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• Liability To A Civil Penalty
• Forfeiture And Ecclesiastical Censure
• Conclusions

7 Civil Penalties, Forfeiture, and Ecclesiastical Censure

[A] party cannot be compelled to discover that which, if answered, would tend to subject him to any punishment, penalty, forfeiture, or ecclesiastical censure . . .[39]

LIABILITY TO A CIVIL PENALTY

Origins and current law

172 THE PENALTY PRIVILEGE applies to prevent liability to penalties imposed in civil proceedings; hence the name “civil penalty”. Civil penalties are penalties which are designed to punish or discipline the defendant rather than to compensate the plaintiff. Therefore, damages awarded against a defendant in civil proceedings do not comprise a civil penalty (E L Bell Packaging Pty Ltd v Allied Seafoods Ltd (1990) 8 ACLC 1135, 1144).[40]

173 As already noted, s 8A of the Evidence Act 1908 states that a witness will not be excused from answering any questions relevant to the proceedings on the sole ground that the answers would leave the witness vulnerable to a debt or civil liability. We suggest that “civil liability” should not be interpreted to include liability to a civil penalty, the primary aim of which is to punish. Rather, s 8A should be interpreted in a way which is consistent with the rule in E L Bell Packaging Pty Ltd.

174 Australian authorities reveal that exposure to liability to statutory police disciplinary proceedings has attracted the protection of the penalty privilege (Police Services Board v Morris (1985) 58 ALR 1), as has an application for removal of the chairperson of the State Rail Authority of New South Wales (Taylor v Carmichal (1984) 1 NSWLR 421), and an action against union officers under the Trade Practices Act 1974 (Navair Pty Ltd v Transport Workers Union (Aust) (1981) 52 FLR 177).

175 There are two types of actions which may result in the imposition of a civil penalty:

• civil actions, the object of which is to impose a civil penalty; and
• civil actions in which the witness’s incrimination leads to the imposition of a civil penalty.

176 It is not entirely clear which proceedings fall into which category; although McNicol suggests that the distinction is relevant in Australia. In the former situation, the courts may refuse to order discovery at all because of the inherent liability to the civil penalty (eg, see Master Builders’ Association (NSW) v Plumbers and Gasfitters Employees’ Union (Aust) (1987) ATPR 40-786, referred to in McNicol, at 190). In the latter situation, the claimant will be required to make a specific claim to the privilege for particular documents or questions, as and when they arise.

177 The first of the two types of civil actions (ie, civil actions the object of which is to impose a civil penalty) appears to have originated from judicial hostility to common informers’ suits for penalties (Pyneboard Pty Ltd v Trade Practices Commission (1983) 45 ALR 609, 621 Murphy J). A common informer was a person who took proceedings for breaches of certain statutes, solely for the penalty which, according to the statute, was paid to the one who gave information of the breach. At common law, when a common informer sued for a penalty, the courts refused to assist in any way and allowed the person sued to avoid giving any evidence at all (Earl of Mexborough v Whitwood Urban District Council [1897] 2 QB 111, 115 Lord Esher). The second type of civil action (ie, where a penalty is imposed in civil proceedings) may have attracted the privilege’s protection because civil penalties are roughly akin to sentences imposed in criminal proceedings (ie, they are designed to punish the defendant).

178 In Pyneboard, the court confirmed that the penalty privilege generally is not confined to discovery and interrogatories. It is available at common law as well as equity, and is distinct from, although often associated in discussion with, the privilege against liability to conviction for a criminal offence (614). The court also said that it was “not prepared to hold that the privilege is inherently incapable of application in non-judicial proceedings” (617). Although it is not entirely clear, it appears that the penalty privilege can be claimed by a person when compelled disclosure takes place outside the context of civil proceedings (eg, in the course of a criminal investigation). In other words, the compulsion, as distinct from the risk of imposition of a penalty, need not arise in civil proceedings.

179 The Commission is not aware of many cases in which the penalty privilege has been claimed and upheld in New Zealand; although under common law it clearly still applies. One case in which the existence of the penalty privilege has been recognised is Port Nelson Ltd v Commerce Commission [1994] 3 NZLR 435. That case considered a pecuniary penalty proceeding under s 80 of the Commerce Act 1986, where the judge required the defendant to disclose briefs of evidence and documents on which it was relying, in advance of the trial. The Court of Appeal affirmed the existence of the penalty privilege, but held that it was not a ground for limiting the court’s power to order the advance exchange of briefs of evidence in such proceedings. Cooke P said:

In principle we can see no ground for limiting the Court’s power by reference to the privilege to which reference has been made. All that happens when there is an order for the exchange of briefs before trial is that each party has the advantage of seeing evidence that may be called by the other party. Neither party, however, is bound to call evidence in terms of the brief or otherwise. There is no compulsion to answer any question. If a defendant wishes to preserve the right to call evidence, it is necessary for that defendant to comply with the timetable. ... Essentially, it is no more than a means of ensuring that the right to call evidence is preserved. (437)

180 New Zealand legislation does not refer to the penalty privilege consistently. Sometimes, both the privilege against self-incrimination and the penalty privilege are individually mentioned. For example, s 49(3) of the Gas Act 1992 provides that no person is excused from giving information sought under subs (1) “on the ground that compliance with that requirement could or would tend to incriminate that person or subject that person to any penalty or forfeiture”. On other occasions, the penalty privilege is not specifically referred to. For example, see s 267(1) of the Companies Act 1993, which provides that a person is not excused from answering a question in the course of being examined under ss 261 and 266 of the Act on the ground that the answer may incriminate or tend to incriminate that person.

181 In England, the penalty privilege has been recognised in legislation. Section 14(1)(a) of the Civil Evidence Act 1968 (UK) confines the privilege to “criminal offences under the law of any part of the United Kingdom and penalties provided for by such law”. Proceedings for recovery of a penalty extend to claimants who would otherwise expose themselves to fines under the European Economic Community Treaty (Cmnd 5179–II) (Rio Tinto Zinc Corporation Ltd v Westinghouse Electric Corporation Ltd [1978] AC 547, 637).

Should the penalty privilege be abolished?

182 In Pyneboard, Murphy J (minority) considered the origins of the penalty privilege (ie, in his view, the judicial hostility to common informers’ suits for penalties). He said that such a privilege, especially available outside judicial proceedings, is difficult to justify and that:

[i]t is an absurd state of the law if a witness, in a civil or criminal trial, can lawfully refuse to answer because the answer may tend to expose him or her to some ecclesiastical censure, or to forfeiture of a lease, or to a civil action for penalties, but may not refuse if the exposure is to some other civil loss, such as an action for damages, even punitive damages. In so far as such absurdity has been introduced or maintained by judicial decision (see R v Associated Northern Collieries (1910) 11 CLR 738 at 742; Blunt v Park Lane Hotel Ltd [1942] 2 KB 253 at 257) it can and should be erased by judicial decision. Whatever their standing in judicial proceedings, I see no reason for recognizing such privileges outside judicial proceedings. (621)

183 Civil penalties can be as severe as criminal offences and can be feared by the witness and investigated by officials in much the same way. These similarities suggest that the rationales behind the privilege identified in chapter 2 will be applicable, at least in some situations, to liability to a civil penalty. For example, a public servant suspected of, and asked questions by, his or her employer about suspected disciplinary offences may be pressured into making unreliable admissions and may be vulnerable to abuses of power. Because of the likely power imbalance between the State employer and the employee, the penalty privilege may redress a fair State-individual balance. In addition, the person will have an interest in maintaining privacy and might, although innocent, wish to remain silent as a protective measure.

184 There are good reasons why the privilege does not apply to compensatory damages in civil proceedings. An extension to the penalty privilege to take in civil actions would give the privilege an unjustifiably broad span, especially when compared to the burgeoning number of statutory powers which require individuals to supply information. It would, for example, enable a defendant in civil proceedings to refuse to answer any questions focusing on his or her alleged negligence or wrongdoing, because of the risk that the plaintiff might be awarded damages.

185 The aim of punitive damages is in part to punish the defendant, but they also have the effect of compensating the plaintiff. In addition, they are seldom awarded and it may be difficult to assess whether there is a real risk of the imposition of such penalties in a particular situation. In other words, it would be difficult to ascertain when a claim to the penalty privilege, based on the risk of liability to punitive damages, was legitimate. For these reasons, the Commission does not propose extending the privilege to encompass protection from liability to punitive damages.

186 Murphy J does not distinguish between the traditional penalty privilege claimed to resist discovery per se and the more specific penalty privilege in response to demands for particular information. The original rationale for blanket claims to prevent any discovery no longer applies, because actions are no longer brought by common informers. However, the more specific penalty privilege appears to have developed alongside, and is akin to, the privilege against self-incrimination.

187 The Commission inclines to the approach adopted recently in s 128 of the Evidence Act 1995 (Aust). Section 128(1)(c) confirms the penalty privilege as well as the privilege against self-incrimination in court proceedings. Section 128 is also a useful model because it does not include both kinds of civil penalty referred to above. Subsection (1) does not contemplate blanket claims to the privilege (ie, a witness can object to giving “particular evidence”). Subsection (2) authorises the courts to assess claims to the privilege in relation to “particular evidence”. However, as the common law privilege co-exists with s 128, it may still be open to a person to claim the penalty privilege to prevent making any disclosure in proceedings brought primarily for a civil penalty. This avenue should be expressly closed off in the Commission’s proposed Evidence Code. For further discussion of the Australian Evidence Act, see chapter 15.

188 The Commission differs from Murphy J in his view that the penalty privilege should be removed. In New Zealand, the Court of Appeal has recognised that the privilege against self-incrimination can be claimed in a broader range of contexts than merely judicial proceedings and procedures (Taylor v New Zealand Poultry Board [1984] 1 NZLR 394, 402). To be consistent, the same approach should apply to the penalty privilege.

Statutory references to the penalty privilege

189 In Part III of this paper, we highlight the lack of consistency and clarity of treatment concerning civil penalties in statutory provisions which expressly preserve or remove the privilege in particular contexts. The Commission proposes a statement in the Evidence Code to the effect that references to the privilege against self-incrimination and to incrimination in legislation should be interpreted as encompassing the penalty privilege and liability to a civil penalty, unless the contrary intention is clear on the face of the provision. Those provisions which already distinguish between the two privileges should be re-examined, bearing in mind the need for consistency. For as the majority said in Pyneboard, when considering a provision which abrogated the privilege against self-incrimination:

[I]t is irrational to suppose that Parliament contemplated that a person could be compelled to admit commission of a criminal offence yet be excused from admitting a contravention of the Act sounding in a civil penalty. (620)

FORFEITURE AND ECCLESIASTICAL CENSURE

190 In Pyneboard, Murphy J also criticised the continuation of the privileges against liability to forfeiture (ie, of estates or interests in land for breach of covenant) and ecclesiastical censure (for adulterous behaviour by members of the clergy). In relation to forfeiture, he said:

In England, this probably arose out of the special regard for land rights originally secured by feudal tenures and later by entailing and other devices. The privilege against forfeiture seems to have been confined to forfeitures of realty, particularly leases. The recognition of such a privilege in modern Australia is, in my opinion, not justified. (621)

He had this to say about ecclesiastical censure:

Any rationale for this privilege in England, where there is an established Church, does not apply to Australian circumstances. In Australia ecclesiastical censure is irrelevant to judicial procedures as well as to non-judicial procedures for obtaining information from public purposes. The privilege should not be recognized as part of the common law in Australia. (621)

191 The privilege against liability to ecclesiastical censure seems never to have applied in New Zealand, because there is no one established church. The Commission agrees with Murphy J’s observations about the inappropriateness of these two limbs of the privilege in contemporary times. The privileges should be expressly removed in the proposed Evidence Code. In relation to ecclesiastical censure, this course of action removes any doubt about its applicability in New Zealand.

CONCLUSIONS

• Subject to the following conclusions, the penalty privilege should continue to be available, but the privileges against liability to forfeiture and ecclesiastical censure should be removed by a provision in the Commission’s proposed Evidence Code.
• The penalty privilege should not operate to enable a person to avoid disclosing all information. For the claim of privilege to be legitimate, it should be made in response to a demand for particular information.
• The penalty privilege should not be extended to take in potential exposure to a civil action for damages or punitive damages.
• There should be a statement in the Code that references to the privilege against self-incrimination and to incrimination in legislation should be interpreted as encompassing the penalty privilege and liability to a civil penalty, unless expressly excluded. Provisions distinguishing between the two privileges should be re-examined.