Nutanix – an Erosion of the Privilege Against Self-Incrimination?
On 3 October 2017, Hon G Lam J, the President of the Competition Tribunal, handed down a decision clarifying the scope of the ‘direct use prohibition’, which restricts use of statements made under compulsion.
In Competition Commission v Nutanix Hong Kong Ltd, BT Hong Kong Ltd & Others (CTEA 1/2017), the Tribunal dismissed applications made by Nutanix and BT to prevent the Competition Commission from relying on certain statements. The statements had been made by their employees in interviews held by the Commission pursuant to s42 of the Competition Ordinance.
S42 empowers the Commission to conduct interviews under compulsion with any individual it reasonably believes to hold information relevant to an investigation. S52 makes it an offence to fail to comply with a s42 requirement without reasonable excuse.
As is common with interviews under compulsion, the information divulged in interview is not admissible in proceedings against the interviewee except in proceedings for perjury or providing false information or where the interviewee adduces evidence about the statement himself. This is set out in section 45(2).
Nutanix argued that the interviewee, Mr A, was called to speak on behalf of Nutanix, about his own acts which have been attributed to Nutanix by the Commission, and so the “person” against whom the statements made in interview are inadmissible includes Nutanix.
BT focused on attribution, and argued that where the conduct of an individual is attributed by the Commission to the entity employing him, then s45(2) ought to be construed either in the way Nutanix urged, or by reading in a supplementary phrase to the effect that the statements are not admissible against the person interviewed or the entity or person to whom the acts complained of are to be attributed.
Lam J observed that the privilege against self-incrimination is not absolute and is frequently abrogated by legislative schemes that impose a restriction on the direct use of compelled statements – a direct use prohibition – and:
The direct use prohibition is clearly aimed at protecting the person being required to make the statement… If he fails to comply with [a s42 requirement] he commits an offence under s52, unless he has a reasonable excuse. Privilege against self-incrimination might have been an excuse but for the express provision in s45(1) that a person is not excused on the ground that it might expose the person to certain specified proceedings. S45(2) affords some protection to the person by providing that no statement so made is admissible against that person in the specified proceedings.
He noted that although an “undertaking” – an entity engaged in economic activity – was capable of being a “person” for the purposes of the Ordinance, there was no doubt that the s42 notices were addressed to the individuals and not the undertaking/employer, and that it was the individuals who would have committed an offence under section 52 had they failed to comply. The privilege is generally understood to be a privilege against incrimination of oneself – s65(1) of the Evidence Ordinance (Cap 8) refers to the right of a person in civil proceedings to refuse to answer questions “if to do so would tend to expose that person to proceedings for an offence or for the recovery of a penalty”.
Lam J referred to Environment Protection Authority v Caltex Refining Co Pty Ltd (1993) 178 CLR 477, in which where Mason J said:
It makes no sense at all to make the privilege available to a corporation in respect of these books and documents when officers of the corporation are bound to testify against the corporation unless they are able to claim the privilege personally.
Lam J held that:
The direct use prohibition protects the person who gave explanation or particulars or answered questions, not necessarily the person being investigated… in the case of an interview under section 42, the beneficiary of the direct use prohibition is the subject of the compulsion, that is to say, the person required by the s42 notice to attend and answer questions…
The subject of the s42 notice was the employee and not the employer. The s45(2) exclusion did not render inadmissible the interviews of employees in a case brought against their employer. Consequently, it offers little protection to any corporate entity that attracts the attention of the Commission. This decision may well have an impact on the interpretation of other, similar, abrogations of the privilege against self-incrimination. We will watch with interest to see if there is any appeal. Corporate clients would be well advised to ensure that employees are appropriately represented in any interviews under compulsion, and should consider whether separate representation is required.