Michael David & 19 Ors v Vamiso Pty Ltd

[2004] NSWSC 326

CITATION:	Michael David & 19 Ors v Vamiso Pty Ltd [2004] NSWSC 326 revised - 27/04/2004
HEARING DATE(S):	20 and 22 April 2004
JUDGMENT DATE:	22 April 2004
JURISDICTION:	Equity Division Technology & Construction List
JUDGMENT OF:	Bergin J
DECISION:	Motion dismissed
CATCHWORDS:	[Referees] - [ Bias] - Application to remove referee on grounds of actual and apprehended bias - allegation of "interference" in agreement between experts during a conclave said to evidence actual bias - allegation of friendship between counsel and referee - referee retained to provide an expert opinion for a client by firm of solicitors appearing for a different client in the reference.
CASES CITED:	Aussie Airlines Pty Ltd v Australian Airlines Pty Ltd (1996) 65 FCR 215 Ex Parte Blume & Anor; re Osbourne & Ors (1958) SR (NSW) 334 Davie v Lord Provost; Magistrates and Councillors of the City of Edinburgh 1953 SC 34 Fingelton v Christian Ivanoff Pty Ltd (1976) 14 SASR 530 Holmes v Neilson [1979] Tas R 89 Kennedy v Cahill (1995) 118 FLR 60 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Najjar v Haines (1991) 25 NSWLR 224 S & M Motor Repairs Pty Ltd & Ors v Caltex Oil (Australia) Pty Ltd & Anor (1988) 12 NSWLR 358 Sun v Minister for Immigration and Ethnic Affairs (1997) 81 FCR 71 Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 Tracomin SA v Gibbs Nathaniel (Canada) Ltd [1985] 1 Lloyd's Rep 586
PARTIES :	Michael David and 19 others (Plaintiffs) Vamiso Pty Ltd (Defendant)
FILE NUMBER(S):	SC 55038/01
COUNSEL:	S Littlemore QC, V Gray (Plaintiffs) G Reynolds SC, J Hmelnitsky (Defendant)
SOLICITORS:	Malcolm Johns & Company (Plaintiffs) Henry Davis York (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

BERGIN J

22 APRIL 2002

55038/01 MICHAEL DAVID & ORS v VAMISO PTY LIMITED

JUDGMENT

1 The plaintiffs are proprietors of units in a building at 12-14 Le Vesinet Drive, Pulpit Point, Hunters Hill (the development). The defendant is the developer of the development who sold the units off the plan to the plaintiffs. Disputation arose between the plaintiffs and the defendant in respect of a number of alleged defects in the development and the plaintiffs commenced these proceedings in 2001.

2 There are cross claims brought by the defendant against the builder and the contract administrators. On 5 December 2003 certain matters were referred to David Plaister (the Referee) pursuant to Part 72 Rule 2 of the Supreme Court Rules 1970 (the Rules). Part of the matters referred included questions relating to the alleged defects and the scope and cost of any rectification. The Referee held a preliminary conference with the parties on 16 December 2003 at the offices of the solicitors for the defendant, Henry Davis York (HDY). The notes of that preliminary conference include the following paragraph:

2.2 Referee’s disclosure
Referee declared that he did not know any of the Parties. Referee declared that he was known professionally to a number of the Barristers and Lawyers present and that he had provided a number of reports over many years to three of the four law firms.
2.3 Any objections raised?
No objections were raised.

3 A conclave of experts occurred between 9 and 13 February 2004. Experts taking part in that conclave included Mark Bullen (MB), an expert retained by the plaintiffs and Stephen Abbott (SA) and John Poiner (JP), experts retained by the defendant. Mr Richardson (MR) an officer of one of the cross-defendants also took part in the conclave. Mr Bullen made notes in the document entitled “Record of Expert’s Conclave 9-13 Feb 2004” in respect of an item CP 2.8.2 dealing with Unit 2, common property. The defect claimed by the plaintiff in CP 2.8.2 was a lack of cavity flashing to window heads to two south windows. The notes in relation to that item were as follows:

AGREED/DISAGREED	BUILDING,DESIGN OR OTHER	RECTIFICATION WORK
All agree a defect with respect to weep holes	All agree a construction defect	Install weep holes
MB, SA agree on the balance of probabilities that head flashings are absent. MR, JP do not know if head flashings are absent. Defect not established.	Construction defect if flashings are absent.	Install head flashings if presently absent

4 On 19 March 2004 Mr Bullen and Mr Abbott met with the Referee. In relation to item CP 2.8.2 in the Record of Experts Conclave, the following was said at some stage during the discussion:

Referee: It is a brave Referee who decides on a matter in direct contradiction to the agreed position of the parties’ experts but gentlemen I must express my difficulty with the agreed position as stated here in relation to head flashings and elsewhere in relation to flashings generally.

Referee: It cannot be inferred from what has been found elsewhere that flashings were omitted. I emphasise that these matters cannot be proved on the basis of probabilities.

Abbott: On the basis of what you’ve said, I would have to change my position and state that the defect claimed is not proved.

5 On 23 March 2004 the matter was listed before the Referee, apparently for hearing. Mr S Littlemore QC leading Mr Ventry Gray, of counsel, appeared for the plaintiffs, Mr S Kerr, of counsel, appeared for the defendant, Mr M Ashurst, of counsel, appeared for one of the cross- defendants and Mr B Kurmond, solicitor, appeared merely to indicate that he would not be taking any further part in the matter.

6 Prior to the commencement of the hearing the following conversation occurred between Mr Littlemore QC and Mr Kerr:

Littlemore QC: I don’t think that anything will be happening with the matter today.
Kerr: Why not?
Littlemore QC: The referee’s father has just died.
Kerr: How sad. I’ll go out and say something to him. He’s a mate of mine.

7 Mr Kerr then spoke with the Referee informing him that he had heard that his father had died and that he was very sorry. The hearing then commenced and Mr Littlemore QC informed the Referee that the matter was really not in a position to proceed and “there are still fundamentally outstanding issues, and there have been, as a result of the recent conclave, some matters which we understood were not in issue that have come back into issue in respect of which we will have to adduce evidence that we’re not yet in a position to do” (Ex 1: p. 2).

8 After further discussion, the Referee informed the parties that the hearing dates remained “as firm as the Rock of Gibraltar” and further debate occurred. Mr Littlemore QC made the following statement:

Mr Referee if I may revert to the document that I handed you as an aid-memoire, and tell you our position on these things. We have set out there what we understand to be the matters presently in issue. They conclude with the costings matters, of course, at the foot. The complexity that’s arisen in terms of meeting the original timetable is really caused by a certain degree of opportunism, as I understand it, arising from the conclave where, if we take, for example, the cavity flashings issue, that matter had been agreed between the parties. My understanding is that you, Mr Referee, raised some query of your own about that and, with great respect, we’re not sure that was necessary or, indeed, entirely appropriate, but whichever way that may be, the expert for the defendant somewhat opportunistically then withdrew the agreement, which necessitates our preparing and adducing evidence in respect of that problem.

(Ex 1: p. 9)

9 Further debate occurred and later Mr Littlemore QC said:

….. [i]t is my understanding that notwithstanding the agreement, you took the attitude that if something is not proved to a very high standard and in more than nineteen places, then it’s not possible for you to draw the inference that this is a general defect applying. This is a Doubting Thomas sort of thing: asking to see the scars in the hands or otherwise concluding Christ was never crucified.
We would say that in the ordinary process of drawing an inference from a proved fact on the balance of probabilities, that if on every occasion the wall is open and there is a defect in the flashing, then it is open for an inference to be drawn on the balance of probabilities that there is a general defect in the placement of flashings.
If the Referee, in any case, is not going to take that attitude and it is an item of the sort of significance that this is, we must then have the opportunity to adduce further evidence to persuade the Referee that this is in fact a general problem, and there are no telephone booths or Superman capes or anything like that or anything facetious of that kind involved. This is an important issue and 100 percent of the tests of this have demonstrated a defect. We would have said that was enough, but if we have to go further we shall.

(Ex 1: pp.13-14)

10 The Referee then responded:

Thank you for that. It has been my experience that parties are entitled to test and a Referee, more importantly, is entitled to test agreements made between experts, and I do that in conclave. I reserve that privilege and that ability to do that.
Just to give a further example of what I’m saying, I had a situation where some 180 shower recesses were claimed by a plaintiff to be defective. They had done a taste test of 24. There were 24 leaking shower recesses. Indeed the defendant looked at them, and accepted them. The claim was for the 188. The defendant simply said “Can I please look at the 188?” But the plaintiff said, “well, that’s a very big ask. You have got to get everyone home at the units. It turned out that there were 29 when this exercise was done. You are simply saying to me that where the building is not displaying distress or any defects present at this time, that the experts have come to agreement to open up or to replace or allow a sum of money to replace large quantities of flashing. This tribunal is not satisfied that is the true position.

(Ex 1: p. 14)

11 Mr Littlemore QC said:

With respect, we don’t agree that you have that right. Where there has been agreement on a subject, we say it’s not open to a Referee to second guess it. The result of the second guessing has been that we have an issue created that we cannot meet at this time. Putting aside the question of whether you are acting within your power or not in finding a disagreement where the parties had agreed, putting that aside, we still cannot proceed further given the change in the ground. This is the problem.

(Ex 1: pp. 14-15)

12 The Referee adjourned the hearing to 24 March 2004 at 10:00am. On the evening of 23 March 2004 the Referee telephoned Mr Kerr and immediately after the conversation Mr Kerr drafted a letter to his opponents and sent it early the next morning in the following terms:

At about 6:30pm last night I received a call from the Referee, Mr Plaister. I spoke to both him and to his wife. Mr Plaister does not wish to sit today. The reason is because of the death of his father yesterday. It would appear that his father died at about 9:00am. Mr Plaister was with him and then immediately left the hospital to attend the Reference.
Last night, he understandably appeared quite upset about the loss of father. His wife explained to me that after coming home from the Reference yesterday, he was “not his usual self”.
Mr Plaister asked me to advise each of you that he would not be in a position to continue the Reference this week. He will issue a note shortly setting down a time for a directions hearing to organise further dates.
I assume that (may) have some impact on whether or not Mr Gray seeks to move the court today. May I suggest that any such application, particularly if all it will now be is an application to vary the order for reference be listed before the Construction List Judge on Friday.

13 Mr Gray responded by letter advising that the matter could be listed before me on 26 March 2004 to vary the orders made on 5 December to permit the Referee to amend the claims in the Scott Schedule and to extend the time for the Referee to deliver his report to 28 May 2004. Mr Gray advised Mr Kerr that he was content for him to arrange with my associate for the proceedings to be listed on 26 March 2004 and to mention that the reference had not proceeded as originally envisaged for reasons including the recent death of the Referee’s father. On 26 March 2004 the parties appeared before me and I made the orders, by consent, varying the orders of 5 December 2003, authorising the Referee to amend the Scott Schedule and to deliver his report by 4:00pm on 28 May 2004. I listed the matter for directions on 4 June 2004 for directions.

14 On 30 March 2004 the solicitors for the plaintiffs wrote to the Referee advising him that they were “concerned by statements made by parties to the within litigation regarding their relationship with you”. They posed the following questions to the Referee: (1) What, if any, relationship, be it social, personal or business, do you have with: (i) Mr Simon Kerr; (ii) Mrs Kerr; (iii) Henry Davis York; (2) Are you presently in receipt of instructions from Henry Davis York and/or any client of Henry Davis York?

15 On 31 March 2004 a solicitor from HDY, Mr Paul Garnon, “briefed” the referee “by letter dated 31 March 2004 in a personal injury matter”. It is apparent that HDY were instructed by a formworker at a building site at which a plaintiff suffered injury when he fell approximately 6 metres to the ground after stepping on unsupported timber. The referee was apparently “briefed” to “report upon whether the conduct of the head contractor (the plaintiff’s employer) and/or the scaffolders caused or contributed to the fall”.

16 On 1 April 2004 the Referee responded to the plaintiffs’ solicitor’s letter of 30 March 2004 in the following terms:

1.0 I refer to my comment in item 2.2 of the Preliminary Conference Notes Referee’s Disclosure , and note that no objection was raised to same at the noted Preliminary Conference or prior to agreement by the Parties and my entering upon the Reference.
2.0 Question 1
2.1 My relationship with Mr Simon Kerr is of a professional nature as described in item 2.2 of the Preliminary Conference Notes 16 December 2003 and to which no objections were raised. In accordance with that professional relationship I have participated in professional networking activities including attending professional development and/or social functions held by various legal firms and relevant associations at which Mr Kerr may have been in attendance and at which we may have interacted. Further in the role of expert I attended a site inspection in Newcastle with Mr Kerr following which we had lunch together.
2.2 I hold no relationship with Mrs Kerr.
2.3 My relationship with Henry Davis York Lawyers is of a professional nature as described in item 2.2 of the Preliminary Conference Notes 16 December 2003 and to which, no objections were raised. In accordance with that professional relationship I have participated in professional networking activities including attending professional development and/or social functions held by various legal firms including Henry Davis York Lawyers and relevant associations at which personnel of Henry Davis York Lawyers may have been in attendance and with whom I may have interacted.
3.0 Question 2
3.1 I refer to my comment in item 2.3 hereinabove.
3.2 In my position as Principal of Plaister Consultancy Group Pty Limited I have been retained by Henry Davis York Lawyers from time to time to provide professional dispute resolution services on behalf of their clients. Presently I have been retained to provide a report in the role of expert.
3.3 Further in my position as Principal of Plaister Consultancy Group Pty Limited I have been retained by a client to provide professional dispute resolution services specific to a matter in which they have also retained the services of Henry Davis York Lawyers.

17 The parties appeared before the Referee on 5 April 2004 at a directions conference. On that occasion the plaintiffs were represented by Mr Gray and his instructing solicitor, Mr Mallos. The developer was represented by Mr Kerr, instructed by Ms Horton, solicitor, of HDY. The Referee noted the orders I made on 26 March 2004 and the plaintiffs foreshadowed that they proposed to make an application to the Court to have the Referee disqualified for apprehended bias. During the course of the directions conference, Mr Mallos heard a conversation between Ms Horton and the Referee in which Ms Horton said to the Referee: “when we’re finished can I please see you about that other matter”.

18 The plaintiffs filed a Motion on 7 April 2004 in which they seek an order that pursuant to Part 72 Rule 10 of the Rules, the order made on 5 December 2003 referring the matter to the referee for enquiry and report be set aside. Part 72 Rule 10 (1) of the Rules provides that the court may on application by a party set aside or vary any order made under Rule 2. The ordinary rules about apprehended bias apply to Referees and an order appointing a Referee may be set aside where bias is established: Najjar v Haines (1991) 25 NSWLR 224. In assessing the circumstances of this matter, the test is whether a moderately-informed observer who knows the actual circumstances of the case would regard the Referee as subject to a reasonable risk of being unable to deal impartially with the proceedings: S & M Motor Repairs Pty Ltd & Ors v Caltex Oil (Australia) Pty Ltd (1990) 12 NSWLR 358; Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 87.

19 The plaintiffs claim that the relationship between counsel for the defendant, Mr Kerr, and the Referee is one that would give rise to a reasonable apprehension of bias in the Referee. This submission is based on the alleged inconsistency in the description of the relationship between that given by the Referee as being of a professional nature and that given by Mr Kerr when speaking with Mr Littlemore QC that he was a “mate” of the Referee.

20 Mr Kerr gave the following affidavit evidence about his use of the term “mate” in that conversation:

12. When, during the conversation I had with Mr Littlemore I used the word “mate” I was intending to convey that I knew the Referee sufficiently to want to pay my condolences to him upon the news of the death of his father, particularly having regard to the shortness of time between his father’s death and the hearing of the reference.
13. I did not intend to convey that Mr Plaister is a close friend of mine. That is not the case. The extent of my relationship with him is set out in a facsimile I sent to Mr Gray on 30 March 2004.

21 That letter was sent to Mr Gray as a result of Mr Kerr becoming aware of the letter sent by the plaintiffs’ solicitors to the Referee in which they posed the questions about his relationship with Mr Kerr and others. That letter included the following:

1. I have known Mr Plaister professionally for the past 10 years. During that period, I have cross-examined him on a number of occasions, I have called him as a witness on less than half a dozen occasions and I have appeared before him when he has acted as Referee, Arbitrator or Mediator.
2 I have never invited Mr Plaister to my home, save as to that on one occasion, 2 years ago, we went on a view to a factory in Newcastle. It was a Saturday. I drove. As such he met me outside my home. He did not come in. After the view we had lunch. I think that is the only time I have had a meal with him.
3. To the best of my recollection, he has met my wife on one occasion, 4 years ago, for about 10 minutes. He was not at my wedding. My wife and I have never been invited to his home. I have never been to his home.

4. Each year, I have a drink with him at the Colin Biggers & Paisley Christmas Party.
5. On the one occasion on which he spoke (by phone) with me last week to indicate that he was upset at the death of his father and did not want to sit the next day, I immediately drafted a facsimile to you (sent at 7.10 am the next morning) advising you that he and I have spoken. During that call, I spoke with his wife for less than 1 minute. She told me that he was upset at the death of his father.
6. On the morning of the Reference, when I said hello to Mr Plaister, he asked how I was. I told him my wife was pregnant. He shook my hand. It should be noted that my wife has been pregnant for 5 months. Such is my relationship with Mr Plaister, that he had not known of her pregnancy.
7. I have met his wife on 2 occasions. One of them was at a Colin Biggers & Paisley Christmas party. The other was when she was assisting him on a view of a building site.

Actual Bias

22 Mr Littlemore QC submitted that the Referee had “interfered with a substantial (in terms of cost) matter that had been agreed between the parties to be a defect (that waterproof flashings had been omitted from the building), reversing the agreement by making assertions in the defendant’s favour”. It is this alleged “interference” that is submitted to amount to evidence of actual bias.

23 The transcript of the hearing before the Referee includes his statement that he reserved to himself, what he called the “privilege” to test agreements between experts. The nature of the “agreement” was described by Mr Kerr before the Referee in the following way:

My instructions from Mr Abbott are that the agreement in the simplistic way in which Mr Littlemore seeks to suggest it was made did not occur. They are my instructions from him. In any event, there has never been any agreement on what’s needed in relation to rectification. If that be the case, then certainly all of them must be opened for analysis to determine whether or not the flashing is there.

(Ex 1: p. 15)

24 The Record of the Conclave of Experts combined with the unchallenged evidence of Mr Bullen demonstrates that he and Mr Abbott had agreed “on the balance of probabilities that head flashings are absent” in respect of item CP 2.8.2 and also “elsewhere in relation to flashings generally”. The extent of the “elsewhere” is not in evidence before me. However it is clear that Mr Abbott changed his position when the Referee expressed what he described as his “difficulty”. It is obvious from the Record that Mr Poiner and Mr Richardson expressed the view that they did not know if the head flashings were absent and the note records “defect not established”.

25 It was submitted that the Referee’s conversation on 19 March 2004 in which Mr Abbott changed his position was inappropriate and demonstrates actual bias. Actual bias exists “where the decision maker has prejudged the case against the applicant (as the case may be), or acted with such partisanship or hostility as to show that the decision-maker had a mind made up against the applicant and was not open to persuasion in favour of the applicant”: Sun v Minister for Immigration & Ethnic Affairs (1997) 81 FCR 71 at 134. In considering allegations of actual bias the focus of the inquiry must be on whether the decision maker has, or will, bring a “closed mind” to the conduct of the proceedings and the conclusions of fact and law to be made therein. Whether the decision maker is tainted with actual bias is a question of fact, turning on “whether the Tribunal (as the case may be) has, at least in some respect, prejudged the case so as to be unable or unwilling to decide it impartially”: Sun at 127.

26 Mr Littlemore QC submitted that the Referee had displayed a manifest error in his approach to testing the experts’ agreement. This submission was combined with a submission that it also demonstrated actual bias. In Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705 Heydon JA, with whom Priestley and Powell JJA agreed, referred with approval (at 729), to the following portion of Lord President Cooper’s observations in Davie v Lord Provost, Magistrates and Councillors of the City of Edinburgh 1953 SC 34 at 39-40:

Expert witnesses, however skilled or eminent, can give no more than evidence. They cannot usurp the functions of the jury or Judge sitting as a jury, any more than a technical assessor can substitute his advice for the judgment of the Court … The duty is to furnish the Judge or jury with the necessary scientific criteria for testing the accuracy of their conclusions, so as to enable the Judge or jury to form their own independent judgment by the application of these criteria to the facts proved in evidence. The scientific opinion evidence, if intelligible, convincing and tested, becomes a factor (and often an important factor) for consideration along with the whole other evidence in the case, but the decision is for the Judge or jury.

27 It is important to remember that the Referee has what has been described as “the right” to conduct the reference as he thinks fit unconstrained by the rules of evidence: Super Pty Limited v SJP Formwork (Aust) Pty Limited (1992) 29 NSWLR 549, per Gleeson CJ at 563. The fact that Mr Abbott changed his position really places the focus upon Mr Abbott rather than the Referee and in any event there is nothing wrong with the Referee saying that he had “difficulty” with their approach. Mr Abbott’s response referring to “the defect” not being proved is far from clear. Is it the defect in clause 2.8.2 as suggested by the content of Mr Bullen’s affidavit, or is it a defect covering the whole of the building? Whatever it was, Mr Abbott does not seem to have been firmly wedded to the view he expressed in the conclave prior to the Referee’s expression of “difficulty”.

28 I am not satisfied that the evidence establishes that the Referee “interfered” inappropriately in his discussions with the experts. There is no evidence upon which this Court could conclude that the Referee has prejudged the matter before him. The evidence establishes that the Referee was exploring with the experts the validity of their approach consistently with his duties as a Referee. The plaintiffs’ claims that the Referee is actually biased fails.

Relationship between counsel and the Referee

29 Aussie Airlines v Australian Airlines (1996) 65 FCR 215 was a case in which senior counsel for one of the parties had a long-standing personal, professional, and financial association with the trial judge, Merkel J. Prior to the commencement of the hearing, Merkel J made disclosures in respect of that association and advised that the senior counsel concerned had been authorised to provide to the parties all of the information which they required concerning the association. The detail of the association between the Judge and senior counsel is contained in the judgment. The matter involved determinations of questions of law, although it was suggested by the parties that there may be some disputed issues of fact. Application was made to his Honour to disqualify himself.

30 His Honour said at 221-222:

In the usual course, the parties are entirely reliant upon disclosure in order to consider whether an issue of disqualification may arise, and if so whether an application to disqualify is to be made.
Secondly, the failure to disclose, of itself, can be one of the circumstances which together with tothers may give rise to a reasonable apprehension of bias: S&M Motor Repairs at 374 per Kirby P. The party or the public may well be left with the impression that there was intentional concealment or non-disclosure, or that something was “wrong about it all”. A failure to disclose no matter how unwitting, can undermine public confidence in the integrity of, and the administration of justice by, the judicial officer or the tribunal concerned.
Thirdly, disclosure of itself, necessarily assists in securing the object that justice is “seen” to have been done …
It is important to emphasise that, however the duty my be formulated, the facts to be disclosed are those that might found or warrant a bona fide application for disqualification. It would defeat the purpose of the disclosure if it was only in respect of or perceived to be in respect of facts warranting disqualification.
Whether the facts disclosed warrant disqualification is the issue arising after the duty of disclosure is duly discharged. Accordingly the fact of disclosure, as opposed to non-disclosure, cannot constitute a circumstance in favour of disqualification.

31 Merkel J took a robust approach and did not disqualify himself. He said at 231:

First, the long-standing and close personal friendship. Counsel for the applicant conceded that that alone is insufficient to disqualify. Yet such a friendship can well be a disqualifying factor if existing between litigant and party. The reason for the concession, which in my view was correctly made, must be that the fair-minded observer is aware of the importance and substance of the distinction between a close friendship between adjudicator and litigant and adjudicator and counsel. In the former situation there may, by reason of the perceived prospect of favour, be a cogent and rational link between the association and its capacity to influence the decision to be made.
In the latter situation there is no such link as the observer must be taken to have understood the professional role of counsel which I have described in general terms above. Once that is appreciated there is no cogent or rational link between the association and any capacity it has to influence the decision in the case.

32 Something more than the mere fact of association is required before concluding that the adjudicator might be influenced in his or her resolution of a particular case by reason of the association. The authorities show, for example, that pre-existing associations in the nature of an intimate personal relationship (Kennedy v Cahill (1995) 118 FLR 60), a close friendship between the decision maker and the father of an accused (Holmes v Neilson [1979] Tas R 89), a close friendship between the decision maker and a lay advocate (Ex Parte Blume & Anor; re Osbourne & Ors (1958) SR (NSW) 334) and a shared employer (Fingleton v Christian Ivanoff Pty Ltd (1976) 14 SASR 530) have all been sufficient to raise a requisite apprehension of partiality.

33 Mr Kerr was not cross-examined. It seems to me that the use of the term “mate” was an inappropriate term to use to describe the true relationship between Mr Kerr and the Referee. It also seems to me that it played a major part in setting the hare running. This was compounded by Mr Kerr initially maintaining an appearance on the Motion and using the term “casual friendship”, in an outline of submissions. That term did not amount to an admission as to the nature of the relationship. The submission took the evidence which included the term “mate”, prior to any evidence being given by Mr Kerr, “at its highest”. Whatever be the motivation for Mr Kerr to use the term “mate” in the sad circumstances in which the Referee found himself on that morning, I am satisfied that the relationship with the Referee is as the Referee described it on 16 December 2003 at the Preliminary Conference, a professional relationship.

34 It was submitted that even if the relationship were categorized as a casual friendship flowing from the use of the term “mate”, it would not be a basis upon which to ground an apprehension of bias in a moderately informed, fair minded observer. There has to be something more. There is not in this case. Merkel J’s observations in Aussie Airlines in respect of the difference between a relationship between advocate and adjudicator and between party and adjudicator, is apt. I am satisfied that Mr Kerr's statement that he was a “mate” of the Referee in the context in which it was said and indeed, his relationship with the Referee, are clearly not matters upon which a reasonable apprehension of bias in the Referee could be found. The plaintiff’s claims in this regard fail.

Relationship with the solicitors

35 The next matter is a claim in respect of the relationship between the Referee and HDY. On this aspect of the matter the parties relied upon Najjar v Haines. In that case the Referee who had been appointed pursuant to Part 72 of the Rules to report on a dispute between a builder and a government department, failed to disclose that he was the director of a company that was a party to and was negotiating substantial contracts with that government department. Clarke JA said at 240:

In circumstances where the court is asked to draw the conclusion that a fair minded observer would have entertained a reasonable apprehension of bias from the referee’s relationship with a company which contracted with one of the parties it would be quite wrong, in my opinion, for the court to act on a selected number of features of that relationship. In order to determine whether the circumstances of the relationship give rise to the relevant apprehension it would be necessary to have regard to all aspects of the relationship. The question being whether the fair minded bystander, would, knowing the broad content of the relationship under consideration, reasonably apprehend bias. I would therefore decline the invitation to be selective: See Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 87 per Mason CJ and Brennan J and Deane J (at 95).

36 In the same case Rogers AJA said at 264:

I am of course mindful of the fact that the authorities have given consideration to the position of judges, and members of the administrative tribunals, not arbitrators much less referees. That in many cases this fact may make a difference cannot be doubted.

37 Rogers AJA referred to English authority in which the substantial difference between the position of judge and arbitrator had been recognised. In Tracomin SA v Gibbs Nathaniel (Canada) Ltd [1985] 1 Lloyd’s Rep 586 Staughton J referring to arbitrators said at 588:

A judge or magistrate may well regard himself as disqualified if either of the parties is known to him. By contrast, the commercial arbitrator will know many of his colleagues in the same trade and may well have at least a business acquaintance with the parties before him.

38 Rogers AJA said at 266-267:

With full knowledge of all the circumstances, bearing in mind that it was a referee whose position was under scrutiny, would the mythical bystander have a reasonable apprehension that the report of the referee might not be the product of an impartial and unprejudiced mind? Regrettably, on an objective basis, without any personal reflection on the referee, the answer should be in the affirmative.

39 It is to be remembered that the relationship under scrutiny here is another example of the relationship between legal practitioners and the Referee and not between parties and the Referee. However it is recognised that the “relationships” between expert witnesses/consultants and firms of solicitors represent a source of income, not from them but from their clients.

40 Michael John Bampton, a partner of HDY, and the solicitor on the record for the defendant gave evidence that the Referee had been retained as an expert in a matter in November 2002 for clients of Colin Biggers & Paisley. In September 2003 HDY took over the carriage of that matter from Colin Bigger & Paisley. Another matter to which Mr Bampton referred was a case in which he is retained to act on behalf of the company, the second defendant, in which other defendants had collectively instructed the Referee to prepare a joint expert report on construction issues. The second defendant did not instruct the Referee.

41 The only matter of real relevance, it seems to me, is the brief delivered to the Referee on 31 March 2004 which was disclosed in general terms in his letter on 1 April 2004. Mr Littlemore QC submitted that by reason of the Referee’s brief to provide an expert report to HDY in the personal injury matter, the moderately informed, and fair-minded, bystander would have a reasonable apprehension of bias in the Referee. It seems to me that this proposition is not consistent with the Referee’s true and separate role in providing an expert report. Schedule K to the Rules provides:

General Duty to the Court
2. An expert witness has an overriding duty to assist the Court impartially on matters relevant to the expert’s area of expertise.
3. An expert’s witness’s paramount duty is to the Court and not to the person retaining the expert.
4. An expert is not an advocate for a party.

42 The other duty is to the client. Mr Littlemore QC emphasised the fact that payment for the expert’s services would be made by HDY, but conceded that it would no doubt be the client’s money. However he submitted that the moderately informed bystander would not appreciate this delineation. It was submitted that such bystander would apprehend that the Referee would want to please HDY by providing an outcome for its clients in the reference so that the flow of work to him from the firm continued. This submission fails to recognise that the Referee provides expert opinions to all but one of the firms appearing before him.

43 At one stage of this hearing it was submitted that Ms Horton’s conversation with the Referee on 5 April 2004 was evidence establishing that she had briefed the Referee in some “other matter” and that is what she wished to speak to him about after they finished the directions hearing. Ms Horton gave evidence and was cross-examined. She could not recall such a conversation with the Referee but accepted that if it occurred it was not relating to any matter other than something to do with this case, more probably than not some administrative arrangements about rooms, transcripts and the like. It is clear that some of the reference hearings or conferences have occurred in the offices of HDY. I accept Ms Horton’s evidence that she has not previously appeared before the Referee and that she has never retained him to provide any expert evidence.

44 Both Mr Kerr and Mr Bampton gave unchallenged evidence about the small pool of people available to consult as experts in technology and construction cases. Mr Bampton gave evidence that there is a “relatively small group” of solicitors and counsel in New South Wales that have expertise in this area. He said that it was “common for firms of solicitors to engage experts who are engaged by solicitors or other parties in other matters”. He also gave evidence that it is “common for building and construction experts to provide expert evidence and to act as commercial arbitrators or referees in different matters at the same time”. Mr Kerr gave similar evidence. This evidence establishes that the observation made by Staughton J in Tracomin, referred to by Rogers AJA in Najjar v Haines at 265, that commercial arbitrators would know many of their colleagues in the same trade and may have at least a business acquaintance with the parties before them, is applicable to the environment in the commercial community in this jurisdiction in which Referees operate.

45 This Referee disclosed to the parties that he had provided a number of expert reports to all the firms of solicitors appearing before him except one. As soon as he was briefed to provide an expert report by letter dated 31 March 2004 for a client of HDY he disclosed in his letter of 1 April 2004 that he was retained. When parties choose to have parts of their litigious disputes referred to Referees pursuant to Part 72 of the Rules, they know that the referee is a person who is usually in a consulting business and, on the evidence before me, it is common that such persons continue to provide expert reports for clients of firms of solicitors who happen to be representing different clients in references before that referee.

46 Mr Littlemore’s submission is one that is not really dependent upon the receipt of the brief on 31 March 2004. His real point is that because the Referee provides expert reports to the solicitors for the defendant, HDY, a moderately informed bystander would apprehend that he would favour that firm’s client in the reference to ensure a flow of work. That was a point that could have been raised from the outset of the reference. The alleged “concerns” were exposed in the plaintiffs’ solicitors letter of 30 March 2004. Between that day and the response of 1 April 2004 the Referee received the request to provide the expert report in the personal injury matter. The “concerns” escalated into an actual bias claim on the day the matter was set down for hearing.

47 The fact that the Referee is presently briefed to provide an expert report to another client who has nothing to do with this case, whose responsibility it is to pay the Referee for his services, and whose solicitor, although at the same firm as the solicitor who appears for the defendant in the reference, has nothing to do with this case, are matters that in my view would not give to the moderately informed fair-minded observer apprehension of bias in this Referee. The “broad content” of the relationship, to adopt the term used by Clarke JA in Najjar v Haines, is one that is informed by the practice and the nature of the environment in which referees conduct their practices and agree to perform the important duties as Referees. The moderately informed bystander is taken to understand that broad content. When providing expert opinion on the one hand the expert is bound by Schedule K of the Rules and when conducting a reference on the other hand, the Referee is bound by the Reference Order and his duties to the Court. I am not satisfied that the plaintiffs have made out their claims in this regard.

48 A submission was also made that the facts to which I have referred, that is, Mr Kerr expressing himself as a “mate” of the Referee, Ms Horton referring to the “other matter” with the Referee and the disclosures of past and present provision of expert opinions to clients of HDY, taken cumulatively, form a proper basis upon which a moderately informed bystander would apprehend bias in the Referee. I am not satisfied that that is correct. The moderately informed bystander is taken to know of the broad content of the relationship to which I have referred. The moderately informed bystander would be taken to know that professionals, in dealing with referees and/or judges do so professionally. In this case the use of the word “mate”, as I have said, was one that was latched onto and, in my view, latched onto quite inappropriately. That would then leave the only matter of the provision of the expert opinion on its own and I heave dealt with that matter above. I am satisfied that in all the circumstances of this case that the facts established, either individually or cumulatively, do not form a proper basis for any apprehension of bias.

49 The Motion is dismissed. The plaintiffs are to pay the defendant’s costs of the Motion.

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Last Modified: 04/28/2004