TW McConnell Pty Ltd as trustee for the McConnell Superannuation Fund v SurfStitch Group Ltd

The nature of the privilege

1. In Smith v R [2007] WASCA 163; (2007) 63 ACSR 445, the Western Australian Court of Appeal (Buss JA, with whom Pullin and Miller JJA relevantly agreed) described the privilege this way (at [46]): "At common law, the privilege against self-incrimination entitles a natural person to refuse to answer any question and to refuse to produce any document if the answer or the document would expose, or would have a tendency to expose, him or her, either directly or indirectly, to the risk of criminal conviction." (Citations omitted.)
2. The privilege against self-incrimination is a basic substantive common law right: Reid v Howard [1995] HCA 40; (1995) 184 CLR 1 at 11 (Toohey, Gaudron, McHugh and Gummow JJ); see X7 v Australian Crime Commission [2013] HCA 29; (2013) 248 CLR 92 at [104].
3. The privilege extends not only to the risk of incrimination by direct evidence "but also from making a disclosure which may lead to incrimination or to the discovery of real evidence of an incriminating character": Sorby v The Commonwealth [1983] HCA 10; (1983) 152 CLR 281 at 310 (Mason, Wilson and Dawson JJ).
4. In some countries, the privilege against self-incrimination is entrenched as a constitutional right. See for example ss 11(c) and 13 of the Canada Act 1982 (UK) c 11, sch B pt 1 ('Charter of Rights and Freedoms'), and the Fifth Amendment and the Fourteenth Amendment of the United States Constitution.
5. However, in Australia, the privilege can be abrogated or modified by statute: Reid v Howard at 12 and Sorby at 308. In recent times, "this has occurred with increasing frequency in enactments of the Commonwealth Parliament": Smith at [51].
6. The privilege may only be abrogated by statute in cases of clear words or necessary implication. Necessary implication "imports a high degree of certainty as to legislative intention": Hamilton v Oades [1989] HCA 21; (1989) 166 CLR 486 at 495.
7. So far as concerns s 68, Buss JA said in Smith at [57]: "Section 68(1) expresses, with clarity, Parliament's intention that the common law privilege against self-incrimination has been abrogated for the purposes of, relevantly, investigations and information-gathering by ASIC under Pt 3 of the ASIC Act."
8. Buss JA continued at [60] and [61]: "In A v Boulton (2004) 136 FCR 420, Kenny J (with whom Beaumont and Dowsett JJ agreed) cited, [at [31]], the following passage from the judgment in HKSAR v Lee Ming Tee [2001] 1 HKLRD 599, in relation to the effect of a statutory abrogation of the privilege against self-incrimination and its replacement with a compensatory provision: 'Where, as in the present case, the words of the statute clearly abrogate the privilege and substitute for it a limited direct use prohibition, the privilege is abrogated in its entirety and the scope of the substituted protections, if any, becomes a matter of statutory construction.' Accordingly, s 68(1) of the ASIC Act having abrogated the privilege against self-incrimination, the scope of the 'direct use' immunity conferred by s 68(3) is to be determined upon the proper construction of s 68 (in particular, s 68(2) and (3)) in the context of the ASIC Act as a whole." (Emphasis added.)
9. In Boulton the Court was dealing with provisions in the Australian Crime Commission Act 2002 (Cth) which are analogous to those in s 68 of the Act. The passage cited from HKSAR v Lee Ming Tee concerned Hong Kong legislation that is also analogous to s 68.
10. I do not see Buss JA's citation of the Hong Kong decision as bespeaking his Honour's conclusion that the effect of s 68(1) is to abrogate the privilege "in its entirety" in the sense of otherwise than for the purposes of Pt 3 of the ASIC Act. The passage I have cited at [28] makes clear that his Honour's conclusion as to abrogation was so confined: cf Dr Austin and the Hon Justice Black in Austin & Black's Annotations to the Corporations Act (looseleaf, LexisNexis Butterworths) at [ASICA.68].
11. I see that conclusion as being consistent with that of the Victorian Court of Appeal in Gemmell v Le Roi Homestyle Cookies Pty Ltd (in liq) [2014] VSCA 182; (2014) 46 VR 583.
12. In that case, the Court was concerned with ss 597(12) and 597(12A) of the Corporations Act which deal with liquidators examinations and which are analogous to ss 68(1) - 68(3) of the ASIC Act. The issue was whether an examinee, later sued by the liquidators for insolvent trading under s 588M of the Corporations Act, could rely on the privilege against self-incrimination to avoid filing a responsive defence or giving discovery.
13. Ashley JA, with whom Almond AJA agreed, held at [65] that s 597(12) of the Corporations Act abrogated the privilege against self-incrimination for the purposes of the relevant Division of that Act, but only to the extent of the answers given to questions put during the examination.
14. Neave JA came to the same conclusion at [116]. Her Honour said: "(a) In an examination under Div 1 of Pt 9 of the Corporations Act 2001…s 597(12) prevents a person from refusing to answer questions on the ground that the answers may tend to incriminate them or make them liable to a penalty. To that extent the Act abridges common law privileges. (b) Except to the extent described in (a), s 597(12) does not abrogate the common law privileges relating to self-incrimination and exposure to a penalty…".
15. In Gemmell, the examinee had not asserted the privilege under the equivalent of s 68(2) so questions of waiver, not relevant here, arose. The Court's conclusion, on the facts, was that the examinee's privilege was not abrogated for the purposes of pleading and discovery in relation to matters not contained in answers given at the examination, except to the extent that a pleading or discovery would "expose them to increased jeopardy": Ashley JA at [114].
16. The questions raised in Gemmell may arise later in these proceedings, for example in relation to discovery, or perhaps in cross-examination: see Neave JA's observations at [117].
17. But I see nothing that fell from their Honours in Gemmell to cast doubt on the correctness of the conclusions to which Foster J and Robson J came in Watson and Australian Property Custodians.
18. In those cases, their Honours were considering whether the privilege against self-incrimination had been abrogated in relation to the answers that were given at a s 19 examination, so as to deny a third party access to the transcript containing those answers.
19. The above authorities make clear that the privilege was so abrogated.
20. In Watson, Foster J said: "[31] In terms of principle, the ASIC Act has modified the privilege against self-incrimination to some extent. As envisaged by the relevant statements of principle in Reid v Howard…, the scope of the privilege has, to some extent, been modified by statute and that modification of the privilege is effective. However, the answers to the questions asked during the course of the relevant examinations which are recorded in the transcripts cannot be used in criminal proceedings other than as permitted by s 68(3) of the ASIC Act. [32] This is not a case of a court in a civil proceeding seeking to override the privilege before the privilege can be invoked. The simple fact is that, to the extent permitted by law, the privilege in its modified form has already been invoked."
21. His Honour's observations were made in the context where, as here, access was sought to a s 19 transcript produced by ASIC on subpoena and, in that context, were correct (if I may respectfully say so).
22. It is clear from his Honour's reasons that his Honour appreciated that different questions might arise if use was later sought to be made of the answers given during the examination in civil proceedings: see [22] and [21].
23. On behalf of Mr Cameron it was submitted: "The proposition that [McConnell] should be granted access to the examination transcripts therefore requires the conclusion that s 68 [of the ASIC Act] abrogated the privilege against self-incrimination in its entirety save for the ability of an examinee to object to the answers given at an examination being admitted into evidence in any criminal proceedings or proceedings for the imposition of a civil penalty. That was the basis for the decisions in…Watson and [Australian Property Custodian]."
24. I do not agree. Giving McConnell or its legal representatives access to the transcripts reflects that Mr Cameron's privilege has been abrogated for the purposes of giving those answers during the s 19 examinations. It reflects no more than that.
25. What use McConnell may make of the answers in these proceedings remains to be seen.
26. On behalf of Mr Cameron it was submitted that, were McConnell permitted to inspect the s 19 transcripts, there is an appreciable risk that McConnell would use the material in the transcripts in a manner that might tend to expose Mr Cameron to criminal and civil penalties. It was submitted that "one would reasonably expect a diligent and motivated plaintiff to exhaust all avenues of inquiry arising from the transcripts and, given the direct overlap between the issues in the proceedings and those about which ASIC examined Mr Cameron, there was a real risk that such inquiries would yield fresh evidence that could be used against him".
27. That might be right. But that is a consequence of the abrogation of privilege effected by s 68(1). As I have said, it remains to be seen what further use McConnell can make, in these proceedings, of those answers.

The subpoena

1. Section 25 of the Act makes particular provision as to the persons to whom ASIC may give copies of a s 19 transcript: see [18] above.
2. That power is not at large. ASIC's discretion under s 25 must be exercised having regard to its obligations under s 127: Johns v Australian Securities Commission [1993] HCA 56; (1993) 178 CLR 408 at 423 and 425 (Brennan J), 436 (Dawson J), 452 (Toohey J) and 468 (McHugh J).
3. Section 127 obliges ASIC to "take all reasonable measures to protect from unauthorised use or disclosure" information given to it in confidence.
4. Section 127 makes detailed provision for the circumstances in which ASIC can disclose such information; for example with the consent of the person who provided the information (s 127(3A)) or where ASIC's Chairperson is satisfied that precisely enumerated agencies and regulatory bodies would be assisted to receive the information (s 127(4)).
5. In ASIC's Regulatory Guide 103: Confidentiality and release of information (1995), ASIC identifies factors to which it will have regard when exercising its discretion to release information under s 25. Those guidelines state that ASIC will have a general discretion to release information taking into account factors such as: 1. its functions and powers; 2. the objects of the Corporations Act and the ASIC Act; 3. the observations of the High Court in Johns v Australian Securities Commission; and 4. the public interest generally.
6. The guidelines also state that: "While ASIC will take all these factors into account, in the absence of compelling reasons to the contrary ASIC will generally assist litigants by disclosing transcripts as contemplated by s 25(1)".
7. Answers compulsorily given by an examinee at a s 19 examination no doubt comprise information given to ASIC "in confidence" for the purposes of s 127 of the Act. In those circumstances, and notwithstanding the generality of the statements made by ASIC in its Regulatory Guide, it is hard to see how ASIC could, consistently with its duty under s 127, exercise its power under s 25 to give to a third party a transcript containing answers to which the examinee has taken objection under s 68(2).
8. That may well be why ASIC did not accede to McConnell's request in this case.
9. None of these matters gainsays this Court's power to issue a subpoena or ASIC's obligation to comply with a subpoena.
10. As Bryson J said in Maronis Holdings Ltd v Nippon Credit Australia Ltd [2000] NSWSC 138; (2000) 18 ACLC 609 the procedure under s 25 of the Act "does not qualify and has no implications for the existence or availability of the Court's powers to allow and control access and inspection" of documents produced on subpoena. On behalf of Mr Cameron it was submitted, albeit without enthusiasm and without elaboration, that Bryson J's decision was "plainly wrong". I do not agree. It has been followed on a number of occasions including in Shipley v Masu Financial Management Pty Ltd [2008] NSWSC 1187 at [16] and [20] (White J); see also Mercedes Holdings Pty Ltd v Waters (No 7) [2013] FCA 138 at [3] (Perram J).
11. It may seem strange that a party can "side step" the procedure contemplated by s 25 of the Act by issuing a subpoena to ASIC. But it follows from the matters at [57] and [58] that this can be done.
12. In any event, this begs the question of whether, now that the transcript has been produced, it may be inspected.

Conclusion

1. For those reasons, my conclusion is that McConnell should have access to the s 19 transcripts.
2. The answers were given in private and under compulsion. They are obviously confidential. I do not see that as a reason to deny, as a matter of discretion, giving McConnell access to the transcripts. However, in the first instance I will confine access to McConnell's legal representatives.
3. If those legal representatives consider that wider access should be given, I will entertain an appropriate application.
4. I invite the parties to confer and agree on the orders necessary to give effect to these reasons, including as to costs.

Amendments 26 July 2018 - [35] typographical error corrected DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 July 2018