Creggan Holdings Pty Ltd as trustee for the Gwendoline Trust v Rizzi as trustee for the Boston Investment Trust [No 2]
[2023] WASC 64
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: CREGGAN HOLDINGS PTY LTD AS TRUSTEE FOR THE GWENDOLINE TRUST -v- RIZZI AS TRUSTEE FOR THE BOSTON INVESTMENT TRUST [No 2] [2023] WASC 64
CORAM: ARCHER J
HEARD: 1 MARCH 2023
DELIVERED : 1 MARCH 2023
PUBLISHED : 3 MARCH 2023
FILE NO/S: CIV 1670 of 2020
BETWEEN: CREGGAN HOLDINGS PTY LTD AS TRUSTEE FOR THE GWENDOLINE TRUST
First Plaintiff
GRANT STREET PTY LTD AS TRUSTEE FOR THE SECOND JOHN THOMPSON SUPERANNUATION FUND
Second Plaintiff
AND
RICCARDO RIZZI AS TRUSTEE FOR THE BOSTON INVESTMENT TRUST
Defendant
RICCARDO RIZZI AS TRUSTEE FOR THE BOSTON INVESTMENT TRUST
Plaintiff by counterclaim
CREGGAN HOLDINGS PTY LTD AS TRUSTEE FOR THE GWENDOLINE TRUST
GRANT STREET PTY LTD AS TRUSTEE FOR THE SECOND JOHN THOMPSON SUPERANNUATION FUND
Defendant by counterclaim
Catchwords:
Application for recusal - Apprehended Bias - Actual Bias
Legislation:
Nil
Result:
Applications dismissed
Representation:
Counsel:
| First Plaintiff | : | G D Cobby SC & J Moore |
| Second Plaintiff | : | G D Cobby SC & J Moore |
| Defendant | : | No Appearance |
| Plaintiff by counterclaim | : | No Appearance |
| Defendant by counterclaim | : | G D Cobby SC & J Moore |
Solicitors:
| First Plaintiff | : | Roe Legal Services |
| Second Plaintiff | : | Roe Legal Services |
| Defendant | : | Not Applicable |
| Plaintiff by counterclaim | : | Not Applicable |
| Defendant by counterclaim | : | Roe Legal Services |
Case(s) referred to in decision(s):
Cheng v Lam [No 4] [2020] WASC 175
Creggan Holdings Pty Ltd as trustee for the Gwendoline Trust v Rizzi as trustee for the Boston Investment Trust [2022] WASC 6
Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337
Jia v Minister for Immigration and Multicultural Affairs (1998) 84 FCR 87
Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488
Livesey v New South Wales Bar Association (1983) 151 CLR 288
Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 244 CLR 427
Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17; (2001) 205 CLR 507
Ogbonna v CTI Logistics Ltd [2021] WASCA 21
Ogbonna v CTI Logistics Ltd [2021] WASCA 22
Patole v Child & Adolescent Health Service [2022] WASC 401
Rayney v The State of Western Australia [2020] WASCA 206
WKS v The State of Western Australia [No 4] [2020] WASCA 178
ARCHER J:
(This judgment was delivered extemporaneously on 1 March 2023 and has been edited to correct matters of expression, include references and add formatting.)
Introduction
The director of the plaintiffs (Mr Thompson) and the defendant (Mr Rizzi) were involved in business for over 20 years. Mr Thompson has an accounting qualification. Mr Rizzi is, among other things, a builder. Through different corporate entities, they developed several properties. They worked well together and made money.
Around 2018, disputes arose between Mr Thompson and Mr Rizzi in relation to a development they were undertaking at 3 Sarich Way, Bentley (Property). Those disputes led to these proceedings.
In September and October 2021, there was a seven day trial in this matter. Mr Rizzi represented himself in the trial.
On 14 January 2022, I delivered judgment (Primary Judgment).[1] By that time, Mr Rizzi was represented.
[1] Creggan Holdings Pty Ltd as trustee for the Gwendoline Trust v Rizzi as trustee for the Boston Investment Trust [2022] WASC 6.
I found for the plaintiffs. I then heard from the parties' legal representatives as to the appropriate orders to reflect the reasons in the Primary Judgment. I then made those orders the same day (my Orders). The form of my Orders was largely agreed between the parties.
In particular, both sides wanted an account to be taken before a Registrar, and agreed various orders in relation to the taking of the account. I relevantly ordered:
16.An account be taken between the parties in relation to their respective entitlements relating to the purchase, development and sale of the Property.
17.The account be taken before a Registrar of this Honourable Court.
18.The account is to be based on the following findings: [which were then listed]
I also made programming orders for the taking of the account and, by order 29, gave parties liberty to apply.
On 11 February 2022, the plaintiffs filed their account.
On 11 March 2022, Mr Rizzi gave notice that he disputed the account.
A hearing was conducted before Registrar Griffin on 24 May 2022. Following the hearing, Registrar Griffin made orders (Registrar's Orders). Orders 1 and 2 imposed obligations on the plaintiffs. Those orders were:
1.In accordance with O 45(6) of the Rules of the Supreme Court 1971 (WA), the plaintiffs provide to the defendant vouchers, receipts or documentation by 12 July 2022.
2.The vouchers, receipts or documentation required by Order 1 be produced in an electronic format to the defendant’s solicitors and numbered consecutively, with reference to the corresponding item number in the plaintiffs’ Account to which each voucher relates.
The plaintiffs' solicitor, Mr Mason, has deposed that those orders were complied with on 12 July 2022.[2]
[2] Affidavit of Andrew John Mason, filed on 7 November 2022 (Mason Affidavit) [5].
The registrar also ordered Mr Rizzi to file his objection by 6 September 2022. That deadline was subsequently extended, by consent, to 8 September 2022. On that date, Mr Rizzi filed his objections.
On 7 November 2022, and after conferral, the plaintiffs filed an application (Application) seeking further orders from me relating to the conduct of the account.
The plaintiffs' Application
By the Application, the plaintiffs seek orders that:
a.the Project Cost Schedule[3] (PCS) stand as prima facie evidence of the truth of specified matters for each item listed on the PCS prior to 30 March 2015; and
b.that specified items be considered in the taking of the Account.
[3] Exhibit 4.266.
On 9 December 2022, by consent, the plaintiffs' Application was ordered to be listed for a special appointment before me, and programming orders were made. The special appointment was listed for 1 March 2023. (The parties had also sought, and obtained, consent orders on 8 November 2022 vacating the next directions hearing before Registrar Griffin until after the Application had been heard).
On 24 January 2023, Mr Rizzi filed a Form 5AA notice that he intended to act in person. In the section for current address and service details, the form included a postal address and a mobile telephone number (Mobile Number).
Allegations of bias raised
On 30 January 2023, the Court received a letter from Mr Rizzi dated 20 January 2023, titled 'Written Submission' (Written Submissions).
Mr Rizzi's Written Submissions did not contain any substantive submissions on the particular orders sought in the Application. However, Mr Rizzi contended that I should not deal with the Application for several reasons. The first of those reasons was based on an allegation of bias based on critical comments I made in the Primary Judgment in relation to Mr Rizzi's evidence.
On 1 February 2023, the court received another letter from Mr Rizzi. This letter was dated 24 January 2023 and attached a copy of a letter he had sent to the Chief Justice dated 20 January 2023. In the letter to the Chief Justice, Mr Rizzi referred to the critical comments I had made in the Primary Judgment. He referred to the plaintiff's Application. He said:
In view of Justice Archers [sic] statements about me, I believe it is inappropriate for Justice Archer to be hearing this new application, the matter should be referred back to Registrar Griffin who has already adjudicated on the issue and the Application discharged.
…
I believe, as Justice Archer did at trial, when she confirm [sic] sale of the property before any Defendant's evidence was provided, her mind is already made [sic]. I believe Justice Archer will agree to give the Plaintiffs everything they want, and possibly more before hearing or reviewing any Defendant evidence.
On 2 February 2023, the Court replied to this letter by email and by an undated letter. In the letter, the Court advised that, if Mr Rizzi wished to make an application that I recuse myself from continuing to act in the matter, he must advise the court of that by 10 February 2023 and provide his unavailable dates for a hearing.
On 17 February 2023, the court received another letter from Mr Rizzi. This letter was dated 12 February 2023. In that letter, Mr Rizzi wrote:
Thank you for your undated letter received on the 8 February 2023. I immediately responded by letter to you on the 9 February 2023.
For clarity and avoidance of doubt:
1. I have not made an application;
2.I could be making an application upon receiving a suitable response to my letter dated 9 February 2023;
3.I should be in a position to make an application after compiling the evidence by, at the earliest, the end of April 2023;
4.I have not conferred with Roe Legal [the plaintiffs' solicitors];
5.I will not confer with Roe Legal until my future proposed application is in a format suitable for conferral and processing;
6. I am not seeking any hearings at this stage.
At the time of receiving this letter, the Court had not received a letter from Mr Rizzi dated 9 February 2023.
On 20 February 2023, the Court received Mr Rizzi's letter dated 9 February 2023 - some 11 days after he had posted it. In that letter, Mr Rizzi made two applications. First, that I recuse myself. Second, that he be allowed to be represented by a person who was not a legal practitioner.
I will refer to this letter as the 'Recusal Application'.
Attempts to contact Mr Rizzi
Throughout this time, the Court made numerous attempts to contact Mr Rizzi in relation to his allegations of bias.
Initially, the Court sought to communicate with Mr Rizzi through email, using the email address that he had used when conducting the trial on his own behalf and which appeared on his letterhead (Hotmail Email Address). Mr Rizzi advised:[4]
My email has been compromised by a hacker in Moscow Russia and is no longer a safe means of communication. I can not vouch for any unauthorised email both received or sent by any party.
I enclose the notice from the Microsoft Account Team for your reference.
[4] Letter dated 1 February 2023, received 8 February 2023.
The Court then sought to contact him by calling the Mobile Number he had listed in his Form 5AA (and which also appeared on his letterhead).
After answering one telephone call to the Mobile Number, Mr Rizzi ceased to answer that phone and did not return messages to call back my associate.
Registered mail sent by the Court to Mr Rizzi was returned, with the reason for return marked as 'refused'.
On 10 February 2023, Mr Rizzi was advised by SMS to the Mobile Number that a directions hearing had been listed on 20 February 2023. On 18 February 2023, an SMS was sent reminding him of the directions hearing. Mr Rizzi did not appear at the directions hearing, nor did he answer a call to the Mobile Number at the time it was due to commence.
On that day, 20 February 2023, I ordered that the hearing of the bias issue be listed for a special appointment at 2.15pm on 22 February 2023. In addition, I ordered that the hearing would also deal with whether I should make orders requiring Mr Rizzi to utilise a new email address. Later that morning, Mr Rizzi was sent SMS messages advising him of the listing of the special appointment and asking him to telephone my associate as soon as possible to discuss the orders that had been made. Mr Rizzi did not return this call.
Mr Rizzi did not appear at the special appointment listed for 22 February 2023, nor did he answer a call to the Mobile Number at the time it was due to commence.
I made orders to the effect that Mr Rizzi was required to comply with the Rules of the Supreme Court 1971 (Supreme Court Rules) (WA) in relation to the filing of documents electronically. I also ordered Mr Rizzi to provide an email address through which the Court and the plaintiffs' solicitors could communicate with him. I gave detailed oral reasons setting out the history of the attempts to communicate with Mr Rizzi. I adjourned the hearing of the bias issue to today, 1 March 2023.
Later that day, the orders were emailed to the plaintiffs' solicitors, copied to Mr Rizzi's Hotmail Email Address.
The following morning, 23 February 2023, Mr Rizzi emailed from that address, and advised that the Hotmail Email Address was his email address. Mr Rizzi made no mention of his previously expressed concerns that the account had been hacked by Russians.
Mr Rizzi was advised that, if he wished to appear at the hearing on 1 March 2023 remotely by Microsoft Teams, he could do so.
The following day, Mr Rizzi emailed to advise, among other things, that he was not seeking a hearing at this time, was not ready to deal with the recusal issue, and that it would take him to about the end of April 2023 to compile his recusal application.
Mr Rizzi was advised that, if he wished to make an application to adjourn the hearing of the bias issue, he could make that application at the commencement of the hearing on 1 March 2023. He was advised that, if he failed to appear at that hearing, the issue would be dealt with in his absence.
Following a further email from Mr Rizzi, he was advised that, if he wished to file further written submissions on the bias issue, he could do so at any time prior to 10 am on 28 February 2023.
Mr Rizzi acknowledged receipt of that email but did not file any further submissions.
Today is the day on which the special appointment to determine the Application was listed to be heard. Mr Rizzi has been aware of this listing for some time. Mr Rizzi elected not to attend Court today.
In the circumstances, I consider it appropriate to deal with Mr Rizzi's application that I recuse myself now, despite his failure to appear.
Mr Rizzi's Recusal Application
In his Written Submissions, Mr Rizzi submits (original emphasis):[5]
[5] Mr Rizzi's Written Submissions pages 1 - 2.
You have in the past had some harmful and awful things to say about me:
1.My cross examination of Mr. Thompson was 'repetitive and argumentative[';]
2.'the defendant (me) was an unsatisfactory witness';
3.'the defendant (me) made unfounded assertions under oath';
4.'the defendant appeared to change his evidence based upon what he thought would best advance his case';
5.'the defendant was often unresponsive or argumentative';
6.'the defendant exaggerated';
7.'I also accept that the defendant did not properly discharge his discovery obligations';
8.'As I have explained, I do not accept the defendants evidence unless it is corroborated or against his interest';
Mr Rizzi further submits that the Application deals in part with 'vouching'. He submits:[6]
In view of past dealings and your opinion of my character, I believe it is inappropriate for you to be dealing with this matter and the application should be returned to Registrar Griffin and discharged:
1.By you hearing this application I am severely disadvantaged. Your opinion is made both as to my character and, as in trial, the outcome of the current application.
[6] Mr Rizzi's Written Submissions page 2.
In Mr Rizzi's Recusal Application, he repeated the eight matters listed in his Written Submissions. He further said:[7]
There has been no judicial equivalency between myself and The Plaintiff, Mr. Thompson, in almost every comment and ruling by you throughout the matter before you.
In just one such example, Your Honour conferred her powers to The Registrar of The Court however, when a determination, clearly favorable to my case, was made by The Registrar, your Honour intends to vacate that ruling.
[7] Mr Rizzi's Recusal Application page 2.
This indicates that Mr Rizzi misunderstood the nature of the plaintiffs' Application. It does not seek to vacate the Registrar's ruling. The plaintiff has complied with the Registrar's Orders.
Mr Rizzi has not identified any other 'example' of bias on my part.
Discussion
Apprehended bias
The principles of apprehended bias are well-settled. They were recently set out by Quinlan CJ in Ogbonna v CTI Logistics Ltd.[8]
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.[9]
In applying this principle, it is necessary to identify what is said might lead a judge to decide a case other than on its legal or factual merits, and to articulate a logical connection between the matter and the feared deviation from the course of deciding the case on its merits.[10] The test is objective and the fair‑minded observer taken to be reasonable and to remember that the person being observed is a professional judge whose training, tradition and oath or affirmation require him or her to discard the irrelevant, the immaterial and the prejudicial.[11]
[8] Ogbonna v CTI Logistics Ltd [2021] WASCA 21 [9] - [10]. See also Ogbonna v CTI Logistics Ltd [2021] WASCA 22 [19] - [21], Rayney v The State of Western Australia [2020] WASCA 206 [103] - [142] and Patole v Child & Adolescent Health Service [2022] WASC 401 [21] - [38] (noting that parts of these paragraphs deal with non-judicial decision-makers).
[9] See Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 (Ebner) [6] (Gleeson CJ, McHugh, Gummow & Hayne JJ).
[10] See Ebner [8] (Gleeson CJ, McHugh, Gummow & Hayne JJ).
[11] Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488 [12] (Gleeson CJ, Gaudron, McHugh, Gummow & Hayne JJ).
The issue in this case is whether a fair‑minded lay observer might reasonably apprehend that my expressed views of Mr Rizzi's evidence in the trial might cause me to decide the Application other than on its merits.
In my view, there are two matters of significance in this case.
First, in this case, the proceedings are, in effect, part heard.
In my Primary Judgment, I decided the substantive liability issues and that the Property should be sold. My Orders included orders for an account.
Once the account is complete, it is to be expected that a party will apply to me, under O 35 r 9 of the Supreme Court Rules read with O 35 r 11, to adopt the report.[12]
[12] See Cheng v Lam [No 4] [2020] WASC 175 [16] - [17].
Second, the plaintiffs' Application does not require me to evaluate the credit of any witnesses, least of all Mr Rizzi. On the contrary, the plaintiffs seek orders that are entirely consistent with, and in a sense rely upon, Mr Rizzi's evidence in the trial. The situation here is very different to the situation discussed in Livesey v New South Wales Bar Association.[13]
[13] Livesey v New South Wales Bar Association (1983) 151 CLR 288.
In all the circumstances I do not consider that a fair‑minded observer might reasonably apprehend that, having expressed critical views of Mr Rizzi's evidence in my Primary Judgment, I might not bring an impartial mind to the issues raised in the plaintiffs' Application for directions in relation to the account.
In my view, this conclusion is reinforced by the findings I made in the Primary Judgment in relation to the factual matters in dispute. As these findings are more directly relevant to the issue of actual bias, I will discuss them later.
Actual bias
Mr Rizzi's Recusal Application refers only to apprehended bias. However, from its content, it should be treated as also alleging actual bias.
Again, the principles are well-settled.
In Ogbonna v CTI Logistics Ltd,[14] Quinlan CJ said:
A determination as to actual bias in the form of prejudgment requires assessment of the state of mind of the judge in question, ordinarily on the basis of what the judge had said and done.[15] The onus of demonstrating actual bias lies upon the party asserting the actual bias and it is a heavy onus.[16]
[14] Ogbonna v CTI Logistics Ltd [2021] WASCA 21 [11].
[15] Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 244 CLR 427 [33] (Gummow A-CJ, Hayne, Crennan & Bell JJ).
[16] Jia v Minister for Immigration and Multicultural Affairs (1998) 84 FCR 87, 106 (French J) and Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17; (2001) 205 CLR 507 [72], [82] (Gleeson CJ and Gummow J).
In Ogbonna v CTI Logistics Ltd,[17] Murphy JA said:
A finding of actual bias is a grave matter. An allegation of actual bias must be distinctly made and clearly proved. Such a finding should not be made lightly, and cogent evidence is required.[18] The inquiry requires an assessment of the state of mind of the judge in question. However it is not confined to a consideration of the intentional state of mind of the judge. Actual bias may be subconscious.[19] Generally speaking, that inquiry has to be undertaken based on what the judge has said and done.[20]
[17] Ogbonna v CTI Logistics Ltd [2021] WASCA 22 [18].
[18] WKS v The State of Western Australia [No 4] [2020] WASCA 178 [341].
[19] WKS [341].
[20] Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 244 CLR 427 [33].
In my Primary Judgment, I discussed the credibility and reliability of each witness.
I found Mr Rizzi to be an unsatisfactory witness. I gave detailed reasons for that conclusion. I said that I did not accept his evidence unless it was corroborated or against his interest.[21]
[21] Primary Judgment [35] - [56].
In the Primary Judgment, I dealt with the factual matters in dispute. In my view, the most significant of these was the 'Builder's Fee'.
It was common ground that Mr Rizzi would be the builder of the development on the Property and would oversee the construction of the building, including the builder's fit-out, in exchange for the Builder's Fee. The Builder's Fee was payable by the first plaintiff (Creggan) and Mr Rizzi. The amount of the Builder's Fee, and how it was to be paid, was in dispute.
The plaintiffs submitted that the parties agreed that the Builder's Fee would be $1 million. They submitted that Mr Rizzi was to receive a credit of $1 million towards his share of the costs and expenses upon the taking of an account between the parties at the completion of construction for his work in overseeing the construction of the building.
Mr Rizzi submitted, in effect, that the parties agreed that Creggan would pay him $1 million (so that, but for the fact Mr Rizzi was also one of the owners, the total of the Builder's Fee would be $2 million; being $1 million from each owner).
On this issue, I found in favour of Mr Rizzi. I considered that documentary evidence supported his evidence. Other documentary evidence caused me to doubt the reliability of Mr Thompson's recollection of these events and I did not accept Mr Thompson's evidence on this point.
There were four other factual issues in dispute:
1.Did the parties later vary their agreement as to what work was required to be done in exchange for the Builder's Fee, so as to release Mr Rizzi from his obligation to do the builder's fit‑out? (Variation of Work Issue)
2.If Mr Rizzi was not released from his obligation, did Mr Rizzi refuse to do the builder's fit-out? (Refusal Issue)
3.Did the plaintiffs agree to indemnify Mr Rizzi for any loss caused to him by the builder's fit-out? (Indemnity Issue)
4.Was the Subdivision Agreement varied in a meeting in October 2020? (Variation of Agreement Issue)
In relation to the Variation of Work Issue, Mr Thompson and Mr Rizzi gave conflicting evidence. I accepted Mr Thompson's evidence. I further noted that, even on Mr Rizzi's version, he provided no consideration for the alleged variation.[22]
[22] See Primary Judgment [127] - [130].
In relation to the Refusal Issue, Mr Thompson gave evidence that he asked Mr Rizzi to do the builder's fit-out on the plaintiffs' side of the building. It appears that this would have been around 2018. Mr Rizzi initially denied having been asked by Mr Thompson. Later, however, he said he could not remember being asked. I accepted Mr Thompson's evidence.[23]
[23] See Primary Judgment [131] - [133].
In relation to the Indemnity Issue, Mr Thompson and Mr Rizzi gave conflicting evidence. I accepted Mr Thompson's evidence which was consistent with the contemporaneous documents. I further noted that, as I was going to order that the property be sold, Mr Rizzi would not suffer any loss from the builder's fit-out.[24]
[24] See Primary Judgment [134] - [137].
In relation to the Variation of Agreement Issue, Mr Thompson and Mr Rizzi gave conflicting evidence. Contemporaneous documents were inconsistent with Mr Rizzi's evidence. I accepted Mr Thompson's evidence, parts of which were also supported by the evidence of another witness.[25]
[25] See Primary Judgment [138] - [151].
I do not consider that my critical comments of Mr Rizzi's evidence in the trial, in that context and in the context of the judgment as a whole, support a finding of actual bias.
I am satisfied that I will be able to, and will, fairly, objectively, and impartially, deal with the Application.
Further, the fact that Mr Rizzi submitted that I should recuse myself will not divert me from fairly, objectively, and impartially, dealing with the Application.
Orders
I would dismiss Mr Rizzi's application that I recuse myself.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
NL
Associate to the Judge
3 MARCH 2023
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