Plaintiff v Defendants

(1) it was the accepted and usual practice of the plaintiff and the defendants that each of the plaintiff and the Collins brothers would be able to use the cheque account of Collins to write cheques for items of personal expenditure without the consent of any of the other signatories thereto;

(2) pursuant to such accepted and usual practice each of the plaintiff and the Collins brothers from time to time drew cheques on the account of Collins for items of personal expenditure;

(3) each of the plaintiff and the Collins brothers had a loan account with Collins;

(4) generally, items of personal expenditure which were drawn on the Collins' cheque account by the plaintiff or one or other of the Collins brothers were taken into account in their respective loan accounts with Collins;

(5) the alleged cheques were or should have been taken into account in the plaintiff's loan account; and

(6) the defendants at all material times knew or should have known that he had written such cheques as they were recorded in the bank statements and cheque books of Collins.

11 Further, the plaintiff makes a number of separate pleas in respect of individual cheques, including allegations that cheques were drawn for the benefit of Gallcoll, his wife (the sister of the Collins brothers) or Collins.

12 These defences were first raised by reply and defence to counterclaim dated 18 February 2005. The most recent amended reply and defence to counterclaim, which repeats these allegations, is dated 5 September 2005.

13 On 14 October 2005, the plaintiff provided discovery in the proceeding.

14 On 24 February 2006, the plaintiff consented to orders against him in the proceeding that he provide further discovery by reference to particular classes of documents and that he file further and better particulars of his statement of claim. The plaintiff consented to make this further discovery and file these further and better particulars by 10 March 2006.

15 Thereafter, the plaintiff's solicitors sought and obtained an indulgence from the defendants' solicitors to extend the time for compliance with the consent orders. An indulgence was granted until 17 March 2006.

16 Then, by letter dated 10 March 2006 from the plaintiff's solicitors to the defendants' solicitors, the plaintiff's solicitors said:

"We refer to recent correspondence on the issue of discovery and further particulars.

Our client has instructed us to seek a stay of any such interlocutory steps on the basis, inter alia, that continuing with same would prejudice his rights in his current defence of criminal charges.

...

For these reasons, we invite you to consent to a stay of the current proceedings. Our view is that your clients would not suffer any real injustice should they consent to such a stay and we therefore ask you to seek your clients' instructions in relation to this request."

17 The criminal charges referred to in the letter from the plaintiff's solicitors are charges brought against the plaintiff in March 2005 in respect of alleged theft of money from Collins. I will refer to the content of the criminal charges in more detail below.

18 The request for a stay of the proceeding was refused by the solicitors for the defendants.

19 Next, the plaintiff filed an interlocutory application seeking to strike out the statement of claim and the defence to counterclaim, and for judgment in the proceeding, on the ground that the plaintiff had not complied with the consent orders made on 24 February 2006 ("the defendants' application).

20 In response, the plaintiff has filed an interlocutory application seeking a stay of this proceeding until the criminal proceeding against the plaintiff is finally determined ("the stay application").

21 I will deal first with the stay application. It was supported by two affidavits sworn by Nancy Hua. Ms Hua deposes that the plaintiff has, since the commencement of this proceeding in March 2005, been charged with 175 criminal charges of theft from Collins and that there is a high degree of overlap between the criminal charges and the counterclaim by Collins in respect of the 177 cheques. Based upon a comparison of the charge sheets and the counterclaim, Ms Hua has deposed that there are 129 cheques which are the subject of both the criminal charges and the counterclaim by Collins in the proceeding.

22 Ms Hua deposes that, in the criminal proceeding, Collins is seeking restitution or compensation orders in the sum of $966,843 against the plaintiff.

23 Ms Hua has been informed by the solicitor acting for the plaintiff in the criminal proceedings that the committal hearing is listed for 10 days from 22 May 2006 in the Melbourne Magistrates' Court and that, if committed for trial, the plaintiff's trial is likely to be in about March or April 2007.

24 Ms Hua deposes that, on the basis of the above matters and on the basis that this proceeding will be long and complex, she is concerned that the plaintiff may not have sufficient time and resources to devote to both the criminal proceedings and this proceeding.

25 Further, Ms Hua deposes that if this proceeding is heard before the trial of the criminal proceeding, she is concerned that the plaintiff will effectively lose his right to silence in the criminal proceeding.

26 Both the plaintiff's stay application and the defendants' application to strike out the plaintiff's statement of claim and defence to counterclaim and for judgment against the plaintiff were argued on Friday 7 April 2006, on a day when there were other opposed interlocutory applications before me. At the conclusion of argument, I informed the parties that I would refuse the plaintiff's stay application. In relation to the defendants' application, I ordered that the plaintiff provide the further discovery and the further and better particulars which were the subject of the consent orders made on 25 February 2006 and that, in default of doing so, the plaintiff's statement of claim and defence to counterclaim be struck out. However, the pressure of business did not permit me to give reasons for judgment at that time. I informed the parties that I would provide them with my reasons subsequently. These are those reasons.

27 There is no doubt that I have a discretion to stay this proceeding until the determination of the criminal proceeding if there is a real prospect of substantial prejudice to the plaintiff in the criminal proceeding by reason of this proceeding continuing. Although such discretion is unfettered, the principles governing its exercise have been discussed in a number of cases. The leading case is McMahon v Gould.[1] After reviewing many of the authorities on the question, Wooten J summarised the factors which are relevant to the exercise of the discretion[2]:

"I approach the decision of this matter with the following guidelines:

(a) Prime 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. I return to this subject below;

(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 pursing 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 proceeding;

(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 the stayed." (Citations omitted.)

28 In respect of these principles, Young CJ in Philippine Airlines v Goldair (Aust) Pty Ltd[3] said he was prepared to adopt them "as a useful guide to the exercise of the court's discretion in cases of this kind". Of course, each case will depend on its own facts and the discretion is not confined by rules. The summary of relevant factors given by Wooten J in McMahon v Gould should, although of great assistance to a judge examining the discretion in a particular case, be used in that light.

29 However, it is clear that the mere fact that the applicant for a stay may have his so-called "right to silence" in criminal proceedings affected by the continuance of the civil proceedings is not, on its own, a sufficient ground to grant a stay except in a very strong case. In this regard I refer also to what was said by Young CJ in Philippine Airlines v Goldair.[4]

30 On behalf of the plaintiff, it was submitted that this was not a case in which sole reliance was placed upon the possible effect upon the plaintiff's right to silence in the criminal proceedings. Reliance was placed upon the following factors which, it was submitted, should cause me to stay this proceeding pending the determination of the criminal proceeding against the plaintiff.

31 First and foremost, it was submitted on behalf of the plaintiff that the claim by Collins in the criminal proceeding for a restitution order in the sum of $936,843 was a strong factor which should guide me in the exercise of my discretion. It was submitted that, if the criminal proceeding proceeds to trial and the plaintiff is convicted, and a restitution order is made as sought, then this will have the effect of practically disposing of this proceeding. It was submitted that in such circumstances, the plaintiff "if properly advised" would not proceed with this proceeding because of the affect upon his credit resulting from a criminal conviction. However, this submission ignores the rights of the defendants. At present, the defendants are exposed to the claims made against them by the plaintiff in the proceeding. The proceeding has been on foot for about 18 months. Further, the restitution orders sought in the criminal proceedings are in respect of only 129 of the 177 cheques in issue in the counterclaim. Finally, having regard to the need to establish the criminal charges beyond reasonable doubt, there is a prospect that the plaintiff will be acquitted in the criminal proceeding and Collins will be left to pursue its counterclaim in this proceeding.

32 In my view, the first ground relied upon on behalf of the plaintiff is without substance. The mere fact that restitution has been sought ought not deprive the defendants of their entitlement to have this proceeding brought on for trial in the ordinary course of business. In this regard, I note that it was accepted by the parties that a trial of this proceeding would occupy some four weeks of court time and thus would not be heard in either the Commercial List or the Corporations List. It was accepted that a trial of such magnitude would not, in the ordinary course, obtain a trial date until after the anticipated trial of the criminal proceedings, assuming the plaintiff is committed for trial.

33 Secondly, reliance was placed upon the fact that the committal proceeding is imminent. In my view, this is of no relevance in this case. If the plaintiff is not committed for trial, there will be no need for a stay. If he is committed for trial, then the facts remain the same. It is unlikely that there will be a trial of any criminal proceedings until March or April 2007 at earliest.

34 Thirdly, it was submitted on behalf of the plaintiff that I should infer that it would place strain upon the time and resources of the plaintiff if he is forced to deal with both the civil and criminal proceedings. There was no evidence of this, apart from the general statement of concern in the affidavit sworn by Ms Hua. In my view, this factor is not of any weight in this case. The remaining interlocutory steps to be completed on behalf of the plaintiff are not onerous and can be completed within a reasonable time. The result will be that the proceeding will be in a position to be fixed for trial. This will be of considerable advantage to the defendants, who wish to obtain a trial date, even though it is acknowledged that it is likely that any trial date will be after the trial of the criminal proceedings.

35 Fourthly, reliance was placed on behalf of the plaintiff on the possibility that the discovery orders which were made by consent may cause the plaintiff some difficulty in the defence of the criminal proceedings. However, on analysis it became apparent that, this submission was of no substance. The first class of documents which is the subject of the consent order relates to the bank accounts of the plaintiff. It was common ground that these documents are already with the police. The other classes of documents are all relevant to the plaintiff's own claim that he is entitled to a one-third interest in the business of Collins. They do not appear to have any relevance to the counterclaim or the criminal proceedings.

36 On behalf of the defendants, it was submitted that the plaintiff has not satisfied the onus on him to show a real, and not merely notional, risk of prejudice to him in the criminal proceedings. The principal matters relied upon on behalf of the defendants were as follows:

(1) The plaintiff has already disclosed his defence to the counterclaim, including by amendment. In this sense, the plaintiff has already taken steps which affect his right to silence in the criminal proceedings.

(2) The plaintiff has delayed for about one year since the criminal charges were laid before making the stay application. In the meantime, the defendants have incurred substantial costs and inconvenience in defending the proceeding and prosecuting the counterclaim.

(3) The plaintiff has already provided discovery and consented to further discovery, in full knowledge of the criminal proceeding.

(4) A trial of this proceeding is unlikely to be listed before any trial of the criminal proceeding. In these circumstances, the interests of justice can be balanced by refusing a stay but making orders that, subject to any contrary direction of a judge, the trial of this proceeding not take place until after the hearing and determination of the criminal proceedings against the plaintiff.

37 In my view, the submissions on behalf of the defendants ought be accepted. The balance clearly favours allowing the interlocutory steps in this proceeding to continue so as to enable it to be fixed for trial at a date which is likely to be after any criminal trial of the plaintiff. In substance, the plaintiff's stay application is based upon the mere fact that the continuation of this proceeding may have an effect upon the plaintiff's right to silence in the criminal proceeding. As I have said, this is not enough by itself and the further factors relied upon on behalf of the plaintiff are not, in my view, sufficient to justify the granting of a stay of all interlocutory steps in this proceeding.

38 I turn next to the defendants' application. Rule 24.02 gives the Court power to dismiss a proceeding or strike out a defence if a party fails to comply with an order to give particulars of any pleading or with an order for discovery. The history of this matter shows that there have been delays on the part of the plaintiff. These include delays caused by the stay application which has been unsuccessful. However, in all the circumstances, I am not satisfied that this is an appropriate case for me to order that the plaintiff's claim be dismissed or that his defence to the counterclaim be struck out. In my view, the plaintiff should be given one further opportunity to comply with the consent orders made on 24 February 2006. However, I am of the view that this is an appropriate case to make a "self-executing" order in this regard. If the plaintiff does not comply with the time specified, his proceeding will be dismissed and his defence to counterclaim will be struck out and he will be placed in the same position as if he had not defended the counterclaim. I note that I made orders to this effect, together with other directions, at the hearing of argument on the defendants' application.

39 On the assumption that the plaintiff complies with the orders for further discovery and the provision of further and better particulars, and the proceeding continues, I intend referring it to the Listing Master for fixing for trial when the matter next comes before me for directions. At that time, I will make orders which will have the effect that the trial of this proceeding not take place before the determination of the criminal proceeding against the plaintiff, unless a Judge otherwise orders. Further, I will make orders which will enable the plaintiff to file further affidavit by him on the merits of the counterclaim after the determination of any criminal trial. Finally, I will at that time order that the proceeding be referred for mediation by a Master of this Court.

[1] (1982) 7 ACLR 202.

[2] (1982) 7 ACLR 202 at 206-7.

[3] [1990] VicRp 34; [1990] VR 385 at 389.

[4] [1990] VicRp 34; [1990] VR 385 at 389-90.