Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs [1985] HCA 6; (1985) 156 CLR 385 (14 February 1985)

HIGH COURT OF AUSTRALIA

CONTROLLED CONSULTANTS PTY. LTD. v. COMMISSIONER FOR CORPORATE AFFAIRS [1985] HCA 6; (1985) 156 CLR 385

Companies

High Court of Australia
Gibbs C.J.(1), Mason(1), Murphy(2), Brennan(3) and Dawson(1) JJ.

CATCHWORDS

Companies - Investigation - National Companies and Securities Commission - Powers - Power to require production of company's documents - Privilege against self-incrimination - Whether available to company - Whether excluded by statute - Reasonable excuse for failure to produce - Securities Industry (Victoria) Code, ss. 8, 10, 11.

HEARING

1984, June 6; 1985, February 14. 14:2:1985
APPEAL from the Supreme Court of Victoria.

DECISION

GIBBS C.J., MASON and DAWSON JJ. The appellant, Controlled Consultants Pty. Ltd., was required by a notice in writing dated 6 August 1982 to produce to an authorized person all of its books, records, documents and any other working papers relating to its dealings in securities in the "Atherton Avocado Project". The notice was given under s.8 of the Securities Industry (Victoria) Code ("the Code") which empowers the National Companies and Securities Commission ("the Commission"), or a person authorized by it under s.8(2), to give a direction to a person who, in the opinion of the Commission, has been a party to any dealings in securities, requiring the production of books relating to any such dealing. See s.8(1)(a)(va) and s.8(2). "Books" are defined in s.4(1) to include records and documents.

2. The appellant declined to produce any books and the respondent, the Commissioner for Corporate Affairs, as the delegate of the Commission, applied to the Supreme Court of Victoria for an order pursuant to s.149 of the Code, amended by s.28 of the Securities Industry Amendment Act (No.2) 1981 (Cth) and ss.4(2) and 6 of the Securities Industry (Application of Laws) Act 1981 (Vic.), requiring the appellant to produce them. The appellant claimed privilege against their production on the ground that they may have tended to incriminate it, but this claim was rejected by Crockett J. He made the order sought. An appeal against that order was dismissed by the Full Court (Starke and Marks JJ.; Murphy J. dissenting).

3. The validity of the notice was not contested before us. The sole point which the appellant sought to make was that it was entitled by its claim of privilege against self-incrimination to refuse production of the books. Upon the basis of Sorby v. The Commonwealth of Australia [1983] HCA 10; (1983) 57 ALJR 248; (1983) 46 ALR 237 it was submitted that the privilege was capable of application in non-judicial proceedings and that a statute should not be construed so as to exclude that privilege unless an intention to do so clearly appears. Sorby's Case is authority for both of those propositions, but it was contended by the respondent that the Code did evince an intention to exclude the privilege and that, in any event, the privilege applies only to natural persons and does not extend to corporate bodies. The latter submission can be put to one side for the purpose of considering the proper construction of the Code.

4. Section 8(1A) of the Code, so far as is relevant, provides that the powers of the Commission under s.8(1), or the powers of an authorized person under s.8(2), to make a requirement of a corporation or person shall not be exercised except for the purpose of the performance of a function or the exercise of a power by the Commission under the Code or where the requirement relates to a matter that constitutes or may constitute a contravention of, or failure to comply with, a provision of the Code. It was common ground that the apprehension, at least, of the respondent was that the appellant was carrying on the business of dealing in securities without being the holder of a licence as required by s.43 of the Code.

5. Section 8(1) of the Code provides for a direction requiring the production of books to be given not only to a person who, in the opinion of the Commission, has been a party to dealings in securities, but to other specified persons as well. It also extends beyond books relating to any dealing in securities to books of other types which are specified. It is sufficient, however, for the purposes of this case, to restrict the discussion of the operation of the section to a party to any dealings in securities and to books relating to any dealing in securities, although we have no reason to think that our conclusion would be any different in relation to any of the other persons or categories of books mentioned.

6. Section 8(6)(a)(ii) provides that where the Commission, or a person authorized by the Commission, requires the production of books and the books are produced by any person, the person to whom the books are produced:

"may require the other person, or any person who
was party to the compilation of the books, 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".
Commission or the authorized person may require the other person to state, to the best of his knowledge and belief, where the books may be found and to identify the person who, to the best of his knowledge and belief, last had custody of the books and to state, to the best of his knowledge and belief, where that last-mentioned person may be found.

7. Under s.9 power is given to a magistrate to issue a warrant to enter and search premises and to seize books the production of which has been required under s.8 and which have not been produced in compliance with that requirement. The person into whose possession any seized books are delivered may also require any person who was a party to the compilation of the books to make a statement providing any explanation that that person 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 (see s.9(4)).

8. Section 10(1) makes it an offence, without reasonable excuse, to refuse or fail to comply with a requirement made under s.8 or s.9. Section 10(5) provides:

"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."

9. Where a requirement is made under s.8 of a qualified legal practitioner in respect of a book and the book contains a privileged communication made by, or on behalf of, or to the legal practitioner in his capacity as a legal practitioner, under s.11(1) the legal practitioner is entitled to refuse to comply with the requirement unless:

"the person to whom or by or on behalf of whom the
communication was made or, if the person is a body
corporate that is under official management or is
in the course of being wound up, the official
manager or the liquidator, as the case may be,
agrees to the legal practitioner complying with the
requirement but, where the legal practitioner so
refuses to comply with a requirement, he shall
forthwith furnish, in writing, to the Commission or
authorized person -

(c) if he knows the name and address of the person
to whom or by or on behalf of whom the
communication was made that name and address
..."

10. As we have said, the Commission apprehended that the appellant was carrying on the business of dealing in securities without a dealer's licence as required by the Code. The requirement that the appellant produce its books was in this case, therefore, a requirement relating to a contravention of, or failure to comply with, a provision of the Code and fell within s.8(1A) as a proper exercise of the power given by s.8(1) to require the production of books. That power must, however, also be seen in the general context of the Code.

11. Section 71 of the Code requires a dealer in securities to keep records which contain details of his dealings. It is an offence of itself to fail to keep such records, which fall within the definition of "books" in s.4(1). Under Part V of the Code there are provisions regulating the conduct of the securities business which create a number of offences in the detection and proof of which access to a dealer's books would be of importance, if not essential. It is not, we think, overstating the position to say that the power of the Commission under s.8 to require the production of books is central to the administration of the Code. Further indication of this is given by the requirement of s.136 that records in relation to a business be preserved, whether or not the business ceases, and by the creation of the offences of concealing, destroying, mutilating or altering a book under s.137 and of falsification of records under s.138.

12. Section 8(1A) of the Code makes explicit the intention that the power to require the production of books may be exercised for the purpose of establishing an offence under the Code, that is to say, it includes the purpose of incriminating the person required to produce the books. That is clearly inconsistent with the privilege, which, apart from the statute, would extend protection against the production of books which may of themselves provide evidence of an incriminating character or may lead to the discovery of other real evidence of such a character. See Sorby's Case, at p.260 of A.L.J.R.; p.259 of A.L.R. Section 8 of the Code does not in as many words abrogate the privilege (except perhaps to the extent that s.8(6)(b) empowers the Commission to require a person to state where books may be found or who last had them), but it is hardly possible to read the section as not extending to books in respect of which the privilege may otherwise be properly claimed.

13. If the Code provides for preservation of the privilege against self-incrimination, that provision must be found in s.10(1) which, in effect, provides that a person will not commit an offence if he does not comply with a requirement under s.8(1) provided he has a reasonable excuse. 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.

14. Section 8 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. This distinction is, as we shall point out in a moment, of importance in relation to s.9 which gives a power to search for and seize books under warrant. It should also be noticed that the requirement to provide an explanation may be extended beyond the person who is required to produce the books to any person who was a party to their compilation. This is another reason why the privilege is expressly preserved in part in relation to explanatory statements and not otherwise.

15. 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.

16. 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.

17. But apart from these considerations, there are, we think, more general indications which make it clear that a requirement under s.8(1) was not intended to be subject to the privilege against self-incrimination.

18. The provision of a power to search for and seize books under warrant is, we think, significant. That provision cannot be read down by reference to the privilege against self-incrimination for, whilst the privilege, apart from any statutory exclusion, would protect a person against a requirement that he produce or identify incriminating documents or reveal their whereabouts or explain their contents in an incriminating fashion, it has no application to the seizure of documents or their use for the purpose of incrimination provided they can be proved by some independent means. The privilege is not a privilege against incrimination; it is a privilege against self-incrimination. See Andresen v. State of Maryland [1976] USSC 154; [1976] USSC 154; (1976) 427 US 463 (49 Law Ed 2d 627). In relation to documents, the privilege against self-incrimination may be contrasted with legal professional privilege, which, in the absence of clear statutory authority to the contrary, affords protection against the seizure of documents which fall within the ambit of the privilege. This is because legal professional privilege exists as a safeguard against the compulsory disclosure of communications between a legal adviser and his client and extends to documents if those communications are in a documentary form. See Baker v. Campbell [1983] HCA 39; (1983) 57 ALJR 749; (1983) 49 ALR 385.

19. With these considerations in mind, it is possible to discern a clear pattern in the provisions of the Code relating to the production of books. A direction may be given requiring the production of books or, failing their production, requiring a statement revealing their whereabouts. There is no exception in relation to books which may tend to incriminate the person required to produce them or the person required to make the statement. On the contrary, a requirement may be made in either case in relation to a matter that constitutes or may constitute a contravention of the Code. A person may, under s.8 or s.9, be required to provide an explanation of books but if the explanation might tend to incriminate him it is not, under s.10(5), admissible against him in criminal proceedings other than proceedings under s.10 itself. Legal professional privilege is preserved by s.11, both in relation to the production of books and in relation to search and seizure.

20. It is hardly to be supposed that the legislature intended that a person should be entitled to refuse to comply with a requirement to produce books which may tend to incriminate him whilst he is at the same time required to disclose where they may be found so that they may be seized. Nor is it to be supposed that it was intended that a person should have an absolute right to refuse production of books of an incriminating character but nevertheless be required to provide, albeit with some protection, an incriminating explanation of the books if they are produced. And the express preservation of legal professional privilege in the absence of any similar provision in relation to the privilege against self-incrimination, whilst not of itself conclusive, is an additional indication of a legislative intent to exclude the latter privilege.

21. In Pyneboard Pty. Ltd. v. Trade Practices Commission [1983] HCA 9; (1983) 57 ALJR 236, at p 241; [1983] HCA 9; (1983) 45 ALR 609, at p 618, the majority said of a comparable provision:

"The privilege will be impliedly excluded if the
obligation to answer, provide information or
produce documents is expressed in general terms and
it appears from the character and purpose of the
provision that the obligation was not intended to
be subject to any qualification. This is so when
the object of imposing the obligation is to ensure
the full investigation in the public interest of
matters involving the possible commission of
offences which lie peculiarly within the knowledge
of persons who cannot reasonably be expected to
make their knowledge available otherwise than under
a statutory obligation. In such cases it will be
so, notwithstanding that the answers given may be
used in subsequent legal proceedings."

22. After referring to Mortimer v. Brown [1970] HCA 4; (1970) 122 CLR 493, the majority went on to point out that the provision then under consideration, namely, s.155 of the Trade Practices Act 1974 (Cth), had the apparent purpose of enabling the Trade Practices Commission to ascertain whether any contravention of the Act has taken place and to provide evidence in any prosecution for a contravention of the Act. That purpose would be defeated, it was said, if the privilege was available and, as in Mortimer's Case, the comment might be made that the provision was valueless if the obligation to comply were subject to privilege. Each of those comments is apposite in this case.

23. For these reasons it is our view that the power under the Code to require the production of books is not subject to the privilege against self-incrimination. This conclusion makes it unnecessary to consider the respondent's alternative submission that the privilege does not extend to corporate bodies. The competing approaches are referred to in Pyneboard Pty. Ltd. v. Trade Practices Commission, at p 238 of ALJR; pp 612-613 of ALR, but here, as there, the matter may be left for decision in a later case. We would dismiss the appeal.

MURPHY J. The privilege against self-incrimination is a human right. It is "a safeguard of conscience and human dignity and freedom of expression" as well as "protection against conviction and prosecution" (Justices Black and Douglas, Ullman v. United States [1956] USSC 31; 350 US 422 at 445 (1956)). It "'registers an important advance in the development of our liberty - one of the great landmarks in man's struggle to make himself civilized'. . . . It reflects many of our fundamental values and most noble aspirations. . ." (Murphy v. Waterfront Commission of New York Harbor [1964] USSC 136; [1964] USSC 136; 378 US 52 at 55 (1964)). It is enshrined in the International Bill of Human Rights (see The International Covenant on Civil and Political Rights, Part III, Article 14(3)(g)). The privilege is peculiarly a human right and thus not available to corporations or unincorporated associations or political entities. In this respect it is distinguishable from other rights such as that of the right of an affected party to be heard in judicial and other proceedings, which extend to artificial persons (for example, corporations and political entities like the Commonwealth and the States).

2. I prefer to decide this case on the basis that only natural persons on their own behalf can claim the privilege (see Hale v. Henkel [1906] USSC 54; 201 US 43 at 74 (1906); United States v. White [1944] USSC 109; 322 US 694 at 698-699 (1944); see generally Antieau, Modern Constitutional Law, volume 1, The Individual and the Government, pp 182-185). There is no satisfactory rationale for extending the privilege beyond humans. English cases which extend the privilege to corporations (Triplex Safety Glass Co. Ltd v. Lancegaye Safety Glass (1934) Ltd (1932) 2 All ER 613; Rio Tinto Zinc Corporation v. Westinghouse Electric Corporation (1978) AC 547) have not advanced any rationale for doing so.

3. I am troubled that what was said by the majority in Pyneboard Pty Ltd v. Trade Practices Commission [1983] HCA 9; (1983) 57 ALJR 236 at 241 , [1983] HCA 9; (1983) 45 ALR 609 at 618 about exclusion of the privilege by implication will tend to erode the principle that the privilege will not be excluded except by unmistakeable language - express words or necessary implication.

4. The appeal should be dismissed.

BRENNAN J. In Pyneboard Pty.Ltd. v. Trade Practices Commission [1983] HCA 9; (1983) 57 ALJR 236 (45 ALR 609) and in Sorby v. The Commonwealth [1983] HCA 10; (1983) 57 ALJR 248 (46 ALR 237) I expressed the opinion that the scope of the privilege against self-incrimination is limited to judicial proceedings governing the obligations to give discovery and to testify in such proceedings. My opinion that the privilege is not an implied exception to a statutory obligation to give information or to produce documents to an investigator in non-judicial proceedings was contrary to the opinion of the majority to which I now defer.

2. The application of the privilege in investigations carried out under statutory powers must now be taken to depend upon legislative intention as derived from the statute, the privilege being held to apply unless the statute impliedly excludes it. The nature of the statutory power, the prescribed manner of its exercise and the purpose which its exercise is designed to achieve are the available, if uncertain, guides as to legislative intention in the absence of express provision.

3. The inability of an investigator conclusively to disallow a claim of privilege and the impairment (at least to some extent) of his ability to insist on a response to his investigation if the privilege is available are two factors that weigh in favour of excluding the privilege, though their weight is not always sufficient to exclude it. In this case, the majority judgment points to the factors that tend to exclude the privilege. It would be repetitious to canvass them. I agree that the intention to be imputed to the legislature is that privilege against self-incrimination does not qualify the obligation imposed by s.10(1) of the Securities Industry (Victoria) Code to comply with a requirement made under s.8 or s.9 of that Code. I agree also that the "reasonable excuse" for which s.10(1) provides does not comprehend a claim of privilege against self-incrimination. Section 10(1) is to be distinguished from s.10(4) of the Commissions of Inquiry Act 1950 (Q.) considered in Sorby, where "reasonable excuse" was so defined as to import the privilege.

4. It is unnecessary to consider the argument that the privilege does not apply to corporations.

5. I agree that the appeal should be dismissed.

ORDER

Appeal dismissed with costs.