FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE - proceedings claiming pecuniary penalties under Pt IV of Trade Practices Act 1974 (Cth) - whether witness statements should be directed prior to trial from natural persons who are respondents - privilege against exposure to a penalty

TRADE PRACTICES - proceedings claiming pecuniary penalties under Pt IV of Trade Practices Act 1974 (Cth) - whether witness statements should be directed prior to trial from natural persons who are respondents - privilege against exposure to a penalty

Refrigerated Express Lines Australasia Proprietary Limited v Australian Meat and Livestock Corporation (1979) 42 FLR 204

Australian Competition and Consumer Commission v Pioneer Concrete Queensland Proprietary Limited (unreported, Drummond J ,15 December 1995)

Reid v Howard (1995) 184 CLR 1

Meinhard v Salmon (1928) 249 NY 458

Environmental Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION -v- J McPHEE & SON (AUSTRALIA) PTY LIMITED & ORS (No.2)

JUDGE:          HEEREY J

PLACE:          MELBOURNE

DATE:            8 AUGUST 1997

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.         The directions given on 2 June 1997 for the filing and serving of witness statements by the second to sixth respondent be rescinded.

2.         The costs of the second to sixth respondent’s notice of the motion of 30 July 1997 to be the respondents’ costs in the cause. 

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

REASONS FOR JUDGMENT

Counsel for the second to sixth respondents, who are natural persons, argues that the directions already given for the filing and serving of witness statements by his clients in these proceedings for pecuniary penalties under Pt IV of the Trade Practices Act 1974 (Cth) (the Act) should be rescinded. 

This issue has to be considered in the light of the general practice in the Federal Court today.  Parties are usually required to file and serve either witness statements or affidavits prior to trial.  However, counsel argues that because pecuniary penalties are sought these respondents can rely on the privilege against making statements which might expose them to a penalty. 

The starting point is the judgment of Deane J when a judge of this Court in Refrigerated Express Lines Australasia Proprietary Limited v Australian Meat and Livestock Corporation (1979) 42 FLR 204.  That case involved alleged contravention of Pt IV, but only injunctive relief was sought.  The question was whether an order for discovery and interrogatories should be made.

His Honour said (at 207):

“It is a well established principle that a defendant in proceedings which are solely for the recovery of a pecuniary penalty should not be ordered to disclose information or produce documents which may assist in establishing his liability to the penalty (see, generally, per Isaacs J in The King v Associated Northern Collieries (1910) 11 CLR 738 at 741-748; Naismith v McGovern (1953) 90 CLR 336 at 341-342 and Martin v Teacher (1886) 16 QBD 507.  Even where, as in the present case the proceedings are not for recovery of a penalty but to prevent and redress civil injury, a party to litigation ought not to be compelled to provide information or produce documents for inspection by the other party if the result thereof will be to provide evidence against him which may be used to establish his liability to a penalty in other proceedings Mayor of the County Borough of Derby v Derbyshire County Council [1897] AC 550 at 552. 

In the former case, that is to say in a mere action for a penalty, a court should, in the absence of statutory provision to the contrary, refuse to make any order at all against the defendant for discovery or production of documents or provision of information for the reason that the whole and avowed object of the proceedings being the imposition and the recovery of a penalty, an order for the production of documents or provision of information against the defendant can, so far as the prosecutor of the action is concerned, properly have no other intended consequence (see The King v Associated Northern Collieries (1910) 11 CLR at 742).

This is a broad and unqualified rule whose origins are apparently to be found in a reluctance on the part of the Court of Chancery to lend the aid of its discovery proceedings to the common informer (see Mexborough (Earl of) v Whitwood Urban District Council [1897] 2 QB 111 at 115 and Heimann v Commonwealth (1935) 54 CLR 126 at 130).”

The present case is one for the recovery of pecuniary penalties.  The filing and service of witness statements by the second to sixth respondents would amount to provision of information by them, to use his Honour’s expression. 

Counsel for the applicant referred to a decision of Drummond J in Australian Competition and Consumer Commission v Pioneer Concrete Queensland Pty Ltd (unreported, 15 December 1995) where his Honour made an order that a respondent in proceedings for a penalty was to file and serve witness statements.  His Honour said (at 5):

“I see no reason with respect to these other issues to depart from the Court’s usual practice of requiring the parties to adduce all their evidence-in-chief in written form, save only for the qualification I have referred to that arises from the penal nature of the proceedings and the need, as I see it, not to deprive a respondent of an opportunity that might otherwise be open to that respondent of persuading the Court to entertain a “no case” submission at the close of the applicant’s case.

If the applicant is prepared to undertake with respect to each respondent not to make any use of that respondent’s evidence in dealing with any “no case” submission that that respondent may make at the close of the applicant’s case against it or him and which the court in its discretion is prepared to entertain, in addition to what the applicant is prepared to offer with respect to each respondent in the way of undertaking not to make any use of that respondent’s affidavits of evidence in the applicant’s case against the respondent, if that respondent does not go into evidence, I will make the following direction as direction number 7.”

Counsel for the applicant in the present case proffered similar undertakings.  However, it does not appear that his Honour was referred to Refrigerated Express Lines.  Nor is there any reference to the decision of the High Court in Reid v Howard (1995) 184 CLR 1 (which was handed down only 13 days before his Honour gave judgment). 

In Reid the High Court confirmed the absolute nature of the privilege against incrimination.  Toohey, Gaudron, McHugh and Gummow JJ said (at 14):

“There is simply no scope for an exception to the privilege, other than by statute.  At common law, it is necessarily of general application, a universal right which, as Murphy J pointed out in Pyneboard Pty Ltd v The Trade Practices Commission (1983) 152 CLR 328 at 346, protects the innocent and the guilty.  There is no basis for accepting any class or category of person whether by reference to legal status, legal relationship or even the offence in which he or she might be incriminated, because, as already indicated, its purpose is the completely general purpose of protecting against the “peril and possibility of being convicted as a criminal”:  Lamb v Munster (1882) 10 QBD 110 at 111.”

For the same reason there can be no exception in civil proceedings, whether generally or of one kind or another.  Moreover, it would be anomalous to allow that a person could refuse to answer questions in criminal proceedings or before investigative bodies where the privilege has not been abrogated if that person could be compelled to answer interrogatories or otherwise make disclosure with respect to the same matter in civil proceedings.”

Reid is particularly significant for present purposes because the orders of the New South Wales Court of Appeal had provided a complex machinery of sealed affidavits and undertakings of non-disclosure without leave of a judge “so as to effectively enforce the respondent’s civil rights against the appellant while protecting him against the risk of self-incrimination” ((1993) 31 NSWLR 298 at 305).  After pointing out (184 CLR at 16-17) the various practical difficulties which could still arise, their Honours on the High Court said (at 17):

“Nor is justice served by the ad hoc modification or abrogation of a right of general application, particularly not one as fundamental and as important as the privilege against self-incrimination.”

To adopt the words of Cardozo CJ in a different context, the privilege is not to be undermined by the disintegrating erosion of particular exceptions:  Meinhard v Salmon (1928) 249 NY 458 at 464. 

In my respectful opinion no distinction can be drawn on the basis that the present case is concerned with the privilege against exposure to a penalty rather than the privilege against incrimination.  It would be contrary to the strong statements in Reid to make (over the objection of the second to sixth respondents) any order for the production of witness statements.  Clearly, as noted, such statements would be analogous to answers to interrogatories or the production of documents on discovery. This position is not altered by the fact that the respondents have already filed a defence.  Counsel for the applicant, correctly in my view, did not argue that there had thereby been a general waiver of the right to take advantage of the privilege. 

There will be an order that the directions given on 2 June 1997 for the filing and serving of witness statements by the second to sixth respondents be rescinded.

The directions for filing and service of witness statements by the applicant and the first respondent (a corporation) will remain.  The latter is not entitled to the privilege:  Environmental Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477.  However there will be no breach of this direction by the first respondent if it fails to file and serve a statement by a proposed witness where that witness (whether or not he or she is one of the other respondents) claims the privilege. 

The costs of the second to sixth respondents of the motion of 30 July 1997 to be those respondents’ costs in the cause.

Associate:

Dated:  8 August 1997