Iphostrou and Iphostrou and Ors (No 2)
[2011] FamCA 84
•21 FEBRUARY 2011
FAMILY COURT OF AUSTRALIA
| IPHOSTROU & IPHOSTROU AND ORS (NO. 2) | [2011] FamCA 84 |
| FAMILY LAW – COURTS AND JUDGES – Recusal – application dismissed |
| Evidence Act 1995 (Cth) Family Law Act 1975 (Cth) |
| British American Tobacco Services Limited v Laurie [2011] HCA 2 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 Gould & Gould unreported 29 June 2004 per Fogarty, Kay & Renaud JJ discussed In the Marriage of Farnell (1996) FLC 92-681) Johnson v Johnson (2000) 201 CLR 488; (2000) FLC 93-014 Livesey and the New South Wales Bar Association (1983) 151 CLR 288 McDonald (O’Ryan J, unreported 8 October 2001) Re JRL; Ex Parte CJL (1986) 161 CLR 342 |
| APPLICANT: | Ms Iphostrou |
| RESPONDENT: | Mr Iphostrou |
| 2ND RESPONDENT: | P Iphostrou |
| 3RD RESPONDENT: | J Iphostrou |
| OTHER PARTIES | Corporate entities |
| FILE NUMBER: | MLC | 8731 | of | 2009 |
| DATE DELIVERED: | 21 FEBRUARY 2011 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | THE HONOURABLE JUSTICE CRONIN |
| HEARING DATE: | 15 FEBRUARY 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | MR BURNSIDE QC WITH MR EDMUNDS |
| SOLICITOR FOR THE APPLICANT: | HALLETT WEST |
| THE RESPONDENT: | IN PERSON |
| COUNSEL FOR THE 2ND AND 3RD RESPONDENTS AND THE CORPORATE ENTITIES: | MR DENTON SC WITH MS DJOHAN |
Orders
That the application filed 11 February 2011 is dismissed.
That the husband’s oral application for recusal of Justice Cronin made 11 February 2011 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Iphostrou & Iphostrou and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 8731 of 2009
| MS IPHOSTROU |
Applicant
And
| MR IPHOSTROU |
Respondent
And
P AND J IPHOSTROU
2nd and 3rd Respondents
And
CORPORATE ENTITIES
Other Parties
REASONS FOR JUDGMENT
The husband and a number of respondents to these financial proceedings have sought an order that I recuse myself from further hearing the proceedings.
The husband did not file such an application but the other respondents did. For convenience, I shall refer to those respondents as the corporate respondents. The husband said that he joined in the submissions of the corporate respondents although his stated position was that I should not hear his case because I had made a decision against him.
Before turning to the recusal issue, it is instructive to consider the law specifically concerning apprehended, as distinct from actual, bias. The assertion of at least the corporate respondents is that the bias takes the form of prejudgment.
The test to be applied is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide.
The applicable principles can be seen in Johnson v Johnson (2000) 201 CLR 488; (2000) FLC 93-014 and Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337. In Johnson, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said that the test was an objective one. Their Honours went on to say that two things needed to be remembered:
(t)he observer is taken to be reasonable; and the person being observed is “a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial”.
In Ebner, Gleeson CJ, McHugh, Gummow and Hayne JJ said at 348:
19.Judges have a duty to exercise their judicial functions when their jurisdiction is regularly invoked and they are assigned to cases in accordance with the practice which prevails in the court to which they belong. They do not select the cases they will hear, and they are not at liberty to decline to hear cases without good cause. Judges do not choose their cases; and litigants do not choose their judges. If one party to a case objects to a particular judge sitting, or continuing to sit, then that objection should not prevail unless it is based upon a substantial ground for contending that the judge is disqualified from hearing and deciding the case.
20.…
21.It is not possible to state in a categorical form the circumstances in which a judge, although personally convinced that he or she is not disqualified, may properly decline to sit. Circumstances vary, and may include such factors as the stage at which an objection is raised, the practical possibility of arranging for another judge to hear the case, and the public or constitutional role of the court before which the proceedings are being conducted. These problems usually arise in a context in which a judge has no particular personal desire to hear a case. If a judge were anxious to sit in a particular case, and took pains to arrange that he or she would do so, questions of actual bias may arise.
22.The particular principle or principles which determine the grounds upon which a judge will be disqualified from hearing a case follow from a consideration of the fundamental principle that court cases, civil or criminal, must be decided by an independent and impartial tribunal.
The High Court in Ebner articulated a two step process to be used in applying that test in individual cases. The first step was the identification of the matter said to give rise to the apprehended bias. The second step required consideration of the “logical connection” between the matters identified and the possibility, real not remote, of a deviation from the course of deciding the case on its merits.
Senior Counsel for the corporate respondents referred me to Livesey and the New South Wales Bar Association (1983) 151 CLR 288. In turn, that decision was considered by Mason J (as he then was) in Re JRL; Ex Parte CJL (1986) 161 CLR 342 where his Honour said at 352:
It seems that the acceptance by this Court of the test of reasonable apprehension of bias in such cases as Watson and Livesey has led to an increase in the frequency of applications by litigants that judicial officers should disqualify themselves from sitting in particular cases on account of their participation in other proceedings involving one of the litigants or on account of conduct during the litigation. It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party. There may be many situations in which previous decisions of a judicial officer on issues of fact and law may generate an expectation that he is likely to decide issues in a particular case adversely to one of the parties. But this does not mean either that he will approach the issues in that case otherwise than with an impartial and unprejudiced mind in the sense in which that expression is used in the authorities or that his previous decisions provide an acceptable basis for inferring that there is a reasonable apprehension that he will approach the issues in this way. In cases of this kind, disqualification is only made out by showing that there is a reasonable apprehension of bias by reason of prejudgment and this must be “firmly established”: Reg. v. Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group; Watson; Re Lusink; Ex parte Shaw. Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour. (footnotes omitted)
In very recent days, the High Court of Australia considered the question of bias by prejudgment in British American Tobacco Services Limited v Laurie [2011] HCA 2. The majority (Heydon, Kiefel and Bell JJ) allowed an appeal in which a judge of the Dust Diseases Tribunal (Judge Curtis) had refused to disqualify himself. Judge Curtis had made significant adverse findings in an earlier proceeding involving British American Tobacco relating to the dishonest concealment of the destruction of documents that may have been prejudicial to it in the litigation. The trial judge found the policy was drafted or adopted for the purpose of fraud within the meaning of the Evidence Act 1995 (Cth) which in turn overcame the objection to production based on legal professional privilege. In the subsequent proceedings involving an entirely different plaintiff, similar allegations concerning the document destruction policy were pleaded. It was likely the same evidence that had formed the basis of the earlier finding would be called again. British American tobacco asked the judge to disqualify himself because of a reasonable apprehension of prejudgment. Discussion included the distinction between findings after consideration of tested evidence and an interlocutory hearing where the evidence could not be tested.
In the High Court, the majority said reference to the interlocutory nature of the hearing dealing with untested evidence made no difference. Their Honours then said (paras 144-145):
The hypothetical observer is reasonable and understands that Judge Curtis is a professional judge. Nonetheless, the observer is not presumed to reject the possibility of pre-judgment. If it were otherwise an apprehension of bias would never arise in the case of a professional judge.
Whenever a judge is asked to try an issue which he or she has previously determined, whether in the same proceedings or in different proceedings, and whether between the same parties or different parties, the judge will be aware that different evidence may be led at the later trial. Judge Curtis's express acknowledgment of that circumstance does not remove the impression created by reading the judgment that the clear views there stated might influence his determination of the same issue in the Laurie proceedings. … In addition to the possibility of the evidentiary position changing, a reasonable observer would note that the trial judge's finding of fraud was otherwise expressed without qualification or doubt, that it was based on actual persuasion of the correctness of that conclusion, that while the judge did not use violent language, he did express himself in terms indicating extreme scepticism about BATAS's denials and strong doubt about the possibility of different materials explaining the difficulties experienced by the judge, and that the nature of the fraud about which the judge had been persuaded was extremely serious. In the circumstances of this unusual case, a reasonable observer might possibly apprehend that at the trial the court might not move its mind from the position reached on one set of materials even if different materials were presented at the trial – that is, bring an impartial mind to the issues relating to the fraud finding. Johnson v Johnson is distinguishable.
The substantive proceedings before me relate to an application by the wife to set aside a variety of instruments said to have had the effect of defeating her claim to a property settlement with the husband. The asserted documents relate specifically to some ASIC records but otherwise the wife pleads in a very unspecific way as to what she seeks to have set aside. The proceedings are listed for final hearing to commence on 28 February 2011.
For reasons to which I shall turn below, I have not made any adverse findings about the conduct of the corporate respondents in the two determinations nor could it be said that I have made any such findings about the husband. There is nothing that could be read into my findings in the discrete interlocutory determinations that could be said to have influenced my determination of the substantive proceeding. The two rulings clearly leave open the questions in dispute.
In the British American Tobacco case, the majority described the circumstances as “most unusual”. In this case, there is nothing unusual about the circumstances. In my view, the decision in British American Tobacco is distinguishable from this case and the appropriate principles to be applied are those in Johnson and Ebner.
The recusal application arises out of two of my decisions. On 13 December 2010, I ruled that evidence obtained illegally could be admitted for the purposes of the wife’s application for a litigation funding order. The second decision was the determination of the litigation funding application itself. That decision was handed down on 18 January 2011.
Whilst a number of submissions were made drawn from the transcript of the hearings, the determinations are found in my reasons. When the litigation funding issue began, it was a dispute between the husband and the wife and, counsel for the corporate respondents left the hearing. It was submitted by Senior Counsel for the corporate respondents that in their absence, inferences were drawn adverse to their clients. I reject that and in the reasons below, I shall summarise what I did say.
In respect of the first of the two determinations, I ruled that the evidence sought to be used by the wife could be admitted for the purposes of the litigation funding application. Although it was said that the wife’s illegal conduct related to 900 documents, only a small number were relied upon by her. In my reasons, I referred to the position of both parties. The wife relied upon assertions by her accountant and lawyer who had examined the various documents. I pointed to the fact that the husband denied the documents were his or were ratified by him. I said that the information in the documents might be of relevance to disprove the husband’s position.
Whilst ineloquently stated, it was clear that I was not making any finding about what the documents (or their contents) established.
I then said that findings could not be made on the evidence without it being tested and its present value was that it might lead to a trail of inquiry.
It had been asserted by Senior Counsel for the wife that the husband had not made proper disclosure. The husband had said that the documents in question were not his nor were they in his possession or control. I referred to the difficulty in dealing with such assertions in an interlocutory application. No finding was made against the husband and no inference was drawn adverse to the conduct of the corporate respondents.
In the determination about litigation funding to which I turn below, I set out in greater detail the evidence as it was presented to me from both the husband and the wife. In those reasons I said I was not sure who owned all of the shares in the various entities. It must be remembered that that was the only evidence to which my attention was drawn in that application. Of the allegations made by the wife, I said the husband had answered them all.
Ultimately, I ruled the tendered evidence could be admitted for the specific application on balancing the various considerations put by both the husband and the wife. That was not a finding as to the truth of evidence nor the weight it could be given.
One complaint made by the corporate respondents was that in their absence, adverse findings and/or inferences were made against them. I reject that. Again ineloquently stated, I said that of the documents shown to me, there may have been a plausible explanation not apparent from public record documents for their existence. No inference could thus be drawn adverse to the corporate respondents as this was a limited issue in a limited hearing.
In the litigation funding reasons, I referred to the inconsistency in the documents presented to me and said that no explanation was given for that but that no doubt it would be the subject of scrutiny in the final hearing. I did not reverse the onus of proof requiring the corporate respondents to disprove the wife’s allegations but rather pointed out that on the interlocutory application, that was all of the evidence I had and consequently, I was conscious that there may have been other evidence.
In his submissions, Senior Counsel for the corporate respondents submitted that I had drawn a conclusion about the ownership of the documents and had prejudged that ownership. It had been said that the documents were taken from a computer of a Ms BA an employee of the corporate respondents although I referred to them as documents of the company. Having regard to my statement that the husband denied any knowledge of them or confirmation of their truth, nothing turns on my description.
Turning to the litigation funding determination, I begin by noting that the wife’s filed application was for a lump sum of $500,000 although the wife’s submissions were directed to what is known as a “dollar for dollar” order.
I said that I could not make findings on the many disputed facts and I could not treat the assets of the corporate respondents as those of the husband and as such, in respect of the lump sum concept, there was not sufficient evidence upon which I could make an order under s 79 of the Family Law Act 1975 (Cth) (“the Act”).
Senior Counsel for the corporate respondents submitted that I accepted the evidence of the wife’s solicitor and accountant having admitted it for this funding application. I reject that. I said that the evidence “highlighted” the inconsistencies between the evidence of the husband and that of the wife. That was not a finding but rather an indication of how starkly different the two positions were.
The wife’s argument had been that it was important to make a costs order to ensure a level playing field. Senior Counsel for the corporate respondents pointed out that there is no reference in s 117 to such a concept. That is not a matter appropriate for consideration in a recusal application. All that could be drawn from my reasons was that I was acknowledging a concept well-known to this jurisdiction that it is important that there be a level playing field which, like disclosure, underpins the fairness and justice requirements of determining property proceedings under Part VIII of the Act. It has been the subject of previous judicial comment. (see Gould & Gould unreported 29 June 2004 per Fogarty, Kay & Renaud JJ discussed In the Marriage of Farnell (1996) FLC 92-681)
The only order I made in the litigation funding determination related to the husband paying money towards the future costs of the wife should he pay such costs to his own lawyer in the future. That determination came from a specific finding that the husband had access to what I described as a financial resource. The power to make a “dollar for dollar” order arises from s 117 of the Act. I had the benefit of reading the decision of O’Ryan J in McDonald (unreported 8 October 2001) where his Honour found there was such a power. The evidence relied upon by the wife was found in material provided by the husband’s legal practitioners who produced under subpoena their accounting records to show payments made to them after rendering accounts. The subpoena had been directed to the husband’s family law proceedings conducted by his lawyers. I noted the generosity of the payer. No finding could be said to have been specifically directed to the corporate respondents. Indeed, I did not find specifically who paid them but asked rhetorically why they would be so paid.
It was submitted that I had not given the husband’s counsel an opportunity to respond to that material and had drawn adverse inferences against the corporate respondents. I reject that submission. Senior Counsel for the husband had ample opportunity in the proceeding to put any submission about what the subpoenaed material meant and to the extent that he had been disadvantaged by the production of it, an application for time to address it could have been made.
I ruled that on the wife’s “dollar for dollar” application, the husband had a financial resource in that his family law legal bills were being paid by someone other than him. As I understood the submission put by Senior Counsel for the corporate respondents, the payer was someone other than his clients. That does not advance the matter further. Even if it could be said that I had inferred that it was his clients, no adverse inference was or could be drawn against them. The finding was that the husband had a financial resource and as I pointed out in the reasons, he had relied upon it for the payment of his family law accounts.
Despite the wife’s application, I declined to make any order for past costs incurred by her but, having found that she was without funds whilst in the hands of the husband there was a resource, any ongoing use of it had to be used to create the level playing field to which I referred. No finding of fact was made against the husband and no adverse inference could be drawn against the corporate respondents in that statement.
Thus, having considered Johnson and Ebner, there is no substantial ground of prejudgment here. Nothing I have said could be construed as having pre-determined the wife’s claim or the respondents’ defence. I will determine the substantive claim on the basis of the evidence presented to me in the way described in paragraph 5 above. Importantly, I find there is no logical connection between the matters asserted by the corporate respondents and the husband and the real possibility that the case would not be determined on its merits.
The application filed 11 February 2011 and the oral application of the husband that I recuse myself are all dismissed.
I certify that the preceding Thirty Four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 21 February 2011.
Associate:
Date: 21 February 2011
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