Elkateb v Lawindi

[2001] HCATrans 167

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S183 of 2000

B e t w e e n -

MOHAMED SAFWAT ELKATEB

Applicant

and

WASFY LAWINDI

First Respondent

LLOYD F. AUSTIN

Second Respondent

Application for special leave to appeal

GAUDRON J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 1 JUNE 2001, AT 2.55 PM

Copyright in the High Court of Australia

MR M.S. ELKATEB appeared in person.

MR C.J. BEVAN:   If it please the Court, I appear with my learned friend, MR G. PESCE, for the respondent.  (instructed by Turner Freeman)

GAUDRON J:   I have a certificate from the Deputy Registrar who certifies that she has been informed by the second respondent, Lloyd F. Austin, that he does not wish to be represented at the hearing of this matter and will submit to any order of the Court save as to costs.

MR ELKATEB:   That is fine, your Honour.

GAUDRON J:   Yes, thank you, Dr Elkateb.

MR ELKATEB:   I admit that I was stressed out as a result of the previous case, however, I will try to actually contain to my submissions.  I have written submissions before.  Have they been received?

GAUDRON J:   Yes.  I am sorry, written submissions.  The ones you filed in Court we have.

MR ELKATEB:   That is correct.

GAUDRON J:   Yes.  These are the ones ‑ ‑ ‑

MR ELKATEB:   And if you allow me, I will just go through my oral submission, your Honour.

GAUDRON J:   Yes, very well.

MR ELKATEB:   Your Honours, this is an application for special leave to appeal, a decision of the New South Wales Court of Appeal which refused me leave to appeal a judgment of Justice Einstein on 24 September 1999.

GAUDRON J:   Now, on what grounds did you seek leave to appeal of that judgment?

MR ELKATEB:   Justice, actually, Powell, who was one of the judges in the Court of Appeal had, in my opinion, made a grave error, which I will be coming to very shortly, your Honour.

GAUDRON J:   So the decision of Justice Einstein that lies at the heart of this matter is the decision whereby he refused you an adjournment and entered judgment for the respondent?

MR ELKATEB:   That is practically it, your Honour.

GAUDRON J:   Well, yes or no?

MR ELKATEB:   I appealed Justice Einstein’s decision in the Court of Appeal and then that was dismissed by Justice Powell.

GAUDRON J:   Yes.

MR ELKATEB:   Does that answer the question?

GAUDRON J:   Yes.  Well, except that when I read Justice Powell’s decision, he suggests you were seeking leave to appeal against two decisions ‑ ‑ ‑

MR ELKATEB:   That is correct.

GAUDRON J:   ‑ ‑ ‑ of Justice Einstein.

MR ELKATEB:   The order that I had made, your Honour – I will be coming to the orders later on, which will cover the whole thing.  I have prepared the written submissions and, in addition, I am making these oral submissions.  Essentially this application is about fresh evidence discovered and the imputed bias of an arbitrator and the crux of the case is whether the New South Wales Court of Appeal erred in law in refusing me leave to appeal.

GAUDRON J:   Yes, but what did the fresh evidence have to do with what was essentially a decision to refuse an adjournment because you had not complied with directions and to enter judgment for the respondents?  I can well understand that that fresh evidence might have been relevant in some other aspect of this litigation that has been taking place, but what did it have to do with the decision of 24 September?

MR ELKATEB:   The decision of 24 September was we put the same matter before Justice Einstein appealing his decision and asked him to set aside his own judgment.

GAUDRON J:   Yes.

MR ELKATEB:   So he declined and he asked me and my opponent to seek a fresh proceeding where I can actually set aside his judgment as a result of the fresh evidence, which I did.  This went before Justice Powell and Justice Heydon and then that was dismissed in the Court of Appeal and I made actually my application to this honourable Court to appeal against the decision of Justice Powell and Justice Heydon.

GAUDRON J:   Yes, I understand that, but I do not understand how the evidence you sought to have adduced bore – or how you say that evidence bore upon the decision of Justice Einstein of 24 September.

MR ELKATEB:   Yes.  If that fresh evidence, your Honour, had been brought to Justice Einstein’s attention ‑ ‑ ‑

GAUDRON J:   When?

MR ELKATEB:   On 24 September, his decision would have been different.  However, what – that fresh evidence did not become available to me until after 24 September.

GAUDRON J:   But, Dr Elkateb, on 24 September you were not present in Court, right?

MR ELKATEB:   No.

GAUDRON J:   You had not filed a defence?

MR ELKATEB:   No.

GAUDRON J:   The application then was for judgment ‑ ‑ ‑

MR ELKATEB:   Correct, your Honour.

GAUDRON J:   ‑ ‑ ‑ to enforce the arbitrator’s award, or to enforce the costs aspect of the arbitrator’s award?

MR ELKATEB:   Indeed, your Honour, indeed.

GAUDRON J:   You did not file a defence?

MR ELKATEB:   No, there was no defence available because I was sick, your Honour.

GAUDRON J:   No, but you did not file a defence.

MR ELKATEB:   No.

GAUDRON J:   Now, the question really is whether, in those circumstances, Justice Einstein was wrong.

MR ELKATEB:   I believe ‑ ‑ ‑

GAUDRON J:   He did not have this material.

MR ELKATEB:   That is correct, your Honour.

GAUDRON J:   You did not seek to lead it.

MR ELKATEB:   That is correct, your Honour.  He did not have any evidence for my part upon which he could rule to ‑ ‑ ‑

GAUDRON J:   Well, he did not have a defence from you.  That seems to me to be the trouble.  He did not have ‑ ‑ ‑

MR ELKATEB:   That is correct.  I was sick, your Honour, and then I instructed a solicitor just in a matter of one or a couple of days before the event and he was not instructed to do anything but vacate or adjourn the case.  Unfortunately, he was asked for a defence that he was not provided with and then Justice Einstein just decide to merge the award into a judgment on that day.  And if you allow me, your Honour ‑ ‑ ‑

GAUDRON J:   Yes, but ‑ ‑ ‑

MR ELKATEB:   ‑ ‑ ‑ just to go through my argument today, as we are here already, would you allow me?

GAUDRON J:   Yes, certainly.

MR ELKATEB:   The fact of the case with respect to the fresh evidence and the imputed bias are relatively straightforward.  They are not actually – on 20 February 1999 the arbitrator published his interim award in proceedings between the first respondent and myself and on 11 August in the same year he published his final award.  On 24 September 1999 Justice Einstein gave his judgment, which effectively merged the award with the judgment.

On 19 January I discovered the fresh evidence in the following circumstances.  I had subpoenaed documents from Turner Freeman and the arbitrator.  A copy of the subpoena can be seen on page 488 to 490, your Honours, if you – page 488 to 490 is the subpoena that I have actually issued to Turner Freeman to produce and in the same time I issued the same subpoena for the arbitrator to produce some documents.  Documents returned with the subpoena was a handwritten note from the arbitrator, Mr Lloyd Austin, to Mr Ian John Cheney of Turner Freeman which stated, “I am also concerned that Elkateb is delaying things to shift his money”.

It is this document, your Honours, that is the focus of the fresh evidence.  It can be found on page 491 in the AB book, the appeal book;  491 it has got it on, 491 of the appeal book.  That document was sent to Mr Austin – by Mr Austin to Mr Cheney on 30 July 1999.  Neither the arbitrator nor Turner Freeman sent me a copy of it.  Indeed, the arbitrator failed to produce under the subpoena.  Although Turner Freeman did produce it pursuant to the subpoena, they had no obligation – they had an obligation as soon as they received it from the arbitrator to inform me of it.  They did not do that.

The crux of the decision of the New South Wales Court of Appeal is to be found in page 336 to 337.  That is in the first volume, your Honour.  If I just take your Honour to the bottom of the page of 366, up to the top paragraph of the next page, 337.

GAUDRON J:   Yes.

MR ELKATEB:   Volume – sorry, that is volume 2, your Honour.  Sorry, volume 2.

GAUDRON J:   Yes, I have that.

MR ELKATEB:   Justice Powell said:

If the evidence must be credible and would more likely than not have had an effect if it had been available at the relevant time, the effect being to demonstrate misconduct on the part of the arbitrator, at the moment while I think it would have been better for that handwritten note never to have been seen I don’t think it has the effect of demonstrating misconduct in the past and that’s really what you’re complaining about, misconduct in the past, and I don’t think it has that effect.

Indeed, your Honours, it had that effect.  With respect, I submit that Justice Powell fell into a grave error with what appears to be a cavalier attitude.  Firstly, the final award had not been handed down as of the date of the letter.  Secondly, even if the date of the interim award is taken as a crucial date, there was only a five‑month lag.  Thirdly, the state of mind of the arbitrator at the time of the handwritten note is highly relevant to his conduct throughout the whole arbitration, in the eyes of an independent observer at least.

Fourthly, the handwritten note is not the first secret communication between the arbitrator and Turner Freeman.  In my written submissions I outline two other secret written communications, one on 1 April 1999 – and that can be found in page 139 in book 1, your Honour.  In this secretly communicated letter, your Honours, I was asked to pay something like $3,000 more than my opponent and the reader is – reading the letter can ascertain that very easily, your Honours.  And on 25 July there is another letter which can be found in page 456 in the volume 2.  It reads, you know, in the second paragraph, at the middle second paragraph, that:

I expect that Mr Lawindi is suffering financially I am prepared to wait –

et cetera, et cetera.  So it is in clear sympathy with my opponent, your Honours.  What was unearthed ‑ ‑ ‑

GAUDRON J:   What was the date of that letter?

MR ELKATEB:   25 July 1999.  It appears on page 456.  The date of the letter ‑ ‑ ‑

GAUDRON J:   Now, this was ‑ ‑ ‑

MR ELKATEB:   ‑ ‑ ‑ is 1 February.

GAUDRON J:   This is well after the ‑ ‑ ‑

MR ELKATEB:   One is 1 February and one is 25 July.

GAUDRON J:   This is well after the – the interim award was concerned with the costs of the arbitration, is that right?

MR ELKATEB:   No, the interim award had dealt with everything ‑ ‑ ‑

CALLINAN J:   It was concerned with the substance, was it not, and then the final award ‑ ‑ ‑

MR ELKATEB:   Yes, but the final award ‑ ‑ ‑

CALLINAN J:   ‑ ‑ ‑ was deferred because matters of costs had to be considered?

MR ELKATEB:   Correct.

CALLINAN J:   Yes.

MR ELKATEB:   So he well in advance had the secret communications with my opponents’ representative and that I had no knowledge of.  Any independent observer would have a well‑founded fear that the arbitrator may have had other secret communications or understandings with Turner Freeman.  The arbitrator’s attempt to suppress the handwritten note is an aggravating factor and smacks of a secret understanding with Turner Freeman that the arbitrator is on their side.

So at no time I had no knowledge of the secret communication.  I had a feeling, but I did not have anything in writing until these documents were subpoenaed.  Although the only written evidence for the allegation consists of the letter of 1 April, 25 July and 30 July, it is sufficient to warrant an apprehension of bias for the whole of the arbitration proceedings.  No confidence whatsoever can be placed in the impartiality of the arbitrator.  What has surfaced in the form of written communication may be the tip of the iceberg, but is more than enough to lose faith in the justice system should the award stand and the arbitrator remain.

There was an obligation on Turner Freeman to not communicate with the arbitrator in secret.  Turner Freeman ought to have informed me of the arbitrator’s handwritten note as soon as they received it.  By secretly communicating with the arbitrator on the said several occasions, Turner Freeman were a party to a secret understanding with the arbitrator that consisted, at minimum, of the two following things:  that the arbitrator is sympathetic towards Lawindi, which is my opponent; and the second point is the arbitrator is hostile towards me.

Your Honours, my written submissions deal with the case law, with section 75A of the Supreme Court Act and sections 42 and 44 of the Commercial Arbitration Act. The fresh evidence was clearly established before the New South Wales Court of Appeal in general under section 75A(7) and between (8) of the Supreme Court Act 1970. Three conditions or three limbs to that Act. It must be shown that – before fresh evidence can be admitted it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial. No 2, the evidence must be such that there must be a high degree of probability that there would be a different verdict. No 3, the evidence must be credible. I just explain that I have covered the three limbs.

The first requirement was met since the arbitrator and Turner Freeman, who deliberately kept the three documents from myself, exclusively held the fresh evidence, which is the fresh evidence that I am relying on.  The second requirement would have been met had the New South Wales Court of Appeal applied the law correctly to the fact.  Justice Powell fell into a grave error when he said:

while I think it would have been better for that handwritten note never to have been seen I don’t think it has the effect of demonstrating misconduct in the past –

and that I referred your Honours to before.

GAUDRON J:   Well, that is in relation to the interim award, is it?

MR ELKATEB:   That is correct.

GAUDRON J:   And it was the interim award that Justice Einstein was being asked to give effect.

MR ELKATEB:   Justice Einstein, yes, that is – yes, that is correct, your Honour.

GAUDRON J:   Your opponent is shaking his head.

MR ELKATEB:   The evidence – yes.  The evidence unearthed the arbitrator imputed bias occurred between 1 April and 30 July 1999.  The interim award was handed down only six weeks earlier on 20 February 1999 and the final award on 11 August 1999.  Any fair‑minded observer would apprehend clear bias on the part of the arbitrator with respect to the three documents unearthed, which I had no knowledge of.

The third requirement, namely, that the evidence must be credible, is also justified.  There is no dispute that the three documents in question were sent by the arbitrator to Turner Freeman and that none of them was ever forwarded to myself, and in the three actually documents I took you to, the three documents before your Honours.  My friend is just paying my attention that Justice Einstein was referred to the final award.  However, none of this material was available at the time, if I made a mistake, if it was interim award or the final award, your Honours.

GAUDRON J:   But you had no defence on at this time when Justice Einstein made his decision?

MR ELKATEB:   I had a very good defence that was not handed because of my inability to attend and an inability to even prepare the defence, your Honours.  I had leave to appeal in the Court of Appeal and this matter is being looked after in the Supreme Court of New South Wales at this point of time.  I had one leave to appeal before Justice Fitzgerald and Justice Beazley due to which it – and it was rescinded as a result of – you know, just a technical morass or a procedural morass that was….., but that was sufficient evidence.  If it was provided to Justice Einstein at the time, he would have had a different opinion and he would have a different judgment.  That was there and that ‑ ‑ ‑

GAUDRON J:   Well, if there had been a defence or some material before him to suggest that there might be a defence.

MR ELKATEB:   Indeed, your Honour.  I took the case actually for this on the assumption that the other barrister, Mr Nicholas Nicholls, and Mr Ian Cheney of Turner Freeman had the opportunity to speak up and tell Justice Einstein that there was, indeed, leave to appeal in the Court of Appeal against Justice Rolfe’s decision, and this mainly concerns the award, your Honour.  Justice Einstein could have taken a completely different approach if that evidence was submitted at the time, but what we are here for today is the bias case, your Honour, because the other case of ‑ ‑ ‑

GAUDRON J:   Yes, I know that that is the case you are trying to make ‑ ‑ ‑

MR ELKATEB:   That is correct.

GAUDRON J:   ‑ ‑ ‑ but I just do not see how you relate it to the decisions which were the subject of appeal to the Court of Appeal and ultimately provide the basis for the appeal in this Court.

MR ELKATEB:   I was asked by Justice Powell to have two – to run two cases, your Honour.

GAUDRON J:   Yes, I know what you were asked ‑ ‑ ‑

MR ELKATEB:   He dismissed the bias part, which I am here for today, and in the other part he said, “You have to go back to a single judge”, which I did, and now it is going before the Court of Appeal.  That that evidence was not provided at the time, although it was sufficient evidence to set aside Justice Einstein’s judgment, your Honour.  So what I am here for, your Honours, is the bias part, which is absolutely clear, and that Justice Powell had erred to the court, that I actually have taken you to in the appeal book and if you allow me to conclude ‑ ‑ ‑

GAUDRON J:   Yes, certainly.

MR ELKATEB:   ‑ ‑ ‑ by saying that if the arbitrator award against me remains intact under the shadow of his blatant bias and misconduct, how can one have faith in the justice system?  How can a law firm be allowed to partake in secret communications with a decision‑maker?  Does not the law firm have an obligation to report the matter to the other side, which is myself?  In this case, both Mr Lloyd Austin, the arbitrator, and Mr Ian Cheney of Turner Freeman are guilty of…..justice.  It is the role of this honourable Court and its honourable member to right the wrong committed.  With respect to your Honours, this is where the buck stops and that is where I stop as well.

GAUDRON J:   Yes, thank you.

MR ELKATEB:   This is my respectful submission.

GAUDRON J:   Yes, thank you.  We need not trouble you, Mr Bevan.

Ultimately, the question raised by this application is whether the Court of Appeal should have granted leave to appeal from a decision of Justice Einstein of 24 September 1999.  However, the matter which the applicant would wish to argue, if he were granted special leave to appeal, is that awards of an arbitrator should have been set aside, or should perhaps be set aside, by reason of misconduct on the arbitrator’s part and because fresh evidence was discovered by him which should have been admitted but which was rejected.

In the Court of Appeal the arguments with respect to those matters were, given the nature of the issue before that court, appropriately dealt with and rejected.  There is no reason to doubt the reasoning of the Court of Appeal or its decision in this matter.  The application for special leave to appeal should be dismissed with costs.

The Court will now adjourn.

AT 3.21 PM THE MATTER WAS CONCLUDED