IOOF Australia Trustees Ltd v Seas Sapfor Forests Pty Ltd

IOOF AUSTRALIA TRUSTEES LIMITED v
SEAS SAPFOR FORESTS PTY LTD & ORS
[1999] SASC 249

Full Court: Doyle CJ, Prior and Mullighan JJ

DOYLE CJ. This appeal is brought against decisions made by a judge of this Court. The decisions were made in the course of hearing a civil action.
The action involves many different issues. The trial began on 14 September 1998. It has continued since then. In March 1999 the judge decided that it was appropriate to hear argument on, and then decide, the meaning of two clauses of an agreement the subject of dispute before the judge. The meaning of those clauses is central to one of the claims being made before the judge. The judge decided that the meaning of the clauses was clear, that certain extrinsic evidence upon which the plaintiff relied was not admissible because there was no ambiguity in the meaning of the clauses, and went on to decide that the clauses had the meaning for which the defendants contended.
His ruling that evidence was not admissible is likely to shorten the trial significantly. His conclusion as to the meaning of the clauses should do the same, because apparently it will eliminate or reduce one of the plaintiff’s claims. From time to time I will refer to these two decisions as the construction decision.
At about the same time the plaintiff made a number of applications to the judge asking him to disqualify himself from further hearing the case. The applications were made on the grounds that a fair minded person would reasonably apprehend or suspect that the judge was biased, and on the basis that the judge was not according to the plaintiff a fair trial. A second application was made on the same basis. A third application was made on much the same basis, but now alleging also bias on the grounds that there was a reasonable apprehension that the judge held and had held the view that senior counsel for the plaintiff was, to put it shortly, not to be trusted in his conduct of the case. A further application was made on similar grounds, but now actual bias was alleged as well.
The judge dismissed the applications made to him, and continues to sit. From time to time I will refer to these decisions as the disqualification decisions.
The appellant, the plaintiff in the action, appeals against the construction decision. The appellant has applied for leave to appeal against the disqualification decisions. The Court directed that the application for leave to appeal against the disqualification decisions be argued as if it were the appeal, because, after hearing initial submissions on the application for leave to appeal, the Court concluded that it could not satisfactorily deal with the application unless it heard full argument on the issue.

Preliminary matters

Before hearing the appeal and the application for leave to appeal, the Court dealt with a number of applications made to it by the parties.
After the judge had made the construction decision, the plaintiff asked him to adjourn the trial of the action pending an appeal by the plaintiff to this Court. The judge declined to do so. The plaintiff applied for leave to appeal against that decision. The plaintiff also applied for an order staying the proceedings before the judge pending the determination of the appeal.
The Court refused leave to appeal, and refused to grant the stay. To interfere with the trial judge’s decision not to adjourn a case would be exceptional. The judge is best placed to decide whether justice requires an adjournment. Quite apart from that, the Full Court would interfere with a decision to refuse an adjournment only if some error of principle has been made or if the decision has resulted in a serious injustice: GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710. The nature of a decision to refuse an adjournment is such that interference by a Full Court will be exceptional. No error of principle on the part of the judge was identified. Nor was the Court satisfied that the plaintiff would be prejudiced were the action to continue. The action is expected to go for some months yet. There are numerous other issues to be dealt with. There was no reason to think that dealing with them would prejudice the plaintiff, should this Court hold that the judge erred in making the construction decision. In relation to the application for a stay, the Court was not satisfied that it had power to make such an order. However, it was not necessary for the Court to come to a final conclusion on this point. Even if the Court had the power, it was of the view that no grounds for ordering a stay had been made out. It was not shown that there was any risk of significant prejudice to the plaintiff were the action to proceed.
The plaintiff also applied for an order staying the trial pending the determination of the appeal against the disqualification decisions. The Court refused to make such an order. It is true that if the judge erred in making the disqualification decisions, the hearing which is continuing will be aborted and will have to begin again. As well, having heard submissions on the application for leave to appeal against the disqualification decisions, the Court was of the view that the plaintiff had an arguable case in support of its application for leave to appeal. On the other hand, even though that was so, the Court does not proceed on the assumption that the appeal will succeed. To order the trial judge to desist from further hearing the case pending the appeal, bearing in mind his decision that the case should proceed, would be a significant intrusion upon the control of the trial judge over the trial. As I have already said, the Court was not satisfied that it had power to grant a stay, although it did not come to a final conclusion on the matter. The Court also had to weigh up the prejudice to the plaintiff if there were to be a significant interruption to the trial. As a matter of practicality, the trial could not resume, if the appeal were to fail, as soon as the appeal were dismissed. If other work were to be allocated to the judge in the meantime, it would probably be some time before the judge could make himself available to resume the hearing. In the end, taking everything into account, the Court was not persuaded that a stay should be granted.
Finally, as I have already said, the Court decided that it would decide the application for leave to appeal against the disqualification decisions after hearing the merits of that appeal argued. The Court took the view that it needed to hear full argument on the facts to enable it to come to a conclusion on the application for leave to appeal. I will return in due course to that application.

The Forest Scheme

The trial before the judge arises out of a scheme under which investors contribute money, the money is used to plant, grow and fell pine trees, and the pine trees are sold as logs or as milled timber, the original investors then receiving their return.
The scheme has been in existence for many years. New investors have been recruited over the years. New plantings are made in each year and, as I understand the scheme, an investor acquires a right to a return based on the return generated by a given area of plantings in a given year. At present there are about 25,000 investors in the scheme.
The first defendant is Seas Sapfor Forests Pty Ltd (“the forest company”). It is the real promoter as well as the general manager of the scheme. It issues prospectuses to potential investors, receives money from the investors, acquires land, and plants and tends the pine trees. It is responsible for the general management of the scheme.
The second defendant is Seas Sapfor Harvesting Pty Ltd (“the milling company”). It has the responsibility, as and when directed by the forest company, to fell and to remove pine trees. These may be either thinnings or mature trees. The milling company is entitled to market and sell the logs resulting from felling thinnings and from felling mature trees. It is also entitled to mill and process the logs if it sees fit, and to sell the timber produced.
The forest company and the milling company are subsidiaries of the third defendant Auspine Limited (“Auspine”).
The trial before the judge revolves around two documents that are central to the scheme. They are the Trust Deed and the Tripartite Agreement. Each of them was entered into in 1964. The forest company and the plaintiff are parties to the Trust Deed. The forest company, the milling company and the plaintiff are parties to the Tripartite Agreement.
The Trust Deed appoints the plaintiff, IOOF Australia Trustees Limited (“IOOF”) as trustee for investors. Throughout the documents they are called covenant holders, but I will refer to them as investors. They are called covenant holders because upon them joining the scheme the forest company issues them with a covenant in terms specified by the Trust Deed. The Trust Deed is long and complex. It contains numerous covenants by the forest company intended to protect the interests of investors. These covenants are made with IOOF in its capacity as trustee for the investors. Thus, IOOF’s function in the scheme is to secure the interests of investors by enforcing as necessary the covenants of the forest company and the rights of the investors.
The Tripartite Agreement contains further covenants by the forest company and the milling company. IOOF is again a party in its capacity as trustee.
The financial arrangements, found mainly in the Trust Deed and to a lesser extent in the Tripartite Agreement, are detailed and complex, as would be expected. It suffices to summarise them in a general way. The milling company receives the proceeds of the sale of logs and timber. The milling company is to be paid all of its expenses in connection with felling, milling and manufacturing. It also receives an annual amount for depreciation of buildings and plant, and a payment of an amount equal to 12% of its issued and fully paid capital. The balance of the sale proceeds is paid to the forest company. The forest company is entitled to deduct its expenses (I will not go into the details of how they are determined) and to retain a commission equal to 5% of the net proceeds received from the milling company. The forest company then pays the balance to IOOF for distribution among investors.
The accounting required is likely to be quite complex, bearing in mind that in a given year pine trees planted in different years and having different values will be felled and sold as logs or timber. It is also necessary to bear in mind the ongoing obligations to maintain the pine forests.
The significant thing about the scheme is that the scheme is one in which the milling company is recouped for its expenses, and receives interest on its capital. The forest company is recouped for its expenses and receives a 5% commission. But it is clear that the intention is that the profits of the scheme go to the investors.
I add that the Trust Deed requires the forest company to keep detailed accounts and records, and to provide accounts and reports to IOOF. Investors in the scheme have certain rights to call for information and to call meetings.
The investors are dependent upon the forest company and the milling company for their return. The success of particular plantings, and of the overall scheme, depends upon the forest company and the milling company. IOOF is expected to ensure that they discharge their obligations.
It is implicit in the structure of the scheme that the forest company and the milling company will act in the interests of the investors.
This is a very simplified description of the scheme, but I believe that it is adequate for present purposes. On occasions I will refer to the forest company, the milling company and Auspine simply as the defendants.

The dispute over the Tripartite Agreement

IOOF has brought an action against the forest company, the milling company and Auspine. I gather that numerous issues are raised, and that they involve the proper application of the Trust Deed and of the Tripartite Agreement. In essence, IOOF claims that the forest company and the milling company have not complied with their obligations in various respects. The case raises a series of issues as to the meaning of the Trust Deed and of the Tripartite Agreement and also, as would be expected, some complex issues relating to the accounting that is required as part of the scheme.
The judge’s reasons indicate that the total claim by IOOF is for about $60M. The judge says that about $20M of that turns on the point that he decided in the construction decision.
I now come to that issue.
Clause 7 of the Tripartite Agreement provides as follows:
“The Milling Company shall market and sell and at all times use its best endeavours to market and sell all logs or timber standing or milled and manufactured by the Milling Company as aforesaid as soon as possible after the same shall have been cut or milled and manufactured and shall use its best endeavours to obtain the best market price from time to time obtained for the said timber.”

Clause 7 is obviously a central provision. The obligation to obtain the best market price for timber (in context this must mean milled timber and logs) in a sense underpins the scheme. Such an obligation would probably be implied, were it not express. The return to investors depends upon logs and timber being sold for the best price obtainable.

The Trust Deed and the Tripartite Agreement have been amended from time to time. A number of amendments were made to the Tripartite Agreement in 1983. The trustee’s power to agree to alterations to the Tripartite Agreement is conferred by cl 5, which provides as follows:
“The Trustee shall during the currency of this agreement be entitled without consulting or obtaining from the Covenantholders express or any consent or approval to make or consent to the making of such additions to amendments of or deletions from the terms and provisions herein contained and such variations in the form of this agreement or in the manner or time of performing the same as it in its uncontrolled discretions shall think proper or desirable in the interests of the covenantholders.”

I am satisfied that this clause permits IOOF to agree to variations that involve short term concessions for long term gains, or that involve concessions to the forest company or the milling company in the longer term or overall interests of investors. I do not accept the submission, if it is advanced, that IOOF could not have made concessions when the amendments were made in 1983.

In 1983 three clauses were amended or inserted at the same time. They are as follows:
“14....... The Milling Company shall during the currency of this agreement have the sole and exclusive right to do any of the following things and either in conjunction with others or to the exclusion of others, namely:
(a). to mill and process the thinnings and fully grown trees planted by the Forest Company pursuant to the hereinbefore recited agreements and sell the product therefrom
(b) subject to the approval of the Forest Company to sell in log form the thinnings and fully grown trees
........... provided that the Milling Company shall not be entitled to assign the benefit of this agreement without first obtaining the joint written consent of the Trustee and the Forest Company. Such consent may be refused without assigning reason for such refusal.
14A.If the Milling Company shall sell logs to a related company (as defined in the Companies (South Australia) Code) it shall do so at not less than the price determined as provided in the Second Schedule annexed hereto.
14B.... If the Milling Company shall cease to carry on business as a timber miller the amount payable to it pursuant to the provisions of clause 9(c) hereof shall be calculated on a capital sum of $10,000 or such other sum as shall from time to time be agreed by the Trustee.”
It is also relevant to note that the milling company is tied to the scheme by cl 15 of the Tripartite Agreement, which provides as follows:
“The Milling Company shall not during the currency of this agreement fell cut mill manufacture or sell any trees other than trees and timber planted of acquired by the Forest Company for the benefit of Covenantholders without the joint written consent of the Trustee and the Forest Company first had and obtained. Such consent may be refused without assigning any reason for such refusal.”
I make the following brief points about these clauses.
The Tripartite Agreement contemplates that the milling company will be an associate of the forest company. The milling company has the sole right to sell logs from thinnings and from mature trees (subject to the approval of the forest company). The milling company has an unqualified right to mill and to process logs and to sell their produce. In that respect the investors are pretty much in the hands of the milling company for their return. The milling company can be bypassed only if the forest company decides to dispose of all trees in log form and not to allow the milling company to handle the sale of the logs. IOOF appears to have no power to make the forest company decline to deal through the milling company.
Clause 14A contemplates sales by the milling company to a related company, and purports to some extent at least to regulate the price to be paid if it does so.
It is now necessary to refer to the Second Schedule, which provides as follows:
“........ SECOND SCHEDULE

Market Price of Logs
1.... The Forest Company shall in or before the month of June each year provide the Trustee with a list of names of suitably qualified independent persons competent to carry out an evaluation of the market value within Australia of radiata pine logs for the ensuing year.
2.... The Trustee shall select from such list a person to carry out such evaluation at the joint direction of the Trustee and the Forest Company at the cost of the Forest Company.
3.... In the making of such evaluation regard shall be had (inter alia) to general market conditions and to the quality of the trees to be felled, forest conditions and distance from mill and market of the Forest Company’s forests.
4.... The amount as certified by the valuer (hereinafter called ‘the market price’) shall be notified by the valuer to the parties hereto by the 1st day of September in each year and subject to the right of any party to have the same submitted to arbitration as hereinafter provided shall apply from the 1st day of October next following.
5.... The price payable by a related company shall be (subject as hereinafter provided):-
(a).. for the year commencing the 1st day of October 1983 the amount as agreed by the Trustee as being the average amount per cubic metre in log form earned for covenantholders as net timber proceeds in respect of the years 1973 to 1982 inclusive (hereinafter called ‘the base price’)
(b). for the year commencing the 1st day of October 1984 - the base price plus 20% of the difference between the base price and the market price
(c). for the year commencing the 1st day of October 1985 - the base price plus 40% of such difference
(d). for the year commencing the 1st day of October 1986 - the base price plus 60% of such difference
(e). for the year commencing the 1st day of October 1987 - the base price plus 80% of such difference
(f).. for the year commencing the 1st day of October 1988 and thereafter - the market price

PROVIDED that if the market price in respect of any year after that commencing the 1st day of October 1983 shall be less than the base price then the market price shall be the price payable.
6.... Any party hereto if dissatisfied with the amount of the market price determined in respect of any year may within fourteen days of the receipt of the advice thereof give notice to the other parties of its desire that such amount be submitted to arbitration whereupon at the cost of such party (and in the case of the Trustee such cost shall be a charge against the timber proceeds for that year) the question shall be submitted to an arbitrator agreed by the Trustee and the Forest Company and the determination of the arbitrator of the market price for that year shall be final and binding on the parties.”

I make the following brief points about the Second Schedule. It provides for a market price to be fixed that will operate for a period of twelve months, from the 1st October to the following 30th September. This market price, fixed by a valuer or after an arbitration, is not the same price as the best market price referred to in cl 7 of the Tripartite Agreement. The best market price referred to in cl 7 is a price that will be determined at any given time by market conditions then current. During the twelve month life of a market price arrived at under the Second Schedule, the best market price (I will use this term to refer to the price under cl 7) might be higher or lower than the market price under the Schedule. Clause 5 of the Schedule warrants consideration. The base price will be determined by amounts received in the past years referred to, and will be unrelated to current market conditions. Clause 5 clearly contemplates that if the market price has risen above the base price, then for four years the amount payable will be less than the market price. However, if the market price falls below the base price it is the market price that will be paid.
It is clear that there is an intention to permit a concession to be made in favour of a related company that buys logs, the concession terminating on 1 October 1988. But, it needs to be made clear, there is a fundamental dispute between the parties about the nature of that concession.
The other point to be made is that there is a provision for arbitration if IOOF or the forest company is dissatisfied with the valuer’s conclusion. If they both agree that the price should be higher, one would think that under cl 14A they could agree with the milling company upon that higher price. If they think that the price should be lower, then it may be that the matter would have to be submitted to arbitration, having regard to the requirement in cl 14A that the price be not less than the price determined under the Schedule.

The judge’s decision

The questions that the judge identified and posed, during the course of the trial, are as follows:
“Question 1
‘Is there a relevant ambiguity such that the parties may call (if so advised) evidence of surrounding circumstances as to the proper construction of clauses 7 and 14A of the Tripartite Agreement?’
Question 2
‘If the answer to question 1 is ‘no’, is SEAS Sapfor Harvesting Pty Ltd, in selling logs to ‘a related company’, entitled to do so at the price determined in accordance with clause 14A of the Tripartite Agreement, notwithstanding such price may be less than the price mentioned in clause 7 of the Tripartite Agreement?’ ”
The judge answered the first question in the negative. He answered the second question in the affirmative.
The judge separated out these issues after the trial had been in progress for about six months. The judge had heard lengthy openings, a good deal of argument and a fair amount of evidence. The trial still had a long way to go.
The judge says in his reasons that it was appropriate to do this because a decision on the point was relevant to the admissibility of a large body of evidence that IOOF sought to lead, and because a decision on the point would have a significant effect on a substantial part of IOOF’s claim.
The evidence that IOOF sought to lead was evidence surrounding the making and the amendment of the Tripartite Agreement. The evidence was to be led to support the construction for which IOOF contended. IOOF relied and relies upon the following passage from the judgment of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352:
“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.
It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.”
Pursuant to a direction by the judge IOOF provided particulars of the evidence that it proposed to lead. Those particulars were available to this Court on the hearing of the appeal.
The judge had these particulars available to him. But in the end he took the view that there was no ambiguity in the Tripartite Agreement which would justify resort to extrinsic evidence intended to affect the construction of the Agreement.
IOOF complains that the judge erred in deciding these questions when he did, rather than at the conclusion of the hearing. In my opinion the judge had power to proceed as he did. The inherent power that the court possesses to regulate its own procedures, as well as the power conferred by r75.02 of the Supreme Court Rules is a sufficient basis for what the judge did. The points that he decided were not hypothetical. On what the judge has said, there were obvious reasons of convenience and economy that might justify the approach that he took. That is not to say that the judge was necessarily right to do what he did. But as the judge conducting the trial he was best placed to make the judgment whether it was appropriate in the interests of justice and efficiency to follow the course that he did.
Of course, this meant that he decided the question of construction without hearing the evidence to be tendered by IOOF. But the admissibility of that evidence is a matter capable of being decided in advance, and it cannot be said that the judge was obliged to hear the evidence before ruling upon its admissibility. Moreover, as the admissibility of the evidence depends upon the Court taking the view that the language of the document is not so clear that the foreshadowed evidence could not throw light upon the meaning, it must be the case that it is open to a judge to examine the document in question and conclude that evidence about the circumstances of its negotiation cannot throw any light upon its meaning. There is the further practical consideration that if the relevant evidence was going to be lengthy, there were obvious reasons of convenience and economy for deciding the issue of admissibility early in the piece.
I therefore do not accept the submissions of IOOF that the judge lacked power to proceed as he did, or that IOOF was denied a fair hearing by the judge following the course that he did.
It was not argued that the decision could not be the subject of an appeal to this Court. It is one thing to say that the judge was entitled to decide the points when he did and in the manner that he did. It is another thing to say that the decision can be appealed. The judge’s decision on the questions of law that he identified has been drawn up and sealed as an Order of the Court. The Order determines that there is no ambiguity in the meaning of the clauses in question, declares the meaning of the clauses, and determines that the milling company can sell logs to a related company at a price less than the best market price. However, the Order does not dispose of any of the claims made in the proceedings. It has not resulted in a judgment for either party on any of the issues raised by the pleadings. It does, however, determine the admissibility of evidence proposed to be led by IOOF. The decision is an answer to a question of law arising in the proceedings, but arguably no more than that. That raises a doubt in my mind about whether the decision can be appealed: see Yule v Junek (1978) 139 CLR 1 at 14 Mason J. However, no objection to the competence of the appeal was raised. It is in the interests of all parties to have the correctness of the decision determined now. The construction decision was made by the judge on the basis that the parties would be able to test it on appeal. I therefore am prepared to proceed on the assumption that the appeal is competent, without deciding the point.
That leaves two issues for resolution on appeal. First, is there an ambiguity or, I would add, sufficient uncertainty about the meaning of cl 7 and cl 14A such that the determination of the meaning of those clauses is likely to be aided by the consideration of evidence relating to the circumstances under which cl 14A came to be introduced into the Tripartite Agreement? If the answer to that question is that such evidence should not be admitted, the remaining question is whether the meaning that the judge attributed to these clauses is correct.

Submissions on appeal

It is convenient to begin with the second issue, because if the meaning of the clause is clear, then there is no scope for evidence tendered on this point, and the only issue is whether the judge correctly interpreted the Tripartite Agreement.
IOOF submits that the forest company and the milling company are fiduciaries, or have fiduciary like obligations imposed on them by the Trust Deed and the Tripartite Agreement. IOOF relies upon that, and upon the fact that the object of the scheme is that the profits from sales (after deducting the specified returns to the milling company and the forest company) pass to the investors. IOOF argues that cl 14A cannot be intended to cut down the basic and vital protection given to investors by cl 7. IOOF makes the point that if the milling company can sell to a related corporation at a price less than the best market price under cl 7, then cl 14A would permit the milling company to transfer to a related corporation gains that would otherwise accrue to the benefit of investors. This is obviously correct, because if the best market price is higher than the schedule price, a sale to a related corporation at the schedule price will deprive investors of a return that they would otherwise receive. This Court is not in a position to say anything about the likelihood of the best market price exceeding the schedule price, or the likely impact upon investors of logs being sold at the lesser price under cl 14A. However, it is undeniable that the effect of the interpretation for which the defendants contend is to allow gains to be transferred to a related company.
In that context it should be noted that the judge records that IOOF claims that since 1989 most of the pine trees have been disposed of as logs to a related company under cl 14A. In fact, the judge records that the sales are made to Auspine and to other companies within the Auspine group. This means that Auspine, through its subsidiaries the forest company and the milling company, is in a position to direct to its subsidiaries gains that would otherwise be received by investors. This highlights how cl 14A could be used to effect a purpose contrary to what IOOF submits is the purpose of the scheme.
Drawing on that, IOOF submits that cl 14A is subordinate to cl 7, does not purport to qualify it, and that cl 14A permits sales to a related company at not less than the price fixed under the Second Schedule but nevertheless still at a price not less than the best market price under cl 7.
Before the judge IOOF conceded, indeed it was common ground, that the effect of cl 5 of the Second Schedule was that for the years referred to in subclauses (b)-(e) the price payable on a sale to a related company was the amount arrived at under the Schedule, even if that were less than the best market price under cl 7. In argument these provisions were apparently treated as reflecting a concession, for those years, made to those conducting the milling operation, with a view to achieving longer term gains for investors. The judge said:
“Clause 14A and the Second Schedule were introduced by way of amendment in 1983. It is common ground between the parties that the Milling operation was facing some difficulties at that time. No doubt the concessions (by the Trustee) in price set out in par5(a)-(e) (of the Second Schedule) for the harvest years 1983-1987 reflect what the parties then considered to be appropriate.”

In oral argument before us that concession was withdrawn, even though it had been repeated in the written outline of submissions filed by IOOF. The issue being one of law, I consider that IOOF is entitled to do that.

On the other hand, the defendants submit that cl 14A speaks for itself. It fixes a minimum price for sales to a related corporation. It is not expressed to be subject to cl 7, and one would think that if that were intended that would have been said so expressly. The submission is made that there would be little point in the elaborate price fixing scheme under the Second Schedule if, in any event, the best market price had to be paid if, at the time of a particular sale, that was higher than the schedule price. The defendants also rely upon IOOF’s concession, now withdrawn. They ask how could it be that cl 14A is not subject to cl 7 for a number of years, and then becomes subject to the operation of cl 7? They submit that the clear inference from the introduction of these changes at the one time is that they were intended to provide for some concession or benefit to an entity, being a related company, which would undertake the milling of logs sold to it, and they submit that IOOF had power to agree to this concession in the longer term interests of the investors. The concession is also made by the defendants that the effect of the words “not less than” in cl 14A is that if the best market price at a given time is less than the schedule price, it is still the schedule price that must be paid.
The approach taken by the defendants is similar to that taken by the judge. He accepted the concession made by IOOF in relation to the years referred to in subparagraphs (b)-(e) of cl 5 of the Second Schedule. That concession, and his acceptance of it, appears to have had a significant influence on the conclusion that the judge reached. Having referred to the concession, the judge went on to say:
“The parties apparently saw advantage in allowing the Milling Co to sell to a related company from 1983 to 1987 even if a concessional basis was involved. Why would the perceived advantage of related party sales (whatever that may be) not continue thereafter? It seems to me that the thrust of the agreement is that sales may be undertaken in accordance with the requirements of the second schedule without regard to cl 7 of the Tripartite Agreement.
In my view, cl 14A and the second schedule were introduced to facilitate related party transactions and not to stifle them commercially. If there be internal tension between cl 14A (not less than the “price”) and par5 of the second schedule (“the price payable shall be”) then in my judgment that conflict should be resolved so that the terms of the second schedule will prevail and over-ride the obligation of cl 7 of the Tripartite Agreement requiring best endeavours to secure best market price. I do not consider that there is an ambiguity such that resort should be had to extrinsic evidence. I consider that cl 7 provides appropriate protection to the Scheme and its investors in one situation whilst cl 14A provides a different form of protection in another situation. Clause 7 provides the protection of the current market; cl 14A provides the protection of an evaluator’s prospective assessment of the year ahead. I do not consider that both forms of protection operate concurrently.”
The judge explained the reference in cl 14A of the Tripartite Agreement to the price being “not less than the price determined ...” under the Schedule as follows. He said that it enables the trustee and the forest company to agree that the price may be higher than the price fixed under the Second Schedule. In the interests of investors, they are not able to agree upon a price lower than that fixed by the valuer. If that is their desire, that can only be done as a result of an arbitration. This is to prevent an inexperienced trustee making an agreement disadvantageous to investors. As well, the judge said, the ability to agree a higher price ensured that a dispute under the Second Schedule could be compromised, thus removing any doubt that a dispute under the Second Schedule is in truth an arbitration. The judge referred to authority on that point: see Santos Ltd v Pipelines Authority of SA (1996) 66 SASR 38 at 49 Debelle J.
I do not find the meaning of the clauses in question by any means as clear as the judge did. First of all, as I have already said the judge proceeded on the basis that it was common ground between the parties that when the amendment was made the milling operations were facing some difficulties, and the four year price concession was seen as reflecting what the parties thought to be appropriate in the circumstances. Even though that was common ground, proceeding on that basis the judge did make use of surrounding circumstances to assist in the interpretation of the Tripartite Agreement, but he has selected just one aspect of the surrounding circumstances. As well, as I have already said, in submissions before us it was no longer conceded by IOOF that there was a price concession for a four year period. I also find the judge’s explanation for the words “not less than” a rather complex one for something that might more readily be read as having a much simpler explanation.
When one considers the judge’s reasoning, one is driven to ask what is left once the concession made by IOOF is removed? The position then is that IOOF’s argument rests ultimately on the underlying purpose of the scheme, the making of gains for the investors, and the incongruity of allowing gains to be transferred to a company related to the milling company. The argument of the defendants is that the introduction of the amendments, and the detailed provisions for arriving at a minimum price for sales to a related company, strongly suggest that such sales are not to be controlled by cl 7.
I am conscious of the fact that the trial judge had a good deal of time, during the course of the trial, to reflect upon the meaning of the Tripartite Agreement, and the submissions that were put to him. But, to my mind there is force in each of the rival meanings. If anything, I am attracted to the conclusion reached by the trial judge, although my reasoning to that result would differ somewhat from his. But I do not agree that, on its face, the relevant part of the Tripartite Agreement is susceptible of only one meaning. The Agreement operates in the context of an industry and dealings between two participants in the industry. Evidence about the operation of the Agreement in the context of the industry is likely to assist in determining its meaning.
It is quite possible that a better understanding of the circumstances under which the amendments were made in 1983 would throw real light on the meaning of cl 14A. For example, it may well be that in 1983 there was recognition on all sides that the milling operations would achieve a better return for investors if sales could be made to a related company and if they could be made exclusively by reference to the price fixed under the Second Schedule. In this respect it seems to me, as it happens, that some of the evidence that IOOF wishes to adduce might support the defendants’ submissions rather than those of IOOF.

I have considered the written summaries of the circumstantial evidence that IOOF sought to tender. I have to say, in fairness to the trial judge, that I suspect that a good deal of it would be of no assistance at all in construing the relevant clauses of the Tripartite Agreement. But that is not to say that none of it would.

Conclusions on the construction decision

In my opinion, considering the Tripartite Agreement and the Trust Deed on their terms, each of the approaches to the meaning of clauses 7 and 14A is arguable. It is quite possible that evidence as to the circumstances in which cl 14A came to be added, and evidence about the manner in which the forest scheme was operated, will be admissible in relation to and throw light upon the meaning of these clauses.
It follows that the judge should not have made the construction decision without hearing that evidence, or at least without considering in greater detail the nature of the evidence and its relevance to the meaning of clauses 7 and 14A.
It may be that, at the end of the day, the judge’s construction decision will be proved to be correct. But the decision should not be made without considering the evidence that the parties wish to tender.
That is not to say that it is open to the parties to tender whatever evidence they wish. There is every reason to be concerned about the length of these proceedings. My own impression is that much of the evidence that IOOF wishes to tender on the construction decision is not admissible on that basis because it will not assist the Court. I do not know what evidence the defendants might wish to adduce. The judge is quite entitled to keep a tight rein on the evidence admitted on the basis of its relevance to the construction decision.
For those reasons I would allow the appeal against the construction decision. I would do so not on the basis that the judge’s decision is necessarily wrong, but on the basis that the relevant clauses are susceptible of more than one meaning and accordingly the parties should be permitted to adduce evidence of the circumstances surrounding the introduction of the relevant clauses into the Tripartite Agreement, to the extent that that evidence may assist in determining the meaning of the clauses.

The background to the disqualification decisions

It is not possible to appreciate properly the issues that arise in connection with the disqualification decisions, unless one has an understanding of the sequence in which and circumstances in which the issue of disqualification arose. To understand this it is necessary for me to set out, at some length, what passed between the judge and counsel.
But before I do that, it is necessary to put the disqualification decisions in their context in the trial.
This is complex litigation. It was estimated that the trial would occupy some six months, but it has already gone longer than that. The opening of the plaintiff, a view, an outline of the case of the defendants and some preliminary matters occupied about six weeks.
At various stages during the trial and, indeed, before it commenced, the judge raised with counsel the prospect of separating and resolving discrete issues as the trial progressed. The plaintiff always opposed such a procedure as did the defendants on some occasions, although the judge received support from the defendants on other occasions. The judge continued with this approach throughout the trial and, from time to time, identified issues which he suggested could be resolved separately. This became a source of continuing dispute between the judge and Mr Abbott QC, who appeared with Mr Blue for IOOF.
The transcript reveals that the judge appreciated the difficulties in adopting such a procedure. Nevertheless, he maintained the view that various issues could be resolved in that way.
On occasions he also considered giving a direction that the evidence of the parties should be given, limited to a particular issue, and that the issue be decided before other evidence in the trial was adduced. These matters were mentioned from time to time during the opening by Mr Abbott QC. Before the opening was completed, the judge said that he favoured approaching the trial in this way.
The judge remained of that view throughout the trial. His purpose was clearly to shorten the length of the trial. He made it plain on many occasions that he was acutely aware of the cost to all concerned of such a very long trial. If necessary, he was prepared to conduct a trial within a trial hearing evidence relevant only to a particular selected issue. He indicated that he had in mind to enter judgment on any issue resolved in this way. At one stage he said:
“Whatever I did I would give an intimation of my reasons and enter judgment on that particular issue when I came to deal with other issues. But somewhere in that case it is necessary to make rulings, whether the parties like it or not, otherwise you just let everyone put in everything they want and there is an absolute lack of discipline in the case.”

The judge made it clear that he was going to “force an agenda” on the parties.

The defendants from time to time made submissions as to the problems which could arise in relation to some matters if that course was adopted, why it would be inappropriate to proceed in that manner with respect to other issues, and that such a course could be beneficial with respect to yet other issues.
The attitude of the plaintiff to the approach of the judge was summarised by Mr Blue when arguing applications for leave to appeal against certain decisions by the judge, including the construction decisions. He submitted that the parties had come to trial on the basis that all of the evidence would be heard, submissions made and one final judgment given at the end of the trial. However, what had happened, as he put it, was that the sword had been taken to various parts of the plaintiff’s case with the result that there was uncertainty about how much of the case was left. Furthermore, he contended, there was no assurance that the trial would proceed to its conclusion with all evidence from all parties being given. He pointed out that a consequence of what he called the fragmented approach was that the plaintiff no longer knew what evidence could be adduced. He contended that the construction of documents and any discrete issues of law should have been determined before the trial commenced, so that any appeals could have been heard and determined and the trial could then proceed in an orderly manner. He submitted that IOOF had embarked upon the trial on the basis that all the relevant evidence would be given, and that IOOF would be greatly prejudiced if denied the opportunity before the trial concluded to appeal against various orders and decisions which had been made.
I will now deal with the matters that led to the application to the judge that he disqualify himself.

The construction issue

At an early stage of the plaintiff’s opening, the judge raised the possibility of separating out the issue of the construction of the Tripartite Agreement. He raised it again about a week later. He said that after Mr Abbott’s opening and the brief opening thereafter to be given by Mr Besanko QC for the defendants, he was determined to get to the point where the construction of that agreement could be considered. He said he might have to hear Mr Abbott again and then said:
“.... because I’m still of the view that this case may be capable, a lot of issues got rid of if we get the document construed. It may not be possible to do it, but I am certainly looking at the possibility.”

Mr Abbott opposed that suggestion. The judge went on to say that he was looking for ways to save the parties money. At an early stage of discussions about separating out the construction issue, Mr Abbott argued that evidence would have to be led to enable the correct meaning to be determined and to permit proper consideration of other aspects of the plaintiff’s case which, it was submitted, would remain regardless of the meaning given to the Tripartite Agreement. An example is the claim that the defendants owed fiduciary obligations to the plaintiff.

The defendants eventually indicated some support for the separation of the construction issue. Mr Besanko contributed to the discussions about the form of the questions that might be determined as separate issues.
As the trial progressed, the separation of the construction issue was discussed from time to time. On occasions the judge indicated that Mr Abbott had persuaded him that he should not deal separately with the construction issue.
The judge informed the parties of what he identified as the benefits of this course, which may briefly be described as eliminating issues about how the price should be calculated for past and future years resolving issues about certain evaluations under the Schedule and resolving the question of whether cl 7 of the Agreement had any work to do. The judge expressed the view that “it would get rid of a big section of this case” if he decided the construction issue. He received support from the defendant’s counsel on the basis that if the judge concluded that the points to be made by the plaintiff were not arguable, the judge should say so. The judge indicated that he was prepared to do so.
It is clear from the transcript that by this stage, late in 1998, the judge had a tentative view about the true construction of these clauses which view was favourable to the defendants. He received support from the defendants to separate this issue. On 11 January 1999 the judge announced that he was going to take the course of construing relevant trust documents and clauses 7 and 14A of the Tripartite Agreement. He expressed his tentative view on the meaning of these clauses, which view was adverse to the case of the plaintiff. This tentative view also included the rejection of the claim that fiduciary obligations were owed to IOOF, which was an important part of its case.
The judge informed Mr Abbott that he must have the opportunity to be heard but he did not want to spend a lot of time dealing with arguments based upon clauses 7 and 14A because it appeared perfectly clear to him what the clauses meant. He went on to say that although Mr Abbott must have the opportunity to be heard, the issued had been agitated “pretty fully”. The judge said he would give a judgment and that the parties could test his decision in an appeal.
The next day the learned judge made his position clear:
“HIS HONOUR: Mr Abbott, I think we have reached the point in this case where I’m going to run the case, I’m going to decide what I think is the efficient way of running it, and I am most keen to decide the point, and whether Mr Besanko is skirting around the point, I don’t really care. I think that this is the way to go, but I want all the help that you can both give me as to the problems that are associated with it to make sure that I don’t foul it up.”
Although Mr Besanko expressed cautious acceptance of the proposal, it was undertaken at the initiative of the judge and over the objection and protest of the plaintiff.
Eventually, Mr Besanko put forward the proposition that the judge should construe the agreement. Mr Besanko reserved the right to call Codelfa evidence should it become necessary.
The judge formulated the questions to be decided with the assistance of the defendants’ counsel. Mr Abbott maintained the plaintiff’s objection to this procedure. The judge said that he did not require an application to be made in writing. He then stood the matter aside whilst another issue in the trial was resolved. At this time the judge also made it clear that what he had earlier described as a tentative view of the true construction of the agreement was correct and that any other view was untenable. He said that he considered that the construction of cl 14A was really very clear. Mr Abbott put to the judge that he was prejudging the matter.
The judge then proceeded to rule upon what he described as the application of the defendants. He identified the two questions to be decided in the same terms as ultimately accepted, and set out earlier in these reasons, except that in the first question reference was made only to the defendants calling evidence. He said that the plaintiff and the defendants claimed to have extensive material available upon which they sought to rely and that in the circumstances any decisions which he made on those questions could only be regarded as provisional. He said he was not persuaded that the procedure would save costs and he then refused what he again described as the defendants application. He deferred the application of the plaintiff for costs. Mr Abbott protested at the judge not having required Mr Besanko to reveal his Codelfa evidence. The judge directed that evidence of a witness, Mr Moore, be called.
On the following Monday, 15 February 1999, the judge raised the question again. He said that he was still considering separating the construction issue and he wanted to have particulars of the Codelfa evidence which the plaintiff wanted to call.
Mr Abbott objected to certain observations of the judge and did so in strong terms. He submitted that what the judge was doing was an abuse of the processes of the Court because he was requiring these particulars, not to elucidate the relevance of evidence to be given by Mr Moore, but for the purpose of reviving the separation of the construction issue despite the application by the defendants having been recently dismissed.
The judge did not require Mr Besanko to particularise the evidence of this nature which the defendants wished to call if relevant, perhaps for the reason that the primary submission of the defendants was that the relevant clauses of the agreement could be construed without extrinsic evidence.
The contention that the judge was acting in abuse of the process of the court is misconceived. It is parties who can abuse the process of a court, not the Court itself. I mention the matter because it is indicative of the intensity of the exchange between the judge and Mr Abbott at the time. Despite the protests of Mr Abbott, the judge directed the particulars to be given. Mr Abbott objected to this issue again being considered at this stage. The judge said that it was his duty to conduct the case in a way “that clears away matters which are unarguable and save time”. Once again, Mr Abbott asserted that it was an abuse of the process of the Court by the judge. The judge again expressed the view that the point was unarguable, meaning the plaintiff’s case on the construction of the Tripartite Agreement. However, he said he was not going to express a final view until the plaintiff had had the opportunity to indicate the Codelfa type evidence it wanted to call. He said that he would then ask Mr Besanko to go first and Mr Abbott to respond.
Mr Abbott refused to comply. He said he wanted the judge to give reasons for giving a direction to give particulars of the Codelfa evidence “when it is clear that Your Honour is going to rule against us”. He asserted that the judge was not giving a fair trial to the plaintiff. It is appropriate to set out part of this assertion:
“Every day we are met with oral objections and intimations from Mr Besanko about applications he is going to bring and demands and directions from your Honour. We cannot, quite frankly, function in this atmosphere. We are endeavouring to confine the issues at this stage to the admissibility of Mr Moore’s evidence, to find that your Honour goes off on these expeditions raising, and now it looks as though Mr Moore’s evidence is receding even further into the distance, that is the time he is getting into the witness box, and we say this is not giving the plaintiff a fair trial. We object to your Honour doing this. We say your Honour has no power, in the circumstances your Honour is doing it, to give these directions, and we require your Honour to give reasons as to why you are doing it.”

Both counsel made brief opposing submissions and assertions. Mr Abbott asserted that the judge was not dealing with the parties in an even handed way in that he was requiring particulars of the proposed evidence from the plaintiff but not from the defendants. Mr Abbott made his complaints in strong terms.

On 16 February 1999 the judge gave a direction that the plaintiff give particulars of the Codelfa type evidence it wished to adduce relating to the construction of cl 14A of the Tripartite Agreement.
On 4 March 1999 the judge decided that he would hear the argument on the two questions relating to the construction of cl 7 and cl 14A. He intimated that he would decide the matter in accordance with the defendants’ case and that there would then not be much left in the case. He said he would decide the case on the pleadings but he would look at the particulars of the Codelfa evidence in considering whether there was an arguable case, presumably, by the plaintiff.
Mr Abbott again protested. He contended that the judge was not dealing with the matter fairly because the defendants had not been required to give particulars of their Codelfa evidence so that all such evidence could be considered before deciding how to approach the construction issue. The protest may be summarised by repeating part of Mr Abbott’s submission:
“Your Honour has called on us, not to hearing whether we have a case but to assist your Honour in your Honour’s intention to decide we haven’t got a case, and that’s what I object to and that’s what I have objected to all along.”
On 5 March 1999 the judge directed that further documents be produced relating to the Codelfa evidence.
It is necessary to say something more about the other matters that the judge suggested could be decided separately.

Clause 10 of the Trust Deed

Clause 10 of the Trust Deed imposes obligations upon the forest company to do what it can to secure reasonable returns for the covenant holders. At an early stage of the trial the judge raised the issue as to whether the plaintiff had pleaded that the obligations required the obtaining of the best market price for logs. He said that the pleading was inadequate in that it had not been alleged that there was a breach of these obligations. Mr Blue submitted to the contrary but the judge remained unconvinced. On 17 November 1998 the judge intimated that he was of the view that the breach of obligation had not been pleaded and that he would not allow a case on that matter to be pursued unless the Statement of Claim was amended.
Later the judge raised the possibility that such an amendment should not be allowed because it would raise an argument not open on the proper construction of the Trust Deed. He queried whether he could deal with this matter without considering the construction of cl 7 and cl 14A of the Tripartite Agreement. Perusal of the transcript reveals that the judge returned to this matter from time to time. On 3 December 1998 he said he did not think that the plaintiff’s case on clauses 7, 14A and 10 could succeed, and said that if that was so, it would have a big impact on the issue of costs. Again the judge returned to the construction of cl 14A of the Tripartite Agreement. He then expressed the view that the construction of these three clauses and the case based upon them should be singled out as a separate issue with the parties being required to adduce evidence as to the background to the clauses. He proposed that these issues should be dealt with immediately after the Christmas break. He expressed a view about cl 14A of the Tripartite Agreement which was entirely contrary to the plaintiff’s case, and said that his view would have the effect of overriding the case based upon cl 10 of the Trust Deed. He went on to say that he could not see any basis for imposing fiduciary obligations on the defendants.
On 15 January 1999 the judge ruled that he would not allow an amendment to the Statement of Claim in relation to cl 10 of the Trust Deed because he considered cl 14A of the Tripartite Agreement to be paramount.

These intimations and the ruling were given despite the submissions of the plaintiff’s counsel that the plaintiff’s case on this matter was soundly based and had been adequately pleaded.

Model case on price

The next matter which the judge proposed to treat as a separate issue was what the plaintiff described as the “model” case on price. This aspect of the case was to be based upon the use of information for the purpose of establishing the model as opposed to actual market prices. This is an inadequate description of a complicated procedure but it is sufficient for present purposes. The issue was raised by the judge on 16 March 1999 after his resolution of the construction of cl 7 and cl 14A of the Tripartite Agreement. At that time, he said that he would have to hear the plaintiff’s case about the matter. He then raised ways and means of reducing the amount of evidence to be given on the issue. Later he considered the possibility of hiving off further issues but did not specifically address the model case in that context.

The Invalidity Issue

On 10 February 1999 Mr Besanko contended that allegations in the Statement of Claim, that evaluations made pursuant to the Second Schedule of the Tripartite Agreement were a nullity were, as a matter of law, unarguable. This issue arose at this time in the context of the evidence to be given by Mr Moore. The judge expressed the tentative view that the issue could be resolved as a matter of legal principle and that the construction of cl 14A would bear upon that issue. Later the judge invited Mr Besanko to put forward a question to be decided which would resolve this matter.
On 15 February 1999 Mr Besanko informed the judge that the defendants had given notice to the plaintiff that they intended to apply for summary judgment on this issue or, alternatively, to strike out the main paragraphs of the Statement of Claim and that he would make that application during the morning. The judge then heard some argument and intimated that the evidence to be given by Mr Moore on this issue was inadmissible. Mr Abbott protested. He pointed out that there was no application before the Court and there was no issue to be resolved. He said that when there was an application he would respond to it. The judge said that he was merely expressing his own view of the matter.
On 18 February 1999 the judge delivered a ruling. It was set out in reasons handed to counsel. He provided counsel with a list of paragraphs in the Statement of Claim which were susceptible to attack on grounds identified by Mr Besanko. The list was more extensive than that suggested by Mr Besanko.
On 23 February 1999 the judge said that the task of counsel was now to make submissions as to the application of his ruling to individual paragraphs of the Statement of Claim. However, he went on to explain that the relevant assertions in the Statement of Claim were unarguable and could not be a basis for admissible evidence. On 5 March he made a ruling in relation to the proposed evidence of Mr Moore and ruled that certain evidence was inadmissible.
The appellant claims that once again the judge had raised matters destructive of its case in addition to those raised by the respondents and ruled on them adversely to the appellant.

Arbitration Proceedings

The next matter relates to the arbitration pursuant to the Second Schedule, which was in progress independently of these proceedings. On 15 February 1999 Mr Besanko intimated that the respondents would be issuing an application for a permanent stay of the arbitration proceedings or, in the alternative, for an injunction relating to them. The basis of the application was that IOOF was seeking in the present proceedings a determination of the current market price for the purposes of cl 14A of the Tripartite Agreement, and it would be an abuse of process of the Court in those circumstances for IOOF to reserve to itself the right to go to arbitration when the very question to be determined by the arbitration was a question in the present proceedings. Alternatively, it was argued that a question of issue estoppel could arise. The defendants applied, in the alternative, to remove the arbitration into the current proceedings.
At an early stage of the proceedings, the judge had intimated that it was not his task to determine whether the evaluation or the decision in the arbitration was a correct decision. He said that it was for him to decide only if the evaluations were valid or invalid.
IOOF opposed the application for a stay of the arbitration proceedings but did not oppose their being removed into the present proceedings. On 15 February the judge gave his decision. He stood over the application for a permanent stay and the application, for an injunction which he said could be dealt with at the end of the trial. He refused the application to remove the arbitration proceedings into the present proceedings.

Restriction on evidence of Mr Moore

The appellants also point to the restrictions which the judge placed upon the evidence of Mr Moore. The judge proposed that Mr Moore’s report should be accepted as his evidence-in-chief subject to rulings as to what parts, if any, were inadmissible. However, he said on 15 March 1999 that he wanted to hear some evidence-in-chief to enable him to assess the witness. He said he thought it was unfair to have cross-examination without evidence-in-chief, a view which usually accords with commonsense and fairness. However, he went on to say that it was a question of how he should control it. He proposed that he should hear evidence-in-chief for an hour. That proposal was opposed by IOOF. Later the judge enquired whether there was any way of cutting through Mr Moore’s evidence or of avoiding his being called at all. On 16 March 1999 the judge gave a ruling which severely limited the amount of oral evidence that Mr Moore could give in chief. In accordance with this ruling, he could be asked to identify his report, whether he adhered to the opinions expressed in the report and whether the matters of fact stated in the report were true to the best of his knowledge. There had already been considerable argument and debate about the admissibility of evidence to be given by Mr Moore. The judge also ruled that Mr Moore could give evidence-in-chief about the matters which had been held to be admissible and which he had decided were reserved for oral evidence.
The next matter is the intimation given by the judge as to the approach he would take to certain expert evidence which the appellant proposed to call.
After ruling on the construction issue, the judge said that whether the defendants objected or not, he was not going to take certain evidence from Mr Moore because he could not see that it had any bearing upon the case. A little later the judge said:
“I don’t care whether he is objecting. Because defence counsel does not object, that doesn’t mean that I am going to receive evidence that I can’t see where it is going.”

On occasions the judge said that he was not going to receive evidence from Mr Moore on certain matters because he did not regard them as relevant even though the defendants had not objected to them.

PISA Scale

The appellants also point to what is said to be pre-judgment by the judge with respect to the relevance of the PISA Scale. This scale is a projection of prices likely to be achieved over a given period. On IOOF’s case, it is relevant as it formed part of the material used by evaluators when undertaking the task pursuant to the Second Schedule.
The judge made it clear that he did not think that it assisted in the resolution of any issue in the case. He first raised the matter on 8 October 1998 and periodically thereafter.
The judge gave a ruling on 16 February 1999 to the effect that the forest company could not have achieved returns based on the PISA Scale which, the appellant says, pre-judges the issue.

Calling of Mr Williams

The last matter is that the judge raised the possibility of giving a direction that the appellant call a Mr Williams as the next witness even though Mr Abbott said that he had not made any decision about that matter. The judge asked Mr Besanko whether the order of calling witnesses would have any bearing on the length of the trial. The judge took the view that he had the power to direct a party to call a particular witness in a particular order. He raised the possibility of such a direction. This matter first arose on 17 November 1998.
The judge returned to the matter on 27 November 1998. He said he could order Mr Williams to be the next witness. He raised the matter in the context of shortening the length of the trial by requiring a selected issue to be separated and resolved at that time. He raised the question of whether Mr Williams should give evidence at that time on the issue described as maintenance beyond contract (“MBC”). On 3 March, the judge said:
“I’m giving you fair notice now that it’s going to take several days to round all of this off, but there is a distinct possibility there is going to be nothing much left in this case except Mr Williams’ evidence and I think he should be on notice that he might be required at quite short notice.”

Mr Abbott objected saying that Mr Williams would have to be carefully proofed. A little later, the judge said that if he decided that Mr Moore’s evidence could not assist, Mr Williams was the only witness left.

Later I return to these matters. I have dealt with them here because they provide the setting for the disqualification decisions.

The disqualification decisions

The judge announced his decision on the construction issue on Friday 5 March 1999. On Monday 8 March 1999 the judge delivered some brief oral reasons for his decision. His written reasons were ultimately published on 31 March 1999.
On the afternoon of 17 March 1999 counsel for IOOF made an oral application to the judge that he disqualify himself from further hearing the case. It was made without prior notice to the judge. Counsel for the defendants had been told of the application at the lunch adjournment. When the application was announced, the judge questioned whether the application was based on events of that morning. No doubt the judge had in mind the principle that a party who apprehends that there are grounds for making an application that the judge should disqualify himself cannot stand by, allow the case to continue, and then make the application at some later time and in particular after a decision adverse to that party has been made: Vakauta v Kelly (1989) 167 CLR 568.
When the judge raised this question, counsel for IOOF indicated that some events of the preceding day had been “the last straw” but that the application was based upon the judge’s conduct of the trial to date. Counsel said:
“It’s not just the passage yesterday; it’s your Honour’s conduct of this trial and the way in which your Honour has dealt with the plaintiff’s case and your Honour’s refusal, we say, to deal with the evidence which the plaintiff wishes to bring forward, and in turn your Honour’s -
HIS HONOUR:          Which evidence is this, you’re talking about?
MR ABBOTT:            All our evidence. We say we’re not getting a fair trial because your Honour has not been prepared to hear our case in the way we’ve sought to present it.
HIS HONOUR:          You mean, you complain about my directions?
MR ABBOTT:            We complain about your Honour’s conduct. In particular, we complain about what’s happened since the first month of this trial when your Honour sought to hive off, or pluck out, as your Honour referred to it, legal issues. That has been an ongoing facet of the way in which your Honour has conducted this trial. All of it has been self-generated, that is generated by your Honour. It has happened repeatedly. There has not been a time when we have been able to conduct the trial without somehow or other there being behind everything a view that your Honour has that there should be issues which your Honour decides, and has decided so far, against us and over our objection. Your Honour will recall right from the start that we objected to your Honour hiving these issues off.”

In effect, the complaint being made was about the judge’s conduct of the trial more or less from the outset.

Having ascertained that that was the nature of the complaint, the judge said that he would hear counsel only briefly. The judge said he would only allow 10 minutes. Mr Abbott informed the judge that he could not possibly put his argument in that amount of time. He said he wanted to refer to authorities and to put various propositions. The judge said that whether he allowed more time would depend upon the submissions to be put. He allowed counsel to develop the submission further. Counsel said:
“Yes, so our application is that you disqualify yourself from further hearing in this case. The two main grounds are that there is a reasonable apprehension of bias on the part of the parties or a member of the public, and a denial of the natural justice, both of which, either cumulatively or on their own, have resulted in a failure to accord to the plaintiff a fair trial.
So far as prejudgment and bias is concerned, or the apparent prejudgment and bias, in our submission this flows from a decision that your Honour has obviously made that the way to deal with the plaintiff’s case is to pick out legal points we say for the purpose of avoiding hearing our evidence, because your Honour has picked them out in a way that can only work on the orders you give in the way you pick them out is against us.
The bias and the apprehension of bias comes from your decision not to hear evidence, or indeed as little evidence as possible, and we say that therefore your decisions firstly to hive off legal matters -
HIS HONOUR: When you say not to hear evidence, are you dealing with the Codelfa evidence, or Mr Montgomery’s evidence?
MR ABBOTT: I’m dealing with all the evidence. We say that the transcript demonstrates a reluctance on your Honour’s part to hear evidence which in itself would be bad enough, but it’s compounded by the fact that your reluctance to hear evidence is translated into a decision not to have to hear the evidence by hiving off in advance legal issues and ruling on them unfavourably to us. The hiving off of legal matters and the decisions you’ve made on legal matters, we say, are not fairly made on the merits because your Honour has approached them at all times with the bias that the decision must be a decision which reduces the amount of evidence. Since the amount of evidence that we’re talking about is the plaintiff’s evidence, the decisions have invariably been against us, and because the issues that your Honour has dealt with so far are issues in our case, the bias about not hearing evidence has worked to our detriment in the determination of the legal issues that your Honour has picked out. So far as a lack of a fair trial and natural justice is concerned, it is but another reflection of your attitude to not hearing evidence.
We say we’re not getting a fair trial because you’re not hearing our case; you’re not allowing us to present the evidence in the way that we seek to present it. The hiving off has been done under the guise of you saying that this is going to save time and cost and evidence, without your Honour being able to identify what time, what cost, what evidence. They’ve always been generated by you, not by the parties, except in the last occasion when your Honour invited Mr Besanko to produce his questions. Your Honour has done it repeatedly since this trial commenced, and your Honour has resolved the legal issues against us and, indeed, has embarked on the resolution of them over our continued objections. So, with regret I say that as far as an observer would discern, the motivation behind such conduct is a refusal or a reluctance to make findings of fact after hearing the evidence which in turn is translated into a decision to hive off legal matters in advance of hearing the evidence, and try and decide them in a vacuum so that the evidence thereafter can be confined.”
Once it was clear that this was the basis of the application, the judge clearly took the view that it lacked any substance. He was not prepared to allow counsel to develop the submission any further. The following exchange occurred:
“HIS HONOUR:           I am not prepared to hear you further on that. In my view there is absolutely nothing in this, and I decline to disqualify myself and I require you to get on with the trial. I have told you my attitude, and I am not going to have this filibustering going on.
MR ABBOTT:            I reject utterly there is filibustering.
HIS HONOUR:          Don’t start me on that topic.
MR ABBOTT:            I find it an amazing comment.
HIS HONOUR:          I have listened to you for days and days simply reading the transcript and I am not going to do that again. You are going to get on with this case. I direct you to call Mr Moore forthwith. Mr Abbott, I am directing you to call Mr Moore immediately. Are you going to do that?
MR ABBOTT:            No, I want to present my argument.
HIS HONOUR:          I am not going to hear you further. I am directing you to call Mr Moore.”

The judge insisted that the case proceed.

Counsel continued to object, insisting that he wanted to develop his submission. The judge insisted that the trial continue and directed the plaintiff to call Mr Moore, who was understood by the judge and counsel to be the next witness. He refused to allow Mr Abbott to develop his argument further, or to submit a list of authorities and he refused to adjourn the trial to enable his refusal to disqualify himself to be tested on appeal. He said he did not want to hear Mr Abbott’s argument. Mr Abbott persisted and the judge said that he would not hear him any further. The judge threatened him with an order as to costs. The judge said that counsel was wasting time. Some of these things were said more than once. This occurred in the course of what was obviously a heated exchange. The judge allowed a short adjournment prior to Mr Moore being called to give evidence.
That was the first disqualification decision. Next morning, on 18 March 1999, the judge gave some brief reasons for the first decision. Having recited the circumstances of the first application, the judge said:
“Thus, we have the case where the plaintiff keeps its cards up its sleeve and plays its hand in steps of its own choosing and in choosing its own timing. I am struck by the injustice of a party participating in and, indeed, seeking adjudications throughout yesterday morning and into the afternoon and then applying to disqualify the judge based on events removed in time from that day. It seems to me that by seeking, without demur, my jurisdiction as trial judge, the plaintiff cannot then be heard to complain by reference to a chain of events culminating in what the plaintiff calls ‘the last straw’ by reference to decisions made on the previous day.
I should observe that the plaintiff made this application without notice to the defendant’s counsel, who obviously would have needed to obtain specific instructions upon a matter, which if I had acceded to the application, would have cost the parties, I estimate, some millions of dollars.”

Counsel for the defendant then sought to correct what his Honour said, saying that he had been told of the application at or before the lunch adjournment. The judge accepted that correction. The judge then went on to say:

“There are a number of matters which concern me about the conduct of this case by the plaintiff.
1......... Counsel has made an issue of routine and well-established matters which simply do not deserve the airing they received. For example, the requirement of the usual undertaking to call evidence to underpin the identified matter relied upon by the experts is a recent example. A dispute as to the trial judge’s powers to give routine directions at trial is another example.

I therefore propose to proceed on that basis. It follows that the application for leave to appeal against the disqualification decisions can be refused, without any injustice to IOOF.

Actual bias

As I have said on a number of occasions, IOOF submits that this Court should make a finding, not just that there is a reasonable apprehension that the judge will not approach the matter with an impartial and unprejudiced mind, but that the judge is in fact prejudiced against IOOF.
It is only rarely that courts have found actual bias to exist: see Sun Zhan Qui v Minister for Immigration and Ethnic Affairs (1997) 151 ALR 505. In Webb v The Queen (1994) 181 CLR 41 at 74 Deane J said:
“I would, however, indicate that I consider that the reasonable apprehension test is of such broad and general application that it is unnecessary and inappropriate for an allegation of actual bias to be raised before or determined by an appellate court.”

Despite what his Honour said, it may be that in exceptional circumstances it will be necessary or appropriate for a court to entertain a submission of actual bias on the part of a judicial officer and to make the appropriate finding. However, I wholeheartedly agree with his Honour’s observation that the common law test for bias is of sufficient width to make it unnecessary for an allegation of actual bias to be made. If the reasonable apprehension test is satisfied, it will be unnecessary to consider an allegation of actual bias. If that test is not satisfied, I find it difficult to understand how an allegation of actual bias could succeed. As well, an allegation of actual bias raises difficult issues for the Court. It is a serious allegation to make. Bearing in mind that, in proceedings by way of appeal, there is no means by which the subject of that allegation can be heard, how can the Court deal fairly with the allegation? I appreciate, as was pointed out by North J in Sun Zhan Qui, that actual bias may exist even if the decision maker did not intend or did not know of his or her prejudice (see at 563-564). However, to say that does not, in my respectful opinion, detract from the seriousness of such an allegation.

In the present case I see no need to consider the submission that the judge was actually biased. Everything that can be argued in support of that submission can be considered in relation to the submission that there was a reasonable apprehension of bias. I consider that it is regrettable that the submission was made at all. In my opinion the matters relied upon provide no support for the allegation made.
Hereafter I will confine my attention to the issue of a reasonable apprehension of bias.

Bias - the Ridgeway issue

It is difficult on appeal to put oneself in the position of the trial judge. But, I must say, I consider it regrettable that the events that occurred in Ridgeway were given the attention that they received.
The judge’s complaint about Mr Abbott’s conduct seems to have been that Ridgeway was an interrupted hearing, that at times the judge listed the case to meet Mr Abbott’s convenience, that at a certain stage when the case was due to resume at a time fixed to meet Mr Abbott’s convenience Mr Abbott ceased to act as counsel, but he did that shortly before the case was due to resume and that he did not provide an explanation to the judge for doing so. The judge obviously thought that Mr Abbott had been discourteous to him in failing to offer an explanation. The judge seems to have thought that Mr Abbott was obliged to see the case through, at least if the reason for his departure was only that the client lacked the funds to continue to retain him. These matters led to a protracted and unedifying debate between the judge and Mr Abbott.
With all respect to the judge, I do not understand the importance of these matters to the case before the judge, or even their relevance. There was no particular reason to think that Mr Abbott was going to cease to act as counsel for IOOF. Perhaps the judge raised Ridgeway because he thought that Mr Abbott was being discourteous again. The transcript contains statements by Mr Abbott that demonstrate an unwillingness to accept that, right or wrong, the trial judge’s rulings had to be accepted. The judge obviously considered that he was not receiving from Mr Abbott the assistance that a judge is entitled to expect from counsel. But these were matters to be dealt with on their merits, and hardly required harking back to Ridgeway. I regret to say that it seems to me that in raising Ridgeway the judge introduced an unfortunate and significant distraction from the management of the case before him.
But a complaint by a judge that counsel has been discourteous, even in an earlier case, cannot of itself give rise to a reasonable apprehension of bias towards the client.
Nor can the fact that the judge would not accept Mr Abbott’s explanation for his conduct in Ridgeway. The issue of whether Mr Abbott was under any obligation to continue to act as counsel in Ridgeway involves a number of matters that were not suitable for investigation during the case before the judge. Nor is it appropriate for me to express any view at all on the matter. The judge should not have pursued the issue as he did, at least once Mr Abbott had offered an explanation for his conduct. The judge should have left the matter there.
The judge’s refusal to accept Mr Abbott’s explanation would cause a fair minded observer to consider that the judge did not accept what Mr Abbott said about his conduct in Ridgeway, and to conclude further that the judge thought that in Ridgeway Mr Abbott had not fulfilled a professional obligation to his client. It is unfortunate that that conclusion should arise, particularly as the IOOF case was not the occasion to resolve these matters.
But, having read much of the transcript, I consider that the fair minded observer would not have been led by those conclusions to conclude that the judge’s attitude towards Mr Abbott would or might affect his approach to the case for IOOF. The fair minded observer would appreciate that what happened in Ridgeway, and the judge’s attitude towards Mr Abbott, were an aspect of the continuing controversy between the judge and Mr Abbott over the proper conduct of the case. I do not consider that the fair minded observer would have had any reason to think that these adverse views of Mr Abbott would or might affect the judge’s assessment of IOOF’s case. There is no reason to think that the judge identified IOOF with its advocate. As well, the judge made it absolutely clear that his concern was with the efficient and fair conduct of the case. The attitude towards Mr Abbott to which I have referred emerged in the context of a dispute about the manner in which the case should be conducted, and in the context of criticisms by the judge of Mr Abbott’s conduct of the case. It was obvious that Mr Abbott and the judge had diametrically opposed views about the appropriate conduct of the case. It was quite clear why each of them adopted the view that he did. The intrusion of personal elements into the submissions was unfortunate. I am fully conscious of the importance of the appearance and substance of impartiality and fairness, but I cannot agree that the fair minded observer would have thought that the judge’s critical view of Mr Abbott would prevent him from considering IOOF’s case fairly.
I consider that the fair minded observer would have concluded that the judge had formed a firm view about the appropriate conduct of the case, was critical of Mr Abbott’s conduct of the case (I will return to this) and was critical of Mr Abbott and annoyed because Mr Abbott continued to resist the judge’s approach, and at some length, at every opportunity. There is nothing in the exchanges that, to my mind, would cause the fair minded observer to conclude that the judge’s approach to the case might have been influenced by his attitude to Mr Abbott, or that the judge’s future approach to the case would be influenced by that attitude. What the fair minded observer would have concluded is that the judge and counsel continued to argue at length over the same issues and, at times, in rather personal terms.
The Ridgeway issue caused some sharp exchanges between Mr Abbott and the judge. On occasions Mr Abbott failed to treat the judge and his rulings with appropriate respect. The fair minded observer would have understood that some of the exchanges about which complaint is made occurred in the heat of the moment. The transcript demonstrates that at other times there was nothing untoward in the dealings between the judge and counsel. The fair minded observer would have noticed that.
It is a pity that matters got to the stage that they reached. Ridgeway was but one of a number of matters the subject of vigorous exchanges. The fair minded observer would not have apprehended that those exchanges, and the attitudes that the judge expressed, might cause the judge to fail to consider IOOF’s case impartially.

Bias - the attitude manifested by the judge towards counsel

I move now to the related but broader issue that the judge’s attitude to counsel on other matters manifested bias towards IOOF. I do not overlook the submission by IOOF that the Ridgeway incident had poisoned the judge’s approach to Mr Abbott. There are a number of matters relied upon by IOOF under this head.
First of all, there is the suggestion, implicit in some of the judge’s questions and comments, that the judge thought that counsel and the solicitors for IOOF might in certain respects have been acting without instructions from IOOF. Linked to this is a further and related implication, that the judge thought that they might not be considering IOOF’s interests. This further implication, and to some extent the former, could be drawn from the judge raising the possibility of orders for costs against counsel or the solicitors.
Secondly, there are the various criticisms that the judge made of Mr Abbott and of his approach to the case. A number of these are recorded in the extracts from the transcript I have set out above. They disclose that the judge thought that Mr Abbott’s approach to the case was not conducive to an efficient disposition of the case. His remarks could be understood as reflecting a view that Mr Abbott was not conducting the case appropriately. On occasions the judge in terms accused Mr Abbott of wasting time and of filibustering.
Thirdly, there is the fact that on occasions the judge refused to hear Mr Abbott on a point, or set strict limits to the time that he would allow Mr Abbott. The judge disposed of the first bias submission in a peremptory fashion. The judge indicated that some of the submissions put in support of the bias submissions were submissions that no responsible counsel would put, and might warrant disciplinary proceedings or proceedings for contempt.
Fourthly, it is submitted that the judge manifested an underlying hostility towards Mr Abbott. This is really a general submission that draws on the particular matters identified by me.
In this summary I have not dealt with every matter raised by counsel for IOOF. I have attempted to capture the essence of the submission.
I begin with the first group of matters. There are, regrettably, occasions when it is appropriate and necessary for a judge to order that costs be paid by a party’s legal representatives. If a judge thinks that a course of conduct being pursued in an action is such that the possibility of such an order arises, it is appropriate for the judge to raise the matter. How the issue should be handled is a matter of judgment. Likewise, if the judge considers that a course of action being pursued in an action might result in a punitive costs order being made against the client, the judge is entitled to raise the matter if the judge thinks fit.
These are matters that require some care. In the present case the judge considered that some of the submissions being put to him were so unreasonable that the possibility of a costs order against the legal representatives arose, or alternatively the possibility of a punitive order against IOOF. The judge thought that, in certain respects at least, the bias applications were completely misconceived.
The fact that the judge raised the concerns he did cannot, of itself, support a claim that the judge is biased against the relevant party, or has an adverse attitude to the party’s legal representatives that might infect the judge’s approach to the party’s case. It might be the duty of the judge to raise these issues.
As it happens, with great respect to the judge, I consider that he took too strong a view of the bias applications. However, in fairness to him it has to be borne in mind that there were four separate applications over a short period of time. Some of the grounds (I will come to these later) were misconceived. As to others, there was an element of re-arguing matters already dealt with. I respectfully consider that the judge did go further than was desirable in questioning whether IOOF understood and had authorised the approach being taken. But it cannot be said, if the judge took the view about the submissions that he apparently did take, that the judge was not entitled to raise the points that he did raise.
The remarks that the judge made would not cause the fair minded observer to suspect impartiality. That person would appreciate that the judge strongly disagreed with the submissions being put to him, and with the approach of counsel, and was annoyed by some of the matters put to him. The fair minded observer would also understand that occasionally judges may get annoyed, like any other person. The judge’s attitude to the submissions necessarily implied that the judge thought that someone was acting irresponsibly. But the occasion for a judge to express this view can arise in the course of a trial, and the fact that the judge does so cannot, in my opinion, be pointed to as an indication of bias.
I turn to the second group of matters.
The fair minded observer must be taken to be acquainted with the course of the whole case. That observer would have seen that almost from the outset the judge and Mr Abbott had differed on the appropriate approach to the case; that the same issues tended to keep arising and to be debated again; that Mr Abbott not only maintained his point of view, but was inclined to argue at length issues on which the judge had already indicated a firm view; that the judge was greatly concerned by the ever increasing length of the case; that Mr Abbott engaged in some strident criticism of the judge’s approach and at times was reluctant to accept the judge’s authority.
The fair minded observer would appreciate that the judge had, as the case unfolded, formed pretty definite views about its proper management, views to which Mr Abbott was implacably opposed. The fair minded observer would realise that the judge and Mr Abbott were going to continue to disagree on these issues, and that to the judge Mr Abbott’s continued opposition would appear to be obstruction to the sensible conduct of the case. The fair minded observer would understand that the judge need not and should not permit these matters to be constantly re-agitated, and also that when the issues on a point were clear, time limits for argument on them could be set. The fair minded observer would realise that on certain issues, particularly of procedure, the judge had obviously made his mind up, but that that was inevitable in a long running case like this. The observer would conclude that the point had been reached at which Mr Abbott should, without having to concede the correctness of the judge’s course, recognise the judge’s authority, conduct his case accordingly while maintaining his opposition, and consider his client’s remedies at the end of the case.
The course of conduct of the judge on these matters is not indicative of bias. It simply reflects the fact that in a long trial certain matters, particularly of procedure, will be resolved as the case progresses, and may have an on-going effect on the conduct of the case. In a long case the losing party on such issues simply must await the remedy of an appeal. The judge was entitled to adhere to the view that he had taken, and to insist that procedural issues that he had decided not be re-argued unnecessarily. It may be that at the end of the day the judge will be shown to be wrong. It may be that some of his criticisms of Mr Abbott’s approach will be shown to be wrong. But the remedy is an appeal, not a complaint of bias during the trial.
What I have just said really disposes of the third group of matters, subject to one point. With all respect to the judge, I consider that he should not have dealt with the first bias application in the peremptory manner in which he did. He thought that the application was precluded by the delay in it being made, and that as well it involved re-arguing matters he had already decided. But the application was really based upon the cumulative effect of what had gone before. In my opinion Mr Abbott was not precluded from raising it. As well, a complaint like this requires careful consideration to avoid the impression that the judge is no longer impartial. However, in due course the judge did hear counsel on the relevant issues. Having regard to the points to be made, I consider that IOOF was given an adequate opportunity to make its submission to the judge. There is no reason to apprehend prejudgment by the judge on this issue, or that his handling of this issue would affect his approach to other issues in the case.
That leaves the fourth general submission. There was considerable tension between the judge and Mr Abbott. But, as I explained earlier in my reasons, that can occur between a particular judge and counsel. In a long case its existence will become more apparent than it otherwise would. Allowing for that, I find nothing that would cause the fair minded observer to conclude that the judge’s attitude to Mr Abbott would affect his consideration of each issue on its merits, making due allowance for the entitlement of the judge to adhere to decisions already made and to the general approach that he had decided to adopt.

Bias - the judge’s conduct of the case

The complaint here is that the judge has prejudged a number of what might be called procedural issues, and is not willing to consider them fairly and impartially.
The complaint relates to the judge’s approach in separating out issues of law, sometimes on his own initiative, and in limiting the evidence to be called by IOOF. The complaint is that the judge has prejudged how the issues in the case should be tried.
I consider that the complaint is misconceived. It is the function of a judge, especially in a long case, to consider how the case can be heard efficiently and fairly. The judge is entitled to raise the possibility of an approach that will achieve an efficient and fair disposition of the case. If a proposal to that end is made, and the judge forms the view that it should be adopted, the judge is entitled to require that it be adopted and that the judge’s ruling be obeyed. In a long case the same or similar issues may continue to arise. The judge can be expected to take a consistent approach if they do. In substance, that is all that has happened here. The judge has adhered to the view that there are issues of law in the case that can and should be isolated and decided in the interests of the fair and efficient disposition of the case. It is not a question of whether the judge is right or not. That is a matter for appeal. The fact that the judge has done what he did, and the manner in which he has done it, is not suggestive of any lack of impartiality.
The same comment applies to the judge’s approach to substantive issues, such as the construction decision and the other issues that I identified earlier in these reasons. I accept that, as the case has unfolded, the judge has formed the view that certain substantive issues can be decided in isolation and should be, and has expressed increasingly firm views on them. The fact that it has happened is not indicative of a lack of impartiality. Once again, if the judge has erred the remedy is an appeal, probably at the end of the case.

It is not necessary to deal separately with each of the issues isolated by the judge, and with his various directions and decisions. They are covered by what I have just said. IOOF has had a series of adverse rulings and decisions from the judge. But that does not demonstrate bias.
Long and complex cases like this present difficulties for all involved. It must be accepted that the judge has the control of the proceedings, and may regulate the conduct of the trial in the manner which the judge thinks best, provided that it is a trial according to law and provided that there is no miscarriage of justice or procedural unfairness.
Usually, because the judge does not know as much about the case at the commencement of the trial as is known by the parties and their counsel, it is better to leave the running of the case to counsel unless a real problem emerges. But each case is different, and sometimes it may become apparent that managing the case in a manner not wished by counsel is the best way to conduct the case. As well, judges differ in their approach to long and complex trials. Some are more inclined to intervene than others. Of course, in the end each party must have the opportunity to present all relevant evidence and argument. But, I emphasise, it must be relevant evidence and argument, and the judge is entitled to expect this to be done in an efficient manner.
In a long trial the separation and resolution of issues may be a more efficient and economical way of conducting the litigation. If this is done, it must not be done in a fashion which effectively prevents counsel for a party from presenting relevant evidence and argument. There is a risk of a case being broken up into parts in a fashion that prevents a party from presenting its case in a fair and coherent fashion. But the presence of that risk is not a reason for the judge to abdicate the judge’s responsibility for the proper management of the case.
There is no reason to doubt that the judge considered these matters. Except in the most obvious circumstances, the effect of judicial intervention of the type undertaken here may not be assessed until the end of the trial and judgment on all issues is given. It will be a rare case in which an appeal court would interfere with the conduct of a trial by the trial judge. While these observations may seem trite, I make them because it seems to me that to a considerable extent IOOF is confusing its dissatisfaction with the judge’s conduct of the trial with an argument that the judge is biased against it. That is not to say that I dismiss the arguments of IOOF as lacking all substance. But, at the end of the day, I consider that they do not succeed.
There is a particular submission to which I must refer. It was submitted to the judge, and on appeal, that the judge has deliberately followed the course that he has followed, of isolating points of law, to avoid the obligation to hear evidence. The submission is that that has been his objective. The submission appears to have annoyed the judge, and seems to have been the reason for some of the remarks complained about on appeal. It is regrettable that the submission was made. The judge was clearly doing what he thought was best to limit the length of the case, consistently with his obligation to hear it fairly. There is simply no reason to think that the judge is setting out to avoid the obligation to hear evidence when appropriate. The submission charges him with a conscious breach of the judicial oath. I unhesitatingly reject the submission.

Bias - an overview

Finally, I must consider the reaction of the fair minded observer to all of these matters in combination.
I consider that the fair minded observer would appreciate that this is a case in which the judge has decided a number of procedural and substantive issues adversely to IOOF. The result is that IOOF cannot present its case as it would like to, and has already failed on some important issues. As well, there have been frequent clashes between Mr Abbott and the judge. They have involved criticism of Mr Abbott’s conduct of the case, although much of that flows from the manner in which (not the bare fact that) he continues to oppose the course of action taken by the judge and to complain about the judge’s approach. Some of the criticism has become personal, and some unnecessarily so. The fair minded observer would appreciate that IOOF can appeal in due course, but that the trial must be conducted in accordance with the judge’s rulings, right or wrong. The observer would realise that if the judge is consistent, IOOF will continue to face obstacles in its path.
Knowing all this, I do not consider that the fair minded observer would, assessing it as a whole, have reason to apprehend that the judge is anything but impartial in the required sense. Viewing the judge’s conduct in context, I consider that the fair minded observer would appreciate that while certain issues have been resolved adversely to IOOF, that is neither the result of a partial and prejudiced approach, nor suggestive of one in the future.

Conclusions

The appeal against the construction decision made by the judge should be allowed. The judgment of 1 April 1999 determining separate questions at trial should be set aside. The questions that the judge decided should be reconsidered in the light of such evidence as the judge considers admissible in relation to the proper construction of clauses 7 and 14A of the Tripartite Agreement. It is unnecessary to make an order to that effect. It can be assumed that, the judgment having been set aside, the judge will simply continue with the trial on the basis that the meaning of the relevant clauses of the Tripartite Agreement has not been decided.
The application dated 31 March 1999, for leave to appeal against decisions made by the judge refusing to desist from further hearing the case, should be refused. All issues that could be considered, had leave to appeal been granted, have been considered by me in the course of dealing with the appeal against the construction decision. I have concluded that the appellant’s submissions that the judge is disqualified from further hearing the case should be rejected. Accordingly, leave to appeal against the decision can be refused without determining the objection to the competence of the application for leave to appeal.
It will be necessary to hear the parties on the issue of costs.
PRIOR J. I agree with the orders proposed by the Chief Justice for the reasons he has given. There is nothing I can usefully add.
MULLIGHAN J. I agree with the orders proposed by the Chief Justice and with the reasons which he has given.

[1999] SASC 249

18 June 1999