FEDERAL COURT OF AUSTRALIA

Deloitte Touche Tohmatsu (A Firm) v Sadie Ville Pty Ltd (As Trustee for Sadie Ville Superannuation Fund) [2020] FCAFC 23

ORDERS

THE COURT ORDERS THAT:

1.    The appellant has leave to appeal.

2.    The appellant file notices of appeal within seven days of this order, the notices of appeal to be in the form of the draft notices of appeal which accompanied the applications for leave to appeal.

3.    The appeals be dismissed.

4.    The appellant pay the respondent’s costs of the appeals.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

WIGNEY J:

1    Sadie Ville Pty Limited (as trustee for Sadie Ville Superannuation Fund) has commenced representative proceedings in this Court against Deloitte Touche Tohmatsu, a firm or partnership which conducts a business which includes the provision of accounting, auditing and advisory services. Sadie Ville alleges in those proceedings that Deloitte is liable to compensate it and group members on whose behalf the proceedings have been commenced for losses or damage arising from alleged breaches by Deloitte of various provisions of the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and the Australian Consumer Law (Victoria). Some of those provisions create criminal offences. Others are civil or pecuniary penalty provisions; meaning that a regulator may institute proceedings against a person who is alleged to have contravened the provisions for the recovery of a pecuniary penalty payable to the Commonwealth or a State or Territory.

2    This application for leave to appeal by Deloitte concerns interlocutory rulings by the primary judge the effect of which was to require certain of the present or former partners of Deloitte to discover and produce documents in respect of which they had claimed privilege against self-incrimination or the privilege against exposure to a penalty. The primary judge upheld privilege claims made by one particular partner, Mr Reuben Saayman, and any other partner who, like Mr Saayman, was directly involved in the relevant engagements which gave rise to the alleged contraventions. Those engagements involved the provision of audit reports in respect of the financial statements of a public company, Hastie Group Limited, and the provision of an investigating accountant’s report for inclusion in a prospectus released by Hastie. Crucially, however, the primary judge found that there was no real or appreciable risk that criminal or civil penalty proceedings would be commenced against any partner or partners who were not directly involved in the Hastie engagements. His Honour also rejected Deloitte’s contention that the so-called “uninvolved partners” did not relevantly have control of the documents which were the subject of the production order.

3    In support of its application for leave to appeal, Deloitte contended that the primary judge erred in finding both that there was no real or appreciable risk that criminal or civil penalty proceedings would be commenced against the uninvolved partners and that the uninvolved partners had control of the relevant documents. It was also contended that his Honour subsequently erred in not excusing the uninvolved partners from complying with the production order, or in not discharging the production order, on the basis that events which occurred after the making of the production order meant that the uninvolved partners were unable to comply with it.

4    I have read the reasons to be published by Markovic and O’Callaghan JJ. I agree with their Honours that leave to appeal should be granted but that the appeals should be dismissed with costs. Subject to what follows, largely by way of elaboration or further elucidation, I also agree with their Honours’ reasons.

5    I gratefully adopt Markovic and O’Callaghan JJ’s detailed recitation and summary of Sadie Ville’s pleaded case, the evidence which was before the primary judge, the decisions and reasoning of the primary judge, the grounds of appeal and the submissions made by the parties in relation to those grounds of appeal. That allows me to go directly to the three critical issues which are raised by the appeals: first, whether the primary judge was right to conclude that there was no real or appreciable risk that criminal or civil penalty proceedings would be commenced against the uninvolved partners; second, whether his Honour was correct in finding that the uninvolved partners had control of the relevant documents at the time of the making of the production order; and third, whether the primary judge erred in any way in finding that Deloitte had failed to discharge its onus of establishing a proper basis for excusing the uninvolved partners from complying with the production order or discharging the order.

REAL OR APPRECIABLE RISK OF PROSECUTION OR PENALTY

6    Deloitte did not take issue with the primary judge’s consideration of the principles regarding the privilege against self-incrimination and the privilege against exposure to penalties: Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (No 3) (2018) 357 ALR 695; FCA 1107 (Sadie Ville v DTT (No. 3)) at [91]-[102]. In simple terms, a person claiming the privilege bears the onus of establishing that their provision of information or documents by compulsion would give rise to a real and appreciable risk of prosecution, in the case of the privilege against self-incrimination, or a real and appreciable risk of the institution of proceedings for a civil penalty, in the case of the privilege against exposure to penalties.

7    The primary judge found that Mr Saayman and the other partners who were directly involved in the Hastie engagements that gave rise to the alleged contraventions (the so-called “involved partners”) had discharged that onus. His Honour accordingly upheld their privilege claim. The critical issue was and is whether the uninvolved partners – partners who had no direct involvement in those engagements, and who therefore had not been, and were not alleged to have been, engaged in, or been aware of, any of the conduct that was alleged to constitute the alleged contraventions – faced any real or appreciable risk of criminal or penalty proceedings being commenced against them.

8    Deloitte contended, in effect, that there was a real or appreciable risk of criminal or penalty proceedings being commenced against the uninvolved partners simply because they were partners of the firm; that is, because they were partners of Mr Saayman and any of the other partners who were directly involved in the Hastie engagements and who had engaged in the conduct which was alleged to have constituted the contraventions. It should perhaps be noted in this context that Deloitte is a large national partnership with upwards of 700 partners. The evidence suggested that the vast majority of those partners were not in the audit division of the firm and had no involvement in that aspect of the firm’s business, let alone any direct involvement in, or even knowledge of, the Hastie engagements or the audit and investigating accountant’s reports which were provided pursuant to those engagements. The effect of Deloitte’s contention, therefore, was that there was a real and appreciable risk that upwards of 700 partners might be prosecuted or face civil penalty proceedings by a regulator simply because they were partners of Mr Saayman or some other partner who was responsible for the provision to Hastie of the relevant reports. Some of the relevant criminal offences were punishable by imprisonment.

9    The uninvolved partners’ potential liability in that regard was said by Deloitte to arise in various different ways. First, it was said to be implicit in the way Sadie Ville had pleaded its case. Second, it was contended that the risk that the uninvolved partners might be exposed to prosecution or penalty proceedings arose by reason of the operation of s 14 of the Partnership Act 1958 (Vic) and similar provisions in other States. Third, it was contended that various authorities supported the proposition that a partner may be held to be vicariously criminally liable for another partner’s criminal conduct. Fourth, it was contended that various authorities also established that where one partner committed a strict liability offence in the course of carrying on the partnership business, his or her partners were “automatically” guilty of the same offence.

10    It is necessary, before considering the various different ways that Deloitte contended that the uninvolved partners might be exposed to prosecution or penalty for the alleged criminal or contravening acts of Mr Saayman or other involved partners, to give close consideration to the relevant offence and civil penalty provisions. As will be seen, close consideration of those provisions confirms that the only possible basis upon which it could be said that there was a real or appreciable risk that the uninvolved partners might be prosecuted or be the subject of civil penalty proceedings is if they might somehow be considered to be vicariously criminally liable, or liable to pay a penalty as a contravener of a civil penalty provision, simply because they were partners of Mr Saayman or some other involved partner.

Sections 1041E and 1311 of the Corporations Act.

11    Section 1041E of the Corporations Act, read together with s 1311 of the Corporations Act, creates a criminal offence, the relevant elements of which may be summarised as follows: first, the accused “person” makes a statement which is false in a material particular or is materially misleading; second, when the person made the statement, the person either did not care whether the statement or information was true or false, or knew, or ought reasonably to have known, that the statement or information was false in a material particular or was materially misleading; and third, the statement or information was likely to induce persons to apply for financial products, or induce persons to dispose of or acquire financial products or have the effect of increasing, reducing, maintaining or stabilising the price for trading in financial products on a financial market. The offence created by s 1041E is not a strict liability offence; the second element is a “fault” element for the offence.

12    A firm or partnership is not necessarily a “person” for the purposes of a criminal offence provision such as s 1041E of the Corporations Act. That would depend on the proper construction of the offence provision in question; however the “difficult question of whether a criminal statute … applies to a partnership as an independent entity and, if so, how that impacts on the potential liability of individual partners does not arise where the legislation in question provides express answers to these questions”: W. Stevenson & Sons (A Partnership) v R [2008] EWCA Crim 273 at [20]-[30]. That is the case with s 1041E of the Corporations Act. That is because s 761F of the Corporations Act provides that, subject to certain “changes”, Chapter 7 of the Corporations Act “applies to a partnership as if the partnership were a person”. Section 1041E is within Chapter 7 of the Corporations Act.

13    One of the key changes specified in s 761F is that any contravention of a provision of Chapter 7 that “would otherwise be a contravention by the partnership is taken (whether for the purposes of criminal or civil liability) to have been a contravention by each partner who: (i) aided, abetted, counselled or procured the relevant act or omission; or (ii) was in any way knowingly concerned in, or party to, the relevant act or omission…”.

14    The effect of s 761F of the Corporations Act, in terms of the offence created by s 1041E, is thus that while a partnership may be a “person” for the purposes of s 1041E, a partner can only commit an offence against s 1041E if he or she aided, abetted, counselled or procured, or was in any way knowingly concerned in, or party to, the relevant act or omission that amounted to a contravention of s 1041E. The relevant act or omission is the making of a statement, or the dissemination of information, that was false in a material particular or was materially misleading.

15    Sadie Ville’s pleaded case did not allege that any uninvolved partner aided, abetted, counselled or procured, or was in any way knowingly concerned in, or party to, the making of any statement, or the dissemination of any information, which amounted to a contravention of s 1041E. Sadie Ville’s pleading also did not include any factual allegation that any uninvolved partner engaged in any such conduct with the relevant fault element. Nor did Deloitte adduce or point to any evidence that suggested that the production of any documents in response to the production order would expose any uninvolved partner to the risk that any such allegation would or might be made, let alone form the basis of any potential criminal prosecution.

16    It follows from this analysis that the uninvolved partners’ claim of privilege against self-incrimination based on the risk of prosecution for an offence against s 1041E could only possibly be made out on the basis that they might somehow be vicariously liable for an offence committed against s 1041E by a partner who was alleged to have engaged in such conduct with the relevant fault element, either by reason of the Partnership Act or otherwise. Deloitte’s contentions in that regard are considered later in these reasons. It suffices at this stage to emphasise that the only basis upon which it could possibly be contended that any uninvolved partner faced any risk of prosecution for an offence against s 1041E was that the uninvolved partner was somehow criminally liable – that is, could be said to have committed an offence – simply because he or she was the partner of Mr Saayman, or some other involved partner.

Sections 307A and 1311 of the Corporations Act

17    Subsection 307A(2) of the Corporations Act applies where, relevantly, an audit firm conducts an audit or review of a financial report for a financial year or half-year. It imposes an obligation on the “lead auditor” for the audit or review. That obligation is to “ensure that the audit or review is conducted in accordance with the auditing standards”. A failure to comply with that obligation is a strict liability offence: subs 307A(4). The “lead auditor” is the “registered company auditor who is primarily responsible to the audit firm … for the conduct of the audit”: subs 324AF(1) of the Corporations Act.

18    The proper construction of subs 307A(2), read together with s 1311 of the Corporations Act, is that if, in the conduct of an audit or review, there is a failure to comply with the obligation to ensure that the audit or review is conducted in accordance with the auditing standards, it is the lead auditor, and only the lead auditor, who commits an offence. That is because the obligation is imposed on the lead auditor, and only the lead auditor. It follows that only the lead auditor of the audits or reviews in question in this case – the registered company auditor who was primarily responsible to Deloitte for the conduct of the relevant audits – could be said to be exposed to any risk of prosecution for an offence against subs 307A(2) of the Corporations Act in this case. There is no suggestion, in Sadie Ville’s pleadings or otherwise, that any uninvolved partner was the lead auditor for any of the relevant audits. Indeed, that is almost by definition not the case.

19    Deloitte nevertheless contended that the uninvolved partners were at risk of prosecution for an offence by reason of the operation of s 324AB of the Corporations Act. That contention is wholly misconceived.

20    Subsection 324AB(1) relevantly provides that the appointment of a firm as auditor of a company is taken to be an appointment of all persons who, at the date of the appointment, are members of the firm and registered company auditors. It follows that the appointment of Deloitte as the auditor of the relevant company in this matter must be taken to have been the appointment of all of the Deloitte partners who were registered company auditors at the time of the appointment. That may perhaps include some uninvolved partners, though there could be no suggestion that it would include all of the uninvolved partners, most of who had nothing to do with Deloitte’s audit business.

21    In any event, it does not follow that any uninvolved partners who were registered company auditors at the time of Deloitte’s appointment as auditor, and who therefore may be taken to have been appointed as auditor, were at risk of prosecution of an offence against subs 307A(2). That is because there was, and is, no suggestion that any such uninvolved partners were the lead auditor in the relevant audits. They were accordingly not subject to the obligation created by subs 307A(2) and cannot be said to have committed the offence of failing to comply with that obligation.

22    Subsection 324AB(5) provides that, for the purposes of criminal proceedings under the Corporations Act against a member of an audit firm, an act or omission by a member, employee or agent of the audit firm acting within the actual or apparent scope of his or her employment, or within his or her actual or apparent authority, is also to be attributed to the audit firm. The operation of subs 324AB(5) does not alter the fact that only the lead auditor is subject to the obligation created by subs 307A(2) and only the lead auditor can be prosecuted for any failure to comply with that obligation. The only relevant effect of subs 324AB(5) in the context of this case is that, for the purposes of any prosecution of the lead auditor for an offence against subs 307A(2), an act or omission by a member, employee or agent of the audit firm, within authority, may be attributed to the audit firm and thus to the lead auditor.

23    It follows from this analysis of the offence in subs 307A(2) that the uninvolved partners’ claim of privilege against self-incrimination based on the risk of prosecution for an offence against that section could only be made out on the basis that they might somehow be vicariously criminally liable, under the Partnership Act or otherwise, for an offence committed by the lead auditor: that is, that they were liable to be prosecuted for an offence against subs 307A(2) simply because they were the lead auditor’s partner.

Sections 728 and 1311 of the Corporations Act

24    Section 728 of the Corporations Act, read together with s 1311 of the Corporations Act, relevantly creates an offence with the following elements: first, the accused “person” offered securities under a disclosure document; second, there was a misleading and deceptive statement in the disclosure document, or any application form that accompanied the disclosure document, or any document that contained the offer; and third, the misleading or deceptive statement was materially adverse from the point of view of an investor.

25    The contention that there may be a real and appreciable risk that any uninvolved partner may be prosecuted for an offence against s 728 of the Corporations Act may be dealt with shortly. In its pleaded case Sadie Ville does not allege that Deloitte, or any partner of Deloitte, offered securities under a disclosure document. Nor does the pleading refer to any fact which could form the basis of any such allegation. There is, accordingly, no basis upon which it could be suggested that any partner of Deloitte, let alone an uninvolved partner, is at risk of being prosecuted as principal for an offence against s 728 of the Corporations Act.

26    Given the nature of the allegations in Sadie Ville’s pleading concerning a Deloitte report which was included in a relevant disclosure document, it could perhaps be argued that there was a risk, albeit perhaps a fairly remote one, that any partner directly involved in the preparation or provision of that report might be prosecuted as an accessory to an offence committed by a person who offered securities under the relevant disclosure document. Accessorial liability is provided for in the Criminal Code, which is the Schedule to the Criminal Code Act 1995 (Cth), in particular s 11.2. It suffices, for present purposes, however, to note that there is no allegation in Sadie Ville’s pleaded case, nor any other basis to believe or suspect, that any uninvolved partner was knowingly involved with the relevant Deloitte report in such a way that might give rise to accessorial liability.

27    It follows again that the uninvolved partners’ claim of privilege against self-incrimination based on the risk of prosecution for an offence against s 728 of the Corporations Act could only possibly be made out on the basis that the uninvolved partners might somehow be vicariously criminally liable, under the Partnership Act or otherwise, for an accessorial offence committed by an involved partner: that is, that they might be prosecuted simply because they were that involved partner’s partner.

Sections 12DB and 12GB of the ASIC Act

28    Subsection 12DB(1)(a) provides that a “person” must not, in trade or commerce, in connection with the supply or possible supply of financial services, or in connection with the promotion by any means of the supply or use of financial services, make a false or misleading representation that services are of a particular standard, quality, value or grade. Subsection 12GB(1) provides that a person who: (a) contravenes; or (b) aids, abets, counsels or procures a person to contravene; or (c) induces, or attempts to induce, a person to contravene; or (d) is in any way knowingly concerned in, or party to, the contravention by a person of; or (e) conspires with others to contravene, relevantly, subs 12DB(1) is guilty of an offence.

29    Subsection 12DB(3) provides that an offence under subsection 12GB(1) relating to subsection (1) of s 12DB is an offence of strict liability. That is a somewhat puzzling provision. One can readily understand how subs 12GB(1) can operate to create a strict liability offence of contravening subs 12GB(1)(a) of the ASIC Act. It is, however, difficult to conceive how an offence of aiding, abetting, counselling or procuring a person to contravene, or being knowingly concerned in or a party to a contravention, or conspiring with another to contravene, subs 12GB(1) could possibly be said to be strict liability offences. That is because those forms of accessorial liability invariably involve mental or fault elements.

30    Fortunately it is unnecessary for present purposes to resolve that issue concerning the proper construction or operation of subs 12GB(1). That is because, critically for the purposes of this case, s 761F of the Corporations Act applies to subs 12DB(1) by reason of subs 5(2)(a) of the ASIC Act. Accordingly, as is the case with the offence provision in s 1041E of the Corporations Act, a partnership can be a “person”, for the purposes of subs 12DB(1), but any contravention of subs 12DB(1) that would otherwise be a contravention by the partnership, is only taken to have been a contravention by any partner who aided, abetted, counselled or procured the relevant act or omission, or was in any way knowingly concerned in or party to, the relevant act or omission.

31    It follows that the analysis and reasoning applied earlier in the context of the contention that there was a risk of prosecution of the uninvolved partners for an offence against s 1041E of the Corporations Act applies equally to the contention that there was a risk of prosecution of the uninvolved partners for an offence under subs 12DB(1) and subs 12GB(1). Sadie Ville did not allege that any uninvolved partner aided, abetted, counselled or procured, or was in any way knowingly concerned in, or party to, the making of any statement, or the dissemination of any information, which amounted or may have amounted to a contravention of subs 12DB(1). Sadie Ville’s pleading did not include any factual allegation that any uninvolved partner engaged in any such conduct. Nor was there any evidence to suggest that the production of any documents in response to the production order would expose any uninvolved partner to the risk that any such allegation would or might be made, let alone form the basis of any potential criminal prosecution.

32    It follows again that the uninvolved partners’ claim of privilege against self-incrimination based on the risk of prosecution for an offence against subs 12DB(1) could only possibly be made out on the basis that they might somehow be vicariously criminally liable for an offence committed against subs 12GB(1) by a partner who was alleged to have engaged in such conduct, either by reason of the Partnership Act or otherwise. That is, that they committed an offence simply because they were a partner of someone who committed an offence against subs 12GB(1) of the ASIC Act.

Sections 12DB and 12GBA of the ASIC Act

33    A person who is found to have contravened s 12DB of the ASIC Act may also be liable to pay a pecuniary penalty to the Commonwealth by reason of subs 12GBA(1) of the ASIC Act. Proceedings to recover such a penalty may only be commenced by the Australian Securities and Investments Commission (ASIC): subs 12GBC(1) of the ASIC Act.

34    The above analysis of the elements of the offence under s 12GB constituted by a contravention of s 12DB of the ASIC Act applies equally to any action by ASIC to recover a pecuniary penalty for a contravention of s 12DB of the ASIC Act. Any contravention of subs 12DB(1) that would, for the purposes of pecuniary penalty proceedings pursuant to s 12GBA of the ASIC Act, otherwise be a contravention by a partnership, is taken to have been a contravention by each partner who aided, abetted, counselled or procured the relevant act or omission, or was in any way knowingly concerned in or party to, the relevant act or omission. It follows that only a partner who engaged in that conduct, with the relevant state of mind, could be said to have contravened s 12DB for the purposes of s 12GBA of the ASIC Act.

35    In those circumstances, any individual partner of Deloitte could only be liable to pay a pecuniary penalty for a contravention of subs 12DB(1) if they aided, abetted, counselled or procured, or were in any way knowingly concerned in or party to, the making of the allegedly false or misleading statements in the relevant audit and investigating accountant’s reports. No such allegation is made against the uninvolved partners. Nor was there any evidence to suggest that the production of any documents in response to the production order would expose any uninvolved partner to the risk that any such allegation would or might be made, let alone form the basis of any potential pecuniary penalty proceedings by ASIC. It follows that the uninvolved partners’ claim of privilege against exposure to penalties based on the risk of civil or pecuniary penalty proceedings pursuant to s 12GBC of the ASIC Act could again only possibly be made out on the basis that they might somehow be vicariously liable for a contravention of subs 12DB(1) of the ASIC Act by Mr Saayman, or another involved partner, either by reason of the Partnership Act or otherwise.

36    There is an additional issue as to whether any action to recover a pecuniary penalty against any of the partners of Deloitte would be statute-barred. The primary judge held that to be the case. That issue is considered later in these reasons.

Section 151 of the Consumer Law

37    The Consumer Law is the Australian Consumer Law, being Schedule 2 to the Competition and Consumer Act 2010 (Cth), as applied to the State of Victoria by Part 2.2 of the Australian Consumer Law and Fair Trading Act 2012 (Vic).

38    Subsection 151(1)(b) of the Consumer Law is in similar terms to subs 12DB(1)(a) of the ASIC Act. It relevantly provides that a “person” commits an offence if the person, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services, makes a false or misleading representation that services are of a particular standard, quality, value or grade. Subsection 151(4) of the Consumer Law provides that the offence in subs 151(1) is a strict liability offence.

39    Unlike in the case of s 1041E of the Corporations Act and subs 12DB(1)(a) of the ASIC Act, there is no provision in the Consumer Law which provides that a partnership may be a “person” for the purposes of subs 151(1) or any other provision of the Consumer Law. Nor is there anything in the text, context or purpose of s 151 or the Consumer Law generally that would compel the conclusion that a partnership can be a person for the purposes of that section, or that s 151 may apply to a partnership as an independent legal entity: cf. Stevenson & Sons at [29]; see also Bishop v Chung Brothers (1907) 4 CLR 1262 at 1267. There is no doubt that a body corporate may be a “person” for the purposes of s 151, and indeed subss 151(5) and 151(6) provide for different penalties depending on whether the offence is committed by a body corporate or a person other than a body corporate. There is no similar provision in relation to offences committed by a partnership. Nor is there any provision in the Consumer Law which imposes any restriction on the assets that could properly be available to meet any penalty imposed on a partnership, a factor which was considered important in Stevenson & Sons (at [29]-[30]) if a criminal statute was to be construed as permitting a charge to be laid against a partnership.

40    In all the circumstances, the proper construction of s 151 of the Consumer Law is that a partnership is not a “person” for the purposes of that section and therefore a partnership cannot commit an offence under that section.

41    In those circumstances, on what possible basis could it be said that any of the uninvolved partners, being partners who were not in any way involved in, or even knew about, the relevant audits, made any allegedly false or misleading representations in the relevant audit reports for the purposes of s 151 of the Consumer Law? The relevant provisions in Pt 2M.3 Div 3 of the Corporations Act relating to audit reports make it tolerably clear that it is the “lead auditor”, or the auditor who conducts an audit, who is responsible for audit reports, not that person’s firm. That may suggest that, at least for the purposes of offence provisions, such as s 151 of the Consumer Law, any false or misleading representations in an audit report could only be said to be made by the lead auditor, or the auditor who conducted the audit, not their firm. That said, s 324AA of the Corporations Act makes provision for the appointment of a firm as auditor and subs 324AB(1) of the Corporations Act provides that when a firm is appointed auditor, the effect is that all members of the firm who were registered company auditors at the time of the appointment are taken to be appointed. Subsection 324AB(3) of the Corporations Act also provides that an audit report may be made or given by an audit firm, so long as it is signed by a member of the firm who is a registered company auditor both in the firm’s name and in his or her own name.

42    In any event, even if it could be said that the relevant audit and investigating accountant’s reports in this matter were made or given by Deloitte, because they were signed by Mr Saayman, or some other involved partner, both in the firm’s name and that partner’s own name, it would not necessarily follow that every partner of Deloitte, including the uninvolved partners, could be taken to have made the relevant representations in those reports for the purposes of s 151 of the Consumer Law. That is because, as Gross LJ (with whom Andrews J agreed) noted in Riley and others v Director of Public Prosecutions [2016] EWHC 2531; [2017] 1 WLR 505 at [29], “in the sphere of partnership as elsewhere, criminal liability is ordinarily personal to the individual offender”. Gross LJ also referred in that context to the observation made by Lord Widgery CJ in Parsons v Barnes [1973] Crim LR 537 at 538 that “[n]o general proposition could be laid down that one partner was necessarily responsible for the acts of his co-partner”.

43    In all the circumstances, there is no sound basis to conclude that every partner of Deloitte could be found to have made the alleged false or misleading representations in the audit and investigating accountant’s reports for the purposes of s 151. The better view is that only the lead auditor, or the partners who were directly responsible for the Hastie engagements, could be said to have made those statements, though it could perhaps be argued other partners who were registered company auditors at the time of Deloitte’s appointment as auditor might also be regarded to have made them. There is, however, no basis for finding that a partner who had no involvement in the provision of Deloitte’s audit or accounting services and no involvement in the Hastie engagements could be criminally liable under s 151 for the making of the allegedly false or misleading representations.

44    Since the uninvolved partners, or at least those who were not registered company auditors at the time of Deloitte’s engagement by Hastie, could not be said to be criminally liable under s 151 for the alleged false or misleading representations, the uninvolved partners’ claim of privilege against self-incrimination based on the risk of prosecution for an offence against s 151 of the Consumer Law must again hinge on the proposition that they might somehow be vicariously or jointly liable, either by reason of the Partnership Act or otherwise, for an offence committed against s 151 by a partner who was responsible for making the relevant representations.

Sections 29 and 224 of the Consumer Law

45    Section 29 of the Consumer Law is in the same terms of s 151 of the Consumer Law, save that it does not provide that a person who engages in the conduct proscribed by the section commits an offence. Rather, a person found to have contravened s 29 is liable to be ordered to pay a pecuniary penalty at the suit of the Director of Consumer Affairs Victoria: see s 224 of the Consumer Law and s 10 of the Fair Trading Act.

46    The issues that arise in relation to the suggestion that the uninvolved partners may be exposed to a pecuniary penalty for a contravention of s 29 of the Consumer Law are essentially the same as those that have been considered in the context of s 151 of the Consumer Law. In short, a partnership is not a “person” for the purposes of s 29 of the Consumer Law. More significantly, even if it could be said that the relevant audit and investigating accountant’s reports in this matter were made or given by the partnership, Deloitte, it would not necessarily follow that every partner of Deloitte, including the uninvolved partners, could be taken to have made the relevant representations in those reports for the purposes of s 29 of the Consumer Law. It follows, once again, that any potential liability on the part of the uninvolved partners for a pecuniary penalty arising from any alleged contravention of s 29 of the Consumer Law must hinge on the proposition that the uninvolved partners were somehow at risk of being found to have vicariously contravened s 29 of the Consumer Law simply because they were the partner of Mr Saayman or some other involved partner.

47    The question whether any proceedings under s 224 of the Consumer Law to recover a pecuniary penalty for breach of s 29 would be statute-barred, as found by the primary judge, is considered later in these reasons.

Liability under the Partnership Act

48    Deloitte contended, in effect, that the uninvolved partners were jointly and severally liable for any penalty that may be imposed on Mr Saayman, or any other involved partner, by reason of subs 14(1) of the Partnership Act (and like provisions in other States), which relevantly provides that “where by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm or with the authority of his or her co-partners … any penalty is incurred the firm is liable therefor to the same extent as the partner so acting or omitting to act”. In Deloitte’s submission, subs 14(1) applied broadly to all civil and criminal wrongs, including those the subject of the allegations in this matter. Therefore, so it was contended, the uninvolved partners were exposed to the same risk of prosecution or penalty as the involved partners were.

49    The difficulty with that contention is that, even if it may be accepted that Deloitte, as the relevant firm, may by reason of subs 14(1) of the Partnership Act be liable for any penalty incurred by Mr Saayman or any involved partner arising from their wrongful acts, it does not follow that the uninvolved partners can be said to be exposed to any real or appreciable risk of prosecution or pecuniary penalty proceedings being commenced against them. That is because provisions such as subs 14(1) are “concerned with satisfying debts and liabilities for which a partnership has become liable; they do not operate to impose criminal liability where none has otherwise been established”: Riley at [33]. Put another way, the fact that, by reason of subs 14(1) of the Partnership Act, Deloitte may ultimately be liable to pay any fine imposed on Mr Saayman or any involved partner by reason of their conviction of a criminal offence does not mean that the uninvolved partners are somehow criminally liable, or liable to be prosecuted for that offence.

50    Subsection 14(1) of the Partnership Act does not provide that if a partner of a firm commits an offence, all of the partners in the firm may also be prosecuted for that offence. It simply provides that the partners in a firm are liable to pay any monetary penalty, for example, a fine, that may be imposed on the rogue partner upon their conviction for the offence. While an uninvolved partner may be civilly liable to pay a fine which may be imposed on an involved partner, that is fundamentally different to saying that an uninvolved partner may be taken to have committed an offence simply on the basis that he or she is the partner of a person (an involved partner) who committed that offence. None of the authorities relied on by Deloitte, including Dubai Aluminium Co Ltd v Salaam [2002] All ER (D) 60 (Dec); [2003] 2 AC 366 and Walker v European Electronics Pty Ltd (in liq) (1990) 23 NSWLR 1, support the contrary proposition advanced by Deloitte.

51    Exactly the same can be said in relation to any potential liability that Deloitte may have in respect of any pecuniary penalty that may be imposed on Mr Saayman or any involved partner by reason of a finding that they contravened a pecuniary penalty provision. The fact that Deloitte may have to satisfy that liability by reason of subs 14(1) of the Partnership Act does not mean that any uninvolved partner can be said to have contravened a pecuniary penalty provision, or that a regulator can seek or obtain a pecuniary penalty order against any of the uninvolved partners. All Deloitte partners, including the uninvolved partners, may ultimately be liable to pay any pecuniary penalty imposed on Mr Saayman or any involved partners who are found to have contravened a civil penalty provision, but that is fundamentally different to saying that the uninvolved partners face a risk of having a court find that they have contravened a civil penalty provision and must pay a pecuniary penalty to the Commonwealth or a State or Territory pursuant to either s 12GBA of the ASIC Act, or s 224 of the Consumer Law.

52    It follows that any potential liability that Deloitte may have under subs 14(1) of the Partnership Act to pay any penalty imposed on Mr Saayman or any involved partner does not give the uninvolved partners any right to claim privilege against self-incrimination or exposure to a penalty in response to the production orders. The mere fact that Deloitte may incur such a liability does not expose the uninvolved partners to any risk of prosecution or pecuniary penalty proceedings, or any risk of being found to be criminally liable, or liable to pay a penalty on the basis that they contravened a civil penalty provision.

53    It should perhaps be noted in this context that the reasons of the primary judge do not deal with any argument based on subs 14(1) of the Partnership Act. That would appear to be because no argument based on that provision was squarely or clearly put to the primary judge.

Liability of one partner for the criminal act of another partner

54    Deloitte contended that the uninvolved partners were exposed to the risk of prosecution on the basis of some broader general law principle that one partner may be liable for the criminal acts of another partner in the course of carrying on the partnership business, either in respect of strict liability offences or generally. That principle was, in Deloitte’s submission, established by two cases: Clode v Barnes [1974] 1 WLR 544 and Collins v Poole (1977) 2 TPC 173.

55    In Clode v Barnes, two partners conducted a business called Wholesale Car Co. which, as the name suggests, was a used car dealership. One of the partners, Mr Thomas, was involved in dealing with customers and the other partner, the defendant, was responsible for the administration of the business. Mr Thomas falsely represented to one customer that a particular motor vehicle had “done no more than 2,000 to 3,000 miles”. The customer bought the car. The defendant did not know anything about the false representation made by Mr Thomas. Mr Thomas and the defendant were charged with jointly supplying a car, in the course of trade as a used car dealer, to which a false trade description had been affixed contrary to s 1 of the Trade Descriptions Act 1968 (UK). The defendant appealed his conviction.

56    The main issue on the appeal was whether the relevant offence was a strict liability offence, or required proof that the defendant knew that the false trade description had been affixed to the car. Lord Widgery CJ held that the offence was a strict liability offence. His Lordship also found that Mr Thomas and the defendant had jointly supplied the car to the customer, reasoning (at 547) that “[p]artners carrying on business jointly, jointly supply vehicles which it is the business of that partnership to sell”. As there was no issue that the vehicle had affixed to it a false trade description and the offence was one of strict liability, the defendant’s appeal was dismissed.

57    Clode v Barnes is not, as Deloitte effectively contended, authority for the broad proposition that where one partner is found to have committed a strict liability offence, that partner’s partners are “automatically” guilty of the same offence. Nor, in my opinion, is it authority for the equally broad proposition that criminal acts carried out by one partner in the course of the partnership’s business can always be attributed to the other partners; that the other partners will always be considered to also have engaged in those criminal acts. The critical finding in Clode v Barnes was simply that, on the particular facts of that case, Mr Thomas and the defendant jointly sold the car to the customer and therefore jointly committed the relevant offence as was alleged. To the extent that the decision in Clode v Barnes has any precedent value, it should essentially be confined to its own fairly narrow set of facts and circumstances.

58    The only strict liability offences in issue in this matter are the offence created by s 307A and s 1311 of the Corporations Act and the offence against s 151 of the Consumer Law. In relation to the s 307A offence, as discussed in detail earlier, there could be no suggestion that any uninvolved partner jointly committed that offence with Mr Saayman or any other involved partner. That is because the relevant conduct in relation to that offence – failing to ensure that the audit or review was conducted in accordance with the accounting standards – could only have been engaged in by the “lead auditor”. It could not sensibly be argued that the relevant obligation was jointly imposed on the uninvolved partners and that the uninvolved partners therefore jointly failed to comply with the relevant obligation.

59    As for s 151 of the Consumer Law, in my view it could not seriously be contended that the uninvolved partners jointly committed that offence with Mr Saayman and any other involved partner on the basis that they jointly made the allegedly false or misleading representations in the reports furnished by Mr Saayman and any other involved partners. Deloitte was at the relevant time a very large partnership which operated in various States and Territories. Its business was not limited to providing auditing and accountancy services. It might possibly be arguable that Deloitte partners who were registered company auditors, and who therefore jointly carried on that part of Deloitte’s business which involved supplying auditing and accounting services, thereby jointly made any statements in audit reports issued by the firm. Could it seriously be suggested, however, that a Deloitte partner who was not a registered company auditor and had nothing whatsoever to do with Deloitte’s business relating to auditing or the provision of accountancy services, let alone anything to do with the Hastie engagements, jointly made the false and misleading representations in the relevant reports simply because he was a partner? Could it seriously be suggested, for example, that a partner who was involved in providing tax advice, or forensic IT services, in an interstate office of Deloitte somehow jointly made a statement in an audit report prepared by an audit partner in a different office? I think not. The facts and circumstances of this case are far removed from Clode v Barnes.

60    I should add that even if it was arguable that the uninvolved partners may be considered to have jointly committed the alleged offence against s 151 of the Consumer Law simply by reason of being partners of Mr Saayman or other involved partners, I agree with the primary judge’s conclusion (Sadie Ville v DTT (No. 3) at [110]) that it was “much less likely that a prosecution would be brought against a non-involved partner compared with a partner who was involved” and that in those circumstances the prospect of prosecution of a non-involved partner was “theoretical rather than real”. In so concluding the primary judge was not, as Deloitte appeared to suggest, simply making some idiosyncratic assumption about what the relevant regulator or prosecuting authority might or might not do. His Honour was, rather, evaluating the relevant risk having regard to the facts and circumstances of the particular case.

61    The decision in Collins v Poole does not advance Deloitte’s case any more than Clode v Barnes does. Collins v Poole was a decision of a single judge in the Industrial Commission of New South Wales. The facts were not dissimilar to the facts in Clode v Barnes, though, as will be seen, the offence provision in question was substantially different. Mr Collins and Mr Salter carried on the business of a used car dealership under the registered business name 623 Car Sales. One of the cars in the dealership had displayed on its front window a sign which falsely represented that it had a mileage of 27,000 miles. Both Mr Collins and Mr Salter were convicted of an offence under s 32 of the Consumer Protection Act 1969 (NSW). The elements of that offence were: first, that the accused person published or caused to be published a statement; second, the statement was intended or “apparently intended” by the accused or any other person to promote the sale of any goods; and third, that the statement was to the accused’s knowledge false or misleading in any material particular. Subsection 32(3) provided, in effect, that the accused was deemed to have known the falsity of a published statement unless he proved that he had taken reasonable precautions and had reasonable grounds to believe that the statement was true and had no reason to suspect it was false or misleading. The effect of subs 32(3) was thus to effectively reverse the onus of proof in relation to the knowledge of the falsity of the statement.

62    It would appear that there was no evidence connecting Mr Collins with the impugned sign, though there was evidence that the informant had a conversation with Mr Salter about the mileage of the car. Mr Collins appealed his conviction. Dey J dismissed that appeal and upheld the conviction. In doing so, his Honour purported to follow Clode v Barnes, holding (at 182) that Mr Collins was a “joint supplier” of the vehicle, presumably with Mr Salter. That was a curious finding given that the offence did not involve any element relating to the supply of a vehicle. In any event, Dey J’s conclusion in that regard appeared to be based on a finding (at 186) that there was a “joint venture” between Mr Collins and Mr Salter and that accordingly Mr Collins was “liable for the infringement … which was committed by [Mr] Salter”. The basis upon which Mr Collins was said to be liable for the infringement committed by Mr Salter was not explained.

63    His Honour also found (at 186) that there was “joint and several liability which arose from the fact that there was a wrongful act committed in the ordinary course of the firm and for which a penalty was incurred”. Again, the precise basis of the finding of “joint and several liability” was left largely unexplained, though it appears again to have been based on the fact that Mr Collins and Mr Salter were said to have been involved in a “joint venture” in relation to the “car sale yard”. His Honour concluded (at 186), in that context, that the “absence of proof of direct involvement of [Mr Collins] should not excuse him from liability for the wrongful act”.

64    Finally, Dey J found (at 186) that the offence created by s 32 of the Consumer Protection Act was an offence of “absolute liability”, apparently on the basis that the Act “would be ineffective if it were open to a member of a firm to say that although the firm’s advertisement was false or misleading the member of the firm charged was not the one who framed it”. That finding was, with the greatest respect, plainly wrong. An offence which includes an element that the accused knew that the relevant statement was false or misleading could not possibly be considered to be a strict or absolute liability offence. While the deeming provision in subs 32(3) effectively reversed the onus of proof in respect of knowledge, that is not to say that the offence was one which involved no mens rea. It is one thing to say that, in light of the fact that Mr Collins apparently did not give evidence, Mr Collins was deemed to have known that the statement was false. It is quite another thing to say that it was unnecessary to prove that Mr Collins knew that the statement was false.

65    Deloitte appeared to rely on Collins v Poole as authority for the broad proposition or principle that, at least in the case of offences involving false, misleading or deceptive representations, a partner is automatically liable or responsible for another partner’s contravention. I do not consider Collins v Poole to be good authority for that broad proposition or principle. Nor do I consider that it should be followed.

66    As already indicated, in my view the finding by Dey J that the offence was one of absolute liability was plainly wrong and should not be followed. Perhaps more significantly, the critical finding that Mr Collins was liable for Mr Salter’s infringement and that there was “joint and several liability”, apparently simply arising from the fact that Mr Collins and Mr Salter were partners, was unsupported by authority and Dey J’s reasoning is at best difficult to follow. His Honour’s curious reference to Clode v Barnes and “joint supply” may suggest that his Honour was persuaded that Mr Collins and Mr Salter had, by reason of their partnership, jointly published the false statement. If that is so, the decision in Collins v Poole does not advance the matter beyond Clode v Barnes which, as already indicated, is a case which, to the extent it has any precedent value, should essentially be confined to its own fairly narrow set of facts and circumstances. The same can be said of the decision in Collins v Poole.

67    Needless to say, the facts and circumstances of this case are far removed from the facts and circumstances in both Clode v Barnes and Collins v Poole. The offences considered in those cases are also materially different to the offences the subject of this matter. In all the circumstances, Deloitte’s contention, based on those authorities, that there was a real and appreciable risk that the uninvolved partners may be prosecuted, or criminally liable, simply because Mr Saayman or some other involved partner may be prosecuted or be criminally liable, has no merit and is rejected.

68    In any event, even if there was some merit in that contention, like the primary judge (Sadie Ville v DTT (No. 3) at [110]) I consider that the prospect of any prosecution of the uninvolved partners simply on the basis that, by reason of their partnership with Mr Saayman and any involved partners, they are somehow jointly liable for their offences, is theoretical rather than real. I do not consider that there is a real or appreciable risk of the uninvolved partners being prosecuted for any of the relevant offences on that basis. Indeed, the suggestion that uninvolved partners who had nothing whatsoever to do with the relevant engagements, or even knew anything about them, faced any risk of being prosecuted for a serious offence, such as the offence created by s 1041E and s 1311 of the Corporations Act, which carries a potential penalty of imprisonment, simply on the basis that they were partners of those who carried out the allegedly criminal acts, borders on being fanciful. The primary judge was correct in finding that if there was any risk, it was at best theoretical rather than real.

Civil penalty proceedings statute-barred

69    There is another reason why there was no real and appreciable risk that the uninvolved partners would be exposed to the risk of civil penalty proceedings. That reason is, as the primary judge held, that any civil penalty proceedings based on the alleged contraventions are statute-barred.

70    The only alleged contraventions which could give rise to civil penalty proceedings are the alleged contravention of s 12DB of the ASIC Act, which may be the subject of civil penalty proceedings pursuant to s 12GBA and s 12GBC of the ASIC Act, and s 29 of the Consumer Law, which may be the subject of civil penalty proceedings by reason of s 228 of the Consumer Law. In the case of the ASIC Act contraventions, subs 12GBC(2) provides that any proceeding by ASIC to recover a pecuniary penalty “may be commenced within 6 years after the contravention”. While the provisions of the ASIC Act concerning the commencement of proceedings to recover pecuniary penalties were amended in March 2019, those amendments do not apply where, as here, the conduct allegedly constituting the relevant contraventions occurred prior to March 2019. In the case of the Consumer Law contraventions, s 228 of the Consumer Law similarly provides that any action by a regulator to recover a pecuniary penalty “may be commenced at any time within 6 years after the contravention or conduct”.

71    The primary judge held that any civil penalty proceedings against the uninvolved partners would be statute-barred (Sadie Ville v DTT (No. 3) at [111]). Deloitte contended that his Honour erred in so finding (ground 2 of the appeal). I agree with Markovic and O’Callaghan JJ that Deloitte’s submissions in support of that ground of appeal have no merit and that the primary judge’s finding was correct. Even putting the decision of the Full Court in Australian Competition and Consumer Commission v PT Garuda Indonesia Ltd (2016) 244 FCR 190 at [520]-[522] to one side, the point remains that the terms of subs 12GBC(2) of the ASIC Act and s 228 of the Consumer Law are materially different to the terms of the provisions considered in The Attorney-General of the Commonwealth v Oates (1999) 198 CLR 162 and, perhaps more significantly, if subs 12GBC(2) of the ASIC Act and s 228 of the Consumer Law are not construed as providing limitation periods, they would have no work to do.

Sadie Ville’s pleadings

72    It remains to briefly say something about Deloitte’s contentions concerning Sadie Ville’s pleadings. Deloitte relied on the fact that Sadie Ville brought the proceedings in the partnership name pursuant to r 9.41 of the Federal Court Rules 2011 (Cth). More significantly, Deloitte pointed out that Sadie Ville had alleged, in its pleading, that Deloitte was a “person” for the purposes of certain of the relevant offence and civil penalty provisions, including s 1041E of the Corporations Act and s 12DB of the ASIC Act. Sadie Ville also alleged in its pleading that Deloitte had not conducted the audit of Hastie in accordance with the accounting standards (an implicit allegation that Deloitte had contravened s 307A of the Corporations Act) and that Deloitte had contravened s 1041E of the Corporations Act and s 12DB of the ASIC Act. It was submitted, in those circumstances, that “Sadie Ville cannot gainsay that all of the Deloitte Partners are exposed to penalties for contravention of” those provisions.

73    The content of Sadie Ville’s pleadings provides no support for the contention that there was a real and appreciable risk that the uninvolved partners may be the subject of criminal prosecution or civil penalty proceedings. It is true that Sadie Ville commenced proceedings in the partnership name and that it is asserted in various parts of the proceeding that Deloitte contravened relevant provisions of the Corporations Act, ASIC Act and Consumer Law. It is tolerably clear from the pleading, however, that Sadie Ville’s case is that the alleged contraventions relate to or arise only from the conduct of those partners who were directly responsible for the Hastie engagements: see in particular paragraph 5.2 and the particulars thereto of the Second Amended Statement of Claim. The pleading does not contain any material facts which could support any finding that any uninvolved partner engaged in any conduct which amounted to a contravention of any of the relevant criminal and civil penalty provisions, let alone that any uninvolved partner was criminally liable or liable to pay a pecuniary penalty. Sadie Ville no doubt commenced the proceeding and couched its case in the way it has because it contends that all of the partners of Deloitte at the time of the alleged contraventions, including the uninvolved partners, are liable to compensate it for loss or damage suffered as a result of the contraventions by the partners responsible for the Hastie engagements. In that regard it relies on s 729 and s 1325 of the Corporations Act, s 12GF and s 12GM of the ASIC Act and s 236 of the Consumer Law: see in particular paragraphs A, B and C at pages 164-167 of the Claim.

74    It would also appear that Sadie Ville relies on s 14 of the Partnership Act, which in this context relevantly provides that “where by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm or with the authority of his or her co-partners loss or injury is caused to any person not being a partner of the firm … the firm is liable therefor to the same extent as the partner so acting or omitting to act”. For the reasons given earlier, s 14 of the Partnership Act does not have the effect of imposing criminal or pecuniary penalty liability on the uninvolved partners. It does, however, have the effect of imposing liability on all partners of the firm at the time of the alleged wrongful acts to, relevantly, compensate any non-partner for any loss or injury caused by the wrongful act or omission of any partner.

75    It may have been open to Sadie Ville to plead its case differently. It may, for example, have been open to it to couch its allegations of contravention specifically against Mr Saayman and any other involved partner and then allege that the other partners were liable pursuant to s 14 of the Partnership Act for loss or damage suffered by it as a result of the contraventions by the involved partners. That perhaps may have been a clearer and more satisfactory way of pleading its case. There has apparently been a dispute concerning the way in which the case has been pleaded: see Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (2017) 123 ACSR 223; Sadie Ville v DTT (No. 3) at [33]-[34]. That issue is not the subject of this application. It suffices, for present purposes, to say that the manner in which Sadie Ville has pleaded its case lends no support to Deloitte’s contentions that there is a real and appreciable risk that the uninvolved partners might be prosecuted or exposed to a penalty.

Conclusion – No real and appreciable risk of prosecution or penalty

76    The primary judge did not err in finding that there was no real and appreciable risk that any of the partners of Deloitte who were not directly involved in the Hastie engagements would or might be prosecuted, or be the subject of civil penalty proceedings, such that they were able to validly claim privilege against self-incrimination or privilege against exposure to penalty. There was, and is, no proper basis for finding that the uninvolved partners were exposed to any such risk. There was no suggestion that any of them had engaged in, or were alleged to have engaged in, any conduct which may have amounted to a contravention of any of the relevant criminal or civil penalty provisions of the Corporations Act, ASIC Act and Consumer Law. The various bases upon which Deloitte contended that the uninvolved partners might somehow be criminally liable, or be liable to pay a penalty on the basis of their contravention of any pecuniary penalty orders, were and are misconceived and have no merit.

77    Grounds 1 and 2 of the notice of appeal in VID 1063 of 2018 accordingly have not been made out. Ground 3 concerned the question of control of the relevant documents.

CONTROL

78    The primary judge found that the relevant documents were relevantly in the control of the partners of Deloitte, including the uninvolved partners: Sadie Ville v DTT (No. 3) at [116]. Deloitte contended that there was no evidence to support that finding. That contention has no merit and is rejected.

79    Mr Anthony Lee, a Senior Legal Counsel at Deloitte, swore an affidavit verifying Deloitte’s list of documents filed pursuant to a discovery order made by the primary judge. In that affidavit, Mr Lee stated that the documents that were the subject of the privilege claim “are in the control of the First Respondent [Deloitte]”. At the time Mr Lee swore this affidavit, the relevant hard copy documents (and a CD containing electronic copies of relevant documents) were secured in a litigation room at Deloitte and electronic copies of relevant documents were stored on Deloitte’s IT network or server. It was no doubt on that basis that Mr Lee deposed that the documents were in the control of Deloitte.

80    Mr Lee was cross-examined about this statement in his affidavit. His evidence was as follows:

Now, Mr Lee, when you refer to the first respondent in this affidavit, you’re referring to Deloitte Touche Tohmatsu the firm; correct? --- Yes. That’s correct

And that firm is a partnership of over 700 partners; correct? --- That’s correct.

And in your first affidavit when you say that the documents are in the control of the first respondent, you mean that the documents are in the control of the 700-odd partners of the first respondent; correct? --- Any of the partners.

Right. And in fact it’s the case that the documents are within the control of all of the partners; is that correct? --- Well, it’s anyone [any one] of the partners.

81    Mr Lee did not otherwise qualify his evidence concerning control. It might perhaps be said that Mr Lee’s responses to the questions put to him about the statement in his affidavit were somewhat vague or ambiguous. What is clear, however, is that he did not retract his unequivocal statement that the relevant documents were in the control of Deloitte. Nor did he deny or dispute that that meant that the documents were in control of the partners of Deloitte. What he seemed to be saying was that the documents were in control of each or every one of the partners.

82    Mr Lee’s evidence provided a sound basis for the primary judge’s finding. That was so particularly given that, as the primary judge noted, Deloitte did not adduce any clear evidence that the uninvolved partners did not have possession, custody or power in respect of the documents: Sadie Ville v DTT (No. 3) at [116].

83    Deloitte contended that when Mr Lee said, during cross-examination, that the relevant documents were in the control of “any” or “anyone [any one] of the [700-odd] partners”, he was saying that the documents were in the possession of Mr Saayman alone, apparently on the basis that Mr Saayman was “any” or “anyone” of the partners. There is no substance whatsoever in that contention. If that is what Mr Lee meant, or intended to say, he plainly would not have said that the documents were in the possession of any or any one of the partners. He would have said that the documents were in the possession of only one of the partners, being Mr Saayman. He did not say that. It is impossible to construe Mr Lee’s evidence in the way Deloitte contended that it should be construed.

84    It should be made clear that the primary judge’s findings concerning control, in this context, occurred at a time before Mr Saayman apparently took it upon himself to take possession of the relevant documents. The situation or circumstances that arose after that occurred is considered later in the context of Deloitte’s application for the uninvolved partners to be excused from complying with the production order.

85    Ground 3 in the notice of appeal in VID 1063 of 2018 must accordingly be rejected.

FORM OF THE PRODUCTION ORDER

86    Ground 4 of the notice of appeal in VID 1063 of 2018 may be dealt with shortly. It relates to the form of the production order. The complaint is that the production order is not directed to individual partners, but to the “first respondent, other than Mr Saayman and any other partner directly involved in the relevant engagements”. The circumstances in which the order came to be framed in those terms is explained in Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (No 4) [2018] FCA 1218 (Sadie Ville v DTT (No. 4).

87    The form that the production order took was largely a product of both the fact that Sadie Ville had taken advantage of the procedural rule permitting it to bring the proceedings in the partnership’s name and the way that the privilege issue had been argued by the parties. The primary judge found that the order in those terms was sufficiently clear and less cumbersome than naming all the individual partners: Sadie Ville v DTT (No. 4) at [4]. Importantly, the primary judge had also directed the parties to provide draft orders to give effect to the reasons in Sadie Ville v DTT (No. 3). Somewhat unhelpfully, Deloitte did not provide a form of order which named all the uninvolved partners to whom the production order should be directed: Sadie Ville v DTT (No. 4) at [4]. It simply raised objections concerning the form of the order proposed by Sadie Ville. Had it pursued a more helpful and constructive approach, the issue may have been dealt with differently.

88    In any event, Deloitte has not demonstrated how the form of the order, at this stage of the proceeding, gives rise to any practical or substantive uncertainty or unfairness. It may be that this issue will need to be revisited if the uninvolved partners continue to resist production in answer to the production order. There may, for example, be issues in relation to the enforcement of the order in its current form if the uninvolved partners fail to comply with it. These are matters that can and should be raised with the primary judge at an appropriate time. If the complaint is persisted with, it could readily be remedied by the primary judge requiring Deloitte to provide a list of the relevant uninvolved partners so that an order can be made in those terms. In the context of this application, however, it suffices to say that the form of the production order provides no basis to allow the appeal. Even if it did, the appropriate order would be to simply remit the matter to the primary judge to vacate the existing order and make an order naming each of the relevant uninvolved partners.

THE APPLICATION TO EXCUSE COMPLIANCE OR DISCHARGE THE ORDER

89    Deloitte subsequently applied for an order that the uninvolved partners be excused from complying with the production order, or that the production order be discharged, apparently on the basis that they were unable to comply with that order. As Markovic and O’Callaghan JJ have explained, having regard to the nature of the application, the effect of which was to set aside, vary or discharge an interlocutory order made after a contested hearing, Deloitte bore the onus of proving that there had been a material change of circumstances since the production order was made. The primary judge held that Deloitte had not discharged that onus. While there may have been a change in circumstances after the production order had been made, his Honour was nonetheless not satisfied that the change of circumstances was material because he was not satisfied that the uninvolved partners were unable to produce the relevant documents in answer to the production order: Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (No 5) [2018] FCA 2066 (Sadie Ville v DTT (No. 5)) at [57].

90    The relevant change in circumstances that Deloitte contended provided a basis for an order that the uninvolved partners be excused from complying with the production order, or that the order be discharged, was that at some point in time shortly after the production order was made, Mr Saayman took possession of the relevant hardcopy documents (including a CD containing electronic copies of documents) and removed them from Deloitte’s premises. He also encrypted the electronic files on Deloitte’s network or server. He subsequently told one of Deloitte’s partners, in a series of apparently carefully contrived and scripted emails, some of which had been settled by Deloitte’s lawyers, that he was not prepared to allow access to the documents and was not prepared to provide the password to the encrypted files. It was on that basis, and that basis alone, that Deloitte contended that the uninvolved partners were unable to comply with the production order.

91    The primary judge, with admirable restraint and understatement, described the circumstances created by Mr Saayman’s actions as “extraordinary and troubling”: Sadie Ville v DTT (No 5) at [54]. I would go further. I would not be so charitable. Indeed, I would characterise Mr Saayman’s conduct as outrageous and contumacious, if not bordering on contempt. Deloitte’s conduct was not much better.

92    On the basis of the evidence before the primary judge, the inference that Mr Saayman’s actions were calculated to frustrate or impede compliance with the production order is almost inescapable. It certainly cannot be doubted that his actions had the effect of frustrating or impeding compliance with the production order that had been made by the primary judge. Mr Saayman undoubtedly knew that, after a strongly contested hearing, the uninvolved partners’ privilege claims had been rejected and they had been ordered to produce the relevant documents. The documents were clearly the property of the partnership, not the property of Mr Saayman alone. He had no right, without the authority of his partners, to take possession of them and remove them from Deloitte’s premises. Nor did he have any right, without authority, to encrypt the electronic files. It may readily be inferred that Mr Saayman knew that to be the case. Yet within about two weeks of the making of the production order, Mr Saayman deliberately took those steps which he must have known would be likely to frustrate the production order and impede the uninvolved partners from producing documents in compliance with the order. Indeed, it may readily be inferred that Mr Saayman intended that his actions would have that effect, or at least that he believed that his actions would have that effect.

93    Mr Saayman, of course, was not called by Deloitte to explain his actions. His actions were conveniently set out in a series of carefully contrived emails with one of his partners. He was thereby shielded from any prospect of cross-examination. Given the outrageous nature of Mr Saayman’s conduct, it is perfectly understandable why he would not have wanted to front the primary judge to give an account of his actions. It is equally understandable why Deloitte did not attempt to adduce evidence from him.

94    As for Deloitte’s response to Mr Saayman’s outrageous conduct, the best that could be said is that the evidence revealed that Deloitte had effectively done nothing more than conveniently, if not cynically, rely on the circumstances supposedly created by Mr Saayman’s actions to defeat the production order. The evidence adduced by Deloitte showed that the partnership or its management had shown no apparent interest in finding out how it was that Mr Saayman had been able to take off with the hardcopy documents and encrypt the electronic documents. The hardcopy documents had been in a secure litigation room, access to which was limited to Deloitte’s in-house litigation team, of which Mr Lee was no doubt a member. The electronic files had been securely maintained by Deloitte’s “IT services team”. Yet none of the witnesses called by Deloitte in support of its application had troubled themselves to ascertain when and how Mr Saayman had been able to enter the secure litigation room and take the documents or when and how Mr Saayman had been able to encrypt files on Deloitte’s supposedly secure IT network.

95    It should perhaps be emphasised, in this context, that there was no evidence that any partner or employee of Deloitte authorised Mr Saayman’s actions. That said, nor was there any clear, cogent or direct evidence that Mr Saayman’s actions had not been authorised in some way by any partner or partners of Deloitte. Equally, there was no evidence that Mr Saayman was assisted by anyone at Deloitte. The inference that he may have received some assistance could not, however, be excluded given that the evidence indicated that nobody at Deloitte had troubled themselves to find out exactly how Mr Saayman was able to do what he did.

96    Deloitte called evidence from three witnesses in support of its application: Mr Lee, Mr David Murray, a Deloitte partner, and Mr Paul Taylor, a Deloitte partner who apparently specialised in “forensic technology”. The evidence of each of those witnesses was, in one way or another, most unimpressive.

97    As already noted, Mr Lee was a Senior Legal Counsel at Deloitte and the person who had effectively been tasked with dealing with Deloitte’s discovery and production obligations. His evidence was, to say the very least, most unimpressive. His evidence was that he did not know if Mr Saayman had entered the litigation room and was unable to explain how, if he did, he was able to do so. He said that he had not made any inquires to ascertain whether anyone had authorised Mr Saayman to enter the room and access the files and that he did not know when the files were removed. As for the electronic documents, Mr Lee’s evidence was that he did not know when or how Mr Saayman had been able to encrypt the electronic files, and that he had not had any discussions with anyone in Deloitte’s IT services team to ascertain when and how Mr Saayman was able to gain access to and encrypt the files.

98    With the greatest respect to Mr Lee, it is simply staggering that, as the in-house solicitor who had been intimately involved in the issues surrounding discovery and the production order, he had made no apparent attempt to ascertain the circumstances in which Mr Saayman had, and had been able to, take steps which had had the effect of frustrating compliance with the production order.

99    Perhaps even more troubling is the fact that Mr Lee had apparently done nothing whatsoever to ascertain what, if anything, had been done, or could be done, by Deloitte to retrieve the documents from Mr Saayman or otherwise remedy the circumstances created by Mr Saayman’s actions. He plainly had either given that issue no thought, or had thought about it but deliberately decided to do nothing. He also appears to have made no attempt, or no genuine attempt, to ascertain the existence or whereabouts of any copies of the documents that may be able to be produced in answer to the production order. He had not, for example, troubled himself to ascertain whether there were any backup copies of the relevant documents maintained on Deloitte’s IT system in a form which had not been encrypted by Mr Saayman.

100    As for Mr Murray, he was party to the emails with Mr Saayman which formed the basis of Deloitte’s case that the uninvolved partners were no longer able to comply with the production order. It is not readily apparent how Mr Murray, who was one of the uninvolved partners, came to be involved in the issue concerning the production of the documents. It does not appear that he had had any prior involvement in the matter. He seems to have simply telephoned Mr Lee out of the blue shortly before his email exchange with Mr Saayman. It is equally unclear how, out of all the Deloitte partners, he was the one who came to be the one to consult with Deloitte’s external lawyers and communicate with Mr Saayman about his actions. In any event, Mr Murray’s convenient appearance on the scene meant that Deloitte had an uninvolved partner, with no apparent previous involvement in the matter, who could swear an affidavit annexing the emails.

101    Despite his supposed interest in compliance with the production order, one of the extraordinary features of Mr Murray’s email exchange with Mr Saayman is that Mr Murray does not, at any point, admonish or criticise Mr Saayman for taking the documents, which were partnership property, or for refusing to allow the partnership access to them in circumstances where the uninvolved partners had been ordered by the Court to produce them. Perhaps even more extraordinarily, at no point does Mr Murray directly ask, let alone demand, that Mr Saayman return the documents or provide the password to the encrypted files. It may be recalled, in this context, that Mr Murray’s emails were settled after consultation with Deloitte’s external lawyers. The fact that the emails did not include any clear or explicit request or demand to return the documents could hardly have been an oversight. Plainly Mr Murray, and those with whom he consulted, had little or no interest in having the documents returned. They were more than happy to simply and cynically take advantage of the circumstances.

102    Mr Murray’s evidence, in cross-examination, also revealed his apparent and manifest disinterest in retrieving the documents or remedying the situation created by Mr Saayman’s actions. He said that he was not aware whether the Chief Executive Officer or Board of Deloitte had taken any action to get the files back from Mr Saayman, had not made any inquiries concerning the encrypted files and had not spoken to the Chief Executive Officer, or any member of the Board, or any person in the IT services team about any steps that could be taken to “break” the encrypted files that were still on Deloitte’s server.

103    Mr Murray’s evidence also revealed an apparent disinterest in ascertaining whether Deloitte had other copies of the audit file which had not been seized or encrypted by Mr Saayman and which could accordingly be produced in answer to the production order. Like Mr Lee, Mr Murray’s evidence was that he had not made any inquiries to ascertain whether there were any backup copies of the audit files on Deloitte’s IT network which had not been encrypted by Mr Saayman.

104    As for Mr Taylor, the apparent point in calling him in support of the application was to demonstrate the difficulty in breaking the encryption that Mr Saayman had applied to the relevant electronic files. Remarkably, however, Mr Taylor was not a part of Deloitte’s IT services team and did not have any knowledge of the IT infrastructure used in the firm. He was not familiar with the firm’s file backup systems, had no knowledge of whether members of the IT services team controlled access to servers and backup systems, and did not have any experience in relation to gaining access to Deloitte’s backup systems. These are not criticisms of Mr Taylor. What is worthy of criticism is that Deloitte chose to call Mr Taylor rather than someone who might have actually known something worthwhile.

105    Deloitte did not adduce any evidence from anyone in its IT services team. There was thus no evidence from anyone who had any knowledge about how Mr Saayman was able to access and encrypt files on a supposedly secure system. More significantly, there was no evidence from anybody about whether there may be backup copies of the relevant audit files, or parts thereof, on Deloitte’s IT network or system. It is difficult to avoid the conclusion that the decision not to call someone who knew about these things was deliberate.

106    Having regard to the wholly deficient and unsatisfactory nature of the evidence relied on by Deloitte in support of its application that the uninvolved parties be excused, or that the production order be discharged, it is hardly surprising that the primary judge held, in effect, that the circumstances had not materially changed since the making of the production order. In particular, it is hardly surprising that his Honour was not satisfied that the uninvolved partners were unable to produce the documents.

107    Deloitte’s main ground of appeal in relation to the primary judge’s dismissal of its excusal or discharge application proceeded on the misconceived premise that the application provided an opportunity for it to simply revisit and re-litigate the question of control that had already been resolved against it. It contended that the primary judge erred in dismissing the application because his Honour did not find, in terms, that any uninvolved partner had control of the documents. But the primary judge had already found that the uninvolved partners had control of the documents. It was incumbent on Deloitte to satisfy the primary judge that the circumstances had materially changed. The relevant material change was said to be that the uninvolved partners were unable to comply with the production order by reason of the actions of Mr Saayman. While to an extent that involved the contention that the uninvolved partners were no longer in control of the documents because Mr Saayman was, that was not the central issue. The central issue, as has been said, was whether the primary judge was satisfied that the uninvolved parties were unable to comply with the order because they were unable to produce the documents.

108    It is, in any event, implicit in the primary judge’s findings and reasons, that his Honour was not satisfied that the uninvolved partners were not relevantly in control of any documents that could be produced in answer to the production order, or not able to put themselves in a position where they had control of such documents. The primary judge was plainly dissatisfied with the evidence adduced by Deloitte in relation to the circumstances in which Mr Saayman had been able to take the relevant hardcopy documents and encrypt the relevant electronic documents. His Honour found, in that context, that the circumstances that had arisen as a result of Mr Saayman’s actions, appeared to have been “designed to bring about a situation where the [u]ninvolved [p]artners could argue that they are unable to produce the documents”: Sadie Ville v DTT (No. 5) at [57]; see also [54]. His Honour was also plainly concerned that “the events … so designed” may have involved “others”, and that if that was the case, the uninvolved partners may well be able to produce the documents. While these were not firm or conclusive findings, nor were they matters of mere speculation. Deloitte bore the onus and its evidence was so deficient and unsatisfactory that it had not excluded the possibility, if not likelihood, that the uninvolved partners had simply cynically sought to take advantage of a contrived set of circumstances which could be reversed if push came to shove and the production order was not discharged or they were not excused from complying with it. That was the effect of his Honour’s findings.

109    It should also be noted, in this context, that there is no merit whatsoever in Deloitte’s contention that the primary judge’s “inquiry” into the circumstances in which Mr Saayman had been able to take possession of the hardcopy documents and encrypt the electronic documents was entirely irrelevant. Deloitte bore the onus of proving that circumstances had materially changed and that the uninvolved partners were no longer able to comply with the order. It was plainly relevant, in those circumstances, for his Honour to consider and assess the evidence, such as it was, concerning the alleged change in circumstances and how it came about.

110    The primary judge was equally dissatisfied with Deloitte’s evidence about what it had done in response to the circumstances created by Mr Saayman’s actions. His Honour observed, in that regard, that “one gets the impression that it is convenient for the [u]ninvolved [p]artners if they are unable to get the documents and they have not tried very hard to overcome the present impediments”: Sadie Ville v DTT (No. 5) at [60]. That observation again involved a degree of understatement. In fact, the evidence revealed that Deloitte, on behalf of the uninvolved partners, had done absolutely nothing to reverse or remedy the situation created by Mr Saayman’s actions. The obvious, if not inescapable, inference, was that that was because it suited Deloitte and the uninvolved partners to do nothing. Deloitte appears to have not even asked Mr Saayman to return the partnership’s documents, or provide the password to the encrypted documents, let alone demand that he do so.

111    Nor was there any suggestion, let alone evidence, that Deloitte had explored the legal options open to it if Mr Saayman refused to accede to any demand that he return the documents and provide the password. Given that the documents were undoubtedly partnership property, those legal options may have included general law actions in detinue or conversion, or an action to recover partnership property pursuant to the terms of Deloitte’s partnership agreement. At the very least it would have been open to the Chief Executive Officer to demand that Mr Saayman return the documents and provide the password. If Mr Saayman wilfully disobeyed that request, it would have been open to the Chief Executive Officer to expel him from the partnership: see cl 11.2(g) of the partnership agreement.

112    It should be emphasised, in this context, that it was not for Sadie Ville to prove that Deloitte had legal options open to it to retrieve the documents taken by Mr Saayman, or legal options open to it to compel Mr Saayman to provide the password to the encrypted documents. Deloitte, or the uninvolved partners, bore the onus of proving that they were unable to comply with the production order. That included, in part, proving that it was unable to retrieve the documents or obtain the password. Deloitte did not even attempt to prove that it was unable to retrieve the documents or obtain the password. That is perhaps not surprising given that the evidence clearly revealed that Deloitte had simply decided to cynically exploit the circumstances created by Mr Saayman’s actions and had given no genuine consideration to how it might remedy or resolve the situation.

113    The final aspect of the primary judge’s reasons for not being satisfied that the uninvolved partners were unable to comply with the production order concerned the potential existence of documents that had not been taken or encrypted by Mr Saayman and accordingly would be able to be produced in answer to the production order. The primary judge found that there were, or may be, such documents in existence, including documents that had previously been produced to Hastie’s liquidator and images of Mr Saayman’s laptop: Sadie Ville v DTT (No. 5) at [58]. His Honour rejected Deloitte’s submission that those documents were not within the terms of the production order because they were copies and the production order refers only to originals: Sadie Ville v DTT (No. 5) at [59]. Deloitte contended that his Honour was in error for so finding. I agree with Markovic and O’Callaghan JJ that Deloitte’s contentions in that regard have no merit.

114    The primary judge also referred to the possible or likely existence of backup copies of the relevant documents on Deloitte’s IT systems: Sadie Ville v DTT (No. 5) at [60]. Once again, the evidence adduced by Deloitte was wholly deficient and unsatisfactory on this topic. As has already been noted, none of the witnesses called by Deloitte were aware whether any searches had been made to ascertain whether backup copies exist, or were able to give any meaningful evidence on that topic. Deloitte appears to have been studious in not calling anyone from its IT services team.

115    In all the circumstances, the primary judge was correct to find that Deloitte had failed to discharge its onus of proving that the relevant circumstances had materially changed. It was well and truly open to his Honour to find that he was not satisfied that the uninvolved partners were unable to comply with the production order. Deloitte failed to demonstrate any error in his Honour’s finding or reasoning in that regard. Ground one in the notice of appeal in VID 65 of 2019 had no merit and is rejected.

116    Deloitte’s second ground of appeal in respect of the primary judge’s refusal to excuse the uninvolved partners from compliance with the production order, or to discharge the production order, relies entirely on the decision in Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647. Deloitte contended, in effect, that that decision was authority for the broad principle or proposition that where a valid claim for privilege is raised by some joint owners of documents, that claim is not defeated simply because other joint owners raise no objection, or have no privilege claims themselves. Put another way, it appeared to be contended that if some joint owners of documents have valid privilege claims, that necessarily relieves other joint owners of the documents, who had no privilege claims, of the obligation to produce. Thus it was said that Mr Saayman’s and other involved partners’ privilege claims are not defeated simply because the uninvolved partners, as joint owners of the documents, have no valid privilege claim. Or, put the other way, it appeared to be said that the uninvolved partners were relieved of the obligation to produce because Mr Saayman and the other involved partners, who jointly owned the documents, had valid privilege claims.

117    It is difficult to see why this was an issue which genuinely arose in the context of Deloitte’s application that the uninvolved partners be excused, or that the production order be discharged. If there was an available argument based on the decision in TNT Management, it should have been put in the original privilege application. The excusal or discharge application was not a general invitation to re-litigate the privilege claims.

118    In any event, there is no merit in Deloitte’s arguments concerning TNT Management. It suffices to say, in response to those contentions, that the primary judge was correct that TNT Management is not authority for that broad principle, however couched, particularly in the context of a partnership: Sadie Ville v DTT (No. 5) at [67]-[68]. It is also abundantly clear that the facts and circumstances in TNT Management were far removed from the facts and circumstances concerning the privilege claims in this matter. Ground 2 of this appeal accordingly had no merit.

CONCLUSION

119    None of Deloitte’s appeal grounds has any merit. The primary judge was correct to reject the privilege claims by the uninvolved partners and was correct to reject the application by the uninvolved partners to be excused from complying with the production order, or for the production order to be discharged. I agree with Markovic and O’Callaghan JJ that the appropriate orders in the circumstances are that the applicant have leave to appeal, but that the appeals be dismissed with costs.

Associate:

Dated:    27 February 2020

REASONS FOR JUDGMENT

MARKOVIC AND O’CALLAGHAN JJ:

INTRODUCTION

120    These applications for leave to appeal concern two principal questions:

(1)    whether so-called Uninvolved Partners of Deloitte Touche Tohmatsu (DTT or the firm) should be required to produce documents, in respect of which they have claimed the privilege against self-incrimination and the privilege against exposure to penalties; and

(2)    whether, even if the claims to privilege fail, those documents are, in any event, not within the Uninvolved Partners’ power, possession or control for the purposes of the rules of court governing the production of documents.

121    An issue subsidiary to the first question also arises, namely whether the primary judge was wrong to find that certain penalty proceedings would now be out of time.

122    The second question arises because a current DTT audit partner, Mr Reuben Saayman, has taken possession of copies of discovered documents in respect of which he has an undisputed claim to privilege and encrypted them with password protection. He now denies his partners access to them which, in turn, has prompted claims by those partners that the documents seized by Mr Saayman are not in their “power, possession or control”, and cannot be produced by them as part of the discovery process.

123    Oral argument proceeded on the basis that leave to appeal would be granted.

124    In order to understand how the two principal questions arise, it will be necessary to recount the relevant history of the proceedings before the primary judge (to whom the proceeding is docketed). As his Honour explained in his reasons in Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (No 3) [2018] FCA 1107; (2018) 357 ALR 695 (Sadie Ville v DTT (No 3)), the proceeding was commenced in 2017 by the applicant, Sadie Ville Pty Ltd (as trustee for the Sadie Ville Superannuation Fund) (Sadie Ville) on its own behalf and as a representative party pursuant to Pt IVA of the Federal Court of Australia Act 1976 (Cth). Sadie Ville had purchased shares in Hastie Group Limited (Hastie) between 14 June 2011 and 21 February 2012 (the Relevant Period). Hastie later went into liquidation. DTT had been the auditors of Hastie and had prepared: an audit report in respect of its audit of Hastie’s financial statements for the financial year ended 30 June 2010; a review report in respect of its review of Hastie’s financial statements for the half-year ended 31 December 2010; an audit report in respect of its audit of Hastie’s financial statements for the financial year ended 30 June 2011; and an investigating accountants’ report for inclusion in a draft prospectus released by Hastie on 14 June 2011 (the Pathfinder) and in a prospectus released by Hastie on 17 June 2011 (the Prospectus). The second respondent in the substantive proceeding, Deloitte Corporate Finance Pty Limited, a wholly-owned subsidiary of DTT, had prepared a report on directors’ forecasts for inclusion in the Pathfinder and in the Prospectus. Sadie Ville brought the proceeding on its own behalf and on behalf of certain other persons who had acquired shares in Hastie during the Relevant Period.

125    Sadie Ville alleges that DTT contravened various provisions of the Corporations Act 2001 (Cth) (the Corporations Act), the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act), and the Australian Consumer Law (Victoria) (the ACLV), being the Australian Consumer Law text as applied by the Fair Trading Act 1999 (Vic) as amended by the Fair Trading Amendment (Australian Consumer Law) Act 2010 (Vic). Some of the provisions that DTT is alleged to have contravened, as well as providing a basis for a claim for compensation, are offence or pecuniary penalty provisions. In particular, DTT is alleged to have contravened s 1041E of the Corporations Act, s 12DB of the ASIC Act and s 29 of the ACLV. Further, the statement of claim in effect alleges that DTT contravened s 307A of the Corporations Act.

THE SECOND AMENDED STATEMENT OF CLAIM

126    Sadie Ville’s pleaded case is contained in its Second Amended Statement of Claim (SASOC) dated 21 December 2017.

127    The Federal Court Rules 2011 (Cth) (Federal Court Rules) permit a proceeding to be brought against two or more persons who it is claimed are liable as partners in the partnership name: r 9.41(2).

128    Sadie Ville’s case is in substance brought against all of the partners of the firm during the Relevant Period.

129    Two partners had responsibility for the audit and review engagements for Hastie during the Relevant Period (the Engagements), Mr Saayman and Mr Moore (who is now retired).

130    We have adapted the following summary of the SASOC largely from the reasons of the primary judge in Sadie Ville v DTT (No 3) at [28] ff.

131    Sadie Ville alleges that DTT operated as a partnership; and acted by a partner of the firm acting in the firm’s name, in the ordinary course of business of the firm, and with the authority of his or her co-partners, within the meaning of s 14 of the Partnership Act 1958 (Vic) and s 10 of the Partnership Act 1892 (NSW) (SASOC, [5]).

132    Paragraph 6 of the SASOC alleges:

In the premises in paragraph 5, at all material times, DTT:

6.1    was a partnership conducting business in Victoria and New South Wales as accountants, auditors and advisors;

6.2    was and is able to be sued in the partnership name, under Rule 9.41 of the Federal Court Rules 2011 (Cth);

6.3    was a partnership that included, among its partners and employees practising in Victoria and New South Wales, persons who are registered company auditors within the meaning of section 9 and Part 9.2 of the Corporations Act; and

  6.4    was a person within the meaning of:

   (a)    section 729 of the Corporations Act;

(b)    sections 1041E and 1041H of the Corporations Act, by reason of section 761F of the Corporations Act;

(c)    sections 12DA and 12DB of the Australian Securities and Investments Commission Act 2001 (Cth) … and

   (d)    sections 18 and 29 of the Australian Consumer Law (Vic) ...

133    Paragraph 15 of the SASOC relates to the auditors’ obligations (defined as “DTT’s Statutory Audit Obligations”). It is alleged that DTT was required to conduct its audits of Hastie’s full year reports in accordance with the applicable Auditing Standards (as defined).

134    Part D of the SASOC concerns Hastie’s 2010 full year results and alleges that:

(a)    Hastie made a number of representations in August 2010, at the time of releasing its annual financial report for the 2010 financial year (defined as “Hastie’s August 2010 Representations”) ([25]).

(b)    Hastie’s actual position as at August 2010 was as set out in [26] (defined as the “August 2010 Information”).

(c)    The August 2010 Information: was material to the accuracy of the representations of Hastie’s financial position and financial performance conveyed by its financial statements for the 2010 financial year ([27]); concerned matters that the auditing standards required an auditor to consider and to obtain sufficient appropriate audit evidence about ([27]); and was information that ought reasonably to have been detected and reported by a professional company auditor exercising due care and skill to conduct the audit of Hastie’s financial statements for the 2010 financial year in accordance with DTT’s Statutory Audit Obligations (including s 307A of the Corporations Act), but was not disclosed in Hastie’s financial statements for the 2010 financial year.

(d)    Hastie’s financial report for the 2010 financial year included DTT’s audit report in respect of Hastie’s financial statements (defined as the “DTT FY2010 Audit Report”) ([28]).

(e)    By the audit report, DTT made certain statements and representations (defined as the “DTT FY2010 Audit Representations”) ([29]).

(f)    The DTT FY2010 Audit Representations: were made in relation to a financial product within the meaning of ss 763A(1)(a) and 764A(1)(a) of the Corporations Act and s 12BAA of the ASIC Act, namely Hastie securities; were statements or information likely to induce persons to apply for, dispose of or acquire Hastie securities; and was information that a reasonable person would expect to have a material effect on the price or value of Hastie securities ([30]).

(g)    In planning, performing and reporting the audit of Hastie’s financial statements for the 2010 financial year, DTT failed in various regards ([31]).

(h)    In the premises, DTT: did not conduct the audit of Hastie’s financial statements for the 2010 financial year in accordance with the Auditing Standards; had not obtained sufficient and appropriate audit evidence to provide a basis for its audit opinion; had not exercised the care and skill to be expected of a competent professional company auditor in the conduct of the audit; and did not have reasonable grounds for the audit opinion it expressed and the representations alleged earlier in the pleading (defined as the “DTT FY2010 Audit Breaches”) ([32]).

(i)    DTT, in making the DTT FY2010 Audit Representations, made a statement or disseminated information that was false in a material particular or materially misleading ([33]).

(j)    DTT ought reasonably to have known at the time of making the DTT FY2010 Audit Representations: the August 2010 Information; the DTT FY2010 Audit Breaches; and the matters alleged in [33] ([34]).

(k)    In the premises, “by issuing the DTT FY2010 Audit Report DTT contravened s 1041E of the Corporations Act” ([35]).

(l)    By issuing the audit report, DTT made certain false representations and, in the premises, DTT contravened s 12DB of the ASIC Act, and, further or alternatively, s 29 of the ACLV ([36]).

(m)    DTT engaged in conduct that was misleading or deceptive or likely to mislead or deceive and, in the premises, contravened s 12DA of the ASIC Act, s 1041H of the Corporations Act, and, further or alternatively, s 18 of the ACLV ([37]).

135    As the primary judge observed, “[t]he pleadings in relation to the review of the financial statements for the half-year ended 31 December 2010 (Part E) adopt a broadly similar structure, with some differences in the formulation of the allegations on account of the fact that DTT conducted a review rather than an audit of the half-year financial statements. Contraventions of the same offence and pecuniary penalty provisions are alleged”: Sadie Ville v DTT (No 3) at [29].

136    Part H deals with the alleged “Prospectus Conduct”. It also alleges that DTT contravened s 1041E of the Corporations Act ([83]), s 12DB of the ASIC Act and s 29 of the ACLV ([84]), and alleges that the so-called “DTT Prospectus Representations” were misleading or deceptive within the meaning of s 728(1) of the Corporations Act ([77]).

137    Part I deals with “Post-Prospectus Conduct”. It concerns allegations relating to the audit of the financial statements for the 2011 financial year and adopts a similar structure to Part D. Contraventions of the same offence and pecuniary penalty provisions are alleged.

138    The claims for loss or damage include claims that, but for the alleged contraventions, the equity raising in June 2011 would not have been undertaken, the Hastie securities would not have been available for acquisition after 14 June 2011, or the securities would not have been available for acquisition at the relevant offer prices ([97I]). In the alternative, it is alleged that the price at which Hastie securities traded was inflated by reason of the alleged representations ([114A]-[114E]), and some of the claimants acquired Hastie securities in a market inflated by the representations ([115]).

THE OFFENCE AND PECUNIARY PENALTY PROVISIONS

139    These appeals were argued by counsel for the parties by reference to the current versions of the relevant offence and pecuniary penalty provisions contained in the Corporations Act and the ACLV, presumably on the agreed assumption that there is no material difference between them and their form when the conduct the subject of the proceeding occurred in 2010 and 2011. For some reason, perhaps because the matter was overlooked, counsel took us to offence and pecuniary penalty provisions in the ASIC Act which have been recently amended. Nothing turns on that, however.

The Corporations Act

140    Section 307A of the Corporations Act provides:

307A Audit to be conducted in accordance with auditing standards

(1)    …

(2)    If an audit firm, or an audit company, conducts:

(a)    an audit or review of the financial report for a financial year; or

(b)    an audit or review of the financial report for a half-year;

the lead auditor for the audit or review must ensure that the audit or review is conducted in accordance with the auditing standards.

    Fault-based offence

(3)    A person commits an offence if the person contravenes subsection (1) or (2).

     Strict liability offence

(4)    A person commits an offence of strict liability if the person contravenes subsection (1) or (2).

141    The penalty for contravention of s 307A(3) is imprisonment for two years or a fine of 240 penalty units or both; the penalty for contravention of s 307A(4) is a fine of 50 penalty units: Corporations Act, s 1311B, Sch 3.

142    Section 324AB of the Corporations Act provides:

324AB Effect of appointing firm as auditor – general

(1)    The appointment of a firm as auditor of a company or registered scheme is taken to be an appointment of all persons who, at the date of the appointment, are:

(a)    members of the firm; and

(b)    registered company auditors.

This is so whether or not those persons are resident in Australia.

 (2)    …

(3)    A report or notice that purports to be made or given by a firm appointed as auditor of a company or registered scheme is not taken to be duly made or given unless it is signed by a member of the firm who is a registered company auditor both:

(a)    in the firm name; and

(b)    in his or her own name.

 (4)    …

(5)    For the purposes of criminal proceedings under this Act against a member of an audit firm, an act or omission by:

(a)    a member of the firm; or

(b)    an employee or agent of the audit firm;

acting within the actual or apparent scope of his or her employment, or within his or her actual or apparent authority, is also to be attributed to the audit firm.

143    Section 761F of the Corporations Act relevantly provides:

761F Meaning of person – generally includes a partnership

(1)    This Chapter applies to a partnership as if the partnership were a person, but it applies with the following changes:

(a)    obligations that would be imposed on the partnership are imposed instead on each partner, but may be discharged by any of the partners;

(b)    any contravention of a provision of this Chapter, or a provision of this Act that relates to a requirement in a provision of this Chapter, that would otherwise be a contravention by the partnership is taken (whether for the purposes of criminal or civil liability) to have been a contravention by each partner who:

(i)    aided, abetted, counselled or procured the relevant act or omission; or

(ii)    was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the partner).

144    Section 1041E of the Corporations Act provides:

1041E False or misleading statements

(1)    A person must not (whether in this jurisdiction or elsewhere) make a statement, or disseminate information, if:

(a)    the statement or information is false in a material particular or is materially misleading; and

   (b)    the statement or information is likely:

(i)    to induce persons in this jurisdiction to apply for financial products; or

(ii)    to induce persons in this jurisdiction to dispose of or acquire financial products; or

(iii)    to have the effect of increasing, reducing, maintaining or stabilising the price for trading in financial products on a financial market operated in this jurisdiction; and

  (c)    when the person makes the statement, or disseminates the information:

(i)    the person does not care whether the statement or information is true or false; or

(ii)    the person knows, or ought reasonably to have known, that the statement or information is false in a material particular or is materially misleading.

 (2)    For the purposes of the application of the Criminal Code in relation to an offence based on subsection (1), paragraph (1)(a) is a physical element, the fault element for which is as specified in paragraph (1)(c).

 (3)    For the purposes of an offence based on subsection (1), strict liability applies to subparagraphs (1)(b)(i), (ii) and (iii).

145    Contravention of s 1041E constitutes an offence under s 1311(1). For completeness we note that s 1311(1) provides:

A person who:

(a)    does an act or thing that the person is forbidden to do by or under a provision of this Act; or

(b)    does not do an act or thing that the person is required or directed to do by or under a provision of this Act; or

(c)    otherwise contravenes a provision of this Act;

is guilty of an offence by virtue of this subsection, unless that or another provision of this Act provides that the person:

 (d)    is guilty of an offence; or

 (e)    is not guilty of an offence.

146    The current penalty for contravention of s 1041E(1) in the case of an individual is: (1) imprisonment for 15 years; and/or (2) a fine the greater of (a) 4,500 penalty units, or (b) if the court can determine the benefit derived and detriment avoided because of the offence, that amount multiplied by three: Corporations Act, s 1311B, Sch 3.

The ASIC Act

147    Section 12DB of the ASIC Act relevantly provides:

12DB False or misleading representations

(1)    A person must not, in trade or commerce, in connection with the supply or possible supply of financial services, or in connection with the promotion by any means of the supply or use of financial services:

(a)    make a false or misleading representation that services are of a particular standard, quality, value or grade …

…

(3)    An offence under subsection 12GB(1) relating to subsection (1) of this section is an offence of strict liability.

148    Contravention of s 12DB constitutes an offence under s 12GB(1) of the ASIC Act, which until 13 March 2019 provided:

12GB Offences against Subdivision D

(1)    A person who:

  (a)    contravenes; or

  (b)    aids, abets, counsels or procures a person to contravene; or

(c)    induces, or attempts to induce, a person whether by threats or promises or otherwise, to contravene; or

(d)    is in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of; or

  (e)    conspires with others to contravene;

a provision of Subdivision D (sections 12DA to 12DN) other than section 12DA, is guilty of an offence punishable on conviction:

(f)    in the case of a person who is not a body corporate—by a fine not exceeding 2,000 penalty units; or

(g)    in the case of a person who is a body corporate—by a fine not exceeding 10,000 penalty units.

149    Section 12GB(1) of the ASIC Act now provides:

12GB Offences against Subdivision D

(1)    A person commits an offence if the person:

(a)    contravenes; or

(b)    attempts to contravene; or

(c)    is involved in a contravention of;

a provision of Subdivision D (sections 12DA to 12DN) other than section 12DA.

Penalty: 2,000 penalty units.

150    Contravention of s 12DB may also lead to the imposition of a pecuniary penalty. Until 13 March 2019, this was so by virtue of s 12GBA, which relevantly provided:

12GBA Pecuniary penalties

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

(a)    has contravened a provision of Subdivision C, D or GC (other than section 12DA); or

   (b)    has attempted to contravene such a provision; or

(c)    has aided, abetted, counselled or procured a person to contravene such a provision; or

(d)    has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene such a provision; or

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

   (f)    has conspired with others to contravene such a provision;

the Court may order the person to pay to the Commonwealth such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the Court determines to be appropriate.

151    Until 13 March 2019, s 12GBC provided:

12GBC Civil action for recovery of pecuniary penalties

(1)    ASIC may institute a proceeding in the Court for the recovery on behalf of the Commonwealth of a pecuniary penalty referred to in section 12GBA.

(2)    A proceeding under subsection (1) may be commenced within 6 years after the contravention.

152    Since 13 March 2019, it has been s 12GBB, rather than ss 12GBA and 12GBC, which provides for the making of pecuniary penalty orders, and for the time in which an application for such an order is to be made. That section provides as follows:

12GBB Pecuniary penalty orders

Application for order

(1)    ASIC may apply to a Court for an order that a person, who is alleged to have contravened a civil penalty provision, pay the Commonwealth a pecuniary penalty.

 (2)    ASIC must make the application within 6 years of the alleged contravention.

Court may order person to pay pecuniary penalty

(3)    If a declaration has been made under section 12GBA that the person has contravened the provision, the Court may order the person to pay to the Commonwealth a pecuniary penalty that the Court considers is appropriate (but not more than the amount specified in section 12GBC).

 (4)    An order under subsection (3) is a pecuniary penalty order.

(5)    …

153    We note that while s 12GBC used to provide that a proceeding for the recovery of a pecuniary penalty “may be commenced within 6 years after the contravention”, s 12GBB now provides that “ASIC must make [an application for a pecuniary penalty order] within 6 years of the alleged contravention”.

The ACLV

154    Section 29 of the ACLV provides in part:

29 False or misleading representations about goods or services

(1)    A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:

…

(b)    make a false or misleading representation that services are of a particular standard, quality, value or grade; or …

155    Although s 29 is not an offence provision, there is an offence provision in substantially the same terms: ACLV, s 151(1). This creates an offence of strict liability: ACLV, s 151(4). The maximum penalty for the offence if the person is not a body corporate is a fine of $500,000: ACLV, s 151(6). Section 29 is a pecuniary penalty provision: ACLV, s 224(1). The maximum penalty for a contravention of s 29 if the person is not a body corporate is also a fine of $500,000: ACLV, s 224(3).

156    Section 228 of the ACLV provides:

228 Civil action for recovery of pecuniary penalties

(1)    The regulator may institute a proceeding in a court for the recovery on behalf of the Commonwealth, a State or a Territory, as the case may be, of a pecuniary penalty referred to in section 224.

(2)    A proceeding under subsection (1) may be commenced at any time within 6 years after the contravention or conduct.

THE PARTNERSHIP ACT

157    Sub-section 14(1) of the Partnership Act 1958 (Vic) (Partnership Act) provides:

Liability of the firm for wrongs

(1)    Subject to subsection (2), where by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm or with the authority of his or her co-partners loss or injury is caused to any person not being a partner in the firm or any penalty is incurred the firm is liable therefor to the same extent as the partner so acting or omitting to act.

158    Section 16 provides:

Liability for wrongs joint and several

Every partner is liable jointly with his co-partners and also severally for everything for which the firm while he is a partner therein becomes liable under either of the last two preceding sections.

159    Sections 10(1) and 12 of the Partnership Act 1892 (NSW) are in almost identical terms (see also ss 10 and 12 of the Partnership Act 1890 (UK)).

THE DISCOVERY ORDERS

160    On 5 March 2018, the primary judge made orders for discovery, requiring DTT to give discovery of the following categories of documents:

(a)    its audit files (however titled) and working papers for:

(i)    the DTT audit of Hastie’s financial statements for the financial year ended 30 June 2010;

(ii)    the DTT review of Hastie’s financial statements for the half-year ended 31 December 2010; and

(iii)    the DTT audit of Hastie’s financial statements for the financial year ended 30 June 2011;

(b)    Hastie’s Audit and Risk Management Committee (ARMC) meeting packs and minutes for the period 25 February 2010 to 28 May 2012; and

(c)    the file and working papers (as the case may be) in relation to the investigating accountants’ report contained in the Pathfinder and the Prospectus issued by Hastie in June 2011,

(collectively, the Engagement Documents).

161    On 3 April 2018, DTT filed and served its list of documents (List of Documents) verified by an affidavit of Mr Anthony Lee (First Lee Affidavit), a Senior Legal Counsel employed by DTT. Mr Lee said that the documents in Pt 2 of the list of discovered documents were “in the control” of DTT, and claimed privilege from production of them on the grounds of privilege against self-incrimination (PSI) or self-exposure to a penalty (penalty privilege).

162    In a second affidavit affirmed on 4 June 2018, Mr Lee sought to clarify what he meant. He said that the claim should be read as a privilege claim made on behalf of the DTT partners at the relevant time or times of the conduct complained of in the statement of claim.

163    In a third affidavit affirmed on 18 June 2018 (Third Lee Affidavit), Mr Lee said that the Engagement Documents were and are “… maintained securely and access to them is limited to domain administrators within [DTT’s] IT services team and/or [DTT’s] in-house litigation team. Otherwise, [DTT] partners and staff can only access the Privileged Material with the consent of Reuben Saayman and a member of [DTT’s] in-house litigation team”.

THE THREE DECISIONS OF THE PRIMARY JUDGE RELEVANT TO THE APPEALS

Privilege claims of Uninvolved Partners not established

164    Sadie Ville challenged DTT’s privilege claims. The primary judge held that partners who were directly involved in the Engagements, including Mr Saayman, had made out their claim to PSI (a finding not now disputed) but that the other partners, called the Uninvolved Partners, had not made out their claim to either PSI or penalty privilege because production of the documents would not give rise to a real and appreciable risk of prosecution or the institution of proceedings for a pecuniary penalty: Sadie Ville v DTT (No 3) at [106] ff.

165    His Honour’s reasons for doing so were as follows:

106.    … For the reasons that follow, I consider that, in relation to [the Uninvolved Partners], production of the documents would not give rise to a real and appreciable risk of prosecution or the institution of proceedings for a pecuniary penalty.

107.    Insofar as s 1041E of the Corporations Act is concerned, to establish an offence based on contravention of this provision, it would be necessary to establish the requisite elements of the offence to the criminal standard. Reading s 1041E together with s 761F, it would need to be established that the partner aided, abetted, counselled or procured the relevant act or omission, or was knowingly concerned in, or party to, the relevant act or omission. The prospect of prosecuting authorities pursuing such a case against a partner who was not directly involved in the relevant engagements is, to my mind, theoretical rather than real. Although s 761F would not be applicable, the same considerations would apply to an offence based on accessorial liability for a contravention of s 728 of the Corporations Act.

108.    Insofar as s 307A of the Corporations Act is concerned, while it is true that an offence based on this provision is a strict liability offence (as to which, see Clode v Barnes [1974] 1 WLR 544), the focus of the provision appears to be on the lead auditor for the audit or review. Section 307A(2) provides that, if an audit firm conducts an audit or review, ‘the lead auditor for the audit or review’ must ensure that the audit or review is conducted in accordance with the auditing standards. Thus the focus is on those directly involved in the audit or review. In light of this, and notwithstanding the rules of attribution in s 324AB(5) of the Corporations Act, I consider there to be little prospect of a prosecution being brought against a partner who was not involved in the relevant engagements.

109.    …

110.    … I do not consider that production of the documents would give rise to a real and appreciable risk of prosecution for the other partners for contravention of s 12DB of the ASIC Act or s 151 of the ACLV. In relation to s 12DB of the ASIC Act, reading this together with s 761F of the Corporations Act (see s 5(2) of the ASIC Act and s 761A of the Corporations Act), the considerations discussed in [107] above would apply equally. In relation to s 151 of the ACLV, while the offence is a strict liability offence, and therefore all partners may be liable for an offence, it is much less likely that a prosecution would be brought against a non-involved partner compared with a partner who was involved. In the circumstances, I consider the prospect of prosecution of a non-involved partner to be theoretical rather than real.

111.    …

112.    I have also given consideration to whether, in respect of the other partners, there may be a real and appreciable risk of prosecution for offences other than those set out above (for example, offences based upon fraud). However, for the reasons expressed above, I consider the risk of prosecution against the non-involved partners to be theoretical rather than real.

113.    Further, and generally, there is no indication that ASIC is investigating the auditors of Hastie or that any consideration is being given to prosecuting the auditors. While it is true that there have been some prosecutions in relation to the Hastie collapse, these were instituted some time ago and involved officers of the company rather than auditors. I also note that the onus is on DTT to establish that the privileges apply. I am not satisfied that it has established this in the case of the other partners.

114.    Accordingly, I reject the claim of privilege made on behalf of the other partners.

“No control” contention rejected

166    In the same judgment, the primary judge also rejected DTT’s contention that the Uninvolved Partners did not have relevant control of the Engagement Documents.

167    In his reasons, his Honour set out the evidence Mr Lee gave in the witness box, as follows:

71.    Mr Lee was cross-examined on the question of access to the relevant documents. Mr Lee said that, when he said in the First Lee Affidavit that the documents were ‘in the control of the First Respondent’, he meant that they were in control of ‘[a]ny of the partners’. He then indicated that by this he meant any one of the partners.

72.    Mr Lee accepted that the firm operates under a partnership deed. He accepted that: the board of the firm could make decisions in relation to the disposition of partnership property; the board could make decisions by way of giving directions to the chief executive officer in respect of any matter that the board on behalf of the partners considered appropriate; and the board is elected by the partners of the firm.

73.    In relation to access to audit files, the following exchange took place during Mr Lee’s cross-examination:

Mr Lee, how are decisions made within the partnership regarding procedures for the storage of documents like audit files?---Audit files are generally, like – the audit files are stored such that only the engagement teams have access.

And that practice is a result of a decision made by a decision making body within the partnership; is that correct?---I don’t know how that came about.

…

Now, that procedure in relation to the storage of audit files is the result of some decision made within the partnership that that procedure should apply; is that correct?---I can’t say.

Right. Are you able to say, Mr Lee, whether a decision made within the partnership regarding that kind of procedure for the storage of audit files is a decision which a meeting of the partners generally is authorised to change?---I can’t say.

Is it a decision regarding procedure – I withdraw that. Is it – sorry. That decision regarding the procedure for storing audit files is a decision that would be amenable to review by other decision-making bodies within the partnership, correct?---I wouldn’t know.

You don’t know?---No.

Mr Lee, do you know anything about the process for making decisions within the Deloitte’s partnership in relation to the management or storage of audit files?---All I know is what I said before, which is they’re limited to the audit engagement team members.

All right. And where does that limit come from?---I don’t know.

All right. So far as you know, it is just a practice by convention?---It’s – I think it – well, the practice is there to prevent partners that aren’t supposed to have access to certain audit files – to obtain access to those audit files, because they don’t need access.

74.    Mr Lee also gave evidence during re-examination that, once litigation is commenced, he seeks approval from the engagement partner to obtain access to the materials for the litigation team and that, once permission is obtained, the files are ‘quarantined’.

75.    As the evidence set out in [73] makes clear, Mr Lee is not familiar with: who determines the access arrangements in relation to audit and review files; whether the arrangements can be changed by the partners in general meeting; or whether the arrangements are amenable to change by other bodies within the partnership. In light of this, I consider the evidence set out in [6] of the Third Lee Affidavit to do no more than describe the current administrative arrangements in relation to access to the documents in question. This is consistent with the way Mr Lee expressed himself during cross-examination (as set out in [73] above), which seems to describe administrative arrangements.

76.    It follows that I do not regard Mr Lee’s evidence as going to the ownership of the documents in question, or the legal entitlement of partners other than Mr Saayman to access the documents. It is plain from Mr Lee’s evidence during cross-examination that he has no knowledge of these matters.

(Emphasis in original.)

168    His Honour returned to the issue later in his reasons at [115] as follows:

DTT contends that the other partners do not have ‘control’ of the documents (in the sense of possession, custody or power in respect of the documents) and therefore an order for production should not be made against them. The evidentiary basis for this submission is [6] of the Third Lee Affidavit. However, as discussed at [68]-[76] above, I consider that paragraph to do no more than describe the current administrative arrangements regarding access to the documents. Mr Lee was not in a position to give evidence about the ownership of the documents or the legal entitlement of partners other than Mr Saayman to access the documents. Accordingly, I do not accept that the other partners do not have control of the documents.

169    The primary judge directed the parties to submit minutes of proposed orders giving effect to his reasons.

“No control” finding re-agitated

170    DTT sought to re-agitate the issue of the Uninvolved Partners’ control of the Engagement Documents. The primary judge (albeit with a degree of understandable reluctance) granted DTT leave to apply to have the order for production varied or discharged if it sought to establish, on proper material, that DTT (other than Mr Saayman and any other partner directly involved in the Engagements) did not have possession, custody or power in respect of the documents. Relevantly, in Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (No 4) [2018] FCA 1218 (Sadie Ville v DTT (No 4)) at [5], his Honour said:

DTT further submits that the Court has not made a finding that any individual named person who was a partner at the relevant historic times has any presently enforceable legal right to or access to the relevant documents. I consider this submission to be contrary to the substance of the Reasons. On the basis of the evidence that was before me, I concluded that the partners of DTT other than those who were directly involved in the relevant engagements do have control of the documents (in the sense of possession, custody or power in respect of the documents): see [15] and [115]-[116] of the Reasons; see also [68]-[76]. However, I will reserve liberty to apply, so that DTT can apply to have the order varied or discharged if it seeks to establish, on proper material, that DTT (other than Mr Saayman and any other partner directly involved in the relevant engagements) does not have possession, custody or power in respect of the documents.

171    His Honour also ordered that “[b]y 4.00 pm on 12 September 2018, [DTT], other than Mr Saayman and any other partner directly involved in the relevant engagements, produce the documents in categories 5 to 9 of the respondents’ list of documents dated 3 April 2018” (being the Engagement Documents) (Production Order). The Production Order was entered on 15 August 2018.

172    DTT then made an application to vary or set aside the Production Order under r 39.05(c) of the Federal Court Rules, which provides that “The Court may vary or set aside a judgment or order after it has been entered if … it is interlocutory”) (Discharge Application). The principal ground relied on by DTT was that Mr Saayman had custody of the Engagement Documents and refused to give them to the Uninvolved Partners.

173    DTT filed additional affidavits in support of that application, namely:

(1)    two affidavits of David Murray, one of the Uninvolved Partners, dated 6 September and 27 September 2018;

(2)    two affidavits of Paul Taylor, a partner of the firm specialising in forensic technology, dated 27 September and 1 November 2018; and

(3)    a fourth affidavit of Mr Lee dated 1 November 2018.

174    The hearing of the Discharge Application proceeded on the basis that it was open to the parties also to rely on the evidence in relation to the claim for PSI and penalty privilege that was before the court at the hearing that took place on 29 June 2018.

175    In his fourth affidavit, Mr Lee said that upon conclusion of an audit or review, the statutory files were archived by the audit or engagement team, and that if an audit or review matter became litigious, the in-house litigation team would obtain access to the relevant audit review files in archives and to the backup folders.

176    Mr Lee was cross-examined at the hearing of the Discharge Application. As the primary judge recorded in his reasons, it emerged during cross-examination that the copies of the Engagement Documents described in the First Lee Affidavit had been collected into the “litigation room” in DTT’s Sydney offices (Litigation Room) in accordance with normal firm procedure, but at some time after that affidavit had been affirmed, but before the making of the Discharge Application, all copies of the Engagement Documents, other than those made for use by the in-house and external DTT lawyers, had been either removed from that room into the physical possession of Mr Saayman or password-encrypted by him (in the case of soft copy files on the firm’s computer system): see Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (No 5) [2018] FCA 2066 (Sadie Ville v DTT (No 5)) at [40]-[41], [54].

177    The cross-examination of Mr Lee included the following exchanges:

MR ARMSTRONG: … Now, Mr Lee, before lunch, we were discussing the process that you were responsible for of getting in the documents that might be required to be discovered by Deloittes for the purposes of this proceeding. And you were explaining that you had caused them to be taken to the litigation room in the Sydney office, do you recall that?---Yes.

Have I misstated your evidence at all?---No, that’s - - -

Thank you. So you were in charge of the process of getting the documents; correct?---Not at the time, no. But for these purposes, yes.

So for the purposes of this proceeding?---Yes.

You were responsible for collecting the documents that might be required to be discovered; is that correct?---That’s correct.

Thank you. And having collected at least some documents, you caused them to be sent to the litigation room in the Sydney office; is that correct?---They were already in the litigation room.

They were already there?---Yes.

…

Were you familiar with the Deloittes Supporting Securities Policies document at the time that you made your first affidavit in this proceeding on 3 April this year?---I think you need to explain what familiar – like, was I aware that some policies existed, yes. Did I – you know, have I – you know, do I know them or have I read them in detail, no.

All right. Well, okay, can I put it to you this way, Mr Lee: were you aware at the time of making your first affidavit on 3 April 2018 that Deloittes had internal policies that required that, once the firm became aware of a litigation risk in relation to, for instance, a particular audit, then the files relating to that audit should be collected by the in-house legal team and, thereafter, held in a secure place?---That’s – that’s my understanding of what’s supposed to take place.

And just to be clear, it was your understanding that, in accordance with those policies, the documents that had been collected were to be kept secure and – so that they could not be interfered with; correct?---That’s correct.

…

Did you enquire whether any precautions were in place to ensure that that manila set [comprising audit documents in the form of hard copies and compact discs] was not removed from the litigation room?---The litigation room was secured.

How was it secured?---It’s only swipe card access.

And what do you have to do to get a swipe card to let you access?---Well, you go to the office services and – yes, but access is restricted.

Okay. And who decides who gets a swipe card?---The litigation team.

…

But you’re the person in charge, you’re the person responsible for keeping these documents secure. So did you check to see who had access to the litigation room?---It’s my understanding that it has just been limited to the litigation team.

Okay. Right. So can you tell his Honour how is it that the manila set got out of the litigation room and got into Mr Saayman’s possession?---I – I don’t know.

Don’t know?---I don’t know.

So let’s just understand this, Mr Lee. You’ve got a litigation room with a swipe card secure access control door on it. Your legal services team decides who gets access to the room. Am I correct so far?---That’s right.

The reason for those extensive precautions is because you are aware of the importance of keeping potentially discoverable documents secure in the way that you’ve already discussed; am I correct?---That’s correct.

And you’re telling his Honour that somehow these documents, the manila set, got out of the litigation room and into the possession of Mr Saayman; is that correct?---As far as I understand, yes, that’s correct, yes.

…

Mr Lee, have you made any inquiries to ascertain how it is that those security precautions set up to maintain the integrity of those files happened we take it, to fail?---No, I haven’t.

You haven’t asked anybody?---Well, it’s not unreasonable for an audit partner to want to look at their files, so that’s - - -

All right. So did you – did you authorise Mr Saayman … to get into the litigation room?---No.

Have you made any inquiries to find out whether anybody authorised Mr Saayman to get the files from the litigation room?---No.

Discharge Application dismissed

178    At [3]-[5] of Sadie Ville v DTT (No 5), the primary judge summarised the grounds of the Discharge Application as follows:

3.    The partners who are subject to the Production Order (the Uninvolved Partners) have made an application pursuant to the liberty to apply afforded by paragraph 3 of the orders dated 15 August 2018 for an order that they be excused from complying with the Production Order or that the Production Order be discharged. The main basis upon which the application is made is that Mr Saayman (who successfully claimed the privilege against self-incrimination and the privilege against exposure to penalties) has custody of the documents and will not release them to the Uninvolved Partners. The evidence indicates that Mr Saayman has obtained the original files for the relevant engagements (comprising both hard copy documents and soft copy (ie, electronic) documents on compact disks (CDs)). Prior to Mr Saayman obtaining the documents, they were held by DTT’s in-house lawyers in the ‘litigation room’ in the firm’s Sydney offices (the Litigation Room). It is unclear how Mr Saayman (who is based in Brisbane) obtained the documents. The Litigation Room is secured by swipe card access, and access is limited to DTT’s litigation team. Mr Saayman has also obtained custody of a laptop computer containing a copy of many of the relevant documents. It is unclear how Mr Saayman obtained the laptop, which had also been in the Litigation Room.

4.    Further, it seems that Mr Saayman has password protected (or encrypted) certain files on the firm’s computer system that contain copies of the documents and will not release the password.

5.     In these circumstances, the Uninvolved Partners contend that they are unable to produce the documents and seek to be relieved from complying with the order.

179    The primary judge made a number of detailed factual findings, based on the evidence produced by DTT and answers given in the course of cross-examination by Mr Lee, Mr Murray and Mr Taylor about:

(1)    the record-keeping practice of DTT at the time of the Engagements (2010 and 2011); and

(2)    the different versions of the Engagement Documents, including:

(a)    hard copy documents (in manila-type folders) and soft copy documents on a CD (inside a plastic sleeve at the front of the manila-type folders) (together called the manila set);

(b)    a backup copy of the soft copy documents from the manila set, which was kept in a secured client folder on DTT’s audit network drive (Hastie Audit Network Drive Backup Copies);

(c)    documents pertaining to the Engagements in the secured client “administration” folder on the audit network drive;

(d)    documents on a laptop computer that was produced by DTT to the liquidators of Hastie in the course of the examination proceeding (the Produced Laptop);

(e)    a USB drive that was provided by DTT to the liquidators of Hastie in the course of the examination proceeding (the Produced USB);

(f)    hard copy documents produced by DTT to the liquidators of Hastie in the course of the examination proceeding (the Produced Hard Copy Documents);

(g)    images of the laptop computers of Mr Saayman and Mr Moore;

(h)    documents pertaining to the Engagements stored on a database used by DTT’s internal and external lawyers referred to as the Relativity Database; and

(i)    documents stored on a laptop computer held by Clifford Chance, the firm of solicitors acting for DTT in this proceeding.

180    At [21]-[23] of Sadie Ville v DTT (No 5), the primary judge made the following findings in relation to Mr Lee’s evidence:

21.    Mr Lee accepted during cross-examination that he was ‘given responsibility for collecting the documents on behalf of Deloittes for the purposes of discovery in this proceeding’. He also gave evidence during cross-examination (which I accept) that at the time he made the First Lee Affidavit (3 April 2018) the Hastie Statutory Audit and Review Files were secured in the Litigation Room. Mr Lee gave the following evidence in relation to the ‘manila set’ (being the Hastie Statutory Audit and Review Files):

… So your evidence is that as at April 2018 that manila set was held in a secure way by the in-house legal team in the litigation room in the Sydney office; is that right?---That’s correct.

Mr Lee also accepted during cross-examination that ‘it was part of [his] responsibility to keep those potentially discoverable documents in a place and in a form that made them accessible to [him], acting on behalf of the first respondent’. It follows that, as at April 2018, DTT’s legal team held the Hastie Statutory Audit and Review Files on behalf of DTT (that is, the partners of DTT at the relevant times for the purposes of the proceeding).

22.    On 18 June 2018, Mr Lee made the Third Lee Affidavit. Mr Lee stated at [6]:

The documents comprising the Privileged Material [that is, the documents over which privilege was claimed] are maintained securely and access to them is limited to domain administrators within [DTT’s] IT services team and/or [DTT’s] in-house litigation team. Otherwise, [DTT] partners and staff can only access the Privileged Material with the consent of Reuben Saayman and a member of [DTT’s] in-house litigation team.

23.    During cross-examination in relation to the present application, Mr Lee sought to clarify some aspects of the above paragraph. He said that it was ‘clumsily worded’ and ‘conflated two different issues’. The first issue was the ‘manila set’, which Mr Lee believed was securely maintained in the Litigation Room (as at 18 June 2018). He said that he had not seen the documents in the room at this time, but this was his assumption. The second issue was that, where he stated that access was limited to DTT’s IT services team, he was referring to the network folders. Later in the cross-examination, Mr Lee further explained that when he referred to ‘access’ he was referring to access to a folder as distinct from accessing the contents of individual documents. He stated that he did not know if the people referred to in [6] of his affidavit could access the individual documents.

(Emphasis in original.)

181    The primary judge also made findings about the evidence given by Mr Murray about email exchanges between Mr Murray and Mr Saayman, after Mr Murray became aware of the Production Order. The correspondence, which senior counsel for Sadie Ville dubbed “a charade of compliance”, and which was settled by DTT’s external lawyers, was as follows.

182    On 29 August 2018, Mr Murray sent an email to Mr Saayman as follows:

I expect you are aware that we have been instructed by the Court to produce the following records.

•    File including working papers for the audit of Hastie Group Limited’s financial statements for the financial year ended 30th June 2010

•    File including working papers for the review of Hastie Group Limited’s financial statements for the half year ended 31st December 2010

•    File including working papers for the audit of Hastie Group Limited’s financial statements for the financial year ended 30th June 2011

•    File and working papers in relation to the Investigating Accountants Report contained in the Pathfinder Prospectus and Prospectus issued by Hastie Group Limited in June 2011

•    ARMC Minutes 26th August 2011.

It is my understanding that all of these documents, comprising hard and soft records, are currently with you or under your control.

Can you confirm that you have the records and advise whether I am able to access them or advise if you are willing to release the records to me.

183    On 30 August 2018, Mr Saayman responded to Mr Murray:

I confirm that all the records referred to below are secured and under my control. The court has found that, on the grounds of privilege against self-incrimination, I may refuse to produce these records. I intend to exercise my right to keep these records under my control and not to release nor provide access to these records.

184    On 5 September 2018, Mr Murray wrote to Mr Saayman:

Thank you for your email.

Please may I ask you to clarify a couple of points.

First, what do you mean when you refer to the documents being secured and under your control, and [s]econdly when you say you intend not to release or provide access to the records, does that mean you will not be willing to allow anyone else to access them.

185    On the same day, Mr Saayman responded:

The records as listed below [are] under my control in the following manner:

1.    The physical files and back up disks have been locked up securely and only I have the keys to these records.

2.    The electronic files have been password protected and only I know the password to these files.

I further confirm that, on the basis set out below, I am not intending to give anyone access to any of these records.

186    On 24 September 2018, Mr Murray sent an email to Mr Saayman:

You state in your email below that the physical files [and] back up discs are locked up. Are you willing to tell me where they are located?

187    On 25 September 2018, Mr Saayman responded:

The physical files, back up disks and computer containing the backups are under my control and I can confirm that these are not on any Deloitte premises.

188    On 26 September 2018, Mr Murray wrote to Mr Saayman:

I note that the files, back up disks and computer are not located on Deloitte Premises. However I need to know whether they are located at premises which I could have access to. Can you therefore let me know where these items are physically located. For example are they being stored at our offsite records storage.

189    On 27 September 2018, Mr Saayman responded:

These items are not on any Deloitte premises nor a location controlled and accessible by any Deloitte partners or staff. The locations are controlled by me and unless I provide that access, which I stated below I am not willing to do, you are not able to access these items.

190    The primary judge concluded on the basis of the evidence before him as follows:

(1)    Mr Saayman has custody of the following:

(a)    the audit and review files for the Engagements;

(b)    the file and working papers pertaining to the investigating accountants’ report engagement;

(c)    the ARMC Minutes of 26 August 2011; and

(d)    the Produced Laptop.

(2)    Mr Saayman has encrypted the following files (the Encrypted Files) on the firm’s computer system:

(a)    the Hastie Audit Network Drive Backup Copies; and

(b)    the documents pertaining to the Engagements in the secured client “administration” folder.

(3)    It is unclear when the Hastie Statutory Audit and Review Files and the other documents referred to in these reasons at [179(2)] were taken out of the Litigation Room and obtained by Mr Saayman.

(4)    It is unclear when the encryption took place.

(5)    Mr Lee did not authorise Mr Saayman to “get into the Litigation Room”.

(6)    Mr Lee did not participate in any communications with anybody in which there was any discussion of the manila set being permitted to be removed from the Litigation Room.

(7)    The Litigation Room was secured by swipe card access.

(8)    Access to the Litigation Room was limited to the litigation team.

(9)    Mr Lee did not know how it was that the manila set got out of the Litigation Room and into Mr Saayman’s possession.

(10)    Mr Lee:

(a)    had not made any inquiries to find out whether anybody authorised Mr Saayman to get the files from the Litigation Room;

(b)    did not know whether Mr Saayman went into the Litigation Room or not;

(c)    did not know when the files were removed from the Litigation Room;

(d)    had not been involved in any discussions about the possibility of someone with appropriate IT expertise using access to the firm’s IT system generally to try to find clues or techniques by which that person might be able to break the encryption that applies to the Encrypted Files; and

(e)    had not made any inquiries to try and find out on what date the encryption was applied.

(11)    The Produced Laptop, which had been returned by the liquidators to Clifford Chance in late November 2017, is now in Mr Saayman’s custody, and no explanation was given as to how that came to be.

(12)    The Produced USB and the Produced Hard Copy Documents were in the possession of the liquidators.

(13)    Mr Murray (who it will be recalled is one of the Uninvolved Partners):

(a)    was not aware of the CEO or the board of the firm taking any action to get the audit files back from Mr Saayman;

(b)    had not made any inquiries as to when the encryption was applied to the files that he understood to be encrypted; and

(c)    had not spoken to the CEO, any member of the board, or any person within the IT department about steps that the firm could take to break the encryption that has been applied to the files that are still on its server.

191    The primary judge also made findings in relation to Mr Taylor’s evidence. Although proffered as a partner of DTT specialising in forensic technology to give evidence about how long it would take to complete further “brute force attacks” on the Encrypted Files to “break a password” (because Mr Saayman refuses to tell anyone what the password is) – namely, over 12,600 years – it transpired that Mr Taylor:

(1)    was not part of the firm’s IT services team;

(2)    did not have knowledge of the IT infrastructure used within the firm;

(3)    did not have familiarity with the firm’s backup systems;

(4)    had no knowledge of whether IT personnel at the firm controlled access to servers and backup systems;

(5)    did not have any experience of gaining access to backup systems within the firm;

(6)    had made no inquiries as to whether there were other copies of the audit file anywhere on the network that have not been encrypted by Mr Saayman; and

(7)    had not looked for documents that contain copies of the audit file or copies of parts of the audit file.

192    Under the rubric of “Consideration”, the primary judge continued (at [54]-[56]):

54.    The circumstances described above are extraordinary and troubling. An order was made for production of certain relevant documents by the Uninvolved Partners. The documents were, at least at the time that the respondents’ list of documents was prepared, held by DTT’s in-house lawyers on behalf of DTT. The documents were located in the secure Litigation Room, access to which was limited to DTT’s litigation team by a swipe card access system. Yet somehow the documents have been obtained by Mr Saayman and he is refusing to release them. The circumstances appear to be designed to bring about a situation where the Uninvolved Partners can argue (as they have on this application) that they are unable to produce the documents in accordance with their discovery obligations.

55.    The circumstances in which Mr Saayman obtained the documents from the Litigation Room have not been explained in any detail in the material before the Court. Remarkably, very little, if anything, has been done to investigate how Mr Saayman obtained the documents. In particular, Mr Lee, the in-house lawyer with the carriage of the proceeding on behalf of DTT, gave evidence that:

(a)    he did not know how it was that the manila set got out of the Litigation Room and into Mr Saayman’s possession;

(b)    he has not made any inquiries to find out whether anybody authorised Mr Saayman to get the files from the Litigation Room;

(c)    he does not know whether Mr Saayman went into the Litigation Room or not;

(d)    he does not know when the files were removed from the Litigation Room; and

(e)    he does not know how the Produced Laptop got from the Litigation Room to Mr Saayman.

56.    Likewise, in relation to the Encrypted Files, the circumstances in which the encryption occurred have not been explained in any detail. It is unclear how and when this occurred. Mr Lee gave evidence that he has not made any inquiries to try to find out on what date the encryption was applied. Similarly, Mr Murray gave evidence that he has not made any inquiries as to when the encryption was applied to the relevant files.

193    The primary judge held that he was not satisfied that the Uninvolved Partners were unable to produce the documents and that the Uninvolved Partners had not adduced sufficient evidence to discharge the burden necessary in order to be excused from complying with the Production Order (or that it be discharged), reasoning at [57]-[58] as follows:

57.    In the absence of a detailed explanation of how Mr Saayman obtained the documents, I am not satisfied that the Uninvolved Partners are unable to produce the documents. The series of events appears to have been designed to bring about a situation where the Uninvolved Partners could argue that they are unable to produce the documents. If the events were so designed, and involved not just Mr Saayman but others as well, it may well be the case that the Uninvolved Partners can produce the documents. In circumstances where the Uninvolved Partners have not provided a full explanation of how Mr Saayman obtained the documents – or even made inquiries to try to find this out – I am not satisfied that they are unable to produce the documents. The Uninvolved Partners are seeking to be excused from complying with the Production Order. Alternatively, they seek an order that the Production Order be discharged. It is incumbent on the Uninvolved Partners on an application such as this to demonstrate that they are unable to comply with the order. For the reasons indicated, the Uninvolved Partners have not satisfied me that they are unable to produce the documents.

58.    Further and in any event, the evidence indicates that there are, or may well be, other copies of the relevant documents accessible to the Uninvolved Partners …

194    The primary judge accordingly dismissed the Discharge Application.

THE APPEALS

195    There are two appeals before the court.

196    The first appeal is against the Production Order (Privilege Appeal). DTT’s grounds of appeal are:

1.    The primary judge erred in finding that … there was not a real and appreciable risk of prosecution in respect of ‘a partner who was not involved in the relevant engagements’ such that they were not able to claim privilege against self-incrimination in respect of the documentary production sought ([Sadie Ville v DTT (No 3)] [106]-[110]).

2.    The primary judge erred in finding that any relevant pecuniary penalty proceeding would be out of time such that ‘a partner who was not involved in the relevant engagements’ was not able to claim privilege against exposure to penalty in respect of the documentary production sought ([Sadie Ville v DTT (No 3)] [111], [118]).

3.    The primary judge erred in finding that the documents in question are in the control of the partners of the firm Deloitte Touche Tohmatsu other than Mr Reuben Saayman ([Sadie Ville v DTT (No 3)] [116]).

4.    The primary judge erred in finding that production orders could be made other than in the name of the individuals who are purported to be the subject of the order ([Sadie Ville v DTT (No 4)] [4]).

197    Sadie Ville relies on a Notice of Contention, which contends in substance that the Production Order should be affirmed on grounds other than those relied upon by the primary judge, as follows:

1.    That there was no real or appreciable risk of any of the partners and former partners comprising the Appellant other than those directly involved in the relevant engagements being exposed to the imposition of a pecuniary penalty because an order for the payment of a pecuniary penalty can only relevantly be made against persons who have engaged in any of the types of conduct described in s 12GBA(1) of the [ASIC Act] or s 224(1) of the [ACLV].

2.    That only Mr Reuben Saayman and other partners directly involved in the relevant engagements discharged their onus of establishing that they should not be compelled to comply with the obligation to produce the documents in categories 5 to 9 of the list of documents dated 3 April 2018 served by the Appellant and Deloitte Corporate Finance Pty Ltd (being the First and Second Respondents, respectively, in the proceedings below) (List of Documents) on the ground of the privilege against self-incrimination.

3.    Alternatively to paragraph 2, that an order directed to the partners and former partners comprising the Appellant, for the production of the documents in categories 5 to 9 of the List of Documents dated 3 April 2018, can be expressed (if required) by reference to the names of the partners in the lists of partners in tabs 3, 4, 5 and 6 of exhibit TF-2 to the affidavit of Timothy Finney affirmed on 19 October 2018, other than Mr Reuben Saayman and Mr Bruce Moore.

198    The appeal was conducted by both parties on the basis that the issues that arise on appeal are not the same as those either argued below or decided by the primary judge. As will become apparent, it is not necessary to give separate consideration to the Notice of Contention.

199    The second appeal is against the primary judge’s dismissal of the Discharge Application (Discharge Appeal). DTT’s grounds of appeal are:

1.    The primary judge erred in not excusing the individuals (Uninvolved Partners) the subject of order 1 of the Orders of Moshinsky J in proceeding VID632/2017 given on 15 August 2018 (Production Order) from complying with the Production Order either in whole or in part in circumstances where the primary judge did not find that any Uninvolved Partner has control of the documents the subject of the Production Order ([Sadie Ville v DTT (No 5)] [57]-[60]).

2.    The primary judge erred in not excusing the Uninvolved Partners from complying with the Production Order either in whole or in part in circumstances where none of the Uninvolved Partners has been found to have control over any document the subject of the Production Order or any document referred to in [Sadie Ville v DTT (No 5)] [58], [60] to the exclusion of Mr Reuben Saayman and other partners of the Applicant (Involved Partners) who have made valid claims for privilege against self-incrimination and self-exposure to penalty which have been upheld by the Court in [Sadie Ville v DTT (No 3)] ([Sadie Ville v DTT (No 5)] [65], [67]-[68]).

200    We will deal with each appeal in turn.

The Privilege Appeal – Ground 1 (real and appreciable risk)

Introduction

201    DTT’s case on the Privilege Appeal hinges upon the proposition that the Uninvolved Partners are liable to prosecution under or by virtue of one or other of the various statutory provisions relied on by Sadie Ville in the SASOC, relevantly, s 14 of the Partnership Act and its NSW equivalent, ss 307A and 1041E of the Corporations Act, ss 12DB, 12GB(1) and 12GBA of the ASIC Act and s 29 of the ACLV (collectively, the Offence and Penalty Provisions) because they “sheet home” to the Uninvolved Partners criminal liability.

202    DTT contends that because the SASOC alleges that “DTT” was appointed as auditor, “DTT” is a “person” within the meaning of the Offence and Penalty Provisions, “DTT” contravened each of those provisions and “DTT” failed to comply with the auditing standards, it follows that Sadie Ville alleges that:

(1)    “all of the Deloitte Partners contravened the [Offence and Penalty Provisions]”; and

(2)    “all of the Deloitte Partners failed to comply with the auditing standards”.

203    It follows, so it is contended, that the Uninvolved Partners are exposed to penalties for contravention of the Offence and Penalty Provisions for reasons which Deane J explained in Reid v Howard (1995) 184 CLR 1 at 7 as follows:

Compliance by the appellant with the order of disclosure … would involve disclosure of potentially incriminating material to an officer of the State … and to solicitors representing clients who are involved in litigation against the appellant in which they claim to have been defrauded by him. In turn, the solicitors would be free to make the disclosed material available to those clients and their counsel. 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. In that regard, the prosecution authorities would be neither obliged to desist, nor justified in desisting, from the duties of their office in order to import to the orders made by the court an effectiveness which they do not of themselves possess …

204    Sadie Ville submits there is no appellable error founding the Privilege Appeal, and that there is no real and appreciable risk that the Uninvolved Partners may be subject to criminal prosecution or exposure to a pecuniary penalty in respect of the matters in issue in this proceeding.

205    Sadie Ville submits that DTT’s contention that, because the allegations in the SASOC are made against all of the partners for contravention of provisions that (in ASIC’s hands) may also give rise to criminal liability it follows that all partners are exposed to a risk of criminal prosecution, is misconceived. It says that the allegations made in the SASOC relate to the conduct of the Engagements, which were the responsibility of two individual partners (Messrs Saayman and Moore), and that accordingly there is no basis for criminal or penal action against any other partner.

206    In our view, for reasons which we explain below, DTT’s critical proposition is misconceived because it confuses one partner’s personal criminal liability for an offence, on the one hand, with another partner’s liability to pay, or contribute to the payment of, any penalty imposed upon that partner, on the other hand. They are two separate and distinct things because the latter liability does not involve the attribution of personal, criminal liability.

207    Accordingly, the production of the Engagement Documents by the Uninvolved Partners would not give rise to any real and appreciable risk of their prosecution, because there is no risk at all.

208    We consider each of the statutory provisions relied upon by DTT in turn, starting with the Partnership Act.

The Partnership Act

209    DTT contends that the provisions set out at [157]-[158] above make each of the DTT partners jointly and severally liable for any penalty incurred by each other partner (including Mr Saayman) in respect of the Engagements.

210    DTT submits that ss 8, 14 and 16 of the Partnership Act and their NSW equivalents (ss 4, 10 and 12 of the Partnership Act 1892 (NSW)) “are capable of applying broadly to both civil and criminal wrongs and penalties” (citing Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366 (Dubai Aluminium) at [108] (Lord Millett)) and that “[a]ccordingly, [the] Uninvolved Partners are jointly and severally liable for the wrongful acts or omissions of the Involved Partners, and are jointly and severally liable for any civil or criminal penalty incurred by the Involved Partners by reason of those wrongful acts or omissions”.

211    DTT’s written submissions go on to say:

Once it is accepted that the Involved Partners are exposed to a real and appreciable risk of a pecuniary penalty (as was found and is not challenged), this necessarily means that the Uninvolved Partners are also exposed to the same risk having regard to the provisions of the Partnership Acts referred to above. Sadie Ville cannot approbate and reprobate. It relies on the provisions of the Partnership Acts, and presumably absent the reliance on those provisions the Uninvolved Partners would not be party to these proceedings and the question of whether they could claim the privilege would not arise. Rather, the only question would be whether the Involved Partners could claim the privilege. Sadie Ville cannot rely on the provisions of the Partnership Acts so as to justify joining the Uninvolved Partners and claiming damages from them, and then (in the context of the privilege claims made by them) deny the operation of the very same provisions which render them jointly and severally liable for any penalty (criminal or civil) incurred by the Involved Partners. None of this was addressed in [Sadie Ville v DTT (No 3)].

212    Sadie Ville says that DTT’s submission that the Partnership Act renders each Uninvolved Partner jointly and severally liable, vicariously or otherwise, for any penalty incurred by any other partner is misconceived, because the criminal liability of partners is personal and where criminal proceedings are brought against more than one partner, the elements of the offence must be proven against each of them individually.

213    We agree. It is a necessary consequence of DTT’s case that a partner who had no involvement in, or knowledge of, his or her partner’s offences is also to be held criminally liable for the conduct the subject of the offences. That would be a surprising result. As senior counsel for Sadie Ville put it, if the construction of the Partnership Acts contended for by DTT were correct, “then the tax partner in the Perth office can go to jail for the conduct of Mr Saayman in the Brisbane office – despite never having known about it – not even having met Mr Saayman [and] having nothing to do with the audit part of the firm”.

214    Such an unlikely proposition finds no support in the language of the Partnership Act (or as we will explain, in the Offence and Penalty Provisions), or in the cases.

215    The “vicarious liability” of a partnership for the acts of a delinquent partner, who has, for example, been found to have contravened a penalty provision and fined, is a liability for the penalty – not for the offence. So much was explained in Strother v 3464920 Canada Inc [2007] 2 SCR 177, which concerned, in part, the effect of s 12 of the British Columbia Partnership Act, RSBC 1996, c 348. That section was in almost identical terms to the relevant provisions of the Partnership Acts and provided as follows:

If, by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm or with the authority of his or her partners, loss or injury is caused to any person who is not a partner in the firm or any penalty is incurred, the firm is liable for that loss, injury or penalty to the same extent as the partner so acting or omitting to act.

216    Binnie J held as follows (at 237-238):

What then is the nature and extent of the innocent partners’ liability? The firm is liable ‘for that loss, injury or penalty’. The inclusion of a ‘penalty’ in s. 12 indicates that even statutory impositions are included (Dubai Aluminium, at para. 103). The combination of ‘loss, injury or penalty’ suggests that the legislative purpose is to ensure that the delinquent partner’s liability incurred ‘to any person who is not a partner’, with the firm’s authority or in the ordinary course of the firm’s business, is to be treated as the obligation of the firm regardless of its legal origin …

…

… Nowhere in s. 12 is it suggested that prior knowledge of the delinquency by the other partners is a condition precedent to liability. On the contrary, proof of prior knowledge by the partners would raise questions of direct liability and, if found, would render unnecessary resort to the carrier’s liability under s. 12 of the Partnership Act. It is in the nature of vicarious liability under s. 12 that the firm may be innocent of any fault other than the misfortune of having on board a rogue partner at the time of his or her delinquency.

217    In Riley v Director of Public Prosecutions [2016] EWHC 2531 (Admin); [2017] 1 WLR 505 (Riley), the defendants were members of a partnership which operated a slaughterhouse.

218    On an occasion when only the first defendant (SR) was present at the slaughterhouse, a cow fell and, at the direction of an on-site official veterinarian, was killed. Charges were then laid against SR, and also against the second to fourth defendants (GR, MR and KR), purely on the basis that they were SR’s partners.

219    Gross LJ, having remarked at [28] that “[s]tatements of principle appear to be few and far between as to the criminal liability of partners …”, continued (at [29]):

… [I]n the sphere of partnership as elsewhere, criminal liability is ordinarily personal to the individual offender. As Lord Widgery CJ observed in Parsons v Barnes [1973] Crim LR 537,538, in the context of trading standards legislation: ‘No general proposition could be laid down that one partner was necessarily responsible for the acts of his co-partner under the legislation’. So too, in Garrett v Hooper [1973] RTR 1. The defendant was a partner in a business and the joint owner of a vehicle which was partnership property and was driven by a co-partner in breach of road traffic legislation. The defendant’s appeal against his conviction not allowed. As expressed in the headnote, ‘a co-partner did not ‘use’ a vehicle merely because it was driven by his partner on partnership business …’ In the present case, however, the Crown Prosecution Service case hinged on GR, MR and KR being criminally liable merely and necessarily, without more, because (as is alleged) SR was guilty of an offence under section 4 (1) of the Act.

220    Gross LJ also observed that where an offence involves an element of mens rea, even if one partner has the requisite mens rea to commit an offence, his “state of mind cannot be attributed to the partnership such as to render … his otherwise blameless co-partners … criminally responsible for his acts or omissions” (at [32]).

221    His Lordship also considered the English equivalent of the provisions of the Partnership Act in issue here, as follows (at [33]):

Fifthly, ss. 10 and 12 of the Partnership Act 1890 (“the Partnership Act”), do not assist the [Crown Prosecution Service] to overcome the difficulties in this case, already canvassed. Ss. 10 and 12 of the Partnership Act provide as follows:

10. Liability of the firm for wrongs

Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm, or with the authority of his co-partners, loss or injury is caused to any person not being a partner in the firm, or any penalty is incurred, the firm is liable therefor to the same extent as the partner so acting or omitting to act.

12. Liability for wrongs joint and several

Every partner is liable jointly with his co-partners and also severally for everything for which the firm while he is a partner therein become liable under either the two last preceding sections.

Even if the allegations against SR are made good and (1) render the partnership liable for a penalty and (2) in addition to SR, GR, MR and KR are liable to pay that penalty if not met out of partnership assets (but see below), these sections go no further and do not provide the basis for holding GR, MR and KR criminally liable for the offence (ex hypothesi) committed by SR. Ss. 10 and 12 of the Partnership Act are concerned with satisfying debts and liabilities for which a partnership has become liable; they do not operate to impose criminal liability where none has otherwise been established. I add this. As already concluded, the offence here is not one of strict liability. In the circumstances, it is even questionable that ss. 10 and 12 of the Partnership Act could be relied upon to satisfy any penalty arising from the acts of SR from the assets of GR, MR and KR, who were not complicit in the s. 4(1) offence: see, R v W. Stevenson & Sons and others [2008] EWCA Crim 273; [2008] 2 Cr App R 14, per Lord Phillips of Worth Matravers CJ (as he then was) at [28] …

(Emphasis in original.)

222    DTT placed much reliance on the brief decision of Lord Widgery CJ (MacKenna and May JJ agreeing), in Clode v Barnes [1974] 1 WLR 544 (Clode v Barnes). The judgment relevantly reads:

LORD WIDGERY C.J. This is an appeal by case stated by Cardiff Crown Court in respect of a charge brought by the prosecutor against the defendant … the charge alleging that the defendant, jointly with one David Lynn Thomas, trading together as Wholesale Car Co., in the course of trade as a used car dealer supplied to Richard Thomas a 1968 Austin 1800 saloon to which a false trade descriptio[n] was verbally applied, namely, that it was fitted with a works re-conditioned engine which had done only 2,000 to 3,000 miles, contrary to section 1 of the Trade Descriptions Act 1968.

The matter came before the Cardiff justices in the first instance in November 1972 and they convicted and imposed a fine. The matter was taken thence by way of appeal to the Crown Court, where it was heard on December 15, 1972, and where the appeal was dismissed, thus leaving a finding of guilt against the defendant in regard to this charge.

The facts found by the Crown Court, which in those circumstances of course is the fact finding tribunal, were that the defendant and Thomas were partners in the business, and they were both working partners, but they for their own convenience, no doubt, decided to work in this way, that Thomas was responsible for sales of motor vehicles, while the defendant was responsible for administration of the business, these two functions being exclusive. In the vernacular of the day, Thomas was the front man who stood on the forecourt and dealt with customers, and the defendant was mainly concerned in the office, keeping the books and running the administration of the company, but to that extent they were both working partners.

The offence, if it was an offence, occurred on January 25, 1972, when Thomas, in the course of his normal duties as the partner on the forecourt dealing with customers, was discussing a car which the company had for sale and which was there. Thomas said quite incorrectly: “There is a new engine in this car. It’s done no more than 2,000 to 3,000 miles.” The car was then sold; the defendant working in the office had no idea of what was going on. He certainly had not authorised Thomas to make any representation about the car, he was quite unaware that Thomas had made it, and possibly would have been unaware of its falsity even if he knew Thomas had made it. Nevertheless he was convicted by the justices and his conviction was upheld in the Crown Court.

The argument for the prosecution, which I must confess I find overwhelming, is this. Under the Trade Descriptions Act 1968, there are provisions in the earlier sections of the Act dealing with the prohibition of applying false descriptions to goods which are sold or supplied in the course of business. Later on in the Act, one comes in section 14 and subsequent sections to a somewhat different code, which deals with the making of false statements in the provision of services. It is perfectly clear that section 14, dealing as it does with the making of a false statement in connection with the supply of services, requires an element of mens rea; in particular, knowledge or means of knowledge of the falsity of the statement. But it is argued, and I think rightly, that no such requirement is to be found in section 1, which is the section under which this offence was charged. Section 1, so far as material, says:

“(1) Any person who, in the course of a trade or business,—(a) applies a false trade description to any goods; or (b) supplies or offers to supply any goods to which a false trade description is applied; shall, … be guilty of an offence.”

The way in which this case is put against the present defendant is that although he did not apply a false trade description because he was in no way a party to the making of the false statement about the re-conditioned engine, yet as a partner in the firm he joined with Thomas in supplying the car, and the car had got a false trade description applied to it, therefore the offence is complete.

To my mind that basis of reasoning is totally convincing to show the guilt of the defendant unless one can say that notwithstanding the absence of any reference to mental state or mens rea, there is nevertheless to be implied some element of knowledge or culpability in the terms of section 1.

It might have been arguable that that was so but for the fact that Parliament has clearly contemplated the possibility of a man being found guilty under section 1 when he was in no sense really responsible for what happened, and has provided him with a defence under section 24. That defence was not open to the present defendant and we are not told why, but the fact that Parliament provides such a defence for people who are innocent in the sense of not being culpable for what is done under section 1 shows, in my judgment, if any doubt lay, that it is not right to import an element of mens rea into it.

Partners carrying on business jointly, jointly supply vehicles which it is the business of that partnership to sell. I cannot see any answer to the proposition that the defendant was a joint supplier. Clearly a false trade description had been applied to the car, and that is sufficient to justify the conclusion of the court below. I would dismiss the appeal.

223    Clode v Barnes thus involved a strict liability offence that was, on the proper construction of the legislation (the Trades Descriptions Act 1968 (UK)), capable of being jointly committed by partners. Secondly, it is important to note that the Court of Appeal had no occasion to consider any defence that may have been available under s 24 of that Act, which provided as follows: “(1) In any proceedings for an offence under this Act it shall, … be a defence for the person charged to prove—(a) that the commission of the offence was due to … the act or default of another person …” In the ordinary case, at least in any case like this one, one would imagine that an innocent partner would be availed by such a defence. For those reasons, the decision is of no assistance to DTT in this case.

224    DTT’s reliance on Lord Millett’s speech in Dubai Aluminium at 396 [108] is also misplaced. When his Lordship refers to s 10 of the Partnership Act 1890 (UK) being “drafted in the widest terms to embrace every kind of wrong capable of causing damage to non-partners”, he was referring to the wide variety of fault-based liability, both at common law and under statute, that the provision picks up. His Lordship’s speech says nothing about the circumstances in which the liability of one partner may be imputed to another.

225    DTT also cited Walker v European Electronics Pty Ltd (in liq) (1990) 23 NSWLR 1, but the question in that case was whether the rogue partner was “acting in the ordinary course of the business of the firm” when he committed acts of wrongdoing. It has no relevance to the issues at hand.

226    For those reasons, the Partnership Act provisions do not assist DTT. As Gross LJ succinctly put it in Riley at [33] (in reference to ss 10 and 12 of the Partnership Act 1890 (UK)), these provisions “are concerned with satisfying debts and liabilities for which a partnership has become liable; they do not operate to impose criminal liability where none has otherwise been established”.

Sections 307A and 324AB of the Corporations Act

227    DTT’s contentions with respect to these provisions may be summarised in this way:

(1)    if an audit firm conducts an audit, the lead auditor must ensure that the audit is conducted in accordance with the auditing standards (s 307A(2));

(2)    if the auditor fails to do so, that constitutes an offence of strict liability (ss 307A(4));

(3)    the appointment of a firm as auditor is taken to be an appointment of all persons who, at the date of the appointment, are members of the firm and registered company auditors (s 324AB(1));

(4)    for the purposes of criminal proceedings under the Corporations Act against a member of an audit firm, an act or omission by a member of the firm (acting within actual or apparent authority) is to be attributed to the audit firm (s 324AB(5)); and

(5)    applying those provisions to this case, if Mr Saayman has contravened s 307A(2), his contravening conduct is to be attributed to each and every member of the firm, regardless of their lack of any involvement in the audit, and even if they are not registered company auditors.

228    Sadie Ville submits that s 307A(2) applies where an audit firm, or audit company, conducts an audit or review, but imposes obligations only upon “the lead auditor for the audit or review” to “ensure that the audit or review is conducted in accordance with the auditing standards”. Thus, it contends, proceedings for the offence of contravening s 307A(2) can only be brought against the lead auditor. The consideration that the offence is strict liability (see s 307A(4)) does not mean the criminal liability extends to the Uninvolved Partners. It means only “that the offence by the lead auditor is established by proof to the criminal standard that s/he failed to comply with the obligation imposed (ie, the physical element of the offence), with no additional requirement of a fault element on the part of that person”. As senior counsel for Sadie Ville said in oral argument, Sadie Ville’s pleaded claim against the Uninvolved Partners is that they are “at most” vicariously liable.

229    In our view, Sadie Ville’s submissions are correct. The reference in s 324AB(5) to “criminal proceedings under this Act against a member of an audit firm” obviously includes criminal proceedings for an offence under s 307A for a failure to ensure that an audit is conducted in accordance with the auditing standards. The audit can only be conducted, self-evidently, by an auditor or an audit firm. When such criminal proceedings are brought under the Act, the effect of s 324AB(5), as senior counsel for Sadie Ville submitted, “is simply to ensure that things which are done by members of the firm or its employees or agents during the course of the audit are nevertheless made the responsibility of the lead auditor … it’s a facultative provision. It assists proof against the lead auditor. It enlarges the scope of personal responsibility of the lead auditor.” Put another way, “[t]he lead auditor cannot, in response to an action under [s] 307A, say to the court – it’s not my fault, it was done by my employee”.

230    It follows, because s 307A does not create the possibility of any offence being committed by anyone other than the lead auditor, that the Uninvolved Partners are at no risk of being prosecuted for a breach of it.

Section 1041E of the Corporations Act

231    DTT next submits that s 1041E of the Corporations Act (as well as misleading conduct provisions giving rise to pecuniary penalties) operates to impose vicarious liability upon partners “for each other’s criminal acts”, citing Collins v Poole (1977) 2 TPC 173.

232    Section 1041E applies to a partnership by virtue of s 761F which provides that Ch 7 of the Corporations Act applies to a partnership as if the partnership were a person, but that any contravention that would otherwise be a contravention by the partnership “is taken (whether for the purposes of criminal or civil liability) to have been a contravention by each partner who: (i) aided, abetted, counselled or procured the relevant act or omission; or (ii) was in any way knowingly concerned in, or party to, the relevant act or omission …”

233    Sadie Ville submits that “[a]s the primary judge held, to establish such an offence by a partner it is necessary to establish the requisite elements of the offence to the criminal standard, ie, that the partner committed the relevant act or omission with the requisite fault element or was complicit in the commission of the offence by another partner (by aiding and abetting, etc): [Sadie Ville v DTT (No 3)], [107]”. Sadie Ville says that that conclusion “is put beyond doubt by s 761F”, the effect of which is that:

… a contravention of s 1041E is taken to have been a contravention by – and only by – each partner who ‘aided, abetted, counselled or procured the relevant act or omission’ or who ‘was in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the partner)’. In short, a partner will not face a risk of criminal sanction under s 1311(1) for contravention of s 1041E merely by reason of partnership – actual knowing involvement, or aiding, abetting etc must be proved. The same reasoning applies to s 728(3) [of the Corporations Act].

234    In our view, that submission must be accepted. Here, there is no allegation in the SASOC that any Uninvolved Partner was knowingly involved in, or aided or abetted, or counselled or procured (and so on) anything that Mr Saayman or Mr Moore is alleged to have done. It follows that, by the clear terms of s 761F when read with s 1041E, there can be no finding that any Uninvolved Partner breached s 1041E, because the SASOC makes no direct allegation of any relevant kind against them.

Section 12DB of the ASIC Act

235    DTT also submits that “all partners may be liable for an offence of strict liability” under s 12DB(1) of the ASIC Act (and s 29(1) of the ACLV and s 307A of the Corporations Act).

236    But, prior to the March 2019 amendments, an offence against s 12GB for contravention of s 12DB(1) was taken to have been a contravention by – and only by – each partner who “aided, abetted, counselled or procured the relevant act or omission” or who “was in any way knowingly concerned in, or party to” the relevant act or omission. (Similarly, after the March 2019 amendments to s 12GB, a contravention of s 12DB(1) is taken to be a contravention by – and only by – each partner who was “involved in” the contravention.) Further s 12GB(1) expressly distinguished between a person who contravenes a relevant provision and a person who aids, abets, counsels or procures a contravention. (Similarly, after the March 2019 amendments, an express distinction is made between a person who contravenes a relevant provision and a person who is merely involved.) Again, those provisions make it quite clear that they are not intended to impose criminal liability on persons who were not involved.

Section 151 of the ACLV

237    Finally, as to the ACLV claim, as Sadie Ville submits, the fact that s 151 of the ACLV is a strict liability offence does not render all partners liable to prosecution. The pleaded representations were allegedly made in the course of partnership business, but they are not said to be joint representations. The partners are civilly liable for the consequences of a contravention, but they cannot be said to have jointly made the representations with the lead auditor for the purposes of penal or criminal action.

The Privilege Appeal – Ground 2 (out of time)

238    DTT’s next ground of appeal is that the primary judge erred in finding that any pecuniary penalty proceedings for contravention of s 12DB of the ASIC Act or s 29 of the ACLV would in any event be out of time, because more than six years has elapsed since the relevant events.

239    On that point, the primary judge reasoned as follows (Sadie Ville v DTT (No 3) at [109] and [111]):

109.    In relation to prosecution for contravention of s 12DB of the ASIC Act and/or s 151 of the ACLV, I proceed for present purposes on the basis that a prosecution would not be out of time. While the relevant provisions (namely, s 12GB(6) of the ASIC Act and s 212 of the ACLV, set out above) are not expressed in the same terms as the provision considered in [Attorney-General (Cth) v Oates (1999) 198 CLR 162] – in particular the words ‘Despite anything in any other law’, which were important in the reasoning of the High Court in Oates, are not present – it is at least arguable that the provisions are facultative and not restrictive. Provisions with similar wording to s 12GB(6) and s 212 were considered in Comptroller-General of Customs v Parker (2006) 200 FLR 44 at [59]-[67] and Seeto v The Queen [2008] NSWCCA 227 at [43]-[44]. In each case, it was held that the provision was facultative, not restrictive.

…

111.    In relation to pecuniary penalty proceedings for contravention of s 12DB of the ASIC Act and/or s 29 of the ACLV, I consider that any such proceeding would be out of time … Each of these provisions adopts the same form as s 77 of the Trade Practices Act 1974 (Cth) … The first subsection confers a power to bring a proceeding for the recovery of a pecuniary penalty, and the second subsection stipulates a time within which such a proceeding may be commenced. It has been held by a Full Court of this Court that s 77(2) operates as a limitation period: Australian Competition and Consumer Commission v PT Garuda Indonesia Ltd (2016) 244 FCR 190 at [522], [547]; see generally at [526]-[547]. That reasoning is, in my view, applicable to s 12GBC of the ASIC Act and s 228 of the ACLV. These provisions are unlike the provision considered in [Attorney-General (Cth) v Oates (1999) 198 CLR 162], and the provisions considered in Comptroller-General of Customs v Parker and Seeto v The Queen, as they involve both a conferral of power to bring a proceeding of a certain character and the stipulation of a time within which such a proceeding may be commenced. Given that more than six years has elapsed since the relevant events, I consider that a pecuniary penalty proceeding would be out of time.

240    We note that the primary judge’s reasons (delivered on 26 July 2018), and the submissions of the parties summarised below, address s 12GBC of the ASIC Act as it stood prior to 13 March 2019.

DTT’s submissions summarised

241    DTT submitted that the primary judge was wrong to rely on the decision of the Full Court in Australian Competition and Consumer Commission v PT Garuda Indonesia Ltd (2016) 244 FCR 190 (Garuda) at [522] and [547], where it was held that s 77 of the Trade Practices Act 1974 (Cth) (Trade Practices Act), a provision relevantly identical to s 12GBC of the ASIC Act and s 228 of the ACLV, was a limitation provision (not a condition precedent to the exercise of power).

242    In summary, DTT’s contentions that those sections do not operate as limitation provisions were as follows:

(1)    The ACCC in Garuda accepted that the pecuniary penalties there under consideration were time barred, so there was no relevant dispute about the point (citing Garuda at [520]).

(2)    Garuda “was not invoked by Sadie Ville and [DTT] had no opportunity to address it”.

(3)    The conclusion of the primary judge is inconsistent with the reasoning in Attorney-General (Cth) v Oates (1999) 198 CLR 162 (Oates); Comptroller-General of Customs v Parker [2006] NSWSC 390; (2006) 200 FLR 44 (Parker) at [59]-[67] and Seeto v The Queen [2008] NSWCCA 227 (Seeto) at [4]-[11], [32]-[44], cases which: (a) were not raised before the Full Court in Garuda, (b) dealt with provisions which provided that relevant proceedings “may be instituted” or “may be taken” within specified periods, and (c) held that such provisions were “facultative” and did not operate as time bars.

(4)    Such a conclusion would involve reading provisions in the same Division of the same Act, namely s 12GB(6) (“A prosecution for an offence against subsection (1) may be commenced within 3 years after the commission of the offence”) and s 12GBC(2) (“A proceeding under subsection (1) may be commenced within 6 years after the contravention”), differently – the former operating in a “facultative” way, the latter as a time bar.

Sadie Ville’s submissions summarised

243    Sadie Ville contended that the primary judge was correct to conclude that pecuniary penalty proceedings for contravention of s 12DB of the ASIC Act or s 29 of the ACLV would be out of time (and that prosecutions for offences under s 307A or s 1041E of the Corporations Act, s 12DB of the ASIC Act and s 151 of the ACLV would not be).

244    In summary, Sadie Ville’s submissions were as follows:

(1)    The High Court’s reasoning in Oates “stems from the foundational proposition” that there is no time limit for the commencing of a prosecution unless statute so provides, citing Jago v District Court (NSW) (1989) 168 CLR 23 at 41 (Brennan J) (see Oates at [9]).

(2)    The purpose of the provision under consideration in Oates (s 1316 of the Corporations Law, “Despite anything in any other law, proceedings for an offence against this Law may be instituted within the period of 5 years after the act or omission alleged to constitute the offence or, with the Minister’s consent, at any later time”) was to extend the time within which a proceeding may be brought if it was otherwise subject to a shorter limitation period – that is, it operated to extend shorter limitation periods, but not abbreviate longer ones.

(3)    There is no facultative work for s 12GBC(2) of the ASIC Act or s 228(2) of the ACLV to do because they govern pecuniary penalty provisions, not provisions like those in issue in Parker, Seeto, and Oates under which proceedings could be brought summarily or by indictment, and which were or may have been subject to different limitation periods from time to time.

(4)    Thus, if s 12GBC(2) of the ASIC Act or s 228(2) of the ACLV have any work to do, it “must be to set the time limit to act as a limitations period in the traditional sense”.

(5)    Although the issue was agreed by the parties in Garuda, the limitations point was the subject of detailed reasons, directly applicable here to a provision in relevantly identical terms to those at issue in this case, citing Garuda at [522] and especially at [526]-[547].

(6)    The Full Court’s detailed reasons in Garuda in support of the proposition that s 77(2) of the Trade Practices Act (“A proceeding under subsection (1) [for a pecuniary penalty] may be commenced within 6 years after the contravention”) is a limitation provision should be applied here.

Consideration

245    As noted above at paragraph [153], s 12GBC(2) of the ASIC Act (which provided that ASIC may bring a proceeding for recovery of a pecuniary penalty within six years after the relevant contravention) was replaced on 13 March 2019 by s 12GBB(2) (which provides that ASIC must bring the proceeding within six years). However, given our conclusion below – that the old provision did not permit ASIC to bring a proceeding to recover a pecuniary penalty more than six years after the relevant contravention – it is unnecessary to consider the relevance of the new provision, if any, to this case.

246    In our view, Sadie Ville’s submissions must be accepted. The decision of the High Court in Oates, and the other cases cited by DTT, involved differently worded provisions, and were intended to fulfil a different purpose. As Price J (Giles JA and Rothman J agreeing) explained in Seeto at [44]:

The Crown drew attention to [Oates]. Section 1316 of The Corporations Law, applying as part of the law of Western Australia, provided that ‘Despite anything in any other law, proceedings for an offence against this Law may be instituted within the period of five years after the act or omission alleged to constitute the offence …’ The respondent was charged with indictable offences against the Law, alleged to have been committed more than 5 years prior to the institution of the proceedings. It was held that s 1316 was facultative, operating to extend the twelve month period for the commencement of proceedings for offences punishable by summary conviction, and did not limit the commencement of proceedings for indictable offences. This construction of s 1316 was reached in the light of (i) the introductory words ‘Despite anything in any other law…’; (ii) the word ‘may’; (iii) the perceived mischief that many summary offences could not be prosecuted if the twelve month period applied; and (iv) the legislative history whereby functional predecessors to s 1316 were enacted in order to deal with that mischief. Not all these matters are found in the present case, but the decision provides some support for the conclusion expressed in the preceding paragraph.

247    Other than the fact that the word “may” is used in s 12GBC(2) of the ASIC Act and s 228(2) of the ACLV (as it was in s 77(2) of the Trade Practices Act), none of those matters has any possible bearing here. Further, the words “Despite anything in any other law …”, which do not appear in either section, are obviously critical to the conclusion reached by the High Court in Oates that s 1316 of the Corporations Law was facultative, not restrictive, because it authorised the commencement of proceedings, including summary proceedings, which would otherwise have been time barred. As Simpson J explained in Parker at [62]:

The High Court [in Oates] … examined the complex interplay of State and Federal statutory provisions of which s 1316 was a part. It concluded that s 1316 was a “facultative” provision and did not create a statutory limitation. As I read the judgment, of some significance in the Court’s reaching this conclusion were the opening words of the section:

Despite anything in any other law …

That was because, by other statutory provisions, time limits of less than five years were imposed in respect of the bringing, in certain courts, of some summary prosecutions under the same law. Section 1316 therefore had the effect of extending the time for prosecution, summarily, of those offences, that otherwise would have been statute barred by reason of provisions applicable to particular courts …

248    It is true, as counsel for DTT contended, that reading s 12GBC(2) of the ASIC Act in the way that we do means that a similarly worded provision in the same Division of the Act dealing with prosecutions, like s 12GB(6), is to be read differently. But, in our view, unless s 12GBC(2) of the ASIC Act and s 228(2) of the ACLV are read, consistently with the views expressed by the Full Court in Garuda, as imposing a time limitation on the bringing of an action for a pecuniary penalty, then, as counsel for Sadie Ville submitted, those provisions would have no work to do.

249    It follows that because the time limits of six years have expired in this case, there can be no risk of any DTT partner being exposed to a pecuniary penalty for any contravention of s 12DB of the ASIC Act or s 29 of the ACLV.

The Privilege Appeal – Ground 3; the Discharge Appeal – Grounds 1-2 (“control” of the Engagement Documents)

DTT’s submissions summarised

The Privilege Appeal – Ground 3

250    DTT submits that the primary judge erred in finding that the documents in question were in the control of the DTT partners other than Mr Saayman, including because “[t]here was no evidence to support that positive finding at the hearing on 29 June 2018”.

251    DTT points to Mr Lee’s evidence in chief that the Engagement Documents could only be accessed with the consent of Mr Saayman and a member of [DTT's] in-house litigation team: see [6] of the Third Lee Affidavit set out at [180] above. As senior counsel for DTT put it in oral argument, “the material, we say, quite clearly established that it was Mr Saayman who, as the engagement partner or audit partner, was the person who had the custody of the audit file at the conclusion of the audit”.

252    DTT also submits that in making the Production Order the primary judge proceeded on the basis that all of the Uninvolved Partners had control, including partners who are now former partners (Sadie Ville v DTT (No 4) at [5]), and that there was “no evidentiary basis for such a positive finding before the Court …”

253    DTT says that that finding is wrong because:

The proceeding is brought against all of the partners of the firm at the relevant time or times, which extend back to 2010. As has been observed, the “First Respondent” is comprised of some former and some present partners. For example, it could not seriously be said that a long since retired-partner from the Perth office could knock on the door of an East-coast office and demand access to another person’s client files, remove those documents and log-on to a computer and copy files. From its own experience, this Court would know that the idea that a long-since departed former partner could show-up at the office and have a right to possession of any client file of any of their former partners is far-fetched.

The Discharge Appeal – Ground 1

254    DTT submits that the primary judge’s “inquiry … as to which he wanted a ‘detailed explanation’” of how Mr Saayman had come into possession of the Engagement Documents “suffered from numerous vices”. The principal so-called “vices” referred to in DTT’s written submissions were as follows.

255    First, DTT submits that the inquiry “was completely irrelevant to any issue of ‘control’” because a person will not have “power” sufficient to give discovery of a document if it is necessary for the person to obtain the consent of anyone else to inspect the document (citing Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627 (Lonrho) at 635-636 (Lord Diplock); Taylor v Santos Ltd (1998) 71 SASR 434 (Taylor) at 438 (Doyle CJ, Prior J agreeing)). DTT also submits that a person will not have “power” sufficient to produce the document for inspection if that person cannot exercise the power unilaterally (such as where the property is jointly owned with someone else) (citing Taylor at 438). DTT says:

Thus, for any one of the individual Uninvolved [Partners] to have ‘power’ in respect of the relevant documents, that ‘power’ must be exercisable by that individual person unilaterally and without requiring the involvement or consent of any other persons. Hypothetically speaking, even if some Uninvolved Partner opened a door (which, to be clear, is certainly not accepted) that does not mean they have a legal right to possession of the files in Mr Saayman's possession. In no sense could ‘how Mr Saayman obtained the documents’ be relevant to whether, having obtained them, someone had a unilateral legal entitlement to the documents.

(Emphasis in original.)

256    Secondly, DTT submits that the primary judge’s inquiry was irrelevant because “[o]n well-established principles arising from the nature of the privilege, how a person entitled to the privilege happened to obtain exclusive possession of the documents is irrelevant” (citing Griffin v Sogelease Australia Ltd (2003) 57 NSWLR 257 (Griffin)). DTT submits that that decision highlighted that the privilege against self-incrimination is not “subject to ‘judge-made exceptions or qualifications’” and that someone entitled to the privilege in respect of certain documents (like Mr Saayman) cannot be compelled even indirectly to disgorge them to someone who had legal title to them.

257    Thirdly, DTT submits that the primary judge’s inquiry was irrelevant because “it is well established that the privilege extends to protect a person against a requirement that he or she reveal the whereabouts of incriminating documents or explain anything about them”, citing Griffin at [42].

258    Fourthly, DTT submits that “the primary judge speculated that there may be other copies of some of the documents forming part of the Engagement Files which could be produced ([Sadie Ville v DTT (No 5)] [58]ff.)” and that such “speculation” “involved an erroneous view of the Production Order”, which did not require production of any copies because the order to produce the “audit files … and working papers … was not an order for standard discovery in r 20.14. It was for discovery of specific things …”

The Discharge Appeal – Ground 2

259    DTT submits that the primary judge “erred in not excusing the Uninvolved Partners from complying with the Production Order either in whole or in part in circumstances where none of the Uninvolved Partners has been found to have control over any document the subject of the Production Order or any document referred to in [Sadie Ville v DTT (No 5)] [58], [60] to the exclusion of Involved Partners whose claims for privilege were upheld ([Sadie Ville v DTT (No 5)] [65], [67]-[68])”.

260    DTT says that the Uninvolved Partners should have been excused, because a valid claim for privilege against self-exposure to penalty that had been raised by some of the joint owners of the documents in question should not in practice be defeated because other joint owners had raised no such objection (citing dicta to that effect in Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647 at 696 (Franki J)). Relatedly, DTT also relies on the proposition that a single partner is not liable to produce documents of the partnership, citing Rochfort v Trade Practices Commission (1982) 153 CLR 134 at 139 for the proposition that “one partner has been held not compellable to produce books which were partnership property when the other partners would not consent to their production”.

Sadie Ville’s submissions summarised

The Privilege Appeal – Ground 3

261    Sadie Ville submits that DTT’s submission that there was no evidence for the primary judge’s finding that the Engagement Documents were in the control of any DTT partner other than Mr Saayman must be rejected in substance because:

(1)    the submission entirely overlooks the evidence in the First Lee Affidavit that the documents set out in Pt 2 of the List of Documents “are in the control of the First Respondent” (see Sadie Ville v DTT (No 3) at [8], [22], [69], [116]); and

(2)    that evidence was sufficient to sustain the finding made by the primary judge, and it was never relevantly qualified.

The Discharge Appeal – Ground 1

262    Sadie Ville submits that DTT misunderstands the nature of the Discharge Application. It says that, because DTT was seeking to vary or set aside the Production Order, the issue of control was not to be determined afresh as if the primary judge had not already made a finding that the Uninvolved Partners had control of the Engagement Documents. Rather, it submits, it was necessary for DTT to show a material change of circumstances since the original application was heard, or to be able to point to the discovery of new material which could not reasonably have been put before the court on the hearing of the original application, in order to justify a departure from that finding and a variation of the Production Order (citing Keynes v Rural Directions Pty Ltd (No 4) [2011] FCA 304 at [32]; Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46-47).

263    Sadie Ville submits that DTT therefore bore the onus of establishing that that finding was wrong or, at least, was no longer correct and that it failed to do so. It submits that “[i]n light of the extraordinary circumstances revealed on the Discharge Application” the primary judge was undoubtedly correct to find that he “was not satisfied on the further evidence that the Uninvolved Partners were unable to produce the Engagement Documents: [Sadie Ville v DTT (No 5)], [57]”.

264    Sadie Ville also says that there is no merit in DTT’s other submission that, because Mr Saayman has seized the Engagement Documents and refuses any Uninvolved Partner (or any partner at all) access to them (in electronic form or the physical manila set), the Uninvolved Partners have no “power” to produce them. In essence, Sadie Ville says that the cases cited by DTT (Lonrho and Taylor) are beside the point because, quite apart from the position at general law concerning the ordinary rights of partners to partnership property, each of the Uninvolved Partners (who form a majority on DTT’s board of directors) has extensive rights under the DTT partnership deed to require Mr Saayman to return or make accessible to them partnership property, including the Engagement Documents. Members of the board of DTT must under the terms of the deed, and by virtue of the Production Order, “exercise their discretions, their powers, their abilities as respondents to the order, to take the steps available to them to get this material back, to vote in a particular way at board meetings, to call a board meeting, to give a direction to Mr Saayman and, if necessary, to expel [him] and say, ‘We want our property back’”. Sadie Ville cites the following clauses of the partnership deed in support of that proposition:

(1)    “The Firm Property is owned by the Equity Partners in their Pro-rata Portions” (cl 4.1(a));

(2)    “A Partner is not entitled to require:

(i)    the realisation or distribution of the Firm Property; or

(ii)    for the Firm Property to be otherwise dealt with,

except as expressly contemplated by this contract” (cl 4.1(b));

(3)    “The Firm Property must be used or applied only for the benefit of the Firm and in accordance with this contract” (cl 4.1(d));

(4)    “The Chairperson and any 3 Elected Board Members who are entitled to vote at Board meetings may call a general meeting of the Partners” (cl 6.2(a));

(5)    “The Firm must have a board … [which] has the power to do everything necessary or convenient to be done for or in connection with the performance of its functions” (cl 7.1);

(6)    “The Firm Property must so far as practicable be vested in a Deloitte Entity nominated by the CEO to hold upon trust for the Equity Partners and subject to the direction of the Board or the CEO, as the case requires” (cl 7.12(a));

(7)    “An Auditor or Reviewer … has a right of access at all reasonable times to the Books of each Group Member …” (cl 10.8 (a));

(8)    A Partner may be expelled if, among other things, “the Partner wilfully disobeys a lawful and reasonable direction of the CEO …” (cl 11.2(g));

(9)    “To the extent permitted by law, each Partner must answer all questions put to him or her by the CEO or the Board in relation to any Group Businesses, notwithstanding that doing so may incriminate the Partner” (cl 12.15(b));

(10)    “A Board Member … may inspect or otherwise have access to the Books of the Group (including its Financial Records) at all reasonable times for any purpose … including for the purposes of a legal proceeding” (Sch 7, cl 6.1); and

(11)    “A person who has ceased to be a Board Member may inspect the Books of the Group (including its Financial Records) at all reasonable times for the purposes of a legal proceeding” (Sch 7, cl 6.2(a)).

265    Sadie Ville submits that DTT’s reliance on Lonrho and Taylor for the proposition that “power” means a presently enforceable legal right to inspect the documents without the need to obtain the consent of another “is a complete misreading” because “[i]f consent were required then there would be no need for an enforceable right. The whole point of enforceability is to override consent. Thus the test is satisfied where there is an enforceable legal right to inspect the documents regardless of the consent of the other person”. Sadie Ville points out that both Lonrho and Taylor concerned respondents to a discovery order who had no anterior rights over the documents in question (citing Lonrho at 633-634; Taylor at 436, 438) and that in this case “[b]y contrast … the Uninvolved Partners (at least those who are current partners) are co-owners of the Engagement Documents”. Accordingly, Sadie Ville submits, the Uninvolved Partners retain “power” over the Engagement Documents because their rights of co-ownership give them a presently enforceable legal right to the documents, even in the face of objection from Mr Saayman, whose claim to PSI does not entitle him to override the pre-existing property rights of his co-owners.

266    As for DTT’s reliance on Griffin, Sadie Ville submits that it “reflects a fundamental misunderstanding of the nature of PSI. PSI protects a person with a bona fide claim from producing documents pursuant to some compulsory process such as an order for discovery, summons for production or other statutory notice” (citing Griffin at [30]). The submission continued:

None of the cases cited by DTT suggest that PSI is a defence to the enforcement of antecedent proprietary rights, for instance by action in detinue, or indeed contractual rights of the kind involved in enforcement of a partnership deed. Mr Saayman’s claim to PSI is no answer to his partners’ demand for return of their property, being the manila set or the Produced Laptop, or their contractual right via the Board and the CEO to require disclosure of the password(s) to the Encrypted Files, even if the result might be to put those partners in a position to comply with court orders for production, leading in turn to a risk of criminal or penal action against him.

(Emphasis in original.)

267    Sadie Ville also submits that Griffin is irrelevant because it held only that the New South Wales Supreme Court’s procedural power under s 76A of the Supreme Court Act 1970 (NSW) to give directions for the conduct of the proceedings was not intended to impact on substantive rights, and did not allow the discovery process to be used to make an order compelling a defendant who has a valid claim to PSI to produce documents to another defendant, the co-owner of the documents, in order to procure discovery by that co-defendant.

268    Sadie Ville further contends that “contrary to DTT’s submission, Griffin is not authority for the proposition that ‘how a person entitled to the privilege happened to obtain exclusive possession of the documents is irrelevant’”.

269    As for DTT’s submission that it is “well established” that PSI extends to protect a person from revealing the whereabouts of incriminating documents or explaining anything about them, Sadie Ville says that this is so in the context of a compulsory process, like discovery, but points out that PSI is not a defence to the substantive anterior rights of co-owners or contract counterparties to require such information.

270    As to DTT’s submission that the Production Order only required discovery of the original audit and review files that were statutorily required to be kept – that is, the manila set that is now in the custody of Mr Saayman – and not copies or partial copies of those files, Sadie Ville submits that such a submission “begs the questions of why Mr Saayman took the steps of removing the hard copies and laptop from the Litigation Room, and encrypting the copies on the firm’s server, or why DTT led evidence of attempts to crack the password. The answer is that the submission is unwarranted, and places a late and unwarranted gloss on the Production Order”. In any event, Sadie Ville submits, although copy documents are not discoverable only because the original is discoverable (per r 20.18 of the Federal Court Rules), where the original is no longer within the party’s control an available copy should be discovered (citing Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 at 509-510; Theodore v Australian Postal Commission [1988] VR 272 at 277, 279; Clone Pty Ltd v Players Pty Ltd (in liq) (2016) 127 SASR 1 at [6], [9], [185], [423]-[424]).

The Discharge Appeal – Ground 2

271    Sadie Ville submits that DTT’s reliance on Trade Practices Commission v TNT Management Pty Ltd (1984) 56 ALR 647 and the dicta of Gibbs CJ in Rochfort v Trade Practices Commission (1982) 153 CLR 134 at 139 is misplaced, and says that in both instances the primary judge explained correctly why that is so. As to the former, see Sadie Ville v DTT (No 5) at [66]-[68], and as to the latter see Sadie Ville v DTT (No 3) at [116]-[117].

Consideration

272    Ground 3 of the Privilege Appeal has no merit. The proposition that there was no evidence for the primary judge’s finding that the Engagement Documents were in the control of any DTT partner other than Mr Saayman, as Sadie Ville submitted, entirely overlooks the evidence in the First Lee Affidavit that the documents set out in Pt 2 of the List of Documents “are in the control of the First Respondent”. Again, as Sadie Ville submitted, in circumstances where that evidence was clearly sufficient to sustain the finding made by the primary judge, and it was never relevantly qualified, Ground 3 must fail.

273    We turn next to Ground 1 of the Discharge Appeal.

274    It is well established that the discretion conferred by r 39.05 of the Federal Court Rules to set aside interlocutory orders once entered should be exercised in a judicial manner and only in exceptional circumstances. That is so because of the “principle of finality of litigation which counsels courts to exercise caution when considering whether orders previously made and final on their face and entered should be re-opened for consideration and set aside”: Professional Administration Service Centres Pty Ltd v Commissioner of Taxation [2012] FCAFC 180; (2012) 295 ALR 52 at [53].

275    In Keynes v Rural Directions Pty Ltd (No 4) [2011] FCA 304, Besanko J cited with approval the following passage from the judgment of McLelland J in Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44 at 46-47:

The private injustice and public undesirability of permitting the relitigation of matters already litigated once is recognised in a number of principles of law, notably the rules relating to res judicata and issue estoppel, the more flexible rules under the rubric of vexation and abuse of process … and the restrictive provisions governing the adducing of further evidence on the hearing of an appeal even by way of rehearing …

Interlocutory orders, of their very nature, create no res judicata or estoppel, and the court retains jurisdiction to set aside, vary or discharge an interlocutory order up to the time of the final disposition of the proceedings. However the general rationale of the principles last referred to applies even in the case of interlocutory orders. It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will.

The overriding principle governing the approach of the court to interlocutory applications is that the court should do whatever the interests of justice require in the particular circumstances of the case. In giving effect to that general principle, and in recognition of the public and private interests earlier referred to, rules of practice have been developed in accordance with which the discretionary power of the court to set aside, vary or discharge interlocutory orders will ordinarily be exercised. Not all kinds of interlocutory orders attract the same considerations. For present purposes one may put to one side orders of a merely procedural nature … and injunctions (or undertakings) made or given by agreement and without contest ‘until further order’ …

In the present case I am dealing with an interlocutory order of a substantive nature made after a contested hearing in contemplation that it would operate until the final disposition of the proceedings. In such a case the ordinary rule of practice is that an application to set aside, vary or discharge the order must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the court on the hearing of the original application …

(Emphasis added.)

276    In our view, it is plain that DTT’s attempt to re-litigate the Production Order was bound to fail. This is because DTT did not adduce evidence of a material change of circumstance about the critical question of whether the Uninvolved Partners have control of the Engagement Documents. And no contention was ever ventured that DTT had discovered “new material” which could not reasonably have been put before the primary judge on the hearing of the original application.

277    Each of the three witnesses called by DTT to give evidence in support of the Discharge Application were ill-equipped to answer questions about DTT’s claim that they no longer have control of the Engagement Documents seized by Mr Saayman (or any copies of them not in his custody).

278    By the end of the hearing of the Discharge Application, DTT’s case confronted a number of factual difficulties, including the following:

(1)    when the order for discovery was made (5 March 2018) and Mr Lee made his first affidavit a month later, affirming that the Engagement Documents were “in the control of the First Respondent [DTT]”, the Engagement Documents were stored in the secure Litigation Room in the firm’s Sydney offices, access to which was limited to swipe cards authorised by the in-house litigation team (Sadie Ville v DTT (No 5) at [14], [43], [54]);

(2)    it was Mr Lee’s “responsibility to keep [the Engagement Documents] in a place and in a form that made them accessible to him, acting on behalf of the first respondent” (Sadie Ville v DTT (No 5) at [21]);

(3)    DTT did not lead any evidence as to when or how the Engagement Documents were removed from the Litigation Room or “conveyed” to Mr Saayman in contravention of the internal procedure that Mr Lee described, involving the quarantining of files in the Litigation Room so that they could be accessible to other partners (Sadie Ville v DTT (No 5) at [55]);

(4)    neither Mr Lee nor Mr Murray had made or knew of any inquiries to ascertain how this was allowed to happen (Sadie Ville v DTT (No 5) at [44], [48], [55]);

(5)    no request had ever been made by the Uninvolved Partners for the return of the Produced USB (Sadie Ville v DTT (No 5) at [15(e)], [58(b)]); and

(6)    no attempt had been made to locate images of the laptop computers of Mr Saayman and Mr Moore (Sadie Ville v DTT (No 5) at [15(g)], [16], [58(c)]).

279    It is also curious, to say the least, that the only Uninvolved Partner called to give evidence in support of the contention that none of them has relevant control of the Engagement Documents, Mr Murray, was not aware of the CEO or the board of the firm taking any action to get the audit files back from Mr Saayman; had not made any inquiries as to when the encryption was applied to the files; and had not spoken to the CEO, any member of the board, or any person within the IT department, about what could be done to break the encryption.

280    Mr Taylor was called to testify, we would have thought absurdly, that it would take 12,600 years to break the encryption that Mr Saayman had applied to the files, in aid of a submission that the Uninvolved Partners did not “control” the documents. However, his evidence was also bound to be less than useful given that he is not part of the firm’s IT services team, has no knowledge of the firm’s IT infrastructure, has no familiarity with the firm’s backup systems, has no knowledge of whether IT personnel at the firm control access to servers and backup systems and has no experience of gaining access to backup systems.

281    Further, presumably because he had not been instructed to, Mr Taylor made no inquiries as to whether there are other copies of the audit file anywhere on the network that have not been encrypted by Mr Saayman, and had not looked for documents that contain copies of the audit file or copies of parts of the audit file.

282    One would have thought that the inquiries not made by Messrs Lee, Murray and Taylor would have been the starting point for the mounting of a case to persuade the judge to discharge a binding order of the court, but they were never made.

283    DTT also relied on the email correspondence set out at [182]-[189] above between Mr Saayman and Mr Murray as “evidence” of the want of control by the Uninvolved Partners over the Engagement Documents. But this correspondence was the product of DTT’s external lawyers, and an obvious contrivance on which the learned primary judge was entitled to place no weight.

284    In any event, given the terms of the DTT partnership deed which are set out in detail above at [264], it is clear, and one would have thought unsurprising, that the Uninvolved Partners, or some of them, are empowered by the express terms of the deed to demand that Mr Saayman provide access to the documents over which he asserts exclusive “control”, and that he be dismissed from the partnership if he fails to do so. Given the powers vested in the CEO, the board and the partners of the firm, it beggars belief that the Uninvolved Partners apparently choose to accept without question Mr Saayman’s assertions in his 5 September 2018 email that “[t]he physical files and back up disks have been locked up securely and only I have the keys to these records”; “[t]he electronic files have been password protected and only I know the password to these files”; and “I am not intending to give anyone access to any of these records”, as if that were the beginning and the end of the matter.

285    No attempt has been made by the CEO, the board or any DTT partner to enforce the unequivocal terms of the DTT partnership deed. Their apparent disinclination to do so is reason enough to reject Grounds 1 and 2 of the Discharge Appeal.

286    In those circumstances, it is unnecessary to deal with the other submissions made by DTT with respect to those grounds.

287    We should, however, deal with DTT’s submission that the terms of the Production Order do not require it to produce copies, even in circumstances where it is admitted that the originals are beyond relevant control. In our view, that submission must be rejected. It is obviously wrong. Where an original document is no longer within the party’s control, because it is lost or because of the more unusual circumstances involved in this case, then absent any legitimate claim to privilege over any copy, of course an available copy must be produced: see Paul Matthews and Hodge M Malek, Disclosure (Sweet & Maxwell, 4th ed, 2012) at [11.36].

The Privilege Appeal – Ground 4 (orders against unnamed individuals)

288    DTT’s final ground of appeal is that the primary judge “erred in finding that production orders could be made other than in the name of the individuals who are purported to be the subject of the order ([Sadie Ville v DTT (No 4)] [4])”.

289    It will be recalled that the Production Order is directed to “[DTT], other than Mr Saayman and any other partner directly involved in the relevant engagements”.

290    The primary judge rejected the contention that forms the basis of this ground in Sadie Ville v DTT (No 4) at [4] as follows:

… I do not consider this argument to have merit. The proceeding is in substance brought against each of the partners of DTT at the relevant time or times. While DTT has not been required to produce a list of those partners, it could be required to do so, and presumably knows who they are. An order that applies to the partners of DTT other than Mr Saayman and any other partner directly involved in the relevant engagements, is in substance the same as an order that names the individual partners of the firm other than Mr Saayman and any other partner directly involved in the relevant engagements. In my view, an order that applies to DTT other than Mr Saayman and any other partner directly involved in the relevant engagements, is sufficiently clear. It is also less cumbersome than an order naming all of the individual partners. Further, in circumstances where the parties were required to provide proposed orders to give effect to the Reasons, if DTT considered it necessary to name each individual partner, the firm should have provided a form of order that included all of their names, to assist the Court in giving effect to the Reasons. However, they did not do so. In the circumstances, I consider that an order for production can be framed against DTT other than Mr Saayman and any other partner directly involved in the relevant engagements.

291    DTT submits that the primary judge erred in so reasoning. It says that although the proceeding is brought in the partnership name pursuant to r 9.41 of the Federal Court Rules, “the proceeding is in fact brought against all of the partners of the firm at the relevant time or times. There is no provision in the [Federal Court Rules] which would permit an order to be entered, [or] enforced, against any legal persons comprising a subset of the partners of a firm at a past time by the adoption of a firm name. A rule allowing proceedings to be brought in the name of a firm (and here, to be noted, the firm as comprised at a past time) does not enable an order or judgment to be made in the name of the firm and such a judgment or order is improper: cf. Bishop v Chung Brothers (1907) 4 CLR 1262. Rather, any order must name the particular person(s) who are required to produce the documents in question”. DTT says that the court “cannot make orders against a fiction – something which does not exist and has no legal personality – no matter how convenient it is thought to be”.

292    Sadie Ville submits that the question raised in respect of this ground of appeal “is not a question of substance or power, but an unmeritorious question of form”.

293    Sadie Ville relies on s 23 of the Federal Court of Australia Act 1976 (Cth), which provides that the court may make such orders as it thinks appropriate in the exercise of its jurisdiction, and says that the court’s procedures authorise references to partners via the description of a firm: Federal Court Rules, r 9.41. Sadie Ville says, as the primary judge held, that “the form in which the Production Order is made is in substance the same as one that names all of the DTT partners other than Mr Saayman and any other partner directly involved in the Engagements, and is far less cumbersome: [Sadie Ville v DTT (No 4)], [5]. Contrary to DTT’s submissions, the Court has not made an order against a fiction. It has made an order against individuals described in a manner expressly authorised by the Rules, leaving no uncertainty as to who is bound or not bound. There is no error in that approach”.

294    In our view, no error of the type alleged by DTT is demonstrated, and the reasons given by the primary judge for making the order in the form that it was made are correct.

CONCLUSION

295    Leave to appeal will be granted, and the appeals will be dismissed, with costs.

Associate:

Dated:    27 February 2020