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  • Unreported Judgment

Hamilton Island Enterprises Ltd v Johnston

 

[2010] QSC 38

 

 

SUPREME COURT OF QUEENSLAND

PARTIES:

FILE NO/S:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

DELIVERED ON:

18 February 2010

DELIVERED AT:

Supreme Court Mackay

HEARING DATE:

1 February 2010

JUDGE:

McMeekin J

ORDER:

1.The proceedings be stayed until the committal of the applicant on the charges set out in exhibit 1 has concluded.

2.In the event that no further application for a stay in the proceedings is filed, the defendant file and serve notice of intention to defend, in compliance with the provisions of the UCPR within 28 days of the conclusion of the committal proceedings relating to the charges set out in exhibit 1.

3.The costs of the application are reserved.

4.Liberty to apply on or before 25 February 2010.

CATCHWORDS:

PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PRACTICE UNDER RULES OF COURT - STAYING PROCEEDINGS - where applicant has been criminally charged - where criminal proceedings not yet determined - whether civil proceedings should be stayed until disposal of criminal proceedings determined.

Uniform Civil Procedure Rules 1999 (Qld), r 367(1)

Australian Securities Commission v Kavanagh (1993) 12 ACSR 69

Commonwealth DPP v Jo & Ors [2007] QCA 251

McMahon v Gould (1982) 7 ACLR 202

Osric Investments Pty Ltd v Probst and Anor [2007] QSC 293

Yuill v Spedley Securities Ltd (in liq) (1992) 8 ACSR 272

COUNSEL:

A.J. Collins for the applicant

G.F. Crow for the respondents

SOLICITORS:

Whitsunday Law for the applicant

Macrossan & Amiet for the respondents

[1] The applicant is Michael Patrick Johnston.  He is the defendant in an action brought by his former employer, Hamilton Island Enterprises Ltd (the first plaintiff) and a related entity, Hamilton West Pty Ltd (the second plaintiff) in which the plaintiffs claim $327,341.21 as damages for breach of contract, conversion, or alternatively equitable compensation or damages for breach of fiduciary duty and fraud.  Effectively the plaintiffs plead that in breach of his contract of employment and of fiduciary duties owed to his employer and its related entity, the defendant misappropriated monies or converted goods to the amount claimed.

[2] On 15 December 2009, the applicant was charged by police with 22 offences under the Criminal Code 1899 (Qld).  All the charges relate to complaints made by the first and second plaintiffs and arise out of the applicant’s employment.  The substance of the claims made by the first and second plaintiffs arises out of the same facts and allegations that are the base of the offences charged.

[3] A few days prior to the hearing the applicant was informed that a further 14 charges were to be bought against him arising out of the same complaints. The charges that the applicant presently faces are summarised in Exhibit 1.

[4] This is an application by Mr Johnston seeking a declaration pursuant to r 367(1) Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) that he “be relieved from the obligations and consequences of failing to plead admissions to the first and second plaintiffs’ statement of claim in these proceedings under part 2 of chapter 6 until the criminal prosecution of the defendant is concluded” and further he seeks an order that the action that I have referred to be stayed until his criminal prosecution is concluded.

[5] I was informed that the police brief of evidence is yet to be delivered to the applicant, that the first return date in respect of his criminal charges took place on 1 February 2010, the same day as the hearing of this application, and that a committal is still some long time off.

[6] Mr A.J. Collins of counsel who appeared for the applicant submitted that “the applicant seeks orders that will not put him at risk of being punished should he make answer to the allegations of fact set out in the statement of claim.”[1]

[7] It is relevant to note that the matter first came before me in the form of a Mareva-type application by the plaintiffs and a freezing order is in place.

The Law

[8] It has long been accepted that the relevant considerations in an application of this type, that is, where there are co-extensive criminal and civil proceedings, were explained by Wootten J in McMahon v Gould (1982) 7 ACLR 202 at 206-207 as follows (omitting citations):

  1. (a)Prima facie a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the court;
  2. (b)It is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification on proper ground;
  3. (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;
  4. (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;
  5. (e)The court’s task is one of “the balancing of justice between the parties”, taking account of all relevant factors;
  6. (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;
  7. (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.
  8. (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;
  9. (i)The court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings;
  10. (j)In this regard factors which may be relevant include:
  1. (i)the possibility of publicity that might reach and influence jurors in the civil proceedings;
  2. (ii)the proximity of the criminal hearing;
  3. (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;
  4. (iv)the burden on the defendant of preparing for both sets of proceedings concurrently;
  5. (v) whether the defendant has already disclosed his defence to the allegations;
  6. (vi)the conduct of the defendant, including his own prior invocation of civil process when it suited him;
  1. (k)The effect on the plaintiff must also be considered and weighed against the effect on the defendant. It may be relevant to consider the nature of the defendant’s obligation to the plaintiff;
  2. (l)In an appropriate case the proceedings may be allowed to proceed to a certain stage, eg, setting down for trial, and then stayed.

[9] This approach was considered by Daubney J in Osric Investments Pty Ltd v Probst and Anor [2007] QSC 293 where his Honour observed (omitting citations):

“[12] The utility of this catalogue of considerations has been recognised on numerous occasions by courts at first instance and on appeal.  Although there have been a number of observations by appellate judges to the effect that these guidelines may need to be revisited to give a proper reflection on contemporary public interest, unless and until a revision of these guidelines is undertaken by an appellate court it is appropriate for me to adopt them as applicable to the present case.”

[10] While I respectfully agree with his Honour’s observations, the issue that he refers to needs more examination in the context of this case.

[11] Although not articulated in his written outline, Mr Collins’ submission was that to require the applicant to plead to the statement of claim and to undertake the further steps that would be required under the rules, such as disclosure, would effectively remove what is often compendiously described as his “right to silence” and abrogate his client’s privilege against self-incrimination.

[12] The “contemporary public interest” that Daubney J referred to is a reference to what might be considered to be the “normal primacy of the administration of criminal justice” (per Kirby P in Yuill v Spedley Securities Ltd (in liq) (1992) 8 ACSR 272 at 274) and the particular privileges that the criminal justice system affords an accused person.  Wilson J dealt with one aspect of this in Commonwealth DPP v Jo & Ors [2007] QCA 251 at [21] (omitting citations):

“The privilege against self-incrimination is a substantive right which has been described as “a cardinal principle of our system of justice”, a “bulwark of liberty” and “fundamental to a civilised legal system”.  It affords protection against the risk of incrimination by both direct evidence and indirect or (“derivative”) evidence.  But a person has to claim the privilege in order to be entitled to its protection, and it may be waived or excluded by statute.”

[13] The potential for the civil proceedings to effectively remove the privilege against self-incrimination or dispense with the right to silence were plainly relevant factors in decisions where stays of civil proceedings were granted, for example: State of Queensland v O’Brien & Anor (unreported, Muir J, Supreme Court of Qld, 22 June 2006), Commonwealth DPP v Jo & Ors (supra) and Jupiters Ltd v Liu (unreported – White J – Supreme Court of Qld – BS4708/05), and see the comments of Mackenzie J in State of Queensland v Shaw [2003] QSC 346 at [24]-[25]. Mr Collins submitted that I should be guided by the approach taken in these cases.

[14] Mr Crow of counsel, who appeared for the respondents, submitted that these various cases were not of assistance in resolving the matter as they concerned forfeiture proceedings which had its own peculiar legislative context and, by inference, merited the application of different principles.  I have some difficulty in seeing why there is any different principle to apply in such cases.  True it is that the State is the party prosecuting both the civil and the criminal proceedings in forfeiture proceedings whereas in the instant case the State has no interest in the plaintiffs recovering damages, but that is not the fundamental point of those cases. The relevant is whether the State would gain an unfair forensic advantage by the running of the civil proceedings first, an advantage not permitted by the criminal law, and hence the defendant suffer a corresponding disadvantage. That disadvantage, so far as I can see, does not depend on who has the conduct of the civil litigation.

[15] There is no doubt that the privileges afforded to an accused under the principles that apply to the administration of the criminal law are a relevant factor in the application for a stay.  So much was acknowledged by Wootten J in paragraph (g) of his guidelines in McMahon v Gould (supra).  Nor can there be any doubt, having considered those various authorities upon which Mr Collins relies, that it is not enough simply to assert that the accused’s privileges and rights might be affected, but rather it is necessary to demonstrate actual prejudice or the potential for real prejudice.  That is reflected in paragraph (i) of Wootten J’s list.

[16] Finally, on the question of the principles that apply, I refer to the comments Hayne J in Australian Securities Commission v Kavanagh (1993) 12 ACSR 69 at 72 where His Honour said:

“In my view it is therefore clear that unless reason is shown to the contrary, a plaintiff is entitled to have its action tried in the ordinary course of the procedure and business of the court and that it is a grave matter to interfere with that entitlement by a stay of proceedings, the grant of which would require justification on proper grounds.  In the end the task is one of the balancing of justice between the parties taking account of all relevant factors judging the case on its own merits.”

[17] Thus I proceed on the assumption that Wootten J’s analysis provides the basis for a principled approach to questions of this type, that the potential to prejudice the fair trial of the applicant in the criminal jurisdiction will always be a relevant matter, and that it is a grave matter to interfere with the plaintiffs’ rights.

Consideration of the Relevant Factors

[18] As Wootten J and Hayne J both point out, the onus lies plainly on the applicant to establish his right to the order sought. 

[19] As the criminal proceedings are at a very early stage and the defence yet to receive full particulars of the charge, let alone the evidence upon which the Crown intends to rely, Mr Collins was somewhat hamstrung in particularising just how it is that his client will be prejudiced.  Both the investigating police officer and an officer of one of the plaintiff companies allege that the defendant has made admissions.  The extent to which those admissions, allegedly made, cover the matters referred to in the statement of claim is not clear to me. Mr Collins’ submissions were therefore quite general and stressed the potential for harm and the inevitability of the prosecution gaining an advantage to which it was not entitled.

[20] The factors that Wootten J outlined as being potentially relevant and that he enumerated in sub-paragraph (j) of his list need to be considered here. 

[21] The plaintiffs’ solicitor swore an affidavit that it was unlikely that the publicity of these proceedings would reach or influence jurors in the civil proceedings.  I am aware from my own knowledge that it is the practice of the local newspaper here in Rockhampton to search court files and to publish matters that they consider might be of interest to the reading public.  That has happened on many occasions and in cases far less sensational than this case has the potential to be.  I do not know whether it occurs in Mackay.  Nor do I know whether the Mackay papers take up material published in Rockhampton.  I think however that there is a possibility of there being some publicity and that that publicity may be adverse to the applicant.

[22] The criminal hearing is not imminent.

[23] The likelihood of prosecution witnesses fabricating evidence or interfering with defence witnesses seems to me to be entirely speculative and unlikely.

[24] The applicant will have the burden of preparing for both sets of proceedings concurrently although the point that Mr Collins made was that the two sets of proceedings are virtually identical and so that burden will not be great.

[25] The defendant has not already disclosed his defence to the allegations.  Rather Mr Crow’s point was to the converse – the applicant has allegedly admitted at least some of the allegations to both a police officer and to his employer.  It is not yet known whether the defendant accepts or denies the making of the alleged admissions. 

[26] There is nothing in the prior conduct of the defendant, in terms of litigation, that is relevant.

[27] It is evident that Wootten J in McMahon considered as relevant the ability of the applicant for a stay to cope with cross examination, if the civil proceedings were allowed to proceed.  He pointed out in his reasons at 208: "There is no suggestion that the defendant is a simple or handicapped man who might suffer unfairly in cross-examination.”  Likewise here there is no suggestion that Mr Johnston would not be perfectly capable of giving accurate instructions and dealing with any questioning he might face.[2]  Until the present complaints were made against him, Mr Johnston held a responsible position with the first Plaintiff – he was the project manager for the Dent Island golf course development.  It would be surprising if a man capable of managing such a project was not perfectly capable of properly instructing his advisors and of coping with the demands of a cross-examination. 

[28] Finally, I do not see that there is anything in the nature of the defendant’s obligations to the plaintiff, in the sense considered by Wootten J, as bearing on this case and adversely to the application. 

[29] Obviously it is relevant to bring into account the effect on the plaintiffs of the stay application.

[30] While that exhausts Wootten J’s list of matters, I do not assume that Wootten J’s list is exhaustive.  But no other factor was referred to as relevant.

[31] The key question then is whether the applicant can identify any particular prejudice that would be suffered by him as a result of him being required to defend these proceedings whilst the criminal prosecution is pending.  None of the factors considered above suggest any significant prejudice of the type sufficient to overcome the plaintiffs’ right to pursue their civil remedies.

[32] Mr Collins, in my view, did not point to any particular prejudice, but as I have said my perception is that his ability to do so was very much constrained by the fact that he is yet to see the Crown case.  The difficulty in this case is that I cannot see how a person in a position of the applicant can particularise prejudice until he is aware of what is alleged against him (and Mr Collins stressed that 14 charges were added only last week) and the evidence that is said to support it.

[33] In my view the applicant will not be in a position to particularise any prospective prejudice until committal proceedings are concluded. 

[34] Mr Crow for the respondents placed great reliance on Daubney J’s decision in Osric Investments (supra) where his Honour refused a stay in a case that is nearly on all fours with the present one.  The crucial difference, as Mr Collins pointed out, is that in Osric the committal had been held prior to the application for the stay.

[35] Bearing in mind these various considerations, it seems to me that it is in the interests of justice that the civil proceedings be stayed until the conclusion of the committal proceedings in the criminal prosecution.  In coming to that view I give very considerable weight to the consideration that it is a fundamental right of every accused person to know the case that is maintained against him before he makes any answer to it. After any committal the applicant should be in a position to particularise any prejudice that he says he might suffer by continuation of the civil proceedings.

[36] I am conscious, of course, that this interferes with the respondents’ rights to pursue their judgement.  However a freezing order is in place and it is not suggested that the respondents will suffer any prejudice, apart from the frustration of delay, should the proceedings be stayed for the period that I have in mind.

[37] I note that a similar approach of delaying for a period and not necessarily until the end of the criminal proceedings was taken by Durward SC DCJ in Commonwealth DPP v Jo & Ors (unreported, District Court of Queensland, 17 January 2007), where charges were yet to be laid, and that his approach was confirmed on appeal.[3]

[38] In my view it is appropriate that costs be reserved until the rights of the parties have been clarified.

[39] In the course of the hearing Mr Collins made an oral application that the freezing order be varied.  This was opposed by Mr Crow for the respondents on the basis that there had been late notice (an affidavit raising the issue was served late on the Friday evening and the hearing took place on the Monday morning), that Mr Johnston had not presented himself for cross-examination as required by the rules (r 439(3)), the respondents would wish to cross examine Mr Johnston as to the claims made, and the respondents would wish further time to prepare.  I indicated to counsel that I would not be prepared to entertain that application and that if it was to be pursued there would need to be a written application which I would deal with in the next sittings of the circuit court in Mackay.

[40] If no application is made within seven days then the orders will be as follows. I order that the proceedings number S665/09 presently pending in the Rockhampton Registry of the Supreme Court be stayed until the committal of the applicant on the charges set out in exhibit 1 has concluded.

[41] I further direct that in the event that no further application for stay of the proceedings is filed, the defendant file and serve such notice of intention to defend in compliance with the provisions of the UCPR within 28 days of the conclusion of the committal proceedings relating to the charges set out in exhibit 1.

[42] The costs of the application are reserved.

[43] As I have not heard from the parties as to the precise form of the orders I give the parties liberty to apply within 7 days to vary the orders if so advised.

Footnotes

[1] See p16 of the applicant’s outline.

[2] In this regard a submission was made that Mr Johnston was receiving psychiatric care and that may be relevant to the exercise of the discretion. Since the hearing Mr Collins has learnt that the treating psychiatrist has expressed the opinion that the applicant is capable of providing instructions and, with the consent of the respondents, has provided me with a letter to that effect. I have marked the letter Exhibit 3. I understand the submission to be withdrawn.

[3] Commonwealth DPP v Jo & Ors [2007] QCA 251.

Close

Editorial Notes

  • Published Case Name:

    Hamilton Island Enterprises Ltd & Anor v Johnston

  • Shortened Case Name:

    Hamilton Island Enterprises Ltd v Johnston

  • MNC:

    [2010] QSC 38

  • Court:

    QSC

  • Judge(s):

    McMeekin J

  • Date:

    18 Feb 2010

Litigation History

No Litigation History

Appeal Status

No Status