Oretek Ltd v Australian Securities and Investments Commission - [2003] WASCA 113

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: ORETEK LTD & ANOR -v- AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION [2003] WASCA 113

CORAM: WHEELER J
HASLUCK J
PULLIN J

HEARD: 7 MAY 2003

DELIVERED : 7 MAY 2003

FILE NO/S: FUL 45 of 2003

BETWEEN: ORETEK LTD
First Applicant
ROBERT SAMUEL ALLEN
Second Applicant
AND
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Respondent

Catchwords:

Practice and procedure - Discovery - Privilege against selfincrimination

Legislation:

Corporations Act 2001 (Cth), s 706, s 707, s 708, s 727

Result:

Extension of time within which to appeal refused

Category: B

Representation:

Counsel:

First Applicant               :     Mr I A Morison
Second Applicant          :     Mr I A Morison
Respondent:     Mr M J Hawkins

Solicitors:

First Applicant               :     O'Connor Partners
Second Applicant          :     O'Connor Partners
Respondent:     Australian Securities & Investments Commission

Case(s) referred to in judgment(s):

Jackson v Gamble [1983] VR 552
Microsoft Corporation & Ors v CX Computer Pty Ltd (2002) 187 ALR 362; [2002] FCA 3
R v Deputy Commissioner of Taxation; Ex parte Briggs (1987) 13 FCR 389
Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat and Livestock Corporation (1979) 42 FLR 204

Case(s) also cited:

Nil

WHEELER J: The Court is today dealing with three applications: for an extension of time within which to appeal; for leave to appeal; and an application to amend the proposed notice of appeal, all of those being heard together. They arose in the following way. On 26 September last year the plaintiff, ASIC, filed an originating process seeking declarations that the first defendant, a company, made an offer of its securities or distributed an application form for an offer of its securities that required disclosure to investors pursuant to the Corporations Act 2001, without a disclosure document for the offer having been lodged with ASIC in contravention of s 727(1) of the Corporations Act, and a declaration that the same company issued securities without disclosure to investors and the issue resulted in a breach of the 20-investor ceiling in contravention of s 727(4).
It also sought orders restraining the first to fifth defendants, (the second to fifth defendants being natural persons) from offering the securities for issue or dealing with them in other related ways and from dealing with moneys from any persons who have applied for the securities, until a disclosure document was first lodged with ASIC.
It appears that there were a number of affidavits, some of them voluminous, filed in support of that originating process. Questions arose between the parties as to whether the matters in issue in that originating process were sufficiently defined by the affidavits. Since the application was made pursuant to O 81G, there was no requirement for pleadings. However, the plaintiff accepted, after discussion between counsel, that it would be desirable to proceed by way of pleadings. On 12 March this year, therefore, Parker J ordered that the application proceed on pleadings, that the plaintiff file and serve a statement of claim on or before Monday, 17 March and that the defendants file and serve their respective defences on or before Monday, 31 March.
His Honour also ordered on 12 March that by 4 pm on Monday, 24 March the first defendant make and serve on the plaintiff a list of discoverable documents and that it do within the same period make and file an affidavit sworn by its secretary, namely Robert Samuel Allen (who is the fourth defendant and the second-named applicant in this application) verifying that list. He also ordered that the plaintiff have leave to issue a writ of subpoena duces tecum to the first defendant for compliance by the fourth defendant or, alternatively, to the fourth defendant directly, requiring the production of all documents that relate to the issue or allotment of Oretek Ltd securities or the subsequent sale, transfer or dealing of those securities or any invitation, application or offer for the allotment, issue or sale of Oretek Ltd securities, including certain specified documents.
It is against those two orders, that relating to discovery and that relating to the issue of subpoenas, that the applicants in this application, being the first and fourth defendants, seek to appeal. The two proposed grounds, if one includes the proposed additional ground of the appeal, are, first:
"The discovery order infringes the second applicant's privilege against self-incrimination in that it expressly requires the affidavit of discovery to be sworn by the second applicant and the discovery ordered is or may be wider than the documents already seized by the respondent."
In relation to that last portion of the ground, I note that there have been documents already seized by the respondent and it appears not to be in dispute that the discovery ordered may be wider than relating to those documents only. Secondly, it is asserted:
"The learned judge erred in law and in fact in ordering discovery and allowing the issue of the subpoena before the issues in the proceedings were determined by a proper statement of claim."
The question of the privilege against self‑incrimination was raised before Parker J on 12 March. The matter raised by the second ground was not, but no issue was taken by the respondent in relation to the raising of that issue for the first time on the proposed appeal. It was said to us by counsel for the applicant that he had limited time to consider the proposed discovery and subpoena, the hearing before Parker J not originally being listed for that purpose.
I also note that the applicants advised us, without objection, that a statement of claim has now been delivered and that the defendants have applied to strike out on a variety of bases that statement of claim. That application is listed to be heard on the 13th of this month and on 24 April Parker J ordered a stay of compliance with the orders in issue here until the hearing and determination of the strike-out application.
The first matter to deal with, logically, is the application in relation to an extension of time and it is settled that the matters to which regard should be had are: firstly, the length of delay; secondly, the explanation, if any, for the delay; and, thirdly, the merits of the proposed appeal.
As to the first, the period of delay is not lengthy. The decision was delivered on 12 March. The applicants' notice of motion was filed on 1 April, although not served until 16 April. I accept that the delay was not significant.
The explanation for the delay, however, appears to me to be unacceptable. It is explained in an affidavit of Mr Knight sworn 1 April. It appears from that affidavit that counsel were promptly instructed to consider an appeal and did so promptly and that a decision was made promptly by the applicants, by 20 March. The delay apparently began, however, when on 17 March the applicants' solicitors requested the court to provide a copy of Parker J's reasons. The affidavit of Ms Hughes deals with that issue. Although it contains in par 7 an apparent typographical error which makes it difficult to follow it appears, generally, that the delay was said to have been caused by confusion about whether and how the applicants' solicitors could obtain his Honour's reasons for decision. The Court has repeatedly emphasised in this context the duty of legal practitioners to make an adequate note of any reasons delivered and has indicated, repeatedly, that waiting for a formal record of those reasons, or delay in obtaining it, will generally not be an adequate explanation for delay. That is, in my view, particularly so in relation to interlocutory matters, where formal written reasons are rare and reasons which are delivered orally are usually, as here, brief.
Notwithstanding that in my view the explanation for the delay is inadequate, because of the relatively brief period of delay I would grant the extension of time if there was significant merit in the proposed grounds. In my view, however, there is not.
As to the first of them, I start by noting that it is accepted on both sides that the privilege against self‑incrimination is not available to the first defendant, as a company, but only to the fourth defendant, the second‑named applicant.
As to the first ground it appears to me there was some confusion in the applicants' submissions as to whether it is sought in relation to the second‑named applicant to seek to excuse him in limine from giving discovery, or not. As I understand it, one can either seek to be excused in limine and without specific objection or on the basis of some particular apprehension. In either case, in my view, there is no basis for the objection to the orders made by Parker J here.
As to the first basis, Deane J explained in Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat and Livestock Corporation (1979) 42 FLR 204, at 207 to 208 (omitting citations):
"It is a well-established principle that a defendant in proceedings which are solely for the recovery of a pecuniary penalty should not be ordered to disclose information or produce documents which may assist in establishing his liability to the penalty. Even where, as in the present case, the proceedings are not for recovery of a penalty but to prevent and redress civil injury a party to litigation ought not to be compelled to provide information or to produce documents for inspection by the other party if the result thereof will be to provide evidence against him which may be used to establish his liability to a penalty in other proceedings.
In the former case - that is to say, in a mere action for a penalty - a court should, in the absence of a statutory provision to the contrary, refuse to make any order at all against the defendant for discovery or production of documents or provision of information for the reason that the whole and avowed object of the proceedings being the imposition and the recovery of a penalty, an order for the production of documents or provision of information against the defendant can, so far as the prosecutor of the action is concerned, properly have no other intended consequence.
This is a broad and unqualified rule whose origins are apparently to be found in a reluctance on the part of the Court of Chancery to lend the aid of its discovery proceedings to the common informer.
In the latter case - that is, in a case such as the present where the proceedings are not for the recovery of a penalty - there is no general rule precluding the making of an order for discovery or interrogatories and there will ordinarily be no proper ground for objecting to an order for production of documents or provision of information being made. The party against whom such an order is made is left to object to producing particular documents or providing particular information on the ground that such production or provision may tend to expose him to a penalty."
In Refrigerated Express, Deane J had before him, as to the way in which an "action for penalty" should be understood, a submission which he summarised at page 211 in the following terms:
"It was submitted on behalf of the respondents that a general order excusing the respondents in limine from discovery of documents or answering interrogatories was justified in the present matter for the reason that the whole basis of the present action for injunctive relief and damages was alleged contravention and involvement in contravention of the provisions of Part IV of the Act. In these circumstances, it was said, the only purpose of discovery or interrogatories would be to provide evidence which would tend to establish the alleged contravention, and involvement in contravention of the Act which, if established would inevitably tend to render the respondents liable to a penalty at the suit of the Minister or the Trade Practices Commission."
That, in my view, is essentially identical with the submission made to us here. The action here is not for recovery of a penalty against the second applicant. However, as the applicants point out, there is in the present statement of claim, which has now been delivered, an allegation of participation by the second applicant in the contravention alleged. Whether that is strictly necessary to the relief claimed it is not necessary for us to consider. It would follow, it is submitted, that the establishing of the plaintiff's claim in the present proceedings would establish that the second applicant was involved in the contravention alleged. However, as I have noted, in the passage at 211 of Refrigerated Express, the argument before Deane J was likewise that the establishment of the alleged contravention would inevitably tend to render the respondent in that case liable to penalty in respect of that contravention. I am not able to see a distinction between the two arguments. In relation to that argument, Deane J said (at 212):
"While I can see great force in the respondents' argument, I am unable to accept it. In my view, the only circumstances which would warrant a departure in the present case from the ordinary approach that a party should be left to object to production of particular documents or to answering particular interrogatories would be that it appeared that the actual discovery as distinct from production for inspection of documents or the actual order for interrogatories would tend to expose the party ordered to make discovery or answer interrogatories to liability to a penalty."
The reasoning of Deane J to which I have referred at some length has been accepted as an authoritative guide in many cases since that decision. A number of them are conveniently collected in Microsoft Corporation & Ors v CX Computer Pty Ltd(2002) 187 ALR 362; [2002] FCA 3, a decision of Lindgren J, and particularly at [69]. There is no reason to doubt the application of those principles in the present case and they mean, in my view, that any objection of the kind taken by the applicants must fail.
I should note that it was sought on behalf of the applicants to distinguish Refrigerated Express, and to do so by analogy with a decision of Beaumont J in R v Deputy Commissioner of Taxation; Ex parte Briggs (1987) 13 FCR 389. In that case, Beaumont J sought to distinguish Refrigerated Express on the basis that in Briggs what was sought was a declaration of contravention, and consequential mandatory and prohibitory injunctions. Of that distinction, Lindgren J observed in Microsoft Corporation at [54]:
"With respect, this seems to me an unsatisfactory basis on which to distinguish Refrigerated Express."
I would respectfully adopt the view taken by Lindgren J. It seems to me that the declaration of contravention sought in this case adds nothing to the applicants' argument.
If an objection of that general kind is not open, the only basis on which objection could be taken is by reference to the principles stated by Young CJ in Jackson v Gamble [1983] VR 552 at 555:
"A mere statement by the witness that his answer might tend to incriminate him is not sufficient. The Court must be able to see for itself that there is reasonable ground to fear that the answer may have the stated effect."
There has been no material placed before us, and there was none placed before Parker J, which seeks to demonstrate that the mere swearing of the affidavit of discovery would tend to incriminate the second applicant. It follows in my view that the first of the proposed grounds of appeal could not succeed.

Proposed ground 2 I can deal with more shortly. As to discovery, it is clear from the chronology that I have mentioned that Parker J's orders would have the effect that there would be a statement of claim delivered before the applicants were required to give discovery. The submission made to us was, in effect, that his Honour should have allowed further time, not just for the delivery of the statement of claim but also for the defendants to consider its adequacy and for strike out or other issues to be resolved.
In my view a court in making directions is not required to assume that the process and proceedings will or may be defective or that some orders may not be complied with adequately or at all. Indeed, it is entitled to assume the contrary. If there do prove to be difficulties with the timetable of orders made on the assumption that orders will be complied with properly and appropriate pleadings delivered, then a party can seek a stay of any orders which it may be necessary to stay in order to ensure that the timetable remains on track.
There was, as I have noted, in this case a stay ordered by Parker J pending the determination of the strike-out application. There is, therefore, in my view no basis for setting aside the order in relation to discovery.
So far as the subpoena issue is concerned, as is clear from the terms of the order, which I have mentioned, that order does not rely on any pleadings to define the matters to which the subpoena relates. Rather the order contains in its own terms the definition of the relevant issues.
In my view there is, therefore, no merit in either of the proposed grounds and for that reason, having regard also to the explanation for the delay which has been proffered, I would refuse to extend the time within which to appeal.
HASLUCK J: I agree with the reasons of Wheeler J and the orders proposed.
PULLIN J: I also agree. I would just add this, that in my opinion when discovery is given and if the applicants consider that a particular document or documents may incriminate, then privilege may be claimed in the list of documents verified by the affidavit of discovery. It is common for some kind of privilege to be claimed in a list of documents and indeed Form 17 in the Rules of the Supreme Court expressly allows

for an objection to be taken in the list of documents. Form 17 is the form setting out the content of the list of documents to be verified by affidavit.