Reported Decision : [1999] 47 NSWLR 538 New South Wales Supreme Court CITATION : Bax Global v Evans [1999] NSWSC 815 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 2153/99 HEARING DATE(S) : 13 & 26 May 1999, JUDGMENT DATE : 10 August 1999 Bax Global (Australia) Pty Ltd (P) PARTIES : v Luke Evans & Ors (D) JUDGMENT OF : Austin J COUNSEL : J R J Lockhart (P) M W Young (D2 & D3) SOLICITORS : Allen Allen & Hemsley (P) Konstan Lawyers (D2 & D3) CATCHWORDS : Supreme Court - interlocutory orders - Mareva orders - ancillary disclosure order - basis of jurisdiction - discovery and interrogatories as alternatives - evidence - privilege against self-incrimination - Equity Division practice on disclosure orders - stay of proceedings ACTS CITED : Evidence Act 1995 (NSW), s 128 Supreme Court Act 1970 (NSW), ss 23, 66(4) A J Bekhor & Co Ltd v Bilton [1981] 1 QB 923 A v C [1980] 2 All ER 347 AMP General Insurance Ltd v Prasad [1999] NSWSC 252 (23 March 1999) and [1999] NSWSC 349 (16 April 1999) Aslanis v Brambles Australia Ltd (1997) 82 IR 220 Ballabil Holdings Pty Ltd v Hospital Products Ltd (1985) 1 NSWLR 155 Busby v Thorn EMI Video Programmes Ltd [1984] 1 NZLR 461 Cardile v LED Builders Pty Ltd (1999) 162 ALR 294 HMP Industries Pty Ltd v Graham (No.2728/96, Young J, unreported, 17 July and 27 August 1996; Istel Ltd v Tully [1993] AC 45 CASES CITED : Jackson v Sterling Industries Ltd (1987) 162 CLR 612 Mareva Compania Naviera SA v International Bulk Carriers SA [1975] 2 Lloyd's Rep 509 McMahon v Gould (1982) 1 ACLC 98 National Australia Bank Ltd v Rusu (No.4371/96, Cohen J, unreported, 13 February 1997; Hamilton J, unreported, 6 April 1998 (two judgments), 7 May 1998) Nippon Yusen Kaisha v Karageorgis [1975] 3 All ER 282 Oades v Hamilton (1987) 11 NSWLR 139 Pelechowski v The Registrar, Court of Appeal (1999) 162 ALR 336 Reid v Howard (1995) 184 CLR 1 Vasil v National Australia Bank Limited [1999] NSWCA 161 Vasil v National Australia Bank Ltd [1999] NSWCA 161 DECISION : Motion for specific disclosure order stayed until further order, with liberty to apply THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION AUSTIN J 10 AUGUST 1999 2153/99 - BAX GLOBAL (AUSTRALIA) PTY LTD v EVANS & ORS JUDGMENT 1 HIS HONOUR: These proceedings were commenced by summons filed on 29 April 1999, by which the plaintiff claims damages as final relief and seeks interlocutory orders. The cause of action appears to relate to the conversion of some computer equipment. The interlocutory orders are 'Mareva orders' and ancillary orders by way of disclosure of assets. 2 The proceedings first came before Bergin J on an ex parte basis on 29 April 1999. Her Honour made the Mareva orders and made orders for the abridgment of time for service. When the matter returned to her on 4 May 1999, she extended the Mareva orders and stood the matter over to 13 May 1999 for the Court to consider the plaintiff's application for ancillary disclosure orders. That application, and the application by the second and third defendants for a stay of proceedings, were heard by me on 13 and 21 May 1999. On 3 June 1999, after the Court of Appeal of New South Wales had delivered its judgment in Vasil v National Australia Bank Ltd [1999] NSWCA 161, I heard supplementary submissions as to the effect of that decision. 3 The Mareva orders, which were modified by me on 13 May on the plaintiff's application and without contest, restrain (a) the first defendant from dealing with money in his name in any financial institution, other than for living expenses not exceeding $150 per week and payment of certain legal expenses; (b) the first defendant from disposing of his Holden Commodore motor vehicle; (c) the second defendant from dealing with a property at Beecroft; (d) the third defendant from dealing with a property at North Rocks; (e) the third defendant from disposing of his Nissan Skyline motor vehicle; (f) each defendant from moving or dealing with any computer equipment. The orders establish a procedure should the second and third defendants' wives wish to deal with any interest they may have in the properties affected by the orders. 4 The ancillary disclosure orders sought by the plaintiff in the summons were in two categories. First, the summons sought an order that each defendant swear an affidavit setting out a list of assets owned, their approximate value and particulars of any co-owner. The plaintiff no longer seeks this order because affidavits on these matters have been provided. Secondly, the summons sought an order that the first and second defendants swear affidavits setting out: (a) the location of specified computer-related equipment; (b) particulars of any assets acquired using the proceeds of sale of that equipment; and (c) the location of any such assets. 5 The first defendant voluntarily provided such an affidavit and gave brief oral evidence on 13 May 1999. I issued a certificate under s 128 of the Evidence Act 1995 (NSW) in respect of the transcript of evidence and affidavit, and made an order restricting access to named lawyers for the plaintiff and the first defendant. 6 The plaintiff now seeks orders for such an affidavit against the third defendant as well as the second defendant. The plaintiff says that s 128 certificates should apply to each affidavit, that the affidavits should be lodged with my Associate so that the certificates can be attached, and that thereafter they should be served on the plaintiff's solicitor in a confidential envelope, and access should be restricted to named lawyers for the plaintiff and the defendants. 7 The first issue for the Court to determine is whether to order the second and third defendants to swear affidavits on these matters, subject to directions providing protection to the defendants along the lines suggested by the plaintiff or in some other way. The second issue is to deal with an application by the second and third defendants for a stay of proceedings. The application, by notice of motion filed on 13 May 1999, seeks an order that there be a stay of the present proceedings, as they affect the second and third defendants, 'pending the resolution of their criminal law matters relating to charges of receiving stolen property, goods in/on premises reasonably suspected stolen, goods in custody of other reasonably suspect stolen' (sic). Facts 8 The plaintiff manages the transportation, warehousing and customs clearance of goods for overseas clients. It has a warehouse in Alexandria. On Monday 8 March 1999 the plaintiff's manager discovered, as a result of a stock reconciliation, that 16 Phillips computer monitors identified by their serial numbers, which had been in the warehouse on Friday 5 March, were missing and had not been recorded as dispatched. 9 A review of security video tape revealed that on Sunday 7 March the first defendant was in charge of logistical operations and the only Air-Road Distribution driver picking up freight on that day was the second defendant, who picked up 14 pallet loads (28 pallets) of equipment in two trips. Suffice it to say that aspects of the dispatch were irregular and not in accordance with the plaintiff's procedures, and appeared to the plaintiff's manager to be suspicious. Additionally, a security video taken at Air-Road Distribution's premises on the same day revealed that only ten pallets were unloaded by the second defendant there, from the 14 pallets in the second load. The plaintiff says that the missing pallets contained 33 Phillips monitors, 33 desk top CPUs, six lap top computers and five sets of computer speakers. This is the specified equipment in respect of which ancillary disclosure orders are sought. 10 The plaintiff reported the matter to Redfern Police on 29 March 1999, and the police have undertaken an investigation. On 13 April 1999 the police arrested and charged each of the defendants. The first defendant was charged with larceny by a servant. The second defendant was charged with receiving stolen property and larceny, and the third defendant was charged with receiving stolen property, 'goods in/on premises reasonably suspected stolen', and 'goods in custody of other reasonably suspected stolen'. Some of the computer equipment was found in the garage of the property occupied by the third defendant. The plaintiff estimates that the value of the equipment found by the police is approximately $40,000, whereas the total value of the equipment removed on 7 March 1999 is estimated at approximately $160,000. Most of the equipment is owned by Dell Computer Pty Ltd, the balance being owned by Phillips Business Electronics. 11 The plaintiff says that approximately $30,000 worth of computer equipment went missing from its premises on about 20 December 1998. The plaintiff has put forward some evidence which may implicate the first and second defendants in the theft of that equipment. There is also some evidence to suggest that the second defendant may have disposed of goods in Queensland in March 1999. 12 None of the defendants has revealed to the police the location of the balance of the computer equipment. The plaintiff says that it has sought relief by way of Mareva orders and ancillary disclosure orders because of its concern that the defendants may put their assets beyond its reach in the event that it is successful in the proceedings for damages. 13 By a facsimile dated 2 June 1999 the Office of the Director of Public Prosecutions (NSW) informed the plaintiff's solicitors that the Director did not desire to be heard with respect to the plaintiff's application before me for orders for affidavits to be filed as to property. The letter said: 'Under no circumstances should information obtained from the affidavits or oral evidence be supplied to this office or to police as such disclosure would preclude the use of that or derivative information which might otherwise be acquired by police as a result of their inquiries.' 14 I cannot share the view expressed in this facsimile that the law is now relatively well settled. In my view substantial uncertainty has surrounded the availability of both Mareva orders and orders ancillary to them ever since the English Court of Appeal invented this form of relief in 1975: Mareva Compania Naviera SA v International Bulk Carriers SA [1975] 2 Lloyd's Rep 509; Nippon Yusen Kaisha v Karageorgis [1975] 3 All ER 282. The uncertainty has been compounded in cases such as the present, because of the propensity of the ancillary disclosure orders to collide with the privilege against self-incrimination, itself a difficult branch of the law even after the enactment of s 128 of the Evidence Act 1995 (NSW). The difficulty of the law is underlined both by the decision in Vasil v National Australia Bank Limited [1999] NSWCA 161 and by the fact that some important issues remain unresolved after that decision. 15 I shall endeavour, at least to the extent necessary to decide the present case, to set out my understanding of the principles concerning the jurisdictional basis of Mareva orders and of ancillary disclosure orders, and concerning claims based on the privilege against self-incrimination in light of s 128, and claims for a stay of proceedings. Then I shall consider the application of these principles to the present case. The jurisdictional basis for Mareva orders 16 The joint judgment (Gaudron, McHugh, Gummow, Kirby and Callinan JJ) in Cardile v LED Builders Pty Ltd (1999) 162 ALR 294 deals specifically with the availability of Mareva orders against third parties to proceedings, but the judgment includes some fundamentally important observations of a more general kind. The following propositions may be derived from the judgment: · broad statutory provisions which confer jurisdiction on superior courts to make such orders as appear just and convenient (including s 23 of the Federal Court of Australia Act 1976 (Cth) and (I infer) ss 23 and 66(4) of the Supreme Court Act 1970 (NSW)) do not confer an unlimited power to grant injunctive relief, and regard must still be had to the existence of the legal or equitable right which the court's order protects against invasion; · a Mareva order is best seen as a special exception to the general law proposition that creditors cannot restrain debtors from dealing with their assets as they please, and should not be regarded as an injunction or any other development of the equitable jurisdiction to grant interlocutory relief; · the source of the power to make Mareva orders is the court's inherent power to prevent the abuse or frustration of its process and to prevent stultification of the administration of justice; · for several reasons, great care should be taken by courts which deal with applications for Mareva orders, especially but not only where the interests of third parties are involved; · the reasons for caution include the potential impact of Mareva orders on third parties; the risk that by making an order the court will confer on the applicant excessive protection in the nature of security for payment; difficulties with quantification and recovery of damages pursuant to the applicant's undertaking as to damages; difficulties as to the identification of trigger events for dissolution of the injunction or entitlement to damages; and the need to protect the respondent by ensuring through undertakings or otherwise that the applicant diligently prosecutes the principal proceedings after the orders are made (see also Pelechowski v The Registrar, Court of Appeal (1999) 162 ALR 336); · it follows that before making a Mareva order, the court should inquire whether there is any other suitable form of interlocutory remedy which will meet the case in hand but be less extensive in scope (such as an order for the appointment of a receiver). The jurisdictional basis for ancillary disclosure orders 17 The practice of making ancillary disclosure orders in support of Mareva orders can be traced back in England to A v C [1980] 2 All ER 347. There Robert Goff J held that the power to make such ancillary orders derived from rules of court in relation to discovery of documents and interrogatories, which could be used at an early stage of proceedings, and also from a provision in the UK judicature legislation corresponding approximately with s 66(4) of the Supreme Court Act. That the latter is not a source of jurisdiction for Mareva orders in Australia has been confirmed by the High Court in the Cardile case. 18 Consistently with the High Court's reasoning in Cardile, a court at first instance ought to consider whether it is more appropriate to invoke those procedures than to follow the newly developed special procedure which I shall describe. An advantage of ordering disclosure by the administration of verified interrogatories is that the questions to be answered are articulated with some precision and the procedure for objecting because of self-incrimination or on some other ground is clearly designated in the rules (see, in particular, Part 24 Rules 5 and 6). 19 However, the procedures for interrogatories and discovery are not always available in cases where the plaintiff seeks disclosure ancillary to Mareva orders, as the English Court of Appeal pointed out in A J Bekhor & Co Ltd v Bilton [1981] 1 QB 923. This is because on some occasions, the information to be disclosed about the defendant's assets is relevant to the Mareva relief but does not relate to the facts in issue in the proceedings. For example, in the Bekhor case the proceedings related to recovery of moneys allegedly lent by the plaintiffs to the defendant, and did not therefore raise any issue as to the nature or location of any particular assets of the defendant, or of the defendant's assets generally. One may contrast such a case with cases such as A v C, where the proceedings involved tracing of assets and so the nature and location of at least some assets were facts in issue in the proceedings. Thus, discovery and interrogatories will not always be alternatives to 'Mareva disclosure orders', especially where the subject matter of disclosure is a broad class of assets. 20 In Ballabil Holdings Pty Ltd v Hospital Products Ltd (1985) 1 NSWLR 155 the Court of Appeal of New South Wales held that this Court has jurisdiction to make a disclosure order in aid of a Mareva order. However the jurisdictional basis for doing so was not expressly stated. The judgments concentrate on whether a Mareva order can be made in respect of foreign assets of a resident New South Wales company, and on the fact that in the instant case the Mareva orders were followed by the appointment of a receiver. Street CJ noted (at 159) that a receiver has the power to require discovery of assets including foreign assets. Glass JA held (at 164) that a disclosure order could be made in aid of a properly drawn Mareva order, but gave no explicit reasons for that view. Priestley JA held that the Court has the jurisdiction to make a Mareva order 'and it has all the ordinary powers to make orders for discovery' (at 165), suggesting that he may have regarded the disclosure order in the instant case as a routine exercise of the power to order discovery under the then equivalent of Part 23 of the Supreme Court Rules. In that case a fact in issue was whether the defendant had taken assets out of the jurisdiction between 24 and 25 October 1994. 21 In Jackson v Sterling Industries Ltd (1987) 162 CLR 612, 622-3 Deane J said that the power to make a Mareva order encompasses an order requiring the disclosure by the defendant of his assets, and an order for the delivery up of designated assets. He did not impose any qualification to the effect that the power is limited to circumstances where discovery or the administration of interrogatories (or in the case of delivery up of assets, the making of interim preservation orders under Part 28 of the Supreme Court Rules) would be appropriate. 22 In Reid v Howard both the High Court of Australia ((1995) 184 CLR 1) and the Court of Appeal of New South Wales ((1993) 31 NSWLR 298) proceeded on the basis that this Court has jurisdiction to make disclosure orders ancillary to Mareva orders, and not merely orders in the nature of discovery and the administration of interrogatories under the Supreme Court Rules. In the Court of Appeal (at 305) the source of the jurisdiction was said to be s 23 of the Supreme Court Act 1970 (NSW), according to which this Court has all jurisdiction necessary for the administration of justice in New South Wales, although the High Court (at 16-17) drew attention to the limits of that section as a source of power. 23 Now that Cardile's case has defined more precisely the source of the jurisdiction to make the Mareva orders themselves, some inferences can be drawn as to the Court's jurisdiction to make ancillary disclosure orders. Since the source of the jurisdiction to make Mareva orders is the Court's inherent power to prevent abuse of its processes and stultification of the administration of justice by the removal of assets from the plaintiff's reach, the Court must also have the power to order disclosure of the nature and location of particular assets or assets of a class so that the Mareva relief is effective and not oppressive. As Robert Goff J pointed out in A v C (at 351), if the plaintiff does not know the number and location of (say) the defendant's bank accounts, a Mareva order in respect of bank accounts generally could be oppressive both to the defendant and to the bankers who are required to act in accordance with it, especially where there is more than one account or several defendants. Without information about the nature and location of the defendant's assets, the plaintiff may be unable to make the risk assessment which is necessary in order to give the undertaking as to damages, or if the undertaking is given, it may lead to an unexpected exposure. Robert Goff J concluded, as do I, that considerations such as these point to the conclusion that in the special cases where the court decides to make Mareva orders, it may make such disclosure orders as are necessary to ensure that the Mareva jurisdiction is properly and effectively exercised. While the power to do so does not depend upon the statutory discovery and interrogatory procedures, Cardile indicates (as I have mentioned) that these procedures should be considered as alternative methods of compelling disclosure, where they are available. The privilege against self-incrimination and s 128 24 Before the High Court decided Reid v Howard (1995) 184 CLR 1, it had been contended that courts in civil proceedings had a broad discretion to override the privilege against self-incrimination so as to prevent defendants from exploiting the privilege to deprive plaintiffs of their civil rights and remedies: see Istel Ltd v Tully [1993] AC 45, 55 per Lord Templeman. In Reid v Howard itself the Court of Appeal of New South Wales, following a course similar to that adopted in New Zealand (Busby v Thorn EMI Video Programmes Ltd [1984] 1 NZLR 461), made orders requiring disclosure subject to detailed protections designed to prevent incriminating material from being used against the disclosing party. The Court of Appeal's disclosure orders were made in support of Mareva orders in proceedings brought by former clients against a chartered accountant who was alleged to have defrauded them. There were no concurrent criminal proceedings. 25 The High Court held that although the privilege against self-incrimination may be abridged by statute or waived, it is otherwise without any real exception (at 12). The privilege is not to be modified or abrogated in favour of some different protection by judicial decision (at 17). Section 23 did not, in the opinion of the High Court, authorise the Supreme Court to modify or abrogate the privilege against self-incrimination (at 17), which the High Court described as a basic and substantive common law right which is a fundamental bulwark of liberty (at 11). 26 Reid v Howard does not prevent the court from making disclosure orders ancillary to Mareva orders, but it establishes that in the absence of a statutory modification or waiver, the defendant may object to compliance with the orders by invoking the privilege. Where the privilege is invoked in the context of discovery or interrogatories, the Supreme Court Rules set out the procedure for objection: see Part 23 Rules 1(c)(ii) and 3(6)(d); Part 24 Rules 5 and 6(3)(d). If the person concerned wishes to claim the privilege he or she does so at the time when the documents are produced or the interrogatories are required to be answered. 27 Where the disclosure order is not an order for discovery or the administration of interrogatories, an issue arises as to how to cater for the right to object on the ground of the privilege. This issue arose in Vasil v National Australia Bank Ltd [1999] NSWCA 161. In that case the respondent bank was the plaintiff in an action against the appellant claiming damages for deceit. Criminal proceedings were commenced against the appellant. The bank then obtained an ex parte Mareva order restraining the appellant from removing any property from the jurisdiction or dealing with property otherwise than to meet day to day living expenses and legal expenses. The judge also ordered the appellant to deliver to the bank an affidavit setting out particulars of accounts with financial institutions and other specified information about his property and liabilities. The order did not make provision for any claim to privilege and as Stein JA pointed out, refusal to provide the affidavit on the ground of privilege could very well have been in breach of the order. The appellant applied by notice of motion for the discharge of the disclosure order on the basis that it infringed his privilege against self-incrimination. 28 Meagher JA, dissenting, held that an objection on the ground of self-incrimination should be taken, if at all, at the time when the information is required to be given, and not earlier. Since the appellant had not objected to the provision of particular information and had not given the grounds for his objection, his application to discharge the disclosure order was premature. The majority (Stein and Fitzgerald JJA) held that the judge's disclosure order was defective because it made no provision for the appellant to claim the privilege, and therefore the real effect of the disclosure order would be to abrogate the privilege itself, contrary to Reid v Howard. The majority took the view that where the disclosure order is inconsistent with the privilege as expounded by Reid v Howard, it should be set aside even though the party ordered to make disclosure has not supported the claim to the privilege by sworn evidence of the kind which would be required had the procedures for discovery or interrogatories been followed. Since the judge had before him facts which suggested the relevance of a claim to the privilege, his order should have expressly permitted the appellant to swear an affidavit claiming the privilege and should not have required that the affidavit of assets be delivered directly to the bank, rather than to the judge in a sealed envelope. The Court held that although Reid v Howard related to the law prior to the commencement of s 128 of the Evidence Act 1995 (NSW), s 128 has not authorised the making of a disclosure order of the kind made against the appellant. 29 Section 128(1) gives a witness the statutory right to object to giving evidence on the ground that the evidence may tend to incriminate the witness. If it finds that there are reasonable grounds for the objection, the court must not require the witness to give the evidence and must inform the witness that the evidence need not be given but that if it is given, the court will issue a certificate under the section (s 128(2)). If a certificate is given, the evidence and any information obtained as a direct or indirect consequence cannot be used against the witness (s 128(7)). However, s 128(5) allows the court to require the witness to give evidence if it is satisfied of certain things, including that 'the interests of justice require that the witness give the evidence'. If the court so requires, it must issue a certificate and accordingly the evidence is protected in the same way. 30 Sub-section (5) is thus a statutory provision which abridges the privilege against self-incrimination which the High Court had held to be absolute in Reid v Howard.. Where it applies, it subjects the privilege to the exercise of judicial discretion. What is envisaged, however, is not that the court will make elaborate orders creating a special protection regime in substitution for the privilege, as Powell J and the Court of Appeal had done in Reid v Howard; rather, the court simply decides whether to require the witness to give evidence and if it does so, it must issue a certificate which gives the witness the statutory protection set out in s 128(7). The scheme of s 128 implies that the statutory protection is sufficient for the witness whose privilege is overridden unless there are special grounds to apprehend some prejudice not adequately addressed by the statute. In this sense s 128 overcomes the effect of the High Court's decision in Reid v Howard: see S Odgers, Uniform Evidence Law (1998), p 414. 31 Given that according to the Court of Appeal in Vasil's case, a disclosure order ancillary to a Mareva order must make some provision to allow the disclosing party to object on the ground of the privilege, and should not give an unqualified direction that the evidence be supplied to the other party, what form of order and procedure should be used? In Vasil's case (paragraphs 45 and 46) Fitzgerald J referred to the current practice of the Equity Division. He described the practice as follows: (i) the judge makes ex parte orders which require an affidavit of assets; (ii) when sworn, the affidavit is brought into Court before it is filed; (iii) notice of the hearing at which that is to occur is given to the Director of Public Prosecutions; (iv) if an objection based on the privilege against self-incrimination is taken when the affidavit of assets is brought into Court, the parties and the DPP are heard on the questions raised by s 128; (v) the judge decides whether to give a certificate; (vi) if the certificate is given the affidavit may be used in the civil proceeding and the deponent is protected by s 128(7) but if the certificate is refused, the judge orders that all copies of the affidavit be surrendered and destroyed. 32 This is the practice which the Equity Division developed in the following cases: HMP Industries Pty Ltd v Graham (No.2728/96, Young J, unreported, 17 July and 27 August 1996); National Australia Bank Ltd v Rusu (No.4371/96, Cohen J, unreported, 13 February 1997; Hamilton J, unreported, 6 April 1998 (two judgments), 7 May 1998); AMP General Insurance Ltd v Prasad [1999] NSWSC 252 (23 March 1999) and [1999] NSWSC 349 (16 April 1999)(Hamilton J). In Rusu and Prasad criminal proceedings had been commenced before the issue of disclosure was determined in the civil proceedings, and in HMP Industries there was a 'distinct possibility' that the defendant would be charged. 33 As I understand the Equity Division practice, an order requiring an affidavit of assets is not made ex parte, or at all, unless the court is persuaded that the order is necessary in the circumstances. Cohen J's judgment in Rusu reinforces the inference to be drawn from Cardile, that the Court should consider using alternative procedures for disclosure when they are available, including the procedure for the administration of interrogatories. 34 It appears from the cases that some aspects of the Equity Division's procedure are not yet settled. First, there is some uncertainty as to whether the deponent of an affidavit is a 'witness' for the purposes of s 128 unless he or she gives oral evidence. In his first judgment in the HMP Industries case Young J held that if the court compels a party to give evidence by swearing an affidavit of assets, the deponent has the protection of s 128(7). However, in his second judgment he embraced a procedure in which the deponent of the affidavit goes into the witness box and gives evidence of the truth of his affidavit, and the certificate under s 128 is given in respect of the oral evidence and the affidavit which is thereby adopted. Young J raised the question whether a 'witness' within the meaning of s 128 includes a person who gives evidence by affidavit or only a person in the witness box, and said: 'Section 128 seems to envisage the situation where a person is in the position of objecting to giving particular evidence. The section also is set in the background of the witness giving evidence with the Court having certain discretions as to whether in all the circumstances it should require the witness to answer a possibly incriminating question. This scenario suggests that it is applicable only where the witness is in Court. Accordingly, what should happen in the situation referred to in my earlier judgment, the witness should be asked in Court for oral evidence.' 35 In Rusu and Prasad, Hamilton J adopted a different procedure. The affidavit was brought into court in the possession of the defendant, not having been communicated to anybody else. The affidavit was inspected by the judge in court. The judge then decided whether there were reasonable grounds for the objection for the purposes of s 128(2) and having made an affirmative decision on that point, gave advice to the deponent as required by that subsection. If the deponent chose to give the evidence subject to a certificate or the judge decided to require that the evidence be given, the evidence would be adduced by the reading of the affidavit. Hamilton J did not require the deponent to give oral evidence as to the contents of the affidavit. In his judgment of 16 April 1999 in Prasad, he explained his view thus: 'The Evidence Act is silent as to the giving of evidence in chief at trials by affidavit, perhaps strangely in that, certainly now (and, indeed, by 1995), evidence in chief is given at almost all trials, at least in this division, by affidavit, and the same is substantially so in the Federal Court of Australia. However, because this practice subsisted at the time of the Act, in my view the Act must be taken to contemplate the giving of evidence in this fashion, and it is also my view that the reading of the affidavit is the most convenient course in this case.' 36 It appears to me, with respect, that although the giving of oral evidence may be a preferable approach on occasions, the giving of evidence by affidavit is appropriate to attract s 128 for the reasons stated by Hamilton J, and will often be the more convenient procedure. 37 Another uncertainty relates to the point at which the judge should make a decision as to the issue of a certificate. In the HPM Industries case Mareva and disclosure orders were made ex parte, with leave to the defendant to apply to vary or discharge the disclosure order. On the return date the defendant sought to discharge the order. Young J took the view that the best way of balancing 'the public interest in preventing people incriminating themselves and the public interest in preventing fraudsters spiriting away property' was to indicate that he would be prepared to give a s 128 certificate in respect of the affidavit when it was prepared. His Honour expressed dissatisfaction with the position, however, because in order to make sure the defendant's rights under Reid v Howard were protected, he felt obliged virtually to promise an indemnity in advance by the issue of a s 128 certificate in respect of an affidavit which had not at that stage been prepared. In his second judgment of 6 April 1998 in Rusu case, Hamilton J made it clear that he would not make any decision under s 128 until the affidavits prepared in compliance with the disclosure order had been brought into court and inspected by him. At that stage he would determine, first, whether there were reasonable grounds for the objection with respect to the privilege, and secondly (in the event that the evidence was not then given voluntarily) whether to require under s 128(5) that the evidence be given subject to a certificate. He said that until then, he would have 'an open mind' as to the exercise of those discretions. Obviously Hamilton J's approach is preferable for the reasons given by Young J, provided that it is consistent with the deponent's privilege against self-incrimination, in light of Reid v Howard and Vasil's case. 38 There are some obiter remarks by Fitzgerald JA in Vasil (para 46) which could be seen as casting doubt on the procedure adopted by Hamilton J. Fitzgerald JA raised a question as to whether the Equity Division practice which he had described encounters some of the objections referred to in the majority judgment in Reid v Howard (184 CLR at 16-17). There the High Court objected to the special procedure established by the Court of Appeal's orders, on the ground that there were no criteria set out for the court to decide whether the plaintiff's solicitors should be granted leave to disclose the information contained in the affidavit, and if it was not to be disclosed, whether it would be necessary to conduct the proceedings behind closed doors; more generally, justice would not be served by the modification of a fundamental right of general application. It seems to me, with respect, that by enacting s 128 the Legislature has modified the privilege by subjecting it to the judicial discretion in s 128(5), and by creating a procedure in which the court must determine whether there are any reasonable grounds for the objection. Restrictions imposed by the court on the use and dissemination of evidence to which a certificate applies will normally be adopted as a practical measure to protect prosecuting authorities, rather than as a judicial supplement to the witness' rights, which I take to be adequately addressed in s 128(7) in the absence of special circumstances. 39 My conclusion is that, notwithstanding Fitzgerald JA's remarks in Vasil, Hamilton J's approach conforms to s 128 and I am at liberty to follow it. Specifically, it is not necessary to make a decision as to the issue of a s 128 certificate before the disclosure affidavit is brought into court and inspected by the judge. 40 It may be useful if I attempt to re-state what seems to me to emerge from the cases as the Equity Division's current procedure. When an application for a disclosure order is made, as an order ancillary to Mareva orders which the Court has decided to make, the Court must first consider whether disclosure is necessary or appropriate to promote the purposes for which the Mareva relief is to be granted. The matters relevant to the Court's discretion to initiate a disclosure process include the breadth or specificity of the disclosure which is sought, the availability of alternatives such as discovery and interrogatories, the existence of other proceedings (especially criminal proceedings) relating to the same subject matter, and (whether there are concurrent criminal proceedings or not) the likelihood that the disclosure order may be open to objection on the ground of the privilege against self-incrimination. The mere existence of concurrent criminal proceedings does not ipso facto prevent a disclosure order from being made, as is shown by Vasil, Rusu and Prasad. It may still be appropriate to initiate the disclosure process, allowing the disclosing party to make submissions about self-incrimination after the affidavit has been brought into court and inspected by the judge. However, where specific disclosure is sought of facts which go to the heart of the matters to be proved at the criminal trial, the better course may be for the court either to stay the application for disclosure or even to deny the motion. 41 If the Court decides to initiate the disclosure process, the procedure which it chooses is likely to depend on whether, on the one hand, an objection to disclosure based on the privilege against self-incrimination has been taken or is a real possibility, or on the other hand the disclosure order is unlikely in the circumstances to raise any question about self-incrimination. In the latter case, it is enough simply to express the order to be subject to any claim of privilege against self-incrimination, as Hodgson J did initially in Reid v Howard. In the former case, it is more appropriate to use the fuller procedure which I shall describe. 42 The Court initiates the disclosure procedure by making an order that a disclosure affidavit be prepared and delivered to the judge's associate in a sealed envelope, together with directions that the affidavit not be filed or served on any other party, and that the further hearing be notified to the Director of Public Prosecutions. At that hearing the judge opens the envelope and inspects the affidavit. Any affidavit or oral evidence to support the witness' objection is then adduced, and submissions are heard as to whether for the purposes of s 128(2) there are reasonable grounds for the objection, even though at that stage the plaintiff's counsel has not had access to the affidavit which is the subject of the objection. The judge then rules on that question. 43 If the decision is that there are no reasonable grounds for the objection, the witness' obligation to comply with the disclosure order remains and must be satisfied. If there are reasonable grounds for the objection, then the Court gives the witness the warning required by s 128(2). If the witness chooses to give the evidence after hearing the warning, the Court directs that copies of the affidavit be provided to the legal representatives of the other parties, but that the contents not be disclosed to any other person. The affidavit is formally read and objections to admissibility are taken in the normal way. If there is a risk that this process will disclose the contents of the affidavit to persons other than the deponent and the legal representatives of the parties, it may be necessary for the court to be closed during this process. Once the affidavit has been read, the s 128 certificate is given and attached to it. 44 If the witness elects not to give the evidence, then the Court hears any further submissions as to whether it should require the witness to give the evidence under s 128(5), and makes a determination accordingly. If the Court decides to require the witness to give the evidence, then it follows the procedure for the reading of the affidavit as outlined above. If the Court decides not to require the witness to give the evidence, the judge directs that all copies of the affidavit be returned to the witness' legal representative and authorises their destruction. 45 Where evidence is given to which a certificate applies, the witness is protected by s 128(7) and there is a risk to the prosecuting authorities that their evidence in the criminal proceedings may be corrupted by knowledge of the witness' civil evidence. For at least that reason, steps should be taken to limit the use and dissemination of the protected evidence. In the HPM Industries case Young J agreed that the appropriate procedure was to permit only the plaintiff's lawyers to see the information, subject to conditions set by the Court. As I have mentioned, there may on occasions be a special risk of prejudice to the witness even though a certificate is given, also justifying orders restricting the inspection of the evidence. 46 The procedure which I have described involves the Court inspecting the affidavit before deciding whether the contents of the affidavit must be given in evidence. It also involves the legal representatives of other parties having access to the affidavit, although only after the deponent has decided to give the evidence or the Court has decided to require that the evidence be given. In my opinion this procedure is appropriate, and some such course is necessary, in order to comply with s 128, even in light of Reid v Howard and Vasil. Stay of proceedings 47 This Court has the power to control its own proceedings and in particular, it has the power to stay proceedings before it in the interests of justice. In an appropriate case the Court may stay civil proceedings before it in order to avoid the risk that those proceedings may create an injustice to a litigant who is standing trial for offences arising out of the same set of facts with which the civil proceedings are concerned: Oades v Hamilton (1987) 11 NSWLR 139. 48 In McMahon v Gould (1982) 1 ACLC 98; 7 ACLR 202 a defendant in civil misfeasance proceedings, brought by the liquidator of a company of which he had been a director, sought a stay of those proceedings pending determination of criminal proceedings against him which arose out of the same facts. Wootten J held that the burden was on the defendant to show that it was in the interests of justice that the plaintiff's rights to have his civil action tried in the ordinary course should be interfered with. One matter to be considered is whether the continuance of the civil proceedings would create a real risk of unjust prejudice to the defendant by undermining his privilege against self-incrimination. Wootten J referred to ss 178 and 179 of the Crimes Act 1900 (NSW), the effect of which is that a person accused of any of the offences in ss 165 to 176 (relating to frauds by agents) cannot invoke the privilege to avoid discovery or interrogatories in a civil proceeding but is protected from conviction if he first discloses his act or omission under compulsory civil process. Although some of the charges against the defendant were not within ss 165-176, Wootten J found that the policy underlying ss 177 and 178 cannot logically be confined to the offences in ss 165-176, and that it would be proper to have regard to that policy in the case before him, by weighing against the application for a stay of proceedings 'the importance in the public interest that persons entrusted with property on behalf of others should be compelled to account without undue delay for their dealings with the property' (1 ACLC at 105). He therefore refused the stay of proceedings. 49 On the other hand, in Oades v Hamilton the Court of Appeal of New South Wales restricted civil proceedings in order to protect the appellant's privilege against self-incrimination. In that case an order had been made for the appellant to be examined by the liquidator of a company with which he had been connected. Before the examination was held, criminal charges were laid against the appellant in relation to that company. The Companies Code provided that a witness in an examination was not excused from answering questions on the ground of the privilege against self-incrimination but where the privilege was claimed, the answer was not admissible in evidence against the witness in criminal proceedings. At first instance McLelland J placed weight on the legislative policy evident in the Companies Code and held that there was no legitimate basis for excluding from the scope of the examination matters which were the subject of pending criminal proceedings. The Court of Appeal disagreed. Clarke JA said (11 NSWLR at 153): 'Once a charge is laid an accused person is, statutory exceptions apart, entitled to all the protection afforded by well established principles of the criminal law. In particular he is not required to submit to pre-trial interrogation, nor is he amenable to the subpoena process. The Crown is obliged to prove the case against him and he is not required to assist the prosecution or to disclose his defence. It follows that the exposure of a person charged with a criminal defence to questioning which may lead to the furnishing of incriminating answers in respect of matters at the heart of the criminal charge may cause significant prejudice to the examinee and constitute a real interference with the administration of criminal justice.' 50 The Court of Appeal held that the appellant was entitled to an order that the examiner be restrained from asking questions which may elicit answers which are incriminating and which go to the heart of one or other of the charges. Although the Court of Appeal's decision was reversed by the High Court of Australia ((1989) 166 CLR 486), it seems to me that nothing in the High Court's judgments is inconsistent with Clarke JA's statement of principles quoted above, the thrust of the judgment being that s 541 of the Companies Code is a special provision which overrides the principles of the kind set out by Clarke JA (see 166 CLR at 497, 502-3). Section 541 is obviously distinguishable from s 128 of the Evidence Act, since the latter does not require disclosure but merely gives the court a discretion to do so. 51 There are some differences of emphasis between the judgments of Clarke JA and Wootten J, the latter having some similarities with the judgment of McLelland J which was overturned by the Court of Appeal. But the cases stand together because the unsuccessful application in McMahon v Gould was to stay the civil proceeding generally because of a number of perceived risks to the defendant's privilege which the Court held to be insubstantial; whereas in Oades v Hamilton the Court of Appeal declined to stay the examination proceedings but made orders designed to prevent the examiner from asking particular questions which, going to heart of the criminal matters, would imperil the defendant's privilege. The present case 52 The most striking feature of the present case is that the disclosure which the plaintiff now seeks is very closely connected with the pending criminal charges. An element of the offences with which the second and third defendants have been charged is the unlawful taking or retaining of possession of goods. There is very real risk that the defendants would be prejudiced in their defences to the criminal charges if they are required to disclose the location of the computer equipment which is the subject of the charges, or the proceeds of sale. Although the disclosure would be protected by s 128(7), the fact of disclosure would be likely as a practical matter to affect the defendants' conduct of their criminal trials. For example, if they disclosed the location of the computer equipment in the civil proceedings, the exercise of their right to put the Crown to proof of that matter in the criminal trials could well be compromised. Knowing that the disclosure had been made, they would inevitably be concerned that the substance of it would become known to the prosecutors notwithstanding the protection in s 128(7), and this would be likely to impose constraints on their preparation for the trial. Further, if disclosure orders are made and complied with and subsequently the police discover the location of the computer equipment, difficult factual and legal questions could well arise as to the admissibility of evidence of that discovery having regard to s 128(7). 53 The parties made competing submissions as to whether it would be consistent with s 128(7) for the Crown to make use of the disclosure affidavits in cross-examination in the criminal proceedings in the event that the deponents give evidence in those proceedings. It seems to me unnecessary to resolve that issue, although I am inclined to think that s 128(7) would apply to prevent the affidavit from being used in hostile cross-examination of the deponent, even though the affidavit is not put into evidence. But for present purposes it is enough to say that there is a plausible view that s 128(7) would not prevent the use of the affidavit in cross-examination. That being so, it is obvious that the provision of an affidavit would affect the defendants' preparation of defences and tactics for the trial, including their decisions as to whether they will give evidence. 54 It seems to me that the best way of avoiding difficulties of these kinds is not make any disclosure order, at least until the determination of the criminal proceedings. In the meantime the plaintiff will have the protection of the Mareva orders which are already in place, including the order which restrains each defendant from moving or dealing with any computer equipment. The evidence before me indicates that the value of the assets of the second and third defendants together exceeds the value of the plaintiff's claim, although the value of the plaintiff's claim exceeds the separate value of the assets of the second and third defendants to which the orders relate. In the circumstances it seems to me that the Mareva orders give the plaintiff a significant level of protection, even it falls short of complete security. Making a disclosure order at this stage of the present case would be inconsistent with the public policy which underlies the privilege against self-incrimination, as expounded by the High Court in Reid v Howard, as well as the protections of the criminal law outlined by Clarke JA in Oades v Hamilton. My decision on this point is consistent with Hungerford J's decision in Aslanis v Brambles Australia Ltd (1997) 82 IR 220, although with respect, his observations at 235 may understate the effect of s 128 on the Reid v Howard doctrine. 55 The defendants submit that I should give effect to this view by making orders staying the civil proceeding as a whole pending the determination of the criminal matters. I do not believe it is necessary to go this far. Resolution of the criminal proceedings could take a substantial time and in the meantime, a stay would prevent the plaintiff from making progress towards the trial of civil proceedings and obtaining its natural priority in the list. The defendants say that if pleadings are ordered, they would be prejudiced in preparing verified defences, and that even if pleadings are not required, difficulties concerning self-incrimination could arise in the supply of particulars and in the preparation of filing affidavits by way of defence. It seems to me that such problems may or may not arise, and the appropriate time to deal with them is when they occur rather than when they are merely possibilities. 56 Three options remain available to me for the implementation of my view that the disclosure which the plaintiff seeks should not be required at this stage. I could simply deny the plaintiff's motion that orders be made in terms of paragraphs 6(b), (c) and (d) of the Summons; or I could stay the plaintiff's application for this relief, or I could initiate the disclosure process to the point of requiring that affidavits in sealed envelopes be supplied, but then stay the application so that no further steps would be taken. If I pursue the second or the third option, the order for a stay would be expressed to operate until further order, with liberty to apply. 57 On balance, I have decided that the most appropriate course is to stay the application for orders under paragraph 6(b) (c) and (d) of the Summons until further order, with liberty to apply. It seems to me that the potential prejudice to the defendants with respect to the criminal proceedings arises as soon as their affidavits are supplied to the Court, because the contents of the affidavits will necessarily have a practical effect on their preparation and tactics for the conduct of their defences at the trials. By staying the application with liberty to apply, rather than dismissing it, I leave open the possibility that the plaintiff may expeditiously raise any such matters, and restore the application if there is a good reason to do so. I prefer not to dismiss the application entirely, because disclosure orders could well become appropriate if (for example) the criminal proceedings are concluded, or it emerges that the defences to the criminal proceedings are consistent with the disclosure which the plaintiff seeks. 58 If the plaintiff exercises the liberty to apply in order to restore the application, an issue for consideration will be whether the administration of interrogatories would be a more appropriate procedure than special disclosure orders ancillary to Mareva relief. Interrogatories may well be preferable. If the plaintiff were to seek to administer interrogatories forthwith after delivery of my reasons for judgment, presumably it would be faced with an objection on the ground of the privilege and consistently with the reasoning in this judgment, any application for an order that interrogatories be answered would be stayed. 59 I therefore propose to order that the plaintiff's application, made at the hearing on 13 May 1999, for orders in terms of paragraph 6(b)(c) and (d) of the Summons be stayed pending further order, and that each party have liberty to apply to the Equity Duty Judge on, say, 48 hours' notice. I shall hear the parties' submissions on the question of costs. * * * * * * * * * * Last Modified: 08/10/1999 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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