A J Bush & Sons (Manufactures) Pty Ltd v Bhanotar [2016] NSWSC 422 | Case summary

Supreme Court of NSW|2016-04-08|Before: Pembroke J

Solicitors: Atkinson Vinden Lawyers - for the plaintiff No appearance - for the first and second defendants Slater and Gordon - for the third and fourth defendants Westsidelegal - for the fifth, sixth, seventh and eighth defendants No appearance for the ninth defendant File Number(s): 2015/124308

Introduction

The question in this case is whether the interests of justice require a stay of the proceedings against the fifth defendant, pending the conclusion of certain criminal proceedings against him. A stay will delay or deprive the plaintiff of its ordinary right to have its money claim against the fifth defendant heard and determined expeditiously in this court. However, there is no absolute principle of law that where there are concurrent criminal and civil proceedings against the same defendant, even in respect of the same subject matter, the latter should be stayed until the conclusion of the former: Commissioner of The Australian Federal Police v Zhao [2015] HCA 5 at [35]; Jefferson Ltd v Bhetcha [1979] 2 All ER 1108 at 1112-3 (Megaw LJ). The plaintiff's opposition to the fifth defendant's application for a stay in this case, requires the consideration and application of that principle.

The Fifth Defendant

The fifth defendant, known as Naresh, is the only son of an Indian farmer from Gujarat state who arrived in Australia in 2012 to pursue studies in accounting. He is 25 years of age and is currently on a student visa studying a bachelor of accounting at the Australian Institute of Higher Education. He has previously completed a diploma of accounting in Australia.
On 25 November 2013 he commenced employment as a casual production worker at the plaintiff's meat wholesaling factory in Riverstone. Also employed there was Mr Bhanotar, an account manager, who was a permanent resident of Australia and had been employed by the plaintiff since 2007. Mr Bhanotar ceased employment in March 2015 and he and his wife have now returned to India.
Until recently Mr Bhanotar and his wife were the registered proprietors of a property in Toongabbie where they resided. It appears that they gathered around them quite a number of Indian nationals, including the fifth defendant, who also lived at the same address. The further amended statement of claim names nine defendants for all of whom (with one exception), the same Toongabbie address is nominated.
Mr Bhanotar is alleged to have acted dishonestly in his role as an account manager for the plaintiff. In March 2015, senior executives of the plaintiff challenged him with having wrongfully diverted monies from the plaintiff's bank account. Soon afterwards, Mr Bhanotar transferred the Toongabbie property to the third and fourth defendants and left Australia.

The Concurrent Proceedings

On 1 July 2015, Naresh was arrested and charged with 41 counts of knowingly dealing with the proceeds of crime contrary to Section 193B(1) of the Crimes Act,1900 (NSW). The 'proceeds of crime' are said to be constituted by monies misappropriated by Mr Bhanotar from the plaintiff and diverted by him to bank accounts in which the fifth defendant had some form of interest. The offence carries a maximum term of imprisonment of 20 years for each count. The fifth defendant's trial will take place in the District Court and a hearing is not expected until 2017. The criminal charges require proof that he dealt with the monies, knowing that they were proceeds of crime and intended to conceal that fact.
These proceedings were commenced on 27 April 2015 but Naresh was not added to the claim until 11 November. The claim for $291,829.87 against him relates to the same misappropriations that are the subject of the criminal charges, give or take a small amount. The civil claim against the fifth defendant is however carefully confined. The essential question is said to be whether he was a volunteer. It does not require proof that he knew the monies were the 'proceeds of crime' or that he intended to conceal that fact.
There are two causes of action against Naresh. The first is for money had and received. The second is for conversion. The constituent elements of these claims are that (1) Mr Bhanotar wrongfully diverted monies from the plaintiff's bank account to accounts owned, operated or controlled by the fifth to ninth defendants and (2) that the monies were received by the fifth to ninth defendant as volunteers.

Legal Principle

The reason why it is sometimes necessary to stay civil proceedings until the conclusion of related criminal proceedings is to avoid prejudice to the accused in the criminal proceedings. Frequently, it will not be possible realistically to defend the civil proceedings without telegraphing a likely defence in the criminal proceedings. Often it will be obvious that the conduct of the defence of the civil proceedings may unavoidably expose the accused's position on a question of fact that is a step toward proof of the prosecution's case in the criminal proceedings. If that occurred, the prosecution would be advantaged 'in a manner which fundamentally alters its position … and renders the trial unfair': Zhao at [17].
It is not sufficient simply that there be some vague or general apprehended factual overlap between the civil and criminal proceedings. There must be a risk of prejudice to the accused that is not merely fanciful. The prejudice will normally be apparent from a consideration of the elements of each of the respective causes of action. But it is also necessary to keep a weather eye on the practical realities of the conduct of civil litigation and the likely extent of the forensic enquiry that will be involved, including by cross-examination of the defendant. And clinical efficiency cannot always be assumed.
Counsel for the plaintiff submitted that the ingredients of the civil claim do not involve attribution to the fifth defendant of any of the elements of complicity, collusion, knowledge or intention that form part of the criminal cause of action. The plaintiff, he said, only has to prove that the fifth defendant was a volunteer. I do not think that the answer to the stay application is as simple as that. In order for the fifth defendant to rebut the plaintiff's claim he will be required to file a defence; he will have to make a decision as to whether to waive his privilege against self-incrimination and his right to silence: Fotis v Favret, Supreme Court of New South Wales, unreported, 8 May 1996; Director of Public Prosecutions v Jo [2007] QCA 251; he will probably also have to give discovery of documents; and he will have to admit, not admit or deny that he owned, controlled or operated the bank accounts into which the 'proceeds of crime' were diverted by Mr Bhanotar.
If Naresh admitted that he did own, control or operate the bank accounts into which the misappropriated monies were diverted, his admission would reveal a fact that the prosecution would have to prove in the criminal action. If he put on a defence that the plaintiff or the first defendant owed him that money, or that for some other reason, he was not a volunteer, the forensic enquiry would necessarily traverse factual questions that may well infect the criminal action and prejudice the fifth defendant. Indeed, the question of whether Naresh was a volunteer might necessarily involve an examination of his relationship with Bhanotar. This may well cover the same ground as that involved in the allegation of complicity or collusion in the criminal action.
It is of course not possible in advance to know precisely how the plaintiff's claim against the fifth defendant in these proceedings will be conducted, or more importantly, how it might be defended. But the probabilities of prejudice to Naresh in the criminal action are sufficiently likely to justify a stay. Indeed the risk of prejudice would seem to be inevitable and unavoidable. I adopt the following observations in Zhao: [42] The risk of prejudice to the second respondent if a stay is not granted in the forfeiture proceedings and the exclusion proceedings is plain. It is not necessary for the second respondent to say any more than he did on the application for a stay in order to identify that risk, given that the offences and the circumstances relevant to both proceedings are substantially identical. [43] The Commissioner contends … that it was necessary that the second respondent state the specific matters of prejudice before a stay could be contemplated. However, to require the second respondent to do so would be to make the risk of prejudice a reality by requiring him to reveal information about his defence, the very situation which an order a stay seeks to avoid.

Orders

I therefore make the order sought in the fifth defendant's notice of motion filed on 12 January 2016. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 May 2016

A J Bush & Sons (Manufactures) Pty Ltd v Bhanotar

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