Plaintiff v Defendant

Plaintiff v Defendant - [2014] VSC 517 - VSC 2014 case summary — Zoe

[37]

We're seeking a Protean order about the order of evidence in relation to the trial. We're not splitting the trial and all the authorities he referred to about splitting the case we would agree with, if it was the fact that we were in a position where we were caught by our pleadings to be put in a position where you were going to have to embark on the merits of the Fagan Memorandum in the sense of the underlying truth or otherwise of the allegations to prove your damages or something of that nature, but that's not our case.

First of all he said the question ought to be determined at trial. Well the first thing is that this is a managed list, Your Honour will be the trial judge and in that context we say now is the appropriate time and before Your Honour makes the relevant directions that will proceed the matter to trial because how the evidence is to come out will determine the order in which witness statements are to be delivered and so forth.[20]

...

"The older case law indicates that there is no such entitlement absent mala fides".[21] Of course in our case there's an expressed contractual term and there's a couple of older cases. "However in Kerr v Morris [[1987] Ch 90], a case relating to a national health service medical practice, Lord Justice Dillon evidently regarded it as arguable that since a power of expulsion must be exercised in good faith", and in our case an expressed term to that effect, "a partner cannot be expelled unheard".

It may be that there is a right to a hearing where the partnership is set up under or reinforced by a statutory scheme and so forth". Then in His Honour's conclusions at Paragraph 3 [Variety Video [2001] NSWSC 5, [185]] he says, "Each of the defendant's [sic] was guilty on or prior to 27th of serious misconduct which prejudiced the partnership business".[22]

...

We deal with that matter and we say it just leaves the matter as a matter of law, but what it does is it highlights in the pleading the fact that we could obtain a result in this case on that point simply as a matter of construction of the contract. It also highlights arguably indirectly why there's a strong [argument not] to decide anything without hearing from us which is most of the paragraphs in the statement of claim, is a lack of good faith and therefore we would win on that basis.

My learned friend then went on ... by saying that the memorandum starts and he talks about that and he talks about those matters. Then he says well so if I may say so, admitted from my learned friend, saying well we haven't been convicted and they tossed us out you don't have to be convicted of a criminal offence involving dishonesty for the Board. What is necessary is the formation of the opinion.

Well we dispute that but at the end of the day it's not a matter that invokes a review of all of the facts of the case in the sense of the underlying facts that are rehearsed in the memorandum or indeed the other matters.[23]

...

He [Mr Karkar QC] then says effectively if one reads from Line 5 of 42 of our statement of claim, "It is alleged the expulsion decision was unlawful and in breach of the partnership agreement because", and he then cited, "No director acting in the utmost good faith could reasonably", and Your Honour will recall I said or good faith, "could reasonably have formed that opinion on the information provided to and considered by the board in the absence of an explanation by the plaintiff".

They're the key words in all of this. You have to set the stage because each time the Board is doing this they're doing it on the face of what is contained in the Fagan Memorandum and that's not to say of course we've got a tender that, it's admitted in the pleadings that they sent it to us and that was what they acted on.

It would be absurd to suggest that by tendering it as part of our case we're admitting to the underlying facts or matters that give rise to the conclusions and statements. It would be like saying if I may, it would be like saying in a defamation case that when the plaintiff proves publication of the article in the newspaper he's admitting to the truth - because he's put the newspaper article into evidence he's admitting the truth of everything that's stated in it which would then be hardly conducive to his case.[24]

I've never heard of that ever happening and there are clearly cases where people tender documents on a clear and fair basis that is proper based on the structure of the pleadings and it would be patently obvious that the plaintiff would not be tendering the document on the basis that he was accepting or proving the truth - by doing so the truth of all the underlying facts and matters in the statement.

Then he says - and this is where Mr Karkar slides into the fallacy. This is on p 73 at Line 2, "Now what the plaintiff is asserting here is this. Had you given me an opportunity to explain you would not have come to this decision. Now for good or ill", no (sic) what he's saying is you didn't give me the opportunity to explain therefore coming to this decision was unfair. I might say it's a point Your Honour picked up.

Now for good or ill that is his case[25] - that's not his case. What his case is in fact if you read it altogether that they were biased and determined to get rid of him wouldn't have made any difference probably. But the fact is that his case is clearly based on the breach of the obligation to act fairly, what was that breach? They didn't give him an opportunity to be heard and every one of the plaintiff's claims, almost every one of them, is based on that.

The others are that they're biased because they were prepared to accept without hearing from him the basis, the factual basis of the Fagan Memorandum when so much of it is expressed or couched in terms that are conclusionary and prejudicial and so forth and raise very serious matters.[26]

...

[71]

I am asked to rule on submissions as to the order in which evidence may be presented in this action.

The plaintiffs' claim is pursuant to a policy of indemnity insurance against fire. The pleadings reveal that there is no issue about the existence of the policy or fire damage to the subject premises during its currency. However, the plaintiffs have been put to proof of the terms of the policy and by a foreshadowed amendment to the defence, to proof perhaps of an insurable interest and privity of contract.

It is conceded on behalf of the plaintiffs that they have the burden of proof in relation to all those matters.

By its defence, however, the defendant alleges a right to avoid the policy; that the plaintiffs lit the fire themselves or caused or connived at it being lit; made misrepresentations of material facts; were guilty of fraud and non-disclosure of material facts. In relation to all these latter allegations Mr O'Callaghan Q.C. for the defendant conceded that the defendant has the burden of proof.

Mr Chernov Q.C. for the plaintiffs submitted that he should not be required to lead evidence directed to the issues on which the defendant has the onus of proof, but be permitted to call rebutting evidence after the defendant has called its evidence on those issues. Mr O'Callaghan opposes this course. He submitted that the plaintiffs should begin and call the whole of their evidence before the defendant is called upon.

Mr Chernov conceded that he must begin in relation to those issues on which the plaintiffs have the burden of proof.

There is clearly, I think, a rule of practice which was succinctly stated by Stawell CJ delivering the judgment of this Full Court in Wharton v. Tuohy (1862) 1 W. & W. (L.) 217, at p. 219: "No rule of practice is better known than that prohibiting a plaintiff from dividing his case; on the other hand, a plaintiff is clearly entitled to reserve for the purpose of rebutting new matter, evidence which, if he, the plaintiff, were disposed, he might give in the first instance by way of anticipation. The correctness of rejecting or receiving the evidence in question depends, therefore, upon whether that evidence, if received, would or would not, have formed a rebutting case, properly speaking."

The rule was also stated by Pollock C.B. in Shaw v. Beck [1853] EngR 105; (1853) 8 Exch. 392, at p. 398; [1853] EngR 105; 155 E.R. 1401, at p. 1403, as follows: "Where there are several issues, some of which are upon the plaintiff and some upon the defendant, the plaintiff may begin by proving those only which are upon him leaving it to the defendant to give evidence in support of those issues upon which he intends to rely; and the plaintiff may then rebut the facts which the defendant has adduced in support of his defence."

There was, I think, recognition of such a principle in the ruling of Lowe J. in Portelli v. Port Waratah Stevedoring Co. Pty. Ltd. [1959] VicRp 31; [1959] V.R. 195, although his Honour in that case did not accede to the application. The rule, however, was acted upon and reasserted by McInerney J. in Re Hardiman, deceased [1967] VicRp 63; [1967] V.R. 577, at p 580. It was discussed at length by the Court of Appeal in Beevis v. Dawson [1957] 1 Q.B. 195 which was followed by the Supreme Court of Canada, comprising a bench of five Judges, in Jerome v. Anderson (1964) 44 D.L.R. (2d) 516, at pp. 526 et seq. But there is high authority for the rule as early as 1825 when Lord Abbott C.J. in Browne v. Murray (1825) Ry. & Mood. 254; 171 E.R. 1012, said: "In actions of this nature, the plaintiff may, if he thinks fit, content himself with proof of the libel, and leave it to the defendant to make out his justification, and then the plaintiff may, in reply, rebut the evidence produced by the defendant." However, Lord Abbott went on to say as do many, if not all, subsequent authorities, that the plaintiff cannot split his case, so that once he enters upon evidence in relation to an issue he cannot seek to call further evidence after the defendant to supplement it.

In Beevis v. Dawson, at ([1957] 1 Q.B.) p. 204 Singleton L.J. said: "The authorities seem to me to show that the practice is based on general convenience. It must depend, of course, upon the issues which are raised; obviously it must depend upon the pleadings in the case in which the issues are set out." He added: "In most cases there are other pleas, and the question arises as to what is the most convenient way of dealing with the matter in the interests of justice, in the interests of the parties, and from the point of view of the court. Those interests are really all the same. If, after hearing submissions, the Judge decides that one course is preferable to another, his decision should in general be treated as final."

At p. 215 Jenkins L.J. said: "For my part, I do not think the principle which is stated in the case of Browne v. Murray, to which my Lord has referred, really amounts to a rule of law, or a right to which the plaintiff may invariably lay claim as a matter of law."

His Lordship added: "I think that the principle there stated may well reflect a practice which in appropriate circumstances it is right to follow, but is subject to the overriding discretion of the court to give such directions as to the order in which the onus of proof is to be dealt with and in which witnesses are to be called as the court may find just and convenient in the circumstances of the particular case."

Jenkins L.J. said he thought that his view was supported by the observations of Parke B. in Shaw v. Beck [1853] EngR 105; (1853) 8 Exch. 392, at p. 398.

I consider that they were, and that what Singleton L.J. said in the passage to which I have referred, is also consisted with the existence of a discretion.

Accordingly, I am minded for the purposes here; to consider that there is left in the Court a discretion in the matter. All authorities refer to the rule being one of practice and not law, and that is consistent with an exercise of discretion being involved in a ruling as to the order of presentation of evidence. But it ought I think, to take place against the background of the practice.

In the exercise of my discretion in this case, I place some importance on what was said in McLaren & Sons v Davis (1890) 6 T.L.R. 372 by Cave J. as a member of a bench of three Judges in the Queen's Bench Division, at p. 373: "It was never convenient to prove a negative. When the defendant had set up something affirmative then was the time to dispose of it. The learned Baron [a reference to Huddleston B. who sat with the jury at first instance] had exercised an erroneous discretion in refusing to allow the rebutting evidence".

Further, in Jerome v. Anderson (1964) 44 D.L.R. (2d) 516, Cartwright J. at p. 531, observed: "In view of the nature of the particulars of the plea of justification delivered in this action, it would, I think, have been highly inconvenient to call upon the plaintiff to prove the negative of that issue before having heard the evidence offered by the defendants in support of it."

In each case, emphasis was laid on the burden which the plaintiff is likely to have of proving a negative if he is to go first in relation to issues on which the defendant has the burden of proof.

In the exercise of a discretion, I think it is proper to take into account the extent to which this so-called proof of a negative would be placed on a plaintiff. This aspect in this case, I think, is highly pertinent and of considerable weight.

Here it would be not only inconvenient but quite unfair and contrary to the interests of justice if the plaintiffs are called upon to adduce all their evidence in disproof of a case with respect to which they have heard no evidence.

[74]

I turn to consider ground 1. As I understand it, it was contended that the Magistrate should have permitted the appellant to "split" the case; that is to say, allow the appellant to defer calling evidence on the question whether he used the name John D. Young as an alias in connection with the registration of the vehicle until after the respondents had led their evidence on this issue.
Ms Lieder argued that the respondents' contention that the appellant used the name John D. Young as an alias amounted to an allegation of deceit or fraud on the part of the appellant, particularly since their principal case was that, at least at the outset, John D. Young did not exist and that therefore the appellant was using a fictitious name for registration purposes.
Consequently, it was argued, the respondents bore the onus of proof on this issue and should have been required to lead their evidence in relation to it with the appellant being entitled to lead rebutting evidence. It was submitted, in effect, that the appellant's position on this issue was similar to that of the insured in Protean (Holdings) Ltd (Receivers and Managers appointed) v. American Home Assurance Co [1985] VicRp 18; [1985] V.R. 187.
Moreover, it was said that her Honour erred in holding that the Magistrate's decision to refuse the appellant the right so to split its case was a discretionary decision on a matter of practice and procedure. Ms Lieder claimed that the decision determined what she called substantive rights and therefore the usual rule that appellate courts exercise particular caution in reviewing discretionary decisions relating to practice and procedure did not apply.
Turning first to the last matter mentioned, it is clear that a decision of a trial judge on the question of whether the plaintiff can defer the calling of its evidence on an issue until after the defendant has presented its evidence on it, and thereby split its case, is a discretionary decision on a matter of practice and procedure and not one which deals with substantive rights; Protean at 191; Re Hardiman dec'd [1967] VicRp 63; [1967] V.R. 577 at 580; and Beevis v. Dawson [1957] 1 Q.B. 195 at 204 per Singleton, L.J. and at 215 per Jenkins, L.J. Moreover, other than in exceptional circumstances, the judge's decision on the matter is final; Beevis v. Dawson at 204 per Singleton, L.J.. In this case, no such exceptional circumstances have been made out and there is, therefore, no basis for interfering with the decision of the Magistrate.
In my view, there was, in any event, no scope in this case for permitting the appellant to defer calling further evidence on the ownership issue until after the respondents' evidence on it was concluded. A party in the position of the appellant might be permitted relevantly to divide its case in relation to an issue in respect of which the other party carries the legal onus of proof. Thus, in Protean the defendant insurer carried the legal onus of establishing fraud on the part of the insured. Similarly, in Re Hardiman dec'd the caveator carried the onus of establishing lack of testamentary capacity. In a defamation case where justification is set up as a defence, it is for the defendant to make out his plea of justification before the plaintiff is called upon to give evidence in rebuttal of that plea; Beevis at 204 per Singleton, L.J. and 215 per Jenkins, L.J.[46]
In those circumstances, there is a proper basis on which the court can consider whether it would be appropriate to permit the plaintiff to lead evidence on the relevant issue by way of rebuttal. No such circumstances, however, arise in this case if for no other reason than that the issue whether the appellant had acted fraudulently was not before the court. Fraud was not pleaded, as I have said, or otherwise alleged by the respondents, and the Magistrate did not find fraud on the part of the appellant.
The appellant alleged trespass and, in the circumstances of this case, he carried the legal onus of establishing that he was not the owner of the vehicle at all relevant times. It was for the appellant to call evidence to make good that claim.
As part of their defence, the respondents alleged that the vehicle was owned by the appellant and the name of John D. Young was used as an alias. In my view, that is not an allegation of fraud. It is clear that the Magistrate found as a fact that the appellant acquired ownership of the vehicle in the first half of 1985 and, as I have said earlier, this finding has nothing to do with fraud.
Ms Lieder agreed (properly, I think) that unless the respondents' case could be characterised as raising an allegation of fraud against the appellant, the question of whether the appellant can split his case cannot arise. Since, in my view, the respondents' case did not raise the issue of fraudulent conduct on the part of appellant, there was no basis on which the appellant could have properly sought to have deferred calling evidence on the issue of ownership of the vehicle.
Another reason why such a division of the appellant's case would not be permissible is that the application to split the case was made after the appellant had led some evidence on the issue of ownership of the vehicle. In those circumstances it could not properly seek to call the balance of its evidence after the respondents had led their evidence on that matter; Re Hardiman at 580. Thus, in my view, her Honour made no reviewable error in relation to this issue and therefore ground 1 must fail.

[104]

In my opinion, the general principle which emerges from the authorities (leaving aside the question of statements which are both admissions and self serving) is this. If evidence, admitted without objection, is legally admissible in proof of some issue in the case, its evidentiary use should be confined to that purpose. The testatrix's statements in Hughes' case provide an example. If, on the other hand, evidence, admitted without objection, is not legally admissible in proof of any issue, it may, once in, be used 'as proof to the extent of whatever rational persuasive power it may have'. Suppose a hearsay document is tendered. It is not legally admissible to prove the truth of the assertions it contains, which are, however, relevant to an issue in the case. It might none the less be legally admissible as original evidence of the making of those assertions. But suppose further that there is in fact no issue to which, as original evidence, the document is relevant. No objection is taken to the tender, and the document is admitted. It is then evidence in proof of the issue to which it is relevant, the want of objection having waived the complaint, which would have been fatal, that, being hearsay, it was legally inadmissible.

It is now necessary to go back and consider the purpose for which the letters in question might have been tendered. They would have been admissible as original evidence had there been any issue about what the late Mr Jones had said or believed at the relevant time. But there was not...

That being so, the two letters, each dated 5th February, 1960 - annexures 'B' and 'C' - were in evidence for what they could prove. There can be no doubt but that their probative value - and I bear in mind the tests proposed in Walker v Walker, and by Professor McCormick, quoted in McLennan v Taylor - was extremely high in relation to any matter concerning the late Mr Jones's conduct of his own business. It would be scarcely possible to envisage a more reliable source of information.

[126]

I make some further brief observations about the pleadings and the nature of the case. Channel Seven's plea of justification has been carefully particularised, although the plaintiff still complains of some inadequacies in that regard. Nevertheless, the plaintiff is on notice as to Channel Seven's allegations and the scope of the plaintiff's cross-examination on this topic is clearly defined. The plaintiff's evidence will be crucial to the issue of justification. There will be little or no oral evidence required of the defendants to raise their respective defences of qualified privilege. The plaintiff's principal reply to those defences is based on allegations by the plaintiff of malice, which allegations have also been carefully particularised. In those circumstances there should be little difficulty in the plaintiff leading evidence of malice as part of his case. Likewise, issues of causation of the plaintiff's economic loss have been particularised by both the plaintiff and Channel Seven. That is an issue on which the plaintiff would normally lead evidence as part of his case.
It is these issues which, I apprehend, will comprise the bulk of the oral evidence in the case. In all the major issues requiring oral evidence, each party is therefore on notice of the allegations made against the other, and the ambit of cross-examination on those issues is clearly defined.
It must also be noted that in the plaintiff's primary submission, namely that orders be made in terms of paragraphs 1, 2 and 3 set forth above, he does not seek to have the defendants made dux litis in the proceedings generally but only in respect of particular issues, with the plaintiff remaining dux litis on those issues on which he bears the burden of proof. Being dux litis is no more than having the right (or obligation) to begin. In most cases it is a procedural consequence of the burden of proof. However, by seeking the orders that he does, the plaintiff is effectively seeking to split his case, which is not permitted in normal circumstances, but which may be permitted in some circumstances.
The issues on which the plaintiff must begin and on which he bears the onus of proof include the extent of likely public knowledge of the plaintiff and of his recognition by the public in the publications, his character and reputation, the effect of the publication on his character and reputation and on the plaintiff himself by way of injury to his feelings. In the case against Channel Seven it will include proof of the causative link between the publication and the plaintiff's loss of employment and proof of his consequent economic loss. Given the nature of the pleadings it would also normally include proof of malice on the part of both defendants in respect of their respective publications. There are therefore substantive issues on which the plaintiff will be required to lead evidence. Significantly, that includes evidence as to causation of his loss of employment and of injury to his feelings based on his beliefs as to the untruth of Channel Seven's publication. Cross-examination on those issues will inevitably involve questions as to the plaintiff's own conduct and in respect of issues relevant to Channel Seven's defence of justification. They cannot be realistically be separated.
In those circumstances I consider that it would be unreasonable to expect counsel for Channel Seven to cross-examine the plaintiff on damages and causation if at the same time he is prevented from cross-examining on issues relating to justification. The two are necessarily intertwined. In particular, it would be unfair to expect cross-examination on the issue of termination of employment and its surrounding circumstances, which inevitably will raise questions of the plaintiff's conduct, without permitting questions on maters going to justification. Furthermore, it is apparent that the plaintiff's credit will be in issue. It would be unreasonable to place restrictions on the defendant's right to cross-examine on credit by preventing him from asking questions which might go to Channel Seven's defence of justification. Cross-examination as to damages and credit will inevitably impinge on matters going to justification.

[129]

[15] The first reason why, in my opinion, the application should be refused is that, as was conceded in argument, there is no guarantee that certain witnesses will not give evidence on the issues of liability and damages. Whilst the plaintiff stated it had filed all its evidence in chief, it did not rule out the possibility that evidence in reply may be filed from a witness going to both issues. In my view, it would require an exceptional case for the Court to order a separate hearing of liability and damages when any witness is likely to give evidence on both issues. The reasons are obvious. A case should be conducted on the basis that the witness is cross-examined on all issues at the same time and in the context of all issues, because his or her evidence on one issue may impact on the acceptability of his or her evidence on the other. If there is not adherence to this practice difficult questions arise for the Court as to the extent to which cross-examination on the matter not being litigated should be allowed, and for the cross-examiner as to how far matters not in issue can and/or should be pursued, and how that evidence should be treated in the overall assessment of the witness. In my opinion, the cross-examiner should not be precluded, particularly where credit is in issue, from cross-examining on the issue of damages merely because the only matter being litigated is liability. That not only causes difficulties for the cross-examiner, but also for the Court. The Court may be prevented from making a fully informed assessment of the credibility of the witness if the cross-examination is truncated, or if certain contradictory material cannot be led because the cross-examination goes only to credit and not to an issue.

[16] A further difficulty, in these circumstances, is that if a Judge hearing the issue of liability makes any finding as to the credit of a witness, who is subsequently to give evidence in the event of the question of damages being litigated, that Judge will, in all probability, be disqualified from hearing the matter and, accordingly, the store of knowledge he or she has obtained from the initial hearing is lost, as is the impact of the evidence upon him or her: Australian National Industries Ltd v Spedley Securities Ltd (In Liquidation) (1992) 26 NSWLR 411. The finding may not necessarily have to be an adverse one to have this result. This is but one consequence, which leads to an inefficient use of the Court's and the parties' time and resources.

[144]

The plaintiff did not give evidence. One can well understand why he did not as he would not be at all anxious to expose himself to cross-examination by counsel for the prosecutor because that might prejudice him in the committal proceedings. Senior counsel for the plaintiff has urged on me that I should not draw any adverse inference to the plaintiff because he did not give evidence because the reason for his non-appearance was obvious. I do not accept this submission. There have been a series of cases in recent years dealing with the situation where a defendant to criminal proceedings is also the defendant in civil proceedings and seeks to stay the civil proceedings pending the outcome of the criminal proceedings: see McMahon v Gould (1982) 7 ACLR 202; 1 ACLC 98 and Cameron's Unit Services Pty Ltd v Whelpton & Associates Pty Ltd [1984] FCA 406; (1984) 59 ALR 754 in which virtually all the modern cases are discussed and summarised. In McMahon's case (at 207; 103 and following), Wootten J examined the so-called right to silence and held that it involved various distinct rules all aimed at avoiding causing unjust prejudice to the accused at his trial but that it could not be said that they had their origin in some over-riding principle which gave a right to an accused person which right he could use "to preserve the tactical status quo in the criminal proceedings whether it be just or unjust". Those cases were in the context of the accused being the defendant in civil proceedings but they a fortiori apply in a case where the accused chooses to commence civil proceedings himself. If an accused person elects to commence civil proceedings, there does not seem to me to be any reason why merely because he is the defendant in criminal proceedings that he should be accorded such special privileges. His right to silence as it is called is purely a defensive matter and is a privilege he has in the criminal proceedings. True it is in rare cases that right can only be preserved if civil proceedings in which the accused is a defendant are stayed but it is difficult to contemplate circumstances where that would apply to civil proceedings which the accused commences himself or at least to proceedings commenced after the criminal proceedings have commenced.

[153]

The failure of a party to give evidence in his own defence clearly gives rise to an inference that his evidence would not assist him in the case: see Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, 312 per Menzies J, 308 per Kitto J, 319-332 per Windeyer J discussed in Manly Council v Byrne [2004] NSWCA 123; see also Cullen (Executor of Lascelles) v Welsbach Light Co of Australasia Ltd [1907] HCA 3; (1907) 4 CLR 990 at (1002) per Griffith CJ and SS Pharmaceuticals Co Ltd v Qantas Airways Co Ltd [1991] 1 Lloyd's Rep 288 and Adler v ASIC; Williams v ASIC [2003] NSWCA 131, [651] per Giles JA with whom Mason p and Beazley concurred. Mr Lloyd pointed out that rule is subject to there not being an explanation for why the witness or, in this case, the party, has not given evidence and submitted that the fact that Mr Adams is under investigation in relation to this matter (see COPS Event Summary at Ex 1D1) is a valid explanation. Mr Lloyd cited Adler v ASIC; Williams v ASIC in which the Court of Appeal rejected an appeal from the trial judge's decision that concerns Mr Adler and Mr Williams claimed to have about the impending Royal Commission were not a sufficient or valid explanation to preclude an adverse inference being drawn in civil penalty proceedings. Mr Lloyd contended that the reasoning of the Court of Appeal from [648] of the judgment supported his contention because the court concluded that generalised assertion by Mr Adler and Mr Williams that the evidence would "in an unelucidated way redound to their disadvantage" was not sufficient rather than holding that a Jones v Dunkel inference would not be precluded in a civil case because of a concern about consequences in other proceedings.
Mr Bartos relied on a decision of Rowell v Larter (1986) 6 NSWLR 21 in which Young J (as his Honour was) held that the prospect of criminal proceedings was not a sufficient reason to preclude an inference being drawn against the person for failing to give evidence. In Rowell it was the plaintiff, who was the defendant in criminal proceedings, and who did not give evidence.
Although I accept that Adler does indirectly provide some support for Mr Lloyd's contention, it does not expressly hold that a Jones v Dunkel inference cannot be drawn in a civil case where a defendant chooses to give evidence because police have been notified of a complaint and have issued a COPS Event Summary. In my view it would be surprising for a defendant against whom a claim of fraud is brought to be able to rely on a concern that criminal charges will be laid as a reason why an adverse inference could not be drawn if he fails to give evidence. First, because if his evidence would, if accepted, support his case that what had been done had been effected with the complete concurrence of the plaintiff, he would have no concern that he would thereby incriminate himself on a charge of obtaining property from the plaintiff by fraud. Second, because it strikes me as inherently unfair that a party who wants to put the plaintiff to proof can decline to give evidence and do so without an adverse inference being drawn. If criminal proceedings are feared, a defendant may take the chance that the plaintiff will not be able to adduce sufficient evidence to establish his case, or may admit liability or not defend the proceedings. The third reason is that even in criminal cases there is, in exceptional and rare circumstances, room for a Jones v Dunkel inference: see Azzopardi v R [2001] HCA 25; (2001) 205 CLR 50 and Comptroller-General of Customs v Parker [2006] NSWSC 390, [89]-[94] in which Simpson J explains that where the accused who does not give evidence and has a personal involvement in the transaction in question, a Jones v Dunkel inference can be drawn.

[168]

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 L.J. in Redfern v. Redfern.[124] See also Martin v. Treacher;[125] Earl of Mexborough v. Whitwood Urban District Council;[126] R v Associated Northern Collieries.[127] 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;[128] Associated Northern Collieries[129]). See generally the discussion by Deane J. in Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat and Live-stock Corp.[130] 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.[131] 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[132]"[133]). 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,[134] 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.

Two points need to be made in connection with the proposition stated by Bowen L.J. in Redfern. The first is that, although the rule is expressed as one which relates to discovery, it is necessarily a reflection of the law of privilege. The second point is that Bowen L.J. was not saying that the privilege against exposure to conviction for a crime was the same as, or includes, the privilege against exposure to penalties or forfeiture or ecclesiastical censure. Quite obviously they are four different aspects or grounds of privilege. So much at least emerges from the judgment of Lord Esher M.R. in Mexborough.[135]

But we do not agree with the suggestion made by the respondent, based on the authorities to which we have referred, that the privilege against exposure to forfeiture and penalty is a special invention of the courts of equity devised for application in suits for discovery and in the administration of interrogatories, commencing at a time when the Chancery Court granted discovery in aid of a common law action. Certainly Lord Hardwicke L.C. in Smith v. Read,[136] asserted: "there is no rule more established in equity, than that a person shall not be obliged to discover what will subject him to a penalty, or any thing in the nature of a penalty." However, his Lordship was merely speaking of the rule in equity and did not direct his attention to the attitude of the common law. The better view is that equity looked to the existing model of the common law and applied the rule which it had established. In Pye v. Butterfield,[137] Crompton J., speaking of courts of equity, said: "I have no doubt that the exemption from a bill of discovery in cases where the discovery would lead to a forfeiture, was adopted in those courts from the courts of law." This statement was quoted, evidently with approval, by Lord Esher M.R. in Mexborough.[138] Chitty L.J.[139] was of the same opinion.

[181]

My conclusion - expressed at [44] above - that the appellants' failure to make sub-s (12A) claims does not constitute waiver of the privileges in this proceeding turns on statutory construction and principle. As such provisions have been construed, see below, a claim made thereunder is not equivalent to a claim of privilege. In those circumstances, the principle discussed at [50] suggests that failure to claim the protection of the subsection should not be treated as waiving the privileges in a proceeding such as this - particularly the privilege against self-incrimination. No authority cited by counsel requires or suggests a different answer.
In my opinion, it is confusing and incorrect to treat sub-s (12A) as if a claim made thereunder is equivalent to a waiver of the privileges. Privilege, where claimed, protects the claimant against direct and indirect use of an answer. Subsection (12A) gives protection only against direct use. The deleterious consequences for a person who is able to claim a direct use immunity but not rely upon a privilege were recognised by Crennan J in Lee.[166] The fact, as I earlier noted, that there is a practice of persons wishing to make a s 597(12A) claim doing so by uttering the word 'privilege' should not distract attention from the fact that such a claim is not equivalent in its consequences to a claim for privilege.[167]
[Registrar, Court of Appeal v] Craven [(1994) 77 A Crim R 410] does not require a conclusion that the appellants are disabled from claiming the privileges in this proceeding. It is unnecessary to set out all the factual complexities of that matter. It suffices to say that the proceeding was one for declarations with respect to nine charges of contempt. The witness had refused to answer many questions on the trial of another man. Six of the declarations were refused because it was in substance conceded that answering questions to which they related would have exposed the witness to risk of prosecution. Three of the declarations were granted. In two instances, giving answers could not possibly have exposed the witness to any such risk. In one of those instances, and another, it was held that the witness had waived privilege by answering substantially identical questions in civil proceeding on a previous occasion.
The differences between that case and the present matter are stark. In the two instances of waiver, evidence had been given on oath, but voluntarily. Moreover, privilege - not use immunity - had been available, but had not been claimed. Moreover, in that case there was nothing akin to the statutory regime, for particular purposes, set up by the Act.
McFadden [Accident Insurance Mutual Holdings Ltd v McFadden (1993) 31 NSWLR 412 (CA)] and Reid [Reid v Howard [1961] HCA 22; (1995) 104 CLR 1] stand for the proposition that the making of an out of court statement does not constitute a waiver of the privilege against self-incrimination in the event that the maker is later called to give evidence. It may be argued that, if the voluntary making of a statement will not constitute waiver, how could it be worse for a person whose answers are compelled on oath, who can only claim a direct use indemnity, and whose answers may be used against him for some purposes regardless whether he claims such an indemnity. This is a persuasive argument. But it was submitted, to the contrary, that here (unlike in those cases) the answers - though compelled - were given on oath; and that this provides a critical distinguishing feature.
In all, I do not rest my conclusion on McFadden or Reid. But, to reiterate what I have already said, this does not mean that Craven provides the answer.
Counsel for the respondents relied upon the ruling of Giles J in BTR Engineering (Australia) v Patterson ('BTR').[168] He did so mainly, as I understand it, on the issue of want of utility. But Giles J did hold that, where a witness had made a statutory declaration and a statement in a civil proceeding, the witness had waived his privilege against self-incrimination, and so could not refuse to adopt the documents.
Whether that conclusion could stand in the face of McFadden and Reid is doubtful. BTR was referred to, but not approved, in McFadden. In any event, it was concerned with steps taken in the very proceeding which was before the court. That is not this case. Further, the steps were taken voluntarily, which is not this case.
Counsel for the respondents relied upon Ewin v Vergara (No 2)[169] ["Ewin"] to support his submission that the appellants' conduct at the examination was inconsistent with a maintenance of the privileges. In my opinion, the ruling in that case does not assist the submission. There, the judge held, following McFadden, that an out of court statement made by a party to police did not constitute a waiver of the privilege against self-incrimination; but that it was otherwise insofar as the party had already given evidence in chief and had already been cross-examined for 'many hours' 'on subject matters in respect of which objections [were] later sought to be taken.[170] The witness's conduct in giving evidence in chief and being cross-examined, all without objection, was 'inconsistent with the maintenance of the privilege.'[171] What was involved, then, was evidence given voluntarily in the very proceeding in which a claim to privilege was later asserted. In a number of respects, that is not this case.

[202]

As to the third reason, the plaintiff has already (on 12 and 15 August 2005) submitted to a voluntary and lengthy (some 15 hours) examination by the Victorian Police, and has not been charged with any criminal offence. A copy of the transcript of this interview has been obtained by the defendant on subpoena, and is exhibited to the Carfoot Affidavit.[190] In this interview the plaintiff was questioned by the Victorian Police and gave detailed answers with respect to the Schmidt/Milte matters identified in paragraphs 51 to 89 of the Defence. Attached to these submissions is a table which extracts the relevant parts of the transcript where the defendant gave an answer in respect of those matters.
The defendant submits that, by reason of his conduct in respect of the Police interview referred to in the preceding paragraph, the plaintiff has waived any privilege against self-incrimination or exposure to a penalty in respect of the matters discussed during that interview, including the matters in paragraphs 51 to 89 of the Defence. During the interview, the plaintiff was cautioned on a number of occasions by the police to the effect that he was not obliged to say anything,[191] but nonetheless determined to give detailed responses to the questions asked. This case is clearly distinguishable from Gemmell which turned on the construction of sub-sections 597(12), (12A) and 14 of the Corporations Act 2001 (Cth) and on the fact that the statements were made in a compulsory examination.[192] It is also distinguishable from Accident Insurance Mutual Holdings Ltd v McFadden[193] in which the relevant statements were seemingly brief. As Kirby P noted in that case, whether waiver has occurred is a "question of degree".[194] Indeed, the plaintiff's conduct in this case in respect of the police interview most closely resembles the facts in Ewin v Vergara (No 2)[195] in which Bromberg J held that the witness' conduct in giving evidence in chief and being cross-examined without objection was clearly inconsistent with the maintenance of the privilege.

[213]

[1] Under the federal discovery rules, any party to a civil action is entitled to all information relevant to the subject matter of the action before the court unless such information is privileged. Fed.R.Civ.P. 26(b)(1). Even if the rules did not contain specific language exempting privileged information, it is clear that the Fifth Amendment would serve as a shield to any party who feared that complying with discovery would expose him to a risk of self-incrimination. The fact that the privilege is raised in a civil proceeding rather than a criminal prosecution does not deprive a party of its protection. Lefkowitz v. Cunningham, [1977] USSC 102; 431 U.S. 801, 805[1977] USSC 102; , 97 S.Ct. 2132, 53 L.Ed.2d 1 (1977); McCarthy v. Arndstein, [1924] USSC 161; 266 U.S. 34, 40[1924] USSC 161; , 45 S.Ct. 16, 69 L.Ed. 158 (1924). Thus, under both the Federal Rules of Civil Procedure and the Constitution, Wehling was under no obligation to disclose to CBS information that he reasonably believed might be used against him as an accused in a criminal prosecution. Maness v. Meyers, [1975] USSC 6; 419 U.S. 449, 461[1975] USSC 6; , 95 S.Ct. 584, 42 L.Ed.2d 574 (1975); Hoffman v. United States, [1951] USSC 64; 341 U.S. 479, 486[1951] USSC 64; , 71 S.Ct. 814, 95 L.Ed. 1118 (1951).[204]

...

[4, 5] We hold that the district court erred in concluding that plaintiff's assertion of his self-incrimination privilege during pretrial discovery automatically required the dismissal of his libel action. First, we find no provision in the federal discovery rules which authorizes a court to impose sanctions on a party who resists discovery by asserting a valid claim of privilege. See 8 C. Wright & A. Miller, Federal Practice and Procedure s 2018 (1970). Rule 26 limits the scope of discovery to matter that is "not privileged". Because CBS had no right to information protected by the privilege against self-incrimination, Wehling did not violate the discovery rules when he declined to answer the questions posed at his deposition. In short, the district court had no authority to order Wehling to disclose privileged information and, consequently, should not have imposed sanctions when Wehling declined to answer.[205]

[6] Second, we believe that dismissing a plaintiff's action with prejudice solely because he exercises his privilege against self-incrimination is constitutionally impermissible. Wehling had, in addition to his Fifth Amendment right to silence, a due process right to a judicial determination of his civil action. ...

...

[9] We find that the balance in this case tips in favor of Wehling and against CBS. Wehling filed his suit against CBS on August 17, 1976, the last day before limitations ran on any libel action arising out of the August 18, 1975 broadcast. Wehling had disposed of his last interest in the trade schools in August of 1975 and, under the applicable statute of limitations,[206] was threatened with potential criminal prosecution until approximately September 1, 1980. Thus, when Wehling filed his Motion for Protective Order in July 1977, he in effect was asking the court to stay further discovery for approximately three years. Although a three-year hiatus in the lawsuit is undesirable from the standpoint of both the court and the defendant, permitting such inconvenience seems preferable at this point to requiring plaintiff to choose between his silence and his lawsuit. Dienstag v. Bronsen, 49 F.R.D. 327, 329 (S.D.N.Y.1970); Paul Harrigan & Sons, Inc. v. Enterprise Animal Oil Co., 14 F.R.D. 333 (E.D.Pa.1953); National Discount Corp. v. Holzbaugh, 13 F.R.D. 236 (E.D.Mich.1952).[207] Because staying discovery would not impose undue hardship on defendant and, therefore, would protect the party exercising a constitutional privilege from unnecessary adverse consequences, we believe the court abused its discretion in denying Wehling's Motion for a Protective Order and dismissing the lawsuit.

[239]

"The substance of the test is thus that there must be grounds to apprehend danger to the witness, and those grounds must be reasonable, rather than fanciful. Other points that emerge from the cases are these: (i) the affidavit claiming privilege is not conclusive: see Reg. v Boyes, [1861] EngR 626; 1 B. & S. 311, Ex parte Reynolds, 20 Ch.D. 294 and Khan v Khan [1982] 1 W.L.R. 513; (ii) the deponent is not bound to go into detail, if to do so would itself deprive him of protection: see Short v Mercier (1851) 20 L.J. Ch. 289, 292, and the Westinghouse case [1978] A.C. 547; (iii) 'if the fact of the witness being in danger be once made to appear, great latitude should be allowed to him in judging for himself of the effect of any particular question:' see Reg. v Boyes, [1861] EngR 626; 1 B. & S. 311, 330; the Westinghouse case [1978] A.C. 547 and Khan v Khan [1982] 1 W.L.R. 513; (iv) the privilege is not available where the witness is already at risk, and the risk would not be increased if he were required to answer: see Brebner v Perry [1961] S.A.S.R. 117 and the Westinghouse case; (v) 'if it is one step having a tendency to criminate him, he is not to be compelled to answer' (see Paxton v Douglas (1809 Ves. Jun. 239 242) and 'as it is one link in the chain of proof:' Paxton v Douglas [1812] EngR 432; (1812) 19 Ves. Jun. 225, 227. That last point recurs in other cases (e.g. the Westinghouse case), and may be important. I am inclined to think that it refers to any fact which a prosecutor would wish to prove in order to establish the guilt of the witness on a criminal charge. In the Rank Film Distributors case [1982] A.C. 380, 443, Lord Wilberforce said that disclosure: 'may set in train a process which may lead to incrimination or may lead to the discovery of real evidence of an incriminating character.' That may be thought to go rather further, and to protect a man from having to disclose the names of those who could give evidence against him - assuming that there was otherwise power to require that information: see also Short v Mercier, 20 L.J. Ch. 289, 292 - 'how evidence can be got.' I am not presently convinced that the privilege, by virtue of the doctrine of links in a chain, extends as far as that. But the point need not be decided in this case."

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