McMahon v Gould (1982) 7 ACLR 202

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  • The Plaintiff was the liquidator of, and the Defendants were at directors of, The Dominion Insurance Company of Australia Ltd (“Dominion“). The Plaintiff sued on behalf of Dominion for the repayment of two sums of $380,000 and $450,000, with interest.
  • The Plaintiff alleged that Mr Gould misapplied a cheque for $380,000 drawn by Dominion in favour of Newport Inn Holdings Pty Ltd, in that without Dominion’s consent or approval he caused the cheque to be negotiated and the proceeds paid to Eraville Pty Ltd (“Eraville“), a company of which he managed, controlled and had a beneficial interest. It is alleged he defrauded Dominion and breached his duties to it.
  • The Plaintiff also alleged that the two defendants, purporting to constitute a meeting of the directors of Dominion, resolved that it make a loan of $450,000 to Eraville, and caused a cheque for that amount to be drawn on Dominion’s account. It is alleged that in relation to these matters the two defendants were negligent and committed a breach of their duties to Dominion in a number of particulars, one of which was that Mr Gould acted in his own interests rather than in the interests of the company as a whole.
  • In relation to both matters, Mr Gould denied the allegations.
  • On 18 January 1982 Mr Gould was committed for trial on five charges, two of which are charges of conspiracy directly relating to the two sums claimed in the proceeding. The other three charges involved related matters arising out of Mr Gould’s activities in Dominion.
  • Mr Gould applied to stay the proceedings pending the determination of the criminal proceedings.


  • Should the Court stay the civil proceedings pending determination of the criminal proceedings?


  • The Court declined to stay the proceedings on the basis that Mr Gould could not demonstrate that the circumstances of the case required it. Indeed, Mr Gould had commenced various other litigation related to the proceedings and given evidence in respect of them.
  • In determining this, the Court had concern for the considerable case law on whether it is appropriate to stay civil proceedings pending the outcome of parallel criminal proceedings.
  • The burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff’s ordinary rights should be interfered with.  The Court’s task is one of balancing justice between the parties.
  • There is a series of criteria to be weighed in the balance to determine whether or not a stay should be granted in circumstances where there are criminal proceedings. These include:
    • The possibility of publicity that might reach and influence jurors in the civil proceedings;
    • The proximity of the criminal hearing;
    • 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;
    • The burden on the defendant of preparing for both sets of proceedings concurrently;
    • Whether the defendant has already disclosed his defence to the allegations;
    • The conduct of the defendant, including his own prior invocation of civil process when it suited him;

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