Khoury v Sidhu
[2010] FCA 556
•1 June 2010
FEDERAL COURT OF AUSTRALIA
Khoury v Sidhu [2010] FCA 556
Citation: Khoury v Sidhu [2010] FCA 556 Parties: MANUEL KHOURY and SAMIRA KHOURY v BALDEV SINGH SIDHU, ALLIANCE CAPITAL CORPORATION PTY LTD ACN 102 712 836 and QUEENSLAND DIRECT FINANCE PTY LTD ACN 112 372 111 File number: QUD 131 of 2009 Judge: LOGAN J Date of judgment: 1 June 2010 Catchwords: HIGH COURT AND FEDERAL COURT – Circumstances giving rise to reasonable apprehension of bias- Application at commencement of trial for leave to call a further witness at trial – Prior interlocutory direction for filing of evidence in chief by affidavit – Witness the husband of long standing friend of trial judge and his wife with resultant derivative association between them and their respective families – Credit of proposed witness an issue at trial – Contingency that proposed witness might also be liable as non party for costs of any adjournment
Held: though relationship beyond three degrees of personal relationship mentioned in Guide to Judicial Conduct; not appropriate to hear trial or application – Trial and application adjourned for hearing by another judge
PRACTICE AND PROCEDURE – Circumstances giving rise to reasonable apprehension of bias - Application at commencement of trial for leave to call a further witness at trial – Prior interlocutory direction for filing of evidence in chief by affidavit – Witness the husband of long standing friend of trial judge and his wife with resultant derivative association between them and their respective families – Credit of proposed witness an issue at trial – Contingency that proposed witness might also be liable as non party for costs of any adjournment
Held: though relationship beyond three degrees of personal relationship mentioned in Guide to Judicial Conduct; not appropriate to hear trial or application – Trial and application adjourned for hearing by another judge
Legislation: Australian Securities and Investment Commission Act 2001 (Cth) ss 12DA, 12GM
Federal Court of Australia Act 1976 (Cth)
Trade Practices Act 1974 (Cth) ss 52, 87Cases cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 cited
The Hon JB Thomas, AM, Judicial Ethics in Australia (3rd ed, LexisNexis, 2009)
Australasian Institute of Judicial Administration Incorporated’s, Guide to Judicial Conduct (2nd ed, Australasian Institute of Judicial Administration Incorporated, 2007)Date of hearing: 1 June 2010 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 19 Counsel for the Applicants: Mr AJ Greinke Solicitor for the Applicants: Cranston McEachern Counsel for the Respondents: Mr A Lyons Solicitor for the Respondents: Plastiras Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 131 of 2009
BETWEEN: MANUEL KHOURY
First ApplicantSAMIRA KHOURY
Second Applicant
AND: BALDEV SINGH SIDHU
First RespondentALLIANCE CAPITAL CORPORATION PTY LTD ACN 102 712 836
Second RespondentQUEENSLAND DIRECT FINANCE PTY LTD ACN 112 372 111
Third Respondent
JUDGE:
LOGAN J
DATE OF ORDER:
1 JUNE 2010
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.The hearing of the Notice of Motion filed by leave on 1 June 2010 is adjourned to a date to be fixed.
2.The trial is adjourned to a date to be fixed.
3.The registrar is to fix a date for hearing of the Notice of Motion and the trial after consultation with the parties.
4.Costs of today are reserved.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 131 of 2009
BETWEEN: MANUEL KHOURY
First ApplicantSAMIRA KHOURY
Second Applicant
AND: BALDEV SINGH SIDHU
First RespondentALLIANCE CAPITAL CORPORATION PTY LTD ACN 102 712 836
Second RespondentQUEENSLAND DIRECT FINANCE PTY LTD ACN 112 372 111
Third Respondent
JUDGE:
LOGAN J
DATE:
1 JUNE 2010
PLACE:
BRISBANE
REASONS FOR JUDGMENT
Mr and Mrs Khoury have instituted proceedings in the Court in which they seek relief in respect of alleged misleading or deceptive conduct contrary to s 12DA of the Australian Securities and Investment Commission Act 2001 (Cth) (ASIC Act) or, alternatively, s 52 of the Trade Practices Act 1974 (Cth) (Trade Practices Act). They seek compensation pursuant to s 12GM of the ASIC Act or further, or alternatively, s 87 of the Trade Practices Act. The first respondent is Mr Baldev Singh Sidhu. He is the director, secretary and shareholder of various finance companies. Those companies are the second and third respondents Alliance Capital Corporation and Queensland Direct Finance.
The background to the dispute, as I understand matters, is that financial difficulties were encountered by a Mr Monty Khoury, who is the son of Mr and Mrs Khoury. Mr Monty Khoury is a property developer. It suffices, for present purposes, to note that he encountered financial difficulties having borrowed significant sums of money from the second and third respondents. One way in which, as he saw it, those difficulties might be overcome was by the provision as security by Mr and Mrs Khoury of their house in respect of a sum of $190,000 being the balance outstanding on his loans. There is a controversy as to whether or not, in the circumstances obtaining, the particular provision of that security was procured in a way contrary to the statutes mentioned.
The case was originally on the docket of Spender J. His Honour is due to retire from the Court in mid-July. Having regard to the demands on his Honour’s time, in light of that pending retirement, the view was formed that he should cease to be docket judge in respect of this case in mid-May. I, then, took over the case as docket judge. At that stage there were different solicitors acting for the respondents from those who presently act for them.
His Honour had made, as is customary in this Court, interlocutory directions in respect of, inter alia, the filing by the parties of affidavits to stand as their evidence-in-chief. There was nothing in relation to the names of the deponents then evident from the court file which caused me any apprehension in respect of agreeing to take over the case as docket judge.
The case was, at that stage, fixed for trial with the trial to commence today (1 June 2010). Since mid-May, there has been a change of solicitors for the respondents.
Even more recently, the view has been formed that a Mr Denis Stephenson ought to be called in the respondents’ case. Mr Stephenson is a solicitor. Further, he is a solicitor who had previously acted for the respondents in the conduct of this litigation.
The view has also been formed on the part of those now representing the respondents that the defence ought to be amended. There is also a view, held on the part of those presently advising the respondents, that there ought to be further and better discovery.
These views have manifested themselves in an application which was made this morning before me.
That Mr Stephenson was to be called or proposed to be called as a witness was made manifest by that application, and for that matter, by the list of proposed material to be read for the respondents, in relation to that application. That list is now exhibit 1.
Also tendered in relation to that application by the respondents were two volumes of material which were proposed to be read at trial. An affidavit of Mr Stephenson is amongst those.
Upon the motion being made I drew to the attention of the parties a particular association which my wife and I had with Mr Stephenson and his wife, and further, an association that existed between our respective daughters. It was foreshadowed on behalf of the applicants that the application was opposed.
In terms of length of association, the association which I have with Mrs Stephenson is the most lengthy. She and I were members of the same Queensland Debating Union team in university days. Then, later, she and my wife were in the maternity ward of the Royal Brisbane Royal Womens’ Hospital at the same time. After the birth of our respective daughters, and particularly during their infancy and years leading up to and including high school, our respective families socialised together regularly in the summer of each year, while on holidays. Our daughters attended the same high school. My wife counts Mrs Stephenson as a particular friend, as do I. In a sense, the association that she and I have with Mr Stephenson is derivative of that friendship and association.
In these circumstances there are at least two ways in which an association which my wife and I have had with Mr Stephenson might intrude. The first, and perhaps the more obvious, is that he is proposed to be called as a witness. Both counsel for the respondents, as well as counsel for the applicants, apprehend that Mr Stephenson’s credibility is an issue to be determined at trial, in the event that leave is granted to call him.
Next, of course, there is a question as to whether leave should be granted at all to call him, having regard to the fact that this is a case-managed court; that there have been long-standing directions in place for the filing of evidence-in-chief, and as a corollary, a long-standing fixing of today as the date of trial. These were always considerations that were pertinent as to whether to permit the calling of a witness, but they are particularly so, in light of what was said in the High Court, in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175. Further, amendments made to the Federal Court of Australia Act 1976 (Cth) last year, with effect from the start of this year, serve to underscore the importance of case management as a consideration in respect of applications such as that made this morning.
More subtly, but associated with the application made this morning, is the contingency, and it is nothing more than that, that one possible way in which the application made today might be dealt with, is that costs might be awarded against a non-party, and in particular, the solicitor previously acting for the respondents. That solicitor is Mr Stephenson.
It is important in the administration of justice, that justice not only be done but be seen to be done. In his valuable work, Judicial Ethics in Australia (3rd ed, LexisNexis, 2009), the Hon JB Thomas, AM remarks, under the heading “Personal Bias and Favouritism”, at para 5.6, p 76:
Cases involving kin or friends are obvious enough, but the duty to avoid personal bias and favouritism extends to other relationships by a judge such as those with an insurer, banker, local government body and the school at which his or her children attend.
His Honour continues, at para 5.7 and by reference to the Australasian Institute of Judicial Administration Incorporated’s, Guide to Judicial Conduct (2nd ed, Australasian Institute of Judicial Administration Incorporated, 2007) (Guide to Judicial Conduct) “Chapter 3 of the Guide now clarifies the borderlines in considerable detail, first defining three degrees of personal relationship”. I interpolate it is not necessary to set those out in the present case. He then states:
It further notes that friendship and past professional relationships may also qualify in calling for consideration to be given to disqualification. Different considerations apply according to whether the person with whom the judge has the relationship is a party or legal representative of a party, a witness, a friend, a past professional colleague or has some other association with the judge. Having observed that there are no hard and fast rules, it proceeds to offer the following fairly extensive guidance.
Two items of guidance, then, reproduced in the work, are these:
(h)Where the relationship of a witness to the judge is of the second or remoter degree, disqualification by the judge is less compelling, but again, the decision to sit or not to sit may depend on the nature of the testimony and the issue, if any, of credibility.
(i)The mere fact that a witness is personally well-known to the judge may not of itself be sufficient reason for disqualification of the judge. If, however, the credibility of the witness, as distinct from opinion, is known or likely to be in dispute, the judge should not sit.
Mr Stephenson was a contemporary of mine and my wife’s at law school at the University of Queensland. Having regard to the guidance in Judicial Ethics in Australia and the Guide to Judicial Conduct, that, of itself, would be no obstacle to my hearing the application and the trial. Here, though, the association is rather more intimate than that. It is more intimate, even, than that of someone who once, as Mr Stephenson did, briefed me when I was in practice at the Bar. This case is one which, whilst it is beyond the three degrees of association where there ought not to be any question about a judge sitting, is nonetheless in that area where legitimately, in my opinion, the circumstances are such that I should not sit.
The consequence of that further, though, in my opinion, is that I should not make any ruling in respect of the costs today but rather reserve those for determination by another judge. That is because, as noted, the question may arise, and it is nothing more than a contingency, of a need to consider whether costs should be awarded against Mr Stephenson. Counsel for the applicants and the respondents very properly, with respect, acknowledged that this was a contingency. Of course, there are many circumstances not known to me which may intrude on the subject of whether it is in any way appropriate to make such an order. It is, though, the existence of a contingency which makes it inappropriate for me even to make a ruling in respect of costs, other than to reserve them, much less to make any determination in respect of the substantive issues on the notice of motion filed today by leave.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. Associate:
Dated: 3 June 2010
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