Haoma Mining Nl v Carpentaria Gold Pty Ltd

[2002] QCA 408

[2002] QCA 408

COURT OF APPEAL

DAVIES JA
HELMAN J
JONES J

Appeal No 9045 of 2002

HAOMA MINING NL  Appellant/Plaintiff
(ABN 12 008 676 177)

and

CARPENTARIA GOLD PTY LTD                 Respondent/Defendant
(ABN 47 010 706 966)

BRISBANE

..DATE 03/10/2002

JUDGMENT

MR N FERRETT (instructed by Paul Everingham & Co) for the appellant

MR R N TRAVES (instructed by Allens Arthur Robinson) for the respondent

DAVIES JA:  This is, on its face, an appeal from an order made by a judge in the Trial Division in the Supreme Court dismissing an application for an order that he disqualify himself from hearing an action.  What his Honour did, in substance, was to refuse to accede to an application that he should so disqualify himself.

There is a question at the outset whether his Honour's refusal, however framed, was a judgment or order of the Court within the meaning of section 69 of the Supreme Court Act 1991 (Qld).  That section provides that an appeal lies to this Court from and, implicitly, only from a judgment or order of the court in the Trial Division.

That section is in much the same terms as section 5F of the Criminal Appeal Act 1912 (NSW) considered by the Court of Criminal Appeal in New South Wales in Rogerson (1990) 45
A Crim R 253.  In that case, Gleeson CJ, with whose reasons the other members of the court agreed, would have declined leave to appeal against such a decision on the ground that there was no jurisdictional basis for the appeal.  In arriving at that conclusion his Honour said at 255:

"It seems to me that there is no interlocutory judgment or order in that respect concerning which an appeal would lie under s 5F of the Criminal Appeal Act. The Court of Appeal held in the case of Barton v Walker [1979] 2
NSWLR 740, that the refusal of a judge of the Supreme Court to disqualify himself after an application in that behalf had been made to him did not constitute a judgment or order against which it was possible to appeal to the Court of Appeal.

Of course such a refusal might constitute a ground of appeal against the ultimate decision in the case in the course of which such an application was made, but, so it was held, a refusal by a judge to accede to a submission that he disqualify himself is not itself a judgment or an order of the court. I am respectfully of the view that the reasons that are given for that conclusion in Barton v Walker are cogent, and in my view the case should be followed in the Court of Criminal Appeal. I might add that within the last few weeks that decision has been followed in the Court of Appeal in the case of Rajski v Wood (1989) 18 NSWLR 512. Accordingly, even leaving to one side the problem about extension of time, I would have declined leave to appeal against that aspect of Judge Shillington's decision on 5 December, simply on the ground that there is no jurisdictional basis for the appeal."

That would be an inconvenient result to reach in a case in which it appeared to this Court that a trial judge had wrongly declined to accede to a submission that he or she should be disqualified from continuing to sit for it would mean that the party, whose submission had been wrongly rejected, would be obliged to wait until the end of what might be a long and expensive trial in order to appeal on that ground.  For reasons which I am about to give, however that is not the case here.  But because of that inconvenience in result I would prefer not to decide this question until it is necessary to do so.  Accordingly I turn to the consideration of the correctness of his Honour's refusal to accede to the appellant's submission.

The action which the learned primary judge had embarked upon was one between two gold mining companies.  The defendant is a wholly owned subsidiary of Mount Isa Mines Limited in which his Honour disclosed to the parties that his superannuation fund held 13,692 shares.  He also disclosed that his wife and children had interests in a family trust which held 1,923 shares in Mount Isa Mines Limited. 

That company is a large public company of around 2000 million shares and his Honour's interest in it was very small.  The shareholding is also less than two per cent of his Honour's superannuation fund.  However, those matters are only of marginal relevance.

The basis of the application that his Honour should disqualify himself, as his Honour correctly stated it, was that the outcome of the action might realistically be such as to affect the share price of Mount Isa Mines Limited.  I should say at once how that became the question which his Honour had to decide and is the question which this Court has to decide.

In the first place it was not suggested by the appellant that his Honour was or might in fact be biased in the matter. The argument that his Honour should have disqualified himself was based solely on the proposition that a fair minded lay observer might reasonably apprehend that his Honour might not bring an impartial and unprejudiced mind to the resolution of the question he was required to decide: Johnson v. Johnson (2000) 201 CLR 488 at [11].

Secondly, that question may ordinarily be resolved by asking whether an outcome of the action might realistically affect the value of the shares. In that respect the majority of the High Court in Ebner v. Official Trustee in Bankruptcy (2000) 205 CLR 337 at 37 said:

"... in the ordinary case, where a judge owns shares in a listed public company which is a party to, or is otherwise affected by, litigation, and there is no other suggested form of interest or association, the question whether there is a realistic possibility that the outcome of the litigation would affect the value of the shares will be a useful practical method of deciding whether a fair-minded observer might hold the relevant apprehension."

It was not submitted to the learned primary judge, and it is not contended here, that an outcome of this case could have any significant financial impact on the overall revenue or operating profit of Mount Isa Mines Limited.  What is contended is that there is a realistic possibility that an outcome of the case will have such an adverse effect on the reputation of the company as to affect its share price.

As originally framed the notice of appeal contained three grounds.  During the course of argument in this Court, however, Mr Ferrett for the appellant, abandoned one of those grounds and, with leave, added another.  As finally advanced the grounds were as follows:

1. the evidence did not support his Honour's finding that if the plaintiff proved the allegations it makes in its statement of claim in the substantive proceeding there would be no impact on the share price of Mount Isa Mines Limited.

1. The evidence did not support his Honour's conclusion that if the plaintiff is successful in proving the allegations it makes in the statement of claim in the substantive proceedings that there was no realistic possibility of an impact on the share price of Mount Isa Mines Limited.

2. His Honour erred by deciding the matter solely on the basis of evidence of experts and failing to hypothesize as to the view a fair minded lay observer might take.

Before turning to those grounds in detail I should say something about the relevance of these proceedings in the overall context of the operating business of Mount Isa Mines Limited.  That company is a large producer of copper, coal and lead and zinc. By comparison with any of these mining activities its production of gold is very small.  It amounts to less than one per cent of the company's overall revenue and of its operating profit.

Carpentaria Gold as its name implies is a Mount Isa Mines Limited subsidiary used by Mount Isa Mines Limited to enter into joint ventures in gold mining activities.  The dispute between the parties concerns such a joint venture. 

The relevant allegation by the plaintiff in the action is that Carpentaria Gold withheld from the plaintiff for about three months a report critical to the joint venture activities.  It was critical, it was said, because it disclosed deficient procedures in allocating gold between the parties and how those deficient procedures might be rectified.

It was not alleged that the withholding of this report involved any dishonesty on the part of those people involved on behalf of Carpentaria Gold.  However it was submitted by Mr Ferrett that, if the plaintiff succeeded entirely in its claim, it might be inferred that there was incompetence on the part of those involved.  The question then was whether a finding or an inference of incompetence on the part of those involved in that respect in Carpentaria Gold, in one matter namely the withholding of this report, gave rise to a realistic possibility that the value of the shares in Mount Isa Mines Limited would thereby be detrimentally affected.

Grounds 1 and 2 of the notice of appeal, as I have set them out, attack the following finding of the learned primary judge:  "The outstanding feature of [the evidence of Mr Wallace-Smith and Mr Brown] is that neither said that there was a realistic possibility that a decision in this case on the issues revealed by the pleadings favourable in every respect to the plaintiff would affect the market value of MIM shares."

Mr Wallace-Smith and Mr Brown were stockbrokers who gave evidence on the central question in issue. 

Mr Ferrett took us to two passages in the evidence of each of these witnesses which he submitted supported his contention that his Honour's finding and conclusion was unjustified.  However Mr O'Donnell QC for Carpentaria Gold took us in some greater detail to the evidence of each of these witnesses which he submitted, read as a whole, fully justified the conclusion which his Honour reached.  In the time since the conclusion of the hearing at 4.10 yesterday I have had the opportunity to read the evidence of each of those witnesses in a little more detail.  I am satisfied that, when read as a whole, the evidence of each of them justifies the conclusion which his Honour reached.

The effect of Mr Wallace-Smith's evidence was, as Mr O'Donnell QC correctly submitted, that he could not say whether, if the appellant succeeded in all its allegations, it would have any effect on share price.  What he could say, relevantly, was that that would only be so if it were seen as part of a larger problem but there was nothing to indicate that it was part of a larger problem.  The effect of Mr Brown's evidence was that this venture was a very small part in the overall operations of Mount Isa Mines Limited and that complete success by the plaintiff in the action would not affect the share price unless the findings of incompetence were seen as part of a wider pattern reflecting on management, but he was unaware of anything known to the share market at the present time indicating any such pattern.

His Honour referred to and accepted the evidence of Mr Brown whom he described as slightly more specific in his evidence than Mr Wallace-Smith.  On my reading of his evidence that appears to be correct and his Honour was plainly justified in accepting it.

On that basis, his Honour's finding, attacked in this Court, was fully justified.  For those reasons grounds 1 and 2 must be rejected.

The argument with respect to ground 3 involved the focus on the evidence of Messrs Wallace-Smith and Brown rather than, as it was contended it should be, upon what a fair minded lay observer might think.  But the reason for the focus on the evidence of these witnesses was a statement of the High Court, which I have already cited from Ebner, to the effect that a useful practical method of deciding whether a fair minded observer might hold a relevant apprehension was whether there was a realistic possibility that the outcome of the litigation would affect the value of the shares.  It seems that rightly, in the hearing before the learned primary judge, both sides concentrated on this question.

It follows that there is no substance in the third ground of appeal because if, as I have held, there was no realistic possibility that the outcome of the litigation would affect the value of the shares, and there was no other relevant matter, a fair minded observer would not hold any reasonable apprehension that the judge might not bring an impartial mind to the solution of the question before him.  It follows that on the substantive question this appeal must fail in any event.

It is important that a judge should be mindful of the possibility that a fair minded observer might apprehend him or her to be biased, notwithstanding the absence of any actual bias, and that in such a case a judge should disqualify himself or herself.  But it is equally important that a judge should not too readily accede to an application that he or she disqualify himself or herself from hearing or further hearing a case.  Applications of this kind can be and some times are made for tactical purposes only.  A party may use such an application to delay or frustrate an opponent, or in the hope of obtaining a hearing before another judge whom the party believes may be more sympathetic to the party's case.  I am not prepared to say that either such motive was behind the present application and appeal.  However it does follow from what I have said that the application and appeal were groundless. 

I would therefore dismiss the appeal.

HELMAN J:  I agree.

JONES J:  I agree.

DAVIES JA:  The appeal is dismissed.

MR TRAVES:  Your Honour, the respondent seeks the costs of the appeal and the costs of the application for the stay of the trial reserved by Justice Jerrard on the morning.

DAVIES JA:  Do you want to say anything about that?

MR FERRETT:  I can't say anything about it, your Honour, I don't think.

DAVIES JA:  With costs of the appeal and of the application

for a stay before Justice Jerrard.

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