Argo Pty Ltd v Attorney-General for the State of Tasmania

[1999] TASSC 154

[1999] TASSC 154

CITATION:Argo Pty Ltd & Ors v Attorney-General for the State of Tasmania & Ors [1999] TASSC 154

PARTIES:  ARGO PTY LTD
  WRIGHT, George Peter
  NATURELAND OF TASMANIA PTY LTD

TATLOW, Michael Winston
v
ATTORNEY-GENERAL FOR THE
STATE OF TASMANIA
TASMANIAN DEVELOPMENT AUTHORITY
CHANDLER, Philip Joseph
FAIRCLOTH, Peter Leonard

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  Original
FILE NO/S:  570/1990
DELIVERED ON:  24 December 1999
DELIVERED AT:  Hobart
HEARING DATES:  20 December 1999
JUDGMENT OF:  The Master

CATCHWORDS:

Procedure - Apprehension of bias - Constructive knowledge of issues which may go to a party's credit.
Livesey v New South Wales Bar Association (1983) 151 CLR 288; Australian National Industries Ltd v Spedley Securities Ltd (In Liq) & Ors (1992) 22 NSWLR 411; Re Polites; ex Parte Hoyts Corp Pty Ltd (1991) 173 CLR 78, followed.
Aust Dig Procedure [67]

REPRESENTATION:

Counsel:
             Plaintiffs:  C J Gunson
             First and Second Defendants:      T J Ellis
Solicitors:
             Plaintiffs:  Abetz Curtis & Worsley
             First and Second Defendants:      Director of Public Prosecutions

Judgment Number:  [1999] TASSC 154
Number of Paragraphs:  21

Serial No 154/1999
File No 570/199

ARGO PTY LTD and GEORGE PETER WRIGHT and
NATURELAND OF TASMANIA PTY LTD and MICHAEL WINSTON TATLOW v ATTORNEY-GENERAL FOR THE STATE OF TASMANIA and TASMANIAN DEVELOPMENT AUTHORITY and PHILIP JOSEPH CHANDLER and
PETER LEONARD FAIRCLOTH

REASONS FOR JUDGMENT  THE MASTER

24 December 1999

1. The first and second named defendants have applied for an order that the plaintiffs' action be dismissed as against them for want of prosecution.  The application has been listed for hearing before me at 10am on 14 January 2000.  The plaintiffs have asked me to disqualify myself from the hearing of the matter on the ground of apprehended bias arising from the fact that up until 31 August 1999, I was a member of the firm of legal practitioners Murdoch Clarke.  Murdoch Clarke is acting for the defendant, the firm of legal practitioners, Page Seager, in action 210/1990.  The plaintiffs in that action (the first named plaintiff having formerly been known as Mack Investments Pty Ltd) are the same persons who are the plaintiffs in these proceedings.  There was no suggestion that at any time I personally had carriage of the matter in which Murdoch Clarke act.

1. For the purpose of deciding whether I should decline to hear the matter, it is necessary that I consider the issues which arise, or may arise, in both actions.  In these reasons I will refer to the proceedings before me as "the action against the Tasmanian Development Authority" and the proceedings in which Murdoch Clarke act, as "the action against Page Seager". 

The action against the Tasmanian Development Authority

1. By writ filed 8 May 1990, the plaintiffs instituted proceedings against the defendants and delivered a statement of claim bearing the same date.  In the statement of claim, the following allegations are made.  The first and second named plaintiffs were the owners of all of the units in the Natureland Unit Trust and that the third plaintiff was the trustee of that trust.  The second and fourth plaintiffs were the sole directors of the third plaintiff.  The third plaintiff (as the trustee for the Natureland Unit Trust) was the holder of a mining lease, pursuant to the Mining Act 1929 and the applicant for three more mining leases, which lease and applications were capable of transfer.  The purpose of acquiring the lease and the making of the applications was to enable the mining of Tasmanian Sphagnum Moss resources.  On 22 May 1984, by a written agreement, the first, second and fourth named plaintiffs agreed to sell to Dranale Pty Ltd all of the issued units in the Natureland Unit Trust for the sum of $3,000,000.  The contract was not completed and, after further negotiations, Dranale Pty Ltd purchased the property, the subject of the original agreement, from the third named plaintiff, for the sum of $160,000.

1. The plaintiffs say that the second named defendant, the Tasmanian Development Authority, by letters signed by the third named defendant, encouraged the Director of Mines and the Acting Director of the Department of the Environment, to withhold the issue of the licences which would have enabled completion of the original contract for $3,000,000 to have occurred.  It is said that this was done with the deliberate intent of interfering with the contractual rights of the plaintiff for the purpose of securing a financial benefit for the State Government.  It is not clear from the pleadings what the financial benefit was, nor how it was expected to arise.  It is alleged that the State of Tasmania withheld the issue of a mining lease and caused the Director of Environmental Control to delay issuing licences to allow mining operations to commence, with the intent of interfering with the contractual rights of the plaintiffs. 

1. It is alleged that the Tasmanian Development Authority and one of its employees, the fourth named defendant, were advised by Dranale Pty Ltd that the mining of Sphagnum Moss was potentially profitable, but that the mining of peat moss was only marginally viable.  Notwithstanding this information, the Tasmanian Development Authority and its Managing Director, the third named defendant, represented to the plaintiffs that the creation of an industry through use of the leases sought would only be of marginal viability, without mentioning the better potential applicable to the mining of Sphagnum Moss.  It is alleged that the second, third and fourth named defendants then conducted an arbitration between the plaintiffs and Dranale Pty Ltd and the third named plaintiff, wrongly believing the proposed mining operations to be only marginally viable, entered into a new agreement whereby the property originally to be transferred for $3,000,000 was transferred for the sum of $160,000. 

1. The plaintiffs claim the difference between the original purchase price of $3,000,000 and the new purchase price of $160,000, namely the sum of $2,840,000, plus aggravated damages, exemplary damages, interest and costs.  The plaintiffs have taken no proceeding in the action since 1990 or 1991.

The action against Page Seager

1. The proceedings against Page Seager were commenced by writ filed 16 May 1990.  A statement of claim has been delivered in which it is alleged that in 1984, the plaintiffs retained Page Seager as their solicitors to advise them and act in respect of the sale of the property referred to above to Dranale Pty Ltd for the sum of $3,000,000.  The plaintiffs complain that Page Seager failed to advise that the original contract was in fact enforceable and wrote to the solicitors for Dranale Pty Ltd confirming that the original agreement was cancelled.  It is alleged that Page Seager advised the first, second and fourth named plaintiffs to negotiate a new agreement (being the less favourable agreement whereby the plaintiffs' property was sold for $160,000) rather than attempting to enforce the original agreement for the sum of $3,000,000.  The plaintiffs claim that Page Seager negligently advised them to enter into the original agreement which, it is said, included a completion date which the vendors were never likely to be able to meet, namely the time likely to be required to obtain the licences to be transferred exceeded the time allowed in the contract for completion.  Finally, it is contended that Page Seager accepted on behalf of the vendors, the payment of a deposit in respect of the original agreement by way of bank guarantee in such a form that the guarantee could not have been enforced in the event of default by Dranale Pty Ltd.  The plaintiffs claim against Page Seager the sum of $2,840,000 (being the difference between the originally agreed purchase price of $3,000,000 and the subsequently agreed purchase price of $160,000), plus interest and costs. The plaintiffs have taken no proceeding in the action since 1990 or 1991.

1. In essence, the plaintiffs say that the negligence of Page Seager created an environment in which the Tasmanian Development Authority was able to upset the original contract and cause a new deal to be negotiated significantly disadvantaging the plaintiff and being financially favourable to the Government.  It is likely that the whole of the factual background set out in the two claims would need to be considered by those advising the defendants in each action. 

The grounds put forward for disqualification

1. It was submitted on behalf of the plaintiffs that I should disqualify myself for a number of reasons.  The primary contention was as follows:

·    Determination of the application to dismiss the action against the Tasmanian Development Authority may require me to assess the credit of the fourth named plaintiff.  The fourth named plaintiff has sworn an affidavit to be read upon the hearing of the dismissal application and the solicitor for the defendants has advised that a notice will issue requiring the fourth named plaintiff to be present for cross-examination upon his affidavit.  Page Seager would have included in their instructions to Murdoch Clarke information about the matter which was likely to be highly detailed.  If I were to hear the matter, the plaintiff would not know what information my former firm had, nor whether that information influenced any finding as to credit which I might make.

The principles

1. In Livesey v New South Wales Bar Association (1983) 151 CLR 288, the Court said, at 293 and 294:

"It was common ground between the parties to the present appeal that the principle to be applied in a case such as the present is that laid down in the majority judgment in Reg v Watson; Ex parte Armstrong (1976) 136 CLR 248, at pp 258-263. That principle is that a judge should not sit to hear a case if in all the circumstances the parties or the public might entertain a reasonable apprehension that he might not bring an impartial and unprejudiced mind to the resolution of the question involved in it. That principle has subsequently been applied in this Court …

If a judge at first instance considers that there is any real possibility that his participation in a case might lead to a reasonable apprehension of pre-judgment or bias, he should, of course, refrain from sitting. On the other hand, it would be an abdication of judicial function and an encouragement of procedural abuse for a judge to adopt the approach that he should automatically disqualify himself whenever he was requested by one party so to do on the grounds of a possible appearance of pre-judgment or bias, regardless of whether the other party desired that the matter be dealt with by him as the judge to whom the hearing of the case had been entrusted by the ordinary procedures and practice of the particular court. Once it is accepted that a judge should not automatically stand aside whenever he is requested so to do, it is inevitable that appellate courts, removed from the pressure of a possible need for immediate decision and enjoying the advantages both of hindsight and, conceivably, further material and information, will on occasion conclude that a decision of a judge at first instance that he should sit was mistaken and has resulted in a situation where one of the parties or a fair-minded observer might entertain a reasonable apprehension of bias or prejudgment."

1. In Australian National Industries Ltd v Spedley Securities Ltd (In Liq) & Ors (1992) 22 NSWLR 411, the Court of Appeal considered the stringency of the rule. Kirby P said, at 419:

"The relevant passage in Livesey was repeated and applied without comment as recently as Polites (at 448; 639 - 640).  I take this Court to be bound to the 'possibility' test.  Alike with Mahoney JA, I regard this as self evidently a particularly stringent test.  Unlike his Honour, I would not favour a return to the former test of probabilities or 'substantial likelihood'.  I would regard that as a departure from the high stringency which the international law of human rights requires.  Moreover, it would be a departure from an important safeguard to acceptability of the conduct of the judicial branch of government in which the public has such an abiding interest.  The vital importance of manifest impartiality for the independent courts and tribunals of this country were stressed in Vakauta v Kelly (1989) 167 CLR 568 at 585, Grassby v The Queen (1989) 168 CLR 1 at 20, Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 and S & M Motor Repairs Pty Ltd v Catlex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358 at 373."

1. At 438, Mahoney JA said:

"In my opinion, four things emerge from the decision in Livesey and the cases which have succeeded it:

(a)the disqualification of a judge for apprehended prejudgment depends on form rather than substance;

(b)whether there is an unacceptable appearance of prejudgment is to be decided, not according to likelihood, but according to possibility;

(c)it is to be judged, not according to what the court and the parties know, but according to the impressions of a lay person who does not know the facts; and

(d)there will be an unacceptable appearance of prejudgment if the judge has previously dealt with the issue of fact or credibility which is before him in the instant case."

1. The High Court considered the position of former legal advisers to parties in Re Polites; ex Parte Hoyts Corp Pty Ltd (1991) 173 CLR 78. The Court said, at 87 and 88:

"A prior relationship of legal adviser and client does not generally disqualify the former adviser, on becoming a member of a tribunal (or of a court, for that matter), from sitting in proceedings before that tribunal (or court) to which the former client is a party. … Much depends on the nature of his or her relationship with the client, the ambit of the advice given and the issues falling for determination."

Application of the principles

1. I am required to consider whether there is a possibility that the parties or the public may apprehend that I have information derived from my membership of the firm of solicitors acting for Page Seager which may influence my assessment of the dismissal application. 

1. The issues raised in the action against Page Seager form part of the series of events in respect of which the plaintiffs claim that they lost the benefit of a contract worth to them the sum of $3,000,000.  Murdoch Clarke in accepting instructions is likely to have acquired a very detailed knowledge of the matter.  The allegation of defective advice given by Page Seager is not confined to advice in writing.  The particulars of negligence include an allegation that the advice complained of was conveyed to the fourth named plaintiff.  In the circumstances, it is conceivable that Page Seager have, in the course of providing instructions to Murdoch Clarke, provided information or opinions relating to the credit or character of the fourth named plaintiff.  As indicated earlier, that plaintiff has sworn an affidavit in the dismissal proceedings.

1. In considering the dismissal application, I would have to make findings of fact and, for all the plaintiffs know, information about facts relevant to issues to be decided in the dismissal application may have been provided to Murdoch Clarke.  It is certainly within the bounds of reasonable contemplation that consideration has been given by Murdoch Clarke to taking proceedings to have the action against Page Seager dismissed for want of prosecution and Murdoch Clarke has collected information in the course of that consideration.  No proceeding has been taken in that action since 1990 or 1991.

1. Even if in hearing the application no dispute as to credit or the facts arose, the plaintiffs, if they were to lose, might nonetheless be suspicious that my conclusion was influenced by information or prejudice undisclosed in the hearing or the reasons for decision.

1. The plaintiffs in this case do not know and, because of legal professional privilege, cannot discover the contents of the instructions issued to Murdoch Clarke by Page Seager.  Similarly, they cannot know the information which Murdoch Clarke might generally have obtained in the course of acting in the matter.  For this reason, I attach no weight to the fact that the plaintiffs, in support of the application that I disqualify myself, have not specified any particular information which may be embarrassing to them.

1. I am conscious of the point made in the passage which I have quoted from Livesey that the judicial function should not lightly be abdicated, but it is clear that if circumstances have arisen where the parties or the public might entertain a reasonable apprehension of bias, the interests of administration of justice demand disqualification.  In the circumstances which I have outlined, this is a case where such an apprehension might reasonably be entertained by the parties or the public.  I uphold the submission that I should not hear the matter. 

1. For me to assert that I have no personal knowledge of the matter derived from my former membership of Murdoch Clarke would be irrelevant.  If, regardless of assurances from me, my impartiality is not self-evident, I should not hear the matter.  I see this as a clear case calling for disqualification, but even if the matter was doubtful, I would still have declined to hear the application.  I am conscious of the potential inconvenience which would be caused to the parties if it were later decided that I had wrongly failed to disqualify myself.  Although I did have time to undertake the hearing of the matter on 14 January 2000, I have no reason to believe that the matter cannot be dealt with by a judge in Chambers within two or three months of that date.  In view of the length of time that has already elapsed since the alleged cause of action arose, the delay is not significant and my decision not to adjudicate will not cause prejudice and will not increase the cost to the parties.

1. Accordingly, the hearing date being 14 January 2000 is vacated and the dismissal application adjourned sine die, to be relisted before a judge in Chambers upon the application of either party, to the Listing Clerk.