Melbourne City Investments Pty Ltd v UGL Limited (No 2)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S CI 2015 01440

IN THE MATTER OF MELBOURNE CITY INVESTMENTS
PTY LTD (ACN 161 046 304)

MELBOURNE CITY INVESTMENTS PTY LTD	Plaintiff
v
UGL LIMITED (ACN 009 180 287)	Defendant

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	16 March 2016
DATE OF JUDGMENT:	21 September 2016
CASE MAY BE CITED AS:	Melbourne City Investments Pty Ltd v UGL Limited (No 2)
MEDIUM NEUTRAL CITATION:	[2016] VSC 554

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COURTS AND JUDGES – The Court heard an application to strike out the statement of claim – The judge in his judgment ruled that he intended to order the statement claim to be struck out – The judge raised the issue of whether the proceeding was an abuse of process and/or contrary to the Civil Procedure Act 2008 and invited the parties to address him on the matter – The defendant subsequently sought an order that the plaintiff’s proceedings be dismissed on the grounds that it was an abuse of process – The plaintiff applied for the judge hearing the defendant’s application and the matter raised by the judge to recuse himself – The plaintiff contended that there was a reasonable apprehension of bias on the part of the judge – Consideration of whether statements made by judge in his judgment, during argument and in an appeal to which the plaintiff was a party, could reasonably be considered prejudgment – Consideration of principles on bias – Judge refused to recuse himself.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N O’Bryan SC with Mr M Symons	Portfolio Law Pty Ltd
For the Defendant	Ms W Harris QC with Mr K Loxley	Herbert Smith Freehills

TABLE OF CONTENTS

Introduction.......................................................................................................................... 1
Relevant principles............................................................................................................. 5
The matters relied on by MCI to establish the apprehension of bias.......................... 7
Transcript Day 1 (24 June 2015)......................................................................................... 7
Transcript Day 3 (20 July 2015)........................................................................................ 10
Appeal in Melbourne City Investments v Leighton Holdings Limited................... 12
Reasons in MCI v UGL..................................................................................................... 14
Incompatibility................................................................................................................... 17
Conclusion of MCI............................................................................................................. 20
UGL’s submissions............................................................................................................ 20
UGL’s submissions on the applicable principles......................................................... 21
UGL:‘Legal, statutory and factual contexts in which the decision is made’........... 25
Factual context...................................................................................................... 25

UGL’s submissions on the Court’s inherent power to prevent abuses of process.. 29
UGL:statutory context: the CPA and s 33ZF of the Supreme Court Act................. 32
UGL:MCI’s failure to establish a reasonable apprehension of bias......................... 33
UGL’s submissions on incompatibility.......................................................................... 39
Resolution of application................................................................................................. 41

HIS HONOUR:

Introduction

The plaintiff (MCI) applies for me to recuse myself from:

(a)the determination of the defendant’s (UGL) summons filed on 19 February 2016 by which UGL applies to have this proceeding stayed as an abuse of process;[1] and
(b)any further management or hearing of this proceeding.

[1]In support of its abuse of process application, UGL has filed and served an affidavit of Jason Lawrence Betts sworn 8 March 2016.

The history of this proceeding is set out in my decision in Melbourne City Investments Pty Ltd v UGL Limited.[2]At a directions hearing before Judd J, UGL foreshadowed an application to strikeout the plaintiff’s (MCI) statement of claim. While no summons was ever issued by UGL seeking the strikeout, the oral application was referred to, and heard by me.
[2][2015] VSC 540 (‘MCI v UGL’) (the strikeout judgment).

The application was heard on 24 and 25 June and 20 July 2015 (referred to herein as days 1, 2 and 3 respectively). My reasons in MCI v UGL were delivered on 7 October 2015.

I found the statement of claim should be struck out. Under the heading ‘Further consideration of the proceeding,’[3] I raised the question of ‘whether or not the proceeding as a whole should be struck out.’[4] After noting that the Court of Appeal had permanently stayed two other proceedings in which MCI was the plaintiff on grounds of abuse of process, I said:[5]

The question arises whether or not this proceeding should be permitted to proceed in view of the questionable claim to damages by MCI.
In this case, MCI has pleaded that it expected that UGL had complied with its obligations under the Listing Rules and the Act as alleged in paragraph [20] of the Statement of Claim. This plea was of critical importance to the claim. It provided the base upon which MCI could act as plaintiff. Without that plea it might be argued that the proceeding could not have proceeded.
To my mind, the question arises whether MCI had a proper factual basis to support that allegation. The question arises whether MCI purchased the shares in the hope and expectation that prior to its purchase, UGL had failed to comply with its disclosure obligations under the Listing Rules or engaged in misleading or deceptive conduct. The question arises whether the real reason MCI purchased the UGL shares was to establish a base to bring a market based causation group proceeding against UGL.
The question arises whether the damage claimed by MCI is a genuine plea or whether any damages claimed by MCI have been manufactured to enable it to claim (wrongly) that it has suffered loss and damage.

[3]MCI v UGL, [160] and following.

[4]MCI v UGL, [160].

[5]MCI v UGL, [162]–[165].

I further raised the possibility that Mr Elliott, MCI’s director, had breached the Civil Procedure Act 2010 (Vic) (‘CPA’) by certifying that he had read and understood the overarching obligations set out in ss 16 to 46 of the CPA where MCI may not have a proper basis for bringing the claim if the loss has been deliberately manufactured.[6]
[6]MCI v UGL, [169], [173].

MCI contends that the my reasons implied there may be a breach of s 18 of the CPA on the basis that either:

(a) the proceeding is an abuse of process; or
(b)there is no proper basis for the claim as MCI has suffered no loss.

MCI submits that my thinking was further developed where I said:[7]

If a person deliberately drove their car onto train tracks, in the hope and expectation that it would be hit by a train so that the person could commence a group proceeding with other drivers who had accidentally been hit by a train on the crossing, alleging safety failures at the level crossing, then, to my mind, that may well be an abuse of process by that person or a breach of the CPA by that person.
…
In light of the conduct of MCI in this Court, it might be argued that it bought the shares in order to provide a platform to launch a group proceeding, for the financial advantage of Mr Elliott and/or his business associates, and it may be suggested that if that is the case there has been a breach of the CPA or an abuse of process.

[7]MCI v UGL, [166], [174].

MCI submits that I drew support for the suggestion of a purpose of creating a financial advantage for Mr Elliott and/or his business associates from the finding of Ferguson J (as her Honour then was) in Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 3),[8] where her Honour found:

In my opinion, it is probable that the reason for MCI’s existence is to launch proceedings, such as the present proceeding, to enable its sole director and shareholder to earn legal fees from acting as the solicitor for MCI.

[8] [2014] VSC 340, [9] (‘Treasury Wine Estates’).

MCI contends that it is important to note that the Court’s intention to determine whether this proceeding is an abuse of process was communicated to the parties in the reasons in MCI v UGL,[9] and MCI submits that it may thus be regarded that the determination of whether MCI is engaged in an abuse of the processes of the Court is to be made of the Court’s own motion rather than finding its basis in UGL’s summons dated 19 February 2016.
[9]MCI v UGL, [176]–[177].

In my reasons I said:[10]

I have an open mind on these issues, but I feel I am duty bound to raise them with the parties.
In those circumstances, I propose to relist this proceeding to hear the parties on these issues before I make final orders in the matter.

[10]MCI v UGL, [176]–[177].

MCI expressly disavowed any intention to engage with the law of abuse of process or whether Mr Elliott or MCI breached the CPA.

MCI said that in relation to the law of abuse of process it is apposite to note my statement on the law in Kermani v Westpac Banking Corporation,[11] where I said that the High Court in Michael Wilson & Partners Ltd v Nicolls[12] had ‘confirmed that what amounts to abuse of process is insusceptible of a formulation comprising closed categories.’
[11](2012) 36 VR 130, 152 [94] (‘Kermani’).
[12](2011) 244 CLR 427, 452 [89].

MCI submits that the factors I set out[13] indicate inter alia that (i) the Court has an inherent jurisdiction to stay proceedings as an abuse of process; (ii) “[t]he jurisdiction to stay for abuse of process is not limited to cases where the proceedings have been brought for an improper purpose …”; (iii) there are many and varied circumstances in which abuse may arise; and (iv) “…the Court should undertake a weighing process involving a subjective balancing of a variety factors [sic] and considerations.”
[13]Kermani, 153–5 [97].

MCI submits that I ought recuse myself from:

(a)the determination of whether MCI is engaged in an abuse of process on the basis of a reasonable apprehension of bias on two bases. The first arises from a reasonable apprehension of prejudgment in respect of abuse of process. The second arises from the incompatibility of my dual roles of prosecutor, in respect of the submission that MCI is engaged in an abuse, and judge, engaged in determining whether that submission is made out;
(b)any further management or hearing of this proceeding on the basis of a reasonable apprehension of bias arising from a reasonable apprehension of prejudgment on the questions of causation which arise in this case.

MCI submits that the appearance of prejudgment arises from the comments I made on days 1 and 3 of the hearing of the strikeout application in this proceeding, and at the hearing of the appeal in Melbourne City Investments v Leighton Holdings Limited.[14]
[14][2015] VSCA 235 (‘Leighton’) (Tate, Beach JJA and Robson AJA, 25 August 2015).

MCI submits that incompatibility between the roles of prosecutor and judge arises as a matter of principle on the basis of my alleged prosecution of the case for the stay of the proceeding as an abuse of process in the MCI v UGL judgment and my proposal that I would hear that application. MCI submits that it makes no difference to the latter question that UGL later issued a summons seeking the same relief, since I also proposed to hear that summons.

As indicated, UGL has instituted its own motion to have the proceeding dismissed as an abuse of process. Ms Harris, One of Her Majesty’s Counsel, for UGL, submitted that the issues I had raised were also covered by the matters raised in UGL’s motion. However, Mr O’Bryan, Senior Counsel for MCI, argued that the matters I raised have not been canvassed or included in the matters raised by the motion.

I do not consider it appropriate to decide whether Ms Harris or Mr O’Bryan is correct without hearing full argument. In any event, a Court is duty bound to raise what it sees as an abuse of process. UGL have referred to relevant authorities below at paragraph 94 and following which establish the Court’s power and duty to do so.

I turn to the question of whether or not I have prejudged the issue of whether this proceeding constitutes an abuse of process by MCI, and whether the fair-minded lay observer might have a reasonable apprehension that I have prejudged the issue.

Relevant principles

In Ebner v Official Trustee in Bankruptcy,[15] the High Court of Australia held that the test to be applied in determining whether a judge is disqualified by reason of apprehended bias is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide.
[15](2000) 205 CLR 337, 344 [6] (‘Ebner’) (Gleeson CJ, McHugh, Gummow and Hayne JJ). See the discussion of the relevant principles in Bridge Bar v Dog at the Bridge Pty Ltd [2016] VSC 224 (Almond J).

In Ebner, the High Court said “[t]he question is one of possibility (real and not remote), not probability.”[16] The Court also said that a twostep approach should be adopted. “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 merits.”[17] Secondly, “[t]here must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case other than on its legal merits.”[18]
[16]Ebner, [7].
[17]Ebner, [8].
[18]Ebner, [8].

The High Court in Ebner said that judges have a duty to exercise their judicial function when their jurisdiction is regularly invoked.[19] Judges are not at liberty to decline to hear cases without good cause.[20] As Mason J indicated in Re JRL; Ex parte CJL,[21] a judge should not too readily accept recusal because a party has demanded it.[22] In Bienstein v Bienstein,[23] the High Court said that “[a] Judge should not disqualify himself or herself on the basis of bias or a reasonable apprehension of bias unless substantial grounds are established.”[24]
[19]Ebner, [19].
[20]Ebner, [19].
[21](1986) 161 CLR 342 (‘JRL’), 352.
[22]See also Antoun v R(No S300/2005) (2006) 224 ALR 51, [34] (Kirby J).
[23](2003) 195 ALR 255 (‘Bienstein’).
[24]Bienstein, [36], (McHugh, Kirby and Callinan JJ).

In JRL, Mason J drew the distinction between an expectation being drawn that a judge is likely to decide issues in a case adversely to one of the parties because of previous decisions of the judge and apprehended bias. Mason J said this expectation “…does not mean either that he will approach the issues in that case otherwise than with an impartial and unprejudiced mind in the sense in which that expression is used in the authorities or that his previous decisions provide an acceptable basis for inferring that there is a reasonable apprehension that he will approach the issue in this way.”[25] His Honour continued:[26]

In cases of this kind, disqualification is only made out by showing that there is a reasonable apprehension of bias by reason of prejudgment and this must be “firmly established”: Reg. v. Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group; Watson; Re Lusink; Ex parte Shaw. Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour.
[25]JRL, 352.
[26]JRL, 352 (citations omitted); see also Bienstein, [35] where McHugh Kirby and Callinan J cite Mason J in JRL.

The matters relied on by MCI to establish the apprehension of bias

MCI submits that the apprehension of prejudgment in relation to each of:

(a)the determination of whether this proceeding constitutes an abuse of process; and
(b)issues of causation relevant to trial and which, based on the reasoning set out at MCI v UGL at [160]–[177], is an integer of my reasoning in relation to abuse of process and breach of the CPA,

arise from statements made by me in:
(i)days 1 and 3 of the hearing of the strikeout application in this proceeding;
(ii)the hearing of the appeal in Leighton on 25 August 2015.

Transcript Day 1 (24 June 2015)

MCI submits that after I postulated that the pleading of group membership in MCI’s statement of claim “…could cover a plaintiff that bought the shares just so they could probably bring a group action”[27] and that it could include a plaintiff that “…bought it on the hope that it was misinformed,”[28] I concluded that “…then if [the market] was misinformed, they hardly suffer loss.”[29]
[27]Transcript of hearing, MCI v UGL, (24 June 2016) T37, L25–6.
[28]Transcript of hearing, MCI v UGL, (24 June 2016) T38, L4.
[29]Transcript of hearing, MCI v UGL, (24 June 2016) T38, L6–7.

MCI submits that I then asked senior counsel for the defendant in an exchange[30] whether it was part of the defendant’s case that MCI had purchased a small shareholding in the defendant “…because it might be useful if there’d been non-disclosure, might be useful in a group proceeding---” and to allege that “---these shares were bought to put in the back pocket along with, in case we subsequently find out there was some mis-disclosure, something withheld and they’d then be useful in a group proceeding? Or is that not alleged?” After learning that the defendant had not yet pleaded any defence, I concluded by saying, “I don’t want to talk about it, if it’s not alleged, we’ll forget about it.”
[30]Transcript of hearing, MCI v UGL, (24 June 2016) T40, L12–29.

MCI submits that at this stage, my engagement with senior counsel for UGL would be regarded by the reasonable lay observer as no more than an exchange in the course of argument about the nature and extent of the defendant’s strikeout application. MCI contends that, immediately thereafter I engaged in the following exchange:[31]

MS HARRIS [senior counsel for UGL]: No so we haven’t pleaded a defence yet Your Honour but this is one of a series of proceedings brought by this plaintiff. And findings were made by Her Honour Justice Ferguson and confirmed in the Court of Appeal in another one of these proceedings. That that was the motivation of this plaintiff in acquiring all of its little parcels of shares. And so most certainly this - - -
HIS HONOUR: So this, this is that plaintiff, because I didn’t know that.

[31]Transcript of hearing, MCI v UGL, (24 June 2016) T40, L30 – T41, L8.

Thereafter, MCI says that my comments were coloured by prejudgment on the basis of MCI’s identity. MCI submits that immediately thereafter, I had the following exchange with senior counsel for UGL:[32] (emphasis added by MCI)

HIS HONOUR: But isn’t it critical to your point that there’s no damage – isn’t it a critical point that, that – doesn’t it overlap with your point that this – they hadn’t pleaded reliance?
MS HARRIS: Well Your Honour - - -
HIS HONOUR: Because the reason – if they disclose the real reason for buying the shares, they have no cause of action.

[32]Transcript of hearing, MCI v UGL, (24 June 2016) T41, L13–20.

Having expressed the view that some shareholders may purchase shares in the hope that there had been a disclosure failure by the listed company, MCI says that I immediately concluded that MCI had no cause of action after I learned of MCI’s involvement in a different case in which findings had been made concerning its motivations for the purchase of parcels of shares.

Later in the course of the day’s hearing, MCI says that I returned to the theme of MCI not having a bona fide claim. MCI contends I expressed ‘real scepticism about MCI’s motivations.’[33]
[33]Transcript of hearing, MCI v UGL, (24 June 2016) T121, L29 – T122, L8 (emphasis added by MCI).

HIS HONOUR: Who buys $700 worth of shares as a profit making venture? I mean it’s just - - -
MS HARRIS: Well that’s a good question Your Honour.
HIS HONOUR: - - - it doesn’t ring true.
MS HARRIS: There might be other reasons for the purchase Your Honour.
HIS HONOUR: That’s right. I mean $700 is you know, what’s the - - -
MS HARRIS: Indeed.
HIS HONOUR: It’s about 20 seconds of this case or less you know.

MCI asserts that I concluded that MCI had not suffered any loss on the theory that its purchase of UGL shares was made in the hope of commencing a group proceeding and not with a profit motivation. MCI submits that I stated the following conclusions in relation to abuse of process:[34]

HIS HONOUR: The court’s here to compensate people for loss and damage. If they’ve suffered no loss and damage, it is an abuse for the process to come to court and have a big proceeding about it and they don’t allege, suffered one cent of loss or damage.
MS HARRIS: Well they say they - - -
HIS HONOUR: It goes straight to the core of this case.
MS HARRIS: Well they allege - - -
HIS HONOUR: That they’ve got a huge statement of claim, six barristers at the Bar table, tying up a Supreme Court judge, $720 was invested and there’s not one allegation a cent of that was lost.
[34]Transcript of hearing, MCI v UGL, (24 June 2016) T122, L24 – T123, L4 (emphasis added by MCI).

Transcript Day 3 (20 July 2015)

MCI contends that I restated a conclusion concerning MCI having no cause of action on the third day of the hearing of the strikeout application. On this occasion, MCI submits that I employed very strong language which MCI submits does not permit any conclusion other than of having reached a fixed position from which I would not be swayed. MCI submits that my comments were not merely an incautious remark or a tentative opinion on causation and the plaintiff’s motivation:[35]

HIS HONOUR: Yes I suppose I’ll be thinking about that in a way, I guess we’ve got to wait because I – looking at the case - - -
MR ARMSTRONG: Your Honour in fact - - -

HIS HONOUR: - - - said that it appeared to me that the plaintiff’s allegation that it suffered loss is patently false because it bought the shares, hoping and intending that they’d bought them in a price inflated market. That was the whole point of buying them. And the fact that it turned to be right doesn’t mean that it suffered loss.

[35]Transcript of hearing, MCI v UGL, (20 July 2016) T269, L14–23 (emphasis added by MCI).

MCI submits that I indicated[36] that I understood for the purpose of determining the strikeout application that I must assume that MCI had made a loss, however, my findings on causation and motivation are central to the question of abuse of process as framed by me in MCI v UGL,[37] which is now before the Court.
[36]Transcript of hearing, MCI v UGL, (20 July 2016) T269, L24 – T270, L20.
[37]MCI v UGL, [160]–[177].

MCI submits that while I may be able to put my earlier stated conclusions concerning causation and motivation out of my mind for the purpose of determining the strikeout application (where those conclusions had no bearing), that mental flexibility cannot here be assumed because any decision on abuse of process, or at trial on causation, would appear to the hypothetical lay observer to be matters that I had prejudged on days 1 and 3 of the strikeout application. MCI submits that my statements militate against any suggestion that my mind remained or remains open on these questions.

MCI contends that this is confirmed where I said:[38]

HIS HONOUR: - - - whereas in fact, your client bought the shares, with the hope and intention the market wasn’t informed - - -
MR ARMSTRONG: No.
HIS HONOUR: - - - with the desire of making a loss.
HIS HONOUR: - - - it’s troubled me, I’m sitting about this saying well the plaintiff hasn’t made a loss, this is exactly what the plaintiff wanted.[39]

[38]Transcript of hearing, MCI v UGL, (20 July 2016) T275, L3–8 (emphasis added by MCI).

[39]Transcript of hearing, MCI v UGL, (20 July 2016) T275, L28–30 (emphasis added by MCI).

Further MCI argues that I reinforced that I had reached a conclusion concerning MCI’s hope that it had bought shares in an uninformed market:[40]
[40]Transcript of hearing, MCI v UGL, (20 July 2016) T278, L27 – T279, L19 (emphasis added by MCI).

HIS HONOUR: It doesn’t plead why it bought the shares [sic]. It doesn’t plead it bought the shares.
MR ARMSTRONG: It doesn’t but - -
HIS HONOUR: Hoping that they hadn’t complied.
MR ARMSTRONG: It doesn’t matter. No, Your Honour, as long as - - -
HIS HONOUR: Well, how do you get to the – you don’t get the loss and damage because they say they expected it complied and had no knowledge. How does that get you loss and damage?
MR ARMSTRONG: Well, Your Honour – Your Honour, a plaintiff’s purpose in purchasing – once the plaintiff is ignorant - - -
HIS HONOUR: It does. It goes right to the heart of whether you suffered loss and damage.
MR ARMSTRONG: No, with respect, Your Honour. If the plaintiff pleads that it expected the defendant had complied and had no knowledge of non-compliance - - -
HIS HONOUR: That hoped that it had not.
MR ARMSTRONG: Well, we can’t – that’s not an element of the cause of action.
HIS HONOUR: Well, that’s the reason why it bought the shares. I mean, you’re trying to plead a loss. How do you get a loss when you expect that it had but hoped it hadn’t?

MCI submits that I indicated extreme scepticism about MCI’s motivations, and I implied that it would be fantastical to draw any other conclusion:[41]

HIS HONOUR: It’s just, I know what you say, it’s just like Alice in Wonderland, I mean, they were bought hoping and expecting the market wouldn’t be informed.

[41]Transcript of hearing, MCI v UGL, (20 July 2016) T281, L29–31 (emphasis added by MCI).

Finally, MCI submits that I again stated in clear terms that MCI “[c]ertainly wasn’t relying on the fact [that UGL had complied with its disclosure obligations], it was hoping they wouldn’t be.”[42]

Appeal in Melbourne City Investments v Leighton Holdings Limited[43]

[42]Transcript of hearing, MCI v UGL, (20 July 2016) T289, L21–2.

[43]Leighton.

MCI refers to the occasion when I sat as a member of the Court of Appeal which heard an appeal on questions of res judicata and issue estoppel which also raised the question whether MCI’s proceeding against Leighton ought be stayed as an abuse of process.

MCI says that in relation to whether the proceeding was an abuse of process, the facts differed from those in the instant case because in the Leighton case Mr Elliott had acted as the plaintiff’s solicitor at the commencement of the proceeding. However, MCI argues that the shareholding facts are similar as in each proceeding MCI pleads that it has suffered loss as a result of overpaying for the purchase of a parcel of shares in each defendant company, because the market price for those shares was artificially inflated at the time of purchase by reason of each defendant’s contraventions of ss 674 and 1041H of the Corporations Act 2001 (Cth) (‘the Corporations Act’).

MCI contends that despite its irrelevance to the questions which were raised before the Court of Appeal, I raised MCI’s motivation for the purchase of shares. MCI submits that I said that I raised the matters for the purpose of ‘postulating some [other] grounds which might support the abuse of process.’[44]
[44]Transcript of hearing, Leighton, (25 August 2015) T69, L1–2.

MCI says that I cast the point a little differently, as I pointed to the plaintiff (or presumably its director) earning legal fees as a justification for the purchase of shares in the hope and expectation of the market being uninformed.[45] I had said:

[…]the object of the plaintiff in buying these shares is the hope that the market’s been misinformed so it will be able to mount such a claim, that is, it doesn’t suffer any loss when it turns out the market has been not properly informed, in fact it strikes gold because this is a case which can now run an action.[46]
[…]isn’t it appropriate that you look at this action and say, where the plaintiffs are pleading they have suffered loss, when in fact that’s what they wanted to do, that was the sole purpose of buying these shares, was the hope that some information hadn’t been released in the market and therefore this proceeding could be instituted?[47]
[…]but in this case you have a proceeding where the plaintiff claims it’s suffered loss when it patently hasn’t.[48]

Reasons in MCI v UGL

[45]Transcript of hearing, Leighton, (25 August 2015) T68, L28.

[46]Transcript of hearing, Leighton, (25 August 2015) T66, L7–13 (emphasis added by MCI).

[47]Transcript of hearing, Leighton, (25 August 2015) T66, L16–22.

[48] Transcript of hearing, Leighton, (25 August 2015) T66, L28–30 (emphasis added by MCI).

MCI submits that in my reasons in MCI v UGL[49] I posed three questions directed to motivation and causation:

The question arises whether MCI purchased the shares in the hope and expectation that prior to its purchase, UGL had failed to comply with its disclosure obligations under the Listing Rules or engaged in misleading or deceptive conduct.
The question arises whether the real reason MCI purchased the UGL shares was to establish a base to bring a market based causation group proceeding against UGL.
The question arises whether the damage claimed by MCI is a genuine plea or whether any damages claimed by MCI have been manufactured to enable it to claim (wrongly) that it has suffered loss and damage.

[49]MCI v UGL, [164], [165].

MCI contends that the hypothetical lay observer who had witnessed the exchanges on days 1 and 3 of the strikeout application and at the Court of Appeal hearing in Leighton on 25 August 2015 would not consider that any of these questions remained open questions for me. Rather, MCI submits that by using language such as “patently false” and “it’s just like Alice in Wonderland” and otherwise as set out above, I made my prejudgments about these issues abundantly clear.

MCI relies on Zhai v Luo,[50] where the Full Federal Court comprising Rares, McKerracher and Gleeson JJ said:

A reasonable apprehension of bias will exist if the fair-minded lay observer might reasonably consider, as a real possibility, that the judge might be so committed to a conclusion already formed that he or she is incapable of altering it, whatever evidence or arguments may be presented: Cabcharge Australia Limited v Australian Competition and Consumer Commission [2010] FCAFC 111 at [25]-[29] per Kenny, Tracey and Middleton JJ. And as their Honours added (at [32]), “disqualification flows from a reasonable apprehension that the judge might not decide the case impartially, rather than that he will decide the case adversely to a party.”

[50][2015] FCAFC 144, [20].

MCI submits that the Full Federal Court in Zhai v Luo[51] went on to adopt a statement by Kirby and Crennan JJ in Concrete Pty Limited v Parramatta Design & Developments Pty Ltd that:[52]

[s]ometimes judicial interventions and observations can exceed what is a proper and reasonable expression of tentative views. Whether that has happened is a matter of judgment taking into account all of the circumstances of the case. However, one thing that is clear is that the expression of tentative views during the course of argument as to matters on which the parties are permitted to make full submissions does not manifest partiality or bias.

[51]Zhai v Luo, [23].

[52](2006) 229 CLR 557, [112] (citations omitted by MCI).

MCI submits that had my comments been expressed as tentative views at the time of their making, the latter part of this statement may have been relevant. However, MCI submits that the statements recorded in the transcript and set out above were not presented tentatively. MCI submits that I chose strong and conclusive language to express views which in the plaintiff’s submission exceeded what could be regarded as a proper and reasonable expression of views in the course of argument. MCI refers generally to the discussion of principle in Zhai v Luo.[53]
[53]Zhai v Luo,, [18]–[23].

MCI submits that in hearing any application to stay this proceeding as an abuse of process, or the trial of this proceeding, or any other interlocutory matter, the hypothetical lay observer would reasonably conclude that:

(a)I had prejudged or was committed to the conclusion that MCI had purchased shares in UGL in the hope and expectation that UGL had contravened ss 674 and 1041H of the Corporations Act;
(b)I had prejudged or was committed to the conclusion that MCI purchased UGL shares to establish a base to bring a market based causation group proceeding against UGL; and
(c)I had prejudged or was committed to the conclusion that accordingly MCI has suffered no loss and does not have a genuine claim for damages.

MCI submits that the effect of my prejudgments or commitment to the stated conclusions is such that the hypothetical observer might reasonably consider, as a real possibility, that I am incapable of altering those judgments, whatever evidence or arguments be presented.

The questions and propositions set out in MCI v UGL[54] are characterised as being open, and MCI concedes that I specifically said,[55] ‘I have an open mind on these issues.’
[54]MCI v UGL, [160]–[177].
[55]MCI v UGL, [176].

MCI submits that this later statement, that I have an open mind on matters which may be determinative of the entire proceeding, either because they could lead to the proceeding being permanently stayed as an abuse of process or to the plaintiff being unable to make out its case at trial, are insufficient to permit the hypothetical observer to abandon an existing and well-founded apprehension of prejudgment.

MCI refers to and relies on the observations by Heydon, Kiefel and Bell JJ’s in British American Tobacco Services Ltd v Laurie[56] in regard to my later statement that I have an open mind. There, the plurality of the High Court said that:

It is clear, as Tobias JA acknowledged, that later statements made by a trial judge may be taken into account in determining whether there exists a reasonable apprehension of prejudgment.[57] A later statement may explain an earlier statement which might otherwise suggest that the trail judge has made up his or her mind about a matter. However, recourse to the later statement is not for the purpose of ascertaining whether the judge has expressed a willingness or confidence in his or her ability to maintain an open mind. It is assumed that a judge who is conscious of having formed so clear a view that the judge is unlikely to be persuaded from it would not sit to hear the later case. Ex hypothesi, a court reviewing the decision of a judge to sit to hear a case in circumstances where apprehended prejudgment is alleged, but not actual bias, will be reviewing the decision of a judge who is confident of his or her ability to decide the case impartially.

[56] (2011) 242 CLR 283, 330-331, [137] (‘BAT v Laurie’).

[57]British American Tobacco AustraliaServices Ltd v Laurie [2009] NSWCA 414, [72] (Tobias JA), referring to Johnson v Johnson (2000) 201 CLR 488, 494, [14] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) (‘Johnson’).

MCI submits that had there been ambiguity in relation to my statements made either in the course of the hearing of the strikeout application or in the Court of Appeal, that ambiguity concerning whether I had made up my mind could perhaps have been resolved by a statement which explained that earlier statement or statements. However, MCI submits that is not this case. MCI contends that my statements concerning causation and the plaintiff’s motivation were conclusory and are not capable of any explanation which would negate the hypothetical lay observer’s apprehension of prejudgment.

MCI submits that my express statement that I have an open mind in MCI v UGL[58] “does not remove the impression created by reading [the transcript] that the clear views there stated might influence [my] determination of the same issue[s]”[59] either in determining whether the proceeding constitutes an abuse of process or at trial, and again refers to: BAT v Laurie per Heydon, Kiefel and Bell JJ quoted above at paragraph 52.
[58]MCI v UGL, [176].
[59]BAT v Laurie, 333 [145] (emphasis in original).

Thus, MCI submits that the hypothetical lay observer would conclude that my statements, which were expressed without qualification or doubt, demonstrate an actual persuasion of the correctness of those conclusions. MCI says that the hypothetical lay observer would fear that there would be deviation from the true course of decision-making should any part of this proceeding be left for me to decide or manage.

Therefore, MCI submits that in the absence of necessity, waiver, or special circumstances, MCI’s application for recusal ought be granted on the grounds of prejudgment.

Incompatibility

MCI contends that my role in acting as prosecutor, accuser or moving party concerning the allegation of abuse of process in this proceeding means that I have a “personal interest” in the determination of whether the proceeding is an abuse of process which is inconsistent and incompatible with my also determining whether the proceeding is an abuse of process as a judge.

MCI contends that the allegations of abuse of process and breach of the CPA articulated in MCI v UGL[60] have now acted as a springboard for a further articulation of the grounds of abuse of process by the defendant, UGL, for the filing of its summons of 19 February 2016 and affidavit of 8 March 2016. However, MCI submits that my role in providing the initial accusation and articulation of the grounds for the finding of abuse is not superseded by UGL’s subsequent actions.
[60]MCI v UGL, [160]–[177].

MCI submits that having articulated the allegation of abuse of process, despite apparently approaching the determination of the question with an open mind[61] it may be apprehended by the hypothetical lay observer that I may have a personal interest in the vindication of my alleged opinion. MCI submits that the prospect of this apprehension is sufficient for me to be obliged to recuse myself.
[61]MCI v UGL, [176].

MCI refers to Ebner, where Gleeson CJ, McHugh, Gummow and Hayne JJ noted[62] that a judicial officer may, in substance, be a moving party where the judicial officer has instituted a prosecution, even where the judicial officer is not on the record as a necessary and proper party to the case. In these circumstances the plurality said:[63]

A judge is disqualified from deciding a case to which he or she is a party, even if the judge has no pecuniary interest in the outcome of the case. Again this rule is subject to qualifications of waiver and necessity.

[62]Ebner, 658, [61].

[63]Ebner, 659, [63].

MCI submits that the law concerning incompatibility has been reiterated recently by the High Court in Isbester v Knox City Council.[64] There the plurality consisting of Kiefel, Bell, Keane and Nettle JJ approved[65] Isaacs J’s statement of the law in Dickason v Edwards that:[66]

[…]there is another kind of disqualification and that is what I may term “incompatibility.” If it is incompatible for the same man to be at once judge and occupy some other position which he really has in the case, the prima facie he must not act as a judge at all. That is a fundamental and essential principle of justice. … There are two exceptions to this rule recognized by law. One is where a person is relieved from the operation of that rule by Statute, and the second is where there is a necessity for him to act.

[64](2015) 255 CLR 135 (‘Isbester’).

[65]Isbester,149, [34]–[35].

[66](1910) 10 CLR 243 at 259 (‘Dickason’).

The plurality went on in Isbester to say that:[67]

The interest identified in Dickason and Stollery as necessitating disqualification was that of a prosecutor, accuser or other moving party. An interest of that kind points to the possibility of a deviation from the true course of decision-making.
A “personal interest” in this context is not the kind of interest by which a person will receive some material or other benefit. In the case of a prosecutor or other moving party it refers to a view which they may have of the matter, and which is in that sense personal to them. The interest of a prosecutor may be in the vindication of their opinion that an offence has occurred or that a particular penalty should be imposed, or in obtaining an outcome consonant with the prosecutor’s view of guilt or punishment. It is not necessary to analyse the psychological processes to which a person in such a position is subject. It is well accepted, as the two cases referred to show, that it might reasonably be thought that the person’s involvement in the capacity of prosecutor will not enable them to bring the requisite impartiality to decision-making. This is not to equate such a person with a judge.

[67]Isbester, 152, [45]–[46].

The plurality in Isbester said that:[68]

[i]n cases of incompatibility, disqualification would seem to be the only possible outcome[…]

and that:[69]
[…]in cases like the present one that concern incompatibility of roles, once the interest is identified as one which points to a conflict of interest, the connection between that interest and the possibility of deviation from proper decision-making is obvious.

[68]Isbester, 152, [47].

[69]Isbester, 153, [49].

MCI submits that the Court’s raising of a matter on its own motion will not ordinarily create a question of incompatibility where the question raised falls within the sphere of case management and is not determinative of substantive rights or the proceeding as a whole. MCI submits, however, that just as the High Court recognised in BAT v Laurie in respect of prejudgment, that apprehended bias could arise outside of the sphere of case management due to the possibility of the Court deviating from proper decision-making, so should the Court recognise that incompatibility should oblige disqualification or recusal where the incompatibility introduces partiality which imperils substantive rights.

Conclusion of MCI

MCI submits that I ought recuse myself from the hearing of this proceeding, including this application, and that the further hearing of this proceeding, and of any applications in this proceeding, be referred to a judge other than me.

MCI submits that the grounds for recusal are made out in respect of both prejudgment and incompatibility. MCI contends that there has been no waiver by MCI, and there is no necessity or special circumstance which requires me, given the reasonable apprehension of bias, to have any further involvement with the management or hearing of any aspect of this proceeding.

UGL’s submissions

UGL submits that in terms of abuse of process, the appearance of bias is said to arise by virtue of me having prejudged the issue and/or of the existing incompatibility between “Robson J’s dual roles of prosecutor … and judge.”[70]
[70]MCI submissions, [11].

UGL contends that the application for recusal from the proceeding as a whole is put on the basis of me having “prejudged the questions of causation” which arise in this case.

UGL says that in instigating, at the Court’s own motion, a hearing on the question of whether or not the Court’s processes have been abused by instituting this proceeding, I acted in accordance with a long line of authority which emphasises the Court’s inherent jurisdiction to protect its processes from abuse.

As to comments made by me in argument during the course of hearing UGL’s application to strikeout MCI’s statement of claim (and remarks in the judgment on that application),[71] or during the hearing of an appeal in another shareholder action instituted by MCI in this Court (Leighton[72]), UGL contends that those comments represent, at most, the expression of tentative views which were expressly qualified as such.
[71]MCI v UGL.
[72]Leighton, (Tate and Beach JJA and Robson AJA).

UGL submits that there is no warrant for a finding that the fair-minded lay observer would discern from these comments and remarks a real possibility that I have formed a view that is incapable of being altered, whatever evidence or arguments may be presented.

UGL contends that the High Court’s jurisprudence on reasonable apprehension of bias establishes a standard against which the conduct sought to be impugned in this case falls short.

UGL’s submissions on the applicable principles

UGL accepts that the parties are ad idem that the legal test governing this application is that set out in the judgment of Gleeson CJ, McHugh, Gummow and Hayne JJ in Ebner, as set above in paragraph 20.[73]
[73]Subsequently adopted by the High Court in several cases, most recently Isbester.

UGL submits that in Isbester, Gageler J set out the three analytical steps involved in the application of the test:[74]

(a)identification of the factor which it is hypothesised might cause a question to be resolved otherwise than as a result of a neutral evaluation of the merits;
(b)articulation of how the identified factor might cause that deviation from a neutral evaluation of the merits; and
(c)consideration of the reasonableness of the apprehension of that deviation being caused by that factor in that way.

[74]Isbester, 155, [59] (Gageler J).

UGL says that in Isbester, Kiefel, Keane, Bell and Nettle JJ held that the application of the test is largely a factual enquiry, albeit one which is necessary to consider in the legal, statutory, and factual contexts in which the decision is made.[75]
[75]Isbester, 146, [20].

UGL submits that the following features are to be imputed to the fair-minded lay observer:

(a)he or she does not make snap judgments;[76]
(b)he or she is taken to be reasonable;[77]
(c)knowledge of all the circumstances of the case must be attributed to him or her;[78] and
(d)he or she will have regard to the fact that a judicial officer’s training, tradition and oath or affirmation equip the officer with the ability to discard the irrelevant, the immaterial and the prejudicial.[79]

[76]Johnson, 494 (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

[77]Johnson, 493 (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

[78]Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293–4; JRL, 355, 359, 368, 371–2; Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70, 87–8, 95 (‘Laws’).

[79]Johnson, 493 (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) citing Vakauta v Kelly (1988) 13 NSWLR 502, 527, adopted in Vakauta v Kelly (1989) 167 CLR 568, 584–5.

In Johnson, the High Court imbued the hypothetical observer with full knowledge of court practice and procedure, including active case management, and held that the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice.[80]
[80]Johnson, 493 (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

UGL contends that an allegation of apprehended bias must be “firmly established.”[81] Moreover, as indicated above at paragraph 22 the High Court held in Bienstein v Bienstein,[82] a judge should not disqualify himself or herself on the grounds of reasonable apprehension of bias unless those grounds are “substantial.” In that case, the appellant contended that Hayne J should have recused himself on the grounds of apprehended bias by reason that certain observations his Honour had made during the course of argument on a removal application under s 40 of the Judiciary Act1903 (Cth) indicated, so it was said, that his Honour had pre-determined the application. In agreeing that Hayne J was correct not to have acceded to the application McHugh, Kirby and Callinan JJ said:[83]

This Court held in Re Keely; Ex parte Ansett Transport Industries[84] that the expression by a judge of tentative views during the course of argument as to matters on which the parties are permitted to address full argument manifests no partiality or bias. This approach has been confirmed and applied in many cases.[85] Clearly the comments of Hayne J in the present case are of this character: they occurred in the normal course of a hearing and do not demonstrate bias or the reasonable apprehension of bias.

[81]R v Commonwealth Conciliation and Arbitration Commission; ex parte Angliss Group (1969) 122 CLR 546, 553–4; R v Watson; ex parte Armstrong (1976) 136 CLR 248, 262.

[82]Bienstein, 233, [36] (McHugh, Kirby and Callinan JJ).

[83]Bienstein, [34]. Adopted by Kirby and Crennan JJ in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577, 630, [112] (emphasis added by UGL).

[84](1990) 64 ALJR 495.

[85]Vakauta v Kelly (1989) 167 CLR 568, 571, 584–5; Johnson, 493 [12]–[13], 504–5 [46], 518–19 [81]–[85].

UGL submits that the High Court’s emphasis upon the responsibility of judges to discharge the judicial function unless substantial grounds are established for disqualification is to be steadily borne in mind in weighing the competing considerations on this application. UGL contends that so too are their Honours’ observations about the unexceptionable character of judicial officers expressing tentative views, or alerting the parties to matters which concern them or upon which they would like to be assisted, during the course of argument.

UGL submits that in this regard, where apprehended bias by way of prejudgment is alleged, the applicant must establish that the fair-minded observer would apprehend that the decision-maker is not “open to persuasion,” or has already formed a view that is “incapable of alteration, whatever evidence or arguments may be presented.”[86]
[86]Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507, 531–2 (‘Jia’); Laws, 100.

UGL argues that the rule against bias, actual or apprehended, is not directed to predisposition capable of being swayed by evidence or argument.[87] UGL says that the fact that a judge has expressed even a strongly worded view at the outset of a hearing does not prevent characterisation of that view as tentative or provisional or exploratory,[88] such that the judge’s mind, although possessed of such a view or perspective, remains open to persuasion.
[87]As Gleeson CJ and Gummow J said in Jia (531, [71] – 532, [72]) “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. … Natural justice does not require the absence of any predisposition or inclination for or against an argument or conclusion.” In the same case, Hayne J said the question was whether the decision-maker will apply his or her opinion (564, [185]): “…without giving the matter fresh consideration in the light of whatever may be the facts and arguments relevant to the particular case.”
[88]BAT v Laurie, 305 (French CJ).

UGL cites Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ in Johnson, where their Honours held:[89]

Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgment. Judges are not expected to wait until the end of a case before they start thinking about the issues, or to sit mute while evidence is advanced and arguments are presented. On the contrary, they will often form tentative opinions on matters in issue, and counsel are usually assisted by hearing those opinions, and being given an opportunity to deal with them.

[89]Johnson, 493, [13] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

UGL argues that the second basis of MCI’s application, which it terms “incompatibility,” is a subset of the category of apprehended bias pertaining to conflict of interest. UGL says that the proposition from the cases on incompatibility which MCI seeks to deploy on this application is that I am, in effect, a “party” to UGL’s abuse of process application because I was the “moving party to the proceedings.” UGL submits that that principle has no application to the facts of this case.

UGL argues that the authorities relied on by MCI in support of this contention do not comprehend of incompatibility where, as is the case here, the Court invokes its inherent jurisdiction to determine whether its processes have been or are being abused.

UGL: ‘Legal, statutory and factual contexts in which the decision is made’[90]
Factual context

[90]Isbester, [20] (Kiefel, Bell, Keane and Nettle JJ).

UGL addressed MCI’s submissions that the apprehension of prejudgment is sourced from three contexts:[91]

(a)remarks made by me during the course of argument on the first and third days of the UGL strikeout application;
(b)remarks made by me during the hearing of the appeal in Leighton; and
(c)paragraphs 160 to 177 of the UGL strikeout judgment.

[91]Cf earlier in the submissions, MCI’s submits prejudgment is only asserted to arise from comments made during argument by me, rather than statements in the UGL strikeout judgment. The UGL strikeout judgment is referred to only in the context of the ‘incompatibility between the roles of prosecutor and judge.’

UGL says that in determining MCI’s application on the grounds of prejudgment, primary regard ought to be had to (c). UGL submits that the UGL strikeout judgment in effect overtook exploratory questions and tentative views expressed during the course of argument on that application.[92] In that judgment, I said that the following questions arose by reason of MCI’s pleading[93] and/or findings made in other similar shareholder class actions brought by MCI in the Supreme Court of Victoria:[94]

(a)whether or not the proceeding as a whole should be struck out;[95]
(b)whether or not the proceeding should be permitted to proceed in view of the questionable claim for damages by MCI;[96]
(c)whether or not MCI had a proper factual basis to support the pleaded allegation that, in purchasing shares in UGL, it expected UGL to have complied with its obligations under the ASX Listing Rules and the Corporations Act;[97]
(d)whether, in light of the conduct of MCI in other cases in this Court regarding the reasons for incorporation of MCI as a vehicle for the bringing of representative proceedings alleging disclosure failures against listed companies, it might be successfully argued that it bought shares in UGL in order to provide a platform to launch a group proceeding, for the financial advantage of Mark Elliott and/or his business associates, and if so, it may be suggested that there has been a breach of the CPA or an abuse of process;[98] and
(e)whether, if the proceeding is an abuse of process, or there has been a breach of the overarching obligations imposed by the CPA, Mr Elliott ought be ordered to pay UGL’s costs on an indemnity basis or some other basis or what other orders may be made.[99]

[92]The subsequent statements made by me are relevant to evaluating whether my earlier remarks give rise to a reasonable apprehension of prejudgment: BAT vLaurie, 330, 331, [137] (Heydon, Kiefel and Bell JJ); Johnson, 494 (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

[93]MCI v UGL, [163]–[165].

[94]MCI v UGL, [161], [169]–[171].

[95]MCI v UGL, [160].

[96]MCI v UGL, [162].

[97]MCI v UGL, [163]–[164].

[98]MCI v UGL, [171]–[174].

[99]MCI v UGL, [175].

UGL observes that at paragraph 171 of the UGL strikeout judgment (MCI v UGL), I made the following relevant observations regarding the basis on which I was raising the matters for the parties’ attention:

(a)the Court has a duty to ensure its processes are not being abused and that the CPA is being observed;[100]
(b)the Court may raise a possible breach of the CPA on its own motion, and has a duty to do so where it considers that the overarching obligations have not been met;[101] and
(c)the Court is entitled to take into account findings made in other cases involving MCI in deciding whether or not to raise the matter with the parties.

[100]Citing Yara Australia Pty Ltd v Oswal (2013) VR 302 (‘Yara Australia’).

[101]Citing Yara Australia, [27].

UGL observes that I concluded that I had ‘an open mind on these issues and said that I felt duty bound to raise them with the parties’[102] and in those circumstances I ‘propose(d) to relist this proceeding to hear the parties before I make final orders in the matter.’[103]
[102]MCI v UGL, [176].
[103]MCI v UGL, [177].

UGL notes that after publishing my reasons for judgment on 7 October 2015, I reiterated that I felt “duty bound to raise” the issue of whether or not the proceeding should be struck out with the parties and observed that because “this is one of those unusual matters where the Court is instigating something of its own motion … as I instigated [it] I’d like to complete it.”[104]
[104]Transcript of hearing on 7 October 2015, T9, L6 – T9, L10; T10, L17 – T10, L20. Both the —MCI v UGL judgment and the transcript of hearing on 7 October 2015 may be taken into account in determining whether there exists a reasonable apprehension of bias: BAT vLaurie, 330 (Heydon, Kiefel and Bell JJ); Johnson, 494 (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

UGL refers to my being a member of the Court of Appeal in Leighton, which upheld the orders of Justice Sifris staying MCI’s group proceeding against Leighton, as an abuse of process.[105] UGL submits that in Leighton, the Court of Appeal stayed the proceeding on the basis that MCI had commenced proceedings for the predominant purpose of generating legal fees for Mr Elliott as solicitor. UGL says that it did so on the basis of unchallenged findings of fact made by Ferguson J on applications brought both by Leighton and Treasury Wine Estates,[106] in which her Honour declined to stay the proceedings against Leighton and Treasury Wine Estates as an abuse. Treasury Wine Estates appealed to the Court of Appeal, which relied on her Honour’s findings in holding that the proceedings against Treasury Wine Estates should be stayed for the following key reasons:

(a)the ‘only legitimate purpose for bringing a proceeding is to vindicate legal rights or immunities by judgment or settlement;’[107]
(b)MCI’s predominant purpose of ‘generating legal fees does not constitute a purpose of vindicating legal rights or immunities;’[108]
(c)the generation of fees for Mr Elliott was not simply a ‘collateral advantage’ or benefit, incidental to the vindication of rights by way of a judgment or settlement, since MCI’s “sole purpose [was]…to create for itself — in this case by acquiring a small parcel of shares — a cause of action of sufficient merit to induce the defendant company to pay Mr Elliott’s fees;”[109] and

(d)the bringing of the proceeding was, therefore, ‘a clear example of an abuse of process.’[110]

[105]Leighton; Melbourne City Investments Pty Ltd v Leighton Holdings Limited [2015] VSC 119 (Sifris J).

[106]Treasury Wine Estates, [6].

[107]Treasury Wine Estates v Melbourne City Investments Pty Ltd [2014] VSCA 351 (‘Treasury Wines Estates v MCI’), [9].

[108]Treasury Wines Estates v MCI, [10].

[109]Treasury Wines Estates v MCI, [11]–[14].

[110]Treasury Wines Estates v MCI, [14]; see also [22].

UGL says that so it was that in Leighton the Court held, after repeating the findings of Ferguson J set out at paragraph 90 above:[111]
We see no error in the conclusion of the majority that the proceeding was brought for an improper purpose, to use them as a means of generating income for Mr Elliott rather than to recover compensation. It is one thing to commence a proceeding for the purpose of obtaining substantive relief, and in the knowledge that if one is successful then costs will likely follow the event. It is another to have commenced a proceeding for the predominant purpose of simply generating income for a legal practitioner in circumstances where the value of any loss meant that it was unlikely that the proceeding had been commenced for the purpose of recovering compensation. We agree with the majority in Treasury Wine that commencing a proceeding, in the circumstances we have described, for the predominant purpose of generating income for a legal practitioner, was and is an abuse of process.
[111][2015] VSCA 235, [44]–[45].
UGL argues that this factual context does not constitute any evidence of prejudgment on my part with respect to the issues that fall for determination on UGL’s abuse of process application; as I emphasised, I had an open mind on these issues.

UGL’s submissions on the Court’s inherent power to prevent abuses of process

UGL addressed MCI’s assertion that its submissions on the recusal application were not directed to engaging with the law of abuse of process. UGL submits that the question of whether or not apprehended bias is established in this case cannot be entirely divorced from, or determined independently of, the principles governing the Court’s inherent power to prevent its processes from being abused.

UGL submits that it is axiomatic that the Court has power — indeed, the obligation — to regulate its own process.[112] As French CJ said in Assistant Commissioner Condon v Pompano Pty Ltd:[113]

The inherent jurisdiction of superior courts of record was described in Master Jacob’s frequently cited Hamlyn lecture on the topic as something which flows from the essential character of such courts:[114]
”the essential character of a superior court of law necessarily involves that it should be invested with a power to maintain its authority and to prevent its process being obstructed and abused. Such a power is intrinsic in a superior court; it is its very life-blood, its very essence, its immanent attribute.”

Another explanation proffered in another influential article is that “inherent powers arise at common law when they are necessary if the court or tribunal in question is to be able to manage its activities appropriately.”[115]

[112]See, eg, Melbourne City Investments Pty Ltd v Leighton Holdings Limited [2015] VSC 119, [20] (Sifris J); Teoh v Hunters Hill Council (No 4) (2011) 81 NSWLR 771, [32] (Allsop P, Beazley JA and Handley AJA).

[113](2013) 252 CLR 38, [41]. See, for example: Bird, G.J v The Hon. Free, R. & Ors [1995] FCA 1288 per Spencer, Einfeld and Cooper JJ. Recently, in Melbourne City Investments Pty Ltd v Leighton Holdings [2015] VSC 119 at [20], Sifris J described it as the Court’s ‘power and obligation’ (emphasis added) to regulate its own process.

[114]Jacob, “The Inherent Jurisdiction of the Court”, (1970) 23 Current Legal Problems 23, 27, cited by the Supreme Court of Canada in MacMillan Bloedel Ltd v Simpson [1995] 4 SCR 725, 749–50 [30] (Lamer CJ). See also Whan v McConaghy (1984) 153 CLR 631, 642 (Brennan J); [1984] HCA 22; John Fairfax & Sons Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465, 476 (McHugh JA); R v Moke [1996] 1 NZLR 263, 267.

[115]Dockray, “The Inherent Jurisdiction to Regulate Civil Proceedings”, (1997) 113 Law Quarterly Review 120, 127.

UGL contends that ‘the power of a Court to control its own process and proceedings is such that its exercise is not restricted to defined and closed categories, but may be exercised as and when the administration of justice demands.’[116] UGL says that one well-established manifestation of that power is to prevent abuses of the Court’s process.[117]
[116] Jago v District Court of NSW (1989) 168 CLR 23, 74 (Gaudron J) (‘Jago’).
[117]See, for example, Williams v Spautz (1992) 174 CLR 509, 520; Jago, 25 (Mason CJ); Clyne v NSW Bar Association (1960) 104 CLR 186, 201; Barton v The Queen (1980) 147 CLR 75, 107, 116.

UGL refers to PT Bayan Resources TBK v BCBC Singapore Pte Ltd,[118] where French CJ, Kiefel, Bell, Gageler and Gordon JJ said:[119]

It is well established by decisions of this Court that the inherent power of the Supreme Court of a State includes the power to make such orders as that Court may determine to be appropriate ”to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction.”

[118](2015) 89 ALJR 975 (‘PT Bayan’).

[119]PT Bayan, [43], citing Jackson v Sterling Industries Ltd (1987) 162 CLR 612, 623.

UGL refers to Commonwealth Trading Bank v Inglis, in which Barwick CJ and McTiernan J said:[120]

[…]there is an inherent power in the court to control the bringing of applications in the course of an action of which the court is seized for the purpose of preventing a party abusing the process of the court.

[120](1974) 131 CLR 311, 320.

UGL refers to Teoh v Hunters Hill Council (No 4),[121] where the New South Wales Court of Appeal observed that while ‘in Inglis the Court’s inherent powers were exercised on the application of the party aggrieved, a Court sufficiently apprised of the relevant facts can act of its own motion to protect itself and prevent abuse of its process.’[122]
[121](2011) 81 NSWLR 771 (Allsop P, Beazley JA and Handley AJA) (‘Teoh’).
[122]Teoh, [38].

UGL says that in holding that the Court can act of its own motion to prevent abuses of its process, the Court in Teoh identified several examples[123] of where the Court can or would do so, and found no reason for thinking that these examples were exhaustive, or the category of case ought not extend to circumstances where a court, sufficiently apprised of the relevant facts, could not act of its own motion with respect to an abuse of process. In Teoh, the Court observed that it:[124]

[…]has a duty to conserve its resources and ensure as far as possible that they are available for other litigants. It is therefore entitled to protect itself and its proceedings from abuse[…]

and concluded that, in the circumstances of the case, it should act of its own motion to prevent a potential abuse of process.[125] The Court in Teoh made orders to this effect.[126]

[123]Teoh, [38], viz: “The court can act of its own motion in cases of contempt in face of the court; clear and serious illegality: North Western Salt Co Ltd v Electrolytic Alkali Co Ltd [1914] AC 461, 469; scandalous allegations: Cracknell v Janson (1879) 11 Ch D 1, 13; in limited circumstances it may set aside its own judgment: Thynne v Thynne [1955] P 272 CA, 314; it may decline to hear a case where there is no actual controversy: Sun Life Assurance Co of Canada v Jervis [1944] AC 111; it may recall its unperfected judgment: Re Harrison’s Share under a Settlement [1955] Ch 260 CA; and it can object to the competency of an appeal: Dudgeon v Chie (1955) 92 CLR 342, 351; Clyne v NSW Bar Association (1960) 104 CLR 186, 205” (emphasis added by UGL).

[124]Teoh, [32].

[125]Teoh, [39].

[126]The Court concluded its judgment by stating that an order should be made in the following terms ([42] (2)):

“The Registrar is directed, should the applicant file a further motion seeking, in substance, leave to appeal from the judgment of Sheahan J of 31 July 2009 [2009] NSWLEC 263, to promptly vacate the return date, notify the parties, and refer the papers to a Judge nominated by the President to determine, in Chambers, whether the Court should fix a new return date and notify the parties, or whether Mrs Teoh should be invited to show cause in writing why the Court should not, in Chambers, summarily dismiss the proceedings as vexatious and an abuse of process.”

UGL says that in this case, of course, the Court is yet to make any orders and I have requested submissions from the parties before any orders are made. Accordingly, while the application has been instigated of the Court’s own motion, I have declined to make any orders until the parties — in particular, MCI — have had the opportunity to be heard.

UGL: statutory context: the CPA and s 33ZF of the Supreme Court Act

UGL says that the inherent power of the Court to regulate its own process, and proactively prevent an abuse of that process, is buttressed by statutory powers applicable to this proceeding.

UGL refers to Yara Australia, where the Court of Appeal held that judges have “responsibilities” under the CPA to conduct an “own-motion inquiry” where the Court considers there may have been a breach of the CPA but where no party invites the Court to make a determination to that effect.[127]
[127]Yara Australia, [27].

Further, UGL argues that as this is a group proceeding brought under Part 4A of the Supreme Court Act 1986 (Vic) (‘Supreme Court Act’), s 33ZF of that Act also provides relevant context. That provision is in broad terms:[128]

In any proceeding (including an appeal) conducted under this Part the Court may, of its own motion or on application by a party, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.

[128]Emphasis added by UGL.

UGL argues that these statutory provisions serve to reinforce the appropriateness of the Court inviting the parties (of the Court’s own motion) to make submissions on the question of whether the proceeding, as instituted, constitutes an abuse of process. UGL submits that both the inherent jurisdiction of the Court, and powers conferred by the CPA and the Supreme Court Act, confer upon the judge an active role in issues of case management, and it was these powers, so it is said, that the Court appropriately invoked in raising the questions for further consideration in paragraphs 160 to 177 of the MCI v UGL judgment.[129]

UGL: MCI’s failure to establish a reasonable apprehension of bias

[129]Cf: BAT v Laurie, 332.

UGL submits that the first basis upon which MCI founds its complaint is that I appeared to have prejudged:

(a)the question of whether or not the proceeding constitutes an abuse of process; and
(b)questions of causation arising in the proceeding,

such that I cannot or will not reconsider those questions with an open mind.[130]

[130]See BAT v Laurie, 315.

UGL argues that, in its submissions, MCI isolates comments made by me during the course of argument in the MCI v UGL judgment and the Leighton appeal which it contends would lead the hypothetical lay observer to apprehend that I am “committed to a conclusion” adverse to MCI on questions of abuse and causation.

UGL submits that four observations may be made with respect to these transcript extracts. Firstly, UGL says that they were made in the context of oral submissions on an argument made by UGL — and not ultimately upheld by me — that MCI’s pleading should be struck out on the ground that it did not contain a viable plea of causation.[131]
[131]In its statement of claim, MCI eschews any plea of direct reliance on UGL’s conduct; its claim depends, instead, solely on so-called ‘market based causation.’ See: MCI v UGL, [139]–[156].

UGL says that it is clear that my remarks were directed towards exploring issues relevant to determination of this question.

Secondly, UGL says that the comments were made during the course of argument in hearings in which no adverse findings were ultimately made against MCI or its principal on either abuse of process of the kind alleged by UGL or causation. Rather, UGL submits that they were, at most, the expression of provisional views about “matters on which the parties are permitted to make full submissions”[132] in due course. Indeed, UGL says that the proper characterisation of my remarks are that they were intended to elicit assistance from the parties on questions relevant to determination of a key aspect of the application, namely, the adequacy or otherwise of MCI’s plea of causation.
[132]Concrete Pty Limited v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577, [112], referred to in MCI’s submissions.

Thirdly, MCI submits that the tipping point from neutrality to partiality occurred when I became aware during argument that MCI was the same plaintiff which had brought other group proceedings in this Court. UGL says that in circumstances where MCI has elected to bring several group proceedings in this Court, each very similar in their nature and legal basis, and judges of the Court (including the Court of Appeal) have published judgments regarding the propriety of those proceedings, it was relevant and hardly improper for me to make the connection between those other proceedings and the case before me. UGL says that the fair-minded observer would have expected me to be aware of, and have regard to, those matters in turning my mind to the question of whether similarities in the factual context of the present proceeding could lead to a concern about whether it might constitute an abuse of process.

Fourthly, UGL submits that contrary to MCI’s submission that the comments cannot be properly characterised as ‘tentative’ or ‘ambiguous’, even those statements to which MCI adds emphasis in its submissions are often expressly qualified, or cast in enquiring terms.[133]
[133]See, for example, transcript extracts from the hearing of the UGL strikeout application referred to by MCI as discussed above.

UGL says that in submitting that these comments are apt to give rise to apprehended bias, MCI refers to the majority judgment (Heydon, Kiefel and Bell JJ) in BAT vLaurie (French CJ and Gummow J dissenting). UGL says that the majority in BAT vLaurie held that an interlocutory ruling in which a judge had made a finding of fraud against the appellant, and in which the judge expressed the finding without qualification or doubt but with actual persuasion of the correctness of the conclusion, gave rise to a reasonable apprehension that the judge might not move his mind from that position at trial.

UGL says that the facts in BAT vLaurie can readily be distinguished from this case in several respects, including:

(a)the primary judge in BAT vLaurie had made findings in the interlocutory judgment on an issue that would also fall for determination at trial;
(b)the nature of the fraud about which the primary judge had been persuaded was extremely serious;[134]
(c)the majority distinguished the facts in BAT vLaurie from those cases raising ‘considerations of case management and the active role of the judge in identification of issues;’[135] and
(d)the key findings in BAT vLaurie concerned the credit of the witness called by British American Tobacco (its former company secretary and in-house solicitor) to give evidence about the company’s document retention policy (which the primary judge subsequently found had been drafted or adopted for the purpose of a fraud).[136] UGL adds that the High Court has held that, where the primary judge has made actual findings as to the credit of a witness whose evidence is of significance on a live question in the subsequent case, a fair-minded observer might entertain a reasonable apprehension of bias if the judge sits to hear the subsequent case.[137] UGL says that no such issue arises here; as my remarks were not directed towards any issues of credit which might arise again in this case.

[134]BAT v Laurie, 333.

[135]BAT v Laurie, 332, [140].

[136]BAT vLaurie, 292–3.

[137]Livesey v New South Wales Bar Association (1983) 151 CLR 288, 300 (Mason, Murphy, Brennan, Deane and Dawson JJ).

UGL submits that the more apt comparison to the circumstances of this case is with the High Court’s decision in Johnson. UGL says that unlike BAT v Laurie, the present case does not bear the same ‘unusual’ circumstances upon which the majority distinguished Johnson.[138] Rather, UGL contends that, as in Johnson, I cannot be understood to be expressing a concluded view on the disposition of the abuse of process application.
[138]Johnson, 495 (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).

UGL says that my remarks were, as in Johnson, apparently open to dissuasion or modification.[139] UGL says that they do not evince ‘actual persuasion of the correctness of the conclusion.’[140]
[139]Johnson, 509 (Kirby J).
[140]Cf: Bat v Laurie, 333, [145].

UGL says that unlike in BAT v Laurie, no conclusion or finding has yet been made by me as to the question of abuse of process, or causation, in this proceeding (notably, with respect to the latter, UGL failed in its contention that MCI’s pleading should be struck out on the ground that MCI failed to put forward a tenable plea of causation).

UGL says that none of my findings on the strikeout of MCI’s pleading could be said to affect the determination of the abuse application. Rather, UGL contends that I conceived that it was possible that the considerations adumbrated in paragraphs 160 to 177 of the MCI v UGL judgment could suggest an abuse of process and/or a breach of the overarching obligations under the CPA.

UGL says that in contrast to BAT v Laurie (where fraud and adverse credit findings had been made[141]), no relevant finding has been made here. UGL says that I expressly stated that I had an “open mind” on the issues but felt “duty bound” to raise them with the parties.[142]
[141]And where that finding was, according to Heydon, Kiefel and Bell JJ, expressed ‘without qualification or doubt’: BAT v Laurie, 333 (emphasis added).
[142]MCI v UGL, [176].

Further, UGL argues that I did not make any findings in the Leighton appeal that could be capable of disqualifying me from hearing the abuse application in this proceeding. As outlined above, in Leighton the Court of Appeal stayed the proceeding on the basis of findings of fact made by Ferguson J on an application by Leighton against MCI to the effect that the proceeding had been commenced for the predominant purpose of generating legal fees. Those were not findings made by me, or by the Court of Appeal in Leighton; they had been made by Ferguson J on applications brought by Treasury Wine Estates and Leighton, and were (a) unchallenged by MCI and (b) upheld by a different Court of Appeal in an appeal by Treasury Wine Estates against her Honour’s decision.

UGL argues that the findings upon which both the Court of Appeal’s decision in Treasury Wines Estates v MCI and that of the differently constituted Court of Appeal (of which I was a member in Leighton) therefore involved no contested credit finding against MCI or its principal, Mr Elliott.

UGL says that MCI did not contend that the facts found by Ferguson J, upon which each Court of Appeal relied, were wrong; rather, it contended that they did not give rise to the legal conclusion that the proceedings were an abuse of process.

UGL submits that, in these circumstances, there has been no relevant finding by me that could give rise to a reasonable apprehension that I have a closed mind on the question of whether the modus operandi of MCI constitutes an abuse.

UGL says that the comments made by me in argument on that appeal, which have been extracted by MCI in its submissions, are nothing more than the expression of tentative or exploratory questions or views on a matter that did not ultimately determine that appeal but arose directly out of the unchallenged facts which had grounded the decision of the judge below to stay the proceeding as an abuse of process.

UGL submits that the brief remarks and questions raised by me during argument could not fairly lead to the conclusion that I am no longer open to persuasion on the issue of abuse. UGL says that these comments would not cause the fair-minded lay observer to apprehend that I would determine the abuse application, or questions of loss and damage, in a manner other than on their merits following a full and fair hearing.

UGL submits that it is difficult to understand MCI’s submission that I have prejudged ‘the questions of causation which arise in this case’ given that I rejected UGL’s arguments and have allowed MCI’s plea based on market based causation to proceed (to the extent the statement of claim, and the proceeding, is otherwise tenable).[143]
[143]MCI v UGL, [156].

UGL says that this is the only relevant finding that I have made on questions of causation in this case, and it was determined in MCI’s favour. UGL says that full argument on market based causation, and other questions of loss and damage which arise in the case, will be heard in due course (in the event that UGL’s application to stay the proceeding as an abuse of process is unsuccessful).

UGL says that there is no warrant for the submission that I have prejudged questions of causation to a degree whereby a fair-minded observer would conclude that my mind is closed and is incapable of persuasion or dissuasion (as the case may be) upon hearing full submissions, which the parties have yet to make.

UGL’s submissions on incompatibility

UGL contends that the fundamental error in MCI’s submissions on incompatibility is exposed by its submission that the impugned personal interest is “in the vindication of his Honour’s opinion”. UGL says that this interest would not suffice, on any view of the authorities, for disqualification on the grounds of apprehended bias.

UGL submits that in Ebner, the example given by Gleeson CJ, McHugh, Gummow and Hayne JJ for where a judge might be ‘effectively or in substance … a moving party,’ was where the judge was a ‘member of a body instituting a prosecution.’[144] Indeed, UGL says that it was this circumstance which recently led the High Court in Isbester to find that a conflict of interest (or ‘incompatibility’) existed where a member of the Council committee who made the decision to destroy a dog was the Council officer responsible for the prosecution of the charges against the owner of that dog. Similarly, the two decisions considered by the High Court on this question in Isbester — Dickason and Stollery v Greyhound Racing Control Board[145] — involved circumstances where incompatibility arose because of the impugned decision-maker’s direct and personal involvement in the matters falling for determination. UGL says that in Dickason, the District Chief Ranger disqualified from sitting to hear charges was the person whom the accused was alleged to have insulted. UGL says that in Stollery the incompatibility arose because the manager of the dog racing association (who was present while deliberations were conducted) had himself accused a greyhound owner of attempting to bribe him.
[144]Ebner, 358.
[145](1972) 128 CLR 509 (‘Stollery’).

UGL says that MCI accepts in its submissions, as it must, that a Court raising of its own motion a matter which falls within the sphere of case management ‘will not ordinarily create a question of incompatibility.’ UGL argues that the distinction MCI then seeks to draw between issues of case management and questions ‘determinative of substantive rights or the proceeding as a whole’ is illusory in this context. The authorities do not contemplate any incompatibility where the Court raises a question of its own motion, irrespective of the characterisation of the hearing which is instigated. MCI’s attempt to anthropomorphise the Court’s exercise of its inherent jurisdiction to prevent its processes from being abused, by equating me with the role of ‘prosecutor’ of that abuse application, is misconceived.

UGL says that, at its essence, MCI’s application for disqualification on the grounds of incompatibility is reducible to a complaint about the fact that I have invited the parties to be heard on an abuse of process application prior to such an application being made. If instigating a hearing of this nature of the Court’s own motion, and in doing so outlining the basis on which the Court wishes to receive submissions on the issue, amounts to apprehended bias, then there is no reason why a party could not successfully apply to have a judge recuse him or herself because they invite submissions on why indemnity costs ought not be ordered against a party or a party’s solicitors by reason of their conduct in litigating a case. UGL says that it could not be said that the mere invitation for submissions in this context could ever rise to the level of apprehended bias (nor could the judge be properly characterised as effectively ‘prosecuting’ that costs application).

UGL says that the Court of Appeal’s injunction in Yara Australia to the effect that trial judges must, in the absence of an application by the parties, of their own motion instigate the hearing of potential breaches of the CPA, runs directly counter to MCI’s submission here to the effect that, in outlining the reasons why the Court wished the parties to be heard on whether the proceeding should be stayed, I have, in effect, disqualified myself from hearing that application.

Resolution of application

I find that I am not obliged to recuse myself from determining UGL’s summons of 19 February 2016, or any further management or hearing of this proceeding.

In my opinion, for the reasons advanced by UGL, a fair-minded lay observer having the features laid down by the High Court, as discussed above at paragraph 76, would not form the view that I had prejudged the issue as to whether MCI’s claim in fact constitutes an abuse of process of the Court. On the contrary, in my opinion, a fair-minded lay observer would form the view that I have not formed a concluded view and have raised the matter for hearing for the very purpose that the usual and proper legal approach should be adopted, so I am able to form a concluded view one way or the other.

In my view, a fair-minded lay observer would be of the view that I put forward the arguments that I did so that a full and comprehensive examination of the issues by the parties could be undertaken.

In my opinion, a fair-minded lay observer would understand that I was duty bound to raise the issue once I perceived that an abuse of process may have arisen. A fair-minded lay observer would have understood that a judge can only perform his duty of raising his view that a possible abuse of process has arisen by articulating the issues and permitting the parties to argue the matter out.

A fair-minded lay observer would not have concluded that I had shut my mind to the arguments. I had already refused to strikeout the statement of claim on the basis that MCI did not plead any reliance on the projections issued by UGL or the implied representations conveyed by UGL and that its claim to damages was instead based on the market based causation theory. It would have been apparent to a fair-minded lay observer who had read my reasons in MCI v UGL, that I had accepted that a market based causation approach to establishing damages was arguable (and did not constitute an abuse of process).

I find that a fair-minded lay observer would have appreciated that my query about whether a plaintiff who bought shares in anticipation of her, him, or it, being able to make a market based causation claim, in fact suffered any justiciable damage, was an issue that I had not yet addressed and about which I had not formed a concluded view. The fact that I thought such a claim may (not would) constitute an abuse of process, or a breach of the CPA, when I was duty bound to raise the issue, does not suggest that I had formed a concluded view on the matter. On the contrary, it would have conveyed to a fair-minded lay observer that I had merely raised a question that I did not propose to resolve until after hearing full argument from the parties.

The fact that I had not heard argument on the issue and had requested to hear argument on the matter would strongly suggest to a fair-minded lay observer that my mind was open and as yet I did not have a concluded view.

In Vakauta v Kelly[146] Brennan, Deane and Gaudron JJ spoke of ‘the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case.’ I have already quoted the observations in Johnson[147] of Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ on this matter at paragraph 82 above.
[146](1989) 167 CLR 568, 571.
[147]Johnson at 13.

In my opinion, a fair-minded lay observer would have concluded that, in discussing the issue of damages alleged to be incurred by MCI and in discussing whether in the circumstances MCI had alleged or sustained a claim for damages that may be an abuse of process, I was merely raising an issue and, at its highest, expressing tentative views to flesh out the issue to be resolved. In my opinion, a fair-minded lay observer would not have apprehended I had a concluded view about the matter and that I did not have an open mind as to the resolution of the question raised.

As to ‘incompatibility’, for the reasons advanced by UGL, I reject the submissions of MCI.

For the foregoing reasons, I dismiss MCI’s application for me to recuse myself from hearing the summons issued by UGL, or further management or hearing of this proceeding.

[2016] VSC 554

21 September 2016