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SUPREME COURT OF QUEENSLAND

FEDERAL COMMISSIONER OF TAXATION v AHERN

Ryan J

17 April 1986 -

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Ryan J    John Waymouth Ahern the appellant in appeals against assessments by the Deputy Commissioner of Taxation has applied for an order pursuant to O 63r 1 of the High Court Rules that all further proceedings in certain appeals be stayed until the hearing and determination by the District Court of Queensland of a criminal charge laid against the appellant under s 86(1)(E) of the Crimes Act 1914 (Cth) or of any appeal therefrom.

   The appeals are against the disallowance by the respondent of objections against income tax with respect to income alleged to have been derived by the appellant during the years 1974-1984 except for the year 1983. Consent orders were made in the proceedings on 18 April 1985 and 21 February 1986, including an order that the appellant and respondent be at liberty to serve interrogatories on the other on or before 10 March 1986 and that the interrogatories be answered on or before 7 April 1986. Such interrogatories have been served on the applicant.

   The applicant was on 14 March 1986 committed for trial in the District Court at Brisbane on the conspiracy charge, namely that between about January 1974 and about July 1978 at Southport in the State of Queensland and other places, John Waymouth Ahern did conspire with Brian James Maher, John Patrick Donnelly, Lee Gabriel Hurley, Lloyd Errol Faint and divers other persons, to defraud the Commonwealth contrary to s 86(1)(E) of the Crimes Act 1914. Mr Nolan, the solicitor who was acting for the applicant in the criminal proceedings, had informed Mr Carter, the solicitor acting for him in the taxation appeals, that the filing of affidavits in answer to the interrogatories could be detrimental to his defence in the criminal proceedings. Mr Carter thereupon wrote to the Australian Government Solicitor a letter suggesting that they concur in an application to the court for a stay. This the Australian Government Solicitor refused to do and indicated that any application for a stay of proceedings would be opposed.

   According to the affidavit by Mr Nolan part of the Crown's case in relation to the criminal proceedings involves companies, trusts and persons, the subject of the taxation appeals. These include Rocklea Industries Pty Ltd, Ahegogo Pty Ltd, Promenade Pty Ltd, Bonney Ltd, Waymouth Trust, L and J Group of Companies, Waymouth Ltd, Tradfern Investments Pty Ltd, Demos Pty Ltd, Nerang Enterprises Pty Ltd, Rehtom Traders Pty Ltd, Bonavista Nominees Pty Ltd, Cascade Charitable Trust, C & G Trust and Commercial Securities Ltd. Mr Nolan has advised the applicant that under no circumstances should he give evidence on oath in these appeals while the criminal proceedings have not been finally disposed of. He states that it is apparent from an examination of the respondent's answers to the appellant's request for particulars in the appeals and the interrogatories delivered by the respondent for the examination of the appellant, that the income tax appeals involve the investigation of transactions which are being investigated in the criminal proceedings and that the conduct of the defence to the criminal proceedings would be severely prejudiced if he were to answer the interrogatories delivered or otherwise give evidence on oath.

   The substantial grounds relied upon in the application for a stay are:

 (a)  That the criminal and civil proceedings involved an investigation of many of the same matters.

 (b)  That the taxpayer would be severely prejudiced in the taxation appeals if he decided not to give evidence in them, or conversely that he would be exposed to a real danger of injustice in the criminal proceedings if he did.

 (c)  That a stay would not prejudice the Commissioner who is entitled to recover tax though appeals are pending.

   In Black and White Cab Co Pty Ltd v Kelk (1984) 2 Qd R 483 Connolly J quoted with approval the following remarks from the judgment of Megaw LJ in Jefferson Ltd v Bhetcha [1979] 1 WLR 898 at 904:

   

"I should be prepared to accept that a court which is competent to control a proceedings in the civil action whether it be a master, a judge or this court 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. There is, I say again in my judgment, no principle of law that a plaintiff in a civil action is to be debarred from pursuing that action in accordance with the normal rules for the conduct of civil actions, merely because so to do would or might result in the defendant, if he wished to defend the action, having to disclose by an affidavit under O 14 or in the pleading of his defence or by way of discovery or otherwise what his defence is or may be in whole or in part, with the result that he might be giving an indication of what his defence was likely to be in the contemporaneous criminal proceedings. The protection which is at present given to one facing a criminal charge - the so called right of silence - does not extend to give the defendant as a matter of right the same protection in contemporaneous civil proceedings."

   Connolly J added at 487 some observations with which I respectfully agree. His Honour said:

   

"The notion that the right to silence extends as far as is contended, so as to deny a plaintiff in civil proceedings the right to prosecute his action, is to my mind an unwarranted extension of that right and on this point I follow the judgment of Megaw LJ, the relevant passage from which I have set out above. Finally, the contention that a defendant in civil proceedings cannot be required to disclose facts which carry no imputation of guilt, simply because they may be part of the factual situation which the Crown may be expected to seek to prove in criminal proceedings, is fanciful. I see no real risk of prejudice in such a course. If a defendant in this situation is to have the discretionary jurisdiction of the court exercised in his favour, he must show a real prospect of substantial prejudice."

   An attempt to do this was made by a reference to the interrogatories delivered by the respondent, the answer by the Commissioner to the request for particulars and the "overt acts" alleged to have been performed in pursuance of the unlawful agreement. There can be no doubt that frequent reference is made in those documents to the companies, trusts and persons already mentioned. But the issues before the two tribunals - the District Court in respect of the conspiracy charge and the Supreme Court to which the taxation appeals have been referred - are very different. In the taxation appeals the essential question is whether income earned by certain entities was in fact derived by the appellant but paid to those entities at his direction, or is income which is deemed to be income of the tax payer by virtue of the application of s 260 of the Income Tax Assessment Act 1936 (Cth). In the criminal proceedings, the overt acts are alleged facts from which the jury will be invited to draw an inference of a conspiracy. It was however submitted for the applicant that the facts to be proved in the income tax appeals would be relied on by the Crown to prove conspiracy. It does indeed seem upon an examination of the documents that some of those facts might be relevant in the criminal proceedings. But I do not think that it can be claimed that this has the necessary consequence that the applicant has a right to a stay of the civil proceedings, either because he would be prejudiced in the taxation appeals or in his criminal trial. Such a claim seems to me to amount to an assertion that there is the same right of silence in civil proceedings as in criminal proceedings, but as Megaw LJ stated in Jefferson Ltd v Bhetcha, supra, at 905, the protection which is at present given to one facing a criminal charge does not extend to give the defendant as a matter of right the same protection in contemporaneous civil proceedings. The essential question is whether there is a real danger of the causing of injustice in the criminal proceedings and I must ask myself whether there has been demonstrated such a real risk of injustice to the applicant that a stay of civil proceedings should be ordered.

   In a valuable survey of the relevant authorities, Wootten J sets out in McMahon v Gould (1982) 7 ACLR 202 at 206-7, factors which may be relevant in determining whether there is a real and not merely notional danger of injustice in the criminal proceedings. I observe that he had already recognized that each case must be judged on its own merits and that it would be wrong and undesirable to attempt to define in the abstract what are the relevant issues. Among the factors are the following:

   (a) 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.

   I consider that the possibility of this occurring is remote at the present stage. The position might be different if the civil proceedings had reached a stage where a trial was imminent. As Wootten J observed, in an appropriate case the proceedings may be allowed to proceed to a certain stage, for example setting down for trial and then stayed.

   (b) The proximity of the criminal hearing. I was informed that the matter has been listed for the sittings of the District Court beginning on 19 May 1986, but there is no certainty that it will proceed at that sittings.

   (c) A possibility of miscarriage of justice, for example by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses or interference with the defence witnesses.

   I regard the possibility of this occurring in these circumstances as extremely slight.

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

   In this regard an affidavit was put before me on behalf of the respondent which indicated that the appellant had stated in other proceedings that he was anxious that a decision be given on his objections as quickly as possible and that the matters on the objections be taken to the courts as quickly as possible so that the matter could be resolved.

   It was also pointed out that the two orders made by Connolly J were consent orders.

   I do not regard these matters as being cogent factors in favour of refusing the application for a stay. A person's perception of a situation may change in the light of new circumstances including here the circumstance of a committal on a conspiracy charge.

   I have concluded however that on the principles applicable to ordinary civil proceedings the applicant has not shown that it is right that the respondent's ordinary rights to proceed in the civil action should be stayed. They should not be stayed on the ground that the applicant would be exposed to a real danger of injustice in the criminal proceedings, or on the ground that he would be seriously prejudiced in the taxation appeals. However it was submitted that those principles were not applicable or required some modification where the proceedings were by an appellant to challenge a decision of the Commissioner of Taxation disallowing an objection to an assessment. It was said that the analogy was with the plaintiff seeking to stay proceedings to enforce his rights, and it was pointed out that by virtue of s 201 of the Income Tax Assessment Act the fact that an appeal is pending does not in the meantime interfere with or affect the assessment the subject of the appeal, and income tax may be recovered on the assessment as if no appeal was pending. However I consider that the Commissioner has an interest in having his rights to levy tax and his possible liability to refund any tax paid determined in an appeal which is analogous to the interest of a plaintiff, and that the ordinary principles are applicable to a taxation appeal.

   I conclude therefore that the application should be dismissed. I should add that nothing I have stated in this judgment is intended to deal with the issue, whether the applicant may refuse to answer any questions on the ground that they might tend to incriminate him. That seems to me to involve other considerations and procedures than were pertinent to deal with the present application.

   I dismiss the application and order the applicant to pay the respondent's costs of and incidental to the application. I shall hear counsel on the question as to what variation should be made to the consent order made by Connolly J on 21 February 1986.