State of Victoria v 5 Boroughs NY Pty Ltd
[2023] VSCA 101
•2 May 2023
| SUPREME COURT OF VICTORIA COURT OF APPEAL | |
| S EAPCI 2023 0024 | |
| STATE OF VICTORIA | Applicant |
| v | |
| 5 BOROUGHS NY PTY LTD (ACN 632 508 304) | Respondent |
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| JUDGES: | BEACH, T FORREST and HARGRAVE JJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 20 April 2023 |
| DATE OF JUDGMENT: | 2 May 2023 |
| MEDIUM NEUTRAL CITATION: | [2023] VSCA 101 |
| JUDGMENT APPEALED FROM: | [2023] VSC 22 (John Dixon J) |
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PRACTICE AND PROCEDURE – Application to stay group proceeding pending determination of criminal proceedings – Substantial overlap between issues in civil and criminal proceedings – Primary judge refused stay application – Application for leave to appeal – Procedural steps capable of being taken which would not prejudice defence of criminal proceedings – Prejudice to plaintiff and group members if civil proceeding stayed – Where protective orders and case management available to ameliorate risk of prejudice – No error in judge’s orders – Application for leave to appeal refused.
Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; Construction, Forestry, Mining and Energy Union v Australian Competition and Consumer Commission (2016) 242 FCR 153; House v The King (1936) 55 CLR 499; Impiombato v BHP Group Ltd (2020) 143 ACSR 301; Reid v Howard (1995) 184 CLR 1; X7 v Australian Crime Commission (2013) 248 CLR 92; Zhao v Commissioner of the Australian Federal Police (2014) 43 VR 187 referred to.
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| Counsel | ||
| Applicant: | Dr DJ Neal SC with Mr MA McLay | |
| Respondent: | Mr MI Borsky KC with Mr HC Whitwell | |
| Solicitors | ||
| Applicant: | Minter Ellison | |
| Respondent: | Quinn Emanuel Urquhart & Sullivan | |
BEACH JA
T FORREST JA
HARGRAVE JA:
On 21 August 2020, the plaintiff (5 Boroughs NY Pty Ltd) commenced a group proceeding (class action) against five defendants. In the proceeding, the plaintiff claims, on its own behalf and on behalf of a group of Victorian businesses, damages. The damages claimed relate to economic loss allegedly suffered by the plaintiff and group members as a result of the spread of COVID-19 from two quarantine hotels (Rydges and Stamford Plaza). The first defendant is the State of Victoria. The second to fifth defendants are individuals (collectively, ‘the individual defendants’) who formerly held the positions of Minister for Health, Minister for Jobs, Secretary of the Department of Health and Human Services and Secretary of the Department of Jobs, Precincts and Regions.
The plaintiff claims that the individual defendants breached duties of care owed by them in the implementation of infection prevention controls at the Rydges and Stamford Plaza quarantine hotels, resulting in the spread of COVID-19 into the community, and the enforcement of consequential lockdowns, which caused economic loss to be suffered by the plaintiff and group members. The plaintiff does not allege that the first defendant was negligent. It alleges that, pursuant to s 23(1)(b) of the Crown Proceedings Act 1958, the first defendant is vicariously liable for the negligence of the individual defendants.
On 29 September 2021, the Victorian WorkCover authority filed 58 criminal charges against the Crown in right of the State of Victoria (Department of Health). The charges allege contraventions of ss 21(1) and 23(1) of the Occupational Health and Safety Act 2004 arising out of the operation of the hotel quarantine program between March and June 2020. They allege a failure to take reasonably practicable steps in relation to the implementation of infection prevention and control measures at 17 quarantine hotels. Four charges relate to Rydges, five relate to the Stamford Plaza, and the remaining 49 charges relate to hotels that are not the subject of the plaintiff’s proceeding.
On 16 September 2022, the first defendant filed a summons in the plaintiff’s proceeding. The summons required the plaintiff and the individual defendants to attend before the Court on the hearing of an application by ‘the First Defendant (Crown in the Right of the State of Victoria (Department of Health)’ for the following orders:
1.That the proceeding be stayed until the criminal charges against the Crown in the Right of the State of Victoria (Department of Health), currently the subject of Magistrates’ Court proceeding number M12097325, are finally determined, withdrawn or discontinued, including any appeals.
2. Liberty to apply.
3. Such further or other order as the Court deems appropriate.
The basis of the first defendant’s application was encapsulated in the following written submission[1] it made to the judge:
The stay is sought to allow the Crown in the Right of the State of Victoria (Department of Health) (the Department) — the named accused in the criminal case[2] — to have the opportunity for a fair trial in the criminal case. The State — and by extension its employees — are entitled to a fair trial of the criminal charges brought against it. The issues in the class action almost completely overlap the issues charged in the criminal case. Were the class action to precede the criminal case, it could only serve to assist the prosecution. As the High Court in Zhao[3] made clear, the prejudice from a civil trial of the same issues is obvious and it breaches the fundamental principle that the prosecution must prove its case and that it cannot compel an accused to assist it.[4]
[1]As typed in the written submission.
[2]Pursuant to ss 6 and 146 of the Occupational Health and Safety Act.
[3]Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46, 54-5 [18] (‘Zhao (HC)’).
[4]Footnote in original.
In response, the plaintiff accepted that, as matters then stood, the trial of the plaintiff’s proceeding could not be held before the trial of the criminal proceeding. The plaintiff’s position, however, was that the application for a stay of his proceeding was premature. Various interlocutory steps could proceed without giving rise to the requisite risk of prejudice to the State in the criminal proceeding. The plaintiff submitted that those steps could, and should, be taken before any consideration is given to staying his proceeding.
On 12 December 2022, the summons came on for hearing before the judge who is managing the plaintiff’s proceeding (John Dixon J). On 3 February 2023, his Honour delivered reasons refusing the stay application.[5] The judge was not persuaded that the interests of justice dictated that the proceeding should be ‘presently stayed so as to preclude all further interlocutory steps until the resolution of the VWA prosecution’.[6] The judge said he was satisfied that there were interlocutory steps that could be taken ‘in a managed way that will not cause the State to inadvertently assist the prosecution in the discharge of its burden of proof’.[7]
[5]5 Boroughs NY Pty Ltd v State of Victoria (No 3) [2023] VSC 22 (‘Reasons’).
[6]Ibid [56].
[7]Ibid [74].
On 23 February 2023, in accordance with the Reasons, his Honour ordered that the summons be dismissed, and made orders for the filing of a proposed defence by the first defendant, the giving of discovery by the defendants, and the filing of any application by the plaintiff for a group costs order.
The first defendant now seeks leave to appeal against the judge’s orders. In the first of its four proposed grounds of appeal, it contends that the judge’s decision ‘is affected by legal error’. In the balance of its proposed grounds, it contends that his Honour erred by failing to find that further interlocutory steps would prejudice the State’s right to a fair trial of the criminal proceedings; erred in concluding that interlocutory steps could be managed in a way which would not cause prejudice to the State; and, ‘further or in the alternative to ground 1’, erred ‘in assessing the balance of the interests of justice, causing the exercise of the discretion to miscarry’.
The judge’s reasons
In the course of setting out the parties’ submissions,[8] the judge identified ‘the accusatory principle’ and ‘the companion principle’ as follows:
(a)The accusatory principle: the prosecution bears the burden of proving its case beyond reasonable doubt;
(b)The companion principle: absent a clear statutory power to the contrary, a person charged with a crime cannot be compelled to assist in the discharge of the prosecution’s onus of proof.[9]
[8]Ibid [15]-[47].
[9]Ibid [19]. See X7 v Australian Crime Commission (2013) 248 CLR 92, 153 [159] (Kiefel J) (‘X7’); Lee v The Queen (2014) 253 CLR 455, 466-7 [32]-[33] (French CJ, Crennan, Kiefel, Bell and Keane JJ) (‘Lee v The Queen’).
After setting out the various submissions made to him, the judge turned to the principles to be applied. The judge observed that the Court had a wide jurisdiction to stay proceedings in the interests of justice, ‘which is an incident of its general power to control its own proceedings’.[10] The judge noted that the plaintiff accepted that there was a substantial overlap in the issues arising in each proceeding, and that it would not seek a trial of its proceeding prior to the completion of the criminal prosecution.[11]
[10]Reasons, [48].
[11]Ibid [49].
After referring to Zhao, both in the Court of Appeal[12] and the High Court,[13] and the High Court’s decision in Lee v The Queen,[14] the judge said that the issue of whether there is prejudice to an accused that may render a criminal trial unfair was a question of fact which had to be evaluated with care. His Honour said that, in the present case, the immediate question was whether it was unfair ‘to require the State to decide whether to submit to pre-trial disclosure in the group proceeding by disclosing its likely defence of substantially the same issues as are in issue in the VWA prosecution’.[15] His Honour said that such a disclosure may prejudice the State’s defence in the criminal trial by conferring an advantage on the prosecution ‘by reason of such disclosure assisting it in proof of the guilt of the State’.[16] He then said that possession of information by the prosecution might unfairly affect the State’s defence of the criminal charges, even if that information could not be used as evidence against it.[17]
[12]Zhao v Commissioner of the Australian Federal Police (2014) 43 VR 187 (‘Zhao (CA)’).
[13]Zhao (HC) (2015) 255 CLR 46.
[14](2014) 253 CLR 455.
[15]Reasons, [52].
[16]Ibid.
[17]Ibid.
After referring further to Zhao (about which we will say more when dealing with the first defendant’s proposed grounds of appeal), the judge[18] set out the relevant principles as follows:
[18]Borrowing from summaries of the relevant principles compiled by Moshinsky J in Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd (2019) 138 ACSR 42 and Impiombato v BHP Group Ltd (2020) 143 ACSR 301 (‘Impiombato’).
(a)As already noted, courts have the power to control their proceedings and to order a stay in an appropriate case, which is one where the interests of justice require such an order.
(b)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).
(c)It must be apparent that the defendant/applicant (the accused) is at risk of prejudice in defending the criminal trial. The risk of prejudice must be real. A civil proceeding will not be stayed merely because criminal proceedings are pending against the defendant in respect of related allegations.
(d)In evaluating prejudice, the following factors, when present, may be relevant:
(i)prejudice to the accused’s right to silence or privilege against self-incrimination;
(ii)the possibility of publicity that might reach and influence jurors;
(iii)It may not be necessary for the applicant for the stay to state the specific matters of prejudice before a stay could be contemplated;
(iv)Various forms of protective orders may ameliorate prejudice, subject to the possibility that such orders may be inadequate protection of an accused’s rights.
(e)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, for example, where the accused would be a material witness in the civil proceeding.
(f)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.
(g)The principles relevant to the exercise of the discretion to grant a stay are not different in the case of a proceeding brought by a regulator, from those that apply in the case of a proceeding brought by a private plaintiff.
(h)In an appropriate case, the civil proceeding might proceed to a certain stage, eg setting down for trial, and then be stayed.
(i)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.[19]
[19]Reasons, [55].
As we have already noted, the judge was not persuaded that the interests of justice dictated that the plaintiff’s proceeding should be stayed so as to preclude all further interlocutory steps until the resolution of the VWA prosecution.[20] The judge then observed that it was not contended by the State that any prejudice would be suffered if the plaintiff was permitted to apply for a group costs order under s 33ZDA of the Supreme Court Act 1986. After referring to the plaintiff’s submission that this was a complete answer to the current stay application, the judge said:
[W]hile in a sense that may be correct, the proper analysis is that balancing the relevant considerations to avoid prejudice to the proper administration of justice must be understood in the context of the particular interlocutory steps that are about to occur in the civil proceeding. To do otherwise would necessarily undermine the plaintiff’s right to a timely trial of the civil proceeding. Rejection of the application for a stay at this stage of the civil proceeding will not preclude another application in the changed circumstances of the continuing civil proceeding.[21]
[20]Ibid [56].
[21]Ibid [57].
Next, the judge discussed the desirability of the State filing a defence so that the Court could understand the issues to be litigated before determining whether a group costs order should be made.[22]
[22]Ibid [58].
The judge rejected a submission made by the State that ‘various forensic choices’ available to it in meeting the prosecution case against it could be compromised by having to deliver a defence in the plaintiff’s proceeding. The judge accepted that access by the prosecution to a full defence filed by the State in the group proceeding ‘may well present some risk of prejudice to the State in its defence of the criminal proceedings’, but said that this was not the end of the matter.[23] His Honour went on:
A critical issue is whether and how the State’s disclosures in the group proceeding would come to the attention of the prosecution, not the fact of disclosure, per se, by the State. It does not automatically follow that disclosure of the civil defence to the prosecution will occur or that the State’s forensic choices would not otherwise be narrowed by some other mechanism.
The State could serve on the plaintiff a proposed defence identifying those parts of it that might be prejudicial to it if disclosed in the VWA prosecution. That contention could be tested and, if established, the court could order that a redacted defence be filed. The issue of access to and use of the unredacted defence could then be determined. The court might then be persuaded that the group proceeding must be stayed without filing any defence at all, or it might conclude that disclosure of the material on which this application proceeded be managed in a manner that does not reveal any prejudicial disclosures to the prosecutors, while permitting the group proceeding to progress towards a trial, including through alternative dispute resolution processes. The legal practitioners and litigants with access to unredacted material will be subject to the paramount duty to further the administration of justice, the relevant content of which would extend to a duty to the court to keep prejudicial material confidential for the express purpose of ensuring that the information did not come to the attention of the prosecution. So much is made plain by these reasons. It should not be assumed that such a duty would be readily breached. I do not accept that an unacceptable risk of ‘leakage’ to the prosecution should be factored into the balance.
Although the plaintiff could be in possession of information that it could not immediately use, I am satisfied that the plaintiff would still be able to take significant steps towards the trial and would be able to minimise the impact of delay on group members. The precise constraints on the plaintiff are not presently clear, but understanding the issues to be in contest would likely permit it to apply for a group costs order, complete discovery, and mediate. It could mostly proof potential witnesses even if it might later need to return to that task to obtain further, particular information.[24]
[23]Ibid [59]-[60].
[24]Ibid [60]-[62].
The judge then dealt with the State’s submission that prejudice could arise through the derivative use of information disclosed in a defence (or through discovery). The State submitted that the plaintiff might innocently disclose information to key witnesses, when seeking statements about issues raised by the defence that the State is otherwise entitled, by the application of the companion principle,[25] not to disclose to the prosecution; and that the prosecution might learn of this information and make some derivative use of it. The judge described this submission as ‘glib’, and requiring a ‘more granular examination, such as might occur on an application to redact the State’s defence’.[26] His Honour also said that it was ‘not readily apparent how the plaintiff might unwittingly communicate such information when subject to an obligation to maintain the confidentiality of redacted parts of the defence’.[27]
[25]The companion principle being, absent a clear statutory power to the contrary, a person charged with a crime cannot be compelled to assist in the discharge of the prosecution’s onus of proof.
[26]Reasons, [65].
[27]Ibid.
The judge said that he was not persuaded that it was desirable, in the interests of the administration of justice, to stay the process of discovery. He gave three reasons:
(1)First, the plaintiff already has substantial discovery by reason of documents already produced by the State.[28]
(2)Second, ‘the State is willing to consent to produce documents obtained by the prosecution pursuant to OHSA processes’.
(3)Third, beyond the documents already produced, it was unclear what further documents might be relevant, or how their production might be prejudicial to the State in its defence of the criminal charges. The judge said that, rather than proceeding on the assumption that ‘prejudice is obvious’, the remaining categories of undisclosed documents should be assessed on the issue of prejudice to determine whether, when that stage is reached, a stay would be appropriate.[29]
[28]Documents produced by the State in the COVID-19 Hotel Quarantine Inquiry, conducted in 2020 by the Honourable Jennifer Coate AO.
[29]Reasons, [66].
The judge then discussed whether the State, or more particularly the accused in the VWA prosecution, enjoyed the privilege against self-incrimination.[30] The judge said that, without deciding this issue, he preferred the conclusion that the State does not enjoy the privilege.[31]
[30]Noting that s 187 of the Evidence Act 2008 provides that Bodies Corporate do not enjoy that privilege.
[31]Reasons, [68].
The judge then referred to what he described as the ‘unique and significant feature’ of the prosecution, being that both the prosecutor and the defendant are organs of the State.[32] His Honour said that it was not at all clear how the State contended that a principle founded on the recognition of the imbalance of power between the State and its citizens is applicable in a contest between different organs of the State. His Honour noted that the issue might need to be the subject of further argument but that, in this case, he did not need to form a concluded view about it because:
assuming for present purposes that the State would be prejudiced in the manner it contends for, other considerations lead me to conclude that the interests of justice do not require the immediate stay of the group proceeding.[33]
[32]Ibid [70].
[33]Ibid [71].
To like effect, the judge said:
It is far from clear that compelling an organ of State, that faces only a pecuniary penalty payable to another organ of State, to file a defence or make discovery in a major, and complex, group proceeding, which defence/documents are protected from any disclosure to the prosecution (directly or indirectly) by protective orders, would constitute relevant prejudice for the purposes of a stay application.
In any event, I am satisfied that there are interlocutory steps that can be taken in a managed way that will not cause the State to inadvertently assist the prosecution in the discharge of its burden of proof.[34]
[34]Ibid [73]-[74].
The judge rejected the State’s submission that, simply because there was a very substantial overlap in the issues raised in each proceeding, prejudice was clear and obvious, and indeed may be exacerbated if articulated in real detail.[35] The judge concluded his reasons for refusing the stay by saying:
[A]s the plaintiff submitted, the State does not face the same peril of conviction as a non-government entity would. It will not be jailed and any financial penalty moves funds from one State account to another. Any financial penalty in the criminal prosecution may be insignificant compared with its damages exposure should the plaintiff establish its claims in the group proceeding. In the context of disclosure that has occurred in the Coate Inquiry and is occurring through the committal and otherwise, it is not clear what forensic choice may be constrained and how, in order to compare the incommensurable prejudice claimed by each party. However, through protective orders, a granular analysis of the possible prejudice to the State from future interlocutory steps in the group proceeding, assuming it is entitled to the protections of the companion principle, can be evaluated without causing the very consequences sought to be avoided.
On the other hand, the prejudice to the plaintiff and group members from a stay of the group proceeding would be considerable and possibly never adequately remedied by delayed receipt of compensation. It is estimated that the group comprises some tens of thousands of businesses in Victoria and that these businesses experience ongoing financial hardship in some cases threatening their financial viability. The State submitted that delay would be minimal because the plaintiff would progressively be substantially informed for the civil trial by the progress of the prosecution. The proposition was that by the conclusion of the prosecution the plaintiff would have all it needed to move swiftly to a trial.
I do not accept the State’s submission in this respect. It actually envisages that it would only be at the conclusion of the prosecution that the State would file a defence and the plaintiff would then learn precisely what the issues were at trial. It might be the case that discovery would effectively be complete and what witnesses could say would be clear, but the proceeding would not have been to mediation, for one thing. Further, the overlap in the issues appears to be predominately on the question of breach and the plaintiff must establish its case on all of the elements of its causes of action. I am satisfied that a stay must occasion considerable delay. Delay in the resolution of the group proceeding will constitute prejudice that is more inimical to the proper administration of justice than the apparent restriction of the operation of the companion principle to a criminal prosecution of the State by the State.
For these reasons, I consider the present application to be an exceptional case where the specific matters of prejudice must be articulated, particularly because it appears to be open to the court to manage the preparation of the group proceeding for trial in a manner that would ameliorate any genuine prejudice to the State in the criminal proceeding.[36]
[35]Ibid [75].
[36]Ibid [75]-[78].
The judge’s orders
In conformity with the Reasons, the judge made an order dismissing the first defendant’s stay application.
In relation to pleadings, the judge ordered the first defendant to deliver a proposed defence. In making this order, the judge directed the first defendant to identify, ‘by a brief outline of its contentions, whether the disclosure of any part of the proposed defence would give rise to a real risk of prejudice to it in respect of the criminal proceeding’. The judge also directed the first defendant to highlight any such part of the proposed defence.
In the event that the first defendant contended that that disclosure of any part of the proposed defence would give rise to a real risk of prejudice, the first defendant was directed to obtain a date for the resumption of the case management conference, and the parties were directed to confer with respect to redactions of the proposed defence. The judge ordered that the disclosure of the proposed defence was otherwise prohibited, save to various identified persons.[37] In the event that the first defendant did not contend that disclosure of any part of its proposed defence would give rise to a real risk of prejudice in respect of the criminal proceedings, the first defendant was ordered to file its defence.
[37]The plaintiff, the plaintiff’s solicitors and counsel, any mediator engaged by the parties, the judge and authorised court staff, and any other person to whom the first defendant has agreed in writing that the proposed defence can be disclosed.
In relation to discovery, the judge ordered the defendants to make discovery to the plaintiff:
of an initial tranche of documents comprising those documents produced by the Crown in the Right of State of Victoria (Department of Health) in response to [the VWA’s] notices to produce [previously] issued under ss 9 and 10 of the Occupational Health and Safety Act 2004 … in connection with the investigation into the ‘Returned Overseas Traveller Quarantine Program (Operation Soteria)’, in the form (and subject to the asserted claims of privilege or immunity) in which the documents were produced to [the VWA].
Finally, the judge ordered the plaintiff to file and serve any summons seeking a group costs order within four weeks of receiving the proposed defence.
Proposed grounds of appeal
In its application for leave to appeal, the first defendant states that it seeks leave to appeal the whole of the judge’s decision. Its proposed grounds of appeal are set out as follows:
1.The primary judge’s refusal to stay the proceeding pending finalisation of the criminal prosecution of the applicant is affected by legal error.
Particulars of error
(a)In refusing to grant a stay even where prejudice of the kind asserted by the applicant was assumed, the primary judge failed to act in accordance with applicable legal principles: (Reasons [71], [77]).
(b)Having found that the allegations in the civil and criminal proceedings were ‘almost indistinguishable’ (Reasons [17]), the primary judge was bound to but failed to follow the principles stated by the Court of Appeal in Zhao v Commissioner of the Australian Federal Police (2014) 43 VR 187 at [53], [58] and [60] and as a result asked and answered the wrong question in determining whether a stay should be granted: (Reasons [51]).
(c)The primary judge should have found that the applicant is prejudiced by the continuation of the civil proceedings (Ground 2), should have found that prejudice could not be overcome by protective orders (Ground 3), and in those circumstances, applying the principles correctly, was required to grant a stay.
2.The primary judge erred in failing to find that further interlocutory steps in the group proceeding, in particular pleadings and discovery, would prejudice the applicant’s entitlement to a fair trial of the criminal proceedings.
Particulars of error
(a)The primary judge’s reasoning is affected by error in his understanding of the companion principle: Reasons [67]-[71].
(b)The primary judge should have found, and erred in failing to find, that the applicant would be prejudiced in the manner described by the High Court in X7 v The Australian Crime Commission (2013) 248 CLR 92 (X7) at [70]-[71] and [124]-[125] and erred in distinguishing X7: Reasons [73].
(c)The primary judge erred in refusing to make any finding of a real risk of prejudice of the kind described in X7 in the absence of more granular evidence and argument: Reasons [61].
(d)The primary judge erred in requiring the applicant to disclose its defence to the respondent before the court determines whether and what prejudice to the applicant exists from a requirement to serve a defence in the proceedings: Reasons [61]-[63].
(e)The primary judge should have found, and erred in failing to find, a real risk of prejudice from derivative use of pleadings and discovery: Reasons [65].
(f)The primary judge erred in refusing to make any finding of a real risk of prejudice from derivative use of pleadings and discovery without more granular evidence and argument: Reasons [65].
(g)The primary judge erred in requiring the applicant to make further discovery to the respondent before the court determines whether and what prejudice to the applicant exists from a requirement to make further discovery in the proceedings: Reasons [66].
3.The primary judge erred in ruling that interlocutory steps can be taken and managed in a way that will not cause prejudice to the applicant.
Particulars of error
(a)The primary judge has made orders for the progression of interlocutory steps, including orders requiring service of a defence and outlines of contentions, that are beyond power and/or not in accordance with applicable legal principles. This is because they do not protect the applicant’s right to require the prosecution to be put to proof unaided by the accused.
4.Further or in the alternative to ground 1, the primary judge erred in assessing the balance of the interests of justice, causing the exercise of the discretion to miscarry.
Particulars of error
(a)The primary judge mistook the prejudicial impact of delay upon the respondent, given the concession that the criminal trial had to precede the civil trial.
(b)The primary judge erroneously characterised the peril to which the applicant is exposed in the criminal proceeding as ‘only a pecuniary penalty payable to another organ of the State’: Reasons [73], [77].
(c)The primary judge mistakenly found that the applicant would not be prejudiced by discovery on the basis that documents and information had previously been disclosed to the Coate Inquiry, and to WorkSafe: Reasons [66], [75].
(d)The primary judge mistakenly found that disclosure of the applicant’s defence was a pre-condition to the parties’ capacity to mediate the proceeding and failed to afford procedural fairness before reaching that conclusion: Reasons [77].
First defendant’s submissions
Proposed ground 1
Under proposed ground 1, the first defendant submitted that, while the judge recognised the relevance of the decision in Zhao (CA), he erred in his identification and treatment of the applicable principles stated in that case. Specifically, it was contended that the judge failed to advert to ‘the salient principles’ set out in Zhao (CA) at paragraphs [53], [58], [60], [63] and [65], and made no reference at all to various post-McMahon v Gould[38] authorities giving emphasis to the primacy of protecting the integrity of the administration of criminal justice, including authorities discussed in Zhao (CA).[39]
[38](1982) 7 ACLR 202 (‘McMahon’).
[39]See Zhao (CA) (2014) 43 VR 187, 195-200 [21]-[31].
The first defendant submitted that the judge also erred in ‘confining the application of the Zhao principles to the particular factual circumstances of Zhao’. Specifically, it was submitted that his Honour erred in distinguishing Zhao on the basis that the prosecution in Zhao did not contend it would be prejudiced from any delay in the forfeiture proceeding caused by the stay sought by the accused in that case; whereas the plaintiff in the present case asserts that a delay will cause prejudice to it and group members. The first defendant submitted that this approach led the judge to reason erroneously that he had to balance the prejudice asserted by the plaintiff in the group proceeding against the prejudice to the State in the criminal case. The first defendant contends that Zhao was not relevantly distinguishable, and the judge was bound to apply the principles set out in Zhao (CA).[40]
[40]Specifically, Zhao (CA) (2014) 43 VR 187, 205-6 [53], 207 [58], 207-8 [60].
In an overlapping submission, the first defendant contended that, by reasoning that a stay was not warranted (even assuming that the State would be prejudiced in the manner it contended), the judge erroneously failed to give effect to the principles in Zhao (CA). The first defendant submitted that:
Properly applied, they [the principles in Zhao (CA)] do not permit a court to simply weigh prejudice to the accusatorial character of a criminal trial against prejudice to the plaintiff from delay and arrive, by the exercise of judicial discretion, at an outcome that permits an alteration to the fundamentally accusatorial character of the criminal trial.
The first defendant submitted that the judge’s error was manifest in his Honour’s conclusions at Reasons [71] and [77], where his Honour concluded that delay in the resolution of the plaintiff’s proceeding would constitute prejudice that was more inimical to the proper administration of justice than ‘the apparent restriction of the operation of the companion principle to a criminal prosecution of the State by the State’.
Proposed ground 2
Under proposed ground 2, the first defendant submitted that the judge’s expressed reservation as to whether the companion principle applied where an agency of the State was prosecuting another arm of the State was ‘misconceived’. The first defendant submitted that, to the extent that this misconception contributed to the judge’s failure to positively find a real risk of prejudice in requiring the State to plead a defence and provide discovery, the misconception ‘resulted in error’. It was submitted that the availability and significance of the companion principle was not diluted by the identity of the accused, and the judge should have found that the State was entitled to the protection provided by the principle.
Next, the first defendant submitted that the judge erred in distinguishing X7 on the basis that it ‘concerned statutory interpretation and was not a stay application’.[41] The first defendant submitted that the relevant passages of X7 were not confined to a particular task of statutory construction, but described, in general terms, the prejudicial alteration to the accusatorial criminal process that flows from requiring an accused to answer the case against it before trial — even if the answers are kept secret.[42] It was submitted that where, as here, an accused is required to serve a full defence to allegations which ‘are in substance almost indistinguishable from’ the criminal charges, the risk of prejudice of the kind described in X7 is plain (again, even if the defence is kept entirely secret).
[41]Reasons, [73].
[42]See Zhao (CA) (2014) 43 VR 187, 197-8 [26].
The first defendant submitted that the risk of prejudice if a stay were not granted was plain on the material and information before the court. It was not necessary for the State to say any more than was said to the judge in the explication of that prejudice. His Honour, having accepted that the disclosure of the State’s defence to the prosecution would present ‘some risk’ of prejudice, was wrong in declining to find that a real risk of prejudice would arise if such a disclosure occurred.
To like effect, the first defendant contended that the judge erred in failing to find that the disclosing of the State’s defence, or the giving of discovery to the respondent, would risk prejudice through the derivative use of that material — particularly through the process of proofing witnesses. It was submitted that the derivative use of disclosed information from confidential documents might trigger a chain of inquiry that may assist the prosecution in the criminal proceedings, and the judge erred in failing to accept this proposition.
Proposed ground 3
Under proposed ground 3, the first defendant contended that the judge ‘erred in finding that confidential disclosure to the respondent would not prejudice the applicant’s protections under the companion principle’. In support of that submission, the first defendant relied upon the High Court’s decision in Reid v Howard[43] — a case in which the High Court upheld an appeal against orders made by the New South Wales Court of Appeal compelling the disclosure of information (in the face of an otherwise valid claim of privilege against self-incrimination) upon conditions intended to protect the appellant from the risk of prosecution. The High Court held that there was no scope for an exception to the privilege against self-incrimination, in criminal or civil proceedings, other than by statute or waiver.[44] The Court described it as ‘inimical to the administration of justice for a civil court to compel self-incriminatory disclosures, while fashioning orders to prevent the use of the information thus obtained in a court vested with criminal jurisdiction with respect to the matters disclosed’.[45] The court went on:
Nor is justice served by the ad hoc modification or abrogation of a right of general application, particularly not one as fundamental and as important as the privilege against self-incrimination.[46]
[43](1995) 184 CLR 1 (‘Reid’).
[44]Ibid 12.
[45]Ibid 17.
[46]Ibid.
The first defendant also submitted that no confidentiality order could protect the State against prejudice of the kind described in X7. Moreover, even if there were no risk of prejudice of the kind described in X7, disclosure of the first defendant’s defence to the plaintiff on a confidential basis would be destructive of the protections that the first defendant seeks to preserve.
Proposed ground 4
Under proposed ground 4, the first defendant submitted that the judge erred in his conclusion about the effect of any delay on the plaintiff and group members arising from a stay. It was submitted that, given the plaintiff’s concession that the civil trial could not commence until the conclusion of the criminal trial, any time savings or efficiency from the completion of interlocutory steps would be ‘marginal’.
The first defendant also contended that the judge was wrong to contrast the present case with other criminal cases where an accused is at risk of imprisonment. It was submitted that distinguishing between cases of imprisonment on the one hand, and a case (like the present) where the accused was only liable to a pecuniary penalty payable to another organ of the State, was unsupported by authority or principle.
As to the production of documents ordered by the judge, the first defendant observed that it had already agreed to provide documents produced to the VWA as part of its investigation. It submitted, however, that the companion principle currently protects the State from having to disclose additional documents.
Finally, the first defendant submitted that there was no basis for the judge’s finding that, without the first defendant serving its defence on the plaintiff, there could be no mediation of the civil proceeding prior to the conclusion of the criminal proceedings.
Plaintiff’s submissions
The plaintiff commenced its submissions by noting that the State seeks leave to appeal from an interlocutory discretionary judgment on a matter of practice and procedure. The plaintiff submitted that, in order to succeed in this Court, the State must establish an error of the kind described in House v The King,[47] and that this Court should exercise particular caution before interfering with the primary judge’s orders.[48] The plaintiff characterised the State’s submissions as cavilling with aspects of the Reasons, rather than sufficiently engaging with the orders which were made, noting that an application for leave to appeal/appeal is not brought from reasons.[49] The plaintiff submitted that the judge made no error of the kind identified in House, or indeed any error in making the orders now sought to be impugned. It was submitted that the proposed appeal had no real prospect of success and that leave should be refused.
[47](1936) 55 CLR 499, 505 (‘House’).
[48]Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, 177.
[49]Driclad Pty Ltd v Federal Commissioner of Taxation (1968) 121 CLR 45, 64.
In response to the arguments advanced by the first defendant under its proposed grounds of appeal, the plaintiff made a number of points, some of which were made in respect of one proposed ground of appeal and then referred to when dealing with the first defendant’s arguments under another proposed ground.
Proposed ground 1
With respect to the first defendant’s submissions under proposed ground 1, the plaintiff made the following points:
•The judge’s summary of relevant principles at Reasons [55] was drawn from Impiombato, which itself cited ample authority in support of each principle, including Zhao (HC).
•It could not seriously be suggested that the judge did not appreciate that the guidelines in McMahon are just that, or that his Honour was not cognisant of the developments in the case law since McMahon. The judge referred to a number of post-McMahon decisions, including Zhao (CA) and Zhao (HC).
•The first defendant’s criticism of the judge for not adverting to specific paragraphs in Zhao (CA) is misplaced. His Honour repeatedly referred to the Zhao litigation and the reasons of this Court and the High Court in that proceeding.
•The first defendant has confused ‘his Honour’s distinguishing of the facts of Zhao from the facts of this case with a failure to apply the principles in Zhao’. His Honour concluded that the facts in the present case led to a different result from the one in Zhao, not that the principles of Zhao were inapplicable. His Honour’s summary of the applicable principles at Reasons [55] was not only consistent with Zhao, but was largely drawn from it.
•The judge was correct to distinguish the facts of Zhao from those of the present case. Unlike the party opposing the stay in Zhao, the plaintiff can point to prejudice resulting from a stay of the present proceeding. Indeed, the plaintiff put on unchallenged evidence before the judge as to that prejudice.
•Insofar as the first defendant submits that a weighing of asserted prejudice to an accused against the prejudice to an opposing party is impermissible, that submission is wrong and inconsistent with authority, including Zhao (HC).[50]
•In any event, the judge’s advertence to prejudice to group members was unnecessary to his decision because nowhere in the Reasons did the judge conclude that the orders which he proposed to make would give rise to a real risk of prejudice to the State in its defence of the criminal proceedings. Indeed, the judge reached the opposite conclusion.[51]
•Contrary to the first defendant’s submissions, the judge did not find that the allegations in the civil and criminal proceedings were ‘in substance almost indistinguishable’. The paragraph of the Reasons relied upon by the first defendant[52] was in fact a recitation of the State’s submissions.
Proposed ground 2
[50](2015) 255 CLR 46, 60-1 [47].
[51]Reasons, [74], [75].
[52]Ibid [17].
Under proposed ground 2, the plaintiff submitted that there was no error in the judge’s discussion of the conceptual difficulty involved in permitting the State to rely upon the companion principle when the rationale for that principle is a power imbalance which does not exist in the present case. Whatever reservation the judge expressed about the appropriateness of the application of the companion principle in the present case, it is plain that the judge decided the stay application on the assumption that the State was entitled to invoke it.
While much of the first defendant’s argument refers to ‘prejudice of the kind described in X7’, no explanation is given as to how what was said in X7 can and should be applied to the facts in the present case. The obligation imposed upon the first defendant by the judge’s order that it file a proposed defence is materially different from being required, on oath or affirmation, to answer an examiner’s questions about whether a charged offence has been committed, on pain of committing an offence for a false or misleading answer or not giving an answer.[53]
[53]See the summary of the relevant provisions of the Australian Crime Commission Act 2002 (Cth) in X7 (2013) 248 CLR 92, 127-9 [72]-[75].
Relying upon observations made in the joint judgment of Mason CJ and Brennan J in Laws v Australian Broadcasting Tribunal,[54] the plaintiff submitted that any admissions made by the first defendant in a proposed defence did not constitute a positive assertion or acknowledgment of that fact which might be capable of being used against the State in the criminal proceedings. Specifically, the plaintiff relied upon the following passage of Laws:
The suggestion that pleadings should be treated in the same way as any other form of admission fails, in our view, to take account of the function and object of pleadings, when they are not required to be verified, in outlining the party’s case and defining the issues to be tried. Especially is this so in the case of pleading defences. A defendant is entitled to put a plaintiff to proof of his or her cause of action and to raise alternative matters of defence which may possibly answer the plaintiff’s claim, without asserting in an absolute sense the truth or correctness of the particular matters pleaded. Accordingly, we do not regard the defences filed by the Tribunal as constituting admissions on the part of the Tribunal or, for that matter, on the part of its individual members.[55]
[54](1990) 170 CLR 70, 85-6 (‘Laws’).
[55]Ibid 86.
Next, the plaintiff submitted that the State had already ‘very publicly telegraphed its position in relation to the implementation of the Hotel Quarantine Program through the COVID-19 Hotel Quarantine Inquiry’. Detailed written evidence and detailed written submissions have been filed, and all of that material is publicly available. It was submitted that there was no substance in the contention that the State’s ‘forensic choices’ would somehow be further limited by service of a proposed defence which the prosecution (in conformity with the judge’s orders) could never see.
The plaintiff submitted that, underlying much of the first defendant’s argument appears to be a contention that Zhao stands for the proposition that a person seeking a stay needs to do no more than assert prejudice to succeed in such an application. In Zhao, because the risk of prejudice was, as the High Court put it, ‘plain’, the applicants did not need to do any more than swear the affidavits they swore. Here, by contrast, the prejudice is not ‘plain’. Zhao was a case about prejudice arising from giving evidence which could lawfully be provided to the prosecutor in the criminal proceeding. The present case is entirely different in that regard. Unlike in Zhao, there is no legislative mechanism for the provision of the contents of the defence to the prosecution. Indeed, to provide that material to the prosecution would be an egregious breach of the judge’s orders.
Moreover, the first defendant’s argument that there is prejudice from the existence of a risk of ‘derivative use’ fails because the prosecution cannot make ‘derivative use’ of information which the judge’s orders prevent them from obtaining.
Proposed ground 3
In answer to proposed ground 3, the plaintiff relied on the submissions it made in answer to proposed grounds 1 and 2.
Proposed ground 4
In response to the first defendant’s submission that any delay caused by a stay of the group proceeding would be ‘marginal’, the plaintiff submitted that there were ‘many time-consuming interlocutory steps, typically taking years’ that must be taken before the group proceeding will be ready for trial. It submitted that it could not sensibly be gainsaid that putting all of those steps on hold would be productive of inefficiency.
The plaintiff submitted that the judge’s reference to the fact that the State was facing, at worst, the prospect of debiting one of its accounts to the credit of another of its accounts, did not bear on the judge’s conclusion that the order which he ultimately made would not give rise to a real risk of prejudice to the State in its defence of the criminal proceedings. The plaintiff submitted that, in any event, his Honour’s statement was an accurate characterisation of what the State now describes as the ‘peril’ that it faces. The plaintiff contrasted this with the peril which the accused in Zhao faced — life imprisonment.
As to the asserted ‘stigma’ that might be suffered upon conviction, the plaintiff noted that the State was the only defendant to the criminal proceeding, and no individuals (including the individual defendants) have been charged.
In relation to the judge’s limited discovery order, the plaintiff noted that the order had now been complied with, and that the first defendant has not identified any prejudice (caused by such compliance) to its defence of the criminal proceedings.
Finally (under proposed ground 4), the plaintiff submitted that the first defendant’s complaint that the judge denied it procedural fairness when he concluded that the filing and serving of the first defendant’s proposed defence was a precondition to mediation, is without substance. It was submitted that if the first defendant’s position is that a mediation can proceed without any defence having been filed, then this was an instance of a further step which could be taken prior to trial without any real risk of prejudice to the State’s defence of the criminal proceeding. The plaintiff submitted that this underscored the unsoundness (or prematurity) of the first defendant’s stay application.
Prematurity of the application for leave to appeal
The plaintiff made two final points in response to the first defendant’s application for leave to appeal:
(1)First, it submitted that the State has never been able to address the plaintiff’s point that an application for a group costs order could be heard and determined without any prejudice to the State — and that this fact alone meant that the current stay application should have been refused.
(2)Second, it submitted that the Reasons left open the possibility for the first defendant to make a subsequent application for a stay if circumstances so required.[56] It was submitted that the application for leave to appeal was thus ‘at the very least’ premature.
[56]Reasons, [57].
Consideration
The judge’s decision was an interlocutory discretionary decision. As such, in order for the first defendant to succeed in this Court, it must show that the judge acted upon a wrong principle; allowed extraneous or irrelevant matters to guide or affect him; mistook the facts; failed to take into account some material consideration; or made orders which were unreasonable, or plainly unjust.[57] For the reasons which follow, we have concluded that the judge made no such error.
[57]House (1936) 55 CLR 499, 505.
Far from being erroneous, the judge’s refusal to grant the stay sought by the first defendant was plainly correct. As the first defendant conceded in oral argument, there are interlocutory steps which can be taken in the proceeding which do not require the first defendant to provide any material disclosing the course the State might take in the criminal trial. In those circumstances, it would not have been correct for his Honour to make an order staying the civil proceeding absolutely until the conclusion of the criminal proceedings.
Similarly, we see no error in the order made by the judge requiring the defendants to give specific discovery of documents already produced by ‘the Crown in the Right of State of Victoria (Department of Health)’, or the order which contemplates the possible filing of an application for a group costs order.
In relation to the discovery order, we note that there is no suggestion that the State’s defence of the criminal proceedings has somehow been prejudiced by the making of that order or the defendants’ subsequent compliance with that order. We would have thought that there is scope for the judge to make further discovery orders which would not risk prejudicing the State’s defence of the criminal proceedings. For example, it may be that the first defendant could be ordered to discover the prosecution brief in relation to the criminal charges.[58] In the event that the plaintiff seeks discovery from the first defendant of documents which, if produced by it, would risk prejudicing the State’s defence of the criminal proceedings, that matter can be the subject of argument before his Honour at the appropriate time; and if the judge makes an order unfavourable to the first defendant, it may seek leave to appeal from that order at that time.
[58]To that end, we note that s 22 of the Public Prosecutions Act 1994 provides that one of the functions of the Director of Public Prosecutions is to ‘institute, prepare and conduct on behalf of the Crown, proceedings in the High Court, Supreme Court or County Court in respect of any indictable offence’.
In the result, the first defendant’s complaints about the orders made by the judge on 23 February 2023 reduce to complaints about the orders requiring the first defendant to serve a proposed defence. It is to those orders that we now turn.
To the extent that the first defendant submitted that the judge erred in his identification of relevant principles at Reasons [55], we reject that submission. His Honour correctly identified the relevant principles, formulating them in accordance with previous authority, including Zhao (CA), Zhao (HC), Impiombato and Construction, Forestry, Mining and Energy Union v Australian Competition and Consumer Commission.[59]
[59](2016) 242 FCR 153 (‘CFMEU v ACCC’).
In oral argument, the first defendant contended that the error made, ‘most starkly’, by the judge was ‘in relation to the X7 principle about forensic choices’. X7 was a case which concerned whether the Australian Crime Commission Act 2000 (Cth) authorised an examiner to require a person charged with a Commonwealth indictable offence to answer questions about the subject matter of the charged offence. The High Court held by majority[60] that it did not. In support of its argument in this Court, the first defendant relied upon the following observations of Hayne and Bell JJ (with whom Kiefel J agreed):
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.
As has been explained, if an alteration of that kind is to be made to the criminal justice system by statute, it must be made clearly by express words or by necessary intendment. If the relevant statute does not provide clearly for an alteration of that kind, compelling answers to questions about the subject matter of the pending charge would be a contempt.[61]
[60]Hayne, Kiefel and Bell JJ, French CJ and Crennan J dissenting.
[61]X7 (2013) 248 CLR 92, 142-3 [124]-[125]. See also Strickland v DPP (Cth) 266 CLR 325, 357-360 [75]-[85].
As the judge, however, observed, X7 was not a case involving an application to stay a civil proceeding. X7 concerned the interpretation of statutory provisions permitting an examination of a person facing pending charges, in circumstances where such an examination had the capacity to constrain forensic choices that might subsequently be made by the accused. The present case is different. First, no examination of an accused person is going to take place — all that is contemplated is the filing and serving of a proposed defence, under a confidentiality regime. Secondly, in the absence of more specific evidence than that relied upon by the first defendant in support of its application for a stay, it is not readily apparent how the filing of a proposed defence might relevantly constrain forensic choices which might subsequently be made in criminal proceedings. One can easily envisage a proposed defence providing that some admission made in it is only made for the purpose of the civil proceeding and in order to save time or expense.
Contrary to the first defendant’s submissions, we see no error in the judge’s distinguishing of Zhao on the facts. As the judge said, the facts in Zhao were very different from the facts in the present case. Zhao involved the requirement for an accused to file an affidavit, with the possibility of cross-examination, dealing directly with the circumstances giving rise to the charges, where the accused’s evidence could lawfully be given to the prosecution; whereas the present case involves the provision of a proposed pleading on terms providing for a confidentiality regime. While the principles in Zhao had to be considered by his Honour, the different facts of this case meant that, on the application of relevant principle, Zhao did not mandate that any stay be granted in the present case.
The evidence of prejudice to the State in the present case was thin to non-existent. Notwithstanding a lack of specific evidence, the first defendant asserted that the prejudice to it was ‘plain’ and, relying on Zhao (HC), also submitted that a detailed exposition of the specific matters of prejudice was unnecessary because it would make the risk of prejudice a reality by requiring the State to reveal information about its defence in the criminal proceedings. But even in Zhao, where the prejudice was ‘plain’, affidavit material of greater detail as to the prejudice to the accused in that case was provided.[62] Moreover, no attempt appears to have been made by the first defendant to provide any confidential affidavit which might have better explained why the first defendant could not state openly how a particular disclosure might prejudice the State’s defence of the criminal charges.
[62]Zhao (CA) (2014) 43 VR 187, 192-3 [16].
To like effect, the judge was correct to distinguish Zhao on a second basis, namely that, unlike the prosecution in Zhao, which would not suffer any prejudice as a result of a stay,[63] there was unchallenged evidence in the present case of the prejudice that would be suffered by the plaintiff and group members in the event of a stay or any significant delay in the proceeding.
[63]Zhao (HC) (2015) 255 CLR 46, 60-1 [47], 61 [50].
The first defendant submitted that the judge was wrong to perform any balancing of the prejudice to the State in not granting a stay against the prejudice to the plaintiff and group members in delaying the civil proceeding. The first defendant’s submission appeared to reduce to the proposition that once it had established a risk of relevant prejudice to the State, orders should be made prohibiting any step in the civil proceeding which might require the first defendant to disclose the course the State might take in its defence of the criminal proceedings. The first defendant’s submission must be rejected. Support for the requirement to perform a weighing of the competing prejudices can be found in Zhao (HC)[64] where the High Court referred twice to the absence of any prejudice that the Commissioner of the Australian Federal Police might suffer if the forfeiture proceedings in issue in that case were stayed until after the criminal trial. Subsequently, following Zhao (HC), the Full Court of the Federal Court in CFMEU v ACCC,[65] concluded that, in considering what the interests of justice required on a stay application, the risk of prejudice to an accused had to be weighed against the prejudice that a stay of the civil proceeding would occasion to other parties.[66] Notwithstanding the invitation of the first defendant for this Court not to follow CFMEU v ACCC on this issue, we see no reason to doubt the correctness of the Full Court of the Federal Court’s decision. Consistently with Zhao (HC) and CFMEU v ACCC, the judge was plainly correct to hold that, if the first defendant established any relevant prejudice (which, in any event, his Honour held that the first defendant did not),[67] then it was necessary to weigh the competing prejudices.[68]
[64]Ibid.
[65](2016) 242 FCR 153 (Dowsett, Tracey and Bromberg JJ).
[66]Ibid 160 [22].
[67]Reasons, [74].
[68]Ibid [55(f)].
In order to avert the risk of prejudice to the State in its defence of the criminal charges, the judge made orders for the filing of a proposed defence on confidential terms. The first defendant submitted that this course was impermissible and contrary to the High Court’s decision in Reid.[69] The question in Reid was whether the New South Wales Court of Appeal had power in the exercise of its civil jurisdiction to make orders compelling an accountant (the appellant), who was alleged to have misappropriated funds entrusted to him by his client (the respondent), to make an affidavit disclosing information about his assets and his dealings with funds entrusted to him by the respondent — notwithstanding his claim that to do so would tend to incriminate him. The Court of Appeal accepted the accountant’s right to claim the privilege against self-incrimination, but nevertheless made orders compelling him to disclose the information on terms which purported to restrict the use which could be made of it. The High Court, however, held to the contrary that, because the privilege against self-incrimination can only be modified by statute, the Court of Appeal should not have made the orders it made. As this Court observed in Zhao (CA), the ratio of Reid was that, because the privilege against self-incrimination can only be modified by statute, a court has no power to disregard it or override it in favour of judicially created exceptions.[70]
[69](1995) 184 CLR 1.
[70]Zhao (CA) (2014) 43 VR 187, 196 [23].
Reid is, however, distinguishable from the present case. The first defendant does not raise the privilege against self-incrimination as an objection to filing the proposed defence, but relies instead on the companion principle. Unlike in Reid, where the privilege against self-incrimination was ‘disregarded’, the orders made by the judge in the present case do not disregard the companion principle. In fact, the confidentiality provisions in his Honour’s orders were made in furtherance of the companion principle. They were specifically designed to prohibit any information produced by the first defendant from being provided to the prosecution in the criminal proceedings against the State. Thus there was no disregarding or overriding of the principle that an accused cannot be compelled to assist the prosecution in the discharge of its burden of proof. Moreover, Reid involved an order to make an affidavit which might directly incriminate the accountant in any criminal proceedings. Here, a proposed unverified defence is all that has been presently ordered.
What we have said so far deals with the prejudice that might be caused to the State by the actual use by the prosecution in the criminal proceedings of information required to be disclosed by the first defendant in the civil proceeding. The first defendant submitted that there was an additional risk to the State by the potential derivative use of such information.[71] In our view, this submission was misconceived. There is no relevant possibility of derivative use in this case. The confidentiality orders made by the judge prohibit the disclosure of the first defendant’s proposed defence, save to certain specified individuals. Those individuals are not permitted to disclose or use, in any manner, the information the subject of the confidentiality regime presently in place. It would be wrong to assume that his Honour’s orders will not be obeyed.
[71]As to the possibility of prejudice being caused by derivative use, see Sorby v The Commonwealth (1983) 152 CLR 281, 294 (Gibbs CJ); X7 (2013) 248 CLR 92, 122-3 [53] (French CJ and Crennan J).
Further, to the extent that it was submitted that the prosecution in the criminal charges might be able to make derivative use of information provided by the first defendant in the civil proceeding, that submission must likewise be rejected. The orders of the judge prevent any material the subject of the first defendant’s claim for confidentiality being provided to anyone other than the individuals specified in the judge’s orders. No material will be provided to any person involved in the prosecution of the criminal charges. There will thus be no occasion for the prosecution to make any use (derivative or otherwise) of the information ordered to be kept confidential by the judge.
In the course of argument, an issue was raised about whether the judge’s current orders contemplate that, after further argument before the judge, a proposed defence filed in accordance with his Honour’s orders might become open, and thus be available to the prosecution in the criminal charges. It seems to us that, while such a possibility might exist on the terms of the orders as they currently stand, any issue about this would be a matter for submissions by the parties to the judge; and that, as the issue has not yet arisen, no submissions have yet been made to his Honour. It may be that, on proper material,[72] the judge may conclude that any defence which the first defendant is required to serve should be kept confidential until the resolution of the criminal proceedings, as should any confidential affidavit relied upon by the first defendant in seeking to have its defence remain confidential. As we say, these are matters which can be dealt with by the judge if and when they arise; and perhaps subsequently, in this Court, should either party be dissatisfied with his Honour’s making of (or failure to make) some further order in the management of the group proceeding
[72]To at least a level of detail of the kind set out in Zhao (CA) (2014) 43 VR 187, 192-3 [16].
Conclusion
The judge did not make any of the specific errors identified in House.[73] He accepted that the State was entitled to the benefit and protection of the companion principle, but concluded that the interests of justice did not require the plaintiff’s proceeding to be stayed. In doing so, he applied settled principle.[74] He gave primacy to the criminal proceedings,[75] noting that the trial of the group proceeding would be required to follow the trial of the criminal proceedings. Further, given the limit of the judge’s orders, and the steps taken by him, in those orders, to ensure that the State is not compelled to assist the prosecution in the charges against it, it cannot be said that his Honour’s decision or orders are unreasonable, or plainly unjust.
[73](1936) 55 CLR 499, 505.
[74]In particular, those set out and discussed in Zhao (CA), Zhao (HC), Impiombato and CFMEU v ACCC.
[75]See CFMEU v ACCC (2016) 242 FCR 153, 167-8 [57]-[59].
There being no error of the kind described in House, the first defendant’s application for leave to appeal must be refused.
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