Federal Court of Australia

Deane, in the matter of MSB Capital Holdings Pty Ltd (in liq) [2023] FCA 919

ORDERS

THE COURT ORDERS THAT:

1.    The answer to the question referred to the Court is as follows:

Section 597(7)(d) of the Corporations Act 2001 (Cth) impliedly abrogates the privilege against exposure to penalty in connection with the production of books pursuant to a s 596B summons.

2.    Mr Rowan Lyndon pay the applicants’ costs of the determination of the question in order 1.

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

REASONS FOR JUDGMENT

DOWNES J:

Overview

1    On 12 March 2021, MSB Capital Holdings Pty Ltd (in liquidation) was wound up in insolvency, and the applicants were appointed as its liquidators, pursuant to an order of this Court.

2    A summons was issued to Mr Rowan Lyndon on 15 February 2023 pursuant to s 596B of the Corporations Act 2001 (Cth) by the liquidators requiring him to:

(1)    be examined about the examinable affairs of MSB Capital Holdings Pty Ltd (in liquidation); and

(2)    produce to the Court various books defined in the summons (including certain documents).

3    In the course of the examination before a Judicial Registrar of this Court, Mr Lyndon claimed privilege against exposure to penalty (otherwise known as the penalty privilege) in respect of certain documents produced or required to be produced under the summons.

4    The liquidators contended that the penalty privilege could not be claimed as it had been abrogated. It was in this context that the Judicial Registrar referred the question of whether s 597 of the Corporations Act abrogates the right to refuse to produce documents in reliance upon the penalty privilege.

5    For the following reasons, the penalty privilege has been impliedly abrogated and is not able to be claimed by Mr Lyndon in response to the s 596B summons to produce books.

Relevant legislation

6    Section 597 is contained within Div 1 of Pt 5.9 of the Corporations Act, which is entitled “Examining a person about a corporation”. Under that Division, the Court is empowered to summon a person for examination about a corporation’s examinable affairs in certain circumstances: see s 596A and s 596B of the Corporations Act (which I will describe as an examination in these reasons).

7    The circumstances in which a Court may summon a person under s 596B includes if the Court is satisfied that, amongst other things, the person has been, or may have been, guilty of misconduct in relation to the corporation: s 596B(1)(b)(i).

8    Section 596D(2) permits a summons issued to a person under s 596A or s 596B to require production at the examination of specified books that are in the person’s possession and relate to the corporation or any of its examinable affairs.

9    Section 597 concerns the conduct of an examination.

10    In particular, a person who attends before the Court for examination must not, without reasonable excuse:

(1)    refuse or fail to take an oath or make an affirmation: s 597(7)(a);

(2)    refuse or fail to answer a question that the Court directs him or her to answer: s 597(7)(b);

(3)    refuse or fail to produce books that the summons requires him or her to produce: s 597(7)(d).

11    By s 597(9), the Court has further powers to require the production of relevant books (although those powers were not exercised in this case). Section 597(10A) provides that a person must not refuse, or intentionally or recklessly fail, to comply with a direction to produce books under s 597(9). Like s 597(7), s 597(10A) does not apply to the extent that a person has a “reasonable excuse”: s 597(11).

12    Section 597(12) provides that a person is not excused from answering a question put to the person at an examination on the ground that the answer might tend to incriminate the person or make the person liable to a penalty.

13    Section 597(12A) contains an express qualification to s 597(12). That section provides as follows:

(12A)    Where:

(a)    before answering a question put to a person (other than a body corporate) at an examination, the person claims that the answer might tend to incriminate the person or make the person liable to a penalty; and

(b)    the answer might in fact tend to incriminate the person or make the person so liable;

the answer is not admissible in evidence against the person in:

(c)    a criminal proceeding; or

(d)    a proceeding for the imposition of a penalty;

other than a proceeding under this section, or any other proceeding in respect of the falsity of the answer.

14    Section 597(12) of the Corporations Act abrogates the penalty privilege expressly insofar as it could otherwise be raised by a person when answering a question put to them at an examination: see, for example, Gemmell v Le Roi Homestyle Cookies Pty Ltd (in liq) (2014) 46 VR 583; [2014] VSCA 182 at [51]–[59] (Ashley JA, with whom Neave JA and Almond AJA agreed). That decision did not address the question of whether penalty privilege had been abrogated in relation to the production of books pursuant to a s 596B summons.

15    Finally, s 596F, which is expressed to be subject to s 597, empowers the Court to give directions about, amongst other things, the procedure to be followed at an examination.

Consideration

Nature of penalty privilege

16    The privilege against exposure to penalty operates to excuse a person from being compelled to answer any question, or produce any document, if the answer or the production would tend to expose that person to a penalty: Australian Securities and Investments Commission v Mining Projects Group Ltd (2007) 164 FCR 32; [2007] FCA 1620 at [7] (Finkelstein J).

17    The penalty privilege is a distinct privilege to the privilege against self-incrimination and was described in The Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543; [2002] HCA 49 at [13] and [31] (Gleeson CJ, Gaudron, Gummow and Hayne JJ) in these terms:

…That privilege is one of a trilogy of privileges that bear some similarity with the privilege against incrimination. The other two are the privilege against exposure to forfeiture and the privilege against exposure to ecclesiastical censure. The privilege against exposure to penalties and that against exposure to forfeiture had their origins in the rules of equity relating to discovery, but it is clear, as noted by Mason A-CJ, Wilson and Dawson JJ in [Pyneboard Pty Ltd v Trade Practices Commission (1982–1983) 152 CLR 328], that the privilege against exposure to penalties has long been recognised by the common law and is no longer simply a rule of equity relating to discovery.

…

Today the privilege against exposure to penalties serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it. However, there seems little, if any, reason why that privilege should be recognised outside judicial proceedings. Certainly, no decision of this Court says it should be so recognised, much less that it is a substantive rule of law…

(citations omitted.)

18    More recently, in Meneses v Directed Electronics OE Pty Ltd (2019) 273 FCR 638; [2019] FCAFC 190 (Moshinsky, Wheelahan and Abraham JJ), the Full Court stated at [87]:

Although there is a close affinity between the privilege against self-incrimination and the penalty privilege, they are distinct: Pyneboard at 336-337 per Mason ACJ, Wilson and Dawson JJ; Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 at 111 per Burchett J (Black CJ and Davies J agreeing); Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 (Daniels) at [12]-[13] per Gleeson CJ, Gaudron, Gummow and Hayne JJ. While the privilege against self-incrimination applies to non-judicial as well as judicial proceedings, the penalty privilege does not apply outside judicial proceedings, and has not been recognised by the High Court as a substantive rule of law: Daniels at [15], [31]. The penalty privilege has a confined operation, and its purpose is to ensure that those who allege criminality or other illegal conduct should prove it: Daniels at [31]; Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at [24] per Gleeson CJ, McHugh, Gummow, Hayne, Callinan and Heydon JJ. The penalty privilege may be invoked in judicial proceedings to resist a requirement that a defence be filed that complies with the rules of pleading, to resist an order for the filing of witness statements, to resist answering interrogatories, and to resist the production of documents by way of discovery, or in response to a notice to produce or subpoena.

(emphasis original.)

19    In Migration Agents Registration Authority v Frugtniet (2018) 259 FCR 219; [2018] FCAFC 5 (Siopis, Robertson and Bromwich JJ) at [50], the Full Court described the privilege as the “lesser penalty privilege” and the privilege against self-incrimination as the “greater privilege” and “the more fundamental right”. At [77], the Full Court continued:

…In each setting where penalty privilege is claimed, the opening question is whether that privilege applies in the first place, not whether it has been abrogated. This emphasises the critical importance of considering carefully the statutory provisions in question, as well as the particular proceedings, the relief sought and the particular adverse consequences faced by the person claiming the benefit of penalty privilege.

20    Having regard to these authorities, it is therefore not correct to say, as was submitted by counsel who appeared for Mr Lyndon, that it is “trite” that penalty privilege is available subject to any question of abrogation. That is especially when a real question arises as to whether an examination is a curial (or judicial) proceeding.

Does penalty privilege arise?

21    In order to answer the “opening question”, the Full Court in Frugtniet identified at [79] that three factors will ordinarily be present, at least in a federal context, before it can be said that the penalty privilege can be claimed, and that the absence of those features means that it is inherently less likely that penalty privilege applies: see [81]. Those features were:

(1)    penalty privilege is claimed in curial (or judicial) proceedings;

(2)    the proceedings expose the claimant to penalties or forfeitures; and

(3)    penalty privilege is claimed as protection from compulsory disclosure of information, where requiring that disclosure would represent a departure from the principle that those who allege the commission of a crime or imposition of a penalty should prove it and should not be able to compel the defendant to provide proof against him or herself.

22    The second and third of these factors are present in this case. This is so even though the liquidators do not seek any penalty in the proceeding in which the privilege is being claimed because there is “a sufficient risk of exposure to a penalty in other proceedings that do not yet exist, and may never exist”: Spotlight Pty Ltd v Mehta [2020] FCA 1422 at [23] (Bromwich J).

23    As to the first factor, there is an apparent inconsistency between the approach of the Full Court in Frugtniet and the differently constituted Full Court in the later decision of Meneses, with the later decision stating at [87] that the penalty privilege does not apply outside judicial proceedings. However, in Frugtniet, the Court recognised at [34] and [47] that penalty privilege can arise in non-curial proceedings by a process of statutory construction.

24    It is not necessary to resolve that inconsistency because of my conclusion that an examination, where the examination is incidental to a court-ordered winding up, is a curial proceeding. Such a conclusion finds general support in a number of authorities.

(1)    In Re Transequity Ltd (in liq) [1991] Tas R 308; (1991) 6 ACSR 517 at page 525, Zeeman J decided that examinations conducted under s 597 are judicial proceedings.

(2)    In Re Westgate Wool Co Pty Ltd (in liq) (2006) 60 ACSR 570; [2006] SASC 372 at [19], Debelle J considered that an examination under s 596A or s 596B is a proceeding, being “an incident of the judicial power of winding up and has a judicial character”.

(3)    In Saraceni v Jones (2012) 42 WAR 518; [2012] WASCA 59 at [229], McLure P, with whom Newnes JA agreed, considered that the examination process is “akin to procedures and powers exercised as a matter of course in curial proceedings”.

25    In Highstoke Pty Ltd v Hayes Knight GTO Pty Ltd (2007) 156 FCR 501; [2007] FCA 13, French J (as his Honour then was) stated at [106]–[107]:

Divorced from association with a judicial proceeding nothing about the examination power under the Corporations Act marks it as judicial in character. It lacks the core elements of the judicial process such as the finding of facts, the making of value judgments and binding determinations as to legal rights and obligations…

The examination power taken alone, in the sense used above, is not an exercise of judicial power nor, taken alone, is it judicial when exercised by a court. It can only be accommodated within the exercise of judicial power if incidental to it or justified by historical usage. An examination ordered in aid of the implementation of a winding-up order made by a court can be seen as incidental to the exercise of judicial power and has long been accepted as such, at least implicitly if not explicitly, on that basis…

26    In Ariff v Fong (2010) 79 NSWLR 392; [2010] NSWSC 696, the Supreme Court of New South Wales considered whether the power under Pt 5.9 of the Corporations Act to summon persons for examination is a judicial power. After citing French J’s observations in Highstoke, Barrett J stated at [37]–[38]:

The quality of an examination as non-judicial in its own right means that it can be of a judicial character only if, in a particular context, it is incidental to some other proceeding or process that is judicial. In the case before me, of course, the other proceeding or process is administration under a deed of company arrangement.

The judicial character of examination as auxiliary or incidental to a winding up by the court is well established. It is sufficient to refer, in that connection, to Gould v Brown (1998) 193 CLR 346, per Brennan CJ and Toohey J at [31]–[33], per Gaudron J at [66]–[70], per Kirby J at [327]–[330]. As Marks J observed in Re Timberland Ltd [1980] VR 669 at 696; (1979) 4 ACLR 259 at 286: “The winding up is by the court which for the purposes the liquidator is”.

(emphasis original.)

27    In Gould v Brown (1998) 193 CLR 346, in the context of considering the power conferred on courts to make examination orders, Brennan CJ and Toohey J observed at [33]:

Although those are the purposes of an examination in a winding up, it is the part which an examination plays in a winding up and the court’s function in conducting the examination that determines whether the court is exercising judicial power. We respectfully adopt the description of the examination process given by Lockhart J in the Full Court of the Federal Court [in BP Australia Ltd v Amann Aviation Pty Ltd (1996) 62 FCR 451 at page 475]:

“The examination orders, summonses and proposed examination which are the subject of this challenge are in truth but part of the processes that follow from the making of the winding-up order, and which ultimately protect and adjust the rights of companies, their creditors and in some cases contributories. The Court’s supervisory role in the course of a winding up is to ensure that the winding-up laws are properly interpreted and applied to correct mistakes, and to supervise the exercise of compulsory processes in relation to the examination of persons and the obtaining of documents for the purposes of the conduct of those examinations.”

True it is that the function of the court in conducting an examination is not the determination of the rights and liabilities of adversaries, but the function is incidental to the winding up. The incidental character of the function and the traditional supervision exercised by the court in performing it are sufficient to stamp it with a judicial character…

(citations omitted.)

28    As the three factors identified by the Full Court in Frugtniet are present in this case, it follows that penalty privilege applies, subject to any question of implied abrogation.

Has the penalty privilege been abrogated?

29    The effect of the Full Court decision in Frugtniet is that the penalty privilege is not a substantive rule of law nor is it an important common law immunity such that it is not to be construed as having been abrogated in the absence of clear words or a necessary implication to that effect. That is, the rule in Potter v Minahan (1908) 7 CLR 277 at page 304 (O’Connor J), expressed in its modern form in Daniels at [11], does not apply to penalty privilege.

30    In particular, the Court in Frugtniet stated at [39] that:

…while penalty privilege and the privilege against self-incrimination are both rules of the common law, penalty privilege is not a substantive rule of law. By contrast, the privilege against self-incrimination and legal professional privilege, which are of the same character, are not “merely” substantive rules of law, but, rather, are important common law immunities that are not to be construed as having been abrogated in the absence of clear words or a necessary implication to that effect: Daniels at [11].

(emphasis original.)

See also [51].

31    It follows that a determination of whether the penalty privilege has been abrogated is a matter of construing the relevant legislation.

32    In this regard, it has been suggested that, because the consequences are less serious than in the case of incrimination, it should be easier to imply an intention to abrogate it: Price v McCabe; ex parte Price [1985] 2 Qd R 510; (1984) 55 ALR 319 (Derrington J, with whom D M Campbell and Kelly J agreed) at page 322; see also Rolfe v The Territory Coroner & Ors [2023] NTCA 8 (Grant CJ, Barr and Brownhill JJ) at [44].

33    An intention to abrogate will also be more readily implied where to do otherwise would contradict or diminish the operation of the legislation and the achievement of its purposes.

34    In Frugtniet at [44], the Court approved the observations of Kirby J in Rich v Australian Securities and Investments Commission (2004) 220 CLR 129; [2004] HCA 42 at [129] including that:

[T]he privileges involved in Daniels were those against self-incrimination and suggested derogations of legal professional privilege. Those privileges are different from the penalty privilege invoked in this case. Compared to the penalty privilege, each of those privileges has a longer history in the law. Each is more fundamental to its operation. Each is reflected in universal principles of human rights. The penalty privilege is not. The penalty privilege is of a lower order of priority. It has a more recent and specialised origin and purpose in our law. It should not be blown into an importance that contradicts or diminishes the operation of the Act and the achievement of its purposes.

(emphasis added; citations omitted.)

35    This accords with the observations of Gageler and Keane JJ in Lee v New South Wales Crime Commission (2013) 251 CLR 196; [2013] HCA 39 at [313] concerning the limitations on the principle of legality by reference to “clearly identified legislative objects”.

36    Similarly, in Rolfe at [46], the Court of Appeal (NT) considered that, even if the principle of legality does apply, “necessary intendment [to abrogate the privilege] may be discerned if the operation of penalty privilege would contradict or diminish the operation of the legislation and the achievement of its purposes”.

37    In this case and for the reasons which follow, even if the rule in Potter v Minahan applies, the requisite necessary implication to abrogate penalty privilege arises from the provisions of the statutory scheme. If it does not apply, then, at the least, an intention to abrogate the privilege can be implied as a matter of statutory construction.

38    The source of the obligation to produce the books identified in a s 596B summons is contained in s 597(7)(d) of the Act, which stipulates that a person who attends before the Court for examination must not, without reasonable excuse, refuse or fail to produce books that the summons requires him or her to produce.

39    Thus, there is a manifest statutory obligation to produce the books, with the only qualification being if there is a “reasonable excuse”.

40    The question of what constitutes “reasonable excuse” is to be determined from the terms and structure of the particular statute and the circumstances of each particular case: see Australian Securities and Investments Commission v Albarran (2008) 169 FCR 448; [2008] FCA 147 (Jacobson J) at [81] citing Bank of Valletta plc v National Crime Authority (1999) 164 ALR 45; [1999] FCA 791 (Hely J) at [39], [47] (which concerned the National Crime Authority Act 1984 (Cth)).

41    This proposition is also supported by the statement of the majority in Taikato v The Queen (1996) 186 CLR 454 (Brennan CJ, Toohey, McHugh and Gummow JJ) at page 464:

The term “reasonable excuse” has been used in many statutes and is the subject of many reported decisions. But decisions on other statutes provide no guidance because what is a reasonable excuse depends not only on the circumstances of the individual case but also on the purpose of the provision to which the defence of “reasonable excuse” is an exception.

(citations omitted.)

42    There is no guidance in the Corporations Act as to the meaning of the phrase “reasonable excuse”; however, Mr Lyndon’s position was that it encompasses penalty privilege. He submitted that if this was not so, it would render s 597(12) “nonsensical” on the basis that there would be no need to expressly abrogate penalty privilege in relation to answers to questions if it did not otherwise apply.

43    However, for the following reasons, a claim for penalty privilege is not a reasonable excuse within s 597(7)(d) of the Corporations Act.

44    First, it would defeat one of the purposes of the statutory scheme if a recipient of a summons to produce books could claim penalty privilege as a reasonable excuse for not complying with it. To find otherwise would be to bestow upon penalty privilege an importance that “contradicts or diminishes the operation of the Act and the achievement of its purposes”.

45    Section 596B(1)(b)(i) of the Corporations Act refers expressly to the Court issuing a summons (which can include a summons to produce books) if satisfied, amongst other things, that the person to whom the summons will be issued “has been, or may have been, guilty of misconduct in relation to the corporation”.

46    That a summons can be issued in such circumstances, including for the production of books, is clearly inconsistent with the maintenance of the penalty privilege because a person who has been or may have been guilty of misconduct may be exposed to a penalty in connection with that misconduct.

47    Further, that a summons to produce books can be issued to such a person is consistent with the purposes of the statutory scheme, one purpose being to enable a liquidator to investigate whether there has been misconduct in relation to the corporation. Such a purpose has been recognised in a number of authorities concerning the construction of legislation governing examinations by liquidators.

48    For example, the decision of Mortimer v Brown (1969–1970) 122 CLR 493 concerned an examination by liquidators under s 250 of The Companies Acts, 1961 to 1964 (Qld). In that case, the issue was whether an examinee could claim privilege against self-incrimination. At page 496, Kitto J (with whom Barwick CJ agreed) stated that:

…the evident purpose of [s 250], primarily even if not wholly, is to enable a suggestion of fraud or concealment of a material fact to be fully investigated by means of the public examination of certain classes of persons. Such a question in its nature must frequently involve consideration of evidence tending to incriminate individuals. To read down the wide terms of the section so as to allow a danger of self-incrimination as a valid ground for refusing to answer a question would render the provision relatively valueless in the very cases which call most loudly for investigation…

49    In Hamilton v Oades (1988–1989) 166 CLR 486, the High Court was concerned with s 541 of the Companies (New South Wales) Code (which was the predecessor provision to s 596B of the Corporations Act). At pp 496–497, Mason CJ observed that:

There are the two important public purposes that the examination is designed to serve. One is to enable the liquidator to gather information which will assist him in the winding up; that involves protecting the interests of creditors. The other is to enable evidence and information to be obtained to support the bringing of criminal charges in connexion with the company’s affairs….The examination is designed to elicit, among other things, evidence and information relating to the question whether the witness “has been, or may have been, guilty of fraud, negligence, default, breach of trust, breach of duty or other misconduct in relation to” the corporation.

(citations omitted.)

50    In Re Compass Airlines Pty Ltd (1992) 35 FCR 447, the Full Court considered whether legal professional privilege had been abrogated by s 597 of the Corporations Law (as it then was). At page 453, Lockhart J (with whom Beaumont and Gummow JJ agreed) stated that:

Like its predecessors, s 597 plays an important role in the administration of companies in liquidation, other administrations in insolvency and “external administrations” generally: see Ch 5 of the Corporations Law. Section 597 and its precursors have always related to the examination of persons before a court and the ancillary requirement of production of documents following the making of a court order for the attendance of the examinees. These provisions are to be contrasted with provisions which relate to the investigation of the affairs of companies (whether or not in the course of being wound up) by government regulatory authorities and the making of reports to those authorities. Provisions of this kind reflect the perceptions of legislatures from time to time that the public interest requires that something be done to guard against fraudulent conduct in the promotion and management of companies…

51    Finally, it was observed by Kiefel CJ and Keane J in Walton v ACN 004 410 833 (formerly Arrium Ltd (in liq)) (2022) 399 ALR 1; [2022] HCA 3 at [78]:

[T]he examination powers are extraordinary, as Chitty J described them in [Re Imperial Continental Water Corporation (1886) 33 Ch D 314]. In Hamilton v Oades, Mason CJ made a similar observation. As his Honour said, they are a form of discovery not available to an ordinary litigant. They are special powers which are intended for wider, public purposes. It needs also to be borne in mind that they involve the denial of certain privileges, including that against self-incrimination, in order that their public purpose can be achieved. The fact that the examination proposed by the appellants might possibly reveal wrongful conduct which may be the subject of charges or other regulatory action does not convert their purpose in seeking the examination to the second purpose stated in Hamilton v Oades.

(citations omitted.)

52    Indeed, the purposes of the statutory scheme would be stultified if penalty privilege could be claimed by the recipient of the summons in relation to the production of the books identified in the summons. That is particularly where the summons has been issued after the Court has been satisfied of the matters in s 596B(1)(b)(i).

53    Second, the existence of s 597(12) is either a neutral factor or does not support Mr Lyndon’s posited construction. That is because, for the reasons given already, s 597(12) recognises expressly what is implicit, that is, that penalty privilege has been abrogated (specifically in relation to answers to questions). Section 597(12A) then provides a code for extending qualified protection to examinees when answering a question at an examination, but not in relation to the production of books.

54    This conclusion is aligned with the approaches taken in Smith v Papamihail (1998) 88 FCR 80 and Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1984–1985) 156 CLR 385, which involved the construction of analogous legislation.

55    Smith concerned the ability of an examinee to assert the privilege against self-incrimination at examinations conducted under the Australian Securities Commission Law (comprising the Australian Securities Commission Act 1989 (Cth) as in force at the time) (ASC Law).

56    Section 19 of the ASC Law enabled a notice to be served, providing that:

(1)    This section applies where the Commission, on reasonable grounds, suspects or believes that a person can give information relevant to a matter that it is investigating, or is to investigate, under Division 1.

(2)    The Commission may, by written notice in the prescribed form given to the person, require the person:

(a)    to give to the Commission all reasonable assistance in connection with the investigation; and

(b)    to appear before a specified member or staff member for examination on oath and to answer questions.

(3)    A notice given under subsection (2) shall:

(a)    state the general nature of the matter referred to in subsection (1); and

(b)    set out the effect of subsection 23(1) and section 68.

57    Section 6 of the ASC Law defined “giving information” as including a reference to:

(a)    explaining or stating a matter;

(b)    identifying a person, matter or thing;

(c)    disclosing information; or

(d)    answering a question.

58    Relevantly, s 63(1) of the ASC Law provided that a person shall not, without reasonable excuse, fail to comply with a requirement made under s 19. Section 68 then dealt with the privilege against self-incrimination as follows:

(1)     For the purposes of this Part, of Division 3 of Part 10, and of Division 2 of Part 11, it is not a reasonable excuse for a person to refuse or fail:

(a)    to give information;

(b)    to sign a record; or

(c)    to produce a book;

in accordance with a requirement made of the person, that the information, signing the record or production of the book, as the case may be, might tend to incriminate the person or make the person liable to a penalty.

(2)     Subsection (3) applies where:

(a)    before:

(i)    making an oral statement giving information;

(ii)    signing a record; or

pursuant to a requirement made under this Part, Division 3 of Part 10, or Division 2 of Part 11, or under a corresponding law of another jurisdiction, a person (other than a body corporate) claims that the statement, or signing the record, as the case may be, might in fact tend to incriminate the person or make the person liable to a penalty; and

(b)    the statement, or signing the record, as the case may be, might in fact tend to incriminate the person or make the person so liable.

(3)    The statement, or the fact that the person has signed the record, as the case may be, is not admissible in evidence against the person in:

(a)    a criminal proceeding; or

(b)    a proceeding for the imposition of a penalty;

other than a proceeding in respect of:

(c)    in the case of the making of a statement – the falsity of the statement; or

(d)    in the case of the signing of a record – the falsity of any statement contained in the record.

(4)     Subsections (2) and (3), as in force after the commencement of section 4 of the Corporations Legislation (Evidence) Amendment Act 1992, apply in relation to a requirement made, as mentioned in paragraph (2)(a) of this section as so in force, at or after that commencement.

59    In construing the ASC Law, Carr J reasoned at page 95:

In my view, the situation is that, on the basis of authorities such as Pyneboard, Controlled Consultants, [Australian Securities Commission v Ampolex Ltd (1995) 38 NSWLR 504], Hamilton v Oades (1989) 166 CLR 486 and the like, s 19(2) impliedly abrogates any privilege against self-incrimination, subject to s 68. Section 68(1) and (2) simply prevents self-incrimination from being “a reasonable excuse” for refusing or failing to do any of the three categories of things mentioned in that subsection, that is, to give information, sign a record or produce a book. The section then goes on to provide a means whereby, in respect of two of those categories (oral statements giving information and signing a record), the statement or the fact that the person had signed the record would not be admissible in evidence in certain proceedings. It is quite true, as the applicant pointed out, that when construing a statute it is presumed that the legislature knows the existing state of the law. But, in my view, s 68 can be seen as recognising expressly what is, on the case law, implicit, that is, absence of privilege and then as providing a code for extending some protection to persons making oral statements, giving information or signing a record. Section 68 singles out some aspects of a person’s duties under the ASIC Law and confirms the unavailability of privilege in those cases, but goes on to carve out some limited areas of exception. In my view, given the statutory policy of the ASIC Law as a whole, it would be a misuse of the “expressio unius” guideline of statutory interpretation to read into the enactment of s 68 an intention to remove the implication which would arise at common law from s 19 that there was to be no privilege from self-incrimination in respect of all of the matters which might fall within s 19(2). As I see it, the statutory scheme works the other way and provides what might be called a code for extending some statutory protection in the limited circumstances which I have just described.

60    The construction by Carr J followed the approach taken in Controlled Consultants, in which the High Court considered the provisions of the Security Industry (Victoria) Code (the Code). Those provisions empowered the National Companies and Securities Commission to give certain directions. Specifically, s 8(1) provided for directions, requiring the production of books, to be given to certain people. Section 8(6)(a)(ii) provided that the person producing the books or “any person who was party to the compilation of the books” could be required to “make a statement providing any explanation that the person concerned is able to provide as to any matter relating to the compilation of the books or as to any matter to which the books relate”.

61    Section 10(1) made it an offence “without reasonable excuse” to fail or refuse to comply with, inter alia, the requirement to produce books or answer questions. Section 10(5) then provided:

A person is not excused from making a statement providing an explanation as to any matter relating to the compilation of any books or as to any matter to which any books relate pursuant to a requirement made of him in accordance with section 8 or 9 on the ground that the statement might tend to incriminate him but, where the person claims before making a statement that the statement might tend to incriminate him, the statement is not admissible in evidence against him in criminal proceedings other than proceedings under this section.

62    Like Div 1 of Pt 5.9 of the Corporations Act, there was a requirement both to produce documents (books), and also to provide some testamentary evidence (by way of a “statement”). A failure to comply with either of these obligations was an offence if there was no “reasonable excuse”, but there was express provision which was similar in its terms to s 597(12) and s 597(12A).

63    The question before the High Court was whether the appellant was entitled to decline to produce books on the basis of the privilege against self-incrimination. The majority (comprised of Gibbs CJ, Mason and Dawson JJ) decided at page 391 that the statute intended to abrogate the privilege against self-incrimination because s 8(1A) made it clear that the intention was to allow the production of books for the purpose of establishing an offence under the Code, and that this was clearly inconsistent with the maintenance of the privilege.

64    In relation to “reasonable excuse”, the majority stated at pp 391–392:

There is no explanation of what constitutes a reasonable excuse, save that s. 10(5) says that a person is not excused from providing an explanation of any books on the ground that the provision of the explanation might tend to incriminate him. There may be thought to be some ground for saying that s. 10(5) appears by way of exception and for that reason a reasonable excuse under s. 10(1) must include the privilege against self-incrimination. However, what may constitute a reasonable excuse obviously extends beyond matters which give rise to the privilege and there are the strongest indications in other provisions of the Code that the privilege was not intended to constitute a reasonable excuse for failing to produce books pursuant to a requirement to do so. Section 10(5) is, we think, to be explained by the fact that the legislature regarded quite differently an explanation relating to books on the one hand and their production on the other.

Section 8(1) itself deals separately with a requirement that books be produced and a requirement that an explanation be given relating to their compilation. And there is a significant distinction, because an explanation may be testimonial in character and the books themselves are in the nature of real evidence which speaks for itself, although the privilege would, as we have said, extend to the production of the books unless it is excluded…

So far as the actual production of books is concerned, it really goes without saying that a requirement that they be produced in relation to a contravention or failure to comply with a provision of the Code, which is what the Code authorizes, is quite inconsistent with the maintenance of the privilege against self-incrimination in relation to their production and, that being so, the absence of any provision dealing with the privilege, such as is to be found in s. 10(5), is a clear indication of an intention to exclude the privilege completely.

For these reasons, the defence of reasonable excuse provided by s. 10(1) does not, in our view, include the privilege against self-incrimination so far as production of the books is concerned and is directed to other matters, such as the physical or practical difficulties which may be involved in their production.

65    An additional argument raised by Mr Lyndon in support of his construction related to s 1316A of the Corporations Act, which relevantly provides that, in a Corporations Act criminal proceeding, a body corporate is not entitled to refuse or fail to comply with a requirement to, amongst other things, produce a book or any other thing on the ground that the production of the book or other thing might tend to make the body liable to a penalty. It was submitted by Mr Lyndon that, as Parliament had turned its mind to the issue of the express abrogation of the penalty privilege in connection with the production of books when it drafted s 1316A, but elected not to include similar wording in s 597(12), this had the consequence that penalty privilege had not been impliedly abrogated in connection with the production of books in response to a s 596B summons.

66    However, s 1316A is contained in a separate and wholly unrelated part of the Corporations Act which will necessarily have other objects and purposes to the statutory scheme concerning examinations by liquidators under Div 1 of Pt 5.9 of that Act.

67    For this reason, the fact that Parliament elected to include more expansive wording in s 1316A, which happens to capture the production of books in proceedings to which that section relates, does not assist in the interpretation of the legislation in question in this case.

Conclusion

68    Section 597(7)(d) of the Corporations Act impliedly abrogates the penalty privilege in connection with the production of books pursuant to a s 596B summons.

69    It follows that Mr Lyndon cannot raise penalty privilege in relation to the production of books in response to the s 596B summons served upon him.

Associate:

Dated:    8 August 2023