FEDERAL COURT OF AUSTRALIA
Meneses v Directed Electronics OE Pty Ltd [2019] FCAFC 190
ORDERS
First Applicant OE SOLUTIONS PTY LTD (ACN 119 188 019) Second Applicant | ||
AND: | DIRECTED ELECTRONICS OE PTY LTD (ACN 130 647 737) Respondent | |
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. The applicants have leave to appeal.
2. The applicants’ draft notice of appeal stand as their notice of appeal.
3. The respondent have leave to rely on its amended notice of contention.
4. The appeal be allowed.
5. Paragraphs 6 and 7 of the orders made by the primary judge on 6 March 2019 be set aside.
6. Paragraph 1 of the costs orders made by the primary judge on 2 April 2019, insofar as it deals with costs as between the first and sixth respondents below and the applicant below, be set aside.
7. The appellants’ claims based on the privilege against self-incrimination and the privilege against self-exposure to penalties be remitted to a judge of this Court for re-determination.
8. In relation to costs:
(a) By 4.00 pm on 8 November 2019, the appellants file and serve a written submission (of no more than three pages), dealing with the costs of the application before the primary judge, and the costs of the application for leave to appeal and the appeal.
(b) By 4.00 pm on 15 November 2019, the respondent file and serve a written submission (of no more than three pages), dealing with the costs of the application before the primary judge, and the costs of the application for leave to appeal and the appeal.
The issue of costs will then be determined on the papers.
9. Paragraphs 1 to 6 of the orders made by the Court on 12 August 2019 (which relate to confidentiality of the reasons for judgment of the primary judge) be extended to apply for a period of five years from the date of these orders, or such other period as the Court might order.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
THE COURT:
Introduction
1 The issue raised by this application for leave to appeal concerns a claim by the sole director and shareholder of a company that he is entitled to invoke the privilege against self-incrimination and the privilege against self-exposure to penalties (the penalty privilege) to resist an order for production of documents.
2 The proceeding below was commenced by Directed Electronics OE Pty Ltd (Directed OE) against various respondents, including OE Solutions Pty Ltd (OE Solutions) as first respondent and Johnny Meneses (Mr Meneses) as sixth respondent (together, the Meneses parties). Mr Meneses is the sole director and shareholder of OE Solutions.
3 In October 2017, on the ex parte application of Directed OE, a judge of this Court (the docket judge) made a search order directed to seven named individuals and corporations, including Mr Meneses and OE Solutions. The order made specific provision for the preservation of claims to privilege against self-incrimination and the penalty privilege.
4 The search order was executed at various properties, including the residence of Mr Meneses at Aspendale Gardens, Victoria (the Aspendale Gardens property). Mr Meneses was not present at the time, as he was overseas. Mr Meneses’s son was present. Subsequently, Mr Meneses’s wife arrived at the property. Mr Meneses’s wife and son obtained legal advice and then, through their lawyer, consented to the search order being executed, subject to a reservation of the right to claim privilege over any documents that were taken. The independent lawyer and the independent computer consultant who assisted in the execution of the search order took away hard copy documents and certain computers and hard drives.
5 Orders were subsequently made by the docket judge to the general effect that any claims for privilege in respect of documents taken pursuant to the search order could be made in the context of giving discovery.
6 The Meneses parties made discovery by filing a joint list of documents verified by an affidavit of Mr Meneses. In the affidavit, Mr Meneses stated that the documents set out in Part 2 of the list were in his control, either personally or in his capacity as sole director of OE Solutions. The Meneses parties objected to production of the documents in Part 2 on the grounds of privilege against self-incrimination and the penalty privilege. These documents included documents taken from the Aspendale Gardens property pursuant to the search order. Subsequently, a second list of documents was provided, again verified by an affidavit of Mr Meneses. The second affidavit was expressed in substantially the same terms as the first affidavit and also included a claim for privilege.
7 Directed OE challenged the Meneses parties’ privilege claims and also claims to privilege made by certain other parties. The docket judge referred the challenges to the primary judge for hearing and determination. Following a hearing, the primary judge determined that the Meneses parties’ claims to privilege should be refused. (The primary judge’s determination in relation to the other parties claiming privilege is not relevant for present purposes and can be put to one side.) The primary judge ordered that OE Solutions and Mr Meneses provide inspection of the relevant documents to the solicitors for Directed OE.
8 In his reasons for judgment, the primary judge addressed six questions. It is sufficient to refer to questions 1, 2 and 6 and the answers to those questions:
(a) Question 1 was whether the party claiming privilege had demonstrated that each of the relevant documents was properly a document of the relevant individual. The primary judge answered this question, in respect of the Meneses parties, “No”.
(b) Question 2 was whether a person who is a single director of a company with no employees (as was the case with Mr Meneses in respect of OE Solutions) could claim privilege against self-incrimination in respect of documents belonging to that company, notwithstanding s 187 of the Evidence Act 1995 (Cth). The primary judge answered this question: “No, no such exception to s 187 should be recognised”.
(c) Question 6 was whether each of the relevant documents had a real and appreciable tendency to incriminate the relevant individual respondents or expose them to a civil penalty. The primary judge answered this question, “Yes”.
9 By application dated 20 March 2019, the Meneses parties applied for leave to appeal from the judgment of the primary judge. The application for leave to appeal was argued with full argument as if on appeal, so that, if leave to appeal is given, the appeal has been heard concurrently. Central to the Meneses parties’ proposed grounds of appeal is the contention that the primary judge erred in how he framed questions 1 and 2. There is no challenge by Directed OE to the primary judge’s conclusion in relation to question 6.
10 Directed OE filed a notice of contention. At the hearing, Directed OE sought leave to rely upon an amended notice of contention. We describe these documents later in these reasons.
11 For the reasons that follow, we have concluded that leave to appeal should be granted and the appeal allowed. In summary, in light of the principles discussed later in these reasons, in our respectful opinion the primary judge erred in his consideration of the privilege claims. In relation to the amended notice of contention, we consider that Directed OE should have leave to rely on the amended notice of contention, but we reject the grounds in the amended notice of contention. We consider that the claims to privilege should be remitted to a judge for re-determination.
Background
The proceeding below
12 Directed OE is an Australian automotive electronics developer and supplier. It specialises in the development and distribution of in-vehicle electronics, hardware, telematics, and emerging technologies. Directed OE alleges that, at all relevant times, Mr Meneses was an employee of Directed OE, having commenced his employment in May 2009. Mr Meneses was employed as Directed OE’s Business Development Manager, and had been acting as its General Manager.
13 On 26 October 2017, and on the ex parte application of Directed OE, the docket judge made a search order as authorised by Division 7.5 of the Federal Court Rules 2011 (Cth). The terms of the order substantially followed the example form of search order annexed to the Court’s Search Orders Practice Note (GPN-SRCH). The order was directed to seven named individuals and corporations, including Mr Meneses and OE Solutions. In addition, the order was directed to “any other person or entity in occupation or at” four identified premises. The order contained detailed provisions. It provided that those to whom the order was directed should permit the persons who were defined in the order as the “search party”, to enter the premises and to search for and inspect “listed things”, which were described in Schedule A of the order. The order also provided that the persons to whom the order was directed should permit: an independent lawyer to remove the listed things; and an independent computer expert to search computers, make copies of any hard drives, and remove any hard drives from the premises. The premises that were identified in the order included the Aspendale Gardens property. A title search obtained on 23 October 2017 recorded that Mr Meneses and Elisa Jenny Meneses were joint proprietors of that property.
14 An affidavit made in support of the search order deposes to a number of facts supporting the allegations that Directed OE makes in the proceeding against Mr Meneses. Those allegations may be summarised as follows. Since 2009, Directed OE had acquired components, products and equipment from a Korean company, Hanhwa Hightech Co Ltd (Hanhwa Korea), which has an Australian subsidiary, Hanhwa Hightech Australia Pty Ltd (Hanhwa Australia). In 2010, Mr Meneses identified a new supplier for some of the products which Directed OE required, and from about that time onwards Directed OE purchased products from OE Solutions. Mr Meneses is the sole director and the sole shareholder of OE Solutions, which has its registered office at the Aspendale Gardens property. Directed OE alleges that over a period of years OE Solutions rendered invoices to Directed OE, which it paid, for the supply of products which OE Solutions acquired from one of Directed OE’s existing suppliers, Kenmarco Industries Pty Ltd (Kenmarco). In substance, Directed OE alleges that Mr Meneses dishonestly arranged for his own company, OE Solutions, to be an intermediary in the supply of goods by Kenmarco to Directed OE, and dishonestly charged marked-up prices to Directed OE.
15 Directed OE alleges a range of other wrongful conduct by Mr Meneses and the other respondents to the proceeding. The allegations include that OE Solutions and Hanhwa Korea entered into a written agreement dated 12 May 2012 under which Hanhwa Korea agreed to pay secret commissions to OE Solutions. The agreement is alleged to be on Hanhwa Korea letterhead, and is addressed to OE Solutions. The text of the agreement is as follows:
Attn: MR JOHNNY MENESES
OE SOLUTIONS PTY LTD
[Street address omitted]
ASPENDALE VIC
AUSTRALIA
Dear Johnny Meneses,
This is to confirm that with effective from the date of 01.July. 2009, it is understood that OE Solution will provide the following services to Hanhwa Co., Ltd.
1. Co-ordination for the on-going business with Directed Electronics & Hanhwa.
2. Control and developing new business with Hanhwa.
It is agreed that charge for such service of buyer orders including Directed will be supported by OE Solutions will be 3% of the shipped order amount per shipment payable upon completion of the shipment.
Also Hanhwa agrees the remittance to OE Solutions service charge agreed between OE Solutions and Hanhwa after shipment for buyer orders as below account no.
Name: Johnny Meneses
Band swift: WPACAU2S
Band name: WESTPAC BANK
Address: 203 Boundary Rd braeside Vic 3195 Australia
Account: [omitted]
Accepted by Very Truly
OE SOLUTIONS PTY LTD HANHWA HIGHTECH CO., LTD
(Errors in original.)
16 Directed OE located this agreement on its email systems, and alleges that on 21 May 2012 the eighth respondent to the proceeding, Ryan Lee, emailed the agreement to Mr Meneses at his Directed OE email address, to which Mr Meneses replied:
Ryan, Please ONLY send this info to my home email ONLY!!!!!!!!!!!!
17 Directed OE alleges that Hanhwa Korea paid into the bank account of Mr Meneses not less than $1.096 million in secret commissions between 2009 and 2016.
18 There are many other claims made against OE Solutions and Mr Meneses. The claims are extensive and include breaches by Mr Meneses of duties under ss 182 and 183 of the Corporations Act 2001 (Cth), which are civil penalty provisions: s 1317E. The claims against Mr Meneses also include breaches of fiduciary duties, breaches of contractual obligations, inducing breach of contract, infringement of copyright, contraventions of s 18 of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth), and accessorial liability for the contraventions of the Corporations Act by the seventh respondent to the proceeding, Mr Mills. As to OE Solutions, Directed OE alleges that it is liable as an accessory to Mr Meneses’s breach of statutory duties, as a knowing participant in dishonest breaches of fiduciary duties, and for inducing Mr Meneses to breach his contractual obligations to Directed OE. The underlying conduct alleged to give rise to the causes of action against the Meneses parties includes diverting commercial opportunities, copying and misusing confidential information, engaging in employment by a competitor whilst employed by Directed OE, and soliciting Directed OE’s employees to leave their employment and to commence work for Hanhwa Australia.
19 Mr Meneses has made a cross-claim in the proceeding against Directed OE and its two directors alleging that in May 2009 he and the other directors entered into an agreement to carry on the business of selling in-vehicle electronics products and components in common for mutual profit, and seeking, amongst other relief, declarations that shares in Directed OE are held on trust for him as to a one third share and that the business was conducted as a partnership.
The execution of the search order
20 The search order was executed at the four premises that were identified in the order. The issues raised by this application for leave to appeal concern Mr Meneses’s claim to privilege in respect of the “listed things” that were removed on 27 October 2017 from the Aspendale Gardens property, which was the home of Mr Meneses and, as we have mentioned, was also the registered office of OE Solutions.
21 The execution of the search order at the Aspendale Gardens property is the subject of an affidavit of the independent lawyer, Mark Andrew Schofield, dated 31 October 2017. Mr Schofield accompanied the solicitor for Directed OE, Mr Anthony Watson, and an independent computer expert, Mr Edgar Zayas, who was employed by Ferrier Hodgson. Mr Schofield knocked on the front door of the premises at approximately 6.30 am, and at approximately 6.35 am spoke to a male occupant who identified himself as Nathan Meneses, a son of Mr Meneses and who is the ninth respondent to the proceeding below. Mr Schofield served Nathan Meneses with a folder of documents, which included the search order. Nathan Meneses informed Mr Schofield that his father, Mr Meneses, was overseas. Mr Schofield ascertained that also present at the property were Nathan Meneses’s sister and his cousin. Mr Schofield deposes to an initial discussion with Nathan Meneses, the attendance of police at the premises, and telephone calls made by Nathan Meneses to his mother, Elisa Meneses, and to the Court. Mr Schofield’s evidence of what followed is set out below:
9. At 8.39am Elisa Meneses arrived at the premises. I introduced myself and explained to her in the presence of her daughter, niece and [Nathan Meneses] the terms and effect of the Order and informed her that she could obtain legal advice. Elisa Meneses then informed me that she would be obtaining legal advice.
10. After 9.30 am Elisa Meneses spoke with her solicitor Hazel Brasington from Norton Rose Fulbright. I then spoke to Hazel Brasington who informed me that Elisa Meneses would co-operate. Hazel Brasington also informed me that her clients being [Mr Meneses], [Nathan Meneses] and Elisa Meneses reserved their right to claim privilege over any documents that were seized after she had inspected them. I also arranged for a copy of the Penal Notice to be emailed to Hazel Brasington. Elisa Meneses then informed me that she and her family agreed to the search being conducted and that representatives from Norton Rose Fulbright were being sent to the address.
11. I then informed Anthony Watson and Edgar Zayas that they could commence the search. Anthony Watson and Edgar Zayas entered the house soon thereafter. I introduced them to [Nathan Meneses] and Elisa Meneses and we discussed how the search would be conducted to ensure minimum disruption. [Nathan Meneses] advised me that he did not know whether he had any of the items referred to in Schedule A of the Order. A room by room search of the premises then commenced. Edgar Zayas reviewed computers, laptops, and tablets. Anthony Watson conducted a physical search of the premises, including cabinets, drawers, shelves, desks, a safe and cupboards in all of the rooms.
12. At approximately 10.50am Raj Pillay and Abbas Hammoud both from Norton Rose Fulbright arrived at the premises. Raj Pillay supervised the search being conducted by Anthony Watson and Abbas Hammoud supervised the search being conducted by Edgar Zayas.
13. I prepared a list of removed items which was checked and signed by [Nathan Meneses], Elisa Meneses and Raj Pillay. The list was also signed by Anthony Watson and me. Raj Pillay took a photograph of the list. The list has also been provided to both [Directed OE’s] solicitor and Norton Rose Fulbright. Annexed and marked “MAS-1” is a copy of the list of removed items.
14. The removed items were then placed in a box which was taped shut by Raj Pillay. Raj Pillay and I signed the tape which secured the box.
15. Edgar Zayas prepared a list of items that were taken by him from the premises. Annexed and marked “MAS-2” is a copy of the list prepared by Edgar Zayas.
16. Raj Pillay then asked me to provide an undertaking that I would not inspect the documents until after Norton Rose Fulbright had inspected them. I informed him that pursuant to paragraph 22 of the orders I had to be present when this inspection took place.
22 Mr Zayas, the independent computer expert, made a report dated 3 November 2017 in which he stated that at approximately 10.00 am he was instructed by Mr Schofield to enter the premises, where he was introduced to Elisa Meneses and Nathan Meneses, whom he described as residents of the address. Mr Zayas stated that Ms Meneses showed him to the study to commence an initial search to identify computers and other devices. Mr Zayas stated that he entered the study where a number of items including a desktop PC, a laptop, a tablet, hard drives, USB sticks and SD cards were located. Later, these devices were forensically imaged before being returned to the premises. Subsequently, Ferrier Hodgson reviewed the digital images with the use of search terms to identify “listed things”. As a result of that process, 629 documents were identified from the images taken from devices at the Aspendale Gardens property together with the entire contents of a 2 terabyte hard drive. The report of another independent computer expert, Justin Geri of Ferrier Hodgson, dated 16 February 2018, stated that on 12 December 2017 a copy of all documents relating to the Aspendale Gardens property was provided to Norton Rose in a Ringtail load file format.
23 The search order was returnable on 1 November 2017 before the docket judge. Relevantly, in relation to the hard copy documents, on that date the Court made the following orders:
Access to documents
9. The independent lawyer is to retrieve from the Court the hard copy documents seized pursuant to the Search Order made on 26 October 2017 (Search Order) from all respondents’ premises and the Gridtraq Australia Pty Ltd (Gridtraq) premises and:
(a) provide access, in the first instance, in respect of [OE Solutions] and [Mr Meneses’s] (Meneses parties) documents, to the lawyers for the Meneses parties for the purpose of making any claims of privilege or confidentiality in respect of those documents, and any such claims to be communicated to the independent lawyer and [Directed OE’s] lawyers by 10.15 am on 8 November 2017;
…
10. In respect of any hard copy documents referred to in sub-paragraphs 9(a) to 9(c) above for which no claim of privilege, confidentiality or relevance is made, [Directed OE’s] lawyers be permitted, after midday on 8 November 2017, to uplift those documents and keep them in [Directed OE’s] lawyers’ custody for the purpose of this proceeding.
24 The solicitors for Mr Meneses and OE Solutions, Norton Rose Fulbright, wrote to Directed OE’s solicitors by letter dated 13 November 2017. The letter referred to the orders made by the docket judge on 1 November 2017 and stated:
Our clients do not object to production of the documents listed in Schedule A to this letter. In accordance with paragraph 10 of the Orders, those documents may now be released to [Directed OE’s] lawyers (only) and kept in their custody for the purposes of this proceeding.
Our clients make claims of privilege in respect of the documents listed in Schedule B to this letter, on the grounds identified in that schedule.
25 The balance of the letter foreshadowed claims for privilege against self-incrimination and the penalty privilege. Subsequently, on 19 February 2018 the docket judge made the following orders which facilitated the making of claims to privilege and the substantiation of those claims:
Claims to privilege
3. By 26 March 2018, any respondent who objects, on the grounds of privilege, to the production of any hard copy or electronic documents that were obtained pursuant to the search order made on 26 October 2017 as amended:
(a) prepare an affidavit setting out, with reference to each document or category of documents, the grounds of objection (privilege objection affidavit) and deliver it to the Court in a sealed envelope; and
(b) file and serve on each other party a separate affidavit setting out the basis of the objections and any written submissions they wish to rely upon in support of their objections.
4. A sealed envelope containing a privilege objection affidavit must not be opened except as directed by the Court.
5. By 4 April 2018, [Directed OE] file and serve any material, including any written submissions, upon which it wishes to rely in answer to any objections notified pursuant to paragraph 3 above.
6. The determination of any objections notified pursuant to paragraph 3 above be listed for hearing on a date to be fixed.
26 The Meneses parties did not file affidavits pursuant to the above orders, but instead filed lists of documents as contemplated by further orders that were made by the docket judge on 16 March 2018:
1. Subject to further order, in respect of those electronic documents seized from each of the premises of the Second and Eighth, First and Sixth and Seventh Respondents’ (Relevant Respondents) pursuant to the Search Order made on 26 October 2017 (the Electronic Documents):
(a) the Relevant Respondents shall be treated as having discharged their obligations under orders 3 and 17 made on 19 February 2018 by claiming privilege and giving standard discovery in respect of only those Electronic Documents that contain one or more of the search terms set out in pages 25 to 27 (inclusive) of exhibit “PJDP1” to the affidavit of Ms Phoebe Jane Donaldson Pitt sworn 15 March 2018 (in respect of those Electronic Documents seized from the Second and Eighth Respondents’ premises, excluding the word “Hanhwa”) (the Refined Electronic Documents);
(b) the Applicant shall only be permitted inspection of the Refined Electronic Documents discovered by the Relevant Respondents, subject to the determination of claims for privilege.
2. Notwithstanding order 1 above, if after making reasonable enquiries of their client(s), a solicitor for a Relevant Respondent becomes aware of a document that is not a Refined Electronic Document but otherwise would (but for order 1 above) be discoverable, then that Relevant Respondent must discover that document.
27 On 25 May 2018, the docket judge made orders that by 15 June 2018, the Meneses parties give standard discovery. In response to those orders, the Meneses parties filed two lists of documents. The first list of documents, which was dated 20 June 2018, was verified by affidavit sworn by Mr Meneses. The list of documents commenced by stating:
Pursuant to the order for discovery made on 25 May 2018, the First and Sixth Respondents [i.e. OE Solutions and Mr Meneses] make this list of documents and affidavit.
28 Paragraph 3 of the affidavit stated:
3. To the best of my knowledge, information and belief, there are no documents specified in the order that are or have been in my control or the control of [OE Solutions], other than:
(a) the documents specified in this list of documents; and
(b) documents received from Ferrier Hodgson in electronic form, where the contents of the electronic images are corrupt or otherwise not yet able to be reviewed.
29 Paragraph 4 of the affidavit stated:
4. The documents set out in part 1 are in my control, either personally or in my capacity as sole director of [OE Solutions], and I do not claim privilege from production for any of these documents.
30 In relation to privilege, paragraphs 6 and 7 of the affidavit stated:
6 In this proceeding, the applicant:
(a) alleges that I have received secret commissions during my employment with [Directed OE] (see, for example, paragraphs 31 to 36 of the statement of claim dated 13 December 2017);
(b) expressly raises the prospect of criminal charges arising out the allegations made against me (per paragraph 82 of the Affidavit of Stavros Siolis sworn 25 October 2017), which may be a reference to s 176 of the Crimes Act 1958 (Vic); and
(c) alleges that I have contravened civil penalty provisions ss 182 and 183 of the Corporations Act 2001 (Cth) (see, for example, paragraphs 35, 44, 68, 97, 116, 131, 136 and 145 of the statement of claim).
7 The documents set out in part 2 are in my control, either personally or in my capacity as sole director of [OE Solutions], but I claim privilege from production of each of these documents on the grounds set out in part 2. In respect of those documents which are held by me in my capacity as sole director of [OE Solutions], if [OE Solutions] is required to produce those documents, my claims to the privilege against self-incrimination or privilege against exposure to penalty (or both) will be rendered nugatory. [OE Solutions] can only give discovery and inspection of these documents by requiring me to tend to incriminate myself or expose myself to a civil penalty.
31 The list of documents was divided into “Part 1” and “Part 2”. Part 2 was headed:
Part 2 – Documents in the control of [OE Solutions] or [Mr Meneses] for which privilege from production is claimed.
32 Part 2 of the list was in the form of a table in which most of the documents were identified as “PSI”, or “PCP”, which acronyms were defined as:
(a) “PSI” means that I claim privilege on the basis that there is a real and appreciable risk that the information in the documents may tend to prove, directly or indirectly, that I have committed an offence arising under an Australian law or a law of a foreign country or may set in train a process which may lead to incrimination or may lead to the discovery of evidence of an incriminating character; and
(b) “PCP” means that I claim privilege on the basis that there is a real and appreciable risk that the information in the documents may tend to prove that I am liable to a civil penalty or otherwise expose me to the imposition of a civil penalty.
33 Most of the documents discovered in the Part 2 list are described as emails, or attachments to emails. The balance of the documents are described as being files in Adobe Acrobat PDF format. The Meneses parties filed a second list of documents which was verified by affidavit sworn by Mr Meneses on 9 July 2018. That list of documents is in corresponding terms to the list of 20 June 2019, and lists a further sixteen documents in Part 2. Mr Meneses swore a third affidavit on 25 October 2018 in which he corrected ten items in Part 2 of the first list where the specific ground on which privilege was claimed had been omitted, and in respect of those ten items made a claim for the penalty privilege.
34 The Meneses parties objected to production of 111 documents on the ground of privilege against self-incrimination, and 3,031 documents on the ground of the penalty privilege. Subsequently, the Meneses parties withdrew claims to privilege in respect of seven documents: see the reasons of the primary judge at [97]. The primary judge found that, of the documents to which objection to production was made, all but 583 of the documents had been removed from the Aspendale Gardens property in the course of the execution of the search order.
The decision of the primary judge
35 Directed OE challenged the claims to privilege from production made by the Meneses parties and certain other respondents. The docket judge referred the challenges to the primary judge for hearing and determination. The hearing took place over four days: 26 October, 19 November and 11 December 2018, and 11 February 2019. Between them, the parties filed ten documents comprising written submissions. The primary judge reserved his decision, and on 6 March 2019 ordered that OE Solutions and Mr Meneses provide inspection of the documents listed in Part 2 of their lists of documents.
36 The primary judge framed the issues that arose on the application as six questions. The questions and the answers to those questions were set out at [18] of his Honour’s reasons for judgment. It is only necessary to refer to questions 1, 2 and 6, and the answers to those questions, which were as follows:
(1) Whether the party claiming privilege has demonstrated that each of the Relevant Documents is properly a document of the relevant individual, and not a corporation.
Answers:
(a) In the case of the Meneses’ parties: No;
…
(2) Whether a person who is a single director of a company with no employees can claim privilege against self-incrimination in respect of documents belonging to that company, notwithstanding s 187 of the Evidence Act.
Answer: No, no such exception to s 187 should be recognised.
…
(6) Does each of the Relevant Documents have a real and appreciable tendency to incriminate Meneses, Mills or Lee for a criminal offence or expose them to a civil penalty?
Answer: Yes.
The expression “Relevant Documents” was used by the primary judge to refer to (relevantly) the documents that the Meneses parties claimed were subject to the privilege against self-incrimination or the penalty privilege.
37 His Honour received into evidence a confidential affidavit of Mr Meneses sworn 29 January 2018. The confidential affidavit was not made available to Directed OE. Confidential affidavits are received into evidence often enough in support of claims for public interest immunity: see Parkin v O’Sullivan (2009) 260 ALR 503 at [23]-[30] per Sundberg J. And courts may inspect documents in respect of which claims for privilege are made: see Evidence Act, s 133; Grant v Downs (1976) 135 CLR 674 at 677, 688-689, 692; Esso Australia Resources Ltd v Federal Commissioner of Taxation (1999) 201 CLR 49 at [52]. In the present case, no application was made to the primary judge by Directed OE to see the confidential affidavit, and there was no objection to its receipt on that basis.
38 His Honour’s reasons for judgment refer in detail to the confidential affidavit. Accordingly, the parts of the judgment containing this material were redacted from the versions of the judgment made available publicly and to Directed OE. In advance of the hearing of the appeal, the solicitors for the Meneses parties offered to provide Directed OE with a slightly less redacted version of the reasons for judgment, and on 12 August 2019 we made orders to facilitate this course. Directed OE makes no complaint about the fact that it has not received the full version of the reasons for judgment. At the hearing of the appeal, senior counsel for Directed OE accepted that it was appropriate in the circumstances that it only receive a redacted version of the reasons.
39 The primary judge considered question 1 at [46]-[99] of his reasons for judgment. At [47], his Honour framed question 1 as whether (relevantly) Mr Meneses had “established that each of the Relevant Documents is properly [his] own document and not a document of OE Solutions”. The primary judge stated, at [47], that this question was “critical because the privilege against self-incrimination is not available to a corporation”, referring to s 187 of the Evidence Act and Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375 at [56]-[57] per Nettle J.
40 The primary judge noted, at [56], that all parties claiming privilege accepted that the onus was upon them to establish the claim.
41 The primary judge then set out, at [58], part of Mr Meneses’s confidential affidavit dated 29 January 2018. This paragraph of the reasons for judgment has been redacted in the version provided to Directed OE. Included in the affidavit were the following statements that do not raise confidentiality concerns. Mr Meneses stated that: “[a]ll of the documents set out in part 2 of the First Affidavit and Second Affidavit were in my possession, custody or power, either personally or in my capacity as sole director of OE Solutions”. Mr Meneses stated that “[s]ome of the documents set out in part 2 were obtained from my family home in Aspendale Gardens through the execution of the search order”. Mr Meneses also stated that: “OE Solutions does not, and has never had, its own separate business premises. At all relevant times, I have conducted the operations of OE Solutions from my family home.” Mr Meneses also stated that, since the incorporation of OE Solutions in 2006, “I am the only person who has been involved in the management of OE Solutions. I am, and at all times have been, its sole director and shareholder.”
42 After setting out the extract from Mr Meneses’s confidential affidavit, the primary judge stated, at [59], that the statement that all of the documents set out in Part 2 of the lists were in Mr Meneses’s possession, custody or power, either personally or in his capacity as sole director of OE Solutions, was “hardly illuminating”. The primary judge stated, at [60], that the statements in Mr Meneses’s confidential affidavit were not informative on the critical question, namely “which documents were held by him personally, or qua director (and thus on behalf of the company)”. (Although these paragraphs of the reasons are redacted, we do not consider them to be confidential.)
43 The confidential affidavit of Mr Meneses identified categories of documents in respect of which privilege was claimed and listed the documents falling into each category. For each category, the affidavit contained a description of the documents, together with a statement regarding the privilege claim. The primary judge addressed each of the categories, setting out the relevant portion of the confidential affidavit and then considering the answer to question 1 in respect of that category. For example, at [66] of the reasons, his Honour set out a paragraph of the confidential affidavit dealing with categories 1 and 2. His Honour then stated, at [67], that only the first two sentences of the paragraph from the affidavit were “capable of going to the company/non-company issue”. His Honour considered that this paragraph of the confidential affidavit indicated that the documents were the documents of OE Solutions. At [68], the primary judge stated that he had inspected the sample documents exhibited to the affidavit and stated that they were, in fact, emails sent by Mr Meneses using his email address at Directed OE. The primary judge said that presumably, therefore, they were Directed OE documents. It followed, the primary judge said at [69], that he was not satisfied that “any of the documents in categories 1 and 2 are capable of attracting Privilege”, that is, the privilege against self-incrimination or the penalty privilege.
44 The primary judge then examined each of the other categories of documents identified in the confidential affidavit. In each case, his Honour concluded that he was not satisfied that the documents in the category were capable of attracting the privilege against self-incrimination or the penalty privilege. In several cases, as with categories 1 and 2, the primary judge considered the documents to be documents of Directed OE. That is, the primary judge did not consider such documents to be documents of OE Solutions (Mr Meneses’s company) but rather documents of Directed OE.
45 In relation to category 10, the primary judge noted, at [92], that the category included accounts of OE Solutions. His Honour stated that those accounts “cannot possibly be the subject of a claim to Privilege”. The category also included documents, tax returns and financial statements of the Meneses Family Trust. His Honour stated that such documents “are OE Solutions documents because that company is the trustee of the Meneses Family Trust”. Although almost all of [92] of the reasons is redacted in the version of the reasons provided to Directed OE, we do not consider these matters to be confidential.
46 In relation to category 11, the primary judge stated, at [95], that no part of the explanation for this category in the confidential affidavit provided “any basis for any conclusion other than that the documents are the documents of one or other of the Hanhwa parties”.
47 The primary judge concluded his consideration of question 1 by stating at [99] that he would “accordingly order that the documents be provided for inspection”. Thus, his Honour considered the answer to question 1 to be determinative.
48 The primary judge considered question 2 at [106]-[120] of his reasons for judgment. At [107], the primary judge noted that the Meneses parties submitted that, if OE Solutions were directed to produce documents, only Mr Meneses could comply with such a direction, and that would inevitably involve Mr Meneses incriminating himself. At [109], the primary judge noted Mr Meneses’s submission that, as he was the sole director (and sole shareholder) of OE Solutions, the company should be relieved from its obligation to produce documents for inspection because he was the only person able to affirm the company’s list of documents, and to require OE Solutions to make discovery of documents would tend to incriminate him. The primary judge stated, at [110], that he did not accept that proposition. The primary judge expressed the view, at [111], that he should follow the decision of Brereton J in Re Kala Capital Pty Ltd (No 2) [2012] NSWSC 1293 (Kala Capital). In that decision Brereton J had applied some observations of Mason P by way of obiter in R v Ronen (2004) 62 NSWLR 707 (Ronen). We discuss these cases later in these reasons. Accordingly, the primary judge answered question 2, “No”.
49 In relation to question 6, the primary judge held at [125]-[129] that the subject documents had a real and appreciable tendency to incriminate Mr Meneses. We take this finding as extending to the exposure of Mr Meneses to a civil penalty. There is no challenge by Directed OE to this finding.
50 The primary judge noted in his conclusion at [135] that he had not addressed Directed OE’s submission that because Directed OE already had in its possession documents implicating the Meneses parties in, among other things, the payment of secret commissions, the production of further documents would not subject them to “further jeopardy”. The primary judge stated that it was unnecessary to decide that question given the view he had taken. His Honour added: “That said, it would be difficult to form the requisite opinion in circumstances where I have not seen all of the more than 3000 documents in respect of which a claim for Privilege is made”.
51 The orders made by the primary judge on 6 March 2019 were, relevantly, as follows:
6. [OE Solutions] and [Mr Meneses’s] (together, Meneses Parties) application (Meneses Parties Privilege Application) seeking an order that they be relieved of the obligation to provide inspection to [Directed OE] of the documents referred to in the Part 2 of each of their Lists of Documents filed in this proceeding dated 20 June 2018 and 9 July 2018 (Meneses Documents) on the grounds of privilege be refused.
7. On or before 4PM on 21 March 2019, the Meneses Parties are to provide inspection of the Meneses Documents to [Directed OE’s] solicitors.
52 Paragraph 7 of the orders was subsequently stayed pending the hearing and determination of the application for leave to appeal and any appeal.
53 On 2 April 2019, the primary judge ordered that the Meneses parties pay the costs of Directed OE in respect of the privilege application.
The application for leave to appeal and the appeal
54 The Meneses parties seek leave to appeal from the judgment of the primary judge. They have provided a draft notice of appeal (annexure “PEC-01” to the affidavit of Peter Edmund Cash dated 20 March 2019) containing six grounds. The sixth ground is not pressed. The remaining five grounds are set out at some length in the draft notice of appeal. In summary, the five grounds that are pressed are as follows:
(a) The primary judge erred in framing the first and second questions, which we have set out at [8] above.
(b) The primary judge erred in answering the first and second questions. This ground involves challenges to those parts of his Honour’s reasons that have been redacted.
(c) The primary judge erred in ordering the Meneses parties to produce the relevant documents despite Mr Meneses’s claim to privilege, as production of them would require Mr Meneses to incriminate himself, or expose himself to a civil penalty.
(d) The primary judge at [50] stated incorrectly the reasons for the Meneses parties seeking an adjournment of the hearing on 11 December 2018. The primary judge stated at [50] that counsel for the Meneses parties applied for an adjournment to justify the claims to privilege and, in particular, to explain why the documents in respect of which privilege was claimed were documents that were in the power, possession or control of Mr Meneses in his own capacity, or were not documents brought into existence by OE Solutions, or otherwise documents of OE Solutions. The Meneses parties contend that the only purpose of the further evidence was to establish the risk of incrimination or exposure to penalties.
(e) The primary judge erred in applying the decision of Brereton J in Kala Capital.
55 In our view, for reasons indicated later in these reasons, the decision at first instance is attended with sufficient doubt to warrant its reconsideration on appeal, and substantial injustice would result if leave to appeal were refused, supposing the decision to be wrong: see Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399. Accordingly, we will grant the Meneses parties leave to appeal. We will also make an order that the draft notice of appeal stand as the notice of appeal.
56 Directed OE has filed a notice of contention. At the hearing of the appeal, Directed OE sought leave to rely upon an amended notice of contention. The original notice of contention contained one ground, being that the judgment of the primary judge should be affirmed on a basis that was argued, but not decided, namely that the privilege does not apply to any document: (a) in existence before the search order was made; (b) that was seized pursuant to the search order; and (c) that can be proved by independent means. The proposed amended notice of contention contains a second ground, namely that in respect of the relevant documents, other than the 583 documents that were not seized during the search, the judgment ought to be affirmed on the basis that: (a) Mr Meneses was not present at the Aspendale Gardens property at the time that the search order was executed; and (b) therefore, on no view can Mr Meneses be said to have done any self-incriminatory act that might constitute “production” of the relevant documents such as to enable him to resist inspection of the documents seized by claiming the privileges.
57 We heard argument on the amended notice of contention and indicated that we would decide in due course whether to grant leave to Directed OE to rely on the amended notice of contention. The Meneses parties submit that the amended notice of contention raises matters that were not argued below. Directed OE submits that, other than the fact that Mr Meneses was not present at the Aspendale Gardens property at the time the search order was executed, the matters were relied on by Directed OE in its written and oral submissions below. Having reviewed the relevant parts of the written and oral submissions below, we consider that the matters set out in the amended notice of contention were sufficiently raised below. In these circumstances, we will grant leave to Directed OE to rely on the amended notice of contention.
The parties’ submissions
The Meneses parties’ submissions in relation to the notice of appeal
58 There is a substantial degree of overlap between grounds 1, 2, 3 and 5 of the notice of appeal. In these circumstances, it is convenient to summarise the parties’ submissions in relation to these grounds together, without distinguishing between these grounds.
59 The Meneses parties submit that, in asking and answering questions 1 and 2, the primary judge directed himself to the wrong questions. The Meneses parties submit that OE Solutions did not assert privilege against self-incrimination or the penalty privilege; it was Mr Meneses who asserted the privileges. In those circumstances, it is submitted, s 187 of the Evidence Act had no application.
60 The Meneses parties submit that Mr Meneses had custody of the relevant documents at the time of the search order; the fact that OE Solutions has its own separate legal identity does not mean that when Mr Meneses gives production only the company is acting; the opposite is true. It is submitted that, as a matter of law, and practical reality, production of the relevant documents by OE Solutions involves an act by Mr Meneses. Reliance is placed on Griffin v Sogelease Australia Ltd (2003) 57 NSWLR 257 (Griffin v Sogelease) at [30]. The Meneses parties submit that: unlike legal professional privilege, where the focus is on the dominant purpose of the communication, the privilege against self-incrimination and the penalty privilege are not directed to the purpose for which a given document was created or who created it; despite this, the primary judge’s reasoning focused on the circumstances in which a document was created and whether the document was “capable of attracting Privilege” (e.g. at [69]).
61 The Meneses parties submit that: in determining a claim to privilege against self-incrimination or the penalty privilege, one asks whether the act of producing a document (handing it over) would tend to incriminate the person who is required to produce it (or would tend to expose them to a civil penalty); if a document has a “real and appreciable risk” of doing so, that person can refuse to produce that document whether the document “belongs” to that person or not; it is irrelevant whether it is their “own document” or someone else’s document.
62 The Meneses parties submit that: the order directed to Mr Meneses requires him to produce documents; the order directed to OE Solutions, while naming OE Solutions, has precisely the same effect; an order directed to OE Solutions requires Mr Meneses to act because there is no other director, officer or employee of OE Solutions; if OE Solutions were to disobey the order, the only person who could be punished for contempt would be Mr Meneses.
63 The Meneses parties submit that the primary judge, having been misdirected by Directed OE as to the appropriate inquiry, then erred in concluding that the relevant documents were not “capable of attracting Privilege” because of the circumstances in which those documents were created. Further, they submit that the primary judge, having found that the relevant documents may incriminate Mr Meneses or expose him to a civil penalty, ought to have held that he could not be compelled to produce them.
64 The Meneses parties submit that the primary judge erred in applying Kala Capital. In support of this submission, the Meneses parties refer to a number of cases, which are discussed later in these reasons.
65 In relation to ground 4 in the notice of appeal, the Meneses parties submit that the primary judge erred in making a statement at [50] concerning the reasons for an adjournment. It is not necessary to set out these submissions in detail. Although the Meneses parties’ written submissions addressed this ground, it was not dealt with in any detail in oral submissions. In response to a question from the Court, senior counsel for the Meneses parties conceded that the ground did not go very far in terms of the appeal (T39).
Directed OE’s submissions in relation to the notice of appeal
66 Directed OE submits that the privilege against self-incrimination and the penalty privilege do not apply to bodies corporate, but the Meneses parties seek to circumvent this settled legal position on the basis that the relevant company (OE Solutions) is a sole director company. It is submitted that the primary judge did not err in refusing to relieve OE Solutions and Mr Meneses, as its sole director and agent (see Kala Capital at [29]), from their obligation to provide inspection to Directed OE of the relevant documents.
67 Directed OE submits that: the Meneses parties’ approach ignores the distinct legal personality of companies; to incorporate a company entails receiving both the benefits and the burdens of distinct legal personality; once brought into existence, companies are obliged to comply with their legal obligations; those obligations are separate from the personal interests of their directors; if a sole director wishes to avoid personally facilitating discovery or production of the documents, then the company is obliged to appoint additional officers, agents or a receiver to do so on its behalf; otherwise, persons such as Mr Meneses (who faces risk from the relevant documents) will be emboldened to incorporate sole director companies to secure for companies the benefits of a privilege which those companies do not have.
68 Directed OE submits that: the primary judge correctly framed the questions, having regard to the onus; question 1 was an essential anterior question given that, if the documents are held on behalf of OE Solutions, then no privilege will apply; accordingly, it was for the Meneses parties to establish whether the relevant documents were properly those of Mr Meneses, and not of OE Solutions.
69 Directed OE submits that the present case is not analogous to Griffin v Sogelease. We address this case later in these reasons. Directed OE submits that OE Solutions is a company in respect of which the privileges do not apply; no privilege attaches to its documents; the company must therefore produce the documents.
70 Directed OE submits that: the relevant documents were seized from the business premises of OE Solutions; they were, therefore, in OE Solutions’s control; to the extent that any action might be required to facilitate their inspection (in the case of documents discovered but not seized), an appropriate officer of the company should produce them; if Mr Meneses does not want to do this, the company must appoint another director or agent to carry out that function.
71 Directed OE submits that: Mr Meneses has already provided a list of documents, including in his capacity as a director of OE Solutions; those documents are apparently in the custody of Norton Rose, which is also representing OE Solutions; all that is left to do is for Norton Rose, as OE Solution’s agent, to provide those documents for inspection.
72 Directed OE submits that the primary judge was correct to apply Kala Capital.
The parties’ submissions in relation to the amended notice of contention
73 In relation to ground 1 of its amended notice of contention, Directed OE submits that: the privilege against self-incrimination and the penalty privilege have no application in relation to pre-existing materials that have been seized and can be proved independently of the respondent’s testimony, relying on Rank Film Distributors Ltd v Video Information Centre [1982] AC 380 (Rank Film Distributors) at 441; C plc v P [2008] Ch 1 at [25], [36] and [38]; and Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR 385 (Controlled Consultants) at 392-393. In making this submission, Directed OE relies on the seizure of the documents, and acknowledges that the principle for which it contends does not apply to the production for inspection of discovered documents, as this conduct by a natural person, if privilege applies, does involve a self-incriminatory act.
74 In response, the Meneses parties submit that Directed OE’s submissions are contrary to Australian authority, citing Griffin v Pantzer (2004) 137 FCR 209 at [37], [39], Griffin v Sogelease, Sorby v Commonwealth (1983) 152 CLR 281 (Sorby) at 288 and Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477 (Caltex) at 502-503. The Meneses parties submit that the error in Directed OE’s position is that it equates a civil search order with a search warrant; they are not the same.
75 In relation to ground 2 of its amended notice of contention, Directed OE submits that, consistently with the fact that the search order was directed to “any other person or entity in occupation or at” the Aspendale Gardens property, those who gave permission to enter the premises and conduct the search and seizure were Nathan Meneses and/or Elisa Meneses; Mr Meneses, who was overseas at the time, did not participate in the search and seizure and cannot, in any sense, be said to have “produced” any of the items seized. Directed OE submits that by reason of his absence, Mr Meneses did not “permit” access to the Aspendale Gardens property or “produce” any documents.
76 In response, the Meneses parties submit that it can be inferred that Mr Meneses gave permission for the search to proceed, by communicating this through Ms Brasington or Mrs Meneses.
Consideration
Search orders
77 The Court has power under Division 7.5 of the Federal Court Rules to make a search order. Rule 7.42 provides that the purpose of a search order is to secure or preserve evidence:
7.42 Search order
The Court may make an order (a search order), in any proceeding or in anticipation of any proceeding in the Court, with or without notice to the respondent, for the purpose of securing or preserving evidence and requiring a respondent to permit persons to enter premises for the purpose of securing the preservation of evidence that is, or may be, relevant to an issue in the proceeding or anticipated proceeding.
78 The express statutory power to make a search order under Division 7.5 of the Rules does not diminish the inherent, implied or statutory jurisdiction of the Court to make a search order: r 7.44.
79 The search order made in the present case differs from a search warrant. The search order did not give the search party authority to enter upon premises, or to search and remove “listed things” against the will of the occupants or any other person entitled to possession of the listed things. As with the original Anton Piller form of order, the search order authorised entry, search, and the removal of listed things only with the permission of the persons to whom the order was directed: Anton Piller KG v Manufacturing Processes Ltd [1976] 1 Ch 55 at 60 per Lord Denning MR. The potency of the order lay in the requirement that the persons to whom the order was directed were required to give permission for the entry, search, and the removal of listed things, and to disclose the whereabouts of the listed things and to facilitate access to them. Refusal of permission might amount to a contempt, but absent permission there was no authority to enter the premises: Long v Specifier Publications Pty Ltd (1998) 44 NSWLR 545 at 547-548 per Powell JA.
80 In Rank Film Distributors, the Anton Piller form of orders that were under consideration were characterised as requiring the immediate discovery of documents: see 444 per Lord Fraser. In Tate Access Floors Inc v Boswell [1991] Ch 512, Browne-Wilkinson VC held that the privilege against self-incrimination was available to resist the supply of information and the disclosure of documents under an Anton Piller order. As Browne-Wilkinson V-C explained in Tate Access Floors Inc v Boswell at 530:
… if a man is entitled to refuse to produce documents, it would be strange if the law permitted an order to be made which forced him to admit others to his house for the purpose of seizing those documents.
See also, Dockray and Laddie, “Piller Problems” (1990) 106 LQR 601 at 612-616.
81 In Rank Film Distributors, Lord Wilberforce stated at 443 that “in due course, no doubt, forms of order will be worked out which will enable the orders to be as effective as practicable while preserving the defendant’s essential rights”. In the years following the decision in Rank Film Distributors Ltd, the form of search orders made by courts in Australia and in the United Kingdom evolved so as to accommodate several criticisms levelled at the terms of orders that had been made in the cases: see the account by Powell JA in Long v Specifier Publications Pty Ltd at 548-551. By 2007, harmonised rules of court and practice notes containing example search orders were adopted in Australian jurisdictions.
82 In Metso Minerals (Australia) Ltd v Kalra (No 3) [2008] FCA 1201, Flick J emphasised the distinction between the preservation of evidence under a search order, and the discovery of documents. This Court’s Search Orders Practice Note at [2.11] refers to the importance of the role of the independent lawyer, and provides that ordinarily the applicant is not permitted, without leave of the Court, to inspect things removed from the premises, or copies of them, or to be given information about them by members of the search party. There are a number of features of the order that was made in the present case which indicate that, as r 7.42 contemplates, its purpose was the preservation of evidence, and not the immediate discovery and production of documents:
(a) the order provided for an opportunity to seek legal advice, and to ask the Court to vary or discharge the order;
(b) the listed things, computers and computer hard drives were to be removed into the custody of an independent lawyer, and an independent computer expert;
(c) the order made specific provision for the preservation of claims to privilege against self-incrimination and the penalty privilege by permitting any things the subject of such a claim to be gathered and handed to the independent lawyer in a sealed envelope or container, which the independent lawyer was then required to deliver to the Court; and
(d) the order provided that before the return date of the order, the respondents might in the presence of the independent lawyer inspect any thing removed from the premises, make copies of the same, and provide the independent lawyer with a signed list of things that were the subject of claims for privilege, or confidentiality, and which should not be inspected by the applicant.
83 The production to the independent lawyer of listed things upon the basis that they were subject to claims for privilege, and subject to the terms of the search order that required that they be sealed, and that the independent lawyer should thereafter deliver those things to the Court, was tantamount to production to the Court pending resolution of the claims to privilege: see C plc v P at [13]-[14] and the first instance ruling referred to therein from which there was no appeal. The procedure largely corresponds to the first of the three stages of production of documents under subpoena referred to in National Employers’ Mutual General Association Ltd v Waind [1978] 1 NSWLR 372 at 381. One difference in the procedures is that under the search order, the things are sealed and placed in the custody of the Court pending resolution of the claims to privilege. The Search Orders Practice Note provides at [2.17] that on the return date of the search order, the Court will consider a number of issues, including any claim of privilege by the respondent. In these ways, the search order provided for a number of safeguards and mechanisms to enable claims for privilege to be preserved, and then later identified and advanced. Were it not for these safeguards and protections, the search order would be liable to be set aside. In these circumstances, the consent to the search of premises, and to the removal of things into the custody of the independent lawyer and the independent computer expert with an express reservation of the right to claim privilege by the solicitor acting for Mr Meneses, his wife, and son (see paragraph 10 of the affidavit of the independent lawyer set out at [21] above) did not give rise to any inconsistency such as to amount to a waiver of privilege to resist an order for production of documents to Directed OE or to the Court upon discovery, or otherwise: see Eizenberg v Eizenberg [2008] VSC 322 at [25], [31]-[34] per Hargrave J, citing Mann v Carnell (1999) 201 CLR 1.
The privilege against self-incrimination and the penalty privilege
84 The privileges that are claimed by Mr Meneses as grounds on which to resist the production of discovered documents are the common law privilege against self-incrimination and the penalty privilege. The corresponding statutory privilege under s 128 of the Evidence Act for a witness who objects to giving evidence about a particular matter on the ground that the evidence may tend to prove that the witness has committed an offence, or is liable to a penalty, does not arise for present purposes. See also, s 17 of the Evidence Act, which provides that in a criminal proceeding a defendant is not competent to give evidence as a witness for the prosecution.
85 The privilege of an individual against self-incrimination is a deeply entrenched common law right not to answer questions or produce documents or things where there would be a tendency to expose the individual to a criminal charge: Griffin v Pantzer at [43] (Allsop J, citing: R v Associated Northern Collieries (1910) 11 CLR 738; Sorby; Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 (Pyneboard); Reid v Howard (1995) 184 CLR 1; and Caltex). Although the privilege against self-incrimination may be abridged by statute, or waived, it has been generally accepted that it is without real exception. In Reid v Howard, Toohey, Gaudron, McHugh and Gummow JJ stated (at 14):
There is no basis for excepting any class or category of person whether by reference to legal status, legal relationship or, even, the offence in which he or she might be incriminated because, as already indicated, its purpose is the completely general purpose of protecting against “the peril and possibility of being convicted as a criminal”. For the same reason, there can be no exception in civil proceedings, whether generally or of one kind or another. Moreover, it would be anomalous to allow that a person could refuse to answer questions in criminal proceedings or before investigative bodies where the privilege has not been abrogated if that person could be compelled to answer interrogatories or otherwise make disclosure with respect to the same matter in civil proceedings.
(Footnote omitted.)
86 The privilege against self-incrimination protects an individual not only from self-incrimination directly under a compulsory process, but also from making a disclosure that may lead to incrimination or to the discovery of real evidence of an incriminating character: Sorby at 310 per Mason, Wilson and Dawson JJ. Thus, the risk of exposure to criminal sanctions may be indirect: Reid v Howard at 7 per Deane J.
87 Although there is a close affinity between the privilege against self-incrimination and the penalty privilege, they are distinct: Pyneboard at 336-337 per Mason ACJ, Wilson and Dawson JJ; Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 at 111 per Burchett J (Black CJ and Davies J agreeing); The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 (Daniels) at [12]-[13] per Gleeson CJ, Gaudron, Gummow and Hayne JJ. While the privilege against self-incrimination applies to non-judicial as well as judicial proceedings, the penalty privilege does not apply outside judicial proceedings, and has not been recognised by the High Court as a substantive rule of law: Daniels at [15], [31]. The penalty privilege has a confined operation, and its purpose is to ensure that those who allege criminality or other illegal conduct should prove it: Daniels at [31]; Rich v Australian Securities & Investments Commission (2004) 220 CLR 129 at [24] per Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ. The penalty privilege may be invoked in judicial proceedings to resist a requirement that a defence be filed that complies with the rules of pleading, to resist an order for the filing of witness statements, to resist answering interrogatories, and to resist the production of documents by way of discovery, or in response to a notice to produce or subpoena.
88 Neither of the privileges is available to a corporation: Evidence Act, s 187; Caltex; Daniels at [31]; Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd at [2] per French CJ, Kiefel, Bell, Gageler and Keane JJ, [82]-[83] per Nettle J. Section 187 is in the following terms:
187 Abolition of the privilege against self-incrimination for bodies corporate
(1) This section applies if, under a law of the Commonwealth or in a proceeding in a federal court, a body corporate is required to:
(a) answer a question or give information; or
(b) produce a document or any other thing; or
(c) do any other act whatever.
(2) The body corporate is not entitled to refuse or fail to comply with the requirement on the ground that answering the question, giving the information, producing the document or other thing or doing that other act, as the case may be, might tend to incriminate the body or make the body liable to a penalty.
89 As we have indicated, the privileges are not merely privileges against giving testimonial evidence, but extend to grounds upon which the production of documents by way of discovery, a notice to produce, or in response to a subpoena may be resisted. And as we have mentioned, the privilege against self-incrimination, extends even further, because it applies outside judicial proceedings. In Caltex, Mason CJ and Toohey J described the privilege against self-incrimination as far reaching, and going beyond its testimonial origins (at 502):
… the privilege against self-incrimination protects an accused person who is required by process of law to produce documents which tend to implicate that person in the commission of the offence charged. The privilege likewise protects a person from producing in other proceedings, including civil proceedings, documents which might tend to incriminate that person. In its application to the production of documents, the operation of the privilege is more far reaching in the protection which it gives than in its application to oral evidence. It is one thing to protect a person from testifying to guilt; it is quite another thing to protect a person from the production of documents already in existence which constitute evidence of guilt, especially documents which are in the nature of real evidence Indeed, the protection afforded by the privilege is now so far reaching that it has been described as protection against being compelled to say anything which “may tend to bring him into the peril and possibility of being convicted as a criminal” or as protection “against exposure to conviction for a crime”. That is because the privilege protects a person from discovering or revealing information which may lead to the discovery of admissible evidence of guilt not in his or her possession or power.
In this respect the protection now conferred by the privilege extends well beyond the objects originally sought to be achieved by way of protecting natural persons from the abuses which necessitated the introduction of the privilege. True it is that the production of documents pursuant to process of law, such as a subpoena duces tecum, involves some testimonial aspects. Thus, by producing the documents described, the person producing them admits that the documents existed, were in his or her possession or power and that they are authentic in the sense that they match the description which they have been given. But the privilege inhibits the production of books which might be used in evidence and are in the nature of real evidence which speak for themselves as distinct from testimonial oral evidence which is brought into existence in response to an exercise of investigative power or in the course of legal proceedings. Plainly enough the case for protecting a person from compulsion to make an admission of guilt is much stronger than the case for protecting a person from compulsion to produce books or documents which are in the nature of real evidence of guilt and are not testimonial in character.
(Footnotes omitted.)
90 Material to the issues that arise in the present case is that the privileges are against self-incrimination and self-exposure to a penalty: Controlled Consultants at 392-393 per Gibbs CJ, Mason and Dawson JJ. Thus, the privilege against self-incrimination is not available to resist the seizure of documents under a search warrant because the statute under which a search warrant is issued will typically authorise the entry onto premises and the seizure of incriminating documents: see, for example, Crimes Act 1914 (Cth), s 3F. The execution of a search warrant pursuant to a statutory provision of this type does not require an individual to consent to entry, or to identify, or produce incriminating documents. And because the privilege is against self-incrimination, the privilege can only be claimed by the person called upon to produce; it cannot be invoked to resist the production of documents that might incriminate others: Rochfort v Trade Practices Commission (1982) 153 CLR 134 at 145 per Mason J. Therefore, in the present case OE Solutions could not resist the production of documents on the ground that their production might incriminate Mr Meneses. Nor could Mr Meneses complain about the production of documents by OE Solutions on the ground that the production of documents by it might incriminate him, or expose him to a penalty.
Discovery and corporations
91 As we have noted, by operation of s 187 of the Evidence Act the privilege against self-incrimination and the penalty privilege are not available to corporations that are called upon to produce documents in proceedings in the Court. Section 187 of the Evidence Act reflects Australian common law principles. Therefore, a corporation that has discovery obligations, or to which a notice to produce or subpoena is directed, cannot resist production of documents on those grounds.
92 It is necessary to refer to Griffin v Sogelease, although it did not concern any claim for privilege in respect of documents of a corporation. In that case the plaintiff (Sogelease) sought discovery of some documents from one of the defendants, Mrs Griffin. The documents that were sought included Mrs Griffin’s cheque books and other documents relating to a number of financial institutions, some of which were solely in Mrs Griffin’s name, and some of which were in the joint names of herself and her husband Mr Griffin, who was also a defendant. The evidence was that Mr Griffin had taken possession of all such documents, and that he had taken them to his solicitors. Mr Griffin declined to produce the documents on the ground of privilege against self-incrimination. The primary judge held that the documents were within Mrs Griffin’s power with the consequence that she had an obligation to discover them and produce them for inspection. The primary judge further held that Mrs Griffin had legal title to the documents in question, and was therefore entitled to their return from Mr Griffin or his solicitors. Consequently, the primary judge made an order pursuant to the general power to give directions under s 76A (since repealed) of the Supreme Court Act 1970 (NSW) that Mr Griffin produce the documents to Mrs Griffin in order that she could comply with an order for discovery. The primary judge’s decision was reversed by the Court of Appeal, which held that Mr Griffin was entitled to rely upon the privilege against self-incrimination. Tobias JA, with whom Meagher JA and McColl JA agreed, stated at [31]:
… the vice against which the privilege protects a person from self-incrimination is the requirement to compulsorily produce the offending documents.
93 The Court of Appeal held that by ordering Mr Griffin to produce the relevant documents to Mrs Griffin or her solicitors the primary judge had required their production by compulsory process, that is, by order of the court. And although Mr Griffin was not required to produce the documents directly to Sogelease he was indirectly required to do so for, once they were in the possession of Mrs Griffin or her solicitors, she was obliged to discover them, and that such an order was impermissible. The Court held at [35] that once Mr Griffin had obtained possession of the documents, he was entitled to object to any mandatory order requiring him to produce them in contravention of his right not to do so based upon his privilege against self-incrimination.
94 In Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372 (Microsoft v CX Computer), the issues before the Court were whether an order for discovery should be made, and whether a notice to produce should be enforced, against a corporate respondent (Natcomp) which had a sole director and secretary (Grassia). The objection to the order was that the giving of discovery would involve self-incrimination by the director. Lindgren J rejected the objection. As to discovery, the corporation had three members, and O 15, r 9(1) of the Federal Court Rules 1979 (Cth) (since repealed) provided that an affidavit verifying a list of documents of a party which was a corporation could be made by a member or officer of the corporation: cf, Federal Court Rules 2011, r 20.22(c) which requires that an “officer” of a corporation make the verifying affidavit. Lindgren J held at [34] that there were two other members of the corporation, and that one of those members, who was the director’s father, was also an “officer” as defined by s 9(1) of the Corporations Act because he held 9,900 of the 10,000 issued shares and therefore had the capacity to affect significantly the corporation’s standing. In consequence, Lindgren J held at [35] that he was not satisfied that it was impossible or impracticable for the corporation’s list of documents to be verified by an individual other than the sole director, or for another individual to respond on behalf of the corporation to the notice to produce. For these reasons, Lindgren J held at [37] that he was not satisfied that giving discovery or complying with the notice to produce by the corporation would require the director to engage in self-incriminatory conduct of any kind.
95 The decision of Lindgren J in Microsoft v CX Computer was cited by Gordon J in Australian Securities and Investments Commission v Mining Projects Group Ltd (No 2) [2008] FCA 951, who formulated the following propositions at [7]:
(1) a corporate defendant … may be required to provide documents and information which may tend to incriminate its officers: Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 at 116;
(2) a corporate defendant cannot invoke privilege on the grounds that an order or requirement to produce documents or information might tend to incriminate a natural person, such as a director: Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372 at [32]-[33] (per Lindgren J) and ASIC v Mining Projects Group Ltd [2007] FCA 1620 at [5];
(3) a natural person cannot complain that a corporate defendant’s compliance with an order or requirement to produce documents or information might tend to incriminate him or her: Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372 at [32]-[33] (per Lindgren J) and ASIC v Mining Projects Group Ltd [2007] FCA 1620 at [5];
(4) the relevant enquiry is whether an order directed to the corporate defendant will require that a natural person tend to incriminate himself or herself: Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372 at [32]-[33] (per Lindgren J) and ASIC v Mining Projects Group Ltd [2007] FCA 1620 at [5]…;
(5) a corporate defendant cannot refuse to comply with a direction for the filing of evidence on the basis that its evidence may incriminate other natural person defendants or expose them to a penalty: Chief Executive Officer of Customs v Camile Trading Pty Ltd (2004) 58 ATR 163 at 170. However, a corporate defendant will not breach such a direction if it fails to file a statement or an affidavit from a witness where that witness claims privilege: ACCC v J McPhee & Son (Australia) Pty Ltd (1997) 77 FCR 217 at 220 and ACCC v Eurong Beach Resort Ltd [2005] FCA 1134 at [10], [12] and [13]. That is to say, compliance is not required if the only source of the information is the director defendants and they are entitled to remain silent (Emphasis added): ASIC v Mining Projects Group Ltd [2007] FCA 1620 at [5]. If the corporate defendant has other sources of information available from which it can comply with the direction, then it must do so.
96 We respectfully agree with the above propositions. It is the fourth proposition that Mr Meneses seeks to invoke in the present case, as he contends that the order that he and OE Solutions produce documents that are within his custody will require him to produce documents that will tend to incriminate him and expose him to a penalty. That circumstance did not arise in Microsoft v CX Computer because on the evidence Lindgren J was not satisfied that there was not another individual, other than the sole director, who could make discovery and produce documents on behalf of the corporation.
97 In Ronen three accused were charged with conspiracy to defraud the Commonwealth of income tax. Each of the three accused was the sole director of a corporation, and two of them were directors of a fourth corporation. The Crown caused a subpoena to be issued directed to the corporations that required production of payroll records. Objection was made by the accused to the production of the documents on the ground that it would require the active participation of an accused person in the process of gathering evidence for use by the Crown in a trial. Spigelman CJ summarised the submissions at [43]:
The appellants submit that, other than each accused, there were no other directors, secretaries or persons who made decisions or participated in the control and/or decision-making processes of the companies or who were in a position to speak with authority on behalf of or to confer authority to speak, or act on behalf of the corporate entity. The subpoenas were, in substance, directed to each accused personally. In the context of a criminal trial, the appellants submit, an accused cannot be compelled to act in his or her capacity as a director and proceed to locate and produce documents or to authorise others to do so.
98 Spigelman CJ, with whom Mason P (subject to some additional observations) and Kirby J agreed, held that from the evidence it appeared that the payroll clerk, or alternatively the chief financial controller, had the necessary authority in relation to the corporations’ payroll records such that they were able to conduct a search and either attend court themselves as the corporations’ proper officer, or to instruct someone else to do so. Further, at [77] Spigelman CJ held that:
It is not necessary, whenever a subpoena is issued, for a company to give anyone express authority to answer the subpoena. The company is obliged to answer the subpoena. If a director or other person cannot or will not act, the company must still comply. Even in the absence of implicit authority the obligation upon the company to comply with the subpoena confers such authority as is required, as a matter of necessity, on those persons in the company who can ensure compliance.
99 At [83], Spigelman CJ concluded that on the primary judge’s findings of fact, each company was physically able to produce the documents, and could do so without any act by an accused.
100 Both Spigelman CJ and Mason P referred to what the position might be in relation to a one-person company. We regard any such observations as obiter, because the case was decided on the grounds to which we have referred at [98]-[99] above. Spigelman CJ, at [53]-[55], referred to two decisions of the Supreme Court of the United States in which it was held that a corporate officer, or an individual acting as a representative of a collective group (a trade union) could not resist a subpoena for production by invoking a personal privilege: Braswell v United States 487 US 99 (1988); United States v White 322 US 694 (1944). Spigelman CJ also cited other authority where the second and fourth circuits of the United States Court of Appeals and the New York District Court held that the position was no different in the case of a corporation with a sole owner, director, officer and employee: Matter of Grand Jury Subpoenas 959 F 2d 1158 (2d Cir 1992); United States v Stone 976 F 2d 909 (4th Cir 1992) cert denied, 507 US 1029 (1993); United States v Moseley 832 F Supp 56 (WDNY 1993). We shall refer to some of the United States authorities in more detail below.
101 Spigelman CJ also cited part of the following passage from the separate reasons of Rand J in the Supreme Court of Canada in Klein v Bell [1955] SCR 309. At the time of that decision, it was accepted in Canada that a corporation could invoke the privilege against self-incrimination to resist the production of documents: Triplex Safety Glass Co. v Lancegaye Safety Glass (1934) Ltd [1939] 2 KB 395. Rand J stated (at 320-321):
The relation of the privilege to the production of documents is also in issue. In the case of the individual defendants the privilege extends to documents in their personal possession which contain incriminating matter and which, accordingly, they may object to produce.
But a distinction must be made in the case of documents of the corporation. The claim of privilege raised on an examination by a company’s officer in whose custody its documents may, at any time, be, may be related either to the criminality of the company or to that of himself. In this I take the privilege to be as open to a body corporate as to an individual: Triplex Safety Glass Co. v. Lancegaye Safety Glass (1934) Ltd [1939] 2 KB 395. Although a witness may not set up the claim for the benefit of a third person yet since in an affidavit of documents the privilege may be taken by a corporation acting through its officer it would be little short of absurd that it could be defeated on the examination of the officer having custody of them. If the custody is that of the corporation for the purposes of production following an affidavit the custodian to that extent represents the corporation, and if documents are privileged in the one case, they must be also in the other.
But the claim may be that the document may tend to criminate the officer personally. In such a case I can see no sound reason for conceding it when the matter is one of authentication only and he is no more intimately associated with the corporation than as an officer, custodian or recorder of its proceedings, actions or transactions. He may be involved in some of the latter, but to admit the privilege would be to enable the corporation to prevent production on an examination by maintaining him as custodian. His custody is the possession of the company and no inference can be drawn against him from either fact: and if he chooses or is chosen to continue as custodian, he must submit to its incidental consequences. But this does not touch questions arising out of the documents so produced.
(Emphasis added.)
102 At [64], Spigelman CJ stated that the reference by Rand J to “no more intimately associated” in the passage of the extract that we have emphasised above left open the position of a one-person company. The Chief Justice then stated at [66]:
There is much to be said for the proposition that if the subpoenas do in fact require the accused to perform some act, then the subpoenas should be set aside as oppressive and/or an abuse of process.
103 Spigelman CJ then referred at [67] to the accusatorial nature of a criminal trial:
The High Court has recently emphasised the accusatorial nature of a criminal trial, in which the prosecution bears the onus of proving the guilt of an accused beyond reasonable doubt and in which the prosecution must put its case fully and fairly before the accused is called on. (See RPS v The Queen (2000) 199 CLR 620 at 630 [22]; Azzopardi v The Queen (2001) 205 CLR 50 at 64 [34], 65 [38], 117 [190], 119 [193]-[194]; Dyers v The Queen (2002) 210 CLR 285 at 292 [9], 301 [53], 308 [60]; R v Soma (2003) 212 CLR 299 at 308 [27].) This fundamental characteristic of a criminal trial does, I am inclined to believe, suggest that, absent statutory authority, a court should not make any order which has the effect that an accused against whom an indictment has been presented must do something calculated to assist the preparation or presentation of the Crown case. However, on the facts, it is not necessary to express a concluded view on this matter.
104 To the cases cited by Spigelman CJ in this passage may be added: X7 v Australian Crime Commission (2013) 248 CLR 92 at [87], [99]-[105], [118]-[120] per Hayne and Bell JJ (Kiefel J at [157] substantially agreeing); Lee v New South Wales Crime Commission (2013) 251 CLR 196; Lee v The Queen (2014) 253 CLR 455 at [31]-[33] per French CJ, Crennan, Kiefel, Bell and Keane JJ; and Strickland v Director of Public Prosecutions (Cth) (2018) 361 ALR 23 at [76]-[79] per Kiefel CJ, Bell and Nettle JJ.
105 After holding that the corporations were obliged to answer the subpoena and that the obligation to comply conferred such authority as a matter of necessity on those persons in the companies who could ensure compliance, Spigelman CJ stated at [79]:
Whether the position is different in a one person company need not be decided. In such a case it may be necessary for the court to appoint a receiver for the specific purpose.
106 Mason P (with whom Kirby J also agreed) stated in his Honour’s additional observations at [106]:
The appellants respond that the subpoenas indirectly command them to take steps to ensure compliance, thereby aiding the Crown in their own prosecution. This too is misconceived. The appellants accept that they have no right to take positive steps, including the giving of instructions to company employees, to frustrate or impede compliance with the subpoenas (cf Registrar of the Supreme Court, Equity Division v McPherson [1980] 1 NSWLR 688). What if the appellants did nothing? If this caused the corporations to disobey the subpoenas, so be it. If it exposed the corporations to punishment and/or enforcement proceedings, so be it. This is no more than the consequence of the corporations being legal entities separate from the appellants. If, and it is a big if, the appellants need to appoint a “proper officer” to cause the subpoenas to be answered (whether or not documents are available to be produced), and if the appellants choose not to do so in consequence of which the corporations disobey the subpoena, so be it. The subpoenas are not an abuse of process on this account.
107 Mason P then considered the hypothetical scenario, contrary to the findings of the primary judge, that the accused were the only proper officers of their respective corporations, and stated at [109]:
… On the assumption made, the appellants are presented with the option of appointing a proper officer to cause the subpoena to be answered. This step would involve no incriminatory admission. Nor, in my view would it involve a step that impinged upon the appellants’ right to put the Crown to proof of guilt without requiring them to assist in the process. It stems from their antecedent relationship with corporations that, in all probability, they brought into being. It is an aspect of their continuing duties as officers of the corporations (if they choose to remain such) to ensure that the corporations obey corporate legal obligations. If those duties are burdensome or inappropriate, the respondents can step aside from a managerial role. It is not oppressive to offer them this choice, or some milder choice such as the appointment of a “proper officer” (if there is presently no such officer who does not fear self-incrimination).
108 A significant point made by Mason P in the above passage is that the appointment of a proper officer to answer a subpoena does not involve an incriminatory admission by the accused, or a step that impinged upon an accused’s right to put the Crown to proof of guilt without requiring them to assist in the process. Mason P also referred to United States authorities, and at [110] set out some passages from the opinion of the Supreme Court in Braswell v United States, which held that a custodian of corporate documents could not resist the production of documents by claiming a personal Fifth Amendment privilege against self-incrimination. At [111] Mason P expressed the opinion that the same principles applied under Australian law. We shall return to that opinion later after we address the United States authorities. At [113] Mason P adapted the language of Lumbard J in Re Two Grand Jury Subpoenae Duces Tecum 793 F 2d 69 (2d Cir 1986) at 74:
It is the duty of the [companies], not the [Supreme Court] or the [prosecution], to identify an appropriate custodian to produce subpoenaed documents. If no one may act as custodian without incriminating himself or herself, the firm is required to produce the subpoenaed records by supplying a new agent who has had no previous connection with the firm.
109 At [114] Mason P concluded that the argument that the subpoenas were oppressive should be rejected because:
At the end of the day, the oppression argument is an attempt by the appellants to frustrate the subpoenas by suggesting that they trench upon the appellants’ rights. This is to shift the proper focus of inquiry. The corporations are not free to select an individual to be their proper officer “ ‘… who because he fears self-incrimination may thus secure for the corporation the benefits of a privilege it does not have’. Such a result would effectively permit the corporation to assert on its own behalf the personal privilege of its individual agents” (United States v Kordel 397 US 1 (1969) at 8).
110 As we have mentioned, in rejecting the claims for privilege in the present case, the primary judge applied the decision of Brereton J in Kala Capital. Brereton J ruled upon an application by a sole director of two one-person companies to set aside or vary orders for production of documents that were directed to his companies on the grounds of privilege against self-incrimination and penalty privilege. The orders for production had been made in association with examination summonses, including one issued to the director under s 596A of the Corporations Act 2001 (Cth): see Re Kala Capital Pty Ltd (in liq) [2012] NSWSC 721 at [2]. Brereton J referred to the reasons for judgment of Spigelman CJ and Mason P in Ronen, and to the United States and Canadian authorities referred to by their Honours in those reasons. Brereton J at [25] noted that in Ronen Spigelman CJ at [79] (which we have set out at [105] above) had left open the position of a one-person company:
In Ronen, Spigelman CJ left open the position in Australia of a one-person company (at [79]). In reaching that conclusion, his Honour gave considerable emphasis to the accusatorial nature of criminal proceedings, and the inappropriateness, absent statutory authority, of making any order that has the effect that an accused against whom an indictment has been presented must do something calculated to assist the preparation or presentation of the Crown case (at [67]).
111 At the commencement of the next paragraph, [26], Brereton J stated:
That concern does not operate in the present circumstances.
112 By this sentence, Brereton J may have been drawing a distinction between the operation of the privilege against self-incrimination in the context of criminal proceedings, and the operation of the penalty privilege in a civil proceeding. Alternatively, Brereton J may have been suggesting that the position of a sole director of a one-person company which is called upon to produce documents may be different in the context of criminal proceedings having regard to the accusatorial nature of the criminal process, which Hayne and Bell JJ described in X7 v Australian Crime Commission at [87] as “a defining characteristic of the criminal justice system”.
113 Amongst the United States authorities to which Brereton J referred was United States v Stone 976 F 2d 909 (4th Cir 1992) from which his Honour at [23] cited the following passage:
Ashford is a one-man operation; however, it is still a corporation, a state law-regulated entity that has a separate legal existence from Wujkowski shielding him from its [liabilities]. The business could have been formed as an unincorporated sole proprietorship and production of its business records protected by the privilege against self-incrimination ... Wujkowski chose the corporate form and gained its attendant benefits, and we hold, in accord with the decisions of sister circuits, that he cannot now disregard the corporate form to shield his business records from production.
114 Brereton J concluded at [29]:
Essentially for the reasons enunciated in United States v Stone and by Mason P in Ronen, I am of the view that in this context the sole director of a one-person corporation is not entitled to object to the production of documents by that corporation on the basis that it would be incriminatory of that director. The production is by the person as an agent of the company, not on his or her own behalf. If the director fears self-incrimination, then it is open to him or her to take steps to have the company appoint some other proper officer for the purpose of compliance with the order for production.
115 In Re Australian Property Custodian Holdings Pty Ltd (in liq) (recs and mgrs apptd) (controllers apptd) (No 2) (2012) 93 ACSR 130 (Re Australian Property Custodian Holdings) three one-person companies applied to be relieved from filing defences that complied with the ordinary rules of pleading, because to do so would necessarily undermine claims of penalty privilege and privilege against self-incrimination that were made by the sole director of the companies. Robson J granted the companies the relief that they sought on the ground that the director was the only person capable of giving full and proper instructions for a defence. In reaching this conclusion, Robson J distinguished the decisions of Lindgren J in Microsoft v CX Computer and the New South Wales Court of Appeal in Ronen. That was because in both cases it had not been shown that there was not another person who could make discovery or produce documents on behalf of the companies, and that the production and verification of documents in the possession of a company was markedly different from the steps required to prepare and file a defence, which could not be assigned to another individual, and nor could meaningful instructions be obtained from a receiver, if one were appointed. In the course of his reasons, Robson J at [159] addressed the position of discovery of documents (which his Honour distinguished) and stated:
If it were to be shown to be the case (and it has not been thus far) that there is no-one with custody or possession of the records who could lawfully answer the call of the subpoena on the corporations’ behalf without risk of testimonial self-incrimination, then the corporations must still take steps to comply. This may mean the appointment of a receiver. Or it may mean that a “proper officer” with nothing to fear by way of self-incrimination has to be appointed.
116 In Devine Marine Group Pty Ltd v Fair Work Ombudsman [2013] FCA 442, the applicant successfully sought leave to appeal and appealed orders of a Federal Magistrate by which the applicant was ordered to make discovery of documents. The applicant had objected to making discovery on the ground that in order to comply with the order its sole director would be required to incriminate himself. The Magistrate rejected this argument, holding that another person could be appointed to make the affidavit of documents. On appeal, Lander J at [66]-[67] cited Microsoft v CX Computer at [32]-[33] for the following propositions:
… a court should not make an order requiring a corporate respondent to make discovery if, by complying with that order, a natural person would be denied the privilege otherwise entitled to that person: Microsoft Corporation v CX Computer Pty Ltd at [32]-[33].
It follows, therefore, that if a corporate respondent can give discovery without thereby requiring a natural person to lose that person’s own entitlement to privilege, an order can be made. If, however, the corporate respondent can only give discovery by requiring a natural person to forego that person’s right to privilege, an order should not be made.
117 Lander J went on to hold that at [70]-[71]:
In this case, the only officer of Devine Marine is Mr Devine. The order which has been made by the Federal Magistrate does not require Mr Devine to swear the affidavit, but there is no-one else who could unless a proper officer is appointed.
It is not enough, in my opinion, to say that Devine Marine could comply with the orders by employing another person to act as the proper officer without inquiry into the cost to Devine Marine in making such an appointment. That cost would bear upon the question of fairness, because the FWO claims that the jurisdiction being exercised is a “no costs” jurisdiction.
(Emphasis added.)
118 These passages accept the director’s claim to privilege against self-incrimination, but assume that the position might be addressed by the appointment of a proper officer to make discovery on the company’s behalf. However, Lander J held that the Magistrate’s discretion to order discovery miscarried because the Magistrate failed to have regard to the cost to the company of making discovery. Lander J held that the cost was a relevant matter to which regard should have been had for the purposes of addressing whether discovery would be likely to contribute to the fair and expeditious conduct of the proceedings, which was a mandatory statutory consideration: Federal Magistrates Act 1999 (Cth), s 45(2)(a).
119 In Fair Work Ombudsman v Hu [2017] FCA 1081, Rangiah J allowed an application by a company (Marland Mushrooms Pty Ltd) and its director (Mr Marland) for relief from compliance with orders that they file affidavits and outlines of submissions in a proceeding alleging contravention of s 45 of the Fair Work Act 2009 (Cth). Section 45 is a civil penalty provision, and both the director and the company relied on the director’s penalty privilege. The reasons of Rangiah J are principally concerned with the question whether there had been a waiver of privilege. His Honour decided that there had been no waiver, and at [38] held that Mr Marland could not be compelled to provide affidavits or submissions dealing with factual issues prior to the close of the applicant’s case, and that Marland Mushrooms should not be required to do so, as that would deprive Mr Marland of the benefit of the privilege. In the course of his reasons, Rangiah J stated at [15]:
Penalty privilege does not apply to a corporation: s 187 of the Evidence Act 1995 (Cth). However, a Court should not make an order requiring a corporate respondent to make discovery if, by complying with that order, a natural person would be denied the privilege the person is otherwise entitled to: Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372 at [31]-[33]; Devine Marine Group Pty Ltd v Fair Work Ombudsman [2013] FCA 442 at [66].
120 This passage should be understood as capturing the principles in the cases which it cites, and the reference to denying the privilege to a natural person is a reference to the natural person entitled to the penalty privilege being required to perform an act so that the corporation complies with an order. That is because a corporation is not excused from making discovery on the ground that the discovery might incriminate others, such as a director of the corporation: see [90] above.
The United States authorities
121 The reasons of Mason P in Ronen and of Brereton J in Kala Capital rely on United States authorities, and we shall refer to the principal cases. We have been assisted by an article written by Samuel A Alito Jr, who is currently an Associate Justice of the United States Supreme Court: “Documents and the Privilege Against Self-Incrimination” (1986) 48 U Pitt L Rev 27.
122 The decisions of the United States Supreme Court address the privilege against self-incrimination that arises under the Fifth Amendment of the Constitution of the United States, which provides that no person shall be compelled in any criminal case to be a witness against himself. This has been interpreted as applying only when an individual is compelled to make a testimonial communication that is incriminating: Fisher v United States 425 US 391 at 408 (1976). The production of documents by an individual pursuant to a subpoena may in some, but not all, circumstances be a testimonial communication: United States v Doe 465 US 605 (1984). Accordingly, the Fifth Amendment privilege, if applicable, protects the act of producing the documents, rather than the documents themselves. Although the cases referred to in the paragraphs below concern proceedings of a criminal character, such as grand jury proceedings, the Fifth Amendment privilege applies alike in civil and criminal proceedings: Kastigar v United States 406 US 441 (1972).
123 In Hale v Henkel 201 US 43 (1906), the Supreme Court held that the Fifth Amendment privilege against self-incrimination was not available to a corporation. At 69 the Court described the right as “purely a personal privilege of the witness”, and reasoned that the right could not be invoked by a witness on the ground that a third person might be incriminated by the testimony. Furthermore, the Court at 74-75 referred to corporations as creatures of the state, and as such it would be anomalous if the state could not inquire into whether the franchises conferred on corporations were abused, and to require the production of corporate books and papers for that purpose.
124 Shortly after Hale v Henkel was decided, the Supreme Court in Wilson v United States 221 US 361 (1911) held that an officer of a corporation could not rely upon a personal Fifth Amendment privilege to resist production of corporate records. Mr Wilson, who was the president of the United Wireless Telegraph Company, claimed in response to a subpoena seeking company records that the books that were sought:
… were kept regularly in my office as President of said corporation, and were regularly used by me and for the most part, if not entirely, by me only, and contained copies of my personal and other correspondence, as well as copies of the correspondence relating to the business and affairs of said corporation.
125 He claimed that the books:
… have been and still are in my possession, custody and control, and as against any other officer or employé of said corporation, or any other person, I have been entitled to such possession, custody and control.
126 The Supreme Court held (at 376) that the subpoena was validly served on the corporation, and required obedience by the corporation:
A command to the corporation is in effect a command to those who are officially responsible for the conduct of its affairs. If they, apprised of the writ directed to the corporation, prevent compliance or fail to take appropriate action within their power for the performance of the corporate duty, they, no less than the corporation itself, are guilty of disobedience and may be punished for contempt.
127 The Court held that a claim to Fifth Amendment privilege by the custodian of corporate documents could not be maintained:
And where an officer of a corporation has possession of corporate records which disclose his crime, there is no ground upon which it can be said that he will be forced to produce them if the entries were made by another, but may withhold them if the entries were made by himself. The books are no more his private books in the latter case than in the former; if they have been held pursuant to the authority of the corporation, that authority is subject to termination. In both cases production tends to criminate; and if requiring him to produce compels him to be a witness against himself in the one case it does so equally in the other.
128 The Court continued at 380:
But the physical custody of incriminating documents does not of itself protect the custodian against their compulsory production. The question still remains with respect to the nature of the documents and the capacity in which they are held. It may yet appear that they are of a character which subjects them to the scrutiny demanded and that the custodian has voluntarily assumed a duty which overrides his claim of privilege.
129 After citing the Court’s earlier decision in Hale v Henkel, the Court stated at 384-385:
The appellant held the corporate books subject to the corporate duty. If the corporation were guilty of misconduct, he could not withhold its books to save it; and if he were implicated in the violations of law, he could not withhold the books to protect himself from the effect of their disclosures. The reserved power of visitation would seriously be embarrassed, if not wholly defeated in its effective exercise, if guilty officers could refuse inspection of the records and papers of the corporation. No personal privilege to which they are entitled requires such a conclusion. It would not be a recognition, but an unjustifiable extension, of the personal rights they enjoy. They may decline to utter upon the witness stand a single self-criminating word. They may demand that any accusation against them individually be established without the aid of their oral testimony or the compulsory production by them of their private papers. But the visitatorial power which exists with respect to the corporation of necessity reaches the corporate books without regard to the conduct of the custodian.
130 There are four threads to the Supreme Court’s reasons in Wilson v United States in the passages set out above. First, that the subpoena is a command that the corporation itself produce the corporate documents. Second, that officers of a corporation in possession of such documents are obliged to facilitate compliance with the subpoena by the corporation. Third, any authority on which an officer of a corporation holds the corporation’s books and records is subject to termination by the corporation. Fourth, any Fifth Amendment privilege is inapplicable in this situation. In relation to this last point, the Court at 380 in the passage set out at [128] above referred to the custodian voluntarily assuming a duty which overrides the claim of privilege.
131 The next principal case was United States v White 322 US 694 (1944), in which the Supreme Court considered whether a personal claim to privilege could be relied upon by the president of an unincorporated trade union to resist production of documents of the union. The Court at 698 affirmed that the constitutional privilege against self-incrimination was essentially a personal one, applying only to natural individuals. The Court held that individuals when acting in a representative capacity were not entitled to rely upon personal privileges, stating at 699:
… the papers and effects which the privilege protects must be the private property of the person claiming the privilege, or at least in his possession in a purely personal capacity. … But individuals, when acting as representatives of a collective group, cannot be said to be exercising their personal rights and duties nor to be entitled to their purely personal privileges. Rather they assume the rights, duties and privileges of the artificial entity or association of which they are agents or officers and they are bound by its obligations. In their official capacity, therefore, they have no privilege against self-incrimination. And the official records and documents of the organization that are held by them in a representative rather than in a personal capacity cannot be the subject of the personal privilege against self-incrimination, even though production of the papers might tend to incriminate them personally. … Such records and papers are not the private records of the individual members or officers of the organization. Usually, if not always, they are open to inspection by the members and this right may be enforced on appropriate occasions by available legal procedures. … They therefore embody no element of personal privacy and carry with them no claim of personal privilege.
(Citations omitted.)
132 In the passage above, the Court addressed the character of the documents, and the capacity in which the individual held them. The Court referred to the requirement that the papers and effects which the privilege protected be the private property of the person claiming the privilege, or at least in the person’s possession in a purely personal capacity, and not in a representative capacity. At 701 the Court referred to the union as representing “organized, institutional activity as contrasted with wholly individual activity.”
133 In Bellis v United States 417 US 85 (1974), the Court held that a former member of a dissolved partnership could not resist compliance with a subpoena requiring the production of partnership financial records by invoking the Fifth Amendment privilege against self-incrimination. The Court affirmed that the privilege applies to the business records of a sole proprietor and to personal documents. However, the Court referred to a number of cases, including Wilson v United States and United States v White, and held at 88 that the privilege did not apply when documents were those of a collective entity that were held in a representative capacity:
… an individual cannot rely upon the privilege to avoid producing the records of a collective entity which are in his possession in a representative capacity, even if these records might incriminate him personally.
134 The Court stated at 93 that partnerships may, and frequently do represent “organized institutional activity” so as to preclude any claim of Fifth Amendment privilege with respect to partnership financial records. The Court held that the former partner had no direct ownership interest in the records as they were partnership property, and that he held the partnership documents in a representative capacity, and that no personal privilege against self-incrimination applied.
135 In Braswell v United States at 104, the Court held by a bare majority that the petitioner, who was the president of two corporations, could not rely upon Fifth Amendment privilege to resist production of the books and records of the corporations. Both corporations had three directors, being the petitioner, his wife and his mother. However, the Court stated that the petitioner’s wife and mother did not have any authority over the business affairs of either corporation. The majority applied the “collective entity” rule and held that, without regard to whether a subpoena is addressed to the corporation, or to the individual in his capacity as a custodian, a corporate custodian may not resist a subpoena for corporate records on Fifth Amendment grounds. This was so even though the focus of inquiry for Fifth Amendment privilege after the Court’s decision in Fisher v United States (see [122] above) was directed to whether the production of documents was an incriminating act, rather than to the nature of the documents or the question of ownership. The Court reasoned as follows at 110:
Artificial entities such as corporations may act only through their agents, Bellis, supra, at 90, and a custodian’s assumption of his representative capacity leads to certain obligations, including the duty to produce corporate records on proper demand by the Government. Under those circumstances, the custodian’s act of production is not deemed a personal act, but rather an act of the corporation. Any claim of Fifth Amendment privilege asserted by the agent would be tantamount to a claim of privilege by the corporation – which of course possesses no such privilege.
136 This passage marshals two concepts. First, it is at least suggestive that the assumption of corporate representative capacity carries with it a deemed surrender of the Fifth Amendment privilege in relation to an obligation to produce corporate records. Second, it characterises the act of production as being that of the corporation. The Court held that certain consequences flowed from the fact that the custodian’s act of production was in a representative rather than a personal capacity. The Court held at 118 that because the custodian acts as a representative, the act is deemed to be one of the corporation, and not the individual, and that therefore the Government could make no evidentiary use of the “individual act” against the individual. In footnote (11), the Court stated that this limitation was a necessary concomitant of the notion that a corporate custodian acts as an agent and not an individual when the custodian produced corporate records in response to a subpoena addressed to the custodian in a representative capacity. The Court explained the evidentiary limitation as meaning that in a proceeding against the individual custodian, the Government could not introduce evidence that the individual delivered the documents pursuant to the subpoena. However, the Government could rely upon the corporation’s act of producing the documents as evidence of their authenticity, and as supporting other inferences. In footnote (11) the Court left open the question whether the agency rationale supported compelling a custodian to produce corporate records when the custodian was able to establish that he was the sole employee and officer of the corporation such that the jury would inevitably conclude that the custodian produced the records. This question was taken up in subsequent federal Court of Appeals decisions, and in a decision of the New York District Court which were cited by Spigelman CJ in Ronen at [60], and was resolved by holding that the privilege was inapplicable in such circumstances.
137 The “collective entity” principle derived from the United States Supreme Court cases referred to above is that an individual who holds documents in a representative capacity for a collective entity such as a corporation, trade union, or partnership, may not assert a Fifth Amendment privilege when the individual is compelled to produce those records, whether the subpoena is directed to the individual, or to the corporation. That principle was applied to a one-person corporation in United States v Stone, which was cited by Brereton J in Kala Capital and to which we referred to at [113] above.
138 However, the Supreme Court’s reasoning in Braswell was not universally accepted. In Massachusetts a separate privilege against self-incrimination exists under article 12 of the Declaration of Rights in the Constitution of the Commonwealth of Massachusetts, which provides that “[n]o subject shall … be compelled to accuse, or furnish evidence against himself”. In Commonwealth v Doe 405 Mass 676 (1989), a grand jury had issued a subpoena to the “keeper of the records” of a corporation that required production of documents. One person was the sole shareholder, director, president, and treasurer of the corporation, and was the custodian of the corporation’s corporate and business records. The Supreme Judicial Court of Massachusetts held that the custodian could invoke the right against self-incrimination under article 12 in response to the subpoena for the production of corporate records when the act of production itself would be self-incriminating. In response to a submission that the Court should adopt the rule in Braswell v United States, and in particular the reasoning that the custodian acts only as a representative, and that the individual custodian’s act is deemed to be one of the corporation and not an act of the individual, the Court stated:
We decline to engage in such a fiction. The act of production is demanded of the witness and the possibility of self-incrimination is inherent in that act. The witness’s status as a representative does not alter the fact that in so far as he is a natural person he is entitled to the protection of art. 12. It would be factually unsound to hold that requiring the witness to furnish corporate records, the act of which would incriminate him, is not his act. … His status as custodian of the corporation’s records does not require that he lose his individual privilege under art. 12.
139 As to an argument that by electing to do business in a corporate form the custodian had waived the right to refuse to produce corporate records, the Court referred to a principle that a waiver must be knowing and intelligent, and stated that there were no facts from which to determine whether the custodian had knowingly relinquished his personal right against self-incrimination simply by becoming the custodian of the corporation’s records.
140 The issue was addressed again by the Supreme Judicial Court of Massachusetts in In the matter of a John Doe Grand Jury Investigation 418 Mass 549 (1994). In that case, two brothers were the sole directors and shareholders of a corporation, and they refused to produce documents in response to a subpoena that was directed to the corporation. Lynch J referred to the Court’s decision in Commonwealth v Doe, noting:
We did not hold that the representative had a personal right against self-incrimination in the documents themselves. The result is that the custodian retains his privilege against incrimination by compelled oral testimony and by an act of production, but that the voluntary act of incorporation cannot insulate the corporate records themselves from disclosure to the grand jury.
141 Lynch J then addressed the submission that an alternative “keeper of the records” could be appointed to produce the corporation’s records that were sought under the subpoena:
Having voluntarily adopted the corporate structure, the corporate principals cannot shield the corporation from a grand jury investigation by seeking to extend their individual rights against self-incrimination to the corporation. If the custodian of the corporate records cannot produce the records without implicating his personal art. 12 rights, an alternate keeper of the records can be appointed. Such an appointment has no testimonial attributes and, as such, does not implicate art. 12 protection. ... The concerns that we expressed in Commonwealth v. Doe … do not arise from the mere act of appointing a new keeper of the records.
142 Lynch J summarised the conclusions:
In summary, we hold that, since the subpoena was directed to the corporation, the corporation, which has no privilege against self-incrimination, can comply without implicating any individual’s art. 12 protections. It should be understood that an order to appoint an alternate keeper of the records is not a mandate to the witnesses to say or do anything.
143 Hale v Henkel, Wilson v United States, United States v White, Bellis v United States and Braswell v United States were cited and discussed by Mason CJ and Toohey J in Caltex at 490-493 as part of their Honours’ review of United States, English, Canadian, and New Zealand authorities concerning the question whether privilege against self-incrimination should be available to corporations. The relevance of the United States authorities appears in the following passage at 497:
Although the decisions of the United States Supreme Court give effect to the Fifth Amendment to the United States Constitution, the reasoning is directly relevant to the purposes which the privilege serves at common law; if accepted, that reasoning would support the conclusion that the privilege is not, and should not be, available to corporations.
144 The reasons of Mason CJ and Toohey J in Caltex do not involve any direct analysis of the “collective entity” principle and its effect on the ability of officers of a corporation to rely on a personal claim for privilege to resist production of corporate documents, or whether a similar principle formed part of the Australian common law, although their Honours referred to it at 492 when discussing Bellis. McHugh J also referred to the United States authorities, and stated at 542:
Moreover, in Braswell v. United States, the Supreme Court held that a representative of a collective entity could not resist the production of documents held in his or her official capacity even though the production might incriminate him personally. Although the privilege against self-incrimination in the United States is a matter of constitutional guarantee, the reasons which have led the Supreme Court to exclude corporations from the privilege are reasons which are equally applicable in a common law context.
145 We do not understand McHugh J in this passage to have said that, under the common law of Australia, an individual’s privilege against self-incrimination does not apply to the production of documents as a representative of a collective entity. Such a proposition would require a detailed analysis which took account of the different way in which the Fifth Amendment privilege against self-incrimination has been formulated in the United States Supreme Court cases, and the broader implications of recognising such a principle under Australian law. And no other justice in Caltex suggested that the principles in Braswell were applicable under Australian common law. However, in Ronen at [111] Mason P cited Caltex at 542 to support his Honour’s opinion that the principles in the opinion of the Court in Braswell, which his Honour set out at [110], applied under Australian law. We respectfully do not agree.
146 As we indicated by our reference to the passages from the reasons of Mason CJ and Toohey J in Caltex which we set out at [89] above, the privilege against self-incrimination protects more than the testamentary admission that might be involved in the coercive production of documents. The privilege extends to protect a person from discovering or revealing information which may lead upon a train of inquiry to the discovery of other admissible evidence of guilt. As Deane J stated in Reid v Howard (1995) 184 CLR 1 at 7:
The disclosed material could be used as a basis of investigation by the clients and their legal representatives. Indirect or derivative evidence discovered through those investigations could constitute the basis of public findings in the civil proceedings to the effect that the appellant was guilty of specific acts of misappropriation of trust moneys. Such indirect or derivative evidence could be made available to prosecution authorities and could be used either in the prosecution of the appellant for such specific offences or as a basis for further investigation.
147 In the case of the penalty privilege, its rationale is similar: a person liable to exposure to a penalty should not have to disclose information that will assist in the prosecution of the claim for the penalty.
148 The principles in the United States Supreme Court decision in Braswell concerning the position of custodians of corporate documents are unsupported by any High Court authority, or any seriously considered dicta of the High Court: see Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [134]. The adoption of an exception to the common law privilege against self-incrimination by adopting Braswell as part of the common law of Australia would, in our view, be to admit a judicially contrived exception to a fundamental common law principle which the High Court has stated is deeply ingrained in the common law, and is without real exception: Sorby at 309 per Mason, Wilson and Dawson JJ; Reid v Howard at 12 per Toohey, Gaudron, McHugh and Gummow JJ. For these reasons, we also decline to adopt the principles in United States v Stone, which was one of the bases of Brereton J’s decision in Kala Capital. It does not follow, though, that the Court should not in due course make an order for production of documents by OE Solutions.
The present case
149 In light of the principles discussed above, in our respectful opinion the primary judge erred in his consideration of the Meneses parties’ claims based on Mr Meneses’s reliance on privilege against self-incrimination and the penalty privilege. First, in framing and answering question 1, the primary judge directed attention to whether the relevant documents were documents “of” Mr Meneses, or “of” a company. However, in our view, the correct question, at this stage of the analysis, was whether the relevant documents were in the control of OE Solutions. Rule 20.16 of the Federal Court Rules provides that a party gives discovery by serving a list of documents in accordance with r 20.17, which requires (inter alia) that a list must describe each document in the party’s control for which privilege from production is claimed, and the grounds of the privilege. The term “control” in relation to a document is defined in the Dictionary as meaning “possession, custody or power”. In B v B [1978] Fam 181 Dunn J stated that for the purposes of the corresponding 1964 English rule, O 24:
… “possession” means “the right to the possession of a document.” “Custody” means “the actual, physical or corporeal holding of a document regardless of the right to its possession,” for example, a holding of a document by a party as servant or agent of the true owner. “Power” means “an enforceable right to inspect the document or to obtain possession or control of the document from the person who ordinarily has it in fact.”
150 Part of the difficulty in the present case is that the Meneses parties’ lists of documents did not indicate whether the documents identified were in the control of OE Solutions or Mr Meneses or both. As indicated at [30] and [33] above, the affidavits verifying the lists of documents simply stated that the documents identified in Part 2 were in the control of Mr Meneses, either personally or in his capacity as sole director of OE Solutions. In this respect the lists of documents did not strictly comply with the relevant rules. In any event, the correct question was whether the relevant documents (being the documents in respect of which the privileges were claimed) were in the control of OE Solutions. In respect of the documents that were taken from the Aspendale Gardens property, it seems likely that at least some of the documents were in the power of OE Solutions, in that the company had an enforceable right to obtain possession of the documents. (They may also have been in its possession or custody.) It may be that, in considering whether the documents were documents “of” Mr Meneses or a company, the primary judge had in mind whether the documents were in the control of a company. However, it is not clear whether this is the case. Further and in any event, for several of the categories of documents identified in Mr Meneses’s confidential affidavit, the primary judge concluded that the documents were documents of Directed OE or the Hanhwa parties, rather than OE Solutions. However, in the context of considering whether an order for production should be made against OE Solutions, the correct enquiry was to determine whether that company had control of the relevant documents.
151 Secondly, in answering question 1, the primary judge focused on whether the nature of the documents themselves gave rise to privilege, rather than whether the act of production of the documents would give rise to a real and appreciable risk of the relevant kind. For example, in relation to categories 1 and 2, the primary judge concluded that he could not be satisfied that any of the documents in these categories “are capable of attracting Privilege” (at [69]). A similar conclusion was reached in relation to the documents in the other categories. This indicates that the primary judge focused attention on the nature of the documents themselves rather than the act of production, which is central to a claim based on the privilege against self-incrimination or the penalty privilege in a context such as this.
152 Thirdly, and relatedly, the primary judge ordered Mr Meneses (in addition to OE Solutions) to produce the relevant documents. Given the primary judge’s finding (in response to question 6) that the relevant documents had a real and appreciable tendency to incriminate Mr Meneses or to expose him to a civil penalty, we assume that the order was directed to Mr Meneses in his capacity as agent for OE Solutions. However, in light of the discussion of the principles set out earlier in these reasons, we do not consider it open to order an individual who is himself or herself at risk of prosecution or the institution of proceedings for a civil penalty to produce the relevant documents on behalf of a company. This would require that individual to undertake an act of self-incrimination or self-exposure to penalties. To the extent that the US cases suggest that an act of production by a director of a company is merely an act as agent for the company, those cases do not reflect Australian law.
153 This is not to say that an order for production cannot be made against OE Solutions (assuming that there are relevant documents in its control). The privilege against self-incrimination and the penalty privilege are available only to natural persons and not to corporations. Thus, OE Solutions cannot rely on the privileges to resist production of documents that are in its control. As the privileges are against self-incrimination and self-exposure to penalties (see [90] above), OE Solutions cannot resist production on the basis that production of documents by the company would expose Mr Meneses to a real and appreciable risk of prosecution or institution of proceedings for a civil penalty. Nor can Mr Meneses complain about the production of documents by OE Solutions on the ground that the production of documents by the company might incriminate him or expose him to a penalty. However, in circumstances where OE Solutions is essentially a one-person company and that person (Mr Meneses) is entitled to rely on the privileges to resist production of the documents, it is necessary to consider mechanisms by which OE Solutions could produce the documents (other than by Mr Meneses doing so on its behalf). These mechanisms include the appointment of a receiver of the company for the purposes of producing the relevant documents on behalf of the company: see Ronen at [79] per Spigelman CJ; Re Australian Property Custodian Holdings at [159] per Robson J. We consider that a receiver could be appointed by the Court in circumstances such as this pursuant to the power conferred by s 57 of the Federal Court of Australia Act 1976 (Cth): see also s 23 of the Federal Court of Australia Act and see, generally, The University of Western Australia v Gray (No 6) [2006] FCA 1825 at [64]-[66], [71]-[74] per French J (as his Honour then was). It is important and necessary that such a mechanism exist; otherwise, a one-person company such as OE Solutions would be effectively immune from producing documents in its control notwithstanding that it is not entitled to claim the privilege against self-incrimination or the penalty privilege.
154 For these reasons, grounds 1 and 2 of the notice of appeal are made out. Ground 3 is made out to the extent that it relates to the order for production directed to Mr Meneses. In relation to ground 4, it is unnecessary to determine whether the primary judge made the asserted error as any such error was not material to his Honour’s determination of the privilege claims. In relation to ground 5, which relates to Kala Capital, while we have declined to adopt some of the bases of Brereton J’s decision, we accept that an order for production of documents can be made against a one-person company such as OE Solutions. Accordingly, ground 5 is not made out.
155 In light of the above, subject to consideration of the amended notice of contention, we consider that the conclusions of the primary judge in relation to the privilege claims cannot stand and the claims to privilege need to be re-determined. In the circumstances of this case, we consider it necessary and appropriate for that re-determination to be undertaken by a judge at first instance, rather than by this Court on appeal. That is because an essential anterior enquiry of a factual nature must be conducted, namely the identification of which documents were within OE Solution’s control. Thus, subject to the matters raised by the amended notice of contention, we consider it appropriate to remit the claims to privilege to a judge of the Court.
156 We now consider the two grounds raised by the amended notice of contention. The first ground is that the judgment of the primary judge should be affirmed on the basis that the privilege does not apply to any document: (a) in existence before the search order was made; (b) that was seized pursuant to the search order; and (c) that can be proved by independent means. We do not accept this contention. As discussed at [82]-[83] above, the search order made specific provision for the preservation of claims to privilege against self-incrimination and the penalty privilege. These provisions were effective to preserve any claims for privilege in relation to the documents that were taken pursuant to the search order. To the extent that Directed OE’s submissions rely on an analogy with a search warrant, that analogy is inapt, for the reasons discussed at [77]-[83] above. Further, to the extent that Directed OE’s submissions relied on C plc v P, the English common law principles that were applied in that decision were shaped by European law, and the Human Rights Act 1998, as [16] of the reasons of Longmore LJ identifies.
157 The second ground in the amended notice of contention is that, in respect of the relevant documents other than the 583 documents that were not seized during the search, the judgment ought to be affirmed on the basis that: (a) Mr Meneses was not present at the Aspendale Gardens property at the time that the search order was executed; and (b) therefore, on no view can Mr Meneses be said to have done any self-incriminatory act that might constitute “production” of the relevant documents such as to enable him to resist inspection of the documents seized by claiming the privileges. We reject this contention. If this contention were correct, it would mean that Mr Meneses was not entitled to claim the privilege against self-incrimination or the penalty privilege in respect of documents taken pursuant to the search order simply because he was not present at the time that the search order was executed. That would be contrary to the evident purpose of the search order, which made specific provision for the preservation of claims to privilege against self-incrimination and the penalty privilege. In any event, if necessary, we would infer that permission to enter and conduct the search was given by Ms Brasington on behalf of Mr Meneses. For completeness, we note that, given the terms of the search order and of the subsequent orders made by the docket judge referred to above, we do not consider there to be any relevant distinction – for the purposes of considering the claims based on the privileges – between the documents that were taken pursuant to the search order and the other documents discovered by the Meneses parties in their lists of documents.
158 It follows that, in our view, the appeal should be allowed. In addition to orders regarding leave to appeal and leave to rely on the amended notice of contention, we will make orders to the effect that:
(a) Paragraphs 6 and 7 of the orders made by the primary judge on 6 March 2019 be set aside.
(b) Paragraph 1 of the costs orders made by the primary judge on 2 April 2019, insofar as it deals with costs as between the Meneses parties and Directed OE, be set aside.
(c) The Meneses parties’ claims based on the privilege against self-incrimination and the privilege against exposure to penalties be remitted to a judge of this Court for re-determination.
159 In relation to costs, we will provide an opportunity for the parties to file and serve written submissions (of no more than three pages). The issue of costs will then be determined on the papers. We will also make orders relating to the confidentiality of the reasons for judgment of the primary judge.
I certify that the preceding one hundred and fifty-nine (159) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Moshinsky, Wheelahan and Abraham. |
Associate:
