FEDERAL COURT OF AUSTRALIA

Ron Medich Properties Pty Ltd v Bentley-Smythe Pty Ltd (No 6) [2010] FCA 1460

FEDERAL COURT OF AUSTRALIA

Ron Medich Properties Pty Ltd v Bentley-Smythe Pty Ltd (No 6) [2010] FCA 1460

CORRIGENDUM

1    In paragraph 5 of the Reasons for Judgment, “s 5(5)(b)(ii)” should be replaced with “s 5(4)(b)(iii)”.

2    In paragraph 9 of the Reasons for Judgment, the second sentence should be replaced with:

“Section 5(4) of the Act provides:

Where:

(a)    a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Federal Court or the Family Court (in this subsection referred to as the first court); and

(b)    it appears to the first court that:

(i)    …

(ii)    …

(iii)    it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of a State or Territory;

the first court shall transfer the relevant proceeding to that Supreme Court”.

Associate:

Dated:    9 May 2011

THE COURT ORDERS THAT:

1.    Pursuant to s 5(4)(b)(iii) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), this proceeding be transferred to the Common Law Division of the Supreme Court of New South Wales.

2.    Subject to the orders made on 29 November 2010, the Respondents’ notice of motion filed on 26 November 2010 be otherwise dismissed.

3.    Subject to the orders made on 29 November 2010, the Applicant’s notice of motion filed on 12 November 2010 be otherwise dismissed.

4.    The costs of the Applicant’s notice of motion filed on 12 November 2010 and the Respondents’ notice of motion filed on 26 November 2010 be costs in the cause.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

Introduction

1    Presently before the Court are two notices of motion. The first was filed by the applicant, Ron Medich Properties Pty Ltd (RMP) on 12 November 2010; the second was filed by the respondents and cross-claimants (McGurk parties) on 26 November 2010. Both motions came on for hearing on 29 November 2010. Paragraph 1 of RMP’s motion moved that the hearing set down for 5 days commencing on 1 February 2011, be vacated. That order, along with a number of other orders, was made by consent on 29 November 2010. The balance of the notice of motion seeks a complete stay of the proceeding pending the resolution of criminal charges against Mr Ronald Edward Medich in relation to the death of Mr Michael McGurk on 3 September 2009.

3    RMP’s motion is supported by an affidavit sworn by John Gerard Bamford, the principal of Bamford Lawyers, the solicitors for the applicant. In his affidavit, Mr Bamford stated that on 27 October 2010 Mr Medich was arrested and charged with ‘solicit to murder’ Mr Michael Loch McGurk who was the fourth respondent in this proceeding. On 4 November 2010 an additional charge of murder of Mr McGurk was laid against Mr Medich. According to Mr Bamford the police had alleged that the basis of Mr Medich’s motive for the murder was continuing and unresolved business disputes between Mr Medich and Mr McGurk.

4    The substantive application, which was filed on 18 March 2009 by RMP, relates to business dealings involving RMP, Mr Medich and some of the McGurk parties. A search of the database of the Australian Securities and Investments Commission exhibited to the affidavit of Richard Allsop, solicitor for the respondents, shows that, as at 23 November 2010, Mr Medich was a shareholder and director of RMP. On both sides allegations are made of monies owed and unpaid.

5    The proceeding is complicated by a number of cross-claims. The First Cross Claim, filed on 12 June 2009, is brought against RMP, and relates to land in Queensland (Mowbray property) and land in New South Wales (Gerroa property). The Second Cross Claim, as amended and filed on 1 December 2010, also concerns a dispute about the Mowbray and Gerroa properties and is brought against RMP and Mr Medich. The Third Cross Claim, filed on 1 December 2010, relates to a claim for damages arising out of the death of Mr McGurk. The Third Cross Claim is subject to a confidentiality order made, by consent, on 29 November 2010.

6    In their motion, the respondents oppose a complete stay of the proceeding and seek directions for its further conduct including orders for discovery, the service of all evidence relied on by RMP (other than any affidavit by Mr Ron Medich), leave to issue subpoenas and leave to file certain revised pleadings. The respondents also seek an order transferring the proceeding to the Common Law Division of the Supreme Court of New South Wales pursuant to s 5(5)(b)(ii) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth).

Conclusion

7    For reasons that follow I have decided that the order for transfer to the Supreme Court should be made and that, in the circumstances, it would be inappropriate for me to make the other orders sought by the respondents or the orders sought by the applicant.

Reasons

8    The respondents do not seek a transfer in the alternative to the other orders they seek but in addition to them. At the hearing I expressed the view that if a transfer order were to be made, the question of whether there should be a stay in whole or in part should be decided by the Supreme Court. In response Mr Kunc, senior counsel for the respondents, said that the respondents would be content with that course although he did urge that this Court make orders with respect to discovery.

9    The applicant opposed the order sought by the respondents for the proceeding to be transferred. It labelled the submissions of the respondents in relation to this issue as weak. It submitted that no convincing case had been made as to why the Supreme Court was better placed to decide the difficult issues that will no doubt arise due to the overlap between the issues to be determined in this proceeding and those to be determined in relation to the criminal charges faced by Mr Medich.

10    The starting point for a consideration of the application for the proceeding to be transferred to the Supreme Court of New South Wales must be the words of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (Cth Act). Section 5(5) of the Act provides

Where:

(a)    a proceeding (in this sub-section referred to as the “relevant proceeding”) is pending in the Federal Court or the Family Court (in this sub-section referred to as the “first court”); and

(b)    it appears to the first court that:

(i)    the relevant proceeding arises out of, or is related to, another proceeding pending in the other of the courts referred to in paragraph (a) and it is more appropriate that the relevant proceeding be determined by the other of the courts referred to in paragraph (a); or

(ii)    it is otherwise in the interests of justice that the relevant proceeding be determined by the other of the courts referred to in paragraph (a),

the first court shall transfer the relevant proceeding to that other court.

11    The Cth Act was introduced as part of a national scheme of legislation which also introduced the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) (NSW Act). In Bankinvest AG v Seabrook (1988) 14 NSWLR 711 at 713-714, Street CJ said:

The cross-vesting legislation passed by the Commonwealth, the States and the Territories both conferred on each of the ten courts Australia-wide jurisdiction and set up the mechanism regulating the transferring of proceedings from one of the ten courts to another. In relation to transfer, the common policy reflected in each of the individual enactments is that there must be a judicial determination by the court in which proceedings are commenced either to transfer or not to transfer the proceedings to one of the other nine based, broadly speaking, upon consideration of the interests of justice … It calls for what I might describe as a ‘nuts and bolts’ management decision as to which court, in the pursuit of the interests of justice is the more appropriate to hear and determine the substantive dispute”.

12    In BHP Billiton Limited v Schultz (2004) 221 CLR 400 the High Court had occasion to comment on the NSW Act, s 5 pursuant to which the criterion for transfer of a proceeding was substantially the same as s 5 of the Cth Act. Gleeson CJ, McHugh and Heydon JJ quoted the above comment of Street CJ and added, at [14]:

In the context of the Cross-vesting Act, one is not concerned with the problem of a court, with a prima facie duty to exercise a jurisdiction that has been regularly invoked, asking whether it is justified in refusing to perform that duty. Rather, the court is required by statute to ensure that cases are heard in the forum dictated by the interests of justice. An application for transfer under s 5 of the Cross-vesting Act is brought upon the hypothesis that the jurisdiction of the court to which the application is made has been regularly invoked. If it appears to that court that it is in the interests of justice that the proceedings be determined by another designated court, then the first court "shall transfer" the proceedings to that other court. There is a statutory requirement to exercise the power of transfer whenever it appears that it is in the interests of justice that it should be exercised. It is not necessary that it should appear that the first court is a "clearly inappropriate" forum. It is both necessary and sufficient that, in the interests of justice, the second court is more appropriate.

13    In dissenting as to the outcome of the appeal in BHP Billiton, Gleeson CJ, McHugh and Heydon JJ, differed from the other members of the Court (Gummow, Kirby, Hayne and Callinan JJ) as to whether the interests of justice in that case required the proceeding under consideration to be transferred to a different forum. However, all members of the Court accepted that the principles expressed above applied. Applying those principles to the present proceeding, it is not to the point that the application regularly invoked the jurisdiction of this Court. It is the circumstances that exist now, namely, that criminal charges have been laid against Mr Medich which give rise to the issues that, in my view, lead to the conclusion that it is in the interests of justice that the proceeding be transferred to the Supreme Court of New South Wales.

14    The prosecution of the present civil proceeding has the potential to compromise Mr Medich’s right to silence and freedom from self-incrimination in criminal proceedings. Were that the only consideration the problem could be resolved by granting the stay sought by the applicant however there are other considerations. In brief, the interests of the McGurk parties, in particular Mr McGurk’s widow, the fifth respondent, and her children are in having the present proceeding resolved as soon as possible.

15    Although Mr Medich is not a party to the main proceeding, he is, as noted above, a cross-respondent to the Second and Third Cross Claims. Moreover, it is submitted, that as the person who made the subject transactions on behalf of RMP and the controlling mind of that company, it is his actions and state of mind that are attributable to RMP. Those actions and state of mind are relevant to the main proceeding and to the claims made in the Cross Claims.

16    It is not in dispute that Mr Medich was involved in the business transactions which gave rise to the present application. RMP submits that, as these business dealings and the consequent souring of the relationship between Mr McGurk and Mr Medich are said by the Crown to have motivated Mr Medich to kill Mr McGurk, it would prejudice his defence if a stay of the present proceeding is not granted. In particular it is submitted that the issues in relation to which discovery will need to be given will be affected by issues raised in the Third Cross Claim and that this should not occur until after the pleadings in relation to that Cross Claim have closed. Similarly, it is submitted, that further affidavits would also need to be tailored to the issues raised on the pleadings and should not be ordered until the pleadings are closed and discovery given. In summary, RMP submits as follows:

To the extent that the onus is on RMP, that onus has been discharged. The seriousness of the charge against Mr Medich; the close connection between the issues in the case and the evidence and instructions to be given by Mr Medich; and now the express allegations of criminal misconduct made the subject of the Third Cross Claim make this a paradigm case for the exercise of the discretion to stay.

17    It is also submitted that the late filing of the Third Cross Claim “changes the landscape of the proceedings … the parties are back to step 1 with the pleadings incomplete”. It was said that Mr Medich would be obliged “to plead to allegations of fact which he does not have any obligation under the criminal law to either admit or deny”. The considerable weight of these is somewhat diminished by the fact that the Cross Claimants in the Third Cross Claim have consented to an order that neither Mr Medich nor RMP is required to file a defence to the Third Cross Claim until further order. That order effectively stays the Third Cross Claim and enables the application and the other cross claims to proceed without reference to it.

18    The principles relevant to whether a stay of a civil proceeding should be granted pending the resolution of an overlapping criminal proceeding was considered in State of Western Australia v Bond Corporation Holdings Pty Ltd (1992) 114 ALR 275. The case concerned issues arising out of the attempted financial rescue of the merchant bank Rothwells in October 1987. By notice of motion the firm, KMG Hungerfords, sought a stay of cross-claims brought against it pending the determination of criminal charges against one of its partners. At 297, French J (as his Honour then was) referred to the guidelines enunciated by Wootten J in McMahon v Gould (1982) 7 ACLR 202 at 206-7. Wootton J emphasised that a stay in such circumstances is not available as of right. Rather, the prima facie position is that a plaintiff is entitled to have the application tried in the ordinary course of the court’s business. The burden will be on the party seeking the stay to show that a stay is necessary in the interests of justice. French J accepted those guidelines “as a comprehensive, although not necessarily exhaustive, statement of the considerations that may be relevant when the power of the court to stay its own proceeding is invoked”. His Honour added:

Consistently with that statement the court will ordinarily allow proceedings in which its jurisdiction has been properly invoked to progress to trial and determination unless the legitimate interests of the parties and the administration of justice require otherwise. The judgment to be made is essentially normative and requires a balancing of factors of the kind referred to in the judgment of Wootton J.

19    The factors to which Wootton J referred included an accused person’s right to silence and whether “there is a real and not merely notional danger of injustice in the criminal proceedings”. In this regard Wootton J regarded the factors that might be relevant as including the following:

(i)    the possibility of publicity that might reach and influence jurors in the civil proceeding;

(ii)    the proximity of the criminal hearing;

(iii)    the possibility of miscarriage of justice eg by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses, or interference with defence witnesses;

(iv)    the burden on the defendant of preparing for both sets of proceedings concurrently;

(v)    whether the defendant has already disclosed his defence to the allegations;

(vi)    the conduct of the defendant, including his own prior invocation of civil process when it suited him.

[citations omitted]

20    Wootton J also noted that “in an appropriate case the proceedings may be allowed to proceed to a certain stage, eg, setting down for trial, and then stayed”. That may well be an appropriate course here, however, whether it is requires an evaluation of the potential prejudice to the interests of each party. The potential prejudice to Mr Medich would, in my view, be better evaluated by a court which customarily exercises criminal jurisdiction and which will exercise the jurisdiction in relation to the charges laid against Mr Medich if they go to trial. The Supreme Court is better placed to weigh those interests against the competing interest of the respondents in this proceeding to have the application faced by them determined as expeditiously as possible. I am satisfied that the interests of justice require this proceeding to be transferred to the Common Law Division of the Supreme Court of New South Wales.

21    Though no submissions on the point were made by either party, I have considered whether Mr Medich’s interests would be appropriately protected by the Court issuing a certificate under s 128 of the Evidence Act 1995 (Cth). Given the scope of s 128 and its application to evidence given by a witness, I am not satisfied that this would be the case. The applicant’s concern as to evidence in the civil proceeding extends beyond evidence that might be given by Mr Medich and includes evidence of other witnesses and disclosure following discovery. The protection afforded by s 128 extends only to protect the witness giving evidence, it does not protect a person from incrimination arising out of the evidence given by others.

22    For these reasons I shall order that the proceeding be transferred to the Supreme Court of New South Wales and that the notices of motion (subject to orders previously made by consent) be otherwise dismissed. The costs of both notices of motion should be costs in the cause.

Associate:

Dated:    22 December 2010