Fair Work Ombudsman v Priority Matters Pty Ltd and ANOR and; Fair Work Ombudsman v Superlattice Solar Pty Ltd and ANOR and; Fair Work Ombudsman v Geneasys Pty Ltd and ANOR and; Fair Work Ombudsman v KIA SILVERBROOK...
[2016] FCCA 2696
•18 October 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v PRIORITY MATTERS PTY LTD & ANOR and FAIR WORK OMBUDSMAN v SUPERLATTICE SOLAR PTY LTD & ANOR and FAIR WORK OMBUDSMAN v GENEASYS PTY LTD & ANOR and FAIR WORK OMBUDSMAN v KIA SILVERBROOK & ANOR and FAIR WORK OMBUDSMAN v MPOWA PTY LIMITED & ANOR (No.2) | [2016] FCCA 2696 |
| Catchwords: PRACTICE AND PROCEDURE – Application for recusal by this Court – whether the Court predetermined the issues of costs and penalty – whether the Court might not bring a fair and independent and impartial mind to the matter – no case of apprehended bias established – the application for recusal is dismissed. |
| Cases cited: Ebner v Official Trustee Bankruptcy (2000) 205 CLR 33. Autodesk Inc v Dyason (1993) 176 CLR 303. |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | PRIORITY MATTERS PTY LTD |
| Second Respondent: | KIA SILVERBROOK |
| Third Respondent: | FIONA INVERARITY |
| File Number: | SYG 3209 of 2013 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | SUPERLATTICE SOLAR PTY LTD |
| Second Respondent: | KIA SILVERBROOK |
| File Number: | SYG 3210 of 2013 |
| Applicant: | FAIR WORK OMBUDSMAN |
| Second Respondent: | KIA SILVERBROOK |
| File Number: | SYG 3228 of 2013 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | KIA SILVERBROOK |
| Second Respondent: | JANETTE LEE |
| File Number: | SYG 1743 of 2014 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | MPOWA PTY LIMITED |
| Second Respondent: | KIA SILVERBROOK |
| File Number: | SYG 1780 of 2014 |
| Judgment of: | Judge Street |
| Hearing date: | 18 October 2016 |
| Date of Last Submission: | 18 October 2016 |
| Delivered at: | Sydney |
| Delivered on: | 18 October 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr A Moses and Ms V McWilliam |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| Solicitors for the Respondents: | Mr P Argy Keypoint Law |
ORDERS
SYG 3209 of 2013; SYG 3210 of 2013; SYG 3228 of 2013; SYG 1743 of 2014; and SYG 1780 of 2014.
The application in a case for recusal is dismissed.
The adjournment application by the Applicant is granted and the matter is fixed part-heard on penalty and costs at 2:15 P.M. on Friday 21 October 2016.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 3209 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| PRIORITY MATTERS PTY LTD |
First Respondent
| KIA SILVERBROOK |
Second Respondent
SYG 3210 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| SUPERLATTICE SOLAR PTY LTD |
First Respondent
| KIA SILVERBROOK |
Second Respondent
SYG 3228 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| GENEASYS PTY LTD |
First Respondent
| KIA SILVERBROOK |
Second Respondent
SYG 1743 of 2014
| FAIR WORK OMBUDSMAN |
Applicant
And
| KIA SILVERBROOK |
First Respondent
| JANETTE LEE |
Second Respondent
SYG 1780 of 2014
| FAIR WORK OMBUDSMAN |
Applicant
And
| MPOWA PTY LTD |
First Respondent
| KIA SILVERBROOK |
Second Respondent
REASONS FOR JUDGMENT
Background of Application for Recusal on the issues of costs and penalty
Following delivery of this Court’s decision on 17 June 2016 making orders in relation to the substantive liability issues, the applicant on 8 September 2016 filed an application for the Court to recuse itself from hearing the issues of costs and penalty. The application was supported by an affidavit dated 7 September 2016 which identified that legal advice had been obtained the obtaining of legal advice by the applicant. No evidence was adduced in support of the proposition central to the submissions being advanced, that the applicant was in some way denied procedural fairness in relation to the issues concerning the failure of the applicant to contact the Australian Taxation Office (“the ATO”) and the Court’s concern in relation to the conduct of the applicant in the bringing of the contempt motion against Ms Inverarity.
Submissions that the Court had predetermined the issues of penalty and costs
Mr Moses SC for the applicant took the Court to the Court’s findings, at paras. [172] – [174] of the Court’s reasons dated 17 June 2016 in oral submissions, in elaboration of the written submissions relied upon in respect of the ATO refund.
Mr Moses SC contended that the findings were made without evidence and without affording procedural fairness. Both propositions are entirely lacking in substance. Mr Moses SC contended that the findings meant that the Court had predetermined that no penalty would be imposed and that the Court would award costs. On a fair reading of the Court’s judgment, it is difficult to understand how those propositions could be put.
Senior Counsel for the applicant, also took the Court orally to the findings in paras. [291] – [296] of the Court’s reasons dated 17 June 2016, in respect of, the conduct of the applicant that was the subject of criticism by this Court in the bringing of a contempt motion in circumstances where the Court found it was a departure from the standards of a model litigant. Mr Moses SC contended that a fair-minded lay observer would form the view that the Court had already determined or predetermined the issue of penalty and costs and that, applying the fair-minded observer double “might” test in Ebner v Official Trustee Bankruptcy (2000) 205 CLR 337, this Court should recuse itself from the further hearing of the matter.
What was developed orally by Senior Counsel expanded upon what was put in writing. In writing, reference was made relevantly to para. [294] of the Court’s reasons referring to providing a further opportunity for the parties to be heard on the question of costs in light of the findings of the Court. What was put in written submissions was that this was an attempt to provide procedural fairness retrospectively that enlivens an apprehension of bias.
Submissions alleging conduct to support allegation of apprehended bias
The submissions made by Senior Counsel for the applicant, identified two alleged matters of conduct to support the allegation of apprehended bias. The first matter being, the findings of the court in relation to the failure of the applicant to contact the ATO. The second matter being, the findings of the Court in relation to the bringing of the contempt motion and the conduct of the applicant in that regard in respect of the solicitor Ms Inverarity. Both matters were live issues in the case that were squarely raised by the Court and issues in respect of which the applicant had a real and genuine opportunity to engage on those issues.
The absence of any evidence in support of this application, so far as it is suggested that there was no opportunity to deal with the issues, is telling. The proposition boldly asserted that there was no evidence in support of the findings is equally bare of substance and unsustainable by reference to the conduct of the hearing.
Contempt Motion
The motion for contempt was first raised at the commencement of the hearing on 7 March 2016. The Court was informed that Mr Taylor had not yet had an opportunity to put on evidence in relation to the motion:
“and that is because the application itself may not have been pressed.”
The Court indicated that, to the extent there was a motion, it would hear it at the end of the case and deal with it then. The Court informed the applicant that if the matter was resolved the Court should be informed. The Court noted that it did not wish to hear anything further about the matter at that stage and indicated that the contempt motion would be dealt with at the end. The Court also noted that Mr Taylor should be informed so as to be in a position to deal with the matter at the end of the hearing.
Before the respondents closed their case, the Court inquired as to what had happened with the motion now that it had arisen in the course of the case. The Court indicated that the matter would be stood down to 2:15pm so that the applicant could let the Court know whether the applicant wished to pursue the application. The Court indicated that if the application was to be pursued, it would be heard forthwith.
After an adjournment, Counsel for the applicant informed the Court that the “application will not be pressed.” The Court sought to clarify the position as to whether there was consent in relation to the dismissal of the application in a case filed on 11 March 2015.
The Court was informed that no order for costs would be sought and that the issue as to whether an order for costs was one that required clarification. The Court again stood the matter down so the applicant could ascertain the correct position.
Cross-Examination of Ms Lee
The contempt application in a case and affidavit arose in the course of evidence of Ms Lee in cross-examination by the applicant. Ms Lee was shown the application and the affidavit relating to the alleged contempt and asked whether that was what she was referring to in her evidence. Ms Lee confirmed that to be the position.
At the end of the evidence of Ms Lee, Mr Argy the solicitor for the respondents, formally tendered what was the application for contempt and the affidavit, which were “MFI 3”. No objection was taken to that tender by Senior Counsel on behalf of the applicant. The application in a case and the affidavit were marked “Exhibit 37”. The Court enquired as to whether that application was now being pursued. Senior Counsel for the applicant’s Counsel indicated that formal instructions were needed from someone who was not in the courtroom.
In the course of cross-examination of Ms Lee, the solicitors for the respondents asked questions about the payment of entitlements to employees. Ms Lee said that she was unable to provide any help to the Court because relevantly she did not feel able to approach the person being Ms Inverarity. In response to a question about having access to company records, Ms Lee explained that they had been attempting to pay out staff and that as a result of the contempt proceedings, which had been in place for nearly sixteen months, which Ms Lee described as a very serious allegation, nobody involved in that application is prepared to talk to each other.
Impact of the contempt motion
It is apparent from the Court file that on 21 January 2014 Ms Inverarity filed a notice of address for service on behalf of both respondents in the Priority Matters proceedings and the applicant effected service of process upon Ms Inverarity as the solicitor for the respondents. On 2 May 2014, Brett Wilson of Adams Wilson Lawyers became the solicitor for the respondents until filing a notice of ceasing to act on 2 March 2015.
Of similar importance, Ms Inverarity filed a notice of address for service on 21 January 2014 in the matter of Superlattice and that was how service was effected upon the respondents. Ms Inverarity also appeared for the respondents on the first directions hearing on 15 May 2014 in the matter of Superlattice and on 9 July 2014 Mr Wilson of Adams Wilson Lawyers filed a notice of address for service. Mr Wilson filed a notice of ceasing to act on 2 March 2015.
In the matter of Geneasys, Ms Inverarity filed a notice of address for service on 21 January 2014 for both respondents. On 20 February 2014 Mr Wilson of Adams Wilson Lawyers filed a notice of address for service for Mr Silverbrook. Again, service upon the respondents of the initiating process was effected on the respondents solicitor Ms Inverarity.
The substance of Ms Lee’s evidence was that as a result of the contempt motion, the respondents had been unable to contact and discuss with Ms Inverarity the attempt to pay out staff and that this had impacted on Ms Lee’s ability to explain the situation to the Court. Ms Lee explained that she had not been able to conduct the process of borrowing funds from somebody to pay out the rest of the employees.
As a result of those contempt proceedings, Ms Lee was asked whether she was referring to the application in a case and affidavit. Ms Lee was shown the documents and confirmed that that was what she was referring to. In her evidence, Ms Lee was again pressed as to why she was unable to identify additional payments. Again, Ms Lee made reference to the fact that the records were with someone that she could not access for legal reasons. That was clearly a reference to Ms Inverarity as a result of the contempt application.
Ms Lee identified that she had expressed a level of distress in circumstances where she believed she could have helped the employees and that she had funding in place for the companies as well. The Court clarified with Ms Lee that she was referring to the contempt proceeds and asked whether they played some role in the cessation of Ms Fiona Invarerity acting for the respondents. Ms Lee answered, “Yes, it did”.
Reference was then made by Counsel for the applicant, to the fact that Mr Wilson had been acting for the respondents initially in the proceedings. Ms Lee responded, identifying that that had been the position until they became self-represented, which was said to have been about a year ago and at the time that there was the service of the notice to produce. I take the reference to the notice to produce in Ms Lee’s evidence, to be a reference to the notice to admit by the applicant, which has been referred to in an earlier judgment of this Court. The application for a notice to admit was served in circumstances after the applicant became aware that the legal representation for the respondents was being withdrawn. That notice to admit gave rise to alleged admissions that pursuant to orders of this Court were withdrawn. Ms Lee identified that the service of the notice to admit was contemporaneous with the contempt of Court motion being filed on the respondents as well. In these circumstances the impact of the contempt application was clearly a live issue arising from the evidence of Ms Lee.
Ms Lee continued:-
“So in effect this solicitor that we had used for many years Fiona Inverarity through the Craig case onwards when we hoped on her good graces she would assist us, which she would have through the notice to produce, but we had no opportunity to even get assistance there, because we could not speak to her, and that is why in the period we were unrepresented until very recently under the kind and good graces of Mr Argy becoming involved to assist.”
The obvious impact of the evidence given, was that the contempt proceedings had caused the inability for the respondents to communicate with and be assisted by Ms Inverarity. The applicant well knew that Ms Inverarity had acted for the respondents at the start of the Priority Matters proceedings. Counsel for the applicant sought to explore the matter further in relation to the representation by Mr Wilson. The only cross-examination that was advanced in that regard, was that Ms Inverarity was not, the solicitor conducting the five proceedings at the time.
In the course of submissions, Counsel for the applicant raised the contempt issue and identified that the contempt issue was a new issue in respect of which, Counsel for the applicant was going to put on as part of the submissions.
The solicitor for the respondents Mr Argy, was asked whether he was happy with that and he said “yes”. It was clear from the exchange of Counsel for the applicant, that the applicant’s Counsel fully appreciated that the contempt issue was a matter that had arisen on the evidence and that it was a new issue. Counsel for the applicant was given an opportunity to put on submissions in that regard.
In the course of oral submissions before the Court, the Court made reference to Ms Lee’s evidence. In particular, the Court made reference to the effect of Ms Lee’s evidence that because of the contempt motion, all communication with employees had ceased.
The Court made reference to it being unfortunate that the motion for contempt was brought and that the motion was utterly misconceived in relation to there being no property and witnesses and the conduct that was identified did not justify the type of application filed by the applicant. The question was raised by the Court as to whether those circumstances gave rise to unreasonable conduct that had caused costs. It was in these circumstances where the Court had expressly raised whether the new issue acknowledged by Counsel for the applicant required an opportunity to respond in writing to the matters that had been raised. The reference to the contempt being a new issue, clearly was a reference to the exchange that had taken place in the course of submissions arising out of the evidence of Ms Lee.
The matters just identified in relation to Ebner v Official Trustee Bankruptcy (2000) 205 CLR 337 in respect of the contempt motion, are not ones that identify a logical basis upon which it could be said that the Court might decide the matters of penalty and costs to be determined, otherwise than in accordance with the legal and factual merits.
ATO Issue
The issue in relation to the ATO was the subject of considerable exchange between Counsel and the Court in the course of submissions. The issue in relation to the ATO was flagged at the commencement of the trial as a matter of concern to the Court. It was the issue in relation to the ATO that gave rise to the applicant tendering a memorandum of understanding and putting submissions as to the scope to which the applicant was able to communicate with the ATO.
The Court squarely raised with Senior Counsel for the applicant at the commencement of the trial, that an issue that it wished to have ascertained was what had gone on in relation to the Commissioner of Taxation. The Court conveyed that it was concerned in relation to the conduct of the applicant. The Court squarely flagged, that an issue that it wished to have ascertained was what had gone on in relation to the Commissioner of Taxation. This was an issue that was up in lights.
Further in relation to the ATO, in the cross-examination of Mr Wohlthat, the issue was raised of funds being expected from the ATO. The ATO issue was then squarely raised in the course of the cross- examination of Inspector Hurrell.
Cross-Examination of Inspector Hurrell
In cross-examination of Inspector Hurrell, the Court raised the issue of contact with the ATO by the applicant, what was the nature of that contact with the ATO, and the reason why the research and development payments were not raised by the applicant with the ATO.
Inspector Hurrell identified that she had not taken any step to obtain information from the ATO and that this was the position to date. At page 69 of the transcript of 7 March 2016, the Court made reference to the ATO issue that had been squarely raised. The Court further raised with Inspector Hurrell, that it must have been apparent that the ATO is an outstanding research and development incentive fund from the complaints made by employees as to the reason for delay in payment of wages.
Inspector Hurrell identified that she had never encountered research and development grants before. References by the Court was made to the proposition that these amounts were very substantial. On the evidence, it is apparent Inspector Hurrell appreciated that the research and development refund amounts were very substantial at that time and that these funds were said to be the subject of imminent payment. The Court found Inspector Hurrell was aware of that at time of the investigation and the very substantial ATO refund amounts were known to Inspector Hurrell.
The Court asked why Inspector Hurrell had not made contact with the ATO to ascertain why the research and development refunds had not been paid. The answer in response was that the ATO had very little inclination to release information and Inspector Hurrell made reference to strict rules governing the release of information.
The proposition was advanced that Inspector Hurrell might have been able to do something if she had been given further information by the company, but she never got that information from the company.
The Court asked whether Inspector Hurrell ever asked for the information from the ATO so she could verify the same. Inspector Hurrell’s response was that she had very little communication with or from the company. The Court raised with Inspector Hurrell that it was concerned that there was obviously a very substantial amount outstanding to employees in respect of whom another Commonwealth body, if payment was made, could have assisted in the paying of those employees. In response, Inspector Hurrell agreed and said “yes”. Reference was then made to the duty of the Fair Work Ombudsman to assist the employees.
The Court’s consideration of the applicant failing to contact the ATO
The Court explained it did not understand why steps had not been taken to contact the ATO, to ascertain why funds had not been paid at this stage. Objection was then taken by Counsel for the applicant to the question by the Court. The Court indicated it would break the question up. The Court asked whether there was a reason why Inspector Hurrell did not contact the ATO to ascertain why the refund was not made in relation to the three companies that Inspector Hurrell had been informed an ATO tax refund was due.
Inspector Hurrell made reference to the fact there may be different answers depending on different times, and Inspector Hurrell had very little knowledge about research and development grants but that they were amounts that the employees were reporting to her and that she had no indication at that time that they were being delayed in some way beyond normal by the ATO processing times. Inspector Hurrell indicated that she had not understood until she saw other material, that that amount should have been released. Inspector Hurrell said it was never presented to her that there was something delaying the process at the ATO.
Inspector Hurrell confirmed that she became aware that there were funds that might be paid to the ATO. In answer to the question:-
“Why didn’t you take steps to ask for information that would have permitted you to make further inquiries from the ATO about it?”
Inspector Hurrell said:-
“Well that would have been in the last few months that I could have done that, but, at this point, I don’t have primary carriage of this matter. The matter is being managed within our legal branch.”
The Court then raised:-
“But when you first spoke to Mr Wohlthat it would have been easily ascertainable by you from him the information he was being told as to why payment hadn’t been made, and one of the reasons, I suggest to you, that he was saying was that there was an ATO payment coming, and that’s what he was waiting for.”
The response by Inspector Hurrell was that there was a lot of information about what had occurred and what was delaying things and that there were different bits of information across the companies.
The Court then raised that it was concerned about the information that Inspector Hurrell must have been given early on. This included information that some of the companies, in fact three, were expecting payments from the ATO that would probably permit payment of the full amount of the amounts being claimed by the employees. The Court raised the issue as to why that had not been pursued by Inspector Hurrell. At this point, objection was taken by Counsel for the applicant in relation of the question raised by the Court.
Counsel for the applicant objected to the entire line of examination concerning the ATO. It was submitted that the Fair Work Ombudsman was a regulator and that it was not a body representing the employees. The line of questioning being directed to the particular witness was said to be irrelevant. The Court indicated that it did not consider the matter to be irrelevant to the case.
The Court stated that there was an avenue of inquiry that appeared to have been obvious. It went to the interests of the employees, which the Court understood the investigator was attempting to advance, that does not seem to have pursued.
The Court squarely said, “I may draw inferences in relation to your client if the matter is not explored”. The Court in response to the objection said it would not press the question. However, the Court informed Counsel for the applicant that there were inferences open to the Court that the Court could draw, in relation to the failure to make inquiries of the ATO and to take steps to obtain information that would permit those inquiries. The Court said that in the absence of further evidence, that is a matter the Court said it had flagged clearly for the applicant’s Counsel to understand.
That exchange between the applicant’s Counsel and the Court could not have failed to make clear, the live issue in relation to the ATO. The making of findings by this Court in relation to the live issue is again not conduct in relation to the second step that identifies a logical basis upon which it could be said that the Court might decide the matters of penalty and costs otherwise than in accordance with the legal and factual merits.
Decision of the Royal Commissioner, Dyson Heydon delivered on 31 August 2015
The principles in relation to recusal on the grounds of apprehended bias have been usefully summarised in the decision of the Royal Commissioner, Dyson Heydon, delivered on 31 August 2015, relevantly as follows in paragraphs [34] – [49]:-
THE LAW
The test
[34] The applicants relied on the legal test set out in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344 [6]. (ACTU written submissions para 4, CFMEU written submissions para 3, AWU written submissions para 3) There Gleeson CJ, McHugh, Gummow and Hayne JJ said:
… a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide.
[35] The CFMEU and Counsel Assisting addressed the question whether the test which applied to judges also applied to Royal Commissioners. Counsel Assisting cited (written submissions para 13) and the CFMEU quoted (written submissions para 4) the following from the joint reasons of Kiefel, Bell, Keane and Nettle JJ in Isbester v Knox City Council (2015) 89 ALJR 609 at 614 [22]:
It was observed in Ebner that the governing principle has been applied not only to the judicial system but also, by extension, to many other kinds of decision-making and decision-makers. It was accepted that the application of the principle to decision-makers other than judges must necessarily recognise and accommodate differences between court proceedings and other kinds of decision-making. The analogy with the curial process is less apposite the further divergence there is from the judicial paradigm. The content of the test for the decision in question may be different.
[36] Counsel Assisting cited (written submissions para 14) a number of cases establishing that in relation to the test for apprehended bias a Royal Commissioner is permitted to take a more interventionist role in conducting hearings: see R v Carter; ex parte Gray (1991) 14 Tas R 247 (FC) at 260-263 [29]-[34]; Carruthers v Connolly [1998] 1 Qd R 339 at 358; Keating v Morris [2005] QSC 243 at [46]. However, since the applications in the present case were not based on anything done in the course of hearings of the Commission, those passages were not directly applicable.
[37] The ACTU also submitted: (written submissions para 20)
The fair-minded lay observer is not a lawyer. Being reasonable and fair-minded, this hypothetical person … would ordinarily be taken to have sought to be informed on at least the most basic considerations relevant to arriving at a conclusion founded on a fair understanding of all the relevant circumstances.
[38] There was some dispute between the applicants and Counsel Assisting about whether the Ebner test created a low hurdle. Thus counsel for the ACTU said it created ‘actually quite a low bar’ (21/8/15, T:31.43-44) or a ‘low threshold’. (21/8/15, T:32.8) Counsel Assisting submitted that an allegation of apprehended bias must be ‘firmly established’. (written submissions para 12) They cited R v Commonwealth Conciliation and Arbitration Commission; ex parte Angliss Group (1969) 122 CLR 546 at 553-554; R v Watson; ex parte Armstrong (1976) 136 CLR 248 at 262. To those authorities may also be added the statements of French CJ and Gummow J respectively in their dissenting reasons in British American Tobacco Services Ltd v Laurie (2011) 242 CLR 283 at 305 and 313-314 and the authorities cited there. Counsel Assisting also submitted that a judge should not disqualify himself or herself on the ground of bias or reasonable apprehension of bias unless ‘substantial grounds’ are established: Bienstein v Bienstein (2003) 195 ALR 225 at 233 [36] per McHugh, Kirby and Callinan JJ. The Ebner passage does not necessarily contradict those on which Counsel Assisting relied. But it seems preferable to concentrate on the language of the test to see whether it is satisfied, not to worry about whether it is hard or easy to satisfy.
[39] It is noteworthy that in one of the cases cited by Counsel Assisting, Isbester v Knox City Council (2015) 89 ALJR 609 at 613 [20], Kiefel, Bell, Keane and Nettle JJ said:
The question whether a fair-minded lay observer might reasonably apprehend a lack of impartiality with respect to the decision to be made is largely a factual one, albeit one which it is necessary to consider in the legal, statutory and factual contexts in which the decision is made.
The fair-minded lay observer
[40] Counsel Assisting also made certain submissions about the role of a fair-minded lay observer. (Counsel Assisting’s written submissions paras 15-18) The applicants did not appear to quarrel with these submissions. Counsel Assisting submitted that the fair-minded observer does not make snap judgments: Johnson v Johnson (2000) 201 CLR 488 at 494 [14]. He or she is taken to be reasonable: Johnson v Johnson (2000) 201 CLR 488 at 493 [12]. He or she knows commonplace things and is neither complacent nor unduly sensitive or suspicious: Johnson v Johnson (2000) 201 CLR 488 at 509 [53]; Helow v Home Secretary [2008] 1 WLR 2416 at 2418 [2], 2421 [14], 2427 [39]. Knowledge of all the circumstances of the case must be attributed to the fair-minded observer: Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293-4; Re JRL; ex parte CJL (1986) 161 CLR 342 at 355, 359, 368 and 371-2; Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 87-8 and 95. Counsel Assisting further submitted that the fair-minded observer was an informed one. Where the decision-maker is a judicial officer the fair-minded observer will have regard to the fact that a judicial officer’s training, tradition and oath or affirmation equip the officer with the ability to discard the irrelevant, the immaterial and the prejudicial: Johnson v Johnson (2000) 201 CLR 488 at 493 [12], citing Vakauta v Kelly (1988) 13 NSWLR 502 at 527, adopted in Vakauta v Kelly (1989) 167 CLR 568 at 584-5. Thus judges are expected to be equipped by training, experience and their oath or affirmation to decide factual contests solely on the material that is in evidence together with other material which is notorious or common knowledge. The same, it may be interpolated, is to be expected of Royal Commissioners with experience of litigation at the bar or on the bench. Counsel Assisting pointed to the words of Lord Rodger of Earlsferry in Helow v Home Secretary [2008] 1 WLR 2416 at 2422 [23]:
Even lay people acting as jurors are expected to be able to put aside any prejudices they may have. Judges have the advantage of years of relevant training and experience.
[41] In the same case, Lord Hope of Craighead said at 2418 [2]-[3]:
The observer who is fair-minded is the sort of person who always reserves judgment on every point until she has seen and fully understood both sides of the argument. She is not unduly sensitive or suspicious. … Her approach must not be confused with that of the person who has brought the complaint. … The assumptions that the complainer makes are not to be attributed to the observer unless they can be justified objectively. But she is not complacent either. She knows that fairness requires that a judge must be, and must be seen to be, unbiased. She knows that judges, like anybody else, have their weaknesses. …
Then there is the attribute that the observer is “informed”. It makes the point that, before she takes a balanced approach to any information she is given, she will take the trouble to inform herself on all matters that are relevant. She is the sort of person who takes the trouble to read the text of an article as well as the headlines. She is able to put whatever she had read or seen into its overall social, political or geographical context. She is fair-minded, so she will appreciate that the context forms an important part of the material which she must consider before passing judgment.
The distinction between prejudgment and predisposition
[42] Counsel Assisting also pointed out that the rule against bias, actual or apprehended, is directed to prejudgment incapable of being altered by evidence or argument. It is not directed to predisposition capable of being swayed by evidence or argument. They cited the words of Gleeson CJ and Gummow J in Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 at 531-2 [71]-[72]:
Decision-makers, including judicial decision-makers, sometimes approach their task with a tendency of mind, or predisposition, sometimes one that has been publicly expressed, without being accused or suspected of bias. The question is not whether a decision-maker’s mind is blank; it is whether it is open to persuasion. … Natural justice does not require the absence of any predisposition or inclination for or against an argument or conclusion.
[43] Counsel Assisting also cited R v S (RD) [1997] 3 SCR 484 at 533-4 [119]. That Canadian case was quoted with approval in Helow v Home Secretary [2008] 1 WLR 2416 at 2435 [57]. In the Canadian case, L’Heureux-Dubé and McLachlin JJ said:
It has been observed that the duty to be impartial “does not mean that a judge does not, or cannot bring to the bench many existing sympathies, antipathies or attitudes. There is no human being who is not the product of every social experience, every process of education, and every human contact with those whom we share the planet. Indeed, even if it were possible, a judge free of this heritage of past experience would probably lack the very qualities of humanity required of a judge. Rather, the wisdom required of a judge, is to recognise, consciously allow for, and perhaps to question, all the baggage of past attitudes and sympathies that fellow citizens are free to carry, untested, to the grave. True impartiality does not require that the judge have no sympathies or opinions; it requires that the judge nevertheless be free to entertain and act upon different points of view with an open mind”.
[44] Counsel Assisting also argued that since the test for apprehended bias is concerned with prejudgment, not predisposition, teetotallers may try licensing applications provided they are not implacably opposed to all applications: M Aronson and M Groves, Judicial Review of Administrative Action (5th ed, Lawbook, 2013), p 642 [9.200]; De Smith’s Judicial Review (7th ed, Sweet & Maxwell, 2013), pp 560-561 [10-054]. On the same reasoning, they argued, it was right to hold that the Chairman of the Independent Liquor and Gaming Authority could hear applications to grant poker machine licences notwithstanding his public statements that he ‘hate[d] gambling’, ‘despise[d] poker machines’ and was a ‘dedicated non-gambler’ who had ‘never gambled with money at all’: O’Hara v Independent Liquor & Gaming Authority [2014] NSWSC 880 at [5]. Counsel Assisting also submitted that the mere fact that a decision-maker is a member of an association does not mean that the decision-maker should be taken to endorse every view or opinion expounded by that association: Helow v Home Secretary [2008] 1 WLR 2416.
[45] Counsel for the ACTU said that Helow v Home Secretary was a fact-specific decision on English law, and was distinguishable. (21/8/15, T:32.41-47) It is true that all the cases in this field are in a sense fact-specific. But the submission did not explain how any difference from English law deprived the case of utility. It is also true that in English law, after Porter v Magill [2002] 2 AC 357, the test for apprehended bias (as opposed to the test for automatic disqualification stated in R v Bow Street Metropolitan Stipendiary Magistrate; ex parte Pinochet (No 2) [2000] 1 AC 119) is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased: see [2002] 2 AC 357 at 484 [103]. The test is thus slightly more demanding than the Ebner test in that it involves a ‘would’ coupled with a ‘might’. However, the point of distinction relied upon by counsel for the ACTU was that the judge in Helow v Home Secretary, ‘while a member of an organisation, had not adopted a public claim of support of that organisation in the way we say you have done’. (21/8/15, T:32.44-46) As explained below, the premise of this distinction, stated in the closing words, is not supported by evidence. Thus it is fallacious so far as the present controversy is concerned.
[46] Counsel for the ACTU accepted that if the present application were ‘simply based on someone doing a search and working out that you had been to Liberal Party Functions, or a member of the Liberal Party indeed, this would be [an] application which I don’t think I would be prepared to make’. (21/8/15, T:30.36-41) That is a concession which is correct. An argument which would disqualify a Commissioner who was not a member of the Liberal Party, but would not disqualify a Commissioner who was a member, raises questions over its own validity. Despite the fact that Helow’s case was said to be distinguishable, the concession appears to have been made in order to accommodate it.
A three –step test
[47] Finally, Counsel Assisting pointed out that the Ebner test involves two steps ((2000) 205 CLR 337 at 345 [8] per Gleeson CJ, McHugh, Gummow and Hayne JJ):
First, it requires the identification of what it is said might lead a [decision-maker] to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding a case on its merits. The bare assertion that a [decision-maker] has an “interest” in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.
[48] However, the last sentence of that passage from Ebner’s case suggests that there is an additional third step. In Isbester v Knox City Council (2015) 89 ALJR 609 at 619 [59], Gageler J set out the three steps as follows:
Step one is identification of the factor which it is hypothesised might cause a question to be resolved otherwise than as a result of a neutral evaluation of the merits. Step two is articulation of how the identified factor might cause that deviation from a neutral evaluation of the merits. Step three is consideration of the reasonableness of the apprehension of that deviation being caused by that factor in that way.
[49] And in Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 208 CLR 507 at 564 [185] Hayne J set out a related but differently expressed three-step analysis:
Saying that a decision-maker has prejudged or will prejudge an issue, or even saying that there is a real likelihood that a reasonable observer might reach that conclusion, is to make a statement which has several distinct elements at its roots. First, there is the contention that the decision-maker has an opinion on a relevant aspect of the matter in issue in the particular case. Secondly, there is the contention that the decision-maker will apply that opinion to the matter in issue. Thirdly, there is the contention that the decision-maker will do so without giving the matter fresh consideration in the light of whatever may be the facts and arguments relevant to the particular case. Most importantly, there is the assumption that the question which is said to have been prejudged is one which should be considered afresh in relation to the particular case.
The application for recusal was opposed by the respondents. The respondents referred to the principles identified by Kirby P in Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411 which relevantly provided in (b) –(d):-
(b) Judges should not too readily accede to applications for disqualification, otherwise litigants may succeed in effectively influencing the choice of the judge in their own cause: see Re JRL; Ex parte CJL (1986) 161 CLR 342 at 352; Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd (1986) 6 NSWLR 272 at 276; ; Fitzgerald v Director of Public Prosecutions (1991) 24 NSWLR 45 at 49;
(c) Judges should resist being driven from their courts by the conduct or assertion of parties, including assertions of actual or imputed bias: see Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd [No 4] (1986) 6 NSWLR 674 at 689;
(d) Judges in the course of litigation, in exchanges with parties and their representatives or in interlocutory decisions may express their preliminary views with vigour but this should not necessitate their disqualification: see Galea v Galea (1990) 19 NSWLR 263 at 278f; Fitzgerald; Re Keely; Ex parte Ansett Transport Industries (Operations) Pty Ltd (1990) 64 ALJR 49594 ALR 1;
It is an important principle that a judge should not too readily accede to an application for the disqualification. The findings by the Court in the present case were findings in respect of live issues upon which the applicant had a real and genuine opportunity to engage.
The Court’s consideration of the application for recusal
The making of those findings are not conduct by reason of which a fair-minded lay observer might reasonably apprehend that this Court might not bring an independent and impartial and fair mind to the determination of the remaining matters on their merits. No case of apprehended bias is established.
The submissions that the Court predetermined the issue of costs and penalty is not supported by a fair reading of the Court’s decision. A fair-minded lay observer might not reasonably apprehend that the Court might not bring an independent and impartial and fair mind to the determination of the matters of penalty and costs on its merits by reason of having made findings on live issues in relation to the conduct of the applicant. The Court, in its reasons, identified that it would give the parties an opportunity to be heard in light of the findings made as to their impact on the issues of penalty and costs.
This was not, as the applicant’s submissions suggested, an attempt to retrospectively provide procedural fairness. For the reasons already given, there was cogent evidence available to support the findings made by the Court, and this is not the forum in which any challenge should be made to the findings made by this Court.
Further, and for the reasons given, the issues in relation to the failure of the applicant to contact the ATO, and the impact and conduct of the applicant in relation to the bringing of the contempt motion were live issues in respect of which it was open to the Court to make the adverse findings, and upon which the applicant had a real and meaningful opportunity to engage in relation to those issues.
The failure by the applicant to pursue, in cross-examination by further evidence or in submissions, the issues that were squarely flagged, is not conduct that can be relied upon by the applicant to ask this Court to recuse itself. In University of Wollongong v Mohamed Naguib Fawzi Ahmed Metwally & Ors (No. 2) (1985) 59 ALJR 481, in the unanimous decision of the High Court of Australia, it was said:
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case has been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.
To the extent that the applicant seeks to complain about the live issues, the subject of adverse findings, the applicant had the opportunity to adduce further evidence, and the opportunity to put further submissions on in relation to those issues. The failure to do so whether, by inadvertence or otherwise, does not give rise to any denial of procedural fairness.
Further, if there had been evidence adduced by the applicant that there had been an issue in respect of which the applicant had not been given a real and genuine opportunity to meet the same, an application could have been made, supported by evidence, to seek to reopen the case in respect of those findings. No such application was brought by the applicant. See Autodesk Inc v Dyason (1993) 176 CLR 303 at paras.[309] – [310]).
Further, in relation to the matters which are the subject of complaint, the applicant has not sought to identify, by affidavit evidence, alleged facts or matters that it would have adduced if in fact it were contended that the applicant was not aware of those issues. The application for recusal has all the flavour of a strategic exercise by the applicant to make bank unmeritorious appellate points and that is not appropriate conduct by a model litigant.
This Court has not heard the parties in relation to the issue of penalty and costs but has made findings in respect of which the parties are to be given an opportunity to be heard as to the significance of those findings in relation to the decision both on penalty and the decision on costs. The Court has not predetermined the issue of penalty, or the issue of costs but has made findings that impact on the same.
It was open to the Court to make findings that impact on the issue of penalty and costs in the determination of the issue on liability. That is what the Court has done. A fair-minded lay observer might not reasonably apprehend that the conduct of the Court in making findings on the issue of liability including the ATO issue and the contempt motion in the reasons published is conduct by reason of which this Court might not bring a fair and independent and impartial mind to the determination of the matter of penalty and the matter of costs on its respective merits. Neither the logical connection nor the reasonableness of the apprehended deviation from a determination on the merits is made out.
The application for recusal is dismissed in each matter.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Judge Street
Date: 10 November 2016
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