OWENS & OWENS
[2009] FMCAfam 1397
•17 September 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| OWENS & OWENS | [2009] FMCAfam 1397 |
| FAMILY LAW ─ Practice and procedure ─ application for judicial officer to be disqualified on the ground of apprehended bias ─ case turns on its own facts. FAMILY LAW ─ Practice and procedure ─ legal practitioners ─ counsel ─ where counsel has behaved inappropriately, including by showing disrespect to the bench, by arguing with the bench and by turning his back on the bench ─ power of court to control counsel ─ power of court to remove counsel ─ discussion of principles in Grimwade v Meagher (1995) 1 VR 446 ─ where counsel put on notice that similar behaviour could lead to counsel being removed. |
| Family Law Act 1975 (Cth) |
| AGF v LLS (2005) 34 Fam LR 161 Ragatta Developments Pty Ltd v Westpac Banking Corporation (Fed C of A, Davies J, 5 March 1993, unreported) Re B (Alleged Apprehension of Bias) (2003) 32 FamLR 1 Re JRL; Ex parte CJL (1986) 10 FamLR 917 Re Watson; Ex parte Armstrong (1976) 1 FamLR 11,297 State of Western Australia v Ward and Ors (1997) 76 FCR 492 Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Fed C of A, French J, 3 May 1991, unreported) Tomkins & Ward & Ors (2007) FMCAfam 858 | ||
| Applicant: | MS OWENS | |
| Respondent: | MR OWENS |
| File Number: | MLC 7175 of 2008 |
| Judgment of: | Walters FM |
| Hearing date: | 17 September 2009 |
| Date of Last Submission: | 17 September 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 17 September 2009 |
REPRESENTATION
| Counsel for the Applicant: | Ms R Teicher |
| Solicitors for the Applicant: | Mirabellas Solicitors |
| Counsel for the Respondent: | Mr M Testart |
| Solicitors for the Respondent: | Plaza Legal |
ORDERS
The husband’s oral application to disqualify Walters FM be dismissed.
The husband do pay the wife’s costs – fixed in the sum of $5,750.00 – within 30 days.
The matter otherwise be adjourned to 18 September 2009 at 10.00 a.m. for interim hearing.
IT IS NOTED that publication of this judgment under the pseudonym Owens & Owens is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 7175 of 2008
| MS OWENS |
Applicant
And
| MR OWENS |
Respondent
PREFACE
(Not part of ex tempore Reasons for Judgment) – provided by way of background information only
The following ex tempore Reasons for Judgment in relation to the husband's application for me to disqualify myself ─ which application was made (orally) by counsel for the husband at the start of a busy duty list on Tuesday 15 September 2009 (and which was heard and determined on Wednesday 16 and Thursday 17 September 2009) ─ have been settled from the transcript. They were delivered orally on
17 September 2009. Neither party sought that I provide written reasons until counsel for the husband requested them in correspondence emailed to the court on 14 December 2009.
Between 17 September 2009 and 14 December 2009 the following events (at least) occurred ─
a)The Court dealt with an application regarding schooling arrangements for the children (and an application for costs arising from that application) on 18 September 2009. Orders were made accordingly.
b)The trial (which had been listed with an estimated hearing time of two to three days) commenced on 9 November 2009. It continued on 10, 11, 12 and 13 November 2009, at which time it was adjourned (part heard) to 23 November 2009;
c)The trial resumed on 23 November 2009. It continued on 24 and 25 November 2009.
d)The "evidence phase" of the trial ended on 25 November 2009. After hearing counsel in relation to mechanical matters (including relevant time frames), I directed that closing submissions be in writing, and made orders to the following effect:
i)closing submissions were to be no longer than 20 pages;
ii)the wife's closing submissions were to be filed and served by not later than 4 p.m. on Thursday 3 December 2009;
iii)the husband's closing submissions were to be filed and served by not later than 4 p.m. on Friday 11 December 2009; and
iv)the wife was given liberty to apply for leave to file brief written submissions in response to the husband's closing submissions.
In somewhat extraordinary circumstances (which I shall discuss in my substantive Reasons for Judgment ─ relating to the issues dealt with at trial), the husband's solicitors failed to comply with the time limit relating to the filing of their closing submissions, and with two subsequent extensions. The final deadline required that the husband's closing submissions be filed by 12 noon on 15 December 2009.
Shortly before 12 noon on 15 December 2009, however, my Associate received an email from counsel for the husband (Mr M Testart). Among other things, the email included a bald statement that the husband's closing submissions "will be ready for the Court very shortly".
Significantly, the email received on 15 December 2009 also included a document headed "Memorandum of Submissions for the Respondent Husband ─ Application for Disqualification (Number 2)". I shall refer to these submissions as "the second disqualification submissions".
The second disqualification submissions comprised 25 pages. Attached to them were a further 25 pages of annexures.
Mr Testart's email of 15 December 2009, and the second disqualification submissions attached to it, were brought to my attention shortly after they were received. A response was emailed to Mr Testart at 12:35 p.m. on 15 December 2009, part of which is as follows:
His Honour has received your email sent to his Associate at 11:37 a.m. today. As foreshadowed in (the Associate’s) email to you sent just after 4 p.m. yesterday, his Honour has asked me to confirm that no further time will be permitted for the filing and service of the husband's closing submissions. His Honour notes the following:
· Although you found time to prepare a 25 page submission in support of an application that his Honour disqualify himself, you apparently did not find time to prepare written submissions on behalf of your client in relation to the substantive issues at trial.
· In your letter to (the Associate) sent at approximately 3 p.m. yesterday, you made no mention of the proposed application for disqualification.
· No formal application has been made to the Court to extend the time for filing written submissions on behalf of the husband, …
On 16 December 2009 ─ having received an email from counsel for the wife on 15 December 2009 stating that she did not propose to respond to the second disqualification submissions "other than to say that the application is opposed", and having read and considered the second disqualification submissions overnight ─ I made orders to the effect that the husband's informal application for disqualification and other orders (as contained in the second disqualification submissions emailed to the court on 15 December 2009) be accepted for filing, and that it be dismissed. I also directed that my Reasons for dismissing the second disqualification application be delivered concurrently with my Reasons in the substantive proceedings.
In late December 2009, the husband lodged an appeal (or an application for leave to appeal) from the orders made on 16 December 2009. The appeal has yet to be determined.
REASONS FOR JUDGMENT
(Delivered ex tempore on 17 September 2009 and since settled from the Transcript)
Introduction (including background remarks regarding counsel's behaviour)
Before the Court is an oral application made by counsel for the husband (Mr M Testart) to the effect that I should disqualify myself on the ground of apprehended bias.
I must say at the outset that, in my opinion, it is most unfortunate that, during the course of his submissions, Mr Testart did not fully explore the context in which some of the comments to which he referred arose. It is also unfortunate that Mr Testart became very personally involved in pressing his submission. Regrettably, I feel compelled to record that the standard of his (in court) behaviour was something less than might fairly be expected from a member of counsel.
I have been urged by counsel for the wife (Ms Teicher) not to adopt any approach which might have the effect of allowing Mr Testart’s extraordinary conduct to itself trigger a disqualification that should not otherwise occur.[1] In that regard, I note that I expressed certain of my concerns regarding Mr Testart’s behaviour before the luncheon adjournment today.[2] That behaviour included:
·showing disrespect to the bench;
·arguing with the bench;
·turning his back on the bench;[3] and
·making comments in relation to evidentiary matters that appeared, in my view, not to have been supported by the documents relied upon.
[1] See, for example, 17 September 2009 transcript from page 32, line 3 to page 36, line 16, and page 40, lines 15 to 40
[2] See 17 September 2009 transcript at pp. 32-36
[3] See 17 September 2009 transcript at p. 21
For example, earlier today I raised with Mr Testart my concerns to the effect that he may have misled the Court. Indeed, I think I put it more strongly than that. Mr Testart reacted angrily and, in my view, in a somewhat petulant matter.[4] At the end of the day, the court cannot know what is in counsel's mind when he makes a submission, or when he directs the Court to certain comments in or parts of the transcript, but not to other comments or parts which clearly qualify or explain the original comments and place them in a different light.
[4] See 17 September 2009 transcript from page 16 (at line 34 – which should read “I said exactly the same thing …”, not “Said exactly the same thing …”) to page 22 (at line 7)
The objective position, though, is this: if the Court is only referred to a part of or extract from the transcript or the evidence, and if that part or extract is not properly and fairly put in context, then, irrespective of what counsel might try to say in justification, the Court could clearly be misled.
So concerned was I by Mr Testart's behaviour in this matter that I have given serious consideration to what the Court’s options might be. One option would be to refer counsel's inappropriate behaviour to the Ethics Committee of the Victorian Bar. I have yet to decide whether I will proceed down that track, but Mr Testart has apologised to me and, at this stage, I am prepared to accept that apology.[5]
[5] See 17 September 2009 transcript at page 36, where Mr Testart said:
MR TESTART: Thank you, your Honour. I wanted to acknowledge your Honour’s concerns with respect to the conduct of this matter – well, in its entirety and particularly over the last couple of days. I would like to just briefly leave aside the matters that my learned friend has raised, but if I could refer to – and I realise that this will not necessarily allay your concerns, but if I can just say that there was an aspect in my submissions and in our dialogue where I did become frustrated and distressed and your Honour has been quite gracious in noting that in relative terms I am a junior practitioner, although I would submit that I would ultimately like to be judged by the words that come from my mouth and not my experience.
If I can refer to turning my back on your Honour, that is regrettable and I apologise for that. If I can not provide a justification but an explanation for that, it was borne out of a frustration and I was upset that your Honour had said that I was being dishonest, and I understand that your Honour might have reasons and justifications for feeling – for reaching that conclusion, but I took offence to that and perhaps I lack the maturity to be able to take that particular comment onboard and not turn my back, and I turned my back to pause – to attempt to gather myself so that I could participate in my role as counsel in an appropriate way.
So I would like to specifically apologise for that behaviour. It is regrettable behaviour. It is not acceptable and I do regret that …
I also gave consideration as to whether I should take steps to prevent Mr Testart from continuing to appear as counsel for the husband.
Grimwade v Meagher and Others
The Court has power to remove counsel in appropriate cases. I refer in that regard to the well-known decision of Mandie J in Grimwade v Meagher and Others (1995) 1 VR 446, which deals with the powers of courts to remove counsel in certain exceptional circumstances. The headnote to that case reads as follows:
The court had inherent jurisdiction to ensure the due administration of justice and to protect the integrity of the judicial process and as a part of that jurisdiction to prevent a member of counsel appearing for a particular party in order that justice should not only be done but be seen to be done. The objective test to be applied is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice required that counsel be prevented from acting, giving due weight to the public interest that litigants should not be deprived of their choice of counsel without good cause.
During the course of the submissions today, I acknowledged the fact that the husband is entitled ─ ordinarily ─ to his counsel of choice; but that is not an absolute entitlement. The headnote in Grimwade v Meagher continues as follows:
In the unique, extraordinary and highly exceptional circumstances of this case (i.e. Grimwade v Meagher), there was a real and sensible risk of a lack of objectivity by the first defendant (i.e. counsel) which not only gave rise to an undue risk of unfairness or disadvantage to the plaintiff but also gave rise to substantial concern that a fair trial would not be had and hence gave rise to a concern for the integrity of the judicial process and the due administration of justice.
It seems to me, however, that it would be unfair to Mr Testart and, more importantly, to his client (and, perhaps, to his instructing solicitors as well) to progress further with consideration of the question of whether or not I can or should take steps to prevent Mr Testart from continuing to appear as counsel for the husband as a result of what I regard as inappropriate behaviour of a very serious nature. The potential taking of such a radical step is a matter of which all those involved, both directly and indirectly, should be made aware well in advance. Hence, I am not prepared to go down that path (as it were) at this stage. I put counsel on notice, however, of the existence of the Supreme Court of Victoria’s decision in Grimwade v Meagher, and that fact that it has been followed on many occasions (although I accept that the present circumstances ─ involving, as they do, Mr Testart's extraordinary behaviour generally, and towards the Court in particular ─ are most unusual).
I would add that in State of Western Australia v Ward and Ors (1997) 76 FCR 492 the Full Court of the Federal Court made reference to decisions such as Grimwade v Meagher, and said that a court exercising federal jurisdiction must also ensure that justice is done and, that, although such a court may not have inherent jurisdiction (such as that which adheres to the Supreme Court of Victoria), it clearly has the powers which are expressly or by implication conferred on it. Those powers include powers that are necessary to enable it to properly and effectively exercise its jurisdiction. Such comments apply to the Federal Magistrates Court.
The Full Court said:[6]
Enough has been said to show that the requirements of natural justice do not involve an absolute right to the legal adviser of a party's choice. The instances in which courts have prevented chosen counsel or solicitors from acting have involved misconduct, potential use of confidential information, and a real risk of lack of objectivity and of conflict of interest and duty … The present case (i.e. State of Western Australia v Ward) is only another example of situations in which the “integrity of the judicial process”, the “interests of justice” and the “need to preserve confidence in the judicial system”, to use some of the notions that lie behind the inherent jurisdiction to exclude counsel or solicitors, may override the public interest that a litigant be able to be represented by the lawyer of its choice. That public interest is “an important value”. … It is a serious matter to prevent a party from retaining its chosen lawyer. … But … particular circumstances may require some modification of the public interest in the ability of a litigant to have a lawyer of its choice.
[6] at page 498 of State of Western Australia v Ward
I want to make it clear, therefore, that, in my opinion, this Court has power to remove counsel in appropriate circumstances (which circumstances will inevitably be unusual and, indeed, exceptional). As I have already said, I gave some consideration as to whether or not I should exercise that power – but procedural fairness would indicate to me, and I think clearly so, that I should not take such a serious step without giving fair warning to counsel, to his instructing solicitors and to his client that such a step might be contemplated (and, of course, without hearing relevant submissions).
In the light of Mr Testart’s behaviour over the past two days, though, I want to give him fair warning at this stage that – irrespective of the result of the current disqualification application (which, in my view, was both fairly made and arguable) – if he behaves in a similar manner and shows disrespect to the bench again, then I will, with due notice to his instructors and to Mr Owens, give very serious consideration to taking appropriate steps to have him removed as counsel.
Application for disqualification – statement of test
I turn now to the issue of the application for disqualification. In Tomkins & Ward & Ors (2007) FMCAfam 858, I dealt with the law that relates to applications of this nature and, given the time,[7] I hope I will be excused for adopting most of what is said in that judgment regarding the law rather than have to go through step by step some of the cases to which I have been referred.
[7] These Reasons were being delivered (orally) during the afternoon of 17 September 2009, and in the context of parties in another set of proceedings waiting to be heard.
In AGF v LLS (2005) 34 Fam LR 161, the Full Court said[8]:
The test of whether a judge is disqualified by reason of the appearance of 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”.[9]
[8] at para 21
[9] See Johnson v Johnson [2000] HCA 48 at [11] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ
I accept that that is an accurate statement of the test that I must apply.
What then is "the question that (I am) required to decide"? In this case there are property settlement issues and there are children’s or parenting issues that the Court is asked to decide. The credibility of the parties is an integral component of those issues.
Put another way, property settlement is only one part of the case. Leaving aside the final orders relating to parenting issues, there is also, of course, an interim application currently before me relating to arrangements for the children’s schooling. Because of the application for disqualification, I have yet to hear argument relating to the schooling matter.
One of the issues that I will ultimately need to decide is the characterisation of payments made by the husband to his father, or to his father’s estate after separation. I shall refer to this broad issue (which involves, among other things, consideration of the nature of funds passing between the husband's father and the husband, including whether relevant payments were loans) as "the characterisation issue". The transcript (to which I will soon refer) makes it clear that the characterisation issue is the key issue in the property settlement proceeding. The transcript also records that I regard the other property issues as being important, but of less significance than the characterisation issue – although counsel did endeavour to inflate the significance of some of the other issues. Thus, identifying the size of the pool or, alternatively, working out how to deal with funds which may have emanated from the husband's father (by treating them as, effectively, contributions made by behalf of the husband or as loans that may or may not be or have been repayable, or by dealing with any relevant payments in some other way) is, it seems to me, the main issue in the property settlement proceedings.
There are many other issues beyond just identifying the asset pool and dealing with the question of the disbursal of funds. Obviously, the Court must look at these parties’ contributions (in all their various guises), and at the relevant section 75(2) factors. What the test in AGF v LLS requires me to do is to consider whether a fair-minded lay observer might reasonably apprehend that I might not bring an impartial and unprejudiced mind to the resolution of those broader questions to which I have referred.
An apprehension of bias should not be based on "a snap judgment"
A longer statement of the law in relation to this subject appears in Re B (Alleged Apprehension of Bias) (2003) 32 FamLR 1, and particularly at paragraph 49. There, the Full Court referred to the usual authorities cited in questions of this nature (including Re Watson; Ex parte Armstrong (1976) 1 FamLR 11,297 and Johnson (2000) 26 FamLR 627), and then quoted with approval the following paragraphs from Johnson:
[11] … It has been established by a series of decisions in this court that the test to be applied in Australia in determining whether a judge is disqualified by reason of the appearance of bias (which in the present case was said to take the form of prejudgment) 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.
[12] That test has been adopted, in preference to a differently expressed test that has been applied in England, for the reason that it gives due recognition to the fundamental principle that justice must both be done, and be seen to be done. It is based upon the need for public confidence in the administration of justice. “If fair-minded people reasonably apprehend or suspect that the tribunal prejudged the case, they cannot have confidence in the decision.” The hypothetical reasonable observer of the judge’s conduct is postulated in order to emphasise that the test is objective, is founded in the need for public confidence in the judiciary, and is not based purely upon the assessment by some judges of the capacity or performance of their colleagues. At the same time, two things need to be remembered: the observer is taken to be reasonable; and the person being observed is “a professional judge whose training, tradition and oath or affirmation requires [the judge] to discard the irrelevant, the immaterial and the prejudicial”.
[13] Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx. In Vakauta v Kelly [(1998) 167 CLR 568] Brennan, Deane and Gaudron JJ, referring both to trial and appellate proceedings, 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.” 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.
[14] .... No doubt some statements, or some behaviour, may produce an ineradicable apprehension of prejudgment. On other occasions, however, a preliminary impression created by what is said or done may be altered by a later statement. It depends upon the circumstances of the particular case. The hypothetical observer is no more entitled to make snap judgments than the person under observation. (Footnotes omitted and emphasis added)
Re B and Re JRL; Ex parte CJL (1986) 10 FamLR 917 also emphasise that the Court should not lightly entertain an application for disqualification. It must be clearly demonstrated that disqualification is warranted. There are obvious reasons for that.
We are now approaching a second trial date in this matter. There are urgent issues to be determined (such as the interim application dealing with the children's schooling, which application is currently before me) and the costs to these parties – both emotionally and financially – of stopping the case in its tracks now, and having to reallocate it to another Federal Magistrate, are significant. It may well be that the parties will have to wait some six to nine months for a fresh trial date if I vacate the trial that is currently listed before me in November. That is not a reason, of course, to refuse an application to disqualify if the grounds are made out, but it does illustrate the reasons why both the Full Court and the High Court have said that a judicial officer should not lightly accede to an application for disqualification.
The last passage to which I want to refer is from Re JRL; Ex parte CJL, where Mason J said:[10]
It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party. There may be many situations in which previous decisions of a judicial officer on issues of fact and law may generate an expectation that he is likely to decide issues in a particular case adversely to one of the parties. But this does not mean either that he will approach the issues in that case otherwise than with an impartial and unprejudiced mind 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 issues in this way. 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” .... 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.
[10] at page 923
I accept that the "double might" test of apprehended bias is different from the test suggested at the commencement of the passage just quoted, but the passage remains very important. The first sentence can be paraphrased as follows:
It needs to be said loudly and clearly that the ground of disqualification is whether a fair-minded lay observer might reasonably apprehend that the judicial officer might not bring an impartial and unprejudiced mind to the resolution of the question the judicial officer is required to decide, rather than that the judicial officer will decide the case adversely to one party.
In my view the submissions presented on behalf of the husband have ultimately misunderstood or overlooked that concept.
Grounds relied upon in support of application for disqualification
I now turn to the specific grounds relied upon by Mr Testart. They are, in essence, four:
a)The first is that I made inappropriate comments regarding the credibility of a non-expert witness. That is how Mr Testart described the ground but, to be fair, a more significant aspect of the complaint contained in this ground is that I allegedly made inappropriate comments about the credibility of the husband, who is a party to the proceedings.
b)The second is that I interrupted the husband's evidence and embarked upon some form of inquisition, and that I did so improperly.
c)The third relates to the issue of procedural fairness. It is argued that I interrupted counsel, that I did not allow cross-examination on credit, that I made threats in relation to orders for personal costs against counsel for the husband, and that I made suggestions to the wife which might be interpreted as indicating to her how she might run her case. There were other matters raised in support of this ground, but I think that the matters that I have mentioned are the main ones.
d)The fourth is that, if each of the previous grounds is insufficient individually or in isolation to meet the relevant test, then the aggregate effect of the Court's behaviour is such as to meet the test.
Hearing giving rise to allegation of apprehended bias (22 and 23 June 2009)
I turn now to the hearing during which the comments that are complained about were made. Some short background information needs to be provided, however, so that anybody reading these Reasons might understand how it came about that the hearing was held at all.
The substantive proceedings began on 7 August 2008, upon the wife filing an initiating application. The first return date for the wife's initiating application was 16 September 2008, on which date various orders were made. Relevantly (for current purposes) it was ordered that the parties attend a conciliation conference on 27 November 2008 and that the matter be listed for trial to commence on 1 June 2009 (with an estimated hearing time of two days). Directions were made regarding the filing of material for trial.
On 26 November 2008, the parties were advised that the trial date had been changed from 1 June 2009 to 22 June 2009 (still with an estimated hearing time of two days).
The matter came back before the Court in November and in December 2008, and a divorce was granted in February 2009. Further orders were made in May 2009. Those orders permitted the payment out of certain funds that were expected to be received from the sale of a property at Property C. The orders of 12 May 2009 speak for themselves.
On the first day of what had been listed as the trial (22 June 2009), both parties were represented. Ms Teicher appeared for the wife and Mr Testart appeared for the husband. Both counsel agreed that the matter was not ready for trial (although for different reasons).
The transcripts of the two days, being 22 and 23 June 2009, are very important. In my view, they must be read in toto in order for all relevant comments to be properly understood; isolated extracts are unlikely to be helpful. In an ex tempore judgment such as this, it is neither appropriate nor feasible to quote the entirety of the transcript. Some matters, however, require emphasis.
The proceedings began at 10 a.m. on 22 June 2009. Appearances were taken, and a request was then made for the matter to be stood down for some “hopefully fruitful discussions in relation to both children and property matters”.[11]
[11] See 22 June 2009 transcript at page 2
According to the transcript, it was 12.38 pm when the matter resumed. Ms Teicher began her submissions by indicating that negotiations had broken down in relation to children's issues. She then said the wife's position as to the rest of the matter was that the case was not ready to proceed …[12]
in that there has been a failure to make proper discovery of the financial documents pertinent to the case which include the taxation returns; superannuation material; the husband has an expectancy under the will of his father, the father passed away, that's not been discovered, nor any probate documents.
[12] See 22 June 2009 transcript at page 2
I then asked Ms Teicher whether she was seeking an adjournment on the basis that the case is not ready for trial. She confirmed that she was.
In response, Mr Testart said:
… I agree with my learned friend's conclusion that the property matter isn't ready to proceed, but not entirely with her reasoning.
Then he said that many of the documents referred to had already been made available to the wife. A few moments later, he said:[13]
… there’s a very important issue raised by my learned friend alluding to my client’s father recently passing away. One of the major points in issue is the transfer of substantial amounts of money to and from my client's father to my client over the course of the marriage and subsequent to the sale of the matrimonial home. This will be an issue that I submit will be hotly contested. How ought these moneys be characterised? Ought they be characterised as a gift, as I understand the applicant wife might characterise these moneys "as a gift to my husband” in which case they ought to be repaid back to the matrimonial pool of assets? Ought they be properly characterised as a loan by the father to the respondent husband over the course of the marriage in which case the moneys need to be paid back to the estate and it's my instructions that a substantial amount of money has been repaid back to the estate but there is more money owing.
[13] See 22 June 2009 transcript at page 3
Mr Testart then suggested that there might be a third construction, namely that "the moneys that were transferred from my client’s father to him were actually to be held on trust for my client’s father or, as it follows, the father's estate now". Mr Testart submitted that, if I were to give proper regard to the provisions of the law, and in particular, section 90AE(3) and (4) of the Family Law Act, then it might be appropriate that I make orders for an adjournment. He continued:[14]
… if that is the intention of the applicant wife that she seeks orders paying back the money (that) was paid after the sale of the matrimonial home, if those are the orders that she seeks, she may want to write to the father's estate so that they might be able to bring relevant matters before your Honour so that you can make those decisions having regard to those matters in accordance with those sections of the Family Law Act.
[14] See 22 June 2009 transcript at page 4
I then asked Mr Testart what difference it made “in a practical sense”. He responded that the three options – that is, a gift, a loan or moneys held on trust – made "a significant difference":[15]
We’re talking hundreds of thousands of dollars here riding on how your Honour characterises what that money was.
[15] See 22 June 2009 transcript at page 4
It was at that point that some of the passages to which Mr Testart has referred to in support of the current application appeared. For example, I made the following comment:[16]
Mr Testart, for 30 years I've run cases, responded to cases and heard cases where funds that came from parents inevitably changed from being gifts or uncharacterised payments to loans or something else upon marriage breakdowns. It's a very usual scenario. … What difference is it going to make at the end in this case?
[16] See 22 June 2009 transcript at page 4, starting at line 40
In my view, there is nothing in that comment but a reasonable query raised with counsel by the presiding judicial officer. I must say, though, that the submission in relation to the establishment of a trust appears to have been abandoned, and the husband himself disavowed any possibility of a trust during the course of his evidence.[17]
[17] See 23 June 2009 transcript at page 4, lines 23 to 39
The transcript reflects that there was a continuing discussion between me (as the presiding judicial officer) and Mr Testart (as counsel for the husband) which reflected my concerns that there could well be other ways of dealing with this problem which might not involve an extended trial. Mr Testart seemed unmoved by my concerns in that regard. For example, he said at an early stage:[18]
Well, from the applicant wife's point of view, the husband transferred money after the sale of the matrimonial home to the effect of some $240,000. That money has gone from moneys that would have gone into the matrimonial pool of assets to the father's bank accounts and has formed part of the father's estate. Now, that's $240,000 right there that your Honour might say that ought to lie where it falls (or be treated in some other way)…
But that's $240,000 and your Honour in determining whether that is a gift or loan or to be held in trust is going to be making a decision that will be either to the benefit of the applicant wife here or the widow of the estate at the expense of the other. They can't both win out of this.
My (fairly predictable) response to that comment was:[19]
[18] See 22 June 2009 transcript at page 5
[19] See 22 June 2009 transcript at page 5
No, they're both going to lose. …
And so the exchange between bench and bar continued.
Mr Testart then submitted that the late Mr Owens Senior’s estate (and, arguably, the beneficiary of that estate, the husband's mother), needed to be able to have its (or her) say.[20]
[20] See 22 June 2009 transcript at page 6
At that stage of the hearing, every relevant aspect of Mr Testart's submissions was in support of a conclusion to the effect that the matter was not ready for trial, and that an adjournment was indeed warranted.
There then began an exchange between the bench and Ms Teicher dealing with the fact that the wife had not particularised her claim. I asked Ms Teicher a number of questions regarding the specific orders that the wife would be seeking. She was unable to identify the precise terms of the orders that her client was seeking.
Thus, on what was to have been the first day of the trial, the Court simply did not know what the parties sought; further, the Court had been clearly told by both counsel that the matter was not ready for hearing.[21]
[21] At the completion of the hearing on 23 June 2009, detailed orders were made to ensure, inter alia, that the matter would be ready for trial on the next trial date. Indeed, the matter was adjourned to 9 November 2009 for final hearing with priority (with an estimated hearing time of two to three days). Relevantly, orders were made to the following effect:
· each party was to file and serve a minute setting out (with particularity) the orders to be sought at trial by not later than 4 p.m. on 21 August 2009;
· the estate of the husband's father was granted leave to intervene in the proceedings;
· a further conciliation conference was ordered;
· each party was ordered to give discovery on oath; and
· a date for return of subpoenas (being 30 July 2009) was fixed.
Discussion then continued as to why the matter was not ready for hearing, and argument took place as to whether it was the fault of one party or the other (or perhaps both) for failing to make full and frank disclosure. I then said:[22]
Today is the trial date. There has been plenty of opportunity to raise all these issues at earlier stages, hasn't there?
That comment was not directed to Mr Testart, but to Ms Teicher. The transcript reveals that the Court expressed frustration with both sides, given that the matter had not been properly prepared in a timely fashion.
[22] See 22 June 2009 transcript at page 8, line 1
When Ms Teicher raised the characterisation issue, I commented[23] that there was some cynicism about that type of action, and that the husband would have to prove his case. I did not say that the husband is a dishonest man; nor did I say that I will not believe the husband. I did say, however, that, in my experience, the types of arguments reflected in the characterisation issue are common, and that all relevant evidence was going to have to be looked at carefully. For example, I said:[24]
[23] See 22 June 2009 transcript at page 8, line 23
[24] See 22 June 2009 transcript at page 8, line 30
It certainly sounds like a cock-and-bull story, but it might be true. You never know.
It needs to be emphasised that those comments were made on the first day of what was supposed to have been the trial, and on the basis of the affidavit material then before the court. Further, the comments were made in the context of full and frank disclosure not having been provided by either party. In my view, there was no clear indication that the court did not or would not accept the husband’s (or the wife's) version of events. As indicated above, I said that it certainly sounds like a cock and bull story, but it might be true. And that, of course, is what the trial was going to be about (and will be about), among other things. In other words, at some stage it will be necessary to determine whether the husband's version of events is true.
Each party complained that the other had not given full and frank disclosure. Mr Testart said:[25]
My client knows … full well his obligations and many of the matters raised by my learned friend are questions of fact as to whether or not he has provided that full and frank financial disclosure and they will come before your Honour and your Honour will be invited to make a determination whether he's met those obligations or not.
[25] See 22 June 2009 transcript at page 9
After a suggestion by Mr Testart that it might be appropriate to make further orders about providing full and frank financial disclosure, I said:[26]
[26] See 22 June 2009 transcript at page 9
That's not the way I'm going to proceed.
Mr Testart responded by acknowledging that the law is clear, and that his client had an obligation to provide full and frank financial disclosure. He also acknowledged that if the husband does not meet the obligations which the law imposes upon him, then the Court can draw certain inferences against him. Mr Testart added:[27]
I can say to the extent that my client isn't aware of his obligation, I can advise him as such of those obligations.
[27] See 22 June 2009 transcript at page 10
The following exchange then occurred:[28]
Walters FM: Mr Testart, your client is going to go into the witness box and he's going to start answering some questions about his disclosure and (provide) answers that Ms Teicher hasn’t got or her instructors from proper inquiries that have been made. He is going to give - anything that's demonstrated to be untruthful I'll refer to the Attorney-General for prosecution for perjury. Do you understand?
Mr Testart: Yes, your Honour
Walters FM: All right. I've got another matter stood over until 2.15 p.m. … That matter got in before you and has priority over you. I can tell you that at 9.45 a.m. (that is, of course, the following day) your client is going to go in the witness box, he's going to start answering some questions only in relation to issues of disclosure and discovery. That will give Ms Teicher plenty of time to prepare an appropriate list of questions. If your client tells me one lie, Mr Testart, I suspect his career is over. Do you understand?
Mr Testart: Yes, your Honour
Walters FM: You had better talk to your client seriously because I didn't come down in the last shower. (Emphasis added)
[28] See 22 June 2009 transcript at page 10
Mr Testart submits that those comments indicate bias or prejudgment (or give rise to a reasonable apprehension of bias or prejudgement). I reject that submission. Those comments emphasise to Mr Testart that his client's version of events has been challenged by the wife (and strenuously so), that it is a version of events that is not unusual and is often found to be untrue, and that, if the husband is going to make comments about loans and the like, then he must make sure that the comments are true and frank ─ particularly in the light of the allegations that had been made regarding his failure to make full and frank disclosure.
I would add that exactly the same comments were made to Ms Teicher regarding the wife.[29]
[29] See 22 June 2009 transcript at page 11, line 19
I later reiterated that the questioning would be about disclosure and documentation (no more and no less), because that was the reason why the trial had had to be adjourned.
In order to ensure that no further delays would occur, I indicated that I would allow the parties to issue up to 25 additional subpoenas, if required.[30]
[30] See 22 June 2009 transcript from page 10, line 38 to page 11, line 8
I later re-emphasised (to both parties) the nature of the inquiry, the obligations of both parties to make full and frank disclosure and the need for both parties to be truthful:[31]
I am only interested in full disclosure at this stage. If your client can satisfactorily answer questions that Ms Teicher asks, well and good.
But if the matter is adjourned, I am going to give very liberal leave to both parties to issue whatever subpoenas they want. This matter will be got ready, and quickly, and both parties will make disclosure above and beyond what the rules require, Which is what the law says they have to do. So they must disclose until it hurts. Your client stands warned that if it is demonstrated that he has been untruthful in sworn material I will refer it for prosecution for perjury. Go and get some instructions and at 9.45 in the morning I will hear what he has to say from the witness box on oath about these issues, that is, disclosure and documents.
Ms Teicher, you will prepare a very crisp and clear set of questions. Whatever you want to ask the husband about what happened to moneys, what bank accounts he's got, what businesses he's got, you can ask him direct. I'm not going to delay (the proceedings further) by expecting (the husband) to make full and frank disclosure when you tell me that he hasn't. He will say that he has. I don't know, but I will find out tomorrow. For the sake of fairness, let me say that if it transpires that your client has been untruthful in sworn material and knowingly so, she will suffer the same fate as I have indicated that the husband should.
So I think both parties need to reality test their cases. I reiterate, Mr Testart, I didn't come down on the last shower.
[31] See 22 June 2009 transcript at page 11
In my opinion, any reasonable lay person observing the hearing on
22 June 2009 would have understand that the Court was exhorting the parties to:
a)make an effort –that afternoon – to resolve issues as they said they might; and
b)make sure that, when they give their evidence, the door is not opened to serious consequences if they are prepared to tell untruths in order to gain some financial advantage.
In my view, any reasonable observer would accept the totality of the comments (made during a relatively short hearing on 22 June 2009) as amounting to the Court expressing its frustrations that the matter was not ready for trial, and emphasising that it would not accept being misled by either party as to the characterisation issue and their true financial position.
That is the sum total of what occurred on the first day. There were no findings regarding credibility, there were no inappropriate interrogations or inquisitions, and neither party was denied procedural fairness. There was simply, one might say (and to use a colloquialism), some sabre rattling on the part of the Court ─ in the form of indicating to the parties they were going to come back the next day, and that they should be very careful to tell the truth (particularly having regard to the allegations that had been made, the one against the other).
As I indicated earlier, when the matter was adjourned to the following day – for the purpose of enabling the issue of discovery and documentation to be further explored ─ it was never intended by anyone that the hearing to take place on 23 June 2009 should be treated as a trial (as such). It was to be a form of preliminary hearing, following which the evidence would be transcribed and provided to the parties. It was, in the view of the Court, a shorthand way of obtaining full and frank disclosure from each party and placing the relevant evidence before the Court.
Proceedings on 23 June 2009
The hearing on 23 June 2009 began with Mr Testart calling his client and saying to him:[32]
Mr Owens, the issue here is one of your obligations to make financial disclosure to your wife. What is your understanding of those obligations?.
I then commented that it was also important that full disclosure be made to the Court.
[32] See 23 June 2009 transcript at page 2
Shortly afterwards, Mr Testart asked the husband:[33]
[33] See 23 June 2009 transcript at page 2
What do you see as the main financial issues in this matter?
The husband replied:
As I dealt with all the financial dealings during our relationship over 10 or so years, I'd say the money as a loan from my father and the moneys that he gave to me as in transferred to me as a loan and the moneys that I transferred back to him.
The husband then gave evidence about documentation being provided to the other side. Mr Testart properly returned to the earlier part of the husband's answer in order to clarify the issue:[34]
Mr Testart: So there's an issue as to whether money that was transferred to you was a loan?
Husband: That's correct, yes.
[34] See 23 June 2009 transcript at page 3
Thereafter, I asked the husband a series of questions. The questions have led to one of the grounds of objection relied upon by Mr Testart.[35]
[35] See 23 June 2009 transcript from page 3, line 29 to page 7, line 19
It is important to note that, at the end of the series of questions directed to the husband, I asked Ms Teicher to commence her cross-examination.[36] A few moments later, I asked Mr Testart whether he had anything further in examination in chief, before inviting
Ms Teicher to cross examine.[37] It is clear from the transcript as a whole that, when I commenced asking questions of the husband,
Mr Testart had completed his examination-in-chief of the husband. Indeed, that is my recollection. My invitation to Mr Testart to ask additional questions of the husband was intended to provide him with the opportunity of clarifying any of the husband's answers to my questions before the commencement of Ms Teicher's cross examination.
[36] See 23 June 2009 transcript at page 7, line 21
[37] See 23 June 2009 transcript at page 7, line 26
My exchange with the husband,[38] speaks for itself. In my view, however, the questioning falls within the usual type of judicial behaviour that can be expected in modern courts, and which is described and approved of in the authorities to which I have referred. There is nothing unduly controversial about it. The husband was not treated with disrespect, and the questions that were asked of him related to what he himself had indicated was the primary issue in the case. Relevantly, and in the light of Mr Testart's comments on the previous day, I was concerned to ascertain whether the purported creation of a trust amounted to a real (as opposed to a hypothetical) issue. If it did, then it could have had a considerable bearing on the ongoing conduct of the case.
[38] See 23 June 2009 transcript from page 3, line 29 to page 7, line 19
I was very cognisant of the fact that Mr Testart is a relatively junior member of the Bar, that he perhaps lacks some degree of experience in Family Law matters and that he may not have been aware – as many more experienced members of the Family Law Bar are aware – that to categorise the transactions forming or likely to form the subject of evidence in the present case as giving rise to the creation of a trust was a most unusual allegation or submission, and one that would have required some considerable exploration. Suffice it to say that, as I have indicated, the husband disavowed any possibility of the funds being treated as a trust. In his subsequent submissions, Mr Testart did not seem to suggest that the formation of the trust remained an option any longer when considering the characterisation issue.
Ms Teicher then commenced to cross-examine the husband in relation to disclosure and documentation. The transcript reveals that I asked some questions during the course of that cross-examination (and also during the course of Mr Testart's re-examination) simply to clarify matters. It would appear from Mr Testart's submissions that most of those questions have caused him no discomfort.
During Ms Teicher’s cross-examination it became clear that the husband had not made full and frank disclosure of all relevant documents in his possession. Thus, during the course of the husband’s cross-examination, I made some comments which were intended to assist him to understand what the discovery and disclosure process involves. For example:[39]
Walters FM: Mr Owens, let me explain the process to you. One often hears comments such as the one you made: "if there's anything else you want, just let me know". That is not what the process is about. The process is that you volunteer every single piece of paper that is currently in your possession or has ever been in your possession that relates in any way to your financial position or to the matters that are an issue in proceedings.
Husband: Yes.
Walters FM: You give until it hurts …
[39] See 23 June 2009 transcript at page 14
As I have already said, during Ms Teicher's cross examination of the husband it became clear that numerous documents had not been disclosed by the husband. On the other hand, it also became clear that many documents had been disclosed.
I emphasised to Ms Teicher that the wife also has an obligation to disclose all her documents.[40] In my opinion, any reasonable observer would have formed the view that the Court had taken a balanced approach to the evidence that was before it, given that the hearing was concerned with disclosure and documentation. I do not accept that such an observer might have formed a different view.
[40] See, for example, 23 June 2009 transcript at page 20, line 31
There is little point in going through all the pages of the transcript, and I will not do so. It is sufficient to reiterate that my view was clearly to the effect that neither party had made full and frank disclosure.[41]
[41] See, for example, 23 June 2009 transcript at page 25
Mr Testart's re-examination of the husband did not include a complaint ─ at that stage – to the effect that the court had overstepped the mark (as it were) in any way at all. Indeed, the issue of apprehended bias/pre-judgment was not raised at all during the hearing of 23 June 2009, which is now some three months ago. We are currently very close to the November trial date and, as Mr Testart conceded to me earlier today, it seems to have been a late decision on his part to raise the question of disqualification.[42] Neither he nor his instructing solicitors gave notice to the wife's solicitors ─ prior to Tuesday of this week ─ of their intention to apply for me to disqualify myself. Certainly, the husband's solicitors did not file an Application in a Case to warn the Court that it might have to look at transcripts or otherwise prepare itself in order to determine whether an application for disqualification might have merit.
[42] See, for example, 17 September 2009 transcript from page 37, line 5 to page 38, line 24
After the husband had given his evidence and been re-examined, the wife was called by Ms Teicher and cross examined by Mr Testart.[43]
[43] See 23 June 2009 transcript at page 28
From the outset, the Court endeavoured to ensure that the cross-examination remained on track (having regard to the purpose of the hearing and the concession by both counsel that the core issue in the proceedings was the characterisation issue).[44]
[44] See, for example, 23 June 2009 transcript at page 28, line 44 where the Court said: "Mr Testart, documentation and disclosure". If
Mr Testart wanted to cross-examine about certain other matters (apart from documentation and disclosure), and ─ to an extent ─ he was permitted to do so. He also cross-examined the wife regarding the non-disclosure of income from her aerobics work, and about her bank accounts.
In broad terms, Mr Testart submitted that the Court had assisted the wife during aspects of her cross-examination. For example, Mr Testart referred to the following passage:[45]
Walters FM: You know, Mrs Owens, it's a good idea to think before you speak?
Wife: Sorry, yes, you’re right.
Walters FM: It's always preferable to think first rather than afterwards?
Wife: Yes, you're right, your Honour.
Walters FM: Alright?
Wife: Yes.
Walters FM: Go ahead, Mr Testart.
[45] See 23 June 2009 transcript at page 32
The fact of the matter is, though, that the wife had just been cross-examined about the number of bank accounts that she had. The number of bank accounts grew from something like one or two accounts to six accounts. The wife's evidence, serious though it is, was almost humorous.[46] It drew the comments from the Court quoted in the previous paragraph.
[46] See 23 June 2009 transcript from page 30, line 44 to page 32, line 28
In my view, the Court's comments could not possibly be interpreted in the way that Mr Testart has suggested that they might ─ namely, as a way of assisting the wife. The reality is the wife's credibility had been damaged by the questioning that had occurred to that point in time, but so vague and "off-the-cuff" were some of her answers that they drew a further comment or rebuke from the Court as follows:[47]
Walters FM: Why don't you say nothing for a minute?
Wife: Okay.
Walters FM: Work it all out in your head?
Wife: I've got it worked out in my head now, your Honour.
Walters FM: And then tell us?
Wife: Okay. …
[47] See 23 June 2009 transcript at page 34
Still, it needs to be emphasised that comments made to both the husband and the wife were always in the context of the hearing that was then taking place (involving, as it did, questions of disclosure or non disclosure of documents). The hearing was not, of course, an integral part of the trial itself; it was at a preliminary stage only, and my recollection is to the effect that there was a degree of good humour in the courtroom at the time that these matters were raised – because any reasonable observer could tell at that time that the wife was somewhat confused as to her answers, and certainly disorganised in some of her comments.
Mr Testart's cross examination of the wife continued properly and without intervention until I made a comment that Mr Testart has emphasised in his submissions. The comment is as follows:
Walters FM: I think I said yesterday that the best form of defence is offence. All this means is what Mr Testart is endeavouring to do is deflect some of the heat from his client on to this witness. That's all right; that's a forensic role that he's got. He can try to do that. But I told him yesterday I didn't come down on the last shower. But he can go ahead. How many tens of thousands did you transfer out of the account after separation to your family members?
Wife: Nothing. …
Walters FM: Why don't you ask her about that, Mr Testart?
Mr Testart argued yesterday that the Court had interrupted his cross-examination to make those comments. That prompted the Court to later respond that it was not an interruption at all. When the transcript is looked at,[48] it is apparent that, in fact, an objection had been raised by Ms Teicher to the line of questioning that Mr Testart was pursuing.
[48] See 23 June 2009 transcript at page 35, lines 32 to 43
It was in response to Ms Teicher's objection that the Court made the comment to which Mr Testart referred. In essence, I said: “Mr Testart can go ahead, and continue to cross-examine. But the key issue has been defined by Mr Testart himself (and by his client) and that is: what do we do about the amount of money that was transferred out of the pool of potential property? Do we regard it as the repayment of a loan, or was it some form of inappropriate action on the husband's part?”
My view of the conduct of the hearing at that point is clear, I think, from the transcript: I felt that the cross-examination was entering into a de minimus situation (in other words, it had made its point and was beginning to deal with issues that were not of any real significance in relation to the outcome of the proceedings – whether in the short or long-term).
Mr Testart then said:[49]
I need to say something first, your Honour. This line of questioning is going to be relevant to, shall I call them the procedural orders that you alluded to before the short recess, which of course implies that this won't finish today? Now, I need to say something just very quickly to that. My client doesn't consent to any adjournment today and, if necessary, will oppose an adjournment and will refer to High Court authority. I'll try and finish this as quickly as possible. But we're ready to proceed and we want to push on. It's not lost on my client that one of the major issues is his transfer of large sums of money. That's something that he'll have to deal with if there's any further cross-examination and his counsel will have to deal with in submissions. (Emphasis added)
[49] See 23 June 2009 transcript at page 36, starting at line 15
In my opinion, and in the light of those comments from Mr Testart, it is extraordinary that he would now see fit to submit that the comment made by the Court about the best form of defence being offence – which clearly relates to Mr Testart cross-examining about relatively minor issues (and I say "relatively minor" because, compared to what he himself said is the main issue, they are indeed minor) – is somehow inappropriate.
Of more significance, however, is a comparison of Mr Testart's comment to the effect that his client strenuously opposes an adjournment of the substantive proceedings with his comments from the previous day regarding the necessity for an adjournment. In my opinion, such a comparison reveals total disorganisation within the husband's case – or, perhaps, a decision taken by counsel to change direction at the last minute.
The response from the Court was:[50]
[50] See 23 June 2009 transcript at page 36, line 30
I don't know what you're talking about, Mr Testart.
Clearly, the Court’s concern was no more and no less than the fact that the indications that had been clearly given the previous day ─ to the effect that this was no more than an interim or preliminary hearing to clarify disclosure and documentation ─ had been ignored. Obviously, the hearing on 23 June 2009 did not comprise part of the trial itself; further, it seemed to me that Mr Testart well knew that the hearing did not comprise the trial itself.
The following comments from the Court indicate some frustration with the approach suddenly adopted by counsel for the husband:[51]
Walters FM: Mr Testart, if this trial was going to proceed as a trial, then I imagine you would have told me about that yesterday and you would have taken steps to protect your client from giving evidence in anything other than the usual way at trial. Now, I’d prefer to think that I haven't been ambushed in any way, but I'll deal with any submissions that are made on their merits in due course. You can cross-examine the witness about disclosure and documentation; that's fine. And you're doing that (i.e. cross-examining) about disclosure at the moment. It's quite clear to me that neither party has made full and frank disclosure in relation to accounts and documentation. Each of them figured out in their own mind what they thought was relevant and probably they filtered that through the concept of whether it was going to harm their case if they disclosed certain documents and if they thought it might harm their case if they didn't disclose (them). Well, that's not what it's about, as I said to your client. It doesn't matter whether it harms your case or it doesn't harm your case, you've got to make disclosure. The idea is you (do not) avoid issues, you deal with the facts, be they in your favour or against you, and then the matter can proceed properly. Otherwise it's just more work for the trial judge.
Mr Testart: That's quite right, your Honour.
[51] See 23 June 2009 transcript at pages 36-7
Mr Testart then made further submissions, which included the following exchange:[52]
Mr Testart: … it seems abundantly clear and I’m sure that we're all in agreement that the major issue here is that a substantial sum of money that my client, rightly or wrongly, transferred from the matrimonial asset pool to his late father's account. That's the real issue. Now, this idea of full and frank financial disclosure is a smokescreen because, as your Honour said yesterday, for example, the law treats it as thus: if he hadn't made full and frank disclosure by now and if he's dishonest, as you fear, as you claim, he's not going to make it. …
Walters FM: That's why I’m proceeding in this way, Mr Testart. (Emphasis added)
[52] See 23 June 2009 transcript at page 37, starting at line 34; see also pages 38 and 39
It is clear that Mr Testart well understood the concerns that the Court had expressed. He also well understood the messages that were being conveyed by the Court, and he himself had emphasised what the key issue was. In my opinion, that puts paid (as it were) to any argument regarding some misunderstanding as to what the key issues might be, or what the comment to the effect that "the best form of defence is offence" might have meant.
I note, as well, the following exchange:[53]
Walters FM: … it’s abundantly clear to me from your client’s evidence, and again from this witness’s evidence (i.e. the evidence of the wife), that I don't think either of these parties has fully understood their obligations to each other or the Court in relation to financial matters.
Mr Testart: Absolutely, that's correct.
[53] See 23 June 2009 transcript at page 38
A little later, Mr Testart asked me whether he could ask "some questions that just stray outside the scope of the mandate that you set".[54] It was at that point that I said to Mr Testart:[55]
The Attorney-General has just published some guidelines under the guise of access to justice legislation. What he says is if lawyers prolong cases, they can pay the costs personally. Fine by me. Go ahead.
[54] See 23 June 2009 transcript at page 39
[55] See 23 June 2009 transcript at page 39
This exchange was towards the end of what should have been a very short hearing. It had turned, however, into a lengthy hearing. I had already indicated what the purpose of the hearing was. Mr Testart wished to expand it to some degree, and he proceeded to do so with some subsequent questions.
Mr Testart’s further cross-examination of the wife in relation to the characterisation issue elicited from her the fact that she really did not know whether there were loans, what they were for, or what the repayment arrangements were.[56] He then wanted to cross-examine the wife further. That prompted the following comment from the bench:[57]
Mr Testart, what difference does it make? The witness has said, "I don't know what his dealings with his father were. He didn't discuss them with me."
[56] See 23 June 2009 transcript at page 41
[57] See 23 June 2009 transcript at page 41
If it is suggested that the Court was in some way prompting and assisting the wife with the comments that have been earlier referred to, then, of course, exactly the same argument could have been raised in relation to that comment ─ although in reverse (i.e. it could have been argued on behalf of the wife that the Court was, in effect, assisting the husband's case). In fact, though, the following exchange then took place:[58] Mr Testart said:
Mr Testart: My client is going to contradict that.
Walters FM: The fact of the matter is on her case what it then boils down to is if your client says that he had a certain arrangement with his father, she can't contradict it, can she?
Mr Testart: No, but she knows that it's an issue and she is claiming that she didn't know what the scope of the issue is.
Walters FM: But, Mr Testart, do you want to prove her case or do you want to prove your client's case?
[58] See 23 June 2009 transcript at page 42
As indicated above, that comment might conceivably have prompted the wife to consider that I was helping the husband unduly – but it appears to be the husband who has taken objection.
Then began further (extended) discussion between Mr Testart and the bench. It commences on page 42 of the transcript of 23 June 2009 (line 19), where Mr Testart says:
… but as a matter of pure technicality … of course the whole argument that my client is putting forward is against his interests. We can look beneath the charade and I'm not asking the court to entertain the dance. …
Given Mr Testart's comments, and the manner in which he had conducted the proceedings to that point in time, I felt that it was appropriate to explain to Mr Testart, as best I could, what property settlement involves.[59] I regret to say that I was not at all sure that he fully understood the process that the Court was required to embark upon, and what impact the type of evidence that was being raised might have.
[59] See 23 June 2009 transcript at page 42, starting at line 32
There followed the making of various comments by the Court, upon which Mr Testart has relied in support of his current application. For example:[60]
When your client makes a concession that he doesn't tell the bank about loans that he owes to his father, moneys that he allegedly has borrowed from his father, then you know what's coming, don't you? Namely the question that I put: why doesn't he do that? ...
… let us just focus on what we need to focus on. I need to know what the size of is pool is and the other factors that we need to determine. If your client thinks that by transferring money out of the pool that's the be all and end all, he is clearly wrong. There's lots of different ways that we can skin cats. But I have to do it on the basis of the evidence before me and that's what I'll do. Now, if you think there is some equivalence here between the wife not disclosing what she earned by way of her aerobics classes and your client's behaviour, then you can think again, because I don't see there being any equivalence at all. …
[60] See 23 June 2009 transcript at page 44, starting at line 15
The above comments all flow from the discussion that began in the middle of page 42 (and more specifically against line 32), about the entire property settlement process, and the court's frustration that
Mr Testart may simply not have understood the steps that the Court is required to take in property settlement proceedings and the fact that the court has the power to construct its findings (in accordance with the evidence, and whilst still applying the law) in various ways; for example, by way of add back, or it can make adjustments in other ways. Alternatively, the Court might conclude that the funds received from the husband’s father (or part of them) really were a loan, and that the loan was properly repayable at the time that the husband transferred moneys out of the “pool”.
I ultimately permitted cross-examination to continue until Mr Testart eventually reached the point where he decided that he would ask no further questions. I note the following exchange:[61]
Mr Testart (to the wife): You think it's relevant, but what I asked you …
Walters FM: Mr Testart – Sit down, Ms Teicher (Note: Ms Teicher had stood up to object to Mr Testart's questioning). Mr Testart, please focus … on documentation and disclosure now and nothing else. You told me 20 minutes.
Mr Testart: I have no further questions, your Honour.
[61] See 23 June 2009 transcript at page 48
Given that the whole purpose of the hearing then in progress was to clarify issues relating to disclosure and documentation, it was, in my view, perfectly proper to remind counsel of the whole purpose of the hearing. Was also proper to remind Mr Testart that he had indicated to the court that his questioning was likely to take some 20 minutes and that he had gone well beyond that time.
I reject any suggestion that counsel was inappropriately interrupted, that he was not allowed to cross-examine on credit, that inappropriate threats were made to him (or to anybody else), and that inappropriate suggestions were made to the wife in order to assist her case. It could equally have been argued, of course, that inappropriate suggestions were made to the husband (or to his counsel) to assist him in his case.
Disqualification – Conclusion
At the end of the day, my view is that the most “serious” of the criticisms raised is the interrogation that occurred at the end of
Mr Testart's examination-in-chief of the husband ─ or what the Court thought was the end of the husband's examination-in-chief of the husband.
The question then becomes: bearing in mind the authorities to which I have referred, might a fair-minded lay observer reasonably apprehend that the judicial officer might not bring an impartial and unprejudiced mind to the resolution of the question the Court is required to decide?
Having gone through the transcript in considerable detail, I certainly accept that Mr Testart's submission was an arguable one, and that he was entitled to raise his concerns regarding some of the comments that the Court made. I accept that he is entitled to press the Court to look at the comments that were made and to ask whether those comments ─ looked at in toto and in context, meet the relevant test. But, as I have indicated, it must be firmly established that the test is met. To say that it is arguable that the test might be met is insufficient.
In my view, although it may be arguable that a fair-minded lay observer might reasonably apprehend that the judicial officer might not bring an impartial and unprejudiced mind to the resolution of the question that he is required to decide, it has not been and cannot be firmly established (or even established with any degree of comfort or certainty at all) that the test has been met.
In my view, therefore, there is insufficient merit in the submission to cause me to disqualify myself. I do not say there is no merit in the submission. I have said from the beginning that it was an arguable case, but when careful consideration is given to the grounds relied upon, and when all relevant comments are placed in context, it is clear that the submission does not meet the criteria that the law imposes.
It follows that Mr Testart's application will be dismissed, and that I decline to disqualify myself from the case.
Costs – Preamble
[An order was sought to the effect that the husband pay the wife's costs relating to the unsuccessful application for disqualification. After hearing argument from both counsel, the following (ex tempore) decision was given.]
Costs – Reasons
The question of costs in Family Law proceedings in dealt with in section 117 of Family Law Act. A judge or, in this case, a federal magistrate, has a broad discretion in costs matters, and the Full Court has said, for example, that it will not ordinarily intervene unless the order is plainly unreasonable. Indeed, the Court has been held to have an almost unlimited jurisdiction in relation to costs – although, clearly, any costs order must be just (see Kelly & Kelly (No 2) (1981) FLC 91,108; Hogan (1986) FLC 91,704; and I & I (No 2) (1996) FLC 92,625).
It is not the law that a costs order should only be made in what has been described as "a clear case". Although a finding of justifying circumstances is an essential preliminary to the making of a costs order, there is no additional or special onus on an applicant for an order for costs. Further, and although the general rule is that each party shall bear his or her own costs, that general rule is expressed to be subject to section 117(2), and must yield whenever the judicial officer finds that there are circumstances which justify the making of a costs order (see Penfold (1980) FLC 90 800).
The first matter that needs to be said is that Ms Teicher argued that I should consider making an order for indemnity costs. Although I am probably putting the cart before the horse in relation to the subject, I refer to the discussion of the criteria for indemnity costs appearing in the LexisNexis Butterworths Australia Family Law loose-leaf service at the paragraph indicated at section 117.4:
[s 117.4] Types of orders
It is open to the court to make costs orders in various forms and on several different bases, of which the more important are as follows. …
Indemnity costs
The most comprehensive type of order is referred to as an order for indemnity costs. The basic idea is, presumably, that the person in whose favour the order has been made should not be out of pocket. On the other hand, the court would not make an order that was in substance a blank cheque, enabling the beneficiary to claim any amount paid, however fanciful or unreasonable: see, for example, In the Marriage of Munday and Bowman(1997) 22 Fam LR 321 at 323; FLC 92–784 at 84,661 . The court needs to be satisfied that the amount to be paid is appropriate. … There are substantial reasons for this rule, and it is ‘not only a matter of form of procedure’: LGM v CAM (Contempt) (No 2) (2008) FLC 93-355; [2008] FamCAFC 1 at para 100, following Kohan (1992) 112 FLR 151; 16 Fam LR 245; (1993) FLC 92-340.
Indemnity costs — when awarded
The leading authorities on indemnity costs include In the Marriage of Kohan(1992) 16 Fam LR 245; (1993) FLC 92–340 (FC) and In the Marriage of Munday and Bowman(1997) 22 Fam LR 321; FLC 92–784 at 84,661 (Holden CJ), which contains a helpful review of the authorities and principles. The court has said that it should not lightly depart from the ordinary rules relating to costs between party and party and that the circumstances justifying the departure “should be of an exceptional kind”, indemnity costs being “still an exception in this and other jurisdictions”. An authority discussed in Munday and Bowman , at Fam LR 322 ; FLC 84,660 , Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248 , gives the following examples where indemnity costs might properly be awarded:
(a) Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts: see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd(1988) 81 ALR 397.
(b) Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud: see Fountain Selected Meats (Sales) Pty Ltd.
(c) Evidence of particular misconduct causing loss of time to the court and to other parties: see Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Fed C of A, French J, 3 May 1991, unreported).
(d) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions: see Ragatta Developments Pty Ltd v Westpac Banking Corporation (Fed C of A, Davies J, 5 March 1993, unreported).
(e) An imprudent refusal of an offer to compromise.
See also JEL v DDF (Repayment on Appeal, and Costs)(2001) 28 Fam LR 119; FLC 93–083.
In broad terms, it seems to me that the matter does not fall within the criteria there indicated, and I am not persuaded that it is either necessary or appropriate to make an order for indemnity costs.
The law directs me to have regard to section 117(2A) in relation to considering what order, if any, should be made.
The first factor is the financial circumstances of each of the proceedings. This has been alluded to by both counsel, but the only relevant question, it seems to me, is the husband’s capacity to pay the costs order. The husband has not sought a costs order against the wife, and no submission has been made to the effect that the husband does not have the capacity to pay an order for costs.
The next factor is whether any party to the proceedings is in receipt of assistance by way of legal aid. That is not a relevant consideration.
The next factor relates to the conduct of the parties to the proceedings in relation to the proceedings. That is a reference to the conduct of the parties as litigants. It requires the Court to look at things like pleadings, particulars, discovery, inspection, directions and the like. In my view, it is relevant under this general heading to record that the application for disqualification was made very late in the context of these proceedings. The application as argued arose out of a hearing that took place on 22 and 23 June 2009, some three months ago.
It would seem to be the case ─ from Mr Testart's comments ─ that, if the wife had not made the application that she did in relation to schooling, then the application for disqualification may never have been made.[62] That is not perfectly clear, however, from Mr Testart's submissions. It might be the case, of course, that such an application would have been delayed until the commencement of the trial. I really do not understand what counsel was endeavouring to say, but to the extent that he was suggesting that there was some adequate reason for the lateness of the application, I reject that suggestion. I find that there was no adequate reason for the lateness of the application.[63]
[62] See, for example, 17 September 2009 transcript at page 54, lines 23 to31
[63] See, 17 September 2009 transcript from page 53, line 8 to page 58, line 46
Also under the general heading of conduct, I would comment that the husband's solicitors saw fit not to file an Application in a Case. Further, no warning was given to the wife ─ or, indeed, to the Court ─ that this application was going to be made until Tuesday (15 September 2009), in a busy duty list. It was only at that time that it became clear that an application for disqualification was to be made.
I have already made a number of comments about the conduct of counsel for the husband during this hearing (i.e. during the hearing on 16 and 17 September 2009). I do not wish to add to them at this stage. I do not think that it is necessary for me to take that conduct into account under section 117(2A)(c), although I do propose to have regard to the delay that has resulted from what I regard as being prolix submissions by Mr Testart on behalf of the husband. That is a relevant factor under both section 117(2A)(c) and (g). Beyond that, I do not think it is necessary for me to take Mr Testart’s demeanour or conduct as counsel into account in relation to the costs application.
The next factor is whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders. That is not a relevant consideration.
The next factor is whether any party has been wholly unsuccessful in the proceedings. Quite clearly, the husband has been wholly unsuccessful in his application to have me disqualified.
The final factor is whether either party has made an offer in writing to the other party to settle the proceedings. That is not a relevant consideration.
I said during the course of my ex tempore decision that the husband's application was arguable, and I do not resile from that statement. Although it was arguable, it is my view that, if the matter had been looked at a little more carefully and dispassionately, then a conclusion would have been reached that it was unlikely to succeed. Nevertheless, it is not my intention to punish anybody. I simply propose to make such order as I consider is appropriate, having regard to accepted legal principles.
I find that there are justifying circumstances for the making of an order for costs. Most relevant to that conclusion are the fact that the husband was wholly unsuccessful and the conduct matters to which I have referred. In all the circumstances, I propose to order that the husband pay the wife’s costs of the current (unsuccessful) application.
[Discussion and took place as to an appropriate quantum of costs, having regard to the costs scale contained in the Federal Magistrates Court Rules 2001]
In my view, a reasonable allowance for costs is $5750. The order that I propose to make, therefore, is that the husband pay the wife's costs ─ fixed in the sum of $5750 ─ within 30 days.
I certify that the preceding one hundred and forty-three (143) paragraphs are a true copy of the reasons for judgment of Walters FM
Associate: Suzette De La Motte
Date: 11 January 2010
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