Ashton, Andrew Craig v Prentice, Maxwell William Prentice, Maxwell William v Ashton, Andrew Craig & Ors Nauen Holdings Pty Ltd v Prentice, Maxwell William [1998] FCA 1081

EX TEMPORE REASONS FOR JUDGMENT There are two proceedings listed for hearing before me on 7 to 9 September 1998 inclusive. Both of these proceedings are brought to challenge notices given by Mr Maxwell William Prentice, Trustee in Bankruptcy of the estate of Mr Eric Abraham Jury under s 139ZQ of the Bankruptcy Act 1966. The notices in question, in effect, require the recipients to transfer to the Trustee certain property which the Trustee alleges to be property of the Bankrupt. In the same proceedings there are also cross-claims brought by the Trustee to set aside a transaction entered into between Mr Jury and Mr Ashton, an accountant, in which it is alleged that Mr Ashton purchased from Mr Jury certain property, perhaps at an under value, where part of the consideration was in respect of fees Mr Ashton alleged were owing to him by Mr Jury for accounting services. The substance of the cross claim is the same as invoked in the proceedings brought by Mr Ashton to challenge the notice given to him by the Trustee. The other proceeding concerns certain Mercedes cars which the Trustee alleges, and the owners of the cars deny, were owned by Mr Jury. I should say at this point that on an earlier occasion it was submitted that I should disqualify myself from hearing these proceedings on the basis that at some time certainly more than ten years ago I gave advice to Mr Jury through his accountant, Mr Milton. It is not suggested that I have ever actually met Mr Jury as far as I am aware nor did any advice I gave have anything whatsoever to do with the matters presently in dispute either between the Trustee and Mr Jury or for that matter between Mr Jury and Westpac to which I will later refer. I indicated when the submission was made that I would see if I could find another judge available to deal with the matter but that I could not see any question of conflict arising. I cannot see how anyone, whether the parties or members of the public, could entertain a reasonable apprehension that I would not bring an impartial unprejudiced mind to the resolution of the issues between the Trustee and Mr Ashton or, for that matter, the Trustee and the alleged owners of the Mercedes cars because I had advised in the past Mr Jury probably in respect of some tax matter. I do not propose to disqualify myself. Mr Jury became a bankrupt as a result of a sequestration order made by Lockhart J on 22 May 1997 (Re: Eric Abraham Jury and Houda Jury; Ex parte Westpac Banking Corporation, unreported, 22 May 1997). The sequestration order was based upon a failure to comply with a Bankruptcy Notice itself founded upon a judgment of Rolfe J in the Supreme Court of New South Wales given on 21 November 1995 and entered on 29 November 1995. The history of the litigation which gave rise to that judgment debt is set out in the judgment of Lockhart J to that point of time. That judgment also sets out details of the claims and cross-claims that were brought and absolves me from the need to restate them. It is important to note, as Lockhart J does in his judgment, that the claim that was made by Westpac Banking Corporation ("Westpac") against Mr Jury was resolved or compromised and an agreement recorded in an exhibit so that his Honour concluded that there was no defence to the Westpac claim which then formed the basis for the Bankruptcy Notice. Certainly claims and cross-claims involving Bill Acceptance Corporation Ltd ("BAC") were the subject of proceedings that were commenced in the Court of Appeal on 19 December 1995. To some extent they did involve Westpac because it was alleged that Westpac was in some way the agent for BAC in making representations that were alleged to have been made or advice that was given at the time. The initial grounds of appeal against orders that were made by Rolfe J appeared to be that his Honour should have disqualified himself because he had, at some stage in the past, appeared in proceedings against Mr Whitbread, a witness in the proceedings. Some of the detail of this is set out in the judgment of the Full Court of this Court comprising Burchett, Foster and O'Connor JJ given on 18 March 1998 in which their Honours dismissed an appeal from the judgment of Lockhart J granting the sequestration order (Eric Jury & Houda Jury v Westpac Banking Corporation, unreported, 18 March 1998). An application has been lodged apparently by Mr Jury to the High Court of Australia seeking special leave to appeal. No attempt has been made to stay the orders initially made by Lockhart J and upheld by the Full Court. One must say that the chances of leave being granted having regard to the unanimous decision of the Full Court of this Court may not be great but it is unnecessary for me to go into that matter. In the meantime, it is said to have come to light that Rolfe J's wife had a certain number of shares in Westpac. It is said that an attempt is being made to issue a subpoena verifying this. It is claimed also that Rolfe J is a customer of Westpac. An application has been made, or is proposed to be made, to have the notices of appeal varied to raise that as yet another ground of appeal. Those matters have not yet been resolved it would seem. There were other parties as well in the proceedings commenced in the Supreme Court and the subject of appeals to the Court of Appeal. These included a number of companies associated, it would seem, with Mr Jury. Applications were made to wind up those companies and Moore J has apparently ordered a temporary stay of the winding up proceedings pending the appeal to the New South Wales Court of Appeal being determined. It seems that the hearing of the appeal is listed for four days commencing on 8 December 1998. It is in these circumstances that I am asked to adjourn the hearing of the proceedings before me next week and, in addition, to stay the notices or stay compliance with the requirement to comply with the notices pending the Court of Appeal determining the appeals. It is perhaps interesting to note that the Full Court of this Court made some comments concerning the chances of success of an appeal then based solely upon Rolfe J's alleged previous association with Mr Whitbread and formed the view that it did not believe that fair minded people might reasonably apprehend or suspect Rolfe J's views of many years would, in any way, cause him to pre-judge Mr Whitbread's veracity as a witness. Their Honours of course were not apprised of the now further allegation that Rolfe J disqualify himself because of his and his wife's association with Westpac. It is submitted that where in essence the same matter is being litigated in two courts, one of them should adjourn or stay its proceedings to permit the matter to be litigated in the most appropriate forum. Reference is made in submissions to a number of cases. It is unnecessary for me to deal with those in detail but the cases cited included L. Grollo Darwin Management Pty Limited v Victor Plaster Products Pty Limited (1978) 33 FLR 170 at 177; Hughes Motor Service Pty Limited v Wang Computer Pty Limited (1978) 35 FLR 346 at 351-354; Muller v Fencott (1981) 53 FLR 184 at 189; Bond Corporation Pty Limited v Thiess Contractors Pty Limited (1987) 14 FCR 193 at 203. With the general proposition I have, with respect, no difficulty. It is clearly enough inefficient for two courts to deal with the same basic issues, not merely because of the difficulty should courts came to different views but also because of necessary economy both to the parties and to the Court in avoiding, if possible, unnecessary proceedings. It is difficult to see that that principle has any application in the present case. The present proceedings concern, in essence, whether certain assets form part of the bankrupt estate of Mr Jury. It is true that, in the remote possibility that the New South Wales Court of Appeal ultimately goes into the further allegation that is made and decides it in a way favourable to Mr Jury, there may be some impact upon the judgment which formed the basis of the Bankruptcy Notice upon which a sequestration order was made. But I am faced with the situation where a sequestration order has been made, a Full Court of this Court has affirmed it, where the Trustee has taken certain steps and issued a notice which it says has not been complied with and where the question of the validity of that notice is ready for determination in proceedings that commenced 11 months ago and which are now ready for hearing. It is possible that, were I to find that assets were assets of the Bankrupt, some consideration might be given to the way in which orders are framed and the possibility that perhaps something will happen in the Court of Appeal. That is a matter upon which no doubt argument can be advanced if and when I were to find the notices valid or the property in question, property of the Bankrupt. The question whether or not to grant an adjournment is obviously a matter of discretion. The discretion is one that should be exercised judicially and take into account all relevant circumstances. I have to say that it does not seem to me to be in the interests of justice that these proceedings be further delayed. If they could not be heard now it would be upwards of six or nine months before another date could be found. I do not know what the possibilities are of steps being taken by the Applicants in the proceedings before me, the Respondents to the notices, which might prejudice recovery of the assets should the proceedings be deferred although there is obviously a possibility that that may be the case. The fact of the matter is there has been a sequestration order. It has not been set aside. It has set in train various steps. It has not been stayed in anticipation of the High Court granting special leave and there is an allegation of a failure on the part of the Respondents to the notices to comply with them which carries certain consequences. In the circumstances, I think that the interest of justice suggests that I should decline to grant an adjournment of the proceedings. The notices, the validity of which are before me, have been stayed by a Registrar of the Court pending the hearing. To the extent that it is necessary I would, of course, stay the operation of the notices pending completion of the proceedings before me but not indefinitely to deal with a possibility that the Court of Appeal might permit the matters that have been foreshadowed before it. It might be possible to draw inferences from the various attempts to have judges disqualify themselves of a desire to defer and delay the matter. I do not propose to do so in the circumstances. I have assumed throughout that both Mr Ashton and Nauen Holdings Pty Limited were acting in good faith in bringing the application before me. The possibility of Mr Ashton and other parties to the present proceedings raising a further objection to my sitting on the case next week on the basis of conflict of interests has been suggested. It arises because I disclosed yesterday, as indeed I thought it appropriate, that a family trust associated with my family, in which I am a beneficiary, owns some number of shares in Westpac Banking Corporation. I have also disclosed that I am a customer of that bank. I did not disclose the branch but it is 60 Martin Place, Sydney and I have, I think, been a customer of that bank since I was about 20. I do not off hand remember the precise number of shares involved. I would suspect that their total value would be about $15,000 maximum but if the parties wish a more precise figure I shall find out what number of shares are held. My recollection is that there are also some convertible notes but I do not remember the precise details of them. Certainly as a customer of Westpac there are moneys on deposit, cheque and savings accounts and matters of that kind. Should an application be made that I disqualify myself, and I stress that none has yet been made, because counsel for Mr Ashton and others have no instructions, then as matters presently stand I can see no reason why I should disqualify myself from hearing proceedings in which Westpac itself is not even a party, but in respect of which, no doubt, should it turn out to be a real creditor it will have some financial interest to the extent of sharing rateably with all other creditors of Mr Jury. I will, of course, listen to any submissions that may be made. Perhaps no more need at this moment be said other than that the authorities on the question of apprehended bias are those that have been set out in the judgment of the Full Court of this Court in the appeal from Lockhart J at page 2, the question being whether fair-minded people might reasonably apprehend or suspect that the judge has prejudged or might prejudge the case. Quite frankly I am unable to see how a fair-minded person would reach that conclusion. I direct the Applicants in the proceedings before me to pay the costs of the application for adjournment. I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill