FEDERAL COURT OF AUSTRALIA Gregg v Fairfax Media Publications Pty Ltd [2017] FCA 440 File number(s): NSD 553 of 2016 Judge: RARES J Date of judgment: 8 February 2017 Catchwords: PRACTICE AND PROCEDURE – stay of proceedings – concurrent criminal and civil proceedings involving party – application for stay of civil proceedings until determination of criminal proceedings – where substantive overlap of issues in criminal and civil proceedings – whether risk of prejudice to applicant's defence of criminal proceedings – whether onus on applicant to establish risk of prejudice – inherent power of Court to stay proceedings where interests of justice require such an order PRACTICE AND PROCEDURE – where both parties consented to stay of civil proceedings pending determination of criminal proceedings – where respondent sought to impose conditions on stay to allow for access to documents produced under subpoena and compel further production of documents the subject of unanswered portion of subpoena – where respondent sought access to documents under implied undertaking – inherent power of Court to impose conditions on order for stay – whether order granting inspection and compelling further production of documents necessary in interests of justice Legislation: Corporations Act 2001 (Cth) s 1307 Federal Court of Australia Act 1976 (Cth) s 37AF Defamation Act 2005 (NSW) s 42 Cases cited: Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256 Beecee Group Ltd v Barton (1980) 5 ACLR 33 Cameron's Unit Services Pty Limited v Kevin R Whelpton Associates (Australia) Pty Limited (1984) 4 FCR 428 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 FAI General Insurance Company Ltd v Southern Cross Exploration NL (1958) 165 CLR 268 Grassby v The Queen (1989) 168 CLR 1 Halabi v Westpac Banking Corporation (1989) 17 NSWLR 26 Hearne v Street (2008) 235 CLR 125 Mansfield v Director of Public Prosecutions (WA) (2006) 226 CLR 486 National Employers' Mutual General Association Limited v Waind and Hill [1978] 1 NSWLR 372 Ransley v Commissioner of Taxation [2016] FCA 778 Tringali v Stewardson Stubbs & Collett Ltd (1966) 66 SR (NSW) 335 Date of hearing: 8 February 2017 Registry: New South Wales Division: General Division National Practice Area: Other Federal Jurisdiction Category: Catchwords Number of paragraphs: 33 Counsel for the Applicant: Mr BR McClintock SC with Ms S Chrysanthou Solicitor for the Applicant: Mark O'Brien Legal Counsel for the Respondents: Mr A Leopold SC with Mr A d'Arville Solicitor for the Respondents: Banki Haddock Fiora ORDERS NSD 553 of 2016 BETWEEN: PETER GREGG Applicant AND: FAIRFAX MEDIA PUBLICATIONS PTY LTD First Respondent THE AGE COMPANY PTY LTD Second Respondent THE FEDERAL CAPITAL PRESS OF AUSTRALIA PTY LTD Third Respondent JUDGE: RARES J DATE OF ORDER: 8 FEBRUARY 2017 THE COURT ORDERS THAT: 1. The proceedings be stayed until the determination of the proceedings in the Local Court of New South Wales and on any indictment brought in respect of those proceedings the subject of Court Attendance Notice in criminal proceedings 2257/2017 commenced by the Australian Securities and Investments Commission on 9 January 2017 against the applicant herein. 2. Orders 12 to 17 and 19 made on 27 September 2016 be set aside. 3. Compliance with the subpoenas issued by the Court on: a. 17 November 2016 to Australian Securities and Investments Commission; and b. 7 December 2016 to CIMIC Group Limited to be returned before the registrar on 15 February 2017, be stayed until further order. 4. The return before the registrar on 15 February 2017 of the subpoenas referred in order 3 above be vacated. 5. The parties relist the proceedings for further directions within 14 days of the determination of the criminal proceedings. 6. The costs of the application for the stay be reserved. 7. Pursuant to s 37AI of the Federal Court of Australia Act 1976 (Cth), until further order: a. The matter at page 17, lines 35 to 38, of the transcript of proceedings on 8 February 2017, be suppressed and not published until further order. b. The suppression and non-publication orders made on 2 February 2017 in respect of the affidavits of Martin Taylor dated 16 December 2016 and 25 January 2017 continue to apply to the use of those affidavits in evidence and argument today on the same terms and on the same grounds until further order. c. The portions in paragraphs 17, 31 and 32 of the applicant's submissions filed on 6 February 2017 referring to the subject matter of order 7(a) above be suppressed and not published on the same terms and on the same grounds as the orders made on 2 February 2017 until further order. THE COURT NOTES THAT: 8. The ground for order 7 is that it is necessary to prevent prejudice to the proper administration of justice. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) RARES J: 1 Peter Gregg, the applicant, has filed this interlocutory application for a stay of these proceedings until the determination of two criminal charges brought against him by an informant on behalf of the Australian Securities and Investments Commission (ASIC). The two criminal charges were proferred in a court attendance notice that came before the Local Court of New South Wales on 31 January 2017. The charges alleged that Mr Gregg contravened s 1307(1) of the Corporations Act 2001 (Cth) as an officer of Leighton Holdings Limited by engaging in conduct that resulted in the falsification of books affecting or relating to the affairs of Leighton in two ways, first, a payment instruction relating to two payments to be made to Asian Global Projects and Trading FZE in the total sum on USD15,000,000, and, secondly, an agreement to buy and sell between Leighton and Asian Global dated 1 August 2011. A person is liable on conviction for a contravention of s 1307(1) to a fine of 100 penalty units or imprisonment for two years, or both, and such proceedings can, and are likely to, be prosecuted on indictment. Background 2 It is common ground that the subject matter of those two charges forms one of the principal bases of the substantive defence of justification pleaded by the respondents, Fairfax Media Publications Pty Limited and its associated companies, The Age Company Pty Limited and the Federal Capital Press of Australia Pty Limited (collectively Fairfax). Fairfax pleaded in par 127 of the further amended defence that Mr Gregg contravened s 1307(1) in substantively the same way as ASIC has alleged in the two counts the subject of the criminal charges. 3 On 2 February 2016, I made suppression and non-publication orders in respect of a document produced by ASIC in partial answer to a subpoena that Fairfax had served on it and I deferred the question of access to the document to today. In addition, I ordered that the unanswered portion of that subpoena be stood over to 15 February 2017 before the Registrar. That portion required ASIC, in substance, to produce the prosecution brief that, with the exception of one document, it had provided to Mr Gregg's legal representatives in the Local Court proceedings on 31 January 2017. In addition, on 2 February 2017, PwC Strategy& (Australia) Pty Limited also produced documents in answer to another subpoena issued at the request of Fairfax. I also deferred the issue of access to those documents. I also stood over to 15 February 2017, before the Registrar, a third subpoena issued to CIMIC Group Limited, which is the new name by which Leighton is now known. 4 It is common ground that these civil proceedings should be stayed until the determination of the criminal charges against Mr Gregg, but the parties are in dispute as to whether, as Fairfax wishes, the stay should be fashioned so as to permit Fairfax, first, to have access to the documents already produced by ASIC and PwC, and secondly, to require ASIC to produce the documents comprising the prosecution brief that it delivered to Mr Gregg in the criminal proceedings on 31 January 2017. Fairfax does not seek that the CIMIC subpoena be called on before the stay ceases. 5 The subject matter of the charges and, indeed, the matters complained of in the proceedings have been the subject of extensive publicity. Upon being served with the court attendance notice earlier in January 2017, Mr Gregg resigned his positions as managing director and chief executive officer of another public listed company, which then made an announcement to the Australian Securities Exchange of his resignation and the fact of his facing charges. 6 I noted when I made the orders for suppression and non-publication in relation to the document produced by ASIC on 2 February 2017 and of certain portions of the evidence and submissions on which ASIC relied in support of the making of those orders, that those orders were necessary to prevent prejudice to the proper administration of justice: see s 37AF(1)(a) of the Federal Court of Australia Act 1976 (Cth). That necessity, of course, arose in the context of the criminal proceedings and the overlap of issues in those proceedings and the present civil proceedings. 7 On 27 September 2016, I made a number of orders preparing this matter for the trial that I fixed for hearing, with an estimate of four weeks, commencing on 4 September 2017. Those included order 12, that required Mr Gregg to serve outlines of evidence of any lay witnesses on which he proposed to rely, including himself. Mr Gregg's solicitor, Paul Svilans, has given evidence that Mr Gregg had intended, but for the intervening pendency of the criminal charges, to serve in his case in chief his own outline of evidence. Clearly any such outline, if now served, would have the capacity to traverse issues the subject of the criminal charges, and any compulsion, under order 12, for him to do so would undermine his common law right to invoke his privilege against self-incrimination. 8 The substantive overlap of issues involving whether Mr Gregg had acted in contravention of s 1307(1) in both these civil proceedings and the criminal proceedings is obvious. To require Mr Gregg to continue to prepare this civil matter for trial and to participate, under compulsion of the orders made on 27 September 2016 to do so, would not be in the interests of justice, because it would impinge on his important common law rights not to incriminate himself or to reveal how, and in what way, he may wish to defend himself against the criminal charges. 9 Moreover, there is an overlap of issues between both proceedings, notwithstanding that there are also wider, but related, allegations of criminal conduct alleged in Fairfax' defence of justification. If these civil proceedings were to proceed concurrently with the criminal proceedings, there are real prospects that: Mr Gregg may have to disclose information in the course of pursuing the civil proceedings that he could not be compelled to disclose in criminal proceedings; disclosures or attempts to obtain statements or other evidence that Mr Gregg, Fairfax or persons under subpoena might make in the further conduct of these proceedings might influence witnesses in the criminal proceedings by alerting them to matters that they were not otherwise aware of; were there to be a continuation of these civil proceedings with its attendant publicity, that might influence persons who were, or might become, members of a jury or jury panel if the criminal charges are prosecuted on indictment; and this might lead to public speculation or conclusions about the criminal proceedings that would not be in the interests of justice. 10 Those factors, doubtless, informed the considerations of Fairfax in accepting the appropriateness of a form of stay, including an order vacating the orders of 27 September 2016 for the preparation of this matter for trial and the hearing date of the trial. Fairfax' submissions 11 However, Fairfax argued, but led no evidence, that I should make an order that it have access to the documents produced by ASIC and PwC on 2 February 2017, and that I should continue to require ASIC to answer the balance of the subpoena to it on 15 February 2017. It also argued that Mr Gregg's written submissions on this application had changed the forensic context significantly. That was, Fairfax contended, because those submissions included an argument that, were Mr Gregg convicted, Fairfax would be entitled to rely on s 42 of the Defamation Act 2005 (NSW) in relation to that conviction, to the extent that it was relevant, which in turn might lead to a potential shortening of these proceedings and a substantial saving of time and costs. Senior counsel for Mr Gregg retorted that, notwithstanding his own words in his written submissions, if it transpired that Mr Gregg were convicted on the counts charged, these proceedings effectively would not proceed. 12 Fairfax argued that it did not have any onus to establish why the orders it sought for access and further production should be made. But, Fairfax submitted in any event, that, if it did have such an onus, it would use the documents to which it were given access in order to update its own current knowledge and understanding of the material now in its possession while that material was relatively fresh in counsel's and solicitor's minds, particularly having regard to the extensive work that had been done in preparing the current version of the defence of justification as extensively and thoroughly as it had. 13 Fairfax also said that it wishes to be able to use information that emerged from any such documents within the constraints of the implied undertaking not to use documents or information produced under the compulsory processes of the Court in civil proceedings for a purpose other than that for which the documents were produced or the information obtained: see Hearne v Street (2008) 235 CLR 125. Fairfax argued that, by being able to have access to those further documents, not only would it be able to correlate the information in them to its current understanding of the material already in its possession, but it would also be able to pursue enquiries, including of witnesses, consistently with its obligation under the implied undertaking in circumstances where there was no evidence that, in doing so, such action had the capacity to interfere in or to prejudice the administration of justice in the criminal proceedings. It argued that access to the further documents would enable it more effectively, should it choose to do so, to interview witnesses responsibly in a way consistent with its obligations in the use of documents obtained under compulsory process and the suppression and non-publication orders that I made in respect of the documents produced by ASIC. It argued that the Court had power to condition any stay so as to fashion it consistently with the purposes both for which a stay was granted and Fairfax' interest in the proceedings, relying on observations by the Court of Appeal in Tringali v Stewardson Stubbs & Collett Ltd (1966) 66 SR (NSW) 335 at 344, and the approach that Waddell J took in a claim for stay of civil proceedings where there were concurrent criminal proceedings in Beecee Group Ltd v Barton (1980) 5 ACLR 33. 14 Fairfax contended that it was entitled to expect that, in the ordinary course, it would be granted access to the documents produced by ASIC and PwC, to expect the enforcement of the balance of the subpoena by ASIC and subsequently that it would granted the right to inspect those documents in accordance with what Moffitt P said in National Employers' Mutual General Association Limited v Waind and Hill [1978] 1 NSWLR 372 at 383-384. It also relied on what Jagot J said in Ransley v Commissioner of Taxation [2016] FCA 778 at [22]. Her Honour observed that it was necessary for an applicant for a stay, on the ground that there were pending concurrent criminal proceedings, to demonstrate real prejudice to justify the grant of the stay and that the mere existence of criminal proceedings was insufficient. Consideration 15 The question whether the common law felony tort rule continues to apply in Australia has not been finally considered by the High Court. However, in Halabi v Westpac Banking Corporation (1989) 17 NSWLR 26 (in which special leave to appeal was refused: see 169 CLR 692) Kirby P and McHugh JA held that that rule no longer applied in Australia, and that the Court had a discretion to determine whether, and on what terms, civil proceedings should be stayed to prevent abuse and to achieve justice between the competing rights of the plaintiff and defendant (or applicant and respondent), having regard to the existence of concurrent criminal proceedings: at 42D-E per Kirby P and at 58F-G, 59A-B per McHugh JA; see also Cameron's Unit Services Pty Limited v Kevin R Whelpton Associates (Australia) Pty Limited (1984) 4 FCR 428 at 435 per Wilcox J. In Beecee 5 ACLR at 39, Waddell J said that, in the exercise of its inherent powers, the Court would not permit civil proceedings to go to trial if to do so would in any way create a real likelihood of prejudice to the defendant in the criminal proceedings. 16 In Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46, French CJ, Hayne, Kiefel, Bell and Keane JJ held that the courts have the power to control their proceedings and to order a stay in an appropriate case. They said that it will be appropriate to do so where the interests of justice require such an order. Their Honours held that the question was whether it was in the interests of justice that the civil proceedings should continue, or not, and that an important consideration was the risk of prejudice to a person's defence of criminal proceedings (see at 58-59 [36]-[37]). 17 They rejected an argument that, ordinarily, where issues in civil and criminal proceedings were identical, the mere existence of a statutory cause of action implied that the plaintiff or applicant could pursue that cause of action in civil proceedings regardless of the effect on the defendant's or respondent's defence of the criminal proceedings (255 CLR at 59 [38]-[41]). They said (at 59 [39] and [42]): 39 It may be accepted that forfeiture proceedings should not be unduly delayed. No litigation should be delayed except for good cause, especially criminal proceedings. On the other hand nothing in the [Proceeds of Crime Act 2002 (Cth)] or in the nature of forfeiture proceedings under the Act suggests that they must proceed at all costs. It could hardly be said, from any point of view, that they are more important than criminal proceedings and should be given priority. … 42 The risk of prejudice to the second respondent if a stay is not granted in the forfeiture proceedings and the exclusion proceedings is plain. It is not necessary for the second respondent to say any more than he did on the application for a stay in order to identify that risk, given that the offences and the circumstances relevant to both proceedings are substantially identical. (emphasis added) 18 Their Honours held that it was not necessary for the defendant (or respondent) to identify specific matters of prejudice. That was because requiring him or her to do so would be to make the risk of prejudice a reality through the person having to reveal information about his or her defence, the very situation an order for a stay sought to avoid. They also rejected the Commissioner's contentions that a decision on whether any order for a stay ought be made should be deferred until the parties had exchanged their evidence and that protective orders could be made that could maintain the confidentiality of that evidence, having regard to the principles of open justice (see 255 CLR at 59-60 [43]-[44]). 19 French CJ, Hayne, Kiefel, Bell and Keane JJ said that, were the defendant required in the civil proceedings to provide his evidence to the Commissioner, even if that evidence could not be used as evidence against him in the prosecution, "its possession by the prosecution might affect his defence. The Court of Appeal's view that protective orders would not suffice to remove the risk of prejudice to the second respondent's defence is clearly correct" (255 CLR at 60 [46]). In the end, their Honours held (255 CLR at 61 [50]) that the interests of justice were not served by requiring the defendant to defend the civil proceedings before the finalisation of his criminal proceedings, especially since the Commissioner would suffer no relevant prejudice from any delay. 20 The Court's inherent power to stay proceedings is not confined to closed categories. Rather, the power is to be exercised in the interests of justice: Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256 at 266-267 [14]-[15] per Gleeson CJ, Gummow, Hayne and Crennan JJ. That case concerned the Court's powers to prevent an abuse of process. Their Honours held that any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the Court's process and that the failure to take, as well as the taking of, procedural steps and other delay in the conduct of proceedings is also capable of constituting an abuse of the process of the Court. 21 There is no suggestion here that the basis of the power to stay rests in the principles apposite to an abuse of process. However, the power of the Court to stay proceedings can arise from the circumstances in which its procedural rules are used, or proposed to be used, where there are concurrent civil and criminal proceedings involving an individual who is liable to criminal punishment. The purpose of the Court's power to order a stay, as the Court explained in Zhao 255 CLR 46, is to prevent prejudice to the administration of justice. 22 The Court exercises a discretionary judgment in deciding whether to grant a stay that involves a balancing exercise in ascertaining where the interests of justice lie. The fact that there are concurrent criminal proceedings is a primary consideration in the sense, as Dowsett, Tracey and Bromberg JJ explained in Construction, Forestry, Mining and Energy Union v Australian Competition and Consumer Commission (2016) 242 FCR 153 at 167-168 [59], that the risk of prejudice to the fair and efficient conduct of the criminal proceedings should be given especial significance. They observed, as did Jagot J in Ransley [2016] FCA 778 at [22], that such a risk must still be established. However, in Zhao 255 CLR at 59 [42], the Court held that the risk of prejudice was "plain" on the face of the issues in the civil and criminal proceedings and did not need to be established there by detailed evidence. That is so here. 23 I am satisfied that the parties' recognition of the substantive overlap between the criminal charges against Mr Gregg and the subject matter of these civil proceedings requires that there be a stay of these proceedings in the interests of justice until the finalisation of the criminal charges that have been brought against Mr Gregg. 24 In essence, Fairfax seeks that I impose a condition on such a stay that would enable the making of orders granting it access to the documents already produced by ASIC and PwC, compelling ASIC to produce further documents and granting it the right of inspection of those new documents. 25 The inherent power of a superior court of record, such as this Court, to stay its proceedings (and the corresponding implied power of an inferior court to do so) carries with it the power to impose conditions on, or in respect of, any order for a stay of proceedings such as these: Grassby v The Queen (1989) 168 CLR 1 at 16-17 per Dawson J, with whom Mason CJ, Brennan, Deane and Toohey JJ agreed; Mansfield v Director of Public Prosecutions (WA) (2006) 226 CLR 486 at 492 [10], 498-499 [33]-[34], 504 [53]-[54] per Gleeson CJ, Gummow, Kirby, Hayne and Crennan JJ; FAI General Insurance Company Ltd v Southern Cross Exploration NL (1958) 165 CLR 268 at 283-284 per Wilson J, with whom Brennan, Deane and Dawson JJ agreed, and at 290 per Gaudron J. 26 If a party seeks to vary, or make conditional, an order for a stay of civil proceedings that is appropriate to prevent prejudice to the administration of justice in concurrent criminal proceedings, the party, ordinarily, will have an onus to establish why the variation or condition is necessary or in the interests of justice. Here, of course, Fairfax sought that the order for a stay, which it accepted was appropriate in principle, should be so fashioned as to permit it to pursue its interests by utilising the Court's processes in having access to documents produced in answer to subpoenas and compelling further compliance by ASIC with the unanswered portions of the subpoena addressed to it. 27 In Waind [1978] 1 NSWLR at 384C-D, Moffitt P said that if a subpoena for production were properly issued and not set aside, and if there were no valid objection to the production of the documents to the Court: then the documents are in the control of the judge, who is invested with jurisdiction to take all steps necessary for the proper trial of the issues before him, subject to the due observance of any relevant rules and procedures of the court. … The only legitimate purpose of requiring the production, and permitting the inspection, of a stranger's documents can be to add, in the end, to the relevant evidence in the case. (emphasis added) 28 I am not persuaded that it is necessary or in the interests of justice to impose conditions on a stay of these proceedings. It is not necessary, in the circumstances, for Fairfax to have access to documents that have been produced by ASIC and PwC or for ASIC to be compelled to produce the balance of the documents the subject of the unanswered portions of the subpoena to it. I accept that Fairfax may wish to use the benefit of access to those documents for the purposes of developing its own current understanding of the material that it may later be able to deploy in its defence of these civil proceedings and to pursue further inquiries. However, it seems to me to be antithetical to the purpose of granting a stay to contemplate that further use could now be made of those documents. 29 Such a use could only be for the purpose of conducting these proceedings in accordance with the implied undertaking given to the Court by a party who obtains access to another's information or documents under compulsion of the Court's process: Hearne 235 CLR at 158 [105] per Hayne, Heydon and Crennan JJ. The implied undertaking is given by a party obtaining access to documents produced under the Court's compulsory processes not to use them "for any purpose other than the action in which they are produced". Since the action is stayed, albeit that it is capable of being revived once the criminal proceedings are concluded, balancing the interests of justice as best I can, I am not satisfied that it is necessary or appropriate to condition what would otherwise be a general stay of the proceedings so as to permit Fairfax to pursue further inquiries by reference to more material that may become available to it were I to allow it to have access to documents already produced or to require the production of, and then give it access to, further documents. 30 If the criminal proceedings run their course and the stay in these proceedings is lifted, Fairfax will have access at that stage to what is likely to be the far more extensive material that becomes available during the criminal proceedings. Moreover, in those circumstances, there is likely to be no necessity for the continuation of the suppression and non-publication orders that I have made for the purposes of protecting the administration of justice in respect of the criminal proceedings. 31 There is also a potential that steps that Fairfax might undertake, were it to have access to the further material it seeks, could, innocently and inadvertently on its part, have unintended or uncontrollable impacts on the conduct of the criminal proceedings. I do not suggest that that would come about in any conscious way, but having regard the purpose for which the stay is granted, I see no need for Fairfax at the present time to be given such access, pursuant to the Court's orders; cf. the analogous, but not identical, position in Zhao 255 CLR at 59-61 [42]-[50]. 32 Moreover, the purpose for which a stay is appropriate necessarily will involve the delay of these proceedings. That consequence arises by reason of the real risk to the administration of justice in the criminal proceedings were these civil proceedings to continue. Unfortunate as that consequential delay might be, I am not persuaded that it is appropriate to fashion a stay that, in effect, permits these proceedings to continue in part by giving Fairfax access, at this stage, to material in the hands of the prosecutor in the criminal proceedings that is not in the public domain and also to other material produced by PwC under compulsion. Conclusion 33 For these reasons, I am of opinion that it is appropriate to order that these proceedings be stayed until the determination of the criminal proceedings in the Local Court of New South Wales and on any indictment brought in respect of those proceedings and to make consequential orders vacating orders made on 27 September 2016, including the trial fixed for 4 September 2017. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. Associate: Dated: 28 April 2017