Goodheart & Goodheart
[2023] FedCFamC1F 715
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Goodheart & Goodheart [2023] FedCFamC1F 715
File number MLC 4209 of 2022 Judgment of WILSON J Date of judgment 24 August 2023 Catchwords FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – RECUSAL APPLICATION – whether disclosure in open court constitutes a waiver of privilege under the Evidence Act – whether the double might test of apprehended bias had been engaged – held, privilege waived and no evidence of apprehended bias. Legislation Evidence Act 1995 (Cth) ss 131 and 131(1)
Family Law Act 2975 (Cth) s 79
Cases cited Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570
Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2022) 97 ALJR 1
Cao & Trong (No. 2) [2019] FamCA 941
Charisteas v Charisteas (2021) 273 CLR 289
CNY17 v Minister for Immigration and Border Protection (2019) 268 CLR 76
Commonwealth v Verwayen (1990) 170 CLR 394
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
Elder’s Trustee & Executor Co Ltd v Commonwealth Homes & Investment Co Ltd (1941) 65 CLR 603
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641
Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427
O’Sullivan v Medical Tribunal of New South Wales [2009] NSWCA 374.
QYFM v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2023) 97 ALJR 419
Sargent v ASL Developments Ltd (1974) 131 CLR 634
Smits v Roach (2006) 227 CLR 423
Vakauta v Kelly (1989) 167 CLR 568
Verdon v Verdon (2020) 62 Fam LR 573
Webb v R (1994) 181 CLR 41
Division Division 1 First Instance Number of paragraphs 39 Date of last submission 7 July 2023 Date of hearing 3 and 7 July 2023 Place Melbourne Counsel for the applicant Mr L. Glick KC Solicitor for the applicant Lander & Rogers Counsel for the respondent Mr T. North SC with Mr A. Barbayannis Solicitor for the respondent Sayer Jones Family Lawyers ORDERS
MLC 4209 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MS GOODHEART
Applicant
AND MR GOODHEART
Respondent
ORDER MADE BY
WILSON J
DATE OF ORDER
24 AUGUST 2023
THE COURT ORDERS THAT –
1.The husband’s recusal application dated 27 June 2023 is dismissed.
2.The further hearing of this proceeding is adjourned to 10:00am on 18 September 2023 for mention in the Major Complex Financial Proceedings List.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
By application in a proceeding dated 27 June 2023, the husband applied for my recusal as the trial judge in this proceeding. He also applied for orders permitting him to redact parts of documents he says are either commercially sensitive or not relevant to an issue in this proceeding. Only the recusal application was pressed before me on 3 July 2023.
Expressed most briefly, the husband contended that an apprehension of bias emerged following an exchange between the husband’s junior counsel then appearing and me on 22 March 2023. The husband contended that by reason of his counsel volunteering information to me that the parties had reached the point in their settlement discussions that a particular sum was to be paid (although the husband’s junior counsel did not say who was to pay the sum to whom), a fair minded lay observer might take the view that as the trial judge I might not bring an impartial mind to bear in the determination of this s 79 property adjustment application.
The wife contended that the recusal application was misconceived and that the joint privilege attaching to settlement negotiations had been waived by the husband’s junior counsel disclosing the substance of the evidence with the consent of the wife. The wife argued that the question whether I should recuse myself by reason of a reasonable apprehension of bias was of hypothetical interest only and should otherwise be dismissed.
As these reasons record, I take the view that the statements made to me by the husband’s junior counsel were properly characterised as being the voluntary disclosure of privileged settlement information on behalf of the husband with the consent of the wife and therefore s 131(1) of the Evidence Act offed no protection. Principles relating to apprehended bias are inapplicable to the circumstances of this application. I dismiss the husband’s recusal application.
RELEVANT FACTUAL SETTING
In March 2023 the husband and wife participated in a mediation although no concluded agreement was reached that day. Thereafter, settlement negotiations continued through the solicitors for the parties.
Pursuant to orders previously made, this proceeding was listed for mention before me on 22 March 2023. By that date no concluded agreement to resolve this litigation had been reached.
On 22 March 2023 the wife’s solicitor appeared before me as did junior counsel then appearing for the husband. The following was the relevant exchange that day –
COUNSEL – Your Honour, there has been some correspondence with your Honour’s chambers to indicate that an in-principle agreement was reached following mediation. The parties are seeking a little time to document that agreement and submit it to the court.
HIS HONOUR: Two things about that. In-principle means different things to different people. Three, a little time is a most nebulous concept, so be more specific if you would, please.
COUNSEL – Your Honour, the parties have reached the point where a tax fee cash payment of 29.1 million is to be made. The first tranche of 16 million within six months, thereafter, four almost equal instalments – substantial instalments on an annual basis to be made upon or before 1 July 2024, 1 July 2025, and, finally, 1 July 2026. There are family entities that will need to be the subject of reconfiguration. Releases of expectancies and other interests and the documentation of that step will take a little time.
HIS HONOUR: Well, what does that mean? I mean, I’ve cut my teeth in the takeover days of the 80s where people put together part A statements overnight and part B statements came out in such cases as BHP and others, so things can be done quickly if you put your mind to it, so what sort of time are we talking about?
COUNSEL – Two weeks, your Honour, is the time we’re - - -
HIS HONOUR: Well, why do you need all that time? Deals go off in that period of time, don’t forget.
COUNSEL – Yes.
HIS HONOUR: Quite often, people have buyers regret and they take a different view if too much time elapses, so I’m keen for that not to happen.
COUNSEL – Two things, your Honour. The parties are represented by responsible practitioners and the second thing, your Honour - - -
HIS HONOUR: Yes. Well, that – notwithstanding that, deals fall over.
COUNSEL – - - - is that the additional time to make sure that the third parties are properly brought into the settlement agreement, if necessary, and get the benefit of releases to make their positions certain is - - -
HIS HONOUR: Were they party to the mediation?
COUNSEL – No. They weren’t party to the mediation, nor are they parties to the proceeding, but the settlement has necessarily incurred – involved dealing with matters of the party’s financial resources and those resources descend from interests in discretionary trusts and estates.
HIS HONOUR: Well - - -
COUNSEL – And there’s – and, obviously, your Honour, from the outlining of the quantum of just the cash payment alone and then there’s a substantial keep by the parties, that those third parties do have a significant interest in the structuring of the settlement and its implementation.
HIS HONOUR: Well, you will forgive me if I express anxiety in what you’ve told me with the potential of this could go sideways, so I’m going to adjourn it for one week for you to give me an update and then I will otherwise adjourn it for a week after that, by which time I expect to see formal terms executed.
COUNSEL – Yes, your Honour.
HIS HONOUR: And I will require an appearance so that you explain to me exactly what has gone on and if there are any hiccups, perhaps it might be necessary to divine a way forward.
COUNSEL – Thank you, your Honour. One matter of an inquiry. Does your Honour anticipate receiving oral submissions on the justice and equity - - -
HIS HONOUR: Of course.
COUNSEL – Yes.
HIS HONOUR: The High Court in Harris v Caladine tells me that I’m forbidden from approving a settlement unless I hear those things.
A further mention was held on 29 March 2023 on which date the proceeding was adjourned to 12 April 2023. On 12 April 2023 the proceeding was adjourned to May. On 1 May 2023 the proceeding was listed for mention as a result of which the proceeding was further adjourned to 8 May 2023. On 8 May 2023 I was informed that settlement negotiations had broken down so I adjourned the proceeding to 22 May 2023. The husband’s application in a proceeding was filed on 27 June 2023 returnable on 3 July 2023 supported by the husband’s affidavit made 27 June 2023.
Prior to 3 July 2023, both husband and wife provided written submissions in relation to the recusal application brought by the husband. The following is a précis of the propositions of fact and law advanced on behalf of the husband –
(a)having heard the statement of 22 March 2023 by the husband’s junior counsel, the trial judge (me) has become possessed of prejudicial but inadmissible material facts and circumstances that may give rise to an apprehension of bias, citing Webb v R[1] and CNY17 v Minister for Immigration and Border Protection;[2]
[1] (1994) 181 CLR 41, 74 (Deane J).
[2] (2019) 268 CLR 76, 98 (at [57]) (Nettle and Gordon JJ).
(b)the relevant information volunteered by the husband’s junior counsel was to the effect that the parties had reached the point by which a tax free cash payment of $29.1 million was to be made in various tranches;
(c)the settlement collapsed prior to it being made the subject of an order or a binding financial agreement;
(d)the statement made on 22 March 2023 by the husband’s junior counsel was prejudicial to the contentions each party may and likely will advance at trial and while the matters discussed on 22 March directly concern the subject matter of the trial, none of those matters could properly be relied on by either party in attempting to establish their respective cases nor could a consideration of that collapsed agreement be relevant to the exercise of discretion under s 79;
(e)a fair minded lay observer might apprehend that this irrelevant and prejudicial exchange might lead me as the trial judge to be of the view (even subconsciously) that –
(i)both parties are accepting that the husband’s interests in the various discretionary trusts are no more than financial resources;
(ii)the wife, notwithstanding her case advanced to date, does not hold an expectation that her position is realistic and has received advice to the effect that the proposed settlement was just and equitable and within the range of likely outcomes;
(iii)the husband was willing to give up his interest in the bulk of the existing property so long as he retained the financial resources, being the interests under the discretionary trusts;
(f)according to the observations of Keifel CJ and Gageler J in QYFM v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs,[3] the “double might” test espoused in Ebner v Official Trustee in Bankruptcy[4] logically entails –
(i)the identification of the factor which it is said might lead a judge to resolve the question other than on its legal and factual merits;
(ii)articulation of the logical connection between that factor and the apprehended deviation from deciding the question on its merits;
(iii)assessment of the reasonableness of that apprehension from the perspective of the fair-minded lay observer;
(g)the public’s view, not the court’s own view is determinative;[5] and
(h)a variety of characteristics are attributed to the fair-minded lay observer.
[3] (2023) 97 ALJR 419.
[4] (2000) 205 CLR 337.
[5] QYFM v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2023) 97 ALJR 419, 433 (at [45]).
The husband was represented on 3 July 2023 by senior and junior counsel. Soon after the case was called, I informed the parties that I had no recollection of the address on 22 March 2023 by junior counsel for the husband. Mr North SC submitted that my actual recollection was not important. I endeavoured to extract precisely what Mr North SC said was the nefarious information that supported the contention that I somehow became seized of information that satisfied the double might test. Mr North SC submitted that my function as case management judge making enquiries about the delays in bringing to a conclusion negotiations about settlement effected a transmogrification such that Mr Wotherspoon (junior counsel for the husband) “informed you of the terms of settlement” (Mr North’s words)[6] with the consequence that my role in case managing the case became inconsistent with being the trial judge. Mr North focused on the precise exchange between Mr Wotherspoon and me after Mr Wotherspoon had said that an in-principle agreement had been reached and that the parties sought a little more time. To that I told Mr Wotherspoon that a little more time means different things to diffetrent people.
[6] Transcript 3 July 2023, T8 L38.
Mr North SC conceded that what Mr Wotherspoon said on transcript voluntarily was not a matter to be imputed to me.[7] He said the following –
I’m not. Your Honour, I don’t – it’s not part of our argument that there is anything said or done by your Honour that is indicative of bias or apparent bias. Our argument is that by reason of what you were told on that day, you’re possessed of information which is inappropriate and impermissible, having regard to performing the function of trial.
[7] Transcript 3 July, T10 L6-9.
Mr North pressed hard on the concept that Mr Wotherspoon informed me about the structure and nature of the settlement. I confess I do not construe Mr Wotherspoon’s volunteering of information as constituting “the structure and nature” of any settlement. It must not be forgotten that the precise words used by Mr Wotherspoon on 22 March 2023 were as follows –
Your Honour, there has been some correspondence with your Honour’s chambers to indicate that an in-principle agreement was reached following mediation. The parties are seeking a little time to document that agreement and submit it to the court.
In response to that very limited statement of the existence of an in-principle agreement, I made a clipt observation. It was as follows –
Two things about that. In-principle means different things to different people. Three, a little more time is a most nebulous concept, so be more specific if you would, please.
Mr Wotherspoon was asked by me for specifics of the time he said he needed. Eventually he told me two weeks. But he said that only after he volunteered details of a payment of $29.1 million involving an initial tranche of $16 million within six months and thereafter four almost equal instalments.
During debate on 3 July 2023, Mr North characterised the very brief exchange narrated immediately above as my being “informed about the structure and nature of the settlement”. Far from the perfunctory information set out above being of the character Mr North attributed to it on 3 July 2023 I informed him of such in the following terms –
And I must say, I’m struggling with your conception that if – if – it involves the dissemination of information about the structure and content of the transactional settlement. I don’t think I agree with you. So persuade me out of that view, if you can.
It went on. It was as follows –
HIS HONOUR: So those words were uttered, that’s true, but how it fitted into the scheme of things was not said, nor - - -
MR NORTH: No.
HIS HONOUR: Nor was it said how they were comprised, nor what percentages this represented or anything of the usual nature that I have to embark upon in entertaining any sort of suggestion about a resolution. All I’ve been told is that there’s a resolution, it’s taking a lot of time. Well, there might – yes, well, no, it was at that stage a resolution. It was taking a lot of time to document. Hadn’t been able to document it, and then Mr Wotherspoon volunteered a few things that were essentially meaningless without more. So I’m really struggling to understand how you say I’m – according to the double might test of Ebner, Charisteas, Isbester, and all the others, that a fair‑minded lay observer might conclude that I might not bring a – an unpolluted mind to the resolution of these issues.
Mr North pressed his characterisation of the information volunteered on 22 March by Mr Wotherspoon. He put the following –
MR NORTH: Your Honour, the other matter we say that might arise is that your Honour may, from that, have an understanding or expectation that the wife, notwithstanding her case as advanced today, which is that she’s entitled to a substantial proportion of what she understands to be a very high value attributable to these interests in the discretionary trusts relating to – what are these franchises? The [B Company] and what’s the other – [C Company]. [B Company] and [C Company] franchises that the settlement terms might be thought to be comparatively modest, having regard to her claims before the court.
HIS HONOUR: Hang on. I missed that. Her settlement terms might be modest? What settlement terms?
MR NORTH: The payments of some $29 million.
HIS HONOUR: As a proportion of what?
MR NORTH: Well, your Honour - - -
HIS HONOUR: That – I would ..... to know, of course, but I mean in the absence of that information, it’s meaningless.
Mr North then proceeded to address the status of this litigation. He said disclosure was still underway and the case was not yet fixed for trial.
Mr North contended that I was not to recuse myself from case management of this proceeding by reason of the information on which he relied to support my recusal from the trial. In other words, Mr North submitted that there was no vice during case management phases of litigation in my hearing information that may found a recusal application yet I was to recuse myself when the litigation went beyond case management.
On behalf of the wife, Mr Glick KC submitted that the husband’s recusal application should be dismissed. In essence, Mr Glick contended as follows –
(a)the discussions between the parties during and subsequent to the mediation were impressed with settlement negotiation privilege;
(b)s 131 of the Evidence Act applied in these circumstances;
(c)the husband’s junior counsel volunteered, unprompted, information otherwise caught by s 131 of the Evidence Act;
(d)having disclosed information otherwise protected from disclosure by settlement negotiation privilege, the husband now asserts that I should recuse myself by reason of having received the information volunteered by his own junior counsel;
(e)the husband had waived the right to object on the basis of apprehended bias, in reliance upon the majority decision in Smits v Roach;[8]
[8] (2006) 227 CLR 423.
(f)when Mr Wotherspoon divulged to the court the information he did on 22 March 2023 no objection was taken by the husband;
(g)the wife, who enjoyed the benefit of settlement negotiation privilege, consented to or acquiesced in Mr Wotherspoon divulging the details of the settlement discussions;
(h)without being asked by the court (me) for details of the settlement discussions, Mr Wotherspoon with the authority of his client informed the court about the matters he imparted on 22 March 2023;
(i)at appearances in this case subsequent to 22 March 2023, the husband’s legal representative (mostly Mr North SC) did not protest about my dealing with the relevant appearance;
(j)subsequent to 22 March 2023, part property orders were made by consent;
(k)consistent with authorities such as Cao & Trong (No. 2)[9] and Verdon v Verdon[10] a part property settlement order is no mere formality but rather it is a discrete exercise of judicial power conferred by s 79 of the Family Law Act such that the court making the order must be persuaded that the part property order sought is just and equitable in all the circumstances;
[9] [2019] FamCA 941.
[10] (2020) 62 Fam LR 573.
(l)the husband consented to a $2 million part property order and is therefore taken to have waived whatever complaint he may have had about my hearing this case beyond mere case management issues;
(m)according to Smits, a recusal application must be brought at the first available opportunity;
(n)on 29 March 2023, being the directions hearing next after the appearance on 22 March 2023, Mr North SC informed the court that documentation to record the parties’ resolution was still in the course of being prepared, yet he did not submit that my role as trial judge had been compromised with the consequence, so Mr Glick submitted, there was a complete waiver of events at the 22 March 2023 appearance;
(o)on 12 April 2023 the proceeding was adjourned by consent, on the papers, to 1 May 2023;
(p)on 1 May 2023, immediately after the appearance in court the parties contemplated conducting a meeting and that the proceeding should be further adjourned yet the wife, as the person entitled to object, did not object and was taken to have waived her right to object;
(q)the husband has not deposed on this recusal application to Mr Wotherspoon making statements to the court on 22 March 2023 without instructions and, to the contrary, the husband relies on what Mr Wotherspoon told the court as the basis of this recusal application;
(r)the making of consent orders for a part property settlement in the sum of $2 million represented a waiver of the husband’s assertions that I must recuse myself of the trial of this proceeding;
(s)the wife did not object to Mr Wotherspoon’s information to the court on 22 March on any of the four subsequent appearances;
(t)on principles of agency, a client is bound by statements made by the client’s barrister in open court;
(u)citing O’Sullivan v Medical Tribunal of New South Wales[11] (Hodgson, Tobias and Basten JJA), the wife argued that every day in court judges rule on evidence, including questions of privilege, and subsequently put the impugned evidence out of their minds;
(v)the lead authorities on reasonable apprehension of bias include Ebner[12] but also Michael Wilson & Partners Ltd v Nicholls;[13] and
(w)where all relevant parties consent to the court receiving the impugned information, the privilege is lost and so the reasonable person embodied in the double might test for apprehended bias will reject any suggestion of bias in circumstances where the parties themselves consented to the adduction of the relevant information and thereafter consented to a part property settlement order being made.
[11] [2009] NSWCA 374.
[12] (2000) 205 CLR 337.
[13] (2011) 244 CLR 427, 445 (at [63]).
In reply on 3 July 2023, Mr North submitted that only when the wife made known that she no longer entertained the notion of settlement on 2 May 2023 did disclosures of information by Mr Wotherspoon become relevant. I brought to Mr North’s attention the decision of the High Court in Grundt v Great Boulder Pty Gold Mines Ltd.[14] Mr North said he needed to consider that authority before addressing on waiver. Mr Glick helpfully brought to my attention the recent statement of the High Court on waiver in Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788.[15] In Allianz, the plurality of the Court observed that the word “waiver” can distract and the better phrase for the purposes of the law of contract (of which this litigation is not an illustration) is election by affirmation.[16]
[14] (1937) 59 CLR 641.
[15] (2022) 97 ALJR 1.
[16] Allianz (op cit) (at [39]), citing Elder's Trustee & Executor Co Ltd v Commonwealth Homes & Investment Co Ltd (1941) 65 CLR 603, 616-618 and Sargent v ASL Developments Ltd (1974) 131 CLR 634, 644.
Mr North submitted by way of reply that no matter how I became possessed of the information volunteered by Mr Wotherspoon – whether under s 131 of the Evidence Act or otherwise – the information (so Mr North said) was prejudicial and it gave rise to apprehended bias. He said the apprehension of bias arose by reason of the possibility that I might, whether consciously or unconsciously, have regard to what Mr Wotherspoon told me on 22 March 2023 when making the discretionary determinations that must be made. The following exchange was then enlivened –
HIS HONOUR: Well, let’s just test that. I can’t act on anything but evidence in an admissible form, no matter what happens in the interlocutory phases of this case, except as to some procedural issues perhaps. It would be highly unlikely that there would be any admissible evidence about negotiations at the mediation. Still less would be admissible that the particular monetary amounts were exchanged back and forth. Hard to imagine what admissible evidence could be led at the trial that touches upon this point.
MR NORTH: Yes.
HIS HONOUR: So that surely goes to feed into what a properly informed layperson might believe might be operative on the mind of a judge. But it’s almost a rhetorical question.
On 7 July 2023 Mr North’s reply continued. The more important points that emerged may be stated in the following manner –
(a)both Vakauta v Kelly[17] and Smits v Roach[18] stand for the proposition that a party may be held to have waived a right to object where that party, being aware of the circumstances giving rise to the right to object, allows the case to continue for a sufficient time to show that he does not presently intend to exercise that right;
(b)no waiver of the sort there described applied to the facts of this case;
(c)what may constitute waiver for the purposes of the law of contract may have limited application to waiver in the context of litigation;
(d)according to Allianz,[19] the majority held that the term waiver is used in many different senses, most common of which describes a party’s unequivocal decision communicated to the other not to insist on a right or not to exercise a power; and
(e)the observations on waiver as canvassed by Gaudron J and by Toohey J in Commonwealth v Verwayen,[20] especially the uncertainties and difficulties attaching to the use of the term “waiver” were cited by Gummow, Hayne and Kiefel JJ in Agricultural and Rural Finance Pty Ltd v Gardiner[21] as prompting attempts to construct a taxonomy of waiver in which distinctions are drawn between “waiver by election” and “pure waiver” or as between “waiver by election” and “unilateral election”.
[17] (1989) 167 CLR 568.
[18] (2006) 227 CLR 423.
[19] Op cit, at [28].
[20] (1990) 170 CLR 394.
[21] (2008) 238 CLR 570, 587 (at [53]-[54]).
Mr Glick KC responded. In essence Mr Glick submitted –
(a)courts routinely determine claims to privilege, either ruling that a document is or is not caught by privilege, for example, without offending rules of bias;
(b)Allianz, the most recent exposition by the High Court of waiver, illustrated unilateral waiver in the reasons of Edelman J at paragraph 30 yet in this case, the parties jointly waived the privilege for the purposes of s 131 of the Evidence Act;
(c)the husband’s case in this s 79 application is for orders dividing assets on a just and equitable basis without saying in what percentage or what assets; and
(d)when the parties sought consent orders for a $2 million part property settlement, the court did not know what the assets that fell for division were, there was no balance sheet in existence yet having no evidence of the proportion $2 million was of the total pool, the husband contended that it was plainly on the cards that the husband would obtain $2 million in the s 79 application.
CONSIDERATION
To my mind, on 22 March 2023 I was performing case management functions in the discharge of my judicial duties. However, the proper characterisation of the nature of the appearance by the parties’ legal representatives on 22 March may be beside the point because the more important issue was the significance of the information Mr Wotherspoon imparted during that appearance. The appearance had followed an unsuccessful mediation during which various proposals were exchanged.
Information exchanged during a mediation is traditionally cloaked in privilege. Each party jointly enjoys the benefit of that privilege. It prevents the disclosure to the court in which the proceeding is pending of information exchanged at the mediation. Either party can enforce the privilege so as to compel the other to preserve the confidentiality of the information exchanged at the mediation.
On 22 March 2023 junior counsel for the husband volunteered – unprompted – the revelation of a particular dollar amount. I did not ask for the disclosure of that amount. Nor did the wife’s legal representative. Who was to pay that sum was not stated. The proportion that sum represented in the value of the total asset pool was not stated. I was not provided with a balance sheet of assets. The wife did not object to the information being given. Nor did the husband’s instructing solicitor protest that information canvassed at or connected with the mediation was being imparted by junior counsel for the husband. There has been no suggestion that Mr Wotherspoon acted without authority in telling me what he did no 22 March 2023. To the contrary, the husband relied on the information his own counsel stated to me as the basis for this recusal application.
In the passages below I have addressed what a fair minded lay observer may have understood by the words the husband’s junior counsel used on 22 March 2023.
To my way of thinking, the parties jointly waived the privilege conferred by s 131 of the Evidence Act. Both were entitled to insist upon strict observance of the privilege. Mr Wotherspoon brought an end to the privilege by telling me about matters canvassed during the mediation. The wife said nothing by way of protest. The information stated by Mr Wotherspoon was recorded on transcript. It has been set out above at paragraph 7.
Both parties waived the privilege they earlier enjoyed in keeping information about settlement discussions confidential.
By 22 March 2023 the parties’ settlement negotiations had not broken down. In fact, the parties were then confident of documenting the resolution of their dispute. They needed time to reflect on certain complexities the details of which were not imparted to me. On 27 June 2023 the husband brought this recusal application.
The husband was required by Smits to have brought this recusal application at the earliest opportunity. It was said that by early May 2023 the collapse of settlement discussions was known. Mr North contended that only when the collapse of settlement discussions was known did the husband realise that the information imparted by Mr Wotherspoon on 22 March 2023 at the directions hearing may become important. There may be truth in that contention for the simple reason that the information given by Mr Wotherspoon on 22 March 2023 was likely to be irrelevant had the case settled, or at least the information he imparted may have formed part of the information on which one or both parties relied when making submissions about the justice and equity of any resolution. The case has not settled. The husband is firmly of the view that if I retain the case, the double might test adumbrated in Ebner and in Michael Wilson and other authorities including Charisteas v Charisteas[22] will be enlivened.
[22] (2021) 273 CLR 289.
I accept that whatever may be my personal recollection of the events of 22 March 2023, and irrespective of whether or not I take the view that I will not bring to the trial an unbiased mind, the law requires the double might test to be measured against what a lay person might conclude. I am of the view that the double might test is not satisfied in the circumstances of this case.
While true, the figure of $29.1 million was canvassed by Mr Wotherspoon. However, what that figure represented was not said whether as a percentage in value of the overall assets in issue in this case or at all. To that must be added the fact that no balance sheet was before me on 22 March 2023. The identity of the payer was not stated. Somewhat ambitiously in my view, Mr North in written submission contended that the revelation of a payment of $29.1 million would lead a fair minded lay observer to conclude that I as trial judge, would be of opinion that –
(a)both parties were accepting that the husband’s interest in the various discretionary trusts were no more than financial resources;
(b)the wife held no expectation that her position is realistic and she has received advice to the effect that the settlement proposed was just and equitable and within the range of likely outcomes; and
(c)the husband was willing to give up his interest in the bulk of the existing property so long as he retained the financial resource, being his interests under the discretionary trusts.
I have very real misgivings that a properly informed lay observer, having been told no more than Mr Wotherspoon told me on 22 March 2023, might reasonable apprehend that I might not bring an impartial mind to the determination of the s 79 application. I was unable to see how a fair minded lay observer, told only of the disclosure made by Mr Wotherspoon on 22 March 2023, would reach the conclusion set out in paragraph 8(i), (ii) and (iii) of the husband’s submissions.[23]
[23] As set out in paragraphs of 9(e)(i), (ii) and (iii) and 34(a), (b) and (c) of these reasons.
Despite the husband taking the view that settlement discussions collapsed in early May 2023 –
(a)the husband waited until 27 June 2023 before bringing this recusal application; and
(b)the parties nevertheless consented to a part property order being made on 28 June 2023 in two tranches, each of $1,000,000.
The delay in bringing this recusal application between 22 March 2023 when the apprehension of bias allegedly first arose, or a date in early May when settlement discussions collapsed, and 26 June 2023 tells against the grant of the relief the husband seeks.
Further, it is inconsistent for the husband to maintain his position for my recusal, having consented to the part property settlement especially as any consideration about the making of a part property order involves questions of the justice and equity of the situation, those being the same as are involved in a trial of a s 79 application.
DISPOSITION
The husband’s recusal application is refused. I am not persuaded that the requisite test, especially the double might test, has been satisfied. Further, in my view, the proper characterisation of the events on 22 March 2023 is that the joint privilege in the communications concerning settlement were jointly waived such that no unfairness has been occasioned to either party.
I certify that the preceding thirty-nine numbered paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson. Associate:
Dated: 24 August 2023
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