Quinlan v ERM Power Limited[2023] QSC 80

SUPREME COURT OF QUEENSLAND

1. [1]
   Each of the natural defendants, namely the third to the thirteenth defendants, apply for relief from compliance with rules 149(1)(b), 149(1)(c), 150, 157, 165 and 166 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) (“pleading rules”) and from disclosure obligations in Chapter 7 of the UCPR.  They seek to do so on the basis of claims to the privilege against self-incrimination and privilege against exposure to a penalty as a result of matters pleaded in the Second Further Amended Statement of Claim (“2FASOC”).
2. [2]
   The issue for determination is whether such relief should be given and, if so, the extent of such relief. There are some incidental issues in relation to directions which should be given.
3. [3]
   The right to claim privilege against self-incrimination is a substantive right to which rules of pleading and disclosure must give way. The right may be claimed in civil proceedings if the provision of information or documents leads to a real and appreciable risk of a criminal prosecution or civil penalty. The Court must be satisfied that the defendant in question has established on reasonable grounds a bona-fide apprehension of incrimination or civil penalty. That requires an examination of the allegations in question, which the applicants have divided into five categories. The plaintiff does not contest the allocation of the categories.
4. [4]
   The plaintiff generally did not contest the relief sought save to invite the Court to exercise greater scrutiny in relation to those categories of allegations which are within the more remote categories, such as those said to be foundational to the pleading of contraventions, in considering whether the dispensation is warranted. I have reviewed all the allegations for which dispensation has been sought and approached those in the more remote categories with some circumspection, particularly given that some of the events occurred a significant time ago.

BROAD OVERVIEW OF THE 2FASOC

5. [5]
   The pleading is extensive and raises serious allegations to a varying extent against each of the natural defendants, including direct and indirect allegations of contraventions of criminal offence and civil penalty provisions in the Corporations Act 2001 (Cth) (“Act”).
6. [6]
   Mr Quinlan, the plaintiff, is a former employee of ERM Power Limited (“ERM”). ERM was, relevantly, a listed public company between 10 December 2010 and 2 December 2019 and carried on the business of owning and operating electricity generators and selling electricity to commercial and industrial customers. The third to thirteenth defendants, the applicants, were directors of ERM at various times between 18 October 2006 and 29 November 2019 and held positions in ERM including as managing director, chairman, secretary and general counsel. The third defendant was formerly the managing director and chief executive officer of ERM while the fourth defendant founded ERM and was formerly its director and chairman.
7. [7]
   In very simplistic terms, Mr Quinlan’s claims arise out of what he contends were transactions which he had reason to believe were sham transactions, as well as insider trading, which he subsequently sought to expose as a whistleblower through disclosures which qualify for protection under the Act, particularly Part 9.4AAA of the Act. He alleges that the whistleblower protections to which he was entitled were breached by the divulgation of information, including information that could lead to his identification as whistleblower. These are referred to as “perfidious divulgations” in the 2FASOC and are alleged to be contraventions of s 1317AE of the Act. Mr Quinlan alleges that as a result of him being a whistleblower, he was victimised and suffered detriment. That conduct is referred to as the “vindictive stratagems” in the 2FASOC and alleged to contravene s 1317AC of the Act. I have used the same terminology in these reasons as is used in the 2FASOC given it is necessary to identify the allegations for which dispensation is sought.
8. [8]
   Mr Quinlan claims that “sham transactions” were entered into in 2012 by ERM Power Retail Pty Ltd (“ERM Retail”) with Stanwell Corporation Limited (“Stanwell”) and Macquarie Group Limited respectively in relation to energy derivatives (the “Transactions”). Mr Quinlan is alleged to have investigated the Transactions. It is further alleged that Mr Quinlan believed that the Transactions served no genuine or legitimate purpose, were shams because they had the effect of artificially reducing ERM Retail’s expenses and increasing EBITDAIF profitability in ERM Retail’s accounts for the 2012 and 2013 financial years, and that the financial statements failed to give a true and fair view of the financial position and performance of ERM and ERM’s subsidiaries. It is alleged that the Transactions had an improper purpose and were calculated to artificially enhance ERM’s market value in a way which misled and deceived investors.
9. [9]
   It is alleged that Mr Quinlan was able to deduce and conclude and held a reasonable belief that the Transactions were artificial or fictitious, liable to mislead the market and ERM’s shareholders, and were in contravention of the Act.
10. [10]
    It is also alleged that Mr Quinlan believed that by entering into and engaging in the Transactions, ERM, ERM Retail and any director, officer, or employee of ERM or ERM Retail who knowingly participated in the transactions lacked the requisite level of care and diligence, had an absence of good faith and an improper purpose, and improperly used information to obtain a collateral advantage, such that they had contravened ss 180­–183 of the Act.  
11. [11]
    It is further alleged that the third defendant engaged in insider trading in the purchase of shares by his family share trading account on two occasions in relation to a company called Empire Oil & Gas NL (“Empire”) (the “Insider Trading”). It is alleged that Mr Quinlan was able to deduce and conclude and held a reasonable belief that the Insider Trading occurred while the third defendant held inside information and that the third defendant contravened s 1043A of the Act and breached his statutory duties under ss 180–183 of the Act.
12. [12]
    In paragraphs [139A]–[169] of the 2FASOC, it is alleged that Mr Quinlan made four whistleblower disclosures regarding the Transactions and Insider Trading to one or more of the fifth, seventh and eighth defendants (the “Protected Disclosures”). It is alleged that those disclosures qualify for protection under ERM’s Whistleblower Policy and were protected at all material times up until 30 June 2019 under the old Part 9.4AAA of the Act and since 1 July 2019 under the new Part 9.4AAA of the Act. 

The perfidious divulgations

13. [13]
    It is alleged that some of the applicants divulged information in contravention of the prohibition in Part 9.4AAA of the Act^[1], particularly s 1317AE(1), on the disclosure of certain information, including the identity of Mr Quinlan as the whistleblower, after a Protected Disclosure had been made. Twelve such disclosures are said to have taken place between May 2012 and September 2019.
14. [14]
    It is alleged that there were wrongful disclosures by the applicants to whom a Protected Disclosure was originally made, namely the fifth, seventh and eighth defendants. There are further allegations of disclosures made by various applicants who were subsequently informed of a Protected Disclosure. The disclosures are alleged to have been made without the authorisation or consent of Mr Quinlan in circumstances where the recipient should have known that the disclosure was unauthorised and in breach of ERM’s Whistleblower Policy, statutory duties imposed by the Act, or in breach of a duty of confidence owed to Mr Quinlan under his employment contract or ERM’s Whistleblower Policy.
15. [15]
    The 2FASOC adopts a similar format in the pleading of each of the perfidious divulgations. An example is the second perfidious divulgation, where at paragraphs [174]–[179] of the 2FASOC it is alleged that:

    1. (a)
       the fifth defendant asked Mr Quinlan to attend a meeting with him to discuss the Transactions;
    2. (b)
       the seventh defendant was also in attendance at the arranged meeting without Mr Quinlan’s prior knowledge and consent;
    3. (c)
       in the course of the meeting the fifth defendant discussed the Transactions in front of the seventh defendant in circumstances where it was apparent that Mr Quinlan was the source of the information held by the fifth defendant regarding the Transactions;
    4. (d)
       by his conduct, the fifth defendant disclosed the fact that Mr Quinlan had made a Protected Disclosure or, alternatively, disclosed information that tended to identify Mr Quinlan as the source of a Protected Disclosure;
    5. (e)
       the divulgations were made without Mr Quinlan’s authorisation or consent; and
    6. (f)
       the divulgations were in breach of the old and new Part 9.4AAA of the Act.

The vindictive stratagems

16. [16]
    There are also allegations of conduct in contravention of Part 9.4AAA of the Act, namely that various applicants who had knowledge of the Protected Disclosures victimised a whistleblower, Mr Quinlan. Those acts are alleged to have caused detriment to Mr Quinlan, such as him suffering ongoing emotional distress. There are alleged to have been twenty-five vindictive stratagems between June 2012 and September 2020.
17. [17]
    An example of how the vindictive stratagems are pleaded is in relation to the twenty-third vindictive stratagem, where it is pleaded that:

    1. (a)
       on 8 November 2018, ERM instructed Clayton Utz to write to Mr Quinlan forbidding him from contacting employees of ERM and certain members of the St Baker family;
    2. (b)
       in February 2019, ERM sent correspondence to a number of its current and former employees warning them to be wary of dealing with Mr Quinlan, including that he was likely to record private conversations and use innocent comments made during private conversations for his own purposes, and that he had already used for his own purposes innocent comments made by the thirteenth defendant;
    3. (c)
       the correspondence was sent on the instructions of the thirteenth defendant and the then board members of ERM; and
    4. (d)
       the correspondence was intended by the third defendant, thirteenth defendant, other members of ERM’s board and ERM to cause detriment to Mr Quinlan, including the suffering of loss and damage.

Loss and damage

18. [18]
    It is alleged that Mr Quinlan has suffered loss and damage for which he is entitled to damages or to be compensated. A number of the allegations are predicated on the applicants having committed either perfidious divulgations or vindictive stratagems.
19. [19]
    The allegations of loss and damage for each perfidious divulgation follow a similar format and include that:

    1. (a)
       the applicants have taken no substantive steps to investigate or address the misconduct associated with the Transactions and Insider Trading that resulted in the Protected Disclosures, the allegation thus being predicated on those matters having occurred in fact;
    2. (b)
       injuries as pleaded were foreseeable as a result of the perfidious divulgations at the time the perfidious divulgations were made;
    3. (c)
       Mr Quinlan did suffer loss and damage as pleaded as a result of the perfidious divulgations when he became aware of them; and
    4. (d)
       the conduct entitles him to claim exemplary damages including by reference to the equivalent of a civil penalty payable by a body corporate under s 1317G(4) of the Act and, if claiming against a natural defendant, by reference to a civil penalty payable by an individual under s 1317G(3) of the Act.
20. [20]
    The allegations of loss and damage for each vindictive stratagem also follow a similar format and include that:

    1. (a)
       at the time of the vindicative stratagem, injuries of the type pleaded were foreseeable as a result of the vindictive stratagem;
    2. (b)
       Mr Quinlan suffered loss and damage as a result of the vindictive stratagem due to, inter alia, hostile behaviour exhibited towards him by the third and fourth defendants or, alternatively, by Mr Quinlan becoming aware that he had been impermissibly victimised for exercising a lawful right and would need to bring proceedings to vindicate his rights;
    3. (c)
       the conduct entitles him to claim damages or equitable compensation against ERM and one or more of the applicants for emotional distress, loss of earnings (present and future) and loss of valuable commercial opportunities and, alternatively, compensation pursuant to s 1317AD of the old Part 9.4AAA of the Act; and
    4. (d)
       Mr Quinlan has a basis upon which to claim exemplary damages including by reference to the civil penalty payable by a body corporate or, in relation to a natural defendant, an individual under the relevant civil penalty provision of the Act.

Relief sought

21. [21]
    Mr Quinlan claims damages for breach of contract, breach of statutory duty, equitable compensation for breach of confidence, orders for compensation pursuant to s 1317AD of the old Part 9.4AAA of the Act and s 1317AE(1) of the new Part 9.4AAA of the Act as well as non-monetary relief against each defendant under s 1317AAE(1)(c) and (d) of the new Part 9.4AAA of the Act.

EXPOSURE TO CRIMINAL PROSECUTION OR CIVIL PENALTY

22. [22]
    The 2FASOC makes allegations of contraventions of both criminal offence and civil penalty provisions under the Act, relevant to the applicants both directly and indirectly. In considering the question of whether there is a real and appreciable risk of prosecution or civil penalty proceedings, and whether such an apprehension is held on reasonable grounds, the question of whether such proceedings can now in fact be instituted given the passing of time since the events giving rise to the allegations made must be considered.
23. [23]
    Proceedings for a declaration of contravention of a civil penalty provision and a pecuniary penalty order must be commenced within six years of the contravention.^[2] Time has passed for such proceedings to be instituted in relation to a number of the allegations.
24. [24]
    Where a criminal offence attracts a penalty of less than six months’ imprisonment, s 1316 of the Act provides for proceedings for the offence to be instituted within a period of five years after the act or omission alleged to constitute the offence occurred or, with the Minister’s consent, at any later time.
25. [25]
    Where the penalty for a criminal offence exceeds six months’ imprisonment, no time limit applies to the commencement of the prosecution for the offence.^[3]
26. [26]
    Sections 1041A, 1041C and 1043A of the Act prohibit market manipulation, false trading and market rigging, and insider trading.  Contraventions of these provisions are a criminal offence and also give rise to a civil penalty.^[4] As the penalty for those criminal offences is more than six months’ imprisonment,^[5] there is no time limit for the commencement of prosecution.^[6]
27. [27]
    Sections 180–183 of Act, in respect of breaches of directors’ duties, are civil penalty provisions under s 1317E of the Act. Proceedings for a declaration of contravention of a civil penalty provision and a pecuniary penalty order must be commenced within six years of the contravention. It is likely that the time for instituting action for civil penalties for such conduct has passed given the Transactions and Insider Trading occurred in 2012 and 2013. However, some of the conduct alleged to be in breach of directors’ duties is relevant to the allegations under ss 1041A, 1041C and 1043A of the Act, which are criminal offence provisions for which no time limit for prosecution applies.
28. [28]
    Under the old Part 9.4AAA of the Act, s 1317AE prohibited unauthorised disclosure of information disclosed in a qualifying disclosure made by a whistleblower, the identity of the whistleblower, or information likely to lead to the identification of the whistleblower. It was a criminal offence provision. A prosecution could be commenced within five years of the contravention or at a later time with the Minister’s consent. Under the new Part 9.4AAA of the Act, s 1317AAE prohibits the unauthorised disclosure of the identity of a whistleblower, or information likely to lead to the identification of a whistleblower, who has made a qualifying disclosure. Section 1317AAE of the Act is a civil penalty provision and failure to comply with it will constitute a criminal offence.^[7] As the maximum penalty is six months’ imprisonment, criminal prosecution may be commenced within five years of the contravention or, with the Minister’s consent, at any later time.^[8]
29. [29]
    As to the vindictive stratagems, under the old Part 9.4AAA of the Act, s 1317AC prohibited victimisation of a whistleblower.^[9] As the maximum penalty was six months’ imprisonment, s 1316 of the old Act provided that prosecution could be commenced within five years of the contravention or, with the Minister’s consent, at any later time. A contravention of the old s 1317AC of the Act required that detriment be caused. If the offence is not complete until the alleged detriment is suffered, given that Mr Quinlan pleads he is suffering ongoing stress, and loss and damage including as a result of having to commence the proceedings, the time for commencement of a prosecution in relation to the offence would not commence until as late as 2020.
30. [30]
    Under the new Part 9.4AAA of the Act, s 1317AC is both a criminal offence and civil penalty provision. As a maximum penalty of two years’ imprisonment applies in respect of the offence, no time limit applies to the commencement of criminal prosecution.^[10]
31. [31]
    Where it is open to seek ministerial consent to institute criminal proceedings under s 1316 of the Act, the Minister is required to consider matters including the reasons for the delay, the purpose of the limitation period and whether a grant of consent would unfairly prejudice the accused.^[11] 

RELIEF FROM THE PLEADING RULES

32. [32]
    The applicants seek relief from the pleading rules in respect of five categories of allegations:

    1. (a)
       Category 1 – direct allegations of contraventions of the Act;
    2. (b)
       Category 2 – allegations of knowing involvement or being a party to a contravention of the Act;
    3. (c)
       Category 3 – allegations which are premised on contraventions of the Act or involvement referred to in Categories 1 and 2;
    4. (d)
       Category 4 – allegations which provide the foundations for such contraventions or involvement; and
    5. (e)
       Category 5 – other allegations which tend to implicate the applicants concerned.
33. [33]
    The submissions of the applicants, both written and oral, give examples of the basis upon which the claims of privilege are made in respect of each of those categories. 

Legal principles

34. [34]
    The privilege against self-incrimination is a rule of substantive law which can be invoked in non-penalty civil proceedings at an interlocutory stage. Pleading rules must give way to privilege, whether it be penalty privilege or privilege against self-incrimination.^[12] 
35. [35]
    The relevant principles with respect to the penalty and self-incrimination privileges were set out by PD McMurdo J in Anderson v Australian Securities and Investments Commission (“Anderson”):^[13]

“The content of each privilege and the relevant principles for its operation are not in question. No person can be compelled to incriminate himself or herself and a person may refuse to answer any question, or produce any document or thing, if to do so ‘may tend to bring him into the peril and possibility of being convicted as a criminal’. The privilege against self-incrimination operates not only to protect against the consequences of the direct use of a person’s statement or document, by that being tendered by a prosecutor, but also against its indirect use, by the statement or document setting ‘in train a process which may lead to incrimination or may lead to the discovery of real evidence of an incriminating character’, as Lord Wilberforce said in Rank Film Distributors Ltd v Video Information Centre. Applying that statement, Gibbs CJ in Sorby v The Commonwealth said:

‘… If a witness is compelled to answer questions which may show that he has committed a crime with which he may be charged, his answers may place him in real and appreciable danger of conviction, notwithstanding that the answers themselves may not be given in evidence. The traditional objection that exists to allowing the executive to compel a man to convict himself out of his own mouth applies even when the words of the witness may not be used as an admission. It is a cardinal principle of our system of justice that the Crown must prove the guilt of an accused person, and the protection which that principle affords to the liberty of the individual will be weakened if power exists to compel a suspected person to confess his guilt. …’”^[14]

36. [36]
    McMurdo J stated that the privilege against exposure to penalty was similar to but distinct from the privilege against self-incrimination, which had its origin in the rules of equity of discovery but developed wider operation.^[15] His Honour further stated:

“The penalty privilege also extends to the provision of information that could be used against a defendant indirectly, in the sense described by Gibbs CJ in Sorby. In Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Live-stock Corporation, Deane J said that the privilege would operate to prevent the provision of any information that would assist in establishing the defendant’s liability to a penalty.”^[16]

37. [37]
    His Honour stated that in relation to the delivery of a defence:

“The privileges apply in the context, as here, of a defendant who is required to deliver a defence in a civil proceeding. In Australian Securities and Investments Commission v Mining Projects Group Ltd, Finkelstein J said:

‘…penalty privilege operates to relieve a defendant from the need to deliver a defence that complies with the pleading rules if the rules would override the privilege. To the extent that pleading rules purport to impose such an obligation they must give way to the privilege: Hadgkiss v Construction, Forestry, Mining and Energy Union (2005) 146 IR 106 at 111-112; A & L Silvestri Pty Ltd v Construction, Forestry, Mining and Energy Union (2005) 226 ALR 247 at 25.’”^[17]

38. [38]
    McMurdo J in Anderson discussed the pleading rules in the UCPR and considered that the relief had to extend beyond admissions to non-admissions and denials in rules 165–166 of the UCPR, as well as rules 149, 150 and 157.^[18] His Honour noted that the matters which the pleading rules require to be pleaded or particularised could well constitute information which, according to the privileges, the defendants cannot be compelled to provide because the information could lead the Australian Securities and Investments Commission (“ASIC”), in that case, to other evidence which could be used to prove the case against them.^[19]

The privilege against self-incrimination may be claimed in civil proceedings, however more is required than in penalty proceedings to establish the defendant should be granted dispensation from pleading on the basis of claims to privileges of self-incrimination and exposure to penalty.^[20] To claim the privilege, the defendant must do more than make a sweeping claim for dispensation on the ground of privilege and must establish that the provision of information leads to a real and appreciable risk of a criminal prosecution^[21] or exposure to civil penalty and that the defendant has “a bona-fide apprehension of the consequence on reasonable grounds”^[22] if required to plead to particular paragraphs of the statement of claim.^[23]

39. [39]
    The question of whether there is a real and genuine basis for asserting that a defendant is at risk of criminal or civil penalty proceedings is not a rigorous one and does not require the Court to assess the precise measure or degree of risk, provided there is a degree of risk which cannot be dismissed as tenuous or illusory or so improbable as to be virtually without substance.^[24] The privilege will not be available where taking the step in question will not increase the defendant’s jeopardy or expose them to an additional peril of prosecution or civil penalty proceedings.^[25] Where serious allegations are made the more likely the real possibility of criminal or civil penalty proceedings and the circumstances will colour the extent to which the defendant must descend into detail.^[26] In the present case there are serious allegations made of contraventions of provisions of the Act which could lead to civil penalties and criminal prosecution. As Ryan J stated in Connelly and Harris v McGrath stated:

It will not be difficult to show that the provision of information or the production of documents in a civil case leads to a real and appreciable risk of a criminal prosecution when the proceeding is aimed at proving that persons engaged in particular conduct, proof of which would establish, or go a long way towards establishing, that they had committed criminal acts (Le Roi).”^[27]

40. [40]
    Thus, the Court must be satisfied that there is a real and appreciable risk of criminal prosecution or exposure to civil penalties and that the defendant has such an apprehension on bona-fide or reasonable grounds.

The plaintiff’s position

41. [41]
    It is a matter for the applicants to satisfy the Court that the circumstances are such that it is necessary to preserve claims of privilege against self-incrimination or exposure to a penalty to obtain dispensation from the pleading rules. The plaintiff, however, did not actively oppose the applications and, indeed, accepts that:

    1. (a)
       the misconduct alleged in the 2FASOC is misconduct of a high order, including insider trading, market manipulation, prohibited disclosure of a whistleblower’s identity, victimisation of a whistleblower, and breaches of statutory directors’ duties, and “[i]t is difficult to conceive of more serious allegations being made against professional directors and officers of a publicly listed company”^[28];
    2. (b)
       quite apart from any potential civil consequences, the misconduct is apt to attract the attention of regulators, namely:

       1. ASIC; and
       2. in the case of the Stanwell Transactions, the Queensland Crime and Corruption Commission (“QCCC”).
    3. (c)
       ASIC and the QCCC are equipped with powerful investigative tools including investigative hearings;
    4. (d)
       the eighth defendant had “personal knowledge of at least some of the allegations” for which he claims privilege;
    5. (e)
       the proceedings have attracted media attention (though not, to the plaintiff’s awareness, any coverage in the Australian Financial Review, contrary to what is contended in the submissions for the eighth defendant^[29]);
    6. (f)
       scrutiny of the proceedings is likely to increase as they progress and especially when they reach trial – and this state of affairs will be exacerbated if every contentious allegation remains in issue and therefore the subject of extensive oral and documentary evidence;
    7. (g)
       the natural-person defendants are figures with public profiles, including in the business or legal communities, and “community expectations may favour a prosecution”^[30] in the event that malfeasance is established at trial;
    8. (h)
       while the plaintiff has not presently made a complaint to a regulator, he has not renounced the possibility of doing so or of providing assistance to a regulator.  Indeed, he is legally incapable of refusing to provide such assistance, where his assistance may be compelled, including through an investigative hearing; and
    9. (i)
       these considerations are consistent with a heightened risk of prosecution.
42. [42]
    The plaintiff does not contest the allocation of the five categories used by the applicants to identify allegations in the 2FASOC said to enliven the privilege against self-incrimination or exposure to a penalty. However, as was submitted by the plaintiff’s counsel, greater scrutiny must be given in determining whether there is a real and appreciable risk of prosecution or civil penalty proceedings to the category of allegations which have a more indirect link to contraventions of civil penalty or criminal provisions. I have taken that into account when determining whether or not I am satisfied that the alleged risk meets the standard required for the granting of relief.
43. [43]
    The plaintiff did not cavil with the legal principles set out in the applicants’ written submissions, in particular the principle that the privileges extend beyond allegations which are central to the circumstances giving rise to the alleged contravention and instead encompass certain connected matters which would imperil the applicants, as was discussed by McMurdo J in Anderson.^[31]

Third and fourth defendants

44. [44]
    The third and fourth defendants contend that they should be entitled to claim self-incrimination privilege and penalty privilege because there is a real and appreciable risk of self-incrimination or exposure to penalty if they are not relieved from compliance with the pleading rules.
45. [45]
    An affidavit was sworn by Ms Corin Morcom, who deposes as to the third and fourth defendants’ real and appreciable risk that a prosecuting authority would commence criminal and/or civil penalty proceedings against them based on the allegations against the third defendant of contraventions of the Act within Categories 1–4 and based on the allegations made against the fourth defendant which fall into Categories 1–3.
46. [46]
    According to the third and fourth defendants, that risk is revealed by the serious allegations made in the 2FASOC, Mr Quinlan’s own statements, the significant media attention the proceeding has received, and ASIC’s statements in its enforcement priorities. In addition, reference is made to correspondence sent by or on behalf of Mr Quinlan which refers to the prospect of him lodging complaints with ASIC, suggesting in 2018 he was forwarding the statement of claim to ASIC, and the reference in the plaintiff’s submissions in 2020 to contraventions of the Act by the directors which if exposed might well attract investigation by ASIC. The third and fourth defendants also refer to ASIC media releases from 2022 which refer to ASIC’s interest in taking action in relation to insider trading and market manipulation.
47. [47]
    I am satisfied that the third and fourth defendants have a real and appreciable risk of criminal prosecution or commencement of civil penalty proceedings which is reasonably held given that Mr Quinlan expressed an intention to lodge a complaint with ASIC, the allegations contained in 2FASOC involving the third and fourth defendants, the media attention of the proceeding, and ASIC’s stated priorities.
48. [48]
    As to those offences which are prima facie beyond time and would require the Minister’s consent under s 1316 of the Act before proceedings could be commenced, the possibility of prosecution must be regarded as diminished from those where there is no time limit or the time has not accrued. However, given that the Minister holds such a discretion to extend time for the commencement of proceedings and there is no evidence suggesting that the question of whether or not commencement of prosecution has been positively considered by ASIC, the possibility of such an extension cannot be dismissed. There is a real and appreciable risk that ministerial consent to the grant of an extension would be given for those offences which could only proceed with such consent, notwithstanding the passing of time.^[32]
49. [49]
    The third defendant claims privilege and seeks relief from the pleading rules and disclosure obligations in relation to the five categories of allegations identified above.
50. [50]
    In relation to Category 1, there are allegations of contraventions of s 1317AE of the old Part 9.4AAA of the Act in relation to the sixth and seventh perfidious divulgations as well as allegations of contraventions of s 1317AC of the old Part 9.4AAA of the Act in relation to the first to twenty-third vindictive stratagems which concern the third defendant.
51. [51]
    The paragraphs of the pleading in Category 1 either:

    1. (a)
       directly allege that there has been contravention of s 1317AE of the old Part 9.4AAA of the Act, which is an offence provision (see, for example, paragraph [192] of the 2FASOC relating to the sixth perfidious divulgation);
    2. (b)
       directly allege that there has been contravention of s 1317AC of the old Part 9.4AAA of the Act, which is an offence provision (see, for example, paragraph [219(h)] of the 2FASOC relating to the first vindictive stratagem);
    3. (c)
       allege facts that are necessary elements of the offence in s 1317AE of the Act. In particular, the unauthorised disclosure of information related to an alleged Protected Disclosure (see, for example, paragraphs [190]–[192] of the 2FASOC concerning the sixth perfidious divulgation);
    4. (d)
       allege facts that are necessary elements of a contravention of s 1317AC of the Act.  In particular: (1) the victimising conduct alleged to have been engaged in by the third defendant; (2) the alleged causing of detriment to Mr Quinlan; (3) the third defendant’s state of mind, including in relation to the alleged Protected Disclosures and his awareness of them; and (4) the reason for the alleged victimising conduct by the third defendant (see, for example, paragraphs [218]–[219] of the 2FASOC concerning the first vindictive stratagem); or
    5. (e)
       allege background or contextual facts to, or facts related or connected to, the facts described in subparagraphs (c) or (d) above.
52. [52]
    According to the third defendant, pleading to those paragraphs would require the pleading of matters bearing upon the issue of whether an offence has been committed.
53. [53]
    Given the nature of the allegations, and in light of the evidence relied upon by the third defendant to show a real and appreciable risk, I am satisfied that if the third defendant was required to plead to the paragraphs identified there is a real and appreciable risk that:

    1. (a)
       he would be exposed to a criminal proceeding being commenced against him; or
    2. (b)
       it could lead a prosecuting authority on a train of inquiry that could assist in the investigation, formulation, preparation and presentation of a criminal proceeding against the third defendant.
54. [54]
    In relation to Category 2, the 2FASOC alleges that the third defendant was knowingly involved in or a party to a contravention of s 1317AE of the old Part 9.4AAA of the Act. In particular, it is alleged that the third defendant was knowingly involved in the tenth perfidious divulgation, in relation to which there is an allegation of contravention of s 1317AE of the old Act.
55. [55]
    Knowing involvement within s 79 of the Act includes aiding, abetting, counselling or procuring a contravention of the Act. By s 11.2 of the Criminal Code Act 1995 (Cth), criminal responsibility extends to such involvement in a contravention.
56. [56]
    In those circumstances, I am satisfied that if the third defendant was required to plead to the Category 2 allegations there is a real and appreciable risk that:

    1. (a)
       he would be exposed to a criminal proceeding being commenced against him; or

    2. (b)
       it could lead a prosecuting authority on a train of inquiry that could assist in the investigation, formulation, preparation and presentation of a criminal proceeding against the third defendant.
57. [57]
    As to the Category 3 allegations, the 2FASOC pleads allegations which the third defendant contends are premised upon the contravention of or involvement in contraventions of criminal offence provisions under the Act which:

    1. (a)
       contain allegations concerning the perfidious divulgations;
    2. (b)
       include allegations as to loss and damage said to be the result of the perfidious divulgations;
    3. (c)
       include allegations as to loss and damage said to be the result of the vindictive stratagems; and
    4. (d)
       include conclusionary paragraphs summarising claims made against the third defendant in relation to the perfidious divulgations and vindicative stratagems.
58. [58]
    The third defendant gives the example of paragraph [383] of 2FASOC, where it states that “as a result of Sixth Perfidious Divulgation, Mr Quinlan has suffered loss and damage”. A claim is then made against the third defendant as a consequence of those allegations which is premised on the sixth perfidious divulgation having occurred in contravention of s 1317AE of the old Part 9.4AAA of the Act. Similarly, in paragraphs [342A]–[357] of the 2FASOC, there are matters relevant to loss and damage and causation, including a counterfactual, which are premised on contraventions of the Act. In relation to the vindictive stratagems, detriment is an element of the contravention of s 1317AC of the Act. Pleading to loss and damage suffered by Mr Quinlan would therefore involve pleading to an element of an offence.
59. [59]
    I am satisfied that if the third defendant was required to plead to the allegations within Category 3, there is a real and appreciable risk that:

    1. (a)
       he would be exposed to a criminal proceeding being commenced against him; or

    2. (b)
       it could lead a prosecuting authority on a train of inquiry that could assist in the investigation, formulation, preparation and presentation of a criminal proceeding against the third defendant.
60. [60]
    As to the Category 4 allegations, the third defendant contends that he should be given relief from pleading to the allegations identified as there are pleaded allegations which provide the foundations for alleged contraventions of, or involvement in contraventions of, criminal offence and civil penalty provisions. The foundational facts for the alleged vindictive stratagems are both the Protected Disclosures and the third defendant’s knowledge and awareness of those Protected Disclosures. The allegations concerning the Transactions and Insider Trading are foundational matters for the alleged Protected Disclosures upon which Mr Quinlan based his belief, which are in turn foundational elements for the alleged contraventions concerning the perfidious divulgations and vindicative stratagems relevant to the third defendant.
61. [61]
    The allegations in this category do not directly allege contraventions of criminal offences or civil penalty provisions by the third defendant. However, I am satisfied that the allegations are premised on contraventions having occurred or are foundational for the subsequent allegations of contraventions constituting criminal offences or giving rise to civil penalties. In the circumstances, I am satisfied that if the third defendant was required to plead to the Category 4 allegations there is a real and appreciable risk that:

    1. (a)
       he would be exposed to a criminal proceeding being commenced against him; or

    2. (b)
       it could lead a prosecuting authority on a train of inquiry that could assist in the investigation, formulation, preparation and presentation of a criminal proceeding against the third defendant.
62. [62]
    Finally, Category 5 concerns allegations that otherwise would have the tendency to implicate the third defendant in relation to a criminal offence provision under the Act. Although no specific claim is made against the third defendant, allegations are made which allege his involvement in relation to perfidious divulgations. For example:

    1. (a)
       in paragraphs [205]–[207] of the 2FASOC in respect of the eleventh perfidious divulgation, which is alleged to have been made in breach of s 1317AE of the old 9.4AAA of the Act, allegations are made implicating the third defendant in the divulgation as a member of ERM’s board. I accept that the allegations are tantamount to knowing involvement, even though no claim is made against the third defendant, and pleading to the allegations would increase his exposure to the risk of prosecution; and
    2. (b)
       similarly, there are allegations of foreseeability of injury in relation to the fourth and fifth perfidious divulgations and perfidious divulgation 4A in paragraphs [370], [375] and [379] of the 2FASOC. It is alleged that the third defendant became aware of the relevant Protected Disclosure. That is relevant to the alleged perfidious divulgations and vindictive stratagems concerning him. Pleading to the allegations would require the third defendant to plead to matters which are relevant to contraventions of a criminal offence concerning him and would increase his exposure to the risk of prosecution.
63. [63]
    Notwithstanding the lack of a direct allegation of contravention, I am satisfied that there is a real and appreciable risk that pleading to the paragraphs containing allegations in Category 5 could:

    1. (a)
       expose the third defendant to a real and appreciable risk that a prosecuting authority would commence criminal proceedings; or
    2. (b)
       lead a prosecuting authority on a train of inquiry that could assist in the investigation, formulation, preparation and presentation of a criminal proceeding or a proceeding seeking civil penalties against the third defendant.
64. [64]
    I am therefore satisfied that the third defendant should be relieved from compliance with the pleading rules in respect of the five categories of allegations.
65. [65]
    The fourth defendant seeks relief from the pleading rules in respect of allegations of direct contravention of the Act (Category 1)^[33], allegations premised on such contraventions (Category 2)^[34], and allegations which provide the foundations for such contraventions (Category 3)^[35].
66. [66]
    Relevant to pleading to the Category 2 allegations is the fact that detriment is an element of a contravention of s 1317AC of the Act. Pleading to those allegations would require pleading to allegations which are relevant to an element of a contravention and therefore relevant to whether an offence had been committed. Other identified paragraphs are premised on a contravention having occurred and pleading to them would require that the fourth defendant plead to matters pertaining to the contravention.
67. [67]
    As to Category 3, the making of each of the Protected Disclosures, identification of the plaintiff as a whistleblower, and the fact that the plaintiff made the first and second Protected Disclosures at a meeting attended by the fourth defendant are foundational facts for the vindictive stratagems relevant to the fourth defendant^[36]. While the allegations of Transactions and Insider Trading, and allegations as to the reasonable basis for the plaintiff’s belief as to those transactions, do not involve direct allegations of contraventions, they are foundational elements for the Protected Disclosures which are in turn foundational elements for the contraventions arising from the vindictive stratagems. I accept that pleading to those allegations would be relevant to whether an offence has been committed or a civil penalty provision contravened, and increase the fourth defendant’s exposure to prosecution. Further, pleading to the allegations with respect to the Transactions, Insider Trading and the reasonableness as to the plaintiff’s belief are relevant to serious allegations of contraventions of the Act giving rise to criminal offences. Pleading to the allegations would expose the fourth defendant, given his position as a director and chairman of ERM, to a risk of prosecution under ss 1041 and 1041C of the Act, which are criminal offences for which there is no time limit for the commencement of prosecution.
68. [68]
    In relation to each of the paragraphs identified by counsel for the fourth defendant, adopting the same reasoning as above, I am satisfied in the circumstances that on the face of the allegations and the evidence of the fourth defendant’s apprehension of risk of self-incrimination or exposure to a penalty in respect of each category of allegations, there is a real and appreciable risk that pleading to the paragraphs identified would expose the fourth defendant to real and appreciable risk that:

    1. (a)
       a prosecuting authority would commence a criminal proceeding or ASIC would commence civil penalty proceedings; or
    2. (b)
       a prosecuting authority or ASIC would be led on a train of inquiry that could assist in the investigation, formulation, preparation and presentation of a criminal or civil penalty proceeding against the fourth defendant. 
69. [69]
    I am therefore satisfied that the fourth defendant ought to be relieved from compliance with the pleading rules in respect of the Category 1–3 allegations. 

Fifth, sixth, seventh, ninth, tenth, eleventh, twelfth and thirteenth defendants

70. [70]
    Allegations are made against the fifth, sixth, seventh, ninth, tenth, eleventh, twelfth and thirteenth defendants (the “Group B defendants”), including in relation to the period after the plaintiff ceased employment with ERM on 18 July 2014, as follows:

    1. (a)
       the fifth defendant was a director of ERM from 1 December 2019 to 28 February 2019.  He is alleged to be responsible for, or otherwise a party to, the first, second, third, fourth, fifth, eighth, ninth, tenth and eleventh perfidious divulgations. He is further alleged to be responsible for the second, fourth, ninth, fourteenth and twenty-third vindictive stratagems;
    2. (b)
       the sixth defendant was a director of ERM from 19 July 2010 to 29 November 2019.  He is alleged to be responsible for or otherwise a party to the fifth, eighth, tenth and eleventh perfidious divulgations. He is further alleged to be responsible for the fourth, night, fourteenth, twenty-second, twenty-third and twenty-fourth vindictive stratagems;
    3. (c)
       the seventh defendant was a director of ERM from 17 July 2007 to 26 October 2016.  He is alleged to be responsible for or otherwise a party to the first, second, third and fifth perfidious divulgations. He is further alleged to be responsible for the fourth, ninth and fourteenth vindictive stratagems;
    4. (d)
       the ninth defendant was a director of ERM from 2 February 2015 to 29 November 2019.  He is alleged to be responsible for or otherwise a party to the tenth, eleventh and twelfth perfidious divulgations.  He is further alleged to be responsible for the twenty-third vindictive stratagem;
    5. (e)
       the tenth defendant was a director of ERM from 24 August 2018 to 29 November 2019.  She is alleged to be responsible for or otherwise a party to the eleventh perfidious divulgation. She is further alleged to be responsible for the twenty-third vindictive stratagem;
    6. (f)
       the eleventh defendant was a director of ERM from 1 January 2015 to 8 November 2019.  He is alleged to be responsible for or otherwise a party to the tenth and eleventh perfidious divulgations. He is further alleged to be responsible for the twenty-third vindictive stratagem;
    7. (g)
       the twelfth defendant was a director of ERM from 26 October 2016 to 29 November 2019.  She is alleged to be responsible for or otherwise a party to the tenth and eleventh perfidious divulgations. She is further alleged to be responsible for the twenty-third vindictive stratagem; and
    8. (h)
       the thirteenth defendant was legal counsel of ERM from December 2007 and general counsel of ERM from October 2015.  He is alleged to be responsible for or otherwise a party to the ninth, tenth and eleventh perfidious divulgations.  He is further alleged to be responsible for the nineteenth and twenty-third vindictive stratagems.
71. [71]
    Mr Brookes, the partner responsible for the conduct of the proceeding on behalf of the Group B defendants, has sworn a detailed affidavit setting out matters relevant to the assessment of whether there is a real and appreciable risk that pleading to allegations in the 2FASOC may expose the Group B defendants to a civil penalty or incrimination, including criminal prosecution, by reference to each of the allegations made against them. Further, Mr Brookes deposes to the fact that given the serious nature of the allegations made, particularly in relation to the Transactions, pleading to the allegations might lead to a train of inquiry and draw the attention of ASIC or a prosecuting authority for a civil or criminal penalty. While some time limitations for civil penalty and criminal proceedings will have accrued, Mr Brookes notes that the Group B defendants are still exposed to civil penalties or incrimination given that there is no limitation period for a prosecution for those offences punishable by greater than six months’ imprisonment, s 1316 of the Act provides for an extension of time, ASIC has stated in recent years that part of its focus is on misconduct damaging market integrity and investigating misconduct revealed by whistle-blowers, as well as media attention and the fact that ASIC has not appeared to have stated that no proceedings will be commenced against the Group B defendants nor has Mr Quinlan said that he does not intend to make a complaint in relation to matters the subject of the proceedings and has foreshadowed complaints being made to ASIC in 2018, 2019 and 2021.
72. [72]
    Mr Brookes deposes to each of the Group B defendants having genuine and honest concern about being exposed to prosecution or civil penalty by a regulator such as ASIC or that pleading to the allegations would lead to a train of inquiry by a regulator which could expose them to a civil penalty or prosecution, assist ASIC in the formulation of civil penalty litigation or generate information which could be used against them if required to plead to each of the paragraphs identified within Categories 1–5 relevant to each Group B defendant respectively.
73. [73]
    In light of the evidence before me and the serious nature of the allegations made, I am satisfied that in respect of the allegations from which relief is sought which fall within Categories 1–5 as identified by the Group B defendants, pleading to those allegations would, to varying degrees based on the allegations made against the particular defendant:

    1. (a)
       expose the defendant to a real and appreciable risk that a prosecuting authority would commence a criminal proceeding against them, or ASIC would commence a civil penalty proceeding against, them based on allegations they contravened ss 180–183 of the Act;
    2. (b)
       require them to plead responsively to allegations that directly constitute the alleged contraventions, constitute parts of the contravention, or to matters otherwise highly relevant to that alleged contravention which could lead to a train of inquiry in relation to a potential prosecution;
    3. (c)
       lead to a train of inquiry which would draw the attention of ASIC or a prosecuting authority who would then bring actions for a civil or criminal penalty in relation to the Transactions, particularly given the serious allegations made as to Transactions; or
    4. (d)
       increase their risk of prosecution or civil penalty proceedings by the response being used against the group B defendants either directly or indirectly in any criminal or civil penalty proceedings that might arise from the conduct the subject of this proceeding.
74. [74]
    I accept that each of the Group B defendants genuinely holds concerns as to the risk of prosecution or civil penalty proceedings on reasonable grounds. I am therefore satisfied that the Group B defendants ought to be relieved from compliance with the pleading rules in respect of the Category 1–5 allegations identified.

Eighth defendant

75. [75]
    More limited allegations are made against the eighth defendant compared to the other applicants. The plaintiff claims compensation from the eighth defendant pursuant to s 1317AD of the old Act and pursuant to s 1317AE of the new the Act. It is not readily apparent how the new 2019 version of the Act can apply given the events occurred in 2012, but that is not a matter for resolution in this application.
76. [76]
    The 2FASOC alleges that the eighth defendant contravened s 1317AE of the Act on two occasions in 2012 by divulging protected information that tended to identify Mr Quinlan’s status as a whistleblower. It further alleges that the eighth defendant, by his conduct as part of ERM’s remuneration committee in approving or alternatively failing to review and correct two decisions to grant Mr Quinlan pay rises in July 2012 and August 2013, contravened s 1317AC of the Act and caused Mr Quinlan to suffer loss, including by receiving inadequate pay rises.
77. [77]
    To prove the alleged breaches of ss 1317AC or 1317AE of the Act, Mr Quinlan must prove that he made Protected Disclosures to the eighth defendant. This requires proof that Mr Quinlan had a reasonable basis for suspecting that the alleged Transactions and Insider Trading occurred, which are said to be the subject of the Protected Disclosures.
78. [78]
    The allegations from which relief from pleading is sought fall within Categories 1, 3, 4 and 5.
79. [79]
    The eighth defendant has detailed the allegations against him in submissions. In relation to allegations of the making of the first Protected Disclosure, they fall within Category 1 by requiring him to plead to matters which are essential elements of a contravention by the eight defendant, such as the eighth defendant disclosing that Mr Quinlan made the first alleged Protected Disclosure and/or the second alleged Protected Disclosure without Mr Quinlan’s authorisation, or Category 4 if they are foundational matters for the subsequent alleged contravention. The Transactions and Insider Trading allegations fall within Category 4 as they form part of the foundation for the allegations of contraventions of s 1317AE of the Act. Other allegations which fall within Category 4 are those which are premised on there having been the first Protected Disclosure and the first Protected Disclosure having been made to the eighth defendant. As to the allegations of contravention of s 1317AC by the eighth defendant as a result of the fourth and ninth vindicative stratagems, the direct allegations of contravention fall within Category 1. Other allegations identified by the eighth defendant are foundational to the allegations of victimisation and fall within Category 4. Allegations which are premised on misconduct having occurred which resulted in the Protected Disclosures fall within Category 5. Those allegations which are premised on the perfidious divulgations or vindictive stratagems relevant to the eighth defendant having occurred, including loss and damage, fall within Category 3.
80. [80]
    Ms Raisa Conchin, the solicitor acting on behalf of the eighth defendant, has raised matters which the eighth defendant relies upon to demonstrate that he has reasonable grounds for apprehending that pleading to the allegations exposes him to the potential for self-incrimination, in addition to the nature of the allegations in each of the categories identified. She deposes to the fact that the eighth defendant is aware of at least personal knowledge of some of the allegations in the 2FASOC for which relief from pleading is sought and that he is concerned that pleading to the identified allegations within the above categories in the usual way may assist Mr Quinlan in proving his case in relation to the contraventions of the Act and potentially culminate in him being exposed to a criminal prosecution or civil penalty. The eighth defendant further instructs that his concerns are exacerbated by his profile as a senior corporate lawyer, ASIC’s mandate to encourage the practice of whistleblowing, and the fact that whistleblower protection appears to be a priority of ASIC, together with the media attention the proceedings have attracted, particularly given the profile of some of ERM’s directors. Those matters support the eighth defendant’s concerns being bona-fide and having a reasonable basis.
81. [81]
    I am satisfied that there is a real, appreciable and not fanciful risk of the potential for self-incrimination if the eighth defendant is required to plead to the allegations, given the implications in terms of exposure to prosecution if the eighth defendant was required to plead to the paragraphs in each of the categories discussed above. The case is not one where ASIC has indicated that it has investigated the matter and decided not to prosecute. It has attracted considerable media attention and concerns areas which are particular priorities of ASIC, as identified in its enforcement policy.  While the Minister’s consent would have to be obtained to launch some of the prosecutions, the prospect that that will occur is not a remote one, notwithstanding the time that has passed since the alleged breaches occurred. That possibility may well diminish with the further passing of time, although the currency of the allegations in the litigation will be a factor weighing in favour of the extension as it potentially ameliorates any prejudice, as is the fact that if ASIC decided to prosecute in relation to some of the alleged contraventions there would be no extension of time required.
82. [82]
    I am therefore satisfied that the eighth defendant holds a genuine concern on reasonable grounds that if he is required to plead to the 2FASOC in the usual way without relief:

    1. (a)
       he may be required to assist Mr Quinlan in proving elements of his case that the eighth defendant has contravened ss 1317AC(1) and 1317AE(1) of the Act;
    2. (b)
       there would be a real risk of ASIC taking prosecutorial action against the eighth defendant with any necessary ministerial consent if adverse findings were made against the eighth defendant on the issue of such contraventions; and
    3. (c)
       pleading in the usual manner required by the UCPR would create a real and appreciable risk of self-incrimination.

RELIEF FROM CHAPTER 7 OF THE UCPR

83. [83]
    The applicants also sought relief from disclosure obligations in Chapter 7 of the UCPR in respect of the allegations identified in Categories 1–5 from which relief is sought from pleading in the usual way.
84. [84]
    The right to claim privilege against self-incrimination or penalty privilege may also result in a party being relieved from obligations of disclosure. The circumstances for such dispensation must be exceptional, as discussed in Connelly and Harris v McGrath.^[37]  Justice Ryan in Connelly and Harris v McGrath,^[38] having reviewed the key authorities in relation to non-penalty proceedings, stated that:

“The privilege may be claimed in an action which is not one to enforce a penalty if it involves proof of elements identical to those constituting the offence created by the section.  Thus production an any document relative to establishing the civil case alleged, or a failure to discover documents, may tend to incriminate (Bell Packaging).

It will not be difficult to show that the provision of information or the production of documents in a civil case leads to a real and appreciable risk of a criminal prosecution when the proceeding is aimed at proving that persons engaged in particular conduct, proof of which would establish, or go a long way towards establishing, that they had committed criminal acts (Le Roi).”^[39]

85. [85]
    The plaintiff contends that such an order is premature. In particular, the plaintiff pointed to some allegations, such as those allegations relating to the plaintiff’s employment and wage, where one would not expect the disclosure of documents to expose the applicants to any real and appreciable risk of self-incrimination. On first glance, that submission is persuasive. However, given part of the plaintiff’s case is that he has been victimised and has suffered detriment in relation to, amongst other things, his inadequate salary reviews and the relevance of a defendant’s knowledge in relation to those matters, those matters are in fact building blocks or foundational to proving those allegations.
86. [86]
    The plaintiff further contends that there are several reasons to await such orders until the close of pleadings, particularly since the matter is being managed on the supervised case list and given that in previous reviews I had indicated that the categories of documents would need to be carefully formulated to focus on the real issues in dispute. 
87. [87]
    While the categories may be more limited, I am satisfied there is a real and appreciable risk of the applicants being exposed to prosecution or civil penalty proceedings or that the documents disclosed will lead prosecutors or regulators on a train of inquiry if they are subject to disclosure obligations in Chapter 7 of the UCPR in respect of those paragraphs identified by the defendants In the circumstances, it will give rise to unnecessary costs to defer the question of dispensation from disclosure to after the formulation of the categories of documents. As discussed below, while possession of documents may not be an element of an offence, knowledge of those documents is relevant to the applicants’ state of mind and knowledge, which is relevant to the provisions in respect of which contraventions have been alleged.
88. [88]
    While decisions of this Court and others indicate a strong disposition in favour of ordering discovery and reserving the issue of self-incrimination to the production of documents for inspection, in the present case I do not consider that would be appropriate. The contraventions relied upon by the plaintiff are punishable criminally as well as by civil penalty and in a number of instances depend upon the alleged knowledge of the applicants, including as to the Transactions, Insider Trading, Protected Disclosures and matters said to have led to detriment being suffered by the plaintiff and the loss and damage claimed. The disclosing of those documents in a list of documents could, of itself, expose the applicants to a risk of self-incrimination or proceedings seeking civil penalties or set a prosecuting authority or ASIC on a train of inquiry that would assist in the investigation of criminal proceedings or a proceeding seeking civil penalties. The present case is similar to that considered in EL Bell Packaging Pty Ltd v Allied Seafoods Ltd^[40] in the context of proceedings to recover a debt. In order to succeed in recovering the debt, the plaintiff had to prove on the balance of probabilities the elements of the criminal offence. The Court of Appeal^[41] accepted in that case that the mere revelation of the possession of particular documents may assist in the proof of the contraventions by showing that the defendants knew or had constructive knowledge of the state of affairs relevant to the question of the company’s solvency at the time of incurring the debts. Disclosure of documents even through the provision of a list of documents could similarly show that the applicants had knowledge or constructive knowledge of the state of affairs giving rise to the state of affairs alleged to give rise to contraventions of the Act and would increase their exposure to prosecution at least by placing a regulator on a train of inquiry.
89. [89]
    I am persuaded that disclosure in relation to the allegations in Categories 1–5 would imperil the applicants and the dispensation should be given in the terms sought.
90. [90]
    It is therefore appropriate at this stage to make some orders in relation to disclosure limited to the allegations identified as discussed below.

FORM OF ORDER

91. [91]
    I am satisfied that an order should be made relieving the applicants from pleading to the allegations which are the subject of the applications. There is some dispute as to the form of order that should be made if I was so satisfied.
92. [92]
    The plaintiff holds a real concern for the ramifications for the plaintiff in the conduct of the proceeding to trial given the large number of allegations from which dispensation from pleading and disclosure are sought, which will result in the greater majority of the provisions effectively being in issue and require them to be the subject of evidence in order to prove them. While that is true, it is the consequence of how the plaintiff has framed his claim and the nature of the allegations that have been made.
93. [93]
    However, the order should not extend beyond what is necessary to protect the applicants’ claim for privilege in relation to the allegations identified which I have determined justify dispensation from the usual pleading rules and disclosure obligations under Chapter 7 of the UCPR.
94. [94]
    The eighth defendant sought additional relief in relation to “subsequent allegations to the extent that they are premised on the allegations pleaded in one or more of the identified paragraphs”. The plaintiff contends that such relief would be undesirable.  I agree. In my view, while it may be that subsequent allegations not covered by the present allegation may be subsequently identified, the applicants have had considerable time, notwithstanding the significant size of the 2FASOC, to identify the relevant paragraphs from which relief for dispensation is sought and it is not appropriate to make an open-ended order. It is open for the applicants to make a further application if necessary.
95. [95]
    In terms of the form of orders sought by the applicants, the plaintiff did not cavil with paragraphs one, two and three of the proposed order. Based on my findings above, I propose to make an order in that form.
96. [96]
    The plaintiff raises the concern that in limine relief from disclosure obligations may deprive the plaintiff of relevant documents for no good reason, as there may be some categories of documents which are innocuous, such that the identification and production of the documents within the categories would not imperil the applicants.
97. [97]
    Mr Franco KC on behalf of the eighth defendant identified that paragraph four of the order could be modified to meet that concern so as to be limited to those documents in respect of which the defendant claimed privilege against self-incrimination or privilege against exposure to a penalty.
98. [98]
    Mr Morris KC considered that the proposal had merit but contends that the order should go further. He proposed an order in the following terms:

“Pursuant to rule 367(1) of the UCPR, and save as may otherwise be ordered by the Court, the third to thirteenth defendants:

1. (a)
   are relieved from any obligation to comply with Chapter 7 of the UCPR in respect of any document:

   1. in respect of which the relevant Defendant claims privilege against self-incrimination or privilege against exposure to a penalty; and
   2. which is directly relevant to one or more of the allegations respectively identified in paragraph 2 above;
2. (b)
   in any affidavit verifying the relevant Defendant’s disclosure:

   1. need not identify any document referred to in subparagraph (a); and
   2. shall be taken to have provided sufficient verification if the affidavit contains a statement to the effect that, if and to the extent the Defendant relies on paragraph 4 of this order, the Defendant says that the disclosure of each relevant document would expose him or her to a risk of self-incrimination or a risk of exposure to a penalty.”

99. [99]
    The applicants in response proposed that the reference to an affidavit verifying the relevant defendant’s disclosure should be amended to refer to “list of documents produced pursuant to rule 214(1)(a) of the UCPR” and other consequential changes in (b)(i). That amendment is appropriate given that is the usual form of disclosure under the UCPR. Notwithstanding it refers to the provision of a list rather than an affidavit for the reasons above, I consider it is still appropriate that dispensation should be given. I will make the order in accordance with paragraph 4 as amended by the third and fourth defendant and agreed by the other defendants.^[42]
100. [100]
     Mr Morris KC proposed a wider dispensation in relation to the application of Browne v Dunn^[43] than that proposed in paragraph nine of the applicants’ order.  The terms of the expanded order are appropriate in order to ensure that the applicants do not waive privilege against self-incrimination and exposure to a penalty merely by the acts identified.  I will therefore make the order in those terms.
101. [101]
     As to the orders sought in relation to the point at which the applicants may elect to waive the privileges against self-incrimination and exposure to a penalty, I consider that the order sought in terms of paragraph five of the applicants’ draft order is appropriate and that the applicants should not be restricted, as proposed by the plaintiff, to only being able to seek to waive the privileges on one occasion.  In my view, I consider only being able to elect to waive privilege once would hinder the limiting of issues in what is going to be a large and complex litigation, which could well be assisted by the applicants identifying those areas in respect of which they waive privilege at the earliest opportunity rather than the last point in time at which it is proposed the applicants would have to make an election.  I do not consider that it would make the task of the plaintiff more onerous in the context of this case.
102. [102]
     As to the last point in time at which the applicants may make an election, I do not consider that it would be appropriate to defer the election until just before the case for the applicants is opened at trial as proposed by the applicants, so that the applicants have the benefit of waiting to see the position of other applicants and potentially their evidence before making the election as proposed by the applicants. Nor do I consider that the time for election should be deferred until after the first defendant, a body corporate which does not have the benefit of a claim for privilege against self-incrimination or exposure to a penalty, has closed its case. This case is case managed on the supervised case list and there are likely to be directions as to the exchange of evidence. By the time the plaintiff has closed its case, the natural defendants will be sufficiently apprised of the plaintiff’s case and first defendant’s case to be in a position to assess and make an election as to the waiver of privilege. Nominating the election at the same time will ensure that the interruption to trial by the natural defendants is minimised such that any directions that may need to be made by the Court can be addressed at that point in time.
103. [103]
     I note that the order does not address any statutory defences that the natural defendants may seek to rely on. If any applicant does propose to rely on such a defence it should be raised with the Court so the plaintiff will be put on notice of such an intention.. Further trial directions will be required as to the steps to be taken by the applicants in the event that they elect to waive privileges.
104. [104]
     The plaintiff contends that there is a genuine prospect that a defendant’s risk of exposure to criminal prosecution or a civil penalty may be reduced or removed before the matter reaches trial.
105. [105]
     To that end, the plaintiff sought an order that if any defendant obtains “first in” status pursuant to the “ASIC immunity policy” published 24 February 2021 (as revised from time to time) in respect of a matter that is the subject of a claim by the defendant for privilege against self-incrimination or exposure to a civil penalty, the defendant must notify the other parties of that fact. It further seeks to extend the notification to circumstances where the defendant otherwise forms the belief that the risk of prosecution or exposure to a civil penalty where any such matter has been eliminated or reduced materially since the filing of his or her application for pleading dispensation on 16 December 2022. 
106. [106]
     The scope of any such immunity would be limited to allegations with respect to the Transactions or Insider Trading. The basis of the dispensation in relation to those allegations is that they are foundational for the other contraventions pleaded in relation to the perfidious divulgations and vindictive stratagems. I do not, therefore, consider that such an order is presently justified. As to a defendant changing its view as to the claim of privilege such that dispensation is no longer required, the provisions in the order with respect to waiver of privilege are adequate to meet such a case.  It would be open to the plaintiff to make an application to the Court if they become aware of circumstances which justify a variation to the orders.
107. [107]
     Finally, there was some controversy as to whether the costs of and incidental to the applications of the natural defendants should be reserved or costs in the proceeding.  The plaintiff proposed that the appropriate order was that costs be costs in the proceeding.  That was ultimately not opposed by the applicants, and I consider that would be the appropriate order to make in the circumstances.

ORDERS

108. [108]
     I will make an order in accordance with the latest order provided on behalf of the third and fourth defendants taking account of the timing of the election. A clean unmarked copy of which should be provided to my Associate by 4:00pm today together with Schedule A, subject to the point of election being at the close of the plaintiff’s case.