RICH & SILBERMANN v THE AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION [2003] NSWCA 342 | Case summary | Zoe

NSWNSWCA

RICH & SILBERMANN v THE AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION

[2003] NSWCA 342

Court of Appeal (NSW)|2003-07-10|Before: Spigelman CJ, Ipp JA, McColl JA

At a glance

AI case summary

Result

respondent. Appeal dismissed with costs (majority: Spigelman CJ and Ipp JA). McColl JA dissented, preferring to uphold penalty privilege and to set aside Austin J's orders.

Key principles

An order under s206C or s206E of the Corporations Act 2001 should not be characterised as a 'penalty' for the purposes of the common law privilege against self-exposure to a...
The characterisation of whether a sanction is a 'penalty' for privilege purposes is principally informed by the purpose of the sanction (punitive v protective) and the statutory...
Part 2D.6 and the statutory history of the civil penalty regime and disqualification provisions point to disqualification orders being integrated with the civil penalty scheme...

Issues before the court

Does the common law privilege against self-exposure to a penalty (penalty privilege) bar orders for discovery and pre-trial filing of witness...
How should courts characterise whether a statutory sanction is a 'penalty' for privilege purposes — by reference to purpose (punitive/protective),...
Does the statutory designation 'civil penalty provision' or the Act's definition of 'civil penalty order' conclusively establish that Part 9.4B...

Plain English Summary

ASIC sued two former One.Tel directors for breaches of their duties and sought declarations, disqualification from managing corporations under s206C/206E, and compensation. ASIC also sought interlocutory orders compelling the defendants to produce documents and to file sworn witness statements before trial. The defendants resisted, invoking the common-law privilege against self-exposure to a penalty. The NSW Court of Appeal (majority Spigelman CJ and Ipp JA) held that, on the statutory history and context and established authorities treating director disqualification as protective, disqualification orders under ss 206C/206E are not 'penalties' for the purposes of the privilege and therefore the interlocutory compulsion was not barred; the appeal was dismissed. McColl JA dissented, taking a substantive approach and concluding disqualification is a disability in the nature of a penalty which attracts the privilege. The judgment emphasises that whether a sanction is a 'penalty' depends on statutory purpose and context, with severity of consequences relevant but not always decisive.

AI-generated legal information, not legal advice. Zoe can make mistakes. Check the cited source, and for advice about your situation consult a qualified Australian lawyer.

Deep Dive

2,060 words · generated 07/09/2026

What happened

ASIC sued John Rich and Mark Silbermann, former directors of One.Tel, alleging multiple contraventions of the statutory duty of care and diligence in s180(1) of the Corporations Act 2001 (Cth). ASIC sought declarations of contravention under s1317E, disqualification orders under ss206C and 206E, and compensation orders under s1317H. The proceedings were civil in form but rested on statutory “civil penalty provisions” (Part 9.4B / s1317E), and the disqualification powers are now consolidated in Part 2D.6.

Before trial ASIC applied to Austin J for interlocutory relief: general discovery, a verified list of documents, and directions fixing dates for filing of affidavit evidence and witness statements (including from the appellants, if they intended to give evidence). The appellants resisted those interlocutory orders invoking the common-law privilege against self-exposure to a penalty (the “penalty privilege”), arguing that discovery or compulsion to provide witness statements would expose them to penalties in the form of disqualification and compensation orders. Austin J held the proceedings were not for imposition of a penalty and made the interlocutory orders. The appellants appealed to the NSW Court of Appeal.

In the Court of Appeal, Spigelman CJ (with Ipp JA agreeing) analysed the history and statutory context of the civil penalty scheme and the disqualification provisions and concluded that, on balance, disqualification orders under ss206C and 206E should be characterised as protective rather than punitive for the purposes of the penalty privilege; accordingly the privilege did not bar the interlocutory orders. McColl JA dissented, concluding disqualification involves a disability in the nature of a penalty and that the penalty privilege should have protected the appellants from the pre-trial compulsion. The majority order: appeal dismissed with costs.

Why the court decided this way

Majority reasoning (Spigelman CJ; Ipp JA concurring)

Framework for penalty privilege: The court started from the long-established common-law principle protecting a person from being required to disclose facts that would expose them to a penalty or anything in the nature of a penalty (Smith v Read through to modern articulation in Daniels v ACCC). The key focus is whether the proceedings and the relief sought would "result in a penalty" (see Daniels joint judgment quoted at [31]).
Analytical approach: Spigelman CJ emphasised that characterisation of a sanction as a penalty for the privilege turns on statutory purpose: whether the sanction is imposed for punishment. Severity (consequences) is also relevant but not determinative. The court warned against collapsing the analysis into a pure consequences test (i.e. “very bad consequences = penalty”) and endorsed attention to statutory context and history (see [22]-[36], [81], [93]-[116]).
Statutory context and history: The court traced the evolution of directors' duties and the sanction regime (Cooney Report, Corporate Law Reform Bill 1992, the insertion of Part 9.4B, and the CLERP 1999 changes). Spigelman CJ noted that s206C and s206E are embedded in Part 2D.6 alongside automatic disqualification (s206B), ASIC administrative disqualification (s206F), and other mechanisms. He highlighted textual features indicating protective intent: (a) s206C and s206E expressly permit the Court to have regard to “the person's conduct in relation to the management, business or property of any corporation” when deciding whether disqualification is justified (i.e. broader protective inquiries); (b) statutory checks such as s206G and ASIC's power to grant leave on conditions; (c) the separate existence of express pecuniary penalty provisions (s1317G) that carry a defined role in the enforcement pyramid ([108]).
Authorities: Spigelman CJ relied on the long line of corporations cases treating disqualification from office as protective (Re Altim; Magna Alloys; Re Tasmanian Spastics Association; ASC v Donovan; Re HIH; ASC v Kippe). While he accepted that disqualification can have serious consequences, he concluded that the long-established "protective" character of disqualification in corporations law, read against the statutory matrix, meant that the penalty privilege did not apply to bar pre-trial discovery and witness-statement orders in this case ([63]-[73], [94]-[116]).

Dissent (McColl JA)

McColl JA took a different, more substantive approach emphasizing that (a) penalty privilege looks to whether the discovery would subject the individual to a penalty or something in the nature of a penalty; (b) disqualification under s206C imposes a disability and is punished-like in nature; (c) the legislative history and textual labelling (Part 9.4B, “civil penalty” language, and definition of “civil penalty order” in s9 which expressly lists disqualification) point toward treating s206C orders as penalties for privilege purposes. He would have held that penalty privilege barred the interlocutory orders and would have allowed the appeal ([319]-[388]).

Why majority prevailed

Spigelman CJ prioritised purpose and the long line of corporations authorities holding disqualification mainly protective; he treated the statutory placement and provisions as indicating protective rationales that rebut a conclusion that the penalty privilege should apply to s206C/206E. Although the scheme contains punitive features and hybridity, the majority found the balance favoured non-application of the privilege in these circumstances.

Before and after state of the law

Before this decision:

The penalty privilege is a long-standing doctrine protecting a person from being compelled to give discovery if it would expose them to a penalty or forfeiture; authorities range from 18th century equity (Smith v Read, Lord Hardwicke) through R v Associated Northern Collieries and Re A Debtor, to modern statements in Pyneboard, Police Service Board v Morris, EPA v Caltex, and Daniels v ACCC.
A substantial body of corporations law authority characterised disqualification orders as protective (Re Altim, Magna Alloys and others). The Full Federal Court in ASC v Kippe held banning orders in the securities context were protective for a statutory admissibility question.
The new civil penalty regime (Part 9.4B and later Chapter 2D) had already created a hybrid landscape: civil procedure and balance-of-probabilities rules but labelled “civil penalties” and providing for disqualification, compensation, and pecuniary penalties.

After this decision:

The NSW Court of Appeal (majority) confirmed that, at least in the factual/statutory circumstances before it, disqualification under ss206C/206E does not attract the penalty privilege; discovery and pre-trial witness statement compulsion is available.
The decision affirms that statutory purpose and context, coupled with the long line of protective-character authorities in corporations law, are decisive in many cases; however, McColl JA’s detailed dissent preserves a serious argument for a consequences/substantive test which other courts may adopt in different contexts.
The judgment leaves open unresolved tensions (see next sections): the hybrid character of civil penalty regimes; cases with different statutory texts or where disqualification flows more directly as a primary penalty may be treated differently.

Key passages with plain-English translation

"The distinction between a 'punitive' and a 'protective' purpose is one of substance and of considerable significance…" (Spigelman CJ)

Plain English: To decide whether a court-ordered sanction is a 'penalty' (and so triggers penalty privilege), you look at why the legislature gave the power: does it aim to punish, or to protect the public? That question matters more than simply how harsh the outcome might be.

"Today the privilege against exposure to penalties serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it." (Daniels quoted)

Plain English: The penalty privilege protects people from being forced to help a plaintiff prove wrongdoing. If you accuse someone of illegal conduct, you should be the one to prove it, not make the accused supply the crucial evidence.

McColl JA: "the imposition of a disqualification order … constitutes a penalty or is in the nature of a penalty so as to attract penalty privilege."

Plain English: Dissenting view: being disqualified from being a director is a real, punitive disability; forcing someone to produce documents or statements that help secure that disability is exactly what the penalty privilege forbids.

What fact patterns trigger this precedent

The majority’s decision is tied to a fact and statutory pattern where:

Proceedings are brought by ASIC for declarations of contravention of civil penalty provisions (Part 9.4B / Ch 2D) including orders under s206C/206E for disqualification; and
The statutory scheme is one in which disqualification provisions have historically been treated as protective (authorities like Re Altim, Magna Alloys, etc.), and where the statutory context and text indicate protective objectives (e.g. s206C’s formulation, the availability of leave, separate pecuniary penalty provisions); and
The interlocutory compulsion is for discovery and for pre-trial documentation and witness statements tied directly to such proceedings.

If those features are present, the NSW Court of Appeal majority suggests penalty privilege will not automatically block pre-trial documentary disclosure or witness-statement directions.

Conversely, this precedent leaves open different outcomes where:

The statutory instrument explicitly treats the relief as penal or labels proceedings as “for the imposition of a penalty” in a way that points to punishment; or
The sanction is imposed directly as a primary penalty (as in some bankruptcy or licence-forfeiture contexts), or the factual matrix makes the punitive character manifest (McColl JA suggests such factual intensities may require privilege protection).

How later courts have treated it

(What follows is grounded in the judgment’s account; the Court of Appeal recognised that other courts had treated the issue variably.)

ASC v Kippe (Full Federal Court) held a banning order in securities legislation was not a proceeding “for the imposition of a penalty” within a statutory admissibility context and relied on the punitive/protective distinction, the Court of Appeal majority, while discussing Kippe, regarded it as persuasive in contexts where the statutory provision expressly directed attention to purpose ([74]-[80]).
Australian Securities & Investments Commission v FFE Building Services Ltd (Full Federal Court) later held that pre-trial compulsion to file witness statements could be barred by penalty privilege in a Trade Practices Act penalty setting; the Court of Appeal majority in Rich reserved determination on the witness-statement sub-issue but indicated the question remained open and dependent on comparative authorities ([117], [390]-[392]).
The split in Rich (majority protective-character result; McColl JA substantive/consequence approach) leaves subsequent courts with a choice: follow the majority’s protective-purpose/textual approach or McColl’s substance/consequence approach. Courts deciding analogous privilege questions must carefully compare statutory language, legislative history, and whether the disqualification is the primary sanction or part of a pyramid.

Still-open questions

The witness-statement issue remains unsettled at appellate level in the judgment. The Court of Appeal majority did not definitively decide whether penalty privilege bars a direction that defendants file verified witness statements pre-trial; it referred to conflicting intermediate appellate authorities (Sidebottom v Commissioner of Taxation; Amcor; and FFE) and left the issue open for future resolution ([117]). Practitioners should note this unresolved point.
The degree to which statutory labelling ("civil penalty", "civil penalty order") should weigh in favour of applying penalty privilege remains contested. Spigelman CJ treated labels as informative but not dispositive; McColl JA attributed greater weight to the statutory labels and the architecture of Part 9.4B. That statutory-labelling debate invites further appellate clarification.
The proper balance between purpose-based and consequence-based tests: Spigelman CJ emphasised purpose/context; McColl JA urged a substantive consequence-focused analysis. Which approach predominates in other courts will materially affect outcomes in similar cases, especially where disqualification has catastrophic practical effects but is framed as protective.
The position where disqualification is paired with a significant pecuniary order or where the legislative scheme expressly contemplates deterrence/deterrent sanctions was left ambiguous. The judgment recognises hybridity, civil penalties can be punitive, but draws a fine line, depending on statutory indicia and precedent. That field remains open for application in different statutory settings.
Whether the Part 9.4B protections (e.g. s1317Q non-admissibility into criminal proceedings of evidence given in civil penalty proceedings) imply any limits on pre-trial compulsion for discovery/witness statements was addressed indirectly; further litigation might explore whether procedural compulsion has indirect effects on later criminal exposures despite statutory safeguard.
Finally, the decision highlights jurisdictional and constitutional considerations (Chapter III issues) arising if administrative/ executive disqualification powers (s206F) are regarded as punitive. Those constitutional edges remain an area for future exploration if courts characterise administrative disqualification as penal.

This analysis summarises and explains the Court of Appeal judgment in RICH & SILBERMANN v ASIC (NSW Court of Appeal, 26 November 2003). It quotes and relies on the reasoning and paragraph ranges identified in the reported judgment. This is general legal information, not legal advice. I can make mistakes. Before you act on, rely on, or file anything based on this, get a qualified Australian lawyer to check it.

Judgment (105 paragraphs)

[1]

Reported Decision : 48 ACSR 6 (2004) 22 ACLC 286

[2]

CITATION : RICH & SILBERMANN v THE AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION [2003] NSWCA 342 revised - 29/04/2004 HEARING DATE(S) : 10 July 2003 JUDGMENT DATE : 26 November 2003

[3]

JUDGMENT OF : Spigelman CJ at 1; Ipp JA at 119; McColl JA at 120 DECISION : Appeal dismissed with costs.

[4]

CATCHWORDS : PRACTICE AND PROCEDURE - Discovery - Privilege against self-exposure to a penalty - Whether available in proceedings for declaration of contravention of civil penalty provision, disqualification from management of corporations and compensation orders - PRACTICE AND PROCEDURE - Pre-trial filing of witness statements - Privilege against self-exposure to a penalty - Corporations Act 2001 (Cth), ss 206C, 206E, 1317EA Australian Industries Preservation Act 1906, ss 4, 6 Australian Securities Commission Act 1989 (Cth), ss 19, 68 Bankruptcy Act 1883, s 32 Bankruptcy Act 1966, Part X Commonwealth Constitution, s 51(xix) Companies Act 1961, ss 116, 117, 122 Companies and Securities (Interpretation and Miscellaneous Provisions) Act 1980 Companies Code 1981, ss 227, 227A, 229, 562, 562A, 570 Corporations Act 2001 (Cth), ss 180, s206B, 206C, 206D, 206E, 206F, 206G, 1311, 1317E, 1317G, 1317H, 1317J Corporations Law 1991, ss 9, 91, 182, 183, 184, 206F, 224, 229, 230, 232, 559, 588J, 588M, 588U, 596AI, 599, 600, 601MA, 829, 830, 1311, 1317, 1317DA, 1317EA, 1317EB, 1317EC, 1317ED, 1317EF, 1317FA, 1317FB, 1317GC, 1317HA, s1317HD, 1317J, 1317K, 1317L, 1317M, 1317N, 1317P, 1317Q, 1332, 1474, Schedule 3 Criminal Justice (Scotland) Act 1949 Criminal Law (Sentencing) Act 1988 (SA), s 52 Customs Act 1901 (Cth) LEGISLATION CITED : Estate Agents Act 1979 Excise Act 1901 (Cth) Fisheries Act 1952 (Cth) Income Tax and Social Services Contribution Assessment Act 1936 Part VII (Cth), s 237 Migration Act 1958 (Cth) Public Health Act 1875 Road Traffic Act 1930 Acts Interpretation Act 1901 (Cth), s 13 Australian Securities Commission Act (1989) (Cth), s 68 Securities Industry Code 1961 ss 60, 62 Sentencing Act 1991 (Vic), Part 4, Div 1 Solicitors Act 1941 (UK) Stock-Jobbing Act (7 Geo.2.c.8) Trade Practices Act 1974 (Cth) s 155 Wine and Beer Amendment Act 1870 (UK) Adams v Batley (1887) 18 QBD 625 Adler v ASIC (2003) 46 ACSR 504 Antonelli v Secretary of State for Trade and Industry [1998] QB 948 ASC v Donovan (1998) 28 ACSR 583 ASC v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 ASIC v Pegasus Leveraged Options Group Pty Limited (2002) 41 ACSR 561 ASIC v Rich [2003] NSWSC 328; (2003) 45 ACSR 305 Australian Competition & Consumer Commission v Amcor Printing Papers Group Limited (1999) 163 ALR 465 Australian Securities and Investments Commission v FFE Building Services Ltd (2003) ATPR 41-938 Australian Securities and Investments Commission v Plymin (2002) 4 VR 168 Australian Securities Commission v Kippe (1996) 67 FCR 499 Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485 Azzopardi v The Queen (2001) 205 CLR 50 Bakker v Stewart [1980] VR 17 Beckwith v R (1976) 135 CLR 569 Bird v Hardwicke (1682) 1 Vern. 109; 23 ER 349 Boteler v Allington (1746) 3 Atk 453, 26 ER 1061 Bridal Fashions Pty Ltd v Comptroller-General of Customs (1996) 140 ALR 681 Brown v Great Eastern Railway Co (1887) 2 QBD 406 Brownsword v Edwards (1751) 2 Ves Sen 243, 28 ER 157 CAC (WA) v Ekamper (1987) 12 ACLR 519 Channon v R (1978) 33 FLR 433 Chauncey v Tahourden (1742) 2 Atk 392; 26 ER 637 Chew v National Companies & Securities Commission (No 2) [1985] WAR 337 Chief Executive Officer of Custom v Labrador Liquor Wholesale Pty Ltd [2003] HCA 49 Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 Clyne v NSW Bar Association (1960) 104 CLR 186 Commissioner for Corporate Affairs v Bracht [1989] VR 821 Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385 Coogans v MacDonald [1954] SLT 279 Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission [2002] HCA 49; (2002) 77 ALJR 40 Deputy Federal Commissioner of Taxation (NSW) v DTR Securities Pty Ltd (1985) 1 NSWLR 653 Dougherty v Nagel 28 Idaho 302, 154 Pac. 375 (1915) Dr SS v Health Care Complaints Commission and Another [2002] NSWCA 391 E L Bell Packaging Pty Limited v Allied Seafoods Limited & Ors (1990) 4 ACSR 85 Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 Ex parte Brounsall (1778) 2 Cowp 830; 98 ER 1385 Federal Commissioner of Taxation v Trautwein (1936) 56 CLR 211 Flavel v Borrett & Haig (1991) 54 A Crim R 452 Friend v Corporate Affairs Commission (1988) 7 ACLC 106 Geaghan v D'Aubert (2002) 36 MVR 542 Glynn v Houston (1836) 1 Keen 329, 48 ER 333 Government of the United States of America v Montgomery & Anor [2001] UKHL 3, [2001] 1 All ER 185, [2001] 1 WLR 196 Gray v Motor Accident Commission (1998) 196 CLR 1 Green v Weaver (1827) 1 Sim. 402, 57 ER 630 Griffin v Sogelease Australia Limited & Ors [2003] NSWCA 158 Hambrook v Smith (1852) 17 Sim. 209, 60 ER 1109 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 Harrison v Southcote & Moreland (1751) 2 Ves. 389, 28 ER 249 Honeywood v Selwin (1744) 3 Atk 276, 26 ER 961 In the Matter of King (1844) 8 QB 129; 115 ER 823 In re a Debtor [1910] 2 KB 59 Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655 Jones v Jones (1889) 22 QBD 425 Kingston v Keprose Pty Ltd (No 3) (1987) 11 NSWLR 404 La Macchia v Minister for Primary Industry (1986) 72 ALR 23 Law Society of New South Wales v Foreman (No 2) (1994) 34 NSWLR 408 Legione v Hateley (1983) 152 CLR 406 L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Company Limited [1994] 1 AC 486 Mallan v Lee (1949) 80 CLR 198 Martin v Treacher (1886) 16 QBD 507 Mexborough (Earl of) v Whitwood Urban District Council [1897] 2 QB 111 Monnins v Monnins (1673) 2 Chan. Rep. 68; 21 ER 618 Morris v Police Service Board [1983] 2 VR 357 Naismith v McGovern (1953) 90 CLR 336 CASES CITED : Nelme v Newton (in Maccallum v Turton (1828) 2 Y. & J. 183, 148 ER 883) Nicholas v Commissioner for Corporate Affairs (1986) 5 ACLC 258 Nicholas v Commissioner for Corporate Affairs [1988] VR 289 NSW Bar Association v Evatt (1968) 117 CLR 177 Orme v Crockford (1824) 13 Price 376; 147 ER 1022 Parkhurst v Lowten (1819) 2 Swans 197, 36 ER 589 Paxton v Douglas (1809) 16 Ves. 239, 33 ER 975; 19 Ves. 225, 34 ER 502 Police Service Board v Morris (1985) 156 CLR 397 Polyukhovich v Commonwealth (War Crimes Act Case) (1991) 172 CLR 501 Poyser v Commissioner for Corporate Affairs [1985] VR 533 Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355 Proudfoot v Proctor (1887) 3 WN (NSW) 69 Pye v Butterfield (1864) 5 B & S 829; 122 ER 1038 at 1042 Pyneboard Pty Ltd v Trade Practices Commission 152 CLR 328 R v Associated Northern Collieries (1910) 11 CLR 738 R v Cuthbert [1967] 2 NSWR 329 R v Davis (1995) 81 A Crim R 156 R v Geddes (1936) 36 SR (NSW) 554 R v Rushby [1977] 1 NSWLR 594 R v Vine (1875) LR 10 QB 195 Re a Solicitor's Clerk [1957] 1 WLR 1219 Re Altim Pty Ltd and the Companies Act 1961 [1968] 2 NSWR 762 Re Dymond (No 3) (1959) 101 CLR 11 Re Ferrari Furniture Co Pty Ltd and the Companies Act [1972] 2 NSWLR 790 Re Harrison (1998) 81 FCR 436 Re HIH Insurance Limited (In prov liq); ASIC v Adler (2002) 42 ACSR 80 Re Magna Alloys & Research Pty Limited (1975) 1 ACLR 203 Re Marsden (1981) 29 SASR 454 Re One.Tel Limited (In liq); ASIC v Rich (2003) 44 ACSR 682 Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725 Re Quinn & Australian Securities Commission (1994) 19 AAR 321 Re Tasmanian Spastics Association; ASC v Nandan (1997) 23 ACSR 743 Re Veron; ex parte Law Society of New South Wales [1966] 1 NSWR 511 Re Westinghouse Uranium Contract [1978] AC 547 Redfern v Redfern [1891] P 139 Refrigerated Express Lines (A/Asia) Pty Limited v Australian Meat & Livestock Corporation Limited (1979) FLR 204 Reid v Howard (1995) 184 CLR 1 Richardson v Federal Commissioner of Taxation (1932) 48 CLR 192 Saunders v Wiel [1892] 2 QB 18, 321 Scott v Miller (No 2) (1859) LJ. Ch 584, 70 ER 448 Short v Mercier (1848) 2 De Ge & Sm 635, 64 ER 285 Short v Mercier (1851) 20 L.J. Ch. 289 Sidebottom v Commissioner of Taxation [2003] VSCA 2 Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 Smith v Read (1737) 1 Atk 527; 26 ER 332 Sorby v the Commonwealth (1983) 152 CLR 281 Swift v Swift (1832) 4 Hagg 139 at 154, 162 ER 1399 T W Hobbs & Co v Hudson & Ors (1890) 25 QBD 232 Taylor & Anor v Carmichael (1984) NSWLR 421 The Gleaner Company Limited & Anor v Abrahams (Jamaica) [2003] 3 WLR 1038 The King v Lord George Gordon (1781) 2 Doug. 593, 99 ER 374 The Southern Law Society v Westbrook (1910) 10 CLR 609 Thruston v Clark 107 Cal. 285, 40 Pac. 435 (1895) Trade Practices Commission v Abbco Iceworks Pty Limited (1994) 52 FCR 96 Trade Practices Commission v CSR Ltd (1991) ATPR 41-076 Triplex Safety Glass Co Ltd v Lancegaye Safety Glass (1934) Ltd [1939] 2 K.B. 395 United States ex rel Marcus v Hess 317 US 537 United States v Chouteau 102 U.S. 603 (1880) United States v Collins 25 F. Cas. 545 (1873) Veen v The Queen [No. 2] (1988) 164 CLR 465 Wall v Taylor [1883] 11 QBD 102 Walter v Council of Queensland Law Society Incorporated (1988) 62 ALJR 153 Walton v Gardiner (1993) 177 CLR 378 Welch v United Kingdom (1995) 20 EHRR 247 Wentworth v New South Wales Bar Association (1992) 176 CLR 239 Zuker v Commissioner for Corporate Affairs [1981] VR 72 PARTIES : John David Rich and Mark Alan Silbermann (Appellants) The Australian Securities & Investments Commission (Respondent) FILE NUMBER(S) : CA 40402/03 COUNSEL : B Walker SC / DL Williams (Appellants) R MacFarlane QC / P Durack (Respondent) SOLICITORS : Joanne Kelly (Appellants) The Australian Securities & Investments Commission (Respondent)

[5]

LOWER COURT Supreme Court - Equity Division JURISDICTION : LOWER COURT EQ 5934/01 FILE NUMBER(S) : LOWER COURT Austin J JUDICIAL OFFICER :

[6]

117 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40402/03 EQ 5934/01

[7]

SPIGELMAN CJ IPP JA McCOLL JA

[8]

Wednesday 26 November 2003 John David RICH & Mark Alan SILBERMANN v THE AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION

[9]

The Appellants are former directors of One.Tel (in liq) ("the company"). ASIC (the Respondent) alleges a number of contraventions by the Appellants of s 180(1) of the Corporations Act 2001 (Cth) in their discharge of that office. The Respondent seeks declarations of the alleged contraventions (s 1317E), orders disqualifying the Appellants from management of companies (ss 206C and 206E) and orders requiring compensation to be paid by the Appellants to the company (s 1317H). The Respondent applied to Austin J for interlocutory orders compelling the discovery of documents and filing of witness statements (including statements of the Appellants' anticipated testimony) by the Appellants in the proceedings in respect of those contraventions. The Appellants resisted the application on the ground that the interlocutory orders would require the Appellants to expose themselves to a penalty, namely the orders sought by ASIC. The Respondent argued that the final orders involved no imposition of a penalty, the disqualification orders being sought for a protective purpose, so that the privilege against self-exposure to a penalty did not avail the Appellants. Austin J held that the proceedings did not seek the imposition of a penalty and the privilege did not apply, and granted the Respondent's application. The Appellants challenged his Honour's characterisation of the proceedings as not punitive, seeking in particular to emphasise the severity of the consequences of disqualification for a company director.

[10]

HELD (per Spigelman CJ, Ipp JA agreeing) A.

[11]

The characterisation of a statutory sanction as a penalty for purposes of the privilege against self-exposure to a penalty is affected by whether the sanction is imposed for the purpose of punishment. [22]-[30]

[12]

Smith v Read (1737) 1 Atk 527; 26 ER 332; Adams v Batley [1887] 18 QBD 625; Saunders v Wiel [1892] 2 QB 18 (QB) and 321 (CA) referred to. Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission [2002] HCA 49; (2002) 77 ALJR 40 distinguished.

[13]

The characterisation referred to in A is also affected by the severity of the consequences of the sanction. [81]

[14]

In re a Debtor [1910] 2 KB 59; R v Associated Northern Collieries (1910) 11 CLR 738; Re One.Tel Limited (In liq); ASIC v Rich (2003) 44 ACSR 682 referred to. Police Service Board v Morris distinguished.

[15]

The distinction between a 'punitive' and a 'protective' purpose to be served by imposing a sanction has been drawn in a number of areas of the law. [50]-[62]

[16]

Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1; R v Vine (1875) LR 10 QB 195; Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725; Clyne v NSW Bar Association (1960) 104 CLR 186; NSW Bar Association v Evatt (1968) 117 CLR 177; Ex parte Brounsall (1778) 2 Cowp 830; 98 ER 1385; In the Matter of King (1844) 8 QB 129; 115 ER 823; Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655; The Southern Law Society v Westbrook (1910) 10 CLR 609 referred to.

[17]

The distinction referred to in D has frequently been made in the corporations law context, including with respect to disqualification orders. [63]

[18]

Re Altim Pty Ltd and the Companies Act 1961 [1968] 2 NSWR 762; Re Magna Alloys & Research Pty Limited (1975) 1 ACLR 203; Re Tasmanian Spastics Association; ASC v Nandan (1997) 23 ACSR 743; ASC v Donovan (1998) 28 ACSR 583; ASC v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339; ASIC v Pegasus Leveraged Options Group Pty Limited (2002) 41 ACSR 561; Re HIH Insurance Limited (In prov liq); ASIC v Adler (2002) 42 ACSR 80; Australian Securities Commission v Kippe (1996) 67 FCR 499 referred to.

[19]

The history and statutory context of the power to disqualify a person from managing corporations, indicate that a disqualification order is protective. The privilege against self-exposure to a penalty does not apply to a proceeding for the orders sought by ASIC. [105], [109]

[20]

The distinction between a 'punitive' and a 'protective' purpose is of considerable significance as it determines the scope of considerations relevant to the exercise of the power to make a disqualification order. [115]-[116]

[21]

The privilege against self-exposure to a penalty ("penalty privilege") is attracted where discovery would subject an individual to a penalty or anything in the nature of a penalty. A disqualification order made pursuant to s 206C of the Corporations Act 2001 (Cth) disabling a person from acting as a director attracts penalty privilege. [246], [266]-[267]

[22]

Smith v Read (1736) 1 Atk 527; 26 ER 332; Harrison v Southcote (1751) 2 Ves. 389 at 394, 28 ER 249; Re A Debtor [1910] 2 KB 59; Coogans v MacDonald [1954] SLT 279; R v Associated Northern Collieries (1910) 11 CLR 738; Taylor v Carmichael [1984] 1 NSWLR 421; Pyneboard Pty Limited v Trade Practices Commission (1983) 152 CLR 328; Daniels Corporation International Pty Limited v Australian Competition & Consumer Commission (2002) 77 ALJR 40 applied.

[23]

The legislative history and statutory construction of Part 9.4B and s 206C of the Act demonstrate that the purpose of civil penalty provisions is to use disqualification orders as one of a range of penalties to regulate corporate officers' behaviour. The imposition of a disqualification order pursuant to s 206C of the Act involves the imposition of a disability and constitutes a penalty or is in the nature of a penalty so as to attract penalty privilege. [205], [208], [220], [260], [264], [267], [269]

[24]

Police Service Board v Morris & Anor (1985) 156 CLR 397 applied; Morris v Police Service Board [1983] 2 VR 357; Gray v Motor Accident Commission (1999) 196 CLR 1; Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited (2003) 77 ALJR 1629 discussed.

[25]

A substantive approach should be taken to determine whether discovery would subject an individual to a penalty or anything in the nature of a penalty. A disqualification order may have more than one function. It may have a penal quality sufficient to attract penalty privilege as well as a protective purpose. [168], [184]-[186], [225], [246], [258]-[262], [264], [266]

[26]

Bakker v Stewart [1980] VR 17; La Macchia v Minister for Primary Industry (1986) 72 ALR 23; Commissioner for Corporate Affairs v Bracht [1989] VR 821; Law Society of New South Wales v Foreman (No 2) (1994) 34 NSWLR 408; Re HIH Insurance Limited; ASIC v Adler (2002) 42 ACSR 80; ASIC v Rich (2003) 44 ACSR 682; Veen v The Queen [No. 2] (1988) 164 CLR 465, R v Cuthbert (1967) 86 WN (Pt. 1) (NSW) 272, The Gleaner Company Limited & Anor v Abrahams (Jamaica) [2003] 3 WLR 1038 referred to.

[27]

R v Vine (1875) LR 10 QB 195; Re a Solicitor's Clerk [1957] 1 WLR 1219; NSW Bar Association v Evatt (1968) 117 CLR 177; Re Magna Alloys & Research Pty Limited (1975) 1 ACLR 203; Re Marsden (1981) 29 SASR 454; Nicholas v Commissioner for Corporate Affairs [1988] VR 289; Re Harrison (1998) 81 FCR 436; CAC (WA) v Ekamper (1987) 12 ACLR 519; ASC v Donovan (1998) 28 ACSR 583; ASC v Forem Freeway Enterprises Pty Ltd (1999) 30 ACSR 339; ASC v Kippe discussed and distinguished.

[28]

The circumstance that Parliament (or a drafter) assumed that the antecedent law differed from the law as the Court finds it to be is not a reason for the Court refusing to give effect to the law. [265]

[29]

Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 at 505-506 per Mason CJ and Toohey J, at 556 per McHugh J applied.

[30]

ASIC's Notice of Contention should not be upheld. The penalty privilege extends to preclude the order for filing and serving of witness statements prior to the hearing of proceedings. [273]

[31]

Australian Securities & Investments Commission v FFE Building Services Limited (2003) ATPR ¶41-938 applied.

[32]

Sidebottom & Anor v Commissioner of Taxation (2003) 173 FLR 335 not followed.

[33]

Appeal dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40402/03 EQ 5934/01

[34]

SPIGELMAN CJ IPP JA McCOLL JA

[35]

Wednesday 26 November 2003 John David RICH & Mark Alan SILBERMANN v THE AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION Judgment 1 SPIGELMAN CJ: This is an appeal pursuant to leave granted on 10 July 2003, from an interlocutory decision of Austin J delivered on 17 April 2003 (ASIC v Rich [2003] NSWSC 328; (2003) 45 ACSR 305. The Australian Securities & Investment Commission ("ASIC"), the Plaintiff in proceedings before the Court, seeks an order that the Appellants, the Defendants in the proceedings, give general discovery and an order fixing a date for the service of a verified list of documents. ASIC also seeks a direction fixing a date for the filing of the affidavit evidence upon which the Appellants intend to rely, including any witness statements by the Appellants themselves to the extent that they intend to give evidence at the hearings. The two issues raised were characterised by Austin J, conveniently, as "the discovery issue" and "the witness statement issue". 2 The Appellants are former directors of One.Tel Limited (In liq). In the principal proceedings ASIC alleges a range of contraventions by the Appellants of their statutory duty of care and diligence under s180(1) of the Corporations Act 2001 (Cth) ("the Act"). By way of relief ASIC seeks:

[36]

(i) Declarations pursuant to s1317E of the Act as to numerous alleged contraventions of s180(1) of the Act.

[37]

(ii) Orders pursuant to s206C and s206E of the Act that each Appellant be prohibited from managing a corporation for such period as the Court thinks fit.

[38]

(iii) An order pursuant to s1317H(1) of the Act that each Appellant pay compensation to One.Tel in an amount which the Court thinks fit together with interest. 3 A contravention of s180 does not constitute an offence. (Note the exclusion of Ch 2D from s1311(1A)(a).) 4 In s1317E of the Act, s180(1) is one of the provisions characterised as a "civil penalty provision". If the Court is satisfied that a person has contravened such a provision then, pursuant to s1317E, the Court must make a declaration of contravention. Such a declaration must specify certain matters identified in s1317E(2), including the identity of the contravener and the conduct constituting the contravention. 5 Where a person has contravened a civil penalty provision in relation to a corporation, an order may be made under s1317H for the person to compensate the corporation. ASIC seeks orders pursuant to this section against each Appellant with respect to each of the alleged contraventions. 6 It is relevant to note that no relief is sought by ASIC pursuant to s1317G. That section authorises a court, which has made a declaration of contravention under s1317E, to order a person to pay to the Commonwealth what is described as a "pecuniary penalty" of up to $200,000. 7 ASIC does, however, seek orders under s206C and s206E. These sections are central to the appeal and relevantly provide: "206C(1) On application by ASIC, the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if: (a) a declaration is made under s1317E (civil penalty provision) that the person has contravened a civil penalty provision; and (b) the Court is satisfied that the disqualification is justified … 206E(1) On application by ASIC, the Court may disqualify a person from managing corporations for the period that the Court considers appropriate if: (a) the person: … (ii) has at least twice contravened this Act while they were an officer of a body corporate … and (b) … the Court is satisfied that the disqualification is justified." 8 The issue before Austin J, and before this Court, was whether the Appellants are entitled to resist the orders for discovery and for the filing of witness statements on the basis of the privilege against self-exposure to a penalty. 9 After a careful review of the authorities, his Honour concluded that the fact that disqualification orders were a principal component of the relief sought by ASIC did not make it appropriate to classify the proceedings as proceedings for the imposition of a penalty for the purposes of the privilege invoked by the Appellants. His Honour relied on case law, to which I will refer below, which characterised orders such as disqualification orders as protective rather than punitive in nature. His Honour also concluded that there was no real or appreciable risk that the Appellants, or other witnesses whose statements were likely to be provided, would be exposed to proceedings for a penalty.

[39]

Issues on the Appeal 10 The Appellants formulated the questions posed by the appeal as follows: (a) Whether the privilege against exposure to a penalty applies to proceedings brought under the civil penalty regime in the Corporations Act. (b) The nature and extent of the privilege against exposure to a penalty. (c) Whether orders which seek the permanent banning of a defendant from managing or being a director of a corporation attract the privilege against exposure to a penalty. (d) Whether proceedings seeking orders which may be described as being for the protection of the public fall outside the ambit of the privilege against exposure to a penalty. 11 The issue before the Court is in a narrow compass. Mr B Walker SC, who appears for the Appellants, submitted that where a person is exposed to the risk of a disqualification order, such as an order under s206C or s206E, by reason of contravention of a statute, that order constitutes a penalty for purposes of the privilege invoked by the Appellants. 12 Mr R MacFarlan QC, who appeared for ASIC, submitted that where a disqualification order is imposed to protect the public, and not by way of punishment, the privilege does not apply. Mr MacFarlan invokes a body of cognate authority, on which Austin J relied, which draws such a distinction. 13 Mr MacFarlan submitted that the Appellants' argument turns on the proposition that disqualification must necessarily constitute the imposition of a penalty and that the purpose of making an order is irrelevant. 14 Mr Walker submitted that there is no dichotomy between punishment and protection of the public. A court order may be both punitive and protective. The applicability of the privilege must focus on the consequences of the order which, in the case of an order disqualifying a person from being an officer of a corporation, is punitive in itself. 15 Mr Walker accepted that the imposition of a sanction, such as removal of a licence or privilege, may be protective but not necessarily punitive. However where, as here, the relevant event is a "contravention", the sanction cannot be regarded as merely protective. It is also punitive. 16 The basic position of the parties to the appeal, on the basic issue "What is a penalty?", is posed in terms of a choice between the purpose and the objective effect of an order of disqualification under s206C or s206E. This is an issue that can be approached at two levels. First, as an issue of statutory construction of s206C and s206E. Secondly, as an issue as to whether there is an exposure to a penalty in the particular circumstances of the case. This appeal was argued on the first basis only. 17 By Notice of Contention, the Respondent seeks to uphold the result on the witness statement issue, even if it should fail on the discovery issue. Austin J held that both issues were determined by his conclusion that the Appellants were not exposed to the imposition of a penalty.

[40]

The Penalty Privilege 18 The privilege against self-exposure to penalty has been referred to conveniently as the penalty privilege. (See Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 at 519 per Brennan J and 547 per McHugh J; Trade Practices Commission v Abbco Iceworks Pty Limited (1994) 52 FCR 96 at 135D per Gummow J.) The submissions in this case raise the issue of how the courts should determine whether a statutory sanction is a "penalty" for purposes of this privilege. 19 Some of the text writers identify the nature of the penalty in terms of a purpose of punishment. Wigmore on Evidence (McNaughton rev. 1961) vol 8 at s2257 (p336) said: "A penalty may be defined as a liability to pay money or to yield up a public privilege by way of punishment. … When the penalty lies in the yielding up of a privilege, a distinction therefore seems proper between inflicting a punishment and restraining the continued improper exercise of functions. The process of impeachment of an official seems to fall in the former class but most other processes of removal or restraint (including disbarment) would ordinarily come within the latter description." [Emphasis added, references omitted.] 20 To similar effect is the observation of A Ligertwood, Australian Evidence (3rd ed, 1998) at 326: "The existence of the penalty privilege allows courts to uphold a claim for privilege where the legislature has seen fit to impose a punishment through the civil courts rather than the criminal courts." 21 The case law which identifies the characteristics of a penalty is surprisingly limited. Most of the cases have been concerned with sanctions which are clearly identified as penalties and are of limited assistance in this respect. The word "penalty" appears in many different contexts, both statutory and at common law. This case is concerned with the penalty privilege and the meaning of the word in that context must be the focus of attention. (See e.g. Adams v Batley (1887) 18 QBD 625 at 629 per Lord Esher MR; Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725 at 733 per Lord Esher MR.) The word "penalty" may have the same connotation but its denotation may differ, particularly from one statutory context to another. (Cf R v Vine (1875) LR 10 QB 195 at 199 per Cockburn CJ and Re Pulborough School Board at 738-739 per Lopes LJ.) 22 There are cases on the penalty privilege which emphasise the purpose of punishment. Other cases distinguish a penalty from compensation, in the context of a sanction for contravention of a statute. 23 In Smith v Read (1737) 1 Atk 527; 26 ER 332, Lord Hardwicke LC said at 332: "… 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. Under the rule, a man is not obliged to accuse himself, is implied that he is not to discover a disability in himself; and there is no difference between a forfeiture of a thing vested, and a disability to take, inflicted as a penalty …" [Emphasis added] 24 His Lordship concluded that a statutory prohibition on a Roman Catholic - a "papist" in the argot of the time - acquiring property was a "penal statute". His Lordship added: "The laws of bankrupts are not all penal laws, and in the cases of aliens, bastards etc., there is a difference where the disability arises from the rules of law, and where it is imposed as a penalty". [Emphasis added]

[41]

The emphasis on purpose, distinguishing a disability arising from a "rule of law", is relevant for present purposes. 25 Similarly in Police Service Board v Morris (1985) 156 CLR 397 at 403, Gibbs CJ, referred to texts which treated exposure to "any kind of punishment" as equivalent to "anything in the nature of a penalty". 26 In Adams v Batley, the penalty privilege was held not to apply to breach of a statute creating a copyright in the performance of an unpublished dramatic work. (The statute is conveniently set out in Wall v Taylor [1883] 11 QBD 102 at 104.) The statute provided that an infringer, referred to as "an offender", was liable to pay an amount not less than forty shillings or the amount of benefit or advantage or the loss incurred. Lord Esher MR said at 629: "Whether it be strictly correct to call this sum a penalty, or liquidated damages, or a forfeiture, or whatever may be the exact term which ought to be applied, I feel sure that it is not a payment of money coming within the doctrine which prevented Courts of Equity from allowing discovery by way of interrogatories administered to the defendant; nor is the case brought within any rule laid down by the Courts of Common Law. It is not a payment of money coming within the same class of payments as in Martin v Treacher ([1886] 16 QBD 507). I think it is clear that this payment is treated in the Act as a payment by way of damages and not by way of penalty. It is imposed not as a punishment upon the defendant, but as compensation to the plaintiff ." [Emphasis added.]

[42]

His Lordship concluded at 631: "I am of opinion, therefore, that this is not a penalty so as to bring the case within the rule that in actions for penalties interrogatories should not be allowed to be administered to the defendant." 27 This judgment is to be contrasted with the later case of Saunders v Wiel [1892] 2 QB 18 (QB) and 321 (CA), which involved infringement of a copyright in a design. The statute provided: "Any person who acts in contravention of this section shall be liable for every offence to forfeit a sum not exceeding 50 [pounds] to the registered proprietor of the design, who may recover such sum as a simple contract debt by action." 28 Both Courts distinguished Adams v Batley and concluded that the statutory provision provided for a penalty, rather than a payment by way of compensation. Consistently with his earlier reasoning in Adams v Batley, Lord Esher MR said at 322: "The question raised in this appeal is whether the action is brought for a penalty by way of a penalty - that is, by way of punishment, as it was put in the course of argument. If it is so brought, it is admitted that interrogatories should not be administered to shew that the defendant has made himself liable to that penalty …"

[43]

His Lordship went on to note that whilst the use of words such as "offence" and "forfeit" were not conclusive, (as indeed the word "penalty" has been held on numerous occasions not to be conclusive in the context of the equitable doctrine applicable to contractual stipulations) they are suggestive. He concluded that the reference to a "sum not exceeding 50 [pounds]" was not a reference to damages sustained, but an amount to be determined in accordance with the conduct of the infringer. Accordingly, the penalty privilege was available. 29 The distinction between "penalty" and "compensation" is a purposive distinction. It is not a distinction based on consequences. An amount payable by way of compensation, which has no necessary relationship to the profit obtained by the infringer, may be more burdensome than any penalty imposed by way of fine or otherwise. 30 There is, however, no authority which clearly establishes that a purposive distinction, such as that between "penalty" and "compensation", can also be drawn between "penalty" and "protection", with respect to the application of the penalty privilege. 31 The High Court has recently identified the basic purpose of the penalty privilege in a four judge joint judgment (Daniels Corporation International Pty Ltd v Australian Competition & Consumer Commission [2002] HCA 49; (2002) 77 ALJR 40). Although that case was concerned with legal professional privilege, this Court should, even if not technically bound to do so, give a statement of this character, in so recent a judgment of the High Court, a high level of persuasive force. 32 The joint judgment of Gleeson CJ, Gaudron, Gummow and Hayne JJ said at [31]: "Today the privilege against exposure to penalties serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it." 33 Counsel for the Appellants relied upon this sentence from Daniels before Austin J and his Honour dealt with in the following way at [28]: "In my opinion, that sentence is not determinative of any question before me. If it were clear that the present case were one where a person 'alleges criminality or other illegal conduct', in the sense intended by their Honours, then I would apply the privilege and decline to order discovery or the filing of witness statements before the trial. But their Honours cannot have intended that their proposition should apply whenever a plaintiff alleges illegal conduct in civil proceedings, otherwise discovery and the filing of witness statements before the trial would not be appropriate in any civil proceedings involving an allegation of contravention of a provision of the Corporations Act, or (say) involving contractual illegality. It seems to me unlikely, in the context in which it appears, that the sentence was intending to broaden the scope of the privilege, or to do anything other than reflect the general availability of the privilege after the Judicature Act." 34 The sentence from [31] in Daniels did not propound the purpose there identified as a complete statement of the relevant purposes. The identified purpose would not, in terms, apply to the application of the doctrine in a context not properly described as "criminality or other illegal conduct", e.g. the application of the privilege when a court of equity grants relief against the imposition of a penalty in contractual disputes or forfeiture of property interests (see TPC v Abbco Iceworks at 143D-E per Gummow J). I do not understand the sentence to be propounded as a complete statement of the circumstances in which the privilege would apply. Accordingly, it is not necessary to have "illegal conduct". The issue is whether such is sufficient. 35 The matter of significance for the present proceedings is the emphasis that the Court has given to the purpose extending beyond "criminality" to "other illegal conduct". Where, as here, a sanction may be imposed by reason of a "contravention" the terminology adopted by the High Court as describing the basal purpose of the privilege may have application. 36 Immediately before the sentence I have extracted above, the joint judgment quoted from the joint judgment in Naismith v McGovern (1953) 90 CLR 336 at 341-342 where the Court had said: "… the Court of Equity would not make an order for discovery or for the administration of interrogatories in favour of the prosecutor whether the prosecutor was the Crown or a …… informer or any other person where the proceeding was of such a nature that it might result in a penalty or forfeiture: ' nemo tenetur seipsum prodere' . ('No one is obliged to betray himself'.)" 37 Furthermore, the authority cited for the critical sentence in [31] of Daniels was the judgment of Burchett J in Abbco Iceworks at 129. The relevant passage is: "… the privilege against self-incrimination, and that against self-exposure to a penalty, are both reflections of the one fundamental principle. It has been stated in various ways, and with differing emphases. But, with respect, it cannot be better expressed than by the words that Deane, Dawson and Gaudron JJ used in Caltex (at 532) with reference to self-incrimination: 'In the end, [the privilege] is based upon the deep-seated belief that those who allege the commission of a crime should prove it themselves and should not be able to compel the accused to provide proof against himself.' Substituting 'the incurring of a penalty' for 'the commission of a crime' and 'the defendant' for 'the accused', I think this statement applies to the privilege against self-exposure to a penalty."

[44]

(This passage was applied by the Full Court of the Supreme Court of Western Australia (Malcolm CJ, Ipp and Owen JJ) in Bridal Fashions Pty Ltd v Comptroller-General of Customs (1996) 140 ALR 681 at 693.) 38 In Daniels at [31] the joint judgment went on to affirm the conclusion reached in Abbco Iceworks that the penalty privilege is not available to corporations by extension of the decision that the privilege against self-incrimination is not available to corporations. Burchett J referred to the joint judgment in EPA v Caltex. I note that the passage relied upon by Burchett J, (being the last of four occasions that the proposition is enunciated at 527.5, 528.3, 528.7 and 532.8), was an important step in the reasoning by which Deane, Dawson and Gaudron JJ arrived, in dissent, at the conclusion that the privilege against self-incrimination was available to corporations, i.e. the opposite conclusion than Burchett J reached in respect of the penalty privilege in Abbco Iceworks as affirmed in Daniels. 39 Nevertheless, unlike Burchett J in Abbco Iceworks, and the Full Court in Bridal Fashions, the joint judgment in Daniels did not assimilate the position between the two privileges. The Court clearly distinguished them when it said that the penalty privilege does "bear some similarity with the privilege against incrimination" ([13]). 40 Indeed in par [31], the joint judgment suggested that there may be a substantial difference between the two privileges when it said: "However, there seems little, if any, reason why that privilege should be recognised outside judicial proceedings. Certainly, no decision of this Court says it should be so recognised, much less that it is a substantive rule of law." 41 There was no rejection of earlier judgments in which the Court recognised that the privilege against self-incrimination is available in non-judicial proceedings. (See Sorby v the Commonwealth (1983) 152 CLR 281 at 309; Pyneboard Pty Ltd v Trade Practices Commission 152 CLR 328 at 341; Police Service Board v Morris at 403.) 42 The joint judgment in Daniels analysed legal professional privilege as a rule of substantive law and accordingly, characterised it as an important common law right or immunity (see at [9]-[11]). As a rule of substantive law it was not confined to the giving of evidence in judicial proceedings (at [10]). In an earlier joint judgment in Reid v Howard (1995) 184 CLR 1 at 11-12, Toohey, Gaudron, McHugh and Gummow JJ had described the privilege against self-incrimination as a "basic and substantive common law right". After the joint judgment in Daniels the penalty privilege cannot be regarded as equivalent in this respect. (Contrast Australian Securities and Investments Commission v Plymin (2002) 4 VR 168 at 169 per Mandie J.) 43 There are a number of aspects of the law affecting penalty privilege which may require more detailed analysis on an appropriate occasion. For example, in Daniels at [13], the joint judgment concluded that the penalty privilege had its origins in the rule of equity relating to discovery. This stands in contrast with the analysis of Mason ACJ, Wilson and Dawson JJ in Pyneboard at 336-337 and of McHugh J in EPA v Caltex at 547, where the conclusion was that equity adopted an existing model from the common law. (Referring to Pye v Butterfield (1864) 5 B & S 829; 122 ER 1038 at 1042; Mexborough (Earl of) v Whitwood Urban District Council [1897] 2 QB 111 at 114-115, 116, 121.) The understanding of the historical development of these privileges has changed in recent times. (See Azzopardi v The Queen (2001) 205 CLR 50 at [118]-[163] per McHugh J; R H Helmholz et al, The Privilege Against Self Incrimination: Its Origins and Development, Uni of Chicago Press, 1997; S McNicol Law of Privilege, LBC, 1992 at 137-139.) 44 A noteworthy feature of the joint judgment in Daniels is that the word "self" is not used in the traditional characterisation of "self-incrimination" or "self-exposure" to penalty. It is not clear whether this was intended as a development of the law. In Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385 at 393, Gibbs CJ, Mason and Dawson JJ said: "The privilege is not a privilege against incrimination; it is a privilege against self-incrimination."

[45]

(See also EPA v Caltex at 519.) 45 The Appellants' submissions in this Court emphasise the significance of "contravention" as the essential trigger for the power to order disqualification under each of the relevant sections. This is an important factor in characterising the power for purposes of the penalty privilege. Nevertheless, there is a formidable body of case law which characterises the power in a corporations law context as protective, in a manner intended to indicate that that characterisation operated to the exclusion of any characterisation of the power as a "punishment" or "penalty". The Appellant cannot point to any equivalent body of authorities supporting their case. In my opinion, the joint judgment in Daniels should not be taken to have qualified such application as this line of authority may have to the penalty privilege. 46 In par [31] of Daniels, the Court was not directing its attention to the issue of when a consequence or remedy or sanction can be classified as a penalty for purposes of the penalty privilege. Their Honours should not be taken to have determined, albeit obiter, that whenever there is "illegal conduct", such as the contravention of a statute, any sanction must be treated as a penalty for purposes of the penalty privilege. To say that a legal rule or principle has a "purpose" does not necessarily suggest that anything which may be seen to serve the purpose falls within the rule or principle. Such a statement cannot be treated as if it were a provision in a bill of rights which is to be applied to particular factual circumstances by a process of interpretation. This is particularly the case as the joint judgment in Daniels itself affirms that the penalty privilege, unlike legal professional privilege and, probably, the privilege against self-incrimination, is not a substantive rule of law. 47 The history of the penalty and of the cognate privileges, indicates that the purpose or purposes to be served by such privileges is often multifaceted and does vary over time. (Wigmore on Evidence, vol 8 at s2251 identifies twelve different policies served by the self-incrimination privilege.) The purpose identified in [31] of Daniels that a person who alleges "illegal conduct" must prove it, does not require the conclusion that every sanction flowing from a contravention of a statute is a penalty for purposes of the penalty privilege.

[46]

The Punitive / Protective Distinction 48 Austin J placed particular reliance on a long line of authority which identifies orders for the disqualification of persons from being involved in the management of corporations as having a "protective" rather than a "punitive" purpose. His Honour said: "[31] There is a line of authorities to the effect that the making of disqualification orders against directors of a company has a protective rather than a punitive purpose. The point is usually made by way of guidance for the setting of an appropriate term of disqualification. Since the purpose of disqualification is to protect the public, rather than to punish, conduct that severely damages the financial interests of investors might attract a long period of disqualification even though it is not culpable conduct in a moral sense. [32] Care must be taken in transposing remarks made for that purpose into the context in which a classification must be made for the purposes of the privilege against exposure to penalties. Even so, it seems to me that the remarks have some utility. The privilege against exposure to penalties is an emanation of a concern about certain kinds of criminal and quasi-criminal sanctions - identified by Bowen LJ in Redfern v Redfern [1891] P 139, at 147 as punishment, penalty, forfeiture and ecclesiastical censure. The criterion of classification is not the hardship or other catastrophic effect that the Court's order may have on the defendants, because an order for damages or an injunction can have the most profound effects and yet there is no privilege from exposure to orders of those kinds. The defendants drew attention to the catastrophic consequences that a disqualification order might have upon them, citing some observations by Olney J in Chew v NCSC (1985) 9 ACLR 527, 528 about the 'substantial hardship' that may flow to the disqualified person. That submission misses the point. The issue is whether a disqualification order should be placed in the same group as punishment, penalty, forfeiture and ecclesiastical censure. If the courts have consistently treated disqualification orders as protective rather than punitive in nature, one can infer that disqualification orders do not fall within and should not be placed together with those four categories." 49 After consideration of the authorities his Honour concluded: "[53] In my opinion the authorities lead to this conclusion: the fact that disqualification orders are a principal component of the relief sought by the Commission does not make it appropriate to classify the proceedings as proceedings for the imposition of a penalty, for the purposes of the privilege against providing information or documents in proceedings for the recovery of a penalty." 50 The distinction between a "protective" and a "punitive" purpose has been made in numerous legal contexts. In an immigration context concerned with the constitutional validity of detention, McHugh J said that detention: "… is ordinarily characterized as punitive in character, it cannot be so characterized if the purpose of the imprisonment is to achieve some legitimate non-punitive object."

[47]

(See Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1 at 71.) 51 In the same case in a joint judgment Brennan, Deane and Dawson JJ said at 28: "… committal to custody awaiting trial is not seen by the law as punitive …" 52 The distinction has also been made in the context of determining whether a statute is penal for purposes of the application of the principle of statutory interpretation that a penal enactment is presumed not to have retrospective effect. 53 In R v Vine, Cockburn CJ said at 199: "… here the object of the enactment is not to punish offenders, but to protect the public against public-houses in which spirits are retailed being kept by persons of doubtful character." 54 To similar effect was the reasoning of Mellor J who said at 200: "It appears to me to be the general object of this statute that there should be restraints as to the persons who should be qualified to hold licences, not as a punishment, but for the public good, upon the ground of character." 55 Accordingly, by majority, the Court concluded that the statute applied to persons who had been convicted prior to the passage of the relevant legislation. 56 The issue also arose in Re Pulborough School Board in the context of the consequences ensuing upon a person becoming bankrupt. One of the consequences was the disqualification of the person from serving as a member of the school board. 57 Davey LJ said at 741: "This Act is not a School Board Act, but a Bankruptcy Act for the primary purpose of defining the liabilities and consequences of bankruptcy, and although the section in question is no doubt dictated by regard to the public interest, it does impose disabilities and consequences of a serious character on persons adjudged bankrupt, and is in that sense and to that extent a penal enactment." 58 Lord Esher MR, dissenting, said at 733: "… the section is not penal within the meaning which must be put on that expression for the purpose of determining whether a statute can be treated as retrospective. I cannot think that the legislature intended these disqualifications as punishments, for by the same section it appears that the disqualifications are to be removed if the debtor obtains a certificate to the effect that his bankruptcy was caused by misfortune, without any misconduct on his part. To my mind, to say that the legislature intended to punish a debtor of whom that can be said would be to charge the legislature with injustice. The disqualifications are intended solely for the protection of the public, and not by way of punishment."

[48]

His Lordship referred to R v Vine . 59 In a context closer to that presently under consideration, namely the disqualification of a professional person, the High Court said in Clyne v NSW Bar Association (1960) 104 CLR 186 at 201-202: "Although it is sometimes referred to as 'the penalty of disbarment', it must be emphasised that a disbarring order is in no sense punitive in character. When such an order is made, it is made, from the public point of view, for the protection of those who require protection, and from the professional point of view, in order that abuse of privilege may not lead to loss of privilege." 60 Similarly, the High Court said in NSW Bar Association v Evatt (1968) 117 CLR 177 at 183-4: "The power of the Court to discipline a barrister is, however, entirely protective, and, notwithstanding that its exercise may involve a great deprivation to the person disciplined, there is no element of punishment involved." 61 To similar effect are the observations of the Full Federal Court in R v Davis (1995) 81 A Crim R 156 at 162: "Although an order striking a practitioner's name from the register ordinarily has serious consequences for the practitioner, such an order is made to protect the public, not to punish the practitioner."

[49]

(See also Walton v Gardiner (1993) 177 CLR 378 at 396; Law Society of NSW v Foreman (1994) 34 NSWLR 408 at 413 and 440-441.) 62 The proposition that disqualification from legal practice is imposed for a protective purpose and is not, notwithstanding the severity of the consequences, imposed by way of punishment is of long standing, going back at least as far as Lord Mansfield. (See Ex parte Brounsall (1778) 2 Cowp 830; 98 ER 1385; In the Matter of King (1844) 8 QB 129; 115 ER 823 at 824; Incorporated Law Institute of New South Wales v Meagher (1909) 9 CLR 655 at 680; The Southern Law Society v Westbrook (1910) 10 CLR 609 at 625.)

[50]

The Corporations Law Cases 63 The dichotomy, which Mr Walker SC urged the Court to reject as a false dichotomy, has proven useful in disparate areas of the law. The line of authority on which Austin J relied is longstanding and unanimous in drawing the distinction in a number of corporations law contexts involving disqualification. The formidable body of judicial statements, many made by judges with great experience in corporations law, has built up over decades. These statements would have been relied upon by the drafters of the corporations legislation which has been amended numerous times over the period. This Court should be very slow to reject the dichotomy in favour of giving determinative effect to consequences, rather than purpose, for which proposition the authorities are few. There are many cases in which loss of office or loss of civil status has been found to be a penalty, however the case law on corporations legislation suggests that disqualification from participation in the management of corporations should not be so regarded. 64 In the context of s117 of the Companies Act 1961, by force of which an undischarged bankrupt was disqualified from participation in the management of a corporation, subject to a discretion reposed in the Court to permit participation, Street J said in Re Altim Pty Ltd and the Companies Act 1961 [1968] 2 NSWR 762 at 764: "It should be borne in mind that the section is not in any sense a punishment of the bankrupt. Nor should a refusal to grant leave under that section be regarded as punitive. The prohibition is entirely protective, and the power of the Court to grant leave is to be exercised with this consideration in the forefront." 65 The same approach was adopted in subsequent cases on s117. (See Poyser v Commissioner for Corporate Affairs [1985] VR 533 at 537 per Murphy J.) It was also applied to the successor provision in s227 of the Companies Code 1981. (See Commissioner for Corporate Affairs v Bracht [1989] VR 821 at 827 per Ormiston J.) 66 In Re Magna Alloys & Research Pty Limited (1975) 1 ACLR 203, Bowen CJ in Eq was concerned with s122 of the Companies Act 1961 which permitted an order for disqualification to be made by the Court after a conviction. His Honour said at 205: "The section is not punitive. It is designed to protect the public and to prevent the corporate structure from being used to the financial detriment of investors, shareholders, creditors and persons dealing with a company." 67 The distinction was relied upon in other authorities on s122. (See Re Ferrari Furniture Co Pty Ltd and the Companies Act [1972] 2 NSWLR 790 at 791 per Street J, applying Re Altim, and the joint judgment of Young CJ, Lush and Marks JJ in the Full Court of the Supreme Court of Victoria, Zuker v Commissioner for Corporate Affairs [1981] VR 72 at 77.) 68 Section 122 of the 1961 Uniform Companies Act was an automatic disqualification provision upon conviction and is the predecessor of s206B of the Act. 69 Section 562A(3) of the Companies Code 1981, which is a predecessor of s206F of the Corporations Law 1991 ("the Law") and of the Act presently under consideration, was similarly characterised as protective in the case law. (See Nicholas v Commissioner for Corporate Affairs (1986) 5 ACLC 258 per O'Bryan J; and on appeal [1988] VR 289 at 299 per Kaye J and 305 per Fullagar J; Friend v CAC (1989) 7 ACLC 106 at 115 per Powell J.) 70 Directly in point for the present proceedings is s1317EA(3)(a) of the Law, the immediate predecessor of s206C of the Act, which was also characterised as "protective". (See Re Tasmanian Spastics Association; ASC v Nandan (1997) 23 ACSR 743 at 751 per Merkel J; ASC v Donovan (1998) 28 ACSR 583 at 602 per Cooper J; ASC v Forem-Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 at 349-350 per Madgwick J; ASIC v Pegasus Leveraged Options Group Pty Limited (2002) 41 ACSR 561 at [105] per Davies AJ; Re HIH Insurance Limited (In prov liq); ASIC v Adler (2002) 42 ACSR 80 at [56] per Santow J, where his Honour summarised this long line of authority.) 71 The position was most recently affirmed in this Court on appeal from the last-mentioned decision when the Court referred to: "… a disqualification order made not punitively but protectively."

[51]

( Adler v ASIC (2003) 46 ACSR 504 at [659].) 72 I note also that the protective/punitive distinction had been made when considering revocation of dealers licenses under s60 and s62 of the Securities Industry Code 1961. See Story v National Companies and Securities Commission (1988) 13 NSWLR 661 at 686 per Young J. 73 As Austin J indicated in his reasons, these cases are not determinative of the present proceedings by reason of the fact that none involved the application of the common law penalty privilege. The characterisation as "protective", often with the distinction that the sanction was not "punitive", was made for other corporations law purposes. Nevertheless, the distinction is well established in a cognate context. 74 Australian Securities Commission v Kippe (1996) 67 FCR 499 to which Austin J referred, and which the Respondent's submissions in this Court emphasised, did raise the issue of privilege, but did so in a statutory context. By s830 of the Law the then Commission was empowered to make a banning order which prohibited a person from acting as a representative of a dealer or investment adviser. 75 The Commission conducted an investigation under s19 of the Australian Securities Commission Act 1989 (Cth). Section 68 of that Act provided that a statement made in the course of an investigation was not admissible as evidence in "a proceeding for the imposition of a penalty" (s68(3)(b)). The Administrative Appeals Tribunal, which was conducting a review of the Commission's decision to make a banning order held that these proceedings were proceedings "for the imposition of a penalty" and accordingly that the statements sought to be relied on by the Commission were not admissible. This conclusion was rejected by the Full Court of the Federal Court (von Doussa, Cooper and Tamberlin JJ). 76 At 506 the Court referred to the authorities, commencing with Magna Alloys which made the distinction between "punitive" and "protective" statutory provisions, and described the distinction as "well settled" (506F). The Court also referred to the professional disciplinary cases. 77 The Court noted the special statutory context with which it was concerned and said at 507G: "Section 68(3)(b) uses the language of purpose. The question posed is whether the proceeding for a banning order is, 'a proceeding for the imposition of a penalty'."

[52]

(See also at 508G.) 78 In this respect the decision is distinguishable, as the Court was not concerned, as these proceedings are concerned, with the penalty privilege at common law. Nevertheless, at least in a context where the sole purpose of a statutory provision is protective in the sense that punishment is not a purpose of the statutory power (I make no observation on the Full Court's references to "predominant purpose") then the reasoning in Kippe is, by analogy, pertinent to the present proceedings. 79 The Full Court concluded at 508A-B: "If the question is asked as to whether the purpose of a proceeding which may result in a banning order is for the imposition of a penalty, the short answer is that it is not for such a purpose. Although a banning order has the consequence of excluding an individual from acting as a representative of a dealer or investment adviser, the making of such an order is not designed to punish or impose a penalty on that person for an offence or contravention of any norm of conduct … That the section is not intended to be punitive is made apparent by having regard to the specified grounds which must be established before such an order is made. These include standard non-blameworthy grounds, for example, becoming 'an insolvent under administration' and becoming 'incapable, through mental or physical incapacity, of managing his or her affairs'. As the question under consideration is one of interpretation, it cannot be said that the character of the subsection changes depending on the particular ground upon which the order is sought. Nor, can it be said in such cases that the purpose of a banning order is to punish or penalise a person who becomes insolvent or incapable. Consideration of the grounds on which a banning order is made does not support the suggestion that the banning order is of a penal nature and certainly is not one for the imposition of a penalty. Rather, the grounds set out in s 829 clearly point to the conclusion that it is properly characterised as protective." 80 This last passage emphasises the significance of the statutory context of the sanction power in the process of determining whether it is "a penalty". This was said for purposes of determining the meaning of the word "penalty" in a statutory context, albeit a provision plainly derived from the common law penalty privilege. Kippe does, however, suggest that the context of a statutory power to impose a sanction must be considered when determining whether or not the sanction is a "penalty" for purposes of the application of the common law penalty privilege. I will return below to the statutory context relevant to the present proceedings.

[53]

Consequences 81 The case law which characterises provisions as protective rather than penal is replete with references to the severity of the consequences for the particular individual, see e.g. Tasmanian Spastics at 751-752. There are, of course, authorities which do emphasise the significance of the consequences of disqualification and I accept that that is a material consideration to be taken into account when determining whether or not a particular sanction should be characterised as a "penalty" for purposes of the penalty privilege. Severity of consequences is not, however, in my opinion determinative in every case. 82 The issue of the penalty privilege arose in the case of In re a Debtor [1910] 2 KB 59. In the basal Australian authority on this area of the law, R v Associated Northern Collieries (1910) 11 CLR 738 at 747.6, Isaacs J characterised the import of this case to the effect that "the loss of civil status" constituted "a penal consequence" for purposes of the penalty privilege. 83 In In re a Debtor, Fletcher Moulton LJ said at 66: " … what the petitioner seeks by his petition is in the highest degree penal in its consequences ." [Emphasis added.]

[54]

His Lordship also referred to "loss of civil status carrying with it grave disqualifications". Farwell LJ, agreeing, identified the loss of status in terms of the public offices which a bankrupt could not occupy. This authority was applied in Taylor v Carmichael (1984) 1 NSWLR 421 esp at 426-427. 84 The loss of status considered in these cases was not explained in terms of protective purpose. There is a focus on the severity of consequences. 85 In Re One.Tel Limited (In liq); ASIC v Rich (2003) 44 ACSR 682, Bryson J had before him a former joint managing director of One.Tel Limited, Mr Bradley Keeling. The case involved an application to the Court to make declarations and orders which were agreed between the parties, disposing of the proceedings. These included consent orders pursuant to s206C and s206E, prohibiting Mr Keeling from managing corporations for ten years. The present Appellants were represented in the proceedings because of the possible implications of the settlement upon their own cases. They submitted that the consent orders ought not be made at that time. 86 In determining that the agreed period of disqualification of ten years was appropriate Bryson J said: "[25] Disqualification is directed both at protection of the public and also at the operation of disqualification as a penalty on the person disqualified. In this case disqualification is the only penalty proposed; there is no proposed pecuniary penalty…" 87 His Honour referred to s206C and s206E and to the fact that he had had a number of prior authorities drawn to his attention including Re HIH Insurance; ASIC v Adler at par [56] where Santow J reviewed the reported cases. His Honour added: "[26] … I must respectfully say that I find a distinction between motives of deterrence and a punitive motive as difficult, in practical terms impossible to sustain. The punitive impact of such an order must be recognised; courts apply punitive measures with care, avoid excessive measures and have regard to the circumstances of individuals. No-one should be sacrificed to the public interest." 88 For some purposes it may be appropriate to characterise the consequences of a sanction in terms of language such as "punitive" and "punishment". That does not however determine the issue of characterisation with respect to the application of the penalty privilege. 89 There is an ambiguity, in the sense of inexplicitness, in the use of general terms such as "punitive", "punishment" or "penalty". Each of these words may signify different matters in different contexts. A criminal sentence, for example, is often referred to as a "punishment" or as a "penalty". That is so even though the sentence is to serve a number of disparate objectives including retribution, specific and general deterrence and/or rehabilitation. Another sense of the word "punishment" would be to restrict that term to the retributive element in a sentence. 90 It is, as Mr Walker SC submitted, appropriate to characterise criminal sentences as being for the protection of the public. That is because the basic function of the criminal law is the protection of the community from crime. (See e.g. R v Geddes (1936) 36 SR (NSW) 554 at 555 per Jordan CJ; R v Cuthbert [1967] 2 NSWR 329 at 330 per Herron CJ.) In a sense, therefore, all relevant elements in the criminal sentence including retribution, deterrence and rehabilitation can be described as the means by which the overriding purpose of the protection of society from crime is to be achieved. Nevertheless, there will be circumstances in which it is appropriate to emphasise, or even to limit, the element of "punishment" to the purpose of retribution, to the exclusion of other purposes served by the imposition of a sentence. 91 Mr Walker SC placed particular reliance on the High Court judgment in Police Service Board v Morris. However, in that case there was no distinction sought to be made between the kinds of sanctions available. The case proceeded on the basis that the police officers facing disciplinary proceedings were exposed to all the sanctions available under the relevant regulations (see at 403). Those sanctions expressly included a monetary penalty. Furthermore, the loss of status said to be equivalent to the disqualification in the present case was the express power given to the relevant disciplinary tribunal to reduce an officer in rank or to dismiss that officer from the force. I do not regard those orders as necessarily equivalent to the loss of status involved in a disqualification order from managing a corporation. Reduction in rank and dismissal from employment may very well be imposed for the purpose of punishment, and not for the purpose of protecting the public. Nothing in the statutory context considered by the court in Police Service Board v Morris suggests that it is equivalent to the context presently under consideration. 92 The authorities which make reference to consequences do suggest that this is a matter appropriate to be considered when determining whether or not a sanction should be characterised as a penalty for purposes of the penalty privilege. They do not, however, require the Court to reject the long-established punitive/penal distinction based on purpose to which I have referred. 93 It is not, in my opinion, possible to answer the question whether exposure to the risk of loss of office or of civil status constitutes a penalty for purposes of the penalty privilege merely by characterising the effect of such a sanction. It is necessary to determine the purpose of the sanction in accordance with the particular legislative scheme under consideration.

[55]

The Statutory Context 94 With respect to the relevant statutory duty of care and diligence under s180(1) of the Act, formerly found as s232(4) of the Corporations Law 1991, the history of the sanction for disqualification has gone through three distinct stages, since 1991. 95 As originally enacted, the contravention of s232(4) of the statutory duty constituted an offence under s1311 of the Law. At first, pursuant to Schedule 3, the penalty was a fine of $5,000. Furthermore, where a person had been convicted of an offence, the Court was empowered to order the person to pay compensation to the corporation pursuant to s232(7). The corporation itself could recover profits earned or damages it suffered as a result of the contravention, whether there had been a conviction or not, pursuant to s232(8). 96 At this stage, there was no provision empowering the Court to disqualify a person from managing the affairs of a corporation by reason of a contravention of s232. There were, however, other statutory provisions empowering the Court to make such orders. 97 Pursuant to s230 of the Law, where a corporation of which a person was an officer or the person "repeatedly breached relevant legislation", the Court could make an order prohibiting the person from managing a corporation. Pursuant to s599, in a number of situations, particularly where a company had been wound up because of inability to pay its debts, a court could prohibit a person from managing a corporation if that person had been a director of two or more such companies over a period of seven years. Finally, pursuant to s600, the Commission could, by notice, prohibit a person from managing a corporation where a liquidator had presented a report containing certain conclusions indicating misconduct by the person. 98 The second stage commenced with the Corporate Law Reform Bill 1992 which inserted a new Pt 9.4B into the Act which made comprehensive provision for a new regime of "civil penalties". Section 232(4) was identified as a civil penalty provision. Sections 230, 599 and 600 continued in existence. 99 Section 1317EA(3) empowered the court, where there had been a contravention of a civil penalty provision, to prohibit a person from managing a corporation. Section 1317EA(3) also empowered the court to order the person to pay a pecuniary penalty. By s1317EA(4), the court was directed not to make an order of disqualification if it was satisfied that "the person is a fit and proper person to manage a corporation". By s1317EA(5), the court was directed not to make an order imposing a penalty unless it was "satisfied that the contravention is a serious one". Section 1317HA empowered the court to order a person to pay compensation to the corporation. By s1317HD, a corporation could recover either profits made or losses suffered, from a person who contravened a civil penalty provision, whether or not the person had been convicted of an offence, or had been subject to a civil penalty order. 100 The Corporate Law Reform Bill 1992 implemented the recommendations of the Senate's Standing Committee on Legal and Constitutional Affairs Company Directors' Duties: Report on the Social and Fiduciary Duties and Obligations of Company Directors 1989 (generally referred to as the "Cooney Committee Report"). The regulatory philosophy underlying this report was the desirability of establishing a clear pyramid of enforcement containing a hierarchy of sanctions. There was, however, criticism of the extent to which the new Pt 9.4B implemented this philosophy (see e.g. Helen Bird, "The Problematic Nature of Civil Penalties in the Corporations Law" (1996) 14 Companies and Securities Law Journal 405). 101 For present purposes, it is relevant to note that s1317EA(5) to which I have referred to above, makes it clear that the imposition of a pecuniary penalty was higher in the pyramid of sanctions than an order prohibiting a person from managing a corporation. Such a hierarchy was first outlined in an explanatory paper accompanying the first draft of the Bill which stated: "178. It is expected that in settling an appropriate order, the Court would first give consideration to whether it should impose a civil penalty disqualification. The issue should be whether the defendant's conduct, whilst not criminal in nature, was so reprehensible and had such serious consequences as to warrant an order prohibiting the person from managing a corporation. For example, if gross negligence by a director had led directly to massive losses for shareholders, the Court may consider that a director should be disqualified for a substantial period, even where there was no question of a dishonest intent. The emphasis should be on preventing a recurrence of the contravention by the defendant, and providing a deterrent to other persons involved in the management of corporations. It is expected that the Courts would consider imposing a pecuniary penalty only if it considered that a civil penalty disqualification provided an inadequate or inappropriate remedy." 102 As at the time that this was written, the Bill did not contain as part of what was then proposed to be s1317AJ, the equivalent of s1317EA, any subsection in the terms of subss (4) and (5) of s1317EA as enacted. (See Corporate Law Reform Bill 1992: Draft Legislation and Explanatory Paper, AGPS, Canberra, February 1992 at pp50-51.) The addition of these subsections was not explained in the final Explanatory Memorandum for the 1992 amendments, but it is clear what their import is for present purposes. (See par [99] above.) 103 The third stage was the insertion of Pt 2D.6 into the Law, which is retained in the Act, by the Corporate Law Economic Reform Program Act 1999. The Explanatory Memorandum for that Amendment Act, suggested that a number of provisions constituted no more than a "rewrite". Included in the provisions so characterised was the civil penalty provisions. (See par 6.127 of the Explanatory Memorandum.) 104 The effect of the new Pt 2D.6 was to bring together in one place the various sections concerning disqualification of persons from the management of corporations. I list the sanctions of the Act, referring to the provision of the Corporations Law as originally enacted, from which the present provisions were drawn:

[56]

(i) Section 206B makes provision for automatic disqualification upon conviction of certain offences, drawn from s229 of the Law.

[57]

(ii) Section 206C gives the Court power to order disqualification where a declaration is made under s1317E, drawn from s1317EA(3)(a).

[58]

(iii) Section 206D empowering the Court to disqualify persons in the case of repeated involvement in the failure of corporations, for which special provision had been made under s599 of the Law.

[59]

(iv) Section 206E empowering the Court to order disqualification of a person where there have been two or more relevant contraventions, is derived from the power in s230 of the Law with respect to situations where legislation has been "repeatedly breached".

[60]

(v) Section 206F giving ASIC power to disqualify a person, which is derived from s600 of the Law, but no longer linked to the provision of a liquidator's report as that section was. 105 The end result of these changes is that the immediate statutory context of the provisions which fall to be construed in the present proceedings is an integrated set of provisions in a Part accurately entitled "Disqualification from managing corporations". Section 206C, although it contains within itself the requirement that a declaration is made under s1317E, is no longer found in the context of a pyramid or hierarchy of sanctions for contravention of a civil penalty provision. Perhaps more significantly, for present purposes, s206E, with respect to repeated contraventions, and upon which reliance is placed in the present proceedings, has never been part of the civil penalty provisions. As I mentioned it finds its origin in s230 of the Law. 106 Section 206E, upon which the Respondent also relies in the present proceedings, turns on multiple "contraventions" of the Act, not on contraventions of civil penalty provisions. This contrasts with s206C which requires a declaration under s1317E. Nevertheless, s206C and s206E operate in the same way. Indeed, any situation in which there was more than one contravention of a civil penalty provision, would also fall within s206E. 107 It is relevant to set out some of the other sections of Pt 2D.6: "206B(1) A person becomes disqualified from managing corporations if the person: (a) is convicted on indictment of an offence that: (i) concerns the making, or participation in making, of decisions that affect the whole or a substantial part of the business of the corporation; or (ii) concerns an act that has the capacity to affect significantly the corporation's financial standing; or (b) is convicted of an offence that: (i) is a contravention of this Act and is punishable by imprisonment for a period greater than 12 months; or (ii) involves dishonesty and is punishable by imprisonment for at least 3 months; or (c) is convicted of an offence against the law of a foreign country that is punishable by imprisonment for a period greater than 12 months. The offences covered by paragraph (a) and subparagraph (b)(ii) include offences against the law of a foreign country. (2) The period of disqualification under subsection (1) starts on the day the person is convicted and lasts for: (a) if the person does not serve a term of imprisonment - 5 years after the day on which they are convicted; or (b) if the person serves a term of imprisonment - 5 years after the day on which they are released from prison. (3) A person is disqualified from managing corporations if the person is an undischarged bankrupt under the law of Australia, its external territories or another country. (4) A person is disqualified from managing corporations if: (a) the person has executed a deed of arrangement under Part X of the Bankruptcy Act 1966 (or a similar law of an external territory or another country) and the terms of the deed have not been fully complied with; or (b) the person's creditors have accepted a composition under Part X of the Bankruptcy Act 1966 (or a similar law of an external territory or another country) and final payment has not been made under the composition. … 206D(1) On application by ASIC, the Court may disqualify a person from managing corporations for up to 10 years if: (a) within the last 7 years, the person has been an officer of 2 or more corporations when they have failed; and (b) the Court is satisfied that: (i) the manner in which the corporation was managed was wholly or partly responsible for the corporation failing; and (ii) the disqualification is justified. (2) For the purposes of subsection (1), a corporation fails if: (a) a Court orders the corporation to be wound up under section 459B because the Court is satisfied that the corporation is insolvent; or (b) the corporation enters into voluntary liquidation and creditors are not fully paid or are unlikely to be fully paid; or (c) the corporation executes a deed of company arrangement and creditors are not fully paid or are unlikely to be fully paid; or (d) the corporation ceases to carry on business and creditors are not fully paid or are unlikely to be fully paid; or (e) a levy of execution against the corporation is not satisfied; or (f) a receiver, receiver and manager, or provisional liquidator is appointed in relation to the corporation; or (g) the corporation enters into a compromise or arrangement with its creditors under Part 5.1; or (h) the corporation is wound up and a liquidator lodges a report under subsection 533(1) about the corporation's inability to pay its debts. (3) In determining whether the disqualification is justified, the Court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and (b) any other matters that the Court considers appropriate. … 206F(1) ASIC may disqualify a person from managing corporations for up to 5 years if: (a) within 7 years immediately before ASIC gives a notice under paragraph (b)(i): (i) the person has been an officer of 2 or more corporations; and (ii) while the person was an officer, or within 12 months after the person ceased to be an officer of those corporations, each of the corporations was wound up and a liquidator lodged a report under subsection 533(1) about the corporation's inability to pay its debts; and (b) ASIC has given the person: (i) a notice in the prescribed form requiring them to demonstrate why they should not be disqualified; and (ii) an opportunity to be heard on the question; and (c) ASIC is satisfied that the disqualification is justified. (2) In determining whether disqualification is justified, ASIC: (a) must have regard to whether any of the corporations mentioned in subsection (1) were related to one another; and (b) may have regard to: (i) the person's conduct in relation to the management, business or property of any corporation; and (ii) whether the disqualification would be in the public interest; and (iii) any other matters that ASIC considers appropriate. (3) If ASIC disqualifies a person from managing corporations under this section, ASIC must serve a notice on the person advising them of the disqualification. The notice must be in the prescribed form (4) The disqualification takes effect from the time when a notice referred to in subsection (3) is served on the person. (5) ASIC may give a person who it has disqualified from managing corporations under this Part written permission to manage a particular corporation or corporations. The permission may be expressed to be subject to conditions and exceptions determined by ASIC. 206G(1) A person who is disqualified from managing corporations may apply to the Court for leave to manage: (a) corporations; or (b) a particular class of corporations; or (c) a particular corporation; if the person was not disqualified by ASIC. (2) The person must lodge a notice with ASIC at least 21 days before commencing the proceedings. The notice must be in the prescribed form. (3) The order granting leave may be expressed to be subject to exceptions and conditions determined by the Court. (4) The person must lodge with ASIC a copy of any order granting leave within 14 days after the order is made. (5) On application by ASIC, the Court may revoke the leave. The order revoking leave does not take effect until it is served on the person." 108 The statutory context manifests a number of indications that a disqualification order is, in accordance with the corporations legislation authorities, protective to the exclusion of a punitive purpose. I refer to the following:

[61]

(i) Each of s206C(2)(a) and s206E(2)(a) makes express provision for matters to which the Court may have regard when "determining whether the disqualification is justified" in the following terms: "the person's conduct in relation to the management, business or property of any corporation". If the focus was on punishment, then the scope of relevant considerations would be restricted to the conduct constituting the contravention or, at most, conduct with respect to the particular corporation with respect to which the contravention occurred. That the Court is empowered to have regard to any conduct in relation to the management, business of property of any corporation, indicates strongly the exclusively protective character of the power. (See also s206D(1)(i), (ii) and s206D(3)(a), (b) and contrast a "pecuniary penalty order" under s1317G which relates only to a specific contravention relating to a specific corporation.)

[62]

(ii) Each of s206C and s206E states as an express requirement before an order can be made that: "the Court is satisfied that the disqualification is justified" (s206C(1)(b) and s206E(1)(b). The legislature did not leave the issue to be encompassed within the generally discretionary words of the grant of power - "may disqualify". The Court must reach an express positive state of satisfaction that "disqualification is justified ". Were punishment the purpose, the test would more likely have been expressed in terms of whether disqualification was "appropriate" or left to the general words of discretion under "may disqualify".

[63]

(iii) The provision expressed to be a penalty (i.e. s1317G) applies only to a contravention which materially prejudices the corporation or its ability to pay its debts or is serious. These considerations relate only to the specific contravention and the corporation against which it was committed. No such effect or level of seriousness is required for s206C or s206E. This reflects Pt 9.4B as originally enacted, when the predecessor of s206C was found as a paragraph of s1317EA(3) together with the express penalty provision, and, as noted above, the latter order could only be made if the contravention was "serious", a qualification not applicable to the disqualification order.

[64]

(iv) The automatic disqualification under s206B applies even when the offences are committed against the law of a foreign country. See s206B(1)(c) and the concluding words of s206B(1) which refer to offences covered by par (a) and subpar (b)(ii) of the subsection. It could not be suggested that the disqualification consequence in such circumstances is in any sense punishment for breach of the foreign law.

[65]

(v) The express reservation of a power in s206G and s206F(5) in the Court or ASIC, to grant leave to a person, the subject of an automatic or general disqualification order or decision, to manage corporations or a particular class of or a particular corporation, is more consistent with a protective purpose for the court's power to make an order and for the automatic disqualification under s206B.

[66]

(vi) In the case of ASIC's power to make a decision under s206F, important issues would arise under Chapter III of the Constitution, if the power involved an element of punishment and was not purely protective. 109 There is a textual indication to the contrary in Pt 2D.6, which is consistent with a punitive purpose. In the case of s206C and s206E, there must have been, respectively, a declaration of or an actual contravention and, in the case of s206E(1)(a)(i), a contravention by the corporation which the person "has failed to take reasonable steps to prevent". Other than in the case of bankruptcy (see s206B(3) and (4)), the person subject to the disqualification order must have done something wrong. 110 In the present context there is no list of "non-blameworthy grounds", of the character which proved significant for the Full Court's reasoning in Kippe. Rather, in the present case, for purposes of both s206C and s206E, there has to have been a contravention. This is a statutory indication pointing in favour of the characterisation of a disqualification order as a penalty for purposes of the penalty privilege. 111 Furthermore, the consequences are significant as Bryson J recognised in ASIC v Rich. The maximum penalty that may be imposed under s1317G is $200,000. A disqualification order may, in substance, have a financial impact in excess of that maximum. So, of course, may an order to pay compensation under s1317H. Indeed, in the present case ASIC seeks compensation orders in the amount of $93 million. 112 Finally, the requirement that there be a "contravention" together with the use of the word 'penalty' in a legislative scheme for "civil penalties" supports the Appellants' contentions. (Cf Chief Executive Officer of Custom v Labrador Liquor Wholesale Pty Ltd [2003] HCA 49 esp at [2] and [139].) 113 These considerations are pertinent but are not, in the particular circumstances of the statutory scheme under consideration, in my opinion, determinative.

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Conclusion 114 The long line of authority identifying a disqualification order under corporations law as having an exclusively protective purpose, together with the textual indications which I have set out above, lead me to conclude, on balance, that an order under either s206C or s206E of the Act should not be characterised as a penalty for purposes of the penalty privilege. 115 The distinction between a "punitive" and a "protective" purpose is one of substance and of considerable significance. It is not just a question of characterising the purpose or effect of the court's order. It is, in essence, a question of characterising the power conferred by the legislative scheme. Insofar as the power to order disqualification is purely protective, the decision to make the order and the determination of the period for which the order can take effect must be made on the basis that only protective considerations are relevant. The power cannot be exercised in order to punish. 116 When a court comes to exercise its discretion to make an order under s206C or s206E, and to determine the length of time for which disqualification should occur, quite different issues arise, and differences in emphasis will ensue, if the disqualification is being imposed by way of punishment than arise if it is being imposed by way of protection of the public. The order, particularly in terms of its length, will be significantly affected if the purpose is only protection and does not contain a punitive element. 117 It is not necessary for me to deal with the Respondent's notice of contention with respect to the orders sought concerning witness statements. Unless the matter is resolved by the High Court, this Court will be obliged, if it becomes necessary to do so, to choose between conflicting decisions of intermediate courts of appeal. (Sidebottom v Commissioner of Taxation [2003] VSCA 2 and Australian Securities and Investments Commission v FFE Building Services Ltd (2003) ¶ATPR 41-938.) That issue should be regarded as open in this Court. 118 The appeal should be dismissed with costs. 119 IPP JA: I agree with Spigelman CJ. 120 McCOLL JA: This appeal arises in proceedings brought by the Australian Securities and Investments Commission ("ASIC") seeking declarations pursuant to s 1317E of the Corporations Act 2001 (Cth) (the "Act") that the appellants have contravened s 180(1) of the Act. Section 180(1) imposes a statutory duty of care and diligence on directors or officers of a corporation. If the declarations of contravention are made, ASIC seeks orders pursuant to s 206C and s 206E disqualifying the appellants permanently or for a substantial period from managing or being a director of a corporation. ASIC also seeks compensation orders in the amount of $93 million pursuant to s 1317H of the Act. 121 The issue in this appeal is whether the appellants are entitled to resist orders requiring them to give verified discovery of documents and to provide witness statements prior to the hearing setting out the evidence each intends to give, on the basis of the privilege against self-exposure to a civil penalty ("penalty privilege"[1]). The appellants submit the disqualification orders ASIC seeks pursuant to s 206C of the Act are in the nature of a penalty sufficient to attract penalty privilege. 122 The facts and the background are set out in the reasons for judgment prepared by Spigelman CJ. I shall not repeat them except insofar as it is necessary to make my own views clear. 123 I have concluded that the appellants' contention that the disqualification orders ASIC seeks pursuant to s 206C of the Act are in the nature of a penalty sufficient to attract penalty privilege should be upheld.

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The Appellants' submissions 124 The appellants submitted that penalty privilege is a rule of ancient authority which has been consistently confirmed by modern authority, importantly in the High Court, referring to Police Service Board v Morris & Anor (1985) 156 CLR 397; Pyneboard Pty Limited v Trade Practices Commission (1983) 152 CLR 328 and Daniels Corporation International Pty Limited v Australian Competition & Consumer Commission (2002) 77 ALJR 40. 125 They submitted that penalty privilege owed its existence to the limitation which courts placed on the exercise of their powers to compel a defendant in an action for the recovery of a penalty to furnish evidence against himself or herself to establish his or her liability. 126 They submitted that penalty privilege was not confined to claims for pecuniary penalties, but applied wherever the defendant was exposed to "any kind of punishment" or "anything in the nature of a penalty".[2] A disqualification order was punitive in nature and thus within the ambit of penalty privilege. They referred to cases in which penalty privilege had been held to apply to a variety of penalties, not all of which were of a pecuniary nature, including:

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(a) disciplinary penalties, including a reprimand, reduction in rank or dismissal from the Police Service: Police Service Board v Morris & Anor ; (b) claims for injunctive and declaratory relief in the nature of quo warranto: Taylor v Carmichael [1984] 1 NSWLR 421;

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[71]

(d) forfeiture of title to land: Earl of Mexborough v Whitwood Urban District Council [1897] 2 QB 111; Harrison v Southcote (1751) 2 Ves. Sen. 389 at 394; 28 ER 249 at 252; and

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(f) disqualification from holding or obtaining a driver's licence: Coogans v MacDonald [1954] SLT 279. 127 Importantly, the appellants submitted that the loss of civil status was a penal consequence to which penalty privilege applied, referring to R v Associated Northern Collieries (1910) 11 CLR 738 at 747. The corollary of this submission was that disqualification as a director or manager of a company was a loss of civil status. Pursuing this argument, they submitted that a close analogy existed between cases concerning disqualification as a director or manager of a company and proceedings in bankruptcy to have a debtor declared bankrupt. They relied on Re A Debtor [1910] 2 KB 59 at 66 to submit that the order sought by a bankruptcy petitioner had been held to be "in the highest degree penal in its consequences" and "to amount to a loss of civil status carrying with it grave disqualifications". 128 Further, they submitted Austin J erred in applying the line of authority which describes disqualification orders as having a protective purpose and not having the relevant quality of punishment to attract penalty privilege. They asserted that to say something was not punitive because it was protective was a false dichotomy. In determining whether a disqualification order had the relative punitive quality, it was necessary to examine its effect on the defendant. 129 Next, they submitted that in the criminal context it was often the case that orders served two purposes: punishment and public protection. 130 They pointed out that cases which concerned the imposition of periods of disqualification did not support the proposition that such provisions were entirely protective in purpose. They referred to ASC v Donovan (1998) 28 ACSR 583 at 606 where the disqualification power was described as "predominantly protective" and to Re HIH Insurance Limited; ASIC v Adler (2002) 42 ACSR 80 at 801 where Santow J observed (at [60]) "that the primary purpose of the disqualification power is the protection of the public". 131 Finally, the appellants submitted Austin J's decision was heavily influenced by ASC v Kippe & Anor (1996) 67 FCR 499, ("Kippe") a case which they submitted was distinguishable and, in any event, wrongly decided.

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ASIC's submissions 132 ASIC submitted that the essence of a penalty for the purpose of penalty privilege was that the order sought had to have a punitive purpose. It referred to Adams v Batley (1887) 17 QBD 625 at 629 per Lord Esher M.R.; Brown v Great Eastern Railway Co (1887) 2 QBD 406 at 409 per Lush J; Coogans v MacDonald [1954] SLT 279 and Legione v Hateley (1983) 152 CLR 406 at 445. 133 ASIC submitted that the essential question was whether or not a disqualification order was imposed by way of punishment. Because the purpose of such orders was not to punish they did not involve the recovery or imposition of a penalty so that penalty privilege was not attracted. It submitted that Austin J correctly followed Kippe in concluding that the purpose of disqualification orders was to protect the public and not to punish. 134 ASIC submitted that s 206C should be construed having regard to the disqualification provisions in Part 2D.6 of the Act. It pointed out the Act provided for a range of grounds for mandatory or discretionary disqualification, only one of which, s 206C, depended on making a declaration of contravention. It submitted s 206C should be characterised by reference to Part 2D.6 where it was found, rather than Part 9.4B. 135 ASIC also relied upon a line of authority which considered whether an order in the nature of a disqualification order was penal for the purpose of considering the presumption against retrospectivity applied in the case of penal statutes referring to Nicholas v Commissioner for Corporate Affairs (Vic) [1988] VR 289. 136 In reply, the appellants submitted that, with the exception of Kippe, none of the cases ASIC relied upon considered penalty privilege. They submitted that care should be taken in transposing remarks about penalties and protective orders in other contexts to cases where the issue was the existence of a privilege. They submitted that in cases concerned with penalty privilege itself, the focus was inevitably on the effect the order may have on the individual.

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Statutory Background 137 In order to understand the legislative intention embodied in s 206C regard should be had to the history of disqualification provisions in corporations law. 138 Historically, Australian corporations legislation has adopted both mandatory and discretionary provisions to disable a person from acting as a director.[3] The mandatory provisions operated upon specified circumstances to make it an offence for a person to act as a director without the leave of the Court.[4] The discretionary provisions enabled an order to be made on application of the relevant regulatory authority to disqualify the subject from acting as a director upon proof of specified circumstances. 139 In New South Wales under the Companies Act 1961 there were three mandatory disqualification provisions: s 116(3) (vacation of office if specified share qualification not obtained or maintained), s 117 (undischarged bankrupt not to act as director without leave of the Court) and s 122 (person convicted of specified offences not to act as director without leave of the Court). 140 From 1981 corporations law in Australia was regulated pursuant to a co-operative scheme. The Commonwealth passed companies and securities legislation for the Australian Capital Territory and each State enacted applications statutes applying that legislation as part of the law of that State.[5] The State legislation was the Companies Code, the Companies (Acquisition of Shares) Code and the Securities Industry Code of each State and Territory. 141 The Companies Code contained both mandatory and discretionary disqualification provisions. 142 The mandatory disqualification provisions were s 222 and s 227. Section 222 provided for the mandatory vacation of the office of a director of a corporation if the director did not hold a specified share qualification, was an insolvent under administration, committed a nominated criminal offence or was subject to an order pursuant to s 227A or s 562 of the Code. Section 227 provided that persons who were either insolvents under administration or who had been convicted of certain offences could not be directors without the leave of the Court. 143 The Code provided for discretionary disqualification orders to be made pursuant to s 227A (inserted in 1983), s 562 and s 562A (inserted in 1985). 144 Pursuant to s 227A, on application by the Commission,[6] or a prescribed person, a Court could make an order prohibiting a relevant person from being a director upon proof of the matters specified in subsection 227A(1). The disqualifying circumstances were threefold. First, if the relevant person failed to take reasonable steps to prevent a corporation of which the person was a relevant officer from breaching corporations and securities legislation (subsections 227A(1)(a) - (b)). Secondly, if the relevant person breached corporations and securities legislation while a relevant officer of a corporation. Thirdly, if while a relevant officer of a corporation the person acted dishonestly or failed to exercise a reasonable degree of care and diligence in the performance of the duties of an officer of the corporation. 145 Pursuant to s 562 on application by the Commission a Court could make an order prohibiting a person from acting as a director where that person had been a director, or concerned in or had taken part in the management of two or more companies which, in the 7 years prior to notice of the application, had, in substance, been unable to pay their debts as and when they became due as a result of the manner in which they had been managed. 146 Section 562A enabled the Commission to prohibit a director of a company from being a director or promoter of a company which had been the subject of a liquidator's report with respect to the ability of the company to pay its unsecured creditors. 147 Two other provisions should be noted. First, s 229 created offences where an officer of a corporation failed to act honestly or exercise a reasonable degree of care and diligence in the exercise of his powers and the discharge of his duties (ss 229(1) and (2)) or where an officer or employee of a corporation made improper use of information acquired by virtue of his position or made improper use of his position to gain an advantage for himself or for any other person or to cause detriment to the corporation (ss 229(3) and (4)). 148 Secondly, s 570 was a general penalty provision which, in essence, provided that if a person did an act or thing that person was forbidden to do under a provision of the Code, or did not do an act or thing that person was required or directed to do under a provision of the Code, or otherwise contravened or failed to comply with the provision of the Code, then that person was guilty of an offence.

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The Corporations Law (the "Law") 149 In 1991 the Corporations Law was enacted under which the Commonwealth assumed primary control for corporate regulation. The new Law reproduced the sections of the Code to which I have referred. Thus s 222 became s 224, s 227A became s 230, s 562 became s 559 and s 570 became s 1311. 150 Section 232 dealt with the duty and liability of officers of certain bodies corporate. Subsection (2) created an offence where an officer of a corporation failed to act honestly in the exercise of his or her powers and the discharge of the duties of his or her office, the penalty for which, subject to the circumstances in which it was committed, was a fine and/or imprisonment for five years (s 232(3)). Subsections 232(4), (5) and (6) dealt with the requirement to exercise care and diligence as an officer of a corporation and not to make improper use of insider information or improper use of an officer or employee's position. Contraventions of these subsections were regulated pursuant to Part 9.4, Division 2 headed "Offences Generally". A breach of subsection 232(4) exposed the offender to a fine while a breach of the improper use provisions exposed the offender to a fine and/or imprisonment (s 1311(3), Schedule 3).

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Company Directors' Duties - Report on Social and Fiduciary Duties and Obligations of Company Directors 151 In November 1989 the Senate Standing Committee on Legal and Constitutional Affairs published the Cooney Report, "Company Directors' Duties - Report on the Social and Fiduciary Duties and Obligations of Company Directors". 152 The Cooney Report arose from a referral by the Senate on 26 May 1988 to the Senate Standing Committee on Legal and Constitutional Affairs to report on "the social and fiduciary duties and responsibilities of company directors." 153 The Cooney Report emphasised the importance of regulating directors and companies "to secure adherence to what the community considers reasonable standards in business practice."[7] 154 The Cooney Report distinguished between breaches of companies legislation for which a criminal penalty was appropriate and breaches for which a civil penalty should be imposed. It recommended that criminal liability under companies legislation not apply in the absence of criminality and that civil penalties be provided in companies legislation for breaches by directors when no criminality was involved.[8] 155 The Cooney Report dealt specifically with the disqualification of directors. Relevantly, it observed: "10.13 The aims of law enforcement are many and varied. Not all of them are discussed here. Suffice to say that one obvious aim is to deter conduct which, inherently or by categorisation is undesirable.

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10.14 Proper regulation of the corporate sector is best achieved through a range of penalties to meet the range of particular circumstances that might arise. To illustrate, regulatory infringements are appropriately dealt with by a pecuniary penalty, fraudulent conduct by criminal penalty. At times, financial compensation will be appropriate; on other occasions, disqualification of directors may be appropriate. ... 13.25 Given the opportunity for error and fraudulent conduct by company directors and the absence of any requirement for formal qualifications, disqualification or prohibition provisions are of considerable importance in protecting the public interest ...

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13.26 Evidence was given to the Committee that disqualification from office was the greatest threat to directors, notwithstanding possible gaol sentences and financial penalties, and therefore was an effective sanction .

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13.27 It is appropriate that there be a range of sanctions available to enforce company directors' duties and obligations. A range of sanctions provides a means whereby sanctions may be tailored to the circumstances. Disqualification is an appropriate sanction as part of that range ." (emphasis supplied)

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Corporate Law Reform Bill 1992 156 The Law was amended in 1992 with the enactment of the Corporate Law Reform Bill 1992 which included provisions said to implement the Cooney Report.[9] 157 The amendments to the Law effected by the Corporate Law Reform Bill 1992 were that breaches of certain directors' duties provisions were no longer subject to "criminal sanctions unless the breaches are committed with a dishonest intent." Civil penalties were said to be "substituted in respect of breaches ... committed without a dishonest intent."[10] 158 The Explanatory Paper to the Public Exposure Draft of the Corporate Law Reform Bill 1992,[11] which led to the enactment of the civil penalty provisions stated: "178. It is expected that in settling an appropriate order, the Court would first give consideration to whether it should impose a civil penalty disqualification. The issue should be whether the defendant's conduct, whilst not criminal in nature, was so reprehensible and had such serious consequences as to warrant an order prohibiting the person from managing a corporation. For example, if gross negligence by a director had led directly to massive losses for shareholders, the Court may consider that a director should be disqualified for a substantial period, even where there was no question of a dishonest intent. The emphasis should be on preventing a recurrence of the contravention by the defendant, and providing a deterrent to other persons involved in the management of corporations. It is expected that the Court would consider imposing a pecuniary penalty only if it considered that a civil penalty disqualification provided an inadequate or inappropriate remedy." 159 In the Second Reading Speech to the Corporate Law Reform Bill 1992, the Attorney-General Michael Duffy said the Bill: "...says that shareholders should be protected against breaches [of director's duties] by the substitution of appropriate civil penalties, including...disqualification in the case of serious breaches."[12] 160 Section 232 still dealt with the duties and liabilities of officers of corporations. It had, however, been significantly amended. Subsection (3) which had set out the penalty for a breach of s 232(2) was omitted. Sub-section 6(B) was inserted. It provided: "Subsections (2), (4), (5) and (6) are civil penalty provisions as defined by s 1317DA, so Part 9.4B provides for civil and criminal consequences of contravening any of them, or of being involved in a contravention of any of them." 161 Section 224 of the Law was amended to include subsection 224(1)(h) so that the office of a director of a company was vacated if the director became subject to a civil penalty disqualification which referred to a s 1317EA(3)(a) disqualification order (s 91(4A)). 162 Section 230(1)(d) was amended to empower the Court to disqualify a person from managing a corporation if, while an officer "of a body corporate (other than a corporation), the relevant person did an act, or made an omission, that would have constituted a contravention of ss 232(2) or (4) in relation to the body if the body had been a corporation at that time."

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Part 9.4B: Civil and Criminal Consequences of Contravening Civil Penalty Provisions 163 For present purposes, the most significant change to the Law was the insertion of Part 9.4B headed "Civil and Criminal Consequences of Contravening Civil Penalty Provisions". The Explanatory Memorandum to the Corporate Law Reform Bill 1992 stated: "61. Clause 17 inserts a new Part 9.4B into the Corporations Law. It implements the Government's decision to accept the Senate Committee's recommendations that criminal liability under the Corporations Law not apply in the absence of criminality, that s 232(4) of the Corporations Law be amended so that criminal liability under that section only applies where the conduct is criminal in nature, and that civil penalties be provided in the Corporations Law for breaches where no criminality is involved..."[13] 164 Part 9.4B revolved around two concepts: the contravention of a civil penalty provision and the making of a civil penalty order. 165 Division 2 was entitled "Civil Penalty Orders". Section 1317DA identified subsections (2), (4), (5) and (6) of s 232 (duty and liability of officers of corporations) as "civil penalty provisions". "Civil penalty order" was defined in s 9 to mean "a declaration or order made under section 1317E." 166 Section 1317EA applied when the Court was satisfied that a person had contravened a civil penalty provision. In such circumstances the Court was required (subject to one exception under Division 4) to make a declaration of contravention of the relevant civil penalty provision (s 1317EA(2)). The Court was also given discretion to make an order prohibiting the person from managing a corporation for a specified period (s 1317EA(3)). Such an order could not be made if the Court was satisfied that, despite the contravention, the person was a fit and proper person to manage a corporation (s 1317EA(4)). 167 The Court could also order the person the subject of the declaration to pay a pecuniary penalty to the Commonwealth (s 1317EA(3)), but such an order could not be made unless the Court was satisfied that the contravention was a "serious one" (s 1317EA(5)). 168 An application for a civil penalty order could be made by the Australian Securities Commission (the "Commission"), a Commission delegate or some other person authorised by the Minister (s 1317EB(1)). Applications for civil penalty orders had to be made within six years after the contravention (s 1317EC). In hearing and determining an application for a civil penalty order the Court was required to apply the rules of evidence and procedure that applied in hearing and determining civil matters (s 1317ED(1)). 169 Section 1317EF(1) provided that a person who was subject to a civil penalty disqualification must not manage a corporation except with the leave of the Court. 170 Division 3 dealt with Criminal Proceedings. Section 1317FA provided that a person was guilty of an offence if the person contravened a civil penalty provision knowingly, intentionally or recklessly and either dishonestly or with intent to deceive or defraud someone. 171 Section 1317FB provided that criminal proceedings for an offence constituted by a contravention of the civil penalty provision could not be begun if a person had already applied for a civil penalty order in relation to the same contravention, even if the application had been finally determined or otherwise disposed of. 172 Division 4 set out an elaborate regime dealing with the relationship between criminal proceedings and civil penalty order proceedings arising out of the same substratum of facts. It is not necessary for present purposes to explore the intricacies of this regime, save to note that if criminal proceedings against a person for an offence constituted by a contravention of a civil penalty provision were disposed of either by a finding of guilt or acquittal (not accompanied by a declaration of contravention), an application for a civil penalty order in relation to the same contravention could not be made: s 1317GC. 173 Section 1332, which appeared in Part 9.6 of the Law, directed that the question whether a person had contravened a provision of the Law, was to be determined on the balance of probabilities.[14]

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The Corporate Law Economic Reform Program Act 1999 174 The Law was amended again in 1999 by the Corporate Law Economic Reform Program Act 1999 (the "CLERP Amendments"). 175 The Explanatory Memorandum to the Corporate Law Economic Reform Program Bill noted that the CLERP Bill would "rewrite without substantial change the remaining provisions in Parts 3.2 (Officers) ... and 9.4B (Civil Penalty Provisions) of the Law." 176 Under the CLERP Amendments the original scheme of Part 9.4B was substantially preserved. Thus a Court which was satisfied that a person had contravened a civil penalty provision was required to make a declaration of contravention (s 1317E(1)). If a declaration of contravention was made ASIC could seek a pecuniary penalty order (s 1317G) or, in the case of a declaration of contravention of a civil penalty provision, a disqualification order pursuant to s 206C. Compensation orders could still be made in relation to relevant contraventions where damage had resulted from the contravention (ss 1317H and 1317HA). 177 The definition of a "civil penalty order" in s 9 was expanded to mean any of: "(a) a declaration of contravention under section 1317F. (b) a pecuniary penalty order under section 1317G. (c) a compensation order under section 1317H. (d) an order under section 206C disqualifying a person from managing corporations". 178 The textual references to "civil penalty order" were replaced by the compendious phrase "a declaration of contravention, a pecuniary penalty order or a compensation order". The expression "civil penalty order" did not appear in Part 9.4B save for the heading to s 1317L, dealing with "Civil evidence and procedure rules for declarations of contravention and civil penalty orders". 179 Civil penalty orders remained relevant in ss 588J, 588M, 588U, 596AI and 601MA. Section 1474 preserved civil penalty orders made under the Law prior to the CLERP Amendments. 180 Only ASIC was permitted to apply for a declaration of contravention, or a pecuniary penalty order (s 1317J(1)). Both ASIC or the corporation or responsible entity for a registered scheme could seek a compensation order (ss 1317J(1) and (2)). Proceedings for a declaration of contravention, a pecuniary penalty order or a compensation order were required to be commenced no later than six years after the contravention (s 1317K). A Court hearing proceedings for a declaration of contravention or a pecuniary penalty order was required to apply the rules of evidence and procedure for civil matters (s 1317L). 181 The new Part 9.4B dealt with the relationship between civil and criminal proceedings in the following manner. 182 Section 1317M provided that a Court must not make a declaration of contravention or a pecuniary penalty order against a person if the person had been convicted of an offence constituted by conduct that was substantially the same as the conduct constituting the contravention. 183 Section 1317N(1) provided that proceedings for a declaration of contravention or a pecuniary penalty order were stayed if criminal proceedings were started or had already been started against the person for an offence in respect of conduct which was substantially the same as the conduct alleged to constitute the contravention. If the person was convicted, the proceedings for a declaration of order were dismissed: s 1317N(2). 184 Section 1317P provided that criminal proceedings could be started against a person for conduct that was substantially the same as conduct constituting a contravention of a civil penalty provision regardless of whether a declaration of contravention, a pecuniary penalty order, or a compensation order had been made against the person or the person had been disqualified from managing a corporation under Part 2D.6. 185 Section 1317Q provided that evidence of information given or evidence of production of documents by an individual was not admissible in criminal proceedings against the individual if the individual previously gave the evidence or produced the documents in proceedings for a pecuniary penalty order against the individual for a contravention of a civil penalty provision (whether or not the order was made) in respect of substantially the same conduct that was claimed to constitute the contravention.

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Consolidation of Disqualification Provisions 186 The CLERP Amendments inserted Chapter 2D which dealt with "Officers and Employees". Part 2D.1 contained s 180(1) which imposed obligations of care and diligence on directors and officers of a corporation. It was a civil penalty provision (s 1317E(1)). Sections 181 (good faith), 182 (use of position) and 183 (use of information) were also civil penalty provisions (s 1317(1)). 187 Section 1317FA was deleted. Section 184 (also in Part 2D.1) provided that directors and officers committed an offence if, in summary, they were reckless or intentionally dishonest in the exercise of their powers or the discharge of their duties, or dishonestly used their position or information they had obtained by virtue of their office to gain an advantage or cause detriment to the corporation. 188 Section 1311, the general penalty provision, was amended so that it did not pick up Chapter 2D. The practical effect of these amendments was that contraventions of the provisions of the Act dealing with the duties and powers of officers ceased to be directly linked to the civil penalty provisions. 189 Part 2D.6, "Disqualification from Managing Corporations", collected the previous provisions of the Law dealing with the mandatory and discretionary disqualification of directors. 190 Part 2D.6 dealt with substantially the same bases for disqualification as the previous provisions. Thus, s 206B(1) provided for the mandatory disqualification of a person from managing a corporation if that person was convicted on indictment of an offence as described in the section (cf former s 224). Subsections 206B(3) and (4) provided for the mandatory disqualification of a person who was an undischarged bankrupt or who had executed a Deed of Arrangement under Part X of the Bankruptcy Act 1966 the terms of which had not been fully complied with or if the person's creditors had accepted a composition under Part X of the Bankruptcy Act 1966 and final payment had not been made under the composition (cf former s 229). 191 Section 206D empowered the Court, on application by ASIC, to disqualify a person from managing corporations for up to ten years if the person had been an officer of two or more corporations which had failed and the Court was satisfied that the manner in which the corporation was managed was wholly or partly responsible for its failing and that disqualification was justified (cf former s 562). 192 The other two disqualification provisions are those upon which ASIC relies in the present proceedings. Section 206C, in substance, reproduced ss 1317EA(3) and (4). It provided: "(1) On application by ASIC, the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if: (a) a declaration is made under section 1317E (civil penalty provision) that the person has contravened a civil penalty provision; and (b) the Court is satisfied that the disqualification is justified. (2) In determining whether the disqualification is justified, the Court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and (b) any other matters that the Court considers appropriate." 193 Section 206E, in substance, reproduced the former s 230. It provided: "(1) On application by ASIC, the Court may disqualify a person from managing corporations for the period that the Court considers appropriate if: (a) the person: (i) has at least twice been an officer of a body corporate that has contravened this Law while they were an officer of the body corporate and each time the person has failed to take reasonable steps to prevent the contravention; or

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(ii) has at least twice contravened this Law while they were an officer of a body corporate; or

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(iii) has been an officer of a body corporate and has done something that would have contravened subsection 180(1) or section 181 if the body corporate had been a corporation; and (b) the Court is satisfied that the disqualification is justified. (2) In determining whether the disqualification is justified, the Court may have regard to: (a) the person's conduct in relation to the management, business or property of any corporation; and

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(b) any other matters that the Court considers appropriate."

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The Corporations Act 2001 194 The Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) (the "ASIC Act") commenced on 15 July 2001. For present purposes it is sufficient to note that the Corporations Act re-enacted Part 2D.6 (with slight modifications to pick up the different terminology used in Part 9.4B). Part 9.4B was amended to include references to "corporation/scheme penalty provision" and "financial services civil penalty provision". The s 9 definition of "civil penalty orders" was preserved. It retained its significance in ss 588J, 588M, 588U, 596AI and 601MA. It remained as part of the heading to s 1317L.

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The History of Privilege against Self-Exposure to a Penalty 195 An examination of the history of penalty privilege reveals it to be a general privilege which developed in tandem with the development of the privilege against self-incrimination. 196 This can be seen from Sorby v The Commonwealth (1983) 152 CLR 281 at 317 - 319, in which Brennan J traced the historical development of the privilege against self-incrimination through the abolition of the Court of Star Chamber and the Court of High Commission in 1641 which had administered the ex officio oath. The abolition of those Courts was followed by the statutory prohibition of officials exercising spiritual or ecclesiastical power, authority or jurisdiction to administer an ex officio oath to any person which would oblige that person: "... to confess or accuse himself or herself of any crime, offence, delinquency or misdemeanour, or any neglect, matter or thing, whereby or by reason whereof he or she shall or may be liable or exposed to any censure, pain, penalty or punishment whatsoever ...". 197 It was that statutory prohibition, Brennan J pointed out, which came to be applied by judges of the Common Law Courts to their own procedure. The privilege was also extended not only to protect accused at a criminal trial but also to protect persons obliged to give discovery in proceedings to recover a penalty or in other civil proceedings. 198 In Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477 at 547, McHugh J said that penalty privilege "was adopted by the Courts of Chancery from the courts of law". This view of the historical development of penalty privilege is not universally accepted. As the subsequent discussion reveals, another view is that the courts of law applied penalty privilege as developed by equity to deal with discovery. It is sufficient, to resolve the issue whether penalty privilege applies in the present case, to undertake an historical analysis of the principle to understand the manner in which it was applied both at law and in equity. 199 Wigmore on Evidence states: "s2256. Penal Liability (1) Forfeiture. Wherever, by way of forfeiture , a right of property is divested or a liability to pay money to another person is created, by way of a retribution for misconduct done or of a deterrent from misconduct apprehended, the effect is in spirit penal . The disclosure of such facts should therefore be protected by the privilege ... the judicial interpretation has always leaned to liberality - partly, perhaps, because of some early cases concerning the ecclesiastical courts, and occurring before the establishment of the common law privilege wherein was involved merely the struggle against the jurisdiction of those courts. It was partly, also, because of the time-honoured maxim of equitable practice never to aid a forfeiture, in consequence of which the boundary between relief and discovery remained confused, and the rule for the former (which was independent of criminality) tended to enlarge the limits of the privilege for the latter. Where the loss of a right is inflicted by statute, there is a greater semblance of penal policy ; the distinction was indeed once taken between 'a determination by the party himself and the determination by Act of Parliament' ... most of the precedents come down from the 1700s. They concern forfeitures of ecclesiastical livings dealt with in violation of the statute against simony , of property titles or other rights by virtue of statutory incapacity as a papist or as an alien , of public office by virtue of statutory incapacity or punishment, or various other interests under statutory prohibitions, and of estates prescribed in a will or deed to be divested by forfeiture as distinguished from conditional limitation ..." (underlining added) "s2257:... (2) Penalty: Incidental criminality in a civil case. The distinction between a penalty and a forfeiture is a shadowy one, though both are in essence contrasted with a civil liability. A penalty may be defined as a liability to pay money or to yield up a public privilege by way of punishment imposed by law. (a) When the penalty lies in the yielding up of a privilege , a distinction therefore seems proper between inflicting a punishment and restraining the continued improper exercise of functions. The process of impeachment of an official seems to fall in the former class, but most other processes of removal or restraint (including disbarment ) would ordinarily come within the latter description....In any case the form of the proceeding is not decisive, for a proceeding essentially civil is sometimes conducted in the name of the state" (emphasis in original)[15] 200 The core principles were articulated in a series of cases decided by Lord Hardwicke LC in the mid-eighteenth century. In Smith v Read (1736) 1 Atk 527; 26 ER 332 Lord Hardwicke LC said: "... [T]here 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 anything in the nature of a penalty. Under the rule a man is not obliged to accuse himself , is implied, that he is not to discover a disability in himself; and there is no difference between a forfeiture of a thing vested, and a disability to take, inflicted as a penalty. ... The laws of bankrupts are not all penal laws, and in the case of aliens, bastards etc., there is a difference where the disability arises from the rules of law, and when it is imposed as a penalty ... where the legislature have intended discoveries of what is penal, they have put in clauses for that purpose ... " (emphasis supplied) 201 The antiquity of penalty privilege, however, can be seen from the transcript of the trial of Sir John Freind at the Old Bailey for high treason in 1696.[16] In response to Sir John Freind's question to a witness, Captain Porter, "whether you be a Roman Catholic or not?", the Solicitor-General asked that Captain Porter be acquainted with the danger that by declaring himself to be a Roman Catholic "he subjects himself to a very severe penalty." Lord Chief Justice Holt stated: "No man is bound to answer any question that tends to make him accuse himself, or subject him to any penalties." 202 Lord Chief Justice Treby, Justice Nevill and Justice Rokeby were of the same opinion, with Justice Rokeby stating: "... he is under no obligation to answer it, because it may tend to accuse himself of a crime for which he may be prosecuted, and likewise will subject him to other penalties, which the law cannot compel himself to subject himself to." [17] 203 The principle had also been applied in earlier civil cases in Monnins v Monnins (1673) 2 Chan. Rep. 68; 21 ER 618 (forfeiture of estate),[18] Bird v Hardwicke (1682) 1 Vern. 109; 23 ER 349 and Chauncey v Tahourden (1742) 2 Atk 392; 26 ER 637 (forfeiture of legacy on marriage without content). 204 Loss of office was clearly regarded by Lord Hardwicke as sufficiently penal to attract the privilege. In Honeywood v Selwin (1744) 3 Atk 276, 26 ER 961, he applied penalty privilege to deny discovery in circumstances which could expose the defendant to his seat in the House of Commons being declared void. 205 In Boteler v Allington (1746) 3 Atk 453 at 457 - 458, 26 ER 1061 at 1063 Lord Hardwicke expressed the rule in cases of forfeiture as being "that a defendant is not obliged by a discovery to subject himself to a forfeiture, or anything in the nature of a forfeiture." (emphasis in original) The plaintiff sought discovery of facts which would have assisted him to prove that a benefice held by the defendant should, according to the statute 21 Hen. 8, "be adjudged by the law to be void". In acceding to a demurrer to the bill of discovery, Lord Hardwicke LC rejected an argument that the Act did not specify a penalty but only avoided the benefice, saying: "The Courts have made a great distinction between a determination by the party himself, and a determination by an act of parliament. Suppose the statute of 21 Hen. 8 had said, if he accepts a second living, the first shall be absolutely void; this would have been a penalty; but although the act of parliament does not say so in words, yet it amounts to just the same thing and therefore I think the defendant is not obliged to make a discovery, in order to preserve the rule of the court intire." 206 Lord Hardwicke LC cast further light on the law of penalties in two subsequent cases which emphasised that the Court was not concerned to take a narrow view of what constituted punishment for the purpose of penalty privilege. In Brownsword v Edwards (1751) 2 Ves Sen 243, 28 ER 157, discovery was denied in a case where discovery of a marriage would have subjected the defendant to punishment for incest in an ecclesiastical court. His Lordship said: "The general rule is, that no one is bound to answer so as to subject himself to punishment, whether that punishment arises by the ecclesiastical law or the law of the land ... nor is it material what the nature of the punishment is . It is a punishment which must be performed or got rid of by commutation, which is like a fine."[19] (emphasis supplied) 207 In Harrison v Southcote & Moreland (1751) 2 Ves. 389 at 394, 28 ER 249 at 251 Lord Hardwicke LC referred to: "The general rule is, that penal laws are not to be taken or construed by equity; and therefore no over-rigorous or strained construction is to be made in any court of justice much less of equity..." 208 He expressed his concern that if he allowed a plea objecting to discovery on the basis of exposure to a penalty, his ruling would defeat the operation of the Act of King William - "the statute of 1698-1699 ... which disabled papists from purchasing land".[20] Upon consideration, however, he observed: "... yet the Court must not make such a determination, as will break in on former, or on that general rule established with great justice and tenderness in the law of England, that none shall be obliged to discover what may tend to subject him to a penalty, or that which is in the nature of penalty."[21] 209 Accordingly he refused to permit discovery directed to the question whether the person from whom the defendant had purchased his estate was a papist, which fact, if established, would have led to the forfeiture of his estate. He said: "... a purchaser is not to be hurt by discovery of a matter, that will tend to forfeiture of his estate, or be a loss in consequence of a penal law ." (emphasis supplied)[22] 210 The entrenchment of penalty privilege was reflected in early nineteenth century cases. It was clearly established that penalty privilege extended not merely to discovery of documents or interrogatories which would directly expose the defendant to a penalty, but also to discovery which might form a link in the chain of proof. In Paxton v Douglas (1809) 16 Ves. 239, 33 ER 975; 19 Ves. 225, 34 ER 502, the defendant objected to answering interrogatories on the ground that the answers may criminate him and subject him to forfeiture under the East India Company's Bye-Laws. The forfeiture complained of was twofold: disability in the nature of discharge from the Company's employ and pecuniary penalties. Lord Eldon LC upheld the right of the defendant not to answer the interrogatories saying: "In no stage of the proceedings in this Court can a party be compelled to answer any question, accuse himself, or anyone in a series of questions, that has a tendency to that effect: the rule in these cases being, that he is at liberty to protect himself against answering, not only the direct question, whether he did what was illegal, but every question, fairly appearing to be put with a view to drawing from him an answer, containing nothing to affect him, except as it is one link in a chain of proof that is to affect him ..." [23] 211 In the early nineteenth century, the breadth of the principle was seen in texts such as Maddock's A Treatise on the Principles and Practices of Chancery[24] which referred to the "general Rule that...no person can be compelled to give a Discovery that may subject him to a Prosecution for Felony...or to what may subject him to a penalty, and not merely what must; or any thing in the nature of a penalty or forfeiture of Interest". (emphasis in original). 212 In Orme v Crockford (1824) 13 Price 376 at 388-389; 147 ER 1022 at 1026, Alexander C.B.[25] allowed a general demurrer to a bill for discovery of money in aid of a qui tam action at law commenced by a common informer to recover treble the value of amounts won at play. In so doing he referred to the "most important right (of a person)...of protecting himself by refusing to answer, from the consequences of answering questions which might tend to charge him with a crime, or subject him to penalties, or forfeiture of estate contrary to the humane policy of the law". 213 In Green v Weaver (1827) 1 Sim. 402 at 430, 57 ER 630 at 640, Sir Anthony Hart V-C interpreted Lord Eldon LC's decision in Paxton v Douglas as meaning that "where the sole gist and object of the suit is to convict a man in a penalty, where there would be no other purpose but to have relief in a Court of Equity on the footing of penalty, that, as a Court of Equity does not relieve on penalty, it will not give incidental discovery." [26] 214 In Glynn v Houston (1836) 1 Keen 329 at 337, 48 ER 333 at 336 Lord Langdale MR emphasised that discovery would not be allowed where the defendant "...would be subject to penal consequences" irrespective of whether those consequences could arise "by indictment, information, impeachment or bill of pains and penalties".[27] He refused to permit discovery in aid of an action brought by the Plaintiff to recover damages for assault and false imprisonment because of the possibility the defendant could be the subject of a criminal charge.[28] 215 In Short v Mercier (1848) 2 De Ge & Sm 635, 64 ER 285 an objection to discovery on the basis that the answers would tend to subject the defendants to forfeitures and penalties imposed by the Stock-Jobbing Act (7 Geo.2.c.8) was allowed. The Act provided, in substance, that any stock-jobbing contracts were null and void and that all persons involved in the making of such contracts should forfeit and pay the sum of 500 pounds. On appeal, the Lord Chancellor, Lord Truro referred to penalty privilege as "[t]he principle of the law of England...that a man shall not be driven to give answers to matters that tend to criminate himself.[29] 216 In Phillipps & Arnold, Treatises on the Law of Evidence,[30] penalty privilege was broadly described as being a privilege "from answering a question, the answering of which might subject him to a penalty or forfeiture of any kind." (emphasis supplied) 217 The risk of loss of professional office was sufficiently penal to attract penalty privilege. In Nelme v Newton, noted as a footnote to Maccallum v Turton (1828) 2 Y. & J. 183, 148 ER 883 at 884, Lord Eldon LC upheld the disallowance of a bill for discovery of documents in partnership proceedings where the defendants objected to production on the basis that the defendants were exposed to the risk of being struck off the roll of notaries.[31] 218 In Scott v Miller (No 2) (1859) LJ. Ch 584, 70 ER 448, a defendant objected to a discovery order on the basis that the discovery would tend to show that he was liable to be struck off the roll and thereafter disabled from practising as an attorney or solicitor. Although the form of his answer was ruled to be insufficient to plead penalty privilege, Sir W Page Wood V-C, did not doubt that if the answer had been sufficient the defendant would be entitled to object to the discovery on the basis that disqualification from the roll of attorneys or solicitors would expose him to a penalty. 219 Contemporary texts in the late nineteenth century recognised penalty privilege as a principle of wide application. 220 In 1870, Daniell's Practice of the High Court of Chancery [32] described penalty privilege as: "...a general rule that no one is bound to answer so as to subject himself to punishment in whatever manner that punishment may arise, or whatever may be the nature of that punishment: whether it arises by Ecclesiastical Law, or by the law of the land, or the laws of a foreign country. This rule is not confined to cases in which the discovery must necessarily subject the defendant of pains and penalties, but it extends to cases where it may do so...It results from the principle...that a defendant is not bound to make any discovery which may tend to show himself to have been guilty of any moral turpitude, which may lay him open to proceedings in the Ecclesiastical or other Courts." 221 The first English edition of Mr Justice Story's Commentaries on Equity Jurisprudence[33] described penalty privilege in broad terms which reflected Lord Hardwicke LC's proposition concerning self accusation, as well as emphasising that the inquiry focussed upon the nature of the proceedings in which the question arose. Story wrote: "... the courts of equity will not allow discovery to aid the promotion or defence of any suit which is not purely of a civil nature. Thus, for example, they will not compel discovery in aid of a criminal prosecution; or of a penal action; or a suit in its nature partaking of such a character; or in a case involving moral turpitude; for it is against the genius of the common law to compel a party to accuse himself; and it is against the general principles of equity to aid in the enforcement of penalties or forfeitures." 222 A year later Bray was equally expansive, stating the principle in Principles and Practice of Discovery [34] in the following terms: "A party is not compelled to give discovery which will expose him to the risk of any kind of punishment, whether it be by way of pains or penalties or forfeiture ... no one is bound to answer so as to subject himself to punishment in whatever manner that punishment may arise or whatever may be the nature of the punishment ... whether by indictment information impeachment or by bill of pains and penalties ... whether by way of criminal prosecution ... or by way of payment of a penalty or anything in the nature of a penalty ... loss by a penal law ... or by way of forfeiture or something in the nature of a forfeiture ... whether to be enforced in equity or at law ... whether a forfeiture of a thing vested or a disability to take inflicted as a penalty ...It is a well known rule applying both to the examination of witnesses...and to interrogatories of defendants in equity, that no person is compellable to answer any question which has a tendency to expose him to a criminal charge, penalty or forfeiture." 223 In Martin v Treacher (1886) 16 QBD 507 a common informer sued the defendant for penalties under the Public Health Act 1875 for acting as a member of a local board without being duly qualified. He sought to administer interrogatories to establish the fact that the defendant was not duly qualified. He argued that the rules for interrogatories in Order XXXI in force after the enactment of the Judicature Act provided no limitation upon discovery. 224 The interrogatories were disallowed on the basis that the proceedings were for the recovery of a penalty and that the pre-Judicature Act principles allowing demurrers to discovery in aid of penalties continued to apply. Lord Esher MR explained the principle whereby courts would not allow discovery in actions brought for penalties on the basis that "although the penalty is not in strict law a criminal penalty, yet the action is in the nature of a criminal charge against the defendant." Harking back to Star Chambers days, he characterised the case as being: "...of a fishing character, the plaintiff first bringing his action and then seeking to obtain the necessary materials to support it by interrogating the defendant: and, the object of the action being to subject the defendant to a penalty in the nature of a criminal penalty, it would be monstrous that the plaintiff should be allowed to bring such an action on speculation, and, then admitting that he had not evidence to support it, to ask the defendant to supply such evidence out of his own mouth and so to criminate himself..."[35] 225 Lopes J articulated the principle in like terms, saying: "...the true principle is...when an action is brought the sole object of which is to enforce penalties, interrogatories cannot be administered, because the action is in the nature of a criminal proceeding , and in such a proceeding it would be monstrous and contrary to the policy of the law to compel the defendant before the trial to make admissions which would incriminate himself and practically decide the action against him." (emphasis supplied)[36] 226 Echoing Story's proposition that penalty privilege would be applied in any suit which was not purely of a civil nature, Lindley L.J. underlined the fact that the plaintiff was not seeking to enforce "any civil rights apart from...penalties". He held that the "well established principles of discovery ... extends to statutory penalties such as those now sued for."[37] 227 In Jones v Jones (1889) 22 QBD 425 at 428 in an action for treble damages under an Act, it was held that the plaintiff was not entitled to an affidavit of documents on the basis of penalty privilege which Lord Coleridge CJ described as a "salutary rule based on the soundest principles". Lord Coleridge also dealt with the manner in which the equitable principle prohibiting discovery in penal actions was adopted by the Courts of Common Law, saying: "Within my memory the power to compel discovery could only be exercised by the Court of Chancery. This was found highly inconvenient, and many years before the Judicature Acts the legislature conferred the power on the Courts of Common Law. In the exercise of the jurisdiction the rules of equity, though not absolutely binding, were accepted by the Courts of Common Law as their guide. In Pye v Butterfield 5 B. & S. 829; 34 L.J. (Q.B.) 17, a case in which the Court of Queens Bench after careful consideration refused to allow a plaintiff in ejectment to interrogate the defendant on the ground that his answers might subject him to forfeiture, Cockburn, C.J. expressed the solemn adhesion of the Court to the rules of equity on the subject of the application."[38] 228 The proposition that the question whether discovery should be given turned upon the nature of the action was affirmed in subsequent decisions. In T W Hobbs & Co v Hudson & Ors (1890) 25 QBD 232 at 233, Lord Esher M.R. applied Jones v Jones to hold that the question whether the plaintiff was entitled to administer interrogatories to the defendant in an action to recover double the value of goods fraudulently removed by one of the defendants turned on "whether this is a penal action." His Lordship observed that Martin v Treacher "was treated in the judgment of this Court as a penal action." Lindley L.J. was also of the view that the action was a penal one and, further, that the Act pursuant to which it was brought was "a penal statute".[39] Lopes L.J. was of the same view. [40] 229 In Earl of Mexborough v Whitwood Urban District Council (1897) 2 QB 111 at 114-115, Lord Esher MR described penalty privilege and the "similar rule" which applied to actions brought to enforce a forfeiture of an estate in land as being more than rules of procedure, and as being "well recognised rules which have existed from time immemorial." His Lordship elaborated upon his articulation of the basic principle in Martin v Treacher and emphasised that the privilege was not rooted in the privilege against self-incrimination, saying: "It has been argued that the reason why the Courts will not assist the plaintiff in an action for a penalty is that it is a criminal action. But it is not. There is no such thing as a criminal action. An action for a penalty is a civil action just as much as an action for a forfeiture. The rule by which a witness is protected from being called on to answer questions which may tend to criminate himself is often referred to in connection with this subject, but it has really nothing to do with the two rules to which I have referred. In an action for a penalty there can be no question of the defendant's being called on to criminate himself." 230 Lord Esher appeared to confine the principle he had articulated in Martin v Treacher to discovery in an action for a penalty by a common informer. In R v Associated Northern Collieries (1910) 11 CLR 738 at 743-4 Isaacs J rejected any such limitation. He said the judgments in Mexborough did not support a distinction between common informer cases and actions for penalties brought at the suit of the Crown representing the community. Such a distinction, his Honour observed, would be inconsistent with "a vast current of authority and precedent", referring to Smith v Read and Harrison v Southcote. 231 In Redfern v Redfern [1891] P 139 at 147, Bowen L.J. described as "one of the inveterate principles of English law 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." 232 In Re A Debtor [1910] 2 KB 59 at 65 - 66 the English Court of Appeal held that the petitioning creditor in a bankruptcy petition could not, before the hearing of the petition, obtain an order for interrogatories or discovery to prove the allegations in the petition. Fletcher Moulton L.J. (with whom Farwell, Buckley and Kennedy LL.J. agreed) referred to the principles by which discovery and interrogatories had been allowed in actions in the High Court as showing "that when the real issue is of a penal nature neither discovery nor interrogatories will be allowed." He described the bankruptcy order which the petitioner sought as being "in the highest degree penal in its consequences ... (and amounting) to loss of civil status carrying with it grave disqualifications...". Farwell L.J. agreed that "an adjudication of bankruptcy involves very grave disqualifications" imposed under s 32 of the Bankruptcy Act 1883. These disqualifications included the fact that a bankrupt could not sit in either House of Parliament or act as a justice of the peace, a mayor, a guardian of the poor or a select vestryman. Buckley L.J. agreed "on the ground that proceedings in bankruptcy are in the nature of penal proceedings in as much as they result or may result in the alteration of the debtor's status." 233 In Triplex Safety Glass Co Ltd v Lancegaye Safety Glass (1934) Ltd [1939] 2 K.B. 395 at 403, Du Parcq L.J who delivered the judgment of the Court, after extracting the passage from Redfern v Redfern I have set out above, said: "To the rule so stated there is no real exception, so far at least as discovery is concerned, and it is the paramount duty of the Court to uphold it." 234 The horrors of the Star Chamber which gave birth to penalty privilege have resonated well into the twentieth century. In the Court of Appeal's judgment in Re Westinghouse Uranium Contract [1978] AC 547 at 564 Lord Denning MR referred to the rationale of penalty privilege as being: "No person should be compelled to expose himself to pains or penalties out of his mouth. If he is to be penalised for wrong doing, it should be proved against him by those who accuse him." 235 His Lordship's words echo the rationale for penalty privilege articulated by Lord Hardwicke LC.[41] 236 The nature of a "penalty" was considered in Coogans v MacDonald [1954] SLT 279, albeit not in the context of penalty privilege. In Coogans the High Court of Justiciary held that disqualification from holding or obtaining a driving licence under the Road Traffic Act 1930 was a penalty within the meaning of the Seventh Schedule to the Criminal Justice (Scotland) Act 1949. Accordingly, a statutory notice apprising the accused of his liability to such disqualification in the event of conviction was a condition precedent to the power of the Court to impose such disqualification. In the course of his judgment Lord Justice-General Cooper considered the meaning of the word "penalty" as used in the Seventh Schedule. He said: "... I consider that the word 'penalty' falls to be read in a wide popular sense ... the late Mr Roberton Christie (The Encyclopaedia, Vol 11, page 204) said: 'Penalty in the broad sense may be defined as any suffering in person or property by way of forfeiture, deprivation or disability, imposed as a punishment by law or judicial authority in respect of ... an act prohibited by statute'. The Oxford Dictionary echoes the same wide conception by referring to 'a loss, disability or disadvantage of some kind ... fixed by law for some offence'. If ... that is the sense in which the Act for 1949 must be read, it necessarily follows that a disqualification from holding or applying for a licence imposed on conviction of an offence under the Road Traffic Act is a 'penalty' liability ... In every case the person against whom such an order is made must suffer at least a theoretical 'disability' ... and in the common case of a person who earns his living as a driver of motor vehicles, the disability is normally very grave, and is notoriously apprehended by many accused persons more keenly than a fine or even imprisonment. It is contrary to the letter and the spirit of the Act of 1949 that a person charged with a Road Traffic Act offence upon which disqualification may follow should be formally informed that he may be fined or imprisoned, but should not be informed that he may lose his driving licence."[42] 237 Lord Russell, who agreed in the Lord Justice-General's reasoning, also expressed the view that the word "penalty" in the Seventh Schedule "must reasonably be interpreted as including an order of Court disqualifying an accused person from holding or obtaining a licence to drive a motor vehicle."[43]

[89]

The Principle of Privilege against Self-Exposure to a Penalty in Australia 238 The application of penalty privilege in Australia has never been doubted. The principle as set out in Hare on Discovery, Pt. III, 100 was applied unhesitatingly by Sir G Innes, J in Proudfoot v Proctor (1887) 3 WN (NSW) 69 to deny discovery in an action to recover a penalty of 500 pounds pursuant to s 29 of the Constitution Act alleged to have been incurred by the defendant who had sat and voted as a member of the Assembly while disqualified, by reason of having been interested in a Government Contract. 239 In R v Associated Northern Collieries (1910) 11 CLR 738, Isaacs J held that the defendants to an action brought by the Crown to recover pecuniary penalties pursuant to ss 4 and 6 of the Australian Industries Preservation Act 1906 could resist an application for discovery on the basis of penalty privilege. He said: "The test whether an order for discovery can be made is whether the Court can see that the discovery may expose the party to a penalty or not. Very often that depends upon whether the action itself is a penal proceeding. It does not rest upon the fact that it is a civil action. An action is nonetheless civil merely because it is penal . 'Penal actions,' says Lord Mansfield in Atcheson v Everitt 1 Cowp, 382 at 391, 'were never yet put under the head of criminal law, or crimes.' That was an action of debt by way of penalty for bribery and Lord Mansfield said further: 'it is as much a civil action, as an action for money had and received.' So per Lord Esher M.R., in Mexborough (Earl) v Whitwood Urban District Council (1897) 2 QB 111, at p 115. But while this proceeding is made a civil action by sec. 13(1) of the Act it is nevertheless by the very terms of the same provision described as a proceeding for the recovery of pecuniary penalties, and so the matter turns on this:- 'Is the plaintiff in a civil action entitled to an order for discovery of documents?' There is an inherent distinction between a civil action to prevent or redress a civil injury on the one hand, and a civil action to recover a penalty on the other. In the latter case the whole and avowed object of the proceedings is the infliction of the penalty, and the discovery sought of documents relevant to the claim can therefore have no other intended consequence . ... The Court can see the effect of discovery from the nature of the proceeding . ... Lord Herschell in the Derby Corporation v Derbyshire County Council [1897] AC 550 at 552, said:-'Of course it is admitted that where a proceeding is one to enforce a penalty, or where a proceeding is ... of such a nature that it may result in a penalty - it is a penal proceeding.' "[44] (emphasis supplied) 240 After referring to Smith v Read and Harrison v Southcote Isaacs J pointed out: " Hare on Discovery (1836), p 131 says:- 'If the answer of the defendant 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 , the defendant will not be compelled to make the discovery. This is in accordance with what is cited in Mitford on Pleading ... and Daniell's Chancery Practice ..."[45](emphasis supplied) 241 It is clear that Isaacs J accepted that the question whether penalty privilege was attracted may depend upon the effect the proceedings may have on the defendant rather than merely the purpose for which they were brought. He concluded after a review of the authorities "[p]lainly then it is the result to the defendant, and not the personnel of the plaintiff, that affects the determination of the Court." He referred approvingly to In Re A Debtor [1910] 2 KB 59 at 66 where Fletcher Moulton L.J. said "When the real issue is of a penal nature neither discovery nor interrogatories will be allowed" and observed, without demur, that Fletcher Moulton L.J. had considered "the loss of civil status was a penal consequence, to which the rule applied."[46] 242 Finally, Isaacs J said: "Nothing short of distinct legislative provision to the contrary can overcome a principle so deeply rooted and consistently enforced, and as there is no such relevant provision, I must take the law as I find it."[47] 243 The High Court has consistently recognised and reinforced the importance of penalty privilege. In Naismith v McGovern (1953) 90 CLR 336 at 341 - 342 Williams, Webb, Kitto and Taylor JJ, in a joint judgment, said the principle applied "where the proceeding was of such a nature that it might result in a penalty or forfeiture." They referred approvingly to Isaacs J's judgment in R v Associated Northern Collieries. They accepted that proceedings pursuant to Part VII of the Income Tax and Social Services Contribution Assessment Act 1936 to recover pecuniary penalties were of a penal nature, even though the procedure by which the order was obtained was that applied to civil cases as required by s 237 of the Act. The Court held that while the plaintiff could not obtain an order for discovery or for interrogatories against the defendant, no like immunity was available to the plaintiff. 244 In Refrigerated Express Lines (A/Asia) Pty Limited v Australian Meat & Livestock Corporation Limited (1979) FLR 204 at 207 - 208, Deane J referred to the "well established principle that a defendant in proceedings which are solely for the recovery of a pecuniary penalty should not be ordered to disclose information or produce documents which may assist in establishing his liability to the penalty." He referred to penalty privilege as a "broad and unqualified rule". To the extent that his Honour appears to have limited the application of the principle to actions for the recovery of pecuniary penalties, the authorities to which I have already referred demonstrate that the privilege is not so confined. 245 In Pyneboard Pty Limited v Trade Practices Commission (1983) 152 CLR 328 Mason ACJ, Wilson and Dawson JJ, in their joint judgment said (at 335 - 336): "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, ecclesiastical censure' to use the words of Bowen L.J. in Redfern v Redfern ... see also Martin v Treacher , Earl of Mexborough v Whitwood Urban District Council ; R v Associated Northern Collieries . Indeed, in a civil action brought merely to establish a forfeiture or enforce a penalty the rule is that neither discovery or interrogatories will be allowed ( Re A Debtor ... Associated Northern Collieries )." 246 Their Honours also referred, with apparent approval, to Deane J's description in Refrigerated Express Lines (A/Asia) Pty Limited v Australian Meat and Livestock Corporation of penalty privilege as "a broad and unqualified rule".[48] They regarded penalty privilege as a reflection of the law of privilege, other aspects of which were the privileges against self-incrimination, against forfeiture and against ecclesiastical censure. [49] 247 In Taylor & Anor v Carmichael (1984) NSWLR 421, Rogers J, sitting in the Administrative Law Division, considered whether a party resisting proceedings in the nature of quo warranto in which orders ousting him from his office as Chairman of the State Rail Authority of New South Wales were sought, was entitled to immunity from discovery and interrogatories on the basis of penalty privilege. Rogers J referred to Honeywood v Selwin (1744) 3 Atk 276, 26 ER 961 as an illustration of the application of penalty privilege in a case involving forfeiture of office. He also referred to Re A Debtor as illustrating the width of the rule. He concluded that penalty privilege was available on the basis that "if successful the action brought by the plaintiffs ... would result in the first defendant losing an office of importance and dignity in the State (and) ... the privileges and monetary compensation which attend it."[50] 248 The appellants placed great weight on the decision in Police Service Board v Morris & Anor (1985) 156 CLR 397. They submitted that it was authority, binding upon this Court, that penalty privilege applied to disciplinary penalties including a reprimand, reduction in rank or dismissal from the Police Force. 249 In Morris the respondents who were members of the Victorian Police were charged with disobeying a lawful order contrary to regulation 95A(7) of the Police Regulations 1957 (Vic) as amended, in refusing to answer questions when ordered by an Inspector to do so during an inquiry into the performance of their duties. The respondents submitted that they had not been required to answer the questions as they had a tendency to expose them to the penalties for which the Police Regulations Act provided. They submitted they were protected by penalty privilege. If found guilty of the disciplinary offence with which they had been charged, the respondents were liable to be reprimanded, subjected to a pecuniary penalty, have their rank reduced or be dismissed from the force: s 88(5). 250 Gibbs CJ recognised the "obvious distinction between criminal offences and breaches of discipline" but held penalty privilege was attracted because: "...although the penalties provided by s.88 are disciplinary penalties, they are nonetheless penalties, and it is old law, confirmed by modern authority, that a person cannot be compelled to answer a question whenever the answer would tend to expose him to 'any kind of punishment' - 'anything in a nature of a penalty'."[51] 251 Wilson and Dawson JJ dealt with the matter briefly, agreeing with the Chief Justice, albeit in slightly different terms. Their Honours said: "The privilege is inherently capable of applying to a statutory provision which requires members of the Police Force to answer questions tending to show the commission by them of disciplinary offences."[52] 252 Brennan J's judgment assumed the availability of the privilege and dealt only with the question whether the relevant regulation demonstrated a legislative intention to exclude the privilege. He agreed with Gibbs CJ, Wilson and Dawson JJ that the necessary legislative intention was demonstrated. 253 Murphy J held that the privilege against self-incrimination was not available, because that privilege was one restricted to protection against self-exposure to criminal process.[53] 254 In Morris v Police Service Board [1983] 2 VR 357 at 359 in the Full Court of the Supreme Court of Victoria from which the appeal to the High Court was brought, Starke J was under no doubt that "depriving a man of his livelihood by dismissal seems to me to be a penalty of the most serious kind." Indeed, his Honour was of the view that "the most severe penalty which may be imposed on this disciplinary charge is dismissal from the Police Force."[54] Crockett J also regarded dismissal as involving the imposition of a penalty.[55] 255 In Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 at 518 - 519 Brennan J referred again to the history of penalty privilege, saying it was developed "by analogy with the privilege against self incrimination, the rule that 'a man is not obliged to accuse himself' being held to imply 'that he is not to discover a disability in himself': Smith v Read." Brennan J clearly regarded a penalty as being either pecuniary or non-corporal. He regarded penalty privilege as owing "its existence not to the law's historical protection of human dignity but to the limitation which the Courts placed on the exercise of their powers to compel a defendant in an action for the recovery of a penalty to furnish against himself the evidence needed to establish his liability." 256 In Daniels Corporation Pty Limited & Anor v Australian Competition & Consumer Commission (2003) 77 ALJR 40 the High Court considered the question whether s 155 of the Trade Practices Act 1974 (Cth) authorised the ACCC to require the production of documents to which legal professional privilege attached. In their joint judgment Gleeson CJ, Gaudron, Gummow and Hayne JJ described penalty privilege as: "...one of a trilogy of privileges that bear some similarity with the privilege against incrimination. The other two are the privilege against exposure to forfeiture and the privilege against exposure to ecclesiastical censure. The privilege against exposure to penalties and that against exposure to forfeiture had their origins in the rules of equity relating to discovery, but it is clear, as noted by Mason ACJ, Wilson and Dawson JJ in Pyneboard, that the privilege against exposure to penalties has long been recognised by the common law and is no longer simply a rule of equity relating to discovery."[56] 257 Later their Honours made the following observation: "Today the privilege against exposure to penalties serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it. However, there seems little, if any, reason why that privilege should be recognised outside judicial proceedings. Certainly, no decision of this Court says it should be so recognised, much less that it is a substantive rule of law. Further, it should now be accepted that, as the privilege against self-incrimination is not available to corporations, the privilege against exposure to penalties is, similarly, not available to them".[57]

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Disqualification Order Cases 258 As I have noted, ASIC submitted that penalty privilege was not attracted because the purpose of disqualification orders was to protect the public rather than to punish. ASIC adopted Austin J's analysis of the authorities said to support these propositions. 259 In his analysis of this line of authority, Austin J observed that the point that disqualification orders against directors of a company have a protective rather than a punitive purpose is usually made by way of guidance for the setting of an appropriate term of disqualification.[58] His Honour also observed that care must be taken in transposing remarks from the sentencing context into a context in which a classification must be made for the purposes of penalty privilege. Having cautioned himself in that respect, his Honour nevertheless concluded that such remarks had some utility.[59] 260 Austin J referred to Re Magna Alloys & Research Pty Limited (1975) 1 ACLR 203 at 205 where Bowen CJ in Eq, in considering the power conferred by s 122 of the Companies Act 1961 to give leave to a convicted person to be a director of and to take part in the management of companies said: "The policy to which section 122 gives effect is that a person convicted of an offence of any of the types specified in that section is not to be permitted to act as a director or to take part in a management of a company. The section is not punitive. It is designed to protect the public and to prevent the corporate structure from being used to the financial detriment of investors, shareholders, creditors and persons dealing with the company. In its operation it is calculated to act as a safeguard against the corporate structure being used ... in a manner contrary to commercial standards." 261 Austin J accepted that there were important differences between s 122 and s 206C, but regarded it as significant that Bowen CJ in Eq made a classification that was capable of extending to the disqualification orders currently available under the Corporations Act, because of their inherent nature as disqualification orders, notwithstanding the different context in which the occasion to make them arose.[60] 262 He rejected an argument that drew attention to the fact that s 122 of the 1961 Act had no effect unless the individual had been convicted and therefore was already the subject of a penalty. In such circumstances, the appellants had submitted, it was relatively easy to say that the purpose of a disqualification order was protective rather than punitive, in order to make the point that the application for leave did not provide an occasion for further punishment, but rather was an appropriate occasion to consider the question of public interest.[61] 263 Austin J also referred to Re Marsden (1981) 29 SASR 454, Re Harrison (1998) 81 FCR 436, CAC (WA) v Ekamper (1987) 12 ACLR 519, ASC v Donovan (1998) 28 ACSR 583, ASC v Forem Freeway Enterprises Pty Ltd (1999) 30 ACSR 339 and Re HIH Insurance Limited; ASIC v Adler (2002) 42 ACSR 80 all of which, in essence, support the proposition that disqualification orders are said to have a protective purpose. None of these cases concerned penalty privilege. 264 The first case in which Magna Alloys appears to have been referred to which concerned making a disqualification order was CAC (WA) v Ekamper (1987) 12 ACLR 519. Ekamper involved an application by the Commission for Corporate Affairs for an order pursuant to s 227A of the Companies (WA) Code to prohibit Mr Ekamper from being a director or promoter or in any way concerned in the management of a company for five years. The application was based on undisputed evidence that companies of which Mr Ekamper had been secretary had, over a period of some seven years, failed to lodge returns on six occasions under the Companies Act 1961 (WA) and twenty-seven occasions under the Code. Franklyn J referred to s 227A as achieving "the desired protection of companies, their shareholders, creditors, employees and the public dealing with them ... by ensuring compliance with the provisions of the relevant legislation ...".[62] No question arose as to whether a disqualification order might also have a punitive purpose. 265 The seminal authority in this area appears to be Re Altim Pty Limited [1968] 2 NSWR 762 in which Street J held that in considering whether leave ought be granted to an undischarged bankrupt to act as a director of a corporation pursuant to s 117(1) of the Companies Act 1961: "It should be borne in mind that the section is not in any sense a punishment of the bankrupt. Nor should a refusal to grant leave under that section be regarded as punitive. The prohibition is entirely protective, and the power of the Court to grant leave is to be exercised with this consideration in the forefront."[63] 266 His Honour applied that decision in his later judgment in Re Ferrari Furniture Co Pty Limited & The Companies Act [1972] 2 NSWLR 790 which is one of the authorities to which Bowen CJ referred in Re Magna Alloys. 267 The line of authority that disqualification orders are protective and not punitive is not unwavering. Even in the "sentencing" context, authority recognises that such orders may have more than one function. 268 In Commissioner for Corporate Affairs v Bracht [1989] VR 821 at 827 Ormiston J considered the proper interpretation of s 227 of the Companies (Victoria) Code which prohibited an "insolvent under an administration" from being a director or promoter of or being in any way concerned in or taking part in the management of a corporation. The penalty for a breach of s 227 was either a fine or imprisonment. It is not surprising, in those circumstances, that Ormiston J referred to s 227 and its predecessors as being "penal provisions". By the same token he also referred to s 227 and its predecessors as having been "viewed as primarily protective rather than penal and its purpose ... described as designed 'to protect the public from imprudent actions ... which could cause the public to suffer financial loss'". (emphasis supplied) 269 In Re HIH Insurance Limited; ASIC v Adler (2002) 42 ACSR 80 at 101 [60], Santow J remarked, in the context of considering the appropriate orders to be made for relief following findings of multiple contraventions of the Corporations Act, that it was "well settled ... that the primary purpose of the disqualification power is the protection of the public" (emphasis suppled). He added: "That its object is to protect the public, with its corollary of personal deterrence, does not mean that its aim should be punitive though personal deterrence is relevant". 270 In ASIC v Rich (2003) 44 ACSR 682 at 691 [26] after referring to Santow J's judgment in Re HIH Insurance Limited; ASIC v Adler and his Honour's proposition that a disqualification order had "a motive for personal deterrence, though it is not punitive", Bryson J said: "I must respectfully say that I find a distinction between motives of deterrence and a punitive motive as difficult, in practical terms impossible to sustain. The punitive impact of such an order must be recognised ; Courts apply punitive measures with care, avoid excessive measures and have regard to the circumstances of individuals. No one should be sacrificed to the public interest." (emphasis supplied)

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ASC v Kippe 271 Austin J regarded the full Federal Court's decision in ASC v Kippe (1996) 67 FCR 499 as having substantial significance as regards the proper classification of s 206C and s 206E.[64] 272 Kippe is the only case considered by Austin J in which the characterisation of a banning (director disqualification order) arose in the context of the admissibility of evidence. Not surprisingly ASIC relied upon Kippe, submitting that it was not materially distinguishable from the present case. The appellants submitted that Kippe was, in fact, distinguishable and, in any event, was wrongly decided. 273 The issue before the Full Federal Court in Kippe was whether a proceeding for a banning order under s 829 of the Corporations Law was properly characterised as a "proceeding for the imposition of a penalty" within the meaning of s 68(3)(b) of the Australian Securities Commission Act (1989) (Cth) (the "ASC Act")". 274 The facts in Kippe were within a short compass. A delegate of the Australian Securities Commission made a banning order pursuant to ss 829(f) and (g) and s 830 of the Corporations Law prohibiting Mr Kippe from doing an act as a representative of a dealer or an investment adviser for three years.[65] Mr Kippe sought a review of that decision.[66] A preliminary question arose as to whether statements Mr Kippe had made during a compulsory examination during which Mr Kippe had claimed privilege under s 68(2) of the ASC Act could be considered. Section 68(1) provided, relevantly, that it was not a reasonable excuse for a person to refuse or fail to give information, to sign a record or to produce a book in accordance with a requirement to do so on the basis that so acting "might tend to incriminate the person or make the person liable to a penalty". 275 Subsection 68(3) provided: "(3) The statement, or the fact that the person has signed the record, as the case may be, is not admissible in evidence against the person in: (a) a criminal proceeding; or

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(b) a proceeding for the imposition of a penalty;" 276 Mr Kippe argued that the proceedings for a banning order pursuant to s 829 were "a proceeding for the imposition of a penalty" and, therefore, the evidence he had given, under objection, was not admissible in evidence against him in the s 829 proceedings. Deputy President Forgie held that even though a banning order made under s 829 was not intended to be punitive, nevertheless it was the imposition of a penalty upon the person to whom it was directed.[67] Accordingly, a decision to make a banning order under s 829 was a proceeding for the imposition of a penalty within the meaning of subsection 68(3) of the ASC Act and the statements were not admissible in evidence against him in the Commission's consideration of whether it should make a banning order. 277 The Full Federal Court (von Doussa, Cooper & Tamberlin JJ) set aside the Tribunal's decision, concluding that a proceeding for the making of a banning order under s 829 was not a proceeding for the imposition of a penalty within subsection 68(3)(b) of the ASC Act. 278 Their Honours referred to what they described as the "well settled" distinction between "punitive" and "protective" statutory provisions. They cited as examples of this distinction Friend v Corporate Affairs Commission (1988) 7 ACLC 106 at 105, Story v National Companies & Securities Commission (1988) 13 NSWLR 661 at 685 - 686, Nicholas v Commissioner for Corporate Affairs (Vic) (1986) 5 ACLC 258 at 265 (affirmed on appeal in Nicholas v Commissioner for Corporate Affairs (Vic) [1988] VR 289), Flavel v Borrett & Haig (1991) 54 A Crim R 452 at 458 - 459 and Re Quinn & Australian Securities Commission (1994) 19 AAR 321 at 326 - 329.[68] 279 Critical to the decision was the Court's conclusion that a banning order was "not designed to punish or to impose a penalty on a person for an offence or contravention of any norm of conduct."[69] They regarded their conclusion that a s 829 order was not intended to be punitive as supported by the range of specified grounds which had to be established before a banning order was made. Some of these their Honours described as "standard non-blameworthy grounds, for example, becoming 'an insolvent under administration' and becoming 'incapable, through mental or physical incapacity of managing his or her affairs'." They were of the view that it could not be said "that the character of the subsection changes depending on the particular ground upon which the order is sought."[70] 280 It seems clear from this passage that their Honours accepted that some of the grounds upon which a banning order might be based were of a blameworthy nature, yet they concluded broadly that "the grounds set out in s 829 clearly point to the conclusion that it is properly characterised as protective."[71] 281 Their Honours also took into consideration the injunction in s 1(2)(b) of the ASC Act that the ASC was to strive "to maintain the confidence of investors in the securities markets and futures markets by ensuring adequate protection for such investors". Their Honours regarded this exhortation as indicating "that one of the underlying purposes of the Act is protective in nature." This, they concluded supported their conclusion that "s 68 is protective and preventive in nature".[72] 282 Finally, their Honours had regard to the fact that the "immediate and direct legal effect intended by a banning order is not to impose a penalty or impose a punishment on the person concerned, but to be preventative in that it removes a perceived threat to the public interest and to public confidence in the securities and futures industry by removing that person from participation therein."[73] This conclusion was reinforced by the fact that s 829 was found in chapter 7.3 of the Law, the section concerned with persons engaged in the securities industry. 283 None of the cases upon which the Full Federal Court relied to distil the distinction between "punitive" and "protective" statutory provisions dealt with the characterisation of proceedings involving a disqualification order in the context of penalty privilege. With the exception of Nicholas, to which I shall return, all were cases in which the statement that a disqualification or like order was protective rather than punitive arose either in the context of an application for leave to act as a director pursuant to s 562A of the Companies Code (Friend), the imposition of a disqualification order in the "sentencing" context (Storey) or observations about the nature of s 227 of the Companies (South Australia) Code (Flavel). Quinn (1994) 19 AAR 321 considered whether a permanent banning order pursuant to s 829 of the Corporations Law should be replaced by a ban for a specified period in the context that the purpose of such an order was "not to punish the applicant but rather to protect the public", citing in support Storey and also referring to Re Altim Pty Limited and the Companies Act [1968] 2 NSWR 762. 284 I agree with Spigelman CJ that Kippe is distinguishable. The Full Federal Court was not dealing with penalty privilege at common law, but with a statutory provision which directed the inquiry to the purpose of the proceedings. The history of penalty privilege to which I have referred makes it clear that, both at common law and in equity, the Court took a broad and substantive approach to determine whether discovery would subject an individual to a penalty or anything in the nature of a penalty. 285 Further, it is significant, in my view, that the Full Federal Court was careful to underline the fact that the banning order regime it was considering was not made in circumstances where the banning order was imposed as a "penalty for an offence or contravention of any norm of conduct." In contrast, however, the proceedings ASIC has brought against the appellants bear all the hallmarks of proceedings intended to impose a consequence on the appellants for a contravention of the civil penalty provisions identified in the Second Further Amended Statement of Claim. 286 As I noted earlier in this judgment, Wigmore stated that in considering whether a statute imposes a penalty "the judicial interpretation has always tended to liberality."[74] This clearly reflects the authorities. In Kippe, that tendency was constrained by the language of subsection 68(3)(b). 287 Contrary to ASIC's submission, in my view, Kippe is materially distinguishable from the present case. 288 It is not necessary in those circumstances to consider the appellants' submissions that Kippe was wrongly decided, a conclusion which, in most circumstances, this Court should be reluctant to entertain.[75]

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Retrospectivity Cases 289 ASIC submitted that the proposition that disqualification orders were protective rather than punitive was supported by cases dealing with the presumption against retrospectivity which applies in the case of penal statutes. 290 In R v Vine (1875) LR 10 QB 195 the Wine and Beer Amendment Act 1870 disqualified persons "convicted of felony ... from selling spirits by retail". The Court held that a person who had been convicted of felony before the passing of the Act was disqualified upon its enactment. Cockburn CJ said: "If one could see some reason for thinking that the intention of this enactment was merely to aggravate the punishment for felony by imposing this disqualification in addition, I should feel the force of Mr Poland's argument, founded on the rule which has obtained in putting a construction upon statutes - that when they are penal in their nature they are not to be construed retrospectively, if the language is capable of having a prospective effect given to it and is not necessarily retrospective. But here the object of the enactment is not to punish offenders but to protect the public against public houses in which spirits are retailed being kept by persons of doubtful character."[76] 291 He construed the Act as intended to operate retrospectively.[77] Archibald J also construed the legislation as intended to have retrospective operation. However, while he characterised the statute as "an enactment with regard to public and social order", he also recognised it had a penal quality but that the infliction of penalties was merely collateral.[78] 292 Lush J dissented. In his view the statute was "a highly penal...disabling and disqualifying enactment." He disagreed with the majority's view that the statute manifested an intention that it should operate retrospectively.[79] 293 R v Vine was not followed by the majority of the Court of Appeal in Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725. In Pulborough the Bankruptcy Act 1883 disqualified a debtor who "is adjudged bankrupt" from election to office of a school board. The Court held by majority (Lord Esher M.R. dissenting), that that section was not intended to operate retrospectively. Lopes L.J. described the disqualification as imposing "a new disability" upon the bankrupt. In his view if the disqualification provision operated retrospectively it would "impose new and penal consequences on bankruptcies already existing." His Lordship distinguished R v Vine on the basis of the difference between the language of the statutes under consideration, but also commented that he preferred Lush J's reasoning in dissent.[80] 294 Davey L.J. (who also distinguished R v Vine) said: "This Act is not a School Board Act but a Bankruptcy Act for the primary purpose of defining the liabilities and consequences of bankruptcy, and although the section in question is no doubt dictated by regard to the public interest, it does impose disabilities and consequences of a serious character once persons are adjudged bankrupt and is in that sense and to that extent a penal enactment."[81] 295 In his dissenting judgment, Lord Esher M.R. adopted the approach that the disqualification provision was "not penal within the meaning of the proposition, which states that a penal statute must be construed strictly." He described the disqualification provision as "intended solely for the protection of the public and, not by way of punishment." He applied the principle adopted in R v Vine that "if a statute creates disqualifications for the public good and not as a matter of punishment to the person disqualified, it should not be treated as penal so as to exclude its being construed retrospectively."[82] 296 In Re a Solicitor's Clerk [1957] 1 WLR 1219 the Divisional Court considered whether an Act amending the Solicitors Act 1941 to enable the Disciplinary Committee of the Law Society to make an order that no person should employ a clerk who had been convicted of larceny enabled the Committee to make such an order in relation to a person who had been convicted of larceny prior to the amendment. In rejecting the argument that the amending Act was retrospective the Lord Chief Justice said: "It enables an order to be made disqualifying a person acting as a Solicitor's Clerk in the future and what happened in the past is the cause or reason for the making of the order, but the order has no retrospective effect. It would be retrospective if the Act provided that anything done before the Act came into force or before the order was made should be void or voidable, or if a penalty was inflicted for having acted in this or any other capacity before the Act came into force or before the order was made. This Act simply enables a disqualification to be imposed for the future which in no way affects anything done by the appellant in the past."[83] 297 In Nicholas v Commissioner for Corporate Affairs [1988] VR 289 the Full Court of the Supreme Court of Victoria held that s 562A of the Companies (Victoria) Code which enabled the Corporate Affairs Commission of Victoria to prohibit a person from being a director or promoter or being in any way concerned in or taking part in the management of a corporation without the leave of the Court, was intended to protect the public interest by preventing persons who were unfit by virtue of past conduct from directing, promoting or managing the affairs of a corporation. The Court also held that the section did not impose penalties for conduct antecedent to its enactment. 298 Kaye J (with whom King J agreed) referred to R v Vine, Re Pulborough School Board; Bourke v Nutt as establishing that "a statute, the object of which is to protect the public interest by disqualification based on conduct antecedent to the enactment, does not fall within the principle of retrospectivity."[84] He construed s 562A as intended "to protect the public's interest by preventing persons, who by past conduct are unfit, from directing promoting or managing the affairs of a corporation."[85] 299 Fullagar J held that s 562A was clearly intended to operate retrospectively so that s 562A was "concerned with past history as an indication of present fitness" so that the "rule against retrospectivity" had no application.[86] He also regarded s 562A as "concerned with past history as an indication of present fitness and...with the protection of the public" so that it was not caught by the presumption against retrospectivity in the case of a penal statute.[87] 300 Both Kaye J and Fullagar J cited with approval the passage in Lush J's decision in Bakker v Stewart [1980] VR 17 at 21 in which his Honour distinguished Re a Solicitor's Clerk and R v Vine as cases which "were not concerned with the primary penalty for or the consequences of an act" but with "past history as an indication of present fitness". In Bakker, Lush J concluded that cancellation and disqualification provisions which were "part of the direct penalties for offences" were penal so that the section imposing them could not operate retrospectively.[88] 301 In La Macchia v Minister for Primary Industry (1986) 72 ALR 23 at 26 Toohey J (with whom Bowen CJ agreed) rejected a submission that a ministerial power pursuant to the Fisheries Act 1952 (Cth) to cancel a master fisherman's licence was a penal power which could not be exercised retrospectively. Although he recognised that cancellation imposed a hardship on the applicants by depriving them for a time of their ability to fish commercially, he characterised the cancellation power as "part of the scheme of the Act which seeks to control commercial fishermen in their fishing activities". He was careful to distinguish the power of cancellation from the penalty a Court of Petty Sessions may impose. French J viewed the provisions of the Act relating to the suspension and cancellation of licences as "of a protective character" and "a familiar feature of laws which regulate, in the public interest, the right to engage in particular occupations or to exploit certain classes of natural resources."[89] 302 ASIC also relied upon Antonelli v Secretary of State for Trade and Industry [1998] QB 948 at 957, where Beldam L.J. who delivered the judgment of the Court of Appeal, cited Lord Goddard CJ's observations in Re A Solicitor's Clerk with approval. Antonelli was concerned with whether the presumption against retrospectivity applied to prevent an estate agent who had been convicted of arson in 1973 in the United States from being disqualified from estate agency work under the Estate Agents Act 1979. The case was not decided by applying Re A Solicitor's Clerk. Rather Beldam L.J approached the issue of retrospectivity by reference to L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Company Limited [1994] 1 AC 486 at 524 - 525 where Lord Mustill emphasised that the basis of the presumption against retrospectivity "is no more than simple fairness, which ought to be the basis of every legal rule."[90] Significantly, Beldam L.J. recognised "that an order of disqualification from carrying on the practice of real estate agency is severe and could be a catastrophic hardship."[91] Taking into account the fact that the disqualification power was both discretionary and intended for the protection of the public, he concluded that Parliament would not have considered it unfair to impose a disqualification upon practitioners with prior convictions. 303 The retrospectivity cases should, in my view, be approached cautiously. First, none concerned penalty privilege. Secondly, none concerned the Part 9.4B - s 206C legislative scheme. Thirdly, each concerned the inference to be drawn from the statutes under consideration. In such circumstances I agree with McHugh J in Daniels Corporation International Pty Limited v Australian Competition & Consumer Commission (2002) 77 ALJR 40 at 51 [53] where his Honour said: "Judicial decisions on statutory terms "can never give more than guidance as to the meaning of the same terms in different statutes unless the statutes are not materially different in context, history and purpose". And a decision on a statute "is likely to be of even less assistance ... when the judicial decision turned on an inference or inferences drawn from the statute as a whole"." 304 Finally, in each case the relevant disqualifying condition applied to conduct which had been independently the subject of conviction and, presumably, criminal penalty. Bakker v Stewart and La Macchia v Minister for Primary Industry make a valuable distinction between disqualification provisions which might be said to operate at a secondary stage and those which form part of the primary penalty for or the consequences of an act. 305 This case falls into the category of a primary stage penalty. The principles in the retrospectivity cases do not apply.

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Disciplinary cases 306 ASIC also relied upon decisions dealing with disciplining legal practitioners stating that the purpose of disbarment was protection and not punishment as supporting the punitive/protective dichotomy. Austin J referred to two of these cases.[92] In the first, NSW Bar Association v Evatt (1968) 117 CLR 177 at 183-4, the High Court disagreed with the Supreme Court's observation that "[t]he exercise of its disciplinary powers was, to some extent, a punishment for wrong doing ..." and remarked: "The power of the Court to discipline a barrister is, however, entirely protective, and, notwithstanding that its exercise may involve a great deprivation to the person disciplined, there is no element of punishment involved." 307 These robust remarks have been qualified, if only slightly, by later statements of the High Court recognising that the "primary object of [disciplinary] proceedings is to protect members of the public from professional misconduct".[93] 308 The reality that disbarment will have a punitive effect was acknowledged in The Southern Law Society v Westbrook (1910) 10 CLR 609 both by O'Connor J referring to "disciplinary punishment" and the fact that "the punishment of striking a solicitor off the roll is a very serious one [involving] very serious consequences to him"[94] and by Isaacs J (at 625) who said, "[n]o doubt the severity of the Court, in repressing the misconduct of its officers, is felt as punishment... that is not the aim of the discipline."[95] 309 In the second case to which Austin J referred, Law Society of New South Wales v Foreman (No 2) (1994) 34 NSWLR 408 at 440 - 441, it is true that Mahoney JA referred to disciplinary proceedings and orders as being directed not to the punishment of the solicitor but the protection of the public. However, Kirby P acknowledged that the order meted out to the legal practitioner in disciplinary proceedings constitutes punishment in fact, saying: "It is true ... that the purpose of the orders made in cases of the present kind is not punitive. It is for the protection of the public. The fact remains that the consequences of the orders (certainly if orders by way of fine, suspension or removal from the Roll are made) will inescapably have a punitive consequence for the practitioner."[96] 310 In considering the utility of observations in disciplinary proceedings in a case concerning penalty privilege, it must be borne in mind that such proceedings are sui generis.[97] The power to discipline legal practitioners derives from the inherent jurisdiction of the Supreme Court to regulate its officers.[98] The Court's jurisdiction is exercised in "the interests of justice and its administration."[99] The Court is concerned to determine whether it is justified to hold the person out as a fit and proper person to be entrusted with the duties and responsibilities which belong to a legal practitioner.[100] 311 Indeed, in such proceedings where a prima facie case of misconduct has been made out and the legal practitioner has been called upon to show cause why he or she should not be dealt with, it is "irregular" for the practitioner "to lie by and engage in a battle of tactics."[101] 312 These observations demonstrate the special nature of disciplinary proceedings. They are not in the nature of proceedings brought by the State to enforce contraventions of statutes in which penalty privilege has been applied.

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Other ASIC Cases 313 The cases upon which ASIC relies in support of its submission that the essence of a penalty for the purposes of penalty privilege is that the order sought must have a punitive purpose do not, in my view, greatly advance the debate turning upon the particular context in which the question was considered. 314 Thus in Adams v Batley (1887) 18 QBD 625 a payment of not less than 40 shillings in respect of the performance of a musical composition without the consent of the author or the full amount of the benefit or advantage arising from such performance was held by Lord Esher MR (at 629) to be "treated in the Act as a payment by way of damages and not by way of penalty ... imposed not as a punishment upon the defendant, but as compensation to the plaintiff." As Spigelman CJ has noted, Adams v Batley was distinguished in Saunders v Wiel [1892] 2 QB 18 and 321 where a statutory provision providing for the forfeiture of a fixed sum for contravention of a copyright provision was held to constitute a penalty so as to attract penalty privilege. 315 In Brown v Great Eastern Railway Co (1887) 2 QBD 406 at 409 Lush J observed, in dicta, that the imposition of a fare greater than that appropriate for a train journey upon which a passenger who had failed to produce a ticket had travelled was "in the nature of a penalty or forfeiture ... [i]t is the exaction of a larger sum as a punishment for acts of commission or omission." 316 In Legione v Hateley (1983) 152 CLR 406 at 445, Mason and Deane JJ in a case concerning relief against forfeiture in a contractual setting, observed that: "A penalty, as its name suggests, is in the nature of a punishment for non-observance of a contractual stipulation; it consists of the imposition of an additional or different liability upon breach of the contractual stipulation." 317 I have already referred to Coogans where Lord Justice-General Cooper accepted that a penalty should be understood in its wide popular sense so as to refer to any forfeiture, deprivation or disability imposed as a punishment by law in respect of an act prohibited by statute. 318 It does not appear that Austin J was referred to Taylor v Carmichael, Re A Debtor or Coogans v MacDonald. Further, although his Honour referred to Police Service Board v Morris for the proposition that penalty privilege "applies to anything in the nature of [a] penalty", he did not deal with the significance of the fact that the disciplinary penalties in that case included reduction in rank or dismissal from the Police Service.[102]

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Consideration 319 The extract from Wigmore which I have set out earlier in this judgment makes clear that where a right of property was divested or a liability to pay money created by way of either retribution for misconduct or as a deterrent from misconduct, the effect was seen as "in spirit penal". Wigmore also highlighted the judicial interpretation in favour of a liberal interpretation of statutes where issues of penal liability were concerned and pointed out that, in any event, "where the loss of a right [was] inflicted by statute, there is a greater semblance of penal policy." 320 The eighteenth century cases to which I have referred tend to express penalty privilege as being attracted where the defendant was exposed to an order of a penal nature. By the late nineteenth century, however, the decisions in Martin v Treacher, Jones v Jones and Earl of Mexborough v Whitwood Urban District Council focussed the inquiry on the question whether the action was "in the nature of a criminal charge against the defendant" (Martin v Treacher, Earl of Mexborough v Whitwood Urban District Council) or "a penal action" (Jones v Jones). 321 Isaacs J, too, made it clear in R v Associated Northern Collieries that the relevant inquiry where a defendant objected to an order for discovery on the basis that the discovery may expose the party to a penalty was "whether the action itself is a penal proceeding." 322 In his compelling analysis in Trade Practices Commission v Abbco Iceworks Pty Limited (1994) 52 FCR 96 Burchett J (with whom Black CJ and Davies J agreed) demonstrated that penalty privilege and the privilege against self-incrimination were manifestations of the same core principle that no person should be obliged to accuse themself. The High Court has confirmed the contemporary relevance of that core principle in the continuing application of penalty privilege in Daniels Corporation International Pty Limited v Australian Competition & Consumer Commission (2002) 77 ALJR 40. 323 I turn then to consider the application of these principles to the Act.

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Statutory Construction 324 ASIC puts its case on the basis that the sole purpose of a s 206C disqualification order is protective. In my view that submission is not borne out by the proper construction of the statutory scheme in which s 206C orders find their place. 325 Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355 at 381, 384 [69] per McHugh, Gummow, Kirby and Hayne JJ dictates that the Act must be construed in the following manner: "[T]he primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole'...[78] The duty of the court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning."[103] 326 Regard may also be paid to extrinsic materials,[104] including the "legislative history and antecedent circumstances",[105] although resort to that history "all too rarely illuminates the meaning of the current provision."[106]

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The Purpose of the Civil Penalty Scheme 327 The legislative history of Part 9.4B and s 206C demonstrates clearly that the purpose of civil penalty provisions is to use disqualification orders as one of a range of penalties to regulate corporate officers' behaviour. 328 The Cooney Report regarded a disqualification order as an effective sanction, using that expression in my view in the sense of a negative sanction traditionally recognised as connoting punishment.[107] 329 The Public Exposure Draft to the Corporate Law Reform Bill 1992 which, by introducing Part 9.4B implemented the Cooney Report, made it clear that civil penalty orders were intended to have a deterrent effect, thus encapsulating one of the traditional purposes of punishment. This intention was made clear in the Corporate Law Reform Bill 1992, Second Reading Speech, to which I have earlier referred. 330 The Explanatory Memorandum to the CLERP Amendments in 1999 made it clear no substantive changes were effected to Part 9.4B. This is apparent from the form of the amendments, albeit that there was some re-arrangement of some provisions. Importantly, the fact that the s 206C disqualification order power was packed into Part 2D.6 with the other disqualification provisions does not detract from the conclusion that it operates as a penalty. It is, on its face, inextricably linked with the Part 9.4B scheme and, for that reason alone attracts singular characterisation in that Chapter. Textual Analysis 331 When the task with which the Court is engaged requires determining whether or not the proceedings involve the imposition of a penalty, it might be thought that the fact that the statutory provisions in respect of which ASIC seeks declarations of contravention are defined as "civil penalty provisions" would be regarded as demonstrating the legislature's intention. It is not surprising, therefore, that before Austin J the appellants contended that the statutory description, "civil penalty provisions", meant that an application for an order under Part 9.4B was necessarily an application for the imposition of a penalty so as to attract penalty privilege. 332 His Honour rejected that submission. In his view the expression "civil penalty provisions" was "used as a convenient designation of a number of provisions of the Act."[108] He concluded that the logical extension of the appellants' submission would be that proceedings for a compensation order brought by a corporation pursuant to s 1317H would then attract penalty privilege, even though such an application in his Honour's view was "quintessentially a civil proceeding not involving the imposition of a penalty." 333 I disagree with Austin J's approach to the significance to be attached to the legislature's use of the expression "civil penalty" in the Act. In an exercise which requires the identification of legislative intention, some might view as ironic the proposition that no weight is placed on the legislature's use of the precise term at the heart of the issue in the proceedings.[109] 334 This is particularly the case when the s 206C order at the heart of the controversy is defined in s 9 as a "civil penalty order". It does not appear that his Honour's attention was drawn to that definition. It is important, in my view, to take that definition into account in considering the characterisation of a disqualification order. Prima facie it indicates the legislature's intention that such an order should operate in a penal manner. The fact that that is achieved in proceedings characterised as "civil" or that the order is a "civil penalty order" is of no moment in the context of penalty privilege, as my earlier discussion of the principles makes plain. 335 I take into account the fact that in Adler and Anor v Australian Securities and Investments Commission (2003) 46 ACSR 504 at [658] - [659], Giles JA (with whom Mason P and Beazley JA agreed) appeared to distinguish pecuniary penalties obtained in Part 9.4B proceedings which he said "can fairly be regarded as punitive" from "a disqualification order made not punitively but protectively." His Honour's observation was not critical to the decision on the point under consideration in Adler. I do not regard it as binding me to conclude that a s 206C disqualification order is protective rather than punitive. Although Adler was decided 2 days before the argument in this case, ASIC did not submit that it is determinative of the outcome in this case. 336 In Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited (2003) 77 ALJR 1629, 201 ALR 1 at [2], Gleeson CJ observed that where the Customs Act 1901 and the Excise Act 1901 referred to "offences", "guilt", "conviction" and "punishment", "the legislative description of the conduct alleged, and of the orders which the appellant seeks, should be accepted at face value" so as to require the Chief Executive Officer of Customs to establish its case upon the criminal standard of beyond reasonable doubt. Gummow J also regarded the form in which the provisions were cast as significant, referring to the heading to Part XIII, "Penal Provisions", and the heading "Penalties" to Division 2, in which s 234 upon which the Chief Executive Officer of Customs relied.[110] 337 The textual approach taken by the Chief Justice has a respectable lineage. His Honour was paraphrasing McTiernan J's judgment in Mallan v Lee (1949) 80 CLR 198 at 217 - 218 where McTiernan J took the view that the Court should give a legislative definition describing a person as, in appropriate circumstances, being "guilty of an offence" its ordinary meaning as indicating the person had committed a crime. 338 Similarly in Richardson v Federal Commissioner of Taxation (1932) 48 CLR 192 at 214, Evatt J thought it appropriate to refer to the heading "Penal Provisions"[111] to Part VII of the Income Tax Assessment Act, as indicating that s 67 (which appeared in that Part) was a penal provision and the "additional tax" it imposed to be "an amount in the nature of a penalty."[112] 339 Applying the textual analysis to the Act supports the conclusion that proceedings for a declaration of contravention of a civil penalty provision in which a s 206C "civil penalty order" is sought are proceedings whose object is to inflict a penalty so as to attract penalty privilege. 340 I also disagree with Austin J's observations about the nature of proceedings for a compensation order pursuant to s 1317H. A compensation order may be made pursuant to that section where it is established that the person against whom the order is sought has contravened a corporation/scheme civil penalty provision in relation to the corporation seeking the order and that damage resulted from that contravention. A compensation order is a "civil penalty order": s 9. 341 The Act expressly requires a declaration of contravention to be made before a pecuniary penalty order or a disqualification order can be sought: s 1317G(1)(a) and s 206C(1)(a). ASIC may apply for a declaration of contravention: s 1317J(1). A corporation may intervene in an application for a declaration of contravention or a pecuniary penalty order in relation to the corporation, but it may not be heard on the question whether the declaration or pecuniary penalty order should be made: s 1317J(3).[113] A corporation may apply for a compensation order: s 1317J(2). 342 While the Act does not expressly require a declaration of contravention before a compensation order is made, it does require a finding that a person has contravened a corporation/scheme civil penalty provision in relation to the corporation seeking the order. Once a Court finds a civil penalty provision has been contravened, it must make a declaration of contravention: s 1317E(1). Thus, albeit indirectly, a declaration of contravention is a gateway to a s 1317H compensation order. 343 In my view, as will be apparent from the succeeding portions of this judgment, Part 9.4B proceedings are of a hybrid nature, displaying features found in both civil and criminal proceedings. I would not, therefore, classify s 1317H compensation order proceedings as "quintessentially a civil proceeding not involving the imposition of a penalty". While a compensation order appears to bear the classic traits of the outcome of civil proceedings, it is obtained in proceedings which depend upon a finding of a contravention of public law. It is not necessary, for the purposes of this judgment, to go further to consider the consequences of the position of s 1317H in the Part 9.4B matrix. I would note, however, that even if s 1317H proceedings did not involve the imposition of a penalty that would not preclude a defendant in those proceedings from objecting to giving discovery or providing witness statements if the result would be to provide evidence against that person which may be used as a "link in the chain" to establish that person's liability to a penalty in other proceedings: Refrigerated Express Lines (A/Asia) Pty Limited v Australian Meat and Livestock Corporation (1979) 42 FLR 204 at 207 - 208.

[99]

The Punitive/Protective Dichotomy 344 I accept the appellants' submission that the punitive/protective dichotomy insofar as penalty privilege is concerned, is a false one. In the context of Part 9.4B and s 206C in particular, it fails to give weight to the hybrid nature of the legislative scheme and disqualification orders. 345 In Gray v Motor Accident Commission (1998) 196 CLR 1 at 8 [16], Gleeson CJ, McHugh, Gummow and Hayne JJ referred to provisions such as Part 9.4B of the Act as denying "the existence of any 'sharp cleavage' between the criminal and the civil law." They also referred to the provisions made in legislation such as the Criminal Law (Sentencing) Act 1988 (SA), s 52 and Part 4, Div 1 of the Sentencing Act 1991 (Vict) enabling a judge at a criminal trial to order restitution or compensation to a person suffering loss or damage as a result of an offence as also denying the existence of that "sharp cleavage". This observation was made in the context of their Honours considering whether there was a real "tension between using civil proceedings to compensate a party who is wronged and using the same proceedings to punish the wrongdoer". 346 In Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited [2003] 77 ALJR 1629 at 1634 [29], Gummow J referred to the "dangers in enforcing a system of classification [of procedures] containing but two classes, civil and criminal." He referred to Frankfurter J's judgment in United States ex rel Marcus v Hess 317 US 537 at 554 (1943): "Punitive ends may be pursued in civil proceedings, and, conversely, the criminal process is frequently employed to attain remedial rather than punitive ends." 347 Kirby J also accepted "that statutory penalties exist that represent a kind of hybrid, lying somewhere between compensation, restitution or restoration (the usual business of civil process) and punishment and public denunciation (the usual business of criminal process)."[114] 348 Significantly, Hayne J (with whom Gleeson CJ and McHugh J agreed) said: "Arguments founded on classification of the proceedings as 'civil' or 'criminal' as determinative of the standard of proof must fail. ... The classification proposed is, at best, unstable. It seeks to divide the litigious world into only two parts when, in truth, that world is more complex and varied than such a classification acknowledges. There are proceedings with both civil and criminal characteristics: for example proceedings for a civil penalty under companies and trade practices legislation. The purposes of those proceedings include purposes of deterrence and the consequences can be large and punishing."[115] 349 ASIC relied upon passages in Heydon JA's judgment in Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at [264] and [306] to demonstrate that the perplexity Bryson J manifested in ASIC v Rich (2003) 44 ACSR 682 at 691 [26] was misplaced. Harris v Digital Pulse Pty Ltd concerned the question whether exemplary damages could be awarded in equity for breach of fiduciary duty. In the second passage relied upon, Heydon JA observed, in relation to the rules dealing with the manner in which dishonest fiduciaries are called to account for profits, "while it is true those rules have a deterrent and prophylactic function, like the whole regime applying to fiduciaries in a position of conflict of duty and interest or duty and duty, they are not penal in character." 350 I do not regard Heydon JA's observation as undermining the validity of Bryson J's quandary. Equity's approach to an account of profits brought to bear to resolve civil suits to enforce private rights has little to contribute to the characterisation of a statutory scheme devised to regulate directors who contravene statutorily imposed duties. Secondly, it is not surprising that equity with its abhorrence of penalties (which abhorrence was, at least in part, the rationale for penalty privilege) would shrink from being an instrument of punishment.[116] Thirdly, even Heydon JA acknowledged that the remedies of equitable compensation and account of profits could be seen as "penal" or "punitive", albeit not in the sense which would justify the imposition of damages which exceeded a compensatory/disgorgement amount.[117] 351 Just as the notion that a strict division of the litigious world into "civil" or "criminal" proceedings is too simplistic, so, too, in my view is the notion that a disqualification order may have only one protective purpose and that its penal quality will not suffice to attract penalty privilege. 352 The common law recognises that a legal sanction may fulfil one or a number of purposes. In The Gleaner Company Limited & Anor v Abrahams (Jamaica) [2003] 3 WLR 1038 at 1050 [41], the Privy Council, referring to what their Lordships described as an "entirely orthodox view of the dual function of compensatory damages" observed: "Ever since the distinction between compensatory and exemplary damages was formulated by Lord Devlin in Rookes v Barnard [1964] AC 1129 it has been recognised that compensatory damages may also have a punitive, deterrent or exemplary function. What distinguishes exemplary damages for the purpose of the Rookes v Barnard dichotomy is that they do not have a compensatory function." 353 Similar observations can be found in the context of criminal sanctions. Thus in Veen v The Queen [No. 2] (1988) 164 CLR 465 at 476 Mason CJ, Brennan, Dawson and Toohey JJ referred to the purposes of criminal punishment as being the "protection of society, deterrence of the offender and of others who might be tempted to offend, retribution and reform." 354 The point was expressed slightly differently in R v Cuthbert (1967) 86 WN (Pt. 1) (NSW) 272 at 274 where Herron CJ observed that the three fold purposes of punishment, retribution, deterrence and reformation, were "in reality ... but the means employed by the courts for the attainment of the single purpose of the protection of society."[118] 355 I accept that in Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 71 McHugh J said that while ordinarily detention imposed by statute would be "characterised as punitive in character, it cannot be so characterised if the purpose of the imprisonment is to achieve some legitimate non-punitive object." Brennan, Deane and Dawson JJ would have characterised the detention as punitive if it was not limited to what was reasonably capable of being seen as necessary for the purposes of deportation or to enable an entry permit to be sought.[119] 356 In Chu Kheng Lim v Minister for Immigration, the detention challenged was interim in nature, being detention pursuant to the Migration Act 1958 (Cth) pending deportation or the grant of an entry permit. It is clear from the joint judgment that if the interim detention had not been found to be incidental to the aliens power in s 51(xix) of the Constitution, it would have been characterised as punitive so as to contravene Ch. IIII's insistence that the judicial power of the Commonwealth, in this case to impose punishment, be vested in the courts.[120] 357 Here, while disqualification is sought in nominally civil proceedings, it is directed to inflicting a disability upon a person as a final order dependent upon the making of a declaration of contravention of a statutory provision: a model with significant similarities to the manner in which punishment is imposed in criminal proceedings. 358 It should be recalled that Wigmore defined "penalty" for the purpose of penalty privilege as "...a liability to pay money or to yield up a public privilege by way of punishment imposed by law."[121] 359 The Australian Law Reform Commission has drawn attention to the elasticity of the expression "penalty", pointing out that: "The term 'penalty' is generally defined as a punishment, commonly in the form of the payment of a sum of money, although caselaw states that the word 'is large enough to mean, is intended to mean, and does mean, any punishment, whether by imprisonment or otherwise': R v Smith (1862) Le & Ca 131, 138 CCR (Blackburn J). Traditionally a 'penalty' has been defined as a punishment meted out under the criminal law...In the legal context, 'punishment' has been defined as: The infliction of some pain, suffering, loss, disability, or other disadvantage on a person by another having legal authority to impose punishment."[122] 360 Coogans v MacDonald to which I have already referred also emphasises the breadth of the concept of a "penalty". To those observations I would add Field J's statement in United States v Chouteau 102 U.S. 603 at 611 (1880): "The term 'penalty' involves the idea of punishment, and its character is not changed by the mode in which it is inflicted, whether by a civil action or a criminal prosecution." 361 Several cases decided in the United States support the proposition that in proceedings which may lead to removal from office, the person liable to that consequence may not be compelled to give evidence on the basis of the privilege against self-incrimination. Thus, in United States v Collins 25 F. Cas. 545 at 549 - 550 (1873), a case decided in the Circuit Court in Georgia, Justice Bradley refused to compel a United States Marshall to testify on the basis that: "...where a charge of misconduct is made against an officer, whether amounting to an indictable offense, or only to his discredit as such officer, which might furnish grounds for his removal or impeachment, he is not bound to be a witness against himself. ... An inquisitorial examination, under oath, of a person charged with an offense, is repugnant to the principles of personal liberty, which are embodied in every fibre of the common law." 362 In Thruston v Clark 107 Cal. 285, 40 Pac. 435 (1895) in proceedings which were said to resemble a qui tam (common informer) action, the court refused to permit the defendant to be called as a witness in proceedings to remove him from his office as sheriff and to recover a monetary judgment against him on the basis of misconduct alleged to have occurred during his first term of office as sheriff. The Court took the view that removing the sheriff from his office would constitute a "punishment for wrongdoing" in proceedings which were regarded as "in body and spirit, in its aim and object, a process for the punishment of crime", so as to fall within the protection of the Fifth Amendment to the American Constitution prohibiting a person from being "compelled in any criminal case, to be a witness against himself."[123] 363 In Dougherty v Nagel 28 Idaho 302, 154 Pac. 375 (1915), the Court applied Boyd v the United States and Thruston v Clark to find that proceedings for the removal of public officials for collecting illegal fees for services rendered, while in form a civil action, were nevertheless in substance and effect a criminal prosecution protected by the constitutional privilege. 364 Acknowledging the difficulties of applying judicial decisions from the United States with its different constitutional framework,[124] these cases offer some guidance in their recognition of the proposition that removal from office constituted punishment sufficient to attract the Fifth Amendment privilege with which, of course, penalty privilege enjoys a similar genealogical base. They are consistent with the authorities I have already mentioned which have applied penalty privilege in cases of removal from office and dismissal. 365 In my view, the imposition of a disqualification order pursuant to s 206C on the appellants involves the imposition of a disability upon them and constitutes a penalty or is in the nature of a penalty so as to attract penalty privilege. The fact that one purpose of the order may be to protect the public does not detract from the conclusion that it is intended, and in fact operates, to punish. Veen and Cuthbert demonstrate that the fact that a sanction protects society does not detract from its punitive nature.

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The Jurisprudence of Civil Penalty Proceedings 366 Theorists support the thesis that civil penalty proceedings have a punitive purpose. Dr Mann uses the term "middleground" to describe the jurisprudence of punitive civil sanctions. According to him, "the middleground draws on the two basic paradigms that form the doctrinal basis for the entire field of sanctioning law: criminal law and civil law". The paradigm of criminal law is its punitive purpose, whereas civil law is distinguished by its focus on compensation, "...on damage rather than blameworthiness". "The middleground", according to Dr Mann, "draws on these two basic paradigms to form a hybrid jurisprudence in which the sanction's purpose is punishment, but its procedure is drawn primarily from the civil law."[125] 367 Both Ligertwood and McNicol take the view that civil actions for penalty "bear a close resemblance to (although they remain distinct from) criminal proceedings to punish offenders".[126] 368 Dr Mann's thesis is endorsed by the Australian Law Reform Commission which concluded that civil penalty provisions are "clearly founded on the notion of preventing or punishing public harm".[127] Gillooly and Wallace-Bruce define civil penalties as "punitive sanctions ...imposed otherwise than through the normal criminal process." They characterise such sanctions as a "convenient 'half way house'"[128] 369 According to the Australian Law Reform Commission, the civil penalty regime emerged in response to the work on regulatory enforcement undertaken by theorists such as Ayres & Braithwaite who advocated "an enforcement pyramid model described as a 'tit for tat' approach. Under this method, breaches of increasing seriousness are dealt with by sanctions of increasing severity, with the ultimate sanctions (such as imprisonment or loss of a licence to carry on business) held in reserve as a threat." Braithwaite described the revocation of the licence to do business as the final step in his enforcement pyramid.[129] 370 Civil penalty schemes such as Part 9.4B are criticised on the basis that wrapping sanctions in a civil, albeit regulatory, framework denies procedural protections available in criminal proceedings to defendants.[130] 371 In his article, Dr Mann criticised the early English and American judges and commentators who, he said, "adopted a language fraught with bipolar images of the law of sanctions ... (who) wrote about the 'criminal law' and 'civil law' in spite of the fact that middleground sanctions, such as punitive damages in tort, always existed."[131] This criticism reflects the remarks made in the High Court in Gray v Motor Accident Commission (1999) 196 CLR 1 at 8 and Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited (2003) 77 ALJR 1629, 201 ALR 1.

[101]

Abrogation of penalty privilege 372 Mr Walker S.C. informed the Court that as this appeal concerned the threshold question whether penalty privilege applied, the Court was not concerned with the question whether the Act had abrogated or modified the privilege. Mr Macfarlan Q.C. did not dispute that proposition. 373 I would, however, observe that Lord Hardwicke LC made it clear in Smith v Read that: "... where the legislature have intended discoveries of what is penal, they have put in clauses for that purpose ... " 374 Expressed in contemporary terms, Lord Hardwicke LC's injunction translates into the "general principle that a statue will not be construed to take away a common law right unless the legislative intent to do so clearly emerges, whether by express words or by necessary implication."[132] 375 ASIC did not submit that any such express intention or necessary implication could be found in the Act.

[102]

Conclusion 376 I do not doubt the force of the line of authority classifying disqualification orders as protective in nature. There are a number of reasons, however, why I do not regard that line of authority as having analogical application. 377 First, those cases were decided in a different statutory and factual context to the present. The legislative history I have recorded earlier in this judgment concerning disqualification order provisions demonstrates that although they are all now located in Chapter 2D.6, they were not introduced in a manner which would indicate a common legislative intention. 378 Further s 206C is expressly linked to Part 9.4B. That, too, serves to distinguish it from the other disqualification order provisions which have been the subject of the "disqualification orders as protection" line of authority. 379 The statutory scheme of which s 206C forms part bears all the hallmarks of a scheme intended to impose disqualification as a punishment, or a consequence in the nature of punishment, albeit in a civil framework. These features are sufficient to attract penalty privilege. Although structured as a civil case both in terms of the procedures to be applied (s 1317L) and the onus of proof (s 1332), the proceedings are, in effect brought by the State and "accuse" the defendant of a contravention of a public law - just as, in the criminal context the defendant is accused of a breach of a statute. The civil penalty scheme pivots around the declaration of contravention which operates in the same sense as a finding of guilt and leads, in turn, to the imposition of one or other of the available civil penalty orders. It is not a suit which is purely of a civil nature. 380 Secondly, with the exception of Kippe (which I have already said is distinguishable) the observations about the protective nature of a disqualification order were made in a different factual context, when there was no question about the mode of proving a contravention, but only the order to be made following a proven circumstance. In Magna Alloys and other cases considering the grant of leave to act as director, the cancellation and disqualification provisions were not part of the direct penalties for the relevant offence: cf Bakker v Stewart and La Macchia v Minister for Primary Industries. 381 Thirdly, even in the "sentencing" cases, the deterrent and punitive quality of a disqualification order have been recognised: ASC v Donovan (1998) 28 ACSR 583 at 606; Re HIH Insurance Limited; ASIC v Adler (2002) 42 ACSR 80 at 801; ASIC v Rich (2003) 44 ACSR 682 at 691 [26]. 382 I note Spigelman CJ's concern that the disqualification order cases upon which ASIC and Austin J relied constitute a formidable body of judicial statements which would have been relied upon by the drafters of the corporations legislation. 383 In my view, however, the history of Part 9.4B and the insertion of s 206C indicate a legislative intention that the disqualification order operate by way of punishment, even if, like most punishments, it may also have a protective purpose. This manifestation is sufficient to displace an inference that the legislature relied upon an assumption that a Part 9.4B disqualification order would be perceived to be protective. 384 Secondly, the "circumstance that Parliament (or a drafter) assumed that the antecedent law differed from the law as the Court finds it to be is not a reason for the Court refusing to give effect to the law."[133] 385 Thirdly, the weight of authority concerning penalty privilege indicates that it is a vigorous principle which looks to the substance of the relief sought in the proceedings. As Lord Hardwicke said in Smith v Read, "a person shall not be obliged to discover what will subject him to a penalty, or anything in the nature of a penalty." Even the line of disqualification order cases upon which Austin J and the Chief Justice rely acknowledge, at times, the serious consequences which a disqualification order can have on its subject. When a Court is focussed on the question whether an enduring principle like penalty privilege should be applied, the fact that the order sought can, even if only at one level, operate "in the nature of a penalty" is sufficient in my view to displace any inferred legislative assumption. 386 Finally, I also accept the appellants' submission that Police Service Board v Morris & Anor (1985) 156 CLR 397 is powerful authority binding on this Court that a loss of office, in this case being disabled from acting as a director, attracts penalty privilege. The historical analysis I have undertaken of authorities dealing with penalty privilege demonstrates that the principle was invariably applied in cases where one of the orders sought would disable a person from carrying on a profession or holding an office. I see no distinction between the loss of such offices and disabling a person from acting as a director. 387 In my opinion the argument ASIC advances relies upon distinctions and descends to subtleties which are inappropriate when the Court is called upon to apply the "broad and unqualified"[134] rule of penalty privilege to which "there is no real exception, so far at least as discovery is concerned, and [which] it is the paramount duty of the Court to uphold".[135] 388 In my view, the appellants' contention that the disqualification orders ASIC seeks pursuant to s 206C of the Act are in the nature of a penalty sufficient to attract penalty privilege should be upheld.

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Notice of Contention 389 ASIC filed a Notice of Contention. It submitted that the Court should, in any event, dismiss the appeal against so much of Austin J's decision as granted ASIC's application for an order that the appellants file and serve witness statements in advance of the hearing. ASIC submitted that Austin J should have followed the unanimous decision of the Victorian Court of Appeal in Sidebottom & Anor v Commissioner of Taxation (2003) 173 FLR 335 which concluded that such a direction did not infringe penalty privilege. 390 The appellants noted, in reply, that since ASIC's submissions on the Notice of Contention were filed, the Full Federal Court had rejected the reasoning in Sidebottom in Australian Securities & Investments Commission v FFE Building Services Limited (2003) ATPR ¶41-938. In FFE Building Services Limited the Full Federal Court (Emmett, Hely and Jacobson JJ) held that an individual respondent in proceedings for recovery of a penalty under s 76(1) of the Trade Practices Act 1974 (Cth) could not be directed to file and serve statements of the evidence proposed to be given by his proposed witnesses prior to the close of the ACCC's case. It did so on the basis that such respondents were protected by penalty privilege. The Court preferred the decision of Sackville J in Australian Competition & Consumer Commission v Amcor Printing Papers Group Limited (1999) 163 ALR 465 to the reasoning of the Victorian Court of Appeal in Sidebottom. 391 ASIC relied upon Sidebottom before Austin J. His Honour was of the view that if it was necessary to decide the point, Sackville J's reasoning in Amcor was compelling. He found it unnecessary, however, to decide between the two approaches in Sidebottom and Amcor because of his view that the present case was not a case for the imposition of a penalty.[136] 392 I, too, find the reasoning of Sackville J in Amcor and the Full Federal Court's decision in ACCC v FFE Building Services Limited compelling. 393 I would, therefore, not uphold ASIC's Notice of Contention.

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Orders 394 In my view the appeal should be allowed and Austin J's orders of 30 April 2003 set aside. * * * * * * 1 Throughout this judgment I shall use the expression "penalty privilege" to refer to the more compendious "privilege against exposure to a civil penalty": see Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 per Mason CJ and Toohey J at 505, Brennan J at 519 and McHugh J at 547. 2 Police Service Board v Morris & Anor (1985) 156 CLR 397 at 403. 3 The provisions conventionally prohibit the person from being/acting as director of, or directly or indirectly taking part in the management of a company or being a promoter of a company. For brevity I shall refer merely to the disqualification as director, which reference should be understood to pick up the full range of proscribed conduct. 4 As the disqualification is imposed in such cases by operation of law upon the happening of specified events, parliament conferred the leave to act power upon the court to enable it to ameliorate the substantial hardship which flowed from the arbitrary provisions: Chew v National Companies & Securities Commission (No 2) [1985] WAR 337 at 339. 5 Ford's Principles of Corporations Law, at [2.210]. 6 Then the Corporate Affairs Commission of each State and Territory. 7 Cooney Report, para 2.22. 8 Ibid at paras 5.57, 13.15. 9 Corporate Law Reform Bill 1992, Second Reading Speech, House of Representatives, 3 November 1992, Hansard at p 2400ff. 10 Corporate Law Reform Bill 1992, Second Reading Speech, supra. 11 The Public Exposure Draft sought comments on the Corporate Law Reform Bill 1992 on behalf of the Commonwealth Attorney-General. 12 Corporate Law Reform Bill 1992, Second Reading Speech, House of Representatives, 3 November 1992, Hansard at p 2400. 13 Corporate Law Reform Bill 1992, Explanatory Memorandum, p 20. 14 The requirement that the standard of proof be on the balance of probabilities save in proceedings for an offence first appeared in Australian corporations legislation in s 38B of the Companies and Securities (Interpretation and Miscellaneous Provisions) Act 1980. 15 8 Wigmore on Evidence (McNaughton rev. (1961)) at 334-7. 16 10 Howell's State Trials (UK) 1090 at [17]. 17 This principle was applied in The King v Lord George Gordon (1781) 2 Doug. 593, 99 ER 374 where the Court ruled that a witness was not obliged to answer a question whether he was a Roman Catholic "because if he were to say he was, his declaration would be evidence against him, and might subject him to penalty." 18 In Hambrook v Smith (1852) 17 Sim. 209 at 217, 60 ER 1109 at 1112. Kindersley V-C, suggested that Monnins v Monnins had been overruled. He held that a defendant could not object to discovery on the basis that it might expose him to forfeiture where he was only required to give discovery of the happening of an event on which an estate would determine. 19 Brownsword v Edwards (1751) 2 Ves. Sen 243 at 245, 28 ER 157 at 158. 20 Holdsworth, A History of English Law, Methuen & Co. Limited, London, Vol XII at 281. Smith v Read and Harrison v Southcote & Anor were both cases which turned upon the statute: ibid. 21 Harrison v Southcote & Moreland (1751) 2 Ves. 389 at 394, 28 ER 249 at 252. 22 Harrison v Southcote & Moreland (1751) 2 Ves. 389 at 395, 28 ER 249 at 252. 23 Paxton v Douglas (1809) 16 Ves. 239, 33 ER 975; 19 Ves. 225 at 228, 34 ER 503. The analogous principle that a person may not be compelled in civil proceedings to make a disclosure which may lead to incrimination or discovery of real evidence of an incriminatory character which might be used in criminal proceedings was recently discussed in Griffin v Sogelease Australia Limited & Ors [2003] NSWCA 158; to be reported as (2003) 57 NSWLR 257. 24 Second edition, 1820 at 214; Mitford, A Treatise on the Pleadings in Suits in the Court of Chancery, Fifth edition, 1847, at 229-230 describes the "general rule" in substantially the same terms as Maddock. 25 Lord Esher M.R. described Alexander C.B. as "a judge who had more knowledge of equity than common law judges usually had at that time": Martin v Treacher (1886) 16 QBD 507 at 511. 26 That interpretation of Lord Eldon's view is borne out by his Lordship's observation in Parkhurst v Lowten (1819) 2 Swans 197 at 202, 36 ER 589 at 591, " ... he is not bound to answer any one question among many, which, as a link, has a tendency to subject him to a penalty" adding (at 214, 595) "... it has been for ages a principle of British jurisprudence, and I hope it will continue so as long as the law continues, that no man shall be called on in a court of justice to accuse himself of an offence." 27 A bill of pains and penalties was a "law...which [punished an] individual...without the procedural safeguards involved in a judicial trial." Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 69 - 70 per McHugh J. The Laws of Australia, Ch. 21. Human Rights, section 21.6, Justice at [10] footnote 3 states: "Strictly speaking, a bill of attainder attaches the penalty of death while a bill of pains and penalties attaches punishments other than death. The term `bill of attainder' is, however, commonly used to encompass both. In Polyukhovich v Commonwealth (War Crimes Act Case) (1991) 172 CLR 501 at 535 Mason CJ described a bill of attainder as "a legislative enactment adjudging a specific person or specific persons guilty of an offence constituted by past conduct and imposing punishment in respect of that offence''. In Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 70 McHugh J assimilated the notions of bills of attainder and bills of pain and penalties. 28 In E L Bell Packaging Pty Limited v Allied Seafoods Limited & Ors (1990) 4 ACSR 85 at 94, Murphy J dismissed the possibility that the fact that the defendant in Glynn's case was the Governor of Gibraltar, Lieutenant-General Sir William Houston, at the time of the alleged assault contributed to make the case special. 29 Short v Mercier (1851) 20 L.J. Ch. 289 at 290. 30 Rayner and Hodges, 1852 at 492. 31 In Maccallum v Turton itself, Alexander LCB (at 195, 888) applied Paxton v Douglas to allow a demurrer to a bill for discovery where the answers might be "links in the chain of proof" in a reasonably probable indictment of fraud against the defendant; See also Swift v Swift (1832) 4 Hagg 139 at 154, 162 ER 1399 at 1404. 32 Stevens and Sons, Fifth edition, 1870 at 482-3. 33 Stevens and Haynes, 1884 at 1021, s 1494. 34 Reeves and Turner, 1885 at 313-314. 35 Martin v Treacher (1886) 16 QBD 507 at 511-512. 36 Martin v Treacher (1886) 16 QBD 507 at 514. 37 Martin v Treacher (1886) 16 QBD 507 at 512 - 513. 38 Cf Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 per McHugh J at 547. 39 T W Hobbs & Co v Hudson & Ors (1890) 25 QBD 232 at 234. 40 T W Hobbs & Co v Hudson & Ors (1890) 25 QBD 232 at 234. 41 Roskill L.J. agreed (at 570) with what Lord Denning MR said about penalty privilege. Shaw L.J. (at 571) agreed with both Lord Denning MR and Roskill L.J. All members of the House of Lords agreed with what the Court of Appeal said on the issue of penalties: see Lord Wilberforce at 612, Viscount Dilhorne at 628, Lord Diplock at 637 and Lord Fraser of Tullybelton at 647. 42 Coogans v MacDonald [1954] SLT 279 at 281. 43 Coogans v MacDonald [1954] SLT 279 at 282. 44 R v Associated Northern Collieries (1910) 11 CLR 738 at 742 - 743. 45 R v Associated Northern Collieries (1910) 11 CLR 738 at 744. 46 R v Associated Northern Collieries (1910) 11 CLR 738 at 747. 47 R v Associated Northern Collieries (1910) 11 CLR 738 at 748. 48 Refrigerated Express Lines (A/Asia) Pty Limited v Australian Meat & Livestock Corporation Limited (1979) FLR 204 at 208. 49 Pyneboard (1983) 152 CLR 328 at 336. 50 Taylor & Anor v Carmichael (1984) NSWLR 421 at 427. 51 Police Service Board v Morris & Anor (1985) 156 CLR 397 at 403. 52 Police Service Board v Morris & Anor (1985) 156 CLR 397 at 408. 53 Police Service Board v Morris & Anor (1985) 156 CLR 397 at 406 - 407. 54 Morris v Police Service Board [1983] 2 VR 357 at 357. 55 Morris v Police Service Board [1983] 2 VR 357 at 365. 56 Daniels Corporation Pty Limited & Anor v Australian Competition & Consumer Commission (2003) 77 ALJR 40 at 43 [13]. 57 Daniels Corporation Pty Limited & Anor v Australian Competition & Consumer Commission (2003) 77 ALJR 40 at 47 [31]. Statements to the effect that penalty privilege applies outside judicial proceedings can be found both in Pyneboard (1983) 152 CLR 328 at 341, cf Murphy J at 346 and in McHugh J's judgment in EPA v Caltex Refining Co Pty. Ltd. (1993) 178 CLR 477 at 547; cf Sorby v The Commonwealth (1983) 152 CLR 281 at 319 per Brennan J; Daniels Corporation Pty Limited & Anor v Australian Competition & Consumer Commission (2003) 77 ALJR 40 at 47 [31] per Gleeson CJ, Gaudron, Gummow and Hayne JJ. 58 ASIC v Rich , Austin J (2003) 45 ACSR 305 at [31]. 59 ASIC v Rich (2003) 45 ACSR 305 at [32]. 60 ASIC v Rich (2003) 45 ACSR 305 at [34]. 61 Ibid. 62 CAC (WA) v Ekamper (1987) 12 ACLR 519 at 526. 63 Re Altim Pty Limited [1968] 2 NSWR 762 at 764. 64 ASIC v Rich (2003) 45 ACSR 305 at [41]. 65 Section 829 empowered the Commission to make a banning order pursuant to s 830(1) prohibiting a natural person (other than a licensee) from doing an act as a representative of a dealer; a representative of an investment adviser; or a representative of a dealer or of an investment adviser; if: (a) he or she becomes an insolvent under administration; (b) he or she is convicted of serious fraud; (c) he or she becomes incapable, through mental or physical incapacity, of managing his or her affairs; (d) he or she contravenes a securities law; (e) the Commission has reason to believe that he or she is not of good fame and character; (f) the Commission has reason to believe that he or she has not performed efficiently, honestly and fairly the duties of: (i) a representative of a dealer; or (ii) a representative of an investment adviser; or (g) the Commission has reason to believe that he or she will not perform efficiently, honestly and fairly the duties of: (i) a representative of a dealer; or (ii) a representative of an investment adviser. 66 The facts are set out in the decision of Deputy President Forgie in the Administrative Appeals Tribunal in Re Kippe & Australian Securities Commission (1995) 19 ACSR 296. 67 Re Kippe & Australian Securities Commission (1995) 19 ACSR 296 at 315 [91]. 68 ASC v Kippe (1996) 67 FCR 499 at 506. 69 ASC v Kippe (1996) 67 FCR 499 at 508. 70 ASC v Kippe (1996) 67 FCR 499 at 508. 71 ASC v Kippe (1996) 67 FCR 499 at 508. 72 ASC v Kippe (1996) 67 FCR 499 at 508. 73 ASC v Kippe (1996) 67 FCR 499 at 508. 74 8 Wigmore on Evidence (McNaughton rev. (1961)) at 334, s2256. 75 Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485 at 492. 76 R v Vine (1875) LR 10 QB 195 at 199. 77 R v Vine (1875) LR 10 QB 195 at 200. 78 R v Vine (1875) LR 10 QB 195 at 202. 79 R v Vine (1875) LR 10 QB 195 at 201. 80 Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725 at 738 - 739. 81 Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725 at 741. 82 Re Pulborough School Board; Bourke v Nutt [1894] 1 QB 725 at 733 - 734. 83 Re a Solicitor's Clerk [1957] 1 WLR 1219 at 1222. 84 Nicholas v Commissioner for Corporate Affairs [1998] VR 289 at 297. 85 Nicholas v Commissioner for Corporate Affairs [1998] VR 289 at 299. 86 Nicholas v Commissioner for Corporate Affairs [1998] VR 289 at 301. 87 Nicholas v Commissioner for Corporate Affairs [1998] VR 289 at 304. 88 Bakker v Stewart [1980] VR 17 at 23. 89 La Macchia v Minister for Primary Industry (1986) 72 ALR 23 at 31 per French J. 90 Lord Mustill's observation was recently referred to with approval by Lord Hoffmann (with whom Lord Cooke of Thorndon, Lord Hutton and Lord Scott of Foscote agreed) in Government of the United States of America v Montgomery & Anor [2001] UKHL 3, [2001] 1 All ER 185, [2001] 1 WLR 196 (at 30). His Lordship also referred to Welch v United Kingdom (1995) 20 EHRR 247, a decision of the European Court of Human Rights which decided that the application of the power to make a confiscation order in respect of an offence committed before Part VI of the Criminal Justice Act (1988) offended against the prohibition on retrospective offences in article 7 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. 91 Antonelli v Secretary of State for Trade and Industry [1998] QB 948 at 959 per Beldam L.J. 92 ASIC v Rich & Ors (2003) 45 ACSR 305 at [48] - [49]. 93 Walter v Council of Queensland Law Society Incorporated (1988) 62 ALJR 153 at 157, 77 ALR 228 at 235, Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 251; Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 at 270 per Deane J. 94 The Southern Law Society v Westbrook (1910) 10 CLR 609 at 620, 622 per O'Connor J. 95 The Southern Law Society v Westbrook (1910) 10 CLR 609 at 625 per Isaacs J. 96 Law Society of New South Wales v Foreman (No 2) (1994) 34 NSWLR 408 at 413. 97 Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 250. 98 Section 171M of the Legal Profession Act 1987 (NSW) preserves the inherent power or jurisdiction of the Supreme Court with respect to the discipline of legal practitioners. 99 Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 250. 100 The Southern Law Society v Westbrook (1910) 10 CLR 609 per Griffith C.J. at 612, O'Connor J at 619, Higgins J at 627. 101 Re Veron; ex parte Law Society of New South Wales [1966] 1 NSWR 511 at 515. The unique and protective nature of disciplinary proceedings was recognised in Walton v Gardiner (1993) 177 CLR 378 at 396 per Mason CJ, Deane and Dawson JJ; R v Davis (1995) 81 A Crim R 156 at 162 and Dr SS v Health Care Complaints Commission and Another [2002] NSWCA 391 at [24] - [26] per Stein JA with whom Sheller and Heydon JJA agreed. 102 ASIC v Rich (2003) 45 ACSR 305 at [20]. 103 See also Kingston v Keprose Pty Ltd (No 3) (1987) 11 NSWLR 404 per McHugh JA at 421-4 referred to with approval in Bropho v Western Australia, supra, at 20. 104 Bropho v Western Australia (1990) 171 CLR 1 at 20. 105 Risk v Northern Territory of Australia and Another (2002) 76 ALJR 845 per Gummow J at [83]; Geaghan v D'Aubert (2002) 36 MVR 542 per Stein JA (Handley JA and Foster AJA agreeing) at [22]-[23]. 106 Beckwith v R (1976) 135 CLR 569 per Mason J at 578. 107 See Arie Freiberg, "Reconceptualizing Sanctions" (1987) 25 Criminology 223 especially at 225, 232, 235, 239 and 242. 108 ASIC v Rich & Ors (2003) 45 ACSR 305 at [7]. 109 Although argument is not reinforced by the weight of numbers, I note that Part 9.4B is headed "Civil consequences of contravening civil penalty provisions." The heading is deemed to be to be part of the Act: s 13(1) Acts Interpretation Act 1901 (Cth). 110 Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited (2003) 77 ALJR 1629, 201 ALR 1 at [14], [24] and [32]. 111 The heading to Part VII can be found in the summary of the submissions of the Attorney-General for Victoria, Robert Menzies at 199. 112 Referred to with approval by Fullagar J in Re Dymond (No 3) (1959) 101 CLR 11 at 21-22; see also Evatt J in Federal Commissioner of Taxation v Trautwein (1936) 56 CLR 211 at 516; see also Deputy Federal Commissioner of Taxation (NSW) v DTR Securities Pty Ltd (1985) 1 NSWLR 653. 113 Presumably a corporation could intervene in proceedings in which ASIC sought a declaration of contravention and a compensation order to assist in proving the quantum of the damage it had suffered by reason of the contravention alleged. 114 Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited [2003] 77 ALJR 1629 at 1637 - 1638 [56], see also at 1639 - 1640 [64] - [67]. 115 Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited [2003] 77 ALJR 1629 at 1649 [114]. His Honour's reference to a civil penalty under companies legislation was a reference to Part 9.4B of the Act. 116 See the discussion in Meagher, Gummow and Lehane's Equity Doctrines and Remedies 4th ed. at p 839, [23-020]. 117 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 at 407 [407]. 118 See also R v Rushby [1977] 1 NSWLR 594 at 597 - 598; Channon v R (1978) 33 FLR 433 at 437 where Brennan J observed that "criminal sanctions are purposive, and they are not inflicted judicially except for the purpose of protecting society, nor to an extent beyond what is necessary to achieve that purpose."; Toohey J at 463 and Trade Practices Commission v CSR Ltd (1991) ATPR ¶41-076 at 52,152 per French J, "Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation." 119 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 33. 120 Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 33. 121 8 Wigmore on Evidence (McNaughton rev. (1961)) at 337, s2257. 122 Australian Law Reform Commission Report on Federal Civil & Administrative Penalties in Australia, paras 2.25, 2.27. 123 Thruston v Clarke 107 Cal. 285 40 Pac. 435 at 436 - 437. 124 See Chief Executive Officer of Customs v Labrador Liquor Wholesale Pty Limited [2003] HCA 49 at [112] per Hayne J. 125 Dr Kenneth Mann, "Punitive Civil Sanctions: The Middleground Between Criminal and Civil Law" (1992) 101 (5) Yale Law Journal 1795 at 1799. 126 Ligertwood, A.L.C. Australian Evidence, Butterworths, 1988, at 196 [5.67]; McNicol, Suzanne B., Law of Privilege, The Law Book Company Limited 1992 at 192. McNicol also views "civil actions for a penalty" as having "the objective of penalising a person through civil courts". 127 Australian Law Reform Commission Report on Federal Civil & Administrative Penalties in Australia, para 2.47. 128 Michael Gillooly and Nil Lante Wallace-Bruce, "Civil Penalties in Australian Legislation" (1994) University of Tasmania Law Review 269, 288. 129 ALRC Report 95 para 2.60 footnote 58 referring to a quote in F Haines, Corporate Regulation; Beyond Punish or Persuade (1997) Clarendon Press, Oxford 218; see also Helen Bird, "The Problematic Nature of Civil Penalties in the Corporations Law" 14 Companies and Securities Law Journal 405 at 410 footnote 63: "Incapacitation is the most severe penalty advocated by pyramidal enforcement theory. It can be effected by imprisonment or a disqualification order" and at 419. 130 Arie Freiberg, "Reconceptualizing Sanctions" (1987) 25 Criminology 223 at 243; Helen Bird, "The Problematic Nature of Civil Penalties in the Corporations Law" 14 Companies and Securities Law Journal 405 at 412; Michael Gillooly and Nil Lante Wallace-Bruce "Civil Penalties in Australian Legislation", (1994) University of Tasmania Law Review 269-271. 131 Punitive Civil Sanctions (1992) 101 (5) Yale Law Journal 1795 at 1803. 132 Pearce, Statutory Interpretation in Australia, 2nd Ed. (1981) pars. 113 - 116 quoted with approval in Pyneboard (1983) 152 CLR 328 at 340; see now Pearce, Geddes, Statutory Interpretation in Australia, 5th Ed. (2001) at [5.21] ff. 133 Environment Protection Authority v Caltex Refining Co Pty Limited (1993) 178 CLR 477 at 505 - 506 per Mason CJ and Toohey J, at 556 per McHugh J. 134 Refrigerated Express Lines (A/Asia) Pty Limited v Australian Meat & Livestock Corporation Limited (1979) FLR 204 at 208. 135 Triplex Safety Glass Co Ltd v Lancegaye Safety Glass (1934) Ltd [1939] 2 K.B. 395 at 403. 136 ASIC v Rich (2003) 45 ACSR 305 at [66] - [69].

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