LSB September 2022 LR

CIVIL LITIGATION
2. The burden is upon the applicant for
the stay to show that the plaintiff ’s right
to an expeditious hearing should be
deferred because of potential injustice
to the defendant in criminal proceedings
3. As an alternative to granting a stay,
the court may give directions
designed to ensure that the
hearing of the civil proceedings
occurs after the determination of
the criminal proceedings 5 , or make
other orders to limit prejudicial impact
of civil steps, which might include
proceeding to a certain point, or
deferring some aspect of proceedings.
Whilst the McMahon factors are still
used as guidelines in stay decisions, the
case has at various times been criticised
and distinguished over the years, although
it has not yet been expressly overruled 6 .
However, authorities applying (or perhaps
misapplying) two recent cases in the High
Court have thrown serious doubt on the
ongoing applicability of the case.
Courts have questioned the implication
in McMahon v Gould that all of the factors
mentioned would be put into the balance
to determine the outcome is flawed, and
that one factor, in favour of the principle
that privilege of the defendant against
self incrimination must outweigh all the
others. This is based on the proposition
that the privilege against self-incrimination
is a cardinal principle, and should not just be
thrown into the balance along with a range
of other factors 7 .
The High Court case of Commissioner
of the AFP v Zhou and Jin 8 has influenced
this trend. Zhou was a criminal accused
charged with people trafficking. At
the same time as the criminal charges
proceeded, the AFP commenced civil
proceedings under Proceeds of Crime Act
2002 (Cth). In staying the civil penalty
proceedings, the court noted that if
the proceedings were not stayed, the
prosecution would be informed, in advance
of the respondent’s criminal trial, of his
defence because he could not realistically
defend the forfeiture proceedings without
telegraphing his likely defence. In a similar
case, involving concurrent criminal and
asset forfeiture proceedings by the Crown 9 ,
the NSW Court of Appeal noted that the
in prosecuting both cases at the same time
the Crown would be advantaged in a way
that would fundamentally alters its position
vis-à-vis the accused and therefore render
the trial of the criminal proceedings unfair,
a decision that was affirmed by the High
Court.
Whilst the High Court in Lee expressly
declined to comment on the applicability
of McMahon v Gould on other cases, this line
of reasoning has influenced subsequent
cases, having the effect of elevating the
protection against the privilege of selfincrimination
to a determining factor in the
balancing, process, rather than considering
it as one (albeit very important) factor to
be considered.
Without in any way questioning the
importance of protecting the interests
of accused persons, our contention is
that using Zhou and Lee to significantly
elevate the bar for plaintiffs to avoid a
long stay of proceedings, fails to recognise
the unique context of the cases, in that
the prosecuting authority was the same in
both the civil recovery and the criminal
cases. In both cases the court determined
that flagging or foreshadowing possible
defence to the criminal proceedings in the
civil process which was prosecuted by the same
authority as the criminal case was basis enough
to warrant a stay.
Clearly this is a different situation to
that of a citizen plaintiff (whether an
individual or corporation) taking action in
a civil case, with no involvement (perhaps
other than as an informant or witness)
in potential criminal proceedings. In
McLachlan v Browne the Court considered
that the weight given to the to the privilege
against self-incrimination must be paramount
in any balancing of the McMahon factors,
emphasising the primary importance of
the liberty of accused persons. The Judge
also stated that the applicant could not be
asked to justify the nature and extent of
the prejudice because this would infringe
on the very right sought to be protected by
the application for stay (25).
In Adelaide Brighton Cement Ltd
v Burgess 10 the Plaintiff took action (cause
of action) in relation to $12 m defrauded
by the Defendant employee. The employee
had not yet been charged for the theft. The
privilege against self incrimination applies
though not just when criminal charges
are laid, but where it there is a reasonable
possibility that charges might be laid.
In considering an application for stay
of the civil proceedings by the Defendant,
Judge Dart considered that the law had
evolved since McMahon v Gould, and
emphasised the fundamental importance
of the privilege against self-incrimination:
“In my opinion, it is not appropriate to read
the more recent authorities in a narrow way.
What the High Court has made clear is that
the privilege against self-incrimination is a
“cardinal principle” laying at the heart of the
administration of criminal law. To accede to
the plaintiff’s submission would be to relegate
that “cardinal principle” to simply one of a
basket of issues to be considered in the balance
when determining whether or not to stay a
matter.” In considering the prejudice to the
plaintiff His Honour described the delay in
finalisation of the civil matter as relevant, but
“not a significant prejudice”.
An illustration of the readiness to
grant a stay perhaps going too far was
a matter where winding up proceedings
against a company were stayed on the basis
of an assertion by directors that they could
provide evidence that the company was
solvent, but in doing so might incriminate
themselves of an offence, leading to the
Court staying the winding up application. 11
This situation can be contrasted with
that in the United Kingdom. Whilst the
foundational principles that require a
balancing of interests with due attention to
the significant risk to the accused are the
same, the weight given to the factors differs.
In FM Conway v Sugget 12 , the Court
determined that being required to disclose
a civil defence that may foreshadow the
criminal defence was not a basis for a stay,
and that in seeking a stay the criminal
defendant would have to explain in the
civil process how they may be prejudiced.
The decision whether to file a defence and
engage in further documentary exchange
etc in the civil case was a strategic decision
for the Defendant. If the Defendant
chose not to file a defence, adverse
inferences could be drawn by the Court,
and by inference any negative effect on the
defendant’s civil case was a consequence
of that choice.
In Barrowfen Properties v Patel and Ors 13
the Court affirmed that the availability of
the right to silence in criminal proceedings,
September 2022 THE BULLETIN 29