Telstra Ltd v Sulaiman and others [2024] NSWSC 971 | Case summary

The applicable principles

I now turn to the applicable principles, and have drawn on Counsel's submissions and my judgment in Application of Computer Sciences Corporation under the Evidence on Commission Act 1995 (NSW) [2019] NSWSC 777 at [15]ff for the observations that appear below.
It is common ground that the Court has power to stay proceedings under s 67 of the CPA and also has an inherent power to stay civil proceedings, because of the existence of criminal proceedings relating to overlapping matters, in a proper case: McMahon v Gould (1982) 7 ACLR 202 ("McMahon"), on which Mr Tam also relies. Earlier cases often refer to several factors identified in McMahon in determining whether civil proceedings should be stayed. However, later case law has recognised that those factors may not give sufficient weight to the accused's right to a manifestly fair criminal trial: Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5 ("Zhao"); Crespin v Francis [2016] VSC 277 at [23].
In X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29 ("X7"), Hayne and Bell JJ, with whom Kiefel J agreed, addressed the question of a compulsory examination of an accused prior to a criminal trial. Their Honours observed that permitting questions to be asked about the subject of a pending charge, whether or not answers could be used in criminal proceedings, "fundamentally alters the process of criminal justice" (at [85]) in which the "accusatorial process of criminal justice and the privilege against self-incrimination both reflect and assume the proposition that an accused person need never make any answer to any allegation of wrong-doing" (at [104]). Their Honours also observed (at [105]) that the right to silence: "encompasses more than the rights that the accused has at trial. It includes the rights (more accurately described as privileges) of a person suspected of, but not charged with, an offence, and the rights and privileges which that person has between the laying of charges and the commencement of the trial."
Their Honours also observed (at [124]) that: "Even if the answers given at a compulsory examination are kept secret, and therefore cannot be used directly or indirectly by those responsible for investigating and prosecuting the matters charged, the requirement to give answers, after being charged, would fundamentally alter the accusatorial judicial process that begins with the laying of a charge and culminates in the accusatorial (and adversarial) trial in the courtroom. No longer could the accused person decide the course which he or she should adopt at trial, in answer to the charge, according only to the strength of the prosecution's case as revealed by the material provided by the prosecution before trial, or to the strength of the evidence led by the prosecution at the trial. The accused person would have to decide the course to be followed in light of that material and in light of any self-incriminatory answers which he or she had been compelled to give at an examination conducted after the charge was laid. That is, the accused person would have to decide what plea to enter, what evidence to challenge and what evidence to give or lead at trial according to what answers he or she had given at the examination. The accused person is thus prejudiced in his or her defence of the charge that has been laid by being required to answer questions about the subject matter of the pending charge."
In Ransley v Commissioner of Taxation [2016] FCA 778, Jagot J considered the question of a stay of civil proceedings, where a witness who was facing criminal proceedings was the essential witness in the plaintiff's case. Her Honour observed (at [24]) that: "Given recent authority … it cannot be said that the relevant issue is merely the conflict of interest of an accused person in deciding whether to advance a civil cause of action at the expense of the right to silence in a criminal prosecution or that the law will not act to relieve that conflict unless some prejudice apart from intrusion into the right to silence itself can be demonstrated."
In Strickland v Commonwealth Director of Public Prosecutions (2018) 361 ALR 23; (2018) 266 CLR 325; [2018] HCA 53, the plurality referred (at [76]) to the observations of Hayne and Bell JJ in X7 above (at [124]) as having effect that: "As Hayne and Bell JJ observed in X7 (No 1) in relation to an unlawful compulsory examination conducted post charge, even if the answers given at a compulsory examination are kept secret, and so cannot be used directly or indirectly by those responsible for investigating and prosecuting the matters charged, the requirement to give answers after being charged fundamentally alters the accusatorial judicial process that begins with the laying of a charge and culminates in the accusatorial and adversarial trial in the courtroom. The examinee can no longer decide the course which he or she should adopt at trial according only to the strength of the prosecution's case as revealed by the material provided by the prosecution before trial or to the strength of the evidence led by the prosecution at trial …" [citation omitted]
The parties also draw attention to the decision of the High Court of Australia in Zhao, where the Court pointed to the relevance of the risk of prejudice in the conduct of defence in a criminal trial as to the grant of a stay, and noted that, where the offences and circumstances relevant to both proceedings were identical, the risk of prejudice was plain. I recognise that, as Mr Tam who appears for Telstra points out, the second respondent in that case ("Jin") had there given evidence of the matters that would have to be addressed in any affidavit filed in the civil proceedings, and how that evidence would be relevant to the criminal charges, with the result that giving evidence would, in effect, waive his right to silence in the criminal proceedings. The Court there rejected a suggestion that it was necessary for the applicant for a stay to state the "specific matters of prejudice" before a stay could be contemplated, stating (at [43]) that: "To require the [applicant] 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."
The Court also rejected the suggestion that protective orders could be made which might maintain the confidentiality of evidence (at [44]), by reference to the rationale of the open justice principle, and rejected the suggestion that the Court should be closed so that forfeiture proceedings could proceed and the respondent's evidence could be received. The Court observed (at [47]): "The prospect that civil proceedings may prejudice a criminal trial and that such prejudice may require a stay of the civil proceedings is hardly novel. In some jurisdictions, procedures are provided for making an application for a stay in such circumstances. The risk of prejudice in a case such as this is real."
The parties also refer to the decision of the Full Court of the Federal Court of Australia in Construction, Forestry, Mining and Energy Union v Australian Competition and Consumer Commission [2016] 242 FCR 153; [2016] FCAFC 97, where the Full Court of the Federal Court considered the High Court's decision in Zhao and (at [22]) summarised several principles that emerged from that decision as follows: "(i) where both civil and criminal proceedings are pending, a stay of the civil proceeding will be ordered where "the interests of justice require such an order": Zhao (HC) at [36]; (ii) 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: Zhao (HC) at [35]; (iii) to warrant a stay of the civil proceeding, "it must be apparent" that the accused "is at risk of prejudice in the conduct of his or her defence in the criminal trial": Zhao (HC) at [35]; (iv) the risk of prejudice must be real and, in considering what the interests of justice require, that risk is to be weighed against the prejudice that a stay of the civil proceeding would occasion: Zhao (HC) at [47] and [50]."
The Full Court also there noted (at [23]-[25]) that: "The reasoning of both the High Court and the Court of Appeal in Zhao recognised that a potential prejudice for an accused is that evidence given by that person in a civil proceeding would reveal or telegraph information to the prosecutor about the accused's defence in the criminal proceeding. The potential to advantage the prosecutor was regarded by the Court of Appeal as an infringement of the privilege against self-incrimination and the right to silence. The High Court relied upon a different but related foundation. As the Court noted at [18], by reference to the fundamental principle of the common law as explained in Lee v R(2014) 253 CLR 455 at [32]-[33], the prosecution is to prove the guilt of an accused person and cannot compel a person charged with a crime to assist in the discharge of its onus of proof. Both the Court of Appeal and the High Court considered whether the risk of prejudice in a criminal proceeding, arising from the accused first giving evidence in a civil proceeding, could be overcome or negated by protective orders made in the civil proceeding. The Court of Appeal held that the making of non-publication orders suppressing evidence given in the civil proceeding was not "the best the court can do" to protect the accused's privilege against self-incrimination, and that in those circumstances a stay was warranted (at [62]-[63]). The High Court, at [46], said this: The Court of Appeal's view, that protective orders would not suffice to remove the risk of prejudice to the second respondent's defence, is clearly correct. The High Court also observed (at [44]) that closing the court as a means of attempting to maintain the confidentiality of evidence given by an accused in the civil proceeding was not a proper reason for departing from the open court principle."
The Court also referred to the decision in McMahon and the guidelines there identified as applicable to a stay of civil proceedings. The Full Court noted that these matters were "only guidelines" and that no attack on the authority of that McMahon had been put in that case. The Full Court there observed (at [30]) that: "It may be accepted that the reasoning in Zhao would strongly support the grant of a stay, if it were the case that [two relevant persons] were being compelled to give evidence in the s 45D proceeding at a time prior to the hearing of the blackmail proceeding. If that were the case, and given the "very substantial overlap in the alleged facts" recognised by the primary judge at [17], the reasoning in Zhao would suggest that the fundamental principle that the Crown must prove its case in the blackmail proceedings without the compelled assistance of an accused would be infringed. The reasoning in Zhao further suggests that protective orders made in the s 45D proceeding would not suffice to protect [the two relevant persons] from the risk of prejudice." There was no evidence in that decision that that would occur; here, by contrast, AS and KS indicate, by their Counsel, that they wish to give evidence in the civil proceedings. The Full Court also observed (at [33]) that both the Court of Appeal and the High Court in Zhao proceeded on the basis that Jin there wished to give evidence in the civil proceedings and would likely have done so but for the risk of prejudice to the criminal proceedings, and noted that the High Court in Zhao had framed the "question" for determination in these terms: "The question is therefore whether the second respondent [Jin] should be placed in a position where he must decide whether to prejudice his criminal trial or his defence of the forfeiture proceedings and his case in the exclusion proceedings."
However, the Full Court held that the mere possibility that the applicants in that case might wish to give evidence did not establish that they were confronted by any "invidious choice". The Full Court also observed (at [38]) that: "The High Court in Zhao evidently considered that the evidentiary burden upon an applicant to establish the existence of an invidious choice was not onerous. But that burden was not discharged in this case. Instead, the applicants' submission impermissibly assumed the existence of the invidious choice for which they contended. They have not established that doubt attends the primary judge's approach sufficient to warrant reconsideration by a Full Court."
The parties also drew my attention to the decision of Moshinsky J in Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd (2019) 138 ACSR 42; [2019] FCA 964 ("ANZ"), where is Honour reviewed (at [43]) the aspects of overlap between the criminal and civil proceedings there in issue and observed (at [53]-[59] and [61]-[63]): "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 (2015) 255 CLR 46 at [35] ; CFMEU v ACCC at [22] ; see also Corporations Act, s 1331. The risk of prejudice must be real: see CFMEU v ACCC at [22]; Ransley at [22] per Jagot J. As to possible prejudice to an accused, the following have been recognised as relevant factors: (a) prejudice to the accused's right to silence or privilege against self‐incrimination: see Zhao at [42]-[47]; CFMEU v ACCC at [23]; Ransley at [24]-[30]; Obeid at [4]; and (b) the possibility of publicity that might reach and influence jurors: see CFMEU v ACCC at [44]-[46] . 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. … 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]. … 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).
In ANZ, his Honour there held that civil proceedings should be stayed where ANZ would otherwise face an invidious choice between seeking to compel two persons to give evidence in the civil proceedings, and not to do so would deprive ANZ of sources of evidence that might be adduced in its defence, prejudicing its rights arising from the accusatorial process relating to civil trials.
In Australian Securities and Investments Commission v Taylor [2023] FCAFC 189 at [41], Mortimer CJ and Abraham J referred to the privilege against self-incrimination, and the associated right to silence, and observed that: "It is important to appreciate that underpinning those concepts is that the prosecution cannot compel a person charged with a criminal offence to assist in the discharge of its onus of proof: see for example, Lee v R [2014] HCA 20; (2014) 253 CLR 455 (Lee v R) at [33]. A fundamental principle of the common law is that it is for the prosecution to prove the guilt of an accused person as "an aspect of the accusatorial nature of a criminal trial in our system of criminal justice": Lee v R at [32]; see also X7 at [46], [101]-[102], [159]-[160]; IBAC at [44]. This is referred to as the companion principle; it is a companion of criminal trials: IBAC at [46] and is engaged when there is a prosecution pending: IBAC at [48]."
Their Honours also noted, in respect of the "McMahon Guidelines" (at [91]) that: "The "McMahon Guidelines" are merely guidelines that Wootten J said he used to approach the decision of the application before him: see McMahon at 206. They ought not be elevated to something they are not. They cannot be seen as exhaustive of what might be relevant considerations in determining an application for a stay. Significantly, these guidelines were identified in 1982. There have been very many decisions of appellate courts, including the High Court, which have in more recent years addressed relevant considerations, including in relation to the circumstances where the issue is an application to stay civil proceedings pending criminal proceedings being finalised. A consideration of the guidelines, read in the context of the judgment in McMahon, indicates that some are outdated, and do not reflect the current understanding of certain concepts, and their significance in the administration of justice. This is particularly evident in Wootten J's discussion of the extent or breadth of the relevant common law rights and the impact of civil or other proceedings on criminal proceedings. It is a judgment reflecting its time. As has been recognised by later Courts, although the guidelines may be of some assistance, any reference to them must be read in light of subsequent cases: see for example, Impiombato v BHP Group Ltd [2020] FCA 350 at [123]. That said, it is the considerations and principles as articulated in recent appellate authorities which are to be considered and applied."
I also have regard to the observations of Matthews J in Figurehead Constructions v Machado [2023] VSC 448 at [15], where substantially identical issues arose in criminal and civil proceedings, as follows: "A temporary stay may be granted where a defendant's participation in a civil proceeding creates a real risk of prejudice in criminal proceedings. A risk of prejudice will arise where the issues and circumstances relevant to both proceedings are substantially identical. The prejudice that a defendant in a civil proceeding might suffer includes: (a) the charges on indictment can be framed with the benefit of the accused's evidence; (b) the informant may use the transcript in the civil proceeding to aid in the criminal investigation; and (c) the complainant is in a position to use evidence from the civil proceeding to craft testimony in the criminal trial."

Submissions and determination

I have had regard to the range of considerations in the case law, including that any stay should only be made where the interests of justice require it. It is common ground between the parties that, and I have recognised that, Telstra is prima facie entitled to have its civil action tried in the ordinary course and a stay therefore requires justification on proper grounds, and that AS and KS bear the burden of demonstrating those grounds. I have also recognised that it is not sufficient basis to grant a stay of the civil proceeding that related charges have been brought against AS and KS and the criminal proceedings are pending; and the more significant question is whether AS and KS are at risk of prejudice in the conduct of their defence in the criminal trial. I have recognised that the evidence led by AS and KS is slight, but that it may not be necessary for the applicant for the stay to state the specific matters of prejudice before a stay could be contemplated, and the prejudice is here readily inferred from the nature and overlap of the claims in the criminal and civil proceedings.
In her outline of submissions, Counsel then appearing for AS and KS pointed to the risk that, if they gave evidence in the civil proceedings, the prosecution in the criminal trial would gain significant forensic advantage by having access to the transcript of the proceeding, and to witnesses who may be called by AS and KS in their defence of the proceedings, and AS and KS will in turn be constrained by the evidence they give in these proceedings. Mr Bagley who now appears for AS and KS also put these propositions in oral submissions before me. Counsel also there referred to the difficulties which would arise in protecting AS's and KS's position in the civil proceedings by any form of protective order, including the fact that a certificate under s 128 of the Evidence Act 1995 (NSW) would not protect AS and KS if they chose to give affirmative evidence in the proceedings, and also referred to the matters which tend against an order closing the Court, as recognised by the High Court in Zhao.
In oral submissions, Mr Bagley emphasised that the civil proceedings against AS and KS "essentially overlap in all material respects with the criminal charges that are brought against them" (T5). He submits that the risk of prejudice must be acute because the evidence that AS and KS would lead in these proceedings would necessarily address matters relevant to the defence of the criminal proceedings. He points to the fact that, if AS or KS lead evidence to seek to displace the allegation that the money they deposited was Telstra's money, they would be cross-examined as to that evidence and that would put their defence of the criminal trial at risk. I again recognise that AS and KS do not lead evidence that they would give such evidence, or identify its scope even in general terms; however, I should at least infer that, where they have elected to give evidence, any evidence which they would give would have to be directed to displacing Telstra's case and advancing a defence of the proceedings, and there is a substantial risk to them in cross-examination as to any such evidence and its adverse impact in the criminal proceedings. Mr Bagley also submits (T6), and I accept, that there would be real difficulties for AS and KS in making a strategic choice to give evidence without the concern that evidence may be used against them in subsequent criminal proceedings. I recognise, however, that the premise of this application is that AS and KS have elected to give evidence in these proceedings, and they now point to the risk to which that evidence would expose them in the criminal proceedings.
Mr Tam responds that AS and KS do not sufficiently articulate prejudice and submits that it would be possible to rely on tailored measures to proceed with the trial. In oral submissions, Mr Tam in turn took me to the caselaw, again in detail, and submitted that the Court should not be satisfied that there was a risk of prejudice to AS and KS, absent evidence led by them to identify that prejudice, and otherwise that the balancing exercise contemplated by the caselaw did not here support a stay (T10).
I accept that AS and KS have led minimal evidence to establish prejudice, and that evidence does not indicate the scope of the evidence which they seek to lead or, in the case of KS, whether it would be the same or different than what she has previously told the police. However, as I noted above, AS and KS have now made the election contemplated by the orders made by Stevenson J, that they will lead evidence in the proceedings. It is plain enough that, in the relevant circumstances, their evidence would need to address the source of the funds they deposited into the relevant bank accounts and their knowledge of the character of those funds; since, absent such evidence, their evidence would potentially not meet the inferences that would be available from the evidence led by Telstra in its case in chief. It seems to me that, here, it is less significant that AS and KS did not lead affidavit evidence which described the evidence that they would give in even general terms, where an inference as to the scope of that evidence is readily drawn from their election to give evidence.
It seems to me that real prejudice to AS and QS is here inevitable from the hearing of the civil proceedings, despite the explanation that KS offered to the police that limited her exercise of the right to silence, where the likely need for AS and QS to give evidence to defend these proceedings, and their choice to do so, would erode their right to silence and the privilege against self‐incrimination, quite apart from any risk of publicity that might reach and influence jurors.
I do not accept Mr Tam's submission that AS's and KS's contentions depend upon any proposition, as a general matter, that nothing can be done short of a stay to alleviate or address the prejudice to a defendant in these circumstances. The problem, here, is a more specific one, that nothing can be done, short of a stay, that would avoid the prejudice to AS and KS of exposing their cases, and giving evidence which could be tested by cross-examination, at a hearing that would occur long before the criminal proceedings went to trial. Here, AS's and KS's case for a stay is strengthened by the very substantial overlap of the factual matters at issue in the criminal and the civil proceedings, both in respect of the identification of the funds received by AS and KS, and in respect of their knowledge of circumstances in which the funds had been obtained or any failure to make any inquiry as to that question.
I have recognised that the case law allows limited scope to meet that prejudice by protective orders; but for the approach taken in the cases, I would have considered that suppression orders could have met that prejudice. It seems to me that, here, there is no real prospect that further protective measures other than suppression orders are available, where the next steps in the conduct of the proceedings would be the filing of Defences which admit, do not admit or deny the specific allegations made by Telstra, and identify the material facts on which AS and KS rely for any affirmative defences, and the leading of their evidence and the allocation of a hearing date to hear their case, where Telstra has already completed its case in chief. Each of those steps would erode AS's and KS's right to silence in the criminal proceedings, and advantage the prosecution in the criminal proceedings so far as it disclosed any defences on which they relied; required admissions as to matters alleged against them, and exposed them to cross-examination as to their evidence.
I have also recognised that the risk of prejudice to AS and KS must be weighed against the prejudice that a stay of the civil proceeding would occasion to Telstra, which is mitigated by the freezing orders but nonetheless real. Mr Bagley fairly accepted that the Court must take into account the risk of prejudice to Telstra; he submitted, and I accept, that that risk was reduced by the existence of freezing orders, although some risk remained in respect of the erosion of the assets available to AS and KS to meet a judgment in Telstra's favour, by ordinary living expenses AS and KS are permitted to incur pursuant to the exception to the freezing order. I accept that, as Mr Tam submits, there is prejudice to Telstra in a delay in the trial, particularly where there is a real prospect that that delay will be lengthy, and the assets of AS and KS that are available to meet a judgment against them will be eroded by funds expended in reliance on the exception for ordinary living expenses under the freezing order, in the period to trial. However, it seems to me that the prejudice to AS and KS of proceeding to hear the balance of this matter substantially outweighs the prejudice to Telstra of delay pending the determination of the hearing.

Telstra Ltd v Sulaiman and others

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Judgment (7 paragraphs)

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