National Australia Bank Limited v Human Group Pty Ltd

Background

1. On 5 December 2017, NAB received an anonymous letter stating that Ms Rogers, then Chief of Staff to NAB's Chief Executive Officer, may have been receiving cash payments from Ms Rosamond in return for NAB contracts. Ms Rosamond was the director and company secretary of Human Group, which had a consulting services agreement with NAB at the time.
2. In early 2018, NAB referred the matters to the Victorian and NSW Police, who commenced an investigation.
3. NAB allowed Ms Rogers to resign from NAB, terminated its contractual arrangements with Human Group, and conducted an internal investigation.

Criminal Proceedings

1. On 1 March 2019, Ms Rosamond was arrested and received court attendance notices in relation to fifty-eight offences. Fifty-seven of the offences relate to NAB, fifty-six of which are offences under s 249B(2) of the Crimes Act of corruptly giving an agent a benefit, and one concerns fraud under s 192E(1)(b) of the Crimes Act.
2. Ms Rogers was also arrested in respect of fifty-seven offences under the Crimes Act, all of which relate to NAB.
3. The facts sheet relating to Ms Rosamond's offences (Facts Sheet) alleges that Human Group first started providing services to NAB in 2006 and entered into a formal Consulting Services Panel Agreement with NAB on 14 February 2008, which had been extended every year until it was terminated by NAB in 2018. The Facts Sheet states that, over a twelve year period, NAB paid in excess of $118 million to Human Group.
4. The Facts Sheet alleges that Ms Rosamond was responsible for managing the relationship between Human Group and NAB and was the only Human Group representative who had direct contact with the bank. It also alleges that Ms Rosamond created and sent invoices to NAB and was the only person within Human Group who could authorise payments made by Human Group to third parties, such as to Ms Rogers.
5. The Facts Sheet also provides details of the fifty-seven secret commission payments and other financial benefits alleged to have been made by Ms Rosamond to Ms Rogers.
6. Ms Rosamond was initially held in custody but has been granted conditional bail.
7. All of the offences relating to Ms Rosamond may be prosecuted on indictment at the election of the Director of Public Prosecutions (DPP). On 15 August 2019, the Local Court extended the date by which the DPP is to file the committal certificate in respect of the charges laid against Ms Rosamond to 3 October 2019.
8. The trial date for the Criminal Proceedings has not been set, but is not expected to occur before September 2020.

These proceedings

1. On 19 August 2019, NAB commenced these proceedings on an ex parte basis by summons seeking urgent interlocutory and final relief. On that day, the Court made asset preservation orders against Human Group and Ms Rosamond, and NAB was given leave to file a commercial list statement (CLS).
2. In the CLS, NAB alleges that, between 2013 and 2017, Human Group issued and NAB paid a series of invoices (totalling approximately $43.4 million) for consulting services purportedly provided by Human Group to NAB. NAB claims the invoices were issued as part of a dishonest and fraudulent scheme devised by Human Group and Ms Rosamond, together with Ms Rogers (fraudulent scheme).
3. Ms Rosamond was the company secretary of the Human Group and, from August 2015, its sole director.
4. NAB alleges that Ms Rosamond was the principal representative of Human Group who had direct contact with NAB. It also alleges that Ms Rosamond arranged for the invoices to be issued and sent to NAB as part of the fraudulent scheme: CLS, [35].
5. NAB alleges that Ms Rogers was the person within NAB principally responsible for approving the Human Group invoices and that, as part of the fraudulent scheme, she received various financial benefits to ensure the invoices were paid: CLS, [31], [34], [36].
6. A schedule to the CLS identifies fifty-seven secret commission payments made by Ms Rosamond and/or the Human Group to Ms Rogers between 2013 and 2017, which correspond to each of the offences relating to NAB the subject of the Criminal Proceedings.
7. NAB's claims against Human Group and Ms Rosamond include breach of contract and tortious interference, misleading and deceptive conduct and tortious deceit and conspiracy. NAB seeks relief from Human Group and Ms Rosamond in the form of damages, equitable compensation and accounts, and proprietary relief in the form of a constructive trust and a tracing remedy.
8. When the matter was before the Court on 21 August 2019, Human Group and Ms Rosamond did not oppose the asset preservation orders but indicated that they would be applying for a stay of these proceedings. On that occasion, the Court granted NAB leave to issue a subpoena to Westpac Banking Corporation for bank statements of accounts in the name of Human Group, Ms Rosamond and other companies controlled by Ms Rosamond (Westpac subpoena) but deferred making any access orders pending the foreshadowed stay application.
9. Documents have been produced to Court in response to the Westpac subpoena. NAB seeks an order for access to those documents.
10. No other steps have been taken in these proceedings pending the determination of the defendants' stay application.

Ms Rosamond's evidence

1. The defendants rely on an affidavit affirmed by Ms Rosamond on 6 September 2019 in support of the stay application.
2. Ms Rosamond is currently the sole director, sole shareholder and company secretary of Human Group.
3. Ms Rosamond has invoked her right to silence and has not answered any questions or given a statement to the police. She has not yet entered a plea as she is waiting to be advised which charges are to be prosecuted on indictment. She intends to plead not guilty to any charges.
4. Ms Rosamond's evidence is that, if Human Group is required to file a CLR or any affidavit evidence, she would be doing so personally, as its representative.
5. Ms Rosamond says she is concerned that she will be prejudiced in the Criminal Proceedings if she or Human Group is required to file a CLR or prepare a detailed affidavit because NAB's contentions are directly relevant to the charges made against her. Doing so, she says, may provide a link in the chain of evidence that could be used against her, might assist in proving some or all of the existing allegations and would provide the NSW Police and the DPP with a significant advantage as they will become aware of her defence and can tailor the prosecution accordingly.
6. Ms Rosamond is also concerned that if she and Human Group have to respond to the CLS, they will need to address matters that are outside the period currently at issue in the criminal charges which may open up further investigations against her.
7. Ms Rosamond notes that there has already been media coverage of the Criminal Proceedings and these proceedings. She is concerned that material that she or Human Group is required to file in these proceedings may become public and affect potential jury members.

Stay of civil proceedings: legal principles

1. The Court may, at any time, stay proceedings either permanently or until a specified time, by virtue of its inherent power to control its own proceedings or pursuant to s 67 of the CPA.
2. The exercise of the Court's discretion to stay proceedings involves an assessment as to whether the dictates of justice require such a remedy: s 58 of the CPA. This assessment must have regard to the overriding purpose of the CPA and rules of Court being to facilitate the just, quick and cheap resolution of the real issues in civil proceedings, although it is a larger task than one of mere "case management": Wigmans v AMP Ltd [2019] NSWCA 243, Bell P at [95].
3. The principles to be applied when determining an application for a stay of civil proceedings are not in dispute. The parties accept they are the principles summarised by Moshinsky J in Australian Securities and Investments Commission v Australia and New Zealand Banking Group Limited [2019] FCA 964 at [50] - [59] and [61] - [63], which are set out below and which I respectfully adopt: "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. 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. 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 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]. 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". 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]. 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. 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] ... 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]. 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]. 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)."
4. The Court's inherent power to stay proceedings carries with it the power to impose conditions on, or in respect of, any order staying of proceedings: Gregg v Fairfax Media Publications Pty Ltd [2017] FCA 440 at [25]; see also Grassby v The Queen (1989) 168 CLR 1 at 16 - 17.
5. Courts have approached the imposition of conditions in respect of a stay in different ways having regard to the facts before them and the position of the parties. In some cases, Courts have required defendants to comply with interlocutory steps in civil proceedings but have deferred any hearing until after the criminal proceedings are concluded: Beecee Group v Barton (1980) 5 ACLR 33 at 38 - 39 and Wallace v Heavy Mechanics Pty Ltd [2017] VSC 772. In other cases, Courts have stayed the civil proceedings pending the outcome of criminal committal proceedings while allowing the claimant to investigate the facts underpinning their claim in the meantime: Re Plutus Payroll Pty Limited [2017] NSWSC 1854.

Stay in relation to Ms Rosamond

1. As noted above, NAB accepts that it is appropriate for the Court to make an order akin to a temporary stay in respect of Ms Rosamond pending final determination of the Criminal Proceedings.
2. NAB acknowledges, correctly in my view, that requiring Ms Rosamond to take steps to defend these proceedings will impact or abrogate her right to silence and her privilege against self-incrimination. There is a clear overlap between the factual matters raised in these proceedings and in the Criminal Proceedings, and Ms Rosamond's evidence is that she has exercised her right to silence and intends to pleads not guilty to any charges.
3. As to the form of stay, NAB proposed a form of order that dispenses with any requirement for Ms Rosamond to take steps in these proceedings. At the hearing, NAB did not object to an order granting a stay in relation to Ms Rosamond so long as it did not otherwise prevent NAB from utilising the ordinary process of the Court against the Human Group and against third parties (T35:30-39).
4. I am satisfied that the interests of justice require that these proceedings be stayed against Ms Rosamond. I will make an order for a stay on the basis that different orders are to apply to Human Group and NAB is entitled to use the Court's processes for the reasons set out below.

Stay in relation to Human Group

1. The defendants must satisfy the Court that a stay in relation to Human Group is required because of the risk of prejudice to Ms Rosamond's position in the Criminal Proceedings. To the extent any prejudice is identified, it must be balanced against NAB's entitlement to pursue these proceedings in the ordinary course and any prejudice NAB might suffer as a result of any stay.
2. The defendants submit that the Court should order a stay of these proceedings in respect of Human Group as not doing so will expose Ms Rosamond to the same risk of prejudice to her defence in the Criminal Proceedings that would arise if she were required to defend these proceedings personally.
3. The prejudice arises because any CLR filed by Human Group will necessarily contain admissions, denials and answers to the very same allegations made against Ms Rosamond in the Criminal Proceedings which, they submit, will be attributable to Ms Rosamond personally given her role and position within Human Group and because she will be putting on the CLR as its representative.

Filing of CLR and evidence by Human Group

1. In essence, the defendants' argument is that requiring Human Group to file a CLR or put on affidavit evidence in these proceedings would have the practical effect of abrogating Ms Rosamond's right to silence in circumstances where "she is, in effect, Human Group". They submit that any admission from Human Group on authority from Ms Rosamond could be admissible against her in the Criminal Proceedings under s 87(1)(b) of the Evidence Act 1995 (NSW). They rely on Helicopter Resources Pty Ltd v Commonwealth [2019] FCAFC 25.
2. I do not accept that Helicopter Resources Pty Ltd v Commonwealth [2019] FCAFC 25 assists the defendants in the way they say. In that case, the Court considered whether the conduct and evidence of an individual could be attributed to that of a corporation. Consistent with long standing authority, the Court held it could, not only under s 87(1)(b) of the Evidence Act but also because that person was acting as the embodiment of a company, at [174].
3. Here the question is whether statements made by Human Group in an unverified CLR would be admissible as admissions by Ms Rosamond under s 87(1)(b) of the Evidence Act. I accept NAB's submission that it would not. That section is concerned with the attribution of statements and representations made by a person to another, often to a company. In terms, that section does not render a statement by a company in an unverified CLR admissible as an admission by an individual.
4. Further, a statement in an unverified pleading filed by a corporation does not constitute an admission by an individual: Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 86.
5. I also accept NAB's submission that it would be wrong to proceed on the basis that Ms Rosamond "is the Human Group", as the defendants seek to do. They are separate legal personalities.
6. NAB submits that Human Group ought not be relieved of the requirement to file and serve a CLR and evidence because it does not have any privilege against self-incrimination. It also submits that any role Ms Rosamond plays in giving instructions to prepare a CLR would be in her capacity as an officer of Human Group, not as an individual, and it would not be inconsistent with the maintenance of Ms Rosamond's right to silence or privilege against self-incrimination in the Criminal Proceedings.
7. It is not in dispute that Human Group, as a company, has no privilege against self-incrimination. The authorities to which I was referred also support the proposition that corporate entities must generally produce documents and adduce evidence, at least from witnesses who are not subject to criminal action: Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375; [2015] HCA 21.
8. NAB also referred to one authority which considered whether a corporation should have to file a defence in circumstances where individuals and the corporation faced prosecution for civil penalties under the Customs Act 1901 (Cth). The Court concluded that it did as, unlike the individual defendants, the corporation did not have the benefit of privilege against self-incrimination: Bridal Fashions Pty Ltd v Comptroller-General of Customs (1995) 17 WAR 499 at 516.
9. While there is force to NAB's submission, the question of whether there is risk of prejudice to Ms Rosamond must be determined on the facts and merits of this case. Relevantly, Ms Rosamond is currently Human Group's sole director (and has been since 2015), its sole shareholder and was, at all material times, its company secretary.
10. Ms Rosamond is also the only person who is alleged in both these and the Criminal Proceedings to have been responsible for the NAB relationship, to have issued the invoices to NAB and to have authorised the payments of the benefits obtained by Ms Rogers. The allegations in both these and the Criminal Proceedings are, in effect, that Ms Rosamond was the controlling mind of Human Group as she was the person responsible for it making fifty-seven secret payments to Ms Rogers during the relevant period, which formed part of the fraudulent scheme the subject of these proceedings. They are also the very payments which are said to give rise to the fifty-seven offences in the Criminal Proceedings.
11. This is not then a situation where the Criminal Proceedings raise very different factual issues to these proceedings. Human Group's CLR will inevitably traverse matters and likely disclose defences which might be run by Ms Rosamond in the Criminal Proceedings. Nor is it a situation where Human Group could defend these proceedings without the need for Ms Rosamond to give evidence: cf Construction, Forestry, Mining and Energy Union (CFMEU) v Australian Competition and Consumer Commission (ACCC) (2016) 242 FCR 153; [2016] FCAFC 97 (CFMEU v ACCC).
12. In CFMEU v ACCC, civil penalty proceedings were brought against the CFMEU and two of its officers. Two contraventions were alleged against the CFMEU, one of which the two officers were also alleged to have been involved (April meeting conduct). The other contravention was pleaded against the CFMEU only (s 45D conduct). The two officers were also charged with criminal counts of blackmail relating to the April meeting conduct. The parties consented to a stay of the proceedings relating to the April meeting conduct and the Court had to consider whether to stay the s 45D conduct portion of the case as well. The two officers argued that it should because of the risk to their defences in the criminal proceedings.
13. The Court concluded that a stay in respect of the s 45D conduct was not warranted because there was no evidential basis for thinking that the officers would need to give evidence, at [37]. The Court also referred to the primary judge's decision, which was not challenged on appeal, that CFMEU's controlling mind did not include the two officers, and that decisions made by the CFMEU in defending the proceedings were unlikely to be imputed to the two officers or relevantly disclose their tactical approach or the defences they may seek to run in the criminal trial, at [40].
14. Given the clear overlap between the facts in these and the Criminal Proceedings and the position of Ms Rosamond vis-à-vis Human Group (as referred to at [55] and [56] above), it seems inevitable that there will be a very close connection between the positions to be adopted by Human Group in a CLR and any evidence it files in these proceedings, and Ms Rosamond's potential defence and tactical position in the Criminal Proceedings.
15. Human Group's defence in these proceedings is also seemingly dependent on Ms Rosamond. This conclusion is supported by Ms Rosamond's evidence that she is the one who would personally be putting on Human Group's defence as its representative.
16. Filing a CLR would require Human Group, based on Ms Rosamond's input, to answer NAB's allegations about the subject matter of the charges made against Ms Rosamond in the Criminal Proceedings: Strickland v Commonwealth Director of Public Prosecutions (2018) 361 ALR 23; [2018] HCA 53, at [76].
17. As a company, Human Group cannot put on a response to the CLS without obtaining instructions from those who have knowledge of the matters alleged. Based on Ms Rosamond's evidence and the allegations made by NAB and the NSW Police, that person appears to be Ms Rosamond alone: cf ASIC v Mining Projects (No 2) [2008] FCA 951. Notwithstanding her instructions to Human Group would be privileged, Ms Rosamond may nevertheless be exposed to some risk of prejudice.
18. In the context of this case, there is a risk that Human Group's stance in a CLR would effectively disclose Ms Rosamond's defence to allegations which lie at the heart of the Criminal Proceedings and confine or constrain her ability to present her defence in the Criminal Proceedings: Re Plutus Payroll Pty Limited [2017] NSWSC 1854 at [42]. It may have the practical effect of effectively binding Ms Rosamond to positions or facts that will be at issue in the Criminal Proceedings.
19. At the very least, answers to the factual allegations made by Human Group in a CLR filed in these proceedings might reveal or telegraph information concerning matters that will arise in Ms Rosamond's Criminal Proceedings, particularly if Human Group was to plead a positive exculpatory case, which might give a lead or open up a new field of enquiry: CEO of Customs v Camile Trading Pty Ltd [2004] NSWSC 1256, at [32]. It might also disclose tactical approaches to matters to be raised and impact on how Ms Rosamond might wish to run her defence: CFMEU v ACCC, at [40].
20. The same risks apply if Ms Rosamond were to give affidavit evidence on behalf of Human Group.
21. Consistent with authority, it was not suggested that making protective orders, such as under s 128 of the Evidence Act, over Human Group's CLR or affidavit evidence filed with the Court would provide adequate protection against the risk of any prejudice to Ms Rosamond.
22. During oral submissions, NAB accepted that the arguments in relation of the filing of a CLR were different to those in relation to NAB gaining access to the Westpac subpoena documents, issuing further subpoenas and seeking documents on discovery (T21:36-45).
23. NAB also stated that a pleading from Human Group would be helpful, but is not essential (T24:7-9).
24. To address the risk of prejudice, Courts in analogous cases have referred to the prospect of parties filing pleadings that are heavily qualified, or that contain non-admissions: MWP Transport Pty Limited v Kent [2018] NSWSC 524 at [18]; Bridal Fashions Pty Ltd v Comptroller-General of Customs (1995) 17 WAR 499 at 516-517. NAB accepted that a similar approach may be taken in this case (T26:47-50).
25. The purpose of a CLR is to identify the real issues in dispute, to ensure that litigation is conducted in accordance with the objectives in s 56 of the CPA. While a CLR is not a pleading in the strict sense, it should admit or deny the allegations made and respond to the plaintiff's contentions, including the legal grounds for opposition to the relief claimed with adequate particulars: Practice Note SC Eq 3 (PN 3).
26. A CLR which does not comply with the requirements of PN 3 and contains only non-admissions would, to my mind, be of little, if any, utility to NAB in these proceedings. It may also lead to increased costs to both parties as Human Group would eventually need to file a CLR that complies with PN 3.
27. Requiring Human Group to take steps to progress its defence and serve its evidence when Ms Rosamond is not required to do so would also result in bifurcation, akin to two sets of proceedings. This is not consistent with the just, quick and cheap resolution of the real issues in dispute, particularly where there are only two defendants. Multiplicity of actions is to be avoided: Commissioner of Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5 at [48].

Blanket stay vs access to Westpac subpoena documents and other materials

1. The defendants submit that NAB's delay in commencing these proceedings is a relevant factor that supports the grant of a temporary stay as a matter of discretion. They point to a delay of nearly 20 months between receipt of the anonymous letter and NAB commencing these proceedings and the length of the temporary stay they seek of only about 12 months.
2. The defendants also submit that allowing NAB to access the Westpac subpoena documents or other documents produced on subpoena by third parties would give rise to a risk of prejudice to Ms Rosamond's defence in the Criminal Proceedings, which supports the grant of a blanket stay.
3. The defendants rely on the approach of Rares J Gregg v Fairfax Media Publications Pty Ltd [2017] FCA 440 (Gregg), in which his Honour refused the defendant access to documents produced on subpoena in circumstances where the plaintiff's defamation proceedings had been stayed pending the determination of criminal proceedings brought against him. In doing so, Rares J identified a number of risks to the plaintiff if the defendant media company were permitted to access the documents.
4. Applying the approach of the Court in Gregg, the defendants argue that granting NAB access to the Westpac subpoena documents would expose Ms Rosamond to the risk that documents and information would be disclosed to NAB that she might not be compelled to disclose in the Criminal Proceedings. These documents might, in turn, be disclosed to the NSW Police and enable the prosecution to "kick along" their case and prejudice Ms Rosamond's right to a fair trial in the Criminal Proceedings. The defendants also refer to the risk of disclosures to the media and public at large which may influence witnesses by alerting them to matters they were not otherwise aware or members of the jury panel in the Criminal Proceedings.
5. The defendants point to the past assistance NAB has given the NSW Police and the publication of parts of an affidavit filed by NAB relating to the claims made in these proceedings in support of the submission that there is a risk of documents to which NAB obtains access being disclosed to the NSW Police or becoming public through the media.
6. It is not in dispute that NAB has provided, and continues to provide, assistance to the NSW Police with its investigations into the conduct of Ms Rosamond, Ms Rogers and Human Group. That assistance is not unexpected given NAB is the victim of alleged crimes. Presumably NAB will need to provide further assistance and co-operation as part of the DPP's prosecution of the Criminal Proceedings. It does not follow, in my view, that providing such assistance gives rise to the risk of inappropriate disclosures of documents produced in these proceedings, which as noted below, would be in breach of the implied undertaking.
7. At the hearing the defendants did not positively submit that the publication in the media of aspects of the allegations in these proceedings was the result of any untoward action on the part of NAB (T13:27-28). Rather, it seems to have been the consequence of an application by a third party to access documents on the Court file.
8. The defendants also rely on the statement of Rares J in Gregg in which his Honour said, at [28], that it would be antithetical to the purpose of granting a stay to allow further use to be made of documents obtained on subpoena or any other documents in the future in circumstances where criminal proceedings continue.
9. I accept NAB's submission that the facts and reasoning in Gregg can be distinguished from the facts and position of the parties in these proceedings. In my view, NAB's delay in commencing these proceedings is also not a significant factor in this matter.
10. These proceedings involve a private plaintiff seeking to vindicate its rights in circumstances where serious allegations have been made in relation to a fraudulent scheme involving over $43 million. They also involve a claim for proprietary remedies, including tracing, to seek to identify and ultimately recoup monies which NAB says were lost as part of that scheme.
11. As the defendants accept, these proceedings are not straightforward and must have taken NAB some time to properly commence (T10:9-11). There is also a risk that the Criminal Proceedings may take longer than 12 months to complete.
12. NAB requires access to the Westpac subpoena documents to identify the whereabouts of the funds to which it claims to be entitled, including funds transferred from Human Group's St George bank account and any funds transferred to or from a further St George bank account in the name of "HRosamond": see Lovell affidavit at [43]. They are not being sought to test the strength of its claims for in personam relief or the likely defences of Ms Rosamond or Human Group.
13. In cases involving fraud allegations, a plaintiff is entitled to attempt to locate the funds, with a view to pursuing tracing or proprietary remedies: MWP Transport Pty Ltd v Michael Thomas Kent [2018] NSWSC 524, per McDougall J at [13].
14. In this case, the tracing remedy may include extending the current freezing orders to other accounts which might be identified from documents produced pursuant to the Westpac subpoena, or in response to subpoenas that might be issued to other third parties in due course.
15. Further, and as NAB submits, there seems little risk that the Westpac subpoena documents could be used by the NSW Police to its advantage given NAB would be bound by the implied undertaking and the NSW Police have no right to access subpoenaed material in these proceedings. In any event, the Facts Sheet suggests that the NSW Police already have extensive access to the defendants' bank records.
16. In my view, the implied undertaking and the serious consequences of non-compliance should provide protection against any risk of disclosure by NAB of the Westpac subpoena documents and any other documents that may, in due course, be produced to NAB in these proceedings. I also note that NAB is prepared to consent to a suppression order over any documents produced (T37:32-40).
17. In any event, the authorities make clear that a recipient of a subpoena cannot assert any privilege against self-incrimination on behalf of another party. Protecting a party's right to silence does not require that a plaintiff in civil proceedings be prevented from utilising the Court's processes to gather documents already in existence from third parties: Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (No 3) (2018) 357 ALR 695 at [81] and [117]; Rochfort v Trade Practices Commission (1982) 153 CLR 134 at 143 and 146; R v Ronen (2004) 62 NSWLR 707 at [65] - [74]; In the matter of Kala Capital Pty Ltd (No 2) [2012] NSWSC 1293 at [29].

Conclusion on Human Group's stay application

1. The threshold question is whether the defendants have shown that Ms Rosamond's defence in the Criminal Proceedings is at risk of prejudice if Human Group is required to defend these proceedings such that a temporary blanket stay should be ordered that would prevent NAB from utilising the Court's processes in aid of its case. For the reasons outlined above, I consider that they have not.
2. The defendants argue that Ms Rosamond's right to silence goes to the heart of the criminal justice system and the Court should err on the side of caution to avoid the risk of that right being prejudiced in any way. I do not disagree. But in exercising that caution the Court must weigh up the risk of prejudice against NAB's right to pursue its claim in the usual way, and the risk of prejudice to NAB if a stay is granted.
3. If NAB is not able to access the Westpac subpoena documents or use the Court's processes to obtain access to other documents in the future, then any further attempt to trace the proceeds of the funds allegedly misappropriated by Human Group will halt, which may prejudice NAB's rights to proprietary relief.
4. On the other hand, the risk of prejudice to Ms Rosamond can be addressed by excusing Human Group from filing a CLR or affidavit evidence until Ms Rosamond is required to do so. That approach is, in my opinion, consistent with the dictates of justice and case management principles. This should not prejudice Human Group because NAB has indicated that it would not seek default judgment against Human Group during that time (T46:22-30).
5. To ameliorate the risk of prejudice to NAB from not having these proceedings progress in the usual way, the defendants accept that orders might be made requiring them to prepare, but not file and serve, their CLR and affidavit evidence. I will make such an order as it should ensure that these proceedings are in a position to be advanced in a timely fashion when the Criminal Proceedings are finalised.
6. I also see no reason why the proceedings should not be brought back for further directions to give NAB the opportunity, if needed, to issue further subpoenas to assist it in ascertaining the magnitude of the alleged fraudulent scheme and the location of the funds. Depending on the nature of the documents disclosed, NAB may apply for further freezing orders to protect its position pending final determination of the Criminal Proceedings against Ms Rosamond.
7. NAB also flagged the prospect of seeking production of documents from Human Group. It is not appropriate at this stage to determine whether NAB should be permitted to do so. In my view, the best way to deal with any future discovery application by NAB against Human Group is for the Court to determine the application as and when it is made having regard to the scope of the documents sought, the issues to which they relate, including whether the discovery is necessary in aid of a tracing remedy, and what protections (if any) are to be put in place over and above the implied undertaking to deal with any risk of prejudice to Ms Rosamond.

Costs

1. On the issue of costs, both parties achieved some success on the motion. Ms Rosamond succeeded with her application for a stay although it was effectively conceded by NAB, as was appropriate to do. In relation to the application for a stay of the proceedings in respect of Human Group, the defendants succeeded in part as did NAB.
2. In those circumstances, it seems to me that the appropriate order for costs is for each party to pay their own costs in relation to the defendants' motion.
3. I will make orders accordingly. If any party considers that some other costs orders should be made, they are to confer with the other parties and, within seven days, notify my Associate that some other costs order is sought, specifying briefly the grounds on which it is sought. They should also provide an agreed timetable so that any remaining issues can be determined on the papers.

Orders

1. For these reasons, I make the following orders: 1. Pursuant to s 67 of the Civil Procedure Act 2005 (NSW) and subject to order 6 below, these proceedings, in so far as they relate to the second defendant, be stayed pending final determination of all criminal matters brought against her in proceedings R v Rosamond, Local Court Sydney Downing Centre, NSW Crime Proceedings Number 2019/0067521 (Criminal Proceedings). 2. Until further order, the first defendant be dispensed from taking any steps to file and serve a commercial list response or any affidavit evidence in these proceedings. 3. Grant general access to the parties to the documents produced pursuant to the plaintiff's subpoena to Westpac Banking Corporation dated 19 August 2019. 4. The defendants' notice of motion dated 6 September 2019 is otherwise dismissed on the basis that each party is to bear its own costs. 5. Relist the proceedings for further directions on 15 November 2019 before the Commercial List Judge. 6. Direct the defendants to prepare, but not file and serve, commercial list responses and affidavit evidence, with the intent that they are to be filed and served on the plaintiff within 7 days of the final determination of the Criminal Proceedings. 7. Liberty to apply on 3 days' notice.

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