New Australian case on whether partners can claim privilege against self incrimination or privilege from exposure to civil penalties

Sadie Ville Pty v Deloitte Touche Tohmatsu (A Firm) (No 3) [2018] FCA 1107, 357 ALR 695, 128 ACSR 625 (available free online at http://www.austlii.edu.au)

The defendant firm was sued in respect of losses alleged to have been sustained from share purchases made in reliance on representations made by it as the company’s auditor. As a matter of procedure, the Federal Court Rules 2011, r 9.41(2) permit proceedings to be brought in the partnership name against two or more persons claimed to be liable as partners, but the proceedings are in fact brought against all of the partners. (The position under the UK’s Civil Procedure Rules 1998, r 5.A3, is similar).

The court held that natural persons - including partners - could claim privilege against self incrimination and privilege from exposure to civil penalties, but legal persons such as companies (and thus corporate partners) could not. However, there must be a real and appreciable risk of prosecution or penalty proceedings, and only a person exposed to that risk could invoke the privileges; as a general rule, they could not do so merely because another person would thereby tend to be incriminated. Therefore, only those partners in the firm who were alleged to be involved in the wrongdoing could claim privilege.

The uninvolved partners appealed unsuccessfully against this ruling in Sadie Ville Pty v Deloitte Touche Tohmatsu (A Firm) (No 5) [2018] FCA 2066.

It is understood that the defendant firm has applied for leave to appeal and, if successful, the hearing has been set down for 6 May 2019 (see further Shanta Martin, ‘The Hastie Class Action: the Privileges of Partnership?’ CommBar Matters Blog, available at http://www.commbarmatters.com.au/2019/03/08/the-hastie-class-action-the-privileges-of-partnership/).

On the position in relation to the privilege against self-incrimination in the UK, see further Elspeth Berry, ‘The Zone of Interaction between Partnerships, LLPs and Human Rights in United Kingdom Law’ (2011) EHRLR 11(3): 503, 511-513.