Recent amendments to the Environmental Protection Act, assented to on 27 April 2016, now compel an individual to answer a question put to them under s476 of the Act even if answering might tend to incriminate the individual.
What this means in practice is that executive officers are increasingly exposed to investigation and consequently possible enforcement action for legislative breaches in their own right. These amendments will prevent companies from sheltering in the executive officer’s claim to privilege against self-incrimination for matters beyond those which have been physically documented or recorded.
Under section 476 of the Act a person required to provide information (which may include external consultants) must do so unless there was a “reasonable excuse” for the refusal. It was a reasonable excuse not to comply with the notice if complying might tend to incriminate the person. In legal terms a person, as defined in the Acts Interpretation Act 1954, includes a corporation. In May 2011, the Act was amended to explicitly provide that the section only applied to individuals and not to corporations. This amendment was consistent with the common law position that self-incrimination privilege does not apply to companies.
The privilege against self-incrimination has been said to be a human right, based on the desire to protect personal freedom and human dignity. Obviously, a corporation cannot be incarcerated and does not experience human dignity.
However, even if the purpose of the amendment (not enabling companies to take advantage of an individual’s privilege) is legitimate, its effect is to erode an important common law right of the individual officer.
The Explanatory Notes gives the reason for the departure from the established common law position as “being unnecessary difficulties in investigating companies suspected of offences under the EP Act”. Impliedly, information within the knowledge of executive officers not otherwise capable of discovery by direct means against the company is being excluded from investigations. From a public policy perspective this may be of some concern, however, it must be balanced against an individual’s rights and liberties.
The State has attempted to strike a balance between the competing issues. A new subsection (3A) provides that incriminating evidence for an individual who answers a question is not admissible in evidence against the individual in a civil or criminal proceeding, other than a proceeding for an offence for which the falsity or misleading nature of the answer is relevant. That said, an investigator may be able to indirectly use this information to find evidence that is admissible in court.
THE PROTECTION OF INTERESTS
With these changes it is likely that executive officers will review their roles and responsibilities in a company against the internal protections afforded to them – for example indemnity insurance. The following is a list of considerations for executive officers (which corporations could also benefit from reviewing):
Check their contracts to ensure that their employer will pay the costs incurred by the executive officer in any investigation and/or legal proceedings, whatsoever, that have arisen as a result of, or relating to, that executive officer acting in good faith and without gross negligence in his or her executive officer capacity.
Section 240 of the Local Government Act 2009 which protects senior management against costs incurred in litigation may not be of any assistance to local government officers responding to a statutory notice of interview because it is triggered only where the officer actsfor the local government.
- Review the corporation’s insurance policy about indemnifying senior management’s legal costs and the scope of that cover. For example, if executive officers’ costs will be covered, are they capped and are there any limitations as to who may legally represent the officer, e.g. lawyers from a particular insurance panel;
- Consider whether the corporation’s and the executive officers’ interests are common or diverge. If so, the executive officer should seek their own independent legal advice particularly with respect to discussing the matter internally with their employer. For example, the Department of Environment and Heritage may argue that no professional privilege attaches to communications between an executive officer and in-house lawyers and seek disclosure of any admissions. That said, in-house lawyers will no doubt consider resisting any requirement to provide such information to the DEHP.
- Consider potential exposure in terms of:
- the more senior they are and more hands-on in terms of decision making;
- where the viability of the company is questionable;
- where the activity or omission that gives rise to the alleged offence is significantly riskier than standard practice;
- where decisions have been made that are contrary to expert opinion or an expert has raised real concerns and steps have not been made to consider and, where appropriate, ameliorate those concerns;
- where the executive officer receives bonuses and those bonuses may, at least, be perceived to incentivise risky behaviour, particularly if actions taken are contrary to expert advice or subcontractors that are engaged have a history of substandard performance.
- Thoroughly document decision making but also be mindful how things are expressed in writing, particularly in emails, which when read at a later time by third parties may be out of context.
It may be tempting to “downplay” certain matters but depending on the circumstances that may actually be evidence of the executive officer who was well aware of the relevant facts and circumstances but who has taken a deliberate path despite that knowledge. In short, it is often best to be realistic without elaboration or alarming.
When obliged to answer questions under the Act, confirm in what capacity you are being questioned, namely, as a potential witness or suspect, i.e. as a representative of the company or in an individual capacity. This will inform an executive officer’s decision whether or not to obtain independent legal advice.
When negotiating employment contracts with its executive officers, corporations should be mindful of the above, particularly in terms of indemnifying for legal proceedings having regard to the statement of job responsibilities.
FURTHER CONSIDERATIONS FOR POSSIBLE PROTECTION AGAINST THE EROSION
There are two further considerations which may be relevant to the regulators and defence. First, it may be reasonable if the amendment was strengthened such that it provided that any evidence obtained directly or indirectly as a result of the answer is not admissible against the individual and that the prosecutor should, in any subsequent proceedings against the individual bear the onus of showing the impugned piece of evidence was not, directly or indirectly, obtained as a result of the answer.
From a regulator’s perspective, it would also be reasonable to clarify that a “reasonable excuse” does not encapsulate a breach of contract where a consultant is bound by confidentiality clauses but that the individual is immune from any civil liability that would otherwise accrue to the individual as a result of that person’s disclosure of information as required under the Act. Otherwise, companies may attempt to exploit the reasonable excuse provision by using contractual provisions to render all information confidential.