Sogelease v Griffin

• 7 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2105/02 - SOGELEASE AUSTRALIA LIMITED & ANOR v GRIFFIN & ORS JUDGMENT 1 These proceedings were commenced by summons filed on 3 April 2002. Certain interlocutory relief of a Mareva kind was granted on the same day. Other interlocutory steps followed. On 19 June 2002, it was ordered that the proceedings proceed by way of pleadings. The plaintiffs' statement of claim was filed on 19 July 2002. The plaintiffs claim, as against the first defendant, damages, equitable compensation, an order that accounts be taken, orders under ss.68 and 72 of the Fair Trading Act 1987 and a declaration that certain moneys are held by the first defendant on trust for the plaintiffs. These claims are advanced on the basis of allegations that the first defendant, while an employee of one of the plaintiffs, misappropriated from it substantial sums of money. Those allegations are, of course, at this stage untested and unresolved. 2 By notice of motion filed on 16 April 2002, the first defendant sought an order that the proceedings be stayed as against him until further order, pending determination of any criminal charges against the first defendant in relation to the subject matter of the proceedings. I heard that notice of motion on 29 October 2002. Mr Street SC, who appeared for the first defendant, indicated on that occasion that his client's alternative application was for a stay pending the laying of any criminal charges. 3 The first defendant's application is opposed by the plaintiffs. The stance adopted by the other defendants who appeared on the hearing of the notice of motion is that they neither support nor oppose the first defendants' application, although each, for one reason or another, may wish to consider his or her position in the light of the outcome. 4 Read in support of the first defendant's application was an affidavit sworn on 21 October 2002 by Mr North, the first defendant's solicitor. He deposed to three telephone conversations with police officers, one on 18 April 2002, another on 17 July 2002 and the third on 17 October 2002. 5 In relation to the first conversation, Mr North said: "From that conversation I understood that the Police intended to make further inquiries with a view to then seeking to interview my client and that in all likelihood criminal charges would then be laid against the First Defendant. 6 As to the second conversation, Mr North said: "As a result of that call I understood that inquiries were continuing and that the Police would contact me if they wished to speak to the First Defendant. Without acknowledging any foundation for the laying of criminal charges, it was my understanding from this call that the First Defendant was likely to be charged with criminal offences." 7 Mr North understood from the third conversation that "police inquiries were continuing". He reports the police officer as having said: "I will call you in the near future to discuss options." 8 Under the "felony-tort" rule, a party to civil proceedings founded on a cause of action involving the proof of facts constituting a felony (or, in reality, any criminal offence: P T Garuda Indonesia Ltd v Grellman (1994) 48 FCR 252) was entitled to a stay of the civil proceedings until either the offence was prosecuted to a conclusion or the prosecution was shown to have been abandoned. But, as the Court of Appeal confirmed in Halabi v Westpac Banking Corporation (1989) 17 NSWLR 26 and Yuill v Spedley Securities Ltd (1992) 8 ACSR 272, that rule no longer forms part of the law of this State. Rather, as is also confirmed in both those cases, the matter is to be approached by reference to principles enunciated by Wootten J in McMahon v Gould (1982) 7 ACLR 202 and applied on many subsequent occasions: "I approach the decision of this matter with the following guidelines: (a) Prima facie a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the court ( Rochfort v John Fairfax & Sons Ltd at 19); (b) It is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification on proper grounds ( ibid ); (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 ( Jefferson v Bhetcha at 905); (d) Neither an accused ( ibid ) nor the Crown ( Rochfort v John Fairfax & Sons Ltd at 21) 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" ( Jefferson Ltd v Bhetcha at 904), taking account of all relevant factors ( ibid at 905); (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 ( ibid at 905); (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 ( ibid at 904). 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 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 proceeding ( ibid at 904-5); (i) The court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings ( ibid at 905); (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 ( ibid at 905); (ii) the proximity of the criminal hearing ( ibid at 905); (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 ( ibid at 905); (iv) the burden on the defendant of preparing for both sets of proceedings concurrently ( Beecee Group v Barton ); (v) whether the defendant has already disclosed his defence to the allegations ( Caesar v Somner at 932; Re Saltergate Insurance Co Ltd at 736); (vi) the conduct of the defendant, including his own prior invocation of civil process when it suited him (cf Re Saltergate Insurance Co Ltd at 735-6); (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 Beecee Group v Barton )."

(The cases to which Wootten J referred are Rochfort v John Fairfax & Sons Ltd [1972] 1 NSWLR 16, Jefferson Ltd v Bhetcha [1979] 1 WLR 898, Beecee Group v Barton (1980) 5 ACLR 33, Caesar v Somner [1980] 2 NSWLR 929 and Re Saltergate Insurance Co Ltd (1980) 4 ACLR 733). 9 The first defendant's contention is that, as he has to this point maintained his silence on the matters alleged against him (except, perhaps, in certain statements to his superiors within the employer group), he should be allowed to continue in that way. The possibility of his having to articulate in his defence in these proceedings matters involving facts that might tend to incriminate him is something to which, in his submission, he should not be exposed. He regards s.128 of the Evidence Act as of no assistance, as it does no more than regulate the giving of evidence in the proceedings when they are eventually heard, and does not address the dilemma he faces in being compelled to formulate a defence in the course of pleadings, as well as being subjected to discovery (although, in the discovery context, Pt 23 of the Supreme Court Rules contains its own regime regulating the situation where self-incrimination is seen as a problem). 10 The submissions advanced by Mr Lindsay SC for the plaintiffs are to the effect that a number of factors combine to indicate that a stay of proceedings is not warranted. The first defendant has not been charged with any criminal offence and, if he were to be charged, the time of the hearing of the criminal proceedings must be assumed to be quite some distance into the future. It would be wrong for the present proceedings to be put into a state of abeyance for what might be a considerable time. The plaintiffs also note that the defences filed by defendants other than the first defendant show that all parties are proceeding on the basis of the truth and accuracy of the plaintiffs' allegations against the first defendant, so that orderly progress of the proceedings as a whole requires the first defendant to indicate whether he disputes those allegations and, if so, on what grounds. 11 Two things are emphasised in the cases: first, that a plaintiff has a prima facie right to continue his or her action; and, second, that an accused person's "right to silence" is in general not something that should intrude upon the civil trial process. The significance and role of the "right to silence" must be considered in the correct context. I quote again from the judgment of Wootten J in McMahon v Gould (above): "In this context 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 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." 12 I quote also from the judgment of Sir John Young CJ in Philippine Airlines v Goldair (Australia) Pty Ltd [1990] VR 385: "The argument that to require a defendant to answer civil proceedings during the pendency of criminal proceedings might in some way infringe his 'right of silence' has been dealt with in other cases. In Jefferson Ltd v Bhetcha Megaw LJ dealt with the argument as follows, at 904-5: 'I should be prepared to accept that the court which is competent to control the proceedings in the civil action, whether it be a master, a judge, or this court, would have a discretion, under s.41 of the Supreme Court of Judicature (Consolidation) Act 1925, to stay the proceedings, if it appeared to the court that justice - the balancing of justice between the parties - so required, having regard to the concurrent criminal proceedings, and taking into account the principle, which applies in the criminal proceeding itself, of what is sometimes referred to as the "right of silence" and the reason why that right, under the law as it stands, is a right of a defendant in criminal proceedings. But in the civil court it would be a matter of discretion, and not of right. There is, I say again, in my judgment, no principle of law that a plaintiff in a civil action is to be debarred from pursuing that action in accordance with the normal rules for the conduct of civil actions merely because so to do would, or might, result in the defendant, if he wished to defend the action, having to disclose, by an affidavit under O.14, or in the pleading of his defence, or by way of discovery or otherwise, what his defence is or may be, in whole or in part, with the result that he might be giving an indication of what his defence was likely to be in the contemporaneous criminal proceedings. The protection which is at present given to one facing a criminal charge - the so-called `right of silence' - does not extend to give the defendant as a matter of right the same protection in contemporaneous civil proceedings.'" 13 In the present case, there are no criminal proceedings. There are not even any criminal charges. Nor, on the evidence of Mr North, has there been any explicit statement by any of the police officers with whom he has spoken that charges will be laid. The case is accordingly one in which the court is asked to deprive the plaintiffs of their right to prosecute their claims in the ordinary way because of the possibility that criminal charges may be forthcoming. The "right to silence" is the only possible basis that can be asserted for such a request, given that considerations arising from the pendency of concurrent proceedings and possible interference of conduct of one on the conduct of the other (including possible impact of any publicity on the minds of potential jurors) simply do not arise here. I am satisfied, however, that the "right to silence" should not, on the authorities, be seen as justifying a stay of the civil proceedings at this stage of the respective developments of those proceedings and the possibility of criminal proceedings in the future. 14 The first defendant bears the onus of showing that the requirements of justice positively require that the plaintiffs be deprived of their right to press on with these proceedings. That onus has not been discharged in such a way as to warrant exercise by the court of its discretion to order a stay of proceedings at this point. I can discern no real (as distinct from merely notional) danger of injustice in any future criminal proceedings in allowing the present proceedings to progress in the normal way at this stage. The first defendant's application for a stay is therefore dismissed.

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