Case: Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298
Outcome: considered
I accept that ASIC's allegations against FMG and Forrest are serious. In addition, I accept that the penalties sought against both would have severe consequences. Any monetary penalties against FMG and Forrest would likely have been very substantial. Section 1317(G)(1) allows the court to impose a pecuniary penalty of up to $200,000 for each contravention of s 180(1). ASIC alleges a total of 22 contraventions of that subsection by Forrest, ASC [177]. ASIC sought orders for Forrest to compensate FMG for the full amount of any damage which FMG suffered by reason of being liable to pay a pecuniary penalty for each contravention of s 674(2). The relevant maximum penalty for each contravention by FMG is $1 million. ASIC also sought orders for Forrest to be disqualified from managing corporations. Jones v Dunkel FMG foreshadowed that it would call evidence from its executives, such as Rowley, David Liu and Alan Watling but it did not do so. ASIC submits that, where an inference is open from facts proved, the unexplained failure of a party to call a witness or tender a document may be taken into account as a circumstance in favour of the drawing inference: Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298 at 308, 312 and 320-321; RPS v The Queen [2000] HCA 3 ; (2000) 199 CLR 620 at [26] . ASIC submits that it should be inferred that Rowley, Liu and Watling were available to be called, but FMG chose not to call them for strategic reasons. As a result, ASIC says, if there are inferences to be drawn from documents in evidence, which could have been explained by these executives, or by Forrest who also elected not to give evidence, the inference should be drawn against FMG that the evidence of these executives would have been of no assistance to their case, and that the documents should bear the meaning contended for by ASIC. FMG made no submissions on whether Jones v Dunkel had any application. Citing Dyers v The Queen [2002] HCA 45 ; (2002) 210 CLR 285 , Forrest submitted in written closing submissions that a Jones v Dunkel inference may not be drawn against an accused in a criminal case because the application of the rule in Jones v Dunkel is incompatible with the presumption of innocence and the rights of the accused; further, this reasoning applies with equal force to the accused calling other persons to give evidence. Forrest then submitted that the point of principle that, when an accused exercises the right not to give evidence the jury is directed that no adverse inference should be drawn, applies to a civil proceeding as against an individual defendant. He referred to the statement of Gleeson CJ, Gummow, Hayne, and Heydon JJ in Rich v Australian Securities and Investment Commission [2004] HCA 42 ; (2004) 220 CLR 129 at [24] that the privilege against exposure to penalty serves the purpose of ensuring that those who allege criminality or other (illegal) conduct should prove it, and said there is no expectation that a defendant will give evidence on matters for which the plaintiff bears the onus of proof. He said there is no authority that supports the proposition that a Jones v Dunkel inference is available against an individual defendant in a civil penalty proceeding, though, he said, the position may be different for a company. Finally, Forrest submitted that inferences are to be drawn from the documents before considering any question of Jones v Dunkel ; and a Jones v Dunkel inference is not be used in determining what inference ought to be drawn from the documents, citing Singh v Minister for Immigration [2001] FCA 389 ; (2001) 109 FCR 152 at [71] . In RPS [2000] HCA 3 ; 199 CLR 620 , Azzopardi v The Queen [2001] HCA 25 ; (2001) 205 CLR 50 and Dyers [2002] HCA 45 ; 210 CLR 285 , the High Court considered the applicability of the rule in Jones v Dunkel to criminal proceedings. It decided that the rule is of very limited application to defendants in criminal cases, its reasoning based on the accusatorial nature of criminal proceedings. As an illustration of the Court's approach, in Dyers , Gaudron and Hayne JJ stated at [9]: As was pointed out in RPS... , it will seldom, if ever, be reasonable to conclude that an accused in a criminal trial would be expected to give evidence. Not only is the accused not bound to give evidence, it is for the prosecution to prove its case beyond reasonable doubt. The mode of reasoning which is spoken of in ... Jones v Dunkel (26) ordinarily, therefore, cannot be applied to a defendant in a criminal trial. That mode of reasoning depends upon a premise that the person concerned not only could shed light on the subject but also would ordinarily be expected to do so. The conclusion that an accused could shed light on the subject-matter of the charge is a conclusion that would ordinarily be reached very easily. But given the accusatorial nature of a criminal trial, it cannot be said that, in such a proceeding, the accused would ordinarily be expected to give evidence. So to hold would be to deny that it is for the prosecution to prove its case beyond reasonable doubt. That is why the majority of the Court concluded, in RPS and in Azzopardi , that it is ordinarily inappropriate to tell the jury that some inference can be drawn from the fact that the accused has not given evidence. In RPS [2000] HCA 3 ; 199 CLR 620 , at [26]-[27] Gaudron A-CJ, Gummow, Kirby and Hayne JJ contrasted the reasonable expectation that a party in a civil trial would give or call relevant evidence in the circumstances described in Jones v Dunkel with the conclusion that it would seldom, if ever, be reasonable to expect an accused in a criminal trial to give evidence. Weissensteiner provides an example of where the latter would be reasonable. The Rich cases therefore turned on the issue of whether a disqualification order was a penalty. It was not in dispute that the privilege against exposure to penalty protected a defendant in civil proceedings not only from being obliged to give discovery, but also from being subject to any direction that affidavits or witness statements be provided to the plaintiff prior to the hearing or at any time prior to the conclusion of the plaintiff's case: see e.g. Austin J at first instance: [2003] NSWSC 328 ; (2003) 21 ACLC 920 , at [19]-[30]. In their judgments, neither the High Court nor the Court of Appeal considered the application of the rule in Jones v Dunkel ; Austin J mentioned it briefly in passing at [58]. The rule in Jones v Dunkel was discussed however in Adler v Australian Securities &amp; Investments Commission [2003] NSWCA 131 ; (2003) 179 FLR 1 , Williams v Australian Securities &amp; Investments Commission [2003] NSWCA 131 ; (2003) 46 ACSR 504 , a judgment handed down before the High Court's Rich ruling, where the New South Wales Court of Appeal ruled that the trial judge, Santow J ((2002) [2002] NSWSC 171 ; 41 ACSR 72) , made no error in so far as his findings against Mr Adler, his company and Mr Williams were aided by Jones v Dunkel inferences against both those individuals and the company. In that proceeding ASIC had sought, inter alia , disqualification orders as well as pecuniary penalties. Giles JA, with whom Mason P and Beazley JA agreed, considered the High Court criminal cases discussed above and noted at [658] that proceedings for civil penalties do not share the same fundamental features of a criminal trial. His Honour stated that civil penalty proceedings are expressly to be maintained by civil law processes, not by a criminal trial with its fundamental features, [659]. He concluded that it was open for Jones v Dunkel inferences to be drawn against Mr Adler, his company, and Mr Williams in the proceedings, [661]. The rulings in Adler were therefore made on the footing that the privilege against exposure to penalty was attracted through ASIC's seeking of pecuniary penalties, but this did not prevent the trial judge from applying the rule in Jones v Dunkel, the rule and privilege both falling within the rules of evidence and procedure for civil matters that the court was bound to apply pursuant to s 1317L of the act when hearing proceedings for a declaration of contravention or a pecuniary penalty order. The High Court refused an application for special leave to appeal from the Court of Appeal's decision in Adler : [2004] HCATrans 182 , 28 May 2004. The transcript reveals that the special leave point argued was the issue of procedural fairness in dealing with the imposition of pecuniary penalties and disqualification under the civil penalties regime of the Act; there was no discussion of the rule in Jones v Dunkel . Further, in my view, nothing that has been said by the High Court in Dyers [2002] HCA 45 ; 210 CLR 285 and the other authorities discussed above supports the proposition that the general rule proscribing the making of inferences from a defendant's failure to give evidence in criminal proceedings should be extended to civil penalty proceedings in the form of a prohibition against applying the rule in Jones v Dunkel , notwithstanding that pursuant to Rich s 1317L also obliges the court to apply the body of law which has developed in relation to the privileges against penalties and forfeitures when deciding whether an order for discovery should be made. Further authority for the availability of the rule in Jones v Dunkel in civil penalty proceedings is found in Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd (2001) 115 FCR 442 , where Hill J stated at [33]: Where the proceedings are criminal (and the present proceedings are not; they are proceedings, inter alia, for the recovery of a civil penalty) it might be thought that the failure of the accused to go into evidence should not lead to the drawing of Jones v Dunkel inferences. After all it is clear that a witness can not be compelled to give evidence which is likely to incriminate the witness or expose the witness to a penalty. However, even in criminal cases it has been held that the failure of the accused, who is in a position to deny, explain or answer the evidence adduced by the prosecution, to give evidence will permit the jury to draw inferences adverse to the accused more readily: see Azzopardi v R [2001] HCA 25 ; (2001) 179 ALR 349 , affirming Weissensteiner v R [1993] HCA 65 ; (1993) 178 CLR 217. A fortiori, therefore, the failure of a respondent to proceedings for recovery of a pecuniary penalty to give evidence on a matter relevant to an issue in the proceeding and deny, explain or answer the evidence adduced against the respondent will permit the Court more readily to draw the inferences to which the decision in Jones v Dunkel refers. In Council of the New South Wales Bar Association v Power [2008] NSWCA 135 ; (2008) 71 NSWLR 451 at [21] , a proceeding seeking removal of a legal practitioner from the Roll, Hodgson JA, with whom Beazley and McColl JJA agreed, referred to the High Court's conclusion in Azzopardi [2001] HCA 25 ; 205 CLR 50 that it was open to a trial judge in a criminal case to make a comment relating to the absence of evidence of additional facts peculiarly within the knowledge of the accused. Hodgson JA went on to say at [22] concerning the case before him that: If this had been a criminal trial, then in my opinion what the High Court said in Azzopardi would have meant that a jury could have been told that inferences from proved facts could more safely be drawn because the opponent elected not to give any explanation in terms of additional facts peculiarly within his knowledge or any evidence of such facts. In my opinion, if such Jones v Dunkel reasoning is available to a jury in a criminal trial, it must a fortiori be available to a court in civil proceedings such as the present. That would be so, even if these civil proceedings are regarded as proceedings for a civil penalty. I note that a similar view was expressed by Hill J in Australian Competition and Consumer Commission v Universal Music Australia Pty Ltd [2001] FCA 1800 ; (2001) 201 ALR 502 at [33] . In Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission [2007] FCAFC 132 ; (2007) 162 FCR 466 , the Court discussed the Adler and Rich cases and concluded at [76] that there is no reason in civil proceedings for pecuniary penalties to deny the applicability of the principles in Jones v Dunkel provided that in doing so the court proceeds in accordance with the principles in relation to s 140 of the Evidence Act , which prescribes he civil standard as the applicable standard of proof. I have discussed the standard of proof earlier. Finally, in Australian Securities and Investments Commission v Rich [2009] NSWSC 1229, Austin J concluded at [458] that, having considered the reasoning in Dyers and Adler , the principle in Jones v Dunkel is applicable against either party to civil penalty proceedings. ASIC seeks to draw Jones v Dunkel inferences against FMG by reason of the failure of Forrest and the other executives to give evidence. ASIC does not seek to draw the inferences against Forrest himself. Forrest has relied on the privilege against self-incrimination and the privilege against exposure to penalty, privileges which are are not available to corporations: Trade Practices Commission v Abbco Ice Works Pty Ltd [1994] FCA 1279 ; (1994) 52 FCR 96. However, even if ASIC had sought to draw inferences against Forrest as well as the corporate entity, on my review of the authorities it would not have been precluded from doing so. There is no reason therefore, in these circumstances, why the inferences cannot, as a matter of law, be drawn against FMG in the present proceedings. The question which then arises is whether I should draw such an inference in the manner urged by ASIC The authorities state that two inferences are involved in the rule in Jones v Dunkel . First, a court might infer that the evidence of the absent witness would not have assisted the party that failed to call that witness; secondly, a court might draw, with greater confidence, any inference unfavourable to the party that failed to call that witness, if that witness appears to be in a position to cast light on whether the inference should be drawn: Manly Council v Byrne and Anor [2004] NSWCA 123 at [51] ; ASIC v Macdonald [2009] NSWSC 287 ; 256 ALR 199 per Gzell J at [1137]. In Manly Council , the Court of Appeal stated that there is no compulsion on the trial judge to draw either of the Jones v Dunkel inferences. This was confirmed by the Court of Appeal in Howell v Macquarie University [2008] NSWCA 26 at [97] - [98], where Campbell JA said, with the agreement of Spigelman CJ and Bell JA (as her Honour then was): In other words, in a civil trial by judge alone Jones v Dunkel licences, but does not compel, the drawing of inferences when a witness is not called. Whether either or both of the inferences are actually drawn is part of the trial judge's task of weighing the evidence. Further, the Court of Appeal in Manly Council referred to the principles concerning the application of Jones v Dunkel set out by Glass JA in Payne v Parker [1976] 1 NSWLR 191 at 201-202 which have been widely regarded as correct although Glass JA was in dissent as to the application of the principles to the facts: per Campbell JA with whom Beazley JA and Pearlman AJA agreed, at [53]. In Payne [1976] 1 NSWLR 191 , Glass JA said that whether Jones v Dunkel should be applied depends on establishing three conditions: (a) the missing witness would be expected to be called by one party rather than the other, (b) his evidence would elucidate a particular matter, (c) his absence is unexplained. Before stating my conclusion on whether I ought to make any Jones v Dunkel inferences, I will deal with the final authority cited by Forrest, Singh v Minister for Immigration [2001] FCA 389 ; (2001) 109 FCR 152 , from which he submits the following propositions emerge: that inferences are to be drawn from the documents before considering any question of Jones v Dunkel ; and that a Jones v Dunkel inference is not to be used in determining what inference ought to be drawn from the documents. In Singh , the applicant sought judicial review of a Ministerial decision to refuse to grant a spouse visa on character grounds. The Minister's reasons for decision were given in two documents: a decision record and a statement of reasons. The applicant argued that the Minister erred in making his decision by failing to have regard to the character references in support of the applicant which were annexed to a letter attached to the decision record. The Minister did not give evidence at trial, but Sackville J found that the statement of reasons provided affirmative evidence that the Minister gave consideration to the contents of the character references. The inferences that the applicant sought to draw by the Minister's failure to give evidence were contradicted by the Minister's statement of reasons. In my view, what Sackville J said in Singh concerning the application of the Jones v Dunkel principle to the case before him is merely an application of the second condition given by Glass JA in Payne at p 201 as to whether the principle can or should be applied, namely whether the evidence of the missing witness would elucidate a particular matter. There was no occasion to draw an inference from the Minister's failure to give evidence because in his Honour's view, the question of whether he took into account the character references was adequately addressed by the statement of reasons. As ASIC's senior counsel put it, in ASIC's closing written submissions, generally, the evidence upon which ASIC relies to establish all of the alleged contraventions is documentary, and founded upon FMG's own business records. This evidence is supplemented by certain alleged admissions by Watling and Rowley, derived from transcripts of examinations conducted by ASIC pursuant to s 19 of the ASIC Act : ASIC's closing submissions [47]-[48]. ASIC withdrew from tender alleged admissions made by Forrest during his s 19 examination. This was so despite the fact that Forrest who had not claimed privilege, as he might have done during his examination sought to have additional parts of his transcript admitted which he said would put in context and explained what ASIC contended amounted to admissions against Forrest's interest. The additional evidence, I infer, would have been favourable to Forrest. If ASIC considered that, despite this additional evidence, the transcript nonetheless disclosed relevant admissions then it would, no doubt, have persisted with its tender. However, I was denied the benefit of any of this evidence. ASIC has not identified any particular matters that the evidence of the executives, including Forrest, would elucidate. For these reasons, I decline to make any Jones v Dunkel inference against FMG from the failure of Forrest and the other executives to give evidence. Browne v Dunn ASIC submits there is also a small amount of direct evidence from witnesses it called which mostly went unchallenged. For example, Catherine Li, a former FMG engineer, was not cross-examined about her evidence concerning a meeting on 6 November in which Forrest offered a 30% equity interest in the Project to a Chinese investor. Likewise, Wei Fisher, a former FMG executive assistant, was not cross-examined about her evidence of a letter from CMCC on about 3 February 2005, in which she recalls that CMCC claimed that the "deal" with the Chinese contractors was off. FMG's honesty in this respect depends on that of Forrest and other members of its board. That FMG's opinion was genuine may be inferred from other facts. For reasons contained under Part 3 I draw no Jones v Dunkel inference against Forrest by reason of him not giving evidence. It is instructive to consider the following: (a) legal oversight and advice; (b) the position adopted by the Chinese Contractors; (c) FMG's internal records; (d) FMG's external communications; (e) the position adopted by FMG executives; (f) Advanced framework agreements; (g) comparison with other FMG documents. Legal oversight and advice ASIC, in respect to its case under s 674, pleads at ASC [136(3)] amongst other things, that FMG by its board, including Forrest, ought to have come into possession of the parts of the Informations concerning, on ASIC's case, the legal effect of the framework agreements by first obtaining competent legal advice as to the legal effect of the framework agreements.