This is the first in a two-part series covering some of the issues arising from compulsory examinations, and the privileges that may be available to a person being examined.
The main regulators of Australian corporate life – ASIC, the ACCC, the ATO and APRA – have the power to conduct compulsory examinations as part of their investigations. Similar powers are enjoyed by certain investigatory commissions established by statute. During these examinations, examinees are required to answer questions, even if an answer may incriminate them.
Examinees need to understand how the information they provide to regulators and commissions can be used against them or others, and the protections that may be available to them.
A word of warning at the outset – the dangers of agreeing to a voluntary interview
During an investigation, a regulator may ask a person if they would be happy to participate in a voluntary interview (and perhaps provide a signed acknowledgement). This request is often preceded by assertions that 'the game is up', there is a clear case against the person, their employer will 'hang them out to dry', and the easiest way ahead for them is to tell everything in a voluntary interview as they have nothing to gain by resisting.
Many go ahead without getting the benefit of legal advice and without having a lawyer present – to their detriment. If a person agrees to a voluntary interview, it will be conducted in what appears to be a friendly environment – but they will be asked the same questions they would be asked in a compulsory examination.
In our experience, the person being interviewed may admit to the interviewer's assertions and propositions without critically assessing them. Crucially, if the person's answers may tend to incriminate them, they will have none of the protections which may be available to them if questioned under a compulsory process.
Voluntary interviews can also create headaches for employers. It is often in an employer's interest to ensure that their staff know that interview requests should be referred to senior office holders, so that legal representation can be arranged for the staff member if appropriate.
In 2015, several significant court cases considered the investigation processes used by ASIC and other regulators, such as the ACCC.
These mainly concerned the powers regulators can deploy for compulsory examinations on oath or affirmation, and the use that can be made of the examination transcripts – a matter of significance given that examinees must answer questions, even if the answers or information provided would incriminate them.
The privilege against self-incrimination
Our justice system follows the principle that, generally, no individual is required to take any step, disclose any information, or provide answers to any question which may tend to incriminate them.1 Our trials and hearings are conducted in an accusatorial system of criminal justice – it is for the prosecuting authority to assemble its evidence and argue and make out its case – rather than a system which requires individuals to provide the evidence that will incriminate them. Accordingly, at common law a person has the right to refuse to answer a question if the answer would be likely to incriminate them.
However, this principle bumps up against the statutory powers and obligations given by parliaments to regulators and other investigatory bodies such as the Australian Crime Commission (ACC), the New South Wales Crime Commission (NSW CC), the NSW Independent Commission against Corruption (NSW ICAC) the Victoria Independent Broad-based Anti-corruption Commission (Vic IBAC), the Queensland Crime and Misconduct Commission(Qld CMC)2 and the Western Australian Corruption and Crime Commission (WACCC). The proposed Australian Building and Construction Commission may be given similar powers.3 The case is similar with Commonwealth Royal Commissions (CRC). The use of the self incriminating evidence gathered by these bodies in proceedings against the individual is prima facie inconsistent with the privilege and the principle.
These bodies are required to investigate a matter, gather the relevant facts, then decide what if any action they should take. For the regulators, their task is also to prosecute.
The Acts of Parliaments governing these bodies clearly recognise that, although a person may be required to provide an answer in a compulsory examination that may incriminate them, the answer cannot be admitted in evidence in certain proceedings against the person.4
What if my transcript may be provided to a prosecutor?
We deal with this in greater detail in the second article. However, the mere possibility that your self-incriminating answers may later be provided to a prosecutor does not entitle you to refuse to answer the question.
You can decline to answer a question in an ASIC, Vic IBAC or NSW CC examination if you have a 'reasonable excuse',5 However it is not a 'reasonable excuse' for an examinee who has not been charged to decline to answer questions, simply because of a concern that their answers may be disclosed later to investigating or prosecuting police. However, if such a matter is sent to trial, it is prudent to quickly seek orders preventing the prosecution team from having access to that information.6 The High Court in a case dealing with Vic IBAC Act has very recently held that in the investigation process, prior to charges being laid, the 'accusatorial judicial process' has not yet been engaged, and thus the principle that an accused person cannot be required to testify to the commission of the offence charged does not at that stage apply.7 The High Court was asked to extend the principle to an investigatory phase when someone is reasonably suspected to have committed an offence. It declined.
How can self incrimination privilege be preserved?
Where the legislation identified in the table below applies, the examinee must assert the privilege against self-incrimination before answering a question.8 This is a strict requirement – and the failure to assert the privilege at this time will be fatal to any later claim of privilege. However, the failure to assert that privilege prior to answering the question does not mean that the privilege is lost where the examining body is the ACCC, Vic IBAC, WA CCC or a Commonwealth Royal Commission. The acts governing those bodies do not require the examinee to formally assert the privilege.
How can a self-incriminating answer be used?
Although a person's self-incriminating answer cannot be admitted in evidence against them when the privilege has been maintained, information provided in the answer can be used derivatively. In other words, a regulator or investigatory body may use information derived from the person's answer or from enquiries made as a result of the answer.
There is also a lesser-known but related common law privilege available to individuals, known as the 'penalty privilege'.9 It applies to civil proceedings where a financial penalty is sought, such as a fine. It is not available to corporations.10
The privilege arises where a particular step in proceedings may have a tendency to expose the person to a penalty – whether the step be pleading a defence, answering interrogatories or giving discovery. It applies where disqualification orders (from management or directorship roles) are sought, as these are also a form of penalty,11 even if a financial penalty is not claimed.12 On some authorities, penalty privilege may also cover certain orders sought by way of declaration and injunctions, if they have a punitive function.13 However, this is unresolved.14
ATO examinations and privilege
The taxation legislation does not explicitly state that the power to issue notices and to conduct examinations overrides an examinee's privilege against self-incrimination.15
However, case law has established that the examination transcript or answers are admissible against an examinee. It likely follows that the ATO's investigative powers are not subject to the penalty privilege, but this is yet to be judicially tested.16
How can an examination transcript be used in a trial or other proceedings?
This table summarises how when a transcript can be admitted as evidence in proceedings against an individual (assuming they have done whatever is required to assert the privilege).
Although an examination transcript cannot be tendered in evidence against the examinee if they are on trial, it can be used where the examinee's employing corporation is the defendant. Cases against corporations are regularly built upon the answers provided by directors, executives and staff. This will particularly be relevant if ASIC's focus on corporate conduct and culture leads to the legislative changes being suggested ( see this article).
Under the Commonwealth Evidence Act, admissions made in the examination of a corporate officer may be used as evidence against the corporation, if they are characterised as admissions by a person with authority to make admissions.18
Recent case law
Over the past 18 months several cases have considered examinees' claims of privilege, as well as who can access and use examination transcripts – and how. The second instalment of this article will discuss these.
1 The privilege against self-incrimination is not available to corporations, only individuals: see Corporations Act 2001 (Cth) s 1316A for criminal proceedings; Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477; Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543,  (Gleeson CJ, Gaudron, Gummow and Hayne JJ); Evidence Act 1995 (NSW) s 187; and Evidence Act 1995 (Cth) s 187.
2 Crime and Corruption Act (Qld)
3 The Australian Building and Construction Commission is proposed under the Building and Construction Industry (Improving Productivity) Bill 2013 which is currently before Parliament. Clause 103 will only provide immunity in respect of criminal proceedings, not civil ones.
4 Section 68(3) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) says that the transcript cannot be used in any criminal or penalty proceedings against the individual. On the other hand, s 159 of the Competition and Consumer Act 2010 (Cth) only prevents use in criminal proceedings (essentially cartel proceedings); the transcript can be used in civil penalty proceedings.
5 ASIC Act s 63(5), Crime Commission Act 2012 (NSW) s 25, Independent Broad-based Anti-corruption Commission Act 2011 (Vic) s 135
6 CC v New South Wales Crime Commission  NSWSC 1866, – (Adams J).
7 R v Independent Broad-based Anti-corruption Commissioner  HCA 8 at  – 10 March 2016
8 ASIC Act s68(2), SIS Act s290(2), ACC Act s30(4)(c), NSWCC Act s39(3)(b), NSW ICAC Act s 26(2), Qld CMC Act s197,
9 Rich v Australian Securities and Investments Commission (2004) 220 CLR 129,  (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).
10 Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543,  HCA 49 at 
11 ASIC v Vizard (2005) 145 FCR 57,  (Finkelstein J); Gillfillan v ASIC  NSWCA 370,  (Sackville AJA).
12 Re Australian Property Custodian Holdings (in liq) (recs and mgrs apptd) (controllers apptd) (No 2) (2012) 93 ACSR 130.
13 See ASIC v Munro  QSC 9 at  - which sets out the opposing theories and decisions concerning orders sought under the Corporations Act - ss 1324 (injunction restraining conduct) and 1101B (restraining involvement in certain conduct). One view is that as these orders serve both protective and remedial functions and are imposed having regard to the objects of personal and general deterrence then the proceeding may be considered as one in which a penalty is sought to be imposed.
14 ASIC v Munro  QSC 9 at .
15 This position was arrived at by implication from the effect of the penalties for non-compliance contained in ss 8C and 8D of the Taxation Administration Act 1953 (Cth): see Commissioner of Taxation v De Vonk (1995) 61 FCR 564, 567 (Foster J), 579–84 (Hill and Lindgren JJ). The High Court was asked in a special leave application in 2012 to revisit this and declined: Binetter v Deputy Commissioner of Taxation  HCATrans 032 (15 February 2013) – dealing with what was then s 263 of the Income Tax Assessment Act 1936 (Cth), but which is now found in the Taxation Administration Act 1953 (Cth) sch 1 s 253-10ff.
16 Thomas Middleton, 'The privilege against self-incrimination, the penalty privilege and legal professional privilege under the laws governing ASIC, APRA, the ACCC and the ATO – suggested reforms' (2008) 30 Aust Bar Rev 282.
17 Under the Independent Commission Against Corruption Act 1988 (NSW) (ICAC Act), the restriction is on "use" in proceedings against the person, rather than making the answer inadmissible in evidence.
18 ACCC v Leahy Petroleum  FCA 1678, – (Merkel J); Australian Securities and Investments Commission v Fortescue Metals Group Ltd (No 2) (2009) 176 FCR 529,  (Gilmour J) – e.g. where ss 81 and 87 of the Commonwealth Evidence Act (or similar) apply and the statements were made by a person who had corporate authority to make those statements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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