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Federal Court of Australia |
Last Updated: 8 January 2002
Microsoft Corporation v CX Computer Pty Ltd [2002] FCA 3
PRACTICE AND PROCEDURE - privilege against self-incrimination - proceeding for infringement of copyright and of registered trade mark - facts pleaded also constitute offences - Australian Federal Police seized documents in execution of search warrants in relation to suspected commission of the offences - applicants seek discovery by corporate respondent and by individual who is its only director and secretary - applicants serve notice to produce on the company and the individual calling for production of any record of the documents seized by the Australian Federal Police - whether individual and company excused from giving discovery and complying with the notice to produce on ground that giving discovery and complying with notice would involve individual incriminating himself
Copyright Act 1968 (Cth) ss 38, 132
Trade Marks Act 1995 (Cth) ss 120, 148
Environment Protection Authority v Caltex Refining Co Pty Ltd [1993] HCA 74; (1993) 178 CLR 477 cited
Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 cited
Rochfort v Trade Practices Commission [1982] HCA 66; (1982) 153 CLR 134 followed
Bond v Tuohy (1995) 56 FCR 92 followed
Garvin v Domus Publishing Ltd [1989] Ch 335 followed
CCOM Pty Ltd v Jiejing Pty Ltd (1992) 37 FCR 1 cited
Reid v Howard [1995] HCA 40; (1995) 184 CLR 1 distinguished
Australian Competition & Consumer Commission v J McPhee & Son (Australia) Pty Ltd (No 2) (1997) 77 FCR 217 distinguished
Sorby v Commonwealth [1983] HCA 10; (1983) 152 CLR 281 cited
Lamb v Munster (1882) 10 QBD 110 cited
Re Intercontinental Development Corporation Pty Ltd (1975) 1 ACLR 253 cited
Authors Workshop v Bileru Pty Ltd (1989) 88 ALR 211 cited
Re New World Alliance Pty Ltd (Receiver and Manager Appointed); Sycotex Pty Ltd v Baseler (1993) 47 FCR 90 discussed
Sociedade Nacional de Combustiveis de Angola UEE v Lundqvist [1991] 2 QB 310 followed
Marcel v Commissioner of Police of the Metropolis [1992] Ch 225 followed
BTR Engineering (Australia) Ltd v Patterson (1990) 20 NSWLR 724 followed
Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat & Livestock Corporation (1979) 42 FLR 204 followed
EL Bell Packaging Pty Ltd v Allied Seafoods Ltd (1990) 8 ACLC 1135 not followed
R v Deputy Commissioner of Taxation; Ex parte Briggs (1987) 13 FCR 389 not followed
Pyneboard Pty Ltd v Trade Practices Commission [1983] HCA 9; (1983) 152 CLR 328 referred to
Adsteam Building Industries Pty Ltd v Queensland Cement & Lime Co Ltd (No.4) [1985] 1 Qd R 127 discussed
Medina v Copenhagen Handelsbank International SA (Spender J, FCA, 10 March 1989, unreported) discussed
Southern Star Group Pty Ltd T/A KGC Magnetic Tapes v Taylor (1991) 4 ACSR 133 discussed
Hince v Caratti (French J, FCA, 25 February 1994, unreported) discussed
Trade Practices Commission v IMB Group Pty Ltd (1994) ATPR 41-348 discussed
Roland Children's Services v Dodd (Underwood J, Tas SC, 26 September 1997, unreported) discussed
MICROSOFT CORPORATION & ORS v CX COMPUTER PTY LTD & ORS
N 1015 OF 2000
LINDGREN J
8 JANUARY 2002
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
1. The motion of the fifth and sixth respondents to set aside a notice to produce brought by notice of motion filed on 7 November 2001 be dismissed.
2. The fifth and sixth respondents pay the applicants' costs of that motion.
3. The fifth and sixth respondents each file and serve by 14 February 2002 a verified list of documents within the categories notified in a letter dated 8 August 2001 from Mallesons Stephen Jaques to Gray & Perkins.
4. Each of the fifth and sixth respondents have liberty to apply on 24 hours' notice for relief in relation to the description of any particular document or documents in its or his verified list of documents.
5. The fifth and sixth respondents pay the applicants' costs of the applicants' motion brought by notice of motion filed on 24 October 2001.
6. The proceeding be stood over to 25 February 2002 at 9.30 am for further directions.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
JUDGE: |
LINDGREN J |
DATE: |
8 JANUARY 2002 |
PLACE: |
SYDNEY |
INTRODUCTION
1 This proceeding has been resolved as between the applicants and the first, second, third and fourth respondents. By motion brought by notice of motion filed on 24 October 2001, the applicants seek an order that the remaining respondents, the fifth and sixth respondents ("Natcomp" and "Grassia" respectively), file and serve verified lists of documents within each of the categories notified by the applicants in a letter dated 8 August 2001 from their solicitors to the solicitors for Natcomp and Grassia, a copy of which is annexed to the notice of motion. Natcomp and Grassia have not suggested that the categories are inappropriate or that discovery should not be ordered on any ground other than the privilege against self-incrimination. Therefore, I proceed on the basis that if that ground fails, it will be appropriate that discovery be ordered by reference to the categories mentioned.
2 By a notice to produce dated 26 October 2001, the applicants required Natcomp and Grassia to produce:
"All documents (including any list or schedule) recording or identifying documents or material taken from any of the following premises by representatives of the Australian Federal Police ["AFP"] on 24 January 2001 which fall within the categories of documents for discovery [there followed a list of premises at which Natcomp carries on business]."
3 By a notice of motion of their own, Natcomp and Grassia seek an order setting aside the notice to produce, or, in the alternative, an order that they not be required to produce documents the subject of the notice.
4 Accordingly, before the Court are the applicants' motion for discovery and the motion of Natcomp and Grassia for a setting aside of the applicants' notice to produce.
BACKGROUND
General
5 By their second further amended statement of claim, the applicants plead causes of action against Natcomp and Grassia of infringement of registered trade marks, infringement of copyright and contravention of certain provisions of the Trade Practices Act 1974 (Cth) ("the TP Act"). I am concerned here only with the claims of trade mark and copyright infringement.
6 Senior counsel for Natcomp and Grassia has read affidavits of Stephen Michael Polczynski and Ian Ible. Mr Polczynski is the solicitor for Natcomp and Grassia. He deposes that Grassia is the sole director and secretary of Natcomp. A historical company extract as at 29 August 2001 annexed to Mr Polczynski's affidavit establishes that Grassia has been the sole director and secretary of Natcomp since 19 May 1997. As appears later, the events with which this proceeding is concerned commenced in August 1999. Mr Polczynski deposes that Grassia is the legal and beneficial owner of 9,999 fully paid ordinary shares of the 10,000 fully paid ordinary shares, which, he states, constitute Natcomp's capital. Mr Ible's affidavit is to the effect that he has been the holder of one fully paid ordinary share of $1.00 in the capital of Natcomp since about August 1989, and that he has, since that time, held that share on trust for Grassia. Mr Ible's affidavit does not depose to the circumstances from which the trust relationship is said to arise.
7 However, there are difficulties in accepting that the state of affairs is as described above. First, the historical company extract attributes the record of the holding of the one share by Mr Ible to the 1998 annual return of Natcomp - a time much later than 1989. However, this date still precedes the conduct of Natcomp and Grassia, described later, on which the applicants rely, and so no difficulty appears to arise from this discrepancy between Mr Ible's affidavit testimony and the official record. More importantly, however, the historical company extract is inconsistent with Mr Polczynski's affidavit testimony that Grassia is the legal and beneficial owner of the other 9,999 shares. It shows that Natcomp's capital comprises 10,000 fully paid shares of $1.00 each, as Mr Polczynski deposes, but that Gaetano Grassia holds 9,900 of those shares, that Grassia himself holds only 99 of them and that Mr Ible holds the remaining share. It also shows that both Gaetano Grassia and Grassia reside at 12 Bay Road, Russell Lea. Yet Mr Polczynski deposes that Gaetano Grassia is Grassia's father and lives next door at 14 Bay Road, Russell Lea (Mr Polczynski's affidavit states, as noted below, that the AFP executed search warrants at both addresses). There is no affidavit by Grassia's father, Gaetano Grassia.
8 I proceed on the footing that at all material times Grassia was the sole director and secretary of Natcomp, and that of Natcomp's total capital of 10,000 fully paid shares of $1.00 each, Gaetano Grassia was the legal and beneficial owner of 9,900 shares, Grassia was the legal owner of 99 shares and beneficial owner of 100 shares, and Mr Ible was the legal owner of one share which he held on trust for Grassia.
9 Both Natcomp and Grassia resist discovery and seek to set aside the notice to produce on the ground that the giving of discovery and compliance with the notice to produce would involve self-incrimination in respect of Grassia. At the heart of the case is the contention that the bases of civil liability for infringement of a registered trade mark and of copyright are also made punishable offences by s 132 of the Copyright Act 1968 (Cth) ("the Copyright Act") and by s 148 of the Trade Marks Act 1995 (Cth) ("the TM Act"), respectively, so that, according to Natcomp and Grassia, the giving of discovery and compliance with the notice to produce would give rise to self-incrimination in respect of Grassia. I will examine this contention in due course.
10 Mr Polczynski's affidavit shows that on 24 January 2001 members of the AFP executed search warrants at Grassia's residential address at 12 Bay Road, Russell Lea, at his parents' residential address next door at 14 Bay Road, Russell Lea and at one of the addresses at which Natcomp carried on business, namely, 15-17 Bibby Street, Chiswick. The affidavit also shows that on an unidentified date, the AFP also executed search warrants at two other offices of Natcomp, namely, at a unit at 1/16 Nile Street, Woolloongabba, a suburb of Brisbane, and at 37-39 Robinson Avenue, Belmont, a suburb of Perth.
11 The warrants were familiar "three-condition" warrants issued under s 3E of the Crimes Act 1914 (Cth) and were, in substance, in identical terms. They authorised seizure of evidential material:
(1) which fell within a wide range of classes of documents and things;
(2) which related to any one or more persons, companies and things, including Natcomp, Grassia and Gaetano Grassia; and
(3) as to which there were reasonable grounds for suspecting that they afforded evidence as to the commission of offences under s 148 of the TM Act or subs 132(1), (2) or (2A) of the Copyright Act by, inter alia, Grassia.
12 Counsel for the applicants submits that the seizure of documents upon execution of the search warrants has produced the result that the giving of discovery and the production of documents referred to in the notice to produce will not make either Natcomp or Grassia more likely to be prosecuted for offences under subs 132(1), (2) or (2A) of the Copyright Act or s 148 of the TM Act than is already the case.
Infringement of copyright
13 According to the second further amended statement of claim, the first applicant is the owner of copyright in certain computer programs ("Microsoft Programs"); the second applicant is a subsidiary of the first applicant and provides marketing and technical support on its behalf in Australia in relation to the Microsoft Programs; and the third applicant is also a subsidiary of the first applicant. With effect from 31 December 1997, the third applicant has been the first applicant's exclusive worldwide licensee with respect to the distribution of certain Microsoft Programs, including the Microsoft Windows 98 2nd Edition, to and by original equipment manufacturers or assemblers ("OEMs") of computer systems as integral elements of the computer systems that OEMs manufacture or assemble.
14 The claim of infringement of the copyright in the Microsoft Programs is based on s 38 of the Copyright Act which provides, relevantly, as follows:
"38(1) ...the copyright in a literary ... work is infringed by a person who, in Australia, and without the licence of the owner of the copyright:(a) sells, ... or by way of trade offers or exposes for sale ... an article; ...
(b) ...;
if the person knew, or ought reasonably to have known, that the making of the article constituted an infringement of the copyright or, in the case of an imported article, would, if the article had been made in Australia by the importer, have constituted such an infringement.
(2) For the purposes of the last preceding subsection, the distribution of any articles:
(a) for the purpose of trade; or
(b) for any other purpose to an extent that affects prejudicially the owner of the copyright concerned;
shall be taken to be the sale of those articles."
15 Section 14 of the Copyright Act provides as follows:
"(1) In this Act, unless the contrary intention appears:(a) a reference to the doing of an act in relation to a work or other subject-matter shall be read as including a reference to the doing of that act in relation to a substantial part of the work or other subject-matter ..."
16 According to par 12 of the second further amended statement of claim, Natcomp and Grassia:
(a) sold, or by way of trade, offered or exposed for sale; and
(b) distributed or supplied for the purpose of trade to an extent that prejudicially affected the applicants
copies of one or more of the Microsoft Programs or a substantial part of them in circumstances where:
(i) the making of the copies constituted an infringement of the first applicant's copyright in the Microsoft Programs; and
(ii) Natcomp and Grassia knew or ought reasonably to have known that it did so and thereby infringed the first applicant's copyright in the Microsoft Programs.
17 Particulars of par 12 indicate that the applicants rely on sales by Natcomp and Grassia on or about 6 August 1999 and 26 May, 1 June, 30 June, 26 July and 4 October 2000, of CD-ROMs on which a copy of the Microsoft Program Windows 98 2nd Edition had been reproduced.
18 In the alternative to having himself effected those sales, Grassia allegedly authorised, directed and procured them and so, according to the pleading, he is liable to the first applicant as a joint tortfeasor with Natcomp. It is also pleaded that the infringements by Natcomp and Grassia were flagrant (particulars of flagrancy are given). Finally, it is pleaded that the copies of the Microsoft Programs supplied were "infringing copies" and that the first applicant is entitled to the rights and remedies by way of conversion or detention to which it would have been entitled if it had been the owner of the infringing copies.
19 The notion of an "infringing copy" of a work is defined in s 10 of the Copyright Act to mean, relevantly, a reproduction of a work, being an article the making of which constituted an infringement of the copyright in the work, or, in the case of an article imported without the licence of the copyright owner, would have constituted an infringement if the article had been made in Australia by the importer.
20 Natcomp and Grassia submit that their conduct as pleaded in par 12 also constitutes an offence under s 132 of the Copyright Act. That section provides relevantly as follows:
"132(1) A person shall not, at a time when copyright subsists in a work:(a) ...;
(b) sell or ... by way of trade offer or expose for sale ..., an article;
(c) ...;
(d) ...;
if the person knows, or ought reasonably to know, the article to be an infringing copy of the work.
(2) A person shall not, at a time when copyright subsists in a work, distribute:
(a) for the purpose of trade; or
(b) for any other purpose to an extent that affects prejudicially the owner of the copyright;
an article that the person knows, or ought reasonably to know, to be an infringing copy of the work.
(2A) A person shall not, at a time when copyright subsists in a work, have in his or her possession an article for the purpose of:
(a) selling ..., or by way of trade offering or exposing for sale ..., the article;
(b) distributing the article for the purpose of trade, or for any other purpose to an extent that will affect prejudicially the owner of the copyright in the work; or
(c) ...;
if the person knows, or ought reasonably to know, the article to be an infringing copy of the work."
21 Subsection 132(6AB) of the Copyright Act provides that a person who contravenes, relevantly, subs (1), (2) or (2A) of s 132 is guilty of an offence punishable on summary conviction by a fine of not more than 550 penalty units and/or imprisonment for not more than five years.
22 The offence created by par 132(1)(b) corresponds with the form of infringement of copyright created by subs 38(1) and the offence created by subs 132(2) corresponds with the form of infringement of copyright created by subs 38(2), but the offence created by subs 132(2A) has no counterpart form of infringement of copyright within s 38.
Infringement of registered trade marks
23 I turn next to the applicants' case of infringement of registered trade marks.
24 The applicants' claim of trade mark infringement is based on subs 120(1) of the TM Act which is as follows:
"(1) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered."
25 According to the second further amended statement of claim, the first applicant is the proprietor in Australia of four trade marks ("Microsoft Trade Marks") registered in respect of four respective classes of goods ("Microsoft Products") and the second applicant is an authorised user of the Microsoft Trade Marks. The applicants allege in par 19 of the second further amended statement of claim that Natcomp and Grassia have, from time to time, in the course of carrying on business and without the licence of the first applicant, used one or more of the Microsoft Trade Marks or a mark that is substantially identical with or deceptively similar to one of the Microsoft Trade Marks, as a trade mark in the course of trade in Australia in relation to the Microsoft Products. The particulars of infringement refer to the same six sales by Natcomp and Grassia of CD ROMs on which a copy of the Microsoft Program known as Microsoft Windows 98 2nd Edition had been reproduced, as were referred to above as the occasions of copyright infringement. According to the particulars, those CD ROMs bore one or more of the Microsoft Trade Marks which had been applied to them without the licence of the first applicant.
26 The second further amended statement of claim pleads that by reason of the acts mentioned, Natcomp and Grassia infringed the Microsoft Trade Marks. It is further alleged that Grassia authorised, directed and procured those acts of Natcomp and is, in consequence, liable to the first applicant as a joint tortfeasor with Natcomp for the pleaded infringements.
27 Natcomp and Grassia submit that their conduct as pleaded in par 19 also constitutes offences under s 148 of the TM Act. That section provides, relevantly, as follows:
"A person is guilty of an offence if the person intentionally:(a) sells goods; or
(b) ...; or
(c) has goods in his or her possession for the purpose of trade ...; or
(d) ...
knowing that, or reckless of whether or not:
(e) ...; ...
(f) ...; ...
(g) a registered trade mark is falsely applied to them or in relation to them."
28 Section 149 of the Act provides that a person guilty of an offence under, relevantly, s 148 is punishable on conviction by a fine not exceeding 500 penalty units or imprisonment for a period not exceeding two years or by both a fine and a term of imprisonment.
29 Natcomp and Grassia submit that the form of conduct constituting the offence created by s 148 of the TM Act is one form of the infringement created by subs 120(1) of the TM Act and is the form of it that is pleaded in the second further amended statement of claim.
30 Counsel for the applicants did not dispute that the conduct relied on by her clients as both copyright and registered trade mark infringement, would also establish the commission of offences by Natcomp and Grassia under subss 132(1) and (2) of the Copyright Act and s 148 of the TM Act.
REASONING
General
31 Section 187 of the Evidence Act 1995 (Cth) provides that that section applies if, inter alia, in a proceeding in a federal court, a body corporate is required to produce a document or do any other act whatever. The substantive provision of s 187 is, relevantly, to the effect that the body corporate is not entitled to refuse or fail to comply with the requirement on the ground that producing the document or doing the act might tend to incriminate the body corporate or make the body corporate liable to a penalty. This provision reflects the decisions of the High Court in Environment Protection Authority v Caltex Refining Co Pty Ltd [1993] HCA 74; (1993) 178 CLR 477 ("Caltex") and a Full Court of this Court in Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 ("TPC v Abbco"). The present case is concerned with self-incrimination, not self-exposure to a civil penalty.
32 One person (such as Natcomp) cannot assert the privilege against self-incrimination on the ground that the giving of discovery or compliance with a notice to produce tends to incriminate another person (such as Grassia): Rochfort v Trade Practices Commission [1982] HCA 66; (1982) 153 CLR 134 at 145 per Mason J (with whom Wilson J agreed), 150 per Murphy J; Caltex at 549 per McHugh J; TPC v Abbco at 116 per Burchett J; Bond v Tuohy (1995) 56 FCR 92 (Ryan J) at 99-100. Nor can Grassia complain about the giving of discovery or responding to the notice to produce by Natcomp on the ground that he might tend to be incriminated as a result, because this is not self-incrimination: cf Caltex at 490-493 per Mason CJ and Toohey J, 548-549 per McHugh J; Garvin v Domus Publishing Ltd [1989] Ch 335 (Walton J) at 348. Accordingly, the submission here, in so far as it relates to Natcomp as a party, must be, and is, that the giving of discovery and compliance with the notice to produce by Natcomp will require that Grassia tend to incriminate himself.
33 Accordingly, the questions for decision are whether Grassia will tend to incriminate himself if he or Natcomp is required to give discovery or to comply with the notice to produce.
34 Subrule 9(1) of O 15 of the Federal Court Rules provides that, subject to subr (2), an affidavit verifying a list of documents of a party may, where the party is a corporation, be made "by a member or officer of the corporation". As noted earlier, Mr Ible and Gaetano Grassia, as well as Grassia, are members of Natcomp. Accordingly, the affidavit verifying the list of documents may be made by either of them. The expression "officer" is not defined in the Federal Court Rules or in the Federal Court of Australia Act 1976 (Cth), but is defined in s 9 of the Corporations Act 2001 (Cth) to include a person "who has the capacity to affect significantly the corporation's financial standing". Gaetano Grassia, as the owner of 9,900 of the 10,000 fully paid shares in the capital of Natcomp appears to be such a person.
35 I am not satisfied that it is impossible or impracticable for Natcomp's list of documents to be verified by an individual other than Grassia (or, for that matter, for an individual other than Grassia, on behalf of Natcomp, to respond to the notice to produce). I need not consider whether, if I were satisfied, Natcomp would nonetheless not be relieved of the obligation to give discovery by reason of the possibility of its appointing (and being required to appoint) another individual to do so (O 15 subr 9(2) of the Federal Court Rules empowers the Court to specify, in various ways, the person to make an affidavit verifying the list of documents of a party which is a corporation).
36 Subrule 12(1) of O 33 of the Federal Court Rules provides that where a party serves on another party a notice in proper form requiring the production of any document or thing for the purpose of evidence, and the document or thing is in the possession, custody or power of the party served, the party served must, unless the Court otherwise orders, produce the document or thing in accordance with the notice without the need for any subpoena for production. It is not in dispute that the notice to produce served on Natcomp and Grassia was in due form. It has been accepted that such a notice served under O 33 subr 12(1) has the same coercive effect as a subpoena for production: CCOM Pty Ltd v Jiejing Pty Ltd (1992) 37 FCR 1 (Cooper J) at 3; TPC v Abbco at 132 per Gummow J. I proceed as if the notice to produce had the effect of a subpoena requiring each of Natcomp and Grassia to produce, what it seems convenient to treat as a record of the documents and things seized by the AFP, where that record is in the possession, custody or power of the party served, Natcomp or Grassia as the case may be.
37 In my opinion, on the evidence before me, Grassia's privilege against self-incrimination does not relieve Natcomp from giving discovery or complying with the notice to produce served on it. It is a sufficient basis for this conclusion that for the reasons mentioned above, I am not satisfied that Natcomp's doing so will require Grassia to engage in self-incriminatory conduct of any kind.
38 Accordingly, Natcomp must give discovery and comply with the notice to produce.
39 I turn now to consider the position of Grassia as a party. In Reid v Howard [1995] HCA 40; (1995) 184 CLR 1, former clients of a chartered accountant, having learned that he was misappropriating funds, sought an order that he disclose his assets and the source of the funds used to acquire them. The High Court held that the privilege against self-incrimination was unqualified except by statute or waiver and provided a complete answer to the application. Reid v Howard was followed in this Court by Heerey J in Australian Competition & Consumer Commission v J McPhee & Son (Australia) Pty Ltd (No 2) (1997) 77 FCR 217 ("ACCC v McPhee"), a case in which the privilege was held to excuse respondent individuals from any obligation to file witness statements in a proceeding for civil pecuniary penalties. Grassia relies on these cases, but they are distinguishable: neither was concerned with the question of the giving of discovery in a proceeding such as the present one which is not a proceeding for the imposition of a criminal or civil penalty.
40 The true scope of the privilege against self-incrimination must be understood. It cannot, without qualification, be identified simply as a privilege against being compelled to do something which may tend to show that the person has committed an offence. Assume, for example, that Grassia had been already convicted or acquitted of all the offences referred to in subss 132(1), (2) and (2A) of the Copyright Act and s 148 of the TM Act. Would he subsequently, in a civil proceeding such as the present one, be excused from the obligation to give discovery or to answer a notice to produce? Clearly not, because the privilege operates to prevent a person from being compelled
"to answer any question, or to produce any document or thing, if to do so `may tend to bring him into the peril and possibility of being convicted as a criminal'."
(Sorby v Commonwealth [1983] HCA 10; (1983) 152 CLR 281 ("Sorby") at 288 per Gibbs CJ, quoting Lamb v Munster (1882) 10 QBD 110 at 111 (the passage from Sorby was cited with approval in the joint judgment of Toohey, Gaudron, McHugh and Gummow JJ in Reid v Howard at 12, and the words from Lamb v Munster, "the peril and possibility of being convicted as a criminal" were again quoted by their Honours at 14). In other cases reference has been made to "reasonable ground to apprehend danger of prosecution or forfeiture" (Re Intercontinental Development Corporation Pty Ltd (1975) 1 ACLR 253 (Bowen CJ) at 259), "a real and appreciable risk of criminal proceedings being taken" (Authors Workshop v Bileru Pty Ltd (1989) 88 ALR 211 (Lockhart J) at 215), "a real and appreciable risk of a prosecution being instituted" (Re New World Alliance Pty Ltd (Receiver and Manager Appointed); Sycotex Pty Ltd v Baseler (1993) 47 FCR 90 (Sheppard J) ("New World") at 96, "reasonable ground to apprehend danger ... from his being compelled ..." (Sorby at 289 per Gibbs CJ, quoting from R v Boyes (1861) 1 B&S 311 at 329-330 (121 ER 730 at 738)).
41 Consistently with the understanding of the nature of the privilege against self-incrimination just adumbrated, the privilege has been held to be not available where it is clear that the taking of the step in question will not add to the individual's jeopardy: Sociedade Nacional de Combustiveis de Angola UEE v Lundqvist [1991] 2 QB 310 at 324 per Staughton LJ; Marcel v Commissioner of Police of the Metropolis [1992] Ch 225 (CA) at 257 per Dillon LJ; BTR Engineering (Australia) Ltd v Patterson (1990) 20 NSWLR 724 (Giles J) at 730.
42 I cannot conceive of any way in which production by Grassia (or by Natcomp for that matter) in response to the notice to produce, of any record of documents and things seized by the AFP could expose Grassia to any additional peril of being prosecuted for the very offences by reference to which the AFP seized those documents and things. Any such peril already exists and will not be increased at all by the production of the record.
43 For this reason, Grassia (and for this additional reason Natcomp) must comply with the notice to produce.
44 I turn lastly to the giving of discovery by Grassia. The documents of which discovery is sought (described in the letter dated 8 August 2001 from the applicants' solicitors to the solicitors for Natcomp and Grassia) may well cover a wider range of documents and things, and more numerous documents and things, than those that were seized by the AFP. For the reason just given in relation to the notice to produce, Grassia must give discovery of those documents and things seized by the AFP which were within his "possession, custody or power" (O 15 r 6 of the Federal Court Rules). It is any additional documents or things which remain within Grassia's possession, custody or power that give rise to a question and call for discussion (although, in fact, there may well be no such documents or things).
45 In Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat & Livestock Corporation (1979) 42 FLR 204 ("Refrigerated Express"), Deane J accepted that whereas, in the absence of statutory provision or waiver, a court should not order a defendant to give discovery or to produce documents for inspection in a proceeding which is itself criminal or for the imposition of a civil penalty, ordinarily, in other proceedings the privilege should not excuse a party in limine from giving discovery, and the party should be left to object to producing particular documents for inspection. But his Honour also accepted that it would be appropriate to excuse in limine in the rare case where that course is the only means of protecting against self-incrimination or self-exposure to a civil penalty.
46 Grassia submits that the present case is one of that rare kind, and points out that the only purpose of discovery is to aid the applicants in proving the very conduct which will also constitutes the statutory offences mentioned. Grassia relies on EL Bell Packaging Pty Ltd v Allied Seafoods Ltd (1990) 8 ACLC 1135 (Vic FC) ("Bell") and R v Deputy Commissioner of Taxation; Ex parte Briggs (1987) 13 FCR 389 (Beaumont J) ("Briggs") as illustrations of cases which were held to fall within the exception recognised by Deane J in Refrigerated Express.
47 Refrigerated Express itself was a strong case. The proceeding was for injunctive relief and damages against six corporate respondents and six natural persons based on contravention and involvement in contravention of provisions of Pt IV of the TP Act. While s 78 of that Act provided that criminal proceedings did not lie against a person for contravention or involvement in a contravention of that Part, s 76 provided that if the Court was satisfied that a person contravened or attempted to contravene, or was involved in specified ways in a contravention of Pt IV, the Court might order the person to pay to the Commonwealth a pecuniary penalty.
48 The proceeding was not itself one for the imposition of a pecuniary penalty, but the alleged conduct of the twelve respondents, if proved, would have rendered them liable to the imposition of a pecuniary penalty in a proceeding brought by the Minister or the Trade Practices Commission for that purpose. Deane J stated as follows (at 210-212) in a passage which has, in whole or in part, often been referred to, and is a convenient starting point for a review of the recent Australian cases:
"... the general rule [is] that a party to proceedings which are for civil redress and not for a penalty ought not ordinarily be excused, in limine, from giving discovery or answering interrogatories but should be left to object to producing particular documents or answering particular questions on the ground that such production or answer might tend to expose him to liability to a penalty ... That general approach is not however, as a matter of law, necessarily appropriate to all circumstances. ... If circumstances arose where the only means of protecting the right against self-incrimination and self-penalization were to excuse a party in limine from discovery or interrogatories, such circumstances should, in my view, be seen as exceptional and as justifying a departure from the general rule. In particular, if it appeared to the court that the making of an affidavit of discovery as distinct from producing the documents referred to in such an affidavit would tend to expose a party to a penalty, any order for discovery should be adjusted to the extent necessary to preclude that tendency. It is, perhaps, conceivable that circumstances could arise where the mere making of an order for interrogatories might have a similar tendency. The cases where the making of an order for discovery or interrogatories will, in itself, involve exposing a party to self-incrimination or self-penalization must, however, be rare indeed in view of the fact that the party will remain entitled to refuse to answer questions asked or produce documents discovered if the answers or production might tend to incriminate him or expose him to a penalty.It was submitted on behalf of the respondents that a general order excusing the respondents in limine from discovery of documents or answering interrogatories was justified in the present matter for the reason that the whole basis of the present action for injunctive relief and damages was alleged contravention and involvement in contravention of the provisions of Pt IV of the Act. In these circumstances, it was said, the only purpose of discovery or interrogatories would be to provide evidence which would tend to establish the alleged contravention and involvement in contravention of the Act which, if established, would inevitably tend to render the respondents liable to a penalty at the suit of the Minister or the Trade Practices Commission. It followed, it was said, that the ordinary approach appropriate to proceedings other than proceedings for a penalty should not be followed and the respondents should be granted the general immunity from discovering documents or answering interrogatories to which they would be entitled in proceedings for a penalty.
While I can see great force in the respondents' argument, I am unable to accept it. In my view, the only circumstances which would warrant a departure in the present case from the ordinary approach that a party should be left to object to production of particular documents or to answering particular interrogatories would be that it appeared that the actual discovery, as distinct from production for inspection, of documents or the actual order for interrogatories would tend to expose the party ordered to make discovery or answer interrogatories to liability to a penalty. Notwithstanding the argument to the contrary advanced on behalf of the respondents, I am unable to see that either an order for discovery or an order for interrogatories would, in the present case, in itself have or be directly productive of that effect. In those circumstances, I consider the ordinary approach should apply and the respondents should be left to object to producing particular documents or answering particular interrogatories.
I should, perhaps, add that if, in relation to any particular document of which discovery is required by a respondent, the view is taken that to describe it by reference to its nature or contents would tend to render that respondent liable to a penalty, that circumstance in itself would justify less precision in the description of the document than would otherwise be appropriate. In circumstances where lack of precision of description would not, in the view of the particular respondent, suffice to avoid a tendency to expose to a penalty, an application to modify the order for discovery could of course be made to the court.
I would also add that the fact that the whole basis of the present proceedings is alleged contravention and involvement in contravention of the provisions of Pt IV of the Act will, in my view, be relevant if and when the court comes to rule upon any disputed issues between the parties as to whether the production for inspection of particular documents should be ordered or the answering of particular interrogatories should be enforced. In other words, it seems to me, as at present advised, that in proceedings where the whole basis of the action is alleged contravention of an Act punishable by a penalty, the party against whom the proceedings are brought will have a lighter onus in persuading the court that the production of particular documents or the answering of particular interrogatories may tend to expose him to a penalty than would otherwise be the case."
49 It is to be noted that his Honour was not persuaded by the submission that the very facts relied on to establish the basis of civil liability provided for in the statute were also made by the statute a ground for the imposition of a civil penalty.
50 It is difficult to accept that the course of authority since Refrigerated Express has been consistent. I will refer to the cases briefly in chronological order.
51 In Pyneboard Pty Ltd v Trade Practices Commission [1983] HCA 9; (1983) 152 CLR 328 ("Pyneboard"), Mason ACJ, Wilson and Dawson JJ stated (at 336), after referring to the discussion by Deane J in Refrigerated Express:
"There his Honour drew a distinction between discovery in a mere action for a penalty and discovery in an action which was not for a penalty the result of which might be used to establish a party's liability to a penalty in other proceedings. In the first situation, the court should, in the absence of statutory provision to the contrary, refuse to make any order for discovery, production of documents or the provision of information for the reason that an intended consequence of the discovery, production of documents or provision of information is the imposition of the penalty, this being the object of the action ... But in the second situation the order will be made and the party against whom the order is made may object to the production of particular documents or to the provision of particular information on the ground that it may tend to expose him to a penalty." (my emphasis)
The unqualified nature of the last sentence is noteworthy. I do not suggest that their Honours intended to reject as inappropriate recognition of the exceptional class of case for which Deane J had allowed in Refrigerated Express, but their failure to refer to it is strong affirmation of Deane J's "ordinary rule".
52 In Adsteam Building Industries Pty Ltd v Queensland Cement & Lime Co Ltd (No.4) [1985] 1 Qd R 127 ("Adsteam") McPherson J held that a defendant was entitled to be excused from producing for inspection certain documents, the disclosure of which would or might tend to expose the party to a penalty under Art 273 of the Swiss Penal Code. There was before his Honour uncontradicted evidence from a doctor of laws and member of the Zurich Bar to the effect that the disclosure sought, which was of a share register of a certain Swiss corporation, would infringe that provision. His Honour was satisfied that disclosure of the document, even to the Court, was liable to attract a penalty or other punishment in Switzerland. But he observed that it was not the mere disclosure in an affidavit of discovery of the existence or possession of the document in question that would constitute an offence under Swiss law, but the production of it for inspection and copying. His Honour therefore ordered discovery, but directed that the individual was entitled to claim privilege against production of documents of a certain description.
53 The case provides little guidance for present purposes, being concerned, as it was, with the question whether the very act of discovery or production for inspection fell foul of Swiss law, not with whether the taking of either step had a tendency to incriminate in respect of an independent offence.
54 In Briggs, a taxpayer (Briggs) sought a declaration against the respondent authorities that any divulging and communication of information concerning the affairs of himself or of certain companies, contravened subs 16(2) of the Income Tax Assessment Act 1936 (Cth) ("the ITA Act") and s 70 of the Crimes Act 1914 (Cth) and consequential relief. Briggs moved for orders that the respondents give discovery and that he have leave to administer interrogatories. Beaumont J refused that application. After referring to Refrigerated Express, his Honour emphasised (at [16]) that Briggs was seeking a declaration that subs 16(2) of the ITA Act had been contravened and that "the main issue" in the present proceeding was "whether any such contravention occurred". In Briggs, Beaumont J sought to distinguish Refrigerated Express on the basis that in Refrigerated Express the only relief sought was injunctive relief and damages, whereas in Briggs it was a declaration of contravention and consequential mandatory and prohibitory injunctions. With respect, this seems to me an unsatisfactory basis on which to distinguish Refrigerated Express. In Refrigerated Express it was the alleged "contravention" of provisions of Pt IV of the TP Act that provided the basis for the injunctive relief and damages sought under ss 80 and 82 of the TP Act. It is difficult to accept that an inclusion in the relief sought in that case of a prefatory declaration of contravention would have had any effect on Deane J's treatment of the issue of self-exposure to a penalty.
55 Spender J followed Refrigerated Express in Medina v Copenhagen Handelsbank International SA (Spender J, FCA, 10 March 1989, unreported) ("Medina"). His Honour ordered further and better discovery by the first respondent, a financial institution established in Luxembourg. The proceeding was based on an alleged contravention of s 52 of the TP Act, but conduct in contravention of the Money Lenders Act 1916 (Qld), for which a criminal proceeding lay, and of certain laws of Luxembourg prohibiting, under penalty, the disclosure of certain secrets and confidential information, was also pleaded. After referring to the approval by Mason ACJ, Wilson and Dawson JJ of Refrigerated Express in Pyneboard, Spender J stated (at [21]):
"It seems to me that it is for the party required to make discovery to object to the production of particular documents or the provision of particular information specifying the ground or grounds and, if the claim is that of a particular class of documents would expose him to a penalty, that class ought to be identified with some particularity."
56 Bell was a claim by a creditor to recover debts owed by a company in liquidation from, relevantly, its directors under s 556 (the "trading while insolvent" provision) of the Companies (Victoria) Code. That section made the same conduct an offence punishable by a fine of $5,000 or imprisonment for one year or both. The section provided for defences, the onus of establishing which lay on the director.
57 The leading judgment was given by Murphy J, with whom Vincent J agreed. His Honour distinguished Refrigerated Express on two grounds: first, unlike the section considered by Deane J, s 556 made it a criminal offence to do what the plaintiff alleged the defendant directors did; and, secondly, an offence against s 556 might be proved by proof of an act or acts of omission, equally as by proof of acts of commission. His Honour thought that the mere making of an affidavit of discovery would go to assist in proof of the criminal offence and that the case was of that kind which Deane J had considered to be exceptional.
58 Young CJ thought the defendants should not be put to the necessity of giving discovery and objecting to production for inspection, since precisely the same facts, if established, would expose a defendant to both civil and criminal liabilities.
59 In the present case, we do not have a single section which creates both civil and criminal liability, but the parties proceeded on the basis that, with the exception of subs 132(2A) of the Copyright Act, the elements of civil and criminal liability, although in different sections, are identical. This difference provides no ground for distinguishing Bell from the present case.
60 With respect I do not find the distinctions drawn by Murphy J between Bell and Refrigerated Express persuasive. The distinction between self-incrimination in the strict sense and self-exposure to a civil penalty was treated as immaterial in related contexts by a Full Court of this Court in TPC v Abbco and by Heerey J in ACCC v McPhee (both decided after Bell). I note, in passing, that a maximum civil penalty may far exceed a maximum fine for an offence. With respect, I do not find the "commission/omission" distinction a cogent one either. The distinctions made seem to elevate form over substance.
61 Stimulated by the decision of the Full Court of the Supreme Court of Victoria in Bell on 22 October 1990, the four defendant directors in Southern Star Group Pty Ltd T/A KGC Magnetic Tapes v Taylor (1991) 4 ACSR 133 (Rolfe J) ("Southern Star"), a similar proceeding under s 556 of the Companies (NSW) Code, moved the Court for an order setting aside consent orders recently made for the giving of discovery and filing of affidavits by those directors. Rolfe J distinguished Bell and followed the "ordinary" approach identified by Deane J in Refrigerated Express. The reason given by Rolfe J was that in the case before him, analysis of the pleadings revealed that the defendant directors were relying on the exculpatory defences provided by subs 556(2), on which they, rather than the plaintiff creditor, bore the onus of proof, whereas it appeared to his Honour that in Bell the onus had rested on the plaintiff creditor to prove the elements of the statutory liability identified in subs 556(1). Further, Rolfe J referred to "discretionary matters in the nature of the guidelines laid down by Wootten J in McMahon v Could (1983) 7 ACLR 202 ... approved by the Court of Appeal in Halabi v Westpac Banking Corporation (1989) 17 NSWLR 26". Rolfe J thought that in the exercise of his discretion, an order excusing discovery in limine should not be made.
62 In New World, discovery had already been given by the directors in a proceeding against them under s 592 of the Corporations Law ("the Law"), the successor provision to s 556 of the Companies Code, and the plaintiff applied for inspection. Sections 1311-1316 of the Law (rather than the substantive provision itself as under the Companies Code) had the effect of making the alleged conduct of the directors a punishable offence. The parties agreed that the appropriate course was that which had been followed, namely, for the respondents to file lists of documents and to object to the production of those documents which they claimed might tend to expose them to the imposition of penalties. Sheppard J said this approach was "in accordance with" the judgment of Deane J in Refrigerated Express. His Honour noted that Deane J's decision had been "consistently applied by judges of [the Federal] Court", and he referred to Briggs, Master Builders Association of New South Wales v Plumbers and Gasfitters Employees' Union of Australia (1987) 14 FCR 479 (Gray J) ("MBA") and Concrete Constructions Pty Ltd v Plumbers and Gasfitters Employees' Union of Australia (1987) 15 FCR 3 (Wilcox J) ("Concrete"). MBA was a proceeding for a penalty, while Concrete concerned the answering of a subpoena, so, like New World itself, neither case is directly relevant to the issue of the availability of the privilege against self-incrimination to excuse in limine the giving of discovery. After deciding that no "middle course" was available, Sheppard J declined to make an order granting the applicants or their legal advisers access to the documents discovered by the directors.
63 Hince v Caratti (French J, FCA, 25 February 1994, unreported) was another proceeding by the creditors of a company in liquidation to recover from its directors on the basis of "insolvent trading" under s 592 of the Law. A director moved for an order excusing him from compliance with an order for discovery. French J referred to English authorities in favour of the proposition that the privilege against self-incrimination does not relieve in limine from the obligation to give discovery, including Spokes v Grosvenor & West End Railway Terminus Hotel Company Ltd [1897] 2 QB 124 at 132, and National Association of Operative Plasterers v Smithies [1906] AC 434 at 436, 437, 438, and to Refrigerated Express, Briggs and New World. His Honour observed, however, that it was not clear, and had not been contended, that in the case before him the conduct relied on by the applicant, if established, amounted to conduct which was an offence against the Law (his Honour distinguished the position in New World in this respect). His Honour concluded that it had not been established on the evidence before him that the case fell within the exception recognised by Deane J in Refrigerated Express.
64 Trade Practices Commission v IMB Group Pty Ltd (1994) ATPR 41-348 (Drummond J) ("TPC v IMB"), was a proceeding for contravention of Pt IV of the TP Act. As against the individual respondents, the Commission was seeking injunctive and other relief, but not the payment of penalties (it sought civil penalties under s 76 of the TP Act against the corporate respondents). Drummond J acknowledged that while the filing of a list of documents would not necessarily tend to expose the individual respondents to penalties, it was possible that the identification of some of the documents in their lists of documents might do so. His Honour followed the procedure suggested by Deane J in Refrigerated Express of ordering discovery but reserving liberty for the respondent individuals to apply for an order absolving them from describing any particular document if to do so would expose them to a penalty.
65 The final case to be noted is Roland Children's Services v Dodd (Underwood J, Tas SC, 26 September 1997, unreported) ("Roland") in which a company sued a former director for company monies allegedly misappropriated by him. In his defence, the defendant did not admit any allegation in the statement of claim and stated that he could not plead further on the grounds that he might incriminate himself. Underwood J observed that the statement of claim did not plead all the facts necessary to establish criminal wrongdoing and that the plaintiff's claim was grounded in "money had and received". There was no pleading of dishonesty or fraud. Accordingly, his Honour held that, although the production of particular documents might tend to incriminate the defendant, there was no basis for sustaining a general claim of tendency to incriminate, and thus to avoid discovery in limine. In the result, his Honour applied the "ordinary approach" referred by Deane J in Refrigerated Express.
66 It now becomes necessary to apply the law to the facts of the present case. The defence filed by Grassia (and Natcomp) consists of non-admissions and denials. Thus, the onus rests on the applicants to prove all elements of the forms of civil liability provided for in subss 38(1) and (2) of the Copyright Act and subs 120(1) of the TM Act. I proceed on the basis that proof of those elements will establish the elements of the offences as mentioned.
67 Although the course of authority since Refrigerated Express is not all one way, there has been a strong disposition in a proceeding not itself concerned with the imposition of a penalty for an offence or a civil penalty, in favour of ordering discovery, reserving the issue of self-incrimination to the stage of production for inspection, and also reserving liberty to apply in relation to the degree of specificity with which a document is to be described in the individual's list of documents.
68 While acknowledging the force of the argument in favour of relieving in limine from the obligation to give discovery, Deane J ordered discovery in Refrigerated Express, and his Honour's approach was approved by Mason ACJ, Wilson and Dawson JJ in Pyneboard and followed by Spender J in Medina, by Rolfe J in Southern Star, by French J in Hince v Caratti, by Drummond J in TPC v IMB and by Underwood J in Roland. In the exercise of my discretion, I propose to follow it also.
69 No doubt it is possible to attempt to distinguish from the present case in so far as it is brought against Grassia, many of the cases discussed earlier:
* Refrigerated Express - as a case concerned with self-exposure to a civil penalty (see [60] above);
* Adsteam - as a case in which disclosure, in the sense of disclosure of the contents of a document, was itself an offence;
* Briggs - as a case in which a declaration of contravention was sought (see [54] above);
* Medina - as a case concerned with further and better discovery by a corporation, not an individual;
* Bell - as a case in which the same section provided for both civil and criminal liability (see [59] above);
* Southern Star - as a case in which the directors relied on exculpatory defences (see [61] above);
* New World - as a case concerned with production for inspection rather than with the antecedent discovery of documents, which had in fact already been given;
* Hince v Caratti - as a case in which it was not clear that the conduct relied on by the applicant, if established, would constitute an offence;
* TPC v IMB - as a case concerned with self-exposure to a civil penalty;
* Roland - as a case in which the elements of civil liability pleaded fell short of all the elements of a criminal liability.
I do not find it necessary to discuss further the suggested distinctions. In several instances I find them unpersuasive. What is cogent, in my view, is the fact that what Deane J said in Refrigerated Express has been accepted in all cases as correct and as providing sound guidance.
70 I am not persuaded that Grassia's provision of a verified list of documents in accordance with O 15 r 6 and Form 22 of the Federal Court Rules might, in the absence of the production of any document listed for inspection, tend to incriminate Grassia. That is to say, I am not persuaded that the circumstances of the present case fall within the rare exception allowed for by Deane J in Refrigerated Express.
71 It is true that the purpose of the discovery sought is to aid the applicants, that the only issues are ones on which they bear the onus of proof, and that it may transpire that not one document discovered by Grassia (except those seized by the AFP) will be made the subject of an order for production and thus available for inspection by the applicants. But this will not necessarily be so: a document discovered by Grassia may clearly contradict, indeed destroy, the case pleaded by the applicants. The applicants are entitled to have the benefit of discovery (and of production for inspection) of a document of that kind. I note that, consistently with this view, two of the categories of documents which O 15 subr 2(3) of the Federal Court Rules ordinarily requires to be discovered are "documents on which the [discovering] party relies" and "documents that adversely affect another party's case". The foregoing discussion shows that discovery in the present case will not necessarily be futile.
72 It should not be thought that the rare exception referred to by Deane J in Refrigerated Express could never have work to do. It would be applicable, for example:
* where an otherwise discoverable document had been stolen and disclosure of the fact that it was in the possession, custody or power of the discovering party might tend to incriminate that party;
* where statute made disclosure of the existence of an otherwise discoverable document an offence or the subject of the imposition of a civil penalty;
* where statute made disclosure of a certain fact an offence or the subject of the imposition of a civil penalty, and any description of an otherwise discoverable document would necessarily amount to disclosure of that fact; or
* where any description of an otherwise discoverable document might tend to incriminate the discovering party or render that party liable to imposition of a civil penalty in respect of other conduct or circumstances.
CONCLUSION
73 For the above reasons the applicants' motion succeeds and the motion by Natcomp and Grassia to set aside the applicants' notice to produce fails. Natcomp and Grassia will be ordered to pay the applicants' costs on each motion.
I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. |
Associate:
Dated: 8 January 2002
Counsel for the applicants: Ms A H Bowne
Solicitors for the applicants: Mallesons Stephen Jaques
Counsel for the fifth and sixth respondents: Mr A J L Bannon SC
Solicitors for the fifth and sixth respondents: Gray & Perkins
Date of Hearing: 7 November 2001
Date of Judgment: 8 January 2002
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