Dovade Pty Ltd v Westpac Banking Group

[1999] NSWCA 113

Reported Decision: 46 NSWLR 168
150 FLR 336

New South Wales

Court of Appeal

CITATION:	DOVADE PTY LTD & ORS v WESTPAC BANKING GROUP & ANOR [1999] NSWCA 113
FILE NUMBER(S):	CA 40805/95
HEARING DATE(S):	8-10 December 1998
JUDGMENT DATE:	30 April 1999
PARTIES :	Dovade Pty Ltd & 14 Ors v Westpac Banking Group & Anor
JUDGMENT OF:	Mason P; Sheller JA; Stein JA

LOWER COURT JURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S) :	CD 50291/94
LOWER COURT JUDICIAL OFFICER:	Rolfe J

COUNSEL:	C J Stevens QC/A J McQuillen (Appellants) TEF Hughes QC/JE Marshall (Respondents)
SOLICITORS:	Central Law Solicitors and Attorneys (Appellants) Clayton Utz (Respondents)
CATCHWORDS:	MISREPRESENTATION; negligent advice; loan agreement; misleading and deceptive conduct; damage; s52 Trade Practices Act ; BREACH OF DUTY OF CARE; whether breach of fiduciary duty; claim for equitable damages; cross-claim; APPREHENSION OF BIAS; waiver; alleged failure to disclose; judge’s customer relationship with bank; wife’s shareholding; whether direct pecuniary interest in outcome of proceedings; scope of pecuniary interest disqualification
DECISION:	Appeal dismissed with costs

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40805/95


MASON P
SHELLER JA
STEIN JA

Friday 30 April 1999

DOVADE PTY LTD & ORS v
WESTPAC BANKING CORPORATION & ANOR

The appeal is from proceedings heard and determined by Rolfe J in 1995. The respondents are related financial institutions. Bill Acceptance Corporation Ltd (“BACL”) is a merchant bank. It is a wholly owned subsidiary of Australian Guarantee Corporation Ltd, which is a wholly owned subsidiary of Westpac Banking Corporation (“Westpac”). The respondents sued Mr and Mrs Jury and several companies in the “Jury Group” for moneys lent or in relation to guarantees of loan agreements. Each of the defendants was found liable. The principal matter litigated at trial was a cross-claim propounded compendiously by each defendant against each of the plaintiffs. Judgments dismissing the cross-claim took effect on 21st November 1995.

In 1989, Mr Whitbread persuaded Mr Jury that the takeover of Trinity Properties Pty Ltd would be a good business opportunity. Mr Jury intended to sell most of Trinity’s real estate once the takeover had been effected in order to repay moneys borrowed through Dovade Pty Ltd, one of the Jury Group, for the acquisition. Loan monies were furnished by Westpac and BACL. Proceeds of the sale of the Trinity assets came only slowly. It was alleged that BACL had given financial advice to the defendants which promoted the takeover scheme by upholding its feasibility. The appellants claimed that the advice was negligent, as well as misleading and deceptive. Rolfe J found that the alleged representations were not made, that such statements as were made were neither representational nor advisory, that the appellants placed no reliance upon what they were told by any officer of BACL in deciding to enter the transaction, and that no damages were proved.

Some years prior to his judicial appointment, Rolfe J had acted as counsel in the preliminary stages of criminal proceedings involving Mr Whitbread. This involvement was known to counsel for the appellants at the trial who indicated no difficulty with the matter. The appellants submitted that this involvement gave rise to a well-founded apprehension of bias in the current proceedings.

At the time when the trial took place and judgment was given, the judge was a customer of Westpac. He operated a cheque account with the Bank and the Bank held a registered mortgage over land belonging to the judge. There was no evidence as to the status of the account. It was also established that Mrs Rolfe, the wife of Rolfe J, held 16,600 ordinary shares in the Bank. (It was common ground that the value of these shares would not be affected by the outcome of the litigation.) A company called Lochiely Pty Ltd had granted a fixed charge in favour of Westpac in 1988. Rolfe J and another person each held one share in the company on trust for other persons. The appellants relied on these matters individually and cumulatively. They also contend that the judge’s non-disclosure of these relationships itself raised an apprehension of bias.

HELD, dismissing the appeal:

a) In relation to allegations of misrepresentation, negligent advice and misleading and deceptive conduct:
That the findings of Rolfe J were based on credibility findings adverse to Mr Jury. The claim for damages based on negligent advice failed because the alleged positive representations were not made, or at least were not made in a “representational or advisory” context. They were not found to be relied upon by Mr Jury and no damage was proved.

b) In relation to the allegation of breach of fiduciary duty:
That the claim for equitable damages was unfounded and failed on its merits. The case for damages fought at trial was tort-based and failed because of findings on causation and damages. These findings were not appealed from and prevent the appellants from attempting to fall back on a fiduciary-based case.

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, Coulton v Holcombe (1986) 162 CLR 1; Water Board v Moustakas (1988) 180 CLR 491 (Refd)

c) In relation to the allegations of apprehension of bias:
The appellants clearly waived any objection based on Rolfe J’s earlier role as counsel which may have been available to them.

Vakauta v Kelly (1989) 167 CLR 568, Re Jury & Anor; ex parte Westpac Banking Corporation Federal Court of Australia, Lockhart J, unreported, 22 May 1997, Jury v Westpac Banking Corporation Federal Court of Australia, Full Court, unreported, 18 March 1998 (approved)

The trial did not miscarry on the basis that the judge failed to disclose both his wife’s shareholding relationship with the Bank and his own customer relationship with the Bank.

The principle of automatic disqualification for direct pecuniary interest in the outcome of a case is clear. However it does not extend to situations where a judge holds shares in a litigant party where the value or income stream of shareholding could not possibly be affected by the outcome of the litigation; or where a family member, however close, has a non-direct pecuniary interest in the proceedings. The pecuniary interest of a family member, however close, cannot be equated automatically with that of the judge.

Webb v The Queen (1994) 181 CLR 41 per Deane J at 74-5 (followed); Grand Junction Canal Co v Dimes (1852) 3 HLC 759, 10 ER 301 (discussed and distinguished); R v Bow Street Metropolitan Stipendiary Magistrate; Ex parte Pinochet [1999] 2 WLR 272 (considered)

In relation to the claim of reasonable apprehension of bias, the test to be applied is whether, in all of the circumstances of the particular case, the parties or the public might entertain a reasonable apprehension that the judge might not bring an impartial and unprejudiced mind to the resolution of the question involved. A reasonable apprehension of bias will generally arise in a case where a close member of a judge’s family owned an asset such as a parcel of shares, to the knowledge of the judge, in circumstances where the outcome of the dispute might affect the value of that property. But this was not the case here. The suggestion that the mere relationship of banker and customer could give rise to a reasonable apprehension of bias is rejected. Only in exceptional cases of dependent obligation towards or animus against a bank will there be the appearance of bias to a reasonable observer.

Livesey v The New South Wales Bar Association (1983) 151 CLR 288 (applied), Bank of New South Wales v Commonwealth (1948) 76 CLR 1 (followed); The Queen v The Industrial Court & Ors [1966] Qd R 245, Gascor v Ellicott [1997] 1 VR 332 (followed); Auckland Casino Ltd v Casino Control Authority [1955] 1 NZLR 142 (distinguished)

************

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40805/95


MASON P
SHELLER JA
STEIN JA

Friday 30 April 1999

DOVADE PTY LTD & ORS v
WESTPAC BANKING CORPORATION & ANOR
JUDGMENT

1 THE COURT:
Overview of the trial
2 The respondents are related financial institutions. Bill Acceptance Corporation Limited (“BACL”) is a merchant bank. It is a wholly owned subsidiary of Australian Guarantee Corporation Ltd, which is a wholly owned subsidiary of Westpac Banking Corporation (“Westpac”).
3 In the proceedings below, which were heard and determined by Rolfe J in 1995, the respondents sued Mr and Mrs Jury and several companies in the “Jury Group” for moneys lent or in relation to guarantees of loan agreements. After a trial spanning 24 days, each of the defendants was found liable.
4 The principal matter litigated at trial was a cross-claim propounded compendiously by each of the defendants against each of the plaintiffs. The dismissal of that cross-claim resulted in the following judgments (which took effect on 21 November 1995):
1. For Bill Acceptance Corporation Limited against each of the first and third to fifteenth defendants in the sum of $4,606,974.36 inclusive of interest to date.

2. For Westpac Banking Corporation against each of the first and third to fifteenth defendants in the sum of $15,352,210.12 inclusive of interest to date.
3. For Westpac Banking Corporation against the second defendant [Mrs Jury] in the sum of $19,959,284.48.

5 The fifteen defendants filed a single notice of appeal in 1995 challenging the dismissal of the cross-claim on 20 grounds.
6 In May 1998 the appellants sought leave to file an amended notice of appeal. Additional grounds asserted that the trial miscarried because Rolfe J failed to disclose or to disclose fully various relationships the presence of which are said to have given rise to a reasonable apprehension of bias on the part of the appellants. The document has undergone further amendments from time to time in relation to pars 21-30. Its latest manifestation was proffered during the hearing. The Court heard full argument subject to the grant of leave to amend. During the hearing leave was granted with respect to some of the grounds and refused as to others. Leave was refused in relation to grounds for which there was no evidentiary base.
7 Since 1995 two of the appellants, Mr and Mrs Jury, have been made bankrupt and five of the appellants, Ian W Jury Pty Ltd, Justall Pty Ltd, Kedse Pty Ltd, Logwon Pty Ltd and Trinity Properties Pty Ltd have been placed into liquidation. The trustee of the estates in bankruptcy of Mr and Mrs Jury elected, pursuant to s60 of the Bankruptcy Act 1966, not to prosecute the appeal on behalf of those persons; and Mr John Lord, as liquidator of the five companies, indicated that he did not intend to support the appeal brought in the name of those companies and the other appellants. In the light of that election and that indication, and because the appeal had not for some time been prosecuted by those appellant parties, Mason P ordered that the appeal be dismissed for want of prosecution in so far as the appeal was brought by the first, second, fifth, seventh, ninth, eleventh and twelfth appellants. This order was made on 24 June 1998.
8 The appeal has continued to be prosecuted by the remaining appellants. It has not been suggested that they lack standing to challenge the judgments entered against the fifteen defendants sued below.
9 The judgment appealed from is 385 pages long. It deals mainly with factual issues and contains lengthy extracts from the evidence. It will be convenient to incorporate significant portions of it by reference to identified pages.
10 In 1989 Mr Whitbread persuaded his friend Mr Jury that the takeover of Trinity Properties Pty Ltd (“Trinity”) would be a good business opportunity. Trinity was a listed public company that owned extensive real estate. A price of 74 cents per issued share was negotiated. This required a total borrowing in the order of $37m. It was Mr Jury’s intention, once the takeover had been effected, to sell all or most of Trinity’s real estate to provide the funds necessary to repay the moneys borrowed for the acquisition (through Dovade Pty Ltd (“Dovade”), one of the Jury Group). The two venturers anticipated a profit of $15m to $18m, although Mr Jury appreciated that the properties would have to be sold within twelve months to prevent interest payments eroding profitability. Mr Whitbread was to receive a percentage of the profit, ultimately determined at ten per cent.
11 Mr Jury was a skilled and experienced businessman. He was the managing director of a group of companies whose activities included the Clock Hotel at Surry Hills, a restaurant, a film studio, a motel, a shopping centre, flats and serviced apartments. He had a good understanding of real estate and a firm belief in his own capacity to make correct decisions. Unfortunately, he entered the venture to acquire Trinity just as the real estate market was deteriorating and interest rates were rising.
12 Mr Jury also relied upon information furnished by Mr Shaddock who was the managing director of Trinity, as well as information and advice furnished by Mr Whitbread.
13 Westpac was disinclined to lend the money needed by the two venturers. However, it suggested that Mr Jury approach BACL to obtain at least a substantial portion of the loan. BACL ultimately advanced $27.1m to Dovade pursuant to the terms of an agreement entered into on 15 May 1990, which was varied by a supplemental agreement dated 31 July 1992. Westpac eventually lent $8.6m by way of a bill line facility. Westpac recovered all the money lent for the takeover, but it claimed for other moneys lent to companies in the Jury Group. Ultimately, the only defence to the claims of BACL and Westpac was the cross-claim for damages.
14 The proceeds of sale of the Trinity assets came in at lesser amounts and more slowly than anticipated by Mr Jury. And, as the real estate market fell, there were cash flow difficulties not only for Dovade, but within the Jury Group generally. The cross-claim sought to place responsibility at the door of BACL on the basis of advice it was said to have given about the Trinity takeover (through Mr Swan, a corporate adviser in BACL’s Corporate Advisory Services Division). Westpac was said to be implicated as BACL’s principal in the relevant transaction.
15 The respondents submitted that the cross-claim was a fabricated concoction designed to preclude summary judgment, to buy time, and to bargain for a favourable settlement if possible. This submission was accepted by Rolfe J (J22).
The allegations in the cross-claim
16 Rolfe J analysed the cross-claim in detail (J16-44), highlighting relevant evidence. In doing so, he found a number of non-contentious facts and disposed of some of the more untenable allegations.
17 We shall deal only with the allegations material to this appeal.
18 It was pleaded that BACL acted as agent for Westpac in the transaction (par 18). The central allegation was that BACL “gave financial advice” to the defendants “and otherwise promoted” the takeover scheme (par 19).
19 Paragraph 20 of the cross-claim alleged that, after a series of meetings between Mr Jury and agents of BACL, BACL “agreed to provide Jury with funding and expert advice in the takeover of Trinity”. These meetings were between January and early April 1990. The critical evidence was identified as that contained in pars 12 and 23 of Mr Jury’s witness statement. According to par 12, Mr Jury and Mr Whitbread attended a meeting with Messrs Swan, Musso and Knight of BACL in January 1990 when Mr Swan said words to the effect:
Michael and I have looked at the accounts of Trinity. We need to make our own valuations but the assets appear to be conservatively valued and should be very readily realisable. Trinity has a good board of directors and it has made good purchases. The land they are selling by way of subdivision appears to be selling well. We would be prepared to advise you and act as corporate advisers on the takeover. We would require an establishment fee for funds which were made available and we would also require various other fees for advising you.

20 In par 23 of the witness statement Mr Jury deposed that in early April 1990 there was a meeting attended by Messrs Jury, Whitbread, Swan and Musso at which Mr Swan said:
We can assure you that the Trinity Properties deal is excellent. The Trinity deal is the best that BAC has ever had. We have been doing sums and you would be a fool if you did not go ahead with the deal. We would not be prepared to fund it if it did not stack up. We can guarantee the deal. BAC can arrange to obtain all of the funds for the takeover of Trinity Properties. Once you gain control you will be able to sell down all the assets and come out with a big profit. We estimate something of the order of $15m to $18m. The takeover can be fully funded so that you do not have to outlay one penny. BAC shall organise all of the finance for you. We are so certain of success that you won't have to pay our fees for acting in the transaction until after all of the funds have been received.

21 The evidence in these paragraphs of the witness statement was denied by Mr Swan. Ultimately it was not accepted by the trial judge.
22 Paragraph 21 of the cross-claim alleged that in various ways BACL held itself out as possessing all due expertise, skill and competence, in advising about matters relevant to the takeover, including its viability and feasibility. (This allegation was denied by BACL, although it was not suggested that it could not have provided such advice if required. Nor was it disputed by BACL that it provided advice on the mechanics of the takeover. But a key dispute at trial - resolved in the respondents’ favour - was whether BACL acted as a financial adviser to the defendants or any of them in the sense of advising as to the financial worth of Trinity or the overall feasibility of the takeover proposal.)
23 Paragraphs 23-26 of the cross-claim pleaded in effect that Mr Swan made a number of representations which he knew or ought to have known would be relied upon (J44-46). The representations asserted, in differing ways, that the proposed takeover was an attractive proposition that would provide assets enabling the intending borrower to repay its loans. The cross-claimants pleaded reliance upon these representations in entering into the loan agreements, guarantees and associated security arrangements and the suffering of damage, in consequence of the demands of Westpac and BACL.
24 Paragraphs 27-29 alleged that the representations were conduct in trade or commerce that was misleading and deceptive or likely to mislead or deceive in various respects. Reliance was placed on ss51A and 52 of the Trade Practices Act 1974 (Cth) and the corresponding provisions of the Fair Trading Act 1987 (NSW).
25 Paragraphs 30-38 and 47-49 effectively repeated earlier paragraphs, including the allegations of holding out by BACL and reliance by the cross-claimants upon BACL’s skill and expertise. It was claimed that damage flowed from the advice (as embodied in most of the representations previously alleged). These allegations were expressly characterised as breaches of a duty of care in the provision of advice and the making of the said representations. Details of the negligence were set out in par 38.
26 Paragraph 52 of the cross-claim was identified early in the trial as embodying a claim of breach of fiduciary duty (J53). The rejection of this claim is challenged in the appeal, and the paragraph will be set out fully below.
27 The cross-claim sought the setting aside of the various loan agreements and mortgages; damages; equitable damages; and damages and other relief under the Trade Practices Act and Fair Trading Act.
Rolfe J rejects the cross-claim allegations of misrepresentation, negligent advice and misleading or deceptive conduct
28 There are two lengthy passages in the judgment which summarise why the basic case alleged in the cross-claim failed (see J178-84, 310-15). They set out in detail why Rolfe J held that the alleged representations were not made, that such statements as were made were neither representational nor advisory, and that the appellants placed no reliance upon what they were told by any officer of BACL in deciding to enter into the transaction.
29 These findings are unchallenged and unchallengeable. They turned on much more than the acceptance of Mr Swan and the rejection of the credibility of Mr Jury, much of whose critical evidence was not corroborated by Mr Whitbread. They were also based upon findings that:
(a) Mr Jury was a very experienced real estate dealer who had a keen sense of his own ability to assess a good business deal (J7-10, 63-4, 119-12, 178). He understood the profitability of the deal at the time he signed the facility letter on 28 March 1990 (J160-164).
(b) The takeover price of 74 cents per issued share was negotiated by Mr Jury and Mr Whitbread, without reference to Mr Swan (J12, 65-69, 75-6, 94-98, 151, 173, 275-6, 301).
(c) Prior to the approach to BACL, Mr Jury had applied to the Hong Kong Bank for finance. That application shows the extent of professed expertise of Messrs Jury and Whitbread. It also shows that the takeover offer had been worked out in detail before BACL came into the picture (J59-89, esp 77, 81, 88, 89).
(d) BACL had made it clear from the outset that the assets of Trinity did not value up to the extent necessary to support the loan having regard to the loan to value ratio imposed (J18).
(e) There was no evidence of any communication stating that advice was being sought from BACL or that reliance would be placed on it. No enquiry was made about the investigations which it carried out seeking the results of such investigations. Nor was there any complaint about its advice until long after the event (J19-22, 237). The only reason Mr Jury hesitated about proceeding with BACL was when it was suggested that he might pay some bank fees up front. When this proposal was withdrawn, Mr Jury’s professed hesitancy vanished (J285-6).
(f) The case was directly contrary to a letter written on 14 February 1994 by Mr Jury’s solicitor recording instructions that:
… Mr Jury did not acquire Trinity because of any particular recommendation or representations made by Bill Acceptance, but rather he purchased Trinity based on his own estimation of the company’s worth. (J21-22, 184-194)

(g) Mr Jury relied upon a letter of advice from his solicitor Mr Kemp, being a letter that was not shown to Mr Swan (J104-114). The fact that Mr Jury lied about this matter only emphasised its materiality (J137-141).
(h) Mr Jury took Mr Swan into his employment after Mr Swan left BACL and was unable to put forward a credible explanation as to why he would have done so if his allegations about Mr Swan’s negligence had any substance. He did not complain to Westpac or BACL about the alleged representations at the appropriate time (J179-180). Mr Jury had also written to Westpac expressing thanks for assistance in the takeover (J141-149).
30 Other bases for rejecting the credibility of Mr Jury’s evidence are also set out at J152-160, 164, 166-167, 177, 179-181. These include instances of lying under oath.
31 By contrast, Mr Swan was accepted as an honest and reliable witness (J298). BACL had held him out as able to provide expert advice in respect of an acquisition such as Trinity (J263). Nevertheless Rolfe J concluded that this did not entail assuming the role of adviser on the commercial merits of the takeover proposal (J263-5, 269-71). His reasons are highly persuasive. Likewise, the reasons given for concluding that Mr Swan’s remarks, en passant, indicating concurrence with decisions already adopted by Mr Jury did not involve the giving of advice, and were not treated as such by Mr Jury (J276-9).
32 At J315-323 Rolfe J addressed the claim of damages sought in the cross-claim. He did this primarily in the context of alleged breach of s52 of the Trade Practices Act. However, the passages that he quoted from various judgments included statements equating damages sought pursuant to s82 of the Trade Practices Act for breach of s52 with damages for tort such as negligent misrepresentation (Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 530; Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281 at 291).
33 In this context, his Honour pointed out that there was no evidence to indicate that any damage or consequential loss stemmed from the alleged inducement to acquire the shares at 74 cents each (J321-323. See also J178.)
34 It can therefore be seen that the claim for damages based on negligent advice failed because:
1. the alleged positive representations were not made;
2. the alleged positive representations and the alleged negative representation were not, if made, made in a “representational or advisory” context;
3. had the representations been made, they were not relied upon by Mr Jury, with the result that:
(i) there was no duty of care
(ii) there was no causal link between the advice and any damage suffered;
4. no damage was proved.
35 The claim that BACL acted as the agent of Westpac was also rejected as baseless (J329-334).
Rolfe J rejects the cross-claim allegation of breach of fiduciary duty
36 In argument at trial the appellants propounded an alternative claim based on breach of fiduciary duty. The respondents objected to this claim, contending that it fell outside the pleading.
37 The only paragraph of the cross-claim asserting such a breach in terms was par 52 (J53-4):
52. Further, and in the alternative, by reason of those matters pleaded above and that which is particularised below the cross-claimants were in a position of special disadvantage vis a vis the cross-defendants at or about the times they performed various acts referred to in paras 20-23, 33, 35, 37-39, 43 and 44 above which position a special disadvantage was known or ought to have been known by the cross-defendants.

Particulars
(i) There was material inequality of bargaining power between the cross-claimants and the cross-defendants.
(ii) The cross-claimants were and are financially unsophisticated in takeover matters and in particular had little or no understanding of the matters which bore upon the financial viability of the takeover of Trinity.
(iii) The cross-claimants received no proper explanation or assistance when such an explanation was clearly necessary for them to make a proper judgement as to whether the venture was truly in their best interests.
(iv) In the premises it was unfair and unconscionable for the cross-defendants to rely on the transactions that took place as referred to in paragraphs 42 and 43 above.
(v) As a result of the unconscionable conduct of the cross-defendants referred to above the cross-claimants have suffered loss and damage.

38 Rolfe J rejected the claim for equitable damages or other relief based upon the assertion of a fiduciary duty in the following terms:
I have dealt with it on a far wider basis than the pleadings would permit, and I appreciate I said I would only deal with it on that basis. Notwithstanding, it is not, even on the view most favourable to the defendants, a sustainable cause of action. (J329)

39 Earlier, his Honour had recorded that the fiduciary relationship had been asserted by counsel in reliance upon Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371 and Commonwealth Bank of Australia v Smith (1991) 102 ALR 453. Those cases were distinguished. It was pointed out that Daly involved a client who approached a stockbroker for investment advice and who received such advice. The present case was distinguished, in the following terms:
In my opinion that is a far different case from the present. The position was not one in which BACL introduced the transaction to the Jury Group, or in which it had any interest in the matter proceeding, other than the lending of money, the acquisition of interest and the receipt of fees. It was not a case where BACL had lent to Trinity or had any prior dealings with it, which could be advantaged or advanced by the present transaction. The parties were simply dealing as lender and borrower and, in my respectful opinion, there is no basis for attributing to that situation, on the facts of this case a fiduciary relationship. (J325)

40 Smith recognised (at 476) that there could be cases where a bank may have moved beyond the situation where it was expected to act in its own interests in ensuring the security of its position as lender to its customer:
… but it may have created in the customer the expectation that nevertheless it will advise in the customer’s interests as to the wisdom of the proposed investment.

41 Rolfe J explained why the present case was different:
In my opinion the circumstances of this case do not disclose any fiduciary relationship. None of the indicia, identified in the authorities to which I have referred, is present. The relationship between BACL and Westpac, on the one hand, and Mr Jury and the Jury Group, on the other, was not such as to give rise to the relationship, particularly once it was found that there was no seeking of advice on the merits from BACL. Further, it seems to me that Mr Jury had sufficient business ability such that no fiduciary duty was brought about and, for all the reasons I have given, there is no suggestion he was seeking advice as to the merits of the deal, or was relying upon any such an advice in entering into it. It was suggested to Mr Swan there was a conflict of interest in the sense BACL became entitled to fees and was furnishing advice. However, my first impression is that this is not the conflict of interest necessary to give rise to a fiduciary relationship. In any event Mr Jury was aware at all material times of the facts and was actively negotiating in relation to the fees as to which no complaint was made, it being specifically stated the fees were acceptable, until, in effect, the hearing. (J329)

The fiduciary claim was correctly dismissed
42 The appellants did not challenge the rejection of so much of the cross-claim as was based upon allegations of misrepresentation, negligent advice, and misleading or deceptive conduct. But they pressed their appeal against the dismissal of the claim based upon breach of fiduciary duty.
43 The formidable difficulties which the appellants faced upon the merits were matched with insurmountable problems stemming from the way this aspect of the case was conducted at trial and on appeal.
44 As regards the appeal, senior counsel for the appellants spent the better part of a day’s argument seeking to formulate and reformulate the fiduciary case. The transcript of argument is eloquent of the difficulties he faced at every turn because of the way the case at trial was pleaded, opened, conducted and dealt with in final address of senior counsel. The pleading suggested a case based upon Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447. The addresses elided the negligence and fiduciary claims by treating the allegations of negligent advice as the breaches of fiduciary duty. No case based upon the withholding of vital information known only to Mr Swan was run at trial, probably because it would have clearly failed. Yet this, for a time at least, was the key allegation of breach of fiduciary duty pressed in the appeal. In a trial fought on all issues, no evidence was led referable to the equitable measure of compensation, and the case referable to common law damages was correctly rejected. To the (large) extent that the equitable case as pressed in oral argument overlapped the negligence claims, it failed utterly for the reasons addressed in an earlier portion of this judgment.
45 Ultimately, on the third day of argument, the appeal on the fiduciary claim was rejected for the following reasons given by Mason P (in which Sheller JA and Stein JA concurred):
When the hearing of this appeal opened, the substantive attack of the appellants was confined to a challenge to the trial judge's failure to find breaches of a fiduciary duty. That is indicated by the amended further outline of submissions of the appellants and the way the case was presented by senior counsel for the appellants over the last two days. As pleaded at trial, the fiduciary case was confined to an allegation based upon Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 and breach of an obligation not to enter into a position of conflict. The Amadio case was clearly not pressed, even at trial.

We have been taken today to written submissions of Mr Graham, senior counsel for the appellants and the other defendants at trial, indicating that in final address counsel took his Honour to authorities relating to the proposition that a fiduciary may breach his or her fiduciary obligation by not disclosing information known to that fiduciary. We are satisfied that a case on those lines was not pressed at trial. It was not pleaded. It cannot fairly be seen to be part of the issues outlined in the Practice Direction 39 document that was proffered at the commencement of the trial. It seems obvious that the reason why the case was not fought along those lines was that the information which is said to have been exclusively known to Mr Swan was in fact known to Mr Whitbread and Mr Jury. We have been taken to the transcript references and to the findings in that regard.
The case for damages, by whatever name, that was fought at trial appears to have been confined to that based upon a breach of the common law duty of care and failure to give advice. Mr Stevens, senior counsel for the appellants, has indicated that the fiduciary-based case urged on appeal did not go beyond the tort-based case except in relation to the non-disclosure point which I have already mentioned. What is clear is that the tort case failed at trial because of findings on causation and damages. The latter finding has not been appealed from. Those findings present an insurmountable barrier to an attempt now to fall back upon a fiduciary-based case said to relate to a failure to give proper advice as regards the so-called mechanics of the takeover.
It is clear that the case at trial proceeded on the basis that Rolfe J was called upon to determine matters of liability and all matters of remedy. There are obvious reasons why that was convenient and proper. Questions of causation, credibility, offsets of profit and the like were all inextricably mixed. His Honour dismissed the case on the remedial basis as well as on its substantive basis and, as I have indicated, there is no appeal from the findings that no damages were established as stemming from the breaches that were litigated at trial.
When this lastmentioned point was made a basis of objection to the appeal in the respondent's written submissions and again in the course of oral argument, particularly yesterday, counsel for the appellant indicated that he acknowledged that he had real difficulties in presenting a case that involved seeking as a remedy in the Court of Appeal a reference to a Master for a further enquiry or alternatively a fresh trial. Counsel said that he nevertheless would wish to propound an argument that there were facts established in the evidence or perhaps even found in the judgment that would indicate that equitable remedies such as equitable compensation were open. Although it was indicated that such a document would be prepared by this morning, we have not been given such a document. (I interpose that I imagine part of the difficulty is that, from my reading of the judgment, it is very hard to see how one could construct from the dead ashes of the damages case some alternative way of presenting that case consistent with the principles in Coulton v Holcombe (1986) 162 CLR 1 and Water Board v Moustakas (1988) 180 CLR 491 to which we were taken this morning.) In these circumstances I would propose that the appellants be refused the right to continue with any case based upon breach of fiduciary relationship.

Whitbread apprehended bias
46 The appellants submit that the involvement of Rolfe J, when he was counsel in criminal proceedings involving Mr Whitbread, gave rise to a well-founded apprehension of bias in the current proceedings. It is argued that the role of counsel for the prosecution must have involved the barrister in evaluating favourably the prosecution case against Mr Whitbread. This is an inference said to arise from the history of the criminal litigation as disclosed in the reported judgments of Maxwell J in Whitbread & Ors v Cooke & Ors; Purcell v Cooke & Ors (No 2) (1987) 5 ACLC 305 and of the Court of Appeal in Cooke v Purcell; Cooke v Whitbread & Ors (1988) 14 NSWLR 51.
47 There is no substance in this ground of appeal, because of waiver.
48 Shortly after appearances were announced on the first day of the trial, senior counsel for the defendants (except Mrs Jury) drew the attention of the judge to the fact that the judge might have had some involvement formerly with Cambridge Credit Corporation Ltd and in particular Mr Whitbread who was to be a witness at the trial. The transcript records Mr Graham QC indicating that “although he brought this to his Honour’s attention, it did not cause him any concern”.
49 Rolfe J’s response was as follows:
At the moment my recollection is I was briefed to appear, I think, in some capacity with Mr Gormly of Queen’s Counsel in the prosecution. The prosecution got as far as an application being made before Mr Gilmore, Stipendiary Magistrate, for a stay on the basis of the delay in bringing the prosecution. That was argued, I think, by Mr Gormly before the magistrate and the matter came up and was heard by Justice Maxwell. He granted a stay and the Court of Appeal upheld his Honour’s decision. Certainly on that short narration, I do not feel embarrassment.

50 After the short adjournment that morning, there was the following exchange:
HIS HONOUR: Mr Graham, I am just wondering about what I said earlier. I would like to make my position clear. I had been briefed by the Corporate Affairs Commission of the proposed prosecution, amongst others, of Mr Whitbread. Mr Gormly was senior counsel. There were some junior counsel. The matter came before Mr Gilmore when an application was made for a stay that was argued before a magistrate and then the Corporate Affairs Commission appealed against that decision and I, on behalf of the Corporate Affairs Commission, appeared as leading counsel before Justice Maxwell who upheld the stay and in the Court of Appeal which upheld Mr Justice Maxwell. That has been my involvement.

MR GRAHAM: I think the matter that concerned us was if your Honour had held a brief to prosecute Mr Whitbread your Honour may have found some difficulty in dealing with Mr Whitbread in relation to evidence in this case. Our view was, understanding that to be case, we were not in the least bit troubled by it and did not want your Honour to be embarrassed halfway through the case.
HIS HONOUR: Thank you for drawing that to my attention. What I said earlier today remains. I am not in the least bit embarrassed. It was not any part of my function to form any view of what Mr Whitbread may or may not have done. I do not consider I should of my own motion and I certainly would not disqualify myself.

51 The history of the criminal proceedings is conveniently summarised by Clarke JA in Cooke at 72-77 and 82-86. Mr Rolfe QC appeared for the prosecutor in the committal proceedings and the proceedings before Maxwell J and the Court of Appeal. Mr Whitbread and others had been charged with summary and indictable offences arising out of the collapse of Cambridge Credit Corporation Ltd. Very early in the committal proceedings the defendants applied to Magistrate Gilmore to stay the proceedings. He declined to do so on the ground that he lacked jurisdiction to grant such relief. The defendants, including Mr Whitbread, then filed summonses in the Common Law Division of the Supreme Court seeking a permanent stay of the prosecution on the ground that the delay was such as to deny them the opportunity of a fair trial. After a lengthy hearing, Maxwell J granted a permanent stay on 9 December 1986. The Corporate Affairs Commission appealed to the Court of Appeal. The appeal was dismissed on 9 August 1988.
52 Whether or not a fair minded observer would infer that involvement as a prosecutor in committal and contested stay proceedings would create a reasonable apprehension of bias in later proceedings in which the former prosecutor is a judge and where the accused person is a significant witness (and we express no view on that matter), it is pellucidly clear that the appellants waived any objection on this ground. The extent of the judge’s involvement in the criminal proceedings is said to be that which is disclosed in the reported judgments or inferences drawn from them. But all of these matters were known to the appellants’ counsel. The exchange between Rolfe J and Mr Graham QC indicates clearly that counsel was aware of the earlier proceedings. Cooke v Purcell is a well-known, reported decision. It was Mr Graham QC who raised the matter in terms indicating that it was a matter for the judge and that the appellants “were not in the least bit troubled by it”. Through their senior counsel, the appellants made it plain that they were not troubled by the matter and that they had faith in the judge’s capacity to be true to his judicial oath.
53 Waiver is available as an answer to an appeal grounded on an allegation of apprehended bias (see Vakautav Kelly (1989) 167 CLR 568 at 572, 577-9, 586-8). The very point now sought to be argued has been rejected by Lockhart J and by the Full Court of the Federal Court in bankruptcy proceedings affecting Mr and Mrs Jury (Re Jury & Anor; ex parte Westpac Banking Corporation Federal Court of Australia, Lockhart J, unreported, 22 May 1997; Jury v Westpac Banking Corporation Federal Court of Australia, Full Court, unreported, 18 March 1998). See also Westpac Banking Corporation v E & W Jury Pty Ltd & Ors, Federal Court of Australia, Emmett J, unreported, 12 February 1998.
54 It has not been suggested that Mr Jury was unaware of the exchange, although it would not matter if that were the case. Cf R v Birks (1990) 19 NSWLR 677 at 683-4. In all probability Mr Jury was present when the discussion took place. He was a party and the principal and directing mind of the appellants who are still prosecuting this appeal. Mrs Jury is no longer an appellant in these proceedings. Nevertheless she too was bound by the waiver having regard to the presence of her counsel when the exchange took place.
55 The trial commenced and continued for 24 days. The matter was never again raised. It would be scandalous if a party were able to hold in reserve an objection based upon apprehended bias as a ground for impugning a judgment when the matter was addressed so squarely at the very commencement of the trial.

Westpac relationship
56 The appellants also submitted that the trial judge’s failure to disclose his relationship with Westpac meant that the trial miscarried. This argument was advanced in different ways, some suggesting that his Honour should have disqualified himself because of a direct pecuniary interest in the outcome of the litigation, others suggesting that a reasonable apprehension of bias arose due to either or both of the objective circumstances of the relationship or the failure of the trial judge to have disclosed it.
(a) The objective facts
57 The original notice of appeal did not contain grounds relating to apprehended bias. So far as concerns a challenge based upon the judge’s relationship with Westpac this was because the appellants’ managing director, Mr Jury did not become aware of any such relationship until early 1998. It does not necessarily follow that the appellants or their legal advisers may not have considered the possibility of some relationship existing (after all, Westpac is one of the four major banks carrying on business in Australia) but regarded the matter as irrelevant unless and until the relationship was considered by the trial judge to be such that disclosure was called for. The respondents have submitted that this was the case, but we find it unnecessary to determine the question.
58 Throughout 1998, the proposed grounds of appeal touching this matter were formulated and re-formulated. In part, this was due to difficulties and uncertainties experienced by the appellants in clarifying the evidence. In part, the legal submissions underwent a process of continuing reformulation which extended into the hearing of the appeal.
59 The appellants read a number of affidavits which proved in some cases and failed to prove in others various relationships existing between the judge, his wife and companies in which he was said to have an interest and/or an office. Some of this material was deficient in that it did not squarely address the situation in 1995.
60 On 14 October 1998 Mason P refused the appellants the leave which they sought to issue a particular subpoena to Westpac. There was a renewed application with a reformulated subpoena. The President declined leave at that stage to issue this further subpoena for reasons set out in his judgment of 26 November 1998. However, the application for leave to issue the subpoena was stood over and it was renewed at the hearing of the appeal. The application was refused by the Court on 9 December 1998. At that time we identified the further grounds of appeal for which leave to amend was granted and those for which such leave was refused.
61 The facts relevant to the grounds of appeal concerning the relationship between the trial judge and Westpac can now be summarised. At the time when the trial took place and judgment was given, the judge was a customer of Westpac in that he operated a cheque account with Westpac. There was no evidence as to the state of the cheque account in 1995. On more than one occasion it was made clear that the appellants regard this as irrelevant. They submitted that the mere relationship of banker-customer was sufficient, at least in a situation where the banker had the security of a mortgage.
62 Since 1983 the Bank had held a registered first mortgage over land belonging to the judge. The mortgage does not secure any particular advance, but covers any and all forms of accommodation present and future. Senior counsel for the appellant described it in argument as a “come and go” facility. It contained frequently encountered “all moneys” provisions.
63 It was also established that Mrs Rolfe, the wife of Rolfe J, held 16,600 ordinary shares in the Bank in 1995. It was established that the total issued capital of Westpac at 30 September 1995 was 1906 million shares and that its market capitalisation in September 1995 was $10,197 million. Mrs Rolfe’s parcel of shares would have then been worth approx $89,000. It was common ground that the matters in dispute in the litigation could not have had any likely effect on the value of Mrs Rolfe’s shareholding.
64 A company called Lochiely Pty Ltd granted a fixed charge in favour of Westpac in 1988. Rolfe J and another person each held one issued share in the company. The company is the trustee for a family trust relating to persons outside the judge’s family, and the share held by the judge was also held on trust. There is no evidence as to any customer relationship between the company and Westpac.
65 The appellants rely upon these matters individually and cumulatively. They also contend that the judge’s silence about them was significant in itself as raising a reasonable apprehension of bias.
(b) Claim of direct pecuniary interest in the outcome of the proceedings
66 In Webb v The Queen (1994) 181 CLR 41 Deane J stated the relevant principles (at 74-5, omitting footnotes)
The area covered by the doctrine of disqualification by reason of the appearance of bias encompasses at least four distinct, though sometimes overlapping, main categories of case. The first is disqualification by interest, that is to say, cases where some direct or indirect interest in the proceedings, whether pecuniary or otherwise, gives rise to a reasonable apprehension of prejudice, partiality or prejudgment. The second is disqualification by conduct, including published statements. That category consists of cases in which conduct, either in the course of, or outside, the proceedings, gives rise to such an apprehension of bias. The third category is disqualification by association. It will often overlap the first and consists of cases where the apprehension of prejudgment or other bias results from some direct or indirect relationship, experience or contact with a person or persons interested in, or otherwise involved in, the proceedings. The fourth is disqualification by extraneous information. It will commonly overlap the third and consists of cases where knowledge of some prejudicial but inadmissible fact or circumstance gives rise to the apprehension of bias.

Within the first category of case, i.e. disqualification by interest, the general rationale underlying the doctrine is reinforced by the principle expressed in the maxim that nobody may be judge in his own cause. Indeed, there is one special class of case within that first category in which, subject to the possible operation of the rule of necessity, the effect of that principle is that disqualification is automatic without there being any “question of investigating, from an objective point of view, whether there was any real likelihood of bias, or any reasonable suspicion of bias, on the facts of the particular case”. That special class consists of cases in which the judge, juror or statutory officer has a direct pecuniary interest in the outcome of the proceedings . In such cases, public confidence in the administration of justice requires that there be disqualification regardless of the particular circumstances. (emphasis added)
[In a footnote, Deane J explained that the expression “direct pecuniary interest”, in the penultimate sentence quoted, was used “in the sense of an interest sounding in money or money’s worth”. He cited Reg v Gough [1993] AC 646 at 673 (“pecuniary or proprietary interest”).]

67 Deane J was in dissent in Webb, but the appellants correctly submitted that his Honour’s approach to the relevant principles was on all fours with that of the other members of the High Court.
68 There was a period in legal history when pecuniary interest was the only basis of disqualification of a judge (Frank, “Disqualification of Judges” (1947) 56 Yale LJ 605 at pp609-10).
69 The leading case is Dimes v Proprietors of Grand Junction Canal (1852) 3 HLC 759, 10 ER 301, in which the House of Lords set aside a decree of Lord Cottenham LC who had decided a case despite being a shareholder in the canal company concerned. The Dimes litigation was prolonged litigious warfare between a determined plaintiff, who was a solicitor, and a substantial corporation. The litigation was waged in practically every court in England between 1836 and 1853. Mr Dimes had some significant victories. He was not the first or last highly motivated litigant who established several points of principle in protracted litigation which was ultimately fruitless. The author of a fascinating history of the litigation correctly observes that the litigation provides “a remarkable example of the problems which the law and legal system could produce when fully exploited by a determined litigant” (Frank Sharman “Feudal Copyholder and Industrial Shareholder: the Dimes Case” (1989) 10 Journal of Legal History 71).
70 Dimes was the owner in fee of copyhold land. His predecessor in title had sold portion of the land to the Grand Junction Canal Co and that portion had become part of a major canal with its associated towing-path. The canal had been used by public traffic since 1797. Dimes challenged the Canal Company’s title to the freehold. He lost at first instance in a trial before Lord Abinger CB, but was successful on appeal to the Court of Queen’s Bench where he obtained possession under a writ of possession. He placed a bar across the canal and threw a large quantity of bricks into the canal to prevent the passage of barges. When he threatened to stop navigation entirely unless the company submitted to his demand for £5,000, the company went to equity. Proceedings were commenced for injunctive and other relief. In 1838 an interlocutory injunction was granted by the Vice Chancellor. That order was confirmed by Lord Chancellor Cottenham on appeal the following year. The substantive proceedings in equity then languished, but eventually came to trial in 1846 when a perpetual injunction was granted by the Vice Chancellor. Dimes’ petition of rehearing came before Lord Chancellor Cottenham but the appeal was dismissed in 1848.
71 Dimes then discovered that Lord Cottenham had held 92 shares in the company. The reporter of the decision in which the Lord Chancellor sought to explain his position states that 17 of these shares were held in the Lord Chancellor’s own right and 75 shares as trustee for other persons though with also a beneficial interest in some of these (see The Grand Junction Canal Co v Dimes (1850) 2 Mac & G 285 at 298, 42 ER 110 at 115). Dimes set about attempting to impugn the decree on that ground. There was full argument before Lord Langdale MR, with particular attention being paid to the difficulties which arose from the Lord Chancellor being technically the sole judge in the Court of Chancery. The motion was dismissed.
72 Dimes then commenced several actions of trespass against persons who had engaged in navigation. The Company obtained a further injunction. Dimes placed a chain across the canal and dug a deep trench across the towing path. He was committed for contempt by Shadwell V-C. An application to discharge this order was refused by the Lord Chancellor. As indicated above, the Lord Chancellor’s decree in the suit was set aside by the House of Lords.
73 Dimes stands incontestably for the proposition that a judge who has a “direct pecuniary interest in the outcome of the proceedings” (Webb at 75 per Deane J) is disqualified automatically from sitting. No additional question arises as to whether there is any likelihood or reasonable apprehension of bias because “in such cases, public confidence in the administration of justice requires that there be disqualification regardless of the particular circumstances” (ibid, citing R v Gough [1993] AC 646 at 661. See also Dickason v Edwards (1910) 10 CLR 243 at 259; R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 263).
74 In R v Bow Street Metropolitan Stipendiary Magistrate; Ex parte Pinochet (No 2) [1999] 2 WLR 272 (“Pinochet”), these principles were extended to a case where a judge had a non-pecuniary interest in the cause. The Full Federal Court has recently pointed out that it may be that the reasonable apprehension test would lead to the same result in Australia as that reached by the House of Lords, without the need to extend the concept of automatic disqualification outside the area of direct pecuniary interest (Ebner v Official Trustee in Bankruptcy [1999] FCA 110 at 58. Cf also Trustees of the Christian Brothers v Cardone (1995) 57 FCR 327). There is no need to pursue this issue in the present appeal.
75 The obligation to disqualify does not apply if statute permits the judge to sit in the particular matter, if the principle of necessity applies, or if there is waiver. Subject to these exceptions, failure to recuse will render the decision voidable on appeal regardless of its substantive merits (Dimes, Pinochet). The possibility of fourth and fifth exceptions - de minimis, and where the judge is ignorant of the pecuniary interest (eg because of a blind trust) - can be considered if the point ever arose (cf R v Hammond (1863) 9 LT(NS) 423; R v Rand (1866) LR 1 QB 230 at 232 per Blackburn J, obiter (“any direct pecuniary interest, however small, in the subject of inquiry”); Auckland Casino Ltd v Casino Control Authority [1995] 1 NZLR 142 at 148; Ebner at 37-39; Thomas, Judicial Ethics 2nd ed p54). United States law takes the position that a direct pecuniary interest in the subject matter of litigation disqualifies the judge no matter how small or trifling it may be (48A Corpus Juris Secundum, “Judges” §120). See also the remarks of Latham CJ in the Bank Nationalisation Case (par 95 below).
76 The principle of disqualification for direct pecuniary interest is clear and unbending. But what is its scope?
77 In Webb (at 75, note 33) Deane J described a pecuniary interest as an interest sounding in money or money’s worth. Pecuniary interest may take many forms. Extreme examples include the receipt of a fine imposed by the judge (as in Dr Bonham’s Case (1609) 8 Co 107a, 77 ER 638) or the receipt of a fee in cases resulting in a conviction as distinct from an acquittal (Tumby v Ohio 273 US 510 (1927)).
78 The idea of having a “direct interest” in “the outcome of the proceedings” is capable of both enlarging and restricting the scope of the pecuniary interest disqualification. Gough and Webb have emphasised that this means an interest in the outcome of the particular litigation; see also Pinochet at 283. Dimes itself illustrates the proposition that the judge need not be a party in the case or have a legal or equitable interest in the assets of a party. A shareholding does not give a legal or equitable interest in the company’s assets (Macaura v Northern Assurance Co Ltd [1925] AC 619; In re Webster (1975) 132 CLR 270). Nevertheless, the Lord Chancellor’s decree in Dimes was overturned. As Lord Campbell pointed out in Dimes (at 793, 315)
the maxim that no man is to be a judge in his own cause…is not to be confined to a cause in which he is a party, but applies to a cause in which he has an interest.

79 It is possible to imagine the converse situation where a judge might be a party but where the matter at issue in the proceedings did not touch the judge’s pecuniary interest. We would doubt, however, that it would be sufficient to avoid preclusion that the judge held the interest in trust for another, although the authorities are not uniform on the point: cf Dimes at 770-1, 306; R v Recorder of Cambridge (1857) 8 E & B 637, 120 ER 238 (Deputy Recorder had sold shares, but transfer not completed); R v Rand. Of course, very many cases in that situation would involve a duty to disqualify based upon reasonable apprehension of bias.
80 In Pinochet, Lord Goff (at 286) referred to Dimes as authority for the proposition that ownership of shares in a litigant party established the necessary interest. He described the ratio decidendi of Dimes as the principle that the holding of shares in a party means that the judge “has by virtue of his shareholding an interest in the cause”. (See also Lord Hope of Craighead at 288, citing Sellar v Highland Railway Co 1919 SC(HL) 19; Ebner at 39-40).
81 It is not clear to us that Dimes establishes this proposition. It has been estimated that Lord Chancellor Cottenham owned 0.8% of the issued capital of the Grand Junction Canal Company and that the 92 shares in his name (17 held in his own right and 75 in a representative capacity) would have yielded £276 in 1848 (Sharman op cit, at p82). The shareholding was described by Lord St Leonards, LC as worth “several thousand pounds” (Dimes at 784, 311). £276 per annum would have been a tidy sum of money in the mid-nineteenth century even though it may not have been a very great element in Lord Cottenham’s annual income. It is easy to see why no possibility of applying the de minimis principle occurred to the House of Lords or to the judges who gave unanimous advice to their Lordships.
82 Although nothing appears to have been said on the point in Dimes, it would have been quite apparent that the activities of Dimes which were restrained by Lord Chancellor Cottenham’s decree were capable of diminishing the value of shares in the company as well as the income stream from dividends. It is hard to think of a more catastrophic event to befall a canal company than to have the passage of barges impeded by a boom gate. If, as we think it correct to do, Dimes is seen as a case involving pecuniary interest, or what Deane J in Webb described as “direct pecuniary interest”, then that principle was satisfied without establishing the wider proposition that any undisclosed shareholding in a litigant party, however small, will effect automatic disqualification. Dimes does not establish that holding shares in a litigant party necessarily establishes that the judge has a direct pecuniary interest in the outcome of the litigation.
83 What then of the shareholding whose value or income stream could not possibly be affected by the outcome of the litigation?
84 American law does not take an absolute position on this matter. There are cases supporting the proposition that ownership of a small portion of issued stock will not necessarily disqualify on the basis of interest. Likewise with ownership of stock in a corporation which in turn owns stock in a second corporation (48A Corpus Juris Secundum “Judges” par 122; 25 ALR 3d 1131 §4(a)). See also Sir Thomas Bingham, “Judicial Ethics” in R Cranston ed, Legal Ethics and Professional Responsibility (1995) at pp40-1. In our view, this approach is consistent with the principle espoused by Deane J in Webb, and it is not inconsistent with Dimes as properly understood.
85 Accordingly, we conclude that the Dimes principle is not attracted simply by showing that a judge (or juror) owns a parcel of shares in a company whose pecuniary interests are in issue. If, as in the present case, the litigation could not possibly affect the value of the shares, then it cannot be said that the judge has a direct pecuniary interest in the outcome of the litigation.
86 The appellants submitted that the judge had such a community of economic interest with his wife that whatever affected the value of her interests affected his. This prompted the submission by the respondents that there was no evidence that Rolfe J knew the details of his wife’s property holdings. Cf also Waterhouse v Bell (1991) 25 NSWLR 99. We reiterate that the facts of this case did not show that Mrs Rolfe’s pecuniary interests were liable to be affected by the outcome of the litigation. But in any event, the appellants’ submission overlooks the fact that for over a century Australian law has had a separate property regime for married couples. Section 79 of the Family Law Act 1975 (Cth) does not undermine this, because it confers no rights prior to a judicial determination following marital breakdown.
87 In Webb (at 75) Deane J stated that he saw great force in the view expressed by Lord Goff and Lord Woolf in Gough (see [1993] AC at 664, 673) to the effect that automatic disqualification should be confined to cases of direct pecuniary interest in the outcome of the proceedings. Deane J added that this did not deny that there will be cases where such a direct pecuniary interest does not exist but where the nature of the relevant interest and/or relationship is such that it is obvious that the person concerned is disqualified by reason of a reasonable apprehension of bias. His Honour gave, as an example of the latter category, the situation where a dependent spouse or child had a direct pecuniary interest in the proceedings (our emphasis). (See footnotes (35) and (28) in Deane J’s judgment.)
88 The appellants did not shrink from the proposition that the holding of a single Westpac share would automatically disqualify a judge from determining a case involving a $5 debt. But, in the light of the foregoing discussion we must reject such a proposition, a fortiori where the share is held by the judge’s spouse.
89 The common law necessarily proceeds by the application of concepts and principles. Some fact situations will fall into more than one category. Without suggesting any deficiency, the inherited structure of the common law is to distinguish between the judge or juror’s direct pecuniary interest in the outcome of the litigation on the one hand and other bases for disqualification such as bias or apprehended bias. The automatic rule of preclusion in the former case does not apply in the latter. And the position of the pecuniary interest of a family member, however close, cannot be equated automatically with that of the judge.
(c) Claim of reasonable apprehension of bias.
90 We have indicated why the facts of this case (including those relating to Mrs Rolfe’s shareholding in Westpac) do not attract the “bright line” principle stemming from Dimes. The appellants’ alternative submission is that a reasonable bystander would apprehend bias from the objective facts, alternatively from the non-disclosure of them by the judge.
91 It was common ground that the test to be applied was whether, in all of the circumstances of the particular case, the parties or the public might entertain a reasonable apprehension that the judge might not bring an impartial and unprejudiced mind to the resolution of the question involved (see Livesey v The New South Wales Bar Association (1983) 151 CLR 288 at 293-4; Webb v The Queen (1994) 181 CLR 41 at 47, 51-2, 67-8, 87). As Deane J pointed out in Webb (at 67-8), the fair-minded observer is assumed to know all of the material objective facts. See also S & M Motors Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358 at 380-1; Gascor v Ellicott [1997] 1 VR 332 at 340, 342-3.
92 In Gascor Tadgell JA observed (at 342) that:
Although the criterion of apprehension of partiality or prejudice is possibility, not likelihood, a reasonable apprehension is to be established to the court’s satisfaction: it is a reasonable and not a fanciful or fantastic apprehension that is to be established; and the apprehension is to be attributed to an observer who is “fair-minded” - which means “reasonable”. As Mason CJ and McHugh J pointed out in Webb v R at 52 “… it is the court’s view of the public’s view, not the court’s own view, which is determinative”. Even so, the court is to be satisfied that the criterion is met not that it might be. In Builders’ Registration Board of Queensland v Rauber (1983) 57 ALJR 376 at 384, Brennan J observed that:

Each of the indicia which a party proves and relies upon to show a reasonable suspicion [which is to be substantially equated with a reasonable apprehension] of bias must be examined, and the Court is called on to determine whether, upon such indicia, a reasonable suspicion of bias arises.
(The parenthetical clause in the passage cited from Brennan J is added by Tadgell JA.)

93 A claim of apprehended bias should be considered in the context of the judicial function and the public perception of it. There is a presumption that public officers have acted with honesty and discretion (Broom’s Legal Maxims 10th ed p642). In the case of a judicial officer, this is no empty form. It is reinforced by the accountability necessarily inherent in the public processes of litigation and the disappointed litigant’s right of appeal. Every judge swears to “do right to all manner of people according to law without fear or favour, affection or ill-will”. This public oath is not a talisman against error, but it forms the constant back-drop to the way in which each judge functions on and off the bench. The history and reach of the oath were discussed by Sir Gerard Brennan on his swearing in as Chief Justice of the High Court of Australia (see 183 CLR at px.). The level of public confidence in the judiciary is based upon experience and a general perception of the rule of law.
94 The facts of no two cases are identical. But, with this proviso, it is instructive to examine the cases to which we were referred that involve a close member of a judge’s family holding shares which, though possibly significant in value, could not have been affected in value by the outcome of the litigation.
95 In the Bank Nationalisation Case (Bank of New South Wales v Commonwealth (1948) 76 CLR 1) it was disclosed that Starke J’s wife held shares in one of the plaintiff banks, and that Williams J was a holder of shares in two of the plaintiff banks, but that his holding was as bare trustee for his sister who lived abroad. In the course of argument, Latham CJ put to the Attorney General, Dr Evatt QC:
You draw a distinction, do you not - an actual pecuniary interest and embarrassment in hearing the case? For example, if there is any degree of pecuniary interest, however small, a Judge is disqualified from sitting. If, however, there is no pecuniary interest, then it becomes a matter of a question in all the circumstances of the case whether there is any degree of embarrassment which would prevent a fair trial. In neither of the cases mentioned is there any actual pecuniary interest - none. My learned brothers have said that they do not regard the existence of the facts stated as in any way affecting a fair and impartial consideration of the issues in the case. It appears to me that that has to be accepted.

96 In The Queen v The Industrial Court & Ors [1966] Qd R 245, a decision of the Industrial Court of Queensland involving a dispute on a question of law arising in an industrial dispute was challenged in prerogative proceedings. The wife of the judge who determined the appeal (Hanger J) held 1235 shares in one of the litigant parties, Mount Isa Mines Ltd. This was a very small part of the issued capital and the judge had no pecuniary interest in his wife’s shares. The Full Court of the Supreme Court of Queensland held that no real likelihood of bias was established. The ruling of Latham CJ in the Bank Nationalisation Case was applied, noting that it extended to the shareholding of Lady Starke. It was held that in cases outside those involving direct pecuniary interest, the test of real likelihood of bias should be adopted as the discrimen of the duty to recuse. The interest of Hanger J’s wife was so small that, taking into account all of the circumstances of the case, there was no real likelihood of bias (see per Mansfield CJ at 268, per Mack J at 278, per Wanstall J at 278-80). The High Court refused special leave to appeal: see [1966] Qd R at 295.
97 We have not overlooked the fact that the test applied by the Queensland Full Court was that of real likelihood of bias, as distinct from that expressed in recent years by the High Court of Australia, namely that of reasonable apprehension (cf Webb at 47, 51-2, 67-8, 87). But this does not destroy the persuasive effect of the Queensland decision.
98 In Auckland Casino Ltd v Casino Control Authority [1995] 1 NZLR 142, the New Zealand Court of Appeal considered whether a decision of the Casino Control Authority to award a licence to Sky Tower Casino Ltd was vitiated by reason of shareholdings in Brierley Investments Ltd (which held 80% of the shares in Sky Tower) held by a member and the wife of a member of the Authority. The case turned on issues of waiver and discretion. However, there is discussion on the point of substance in the judgment of the Court (Cooke P, Hardie Boys J and McKay J). Blackburn J’s dictum in R v Rand (1866) 1 LR 1 QB 230 at 232 (that any direct interest, however small, in the subject of inquiry disqualified a person from acting as a judge in the matter) was noted. Nevertheless, the Court was inclined to think that the words “however small” should be treated in the present day in New Zealand as an exaggeration and that there was scope for the de minimis rule. However, the interests held by the member and the member’s wife via the parent company were sufficiently direct to be realistically within the disqualification rule concerning pecuniary disqualification. On an alternative challenge based upon apparent bias, the Court thought that there was a seriously arguable case based upon an aggregation of matters of which the shareholdings in Brierley Investments were part. We do not think that great weight can be placed upon this discussion (either way), because of the peculiar facts, including the probability of direct pecuniary interest.
99 If any general principle can be derived from the discussion in Auckland Casino Ltd, it is that a reasonable apprehension of bias may well arise in a case where a close member of a judge’s family owns an asset such as a parcel of shares, to the knowledge of the judge, in circumstances where the outcome of the dispute might affect the value of that property. This is not to be seen as a categorical statement, or one incapable of being subject to proper exceptions. But this is clearly a situation where the Livesey principle may apply depending on the circumstances.
100 The suggestion that the mere relationship of banker and customer could give rise a reasonable apprehension of bias in accordance with the Livesey test should be firmly rejected (as it was in the Bank Nationalisation Case: see par 95 above). Whatever the situation in times past, the relationship that now exists between a banking corporation and its customers is necessarily highly impersonal and remote. Modern banking is, for most customers, a relationship in which the intercourse takes place at the ATM and through the mail and the telephone. It is analogous to that which exists with a telecommunications service provider, a motor vehicle or general insurer, or a large supermarket chain. No one would reasonably apprehend that the judge might be diverted from the judicial oath to do justice without fear or favour, affection or ill will by the mere existence of such a link.
101 And, as regards the judge who is a customer of a particular bank, telecommunications service provider, motor vehicle insurer or supermarket chain, nothing turns upon the state of accounts at any point of time, at least with a customer who pays accounts as they fall due. For many people, short-term indebtedness to the provider of goods or services is a relationship of pure convenience, which in no way places the debtor at the pecuniary mercy of the creditor or establishes any sense of obligation beyond the immediate indebtedness from time to time.
102 Obviously, there will be situations where the affairs of a particular bank branch or group of bank personnel are involved in litigation, or where the judge has some special association with the branch or bank personnel. And it is conceivable that a particular judge may be in such financial difficulty or may through some dealing with a present or former bank have a such a level of obligation towards or animus against a bank that there may be actual bias or at least its appearance to a reasonable observer. But these are exceptional cases. They are no different from the infinite range of adventitious relationships with litigants, counsel or witnesses that could arise in any piece of litigation, and which are dealt with (in the ultimate resort) by application of the Livesey principle to the particular facts of the case.
103 In Conkling v Crosby 239 P 506 (1925), the Supreme Court of Arizona held that a judge’s indebtedness to a bank did not constitute bias or other ground for disqualification. Of course it may be different if the judge were a depositor in an insolvent bank (see 48A Corpus Juris Secundum,“Judges” §121).
104 One submission advanced by the appellants was that a relationship or association may exist which, if disclosed, would not cause disqualification, but which if left undisclosed by the judge would give rise to a reasonable apprehension of bias when the facts are brought to light. The submission was that in some cases a relationship may cross a “threshold” that prompts a duty of minimum disclosure by the judge. The duty of disclosure is said to require the judge to clear the air by inviting waiver on the litigant’s part whether or not the facts would require recusal according to Livesey principles. It was suggested that another function of such disclosure would be to enable the otherwise unsuspecting litigant to interrogate the judge, or pursue further enquiries, or issue subpoenas in order to flush out the full facts or to allay subjective suspicion. One example of this category of disclosure was said to be where a banker-customer relationship exists, though presumably the principle would extend to other forms of relationship or association. The appellants sought to bolster this submission by pointing to examples where judges had erred on the side of caution by making disclosures of tangential relationships, or of banker-customer relationships. In our view this proposition is not supported by authority. It is capable of generating confusion and unnecessary suspicion where threshold disclosure does not lead to recusal in the absence of waiver. And it has the tendency to bring justice into disrepute by encouraging parties to believe that by seeking disqualification of a judge, they will be a step closer to getting the judge of their choice (cf Re JRL; Ex parte CJL (1986) 161 CLR 342 at 352 per Mason J). In the ultimate resort, a judge does not have a discretion as to whether to deal with a matter that regularly comes into his or her list for determination (see R v Brown (1989) 17 NSWLR 472 at 479).
105 We acknowledge that the statements in the preceding paragraph are categorical in form, even when confined to disclosure by judges and the facts of this present case. Nevertheless, the propositions are (we believe) correct and consistent with remarks of Ormiston JA in Gascor at 353-362 with which we respectfully agree. That case deals with the disqualification of an arbitrator and, for that reason, the views expressed by Ormiston JA apply with even greater force to a Supreme Court judge. Like Ormiston JA (see at 356) we would not see it as controversial to assert that every judicial officer should feel obliged, if he or she does not decide to withdraw of his or her own accord, to bring to the attention of the parties as soon as practicable any fact or circumstance which could lead to disqualification for apprehended bias. Disclosure would only be required if the judge thought waiver was possible, for otherwise withdrawal would be imperative. It is common sense to require such disclosure if only because ordinarily the facts are not available to the parties and it is ordinarily desirable to bring to their attention any grounds for disqualification, in order to determine if the disqualifying facts will be waived, before the parties have expended time or effort in preparing for a dispute before a tribunal which must otherwise be reconstituted. It may also be appropriate if there is any possibility that the judge’s shareholding might be affected in value by the outcome of the litigation. Disclosure in such circumstances would allow relevant facts to be brought to the attention of the judicial officer and submissions to be made. The disclosure should emphasise that it is not the party’s consent that is being sought but assistance on the question of whether grounds exist for disqualification (absent waiver).
106 Ormiston JA suggested (at 361) that there may be circumstances where a failure to disclose may, as a matter of evidence, provide a basis for a reasonable apprehension of possible bias. We would prefer to reserve our position on that particular matter, contenting ourselves with remarking that we feel some distaste in applying the principles of Jones v Dunkel (1959) 101 CLR 298 to the assessment of the conduct of a judge as distinct from the context of resolving the rights of litigant parties.
107 Statements are to be found in judgments and writings to the effect that it would be good practice for judges who may be concerned that some matter or association could possibly give rise to an apprehension of bias ought in those circumstances to disclose the matter or association. Obviously this may be prudent. And, like judicial courtesy, it may serve the interests of justice in that it removes unnecessary obstacles and difficulties. However it is a different matter to elevate cautious or even good practice into a legal principle that the failure to disclose in such circumstances is itself a ground for setting aside a judgment. The party that succeeded in litigation has interests too.

108 The Court was invited to lay down certain minimum requirements for disclosure. We would decline this invitation for several reasons. In the first place it places the Court in the invidious position of being something of a law reform agency in a matter that does not affect legal rights (cf Bateman’s Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd [1998] HCA 49 at 81 per by McHugh J). More importantly, it is beyond the capacity of a court seized with the obligation of deciding this and many other cases with dispatch. The intricacies of human behaviour and the varieties of relationship are such that any set of principles are bound to excite controversy for their over-inclusiveness or under-inclusiveness, lack of practicality, or other reasons. We are not saying that the task may not be useful in some areas. But the complexities of the task are such that it should not be embarked upon in a case such as the present which does not call for it. One has only to observe the details of the American legislation and the American Bar Association Code of Judicial Conduct to see the range of contestable choices offered, and the risks of over - or under - inclusiveness, if the path of codification is chosen (see generally Cominsky and Patterson, The Judiciary - Selection, Compensation, Ethics and Discipline (1987) chapter 4; Shaman & Ors, Judicial Conduct and Ethics (1990) chapters 5 and 8).
109 We accept the appellants’ entitlement to have the cumulative effect of all of the matters relied upon in the assessment of whether they provide a basis for reasonable apprehension of bias. Nor have we overlooked the importance of the appearance of justice as an element of justice itself (The Queen v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 259).
110 Speaking of the test for apprehended bias, Aickin J said in Re Shaw; Ex parte Shaw (1980) 32 ALR 47 at 54:
It is a test which is not always easy to apply for it may involve questions of degree and particular circumstances may strike different minds in different ways.

In our view the objective facts, when applied to the circumstances of this case, do not provide a reasonable basis for apprehension that Rolfe J diverted from his sworn duty to try the case according to law and without fear or favour, affection or ill will.
111 For these reasons it is unnecessary to decide the correctness of the respondents’ ultimate fall-back position, which was to submit that the judgment should stand, even if a reasonable apprehension of bias is established. This was because one of the grounds upon which the cross-claim failed was the complete absence of evidence of damages suffered by the cross-claimants in consequence of the conduct about which complaint was made.
112 Since preparing these reasons we have had the benefit of reading the judgment of the Victorian Court of Appeal in Clenae Pty Ltd & Ors v Australia and New Zealand Banking Group Ltd [1999] VSCA 35. That case deals with a judge’s own shareholding in a litigant party and involves special circumstances relating to necessity which are absent from the present case. We respectfully agree with what the Victorian Court of Appeal has written in relation to the scope of the Dimes principle.
113 The appeal should be dismissed with costs.

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