Sullivan v Krepp - [2020] SASC 97

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Civil)
SULLIVAN v KREPP
[2020] SASC 97
Judgment of The Honourable Justice Peek
11 June 2020
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - PLEADINGS - STRIKING OUT - PROCEDURAL MATTERS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION OF DOCUMENTS - GROUNDS FOR RESISTING PRODUCTION - PRIVILEGE - TENDENCY TO INCRIMINATE AND EXPOSURE TO PENALTY
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - PLEADINGS - PARTICULAR PLEADINGS - DEFENCE
Appeal against a Supreme Court Master’s dismissal of interlocutory applications.
The plaintiff (Sullivan) was convicted of a criminal offence and incarcerated during which time the defendant (Krepp) assisted Sullivan by storing his personal property and finalising the settlement of a property he owned in New South Wales.
Upon release, Krepp did not return the property or the proceeds of the property settlement. Sullivan reported the matter to police in South Australia, New South Wales and Victoria but no criminal charges were laid. Sullivan later commenced this action.
Krepp filed a bare denial defence. Later, when represented, consent orders were agreed to, inter alia, obliging Krepp to file a second defence and to make disclosure. Shortly thereafter, an interlocutory application was filed by Krepp’s solicitors seeking that the consent orders be vacated and the matter be stayed. Alternatively, Krepp sought that paragraphs 14, 15, 19 and 26 of the statement of claim be struck out.
At the hearing before the Master, Krepp sought a stay of proceedings and indicated that he wished to claim privilege against self-incrimination and be excused from the usual rules relating to procedure and disclosure. The application was dismissed.
On appeal, Ground 1 related to the refusal to strike out/or order further particulars of the pleas of fraud. Ground 2 related to the refusal to excuse the defendant from filing a further defence and/or from making further and better disclosure until the close of the plaintiff’s case.
Held, dismissing the appeal:
1. As to Ground 1:
(a) An appellate court should only interfere with an exercise of judicial discretion in pre-trial interlocutory applications in instances of plain error: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, discussed. House v The King (1936) 55 CLR 499, considered.
(b) The Court will only order further particulars where the pleadings do not give fair notice of the plaintiff’s case and the order is necessary to avoid substantial prejudice to the party in whose favour the order is sought. By dint of r 102(5), the same obligations apply to applications for further particulars and to applications to strike out an opponent’s pleading: Supreme Court Civil Rules (2013) r 102; referred to. Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, discussed.
2. As to Ground 2; in civil non-penalty proceedings, a defendant wishing to invoke the privilege against self-incrimination is not to be excused in limine from an obligation to file a defence or provide disclosure. The defendant must object to a particular step or steps in the proceedings which might tend to expose him to self-incrimination and must usually adduce evidence and advance submissions directed to each particular dispensation sought.
CC Containers Pty Ltd & Ors v Lee & Ors (No. 2) [2012] VSC 149; Pascoe & Anor v Divisional Security Group Pty Ltd & Ors (2007) 209 FLR 197; Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328; QC Resource Investments Pty Ltd (In Liq) v Mulligan [2016] FCA 813; Re Australian Property Custodian Holdings Ltd (In Liq) (Recs & Mgrs Apptd) (Controllers Apptd) (No. 2) (2012) 93 ACSR 130; Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Livestock Corporation & Ors (1979) 42 FLR 204, discussed.
A & L Silvestri Pty Ltd v Construction, Forestry, Mining and Energy Union (2005) 226 ALR 247; Anderson & Ors v Australian Securities and Investments Commission (2012) 297 ALR 546; Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No. 5) [2013] FCA 369; Australian Securities and Investments Commission v Mining Projects Group Ltd (2007) 164 FCR 32; Citation Resources Ltd v Landau [2016] FCA 1114; (2016) 116 ACSR 410; Gemmell & Anor v Le Roi Homestyle Cookies Pty Ltd (In Liq) & Ors (2014) 46 VR 583; LM Investment Mgmt Ltd v Drake & Ors [2017] QSC 34; MacDonald v Australian Securities and Investments Commission (2007) 73 NSWLR 612; Re New World Alliance Pty Ltd (Receiver and Manager Appointed); Sycotex Pty Ltd v Baseler & Ors (1993) 47 FCR 90; The Daniels Corporation International Pty Ltd & Anor v Australian Competition & Consumer Commission (2002) 213 CLR 543; Woods v Skyride Enterprises Pty Ltd [2012] WASC 4, considered.

SULLIVAN v KREPP
[2020] SASC 97
Civil

PEEK J: Appeal against the dismissal of interlocutory applications by a Supreme Court Master.[1]
[1] The parties were in agreement that the appellant did not need to obtain permission to appeal. See Stanberg Pty Ltd v Tabibi [2012] SASC 187.
The factual background
In the judgment appealed from, Supreme Court Master, Judge Bochner (the Master), summarised the factual background as asserted by the plaintiff, Mr Sullivan (Sullivan) thus:
2. At some time prior to September 2007, the plaintiff was convicted of criminal offences. He remained on bail until a sentencing hearing in the District Court of South Australia on 11 September 2007. The plaintiff had, shortly before this date, sold a property, with settlement scheduled for 14 September 2007. Prior to the sentencing hearing, the defendant, who was a friend of the plaintiff, offered to assist the plaintiff by storing some personal belongings and assisting with the settlement of the contract of sale. The net proceeds of sale were expected to be around $300,000.
3. On 11 September 2007, the plaintiff was sentenced to a period of imprisonment. He instructed the solicitor handling the sale of the property to pay the net proceeds (“the net proceeds”) into his bank account with the Commonwealth Bank of Australia (“CBA”). He gave the defendant access to his CBA account and asked him to pay any bills that came in during the period of his incarceration, from the net proceeds. The defendant also took custody of the plaintiff’s personal property, including a motor vehicle.
4. The plaintiff was released from prison on 31 January 2013. He accessed his CBA account, to find that the net proceeds were not in his account. He contacted the CBA and was told that the security settings for his account had been changed on 14 September 2007, the date of settlement of the sale of the property. Further, the plaintiff’s items of personal property, including his motor vehicle have not been returned to him. The plaintiff has, on numerous occasions, requested the defendant to return the net proceeds and his personal property.
5. It is the plaintiff’s case that the defendant removed the net proceeds from the CBA account without permission. He says that the defendant told him that he had invested the funds and they could not be released. No evidence of any investment has been provided by the defendant. As to the motor vehicle, the plaintiff says that the defendant sold it and kept the proceeds of sale. The defendant has pleaded no positive case in his defence.
6. The plaintiff commenced this action in an attempt to recover his money and his personal property.
The procedural background
On 29 June 2018, Sullivan commenced this action against the defendant, Mr Krepp (Krepp) by filing a Summons (FDN 1) and Statement of Claim (FDN 2). On 7 November 2018, Sullivan filed an interlocutory application (FDN 3) seeking, inter alia, orders for presumptive service on Krepp which was supported by the affidavit of a process server, who had been unsuccessfully attempting for some time to effect service, and on 30 November 2018, the Master made orders in chambers for presumptive service to be effected.
On 4 February 2019, Krepp filed a Notice of Address for Service (FDN 6) and a Defence (FDN 7). The defence was a bare denial, denying or not admitting the contents of the statement of claim but pleading no alternative basis of fact.
On 8 May 2019, Krepp attended at a Directions Hearing before the Master. He applied for further time to obtain legal advice and the matter was adjourned to a further Directions Hearing on 7 June 2019.
On 5 June 2019, Sullivan’s solicitors filed a List of Documents (FDN 8) and certified that “the plaintiff by this list of documents has now fully discharged the obligations of the plaintiff as at the date of delivery of this list, regarding disclosure of documents in this action”.
On 7 June 2019, Krepp failed to appear at the adjourned Directions Hearing scheduled for that day. The Master made orders in his absence. First, that he file a Notice of Address For Service within seven days. Secondly, that he make disclosure within 28 days, that is to say by 5 July 2019. The matter was adjourned to a further Directions Hearing on 12 July 2019.
On 14 June 2019, a Notice of Acting and Address for Service (FDN 9) was filed on behalf of Krepp by Mr Silva of Pace Lawyers (Krepp’s present solicitors).
On 11 July 2019, Krepp’s solicitors filed a List of Documents (FDN 10) and certified that “the defendant by this list of documents has now fully discharged the obligations of the defendant, as at the date of delivery of this list, regarding disclosure of documents in this action”. The document made no claim for privilege. The filing of that document was about a week out of time having regard to the Master’s previous order on 7 June 2019 that the defendant make disclosure by 5 July 2019.
On 12 July 2019, at the scheduled Directions Hearing, the Master ordered a judicial mediation before Judge Dart to be held on 27 September 2019 and a further Directions Hearing before the Master on 1 October 2019. Her Honour recorded that Krepp was now represented and that should the matter not resolve at mediation, a further defence would need to be filed. The Master also foreshadowed the potential for a listing conference should the matter not be resolved at mediation.
On 27 September 2019, Judge Dart presided over a judicial mediation which was ultimately unsuccessful. Later that day, his Honour proceeded to make in Court the following orders which were recorded as being by consent of the parties:
1.     Defendant to file a Second Defence with 28 days.
2.Plaintiff to file a Reply, if so advised, within 7 days of receipt of the Second Defence.
3.     Hearing before Judge Bochner on 1 October 2019 is vacated.
4.     All parties to make additional disclosure within six weeks.
5.Adjourned to a directions hearing before Judge Bochner on 13 November 2019 at 9:45 am.
Accordingly, as at 27 September 2019, the defendant, who was represented, had consented to the making of orders which required him to file a second defence by 25 October 2019 and to make disclosure by 8 November 2019.
On 25 October 2019, being the expiry date for the filing of a second defence (and without filing such a defence), Krepp filed an interlocutory application (FDN 11) (supported by the affidavit of Mario Silva, his solicitor) made specially returnable to the directions hearing already scheduled before the Master on 13 November 2019. Such hearing was due to take place about three weeks after the expiry date for the filing of a second defence and about one week after the expiry date for the making of disclosure. Krepp thereby sought the following substantive orders:
2.the orders made by this Honourable Court on 27 September 2019 for the Defendant to file a second Defence and for the Defendant to make additional disclosure within 6 weeks be vacated;
3. this matter be stayed until further order of the Court;
4.in the alternative, paragraphs 14, 15, 19 and 26 of the Statement of Claim be struck out;
This application was subsequently amended and re-filed on 23 January 2020 (FDN 17) in the following form:
The defendant SELWYN ANDRESS KREPP applies for the following orders or directions, that:
1.this application be made specially returnable to ~~the directions~~ hearing before Judge Bochner on 30 January 2020 ~~13 November 2019~~;
2.the orders made by this Honourable Court on 27 September 2019 for the Defendant to file a second Defence and for the Defendant to make additional disclosure within 6 weeks be vacated;
3.this matter be stayed until further order of the Court;
4.further, or in the alternative to paragraph 3 above, the plaintiff make disclosure of all communications by or on his behalf (by his agent, Geoffrey Steuart Glanville, or otherwise) with police in relation to the subject matter of his claim, including:
4.1    communications with NSW police, including documents referred to as attachments to an email dated 22 September 2016 from Detective Senior Constable David Campbell to the plaintiff (which email is part of Exhibit LMS-1 to the affidavit of the plaintiff sworn 6 December 2020);
4.2    communications with Victorian police; and
4.3    communications with South Australian police.
5.further, or in the alternative to paragraphs 3 and 4 above:
5.1    Geoffrey Steuart Campbell; and
5.2    the plaintiff
attend this Honourable Court on 30 January 2020 for cross-examination on his affidavit sworn 6 January 2020.
4.6.    in the alternative, paragraphs 14, 15, 19, ~~and~~ 26 and 54 of the Statement of Claim be struck out;
5.7.    the defendant have his costs of and incidental to this application; and
6.8.    such further orders as this Honourable Court deems fit.
On 30 January 2020, the Master heard the applications. Both parties relied on affidavit evidence. Inter alia, Sullivan tendered two emails from Detective Senior Constable Randle of Northern Beaches Detectives, Manly police station, NSW (Randle) with whom there had been communications concerning the possibility of the NSW police taking up the matter. In the first of those emails (dated 7 February 2017) Randle stated:
At this stage I do not believe that we would be able to establish that Mr Krepp has committed an offence within New South Wales.
Based on the information you have provided me the offence which may have occurred in New South Wales was Mr Krepp presenting a fraudulent power of attorney to the Commonwealth Bank in order to gain control of your bank accounts. In order to establish this offence I would require the following evidentiary items:
- A copy of the power of attorney document as presented to the bank
-A copy of the form submitted by Mr Krepp to the bank to gain access to the account
-Transaction records to show that the money was removed from the account by Mr Krepp
I have spoken with the Commonwealth Bank in relation to the records relating to your mortgage and streamline accounts. I have been informed by the bank that they have a seven year document retention policy, and after this time the documents are destroyed. As a result they do not have any records for the mortgage or streamline accounts for the period during 2007 when the offences are alleged to have occurred. The bank representative was of the opinion that these records would have been destroyed in late 2014 to early 2015 in accordance with the banks policy.
Without the documents I cannot establish that the offence has occurred, let alone establish that it has occurred within New South Wales.
If you are not able to provide me with some form of financial documents which establish the offence then there is no point in providing a statement in relation to the matter as it cannot be investigate [sic] any further.
In response to this email, further material was apparently sent to Randle but the second of the two emails from Randle (dated 8 February 2017) made clear that no action would be taken by NSW police thus:
I have reviewed the letters which you sent through and these have clarified the progression of events much clearer. However, this does not change my initial assessment that we have insufficient evidence to establish that a criminal offence has been committed within New South Wales. In order for the NSW Police to investigate and prosecute this matter we would have to establish that Mr Krepp, whilst physically present in the state of New South Wales, fraudulently gained access to your bank account and removed the funds. For simplicity I will break down the issues in point form:
-Without a copy of the power of attorney we are unable to establish it’s [sic] validity.
-The documents provided to the Commonwealth Bank have now been destroyed, which means we are unable to prove what documents were provided to the bank to gain access to your account.
-We do not know when, where or how the documents where [sic] submitted to the Commonwealth Bank so we are unable to create a geographical nexus linking the crime to the jurisdiction of the NSW Police.
For this reason the matter will not be investigated any further.
On the same topic, an affidavit sworn on 11 November 2019 by Sullivan’s solicitor (FDN 13) was tendered wherein he deposed:
I am instructed by the Plaintiff that he spoke with the Police in South Australia, Victoria, and New South Wales in or about 2016 about the conduct of the Defendant the subject of these proceedings but he has since been advised that each of these Police forces declined to take any further action in relation to the Plaintiff’s complaints.
On the same topic, an affidavit sworn on 6 January 2020 by Mr Geoffrey Steuart Glanville (FDN 14) (who rendered some assistance to Sullivan in relation to this matter) was tendered wherein Glanville deposed:
7.Later some time in 2016 suggested to the Plaintiff that I believed the proceeds of sale had been misappropriated and with his consent I approached the Police in the states of South Australia first, Victoria second, and lastly being passed on to the New South Wales Police as a result of my discussions with the Victorian Police.
8.Ultimately I was told by the Police of each State that they would not be able to investigate this matter further given that it was too difficult to ascertain in which jurisdiction crime had occurred.
9.I spoke with the Plaintiff about this and as a result he ultimately decided not to pursue the matter with the Police any further.
10.I have not had any further communications with the Police about this matter since then and believe that no investigation is ongoing.
On the same topic, an affidavit sworn by Sullivan (FDN 15) was tendered wherein he deposed:
3.In 2016, I spoke with Mr Geoffrey Glanville about the circumstances of these proceedings. With my permission, he had discussions with the Police in South Australia, Victoria, and ultimately New South Wales about the Defendant to no effect.
4.The only correspondence I had with the Police was answering questions from a David Randle, Detective Senior Constable in New South Wales via email. Now shown to me and marked hereto as LMS-1 is a copy of said chain of emails, which ultimately resulted in the statement from DSC Randle stating “For this reason the matter will not be investigated any further.”
Inter alia, the defence tendered an affidavit sworn by Krepp on 23 January 2020 (FDN 18) wherein he deposed:
3.I refer to the affidavit of my solicitor, Mr Mario Reshan Shavin Silva, affirmed and filed 25 October 2019.
4.I acknowledge that I have already filed a Defence in these proceedings, but further say that:
4.1    the Defence filed is a bare defence which broadly denies the claims made by the Plaintiff;
4.2    I drafted the filed Defence before instructing solicitors in relation to this matter; and
4.3    I was only advised of the consequences of filing a Defence in this matter after the listed mediation in this matter on 27 September 2019.
5.If criminal proceedings are brought against me, I expect that they will relate to largely the same matters and circumstances which are alleged in the statement of claim in these proceedings.
6.If I am now required to defend these proceedings by filing a detailed defence, I will be required to address the matters alleged against me by addressing the allegations in an amended detailed Defence in a manner that will interfere with my right to silence in the criminal prosecution that I am concerned is forthcoming. I do not wish to waive my right to silence.
7.I am particularly concerned about waiving my right to silence in circumstances where the allegations of fraud made against me are vague and unparticularised and where I have not been provided with details of what the plaintiff has apparently reported to the police. I note that the email dated 7 February 2017 from Detective Senior Constable David Randle to the plaintiff (which forms part of the exhibit LMS-1 to the plaintiff’s affidavit sworn 6 January 2020) refers to an allegation that I “presented a fraudulent power of attorney” to the Commonwealth Bank in order to gain control of the plaintiff’s bank accounts. This allegation is said by Detective Randle to be based upon the information the plaintiff has provided him. I also note that this allegation is not made by the plaintiff in his Statement of Claim and that he alleges instead (in paragraph 19 (A) of the Statement of Claim) that “further particulars of the manner in which the defendant misappropriated the Proceeds will be provided after the completion of disclosure”.
The Judgment of the Master

At the hearing before the Master, the focus was squarely on the main application which was to stay the proceedings. Her Honour dismissed that application and the defendant does not appeal against that dismissal. However, it is important to note that her Honour’s approach to that primary issue, and the way in which she resolved it, form an important background to a consideration of the Grounds of appeal presently before me. Her Honour’s analysis of the authorities and facts relevant to the primary issue and her analysis of the correct approach to the resolution of that matter flowed through to the subsidiary matters the subject of the Grounds of appeal; they did not need to be restated by her Honour in the context of her subsequent consideration of those subsidiary matters.
The Master’s resolution of the primary application for a stay
Her Honour proceeded as follows:[2]
[2]    I have omitted some passages and authorities cited.
12. … Moshinsky J, in Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited,[3] provides a useful summary of the relevant authorities and the principles to be elicited from them. He said, inter alia:
[3] [2019] FCA 964.
…
First, courts have the power to control their proceedings and to order a stay in an appropriate case; it will be appropriate to do so where the interests of justice require such an order: Zhao at [36] per French CJ, Hayne, Kiefel, Bell and Keane JJ; CFMEU v ACCC at [22] per Dowsett, Tracey and Bromberg JJ.
Secondly, a plaintiff is prima facie entitled to have his, her or its civil action tried in the ordinary course and a stay therefore requires justification on proper grounds (with the applicant for a stay bearing the burden of demonstrating proper grounds): see Zhao at [39]; McMahon v Gould at 206.
Thirdly, a court will not grant a stay of a civil proceeding merely because related charges have been brought against an accused and criminal proceedings are pending; a stay of the civil proceeding may be warranted if it is apparent that the accused is at risk of prejudice in the conduct of his, her or its defence in the criminal trial: see Zhao (2015) 255 CLR 46 at [35]; CFMEU v ACCC at [22]; see also Corporations Act, s 1331. The risk of prejudice must be real: see CFMEU v ACCC at [22]; Ransley at [22] per Jagot J. As to possible prejudice to an accused, the following have been recognised as relevant factors:
(a)     prejudice to the accused’s right to silence or privilege against self-incrimination: see Zhao at [42]-[47]; CFMEU v ACCC at [23]; Ransley at
[24]-[30]; Obeid at [4]; and
(b)     the possibility of publicity that might reach and influence jurors: see CFMEU v ACCC at [44]-[46].
It may not be necessary for the applicant for the stay to state the specific matters of prejudice before a stay could be contemplated. As the High Court said in Zhao at [43], “to require the second respondent to do so would be to make the risk of prejudice a reality by requiring him to reveal information about his defence, the very situation which an order for a stay seeks to avoid”.
A number of recent decisions have emphasised that the possibility of protective orders being made (such as an order made under s 128 of the Evidence Act 1995 (Cth) or a non-publication or suppression order) is not an adequate protection against the risk of prejudice to the accused: see Zhao at [44]-[46]; CFMEU v ACCC at [24]-[25]; Ransley at [29]-[30]; Re Plutus Payroll at [38] and [42] per Brereton J; Websyte at [121].
…
Sixthly, the risk of prejudice identified by an applicant for a stay must be weighed against the prejudice that a stay of the civil proceeding would occasion: see Zhao at [47], [50]; CFMEU v ACCC at [22].
Seventhly, the principles relevant to the exercise of the discretion to grant a stay are not different in the case of a proceeding brought by a regulator, from those that apply in the case of a proceeding brought by a private plaintiff: CFMEU v ACCC at [60]-[62].
Eighthly, each case must be judged on its own merits; the matters that might individually, or in combination, be relevant to the exercise of the discretion are not rigid or closed; the factors identified in the authorities are not a prescriptive or an exhaustive statement of all of the considerations, or the weight to be attached to them: see Australian Competition and Consumer Commission v The Construction, Forestry, Mining and Energy Union [2016] FCA 504 at [51] per Middleton J (application for leave to appeal dismissed: CFMEU v ACCC).[4]
13. Importantly, the decision to grant a stay will depend on a balancing of the rights of the plaintiff, to have his action tried in the ordinary course, and those of the defendant, who should not have to face the risk that his right to claim the privilege against self-incrimination will be infringed. Each case must be judged on its merits. Ultimately, the decision in each case will depend on what the interests of justice demand.
[4] [2019] FCA 964 at [51]–[63].
Her Honour then referred to the evidence before her in detail and then proceeded as follows:
Consideration
24. The defendant’s application for a stay must be dismissed. Far from there being any evidence that criminal proceedings are likely or imminent, the evidence is in fact, that there is no current police investigation on foot, and there is unlikely to be one.
25. The plaintiff’s evidence is that his last contact from police in any state was the email from Mr Randle, on 8 February 2017, at which time he was advised that the matter would not be investigated any further. The defendant has adduced no evidence to the contrary. There is no reason to believe or infer that a criminal investigation will be commenced or continued, or that criminal proceedings will be brought against the defendant. I note that in this regard, the defendant carries the burden of proof.
26. I note, too, that the authorities demonstrate that courts have been reluctant to impose a stay, even in cases where the defendant has been able to establish that an active police investigation is on foot. In Citation Resources Ltd v Landau,[5] for example, the Federal Court refused to grant a stay, where the defendant relied on an affidavit sworn by an officer of ASIC, who deposed that the defendant was potentially facing a criminal action as a result of ASIC’s investigations.[6] In discussing the meaning of the phrase, that litigation was “on the cards”, McKerracher J said:
[5] [2016] FCA 1114.
[6] [2016] FCA 1114 at [45].
The expression ‘on the cards’ appears to be interpreted as meaning ‘reasonably possible’ or a ‘reasonable possibility’: see, for example, Websyte Corporation Pty Ltd v Alexander (No 2) [2012] FCA 562 per Dodds-Streeton J (at [117]); and see also CC Containers Pty Ltd v Lee (No 2) [2012] VSC 149 per Ferguson J (at [15]). It is not the position that for a prosecution to be ‘on the cards’ a decision must have been made to recommend prosecution or that a decision has already been made to send a brief to the relevant prosecuting authority. In Australian Securities and Investments Commission v Craigside Company Limited [2013] FCA 201, Jagot J considered whether a prosecution was ‘on the cards’ where ASIC has brought proceedings for declarations for contraventions of certain provisions of the Corporations Act against, amongst others, two individuals, one of whom was not the subject of an investigation and one of whom had been investigated. In relation to the person who had not been investigated, ASIC refused to rule out the possibility of his being prosecuted. In those circumstances, the Court took the view that a prosecution of both men was ‘on the cards’. As a matter of commonsense, one reason for ASIC continuing to investigate the first person was to enable it to determine whether or not to prosecute him. In relation to the second person, it was clear that his conduct was related to the first person and the Court concluded that ASIC must already have believed it had a sufficient basis to establish the civil standard of proof that the second person had contravened a provision of the Corporations Act, and even though no steps of investigation had taken place, it was sufficient for a prosecution to be ‘on the cards’.
I have referred to HLP above. In that case, ASIC sought a declaration that a director operated an illegal managed investment scheme and carried on a financial services business without an Australian financial services licence. Finkelstein J noted that ASIC’s investigation into the person’s activities was not confined to determining whether he committed merely regulatory offences, but, rather, what was also under consideration was whether he should be charged with any criminal offences. Again, ASIC did not identify the relevant offences. It indicated that if charges were laid, its preliminary view was that they would be tried in a Victorian court, probably the County Court. In those circumstances, Finkelstein J considered that a criminal prosecution was ‘on the cards’.
In these cases, decisions to prosecute had not been made and a brief had not been sent to the relevant prosecuting authority. Moreover, in Craigside, the second person was not even the subject of investigation, albeit that ASIC did not rule out the possibility of his being prosecuted.
The prospects of criminal prosecution in relation to Mr Landau would appear to be more advanced than these examples. I am entirely unable and expressly make no comment whatsoever about the prospects in relation to such a prosecution. But, in this instance, while any one particular matter may not, taken alone, be sufficient to constitute formation of an opinion that criminal prosecution is ‘on the cards’, the totality of the following matters support such a possibility.[7]
27. Despite reasoning as he did in [52], McKerracher J considered that it was “premature” to conclude that a criminal prosecution was “on the cards”.[8] In the matter at bar, the likelihood of criminal proceedings against the defendant is far more remote than in the matter dealt with by McKerracher J.
28. In Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 5),[9] Gordon J considered that:
On the cards” [sic] means there must be a “reasonable possibility” of a prosecution …[10]
29. She then found that, despite correspondence from ASIC stating that investigations into the defendant were continuing and no decision as to prosecution had yet been made, a prosecution was not “on the cards”.
30. In light of these authorities, it is impossible to find that a criminal prosecution of the defendant in the present case is on the cards, or reasonably likely. The only evidence on the topic is the plaintiff’s, to the effect that no criminal investigation is ongoing. Thus, there is no prospect of a prosecution as matters currently stand.
[7] [2016] FCA 1114 at [49]–[52].
[8] [2016] FCA 1114 at [54].
[9] [2013] FCA 369.
[10] [2013] FCA 369 at [18].
The present appeal to the Supreme Court
On 26 March 2020, a Notice of Appeal (FDN 23) was filed on behalf of Krepp which seeks the following substantive orders:
2.1Paragraphs 19, 26 and 54 of the Statement of Claim be struck out, with leave to replead with further particulars;
2.2The [Appellant] be excused from filing a further defence and/or to make further and better disclosure until the close of the [respondent’s] case;
The Grounds of appeal are as follows:
The learned Judge erred in law and/or in the exercise of her discretion in:
3.1Refusing to strike out and/or order further particulars of the pleas of fraud (Reasons, paragraph 42); and
3.2Refusing to excuse the defendant from filing a further defence and/or to make further and better disclosure until the close of the plaintiff’s case (Reasons, paragraph 43).
The positions of the parties in overview
In brief, the appellant’s position is that, as to Ground 1, certain paragraphs of the statement of claim should be struck out on the basis that they plead evidence rather than material facts; and, further, that other paragraphs do not adequately particularise the allegations of fraud and should be struck out on that basis. As to Ground 2, while it is not contended that the Master erred in refusing to order a stay of proceedings, there remains a risk that the filing of a positive defence and/or the making of disclosure at this time in response to orders to do so may lead to the bringing of criminal proceedings against him and, accordingly, the making of such orders should be deferred to the end of the plaintiff’s case at trial.
The respondent’s position is briefly that the appellant has already made disclosure and filed a defence and the orders for the filing of a second defence and for additional disclosure were made on 27 September 2019 by consent. Counsel submits in writing that three matters flow from these facts:
(a)First, there is no submission, much less evidence, as to why the initial disclosure was inadequate, and hence why the further disclosure may expose the defendant to a real and appreciable risk of a criminal prosecution.
(b)Secondly, in a context where a defence has already been filed, and what is in issue is an amended defence, there is no submission, much less evidence, as to the scope of any more expansive pleading that would otherwise be filed, and hence why the further disclosure may expose the defendant to a real and appreciable risk of a criminal prosecution.
(c)Thirdly, there is no proper explanation for either the delay or the tactical decisions that have now been made, and why they were not made earlier. The appellant’s affidavit of 23 January 2020 is remarkable for what it does not address. The detail is scant. An inference is seemingly sought from the fact that the respondent was not represented until 14 June 2019 that he was unaware of his right to make such an application previously. Yet, if that be the case, evidence to that effect could readily have been given. Moreover, it is no explanation for the fact that consent orders were made on 27 September 2019 by consent at a time that he was represented, and the current appeal seeks to substantively impugn the consent orders.
Ground 1 of appeal
As to a suggested refusal to “order further particulars of the pleas of fraud”, it is to be noted that no such alternative application was made in the plaintiff’s Amended Interlocutory Application (reproduced above at [14]). However, the Master, recognising that ordering further particulars in some circumstances might be an available alternative to striking out for want of particulars, considered that alternative of her own motion.
Despite, or perhaps in line with, that lacuna in the Amended Interlocutory Application, the appellant on this appeal seeks an order for the striking out of paragraphs [19], [26] and [54] of the statement of claim with no order being sought for the provision of further particulars. And yet one finds that there is a complaint in Ground 1 of appeal about the matter of particulars.
The Master’s resolution of the application to strike out
The Master resolved the application to strike out thus:
34. The plaintiff says that paragraphs 14 and 15 plead an admission by the defendant, on which the plaintiff intends to rely at trial. They are included in the statement of claim to ensure that the defendant is on notice of the case that the plaintiff intends to run and to ensure that there can be no suggestion that the defendant has been taken by surprise by the plaintiff’s giving evidence of the alleged admission. The admissibility or otherwise of the plaintiff’s evidence will be a matter for the trial judge. The plaintiff has offered to remove these paragraphs from the statement of claim on the proviso that the defendant does not, at trial, seek to preclude the plaintiff from leading this evidence on the ground that it was not pleaded.
35. As to paragraphs 19, 26 and 54, the plaintiff accepts that they amount to pleas of fraud. He says, however, that they are properly particularised. He says that his case is straightforward and there can be no suggestion that the defendant does not know the case he needs to meet. He says that his case is based on inference. The plaintiff says that he does not know how or when the net proceeds were withdrawn from the CBA account; he will ask the Court to draw the necessary inferences, on the basis that the only person with access to the CBA account during the plaintiff’s period of incarceration was the defendant, that he did not consent to the defendant’s withdrawal of the net proceeds, and the defendant has in fact admitted to withdrawing the net proceeds. He will ask the Court to draw similar inferences in relation to the motor vehicle and other personal property.
After referring to the well-known “fine line between material facts and evidence” and referring to the decision of the Full Court in H Stanke & Sons Pty Ltd v O’Meara,[11] her Honour concluded:
[11] (2007) 98 SASR 450.
37. In my view, paragraphs 14 and 15 do not offend against the rule that evidence must not be pleaded. As set out in the passage from Stanke v O’Meara, at times there will be overlap between evidence and material facts. This is such a case. It is impossible for the plaintiff to plead sufficient particulars of the defendant’s alleged admission, without in fact pleading the document in which the plaintiff says that the admission is made.
38. Even if I am wrong about that, I am of the view that there is no need to strike out paragraphs 14 and 15. Rule 104 of the Supreme Court Civil Rules 2006 (“the Rules”) provides:
104—Court's power to strike out pleading
The Court may strike out a pleading in whole or part if the pleading—
(a) does not comply with these rules; and
(b) is an abuse of the process of the Court or prejudices the proper conduct of the action.
39. Even if paragraphs 14 and 15 do offend against Rule 98, they do not amount to an abuse of process nor do they prejudice the proper conduct of this action.
As to the possibility of an order for further particulars, the Master held:
41. Each of the provisos in R 102(3)(b) must be satisfied for further particulars to be ordered. It cannot be said that the statement of claim in this matter fails to give the defendant fair notice of the plaintiff’s case, nor that he will suffer substantial prejudice in the absence of further particulars.
42. I do not consider that the paragraphs complained of amount to an abuse of process, or that they prejudice the proper conduct of this action. In the event that the plaintiff fails to prove sufficient facts to allow the Court to draw the required inferences, he will not succeed at trial. The defendant is fully apprised of the plaintiff’s case.
Consideration of Ground 1 of appeal
I agree with the Master’s decision and reject Ground 1 of appeal. I would add only the following remarks.
There are innumerable decisions in many jurisdictions concerning the striking out, and ordering of further particulars, of pleas of fraud; it is not suggested that this experienced Master was unaware of the correct principles or that her Honour proceeded by reference to other than those correct principles. Cases will always be factually different and it is the province of the judicial officer to apply the correct principles to the facts presented. An exercise of judicial discretion will be interfered with only by the application of the precepts adumbrated in such cases as House v The King.[12] Further, and importantly, we are here dealing with an exercise of discretion concerning pre-trial interlocutory procedural matters and the Courts have consistently stressed their reluctance to interfere with such decisions unless plain error can be clearly established.
[12] (1936) 55 CLR 499.
Thus, in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc, the plurality judgment of the High Court stated:[13]
Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. Counsel for Brown urged that specific cumulative bars operate to guide appellate courts in the discharge of that task. Not only must there be error of principle, but the decision appealed from must work a substantial injustice to one of the parties. The opposing view is that such criteria are to be expressed disjunctively. Cases can be cited in support of both views: for example, on the one hand, Niemann v. Electronic Industries Ltd.; on the other hand, De Mestre v. A. D. Hunter Pty. Ltd. For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various. We would merely repeat, with approval, the oft-cited statement of Sir Frederick Jordan in In re the Will of F. B. Gilbert (dec.):
“… I am of opinion that, … there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.”
See also, Brambles Holdings Ltd. v. Trade Practices Commission; Dougherty v. Chandler. It is safe to say that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration. [Citations omitted]
[13] (1981) 148 CLR 170, 177.

The conjunctive/disjunctive ‘debate’ referred to here has, for present purposes at least, been settled by r 102(3) and (5). Rule 102 provides in full:
102—Power to order further particulars of party’s case
(1)The Court may, on its own initiative or on application, order a party to file further particulars of its case.
(2)The further particulars are, however, to be confined to facts and matters that are material to the party's action.
(3)     The Court will only make an order for further particulars if satisfied that—
(a)     the pleadings do not give fair notice of the party’s case; and
(b)     the order is necessary to avoid substantial prejudice to the party in whose favour the order is to be made.
(4)Unless the Court directs to the contrary, the further particulars are to be provided by substituting for an existing pleading a new pleading incorporating the further particulars required by the Court.
(5)No pleading is defective for want of particularity unless the missing particulars would be ordered under this rule. [Emphasis added]
Rule 102 makes clear that the Court will only order further particulars in quite limited circumstances, namely where the pleadings do not give fair notice of the party’s case and the order is necessary to avoid substantial prejudice to the party in whose favour the order is to be made.[14]
[14] In Adam P Brown Male Fashions the Court had under consideration Rules which conveyed power subject to satisfaction as to both (on one view) or either (on the other view) of two conditions; the former view would be termed ‘conjunctive’ and the latter view ‘disjunctive’. The South Australian Rule 102 has the effect that the Judge can only make such order if satisfied of both conditions which would be termed ‘conjunctive’.
Further, by dint of r 102(5), the above obligations apply not only to an application for further particulars but also to an application to strike out an opponent’s pleading on the ground that it is defective for want of particularity.
Thus, to establish that a pleading is defective for want of particularity and should therefore be struck out, one must establish that the particulars alleged to be missing would be ordered under r 102; and to establish that, one must establish that r 102(3) is satisfied in that “the pleadings do not give fair notice of the party’s case and also that the order is necessary to avoid substantial prejudice to the party in whose favour the order is to be made”.
Of course, “substantial prejudice” of the relevant kind may arise in many sets of circumstances but the present point is that it must be actual rather than merely theoretical. Here, the Master was well entitled to be unsatisfied of either or both of the mandatory provisos in r 102(3).
Ground 2 of appeal
Ground 2 of appeal is as follows:
The learned Judge erred in law and/or in the exercise of her discretion in:
3.2Refusing to excuse the defendant from filing a further defence and/or to make further and better disclosure until the close of the plaintiff’s case (Reasons, paragraph 43).
This ground must relate to the application by the defendant at paragraph 2 of the Amended Interlocutory Application filed on 23 January 2020 which, as reproduced above at [14], is as follows:
2.the orders made by this Honourable Court on 27 September 2019 for the Defendant to file a second Defence and for the Defendant to make additional disclosure within 6 weeks be vacated;
It is to be noted that the origin of the suggested further alternative application order “to make further and better disclosure until the close of the plaintiff’s case” was not an application contained within either the original or the amended Interlocutory Application. Rather, it was simply a proposal made in the course of the applicant’s submissions before the Master which was never carried through to a formal amendment of the application.
The judgment of the Master
The Master refused to accede to paragraph 2 of the application. As noted above, much of her Honour’s reasoning concerning the primary application for a stay flowed through to a consideration of the matters now the subject of Ground 2 of appeal. Her Honour further observed:
43. … If the defendant wishes to plead a positive case, he must do so now. There is no good reason to allow the defendant to take the plaintiff by surprise as to the matters he intends to plead in defence of the claim. If he wishes to put a positive defence, it must be done at the time required by the Rules. The same applies to disclosure. There is no reason why the defendant should be given a significant procedural advantage over the plaintiff, by not requiring disclosure the documents in accordance with the Rules.
Consideration of Ground 2 of appeal
The authorities[15] draw a clear distinction between the making of orders to file a positive defence or make disclosure in actions designed to impose a penalty upon the defendant on the one hand, and ‘ordinary’ civil actions on the other hand.
[15] The authorities (including from overseas and particularly the United Kingdom) are many. Some only of the important Australian authorities over the last forty years or so (in chronological order) are: Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat & Livestock Corporation & Ors (1979) 42 FLR 204; Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328; Re New World Alliance Pty Ltd (Receiver and Manager Appointed); Sycotex Pty Ltd v Baseler & Ors (1993) 47 FCR 90; The Daniels Corporation International Pty Ltd & Anor v Australian Competition & Consumer Commission (2002) 213 CLR 543; A & L Silvestri Pty Ltd v Construction, Forestry, Mining and Energy Union (2005) 226 ALR 247; Australian Securities and Investments Commission v Mining Projects Group Ltd (2007) 164 FCR 32; MacDonald v Australian Securities and Investments Commission (2007) 73 NSWLR 612; Pascoe & Anor v Divisional Security Group Pty Ltd & Ors (2007) 209 FLR 197; Anderson & Ors v Australian Securities and Investments Commission (2012) 297 ALR 546; Re Australian Property Custodian Holdings Ltd (In Liq) (Recs and Mgrs Apptd) (Controllers Apptd) (No. 2) (2012) 93 ACSR 130; CC Containers Pty Ltd & Ors v Lee & Ors (No. 2) [2012] VSC 149; Woods v Skyride Enterprises Pty Ltd [2012] WASC 4; Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No. 5) [2013] FCA 369; Gemmell & Anor v Le Roi Homestyle Cookies Pty Ltd (In Liq) & Ors (2014) 46 VR 583; Citation Resources Ltd v Landau [2016] FCA 1114; (2016) 116 ACSR 410; QC Resource Investments Pty Ltd (In Liq) v Mulligan [2016] FCA 813; LM Investment Mgmt Ltd v Drake & Ors [2017] QSC 34.
In the Federal Court decision in Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Livestock Corporation & Ors, Deane J said:[16]
It is a well-established principle that a defendant in proceedings which are solely for the recovery of a pecuniary penalty should not be ordered to disclose information or produce documents which may assist in establishing his liability to the penalty. Even where, as in the present case, the proceedings are not for recovery of a penalty but to prevent and redress civil injury, a party to litigation ought not to be compelled to provide information or produce documents for inspection by the other party if the result thereof will be to provide evidence against him which may be used to establish his liability to a penalty in other proceedings.
In the former case, that is to say in a mere action for a penalty, a court should, in the absence of statutory provision to the contrary, refuse to make any order at all against the defendant for discovery or production of documents or provision of information for the reason that the whole and avowed object of the proceedings being the imposition and the recovery of a penalty, an order for the production of documents or provision of information against the defendant can, so far as the prosecutor of the action is concerned, properly have no other intended consequence. This is a broad and unqualified rule whose origins are apparently to be found in a reluctance on the part of the Court of Chancery to lend the aid of its discovery proceedings to the common informer.
In the latter case, that is in a case such as the present where the proceedings are not for the recovery of a penalty, there is no general rule precluding the making of an order for discovery or interrogatories and there will ordinarily be no proper ground for objecting to an order for production of documents or provision of information being made. The party against whom such an order is made is left to object to producing particular documents or providing particular information on the ground that such production or provision may tend to expose him to a penalty. [Emphasis added] [Citations omitted]
[16] (1979) 42 FLR 204, 207–208.
In the later High Court decision in Pyneboard Pty Ltd v Trade Practices Commission, the approach of Deane J was approved by the majority thus:[17]
Indeed, in a civil action brought merely to establish a forfeiture or enforce a penalty the rule is that neither discovery nor interrogatories will be allowed (In re A Debtor; Associated Northern Collieries). See generally the discussion by Deane J. in Refrigerated Express Lines (A’asia) Pty. Ltd. v. Australian Meat and Live-stock Corp. There his Honour drew a distinction between discovery in a mere action for a penalty and discovery in an action which was not for a penalty the result of which might be used to establish a party’s liability to a penalty in other proceedings. In the first situation, the court should, in the absence of statutory provision to the contrary, refuse to make any order for discovery, production of documents or the provision of information for the reason that an intended consequence of the discovery, production of documents or provision of information is the imposition of the penalty, this being the object of the action. His Honour described this as “a broad and unqualified rule whose origins are apparently to be found in a reluctance on the part of the Court of Chancery to lend the aid of its discovery proceedings to the common informer (see Mexborough) and Heimann v. Commonwealth). To these authorities there should be added a reference to the statement of Lord James of Hereford in National Association of Operative Plasteres v. Smithies, that courts of equity were averse to actions for penalties and forfeitures being brought and would not assist them. But in the second situation the order will be made and the party against whom the order is made may object to the production of particular documents or to the provision of particular information on the ground that it may tend to expose him to a penalty. [Emphasis added] [Citations omitted]
[17] (1983) 152 CLR 328, 335–336 (Mason ACJ, Wilson and Dawson JJ).
In Pascoe & Anor v Divisional Security Group Pty Ltd & Ors, White J distinguished the well-known decision in One.Tel v Rich[18] on the basis that it was ‘exceptional’ in that the proceedings against Mr Rich had there already been commenced by ASIC, in which proceedings he was entitled to the privilege applying to proceedings for the recovery of a penalty. Thus, White J stated:[19]
33. In my view, One.Tel Ltd (in liq) v Rich is one of the exceptional cases referred to by Deane J in Refrigerated Express. If that were not so, I would be respectfully of the view that it is not in accordance with appellate authority by which I am bound. Being such an exceptional case, it is distinguishable. No exceptional circumstances apply in the present case. It is not suggested that proceedings for a pecuniary penalty order or a disqualification order have been brought or foreshadowed by ASIC. The third defendant may be entitled in these proceedings to object to answering particular questions on the grounds that answers may expose him to a civil penalty. He may be entitled to object to producing particular documents for inspection on the same grounds, provided, in each case, that he swears to a belief that to answer the questions, or to produce the documents, would tend to expose him to that jeopardy, and the Court is satisfied that the objection is well taken.
…
34. … Admissions in a defence would not tend to expose the third defendant to liability for a civil penalty. The purpose of pleadings is to define the issues for the trial. Whilst a defendant who makes any allegations of fact in the defence is required to depose that he or she believes the allegations to be true, a defendant is not required to depose that he or she believes allegations of fact in the statement of claim, which are admitted, to be true: (UCPR, r 14.23(3)).
35. The filing of an unverified defence is unlikely to create a risk of exposure to a civil penalty (Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 86), although it is possible to conceive of circumstances where unverified allegations of fact in a defence may lead to a train of enquiry by ASIC which could have that tendency (Chief Executive Officer of Customs v Camile Trading Pty Ltd (2004) 58 ATR 163 at [32]). It may be that the pleading of verified allegations of fact or verified non-admissions could have a tendency to expose the third defendant to liability for a civil penalty. However, the third defendant is not to be excused in limine from filing a verified and certified pleading.
36. As the proceedings are not proceedings for the imposition of a penalty, it was necessary for the third defendant to depose on affidavit that the verification of the defence could tend to prove that he was liable to a civil penalty, and for the Court to be satisfied that there were reasonable grounds for that belief. No affidavit was relied upon on this application.
[18] (2005) 190 FLR 443.
[19] (2007) 209 FLR 197.
In Re Australian Property Custodian Holdings Ltd (In Liq) (Recs & Mgrs Apptd) (Controllers Apptd) (No. 2), Robson J of the Victorian Supreme Court considered, at length, a number of the central authorities and formulated a number of principles to which reference is now often made. They are as follows:[20]
[20] (2012) 93 ACSR 130, 154 [115].
(a)In the case of self-incrimination privilege, the defendant must establish that the provision of information or the production of documents in the civil case leads to a real and appreciable risk of a criminal prosecution before the privilege can be invoked.
(b) In an action to recover a penalty it is not necessary for a defendant to establish that there is a risk the defendant will be subjected to a penalty by providing information to the plaintiff. The plaintiff is seeking the information for that very purpose.
(c) In civil actions, where no claim for penalty is made, the defendant must show that providing the information requested would tend to subject him to a penalty in separate proceedings before he can rely on the privilege.
(d) The privilege against exposure to penalty is a common law right of privilege that may be availed of as of right and is enforced and protected by the court.
(e) The privilege against the exposure to penalty may be relied on by a defendant to a civil procedure in which a penalty is not sought (the non penalty civil proceeding).
(f) The privilege against the exposure to penalty extends to the obligation upon a defendant to plead, give discovery and answer interrogatories in the non penalty civil proceeding.
(g) As a general rule, the privilege does not entitle a defendant to a non penalty civil proceeding to obtain an order in limine excusing him or her from giving discovery or answering interrogatories.
(h) In exceptional circumstances, a defendant may be entitled to such orders in limine.
(i) By extension, in exceptional circumstances, a defendant may be entitled to orders in limine that he may deliver a defence that departs from the Rules of Court only in so far as to protect his privilege against exposure to penalty.
(j) Exceptional circumstances may exist where the defendant to the civil proceeding is also the subject of separate civil penalty proceedings alleging the same or similar conduct.
(k) Where a defendant seeks to take the privilege against exposure to penalty in a defence, the proper course is to plead accordingly and – if challenged – the defendant will be required to justify that the privilege is taken in good faith and on reasonable grounds for the privilege to stand. [Citations omitted]
Robson J then considered the position concerning the filing of a defence and stated:[21]
116. As discussed above, there is a clear line of authority regarding the protection of the privilege from exposure to penalty. As a general rule, a defendant in a penalty proceeding is entitled to be excused in limine from giving discovery or answering questions in penalty proceedings. In other civil proceedings, the privilege may not be invoked in limine but requires the defendant to exercise the privilege – where it is available – on a particular interrogatory question or production of a particular document.
117. Although the authorities regarding pleading a defence are not as extensive as those on discovery and interrogatories, the position is treated consistently. The authorities establish that in civil penalty proceedings the defendant is not excused from filing a defence. He is, however, excused, in limine from complying with the rules relating to the content of the defence, but only to the extent that the rules would override the privilege. This requires a plea by plea examination of the requirements of the rules and their interaction with content of the privilege. The rationale for being excused in limine is that the purpose of the proceeding is to impose a penalty.
118. The position with pleading of a defence in a non penalty proceeding differs from a penalty proceeding, in that the onus is on the defendant in the non penalty proceeding to establish that he has a bona fide and reasonable basis for exercising the privilege when pleading his defence. Unlike in a penalty proceeding, the defendant is not entitled in limine to file a defence relying on the privilege. If the defendant in a non penalty proceeding is able to establish a bona fide and reasonable basis for exercising the privilege then the defendant may take the same approach to pleading his defence as that taken by a defendant in a penalty proceeding.
119. In my view, as a general rule, the proper course to be adopted is that where a defendant in the non penalty proceeding believes he has good grounds to rely on the privilege in pleading his defence, then he should plead according to the rules, but taking the privilege where appropriate. If the pleadings in that form are then challenged by the plaintiff, then the proper course is for the defence and its justification in taking the privilege to be ruled on by the Court with the defendant bearing the onus of establishing a bona fide and reasonable basis for taking the privilege. [Emphasis added]
[21] (2012) 93 ACSR 130, 155 [116]–[119].
Of course, in some cases of non-penalty proceedings, all of the circumstances of the case (including the very seriousness and magnitude of specific criminal offending being alleged), may itself demonstrate that prosecution is ‘on the cards’ even though there is no separate evidence led on the application specifically directed to that issue.[22] However, by contrast, the present case is notable for the fact that the only evidence presented to the Master was that three police forces (South Australia, Victoria and NSW) had been approached and each had exhibited no interest in investigating (let alone prosecuting); and the third, (NSW), had positively declared that it would not investigate the matter further for the reasons reproduced above at [16].
[22] An example is provided by the decision in CC Containers Pty Ltd & Ors v Lee & Ors (No. 2) [2012] VSC 149, 7 [18] wherein Ferguson J of the Victorian Supreme Court observed: “Where, as in this case, the allegations are of a very serious nature and magnitude, the pleading alone is sufficient to establish that there is a real and appreciable risk of criminal prosecution should the matters alleged be proven. Similarly, in this case, the proof of those allegations would tend to subject Messrs Chong and Neale to a penalty in a separate proceeding. These are not trifling matters nor matters which are tangential to the claim. At the heart of this claim are allegations of regular and systemic fraud with the amount claimed being in the many millions of dollars. If the allegations are established, then in my opinion it is likely that a prosecuting agency would examine the case very closely with an eye to criminal prosecution or imposition of a penalty. In those circumstances, the privileges may be claimed.”

These matters, combined with the considerable time that has now elapsed since the allegations against Krepp were first made to the police forces, were important in demonstrating that it was not appropriate to stay the civil proceedings since it could not be shown that a prosecution was, or is, ‘on the cards’.
The recent decision in QC Resource Investments Pty Ltd (In Liq) v Mulligan provides an example of a case not dissimilar to the present. Edelman J[23] there commenced his judgment thus:[24]
1. This interlocutory application is concerned with whether the respondent, Mr Mulligan, can decline to plead to 92 paragraphs of a statement of claim by making a sweeping claim alleging that if he were required to plead to those paragraphs then he might be exposed to a penalty in other, unspecified litigation which has not been threatened or commenced.
…
3. The dispute between the parties only emerged clearly after submissions were filed yesterday afternoon. Essentially, Mr Mulligan submitted that the ordinary pleading rules should give way to his claim of privilege in 92 instances without Mr Mulligan descending to the detail of the reasonable basis upon which he claims a privilege as a basis for relief from pleading a response to any of those paragraphs. The careful written and oral submissions by counsel for Mr Mulligan were more nuanced than this, and the position in the authorities, to which he comprehensively referred, is not wholly pellucid. But this is the broad nature of the dispute as it currently exists.
4. Mr Mulligan’s submission is not correct. He should be required to file and serve a defence that complies with the Federal Court Rules 2011 (Cth) unless he provides affidavit evidence which provides sufficient support in the circumstances of each contested claim for privilege.
[23] Then a Justice of the Federal Court and now of the High Court.
[24] [2016] FCA 813.
His Honour then considered the facts and the procedural history in some detail. After referring to the judgment of Deane J in Refrigerated Express Lines and the majority judgment of the High Court in Pyneboard, his Honour stated:[25]
22. The rationale for the distinction between these two circumstances is obvious and capable of application to other circumstances such as dispensation from rules of pleading. In the first case, where the proceedings are themselves for a penalty then any fact which is admitted, or any positive fact which is pleaded in response, might easily be seen immediately to expose the respondent to a penalty. There will be exceptions. For instance, if the respondent’s position were that there was some basic legal basis upon which the applicants’ claim for a penalty was defective, independently of any facts, then that should be pleaded.
23. In contrast, in a civil case which does not seek any penalty something more will be required before dispensation from pleading rules can be given. The reason why something more is required is because any effects of pleadings upon privilege will usually be less direct. …
24. … where the proceeding does not seek a penalty, the “something more” which is required before dispensation from the rules is granted will depend on all the circumstances of the case and upon the rules of pleading from which dispensation is sought. In a case such as this where the allegations are very serious, the circumstances will colour the extent to which a respondent must descend into detail to show a reasonable basis for dispensation. But it is not enough simply to allege that there is a possibility of ASIC commencing penalty proceedings. It is necessary to descend to the detail of each claim for privilege. As Robson J said in Re Australian Property Custodian Holdings Ltd (in liq) (recs and mrgs apptd) (controllers apptd) (No 2) [2012] VSC 576; (2012) 93 ACSR 130, 155 [119]:
In my view, as a general rule, the proper course to be adopted is that where a defendant in the non penalty proceeding believes he has good grounds to rely on the privilege in pleading his defence, then he should plead according to the rules, but taking the privilege where appropriate. If the pleadings in that form are then challenged by the plaintiff, then the proper course is for the defence and its justification in taking the privilege to be ruled on by the court with the defendant bearing the onus of establishing a bona fide and reasonable basis for taking the privilege.
[25] [2016] FCA 813.
Edelman J, after referring to the remarks of White J in QC Resource Investments, with which he agreed entirely, observed:[26]
40. Exceptional circumstances do not exist in this case such as would permit departure from the rules without descending into any particular details of the particular dispensations sought on each occasion. Mr Mulligan must provide reasonable grounds, by affidavit or submission, for each of the occasions upon which he claims privilege where that privilege is challenged.
[26] [2016] FCA 813.
As noted above, analysis relevant to the matter of a stay also has relevance to the matters raised in the Grounds of appeal. This is a non-penalty case and the authorities establish that in circumstances such as the present, potentially involving the privilege against self-incrimination, a defendant is not to be excused in limine from an obligation to file a defence or provide disclosure. Rather, the defendant is required to specifically object to taking a particular step in the proceeding on the ground that such step might tend to expose him to self-incrimination. Thus, here the appellant was required to adduce evidence and to advance submissions before the Master directed to each particular dispensation sought.
The appellant has failed to discharge that onus cast upon him. It is readily apparent that it was simply not demonstrated that exceptional circumstances existed such as to justify both depriving the plaintiff of the usual opportunity of knowing the nature of the defendant’s defence prior to trial and imposing upon the Court the high risk of dislocation of Court schedules entailed in deferring either, or both, of the obligations to file a positive defence and disclosure to the end of the plaintiff’s case at trial, with the associated high probability of an application by the plaintiff at that time for a substantial adjournment.
For all of the above reasons, I reject Ground 2 of appeal.
Disposition of the appeal
The appeal is dismissed.