Sorby v The Commonwealth

Federal Court of Australia|1994-12-22|Before: Sheppard J

30 November and 7 December last concern the construction and application to the circumstances of the case of the provisions of s.77 of the Bankruptcy Act 1966 ("the Act"). The respondent to the application is Mr Alan Bond who is an undischarged bankrupt. The applicant is his trustee in

"77. A bankrupt shall, unless excused by the trustee or prevented by illness or other sufficient cause:

(a) forthwith after becoming a bankrupt, give to the trustee:

relate to any of his or her examinable affairs; and

(b) attend the trustee whenever the trustee reasonably requires;

(ba) give such information about any of the bankrupt's conduct and examinable affairs as the trustee requires;

(d) at each meeting of creditors at which the bankrupt is present, give such information about any of the bankrupt's conduct and examinable affairs as the meeting requires;

(e) execute such instruments and generally do all such acts and things in relation to his property and its realization as are required by this Act or by the trustee or as are ordered by the Court upon the application of the trustee;

(f) disclose to the trustee, as soon as practicable, property that is acquired by him, or devolves on him, before his discharge, being property divisible amongst the creditors; and

(g) aid to the utmost of his power in the administration of his estate."

The particular paragraphs of the section upon which the

Trustee relies are paras (e) and (g) but, as will be seen, it

is para (g) upon which the Trustee needs to rely, at least in

The first of the applications concerns a direction given by the Trustee to Mr Bond to provide detailed particulars of a

number of telephone calls made by him from the Sheraton

Wentworth Hotel in Sydney where he was staying during the

course of his examination under s.81 of the Act. The second application concerns a direction requiring Mr Bond to consent to the Trustee inspecting a number of documents which have been taken from Mr Bond by members of the Australian Federal Police as a consequence of the execution of a search warrant. The police will not make the documents available for the

The principal question which the applications raise for determination is whether the provisions of s.77 reveal a legislative intention to deprive a person affected by the section of the privilege against self-incrimination and of legal professional privilege. I should decide that question first. If it is answered favourably to Mr Bond, the consequence will require the substantial amendment of the applications or perhaps their dismissal. The principles which guide me are not in doubt. It is their application to the

circumstances of a given case which occasion difficulty.

In the view I take of the matter it does not necessarily follow that the result must be the same in the case of both privileges; it may be that the section takes away one but not the other. I propose to deal first of all with the privilege against self-incrimination. Section 77 is the opening section of Part V of the Act which is entitled, "Control Over Person and Property of Debtors and Bankrupts". The section is in

Other sections in the Part are s.77AA dealing with access by the Official Receiver to premises, s.77A dealing with access by the Trustee or the Official Receiver to books of what is described as an "associated entity", s.77B providing for obligations on the part of bankrupts to assist the Official Receiver, s.77C dealing with the power of the Official Receiver to obtain information and evidence, s.77D dealing with allowances and expenses in respect of attendances, s.77E dealing with advances on account of allowances and expenses, s.77F making further provisions about allowances and expenses, s.78 dealing with the arrest of debtors or bankrupts, ss.79 and 80 to the detail of which I need not refer, and s.81 dealing with the discovery of the bankrupt's property and which provides, of course, for the examination of bankrupts and others before a Registrar of this Court. I should also mention Divisions 2 and 3 of Part V which are headed respectively, "Offshore information notices" and "Failure to comply with certain notices". The detail of these provisions is not of relevance to the question of

construction to be decided and I do not refer further to them.

The two most helpful authorities on the question are Sorby v The Commonwealth (1983) 152 CLR 281 and Pyneboard Pty Limited v Trade Practices Commission (1983) 152 CLR 328. In

"However, the provisions of the statute have to be interpreted against the background provided by the

e.g. Mortimer v. Brown (1970) 122 C.L.R. 493 and Rees v. Kratzmann (1965) 114 C.L.R. 63, esp. At p.80, but cf. Mitcham v. O'Toole (1977) 137 C.L.R. 150. However, a statute will not be construed as excluding so valuable a privilege unless = an intention to do so clearly appears; see R. v. Associated Northern Collieries (1910) 11 C.L.R. 738, at p.748, and £x parte Grinham; Re Sneddon [1961] S.R. (N.S.W.) 862, at pp.870-871, 874-875."

In their joint judgement in Sorby, Mason, Wilson and

"The privilege against self-incrimination is deeply ingrained in the common law. The principle is that a statute will not be construed to take away a common law right, including the privilege against self-incrimination, unless a legislative intent to do so clearly emerges, whether by express words or necessary implication: Pearce, Statutory Interpretation in Australia, 2nd ed. (1981), pars

113-116; Pyneboard; Crafter v. Kelly [1941] S.A.S.R. 237, at p.242."

They then referred to Mortimer v Brown (1970) 122 CLR 493 which they said provided a compelling illustration of a statute which abrogated the privilege by necessary

In Pyneboard, Mason ACJ, and Wilson and Dawson JJ referred (at 337) to the question whether the privilege against self incrimination was confined in its application to testimonial disclosures in judicial proceedings so that it was inherently incapable of application in non-judicial proceedings. After referring to a number of authorities,

common law. It has been a firmly established rule of the common law, since the seventeenth century, that no person can be compelled to incriminate himself. A person may refuse to answer any question, or to produce any document or thing, if to do so 'may tend to bring him into the peril and possibility of being convicted as a criminal': Lamb v. Munster (1882) 10 Q.B.D. 110, at p.111. The mere fact that the witness swears that he believes that

the answer will incriminate him is not sufficient; 'to entitle a party called as a witness to the privilege of silence, the Court must see, from the circumstances of the case and the nature of the evidence which the witness is called to give, that there is reasonable ground to apprehend danger to the witness fo his being compelled to answer': Reg. v. Boyes (1861) 1 B. & S. 311, at pp.329-330 [121 E.R. 730, at p.738]. That statement of the law has frequently been approved; see Ex parte Reynolds; In re Reynolds (1882) 20 Ch.D.294; Triplex Safety Glass Co. v. Lancegaye Safety Glass (1934) Ltd [1939] 2 K.B. 395, at pp.403-404; In re Westinghouse Uranium Contract [1978] A.C. 547, at pp.612, 627, 647. It is clear that in England the Parliament may take away the privilege and enact that a party may be bound to accuse himself: Reg. v. Scott (1856) Dears. & B. 47 at p.59 [169 E.R. 909, at p.914]. Whether the powers of the Commonwealth Parliament under the Constitution are more restricted in this respect is a matter to which I shall later refer. Although the legislature may abrogate the privilege, there is a presumption that it does not intend to alter so important a principle of the common law. In Kempley v. The King [1944] A.L.R. 249, at p.253, Starke J. went so far as to say that 'where authority is given to compel the examination of persons, the ordinary rule of the common law which protects a person from answering questions which tend to criminate him applies unless expressly excluded'. However, he went on to say that 'whether the rule is excluded must depend upon the provisions of the legislative act or the nature of the subject', and this appears to recognize that an intention to exclude the privilege may appear although there are no express words of exclusion. Although there are not wanting other statements to the effect that the privilege will not be taken away without express words (see, for instance, Crafter v. Kelly [1941] S.A.S.R. 237, at pp.241-242 it is not correct to say that if the legislature wishes to render the privilege unavailable ti must in every case do so expressly. The character and purpose of the statute may indicate that it should not be construed so as to preserve the privilege: see,

"In the light of these competing considerations we are not prepared to hold that the privilege is inherently incapable of application in non-judicial proceedings. The issue of its availability in these proceedings therefore falls to be decided by reference to the statute itself. In the consideration of that question it is necessary to bear in mind the general principle that a statute 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: Pearce, Statutory Interpretation in Australia, 2nd ed. (1981) pars. 113-116; cf. Mitcham v. O'Toole (1977) 137 C.L.R. 150.

In deciding whether a statute impliedly excludes the privilege much depends on the language and character of the provision and the purpose which it is designed to achieve. The privilege will be impliedly excluded if the obligation to answer, provide information or produce documents is expressed in general terms and it appears from the character and purpose of the provision that the obligation was not intended to be subject to any qualification. This is so when the object of imposing the obligation is to ensure the full investigation in the public interest of matters involving the possible commission of offences which lie peculiarly within the knowledge of persons who cannot reasonably be expected to make their knowledge available otherwise than under a statutory obligation. In such cases it will be so,

notwithstanding that the answers given may be used in subsequent legal proceedings."

Their Honours went on (at 342) to discuss a number of

authorities. I do not find it necessary to refer to what they

I am clearly of the opinion that s.77 in the setting in which it appears in the Act evinces an intention on the part of the legislature that the privilege against self- incrimination is not to be available to bankrupts required to

do any of the things specified in the section. The existence

of the privilege would tend to stultify the operation of the section and thus seriously affect the due course of the administration of a bankrupt's estate. The provision is of a

type plainly contemplated in the dictum I have quoted from

Counsel for Mr Bond referred specifically to s.77AA and s.77C and to sub-sec.81(11AA). He claimed that the privilege against self~incrimination was available in cases to which s.77AA and s.77C applied. I have not understood why this 1s necessarily so. I do not decide the question in relation to these sections because it is unnecessary to do so, but I point out that the sections differ from s.77 in that they are capable of applying to persons other than the bankrupt; s.77 is not. Counsel said that, if the privilege were available in relation to some sections in Part V, that in itself, for reasons of consistency of interpretation, was a reason why

each of the sections should be construed in the same way.

I reject this argument. Even if the premise upon which it is based be right - and that itself is open to serious question - each subject matter dealt with has to be considered

from the point of view of its own place in the overall

"Subject to any contrary direction by the Court, the Registrar or the magistrate, the relevant person is not excused from answering a question merely because to do so might tend to incriminate the relevant person."

Counsel relied on this provision as an indication that the legislature had given an express indication of its intention. It followed, so he submitted, that in the absence

of any such indication in other parts of the same Part of the

I think that this proposition is demonstrated to be erroneous in the judgment of Jackson J in Re Clyne; ex parte

Deputy Commissioner of Taxation, (1986) 15 FCR 128 where his

"It is clear, of course, that as Mason, Wilson and Dawson JJ (repeating their observations in Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR

328 at 341) said in Sorby v Commonwealth (1983) 152 CLR 281 at 309:

'... a Statute will not be construed to take away a common law right, including the privilege against self-incrimination, unless a legislative intent to

do so clearly emerges, whether by express words or necessary implication...'

Further as their Honours said in both those cases, in determining whether the privilege against self- incrimination is impliedly excluded, much depends on the language and character of the relevant legislative provision and on the purpose which it is designed to achieve: Pyneboard Pty Ltd v frade Practices Commission (supra, at 341) and Sorby v Commonwealth (supra, at 309).

Putting to one side for a moment the provisions of s 306A of the Act, it is clear that the public examination of bankrupts under the enactments in

bankruptcy has long been an instance where, without there being any reference to the exclusion of the privilege against self-incrimination, a statutory duty of the bankrupt to answer 'all such questions as the Court may put or allow to be put to him' has been held to carry with it an exclusion of the privilege against self-incrimination."

His Honour then referred to what had been said by Phillimore J (as he then was) in Re Atherton [1912] 2 KB 251.

"This is a question which has arisen out of the public examination of a debtor under s 17 of the Bankruptcy Act 1883 (UK), which provides in subs 1 that the debtor 'shall be examined as to his conduct, dealings and property,' and in subs 8 that 'it shall be his duty to answer all such questions as the Court may put or allow to be put to him'. Those words are in themselves wide enough for the purpose of the matter now before me, but I have also the authority of the cases of Re a Solicitor (1890) 25 QBD 17, R v Erdheim [1896] 2 QB 260, and Rv Scott (1856) 25 Ld MC 128, which decide that those words mean what they say, that a debtor is bound to answer all such questions as the Court may put or allow to be put to him, whether they tend to criminate him or not --- even such a question as 'Have you cammitted a crime?'"

"That statement of principle was approved by the Court of Appeal in England in Re Paget; Ex parte Official Receiver (supra, at 88-89) and it has been treated as correct on many occasions both in England (see for example Re Jawett (supra) and R v Harris [1970] 1 WLR 1252) and in Australia (see for example Re Wagner [1958] QWN 49, Rees v Kratzmann (1965) 114 CLR 63, Mortimer v Brown (supra) and Re Clyne; Ex parte O'Brien (supra)).

On that view the terms of s 69(12) should be treated as providing, in favour of the bankrupt, for an

exception to the general principle that the privilege does not apply."

Subsection 69(12) was a precursor of subsec 81(11AA).

Accordingly, I conclude that the privilege against self- incrimination is not available. I turn to the question of the

availability of legal professional privilege. In Re Steele;

ex parte Official Trustee in Bankruptcy v Clayton Utz (1994) 48 FCR 236, Ryan J held that s.77AA was not to be read as

denying the common law right to claim legal professional privilege. Counsel for the Trustee did not dispute the correctness of that decision nor did he seek to argue that legal professional privilege was not available to Mr Bond in relation to s.77; but his concession was qualified by reference to The Queen v Cox and Railton (1884) 14 QBD 153 and cases in which it has since been applied. Cox and Railton is authority for the proposition that only those communications passing between solicitors and their clients in professional confidence and in the legitimate course of professional employment of their solicitor are privileged. Thus communications made to a solicitor by his client before the commission of a crime for the purpose of being guided or

helped in the commission of it are not privileged from

disclosure. See also: The Queen v Bell; ex parte Lees (1980)

146 CLR 141 and The Attorney General for the Northern Territory of Australia v Kearney (1985) 158 CLR 500.

It follows that, if the telephone calls made by Mr Bond from the hotel were calls in which he sought or received advice concerning, for instance his bankruptcy, or if documents seized by the police include letters or other documents relating to advice sought by him or given to him, those documents will be privileged from inspection. If there is any dispute about any such claim, assuming it is made, the

matter can be resolved on an application to the Court.

It remains to deal with an argument relied upon by counsel for Mr Bond in relation to the requirement that he consent to the production to the Trustee of documents seized from him by the police when a search warrant was executed. Counsel for Mr Bond contended that a consent did not fall

In relation to para (e) I should say that I have reservations whether it is applicable to the circumstances of this case. It provides that a bankrupt shall, unless excused by the trustee or prevented by illness or other sufficient cause, execute such instruments and generally do all such acts and things in relation to his property and its realization as are required by this Act or by the trustee or as are ordered

The question in my mind is whether the consent here

sought may properly be said to be an instrument or the doing

of an act or thing in relation to Mr Bond's property and its realisation. I bear in mind the submission made by counsel

for the Trustee that the documents themselves should, for the purposes of the argument, be assumed to be the bankrupt's property. Nevertheless, I have reservations whether the provision is applicable. My reservations are of no relevance to the outcome of the matter because, plainly enough, para (g) of the section applies. It is expressed in quite general terms requiring a bankrupt to aid to the utmost of his power

The point made by counsel for Mr Bond was that a consent given under compulsion, that is a forced consent, was no consent at all. The provisions of s.77 and the other provisions of Part V of the Act are designed to enable the Trustee to make the fullest investigation into a bankrupt's property, dealings and affairs. At least so far as bankrupts are concerned, the essence is a requirement that they co- operate. Co-operation can and will be compelled in appropriate cases. If this were not the case, bankrupts could make a laughing stock of their obligations. Thus unwilling and uncooperative bankrupts must produce documents and answer questions against their will. That is their obligation. If they fail in that obligation they expose themselves to the risk of being found in contempt of court or in breach of the criminal law. To require Mr Bond to sign the consent here in

question is, in my opinion, an ordinary and commonplace

incident of his overall obligation to co-operate with his Trustee. He is required to do many things that he is probably unwilling to do. This is but one of them. Accordingly, I

reject the submission made on his behalf on what may be called

The documents seized by the police from Mr Bond are only some of a large number of documents seized from numbers of persons as the consequence of the issue of search warrants. The Trustee wishes access to all these documents, not just those seized from Mr Bond. There are proceedings pending in the Victorian Registry of this Court (No. VG 427/94) in which

In those proceedings the Trustee will rely on the decision of the English Court of Appeal in Marcel v Commissioner of Police [1992] Ch. 225; see also Morris v The Director of the Serious Fraud Office [1993] Ch. 372 and Johns v Australian Securities Commission (1993) 178 CLR 408 (at 423-4 and 429). The issues for determination in the Victorian matter do not in my opinion arise for determination here. The question in the present case is a much more limited one. It concerns documents which the evidence establishes were in Mr Bond's possession and are now in the possession of the Australian Federal Police. The Trustee wants to inspect them.

He requires Mr Bond's consent for this purpose. In my opinion

the provisions of para 77(g) of the Act empower him to require

It follows that, subject to what I have said about legal professional privilege, if a claim for it be made in proper form, the Trustee is entitled to the relief which he seeks. I now propose to discuss with counsel the form of the relief

I certify that this and the 14 preceding pages are a

true copy of the reasons for judgment herein of the

Solicitors for the Trustee: Mallesons Stephen Jaques.

Counsel for the Bankrupt: J W K Burnside QC with M Barnett.

Solicitors for the Bankrupt: Galbally Fraser & Rolfe.

At a glance

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Judgment (94 paragraphs)

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