High Court stops use of privilege against self-incrimination to avoid disclosure in freezing order

On 4 August 2021 in Deputy Commissioner of Taxation v Shi [2021] HCA 22, the High Court of Australia allowed an appeal from a decision of the Full Court of the Federal Court of Australia (Full Court) refusing to make an order under s 128A(6) Evidence Act 1995 (Cth) that a privilege affidavit be provided to the Deputy Commissioner of Taxation (Deputy Commissioner). 

Section 128A deals with freezing orders and the usual accompanying disclosure order. If an objection grounded on the privilege against self-incrimination is raised, the privileged information is set out in a ‘privilege affidavit’ provided to the Court in a sealed envelope – s 128A(2). The Court then considers if there are reasonable grounds for the objection – s 128A(4). Under s 128A(6) the court may order that the privilege affidavit, in whole or in part, be disclosed if satisfied that, among other things, that (a) any information in it may tend to prove that the person has committed an offence against or arising under an Australian law; and (b) the interests of justice require the information to be disclosed.  Even if disclosed, the information in the privilege affidavit cannot be later used in other proceedings except as to its falsity – s 128A(8).

The Deputy Commissioner had obtained worldwide freezing orders in the Federal Court and ancillary disclosure orders relating to the whereabouts of assets. There was an objection to complying with part of the disclosure order on the grounds of self-incrimination.  A privilege affidavit was prepared. 

Interests of justice

The key issue on appeal was the correctness of the primary judge’s reasoning, upheld by the Full Court, that the interests of justice did not require the privilege affidavit to be disclosed because there were other means by which the Deputy Commissioner could obtain the information in the privilege affidavit, and because of the risk of derivative use of the information (for example, use in criminal proceedings against Mr Shi).[1] The primary judge reasoned that the derivative use immunity in s 128A(8) was very difficult to enforce and a certificate issued under s 128A(7) was not a complete answer to that difficulty.

The High Court, by majority (Edelman J dissenting), allowed the appeal and rejected this reasoning, holding that for the purposes of determining whether disclosure was in the interests of justice:

1. the availability of an alternative compulsory process to obtain the information was an “irrelevant consideration”;[2] and
2. it is “contrary to the proper construction of s 128A” to consider the risk of derivative use of the information.[3] The High Court considered that the resulting unfairness to a relevant person of an order under s 128A(6) and the risk of derivative use is addressed by a number of measures such as the procedure under s 128A(7) that requires the Court to issue a certificate to prevent the future use of the information in Australian legal proceedings; the Harman undertaking; and the ability of the court to craft the form of the orders made under s 128A(6).[4]