newspaper he’s admitting to the truth – because he’s put the newspaper article into evidence he’s admitting the truth of everything that’s stated in it which would then be hardly conducive to his case.[24]
I’ve never heard of that ever happening and there are clearly cases where people tender documents on a clear and fair basis that is proper based on the structure of the pleadings and it would be patently obvious that the plaintiff would not be tendering the document on the basis that he was accepting or proving the truth – by doing so the truth of all the underlying facts and matters in the statement.
Then he says – and this is where Mr Karkar slides into the fallacy. This is on p 73 at Line 2, “Now what the plaintiff is asserting here is this. Had you given me an opportunity to explain you would not have come to this decision. Now for good or ill”, no (sic) what he’s saying is you didn’t give me the opportunity to explain therefore coming to this decision was unfair. I might say it’s a point Your Honour picked up.
Now for good or ill that is his case[25] - that’s not his case. What his case is in fact if you read it altogether that they were biased and determined to get rid of him wouldn’t have made any difference probably. But the fact is that his case is clearly based on the breach of the obligation to act fairly, what was that breach? They didn’t give him an opportunity to be heard and every one of the plaintiff’s claims, almost every one of them, is based on that.
The others are that they’re biased because they were prepared to accept without hearing from him the basis, the factual basis of the Fagan Memorandum when so much of it is expressed or couched in terms that are conclusionary and prejudicial and so forth and raise very serious matters.[26]
…
[24]Further, as to the analogy with defamation cases, see the discussion below at paragraphs 50 to 54 with respect to S, DJ v Channel Seven Adelaide Pty Ltd (2009) 260 LSJS 287.
[25]This is a reference by Mr Wilson QC, Counsel for the plaintiff, to Mr Karkar QC’s, Counsel for the defendant, oral submission at Transcript page 73 line 6.
[26]Transcript pp 157-8.
Emphasising the limited ambit of the plaintiff’s case which he seeks to put – and having also emphasised that this proceeding is judge-managed in a Commercial Court managed list where the judge hearing this application is also the trial judge – Mr Wilson QC said:[27]
Well basically that’s our case and Your Honour was onto that. We’re saying to you if we’re required to elect we elect now. That’s how we’re putting our case. We are not putting it on the basis that we will try to establish that had we given all the explanations the Board would have decided differently which then of course kills the causation argument and I’ll come to that in a second.
Mr Karkar says, “Well Your Honour will have to wait until the opening of this case by the plaintiff in order to come to a conclusion”. No you don’t, I’ve told Your Honour today and I’ve told Your Honour the other day when we took Your Honour through the pleading and explained how the case was going to be put.
[27]Transcript, p 160.
In my view, there is much to be said for the course proposed by the plaintiff. Having regard to the significance and effect of a Protean Holdings “split” delaying the issue until the commencement of the trial itself is both unnecessary in a judge-managed proceeding of this kind – managed by the same judge who will hear the trial – and does not assist either party in terms of procedural fairness as it means they must prepare for trial not knowing exactly how it will be conducted. Moreover, the approach advocated by the defendant by reference to Downs Irrigation Co-operative Australia Limited v The National Bank of Australasia Limited[28] does not assist in this respect – and if the approach of the Queensland Full Court with respect to rebuttal evidence were applied in the present circumstances, the possibility of a Protean Holdings “split and any advantages in terms of fairness are simply denied. This would be at odds with the approach in Protean Holdings itself and the other authorities in relation to such a “split” which are considered in these reasons.
[28][1983] 1 Qd R 130 (FC).
Particular issues with respect to the application
It is against this background that attention is now directed to some particular issues with respect to the application. These arise out of both the party submissions and the pleadings.
The defendant responds to the plaintiff’s case as pleaded[29] with denials[30] and then pleads further matters;[31] matters which the plaintiff contends are properly characterised as constituting a positive case, in relation to which the defendant bears the onus of proof. The plaintiff seeks to make good this contention by particular reference to parts and aspects of the defendant’s pleadings.
[29]See above, paragraph 11.
[30]Defence, [14], [15], [38], [42] to [46] and [48].
[31]Defence, [49] to [145].
In this respect, the plaintiff makes reference to paragraph 49 of the Defence where the defendant pleads:
49.Further, the Board’s decision to require the plaintiff to leave the Partnership was made in good faith in the best interests of the partnership and in accordance with the power expressly conferred by clause 16.1 of the Partnership Agreement and:
(a)the Board held an opinion that the plaintiff had wilfully or persistently acted in a manner contrary to his obligations under the Partnership Agreement or the Partnership Handbook or was guilty of serious professional misconduct within the meaning of clause 16.1(a)(i) of the Partnership Agreement; and/or
Particulars
The above opinion was bona fide held by each of the Board members based on the materials before them at the time of making the Decision, including the Fagan Memorandum and annexures which made reference to the conduct of the plaintiff alleged in paragraphs 50 to 101 below.
(b)by engaging in the conduct alleged in paragraphs 50 to 144 below, the plaintiff had prior to the making of the Decision acted in a manner which had caused or was likely to cause serious prejudice to the reputation of the Partnership within the meaning of clause 16.1(a)(ii) of the Partnership Agreement.
The plaintiff contends that defendant’s positive case culminates in paragraph 145 of the Defence in the pleading:
145.Further and alternatively, if (which is denied) the matters alleged in the plaintiff’s Statement of Claim are established, by reason of:
(a)the circumstance that the allowing of any further time to the plaintiff would not have resulted in the Board not making a decision to require the plaintiff to leave the Partnership;
(b)…
(c)the matters alleged in paragraphs 49 to 101 above;
(d)the matters alleged in paragraphs 102 to 119 above; and/or
(e)the matters alleged in paragraphs 120 to 144 above;
the plaintiff:
(i)has not suffered any loss and damage as a result of the Board’s Decision to require him to leave the Partnership,
(ii)alternatively, the plaintiff has not suffered any loss and damage as a result of the Board’s Decision to require him to leave the Partnership on 8 October 2005; and/or
(iii)further and alternatively, the plaintiff’s claimed loss and damage should be wholly or substantially reduced to reflect the circumstance that the plaintiff would have been required to leave the Partnership in any event by subsequent decision of the Board after 7 September 2005.
Thus, it is said, the defendant, by paragraph 49 of the Defence, runs a positive case by which it seeks to justify the expulsion and then, by paragraph 145, relies upon the same positive case on the question of loss and damage even if the plaintiff establishes his case. Emphasising this point, the plaintiff says that the defendant, in support of its positive case of 97 paragraphs running to some 45 pages, provides 53 additional pages of what it describes as confidential particulars of the plaintiff’s alleged wrongdoing. Continuing, the plaintiff observes that even the paragraphs in the Defence which deal with matters referred to in the Fagan Memorandum are greatly expanded upon, and paragraphs 102 to 150 plead matters not alleged in the Fagan Memorandum and not forming part of the expulsion record.[32] Thus the plaintiff contends, on any view, the Defendant has pleaded a positive case of serious professional misconduct and serious criminal conduct on which it has the onus of proof, including conduct which was not part of the expulsion record.
[32]By paragraphs 102 to 119 the defendant purports to rely upon matters that it was not aware of prior to the expulsion decision but learned about before the expulsion decision took effect on 8 October 2005 and by paragraphs 121 to 144 it purports to rely upon matters it became aware of after 8 October 2005.
In support of his contention, the plaintiff submits:[33]
[33]Plaintiff’s Submissions (12 September 2014), [20] to [22].
20.In substance, the defendant seeks, in this proceeding, to conduct a roving commission into the conduct of the plaintiff from as early as 1998 (which is 2 years prior to the establishment of the partnership from which he was expelled in 2005) and 7 years prior to the expulsion decision itself (which was made on 7 September 2005).
21.All of this conduct (that is, all of the conduct pleaded in paragraphs 49 to 101, 102 to 119 and 120 to 144) is said to:
(a)be in breach of the “terms, duties and obligations referred to in paragraph 3B” (see paragraphs 50, 101, 103, 110, 141, 142); and/or
(b)to constitute serious professional misconduct (see paragraphs 49(a), 102(a), 120(a)).
22.Paragraph 3B itself extends to 3½ pages and the defendant by reference to paragraph 3B alleges:
(a)breaches of the Partnership Acts of Victoria, NSW and the ACT;
(b)breaches of the relevant Legal Practice Acts of Victoria, NSW and the ACT and breaches of the Professional Conduct and Practice Rules of Victoria, NSW and the ACT;[34]
(c)breaches of the paramount duty of candour to the Court;
(d)dishonesty;
(e)intimidation;
(f)the making of false statements;
(g)acting without instructions; and
(h)borrowing monies from clients.
[34]Paragraph 3B of the Defence pleads breaches of the Legal Practice Act 1996 (Vic), Legal Profession Act 2004 (Vic), Legal Practitioners Act 1970 (ACT), Legal Profession Act (2004) (NSW), Legal Profession Act 1987 (NSW), Professional Conduct and Practice Rules 2005 (Vic), Revised Professional Conduct and Practice Rules 1995 (NSW), Guide to Professional Conduct and Etiquette 1984 (ACT).
In concluding this aspect of his submissions, the plaintiff contends that there can be no doubt that:
(a)the defendant has the onus of proof on all of these allegations (yet what conduct is said to engage what terms, duties and obligations is entirely unexplained. The pleading is entirely embarrassing and uncross referenced in that regard); and
(b)many of the allegations made by the defendant also amount to serious criminal conduct including allegations of threat making to effect a settlement (in effect, blackmail, extortion and/or demanding money with menaces), false accounting and obtaining confidential immigration information and confidential police information through unlawful or improper means.
The defendant, on the other hand, in opposition to the plaintiff’s application contends that the plaintiff has, as a result of the manner in which he has pleaded his case, assumed the obligation of proving the acts, facts, matters and circumstances referred to in the Fagan Memorandum were so unsubstantiated or uncertain that no Board acting in good faith could have formed the opinion that the requirements in clause 16.1(a)(i) or (ii) of the Partnership Agreement had been satisfied with respect to the claimant. In seeking to emphasise this position, the defendant submits that:[35]
9.… It is inconceivable that the plaintiff could demonstrate that the Decision was in breach of the Partnership Agreement in this way without proving that the acts, facts, matters and circumstances referred to in the Fagan Memorandum were not correct or not reliable or were capable of innocent explanation. It remains to be seen how the plaintiff will seek to make good his pleaded case at trial in circumstances where the plaintiff challenges statements of fact in the Fagan Memorandum which were plainly supported by contemporaneous documents annexed thereto. For present purposes, it is sufficient to note that the plaintiff has thus voluntarily assumed the burden of proving this case at trial.
[35]Defendant’s Submissions (19 September 2014), [9].
More particularly, the Defendant’s submissions continue:[36]
10.The relevant allegations in the defendant’s Defence which are the subject of the plaintiff’s application are contained in paragraph 49 to 145.[37] The plaintiff mischaracterises those allegations in his submissions at [21] as amounting to a “roving commission into the conduct of the plaintiff”. The allegations relate to specific and clearly identified conduct engaged in by the plaintiff concerning the defendant firm prior to the making of the Decision. The relevant paragraphs identify the salient matters referred to in the Fagan Memorandum. The defendant has exhibited a copy of the Fagan Memorandum to illustrate this point.[38] If the plaintiff wishes to establish his pleaded case, he will need to give evidence attempting to challenge the bona fides of what is alleged in paragraphs 50 to 101 of the defendant’s Defence. If this amounts to “a roving commission” (which is rejected), it is of the plaintiff’s own making because he has so framed his case to attract an enquiry into his conduct.
11.Further, to prove his claimed loss and damage, the plaintiff must prove – in his case – that the Board would not have decided to expel him had he been afforded the alleged procedural fairness and natural justice (i.e., a further 30 days in which to make responses to the Fagan Memorandum). For that purpose, if the plaintiff wishes to establish his claim for damages, he must again come forward and seek to challenge the bona fides of what is alleged in paragraphs 50 to 145 of the Defence.
[36]Defendant’s Submissions (19 September 2014), [10] to [11].
[37]Plaintiff’s application, [3(a)(i)].
[38]Carfoot Affidavit, exhibit GJC-1.
For the reasons which follow, I am of the view that the defendant mischaracterises the plaintiff’s case. As indicated in the submissions of the plaintiff to which reference has been made and as emphasised in the plaintiff’s oral reply submissions, his case is much narrower. It is a case founded on a denial of natural justice, a denial of procedural fairness. The plaintiff’s pleadings – in claim and reply – are, in my view, entirely consistent with this position. Moreover, in oral reply submissions – many of the relevant parts of which are set out above – Mr Wilson QC expressly stated the limitations of the plaintiff’s case and committed the plaintiff to a case in these terms – as, in effect, by way of a statement of case definition in the plaintiff’s opening. As observed previously, this is particularly significant as it is a statement made to the trial judge, the judge hearing the present application in what are judge-managed proceedings.
At this point, it is appropriate to make reference to the, so called, rule in Shepherd v Felt and Textiles of Australia Ltd,[39] upon which it appears the defendant will seek to place some reliance. At this point, it is sufficient to treat Shepherd’s case, a case concerned with a contract of agency, as authority for the primary proposition as stated in the headnote that: “The termination of an agreement may be justified by proof of circumstances existing prior to such determination but of which the party terminating the agreement was unaware until subsequently thereto”. What might be described as the Shepherd’s case approach on the part of the defendant is addressed in the plaintiff’s reply. In terms of the ambit of his case, the die is really cast by the first paragraph of that pleading, in the following terms:[40]
1.In answer to paragraphs 49 to 144 and 145 of the Amended Defence, the Plaintiff says that the Defendant may not, as a matter of law, rely on any facts, matters or circumstances that were not before the Board when the Expulsion Decision was made for the reason that the rule, so-called, in Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 has no application in a partnership because:
(a)there is, and was, no basis in law upon which the Defendant was entitled to expel or remove the Plaintiff from the firm other than through, and in strict accordance with, a proper and bona fide exercise, by the Board, of the expulsion procedure set out in clause 16.1 the Partnership Agreement: see s 30 of the Partnership Act 1963 (ACT);
(b)further or alternatively, clause 16.1 of the Partnership Agreement is part of an exclusive code dealing with the removal of a partner for cause or otherwise, thus otherwise precluding any application of the rule, so-called, in Shepherd v Felt and Textiles of Australia Ltd;
(c)further or alternatively, clause 16.1 of the Partnership Agreement required a third party, being the Board, to form an “opinion” of the requisite matters there stated such as to preclude any removal or expulsion of the Plaintiff absent a proper and bona fide determination of such an opinion by a Board in accordance with clause 16.1.
[39](1931) 45 CLR 359; and see Carter, Contract Law in Australia (6th ed, LexisNexis, 2013), [31-03]; and Carter, Breach of Contract (LexisNexis, 2011), [10-07].
[40]Plaintiff’s Reply (23 October 2012), [1].
The question whether the, so called, rule in Shepherd’s case is applicable in the present circumstances is, of course, a matter for trial. Nevertheless, it is relevant with respect to the present application to observe that the plaintiff’s pleaded response to any reliance upon Shepherd’s case by the defendant is a responsive pleading. Moreover, it is a pleading which does not join issue with matters alleged by the defendant as to the actual conduct – the facts, matters and circumstances – alleged by the defendant against the plaintiff which would provide a basis, as it is contended, for the application of the, so called, rule. Consequently, the plaintiff’s response in this respect does not, in my view, have the effect of expanding the plaintiff’s case beyond that as already pleaded and reaffirmed in submissions. The other matters pleaded in reply are also consistent with this position.
Principles applicable to a Protean Holdings “split”
Protean Holdings[41] was a case where the insured sued its insurer for indemnity under a fire policy for fire damage to an abattoir which it owned. Defences were raised by the insurer, including an allegation that the insured had lit or connived in the lighting of the fire. The rulings of Marks J in that case – rulings which were embraced rather than doubted in any way by the Full Court – are presently of significant importance and are relied upon by the plaintiff.
[41][1985] VR 187 (FC).
Having regard to the nature of the present proceeding and the nature of the allegations made by and against the plaintiff, it is, I think, helpful and desirable to direct close attention to and to set out substantial parts of the ruling of Marks J on what might be called the Protean Holdings “split”. In so doing, I preface this exercise by observing the emphasis which Marks J gave to the general rule of practice which prevents a plaintiff from splitting or dividing his or her case. Thus, it is clear that it is only in certain circumstances that a court is likely to exercise its discretion to order a Protean Holdings “split”. It is to those that I now turn, aided by the ruling of Marks J, particularly as follows:[42]
[42][1985] VR 187 at 189 to 191.
I am asked to rule on submissions as to the order in which evidence may be presented in this action.
The plaintiffs’ claim is pursuant to a policy of indemnity insurance against fire. The pleadings reveal that there is no issue about the existence of the policy or fire damage to the subject premises during its currency. However, the plaintiffs have been put to proof of the terms of the policy and by a foreshadowed amendment to the defence, to proof perhaps of an insurable interest and privity of contract.
It is conceded on behalf of the plaintiffs that they have the burden of proof in relation to all those matters.
By its defence, however, the defendant alleges a right to avoid the policy; that the plaintiffs lit the fire themselves or caused or connived at it being lit; made misrepresentations of material facts; were guilty of fraud and non-disclosure of material facts. In relation to all these latter allegations Mr O’Callaghan Q.C. for the defendant conceded that the defendant has the burden of proof.
Mr Chernov Q.C. for the plaintiffs submitted that he should not be required to lead evidence directed to the issues on which the defendant has the onus of proof, but be permitted to call rebutting evidence after the defendant has called its evidence on those issues. Mr O’Callaghan opposes this course. He submitted that the plaintiffs should begin and call the whole of their evidence before the defendant is called upon.
Mr Chernov conceded that he must begin in relation to those issues on which the plaintiffs have the burden of proof.
There is clearly, I think, a rule of practice which was succinctly stated by Stawell CJ delivering the judgment of this Full Court in Wharton v. Tuohy (1862) 1 W. & W. (L.) 217, at p. 219: “No rule of practice is better known than that prohibiting a plaintiff from dividing his case; on the other hand, a plaintiff is clearly entitled to reserve for the purpose of rebutting new matter, evidence which, if he, the plaintiff, were disposed, he might give in the first instance by way of anticipation. The correctness of rejecting or receiving the evidence in question depends, therefore, upon whether that evidence, if received, would or would not, have formed a rebutting case, properly speaking.”
The rule was also stated by Pollock C.B. in Shaw v. Beck (1853) 8 Exch. 392, at p. 398; 155 E.R. 1401, at p. 1403, as follows: “Where there are several issues, some of which are upon the plaintiff and some upon the defendant, the plaintiff may begin by proving those only which are upon him leaving it to the defendant to give evidence in support of those issues upon which he intends to rely; and the plaintiff may then rebut the facts which the defendant has adduced in support of his defence.”
There was, I think, recognition of such a principle in the ruling of Lowe J. in Portelli v. Port Waratah Stevedoring Co. Pty. Ltd. [1959] V.R. 195, although his Honour in that case did not accede to the application. The rule, however, was acted upon and reasserted by McInerney J. in Re Hardiman, deceased [1967] V.R. 577, at p 580. It was discussed at length by the Court of Appeal in Beevis v. Dawson [1957] 1 Q.B. 195 which was followed by the Supreme Court of Canada, comprising a bench of five Judges, in Jerome v. Anderson (1964) 44 D.L.R. (2d) 516, at pp. 526 et seq. But there is high authority for the rule as early as 1825 when Lord Abbott C.J. in Browne v. Murray (1825) Ry. & Mood. 254; 171 E.R. 1012, said: “In actions of this nature, the plaintiff may, if he thinks fit, content himself with proof of the libel, and leave it to the defendant to make out his justification, and then the plaintiff may, in reply, rebut the evidence produced by the defendant.” However, Lord Abbott went on to say as do many, if not all, subsequent authorities, that the plaintiff cannot split his case, so that once he enters upon evidence in relation to an issue he cannot seek to call further evidence after the defendant to supplement it.
In Beevis v. Dawson, at ([1957] 1 Q.B.) p. 204 Singleton L.J. said: “The authorities seem to me to show that the practice is based on general convenience. It must depend, of course, upon the issues which are raised; obviously it must depend upon the pleadings in the case in which the issues are set out.” He added: “In most cases there are other pleas, and the question arises as to what is the most convenient way of dealing with the matter in the interests of justice, in the interests of the parties, and from the point of view of the court. Those interests are really all the same. If, after hearing submissions, the Judge decides that one course is preferable to another, his decision should in general be treated as final.”
At p. 215 Jenkins L.J. said: “For my part, I do not think the principle which is stated in the case of Browne v. Murray, to which my Lord has referred, really amounts to a rule of law, or a right to which the plaintiff may invariably lay claim as a matter of law.”
His Lordship added: “I think that the principle there stated may well reflect a practice which in appropriate circumstances it is right to follow, but is subject to the overriding discretion of the court to give such directions as to the order in which the onus of proof is to be dealt with and in which witnesses are to be called as the court may find just and convenient in the circumstances of the particular case.”
Jenkins L.J. said he thought that his view was supported by the observations of Parke B. in Shaw v. Beck (1853) 8 Exch. 392, at p. 398.
I consider that they were, and that what Singleton L.J. said in the passage to which I have referred, is also consisted with the existence of a discretion.
Accordingly, I am minded for the purposes here; to consider that there is left in the Court a discretion in the matter. All authorities refer to the rule being one of practice and not law, and that is consistent with an exercise of discretion being involved in a ruling as to the order of presentation of evidence. But it ought I think, to take place against the background of the practice.
In the exercise of my discretion in this case, I place some importance on what was said in McLaren & Sons v Davis (1890) 6 T.L.R. 372 by Cave J. as a member of a bench of three Judges in the Queen’s Bench Division, at p. 373: “It was never convenient to prove a negative. When the defendant had set up something affirmative then was the time to dispose of it. The learned Baron [a reference to Huddleston B. who sat with the jury at first instance] had exercised an erroneous discretion in refusing to allow the rebutting evidence”.
Further, in Jerome v. Anderson (1964) 44 D.L.R. (2d) 516, Cartwright J. at p. 531, observed: “In view of the nature of the particulars of the plea of justification delivered in this action, it would, I think, have been highly inconvenient to call upon the plaintiff to prove the negative of that issue before having heard the evidence offered by the defendants in support of it.”
In each case, emphasis was laid on the burden which the plaintiff is likely to have of proving a negative if he is to go first in relation to issues on which the defendant has the burden of proof.
In the exercise of a discretion, I think it is proper to take into account the extent to which this so-called proof of a negative would be placed on a plaintiff. This aspect in this case, I think, is highly pertinent and of considerable weight.
Here it would be not only inconvenient but quite unfair and contrary to the interests of justice if the plaintiffs are called upon to adduce all their evidence in disproof of a case with respect to which they have heard no evidence.
Continuing, his Honour said:[43]
I am further persuaded in favour of the plaintiffs, by the circumstance that there appears at this time very little difficulty in separating out the issues with respect to which the plaintiffs have the burden of proof, and permitting them to lead the whole of their evidence in relation to them without embarking on evidence to counter anticipated evidence of the defendant.
Accordingly, I rule as follows: The plaintiffs may choose not to call evidence in relation to any issue on which the defendant has the burden of proof until after the defendant has closed its case on it.
The plaintiffs must begin in respect to the issues on which it has the burden of proof. However, the plaintiffs cannot split their case on any issue. Once embarked on evidence in relation to an issue, they must call all the evidence on which they wish to rely in relation thereto.
This means that if they call any evidence before the defendant, which is directed solely at an issue on which the defendant has the burden of proof, they will not, without good reason, be permitted to call further evidence after the defendant’s evidence in relation to that issue.
[43][1987] VR 187 at 191-2.
The issue whether a Protean Holdings “split” was appropriate and permissible also arose more recently before the Court of Appeal in Wong v Carter.[44] This appeal arose out of Magistrates’ Court proceedings with respect to the ownership of a motor vehicle. This is, of course, to state the issue rather generally because the unusual circumstances involved were the basis upon which the question whether such a “split” should be ordered arose. In any event, these issues are summarised and Protean Holdings endorsed and explained as to its possible application in the judgment of Chernov JA (with whom Winneke P and Tadgell JA agreed):[45]
[44][2000] VSCA 53.
[45][2000] VSCA 53, [14] to [24].
14.I turn to consider ground 1. As I understand it, it was contended that the Magistrate should have permitted the appellant to “split” the case; that is to say, allow the appellant to defer calling evidence on the question whether he used the name John D. Young as an alias in connection with the registration of the vehicle until after the respondents had led their evidence on this issue.
15.Ms Lieder argued that the respondents’ contention that the appellant used the name John D. Young as an alias amounted to an allegation of deceit or fraud on the part of the appellant, particularly since their principal case was that, at least at the outset, John D. Young did not exist and that therefore the appellant was using a fictitious name for registration purposes.
16.Consequently, it was argued, the respondents bore the onus of proof on this issue and should have been required to lead their evidence in relation to it with the appellant being entitled to lead rebutting evidence. It was submitted, in effect, that the appellant's position on this issue was similar to that of the insured in Protean (Holdings) Ltd (Receivers and Managers appointed) v. American Home AssuranceCo [1985] V.R. 187.
17.Moreover, it was said that her Honour erred in holding that the Magistrate’s decision to refuse the appellant the right so to split its case was a discretionary decision on a matter of practice and procedure. Ms Lieder claimed that the decision determined what she called substantive rights and therefore the usual rule that appellate courts exercise particular caution in reviewing discretionary decisions relating to practice and procedure did not apply.
18.Turning first to the last matter mentioned, it is clear that a decision of a trial judge on the question of whether the plaintiff can defer the calling of its evidence on an issue until after the defendant has presented its evidence on it, and thereby split its case, is a discretionary decision on a matter of practice and procedure and not one which deals with substantive rights; Protean at 191; Re Hardiman dec’d [1967] V.R. 577 at 580; and Beevis v. Dawson [1957] 1 Q.B. 195 at 204 per Singleton, L.J. and at 215 per Jenkins, L.J. Moreover, other than in exceptional circumstances, the judge's decision on the matter is final; Beevis v. Dawson at 204 per Singleton, L.J.. In this case, no such exceptional circumstances have been made out and there is, therefore, no basis for interfering with the decision of the Magistrate.
19.In my view, there was, in any event, no scope in this case for permitting the appellant to defer calling further evidence on the ownership issue until after the respondents’ evidence on it was concluded. A party in the position of the appellant might be permitted relevantly to divide its case in relation to an issue in respect of which the other party carries the legal onus of proof. Thus, in Protean the defendant insurer carried the legal onus of establishing fraud on the part of the insured. Similarly, in Re Hardiman dec’d the caveator carried the onus of establishing lack of testamentary capacity. In a defamation case where justification is set up as a defence, it is for the defendant to make out his plea of justification before the plaintiff is called upon to give evidence in rebuttal of that plea; Beevis at 204 per Singleton, L.J. and 215 per Jenkins, L.J.[46]
20.In those circumstances, there is a proper basis on which the court can consider whether it would be appropriate to permit the plaintiff to lead evidence on the relevant issue by way of rebuttal. No such circumstances, however, arise in this case if for no other reason than that the issue whether the appellant had acted fraudulently was not before the court. Fraud was not pleaded, as I have said, or otherwise alleged by the respondents, and the Magistrate did not find fraud on the part of the appellant.
21.The appellant alleged trespass and, in the circumstances of this case, he carried the legal onus of establishing that he was not the owner of the vehicle at all relevant times. It was for the appellant to call evidence to make good that claim.
22.As part of their defence, the respondents alleged that the vehicle was owned by the appellant and the name of John D. Young was used as an alias. In my view, that is not an allegation of fraud. It is clear that the Magistrate found as a fact that the appellant acquired ownership of the vehicle in the first half of 1985 and, as I have said earlier, this finding has nothing to do with fraud.
23.Ms Lieder agreed (properly, I think) that unless the respondents’ case could be characterised as raising an allegation of fraud against the appellant, the question of whether the appellant can split his case cannot arise. Since, in my view, the respondents’ case did not raise the issue of fraudulent conduct on the part of appellant, there was no basis on which the appellant could have properly sought to have deferred calling evidence on the issue of ownership of the vehicle.
24.Another reason why such a division of the appellant’s case would not be permissible is that the application to split the case was made after the appellant had led some evidence on the issue of ownership of the vehicle. In those circumstances it could not properly seek to call the balance of its evidence after the respondents had led their evidence on that matter; Re Hardiman at 580. Thus, in my view, her Honour made no reviewable error in relation to this issue and therefore ground 1 must fail.
[46]Cf the unusual circumstances of S, DJ v Channel Seven Adelaide Pty Ltd (2009) LSJS 287; discussed below, paragraph 50 to 54.
The final point made in the passages set out from the ruling of Marks J and the judgment of Chernov JA in Protean Holdings[47] and Wong,[48] respectively, is that, critically, if the plaintiff embarks on evidence in relation to which it bears the burden of proof, it must call all evidence on that issue. Moreover, if the plaintiff calls any evidence prior to the defendant in relation to an issue upon which the defendant bears the burden of proof – absent good reason – the plaintiff will not be permitted to split its case by calling further evidence on that issue after the defendant’s evidence thereon. Apart from sounding a helpful warning to parties in the arena of a Protean Holdings “split”, these statements do highlight a potential problem which, in particular circumstances, may negate the possibility of such a “split”. This is, of course, a reference to circumstances where the issues upon which the plaintiff and the defendant bear the onus of proof are so intertwined that it is not possible to disentangle them to avoid, on the plaintiff’s part, entering into the matters upon which the defendant bears the burden of proof. Thus, in considering the issue of a Protean Holdings “split” in the present proceedings, the question whether there is fatal “entanglement” of the plaintiff’s and defendant’s cases is critical. It is to this question in the context of considering the possible application of these authorities in the present circumstance to which attention is now directed.
Application of the Protean Holdings principles
[47][1985] VR 157.
[48][2000] VSCA 53.
As discussed previously, the plaintiff contends that his case – hence the extent of the burden he bears - is quite limited. In this context, the plaintiff submits that there can be no doubt in this case that the defendant -
(a)alleges serious professional misconduct and serious criminal conduct. Its Submission dated 19 September 2013 makes that clear, and it is clear enough from the Defence; and
(b)carries the legal onus of proof on its claims.
In these circumstances, it is contended that there is a proper basis on which the court can consider whether it would be appropriate to permit the plaintiff to lead evidence on the relevant issue by way of rebuttal.
In support of his contention that a Protean Holdings “split” should be ordered in the present circumstances, the plaintiff makes reference to the relatively recent case of Hodgson v Amcor Ltd; Amcor Ltd v Barnes.[49] The plaintiff draws attention to submissions in favour of such a course accepted by Vickery J in that case, submissions which the plaintiff says are entirely apt in this case:[50]
113.Finally, (and alternatively) it was submitted that there should be a Protean Holdings split between Mr Hodgson’s claim and the Amcor claims. Mr Hodgson’s case is essentially a simple money claim, he can lead evidence and be cross-examined on those matters.
114.In support of this contention, it was submitted that the Amcor counterclaim is complex and factually dense. It makes serious allegations in the nature of fraud against Mr Hodgson. The Amcor parties should bear the onus of proof of those matters and lead evidence first on those issues. To the extent that there is some overlap with Amcor’s defence, these matters should also be included. This is not only fair to Mr Hodgson (so that he is not required to respond to allegations in advance) but logical insofar as Amcor has knowledge of its case and can present it first. It was submitted that it would be inconvenient, unfair, and contrary to the interests of justice if Mr Hodgson were required to disprove the Amcor parties’ case and to be cross-examined, in advance of the Amcor parties showing by evidence what their case actually is.
(footnote omitted)
[49][2011] VSC 63 (”Hodgson v Amcor Ltd”).
[50][2011] VSC 63, [113], [114].
The plaintiff submits that the applicability of the approach adopted by Vickery J in Hodgson v Amcor Ltd to this case is clear, for the following reasons:[51]
[51]Plaintiff’s Submissions (12 September 2014), [32].
(a)the plaintiff pleads a relatively simple claim;
(b)the defendant’s positive Defence is, on any view, complex and factually dense;
(c)the defendant bears the onus of proof and should lead evidence first on those issues;
(d)this is not only fair to the plaintiff (so that he is not required to respond to allegations in advance) but logical insofar as the defendant has knowledge of its case and can present it first;
(e)it would be inconvenient, unfair, and contrary to the interests of justice if the plaintiff were required to disprove the defendant’s case and to be cross-examined, in advance of the defendant showing by evidence what their case actually is; and
(f)the plaintiff should not be required to prove a negative in his case or to be subjected to cross-examination on the defendant’s positive case before it has been opened and before the defendant has called its evidence in support of its case.
Moreover, the plaintiff submits that not only is he being asked to prove a negative – but a hypothetical negative because by paragraph 145 the defendant pleads that the plaintiff “would have been required to leave the Partnership in any event by subsequent decision of the Board after 7 September 2005” [plaintiff’s emphasis].
Thus, the plaintiff submits that the case must be the subject of a Protean Holdings “split” and that he must be permitted a case in rebuttal to the matters raised in the defendant’s case. Moreover, it is submitted that the plaintiff should not be required to prove a negative in his case or to be subjected to cross-examination on the defendant’s positive case before it has been opened and before the defendant has called evidence in support of its case. The plaintiff submits that the defendant really opposes this application because it wishes to strip away his right to put the defendant to its proof and his right to make an election at the conclusion of the defendant’s case. It is submitted that this is not fair in the context of a proceeding of this kind where the plaintiff is accused of serious professional misconduct and serious criminal conduct. The defendant should not, it is contended, be entitled to seek to prove its case through cross-examination without having opened its case and called its evidence in support of its case.
The plaintiff did put his request for a Protean Holdings “split” to the defendant. That request was, however, denied in a letter of 3 June 2014 from the defendant’s solicitors.[52] It is said in this letter that:
Unlike the Protean case, the matters in our client’s Amended Defence which you suggest could be “split” are not clearly distinguishable from the matters pleaded by the plaintiff. The matters raised by paragraphs 50 to 144 of our client’s Amended Defence largely occurred during the same period of time as, and are factually intertwined with, those matters which were before the Board of our client at the time of its decision in respect of your client. It would obviously be undesirable for witnesses to give evidence twice (in separate stages) about factually intertwined matters. To do so would add to the complexity and length of the trial and, in our view, would be unworkable.
[52]Exhibit CAT-3 to the Affidavit of Ms Carole Agnes Timmins (made 9 July 2014).
The plaintiff submits that there is no basis for such an assertion. The matters raised by paragraphs 101 to 144 of the Defence are, it is said, not factually intertwined and the plaintiff misconceives the plaintiff’s case, which is a process complaint not a merits review. In this respect, the plaintiff reaffirms that he will not be seeking to demonstrate what his defence would have been had he been provided with the natural justice and procedural fairness he was denied. Moreover, the plaintiff says that the only witness who might conceivably give evidence twice is the plaintiff himself, and his evidence in his case will not deal with the defendant’s positive case if a Protean Holdings “split” is ordered. It would follow, it is said, that the defendant’s witnesses would give evidence only once. In any event, it is submitted that the fact that one (or even some) witnesses might be required to give evidence twice is a consequence of an order providing for a case in reply, not a reason to deny it. Moreover, it is submitted that there is nothing unworkable about such a proposal and in any event the test is how are the interests of justice best served. In this respect, reference is made to French v Triple M Melbourne Pty Limited Ruling (No 2) where J. Forrest J relevantly said:[53]
[53][2008] VSC 548, [8].
I think that the relevant principles can be distilled as follows:
(a)in normal circumstances a plaintiff will not be permitted to split his or her case;
(b)however in some cases particularly where the burden of proof shifts to the defendant a court will entertain the splitting of the case to enable the plaintiff to rebut evidence led on a particular issue by the defendant. This is a rule of practice, not one of substantive law;
(c)the paramount question is how are the interests of justice best served. This discretionary consideration includes taking into account the interests of the parties and also the orderly presentation of evidence before the jury. Two relevant considerations as disclosed by the authorities in relation to the exercise of the discretion are -
(i)the inconvenience to a party in proving a negative;
(ii)where a plea of justification in a libel action is raised a plaintiff will not have had the opportunity to hear the evidence said to justify the alleged defamatory matter. In those circumstances a court may permit the splitting of the case. Indeed, the earlier authorities indicate that in such cases this was the norm rather than the exception.
The defendant, on the other hand, contends that “this case does not begin to resemble Protean Holdings or any of the cases that have applied the rule of practice referred to by Marks J”.[54] Further, in support of this position, the defendant contends that in those cases, a discrete naked issue was raised by the defendant upon which it had the onus of proof and in respect of which the plaintiff was not required to lead evidence in its case. In Protean Holdings, it was a defence that the insured lit the fire in an action upon an admitted policy of insurance. In French v Triple M Melbourne Pty Ltd Ruling (No 2),[55] it was a defence of justification in an action for defamation, and a “split” was ordered in respect of certain expert evidence (and not the plaintiff’s evidence). In Hodgson v Amcor Ltd,[56] the plaintiff’s claim was “a simple money claim” which was met by a counterclaim which was “complex and factually dense … [making] serious allegations in the nature of fraud”[57] and which were quite unrelated to the simple money claim. Nevertheless, it is clear from the judgment of Vickery J that his Honour was approaching the question of the manner in which claims should be dealt with in light of and on the basis of the approach in Protean Holdings.[58] Indeed, it appears to be recognised in the defendant’s oral submissions that what was ordered was a Protean Holdings “split” and not some splitting of the plaintiff’s case on some other basis. Thus, Mr Karkar QC said:[59]
And that is what His Honour did. That wasn’t the split case. That was simply saying the quantum of the claim will be determined separately and on the counterclaim, because the counterclaimants are the plaintiffs, they should start first and Your Honour will see this from His Honour’s orders.
[54]Defendant’s Submissions (19 September 2014), [12].
[55][2008] VSC 548.
[56][2011] VSC 63.
[57]Defendant’s Submissions (19 September 2014), [12].
[58]See [2011] VSC 63, [113], [114] (set out above, paragraph 34).
[59]Transcript, p 89.
Reference has already been made to these cases in the course of discussing the plaintiff’s submissions. In my view, they would not assist the defendant’s position unless the plaintiff’s case were not discrete and separable, contrary to the position which the plaintiff asserts. Moreover, the fact that the “split” ordered in French was not with respect to the evidence of the plaintiff in that case does not affect the generality of the principles to be applied with respect to a Protean Holdings “split”.
The generality of these principles is made clear in both the passage from the ruling of J. Forrest J which is set out above[60] and also from the following passages in the same ruling:[61]
[60]See above, paragraph 38.
[61][2008] VSC 548, [3] to [6] and [12], [13]; further background to this case is provided by the previous ruling of J. Forrest J in French v Triple M Melbourne Pty Limited Ruling (No 1) [2008] VSC 547.
3.The defendants propose to call two witnesses, a Dr Trout and a Ms Lucca, to give evidence as to the presence of equine growth hormone, and as to the lack of the likelihood or prospect of cross contamination having occurred.
4.The plaintiff proposes to call three witnesses, a Dr Atchison, Professor Boettcher and a Dr Gerastamoulos, who contend there is a real prospect of cross‑contamination in the circumstances of the finding of the materials and their analysis.
5.The plaintiff now seeks to split his case in relation to the calling of expert evidence. He contends that given that the burden of proof rests on the defendants on this issue, and that it will be up to the defendants to establish the factual matrix underlying the analysis, he should be permitted to call his three experts in reply to the defendants' case.
6.The defendants contend that this will inevitably distract the jury and the trial will lack coherence in presentation.
…
12.Applying the principles I have set out, I think the following can be said in favour of not splitting the plaintiff’s case:
(a)this is a jury trial, and any lack of coherence in the presentation of the case should be avoided;
(b)unlike Protean, each side, by reason of the delivery of Order 44 reports, knows what the other experts contend;
(c)there is no realistic prospect of the plaintiff being able to put a no case submission as was entertained in Protean; and
(d)the plaintiff's defamatory imputations are not confined to that of drug-taking and the analysis which underpins the plea of justification.
13.However, against those matters I must consider the following matters:
(a)even allowing for the exchange of Order 44 reports, the plaintiff is required to prove a negative, that is, the prospect of cross contamination or unsatisfactory analysis by calling his witnesses first;
(b)the factual substratum upon which the experts rely to one extent or another comes at least in part from Dr Trout. The plaintiff's expert witnesses, if giving evidence first, will be giving evidence at least to some degree in a factual vacuum with the risks that the facts relied upon by these experts may or may not be the facts proved at trial. This, in my view, is highly undesirable;
(c)the orderly presentation of the trial will not be overly disrupted. The jury can be instructed as to why this process is being adopted, and only the expert witnesses on this issue will be called in reply;
(d)it is not sought to divide the evidence given by the plaintiff himself which has, at times in the past, been permitted where a plea of justification is raised. In this case, there is a body of expert evidence which goes to rebut a specific part of the defendants' plea of justification;
(e)there is a risk of injustice to the plaintiff if I do not permit this application. It is, as I have said, for the defendants to establish the substratum of fact upon which the expert opinions are based. This can then be challenged by the plaintiff either in cross-examination or by calling witnesses as he proposes to do;
(f)there will be no real lack of coherence in the presentation of the case before the jury as the witnesses will give evidence effectively in a group on one discrete issue.
Thus the critical factors and considerations with respect to a Protean Holdings “split” are not confined as the defendant contends and so the factors and considerations enunciated by J. Forrest J are applicable in the present proceedings with respect to the plaintiff’s application.
The defendant contends that the plaintiff’s submission that his case is a “process complaint” and “… is not a merits application and he does not seek merits review”,[62] is not correct having regard to the way the plaintiff’s case has been pleaded. Moreover, the defendant contends that the plaintiff’s case is not “a relatively simple claim”, as asserted by the plaintiff.[63] Rather, the defendant submits that the plaintiff’s claim, as pleaded, gives rise to a magnitude of factual and legal propositions, and that the relevant allegations in the Defence do no more than meet that case in the manner required by r 13.07(1)(b) and 13.12(3).
[62]Plaintiff’s Submissions (12 September 2014), [6].
[63]Plaintiff’s Submissions (12 September 2014), [32(a)].
In my opinion, the defendant’s assessment of the nature and extent of the plaintiff’s case is not correct. In my view, on the basis of the plaintiff’s pleadings, both by way of claim and reply, and the way in which the plaintiff’s case has been stated and constrained by its senior counsel, in submissions before the judge who will hear the trial, the plaintiff’s case is constrained as he contends. In my view, this is clear from the preceding discussion of the ambit of the plaintiff’s case in the context of consideration of the plaintiff’s submissions. Moreover, were this not abundantly clear, it is, in my view, made clear by the statements of his senior counsel with respect to the nature and ambit of his case, statements and assurances to, in effect, the trial judge by way of opening; matters from which it would not be possible to resile except in unusual circumstances.
A further issue raised by the defendant is an evidentiary one, with particular reference to the Fagan Memorandum. In this respect, reference is made to the judgment of Muir JA in Robert Bax v Cavenham Pty Ltd,[64] in which reference was made to Jones v Sutherland Shire Council.[65] The particular aspect of the judgment of Muir JA which is relied upon is the reference to McCormick, Law of Evidence (1954) in the judgment of Samuels JA in Jones v Sutherland Shire Council.[66] The reference does, however, need to be viewed in the context of both the judgment of Samuels JA and that of Muir JA:[67]
[64][2013] 1 Qd R 476 (with whom Holmes JA and Martin J agreed).
[65][1979] 2 NSWLR 206 (CA).
[66][1979] 2 NSWLR 206 at 216-217.
[67][2013] 1 Qd R 476 at 484-5, [35]-[37].
[35]In Jones v Sutherland Shire Council,[68] a question arose as to the use which could be made of admissions contained in a letter sent from the appellant‘s predecessor in title to the respondent Council. The letters were admitted into evidence without objection and it was held that the fact that they were hearsay was relevant only to the question of the weight they were to be given.
[68][1979] 2 NSWLR 206.
[36]After referring to the above passage from the reasons of Gibbs J in Hughes, Samuels JA articulated the following principles in relation to the use which may be made of hearsay evidence admitted without objection:[69]
[69]Ibid, 219 – 220 (citations omitted).
In my opinion, the general principle which emerges from the authorities (leaving aside the question of statements which are both admissions and self serving) is this. If evidence, admitted without objection, is legally admissible in proof of some issue in the case, its evidentiary use should be confined to that purpose. The testatrix‘s statements in Hughes’ case provide an example. If, on the other hand, evidence, admitted without objection, is not legally admissible in proof of any issue, it may, once in, be used ‘as proof to the extent of whatever rational persuasive power it may have‘. Suppose a hearsay document is tendered. It is not legally admissible to prove the truth of the assertions it contains, which are, however, relevant to an issue in the case. It might none the less be legally admissible as original evidence of the making of those assertions. But suppose further that there is in fact no issue to which, as original evidence, the document is relevant. No objection is taken to the tender, and the document is admitted. It is then evidence in proof of the issue to which it is relevant, the want of objection having waived the complaint, which would have been fatal, that, being hearsay, it was legally inadmissible.
It is now necessary to go back and consider the purpose for which the letters in question might have been tendered. They would have been admissible as original evidence had there been any issue about what the late Mr Jones had said or believed at the relevant time. But there was not...
That being so, the two letters, each dated 5th February, 1960—annexures ‘B‘ and ‘C‘—were in evidence for what they could prove. There can be no doubt but that their probative value—and I bear in mind the tests proposed in Walker v Walker, and by Professor McCormick, quoted in McLennan v Taylor—was extremely high in relation to any matter concerning the late Mr Jones‘s conduct of his own business. It would be scarcely possible to envisage a more reliable source of information.
[37]Paragraph 54 of the Law of Evidence (1954), to which his Honour referred, stated:[70]
A failure to make a sufficient objection to evidence which is incompetent waives any ground of complaint of the admission of the evidence. But it has another effect, equally important. If the evidence is received without objection, it becomes part of the evidence in the case, and is usable as proof to the extent of whatever rational persuasive power it may have. The fact that it was inadmissible does not prevent its use as proof so far as it has probative value. Such incompetent evidence, unobjected to … may support a verdict or finding … If the evidence has no probative value, or insufficient probative value to sustain the proposition for which it is offered, the want of objection adds nothing to its worth and it will not support a finding. It is still irrelevant or insufficient.
[70]At 216 – 217.
Section 136 of the Evidence Act 2008 is, as is also clear from the defendant’s submissions, of relevance in this context. Section 136 reposes a general discretion in the Court to limit the use of evidence which has been admitted (in contrast to section 135 of that Act which provides for refusal to admit evidence); in the following terms:
136.The court may limit the use to be made of evidence if there is a danger that a particular use of the evidence might:
(a)be unfairly prejudicial to a party; or
(b)be misleading or confusing.
As the defendant observed in submissions, considerable care is required with respect to the invocation of s 136 – referring to the judgment of Sackville J in Seven Network Limited v News Limited (No 8):[71]
[21]In my opinion, considerable care should be exercised before s 136 of the Evidence Act is invoked to limit the use of evidence on the ground that its use might be unfairly prejudicial to a party in a procedural sense. I agree with Mr Sheahan that the policy apparently underlining provisions such as ss 60 and 77 of the Evidence Act should not be undercut by the making of orders under s 136 as a matter of course. This is particularly so where a judge, rather than a jury, is the trier of fact, since the danger of unfairness to a party might be expected to be mitigated by the judge attributing less weight to material that cannot adequately be tested in cross-examination. Even so, the circumstances may be such that the power conferred by s 136 will not only be enlivened but it will be appropriate for the Court to make a direction limiting the use of otherwise admissible evidence.
27.… Further, the Legal Services Commissioner has already conducted an investigation of the plaintiff with respect to the Schmidt trust account matters identified in paragraphs 55 to 89 of the Defence,[219] and found that there was a reasonable likelihood of the Tribunal finding that the plaintiff was guilty of unsatisfactory conduct and gave him a reprimand under section 4.4.13(3)(b) of the Legal Profession Act 2004 (Vic). The plaintiff consented to this course. A copy of the letter from the Legal Services Commissioner to the plaintiff has also been obtained by the defendant by notice to produce, and is exhibited to the Carfoot Affidavit.[220] The letter also records the responses given by the plaintiff to the Commissioner as to the relevant matters. Thus, there would appear to be no increased risk of jeopardy as a consequence of the plaintiff responding to those same matters in this proceeding.[221]
28.More generally, in view of the significant passage of time together with the events referred to above, the defendant submits that there is no real or appreciable risk of the plaintiff being the subject of a criminal or civil penalty proceedings in respect of the matters the subject of this action, and the plaintiff has not demonstrated that providing responses to the relevant matters in the Defence would tend to subject him to any such proceedings.[222]
[218]Defendant’s Submissions (19 September 2014), [27]-[28].
[219]Exhibit GJC-3 and exhibit GJC-4 to the Affidavit of Mr Gregory John Carfoot (5 September 2014).
[220]Exhibit GJC-3 to the Affidavit of Mr Gregory John Carfoot (5 September 2014).
[221]Gemmell v Le Roi Homestyle Cookies Pty Ltd (in liq) [2014] VSCA 182, [107]; see also Brebner v Perry [1961] SASR 177 (BRT Engineering Aust Ltd v Patterson (1990) 20 NSWLR 724; Sorby v The Commonwealth (1983) 122 CLR 493; Rio Tinto Zinc Corporation v Westinghouse Electric Corporation [1978] 1 All ER 434.)
[222]See, e.g., Re APCH (No 2), [115(a)] and [115(c)].
The plaintiff, on the other hand, contends that there is no requirement to put on evidence how self-incrimination might lead to appreciable risk. In this respect, the plaintiff makes reference to the statement of Ferguson J at first instance in Gemmell,[223] a statement which was not doubted by the Court of Appeal:[224]
17.In my opinion, if the Liquidators establish their claim against the Defendants, it is almost inevitable that the facts necessary for the imposition of a civil penalty will also be established. It would also be likely to establish at least some of the elements that would need to be proved in a criminal prosecution. ASIC has not given any indication as to whether penalty proceedings would be instituted, nor has the Director of Public Prosecutions ruled out criminal proceedings. In this regard, there is no time limit on when a criminal prosecution may be brought. As set out above, the Associate Judge observed that the Defendants had not established that pleading defences would tend to subject them to a penalty in separate proceedings and that their apparent misgivings about filing defences were more apparent than real. Whilst as a matter of practical reality the likelihood of penalty proceedings (or for that matter, criminal proceedings) being brought may be low, I do not think that it can be discounted sufficiently to render it ‘so improbable as to be virtually without substance’. In my opinion, in the absence of a positive indication from ASIC that penalty proceedings will not be brought, it is not possible to say that the risk of penalty proceedings is so low as to be of no consequence. Similarly, in respect of criminal proceedings, in the absence of a prior conviction for the offence or an immunity from prosecution having been given or other similar circumstances, the risk is not sufficiently low to warrant ignoring it. It should not be forgotten that it is not for the Liquidators, nor for the Court, to determine whether penalty proceedings or a criminal prosecution ought be brought — those are matters for ASIC and the relevant prosecuting authority.
[223]Le Roi Homestyle Cookies Pty Ltd (in liq) v Gemmell [2013] VSC 452, [17] and see also [11].
[224]And was, rather, referred to with apparent approval: see [2014] VSCA 182, [22] (Ashley JA); in the passage set out above.
In this context, it should not be overlooked that the privileges against self-incrimination afford protection against the risk of incrimination by both direct and indirect, or derivative, evidence. The consideration that the provision of direct evidence may set in train a process which exposes the person giving evidence to the possibility of liability as a result of what flows indirectly from his or her evidence is identified and explained by Lord Wilberforce in Rank Film Distributors Ltd v Video Information Centre:[225]
... whatever direct use may or may not be made of information given or material disclosed, under the compulsory process of the court, it must not be overlooked that, quite apart from that, its provision or disclosure may set in train a process which may lead to incrimination or may lead to the discovery of real evidence of an incriminating character. ….The party from whom disclosure is asked is entitled, on established law, to be protected from these consequences.
This approach has also been applied in the Australian authorities.[226]
[225][1982] AC 380 at 443.
[226]Sorby & anor v The Commonwealth of Australia & ors (1983) 152 CLR 281 at 294 (Gibbs CJ) and at 310 (Mason, Wilson and Dawson JJ); Reid v Howard (1995) 184 CLR 1 at 6-7 (Deane J)
The defendant’s solicitors asserted in their letter of 3 June 2014 denying the plaintiff’s request for the orders sought in this application, that:
We also do not consider there to be any reasonable basis to suggest that the protection available to the defendants in Re Australian Property Holdings Limited (in liq) (Receivers and Managers Appointed) (No 2) [2012] VSC 576 should be available to Mr Dale. Unlike in that case, there is no other proceeding on foot against Mr Dale.
Nor to our knowledge is there any open investigation or contemplation of any charges. If you believe there is, please let us know so we can reconsider the issue.
I do, however, accept the plaintiff’s submissions that this assertion by the defendant’s solicitors is misconceived because it does not matter whether there is a current proceeding, whether criminal or civil, on foot or whether there is currently an open investigation or contemplation of charges. The Court of Appeal decision in Gemmell makes this position clear. In that case, there was no current proceeding on foot, whether criminal or for a civil penalty, and no evidence of an open investigation or contemplation of charges. It was an insolvent trading case and not a case alleging the type of serious conduct which is made against the plaintiff in these proceedings and sought to be proved by the defendant. In this regard, I am of the opinion that the statement of Ferguson J which is set out above is particularly apposite.[227] In my view, it is quite correct to say, as the plaintiff submits, that the whole point of the privileges against self-incrimination is that there might well be such proceedings commenced, if not already commenced, if orders giving effect to the privileges are not made.
[227]See above, paragraph 73.
Moreover, in this context, it should be observed that the authorities are clear that disciplinary penalties are civil penalties for the purposes of the privileges now under consideration. Thus, Gibbs CJ in Police Services Board v Morris said:[228]
There is an obvious distinction between criminal offences and breaches of discipline and it is necessary to insist upon that distinction for some purposes: see, eg R v White; Ex parte Byrnes.[229] Nevertheless, although the penalties provided by s 88 are disciplinary penalties, they are nonetheless penalties, and it is old law, confirmed by modern authority, that a person cannot be compelled to answer a question whenever the answer would tend to expose him to “any kind of punishment” — “anything in the nature of a penalty”: see Phillipps and Arnold, A Treatise on the Law of Evidence, 10th ed (1852), vol 2, p 487; Greenleaf on Evidence, 11th ed (1863), vol 1, p 621; Bray on Discovery (1885), p 313; In re Westinghouse Uranium Contract[230] (a statement not challenged on appeal[231]) and Pyneboard Pty Ltd v Trade Practices Commission.[232] Moreover, it is now accepted that the privilege is capable of application in non-judicial proceedings: Pyneboard Pty Ltd v Trade Practices Commission;[233] Sorby v The Commonwealth.[234]
[228](1985) 156 CLR 397 at 403.
[229](1963) 109 CLR 665, at p 670.
[230][1978] AC 547, at pp 563–564.
[231][1978] AC, at pp 612, 627, 632, 647.
[232](1983) 152 CLR 328.
[233](1983) 152 CLR, at p 340.
[234](1983) 152 CLR, at p 309.
This then raises for consideration the question, how does a court determine whether a claim of privilege against self-incrimination should be upheld? As the authorities indicate, the test is whether compelling answers in the face of claimed privilege of this nature would place the person claiming the privilege in “real and appreciable danger of conviction”.[235] Clearly, the mere statement by a witness that he believes that an answer would tend to incriminate him may not be enough to persuade a court that the basis for the claim of this privilege is established, but to require the witness to give a full explanation as to how it would have a tendency may, in itself, defeat the purpose of the privilege.[236] Naturally, the question must be approached in the context of the circumstances of the particular case and the circumstances in which the privilege is claimed. It follows that it may not always be necessary to call evidence on the point, as the tendency to self-incrimination may be obvious or sufficiently discernible.[237] Thus, in McFadden,[238] Clark JA cited Taylor, Treatise on the Law of Evidence:[239]
… In all cases of this kind the court must see, from the surrounding circumstances, and the nature of the evidence which the witness is called to give, that reasonable grounds exist for apprehending danger to the witness from his being compelled to answer. When, however, the fact of such danger is once made to appear, considerable latitude should be allowed to the witness in judging for himself of the effect of any particular question; for it is obvious that a question, though at first sight apparently innocent, may, by affording a link in a chain of evidence, become the means of bringing home an offence to the party answering …
[235]Sorby & anor v The Commonwealth of Australia & ors (1983) 152 CLR 281 at 289 and 294 particularly (Gibbs CJ); Busby v Thorn EMI Video Programmes Ltd [1984] 1 NZLR 461 at 469 (Cooke J).
[236]Rio Tinto Zinc Corporation v Westinghouse Electric Corporation [1978] AC 547 at 574 (Lord Denning) MR.
[237]Ross v Internet Wines Pty Ltd (2004) 60 NSWLR 436 at 447.
[238](1993) 31 NSWLR 412 at 430.
[239]8th ed vol 2 at 1242 - 1243
As Robson J observed in Re APCH (No 2),[240] in a statement of law approved by the Court of Appeal in Gemmell,[241] there need only be a real and appreciable risk of criminal prosecution or a tendency to subject the person to a penalty for the privileges to be invoked in separate civil proceedings.[242] In this respect, in Rio Tinto Zinc Corporation v Westinghouse Electric Corporation,[243] Shaw LJ said:
… before a claim for privilege is upheld the court must be satisfied that there is a real and genuine basis for the assertion by the witness that he will tend to be exposed to proceedings or penalties. The precise measure or degree of the risk to the witness is something which the court is not called upon to assess so long as there is a degree of risk which cannot be dismissed as tenuous or illusory or so improbable as to be virtually without substance. The question is, whether there is a recognisable risk? The principle which protects a witness from obligatory self-incrimination is not to be qualified by or weighed against any opposing principle or expedient consideration so long as the risk of self-incrimination is real in the sense that what is a potential danger may reasonably be regarded as one which may become actual if the witness is required to answer the questions or to produce the documents for which privilege is claimed.[244]
[240](2012) 93 ACSR 130 at 154.
[241][2014] VSCA 182, [20] (with whom Neave JA and Almond AJA agreed).
[242]See Re APCH (No 2) (2012) 03 ACSR 130 at 154.
[243][1978] AC 547 at 581.
[244]Ibid 581.
The South Australian case of Brebner v Perry[245] also emphasised that the relevant apprehension of risk and prejudice is to the person claiming the benefit of the privileges for his or her own protection. Other aspects of this case were considered in the context of considering the substance of the test itself by the English Court of Appeal in Den Norske Bank ASA v Antonatos.[246]
[245][1961] SASR 177.
[246][1999] QB 271.
The Court of Appeal in Den Norske Bank, having adopted the summary of the principles relating to the privilege against self-incrimination as summarised by Kirby P in McFadden,[247] turned to consider the authorities on the test in relation to whether an answer will incriminate. Waller LJ (with whom Chadwick and Millett LJJ agreed) said:[248]
[247](1993) 31 NSWLR 412 at 420-424; the passages set out at [1999] QB 285-287.
[248][1999] QB at 287-289.
One of the main points taken by DnB in this case was that DA was not entitled to claim privilege because there was no greater risk of him incriminating himself by the answers that he might give, as compared with the risk that there already was. Reliance was placed on Brebner v Perry [1961] SASR 177. To consider that submission it is necessary to define the test in relation to whether an answer will incriminate. In many cases one sees the court using the test of “increase the risk of prosecution”, the phrase used by the judge in this case. In my view, the authorities demonstrate that “risk of prosecution” is to put the test too narrowly. In Sociedade Nacional v Lundqvist [1991] 2 QB 310 at 324-325, Staughton LJ deals with this aspect:
“The substance of the test is thus that there must be grounds to apprehend danger to the witness, and those grounds must be reasonable, rather than fanciful. Other points that emerge from the cases are these: (i) the affidavit claiming privilege is not conclusive: see Reg. v Boyes, 1 B. & S. 311, Ex parte Reynolds, 20 Ch.D. 294 and Khan v Khan [1982] 1 W.L.R. 513; (ii) the deponent is not bound to go into detail, if to do so would itself deprive him of protection: see Short v Mercier (1851) 20 L.J. Ch. 289, 292, and the Westinghouse case [1978] A.C. 547; (iii) ‘if the fact of the witness being in danger be once made to appear, great latitude should be allowed to him in judging for himself of the effect of any particular question:’ see Reg. v Boyes, 1 B. & S. 311, 330; the Westinghouse case [1978] A.C. 547 and Khan v Khan [1982] 1 W.L.R. 513; (iv) the privilege is not available where the witness is already at risk, and the risk would not be increased if he were required to answer: see Brebner v Perry [1961] S.A.S.R. 117 and the Westinghouse case; (v) ‘if it is one step having a tendency to criminate him, he is not to be compelled to answer’ (see Paxton v Douglas (1809 Ves. Jun. 239 242) and ‘as it is one link in the chain of proof:’ Paxton v Douglas (1812) 19 Ves. Jun. 225, 227. That last point recurs in other cases (e.g. the Westinghouse case), and may be important. I am inclined to think that it refers to any fact which a prosecutor would wish to prove in order to establish the guilt of the witness on a criminal charge. In the Rank Film Distributors case [1982] A.C. 380, 443, Lord Wilberforce said that disclosure: ‘may set in train a process which may lead to incrimination or may lead to the discovery of real evidence of an incriminating character.’ That may be thought to go rather further, and to protect a man from having to disclose the names of those who could give evidence against him - assuming that there was otherwise power to require that information: see also Short v Mercier, 20 L.J. Ch. 289, 292 – ‘how evidence can be got.’ I am not presently convinced that the privilege, by virtue of the doctrine of links in a chain, extends as far as that. But the point need not be decided in this case.”
In Tate Access v Boswell [1991] Ch 512 at 529, Sir Nicholas Browne-Wilkinson V-C talks about a prosecutor finding documents “equally useful”. In IBM United Kingdom Ltd v Prima Data International Ltd [1994] 1 WLR 719, 731 Sir Mervyn Davies applies a test of “some important facts that bear on establishing whether or not he has acted criminally.” In Saunders v United Kingdom [1997] 23 EHRR 313, 338-399 the European Court of Human Rights uses the test of testimony:
“which appears on its face to be of a non-incriminating nature - such as exculpatory remarks or mere information on questions of fact - may later be deployed in criminal proceedings in support of the prosecution case, for example to contradict or cast doubt upon other statements of the accused or evidence given by him during the trial or to otherwise undermine his credibility.”
Cockburn CJ in R v Boyes (1861) 1 B & S 311 at 330, as quoted by Staughton LJ in the Sociedade Nacional case [1991] 2 QB 310, 324, perhaps put the matter most neatly when he said:
“the court must see, from the circumstances of the case and the nature of the evidence which the witness is called to give, that there is reasonable ground to apprehend danger to the witness from his being compelled to answer.”
Thus, it is not simply the risk of prosecution. A witness is entitled to claim the privilege in relation to any piece of information or evidence on which the prosecution might wish to rely in establishing guilt. And, as it seems to me, it also applies to any piece of information or evidence on which the prosecution would wish to rely in making its decision whether to prosecute or not.
In Brebner v Perry [1961] SASR 177 the witness had provided a statement making admissions to the police and then when called to give evidence claimed the privilege. The ruling was not only that there was no increased danger to the witness in answering the questions but was also a ruling that the witness was taking the privilege against self-incrimination in bad faith. Clarke JA in Accidental Mutual Holdings Ltd v McFadden 31 NSWLR 412, 433 thought that the correctness of the Brebner case would need to be considered at some time, and said:
“Finally it is submitted that, as Leathem had already provided a statement, he would not have exposed himself to further jeopardy by giving sworn testimony. As a matter of fact I do not think that is correct. Any witness who gives sworn evidence admitting to his guilt of a crime is exposing himself to jeopardy unless he has already been dealt with for that crime, he has been pardoned or there are other similar circumstances. The fact that he might have earlier admitted the crime in a signed statement, which he may or may not wish to disavow, cannot mean, in my view, that there is no additional prejudice in giving sworn testimony to like effect ...”
I respectfully agree with Clarke JA. It is one thing for someone to make a statement to the police or anyone else which he might afterwards try to retract. It is quite another for him sometime later to be made to repeat any admission on oath in court in the presence of a judge and his own lawyers. It makes the potentially retractable impossible to retract. If there is a risk of self-incrimination and if there is no bad faith a “no increase in risk” must be almost impossible to establish. It is of interest that it failed in the Tate Access case [1994] 1 WLR 719, 732.
See also the reference to Brebner in Sorby v The Commonwealth.[249]
[249](1983) 152 CLR 281 at 290 (Gibbs CJ).
In any event, in Australian Securities and Investments Commission v Mining Projects Group Ltd,[250] Finkelstein J observed that it will not be difficult to show that the provision of information or the production of documents in a civil case leads to a real and appreciable risk of a criminal prosecution when the proceeding is aimed at proving that the directors engaged in conduct which would establish, or go a long way toward establishing, that they had also committed criminal acts. Again, in this respect I refer to and repeat the observations of Ferguson J in Gemmell at first instance, which are set out above.[251]
[250](2007) 164 FCR 32.
[251]See above, paragraph 73.
In this case, the defendant directly alleges serious professional misconduct which could lead to obvious civil penalties and also serious criminal conduct which could lead to criminal charges. There is clearly, nothing tenuous or illusory or without substance in the nature of the allegations which are raised against the plaintiff. I say this, of course, on the basis that I have no view one way or the other as to whether there is any veracity in these allegations or whether they might ultimately be proved. That is, however, not the point in the context of an application of this kind and there is no suggestion in the authorities that the basis or bases of the privileges against self-incrimination, when claimed, are to be assessed in terms of their substance. It is a matter of assessing degree of risk, as indicated in the authorities.
In this application, the defendant seeks to tender police interviews which, in my view, simply serve to emphasise the serious nature of the allegations made by the defendant against the plaintiff and the ramifications for the plaintiff if he is required to comply with the rules of Court dealing with disclosure requirements.[252] It is obviously the case that effluxion of time since the critical events or allegations may be a circumstance relevant to the assessment of risk. In this case, however, I accept that effluxion of time is not a relevant factor having regard to the seriousness of the allegations made against the plaintiff as an officer of this Court, particularly having regard to the inherent jurisdiction of the Court to discipline solicitors, including by removing them from the Roll.[253] Moreover, the defendant’s submissions with respect to effluxion of time do overlook the fact that the defence raises serious issues which have not thus far been investigated and which, in my view, clearly raise relevant risks as far as the plaintiff is concerned in terms of the assessment of the justification for the claimed privileges. In terms of risk, the defendant also sought to place reliance on the evidence of a senior police officer involved in the investigation. Even if evidence of this kind were regarded as relevant and carrying weight in relation to the assessment of risk, there is no information as to why there was no prosecution or what might be the position with respect to prosecution if further incriminating evidence arose. In other words, this evidence is of no assistance in terms of risk assessment.
[252]And in this respect, see s 131A of the Evidence Act 2008.
[253]Re a Solicitor [1952] VLR 385 at 388 (Lowe, Martin and Dean JJ); Weaver v Law Society (NSW) (1979) 142 CLR 201 at 207 (Mason J, Barwick CJ, Gibbs, Stephen and Aickin JJ agreeing).
In this case, the plaintiff has not sought orders in limine and the privileges are available, even though this is a non-penalty proceeding, provided only that Mr Dale can establish that the provision of information or the production of documents in the civil case leads to a real and appreciable risk of a criminal prosecution before the privilege can be invoked or that providing the information requested would tend to subject him to a civil penalty in separate proceedings.
In conclusion, I echo the statement made by Ashley JA in the Court of Appeal in Gemmell:[254]
47.The privilege against a witness being compelled to answer a question or questions which may tend to incriminate the witness has been described as ‘a fundamental ... bulwark of liberty’, and as ‘not simply a rule of evidence, but a basic and substantive common law right.’
48.The privilege extends to pleadings and other interlocutory process, as Reid demonstrates, and as Robson J explained by reference to authority in APCH (No 2).
[254][2014] VSCA 182, [47]-[48].
A further matter
A further matter which strengthens the conclusions I have reached with respect to the privileges is that, for the reasons indicated in relation to the Protean Holdings “split” issue, the plaintiff is with respect to the defendant’s case – in substance – a defendant. He is not a “volunteer” to this case as a plaintiff might be seen with respect to his, her or its own case. Consequently, even if I were of the opinion that the privileges could only be invoked by a defendant, it would truly be a triumph of form over “a fundamental … bulwark of liberty” if a plaintiff in the position of Mr Dale could not invoke the privileges in response to the defendant’s case against him. Moreover, having regard to the manner in which the plaintiff’s case is put and the defendants’ pleading of a discrete and positive case against him, no unfairness or injustice arises for the defendant in the conduct of the firm’s case as a result of the plaintiff invoking the privileges.[255]
[255]See Television New Zealand Ltd v Prebble (CA 161 of 1992, 14 May 1993, unreported); Breunis v Penthouse Publications Ltd (NSWSC, 15619 of 1992, 20 August 1993, unreported); and Allason v Haines (QBD, Times Law Reports, 25 July 1995).
Objections to defendant’s evidence
A variety of objections were made by the plaintiff to evidence which the defendant sought to lead through the evidence of Mr Gregory John Carfoot, being exhibits to his affidavit made on 5 September 2014.[256]
[256]See Plaintiff’s Submissions (12 September 2014), [60]-[95].
Having regard to the preceding reasons and the position I have reached with respect to the other relief sought in the plaintiff’s application, it may be that these objections are to a greater or lesser extent no longer live issues, at least for the purposes of the present application. Accordingly, I propose to reserve the question whether the plaintiff’s objections to the tender of this evidence by the defendant are made out and will hear the parties further on both whether the objections remain live issues and, if so, whether the objections are established. I will also hear from the parties as to what, if anything, flows from any objections being established and also from the admission of any of this evidence.
Conclusions and orders
For the preceding reasons, I am of the opinion that the plaintiff’s application should be acceded to, in all its elements, save for the objections made by the plaintiff to the tender of evidence by the defendant through the affidavit of Mr Gregory John Carfoot, made 5 September 2014. The question whether these objections, or any of them, are established and what flows from any finding in this respect are reserved.
I also reserve the question of costs.
The parties are to bring in orders to give effect to these reasons.
APPENDIX
LIST OF AUTHORITIES RE PRIVILEGE
| Case | Privilege claimed by | |
| 1. | Accident Insurance Mutual Holdings Ltd v McFadden (1993) 31 NSWLR 412 | Witness |
| 2. | Reid v Howard (No 2) (1995) 184 CLR 1 | Defendant |
| 3. | Re Australian Property Custodian Holdings (In Liquidation) (Receivers and Managers Appointed) (Controllers Appointed) (No 2) (2012) 93 ACSR 130 | Defendants |
| 4. | Rio Tinto Zinc Corp v Westinghouse Electrical Corp | Defendant |
| 5. | Australian Securities and Investments Commission v Mining Projects Group Ltd (2007) 164 FCR 32 | Defendants |
| 6. | Rowell v Larter (1986) 6 NSWLR 21 | Plaintiff |
| 7. | Ewin v Vergara (No 2) (2012) 209 FCR 288 | Defendant |
| 8. | Registrar, Court of Appeal v Craven (No 1) (1994) 126 ALR 668 | Defendant |
| 9. | Pascoe v Divisional Security Group Pty Ltd (2007) 209 FLR 197 | Defendants |
| 10. | Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477 | Defendant |
| 11. | Brebner v Perry [1961] SASR 177 | Witness |
| 12. | BTR Engineering v Patterson (1990) 20 NSWLR 724 | Witness |
| 13. | Sorby & Anor v The Commonwealth of Australia & Ors (1983) 152 CLR 281 | Witness (Applicant sought to resist compulsion to answer questions by Royal Commission) |
| 14. | MacDonald v Australian Securities and Investments Commission (ASIC) (2007) 73 NSWLR 612 | Defendant |
| 15. | Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 29 | Plaintiff |
| 16. | Hudak and Anor v Adams and Anor [2013] NSWSC 1464 | Defendant |
| 17. | Wehling v Columbia Broadcasting System, 608 F.2d 1084 (5th Cir. 1979) | Plaintiff |
| 18. | Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 | Witness (Appellants sought to resist production of documents under s 155 of the TPA) |
| 19. | Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385 | Witness |
| 20. | Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat & Livestock Corporation (1979) 42 FLR 204 | Defendant |
| 21. | Rank Film Distributors Ltd v Video Information Centre [1982] AC 380 | Defendant |
| 22. | Le Roi Homestyle Cookies Pty Ltd (in liquidation) v Gemmell [2013] VSC 452 | Defendants |
| 23. | Busby v Thorn EMI Video Programmes Ltd [1984] 1 NZLR 461 | Defendant |
| 24. | Ross v Internet Wines Pty Ltd (2004) 60 NSWLR 436 | Defendant (Appellant sought to resist Mareva injunction) |
| 3 | Redfern v Redfern [1891] P 139 | Defendant |
| 5 | Pappas v New World Oil Developments (1993) 117 ALR 304 | Plaintiff |
| 6 | Dolan v Australian Overseas Telecommunications Corp (1993) 114 ALR 231 | Plaintiff |
| 7 | R v Roberts (2004) 9 VR 295 | Witness |
| 8 | Westpac Banking Corporation v Hilliard [2006] VSC 470 | Witness |
2. On the trial of any issue joined, or of any matter or question, or on any inquiry arising in any suit, action, or other proceeding in any court of justice, or before any person having by law, or by consent of parties, authority to hear, receive, and examine evidence, the parties thereto, and the persons in whose behalf any such suit, action, or other proceeding may be brought or defended, shall, except as herein-after excepted, be competent and compellable to give evidence, either vivâ voce or by deposition, according to the practice of the court, on behalf of either or any of the parties to the said suit, action, or other proceeding.
3. But nothing herein contained shall render any person who in any criminal proceeding is charged with the commission of any indictable offence, or any offence punishable on summary conviction, competent or compellable to give evidence for or against himself or herself, or shall render any person compellable to answer any question tending to criminate himself or herself, or shall in any criminal proceeding render any husband competent or compellable to give evidence for or against his wife, or any wife competent or compellable to give evidence for or against her husband. [Plaintiff’s emphasis]
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