Gemmell v Le Roi Homestyle Cookies Pty Ltd (in liq)
[2014] VSCA 182
•22 August 2014
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2013 0137
| WILLIAM GEMMELL | First Appellant |
| and | |
| SEAN CONLON | Second Appellant |
| v | |
| LE ROI HOMESTYLE COOKIES PTY LTD (IN LIQUIDATION) (ACN 102 590 483) | First Respondent |
| and | |
| DAVID ANTHONY ROSS, RICHARD ALBARRAN AND BLAIR ALEXANDER PLEASH (AS LIQUIDATORS OF LE ROI HOMESTYLE COOKIES PTY LTD (IN LIQUIDATION) (ACN 102 590 483) | Second Respondent |
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| JUDGES: | ASHLEY and NEAVE JJA and ALMOND AJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 2 May 2014 |
| DATE OF JUDGMENT: | 22 August 2014 |
| MEDIUM NEUTRAL CITATION: | [2014] VSCA 182 |
| JUDGMENT APPEALED FROM: | [2013] VSC 452 (Ferguson J) |
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PRACTICE AND PROCEDURE – Pleadings – Discovery – Appeal from order for delivery of defence and for giving discovery in insolvent trading claim – Appellants were directors of company in liquidation – Appellants did not claim use‑immunity against self-incrimination or exposure to penalty during public examinations by liquidator – Statement of Claim based on answers given during public examinations – Whether appellants relieved from delivering substantive defences and making discovery – Whether common law privileges abrogated in present proceeding – Effect of answers given in public examination upon common law privileges – Appellants not relieved from delivering defences and making discovery to extent of answers previously given – No waiver of privileges, but no increased jeopardy – Appellants not disentitled from claiming privileges with respect to potential self‑incrimination or exposure to penalty travelling beyond that resulting from answers given (and incorporated documents) at public examination – Corporations Act 2001 (Cth), ss 597(12), (12A) and (14) – Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372 applied.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellants | Mr I D Martindale QC with Mr P L Ehrlich | Chiodo Madafferi |
| For the Respondents | Mr A R Kirby | Clamenz Evans Ellis |
ASHLEY JA:
The proceeding
Le Roi Homestyle Cookies Pty Ltd (in liquidation) (‘Le Roi’) is a company under liquidation. The liquidators are Messrs David Ross, Richard Albarran and Blair Pleish. They and Le Roi are the respondents before this Court.
The respondents have brought a proceeding against William Gemmell and Sean Conlon pursuant to s 588M of the Corporations Act 2001 (‘the Act’) for insolvent trading. Gemmell and Conlon are the present appellants.
It is the respondents’ case that the appellants were in substance, though not in form, directors of Le Roi during a lengthy period when that company, though insolvent, traded. The respondents seek declarations that each appellant breached s 588G of the Act, and compensation pursuant to s 588M – about $673,000 from Gemmell, and about $1.3 million from Conlon. They do not seek a civil penalty order, although a breach of s 588G exposes a director to such an order.
The appellants’ summons
The appellants, by summons dated 17 December 2012, sought, inter alia, orders –
That the requirements of Supreme Court (General Civil Procedure) Rules 13.07, 13.10, 13.12 and 29 be dispensed with in respect of the Defendants to the extent that compliance with these Rules may have a tendency to expose the Defendants directly or indirectly to civil penalty in respect of the subject matter of this proceeding, and that in providing their defences and in making discovery the defendants are relieved from the obligation to comply with the said Rules to the extent claimed until further order.
Order 13 relates to pleadings. In the present case, rr 13.07, 13.10 and 13.12 are pertinent to what the appellants must plead by their defences.
Order 29 relates to discovery. Where notice for discovery is given, the ordinary obligation of the party required to make discovery is set out in r 29.01.1(3).
Examination under the Act
Division 1 of Part 9 of the Act is headed ‘Examining a Person about a Corporation’. Each of the appellants was so examined. The examinations were conducted before an Associate Justice of this Court in the period between 19 and 21 March 2012.
Section 597(12) of the Act says this:
(12) A person is not excused from answering a question put to the person at an examination on the ground that the answer might tend to incriminate the person or make the person liable to a penalty.
Section 597(12A) is also of importance to this appeal. It reads as follows –
(12A) Where:
(a) before answering a question put to a person (other than a body corporate) at an examination, the person claims that the answer might tend to incriminate the person or make the person liable to a penalty; and
(b) the answer might in fact tend to incriminate the person or make the person so liable;
the answer is not admissible in evidence against the person in:
(c) a criminal proceeding; or
(d) a proceeding for the imposition of a penalty;
other than a proceeding under this section, or any other proceeding in respect of the falsity of the answer.
So s 597(14) is also of importance. It reads as follows:
Subject to subsection (12A), any written record of an examination so signed by a person, or any transcript of an examination of a person that is authenticated as provided by the rules, may be used in evidence in any legal proceedings against the person.
Before each appellant was examined, the Associate Judge read out the text of sub-s (12A) to him. His Honour asked each appellant if he understood it. Each answered affirmatively. Neither claimed the statutory protection before giving any answer.[1]
[1]It was said, in Re Vista Capital Pty Ltd (in liq) (2013) 271 FLR 212, 215 [11] to be sufficient to invoke that protection, that the examinee state ‘privilege’ before giving an answer. That has long been the practice. But it conceals a difficulty, which I discuss later in these reasons.
The statement of claim
The statement of claim in substance pleads the following matters: (1) the status of Le Roi and the identity and status of the liquidators; (2) the identity of the appointed directors in the relevant period; (3) facts from which the conclusion is alleged to follow that each of the appellants was a shadow director during a particular period; (4) facts from which it is alleged to follow that the company traded whilst insolvent[2] during a particular period when each appellant was a shadow director; (5) an assertion that, having the relevant awareness, each appellant failed to prevent the company incurring particular debts; (6) the conclusion that, in the circumstances, each appellant breached s 588G of the Act; (7) the suffering thereby of loss and damage by creditors; (8) reliance on s 588M of the Act to found a claim against the appellants for compensation.
[2]Or when presumed to be insolvent.
As I noted earlier, the prayer for relief seeks, inter alia, a declaration that each appellant breached s 588G of the Act, and compensation pursuant to s 588M.
It is common ground that the examinations of the appellants provided the basis for allegations pleaded and particularised with respect to matters (3), (4) and (5) identified at [12] above.[3] But that is not to say that answers given were always, or even often, inculpatory. That is particularly so with respect to the issue whether either appellant was a shadow director of Le Roi.
[3]The particulars to matter (5) refer to and repeat the matters particularised with respect to matter (4).
The Court requested appellants’ counsel to provide it with draft proposed defences. The documents provided disclosed no apparent difficulty in pleading to the allegations raised by the statement of claim, albeit that no positive case is raised,[4] and that each defendant would want to preface the pleading to this effect:
This defence is filed … without prejudice to the … defendant’s privilege against self-incrimination or self-exposure to a penalty. The … defendant reserves the right to file and serve an amended defence at the conclusion of the plaintiff’s case.
[4]Although each appellant gives notice of intention to rely upon s 1318 of the Act in the event of a finding of contravention of s 588G being made against him.
The course of the summons
On 22 February 2013, an Associate Judge dismissed the summons. It is only necessary to note that, before his Honour and subsequently, the appellants have relied not only upon risk of exposure to penalty (mentioned in the summons) but also upon tendency to self-incrimination.
The appellants unsuccessfully appealed to a judge in the Trial Division. From her Honour’s order, made on 6 September 2013, the appellants now, by leave, appeal.
The grounds of appeal
The Notice of Appeal sets out the following grounds (I have retained the original footnotes):
Ground 1
Having found that there was a sufficient risk of being exposed to criminal prosecution or civil penalty proceedings based on a contravention of s 588G of the Corporations Act, her Honour erred in law in failing to excuse the appellants from pleading (other than a McDonald defence) or making discovery[5] on the basis that at a public examination under s 596B of the Corporations Act, each defendant failed to claim privilege against self-incrimination or penalty privilege (“the privileges”) and had thereby waived the privileges with respect to the information contained within their answers.
[5]That is, complying 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 defendants to criminal prosecution or a civil penalty proceeding.
Ground 2
(a)Her Honour erred in law by holding[6] that the explanation or warning given to the appellants at the beginning of their examinations was sufficient to inform the appellants that they would waive the privileges by answering questions in respect of which they could invoke their statutory rights under s 597(12A).
[6]Reasons, [22].
(b)Her Honour should have held that the only significance of the explanation and warning given to the appellants at the beginning of their examinations was to alert them that if they failed to invoke their statutory rights under s 597(12A) then their answers could be used against them in a criminal proceeding or a proceeding for the imposition of a penalty.
Ground 3
(a)Her Honour erred in law in holding:[7]
[7]Reasons, [19], [22], [23], [30], [31] and [34].
(i)that the effect of s 597(12A) of the Corporations Act is that an examinee who claims that the answer to a question might tend to incriminate the examinee or make the examinee liable to a penalty is thereby invoking the privileges rather than seeking the statutory protection afforded by the sub-section itself, and
(ii)the effect of not claiming the privileges in accordance with s 597(12A) is that the examinee thereby waives the right to claim the privileges in respect of the answers to the questions.
(b)Her Honour should have held that:
(i)answers given by each appellant at their public examination, being admissions made under compulsion of law, do not constitute a waiver of the privileges in another proceeding; and
(ii)that a failure by the appellants to exercise their statutory rights under s 597(12A) operates only so as to make their answers admissible in a criminal proceeding or a proceeding for the imposition of a penalty and is not a waiver, limited or otherwise, of the privileges.
Ground 4
(a)Her Honour erred in law by holding that:[8]
[8]Reasons, [31].
(i)A person who has answered questions in earlier court proceedings is not entitled to claim the privilege against self-incrimination to refuse to answer the same questions when put; and
(ii)by analogy, with that principle, the defendants should not be permitted to avoid pleading and providing discovery.
(b)Her Honour should have held that as neither of the appellants could be compelled to give evidence in a criminal proceeding in which they were the accused, there was no analogy to be drawn from Registrar, Court of Appeal v Craven (No 1) or Mining Projects.[9]
[9]Footnote 37 and text accompanying.
Ground 5
(a)Her Honour erred in law by holding that[10] the outcome would be irrational if the appellants were to be excused from pleading the matters about which they have already answered questions in their public examinations.
[10]Reasons, [31].
(b)Her Honour should have held that it is rational to excuse the appellants from pleading to matters about which they have already answered questions in public examinations because the statement of claim in this proceeding pleads conclusions, including allegations that:
(i)the appellants were each persons who acted in the position of director of the company and whose instructions or wishes the directors of the company were accustomed to act in accordance with;
(ii)the appellants were therefore each a director of the company for the purposes of the definition of “director” in section 9 of the Corporations Act;
(iii)the appellants had each contravened s 588GB of the Corporations Act,
which, if they have not waived the privileges, it would be rational for them not to admit.
Ground 6
(a)Her Honour erred in law by holding that[11] there is now no utility in claiming privilege against self-incrimination.
(b)Her Honour should have held that utility, or lack of utility, is not a relevant consideration in determining whether or not a person is entitled to claim the privileges, the only issue being whether or not there has been a waiver.
Ground 7
(a)Her Honour erred in law in holding[12] that there was no justification for relieving the appellants of their obligations to comply with the pleading and discovery rules because they did not submit that in pleading their defences and making discovery they would have to go beyond the information that they provided during their examinations.
(b)Her Honour should have held that it is inevitable that in pleading their defences and making discovery the appellants would have to go beyond the information that they provided during their examinations, or that the risk that they would have to do so was sufficient that they should be relieved of those obligations.
Ground 8
(a)Her Honour erred in law in distinguishing Accident Insurance Mutual Holdings Ltd v McFadden (1993) 31 NSWLR 412 and Reid v Howard (1995) 184 CLR 1.[13]
(b)Her Honour should have held that no relevant distinction exists between sworn and unsworn answers, and that the principles applied in McFadden and Reid are more powerfully engaged in the proceeding before her Honour because the information provided by the appellants was given under compulsion of law and not, as it had been in McFadden and Reid, on a voluntary basis.
[11]Reasons, [31].
[12]Reasons, [32].
[13]Reasons [23]–[30].
The judge’s reasons
The judge described the central issue before her, and the way in which it was to be resolved, this way –
The central issue in the appeal is whether, having failed to claim either penalty privilege or privilege against self-incrimination during the course of their public examinations, the Defendants may now invoke those privileges, and avoid filing fully responsive defences or making discovery. In my opinion, for the reasons set out below, the Defendants have waived their rights to claim privilege and must plead a defence and provide discovery in accordance with the Rules.[14]
[14]Le Roi Homestyle Cookies Pty Ltd (in liq) v Gemmell [2013] VSC 452 (‘Reasons’) [3].
Her Honour accepted the following propositions, stated by Robson J in Re Australian Property Custodian Holdings (in liq) (recs and mgrs apptd) (controllers apptd) (No 2) (‘Re APCH (No 2)’):[15]
[15](2012) 93 ACSR 130, 154 [115] (citations omitted).
(a)In the case of self-incrimination privilege, the defendant must 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.
…
(c)In civil actions, where no claim for penalty is made, the defendant must show that providing the information requested would tend to subject him to a penalty in separate proceedings before he can rely on the privilege.
(d)The privilege against exposure to penalty is a common law privilege that may be availed as of right and is enforced and protected by the Court.
(e)The privilege against the exposure to penalty may be relied on by a defendant to a civil [proceeding] in which a penalty is not sought (“the non penalty civil proceeding”).
(f)The privilege against the exposure to penalty extends to the obligation upon a defendant to plead, give discovery and answer interrogatories in the non penalty civil proceeding.
(i)… in exceptional circumstances, a defendant may be entitled to orders in limine that he may deliver a defence that departs from the Rules of Court only insofar as to protect his privilege against exposure to penalty.
(j)Exceptional circumstances may exist where the defendant to the civil proceeding is also the subject of separate civil penalty proceedings alleging the same or similar conduct.
(k)Where a defendant seeks to take the privilege against exposure to a penalty in a defence, the proper course is to plead accordingly and – if challenged – the defendant will be required to justify that the privilege is taken in good faith and on reasonable grounds for the privilege to stand.[16]
[16]Reasons [9].
Her Honour added that –
I would add that the privileges can only be overridden by statutory authority, or waived and may not be abrogated by the purported exercise of a judicial discretion.[17]
[17]Reasons [10], citing Reid v Howard (1995) 184 CLR 1, 5, 8 (Deane J), 12, 14, 17 (Toohey, Gaudron, McHugh and Gummow JJ).
Her Honour then considered whether there was ‘a real and appreciable risk of criminal prosecution or tendency to subject [the appellants] to a penalty’.[18] She held that there was such a risk. She said this –
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.[19]
[18]Reasons [11].
[19]Reasons [17]. I further note that, although neither appellant was represented at his examination, it appears that each had by then engaged his present solicitors.
The respondents do not seek to challenge that conclusion. But, as will be seen, there was what has been said to be an aspect of ‘real and appreciable risk’ which the judge did not consider at that point in her reasons.
The conclusion just cited led on to the judge’s consideration whether ‘the [appellants] are entitled to maintain the privileges in this proceeding or whether they have waived that right.’[20]
[20]Reasons [18].
Her Honour first addressed the submission for the appellants that what the Associate Judge said to each appellant before he was examined was insufficient to put that appellant on notice that giving an answer without claiming privilege established waiver. She rejected that submission, holding that what the Associate Judge had said had been clear and sufficient. Her Honour said this:
In my view, the warning that the Associate Judge gave was clear and their lack of legal representation is of little moment. The Defendants were informed about their rights and chose not to claim either privilege. This is not a case where the Defendants claimed privilege in respect of some answers but, through inadvertence, failed to claim privilege in respect of all answers. They simply did not claim any privilege in respect of any question at all despite the warning given to them by the Associate Judge.[21]
[21]Reasons [22].
Then her Honour turned to the question of the effect of the appellants having failed to claim statutory protection during their public examinations. She framed the issue this way:
If during a public examination a person claims the privileges against self-incrimination and penalty privilege, they may maintain their right to claim the privileges on subsequent occasions, despite the fact that answers have been given during the examination.[22] In those circumstances, the answers have been given under compulsion of law and there has been no waiver of the privileges. Here, however, the question is whether having failed to claim either privilege during the course of the public examinations, the Defendants have now waived their rights to make those claims in this proceeding.[23]
[22]Southern Equities Corporation Ltd (in liq) v Bond (2001) 78 SASR 554.
[23]Reasons [19].
The judge noted that counsel for the appellants had made these submissions:
… in any event, a person having failed to claim the privileges on one occasion could not be required to incriminate themselves on a different occasion, for example, in pleading a defence or by making discovery. … [Section] 597(12) abrogates the privileges against self-incrimination and penalty with respect to a question — in other words, it is a question by question abrogation. Moreover … s 597(12A) is directed to something different — it provides a statutory admissibility protection so that, with some limited exceptions, the answer in respect of which privilege has been claimed cannot be used in any criminal or penalty proceeding. Consequently, … unless the Court could be satisfied that the answers to questions asked in the examinations sufficiently support the allegations of material fact pleaded in the amended statement of claim, such that they would not be further disadvantaged by having to plead a defence, the Court ought not require them to plead or provide discovery.[24]
[24]Reasons [23] (citation omitted).
Her Honour noted that counsel for the appellants had –
relied on the decision in Accident Insurance Mutual Holdings Ltd v McFadden (‘McFadden’).[25] In that case, an insurer had denied indemnity under a car insurance policy in respect of a claim for theft of a car. The insured sued. Part of the defence to the claim was that the car had not been stolen because one of the insured had told a third party (Mr Leathem) to ‘get rid of’ the car. Mr Leathem had provided statements to the insurer’s investigator about this. At trial, Mr Leathem was called as a witness but refused to answer questions put to him and invoked the privilege against self-incrimination. The New South Wales Court of Appeal held that the trial judge had been correct in upholding Mr Leathem’s claim for privilege and determined that he had not waived the privilege in making the statements to the investigator. Kirby P stated:
The witness may have been fixed with the written statements which he had already signed. But he was not obliged to go beyond those statements, to provide elaborated oral testimony which could be used in later criminal proceedings or could afford the prosecuting authorities evidentiary leads with which to enlarge the prospects of obtaining his conviction out of his own mouth.
The giving of a written statement (whether to police or to an insurance investigator) on the general subject matter of certain criminal activities does not forever waive the privilege against self-incrimination in respect of other crimes which may arise from the oral elaboration of the written document. Of course, what is involved raises a question of degree. Each question put must be judged by reference to the matters already admitted and the waiver already expressed. But because of the prosecution for a wide range of offences which this witness potentially faced and the great latitude normally allowed to a witness to be protected from self-incrimination, I consider that the course adopted by P R Bell DCJ was proper.[26] [27]
[25](1993) 31 NSWLR 412.
[26]Ibid 424.
[27]Reasons [23].
Her Honour also referred to Reid v Howard (‘Reid’).[28] There, an accountant misappropriated client’s funds. He made a general statement to the police as to the use of some of the funds. Charges were not laid. Clients brought a civil suit against him, and sought an interlocutory order for disclosure of his assets and the source of funds for their acquisition. The accountant resisted the order sought, claiming privilege against self-incrimination. The High Court upheld his claim. Her Honour cited the following passage from the joint judgment of Toohey, Gaudron, McHugh and Gummow JJ:
… the appellant’s statement to the police has not resulted in the laying of criminal charges. Almost certainly, that is because it lacks detailed particulars of his misappropriations. There can be no doubt that disclosure of the assets upon which the appellant ‘applied … moneys or property entrusted to him’ by the respondents and, in respect of each of those assets, ‘the amount of any moneys and the identity of any property’ applied in its acquisition, as required by the various orders which have been made against him, would place him in greater ‘peril … of being convicted as a criminal’ than the perfectly general admission of fraudulent misappropriation contained in his statement to police.[29]
[28](1995) 184 CLR 1.
[29]Ibid 12.
Her Honour contrasted the circumstances of the present case with those that arose in Reid. There, the accountant’s general statements did not constitute a waiver of the privilege with respect to the more detailed information which was sought in the civil proceeding. But here, by contrast, ‘the detailed information has been provided through the answers given at the public examinations and has been used to draw the more general statement of claim’.[30]
[30]Reasons [29].
Her Honour then further focused upon the question whether, by delivering a defence or making discovery, the appellants would be obliged to expand upon answers which they had already given at their public examinations, in respect of which they had not claimed the statutory protection available to them. She concluded that this was not the situation. There was –
… no suggestion that the Defendants will expose themselves to any different penalty or criminal proceeding to which they are not already exposed by virtue of having failed to claim privilege during the course of their public examinations. Moreover, the Defendants had their rights explained to them at the beginning of their examinations.[31]
[31]Reasons [30].
Again, the appellants ‘did not submit that in pleading their defences and making discovery they would have to go beyond the information that they provided during their examinations.’[32]
[32]Reasons [32].
Then Her Honour said this:
In my opinion, the Defendants have waived the right to claim the privileges in respect of the answers that they gave during their public examinations. It should not be forgotten that a person who has answered questions in earlier court proceedings (as the Defendants have here) is not entitled to claim the privilege against self-incrimination to refuse to answer the same questions when put.[33] By analogy, they should also not be permitted to avoid pleading and providing discovery.[34]
[33]Registrar, Court of Appeal v Craven (1994) 77 A Crim R 410, 428; Australian Securities and Investments Commission v Mining Projects Group Ltd [2007] FCA 1620; (2007) 164 FCR 32 [24].
[34]Reasons [31].
She added that –
… if the Defendants were to be excused from pleading the matters about which they have already answered questions in their public examinations, the outcome would be irrational. For example, having failed to claim the privileges, the answers they gave are admissible in a proceeding brought by ASIC for the imposition of a penalty.[35] Yet, as counsel for the Liquidators noted, it is that type of proceeding that the Defendants seek to protect themselves from by belatedly seeking to claim penalty privilege. They have already lost the protection that they now seek. As the Associate Judge said there is now no utility in claiming privilege against self-incrimination.[36]
[35]Corporations Act s 597(12A)(d).
[36]Reasons [31].
The authority cited by her Honour for the proposition that a person who has answered questions in earlier court proceedings is not entitled to claim the privilege against self-incrimination to refuse to answer the same question when put was Registrar, Court of Appeal (NSW) v Craven (‘Craven’).[37] As will be seen, the appellants submitted that the judge incorrectly drew upon Craven in support of her conclusions (wrongly distinguishing McFadden and Reid) whilst the respondents supported her Honour’s reliance upon it.
[37](1994) 126 ALR 668.
It was in light of the considerations to which I have referred that her Honour dismissed the appeal.
Submissions for the appellants
According to the appellants, this appeal raises for determination an important question which has never been answered before, viz:
Is the result of a person’s failure to exercise the statutory right under s 597(12A) of the Corporations Act only that the person’s answers are admissible in a criminal proceeding or a proceeding for the imposition of a penalty, or is it also that the person has waived the privilege against self-incrimination and/or ‘penalty privilege’ for all purposes whereby the person may subsequently be required, by Rules of Court, to:
(i)further or again disclose the information contained within the person’s examination answers or otherwise; or
(ii)make discovery of documents; or
(iii)file and serve an affidavit or a witness statement;
that might incriminate the person or expose the person to a penalty?[38]
[38]Appellants’ Outline of Submissions [1].
Counsel for the appellants made the following principal submissions:
(1)The resolution of this appeal had nothing to do with waiver of the privileges. The privilege against self-incrimination is designed to protect a person against convicting himself out of his own mouth, and against the indirect use of answers which may tend to incriminate. But s 597(12A) provides a direct use indemnity only. So, even with respect to questions asked and answered, failure to claim protection under s 597(12A) was not equivalent to waiver of privilege. Direct use indemnity gives less protection than the privilege against self-incrimination.
(2)The warning given by the Associate Justice was in each instance inadequate because the appellants were not told that, even if they made sub-s (12A) claims, this would not give them indirect use protection. Further, they were not told (if it be the case) that failure to make sub-s (12A) claims would operate as a total or partial waiver of their ability to claim the privileges in a later civil proceeding.
(3)Where privilege is to be claimed, it is taken question by question. By analogy, if there was any waiver of privilege by not making sub-s (12A) claims, it was confined to the answers given to questions asked. There was no ‘issue’ waiver.
(4)There was no waiver of the privileges in the present proceeding by answers given under compulsion, regardless that sub-s (12A) claims were not made.
(5)There was no want of utility in the appellants being entitled to claim the privileges in respect of their defences and discovery. Although their answers could be evidence against them, that was not the end of the matters pleaded by the statement of claim. Particularly that was so where the appellants had made denials during their examinations.
(6)There would be no relevant inconsistency in the appellants being entitled to rely upon the privileges in this proceeding. Ewin v Vergara (No 2)[39] was not in point.
(7)It was not irrational that the appellants be excused from pleading to matters about which they had already answered questions in circumstances where the answers were given under compulsion, and where the statement of claim pleaded conclusions both of fact and law.
[39](2012) 209 FCR 288.
Submissions for the respondents
Counsel for the respondents submitted that:
(1)The privileges which would otherwise be available to the appellants in this proceeding were capable of waiver and had been waived when, given relevant information about sub-s (12A), the appellants answered questions without making the claims available under that sub-section. The judge had correctly applied relevant authorities in so concluding.
(2)There would be inconsistency and unfairness if the appellants were now permitted to assert the privileges.
(3)The waiver was ‘issue’ waiver. That is, it extended beyond the questions asked and answers given.
(4)It was true that the evidence was compelled, but sub-s (12A) protection had been available.
(5)In fact, the scope of the defences and discovery would ‘inhabit a smaller sphere’ than the examinations had extended to.
(6)The genie was out of the bottle. The respondents had already used evidence given by the appellants on the examinations.
(7)If the appellants were unable to claim the privileges, there would be no increase in the risk that criminal proceedings or proceedings for a penalty would be brought against them. They were already in jeopardy by reason of their answers at the examinations.
(8)The judge was correct to conclude that it would be irrational for the appellants now to be able to assert the privileges.
Disposition
I consider that, to resolve this appeal, the issue of alleged inadequate warning must be addressed; and then three questions must be answered.
The warning
In my opinion, there is nothing to the submission noted at [38](2) above. It is true, see later in these reasons, that sub-s (12A) provides a direct use indemnity only. But I do not understand why an examinee needs to be told what protection a claim under the subsection will not give, as contrasted with the protection which it will give. Surely, a claim is made for the protection which is thereby given. Then, as to waiver, I later conclude that failure to make a claim does not operate as a total or partial waiver of the privileges in a proceeding such as this.
The three questions and answers
The questions, and my answers, are as follows.
First, putting waiver and the concept of ‘no increased jeopardy’ to one side, does sub-s (12) operate to abrogate the privileges in the present proceeding? For the reasons stated at [46]-[73] below, my answer is ‘no’, regardless whether the privileges arise at common law or under Chapter 3 of the Evidence Act 2008 (Vic).[40]
[40]There is an argument that parts of Chapter 3 constitute a code. For present purposes, I do not need to consider that matter.
Second, did the appellants waive their right to claim the privileges by not making use indemnity claims under sub-s (12A)? For the reasons stated at [74]-[84] below, my answer is ‘no’.
Third, does the concept of ‘no increased jeopardy’ mean that the appellants fail in their claims for the privileges? For the reasons stated at [85]-[112] below, my answer is ‘yes’, at least with respect to answers which they gave in their examinations and documents thereby incorporated.
Abrogation of the privileges?
The resolution of the first question turns upon principle and statutory construction. The former involves consideration of the significance and – particularly – the reach of the privilege against self-incrimination. The latter mainly raises for consideration the proper construction of sub-s 597(12), (12A) and (14) of the Act.
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.’[41]
[41]Reid v Howard (1995) 184 CLR 1, 11 (Toohey, Gaudron, McHugh and Gummow JJ), cited, inter alia, by Hayne and Bell JJ in X7 v Australian Crime Commission (2013) 248 CLR 92, 136 [104]. See also the reasons of Kirby P in Accident Insurance Mutual Holdings Ltd v McFadden (1993) 31 NSWLR 412, 420-421.
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).[42]
[42]See [20] above.
‘The privilege … may be abridged by statute or waived but, that aside, it has generally been accepted that it is without “real exception”.’[43]
[43]Reid, 12 (citation omitted).
Such abridgement, or abrogation, may be effected either by express words or by necessary implication. But it must always be necessary to carefully study the words of a statute to determine the extent of any such abrogation; and the importance of the privilege against self-incrimination means that the extent of abrogation should be confined to the smallest area consistent with the words of the provision and the evident intent of the legislature derived from those words set in the context of the instant legislation.[44]
[44]Yuill v Corporate Affairs Commission of New South Wales (1990) 20 NSWLR 386, 395-397 (Kirby P). Yuill involved legal professional privilege, but that is not in point for present purposes; Kirby P restated the applicable principle of construction in McFadden at 428.
In the present case, s 597(12), on its face, expressly abrogates both privileges. It has none of the uncertainties which existed under the Royal Commissions Act 1902 (Cth) before the enactment of s 6A(2) of that Act – as to which see Sorby v The Commonwealth (‘Sorby’);[45] or the complication of omission to refer to risk of exposure to a penalty, which arose for consideration in Pyneboard Pty Ltd v Trade Practices Commission (‘Pyneboard’).[46]
[45](1983) 152 CLR 281, 287-296 (Gibbs CJ), 305 (Mason, Wilson and Dawson JJ).
[46](1983) 152 CLR 328.
The subsection is part of a ‘historical pedigree of … legislation’[47] in which there has been a willingness to conclude that the privilege against self-incrimination, consistent with the purpose of such legislation, has been abridged. In that lineage are Rees v Kratzmann (‘Rees’),[48] Mortimer v Brown (‘Mortimer’),[49] and Hamilton v Oades (‘Hamilton’).[50] As Mason CJ observed in Hamilton –
[t]here has been a long history of legislation governing examinations in bankruptcy and under the Companies Acts which abrogate or qualify the right of the person examined to refuse to answer questions on the ground that the answers may incriminate him[.][51]
[47]X7 v Australian Crime Commission (2013) 248 CLR 92, 148 [140] (Hayne and Bell JJ).
[48](1965) 114 CLR 63.
[49](1970) 122 CLR 493.
[50](1989) 166 CLR 486.
[51]Ibid 494.
In Mortimer, Walsh J referred to remarks of Windeyer J in Rees, and added observations of his own. This is what his Honour said:
His Honour referred[52] to decisions that a debtor upon his public examination in bankruptcy cannot refuse to answer questions on the ground that the answers may incriminate him and his Honour considered that the idea underlying those decisions, namely that the purpose of the bankruptcy statute was to secure a full disclosure of facts in the interests of the public, was reflected also in The Companies Act. His Honour added:
‘The honest conduct of the affairs of companies is a matter of great public concern today. If the legislature thinks that in this field the public interest overcomes some of the common law’s traditional consideration for the individual, then effect must be given to the statute which embodies this policy’[53].
This view, with which I am in respectful agreement, means that, having regard to the purpose of s 250 and to the public interest which it is intended to serve, the contention should not be accepted that there should be applied to its construction the principle that a statute should not be construed as being intended to take away common law rights unless that intention is specifically stated.[54]
[52](1965) 114 CLR, 80.
[53](1965) 114 CLR, 80.
[54]Mortimer (1970) 122 CLR 493, 499.
Respecting purpose, I mention also the observations of Mason CJ in Hamilton. There, his Honour said this:
There are the two important public purposes that the examination is designed to serve. One is to enable the liquidator to gather information which will assist him in the winding up; that involves protecting the interests of creditors. The other is to enable evidence and information to be obtained to support the bringing of criminal charges in connection with the company’s affairs[.][55]
[55]Hamilton (1989) 166 CLR 486, 496.
In Mortimer, the language of the statute held to abrogate the privilege against self-incrimination was much less specific than in the present case. So the purpose of the provision was pertinent to a conclusion that it was intended to take away a common law right.
My conclusion, consistent with a submission advanced for the appellants, that the privileges are expressly abrogated by sub-s (12), at least for the purposes of Division 1 of Part 5.9, scarcely needs fortification. The language is explicit. But I will add three matters.
First, it has been said that intent to abrogate may be less clear if there is a ‘reasonable excuse’ qualification. Here, there is none. But compare the immediately preceding sub-ss (9), (10A) and (11).
Second, it has been held that intent to abrogate may more easily be discerned where failure to answer is an offence. That is the case here. See Schedule 3, Item 147 of the Act.
Third, subject to sub-s (12A), by sub-s (14) the record of an examination ‘may be used in any legal proceedings against’ the examinee. That was a consideration to which Walsh J referred in Mortimer as tending to a conclusion that the common law right had been taken away.[56]
Extent of the abrogation: the significance of questions and answers
[56]Mortimer (1970) 122 CLR 493, 501.
But concluding that sub-s (12) abrogates the privileges, at least for the purposes of Division1 of Part 5.9 of the Act, does not answer the question: what is the extent of the abrogation? The answer to one aspect of that question lies, in my opinion, within the text of sub-s (12), which focuses upon ‘a question’ and ‘the answer’. That text is mirrored by sub-s (12A), which permits an examinee, before answering ‘a question’ put to him or her, to obtain the use immunity available under the subsection by claiming that ‘the answer’ might have a relevant tendency.[57] In short, sub-s (12) is directed to a particular question – it may be very many particular questions in the course of an examination – and sub-s (12A) permits a use immunity claim to be made with respect to the answer to each such question. Subsection (12A) does not contemplate the possibility of an examinee simply raising a claim with respect to any question which might be asked upon a particular topic.
[57]It might be of itself, or else as a ‘link in the chain’.
Subsection (14) bears upon this aspect of extent. Its effect, subject to sub-s (12A), is that what may be used in any legal proceedings against the examinee are the questions asked and answers given at the examination.
The use of ‘question’ and ‘answer’ in sub-ss (12) and (12A) is pointed and specific. It is more specific than language which has been used in other provisions of a similar kind, even if their substantial effect turned out to be no different. Section 6DD of the Royal Commissions Act 1902 (Cth), discussed in Sorby, referred to a ‘statement or disclosure … in the course of giving evidence’. Section 14(2) of the Commissions of Inquiry Act1950 (Qld), also considered in Sorby, referred to a ‘statement or disclosure made by any witness in an answer to any question’. Section 30 of the Evidence (Miscellaneous Provisions) Act 1958 (Vic) refers to a ‘statement made by [a] person in answer to any question’. Section 155(7) of the Competition and Consumer Act2010 (Cth) refers to ‘the answer to any question ... or the furnishing … of any information’.
In the event, I consider that sub-s (12) abrogates the privileges with respect to questions asked and answers given at the examination. So to conclude recognises the evident legislative intent to abrogate, the purpose lying behind that intent, and its achievement by precise words. Those words fit in with the nature of the privilege against self-incrimination – as Keifel J noted in Lee v New South Wales Crime Commission (‘Lee’), ‘the privilege attaches to the answer which is sought.’[58] My conclusion also recognises the desirability of not reading the legislation any more widely than is required in abrogating an important common law right.
[58](2013) 302 ALR 363, 419 [184]. Her Honour dissented in the result, but that is not to the point. This proposition has very often been stated. See, for instance, McFadden (1993) 31 NSWLR 412, 424 (Kirby P), cited by Finkelstein J (with respect to a pleaded fact) in ASIC v Mining Projects Group Ltd (2007) 65 ACSR 264, 272 [24].
In determining the extent of the abrogation, so far as it depends upon this aspect of ‘extent’, it will always be important to study the text of a question and answer. The breadth of questions and answers will obviously vary. In a given case, also, a question and answer might incorporate reference to a document. In that event, the abrogation of privilege would extend to the document – or at least so much of it as was the subject of the question and answer.
It follows, in my opinion, that the two privileges were at least not abrogated, in respect of a civil proceeding of this kind, beyond the answers to particular questions. Although the language which the judge below used was not always quite consistent, I think that this was, correctly, the gist of her Honour’s conclusion.[59]
Extent of abrogation: any abrogation at all in this civil proceeding?
[59]See Reasons [31] and [34].
The next issue is whether sub-s (12), for the purposes of this proceeding, has operated to abrogate the privileges with respect to the answers given to questions which were asked. For, having regard to my conclusion thus far, there could only be abrogation with respect to those answers.
This is another aspect of ‘extent’, and again the answer depends upon principle and statutory construction. All of sub-ss (12), (12A) and (14) are in point.
The judge decided that, because the appellants had not made sub-s (12A) claims, they had waived the privileges.[60] The underlying assumption was that sub-s (12) had no abrogating effect at all in the context of the present proceeding.
[60]I will assume – see [65] in these reasons – that her Honour confined the waiver to the answers given to questions asked.
In my opinion, that unstated assumption was correct. The construction of sub-s (12) is informed by the fact that answers were given under compulsion of statute, in order to serve particular purposes. Read together, sub-ss (12), (12A) and (14) show that it is enough that – (a) answers are compelled; (b) a liquidator can make full use of them in probing the affairs of the company and the possible blameworthiness of an examinee;[61] (c) the answers of an examinee who does not make a use indemnity claim may be used against that person in a criminal prosecution or a proceeding for a penalty; (d) even if claims are made under sub-s (12A), the examinee is not protected, in a criminal prosecution or a proceeding for a penalty, from derivatively acquired information being used against him;[62] and (e) criminal prosecution or proceedings for a penalty aside, the record of questions and answers can be used against an examinee in any legal proceedings. The legislature, I consider, chose those consequences as marking out the farthest extent of the abrogation and its consequences. It follows that the examinee will be entitled to claim the privileges[63] (though not necessarily successfully) in a proceeding such as the present.[64]
[61]Section 597(12A) provides only a direct use immunity. See the reasons of Mason CJ in Hamilton at 496. In that case, s 541(12) of the Companies (New South Wales) Code fell for consideration. It was in a number of respects different from s 597(12) and (12A), but no different conclusion follows from that. Of course it is difficult to give protection against derivative use, as Mason CJ observed in Hamilton at 496. But this does not mean that the character of s 597(12) is other than a direct use immunity. It is of no moment that under the Corporations Act 2001 (Cth) there is no provision comparable with s 13A(3) of the Criminal Assets Recovery Act 1990 (NSW), by which derivative evidence is specifically taken outside the protection given by a use immunity provision.
[62]Or it may be ‘her’. I will not keep repeating it.
[63]Whether they arise at common law, or by operation of Chapter 3 of the Evidence Act 2008 (Vic), or by the common law and provisions of the Evidence Act.
[64]The practical impact of such a claim being made will, of course, be affected by the operation of s 597(14).
So to conclude is consistent with the purposes of the legislation being achieved by requiring answers under compulsion, but at the same time not construing legislation which abrogates a fundamental right any more widely than the language and purposes of the provision require.
Counsel for the appellants advanced an argument which ran this way: suppose an examinee made use immunity claims under sub-s (12A). The effect of sub-ss (12A) and (14) would be that those answers could be used in a proceeding against him except in a criminal proceeding or a proceeding for the imposition of a penalty. But if the person was required to re-assert those answers in a pleading, or by discovery, or by answers to interrogatories, or in evidence, would not those same answers be usable against him or her in a later criminal proceeding or proceeding for a penalty? Would that not be anomalous? The resolution of the anomaly, counsel submitted, lay in conclusions that sub-s (12) did not abrogate the privileges in a proceeding such as this, and that waiver had no application in either situation – it following that both an examinee who claimed use indemnity and an examinee who did not were each able to claim the privileges.
The argument assumed that it would be open to all examinees to successfully claim the privileges in a proceeding such as this. But it does not follow, from the answer which I give to the question of abrogation, that examinees who make use indemnity claims and examinees who do not do so will each be able to successfully claim the privileges in a such a proceeding. In my opinion, see later, that is not the situation.
A question which the parties declined to address was whether the provisions of the Act would conflict with s 128 of the Evidence Act 2008(Vic). If the effect of the Act was to diminish or obliterate an examinee’s right to claim the privileges in a case such as the present, it would seem to be arguable that, in substance, it would collide with s 128. That provisional conclusion does not require consideration of the question whether parts of Chapter 3 of the Evidence Act are a code, and displace the common law (in this case, with respect to the privileges).[65] But because, as I have concluded, s 597(12) does not diminish or obliterate the appellants’ rights to claim the privileges, the question of possible conflict does not arise.
[65]A related question was recently considered in Haddara v The Queen [2014] VSCA 100, in which the majority (Redlich and Weinberg JJA, Priest JA dissenting) held that ch 3 relevantly was not a code.
Waiver
My conclusion – expressed at [44] above - that the appellants’ failure to make sub-s (12A) claims does not constitute waiver of the privileges in this proceeding turns on statutory construction and principle. As such provisions have been construed, see below, a claim made thereunder is not equivalent to a claim of privilege. In those circumstances, the principle discussed at [50] suggests that failure to claim the protection of the subsection should not be treated as waiving the privileges in a proceeding such as this – particularly the privilege against self-incrimination. No authority cited by counsel requires or suggests a different answer.
In my opinion, it is confusing and incorrect to treat sub-s (12A) as if a claim made thereunder is equivalent to a waiver of the privileges. Privilege, where claimed, protects the claimant against direct and indirect use of an answer. Subsection (12A) gives protection only against direct use. The deleterious consequences for a person who is able to claim a direct use immunity but not rely upon a privilege were recognised by Crennan J in Lee.[66] The fact, as I earlier noted, that there is a practice of persons wishing to make a s 597(12A) claim doing so by uttering the word ‘privilege’ should not distract attention from the fact that such a claim is not equivalent in its consequences to a claim for privilege.[67]
[66](2013) 302 ALR 363, 408 [137]. See also X7 v Australian Crime Commission (2013) 248 CLR 92, 122-123 [53] (French CJ and Crennan J). Their Honours were in dissent, but not on this point.
[67]As Mason CJ said in Hamilton (at 496), a claim gives ‘specific protection in relation to the principal matter covered by the privilege but not otherwise’.
Craven does not require a conclusion that the appellants are disabled from claiming the privileges in this proceeding. It is unnecessary to set out all the factual complexities of that matter. It suffices to say that the proceeding was one for declarations with respect to nine charges of contempt. The witness had refused to answer many questions on the trial of another man. Six of the declarations were refused because it was in substance conceded that answering questions to which they related would have exposed the witness to risk of prosecution. Three of the declarations were granted. In two instances, giving answers could not possibly have exposed the witness to any such risk. In one of those instances, and another, it was held that the witness had waived privilege by answering substantially identical questions in civil proceeding on a previous occasion.
The differences between that case and the present matter are stark. In the two instances of waiver, evidence had been given on oath, but voluntarily. Moreover, privilege – not use immunity – had been available, but had not been claimed. Moreover, in that case there was nothing akin to the statutory regime, for particular purposes, set up by the Act.
McFadden and Reid stand for the proposition that the making of an out of court statement does not constitute a waiver of the privilege against self-incrimination in the event that the maker is later called to give evidence. It may be argued that, if the voluntary making of a statement will not constitute waiver, how could it be worse for a person whose answers are compelled on oath, who can only claim a direct use indemnity, and whose answers may be used against him for some purposes regardless whether he claims such an indemnity. This is a persuasive argument. But it was submitted, to the contrary, that here (unlike in those cases) the answers – though compelled – were given on oath; and that this provides a critical distinguishing feature.
In all, I do not rest my conclusion on McFadden or Reid. But, to reiterate what I have already said, this does not mean that Craven provides the answer.
Counsel for the respondents relied upon the ruling of Giles J in BTR Engineering (Australia) v Patterson (‘BTR’).[68] He did so mainly, as I understand it, on the issue of want of utility. But Giles J did hold that, where a witness had made a statutory declaration and a statement in a civil proceeding, the witness had waived his privilege against self-incrimination, and so could not refuse to adopt the documents.
[68](1990) 20 NSWLR 724.
Whether that conclusion could stand in the face of McFadden and Reid is doubtful. BTR was referred to, but not approved, in McFadden. In any event, it was concerned with steps taken in the very proceeding which was before the court. That is not this case. Further, the steps were taken voluntarily, which is not this case.
Counsel for the respondents relied upon Ewin v Vergara(No 2)[69] to support his submission that the appellants’ conduct at the examination was inconsistent with a maintenance of the privileges. In my opinion, the ruling in that case does not assist the submission. There, the judge held, following McFadden, that an out of court statement made by a party to police did not constitute a waiver of the privilege against self-incrimination; but that it was otherwise insofar as the party had already given evidence in chief and had already been cross-examined for ‘many hours’ ‘on subject matters in respect of which objections [were] later sought to be taken’.[70] The witness’s conduct in giving evidence in chief and being cross-examined, all without objection, was ‘inconsistent with the maintenance of the privilege.’[71] What was involved, then, was evidence given voluntarily in the very proceeding in which a claim to privilege was later asserted. In a number of respects, that is not this case.
[69](2012) 209 FCR 288.
[70]Ibid 290 [8] and 295 [25].
[71]Ibid 295 [25].
The trial judge referred to Southern Equities Corporation Ltd (in liq) v Bond[72] for the proposition that ‘[i]f during a public examination a person claims the privileges … they may maintain their right to claim the privileges on subsequent occasions, despite the fact that answers have been given during the examination.’[73] This was the starting point for her Honour’s examination of the situation where sub-s (12A) was not relied upon. But, putting to one side her Honour’s approximation of sub-s (12A) protection with the protection afforded by the privileges, a matter which I have already addressed, I think that Southern Equities does not stand for the proposition asserted.
[72](2001) 78 SASR 554.
[73]Reasons [19].
Finally, even if I had concluded that failure to make sub-s (12A) claims constituted some waiver of the privileges in this proceeding, I would reject the submission for the respondents that the privileges were waived, as it were, by ‘issues’ identifiable from the gist of the examinee’s examination. So to conclude would be contrary to a long-established body of authority bearing upon the nature of, particularly, the privilege against self-incrimination.
No increased jeopardy
To paraphrase propositions stated by Robson J in Re APCH (No 2),[74] the privilege against self-incrimination can only be successfully invoked where a person shows that there is a real and appreciable risk of criminal prosecution if he gives an answer or answers; and the privilege against exposure to a penalty can only be successfully claimed where a person shows that to give an answer or answers would tend to subject him to a penalty in separate proceedings.
[74](2012) 93 ACSR 130, 154 [115].
It is clear that –
… a witness cannot refuse to answer a question which tends to show that he has committed a crime for which he cannot be convicted and punished – for example, because he has received a pardon …, or a certificate under [a] statute … which protects him against all criminal prosecutions, or because he has already been convicted or acquitted of the crime …, or because the time for prosecution for the crime has expired … .[75]
[75]Sorby v The Commonwealth (1983) 152 CLR 281, 290 (Gibbs CJ) (citations omitted).
Those are all situations of impossibility of successful prosecution. But there is a line of cases which holds that there is absence of real and appreciable risk despite successful prosecution being possible. It is the situation where a witness’s prior statements have already exposed him to risk of prosecution and where giving answers would not lead to any increase in the jeopardy to which the witness is already exposed.
There may be much to be said for denying a witness the ability to successfully rely upon the privilege in such circumstances. But to place such denial within the framework of real and appreciable risk is, I think, odd; for to do so fits within a concept of absence of risk the converse situation – that is, the situation where there is a risk of successful prosecution. Gibbs CJ was evidently alive to the problem when he said in Sorby:
In Brebner v Perry it was held that a witness who had already implicated himself in the Commission of an offence by an earlier statement to the police could not object to answering questions on the ground that they might incriminate him. It is unnecessary to consider whether that was a correct application of the principle that an objection on the ground of privilege will not be upheld unless there is a real and appreciable risk to the witness, although Lord Denning MR in In re Westinghouse Uranium Contract appears to have taken the view that it was.[76]
[76]Ibid 290 (citations omitted).
Counsel for the respondents cited BTR and Microsoft Corporation v CX Computer Pty Ltd (‘Microsoft’)[77] in support of a ‘no increased jeopardy’ submission. He did not address the question whether the concept of no increased jeopardy could logically be fitted within the appreciable risk framework.
[77](2002) 116 FCR 372 (Lindgren J).
The authorities cited by counsel support his submission that no increased jeopardy is a basis for denying reliance upon the privilege against self-incrimination. There is an issue as to the way in which the concept, assuming for the moment its application generally, would operate in this case. But first, principle.
In my opinion, whether or not the pigeonhole into which the concept of ‘no increased jeopardy’ has been fitted is logically appropriate, the concept itself is part of Australian law, and falls for application in the present case.
The starting point for the concept is the judgment of Mayo J in Brebner v Perry.[78] The prosecution called as a witness one of three persons alleged to have carried on an unlawful bookmaking business in order to establish a charge against another of those persons. The witness had given to the prosecution a statement of facts known to him. It was apparent that the evidence which the prosecution sought to lead was based upon that proof. The witness claimed privilege. Mayo J held that he was not entitled to do so.
[78][1961] SASR 177.
In the course of his reasons, Mayo J said that –
[t]he witness had already, so far as it had been shown to the Court, made himself liable to any prosecution that might have been laid. Can his objection to answer be treated as bona fide? I think not. He was not concerned with his own protection. His conduct was in the interest of the defendant.[79]
[79]Ibid 182–183.
As Giles J observed in BTR:
The reasoning here is not that of waiver, but rather invites consideration of the purpose of the privilege, namely to protect the witness. Where the claim for privilege is not taken for that purpose but for a different purpose and is thus not bona fide, then the claim will not be recognised.[80]
[80]BTR (1990) 20 NSWLR 724, 729.
In BTR, pertinent circumstances of which I set out at [80] above, Giles J stated that authorities to which reference had been made demonstrated –
three different lines which are distinct in concept, although perhaps running together in a case such as the present.[81]
[81]Ibid 726.
The first line was waiver. The second was bona fides, the third was no increased jeopardy.
His Honour noted that in Rio Tinto Zinc Corporation v Westinghouse Electric Corporation (‘Westinghouse’),[82] Lord Denning, in the Court of Appeal, had treated Brebner as a no increase in risk case. So, apparently, had Gibbs CJ in Sorby in the passage which I cited at [88] above.
[82](1978) AC 547.
Giles J said this:
If one were to follow this third line then it seems to me that it leads to the same result, and indeed it may be that that is simply another way of expressing lack of bona fides in the sense in which Mayo J employed that phrase. The material in the statutory declaration and the statement is already available to the prosecution in the event that there be criminal charges brought against [the witness]. … it cannot be concluded that there is reasonable ground to apprehend danger of incrimination to [the witness] if he is compelled to answer, because compulsion to answer will not add to the danger in which he already stands.[83]
[83]BTR (1990) 20 NSWLR 724, 730.
In Microsoft, the applicants brought civil proceedings alleging breach of copyright and trade mark infringement. They sought discovery and production of documents from a respondent company and its sole director and secretary. The applicants’ pleaded case alleged conduct by those respondents which would have constituted criminal offences under the Copyright Act 1968 (Cth) and the Trade Marks Act 1995 (Cth). The respondents resisted giving discovery and producing documents on the footing that to give discovery or make production would give rise to self-incrimination. Documents had earlier been seized from the respondents by the Australian Federal Police, pursuant to search warrants issued under the Crimes Act 1914 (Cth). The documents which had been seized exposed the respondents to prosecution under those provisions. The applicants contended that discovery should be given and documents should be produced because to do so would not cause either respondent more likely to be prosecuted for offences against the Copyright Act or the Trade Marks Act.
It is only necessary to consider the position of the individual respondent. Lindgren J held that the provision against self-incrimination is not available when it is clear that the taking of the step in question will not add to the individual’s jeopardy. In the event, he ruled that the individual respondent must give discovery and comply with the notice to produce.
His Honour said this:
The true scope of the privilege against self-incrimination must be understood. It cannot, without qualification, be identified simply as a privilege against being compelled to do something which may tend to show that the person has committed an offence. Assume, for example, that [the party] had been already convicted or acquitted of all the offences referred to in [the provisions of the Copyright Act and the Trade Marks Act]. Would he subsequently, in a civil proceeding such as the present one, be excused from the obligation to give discover or to answer a notice to produce? Clearly not, because the privilege operates to prevent a person from being compelled “to answer any question or to produce any document or thing, if to do so ‘may tend to bring him into the peril and possibility of being convicted as a criminal’”.
…
Consistently with the understanding of the nature of the privilege against self-incrimination just adumbrated, the privilege has been held to be not available where it is clear that the taking of the step in question will not add to the individual’s jeopardy.[84]
[84]Microsoft Corporation v CX Computers Pty Ltd (2002) 116 FCR 372, 381 [40]–[41].
Lindgren J cited BTR, Sociedade Nacional de Combustiveis de Angola UEE v Lundqvist (‘Sociedade’)[85] and Marcel v Commissioner of Police of the Metropolis (‘Marcel’)[86] in support of his statement of principle.
[85][1991] 2 QB 310.
[86][1992] Ch 225.
In Sociedade, Staughton LJ cited Brebner and Westinghouse for the proposition that –
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 …[87]
[87]Sociedade [1991] 2 QB 310, 324.
In Marcel, Dillon LJ referred to the privilege against self-incrimination. His Lordship referred to Sociedade, in the first place with respect to the standard of proof for a claim to the privilege. He then referred to the passage in the judgment of Staughton LJ which I have cited above, and referred also, in support of the proposition, to Khan (Mohammed Krim) v Khan (Iqbal Ali).[88]
[88](1982) 1 WLR 513, 520 (Stephenson LJ) and 521 (Griffiths LJ).
His Lordship then said:
In the present case the production in evidence by the police pursuant to the subpoena of the plaintiffs’ documents already in the possession of the police cannot, in the words of Griffiths LJ, add a pennyweight to the strength of the criminal case against any of the plaintiffs. Therefore, the privilege against self-incrimination is not available to the plaintiffs …[89]
[89]Marcel [1992] Ch 225, 257–258.
In Westinghouse, Denning MR, having referred to the concept of appreciable risk, identified the situations where a witness had been given a pardon, and where an offence had become obsolete. He then added:
… in the Australian case of Brebner v Perry, where he had already given a like statement to the police – and by giving evidence there was no increase in risk by his being made to answer – he was made to answer. But where there is a real and appreciable risk – or an increase of an existing risk – then his objection should be upheld.[90]
[90]Westinghouse (1978) AC 547, 574 (citation omitted).
It may be that the reason why a person should be denied a claim for privilege in the circumstances under discussion should be characterised as a denial for want of bona fides. That was the way in which Brebner was explained by Giles J in BTR. But, ultimately, it is at least clear that ‘no increased jeopardy’ is a basis for denying the availability of the privilege.
Then the questions arise: Should the concept to be applied in the present case? If so, then how?
My answer to the first of those questions is ‘yes’. It is no objection to that conclusion that answers were compelled by s 497(12). The appellants could have claimed the use indemnity available by sub-s 12A; and had they done so, they would have been protected in criminal and penalty proceedings against the use of any answer in respect of which the claim had been made.
I turn to the second question. In respect of answers given, neither of the appellants could be any worse off by having to answer the same questions – whether by his defence, or by giving discovery (in the latter case, of documents incorporated in questions to which answers were given). To the extent that those answers, incorporating any documents, expose the appellants to risk of prosecution, or liability to a penalty, repetition would add nothing.
Thus are distinguished, with respect to answers given, the circumstances of an examinee who does, and an examinee who does not, claim the use immunity. In the former case, but not the latter, an examinee will be put at risk by having to affirm his answers, by pleading or discovery, in a proceeding such as this. It follows that the privileges may be successfully invoked in the case of an examinee who has claimed use immunity, but not by an examinee who has not made such a claim.
It does not follow, however, that the appellants may not successfully raise some claims to privilege. To the extent that the appellants would be obliged to go outside their answers on examination in order to plead their defences, or in giving discovery, it cannot be baldly concluded that the appellants would not be at increased risk[91] of jeopardy were the privileges not successfully invoked. It has been consistently said that, once it appears that a witness is at risk, then great latitude should be allowed to him in judging for himself the effect of any particular question. In the present matter, therefore, the appellants may successfully invoke the privilege against potential self-incrimination if there is a real and appreciable risk that a pleading or the giving of discovery might expose them to increased jeopardy of criminal prosecution, and may successfully invoke the privilege against exposure to a penalty if a pleading or the giving of discovery would tend to subject them to increased jeopardy of exposure to a penalty. To be clear, the concept of increased jeopardy has a role to play in this context.[92]
[91]In Westinghouse, see [106] above, Denning MR specifically referred to ‘an increase of an existing risk’.
[92]Neither BTR nor Microsoft stands against this conclusion.
There is one matter to add. I mentioned earlier that there is an argument that parts of Chapter 3 of the Evidence Act 2008 (Vic) constitute a code. Within Chapter 3 are – s 128, headed ‘Privilege in respect of self-incrimination in other proceedings’; [93] s 128A, which relates to the obligation to make pre-trial disclosures where such a privilege is asserted; and s 131A, which relates to pre-trial disclosures where other kinds of privileges are in point. It is apparent that the bases upon which there may be objection to pre-trial disclosures in the cases to which s 131A applies are broader than the circumstances in which objection may be made to pre-trial disclosures when s 128A applies. There was no argument in this case whether, assuming the privileges to be available, they were confined to the situations addressed in s 128A. Absent argument, that issue must be left open.
[93]As I earlier noted, s 128 also extends to the privilege against exposure to a penalty.
Orders
In order to fully reflect the conclusions which I have reached, and notwithstanding that in the result they probably accord with the result arrived at by the judge below, I would allow the appeal and set aside the orders made by the judge on 6 September 2013. In lieu thereof, orders should be made generally to the
effect of paragraph 3 of the appellants’ summons dated 17 December 2012, but confining the dispensation to matters and documents not contained in the answers given by the appellants at their respective public examinations, except if a pleading or the giving of discovery would expose them to increased jeopardy. I would hear the parties as to who should have the costs of the hearings before the Associate Justice and below.
NEAVE JA:
I have had the considerable advantage of reading Ashley JA’s draft reasons and agree with his Honour that the appeal should be allowed.
For the reasons his Honour gives I agree with him that:
(a) In an examination under Division 1 of Part 9 of the Corporations Act 2001 (‘the Act’) (‘examination proceedings’) s 597(12) prevents a person from refusing to answer questions on the ground that the answers may tend to incriminate them or make them liable to a penalty. To that extent the Act abridges common law privileges.
(b) Except to the extent described in (a), s 597(12) does not abrogate the common law privileges relating to self-incrimination and exposure to a penalty (hereafter ‘common law privilege’).
(c) Section 597(12A) confers direct use immunity in relation to the answers to questions asked in examination proceedings, if the person being examined claims that the answers will have that effect.
(d) A person who claims use immunity in examination proceedings, will not be required to affirm answers to particular questions in pleadings or discovery in civil proceedings, if there is a real or appreciable risk that the answers would have the tendency of incriminating them or rendering them liable to a penalty. That is the case even though s 597(12A)(c) and (d) refer only to the admissibility of the answer in a criminal proceeding or a proceeding for the imposition of a penalty. It is a consequence of the fact that the person did not generally waive privilege by their answer.
(e) A person who does not claim use immunity in examination proceedings cannot claim privilege in criminal proceedings, and proceedings for the enforcement of a penalty in relation to their answers and may be required to affirm answers in civil proceedings, in respect of particular questions asked and answers given (see (g) below). That is the significant difference between the position of those who do or do not claim use immunity in examination proceedings.
(f) A person who does not claim use immunity in examination proceedings is not necessarily to be taken as having waived common law privilege generally in civil proceedings. He or she cannot refuse to affirm answers given in examination proceedings by pleading or discovery. But he or she may be able to refuse to go outside those answers or questions if, by so doing there is a real and appreciable risk of criminal prosecution as a consequence of the answers given (see (g) below).
(g) In this case, the appellants were not entitled to refuse to answer questions or give discovery in relation to matters to which they were already exposed to risk of prosecution or penalty proceedings by virtue of the answers given in the earlier proceedings. That is because they were not exposed to any increased risk of jeopardy by doing so. However, they were not necessarily precluded from claiming privilege in respect to answers or documents that went beyond the content of the answers in the Division 1 Part 9 proceedings or documents to which those answers referred or documents which were incorporated.
I should also make this point. Section 597(14) provides that a written record of an examination signed by a person or an authenticated transcript is admissible in evidence in any legal proceedings. A question could arise whether a person could claim privilege in response to cross examination about inconsistencies between the written record or transcript and the person’s evidence in chief. It is likely that by giving evidence in chief the person would be regarded as having waived any privilege which remained to them following the application of ss 597(12) and (12A).
ALMOND AJA:
I agree that the appeal should be allowed for the reasons given by Ashley JA.
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