APPEALED FROM: Gunns Limited v Alishah (No 2) [2009] TASSC 93

Procedure - Discovery and interrogatories - Interrogatories - Upon what matters - What questions disallowed - In general - Objections - Application for answers - Ground of objection arguable although not stated in affidavit.

Royal and Sun Alliance Assurance Aust Ltd v Falzon [2002] TASSC 52; (2002) 10 Tas R 452, followed.

Procedure - Discovery and interrogatories - Interrogatories - Upon what matters - Privilege - Incriminating questions - Whether privilege available.

Sorby v The Commonwealth [1983] HCA 10; (1983) 152 CLR 281; Accident Insurance Mutual Holdings Ltd v McFadden (1993) 31 NSWLR 412, applied.

Procedure - Discovery and interrogatories - Interrogatories - Upon what matters - Privilege - In general - Penalty privilege - Whether penalty privilege available in relation to a claim for exemplary damages.

Rich v Australian Securities & Investments Commission [2004] HCA 42; (2004) 220 CLR 129; Rookes v Barnard [1964] UKHL 1; [1964] AC 1129; Gray v Motor Accident Commission (1998) 196 CLR 1; Uren v John Fairfax & Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118, considered.

Judgment Number: [2010] TASSC 24

GUNNS LIMITED (ACN 009 478 148) TASMANIAN PULP & FOREST HOLDINGS LTD (ACN 009 488 733) GUNNS FOREST PRODUCTS PTY LTD (ACN 004 208 904) v SYED ALISHAH, WARRICK JORDAN, PAUL ERIC KIMBELL, NATHAN HARRIS, LEE ANTHONY SARGENT, BRETT THOMPSON, NISHANT ALLAN DANT, URSULA DUBIEL MAJEWSKI, CHRISTOPHER JOSEPH MILLS, BENJAMIN HUW SHARP, MIRANDA KYMALEE GIBSON, WILLIAM HUGH MOONEY, RACHEL ALISON MARGARET LEWANDOWSKY

1 This is an appeal from orders of the Associate Judge relating to answers to interrogatories administered by the plaintiff for the examination of all defendants. The action is one for damages in trespass, included in which there is a claim for exemplary damages. There were 39 interrogatories in identical terms in the case of each defendant, and all defendants objected to answering all of the interrogatories with the exception of three interrogatories which were said to be unnecessary to answer.

2 One ground of stated objection by each defendant was that answering the interrogatory might tend to incriminate them. The grounds for the assertion was said to be set out in the covering affidavit. The plaintiff applied for orders that each defendant answer the interrogatories. At the hearing, but with notice having been given shortly beforehand, the defendants relied on "penalty privilege", or the privilege against exposure to a penalty, the suggested penalty being exemplary damages.

3 At the hearing, argument was confined to the objections of self-incrimination and penalty privilege. Interrogatories numbered 34 - 37 inclusive were also excluded from the argument. Penalty privilege was not made out in respect of any defendant. There were grounds for distinguishing the position of the first seven defendants from that of the remaining defendants in relation to self-incrimination. The Associate Judge ordered that the first seven defendants answer specified interrogatories within a certain time, but upheld the objection on the self-incrimination ground as to further related questions. It was held that the self-incrimination objection had been generally made out by the eighth - thirteenth defendants, and no order was made. It is only those defendants in respect of whom this appeal is brought; there is no challenge to the orders made in relation to the first seven defendants. The appeal is by way of rehearing in which error must be demonstrated: Supreme Court Civil Procedure Act 1932, s191B; Allesch v Maunz [2000] HCA 40; (2003) 203 CLR 172 at [23].

4 The grounds of appeal are that the Associate Judge erred:

"(a) in accepting that defendants eight - thirteen inclusive were excused from answering any of the plaintiffs' interrogatories by reason of their claim to privilege against self-incrimination;

(b) in his application of the law and/or the proper exercise of his discretion to permit defendants eight - thirteen inclusive to refuse to answer interrogatories based on a claim of privilege against self-incrimination."

5 As this appeal concerns the eighth - thirteenth defendants, I will simply refer to them as the defendants unless I need to particularly distinguish the two groups of defendants. The issues which are to be determined in this appeal are:

•

whether the claim for privilege on the basis of self-incrimination is open to the defendants on the material.

•

whether the claim for penalty privilege was open to the defendants, the objection on that basis not having been stated in the answers to the interrogatories.

•

in any event, whether the claim for penalty privilege is available in that exemplary damages amount to, or are in the nature of, a "penalty".

6 The plaintiffs collectively operate a woodchip processing and export business. The second and third plaintiffs are wholly owned subsidiaries of the first plaintiff. The defendants are individuals who are self-described as active and vocal participants in the public debate concerning forestry operations and associated biodiversity, conservation and environmental protection issues and, in particular, woodchipping in Tasmania. The plaintiffs' action relates to protest activities carried out by the defendants on land occupied by the plaintiffs on 16 December 2008. It is alleged that at about 4.50am on that date, each of the 13 defendants entered the plaintiffs' woodchip facility at Triabunna without permission, chained or otherwise attached themselves to equipment there, and when requested to do so by the plaintiffs, refused to leave. It is further alleged that the first seven defendants refused to leave when requested to do so by members of Tasmania Police, but that the eighth - thirteenth defendants left at about 7.30am when requested by police to do so.

7 It is pleaded that as a consequence of the actions of each of the defendants, alone or in combination, that the business of the plaintiffs was unable to be conducted between approximately 4.50am and 11.30am on 16 December 2008, that independent contractors were unable to fulfil their contractual duties to deliver logs to the land as a consequence of which the plaintiffs have suffered loss, damage and expense. It is further alleged that the actions of the defendants were undertaken as a conscious wrongdoing in contumelious disregard for the rights of the plaintiff and were calculated and were likely to disrupt the business operations of the plaintiffs and to disrupt the lawful business operations of contractors engaged to deliver logs to the plaintiffs. In addition to the claim for damages for trespass, there is a claim for "aggravated and/or exemplary damages for trespass".

8 No doubt for reasons connected with plaintiffs' cause of action, the principal focus in the argument before the Associate Judge was on interrogatory No 1 which asks "Did you on 16 December 2008 enter the land?" Several of the subsequent questions are premised on an affirmative answer to that question, and seek specific detail, often in the form of leading questions, about the defendants' movements and activities. Some questions refer to attached photographs which show persons on and near machinery, and generally in an area which appears to be a woodchip mill. The relevant objections stated in the answers were in identical terms, as follows:

"I object to answering this interrogatory, on the grounds that answering the interrogatory might tend to incriminate me or render me liable to a criminal charge or prove such a charge against me. The grounds for this assertion are set out in the covering affidavit."

9 The covering affidavit again was in identical terms in each case, and read:

"4 My grounds for asserting that answering the plaintiffs' interrogatories will incriminate me or render me liable to a criminal charge or prove such a charge against me are that I believe that an investigation is being conducted into a protest action at Gunns Triabunna Woodchip Mill on 16 December 2008 by an officer authorised under s34 of the Workplace Health and Safety Act 1995. I base this belief on a letter dated 11 February 2009, a copy of which is annexed to this affidavit and marked 'C'. The addressee of the letter is the eighth defendant in this action. I have been informed that the s36(1)(e) requirement referred to in the letter has been withdrawn but nothing has been said to me to indicate that the investigation has ceased or has been concluded."

10 The letter referred to as the annexure and marked "C" is addressed to the eighth defendant, Ms Majewski. It is on "Department of Justice - Workplace Standards Tasmania" letterhead and is signed by a senior inspector. It informs the addressee that as an inspector authorised under s34 of the Workplace Health and Safety Act 1995 ("the Act"), the author is investigating the circumstances surrounding the protest action at the workplace situated at Gunns Triabunna Woodchip Mill on 16 December 2008. The letter says that to assist the investigation, information is required pursuant to s36(1)(e) of the Act. The letter poses fourteen questions which relate to personal matters, Ms Majewski's general involvement with the protest action on 16 December 2008, her movements on the plaintiffs' premises, in particular as they involved pieces of machinery.

"36 - Powers and functions of inspectors

(1) Subject to subsection (1A) and in addition to any other powers conferred upon an inspector by any other provisions of this Act, an inspector may at any time enter and inspect any place if the inspector has reasonable cause to believe that an industry is, or is intended to be, carried on, or an amusement structure or temporary public stand is located, in or on that place and may -

(e) require any person to answer any question or to provide any information relating to the health or safety of persons at any workplace, whether or not the person is at that workplace, or to any other matter to which this Act applies."

As can be seen, the only recipient of this letter was Ms Majewski, the eighth defendant, and as stated in the objection and in the affidavit, the request to her had been withdrawn at the time of each defendant swearing his or her affidavit.

12 I should note at this stage that the first seven defendants were charged with trespass contrary to the Police Offences Act 1935, no doubt because they refused to leave when requested to do so by police. Each pleaded guilty to the charge and it was this which formed the basis of the distinction drawn between the groups of defendants concerning the self-incrimination privilege. In relation to interrogatory no 1 as to whether the particular defendant had entered the land, the Associate Judge concluded that the self-incrimination objections made by this group of defendants were "not made bona fide". Further questions which dealt with matters "pertaining to the initial entry onto the land" were similarly dealt with. The claim for privilege was upheld in relation to questions which went beyond matters to which the pleas of guilty related, but as I have said, that ruling is not the subject of this appeal.

13 As I have noted, the objection of penalty privilege was not stated in the answer nor dealt with in the verifying affidavit as required by the Supreme Court Rules 2000, r409[1]. Shortly before the hearing the plaintiffs' solicitors were advised that the defendants intended to rely on the objection as an alternative to the privilege against self-incrimination. The plaintiffs argued before the Associate Judge that the defendants could not rely on an objection which had not been formally dealt with. The plaintiffs did not seek an adjournment. Although it is not dealt with in the Associate Judge's reasons, I was told that the defendants were permitted to argue the point by virtue of SCR r410(3)(a)(iv).

"410 - Application for order by person interrogating

(1) A party interrogating may apply to the Court or a judge for an order that the person interrogated -

(a) answer an interrogatory which the person interrogated has objected to answering in the affidavit; or

(b) answer further any other interrogatory that the person interrogated has not objected to answering.

...

(3) On the hearing of an application, the Court or a judge may -

(a) disallow any interrogatory to which the application relates if -

(i) the interrogatory is scandalous or irrelevant or not in good faith for the purpose of the proceeding; or

(ii) the matters inquired into are not sufficiently material at that stage; or

(iii) the cost of administering interrogatories is not justified having regard to the circumstances of the case, including the subject matter of the action; or

(iv) on any other grounds, the Court or judge considers it should be disallowed; or

(b) order to be answered or answered further, by affidavit or oral examination, any interrogatory the Court or judge directs."

15 The Associate Judge dealt with the claim for penalty privilege first. His Honour noted that counsel were unable to refer to any case where a claim for exemplary damages had been sufficient to result in the privilege applying, and as a consequence, was "unpersuaded that penalty privilege has any application to the present case".

16 In relation to the privilege against self-incrimination, his Honour referred to several authorities in which the basis of it was explained, and turned to the plaintiffs' submission that the claim for privilege was not objectively reasonable. The position of the defendants is dealt with in this paragraph:

"17 Next it was submitted on behalf of the plaintiffs that there is no reasonable basis for concern that a prosecution might be instituted under the Act. I agree that it might be unlikely that a prosecution would now be instituted by an inspector. However, it is clear that the plaintiffs want to see the defendants punished for their conduct. There is the claim for exemplary damages. The time for instituting proceedings has not yet run out. Although the answers to the interrogatories could not be used in other proceedings, if admissions are made, that might fortify the plaintiffs in a resolve to prosecute. As earlier mentioned defendants are to be allowed great latitude in taking the objection. Having regard to the circumstances of the case and nature of the question asked and giving the required latitude to the defendants I am satisfied that the question has an objective tendency to expose the defendants to the risk of prosecution. The defendants who have not pleaded guilty to trespass will not be required to answer interrogatory 1."

17 The basic statement of the law is that a person may refuse to answer any question, or 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": Sorby v The Commonwealth [1983] HCA 10; (1983) 152 CLR 281 at 288, per Gibbs CJ citing Lamb v Munster (1882) 10 QBD 110 at 111. The privilege has been described as extending to protection against exposure to conviction for a crime, and from discovering or revealing information which may lead to the discovery of admissible evidence of guilt not in the person's possession or power: Environment Protection Authority v Caltex Refinery Co Ltd [1993] HCA 74; (1993) 178 CLR 477, per Mason CJ and Toohey J at 502.

18 The principles relating to the objection have been authoritatively discussed on a number of occasions. In addition to Sorby v The Commonwealth (above) I refer in particular to Accident Insurance Mutual Holdings Ltd v McFadden (1993) 31 NSWLR 412 and Ross v Internet Wines Pty Ltd [2004] NSWCA 195; (2004) 60 NSWLR 436. The following is a short summary for the purposes of this case:

•

the essence of the privilege is whether the giving of the answer would tend to expose the person to the risk of criminal proceedings.

•

the defendant must genuinely and reasonably apprehend a danger from being compelled to answer the question; that is, reasonable grounds must be shown and the objection must be bona fide.

•

the court's primary concern is whether the claim is objectively a reasonable one, in the sense of whether answering the question would have a tendency to expose the defendant to a risk of criminal proceedings.

•

a mere statement by the defendant that the answer may tend to incriminate is not sufficient; the defendant needs to satisfy the court that there is a real and appreciable risk of criminal proceedings, as distinct from a remote or insubstantial one.

•

where a question arises as to whether or not there is a reasonable apprehension of danger, or whether the claim is a bona fide one, "great latitude" is permitted to the person to judge for themselves the effect of answering a particular question.

19 The plaintiffs do not allege that the Associate Judge made any error as to the law to be applied. They argue that the error was in applying the law to the facts, the particular issue being whether the defendants had made out a real and appreciable risk of criminal proceedings arising from the answering of the questions.

20 The defendants' apprehension as to criminal proceedings related to possible charges under the Act. Counsel for the defendants referred to s20 as the provision under which a charge was most likely. It provides as follows:

"20 - Interference, misuse, &c

A person must not intentionally, recklessly or without reasonable excuse -

(a) interfere with, misuse or damage anything provided in the interests of health, safety or welfare pursuant to this Act; or

(b) place at risk the health or safety of any other person while that other person is at a workplace; or

(c) by an act or omission at a workplace, put at risk the health or safety of any other person; or

(d) interfere with any plant at a workplace; or

(e) do anything that causes, or is likely to cause, damage to plant at a workplace whether or not that activity puts at risk the health or safety of any other person.

(a) a body corporate, a fine not exceeding 500 penalty units; and

(b) a natural person, a fine not exceeding 250 penalty units."

21 The Act, s55(1), provides that proceedings for an offence against the Act may not be instituted later than 12 months after an inspector becomes aware of the act or omission alleged to constitute the offence. Section 55(2) provides that a person seeking to rely on subs(1) must show that the inspector became aware of the relevant act or omission at least 12 months before the proceedings were instituted. The Associate Judge heard the case on 15 September 2009 and handed down his decision on 15 October. Whilst it is not of course necessarily the case that an inspector immediately became aware of the acts of the defendants at the plaintiffs' premises on 16 December 2008, it is likely that this occurred shortly thereafter, although there is no evidence about this. The paragraph which pleads the "contumelious disregard" basis for the aggravated and exemplary damages claim, contains an assertion of the presence on 16 December 2008 of officers of Workplace Standards Tasmania, but as I understand it, the paragraph in its entirety is put in issue by the defence.

22 Assuming that an inspector did become aware on 16 December 2008 of a relevant act of each defendant, at the time of hearing before the Associate Judge, it was still possible for proceedings to be instituted[2]. However, his Honour said "it might be unlikely that prosecution would now be instituted by an inspector". He went on to observe that it was clear that the plaintiffs wanted to see the defendants punished for their conduct and referred to the claim for exemplary damages, saying that although the answers to the interrogatories could not be used in other proceedings, if admissions were made, that might fortify the plaintiffs' inner resolve to prosecute.

23 Whether his Honour meant to distinguish a prosecution brought by an inspector from one instituted directly by one or more of the plaintiffs was a matter of some debate. The plaintiffs submitted that the reference to the claim for exemplary damages and the desire on the part of the plaintiffs to see the defendants punished for their conduct, could be readily taken as a reference to their direct responsibility for criminal proceedings. That, it was submitted, was speculative and fanciful.

24 The defendants suggested that his Honour's comments should be interpreted as meaning that in light of the claim for exemplary damages, the plaintiffs might be encouraged by admissions obtained in the answers to bring pressure to bear on the relevant authority to, or if necessary, to reactivate the process of instituting proceedings. Further, counsel pointed out that complaints may well have already been filed but not served[3].

25 The question which had to be addressed was whether the defendants had established a real and appreciable risk of criminal proceedings being taken against them. It was the danger of criminal proceedings under the Act to which the defendants had alluded in their affidavits. The provision of the answers to the interrogatories was a factor in the assessment of the existence of the real and appreciable risk of those criminal proceedings. Was there a reasonable apprehension of danger to that extent?

26 In my respectful view, the Associate Judge fell into error in having said that it was unlikely that proceedings would be taken by an inspector, he found that a risk to the requisite degree had been established by reference to the claim for exemplary damages. In my view, the claim for such damages was of little, if any relevance. It is difficult to see why the inquiry went past a finding that proceedings by an inspector were unlikely. Whichever way the debate about what was meant is resolved, the effect of focussing on the plaintiffs' attitude, as evidenced by the claim for exemplary damages, and what might flow from that in terms of a prosecution, was to distract from the proper task.

27 The task was to assess the degree of risk of the identified proceedings, and required an examination of the terms of the objection, as illuminated by the affidavit. Of course, that exercise would have revealed the following:

•

the Workplace Standards letter was dated 11 February 2009, some seven months previously, and had been later withdrawn on an unknown date;

•

just as nothing had been said to indicate that the investigation had ceased or concluded, nothing had been said to indicate that it was ongoing;

•

the letter had only been addressed to the eighth defendant;

•

the conduct of the defendants had not been such to warrant prosecution under the Police Offences Act.

28 I am satisfied on the material before the Associate Judge that that there was no reasonable apprehension of danger of exposure to criminal conviction from providing the answers to the interrogatories. There was no real and appreciable risk of criminal proceedings such as to support the claim to the privilege, and I would allow the appeal on that basis. Moreover, this is a re-hearing. It was common ground that at the time of the hearing before me, no defendant had been served with any criminal proceedings. Counsel for the defendants accepted that a reasonable inference to be drawn from the letter is that by 11 February 2009 a Workplace Standards inspector would have been aware of relevant acts of the defendants.

29 If that were the case, then as at the date of the hearing before me, proceedings could no longer be instituted by virtue of the Act, s55. As pointed out in Sorby (above) at 290, a witness cannot refuse to answer a question which tends to show that he has committed a crime for which he cannot be convicted because the time for prosecution for the crime has expired. There is now even far greater reason not to be satisfied of a real and appreciable risk of criminal proceedings being taken. The defendants' claims to self-incrimination privilege are not made out. It follows that subject to the arguments as to penalty privilege, the defendants will be ordered to answer the interrogatories.

Whether the claim to penalty privilege was procedurally open

30 The defendants succeeded in having the issue of penalty privilege agitated before the Associate Judge, notwithstanding that the objection had not been formally taken as required by SCR, r409. They failed to persuade the Associate Judge that penalty privilege applied in the present case. They contend that the Associate Judge erred in that respect, but the plaintiffs maintain the argument that the objection ought not to have been entertained in the first instance. This is because, it is submitted, the claim could not be objectively assessed in the absence of a stated objection verified by affidavit explaining the basis of that objection, as is the case in respect of the privilege against self-incrimination.

31 However, the penalty privilege point was argued, both before the Associate Judge and before me, simply on the basis that the plaintiffs' claim for damages included a claim for exemplary damages, that exemplary damages were in the nature of a penalty, and that the privilege could be invoked on that basis. In other words, the objection in the form of the claim for privilege was argued on the basis of the pleadings.

32 In my view the answer lies in a reported Tasmanian case not cited by either counsel. In Royal and Sun Alliance Assurance Aust Ltd v Falzon [2002] TASSC 52; (2002) 10 Tas R 452, Cox CJ rejected the contention that a party who was required by SCR, r409(1), to state in writing the objection to answering an interrogatory "with a concise statement for the reasons for the objection", could not canvass any other ground of objection when the issue was put to the test under r410. His Honour said:

"I see no warrant for so limiting the Court's power under the latter rule. Subrule (3) does not fetter the Court's power to disallow an interrogatory on the grounds specifically nominated in pars (a)(i)-(iii) or 'on any other grounds that Court or judge considers it should be disallowed'. It was submitted that fairness required this limitation and that the interrogating party could otherwise be taken by surprise. Such surprise, however, could be remedied by an adjournment on just terms."

33 On that basis, in the circumstances which existed, the Associate Judge was correct in allowing the defendants to rely on the additional ground of objection, notwithstanding the defendants had not complied with r409(1).

34 "Penalty privilege" is the shorthand expression for the privilege against self-exposure to penalty. It "operates to excuse a person from being compelled to answer any question or produce any document, if doing so would have a tendency to expose that person, either directly or indirectly, to a penalty"; Australian Securities and Investments Commission v Mining Projects Group [2007] FCA 1620; (2007) 164 FCR 32 at [7]. In that sense, its operation is similar to the privilege against self-incrimination, as previously discussed. However, penalty privilege is not a substantive rule of law, but merely a procedural rule: Rich v Australian Securities and Investments Commission [2004] HCA 42; (2004) 220 CLR 129 at [24], [129].

35 A classic statement of the rule is that of Lord Hardwicke in Smith v Read (1736) 1 Atk 527; 26 ER 332[4]:

"[T]here is no rule more established in equity, than that a person shall not be obliged to discover what would subject him to a penalty, or anything in the nature of a penalty."

In 1877, the general rule was described by Hare, A Treatise on the Discovery of Evidence, 2nd ed, as follows:

"If the answer of the party might be evidence tending to subject him to punishment by any judicial or competent authority, or to any penalty or forfeiture, or disability in the nature of a penalty, he will not be compelled to make the discovery."

36 The issue in this case is whether, in the context of the operation of the privilege, exemplary damages are "a penalty" or in the "nature of a penalty". Generally, the word "penalty" connotes punishment, commonly in the form of the payment of a sum of money, but is wide enough to include, and is often intended to mean, imprisonment[5]. In Rich v Australian Securities & Investments Commission [2003] NSWCA 342; (2000) 203 ALR 671 at [21], Spigelman CJ said that the case law "which identifies the characteristics of the penalty is surprisingly limited". Ostensibly, there is little support for the proposition that exemplary damages, albeit punitive in nature, amount to a penalty for the purposes of the penalty privilege rule. In Rookes v Barnard [1964] UKHL 1; [1964] AC 1129, Lord Devlin, in discussing factors which should be borne in mind when awards of exemplary damages are being considered, observed at 1227 that some of the awards that had been made seemed to amount to a greater punishment than would be likely to have been incurred if the conduct were criminal and were "moreover a punishment imposed without the safeguard which the criminal law gives to an offender". All other members of the House concurred.

37 Taking this point further, in Luntz, Assessment of Damages for Personal Injury and Death, 4th ed (2002), at [1.7.9] 81 - 2, the author notes that the main objection to exemplary damages is that the doctrine confuses the functions of the criminal and civil law, said to be respectively, punishment and compensation, and continues:

"Punishment, it has been thought, should be confined to the sphere of the criminal law because in civil proceedings a defendant is exposed to risks against which the safeguards of the criminal trial are designed to protect. Thus the defendant may be ordered to answer interrogatories, be found liable on a mere balance of probabilities and be subject to cross-examination or trial tactics by counsel not bound by the traditions of restraint and moderation followed by the Crown."[6] [My emphasis]

38 There does not appear to be any Australian or English authority directly on point[7]. As will emerge, the explanation for this may well lie in the history of the privilege. In any event, the defendants say that regard should be had to the underlying rationale and objects of an award of exemplary damages. There is no doubt that such damages are intended to be punitive and to exact retribution. The role of the award is to punish. That being the case, the defendants say there is no reason the privilege should not apply to proceedings in which such damages are claimed, even though they are claimed in addition to compensatory damages in an action in tort. What needs to be considered is the meaning of "penalty" in the context of the operation of the privilege rule. I also propose to examine the nature of exemplary damages and the basis of an award.

The meaning of penalty in the context of the privilege

39 In the main, the privilege had its origins in the rules of equity relating to discovery, although it was also recognised by the common law. Originally, orders for discovery were not available at common law, except to a limited extent, and a party to a common law action who sought discovery had to proceed by bill in equity. Courts of equity would not make an order in favour of a Crown prosecutor or common informer, or where the proceedings were of such a nature that it might result in a penalty. Following the passing of statutory provisions in the early 1850s, the common law courts had the power to order discovery of documents and to allow interrogatories. After that, the same principles were generally applied, but indeed were within the fused system of administration following the Judiciature Act: Naismith v McGovern [1953] HCA 59; (1953) 90 CLR 336 at 341 - 42; Trade Practices Commission v Abbco Iceworks (above) at 140 - 44; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49; (2002) 213 CLR 543 at [13] and Sichel and Chance, Interrogatories and Discovery, (1883) London, Stevens & Sons at 1 - 17. It may also be of note that before the Judiciature Act, equity would not lend its aid to enforce discovery for an action in tort: Lyell v Kennedy (No 1) (1883) 8 App Cas 217, discussed by Gummow J in Abbco Iceworks at 143 - 144.

40 Much has been recently written on the history of the subject. McColl JA in Rich v ASIC [2003] NSWCA 342; 203 ALR 671 at [195] - [257], carried out an extensive analysis of the history of the privilege and its application in Australia; see also Spigelman CJ at [18] - [47]. In the joint judgment following the appeal to the High Court - Rich v ASIC [2004] HCA 42; 220 CLR 129 - the following is said:

"[26] The penalties and forfeitures which attract the privileges include, but are not confined to, monetary exactions. The privilege against exposure to penalties has been applied in common informer proceedings and actions for monetary penalties or treble damages. But:

'[t]he term "penalty" was not used in courts of equity merely in the sense of an exaction pursuant to statute as a punishment for contravention thereof. It embraced the wider concept of penalty as understood in the law of relief in equity against the exaction of penal payments in contractual disputes and the forfeiture of property interests.' Trade Practices Commission v Abbco Iceworks Pty Ltd [1994] FCA 1279; (1994) 52 FCR 96 at 143, per Gummow J.

That is why the privileges against exposure to penalties or forfeiture have been allowed in cases as diverse as those already mentioned and to cases of forfeiture of estate, as for simony, for infringing the Pluralities Act (1 & 2 Vict c 10), for breaches of covenants in leases, by marriage without consent, or by having acted as agent for the Confederate States of America. Moreover, the privilege against exposure to penalties has been held applicable to preclude an order for discovery by the debtor in a petition for bankruptcy on the basis that the loss of civil status consequent on bankruptcy is penal."

41 Often it was the classification of the proceedings as penal in nature which led to the claim for privilege being allowed. However, the characterisation of the proceedings as penal in nature or as ones to prevent or redress civil injury, may determine how the privilege is invoked and operates, but is not determinative of whether it applies. Unless the area of exposure is said to lie outside the proceedings, the focus is on the nature and the effect of the orders sought: R v Associated Northern Collieries [1910] HCA 61; (1910) 11 CLR 738 at 742 - 47; Abbco Iceworks per Burchett J at 128 - 129.

42 This question was discussed by the High Court in Rich v ASIC [2004] HCA 42; 220 CLR 129. The issue was whether the privilege was available in proceedings under the Corporations Act 2001 for disqualification as a director. The particular point was the merits of the characterisation of the proceedings as having a protective, rather than a punitive, purpose. At [34] Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said that the inquiry as to how the general principles of the privilege found application in the circumstances of the case was not assisted by examining why the orders sought might be made, or what purpose might be achieved. "[A]ttention should be focussed upon the nature of the orders that are sought." At [35] their Honours went on to say that whilst it may be possible to characterise the proceedings as protective of the public, it was not determinative, and that beginning the inquiry from an a priori classification of proceedings invited error. This was because the classification assumed mutual exclusivity and was unstable, and ignored the fact that a proceeding may bear several characters.

43 As to the operation of the privilege_,_ SCR, r383(4)(a), relieves a defendant to an action to recover a penalty under an enactment, from the obligation to make discovery. No doubt interrogatories in such an action would also be disallowed from the outset under r409(3). The same situation would apply where otherwise the purpose of the action is to enforce or recover a penalty: Associated Northern Collieries. In the case of actions for the prevention or redress of civil injury which involve a claim for a penalty, the defendant ordinarily has to raise the objection in the course of making discovery or answering the interrogatories: Refrigerated Express Lines (A'Asia) Pty Ltd v Australian Meat and Live-Stock Corporation (1979) 42 FLR 204 at 207 - 8; Roland Children's Services v Dodd Tas unreported 108/1997. If the claim for a penalty relates to the same issue as other claims made in the action, the plaintiff is not entitled to discovery limited to those other claims: Colne Valley Water Company v Watford & St Albans Gas Company [1947] 1 KB 500.

44 As I have demonstrated, "penalty" in the form of monetary exactions extended to penal payments in contractual disputes. Thus, if the liability of the defendant was in the nature of agreed damages rather than a penalty, the principle against discovery would not apply: Abbco Iceworks per Gummow J at 143. Apart from this form of monetary exactions, a review of the cases shows that the only other form, or at least the only other form which I have been able to find, is statutory based[8]. That is to say, what is said to be a penalty arises in proceedings based on statute, and the sum is a fixed amount, or is fixed by the use of a formula based on a proven loss or the like. Examples of the former are Hunnings v Williamson (1883) 10 WBD 459 and Proudfoot v Proctor (1887) 3 WN(NSW) 69. Examples of the latter are Jones v Jones (1889) 22 QBD 425 (treble damages for pound-breach and rescue of chattels), and T W Hobbs & Co v Hudson (1890) 25 QBD 232 (double the value of goods fraudulently removed).

45 There are two cases which relate to whether unliquidated damages might amount to a penalty. Each was determined as a matter of statutory construction, and demonstrate a distinction drawn (differently in each case) between compensation and penalty. They are Adams v Batley (1887) 18 QBD 625 and Saunders v Wiel [1892] 2 QB 321. In Adams the relevant statute dealt with copyright and allowed recovery from an "offender" of an amount not less than a specified sum, or the full amount of the benefit arising from the representation, or the loss sustained, or "whichever shall be the greater damages". It was held that the specified amount was not a penalty but effectively liquidated damages, with the plaintiff given the choice to prove damages over and above the specified amount; if not, he may recover that amount. Wills J at 629 described the sum as a "statutory assessment of the damages in the case of small injuries, where it is difficult or impossible to prove greater damages". On appeal, Lord Esher MR agreed. Interestingly, his Lordship could see no characteristic of a penalty in the payment, questioning if it were to be so described "... who is to settle the amount - ought the jury to settle it; and if so, upon what considerations? Are they to look at the conduct of the defendant; or upon what are they to act?"

46 In contrast, his Lordship saw no such difficulties in Saunders v Wiel. In legislation dealing with patents, designs and trademarks, it was provided that the person who infringed copyright of a registered design was liable to forfeit to the registered proprietor, a specified amount, that sum being recoverable as a simple contract debt. It was held that the sum so forfeited must be taken to be a penalty in that the plaintiff in an action to recover such a sum was not entitled to interrogate. Lord Esher MR distinguished Adams v Batley on two bases. The first was the use of the language in the particular section in that it used the words "offence" and "forfeit", but more particularly there was a further section which gave to the registered proprietor the right to bring an action for the recovery of damages arising from the infringement. As to the question of the assessment of the sum "not exceeding" the specified amount, his Lordship said:

"The true intention of the section seems to me that those words as to the amount to be recovered do not apply to the damage sustained by the plaintiff, but to the conduct of the defendant, which the jury may take into consideration."

47 I now turn to the nature of exemplary damages and the basis on which an award is made, particularly where, as here, there is a claim for aggravated damages, as well as compensatory damages. Some of the history of exemplary damages needs to be examined, as does the position of where they sit in the civil law scheme of dealing with the redress of private grievances. I should immediately say though, that exemplary damages have been expressly referred to as a "penalty"; Uren v John Fairfax & Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118 per Taylor J at 137 - and there is no doubt that their purpose is to punish and to deter: Lamb v Cotogno (1987) 164 CLR at 8, Gray v Motor Accident Commission (1998) 196 CLR 1 at [15].

48 In Rookes v Barnard (above) Lord Devlin demonstrated that in a number of cases to that point, the relevant awards could be explained in terms of aggravated damages rather than exemplary damages. At 1223, his Lordship noted that it was not until 1861 that there was a clear dictum in relation to the award of exemplary damages. He sought to make clear the conceptual distinction between compensatory damages and those aimed at punishment, the latter being confined to the expression "exemplary damages". The outcome of the case was to limit recovery of those damages to two categories of cases (apart from where statutory provision was made): oppressive, arbitrary or unconstitutional action by government servants, and where the defendant's conduct was calculated to return a profit which may exceed any compensation payable. This restatement of the law was rejected by the High Court of Australia in Uren's case, some issue being taken with the historical analysis, and reliance being placed on the development of the law in Australia. Taylor J at 137 said that the attempt "to remove an anomaly" was not justified by the assertion that it was not the function of the civil law to permit the award of damages by way of penalty.

49 I think the aims of tort law and the role of exemplary damages alongside compensation are important considerations in this case. In Gray (above) the court noted that it had not been invited to reconsider Uren "or the considerable body of authority in this court that lies behind it ...". At [10] it was said that notwithstanding what are sometimes seen as the anomalies and difficulties that attend the awarding of exemplary damages, the appeal concerned when such an award may be made, not whether there were any anomalies such as to invite some radical change to the law. The court continued:

"[11] It is as well, however, to say something about some of those apparent anomalies. As Windeyer J said in Uren:

'Compensation is the dominant remedy if not the purpose of the law of torts today. But fault still has a place in many forms of wrongdoing. And the roots of tort and crime in the law of England are greatly intermingled. Some things that today are seen as anomalies have roots that go deep, too deep for them to be easily uprooted'."

50 The approach in relation to the award of exemplary damages was addressed as follows:

"[12] Exemplary damages are awarded rarely. They recognise and punish fault, but not every finding of fault warrants their award. Something more must be found.

...

[15] In considering whether to award exemplary damages, the first, if not the principal, focus of the inquiry is upon the wrongdoer, not upon the party who was wronged. (The reaction of the party who is wronged to high-handed or deliberate conduct may well be a reason for awarding aggravated damages in further compensation for the wrong done. But it is not ordinarily relevant to whether exemplary damages should be allowed.) The party wronged is entitled to whatever compensatory damages the law allows (including, if appropriate, aggravated damages). By hypothesis then, the party wronged will receive just compensation for the wrong that is suffered. If exemplary damages are awarded, they will be paid in addition to compensatory damages and, in that sense, will be a windfall in the hands of the party who was wronged. Nevertheless, they are awarded at the suit of that party and, although awarded to punish the wrongdoer and deter others from like conduct, they are not exacted by the State or paid to it."

51 Some further features of awards of exemplary damages need to be noted. Exemplary damages are parasitic on compensatory damages, the plaintiff being unable to recover exemplary damages if he is not the victim of the behaviour which attracts the exemplary damages. A single cause of action provides the foundation for the award of both forms of damages: XL Petroleum (NSW) Pty Ltd v Caltex Oil (Aust) Pty Ltd [1985] HCA 12; (1985) 155 CLR 448, per Brennan J at 468 - 69. The remedy of exemplary damages is a discretionary one, a central factor relevant to which is the gravity of conduct of the wrongdoer. Relevant considerations also include whether the defendant has been punished in the criminal jurisdiction, and the means of the defendant. In that respect insurance against liability for exemplary damages does not bar an award: Lamb v Cotogno (above); Gray at [51] - [57].

52 More significantly perhaps, going back to the relationship to compensatory damages, is the proposition that the discretion to award exemplary damages is to be exercised with restraint and only if the sum awarded as compensatory damages is inadequate to punish the wrongdoer for the conduct. This was the approach suggested by Lord Devlin in Rookes v Barnard. What became known as the "if, but only if," principle was explained in Broome v Cassell & Co [1972] UKHL 3; [1972] AC 1027 per Lord Reid at 1089. It was confirmed that if compensatory damages were seen as sufficient punishment, then a further sum should not be added to it; sums as compensatory and punitive damages should not be fixed and added together. In the XL Petroleum case (above) at 463, which involved trespass to land, Gibbs CJ considered this approach to be correct, and it seems to be the established law in Australia: Backwell v AAA [1996] 1 VR 182 (negligence); Avram v Inches [1999] TASSC 10 (defamation); Amalgamated Television Services Pty Ltd v Mardsen (No 2) [2003] NSWCA 186; (2003) 57 NSWLR 338 (defamation).

53 I need to say something further about the relationship between aggravated damages and exemplary damages. In Uren's case at 130, Taylor J said that aggravated damages fix upon the circumstances and the manner of the wrongdoing of the defendant, and contrasted the function of exemplary damages as punishment and deterrent of the wrongdoer, observing that "in many cases, the same set of circumstances might well justify either an award of exemplary or aggravated damages". Windeyer J at 149 described the difference as being that aggravated damages are given to compensate the plaintiff when the harm done to him by a wrongful act was aggravated by the manner in which the act was done, whereas exemplary damages were intended to punish the defendant.

54 The conceptual distinction between the compensatory nature of aggravated damages and the punitive and deterrent nature of exemplary damages was maintained in Lamb v Cotogno, and further confirmed in New South Wales v Ibbett [2006] HCA 57; (2006) 229 CLR 638 at [33]. At [34] Gleeson CJ, Gummow, Kirby, Heydon and Crennan JJ highlighted the need to maintain the conceptual distinctions between aggravated and exemplary damages, and said that it was necessary to determine both heads of compensatory damages before deciding whether or not an award of exemplary damages was justified. At [35] their Honours said that in cases where the same circumstances increase the hurt to the plaintiff and also make it desirable for a court to mark its disapprobation of that conduct, the court may choose to award one sum which represents both heads of damage, and no element more than once.

55 One last aspect of exemplary damages needs to be mentioned. Not only are such damages said to serve punitive and deterrent functions, but also one of "corrective justice". In Lamb v Cotogno, in which the defendant was insured against such awards, it was said[9] (at 9) that an aspect of exemplary damages was "that they serve to assuage any urge for revenge felt by victims and to discourage any temptation to engage in self-help likely to endanger the peace".[10] The court went on to point out that those considerations probably had more force when exemplary damages were in their infancy, but it nevertheless remained an aspect of them. It was also noted that exemplary damages "are not without their critics who assert generally that they are both anachronistic and anomalous" but "[t]hey nevertheless remain as part of the law."[11]

56 To return to a point earlier made, to label a remedy a "penalty" or "punitive" is not necessarily to answer the question as to whether the privilege applies. As to whether it applies as the defendants claim, I would first note that there is no real support in any authority for their contention. There are some cases in which statutory provisions have been held to create penalties where the amount is to be determined by reference to amounts to be assessed as damages, or even directly assessed, but these are not common. Whilst then there does not appear to be any objection in principle why unliquidated damages may not amount to a penalty, the clearer view, apparently held by their Lordships in Rookes v Barnard, and at least as evidenced by academic writings, is that the privilege does not apply to exemplary damages.

57 The next point relates to the characterisation of the proceedings. In Rich v ASIC [2004] HCA 42; 220 CLR 129, the argument as to whether the privilege was available concerned competing characterisations of the proceedings where one remedy was pursued. Whilst it is possible to characterise these proceedings as both compensatory and punitive because of the several claims made, and whilst I do not see the High Court in Rich v ASIC as having completely done away with relevant distinctions as to the nature of particular proceedings, there is no denying the proposition that the principal focus of the inquiry is on the nature of the remedy of exemplary damages. The proceedings expose the defendants to a liability to such an award. However, it seems to me that when considering whether such damages are a penalty for the purposes of the privilege, it is necessary to consider them in the context of the body of law in which they exist and operate. This is because of the aims of tort law and the role of compensatory damages, and the circumstances in which an award of exemplary damages will be made.

58 The general aim of tort law is to prevent and redress civil wrongs; in particular to provide compensation for losses suffered as a result of such civil wrongs. In the operation of tort law, there is an inherent function of condemnation and admonishment. In Uren at 149, Windeyer J said that compensation and fault compete for first place as the fundamental principle. One of the objectives of the law is deterrence[12]. The vindication of rights and the award of compensatory and aggravated damages, are intended to achieve those aims and objectives. More specifically, compensatory damages may, in some cases, be sufficient to fulfil the purpose of punishment. Exemplary damages remain part of modern tort law and are not only intended to punish and deter, but are specifically said to be part of a broader notion of corrective justice. In that sense, although they might be seen as a drastic measure, they are intended to achieve, in an acute and salutary way, no more than the underlying aims of the body of law of which they are a part. Perhaps putting it more relevantly, in the operation of tort law, remedies which are not specifically said to be punitive, do have on a broad policy level, an objective in common with exemplary damages.

59 At the same time, exemplary damages are awarded to a plaintiff as a consequence of a violation of a right or of a breach of duty owed. They are parasitic on compensatory damages. Where claimed, they are awarded if, and only if, compensatory damages are assessed as insufficient to fulfil the purpose. Further, where aggravated damages are claimed, that claim also needs to be assessed before exemplary damages are considered, the result in some cases being that, depending on the circumstances, the award under the former head means that no award is necessary under the latter. Because of those aspects of dependence on compensatory damages (using that expression broadly), it is not possible to completely isolate exemplary damages from the remedial purpose of actions in tort. This is relevant as to whether the term "penalty" is appropriate to apply in the context.

60 Given the state of the authorities and the history of the privilege as I have been able to ascertain it, and given the position exemplary damages occupy in the law of torts as I have outlined it, I am not persuaded that the epithet "penalty" can be properly ascribed to such damages for the purposes of the privilege. For the foregoing reasons I hold that the privilege does not apply in respect of a claim for exemplary damages, and that the claim in this case is not made out.

61 For the foregoing reasons, the appeal will be allowed. As I have said, I am not dealing with an appeal from the orders made in respect of the first - seventh defendants. Strictly speaking, it seems to me that the eighth - thirteenth defendants should be ordered to answer all interrogatories, but in the circumstances I assume that the plaintiffs may be content that those defendants be made the subject of the same orders as were the first - seventh defendants. I will hear further from counsel as to this.

[1] 409 - Answers to interrogatories and affidavit verifying

(1) A person interrogated is to answer each interrogatory by a document identifying each separate interrogatory by its distinctive number followed by -

(b) the objection to answering it with a concise statement of the reasons for the objection.

(a) verify the answers and objections to interrogatories by an affidavit exhibiting a copy of the interrogatories and the answers and objections; and

(b) file the affidavit, and serve a copy of it on the party interrogating, within 14 days after the interrogatories are delivered.

[2] Counsel were agreed that the s55(1) time limit would apply to any proceedings, irrespective of who instituted them.

[3] The Justices Rules 2003, r24, enables the return day of a summons which has been filed to be extended either before or after the allocated return date.

[4] This has been referred to with apparent approval in Rich v ASIC (above) per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ at [20] and in Trade Practices Commission v Abbco Iceworks Pty Ltd [1994] FCA 1279; (1994) 52 FCR 96 per Burchett J at 127 - 128.

[5] Australian Law Reform Commission Report 95: Penalties in Australian Government Regulation, at 2.25.

[6] See also Michael Tilbury, "Factors inflating damages awards", in Essays on Damages - _ P D Finn (ed),_ (1992) at 100. "[T]he defendant is only guilty 'in a civil law sense, having been denied the procedural protections of the criminal law (for example, the privilege against self-incrimination ...')."

[7] Counsel were unable to find any, and nor was I. However, my associate, Mr Hughes, unearthed a decision of a two-member bench of the Court of Appeal of the Supreme Court of North Carolina, USA; Allred v Graves 261 NC 31; 134 SE 2d 186 (1964). Although one judge dissented, it is taken to be authority for the proposition that the Constitutional right against self-incrimination may be invoked so as to resist pre-trial examination in an action for damages for assault which included a claim for punitive damages. The privilege was said to apply because of the defendants' amenability to the remedies of arrest and body execution in order to satisfy any award. The case was criticised in an article by Gary C Borchard, New Grounds for Self-Incrimination: Exemplary Damages and Civil Arrest (1965) 17 Stanford Law Review (No 2) 327.

[8] See for example The African Company v Parish [1691] EngR 72; (1691) 23 ER 758 (2 Vern 244); The East India Company v Atkins (1720) 93 ER 452 (1 Strange 168); Bones v Booth [1746] EngR 67; (1778) 96 ER 721 (2 W Bl 1226); Orme v Crockford (1824) 147 ER 1022 (13 Price 376); Short v Mercier [1849] EngR 777; (1849) 64 ER 285 (2 De G & Sm 635); Hunnings v Williamson (1883) 10 QBD 459; Martin v Treacher (1886) 16 QBD 507; Adams v Batley (1887) 18 QBD 625; Proudfoot v Proctor (1887) 3 WN (NSW) 69; Jones v Jones (1889) 22 QBD 425; T W Hobbs & Co v Hudson (1890) 25 QBD 232; Saunders v Wiel [1892] 2 QB 18; Earl of Mexborough v Whitwood Urban District Council [1897] 2 QB 111. Most of these cases did not involve actions brought by, or on behalf of, the Crown or State instrumentalities, or brought by common informers.

[9] Per Mason CJ, Brennan, Deane, Dawson and Gaudron JJ.

[10] See also to like effect the comments of Brennan J in the XL Petroleum case [1985] HCA 12; 155 CLR 448 at 471-72.

[11] See Luntz, Assessment of Damages for Personal Injury and Death, 4th ed, and the articles and other material referred to in footnote 516 to par1.7.9 "Objections to exemplary damages".

[12] See the discussions in Balkin and Davis, Law of Torts, 4th ed (2009) at 7 - 9 and Trindade, Cane and Lunney, The Law of Torts in Australia, 4th ed (2007) at 6.