Grofam Proprietary Ltd v Macauley, P

[1994] FCA 129

JUDGMENT NO. ....... ........ ... "...law lad/ 9.t

CATCHWORDS

EVIDENCE - anticipated claim for privilege against self incrimination by solicitor - whether court will order evidence to be given in camera and restrict its subsequent disclosure discretionary factors - interest of opposing parties - public interest in hearing in open court.

BPA Industries v Black (1987) 11 NSWLR 609.
Busbv v Thorn EM1 Video Proarammes Ltd [l9841 1 NZLR 461.
Istel Ltd v Tully (1993) AC 45.
Jackson v Wells (1985) 5 FCR 296.
R v Cox & Railton (1884) 14 QB 153.
Re 0 (Restraint Order: Disclosure of Assets1 [l9911 2 QB 520.

Re New World Alliance Ptv Ltd (1993) 12 ACSR 299.

Rank Film Ltd v Video Information Centre [l9821 AC 380.

Reid v Horward (unreported NSW Court of Appeal) 29 July 1993).

Warman International Ltd v Envirotech Australia Ptv Ltd (1986)

11 FCR 478.

Western Australia v Bond Corporation Holdinas Ltd (No 2)

(1992) 37 FCR 150.

GROFAM PROPRIETARY LIMITED & ORS v PETER MACAULEY & ORS

No VG 399 of 1992

CORAM :	RYAN J
PLACE :	MELBOURNE
DATE :	18 MARCH 1994

23 MAR 1994

IN TFIE FEDERAL COURT OF AUSTRALIA	)
)
VICTORIA DISTRICT REGISTRY	)
)
GENERAL DIVISION	)
B E T W E E N :

GROFAM PROPRIETARY LIMITED
A.C.N. 004 970 487

First Applicant

GROFAM AUSTRALIA PROPRIETARY LIMITED
A.C.N. 004 844 026

Second Applicant

G R O W AUSTRALIA PROPRIETARY LIMITED
A.C.N. 005 717 199

Third Applicant

BRUNO GROLLO

Fourth Applicant

RINO JOHN GROLLO

Fifth Applicant

GROLLO BROTHERS PROPRIETARY LIMITED
A.C.N. 005 503 435

Sixth Applicant

GROLLO FINANCE IHOLDINGS) PROPRIETARY LIMITED
A.C.N. 004 970 478

Seventh Applicant

GROLLO FINANCE PROPRIETARY LIMITED

A.C.N. 004 970 692

Eighth Applicant

GROLtO CONSTRUCTIONS PROPRIETARY LIMITED

A.C.N. 006 264 295

Ninth Applicant

GROLLO NOMINEES PROPRIETARY LIMITED

A.C.N. 004 970 576

Tenth Applicant

and

PETER MACAULEY

First Respondent

KERYN-LOUISE ELIZABETH REYNOLDS

Second Respondent

RUSSELL FREDERICK KOCH

Third Respondent

KENNETH WAYNE MCDERMOTT

Fourth Respondent

ROXANNE ELIZABETH GRIFFIN

Fifth Respondent

ROBERT LESLIE TUPPEN

Sixth Respondent

JOHN CLIVE WHITE-

Seventh Respondent

DENNIS JAKES CARR

Eighth Respondent

C O N :	Ryan J
PLACE	: Melbourne
DATE:	18 March 1994

MINUTE OF ORDERS

THE COURT ORDERS:

1.  That the motion on notice dated 17 December 1993 be refused.

2.    That the costs of all parties of and incidental to the

Judge hearing and determining the application herein. said motion be reserved for the consideration of the

NOTE :  Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )

)

VICTORIA DISTRICT REGISTRY	1 1
GENERAL DIVISION	1
B E T W E E N :

GROFAM PROPRIETARY LIMITED
A.C.N. 004 970 487

First Applicant

GROFAM AUSTRALIA PROPRIETARY LIMITED

A.C.N. 004 844 026

Second Applicant

GROLLO AUSTRALIA PROPRIETARY LIMITED

A.C.N. 005 717 199

Third Applicant

BRUNO GROLLO

Fourth Applicant

RINO JOHN GROLLO

Fifth Applicant

GROLLO BROTHERS PROPRIETARY LIMITED

A.C.N. 005 503 435

Sixth Applicant

GROLLO FINANCE (HOLDINGSI PROPRIETARY LIMITED

A.C.N. 004 970 478

Seventh Applicant

GROLLO FINANCE PROPRIETARY LIMITED

A.C.N. 004 970 692

Eighth Applicant

GROLLO CONSTRUCTIONS PROPRIETARY LIMITED

A.C.N. 006 264 295

Ninth Applicant

GROLLO NOMINEES PROPRIETARY LIMITED

A.C.N. 004 970 576

Tenth Applicant

and

PETER MACAULEY

First Respondent

KERYN-LOUISE ELIZABETH REYNOLDS

Second Respondent

RUSSELL FREDERICK KOCH

Third Respondent

KENNETH WAYNE MCDERMOTT

Fourth Respondent

ROXANNE ELIZABETH GRIFFIN

Fifth Respondent

ROBERT LESLIE TUPPEN

Sixth Respondent

JOHN CLIVE WHITEHEAD

Seventh Respondent

DENNIS JAMES CARR

Eighth Respondent

CORAM:	Ryan J
PLACE :	Melbourne
m:	18 March 1994

REASONS FOR JUDGMENT

RYAN J: By motion on notice dated 17 December 1993, the applicants, who are Mr Bruno Grollo and M r Rino Grollo and companies controlled by or associated with them, seek orders which were modified in the course of the hearing to conform with the following:

"1.

That Richard Edward Nelson have leave to swear an Affidavit on behalf of the Appllcants in this proceedrng which Affrdavit may be used, referred to and relied upon by the parties herem at the hearing of this proceeding on the terms of and subject to the following condrtions and orders:

(a)	that any Affidavit to be sworn by Richard Edward Nelson and to be relied upon by the Applicants, together w ~ t h two copies thereof, be lodged in a sealed envelope wrth a Deputy Registrar of this Court withln ... weeks of the hearing and determination of this Motion;
(b)	that at the hearrng of thrs proceedlng, lf the Appllcants lntend to rely upon the said Affidavit of Rrchard Edward Nelson, the sealed envelope shall be opened and the original and the two copies of the said Affidavit shall be removed and dealt with in accordance with the following orders;
(c)	the Respondents shall nominate a Counsel and Solicitor who shall each be a person who shall undertake to this

the said undertaking accept a brief or rnstructions in

Court that he or she shall not at any time after giving

respect of, grve advice, or have any ~nvolvement whatsoever Ln the investigation charging or prosecution of the any person for any offence or suspected offence commrtted against the taxation laws of the Commonwealth or the Crimes Act 1914 (C'wth) being an offence or suspected ofence arising out of any of the facts and materials set out in the Information dated 17 September 1992 being part of exhibit "MAC1" to the Affidav~t of Michael Andrew Clough sworn 10 February 1994;

(d)	that upon the said nominated Counsel and Solicitor for the Respondents each giving such undertaking to t h ~ s Court, one of the two copres of the said Affidavit of Rlchard Edward Nelson will be delivered to each of the nominated Counsel and Solicitor for the Respondents;
(e)	the nominated Counsel and Solrcrtor for the Respondents are, from the time that the said copy of the said Affidavit of Richard Edward Nelson is delivered into his

or her possession, hereby restrarned from:

(i)	disclosing by himself or herself, his or her servants or agents or howsoever otherwise the said copy Affidavit or any of the contents or informat~on contained therein to any person other than the other nominated Counsel or Solicitor, as the case may be;
(rr)	making any use, either drrect or rnd~rect, by himself or herself, his or her agents or howsoever otherwrse of any of the information contained in the said copy affidavit;

(iii) making any further copy thereof;

(iv) parting wrth possession of such copy Affidavit, whether pursuant to a Subpoena, search warrant or otherwise, without the leave of a Judge of this Court;

2.     The reading of any Affidavit of the sard Richard Nelson filed and relied upon by the Applicants, and any viva voce evrdence of the said Richard Nelson, rncluding any cross-exammation, at the hearing of this proceeding be conducted at a hearing in camera, with no persons being present rn Court during such hearing, with the exception of the legal representat~ves of the Applicants and the nominated Counsel and Solicitor for the Respondents.

3 .     The nominated Counsel and solicrtor for the Respondents are, by this Order, restrained from:

(i) disclosing by hrm or herself, hrs or her agents or servants or howsoever otherwise any of the viva voce evrdence of the sard Rrchard Edward Nelson, including any cross-examination, and any other matters referred to in such in camera hearmg;

making any use, either direct or rndrrect, by him or herself, his or her servants or agents, or howsoever otherwise of any of the information contained in the viva voce evidence of the said Richard Edward Nelson, including any cross- exammation, and any other matters referred to in such in camera hearing."

Mallesons Stephen Jaques, which acted for the applicants in	Mr Nelson is a senior partner in the firm of solicitors,
preparing contracts and other documents pursuant to which they erected a large Melbourne building known as the Rialto Twin Towers. The substantive application to this Court is for review of a decision by the sixth respondent, Mr Tuppen, a magistrate, to issue certain search warrants. The applicants complain that, contrary to S. 10 of the Crimes Act 1914 (Cth) the learned Magistrate, at the time of issuing the warrants "was not or ought not to have been satisfied by the information on oath before him that the offences alleged in the third condition of the search warrants had been committed or that there were reasonable grounds for suspecting that such offences had been committed."
The information on which the search warrants were issued included the following paragraph:

"3. The informant believes the following summary represents an accurate overview of the matter under investigation;

(i)          In 1981 the Grollo Group entered into a loint venture partnership with a corporate arm of the Kuwart government to construct the Rialto Twin Towers.

(ii)         Grollo Group companies undertook the construction on behalf of the partnership. The documentatron records Grofam Pty Ltd (as Trustee for the Grofam Unit Trust) as being 'Project Builder' until 27 October 1983. The documentation was altered so that from this date, Grollo Australia Pty Ltd (as Trustee for the Rlalto Unlt Trust) was substituted as the 'Project Builder'.

The Grollo Group made consrderable savlngs on the original projected building construction costs and thrs lead to a group profit of approximately $59 million over the period 1982 - 1989.

Instead of declaring thrs income as profit in their books of account, Grollo channelled these funds

back into the joint venture partnershrp as equity

contributrons; as well as using the funds to meet therr interest obligations on loan monres of $123 million advanced to te Group via their Joint Venture partner's U.K. parent company.

Grofam Pty Ltd (as Trustee for the Grofam Unit Trust) and Grollo Australra Pty Ltd (as Trustee for the Rialto Unit Trust) included detailed Profit and Loss accounts in their rncome tax returns for trust estates for each of the years ended 30 June 1983 and 30 June 1984 - 1989 respectively.

These Profit and Loss accounts failed to mention the recelpt from the Rialto Joint Venture (RJV) of gross income of approximately $257.5 million, derrved in the period 1982 - 1989 on the construction of the Rialto Twin Towers.

Of this gross amount, none of the profit calculated

to be approx~mately $59 million, was ever brought to account by Grollo Australia Pty Ltd as income, or ultimately by any other Gr0ll0 entrty.

(vrii) As a consequence, the Grollo Group paid no income tax to the Australian Taxation Office (ATO) on the prof~ts earned during the construction of the R~alto Twin Towers. The estimated amount of Income Tax which should have been paid during this period is approximately $35.5 million."

There follow assertions of belief by the informant that the alleged conspiracy consisted of an agreement between Bruno Grollo, Rino Grollo and their companies not to declare the builder's profit earned by the Grollo Group during the construction of the Rialto Twin Towers. The evidence of the conspiracy is alleged to consist of journal entries whereby an amount of $3.5m being the estimated profit on the Rialto project to 30 June 1983 was written out of the books of Grofam Pty Ltd and transferred to Grollo Australia Pty Ltd which did not declare that amount in its tax return for that year. It is also alleged that there was an agreement to substitute Grollo Australia Pty Ltd for Grofam Pty Ltd as project builder of the Rialto Twin Towers. The purpose of that agreement, it was alleged, was to enable Grollo Australia Pty Ltd as a joint

mutuality" thereby reducing by half its liability to tax. venturer in the project to avail itself of the "principle of The information also alleged the following further agreements:

"(c) An agreement to fabricate the existence of a secret agreement between Grollo Australia Pty Ltd and Grofam Pty Ltd to the effect that;

-	Grollo Austral~a Pty Ltd had in fact been the Project Builder from the commencement of Rialto Twin Towers
construct~on and
-	Grofam Pty Ltd had only ever acted in the capacity of agent and sub-contractor to Grollo Australia Pty Ltd.

An agreement to disguise the builder's profit earned by Grollo

(d) Australia Pty Ltd on the construction of the Rialto TwLn Towers during the 1983 - 1988 f~nancial years. This was achieved by divert~ng income earned back into the Project as 'Capital Equity Contributions' to the joint venture partnership, as well as uslng the income to re-pay the interest on the loan funds advanced to Grollo Australia Pty Ltd."

After the search warrants had been executed, I made an order by consent on 8 January 1993 which included the following paragraphs:

"1.	The eleven boxes, contam~ng f~les, documents and other things seized purportedly pursuant to the search warrants, the subject of these proceedings, and currently in the possession and custody of the Prothonotary of the Supreme Court of V~ctoria
("the boxes"), be transferred into the custody and control of
the Distr~ct Registrar of the Federal Court.
2.	The District Reg~strar may store the boxes at premises to be agreed between the parties, and which in the oninion of the ~istrict Registrar satisfy h ~ s requirements for secure storage ("the prem~ses").
3.	The District Registrar have exclusive access to that part of the premlses where the boxes are stored.
4.	Any party may apply to the District Reg~strar for access to the boxes, whilst they are m the custody and control of the District Registrar, but that the D~strict Registrar shall only grant access to the boxes on terms that all parties consent to such access and that the partles have joint access."

narrowed the issues between them to two, namely whether any of	By agreement the parties to the substantive application
the seized documents were within the terms of the warrant, and, if so, whether any of them which were covered by the warrant were protected by legal professional privilege from disclosure to the prosecuting authorities. Those issues were referred in the first instance to the arbitration of two Queen's Counsel, ("the Inspectors"), one nominated by the applicant and the other nominated by the prosecuting authorities.
By a memorandum dated 28 February 1994, the inspectors indicated that they saw themselves as required to determine in respect of each of the documents submitted to them:

(a) whether there was a dispute that the document was within the

terms of warrant;

(b)	whether there was a dispute whether legal professional prrvilege ever attached to the document;
(c)	xf the document re prima facie privileged whether there is a
dispute whether the privilege has been lost and, rf so, upon what basis. "

In respect of question (c) it was indicated that the only basis upon which there had ever been a dispute as to whether privilege had been lost was whether the document was within the exception identified in The Queen v Cox and Railton (1884)

14 QB 153. In that case it was held that a communication

between legal adviser and client is not privileged if it is made or obtained in furtherance of a criminal or fraudulent purpose.

discloses that by December 1993 their examination had become	The Inspectorsr memorandum which was tendered in evidence
focused on 87 disputed documents. A further 28 documents were examined in January 1994. Of the initial 87 documents 76 were, on the evidence of Mr Clough, created by Mr Nelson for the purposes of recording his communication to the Grollo Group or a servant or an agent of the Grollo Group of Companies. Analysis of the Inspectorsf memorandum reveals that of those 76 documents created by M r Nelson, nine have been returned to a party as outside the terms of a warrant or have been released to the police. In respect of 48 of the remaining 67 documents there is, according to the memorandum, no dispute that legal privilege attached to the document, subject to it being lost by application of the principle in R v Cox and R a i l t o n . Thus, it is in respect of 19 documents created by Mr Nelson that there is a dispute on the threshold question of whether legal professional privilege ever attached to the documents. It seems to be common ground that the respondents bear the evidentiary onus of demonstxating that the other 48 documents are not privileged by reason of the
principle in R v Cox and Rail t on .
On 3 December 1993, Mr Nelson was interviewed by two officers of the Australian Federal Police ("AFP") and was told by one of them that he was suspected of having conspired with Bruno Grollo, Rino Grollo and others to defeat the execution and enforcement of the Income Tax Assessment A c t 1936. Mr Nelson was further told that the AFP's suspicion was based on his,
Nelson's "close involvement with the Grollo brothers". Mr Nelson was also formally cautioned by one of the AFP officers
and told that anything he might say could be used against him. Mr Nelson was then invited to attend at APP Headquarters with a view to making a statement but, as I infer, he declined that invitation.
It has been deposed on information and belief by Mr Clough, a solicitor and another member of Mallesons Stephen Jaques, in

- l0 -

an affidavit in support of the motion that:

"Mr Richard Nelson had been advised not to make any affidavrt in support of the claims made for legal professional privilege or to provide any informatron upon whrch such an affrdavit could be based until his Counsel and legal advisers had an opportunity to assess Mr Nelson's position with a view to giving hrm proper and rnformed advice"

. . . and

"that Mr Nelson was unlikely to file an affidavrt in any event wrthout Orders being obtained first whrch should protect his position."

Mr Clough has further deposed that there is no deponent other than Mr Nelson who can give evidence necessary to support the applicants' claim of legal professional privilege in respect of the documents which remain in dispute after the examination by the Inspectors. However, the applicants apprehend that upon the trial, at the end of which the Court will adjudicate on that dispute, Mr Nelson will object to answer relevant questions which may be put to him and will support that objection by asserting that his answers may tend to incriminate him. The applicants thus invite the Court to

evidence in the present proceedings without that evidence	frame procedures whereby Mr Nelson can be enabled to give
coming to the knowledge of any person who could subsequently use it in connection with any investigation of, or proceedings for, a criminal offence allegedly committed by Mr Nelson.
Reference was made to American authorities where orders have been made in civil cases "sealing the court process" to allow interlocutory steps to be taken while criminal trials remained
pending. The need for striking a balance between what has hitherto been a paramount claim of privilege against self- incrimination and the interests of parties to a civil proceeding in being able to adduce all relevant evidence was adverted to by Wilcox J in Warman International Ltd v
Envirotech Australia Pty Ltd (1986) 11 FCR 478 where his Honour observed, at 489:

"On the one hand, the rule against self-incrimination is firmly fixed in our law and not properly to be circumvented by too restricted an application of the test of reasonable prospect of a prosecution being launched. And although, according to Lord Dennrng, the courts will look with greater scepticism at a clarm for privilege made by a party than one made by a witness, it is clear that, once it appears that there rs a real prospect of crimrnal proceedings, the court will not compel self-incrimination even by a party. On the other hand, the upholdrng of a claim for prrvilege in a crvil case may have a drastrc effect upon the abrlity of a party to obtain a redress to which he or she is entitled at law. The dilemma becomes particularly acute in a case where the method urimarrlv contemalated for arotection of individual rights conferred by a-statute 1 s by a civfi action, the effectiveness of which may be threatened by concern about self- incrimination for offences inserted in the Act merely as ancillary enforcement provisions. The Copyright Act is such a case. It would be curious if such a statute was-rendered less effective to safeguard the rrghts of the indrvidual by reason of the fact that Parliament had thought those rights to be sufficiently valuable as also to

warrant vrndicat~on under the criminal law.

A possrble partral solution of the dilemma rs that adopted in Rank Film Distributors L t d v Video Information Centre 119821 AC 380 to exclude from the principle about self-incrimmatron offences which may be categorised as "petty' or as merely ancillary to civrl liability. However, in a legal system whrch, in the absence of specral statutory provisron to the contrary, maintains an absolute right to silence in respect of even the most trivial offences, there

exclusions will have to be established on a case to case basis. Not	this basis. Moreover, there are practical difficulties in that are conceptual difficulties in modifying the traditional rule upon
until a decision is made - probably at an appellate level - will it be known whether the rule re excluded in respect of a particular offence. If the right to maintarn srlence is to be overridden in particular cases because of the desirability of making available material evidence to an affected party, perhaps the courts should overtly adopt a balancing process; discardrng an absolute prrvilege against self-incrimination and substituting a drscretionary judgment wherein the nature and degree of the risk of self-incrimination and the seriousness of the possible offence are to be werghed against the importance of the evrdentrary material in the instant case.
However, the desirability of such an approach 1s for appellate courts to consider. Notwrthstanding that a first offence under the Australian Copyr~ght Act 1968 is no more serious than its equivalent in the Unrted Kingdom, it rs not for me to make, for the Australian Act, the policy decrsion made by the House of Lords rn Rank Film in respect of Unlted Kingdom copyright offences. I must apply the traditronal rule in its full rigour."

Those reflections led his Honour to indicate at 490:

"But there zs no such danger [of self-lncrlmmation] m the production of documents to the court, wlthout public rdentification of their nature and content, for consrderation by the court - pursuant to the princ~ple applred in Busby v Thorn EMI Video Programmes Ltd [l9841 1 NZLR 461 - of the procedures possible and desirable to be taken ln order to make the documents available in the instant case without thereby forcing self-incrimination upon the producing person. ..... One possibrlity may be to restrict access to the documents to persons who are prepared to glve undertakrngs as to confidentialrty, as in Busby, and to receive the documents - and any evldence in relation thereto - in closed court: see Federal Court of Australra 1976, 6.50; Allied M ~ l l s Industries at 170-171; and Re Intercontinental Development Corporation Pty Ltd (1975) 1 ACLR 253 at 259.

In Western Australia v Bond Corporation Holdings Ltd (No 2) (1992) 37 FCR 150 a respondent, Connell, moved in this Court for orders that the claim and cross-claims by and against him be stayed pending the prosecution of criminal charges against him the Supreme Court of Western Australia. Similar orders were sought by another cross-respondent, the accounting firm, KMG Hungerfords, a partner in which, one Carter, had been charged on the same indictment as Connell. The third person charged on that indictment, Lucas, sought similar orders. French J at 173 expressed himself "satisfied that there will be a significant overlap of issues between the proceedings in

this Court and the criminal proceedings so far as they relate	to the preparation and signing of the Rothwells Annual Report
and accounts of 1987". However, his Honour declined to grant the stays sought, saying at 175:

"In the event, I am not satisfied that Messrs Connell and Lucas or

KMG Hungerfords have made a case for a stay of these proceedings so

far as they relate to them. I also take into account the risk that any such stay could prejudrce the already slow progress of these proceedings generally. The preferable course rs to keep the interlocutory process golng and to accommodate, so far as is reasonable and practical, the special interests of Messrs Connell, Carter and Lucas. I am of the view that Connell, KMG Hungerfords and Lucas should be required to plead to the cross-claims against them, but that such pleadings may be protected by confidentiality orders limrtmg access to them to counsel for a trme sufficient to enable consrderation of whether such orders should be extended until after the hearrng and determinat~on of the criminal proceedings. The provision of part~culars subject to judgments about the resources burden imposed by them can be made subject to the same constraints. I would not at this stage entertain orders for general drscovery against any of these parties. Limited discovery may be sought but its scope, the time for compliance with any orders made, and the desirability of any confidentiality order m respect of it will have to be considered against the circumstances at the time that any such order rs sought. I do not anticipate that leave would be granted to mterrogate these parties until after the completion of the criminal proceedings. In the event I propose to dismiss the motrons for stays and general conf~dentrality orders. Programrng of particular interlocutory steps and the questron of specific confidentiality orders will be dealt wrth on a case by case basis."

However, it must be remembered that in Bond Corporation the criminal proceedings had been formulated and were already pending. Nor was there any suggestion that counsel who were to have access to the confidential pleadings were, or were likely to be, involved at all in the criminal proceeding.

In Busby v Thorn EM1 Video Programmes Ltd to which Wilcox J referred in Warman International v Envirotech (supra) , an Anton Piller order was granted in aid of an action for breach of copyright. Paragraphs 3 and 4 of the order required the defendants to disclose the names and addresses of all persons

had supplied those goods. The defendants complained that	responsible for making the infringing goods or to whom they
those paragraphs should be rescinded because to comply with them would tend to incriminate the defendants or expose them to a penalty. The Court of Appeal declined to set aside the orders but extracted further undertakings from the plaintiffs. The reasoning on appeal is disclosed by this passage from the judgment of Cooke J, at 474:

"If a defendant is required to provide rnformation or documents which may include evrdence of criminal offences, rt zs reasonable that it should be on condztion that they are not used for the purpose of prosecuting him. In New Zealand in this class of case that result can be achzeved for all practzcal purposes, I think, by two steps.

First, the Court can hold, as a general rule regarding criminal evrdence, that the documents and LnformatLon will not be admissible against such a defendant in any crzmrnal proceedings for an offence relating to the rntellectual property or other subject-matter of the action in which the order has been made. I would hold this to be the rule; zt is a reasonable corollary of the order. Nor is there any threat to the publzc interest. Essentially what are being protected are the orivate orooertv rzghts of the plaintzff. The law enforcemeni. agencies Gf <he State have no particular rnterest in urosecutinq the defendant; the public peace and the protection of citizens fiom violence are not involved.

Secondly, as an aid to ensuring observance of that rule, the plazntrff can be put on terms. In addition to the undertakings set out in the Chref Justice's orders, the plaintiffs here should now be requrred to undertake that (except for the purposes of proceedings for perjury or contempt of Court) they will not, either directly or indzrectly, use any document whrch is a subject of the order or any informatzon obtained from it or from any answers by the defendant under the order for the purpose of any criminal prosecution of the defendant, nor make the same available to the police for any purpose. Mr Gazley indrcated durzng the argument that an undertaking to this effect would be forthcoming here. As a matter of practrce Judges making Anton Piller orders can require szmilar undertakings in future.

With those joint safeguards there will be no real risk that defendants will incriminate themselves by complying wrth orders such as were made by the Chief Justice. Accordingly I would hold that such orders can properly be made, on sufficiently strong evidence as previously discussed, in future cases."

To similar effect Bisson J observed at 487:

"In the rnterests of justzce, I consider the Court should in its equitable and inherent jurrsdzction make approprrate orders of the	Anton Piller variety in these cases to preserve and obtain	evrdentiary material and information in an endeavour to prevent a
defendant from taking advantage of hzs own fraud, but at the same
tzme observing the priv~lege against self-incrimination.
I consider the situatron calls for further safeguards, to remove any
added danger of prosecution arising from compliance wrth the orders, thereby ensuring that any peril to the appellants remains insignifzcant. The safeguards I would impose are twofold; first, by way of a condztion restricting the use which may be made of the documents and informatron derived per medium of the orders; and secondly, by way of undertakings by the respondents.
The condition to the making of the order rn each case should be that any documents and information obtained under para 2(ii) and any answers to quest~ons under paras 3, 4 and 5 , shall not be admissible in evzdence agarnst that defendant in any prosecution (other than for perpry or contempt of Court) relating to the illicit goods.
The undertaking required of the plaintrffs should be that they will not, either directly or indirectly, use any document or information which is obtalned under para 2(ii) nor any answer under paras 3, 4 and 5, for any prosecution (other than for perjury or contempt of Court) relatrng to the illicit goods, nor make the same available to the police for any purpose other than for proceedings in respect of perjury or contempt of Court.
For the reasons given by Cooke J, with which I fully agree, the said condrtron should be a general rule of law applicable in cases such as these whrch, on the~r facts, warrant an order of the kind made. Such a rule, when coupled with the said undertakings, enables the Court to further the ends of justice in a very special and new situatron, while at the same trme maintaming the privilege against self- incrimrnation by ensuring the perrl of prosecution rs insignrficant."

However, Somers J dissented on the question of whether it was appropriate to qualify the privilege against self- incrimination, saying at 482:

"Our constraint is that we must not pass beyond that which is truly ad-~udlcatory to that which is truly leg~slatrve. The principle that a person is not obliged to give answers whrch would tend to incrrminate him has become a fundamental prrnciple of our law. It is one which the legislature has recognised and one which where considered necessary it has abrogated with or without prov~ding

safeguards for the w~tness. I am of opinion that it is for Parliament to decide whether persons in the srtuation of the instant appellants should be compellable to answer questions when the answers may tend to incriminate; and whether the State should pay a price, in the form of inadmissibility of oral and documentary evidence, for the removal of the privilege."

Counsel for the applicant very properly acknowledged that there is "real doubt" whether a court exercising civil

documents and information not be admissible in evidence in a	jurisdiction in Australia can effectively order that certain
criminal prosecution. To my mind that doubt is accentuated when it is this Court, having no general criminal jurisdiction at first instance, which is asked to render presumptively relevant evidence inadmissible in a criminal proceeding.
Moreover, in BPA Industries v Black (1987) 11 NSWLR 609, Waddell CJ in Eq. at 613 regarded the decision of the majority in Busby as "based upon circumstances of the New Zealand legal system which are not to be found in that of New South Wales".
In Re 0 (Restraint O r d e r : Disclosure of Assets) [l9911 2 QB
520 the Court of Appeal had to consider the impact of
privilege against self-incrimination on an order requiring persons charged with various offences to disclose their assets by affidavit. Lord Donaldson of Lymington MR observed:

"It is part of the common law of England that no man shall be subject to an order compliance with which might tend to rncrim~nate him. Thus where in civil proceedings the defendant was ordered to answer interrogatories, it was a valid reason for refuslng to comply with the order if, and to the extent, that he could reasonably claim that to do so would rnvolve a rrsk of self-incrrmination: see Lamb v Munster (1882) 10 QBD 110. The common law can, of course, be varied or overruled by statute, but it requrres clear words, or even clearer Implication, to achieve this result particularly where so old and fundamental a freedom is involved."

However, his Lordship perceived a "way round" the difficulty posed by the privilege and continued at 530:

"The applicants would be entitled to refuse to comply with the disclosure order made in thrs case, if and m so far as to do so might tend to incriminate them. This would or might frustrate the purpose of the order and, rf there were no way round the problem, might suggest that Parliament had impliedly varied the common law rule. There is, however, a way round, namely, to impose conditions upon the use which may be made of the affrdavits sworn in compliance	with the order. An appropriate condition, which should be inserted	in all orders for disclosure in aid of a restraint order, would read: "No disclosure made in compliance with thrs order shall be used as evidence in the prosecution of an offence alleged to have been committed by the person requ~red to make that disclosure or by any spouse of that person."
We were told that In another case the Crown Prosecution Service was required to give an undertaking limiting the class of person to whom the disclosure information could be given and the purposes for which rt could be used. I would not wish to be taken to cratic~se such an approach, but consider rt preferable to impose a condition in the order rather than to seek an undertaking.
It was also suggested that it would be possible to rely solely upon the power of the trral judge in the criminal proceedrngs to exclude any evidence which it would be unjust to admit. Whilst I have every confidence that those powers would be used m an appropriate case, the applicants and others in a similar position cannot be expected to rely exclusively upon this for therr protection and such an approach
would accordingly leave it open to them to refuse to make drsclosure rn so far as it might tend to rncrrminate them.''

Glidewell LJ agreed, saying at 531:

"However, the purpose for which information so disclosed can properly be used must be lrmated to the purpose for whrch the power to make the restraint order is granted, namely, to ensure that the defendant's property is preserved so as to be available to satisfy any confiscataon order which may be made if the defendant is convrcted of the offence or offences charged. Any attempt by the prosecution to seek to use information disclosed under the compulsion of a drsclosure order as evidence in the prosecution of the offences charged would, in my view, normally be an attempt to use the rnformation for a purpose outside those for which the order was made. Moreover, as Lord Donaldson of Lym~ngton MR has said, unless a defendant is assured that information given in response to an order for disclosure cannot and thus will not be used as evidence at his trial for the offences charged, he may well be entitled to refuse to supply the information on the ground that it would tend to rncraminate him. Thus I agree with Lord Donaldson of Lymrngton MR that a disclosure order under these provrsions should normally contain an express condition in the terms he suggests, to obviate this risk.''

Re 0 was referred to by the House of Lords in Istel Ltd v Tully [l9931 AC 45 where Lord Templeman pointed out that in Re

0 the Crown Prosecution Service had been a party to the

proceedings and had consented to the order. His Lordship, although acknowledging that the Crown Prosecution Service was not a party to the proceedings in Istel, referred to a letter

which it had written disclaiming any intention of using, in	later criminal proceedings, evidence which might be given in
the civil action by the respondent Tully in respect of his dealings with certaln assets. His Lordshlp continued, at 57:

"In view of that letter it rs clear that the Crown Prosecution Service do not seek to employ any of the material disclosed by Mr Tully in complrance with the order of Buckley J but of course the Crown Prosecutron Service can use any material which the Crown Prosecutron Service have already obtarned and any other material which they obtain "andependently" of the present proceedings. On behalf of Mr Tully it was argued that the disclosures made by Mr Tully in complaance with the order of Buckley J might be "leaked" to the Crown Prosecutron Servace or might suggest to the Crown Prosecution Service new lines of inqurry. It was also suggested that a policeman attending court at the t r ~ a l of the present proceedings might take note of evidence based on the drsclosures and use that evidence. My Lords, in vrew of the terms of the letter from the Crown Prosecution Servrce I am satrsfied that the Crown Prosecution Service cannot profit from any disclosures rn the present proceedings. They can only rely on evidence obtained rndependently of these proceedings.

The precautions taken by Buckley J in paragraph 33 of his order to ensure that the privilege against self-incrimination is not necessary in the present instance exceed the statutory protection afforded by the Criminal Justice Act 1987. The Court of Appeal reached their decision with regret because as they clearly saw Mr Tully rs seeking to exploit the pr~vllege against self-incrimination in order to frustrate the plaintiffs' claims. In my oprnion compliance wrth the order of Buckley J subject to the safeguards provided by paragraph 33 of that order wrll not create for Mr Tully any real danger that he will be prejudiced in criminal proceedings by his complrance."

Lord Ackner in the same case referred at 63 to the risk of injustice to a plaintiff in a civil action if a defendant is allowed to avoid giving evidence by invoking the privilege against self-incrimination. His Lordship then observed:

"It is, I believe, in the public interest that your Lordships should remedy that injustice if this can be achieved while ensuring that the defendant shall not be subject to an order, compliance with w h ~ c h

mrght tend to ~ncrrminate him."

After indicating that he regarded the letter from the Crown Prosecution Service as affording sufficient protection to the defendant in the instant case, his Lordship rejected as remote

or insubstantial the risk of a "leak" to the prosecuting	authorities of information disclosed by the defendant in
compliance with the order at first instance. He then concluded, at 63:

"I would allow this appeal on the ground that the courts are entitled to substitute some different protection in place of the privrlege against self-incrim~nation, providing that such protection can properly be considered as adequate protection. I would reject the submissron made to the Court of Appeal that so long as the terms of paragraph 33 had been brought to the notrce of the prosecution authorities they would be unable to adduce in a criminal court evidence disclosed in complrance with the order. Not only must the prosecuting authorities have notice of the proposed order but they must unequivocally agree not to make use, directly or indirectly, of material divulged as a result of compl~ance with the order. It must remain entirely a matter for the drscretion of the prosecuting authorities as to whether they are in a positzon to and are prepared to give an assurance. Without such an assurance the court would not be able to provrde a substitute protection whrch was adequate."

By contrast, the prosecuting authorities in the present case unequivocally decline to consent to the safeguards which the applicants ask the Court to erect for Mr Nelson's protection. However, in Reid v Howard unreported NSW Court of Appeal 29 July 1993, Handley JA, with whom Meagher and Sheller JJA agreed, expressed doubts, at 15, whether the consent of the prosecuting authorities is essential to the making of a protective order like that formulated in Istel. His Honour then observed, at 17:

"With respect, I can drscern no reason in principle why the prosecution authorities should be immune from proceedings for contempt of court if they knowrngly act to thwart or frustrate orders of a civil court and we were referred to no authority for that propositron. Moreover unless orders of a civll court are enforceable against the prosecutzon authoritres on this baszs I cannot see how their consent which rs not embodied in an order made against them can make any difference. Orders framed to prevent the prosecutron authorities from obtaining the benefit of compulsory disclosures pursuant to orders of a crvil court would not prevent them from takrng ~ndependent action to secure evidence. Such orders would only prevent them from obtaining the benefit of compulsory drsclosures whrch they could not otherwise lawfully obtain themselves."

The order in Reid v Howard as modified by the Court of Appeal	included a requirement for the filing by the solicitors for
the plaintiffs of:

" (ii)

a written undertaking to the Court srgned by the sollcztor on the record on behalf of such solicitors undertaking that they, by themselves their servants and agents will not disclose those copy affidavrts or any further copy thereof or the informat~on therern to any person other than the nomrnated partner and employed solrcitor, their counsel and their clients, or the nominated partner and employed solic~tor for the plaintrffs in the other proceedings or therr counsel and that they will not part w ~ t h possessron of such copy affidavits or any further copy thereof, whether pursuant to a subpoena, search warrant or otherw~se, except to therr counsel, without the leave of a Judge of the Equity

Divlsron. "

There was also required to be filed a similar undertaking of confidentiality by each plaintiff personally.

However, Sheppard J in Re New World Alliance Pty Ltd (1993) 12 ACSR 299 declined to follow Reid v Howard. His Honour was there invited to order production of certain documents, notwithstanding an objection invoking the privilege against self-incrimination, upon the applicant's solicitors' undertaking to the court not to divulge the contents of the documents to any person other than counsel without further order of the court. The applicant also offered an undertaking to the court not to permit the documents to be used for the purposes of any subsequent prosecution. His Honour's reasons for declining to follow Reid v Howard, as explained at 316, were :

"With respect, I have no problem with the proposition that, if a superror court of record makes an order, persons not party to rt, whether the Crown or not, will, provided they have notice of its terms, be in contempt of court if they do something which tends to thwart or frustrate lt. But the essential question which one must

answer before that conclusron becomes relevant is whether the court

should make an order of this kind at all. I have earlier touched on this question when mentioning the exercise of the court's discretion under 8.50 of the Federal Court of Australia Act.

I do not question the court's jurisdiction or power to make such an order. To me the matter is one concerning the proper exercise of a discretion. The privilege against self-incrimination is entrenched in our law. It is true that it rs judge-made law, not statutory law. But until the principle 1s modified to allow for the qualification of it which is necessary if orders of the kind made by the Court of Appeal in Reid are to be made, it does not seem to me to be a proper exercise of discretion to take that course. Certainly, I do not think that it is an appropriate course for a judge sltting at first instance to take. If the law relating to the privilege against self-

incrimination is to be altered, it needs to be altered by a consensus

of at least three judges constituting an mtermediate court of

appeal.

The other side of the coin is the positlon of the prosecutor. I have

referred to the fact that there can be no confrdence in an iniquity. Thrs is another circumstance to be taken into account in determrning whether the discretion should be exercrsed. I emphasise that once the discretron is exercrsed, it will follow that the court's order will stand and the prosecuting authority seeking to obtain access to the documents may be at risk as to contempt. But should the court in the proper exercise of its discretion inflict on a prosecuting authority against rts will, or without knowing what its attrtude is, a situation rn which rt will be effectively denied access to documents (eg by the execution of a search warrant) which could be of critical importance for the prosecution? I think that this is what troubled Lord Ackner in Istel and accounts for what he sard about the matter. Havrng reflected on the question, my own respectful opinion is that what Lord Ackner said is to be preferred to what was said by Handley JA and agreed in by the two other members of the Court of Appeal who constituted the court in the Rerd case."

Similar reasoning deterred Sheppard J from extracting an undertaking from the applicant for an Anton Piller order not to proffer to the police any document or thing obtained as part of the fruits of the order. In that context his Honour said, at 317:

"Cases such as the present concern a tension between two public mterests. These are the publrc interest in persons berng able properly to prosecute civil claims and, for this purpose, to have available all relevant evidence, and the publrc interest in persons who are, or who may be, accused of crime, as an element of their rrght to silence, bezng entitled to clarm privilege from answering questions or producing documents which may tend to incriminate them. It is apparent from decisions of courts in England, New Zealand and t h ~ s country that many judges are unhappy about the continued existence of the privilege at least rn its present unqualrfied form. This has led them to seek ways around it; ways that are said not to circumscribe it or cut it down, but which are thought to reconcile the tensron between the two public interests which are in play. But, so it seems to me, the various solutrons encounter difficulty because	they tend to imprnge upon other publrc interests such as the public	interest in judicial proceedings berng heard in public and the public
interest in members of the community being able to discharge, in an unfettered way, their public duty to inform law enforcement agencies of criminal conduct and to give them unrestrrcted assistance in order that the criminal law may be properly administered and enforced.
In my opinion, so long as the law remains as rt is, the privilege against self-incrimination must be upheld in the sense that it must be given rts full effect. Otherwise, situations will arrse in which documents tendered or answers given in public proceedings which provide evidence of crrmrnal conduct will not be permitted to be used in criminal proceedings. This rs something which many members of the public may find difficult to understand; rt will have the tendency to brrng the law into disrepute.
If the law in relation to the privilege against self-incrimrnation is to be changed or substantially modified, either Parliament or the courts at the appellate level wrll need to grasp the nettle and do what is necessary rather than taking the present course of devising ad hoc solutions which are intended to achreve some sort of
satisfactory compromzse in a given case.
It follows that, in my view, there is no available middle course pursuant to which the documents may be produced for inspection by the applzcant and zts legal advisers, whether in confrdence or otherwise, and at the same tzme, the privilege against self-incriminatzon is preserved."

I have accepted, for the purpose of reaching a conclusion on this interlocutory application that this Court has power to make orders of the kind sought by the applicant. However, I have formed the firm view that the presumed power should be very sparingly exercised, and, in the circumstances of this case, if it is to be exercised at all, the orders should be framed by the trial judge. I shall indicate in a summary way the considerations which have led me to this view.

In the first place, by the orders proposed by the applicants, the investigative and prosecuting officers who are directly concerned to uphold the validity of the search warrants and to ensure that as many documents as possible are made available as a result of their execution, would be precluded from participating in, or observing a critical part of the judicial

determination will very largely involve questions of whether	process by which those matters are to be determined. That
communications for which legal professional privilege is claimed occurred in the furtherance of a crime or fraud. It is highly likely that, but for the proposed orders, the respondents would be assisted in the resolution of those questions by investigative or prosecuting officers. Those officers, however, would be precluded by the proposed orders from ever being privy to Mr Nelson's evidence. Counsel for the applicants sought to overcome this difficulty by suggesting that relevant officers could be present during the proposed hearing in camera, provided that those officers were thereafter "quarantined" in the same way as the nominated counsel and solicitors referred to in paragraph l(c) of the proposed order. However, this suggestion would impose a burden on the investigative and prosecuting authorities at least as heavy as that discussed below in relation to the nominated counsel and solicitors.
A related consideration is that the proposed orders impose very grave restrictions on the respondents, and the prosecuting authorities generally, in their choice of counsel and solicitors for both the present proceedings and any subsequent criminal prosecution which it may be decided should be brought. It is a reasonable supposition that at least some of the counsel and solicitors retained to resist the application to this Court have advised, or would be retained, in relation to the criminal prosecution. However, by the
terms of the order those counsel and solicitors would be precluded from any further participation in the prosecution,
even to the extent of conferring with, or providing information to their successors in the retainer.
To avoid that disability the prosecuting authorities would be forced to retain, for the purpose of the present application to this Court, counsel and solicitors having little or no acquaintance with the complex factual and legal issues raised by the investigations in the course of which the search warrants have been issued and executed. Considerable time and costs would have to be expended in making new counsel and solicitors appropriately familiar with those issues, yet the prosecuting authorities would be precluded from obtaining any contribution from those new counsel and solicitors to any subsequent investigation or prosecution.
Underlying the necessity to choose between two unattractive alternatives which the proposed orders would impose on the prosecuting authorities is a recognition of the force of an observation by Wilcox J in Jackson v Wells (1985) 5 FCR 296. His Honour there said, at 307:

"Thirdly, M r Roberts [counsel f o r one of t h e appl icants] suggested t h a t , r f I were not drsposed t o g ran t access t o t h e subjec t ma te r i a l

t o t h e p a r t i e s , I should a t l e a s t g ran t access t o t h e l e g a l

representa t ives of t h e p a r t i e s . I gave t h i s submission anxious

consideration. It was a course apparently considered by t h e High

Court i n Alister v The Queen (1984) 154 CLR 404 although ul t imate ly not adopted. A s I have indicated, I would have welcomed t h e

as s i s t ance of counsel upon t h e content of t h e documents. The

applicants would, no doubt, have f e l t more s a t r s f i e d t h a t t h e

documents w e r e r igorous ly examined by t h e cour t i f t h e m counsel had

been	given t h e opportunity t o t a k e t h e cour t through t h e documents.
But,	i n t h e end, I r e - ~ e c t e d t h e proposal. It rnvolves a number of

problems. Without r e f l e c t i n g i n any way upon t h e i n t e g r i t y of any

counsel o r solicitor, d r f f i c u l t i e s a r e l i k e l y t o a r i s e where counsel

appearing i n , and advising t h e r r c l r e n t s i n respect o f , pro t rac ted

and complex proceedings acquire mformation whrch they a r e not f r e e t o use o r t o pass on t o t h e r r c l i e n t s . During t h e heat of b a t t l e an

unwitting d i sc losure may occur. Frank and f u l l advice becomes

impossible. I am aware of cases rn whrch, f o r reasons such a s these , experrenced counsel have declrned t o rece ive information whrch they a r e not f r e e t o share with t h e m c l i e n t s . I t seems t o m e merely

commonsense t o conclude t h a t t h e fewer people who have access t o
conf iden t i a l information t h e less is t h e r i s k of unauthorised
d isc losure . ''

However, to compel a choice between the invidious alternatives to which I have just referred in order to facilitate the applicant's conduct of civil proceedings in this Court, would be to subject the prosecuting authorities to a very grave burden. A further reason for not imposing it is that these civil proceedings have been initiated by the parties at whose behest the burden is to be imposed.

It is significant that the orders proposed would immunize from

scrutiny by the prosecuting authorities and the public the whole of Mr Nelson's evidence. That would be done in advance of his objecting to answer a particular question on the ground that to do so may tend to incriminate him. It would also occur irrespective of whether the relevant evidence could be obtained from some other witness to whom the same objection is not available. Whether the objection can be sustained is a matter for the trial Judge, to be ruled on, as each question is asked, in the light of any safeguards to preserve the confidentiality of each answer which that judge may consider appropriate. Moreover, if a solicitor, being an officer of the court, is to take an objection against self-incrimination, I consider that there is a strong public interest in that

being done and ruled upon in open court. Acknowledgement of that public interest was implicit in the statement, for	example, of Lord Wilberforce in Rank Film Ltd v Video
Information Centre [l9821 AC 380. His Lordship there observed, at 443:

"Secondly, and thrs was very much an argument of last resort, Mr Nicholls suggested that protection could be given by a hearing, wholly or rn part, in camera. But such procedure rs totally alien, except rn the most exceptional cases, to our procedure and I do not think that so wide an extension of it as the submission involves ought to be contemplated."

It is not irrelevant to the discretion which I have to 2exercise that the application for what has been called a "blanket immunity" from disclosure for Mr Nelson's evidence has been made, not by Mr Nelson himself, but by the applicants who expect to seek to adduce his evidence. It is reasonable to assume, as Mr Finkelstein QC for the applicants submitted, that, if called, Mr Nelson will claim the privilege against self-incrimination and will do so frequently. However, as I have already indicated, whether each objection will be upheld and whether another witness can supply the deficiency of evidence resulting from a successful objection can only be determined by the trial judge in the light of facts and submissions fully exposed to that judge.

Counsel for the respondents also complained that paragraph l(b) of the proposed orders, by requiring the affidavit of Mr Nelson to be kept sealed until the commencement of the trial of the substantive application, would seriously disadvantage the respondents in preparing to cross-examine Mr Nelson and

marshalling evidence to rebut his assertions. I do not regard	that requirement as essential to the scheme of the proposed
orders. In the second place, it is by no means clear that M r Nelson will elect, even if protected by orders of the kind proposed, to furnish evidence on affidavit. If he were to choose, as is his right, merely to attend in response to a subpoena and give viva voce evidence, counsel for the respondents would have to cross-examine him and make their decisions about evidence in rebuttal "on the run". If M r Nelson were to make an affidavit the proposed orders could be modified to require to be furnished to the respondents a reasonable time before the commencement of the trial of the action.
However, for the reasons indicated above, I am not persuaded to make any orders of the kind proposed. I accept that it was in the interests of both sides for the issues raised by the applicants' motion to be ventilated in advance of the trial. Although the motion is refused, it has permitted those issues to be debated over one sitting day and ruled upon in a way which may result in a significant saving of time on the trial itself. I shall therefore reserve to the trial judge the question of the costs of all parties of and incidental to the motion.

I certify that this and the

preceding twenty six (26) pages are a true copy of the reasons for judgment of his Honour Mr Justice Ryan

Associate:

Date: (2 199 y

Counsel for applicant:	Mr R Finkelstein QC Mr I Jones
Solicitors for applicant:	Arnold Bloch Leibler
Counsel for respondent:	Mr M Weinberg QC Mr H Aizen
Solicitors for respondent:	Director of Public Prosecution for the Commonwealth o f Australia