Comments

The Shi decision signals that the High Court is willing to adopt a narrow interpretation of the privilege against self-incrimination set out under section 128A of the Evidence Act.

Although the High Court noted that any consideration of the ‘interests of justice’ will depend on the specific nature of the proceeding, the Shi decision suggests that any consideration of whether a regulator has other methods of accessing privileged information will be irrelevant. This effectively limits the grounds on which persons claiming the privilege can argue that the interests of justice do not favour disclosure of the relevant information. The Shi decision may also be influential in any consideration of a claim of privilege against self-incrimination in other contexts beyond section 128A, which deals with privilege in relation to disclosure of information associated with freezing or search orders.

The outcome of the Shi decision may encourage regulators with similar investigative and information gathering powers to the Australian Taxation Office to be more assertive in their claims for the disclosure of material that may be subject to the privilege against self-incrimination.

Those seeking to rely on the privilege against self-incrimination to withhold documents sought under compulsory powers by regulators should carefully consider if there is a basis on which it can be asserted that the ‘interests of justice’ do not favor disclosure or do not outweigh any unfairness that may result due to the disclosure of privileged information.

In more detail

Facts

• In April 2019, the Commissioner successfully obtained judgment against Mr Shi for tax debts and penalties totaling AUD 42 million.
• The Commissioner was subsequently successful in obtaining freezing orders in the Federal Court against Mr Shi’s assets in an attempt to prevent the assets from being disposed of before the judgment debt was satisfied. The Federal Court also made ancillary orders that required Mr Shi to disclose information relating to the assets (Disclosure Order).
• Mr Shi objected to providing the information pursuant to the Disclosure Order on the basis of the privilege against self-incrimination set out in section 128A of the Evidence Act.
• The primary judge was satisfied that there were reasonable grounds for Mr Shi’s objection and that the interests of justice did not require the disclosure of the information because the Commissioner could obtain the information via other means.
• On appeal, the Full Court, by majority, upheld the primary judge's finding that the interests of justice did not require disclosure of the privileged information, taking into account other available ways that the information could be obtained.

Legislative Framework

• Section 128A(2) of the Evidence Act provides that if a person subject to a disclosure order objects to complying with it on the grounds of the privilege against self-incrimination, the person must prepare an affidavit containing the information to which the objection is taken (Privilege Affidavit).
• If the Court is satisfied that there are reasonable grounds for the objection, section 128A(5) provides that the Court must not require the information in the Privilege Affidavit to be disclosed, subject to an exception in section 128A(6).
• Section 128A(6) permits the Court to make an order that the Privilege Affidavit, in whole or in part, be disclosed if the Court is satisfied that:
  1. any information in it may tend to prove that the person has committed an offence against or arising under an Australian law; and
  2. the information does not tend to prove that the person has committed an offence against or arising under, a law of a foreign country; and
  3. the interests of justice require the information to be disclosed.
• Section 128A(8) of the Evidence Act provides some protection of privileged information that has been disclosed pursuant to a disclosure order. That subsection prevents any such information from being used against the discloser in any subsequent Australian proceeding.

Decision

• The key issue in Shi was whether the section 128A(6) exception applied, and in particular, if the lower Courts properly considered whether the interests of justice required the disclosure of the information in the Privilege Affidavit.
• The majority of the High Court (Gordon J with Kiefel CJ, Gageler and Gleeson J agreeing) made the following key findings in upholding the Commissioners appeal:
  • “What the interests of justice require in a particular case is to be weighed having regard to the proceeding in which the question arises”;
  • “The factors to be balanced in determining whether the interests of justice require the information to be disclosed are not and cannot be prescribed but may include the nature of the information, the likelihood of an offence being prosecuted and any resulting unfairness to a party”; and
  • “The availability of alternative forms of information gathering is not a consideration of any moment. The information has been gathered. The information was required to be gathered and disclosed by the Disclosure Order, where the basis of, reasons for and extent of the Disclosure Order (and the Freezing Orders) remain extant. Pointing to other available means for gathering the same information suggests that the information both is required and should be made available.”
  • Although the above findings proved determinative in Shi, Justice Gordon observed that where the regulator already possesses information that is the same as the privileged information, or if the privileged information is not particularly important to the efficacy of the freezing order, then the interests of justice would not support disclosure of that information.
  • Justice Gordon also noted that the Harman undertaking operates to mitigate the unfairness to a party having to disclose privileged information. The Harman undertaking prevents a party from using information disclosed in Court proceedings for a purpose other than that for which it was given, unless the information is received in evidence or the Court orders otherwise. Consequently, Gordon J dismissed submissions from Mr Shi that the Australian Federal Police could use the information in the Privilege Affidavit to further a criminal investigation against him as doing so would be inconsistent with the Harman undertaking. 
• In his dissenting opinion, Justice Edelman agreed with Mr Shi’s submissions that Mr Shi had prima facie established the privilege against self-incrimination and that the onus to displace Mr Shi’s entitlement to the privilege should have shifted to the Commission. Justice Edelman would have dismissed the Commissioners appeal as that shift in onus did not occur in the lower Courts.
• Interestingly, Justice Edelman also made some observations in relation to the practical realities of compliance with the Harman undertaking, noting that: “It would be naïve to assume that every recipient of the information will know of, and will always strictly comply with, an obligation not to use the information for any collateral purpose, which includes an obligation not to reveal the information for use by any other person”.