Applicant v Respondent

1 This is an application by Armour Legal and Mr Brian Burton that I should recuse myself from the hearing and determination of the application by the Respondent that its costs of and incidental to the proceeding should be paid by Armour Legal and Brian Burton on an indemnity basis and for interest on the principal sum of the arbitral award pursuant to s 29(1)(c) of the Civil Procedure Act 2010.

2 The application is made on the grounds of a reasonable apprehension of bias. The nature of the apprehended bias relied upon is that a fair minded lay observer might reasonably apprehend that the judge might have prejudged a question the judge is required to decide.

3 In the absence of waiver or necessity, a judge should disqualify himself or herself if a fair minded lay observer might "reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question that the judge is required to decide" [emphasis added]. This test derives from Ebner v Official Trustee in Bankruptcy[1] and has been applied on numerous occasions.[2]

4 It is, as is submitted in support of this application, important to bear in mind that because the test is objective, the actual state of mind of the judge in question is irrelevant. Whether in fact the judge has prejudged an issue to enter into the debate about what a fair minded lay observer might apprehend would be to introduce considerations that are irrelevant to the issue that is to be decided.[3]

5 The application of the two step test in an application based on an apprehension of bias on the ground of prejudgment involves the identification of the conduct of the judge said to give rise to an apprehension of prejudgment as the first step. 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 that the judge is required to decide.[4] The test has been described as a "relatively undemanding 'double might'" one.[5]

6 The conduct relied upon in support of this application is a statement which I made at a directions hearing in these proceedings on 23 February 2018 after the filing of affidavits and submissions in respect of an application for costs against non-parties. The statement made is as follows:[6]

All right. I should indicate that, and this shouldn't be taken as indicating any views on my part, in light of the issues raised in the submissions in this proceeding, and in light of what I've heard this morning, I should tell the parties that the transcripts henceforth in this proceeding will be sent to the Legal Services Commissioner and also to the Ethics Committee of the Bar. So it's important that everybody realises that I think and is not taken by surprise, but that doesn't express or indicate any views on my part and I'm not being critical of anyone at this stage. But thank you for that explanation. So what do you want to do now?

7 This statement was made following Mr Mifsud filing material in the Court on 22 February 2018; material which raised serious matters in relation to the conduct of this proceeding. Mr Mifsud was, prior to a liquidator being appointed, a director of the Applicant, QBH Commercial Enterprises Pty Ltd. The matters raised by Mr Mifsud were, however, matters raised by him and are not matters which were raised by me as the judge hearing the proceedings on the basis of my own assessment or perceptions with respect to the proceedings. Indeed, I think this position is made clear in the statement itself where I said that no views had been formed or criticisms made. In any event, the statement was made following the reference of matters raised by Mr Mifsud with respect to this proceeding to regulatory bodies - bodies which have different powers and functions from that of this Court and which may investigate issues and proceed in a manner different in method, scope and nature from those relevant to these particular proceedings and otherwise available to this Court. For these reasons, I remain of the view the step of referring matters to regulatory bodies was appropriate and it is a step that needed to be taken sooner, rather than later. Additionally, as a matter of fairness to parties and others associated with these proceedings, I thought, and still think, that it was appropriate that they be advised immediately and openly that this step had been taken. For the preceding reasons, I am of the view that these circumstances are relevantly different from the circumstances arising in cases such as AJH Lawyers Pty Ltd v Careri and the other cases to which reference has been made. As I said, and emphasise, the step which I took by way of referral did not and does not reflect any concluded views on my part on any matter going to these proceedings or any aspect of them.

8 There are also some procedural and contextual issues raised by the Respondent, Dalle Projects Pty Ltd, which might be thought to detract from the adverse inferences the present Applicant seeks to draw from my statement.[7] Moreover, having regard to this context the Respondent submits that:[8]

The hypothetical fair minded lay observer would simply observe that within the context of this proceeding, His Honour's comments were attempting to maintain the standards of excellence demanded from the officers of the Court, as is required for the proper administration of justice, and to give fair warning to those practitioners then appearing, that His Honour would not permit those standards to fall.

9 Nevertheless, the relevant test in an application such as this requires that it is the Court's view of the public's view, and not the Court's own view, that is determinative.[9] In applying the test, it is to be assumed that the fair minded lay observer is informed as to the relevant facts of the case and the issues, including a basic understanding of the duties and responsibilities of counsel and the judge, and is sufficiently knowledgeable to bring a rational and reasonable assessment to bear on the question.[10] The knowledge of the lay observer does not, however, extend to the knowledge that a judge is capable of putting aside knowledge of facts or preconceived views formed prior to a case and deciding the case before him or her only on the evidence led in that case.[11] True it is that the "immediate observers" in the present application are not lay persons but, in my view, the public policy considerations applied by the courts in relation to applications such as this do not, in the circumstances of this matter, merit drawing such a distinction.

10 There is a convention amongst courts that where there is a real possibility of an application being made for the judge to be disqualified prior to the hearing of a proceeding another judge should be found to hear the case.[12] The reason for this convention is to avoid damage to the general reputation and public perception of the judiciary by unseemly public questioning of a judge or the public challenge to his or her appearance of impartiality. The present proceeding is, of course, beyond the initial hearing stage, but having regard to the way this application is put, it is fairly to be described as an application made prior to the hearing of the issues with which the application is concerned and, consequently, is, in practical terms, made prior to the hearing of the relevant issues.

11 It is clear that the public policy considerations applicable in the present circumstances lead courts to err on the side of caution. Thus a judge may continue to sit in a matter unless the judge has affirmatively concluded that he or she is disqualified by reason of apprehended bias. It will, however, "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 on the matter of disqualification".[13] Thus, where a reasonable apprehension of bias issue is raised at an early stage, a court should not be reluctant to reconstitute itself so as to avoid the problem of the reasonable apprehension of bias. Thus, in S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd,[14] Kirby P said:

Where, however, before decision, and without the injustice or unnecessary inconvenience to which Priestly JA referred in Raybos, a court may be reconstituted thus avoiding the problem of the reasonable apprehension of bias, is the court's duty to do so. It should not be reluctant to do so for though cost, delay and inconvenience may attend recommencement and reconstitution of the court, the dangers that may result from failing to do so may include the disillusionment of particular litigants and loss of confidence in judicial impartiality generally, on the part of reasonable observers, who know of that litigant's predicament.

As indicated in the preceding reasons, this application does relevantly occur at "an early stage" with respect to the issues in question. Thus, the statement of Kirby P must, in the present circumstances, weigh very heavily.

12 For the preceding reasons, I will recuse myself from the hearing and determination of any further issues in these proceedings and make arrangements for those matters to be heard and determined by another judge of the Commercial Court. The costs of this application are reserved.

[1] [2000] HCA 63; (2000) 205 CLR 337 at 344 [6].

[2] See, for example, Isbester v Knox City Council [2015] HCA 20; (2015) 320 ALR 432, especially at 437 [20]-[23]; and also AJH Lawyers Pty Ltd v Careri [2011] VSCA 425; (2011) 34 VR 236 at 241-3 [17]- [25]; referred to and affirmed in Michael Wilson & Partners Limited v Nicholls [2011] HCA 48; (2011) 244 CLR 427 at 437-8 [31]- [33].

[3] Michael Wilson & Partners Limited v Nicholls [2011] HCA 48; (2011) 244 CLR 427 at 437-8 [33].

[4] See AJH Lawyers Pty Ltd v Careri [2011] VSCA 425; (2011) 34 VR 236 at 242 [22].

[5] British American Tobacco Australia Limited v Peter Gordon [2007] NSWSC 109 [94] (Brereton J).

[6] Transcript (23 February 2018), 3-4.

[7] Respondent's Submissions in Response to an Application for the Honourable Justice Croft to recuse himself (10 May 2018), [4]-[10].

[8] Respondent's Submissions in Response to an Application for the Honourable Justice Croft to recuse himself (10 May 2018), [15].

[9] Webb v The Queen [1994] HCA 30; (1994) 181 CLR 41 at 51-52.

[10] Webb v The Queen [1994] HCA 30; (1994) 181 CLR 41, at 51-52, 55 (Mason CJ and McHugh J), 57 (Brennan J), at 87-8 (Toohey J), at 76 (Deane J); Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd [2006] HCA 55; (2006) 229 CLR 577 at 609-10 [110]- [112] (Kirby and Crennan JJ); at 635-5 [177] (Callinan J); at 582 [4] (Gummow ACJ); and at 612 [120] (Hayne J) agreeing; Vakauta v Kelley [1989] HCA 44; (1989) 167 CLR 568 at 584-5; British American Tobacco Australia Limited v Peter Gordon [2007] NSWSC 109 [63].

[11] Australian National Industries Ltd v Spedley Securities Ltd (1992) 9 ACSR 309 at 345.

[12] S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) (1988) 91 FLR 175 at 184-5 (Kirby P); British American Tobacco Australia Limited v Peter Gordon [2007] NSWSC 109.

[13] Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 at 348 [20].

[14] (1988) 91 FLR 175 at 189.