Mandie v Memart Nominees Pty Ltd (No 3)
[2016] VSC 267
•23 May 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S CI 2014 06635
| EDWARD NICHOLAS MANDIE and others | Plaintiffs |
| v | |
| MEMART NOMINEES PTY LTD (ACN 005 024 617) (as Trustee for the DAVID MANDIE FAMILY TRUST) | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 27 April 2016 |
DATE OF RULING: | 23 May 2016 |
CASE MAY BE CITED AS: | Mandie v Memart Nominees Pty Ltd (No 3) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 267 |
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COURTS AND JUDGES — Judges — Disqualification — Actual bias — Apprehended bias – Discretion to recuse — Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 — Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427 — Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 — Johnson v Johnson (2000) 201 CLR 488.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr R Gillies QC | Cornwall Stodart |
| Mr B Jellis | ||
| For the Defendant | Mr A Archibald QC | Allens |
| Mr P Herzfeld |
SCHEDULE OF PARTIES
| EDWARD NICHOLAS MANDIE | First Plaintiff |
| JANE ELIZABETH MANDIE | Second Plaintiff |
| ISABELLA MANDIE | Third Plaintiff |
| AMANDA MANDIE | Fourth Plaintiff |
| NICHOLAS ELLIOTT MANDIE | Fifth Plaintiff |
| DANIELLA MANDIE (a person under a disability being a minor by her litigation guardian AMANDA MANDIE) | Sixth Plaintiff |
| - and - | |
| MEMART NOMINEES PTY LTD (ACN 005 024 617) | Defendant |
HER HONOUR:
Introduction
By summons filed 18 April 2016 the plaintiffs applied for me to recuse myself from further hearing this proceeding on the grounds of actual bias and apprehended bias. In the event that neither form of bias is established, the plaintiffs sought that I recuse myself on the basis of a residual discretion to recuse. The defendant opposed the plaintiffs’ application.
The application was based on two rulings that I have made in this proceeding: Mandie v Memart Nominees Pty Ltd (the primary decision),[1] and Mandie v Memart Nominees Pty Ltd (No 2) (the costs decision).[2]
[1] [2015] VSC 446 (28 August 2015).
[2] [2015] VSC 622 (13 November 2015).
In the primary decision, the plaintiffs applied for leave to file and serve an amended statement of claim in this proceeding. That application was refused save for certain agreed deletions from the statement of claim. In the costs decision adverse costs orders were made against the plaintiffs in relation to their application in the primary decision.
The plaintiffs appealed the primary decision and the costs decision. The Court of Appeal allowed the appeal in part, and as a consequence, the primary decision was partially overturned and the orders made in the costs decision were set aside.[3]
[3]Mandie v Memart Nominees Pty Ltd [2016] VSCA 4 (5 February 2016).
Background
The background to the substantive proceeding is set out in the primary decision.[4] The plaintiffs’ written outline of submissions helpfully sets out the procedural history behind this application now before me.
[4] [2015] VSC 446 (28 August 2015) [2]-[17].
On 1 May 2015 the plaintiffs applied for leave to file and serve an amended statement of claim. The proposed amendments included several deletions and the addition of allegations described in the primary decision as the ‘specified beneficiaries allegations’ and the ‘conflict of interest allegations’. The defendant consented to the deletions but otherwise opposed the plaintiffs’ application for leave, arguing that the claim made in the ‘specified beneficiaries allegations’ and the ‘conflict of interest allegations’ had no real prospect of success and should be summarily dismissed.
In the primary decision, the plaintiffs’ application for leave was refused because I found that the proposed amendments had no real prospect of success. The defendant sought costs of the application. In the costs decision, I ordered that the plaintiffs pay the defendant’s costs in relation to the leave application on an indemnity basis and that those costs be taxed immediately.
On appeal, the Court of Appeal granted leave to appeal on the grounds that concerned the specified beneficiaries allegations, and allowed the appeal. The primary decision in respect of the specified beneficiaries allegations and the costs decision were overturned, and the plaintiffs were given leave to amend their statement of claim accordingly.
The plaintiffs have now filed an amended statement of claim that include the specified beneficiaries allegations in the same form as were before me on the leave application. The plaintiffs submitted that the specified beneficiaries allegations are now a central issue in dispute between the parties, and the result of the proceeding will heavily depend on whether those allegations are made out.
The plaintiffs now ask that I recuse myself from the further hearing this proceeding, including any directions hearings, based on my comments, conclusions and orders in the primary decision and the costs decision.
Paragraphs relied on in the primary decision
For the purposes of this application, the plaintiffs relied on paragraph [35] of the primary decision, particularly:
In this application, one does not have to descend too far into the content of the substantive proceeding to notice that the pleadings in their current form do not identify the issues adequately, giving some force to Memart’s submission that the application is driven in order to justify ‘a broad discovery inquiry’. The specified beneficiary allegations are couched in terms that fail to take into account, not only the clear statement in the settlement agreement that Ian and Stephen disclaim all rights as beneficiaries under the trust, with the obvious intent and consequence that they cease to be beneficiaries at all, but also the terms of the ‘taking in default’ clause of the deed itself. The latter issue has obvious implications for those general beneficiaries whose status as beneficiary was tied to or derived from that of Ian and Stephen as specified beneficiaries. In my view, leave should not be granted to the plaintiffs to amend the statement of [sic] in relation to the specified beneficiary allegations as pleaded as it has no real prospect of succeeding, in its current form, if it were to proceed to trial.
It is important also to note paragraph [32] which stated:
Memart asserts that the plaintiffs’ conduct, in repeatedly foreshadowing amendments to the statement of claim, creates the impression that they seek not to identify the real issues in dispute, but rather to cast as wide a net as possible in a fishing exercise conducted through discovery. Whilst I make no finding as to whether such an assertion is justified, it is certainly the case that the plaintiffs’ conduct thus far in regard to the proposed amendments to the statement of claim has not been conducive to the clear identification of the issues in dispute between the parties.
Paragraphs relied on in the costs decision
For the purposes of this application, the plaintiffs relied on the following paragraphs of the costs decision:
The authorities concerning the principles to be applied when a court, in the proper exercise of its discretion, may depart from the making the usual order for costs on a standard basis are well known and conveniently set out in cases such as Colgate-Palmolive Co v Cussons Pty Ltd; Ugly Tribe Co Pty Ltd v Sikola and Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3). In Ugly Tribe, Harper J identified the following circumstances as warranting a special costs order, noting that the categories of circumstances are not closed:
(a) the making of an allegation, known to be false, that the opposite party is guilty of fraud;
(b) the making of an irrelevant allegation of fraud;
(c) conduct which causes loss of time to the court and to other parties;
(d) the commencement or continuation of proceedings for an ulterior motive;
(e) conduct which amounts to a contempt of court;
(f) the commencement or continuation of proceedings in wilful disregard of known facts or clearly established law; and
(g) the failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial.
…
As stated above, the now deleted allegations should never have been made. Leave was not granted for the proposed specified beneficiary allegations and these allegations ought not have been made by the plaintiffs. As determined in the reasons, the proposed amendments were matters that the plaintiffs ought already to have been aware. Leave was also not granted for the proposed conflict of interest amendments. That proposed amendment involved allegations of fraud that ought never have been made without a proper basis and was not particularised by any evidence that would indicate the claim had some prospect of success.
…
Under the Civil Procedure Act 2010, the parties and their legal practitioners have an obligation to ensure all claims brought have a proper basis, to take steps to resolve or determine the dispute, to co-operate in the conduct of the proceeding, to narrow the issues in dispute, and to minimise delay. The plaintiffs’ applications for amendments to their statement of claim have been determined to have no real prospect of success and, as such, are not in line with these obligations.
In my view, making allegations that ought never to have been made, including allegations of fraud, and causing delay and wasted costs, justifies the conclusion that the conduct of the plaintiffs falls within the scope of the circumstances described in Colgate-Palmolive and warrants a special costs order in favour of Memart.
…
Whether the costs should be taxed when the proceeding is completed or immediately
Rule 63.20 of the Rules provides that where an interlocutory application is made in a proceeding and no order is made on the application or the order is silent as to costs, the costs are the parties’ costs in the proceeding, unless the Court otherwise orders. Rule 63.20.1 provides that unless the Court orders, costs orders on an interlocutory application or hearing shall not be taxed until the proceeding is completed.
…
Notwithstanding this general rule, there are certain circumstances in which the Court will make an order as to how costs will be taxed on an interlocutory application. For example, where:
(a) there is a prospect of considerable delay in the completion of a proceeding;
(b) the issue that is the subject of the interlocutory order involved a separate or discrete issue;
(c) the party against whom the substantive order was made was guilty of ‘unreasonable’, ‘reprehensible’ conduct or conduct lacking ‘competence and diligence’, which the Court has found to constitute unsatisfactory conduct in the circumstances.
…
As determined in the reasons, the deleted allegations ought never to have been made and the specified beneficiaries allegations and the conflict of interest allegations ought never to have been pleaded. While it is understandable that a party may require leave to amend a statement of claim after discovery, it is not understandable that a party would bring a claim for where insufficient evidence is pleaded in the particulars in the statement of claim.
…
In my view, the plaintiffs’ conduct lacks the competence and diligence expected of parties in commencing civil litigation and the unsatisfactory procedural history has resulted in conduct that should properly be described as unreasonable and unmeritorious.
…
I am satisfied that the plaintiffs’ conduct in the proceeding to date warrants a departure from the usual rule under r 63.20 and will make orders that the costs to be paid by the plaintiffs be taxed immediately.[5]
[5][2015] VSC 622 (13 November 2016) [15], [18], [20]-[21], [23], [25], [27], [31] and [33]. (Citations omitted.)
The defendant also relied on paragraph [19] of the costs decision:
Further, in the reasons, the Court found that the procedural history of the proceeding had been unsatisfactory. This has meant that more time than was necessary has been spent in dealing with interlocutory steps. Orders for discovery have yet to be made because of the plaintiffs’ conduct in relation to amending their claim three times to date.
The context within which the above statements were made is explained at paragraph [30]:
In the reasons, and as noted above at paragraph [19] the Court determined that the procedural history of the proceeding has been unsatisfactory and the plaintiffs’ conduct has not been conducive to the clear identification of issues in dispute. As a result, the proceeding has been delayed and costs have been wasted…
Court of Appeal decision
For the purposes of this application, the plaintiffs relied on the following paragraphs of the Court of Appeal decision:
In our opinion, on the basis of the drafting of the specified beneficiary allegations and the limited and confined submissions that the applicants made before the judge in support of those allegations, it is understandable that she concluded that they had no real prospect of succeeding if they proceeded to trial. The applicants did not explain their preferred construction of cl 5(2) of the Trust Deed or identify how the specified beneficiary allegations exposed that construction as an issue in the proceeding.
It is unfortunate, and inconsistent with the approach to the conduct of civil litigation that is now enshrined in the CP Act, that the case that the applicants sought to make in respect of the specified beneficiary allegations was not fully exposed until the hearing of the application for leave to appeal. We defer to another day the cost consequences, if any, of the late articulation of the applicants’ preferred construction of cl 5(2) of the Trust Deed.[6]
[6][2016] VSCA 4 (5 February 2016) [61]-[62].
The defendant relied on the following paragraphs of the Court of Appeal decision:
The applicants’ challenge to the judge’s costs order is conditional upon the success of the challenge to the substantive order. They contend that the judge erred in ordering that they pay the respondent’s costs on an indemnity basis and that the costs be taxed immediately. The applicants have not made any separate submissions in support of this contention but have relied on their submissions relating to the substantive order.
…
The applicants submitted that the specified beneficiary allegations gave rise to a question as to the proper construction of cl 5(2) of the Trust Deed…
The proper construction of cl 5(2) of the Trust Deed was not clearly identified by the applicants either before the judge or in their written case in support of their application for leave to appeal. It was articulated for the first time on the hearing of that application.
…
As the submissions of the parties which we have summarised above demonstrate, the construction of cl 5(2) of the Trust Deed is not straightforward. While we were informed that clauses similar to cl 5(2) are in general use, we were not referred to any relevant authorities other than Re Wells; Wells v Begley. However, the clause under consideration in that case did not contain the words ‘and attained a vested interest’. In these circumstances, we are satisfied that the applicants’ preferred construction of cl 5(2) is not fanciful. As such, the specified beneficiary allegations, as expounded before us, have a real prospect of success.[7]
[7]Ibid [5], [49]-[50], [63] (citation omitted). It is also cited at [64]-[67].
I also note the following paragraphs of the Court of Appeal decision:
The CP Act has changed the litigation landscape. One of the main purposes of that legislation is to reform practice and procedure in civil proceedings, including by reforming the law relating to summary judgment. More than ever, the focus is now pointedly on efficiency and cost-effectiveness, albeit that they are not the only, nor the predominant, considerations. One consequence is that amendments that might have been permitted previously may no longer be allowed. As such, the older authorities that preceded the CP Act which set out when a pleading amendment will be allowed must be approached with caution.
The power conferred on the court by s 63(1) of the CP Act to dispose of claims before a trial facilitates one of the stated purposes of the Act. Subject to limited exceptions, if a claim or defence has no real prospect of success, then summary judgment may be given. It must follow that a proposed pleading amendment raising a claim or defence of that type should not be permitted. To grant leave in that circumstance would be futile as the claim or defence would be susceptible to a summary judgment application. This principle facilitates the administration of justice, as it enables courts to prevent claims or defences being pleaded where they will inevitably fail and thus avoid the cost and inconvenience that would otherwise arise if those claims or defences were permitted to be made only to be the subject of summary judgment subsequently.
…
When one considers the substance of what the judge decided rather than the precise language that she used, it is clear that she concluded that, on the basis of the key documents before her, the uncontested facts and the state of the law, the allegations in the impugned amendments were unarguable, fanciful or futile and could not realistically add to the applicants’ prospects of obtaining the relief sought by them.[8]
[8]Ibid [42]-[43], [47]. (Citations omitted.)
Plaintiffs’ submissions
Actual bias
In their written submissions, the plaintiffs argued that I have ‘actually prejudged the merits of the specified beneficiary allegations’ because I held that those allegations had no real prospect of success.[9] They submitted that I construed the ‘taking in default’ clause adversely to the plaintiffs and was ‘critical in relation to what [I] suspected may have been the true basis of the application’.[10]
[9]Plaintiffs’ Outline of Submissions in Support of Recusal Application, [11].
[10]Ibid.
At the hearing before me, the plaintiffs submitted that paragraph [35] of the primary decision contains a description of an ulterior motive (broadening the ambit of discovery), a suspicion that the leave application was not bona fide, and a criticism that may have contributed to the costs orders. Further, they argued that in that paragraph I said the settlement agreement, and its spirit and intent, affected the terms of the ‘taking in default’ clause in the trust deed that ‘will always be a matter of hot contest and it will be re-agitated at the trial of the action’. As the specified beneficiaries allegations have now been allowed, the plaintiffs will argue at trial that the settlement agreement cannot be used in that way. On this basis, it was contended that in paragraph [35] of the primary decision I have prejudged highly relevant issues that will be triable issues in the action.
The plaintiffs submitted that the orders as to costs were intended to be punitive and were highly pejorative of the plaintiffs’ conduct. They were a clear indication of my ‘unfavourable view not only of the application to amend in respect of the specified beneficiaries allegations, but also of the conduct of the plaintiffs in the making of the application for amendment’.[11] The criticism inherent in the costs orders is a subjective criticism of the plaintiffs and of what they were seeking to do.
[11]Plaintiffs’ Outline of Submissions in Support of Recusal Application, [14].
In order to make those costs orders, it was necessary to overcome three presumptions enshrined in the Supreme Court (General Civil Procedure) Rules 2015, namely that costs:
(a) in interlocutory proceedings be ordered to be costs in the proceeding;
(b) be awarded on the standard basis; and
(c) not be taxed until the proceeding is completed.
It was submitted that in the costs decision, I found a breach of the Civil Procedure Act 2010 and regarded the plaintiffs and or their advisers as being guilty of unreasonable or reprehensible conduct or conduct lacking competence and diligence.
The primary decision and the costs decision are, therefore, redolent of a clear dissatisfaction with the manner in which the proceeding was being conducted by the plaintiffs and of the relief they sought. Were I to remain seized of this proceeding, the plaintiffs would ‘start a long way behind scratch’ because I have ‘already taken a very dim view, not only of the amendment, but also of the people behind the amendment’. It would be ‘humanly impossible for [me] to erase the thoughts that inspired the language’ in the two decisions.
The plaintiffs submitted that they have made this recusal application as soon as they could, the case is still in its infancy and it is therefore a ‘good candidate’ for recusal. The fact that the case is in its infancy also means that it is impossible to predict at this point in time which way the evidence will go.
Apprehended bias
In the alternative, the plaintiffs relied on apprehended bias.
The test to be applied was stated in Ebner v Official Trustee in Bankruptcy.[12] Under that test ‘a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide’.[13] The apprehended bias principle will apply where a judge has expressed a conclusion on a fact or issue that must be decided in the case before the judge.[14] The plaintiffs relied on the following part of the majority judgment in British American Tobacco Australia Services Ltd v Laurie:
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. Allsop P’s conclusion was correct. 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 is distinguishable.[15]
[12]Ebner v Official Trustee in Bankruptcy (2000) 205 337 (‘Ebner’).
[13]Ibid [6] (Gleeson CJ, McHugh, Gummow and Hayne JJ). (Emphasis added.) See also, Trombone Investments Pty Ltd v TBT (Victoria) Pty Ltd [2016] VSCA 108 (16 May 2016).
[14]Plaintiffs’ Outline of Submissions in Support of Recusal Application, [17], citing British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283 (‘BATA’) and Livesy v New South Wales Bar Association (1983) 151 CLR 288, 300.
[15](2011) 242 CLR 283, [145] (Heydon, Kiefel and Bell JJ). (Citation omitted and plaintiffs’ emphasis in bold.)
The plaintiffs said they understood that bias is not established simply because a judge has expressed a view on a matter or a topic or principle of law. The situation is different, however, where the judge has made a finding of misconduct and has criticised a party’s motive, and where there is a ‘notion of punishment for having run the argument’. As BATA did not have this ‘pejorative flavour’ to it, the dissenting judgment of French CJ does not aid the defendant’s case.
The plaintiffs advanced three reasons for the rejection of the defendant’s submission that there can be no reasonable apprehension of prejudgment or bias because the Court of Appeal decided the specified beneficiaries allegations issue on a ground not argued before me.
The first reason is that the defendant’s submission ignores the emphatic force of the conclusions in the primary decision and the punitive costs orders made in the costs decision, both of which would or might loom large in a reasonable bystander’s mind.
The second reason is that the arguments made before me and before the Court of Appeal overlap such that there is no bright line between them. In these circumstances the comments of Brennan J in Builders Registration Board of Queensland v Rauber apply:
The test of bias arising from the prejudgment of issues is no narrow or technical test; it is a test applied in order to preserve confidence in the administration of justice. The confidence of ordinary men and women — especially the confidence of parties to proceedings — is not preserved by pointing to nice distinctions which lawyers may perceive between issues which are substantially the same.[16]
[16](1983) 47 ALR 55, 69. (Citation omitted.) The plaintiffs also relied on Vakauta v Kelly (1989) 167 CLR 568, 585; and ANI Ltd v Spedley Securities Ltd (1992) 26 NSWLR 411, 419-420.
The test for apprehended bias uses a fair-minded lay person, not a professor of jurisprudence or someone finely construing a deed. It is not appropriate to go looking for fine distinctions between the argument put before me and that put before the Court of Appeal. The plaintiffs conceded that the construction of the ‘taking in default’ clause was different to the arguments made before me, but did not accept that it was entirely different or even materially different.
The third reason is that, when arguing their case on the specified beneficiaries allegations, the plaintiffs will not be confined to the terms of the argument advanced before the Court of Appeal. Rather, ‘[t]hey can, and will, draw upon the matters rejected as fanciful by [me] at first instance’.[17] On those matters, a reasonable apprehension of prejudgment is inescapable.
[17]Plaintiffs’ Outline of Submissions in Support of Recusal Application, [27].
In reply, the plaintiffs criticised the defendant’s reliance on Helljay Investment Pty Ltd v Deputy Commissioner of Taxation (Cth).[18] The plaintiffs submitted that Helljay concerns the construction of the trust deed, which is a question of fact and law, not just a question of law and, unlike in Helljay, the finding on the question in this case has been within the one proceeding, not in some previous case. Helljay deals with the doctrine of precedent and situations where there has been a ruling in another case. It does not deal with a statement of law made in the same case, because the doctrine of precedent does not apply within the confines of a case that is being argued.
[18](1999) 166 ALR 302 (‘Helljay’).
The plaintiffs also submitted that the defendant’s opposition to the application for recusal ‘is a source of fortification to the application’.[19] At the hearing counsel for the plaintiffs said:
Some people just appear in courts altruistically. Some people just look at the rule of law. Most people make applications to further their client's case and if, in fact, the opposition to our application really is on the basis that their case would be better served by Your Honour hearing it, our client would have that same apprehension. We would say that they would be justified in concluding that they'll get a better run out of Your Honour than out of a fresh judge, and that's really the basis of our application.[20]
[19]Plaintiffs’ Outline of Submissions in Support of Recusal Application, [28].
[20]Transcript of Proceedings, Mandie v Memart Nominees Pty Ltd (Supreme Court of Victoria, S CI 2014 06635, McMillan J, 27 April 2016) 12:23 —13:1 (R Gillies QC).
Applying the Ebner test to this case, the plaintiffs argued that based on the primary decision and the costs decision, I must necessarily have strongly disapproved of the conduct of the plaintiffs and possibly their representatives. On this basis, it is not possible to excise from the primary decision any pejorative comments that I made and any critical thoughts behind those comments, in order to give the case the appearance of a fair trial were I not to recuse myself.
Discretion to recuse
Relying on Ebner, the plaintiffs argued that even if actual bias and apprehended bias are not established, there is a further basis on which I might recuse myself. The plaintiffs submitted that the following passages of Ebner provided authority for a discretion to recuse myself:
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.
This is not to say that it is improper for a judge to decline to sit unless the judge has affirmatively concluded that he or she is disqualified. In a case of real doubt, it will often be prudent for a judge to decide not to sit in order to avoid the inconvenience that could result if an appellate court were to take a different view on the matter of disqualification. However, if the mere making of an insubstantial objection were sufficient to lead a judge to decline to hear or decide a case, the system would soon reach a stage where, for practical purposes, individual parties could influence the composition of the bench. That would be intolerable.
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.[21]
[21](2000) 205 CLR 337, [19]-[21] (Gleeson CJ, McHugh, Gummow and Hayne JJ).
It was submitted that in a ‘borderline’ case where there is ‘some doubt’ about bias, a judge might recuse herself in the interests of timeliness and efficiency. This approach was said to be consonant with the provisions of the Civil Procedure Act 2010. The plaintiffs submitted that where there is a real and not fanciful doubt about impartiality,[22] a judge may decide not to sit even if the judge does not affirmatively find that there is actual bias or apprehended bias. Should a judge not disqualify himself or herself on account of bias, he or she should be careful not to show a ‘great desire or anxiety to remain seized of the case because that would reenergise’ the bias argument.
[22]Counsel for the plaintiffs used the word ‘independence’. However, in my view this application does not concern independence; it concerns impartiality.
In their written submissions the plaintiffs acknowledged that a recusal application should be based on ‘substantial grounds’, but then contended that a judge ‘has a wide discretion in relation to recusal’.[23] They quoted paragraph [20] of the majority judgment in Ebner and the suggestion in paragraph [21] that ‘[i]f 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’. This reasoning, it was submitted, compels my recusal in this case.[24]
[23]Plaintiffs’ Outline of Submissions in Support of Recusal Application, [20].
[24]Ibid [22].
Defendant’s submissions
Actual bias
The defendant submitted that to establish actual bias the plaintiffs ‘must demonstrate that the judge is in fact so committed to a conclusion already formed as to be incapable of persuasion, whatever evidence or argument may be presented’.[25] That is, the plaintiffs must show that ‘the judge is in fact precluded from bringing to bear his or her professional skills and from determining the issues by reference only to the evidence and arguments presented’.[26]
[25]Defendant’s Outline of Submissions, [12], citing Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 [72].
[26]Defendant’s Outline of Submissions, [12], citing Vakauta v Kelly (1989) 167 CLR 568, 584.
It was also submitted that a finding of actual bias is a grave matter, and such a finding should not be made lightly.[27] Matters relied on to establish actual bias must be considered in their proper context, and the party alleging actual bias bears a heavy onus.[28]
[27]Defendant’s Outline of Submissions, [14].
[28]Ibid.
The defendant submitted that the primary decision and costs decision do not justify a finding of actual bias, for essentially the same reasons that they do not justify a finding of apprehended bias. Those decisions are not evidence that I am in fact incapable of determining the specified beneficiaries allegations on their merits.
Apprehended bias
The Ebner test for apprehended bias involves two steps:
First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an “interest” in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision-making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.[29]
[29](2000) 205 CLR 337 [8] (Gleeson CJ, McHugh, Gummow and Hayne JJ).
Apprehended bias must be firmly established and judges should not accede to allegations of apprehended bias too easily, lest such applications become a form of ‘judge shopping’.[30]
[30]Defendant’s Outline of Submissions, [5].
The defendant submitted that the ‘fair-minded lay observer’ in the Ebner test is a reasonable person who is attributed with knowledge of all of the circumstances of the case, and is neither complacent nor unduly sensitive or suspicious.[31] The fair-minded lay observer also knows that the judge is a professional judge whose training, tradition and oath or affirmation require her to discard the irrelevant, the immaterial and the prejudicial.[32]
[31]Ibid [6].
[32]Ibid.
The defendant conceded that decisions made on interlocutory applications in a proceeding may give rise to apprehended bias.[33] However, it relied on the comments of French CJ, in dissent, in BATA concerning a finding made by a judge as part of an interlocutory ruling:
It is an area in which courts should be astute not to defer to that kind of apprehension that is engendered by the anticipation of an adverse outcome, rather than a legitimate concern about partiality. By way of example, the fact that a judge who has made a finding of fact adverse to a party on particular evidence is likely to make the same finding on the same evidence, is not of itself indicative of bias. It could be indicative of consistency subject to the judge having an open mind when it came to argument about the effect of the evidence.[34]
[33]Ibid [7].
[34](2011) 242 CLR 283 [39].
The defendant emphasised that apprehension of likely adversity of decision is not bias or apprehended bias and also relied on the observation of Mason J in Re JRL; Ex parte CJL:
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…[35]
[35](1986) 161 CLR 342, 352.
The apprehension must be of prejudgment not predisposition to a particular view:
Decision-makers, including judicial decision-makers, sometimes approach their task with a tendency of mind, or predisposition, sometimes one that has been publicly expressed, without being accused or suspected of bias. The question is not whether a decision-maker's mind is blank; it is whether it is open to persuasion.
…
The state of mind described as bias in the form of prejudgment is one so committed to a conclusion already formed as to be incapable of alteration, whatever evidence or arguments may be presented. Natural justice does not require the absence of any predisposition or inclination for or against an argument or conclusion.[36]
[36]Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507, [71]-[72] (Gleeson CJ and Gummow J, with whom Hayne J agreed), referring to actual bias.
The defendant further conceded that previously expressed conclusions of law by a judge may give rise to apprehended bias. What must be shown is that a fair-minded lay observer might reasonably apprehend that the judge might have closed his mind to argument on the point.[37] On this issue the defendant relied on the following comments of Hayne J in Helljay:
The principles about apprehension of bias must be understood in the context of a judicial system founded in precedent and directed to establishing, and maintaining, consistency of judicial decision so that like cases are treated alike and principles of law are applied uniformly.[38] The bare fact that a judicial officer has earlier expressed an opinion on questions of law will therefore seldom, if ever, warrant a conclusion of appearance of bias, no matter how important that opinion may have been to the disposition of the past case or how important it may be to the outcome of the instant case. Fidelity to precedent and consistency may make it very likely that the same opinion about a question of law will be expressed in both cases. But that stops well short of saying that the judicial officer will not listen to and properly consider arguments against the earlier holding.[39]
[37]Defendant’s Outline of Submissions, [11].
[38] The defendant’s submissions did not include this sentence, which the plaintiffs pointed out.
[39](1999) 166 ALR 302, [0-12].
The defendant submitted that the essence of those comments is that the Court is always wary of acceding to bias applications, and is even more reluctant to accede when the stimulus for the application is referable to a question of law.
Applying those principles to the present case, the defendant submitted that what has occurred in this case is an unexceptional circumstance in an interlocutory phase of the matter, and that the matters relied on by the plaintiffs do not come close to establishing either apprehended bias or actual bias, for several reasons.
First, the Court of Appeal reached a conclusion different to that reached in the primary decision only because the plaintiffs made a new and different argument in relation to the specified beneficiaries allegations when seeking leave to appeal from the primary decision. The construction of cl 5(2) of the trust deed, put orally by the plaintiffs to the Court of Appeal, was a question purely of law and was entirely different to that advanced by the plaintiffs at first instance. Given the plaintiffs succeeded on an argument not made at first instance, the Court of Appeal ordered the plaintiffs to pay the costs of the hearing of the first instance amendment application and the amendments, and the plaintiffs did not obtain their costs in the Court of Appeal.[40]
[40]Defendant’s Outline of Submissions, [19].
No fair-minded lay observer might reasonably think that I might have prejudged the plaintiffs’ new argument advanced in support of the specified beneficiaries allegations without having had an opportunity to form a view about it.[41] The reasons and conclusion in the primary decision were not directed to that new argument, because that argument was not put at first instance. In respect of the arguments put to me, the Court of Appeal agreed that those arguments had no real prospect of success. But the fact that a judge has come to a conclusion adverse to a party on particular arguments does not mean the judge might be incapable of approaching different arguments with an open mind. This is especially so if resolution of the different argument will involve considering evidence not yet put before the Court or authorities not yet cited to the Court.
[41]Defendant’s Outline of Submissions, [23].
The fair-minded lay observer would understand that if a litigant puts a new point to a judge it might win even where the old point was not considered to be a good point. The fair-minded lay observer has faith in the judicial system and is neither cynical nor sceptical. The community understands that judges’ training, experience, responsibilities and duties require them to approach arguments put to them with an open mind.
Second, the orders made in the costs decision were based on the plaintiffs’ failure to substantiate any basis for the amendments for which they sought leave. Neither the plaintiffs nor the Court of Appeal made any criticism of the orders per se.[42] The Court of Appeal’s decision casts no doubt on the correctness of the costs orders made based on the arguments presented. The defendant also submitted that the costs orders were not punitive. Indemnity costs orders are made more often in recent times, and it is commonplace that in the course of litigation matters are raised, adverse interlocutory orders are made, some matters are not pursued, and the matter moves on. The past does not dictate the future.
[42]Defendant’s Outline of Submissions, [22].
Third, the costs orders were influenced by the unsatisfactory procedural history of this proceeding, the circumstances of which were not disputed by the plaintiffs before the Court of Appeal.[43] To the extent the costs orders were based on this unsatisfactory history, the making of the orders is not logically connected with whether I will bring an open mind to the determination of the specified beneficiaries allegations.
[43]Defendant’s Outline of Submissions, [24].
Finally, as to paragraph [35] of the primary decision, the defendants submits that I did not make any finding as to ulterior motive, nor did my observation concerning ulterior motive play any part in the matters that led to the conclusion that the amendment should not be allowed. Paragraph [35] contained a conclusion on a matter of construction based on the arguments made by the parties at the hearing of the application for amendment. There was no adverse finding against the plaintiffs or their advisers as to the conduct of the proceeding.
Put simply, the taint asserted by the plaintiffs is that I have heard argument and, having looked at the trust deed, expressed a view on it. However, life’s experience is that if one looks at a matter on a second occasion, with the benefit of a deeper appreciation and the benefit of further aid in understanding a document’s operation, one will not be tied to an initial view, however considered that initial view was at the time. That is true of the ordinary member of the community, and all the more so of a judge, whose function it is to maintain an open mind and be persuaded. In closing, the plaintiffs submitted that there is no reasonable apprehension that if the specified beneficiaries allegations are agitated at trial in any way, I might approach the matter with a closed mind.
Discretion to recuse
The defendant submitted that if neither actual bias nor apprehended bias is found, there is no further discretion to recuse myself, but, conversely, I am under a duty to stay in the matter.
Consideration
Actual bias
In my view, the defendant is entitled to oppose the plaintiffs’ application for recusal. The defendant’s opposition to the application does not makes it any more or less likely that I have prejudged an issue in dispute or that a fair-minded lay observer might reasonably apprehend that I might not bring an impartial mind to the resolution of an issue in dispute. Accordingly, I reject the plaintiffs’ argument that the defendant’s opposition to their application is a factor weighing in favour of their application.
Actual bias is a very serious matter, and it is more difficult to establish than apprehended bias. This is because the test for apprehended bias is objective, while the test for actual bias involves an assessment of the judge’s state of mind.[44] To establish actual bias, the plaintiffs must demonstrate that the judge is in fact so committed to a conclusion already formed as to be incapable of persuasion, whatever evidence or argument may be presented.[45]
[44]Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427, [33] (Gummow ACJ, Hayne, Crennan and Bell JJ).
[45]Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507, [72] (Gleeson CJ and Gummow J, with whom Hayne J agreed).
For the following reasons, I also reject the plaintiffs’ argument that I have prejudged the merits of the specified beneficiaries allegations and that I should therefore recuse myself on the basis of actual bias.
In the primary decision I determined on the basis of the drafting of the specified beneficiaries allegations and the limited and confined submissions put before the Court, that the specified beneficiaries allegations had no real prospect of success. The Court of Appeal said that that conclusion was ‘understandable’. The Court of Appeal described the process involved in reaching that conclusion as follows:
When one considers the substance of what the judge decided rather than the precise language that she used, it is clear that she concluded that, on the basis of the key documents before her, the uncontested facts and the state of the law, the allegations in the impugned amendments were unarguable, fanciful or futile and could not realistically add to the applicants’ prospects of obtaining the relief sought by them.
Considering the arguments made by the parties, the key documents, the facts, and the state of law before reaching an ‘understandable’ conclusion demonstrates that the Court went about determining the question before it with an open mind. The plaintiffs have not suggested that in reaching the primary decision itself I had prejudged the specified beneficiaries allegations. Nor have the plaintiffs identified anything that I have said or done since the primary decision and costs decision that suggests my mind is not open to persuasion.
Rather, the plaintiffs’ complaint is that because I concluded in the primary decision that the specified beneficiaries allegations have no real prospect of success and because I made adverse costs orders in the costs decision, my mind is now closed to persuasion in respect of those allegations. Contrary to the plaintiffs’ submissions, it was not found in the primary decision or the costs decision that the leave application was brought for an ulterior motive, or that the plaintiffs had engaged in misconduct. The plaintiffs’ conduct was described as not conducive to narrowing the issues in dispute,[46] a description that does not amount to misconduct. The plaintiffs’ conduct was also described as falling within the scope of Colgate-Palmolive because it had been held that the plaintiffs had made unfounded allegations of fraud and had caused delay and wasted costs.
[46]Mandie v Memart Nominees [2015] VSC 446 (28 August 2015) [32].
Similarly, contrary to the plaintiffs’ submissions there was not any subjective criticism of the plaintiffs or their advisers in the primary decision or costs decision. The Court was critical of the plaintiffs’ conduct in bringing the leave application, but this does not amount to personal criticism directed at the plaintiffs or their advisers. As noted in the Court of Appeal decision, the litigation landscape has changed since the commencement of the Civil Procedure Act 2010. In the current litigation landscape, it is unlikely that a court will find an application has no real prospect of success and then say nothing more. It is now to be expected that if a court finds an application has no real prospect of success, the court may justifiably:
(a) say the application ought never have been brought;
(b) be critical of the conduct of the party in bringing the application, including by describing it as unreasonable and unmeritorious;
(c) remind the parties of their obligations under the Civil Procedure Act 2010;
(d) speak in terms of breach of the Civil Procedure Act 2010;
(e) talk of the competence and diligence expected of parties in commencing civil litigation;
(f) lament the delay and costs occasioned by the application; and
(g) make adverse costs orders against the party who brought the application. [47]
[47]The Court of Appeal has stated that the Civil Procedure Act 2010 is to be used to sanction legal practitioners and parties who fail to comply with their overarching obligations, noting that delay and the reasonable and proportionate nature of costs are significant problems to be dealt with. The Court of Appeal stated that non-compliance with or breach of any obligations under the Civil Procedure Act 2010 will usually sound in a costs order: Yara Australia v Oswald (2013) 41 VR 302.
Those matters simply flow from the conclusion that the application has no real prospect of success. They do not demonstrate that the conclusion was reached in such a way as to prevent the judge being open to persuasion on the same or similar issues in future. As above, that conclusion was understandable and reached after a proper process of consideration of the arguments made before the Court, the evidence, the uncontested facts, and the state of the law.
The fact of having reached a conclusion on certain allegations, coupled with the matters that necessarily flow from that conclusion in the current litigation landscape, do not establish that a judge will not be open to persuasion if those allegations are re-agitated with new arguments and evidence. The comments of Mason J in Re JRL; Ex parte CJL, on which the defendant relied, are apposite:
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.[48]
[48]Re JRL; Ex parte CJL (1986) 161 CLR 342, 352 (Mason J).
The plaintiffs have failed to establish that based on the primary decision and the costs decision I have prejudged the merits of the specified beneficiaries allegations.
Apprehended bias
A judge will be disqualified on account of apprehended bias only if it is firmly established[49] that a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide.[50] Here that question is whether the specified beneficiaries allegations are made out. The apprehension must be reasonable and it must be an apprehension that the judge might not decide the question impartially, rather than an apprehension that she will decide it adversely to a party.[51]
[49]Ibid.
[50]Ebner (2000) 205 CLR 337, [6] (Gleeson CJ, McHugh, Gummow and Hayne JJ). (Emphasis added). This test was recently reaffirmed by the Court of Appeal: Trombone Investments Pty Ltd v TBT (Victoria) Pty Ltd [2016] VSCA 108 (16 May 2016).
[51]Cabcharge Australia Ltd v Australian Competition and Consumer Commission [2010] FCAFC 111, [32].
The test in Ebner also requires that there be an articulation of the logical connection between the matters said to give rise to the apprehension on the one hand, and the feared deviation from the course of deciding the case on its merits on the other hand.[52] Here, that means there must be a logical connection between the comments, conclusions and orders in the primary decision and costs decision, and the submission that I might not decide the specified beneficiaries allegations on their merits at trial.
[52](2000) 205 CLR 337, [8].
It is first necessary to characterise the fair-minded lay observer who will be used to determine whether there is a reasonable apprehension of bias in this case. The fictitious observer is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge.[53] The observer is, however, assumed to know the actual circumstances of the case and will understand that the evidentiary position in earlier proceedings may change in later proceedings.[54] The observer will recognise that a professional judge may depart from an earlier expressed opinion.[55]
[53]Johnson v Johnson (2000) 201 CLR 488, [13] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).
[54]GlaxoSmithKline Australia Pty Ltd v Reckitt Benckiser Healthcare (UK) Ltd [2013] FCAFC 150, [37]-[38].
[55]Ibid [39].
The actual circumstances of this case include the following:
(a) The plaintiffs brought an application for leave to file and serve an amended statement of claim. They wished to make two new sets of allegations – the specified beneficiaries allegations and the conflict of interest allegations;
(b) I refused leave on the basis that both sets of allegations had no real prospect of success;
(c) I made adverse costs orders against the plaintiffs in respect of their application for leave to file and serve an amended statement of claim;
(d) The plaintiffs appealed and the Court of Appeal allowed the appeal in part. The Court of Appeal held that the specified beneficiaries allegations have a real prospect of success. It did so on the basis of an oral argument made for the first time before the Court of Appeal. The plaintiffs took issue with the defendant describing this argument as entirely different or materially different. It is sufficient to refer to the argument as new;
(e) The Court of Appeal said that on the basis of the drafting of the specified beneficiaries allegations and the ‘limited and confined submissions that the applicants made before the judge in support of those allegations, it is understandable that she concluded that they had no real prospect of succeeding’;
(f) The Court of Appeal itself criticised the conduct of the plaintiffs in not fully exposing their case in respect of the specified beneficiaries allegations until they reached the Court of Appeal. The Court referred to the plaintiffs’ approach as unfortunate and inconsistent with the approach to litigation enshrined in the Civil Procedure Act 2010, and later made adverse costs orders against the plaintiffs requiring them to pay the costs of the original application and the appeal. Yet despite the criticism and adverse costs orders, the plaintiffs succeeded in part; and
(g) The Court of Appeal did not order that the matter be heard by a different trial judge.
The fair-minded lay observer will have read the primary decision and costs decision, knowing that they were interlocutory decisions, and also the Court of Appeal decision.
If the fair-minded lay observer, thus characterised, might in fact apprehend bias, it must be determined whether that apprehension is reasonable. The reasonableness of the apprehension is to be considered in the context of ordinary judicial practice, and the rules and conventions governing such practice are not frozen in time; they develop to take account of the exigencies of modern litigation.[56] Those exigencies led to the Civil Procedure Act 2010 and its pointed focus on efficiency and cost-effectiveness.[57] In modern litigation courts have a role to play in minimising cost and inconvenience by preventing claims or defences being pleaded where they will inevitably fail.[58] Stopping at the threshold claims or defences that have no real prospect of success is now considered part of the proper administration of justice.
[56]Johnson v Johnson (2000) 201 CLR 488, [13] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).
[57]Mandie v Memart Nominees Pty Ltd [2016] VSCA 4 (5 February 2016) [42]. See also, Yara Australia v Oswald (2013) 41 VR 302.
[58]See ibid [43].
Ordinary judicial practice today also involves increased case management, more interlocutory applications and decisions, and therefore more occasions on which judges are expected to express views on issues in dispute. Such views may reflect a tendency of mind or preliminary assessment on the material before the judge, but they do not necessarily indicate prejudgment.[59] Another element of the ordinary judicial practice is that indemnity costs are ordered in appropriate circumstances.[60] This is the context in which the reasonableness of the fictitious observer’s apprehension is to be considered.
[59]See Johnson v Johnson (2000) 201 CLR 488, [14] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).
[60]Guastalegname v Chevros Pty Ltd [2015] VSC 408, [52]. See also Bridge Bar Investments Pty Ltd v Dog at the Bridge Pty Ltd [2016] VSC 224, [63].
The next consideration is whether the fair-minded lay observer might apprehend that I might not bring an impartial mind to the resolution of the specified beneficiaries allegations at trial, keeping in mind that the lay observer is no more entitled to make snap judgments than a judge.[61] If the observer might so apprehend, it must then be considered whether the apprehension is reasonable in the context outlined above.
[61]See Johnson v Johnson (2000) 201 CLR 488, [14] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).
The fair-minded lay observer might apprehend that the Court might find against the plaintiffs on the specified beneficiaries allegations at trial, but I do not accept that the observer might apprehend that the Court might not approach those allegations impartially. The Court of Appeal overturned the primary decision on the basis of an argument not made before the Court at first instance. The Court of Appeal was able to consider the plaintiffs’ arguments made at first instance and conclude that the trial judge’s decision on those arguments was understandable, and then consider those arguments with the addition of a new argument, and as a result see the matter in a different light. In other words, the Court of Appeal was able to see an existing set of arguments in a different light once a new argument was added to the mix. There is no reason for the fair-minded lay observer to consider that the trial judge might not be capable of doing exactly the same, especially given the observer knows that a professional judge may depart from earlier expressed opinions.
As already stated, in the primary decision I did not make any findings as to ulterior motive or misconduct. No personal criticisms were directed at the plaintiffs or their advisers.
Similarly, there were no findings as to credit or findings of dishonesty or fraud against any of the plaintiffs or their advisers, as there had been in BATA.[62] The Court did not criticise any conduct relevant to the issues in dispute in the substantive proceeding, or make any disparaging remarks about the plaintiffs’ credibility or bona fides generally. The Court was critical of the plaintiffs’ conduct in bringing the leave application and adverse costs orders followed, however, these are simply matters that flowed from the ‘understandable’ conclusion that the specified beneficiaries allegations had no real prospect of success. They are not matters that give the fictitious observer cause to apprehend that the conclusion in the primary decision was reached other than in accordance with the proper judicial method, or that the judge might not employ the proper judicial method in future when considering the specified beneficiaries allegations.
[62]See also Australian National Industries Ltd v Spedley Securities Ltd (1992) 26 NSWLR 411; Southern Equities Corp Ltd v Bond (2000) 78 SASR 339; Kwan v Kang [2003] NSWCA 336; Vakauta v Kelly (1989) 167 CLR 568.
Indeed, the observer will have noted that in its decision, the Court of Appeal was critical of the plaintiffs’ conduct in not fully exposing their case earlier, and adverse costs orders followed. However, the plaintiffs were partially successful in their appeal. The Court of Appeal was therefore able to consider the merits of the specified beneficiaries allegations independently of the plaintiffs’ conduct of the case. In my view, the fair-minded lay observer would anticipate that I too would consider the merits of the specified beneficiaries allegations, in the different light of the new argument raised before the Court of Appeal, independently of the plaintiffs’ conduct of the case to date.
Once it is understood that the primary decision and costs decision did not contain any findings of ulterior motive or misconduct, or any general criticisms directed at the plaintiffs’ bona fides, it becomes clear that there is no logical connection between the two previous interlocutory decisions in this matter and the contention that I might not consider the specified beneficiaries allegations on their merits at trial. As referred to above, if an application is held to be meritless, the Court can be expected to award indemnity costs and make critical comments while reminding the parties of their obligations under the Civil Procedure Act 2010. The Civil Procedure Act 2010 aims to change litigation culture.[63] Achieving that change involves courts being willing, where appropriate, to comment on conduct deemed inconsistent with the Civil Procedure Act 2010 and award costs accordingly. Critical comments and adverse costs orders, in this culture, do not logically lead to a fear that the judge might not consider the arguments on their merits, if raised again with the addition of evidence and arguments not yet put before the court.
[63]Fabfloor (Vic) Pty Ltd v BNY Trust Company of Australia Ltd [2016] VSC 99, [43].
It should also be noted that I did not express any final views in the primary decision and costs decision. Rather, they were interlocutory decisions concerning a question of law. Interlocutory decisions do not usually require a judge to determine any matter on a final basis.[64] In Southern Equities Corp Ltd v Bond, Bleby J said:
In particular, it should not be assumed that, merely because a judge has been responsible for the pre-trial case management of a particular case and will obviously have made decisions adversely affecting one party or another, the judge is necessarily precluded from conducting the trial. Indeed, there would be few interlocutory applications, a decision on which would be likely to give rise to a reasonable apprehension of bias.[65]
[64]Michael Wilson & Partners Limited v Nicholls (2011) 244 CLR 427 [68] (Gummow ACJ, Hayne, Crennan and Bell JJ).
[65](2000) 78 SASR 339, [129].
While I accept that it is possible for interlocutory decisions on questions of law to be reached in such a way as to give rise to a reasonable apprehension of bias, this is not such a case. The conclusion in paragraph [35] of the primary decision uses the expressions ‘the pleadings in their current form’, ‘The specified beneficiary allegations are couched in terms…’, ‘the specified beneficiary allegations as pleaded’ and ‘has no real prospect of succeeding, in its current form’.[66] The conclusion is plainly addressed to the specified beneficiaries allegations as pleaded and as argued on ‘limited and confined submissions’.[67] It is not expressed as a final view on the specified beneficiaries allegations per se.
[66](Emphasis added.)
[67]Mandie v Memart Nominees Pty Ltd [2016] VSCA 4 (5 February 2016) [61].
Even if the fair-minded lay observer might apprehend that I might not bring an impartial mind to the resolution of the specified beneficiaries allegations, I consider such an apprehension not to be reasonable in the context of ordinary judicial practice today. The plaintiffs did not argue that a mere conclusion that the specified beneficiaries allegations had no real prospect of success resulted in a reasonable apprehension of bias. Their argument relied on that conclusion coupled with the additional comments and orders made after that conclusion was reached. In current judicial practice, critical comments and adverse costs orders are unremarkable consequences of bringing an application held to be meritless. They are consequences directed to the bringing of the application. It would not be reasonable on the basis of those consequences to apprehend that the judge’s impartial consideration of the merits of the case might be compromised.
This view is supported by the recent case of Bridge Bar Investments Pty Ltd v Dog at the Bridge Pty Ltd,[68] where Almond J dismissed the plaintiffs’ application for recusal on the basis of apprehended bias. Almond J had awarded indemnity costs against the plaintiffs, referring to their conduct as ‘obstruction’ in his costs ruling. The plaintiffs relied on those matters, among others, to argue that there was a reasonable apprehension of bias. Almond J pointed out that the plaintiffs had not advanced any argument to the effect that the use of the word ‘obstruction’ was unjustified, and concluded that the fair-minded lay observer would not consider the reference to obstruction by the plaintiffs or the fact that indemnity costs were ordered against the plaintiffs was unreasonable.[69] Likewise, the plaintiffs in this case have not advanced any argument independent of their challenge to the primary decision that the comments and conclusions in the costs decision were unjustified.
[68][2016] VSC 224 (10 May 2016).
[69]Ibid [62].
I am not satisfied that based on the comments, conclusions and orders in the primary decision and costs decision, considered individually or collectively, a fair-minded lay observer might reasonably apprehend that I might not bring an impartial mind to the resolution of specified beneficiaries allegations. The plaintiffs’ application on the basis of apprehended bias must be dismissed.
Discretion to recuse
The final issue is whether I should recuse myself on discretionary grounds, even though I have concluded that neither actual bias nor apprehended bias has been established. I accept the plaintiffs’ submission based on Ebner that even if neither actual bias nor apprehended bias is established, there are other circumstances in which a judge may recuse herself. The circumstances justifying discretionary recusal, however, are exceptional.
Before Ebner was handed down, Chernov JA made the following comments in R v Nicholas concerning a judge’s duty to hear a matter:
…it is important to bear in mind what Mason J said in Re JRL; Ex parte CJL:
"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. ... 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."
…
It is trite that no litigant has the right to choose which judge will hear his or her case…I mentioned this only because the other side of that coin is that the judge cannot choose which litigant's case he or she will hear. Subject to administrative considerations, a judge is under a duty to hear the case that has been assigned to him or her unless exceptional circumstances require that the judge not sit on it. Such circumstances include a reasonable but not fanciful apprehension of bias on the part of the judge.[70]
[70](2000) 1 VR 356 [18]-[20] of Annexure 1. (Citation omitted and emphasis added.)
The other members of the Court, Phillips CJ and Ormiston JA, agreed with the decision of Chernov JA not to recuse himself.[71] R v Nicholas is not inconsistent with Ebner. The decision of Chernov JA recognised that the circumstances in which a judge may not continue to sit on a matter are exceptional. Like the majority in Ebner, Chernov JA did not confine those exceptional circumstances to cases where bias is established. In the absence of exceptional circumstances and administrative considerations, the judge’s duty to hear the case prevails.
[71]Ibid [48].
Exceptional circumstances other than established bias were relied on to justify recusal in Margarula v Northern Territory.[72] In that case Reeves J had previously, as a barrister, given advice on an issue that was likely to arise in the proceeding before him. One of the parties asked his Honour to recuse himself on the basis of apprehended bias. Although Reeves J was ‘not personally convinced that [apprehended bias had] been firmly established’, he considered that the grounds for the application for recusal were not insubstantial and he had ‘a real doubt’ about which of his obligations prevailed: the duty to hear the matter or the duty to recuse himself when the apprehension of bias principle applies.[73] Reeves J went on:
In this situation, the decision in Ebner suggests (at [21]) that I should look to the circumstances in which this, not insubstantial objection, is raised. Here, I consider the relevant circumstances are these:
This objection has been raised at an early stage in the proceedings — the tentative hearing dates are still some nine months off.
It will be a relatively simple matter to arrange for another judge of the Federal Court to hear the Mirrar application.
If I were to proceed to hear and determine the Mirrar application and a Full Court later ruled that I should have disqualified myself, a great deal of public resources will have been wasted. Moreover, there will be a significant loss of time in resolving the long outstanding native title and related land use issues in and around the town of Jabiru — the Mirrar application has now been on foot for almost 12 years. In my view, it is particularly important to avoid the risks of these things occurring because, as Mr Glacken rightly pointed out, such would be a “calamitous outcome”.[74]
[72][2009] FCA 290 (Margarula). Cf R v Pinkstone [2001] WASC 252, [70].
[73][2009] FCA 290, [54]-[55].
[74]Ibid [55].
His Honour concluded that in those circumstances ‘the prudent course’ would be to recuse himself, an application which was not opposed by the opposing party.[75] In Ebner, the initial application for recusal was also unopposed.
[75]Ibid [56].
In this case, however, the recusal application is opposed. This is enough to distinguish Ebner and Margarula insofar as they suggest I may recuse myself even if I find on the balance of probabilities that there is no actual bias or apprehended bias.
Where an application is opposed, the prospect of a successful appeal from a decision to refuse the application is not enough to justify granting the application, if the judge otherwise thinks the application should be refused. Granting an unopposed application in circumstances where the judge has a real doubt about whether the application should be granted may avoid an appeal by the applicant and the expense and delay involved in such an appeal. The same does not apply to an opposed application. If an opposed application is granted not because the judge thinks on balance it should be granted, but because there is real doubt about whether it should be granted, the defendant may appeal the decision, resulting in the delay and expense sought to be avoided by granting the application.
Although Ebner and Margarula may be distinguished, I will nevertheless apply them to the plaintiffs’ application in this proceeding. The plaintiffs relied on the majority’s comment in Ebner that ‘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’. That comment does not apply in this case. I understand the majority there to be referring to a judge at the case allocation stage, or a judge who goes out of her way to be given a case originally assigned to another judge. The plaintiffs have not argued that I demonstrated any anxiety to be allocated to this case.
If a judge, already seized of a case in circumstances where there is nothing unusual or untoward about his or her allocation to the case, finds that there is no actual bias or apprehended bias, that in itself is not evidence of her taking ‘pains to arrange’ that he or she sits on that case. If the judge is correct that there is no actual bias or apprehended bias, it could not be argued that by reason of that finding, he or she ‘took pains’ to sit on or remain on the case. If the judge is incorrect in that finding, the judge will be disqualified on the basis of actual bias or apprehended bias, not on the basis that he or she should have exercised some residual discretion to disqualify herself.
As above, I have found that, on balance, the plaintiffs have not established actual bias or apprehended bias. This is, therefore, not an appropriate case for the exercise of a residual discretion to recuse. Even if I did have a real doubt about it, given that this application is opposed and I have found on balance that the plaintiffs have not made out their argument, it would be inappropriate to find in favour of the plaintiffs simply because the Court of Appeal might disagree. That the Court of Appeal might disagree on the issue of bias does not itself require a judge to disqualify himself or herself. As the High Court said in Livesey v New South Wales Bar Association,[76] the principle that a judge does not automatically stand aside when asked to do so necessarily results in appellate courts sometimes reversing the judge’s decision on bias:
If a judge at first instance considers that there is any real possibility that his participation in a case might lead to a reasonable apprehension of pre-judgment or bias, he should, of course, refrain from sitting. On the other hand, it would be an abdication of judicial function and an encouragement of procedural abuse for a judge to adopt the approach that he should automatically disqualify himself whenever he was requested by one party so to do on the grounds of a possible appearance of pre-judgment or bias, regardless of whether the other party desired that the matter be dealt with by him as the judge to whom the hearing of the case had been entrusted by the ordinary procedures and practice of the particular court. Once it is accepted that a judge should not automatically stand aside whenever he is requested so to do, it is inevitable that appellate courts…will on occasion conclude that a decision of a judge at first instance that he should sit was mistaken…[77]
[76](1983) 151 CLR 288.
[77]Ibid 294. (Emphasis added.) The majority in Ebner did not refer to this passage. See also TCN Channel 9 Pty Ltd v Mahony (1993) 32 NSWLR 397, 406 where Kirby P suggested it is undesirable for trial judges, when making interlocutory decisions, to be forced to look over their shoulders to the Court of Appeal lest it might intervene.
Finally, the plaintiffs submit that the fact that their application is brought at an early stage in the proceeding is relevant to the issue of waiver.[78] This however is not a factor weighing in favour of recusal; it is merely a factor to be considered when viewing the application as a whole. No matter how convenient it is to find another judge, and no matter how little expense has been incurred by the parties before the recusal application is made, those factors do not themselves amount to exceptional circumstances that justify recusal. Certainly, when it comes to exercising a ‘residual discretion’ to recuse, the late stage of the proceedings and the difficulty in finding another judge to hear the matter will be factors weighing against recusal. However, the absence of factors against recusal does not translate into the presence of factors favouring recusal.
[78]The defendant did not argue that the plaintiffs had waived their objection based on bias.
Conclusions
The plaintiff has not established either actual or apprehended bias and there are no exceptional circumstances otherwise justifying my recusal. Accordingly, it is my duty to continue to hear this proceeding.
I order that the plaintiffs’ summons filed 18 April 2016 be dismissed. I will hear the parties as to the costs of the application.
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