There are two recent decisions in the Federal Court of Australia and the Supreme Court of New South Wales usefully discussing penalty privilege and privilege against self-incrimination respectively.
In Re Deane; Ex parte: MSB Capital Holdings Pty Ltd [2023] FCA 919 (8 August 2023), Downes J canvassed penalty privilege, in the context of the Corporations Act 2001 (Cth):
[1] On 12 March 2021, MSB Capital Holdings Pty Ltd (in liquidation) was wound up in insolvency, and the applicants were appointed as its liquidators, pursuant to an order of this Court.
[2] A summons was issued to Mr Rowan Lyndon on 15 February 2023 pursuant to s 596B of the Corporations Act 2001 (Cth) by the liquidators requiring him to:
(1) be examined about the examinable affairs of MSB Capital Holdings Pty Ltd (in liquidation); and
(2) produce to the Court various books defined in the summons (including certain documents).
[3] In the course of the examination before a Judicial Registrar of this Court, Mr Lyndon claimed privilege against exposure to penalty (otherwise known as the penalty privilege) in respect of certain documents produced or required to be produced under the summons.
[4] The liquidators contended that the penalty privilege could not be claimed as it had been abrogated. It was in this context that the Judicial Registrar referred the question of whether s 597 of the Corporations Act abrogates the right to refuse to produce documents in reliance upon the penalty privilege.
[5] For the following reasons, the penalty privilege has been impliedly abrogated and is not able to be claimed by Mr Lyndon in response to the s 596B summons to produce books.
…
[13] Section 597(12A) contains an express qualification to s 597(12). That section provides as follows:
(12A) Where:
(a) before answering a question put to a person (other than a body corporate) at an examination, the person claims that the answer might tend to incriminate the person or make the person liable to a penalty; and
(b) the answer might in fact tend to incriminate the person or make the person so liable;
the answer is not admissible in evidence against the person in:
(c) a criminal proceeding; or
(d) a proceeding for the imposition of a penalty;
other than a proceeding under this section, or any other proceeding in respect of the falsity of the answer.
[14] Section 597(12) of the Corporations Act abrogates the penalty privilege expressly insofar as it could otherwise be raised by a person when answering a question put to them at an examination: see, for example, Gemmell v Le Roi Homestyle Cookies Pty Ltd (in liq) (2014) 46 VR 583; [2014] VSCA 182 at [51] –[59] (Ashley JA, with whom Neave JA and Almond AJA agreed). That decision did not address the question of whether penalty privilege had been abrogated in relation to the production of books pursuant to a s 596B summons.
[15] Finally, s 596F, which is expressed to be subject to s 597, empowers the Court to give directions about, amongst other things, the procedure to be followed at an examination.
CONSIDERATION
Nature of penalty privilege
[16] The privilege against exposure to penalty operates to excuse a person from being compelled to answer any question, or produce any document, if the answer or the production would tend to expose that person to a penalty: Australian Securities and Investments Commission v Mining Projects Group Ltd (2007) 164 FCR 32; [2007] FCA 1620 at [7] (Finkelstein J).
[17] The penalty privilege is a distinct privilege to the privilege against self‐incrimination and was described in Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543; [2002] HCA 49 at [13] and [31] (Gleeson CJ, Gaudron, Gummow and Hayne JJ) in these terms:
…That privilege is one of a trilogy of privileges that bear some similarity with the privilege against incrimination. The other two are the privilege against exposure to forfeiture and the privilege against exposure to ecclesiastical censure. The privilege against exposure to penalties and that against exposure to forfeiture had their origins in the rules of equity relating to discovery, but it is clear, as noted by Mason A‐CJ, Wilson and Dawson JJ in [Pyneboard Pty Ltd v Trade Practices Commission (1982–1983) 152 CLR 328 ], that the privilege against exposure to penalties has long been recognised by the common law and is no longer simply a rule of equity relating to discovery.
…
Today the privilege against exposure to penalties serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it. However, there seems little, if any, reason why that privilege should be recognised outside judicial proceedings. Certainly, no decision of this Court says it should be so recognised, much less that it is a substantive rule of law…
(citations omitted)
[18] More recently, in Meneses v Directed Electronics OE Pty Ltd (2019) 273 FCR 638; [2019] FCAFC 190 (Moshinsky, Wheelahan and Abraham JJ), the Full Court stated at [87]:
Although there is a close affinity between the privilege against self‐incrimination and the penalty privilege, they are distinct: Pyneboard at 336–337 per Mason ACJ, Wilson and Dawson JJ; Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 at 111 per Burchett J (Black CJ and Davies J agreeing); Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 (Daniels) at [12]–[13] per Gleeson CJ, Gaudron, Gummow and Hayne JJ While the privilege against self‐incrimination applies to non‐judicial as well as judicial proceedings, the penalty privilege does not apply outside judicial proceedings, and has not been recognised by the High Court as a substantive rule of law: Daniels at [15], [31]. The penalty privilege has a confined operation, and its purpose is to ensure that those who allege criminality or other illegal conduct should prove it: Daniels at [31]; Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at [24] per Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ The penalty privilege may be invoked in judicial proceedings to resist a requirement that a defence be filed that complies with the rules of pleading, to resist an order for the filing of witness statements, to resist answering interrogatories, and to resist the production of documents by way of discovery, or in response to a notice to produce or subpoena.
(emphasis original)
[19] In Migration Agents Registration Authority v Frugtniet (2018) 259 FCR 219; [2018] FCAFC 5 (Siopis, Robertson and Bromwich JJ) at [50], the Full Court described the privilege as the “lesser penalty privilege” and the privilege against self‐incrimination as the “greater privilege” and “the more fundamental right”. At [77], the Full Court continued:
…In each setting where penalty privilege is claimed, the opening question is whether that privilege applies in the first place, not whether it has been abrogated. This emphasises the critical importance of considering carefully the statutory provisions in question, as well as the particular proceedings, the relief sought and the particular adverse consequences faced by the person claiming the benefit of penalty privilege.
[20] Having regard to these authorities, it is therefore not correct to say, as was submitted by counsel who appeared for Mr Lyndon, that it is “trite” that penalty privilege is available subject to any question of abrogation. That is especially when a real question arises as to whether an examination is a curial (or judicial) proceeding.
…
[28] As the three factors identified by the Full Court in Frugtniet are present in this case, it follows that penalty privilege applies, subject to any question of implied abrogation.
Has the penalty privilege been abrogated?
[29] The effect of the Full Court decision in Frugtniet is that the penalty privilege is not a substantive rule of law nor is it an important common law immunity such that it is not to be construed as having been abrogated in the absence of clear words or a necessary implication to that effect. That is, the rule in Potter v Minahan (1908) 7 CLR 277 at page 304 (O’Connor J), expressed in its modern form in Daniels at [11], does not apply to penalty privilege.
[30] In particular, the Court in Frugtniet stated at [39] that:
…while penalty privilege and the privilege against self‐incrimination are both rules of the common law, penalty privilege is not a substantive rule of law. By contrast, the privilege against self‐incrimination and legal professional privilege, which are of the same character, are not “merely” substantive rules of law, but, rather, are important common law immunities that are not to be construed as having been abrogated in the absence of clear words or a necessary implication to that effect: Daniels at [11].
(emphasis original)
See also [51].
[31] It follows that a determination of whether the penalty privilege has been abrogated is a matter of construing the relevant legislation.
[32] In this regard, it has been suggested that, because the consequences are less serious than in the case of incrimination, it should be easier to imply an intention to abrogate it: Price v McCabe; ex parte Price [1985] 2 Qd R 510; (1984) 55 ALR 319 (Derrington J, with whom D M Campbell and Kelly J agreed) at page 322; see also Rolfe v Territory Coroner [2023] NTCA 8 (Grant CJ, Barr and Brownhill JJ) at [44].
[33] An intention to abrogate will also be more readily implied where to do otherwise would contradict or diminish the operation of the legislation and the achievement of its purposes.
[34] In Frugtniet at [44], the Court approved the observations of Kirby J in Rich v Australian Securities and Investments Commission (2004) 220 CLR 129; [2004] HCA 42 at [129] including that:
[T]he privileges involved in Daniels were those against self-incrimination and suggested derogations of legal professional privilege. Those privileges are different from the penalty privilege invoked in this case. Compared to the penalty privilege, each of those privileges has a longer history in the law. Each is more fundamental to its operation. Each is reflected in universal principles of human rights. The penalty privilege is not. The penalty privilege is of a lower order of priority. It has a more recent and specialised origin and purpose in our law. It should not be blown into an importance that contradicts or diminishes the operation of the Act and the achievement of its purposes.
(emphasis added; citations omitted)
[35] This accords with the observations of Gageler and Keane JJ in Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39 at [313] concerning the limitations on the principle of legality by reference to “clearly identified legislative objects”.
[36] Similarly, in Rolfe at [46], the Court of Appeal (NT) considered that, even if the principle of legality does apply, “necessary intendment [to abrogate the privilege] may be discerned if the operation of penalty privilege would contradict or diminish the operation of the legislation and the achievement of its purposes”.
[37] In this case and for the reasons which follow, even if the rule in Potter v Minahan applies, the requisite necessary implication to abrogate penalty privilege arises from the provisions of the statutory scheme. If it does not apply, then, at the least, an intention to abrogate the privilege can be implied as a matter of statutory construction.
[38] The source of the obligation to produce the books identified in a s 596B summons is contained in s 597(7)(d) of the Act, which stipulates that a person who attends before the Court for examination must not, without reasonable excuse, refuse or fail to produce books that the summons requires him or her to produce.
[39] Thus, there is a manifest statutory obligation to produce the books, with the only qualification being if there is a “reasonable excuse”.
[40] The question of what constitutes “reasonable excuse” is to be determined from the terms and structure of the particular statute and the circumstances of each particular case: see Australian Securities and Investments Commission v Albarran (2008) 169 FCR 448; [2008] FCA 147 (Jacobson J) at [81] citing Bank of Valletta plc v National Crime Authority (1999) 164 ALR 45; [1999] FCA 791 (Hely J) at [39], [47] (which concerned the National Crime Authority Act 1984 (Cth)).
[41] This proposition is also supported by the statement of the majority in Taikato v R (1996) 186 CLR 454 (Brennan CJ, Toohey, McHugh and Gummow JJ) at page 464:
The term “reasonable excuse” has been used in many statutes and is the subject of many reported decisions. But decisions on other statutes provide no guidance because what is a reasonable excuse depends not only on the circumstances of the individual case but also on the purpose of the provision to which the defence of “reasonable excuse” is an exception.
(citations omitted)
[42] There is no guidance in the Corporations Act as to the meaning of the phrase “reasonable excuse”; however, Mr Lyndon’s position was that it encompasses penalty privilege. He submitted that if this was not so, it would render s 597(12) “nonsensical” on the basis that there would be no need to expressly abrogate penalty privilege in relation to answers to questions if it did not otherwise apply.
[43] However, for the following reasons, a claim for penalty privilege is not a reasonable excuse within s 597(7)(d) of the Corporations Act.
[44] First, it would defeat one of the purposes of the statutory scheme if a recipient of a summons to produce books could claim penalty privilege as a reasonable excuse for not complying with it. To find otherwise would be to bestow upon penalty privilege an importance that “contradicts or diminishes the operation of the Act and the achievement of its purposes”.
…
[53] Second, the existence of s 597(12) is either a neutral factor or does not support Mr Lyndon’s posited construction. That is because, for the reasons given already, s 597(12) recognises expressly what is implicit, that is, that penalty privilege has been abrogated (specifically in relation to answers to questions). Section 597(12A) then provides a code for extending qualified protection to examinees when answering a question at an examination, but not in relation to the production of books.
…
(emphasis added)
The full decision may be found here.
In Big Un Ltd (In Liquidation) v Evertz [2024] NSWSC 878 (19 July 2024), McGrath J dealt with whether privilege against self-incrimination should allow of dispensation with a defendant’s obligation to fully plead to all issues and in turn diminish the obligation upon document disclosure in the commercial proceeding at hand. Making such orders, his Honour wrote:
[1] This is an application by the fourth defendant, Andrew Corner, seeking dispensation from the requirement to take procedural steps in these proceedings, including to file and serve a commercial list response pursuant to paragraphs 10 and 11 of the Practice Note SC Eq 3 — Commercial List and Technology and Construction List and/or other defence pursuant to r 14.3 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR); plead matters specifically pursuant to paragraph 11 of the Practice Note and/or r 14.14 of the UCPR; provide particulars pursuant to paragraph 11 of the Practice Note and/or r 15.1 of the UCPR; serve evidence (other than expert evidence or evidence from persons other than Mr Corner); and provide disclosure (other than that of certain books and records) in the course of the proceedings.
[2] The application by Mr Corner also sought a stay of these proceedings against him pending the final determination of criminal proceedings which have been brought against Mr Corner in the Local Court of New South Wales. Mr Corner no longer presses for such a stay.
[3] The application arises in the context of proceedings which have been commenced by the plaintiff, Big Un Ltd (in liquidation) against three defendants, being Brandon Evertz (the first defendant), Sonia Thurston (the third defendant) and Mr Corner (the fourth defendant). The allegations against the defendants are set out in the commercial list statement filed 7 November 2023 (CLS), in which Big Un seeks damages against its former directors and officers for alleged breaches of the Corporations Act 2001 (Cth) in relation to various intercompany loans advanced by Big Un to its subsidiary, Big Review TV Ltd.
[4] Mr Corner and Big Un have reached agreement on the terms of consent orders which deals with the application insofar as it affects the plaintiff, including that there be no order as to costs. Mr Evertz consents to the orders sought save insofar as they concern disclosure and costs. Ms Thurston opposes those orders in relation to disclosure and costs and otherwise neither consents to nor opposes the balance of the orders sought.
…
The Criminal proceedings
[12] On about 21 April 2023, Mr Corner was served with a Court Attendance Notice by the Australian Securities and Investments Commission (ASIC) commencing a criminal prosecution against him in the Local Court (Criminal proceedings).
[13] In the Criminal proceedings, it is alleged that Mr Corner engaged in prohibited conduct by a person in possession of inside information in breach of ss 1043A(1) and 1311(1) of the Corporations Act as follows:
(1) between 13 September 2017 and 2 November 2017, by procuring Dream Investment Nominees Pty Ltd to dispose of 1,131,015 ordinary shares in Big Un whilst being in possession of inside information about Big Un (Sequence 1); and
(2) between 3 October 2017 and 10 November 2017, by procuring Cloudy Moon Pty Ltd to dispose of 640,102 ordinary shares in Big Un whilst being in possession of inside information about Big Un (Sequence 2).
[14] In essence, the offence in s 1043A of the Corporations Act prohibits a person who possesses “inside information”, and who knows or ought reasonably to know that the matters which comprise the definition of “inside information” in s 1042A(1) are satisfied in relation to that information, from engaging in specified conduct, including acquiring or disposing of financial products or procuring another person to do so. The maximum penalty for the contravention of s 1043A is 10 years imprisonment, a fine in the order of $1.4 million and/or three times the value of the proceeds derived from the commission of the offence.
[15] The statement of facts dated 21 April 2023 which is relied upon by the Commonwealth Director of Public Prosecutions (DPP) in the prosecution against Mr Corner in the Criminal proceedings are contained in a confidential document which was provided to me for the purposes of this application. I was informed that Mr Corner provided the statement of facts to the other parties in these proceedings on terms that they each provide a confidentiality undertaking in relation to it, which they did. In an endeavour to preserve the confidentiality of the statement of facts, I will only refer to the factual detail in the Criminal proceedings in the most general way.
[16] I am satisfied that the facts which are relied upon by the DPP in the Criminal proceedings as detailed in the statement of facts canvass events in the period from 2013 to 2018 concerning Mr Corner’s involvement in the business of Big Un and Big Review as chief financial officer and director such that there is a general overlap of the factual matters which are relevant to the Criminal proceedings and these proceedings. I am also satisfied that there is a specific overlap of particular matters which are outlined in the statement of facts which are relevant to the Criminal proceedings and these proceedings, not only by reference to the period covered but also due to the alleged business and financial states of Big Un and Big Review, as well particular documents, including financial statements, sponsorship agreements and the “Hot Reports”.
[17] In essence, the events covered by the statement of facts are broad, both in terms of time and nature.
[18] Mr Corner asserts and intends to continue to assert his right to silence and privilege against self-incrimination. Mr Corner has not yet been required to enter a formal plea in the Criminal proceedings.
[19] On 13 June 2023, Mr Corner appeared via his lawyer in the Local Court in the Criminal proceedings.
[20] On 25 July 2023, the Criminal proceedings were adjourned to 8 August 2023 for brief of service.
[21] On 8 August 2023, the Criminal proceedings were listed for mention in the Local Court, at which time they were adjourned to 19 September 2023.
[22] On 19 September 2023, the Local Court adjourned the Criminal proceedings to 14 November 2023.
[23] On 14 November 2023, the Criminal proceedings were adjourned to 13 February 2024 for subpoenas to be issued.
[24] On 13 February 2023, the Criminal proceedings were listed for mention in the Local Court, at which time they were adjourned to 9 April 2024 for further case conferencing.
[25] On 9 April 2024, the Criminal proceedings were listed for mention in the Local Court, at which they were listed for a further case conference on 14 May 2024 and adjourned until 28 May 2024.
[26] It is estimated by Mr Corner’s criminal lawyers, Nyman Gibson Miralis, that the trial of the Criminal proceedings will likely take place in the second half of 2025 in the District Court of New South Wales, with an estimate duration of six to eight weeks.
…
LEGAL PRINCIPLES
[32] The privilege against self-incrimination is a long-established common law right of a person to refuse to answer any question or produce any document or thing which may tend to incriminate them: Sorby v Commonwealth (1983) 152 CLR 281 , Gibbs CJ at 288–9 and Mason, Wilson and Dawson JJ at 309.
[33] In Reid v Howard (1995) 184 CLR 1 , Toohey, Gaudron, McHugh and Gummow JJ at 11–12 expressed the privilege against self-incrimination in this way (citations omitted):
The privilege, which has been described as a “fundamental … bulwark of liberty”, is not simply a rule of evidence, but a basic and substantive common law right. It developed after the abolition of the Star Chamber by the Long Parliament in 1641, and, by 1737, it was said that “there [was] no rule more established in equity”. More recently, the privilege has been described as “deeply ingrained in the common law”. It operates so that a person cannot be compelled “to answer any question, or to produce any document or thing, if to do so ‘may tend to bring him into the peril and possibility of being convicted as a criminal’”.
[34] The purpose and bounds of the privilege against self-incrimination, as well as the degree of caution that a court should exercise in the face of its assertion, are described in MacDonald v Australian Securities and Investments Commission (2007) 73 NSWLR 612 , by Mason P (with whom Giles JA agreed) at [64] and [66]–[67] in these terms:
[64] The privilege serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it ( Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 559 [31], Rich at 142[24]). But this does not define the scope of the privilege. The related privilege touching the criminal law is one of self— incrimination (emphasis added). The nub of the privilege is that the State should not be able to compel a defendant to provide proof against him or herself ( Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477 at 532 ; Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 at 129 ). The privilege extends to protect against compelled disclosure of evidence or documents that would increase the tendency of exposure to penalty ( Rio Tinto Zinc Corporation v Westinghouse Electric Corporation [1978] AC 547 at 612F per Lord Wilberforce).
…
[66] A defendant is entitled to be protected against both direct and indirect self-incrimination. Accordingly, the privilege also protects against the compelled disclosure of information that “may set in train a process which may lead to incrimination or may lead to the discovery of real evidence of an incriminating character” (per Lord Wilberforce in Rank Film Distributors Ltd v Video Information Centre [1982] AC 380 at 443 , cited by Gibbs CJ in Sorby v The Commonwealth (1983) 152 CLR 281 at 294 . See also Sorby at 310 per Mason, Wilson and Dawson JJ; Reid v Howard (1995) 184 CLR 1 at 6 –7 per Deane J.).
[67] The need for a privilege claim to be bona fide and reasonable is well established (see generally Heydon J D, Cross on Evidence 6th Aust ed, Butterworths, Sydney, 2000 at [25100]). But courts err on the side of caution lest an apparently innocuous disclosure has unforeseen adverse consequences (see generally Re New World Alliance Pty Ltd (Receiver and Manager Appointed); Syncotex Pty Ltd v Baseler (1993) 47 FCR 90 at 96 –7 per Sheppard J).
[35] A useful summary of the privilege against self-incrimination and the penalty privilege is contained in the judgment of Finkelstein J in Australian Securities and Investments Commission v Mining Projects Group Ltd (2007) 164 FCR 32; [2007] FCA 1620at [7] , which states:
By way of introduction, it is necessary to say a word or two about each privilege. Each privilege operates to excuse a person from being compelled to answer any question or produce any document if doing so would have the tendency in one case to expose that person either directly or indirectly to a criminal charge and in the other to a penalty. Though often said to be analogous and based on the same rationale, the privileges are quite distinct. The privilege against self-incrimination is a “fundamental … bulwark of liberty” ( Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 at 340 ) that “protects personal freedom, privacy and human dignity” (Caltex Refining 178 CLR at 500) and is “deeply ingrained in the common law” ( Sorby v Commonwealth (1983) 152 CLR 281 at 309 ). It applies in curial proceedings, including procedures related to curial proceedings, and non-curial proceedings: Pyneboard 152 CLR at 340–341; Sorby 152 CLR 281 at 309 . By contrast, the penalty privilege is different in several fundamental respects. The penalty privilege is not a substantive rule of law: Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at 142 , 179 . It is merely a procedural rule that applies in curial proceedings to require the plaintiff to prove his case without any assistance from the defendant: Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at 559 .
[36] There is a line of authorities concerning the circumstances in which a party might be wholly relieved from participating in the court processes in civil proceedings, such as by giving discovery (disclosure as it is now termed in this court) or information (such as might be contained in defences, particulars, interrogatories and evidence), on the basis of protecting the privilege against self-incrimination.
[37] Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat & Livestock Corporation (1979) 42 FLR 204 involved proceedings against six corporate respondents for contraventions of the Trade Practices Act 1974 (Cth). The respondents sought an order excusing them in limine from giving discovery or answering interrogatories on the basis that the alleged contraventions would render them liable to a penalty brought by the Minister or the Trade Practices Commission. Deane J refused to make the order sought on the basis that the proceedings were not for the recovery of a penalty and did not involve any allegation of criminal conduct against the respondents.
[38] In doing so, by reference to the previous authorities, Deane J at 207–208 described the general rule in the following terms (footnotes omitted):
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 (see, generally, per Isaacs J. in R v Associated Northern Collieries ; Naismith v McGovern and Martin v Treacher ). 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 ( Mayor of the County Borough of Derby v Derbyshire County Council ).
[39] But, after reviewing the longstanding authorities, Deane J at 209 also expressed the view that there was no general rule in civil proceedings (not being those for the recovery of a penalty) to relieve a party from the obligations of discovery or interrogatories and no proper basis for objecting to the production of documents or the provision of information in such a case, but objections could be taken to the production of specific documents or answering of specific questions. Deane J concluded at 210–211 (footnotes omitted):
These strongly worded statements plainly establish the general rule that a party to proceedings which are for civil redress and not for a penalty ought not ordinarily be excused, in limine, from giving discovery or answering interrogatories but should be left to object to producing particular documents or answering particular questions on the ground that such production or answer might tend to expose him to liability to a penalty (see also Egg and Egg Pulp Marketing Board v K. H. Korp Tocumal Trading Co Pty Ltd ; Castlemaine Perkins Ltd. v Queen Street Hotels Pty Ltd. (No 2) ). That general approach is not however, as a matter of law, necessarily appropriate to all circumstances (see per Lindley LJ in Martin v Treacher ; R v Associated Northern Collieries ). If circumstances arose where the only means of protecting the right against self-incrimination and self-penalization were to excuse a party in limine from discovery or interrogatories, such circumstances should, in my view, be seen as exceptional and as justifying a departure from the general rule. In particular, if it appeared to the court that the making of an affidavit of discovery as distinct from producing the documents referred to in such an affidavit would tend to expose a party to a penalty, any order for discovery should be adjusted to the extent necessary to preclude that tendency. It is, perhaps, conceivable that circumstances could arise where the mere making of an order for interrogatories might have a similar tendency. The cases where the making of an order for discovery or interrogatories will, in itself, involve exposing a party to self-incrimination or self-penalization must, however, be rare indeed in view of the fact that the party will remain entitled to refuse to answer questions asked or produce documents discovered if the answers or production might tend to incriminate him or expose him to a penalty.
[40] Importantly, as this passage from Refrigerated Express demonstrates, the general rule does not apply in the exceptional case where the only means of protecting the right against self-incrimination is to depart from the general rule, such as where a person may incriminate themselves by the mere giving of discovery or answering of interrogatories. Deane J expanded on this aspect at 212, saying:
… In my view, the only circumstances which would warrant a departure in the present case from the ordinary approach that a party should be left to object to production of particular documents or to answering particular interrogatories would be that it appeared that the actual discovery, as distinct from production for inspection, of documents or the actual order for interrogatories would tend to expose the party ordered to make discovery or answer interrogatories to liability to a penalty.
[41] In Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 , Mason ACJ, Wilson and Dawson JJ at 335–336 stated the position in relation to discovery and referred to Refrigerated Express in the following way (footnotes omitted):
It is well settled that “a party cannot be compelled to discover that which, if answered, would tend to subject him to any punishment, penalty, forfeiture, or ecclesiastical censure” to use the words of Bowen LJ in Redfern v Redfern . See also Martin v Treacher ; Earl of Mexborough v Whitwood Urban District Council ; R v Associated Northern Collieries . 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 Plasterers 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.
[42] EL Bell Packaging Pty Ltd v Allied Seafoods Ltd (1990) 4 ACSR 85 is an instance of the exceptional case described by Deane J in Refrigerated Express. Civil proceedings were brought in the County Court of Victoria by the plaintiff company under s 556 of the Companies (Vic) Code against two directors for debts incurred by the company in which a notice of discovery was served on those directors. The directors objected to the notice of discovery on the basis of their privilege against self-incrimination. The judge of the County Court dismissed the notice of discovery on the basis that the proceedings were for the recovery of a penalty and the production of documents would tend to incriminate the directors.
[43] The Victorian Court of Appeal (Young CJ, Murphy and Vincent JJ) dismissed the appeal, writing separate judgments. Young CJ at 86 outlined the basis for the exceptional case, finding that under the statute precisely the same facts if established would expose a defendant to both civil and criminal liability. After citing the general rule and the exceptions to it explained in Refrigerated Express at 90–91, Murphy J at 91–92 referred to the decision in R v DCT; Ex Parte Briggs (1987) 71 ALR 86 where Beaumont J at 89 concluded that:
… discovery should not be ordered because it may expose the respondents to the penalties of a crime.
[44] Murphy J at 93 concluded that the actual knowledge of the directors of the company’s solvency at the time of incurring the debt was equally as important for a prosecutor or a plaintiff to establish, holding:
If this is so, it was submitted that the mere revelation on oath of a director’s possession of documents or even of his non-possession of documents would be relevant to assist the proof of the criminal offence created by the section. In my opinion this is probably so.
The present case is, I believe, the very type of case contemplated to be exceptional by Deane J in his judgment referred to earlier.
Having to discover documents on affidavit, and then to object to production is calculated to have several consequences. It could establish that the deponent had the means of actual knowledge of the state of the company’s affairs at the relevant time. It could also assist to establish a negligent absence of actual knowledge, by the omissions from the documents scheduled of material with which a competent or diligent director ought to have made himself familiar or should at some time have had in his possession. All details of actual knowledge or absence of knowledge would go to assist in the establishment of the offence, which the plaintiff must prove on the balance of probabilities before it can succeed in the action.
By an order for discovery the defendant is required to stated [sic] on affidavit all documents which are or have been in his possession custody or power relevant to the issues identifying the same.
In the present case, I think that it is quite clear on the face of things that the mere making of such an affidavit of documents would go to assist in the proof of a criminal offence, for the only relevant documents would be those going to prove or disprove such an offence on the balance of probabilities.
[45] Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372 concerned the application of the general rules outlined in Refrigerated Express in the context of proceedings which had been brought for copyright and trademark infringement where two of the respondents had already had their documents seized by the Australian Federal Police. Those respondents argued that the privilege against self-incrimination applied to relieve them of discovery obligations because the allegations in the civil proceedings could support liability for criminal offences under the Copyright Act 1968 (Cth) and the Trade Marks Act 1995 (Cth). Lindgren J considered Refrigerated Express and Pyneboard and the other cases which had analysed them, finding at [69] that the exposition given by Deane J in Refrigerated Express “has been accepted in all cases as correct and as providing sound guidance”, and summarising the position at [67] as follows:
Although the course of authority since Refrigerated Express is not all one way, there has been a strong disposition in a proceeding not itself concerned with the imposition of a penalty for an offence or a civil penalty, in favour of ordering discovery, reserving the issue of self-incrimination to the stage of production for inspection, and also reserving liberty to apply in relation to the degree of specificity with which a document is to be described in the individual’s list of documents.
[46] In Microsoft, Lindgren J at [70] said that he was not persuaded that the provision of the verified list of documents would tend to incriminate the respondents or that the case fell within the “rare exception allowed for by Deane J in Refrigerated Express”. Lindgren J at [72] opined that the “rare exception” would apply in particular circumstances, saying:
It should not be thought that the rare exception referred to by Deane J in Refrigerated Express could never have work to do. It would be applicable, for example:
- where an otherwise discoverable document had been stolen and disclosure of the fact that it was in the possession, custody or power of the discovering party might tend to incriminate that party;
- where statute made disclosure of the existence of an otherwise discoverable document an offence or the subject of the imposition of a civil penalty;
- where statute made disclosure of a certain fact an offence or the subject of the imposition of a civil penalty, and any description of an otherwise discoverable document would necessarily amount to disclosure of that fact; or
- where any description of an otherwise discoverable document might tend to incriminate the discovering party or render that party liable to imposition of a civil penalty in respect of other conduct or circumstances.
[47] In the matter of Kala Capital Pty Ltd (No 2) [2012] NSWSC 1293 , Brereton J dealt with an objection to an order for the production of documents on the basis that it would require the applicant to incriminate himself. At [13] Brereton J stated that the rule that courts will not make an order for discovery in proceedings for a penalty is distinct from the rule which allows a claim for privilege against self-incrimination in response to a subpoena, an order for production or an order to answer interrogatories. Citing the decision of the Court of Appeal of this court in Vasil v National Australia Bank Ltd (1999) 46 NSWLR 207; [1999] NSWSC 161 , Brereton J concluded at [16] that the circumstance that an order for production might require the production of documents that would have a tendency to incriminate does not render that order invalid or liable be set aside but enables the recipient to take objection to production of the documents at the time of production.
[48] In Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (No 3) (2018) 128 ACSR 625; [2018] FCA 1107 , Moshinsky J at [97] recited the general rule described in Refrigerated Express as follows:
As a general rule, in the absence of exceptional circumstances, a party to non-penalty civil proceedings is not to be excused in limine from giving discovery, but should instead be left to object to producing particular documents on the grounds that such production might tend to expose him or her to criminal liability or a civil penalty: Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat and Live-stock Corporation (1979) 42 FLR 204 at 208 , 210 –211 ; QC Resource Investments Pty Ltd (In Liq) v Mulligan [2016] FCA 813 at [19] .
[49] In Sadie Ville, Moshinsky J at [99] reminds that a valid claim for protection of the privilege against self-incrimination requires the person asserting it to prove that the act of providing information or documents would give rise to a “real and appreciable” risk of prosecution, citing Sorby at 290 and Microsoft at [40] amongst others.
…
CONSIDERATION
[56] In the face of Mr Corner’s assertion of his privilege against self-incrimination in the context of Criminal proceedings which have been brought against him, I need to heed the warnings given in MacDonald to be cautious not to set in train a process which may lead to his incrimination and cause what might appear to be an innocuous disclosure to have adverse consequences for him in those Criminal proceedings. The serious and longstanding role in our society performed by the right to claim privilege against self-incrimination in protecting personal liberty, freedom, privacy and human dignity demands that I exercise this caution. Mr Corner has asserted his right to claim the privilege against self-incrimination and I must recognise the fundamental protection that the law gives him when doing so — the “fundamental … bulwark of liberty” as described in Pyneboard and Reid.
[57] While I recognise that Mr Evertz and Ms Thurston have rights which should be protected, this factor has less weight than the potential prejudice of the self-incrimination risks faced by Mr Corner, particularly in circumstances where the claims are brought by Big Un against Mr Evertz, Ms Thurston and Mr Corner and there is no cross-claim between them. Mr Evertz and Ms Thurston should primarily be looking to Big Un to provide the disclosure of relevant documents which they seek, particularly when the liquidators of Big Un would be expected to possess all the books and records of Big Un and Big Review.
[58] The distinguishing features of this case are that Mr Corner has been charged with criminal offences in the Criminal proceedings relating to Mr Corner’s possession of “inside information”, in circumstances where the events in question (as described in the statement of facts) overlap in a general and specific way with the relevant events in these proceedings. As I have already found, there is a general overlap of the relevant events in these proceedings and the Criminal proceedings covering the period from 2013 to 2018 concerning Mr Corner’s involvement in the business of Big Un and Big Review as chief financial officer and director. There is significant common breadth in the factual content behind the allegations in both proceedings. The specific overlap in these proceedings and the Criminal proceedings is provided by the matters concerning the business and financial state of Big Un and Big Review and the common financial documents to which reference is made.
[59] In my view, this case comes within the “rare exception” as described in Refrigerated Express and confirmed in Pyneboard. That being so, Mr Corner should be relieved in limine of all of the requirements upon him imposed by the court processes to give a response or defence, plead specific matters, provide particulars, serve evidence and give disclosure. I believe that the present circumstances meet the description in Microsoft of instances in which the “rare exception” has work to do, being “where any description of an otherwise discoverable document might tend to incriminate the discovering party”.
[60] The circumstances of a “rare exception” do not require a complete overlap in the events or allegations made in these proceedings and the Criminal proceedings. Bell Packaging just happens to be a case of the application of the exception which involved complete overlap. The circumstances in which a case might fall within the “rare exception” are not closed. It is sufficient for there to be an overlap of such significance that there is a real and material risk to the maintenance of the privilege against self-incrimination. For the reasons I have stated above in relation to the general and specific overlap of the relevant events in these proceedings and the Criminal proceedings, I am satisfied that this case comes within the “rare exception”.
[61] The “real and appreciable risk of prosecution” as discussed in Sadie Ville has already arrived for Mr Corner — he is now a criminal defendant in the Criminal proceedings. It is not to the point to ask whether Mr Corner’s act of disclosing documents or providing information would give rise to a real and appreciable risk of criminal prosecution. Having already been the subject of an ongoing criminal prosecution, there is very real potential that Mr Corner, if asked to produce a document or provide information, will face greater jeopardy in the Criminal proceedings.
[62] In none of the authorities on which Mr Evertz and Ms Thurston rely was there an existing criminal prosecution running at the same time as the civil proceedings involving overlapping events and allegations against the same defendant. There is a material difference between the circumstances faced by Mr Corner, where the threat to his liberty is clear and present, and the circumstances in Refrigerated Express, Pyneboard, Bell Packaging, Microsoft and Sadie Ville.
[63] Contrary to the submissions made by Ms Thurston and supported by Mr Evertz, the application made by Mr Corner is not premature or too broad. The Criminal proceedings are being faced by him now. The Criminal proceedings allege matters going to the information Mr Corner possessed and his state of knowledge. I agree with Mr Corner’s submissions that there is no reasonable way for him to respond to the allegations made against him in these proceedings or participate in the various court processes without also revealing the state of his knowledge as to the financial performance of Big Un across the overlapping time periods. I also agree with Mr Corner that he cannot respond to alleged facts before, during or after the overlapping time periods because anything that he might reveal as to his knowledge outside the period of the alleged offences would also reveal his state of knowledge within it. A request for documents in these proceedings which post-dates the allegations in the Criminal proceedings may cause as much risk to Mr Corner as a request for documents within the time period of those allegations.
[64] The essential problem for Mr Corner is how he could respond to the request for a specific document or category of documents without putting himself at risk in the Criminal proceedings. He would either be admitting that he had such documents or denying that he had such documents. Both answers would shed light on the state of the information he admits that he possessed and the state of his knowledge in the relevant period, each of which are at issue in the Criminal proceedings. Once Mr Corner’s position is seen in this light, it does appear to be a case in which any form of disclosure by him would risk self-incrimination.
[65] Exactly the same issues arise for me in deciding this application at the present time as they would for another judge of this court if the application was postponed to a future time when the specific documents or categories of documents sought by Mr Evertz and Ms Thurston from Mr Corner become known.
[66] In my view, if Mr Corner was to produce one or more documents in response to a specific or general request for disclosure (whether by individual document or by category), he runs the very real risk of jeopardising his right to assert his privilege against self-incrimination in responding to that request, such that he would be exposed to criminal liability in the Criminal proceedings.
[67] Applying the exception to the general rule in Refrigerated Express, I consider that the only means by which Mr Corner’s privilege against self-incrimination can be protected is to excuse him from the procedural steps as sought by him, subject to a grant of liberty to Mr Evertz and Ms Thurston to enable each of them to apply for disclosure by Mr Corner of a specific document or thing which is identified and relevant to a fact in issue. I also consider that the liberty provided to Mr Evertz and Ms Thurston should not cover documents which they should otherwise seek from Big Un.
[68] I recognise that in accordance with the orders I propose to make it may be necessary for further applications to be considered by the court at a future time in which Mr Evertz and Ms Thurston seek the production of specific documents from Mr Corner. If Mr Evertz and Ms Thurston first obtain disclosure from Big Un, the need for further documents to be sought from Mr Corner should be limited. In that way, by determining the application in the manner that I have, by recognising the present risk to Mr Corner’s invocation of the privilege to self-incrimination from procedural steps in these proceedings, the time and cost that might be taken from those steps will be contained. This will particularly be so if the parties conduct themselves with common sense, as I was assured that they would.
ORDERS
[69] For the reasons stated above, I propose to make the following orders:
(1) Order that the fourth defendant, Andrew Scott Corner, be relieved of the requirements of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and Practice Note SC Eq 3 Commercial List and Technology and Construction List (Practice Note) to:
(a) file and serve any commercial list response or other defence to the plaintiff’s commercial list statement filed 7 November 2023 pursuant to paragraphs 10 and 11 of the Practice Note and/or r 14.3 of the UCPR;
(b) plead matters specifically pursuant to paragraph 11 of the Practice Note and/or r 14.14 of the UCPR;
(c) provide particulars pursuant to paragraph 11 of the Practice Note and/or r 15.1 of the UCPR;
(d) serve any evidence (other than expert evidence or evidence from persons other than the fourth defendant); and
(e) provide any disclosure except the books of the plaintiff or Big Review Pty Ltd, which are not otherwise in the possession, custody or control of the plaintiff or Big Review TV Pty Ltd or their liquidators.
(2) The fourth defendant is granted liberty to make any application:
(a) to be relieved from any requirement to serve expert evidence, or lay evidence from persons other than the fourth defendant, after the plaintiff has served any evidence on which it wishes to rely; and
(b) concerning the trial of this proceeding.
(3) The first and third defendants have liberty to apply on 3 days’ notice for disclosure from the fourth defendant of any specific document or thing that is clearly identified in the notice and is relevant to a fact in issue, provided that such documents are not the books or records of the plaintiff or Big Review TV Ltd and otherwise not in the possession, custody or control of the plaintiff or Big Review Pty Ltd or their liquidators.
(4) The notice of motion filed 18 April 2024 is otherwise dismissed insofar as it concerns the plaintiff with no order as to costs.
(5) The notice of motion filed 18 April 2024 is otherwise dismissed insofar as it concerns the first defendant and the third defendant.
(6) The issue of costs as between the fourth defendant, and the first defendant and the third defendant, is reserved to be dealt with by McGrath J in chambers on the papers.
…
(emphasis added)
Recent Queensland decisions addressing variation to the civil procedural pleading rules are Anderson v Australian Securities and Investments Commission [2013] 2 QdR 401, [2012] QCA 301 and Chardon v Bradley [2017] QCA 314.
The full decision may be found here.
