Hot Holdings Pty Ltd v Creasy and Ors P72/2000

[2001] HCATrans 543

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P72 of 2000

B e t w e e n -

HOT HOLDINGS PTY LTD

Applicant

and

MARK GARETH CREASY, ARIMCO MINING PTY LTD (liquidator appointed) and ORESEARCH NL

First Respondents

MINISTER FOR MINES

Second Respondent

Application for special leave to appeal

GLEESON CJ
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON WEDNESDAY, 24 OCTOBER 2001, AT 12.08 PM

Copyright in the High Court of Australia

MR M.J. BUSS, QC:   May it please your Honours, with my learned friend, MR C.G. COLVIN, I appear for the applicant, Holt Holdings Pty Ltd.  (instructed by Lawton Gillon)

GLEESON CJ:   This is the bias case?

MR BUSS:   Yes, it is, your Honour.

MR J. GILMOUR, QC:   With MR C.P. STEVENSON I appear for the respondent.  (instructed by Mallesons Stephen Jaques)

MR G.T.W. TANNIN:   If your Honour pleases, with MS K.E. McDONALD, I appear for the second respondent.  (instructed by Crown Solicitor for the State of Western Australia)

GLEESON CJ:   Are you supporting or opposing the application?

MR TANNIN:   I support the application, your Honour.

GLEESON CJ:   Yes, Mr Buss.

MR BUSS:   Your Honours, the special leave application which we submit arise may be stated as follows:  where an administrative decision‑maker receives a recommendation as to the decision to be made which the decision‑maker is not bound to take into account or apply, will the decision‑maker’s ultimate decision subject to judicial review on the ground of a reasonable apprehension of bias where another person, apart from the decision‑maker, who has an interest in the outcome has had an insignificant involvement in the process of forming the recommendation or where another person who does participate in the decision‑making process forming the recommendation does not himself have a personal interest in the outcome but has an independent adult child who does have such an interest.

Now, in determining the answer to that question, a further question that arises is whether it is relevant that the person with an interest in the outcome has played no part in forming and did not influence the content of the recommendation made to the ultimate decision‑maker.  Now, in our submission, where a decision‑maker has an interest in the outcome of his decision‑making process, it is plain, on the authorities, that no amount of protest by the decision‑maker of honest endeavour to determine the matter free from bias will overcome the perception of bias and he will be disqualified, or if he fails to disqualify himself then his decision will be set aside.

However, in our submission, different considerations arise where, as in the present case, the decision‑maker is not a judge or tribunal and also where it is not the ultimate decision‑maker but, rather, those involved in preparing a non‑binding recommendation to be sent to him for his assistance have the interest.  Now, this Court has relatively recently in
Ebner and Jia given some consideration to different issues but issues which are analogous in the sense that this Court has considered the operation of the rule relating to reasonable apprehension of bias in contexts that are analogous but not precisely in point.

It is our submission that the independence of the ultimate decision‑maker will not be tainted unless the person who has an interest was involved in the process of providing the non‑binding recommendation and was reasonably capable and can be seen on objective grounds to be reasonably capable of influencing the outcome when the matter was considered by the ultimate decision‑maker.  It is our submission that the Full Court in this case failed adequately to distinguish this case from those cases in which the personal interest was in fact held by the decision‑maker whose decision it is sought to quash.

In our submission, the reasoning of the Full Court also failed to view the facts of the case from the perspective of the fully informed fair‑minded observer who would know precisely what part each of Mr Miasi, the gentleman who held shares in Audax played in the forming of the departmental recommendation to the Minister - -

GLEESON CJ:   What were the trial judge’s findings as to the part that Mr Miasi actually played?

MR BUSS:   The judge made findings to the effect that Mr Miasi was involved to the extent that he was present while his superiors, Mr Phillips and Mr Burton, considered the recommendation of the Warden and what recommendation the Department should make to the Minister but there was a finding that Mr Miasi did not influence the formation of that decision by Mr Burton and Mr Phillips.

GLEESON CJ:   But what did Mr Miasi actually do?

MR BUSS:   Thereafter, Mr Burton and Mr Phillips requested Mr Miasi to prepare a draft minute which Mr Miasi did by hand.

GLEESON CJ:   A draft minute of what?

MR BUSS:   Of the recommendation to be made to the Minister.

GLEESON CJ:   By - - -?

MR BUSS:   By, ultimately, the more senior members; effectively, by the
Department, by the Director‑General of the Department.  So, Mr Miasi prepared a handwritten draft minute and he himself then asked Mr Hicks to prepare the minute, Mr Miasi having prepared a handwritten statement which set out the history of the matter and the proposed recommendation.  Mr Hicks, himself, then prepared a typewritten minute, or memorandum, and there was some uncertainty in the evidence as to whether or to what extent, it had any discussion with Mr Miasi about that, but the ‑ ‑ ‑

GLEESON CJ:   Did Mr Miasi participate in the making of any relevant decision?

MR BUSS:   No, not in our submission.  No, he did not.  There is, indeed, a finding to that effect.

GLEESON CJ:   Was the finding that Mr Miasi’s role was purely clerical?

MR BUSS:   No, it was – well, the word “clerical” was not used but it is plain that Mr Miasi’s - Mr Miasi, or the concern about Mr Miasi involved the fact that he held some shares.  He was present while Mr Phillips and Mr Burton discussed the matter but he did not influence their decision.  He prepared a handwritten memorandum which he gave to Mr Hicks and asked Mr Hicks to prepare the form of memorandum to be submitted to Mr Burton and Mr Phillips.  Mr Hicks thereupon prepared the typewritten memorandum and gave it to the other gentlemen.

It was then settled and forwarded to the Minister and there were two separate discussions which the Minister had with Mr Burton and a separate conference that the Minister had with a senior solicitor from the Crown Solicitor’s Office.

GLEESON CJ:   Now, did the decision of the Full Court turn, at least in part, upon the view that the fact that Mr Miasi did not play any part in the decision‑making process was “not relevant” to a consideration of whether there was “a reasonable apprehension” of bias?  I am looking at page 119, line 25.

MR BUSS:   Yes.  The point, I think, that the Full Court is making there, or Justice Sheller is making, is that there is a distinction between the objective facts which need to be evaluated in determining a reasonable apprehension of bias, on the one hand, as opposed to evidence from Mr Phillips and Mr Burton that as a matter of fact their minds were not influenced.  In other words, we apprehend that the reference is to evidence that Mr Miasi did not influence their thinking.  In other words, that their ‑ ‑ ‑

GLEESON CJ:   But what Justice Sheller actually said – correct me if I am wrong – is that:

“The trial judge’s finding that Mr Miasi did not play any part in forming the decision of Messrs Burton and Phillips -

was:

not relevant to a determination of whether the circumstances gave rise to a reasonable apprehension or suspicion of partiality.

MR BUSS:   Yes.  The reason for that finding was that there was evidence from Mr Burton and Mr Phillips which would be regarded as not setting out objective fact, solely, but really going to their own mental processes that whatever Mr Miasi had done had not influenced the formation of their own view or its expression in the recommendation to the Minister.

McHUGH J:   Mr Miasi’s document was destroyed, was it not?

MR BUSS:   Yes, that is right.

McHUGH J:   And, there was an attempt by one of the witnesses - Mr Hicks, or one of them - to reproduce it.

MR BUSS:   Yes, Mr Hicks.  That is correct.

McHUGH J:   But, one of the matters that he said was in the document that was destroyed - Mr Miasi said, “There is no compelling reason why you should not follow the Warden’s recommendation”.

MR BUSS:   Yes.

McHUGH J:   Now, that being so, why would not that give rise to a reasonable apprehension of bias, leaving aside for the moment your point that this document has to apply to an administrative decision, but, assume it does.

MR BUSS:   Yes.  The reason, in our submission, is that at an earlier time there was a decision that was formed in discussions between Mr Phillips and Mr Burton, who were Mr Miasi’s superiors, that there was no good reason why the recommendation of the Warden should not be followed and a recommendation to that effect made to the Minister.  In those circumstances where there ‑ ‑ ‑

McHUGH J:   Their decision preceded the production of the Miasi note?

MR BUSS:   That is correct, your Honour, yes.  That is the reason why we say, in those circumstances, that decision having been made at a higher level than Mr Miasi, and Mr Miasi not having played any role in the formation of that decision, that that observation of Mr Miasi, in that context, would not give rise to a reasonable apprehension of bias.

McHUGH J:   Mr Miasi was never present at either of the meetings with the Minister?

MR BUSS:   There was no evidence that he was present at either of the meetings with the Minister, your Honour.  The finding of the judge at first instance, Justice Heenan, is summarised at the top of page 30 of the application book where his Honour said:

Once that is appreciated, it is clear that the only contribution by Mr Miasi to the preparation of the final minute was to express in writing the decision of Messrs Burton and Phillips to adopt the recommendation – that is, that priority be given to the application of Hot Holdings by reason of the result of the ballot.

GLEESON CJ:   Can I ask you about a factual matter?

MR BUSS:   Yes, your Honour.

GLEESON CJ:   You may recollect that the cases of Ebner v Clenae involved factual circumstances in which it was conceded and found that the outcome of the litigation in question could not possibly have had any effect upon the value of the shares in the companies in question.  I do not see any reference in the papers here to any similar factual finding in relation to the value of Mr Miasi’s shares in whatever was the relevant company.

MR BUSS:   Yes.  There are not, although there was evidence before the Full Court on that point.  As your Honours know, Mr Miasi held 40,000 shares and there was evidence as to the issued share capital of Audax at material times.  It had an issued share capital of some 50 million shares at the time that the Warden’s recommendations ‑ ‑ ‑

GLEESON CJ:   I was only inquiring whether the decision in the case that we are looking at turned upon any view of whether there was a possible effect on the market value of the shares.

MR BUSS:   Yes.  The answer to that is “no” in our respectful submission.  It is insignificant, on those figures.

GLEESON CJ:   I am sorry, the answer to what is “no”?

MR BUSS:   I am sorry, perhaps I misunderstood the question.  I am sorry.

GLEESON CJ:   My question to you is this, was there either a finding of fact or a concession as to whether or not the decision of the Minister could have any possible effect on the market value of the shares in the company in question?

MR BUSS:   There was not any finding of fact to that effect.  It would, at most, be a matter for inference but there was no finding of fact to that effect and, from memory, there was no evidence to that effect before the Full Court.

GLEESON CJ:   And there was certainly no concession of the kind that there was in Ebner v Clenae that the decision could not possibly have affected the market value of the shares.

MR BUSS:   There was no concession to that effect before the Full Court, your Honour.  Now, in those circumstances, we submit that there is a matter of general public importance, in terms of determining the proper approach in a case of this kind and there does not appear to be any authority of this Court which is directly applicable to the circumstances as we have outlined them, in particular, where the role of Mr Miasi was peripheral, in circumstances were, in relation to Mr Phillips, to the extent of his involvement, that there was a holding of shares by an independent adult son, a shall holding of shares, and, also, in circumstances where the recommendation that was made to the Minister was non‑binding and where there was a finding that, on the face of it, the Minister had taken all relevant matters into account, he having received not only a recommendation from his Department but also from the Warden and very substantial submissions from each of the parties with an interest in the matter.

In those circumstances, we would submit that it is an appropriate case for the grant of special leave.

GLEESON CJ:   Yes, thank you.  Mr Tannin, we will hear you next.

MR TANNIN:   If your Honour pleases.  The second respondent supports the application.  I do not need to canvass all the matters my friend has referred to but indicate that since the submissions were made this Court decided the case of The Minister v Jia I think it is pronounced.  The judgment in that case clearly, in terms of the obiter, refers to the need to adapt the test for administrative decision‑makers in respect of apprehended bias to the circumstances.  The circumstances here involved not a judicial officer but a minister of the Crown, an elected official, dealing in an

orthodox way with a bureaucratic decision that was an entirely orthodox process.

The Full Court’s judgment in this case does not make that form of adaption at all.  So, the judgment, in my respectful submission, must be wrong, at least to that extent.  The further question, the greater question in terms of special leave is how, if there is to be an apprehended bias test to be modified, should it be modified, should it be a different test, should it be a different standard?  They are properly questions to exercise the grant of special leave.

GLEESON CJ:   Yes, Mr Gilmour.

MR GILMOUR:   Your Honours, can we begin by looking at page 2 of the application book, dealing with the facts.  Your Honour the Chief Justice raised, I think, the question of whether this was a clerical involvement on the part of Mr Miasi.  One sees at paragraph 5 that his task, and he was no clerk, he was the Manager of the Tenure Branch:

was requested by Mr Phillips to arrange for a draft minute (the draft minute) to be prepared.

Now, this was a draft minute in relation to – the minute that would go to the Minister which I took you to earlier in relation to our applications.  At 6:

After due consideration, Mr Phillips and I decided that subject to issues raised in submissions and legal advice being obtained in the future the minute should support the Warden’s recommendation.

And they say why:

Therefore Mr Miasi was requested by Mr Phillips to prepare the draft minute to reflect this tentative position.

Now, I think your Honour Justice McHugh looked at the chronology of when Mr Miasi was involved and the decision that was taken.  Prior to the draft minute which Mr Miasi was involved in got into existence there was merely a tentative position on the part of Mr Phillips, who of course is the father of the son who held shares in Audax, and Mr Burton.  At 7:

I believe ‑ ‑ ‑

GLEESON CJ:   Excuse me.  Was there evidence about whether Mr Phillips knew that his son held shares in Audax?

MR GILMOUR:   I think the evidence was that he did not know.

GLEESON CJ:   So, a reasonable ‑ ‑ ‑

MR GILMOUR:   I am sorry, your Honour, I am told by my junior that he was aware of son’s shareholding.

GLEESON CJ:   Thank you.

McHUGH J:   He said it was because of a telephone conversation.

MR GILMOUR:   Yes.

McHUGH J:   Yes.  He was not aware of the amount.

MR GILMOUR:   No

McHUGH J:   And, indeed, he was not aware until after the proceedings as to whether his son held shares at the relevant time.

MR GILMOUR:   Yes.

McHUGH J:   But he knew he had held them.

MR GILMOUR:   Then we have the meeting at which the decision was made – that is at 7 – at which Mr Miasi was present.  That is the decision that:

the draft minute should support the Warden’s recommendation.

Now, we do not know what role Mr Miasi played or might have played because he did not make an affidavit.  For example, because he was not merely a clerk, he was a very senior person within the Department, he may have held different views to those that Mr Burton and Mr Phillips held and so it is not such much that he did not say anything but that he might have said something which may have produced an opposite result in relation to a matter in which he had a direct interest.

In our submission, this is the very kind of situation that this Court had in mind in Ebner when it said that once a decision has been made one does not then become involved in what were the actual factors which influenced the decision or to get into the mind and mental processes of those involved in making the decision.  It produces a very unsatisfactory result. 

Not that this is the test but perhaps it one way of looking at it:  if the Minister had known of Mr Miasi’s shareholding and that he was involved in any way, one cannot suppose that he would have thought that that was inappropriate.  So, on the facts, we put the matter, your Honours, on the basis that Mr Miasi did not come forward and explain his involvement of what he thought and what he might have said, and what he might have said may have influenced either Mr Phillips or Mr Burton and at that level – and we will never know, with respect.  That, in our respectful submission, is on the facts.  That sufficiently attracts the test dealing with apprehended bias.  In that respect we say that the Full Court was correct. 

As to the question of whether there is any special leave point of general application dealing with administrative decisions, in our submission, all that one is concerned with here is not the test, that is the principal or the formulation of the test, but the applicable standard in terms of the decision‑maker, whether it is a judge, a juror, a statutory tribunal or, in this case, a minister.

McHUGH J:   But it is a far-reaching proposition if decision‑makers are responsible not only for their own pecuniary interests in the subject matter of the litigation but that their decisions are vitiated by those who assist them.  I mean, take a judge who relies on a research assistant to do an analysis of these cases…..is the judge, in those circumstances, disqualified because the researcher has some interest in a company which is the subject of the litigation.

MR GILMOUR:   With respect one could formulate a test that would accommodate every conceivable fact or situation.  In the end, it is a matter of fact and degree, by reference to the test of the apprehension of bias.  In this case, the involvement of someone with a shareholding in a company that had an option to acquire a significant interest in the tenement, the subject of the application, in and of itself, with respect, we regard as a plain case where - - -

GLEESON CJ:   Yes, except that that word “involvement” is a touch imprecise.

MR GILMOUR:   I appreciate, your Honour, in the way that the debate has done that the highest at which we could put it is the way that I have put it, namely, that Mr Miasi’s involvement is largely unknown because he did not come forward and say what his involvement was but, plainly, he was not merely a clerk, he was someone given a very important task in relation to a very important minute for a very important decision, namely, the grant of a mining tenement which inevitably, potentially, was of considerable value and therefore would reflect in the value of the shares of the company that had the option.

Were it a mere clerical involvement, that might be something different but it was not and he was present at the meeting when the decision to support the recommendation of what was made.  It is not, with respect, enough, we say, to say that he was silent when he has got a direct interest because he may well have had a view contrary to that of the others and if he had that he should have said it.

GLEESON CJ:   But did the case proceed on the assumption that he was silent?

MR GILMOUR:   That is the finding.

GLEESON CJ:   Or the different assumption that we do not know what, if anything, he said.

MR GILMOUR:   The evidence before Justice Heenan did not include the affidavit of Mr Phillips but before the Full Court there was Mr Phillips’ affidavit and I recollect that he ‑ ‑ ‑

GLEESON CJ:   But what does the evidence show in your submission?  Does it show that he was silent or does it show that we simply do not know what, if anything, he said?

MR GILMOUR:   Probably it is the latter, your Honour.  Mr Phillips says in discussions on the matter Mr Miasi did not express a view as to the merits of the competing applications which may mean that he did take part in the discussions but did not express a view but that does not mean that he might not have expressed a view, and that is our point.

McHUGH J:   But how far does this doctrine go in relation to what I will call administrators – “pure administrators” as opposed to those who are required to act as judges or quasi-judicial judges or tribunals?  Is the officer in the Department of Social Security that considers an application affected by these rules about bias?

MR GILMOUR:   Your Honour, in Ebner’s Case the majority said at paragraph [4]:

The application of the principle in connection with decision makers outside the judicial system must sometimes recognise and accommodate differences between court proceedings and other kinds of decision making.

GLEESON CJ:   Yes, and I think that was pursued further in case if Jia, was it not?  Is that the case?

MR GILMOUR:   Yes, I think it was, but in the end, your Honours, as I said earlier, in our submission, it comes down to no more than an appreciation of particular facts of a particular case.

GLEESON CJ:   What about if it appeared that a minister thought that a decision would be politically popular and would help to secure his re‑election, would that constitute the ground for apprehending bias?

MR GILMOUR:   One imagines that would demonstrate, as a matter of fact, to be the basis upon which he made the decision, then it might be but it might be that what he felt was a popular decision was, nonetheless, the correct decision.  It would depend on whether there was a disparity viewed objectively between what he felt was popular and what might be thought to have been right.

McHUGH J:   The line between what a minister may think is in the public interest and what he may think is in the interests of his party is often very difficult to draw.  I mean, we are going to open up a real area if this doctrine is going to apply across the board to administrators.

MR GILMOUR:   One can appreciate the difficulties in the way your Honour has put it and I do not think I can add other than to say that it is the question of the standard in the particular case, as your Honours have said in Ebner and in Jia’s Case.  Perhaps our last submission is that because of the factual uncertainty, and in our submission there is factual uncertainty, this is probably not a suitable vehicle.

GLEESON CJ:   Thank you.  In this matter there will be a grant of special leave to appeal.

AT 12.36 PM THE MATTER WAS CONCLUDED