Consideration
91 The applicable principles regarding the privilege against self-incrimination and the privilege against exposure to penalties may be briefly stated as follows.
92 The rule, in summary, is that "[n]o one is bound to answer any question or produce any document if the answer or the document would have a tendency to expose that person to the imposition of a civil penalty or to conviction for a crime": Heydon JD, Cross on Evidence (11th Aust ed, LexisNexis Butterworths, 2017), at [25065].
93 The privilege against self-incrimination and the privilege against exposure to penalties are distinct (see Australian Securities and Investments Commission v Mining Projects Group Ltd (2007) 164 FCR 32 (Mining Projects) at [7]), although they are often said to be based upon the same rationale and to have developed into their modern form by analogy and upon the same principles: see Caltex at 504-505, 518-521; Abbco at 117-118, 121, 129; Mining Projects at [7]. The privilege against self-incrimination is a substantive common law right: Reid v Howard at 11; X7 v Australian Crime Commission (2013) 248 CLR 92 at [104]. The privilege against exposure to penalties serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it: Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 at [31]; Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at [24].
94 The privileges are personal in nature. In its modern form, the privilege against self-incrimination is "in the nature of a human right, designed to protect individuals from oppressive methods of obtaining evidence of their guilt for use against them" (Caltex at 508; see also at 498-499, 545-546) and to maintain a fair state-individual balance (Caltex at 499). The penalty privilege is based on substantially the same rationale: Abbco at 129.
95 In light of their nature and purpose, both privileges are available only to natural persons and not to artificial legal entities such as corporations: Caltex (in relation to the privilege against self-incrimination); Abbco (in relation to the privilege against exposure to penalties); see also Evidence Act 1995 (Cth), s 187.
96 Subject to a possible exception in relation to spouses, one person cannot claim the privilege against self-incrimination on the ground that the answering of a question or the giving of discovery would tend to incriminate another: Rochfort at 145, 150; Caltex at 549; Cross on Evidence at [25075]. Only the person who is exposed to the risk of prosecution or the imposition of a penalty can invoke the privileges.
97 As a general rule, in the absence of exceptional circumstances, a party to non-penalty civil proceedings is not to be excused in limine from giving discovery, but should instead be left to object to producing particular documents on the grounds that such production might tend to expose him or her to criminal liability or a civil penalty: Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat and Live-stock Corporation (1979) 42 FLR 204 at 208, 210-211; QC Resource Investments Pty Ltd (In Liq) v Mulligan [2016] FCA 813 at [19].
98 The gist of the privileges is that the giving of answers or the production of documents would tend to expose the claimant to the apprehended consequence: Cross on Evidence at [25100].
99 In the context of the privilege against self-incrimination, a valid claim for the privilege can be made out if the claimant can establish that the act of providing information or documents would give rise to a "real and appreciable" risk of prosecution: Rio Tinto Zinc Corporation v Westinghouse Electric Corporation [1978] AC 547 at 574; Rank Film Distributors Ltd v Video Information Centre [1982] AC 380 at 392; Sorby v Commonwealth (1983) 152 CLR 281 (Sorby) at 290; Microsoft at [40]. By parity of reasoning, a valid claim for the privilege against exposure to penalties can be made out if the claimant can establish that providing the information or documents would give rise to a "real and appreciable" risk of institution of proceedings for a civil penalty. I note that in Mining Projects, Finkelstein J stated at [10] that in civil actions where no claim for a penalty is made, the defendant must show that providing the information requested "would tend to subject him to a penalty" in separate proceedings, before he or she can rely on the privilege. I do not consider this formulation to be substantively different.
100 There can be no real and appreciable risk of prosecution or exposure to a penalty where the limitation period for the commencement of such a proceeding has expired: see Sorby at 290.
101 The privilege against self-incrimination has been held to not be available where it is clear that the taking of the step in question will not add to the individual's jeopardy: Microsoft at [41] and cases there cited.
102 In some cases, the pleading itself has provided a basis upon which to infer that the act of providing information or documents would give rise to a real and appreciable risk of criminal prosecution: see, eg, CC Containers Pty Ltd v Lee (No 2) [2012] VSC 149 at [18]; see also Re New World Alliance Pty Ltd (Receiver and Manager Appointed); Sycotex Pty Ltd v Baseler (1993) 47 FCR 90 at 98; Mining Projects at [9].
103 In the present case, the statement of claim contains, as central allegations in the case against DTT, alleged contraventions of s 1041E of the Corporations Act, s 12DB of the ASIC Act and s 29 of the ACLV. Further, the statement of claim in effect alleges that DTT contravened s 307A of the Corporations Act. I note, in particular, the following paragraphs of the statement of claim:
(a) In relation to s 1041E of the Corporations Act: [35], [51], [83], [110] and [126].
(b) In relation to s 12DB of the ASIC Act: [36.2], [52.2], [84.2], [111.2] and [126].
(c) In relation to s 29 of the ACLV: [36.2], [52.2], [84.2], [111.2] and [126].
(d) In relation to DTT's Statutory Audit Obligations or the Auditing Standards (and thus, in effect, s 307A of the Corporations Act): [27.2], [32.1], [34.2], [34.3], [43.2], [105.2], [107.1], [108.2], [109.2] and [109.3].
104 The alleged contraventions of s 1041E, s 12DB and s 29 are the primary allegations made by Sadie Ville in respect of the relevant engagements. The alleged contraventions of the (less serious) misleading or deceptive conduct provisions follow after the alleged contraventions of s 1041E, s 12DB and s 29. The alleged contraventions of s 307A of the Corporations Act run through the whole of the statement of claim.
105 I will consider, first, the position of the partners, such as Mr Saayman, who were directly involved in the relevant engagements. In relation to these partners, it seems clear enough that production of the documents in question would give rise to a real and appreciable risk of prosecution for contraventions of ss 307A and 1041E of the Corporations Act. In respect of these provisions, a prosecution would not be out of time. It is true that there is no indication that ASIC is investigating the matter or that ASIC or the CDPP are considering a prosecution. But in circumstances where Sadie Ville's case is that ss 307A and 1041E were contravened, and it is likely that the documents, if produced, would be deployed by Sadie Ville in support of its case, I consider that the production of the documents would give rise to a real and appreciable risk of prosecution for contraventions of ss 307A and 1041E. Although ASIC and the CDPP may not be currently investigating or considering prosecution, this could well change if Sadie Ville obtains the documents and builds and presents a case based on the documents (albeit one directed to establishing contraventions for civil purposes). In light of these conclusions, it is unnecessary to consider whether production of the documents would also give rise to a real and appreciable risk of prosecution or the institution of pecuniary penalty proceedings in respect of the other relevant provisions (namely, s 12DB of the ASIC Act and ss 29 and 151 of the ACLV). It is sufficient that I have concluded that there would be a real and appreciable risk of prosecution for ss 307A and 1041E. Accordingly, insofar as the claim for privilege is made by or on behalf of the partners who were directly involved in the relevant engagements, I consider the claim to be made out.
106 I turn now to consider the position of the other partners of DTT, that is, the partners of DTT who were not directly involved in the relevant engagements. For the reasons that follow, I consider that, in relation to these partners, production of the documents would not give rise to a real and appreciable risk of prosecution or the institution of proceedings for a pecuniary penalty.
107 Insofar as s 1041E of the Corporations Act is concerned, to establish an offence based on contravention of this provision, it would be necessary to establish the requisite elements of the offence to the criminal standard. Reading s 1041E together with s 761F, it would need to be established that the partner aided, abetted, counselled or procured the relevant act or omission, or was knowingly concerned in, or party to, the relevant act or omission. The prospect of prosecuting authorities pursuing such a case against a partner who was not directly involved in the relevant engagements is, to my mind, theoretical rather than real. Although s 761F would not be applicable, the same considerations would apply to an offence based on accessorial liability for a contravention of s 728 of the Corporations Act.
108 Insofar as s 307A of the Corporations Act is concerned, while it is true that an offence based on this provision is a strict liability offence (as to which, see Clode v Barnes [1974] 1 WLR 544), the focus of the provision appears to be on the lead auditor for the audit or review. Section 307A(2) provides that, if an audit firm conducts an audit or review, "the lead auditor for the audit or review" must ensure that the audit or review is conducted in accordance with the auditing standards. Thus the focus is on those directly involved in the audit or review. In light of this, and notwithstanding the rules of attribution in s 324AB(5) of the Corporations Act, I consider there to be little prospect of a prosecution being brought against a partner who was not involved in the relevant engagements.
109 In relation to prosecution for contravention of s 12DB of the ASIC Act and/or s 151 of the ACLV, I proceed for present purposes on the basis that a prosecution would not be out of time. While the relevant provisions (namely, s 12GB(6) of the ASIC Act and s 212 of the ACLV, set out above) are not expressed in the same terms as the provision considered in Oates - in particular the words "Despite anything in any other law", which were important in the reasoning of the High Court in Oates, are not present - it is at least arguable that the provisions are facultative and not restrictive. Provisions with similar wording to s 12GB(6) and s 212 were considered in Comptroller-General of Customs v Parker (2006) 200 FLR 44 at [59]-[67] and Seeto v The Queen [2008] NSWCCA 227 at [43]-[44]. In each case, it was held that the provision was facultative, not restrictive.
110 Nevertheless, I do not consider that production of the documents would give rise to a real and appreciable risk of prosecution for the other partners for contravention of s 12DB of the ASIC Act or s 151 of the ACLV. In relation to s 12DB of the ASIC Act, reading this together with s 761F of the Corporations Act (see s 5(2) of the ASIC Act and s 761A of the Corporations Act), the considerations discussed in [107] above would apply equally. In relation to s 151 of the ACLV, while the offence is a strict liability offence, and therefore all partners may be liable for an offence, it is much less likely that a prosecution would be brought against a non-involved partner compared with a partner who was involved. In the circumstances, I consider the prospect of prosecution of a non-involved partner to be theoretical rather than real.
111 In relation to pecuniary penalty proceedings for contravention of s 12DB of the ASIC Act and/or s 29 of the ACLV, I consider that any such proceeding would be out of time. Section 12GBC of the ASIC Act and s 228 of the ACLV are set out above. Each of these provisions adopts the same form as s 77 of the Trade Practices Act 1974 (Cth), now s 77 of the Competition and Consumer Act 2010 (Cth). The first subsection confers a power to bring a proceeding for the recovery of a pecuniary penalty, and the second subsection stipulates a time within which such a proceeding may be commenced. It has been held by a Full Court of this Court that s 77(2) operates as a limitation period: Australian Competition and Consumer Commission v PT Garuda Indonesia Ltd (2016) 244 FCR 190 at [522], [547]; see generally at [526]-[547]. That reasoning is, in my view, applicable to s 12GBC of the ASIC Act and s 228 of the ACLV. These provisions are unlike the provision considered in Oates, and the provisions considered in Comptroller-General of Customs v Parker and Seeto v The Queen, as they involve both a conferral of power to bring a proceeding of a certain character and the stipulation of a time within which such a proceeding may be commenced. Given that more than six years has elapsed since the relevant events, I consider that a pecuniary penalty proceeding would be out of time.
112 I have also given consideration to whether, in respect of the other partners, there may be a real and appreciable risk of prosecution for offences other than those set out above (for example, offences based upon fraud). However, for the reasons expressed above, I consider the risk of prosecution against the non-involved partners to be theoretical rather than real.
113 Further, and generally, there is no indication that ASIC is investigating the auditors of Hastie or that any consideration is being given to prosecuting the auditors. While it is true that there have been some prosecutions in relation to the Hastie collapse, these were instituted some time ago and involved officers of the company rather than auditors. I also note that the onus is on DTT to establish that the privileges apply. I am not satisfied that it has established this in the case of the other partners.
114 Accordingly, I reject the claim of privilege made on behalf of the other partners.
115 DTT contends that the other partners do not have "control" of the documents (in the sense of possession, custody or power in respect of the documents) and therefore an order for production should not be made against them. The evidentiary basis for this submission is [6] of the Third Lee Affidavit. However, as discussed at [68]-[76] above, I consider that paragraph to do no more than describe the current administrative arrangements regarding access to the documents. Mr Lee was not in a position to give evidence about the ownership of the documents or the legal entitlement of partners other than Mr Saayman to access the documents. Accordingly, I do not accept that the other partners do not have control of the documents.
116 DTT refers to the judgment of Gibbs CJ in Rochfort, where the Chief Justice stated (at 139) that "one partner has been held not compellable to produce books which were partnership property when the other partners would not consent to production", citing Attorney-General v Wilson (1839) 9 Sim 526; 59 ER 461, and Lee v Angas (1866) LR 2 Eq 59. However the circumstances of those cases were quite different to the present case. Attorney-General v Wilson concerned a subpoena duces tecum served on a partner in a bank, requiring him to produce all books and accounts in his custody or power containing entries relating to certain matters or relating to the matters in question in the case. It was held to be "plain … on the face of the affidavits" that the documents were "not in his possession or power, so that he alone, without the consent of his co-partners, can produce them" (at 529; 462). In the present case, there is no comparable evidence. Lee v Angas concerned a subpoena duces tecum requiring a solicitor to produce all papers relating to all dealings and transactions between his firm and the plaintiff and defendants for a period of 30 years. The subpoena was held to be "too wide" (at 63). Attorney-General v Wilson was approved, but there was no substantive discussion of the partnership aspect of that decision. DTT also cites Ex parte Merrett (1997) 140 FLR 412 at 417; 25 ACSR 146 at 151. In that case, the liquidators of a company had sought an order from the Registrar of the Supreme Court of New South Wales to issue summonses for the public examination of the managing partner of a firm and the production of certain books and records. The managing partner applied to set aside the summonses. It was held that the summonses should be set aside. Young J stated that "the point that one partner has not the power to produce the partnership documents unless something more is established as to his or her authority, appears to be correct" (at 151). The case does not contain any further discussion of the issue. I consider the case to be distinguishable. In the present case, there is evidence in the First Lee Affidavit that the documents are in the control of DTT, albeit qualified by Mr Lee's oral evidence. In the circumstances, including the statement in the First Lee Affidavit and the absence of any clear evidence from DTT that the other partners do not have possession, custody or power in respect of the documents, I infer that the documents are in the control of the other partners.
117 It may be said that ordering the partners who were not directly involved in the relevant engagements to produce the documents would undermine the privilege claimed by the partners who were directly involved. While this may be true as a matter of practical effect, it is important to emphasise that the privilege is against self-incrimination (or self-exposure to a penalty). The partners who were directly involved in the relevant engagements should not be required to produce documents in circumstances where (as described above) production would give rise to a real and appreciable risk of prosecution against them. However, in circumstances where other partners have possession, custody or power in respect of the documents, and production of the documents would not give rise to a real and appreciable risk of prosecution or the institution of pecuniary penalty proceedings against them, there is no proper basis not to order production by those partners.
118 I have given consideration to whether DTT as a partnership can claim the privileges and whether this affects the analysis. Given that DTT as a partnership could not itself be prosecuted for an offence against any of the relevant provisions, the privilege against self-incrimination does not arise. While it would seem to be possible to bring a pecuniary penalty proceeding against two or more partners in the partnership name, for the reasons given above any such proceeding would be out of time. Thus, considering the matter from the perspective of the partnership does not take things any further.
119 Accordingly, I consider it appropriate to make an order that the partners of DTT other than those directly involved in the relevant engagements produce the documents in categories 5 to 9 of the respondents' list of documents.