Bergman & Bergman (No. 7)

[2008] FamCA 808

FAMILY COURT OF AUSTRALIA

BERGMAN & BERGMAN (NO. 7) [2008] FamCA 808

FAMILY LAW – COURTS AND JUDGES - DISQUALIFICATION - Apprehension of Bias - Pre-judgment - Interlocutory Judgment - Reasonably objective bystander

Johnson v Johnson (2000) 201 CLR 488
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
Fauna Holdings Pty Ltd v McGillivray & Ors & Mitchell (2000) FLC 93-053
G & B [2006] FamCA 748

Re JRL; ex parte CJL (1986) 161 CLR 342
Taylor & Anor v Lawrence & Anor (2002) 2 WLR 640

APPLICANT: MR BERGMAN (via his appointed Case Guardian)

RESPONDENT: MRS BERGMAN

POTENTIAL THIRD PARTY: MR SARINSSON

POTENTIAL FOURTH PARTY: MR PORTER

FILE NUMBER: MLF 5245 of 2005

DATE DELIVERED: 1 OCTOBER 2008

PLACE DELIVERED: MELBOURNE

PLACE HEARD: MELBOURNE

JUDGMENT OF: YOUNG J

HEARING DATE: 16 September 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR KIRKHAM QC and
MR STRUM

SOLICITOR FOR THE APPLICANT: CAROLINE COUNSEL FAMILY LAWYERS

COUNSEL FOR THE RESPONDENT: MR VAN DER HEYDEN

SOLICITOR FOR THE RESPONDENT: MARSHALLS AND DENT

SOLICITOR FOR POTENTIAL THIRD PARTY: IN PERSON

COUNSEL FOR POTENTIAL FOURTH PARTY: CAREW COUNSEL

SOLICITOR FOR POTENTIAL FOURTH PARTY: MS NIKOU SC

ORDERS

IT IS ORDERED:

1. THAT the oral application of the Case Guardian, as identified in the accompanying reasons for judgment, be dismissed.

2. THAT leave be reserved to each of the parties to make application for costs of and incidental to this hearing.

IT IS CERTIFIED

1. THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Senior Counsel appearing with junior Counsel for the Case Guardian and Senior Counsel appearing for Mr Porter and solicitor appearing as counsel for the wife.

IT IS NOTED that publication of this judgment under the pseudonym Bergman & Bergman is approved pursuant to s121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 5245 of 2005

MR BERGMAN

Applicant

And

MRS BERGMAN

Respondent

And

MR SARINSSON

Potential third party

And

MR PORTER

Potential fourth party

REASONS FOR JUDGMENT

1. On 4 August 2008 I delivered reasons for judgment and made orders after an extended interlocutory hearing in what I will term the “joinder proceedings”.

2. Subsequently the case guardian, on behalf of the husband, lodged a Notice of Appeal which is now listed for hearing before the Full Court on 6 October 2008.

3. In my reasons for judgment it is now submitted by the case guardian that I made certain findings on the material before me, which were unnecessary and which were therefore alleged to be tantamount to an apprehension of bias by reason of pre-judgment of the husband’s credit.

4. By an oral application, outlined to the Court on 8 August 2008, (which was the date fixed before me to receive costs submissions consequent to my orders and judgment delivered 4 August 2008) it was contended by the case guardian that:

   “Young J should disqualify himself from all further hearings in this matter, not simply the instant applications before him.  The findings complained of fundamentally affect the case otherwise before the court, the credibility of the husband and the credibility/professionalism of his legal advisers”.

5. By way of background to the judgment and orders made on 4 August 2008 the interlocutory hearing occupied three court days.  I provided in the judgment a detailed explanation of the timetable of the hearing, the required adjournments (in paragraphs 39 – 43, inclusive), the substantial affidavit material and written submissions relied upon.

6. There was, of course, no oral evidence or cross examination of witnesses.  I was acutely aware that it was an interlocutory hearing on the papers though accompanied by very lengthy and substantial submissions, in particular from Senior Counsel for the Case guardian.  I carefully highlighted in paragraph 38 of my judgment the nature of my approach to that interlocutory hearing where I stated:

   “I highlight that I am now hearing interlocutory proceedings and for this purpose I have read all of the affidavits and annexures relied upon and I have listened carefully to and evaluated the lengthy legal submissions received both in writing and orally.  There has been no oral evidence or cross examination of witnesses.  I have previously delivered numerous ex tempore judgments on interim and case management issues leading up to the hearing of this interlocutory joinder application.  I have made required findings of fact only where necessary and when proven to the required level in interlocutory proceedings.  I have endeavoured to act prudently and with a level of care not to, in any way whatsoever, exclude the future testing of evidence by cross examination in this continuing and seemingly never ending litigation.  To the extent that it may be argued that I have not considered material relevant to this application I draw attention to Rule 5.10 which provides that hearing of an interim application should be no longer than two hours.  I have of necessity allowed the parties in this case much more time than is ordinarily contemplated in these matters and taken into account the large volume of documents sought to be relied upon, without unduly limiting them as to timetable or content”.

7. In this disqualification hearing Mr Kirkham, one of Her Majesty’s Counsel, appeared with Mr Strum for the case guardian on behalf of the husband.  Mr Van der Heyden, solicitor, appeared for the wife.  Ms Nikou of Senior Counsel appeared for Mr Porter and Mr Sarinsson appeared in person.

8. I have carefully read the submissions of the Case guardian and the oral presentation of those submissions to the Court on 16 September 2008. 

9. The wife’s solicitor sought leave to file a written submission and I have now read and evaluated that document.  Ms Nikou addressed the Court in opposition to the disqualification application and Mr Sarinsson supported the arguments advanced by the wife and Mr Porter.

10. The written submissions of the case guardian helpfully identified the specific paragraphs of the joinder judgment which are alleged to give rise to an apprehension of bias and therefore to support their submission that I should disqualify myself.

11. It may be of importance to understand that the substantial grounds of complaint as to disqualification (paragraph 2(a) – (j)) are repeated as a ground of appeal against my orders in the joinder proceedings now listed for hearing before the Full Court.

12. The purported basis of disqualification provided for in the written submissions of the case guardian are identified in paragraph 2 (a) – (j) as follows:

    “(a)Paragraph 50:  That “Subject to any future and specific cross examination of Rockman or other witnesses and for the purposes of this interlocutory hearing”, explanations and evidence given by Mr Rockman, solicitor, for and on behalf of [Sarinsson], should be preferred and accepted over the evidence adduced by the Case guardian;

    (b)Paragraph 51:  That the professional opinion of Mr Rockman as to the proper interpretation of the Shareholders Agreement between the Husband and [Sarinsson] and [Porter] should be accepted;

    (c)Paragraph 52:  That all issues concerns or positions adopted by the Husband as to the purported exit of the proposed second respondent as a shareholder of the relevant overseas incorporated companies should be rejected (on the basis of the affidavit evidence of Mr Rockman and the supporting documents and the evidence of [Porter] and [Sarinsson]);

    (d)Paragraph 78:  That it is difficult to comprehend and accept the basis of opposition of the Husband to the alleged sale and transfer of shares between [Porter] and [Sarinsson]; (see paragraph 78 below (g));

    (e)Paragraph 78:  That there was no evidence of a proper challenge by the Husband to the share transfer alleged to have occurred between [Porter] and [Sarinsson]; (see paragraph 78 below (g));

    (f) Paragraph 78:  That (cumulatively, when taken with earlier findings) the challenge of the Husband in the proceedings before Young J to the alleged share sale and transfer between [Porter] and [Sarinsson] was not made bona fide; (see paragraph 78 below (g));

    (g) Paragraph 78:  That the real intent behind the challenge to the alleged share sale and transfer between [Porter] and [Sarinsson] may be dissatisfaction with the price negotiated between them and attempt to obtain a better price for the shares held by the husband;

    (h) Paragraphs 96 & 99:  That the shareholder’s agreement was appropriate to be acted upon, and should be acted upon, notwithstanding the objections of the Husband;

    (i) Paragraph 99:  that the refusal of the Husband to utilise the dispute resolution mechanism of the Shareholders Agreement was prompted, in whole or in part, by a failure of his legal advisers, perhaps for reasons connected with the convenience of those legal advisers, to give proper or complete advice as to the efficacy of the Shareholders Agreement;

    (j) Paragraphs 21 and 57:  that the Case guardian has selectively chosen the Family Court for reasons of personal choice or convenience.’

13. In addition to each of the specific ten issues (but involving only eight paragraphs of the judgment) addressed by Mr Kirkham there was the additional complaint that, on all matters properly in dispute between the parties, I found against the case guardian and otherwise in favour of the various other potential parties on each and every issue and, cumulatively, that was said to be evidence of bias by way of a pre-judgment of credit against the husband.

THE LAW

1. Each party who made submissions, written or oral, to the Court in respect of this disqualification application submitted that the applicable law for disqualification of a, judicial officer, is well settled.  In the filed written submissions on behalf of the case guardian the High Court decision in Johnson v Johnson (2000) 201 CLR 488 (pp 492-493) (‘Johnson’) was identified as being the proper statement of the legal principle according to which I should determine the disqualification application.  The majority (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) there held:

   “It has been established by a series of decisions of this Court that the test to be applied in Australia in determining whether a judge is disqualified by reason of the appearance of bias (which, in the present case, was said to take the form of pre-judgment) is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide (eg Re Lusink; Ex parte Shaw (1980) 55 ALJR 12; 32ALR 47; Livesey v New South Wales Bar Association (1983) 151 CLR 288; Vakauta v Kelly (1989) 167 CLR 568; Webb v The Queen (1994) 181 R 4.)

   That test has been adopted, in preference to a differently expressed test that has been applied in England, for the reason that it gives due recognition to the fundamental principle that justice must both be done, and be seen to be done. It is based upon the need for public confidence in the administration of justice. “If fair-minded people reasonably apprehend or suspect that the tribunal has prejudged the case, they cannot have confidence in the decision”. The hypothetical reasonable observer of the judge’s conduct is postulated in order to emphasise that the test is objective, is founded in the need for public confidence in the judiciary, and is not based purely upon the assessment by some judges of the capacity or performance of their colleagues. At the same time, two things need to be remembered: the observer is taken to be reasonable; and the person being observed is “a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial (footnotes omitted).”

2. An earlier and very helpful understanding of how an application of disqualification should be approached is set out by his Honour Mason J (as he then was) in Re JRL; ex parte CJL (1986) 161 CLR 342 at 351 (‘Re JRL’):

   “It needs to be said loudly and clearly that the ground for 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.  This does not mean either 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 pre-judgment, 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 a disqualification of a judge they will have their case tried by someone thought to be more likely to decide the case in their favour.”

3. Justice Kirby in Johnson (supra) considered what was said by Mason J in Re JRL (supra) and further said at page 504:

   “Such considerations lay behind the salutary warning given in Re JRL; Ex parte CJL   [90] that judicial officers in Australia were obliged to discharge their professional duties unless disqualified by law. They were told not to accede too readily to suggestions of an appearance of bias, lest parties be encouraged to seek such disqualification without justification. Applications of that kind might sometimes be made in the hope of securing an adjudicator more sympathetic to a party's cause. Or they might be made because of the strategic advantage that may thereby be secured, especially the interruption of lengthy proceedings [91]  and the delays consequent upon obtaining a fresh start in a busy court or tribunal. (footnotes omitted)”

4. At the commencement of his oral submissions Mr Kirkham provided an aide memoir to the Court on the legal principles which identified other reported decisions and I have read that submission and had regard to the authorities identified therein.

5. Mr Kirkham further referred me to an unreported decision which I delivered on 8 August 2006 in the matter of G & B [2006] FamCA 748, a case in which he appeared.  His submission was that I had there correctly identified and applied the law as to the disqualification issues. He made particular reference to those parts of the judgment where I referred to Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 348 (‘Ebner’ ) and Taylor & Anor v Lawrence & Anor (2002) 2 WLR 640 (‘Taylor’s Case’).  I therefore include references to those authorities which I have read and considered.

6. In Ebner (supra) the High Court said:

   “Judges have a duty to exercise their judicial function when their jurisdiction is regularly invoked and they are assigned to cases in accordance with the practice which prevails in the court to which they belong.  They do not select the cases they will hear, and they are not at liberty to decline to hear cases without good cause.  Judges do not choose their cases and litigants do not choose their judges.  If one party to a case objects to a particular judge sitting, or continuing to sit, then that objection should not prevail unless it is based upon a substantial ground for contending that the judge is disqualified from hearing and deciding the case.

   This is not to say that it is improper for a judge to decline to sit unless the judge has affirmatively concluded that he or she is disqualified.  In a case of real doubt, it will often be prudent for a judge to decide not to sit in order to avoid the inconvenience that could result if an appellant court were to take a different view on the matter of disqualification.  However, if the mere making of an insubstantial objection was sufficient to lead a judge to decline to hear or decide a case, the system would soon reach a stage where, for practical purposes, individual parties could influence the composition of the bench.  That would be intolerable. “

7. In line with this authority Mr Kirkham suggested that my judgment was a case in which real doubt could be said to arise and therefore I should be careful to proceed with caution and disqualify myself. I highlight, however, that a substantial ground is required for disqualification and that I would have to find a good cause to disqualify myself. The High Court in Ebner (supra) summarised succinctly the balancing of considerations which needs to be undertaken in determining whether disqualification is appropriate, and those are considerations which I have taken into account in considering the specific complaints enumerated in the case guardian’s application.

8. In Taylor’s case (supra) the English Court of Appeal observed:

   “61.  The fact that an observer has to be “fair minded and informed” is important.  The informed observer can be expected to be aware of the legal traditions and culture of this jurisdiction.  Those legal traditions and the culture have played an important role in ensuring the high standards of integrity on the part of both the judiciary and the profession which happily still exists in this jurisdiction.  Our experience over centuries is that this integrity is enhanced, not damaged, by the close relations that exist between the judiciary and the legal profession.  Unlike some jurisdictions, the judiciary here does not isolate itself from contact with the profession.  Many examples of the traditionally close relationship can be given:  the practise of judges and advocates lunching and dining together at Inns of Court; the Master of the Rolls's involvement in the activities of the Law Society; the fact that it is commonplace, particularly in specialist areas of litigation and on circuits, for the practitioners to practise together in a small number of chambers and in a small number of firms of solicitors, and for members of the judiciary to be recruited from those chambers and firms.”

9. One somewhat unique aspect of this disqualification application is that the apprehension of bias is alleged to arise from an interlocutory judgment in which findings were said to have been made unnecessarily and inappropriately. Junior counsel for the case guardian advised the court that he was unable to identify any legal authority discussing what nature or extent of findings were appropriate or inappropriate in an interlocutory application. This lack of express authority on this issue is one of the reasons why I exercised caution in my judgment, in qualifying my expressed findings to be subject to the testing of evidence available, and further why I otherwise carefully identified upon certain of the evidence rather than made findings.

10. One reported authority which provides some guidance on the issue of interlocutory proceedings and applications for disqualification is the Full Court’s decision in Fauna Holdings Pty Ltd & McGillivray & Ors & Mitchell (2000) FLC 93-053 (Nicholson CJ, Kay and Warnick JJ). In that case part of the objection taken, and a ground of appeal, was that the trial Judge erred in not disqualifying herself from the hearing because of findings made and comments expressed by her during the interlocutory proceedings.

11. The Full Court dismissed the appeal and found in relation to the submission of bias or pre-emptive findings that the comments of the trial Judge were unexceptional and ought not to inevitably or reasonably lead an intelligent lay observer to form the view that there had been any pre-judgment of facts or issues by the trial Judge.  The relevant and very helpful paragraphs from the judgment of the Full Court are:

    “111. The remarks her Honour made on 13 August 1998 were made in the course of proceedings seeking injunctions against Blueseas Investment Pty Ltd and in the course of proceedings brought by Jan to seek the discharge of an injunction restraining her from dealing with the $150,000 which had been paid to her by Fauna on 20 October 1997. The remarks were made on the strength of the material that was then before her Honour and in response to submissions that were being made to her. They did not amount to any findings of fact in respect of contested issues nor any findings as to the credit of the parties.

    112. The untested evidence that was before her Honour in August of 1998 could clearly have justified her Honour in making each of the conclusions she did (save for the conclusion that Kristen signed the cheques). The adoption of the submissions of Mr Walters that Jan was “completely involved in all the steps that occurred then and it is no good to come back here now complaining about it” has to be seen in the context in which ti was adopted, namely a submission that Jan’s involvement in the proceedings was an accidental one which was achieved by reason of her status as the wife of Brian McGillivray and not because she was in any way an active participant. Given that the evidence was that she had signed the cheques and had received the benefit of a large payment of monies, that finding was clearly open to her honour at the time.

    113. Seen in the context in which they were uttered, in our view it cannot be said that the comments made by the trial Judge in the earlier proceedings could lead a properly informed bystander to entertain a reasonable fear that the trial Judge would approach the task of determining whether or not there had been a contempt of court or an unlawful non- compliance with the orders of the court with a mind so prejudiced that she could not allow a fair trial of the issues to take place. There could not, in our view, be anything raised that would indicate that the Judge was in any way partial. The findings which she had already made on interlocutory proceedings on a lesser standard of proof, it could not, in our view, be said to have created a reasonable basis for her to have disqualified herself from hearing the proceedings, and certainly would not be such that the Court would interfere in her decision to continue on with the proceedings.

    114. In our view, the remarks of 8 September 1998 were unexceptional.

    115. As to the specific complaints raised by Mr Errington, the findings of the trial Judge do no more than show that on the material then before her in the interlocutory proceedings she was appropriately satisfied of the prima facie existence of facts which justified the granting of the orders she made in those proceedings. They ought not inevitably or reasonably lead an intelligent lay observer to hold the view that the trial Judge had prejudged the issues which were to be the subject matter of the enforcement proceedings in accordance with the requisite standard of proof and given that the findings were made without having had the opportunity to hear both sides of the story”.

1. I have therefore evaluated each of the objections and all of the written submissions with reference to the applicable legal principals.  My inquiry has been to determine whether any of the conclusions made or references identified were appropriate and justifiable in the particular circumstances of this hearing.  I have examined the extent to which I have made any finding or identification of fact in contested issues that could, in any further and final hearing, prejudice the applicant or whether I have made particular credit findings so adverse that they would be binding upon or significantly influential in any other further proceeding. 

2. In summary therefore and certainly by agreement of all parties to these proceedings the legal test that I will apply in determining this application is simply stated, in summary, as:

   “Whether a fair-minded lay observer might reasonably apprehend that the Judge might not bring an impartial and unprejudiced mind to the resolution of the question the Judge is required to decide”.

THE APPLICATION

1. I set out the specific written submissions of the case guardian and the judgment paragraphs to which they correspond.

PARAGRAPHS 21 AND 57

“(j) Paragraphs 21 and 57:  that the case guardian has selectively chosen the Family Court for reasons of personal choice or convenience.”

1. It is suggested that I erred by stating that the case guardian, or previously the husband, and other potential parties have selectively issued related proceedings in other courts as a matter of choice or convenience or otherwise and further that I identified the husband’s past and informed election to institute court related proceedings elsewhere. The complaint in respect of these paragraphs (and indeed it is submitted it is the cumulative effect of all the paragraphs complained of) is that such statements or findings were unnecessary and would lead a fair minded reasonable observer to apprehend that I had prejudged the credit of the husband and would not bring an impartial mind to any future determination of issues in this matter. 

2. I wholly reject this ground.  What I identified is supported by the evidence and past history and is carefully documented in the evidence before me and in my judgment, for example paragraph 17 thereof.

3. These facts were not evidence which was contested, indeed it was counsel on behalf of the case guardian who informed the court of the various other court proceedings either currently on foot or pursued in the past. These paragraphs represent an unremarkable commentary to give context to the complexity of the issues sought to be litigated in this court.

PARAGRAPH 50

“(a)Paragraph 50:  That “Subject to any future and specific cross examination of Rockman or other witnesses and for the purposes of this interlocutory hearing”, explanations and evidence given by Mr Rockman, solicitor, for and on behalf of [Sarinsson], should be preferred and accepted over the evidence adduced by the case guardian;”

1. The existence of a Shareholders Agreement executed between the husband, Mr Porter and Mr Sarinsson was an important document in, and aspect of, this case.  The preparation and execution of that agreement, and its relevant clauses, were documented in paragraphs 44 – 46 (inclusive) of the judgment.

2. Thereafter I examined the role of the commercial solicitor then jointly engaged by Porter, Sarinsson and the husband, to draw that agreement (Mr Rockman) and I read and evaluated his affidavits that were in evidence.  I, of course, had in evidence and had earlier identified and read the relevant affidavits of the case guardian and listened to the substantial submissions of Mr St John made in response to the existence and effect of that agreement. The crux of the case guardian’s submissions to the court in respect of this issue was that the transfer of shares was invalid and not in accordance with the shareholder’s agreement, rather than that the shareholder’s agreement itself was invalid.

3. Specifically in the introduction to paragraph 50 I carefully balanced the current evidence in affidavit form of the case guardian against the affidavits in response by Rockman and his annexures.  My finding was expressed to be subject to any future and specific cross examination of Rockman or other witnesses in this or any other court and the qualified finding that I made was required for and relevant to this interlocutory hearing. I record, as the case guardian would know, that my preference for this evidence, on the papers and in these interlocutory proceedings, was not in relation to any fact contested by the case guardian (save that I accepted for this hearing Mr Rockman’s interpretation of the clauses for the transfer of shares).

PARAGRAPH 51

“(b)Paragraph 51:  That the professional opinion of Mr Rockman as to the proper interpretation of the Shareholders Agreement between the Husband and [Sarinsson] and [Porter] should be accepted;”

1. Whilst I found the professional opinion of Rockman, an experienced commercial solicitor, should be accepted, the written submissions of the case guardian do not identify that it was for the specific purpose of the interlocutory judgment and I expressed that finding with the very clear qualification of leaving open any other finding that may properly be made after a defended hearing and cross examination of witnesses.

2. I highlight that the matter in dispute related to the particular interpretation of a pre-emptive clause (clause 5) of the agreement and the specific evidence of Rockman was that such a clause was clear, unambiguous and common in corporate documents.

3. As to each of paragraph 50 and 51 I conclude that any fair-minded lay observer would reasonably apprehend that the qualified findings were both impartial and proper and indeed were necessary to determine the interlocutory question before the Court.

PARAGRAPH 52

“(c)Paragraph 52:  That all issues concerns or positions adopted by the Husband as to the purported exit of the proposed second respondent as a shareholder of the relevant overseas incorporated companies should be rejected (on the basis of the affidavit evidence of Mr Rockman and the supporting documents and the evidence of [Porter] and [Sarinsson]);”

1. Again I observed that the specific complaint of the case guardian does not wholly reflect the entirety of that paragraph which I therefore set out in full:

   “On the basis of the current affidavit evidence of Rockman, and the supporting documents and the evidence of [Porter] and [Sarinsson] I reject in this interlocutory hearing any issue, concern or position that otherwise might be adopted by the case guardian on behalf of the Husband as to [Sarinsson’s] exit as a shareholder and director of both overseas incorporated companies.  I conclude that this qualified interlocutory finding is open and appropriate on the evidence now before me, but in any event I have concluded on all of the facts and evidence in this case that there is no single justiciable controversy and on that basis I am not persuaded to apply any accrued jurisdiction or make any other extended orders.  I would not join [Sarinsson] as a party in these substantial proceedings”.

2. On all of the evidence before me, and for the purposes of the interlocutory hearing, this qualified finding was necessary and balanced, available upon the evidence before the court and appropriate.  An issue that I had to determine was the joinder of Sarinsson as a party and I assessed all of the available evidence in that regard, and determined Sarinsson had no relevant interest. This was necessary notwithstanding I found that there was no single justiciable controversy, and therefore no jurisdiction to determine the extensive disputes, because Sarinsson separately appeared in the interlocutory proceedings. In the event that I was found to be wrong in respect of the jurisdiction issue on appeal I did not find that there was sufficient evidence put before the court to demonstrate that Sarinsson was a necessary party to the section 79 proceedings as I could not find that he had any interest, by way of shareholding or directorship, in W Corporation. Therefore any submissions by the case guardian in this disqualification application that those findings were unnecessary and therefore tantamount to pre-judgment against the case guardian are wholly rejected.

PARAGRAPH 78

1. This paragraph is one about which numerous complaints are made. I consider a reasonable objective bystander would read the paragraph as a whole and it is in that context that I will consider the cumulative strength of the specific submissions. I therefore set out paragraph 78 of the joinder judgment in full:

   “[Sarinsson] submitted that he had validly sold his shareholding in [W Corporation] to [Porter] for $1.350 million in reliance on the permitted transfer provisions of clause 5.3 of the Shareholders Agreement and had resigned his directorship.  The case guardian has continued to dispute that the sale of [Sarinsson’s] shares was valid and therefore sought to join him on the basis that he has or should in fact retain his one third shareholding in [W Corporation]. On all of the filed evidence and submissions, even in these interlocutory proceedings, it is very difficult both to comprehend and to accept the basis of opposition of the case guardian to the sale and transfer of shares which occurred over twelve months ago, as indicated earlier in this judgment.  There are no current proceedings initiated on behalf of the Husband in other jurisdictions pursuant to the shareholders agreement seeking to cancel the transfer and nullify the sale.  The husband has had, and now retains, commercial and family law solicitors to advise him and there is no evidence now before me of a proper challenge, not even a legal letter of demand on this matter.  Tactically the inference placed before the court and indeed the oral submissions on behalf of [Porter] (but upon which I do not need to make a finding) are to the effect that the Husband was dissatisfied with the sale price achieved by [Sarinsson] for his parcel of shares and otherwise would intend to resist [Porter] now being the majority shareholder of [W Corporation]”.

2. There are four separate complaints, or alleged grounds for disqualification, arising from this paragraph which I repeat:

   “(d)Paragraph 78:  That it is difficult to comprehend and accept the basis of opposition of the Husband to the alleged sale and transfer of shares between [Porter] and [Sarinsson]; (see paragraph 78 below (g));

   (e)Paragraph 78:  That there was no evidence of a proper challenge by the Husband to the share transfer alleged to have occurred between [Porter] and [Sarinsson]; (see paragraph 78 below (g));

   (f) Paragraph 78:  That (cumulatively, when taken with earlier findings) the challenge of the Husband in the proceedings before Young J to the alleged share sale and transfer between [Porter] and [Sarinsson] was not made bona fide; (see paragraph 78 below (g));

   (g) Paragraph 78:  That the real intent behind the challenge to the alleged share sale and transfer between [Porter] and [Sarinsson] may be dissatisfaction with the price negotiated between them and attempt to obtain a better price for the shares held by the husband;”

3. On the basis of evidence and submissions which were before me, in those interlocutory proceedings I observed that it was difficult to both comprehend and identify the basis of opposition of the case guardian to a past transfer and sale of shares.  That observation was clearly open to me on all of the material.  It was a matter that I had raised with Senior Counsel in argument and to which a satisfactory response, in these interim proceedings, was never provided.

4. There was indeed no evidence before me of any proper challenge to that transfer or sale of shares.  My observation that not even a legal letter of demand was written on this topic was factually correct on the material the case guardian elected to place before me.  It was also relevant to the determination on the balance of probabilities that the transfer was valid and that the case guardian had not satisfied me that Sarinsson continued to have any interest in W Corporation, and therefore why it was that he should have been appropriately joined to the s 79 proceedings. 

5. Thereafter, and whilst it remained subject of further complaint on behalf of the case guardian, I have merely identified the inference before the Court which was raised by other Counsel in the proceedings and which I carefully recorded that I did not need to make a finding thereupon.  The husband’s alleged dissatisfaction was a matter raised by other Counsel and was not any concluded finding by me. To the proposition of Mr Kirkham that “it was an impermissible conclusion to draw” – I wholly reject that submission on the basis that it was not a conclusion drawn by me but one identified by Counsel for the proposed respondents.

6. However I re-read paragraph 78, either as a whole or broken down into the four areas of complaint as identified in the written submission, I do not come to any conclusion that the paragraph is judicially offensive or improper.  It does not impart to me any issue of bias.  It represented a discrete summary of the evidence and the submissions made, or not made, on this issue.

7. What must be further understood and balanced is that my obligation was to determine the joinder proceedings.  What that meant was to either include or exclude from the ongoing proceedings one or other of the potential parties (Porter or Sarinsson or W Corporation) on the evidence before me in the interlocutory hearing.  If I am legally in error in my reasons for judgment and orders, then that matter can be corrected on appeal.  It is however not, in my opinion, a matter capable of supporting a complaint of any bias or pre-judgment of the credit of the husband or case guardian. It was necessary to make the findings that I did, qualified as they were, given that there was no testing of the evidence, so as to determine that Sarinsson ought not be joined regardless of any findings in relation to the application of the law with respect to accrued jurisdiction.

8. In his submissions, Mr Kirkham collectively addressed the issue that there is, at least impliedly in paragraph 78, a very clear inference that I questioned the bona fides of the husband and the case guardian.  I reject that submission as inaccurate and not in accordance with how a fair-minded objective bystander would read the paragraph in the context of the judgment.

PARAGRAPHS 96 AND 99

1. Before dealing with these applications I first highlight that both of these paragraphs are contained under the principle question which I posed at paragraph 90, being “Is there a single justiciable controversy?”

2. The structure of my judgment, having posed that substantial question, was thereafter to consider earlier reported cases where accrued jurisdiction was exercised and then specifically consider each of the five Warby factors.

3. It is within a consideration of what the parties had done (the first of the Warby factors) that I included paragraph 96 which provided as follows:

   “I conclude that it is relevant that the parties negotiated and executed a shareholders agreement which provided a clear avenue for commercial action to be taken by any of its signatories in the event of a commercial or shareholding dispute.  The Husband has elected, intentionally, to avoid this procedure and mechanism for dispute resolution and it is on that basis that he has endeavoured to bring the whole of the commercial dispute under the umbrella of the jurisdiction that he has submitted should vest with the Family Court on the particular facts in this case”.

4. The case guardian makes the following complaints in respect of paragraphs 96 and 99:

   “(h) Paragraphs 96 & 99:  That the shareholder’s agreement was appropriate to be acted upon, and should be acted upon, notwithstanding the objections of the Husband;

   (i) Paragraph 99:  that the refusal of the Husband to utilise the dispute resolution mechanism of the Shareholders Agreement was prompted, in whole or in part, by a failure of his legal advisers, perhaps for reasons connected with the convenience of those legal advisers, to give proper or complete advice as to the efficacy of the Shareholders Agreement;”

5. Whilst I found that the husband had intentionally not proceeded in accordance with the mechanism available in the Shareholder’s Agreement for dispute resolution, that was, in reality, only stating the obvious.  Much of the evidence in this hearing was about the husband, and others from time to time, instituting and continuing proceedings in various courts in the State jurisdiction of Victoria or in Fiji.  The husband, through the case guardian, elected to raise issues in this Court in the same way as he, personally, has pursued related party and financially based proceedings in the Victorian County Court, for example see the 30 May 2008 judgment concerning disclosure of material.

6. The submission of Mr Kirkham is that paragraph 96, when read together with paragraph 78, underlines a concern that I had found, or pre-judged, that the husband had shown a lack of bona fides in abandoning the procedures available under the Shareholders Agreement.  Again I reject any such submission.

7. I highlight that I was required to hear and conclude an interim proceeding and to give proper and complete reasons and pronounce orders in an important interlocutory aspect of this case.  Indeed it was both the importance and, in many ways, the finality of this interlocutory application, subject to any right of appeal, that persuaded me to give every extended opportunity to Counsel to prepare and present arguments both in written submissions and orally before the Court.

8. The first factor identified in Warby & Warby (2001) FLC 93-091 (‘Warby’), and that which I was required to examine, is the conduct and actions of the parties, and in that regard I had substantial affidavit material and lengthy submissions before me to assist in my deliberations and pronouncements.  I therefore reject any complaint or criticism of the content of this paragraph.

PARAGRAPH 99

1. This paragraph was directed to an examination of the third of the Warby factors, which is a consideration of laws which attach rights or liabilities to their conduct and relationships.  With that background the part of paragraph 99 now complained of on behalf of the husband reads as follows:

   “Mr St John relied upon this factor as one of significance and submitted that if the case guardian is not permitted to pursue her claims under the accrued jurisdiction of this Court then the Husband would likely be faced with the alternative requirement of instituting proceedings for a winding up of [W Corporation] within the courts of Fiji.  That may or may not be the available or appropriate course of action and I make no finding in that regard.  What I do repeat, and in this regard the various Warby factors are somewhat interwoven, is that there is an executed shareholder’s agreement which has been conveniently or otherwise ignored in the advice given to the Husband”. 

2. In the written legal submissions of the practitioners for the case guardian the complaint and objection as to this paragraph was stated to be that:

   “The refusal of the husband to utilise the dispute resolution mechanism of the shareholders agreement was prompted, in whole or in part, by a failure of his legal advisers, perhaps for reasons connected with the convenience of those legal advisers, to give proper or complete advice as to the efficacy of the shareholders agreement”.

3. In my opinion that objection does not fairly identify the context or meaning of that part of my judgment nor does it do justice to the far more limited issue upon which I commented in that paragraph.  The objection is both inaccurate and over-sensitive. 

4. I highlighted to Mr Kirkham during his oral submissions that my reasons merely identified that the Shareholders Agreement had been “conveniently or otherwise ignored in the advice given to the husband”.  The reasons in the judgment certainly do not identify or make any finding that there was “in whole or in part a failure by his legal advisers”.  Further I reiterate that there was no finding as to any “proper or complete” advice, nor was there comment or finding on the legal advice as to “the efficacy” of the Shareholders Agreement.

1. The observation that I made, and that which is challenged in this sub-paragraph (2)(j), was said in the context of what I described as the somewhat interwoven and various Warby factors.  In many ways it was simply stating what was obvious and apparent to all, and which I had earlier observed upon in paragraph 96, that there was a negotiated and executed Shareholders Agreement which the husband (or the case guardian) did not elect to avail themselves of for the purposes of resolution and that did have relevance to the resolution of interlocutory matter.

2. I reject any argument advanced by Mr Kirkham that the necessary or only inference is that I had impliedly found a lack of bona fides on the part of the case guardian or the husband.  Further I do not accept that my reasons could be read as “a tactical criticism” of the applicants.

3. Mr Kirkham further addressed me upon the wife’s written submissions filed subsequent to the joinder judgment being handed down as to costs for those proceedings, and highlighted that in those submissions she maintained that the husband (or the case guardian) had pursued the joinder application for some ulterior purpose.  Those submissions do not and should not impact upon any proper determination of this oral application which I will decide on its merits and on the proper application of the law to the material and written submissions before me on this issue.

4. I reject any further submission that what I actually said in this paragraph indicates or supports any conclusion of pre-judgment.  There is no specific finding of fact such as to validate any objection. I again repeat that the objection is not balanced within the proper meaning and context of the paragraph and I find it to be over-sensitive and inaccurate and not in accordance with what a reasonable objective bystander would perceive.

5. In summary, and in the context of all of the proper facts and evidence, I conclude that it would not be open, and certainly would not be inevitable, nor could it reasonably lead an intelligent lay observer to hold the view, that I had pre-judged any relevant issue or made any findings of adverse credit upon the husband, the case guardian or his advisers so as to impact in any way upon the final hearing of the s79 proceedings.

PARAGRAPHS 6 AND 7 OF WRITTEN SUBMISSIONS

1. It was submitted on behalf of the case guardian that:

   “6.The effect of the findings particularised in paragraph 2 of these Submissions is that the evidence by and on behalf of [Sarinsson] and [Porter] is to be preferred to that called on behalf of the Husband, notwithstanding that the competing evidence has not been subject to cross-examination.  Upon that preferential finding, the application for joinder was dismissed.

   7.The Court is now asked to make further findings.  To do so, the Court must consider anew competing factual matters.  The Court has already found that it prefers the untested evidence and opinion called against the Husband to that called by or on behalf of him”.

2. I do not accept that there is an unnecessary or unwarranted preferential finding in the reasons for judgment such as to bring about any result that a fair-minded lay observer might apprehend that further factual disputes or opinions expressed will not be considered in both an impartial and unprejudiced manner.  I have, and retain, an open mind on any and all issues that will be before the Court for determination in any future hearing. 

3. The dismissal of the joinder application was heard and determined on the appropriate burden of proof, which is the balance of probabilities, on the material that all parties elected to place before the Court.  In any event I was not otherwise addressed on any issue of the required level of proof.  There will be future required findings on the evidence then in contest, and the orders arising from these reasons for judgment relate to a now concluded interlocutory aspect of the case. In respect of these submissions I refer again to what I have said in evaluating the individual grounds of complaint. I reiterate that any such findings were necessary in determining the interlocutory issues then before the court.

WIFE’S SUBMISSIONS

1. As I earlier indicated the wife wholly opposed any disqualification application and her written submission was that “It has not been shown that a fair minded lay observer could reasonably apprehend that His Honour did not bring an impartial and unprejudiced mind to the resolution of the question which was to be decided”.

2. The basis of the wife’s submission was that, on the evidence before the Court it was open for me to make findings and reach conclusions as were incorporated within my reasons for judgment.  Thereafter the wife submitted and I record, that:

   “5. The Court must weigh the evidence of the parties and form an opinion based upon that evidence.  The Husband now complains, by virtue of this Application, that his Honour has preferred the evidence of Mr Ray Rockman to that of the Case guardian.  It is submitted that to a lay observer this is precisely what is required of a Judge, to critically analyse and weigh up the evidence before the Court and make a determination taking into account the differing accounts of the partis based upon the same set of facts.  It is a consequence of this decision making process that there must be, of necessity if there is ever to be an outcome, a preference given to the evidence provided by one party over that of another.

   6. It is submitted that His Honour was entitled to make the findings which he did based upon the evidence which was put before him.  It was put in issue at the outset of this hearing that the Shareholders Agreement governed the dealings as between the Husband, [Porter] and [Sarinsson].  The Husband, through the case guardian, chose to remain silent on the efficacy of the Shareholders Agreement, save to say that the Heads of Agreement, which was signed prior to the parties entering into the Shareholders Agreement, was the document which should apply when governing transfers of shares between existing shareholders (paragraph 24 of the Affidavit of [the case guardian] sown and filed 11 September, 2007).  The evidence of the Case guardian differs to that of Mr Rockman, [Sarinsson] and [Porter] who were all involved in the transaction.  Again it is submitted that to the lay person it is consistent that the Court could find that evidence of Mr Rockman, [Sarinsson] and [Porter] should be preferred to that provided by the case guardian who was not a party to the transaction”.

3. In summary Mr Van der Hayden submitted that it was a “long bow to draw” from statements that there was a Shareholders Agreement which was not relied upon or other statements about inferences put before the court but not accepted or rejected, to a conclusion that I found that the case guardian and/or his legal advisors lacked bona fides in bringing the joinder application. I accept this submission. His submission was that those statements put into context the depth of the commercial disputes between the parties and underlined the final result that I did not believe this court had the requisite accrued jurisdiction to determine the multiple commercial and other controversies in dispute.

SUBMISSIONS ON BEHALF OF PORTER:

1. Ms Nikou argued, in summary, that:

   (a)the test of the fair-minded observer would not entitle a conclusion that the judgment demonstrated bias and that the submissions made in complaint go no further than to demonstrate that the case guardian was dissatisfied with the result;

   (b)it was her first and main submission in the joinder proceedings that the Shareholders Agreement be relied upon, and that Mr St John SC at no stage submitted it was no longer appropriate or valid. It was therefore open and proper for comment upon that absence and such comments should not lead a reasonable lay observer to conclude that the court regarded the case guardian, or her legal advisers, as lacking bona fides;

   (c)the nature of the interlocutory proceedings and the extended submissions which were put before the court, both written and orally over a number of days, particularly on behalf of the case guardian, made it necessary to give a comprehensive interlocutory judgment balancing all of the evidence and all of the submissions before the court;

   (d)as to paragraph 78 of the judgment comments upon the share transfer were proper given it was a fundamental element to the defence of Porter. The case guardian whilst he put the transfer of shares in issue did not demonstrate that the sale was improper nor why such a finding, if made, would necessitated joinder;

   (e)the submissions of the case guardian confused those matters relevant to this disqualification application and those relevant to any appeal; and

   (f)the fact that Mr Rockman was an officer of the court does give some additional weight in comparison to lay conflicting witnesses, although that does not allow his evidence to be taken without proper evaluation.

2. I have considered and evaluated these oral submissions and those received on behalf of the wife in this further interlocutory judgment, and have taken them into account in determining the question of disqualification.

CONCLUSION

1. I conclude that the oral application for disqualification should be dismissed.  On a careful and detailed evaluation of all of the evidence and submissions there is no reasonable apprehension of bias by reason of any alleged pre-judgment.  I conclude that no fair-minded lay observer might reasonably apprehend that I would not or could not bring an impartial and unprejudiced mind to the resolution of any future question before me for determination.  I have a professional duty to hear and determine proceedings before me and part of that responsibility is not to accede too readily to suggestions of any appearance or bias.  For all of the reasons discussed in this judgment the oral application for me to disqualify myself from any further hearing in these proceedings is dismissed.

2. Subject to any appeal as a result of this judgment or the outcome of the joinder appeal now before the Full Court I further reserve all costs of and incidental to this application and judgment to a date to be fixed.

3. I would therefore intend, subject to the outcome of the extant Full Court appeal to list for hearing and determination the costs applications arising out of the joinder judgment and otherwise, in due and proper course any consequential issues arising out of this judgment.

I certify that the preceding paragraphs are
a true copy of the reasons for judgment herein
of The Honourable Justice Young

………………………………………………………..
Associate: