Commonwealth Bank of Australia v Christian Orlando May

Halabi v Westpac Banking Corporation (1989) 17 NSWLR 26 Jefferson Ltd v Bhetcha [1979] 1 WLR 898 John Fairfax Publications Pty Ltd v District Court of New South Wales (2004) 61 NSWLR 344 John Fairfax & Sons Pty Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465 McMahon v Gould (1982) 7 ACLR 202 Murphy v The Queen (1989) 167 CLR 94 CASES CITED : Niven v SS [2006] NSWCA 338 R v Bell (Court of Criminal Appeal, 8 October 1998, unreported) R v Burrell [2004] NSWCCA 185 R v D'Arcy (2003) 140 A Crim R 303 R v Dudko (2002) 132 A Crim R 371 R v Long (2002) 128 A Crim R 11 R v Milat (Court of Criminal Appeal, 26 February 1998, unreported) Ross v Internet Wines Pty Ltd & Ors [2004] NSWCA 195

PARTIES : Commonwealth Bank of Australia (Plaintiff) Christian Orlando May (Defendant)

COUNSEL : Mr D McLure (Plaintiff) Mr R Tregenza (Defendant)

SOLICITORS : John O'Sullivan solicitors (Plaintiff) Watson Stafford (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

Monday, 14 May 2007 ex tempore Revised 15 May 2007

50023/07 Commonwealth Bank of Australia v Christian Orlando May JUDGMENT The proceedings 1 These proceedings brought by the Commonwealth Bank of Australia commenced on 16 January 2007 on which occasion orders were made inter alia freezing the defendant's assets in Australia, imposing conditions upon the defendant's entitlement to dispose of or to deal with or diminish the value of any of his ex-Australian assets and, subject to conditions treating with the possibility that the defendant may claim privilege against self-incrimination, ordering that the defendant make written disclosure of all of his assets worldwide. The notices of motion 2 There are presently before the Court two notices of motion:

i. The first, brought by the defendant, seeks a stay of the proceedings until after the completion of concurrent criminal proceedings which have been commenced;

ii. the second, brought by the plaintiff, seeks orders that the defendant file and serve an affidavit, in particular disclosing details of financial institutions in terms of accounts in which the defendant has had an interest over particular periods, detailing the names and addresses of persons or entities to whom the defendant has made loans or gifts over particular periods, detailing the names and addresses of persons or entities to whom the defendant has transferred assets over a particular period and like information. The nature of the proceedings 3 The claims made by the Bank are described in its overview submissions in the following terms:

i. The defendant is said to have been employed in the Bank's Group Security Division. In that role, he is said to have had access to the personal information of the Bank's customers. In late 2005, the Bank is said to have detected that a large number of fraudulent credit card applications were being made with a similar modus operandi. It is said to have been discovered that multiple applications were being made using the same post office box, and in some cases the same identification referee. As a result, the Bank alleges that it undertook various surveillance measures. Critically, this is said to have led to: a) the observation of the defendant using credit/debit cards at ATMs that had been fraudulently applied for in the names of Bank customers: Bank CDs 1, 3, 4 and 6;

b) the observation of the defendant collecting mail from post office boxes not in his name, that had been used as addresses for fraudulent credit card applications: Bank CDs 2 and 5; c) Bank officers ringing the mobile telephone numbers provided on various fraudulent credit card applications. Four Bank officers (co-workers of the defendant) identified the voice on the recorded message for those mobile telephone numbers as being the voice of the defendant: Hilton, Keaney, Moore and Misitano of 12 April 2007;

d) monitoring the defendant's use of the Bank's computer system, from which it was discovered that the defendant had accessed the details of three customers in whose name fraudulent card applications had been made: Misitano no. 3 of 24 April 2007. e) nine fraudulent credit card applications included with them a forged reference, purportedly signed by Dr P Radvan, a veterinary surgeon in Wakeley. Those references are said to have been compared with a sample of the defendant's handwriting by an expert handwriting analyst, Ms Novotny. The conclusion of Ms Novotny is said to have been that the defendant had prepared the forged references.

f) the total loss to the Bank from the defendant's alleged fraud is $1,151,199.94.

4 A plethora of evidence has been adduced by the Bank exposing its serious case in terms of these allegations and of the alleged wrongdoing of the defendant. This included some four folders of exhibits, which went into evidence as exhibit VMM1 volumes 1 to 4 inclusive and 21 affidavits identified in MFI P1 and the sundry exhibits to those affidavits [which included in various instances bank tapes and bank CDs, some of which evidence was screened during the hearing of the motions].

5 There are a number of authorities which set out the principles to be applied on stay applications of the type presently before the Court. Naturally each particular set of circumstances requires to be separately assessed in terms of the principled exercise of the Court's relevant discretion. 6 In what appears to be the most recent affirmation of the well-established principles, Niven v SS [2006] NSWCA 338 Tobias JA [with whose reasons Giles JA agreed] [Beazley JA expressing some reservations] referred with approval to the guidelines stated by Wootten J in McMahon v Gould (1982) 7 ACLR 202 at 206-207. Those guidelines [excluding citations] were summarised as follows :

(a) Prima facie a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the court;

(b) It is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification on proper grounds;

(c) The burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff's ordinary rights should be interfered with;

(d) Neither an accused nor the Crown are entitled as of right to have a civil proceeding stayed because of a pending or possible criminal proceeding;

(e) The court's task is one of 'the balancing of justice between the parties', taking account of all relevant factors;

(f) Each case must be judged on its own merits, and it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors;

(g) One factor to take into account where there are pending or possible criminal proceedings is what is sometimes referred to as the accused's 'right of silence', and the reasons why that right, under the law as it stands, is a right of a defendant in a criminal proceeding;

(h) However, the so-called 'right of silence' does not extend to give such a defendant as a matter of right the same protection in contemporaneous civil proceedings. The plaintiff in a civil action is not debarred from pursuing action in accordance with the normal rules merely because to do so would, or might, result in the defendant, if he wished to defend the action, having to disclose, in resisting an application for summary judgment, in the pleading of his defence, or by way of discovery or otherwise, what his defence is likely to be in the criminal proceedings;

(i) The court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings;

(j) In this regard factors which may be relevant include: (i) the possibility of publicity that might reach and influence jurors in the civil proceedings;

(iii) the possibility of miscarriage of justice eg by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses, or interference with defence witnesses;

(iv) the burden on the defendant of preparing for both sets of proceedings concurrently;

(v) whether the defendant has already disclosed his defence to the allegations;

(vi) the conduct of the defendant, including his own prior invocation of civil process when it suited him; (k) The effect on the plaintiff must also be considered and weighed against the effect on the defendant. In this connection I suggest below that it may be relevant to consider the nature of the defendant's obligation to the plaintiff;

(l) In an appropriate case the proceedings may be allowed to proceed to a certain stage, eg, setting down for trial, and then stayed. 7 As Tobias JA observed at [26]:

" McMahon was expressly approved in the Court of Appeal by McHugh JA in Halabi v Westpac Banking Corporation (1989) 17 NSWLR 26 at 59. After observing that the source of the appropriate power of a court when application for a stay of civil proceedings pending the hearing of criminal proceedings was made was the inherent jurisdiction of the court to prevent an abuse of process and to achieve justice between the competing rights of the plaintiff and the defendant after a proper evaluation of all the relevant circumstances, his Honour identified that approach as having been espoused by Wootten J in McMahon , noting that it had been followed on numerous occasions both in the Court of Appeal and other jurisdictions. It was an approach which required attention be paid to all factors relevant to the case ." [emphasis added] 8 Albeit that Mr Tregenza of counsel appearing for the defendant recognised the nature of the guidelines set out in McMahon v Gould in terms of binding a first instance judge, he sought to reserve his client's position to argue on appeal that those guidelines were no longer appropriate or should not be followed in this case for particular reasons.

The defendant's submissions in support of the stay application

9 The defendant submitted as follows: i. In (h) of the criteria in McMahon v Gould Wootten J deals with the right of silence. His Honour puts it that a plaintiff is not debarred from civil proceedings merely because a defence to those proceedings may lead to a disclosure of a defence in the criminal proceedings (the emphasis is His Honour's). Clearly His Honour anticipates that together with another or other factor/s the "right of silence" may be given full effect.

ii. Taking the factors specifically identified (j) of the criteria in McMahon v Gould : Publicity

a) There is a possibility that publicity might reach and effect potential jurors in the criminal proceedings. The reference in McMahon v Gould is to "jurors in the civil proceedings". However, that is an obvious typographical error for "jurors in the criminal proceedings" as may be verified by examining the authority upon which that proposition is based (Megaw LJ in Jefferson Ltd v Bhetcha [1979] 1 WLR 898 at 905 line E).

b) The likelihood of future publicity is not a matter that is capable of expert evidence and the Court must apply common sense.

c) The matters the subject of these proceedings is of significant public interest. They involve allegations of credit card fraud for an overall large amount of money from a well-known Bank.

d) There is a real possibility of there being publicity in the media by television, radio and newspapers in relation to the civil proceedings if they proceed prior to the criminal trial. That publicity is likely to reach potential jurors. Proximity of Criminal Hearing a) This factor is usually considered if the criminal proceedings are to be heard within a reasonably short period of time. However, in this matter the criminal proceedings are not far advanced. Even as this application was being foreshadowed in directions hearings before Bergin J. fresh charges were still being laid (the last nine).

b) At this stage the defendant has the benefit of information provided to his legal representatives by the prosecution that there will be no further charges brought against him. Common sense dictates that such assurances may be given in good faith but later departed from as the prosecution develops. At this early stage the ambit of the prosecution cannot be said to be fixed.

c) The defendant has been recently served with the prosecution brief in relation to four of the charges and not that in relation to the balance of the charges. His counsel in the criminal proceedings has not yet considered and advised him in relation to the brief received so far.

d) The defendant has not received the balance of the prosecution brief, being in relation to the further nine charges laid.

e) It is unfair to the defendant to anticipate all relevant factors that may have the effect of denying him a fair trial or which may adversely affect his rights where the defendant does not know the prosecution case that is to be brought against him.

f) It is also unfair to the defendant to prosecute the civil proceedings before he and his legal advisors have had a reasonable opportunity to consider the brief already delivered. Miscarriage of Justice a) The next factor is the possibility of a miscarriage of justice. The point made in McMahon v Gould is that disclosure of the defence in the civil proceedings may result in interference with the defendant's witnesses or the fabrication of evidence. The likelihood of those particular events occurring is not raised in this application.

b) In Jefferson Ltd v Bhetcha (supra) the possibility of interference with defence witnesses and fabrication of evidence was pointed to merely as an example of situations where a miscarriage of justice could actually arise rather than theoretically arise. Clearly, the manner in which a miscarriage of justice may actually arise is not limited to these two usual and unlikely events. c) Just as much as the fabrication of evidence would be a miscarriage of justice, so would the requirement that a defendant defend civil proceedings until he knows the full case against him in the criminal proceedings and has an opportunity to consider his position. Dealing with the matter 10 In my view none of these submissions makes good the proposition that the stay should be ordered. For the reasons given by Wootten J in McMahon v Gould the Court's task is one of the balancing of justice between the parties taking account of all relevant factors, the burden being on the defendant in a civil action to show that it is just and convenient that the plaintiff's ordinary rights should be interfered with. The plaintiff's submissions are generally adopted in what follows. 11 I deal with the bases relied upon by the defendant seriatim. "Right to silence" 12 In McMahon v Gould (1982) 7 ACLR 202 [at 208] Wootten J said this of the "right to silence":

"…there are some consequences of the "right of silence" which no one, so far as I am aware, puts forward as legitimate reasons for its existence. These include the opportunity it may give the accused to remain silent till the end of the evidence given against him at the trial, and then produce a fabricated story perfectly tailored to meet that evidence. They include the possibility of depriving the prosecution of any opportunity to check the accused's story and obtain evidence to refute it before the trial is over. In one particular matter - the last minute production of alibis - the injustice was so frequent and obvious that the legislature made an inroad into the "right of silence" by requiring notice of such an intended defence.

These are advantages which the "right of silence" gives to an accused, but they cannot reasonably be regarded as part of the reason why the right exists. In exercising its discretion to stay civil proceedings the court need not be concerned to preserve these advantages. It should be concerned to avoid the causing of unjust prejudice by the continuance of the civil proceedings, not to preserve the tactical status quo in the criminal proceedings whether it be just or unjust." 13 I accept that the submissions for the defendant do not advance any reason why the continuation of these proceedings would cause unjust prejudice, other than to say that "disclosure of the defence in civil proceedings has the potential to deny, wholly or in part, to the defendant that right of silence in the criminal proceedings" and that evidence in the civil proceedings "may have the effect of giving the Crown notice of … how he proposes to conduct his defence". These perceived tactical advantages do not justify the stay sought. 14 Mr Tregenza also strongly urged upon the Court the proposition that the material injustice to the defendant in the Court not granting a stay was to be found in the fact that the defendant for various reasons could not be said yet to be in a position to know the full ambit of the possible charges to be laid against him and/or to have received proper advice in that regard. In this respect the evidence before the Court was somewhat ambiguous. However, as Mr Tregenza explained, that which Mr Michael Baker had deposed to in his affidavit of 12 May 2007 [concerning the brief in respect of the first four charges having been served and concerning there having been a facts sheet provided by the prosecution in respect of another seven charges, in respect of which the brief in respect of the additional charges had not been served], may or may not be correct. None of that seems to me to be of radical significance in relation to the point which Mr Tregenza sought to make. The essence of the submission was that it was simply inappropriate to permit these proceedings to go forward at this point in time, bearing in mind the pendency of the criminal proceedings and the fact that Mr Michael Gallagher of Lachlan Macquarie Chambers in Parramatta [being the barrister briefed for the defendant in the criminal matters], had stated that he had not yet had an opportunity to read the brief in respect of the first four charges, but proposed to do so in this coming week. Apparently the matter is listed again before the Local Court on Monday 21 May 2007. 15 The plaintiff is entitled in these civil proceedings, unless the defendant has satisfied the Court that it is just and convenient that the plaintiff's ordinary rights should be interfered with, to have these proceedings progress in the usual manner. Nothing in the suggested special grounds of injustice put by Mr Tregenza as referred to above is to my mind of substance. It cannot be the case that the plaintiff must stand by dependent upon the exigencies of when those who are briefed by the defendant in the criminal proceedings ultimately place themselves into a position, on an informed basis, to give advice to the defendant.

16 I further accept that the assessment of any asserted prejudice must be made against the facts of the case. While the Bank's evidence is voluminous, as I have said, having regard to the quantity of the allegedly fraudulent transactions, the case is likely to be essentially a simple one from the plaintiff's side of the Bar table. As the plaintiff has submitted, the Court would likely either accept or reject the identification of the defendant in the video and audio recordings; as the plaintiff has submitted, the defendant is likely to either admit or deny being the person in the recordings and, as the plaintiff has submitted, any evidence which the defendant would give would undoubtedly be the subject of a certificate issued pursuant to section 128 of the Evidence Act. The likelihood of future publicity / the proximity of the criminal hearing 17 As the Bank has contended it is useful to consider these points together. Apparently the defendant has been charged with twelve offences or, if not so charged with all twelve, a facts sheet has been provided in respect of the additional seven charges. He has pleaded not guilty to four before the Bankstown Local Court and has not yet been arraigned on the others. He has not yet been committed to the District Court for trial. The defendant has not adduced any evidence of when those charges could be tried. The plaintiff has submitted that realistically it would not be within twelve months that those charges could be tried, but the Court has no hard evidence in relation to that estimate. 18 It seems also correct to observe that if the Court's judgment in these civil proceedings was to attract some publicity, it will hardly be likely to remain in the memory of members of the public much longer than it will take to turn, as the plaintiff has suggested, the page of a newspaper. The misappropriation of money by employees (including bank employees) is not uncommon. The amount involved in this case is certainly substantial, but is far from astonishing. As the plaintiff has submitted, the criminal law system copes with far greater publicity than this case would ever generate or be likely to generate. As Spigelman CJ observed in John Fairfax Publications Pty Ltd v District Court of New South Wales (2004) 61 NSWLR 344 at [59]:

Applications for a permanent stay have failed in the most sensational of cases: Anita Cobby, Ivan Milat, Phillip Bell, the Childers Backpacker Hostel fire, Lucy Dudko, William D'Arcy, Bruce Burrell ( Murphy v The Queen (1989) 167 CLR 94; R v Milat (Court of Criminal Appeal, 26 February 1998, unreported); R v Bell (Court of Criminal Appeal, 8 October 1998, unreported); R v Long (2002) 128 A Crim R 11; R v Dudko (2002) 132 A Crim R 371; R v D'Arcy (2003) 140 A Crim R 303; R v Burrell [2004] NSWCCA 185.

Naturally the Court does not here regard Mr Tregenza's submissions as being for a permanent stay of the proceedings, but the observations by Spigelman J are nonetheless apt to be cited here. 19 It is also correct to observe that if the defendant had a proper basis for contending that the Court's judgment in these civil proceedings would interfere with his right to a fair trial in the criminal proceedings, he could apply for an order preventing publication of the judgment until after the verdict: John Fairfax & Sons Pty Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465 at 476-477 per McHugh JA. The possibility of a miscarriage of justice 20 The defendant's submissions in contending that a miscarriage of justice would arise from "the requirement that a defendant defend civil proceedings until he knows the full case against him in the criminal proceedings and has an opportunity to consider his position" are not of substance. As the plaintiff has submitted, this is for the following reasons:

i. The Bank sues the defendant for the same matters in respect of which he has been charged (albeit the Bank sues him in respect of many more transactions than those with which he has been charged).

ii. If the effect of the submission is to point to the possibility that the defendant might adopt different strategies in these proceedings as opposed to the criminal proceedings, this is not a matter justifying the stay.

iii. As earlier observed, the defendant's evidence in these proceedings would undoubtedly, if given, attract a certificate under s 128 of the Evidence Act . The Bank's desire to proceed 21 The Bank claims that its total loss from the defendant's alleged fraud is $1,151,199.94. 22 However, the defendant asserts in his affidavit of 24 May 2007 to have only net assets of $379,800. On the Bank's case, the defendant's affidavit falsely understates the extent of his assets. In this regard the Court's attention has been drawn to the affidavit made by the defendant on 24 January 2007 where an entirely different order of net assets was given. It is correct to say that the sooner the Bank obtains judgment against the defendant, the greater will be its chances or likely chances of recovering some of its loss. Conversely, those chances likely reduce as time continues. 23 In terms of the current forensic position pursued by the Bank, it has made clear that it is ready for the matter to be set down for final hearing and that it seeks for the Court to do so on the earliest available date. It makes the point that the defendant has not yet filed a defence and has made clear that it, the Bank, is prepared to proceed on the basis that it will be put to proof on all issues. Decision 24 For the reasons given above, the principled exercise of the relevant discretion is to dismiss the motion for the stay.

Dealing with the Bank's motion for orders that the defendant file and serve affidavits particularising particular matters and for the defendant to sign particular forms of authority

25 In relation to the application pursued by the Bank under cover of its notice of motion filed on 14 May 2007, the Court has made plain during the course of submissions that insofar as there would be no concession by the defendant of his being content to make an affidavit without claiming the privilege against self-incrimination, the Court following Ross v Internet Wines Pty Ltd [2004] NSWCA 195 would only make the orders sought in the amended notice of motion subject to a condition that if and insofar as the defendant sought to raise an entitlement to rely upon the privilege against self-incrimination, that matter would require to be treated with by notice of motion and affidavits of the usual type and ultimately would be determined by the Court. In that event the defendant does not, as long as that condition forms part of the Court's orders, oppose the orders sought in the amended notice of motion in paragraphs 1(a) to (e) inclusive. 26 In relation to the amended notice of motion paragraph (f) the defendant by his counsel Mr Tregenza has made clear that there is no intent to rely upon the privilege against self-incrimination so that an order may be made in terms of paragraph 1(f) of the amended notice of motion in unconditional terms. 27 Likewise, in relation to paragraph 2 of the amended notice of motion, the Court will make an order to that effect but only conditional upon the defendant having an entitlement to claim that there should be no requirement that he sign that form by reason of any suggested privilege against self-incrimination. In the event that, as I have already indicated, the stay is not to be granted, the plaintiff does not pursue the relief sought in paragraph 3 of the amended notice of motion. Costs

28 The orders of the Court are as follows: · I order that the defendant pay the plaintiff's costs of the plaintiff's amended notice of motion. · I order that the defendant pay all of the plaintiff's costs of the defendant's notice of motion seeking a stay, excluding any of the plaintiff's costs of and occasioned by the need to prepare exhibits VMM1 volumes 1 to 4 inclusive to the affidavit of Vistoria Marie Misitano sworn on 13 April 2007 and excluding also, any of the plaintiff's costs of the preparation of the materials to be found in MFI P1. · The Court having earlier ordered that pending conclusion of the hearing of the motions the Bank was to pay the costs of the external transcription, it is necessary to note that those costs are as between the parties to be paid by the defendant in relation to the two motions. Pending that payment the plaintiff is to pay the whole of the external transcription costs. · I order that the proceedings be before the Commercial List list judge on Friday 18 May 2007 for directions.

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.