Nova Builders Pty Ltd v Beno Excavations Pty Ltd (No 7)

[2024] ACTSC 15

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Nova Builders Pty Ltd v Beno Excavations Pty Ltd (No 7)

Citation: 

[2024] ACTSC 15

Hearing Date: 

Decided on the papers

Decision Date: 

6 February 2024

Before:

Mossop J

Decision: 

1. I decline to disqualify myself from hearing the application dated 22 November 2023 in relation to Mr Moseley.

2. Any question of costs is reserved.

Catchwords: 

CIVIL LAW – PRACTICE AND PROCEDURE – Application for non-party costs order – application for disqualification on the ground of apprehended bias – non-party a director of defendant company – where trial judge made adverse credit findings about non-party in substantive judgment – approach to apprehended bias where summary proceedings on costs arise out of earlier substantive judgment – application for disqualification refused

Legislation Cited:

Court Procedures Rules 2006 (ACT), rr 1703, 1721

Cases Cited: 

Bahai v Rashidian [1985] 1 WLR 1337

Bolitho & Anor v Banksia Securities Ltd & Ors (No 19) [2022] VSC 761

British American Tobacco Australia Services Ltd v Laurie [2011] HCA 2; 242 CLR 283

Clarence City Council v Howlin [2010] TASFC 2; 20 Tas R 136

Deutsche Bank AG v Sebastian Holdings Inc [2016] 4 WLR 17

Ebner v Official Trustee in Bankruptcy [2000] HCA 63; 205 CLR 337

In the matter of Condor Blanco Mines Ltd (No 3) [2017] NSWSC 65

Johnson v Johnson [2000] HCA 48; 201 CLR 488

King v Muriniti [2018] NSWCA 98; 97 NSWLR 991

Knight v FP Special Assets Ltd (1992) 174 CLR 178

Nova Builders Pty Ltd v Beno Excavations Pty Ltd (No 3) [2023] ACTSC 319

Nova Builders Pty Ltd v Beno Excavations Pty Ltd (No 5) [2023] ACTSC 370

Shears v Chisholm [1994] 2 VR 535

Symphony Group Plc v Hodgson [1994] QB 179

Westpac Banking Corporation v Forum Finance Pty Limited (Apprehended Bias Application) [2022] FCA 981

Texts Cited

Butterworths, Halsbury’s Laws of England, 4^th ed, vol 1(1) (2001 reissue)

Parties: 

Nova Builders Pty Ltd ( Plaintiff)

Beno Excavations Pty Ltd ( First Defendant)

Civil and Civic Corporation Pty Ltd (Second Defendant)

Benjamin Moseley (Non-Party)

Representation: 

Counsel

R Arthur ( Plaintiff)

A Greinke and S Lamb ( Mr Moseley)

Solicitors

Lexicon Lawyers ( Plaintiff)

Self-represented ( Mr Moseley)

File Number:

SC 276 of 2020

MOSSOP J:  

Introduction

1․On 3 November 2023, I delivered my principal judgment in these proceedings in relation to a claim for restitution as between Nova Builders Pty Ltd (Nova) and Civil and Civic Corporation Pty Ltd (Civil): Nova Builders Pty Ltd v Beno Excavations Pty Ltd(No 3) [2023] ACTSC 319 (Nova (No 3)).

2․On 8 December 2023, I addressed the issue of costs of the proceedings as between Nova and Civil: Nova Builders Pty Ltd v Beno Excavations Pty Ltd (No 5) [2023] ACTSC 370 (Nova (No 5)). I ordered that Civil pay Nova’s costs of the proceedings on an indemnity basis and that liberty was reserved to Nova in relation to any application for a third-party costs order.

3․On 22 November 2023, Nova filed an application in proceeding seeking costs orders against Benjamin Peter Moseley and Chamberlains Law Firm (Chamberlains). Mr Moseley is the sole director of Civil. Chamberlains are the solicitors that acted for Civil in the proceedings. Although Mr Moseley had not yet filed a Notice of Intention to Respond, on 8 December 2023, he appeared by counsel and directions were made relating to the costs application against him. At that point, counsel indicated that Mr Moseley would seek that I disqualify myself from the hearing and determination of the application for the costs order against him. Submissions in support of that application were provided by counsel for Mr Moseley, dated 15 December 2023, and by counsel for Nova, dated 22 December 2023, and the matter determined on the papers.

Submissions

4․Counsel for Mr Moseley pointed to the adverse findings that I had made in relation to Mr Moseley’s credibility and conduct in Nova (No 3) and Nova (No 5). He submitted that they reflected “antipathy towards Mr Moseley”. He submitted that the decision awarding indemnity costs in favour of Nova indicated that a central and decisive part of the exercise of discretion in relation to costs arose from those findings and that the decision did not involve “a careful balancing of competing considerations”. He submitted, by reference to the decision in British American Tobacco Australia Services Ltd v Laurie [2011] HCA 2; 242 CLR 283 at [25], that my previously expressed views about Mr Moseley’s conduct “would prevent the reasonable and proper balancing of discretionary considerations in [a] costs application against Mr Moseley personally”. He submitted that the grounds identified by Nova in its application rely upon the adverse findings about Mr Moseley’s credit and conduct as the central foundations for its case for a personal costs order. He submitted, relying on Shears v Chisholm [1994] 2 VR 535 at 545, that Mr Moseley is not a “privy” of Civil and hence the adverse findings should not bind him.

5․The submissions made by Nova were that the apprehended bias rule did not have any application because it applies (citing Laurie at [145]):

[w]henever a judge is asked to try an issue which he or she has previously determined, whether in the same proceedings or in different proceedings, and whether between the same parties or different parties …

6․Nova submitted that the application for a personal costs order arises out of the decided case between Nova and Civil, that the “findings are part of the res judicata in that case”, and that it is not open to a party to the application to adduce evidence to contradict the findings or for the judge to revisit them. All that is left is the exercise of judicial discretion, which will include consideration of those findings as part of the balancing of considerations overall. It submitted that there was therefore no possibility that the judge will be required to try the same issue in respect of the same party. It submitted that the issue of whether Mr Moseley is or is not a privy of Civil does not arise. It submitted that “[t]he relevant findings were made in respect of Mr Moseley, or Mr Moseley and Civil, and arise for consideration in the same proceedings’’. Finally, it submitted that the circumstances of Shears v Chisholm were different because, in that case, the relevant adverse findings were made in earlier separate proceedings.

7․The submissions made on behalf of Mr Moseley and Nova made no reference to any case in which an application for disqualification had been made in relation to an application for a costs order against a non-party. For that reason, they did not provide significant assistance with the principles to be applied or the application of those principles to the circumstances of this case.

Consideration

8․Rule 1721 of the Court Procedures Rules 2006 (ACT) provides that costs are in the discretion of the court. Rule 1703 assumes the existence of a power consistent with that found to exist in Knight v FP Special Assets Ltd (1992) 174 CLR 178 to award costs against a non-party. Rule 1703(1) qualifies that power by providing that, unless the rules otherwise provide, the court must not make such an order other than in accordance with subrule (2). In the present case, the application for costs against Mr Moseley is stated in the application in proceeding as being made pursuant to r 1703(2)(e). This provides that one of the non-parties against whom a costs order may be made is “a person who starts or carries on a proceeding, or purports to do so, as an authorised director of a corporation”. It is unnecessary, for present purposes, to consider the scope of the class of persons captured by this paragraph of r 1703(2).

9․Authorities relevant to the making of an application that the trial judge be disqualified from hearing an application for a costs order against a non-party include the following:

(a)Bahai v Rashidian [1985] 1 WLR 1337;

(b)Symphony Group Plc v Hodgson [1994] QB 179;

(c)Clarence City Council v Howlin [2010] TASFC 2; 20 Tas R 136;

(d)Deutsche Bank AG v Sebastian Holdings Inc [2016] 4 WLR 17;

(e)In the matter of Condor Blanco Mines Ltd (No 3) [2017] NSWSC 65;

(f)King v Muriniti [2018] NSWCA 98; 97 NSWLR 991; and

(g)Bolitho & Anor v Banksia Securities Ltd & Ors(No 19) [2022] VSC 761.

10․Applications for costs orders against non-parties are usually dealt with by the trial judge: Bahai at 1342, 1346; Symphony at 193; Clarence City Council at [114]; Deutsche Bank at [17]. They are summary in nature in the sense that the judge would make an order based on the evidence given and facts found at trial together with an assessment of the behaviour of those involved in the proceedings: Deutsche Bank at [17]. An application for a costs order against a non-party is part of the overall process by which orders are made by the court at the conclusion of the trial and it does not involve some different or separate proceeding: Bahai at 1342, Deutsche Bank at [17], Muriniti at [37], [97]. The justification for adopting a summary procedure is that the non-party had a close connection of some kind with the proceedings: Symphony at 193; Deutsche Bank at [17]. Where that is not the case, then it is less likely to be fair to treat the application as a mere adjunct to the trial of the action in which the target of the costs order is bound by the evidence given at trial and the trial judge’s findings of fact: Symphony at 195, 196; Clarence City Council at [114]; Deutsche Bank at [17]. A non-party is entitled to appear, be heard and adduce evidence in opposition to the making of such an order.

11․It is in that context that any question of an apprehension of bias must be determined. The fact that the trial judge may, in the course of judgment in the action, have expressed views on the conduct of the non-party has not generally been accepted as indicative of an appearance of bias: Bahai at 1342, 1346; Symphony at 193; Condor Blanco Mines at [22]; Bolitho at [20]. Where, however, there is not such a close connection between the non-party and the conduct of the proceedings, then it may not be fair to proceed on the basis of the earlier findings. In those circumstances, the summary procedure may not be possible as there may be challenges to the decision of the judicial officer on issues of fact and law that mean that the proceedings in relation to the non-party costs order are not a “mere adjunct to the trial of the action” and are instead “in the nature of an appeal from [the trial judge]”: Clarence City Council at [110], [114].

12․For these reasons, the question of disqualification for apprehended bias in relation to a non-party costs order arises in a different context to that in Laurie, where the adverse findings had been made in separate, earlier proceedings. The question is also distinct from situations in which adverse findings are made in the course of interlocutory proceedings, such as, for example, Westpac Banking Corporation v Forum Finance Pty Limited (Apprehended Bias Application) [2022] FCA 981.

13․It is in that context that the question of apprehended bias in this case must be addressed. In the present case, Mr Moseley is the sole director of Civil and was the only witness who gave evidence for Civil. The documentary evidence appeared to indicate that he was, as managing director, the person responsible for the conduct of Civil. There was no submission made for the purposes of the present application that Mr Moseley was not closely involved in the conduct of the proceedings. It is therefore a case where, prima facie, a summary procedure would be appropriate. It is certainly distinct from cases in which the target of the costs order had only limited association with the earlier proceedings, such as in Symphony and Clarence City Council.

14․The findings made in relation to Mr Moseley’s conduct were clearly very adverse ones. The submissions made on behalf of Mr Moseley appeared to focus upon whether, in light of those findings, the discretion in relation to whether or not to make a costs order could be properly exercised. The contention appeared to be that there was such “antipathy towards Mr Moseley” that the discretion to make an indemnity costs order against Civil was not properly exercised and that because of the “firmly expressed views about the dishonesty and moral delinquency of Mr Moseley”, a fair-minded lay observer might perceive that the discretion as to whether or not to make a costs order against him personally might be affected by that improper antipathy. While the submissions appeared to seek to keep open the potential for a challenge to findings of fact made in the principal judgment, the submissions did not indicate what, if any, factual findings Mr Moseley would seek to challenge, if that course was an available one.

15․The position is similar to that which was addressed in Bahai. In that case, the trial judge had made highly critical remarks concerning the solicitor for the plaintiff. His Honour indicated that he regarded the conduct of the solicitor as being “deplorable”, reflecting either “gross incompetence” or a willingness to use “improper means” to see the plaintiff succeed. His Honour found the solicitor to be “an extremely unsatisfactory and unreliable witness”: Bahai at 1340. An application for a costs order against the solicitor was made. Subsequently, an application was made for the trial judge to recuse himself from determining the issue of the solicitor’s liability to pay the defendant’s costs. The trial judge explained that, while it was distasteful for him to deal with the matter in circumstances where one of the parties had complained that he was biased, he regarded it as his duty to adjudicate on the matter since he was the judge who tried the action and the subsequent application related to the costs of that action. However, he made it clear that he would give the solicitor an opportunity to call evidence and make submissions. By majority, the Court of Appeal upheld that approach. Sir John Donaldson MR said (at 1342):

The fact that a judge has determined the issues in the action and in so doing has expressed views on the conduct of the parties and of the witnesses, neither constitutes bias nor the appearance of bias in relation to subsequent applications in the action.

16․His Lordship concluded that the trial judge was right to consider that it was his duty to hear and determine the application. Balcombe LJ said (at 1346) that the application was one which should be tried by the judge who heard the action unless there are compelling reasons to the contrary, and that:

A judge properly exercising his judicial function, e.g., by criticising the conduct of a party’s solicitor in the course of his judgment on a matter which he considers relevant to his decision, cannot by that process be said to be biased. Bias is the antithesis of the proper exercise of a judicial function.

17․It is that comment that was picked up in Symphony (at 193) which, in turn, was applied by Barrett AJA in Condor Blanco Mines (at [22]). Care must be taken to the application of these comments in an Australian context where the formulation of the test for an apprehension of bias is different to that which is applied in the United Kingdom: as to which, see Butterworths, Halsbury’s Laws of England, 4^th ed, vol 1(1) (2001 reissue) at 228 [99]; Johnson v Johnson [2000] HCA 48; 201 CLR 488 at [12]. However, what is significant is that part of the judicial function includes, in an appropriate case, reaching adverse conclusions as to the reliability of a witness’ evidence and the conduct engaged in by them. To take that into account in the same case is consistent with, rather than antithetical to, the proper discharge of the judicial function.

18․It is in this context that the test in Ebner v Official Trustee in Bankruptcy [2000] HCA 63; 205 CLR 337 at [6] must be applied, namely, whether “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”. A fair-minded lay observer would be taken to be familiar with the facts of the case and the reasons given for the very adverse conclusions reached about the reliability of Mr Moseley’s evidence and his conduct.

19․There is no doubt that I made findings adverse to Mr Moseley’s credit and conduct in Nova (No 3) at [82], [84], [85], [107], [115]; and Nova (No 5) at [37]. Had the proceedings been separate proceedings to those the subject of the application for recusal, then it is clear that a relevant apprehension of bias would arise because of the potential for that material, which would be extraneous to the proceedings, to influence my perception of the evidence in the present case. However, as pointed out above and reinforced by the decision in analogous circumstances in Muriniti at [37], [97], the proceedings are not separate, the material is not extraneous and hence the approach adopted in relation to issues of apprehended bias where there are separate proceedings is not applicable.

20․To adopt the words of Dixon J in Bolitho at [20]:

The touchstone of apprehended bias on the basis of prejudgement is not the fact that the judge may have formed a view, but rather that the judge’s mind is not open to persuasion by evidence or argument. In this instance, it is non-sensical to suggest that I have not formed views and cannot have a ‘blank mind’. A non-party costs application necessarily follows on the completion of a trial with a judgment expressing findings of fact, reasoning, and conclusions. Whether a logical connection has been established, the second step in Ebner, must focus on how it is being put that I am not open to persuasion by evidence or argument and able to fairly discharge my oath of office.

(Footnote omitted).

21․The test in Ebner is a two-step process (see Ebner at [8]):

First, it requires the identification of what it is said might lead a judge … 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.

22․Given that the earlier findings have been made in the same case and are therefore not impermissible extraneous material, the second step as articulated in Mr Moseley’s submissions appears to be based upon an asserted personal antipathy that is so significant that it would impermissibly affect the exercise of the costs discretion and (although the submission was not clear) the assessment of any further factual issues. As I understand this submission, the existence of an apprehension of bias is said to be reinforced by the manner in which I addressed the application for an indemnity costs order.

23․I accept that the determination of the credibility of the respective witnesses, particularly Mr Pierlot and Mr Moseley, was of central importance to the determination of the outcome of the case. I accept that both the principal judgment and the reasons in relation to costs contain strong adverse findings about Mr Moseley. However, I do not accept that the findings of fact that were made were such as to indicate any personal antipathy as distinct from findings necessary to determine the issues between the parties or that a reasonably informed lay observer might perceive that might be the case. Having regard to the discrete context in which the issues arise, I do not accept that the findings previously made in either the principal judgment or that the manner in which the issue of indemnity costs was dealt with might cause a fair-minded lay observer to apprehend that I might decide the question of a non-party costs order other than on its legal and factual merits.

24․For those reasons, I decline to disqualify myself from hearing Nova’s application for a costs order against Mr Moseley.

I certify that the preceding twenty-four [24] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop.

Associate:

Date: 6 February 2024