Telstra Ltd v Sulaiman and others

This judgment deals with stay applications brought by two of the Defendants to these proceedings, the Second Defendant, Mr Azatullah Sulaiman (“AS”) and the Third Defendant, Mrs Khalida Sulaiman (“KS”).

By way of background, by Summons filed on 11 December 2023, the Plaintiff, Telstra Corporation Limited (“Telstra”), sought certain orders in respect of the conduct of these proceedings, including freezing orders against the First Defendant, Mr Qartullah Sulaiman (“QS”), AS and KS. On 11 December 2023, McGrath J, as duty judge, made freezing orders against each of the Defendants. On 15 December 2023, Ball J varied that order reducing the amount which the Defendants could spend each week in respect of ordinary living expenses.

By Notice of Motion filed on 1 February 2024, QS sought an order that the proceedings be stayed under s 67 of the Civil Procedure Act 2005 (NSW) (“CPA”) or in the Court’s inherent jurisdiction. QS no longer pursues that stay application and I will order that it be dismissed. By Notice of Motion filed on 5 February 2024, AS and KS also sought an order that the proceedings be stayed on the same basis, and they pursue that application.

On 19 April 2024, by his judgment in Telstra Ltd v Sulaiman [2024] NSWSC 440, Stevenson J declined to vary the freezing orders to further reduce the amount which the Defendants were able to spend each week in respect of living expenses. On the same date, Stevenson J also made orders, for the reasons set out in his judgment in Telstra Ltd v Sulaiman (No 2) [2024] NSWSC 441 that provided for the hearing of Telstra’s case in chief and provided that the Defendants would be required, at the conclusion of Telstra’s case in chief, to inform the Court whether they wished to make an application under r 29.19 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) that Telstra’s case be dismissed, or whether they wished to adduce evidence in response to Telstra’s case, and the Court would then consider what steps should be taken in respect of the stay applications and hearing of the balance of the proceedings.

The hearing of Telstra’s case in chief has now occurred before me. After Telstra closed its case in chief, none of QS, AS or KS made an application under UCPR r 29.19 that Telstra’s case be dismissed. Mr Bagley, who appears for AS and KS has indicated they wish to adduce evidence in response to Telstra’s case. However, neither AS, KS nor their solicitor led any evidence to identify, even in general terms, the nature of the evidence which would be led by them.

The proceedings have since continued in the Commercial List of this Court and, by its Amended Commercial List Statement filed on 17 June 2024, Telstra set out the nature of the dispute as follows:

By his Commercial List Response dated 19 June 2024, QS did not plead to the substantive allegations made by Telstra and invoked his right to silence and did not admit or deny those allegations and, by their Commercial List Response dated 20 June 2024, AS and KS took the same approach.

In support of that application, AS and KS now read the affidavit dated 5 February 2024 of their solicitor, Mr Ahmadi, who notes that he acts for them in these proceedings and in criminal proceedings against them relating to allegations made against them that they have recklessly dealt with proceeds of crimes committed by QS relating to Telstra. Mr Ahmadi’s evidence, by way of submission, is that charges against AS and KS are “significantly similar” to each other and to the matters alleged in these proceedings, and he annexes the police fact sheet for both of them in the proceedings. His evidence is that the prosecution brief in that matter would take approximately 12 months to be served, so that would not occur until early 2025, and any hearing of the criminal claims would occur at a later date. Neither AS nor KS gave evidence in support of the stay application.

The Court attendance notice in respect of AS refers to a charge under s 193B(3) of the Crimes Act 1900 (NSW) (“Crimes Act”) of recklessly dealing with proceeds of crime, totalling $417,300 in Australian currency cash being reckless as to whether it was the proceeds of crime. The police fact sheet again refers to QS’s employment with Telstra and advances allegations against QS in a manner which overlaps with the claims in these proceedings and refers to deposits made by AS to a bank account in the amount of $417,300. The fact sheet refers to AS having been cautioned and asked about the source of the cash which had been deposited into that account and to his having declined to answer questions and declined to take part in an electronic record of interview with police.

The Court attendance notice in respect of KS in turn refers to a charge under s 193B(3) of the Crimes Act of recklessly dealing with the proceeds of crime on 22 November 2022 and 5 September 2023, totalling $897,250 in Australian currency cash being reckless as to whether that amount was the proceeds of crime. The police fact sheet in respect of the proceedings against KS refer to QS’s employment by Telstra and set out the allegations against him, in terms which are substantially similar to the case against him in these proceedings; and refer to cash deposits made by KS into her “pensioner security account” at a bank totalling $897,250. They also refer to an explanation given by KS, under caution, to the source of the cash that she deposited in that account.

Telstra opposes the stay application and reads the affidavit dated 1 March 2024 of its solicitor, Mr D’Alessandro. He there refers to the result of his review of bank records for accounts in the name of the Defendants produced under subpoena in the proceedings.

I now turn to the applicable principles, and have drawn on Counsel’s submissions and my judgment in Application of Computer Sciences Corporation under the Evidence on Commission Act 1995 (NSW) [2019] NSWSC 777 at [15]ff for the observations that appear below.

It is common ground that the Court has power to stay proceedings under s 67 of the CPA and also has an inherent power to stay civil proceedings, because of the existence of criminal proceedings relating to overlapping matters, in a proper case: McMahon v Gould (1982) 7 ACLR 202 (“McMahon”), on which Mr Tam also relies. Earlier cases often refer to several factors identified in McMahon in determining whether civil proceedings should be stayed. However, later case law has recognised that those factors may not give sufficient weight to the accused’s right to a manifestly fair criminal trial: Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46; [2015] HCA 5 (“Zhao”); Crespin v Francis [2016] VSC 277 at [23].

In X7 v Australian Crime Commission (2013) 248 CLR 92; [2013] HCA 29 (“X7”), Hayne and Bell JJ, with whom Kiefel J agreed, addressed the question of a compulsory examination of an accused prior to a criminal trial. Their Honours observed that permitting questions to be asked about the subject of a pending charge, whether or not answers could be used in criminal proceedings, “fundamentally alters the process of criminal justice” (at [85]) in which the “accusatorial process of criminal justice and the privilege against self-incrimination both reflect and assume the proposition that an accused person need never make any answer to any allegation of wrong-doing” (at [104]). Their Honours also observed (at [105]) that the right to silence:

Their Honours also observed (at [124]) that:

In Ransley v Commissioner of Taxation [2016] FCA 778, Jagot J considered the question of a stay of civil proceedings, where a witness who was facing criminal proceedings was the essential witness in the plaintiff’s case. Her Honour observed (at [24]) that:

In Strickland v Commonwealth Director of Public Prosecutions (2018) 361 ALR 23; (2018) 266 CLR 325; [2018] HCA 53, the plurality referred (at [76]) to the observations of Hayne and Bell JJ in X7 above (at [124]) as having effect that:

The parties also draw attention to the decision of the High Court of Australia in Zhao, where the Court pointed to the relevance of the risk of prejudice in the conduct of defence in a criminal trial as to the grant of a stay, and noted that, where the offences and circumstances relevant to both proceedings were identical, the risk of prejudice was plain. I recognise that, as Mr Tam who appears for Telstra points out, the second respondent in that case (“Jin”) had there given evidence of the matters that would have to be addressed in any affidavit filed in the civil proceedings, and how that evidence would be relevant to the criminal charges, with the result that giving evidence would, in effect, waive his right to silence in the criminal proceedings. The Court there rejected a suggestion that it was necessary for the applicant for a stay to state the “specific matters of prejudice” before a stay could be contemplated, stating (at [43]) that:

The Court also rejected the suggestion that protective orders could be made which might maintain the confidentiality of evidence (at [44]), by reference to the rationale of the open justice principle, and rejected the suggestion that the Court should be closed so that forfeiture proceedings could proceed and the respondent’s evidence could be received. The Court observed (at [47]):

The parties also refer to the decision of the Full Court of the Federal Court of Australia in Construction, Forestry, Mining and Energy Union v Australian Competition and Consumer Commission [2016] 242 FCR 153; [2016] FCAFC 97, where the Full Court of the Federal Court considered the High Court’s decision in Zhao and (at [22]) summarised several principles that emerged from that decision as follows:

The Full Court also there noted (at [23]-[25]) that:

The Court also referred to the decision in McMahon and the guidelines there identified as applicable to a stay of civil proceedings. The Full Court noted that these matters were “only guidelines” and that no attack on the authority of that McMahon had been put in that case. The Full Court there observed (at [30]) that:

However, the Full Court held that the mere possibility that the applicants in that case might wish to give evidence did not establish that they were confronted by any “invidious choice”. The Full Court also observed (at [38]) that:

The parties also drew my attention to the decision of Moshinsky J in Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd (2019) 138 ACSR 42; [2019] FCA 964 (“ANZ”), where is Honour reviewed (at [43]) the aspects of overlap between the criminal and civil proceedings there in issue and observed (at [53]-[59] and [61]-[63]):

In ANZ, his Honour there held that civil proceedings should be stayed where ANZ would otherwise face an invidious choice between seeking to compel two persons to give evidence in the civil proceedings, and not to do so would deprive ANZ of sources of evidence that might be adduced in its defence, prejudicing its rights arising from the accusatorial process relating to civil trials.

In Australian Securities and Investments Commission v Taylor [2023] FCAFC 189 at [41], Mortimer CJ and Abraham J referred to the privilege against self-incrimination, and the associated right to silence, and observed that:

Their Honours also noted, in respect of the “McMahon Guidelines” (at [91]) that:

I also have regard to the observations of Matthews J in Figurehead Constructions v Machado [2023] VSC 448 at [15], where substantially identical issues arose in criminal and civil proceedings, as follows:

I have had regard to the range of considerations in the case law, including that any stay should only be made where the interests of justice require it. It is common ground between the parties that, and I have recognised that, Telstra is prima facie entitled to have its civil action tried in the ordinary course and a stay therefore requires justification on proper grounds, and that AS and KS bear the burden of demonstrating those grounds. I have also recognised that it is not sufficient basis to grant a stay of the civil proceeding that related charges have been brought against AS and KS and the criminal proceedings are pending; and the more significant question is whether AS and KS are at risk of prejudice in the conduct of their defence in the criminal trial. I have recognised that the evidence led by AS and KS is slight, but that it may not be necessary for the applicant for the stay to state the specific matters of prejudice before a stay could be contemplated, and the prejudice is here readily inferred from the nature and overlap of the claims in the criminal and civil proceedings.

In her outline of submissions, Counsel then appearing for AS and KS pointed to the risk that, if they gave evidence in the civil proceedings, the prosecution in the criminal trial would gain significant forensic advantage by having access to the transcript of the proceeding, and to witnesses who may be called by AS and KS in their defence of the proceedings, and AS and KS will in turn be constrained by the evidence they give in these proceedings. Mr Bagley who now appears for AS and KS also put these propositions in oral submissions before me. Counsel also there referred to the difficulties which would arise in protecting AS’s and KS’s position in the civil proceedings by any form of protective order, including the fact that a certificate under s 128 of the Evidence Act 1995 (NSW) would not protect AS and KS if they chose to give affirmative evidence in the proceedings, and also referred to the matters which tend against an order closing the Court, as recognised by the High Court in Zhao.

In oral submissions, Mr Bagley emphasised that the civil proceedings against AS and KS “essentially overlap in all material respects with the criminal charges that are brought against them” (T5). He submits that the risk of prejudice must be acute because the evidence that AS and KS would lead in these proceedings would necessarily address matters relevant to the defence of the criminal proceedings. He points to the fact that, if AS or KS lead evidence to seek to displace the allegation that the money they deposited was Telstra’s money, they would be cross-examined as to that evidence and that would put their defence of the criminal trial at risk. I again recognise that AS and KS do not lead evidence that they would give such evidence, or identify its scope even in general terms; however, I should at least infer that, where they have elected to give evidence, any evidence which they would give would have to be directed to displacing Telstra’s case and advancing a defence of the proceedings, and there is a substantial risk to them in cross-examination as to any such evidence and its adverse impact in the criminal proceedings. Mr Bagley also submits (T6), and I accept, that there would be real difficulties for AS and KS in making a strategic choice to give evidence without the concern that evidence may be used against them in subsequent criminal proceedings. I recognise, however, that the premise of this application is that AS and KS have elected to give evidence in these proceedings, and they now point to the risk to which that evidence would expose them in the criminal proceedings.

Mr Tam responds that AS and KS do not sufficiently articulate prejudice and submits that it would be possible to rely on tailored measures to proceed with the trial. In oral submissions, Mr Tam in turn took me to the caselaw, again in detail, and submitted that the Court should not be satisfied that there was a risk of prejudice to AS and KS, absent evidence led by them to identify that prejudice, and otherwise that the balancing exercise contemplated by the caselaw did not here support a stay (T10).

I accept that AS and KS have led minimal evidence to establish prejudice, and that evidence does not indicate the scope of the evidence which they seek to lead or, in the case of KS, whether it would be the same or different than what she has previously told the police. However, as I noted above, AS and KS have now made the election contemplated by the orders made by Stevenson J, that they will lead evidence in the proceedings. It is plain enough that, in the relevant circumstances, their evidence would need to address the source of the funds they deposited into the relevant bank accounts and their knowledge of the character of those funds; since, absent such evidence, their evidence would potentially not meet the inferences that would be available from the evidence led by Telstra in its case in chief. It seems to me that, here, it is less significant that AS and KS did not lead affidavit evidence which described the evidence that they would give in even general terms, where an inference as to the scope of that evidence is readily drawn from their election to give evidence.

It seems to me that real prejudice to AS and QS is here inevitable from the hearing of the civil proceedings, despite the explanation that KS offered to the police that limited her exercise of the right to silence, where the likely need for AS and QS to give evidence to defend these proceedings, and their choice to do so, would erode their right to silence and the privilege against self‐incrimination, quite apart from any risk of publicity that might reach and influence jurors.

I do not accept Mr Tam’s submission that AS’s and KS’s contentions depend upon any proposition, as a general matter, that nothing can be done short of a stay to alleviate or address the prejudice to a defendant in these circumstances. The problem, here, is a more specific one, that nothing can be done, short of a stay, that would avoid the prejudice to AS and KS of exposing their cases, and giving evidence which could be tested by cross-examination, at a hearing that would occur long before the criminal proceedings went to trial. Here, AS’s and KS’s case for a stay is strengthened by the very substantial overlap of the factual matters at issue in the criminal and the civil proceedings, both in respect of the identification of the funds received by AS and KS, and in respect of their knowledge of circumstances in which the funds had been obtained or any failure to make any inquiry as to that question.

I have recognised that the case law allows limited scope to meet that prejudice by protective orders; but for the approach taken in the cases, I would have considered that suppression orders could have met that prejudice. It seems to me that, here, there is no real prospect that further protective measures other than suppression orders are available, where the next steps in the conduct of the proceedings would be the filing of Defences which admit, do not admit or deny the specific allegations made by Telstra, and identify the material facts on which AS and KS rely for any affirmative defences, and the leading of their evidence and the allocation of a hearing date to hear their case, where Telstra has already completed its case in chief. Each of those steps would erode AS’s and KS’s right to silence in the criminal proceedings, and advantage the prosecution in the criminal proceedings so far as it disclosed any defences on which they relied; required admissions as to matters alleged against them, and exposed them to cross-examination as to their evidence.

I have also recognised that the risk of prejudice to AS and KS must be weighed against the prejudice that a stay of the civil proceeding would occasion to Telstra, which is mitigated by the freezing orders but nonetheless real. Mr Bagley fairly accepted that the Court must take into account the risk of prejudice to Telstra; he submitted, and I accept, that that risk was reduced by the existence of freezing orders, although some risk remained in respect of the erosion of the assets available to AS and KS to meet a judgment in Telstra’s favour, by ordinary living expenses AS and KS are permitted to incur pursuant to the exception to the freezing order. I accept that, as Mr Tam submits, there is prejudice to Telstra in a delay in the trial, particularly where there is a real prospect that that delay will be lengthy, and the assets of AS and KS that are available to meet a judgment against them will be eroded by funds expended in reliance on the exception for ordinary living expenses under the freezing order, in the period to trial. However, it seems to me that the prejudice to AS and KS of proceeding to hear the balance of this matter substantially outweighs the prejudice to Telstra of delay pending the determination of the hearing.

In these circumstances, I am satisfied that the proceedings against AS and KS must be stayed while the criminal proceedings against them are ongoing. There is a question whether Telstra will now seek to proceed with the trial against QS alone, where he has not sought a stay of the proceedings against him. I will hear the parties as to the orders to be made to give effect to this judgment.