Battenberg v Union Club

[2007] NSWSC 265

CITATION:	Andrew Charles Robert Battenberg v Union Club [2007] NSWSC 265
HEARING DATE(S):	12.03.07, 13.03.07, 15.03.07
JUDGMENT DATE :	27 March 2007
JUDGMENT OF:	Nicholas J
DECISION:	para 42
CATCHWORDS:	COURTS AND JUDGES - apprehended bias - disqualification of judge - whether grounds for apprehension of bias established - failure to object promptly to judge's participation in the proceedings - waiver of right to object - - COSTS - order for security for costs - dismissal for failure to comply - UCPR Pt 42, r 42.21(3)
LEGISLATION CITED:	UCPR Pt 42, r 42.21(3)
CASES CITED:	Chalik v Wales [2006] NSWSC 129 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 Fairey v Fairey (No 2) [2000] NSWCA 173 Idaport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271 Porter v Gordian Runoff Ltd (No. 3) [2005] NSWCA 377 Queensland v JL Holdings Pty Ltd (1996-1997) 189 CLR 146 Smits v Roach (2006) 80 ALJR 1309 Vakauta v Kelly (1989) 167 CLR 568
PARTIES:	Andrew Charles Robert Battenberg - plaintiff Union Club - defendant
FILE NUMBER(S):	SC 20454/05
COUNSEL:	S Russo (solicitor) 12.03.07, 15.03.07 - plaintiff G Pesce 13.03.07 – plaintiff C A Evatt 13.03.07 - plaintiff A T S Dawson - defendant
SOLICITORS:	Russo & Partners - plaintiff Minter Ellison - defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
DEFAMATION LIST

Nicholas J

27 March 2007

20454/05 Andrew Charles Robert Battenberg v Union Club

JUDGMENT

1 His Honour: On 15 March 2007 I heard and dismissed the plaintiff’s application that I should disqualify myself from further participating in these proceedings. I then heard the defendant’s notice of motion filed 22 December 2006 for orders that the proceedings be dismissed, and for costs, and reserved my decision. I have decided that the orders sought by the defendant should be made. These are my reasons in both applications.

The application for disqualification

2 On 15 March 2007 Mr Sal Russo, the plaintiff’s solicitor, made an application that I should disqualify myself from further participation, and make no further order, in these proceedings and direct that any further applications be transferred to another judge for determination. The ground relied upon was apprehended bias. The apprehension of bias was said to arise from the fact that, as counsel, I had advised the defendant on an issue concerning the plaintiff’s membership of the first defendant following his bankruptcy on 19 May 1997 and the annulment thereof on 23 March 2000. Additional bases for apprehension were said to be the manner in which I conducted the proceedings on 19 July 2006 being the defendant’s application to strike out various claims pleaded in the amended statement of claim, and the proceedings on 17 November 2006 being the defendant’s application for security for costs.

3 The relevant history is as follows.

4 On 13 August 2001 I and another counsel provided to the defendant the advice referred to.

5 On 18 May 2004, in the course of proceedings in the Equity Division no. 2448/04 between the parties, a copy of the advice was provided to Mr Russo as the plaintiff’s solicitor.

6 On 17 July 2006 these proceedings were listed in the ordinary course before me in the defamation list for the hearing of the defendant’s objections to the statement of claim. On that occasion Mr C A Evatt appeared with Mr J R Dupree as counsel for the plaintiff instructed by Mr Russo who was present some of the time. Mr A T S Dawson appeared as counsel for the defendant. Sometime prior to this occasion Mr Russo had briefed Mr Evatt with a copy of the advice. The matter was stood over for hearing on 19 July 2006. No application was made that I should disqualify myself.

7 My clear recollection is that when the matter was first called in open court I disclosed to counsel that I had advised the defendant and invited objection to me hearing it, and that counsel for both parties stated no objection would be taken. The present recollection of counsel is uncertain as to whether I did so or not, and there is no record on the transcript. In the circumstances, I have proceeded on the basis that I made no disclosure prior to the issue being raised before me by Mr Russo on 12 March 2007.

8 On 19 July 2006 I heard the defendant’s challenge to the amended statement of claim. The parties were represented as before. No application was made that I should disqualify myself. In the judgment delivered on 11 August 2006 I ordered several paragraphs of the amended statement of claim be struck out, and the plaintiff to pay the defendant’s costs.

9 The matter was again before me on 15 August, 23, 27 October, 13, 16, and 17 November 2006 for directions. On these occasions the plaintiff was represented by Mr C J Dibb of counsel, and the defendant by Mr Dawson. On 17 November 2006 I heard the defendant’s motion for security for costs which Mr Dibb contested. I then ordered the plaintiff to provide security for costs within 28 days, and that the action be stayed until security was provided. On none of these occasions was I asked to disqualify myself.

10 On 12 March 2007 the defendant’s notice of motion for dismissal of the proceedings was before me in the defamation list. Mr Russo appeared for the plaintiff and foreshadowed that an application would be made for me to disqualify myself from any further participation in these proceedings. The parties were directed to exchange contentions on the issue and the matter was stood over to 13 March 2007.

11 On 13 March 2007 Mr Evatt attended court at my request with Mr Dawson. I asked him whether my recollection accorded with his. The ensuing discussion is recorded in the transcript. It includes the following:

(p 6, l 50)
“HIS HONOUR … And that's when I thought it would be appropriate to get the opportunity of asking you. I don't want to have an exercise of competing recollections.

EVATT: My recollection is pretty hopeless. When this matter was listed before your Honour first time, in my brief was your Honour's advice, but it wasn't just signed by your Honour, it was also signed by junior counsel.
HIS HONOUR: Yes I had a junior in the matter.
DAWSON: Miss Williams.
EVATT: And the date was 2002.
HIS HONOUR: That's probably right.
DAWSON: I can confirm that.
EVATT: And it was 2002 and this was 2006, four years later. And your Honour had been on the bench for two years or more and I remember Mr Justice McHugh telling me that when he first went on the bench he would not hear any matter in which he was involved but when two years were up that was the end of it, so I didn't raise it with your Honour. So I am surprised your Honour mentioned it. My recollection is I never raised it because I had it there, I didn't think it was a matter I should raise.
HIS HONOUR: I have no quarrel with it, and it's not appropriate for us to debate it and there is no record and we have looked to find a transcript. I have no doubt in my mind that I raised it and the issue went away because I was very conscious of the fact I advised in the matter and I would not have stayed silent on the matter.
EVATT: If your Honour raised it I would have said don't worry about it because I had already told my solicitor it was not a relevant matter, it was four years ago, not the week before, and the only thing about it is that the advice was correct.
HIS HONOUR: Not at first instance.
EVATT: Ultimately. And I think I said that I thought the advice was correct and it ultimately turned out it was correct but I can't see how that can apprehend bias, after all you are the defamation list Judge, you have to hear these matters. I didn't see that was sufficient cause to go out to another Court.
HIS HONOUR: It's only raised because it was raised by Mr Russo yesterday afternoon and I regard these as important issues and I don't want there to be any basis for doubt about it ….”

and (p 8, l 14):
“EVATT: It is not going to be pursued by me because if it was to be pursued by me I would have pursued it. The only thing I am not sure about is whether your Honour raised it or not, but if your Honour raised it I would have said we were not concerned about it. I knew about it and I wasn't concerned about it.”

The proceedings were stood over to 15 March 2007 for the purpose of hearing an application for disqualification if one was to be made and, depending on the outcome of any application, of the motion for an order for dismissal.

12 On 15 March 2007 Mr Russo represented the plaintiff, and Mr Dawson the defendant. I deal first with the grounds for apprehension of bias based on my conduct of the proceedings to strike out the statement of claim, and for security for costs and a stay. In essence, Mr Russo contended that these were conducted in such a way as to give the appearance that I was unfairly disposed towards the plaintiff and, in effect, denied him natural justice. It was put that the orders made against the plaintiff were wrong, and reflected the apparently biased approach taken. In particular, it was put that during the hearing of the security for costs application on 17 November 2006 I cut Mr Dibb off whilst he was cross-examining the defendant’s witness, with the result that he felt so intimidated that he was unable to put any further submissions to the court.

13 Mr Russo’s submissions are recorded in the transcript (pp 19-23). It is unnecessary to recite the details. He had no transcript of either occasion, and was unable to refer to any specific evidence in support of these grounds. He informed me that there was no appeal from the decision of 11 August 2006, and that the holding summons for leave to appeal from the decision of 17 November 2006 expired on 1 March 2007.

14 In the absence of any suggestion of actual bias the governing principle is that 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 (Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337, para 6). Explanation of the application of the apprehension of bias principle was explained in Ebner thus:

“8. …. Its application requires two steps. 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 Another passage from Ebner is also of direct relevance to this case:

“70. …. A failure to disclose is relevant (if at all) only because it may be said to cast some evidentiary light on the ultimate question of reasonable apprehension of boas. A failure to disclose has no other legal significance. In particular it does not, of itself, give a litigant any right to have the judge desist from further hearing the matter or to have the ultimate decision in the matter set aside for want of procedural fairness.”

16 I have read the transcripts of the proceedings on each of 19 July and 17 November 2006. I find they provide no support whatsoever for disqualification based on an apprehension of bias based on my conduct on those occasions. In my opinion Mr Russo’s exercise in putting these submissions without evidence was futile and a waste of the court’s time. The submissions were without substance and are rejected.

17 I turn now to the ground of apprehension based on my advice to the defendant.

18 Mr Russo accepted that the first time the question of disqualification was raised was by him on 12 March 2007. However, he submitted that prior to the hearing of the defendant’s strike out application on 19 July 2006 I should have disclosed to the parties that I had advised the defendant, and given the parties the opportunity to object to me acting as a judge in these proceedings.

19 During the course of his submissions Mr Russo clarified his position. He, correctly in my opinion, accepted that the plaintiff was bound by his counsels’ conduct in the proceedings. Accordingly, he accepted that in the circumstances where counsel were aware of the advice and raised no objection, the plaintiff had waived his right to seek to have me disqualify myself. In the end (T p 31) his submission was that although until now there had been a waiver of the right to object on the basis of the advice, the plaintiff was entitled to ask me to disqualify myself henceforth.

20 The relevant principles were stated in Vakauta v Kelly (1989) 167 CLR 568 by Brennan, Deane, Gaudron, JJ (p 572):

“Where such comments which are likely to convey to a reasonable and intelligent lay observer an impression of bias have been made, a party who has legal representation is not entitled to stand by until the contents of the final judgment are known and then, if those contents prove unpalatable, attack the judgment on the ground that, by reason of those earlier comments, there has been a failure to observe the requirement of the appearance of impartial judgment. By standing by, such a party has waived the right subsequently to object. The reason that is so is obvious. In such a case, if clear objection had been taken to the comments at the time when they were made or the judge had then been asked to refrain from further hearing the matter, the judge may have been able to correct the wrong impression of bias which had been given or alternatively may have refrained from further hearing. It would be unfair and wrong if failure to object until the contents of the final judgment were known were to give the party in default the advantage of an effective choice between acceptance and rejection of the judgment and to subject the other party to a situation in which it was likely that the judgment would be allowed to stand only if it proved to be unfavourable to him or her.”

and by Dawson, J (p 577):

“…. It cannot be the position that a party can wait to see whether the outcome of a case is favourable to him before raising an objection, the availability of which he was previously aware, on the ground of bias. See R v Sussex Justices ; Ex parte McCarthy [1924] 1 KB 256 at 259.
There can, I think, be no doubt that an objection upon the ground of bias can be waived. Even where it is a question of the public apprehension of bias, the parties themselves must be competent to waive the objection. Although justice must manifestly be seen to be done, where a party, being aware of his right to object, waives that right, there will be little danger of the appearance of injustice ….”

21 These passages were referred to with approval in Smits v Roach (2006) 80 ALJR 1309 in which Gleeson, CJ, Heydon, Crennan, JJ said:

“43. It has been held in this court, on a number of occasions, that an objection to the constitution of a court or tribunal on the ground of apprehended bias may be waived, and that, if a litigant who is aware of the circumstances constituting a ground for such objection fails to object, then waiver will result. The general principle is not in contest in this appeal ...”

Their Honours went on to explain the significance of the relationship between a party and counsel (and I would include, a solicitor) in the conduct of litigation. They said:

“46. The adversarial system of litigation operates upon the basis that a party is generally bound by the conduct of counsel and that counsel has a wide discretion as to the manner in which proceedings are conducted. The width of that discretion is reinforced by the role of the barrister as an officer of the court, by the barrister’s paramount duty to the court, and by the public interest in the efficiency and finality of the judicial processes ….
47. The considerations according to which a principal is affected by an agent’s knowledge, and the relevance of the circumstances in which the agent acquired the knowledge, depend upon the context in which the problem arises. Having regard to counsel’s role in the conduct of litigation, when a characterisation of the legal nature and quality of counsel’s acts and omissions depends upon knowledge of some fact or circumstance, then counsel’s clients are affected by that knowledge. In this context, there is no reason in principle to distinguish between the knowledge of Mr Lindsay and that of his clients, or between knowledge that Mr Lindsay acquired as counsel for the appellants and knowledge that he acquired in some other capacity. To adopt language used by Handley JA, and quoted with approval by Gummow and Hayne JJ, in a somewhat different context, there is no basis for ignoring any part of Mr Lindsay’s knowledge, present to his mind, when conducting the litigation ….
48. …. It cannot make a difference, as far as the legal consequences for the respondents are concerned, that the case is one of omission by Mr Lindsay. In the course of the litigation, Mr Lindsay’s conduct included what he did not do as much as what he did. Failure to object to evidence or to pursue a particular line of argument may, from one point of view, be an omission, but it is part of the conduct of the case. Nor is it possible to distinguish between the failure to object considered in Vakauta , where the potentially disqualifying conduct occurred in court, and the failure to object in the present case, where there was a potentially disqualifying circumstance known to counsel. Indeed, the case illustrates the futility of endeavouring to assign an omission by counsel to either a particular time or a particular place.”

22 With regard to waiver, Kirby, J said:

“125. However, it is now settled law in this court that where a litigant, aware of circumstances providing a ground for objection on the basis of disqualification, fails to object promptly, that litigant will be taken to have waived the objection and cannot later rely on it. Obviously, this conclusion represents a practical approach, even if at the cost of some doctrinal purity. Neither party to this appeal challenged the established holding of this court in this regard ….
126. It is clear that any objection to a judge’s participation in a trial on the ground of disqualification for association must be made promptly, once the affected party becomes aware of the suggested cause of the disqualification.”

23 My understanding of these principles is that by standing by a party has waived the right subsequently to object. The principles establish that where a litigant, aware of circumstances which justify objection on the basis of disqualification, fails to object promptly that litigant will be taken to have waived the objection and cannot later rely on it.

24 The application of these principles to the circumstances of this case leads to the inevitable conclusion that the application for disqualification must be refused. If objection was to be taken in these proceedings, the plaintiff was required to raise it on 17 July 2006 when they were first before me, alternatively, on 19 July 2006 when the defendant’s strike out application was heard. The right to seek my disqualification was waived then and cannot now be invoked. Accordingly, the application is refused.

25 In any event, absent waiver, the application was doomed to fail. As held in Ebner (paras 8, 70) the application of the apprehension of bias principle requires identification of what it is said might lead a judge to decide a case other than on its legal and factual merits, and the articulation of the logical connection between that matter and the feared deviation from the course of deciding the case on its merits. No plausible attempt was made to meet these requirements with respect to any of the grounds relied upon in this case. In my opinion the plaintiff failed to establish that the apprehension of bias principle was applicable in the circumstances.

The application for dismissal

26 The defendant seeks an order under Pt 42, r 42.21(3) that the plaintiff’s claim in the proceedings be dismissed upon his failure to comply with the order for security made 17 November 2006.

27 The order required provision of security in the sum of $73,000 within 28 days. A holding summons for leave to appeal against the order was filed on 1 December 2006 and expired on 1 March 2007. No summons for leave to appeal has been filed. The plaintiff has not complied with the order.

28 The notice of motion was sent to the plaintiff’s solicitors on 22 December 2006 with a letter advising that it would not be acted upon until the leave application had been dealt with.

29 By letter of 19 January 2007 to the defendant’s solicitors, the plaintiff’s solicitors informed them that:

“…. we have been instructed by our client that he is in the process of seeking relief from the International Bureau of the Permanent Court of Arbitration in the International Court of Justice in respect of various determinations of the Court.
As there are developments we shall advise”.

There has been no further relevant correspondence.

30 On 6 February 2007 the plaintiff was made bankrupt pursuant to a sequestration order against his estate. A notice of appeal from the decision was filed by the plaintiff on 27 February 2007.

31 The plaintiff adduced no evidence in support of his opposition to the defendant’s claim. Mr Russo stated that the plaintiff has elected to pursue the appeal in the bankruptcy proceedings. No indication was given as to when an appeal would be heard.

32 Guidance in the exercise of the court’s wide discretion requires consideration of a number of factors, including the time that has passed since security was ordered; the plaintiff’s likely ability to provide security; the extent to which the plaintiff has been on notice of the dismissal application; the likelihood of prejudice to the defendant (as a result of continuing the stay); the impact on the court of continuing the stay; the ability of the plaintiff to commence new proceedings; and prejudice to the plaintiff. (Idaport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271; Porter v Gordian Runoff Ltd (No. 3) [2005] NSWCA 377.)

33 In Porter Tobias, JA pointed out (para 25) the need to take into account all the relevant circumstances of the case consistently with the interests of justice, having regard to the significance of an order which would deny a plaintiff his day in court.

34 The defendant pointed to the lapse of four months since the order was made, and to the fact that since 22 December 2006 the plaintiff has been aware of its intention to proceed with this application when the appeal process came to an end. It was submitted that it was relevant to take into account that no evidence had been forthcoming from the plaintiff as to his intention or capacity to comply with the order at any time, or as to his intention or concern to proceed with his claims should he be in a position to do so.

35 The defendant submitted that it was relevant that although the statement of claim was filed on 30 December 2005 the pleadings have not advanced beyond the point when, on 11 August 2006, orders were made striking out much of the amended statement of claim. No further amended statement of claim has been foreshadowed. It was put that it was also relevant that the plaintiff is presently concerned with the bankruptcy proceedings, and has elected to attend to them rather than to these.

36 The plaintiff submitted that the defendant was adequately protected by the order, and that the circumstances did not justify denial of his claim by dismissing the proceedings.

37 In my opinion the defendant’s submission should be accepted. The proceedings have been on foot for over two years. The plaintiff has provided no explanation for non-compliance, or evidence of intention or capacity to comply at some time in the future. His recent bankruptcy, and his choice not to adduce evidence in opposition to the application for the order for security and to the present application supports the inference, which I make, that by reason of his impecuniosity it is highly unlikely that he will ever comply with the order for security.

38 As Mason, P pointed out in Fairey v Fairey (No 2) [2000] NSWCA 173 at [52]

"The power to dismiss proceedings summarily serves the dual purposes of ensuring fairness to litigants in preserving the integrity of the judicial system. The former purpose aims essentially to protect the litigant, in this case the respondent, from the consequences of delay, be those consequences financial, impacts on litigation, psychological or otherwise. The latter purpose, namely the integrity of the judicial system, promotes the expedient resolution of cases and has some regard to the interests of litigants generally in the Court. I hasten to say that regard cannot over-reach the rights of the individual litigants to justice in their own case."

39 Consistent with this view, in my opinion, are the observations of Kirby, J (although made in a different context) in Queensland v JL Holdings Pty Ltd (1996-1997) 189 CLR 146 (p 170):

“Courts now take into account the strain which litigation may place upon those involved and the natural desire of most litigants to be freed, as quickly as possible, from the anxiety, distraction and disruption which litigation causes. In my view this is not a consideration limited to litigation by natural persons or involving private citizens. Because justice cannot be measured solely in monetary terms, costs orders are not necessarily an adequate balm to the other party.”

40 In my opinion the interests of justice in this case warrant the exercise of discretion to dismiss the proceedings. Having regard to all the circumstances since the institution of these proceedings it is appropriate that the defendant be relieved of the burden which would be imposed by permitting them to remain on foot. Accordingly, I propose to order that the proceedings be dismissed.

41 The ordinary rule is that costs follow the event. The bankrupt status of the plaintiff is not an impediment to making an order that he pay the defendant’s costs of the notice of motion (Chalik v Wales [2006] NSWSC 129).

Orders

42 It is ordered that:

(1) The proceedings be dismissed.

(2) The plaintiff pay the defendant’s costs which include its costs for attendances and hearings on 8, 12, 13 and 15 March 2007.

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