De Lutis v De Lutis
[2017] VSC 505
•28 AUGUST 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S ECI 2015 00435
| PAUL DE LUTIS | Plaintiff |
| v | |
| COLIN DE LUTIS AND OTHERS | Defendants |
---
JUDGE: | ELLIOTT J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 24 AUGUST 2017 |
DATE OF RULING: | 28 AUGUST 2017 |
CASE MAY BE CITED AS: | DE LUTIS v DE LUTIS & ORS |
MEDIUM NEUTRAL CITATION: | [2017] VSC 505 |
---
EVIDENCE – Privilege – Privilege against self-incrimination – Plaintiff’s application for certificate – Whether plaintiff is compellable to give evidence in chief – Whether plaintiff “objects” – Application refused – Evidence Act 2008 (Vic), s 128.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Bick QC with Mr B Gibson | Kalus Kenny Intelex |
| For the 1st defendant | Mr A Myers QC with Mr J Tomlinson and Mr D Briggs | Nick Stretch Legal |
| For the 2nd to 66th defendants | — | — |
HIS HONOUR:
The plaintiff, Paul De Lutis (“Paul”), and the first defendant, Colin De Lutis (“Colin”), are brothers. They have worked together in a business involving, to put it in neutral terms,[1] other family members for many years. The evidence presently before the court suggests that for nearly the entirety of the decades they have worked together, it has been a constructive and harmonious relationship.
[1]The issues for determination involve questions as to the ownership of, at least, some of the assets of the business.
In 2005, Paul and Colin, together with their parents and related companies (including trustee companies) (“the Group”), executed a deed (“the Deed”) by which provision was made for the possibility of Paul and Colin ceasing to remain in the family business together. The Deed expressly provided that, if Paul were the “Exiting Brother”, his share would be 35.5 percent. Correspondingly, in these circumstances, Colin’s share would be 64.5 percent.
In 2014, Paul decided to leave the Group. Initially, it looked as though the split would be dealt with amicably. Now Paul and Colin are engaged in a bitter dispute.
Very broadly, the issues in this proceeding[2] include the construction and operation of the Deed, whether there has been compliance with the Deed, whether agreements were struck between Paul and Colin with respect to the manner by which Paul would receive the “Exiting Brother’s share” for the purposes of the Deed, or alternatively, whether the discussions gave rise to an estoppel by convention. There are also claims based on alleged oppressive conduct.
[2]This proceeding is being heard with a related proceeding concerning Paul’s access to the books and records of the Group: see proceeding S ECI 2015 00412.
On 15 December 2016, the proceeding was set down for trial for a second time,[3] to commence on 21 August 2017. Part of the reason for the delay of the trial was that a large amount of expert evidence needed to be prepared. This included valuing a large number of properties and other assets of the Group.
[3]The trial was originally fixed for hearing on 28 June 2016. By consent, that trial was vacated and extensive orders were made for the appointment of experts and the determination of questions.
When the matter was set down for trial, each of the parties was ordered to prepare witness outlines. The order expressly provided that such outlines should be brief. Effectively, Paul chose to ignore this order. Without any consultation with the court, Paul prepared, filed and served a full witness statement, consisting of 271 paragraphs. With the agreement of the parties, and ultimately the court, Paul was permitted to give most of his evidence in chief by way of this witness statement.
However, when it came time for Paul’s evidence in chief to be presented by way of the witness statement, his senior counsel indicated that Paul “objected” to giving the evidence contained in paragraphs 206 to 235, unless the court gave a certificate pursuant to s 128 of the Evidence Act 2008 (Vic). It was submitted that, if a certificate were not given, Paul might be exposed to liability for being involved in the alleged failure of a family company to disclose or declare its income for the purposes of the income tax laws of the Commonwealth.
When the application was made, I indicated I would give a ruling on the morning of the following hearing day, being today. Paul proceeded to give the remainder of his evidence in chief. He was then cross-examined on the basis that he would not be asked questions on the evidence contained in the paragraphs in question.
The matters referred to in paragraphs 206 to 235 concern funds of approximately $18 million, referred to in the proceeding as the “DAP Funds”, that were deposited in Swiss bank accounts in the 1980s. Later, the DAP Funds were remitted to accounts held in Singapore and the British Virgin Islands, and then, in around 2009, to accounts in Hong Kong.
Reference by Paul to the DAP Funds in this proceeding is not confined to the paragraphs the subject of this application. In Paul’s further amended statement of claim, he alleges an entitlement to a split of the Group assets, referred to as including “all other assets and liabilities of the Group including DAP Funds”.[4]
[4]Paragraph 87(b).
Further, in May 2016, Paul sought interlocutory injunctive relief with respect to certain assets of the Group. Orders were ultimately made by consent, which included the following:
2Without prejudice to the rights and contentions of the parties pending the determination or resolution of this proceeding or further order, the [DAP Funds] the subject of deeds of settlement between the Commissioner of Taxation of the Commonwealth of Australia and the 1st defendant, the 3rd defendant and the 5th defendant (being pages 173 to 235 of exhibit “PD-1” to the affidavit of Paul De Lutis sworn 9 May 2016) (“the Deeds”):
(1)Shall be repatriated in their entirety to the 3rd defendant and the 5th defendant; and
(2)May not be dealt with other than in accordance with the Deeds and with the prior written consent of the plaintiff,
and the parties will execute all such documents and take all such steps as may be required to procure compliance with this order.
3Subject to further order, the Deeds will remain confidential to the parties to this proceeding and to the court.
In the affidavit in support of the interlocutory injunction sought, Paul gave evidence as to the ownership of the DAP Funds, and the dealings with the Australian Taxation Office.[5]
[5]Paragraphs 42-48. See also par 15 of a further affidavit sworn by Paul on 9 May 2016.
It follows from the matters set out above that:
(1)The issue of the DAP Funds was raised by Paul in formulating his claim in the pleadings.
(2)Before trial, Paul already voluntarily gave evidence concerning the beneficial ownership of the DAP Funds through 2 corporate entities within the Group, of which he and Colin jointly own shares.
(3)Although confidentiality was sought by consent and, subject to further order, was ordered by the court, Paul did not seek to obtain a certificate under s 128 of the Evidence Act when voluntarily giving his evidence in May 2016. (There is no suggestion that this was a matter of oversight. Indeed, on 16 November 2016, Paul sought and obtained a certificate concerning privilege in respect of self-incrimination under s 128A of the Evidence Act with respect to a separate subject matter.)
Further, as part of his case at trial, Paul has put forward evidence concerning the DAP Funds without seeking the protection of a s 128 certificate.
First, paragraphs 201 to 205 of his witness statement have been led into evidence without any request for a certificate. Without descending to the detail, those paragraphs deal with the source of the DAP Funds and the names of the persons in whom it is alleged that the Swiss bank accounts were opened. Reference was also made to the later bank accounts. In short, Paul has taken no objection with respect to the same subject matter that is the premise of his “objection” presently under consideration.
Secondly, during the opening of Paul’s case, documents that expressly referred to the DAP Funds were tendered. These documents reflected claims made by Paul to 35.5 percent of either some or all of the DAP Funds.
Thirdly, during the course of Paul’s cross-examination, the issue of the DAP Funds has been raised on numerous occasions.[6] The questions relating to the DAP Funds put to Paul included questions directly concerned with the amount of the DAP Funds and Paul’s entitlement to his share. This evidence has been given voluntarily and without objection.
[6]Based on a word search, it appears that the DAP Funds have been expressly referred to in cross-examination to date on 17 occasions.
It is in the context set out above that the application must be considered.
Applicable law and relevant principles
Section 128 of the Evidence Act provides as follows:
128 Privilege in respect of self-incrimination in other proceedings
(1)This section applies if a witness objects to giving particular evidence, or evidence on a particular matter, on the ground that the evidence may tend to prove that the witness—
(a)has committed an offence against or arising under an Australian law or a law of a foreign country; or
(b) is liable to a civil penalty.
(2)The court must determine whether or not there are reasonable grounds for the objection.
(3)Subject to subsection (4), if the court determines that there are reasonable grounds for the objection, the court is not to require the witness to give the evidence, and is to inform the witness—
(a)that the witness need not give the evidence unless required by the court to do so under subsection (4); and
(b) that the court will give a certificate under this section if—
(i)the witness willingly gives the evidence without being required to do so under subsection (4); or
(ii)the witness gives the evidence after being required to do so under subsection (4); and
(c) of the effect of such a certificate.
(4)The court may require the witness to give the evidence if the court is satisfied that—
(a)the evidence does not tend to prove that the witness has committed an offence against or arising under, or is liable to a civil penalty under, a law of a foreign country; and
(b)the interests of justice require that the witness give the evidence.
(5)If the witness either willingly gives the evidence without being required to do so under subsection (4), or gives it after being required to do so under that subsection, the court must cause the witness to be given a certificate under this section in respect of the evidence.
(6)The court is also to cause a witness to be given a certificate under this section if—
(a) the objection has been overruled; and
(b)after the evidence has been given, the court finds that there were reasonable grounds for the objection.
(7)In any proceeding in a Victorian court or before any person or body authorised by a law of this State, or by consent of parties, to hear, receive and examine evidence—
(a)evidence given by a person in respect of which a certificate under this section has been given; and
(b)evidence of any information, document or thing obtained as a direct or indirect consequence of the person having given evidence—
cannot be used against the person. However, this does not apply to a criminal proceeding in respect of the falsity of the evidence.
(8)Subsection (7) has effect despite any challenge, review, quashing or calling into question on any ground of the decision to give, or the validity of, the certificate concerned.
(Emphasis added.)
In Clayton Utz (a firm) v Dale,[7] the Court of Appeal considered s 128 of the Evidence Act. After considering the relevant authorities, it was observed that the provision made no distinction between a plaintiff and a defendant with respect to recourse to s 128.[8] Having made this observation, the following was stated:[9]
The question is whether, in the circumstances of the case, the witness is under an element of compulsion with respect to the evidence he or she is to give. It is clear that, for a plaintiff, the most relevant context of compulsion is that of cross-examination. Section 128 supports, and does not detract from, the proposition that the privilege against self-incrimination is available to a plaintiff.
[7](2015) 47 VR 48.
[8]At 111 [180] (Tate JA, with whom Ashley and Ferguson JJA agreed).
[9]Ibid.
One of the authorities referred to in Clayton Utz (a firm) v Dale with apparent approval was Song v Ying.[10] In that case, the New South Wales Court of Appeal stated that a party giving evidence in chief is, generally speaking, not compellable to give evidence. In that regard the following was stated:[11]
A party giving evidence in chief, in response to questions from that party’s own legal representative, is not generally giving evidence which that party is, in any real sense, compellable to give: unless called by another party and asked questions in chief by that other party, a party’s evidence in chief is given entirely at the choice of that party and is not evidence that the party is compellable to give at the instance of anyone else. It is true that a party’s legal representative can ask questions in chief without specific instructions to ask them; but if the party instructed the representative to withdraw such a question, there would in my opinion be no possibility of the witness being compelled to answer the question, at least unless it was pressed by another party or the judge, in which case no doubt s 128 could apply.
In all cases apart from a party giving evidence-in-chief or re-examination in response to questions from the party’s own legal representative, witnesses are compellable to give evidence either at the instance of the party calling them, or the party directing questions in cross-examination, or the judge (if the judge asks questions). It is compellability of this nature that gives sense to the word “objects” in s 128(1) and makes sense of the word “require” in s 128(4).
(Emphasis added.)
[10](2010) 79 NSWLR 442.
[11]At 449-450 [26]-[27] (Hodgson JA, with whom Giles and Basten JJA agreed), quoted with approval in Clayton Utz (a firm) v Dale, 109 [173].
After referring to a further passage from Song v Ying,[12] the following was stated in Clayton Utz (a firm) v Dale:[13]
The approach adopted in Song v Ying thus allows for the privilege to be claimed by a plaintiff, within the rubric of s 128, in respect of circumstances where the evidence is otherwise compellable, most especially cross-examination. What is important is not whether the witness is a plaintiff or a defendant, or generally whether the evidence is given in chief or in cross-examination; what is important is whether there is an element of compulsion or potential compulsion.
(Emphasis added.)
[12]At 450 [28], quoted with approval in Clayton Utz (a firm) v Dale, 109-110 [174].
[13]At 110 [175].
In requesting the certificate, Paul also relied upon a decision of the Family Court in Old v Old.[14] In that case, a certificate was granted under s 128 of the Evidence Act 1995 (Cth) with respect to an affidavit sought to be relied upon by a husband with respect to an application before the Family Court. In deciding this course, Young J referred to the Full Court of the Family Court decision of Ferrall and McTaggart v Blyton,[15] in which it was held that “the availability of a certificate clearly applies to evidence given in chief” on the basis that it would otherwise give an inappropriate forensic advantage by a party not seeking to cross-examine on the issue.[16] The passage relied upon included the following:[17]
In the particular circumstances of the Family Court of Australia, evidence in chief is normally given by affidavit. We think that in the circumstances of the present case, the witness was objecting, in the sense required by s 128, by indicating that he would not file the affidavit unless a certificate was given. We see the situation as no different from that which would have been the case if he had been sworn in and asked to answer questions concerning the matter in evidence in chief, and had objected to doing so without the issue of such a certificate.
[14](2006) FLC 93-280.
[15](2000) FLC 93-054.
[16]At 80,790 [48] (Young J).
[17]Ferrall and McTaggart v Blyton (2000) FLC 93-054, 87,883 [90] (Nicholson CJ, Lindenmayer and Kay JJ).
The ruling
Based on the wording of the Evidence Act, the application for a certificate must be refused.
Paul, as a plaintiff giving his evidence in chief, is not in a position to “object” for the purposes of s 128. Further, the court is not requiring Paul to give any evidence. It is entirely a matter for him as to what evidence he gives. For completeness, as explained above,[18] the court did not require Paul to file or serve a witness statement; this was done of Paul’s own volition.
[18]See par 6 above.
In short compass, there is no element of compulsion with respect to what Paul chooses to give by way of his evidence in chief.
With respect to the authorities referred to above, the court was invited not to follow Clayton Utz (a firm) v Dale.[19] It was submitted that what was said in that case was obiter dicta and, for the reasons stated in Ferrall and McTaggart v Blyton,[20] as followed in Old v Old,[21] it would give an unfair advantage to Colin if Paul were not given a certificate and could not give all his evidence with respect to the DAP Funds. There are a number of responses to this.
[19](2015) 47 VR 48.
[20](2000) FLC 93-054.
[21](2006) FLC 93-280.
First, whether or not it was strictly necessary for the Court of Appeal to decide the issue concerning s 128 of the Evidence Act in Clayton Utz (a firm) v Dale, the question was before it, it was fully argued by the parties, and the Court of Appeal stated its position after a careful consideration of the section and relevant authorities.
Secondly, the authorities considered included authority of the Court of Appeal of New South Wales[22] with respect to what is substantially uniform legislation. This is the authority that the Victorian Court of Appeal has adopted with approval. In these circumstances, a trial judge should not depart from such decisions unless she or he is convinced that the interpretation is plainly wrong.[23]
[22]Song v Ying (2010) 79 NSWLR 442.
[23]Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89, 151-152 [135] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ).
Thirdly, given the wording of the provision, as emphasised above,[24] the section is simply not enlivened. Paul is entitled to maintain any claim to privilege against self-incrimination and there is no court process to which he needs to object in order to maintain that privilege.
[24]See par 19 above.
Fourthly, it is not immediately apparent what forensic advantage it might be said that Colin would gain if a certificate is not given. There is already evidence before the court of the amount of the DAP Funds and the fact that they have been the subject of negotiation between the parties, including an agreement that the entirety of the DAP Funds be split (the enforceability of which is in issue). If Colin wishes to give evidence on this topic beyond what is already before the court, then he will be required to put the substance of his version of events to Paul in cross-examination.[25]
[25]Chong v CC Containers Pty Ltd (2015) 49 VR 402, 460-461 [201] (Redlich, Santamaria and Kyrou JJA).
Another issue raised by Paul concerned his ability to control the questions put to him in chief by his own counsel. When it was put to his senior counsel that Paul could simply direct him not to ask the questions in respect of the evidence in the relevant paragraphs concerning the DAP Funds, it was submitted that counsel had duties beyond acting in accordance with instructions given by her or his client. Further it was contended that counsel would be remiss in her or his duties by not asking a question, or series of questions, that go to a matter a plaintiff seeks to prove and in respect of which proof must be led by the plaintiff.
It is ultimately a matter for a plaintiff as to what case it wants to put before the court. In private civil litigation, such matters are voluntary and a plaintiff can choose whether or not to prosecute its case. This issue was addressed directly in the passage in Song v Ying set out above.[26] There cannot be said to be, in substance, an objection in such circumstances.
[26]See par 21 above.
To the extent that the submission might be understood to be a reference to the Civil Procedure Act 2010 (Vic), there is a real issue as to whether the overarching obligations as set out in the Civil Procedure Act apply to a party in her or his capacity as a witness.[27] In any event, it is not clear how it is said that the Civil Procedure Act might be infringed in the particular circumstances of this case if Paul were to choose not to give the evidence in question.
[27]See Giles v Jeffrey [2016] VSCA 314, [81]-[108] (Santamaria and Kyrou JJA and Elliott AJA).
What is stated above resolves the issue. However, I should also note that I have serious doubts about whether the proposed evidence in paragraphs 206 to 235 of Paul’s witness statement might tend to prove Paul has committed an offence or would be liable to a penalty. In circumstances where so much of the subject matter has been disclosed voluntarily, it is difficult to see how this further evidence would materially alter Paul’s position. However, in light of the conclusion expressed above, it is unnecessary to say anything further on this point.
For the reasons stated, the application is refused.
---
0
6
0