MSI Developments Pty Ltd v National Australia Bank (Ruling No 1)
[2013] VSC 551
•16 October 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 3565 of 2013
| MSI DEVELOPMENTS PTY LTD DSI DEVELOPMENTS PTY LTD SS PROPERTY INVESTMENTS PTY LTD (ACN 131 285 473) | First Plaintiff Second Plaintiff Third Plaintiff |
| v | |
| NATIONAL AUSTRALIA BANK LTD | Defendant |
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JUDGE: | ALMOND J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | No oral hearing | |
DATE OF RULING: | 16 October 2013 | |
CASE MAY BE CITED AS: | MSI Developments Pty Ltd & Ors v National Australia Bank (Ruling No 1) | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 551 | |
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Courts and Judges – Apprehended bias – Application for disqualification of judge – Indirect shareholding in party to proceeding – Previously acted as barrister for party to proceeding – Whether reasonable apprehension of bias – Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 applied – Application dismissed.
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| Solicitors | ||
| For the Plaintiffs | Mr M Clarke of Counsel | Jonathan Kemp & Associates |
| For the Defendant | Ms S Kinsey, Solicitor | King & Wood Mallesons |
HIS HONOUR:
The plaintiffs have made an application that I disqualify myself on the ground of apprehended bias following my disclosure to the parties that:
(a)I have an indirect shareholding in the defendant, National Australia Bank Ltd (NAB) through my superannuation fund; and
(b)that I acted for NAB from time to time during my career as a barrister at the Victorian Bar before my appointment to the court.
In support of their application, the plaintiffs rely upon an affidavit of Matthew Gregory Spinks, director of the first plaintiff, sworn 19 September 2013 on behalf of the plaintiffs. In addition, counsel for the plaintiffs provided to the court a document (which I was informed had been provided to him by the defendant’s solicitor) listing seven employees or former employees of NAB who may be involved or may be required to give evidence in the proceeding.
The defendant was granted leave to file and serve any affidavit and any submissions upon which it intended to rely in relation to the plaintiffs’ application. The defendant has chosen not to file and serve any affidavit material or submissions. I have decided the application on the basis of the plaintiffs’ written material and on the assumption that the defendant has elected to abide the decision of the court.
Relevant principles
In Livesey v New South Wales Bar Association,[1] the High Court set out the relevant principle as follows:
a judge should not sit to hear a case if in all the circumstances the parties or the public might entertain a reasonable apprehension that he might not bring an impartial and unprejudiced mind to the resolution of the question involved in it.[2]
[1](1983) 151 CLR 288.
[2]Ibid, 293-4.
In Ebner v Official Trustee in Bankruptcy,[3] the court described the principle and its application as follows:
the governing principle is that…a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide (citations omitted)
...
Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an “interest” in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.
…
Similarly, the bare identification of an “association” will not suffice to answer the relevant question.[4]
[3](2000) 205 CLR 337 (‘Ebner’).
[4]Ibid, 344, 345, 350.
The test is objective and the hypothetical fair minded lay observer is not assumed to have a detailed knowledge of the law, or of the character and ability of a particular judge.[5]
[5]Johnson v Johnson (2000) 201 CLR 488, [13], citing with approval Deane J in Webb v The Queen (1994) 181 CLR 41, 73.
In his affidavit, Mr Spinks deposes that he is not concerned that I have an indirect shareholding in NAB but that he is concerned by my disclosure of having acted for the bank as a barrister from time to time. The substance of his concern is that I may be in a position of conflict in deciding matters of credit in this proceeding.[6]
[6]Affidavit of Matthew Gregory Spinks, sworn 19 September 2013, [6] and [7].
Mr Spinks deposes that he is ‘particularly concerned because there are a lot of facts in issue, and a lot of these facts revolve around and will revolve around evidence being given as to the credibility of statements made by members of National Australia Bank and of me’. Mr Spinks identifies the matters which are in issue between the parties on the pleadings. In particular, what was discussed between the parties around the time of the loan approval, and at various meetings between the parties in 2008, what disclosure was made by the defendant at relevant times and what the plaintiffs understood at such times, and what was said between the parties in late-2008 and early-2009 as to the reason for the delay in construction of a facility on land in Pakenham.[7]
[7]Affidavit of Matthew Gregory Spinks, sworn 19 September 2013, [8], Exhibit ‘MGS-1’, 1.29-31.
Determination
In my practice at the Victorian Bar, my area of specialisation was commercial law, including banking and finance law. In the course of my practice I acted for banks including the defendant from time to time.
In the ten years prior to my appointment as a judge of this court in July 2010, I acted for NAB about every two or three years in discrete matters, which involved giving legal advice, settling pleadings, and included appearances on an application for costs, one trial, and two mediations. I have never had a general retainer to act for NAB. During my career as a barrister, I acted both for and against banks.
As the High Court noted in Ebner, one reason for the practice of making disclosure of interests and association is that it gives the parties an opportunity to bring to the judge's attention some aspect of the case, or of its possible consequences not known to or fully appreciated by the judge. In this case, taking the two-step approach propounded in Ebner, the plaintiffs have identified the fact that I had previously acted for a party to the proceeding, which, it is said, might lead me to decide the case other than on its legal and factual merits. It is my duty to consider the material upon which the concern is based.
In deciding this matter, I have been greatly assisted by the provision by counsel of a list of names of employees or former employees of NAB that would be called to give evidence or who are referred to in any of the pleadings. I do not recognise any of the names. So far as I am aware I have not had any dealings with any of those individuals. By being retained as a barrister my dealings were primarily with the solicitors acting for NAB in the respective matters.
In my view, a fair-minded lay observer would appreciate the following. First, that barristers who practice in commercial law are likely to have, from time to time, acted for banks. Secondly, that the nature of such associations in the practice of commercial law do not necessarily lead to associations which would divert a judge (who has previously acted as counsel for a bank) from deciding a case involving such a party on its merits. In the present circumstances, my view is that a fair-minded lay observer with a general understanding of the way barristers carry out their work would not reasonably apprehend that a judge might bring a partial or prejudiced mind to the resolution of the questions in this proceeding, including the assessment of matters such as the credit of bank witnesses.
While Mr Spinks has deposed that he is not concerned that I have an indirect shareholding, I will address this issue for completeness. A fair-minded lay observer would know, having regard to the size of the claim for loss and damage in this case,[8] there is no realistic possibility that the outcome of the litigation would affect the value of shares in NAB.
[8]$5.7 million as formulated in ‘Scenario 1’ in the Plaintiffs’ Particulars of Loss and Damage, 11 July 2013.
In my deliberation, I have also been cognisant of the judge’s duty to exercise judicial functions. In Ebner, the court referred to the principle as follows:
Judges have a duty to exercise their judicial functions when their jurisdiction is regularly invoked and they are assigned to cases in accordance with the practice which prevails in the court to which they belong. They do not select the cases they will hear, and they are not at liberty to decline to hear cases without good cause. Judges do not choose their cases; and litigants do not choose their judges. If one party to a case objects to a particular judge sitting, or continuing to sit, then that objection should not prevail unless it is based upon a substantial ground for contending that the judge is disqualified from hearing and deciding the case.[9]
[9](2000) 205 CLR 337, 348.
In this case in my view good cause has not been established. It follows that the application should be dismissed.
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