Self Care Corporation Pty Ltd v Green Forest International Pty Ltd (No 8)
[2021] FCCA 1668
•23 July 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Self Care Corporation Pty Ltd v Green Forest International Pty Ltd (No 8) [2021] FCCA 1668
File number(s): SYG 2771 of 2019 Judgment of: JUDGE BAIRD Date of judgment: 23 July 2021 Catchwords: PRACTICE AND PROCEDURE – application for recusal for apprehended bias – waiver – discussion of principles – application dismissed. Legislation: Competition and Consumer Act 2010 (Cth) Sch.2 (Australian Consumer Law) s 18 Cases cited: AJH Lawyers Pty Ltd v Careri [2011] VSCA 425; (2011) 34 VR 236
Antoun v R [2006] HCA 2; (2006) 224 ALFJR 51
British American Tobacco Australia Services Limited v Laurie [2011] HCA 2; (2011) 242 CLR 283; (2011) 85 ALJR 348
Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337
GetSwift Limited v Webb [2021] FCAFC 26; (2021) 388 ALR 75
Kwan v Kang & Others [2003] NSWCA 336
Liveseyv The New South Wales Bar Association [1983] HCA 17; (1983) 151 CLR 288
Michael Wilson & Partners v Nicholls [2011] HCA 48; (2011) 244 CLR 427
R v Watson; ex parte Armstrong (1976) 136 CLR 248; (1967) 9 ALR 551
Self Care Corporation Pty Ltd v Green Forest International Pty Ltd [2021] FCCA 129
Self Care Corporation Pty Ltd v Green Forest International Pty Ltd (No 2) [2020] FCCA 1000
Self Care Corporation Pty Ltd v Green Forest Pty Ltd (No 3) [2021] FCCA 1277
Southern Equities Corporation Limited (in liquidation) v Bond & Others [2000] SCASC 450; (2000) 78 SASR 339
Tarrant v R [2018] NSWCCA 21
Number of paragraphs: 160 Date of last submission/s: 23 June 2021 Date of hearing: 17 June 2021 Place: Sydney Counsel for the Applicants: Mr J Hennessy SC Solicitor for the Applicants: Gilbert + Tobin Counsel for 6th Respondent: Mr R Smith SC and Mr B Le Plaistrier Solicitor for the 6th Respondent: Taylor David Lawyers ORDERS
SYG 2771 of 2019 BETWEEN: SELF CARE CORPORATION PTY LTD
First Applicant
SELF CARE IP HOLDINGS PTY LTD
Second Applicant
AND: GREEN FOREST INTERNATIONAL PTY LTD ACN 607 602 988
First Respondent
YAOAN (ERIC) CHEN
Second Respondent
YILIN TRADING PTY LTD ACN 626 244 479 (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
JUDGE BAIRD
DATE OF ORDER:
23 JULY 2021
THE COURT ORDERS THAT:
1.The sixth respondent’s application in a case filed 2 June 2021 be dismissed.
2.The question of costs of the application stand over to a date to be fixed after consultation with counsel.
REASONS FOR JUDGMENT
JUDGE BAIRD
INTRODUCTION
The applicants in this proceeding, Self Care Corporation Pty Ltd and Self Care IP Holdings Pty Ltd, sue 17 respondents including the sixth respondent, Mr Pascal Skelin, for, inter alia, dealings in relation to the applicants’ freezeframe products, being cosmeceutical skincare products distributed and sold under the primary brand, freezeframe.
Broadly and non‑exhaustively, the applicants’ allegations include allegations against various of the respondents of infringements of intellectual property rights (trade mark and copyright), authorisation of those infringements of trade mark and copyright, passing off, breaches of confidence, breaches of fiduciary duties, by certain alleged conduct engaging in misleading and deceptive conduct under s 18 of the Australian Consumer Law (Schedule 2 to the Australian Competition and Consumer Act 2010 (Cth)), negligent misstatement, joint tortfeasor, being party to common design, and/ or being involved in, and being knowingly concerned in and liable for various of such activities.
This proceeding was commenced on 25 October 2019, and has been allocated to my docket and under my case management since its commencement.
In two previous judgments in this matter I set out, in broad terms, some background to the proceeding, and described the parties – participating and non‑participating, or no longer participating, and some case management history and interlocutory steps taken in the proceeding. Those judgments are:
(a)Self Care Corporation Pty Ltd v Green Forest International Pty Ltd [2021] FCCA 129 delivered on 5 February 2021 (Self Care No. 1), particularly see [9]‑[32], and
(b)Self Care Corporation Pty Ltd v Green Forest International Pty Ltd (No 2) [2020] FCCA 1000 delivered 12 May 2021(Self Care No. 2), particularly see [7]‑[17].
On 17 February 2021, the matter was listed for hearing to commence on 11 July 2021, for up to 9 days in the period to 25 July 2021, and continuing on 11 and 12 August 2021. Prior to 15 February 2021, the proceeding was listed for hearing commencing 22 March 2021. On 15 February 2021, my Chambers informed the parties that due to reasons beyond the Court’s control I would not be able to hear the matter on the dates then fixed, and of the Court’s initiative the hearing dates would be vacated with no orders as to costs, and a new hearing date fixed by the Court at the case management hearing on 17 February 2021, having regard to, but not necessarily accommodating, all parties’ preferred dates. That occurred.
On 29 June 2021, at a relisting before me at the request of some of the parties because of the then recently announced Greater Sydney lockdown the commencement of the final hearing was adjourned a week, to commence on 19 July 2021. With the further extension of the lockdown, the hearing is now listed to commence on 28 July 2021, and thence from 2 August 2021, on 28 July 2021 as a virtual hearing conducted by electronic means.
In the course of case management of this proceeding I have heard and determined several interlocutory disputes between the applicants and one or more of the respondents, including Mr Skelin, and delivered written reasons in Self Care No. 1 (discharge of previous orders for surrender of passport of the fourteenth respondent), Self Care No. 2 (application for leave to further amend the applicants’ claim, and opposition thereto by the first, second, and fifteenth respondents, and Mr Skelin), and Self Care Corporation Pty Ltd v Green Forest Pty Ltd (No. 3) [2021] FCCA 1277 (Self Care No. 3) (transfer application to the Federal Court by the first and second respondents/ cross‑claimants, and Mr Skelin, delivered 21 May 2021, published 10 June 2021).
On 27 May 2021, Mr Skelin applied to the Federal Court of Australia for leave to appeal Self Care No. 2. As at the date of the final submissions in this present application no steps had been taken in respect of that filing by Mr Skelin. Subsequently, this Court has been informed that on 29 June 2021 Mr Skelin applied for expedition of that proceeding, a case management hearing was listed the next week before the Duty Judge in the Federal Court, some steps appear to have been taken for an interlocutory hearing, but it appears no hearing took place, and subsequently, the matter was stood over to 5 August 2021 for further case management. Yet more recently, it has been brought to the Court’s attention that Mr Skelin has applied to the Federal Court in that proceeding for a stay of this proceeding until the Federal Court determines in that proceeding his extension of time, leave to appeal, and appeal from Self Care No. 2.
MR SKELIN’S APPLICATION FOR RECUSAL
By application in a case dated 2 June 2021 (recusal application), Mr Skelin seeks an order that I recuse myself “from further case management, and the hearing and determination of this proceeding on the basis of apprehended bias”, and supplementary orders that no further step be taken in this proceeding until the determination of such application, and costs. The recusal application does not identify any grounds for that apprehension of bias. The prospect of a recusal application was first foreshadowed in passing by Mr Skelin’s junior counsel at a case management hearing on Monday, 31 May 2021, listed following delivery of Self Care No. 3 the previous Friday.
In support of the recusal application, Mr Gregory Alberto Grunert, a solicitor in the employ of Mr Skelin’s solicitors, swore an affidavit dated 2 June 2021. The affidavit comprises 2,677 pages, 2,667 of which are annexure GAG-3. In the body of his affidavit Mr Grunert identifies “19 case management hearing or court appearances in which judgment was delivered in the period 25 October 2019 to 21 May 2021”, and describes the annexure as transcripts of those hearings, orders, and bundles of correspondence exchanged between the parties and the associate “in relation to” the hearings and appearances. I observe these 19 hearings do not include ex parte hearings not related to Mr Skelin, for example, joinder of other respondents or consequent necessary court appearances, nor do the orders include all orders made, for example consent or other orders not directly including Mr Skelin.
Mr Grunert’s affidavit does not assist to identify any basis for the application. He does not identify any grounds of apprehended bias, nor direct attention to any item of evidence, nor does the affidavit disclose any contention on the part of Mr Skelin or any of his legal representatives as to how the apprehension of bias may arise in the mind of the hypothetical bystander. Mr Grunert does not direct attention to any part or parts of the annexure (apart from listing the pages where the respective transcript, order or correspondence bundle is said to be located). The annexure is paginated.
Annexure GAG‑3 is not, however, a complete record of all it purports to be: on my perusal dozens of pages of transcript are missing, and the bundles of correspondence are incomplete. The partial nature of annexure GAG‑3 became apparent upon examination of the transcript and correspondence bundle relating to the case management hearing on 28 September 2020, particularised by Mr Skelin (see below, 9 June particulars), and to which the applicants’ senior counsel, Mr Hennessy SC, took me to in the course of argument.
The applicants oppose the recusal application. Further, they make a submission that by reason of his conduct since the hearings on 17 and 18 December 2019 (when Mr Skelin says the relevant comments and findings were made), it is open to the Court to dismiss the recusal application on the basis that Mr Skelin has given up his right to make the present recusal application in the present circumstances. This contention raises the issue of waiver, to which I will return later in these reasons.
On 7 June 2021, following some exchanges of correspondence between the applicants and Mr Skelin’s legal representatives I made orders in Chambers requiring Mr Skelin by 8 June 2021 to provide “particulars of the ground or grounds (specifying which) and the precise evidence and factual matters relied upon” in support of the recusal application, and listed the application on 9 June 2021 for directions to set a timetable to hearing and to set a date for hearing. At that directions hearing, further to his counsel’s request, I allowed Mr Skelin the additional time he sought to provide the particulars to 5pm, 9 June 2021.
At that Court appearance on 9 June 2021 I raised with counsel whether either party contended that the recusal application should be heard by another judge. Counsel for both parties advised the Court they did not so contend. They were content for me to hear and determine the recusal application. Senior Counsel for Mr Skelin, Mr Smith SC, informed the Court that there is no allegation of actual bias relied upon in connection with his client’s application. Mr Skelin’s application is based on the ground of apprehension of bias by reason of apparent prejudgment. Mr Smith SC reiterated these statements confirming the basis of the recusal application as apprehended bias at the hearing of the recusal application.
I heard the recusal application on 17 June 20221 for the day. Both parties relied on outlines of written submissions, and made further written submissions after being heard orally.
Grounds and particulars
Mr Skelin relies on particulars of grounds, evidence and factual matters dated 8 June 2021 comprising 14 paragraphs (8 June particulars), and a second document dated 9 June 2021 comprising 27 paragraphs (9 June particulars). A copy of the 8 June particulars is set out in full (excepting Court heading and title), in Annexure 1 to these reasons. A copy of the 9 June particulars is set out in full (excepting Court heading and title), in Annexure 2 to these reasons.
In the 8 June particulars the grounds are stated as:
Grounds
(1)The Sixth Respondent contends that Judge Baird ("the Judge") should recuse herself from the hearing of this case on the grounds that her conduct as particularised below ("the conduct") gives to a reasonable apprehension of bias by reason of apparent prejudgment.
(2)The Sixth Respondent submits that a fair-minded lay observer might reasonably apprehend that by reason of the conduct the Judge might not bring an impartial and unprejudiced mind to the resolution of the questions the Judge is required to decide namely the questions recorded in paragraph 11 [see Annexure 1].
The conduct relied upon is stated to be:
Conduct relied upon
(3)Inclusion in the Freezing Orders made on 17 and 18 December 2019 of the property at 30 Russell Street Vaucluse ("the property") Orders 3, 4(a)(D).
The “evidence and factual matters relied on” then follow in [3]-[14] of the 8 June particulars: see Annexure 1.
In these reasons, I refer to the property as the Vaucluse property, and the orders made on 17 December 2019 as the Freezing Orders. The orders made on 18 December 2019 do not relate to the Freezing Orders.
It is not in dispute that the Vaucluse property, in Sydney’s Eastern suburbs, is Mr Skelin’s residence, and that of his wife, Anne Skelin, and two school age children.
The 9 June particulars in [1] repeat the substance of the 8 June particulars at [2], and then follow with 26 paragraphs organised under various dates: see Annexure 2.
The parties have referred to the 8 June particulars as ground 1, and the 9 June particulars as modified by the immediately below paragraph in these reasons as ground 2, and I will do likewise.
During the course of hearing of the recusal application on 17 June 2021, Mr Smith SC identified several paragraphs and Court dates in the 9 June particulars that Mr Skelin now does not rely on. These are identified in Annexure 2 by the notation “Not pressed”. Accordingly, the conduct said by Mr Skelin to comprise ground 2 is the Judge’s asserted differential treatment viz‑á‑viz Mr Skelin and the applicants with respect to their non‑compliance with orders made on various dates, and identified conduct at or by orders made at case management hearings on 8 occasions over a 15 month period, being 20 March 2020, 23 July 2020, 28 September 2020, 3 December 2020, 17 February 2021, 15 March 2021, 23 March 2021, and 12 May 2021 (orders on judgment).
Relationship between grounds
Mr Skelin explains ground 1 as having the following context and giving rise to the following (Skelin written submissions at [2]-[5]):
[2]The Applicants’ case, in substance, is that the Sixth Respondent, with others, developed and adopted a fraudulent business plan to counterfeit the Applicants’ products, destroy their business in Australia and China and by lies and deception conceal this conduct from the Applicants (see paragraph 7 of the 8 June Particulars).
[3]The case thus alleges dishonesty, fraud and moral delinquency against the Sixth Respondent. On the Applicants’ case, he is a man of no credit.
[4]These allegations of dishonesty and fraud were advanced by the Applicants – as reasons why the Court should make the Freezing Orders sought on 17 and 18 December 2019. The Judge made those orders but did not deliver written reasons explaining her reasoning and the findings supporting the orders which she made.
[5]It is plain that in concluding that the Freezing Orders sought were appropriate, the Judge accepted the Applicants’ submissions that the Sixth Respondent had conducted himself as they alleged. The observations recorded at paragraphs 8 and 9 of the 8 June Particulars, demonstrate the Judge’s satisfaction as to the Applicants’ allegations – which included the charge that the Sixth Respondent was a liar and a fraudster; who deceived Ms. Amoroso. [Self Care’s CEO]
As to the significance of the conduct identified in the 9 June particulars, that is, ground 2, in his written submissions at [35] Mr Skelin contends that that conduct (emphasis added) “reinforced the apprehension of bias which arose from the conduct” in ground 1 (set out in his written submissions at [6]-[14], and being a partial sub-set, and variation of Annexure 1 at [8] and [9]. See further below at [71]. At the hearing Mr Smith SC did not argue otherwise.
Mr Skelin in reply submissions after the hearing explains that ground 2 is the “aggregation of remarks over 18 months to reinforce the pre‑judgment submitted to arise from the remarks” which he says “in the context of the applicants’ submissions the Court accepted” on 17 December 2019.
It follows from Mr Skelin’s submission that standing alone ground 2 is not said to give rise to an apprehension of bias. On Mr Skelin’s case, ground 2 is only relevant and only requires consideration if ground 1 is established. Otherwise, it falls away. It follows, further, that if ground 1 is established, it suffices: it is not necessary to consider ground 2. Ground 2, so named, is thus a misnomer, however it remains convenient to so identify the content of the 9 June particulars.
Mr Skelin’s overarching contention – Freezing Orders show pre-judgment
Mr Skelin contends (written submissions at [30]) that certain comments or observations I made during the Court appearances on 17 and 18 December 2019 were “findings … made in the context of the application of the Freezing Orders”, and these “involved the Judge accepting the applicants’ submission involving two propositions adverse to Mr Skelin”:
(a)first, that Mr Skelin “had been dealing in the counterfeit product”; and
(b)second, “that he could not be trusted not to attempt to make himself “judgment-proof” by taking steps to deal with his assets and defeat any judgment which might be obtained”.
(See further, reasons below at [71]).
Mr Skelin (written submissions at [31]-[32]) contends that the applicants’ case involved grave allegations of dishonest and fraudulent conduct, and the Judge accepted those allegations, not stating that her views were preliminary, tentative, or subject to revision. The fair-minded lay observer might reasonably apprehend that the Judge might not bring an impartial mind to the resolution of some of the questions the Court will be called upon to decide at trial in the present proceeding. These questions are said to be those particularised in ground 1 at [11]: see Annexure 1, at [11].
PROCEDURAL CONTEXT AND CIRCUMSTANCES
Before setting out relevant principles, and turning to the 17 December 2019 and 18 December 2019 hearings, I propose to provide some history of the proceeding and the orders made leading to those hearings, and the context in which the recusal application is brought.
25 October 2019 orders
As I have said above, and in Self Care No. 1 at [27] and Self Care No. 2 at [13]-[14], the proceeding was commenced on 25 October 2019 by way of urgent application for ex parte relief against the first to sixth respondents, including the fifth respondent, Emilio Wang, and Mr Skelin. The relevant context to the making of orders on 25 October 2019 (25 October 2019 orders) is set out in Self Care No. 1 at [17]-[23]. The orders are summarised in Self Care No. 2 at [13]-[14] (emphasis in original):
[13]As I stated in Self Care (No. 1), at [27], on 25 October 2019 I made orders restraining the 6 respondents then named, being Green Forest, Mr Chen, the third respondent, Yilin Trading Pty Ltd, Freezeframe China Co, Emilio Wang, and Mr Skelin. I summarized those orders, as:
[27]… orders restraining Emilio Wang and the 5 other respondents then named from dealing in freezeframe products, and counterfeit freezeframe products, from destroying records, orders requiring each of them to provide records and deliver up certain electronic storage devices to the applicants’ solicitors for investigation by an independent engaged computer expert, and orders that the restrained respondents make Norwich Pharmacal affidavits deposing as to their respective current and past holdings of freezeframe products, and customers, and when and how the respondents obtained possession of the products.
[14] The orders I referred to in the above summary included the following:
[6]Until further order, each Respondent be restrained from obtaining, offering to supply or supplying, offering for sale or selling, offering to distribute or distributing, offering to make available or making available, or otherwise dealing in or enabling others to deal in any of the products listed in Schedule A to these orders, or any product under the same name, or in packaging depicting any of those product names (FreezeFrame Products), without the prior written consent of the First Applicant.
(the FreezeFrame Products restraining order)
[8]By no later than 1pm AEDT on Thursday, 31 October 2019, each of the First Respondent (by its proper officer), the Second Respondent, the Third Respondent (by its proper officer), the Fourth Respondent (by its proper officer), the Fifth Respondent, and the Sixth Respondent make and serve on the Applicants’ solicitors an affidavit duly sworn or affirmed by him or her, to the best of his or her knowledge and belief and upon reasonable inquiry:
(a)providing a description of all FreezeFrame Products in the possession, custody or control of the Respondent as at the date of this order;
(b)providing a description of all FreezeFrame Products that have been in the Respondent’s possession, custody or control but which are no longer in the Respondent’s possession, custody or control;
(c) in respect of all such FreezeFrame Products:
i. their location;
ii. how and when they came into the possession of the Respondent;
iii.the identity of any person or entity to whom the Respondent has supplied or is to supply (but for the making of Order 6 above) them.
(the FreezeFrame Products Norwich Pharmacal order).
It can be seen from the above orders that they encompass both genuine and counterfeit products. (Freezeframe Products are also referred to in the course of the proceeding with variations of initialisation, including as ‘freezeframe products’, and ‘Freezeframe products’).
In the course of the hearing on 25 October 2019 over 4 plus hours, upon the evidence read and tendered (including confidential material), and the submissions made, I was satisfied for the purposes of the ex parte interlocutory application that it was then appropriate to make the above orders and further orders including for delivery up, in electronic form, of records and external storage devices containing records. I listed the applicants’ originating application for case management hearing, and for directions for the hearing of the interlocutory application on 31 October 2019 at 2.15 pm, and I granted liberty to apply on 2 hours’ notice between 9am and 5pm.
31 October 2019 court appearance
On 31 October 2019, when the proceeding was next before the Court, Mr Weinberger of counsel appeared for the fourth respondent (Freezeframe China Co) and Mr Skelin, instructed by Thomson Geer, the fourth respondent and Mr Skelin’s then instructing solicitors. Ms Sethi of counsel appeared for the first and second respondents, instructed by their solicitors.
Mr Weinberger stated to the Court that his clients were content with the FreezeFrame Products restraining order (see at [33] above), without admissions, without prejudice, but foreshadowed that Mr Skelin would seek to vary or discharge parts of the FreezeFrame Products Norwich Pharmacal order – orders [8(b)] and [8(c)] (see [33] above), and other of the 25 October 2019 orders being for production of any external storage devices for forensic imaging, and in all likelihood, also orders permitting inspection and certain disclosure by the applicants’ independent engaged computer expert. Mr Weinberger explained his clients’ concern with orders [8(b)] and [8(c)] was with the requirement to review historical records. Mr Weinberger reiterated that he was not seeking to vary or remove the prohibitory injunctions, that is, the FreezeFrame Products restraining order.
After a short adjournment, orders were agreed between counsel, and made by consent, relevantly in relation to the fourth respondent and Mr Skelin, varying the time and location for compliance with the orders for delivery up of records, and the provision of external storage devices for forensic imaging. Compliance with the Freezeframe Products Norwich Pharmacal order was extended to a date to be determined after the hearing and determination of the applicants’ interlocutory application. By consent, the fourth and sixth respondents were directed to file and serve any application to discharge or vary the 25 October 2019 orders by 1 November 2019, and a timetable was set for the filing of evidence in support, and the hearing of such application on 8 November 2019. On 1 November 2019, as foreshadowed, Mr Skelin and Freezeframe China Co filed an application to vary certain of the 25 October 2019 orders, returnable 8 November 2019 (Skelin November 2019 application). Mr Skelin did not file any application to discharge or vary the FreezeFrame Products restraining order.
November and December 2019 court appearances and orders
During November and December 2019, various interlocutory hearings and case management hearings and adjournments took place, including of the Skelin November 2019 application. Orders were made varying or extending time for compliance by respondents with certain previous orders, and otherwise facilitating the production and inspection of documents recovered from electronic storage devices produced by certain of the respondents, including Mr Skelin. Inspection, confidentiality claims, and disclosure regimes were ordered varying the orders for delivery up, imaging, and the production of results forming part of the 25 October 2019 orders, in respect of the first and second respondents, and the fourth respondent (Freezeframe China Co) and Mr Skelin.
The November and early December 2019 hearings, and orders included (non‑exhaustively):
(a)on 8 November 2019, on application by the applicants, the seventh respondent, EPAQ International Pty Ltd, was joined as a respondent to the proceeding, and restraining orders made concerning it. Also on 8 November 2019, time for Freezeframe China Co and Mr Skelin’s compliance with certain of the 25 October 2019 orders was extended, the regimes for delivery up of devices, forensic imaging and provision of results was further varied, part of the Skelin November 2019 application was adjourned for hearing to 15 November 2019, and part was dismissed;
(b)on 15 November 20119, a varied regime was ordered as between the applicants and first and second respondents regarding the regime for dealing with the results of forensic imaging of their devices, and providing for confidentiality, the balance of the Skelin November 2019 application was dismissed, with costs in the cause, and the proceeding was stood over to 17 December 2019 for directions;
(c)on 22 November 2019, I made consent orders as between the applicants and Freezeframe China Co and Mr Skelin, lifting the stay on their compliance with the Freezeframe Products Norwich Pharmacal orders, and varying those orders to provide for a regime to deal in tranches with the results of the applicants’ independent expert’s investigation of the forensic images of Freezeframe China Co’s and/or Mr Skelin’s devices pursuant to the 25 October 2019 orders, directing tranches of documents to be released in the first instance only to Mr Skelin’s instructing solicitors, claims for exclusion to be made, and subsequent release of documents over which no claim was maintained, or in respect of which confidentiality regimes were agreed;
(d)a Court appearance, not relevant to Mr Skelin, took place on 2 December 2019, and consent orders as between the applicants and the first and second respondents were made in Chambers on 6 and 10 December 2019.
By the making of the orders and regimes in October and November 2019 described above, I was then satisfied that the applicants had demonstrated a sufficiently arguable case to justify the above interlocutory orders, and that the parties’ other orders and variations were appropriate. Substantial Court time was devoted to the hearing of the interlocutory applications and the making of the above referenced orders, with the Court sitting well beyond usual hours during the November 2019 listings.
The proceeding was next listed on 17 December 2019. Three applications in a case filed by the applicants in December were returnable. At the conclusion of the hearing that evening (at 8:42pm), I made the Freezing Orders, and adjourned the proceeding to 18 December 2019. What was said in the course of the Court appearances on 17 December 2019 and 18 December 2019 is the subject of ground 1 of the recusal application. I return to the 17 December 2019 and 18 December 2019 hearings later in these reasons.
Context in which the recusal application is brought
The recusal application has been brought just shy of 18 months after the Freezing Orders were made. As I have said above, at no time prior to 31 May 2021 did Mr Skelin raise any possibility that such an application for recusal might be made.
No application to vary or discharge the Freezing Orders has been made by Mr Skelin or the fourth respondent, Freezeframe China Co, since the 17 and 18 December 2019 hearings, to date. Nor has there been any application by or on behalf the third party, the sixth respondent’s wife, Ms Anne Skelin. She has not sought to intervene or otherwise appear in the proceeding. In contrast, by consent the Freezing Orders as against the fifth respondent, were varied on 24 December 2019.
Since 18 December 2019 (and up to 2 June 2019, the date of filing the recusal application), there have been 26 occasions on which this proceeding has been before me for either case management, interlocutory hearings or judgment. There have been a number of interlocutory applications brought by Mr Skelin and/or including Mr Skelin, which are the subject of my earlier judgments referred to above.
It has not been suggested to me that it was inappropriate for me to hear and determine the earlier interlocutory applications in this proceeding, or to conduct case management hearings, or to set the matter down for final hearing (see above at [5]).
RELEVANT PRINCIPLES
In the course of written and oral submissions, I was taken to the relevant principles concerning disqualification for apprehended bias and the application of those principles in a number of leading authorities.
The classic statement of the principle was stated by the High Court of Australia in Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488, where the plurality (Gleeson CJ, Gaudron, McHugh, Gummow, and Hayne JJ) said at [11]:
… 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.
In Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337, decided shortly after Johnson, the plurality (Gleeson CJ, McHugh, Gummow and Hayne JJ) said at [7]:
[7]…Deciding whether a judicial officer (or juror) might not bring an impartial mind to the resolution of a question that has not been determined requires no prediction about how the judge or juror will in fact approach the matter. The question is one of possibility (real and not remote), not probability. …
The application of the apprehension of bias principle requires two steps, as explained by the High Court in Ebner at [8].
[8]The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an “interest” in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.
In AJH Lawyers Pty Ltd v Careri [2011] VSCA 425; (2011) 34 VR 236, the Victorian Court of Appeal formulated 8 relevant principles, at [17]-[22]. At [22] the two steps in Ebner were explained thus:
Fifthly, the application of the test involves two steps. The first step is “the identification of what it is said might lead a judge … to decide a case other than on its legal and factual merits”. The second step is the “articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits”. Contrary to AJH Lawyers’ submission, the two-step approach is applicable to cases of apprehended bias on the ground of prejudgment. In such a case, the matter to be identified in the first step is the conduct of the judge said to give rise to apprehension of bias. And the logical connection that needs to be articulated in the second step is the logical connection between the conduct of the judge and the feared prejudgment of a question the judge is required to decide
(Footnotes omitted.)
In GetSwift Limited v Webb [2021] FCAFC 26; (2021) 388 ALR 75, the Full Court of the Federal Court of Australia recently visited the law and set out the applicable principles by reference to High Court and Full Court authority as follows at [27] – [29]:
[27]The test for apprehended bias is whether a fair- minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question he or she is required to decide: Ebner v Official Trustee in Bankruptcy (Ebner’) at [6], applied in CNY17 v Minister for Immigration (‘CNY17’) at [17]-[18]. The bias rule is concerned as much to preserve the public appearance of independence and impartiality as it is to preserve the actuality: CNY17 at [18]. It also reflects a precautionary approach: “In a case of real doubt, it will often be prudent for a judge to decide not to sit in order to avoid the inconvenience that could result if an appellate court were to take a different view”: Ebner at [20]. The application of the rule involves two steps: first, identification of the factor which it is said might lead the judge to decide the case otherwise than on its legal and factual merits; and, second, an articulation of the logical connection between that factor and the feared deviation from the course of deciding the case impartially on the merits: Ebner at [8]; CNY17 at [21]; cf Isbester v Knox City Council (‘Isbester’) at [59] (Gageler J) where three steps are articulated. The connection must be assessed objectively: see Michael Wilson & Partners v Nicholls at [67]. The conclusion of apprehended bias is “largely a factual one”: CNY17 at [93].
[28]Whilst a precautionary approach is to be observed, the cases emphasise that an allegation of apprehension of bias must be “firmly established”: see, e.g., Reece v at [45] citing Re JRL; Ex parte CJL (‘Re JRL’) at 352. The reference to “firmly established” originated in R v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group at 553. A conclusion of apprehended bias “is not to be reached lightly”: see CNY17 at 61 [56] citing Re JRL at 371.
[29]There is a variety of ways in which the impartiality of a court may be or may appear to be compromised. In Webb v The Queen at 74, Deane J, who was not dissenting on this point, identified four of them as “distinct, though sometimes overlapping, main categories of case”. They were:
(1)interest – where the judge has an interest in the proceedings, whether pecuniary or otherwise, giving rise to a reasonable apprehension of prejudice, partiality or prejudgment;
(2)conduct – where the judge has engaged in conduct in the course of, or outside, the proceedings, giving rise to such an apprehension of bias (including prejudgment);
(3)association – where the judge has a direct or indirect relationship, experience or contact with a person or persons interested in, or otherwise involved in, the proceedings; and
(4)extraneous information – where the judge has knowledge of some prejudicial but inadmissible fact or circumstance giving rise to the apprehension of bias.
(Full citations omitted, emphasis in original.)
I am concerned in the recusal application with the second category of case – conduct engaged in the course of the proceeding giving rise to such an apprehension of bias (including prejudgment). The test for apprehended bias is the same wherever it arises, although the context in which it falls to be applied will clearly affect how the test is to be applied: GetSwift at [37]. The principle of impartiality will override any case management consideration: GetSwift at [62].
The hypothetical observer
The hypothetical observer is a construct. The authorities also refer to them as the fictional observer, or hypothetical or fictitious bystander, fair‑minded lay observer or similar. In the case of apprehended bias, the test is objective in that it is a third party’s assessment of the judge’s conduct and capacity: Tarrant v R [2018] NSWCCA 21 at [9].
The question of the extent of the knowledge attributable to the hypothetical observer was discussed in Johnson, where the plurality said:
[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…
Justice Kirby also discussed the attributes of the fictitious bystander at [53]:
[53]… Such a person is not a lawyer. Yet neither is he or she a person wholly uninformed and uninstructed about the law in general or the issue to be decided. Being reasonable and fair-minded, the bystander, before making a decision important to the parties and the community, would ordinarily be taken to have sought to be informed on at least the most basic considerations relevant to arriving at a conclusion founded on a fair understanding of all the relevant circumstances. … a reasonable member of the public is neither complacent nor unduly sensitive or suspicious.
The Full Court in GetSwift cited the above passages of the Court in Johnson, and further said of the hypothetical observer:
[33]It is probably fair to conclude that the hypothetical observer today is more aware of the court processes than, say, a few decades ago. Knowledge about courts has become more accessible through the media, and the courts are more accountable in the conduct of judicial functions. It is also appropriate to conclude that the hypothetical observer would, before forming a view about the existence of a reasonable apprehension of bias, take the trouble to inform himself or herself to the extent necessary to make a fair judgment of what might occur in the process confronting a fact-finding judge.
[34]The hypothetical observer is to be attributed with knowledge of the nature of the decision, the context in which it is made and the circumstances leading to it. Nevertheless, it is always to be kept in mind that the observer is a layperson and not a lawyer.
[35]The hypothetical observer is taken to understand how a judge is capable of putting irrelevant and immaterial matters to one side as part of the assumed abilities of a judge. In this regard a number of observations have been made by the courts:
(a)a judge as a professional decision-maker can ordinarily be expected to be capable of discarding “the irrelevant, the immaterial and the prejudicial”;
(b)a judge is “equipped by training, experience and their oath or affirmation to decide factual contests solely on the material that is in evidence” and furthermore is aware of “the possibility of the evidentiary position changing”;
(c)“[a] judge will be assumed to have a capacity to put from his or her mind evidence of a prejudicial kind which has been heard or seen but is not relevant to the determination of the question before the Court”; and
(d)judges are capable of impartially reconsidering matters which have previously been considered or which may even have been pronounced upon by that particular judge – subject always to the nature of the findings.
(Citations omitted.)
The Full Court in GetSwift, further said, at [65]:
Where apprehended bias is said to arise because a judge has prejudged matters in a controversy, there is a need to firmly establish a reasonable basis for thinking that the decision maker “might be so committed to a conclusion as to be incapable of persuasion to a different view”: see Cabcharge Australia v Australian Competition and Consumer Commission at [25] (Kenny, Tracey and Middleton JJ) citing Re JRL at 352 (Mason J); Laws v Australian Broadcasting Tribunal at 100 (Gaudron and McHugh JJ).
(Citations omitted)
Mr Skelin submits the reasonable observer is presumed to approach the matter on the basis that ordinarily a judge will act to ensure both the appearance and substance of fairness and impartiality, but the reasonable observer is not presumed to reject the possibility of pre‑judgment or bias: see Liveseyv The New South Wales Bar Association [1983] HCA 17; (1983) 151 CLR 288 at page 299, British American Tobacco Australia Services Limited v Laurie [2011] HCA 2; (2011) 242 CLR 283; (2011) 85 ALJR 348 (BATAS) at [144].
The applicants submit that the assessment to be made of the hypothetical observer is at the time the application for recusal is made, whereas here the application is made a long time after most of the relevant events relied on occurred. The hypothetical observer would be taken to be aware of subsequent events, e.g., in the case of extensions under timetables, extensions granted to other parties than the applicants, including Mr Skelin, non-compliances with the timetable, and the like. The hypothetical observer would well appreciate the need for the docket judge to manage the preparation of the case for hearing and, where relevant, make orders requiring the parties to comply with the steps necessary to have the matter heard.
Illustrative cases detailed by Mr Skelin
In oral submissions addressing the application of relevant principles, Mr Smith SC took me first to R v Watson; ex parte Armstrong (1976) 136 CLR 248; (1967) 9 ALR 551, as a case of an adverse credit finding made in an interlocutory proceeding, giving rise to apprehended bias. The apprehended bias there found was based on the statement of the primary judge “I simply, as a judge of the facts in this matter, propose to proceed on the basis that credit is a non‑issue, because I require corroboration of any issue” and thereby pre-judged the credit of the wife. Mr Smith SC referred to the judgment of the majority (Barwick CJ, Gibbs, Stephen, and Mason JJ) at 264, and drew particular attention to the passage I have italicised below:
The remarks on which the wife’s submission was founded were made during argument in an interlocutory proceeding. One must be careful not to exaggerate the importance of remarks of that kind. During the course of argument a judge will often follow the common and sometimes necessary course of formulating propositions for the purpose of enabling their correctness to be tested, and, as a general rule, anything that a judge says in the course of argument will be merely tentative and exploratory. However, a fair-minded observer would have been justified in thinking that the remarks of the learned trial judge in the present case were not of that description. …
As the cases show, there are some matters on which a judge may have preconceived opinions, and yet be qualified to sit, but speaking generally the credit of an essential witness, where the case may turn on credibility. It is apparent from the facts that have been recited that it is possible, if not probable, that an assessment of the credit of the witnesses may play an important part in the resolution of the proceedings between the husband and the wife. This has indeed already been shown by the fact that the learned judge has drawn an inference adverse to the wife because she has greatly increased the amount which she has claimed.
Mr Smith SC then took me to BATAS. The statement of principle in the majority joint judgment of Heydon, Kiefel, and Bell JJ, is at [139] (French CJ agreeing at [35]) and [140]:
[139]It is fundamental to the administration of justice that the judge can be neutral. It is for this reason that the appearance of departure from neutrality is a ground of disqualification. Because the rule is concerned with the appearance of bias, and not the actuality, it is the perception of the hypothetical observer that provides the yardstick. It is the public’s perception of neutrality with which the rule is concerned. In Livesey it was recognised that the lay observer might reasonably apprehend that a judge who has found a state of affairs to exist, or who has come to a clear view about the credit of a witness, may not be inclined to depart from that view in a subsequent case. It is a recognition of human nature.
[140]Of course judges are equipped by training, experience and their oath or affirmation to decide factual contests solely on the material that is in evidence. Trial judges are frequently required to make rulings excluding irrelevant and prejudicial material from evidence. Routine rulings of this nature are unlikely to disqualify the judge from further hearing the proceeding. This is not a case of that kind. It does not raise considerations of case management and the active role of the judge in the identification of issues with which Johnson was concerned. At issue is not the incautious remark or expression of a tentative opinion but the impression reasonably conveyed to the fair-minded lay observer who knows that Judge Curtis has found that BATAS engaged in fraud and who has read his Honour’s reasons for that finding. Some further reference should be made to those reasons.
(Citations omitted)
Mr Smith SC submits that in the hearings on 17 and 18 December 2019, I had made a finding which attracts the above description in BATAS at [139] - that Mr Skelin was involved in counterfeit – and thus was “a judge who has found a state of affairs to exist, or who has come to a clear view about the credit of a witness, may not be inclined to depart from that view”. In reply submissions counsel for Mr Skelin expanded this submission to explain that the applicants had submitted on 17 December 2019 I should find fraud and dishonesty, and “clear views” or “concluded findings” of fraud or dishonesty were expressed in the comments as to counterfeits Mr Skelin points to at the hearing on 17 December 2019: see Annexure 1.
Mr Smith SC submits the majority judgment in BATAS at [145] is “really, the nub of the analysis” (emphasis in original):
[145]Whenever a judge is asked to try an issue which he or she has previously determined, whether in the same proceedings or in different proceedings, and whether between the same parties or different parties, the judge will be aware that different evidence may be led at the later trial. Judge Curtis’s express acknowledgment of that circumstance does not remove the impression created by reading the judgment that the clear views there stated might influence his determination of the same issue in the Laurie proceedings. Allsop P’s conclusion was correct. In addition to the possibility of the evidentiary position changing, a reasonable observer would note that the trial judge’s finding of fraud was otherwise expressed without qualification or doubt, that it was based on actual persuasion of the correctness of that conclusion, that while the judge did not use violent language, he did express himself in terms indicating extreme scepticism about BATAS’s denials and strong doubt about the possibility of different materials explaining the difficulties experienced by the judge, and that the nature of the fraud about which the judge had been persuaded was extremely serious. In the circumstances of this unusual case, a reasonable observer might possibly apprehend that at the trial the court might not move its mind from the position reached on one set of materials even if different materials were presented at the trial – that is, bring an impartial mind to the issues relating to the fraud finding. Johnson v Johnson is distinguishable.
(Citations omitted)
As further relevant illustrations of conduct at interlocutory level which appeal courts have held gave rise to a reasonable apprehension of bias, which he submitted showed that I should recuse myself from this proceeding, Mr Smith SC took me in detail to Southern Equities Corporation Limited (In Liquidation) (ACN 008 721 926) & Ors v Bond & Ors [2000] SASC 450; (2000) 78 SASR 339, and Kwan v Kang & 2 Ors [2003] NSWCA 336. Each of these cases involved express allegations and findings of fraud.
Southern Equities is a decision of the Full Court of the Supreme Court of South Australia, comprising Olsson, Williams and Bleby JJ, involving liquidator proceedings following upon the collapse of the so‑called “Bond Group”, in which the liquidator asserted that the appellant and other entities in the Group purchased and became beneficial owners of a series of artworks, and that the defendants (including Mr Alan Bond and two sons and a Ms Caboche) became parties to a conspiracy to deal with the relevant artworks to the detriment of and in fraud upon the appellant and another. In interlocutory proceedings, Debelle J (who was also designated the trial judge) dealt with two applications seeking Mareva injunctions and other orders. His Honour dealt with a first application ex parte in relation to a substantial sum of money to the credit of Ms Caboche held with Challenge Bank, which he granted, and an application inter partes in respect of certain lands. The inter partes application took 5 days. His Honour had before him a substantial quantity of evidence, and transcripts of examinations of certain of the defendants pursuant to the Corporations Law. His Honour published written reasons. He granted the application.
In separate judgements Olsson J and Bleby J held his Honour’s granting of the first application did not give rise to apprehended bias, but that his judgment granting the second application did. Williams J dissented, not finding apprehended bias in either case. Mr Skelin’s counsel, inter alia, took me to Olsson J at [28], [31]-[33], [46]-[65], and Bleby J [130]-[145] (see also at [147]), [152] (see also [153]‑[155]). Mr Skelin submits that what was before the Full Court were findings expressed in unqualified terms involving serious fraud allegations and issues which have to be found for the purpose of the Mareva injunction application were found and would be live issues at a final hearing, and which have been subject to adverse findings as to credit. I have had regard to the decision, and to the passages relied on by Mr Skelin.
In discussing Kwan, Mr Smith SC especially referred to [49]‑[50], [86]-[88]. In Kwan the first respondent commenced proceedings in the Supreme Court of New South Wales asserting that a loan and mortgage were spurious contrivances set up by a third party (Kate) and the appellant solely for the purpose of frustrating any judgment that he might obtain against persons named Woowins. In the course of the trial before Santow J the first respondent sought access to certain documents for which privilege was claimed. His Honour held the documents were in furtherance of the commission of a fraud, or abuse of power, s 125 of the Evidence Act 1995 (NSW) applied, and the documents were made available to the plaintiff. The appellant brought an application that Santow J disqualify himself. His Honour declined, and revised his written judgment. On appeal, the Court of Appeal held that his Honour should have recused himself, finding the trial judge made a finding of fraud or abuse of power in absolute and unconditional terms when the evidentiary ruling in question was handed down, not appropriate or necessary at that time. The Court at [86]-[87] said:
[86]It is not unknown for judges to make findings on an interlocutory issue and to express those findings in a way that indicates that they have come to a final conclusion. If that conclusion is as to a significant issue on which the ultimate result of the trial depends, and further evidence is still to be led and final addresses are still to be made, the likely consequence is that the judge concerned will have to disqualify himself or herself.
[87]The reason for this is that a finding expressed in terms of finality, when made at an interlocutory stage, will usually give the impression that the judge’s mind is made up. If the judge’s mind is made up before evidence and final addresses are complete, it will mean that a conclusion has been unfairly arrived at. There is then likely to be an apprehension that, when the time comes to give final judgment, the judge might not be impartial or might be prejudiced against the party who was unsuccessful in the interlocutory judgment. It will then not merely be an apprehension that the judge will decide the case adversely against that party.
I refer to the authorities on the issue of waiver later in these reasons. The parties’ written submissions contained other references to authorities, which I have considered.
GROUND 1
Mr Skelin’s contentions (ground 1)
Mr Skelin contends that in making the Freezing Orders I accepted the applicants’ submissions that Mr Skelin had conducted himself as the applicants had alleged (see Annexure 1, at [7]). He says certain observations made in the course of the hearing on 17 December 2019 demonstrate my satisfaction as to the applicants’ allegations – relevantly, he says “the charge that [Mr Skelin] was a liar and a fraudster; who deceived Ms Amoroso” (Self Care’s CEO): the transcript references said to evidence my unqualified acceptance of those submissions are listed in Annexure 1 at [8]. The corresponding transcript passages are set out in Annexure 3 attached to these reasons.
Mr Skelin relies on “comments” made in some 16 pages scattered over 179 content pages of transcript from 17 and 18 December 2019 hearings (150 and 32 pages respectively, 182 in total): see listed transcript references in Annexure 1 at [9]. Mr Skelin’s written submissions listed transcript references within and beyond the page ranges listed in Annexure 1.
Mr Skelin then contends that what I said during the hearing on 17 December 2019 in discussion with Mr Skelin’s then counsel, Ms Stewart, were findings I made, which were not expressed with qualification or doubt. These findings, he says, are the following (by reference to Mr Skelin’s written submissions, [6]-[14], a subset of which were resaid in varied form in reply submissions at [27], including the transcript references):
[6] that in discussion with Ms Stewart I said the documents relied upon by the applicants taken from Mr Skelin’s computers showed that there was “at least” a business plan from him to intermingle genuine and fake product; and
that I indicated scepticism of Ms Stewart’s offered explanation that the documents could be characterised as in “the nature of musings or potential plans”, not evidenced as executed [T80/1-22];
[7]that I described Ms Stewart’s construction of the documents written by Mr Skelin as above was “putting it a little bit generously to your client” [at T81/41, and at 84/27];
[8]that I noted counsel was “bursting to make submissions”, but before hearing the submissions stated that I was “inclined” to make the orders, and that the questions currently “exercising her” mind were “the amount and reasonable expenses per respondent” [at T103/11‑19];
[9]that I said the evidence I had seen meant that it could not be said that “no counterfeit product has been touched by any of the respondents” [at T84/1-4], and repeated [at T99/1-10]; which meant that Mr Skelin had been involved in counterfeiting;
[10]which remarks Mr Skelin contends recorded the “Judge’s actual persuasion” that Mr Skelin’s documentation “proved the respondents had been dealing in counterfeit product and the charge of dishonest conduct had been established”, [T98/20-T99/10] and [T103/15] and
[11]that the “considerable concern” the Judge mentioned at T138/29‑44 was the product of that persuasion;
[12]when reaching these conclusions, the Judge’s state of mind was that Mr Skelin “had to be … dragged kicking and screaming to compliance with earlier orders” [for production of particular documents and devices, and regimes permitting identification and inspection of categories of documents], which Mr Skelin said was “a finding strongly adverse to the Sixth Respondent”;
[14] “they [Mr and Mrs Skelin] should not be selling [the Vaucluse property]” (over Christmas), and that I did not have any evidence as to assertions made by Ms Stewart and instructors, which Mr Skelin submits was the Judge’s assumption “without evidence that [Mr Skelin] had an interest, and required him to prove that he did not; reversing the onus of proof”.
Several of the above transcript references are not particularised in either 8 June particulars or 9 June particulars.
Transcript corresponding to the above references - so far as they are identifiable, together with surrounding passages of transcript of hearing on 17 December 2019, are set out in Annexure 4 to these reasons. The quoted passages are emboldened.
As I have already said (see above, reasons at [30] and [31]) Mr Skelin’s overarching contention is that the above were “findings … made in the context of the application of the Freezing Orders”, and these “involved the Judge accepting the applicants’ submission involving two propositions adverse to Mr Skelin”: that he “had been dealing in the counterfeit product”; and “that he could not be trusted not to attempt to make himself “judgment-proof” by taking steps to deal with his assets and defeat any judgment which might be obtained”.
Further to the comments which Mr Skelin contends I made and which are findings, he submits that the fair‑minded observer would take into account what he says are:
(a)the gravity of the allegations which I accepted the applicants had established, viz., counterfeiting involving Mr Skelin and others;
(b)the scepticism I expressed in response to Mr Skelin’s explanation;
(c)my view that Mr Skelin was reluctant to comply with the Court’s orders;
(d)the order that the Vaucluse property be subject to the Freezing Order when the applicants led no evidence that Mr Skelin had an interest in the property, when the evidence established that his wife had owned the property since 2002, and making the order against the wife without her being a party to the proceeding;
(e)making the Freezing Orders without articulating the factual basis on which I acted – particularly explaining how the wife could be restrained in relation to the property when there was no evidence that she held the property subject to any interest for her husband;
(f)that ordinarily a judge would not make an order as in (e) without evidence that Mr Skelin had an interest in the property; and without requiring the owner to be joined so that the judge could hear from her as to why such an order should be made; and without requiring the applicants to explain why such an order should be made without evidence;
(g)the factors in (f) might reasonably cause the fictitious bystander to apprehend that the explanation for my conduct was that I had concluded that the applicants’ case was correct and that consequently there was a reasonable doubt that I could reach a different view, or conclusion when having to decide the same issues on a final hearing.
Thus, he says, ground 1 is established; apprehended bias is made out.
Hearings on 17 and 18 December 2019, and Freezing Orders
The authorities direct attention to the context and circumstances in which the impugned comments of the judge are made. Annexure 4 comprises some of the immediate context in which the comments were said that are alleged by Mr Skelin to be findings that were made. It is relevant to bear in mind that those passages are only part of the whole, and it is knowledge of the whole with which the hypothetical observer is attributed: GetSwift at [34].
17 December 2019 hearing
The Freezing Orders were the subject of one of three applications in a case made by the applicants in December 2019, returnable before the Court for hearing on 17 December 2019:
(a)an application dated 12 December 2019 for alleged contempt by the third, fifth, and seventh respondents, for whom Mr Hallahan of counsel appeared on 17 December 2019 (he is incorrectly referred to in the transcript as Mr Hannon). During the hearing on 17 December 2019 this application was referred to as the contempt application;
(b)a second application also dated 12 December 2019 pursuant to which the applicants sought freezing orders until further order against 5 respondents (the third, fourth, fifth, sixth (Mr Skelin), and seventh respondents) in the sum of $2.5 million, and ancillary orders for disclosure of information. This application was referred to as the freezing application; and
(c)a third application dated 16 December 2019 directed against those same respondents in respect of certain trade mark and domain name applications made by one or more of them. This application was referred to as the trade mark application.
On both 17 and 18 December 2019, the applicants and the potentially affected 5 respondents were represented by counsel with their instructing solicitors present. Mr Shea, solicitor, appeared for the first and second respondents, and at his request was excused, as the applications did not concern his clients. Ms Stewart of counsel appeared for Mr Skelin and the fourth respondent, Freezeframe China Co, instructed by Thomson Geer, solicitors. As I have said, Mr Hallahan of counsel appeared for the third, fifth, and seventh respondents, with his instructing solicitors, Resolve Litigation Lawyers. To complete the record of appearances, Mr Hennessy SC appeared for the applicants, instructed by Gilbert + Tobin.
The Freezing Orders record, relevantly, that the fourth respondent and Mr Skelin were served with the freezing application on 12 December 2019, and thereafter with the affidavits in support. The Orders further record that the legal representatives for the third, fifth and seventh respondents were informally served with the freezing application and affidavits in support on Court on the day. The transcript records that 17 December 2019 was the first occasion on which the fifth respondent had participated in the proceeding in any way.
The transcript of 17 December 2019 records that as a preliminary matter I informed the parties I had limited time available on the day and so might proceed a little bit faster than usual, and noting that it was the week before Christmas. It further records that shortly before lunchtime, having heard from the fifth respondent on his position (see below), Mr Skelin’s counsel, Ms Stewart, having flagged a timetable for pleadings and evidence, and made submissions concerning a subpoena to Ernst & Young relating to documents concerning her clients, and Mr Hennessy SC having referred to some of the evidence the applicants relied on for the orders sought by the applications (in respect of which Ms Stewart interposed observations about documents produced from Mr Skelin’s devices which Mr Hennessy SC identified), I sought a priority of what was to be covered in the day. The following exchange occurred at 12:30pm:
JUDGE:So I need from you a priority of what we are going to cover, given that Ms Stewart has indicated she has submissions. Now, Mr Hannon [sic] is in a different category, but of course by this afternoon he will speedread for three hours and he will be on top of it all. So can I just go to the applications – I think is probably going to the end first. What would I need to do if I am satisfied that there are things to do? And whilst I am on leave next week, Judge Manousaridis is the duty judge, and so the matter can – I wouldn’t say come back, but if there are – otherwise we’re into the new year, but I’m ‑ ‑ ‑
MR HENNESSY: I made it plain to my learned friend Mr Hannon over the break that the approach we’re seeking to adopt in obtaining relief today is to very much make it interim in nature, to get us over the next ‑ ‑ ‑
JUDGE:Break.
MR HENNESSY: ‑ ‑ ‑ break ‑ ‑ ‑
JUDGE:Yes.
MR HENNESSY: ‑ ‑ ‑ with a view ‑ ‑ ‑
JUDGE:And it can be made, you know, without admissions or ultimately ..... objections.
MR HENNESSY: Precisely. And it may then be varied either by – in the new year by agreement between the parties, or otherwise with the benefit of some more evidence.
The transcript also shows that later that day I informed counsel that I would be returning to Chambers on 10 January 2020, and that I assured the parties the duty judge would be available over the Christmas / New Year period. According to the transcript on 17 December 2019 Court commenced at 9:40am, adjourned for 40 minutes around 11am, then sat until 12:46pm, resumed at 4:11pm, and continued until 8:42pm, with a short break from 6:07pm.
The first issue ventilated in Court on 17 December 2019 was the fifth respondent’s position, including awareness of the applications in a case, the proceeding, Court documents, and previously made orders, and whether (and if so when) service had been effected, or those documents were otherwise made available to him, including by email by Mr Skelin on 29 October 2019.
At the commencement of hearing on 17 December 2019, Mr Hennessy SC, for the applicants, described the context in which the matter came before the Court on 17 December 2019, following the 25 October 2019 Orders, and the November interlocutory hearings and document production regimes, as follows:
MR HENNESSY: … There was then a notice to produce issued to those respondents in respect of his [Mr Skelin’s] affidavit. It was resisted but, ultimately, got production. And as I understand it, what has been happening is there has been production in tranches held up, so to speak, by the fact that the position the fourth and sixth respondents took was that they wanted their solicitors to review all documents prior to it being produced in a tranche. And so, that has taken some time. And we’ve now had the opportunity to review that material as it has come in.
And that has, effectively, turned what have been all along very strong suspicions about what has been going on in this matter into a strong foundation for the interlocutory relief that we’re seeking today because, in essence, there is now very strong evidence of internal admissions about the running of a counterfeit operation. And I will take you to the evidence in due course, of course. But what it reveals, you may remember way back when
that the pivotal date was February 2019 when the distribution agreement came to an end.
And what it reveals is plans being made at around that time, and then following the break-up of the distribution agreement to, effectively, continue albeit with counterfeit product because, of course, the authentic stock ceased to be supplied to the respondents.
So that’s the context in which we then bring these three applications. The affidavits that we’ve filed effectively overlap with the various applications. And if I can, perhaps, first just identify for you ‑ ‑ ‑
…
JUDGE:Okay. We’re in the week before Christmas dealing with things on return.
MR HANNON: May it please.
JUDGE:And we will see how far it goes, but I’m not going to kick things into my leave period.
…
MR HENNESSY: May I just indicate, picking up on that observation, your Honour, that there is an element to which with each of these three applications it can be a graded approach, if you like. We’re not seeking all relief in each application today.
JUDGE:In toto [sic] today.
MR HENNESSY: Precisely.
I said I wanted to identify what applications I had before me, and which applications affected whom. Mr Hennessy SC thereafter identified the affidavits the applicants relied on, including the affidavit of Ms Claudia Louise Lewis of the applicants’ solicitors, Gilbert + Tobin, dated 13 December 2019. He identified the heart of the affidavit in the following terms:
MR HENNESSY: May I just draw your attention briefly to the – the heart of the affidavit is really just paragraphs 8 and 9. So in 8 she groups together some documents that have been reviewed from the production by the fourth and sixth respondents. Generally, so to speak, and by contract [sic] with paragraph 9 where she groups together documents that identify a connection, if you like, between the fourth and sixth respondents, on the one hand, and the first and second respondents on the other in terms of the provision of what we will contend are counterfeit products. And there’s material in the exhibits that we can come back to in due course, if it pleases the court.
Your Honour, that leaves, then, …
Mr Hennessy submitted:
If there’s one person that seems to ultimately be pulling all the levers when it comes to structure and finance, it’s Mr Wang… [that is, the fifth respondent, Mr Hallahan’s client.]
The transcript records that I was conscious of the time available to the Court, and the applications before it. The transcript records that after Mr Hennessy SC introduced in overview some of the material the applicants relied on, I responded:
Yes. Well that’s all very interesting. Well what are we going to do in the time we have?
Shortly thereafter I invited counsel to:
Take a moment to discuss so we can see what sensibly – if there’s – everyone is going to resist everything, well then we will deal with it in due course. But if there’s going to be some common sense and some attention paid to the rules, including case management principles which, of course we import from the Federal Court in this matter, then my task should be made a little bit clearer today.
The applicants read a number of affidavits (Ms Lewis’ affidavit is referred to above) to which were exhibited documents produced from forensic imaging of Mr Skelin’s electronic devices, which documents had been first reviewed by his solicitors, and released in tranches. The applicants also relied on parts of Mr Skelin’s affidavit affirmed 31 October 2019 further to the 25 October 2019 orders (as varied) and as to his awareness of other respondents, specifically Emilio Wang. Ms Stewart informed the Court Mr Skelin had affirmed a supplementary Norwich Pharmacal affidavit (affirmed 14 or 15 November 2019 - both dates are stated).
Mr Skelin did not read or tender any evidence at the hearing on 17 December 2019.
Considerable time was taken with Ms Stewart’s submissions in relation to her clients’ concerns with and desire for first access to documents produced on subpoena from Ernst & Young. Whilst documents had been produced to the Registry (not co-located with the Court), the Court had not been informed. The transcript records the progress with enquiries as to the practicalities of location and inspection (it then being after 5pm): see exchanges in Annexure 4.
The applicants submissions were summarised by Mr Hennessy SC (T94/18 to T95/5):
MR HENNESSY: Your Honour, the short point in support of our first application just in the freezing orders is to note that this in many respects a logical progression. To date, many of the orders that you have made have been designed to protect the subject matter of the dispute and we are now seeking, having been provided with many documents by Mr Skelin, to protect the proceeds of sale to ensure that their available assets might be recovered in circumstances where at the very least on one rational reading of the material produced by Mr Skelin the respondents have been dealing covertly and clandestinely in transactions both in the Australian and the Chinese markets and we do not have any confidence that the moneys earnt from those activities won’t be moved around and nor is there any evidence filed by any of the respondents to address these matters.
JUDGE:Now, they would say they didn’t have sufficient notice.
MR HENNESSY: Well, they might, but the reality is that the fourth and sixth respondents had their lawyers looking through those documents for an awful long time. We haven’t even completed looking through the documents but thought that we had no option but to move as soon as we could. And it had plenty of time because any experienced lawyer looking at this material would have known that at the very least his or her client was going to be experiencing considerable difficulties in light of everything that has preceded this application when it comes to counterfeits and so forth. We have made it plain, and I think we have made it plain, your Honour, this morning that the amount we are seeking is intended to be on an interim basis with a view whether by agreement or through argument having the amount revised upwards or downwards as the case may be when the parties have had time to look at further evidence and, in particular, on our application evidence in relation to the assets of the respondents.
The suggestion up until this evening or the position taken by the fourth and sixth respondents was merely to make a pleading point and say that because there was no statement of claim we weren’t somehow entitled to this order. We certainly suggest to your Honour there is no authority.
Later, in the course of submissions from Mr Skelin’s counsel, Ms Stewart, the following exchanges occurred (T136/46 to T137/46):
JUDGE:I have heard you several times on the fact of the amount, Ms Stewart.
MS STEWART: Yes. Yes, your Honour. And I don’t ‑ ‑ ‑
JUDGE:And Mr Hannon has said it’s excessive. What I’m looking from you – and I presume you say it’s excessive.
MS STEWART: Yes, your Honour.
JUDGE:What I haven’t heard from you is what you say is not excessive. And you may not have instructions on that, other than zero.
MS STEWART: I don’t have instructions on that point. But, your Honour, when there are clearly questions to be asked, your Honour – obviously, the case hasn’t closed and what any amount of damages or other award might be, but what is the right amount to prevent frustration or abuse of the process of the court? And I don’t have instructions on that specific number but, your Honour, given that this is a matter before the Federal Circuit Court, it is a matter which has gone on for approximately seven weeks. The applicants have been granted relief which includes, amongst other things, the equivalent of preliminary discovery, really, against those respondents in relation to whom there were not tracked [sic- “trap”?] purchases. And, in those circumstances ‑ ‑ ‑
JUDGE:I was persuaded that there was sufficient nexus from one respondent through to the other.
MS STEWART: Yes. I accept that, your Honour. Seven weeks has now passed, and there has been review of documents and so forth. The documents that your Honour has been taken to, it appears reasonable to assume that those are the high points.
JUDGE:Well, I think they’re sufficient appropriately for – Mr Hennessy would say or has been representing to me – the making of freezing orders.
MS STEWART: Accepting that, your Honour, the question then becomes ‑ ‑ ‑
JUDGE:What I am conscious of is what is reasonable in the circumstances and what the respondents propose to do in terms of participating in the proceedings.
MS STEWART: My instructions are, your Honour, that ‑ ‑ ‑
JUDGE:Other than require the applicants to do a pleading.
MS STEWART: Well, that in part, your Honour ‑ ‑ ‑
JUDGE:And say that the subpoena should be set aside.
MS STEWART: Yes, your Honour. And I am instructed that the sixth respondent would be prepared to put on a substantive affidavit.
In the above exchanges Mr Skelin, through his counsel, (a) accepts that there is a sufficient nexus from one respondent through to the other, in relation to the subject “tracked” [query whether mistranscribed, and should read “trap”] purchases – being the evidenced counterfeit product before the Court on 25 October 2019, and (b) accepts that the evidence before the Court on 17 December 2019 is sufficient for the Court to appropriately make freezing orders, and (c) proffers that Mr Skelin will be putting on a substantial affidavit. Quantum was at issue that day.
The transcript shows that shortly before 8pm on 17 December 2019, I informed counsel that it was apparent the Court was not going to get to any orders relating to the trade mark or contempt applications that night, and that I proposed the best course was for the parties to come back in the morning (that is, on 18 December 2019). I stated that the Court would make orders on the freezing application before rising, but I first required to hear from the applicants’ senior counsel in reply in relation to matters put by Ms Stewart.
I invited the parties to confer before the next Court appearance, and submit proposed orders relating to uplift, and access to subpoenaed documents produced by Ernst & Young, and to make inquiries of the Registry in the morning concerning access. I ascertained counsel’s availability the following day, heard shortly in reply, and further argument from Ms Stewart. Noting the mechanism in the draft orders for agreed variations, I made the Freezing Orders affecting the third, fourth, fifth, sixth (Mr Skelin), and seventh respondents, accepting Ms Stewart’s submission as to the inclusion of school fees, further to which she advised that Mr Skelin did not press any further increase in living expenses, and otherwise varying the amount and form of the draft freezing orders sought by the applicants.
The transcript on 17 December 2019 further records that whilst the mechanics of entering the orders were being attended to, I informed the parties I was proposing dates in mid-January 2020 for hearing of the outstanding applications, and from Ms Stewart if she wished to put on any evidence for any variation in the Freezing Order in terms of amount or in terms of the house (Vaucluse property):
JUDGE:And then the question, really, is the question for what I’m calling the contempt, but, really, which should now be called the subpoena application, and I am thinking of a date in the – around about 15 January, … so if that’s not suitable to the parties, then the later – …, but otherwise the following weeks are available. I should say registry staff is skeletal for the Federal Court and the Federal Circuit Court from throughout January. … Through to 3 February. …
JUDGE:… So that’s the – and in terms of any evidence for any variation in the freezing order in terms of amount or in terms of the house then, Ms Stewart, you’ve got – you’re on notice.
MS STEWART: Yes. Yes, your Honour.
JUDGE:But between today and tomorrow we have $2 million: $1 million each.
MS STEWART: And their house is currently included in the orders?
JUDGE:The house is currently included.
I reiterated that the Freezing Orders were made until further order, and said to Ms Stewart “but if there is something that [is] most relevant to be brought to [the Court’s] attention, again, Ms Stewart, it’s in your hands”. I informed Mr Hallahan similarly. I requested that if the question of subpoenaed material was not so urgent, Mr Hennessy could let Ms Stewart know, saying “If you’re not going to rely on that material tomorrow then I would rather Ms Stewart was focussed on whatever she needs to do, if she is wishing to varying the orders or if she’s not”, and noted that a confidentiality order was outstanding. I informed the parties that a number of unrelated other matters were listed before me in the morning on 18 December 2019. At 8:42pm I adjourned the matter to 18 December 2019, with a listing not before 11:30am:
The Freezing Orders were made on 17 December 2019 in the context of:
(a)the Court first being informed by the applicants that the amount sought was intended to be on an interim basis, with a view that it be varied by agreement or otherwise upwards or downwards when the parties have had time to look at further evidence;
(b)counsel being invited by the Court to confer, and having several opportunities to do so during the course of the day and evening;
(c)my saying in early evening, having heard from Mr Hennessy SC, and Ms Stewart (in part), “It seems to be the position – and I need shortly to hear from each of the respondents on the orders – I am inclined to make the orders … on an interim basis, but that interim basis will last until the new year. The questions that I have currently exercising my mind is… the amount and the reasonable expenses per respondent and other regimes that should go in place so that everyone has time to put on whatever evidence they wish to address the matter;
(c)Mr Skelin by his counsel accepting that the evidence supported the making of freezing orders (see [91]-[92] above); and
(d)my later saying upon making the orders that Mr Skelin, and by implication the other respondents restrained, could apply to vary or discharge the orders early in the 2020 New Year, including with the benefit of evidence.
As I have noted earlier in these reasons the fifth respondent obtained a variation of the Orders by consent on 24 December 2019.
18 December 2019 hearing
MS STEWART: I - - -
HER HONOUR: If that’s how I’ve understood the behavior in the past.
MS STEWART: Although there’s no suggestion there has not been full compliance with your Honour’s injunctive orders made on the 25th.
[10]
[12] MR SKELIN’S SUBMISSIONS “DRAGGED KICKING AND SCREAMING” TRANSCRIPT REFERENCE NOT PROVIDED
HER HONOUR: Some of the – that has had to – your clients have had to be kicking – dragged kicking and screaming to compliance.
MS STEWART: But they have complied. I don’t - - -
HER HONOUR: After being kicking and screaming.
MS STEWART: My understanding - - -
HER HONOUR: Or silently kicking and screaming, but taking their time and fighting. So we’ve taken that time. I don’t think – well, unlike the first and second respondents there has not been prompt cooperation that I have viewed from this side of the bench to that side of the bar table. The position may now have changed now that you and your instructor are involved, but it wasn’t before.
MS STEWART: I was not involved, your Honour. I will take your Honour’s - - -
HER HONOUR: No. No, you weren’t. And that’s what I say.
MS STEWART: Yes.
HER HONOUR: So you say what is missing is a link between the thought and action.
MS STEWART: In this case, that has not been - - -
HER HONOUR: Established.
6
[Transcript continued… page 86 line 13 to line 34]
12
MS STEWART: …to the point about this new allegation that appeared for the first time in Mr Williams’ seventh affidavit, that there is now an allegation of fraud and misappropriation of funds – forgive me, your Honour, I seem to have – sorry, your Honour. I will actually – and the allegation doesn’t get – it – this is what it states at 41, paragraph (c): Misappropriation of funds in the form of discounts or credits advanced by the applicants to these respondents for use in the development, manufacture and acquisition of the counterfeit products. That is a very specific, direct and serious allegation. And, in my submission, your Honour, that is one factor which justifies – as well as the $2.5 million of asset seizure - - -
HER HONOUR: Well, freezing.
MS STEWART: Sorry, freezing sought.
[11]
HER HONOUR: All that just means don’t take it out of the country.
MS STEWART: Yes, your Honour. But the relief sought must be proportionate to the evidence, and in my submission, your Honour, this type of - - -
35
[Transcript continued…page 87 line 1 to 31]
1
HER HONOUR: Well, you’re making these allegations and claims, but surely the best way forward for your client is to come up here and tell us what his story is, on oath.
MS STEWART: Well, your Honour, the - - -
HER HONOUR: We haven’t had any of that. You’re making statements from the bar t able.
MS STEWART: Well, I’m making statements that are - - -
HER HONOUR: You’re critiquing the material but there is nothing that I have that is going to support an alternative explanation from your clients.
MS STEWART: In my submission, your Honour, the documents which my client wrote, and I’m happy to take your Honour to those parts.
HER HONOUR: Well, I’m sorry, Ms – anyway, I think, Ms – it’s – there’s an opportunity for you to obtain something from your client and come on oath from your client. That would be good. It’s a matter for you. It’s a matter for your instructors how you wish to deal with that matter, but there may well be time for you to do that.
MS STEWART: Yes, your Honour. And, your Honour, I can also take you to the documents themselves.
HER HONOUR: Mr Hennessey hasn’t finished his claim.
MS STEWART: Yes, your Honour.
HER HONOUR: But I understand that you’ve got a claim for privilege in relation to the subpoenaed documents.
MS STEWART: Yes, your Honour.
32
[Transcript continued… page 88 line 15 to 16]
14
[12]
HER HONOUR: - - - not going into the argument. It’s late. We’ve all got other things to do, no doubt, including paying my staff afterhours and keeping the court open. So let’s continue.
17
[Transcript continued… page 88 line 25 to page 89 line 30]
24
HER HONOUR: I’m just thinking of a practical way through if those documents are able to be brought to this court.
MS STEWART: Yes, your Honour. I have those instructions.
HER HONOUR: That there’s a way through seeing whether it’s a storm in a teacup. I mean, we don’t know how many documents there are. It may be nothing more than what is already produced through, I presume, some different years, the 2017 year, and I can see rational reasons why you would have a comparator with the 27 and 2018 and the 29 year for that reason if no other. So this is normal trading, nothing outrageous or nothing different, you know. And that might be beneficial to your client. There may not be a lot of documents. There may be lots. Let’s see.
MS STEWART: May it please the court.
HER HONOUR: And let’s see, of course, if we can find them in the registry. We remain optimistic. Ms Stewart, I’ve noted I think the three matters that really come out of what you’ve just said is that fraud should be pleaded and particularised as per the rules before settlement – we get to any final relief in this matter. It certainly will have to be. Secondly, in relation to the subpoena, I may have put words in your mouth, but I understand that there is at least a – there’s a potential privilege claim. You won’t know till you’ve reviewed the documents. And the first step is first review.
MS STEWART: Yes, your Honour. There was also a relevance issue, but I’ve heard your Honour on that point.
HER HONOUR: Well, I haven’t seen the subpoena, so I’m a little bit at issue in the dark on the relevance, but I’m just saying if it’s from 2017 I would see a comparator which would be at the level of relevance for a subpoena - - -
MS STEWART: I hear your Honour.
HER HONOUR: - - - rather than necessarily for admissibility in the hearing.
MS STEWART: I hear your Honour.
HER HONOUR: So that deals with those two matters. And then the third is really the critical eye and alternative or – alterative might not be the right word –
[13]
more the universe of explanation may be broader than Mr Hennessy is assertion.
MS STEWART: Yes. And any assumption that sales during the course of 2019 must be counterfeit products, there is simply no basis - - -
HER HONOUR: Yes. But it’s not an all or nothing.
MS STEWART: No. Or that there is even a blend of them. The evidence is unequivocally clear from Ms Amoroso herself that that press release was not issued until 6 December 2019, and was effective on 6 - - -
HER HONOUR: No. No. No. October.
MS STEWART: No. It was issued on 6 – I believe it’s 6 September, and it was effective - - -
31
[Transcript continued… page 90 line 38 to page 91 line 20]
37
HER HONOUR: Right. I just need some – well, Mr Hennessy, you’ve got some opposition there.
MR HENNESSY: Yes, your Honour. ..... the argument ..... prima facie case that your Honour weigh when they amend their application. But may I just give you a reference - - -
HER HONOUR: Yes, although remember, Ms Stewart wasn’t involved, so - - -
MR HENNESSY: No.
HER HONOUR: - - - it can’t come back to Ms Stewart.
MR HENNESSY: Well, but maybe they can renew their application to set aside the 25 October orders. But if I could just give you a - - -
HER HONOUR: I don’t Ms Stewart was taking it that far.
MR HENNESSY: May I just give you a reference in Ms Amoroso’s affidavit of 6 November 2019 to the status of her commercial relationship with, amongst others, the fifth and sixth respondents and EPAQ.
HER HONOUR: I’m not going on till midnight, you know.
MR HENNESSY: No. I’m wishing to just give you these references and then sit 15 down.
HER HONOUR: No, no, no, that’s fine, that’s fine. Just generally saying we’re all getting a bit over at this time of year stuff that it’s ..... I’m with Ms
Amoroso.
[14]
MR HENNESSY: Yes, Mr Amoroso, 6 November 2019.
21
[10] MR SKELIN’S SUBMISSIONS “ACTUAL PERSUASION” TRANSCRIPT REFERENCE BELOW (T98/20 – T99/10)
14
MR HENNESSY: But the point being this. Even when he has chosen not to be legally represented by Thomson Geer and its barristers, he - - -
HER HONOUR: He’s putting money - - -
MR HENNESSY: - - - he has to be asked by Mr Skelin and the fourth respondent to authorise payments to them. So he’s funding it all, it seems, on the face of this. And then last point then on risks is it’s plain that Mr Skelin on his own documents has demonstrated an intent to counterfeit Freezeframe products including the products that he specifically mentioned in the notes. The last observation is really this: that he – for anyone who has done a number of counterfeit cases, those documents of Mr Skelin’s are, in any event, quite extraordinary. They’re really if not in a class of their own – and it’s a fairly rare instance in which you see someone, really, brazenly setting out a business plan to counterfeit products and destroy the business of the owner.
HER HONOUR: Of their former - - -
MR HENNESSY: Yes.
HER HONOUR: - - - principal.
MR HENNESSY: And we would say that that gives rise to a really serious apprehension about just what he is prepared to do and that’s why it is appropriate to make sure that the order we seek in this particular application – the orders for freezing orders and the associated affidavit are made.
HER HONOUR: Yes.
MR HENNESSY: Because there is zero confidence one can have that any assets of his would be otherwise available when it comes to enforcing any damages award w might be fortunate enough to obtain. If it please the court.
HER HONOUR: And you say as against both – well, each of the individuals and their companies with which they’re so mutually involved because of the WeChat - - -
MR HENNESSY: Yes.
HER HONOUR: - - - connection.
MR HENNESSY: Yes. And then you see - - - [15]
HER HONOUR: And the - - -
11
[Transcript continued…page 98 line 35 to 41]
34
HER HONOUR: - - - principal.MR HENNESSY: And we would say that that gives rise to a really serious apprehension about just what he is prepared to do and that’s why it is appropriate to make sure that the order we seek in this particular application – the orders for freezing orders and the associated affidavit are made.
HER HONOUR: Yes.
42
[Transcript continued… page 99 lines 1-10]
1
HER HONOUR: And you say as against both – well, each of the individuals and their companies with which they’re so mutually involved because of the WeChat - - -
MR HENNESSY: Yes.
HER HONOUR: - - - connection.
MR HENNESSY: Yes. And then you see - - -
HER HONOUR: And the - - -
11MR HENNESSY: And I should have pointed out – I don’t want to single out Mr Skelin for special attention. Mr Wang as late as today is having you – sorry, I don’t say that disrespectfully – having the court told, on instructions, that he’s in China.
[Transcript continued… page 103 lines 11 to 19]
[8] MR SKELIN’S SUBMISSIONS “BURSTING TO MAKE SUBMISSIONS”, “INCLINED”, “EXERCISING MY MIND”, “IS THE AMOUNT AND THE REASONABLE EXPENSES PER RESPONDENT” TRANSCRIPT REFERENCES BOLDED BELOW
10
HER HONOUR: Yes. Well, what I’m proposing to do is – I know, Ms Stewart, you’re bursting to make some submissions, but – she’s ..... very well. It seems to be the position – I haven’t asked Mr Hannon what his position is on the matter, but let me say with – and I need shortly to[16]
hear from each of the respondents on the orders –I am inclined to make the orders. Your – and I’m inclined to make them on an interim basis, but that interim basis will last until the new year. The questions that I have currently exercising my mind is whether – is the amount and the reasonable expenses per respondent and other regimes that should go in place so that everyone has time to put on whatever evidence they wish to address the matter.
20
The above transcript took place in the context of Ms Stewart’s expressed concern about the subpoena to Ernst & Young, and resulted in orders being made by consent on 18 December 2018.
[Transcript continued… page 127 line 30 to page 129 line 36]
29
HER HONOUR: Why don’t you just tell me what the first words of the paragraph are?MS STEWART: The first words are: The property known as 30 Russell Street, Vaucluse.
HER HONOUR: Yes.
MS STEWART: My instructions - - -
HER HONOUR: D.
MS STEWART: My instructions are - - -
HER HONOUR: 3A, 3D.
MS STEWART: I – yes, or is it 4?
HER HONOUR: Anyway - - -
MS STEWART: Yes.
HER HONOUR: Whatever number it is.
MS STEWART: Yes, your Honour. That property – and this appears to be conceded by the applicants – is owned by the 6th respondent’s partner, shall we say, and has been for 17 years.
HER HONOUR: Excellent.
MS STEWART: This is not a recent movement, but, obviously, she is not a party.
The family live there with their dependent children.
[17]
[14] MR SKELIN’S SUBMISSIONS “SO THEY SHOULDN’T BE SELLING IT” TRANSCRIPT REFERENCE BOLDED BELOW (T128/16)
HER HONOUR: So they shouldn’t be selling it?
MS STEWART: In my submission, your Honour, it’s not an appropriate asset. This person is a stranger to the proceedings. She’s not involved. She’s not represented. It’s the family home where a spouse and dependent children - - -
HER HONOUR: And I don’t have any evidence.
MS STEWART: I – well, that evidence, your Honour, could come from the – the affidavit that’s foreshadowed to be filed if it needs to be, but it’s – I understand, your Honour, it’s not in contention. My – the applicants appear to have conducted a title search.
HER HONOUR: It was, wasn’t it – but it was the - - -
MR HENNESSY: Registered office.
HER HONOUR: It’s – I’m sorry, Mr Hennessy.
MR HENNESSY: Sorry.
HER HONOUR: As I was about to say - - -
MR HENNESSY: Sorry. Sorry.
HER HONOUR: - - - it was the registered office of, at least, I thought, the 4th respondent, was it? And, until recently, possibly the – let me get my notes – seventh respondent.
MS STEWART: And that was – I presume, I don’t have specific information on
this, but that is because the sixth respondent, that was his residence.
HER HONOUR: But the seventh respondent is - - -
MS STEWART: The sixth respondent was formerly a director of the seventh respondent but ceased to be so - - -
HER HONOUR: Okay.
MS STEWART: I can check the date, your Honour, but, from memory, around 2018.
HER HONOUR: 15 June 2018.
MS STEWART: And that is the explanation for that. But it is, I am instructed, a residence where a family live with dependent children. And there can be no suggestion that there has been movement of assets deliberately in relation to these proceedings where that property has been owned by the same person for 17 years.
HER HONOUR: Well, that’s why this is here to make sure it doesn’t happen.
MS STEWART: Yes.
HER HONOUR: Right.
MS STEWART: And so, in my submission, your Honour, that paragraph ought to be deleted.
HER HONOUR: Because it’s not his.
MS STEWART: Precisely, your Honour. It’s owned by another person and has been for 17 years. It’s a residence and dependants live there.
HER HONOUR: Well, doesn’t it tie into a (1) all your assets, whether or not they’re in your name?
MS STEWART: It would be caught, your Honour, and that’s precisely my point.
HER HONOUR: Yes, indeed. Yes.
37
[Transcript continued… page 136 line 30 to page 137 line 47]
29
HER HONOUR: Well, the point about a freezing order is that while that’s going on, money doesn’t move.
MS STEWART: I appreciate that, your Honour, but - - -
HER HONOUR: So why should I be persuaded by what you say to allow money to move?
MS STEWART: $2.5 million. Your Honour, I don’t wish to – your Honour knows this. The purpose of a freezing order is to prevent frustration or abuse of the processes of the court, not to provide security in respect of a judgment or order. The question for the court is whether an amount should be frozen of $2.5 million to prevent frustration or abuse of the process of the court. If your Honour is not satisfied in relation to $2.5 million - - -
HER HONOUR: I have heard you several times on the fact of the amount, Ms Stewart.
MS STEWART: Yes. Yes, your Honour. And I don’t - - -
HER HONOUR: And Mr Hannon has said it’s excessive. What I’m looking from you – and I presume you say it’s excessive.
MS STEWART: Yes, your Honour.
[19]
HER HONOUR: What I haven’t heard from you is what you say is not excessive. And you may not have instructions on that, other than zero.
MS STEWART: I don’t have instructions on that point. But, your Honour, when there are clearly questions to be asked, your Honour – obviously, the case hasn’t closed and what any amount of damages or other award might be, but what is the right amount to prevent frustration or abuse of the process of the court? And I don’t have instructions on that specific number but, your Honour, given that this is a matter before the Federal Circuit Court, it is a matter which has gone on for approximately seven weeks. The applicants have been granted relief which includes, amongst other things, the equivalent of preliminary discovery, really, against those respondents in relation to whom there were not tracked purchases. And, in those circumstances - - -
HER HONOUR: I was persuaded that there was sufficient nexus from one respondent through to the other.
MS STEWART: Yes. I accept that, your Honour. Seven weeks has now passed, and there has been review of documents and so forth. The documents that your Honour has been taken to, it appears reasonable to assume that those are the high points.
HER HONOUR: Well, I think they’re sufficient appropriately for – Mr Hennessy would say or has been representing to me – the making of freezing orders.
MS STEWART: Accepting that, your Honour, the question then becomes - - -
HER HONOUR: What I am conscious of is what is reasonable in the circumstances and what the respondents propose to do in terms of participating in the proceedings.
MS STEWART: My instructions are, your Honour, that - - -
HER HONOUR: Other than require the applicants to do a pleading.
MS STEWART: Well, that in part, your Honour - - -
HER HONOUR: And say that the subpoena should be set aside.
MS STEWART: Yes, your Honour. And I am instructed that the sixth respondent would be prepared to put on a substantive affidavit.
48
[Transcript continued… page 138 line 14 to page 140 line 17
13
MS STEWART: Yes, I anticipate so, your Honour. The – but essentially the intention is to defend the matter.
[20]
HER HONOUR: Absolutely. I’m assuming so.
MS STEWART: Indeed, but if your Honour would not make an order to – in the amount of $2.5 million based on the evidence that your Honour has seen to date, then - - -
HER HONOUR: On the other hand, if I do make an order of $2.5 million the parties’ minds will be sharpened.
MS STEWART: With respect, your Honour, I am not certain that that is contemplated by the - - -
[11] MR SKELIN’S SUBMISSIONS “CONSIDERABLE CONCERN” TRANSCRIPT REFERENCE BOLDED BELOW (T138/30)
HER HONOUR: I mean, I’ve got – the documents that I’ve seen and the things that are said in it have caused, with respect, considerable concern.
MS STEWART: Yes, your Honour.
HER HONOUR: That’s the position. I appreciate that you’re saying that there may be a number of ways to construe the documents and that they may be simply internal, but they were there. They were stated and they’ve been worked upon. They’ve been worked upon over a period of months once the relationship disintegrated and terminated, and thereafter there were product which I was persuaded, a counterfeit in the market, through parties for whom there has been sales relationships between the various respondents. I’m not articulating, you know, particular ones.
MS STEWART: Yes.
HER HONOUR: That causes me concern.
MS STEWART: For the purposes of - - -
HER HONOUR: And I have seen that there is considerable money being transferred on sales and the like. So - - -
MS STEWART: For the sales of the legitimate product that were purchased.
HER HONOUR: Well, sales. I’m just going to say sales of product.
MS STEWART: Yes, but in relation to the - - -
HER HONOUR: And I understand from you that there is overtime. Mr Skelin will provide – will put his case.
[21]
MS STEWART: Yes, but in relation to the case put by the applicants, there’s no – there does not appear to be any infringing conduct on the evidence as currently before the court the court that could possibly have commenced before July.
HER HONOUR: I’m not persuaded about that, Ms Stewart.
MS STEWART: May it please the court.
HER HONOUR: I’m not persuaded that there is a cut-off date of, you know, July
2019 or August 2019, given the thinking going on forward. I notice in this document, this last one – I’m sorry, this is the one that commences at page 124, there seems to be a distinction between FF and Self Care, and it’s almost like FF is Mr Skelin’s company side of the matter, and then we get to SC that I’m reading as Self Care. So maybe I’m incorrect on that. So I’ve just randomly looked at a number on a page that jumped out at me and then I was working backwards and forwards, but, for example, at page 133, item 243 has: Table to SC without our margin. FF Kaola calculations. And so then the next page, 135: FF, move all emails across from SC to E-PAC now in case she shuts off my 35 email. That’s at number 296. 297: FF NAB business loan. Take out for FF. Find out how much we can take out and replace SBFF. NAB loan docs for business facility. So there’s a lot in these – material that I’m not going to – I don’t see the need to go into at the moment. So I hear the point on the dollar amount and on the – $3.3 amount, reasonable expenses, the dates of the accounts, four points, and the house.
MS STEWART: Yes, your Honour.
HER HONOUR: Have I got those - - -
MS STEWART: Yes, your Honour.
HER HONOUR: Right.
MS STEWART: Thank you, your Honour.
HER HONOUR: Thank you very much. Could you just pause for a minute. I just need to see my associate. We’re not going to get to the other trademark orders tonight. Mr Hennessy. And unless we have big objections on the contempt orders, I think the best course is for parties to come back in the morning. I am going to make orders on the freezing. I can make those now. I am going to hear from you, however, Mr Hennessy, if you have anything to answer in relation to Ms Stewart’s points because I am currently ..... to say 2.5 million, or whatever, was too much – don’t know.
MR HENNESSY: The difficulty with the approach from the fourth - - -
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[Transcript continued…142 line 20 to line 46]
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MR HENNESSY: Your Honour would perhaps just note in the very next paragraph, there’s a mechanism for agreed variations.
HER HONOUR: Yes.
MR HENNESSY: Otherwise the short fact of the matter is that there has been no attempt on the expenses side to meaningfully adjust from 2000 upwards, other than effectively just submissions from the bar table, including characterising Mr Skelin’s partner as a dependent, which we don’t know about. And otherwise assuming - - -
HER HONOUR: I think dealing with the school fees should do it.
MR HENNESSY: Yes. And otherwise assuming, for example, that the house shouldn’t be there. Who knows whose – whose funds went into acquiring the house.
HER HONOUR: Well, if it’s a dependent, it would have been his.
MR HENNESSY: It may or may not. We don’t know. But that’s all the sort of information Mr Skelin can provide us with in due course. But there’s no proper basis with respect to increase from 2000 to the four and a half. So that’s just a – just a request in circumstances where it was completely open to the fourth and sixth respondents to put on even the most basic evidence for you to consider this issue. And they’ve just eschewed the opportunity to do so. And we would submit that you – you ought not alter that amount.
MS STEWART: Your Honour, I’m instructed that now that the school fees issue has been dealt with, that the $2000 is not opposed.
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[Transcript continued… page 143 line 5 to line 17]
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HER HONOUR: I’m not taking anything as consent, Ms Stewart.MR HENNESSY: And that takes two and a half million. And even now there is no attempt to articulate why it is that any other amount should be charged, so in other words, the only thing that the respondents, but particularly the fourth and sixth respondents who seem to have the running mainly in the respondents camp this argument can do is point to some evidence – four pieces of evidence that had nothing to do with the 2.5 million.
HER HONOUR: Well, I think Ms – Ms Stewart’s fundamental point is that the respondents were dealing in genuine Freezeframe products and were
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dealing in considerable amounts of Freezeframe products, prior to 31 March 2019. And there’s insufficient evidence to say that everything thereafter is non-genuine.
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[Transcript continued… page 143 line 35 to page 144 line 14]
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MR HENNESSY: Sorry. It’s no criticism of your Honour, but your Honour had to ask. Your Honour had to ask in circumstances where you would have thought the very first thing that a respondent would do is to – short of just deposing and saying that there should be no fee at all – sorry, no amount at all – is to try and assist the court by identifying, “Well, what should the amount be, then, instead?”, but there’s not attempt to do that at all.
HER HONOUR: Well, I think because Ms Stewart opposes the amount.
MR HENNESSY: And I – no, well, opposes – directed her arguments not at, “don’t insert any amount at all”, but “don’t order 2.5”, and then has to be asked, because she couldn’t address it other, “Well, what is the amount that you say?”, and then the answer is, “Well, I don’t have any instructions on that”, and that’s just consistent with the 4th of the 6th respondents’ approach to this application, because in the time – it – I really – look, I’m on my feet. You will have a minute.
HER HONOUR: No, I’m sorry. I was not looking, so - - -
MR HENNESSY: No, your Honour. I’m just trying to address your – but there’s been no attempt – even today, with the luxury of a couple of hours that the parties managed to obtain in the middle of the day – no attempt to try and get on some quick evidence from Mr Skelin to try and address this at all, and in circumstances where we can point you, amongst other things, to the 4th respondent making sales of $1 million in the third quarter of 2019 alone, we would have thought that 2.5 is, as I said, a proportionate amount against which we should be secured.
HER HONOUR: Sorry. You – what was that? That was $1 million.
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[Transcript continued… page 146 line 6 to 47]
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HER HONOUR: I have the statement at paragraph 14 of the first affidavit – the affidavit of 31 October 2019, which is the high point – the statement – that’s all the evidence I have.
Sold all its product stocked at Freezeframe Hong Kong. Mr Skelin could have told us when, but he didn’t.
MS STEWART: But he is prepared to give additional evidence if - - -
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HER HONOUR: But he didn’t at that time. He could’ve. He should’ve. He didn’t.
MS STEWART: Well, he may not know when it was sold to Hong Kong.
HER HONOUR: It’s his company. I’m a director of the 4th respondent, Freezeframe Australia.
MS STEWART: Yes, but once those products are sold to Hong Kong, presumably - - -
HER HONOUR: They’re not in Freezeframe Australia’s – they’re not in its possession – custodial control – and he would know when he sold them, so that when I’m - - -
MS STEWART: Into Hong Kong.
HER HONOUR: - - - looking at a quarterly activities statement for a period July
2019 to September 2019 in circumstances where Mr Skelin hasn’t told me when he sold them, why should I infer favourably to your client that those products – that the money, indeed, presumably, considering that he had previous said that the period November 2016 to March 2019 were 100 purchase orders with a total cost of $22 million.
MS STEWART: And that is, your Honour – in my submission, is because those two affidavits were the Norwich Pharmacal affidavits. They were directed quite particularly at certain orders that were made. So that – they’re not – they’re responding to the Norwich Pharmacal orders that were made.
HER HONOUR: Well, that’s the evidence I have.
MS STEWART: Yes. Yes, your Honour. I accept that. I can’t put that any higher.
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[Transcript continued… page 138 line 29 to 44]
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HER HONOUR: I mean, I’ve got – the documents that I’ve seen and the things that are said in it have caused, with respect, considerable concern.
MS STEWART: Yes, your Honour.
HER HONOUR: That’s the position. I appreciate that you’re saying that there may be a number of ways to construe the documents and that they may be simply internal, but they were there. They were stated and they’ve been worked upon. They’ve been worked upon over a period of months once the relationship disintegrated and terminated, and thereafter there were product which I was persuaded, a counterfeit in the market, through parties for whom there has been sales relationships between the various respondents. I’m not articulating, you know, particular ones.
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MS STEWART: Yes.
HER HONOUR: That causes me concern
MS STEWART: For the purposes of - - -
HER HONOUR: And I have seen that there is considerable money being transferred on sales and the like. So - - -
MS STEWART: For the sales of the legitimate product that were purchased.
HER HONOUR: Well, sales. I’m just going to say sales of product.
MS STEWART: Yes, but in relation to the - - -
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(I note that several of the above transcript references were not particularised in either 8 June particulars or 9 June particulars.)
The above transcript references are extracted from the transcript of hearing on 17 December 2019, and included in context in surrounding transcript in Annexure 4 to these reasons.
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SCHEDULE OF PARTIES
SYG 2771 of 2019 Respondents
Fourth Respondent:
FREEZEFRAME CHINA CO PTY LTD ACN 621 016 975
Fifth Respondent:
KEFEI (EMILIO) WANG
Sixth Respondent:
PASCAL SKELIN
Seventh Respondent:
EPAQ INTERNATIONAL OTY LTD ACN 608 870 588
Eighth Respondent:
QUANJIAN PTY LTD
Ninth Respondent:
YIPING YANG
Tenth Respondent:
TAOYU PAN
Eleventh Respondent:
KEFEI (IVAN) WANG
Twelfth Respondent:
ZUREN INTERNATIONAL PTY LTD
Thirteenth Respondent:
SIQI HUO
Fourteenth Respondent:
YULIN WANG
Fifteenth Respondent:
E-GO CHANNEL PTY LTD
Sixteenth Respondent:
AUSTRALIAN VITAMIN PLUS PTY LTD
Seventeenth Respondent:
YAN (CYNTHIA) LI
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