Rich v Australian Securities and Investments Commission - [2003] NSWCA 342

No judgment structure available for this case.

Reported Decision:
48 ACSR 6
(2004) 22 ACLC 286

Court of Appeal

CITATION: RICH & SILBERMANN v THE AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION [2003] NSWCA 342 revised - 29/04/2004

HEARING DATE(S): 10 July 2003

JUDGMENT DATE:
26 November 2003

JUDGMENT OF: Spigelman CJ at 1; Ipp JA at 119; McColl JA at 120

DECISION: Appeal dismissed with costs.

CATCHWORDS: PRACTICE AND PROCEDURE - Discovery - Privilege against self-exposure to a penalty - Whether available in proceedings for declaration of contravention of civil penalty provision, disqualification from management of corporations and compensation orders - PRACTICE AND PROCEDURE - Pre-trial filing of witness statements - Privilege against self-exposure to a penalty - Corporations Act 2001 (Cth), ss 206C, 206E, 1317EA

LEGISLATION CITED: Australian Industries Preservation Act 1906, ss 4, 6
Australian Securities Commission Act 1989 (Cth), ss 19, 68
Bankruptcy Act 1883, s 32
Bankruptcy Act 1966, Part X
Commonwealth Constitution, s 51(xix)
Companies Act 1961, ss 116, 117, 122
Companies and Securities (Interpretation and Miscellaneous Provisions) Act 1980
Companies Code 1981, ss 227, 227A, 229, 562, 562A, 570
Corporations Act 2001 (Cth), ss 180, s206B, 206C, 206D, 206E, 206F, 206G, 1311, 1317E, 1317G, 1317H, 1317J
Corporations Law 1991, ss 9, 91, 182, 183, 184, 206F, 224, 229, 230, 232, 559, 588J, 588M, 588U, 596AI, 599, 600, 601MA, 829, 830, 1311, 1317, 1317DA, 1317EA, 1317EB, 1317EC, 1317ED, 1317EF, 1317FA, 1317FB, 1317GC, 1317HA, s1317HD, 1317J, 1317K, 1317L, 1317M, 1317N, 1317P, 1317Q, 1332, 1474, Schedule 3
Criminal Justice (Scotland) Act 1949
Criminal Law (Sentencing) Act 1988 (SA), s 52
Customs Act 1901 (Cth)
Estate Agents Act 1979
Excise Act 1901 (Cth)
Fisheries Act 1952 (Cth)
Income Tax and Social Services Contribution Assessment Act 1936 Part VII (Cth), s 237
Migration Act 1958 (Cth)
Public Health Act 1875
Road Traffic Act 1930
Acts Interpretation Act 1901 (Cth), s 13
Australian Securities Commission Act (1989) (Cth), s 68
Securities Industry Code 1961 ss 60, 62
Sentencing Act 1991 (Vic), Part 4, Div 1
Solicitors Act 1941 (UK)
Stock-Jobbing Act (7 Geo.2.c.8)
Trade Practices Act 1974 (Cth) s 155
Wine and Beer Amendment Act 1870 (UK)

CASES CITED: Adams v Batley (1887) 18 QBD 625
Adler v ASIC (2003) 46 ACSR 504
Antonelli v Secretary of State for Trade and Industry [1998] QB 948
ASC v Donovan (1998) 28 ACSR 583
ASC v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339
ASIC v Pegasus Leveraged Options Group Pty Limited (2002) 41 ACSR 561
ASIC v Rich [2003] NSWSC 328; (2003) 45 ACSR 305
Australian Competition & Consumer Commission v Amcor Printing Papers Group Limited (1999) 163 ALR 465
Australian Securities and Investments Commission v FFE Building Services Ltd (2003) ATPR 41-938
Australian Securities and Investments Commission v Plymin (2002) 4 VR 168
Australian Securities Commission v Kippe (1996) 67 FCR 499
Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485
Azzopardi v The Queen (2001) 205 CLR 50
Bakker v Stewart [1980] VR 17
Beckwith v R (1976) 135 CLR 569
Bird v Hardwicke (1682) 1 Vern. 109; 23 ER 349
Boteler v Allington (1746) 3 Atk 453, 26 ER 1061
Bridal Fashions Pty Ltd v Comptroller-General of Customs (1996) 140 ALR 681
Brown v Great Eastern Railway Co (1887) 2 QBD 406
Brownsword v Edwards (1751) 2 Ves Sen 243, 28 ER 157
CAC (WA) v Ekamper (1987) 12 ACLR 519
Channon v R (1978) 33 FLR 433
Chauncey v Tahourden (1742) 2 Atk 392; 26 ER 637
Chew v National Companies & Securities Commission (No 2) [1985] WAR 337
Chief Executive Officer of Custom v Labrador Liquor Wholesale Pty Ltd [2003] HCA 49
Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1
Clyne v NSW Bar Association (1960) 104 CLR 186
Commissioner for Corporate Affairs v Bracht [1989] VR 821
Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385
Coogans v MacDonald [1954] SLT 279
Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission [2002] HCA 49; (2002) 77 ALJR 40
Deputy Federal Commissioner of Taxation (NSW) v DTR Securities Pty Ltd (1985) 1 NSWLR 653
Dougherty v Nagel 28 Idaho 302, 154 Pac. 375 (1915)
Dr SS v Health Care Complaints Commission and Another [2002] NSWCA 391
E L Bell Packaging Pty Limited v Allied Seafoods Limited & Ors (1990) 4 ACSR 85
Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477
Ex parte Brounsall (1778) 2 Cowp 830; 98 ER 1385
Federal Commissioner of Taxation v Trautwein (1936) 56 CLR 211
Flavel v Borrett & Haig (1991) 54 A Crim R 452
Friend v Corporate Affairs Commission (1988) 7 ACLC 106
Geaghan v D'Aubert (2002) 36 MVR 542
Glynn v Houston (1836) 1 Keen 329, 48 ER 333
Government of the United States of America v Montgomery & Anor [2001] UKHL 3, [2001] 1 All ER 185, [2001] 1 WLR 196
Gray v Motor Accident Commission (1998) 196 CLR 1
Green v Weaver (1827) 1 Sim. 402, 57 ER 630
Griffin v Sogelease Australia Limited & Ors [2003] NSWCA 158
Hambrook v Smith (1852) 17 Sim. 209, 60 ER 1109
Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298
Harrison v Southcote & Moreland (1751) 2 Ves. 389, 28 ER 249
Honeywood v Selwin (1744) 3 Atk 276, 26 ER 961
In the Matter of King (1844) 8 QB 129; 115 ER 823
In re a Debtor [1910] 2 KB 59
Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655
Jones v Jones (1889) 22 QBD 425
Kingston v Keprose Pty Ltd (No 3) (1987) 11 NSWLR 404
La Macchia v Minister for Primary Industry (1986) 72 ALR 23
Law Society of New South Wales v Foreman (No 2) (1994) 34 NSWLR 408
Legione v Hateley (1983) 152 CLR 406
L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Company Limited [1994] 1 AC 486
Mallan v Lee (1949) 80 CLR 198
Martin v Treacher (1886) 16 QBD 507
Mexborough (Earl of) v Whitwood Urban District Council [1897] 2 QB 111
Monnins v Monnins (1673) 2 Chan. Rep. 68; 21 ER 618
Morris v Police Service Board [1983] 2 VR 357
Naismith v McGovern (1953) 90 CLR 336
Nelme v Newton (in Maccallum v Turton (1828) 2 Y. & J. 183, 148 ER 883)
Nicholas v Commissioner for Corporate Affairs (1986) 5 ACLC 258
Nicholas v Commissioner for Corporate Affairs [1988] VR 289
NSW Bar Association v Evatt (1968) 117 CLR 177
Orme v Crockford (1824) 13 Price 376; 147 ER 1022
Parkhurst v Lowten (1819) 2 Swans 197, 36 ER 589
Paxton v Douglas (1809) 16 Ves. 239, 33 ER 975; 19 Ves. 225, 34 ER 502
Police Service Board v Morris (1985) 156 CLR 397
Polyukhovich v Commonwealth (War Crimes Act Case) (1991) 172 CLR 501
Poyser v Commissioner for Corporate Affairs [1985] VR 533
Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355
Proudfoot v Proctor (1887) 3 WN (NSW) 69
Pye v Butterfield (1864) 5 B & S 829; 122 ER 1038 at 1042
Pyneboard Pty Ltd v Trade Practices Commission 152 CLR 328
R v Associated Northern Collieries (1910) 11 CLR 738
R v Cuthbert [1967] 2 NSWR 329
R v Davis (1995) 81 A Crim R 156
R v Geddes (1936) 36 SR (NSW) 554
R v Rushby [1977] 1 NSWLR 594
R v Vine (1875) LR 10 QB 195
Re a Solicitor's Clerk [1957] 1 WLR 1219
Re Altim Pty Ltd and the Companies Act 1961 [1968] 2 NSWR 762
Re Dymond (No 3) (1959) 101 CLR 11
Re Ferrari Furniture Co Pty Ltd and the Companies Act [1972] 2 NSWLR 790
Re Harrison (1998) 81 FCR 436
Re HIH Insurance Limited (In prov liq); ASIC v Adler (2002) 42 ACSR 80
Re Magna Alloys & Research Pty Limited (1975) 1 ACLR 203
Re Marsden (1981) 29 SASR 454
Re One.Tel Limited (In liq); ASIC v Rich (2003) 44 ACSR 682
Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725
Re Quinn & Australian Securities Commission (1994) 19 AAR 321
Re Tasmanian Spastics Association; ASC v Nandan (1997) 23 ACSR 743
Re Veron; ex parte Law Society of New South Wales [1966] 1 NSWR 511
Re Westinghouse Uranium Contract [1978] AC 547
Redfern v Redfern [1891] P 139
Refrigerated Express Lines (A/Asia) Pty Limited v Australian Meat & Livestock Corporation Limited (1979) FLR 204
Reid v Howard (1995) 184 CLR 1
Richardson v Federal Commissioner of Taxation (1932) 48 CLR 192
Saunders v Wiel [1892] 2 QB 18, 321
Scott v Miller (No 2) (1859) LJ. Ch 584, 70 ER 448
Short v Mercier (1848) 2 De Ge & Sm 635, 64 ER 285
Short v Mercier (1851) 20 L.J. Ch. 289
Sidebottom v Commissioner of Taxation [2003] VSCA 2
Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256
Smith v Read (1737) 1 Atk 527; 26 ER 332
Sorby v the Commonwealth (1983) 152 CLR 281
Swift v Swift (1832) 4 Hagg 139 at 154, 162 ER 1399
T W Hobbs & Co v Hudson & Ors (1890) 25 QBD 232
Taylor & Anor v Carmichael (1984) NSWLR 421
The Gleaner Company Limited & Anor v Abrahams (Jamaica) [2003] 3 WLR 1038
The King v Lord George Gordon (1781) 2 Doug. 593, 99 ER 374
The Southern Law Society v Westbrook (1910) 10 CLR 609
Thruston v Clark 107 Cal. 285, 40 Pac. 435 (1895)
Trade Practices Commission v Abbco Iceworks Pty Limited (1994) 52 FCR 96
Trade Practices Commission v CSR Ltd (1991) ATPR 41-076
Triplex Safety Glass Co Ltd v Lancegaye Safety Glass (1934) Ltd [1939] 2 K.B. 395
United States ex rel Marcus v Hess 317 US 537
United States v Chouteau 102 U.S. 603 (1880)
United States v Collins 25 F. Cas. 545 (1873)
Veen v The Queen [No. 2] (1988) 164 CLR 465
Wall v Taylor [1883] 11 QBD 102
Walter v Council of Queensland Law Society Incorporated (1988) 62 ALJR 153
Walton v Gardiner (1993) 177 CLR 378
Welch v United Kingdom (1995) 20 EHRR 247
Wentworth v New South Wales Bar Association (1992) 176 CLR 239
Zuker v Commissioner for Corporate Affairs [1981] VR 72

PARTIES :
John David Rich and Mark Alan Silbermann (Appellants)
The Australian Securities & Investments Commission (Respondent)

FILE NUMBER(S): CA 40402/03

COUNSEL: B Walker SC / DL Williams (Appellants)
R MacFarlane QC / P Durack (Respondent)

SOLICITORS: Joanne Kelly (Appellants)
The Australian Securities & Investments Commission (Respondent)

LOWER COURTJURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): EQ 5934/01

LOWER COURT
JUDICIAL OFFICER : Austin J

- 117 -

CA 40402/03
EQ 5934/01

SPIGELMAN CJ
IPP JA
McCOLL JA
Wednesday 26 November 2003

John David RICH & Mark Alan SILBERMANN v THE AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION

FACTS

The Appellants are former directors of One.Tel (in liq) (“the company”). ASIC (the Respondent) alleges a number of contraventions by the Appellants of s 180(1) of the Corporations Act 2001 (Cth) in their discharge of that office. The Respondent seeks declarations of the alleged contraventions (s 1317E), orders disqualifying the Appellants from management of companies (ss 206C and 206E) and orders requiring compensation to be paid by the Appellants to the company (s 1317H). The Respondent applied to Austin J for interlocutory orders compelling the discovery of documents and filing of witness statements (including statements of the Appellants’ anticipated testimony) by the Appellants in the proceedings in respect of those contraventions. The Appellants resisted the application on the ground that the interlocutory orders would require the Appellants to expose themselves to a penalty, namely the orders sought by ASIC. The Respondent argued that the final orders involved no imposition of a penalty, the disqualification orders being sought for a protective purpose, so that the privilege against self-exposure to a penalty did not avail the Appellants. Austin J held that the proceedings did not seek the imposition of a penalty and the privilege did not apply, and granted the Respondent’s application. The Appellants challenged his Honour’s characterisation of the proceedings as not punitive, seeking in particular to emphasise the severity of the consequences of disqualification for a company director.

HELD
(per Spigelman CJ, Ipp JA agreeing)
A.

The characterisation of a statutory sanction as a penalty for purposes of the privilege against self-exposure to a penalty is affected by whether the sanction is imposed for the purpose of punishment. [22]-[30]

Smith v Read (1737) 1 Atk 527; 26 ER 332; Adams v Batley [1887] 18 QBD 625; Saunders v Wiel [1892] 2 QB 18 (QB) and 321 (CA) referred to. Daniels Corporation International Pty Ltd v Australian Competition &Consumer Commission [2002] HCA 49; (2002) 77 ALJR 40 distinguished.

B.

The characterisation referred to in A is also affected by the severity of the consequences of the sanction. [81]

In re a Debtor [1910] 2 KB 59; R v Associated Northern Collieries (1910) 11 CLR 738; Re One.Tel Limited (In liq); ASIC v Rich (2003) 44 ACSR 682 referred to. Police Service Board v Morris distinguished.

C.

The distinction between a ‘punitive’ and a ‘protective’ purpose to be served by imposing a sanction has been drawn in a number of areas of the law. [50]-[62]

Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1; R v Vine (1875) LR 10 QB 195; Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725; Clyne v NSW Bar Association (1960) 104 CLR 186; NSW Bar Association v Evatt (1968) 117 CLR 177; Ex parte Brounsall (1778) 2 Cowp 830; 98 ER 1385; In the Matter of King (1844) 8 QB 129; 115 ER 823; Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655; The Southern Law Society v Westbrook (1910) 10 CLR 609 referred to.

D.

The distinction referred to in D has frequently been made in the corporations law context, including with respect to disqualification orders. [63]

Re Altim Pty Ltd and the Companies Act 1961 [1968] 2 NSWR 762; Re Magna Alloys & Research Pty Limited (1975) 1 ACLR 203; Re Tasmanian Spastics Association; ASC v Nandan (1997) 23 ACSR 743; ASC v Donovan (1998) 28 ACSR 583; ASC v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339; ASIC v Pegasus Leveraged Options Group Pty Limited (2002) 41 ACSR 561; Re HIH Insurance Limited (In prov liq); ASIC v Adler (2002) 42 ACSR 80; Australian Securities Commission v Kippe (1996) 67 FCR 499 referred to.

E.

The history and statutory context of the power to disqualify a person from managing corporations, indicate that a disqualification order is protective. The privilege against self-exposure to a penalty does not apply to a proceeding for the orders sought by ASIC. [105], [109]

F.

The distinction between a ‘punitive’ and a ‘protective’ purpose is of considerable significance as it determines the scope of considerations relevant to the exercise of the power to make a disqualification order. [115]-[116]

(per McColl JA dissenting)
A.

The privilege against self-exposure to a penalty (“penalty privilege”) is attracted where discovery would subject an individual to a penalty or anything in the nature of a penalty. A disqualification order made pursuant to s 206C of the Corporations Act 2001 (Cth) disabling a person from acting as a director attracts penalty privilege. [246], [266]–[267]

Smith v Read (1736) 1 Atk 527; 26 ER 332; Harrison v Southcote (1751) 2 Ves. 389 at 394, 28 ER 249; Re A Debtor [1910] 2 KB 59; Coogans v MacDonald [1954] SLT 279; R v Associated Northern Collieries (1910) 11 CLR 738; Taylor v Carmichael [1984] 1 NSWLR 421; Pyneboard Pty Limited v Trade Practices Commission (1983) 152 CLR 328; Daniels Corporation International Pty Limited v Australian Competition & Consumer Commission (2002) 77 ALJR 40 applied.

B.

The legislative history and statutory construction of Part 9.4B and s 206C of the Act demonstrate that the purpose of civil penalty provisions is to use disqualification orders as one of a range of penalties to regulate corporate officers’ behaviour. The imposition of a disqualification order pursuant to s 206C of the Act involves the imposition of a disability and constitutes a penalty or is in the nature of a penalty so as to attract penalty privilege. [205], [208], [220], [260], [264], [267], [269]

Police Service Board v Morris & Anor (1985) 156 CLR 397 applied; Morris v Police Service Board [1983] 2 VR 357; Gray v Motor Accident Commission (1999) 196 CLR 1; Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited (2003) 77 ALJR 1629 discussed.

C.

A substantive approach should be taken to determine whether discovery would subject an individual to a penalty or anything in the nature of a penalty. A disqualification order may have more than one function. It may have a penal quality sufficient to attract penalty privilege as well as a protective purpose. [168], [184]-[186], [225], [246], [258]–[262], [264], [266]

Bakker v Stewart [1980] VR 17; La Macchia v Minister for Primary Industry (1986) 72 ALR 23; Commissioner for Corporate Affairs v Bracht [1989] VR 821; Law Society of New South Wales v Foreman(No 2) (1994) 34 NSWLR 408; Re HIH Insurance Limited; ASIC v Adler (2002) 42 ACSR 80; ASIC v Rich (2003) 44 ACSR 682; Veen v The Queen [No. 2] (1988) 164 CLR 465, R v Cuthbert (1967) 86 WN (Pt. 1) (NSW) 272, The Gleaner Company Limited & Anor v Abrahams (Jamaica) [2003] 3 WLR 1038 referred to.

R v Vine (1875) LR 10 QB 195; Re a Solicitor’s Clerk [1957] 1 WLR 1219; NSW Bar Association v Evatt (1968) 117 CLR 177; Re Magna Alloys & Research Pty Limited (1975) 1 ACLR 203; Re Marsden (1981) 29 SASR 454; Nicholas v Commissioner for Corporate Affairs [1988] VR 289; Re Harrison (1998) 81 FCR 436; CAC (WA) v Ekamper (1987) 12 ACLR 519; ASC v Donovan (1998) 28 ACSR 583; ASC v Forem Freeway EnterprisesPty Ltd (1999) 30 ACSR 339; ASC v Kippe discussed and distinguished.

D.

The circumstance that Parliament (or a drafter) assumed that the antecedent law differed from the law as the Court finds it to be is not a reason for the Court refusing to give effect to the law. [265]

Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 at 505–506 per Mason CJ and Toohey J, at 556 per McHugh J applied.

E.

ASIC’s Notice of Contention should not be upheld. The penalty privilege extends to preclude the order for filing and serving of witness statements prior to the hearing of proceedings. [273]

Australian Securities & Investments Commission v FFE Building Services Limited (2003) ATPR ¶41-938 applied.

Sidebottom & Anor v Commissioner of Taxation (2003) 173 FLR 335 not followed.

Order
Appeal dismissed with costs.

CA 40402/03
EQ 5934/01

SPIGELMAN CJ
IPP JA
McCOLL JA
Wednesday 26 November 2003

John David RICH & Mark Alan SILBERMANN v THE AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION

Judgment

1 SPIGELMAN CJ: This is an appeal pursuant to leave granted on 10 July 2003, from an interlocutory decision of Austin J delivered on 17 April 2003 (ASIC v Rich [2003] NSWSC 328; (2003) 45 ACSR 305. The Australian Securities & Investment Commission (“ASIC”), the Plaintiff in proceedings before the Court, seeks an order that the Appellants, the Defendants in the proceedings, give general discovery and an order fixing a date for the service of a verified list of documents. ASIC also seeks a direction fixing a date for the filing of the affidavit evidence upon which the Appellants intend to rely, including any witness statements by the Appellants themselves to the extent that they intend to give evidence at the hearings. The two issues raised were characterised by Austin J, conveniently, as “the discovery issue” and “the witness statement issue”.

2 The Appellants are former directors of One.Tel Limited (In liq). In the principal proceedings ASIC alleges a range of contraventions by the Appellants of their statutory duty of care and diligence under s180(1) of the Corporations Act 2001 (Cth) (“the Act”). By way of relief ASIC seeks:

(i) Declarations pursuant to s1317E of the Act as to numerous alleged contraventions of s180(1) of the Act.

(ii) Orders pursuant to s206C and s206E of the Act that each Appellant be prohibited from managing a corporation for such period as the Court thinks fit.

3 A contravention of s180 does not constitute an offence. (Note the exclusion of Ch 2D from s1311(1A)(a).)

4 In s1317E of the Act, s180(1) is one of the provisions characterised as a “civil penalty provision”. If the Court is satisfied that a person has contravened such a provision then, pursuant to s1317E, the Court must make a declaration of contravention. Such a declaration must specify certain matters identified in s1317E(2), including the identity of the contravener and the conduct constituting the contravention.

5 Where a person has contravened a civil penalty provision in relation to a corporation, an order may be made under s1317H for the person to compensate the corporation. ASIC seeks orders pursuant to this section against each Appellant with respect to each of the alleged contraventions.

6 It is relevant to note that no relief is sought by ASIC pursuant to s1317G. That section authorises a court, which has made a declaration of contravention under s1317E, to order a person to pay to the Commonwealth what is described as a “pecuniary penalty” of up to $200,000.

7 ASIC does, however, seek orders under s206C and s206E. These sections are central to the appeal and relevantly provide:

“206C(1) On application by ASIC, the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if:

(a) a declaration is made under s1317E (civil penalty provision) that the person has contravened a civil penalty provision; and

(b) the Court is satisfied that the disqualification is justified

…

206E(1) On application by ASIC, the Court may disqualify a person from managing corporations for the period that the Court considers appropriate if:

(a) the person:

…

(ii) has at least twice contravened this Act while they were an officer of a body corporate

… and

(b) … the Court is satisfied that the disqualification is justified.”

8 The issue before Austin J, and before this Court, was whether the Appellants are entitled to resist the orders for discovery and for the filing of witness statements on the basis of the privilege against self-exposure to a penalty.

9 After a careful review of the authorities, his Honour concluded that the fact that disqualification orders were a principal component of the relief sought by ASIC did not make it appropriate to classify the proceedings as proceedings for the imposition of a penalty for the purposes of the privilege invoked by the Appellants. His Honour relied on case law, to which I will refer below, which characterised orders such as disqualification orders as protective rather than punitive in nature. His Honour also concluded that there was no real or appreciable risk that the Appellants, or other witnesses whose statements were likely to be provided, would be exposed to proceedings for a penalty.

Issues on the Appeal

10 The Appellants formulated the questions posed by the appeal as follows:

Corporations Act.

(b) The nature and extent of the privilege against exposure to a penalty.

(c) Whether orders which seek the permanent banning of a defendant from managing or being a director of a corporation attract the privilege against exposure to a penalty.

(d) Whether proceedings seeking orders which may be described as being for the protection of the public fall outside the ambit of the privilege against exposure to a penalty.

11 The issue before the Court is in a narrow compass. Mr B Walker SC, who appears for the Appellants, submitted that where a person is exposed to the risk of a disqualification order, such as an order under s206C or s206E, by reason of contravention of a statute, that order constitutes a penalty for purposes of the privilege invoked by the Appellants.

12 Mr R MacFarlan QC, who appeared for ASIC, submitted that where a disqualification order is imposed to protect the public, and not by way of punishment, the privilege does not apply. Mr MacFarlan invokes a body of cognate authority, on which Austin J relied, which draws such a distinction.

13 Mr MacFarlan submitted that the Appellants’ argument turns on the proposition that disqualification must necessarily constitute the imposition of a penalty and that the purpose of making an order is irrelevant.

14 Mr Walker submitted that there is no dichotomy between punishment and protection of the public. A court order may be both punitive and protective. The applicability of the privilege must focus on the consequences of the order which, in the case of an order disqualifying a person from being an officer of a corporation, is punitive in itself.

15 Mr Walker accepted that the imposition of a sanction, such as removal of a licence or privilege, may be protective but not necessarily punitive. However where, as here, the relevant event is a “contravention”, the sanction cannot be regarded as merely protective. It is also punitive.

16 The basic position of the parties to the appeal, on the basic issue “What is a penalty?”, is posed in terms of a choice between the purpose and the objective effect of an order of disqualification under s206C or s206E. This is an issue that can be approached at two levels. First, as an issue of statutory construction of s206C and s206E. Secondly, as an issue as to whether there is an exposure to a penalty in the particular circumstances of the case. This appeal was argued on the first basis only.

17 By Notice of Contention, the Respondent seeks to uphold the result on the witness statement issue, even if it should fail on the discovery issue. Austin J held that both issues were determined by his conclusion that the Appellants were not exposed to the imposition of a penalty.

The Penalty Privilege

18 The privilege against self-exposure to penalty has been referred to conveniently as the penalty privilege. (See Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 at 519 per Brennan J and 547 per McHugh J; Trade Practices Commission v Abbco Iceworks Pty Limited (1994) 52 FCR 96 at 135D per Gummow J.) The submissions in this case raise the issue of how the courts should determine whether a statutory sanction is a “penalty” for purposes of this privilege.

19 Some of the text writers identify the nature of the penalty in terms of a purpose of punishment. Wigmore on Evidence (McNaughton rev. 1961) vol 8 at §2257 (p336) said:

by way of punishment.

… When the penalty lies in the yielding up of a privilege, a distinction therefore seems proper between inflicting a punishment and restraining the continued improper exercise of functions. The process of impeachment of an official seems to fall in the former class but most other processes of removal or restraint (including disbarment) would ordinarily come within the latter description.” [Emphasis added, references omitted.]

20 To similar effect is the observation of A Ligertwood, Australian Evidence (3rd ed, 1998) at 326:

“The existence of the penalty privilege allows courts to uphold a claim for privilege where the legislature has seen fit to impose a punishment through the civil courts rather than the criminal courts.”

21 The case law which identifies the characteristics of a penalty is surprisingly limited. Most of the cases have been concerned with sanctions which are clearly identified as penalties and are of limited assistance in this respect. The word “penalty” appears in many different contexts, both statutory and at common law. This case is concerned with the penalty privilege and the meaning of the word in that context must be the focus of attention. (See e.g. Adams v Batley (1887) 18 QBD 625 at 629 per Lord Esher MR; Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725 at 733 per Lord Esher MR.) The word “penalty” may have the same connotation but its denotation may differ, particularly from one statutory context to another. (Cf R v Vine (1875) LR 10 QB 195 at 199 per Cockburn CJ and Re Pulborough School Board at 738-739 per Lopes LJ.)

22 There are cases on the penalty privilege which emphasise the purpose of punishment. Other cases distinguish a penalty from compensation, in the context of a sanction for contravention of a statute.

23 In Smith v Read (1737) 1 Atk 527; 26 ER 332, Lord Hardwicke LC said at 332:

“… there is no rule more established in equity, than that a person shall not be obliged to discover what will subject him to a penalty, or any thing in the nature of a penalty.

inflicted as a penalty

24 His Lordship concluded that a statutory prohibition on a Roman Catholic – a “papist” in the argot of the time – acquiring property was a “penal statute”. His Lordship added:

imposed as a penalty”.

25 Similarly in Police Service Board v Morris (1985) 156 CLR 397 at 403, Gibbs CJ, referred to texts which treated exposure to “any kind of punishment” as equivalent to “anything in the nature of a penalty”.

26 In Adams v Batley, the penalty privilege was held not to apply to breach of a statute creating a copyright in the performance of an unpublished dramatic work. (The statute is conveniently set out in Wall v Taylor [1883] 11 QBD 102 at 104.) The statute provided that an infringer, referred to as “an offender”, was liable to pay an amount not less than forty shillings or the amount of benefit or advantage or the loss incurred. Lord Esher MR said at 629:

Martin v Treacher

It is imposed not as a punishment upon the defendant, but as compensation to the plaintiff

“I am of opinion, therefore, that this is not a penalty so as to bring the case within the rule that in actions for penalties interrogatories should not be allowed to be administered to the defendant.”

27 This judgment is to be contrasted with the later case of Saunders v Wiel [1892] 2 QB 18 (QB) and 321 (CA), which involved infringement of a copyright in a design. The statute provided:

“Any person who acts in contravention of this section shall be liable for every offence to forfeit a sum not exceeding 50 [pounds] to the registered proprietor of the design, who may recover such sum as a simple contract debt by action.”

28 Both Courts distinguished Adams v Batley and concluded that the statutory provision provided for a penalty, rather than a payment by way of compensation. Consistently with his earlier reasoning in Adams v Batley, Lord Esher MR said at 322:

“The question raised in this appeal is whether the action is brought for a penalty by way of a penalty – that is, by way of punishment, as it was put in the course of argument. If it is so brought, it is admitted that interrogatories should not be administered to shew that the defendant has made himself liable to that penalty …”

29 The distinction between “penalty” and “compensation” is a purposive distinction. It is not a distinction based on consequences. An amount payable by way of compensation, which has no necessary relationship to the profit obtained by the infringer, may be more burdensome than any penalty imposed by way of fine or otherwise.

30 There is, however, no authority which clearly establishes that a purposive distinction, such as that between “penalty” and “compensation”, can also be drawn between “penalty” and “protection”, with respect to the application of the penalty privilege.

31 The High Court has recently identified the basic purpose of the penalty privilege in a four judge joint judgment (Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission [2002] HCA 49; (2002) 77 ALJR 40). Although that case was concerned with legal professional privilege, this Court should, even if not technically bound to do so, give a statement of this character, in so recent a judgment of the High Court, a high level of persuasive force.

32 The joint judgment of Gleeson CJ, Gaudron, Gummow and Hayne JJ said at [31]:

“Today the privilege against exposure to penalties serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it.”

33 Counsel for the Appellants relied upon this sentence from Daniels before Austin J and his Honour dealt with in the following way at [28]:

“In my opinion, that sentence is not determinative of any question before me. If it were clear that the present case were one where a person ‘alleges criminality or other illegal conduct’, in the sense intended by their Honours, then I would apply the privilege and decline to order discovery or the filing of witness statements before the trial. But their Honours cannot have intended that their proposition should apply whenever a plaintiff alleges illegal conduct in civil proceedings, otherwise discovery and the filing of witness statements before the trial would not be appropriate in any civil proceedings involving an allegation of contravention of a provision of the Corporations Act, or (say) involving contractual illegality. It seems to me unlikely, in the context in which it appears, that the sentence was intending to broaden the scope of the privilege, or to do anything other than reflect the general availability of the privilege after the Judicature Act.”

34 The sentence from [31] in Daniels did not propound the purpose there identified as a complete statement of the relevant purposes. The identified purpose would not, in terms, apply to the application of the doctrine in a context not properly described as “criminality or other illegal conduct”, e.g. the application of the privilege when a court of equity grants relief against the imposition of a penalty in contractual disputes or forfeiture of property interests (see TPC v Abbco Iceworks at 143D-E per Gummow J). I do not understand the sentence to be propounded as a complete statement of the circumstances in which the privilege would apply. Accordingly, it is not necessary to have “illegal conduct”. The issue is whether such is sufficient.

35 The matter of significance for the present proceedings is the emphasis that the Court has given to the purpose extending beyond “criminality” to “other illegal conduct”. Where, as here, a sanction may be imposed by reason of a “contravention” the terminology adopted by the High Court as describing the basal purpose of the privilege may have application.

36 Immediately before the sentence I have extracted above, the joint judgment quoted from the joint judgment in Naismith v McGovern (1953) 90 CLR 336 at 341-342 where the Court had said:

nemo tenetur seipsum prodere’

37 Furthermore, the authority cited for the critical sentence in [31] of Daniels was the judgment of Burchett J in Abbco Iceworks at 129. The relevant passage is:

Caltex

‘In the end, [the privilege] is based upon the deep-seated belief that those who allege the commission of a crime should prove it themselves and should not be able to compel the accused to provide proof against himself.’

Substituting ‘the incurring of a penalty’ for ‘the commission of a crime’ and ‘the defendant’ for ‘the accused’, I think this statement applies to the privilege against self-exposure to a penalty.”

Bridal Fashions Pty Ltd v Comptroller-General of Customs

38 In Daniels at [31] the joint judgment went on to affirm the conclusion reached in Abbco Iceworks that the penalty privilege is not available to corporations by extension of the decision that the privilege against self-incrimination is not available to corporations. Burchett J referred to the joint judgment in EPA v Caltex. I note that the passage relied upon by Burchett J, (being the last of four occasions that the proposition is enunciated at 527.5, 528.3, 528.7 and 532.8), was an important step in the reasoning by which Deane, Dawson and Gaudron JJ arrived, in dissent, at the conclusion that the privilege against self-incrimination was available to corporations, i.e. the opposite conclusion than Burchett J reached in respect of the penalty privilege in Abbco Iceworks as affirmed in Daniels.

39 Nevertheless, unlike Burchett J in Abbco Iceworks, and the Full Court in Bridal Fashions, the joint judgment in Daniels did not assimilate the position between the two privileges. The Court clearly distinguished them when it said that the penalty privilege does “bear some similarity with the privilege against incrimination” ([13]).

40 Indeed in par [31], the joint judgment suggested that there may be a substantial difference between the two privileges when it said:

“However, there seems little, if any, reason why that privilege should be recognised outside judicial proceedings. Certainly, no decision of this Court says it should be so recognised, much less that it is a substantive rule of law.”

41 There was no rejection of earlier judgments in which the Court recognised that the privilege against self-incrimination is available in non-judicial proceedings. (See Sorby v the Commonwealth (1983) 152 CLR 281 at 309; Pyneboard Pty Ltd v Trade Practices Commission 152 CLR 328 at 341; Police Service Board v Morris at 403.)

42 The joint judgment in Daniels analysed legal professional privilege as a rule of substantive law and accordingly, characterised it as an important common law right or immunity (see at [9]-[11]). As a rule of substantive law it was not confined to the giving of evidence in judicial proceedings (at [10]). In an earlier joint judgment in Reid v Howard (1995) 184 CLR 1 at 11-12, Toohey, Gaudron, McHugh and Gummow JJ had described the privilege against self-incrimination as a “basic and substantive common law right”. After the joint judgment in Daniels the penalty privilege cannot be regarded as equivalent in this respect. (Contrast Australian Securities and Investments Commission v Plymin (2002) 4 VR 168 at 169 per Mandie J.)

43 There are a number of aspects of the law affecting penalty privilege which may require more detailed analysis on an appropriate occasion. For example, in Daniels at [13], the joint judgment concluded that the penalty privilege had its origins in the rule of equity relating to discovery. This stands in contrast with the analysis of Mason ACJ, Wilson and Dawson JJ in Pyneboard at 336-337 and of McHugh J in EPA v Caltex at 547, where the conclusion was that equity adopted an existing model from the common law. (Referring to Pye v Butterfield (1864) 5 B & S 829; 122 ER 1038 at 1042; Mexborough (Earl of) v Whitwood Urban District Council [1897] 2 QB 111 at 114-115, 116, 121.) The understanding of the historical development of these privileges has changed in recent times. (See Azzopardi v The Queen (2001) 205 CLR 50 at [118]-[163] per McHugh J; R H Helmholz et al, The Privilege Against Self Incrimination: Its Origins and Development, Uni of Chicago Press, 1997; S McNicol Law of Privilege, LBC, 1992 at 137-139.)

44 A noteworthy feature of the joint judgment in Daniels is that the word “self” is not used in the traditional characterisation of “self-incrimination” or “self-exposure” to penalty. It is not clear whether this was intended as a development of the law. In Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385 at 393, Gibbs CJ, Mason and Dawson JJ said:

“The privilege is not a privilege against incrimination; it is a privilege against self-incrimination.”

EPA v Caltex

45 The Appellants’ submissions in this Court emphasise the significance of “contravention” as the essential trigger for the power to order disqualification under each of the relevant sections. This is an important factor in characterising the power for purposes of the penalty privilege. Nevertheless, there is a formidable body of case law which characterises the power in a corporations law context as protective, in a manner intended to indicate that that characterisation operated to the exclusion of any characterisation of the power as a “punishment” or “penalty”. The Appellant cannot point to any equivalent body of authorities supporting their case. In my opinion, the joint judgment in Daniels should not be taken to have qualified such application as this line of authority may have to the penalty privilege.

46 In par [31] of Daniels, the Court was not directing its attention to the issue of when a consequence or remedy or sanction can be classified as a penalty for purposes of the penalty privilege. Their Honours should not be taken to have determined, albeit obiter, that whenever there is “illegal conduct”, such as the contravention of a statute, any sanction must be treated as a penalty for purposes of the penalty privilege. To say that a legal rule or principle has a “purpose” does not necessarily suggest that anything which may be seen to serve the purpose falls within the rule or principle. Such a statement cannot be treated as if it were a provision in a bill of rights which is to be applied to particular factual circumstances by a process of interpretation. This is particularly the case as the joint judgment in Daniels itself affirms that the penalty privilege, unlike legal professional privilege and, probably, the privilege against self-incrimination, is not a substantive rule of law.

47 The history of the penalty and of the cognate privileges, indicates that the purpose or purposes to be served by such privileges is often multifaceted and does vary over time. (Wigmore on Evidence, vol 8 at §2251 identifies twelve different policies served by the self-incrimination privilege.) The purpose identified in [31] of Daniels that a person who alleges “illegal conduct” must prove it, does not require the conclusion that every sanction flowing from a contravention of a statute is a penalty for purposes of the penalty privilege.

The Punitive / Protective Distinction

48 Austin J placed particular reliance on a long line of authority which identifies orders for the disqualification of persons from being involved in the management of corporations as having a “protective” rather than a “punitive” purpose. His Honour said:

“[31] There is a line of authorities to the effect that the making of disqualification orders against directors of a company has a protective rather than a punitive purpose. The point is usually made by way of guidance for the setting of an appropriate term of disqualification. Since the purpose of disqualification is to protect the public, rather than to punish, conduct that severely damages the financial interests of investors might attract a long period of disqualification even though it is not culpable conduct in a moral sense.

Redfern v Redfern

Chew v NCSC

49 After consideration of the authorities his Honour concluded:

“[53] In my opinion the authorities lead to this conclusion: the fact that disqualification orders are a principal component of the relief sought by the Commission does not make it appropriate to classify the proceedings as proceedings for the imposition of a penalty, for the purposes of the privilege against providing information or documents in proceedings for the recovery of a penalty.”

50 The distinction between a “protective” and a “punitive” purpose has been made in numerous legal contexts. In an immigration context concerned with the constitutional validity of detention, McHugh J said that detention:

“… is ordinarily characterized as punitive in character, it cannot be so characterized if the purpose of the imprisonment is to achieve some legitimate non-punitive object.”

Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs

51 In the same case in a joint judgment Brennan, Deane and Dawson JJ said at 28:

“… committal to custody awaiting trial is not seen by the law as punitive …”

52 The distinction has also been made in the context of determining whether a statute is penal for purposes of the application of the principle of statutory interpretation that a penal enactment is presumed not to have retrospective effect.

53 In R v Vine, Cockburn CJ said at 199:

“… here the object of the enactment is not to punish offenders, but to protect the public against public-houses in which spirits are retailed being kept by persons of doubtful character.”

54 To similar effect was the reasoning of Mellor J who said at 200:

“It appears to me to be the general object of this statute that there should be restraints as to the persons who should be qualified to hold licences, not as a punishment, but for the public good, upon the ground of character.”

55 Accordingly, by majority, the Court concluded that the statute applied to persons who had been convicted prior to the passage of the relevant legislation.

56 The issue also arose in Re Pulborough School Board in the context of the consequences ensuing upon a person becoming bankrupt. One of the consequences was the disqualification of the person from serving as a member of the school board.

57 Davey LJ said at 741:

“This Act is not a School Board Act, but a Bankruptcy Act for the primary purpose of defining the liabilities and consequences of bankruptcy, and although the section in question is no doubt dictated by regard to the public interest, it does impose disabilities and consequences of a serious character on persons adjudged bankrupt, and is in that sense and to that extent a penal enactment.”

58 Lord Esher MR, dissenting, said at 733:

“… the section is not penal within the meaning which must be put on that expression for the purpose of determining whether a statute can be treated as retrospective. I cannot think that the legislature intended these disqualifications as punishments, for by the same section it appears that the disqualifications are to be removed if the debtor obtains a certificate to the effect that his bankruptcy was caused by misfortune, without any misconduct on his part. To my mind, to say that the legislature intended to punish a debtor of whom that can be said would be to charge the legislature with injustice. The disqualifications are intended solely for the protection of the public, and not by way of punishment.”

R v Vine

59 In a context closer to that presently under consideration, namely the disqualification of a professional person, the High Court said in Clyne v NSW Bar Association (1960) 104 CLR 186 at 201-202:

“Although it is sometimes referred to as ‘the penalty of disbarment’, it must be emphasised that a disbarring order is in no sense punitive in character. When such an order is made, it is made, from the public point of view, for the protection of those who require protection, and from the professional point of view, in order that abuse of privilege may not lead to loss of privilege.”

60 Similarly, the High Court said in NSW Bar Association v Evatt (1968) 117 CLR 177 at 183-4:

“The power of the Court to discipline a barrister is, however, entirely protective, and, notwithstanding that its exercise may involve a great deprivation to the person disciplined, there is no element of punishment involved.”

61 To similar effect are the observations of the Full Federal Court in R v Davis (1995) 81 A Crim R 156 at 162:

“Although an order striking a practitioner’s name from the register ordinarily has serious consequences for the practitioner, such an order is made to protect the public, not to punish the practitioner.”

Walton v Gardiner

Law Society of NSW v Foreman

62 The proposition that disqualification from legal practice is imposed for a protective purpose and is not, notwithstanding the severity of the consequences, imposed by way of punishment is of long standing, going back at least as far as Lord Mansfield. (See Ex parte Brounsall (1778) 2 Cowp 830; 98 ER 1385; In the Matter of King (1844) 8 QB 129; 115 ER 823 at 824; Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655 at 680; The Southern Law Society v Westbrook (1910) 10 CLR 609 at 625.)

The Corporations Law Cases

63 The dichotomy, which Mr Walker SC urged the Court to reject as a false dichotomy, has proven useful in disparate areas of the law. The line of authority on which Austin J relied is longstanding and unanimous in drawing the distinction in a number of corporations law contexts involving disqualification. The formidable body of judicial statements, many made by judges with great experience in corporations law, has built up over decades. These statements would have been relied upon by the drafters of the corporations legislation which has been amended numerous times over the period. This Court should be very slow to reject the dichotomy in favour of giving determinative effect to consequences, rather than purpose, for which proposition the authorities are few. There are many cases in which loss of office or loss of civil status has been found to be a penalty, however the case law on corporations legislation suggests that disqualification from participation in the management of corporations should not be so regarded.

64 In the context of s117 of the Companies Act 1961, by force of which an undischarged bankrupt was disqualified from participation in the management of a corporation, subject to a discretion reposed in the Court to permit participation, Street J said in Re Altim Pty Ltd and the Companies Act 1961 [1968] 2 NSWR 762 at 764:

“It should be borne in mind that the section is not in any sense a punishment of the bankrupt. Nor should a refusal to grant leave under that section be regarded as punitive. The prohibition is entirely protective, and the power of the Court to grant leave is to be exercised with this consideration in the forefront.”

65 The same approach was adopted in subsequent cases on s117. (See Poyser v Commissioner for Corporate Affairs [1985] VR 533 at 537 per Murphy J.) It was also applied to the successor provision in s227 of the Companies Code 1981. (See Commissioner for Corporate Affairs v Bracht [1989] VR 821 at 827 per Ormiston J.)

66 In Re Magna Alloys & Research Pty Limited (1975) 1 ACLR 203, Bowen CJ in Eq was concerned with s122 of the Companies Act 1961 which permitted an order for disqualification to be made by the Court after a conviction. His Honour said at 205:

“The section is not punitive. It is designed to protect the public and to prevent the corporate structure from being used to the financial detriment of investors, shareholders, creditors and persons dealing with a company.”

67 The distinction was relied upon in other authorities on s122. (See Re Ferrari Furniture Co Pty Ltd and the Companies Act [1972] 2 NSWLR 790 at 791 per Street J, applying Re Altim, and the joint judgment of Young CJ, Lush and Marks JJ in the Full Court of the Supreme Court of Victoria, Zuker v Commissioner for Corporate Affairs [1981] VR 72 at 77.)

68 Section 122 of the 1961 Uniform Companies Act was an automatic disqualification provision upon conviction and is the predecessor of s206B of the Act.

69 Section 562A(3) of the Companies Code 1981, which is a predecessor of s206F of the Corporations Law 1991 (“the Law”) and of the Act presently under consideration, was similarly characterised as protective in the case law. (See Nicholas v Commissioner for Corporate Affairs (1986) 5 ACLC 258 per O’Bryan J; and on appeal [1988] VR 289 at 299 per Kaye J and 305 per Fullagar J; Friend v CAC (1989) 7 ACLC 106 at 115 per Powell J.)

70 Directly in point for the present proceedings is s1317EA(3)(a) of the Law, the immediate predecessor of s206C of the Act, which was also characterised as “protective”. (See Re Tasmanian Spastics Association; ASC v Nandan (1997) 23 ACSR 743 at 751 per Merkel J; ASC v Donovan (1998) 28 ACSR 583 at 602 per Cooper J; ASC v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 at 349-350 per Madgwick J; ASIC v Pegasus Leveraged Options Group Pty Limited (2002) 41 ACSR 561 at [105] per Davies AJ; Re HIH Insurance Limited (In prov liq); ASIC v Adler (2002) 42 ACSR 80 at [56] per Santow J, where his Honour summarised this long line of authority.)

71 The position was most recently affirmed in this Court on appeal from the last-mentioned decision when the Court referred to:

“… a disqualification order made not punitively but protectively.”

Adler v ASIC

72 I note also that the protective/punitive distinction had been made when considering revocation of dealers licenses under s60 and s62 of the Securities Industry Code 1961. See Story v National Companies and Securities Commission (1988) 13 NSWLR 661 at 686 per Young J.

73 As Austin J indicated in his reasons, these cases are not determinative of the present proceedings by reason of the fact that none involved the application of the common law penalty privilege. The characterisation as “protective”, often with the distinction that the sanction was not “punitive”, was made for other corporations law purposes. Nevertheless, the distinction is well established in a cognate context.

74 Australian Securities Commission v Kippe (1996) 67 FCR 499 to which Austin J referred, and which the Respondent’s submissions in this Court emphasised, did raise the issue of privilege, but did so in a statutory context. By s830 of the Law the then Commission was empowered to make a banning order which prohibited a person from acting as a representative of a dealer or investment adviser.

75 The Commission conducted an investigation under s19 of the Australian Securities Commission Act 1989 (Cth). Section 68 of that Act provided that a statement made in the course of an investigation was not admissible as evidence in “a proceeding for the imposition of a penalty” (s68(3)(b)). The Administrative Appeals Tribunal, which was conducting a review of the Commission’s decision to make a banning order held that these proceedings were proceedings “for the imposition of a penalty” and accordingly that the statements sought to be relied on by the Commission were not admissible. This conclusion was rejected by the Full Court of the Federal Court (von Doussa, Cooper and Tamberlin JJ).

76 At 506 the Court referred to the authorities, commencing with Magna Alloys which made the distinction between “punitive” and “protective” statutory provisions, and described the distinction as “well settled” (506F). The Court also referred to the professional disciplinary cases.

77 The Court noted the special statutory context with which it was concerned and said at 507G:

for

78 In this respect the decision is distinguishable, as the Court was not concerned, as these proceedings are concerned, with the penalty privilege at common law. Nevertheless, at least in a context where the sole purpose of a statutory provision is protective in the sense that punishment is not a purpose of the statutory power (I make no observation on the Full Court’s references to “predominant purpose”) then the reasoning in Kippe is, by analogy, pertinent to the present proceedings.

79 The Full Court concluded at 508A-B:

“If the question is asked as to whether the purpose of a proceeding which may result in a banning order is for the imposition of a penalty, the short answer is that it is not for such a purpose. Although a banning order has the consequence of excluding an individual from acting as a representative of a dealer or investment adviser, the making of such an order is not designed to punish or impose a penalty on that person for an offence or contravention of any norm of conduct …

punish or penalise

imposition

80 This last passage emphasises the significance of the statutory context of the sanction power in the process of determining whether it is “a penalty”. This was said for purposes of determining the meaning of the word “penalty” in a statutory context, albeit a provision plainly derived from the common law penalty privilege. Kippe does, however, suggest that the context of a statutory power to impose a sanction must be considered when determining whether or not the sanction is a “penalty” for purposes of the application of the common law penalty privilege. I will return below to the statutory context relevant to the present proceedings.

Consequences

81 The case law which characterises provisions as protective rather than penal is replete with references to the severity of the consequences for the particular individual, see e.g. Tasmanian Spastics at 751-752. There are, of course, authorities which do emphasise the significance of the consequences of disqualification and I accept that that is a material consideration to be taken into account when determining whether or not a particular sanction should be characterised as a “penalty” for purposes of the penalty privilege. Severity of consequences is not, however, in my opinion determinative in every case.

82 The issue of the penalty privilege arose in the case of In re a Debtor [1910] 2 KB 59. In the basal Australian authority on this area of the law, R v Associated Northern Collieries (1910) 11 CLR 738 at 747.6, Isaacs J characterised the import of this case to the effect that “the loss of civil status” constituted “a penal consequence” for purposes of the penalty privilege.

83 In In re a Debtor, Fletcher Moulton LJ said at 66:

in its consequences

Taylor v Carmichael

84 The loss of status considered in these cases was not explained in terms of protective purpose. There is a focus on the severity of consequences.

85 In Re One.Tel Limited (In liq); ASIC v Rich (2003) 44 ACSR 682, Bryson J had before him a former joint managing director of One.Tel Limited, Mr Bradley Keeling. The case involved an application to the Court to make declarations and orders which were agreed between the parties, disposing of the proceedings. These included consent orders pursuant to s206C and s206E, prohibiting Mr Keeling from managing corporations for ten years. The present Appellants were represented in the proceedings because of the possible implications of the settlement upon their own cases. They submitted that the consent orders ought not be made at that time.

86 In determining that the agreed period of disqualification of ten years was appropriate Bryson J said:

“[25] Disqualification is directed both at protection of the public and also at the operation of disqualification as a penalty on the person disqualified. In this case disqualification is the only penalty proposed; there is no proposed pecuniary penalty…”

87 His Honour referred to s206C and s206E and to the fact that he had had a number of prior authorities drawn to his attention including Re HIH Insurance; ASIC v Adler at par [56] where Santow J reviewed the reported cases. His Honour added:

“[26] … I must respectfully say that I find a distinction between motives of deterrence and a punitive motive as difficult, in practical terms impossible to sustain. The punitive impact of such an order must be recognised; courts apply punitive measures with care, avoid excessive measures and have regard to the circumstances of individuals. No-one should be sacrificed to the public interest.”

88 For some purposes it may be appropriate to characterise the consequences of a sanction in terms of language such as “punitive” and “punishment”. That does not however determine the issue of characterisation with respect to the application of the penalty privilege.

89 There is an ambiguity, in the sense of inexplicitness, in the use of general terms such as “punitive”, “punishment” or “penalty”. Each of these words may signify different matters in different contexts. A criminal sentence, for example, is often referred to as a “punishment” or as a “penalty”. That is so even though the sentence is to serve a number of disparate objectives including retribution, specific and general deterrence and/or rehabilitation. Another sense of the word “punishment” would be to restrict that term to the retributive element in a sentence.

90 It is, as Mr Walker SC submitted, appropriate to characterise criminal sentences as being for the protection of the public. That is because the basic function of the criminal law is the protection of the community from crime. (See e.g. R v Geddes (1936) 36 SR (NSW) 554 at 555 per Jordan CJ; R v Cuthbert [1967] 2 NSWR 329 at 330 per Herron CJ.) In a sense, therefore, all relevant elements in the criminal sentence including retribution, deterrence and rehabilitation can be described as the means by which the overriding purpose of the protection of society from crime is to be achieved. Nevertheless, there will be circumstances in which it is appropriate to emphasise, or even to limit, the element of “punishment” to the purpose of retribution, to the exclusion of other purposes served by the imposition of a sentence.

91 Mr Walker SC placed particular reliance on the High Court judgment in Police Service Board v Morris. However, in that case there was no distinction sought to be made between the kinds of sanctions available. The case proceeded on the basis that the police officers facing disciplinary proceedings were exposed to all the sanctions available under the relevant regulations (see at 403). Those sanctions expressly included a monetary penalty. Furthermore, the loss of status said to be equivalent to the disqualification in the present case was the express power given to the relevant disciplinary tribunal to reduce an officer in rank or to dismiss that officer from the force. I do not regard those orders as necessarily equivalent to the loss of status involved in a disqualification order from managing a corporation. Reduction in rank and dismissal from employment may very well be imposed for the purpose of punishment, and not for the purpose of protecting the public. Nothing in the statutory context considered by the court in Police Service Board v Morris suggests that it is equivalent to the context presently under consideration.

92 The authorities which make reference to consequences do suggest that this is a matter appropriate to be considered when determining whether or not a sanction should be characterised as a penalty for purposes of the penalty privilege. They do not, however, require the Court to reject the long-established punitive/penal distinction based on purpose to which I have referred.

93 It is not, in my opinion, possible to answer the question whether exposure to the risk of loss of office or of civil status constitutes a penalty for purposes of the penalty privilege merely by characterising the effect of such a sanction. It is necessary to determine the purpose of the sanction in accordance with the particular legislative scheme under consideration.

The Statutory Context

94 With respect to the relevant statutory duty of care and diligence under s180(1) of the Act, formerly found as s232(4) of the Corporations Law 1991, the history of the sanction for disqualification has gone through three distinct stages, since 1991.

95 As originally enacted, the contravention of s232(4) of the statutory duty constituted an offence under s1311 of the Law. At first, pursuant to Schedule 3, the penalty was a fine of $5,000. Furthermore, where a person had been convicted of an offence, the Court was empowered to order the person to pay compensation to the corporation pursuant to s232(7). The corporation itself could recover profits earned or damages it suffered as a result of the contravention, whether there had been a conviction or not, pursuant to s232(8).

96 At this stage, there was no provision empowering the Court to disqualify a person from managing the affairs of a corporation by reason of a contravention of s232. There were, however, other statutory provisions empowering the Court to make such orders.

97 Pursuant to s230 of the Law, where a corporation of which a person was an officer or the person “repeatedly breached relevant legislation”, the Court could make an order prohibiting the person from managing a corporation. Pursuant to s599, in a number of situations, particularly where a company had been wound up because of inability to pay its debts, a court could prohibit a person from managing a corporation if that person had been a director of two or more such companies over a period of seven years. Finally, pursuant to s600, the Commission could, by notice, prohibit a person from managing a corporation where a liquidator had presented a report containing certain conclusions indicating misconduct by the person.

98 The second stage commenced with the Corporate Law Reform Bill 1992 which inserted a new Pt 9.4B into the Act which made comprehensive provision for a new regime of “civil penalties”. Section 232(4) was identified as a civil penalty provision. Sections 230, 599 and 600 continued in existence.

99 Section 1317EA(3) empowered the court, where there had been a contravention of a civil penalty provision, to prohibit a person from managing a corporation. Section 1317EA(3) also empowered the court to order the person to pay a pecuniary penalty. By s1317EA(4), the court was directed not to make an order of disqualification if it was satisfied that “the person is a fit and proper person to manage a corporation”. By s1317EA(5), the court was directed not to make an order imposing a penalty unless it was “satisfied that the contravention is a serious one”. Section 1317HA empowered the court to order a person to pay compensation to the corporation. By s1317HD, a corporation could recover either profits made or losses suffered, from a person who contravened a civil penalty provision, whether or not the person had been convicted of an offence, or had been subject to a civil penalty order.

100 The Corporate Law Reform Bill 1992 implemented the recommendations of the Senate’s Standing Committee on Legal and Constitutional Affairs Company Directors’ Duties: Report on the Social and Fiduciary Duties and Obligations of Company Directors 1989 (generally referred to as the “Cooney Committee Report”). The regulatory philosophy underlying this report was the desirability of establishing a clear pyramid of enforcement containing a hierarchy of sanctions. There was, however, criticism of the extent to which the new Pt 9.4B implemented this philosophy (see e.g. Helen Bird, “The Problematic Nature of Civil Penalties in the Corporations Law” (1996) 14 Companies and Securities Law Journal 405).

101 For present purposes, it is relevant to note that s1317EA(5) to which I have referred to above, makes it clear that the imposition of a pecuniary penalty was higher in the pyramid of sanctions than an order prohibiting a person from managing a corporation. Such a hierarchy was first outlined in an explanatory paper accompanying the first draft of the Bill which stated:

“178. It is expected that in settling an appropriate order, the Court would first give consideration to whether it should impose a civil penalty disqualification. The issue should be whether the defendant’s conduct, whilst not criminal in nature, was so reprehensible and had such serious consequences as to warrant an order prohibiting the person from managing a corporation. For example, if gross negligence by a director had led directly to massive losses for shareholders, the Court may consider that a director should be disqualified for a substantial period, even where there was no question of a dishonest intent. The emphasis should be on preventing a recurrence of the contravention by the defendant, and providing a deterrent to other persons involved in the management of corporations. It is expected that the Courts would consider imposing a pecuniary penalty only if it considered that a civil penalty disqualification provided an inadequate or inappropriate remedy.”

102 As at the time that this was written, the Bill did not contain as part of what was then proposed to be s1317AJ, the equivalent of s1317EA, any subsection in the terms of subss (4) and (5) of s1317EA as enacted. (See Corporate Law Reform Bill 1992: Draft Legislation and Explanatory Paper, AGPS, Canberra, February 1992 at pp50-51.) The addition of these subsections was not explained in the final Explanatory Memorandum for the 1992 amendments, but it is clear what their import is for present purposes. (See par [99] above.)

103 The third stage was the insertion of Pt 2D.6 into the Law, which is retained in the Act, by the Corporate Law Economic Reform Program Act 1999. The Explanatory Memorandum for that Amendment Act, suggested that a number of provisions constituted no more than a “rewrite”. Included in the provisions so characterised was the civil penalty provisions. (See par 6.127 of the Explanatory Memorandum.)

104 The effect of the new Pt 2D.6 was to bring together in one place the various sections concerning disqualification of persons from the management of corporations. I list the sanctions of the Act, referring to the provision of the Corporations Law as originally enacted, from which the present provisions were drawn:

(i) Section 206B makes provision for automatic disqualification upon conviction of certain offences, drawn from s229 of the Law.

(ii) Section 206C gives the Court power to order disqualification where a declaration is made under s1317E, drawn from s1317EA(3)(a).

(iii) Section 206D empowering the Court to disqualify persons in the case of repeated involvement in the failure of corporations, for which special provision had been made under s599 of the Law.

(iv) Section 206E empowering the Court to order disqualification of a person where there have been two or more relevant contraventions, is derived from the power in s230 of the Law with respect to situations where legislation has been “repeatedly breached”.

105 The end result of these changes is that the immediate statutory context of the provisions which fall to be construed in the present proceedings is an integrated set of provisions in a Part accurately entitled “Disqualification from managing corporations”. Section 206C, although it contains within itself the requirement that a declaration is made under s1317E, is no longer found in the context of a pyramid or hierarchy of sanctions for contravention of a civil penalty provision. Perhaps more significantly, for present purposes, s206E, with respect to repeated contraventions, and upon which reliance is placed in the present proceedings, has never been part of the civil penalty provisions. As I mentioned it finds its origin in s230 of the Law.

106 Section 206E, upon which the Respondent also relies in the present proceedings, turns on multiple “contraventions” of the Act, not on contraventions of civil penalty provisions. This contrasts with s206C which requires a declaration under s1317E. Nevertheless, s206C and s206E operate in the same way. Indeed, any situation in which there was more than one contravention of a civil penalty provision, would also fall within s206E.

107 It is relevant to set out some of the other sections of Pt 2D.6:

“206B(1) A person becomes disqualified from managing corporations if the person:

(a) is convicted on indictment of an offence that:

(i) concerns the making, or participation in making, of decisions that affect the whole or a substantial part of the business of the corporation; or

(ii) concerns an act that has the capacity to affect significantly the corporation’s financial standing; or

(b) is convicted of an offence that:

(i) is a contravention of this Act and is punishable by imprisonment for a period greater than 12 months; or

(ii) involves dishonesty and is punishable by imprisonment for at least 3 months; or

(c) is convicted of an offence against the law of a foreign country that is punishable by imprisonment for a period greater than 12 months.

The offences covered by paragraph (a) and subparagraph (b)(ii) include offences against the law of a foreign country.

(2) The period of disqualification under subsection (1) starts on the day the person is convicted and lasts for:

(a) if the person does not serve a term of imprisonment – 5 years after the day on which they are convicted; or

(b) if the person serves a term of imprisonment – 5 years after the day on which they are released from prison.

(3) A person is disqualified from managing corporations if the person is an undischarged bankrupt under the law of Australia, its external territories or another country.

(4) A person is disqualified from managing corporations if:

Bankruptcy Act 1966

…

206D(1) On application by ASIC, the Court may disqualify a person from managing corporations for up to 10 years if:

(a) within the last 7 years, the person has been an officer of 2 or more corporations when they have failed; and

(b) the Court is satisfied that:

(i) the manner in which the corporation was managed was wholly or partly responsible for the corporation failing; and

(ii) the disqualification is justified.

(2) For the purposes of subsection (1), a corporation fails if:

(a) a Court orders the corporation to be wound up under section 459B because the Court is satisfied that the corporation is insolvent; or

(b) the corporation enters into voluntary liquidation and creditors are not fully paid or are unlikely to be fully paid; or

(c) the corporation executes a deed of company arrangement and creditors are not fully paid or are unlikely to be fully paid; or

(d) the corporation ceases to carry on business and creditors are not fully paid or are unlikely to be fully paid; or

(e) a levy of execution against the corporation is not satisfied; or

(f) a receiver, receiver and manager, or provisional liquidator is appointed in relation to the corporation; or

(g) the corporation enters into a compromise or arrangement with its creditors under Part 5.1; or

(h) the corporation is wound up and a liquidator lodges a report under subsection 533(1) about the corporation’s inability to pay its debts.

(3) In determining whether the disqualification is justified, the Court may have regard to:

(a) the person’s conduct in relation to the management, business or property of any corporation; and

(b) any other matters that the Court considers appropriate.

…

206F(1) ASIC may disqualify a person from managing corporations for up to 5 years if:

(a) within 7 years immediately before ASIC gives a notice under paragraph (b)(i):

(i) the person has been an officer of 2 or more corporations; and

"...where a charge of misconduct is made against an officer, whether amounting to an indictable offense, or only to his discredit as such officer, which might furnish grounds for his removal or impeachment, he is not bound to be a witness against himself. ... An inquisitorial examination, under oath, of a person charged with an offense, is repugnant to the principles of personal liberty, which are embodied in every fibre of the common law."

362 In Thruston v Clark 107 Cal. 285, 40 Pac. 435 (1895) in proceedings which were said to resemble a qui tam (common informer) action, the court refused to permit the defendant to be called as a witness in proceedings to remove him from his office as sheriff and to recover a monetary judgment against him on the basis of misconduct alleged to have occurred during his first term of office as sheriff. The Court took the view that removing the sheriff from his office would constitute a "punishment for wrongdoing" in proceedings which were regarded as "in body and spirit, in its aim and object, a process for the punishment of crime", so as to fall within the protection of the Fifth Amendment to the American Constitution prohibiting a person from being "compelled in any criminal case, to be a witness against himself."[123]

363 In Dougherty v Nagel 28 Idaho 302, 154 Pac. 375 (1915), the Court applied Boyd v the United States and Thruston v Clark to find that proceedings for the removal of public officials for collecting illegal fees for services rendered, while in form a civil action, were nevertheless in substance and effect a criminal prosecution protected by the constitutional privilege.

364 Acknowledging the difficulties of applying judicial decisions from the United States with its different constitutional framework,[124] these cases offer some guidance in their recognition of the proposition that removal from office constituted punishment sufficient to attract the Fifth Amendment privilege with which, of course, penalty privilege enjoys a similar genealogical base. They are consistent with the authorities I have already mentioned which have applied penalty privilege in cases of removal from office and dismissal.

365 In my view, the imposition of a disqualification order pursuant to s 206C on the appellants involves the imposition of a disability upon them and constitutes a penalty or is in the nature of a penalty so as to attract penalty privilege. The fact that one purpose of the order may be to protect the public does not detract from the conclusion that it is intended, and in fact operates, to punish. Veen and Cuthbert demonstrate that the fact that a sanction protects society does not detract from its punitive nature.

The Jurisprudence of Civil Penalty Proceedings

366 Theorists support the thesis that civil penalty proceedings have a punitive purpose. Dr Mann uses the term "middleground" to describe the jurisprudence of punitive civil sanctions. According to him, "the middleground draws on the two basic paradigms that form the doctrinal basis for the entire field of sanctioning law: criminal law and civil law". The paradigm of criminal law is its punitive purpose, whereas civil law is distinguished by its focus on compensation, "...on damage rather than blameworthiness". "The middleground", according to Dr Mann, "draws on these two basic paradigms to form a hybrid jurisprudence in which the sanction's purpose is punishment, but its procedure is drawn primarily from the civil law."[125]

367 Both Ligertwood and McNicol take the view that civil actions for penalty "bear a close resemblance to (although they remain distinct from) criminal proceedings to punish offenders".[126]

368 Dr Mann's thesis is endorsed by the Australian Law Reform Commission which concluded that civil penalty provisions are "clearly founded on the notion of preventing or punishing public harm".[127] Gillooly and Wallace-Bruce define civil penalties as "punitive sanctions ...imposed otherwise than through the normal criminal process." They characterise such sanctions as a "convenient 'half way house'"[128]

369 According to the Australian Law Reform Commission, the civil penalty regime emerged in response to the work on regulatory enforcement undertaken by theorists such as Ayres & Braithwaite who advocated "an enforcement pyramid model described as a 'tit for tat' approach. Under this method, breaches of increasing seriousness are dealt with by sanctions of increasing severity, with the ultimate sanctions (such as imprisonment or loss of a licence to carry on business) held in reserve as a threat." Braithwaite described the revocation of the licence to do business as the final step in his enforcement pyramid.[129]

370 Civil penalty schemes such as Part 9.4B are criticised on the basis that wrapping sanctions in a civil, albeit regulatory, framework denies procedural protections available in criminal proceedings to defendants.[130]

371 In his article, Dr Mann criticised the early English and American judges and commentators who, he said, "adopted a language fraught with bipolar images of the law of sanctions ... (who) wrote about the 'criminal law' and 'civil law' in spite of the fact that middleground sanctions, such as punitive damages in tort, always existed."[131] This criticism reflects the remarks made in the High Court in Gray v Motor Accident Commission (1999) 196 CLR 1 at 8 and Chief Executive Officer of Customs v Labrador LiquorWholesale Pty Limited (2003) 77 ALJR 1629, 201 ALR 1.

Abrogation of penalty privilege

372 Mr Walker S.C. informed the Court that as this appeal concerned the threshold question whether penalty privilege applied, the Court was not concerned with the question whether the Act had abrogated or modified the privilege. Mr Macfarlan Q.C. did not dispute that proposition.

373 I would, however, observe that Lord Hardwicke LC made it clear in Smith vRead that:

"... where the legislature have intended discoveries of what is penal, they have put in clauses for that purpose ... "

374 Expressed in contemporary terms, Lord Hardwicke LC's injunction translates into the "general principle that a statue will not be construed to take away a common law right unless the legislative intent to do so clearly emerges, whether by express words or by necessary implication."[132]

375 ASIC did not submit that any such express intention or necessary implication could be found in the Act.

Conclusion

376 I do not doubt the force of the line of authority classifying disqualification orders as protective in nature. There are a number of reasons, however, why I do not regard that line of authority as having analogical application.

377 First, those cases were decided in a different statutory and factual context to the present. The legislative history I have recorded earlier in this judgment concerning disqualification order provisions demonstrates that although they are all now located in Chapter 2D.6, they were not introduced in a manner which would indicate a common legislative intention.

378 Further s 206C is expressly linked to Part 9.4B. That, too, serves to distinguish it from the other disqualification order provisions which have been the subject of the "disqualification orders as protection" line of authority.

379 The statutory scheme of which s 206C forms part bears all the hallmarks of a scheme intended to impose disqualification as a punishment, or a consequence in the nature of punishment, albeit in a civil framework. These features are sufficient to attract penalty privilege. Although structured as a civil case both in terms of the procedures to be applied (s 1317L) and the onus of proof (s 1332), the proceedings are, in effect brought by the State and "accuse" the defendant of a contravention of a public law - just as, in the criminal context the defendant is accused of a breach of a statute. The civil penalty scheme pivots around the declaration of contravention which operates in the same sense as a finding of guilt and leads, in turn, to the imposition of one or other of the available civil penalty orders. It is not a suit which is purely of a civil nature.

380 Secondly, with the exception of Kippe (which I have already said is distinguishable) the observations about the protective nature of a disqualification order were made in a different factual context, when there was no question about the mode of proving a contravention, but only the order to be made following a proven circumstance. In Magna Alloys and other cases considering the grant of leave to act as director, the cancellation and disqualification provisions were not part of the direct penalties for the relevant offence: cf Bakker v Stewart and La Macchia v Minister for Primary Industries.

381 Thirdly, even in the "sentencing" cases, the deterrent and punitive quality of a disqualification order have been recognised: ASC v Donovan (1998) 28 ACSR 583 at 606; Re HIH Insurance Limited; ASIC v Adler (2002) 42 ACSR 80 at 801; ASIC v Rich (2003) 44 ACSR 682 at 691 [26].

382 I note Spigelman CJ's concern that the disqualification order cases upon which ASIC and Austin J relied constitute a formidable body of judicial statements which would have been relied upon by the drafters of the corporations legislation.

383 In my view, however, the history of Part 9.4B and the insertion of s 206C indicate a legislative intention that the disqualification order operate by way of punishment, even if, like most punishments, it may also have a protective purpose. This manifestation is sufficient to displace an inference that the legislature relied upon an assumption that a Part 9.4B disqualification order would be perceived to be protective.

384 Secondly, the "circumstance that Parliament (or a drafter) assumed that the antecedent law differed from the law as the Court finds it to be is not a reason for the Court refusing to give effect to the law."[133]

385 Thirdly, the weight of authority concerning penalty privilege indicates that it is a vigorous principle which looks to the substance of the relief sought in the proceedings. As Lord Hardwicke said in Smith v Read, "a person shall not be obliged to discover what will subject him to a penalty, or anything in the nature of a penalty." Even the line of disqualification order cases upon which Austin J and the Chief Justice rely acknowledge, at times, the serious consequences which a disqualification order can have on its subject. When a Court is focussed on the question whether an enduring principle like penalty privilege should be applied, the fact that the order sought can, even if only at one level, operate "in the nature of a penalty" is sufficient in my view to displace any inferred legislative assumption.

386 Finally, I also accept the appellants' submission that Police Service Boardv Morris & Anor (1985) 156 CLR 397 is powerful authority binding on this Court that a loss of office, in this case being disabled from acting as a director, attracts penalty privilege. The historical analysis I have undertaken of authorities dealing with penalty privilege demonstrates that the principle was invariably applied in cases where one of the orders sought would disable a person from carrying on a profession or holding an office. I see no distinction between the loss of such offices and disabling a person from acting as a director.

387 In my opinion the argument ASIC advances relies upon distinctions and descends to subtleties which are inappropriate when the Court is called upon to apply the "broad and unqualified"[134] rule of penalty privilege to which "there is no real exception, so far at least as discovery is concerned, and [which] it is the paramount duty of the Court to uphold".[135]

388 In my view, the appellants' contention that the disqualification orders ASIC seeks pursuant to s 206C of the Act are in the nature of a penalty sufficient to attract penalty privilege should be upheld.

Notice of Contention

389 ASIC filed a Notice of Contention. It submitted that the Court should, in any event, dismiss the appeal against so much of Austin J's decision as granted ASIC's application for an order that the appellants file and serve witness statements in advance of the hearing. ASIC submitted that Austin J should have followed the unanimous decision of the Victorian Court of Appeal in Sidebottom & Anor v Commissioner of Taxation (2003) 173 FLR 335 which concluded that such a direction did not infringe penalty privilege.

390 The appellants noted, in reply, that since ASIC's submissions on the Notice of Contention were filed, the Full Federal Court had rejected the reasoning in Sidebottom in Australian Securities & InvestmentsCommission v FFE Building Services Limited (2003) ATPR ¶41-938. In FFE Building Services Limited the Full Federal Court (Emmett, Hely and Jacobson JJ) held that an individual respondent in proceedings for recovery of a penalty under s 76(1) of the Trade Practices Act 1974 (Cth) could not be directed to file and serve statements of the evidence proposed to be given by his proposed witnesses prior to the close of the ACCC's case. It did so on the basis that such respondents were protected by penalty privilege. The Court preferred the decision of Sackville J in Australian Competition & Consumer Commission v Amcor Printing Papers Group Limited (1999) 163 ALR 465 to the reasoning of the Victorian Court of Appeal in Sidebottom.

391 ASIC relied upon Sidebottom before Austin J. His Honour was of the view that if it was necessary to decide the point, Sackville J's reasoning in Amcor was compelling. He found it unnecessary, however, to decide between the two approaches in Sidebottom and Amcor because of his view that the present case was not a case for the imposition of a penalty.[136]

392 I, too, find the reasoning of Sackville J in Amcor and the Full Federal Court's decision in ACCC v FFE Building Services Limited compelling.

393 I would, therefore, not uphold ASIC's Notice of Contention.

Orders

394 In my view the appeal should be allowed and Austin J's orders of 30 April 2003 set aside.

* * * * * *

1 Throughout this judgment I shall use the expression "penalty privilege" to refer to the more compendious "privilege against exposure to a civil penalty": see Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 per Mason CJ and Toohey J at 505, Brennan J at 519 and McHugh J at 547.

2 Police Service Board v Morris & Anor (1985) 156 CLR 397 at 403.

3 The provisions conventionally prohibit the person from being/acting as director of, or directly or indirectly taking part in the management of a company or being a promoter of a company. For brevity I shall refer merely to the disqualification as director, which reference should be understood to pick up the full range of proscribed conduct.

4 As the disqualification is imposed in such cases by operation of law upon the happening of specified events, parliament conferred the leave to act power upon the court to enable it to ameliorate the substantial hardship which flowed from the arbitrary provisions: Chew v National Companies & Securities Commission (No 2) [1985] WAR 337 at 339.

5 Ford's Principles of Corporations Law, at [2.210].

6 Then the Corporate Affairs Commission of each State and Territory.

7 Cooney Report, para 2.22.

8 Ibid at paras 5.57, 13.15.

9 Corporate Law Reform Bill 1992, Second Reading Speech, House of Representatives, 3 November 1992, Hansard at p 2400ff.

10 Corporate Law Reform Bill 1992, Second Reading Speech, supra.

11 The Public Exposure Draft sought comments on the Corporate Law Reform Bill 1992 on behalf of the Commonwealth Attorney-General.

12 Corporate Law Reform Bill 1992, Second Reading Speech, House of Representatives, 3 November 1992, Hansard at p 2400.

13 Corporate Law Reform Bill 1992, Explanatory Memorandum, p 20.

14 The requirement that the standard of proof be on the balance of probabilities save in proceedings for an offence first appeared in Australian corporations legislation in s 38B of the Companies and Securities (Interpretation and Miscellaneous Provisions) Act 1980.

15 8 Wigmore on Evidence (McNaughton rev. (1961)) at 334-7.

16 10 Howell's State Trials (UK) 1090 at [17].

17 This principle was applied in The King v Lord George Gordon (1781) 2 Doug. 593, 99 ER 374 where the Court ruled that a witness was not obliged to answer a question whether he was a Roman Catholic "because if he were to say he was, his declaration would be evidence against him, and might subject him to penalty."

18 In Hambrook v Smith (1852) 17 Sim. 209 at 217, 60 ER 1109 at 1112. Kindersley V-C, suggested that Monnins v Monnins had been overruled. He held that a defendant could not object to discovery on the basis that it might expose him to forfeiture where he was only required to give discovery of the happening of an event on which an estate would determine.

19 Brownsword v Edwards (1751) 2 Ves. Sen 243 at 245, 28 ER 157 at 158.

20 Holdsworth, A History of English Law, Methuen & Co. Limited, London, Vol XII at 281. Smith v Read and Harrison v Southcote & Anor were both cases which turned upon the statute: ibid.

21 Harrison v Southcote & Moreland (1751) 2 Ves. 389 at 394, 28 ER 249 at 252.

22 Harrison v Southcote & Moreland (1751) 2 Ves. 389 at 395, 28 ER 249 at 252.

23 Paxton v Douglas (1809) 16 Ves. 239, 33 ER 975; 19 Ves. 225 at 228, 34 ER 503. The analogous principle that a person may not be compelled in civil proceedings to make a disclosure which may lead to incrimination or discovery of real evidence of an incriminatory character which might be used in criminal proceedings was recently discussed in Griffin v Sogelease Australia Limited &Ors [2003] NSWCA 158; to be reported as (2003) 57 NSWLR 257.

24 Second edition, 1820 at 214; Mitford, A Treatise on the Pleadings in Suits in the Court of Chancery, Fifth edition, 1847, at 229-230 describes the "general rule" in substantially the same terms as Maddock.

25 Lord Esher M.R. described Alexander C.B. as "a judge who had more knowledge of equity than common law judges usually had at that time": Martin v Treacher (1886) 16 QBD 507 at 511.

26 That interpretation of Lord Eldon's view is borne out by his Lordship's observation in Parkhurst v Lowten (1819) 2 Swans 197 at 202, 36 ER 589 at 591, " ... he is not bound to answer any one question among many, which, as a link, has a tendency to subject him to a penalty" adding (at 214, 595) "... it has been for ages a principle of British jurisprudence, and I hope it will continue so as long as the law continues, that no man shall be called on in a court of justice to accuse himself of an offence."

27 A bill of pains and penalties was a "law...which [punished an] individual...without the procedural safeguards involved in a judicial trial." Chu Kheng Lim v Ministerfor Immigration (1992) 176 CLR 1 at 69 - 70 per McHugh J. The Laws of Australia, Ch. 21. Human Rights, section 21.6, Justice at [10] footnote 3 states: "Strictly speaking, a bill of attainder attaches the penalty of death while a bill of pains and penalties attaches punishments other than death. The term `bill of attainder' is, however, commonly used to encompass both. In Polyukhovich v Commonwealth (War Crimes Act Case) (1991) 172 CLR 501 at 535 Mason CJ described a bill of attainder as "a legislative enactment adjudging a specific person or specific persons guilty of an offence constituted by past conduct and imposing punishment in respect of that offence''. In Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 70 McHugh J assimilated the notions of bills of attainder and bills of pain and penalties.

28 In E L Bell Packaging Pty Limited v Allied Seafoods Limited & Ors (1990) 4 ACSR 85 at 94, Murphy J dismissed the possibility that the fact that the defendant in Glynn's case was the Governor of Gibraltar, Lieutenant-General Sir William Houston, at the time of the alleged assault contributed to make the case special.

29 Short v Mercier (1851) 20 L.J. Ch. 289 at 290.

30 Rayner and Hodges, 1852 at 492.

31 In Maccallum v Turton itself, Alexander LCB (at 195, 888) applied Paxton v Douglas to allow a demurrer to a bill for discovery where the answers might be "links in the chain of proof" in a reasonably probable indictment of fraud against the defendant; See also Swift v Swift (1832) 4 Hagg 139 at 154, 162 ER 1399 at 1404.

32 Stevens and Sons, Fifth edition, 1870 at 482-3.

33 Stevens and Haynes, 1884 at 1021, § 1494.

34 Reeves and Turner, 1885 at 313-314.

35 Martin v Treacher (1886) 16 QBD 507 at 511-512.

36 Martin v Treacher (1886) 16 QBD 507 at 514.

37 Martin v Treacher (1886) 16 QBD 507 at 512 - 513.

38 Cf Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 per McHugh J at 547.

39 T W Hobbs & Co v Hudson & Ors (1890) 25 QBD 232 at 234.

40 T W Hobbs & Co v Hudson & Ors (1890) 25 QBD 232 at 234.

41 Roskill L.J. agreed (at 570) with what Lord Denning MR said about penalty privilege. Shaw L.J. (at 571) agreed with both Lord Denning MR and Roskill L.J. All members of the House of Lords agreed with what the Court of Appeal said on the issue of penalties: see Lord Wilberforce at 612, Viscount Dilhorne at 628, Lord Diplock at 637 and Lord Fraser of Tullybelton at 647.

42 Coogans v MacDonald [1954] SLT 279 at 281.

43 Coogans v MacDonald [1954] SLT 279 at 282.

44 R v Associated Northern Collieries (1910) 11 CLR 738 at 742 - 743.

45 R v Associated Northern Collieries (1910) 11 CLR 738 at 744.

46 R v Associated Northern Collieries (1910) 11 CLR 738 at 747.

47 R v Associated Northern Collieries (1910) 11 CLR 738 at 748.

48 Refrigerated Express Lines (A/Asia) Pty Limited v Australian Meat & Livestock Corporation Limited (1979) FLR 204 at 208.

49 Pyneboard (1983) 152 CLR 328 at 336.

50 Taylor & Anor v Carmichael (1984) NSWLR 421 at 427.

51 Police Service Board v Morris & Anor (1985) 156 CLR 397 at 403.

52 Police Service Board v Morris & Anor (1985) 156 CLR 397 at 408.

53 Police Service Board v Morris & Anor (1985) 156 CLR 397 at 406 - 407.

54 Morris v Police Service Board [1983] 2 VR 357 at 357.

55 Morris v Police Service Board [1983] 2 VR 357 at 365.

56 Daniels Corporation Pty Limited & Anor v Australian Competition & Consumer Commission (2003) 77 ALJR 40 at 43 [13].

57 Daniels Corporation Pty Limited & Anor v Australian Competition & Consumer Commission (2003) 77 ALJR 40 at 47 [31]. Statements to the effect that penalty privilege applies outside judicial proceedings can be found both in Pyneboard (1983) 152 CLR 328 at 341, cf Murphy J at 346 and in McHugh J's judgment in EPA v Caltex Refining Co Pty. Ltd. (1993) 178 CLR 477 at 547; cf Sorby v TheCommonwealth (1983) 152 CLR 281 at 319 per Brennan J; Daniels Corporation Pty Limited & Anor v Australian Competition & Consumer Commission (2003) 77 ALJR 40 at 47 [31] per Gleeson CJ, Gaudron, Gummow and Hayne JJ.

58 ASIC v Rich , Austin J (2003) 45 ACSR 305 at [31].

59 ASIC v Rich (2003) 45 ACSR 305 at [32].

60 ASIC v Rich (2003) 45 ACSR 305 at [34].

61 Ibid.

62 CAC (WA) v Ekamper (1987) 12 ACLR 519 at 526.

63 Re Altim Pty Limited [1968] 2 NSWR 762 at 764.

64 ASIC v Rich (2003) 45 ACSR 305 at [41].

65 Section 829 empowered the Commission to make a banning order pursuant to s 830(1) prohibiting a natural person (other than a licensee) from doing an act as a representative of a dealer; a representative of an investment adviser; or a representative of a dealer or of an investment adviser; if:

66 The facts are set out in the decision of Deputy President Forgie in the Administrative Appeals Tribunal in Re Kippe & Australian Securities Commission (1995) 19 ACSR 296.

67 Re Kippe & Australian Securities Commission (1995) 19 ACSR 296 at 315 [91].

68 ASC v Kippe (1996) 67 FCR 499 at 506.

69 ASC v Kippe (1996) 67 FCR 499 at 508.

70 ASC v Kippe (1996) 67 FCR 499 at 508.

71 ASC v Kippe (1996) 67 FCR 499 at 508.

72 ASC v Kippe (1996) 67 FCR 499 at 508.

73 ASC v Kippe (1996) 67 FCR 499 at 508.

74 8 Wigmore on Evidence (McNaughton rev. (1961)) at 334, §2256.

75 Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485 at 492.

76 R v Vine (1875) LR 10 QB 195 at 199.

77 R v Vine (1875) LR 10 QB 195 at 200.

78 R v Vine (1875) LR 10 QB 195 at 202.

79 R v Vine (1875) LR 10 QB 195 at 201.

80 Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725 at 738 - 739.

81 Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725 at 741.

82 Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725 at 733 - 734.

83 Re a Solicitor's Clerk [1957] 1 WLR 1219 at 1222.

84 Nicholas v Commissioner for Corporate Affairs [1998] VR 289 at 297.

85 Nicholas v Commissioner for Corporate Affairs [1998] VR 289 at 299.

86 Nicholas v Commissioner for Corporate Affairs [1998] VR 289 at 301.

87 Nicholas v Commissioner for Corporate Affairs [1998] VR 289 at 304.

88 Bakker v Stewart [1980] VR 17 at 23.

89 La Macchia v Minister for Primary Industry (1986) 72 ALR 23 at 31 per French J.

90 Lord Mustill's observation was recently referred to with approval by Lord Hoffmann (with whom Lord Cooke of Thorndon, Lord Hutton and Lord Scott of Foscote agreed) in Government of the United States of America v Montgomery & Anor [2001] UKHL 3, [2001] 1 All ER 185, [2001] 1 WLR 196 (at 30). His Lordship also referred to Welch v United Kingdom (1995) 20 EHRR 247, a decision of the European Court of Human Rights which decided that the application of the power to make a confiscation order in respect of an offence committed before Part VI of the Criminal Justice Act (1988) offended against the prohibition on retrospective offences in article 7 of the European Convention for the Protection of Human Rights and Fundamental Freedoms.

91 Antonelli v Secretary of State for Trade and Industry [1998] QB 948 at 959 per Beldam L.J.

92 ASIC v Rich & Ors (2003) 45 ACSR 305 at [48] - [49].

93 Walter v Council of Queensland Law Society Incorporated (1988) 62 ALJR 153 at 157, 77 ALR 228 at 235, Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 251; Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 at 270 per Deane J.

94 The Southern Law Society v Westbrook (1910) 10 CLR 609 at 620, 622 per O'Connor J.

95 The Southern Law Society v Westbrook (1910) 10 CLR 609 at 625 per Isaacs J.

96 Law Society of New South Wales v Foreman (No 2) (1994) 34 NSWLR 408 at 413.

97 Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 250.

98 Section 171M of the Legal Profession Act 1987 (NSW) preserves the inherent power or jurisdiction of the Supreme Court with respect to the discipline of legal practitioners.

99 Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 250.

100 The Southern Law Society v Westbrook (1910) 10 CLR 609 per Griffith C.J. at 612, O'Connor J at 619, Higgins J at 627.

101 Re Veron; ex parte Law Society of New South Wales [1966] 1 NSWR 511 at 515. The unique and protective nature of disciplinary proceedings was recognised in Walton v Gardiner (1993) 177 CLR 378 at 396 per Mason CJ, Deane and Dawson JJ; R v Davis (1995) 81 A Crim R 156 at 162 and Dr SS v Health Care Complaints Commission and Another [2002] NSWCA 391 at [24] - [26] per Stein JA with whom Sheller and Heydon JJA agreed.

102 ASIC v Rich (2003) 45 ACSR 305 at [20].

103 See also Kingston v Keprose Pty Ltd (No 3) (1987) 11 NSWLR 404 per McHugh JA at 421-4 referred to with approval in Bropho v Western Australia, supra, at 20.

104 Bropho v Western Australia (1990) 171 CLR 1 at 20.

105 Risk v Northern Territory of Australia and Another (2002) 76 ALJR 845 per Gummow J at [83]; Geaghan v D'Aubert (2002) 36 MVR 542 per Stein JA (Handley JA and Foster AJA agreeing) at [22]-[23].

106 Beckwith v R (1976) 135 CLR 569 per Mason J at 578.

107 See Arie Freiberg, "Reconceptualizing Sanctions" (1987) 25 Criminology 223 especially at 225, 232, 235, 239 and 242.

108 ASIC v Rich & Ors (2003) 45 ACSR 305 at [7].

109 Although argument is not reinforced by the weight of numbers, I note that Part 9.4B is headed "Civil consequences of contravening civil penalty provisions." The heading is deemed to be to be part of the Act: s 13(1) Acts Interpretation Act 1901 (Cth).

110 Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited (2003) 77 ALJR 1629, 201 ALR 1 at [14], [24] and [32].

111 The heading to Part VII can be found in the summary of the submissions of the Attorney-General for Victoria, Robert Menzies at 199.

112 Referred to with approval by Fullagar J in Re Dymond (No 3) (1959) 101 CLR 11 at 21-22; see also Evatt J in Federal Commissioner of Taxation v Trautwein (1936) 56 CLR 211 at 516; see also Deputy Federal Commissioner of Taxation (NSW) v DTR Securities Pty Ltd (1985) 1 NSWLR 653.

113 Presumably a corporation could intervene in proceedings in which ASIC sought a declaration of contravention and a compensation order to assist in proving the quantum of the damage it had suffered by reason of the contravention alleged.

114 Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited [2003] 77 ALJR 1629 at 1637 - 1638 [56], see also at 1639 - 1640 [64] - [67].

115 Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited [2003] 77 ALJR 1629 at 1649 [114]. His Honour's reference to a civil penalty under companies legislation was a reference to Part 9.4B of the Act.

116 See the discussion in Meagher, Gummow and Lehane's Equity Doctrines and Remedies 4th ed. at p 839, [23-020].

117 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at 407 [407].

118 See also R v Rushby [1977] 1 NSWLR 594 at 597 - 598; Channon v R (1978) 33 FLR 433 at 437 where Brennan J observed that "criminal sanctions are purposive, and they are not inflicted judicially except for the purpose of protecting society, nor to an extent beyond what is necessary to achieve that purpose."; Toohey J at 463 and Trade Practices Commission v CSR Ltd (1991) ATPR ¶41-076 at 52,152 per French J, "Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation."

119 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 33.

120 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 33.

121 8 Wigmore on Evidence (McNaughton rev. (1961)) at 337, §2257.

122 Australian Law Reform Commission Report on Federal Civil & Administrative Penalties in Australia, paras 2.25, 2.27.

123 Thruston v Clarke 107 Cal. 285 40 Pac. 435 at 436 - 437.

124 See Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited [2003] HCA 49 at [112] per Hayne J.

125 Dr Kenneth Mann, "Punitive Civil Sanctions: The Middleground Between Criminal and Civil Law" (1992) 101 (5) Yale Law Journal 1795 at 1799.

126 Ligertwood, A.L.C. Australian Evidence, Butterworths, 1988, at 196 [5.67]; McNicol, Suzanne B., Law of Privilege, The Law Book Company Limited 1992 at 192. McNicol also views "civil actions for a penalty" as having "the objective of penalising a person through civil courts".

127 Australian Law Reform Commission Report on Federal Civil & Administrative Penalties in Australia, para 2.47.

128 Michael Gillooly and Nil Lante Wallace-Bruce, "Civil Penalties in Australian Legislation" (1994) University of Tasmania Law Review 269, 288.

129 ALRC Report 95 para 2.60 footnote 58 referring to a quote in F Haines, Corporate Regulation; Beyond Punish or Persuade (1997) Clarendon Press, Oxford 218; see also Helen Bird, "The Problematic Nature of Civil Penalties in the Corporations Law" 14 Companies and Securities Law Journal 405 at 410 footnote 63: "Incapacitation is the most severe penalty advocated by pyramidal enforcement theory. It can be effected by imprisonment or a disqualification order" and at 419.

130 Arie Freiberg, "Reconceptualizing Sanctions" (1987) 25 Criminology 223 at 243; Helen Bird, "The Problematic Nature of Civil Penalties in the Corporations Law" 14 Companies and Securities Law Journal 405 at 412; Michael Gillooly and Nil Lante Wallace-Bruce "Civil Penalties in Australian Legislation", (1994) University of Tasmania Law Review 269-271.

131 Punitive Civil Sanctions (1992) 101 (5) Yale Law Journal 1795 at 1803.

132 Pearce, Statutory Interpretation in Australia, 2nd Ed. (1981) pars. 113 - 116 quoted with approval in Pyneboard (1983) 152 CLR 328 at 340; see now Pearce, Geddes, Statutory Interpretation in Australia, 5th Ed. (2001) at [5.21] ff.

133 Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 at 505 - 506 per Mason CJ and Toohey J, at 556 per McHugh J.

134 Refrigerated Express Lines (A/Asia) Pty Limited v Australian Meat & Livestock Corporation Limited (1979) FLR 204 at 208.

135 Triplex Safety Glass Co Ltd v Lancegaye Safety Glass (1934) Ltd [1939] 2 K.B. 395 at 403.

136 ASIC v Rich (2003) 45 ACSR 305 at [66] - [69].

Last Modified: 09/24/2007

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Rich v Australian Securities and Investments Commission [2003] NSWCA 342

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Rich v Australian Securities and Investments Commission [2004] HCA 42

Fardon v Attorney-General (Qld) [2004] HCATrans 39

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Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49

Naismith v McGovern [1953] HCA 59

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CITATION:	RICH & SILBERMANN v THE AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION [2003] NSWCA 342 revised - 29/04/2004
HEARING DATE(S):	10 July 2003
JUDGMENT DATE:	26 November 2003
JUDGMENT OF:	Spigelman CJ at 1; Ipp JA at 119; McColl JA at 120
DECISION:	Appeal dismissed with costs.
CATCHWORDS:	PRACTICE AND PROCEDURE - Discovery - Privilege against self-exposure to a penalty - Whether available in proceedings for declaration of contravention of civil penalty provision, disqualification from management of corporations and compensation orders - PRACTICE AND PROCEDURE - Pre-trial filing of witness statements - Privilege against self-exposure to a penalty - Corporations Act 2001 (Cth), ss 206C, 206E, 1317EA
LEGISLATION CITED:	Australian Industries Preservation Act 1906, ss 4, 6 Australian Securities Commission Act 1989 (Cth), ss 19, 68 Bankruptcy Act 1883, s 32 Bankruptcy Act 1966, Part X Commonwealth Constitution, s 51(xix) Companies Act 1961, ss 116, 117, 122 Companies and Securities (Interpretation and Miscellaneous Provisions) Act 1980 Companies Code 1981, ss 227, 227A, 229, 562, 562A, 570 Corporations Act 2001 (Cth), ss 180, s206B, 206C, 206D, 206E, 206F, 206G, 1311, 1317E, 1317G, 1317H, 1317J Corporations Law 1991, ss 9, 91, 182, 183, 184, 206F, 224, 229, 230, 232, 559, 588J, 588M, 588U, 596AI, 599, 600, 601MA, 829, 830, 1311, 1317, 1317DA, 1317EA, 1317EB, 1317EC, 1317ED, 1317EF, 1317FA, 1317FB, 1317GC, 1317HA, s1317HD, 1317J, 1317K, 1317L, 1317M, 1317N, 1317P, 1317Q, 1332, 1474, Schedule 3 Criminal Justice (Scotland) Act 1949 Criminal Law (Sentencing) Act 1988 (SA), s 52 Customs Act 1901 (Cth) Estate Agents Act 1979 Excise Act 1901 (Cth) Fisheries Act 1952 (Cth) Income Tax and Social Services Contribution Assessment Act 1936 Part VII (Cth), s 237 Migration Act 1958 (Cth) Public Health Act 1875 Road Traffic Act 1930 Acts Interpretation Act 1901 (Cth), s 13 Australian Securities Commission Act (1989) (Cth), s 68 Securities Industry Code 1961 ss 60, 62 Sentencing Act 1991 (Vic), Part 4, Div 1 Solicitors Act 1941 (UK) Stock-Jobbing Act (7 Geo.2.c.8) Trade Practices Act 1974 (Cth) s 155 Wine and Beer Amendment Act 1870 (UK)
CASES CITED:	Adams v Batley (1887) 18 QBD 625 Adler v ASIC (2003) 46 ACSR 504 Antonelli v Secretary of State for Trade and Industry [1998] QB 948 ASC v Donovan (1998) 28 ACSR 583 ASC v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 ASIC v Pegasus Leveraged Options Group Pty Limited (2002) 41 ACSR 561 ASIC v Rich [2003] NSWSC 328; (2003) 45 ACSR 305 Australian Competition & Consumer Commission v Amcor Printing Papers Group Limited (1999) 163 ALR 465 Australian Securities and Investments Commission v FFE Building Services Ltd (2003) ATPR 41-938 Australian Securities and Investments Commission v Plymin (2002) 4 VR 168 Australian Securities Commission v Kippe (1996) 67 FCR 499 Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485 Azzopardi v The Queen (2001) 205 CLR 50 Bakker v Stewart [1980] VR 17 Beckwith v R (1976) 135 CLR 569 Bird v Hardwicke (1682) 1 Vern. 109; 23 ER 349 Boteler v Allington (1746) 3 Atk 453, 26 ER 1061 Bridal Fashions Pty Ltd v Comptroller-General of Customs (1996) 140 ALR 681 Brown v Great Eastern Railway Co (1887) 2 QBD 406 Brownsword v Edwards (1751) 2 Ves Sen 243, 28 ER 157 CAC (WA) v Ekamper (1987) 12 ACLR 519 Channon v R (1978) 33 FLR 433 Chauncey v Tahourden (1742) 2 Atk 392; 26 ER 637 Chew v National Companies & Securities Commission (No 2) [1985] WAR 337 Chief Executive Officer of Custom v Labrador Liquor Wholesale Pty Ltd [2003] HCA 49 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 Clyne v NSW Bar Association (1960) 104 CLR 186 Commissioner for Corporate Affairs v Bracht [1989] VR 821 Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385 Coogans v MacDonald [1954] SLT 279 Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission [2002] HCA 49; (2002) 77 ALJR 40 Deputy Federal Commissioner of Taxation (NSW) v DTR Securities Pty Ltd (1985) 1 NSWLR 653 Dougherty v Nagel 28 Idaho 302, 154 Pac. 375 (1915) Dr SS v Health Care Complaints Commission and Another [2002] NSWCA 391 E L Bell Packaging Pty Limited v Allied Seafoods Limited & Ors (1990) 4 ACSR 85 Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 Ex parte Brounsall (1778) 2 Cowp 830; 98 ER 1385 Federal Commissioner of Taxation v Trautwein (1936) 56 CLR 211 Flavel v Borrett & Haig (1991) 54 A Crim R 452 Friend v Corporate Affairs Commission (1988) 7 ACLC 106 Geaghan v D'Aubert (2002) 36 MVR 542 Glynn v Houston (1836) 1 Keen 329, 48 ER 333 Government of the United States of America v Montgomery & Anor [2001] UKHL 3, [2001] 1 All ER 185, [2001] 1 WLR 196 Gray v Motor Accident Commission (1998) 196 CLR 1 Green v Weaver (1827) 1 Sim. 402, 57 ER 630 Griffin v Sogelease Australia Limited & Ors [2003] NSWCA 158 Hambrook v Smith (1852) 17 Sim. 209, 60 ER 1109 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 Harrison v Southcote & Moreland (1751) 2 Ves. 389, 28 ER 249 Honeywood v Selwin (1744) 3 Atk 276, 26 ER 961 In the Matter of King (1844) 8 QB 129; 115 ER 823 In re a Debtor [1910] 2 KB 59 Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655 Jones v Jones (1889) 22 QBD 425 Kingston v Keprose Pty Ltd (No 3) (1987) 11 NSWLR 404 La Macchia v Minister for Primary Industry (1986) 72 ALR 23 Law Society of New South Wales v Foreman (No 2) (1994) 34 NSWLR 408 Legione v Hateley (1983) 152 CLR 406 L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Company Limited [1994] 1 AC 486 Mallan v Lee (1949) 80 CLR 198 Martin v Treacher (1886) 16 QBD 507 Mexborough (Earl of) v Whitwood Urban District Council [1897] 2 QB 111 Monnins v Monnins (1673) 2 Chan. Rep. 68; 21 ER 618 Morris v Police Service Board [1983] 2 VR 357 Naismith v McGovern (1953) 90 CLR 336 Nelme v Newton (in Maccallum v Turton (1828) 2 Y. & J. 183, 148 ER 883) Nicholas v Commissioner for Corporate Affairs (1986) 5 ACLC 258 Nicholas v Commissioner for Corporate Affairs [1988] VR 289 NSW Bar Association v Evatt (1968) 117 CLR 177 Orme v Crockford (1824) 13 Price 376; 147 ER 1022 Parkhurst v Lowten (1819) 2 Swans 197, 36 ER 589 Paxton v Douglas (1809) 16 Ves. 239, 33 ER 975; 19 Ves. 225, 34 ER 502 Police Service Board v Morris (1985) 156 CLR 397 Polyukhovich v Commonwealth (War Crimes Act Case) (1991) 172 CLR 501 Poyser v Commissioner for Corporate Affairs [1985] VR 533 Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355 Proudfoot v Proctor (1887) 3 WN (NSW) 69 Pye v Butterfield (1864) 5 B & S 829; 122 ER 1038 at 1042 Pyneboard Pty Ltd v Trade Practices Commission 152 CLR 328 R v Associated Northern Collieries (1910) 11 CLR 738 R v Cuthbert [1967] 2 NSWR 329 R v Davis (1995) 81 A Crim R 156 R v Geddes (1936) 36 SR (NSW) 554 R v Rushby [1977] 1 NSWLR 594 R v Vine (1875) LR 10 QB 195 Re a Solicitor's Clerk [1957] 1 WLR 1219 Re Altim Pty Ltd and the Companies Act 1961 [1968] 2 NSWR 762 Re Dymond (No 3) (1959) 101 CLR 11 Re Ferrari Furniture Co Pty Ltd and the Companies Act [1972] 2 NSWLR 790 Re Harrison (1998) 81 FCR 436 Re HIH Insurance Limited (In prov liq); ASIC v Adler (2002) 42 ACSR 80 Re Magna Alloys & Research Pty Limited (1975) 1 ACLR 203 Re Marsden (1981) 29 SASR 454 Re One.Tel Limited (In liq); ASIC v Rich (2003) 44 ACSR 682 Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725 Re Quinn & Australian Securities Commission (1994) 19 AAR 321 Re Tasmanian Spastics Association; ASC v Nandan (1997) 23 ACSR 743 Re Veron; ex parte Law Society of New South Wales [1966] 1 NSWR 511 Re Westinghouse Uranium Contract [1978] AC 547 Redfern v Redfern [1891] P 139 Refrigerated Express Lines (A/Asia) Pty Limited v Australian Meat & Livestock Corporation Limited (1979) FLR 204 Reid v Howard (1995) 184 CLR 1 Richardson v Federal Commissioner of Taxation (1932) 48 CLR 192 Saunders v Wiel [1892] 2 QB 18, 321 Scott v Miller (No 2) (1859) LJ. Ch 584, 70 ER 448 Short v Mercier (1848) 2 De Ge & Sm 635, 64 ER 285 Short v Mercier (1851) 20 L.J. Ch. 289 Sidebottom v Commissioner of Taxation [2003] VSCA 2 Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 Smith v Read (1737) 1 Atk 527; 26 ER 332 Sorby v the Commonwealth (1983) 152 CLR 281 Swift v Swift (1832) 4 Hagg 139 at 154, 162 ER 1399 T W Hobbs & Co v Hudson & Ors (1890) 25 QBD 232 Taylor & Anor v Carmichael (1984) NSWLR 421 The Gleaner Company Limited & Anor v Abrahams (Jamaica) [2003] 3 WLR 1038 The King v Lord George Gordon (1781) 2 Doug. 593, 99 ER 374 The Southern Law Society v Westbrook (1910) 10 CLR 609 Thruston v Clark 107 Cal. 285, 40 Pac. 435 (1895) Trade Practices Commission v Abbco Iceworks Pty Limited (1994) 52 FCR 96 Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 Triplex Safety Glass Co Ltd v Lancegaye Safety Glass (1934) Ltd [1939] 2 K.B. 395 United States ex rel Marcus v Hess 317 US 537 United States v Chouteau 102 U.S. 603 (1880) United States v Collins 25 F. Cas. 545 (1873) Veen v The Queen [No. 2] (1988) 164 CLR 465 Wall v Taylor [1883] 11 QBD 102 Walter v Council of Queensland Law Society Incorporated (1988) 62 ALJR 153 Walton v Gardiner (1993) 177 CLR 378 Welch v United Kingdom (1995) 20 EHRR 247 Wentworth v New South Wales Bar Association (1992) 176 CLR 239 Zuker v Commissioner for Corporate Affairs [1981] VR 72
PARTIES :	John David Rich and Mark Alan Silbermann (Appellants) The Australian Securities & Investments Commission (Respondent)
FILE NUMBER(S):	CA 40402/03
COUNSEL:	B Walker SC / DL Williams (Appellants) R MacFarlane QC / P Durack (Respondent)
SOLICITORS:	Joanne Kelly (Appellants) The Australian Securities & Investments Commission (Respondent)

LOWER COURTJURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	EQ 5934/01
LOWER COURT JUDICIAL OFFICER :	Austin J