Thorneton Avenue Pty Ltd v Body Corporate for the Avenues CTS 19609
[2013] QCAT 173
| CITATION: | Thorneton Avenue Pty Ltd v Body Corporate for the Avenues CTS 19609 [2013] QCAT 173 |
| PARTIES: | Thorneton Avenue Pty Ltd (Applicant) |
| v | |
| Body Corporate for the Avenues CTS 19609 (Respondent) |
| APPLICATION NUMBER: | OCL155-10 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | 18 April 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Dr J R Forbes, Member |
| DELIVERED ON: | 18 April 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Thorneton’s application for an order setting aside the REIQ’s appointment of Delwyn Ross Linkhorn as valuer is dismissed. 2. Each party shall provide the Tribunal and the other party with true copies of all information in writing that it delivers to the valuer to assist him in the preparation of his report. 3. If the valuer requests discussion or inspection with a party (or its representative) in person, that discussion or inspection shall take place wholly in the presence of the other party (or its representative) or with the absent party’s prior written consent. 4. Each party shall promptly provide the other party and the Tribunal with a full and true account of every non-documentary communication by it with the valuer. 5. The costs of appointment of the valuer, and of the valuation, shall be borne by the parties in equal shares. 6. The costs of any relevant report obtained by the valuer from another person (not being a party to these proceedings) shall be borne by the parties in equal shares, provided that the valuer shall give the parties seven (7) days’ notice in writing of his intention to obtain any such report. 7. The valuer shall deliver his report to the parties and to the Tribunal by 4 pm on Thursday 30 May 2013, or within such extended time as the parties agree, or the Tribunal orders. 8. The Directions issued on 23 February 2013, in so far as they remain relevant, are hereby withdrawn. 9. Costs of this application are reserved. |
| CATCHWORDS: | OTHER CIVIL DISPUTE – community home unit complex - remuneration of caretaker – right to review same disputed – contract providing for agreed valuer – no agreement - order for appointment of valuer by Real Estate Institute of Queensland – valuer appointed by REIQ – application to set aside appointment – apprehended bias claim – different application of apprehended bias principle to courts and other decision makers discussed – application for disqualification of REIQ appointee refused Queensland Civil and Administrative Tribunal Act 2009, s 32 Able Demolitions and Excavations Pty Ltd v State of Victoria [2004] VSC 511 Chu v Minister for Immigration and Ethnic Affairs (1997) 78 FCR 314 Crewdson v Department of Community Services (NSW) (No 13) (2006) 152 IR 42 Gascor v Elliott [1977] 1 VR 332 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 Morelite Construction Corp v New York City District Council Carpenters Benefit Funds 748 F 2d 79 (1984) Najjar v Haines (1991) 25 NSWLR 224 R v George (1987) 9 NSWLR 527 Re Polites; Ex parte Hoyts Corporation Pty Ltd (1991) 173 CLR 78 Re Renaud; Ex parte CJL (1986) 161 CLR 342 S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358 South Western Sydney Area Health Service v Edmonds [2007] NSWCA 16 Thorneton Avenue Pty Ltd v Body Corporate for the Avenue [2013] QCAT 39 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
REASONS FOR DECISION
History
These protracted proceedings were commenced on 1 October 2010. The principal relief sought by Thorneton Avenue Pty Ltd (“Thorneton”), caretaker of the Respondent (“The Avenues”) was a ruling that it is entitled to a market remuneration review for the year 5 April 2009 to 4 April 2010.
The hearing commenced on 2 April 2012 and occupied three days. Lengthy written submissions followed; they were completed on 15 October 2012.
On 15 January 2013 I granted the principal relief, and made incidental orders. One such order was for the appointment of a valuer, pursuant to the caretaking agreement in question.
In the absence of an agreed selection of a valuer the parties, in accordance with their agreement and the order of the Tribunal, requested the President of the Real Estate Institute of Queensland (“REIQ”) - an office now exercised by the Chief Executive Officer of the Institute (“the CEO”) - to appoint a suitable person for that purpose.
Thorneton proposed the appointment of Mr Gregory Jorgenson of Australian Valuers Pty Ltd, Brisbane. The Avenues did not accept that proposal.
The Avenues proposed Mr Barry Richard Turner of B & D Turner Pty Ltd, Doonan, or Mr Delwyn Ross Linkhorn, of Resident Building Services, Maroochydore. Thorneton did not accept either proposal.
On 6 March 2013 the CEO appointed Mr Linkhorn to perform the requisite valuation. Upon acceptance of the appointment, Mr Linkhorn gave the REIQ a written assurance that he had “no conflict in the matter by reference to the identity” of the parties.[1]
[1]Affidavit of M J Kleinschmidt filed 12 March 2013 annexure MJK7 “Nomination of ... Valuers”, paragraph 6.
Application to remove appointed valuer
On 13 March 2013 Thorneton applied to the Tribunal for an order, inter alia, that the appointment of Mr Linkhorn be set aside, upon the ground of apprehended bias, or conflict of interest. Thorneton summarises its case as follows[2]:
The basis of the application rests solely on grounds of fairness. [Mr Linkhorn] has a conflict of interest in acting in this matter. [He] is biased in favour of [the Avenues]. There exists a real and genuine perception on the part of [Thorneton] that [Mr Linkhorn] is biased against them [sic]. In the premises, it would not accord with ideas of fairness and would not be in the interest of natural justice if the appointment of [Mr Linkhorn] was not set aside and an independent valuer appointed in his stead.
[2] Submissions of Thorneton 8 April 2013 paragraph 3.
For the purposes of this application I shall assume, not without doubt, that I have jurisdiction to remove a valuer appointed in accordance with the caretaking contract.
The Main allegation
The gravamen of Thorneton’s claim of apprehended bias is a bald allegation that “Mr Linkhorn is a partner of Mr Turner”.[3] The implicit point is that Mr Turner, in 2006, and again in 2008, assessed the remuneration of caretakers (other than Thorneton) pursuant to the caretaking agreement.
[3] Submissions of Thorneton 8 March 2013 item 1.
The Avenues meets the partnership allegation head-on:
Mr Linkhorn and Mr Turner are not business partners and this fact was ascertainable by [Thorneton] before the valuer application was made, through simple and near instantaneous searches of public data bases.[4]
[4] Submissions of the Avenues 12 March 2013 paragraph 3.2(4).
In an affidavit[5] tendered on behalf of The Avenues its solicitor deposes:
On 11 March 2013 I caused to be conducted a search of the business names register maintained by the Australian Securities and Investments Commission in relation to “Building Management Consultancy & Services”. I also caused to be conducted a current company search of the ASIC company register of the holder of the business name, B & D Turner Pty Ltd. Annexed to this my affidavit and marked “MJK15” are a copy of the search results.[6]
[5] Filed 12 March 2013.
[6] Affidavit of M J Kleinschmidt filed 12 March 2013, paragraph 20.
The search results marked “MJK15” disclose that the “organisation name” for Building Management Consultancy and Services is B & D Turner Pty Ltd. The officers of B & D Turner Pty Ltd are Barry Richard Turner and Desley Estelle Turner, each described as director and secretary. The holders of the two issued shares in the company are Barry Richard Turner and Desley Estelle Turner.
Mr Kleinschmidt also initiated a search of ASIC records of the partnership business Resident Building Services.[7] Only two partners are recorded, namely Delwyn Ross Linkhorn and Yvonne Myrtle Linkhorn, as from 16 June 1995.
[7] Affidavit of M J Kleinschmidt filed 12 March 2013 exhibit MJK16.
Thorneton filed further submissions on 8 April 2013, in reply to those filed by The Avenues on 12 March 2013. They do not contest Mr Kleinschmidt’s evidence on the partnership question. I accept that evidence, and I am satisfied that the partnership allegation is baseless.
Main allegation refuted
The demolition of that allegation leaves Thorneton relying on the admitted fact that, in May 2006, Mr Linkhorn assisted Mr Turner to prepare a report recommending that the then caretakers’[8] salary be increased. Mr Turner made a similar report in July 2008. However, Turner declares (and I find) that he was sole author of the 2008 report[9]; it was signed by him alone.[10]
[8] Gerald and Robyn Godwin.
[9] Exhibit 23, statement of Turner, paragraph 18.
[10] Contrast the 2006 report, signed by both Turner and Linkhorn.
Apprehended bias – the test
The test of apprehended bias is not what a possibly hypersensitive claimant perceives.[11] The question here is not whether there is “a real and genuine perception [of bias] on the part of [Thorneton]”[12] or whether “at the very least [Thorneton is] convinced that [Linkhorn] is biased against them and ... conflicted”,[13] but what a disinterested and adequately informed bystander might reasonably suspect. Would that hypothetical, fair-minded person
reasonably apprehend that the [valuer] would not bring an impartial and unprejudiced mind to the resolution of the question [he] is required to decide?[14]
[11]S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358 at 374 per Kirby P.
[12] Submissions of Thorneton 8 April 2013 paragraph 3.
[13] Submissions of Thorneton 8 April 2013 paragraph 13.
[14] Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at 437.
There are, of course, numerous statements of high authority to the same effect.[15] The present task is not simply to recite and re-recite the overarching principle, but to apply it to the facts and circumstances of the instant case. In that process there are two steps: first, to identify the event or circumstance that might give rise to bias, and second, to show a “logical connection between [that] matter and the feared deviation from the course of deciding ... on the merits”.[16]
[15]Including R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 262; Stollery v Greyhound Racing Control Board (1972) 128 CLR 509 at 519; Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293-294; Re Finance Sector Union of Australia; Ex parte Illaton Pty Ltd (1992) 66 ALJR 583; Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344; McGovern v Ku-ring-gai Council (2008) 72 NSWLR 504.
[16]Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 345 per Gleeson CJ, McHugh, Gummow and Hayne JJ.
Valuer’s role non-partisan
There is an important aspect of this case to which the parties have not referred. It limits the assistance to be derived from cases about advisers proposing to “change sides”, or decision makers with a demonstrable propensity to favour one party to a dispute.
The aspect to which I refer is this: When Turner and Linkhorn examined the parties’ materials and made their recommendations in May 2006 they were not acting ex parte, or arbitrating between parties to a dispute. Rather, they were assisting each party to perform its agreement to revise the caretaker’s salary from time to time. There is no suggestion that the Godwins and The Avenues were adversaries when the Godwins’ remuneration was revised in 2006 or 2008. On each occasion Mr Turner had amicable discussions with the parties before the report was made.[17] There is no suggestion that the Godwins were dissatisfied with the results; on the contrary, they signed acceptances of the increases granted, decided not to seek more money, and declined to press for an increase when Thorneton urged them to do so.[18]
[17]Exhibit 3 paragraphs 19 and 22; Transcript of hearing paragraphs 6.557, 6.551 (Turner).
[18]Transcript of hearing 3.350-3.359, 3.503, 3.522, 3.568, 3.572, 3.595 3.756 (Mr Godwin), Exhibit 8 paragraph 4, Exhibit 9, paragraph 9.
The Turner-Linkhorn report was not a judgment for The Avenues or against the caretaker, or vice versa. It was a service to both parties to enable them to perform their contract. Information from either party was received for that mutual purpose, as the forthcoming valuation will be. Hence there is no foundation for a reasonable suspicion of bias or conflict of interest.
Application of the bias test – reasonable expectations vary
If the above is not a sufficient answer to Thorneton’s submissions, and if, after all, there is some basis for raising an issue of apprehended bias, that is by no means the end of the matter.
Even where professional judges are concerned, modern authorities warn against the encouragement of forum shopping by over-scrupulous findings of apprehended bias.[19] In Re Renaud; Ex parte CJL[20] Mason J declared:
It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the [decision maker] will not decide the case impartially ... [and not] that he will decide the case adversely to one party ... Although it is important that justice must be seen to be done, it is equally important that [decision makers] discharge their duty to [decide], and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of the [decision maker] they will have their case tried by someone thought to be more likely to decide the case in their favour.
[19] Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 348.
[20] (1986) 161 CLR 342 at 352.
Mason J’s dicta were influential in R v George[21] and S & M Motor Repairs Pty Ltd v Caltex (Australia) Pty Ltd[22]. In George, Street CJ observed[23]:
It is plain from the law as stated in [Renaud] that ... judges should not too readily respond to protests advanced on the basis that they may not be able to discharge their judicial duties properly ... The reasonable apprehension of bias, which is the core of the test, turns very much on the adjective `reasonable’.
[21] (1987) 9 NSWLR 527 (NSW Court of Criminal Appeal).
[22] (1988) 12 NSWLR 358 (NSW Court of Appeal; leave to appeal High Court refused).
[23] (1987) 9 NSWLR 527 at 536, emphasis added.
In S & M Motor Repairs the court rejected an allegation of apprehended bias against a trial judge who, prior to his appointment, had appeared for Caltex several times, and who received a lucrative brief for that company in a Royal Commission.
The Renaud appeal was followed by several cases in which decision makers who too readily disqualified themselves for apprehended bias were ordered to resume the hearings concerned. In Re Polites; Ex parte Hoyts Corporation Pty Ltd[24] Mr Polites, a Deputy President of the Australian Industrial Relations Commission, acceded to a submission that certain advice that he, as a solicitor, had given Hoyts four or five years earlier disqualified him from hearing the present case. In a joint judgment Brennan, Gaudron and McHugh JJ stated[25]:
The prior involvement of a Deputy President with associations or with governments who are frequently parties to proceedings before the Commission cannot be sufficient by itself to amount to a disqualification from sitting in a particular case; nor can the prior acquisition of `skills and experience’ amount to such a disqualification. Deputy Presidents who are appointed on account of their industrial background are not disqualified merely because persons with that background have a measure of knowledge or are likely to have a particular attitude to the exercise of the Commission’s powers.
[24] (1991) 173 CLR 78.
[25] (1991) 173 CLR 78 at 87.
Other cases in which excessively self-effacing decision makers were ordered back on duty are Sankey v Whitlam[26], and Crewdson v Department of Community Services (NSW) (No 13)[27].
[26] [1977] 1 NSWLR 333.
[27] (2006) 152 IR 42.
There was no reasonable apprehension of bias in Gascor v Elliott[28], where, 10 years earlier, the arbitrator acted as counsel for one of the parties (a vendor of natural gas), and subsequently was one of several arbitrators who found in favour of another natural gas vendor against other purchasers of that product. An “innocuous” conversation between a judge and a party, while judgment was reserved, was no disqualification in Walkden v Townsville City Council.[29]
[28] [1977] 1 VR 332.
[29] [1991] 2 Qd R 221.
As one shifts attention from courts of law to decision makers more or less removed from the court environment the requisite degree of detachment becomes less demanding:
The analogy with curial processes becomes even less apposite as the nature of the decision making process, and the identity of the decision maker, diverges [sic] further from the judicial paradigm.[30]
[T]he court may expect the fair-minded observer to require less of an administrative decision maker, according to the function being discharged and the particular circumstances, than of a judge or formally constituted tribunal.[31]
The application of the principle with decision makers outside the judicial system must sometimes recognise and accommodate differences between court proceedings and other kinds of decision making.[32]
[30]Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 at 563 per Hayne J.
[31] Chu v Minister for Immigration and Ethnic Affairs (1997) 78 FCR 314 at 338.
[32] Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 343-344.
Such judicial caveats offer a useful antidote to lawyers’ tendency to assess all claims of bias in the context of superior courts.[33] In plain terms, an apprehension that is reasonable in relation to Supreme Court judges may be quite unreasonable with respect to Royal Commissioners,[34] industrial arbitrators,[35] statutory tribunals,[36] mining wardens,[37] ministers of state,[38] town councillors,[39] and commercial arbitrators[40]:
A judge or magistrate may well regard himself as disqualified if either of the parties is known to him. By contrast, the commercial arbitrator will know many of his colleagues in the same trade and may well have at least a business acquaintance with the parties before him.[41]
[33]Najjar v Haines (1991) 25 NSWLR 224 at 264 per Rogers AJA: “I am of course mindful ... that the authorities have given consideration to the position of judges ... not arbitrators, much less referees. That in many cases this fact may make a difference cannot be doubted”. However, as we have seen, there is room for pragmatism, even where superior courts are concerned.
[34]Connolly v Carruthers [1998] 1 Qd R 339 at 358; Duncan v The Honourable David Andrew Ipp AO QC [2013] NSWSC 314 at [77].
[35] Re Polites; Ex parte Hoyts Corporation Pty Ltd (1991) 173 CLR 78.
[36] Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 87.
[37] Carr v Simnovec (1980) 26 SASR 263 at 268-269.
[38]Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 at 563.
[39] McGovern v Ku-ring-gai Council (2008) 72 NSWLR 504 at 508, Spigelman CJ.
[40]South Western Sydney Area Health Service v Edmonds [2007] NSWCA 16; Able Demolitions and Excavations Pty Ltd v State of Victoria [2004] VSC 511;
[41]Tracomin SA v Gibbs Nathaniel (Canada) Ltd [1985] 1 Lloyds Rep 586 at 588 per Staughton J.
In Najjar v Haines[42] Rogers AJA cited with approval this passage in the judgment of an American court.[43] It is applicable equally, if not a fortiori, to a valuer who has no quasi-judicial[44] function:
Familiarity with a discipline often comes at the expense of complete impartiality. Some commercial fields are quite narrow, and a given expert may be expected to have formed strong views on certain topics, published articles in the field and so forth. Moreover, specific areas tend to breed tightly knit professional communities. Key members are known to one another, and in fact may work with, or for, one another, from time to time. ... It comes as no surprise, then, that the standards for disqualification of arbitrators have been held to be less stringent than those for federal judges ... For to disqualify any arbitrator who had professional dealings with one of the parties (to say nothing of a social acquaintanceship) would make it impossible, in some circumstances, to find a qualified arbitrator at all. There may necessarily be a `trade-off between expertise and impartiality’.
[42] (1991) 25 NSWLR 224 at 264-265.
[43]Morelite Construction Corp v New York City District Council Carpenters Benefit Funds 748 F 2d 79 (1984) at 83-84.
[44]Thorneton Avenue Pty Ltd v Body Corporate for the Avenue [2013] QCAT 39 at [91]- [92].
Indeed, if Mr Linkhorn retains any prior knowledge of The Avenues and its former caretakers that is relevant to the present exercise, it may assist him and the parties to save time and costs that must already be heavy, if not disproportionate.
Conclusion
In my view, if it is appropriate to raise an issue of apprehended bias in this case[45] the apprehension is fanciful[46] rather than reasonable. I shall dismiss the application to disqualify Mr Linkhorn.
[45] See paragraphs [19]-[21], above.
[46]Stollery v Greyhound Racing Control Board (1972) 128 CLR 509 at 519: The reasonable apprehension test “does not, of course, warrant fanciful and extravagant assertions and demands.”
Ancillary orders
Each party seeks several ancillary orders. Directions were issued on 23 February 2013. For the sake of clarity and simplicity I withdraw those directions that remain relevant, and in lieu thereof, will make the following orders.
I decline to make order 4 as sought by Thorneton. The valuer is better placed than the Tribunal to decide what is and is not necessary and appropriate for the preparation of his report. If the valuer is in doubt he may directly seek the directions of the Tribunal.
I decline to make order 5 as sought by Thorneton. The suggested order would make the valuation process unduly cumbersome, expensive, and possibly more contentious. The Tribunal should be kept informed of all communications with the valuer, but not as a referee, prior to their occurrence.
I shall make, in substance, orders 3, 6, 7 and 8 as sought by Thorneton, subject to an adjustment of the time for delivery of the valuer’s report.
I shall make, in substance, orders 2, 3, 4, 5 and 6 (subject to an adjustment of time) as sought by The Avenues. Proposed order 1 is otiose.
ORDERS
Thorneton’s application for an order setting aside the REIQ’s appointment of Delwyn Ross Linkhorn as valuer is dismissed.
Each party shall provide the Tribunal and the other party with true copies of all information in writing that it delivers to the valuer to assist him in the preparation of his report.
If the valuer requests discussion or inspection with a party (or its representative) in person, that discussion or inspection shall take place wholly in the presence of the other party (or its representative) or with the absent party’s prior written consent.
Each party shall promptly provide the other party and the Tribunal with a full and true account of every non-documentary communication by it with the valuer.
The costs of appointment of the valuer, and of the valuation, shall be borne by the parties in equal shares.
The costs of any relevant report obtained by the valuer from another person (not being a party to these proceedings) shall be borne by the parties in equal shares, provided that the valuer shall give the parties seven (7) days’ notice in writing of his intention to obtain any such report.
The valuer shall deliver his report to the parties and to the Tribunal by 4 pm on Thursday 30 May 2013, or within such extended time as the parties agree, or the Tribunal orders.
The Directions issued on 23 February 2013, in so far as they remain relevant, are hereby withdrawn.
Costs of this application are reserved.
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