Ozmen v Culture Map Pty Ltd (No 1)

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FEDERAL COURT OF AUSTRALIA

Ozmen v Culture Map Pty Ltd (No 1) [2020] FCA 1890

File number(s): NSD 2423 of 2018
Judgment of: RARES J
Date of judgment: 11 December 2020
Catchwords: PRACTICE AND PROCEDURE – application for recusal – whether a fair-minded lay observer might perceive judge might not bring an impartial mind to resolution of issues – Held: application dismissed
Legislation: Corporations Act 2001 (Cth) s 237
Federal Court of Australia Act 1976 (Cth) s 37N
Cases cited:

Adacot and Sowle [2020] FamCAFC 215

Almeida v Opportunity Equity Partners Ltd [2006] UKPC 44

Bienstein v Bienstein (2003) 195 ALR 225

British America Tobacco Australian Services Limited v Laurie (2011) 242 CLR 283

Cabcharge Australia Ltd v Australian Competition and Consumer Commission [2010] FCAFC 111

Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577

Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337

IOOF Australia Trustees Ltd v SEAS Sapfor Forests Pty Ltd (1999) 78 SASR 151

Johnson v Johnson (2000) 201 CLR 488

Livesey v New South Wales Bar Association (1983) 151 CLR 288

Michael Wilson Partners & Partners v Nicholls (2011) 244 CLR 427

Neptune Hospitality Pty Ltd v Ozmen Entertainment Pty Ltd (2020) 375 ALR 489

Ozmen Entertainment Pty Ltd v Neptune Hospitality Pty Limited (2019) 369 ALR 644

Ozmen Entertainment Pty Ltd v Neptune Hospitality Pty Ltd (No 5) [2019] FCA 904

Re JRL; Ex parte CJL (1986) 161 CLR 342

Re Keely; Ex parte Ansett Transport Industries (1990) 94 ALR 1

The Queen v Watson; Ex parte Armstrong (1976) 136 CLR 248

Vakauta v Kelly (1989) 167 CLR 568

Webb v The Queen (1994) 181 CLR 41
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 76
Date of hearing: 11 December 2020
Counsel for the Applicants: Mr Alwyn Narayan
Solicitor for the Applicants: Craddock Murray Neumann
Counsel for the First and Third Respondents Ms Bridie Nolan
Solicitor for the First and Third Respondents Metis Law
Counsel for the Second Respondent Self-represented

ORDERS

NSD 2423 of 2018
BETWEEN:

MERT ACUN OZMEN

First Applicant

KARTAL ALTIKULACOGLU

Second Applicant

OZMEN ENTERTAINMENT GROUP PTY LTD

Third Applicant
AND:

CULTURE MAP PTY LTD

First Respondent

NGUYEN (JOHN) LE

Second Respondent

ERIC WOO (and another named in the Schedule)

Third Respondent

ORDER MADE BY:

RARES J

DATE OF ORDER:

11 DECEMBER 2020

THE COURT ORDERS THAT:

1.The first and third respondents’ interlocutory application for recusal dated 28 August 2020 be dismissed with costs.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT
(REVISED FROM THE TRANSCRIPT)

RARES J:

  1. This is an application by Culture Map Pty Ltd and Eric Woo, the first and third respondents (compendiously Culture), that I recuse myself in this proceeding (the Culture Map proceeding).  The application is based on remarks and conduct of mine in another proceeding between Ozmen Entertainment

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Details
Case
[2020] FCA 1890
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, the case of Ozmen v Culture Map Pty Ltd (No 1) involved an application for the recusal of a judge from a proceeding, based on concerns about potential bias. The Ozmen parties, who had become self-represented in February 2020, sought the recusal of the judge on the basis of alleged bias stemming from the judge's conduct in a related proceeding, the Neptune proceeding. The application was made by the first and third respondents in the Culture Map proceeding, who were represented by counsel who had also represented the Ozmen parties in the Neptune proceeding.

The court was required to determine whether the judge's conduct in the Neptune proceeding gave rise to a reasonable apprehension that the judge might not bring an impartial mind to the resolution of the issues in the Culture Map proceeding. The court considered the principle that a fair-minded lay observer might question the judge's impartiality if they believed there was a real possibility of bias, as established in Michael Wilson Partners & Partners v Nicholls. The court also had to assess whether the Ozmen parties had given a reasonable explanation for their application for recusal, and whether their failure to appeal the refusal to recuse amounted to a waiver.

The court dismissed the application for recusal, finding that there was no reasonable explanation for a fair-minded lay observer to believe that the judge might not be impartial. The court noted that the Ozmen parties had waived their right to object to the judge's conduct in the Neptune proceeding, as their counsel had represented the same parties in that proceeding. The court also found that the judge's irritation during a hearing did not indicate a lack of impartiality, and that any incautious remarks made were not sufficient to establish bias.

The court ordered that the application for recusal be dismissed with costs. This decision highlighted the importance of providing a reasonable explanation for an application for recusal and the impact of a party's conduct in related proceedings on the perception of bias.

Orders

Orders of the court

1. The first and third respondents’ interlocutory application for recusal dated 28 August 2020 be dismissed with costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The Ozmen parties became self-represented in February 2020 after their solicitors filed a notice of ceasing to act. In the event, because of the COVID-19 pandemic, the Chief Justice ordered that all hearings in the Court be vacated in the week commencing 23 March 2020 and so the hearing of the Culture Map proceeding did not go ahead. Background to the Neptune proceeding On 17 April 2019 in the Neptune proceeding, I ordered that the parties provide particulars of the amounts that each would claim in respect of unresolved issues. Those particulars were needed in order to resolve what amount of security should be placed in ship’s mortgages to be given to secure Neptune’s best arguable claim. Neptune appealed from the orders that I made on 9 May 2019 (Ozmen Entertainment Pty Ltd v Neptune Hospitality Pty Ltd (No 5) [2019] FCA 904) in consequence of my findings in Ozmen 369 ALR 644, that had been the subject of long and complex arguments over five days following the delivery of my reasons on 3 April 2019, when other counsel and solicitors represented Entertainment and Kanki. The Full Court dismissed that appeal substantially on 19 March 2020: Neptune Hospitality Pty Ltd v Ozmen Entertainment Pty Ltd (2020) 375 ALR 489. Once that occurred, the Neptune proceeding came back before me for case management to deal with the outstanding issues for the referee. Thereafter, there were issues between, principally, the receivers, whom Burley J had appointed in 2018. The receivers were no longer necessary, following my findings in Ozmen 369 ALR at 700 [287] that Entertainment and Kanki had validly terminated the joint venture in July 2017. Over the intervening period until 22 May 2020, I also dealt with issues arising out of the termination of the receivership and payment of the receivers, during which the new counsel and solicitors, being those now representing Culture in the Culture Map proceeding, have also represented Entertainment and Kanki in the Neptune proceeding. At the 22 May 2020 case management hearing in the Neptune proceeding, Ms Nolan, as counsel for Entertainment and Kanki, said that there was no utility in making a reference where Neptune was impecunious. She contended that I should not make any order for a reference. She also argued that, if Neptune were to pursue a claim, Entertainment and Kanki would seek security for costs. During the course of that hearing, she also said that her clients would need another month to deal with any properly particularised claim by Neptune. Then, the transcript proceeded:MS NOLAN: All right. Well, your Honour has heard that my clients intend to seek security for costs. Within that formulation of case management, where would your Honour anticipate hearing that application? At the conclusion of our joint – our exchange of claims, or at the conclusion of the defence’s? Because in my submission, your Honour would take into account the likelihood of my friend’s client succeeding as a basis for ordering security. Is that - - - HIS HONOUR: Well - - - MS NOLAN: When would you like that returned? HIS HONOUR: Well, it’s really a matter for your client to say what to do. So you want to – I mean, part of the ascertainment of what the security will involve would be working out what on earth the referee is going to have to deal with, part of it being - - - MS NOLAN: Your Honour - - - HIS HONOUR: Yes? MS NOLAN: We will put it on straightaway. I mean, we will put – my friends are on notice that it’s coming, and it’s coming. So it will be put on fairly straightaway and then it will automatically trigger a return date and all I’m trying to do is align that with what your Honour foresees as being proper case management of this stage of the proceedings.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

However, it may be inferred that, because the Culture Map proceeding involves a loan agreement, it is highly likely that at some point Mr Ozmen or the Ozmen parties needed some money, which Culture was going to provide. To the extent that his or their financial position will be in issue at the trial, it will need to be established at what point that issue arose and what his or their financial position then was, being a subject that I have no views or information about beyond what was in evidence in the Neptune proceeding, which may or may not be evidence in the Culture Map proceeding. Obviously, any of those views or that information will be irrelevant to, and I will disregard, in assessing the evidence tendered at the trial of the Culture Map proceeding. Conclusion For these reasons, I dismiss the application for recusal with costs.

Ratio Decidendi

Legal Principle Established

In Michael Wilson Partners & Partners v Nicholls (2011) 244 CLR 427 at 451 [84], Gummow ACJ, Hayne, Heydon, Crennan and Bell JJ, noted that when a judge had refused to disqualify himself after an application had been made, the question of whether the party’s failure to seek leave to appeal against that refusal amounted to a waiver, would depend on whether the failure to seek leave to appeal was reasonable. Consideration In my opinion, Culture has not given any reasonable explanation as to why a fair-minded lay observer might form the view that I might not decide any live issue in the Culture Map proceeding (or the Neptune proceeding) impartially on the evidence and the law, by reason of my conduct on 31 July 2020. I do not understand the mental process by which a fair-minded lay observer, simultaneously, might be able to think that a party who says that my conduct in the Neptune proceeding might give rise to an apprehension of bias based on alleged judicial bullying of the very counsel who is also going to present arguments for Culture in this proceeding when her clients in the Neptune proceeding have waived their right to complain of that apprehension in it. The observer would know that Culture Map is in commercial control of both Entertainment and Kanki, which have waived any entitlement to rely on that same conduct in the Neptune proceeding in which that conduct occurred. It is difficult to comprehend how Culture can assert that the fair-minded lay observer who was aware of that waiver, might think that, in the Culture Map proceeding, I might not bring an impartial mind and might not determine the issues impartially. I accept that, during the hearing on 31 July 2020, I was, and gave the appearance of being, irritated by both parties’ failure to comply with the orders on 22 May 2020, and particularly by the submission made by Ms Nolan that despite my previous ruling on 22 May 2020, in accordance with her clients’ agreed position throughout my hearing of the Neptune proceeding (as recorded in Ozmen 369 ALR at 48 [13]) that there would be a reference of the current live issues, she continued to traverse the old ground that she had raised on previous occasions, and I had not accepted, namely her clients did not see any need for a reference. I was (and also gave the appearance of being) irritated that counsel was not even prepared at that hearing in accordance with the orders that I had made on 22 May 2020 (including, at her suggestion, for the proper case management of the Neptune proceeding) so that I would be able to be deal on 31 July 2020 with her clients’ application for security for costs of the reference, for which there had been no submissions. If I conflated the failure of Culture to adhere to earlier orders in the Culture Map proceeding, as Ms Nolan suggested, with the conduct of her clients in the Neptune proceeding by saying what I have set out at [23] above about her client being in egregious default, then that may have been an unfortunate slip or incautious remark: cf Laurie 242 CLR at 332 [140] per Heydon, Kiefel and Bell JJ. I have not gone over in these reasons the whole history of the Neptune proceeding to deal with whether there were other delays to which my comments may have referred.