McMahon v Gould

(1982) 7 ACLR 202

Companies — Directors — Liquidator — Action to recover moneys from director — Fraud and breach of duty by director alleged — Criminal proceedings against director — Application by defendant to have action stayed pending termination of criminal proceedings — (NSW) Companies Act 1961 s 367B

The Crimes Act 1900 (NSW) by s 178(1) provides:

Nothing in ss 165–176 both inclusive shall relieve any person from making a full discovery, by answer to interrogatories, or from answering any question in a civil proceeding.

The liquidator of D commenced proceedings against X who had been at material times a director of D. The liquidator relied upon s 367b of the Companies Act 1961 (NSW) alleging that X had been guilty of fraud and breach of duty owed to D.

Criminal proceedings had already been commenced against X, who applied to the Supreme Court for a general stay of the liquidator’s proceedings pending the termination of the criminal proceedings.

Held: (i) It is clear that s 178 means that no person who has been charged with an offence under ss 165–176 may decline to answer any question in a civil proceeding based on the facts, the subject of the charge.

Re Saltergate Insurance Co Ltd (1980) 4 ACLR 733, at 734–5, cited

(ii) However, it goes too far to treat that as a legislative indication that the principle expounded in Jefferson Ltd v Bhetcha [1979] 1 WLR 898 is not to be applicable where such charges are laid.

(iii) The court retains its discretion to stay proceedings, but in exercising it should have regard to the policy underlying s 178.

(iv) In all the circumstances a stay of proceedings should be refused.

Principles relevant to the exercise “of the discretion to stay proceedings”, discussed.

The “felonious tort rule” and the “right to silence”, discussed.

Date Heard: 15, 19 February 1982

Decision Date: 19 February 1982

Judgment: Wootten J

206

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 (ibidat 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 (ibidat 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 (ibidat 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 (ibidat 904–5);

(i) The court should consider whether there is a real and not merely notional danger of injustice in the criminal proceedings (ibidat 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 (ibidat 905);
• (ii) the proximity of the criminal hearing (ibidat 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 (ibidat 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);

207

(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;

(1) 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).

208

Turning to the present case, has there been demonstrated such a real risk of injustice to the defendant that the court would be justified in denying the plaintiff his fundamental right to a hearing in ordinary course? No case has been made that the civil case is likely to attract publicity that might prejudice criminal jurors; or that the criminal trial is immiment; or that disclosure of the accused’s case might give rise to malpractice in the criminal trial. There is no suggestion that the defendant is a simple or handicapped man who might suffer unfairly in cross-examination. On the contrary, he is apparently a sophisticated man of affairs, experienced in the world of company and financial manipulation, who has initiated litigation and gone into the box and given evidence about these very matters when it suited him, even after the criminal charges were laid.

Griffin, David James v Sogelease Australia Limited & Ors

[2002] NSWCA 421

PRACTICE AND PROCEDURE – stay whether civil proceedings should be stayed when criminal prosecution likely

Date Heard:  19 December 2002

Decision Date: 20 December 2002

Judgment: Sheller, Ipp JJA, Davies AJA

13 A useful example of the application of the rule may be seen in Cameron’s Unit Services Pty Limited v Whelpton & Associates Pty Limited [1984] FCA 406; (1984) 59 ALR 754 where Wilcox J refused a stay of proceedings notwithstanding that a director of the plaintiff company had been charged with fraud and other offences arising out of the events which were the subject of the proceedings. Wilcox J discussed the rule in terms similar to those which we have set out, and said, at 760, in relation to “the right to silence”:

“The `right of silence’ is a right which a person has in relation to present or anticipated criminal proceedings. As a matter of everyday experience, suspects or accused persons waive the right by giving an explanation of their conduct during the course of interrogation by police or other investigating authorities or in evidence at their trial. No doubt the right is often waived incautiously or through ignorance, but is also deliberately waived by informed persons who take the view that waiver will best serve their interests overall. The conflicts of interest which give rise to waiver already exist; the law does not step in to prevent those conflicts or to deny the ability to waive the right. The existence of a civil action which an accused person may wish to defend provides simply another example of a conflict of interest between maintaining silence and disclosing the substance of the defence in the criminal proceedings. I see no basis for the view that the court should intervene to relieve against this particular conflict, when it does not relieve against others. The fact that the existence of the civil action may result in a decision by the accused person to waive his right of silence is not, in itself, a sufficient reason to stay that action. The real question must be the likelihood of causing injustice in the criminal proceedings: para (i) above.”

14 His Honour’s reference to para (i) was a reference to one of the precepts enunciated by Wootten J in McMahon v Gould.

15 In the present case, the Learned Judge concluded:

“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.”

In the Estate of Winter (Deceased)

[2012] SASC 16

SUCCESSION – WILLS, PROBATE AND ADMINISTRATION – THE MAKING OF A WILL – EXECUTION – INFORMAL DOCUMENT INTENDED TO BE WILL – SOUTH AUSTRALIA – OTHER CASES

SUCCESSION – WILLS, PROBATE AND ADMINISTRATION – THE MAKING OF A WILL – REVOCATION – METHODS OF REVOCATION – OTHER WILLS, CODICILS OR WRITINGS

Referral from Registrar of Probates regarding which testamentary documents of the deceased should be admitted to probate – the deceased executed a formal will in 1999, bequeathing the residuary of her estate equally to her two nephews, her niece and the Holy Cross Lutheran Church Murray Bridge Inc. – a first, formal codicil was executed in 2002, not altering the residuary, but providing for a specific bequest of a dinner set and jewellery to the niece – a second, formal codicil was executed in 2006, revoking the residuary clause of the will and providing for the residue to be distributed equally to the two nephews and niece only – a third, informal document was executed in 2010, on its face bequeathing a cash sum to the Lutheran Community Care Services – where the 2010 document expressed to be an addendum to the last will of the deceased dated 5 December 2002, in circumstances where the last will of the deceased was dated 20 July 1999 and the first codicil dated 5 December 2002 – whether the 2010 document ought to be admitted to probate as a codicil to the will of the deceased pursuant to section 12(2) of the Wills Act 1936 (SA) as an informal codicil – whether the 2010 document impliedly revokes the second codicil, executed in 2006.

Date Heard: 9 February 2012

Decision: 9 February 2012

Judgment: Gray J

30 The following propositions, relevant to the within enquiry, may be discerned from the authorities:

• The Court is to look at all the circumstances to ascertain the intention of the testator as to what instruments should compose his or her last will.(Green v Tribe (1878) 9 Ch D 231, 235; Greenough v Martin (1824) 2 Add 239.) After all, it is the first duty of the Court to ascertain what a testator meant by his or her words, expressly or implicitly, and to give effect as far as possible to that intention.( Smidmore v Smidmore [1905] HCA 58; (1905) 3 CLR 344, 354; Nicol v Chant [1909] HCA 4; (1909) 7 CLR 569, 577. )
• The “will of a testator” is the aggregate of his or her testamentary intentions as expressed in valid wills and codicils.( See further Jenkins v Stewart [1906] HCA 35; (1906) 3 CLR 799, 805-806; Re Jackson (decd) [1950] SASR 268, 271. ) In short, prima facie, if a testator ratifies and confirms a last will he or she “ratifies and confirms it with every codicil that has been added to it.”( Green v Tribe (1878) 9 Ch D 231, 235 )
• Freedom of testation and the ambulatory nature of will allow a testator to revoke a testamentary document, including a codicil, and restore a will to be unaffected by that codicil.( Green v Tribe (1878) 9 Ch D 231, 234 )
• Implied revocation may arise where a later testamentary document does not contain an express revocation clause.
• It is a question of construction as to whether a later document impliedly revokes an earlier document, for example by containing clauses inconsistent with the earlier document.
• A central issue is one of construing the testator’s intention, and oral and extrinsic evidence is admissible for this purpose.( In the Estate of Gall [2008] SASC 349; Payten v Perpetual Trustee Co Ltd [2005] NSWSC 345, [100] (Austin J) citing In the Estate of Brian [1974] 2 NSWLR 231 and Re Fairhurst[1976] 1 NZLR 51 )
• Absent a contrary intention, a codicil confirming a will republishes the will, bringing it to the date of the codicil including the alterations or additions made.( Re Champion, Dudley v Champion [1893] 1 Ch 101; Re Fraser, Lowther v Fraser [1904] 1 Ch 726 ) As put by Fry J in Green v Tribe “ratification of a will described by its date is a ratification of the will as modified by the codicils, and therefore does not revoke the codicils which were made between the date of the will and the confirming codicil.”( Green v Tribe (1878) 9 Ch D 231, 235 )
• An intention to revoke must be clear and unequivocal.( Smith v Cunningham (1823) 1 Add 448, as cited in Green v Tribe (1878) 9 Ch D 231 )
• A reference in a codicil to a will of a particular date being that to be confirmed will not on its own be sufficient to restrict the confirmation to that document, if other words and surrounding circumstances convey an intention to revoke with reasonable certainty, an intermediate codicil will be treated as revoked.( Upfill v Marshall (1843) 3 Curt 636; McLeod v McNab [1891] AC 471 )

R v Rondo

[2001] NSWCCA 540

Unlawful stopping of vehicle and appellant – subsequent search – admissibility of admissions made to police and not tape recorded – application for detention warrant not complying with Act – invalidity of detention warrant Object and history of Part 10A of Crimes Act (detention warrants) – balancing of conflicting interests of police investigations and rights of citizens – importance of contents of application, prescribed form of application requires amendment to elicit information required by Act – grounds specified for issue of search warrant insufficient – invalid search warrant — admissibility of evidence obtained – cumulative effect of unlawful acts resulting in evidence being inadmissible – exercise of discretion under s.138 of Evidence Act flawed.

Date Heard: 26 June 2001

Decision Date: 24 December 2001

Judgment: Spigelman CJ, Simpson J, Smart AJ

49 The initial question was whether at the time Cons Gautier and Cons Barnes stopped the appellant either reasonably suspected the appellant of having or conveying any thing stolen or otherwise unlawfully obtained or any thing used or intended to be used in the commission of an indictable offence or either reasonably suspected that in the vehicle being driven by the appellant there was anything stolen or otherwise unlawfully obtained or anything used or intended to be used in the commission of an indictable offence.

50 The judge did not canvass the legality of the police, particularly Cons Barnes, requiring the appellant to stop his vehicle. This was the primary focus of the appellant. If there was no lawful stopping of the appellant and his Supra it was submitted that the subsequent search was illegal. The subsequent search could not have taken place but for the stopping.

56 Where a vehicle has been unlawfully stopped it becomes a matter for the Court’s consideration whether evidence obtained as a consequence revealing a criminal offence should be admitted: see s.138of the Evidence Act 1995. Much will depend on the offence alleged and its relative seriousness as well as all the other circumstances.

58 As appears from the passage quoted from his reasons, the judge took the view that the appellant’s alleged actions, after the Supra had stopped and the police had stopped behind it, in reaching across to the passenger’s side of the Supra and appearing to place something in its glovebox might reasonably raise a suspicion within s.357E to enter the mind of the police officer and that he honestly did so. The judge recognized that this was a borderline case. Placing an item in a glovebox at any stage is a very routine matter. Mostly it would be an innocent everyday act not calling for comment. A glovebox is also a place in which stolen or illicit items can be put as numerous cases in the courts have revealed. The Crown relied on the time at which the item appeared to be placed in the glovebox, that is just after the vehicles had stopped and Cons Barnes was leaving the police vehicle to go to the appellant in the Supra. My mind has fluctuated as to whether the appellant’s alleged actions were sufficient to ground the reasonable suspicion alleged. Not without doubt I have concluded that it was open to the judge to find that they were. Both the amount of money found, namely, $860 and the quantity of cannabis leaf found, namely 9.4 grams were small.

Gypsy Fire v Truth Newspapers Pty Ltd

(1987) 9 NSWLR 382

Practice – Stay of proceedings – Concurrent civil and criminal proceedings – Defamation and criminal defamation – Grounds for stay – Potential miscarriage of justice in criminal prosecution – When application to be made.

Date Heard: 29 May 1987

Date Delivered: 23 June 1987

Judgment: Hunt J

386 Where a party to civil litigation has been charged with a criminal offence arising out of the same subject matter, the civil litigation may be stayed until the conclusion of the criminal prosecution if there is a real danger that that party will be prejudiced in his defence to the prosecution by the continuation of the civil litigation. Such a stay of the civil litigation is necessarily a matter of discretion, and not of right. The court must balance the prejudice claimed by the defendant to be created by the continuation of the litigation against the interference which would be caused to the plaintiff’s right (discussed in Rochfort v John Fairfax & Sons Ltd (at 19-20)) to have his claim heard without delay in the ordinary course of the court’s business.

…

What has been made clear in all of these cases (except perhaps Rowell v Larter ) is that the defendant who seeks the stay must show that there is a real – and not merely a notional – danger that the continuation of the civil litigation could lead to a potential miscarriage of justice in the criminal proceedings. The burden lies on the defendant to show that that potential outweighs the plaintiff’s ordinary right to have his claim heard without delay. Three matters of prejudice have been envisaged in the cases: the premature disclosure of the defendant’s case in the criminal prosecution; the possibility of interference with the defendant’s witness prior to the trial of that prosecution; and the effect of publicity given to the civil litigation upon jurors in the criminal trial.

Held, that if a defendant in civil defamation litigation had been charged with a criminal offence arising out of the same subject matter, or if there was a real prospect that he would be so charged, it was open to him to seek a stay of the civil litigation until the conclusion of the prosecution if he was able to show that his obligation in the civil litigation to disclose his case in answer to the criminal charge might lead to a potential miscarriage of justice in the prosecution. Such an application must be made before his case had been disclosed in the civil litigation.