Hy-Tec Industries v Constable (No 2)

[2006] FMCA 966

FEDERAL MAGISTRATES COURT OF AUSTRALIA

HY-TEC INDUSTRIES v CONSTABLE & ORS (NO 2) [2006] FMCA 966

PRACTICE & PROCEDURE – Application to disqualify for apprehended bias – where after judgment representations are made to court by interested and named non party – where court writes to parties indicating a preliminary view of representations and writes to all parties inviting representations – whether views expressed could be considered immutable – whether apprehended bias is thus established.

Re J.R.L; Ex parte C.J.L [1986] 161 CLR 342
The Anderson Group Pty Ltd v Tynan Motors Pty Ltd [2006] NSWCA 22
Hy-Tec Industries v Constable & Ors [2006] FMCA 704

Applicant:

HY-TEC INDUSTRIES PTY LIMITED

ACN 070 100 702

First Respondent: STEPHEN CONSTABLE TRADING AS STEVE CONSTABLE CONCRETE SERVICES

Second Respondent: GEOFFREY DAVID MCDONALD AS TRUSTEE OF THE BANKRUPT ESTATE OF STEPHEN CONSTABLE TRADING AS STEVE CONSTABLE CONCRETE SERVICES

Third Respondent: SIMON ROBERT BEVERLY

File Number: SYG648 of 2005

Applicant:

HY-TEC INDUSTRIES PTY LIMITED

ACN 070 100 702

First Respondent: STEPHEN CONSTABLE ALSO KNOWN AS STEVEN CONSTABLE

File Number:	SYG612 of 2006
Judgment of:	Raphael FM

Hearing date: 27 June 2006

Date of Last Submission: 27 June 2006

Delivered at: Sydney

Delivered on: 27 June 2006

REPRESENTATION

Solicitors for the Applicant: TurksLegal

For the first Respondent: No Appearance

Counsel for the second Respondent: Mr S Golledge

Solicitors for the second Respondent: Yates Beaggi Lawyers

Counsel for the Third Respondent: Mr J Johnson

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG648 of 2005

HY-TEC INDUSTRIES PTY LIMITED

ACN 070 100 702

Applicant

And

STEPHEN CONSTABLE TRADING AS STEVE CONSTABLE CONCRETE SERVICES

First Respondent

GEOFFREY DAVID MCDONALD AS TRUSTEE OF THE BANKRUPT ESTATE OF STEPHEN CONSTABLE TRADING AS STEVE CONSTABLE CONCRETE SERVICES

Second Respondent

SIMON ROBERT BEVERLY

Third Respondent

SYG612 of 2006

HY-TEC INDUSTRIES PTY LIMITED

ACN 070 100 702

Applicant

And

STEPHEN CONSTABLE ALSO KNOWN AS STEVE CONSTABLE

Respondent

REASONS FOR JUDGMENT

1. On 10 May 2006 I heard an application of a rather unusual type.  The applicant was a petitioning creditor who sought to have the sequestration order that was made by this court against the debtor set aside or alternatively annulled.  The basis for this application, which was unusual because it is the type of application that is normally made by a debtor, is set out in my judgment Hy-Tec Industries v Constable & Ors [2006] FMCA 704 but in short, it arose because prior to the hearing of the application for the sequestration order an arrangement had been entered into between the judgment debtor and the creditor for payment of the debt by instalments. This arrangement was not communicated to relevant parties and the proceedings went ahead.

2. The judgment creditor had been represented by a solicitor known as Mr Hodges following the withdrawal of instructions to the solicitor who was acting on its behalf in relation to the application for the sequestration order.  Mr Hodges then ceased to act and another firm was instructed.

   In paragraph 15 of my judgment I said:

   “Hy-Tec employed Mr Hodges to act for them in early 2006.  Mr Hodges was required to obtain the file from Mr Beverly to consider the situation and to advise.  I do not think there was any delay in his making the application for annulment on 27 February 2006.  There was some further delay until 11 April 2006 when Mr Hodges filed the second application for the extension of time and for the review.  Mr Hodges is no longer acting for Hy-Tec.  I think I can draw an inference that Mr Hodges’ knowledge of the Bankruptcy Act and procedures may not have been that of the experts who have appeared before me in these proceedings.  The subtleties of the two different types of application may have evaded him.”

3. After my judgment was published Mr Hodges wrote a letter to the court.  In that letter Mr Hodges indicated that affidavit evidence filed showed that he had given his client certain advice which could be considered to be inconsistent with the statement about his knowledge of the Act that was made in the judgment.  Because Mr Hodges is a practitioner he felt that the reference made about him in paragraph 15 of my judgment could be considered by some people to be derogatory or as reflecting upon his ability.

4. Having received Mr Hodges' letter caused my associate to write to each of the parties a letter set out in the following terms:

   “In the judgment in these proceedings Federal Magistrate Raphael said at paragraph 15 in respect of Mr Hodges:

   “I think I can draw an inference that Mr Hodges’ knowledge of the Bankruptcy Act and procedures may not have been that of the experts who have appeared before me in these proceedings.  The subtleties of the two different types of application may have evaded him”

   Mr Hodges has written to the court providing it with a clear indication from the affidavit evidence that between 27 February 2006 and 11 April 2006 he was advising his clients in relation to the proceedings which resulted in the filing of the second application.  Because of the possible adverse inference that might be obtained from a reading of paragraph 15 of His Honour’s judgment he proposes to issue a corrigendum so that the relevant part of paragraph 15 now reads:

   “During that period Mr Hodges gave his client certain further advice which resulted in the second application.”

   Please let me have any representations you may wish to make concerning this proposed corrigendum within seven days.”

5. In response to the letter from my associate a letter was received from the solicitors for the applicant indicating that it had no objections.  On 6 June 2006 Mr Johnson, counsel for Mr Beverley the third respondent, wrote to the court in the following form:

   “I refer to your letter of 31 May 2006 in relation to issues raised by Mr Hodges as to the terms of paragraph 15 of the Judgment delivered in these proceedings.

   Judgment has been entered in the proceedings on 25 May 2006.

   I have not been provided with a copy of any material provided by Mr Hodges as an “interested bystander” - he no longer being on the record in relation to the affairs of the Plaintiff, referred to in the letter.  To that extent my client is denied the opportunity of expressing any view as to the matters set out in such material.

   A reserved judgment in the proceedings was delivered on 24 May 2006.  That Judgment was delivered in accordance with the evidence that was before the Court, and specifically put before the Court as being relevant by those advising the Applicant.

   It is quite inappropriate for the Court to take into account evidentiary matters received after delivery of Judgment and entry of orders in effect to reopen the Judgment to deal with matters put by a third party who has previously represented the interests of the applicant.

   It is submitted in the circumstances that the Court:

   1.Has no jurisdiction to issue a corrigendum as contemplated in the letter.

   2. In the circumstances to issue such a corrigendum would constitute a denial of natural justice in that the materials sought to be relied upon in the absence of any application being made by a party have not been disclosed to the parties in the proceedings and in particular Mr Beverley.

   It is not known to the writer whether a copy of the letter of 31 May 2006 or the materials have been provided to the other legal representatives in the proceedings.  In those circumstances I have circulated a copy of the letter of 31 May 2006 and this email to them.

   J T Johnson

   Counsel for Simon Beverley

   Frederick Jordan Chambers

   PH: [phone]

   FAX: [phone]

   Email: [email protected]”

6. As I was not in the country at the time, I considered that the best way to deal with the matters raised by Mr Johnson in his facsimile was to bring the matter back before me so that any difficulties might be dealt with in the presence of all parties.  When Mr Johnson appeared this morning he made an application that I should disqualify myself on the grounds of what I understand him to allege was apprehended bias.

7. Mr Johnson's major point was that the letter which had been written appeared to indicate that I had formed a preliminary view about what should be done and that this preliminary view could be considered by a properly informed member of the public listening to the case, to have been fixed and incapable of change, notwithstanding any representations that might be made by any of the parties.  Mr Johnson also suggested that what had occurred, namely, the communication between myself through my associate and Mr Hodges, was comparable to the types of communication dealt with by the High Court in Re J.R.L; Ex parte C.J.L [1986] 161 CLR 342 or that in The Anderson Group Pty Ltd v Tynan Motors Pty Ltd [2006] NSWCA 22.

8. In regard to Mr Johnson's reference to the two cases quoted above I should say that I do not accept that the situation which his client faced is in any way similar to those.  In both of those cases a Judge had private communication on matters which would affect the final judgment that was given and did not disclose those communications. 

9. In this case the judgment has already been delivered and the existence of the communication between Mr Hodges and the court was made public to all interested parties including Mr Constable the former bankrupt, who has not appeared today, although he has had notice.  Mr Hodges' actual letter to the court was not disclosed to the parties but that could have been done if requested. No change to the judgment has yet been made.  The letter which my associate wrote seems to me to indicate quite clearly that no final determination of the matter regarding the change of wording had occurred and that the parties at all times had the right to make representations including the representation made by Mr Johnson that he should be allowed to appear, which was acceded to.

10. I cannot see that the interpretation placed upon the letter by Mr Johnson is an interpretation that could be derived from it, insofar as a reasonable bystander might come to a view that a preliminary opinion had been expressed.  To my mind, if the letter is read as a whole, it is quite clear that the court was open to hear any representation in relation to the matter and that no final determination would be made until such representations were heard and considered.

11. The letter would indicate that I had considered Mr Hodges' representations and felt that they had merit but that did not mean that I was unprepared to change any preliminary view expressed after hearing from any of the parties.  For these reasons I am not prepared to accede to Mr Johnson's request that I disqualify myself and I will now hear Mr Johnson's application that I should not make any change to the judgment on the basis that I am functus.  Mr Hodges is here today, he is the most directly affected person by both my comments and Mr Johnson's opposition to any change.  I believe it is in the best interests of justice that Mr Hodges have an opportunity to express his views on the functus point.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate: 

Date: