Ceasar v. Sommer
[1980] 2 NSWLR 929(Judgment by: Roden J)
Ceasar
v. Sommer
Judge:
Roden J
Subject References:
Practice
Stay of proceedings
Concurrent civil and criminal proceedings
Same subject matter
Application by defendant for stay to civil proceedings
Principle of justice between parties applied
Burden of establishing on defendant
Stay refused
Legislative References:
Crimes Act 1900 - Section 158
Case References:
Carlisle v Orr - [1917] 2 IR 534
Jack Clark (Rainham) Ltd v Clark - [1946] 2 All ER 683
Jefferson Ltd v Bhetcha - [1979] 1 WLR 898; [1979] 2 AllER 1108
Ricketts v Ingersoll - [1930] 47 WN (NSW) 56
Rochfort v John Fairfax & Sons Ltd - [1970] 92 WN (NSW) 483
Saltergate Insurance Co Ltd (in liq) and the Companies Act, Re - [1980]4 ACLR 733
Smith v Selwyn - [1914] 3 KB 98
Thomas v High - [1960] 60 SR (NSW) 401; 76 WN 641
Wonder Heat Pty Ltd v Bishop - [1960] VR 489
Judgment date: 28 November 1980
Judgment by:
Roden J
This is an application by the defendant for an order "that the proceedings herein by the plaintiff be stayed until further order of the Court", and ancillary relief.
[(2)] The plaintiff's action is for money received by the defendant for the use of an association upon whose behalf the plaintiff sues. The amended statement of claim alleges that the defendant, then in the employ of that association, so received the sum of $52,935.38, for which she failed to account to the association. A default judgment was obtained by the plaintiff on 7th September, 1979. This was set aside by order of the Master made on 5th November, 1979.
[(3)] The present application is based upon what has been referred to as the rule in Smith v Selwyn (7). It is submitted on behalf of the defendant that that rule is part of the common law, that it applies in New South Wales, and that, as properly interpreted, it provides in effect that an action for the recovery of damages based upon a felonious act on the part of the defendant, or for the recovery of money feloniously obtained by the defendant, is not maintainable so long as the defendant has not been prosecuted and that prosecution has been concluded, unless reasonable excuse is shown for his not having been prosecuted or for his prosecution not having been concluded.
[(4)] The circumstances said to give rise to its application here are as follows:
1. The plaintiff's claim has been particularized and is made up of a large number of alleged receipts of relatively small amounts over the period 1st January, 1977, to 5th May, 1979.
2. On 4th February, 1980, the defendant appeared before a magistrate in the Central Court of Petty Sessions charged with one offence of fraudulently omit to make an entry, contrary to the Crimes Act, 1900, s 158 and one hundred and sixteen charges each of making a false entry contrary to the same section.
3. The one hundred and seventeen charges, each of a felony, are made up of allegations relating to those same alleged receipts by the defendant as have been particularized as the basis of the plaintiff's claim in these proceedings.
4. On 5th February, 1980, the defendant was committed for trial on each of those one hundred and seventeen charges. Those charges have not yet been disposed of nor has a date been fixed for the hearing of them.
[(5)] The argument on behalf of the defendant proceeded along the following lines: 1. It is an established rule of the common law that a plaintiff against whom a felony has been committed cannot make that felony the foundation of a cause of action unless the defendant has been prosecuted or a reasonable excuse has been shown for his not having been prosecuted.
2. That rule was stated in various forms in the judgments in Smith v Selwyn (7), which is authority for the proposition that it is by granting a stay of proceedings that the rule is to be enforced.
3. The relevant authority in this State is Thomas v High (8), wherein criteria were stated which govern the exercise of the discretion to grant a stay. Owen J. said (8a): "It is clear from those cases that before a Court will stay proceedings from such a cause, it must appear that the plaintiff's case is based upon the commission by the defendant of a felony and nothing else. The evidence of felony must be such that if believed there would be a reasonable prospect that a prosecution would succeed."
4. In the present case those requirements are both satisfied as: (a) the plaintiff's case is founded upon the same receipt of funds and failure to account therefor which in real terms constitute the felonies referred to above, and (b) the fact that the defendant has been committed for trial on all charges ought to be regarded, at least in the absence of any indication to the contrary, as establishing that the evidence of felony is such that if believed there would be a reasonable prospect that the prosecution would succeed.
5. Although initially stated in terms that the civil action ought not to proceed "unless the defendant has been prosecuted", the rule in fact requires that the civil action be stayed until completion of the criminal proceedings by acquittal or conviction.
6. This was the approach adopted without stated authority by the Prothonotary in this Court in Ricketts v Ingersoll (4), and by Isaacs J in Rochfort v John Fairfax and Sons Ltd (5a): "This case is really unique because the usual type of case where this sort of question arises is where the defendant in the civil proceedings is the accused in the criminal proceedings and in which the plaintiff in the civil proceedings is the complainant in the criminal proceedings. The civil proceedings in those cases are postponed as a matter of public policy and fairness to the accused until the criminal proceedings are terminated so that the accused may not be prejudiced." It was expressly held to be the law by Pape J in the Supreme Court of Victoria in Wonder Heat Pty Ltd v Bishop (9).
7. In the most recent relevant judgment of this Court, in Re Saltergate Insurance Co Ltd and the Companies Act (6), and in the various cases referred to by Needham J in that judgment, particularly Jefferson Ltd v Bhetcha (3), it was stated that the emphasis of the rule had shifted from the public policy considerations upon which it was originally based to a consideration of the "principle of justice between the parties". (6a).
8. Viewed in that light, the rule would entitle the defendant to a stay here on the basis of: (a) the likelihood of publicity, having regard to the identity of the "true" plaintiff, and (b) the desirability of preserving the defendant's right to silence so long as the criminal proceedings against her are pending.
[(6)] It seems to me that even without having regard to the more recent cases such as Jefferson Ltd v Bhetcha (3), it would be wrong to regard the rule in Smith v Selwyn (7) as a rule of law applying in New South Wales today. To seek to apply that rule in the circumstances obtaining today in this State would be to attribute to the common law a sterility and rigidity which are foreign to its nature. It would be to treat the rule as though it were a principle.
[(7)] The common law, as I understand it, is based upon a series of principles which are regarded as being immutable. From time to time, as those principles are applied to prevailing circumstances, rules are developed which can become part of the fabric of binding precedents. But the applicability of those rules, and the relevance of the precedents which embody them, are both limited by the circumstances in which they were conceived. As circumstances change, the rules too must be expected to change if those immutable principles are to remain operative.
[(8)] The origin of the rule in Smith v Selwyn (7) has been the subject of a deal of consideration by learned writers, and much of this was canvassed by Pape J in the Wonder Heat case (9a). Whether the rule was based upon "the public policy of a bygone age when no police existed", or whether the origin of the rule lay in the fact that the property of a convicted felon was forfeited to the Crown, its foundation has clearly disappeared, if indeed it ever existed, in New South Wales, despite our retention, for no discernible reason, of a totally artificial version of the archaic distinction between felonies and misdemeanours. What remains is the immutable principle that the common law will have regard to the requirements of public policy.
[(9)] Public policy makes many demands, some of which may appear to be conflicting, and it is a function of the law to resolve such conflicts as they arise. Relevant demands arising in this type of situation were considered by the Court of Appeal in Jefferson Ltd v Bhetcha (3). There Megaw LJ said (3a): "I should be prepared to accept that the court which is competent to control the proceedings in the civil action ... would have a discretion ... to stay the proceedings, if it appeared to the court that justice-the balancing of justice between the parties-so required, having regard to the concurrent criminal proceedings, and taking into account the principle, which applies in the criminal proceeding itself, of what is sometimes referred to as the 'right of silence' and the reason why that right, under the law as it stands, is a right of a defendant in criminal proceedings. But in the civil court it would be a matter of discretion, and not of right.", and (3b): "Of course, one factor to be taken into account, and it may well be a very important factor, is whether there is a real danger of the causing of injustice in the criminal proceedings. There may be cases-no doubt there are-where that discretion should be exercised. In my view it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors. By way of example, a relevant factor telling in favour of a defendant might well be the fact that the civil action, or some step in it, would be likely to obtain such publicity as might sensibly be expected to reach, and to influence, persons who would or might be jurors in criminal proceedings. It may be that, if the criminal proceedings were likely to be heard in a very short time (such as was the fact in the Wonder Heat case (9) in the Victoria Supreme Court) it would be fair and sensible to postpone the hearing of the civil action. It might be that it could be shown, or inferred, that there was some real-not merely notional-danger that the disclosure of the defence in the civil action would, or might, lead to a potential miscarriage of justice in the criminal proceedings, by, for example, enabling prosecution witnesses to prepare a fabrication of evidence or by leading to interference with witnesses or in some other way."
[(10)] Whilst regard must be had to such matters, which bear upon the interests of defendants, it is equally incumbent upon the law, and in accordance with public policy, to allow plaintiffs free access to the courts and to protect their right to have their claims litigated and decided. That right, I believe, will not easily be displaced.
[(11)] In the present case the defendant has already disclosed her defence. In a statement of defence annexed to and referred to in her affidavit sworn on 24th October, 1979, in support of the application to set aside the default judgment, the defendant stated that "the defendant denies that she has had or received money as therein (ie in the statement of claim) alleged or at all". The defendant would not be prejudiced in any way which is apparent to me, in so far as the pending criminal proceedings are concerned, if this action were now to proceed on the basis of the issues to which that defence gives rise. The defendant may, in the course of defending the action, make statements which as an accused person in a criminal trial she could not be required to make. That fact of itself does not mean that she would be prejudiced in a manner calling for intervention, the effect of which would be to deprive the plaintiff of his prima facie right of access to the court to pursue his claim. No evidence has been led to suggest actual prejudice arising from that circumstance. Nor has evidence been led with regard to the apparently feared publicity.
[(12)] Dealing with the matter then upon what I believe to be a correct approach, namely that adopted in Jefferson's case (3), and followed by Needham J in the Saltergate Insurance case (6), I see no reason for granting the stay sought.
[(13)] In arriving at this conclusion, I have regard to the following statement of principle by Megaw LJ in Jefferson's case (3b): "In my judgment, while each case must be judged on its own facts, the burden is on the defendant in the civil action to show that it is just and convenient that the plaintiff's ordinary rights of having his claim processed and heard and decided should be interfered with."
[(14)] If I were to treat the rule in Smith v Selwyn (7) as an applicable rule of law I would arrive at the same conclusion on the following basis:
1. I am satisfied that although the issues are not strictly the same, the subject matter of the plaintiff's claim is substantially the same as the felonies alleged against the defendant.
2. I accept for the purposes of this consideration that in the rule in Smith v Selwyn (7) the reference to prosecution should be taken as a reference to the conclusion of the relevant prosecution.
3. However, charges having been laid, committal proceedings having been held, the defendant having been committed for trial, and the prosecution now being in the hands of the Crown authorities and beyond the power of the plaintiff, I am satisfied that there is "reasonable excuse" for the prosecution not having been concluded, and that the plaintiff is accordingly free from any restriction which the rule would otherwise impose.
[(15)] In arriving at that conclusion, I have regard to the following passage from the judgment of Gibson J in Carlisle v Orr (1a), cited with approval by Morton LJ in Jack Clark (Rainham) Ltd v Clark (2a): "The court in applying this age-worn rule which still abides with us, should only act in a clear case where public justice manifestly requires the plaintiff to prosecute or bring the matter before the public prosecutor."
[(16)] The cited passage is of course authority for the proposition that if the rule does survive, its requirement for the plaintiff in the contemporary context does not extend beyond "bringing the matter before the Public Prosecutor". Whether that be the correct position or whether it be, as was held in the Wonder Heat case (9), that the prosecution must be brought to finality by acquittal or conviction, appears to me to be of no moment here. On the Irish basis the rule is satisfied because the prosecution has been launched. On the Victorian basis it is satisfied because, as I have found, in respect of what remains to be done there is "reasonable excuse".
[(17)] I accordingly refuse the orders sought.
[(18)] The question of costs is reserved, with liberty to either party to approach my associate and have the matter mentioned at any time.
[(19)] I order that the statement of defence be filed within seven days, and I extend the time for filing that pleading until the expiry of that period, with liberty to apply.
Orders accordingly