Bakarich v Commonwealth Bank of Australia

[2010] NSWCA 43

New South Wales

Court of Appeal

CITATION:	Bakarich v Commonwealth Bank of Australia [2010] NSWCA 43
HEARING DATE(S):	26 March 2010
JUDGMENT DATE:	1 April 2010
JUDGMENT OF:	Campbell JA at 1
DECISION:	Application to recuse refused
CATCHWORDS:	PROCEDURE – courts and judges generally – judges – appellant seeking disqualification for apprehended interest or bias – request for judge to disqualify self on basis of apprehended bias – what amount of relevant knowledge is to be attributed to the “fair-minded lay-observer” – question of apprehended bias in context of judges and lawyers operating as part of a shared profession – judge’s prior associations with litigant and that litigant’s barristers held insufficient to warrant self-exclusion
CATEGORY:	Procedural and other rulings
CASES CITED:	Bainton v Rajski (1992) 29 NSWLR 539 Bakarich v Commonwealth Bank of Australia [2004] NSWSC 283 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd (1986) 6 NSWLR 272 Re Renaud; ex parte CJL (1986) 60 ALJR 528 R v Judge Russell; ex parte Reid (1984) 35 SASR 417 Re Polites; Ex parte Hoyts Corporation Pty Ltd (1991) 173 CLR 78 Vakauta v Kelly (1989) 167 CLR 568
PARTIES:	Allan John Bakarich (Applicant) Commonwealth Bank of Australia (Respondent)
FILE NUMBER(S):	CA 2005/270113
COUNSEL:	D Quinn, solicitor (Applicant) T Bathurst QC; DFC Thomas (Respondent)
SOLICITORS:	Quinn & Quinn (Applicant) In House counsel (Respondent)

2005/270113

CAMPBELL JA

1 APRIL 2010

ALLAN JOHN BAKARICH & ORS v COMMONWEALTH BANK OF AUSTRALIA

Judgment

1 CAMPBELL JA: On 26 March 2010 I heard an application that I should disqualify myself from continuing to sit in the present matter. After an adjournment at the end of submissions, I announced that I declined to disqualify myself, and would give reasons later. These are those reasons.

2 On 13 July 2007 this Court, comprised of Hodgson and Santow JJA and myself, gave a judgment in an appeal brought by Mr Tony Bakarich and Mr Allan Bakarich (in both their personal capacities and as executors of the estate of their deceased mother), and two companies with which the Appellants were associated, against the Commonwealth Bank of Australia. The appeal related to the circumstances in which the Bank had made available financial accommodation to various members of the Bakarich family and companies associated with them in 1989. The Appellants had provided either a personal guarantee, or a third party mortgage security, concerning that financial accommodation. The Appellants had paid the amount demanded by the Bank pursuant to those securities, but brought an action contending that the Bank had received more money than it was entitled to receive, because of the existence of various deficiencies concerning the securities or the circumstances in which they had been granted. In that action, the Appellants sought declarations that the Bank had breached various identified legal norms, damages, equitable compensation and interest.

3 The trial of that action occurred before Nicholas J in the Equity Division of the Supreme Court. At that trial, the Bank was represented by Mr Sackar QC and Mr McCulloch (then still a junior counsel). The trial occurred over 17 days in November and December 2003.

4 Nicholas J gave his judgment on 20 April 2004: Bakarich v Commonwealth Bank of Australia [2004] NSWSC 283. Its bottom line was that all claims of the Appellant were dismissed. Orders to give effect to the judgment were made on 17 May 2005.

5 The original Notice of Appeal lodged by the Appellants, on 29 August 2005, included as one of the grounds of appeal:

“2. The trial judge erred in departing from the appropriate procedure for a judicial officer in hearing a cause of action involving the parties in circumstances when counsel appearing for the Respondent had business dealings with the trial judge and in the circumstances the trial judge should have disqualified himself from hearing the cause of action.”

6 However, by the time of the hearing of the appeal, the operative Notice of Appeal was a Further Amended Notice of Appeal dated 7 August 2006, that deleted the allegation that had been made in clause 2 of the original Notice of Appeal.

7 The Court now has before it a Notice of Motion filed by the Appellants that seeks, in substance, to re-open the hearing of the appeal. After the retirement and untimely death of Santow JA, the Appellants had consented to that Notice of Motion being dealt with by Hodgson JA and myself.

8 Hodgson JA gave various pre-trial directions, that culminated in the Notice of Motion being set down for hearing on 26 March 2010.

9 Upon reading the papers in preparation for the hearing of that Notice of Motion, I observed that one of the bases upon which the re-opening of the appeal was sought was, in substance (though possibly at the risk of some oversimplification), a contention that Nicholas J should not have heard the case, by reason of a combination of factors, including:

(a) While at the Bar, his Honour had appeared for the Bank in various cases, including four named cases in the range 1994 to 1998. In one of those cases, his Honour and Mr Sackar had both been briefed for the Bank.

(b) His Honour had been appointed to the Supreme Court on 5 February 2003, conducted a directions hearing in the case, some seven months later, and commenced the hearing of the case some nine months later.

(c) His Honour and Mr Sackar were both barristers who occupied chambers on the Sixth Floor Selborne Chambers for many years, up to the time of his Honour’s appointment.

(d) His Honour had been a director of Counsels Chambers Limited over a period of approximately four years, during which period Mr Sackar was also a director of Counsels Chambers Limited.

(e) His Honour, while at the Bar, had held shares in Counsels Chambers Limited, a company in which Mr Sackar and Mr McCulloch both also held shares.

(f) His Honour, while at the Bar, was a director of Denman Chambers Pty Ltd, a company of which Mr Sackar and Mr McCulloch were also directors.

(g) His Honour, Mr Sackar and Mr McCulloch were also shareholders in Denman Chambers Pty Ltd.

(h) His Honour had been a partner with Mr Sackar in a cattle-breeding venture, including in the period after his Honour’s appointment.

10 Upon realising that the application to re-open the hearing might involve such allegations, I decided to attend a directions hearing that had been fixed before Hodgson JA on 23 March 2010. At the hearing on that day, I made a statement in the following terms:

“The principal reason why I'm here today is that there are some things that I think in light of the particular allegations that have been made in this case I ought to disclose. These are things which I would not, in the ordinary course of things, feel any need to disclose but because of the particular allegations that have been made, I think caution suggests that I should put them on the record in the present case.
The first of them is that in the period from 1991 to 1995 I had chambers on the sixth floor of Wentworth Chambers. There were about 30 barristers on the floor at that stage. Mr Sackar and Mr Nicholas, as he then was, were amongst those barristers. For the rest of the time I was at the Bar, which was a period from 1975 to 2001, apart from this period in 1991 to 1995, my chambers were on the eleventh floor of Wentworth Chambers.
The next thing that I should mention is that during the whole of the period of 1975 to 2001 I held shares in Counsels Chambers Limited, and every barrister who occupies Counsels Chambers, apart from those who occupy as licensees, hold shares in that company.
The next thing is that at the Bar I had a commercial practice in the course of which I was briefed by practically all of the major banks, but I also on occasions acted against major banks. The Commonwealth Bank was a bank that's briefed me on occasions although I can't recall any specific major case in which I was briefed, and the pattern of briefing would suggest that I was not one of the bank's preferred counsel.
I think that it is, as I say, useful to have those matters on the public record just so that people will have the opportunity of deciding whether they wish to do anything about them or not.”

11 That disclosure has led to the Appellants making an application that I should disqualify myself from the hearing of the application to re-open.

Principles Concerning Disqualification

12 When a litigant makes a submission that a judge should not hear, or continue to hear a case, the appropriate procedure is for the judge in question to decide that matter himself or herself: Bainton v Rajski (1992) 29 NSWLR 539 at 544, 548.

(2000) 205 CLR 337 stated the test by reference to which a judge decides whether to disqualify himself or herself. The joint judgment of Gleeson CJ, McHugh, Gummow and Hayne JJ stated, at [6]:

“Where, in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge (or other judicial officer or juror), as here, the governing principle is that, subject to qualifications relating to waiver … or necessity … a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide: R v Watson; Ex parte Armstrong (1976) 136 CLR 248; Re Lusink; Ex parte Shaw (1980) 55 ALJR 12; 32 ALR 47; Livesey v NSW Bar Association (1983) 151 CLR 288; Re JRL; Ex parte CJL (1986) 161 CLR 342; Vakauta v Kelly (1989) 167 CLR 568; Webb v The Queen (1994) 181 CLR 41; Johnson v Johnson (2000) 201 CLR 488. That principle gives effect to the requirement that justice should both be done and be seen to be done ( R v Sussex Justices; Ex parte McCarthy [1924] 1 KB 256 at 259, per Lord Hewart CJ), a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial.”

14 Their Honours identified, at [8], the manner in which that principle is to be applied:

“First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an ‘interest’ in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.”

15 Application of this principle requires one to decide what amount of relevant knowledge is to be attributed to the “fair-minded lay observer”.

16 The fair-minded observer can have attributed to him or her “knowledge of the actual circumstances of the case”: Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 87 per Mason CJ and Brennan J (with whom Gaudron and McHugh JJ agreed, subject to some matters that appear not presently relevant: 98). Some cases have considered, in particular, what knowledge concerning the operation of the legal system can be attributed to the fair-minded lay observer.

17 In Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd (1986) 6 NSWLR 272 this Court approved the refusal of Powell J to decline to hear litigation brought against two prominent firms of Sydney solicitors. Priestley JA (with whom Hope and Glass JJA agreed) set out and approved, at 275, a statement of principle by Powell J that included:

“I do not believe that any right-minded person who knows of the manner in which the legal profession in this State is organised, and who knows of the fact that, traditionally, the judges in this State have been appointed from the ranks of the practising members of the legal profession (as to the relevance of existing practices, see Re The Queen and His Honour Judge Leckie; Ex parte Felman (1977) 52 ALJR 155, 158 per Gibbs J, as he then was) could reasonably suspect that a judge who, on occasion, over a reasonably long time as a practising member of the Bar, which period, in any event, expired over nine years ago, was retained, and instructed by, a member or members of a particular firm of solicitors on behalf of clients of that firm, was, by virtue of that fact alone, incapable of bringing an impartial and unprejudiced mind to the resolution of the issues in a proceeding to which that firm of solicitors, or a party of that firm of solicitors, may be a party.”

18 Priestley JA set out, at 275-6 the principle stated by Mason J in Re Renaud; ex parte CJL (1986) 60 ALJR 528 at 531-2:

“It seems that the acceptance by this Court of the test of reasonable apprehension of bias in such cases as R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 258-263 and Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293-294 has led to an increase in the frequency of applications by litigants that judicial officers should disqualify themselves from sitting in particular cases on account of their participation in other proceedings involving one of the litigants or on account of conduct during the litigation. It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party. There may be many situations in which previous decisions of a judicial officer on issues of fact and law may generate an expectation that he is likely to decide issues in a particular case adversely to one of the parties. But this does not mean either that he will approach the issues in that case otherwise than with an impartial and unprejudiced mind in the sense in which that expression is used in the authorities or that his previous decisions provide an acceptable basis for inferring that there is a reasonable apprehension that he will approach the issues in this way. In cases of this kind, disqualification is only made out by showing that there is a reasonable apprehension of bias by reason of prejudgment and this must be ‘firmly established’ … Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour.”

19 Priestley JA commented, at 276, on Powell J’s observations about the effect of the method of appointment of judges on the operation of the apprehension of bias principle:

“That method of appointment means that built into the legal system is public knowledge and long acceptance of the fact that judges will often know to a greater or less degree the counsel and solicitors who appear before them. Also when, as not infrequently happens, members of the legal profession are parties to litigation, it is inevitable that their cases will be decided by other members of the legal profession. It has long been accepted that a judge should not sit on a case involving a person with whom he has a connection which might in fact or in appearance affect his impartiality; when the judge’s connection is less than that there is no reason why he should not sit.”

20 In R v Judge Russell; ex parte Reid (1984) 35 SASR 417 the South Australian Full Court refused to prohibit a judge of the Industrial Court from hearing an appeal against a decision of an Industrial Magistrate. While at the Bar, the judge had appeared as counsel for the appellant, GMH, in various pieces of industrial litigation, that involved the same area of law as that relevant to the case before him as judge. That earlier litigation had occurred in 1978. The judge was appointed to the Bench in 1980. The application for prohibition was heard in February 1984 and decided in March of that year. Walters J (with whom King CJ and Mohr J agreed) said, at 421-2:

“… there is no valid basis, in the instant case, for suggesting that whatever may have been the nature of the advice given to GMH by the learned Judge in connection with the case of Bowling and others in 1978 and the succeeding years, that advice had any part to play in, or was linked in any way with, the circumstances leading up to the applicant's dismissal by GMH in April 1983. Nor can I find any good grounds for thinking that the advice given to GMH by the Judge in 1978 would have affected his ability to hear and determine, with fairness and impartiality, an appeal concerning the applicant’s dismissal. …
For my part, I find it difficult to believe that a fair-minded observer would have reasonable grounds for apprehending that simply because a member of a small industrial Bar had identified himself, in his professional duties as a barrister, with the interests of a particular employer in matters of industrial disputation, he would, on his appointment to judicial office in the Industrial Court, be unable to bring a fair and unprejudiced mind to the decision of matters involving the party for whom he has formerly acted. To take the obverse position, I could scarcely believe that simply because a barrister practising in the field of industrial law had commonly acted in a professional capacity in the interests of employees, any reasonable observer would have grounds for apprehending that on the appointment of that barrister to judicial office in the Industrial Court, he would be unable to bring a fair and unprejudiced mind to the resolution of matters arising before him. If I may take the matter one step further, I think it would be absurd to suggest that on the appointment of an officer of the Crown to a judgeship of the Supreme Court of this State, he would be unable, in matters in which the Crown was a party, to administer justice with an independent and impartial mind. No fair-minded citizen could reasonably apprehend or suspect that that Judge would depart from his judicial oath.
As I see it, the ultimate question for decision is whether, in the circumstances existing in the present case, the applicant or a fair-minded observer, might have entertained a reasonable apprehension that because the learned Judge had advised and acted as counsel for GMH prior to his appointment to judicial office in 1980, that fact might result in the appellate proceedings being affected by bias by reason of pre-judgment. However, it seems to me that it is the apprehensions of the reasonable observer with which we are concerned; the apprehensions of a reasonable and right-minded person, and not those of a person at the opposite extreme. I have come to a conclusion which I would express in words that I used in Lyle v Christian Ivanoff Pty Ltd (1977) 16 SASR 476, at p 494:
‘I think it would involve nothing more than mere surmise or conjecture to suggest that in the present case there might be engendered in the mind of a reasonable right-minded person a reasonable [apprehension] that the learned [judge] might not deal with the questions arising for his decision with his acknowledged ability and with a fair and unprejudiced mind.’ ”

21 In Re Polites; Ex parte Hoyts Corporation Pty Ltd (1991) 173 CLR 78 the High Court issued an order nisi for a writ of mandamus against a Deputy President of the Australian Industrial Relations Commission, requiring him to continue to hear a case that involved a former client who the Deputy President had advised on an issue relevant to the proceedings. Brennan, Gaudron and McHugh J said, at 87-88:

“The prior involvement of a Deputy President with associations or with governments who are frequently parties to proceedings before the Commission cannot be sufficient by itself to amount to a disqualification from sitting in a particular case ….
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. Of course, if the correctness or appropriateness of advice given to the client is a live issue for determination by the tribunal (or court), the erstwhile legal adviser should not sit. … 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.”

22 In Vakauta v Kelly (1989) 167 CLR 568 at 585 Toohey J (with whose reasons Brennan, Deane and Gaudron JJ were “in general agreement”: 570) said that the fair-minded observer ought not have attributed to him:

“… a knowledge of the law and an awareness of the judicial process that ordinary experience suggests not to be the case … As to the level of sophistication that should be attributed to the reasonable or fair minded observer, see Kirby P in S & M Motor Repairs v Caltex Oil (1988) 12 NSWLR 358 at 375-376.”

23 Though the judgment of Kirby P in S & M was a dissenting one, the approval in Vakauta of Kirby P’s remarks about the level of sophistication that should be attributed to the reasonable or fair-minded observer requires one to consider Kirby P’s judgment carefully. Kirby P’s account, at 376, is not cast in terms of readily applicable principles, but rather of disapproval of the nature of a hypothetical dialogue between citizens (itself tied closely to the facts of the case) upon which the majority judges had relied, which in the view of Kirby P was “more reminiscent of the hushed tones and cloistered atmosphere of a Bar common room or judicial luncheon table than robust discussion between ordinary reasonable citizens on the Emu Plains omnibus”. An alternative hypothetical dialogue, which Kirby P proposed as more likely, included reliance on the “long and recent connection” between the judge and the litigant.

Decision

24 I ceased practice at the Bar in September 2001, and was sworn in as a judge of this Court on 26 October 2001. It is now over eight and a half years since I was in practice. That I was briefed by the Commonwealth Bank on occasions during my career at the Bar, in cases the names of which I cannot now remember, and on occasions that I cannot now remember but which must have been prior to September 2001, could not, consistently with the authorities I have quoted, be part of a reasonable apprehension of the type described in Ebner. Particularly is that so when I was not one of the counsel who the Bank briefed regularly. In the time since I was at the Bar I have had no involvement with any of the people who might have been involved in briefing me on behalf of the Bank. The present is not a case that involves any issue about the correctness or appropriateness of advice I might have given to the Bank. My relationship with the Bank more fits the description of sporadic and, in the context of a working lifetime, by now moderately distant in time, rather than long and recent.

25 The period during which I shared (along with numerous other barristers) chambers with Mr Sackar and Mr Nicholas (as his Honour then was) occupied four or five of the twenty-six years I spent at the Bar, and ended more than 14 years ago.

26 The “actual circumstances of the case” concerning the circumstances in which barristers share chambers is that, while it provides the opportunity for the sort of friendly relations to develop that are usual between professional colleagues, those colleagues can also be one’s competitors. Sharing chambers also provides a means whereby the overhead expenses of a barrister’s practice can be shared, but that in itself produces no more closeness of relations than arises from people who share a home unit building sharing some of the overheads of that building. I had no financial or social association with Mr Sackar or Nicholas J, beyond that which is inherent in barristers sharing chambers.

27 My shareholding in Counsel Chambers Limited was a prerequisite to having the right to occupy chambers on one of the 13 floors of the building owned by Counsel Chambers Limited at 174-180 Phillip Street, Sydney. It involved payment of periodical levies for the services of the building, and the opportunity to vote in annual elections for directors if one wanted to.

28 There was no attempt, in the argument of the application that I disqualify myself, to articulate the “second step” that was identified in [8] of Ebner, concerning any of the three different types of matter that I disclosed.

29 For these reasons I was not persuaded that any of the matters that I disclosed might give rise in the fair-minded lay observer to a reasonable apprehension that I might not decide the application to re-open on its merits.

**********