FEDERAL COURT OF AUSTRALIA

AUSTRALIAN COMPETITION & CONSUMER COMMISSION v FFE BUILDING SERVICES LTD [2003] FCAFC 132

PRACTICE & PROCEDURE – privilege against exposure to penalty – whether order requiring provision of statements of evidence prior to trial would infringe privilege – where corporate and individual respondents – where conflicting authority between Federal Court and Victorian Court of Appeal

Trade Practices Act 1974 (Cth) ss 45, 76, 77, Pt VC, Pt VI

Excise Act 1901 (Cth)

ASIC v ABC Fund Managers Ltd [2001] VSC 92 cited

ASIC v Rich [2003] NSWSC 328 considered

Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd (1999) 163 ALR 465 followed

Australian Competition & Consumer Commission v FFE Building Services Ltd [2003] FCA 157 affirmed

Australian Competition and Consumer Commission v J McPhee & Son (Australia) Pty Ltd (1997) 77 FCR 217 cited

Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 cited

Australian Securities and Investments Commission v Plymin (2002) 4 VR 168 cited

Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 192 ALR 561 cited

Ganin v NSW Crime Commission (1993) 32 NSWLR 423 cited

Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 cited

Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Livestock Corporation (1979) 42 FLR 208 cited

Registrar, Court of Appeal (NSW) v Craven (1994) 126 ALR 663 cited

Reid v Howard (1995) 184 CLR 1 cited

Sidebottom v Federal Commissioner of Taxation (2003) 52 ATR 184 not followed

Sorby v Commonwealth of Australia (1983) 152 CLR 281 cited

Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 cited

AUSTRALIAN COMPETITION & CONSUMER COMMISSION v FFE BUILDING SERVICES LTD (FORMERLY CHUBB BUILDING SERVICES LTD) (FORMERLY JAMES HARDIE BUILDING SERVICES P/L) t/as FIRE FIGHTING ENTERPRISES ACN 000 067 541, TYCO AUSTRALIA PTY LTD (FORMERLY WORMALD AUSTRALIA PTY LTD) t/as WORMALD FIRE SYSTEMS ACN 008 399 004, PREMIER FIRE PROTECTION (NSW) PTY LTD (DEREGISTERED) ACN 067 652 895, METROPOLITAN FIRE SYSTEMS PTY LTD ACN 061 519 471, ALLEN EDWARD SMITH, COLIN SIMPSON, VITO FODERA, JAMES BELL, ALLAN CARR, MITCHELL GRICE AND BILL LAWSON

N440 OF 2003

EMMETT, HELY & JACOBSON JJ

16 JUNE 2003

SYDNEY

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.         the appeal is dismissed with costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

THE COURT:

1                     The appellant, Australian Competition & Consumer Commission (‘the Commission’), claims injunctive relief under the Trade Practices Act 1974 (Cth) (‘the Act’) against four corporations, including FFE Building Services Ltd (‘FFE’) and Metropolitan Fire Systems Pty Limited (‘MFS’) and seven individual respondents, including Mr Vito Fodera (‘Fodera’) and Mr James Bell (‘Bell’).  The amended application also seeks pecuniary penalties from all of the corporate and individual respondents. 

2                     The Commission’s statement of claim alleges that the four corporate respondents made arrangements or arrived at understandings in contravention of ss 45(2)(a)(i), 45(2)(a)(ii), 45(2)(b)(i) and 45(2)(b)(ii) of the Act.  Those provisions are contained within Pt IV of the Act.  The Commission also alleges that Fodera was knowingly concerned in, or was a party to, the alleged contraventions by FFE and that Bell was knowingly concerned in, or was a party to, the alleged contraventions by MFS. 

3                     One of the individual respondents has not been served, one of them has submitted and three have admitted relevant contraventions of the Act.  However, Fodera and Bell have filed defences whereby the contraventions in which they are alleged to have been involved are put in issue. 

4                     The claims for penalties are brought pursuant to s 76 and s 77 of the Act, which relevantly provide as follows:

‘76       (1)        If the Court is satisfied that a person:

(a)        has contravened … a provision of Part IV;

…

(e)        has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such provision;

            …

            the Court may order the person to pay to the Commonwealth such pecuniary penalty … as the Court determines to be appropriate ….

77        (1)        The Commission may institute a proceeding in the Court for the recovery on behalf of the Commonwealth of a pecuniary penalty referred to in s 76.’

5                     Sections 76 and 77 are contained in Pt VI of the Act, which is entitled ‘Enforcement and Remedies’.  Part VI is to be contrasted with Pt VC of the Act, which is entitled ‘Offences’ and which creates a variety of criminal offences.  The contraventions alleged by the Commission do not constitute criminal offences. 

6                     The Commission was directed by a judge of the Court to file and serve statements of evidence of all its proposed witnesses.  It was accepted by all parties that it would be appropriate for the Court to make a similar direction in respect of the witnesses proposed to be called on behalf of the corporate respondents.  However, the Commission also requested the Court to make similar orders in relation to the individual respondents.  The Commission proffered an undertaking, through its counsel, that, if statements were provided by the individual respondents, the statements would not be tendered in the Commission’s case in chief nor used to support an argument that a particular individual respondent had a case to answer. 

7                     The course proposed by the Commission was opposed by Fodera and Bell who contended that, to require them to serve statements in advance of the hearing, would be inconsistent with their right to refuse to provide information that might tend to expose them to a penalty.  Each of Fodera and Bell, however, offered to consent to a direction that he provide statements of evidence within a relatively short period, such as 48 hours, after the Commission’s case against him closed. 

8                     The Commission accepted that the individual respondents have a right to remain silent, even though the proceeding is a civil action and not a prosecution for a criminal offence.  The Commission accepted, therefore, that the individual respondents should not be compelled to provide information that might tend to expose them to a penalty.  However, the Commission says that the proposed direction does not contravene this principle because the question of whether or not the individual respondents decide to give evidence is for them to determine.  The only effect of the direction to provide statements would be that the Commission would have advance notice of the evidence likely to be given on behalf of the individual respondents. 

9                     The primary judge declined to adopt the course proposed by the Commission and indicated that, at that stage, he did not propose to direct service of statements of the evidence proposed to be led on behalf of Fodera and Bell.  However, his Honour indicated that the parties should conduct themselves on the assumption that, at trial, his Honour would make a direction for the provision of witness statements by Fodera and Bell within a very short period, possibly as short as 24 hours, after the close of the Commission’s case. 

10                  In his reasons for taking that course, the primary judge referred to a conflict in the authorities between decisions of this Court, on the one hand, and a decision of the Court of Appeal of Victoria, on the other hand: see Australian Competition & Consumer Commission v FFE Building Services Ltd [2003] FCA 157.  The conflict concerns the extent to which a direction of the kind sought by the Commission would have the effect of contravening the principle that an individual should not be compelled to furnish information that might tend to expose that individual to a penalty.  Because of that conflict, Hely J granted leave to the Commission to appeal from the refusal of the primary judge to give the direction sought by the Commission. 

11                  The appeal was listed for hearing with some urgency in order to ensure that there be no delay in the preparation of the proceeding for hearing.  The issue on appeal is whether an individual respondent in a proceeding for recovery of a penalty under s 76(1) of the Act can be directed to file and serve statements of the evidence proposed to be given by his proposed witnesses prior to the close of the appellant’s case. 

GENERAL PRINCIPLES

12                  The privilege against self-incrimination protects an individual from making a disclosure that may lead to incrimination or to the discovery of real evidence of an incriminating nature: Sorby v Commonwealth of Australia  (1983) 152 CLR 281 at 310.  Further, a respondent in a proceeding that is solely for the recovery of a pecuniary penalty should not be ordered to disclose information or produce documents that may assist in establishing his or her liability to the penalty: Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Livestock Corporation (1979) 42 FLR 208; Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 at 336.

13                  The privilege of refusing to answer questions or provide information on the ground that the answers or the information might tend to expose the party to the imposition of a pecuniary penalty:

• is not confined to discovery and interrogatories;
• is available at common law;
• is distinct from the privilege against exposure to conviction for a crime (Pyneboard (at 337)).

The rationale for the privilege is that an applicant must prove its own case and should not get any assistance from the respondent in proving its case: Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 at 129; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 192 ALR 561 at 570, at [31].  The privilege can only be abrogated by statute: Reid v Howard (1995) 184 CLR 1.  As the privilege is not subject to judge-made exceptions or qualifications, it cannot be abridged or undermined in consequence of a Court accepting undertakings proffered by the applicant designed to avoid or diminish the danger that provision of the information would expose the respondent to a penalty.

14                  By requiring an individual respondent, prior to the closure of an applicant’s case, to file statements of evidence proposed to be given by witnesses to be called by that respondent, such a respondent would be exposed to the risk that indirect or derivative evidence, being evidence obtained by using the material disclosed in the statement as a basis of investigation, could be tendered against the respondent.  The provisional disclosure of information may set in train a process that may lead to the imposition of a penalty or may lead to the discovery of real evidence in support of the imposition of a penalty: Reid v Howard (at 6).

THE DECISION OF SACKVILLE J IN AMCOR

15                  In Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd (1999) 163 ALR 465 (‘Amcor’), the issue before Sackville J was identical to that raised on this appeal.  Sackville J reviewed all of the authorities on the question and concluded (at 469, at [16]) that there is ‘no reason to think that the scope of the privilege against exposure to a penalty is any narrower than that of the privilege against self-incrimination’.  That view was not challenged by the Commission in the present case. 

16                  However, Sackville J also concluded that to require individual respondents to file statements before the commencement of the trial, was not consistent with the rationale underlying the privilege against exposure to penalties.  His Honour therefore refused an application by the Commission for orders that witness statements be filed in advance of the trial.

17                  Sackville J’s reasoning for refusing the Commission’s application included the following (at 469-470, at [17], [19]):

‘The orders sought by the [Commission] would require the individual respondents to file their statements of  evidence in advance of the trial on pain of foregoing the opportunity of giving evidence at the trial and of placing themselves at risk that the court would draw adverse inferences against them.  Moreover, at least in this case, they would run the risk that their statements of evidence would provide the [Commission] with “leads” that would result in other evidence adverse to them being adduced in the very proceeding in which penalties are sought.

…

In my opinion, if the orders sought by the [Commission] were made, the “election” facing the individual respondents would neither be unconstrained nor free.  The individual respondents would not be compelled by an order of the court to make statements or provide information that would expose them to a penalty.  In this sense, the case is different from an order requiring the production of documents or the filing of an affidavit disclosing specific information.  But if they wish to avoid adverse forensic consequences in the penalty proceedings, they would have little choice but to file statements of evidence.  By taking that course they would expose themselves, to the risk that their own words would materially assist the [Commission] to make out the case against them.  To require the individual respondents to make this invidious choice is not, in my opinion, consistent with the rationale underlying the privilege against exposure to penalties.’  (Original emphasis).

VICTORIAN COURT OF APPEAL

18                  Following the decision of Sackville J in Amcor, the Victorian Court of Appeal considered the question of directions for the filing and service of witness statements in a proceeding for pecuniary penalties under the Excise Act 1901 (Cth): see Sidebottom v Federal Commissioner of Taxation (2003) 52 ATR 184.  The Excise Act proclaimed the relevant conduct to be an ‘offence’ and it spoke of ‘excise prosecution’.  Nevertheless, the Court of Appeal upheld an order made by a judge of the Supreme Court of Victoria requiring non-corporate defendants to file and serve witness statements prior to the trial. 

19                  The leading judgment of the Court of Appeal in Sidebottom was given by Phillips JA, with whom Batt JA and O’Bryan AJA agreed.  Phillips JA expressly rejected the views adopted by Sackville J and observed that the ‘adverse forensic consequences’ and correspondingly granted ‘forensic advantage’ referred to by Sackville J ‘are merely the result of any defendant’s choosing to give evidence’.  His Honour considered that if there is an exposure to penalty, that exposure comes about by the giving of evidence, not the timing of its disclosure.

20                  Phillips JA distinguished the situation from that involved in discovery and interrogatories, where there is coercion requiring a response.  His Honour considered that such coercion is lacking where the order sought is for no more than the delivery of witness statements before trial.  His Honour considered that such an order does not involve compulsion, because no one is compelled to put forward witnesses if he or she chooses not to go into evidence.  The respondents would be required to file and serve witness statements only if they choose to give or adduce evidence, and then only in respect of evidence that they choose to lead.  Accordingly, the order would be concerned only with the timing of the disclosure of the evidence rather than with its provision. 

THE DECISION OF THE PRIMARY JUDGE

21                  The primary judge in the present proceeding expressed a personal preference for the view of Phillips JA in Sidebottom to that expressed by Sackville J in Amcor.  Like Phillips JA, the primary judge considered that there was a fundamental distinction between a situation in which a person is required to produce documents and provide information, on the one hand, and a situation in which the person is left entitled to remain silent and uncooperative but is directed that, if he or she wishes to provide information, that must be done in a particular way or by a particular date.  His Honour considered that, while the former requirement destroyed the right of silence, the latter requirement merely regulated the manner of breaking the silence that the person had the option to maintain. 

22                  His Honour considered that, since the statements from Fedora and Bell would not be required until after the Commission had filed and served all of its statements of evidence and completed its discovery of documents, the Commission’s ‘cards would all be on the table’.  His Honour considered that, because it would not be proper for the Commission to use the individual respondents witness statements as a source of new ‘leads’, giving rise to further evidence in chief, there would be no adverse forensic consequences for Fodera and Bell in providing their statements in advance of the trial and prior to the closure of the Commission’s case.  His Honour concluded that the dispute was only about timing and that the arguments of Fodera and Bell were based on mistrust of the Commission, in relation to the use that would be made of the statements, and the Court, in relation to enforcement of the relevant limitations on such use. 

23                  Nevertheless, his Honour considered that it was important for there to be consistency of approach within the Federal Court in relation to matters of practice and procedure.  His Honour considered, therefore, that it was undesirable for the course to be followed in preparation for trial of a matter should vary, in any significant way, as between one judge and another.  His Honour, therefore, in refusing the Commission’s application, followed the decision of Sackville J in Amcor.

DISPOSITION OF THE APPEAL

24                  The Commission has urged on the Court the desirability of ensuring consistency in the interpretation of statutes that have a national operation.  Thus, where concurrent jurisdiction is exercised under a statute that operates throughout Australia, it is highly desirable that intermediate appellate courts adopt a consistent approach to the construction of such a statute: see Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492.

25                  However, the issue presently under consideration is not one of the construction of a statute.  It is a question of the general law.  The considerations that arise in relation to the construction of a statute that applies nationally do not necessarily arise in the present case.  The question concerns the content of the privilege against being required to furnish information that might tend to result in the imposition of a penalty.  The decision of the Victorian Court of Appeal is inconsistent with the approach taken by a number of judges at first instance in proceedings in both the Trade Practices and Corporations Law fields where individual respondents have been excused from filing and serving affidavits/witness statements on the basis of the ‘penalty’ privilege: see, for example, Australian Competition and Consumer Commission v J McPhee & Son (Australia) Pty Ltd (1997) 77 FCR 217 (Heerey J); ASIC v ABC Fund Managers Ltd [2001] VSC 92 (Warren J); Australian Securities and Investments Commission v Plymin (2002) 4 VR 168 (Mandie J).  Recently, in ASIC v Rich [2003] NSWSC 328, Austin J observed (at [69]):

‘If it were necessary for me to make a decision, I would hold, with the greatest respect to Phillips JA, that the reasoning of Sackville J is compelling in a case where the proceeding is for the imposition of a penalty.  It is unnecessary for me to decide between the two approaches, however, because my view is that the present case is not a case for the imposition of a penalty….’

26                  Whilst the decision of the Victorian Court of Appeal in Sidebottom is entitled to the greatest of respect, we are not bound to follow it.  We do not do so for the following reasons.

27                  It is common ground that, by furnishing statements, Fodera and Bell might provide information that would enable the Commission to improve its case.  However, the Commission points to the undertaking that it has proffered and says that the consequence of the undertaking is that it would not be able to make any use of statements filed that would be inconsistent with the rationale for the privilege.  However, the existence of the undertaking cannot be determinative of the question.  Either the privilege is infringed by the proposed direction or it is not.  If the privilege is infringed, then the undertaking does not justify infringement.  The respondent cannot be required to surrender a privilege in return for protection different from that which the law provides.  In point of principle, if the decision in Sidebottom were correct, a Court would be entitled (subject to discretionary considerations) to give a direction for the filing of witness statements by individual respondents in penalty proceedings whether or not an undertaking of the kind proffered in the present case is or is not given.

28                  The decision in Sidebottom rests on the premise that an order for the provision of witness statements before trial does not oblige the individual respondent to provide information, hence the cases which decide that orders for discovery or interrogatories will not be made in proceedings for the recovery of a penalty have no application.  Any information which the respondent provides in consequence of an order for the provision of witnesses statements, according to the decision in Sidebottom, is as a result of the respondent’s choice to give evidence; any forensic disadvantage which accrues to the respondent from the provision of witnesses’ statements is also merely the result of that choice.

29                  While there would be no direct compulsion on Fodera and Bell to file statements pursuant to the directions sought by the Commission, the practical consequence of the direction may be that they will be compelled to file statements in order to preserve the option to which they are entitled, to decide after the Commission’s case is closed, to go into evidence.  If they are compelled either to file statements before the commencement of the trial or to be precluded from going into evidence, there is a practical compulsion imposed on them, in order to preserve the option that the law gives to them, to file statements.  That is inconsistent with the privilege. 

30                  We agree with the observations of Sackville J, quoted above, that the ‘election’ which individual respondents face as a result of an order for the provision of witnesses’ statements is neither unconstrained nor free and the ‘choice’ with which a respondent is confronted may be more apparent than real.

31                  The Commissioner submits that, in view of the fact that it has filed and served its case in chief, both affidavit and documentary, and has proffered and proffers an undertaking to the Court that any statements provided on behalf of individual respondents will not be tendered in its case in chief or relied upon to support a submission that the particular individual respondent had a case to answer, there is in any event no real or appreciable risk of self-exposure: see Ganin v NSW Crime Commission (1993) 32 NSWLR 423 at 436-439; Registrar, Court of Appeal (NSW) v Craven (1994) 126 ALR 663 at 689-670.  On the other hand, the individual respondents assert that the provision of witness statements by an individual respondent to an applicant in civil penalty proceedings in advance of the trial provides a forensic advantage to the applicant and affords the applicant an opportunity of improving its case.

32                  For the reasons we have already given, the privilege cannot be abrogated or undermined because the Commission proffers undertakings designed to replicate the protection otherwise afforded by the privilege.  As the action is one for the imposition of a penalty, the Court declines to make any order ‘for the provision of information’ by an individual respondent without there being any obligation on the respondent to show otherwise than from the nature of the proceedings that there is a real or appreciable risk of self-exposure: Refrigerated Express (at 208).  Hence it is unnecessary to endeavour to isolate and examine the forensic advantage(s) which may accrue(s) to a party from the provision of witness statements in advance of the trial.

33                  However, it may readily be inferred that such forensic advantage may accrue to the Commission if only because the Commission sees its interests, as the party seeking a penalty, as being furthered by an obligation to provide the statements.  Pre-trial disclosure of the evidence to be called by an individual respondent may assist the Commission to improve its case against that respondent, albeit leave of the Court would be required if the Commission sought to expand its case in chief as a result of ‘leads’ obtained from the statements.  The undertakings proffered by the Commission would not preclude the Commission from seeking leave.  Whether leave would be granted is a different question.  But the possibility that it might be granted indicates that the respondent is at risk of exposing himself to a penalty by reason of the provision of information in advance of the trial.  It is not a matter of mistrusting the Commission or the Court.  Circumstances might arise where it would be proper to permit such evidence to be adduced by the Commission notwithstanding that it was obtained as a result of ‘leads’ obtained from the statements.  As Deane J said in Reid v Howard it is obvious that a person who has to rely on a refusal to exercise a judicial discretion is in a less secure position than one who, by relying on the privilege, can avoid providing the information in the first place.

34                  It is true that, at some stage of the proceedings, a respondent  must elect whether or not to go into evidence.  But an election which is preserved until after the  Commission closes its case is quite different from one which is brought forward to a time before the case is closed.  Once it is acknowledged that circumstances may arise before the case is closed under which supplementary evidence may be adduced, even though it was obtained from the respondent’s ‘leads’, it is plain that the privilege is so weakened that it is either impermissibly abrogated or substantially undermined.

35                  The appeal should be dismissed with costs.

Associate:

Dated:              16 June 2003