Reported Decision : 75 NSWLR 418 [2010] ALMD 6454 New South Wales Supreme Court CITATION : Sheikholeslami v Tolcher [2009] NSWSC 920 HEARING DATE(S) : 2 July 2009 JUDGMENT DATE : 4 September 2009 JURISDICTION : Equity Division Expedition List JUDGMENT OF : Rein J DECISION : Certificate granted under s 87 of the Civil Procedure Act 2005. CATCHWORDS : EVIDENCE – facts excluded from proof – protection in respect of self-incrimination – whether certificate under s 128 of the Evidence Act 1995 or under s 87 of the Civil Procedure Act 2005 can be granted for plaintiff's evidence in chief by affidavit Civil Procedure Act 2005 LEGISLATION CITED : Evidence Act 1995 Foreign Acquisitions and Takeovers Act 1975 (Cth) CATEGORY : Procedural and other rulings Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 Chao v Chao [2008] NSWSC 584 Cornwell v R (2007) 231 CLR 260 CASES CITED : Ferrall and Others v Blyton; Attorney-General of the Commonwealth (Intervener) [2000] FCA 1442; (2000) 27 Fam LR 178 Meiko Australia Pacific Pty Limited v Adam Samuel Hinchliffe & Anor [2009] NSWSC 354 Ollis v Melissari [2005] NSWSC 1016 Vaughan Constructions Pty Ltd v Alan Luong [2008] NSWSC 1033 PARTIES : Gita Sheikholeslami (Plaintiff) Raymond Tolcher as Trustee of the bankrupt estate of Roya Sheikholeslami (Defendant) FILE NUMBER(S) : SC 1912/09 COUNSEL : Mr M Condon (Plaintiff) Mr S Golledge (Defendant) SOLICITORS : Brown & Partners Solicitors (Plaintiff) Turnbull Hill Lawyers (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EXPEDITION LIST Rein J Date of Hearing: 2 July 2009 Date of Judgment: 4 September 2009 1912/09 Gita Sheikholeslami v Raymond Tolcher JUDGMENT 1 Rein J: These proceedings concern a property known as 609 Kent Street, Sydney purchased by the plaintiff's sister in 1996. The plaintiff claims that it was agreed between the plaintiff and her sister Roya that the plaintiff would buy the property in Roya's name but that Roya would hold the property in trust beneficially for the plaintiff. The plaintiff claims that she provided $130,000 of the monies required to buy the property and that the rest was borrowed from a bank. Rent received was to be paid to service the mortgage debt and the balance to a nominated account in the name of the plaintiff. 2 On the plaintiff's case, the purpose of the arrangement was, it appears, to avoid the prohibition on the plaintiff, who is neither a citizen nor resident of Australia, from owning property in Australia. 3 On 24 September 2008 the defendant was appointed as trustee of the estate of Roya. The only significant asset of the estate is the Kent Street property. 4 The plaintiff is concerned that the evidence which she wishes to give may incriminate her and more specifically may provide evidence that she has breached the Foreign Acquisitions and Takeovers Act 1975 (Cth) by arranging to purchase a property without seeking and obtaining approval of the relevant authority. The Court is not presently concerned with whether any breach of the legislation would disentitle the plaintiff to relief or whether in due course it would be appropriate to refer the papers to the appropriate authority. 5 The plaintiff has, I was informed, sworn an affidavit setting out the background to her purchase but the affidavit has not been served or filed. Orders were made previously by consent for her to serve any affidavits on which she intends to rely in the proceedings. She seeks to obtain a certificate pursuant to s 128 of the Evidence Act 1995 or, alternatively, pursuant to s 87 of the Civil Procedure Act 2005. Section 128 of the Evidence Act is in the following terms: "128 Privilege in respect of self-incrimination in other proceedings (1) This section applies if a witness objects to giving particular evidence, or evidence on a particular matter, on the ground that the evidence may tend to prove that the witness: (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. (2) The court must determine whether or not there are reasonable grounds for the objection. (3) If the court determines that there are reasonable grounds for the objection, the court is to inform the witness: (a) that the witness need not give the evidence unless required by the court to do so under subsection (4), and (b) that the court will give a certificate under this section if: (i) the witness willingly gives the evidence without being required to do so under subsection (4), or (ii) the witness gives the evidence after being required to do so under subsection (4), and (c) of the effect of such a certificate." 6 Section 87 of the Civil Procedure Act is in the following terms: "87 Protection against self-incrimination in relation to interlocutory matters (1) In this section: civil penalty has the same meaning as it has in the Evidence Act 1995. conduct includes both act and omission. culpable conduct means conduct that, under: (a) the laws of New South Wales, or (b) the laws of any other State or Territory, or (c) the laws of the Commonwealth, or (d) the laws of a foreign country, constitutes an offence or renders a person liable to a civil penalty. order for production means an interlocutory order requiring a person (other than a body corporate) to provide evidence to the court or to a party to a proceeding before the court. provide evidence means: (a) to provide an answer to a question or to produce a document or thing, or (b) to swear an affidavit, or (c) to file and serve an affidavit or a witness statement, or (d) to permit possession to be taken of a document or thing. (2) This section applies in circumstances in which: (a) an application is made for, or the court makes, an order for production against a person, and (b) the person objects to the making of such an order, or applies for the revocation of such an order, on the ground that the evidence required by the order may tend to prove that the person has engaged in culpable conduct. (2A) This section does not apply in circumstances in which section 128A of the Evidence Act 1995 applies. (3) If the court finds that there are reasonable grounds for the objection or application referred to in subsection (2) (b), the court is to inform the person, or the person's legal representative: (a) that the person need not provide the evidence, and (b) that, if the person provides the evidence, the court will give a certificate under this section, and (c) of the effect of such a certificate. (4) If the person informs the court that he or she will provide the evidence, the court is to cause the person to be given a certificate under this section in respect of the evidence. (5) The court is also to cause a person to be given a certificate under this section if the court overrules an objection to the making of an order for production, or refuses an application for the revocation of such an order, but, after the evidence is provided, the court finds that there were reasonable grounds for the objection or application. (6) Despite anything in this section, the court may make an order for production if it is satisfied of the following: (a) that the evidence required by the order may tend to prove that the person has engaged in culpable conduct, (b) that the culpable conduct does not comprise conduct that, under: (i) the laws of any State or Territory (other than New South Wales), or (ii) the laws of the Commonwealth, or (iii) the laws of a foreign country, constitutes an offence or renders a person liable to a civil penalty, (c) that the interests of justice require that the person provide the evidence. (7) If the court makes an order for production under subsection (6), it is to cause the person to be given a certificate under this section in respect of the evidence required by the order. (8) In any proceedings: (a) evidence provided by a person in respect of which a certificate under this section has been given, and (b) evidence of any information, document or thing obtained as a direct or indirect consequence of the person having provided such evidence, cannot be used against the person. However, this does not apply to a criminal proceeding in respect of the falsity of the evidence. (9) If a question arises under this section relating to a document, the court may order that the document be produced to it and may inspect the document for the purpose of determining the question." 7 Mr Condon of counsel appeared for the plaintiff and Mr Golledge of counsel appeared for the defendant. I received detailed and helpful written submissions from Mr Condon on 20 July 2009. Mr Golledge was given an opportunity to provide submissions but did not avail himself of the opportunity because, as he indicated to the Court, whilst the trustee does not consent, he does not actively oppose the grant of a certificate. Section 128 of the Evidence Act 8 For the section to operate the witness must "object" to giving particular evidence. When a party wishes to advance affidavit evidence in support of his or her case the process would not appear to me to involve "objecting" to giving evidence. This aspect of the section has, however, been the subject of consideration in several cases. In Ferrall and ors v Blyton; Attorney-General of the Commonwealth (Intervener) [2000] FCA 1442; (2000) 27 Fam LR 178, a Family Court judge granted a certificate pursuant to s 128 of the Evidence Act. The husband had engaged in a scheme to attempt to thwart his wife's legitimate claims to the share of assets held by him which scheme had lead to the husband losing assets to the person whose scheme he was implementing (the applicants). The husband wanted to give evidence of those activities to assist in him obtaining orders that property which had been transferred was in reality his (and his wife supported that process). The Full Court of the Family Court rejected the applicants' arguments that the certificate should not have been granted. The Full Court said at [89] – [90]: "[89] We think the trial judge was clearly correct in holding that it was within his discretion to grant such a certificate. First, we think it would be unrealistic to limit the availability of a certificate to a situation where a witness is asked a particular question in cross-examination. We think the availability of a certificate clearly applies to evidence given in chief, otherwise an inappropriate forensic advantage would rest with the other party who would be in a position to prevent the question of an objection arising by simply not seeking to cross-examine. [90] In the particular circumstances of the Family Court of Australia, evidence-in-chief is normally given by affidavit. We think that in the circumstances of the present case, the witness was objecting, in the sense required by s 128, by indicating that he would not file the affidavit unless a certificate was given. We see the situation as no different from that which would have been the case if he had been sworn in and asked to answer questions concerning the matter in evidence-in-chief, and had objected to doing so without the issue of such a certificate." It should be noted that notice had been given to the Commonwealth Attorney-General whose representative supported the husband's position on the appeal. As in the Family Court, in the Equity Division evidence in chief is normally given by affidavit. 9 In Ollis v Melissari [2005] NSWSC 1016, a witness was asked questions in re-examination to which the witness objected on the grounds that the answers may tend to incriminate him. Campbell J (as he then was) had to consider whether the Court has power pursuant to s 128 of the Evidence Act to grant such a certificate, and held that it did. He said at [5] – [7]: "[5] It will be seen that the first step in the application of section 128 is the witness objecting to giving particular evidence, on one of the grounds set out in section 128(1). In my view, the expression "if a witness objects to giving particular evidence" is not to be construed in a narrow way, by reference only to someone saying "I object" in response to a particular question, in the course of taking evidence in court, in the way barristers traditionally do. Rather, the expression is to be construed more broadly, so that it also relates to the witness expressing an unwillingness to give the evidence. Further, it seems to me that the "particular evidence" which is referred to is not confined to particular questions, as they are asked one by one. Rather, it is capable of extending to a witness expressing an unwillingness to giving evidence on particular topics. [6] In the present case, objection has already been taken by the witness to evidence being given on those topics. The re-examination, assuming for the moment that it is proper re-examination, will be confined to those topics which have been opened up by the evidence which has been given by the witness under cover of the section 128 certificate. It seems to me that the objection of the witness to giving evidence on the topic extends also to the giving of evidence on the topic, even in re-examination in response to questions from his own counsel. It is not necessary to go through the artificial procedure of counsel asking the questions, and the witness objecting to the question asked by his own counsel. [7] I am strongly influenced in reaching this conclusion by the evident policy behind section 128. Part of that policy is that a way should be provided in which the claiming of a privilege against self-incrimination does not prevent a court hearing a civil case from obtaining relevant evidence, while at the same time to the extent the New South Wales Parliament has power to do so, not prejudicing in a subsequent criminal trial, the person who gives such evidence. That policy would be carried through only imperfectly if a section 128 certificate were not available concerning evidence given in re-examination. Further it would be a fundamental unfairness if a witness were encouraged by the giving of a section 128 certificate, to give evidence in relation to which he had a right to remain silent, and for the topic so opened up not to be able to be clarified by legitimate re-examination, if the cross-examination on that topic left a misleading or incomplete impression. I decline to believe that it was the intention of parliament to bring about a situation which caused that sort of fundamental procedural unfairness." (emphasis added) 10 In Meiko Australia Pacific Pty Limited v Adam Samuel Hinchliffe & Anor [2009] NSWSC 354 Einstein J had granted a certificate in respect of evidence to be given. Subsequently the party sought a certificate in respect not only of the oral evidence given but also affidavits which had already been served on the plaintiff and read at the final hearing and at interlocutory hearings. Einstein J rejected the claim for a certificate for affidavits already served and read on the basis that s 128 was not designed to permit retrospective immunity: see [184], and he said "once the evidence has been given, it cannot be said that the witness has been compelled". 11 His Honour held that a certificate should "extend only to questions to which objection might be taken, that is, to questions put in cross examination": see [184]. His Honour said at [190] – [191]: "[190] All of the affidavits were read in the course of evidence in chief of the first defendant and so cannot be said to have in any way been the subject of an objection, implied or otherwise. [191] In Ross v Internet Wines Pty Ltd (2004) 60 NSWLR 436 at [104] the purpose of s 128 was identified as being to protect against self-incriminatory disclosures by compulsion. In the present proceedings, the first defendant was not compelled to read the affidavits. For this further reason, no certificate should be granted in respect of the first defendant's affidavit evidence." 12 In Cornwell v R (2007) 231 CLR 260 the High Court had to consider whether a certificate should have been granted to an accused who was asked questions in chief about conversations he had with a third person. The issue revolved around the interpretation of s 128(8), but at [106] – [113] the majority of the Court (Gleeson CJ, Gummow, Heydon and Crennan JJ) said: "[106] Finally, one other aspect of s 128 may be referred to. The opening words of s 128(1) provide that s 128 only applies if "a witness objects to giving particular evidence". A fair characterisation of the exchanges between counsel for the accused and Howie J set out earlier [104] is that while in one sense the accused "objected" to the thirty-fifth question he was asked in chief when he claimed privilege, in another sense he did not object at all. He evidently wanted to give some evidence about the Diez-Lawrence conversations. He could only be sure of giving it in the way he would have liked if he gave it in chief; if he took the risk of leaving its reception to the chance of particular questions in cross-examination, he ran the risk of not being able to give it, or not in the way perceived to be most favourable to his interests. Hence his claim of privilege was arguably not a means by which he "objected", but was an attempt to ensure that s 128 protected him from some potentially adverse consequences of evidence which he did not "object" to giving, but strongly wanted to give. [107] The accuracy of that characterisation is supported by the following factors. [108] First, counsel for the accused carefully spent time in the days preceding 5 May 2003 seeking to prepare the ground for a favourable ruling on the evidence. He had hopes of a favourable ruling before the accused's case opened. While Howie J was resistant to blandishments seeking a favourable ruling, the course being charted for the accused was plainly driven by the desire of the accused to give evidence in chief about the Diez-Lawrence conversations. [109] Secondly, the thirty-fourth question was leading and the thirty-fifth question explicitly triggered the claim to privilege which the accused made: what was happening was no surprise to the accused. [110] Thirdly, if the accused had objected to counsel's question in the sense of not wanting to answer it, or not wanting it to be asked, the issue probably would have been sorted out before the accused entered the witness box, or the accused could have reacted in such a way as to cause counsel to withdraw the question. The fact that the thirty-fifth question, and all the later questions in chief about the Diez-Lawrence conversations, were asked supports the conclusion that the accused wanted to give evidence about them and instructed counsel to structure events so that he could do so with a measure of impunity. [111] This characterisation raises a question whether s 128(1), and hence s 128 as a whole, applies where a witness sets out to adduce in chief evidence revealing the commission of criminal offences other than the one charged. A criminal defendant might wish to present an alibi, the full details of which would reveal the commission of another crime. A civil defendant might wish to prove the extent of past earnings, being earnings derived from criminal conduct. This raises a question whether witnesses who are eager to reveal some criminal conduct in chief, because it is thought the sting will be removed under sympathetic handling from their own counsel or for some other reason, are to be treated in the same way as witnesses who, after objection based on genuine reluctance, give evidence in cross-examination about some crime connected with the facts about which evidence is given in chief. [112] The view that the accused's claim of privilege in all the circumstances answered the requirements of s 128(1) has difficulties. It strains the word "objects" in s 128(1). It also strains the word "require" in s 128(5) – for how can it be said that a defendant-witness is being "required" to give some evidence when his counsel has laid the ground for manoeuvres to ensure that the defendant-witness's desire to give the evidence is fulfilled? And it does not fit well with the history of s 128(8). For one thing, s 1(e) of the 1898 Act and its Australian equivalents provided that an accused person called pursuant to the legislation could be "asked any question in cross-examination notwithstanding that it would tend to criminate him as to the offence charged", which implies that the protection of the accused's position in chief or in re-examination was a matter between the witness's counsel and the witness. For another thing, the Australian Law Reform Commission, in summarising the pre-s 128(8) law, assumed that s 1(e) and its Australian equivalents were to be construed as applying to questions in cross-examination only. [113] The present point was not raised by the DPP either in the courts below or in this Court. It was raised by this Court in the course of oral argument, but was not embraced by counsel for the DPP. "Sometimes this Court will decide a question which has not been referred to or discussed by an intermediate court of appeal but that is not the course which should ordinarily be followed." The present question could be of considerable importance in the day-to-day conduct of trials, since counsel for the accused submitted that in practice s 128 was often employed by prosecutors to elicit evidence in chief. It is not necessary finally to decide this issue, since the appeal is to be allowed on other grounds. And it is not desirable to do so in view of the absence of dispute between the parties on the question and the importance of the question." 13 It is clear that the majority were not determining the matter but the observations by the majority in Cornwell introduce a complication to the present task, as, in my view, although not binding, they point strongly to the reasoning adopted in Ferrall as being unsound, and I remain doubtful as to whether s 128 was intended to protect plaintiffs or defendants who positively wish to assert facts in their oral evidence in chief, or a fortiori in affidavits, which would incriminate them. I take into account, however: (a) the need for a first instance judge (and state intermediate appellate courts) to approach the decisions of intermediate courts with due deference and to depart from them only where convinced that the interpretation is plainly wrong: see Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492; (b) the absence of any submissions by the defendant opposing the application for a certificate; and (c) the fact that although Einstein J rejected the approach taken in Ferrall , such an approach has been implicitly endorsed in Ollis and in Chao v Chao [2008] NSWSC 584 in this Court, and not being convinced that the interpretation adopted in Ferrall is plainly wrong, I would follow Ferrall and grant a certificate under s 128 of the Evidence Act, but for the reliance on s 87 of the Civil Procedure Act which I deal with below. Section 87 of the Civil Procedure Act 14 Section 87 of the Civil Procedure Act follows the form of s 128 of the Evidence Act fairly closely. It is, however, clearly focused on interlocutory matters because "order for production" means "an interlocutory order requiring a person (other than a body corporate) to provide evidence to the Court or to a party to a proceeding before the Court": see s 87(1). It specifically contemplates a certificate in respect of an affidavit. 15 If the approach taken in Ferrall is correct the reasoning a fortiori must apply to s 87. It does not, however, follow that if the approach in Ferrall is incorrect and s 128 of the Evidence Act has no application in relation to affidavits which a party wishes to file in support of his or her case, that s 87 of the Civil Procedure Act is not available. Indeed, in Vaughan Constructions Pty Ltd v Alan Luong [2008] NSWSC 1033, Brereton J held that it was without any reliance on Ferrall. 16 Some of the problems apparent in relation to s 128 of the Evidence Act to which I have referred are not found in relation to s 87 of the Civil Procedure Act. For s 87 to be unavailable there would need to be a preclusion of evidence in chief by affidavit where the party objecting to (or seeking the revocation of) the order is the moving party in the proceedings. The section contains no express preclusion and I do not think any such restriction can be implied. I treat the plaintiff's application as being an application for a revocation of the order with the consequence that under s 87(3) the Court could indicate that a certificate will be granted. There is no dispute that the plaintiff's concerns as to possible infringement of the Foreign Acquisitions and Takeovers Act are reasonable concerns. 17 It follows in my view that a certificate can be granted under s 87 of the Civil Procedure Act and no reason has been advanced as to why I should not grant the certificate. 18 As I have said, on the current state of authority, a certificate could also be granted under s 128 of the Evidence Act but as only one certificate is required, I will found the certificate on s 87 of the Civil Procedure Act. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.