Federal Court of Australia Pro Plumbing & Gasfitting Pty Ltd v Betts [2023] FCA 1433 File number(s): NSD 1221 of 2023 Judgment of: GOODMAN J Date of judgment: 15 November 2023 Date of publication of reasons: 22 November 2023 Catchwords: PRACTICE AND PROCEDURE – orders ancillary to freezing orders – affidavits of disclosure – claim of privilege against self-incrimination with respect to one affidavit – order made requiring the affidavit the subject of the claim for privilege to be provided to the plaintiff – certificate granted under s 128A of the Evidence Act 1995 (Cth) Legislation: Corporations Act 2001 (Cth), ss 182, 1317G Evidence Act 1995 (Cth), s 128A Cases cited: Deputy Commissioner of Taxation v Shi [2021] HCA 22; (2021) 273 CLR 235 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Number of paragraphs: 18 Date of hearing: 13 and 15 November 2023 Counsel for the Plaintiff: Mr T E O'Brien Solicitor for the Plaintiff: Polczynski Robinson Counsel for the Defendant: Mr A Gauja Solicitor for the Defendant: Taylor Rose ORDERS NSD 1221 of 20232 BETWEEN: PRO PLUMBING & GASFITTING PTY LTD ACN 607 531 671 Plaintiff AND: REBECCA BETTS Defendant order made by: GOODMAN J DATE OF ORDER: 15 November 2023 THE COURT ORDERS THAT: 1. The whole of the privileged affidavit of the defendant provided to the Court on 15 November 2023 be filed and served on the plaintiff. 2. The defendant be given a certificate under s 128A of the Evidence Act 1995 (Cth) in respect of the privileged affidavit. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT GOODMAN J 1 On 27 October 2023, I made a freezing order against the assets of the defendant, together with ancillary orders, including an order that the defendant serve affidavit evidence providing disclosure of her assets (asset disclosure order). The plaintiff's case, as presented on the application for such orders, was that the defendant had, while an employee of the plaintiff, misappropriated moneys belonging to the plaintiff by causing moneys belonging to the plaintiff to be paid into bank accounts in the name of the defendant and to a superannuation fund in which the defendant had a beneficial interest. 2 The defendant subsequently filed and served such an affidavit, affirmed 9 November 2023, in purported compliance with the asset disclosure order. 3 The plaintiff, dissatisfied with the extent of the disclosure in the 9 November 2023 affidavit, exercised its liberty to apply for the purposes of seeking an order that the defendant be required to submit to cross-examination upon that affidavit. 4 On 13 November 2023 the defendant sought, and I granted, an opportunity to file supplementary affidavit evidence. On 14 November 2023, the defendant made three further affidavits. In the first, she provided further detail of her assets. In the second, which I will refer to as the objection affidavit, she gave evidence that she otherwise objected to complying with the asset disclosure order on the basis that to do so would require her to provide information that may tend to prove that she had committed an offence under an Australian law or that she is liable to a civil penalty in circumstances where the proceeding relates to allegations that she has misappropriated funds. 5 The third affidavit, which I will refer to as the privileged affidavit, was provided to the Court in a sealed envelope. 6 On 15 November 2023, I made an order pursuant to s 128A(6) of the Evidence Act 1995 (Cth) requiring the defendant to provide the privileged affidavit to the plaintiff, together with an order that the defendant be given a certificate under that section. These are my reasons for doing so. 7 Section 128A provides in so far as is presently relevant: 128A Privilege in respect of self-incrimination—exception for certain orders etc (1) In this section: disclosure order means an order made by a federal court in a civil proceeding requiring a person to disclose information, as part of, or in connection with a freezing or search order, but does not include an order made by a court under the Proceeds of Crime Act 2002. relevant person means a person to whom a disclosure order is directed. (2) If a relevant person objects to complying with a disclosure order on the grounds that some or all of the information required to be disclosed may tend to prove that the person: (a) has committed an offence against or arising under an Australian law or a law of a foreign country; or (b) is liable to a civil penalty; the person must: (c) disclose so much of the information required to be disclosed to which no objection is taken; and (d) prepare an affidavit containing so much of the information required to be disclosed to which objection is taken (the privilege affidavit) and deliver it to the court in a sealed envelope; and (e) file and serve on each other party a separate affidavit setting out the basis of the objection. (3) The sealed envelope containing the privilege affidavit must not be opened except as directed by the court. (4) The court must determine whether or not there are reasonable grounds for the objection. (5) Subject to subsection (6), if the court finds that there are reasonable grounds for the objection, the court must not require the information contained in the privilege affidavit to be disclosed and must return it to the relevant person. (6) If the court is satisfied that: (a) any information disclosed in the privilege affidavit may tend to prove that the relevant person has committed an offence against or arising under, or is liable to a civil penalty under, an Australian law; and (b) the information does not tend to prove that the relevant person has committed an offence against or arising under, or is liable to a civil penalty under, a law of a foreign country; and (c) the interests of justice require the information to be disclosed; the court may make an order requiring the whole or any part of the privilege affidavit containing information of the kind referred to in paragraph (a) to be filed and served on the parties. (7) If the whole or any part of the privilege affidavit is disclosed (including by order under subsection (6)), the court must cause the relevant person to be given a certificate in respect of the information as referred to in paragraph (6)(a). (8) In any proceeding in an Australian court: (a) evidence of information disclosed by a relevant person in respect of which a certificate has been given under this section; and (b) evidence of any information, document or thing obtained as a direct result or indirect consequence of the relevant person having disclosed that information; cannot be used against the person. However, this does not apply to a criminal proceeding in respect of the falsity of the evidence concerned. … (emphasis in original) 8 The asset disclosure order was a "disclosure order" within the meaning of s 128A(1) and thus the defendant was a "relevant person" within the meaning of that sub-section. 9 I was satisfied that there were reasonable grounds for the defendant's objection for the following reasons. 10 First, a premise of the plaintiff's case for the freezing order is that the defendant, as an employee of the plaintiff, had misappropriated moneys belonging to the plaintiff. Secondly, the objection related to information concerning the bank accounts and the superannuation fund into which those moneys were allegedly paid. Thirdly, as Gordon J explained in Deputy Commissioner of Taxation v Shi [2021] HCA 22; (2021) 273 CLR 235 at 251 [29], evidence may tend to prove the commission of an offence where the evidence provides a "link in the chain of evidence" and thus becomes a "means of bringing home an offence". Fourthly, it was plain that the allegations against the defendant could, if proven, expose her to prosecution for offences relating to misappropriation and to a civil penalty (e.g., under ss 182 and 1317G of the Corporations Act 2001 (Cth)). 11 As I was satisfied that there were reasonable grounds for objection, it was necessary to consider the operation of s 128A(5) and (6). As s 128A(5) is subject to s 128A(6), it was convenient to consider the latter sub-section first. 12 Sub-section 128A(6) provides the Court with a discretion to make an order requiring the whole or part of the privileged affidavit (containing information of the kind referred to in s 128A(6)(a)) to be filed and served on the plaintiff. That discretion is enlivened if the Court is satisfied of the matters set out in each of s 128A(6)(a), (b) and (c). 13 The s 128A(6)(a) criterion is that: "any information disclosed in the privilege affidavit may tend to prove that the relevant person has committed an offence against or arising under, or is liable to a civil penalty under, an Australian law". I was satisfied of that criterion for the reasons set out at [10] above. 14 The s 128A(6)(b) criterion is that: "the information does not tend to prove that the relevant person has committed an offence against or arising under, or is liable to a civil penalty under, a law of a foreign country". There was no evidence suggesting that the defendant may have committed an offence against or arising under the law of a foreign country or is liable to a civil penalty under a law of a foreign country. In those circumstances the s 128A(6)(b) criterion was satisfied: see Shi at 245 [9] (Kiefel CJ, Gageler J (as his Honour then was) and Gleeson J). 15 The s 128(6)(c) criterion is that: "the interests of justice require the information to be disclosed". In Shi at 246 [12], the plurality explained: Evaluation of the interests of justice for the purpose of s 128A(6)(c) is informed primarily by balancing the public interest in the person to whom the extant disclosure order is directed complying with that disclosure order by disclosing information to the party to the civil proceeding in whose favour the order has been made against the potential detriment to the person that arises from the tendency of the information to prove that the person has committed an offence against or arising under, or is liable to a civil penalty under, an Australian law. A court assessing that potential detriment must obviously take into account the prohibition in s 128A(8) on derivative use of the information disclosed. As recognised by the primary judge, and as explained by Gordon J, a court assessing that potential detriment must also take account of constraints on the use and dissemination of the disclosed information that arise within the context of the civil proceeding in which the disclosure order has been made. Those constraints include the obligation of the party to whom disclosure is made, and of any other person to whom the disclosed information might be given, not to make any use of the information other than for the purpose of the civil proceeding without leave of the court (14). They include too the availability of orders restricting the dissemination of the disclosed information, relevantly under s 37AF of the Federal Court of Australia Act 1976 (Cth). 16 It was common ground that this criterion was satisfied. I agreed, particularly as disclosure of the information was consistent with the purpose of the asset disclosure order, namely to prevent the abuse or frustration of the processes of the Court. 17 Thus the discretion in s 128A(6) was enlivened. The factors which enlivened the discretion also informed its exercise and made it appropriate to order that the defendant file and serve the privileged affidavit. 18 From this, it followed that s 128A(5) had no role to play; and that by dint of s 128A(7) the Court was compelled to cause the issue of a certificate in respect of the information in the privileged affidavit. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Goodman. Associate: Dated: 22 November 2023