State Pollution Control Commission v Caltex Refining Co Pty Limited

[1992] HCATrans 166

••

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S165 of 1991

B e t w e e n -

STATE POLLUTION CONTROL

COMMISSION

Applicant

and

CALTEX REFINING CO PTY LIMITED

Respondent

Application for special leave

to appeal

MASON CJ
TOOHEY J .

MCHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY. 5 JUNE 1992, AT 9.34 AM

Copyright in the High Court of Australia

Pollution 1 5/6/92

MR K. MASON, QC, Solicitor-General for New South Wales: If

the Court pleases, in this matter I appear with my learned friend, MR M.J. JOSEPH, for the applicant.

(instructed by Crown Solicitor for New South Wales)

MR D.E. HORTON, QC: If your Honours please, I appear with

my learned friend, MR D.E.J. RYAN, for Caltex.

(instructed by Moore & Bevins)

MASON CJ: Yes, Mr Solicitor?

MR MASON:  Your Honours, there are two questions raised in

this application. The first is whether

corporations have available to them the privilege

against self-incrimination, in particular in a case

where what is sought is documents held by a

corporation. There may be points of distinction

between documentary privilege and a privilege in

the context of interrogatories.

Secondly, whether a notice issued under

section 29(2)(a) of the Clean Waters Act, which was

held not to amount to a contempt, a section which

was held not to import the privilege against self-

incrimination, was nevertheless, as ·the Court of

Criminal Appeal held, issued for an improper

purpose because the sole purpose for issuing it was

to obtain material for use in a pending

prosecution.

Your Honours, it is, broadly speaking, an

offence to pollute unless licensed, and the

respondent was given a licence to pollute subject

to conditions, one condition being that it keep

records relating to the discharge of any relevant

effluent. When a prosecution for pollution was

launched, the access to those documents was sought,

concededly for the sole purpose of use in the

prosecution, but it was held that the prosecutor

could not obtain access to those documents.

As to the first question, whether the

privilege against self-incrimination is available

to a corporation, it is a matter which has been

raised in this Court but not previously decided.

MASON CJ:  On that point, I think you can take it, subject

to anything that may develop in the course of

argument, that the question if sufficiently

arguable is one that might well attract the grant

of special leave. So that I think you might set

about endeavouring to persuade us that it is an

arguable question.

MR MASON:  Your Honours, there was not reproduced in the

application book the summary of arguments to be

Pollution 2 5/6/92

advanced on behalf of the applicant. It may be

convenient if I just tender that to the Court and

then speak briefly to it.	It was an exhibit to the
affidavit.	The submission is that the nature of

the privilege is that it arises from concern for a

human right protecting privacy, which is by nature

inapt for corporations.

The Court of Criminal Appeal acknowledged this

but said in effect that the privilege was

supportable on additional bases, one being that it

embodied a proper balance between the State and its

citizens. We would submit that misconceives the

origin of a privilege, because if that were an

integral part of the privilege, it would not

explain how the privilege is available between

civil litigants, how an ordinary defendant can

claim the privilege against self-incrimination in

private litigation.

That suggests, in our submission, that it is

not properly seen as itself part of the balance

between the State and the citizen in the adversary

system. One of the other reasons advanced for the

privilege, and a reason given in the English case

of Triplex and Scorer was concern for the interests
of the shareholders and the unfairness and

oppression to them if privilege should not be

available by the corporation.

That involves, in our submission, a

fundamental misconception and it is inconsistent

with this Court's decision in Rochfort referred to

on page 2 of the outline. The privilege against

self-incrimination is never available to protect

the interests of another. A senior executive of a corporation can be required on subpoena to testify against his or her employer corporation. It is

therefore a fallacy, in our submission, to say that
the interests of the shareholders can be erected as

a basis for the privilege by the corporation.

We would submit that it is against the general public interest that the privilege should extend

particularly to documents when it would allow oral

testimony to be given. A document, particularly

one of the nature that we are seeking here, is the

best indication of the truth of the situation. It

is rather odd, we would respectfully submit, that

an executive can give an oral version of facts
under compelled testimony, but the documents which

will speak for themselves may not be used or may

not be required of a corporation to be used against

it.

We would submit that the interests of truth as an aspect of the justice system are not outweighed

Pollution 3 5/6/92

by relevant concerns of fairness such as to erect

the privilege in favour of a corporation.

TOOHEY J:  Mr Solicitor, how do you identify the matter that

is sought to be raised by the application.	Is it
simply the question of privilege against

self-incrimination as one of the questions asked of

the Court of Criminal Appeal might suggest, or is

it restricted to the production of documents?

MR MASON:  In the context of the case, it is dealing with production of documents.

TOOHEY J: Yes, I appreciate that.

MR MASON:  We would certainly argue on the alternative that

the corporation does not have available the

privilege, even with respect to answering

interrogatories. But in the alternative, it does

not have available the privilege with respect to

producing discovery. That distinction has been

suggested in dicta in some Canadian cases.

Your Honours, the American law affords no

privilege to corporations. It was that law which

Mr Justice Murphy, who is the only member of this

Court who has actually expressed an opinion on the

issue, applied in favour of there being no

privilege.

MASON CJ:  On what basis has the American absence of

privilege been put?

MR MASON:  It has been put on two bases; initially put on

the basis that it was an interference with what is described as the visitatorial powers of the State.

If the State has brought corporations into life, it

should have the right in effect to check whether

they are acting lawfully, and therefore the

privilege does not arise.

MASON CJ: That is very close to the view that

Justice Murphy expressed.

MR MASON:  Yes. That does not appear to be the present

rationale accepted by the court in America.

Rather, it is that the basis of the privilege is a

protection of privacy, that being an historical

argument going back to the abuses of the privilege

with the ex officio oath, the abuses of the Star

Chamber, and that those human rights do not inure

in corporations. That is the present rationale

that the American courts proceed upon.

The American law has also drawn a distinction

which we sought to draw in argument below between

testimonial incrimination and other forms of

Pollution 4 5/6/92

incrimination, saying that the privilege in

relation to documents really only protects against

testimonial incrimination, which is the situation

whereby if I produce a document, I am, by the very

act of producing it from my custody, admitting that

this was a document which I had in my custody.

In American law, that can be covered by the

grant of an appropriate immunity from the
testimonial consequences of production so that
access can be obtained to the documents themselves

for their forensic use. We argued that this

principle applied here. True it is that no

indemnity has been offered to the respondent, but if the privilege is of that narrower nature, that

would be an option that would be open in the

present context.

Your Honours, those in brief would be the

reasons why we would submit that the correctness of

the decision below is arguable. The English case of Triplex has been applied in Australian law but without any critical analysis, certainly before the

present case. The House of Lords has not passed

upon the matter, although Lord Denning in one

passage has said that he considers the privilege is

not available to corporations.

Your Honours, the second point -

MASON CJ: Before you leave that, could I just ask you about

the decision in Amway. What basis was the absence

of the privilege or non-application of the

privilege put in Amway?

MR MASON:	In Amway there had been a statutory abrogation of the privilege, but there was some discussion obiter
about the inappropriateness of the privilege to
discovery. It is the suggested distinction between
the two that the Amway case reflects upon. They
deferred to Mr Justice Murphy's views in that
respect.
Your Honours, the second point concerns the notice - there were two notices; one issued under
the rules of Court which, if there is no privilege to corporations, would be a valid subpoena in
effect.  The second was the statutory notice. The
court held that under section 29(2)(a), the
privilege against self-incrimination was abrogated.

The court below had held that there was no

contempt involved in the issue of the notice and

the Court of Criminal Appeal did not find it

necessary to deal with that issue. We, of course,

argue there could be no appeal against an acquittal

Pollution 5/6/92

for contempt in any event.	So one accepts that
there is no contempt.

The nub of the reasoning on the second point

perhaps appears at pages 39 and 40. At 39, about

the middle of the page, after referring to cases

which we say should be seen against the background

of their Chapter III and federal judicial power,
they said:

Nevertheless there are underlying issues as to the interference by the Executive in the process of adjudication by courts which are of abiding importance.

At the bottom of page 40, a passage in a judgment

of Mr Justice Deane in Hammond's case was quoted.

The nub is perhaps in the middle of page 40, that

the statutory power to issue the notice is:

circumscribed to the purpose for which it is

given. That does not include the purpose of
gathering evidence for use in current criminal

proceedings or of enabling the prosecution to

circumvent the limitations which the process of the Court places upon the power to compel production of documents.

With respect, Your Honours, we would say there are

not limitations in the rules. There is just, on the hypothesis that the first point is wrong, an absence of power in the rules to issue a subpoena

against a defendant for the purpose of use in

criminal proceedings or proceedings for a penalty.

If one accepts that the privilege is not

available under the notice, then we would submit

that cases such as Hammond are really quite

inapposite. They dealt with a royal commission

that was investigating questions of guilt or

innocence of persons who were currently under

criminal process. It was the fact that the

independent investigation, the parallel

investigation, could itself trench upon the rights

of the accused person.

Here, by contrast, the notice is served purely for the purpose of the litigation. If one accepts

that there is no privilege being abrogated by

statute, if one accepts that there is no contempt,

then we would submit that one could not find, as
the court did, that there is an implied prohibition

upon the use of the document.

We would seek to reinforce that by saying that

what purpose could there have been for imposing

this licence condition to keep the record of

Pollution 6 5/6/92

pollution if it was not for use? The court's

judgment arrives at the position that one can

require production of the document at the time you

are thinking of prosecuting, and the privilege

against self-incrimination is no defence to

production, but having decided to obtain it solely

for the purpose of being put into evidence, you

cannot press for it under the statute. We would

submit that that involves a combination of

principles which is inapposite.

We would say that that second point is itself

of general importance and sufficiently arguably

wrong as to justify the grant of special leave.

MASON CJ: Yes, Mr Horton?

MR HORTON:	Your Honours, our submissions are that the decision of the Court of Criminal Appeal was
clearly correct consistent with the English
authority of Triplex, Rio Tinto, in spite of
Lord Denning's two-line remark, and with other
cases in New Zealand and in England, the detail of
which I need not trouble Your Honours with at the
moment.
The contrary proposition was first advanced, so far as we have been able to find, by
Mr Justice Murphy in Pyneboard, and His Honour
repeated that view of the situation once or twice
thereafter.  We would submit, Your Honours, that
the existence of the privilege has been universally
recognized by the legal profession and judges
without question until His Honour expressed his own
view, if I can put it that way, in Pyneboard.

MASON CJ: What is the highest level of recognition as far

as a court decision in this country is concerned?

MR HORTON:  The highest level, Your Honour, is the supreme

courts and Federal Court. There is a decision in

Victoria, Controlled Consultants, a Full Court

decision, I think, in favour of the privilege. It

came to this Court, but I understand that there was

no discussion about the question on appeal.

McHUGH J: Did not Justice Murphy discuss it in Controlled

Consultants?

MR HORTON:  Yes, Your Honour, but there was no decision on

it. The Full Court in Victoria had held that the

privilege existed. There are two decisions of

single judges in the Federal Court upholding -

MASON CJ:  There is no need to go to the detail of it. I

just wanted to know the level of recognition.

Pollution 7 5/6/92

MR HORTON:  Your Honours, so far as the American cases are

concerned, I do not want to go into that - it is a

long story - but - - -

MASON CJ: And no doubt confused.

MR HORTON:  Indeed. One might say that the whole line of -

one cannot even call it development of the law; it

is distortion of the law, with all respect to Their

Honours in the Supreme Court. My friend mentioned

the visitatorial theory, that is to say it springs out of the fact that if a sovereign, going back to the days of the Tudors and so on, grants a right or

privilege such as to have a college or a hospital

or a ferry, then he is entitled to come to see that

the conditions upon which the monopoly or whatever
was granted are being fulfilled, hence the

reference to a visitor of a college or of a

university and the like.

That idea is picked up in the United States in

the early days of this century and is said to justify the abolition of an immunity that the Constitution of the United States embedded in the

law on the basis that a State, such as Delaware,

which has granted the right of incorporation to a

company has a right to supervise the affairs of the

company, then that principle is used to justify an

invasion by the federal agencies of the immunity

that the company would otherwise have.

So it was obviously a weak reed upon which to

put the principle, if you can call it that, that

the Supreme Court was espousing. That was thrown

overboard as long ago as 1944 in United States v

White and abandoned as a basis upon which the

abolition, as it were, of the privilege in the

United States could be put.

The most recent way in which, in so far as one

can identify principle is put is really this: they

the Constitution which, put very shortly and	say because of the fact that the Fifth Amendment of	inaccurately, provides the immunity from self-
incrimination, because that would prevent federal agencies, and States, for that matter, enforcing federal laws, because it would make it too
difficult to successfully prosecute companies and
the like, we cannot allow it to stand. We cannot
amend the Constitution, they say obviously, so what we will do is say that corporations have no
immunity.

They moved from that to saying that

partnerships had no immunity if they were large and

then they moved from that to saying partnerships

which had been wound up years before and, as it

Pollution 5/6/92

were, the ex-partners had no immunity. They moved

from that to saying that two-man partnerships - I

think three-man, it was - had no immunity. It is a

slippery slope, as Your Honour sees, and the courts

have been driven to saying that because there is no

stopping.

Once one says that a corporation has no

immunity, you are driven to saying that a trade
union has not - that is another case in the United

States. From there you must say partnerships have

no immunity, and ultimately they have got

themselves into a situation where they say anyone

who is organized in some way - and it is not

explicit as in what way - for the purpose of

commerce or some activity, is not to have any

immunity.

So Your Honours see that the American cases

are really no justification for the somewhat
limited and properly limited submission that my

friend makes. He does not, of course, go nearly as

far as they do, but once you embark on the course

that has been embarked upon over there, there is no

stopping.

MASON CJ: What do you say about the anomaly to which he

points, namely that the testimony of executives of

a company is not subject to the privilege?

MR HORTON:  Your Honour, the testimony of an executive

employed by a sole trader or a partnership is not

subject to the privilege either, the reason being

that the privilege against self-incrimination

belongs to the individual employer, not to his

employee. If you can subpoena the employee and ask

him was it not thus and thus that things happened

and transactions took effect, nobody has ever

suggested that the disappointed employer could

complain. So that there is no difference at all

between calling as witnesses employees of

corporations and employees of individuals. All

that that shows is that the immunity from

self-incrimination, whether belonging to an

individual or to a body of individuals or to a

corporation, has always been very limited.

TOOHEY J: That may be part of the problem here, Mr Horton,

in identifying what the privilege is against

self-incrimination; how wide it is or how narrow

it is, how far it operates when documents are

required to be produced, how widely it operates

where oral evidence is required of officers of a

corporation. The decision of the Court of Criminal

Appeal in this matter would seem to cast the net

pretty widely.

Pollution	5/6/92
MR HORTON:	Your Honour, we did not contend before

Their Honours in the court below - and if

Your Honours were to grant leave, I would want to

leave my options open on them, but I doubt that I

would want to contend before Your Honours that an

employee of a corporation can be stopped in some

way from giving evidence about the affairs of the

corporation because the corporation has an

immunity. I do not think we would want to contend

that, but the corporation cannot be forced to do
probably all that corporations can do short of

answering interrogatories, as my friend said, and

that is to produce documents.

So that while there is clearly a practical distinction between oral evidence and documentary

evidence, that distinction does not touch the

principle, we would submit. I am going too long,

Your Honour. If I start on this, I will be getting

into the appeal, so I do not want to do that. But

we would press upon Your Honours that in a strong

Court of Criminal Appeal, as Your Honours have

observed, who were unanimous, there is no decision

to the contrary except Mr Justice Stein from which

this appeal comes.

The only other suggestion is

Mr Justice Murphy's views based upon the American

view, but with all respect to His Honour, his

judgments at all events do not show that His Honour

went in any great detail into the history or into

the basis, if one could ever find one, of the

American view. So that we would submit that the

law has been settled for hundreds of years really,

and this is not an occasion to overturn it.

· So far as the other point is concerned, the

section 29 point, again we would say the law is

quite settled on that, that you cannot use a

statutory power to get around the procedure of the

courts. That is what they tried to do. Of course,

if we were wrong on what I call the immunity point,

we would have had to produce on the notice to

produce the ordinary court process. If that is so,

then the section 29 point of compulsion under the

statute disappears, because exactly the same

documents were called for under both notices.	So
nothing would turn really on that.

Your Honours, may I just make two further

observations. If Your Honours were minded to grant

leave, it occurs to us that Your Honours would
probably do so because of the general public

importance of the point, and no doubt that is in

the forefront of my friend's submission. If that

were so, we would ask Your Honours to consider

Pollution 10 5/6/92

imposing a term on my friend that he pay the costs

in any event.

The other observation we would wish to make,

Your Honours, is that the Court of Criminal Appeal,

being minded of the necessity to look into the

history of matters from the time of Charles I or even before - at the time of Magna Carta - until

now directed that the parties put in some written

material. I know that Your Honours usually only

like to have four pages or so, but the written

material that we put in and which would need

modification to bring it up to date and make sure

we have got the latest American authorities is

that, and it reduced the time of the hearing by, I

would think, a day and a half, or two days perhaps

even, and we would ask Your Honours to consider

doing that.

TOOHEY J: That is very modest compared to what we have been

getting lately.

MR HORTON:	I am always short, as Your Honour knows.
MASON CJ: Mr Solicitor, we need not trouble you.	There

will be a grant of special leave to appeal in this

matter. The Court will not impose a condition in

terms of costs, but the Court will direct that the

parties file comprehensive written argument and

such materials as they want in support of that

argument. No doubt a time frame, a schedule, can

be worked out in conjunction with the Registrar.

McHUGH J: When you file the written submissions, could some

thought be given to preparing them along the lines

of the American written briefs. The written

submissions that are filed, at least speaking for

~yself, are not satisfactory. They really do not

argue a case. They tend to be a series of points

and some cases just cited after. If we are going

to have written submissions, we might as well have

proper ones.

MASON CJ:  I would endorse those remarks, but I do not think

His Honour was intending to convey that we want a

brandise brief. That is another question

altogether. But I would certainly endorse the

remarks to the extent to which they convey to the

profession that comprehensive written arguments

should attempt to persuade the Court to the point

of view for which the party is contending.

The comprehensive written submissions we have

received in recent times, as you well know,

Mr Solicitor, are really like a series of

particulars containing references to cases; in some

instances, as during the course of the last week,

Pollution 11 5/6/92

being a collection of long citations from

judgments. But there is not argumentation of the

kind that we would want.

MR HORTON:  I am tempted to ask Your Honours to glance at

this. We are rather proud of it, Your Honour.

MASON CJ:  You run the risk that we will say it is not

satisfactory.

MR HORTON:  Your Honour, with a junior like Mr Ryan, I think

I am safe from that risk.

MASON CJ:  We are going to see it in due course though, are

we not? There is no reason to see it now.

MR HORTON:  No, Your Honour, I just wanted to show off.

AT 10.05 AM THE MATTER WAS ADJOURNED SINE DIE

Pollution 12 5/6/92