Consideration and determination
21 The relevant principles guiding the exercise of the Court's discretion to grant a stay in circumstances where there are related civil and criminal proceeding are helpfully summarised by Moshinsky J in Australian Securities and Investments Commission v Australian and New Zealand Banking Group Ltd [2019] FCA 964; 138 ACSR 42 (ANZ) at [50]-[63]. Despite their length, those passages should be set out in full:
50 The Court has a wide jurisdiction to stay proceedings in the interests of justice: Obeid v Commissioner of Taxation [2017] FCA 1135 (Obeid) at [2] per Pagone J (and cases there cited); Websyte Corporation Pty Ltd v Alexander (No 2) [2012] FCA 562 (Websyte) at [53] per Dodds-Streeton J. The Court's power to grant a stay is an incident of its general power to control its own proceedings for which s 23 of the Federal Court of Australia Act provides statutory support.
51 The appropriate approach in considering whether to grant a stay in the interests of justice has been considered in a number of recent decisions, including by the High Court of Australia in Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46 (Zhao) and by the Full Court of this Court in Construction, Forestry, Mining and Energy Union v Australian Competition and Consumer Commission (2016) 242 FCR 153 (CFMEU v ACCC). Recent first instance decisions concerning applications for a stay of a civil proceeding pending a criminal proceeding include: Ransley v Commissioner of Taxation [2016] FCA 778 (Ransley); Obeid; Re Plutus Payroll Australia Pty Ltd [2017] NSWSC 1854 (Re Plutus Payroll); and McLachlan v Browne (No 9) [2019] NSWSC 10 (McLachlan v Browne). Although reference is often made in this context to the guidelines set out by Wootten J in McMahon v Gould (1982) 7 ACLR 202 at 206-207, it is important to recognise that these are merely guidelines. While they may still offer some assistance, the guidelines need to be read in light of the subsequent cases.
52 Based on the authorities identified above, the applicable principles may be summarised as follows.
53 First, courts have the power to control their proceedings and to order a stay in an appropriate case; it will be appropriate to do so where the interests of justice require such an order: Zhao at [36] per French CJ, Hayne, Kiefel, Bell and Keane JJ; CFMEU v ACCC at [22] per Dowsett, Tracey and Bromberg JJ.
54 Secondly, a plaintiff is prima facie entitled to have his, her or its civil action tried in the ordinary course and a stay therefore requires justification on proper grounds (with the applicant for a stay bearing the burden of demonstrating proper grounds): see Zhao at [39]; McMahon v Gould at 206.
55 Thirdly, a court will not grant a stay of a civil proceeding merely because related charges have been brought against an accused and criminal proceedings are pending; a stay of the civil proceeding may be warranted if it is apparent that the accused is at risk of prejudice in the conduct of his, her or its defence in the criminal trial: see Zhao (2015) 255 CLR 46 at [35]; CFMEU v ACCC at [22]; see also Corporations Act, s 1331. The risk of prejudice must be real: see CFMEU v ACCC at [22]; Ransley at [22] per Jagot J. As to possible prejudice to an accused, the following have been recognised as relevant factors:
(a) prejudice to the accused's right to silence or privilege against self-incrimination: see Zhao at [42]-[47]; CFMEU v ACCC at [23]; Ransley at [24]-[30]; Obeid at [4]; and
(b) the possibility of publicity that might reach and influence jurors: see CFMEU v ACCC at [44]-[46].
56 It may not be necessary for the applicant for the stay to state the specific matters of prejudice before a stay could be contemplated. As the High Court said in Zhao at [43], "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 for a stay seeks to avoid".
57 A number of recent decisions have emphasised that the possibility of protective orders being made (such as an order made under s 128 of the Evidence Act 1995 (Cth) or a non-publication or suppression order) is not an adequate protection against the risk of prejudice to the accused: see Zhao at [44]-[46]; CFMEU v ACCC at [24]-[25]; Ransley at [29]-[30]; Re Plutus Payroll at [38] and [42] per Brereton J; Websyte at [121].
58 Fourthly, relevant prejudice to a party in the civil proceeding may arise from the existence of the criminal proceeding even in circumstances where there is not a strict identity between the applicant for the stay of the civil proceeding and the criminal accused: see Ransley at [15]; Obeid at [7]; Re Plutus Payroll at [33], [39], [41]-[43]. There may, for example, be relevant prejudice where the criminal accused, although not a party to the civil proceeding, would be a lay witness in that proceeding. In such circumstances, the criminal accused's invocation of the privilege against self-incrimination and the right to silence may deprive a party to the civil proceeding of assistance or evidence that is critical or very important to its claim or defence.
59 Fifthly, prejudice to an accused who is not a party to the civil proceeding, or against whom relevant allegations are not made in the civil proceeding, may be a relevant consideration: see CFMEU v ACCC at [28]-[49] (although this argument failed on the facts in that case). There was a difference between the parties to the present case on this point. In oral submissions, ASIC submitted that the focus (in an application for a stay of a civil proceeding pending a criminal proceeding) is on the parties to the civil proceeding and whether the existence of the criminal proceeding gives rise to a risk of prejudice to a party; prejudice to a person who is not a party to the civil proceeding is not a relevant consideration. ASIC did not submit that prejudice to a non-party is completely irrelevant; however, on ASIC's submission, prejudice to a non-party is only relevant to the extent that it impacts on the party to the civil proceeding in a relevant way. In support of these submissions, ASIC relied on Obeid at [2], [4], [6], [7]; McMahon v Gould at 206 (paragraphs (e) and (h)); Zhao at [19], [35], [37], [42], [48]; Ransley at [10], [15]; and Re Plutus Payroll at [33], [37], [41]-[43].
60 However, as pointed out by ANZ in its reply submissions, the cases relied upon by ASIC leave open the possibility that prejudice to an accused who is not a party to the civil proceeding may itself be a relevant consideration. In Obeid, Pagone J expressly refrained from deciding the point: at [7] ("Counsel for the applicants had also submitted … that relevant prejudice might also be caused to each of Messrs Obeid in their criminal trial if they were compelled to give evidence in the tax proceedings, but in the circumstances it is unnecessary to express a concluded view about whether that is the correct way to identify the relevant prejudice …"). In Ransley, Jagot J referred, not only to the risk of prejudice to the party to the proceeding, but also to the risk of prejudice to the accused (who was not a party to the civil proceeding): at [20] ("… I do not consider the existence of these powers [to make a non-publication or suppression order, etc.] to outweigh the potential prejudice to which the applicant will be exposed if forced to trial in the appeal without Mr Ransley's evidence or to which Mr Ransley will be exposed if he is compelled by the applicant to give evidence in the appeal …" (emphasis added)). Indeed, the subsequent paragraphs of the judgment in Ransley focus on the position of the accused (as distinct from the party to the proceeding): see [21]-[30]. In Re Plutus Payroll, Brereton J referred, not only to the risk of prejudice to the party to the civil proceeding, but also to the risk of prejudice to the accused: at [43] ("… it seems to me that to require Synep to defend the winding up proceedings at this stage would require it to do so in circumstances where either it would be deprived of the most important source of evidence that might be adduced in its defence, or Messrs Onley and Cranston would have to forgo their right to silence in the criminal proceedings" (emphasis added)). Thus, in both Ransley and Re Plutus Payroll, the Court gave separate consideration to the risk of prejudice to a criminal accused who was not a party to the civil proceeding. In relation to Zhao, the passages relied on by ASIC reflect the particular circumstances of that case rather than supporting the general principle contended for by ASIC. In relation to McMahon v Gould, as noted above, the guidelines set out by Wootten J are just that: guidelines. Further, in CFMEU v ACCC, the Full Court considered whether there was a risk of prejudice to the individuals who were the subject of criminal charges in circumstances where the application for the stay of the civil proceeding was made by the union in respect of the claims against the union (the claims against the individuals in the civil proceeding having already been stayed): see [28]-[49]. In light of the approach taken by the Full Court in CFMEU v ACCC, and having regard to the other authorities discussed above, I consider that prejudice to an accused who is not a party to a civil proceeding may be a relevant consideration in considering whether or not to grant a stay of a civil proceeding. However, as discussed later in these reasons, acceptance of this proposition is not necessary for the disposition of the present application.
61 Sixthly, the risk of prejudice identified by an applicant for a stay must be weighed against the prejudice that a stay of the civil proceeding would occasion: see Zhao at [47], [50]; CFMEU v ACCC at [22].
62. Seventhly, the principles relevant to the exercise of the discretion to grant a stay are not different in the case of a proceeding brought by a regulator, from those that apply in the case of a proceeding brought by a private plaintiff: CFMEU v ACCC at [60]-[62].
63. Eighthly, each case must be judged on its own merits; the matters that might individually, or in combination, be relevant to the exercise of the discretion are not rigid or closed; the factors identified in the authorities are not a prescriptive or an exhaustive statement of all of the considerations, or the weight to be attached to them: see Australian Competition and Consumer Commission v The Construction, Forestry, Mining and Energy Union [2016] FCA 504 at [51] per Middleton J (application for leave to appeal dismissed: CFMEU v ACCC).
22 Although each case necessarily turns upon its own facts, it is appropriate to say something more about the Full Court's decision in Construction, Forestry, Mining and Energy Union v Australian Competition and Consumer Commission [2016] FCAFC 97; 242 FCR 153 (CFMEU v ACCC) (which Moshinsky J referred to in ANZ). In CFMEU v ACCC, the ACCC commenced pecuniary penalty proceedings against the CFMEU as well as two individuals who were associated with that body. Subsequently, criminal proceedings were commenced against the two individuals on charges of blackmail. The pecuniary penalty proceedings were stayed in relation to those individuals, but the primary judge refused to stay the proceeding against the CFMEU.
23 The Full Court refused leave to appeal from the primary judge's decision. The Court held that, in order to establish potential prejudice warranting the grant of a stay of the civil proceeding, there must be an evidential basis for thinking that it is likely that the person would give evidence in the civil proceeding if there was no risk of prejudicing the criminal proceeding. The Full Court reasoned that there was no basis for thinking that the two individuals were likely to give evidence in the pecuniary penalty proceeding, with the consequence that the approach taken in Zhao was distinguishable.
24 Their Honours said at [36]-[38] (emphasis in original):
36 In the absence of that evidence there was no basis for concluding that an invidious choice was actually faced by Setka and Reardon. We would accept that the wish or need to defend or protect a financial interest (as in Zhao) is not essential, and that an invidious choice may be founded upon a person's desire to clear his or her name and assist the organisation in which he or she is a senior official (as was here contended). However, the mere possibility that Setka and Reardon might desire to clear their names or assist the CFMEU does not establish that they are confronted by an invidious choice. Setka and Reardon may have no wish or desire to give evidence in the s 45D proceeding. For instance, they may have no basis for thinking that their evidence could be of assistance either to themselves or to the CFMEU.
37 The issue may be expressed thus: does it suffice to establish an "invidious choice" that Setka and Reardon might give evidence in the civil proceeding? Or, is it necessary that there be an evidential basis for thinking that it is likely that they would give evidence in that proceeding were it not for the potential of prejudicing the criminal proceeding? Inherent in the applicants' position is that the former question should be answered "yes". It is evident from what is said above that we disagree.
38 The High Court in Zhao evidently considered that the evidentiary burden upon an applicant to establish the existence of an invidious choice was not onerous. But that burden was not discharged in this case. Instead, the applicants' submission impermissibly assumed the existence of the invidious choice for which they contended. They have not established that doubt attends the primary judge's approach sufficient to warrant reconsideration by a Full Court.
25 The Full Court rejected the CFMEU's submission that because of the overlap in timing between the civil and criminal proceedings, there would be prejudice to the two individuals in that their involvement in the civil proceeding could prejudicially impact upon their capacity to prepare for their defence in the criminal proceeding. The Full Court observed at [42] that this contention may have been more persuasive if there was a basis for finding that the two individuals would be burdened by a significant involvement in the civil proceeding, but the evidence before the primary judge did not indicate that the two individuals would be involved in the civil proceeding either as witnesses or as instructors.
26 The Full Court noted at [59]:
We would agree with the applicants that, in the sense we have explained it, the primacy of a criminal proceeding needs to be taken into account in the balancing process. In other words, the risk of prejudice to the fair and efficient conduct of the criminal proceeding should be given especial significance. But the difficulty for the applicants in this case is that a risk of that kind was not established. It was therefore not necessary for the primary judge to enter into an assessment of the importance to be given to such a consideration in the balancing process.
27 Applying the relevant principles to the circumstances here, I consider that, for the following reasons, the stay should be granted. First, in contrast with the position in CFMEU v ACCC, I find that it is likely that one or more of the Oliviers will be primary witnesses for the applicant in the present proceedings. They are the "directing mind" of the applicant (which is also known as Australian Mental Dental Care). During the relevant period Jeremias Olivier was the Chief Executive Officer of the company and was present at its headquarters nearly every day. He regularly had meetings with Johanna, Michelle and Venessa. His daughters were managers at the company and his wife was in charge of accounts and processing Medicare claims. Michelle Olivier was a manager with responsibility for calling staff in the mobile dental vans to encourage them to work faster and meet targets. She and her sister, Venessa, shared a HICAPS terminal, which they used to submit claims to Medicare. Venessa was the Department Manager for Quality and Procedures. All of those matters are raised in the draft summary of facts provided by the CDPP.
28 I do not accept the respondent's submission that the issues concerning the applicant's "questionable ethics" and alleged misuse of the CDBS scheme could adequately be addressed by the applicant's business records and without calling one or more of the accused as witnesses. Given the senior management positions held by the relevant Olivier family members, they are likely to be required to be called as witnesses in the civil proceeding to establish the falsity of the relevant representations, as set out in the ASOC, including the alleged representation that the applicant's use of the CDBS was not appropriate.
29 Secondly, on 28 May 2021, the respondent included among its proposed further categories for discovery and documents relating to the investigation into the applicant carried out by Medicare or the DHS (Medicare Category). I accept the applicant's submission that the Medicare Category captured all documents within the applicant's possession which go to the investigation, which investigation then led to the criminal proceedings. I also accept the applicant's submission that the accused persons may be required in the present proceedings to give evidence to explain the documents discovered during the investigation.
30 Thirdly, although not themselves a party to the present proceedings, I consider that each of the accused Olivier family members would be at risk of prejudice in the conduct of their defence in the criminal proceedings if the civil proceedings are not stayed. It is important to note that it is alleged in the criminal proceedings that the four accused engaged in a joint enterprise and acted under an agreement to obtain, dishonestly, a financial advantage from Medicare. The criminal proceedings are listed for hearing tomorrow on 30 November 2021, when it is expected that the accused will plead to the charges. However, I was told from the Bar table during the course of today's hearing that that hearing in the criminal proceedings may need to be adjourned to February 2022 because of the recent production of a database of material.
31 I accept that it may not be until sometime in 2023 that the prosecution will be heard. It is probable that the civil proceeding will have been heard and determined by then (assuming they are not stayed). I find that the risk of prejudice to the persons accused is real, with particular reference to their right to silence or privilege against self-incrimination if they give evidence in the present proceedings. That risk of prejudice is not entirely avoided by the possibility of protective orders (see Zhao at [44]-[46]; CFMEU v ACCC at [24]-[25]).
32 Fourthly, I find that there is a sufficient overlap in the subject matter of the two proceedings, relating as they both do to claims of misuse of the CDBS scheme.
33 Fifthly, I accept that it is relevant to note that none of the accused persons is a party to the present proceeding. That does not mean, however, that the risk of prejudice to those accused persons is not itself a relevant consideration.
34 Sixthly, I accept that the risk to be weighed against the prejudice to the accused is the prejudice to the respondent if the present proceedings are stayed. I do not doubt the validity of the matters of prejudice raised by Mr Herzfeld SC (who appeared for the respondent with Mr Farinha) and which are summarised at [20] above. I consider, however, that those matters are significantly outweighed by other considerations which favour a stay.
35 Finally, I address the respondent's contention that the many procedural steps taken by the applicant in the proceedings to date, knowing that the criminal proceedings were on foot, amounted to an abandonment of any concerns relating to the implications of the criminal prosecutions. There has been delay in bringing this interlocutory application, noting that it was put from the Bar table that the applicant only first appreciated the significance of the overlap of the civil and criminal proceedings in late May 2021, in the context of the parties' discussions about further categories of discovery. I note that the applicant first raised the issue of a stay in a letter to the respondent, which is dated 1 July 2021, and there then occurred a series of discussions between the parties in order for the respondent to be able to obtain sufficient information for it to finalise its position regarding the proposed stay.
36 The applicant's conduct in progressing the proceeding and its delay in filing the interlocutory application is regrettable, but it does not constitute an abandonment of its concerns relating to the overlap between the criminal and civil proceedings. Those matters, however, are relevant to costs.