Easterday v The State of Western Australia

[2005] WASCA 202

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT :   COURT OF CRIMINAL APPEAL

CITATION:   EASTERDAY -v- THE STATE OF WESTERN AUSTRALIA [2005] WASCA 202

CORAM:   STEYTLER J

WHEELER J
ROBERTS-SMITH J

HEARD:   13 SEPTEMBER 2005

DELIVERED          :   28 OCTOBER 2005

FILE NO/S:   CCA 111 of 1999

BETWEEN:   CLARK ERVIN EASTERDAY

Applicant

AND

THE STATE OF WESTERN AUSTRALIA
Respondent

AND

NORILYA MINERALS PTY LTD
Interested Party

FILE NO/S              :CCA 112 of 1999

BETWEEN             :DEAN EDWARD IRELAND

Applicant

AND

THE STATE OF WESTERN AUSTRALIA
Respondent

AND

NORILYA MINERALS PTY LTD
Interested Party

FILE NO/S              :CCA 113 of 1999

BETWEEN             :LEONARD LANCELOT IRELAND

Applicant

AND

THE STATE OF WESTERN AUSTRALIA
Respondent

AND

NORILYA MINERALS PTY LTD
Interested Party

Catchwords:

Application for orders for repayment of money paid under restitution order - Whether orders for repayment should be stayed pending determination of parallel civil proceedings - Whether simple interest or compound interest should be paid

Legislation:

Criminal Code (WA), s 697, s 717

Rules of the Supreme Court 1971 (WA), O 14 r 3
Sentencing Act 1995 (WA), s 140(1)

Supreme Court Act 1935 (WA), s 32

Result:

Norilya to repay money received from applicants under restitution order
Application for stay dismissed
Question of interest adjourned sine die for later determination

Category:    B

Representation:

CCA 111 of 1999

Counsel:

Applicant:     Mr N J Mullany & Mr M Ryan

Respondent:     Mr N R Barber

Interested Party             :     Mr J Gilmour QC & Ms E L Blewett

Solicitors:

Applicant:     Bostock & Ryan

Respondent:     State Director of Public Prosecutions

Interested Party             :     Deacons

CCA 112 of 1999

Counsel:

Applicant:     Mr N J Mullany & Mr M Ryan

Respondent:     Mr N R Barber

Interested Party             :     Mr J Gilmour QC & Ms E L Blewett

Solicitors:

Applicant:     Bostock & Ryan

Respondent:     State Director of Public Prosecutions

Interested Party             :     Deacons

CCA 113 of 1999

Counsel:

Applicant:     Mr N J Mullany & Mr M Ryan

Respondent:     Mr N R Barber

Interested Party             :     Mr J Gilmour QC & Ms E L Blewett

Solicitors:

Applicant:     Bostock & Ryan

Respondent:     State Director of Public Prosecutions

Interested Party             :     Deacons

Case(s) referred to in judgment(s):

Bank of America Canada v Mutual Trust Co [2002] 2 SCR 601; (2002) 211 DLR (4th) 385

BHP Steel (JLA) Pty Ltd v Khan [No 2] [2001] NSWCA 269

Caldwell v Hill [2000] NSWCA 239

Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220

Commonwealth of Australia v McCormack (1984) 155 CLR 273

Commonwealth of Australia v SCI Operations Pty Ltd (1998) 192 CLR 285

Easterday v The State of Western Australia [2005] WASCA 105

Heydon v NRMA Ltd (No 2) (2001) 53 NSWLR 600

Idemitsu Queensland Pty Ltd v Agipcoal Australia Pty Ltd [1996] 1 Qd R 26

Meerkin & Apel v Rossett Pty Ltd (No 2) [1999] 2 VR 31

National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386

Production Spray Painting & Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659

R v Easterday (2003) 143 A Crim R 154

TCN Channel Nine Pty Ltd v Antoniadis [No 2] (1999) 48 NSWLR 381

Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669

Case(s) also cited:

Andjelic v Marsland (1996) 186 CLR 20

Central Electricity Board of Mauritius v Bata Shoe Co (Mauritius) Ltd [1983] 1 AC 105

Cullen v Trapper (1980) 146 CLR 1

Elspan International Ltd v Eurocopter International Pacific Ltd [1999] NSWSC 555

Hanave Pty Ltd v LFOT Pty Ltd [2003] FCA 1154

Hungerfords v Walker (1990) 171 CLR 125

JEL v DDF (No 2) (2001) 28 Fam LR 119

Kuwait Oil Tanker Co SAK v Al Bader [2000] 2 All ER (Comm) 271

London Chatham & Dover Railway Co v South Eastern Railway Co [1893] AC 429

National Australia Bank Ltd v Budget Stationery Supplies Pty Ltd (1997) 217 ALR 365

Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1998] 1 All ER 305

Roads and Traffic Authority v Ryan [2002] NSWCA 128

Rodger v Comptoir D'Escompte de Paris (1869) LR 2 PC 393

Ronstan International Pty Ltd v Thomson [2002] VSCA 107

SCI Operations Pty Ltd v Commonwealth of Australia (1996) 69 FCR 346

State Bank of New South Wales Ltd v Federal Commissioner of Taxation (1995) 62 FCR 371

Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520

White v Tomasel [2004] 2 Qd R 438

1. STEYTLER J:  By a judgment given in Easterday v The State of Western Australia [2005] WASCA 105 ("previous judgment") this Court declared that restitution orders made on 30 July 1993 against the applicants and others were null and void, that the Court has power to order repayment, with interest, to the applicants of what was paid by them pursuant to those restitution orders and that the power is discretionary, to the extent provided for by s 697 of the Criminal Code (WA). The applicants have now applied for orders against Norilya Minerals Pty Ltd ("Norilya"), the original beneficiary of the restitution orders made on 30 July 1993, for repayment of what was paid by them, with compound interest. They have also sought an order that a civil judgment entered against them in favour of Norilya be set aside.

2. In order to place the applications in context, and to understand Norilya's contentions in respect of them, it is necessary to restate some of the background which appears in the previous judgment.

3. In 1990 Norilya commenced civil proceedings against the applicants.  It alleged that, by a deed dated 1 June 1990 ("the first deed"), a company, Acarus Pty Ltd ("Acarus"), acquired from the applicants an option ("the Acarus option") to purchase mining tenements then held by the applicants for a sum of $6,000,000 and that, by a second deed dated 8 June 1990 made between Norilya and Acarus ("the second deed"), Acarus granted to Norilya an option ("the Norilya option") to purchase a 30 per cent interest in the tenements for $6,000,000.  Norilya claimed that various fraudulent misrepresentations were made by the applicants which were intended to induce it, and did induce it, to enter into the second deed and then to exercise, on 9 July 1990, the Acarus option on behalf of Acarus and the Norilya option on its own behalf.  It pleaded that, in satisfaction of its obligations to Acarus under the second deed, and of those owed by Acarus to the applicants under the first deed, on 9 July 1990 it paid the sum of $6,000,000 and interest of $13,808.21 to the applicants.  It contended that the interest in the tenements so acquired by it was worthless and that, as a result, it had suffered damage in the sum of $6,013,808.21 and consequential loss.

4. Norilya was successful in obtaining from the Court orders (referred to by the parties in these proceedings as "the Mareva orders") securing, in the hands of the applicants, assets comprising, or obtained as a result of, the moneys paid by Norilya to the applicants.

5. After the commencement of the civil proceedings and the obtaining of the Mareva orders, each of the applicants was convicted, in 1993, of one count of conspiracy to defraud and of 10 counts of false pretences arising out of their conduct in respect of the sale of the mining tenements.  On 30 July 1993 the applicants and others associated with them (whose applications for return of what was paid by them have yet to be dealt with) were ordered to make restitution of what had been obtained by them as a result of the applicants' commission of the offences of which they had been convicted.

6. Following upon the convictions, Norilya amended its statement of claim in the civil proceedings in order to plead the fact of the convictions and, in August 1993, applied for summary judgment under the provisions of O 14 r 3 of the Rules of the Supreme Court 1971 (WA). It did so upon the basis that the issues in the criminal proceedings were identical to those in the civil action. The Court accepted Norilya's contentions and, by order dated 18 August 1994, entered judgment against the applicants in favour of Norilya for damages to be assessed. However, the action was never proceeded with, and Norilya's damages were never assessed, because of its receipt, in 1994, of money pursuant to the restitution orders. However, the civil judgment stands as, indeed, do the Mareva orders which preceded it.

7. The applicants appealed against their convictions. They were unsuccessful. Some years later, they lodged a petition for the exercise of the Royal Prerogative of Mercy. That petition was referred to the Court of Criminal Appeal pursuant to s 140(1) of the Sentencing Act 1995 (WA) and, on 28 March 2003, that Court quashed the convictions of each of the applicants: R v Easterday (2003) 143 A Crim R 154. That, in turn, led to the proceedings for the declarations to which I have earlier referred and, now, to the applications for orders for the repayment of what was paid pursuant to the restitution orders and for the payment of compound interest on the amounts to be repaid: see Idemitsu Queensland Pty Ltd v Agipcoal Australia Pty Ltd [1996] 1 Qd R 26 at 31 ‑ 32, 46 ‑ 47 and 52; Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669; Commonwealth of Australia v SCI Operations Pty Ltd (1998) 192 CLR 285 at 316 [74] and 328 (fn 165); Meerkin & Apel v Rossett Pty Ltd (No 2) [1999] 2 VR 31; Bank of America Canada v Mutual Trust Co [2002] 2 SCR 601; (2002) 211 DLR (4th) 385 and The Law Commission, Report of Pre‑Judgment Interests on Debts and Damages, (Com No 287 (London, HMSO, 24 February 2004) at [1.9] - [1.18], [4.2] - [4.33], [5.2] - [5.40], [6.18] - [6.24] and [6.35]).

8. Norilya acknowledges the applicants' entitlement to repayment of what was paid by them pursuant to the restitution orders, together with interest.  However, it contends that the applicants are entitled to simple interest only, and not to compound interest, and that the execution of the orders for repayment should be stayed pending determination of its claims in the civil proceedings.  It also contends that the question of the type and rate of interest to be paid should be stood over for later determination, once the outcome of the civil action is known.

9. I will deal, first, with the question whether or not there should be a stay of execution and then with the issue of interest.

Should There Be a Stay?

1. I mentioned, in the previous judgment (at [30]), that the making of a restitution order under the former s 717 of the Code (being the section which was relied upon in making the restitution orders against the applicants) is, for any practical purpose, very similar to an award of judgment in civil proceedings in which the judgment relies upon the fact of conviction.  I also mentioned (at [31]) that there is a good deal of authority in civil jurisdictions establishing that, once a judgment is set aside on appeal, the successful appellant is entitled, in principle, to recover all moneys paid under the judgment that has been set aside:  Commonwealth of Australia v McCormack (1984) 155 CLR 273; National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 591 ‑ 592, per Brooking J; TCN Channel Nine Pty Ltd v Antoniadis [No 2] (1999) 48 NSWLR 381 at 382, per Handley, Beazley and Stein JJA; Meerkin at 32, per Callaway JA (with whom Charles and Batt JJA were in agreement); and Heydon v NRMA Ltd (No 2) (2001) 53 NSWLR 600 at 603, per Mason P (with whom Beazley JA and Ipp AJA were in agreement) and see also Mason and Carter: Restitution Law in Australia (1995) at [706]. I also referred, in the previous judgment, to a number of authorities which support the proposition that, in the civil jurisdiction, restitution follows as of course. I said, in that regard, at [38], that:

   "Restitution, in this context, is sometimes described as 'the right' of the successful appellant (see Lord Field in Cox v Hakes at 547, McCormack at 276, Rimanic [v Business Licensing Authority (2002) 129 A Crim R 356] at 361 [14] and Mason and Carter at [706]) or as his or her entitlement: see Rimanic at 360 [10] and Production Spray Painting [& Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659] at 663 (where the Court said at 662 that, in a case of the kind there under consideration an order for restitution followed 'as of course' from the quashing of the orders made at first instance). In Haig v The Minister Administering the National Parks and Wildlife Act 1974 (No 3) (1996) 90 LGERA 408, Handley JA (with whom Priestley and Clarke JJA agreed) spoke of the successful appellant in a case such as that (a successful cross‑appeal against the amount of compensation assessed by the Land and Environment Court and paid by the cross-appellant) as being 'entitled as of right' to restitution of any amounts overpaid pursuant to the judgment reversed. The unsuccessful party had submitted arguments on discretionary grounds why a refund should not be ordered, but the Court held that it had 'no general discretion to exercise in a case such as this'. In BHP Steel (JLA) Pty Ltd v Khan (No 2) [2001] NSWCA 269 at [5] Giles and Hodgson JJA said that a successful appellant 'is entitled to recover all monies paid under the judgment that has been set aside' and that the 'entitlement is as of right, not as a matter of discretion'. Similarly in Krishna v Loustos (No 2) [2001] NSWCA 99 at [4] Spigelman CJ, Mason P and Handley JA said that the claimant was 'entitled to restitution as of right following the reversal of the judgments against him'."

2. Norilya acknowledges the force of what was said in these cases. However, it points to the fact that, in this case, the Court's power to order repayment of what was paid pursuant to the restitution orders arises out of the former provisions of s 697 of the Code (as to which see [10], [34] and [35] of the previous judgment), which is to the effect that the powers so conferred may be exercised if the Court should "think it necessary or expedient in the interests of justice".  Its counsel submits that, in this case, while it may be necessary or expedient in the interests of justice to order the repayment of what was paid by the applicants to Norilya, those interests also demand that there should be a stay of that order.  That is said to be so because, even if the judgment in the civil proceedings is set aside (as Norilya concedes it should be), the action will remain on foot.  Counsel for Norilya submits that, if the Court should stay execution of each order for repayment, the parties will, in effect, be restored to the position which existed prior to the applicants' convictions and the consequential making of the restitution orders by the District Court.  At that time the civil action had been entered for trial and, although the purchase price of the mining tenements had been paid to the applicants, the Mareva orders preserved that money pending the outcome of the action.

3. I am not persuaded that any basis has been made out for a stay.

4. I do not accept that the effect of a stay would be that of restoring the parties to the position in which they were prior to the making of the restitution orders by the District Court.  The purchase price was then in the hands of the applicants and not in those of Norilya.  While it is true that the Mareva orders largely preserved that money pending resolution of the civil action, there is plainly a distinction of some significance between a situation in which the applicants have the money, albeit subject to restrictions, and one in which the money is in the hands of Norilya, over which the applicants have no control.  Moreover, as counsel for Norilya acknowledged, if the money was to be returned to the applicants subject to the Mareva orders (I should mention that counsel for the applicants has foreshadowed an application to set aside those orders) the applicants would nonetheless be given access to the moneys for the purposes of funding their defence of the civil proceedings.

5. In the previous judgment I mentioned (at [41]) that in the civil jurisdiction the proposition that restitution follows as of course from the quashing of orders made at first instance has been applied in cases in which a restitutionary order has been opposed upon the basis of a claimed entitlement, under the civil law, to the money in question.  I gave, as an example, the case of Production Spray Painting & Panel Beating Pty Ltd v Newnham [No 2] (1992) 27 NSWLR 659, in which the opponents resisted the application for restitution on grounds which included asserted counterclaims for fraud or deceptive conduct. The opponents also advanced an alternative submission that the Court should mould the relief to be granted to the claimants to preserve the sum and interest claimed by them as a fund, so that it would be available to meet any judgment that the opponents might eventually obtain against the claimants in the foreshadowed proceedings. Handley JA (with whom Mahoney and Priestly JJA were in agreement) said of that submission (at 663) that:

   "The orders sought would either convert the opponents into secured creditors of the claimants, or else would tie up the fund in some other way.  On either basis the claimants would continue to be disadvantaged as a result of the orders … quashed by this Court, and they would not have been 'restored to all things' which they had lost as a result of those orders.  The claimants are entitled to an unconditional order for the repayment of the sum paid … and interest thereon."

6. Similarly, in Antoniadis [No 2] the Court (Handley, Beazley and Stein JJA) was called upon to deal with an application for a stay brought simply upon the basis that it would enable the opponent in that case to retain the funds received by her pursuant to the judgment which had been set aside while she attempted to acquire a new right to them at a further trial.  The Court said (at 384 ‑ 385) that there was no support for such an approach in the decisions and that the Court "must give effect to the claimant's right to be repaid its money".

7. It seems to me that in this case, too, the effect of a stay would be that the applicants would not be restored to all that was lost by them as a consequence of the erroneous judgment (see Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220 at 225; McCormack at 276; and Production Spray Painting at 661). Instead, Norilya would be allowed to benefit from the judgment by retaining money which it would not otherwise have held and to which it has yet to establish any entitlement (as to which see Production Spray Painting at 663; Antoniadis [No 2] at 384; Caldwell v Hill [2000] NSWCA 239 at [56] and BHP Steel (JLA) Pty Ltd v Khan [No 2] [2001] NSWCA 269 at [7]). The position would, in reality, be no different than if the Court had declined to make orders for restitution pending the outcome of the civil action. That being so, and given the potential prejudice which that course might work upon the applicants (as a consequence, at least, of what would then be their inability to resort to any funds, which might otherwise have been repaid by Norilya, for the purpose of funding their defence of the civil action), and given also that no other basis has been put forward to support the imposition of a stay, it seems to me that it would be inappropriate to order a stay and I would decline to do so.

The Issue of Interest

1. I have said that Norilya takes no issue with the proposition that the Court is empowered to award interest on the moneys to be repaid to the applicants but contends that compound interest should not be awarded. This contention is based upon two propositions. The first is that there is no power in this Court to award compound interest having regard, in particular, for the provisions of s 32(2) of the Supreme Court Act 1935 (WA), which provides that s 32 of that Act does not authorise "the giving of interest upon interest" (counsel for Norilya relied, also, upon what was said by the majority in Westdeutsche Landesbank and by Callaway JA (with whom Charles and Batt JJA were in agreement) in Meerkin, at 36 [12] and [13]). The second is that, even if the Court has that power, it should not exercise it in this case, as a matter of discretion.

1. As I have mentioned, Norilya also makes the submission that the question of the measure of the interest to be awarded should be deferred pending the outcome of the civil proceedings.  This was said by its counsel to be the most desirable course because an award of interest, now, would result in what he described as "an inevitable tension" between this Court's orders and those which might subsequently be made in the civil proceedings.  He submitted that an award, by this Court, of interest in favour of the applicants from 1994 onwards might exceed Norilya's entitlement to interest on a judgment or judgments obtained in the civil proceedings, if it should prove to be successful, leading to an injustice.

2. It seems, from the limited information presently available to the Court, that the question may prove to be academic.  In the course of an earlier interlocutory application brought by the applicants in these proceedings, they relied upon an affidavit sworn on 13 August 2004 by Mr Richard Bosward, a certified practising accountant.  In a report which was attached to his affidavit, Mr Bosward concluded, on the strength of documentary evidence to which he referred, that almost all of the money paid by the applicants to Norilya pursuant to the restitution orders was paid by Norilya to a related company, Noranda Group Pty Ltd (which has since been deregistered), in repayment of a loan which had been made by Noranda Group Pty Ltd to Norilya.  The evidence upon which he relied led him to conclude, also, that at the time of repayment of the loan Norilya had never had a separate bank account and all of its operating costs had been paid by an unidentified associated company.  We were told by counsel for Norilya that Norilya presently has no assets from which it could hope to satisfy the repayment orders, let alone interest.  Indeed, he said (although he was unsupported by any evidence in this respect) that he was instructed to inform the Court that, apart from the choses in action which it has arising out of the civil proceedings against the applicants, Norilya has no assets at all.

3. Given what presently seems to be the likelihood that the issue of interest will prove to be academic (although I accept that the position in that regard may alter once more evidence is available) and given, also, the prospect that an award of interest, now, might lead to difficulty later, if Norilya should succeed in the civil action (although I am not yet persuaded that any such difficulty would prove to be insuperable), it seems to me to be sensible to defer a decision on that issue pending the outcome of the civil proceedings.  However, I would give the applicants liberty to apply in that regard, in case it should turn out, once the position becomes clearer, that they face any real prejudice as a consequence of the deferral. 

Orders Which Should Be Made

1. It follows from what I have said that Norilya should be ordered to repay to each of the applicants the amount received by it from that applicant pursuant to the making of the restitution orders and that the application for a stay should be dismissed.  There is no issue as regards the amounts to be repaid, being, in the case of Clark Ervin Easterday, the applicant in CCA 111 of 1999, the sum of $1,866,818.62, in the case of Dean Edward Ireland, the applicant in CCA 112 of 1999, the sum of $1,898,703.33, and in the case of Leonard Lancelot Ireland, the applicant in CCA 113 of 1999, the sum of $197,033.09.  It also follows that the question of what interest should be paid on those sums should be adjourned, sine die, for later determination (if that becomes necessary), with liberty to the applicants to apply in that regard.  While both parties accept that the judgment in the civil proceedings should be set aside, it seems to me that that is something which ought be done by a civil court and not by the Court of Criminal Appeal.  I would consequently make no order in that respect.

2. I would leave it to the parties to bring in a minute of formal orders designed to give effect to these conclusions.

3. WHEELER J:  I have had the advantage of reading in draft the reasons for decision of Steytler J.  I agree with those reasons and have nothing to add.

4. ROBERTS-SMITH J:  I agree with the reasons for judgment prepared by Steytler P and have nothing to add.