Directed Electronics OE Pty Ltd v OE Solutions Pty Ltd

Introduction and summary 1 This decision addresses objections by the sixth respondent and cross-claimant, Johnny Meneses (Mr Meneses), to the production of certain documents on the grounds of his privileges against self-incrimination and self-exposure to penalties. Mr Meneses is the sole director and shareholder of the first respondent, OE Solutions Pty Ltd (OE Solutions). 2 This proceeding was commenced in October 2017. Shortly afterwards, on the ex parte application by the applicant (and now first cross-respondent), Directed Electronics OE Pty Ltd (Directed), a judge of this Court (docket judge) made a search order directed to seven named individuals and corporations, including Mr Meneses and OE Solutions (together, the Meneses parties). The order made specific provision for the preservation of claims to privilege against production. 3 In accordance with the terms prescribed by the docket judge, the search order was executed under the supervision of an independent lawyer at various properties, including the residence of Mr Meneses (Aspendale Gardens property). A solicitor acting on behalf of Mr Meneses (and his wife and son) consented to the search order being executed, subject to the right to claim privilege over any documents taken. 4 The documents seized from the Aspendale Gardens property remain in the hands of the independent lawyer and an independent computer expert. Copies of those documents are also in the possession of Norton Rose Fulbright (NRF), a firm of solicitors that acted for both of Mr Meneses and OE Solutions at the time of obtaining the documents, but now only act for Mr Meneses in his personal capacity. 5 Orders were made by the docket judge to the effect that any claims for privilege in respect of documents taken pursuant to the search order could be made in the context of discovery. Subsequently, in the course of making discovery, Mr Meneses objected to the production of certain documents on the grounds of his privileges against self-incrimination and self-exposure to penalties. 6 As will be detailed below, a judge of this Court (primary judge) refused Mr Meneses' privilege claims and ordered that the documents seized be made available to Directed's solicitors for inspection. However, the primary judge's decision was overturned on appeal and Mr Meneses' privilege claims have been remitted to me for re-determination. 7 After the remitter of the privilege claims, the Meneses parties filed a new list of documents verified by an affidavit of Mr Meneses. The list of documents divided the documents over which Mr Meneses claimed privilege into seven categories by reference to: (i) the purpose for which the document was created; and (ii) the subject matter of the document. This process resulted in categories labelled as "P1A", "P1B", "P1C", "P1D", "P2", "P3" and "P4". 8 The Meneses parties do not oppose an order that OE Solutions produce the documents in categories P1C and P1D to Directed, and I will make such an order. My conclusion in respect of the remaining categories, as explained in detail throughout these reasons, is as follows. 9 Having reviewed the sample documents from which the Court was to determine the merits of Mr Meneses' privilege claims, I accept that the production of all the documents over which Mr Meneses claimed privilege would have a real and appreciable tendency to prove, directly or indirectly, that Mr Meneses has committed an offence arising under Australian law or a foreign law, or otherwise expose Mr Meneses to the imposition of a civil penalty. 10 As the documents in categories P3 and P4 were, at the time that search order was executed, in Mr Meneses' sole "control" (which is defined by the Federal Court Rules 2011 (Cth) (Rules) as meaning "possession, custody or power"), Mr Meneses is entitled to rely on the privileges to resist production of those documents. Accordingly, no order should be made requiring production of the documents in those categories. 11 On the other hand, the documents in categories P1A, P1B and P2 were in the "control" of both Mr Meneses and OE Solutions at the time the search order was executed. Mr Meneses is entitled to refuse production of those documents on the grounds of the privileges claimed. However, as the privileges claimed by Mr Meneses are not available to a corporation, OE Solutions, being a legal entity separate from Mr Meneses, is required to produce those documents as part of discovery in this proceeding. 12 In this context, the parties disputed whether the Court could make an order compelling NRF (who now only acts for Mr Meneses) to produce copies of the relevant documents to Directed. Mr Meneses argued that such an order would impermissibly compel him to participate in the production of the documents in contravention of his privilege not to do so. My view is that OE Solutions is entitled to request that NRF return to it the documents that were in OE Solutions' control. However, there is an alternative method of production that is preferable in the circumstances of the present case. 13 Given OE Solutions is essentially a one person company, and that person (Mr Meneses) is entitled to rely on the privileges to resist production of the documents, the preferable way for the production of documents in categories P1A, P1B, P1C, P1D and P2 to occur is for a receiver to be appointed over those documents for that discrete purpose. The receiver will then be empowered to instruct the independent lawyer and independent computer expert to produce the documents for inspection by the parties in the proceeding, including Directed.