Bakarich v Commonwealth Bank of Australia

Bakarich v Commonwealth Bank of Australia - [2010] NSWCA 314 - NSWCA 2010 case summary — Zoe

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26 NOVEMBER 2010 Allan John BAKARICH and Ors v COMMONWEALTH BANK OF AUSTRALIA Judgment 1 THE COURT: The Court is dealing with an application by the appellants to reopen the appeal in this matter, which had been heard on 17 - 19 April 2007 and in which a reserved judgment had been delivered on 13 July 2007 ([2007] NSWCA 169). 2 That appeal had been brought from a decision of Nicholas J given on 20 April 2004. This decision was given after a 17 day hearing, in November and December 2003, of proceedings in which Mr Tony Bakarich, together with members of his family (his late mother Mary Bakarich and his late brother Allan Bakarich) and associated companies had sought relief against the Commonwealth Bank of Australia (the Bank) in respect of certain guarantees and a mortgage. The primary judge found that the plaintiffs failed to establish any of their claims, and on 3 May 2005 he ordered that there be judgment for the Bank and ordered the plaintiffs to pay the Bank's costs on an indemnity basis. 3 In its decision of 13 July 2007, the Court (Hodgson, Santow and Campbell JJA) decided that relief was available under the Contracts Review Act 1980 to Mr Bakarich's late mother and late brother, if it were shown that such relief would have utility. The difficulty was that Mr Bakarich would remain fully liable to the Bank under his guarantee, and he was the person most interested in the estates of his late mother and his late brother. 4 Following further evidence and submissions, orders were made on 24 July 2008 directing an inquiry by a judge of the Equity Division. Substantial material was prepared and filed pursuant to those orders; but on 24 July 2009 the appellants filed a notice of motion which in substance sought to reopen the hearing of the appeal; and that is the application with which the Court is now dealing. 5 There were a number of directions hearings before Hodgson JA between 1 September 2009 and 2 June 2010, the effect of which were summarised in a judgment which he gave on 2 June 2010 ([2010] NSWCA 130). This was that the Court would first conduct a hearing in which it would decide whether or not there should be a further hearing of the appeal, and that the appellants should not be permitted to issue subpoenas for the purpose of that hearing. If the Court decided that there should be a further hearing of the appeal, appropriate subpoenas might then be permitted for the purposes of that hearing. 6 The application to reopen the appeal was heard on 13 August 2010. Mr Bakarich was self-represented, and spoke on behalf of all appellants; and the Bank was represented by Mr Bathurst QC and Mr Thomas of counsel.

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(b) in the form of speech by means of guided and/or unguided electromagnetic energy, where the speech is processed at its destination by an automated voice recognition system. 13 A 2003 amendment to that section, taking effect from 14 January 2004, related to s 121(9)(da), which is immaterial to this case, and added s 121(9)(g), which is as follows: (g) Publication of accounts of proceedings, where those accounts have been approved by the Court. 14 A file of Family Court proceedings between Mr Bakarich and his former wife was subpoenaed from the Family Court, and was produced to the court constituted by the primary judge. The primary judge granted access to the file to both parties. The file was accompanied by a letter from the Family Court asserting that the file should not leave the custody of the Supreme Court and that the Supreme Court ought not permit photocopying of any part of the file. Counsel for the Bank applied to uplift the file and make copies. The primary judge suggested that the Bank's legal representatives speak to the author of that letter; and he was later advised that junior counsel had spoken to the Registrar of the Family Court, that the Registrar had agreed that the file might be released to the parties' legal representatives with two provisos, namely that any photocopy taken be returned to the file and destroyed at the end of the case and that the file or copy not be released from the possession of the parties' legal representatives. The Bank's junior counsel accepted those conditions, and the primary judge permitted the file to be uplifted on that basis. 15 Subsequently, Mr Bakarich was cross-examined on material in the file, and the primary judge made adverse findings on Mr Bakarich's credibility on the basis of that cross-examination. 16 A ground of appeal which was at one stage included in the appellants' notice of appeal was as follows: 1. The trial judge erred in his interpretation of the Family Law Act, 1975 as amended and in particular s.121 of the Act by granting the parties legal representatives access to a Family Court of Australia file involving the First named Appellant and his former wife, making orders in respect of the said file and admitting into evidence material from the said file concerning the First named appellant and his associated business entities. 17 Prior to 1 August 2006, Dr Birch (senior counsel then retained for the appellants on the appeal), advised that s 121 did not apply to other proceedings and did allow these issues to be raised in other court proceedings: see appellants' 24.7.09 tender bundle 260. Following that advice, this ground was deleted. 18 Mr Bakarich on behalf of the appellants now makes the following allegations:

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(5) The primary judge's assistance to the Bank in this respect contrasted with his treatment of evidence proposed to be called from the appellants' witness Mr Rae and efforts on behalf of the appellant to obtain files from the Bank. 19 We note also that, after receiving Dr Birch's advice, Mr Bakarich on 7 March 2008 wrote to ICAC alleging that the primary judge committed many breaches the Family Law Act and committed crimes for which he should be held accountable: 24.7.09 tender bundle 299 - 306. 20 Mr Bakarich produced no evidence that the Family Court files had been included in the tender bundle. In the affidavit where he complains about their use (24.7.09, par [51]), he refers to all the documents as having MFI numbers, this being inconsistent with their being in the tender bundle. The transcripts do not support any suggestion that the Family Court advised the primary judge he was not entitled to the file: the files were produced by the Family Court in response to the subpoena, albeit with a note concerning their use. What the primary judge did concerning that note (that is, suggested that the Bank's legal advisers contact the Family Court) was entirely proper. It is true that the Family Court documents relied on were created up to 17 years before the trial, but the events with which the proceedings before the primary judge were principally concerned occurred over 14 years before the trial, and some of the Family Court documents on which Mr Bakarich was cross-examined were created only about six months before those events. The matters on which Mr Bakarich was cross-examined were relevant to his credit, and the fact that the Family Court judge took a favourable view of Mr Bakarich in no way precluded the primary judge from reaching the view that Mr Bakarich's answers in cross-examination reflected badly on his credibility. 21 In our opinion it is clear that there was no breach of the Family Law Act. Under s 121(11) "court" includes the Supreme Court of New South Wales; and even if production to parties to a court case for the purposes of that case can be considered dissemination to the public or a section of the public within s 121(1) (a matter on which we express no opinion), what actually happened was plainly within the exemption provided by s 121(9)(a). 22 Mr Bakarich complains that in contrast, the primary judge resisted production of evidence for the appellants from Mr Rae on the basis of likely bias in favour of the appellants, referring to an exchange that took place on p 460 of the transcript: HIS HONOUR: That might be so. I simply do not know. Just sidestepping things for a moment, if there is going to be an issue about disqualification in relation to the expert, I know that there has been consideration of these sort of questions by, for example, Austin J, who did something about it - I can't remember when, but there are a number of unreported decisions on those sorts of considerations, and if there is to be a real argument about that, I would welcome the parties looking at it, and I'm sure they will, but there is certainly some unreported material in this division, and no doubt elsewhere, on this sort of thing.

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HIS HONOUR: Let's wait until that comes. You mentioned lack of independence arguably. That then suggested to me that if there is going to be some contest on that basis, it will be appropriate to look at some consideration of principles and I would ask for help on that when the time comes. 23 That exchange could not reasonably be understood as resistance by the primary judge to evidence of Mr Rae on the basis of bias. The primary judge was simply indicating that if such objection was taken, he would be assisted by reference to authority. The decision apparently taken by the appellants' legal representatives not to read Mr Rae's evidence could not, on the basis of this material, reasonably be supposed to flow from resistance by the primary judge. 24 A further complaint is that when the appellants' counsel called for the production of Bank documents, especially concerning an alleged misappropriation of $15,000 on 18 October 1988, and the Bank did not produce them, the primary judge did not pursue the matter. However, when documents are called for without the prior issue of a subpoena or notice to produce, the only obligation is to produce documents if they happen to be in court; and if the party does not then produce them, there is nothing a judge can or should do unless a subpoena or notice to produce is issued and called on. 25 In our opinion, this discussion shows that there is no basis whatsoever in Mr Bakarich's complaints concerning the Family Court files; so that quite apart from the point that this matter was raised and then abandoned, it could not possibly be a basis for reopening the appeal. In our opinion it also shows that Mr Bakarich is prepared to make extremely serious allegations without there being any basis for his doing so. We do not doubt that Mr Bakarich genuinely believes that he has been very seriously wronged, and believes that the primary judge and the Bank have misconducted themselves. However, in the case of the Family Court files, it is apparent that there is no reasonable basis whatsoever for these beliefs; and it is notable that, even after receiving the correct advice from Dr Birch that there was no breach of the Family Law Act, Mr Bakarich was prepared to complain to ICAC that the primary judge had committed crimes against the Family Law Act for which he should be held accountable.

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Alleged bias 26 It is convenient first to set out a chronology of events relevant to the complaint of bias arising from the relationship between the primary judge, on the one hand, and Mr Sackar, Mr McCulloch and the Bank on the other. 27 Prior to his appointment to the Supreme Court in early 2003, the primary judge had represented the Bank in a number of cases. These included Bryant v Commonwealth Bank of Australia [1995] FCA 1299; (1995) 57 FCR 287 (heard on 22 May 1995), Bryant v Commonwealth Bank of Australia [1996] HCA transcript 84 (heard on 21 February 1996), Healey v Commonwealth Bank of Australia [1998] NSWSC 678 (heard on 30 November 1998), Finance Sector Union v Commonwealth Bank of Australia [1995] IRCA 691 (heard in August 1995), and Hawkins v Commonwealth Bank of Australia [1996] IRCA 236 (heard in March and August 1995 and January and February 1996, in which Mr Sackar was also briefed for the Bank). 28 From 1971 until his appointment, the primary judge was a member of the Sixth Floor Wentworth Chambers. Mr Sackar was also a member of that Floor, at least from 1 July 1986, and Mr McCulloch was a member of that Floor, at least from 30 January 1998. 29 The primary judge was a director of Counsel's Chambers Limited (owner of the Wentworth Chambers and Selborne Chambers building) from 24 August 1994 to 26 November 1999; and Mr Sackar was also a director of that company from 29 March 1995 to 19 July 2000. Although Mr Bakarich alleged that the primary judge held and still holds 12,000 shares in that company, we accept as reliable information from the general manager of that company that the primary judge (through a private company) held 4,500 shares in that company, which were sold on 18 March 2003, since which date neither the primary judge nor his private company has held shares in Counsel's Chambers Limited. Mr Bakarich states in his affidavit (par 9) that Mr Sackar and Mr McCulloch "held and continue to hold 6,000 shares each" in that company. 30 The primary judge, Mr Sackar and Mr McCulloch are still shareholders in Denman Chambers Pty Limited. There are 15 ordinary shares in the issued capital of that company of which his Honour, Mr Sackar and Mr McCulloch hold one share each, the remaining 12 shares being held by others. The primary judge was a director of that company from 1 July 1986 to 18 March 2005; and Mr Sackar was a director of that company from 1 July 1986 at least until 5 June 2009. Mr McCulloch was a director and also secretary of that company from 30 January 1998 until at least 5 June 2009. However, we accept as reliable information from the clerk of Sixth Floor Selborne Wentworth Chambers that Denman Chambers Pty Limited operated as a service company for the administration of the Sixth Floor Wentworth Chambers for a period of time prior to 1 January 1997, and that it has not operated as a service company or in any other capacity since prior to January 1997. We note that the search of that company as at 5 June 2009 discloses that strike-off action was in progress. 31 Prior to his appointment to the Supreme Court, the primary judge acquired various properties in the Liverpool Plains area, including substantial properties acquired in 1987 and 1991. In October 2001, he sold four properties in that area. For many years prior to his appointment, the primary judge and Mr Sackar were in partnership in a cattle stud business. The cattle were maintained on the properties owned by the primary judge, until the properties were sold; and after disposal of those properties, they were agisted on the stud manager's property. 32 On 5 February 2003 at the swearing-in ceremony of the primary judge, Mr Tobias QC (as he then was) speaking on behalf of the Bar Association of New South Wales said this: For many years you have been a commercial breeder of Aberdeen Angus cattle in partnership with you colleague, John Sackar QC, and you have both bred, vicariously that is, the grand champion bull at the Sydney and Brisbane shows in 1994 who, not surprisingly, then answered to the name of Magistrate. 33 On 11 June 2003, the proceedings brought by the appellants against the Bank were fixed for hearing on 10 - 28 November 2003, with a pre-trial directions hearing fixed for 10 September 2003. 34 By 10 September 2003, the primary judge had been identified as the judge allocated to hear the case, and the pre-trial directions hearing took place before him. At that pre-trial directions hearing, Mr Randall Powell appeared for the appellants, and Mr McCulloch appeared for the Bank. The following exchange occurred: MCCULLOCH: Might I inquire, your Honour is appointed as the trial judge?

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Mr Bakarich is not aware of any written record of the meeting. Mr Bakarich says that he was not expressly asked to consent to his abrogation of his right to a court hearing free of any apprehension of bias. I assume he means that he was not asked to consent to a court hearing at which the judge had some commercial relationship with the counsel for the Bank. 51 The advice went on to assert that the ground of appeal related to apparent bias had little or no prospect of success, and that to pursue it may have some negative consequences; and the advice recommended that this ground be deleted. 52 According to Mr Bakarich, following his receipt of Dr Birch's advice, referred to above, Dr Birch said he would refuse to do the case if Mr Bakarich persisted in the claim of bias and also in the claim concerning alleged contravention of s 121 of the Family Law Act; and in fact this is confirmed by a letter to Mr Bakarich from his then solicitor dated 3 August 2006. Mr Bakarich says he was compelled to withdraw these grounds because he could not find another barrister at that stage and he had already paid Dr Birch a lot of money. 53 On 8 August 2006, senior counsel for the appellants handed up a further amended notice of appeal which was filed in court and which omitted ground 2. 54 On 11 August 2006, the appellants' then solicitor wrote to Mr Bakarich advising him of the filing of the further amended notice of appeal and enclosing a copy. 55 As noted at [1] above, the appeal was heard on 17, 18 and 19 April 2007 and judgment on the appeal was delivered on 13 July 2007. 56 In written submissions prepared by Mr Quinn, then acting as solicitor for the appellants, in support of the application to re-open the appeal, it was submitted that this was a case in which the parties or the public might entertain a reasonable apprehension that the judge might not bring an impartial and unprejudiced mind to the resolution of the questions before him, referring to Livesey v NSW Bar Association [1983] HCA 17; (1983) 151 CLR 288, Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337, and Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488. It was submitted that the "two mights" test was satisfied, because (1) the primary judge had represented the Bank in a number of cases, briefed by the Bank's lawyers, (2) both counsel acting for the Bank were co-directors with the primary judge in public and private companies, (3) the primary judge was in partnership with the Bank's senior counsel and was paid $61,499.50 by him between the hearing and the judgment, and (4) any disclosure by the primary judge and/or by the Bank and its counsel was grossly inadequate. 57 We should also note that Mr Bakarich has made a submission that the primary judge, Mr Sackar and Mr McCulloch were together involved in a travel business. However, the Court has not been referred to any evidence supporting that allegation. 58 In our opinion, no basis is shown for reopening the appeal to consider the allegation of bias. 59 In our opinion, the circumstance that the primary judge represented the Bank on a number of occasions while he was a barrister was not a circumstance such that the parties or the public might entertain a reasonable apprehension that he might not bring an impartial and unprejudiced mind to the resolution of the issues. The evidence does not suggest that the primary judge's representation of the Bank indicated a relationship that was of the order of that considered in S & M Motor Repairs Pty Limited v Caltex Oil (Australia) Pty Limited (1988) 12 NSWLR 358; and the majority of the Court of Appeal in that case held that the trial judge did not err in not disclosing his relationship with Caltex and in not disqualifying himself. Kirby P in dissent held that the trial judge in that case should have done so, but did so on the basis of the duration and intensity of the judge's connection with Caltex (at 375). The evidence does not suggest a connection of that kind in this case. 60 Accordingly, in our opinion, it was not necessary for the primary judge in this case to have disclosed that he had, when a barrister, acted for the Bank on a number of occasions between 1995 and 1998: cf Re Polites (1991) 173 CLR 71. 61 In our opinion also, the common membership of the primary judge, Mr Sackar and Mr McCulloch of Sixth Floor Wentworth Chambers could not possibly be a basis for assertion of apprehended or actual bias; and the circumstance that the primary judge and Mr Sackar were both directors of Counsel's Chambers Limited during the period March 1995 to November 1999 similarly could not do so, as it merely showed that both were taking responsible roles in the administration of a large building of counsel's chambers. Denman Chambers Pty Limited was a service company operating in connection with the Sixth Floor Wentworth Chambers and has not functioned since January 1997; and in those circumstances, the common directorship and shareholding of the primary judge, Mr Sackar and Mr McCulloch could not give rise to any reasonable apprehension of bias. 62 However, the business relationship of the primary judge and Mr Sackar, if not known or disclosed, could have given rise to an apprehension of bias. 63 There is no basis in the evidence for questioning the assertion in Mr Sackar's draft affidavit that, prior to the directions hearing on 10 September 2003, he and the primary judge had agreed to terminate their partnership, that all that remained to be done to that end was to sell the cattle and divide the proceeds, and that the cheque sent by Mr Sackar to the primary judge was a result of this process. It is plain that the appellants' legal advisers knew that a partnership had existed between the primary judge and Mr Sackar, and knew the general nature of that partnership. 64 Mr Bakarich's evidence concerning the lack of disclosure to him of the business relationship between the primary judge and Mr Sackar could be considered as weighing against the assertion in Mr Sackar's draft affidavit as to his conversation with Mr Coles; but no evidence has been led from any of the appellants' legal advisers either to support Mr Bakarich's evidence or to contradict the assertion in Mr Sackar's draft affidavit. In any event, even if Mr Bakarich's evidence on this were to be accepted in its entirety, in our opinion his legal advisers knew enough of the relationship between the primary judge and Mr Sackar for them to be in a position to waive any objection to the primary judge on the ground of his partnership with Mr Sackar. Even if they did not know all the details, they knew of the substance of the relationship, they knew they could ascertain more details by asking the primary judge or Mr Sackar, and the details now disclosed do not suggest they were ignorant of any significant matter. The appellants are bound by the waiver by their legal representatives of such an objection: Smits v Roach [2006] HCA 36; (2006) 227 CLR 423. 65 The withdrawal of the ground of appeal on the advice of Dr Birch constituted a further waiver by the appellants of this objection. It would not matter if Mr Bakarich had felt obliged to withdraw the ground because of pressure from his legal advisers. He and the other appellants would still be bound by the conduct of their legal representatives, at least unless it were shown that there was some material matter not known to the legal representatives. The evidence does not support any finding that there was any material matter not then known to Mr Bakarich or the appellants' legal representatives. 66 In his affidavit in support of the application to reopen under the heading "DIFFERENT MANNER OF DEALING WITH WITNESSES AND THE ENQUIRY AND INTERROGATION BY HIS HONOUR", Mr Bakarich quotes certain passages from the transcript of the trial which he submits demonstrate bias by the primary judge against the appellants and in favour of the bank. In our view the passages demonstrate nothing more than an attempt by his Honour to elucidate and test evidence and, at least in one case, an acceptance of a witness's testimony adverse to the appellants' case at trial. The passages quoted do not support a conclusion of reasonable apprehension of bias.

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However, as often happens in relatively lengthy hearings and as I think probably happened in the present case, the task of agreeing on transcript emendations was committed for discussion and agreement to junior counsel, who may have prepared an agreed schedule of corrections. 77 Transcripts are generally not perfect; and as set out in Mr Coles' letter, it is usual practice for counsel to suggest corrections to the transcript as a trial proceeds, and often such corrections are agreed between counsel. What appears on page 221 of the transcript is an ordinary example of this procedure. The primary judge's statement suggesting that he had already a copy showing the correct version does not suggest any prior communication between Mr Sackar or some other Bank representative and the primary judge, or any other impropriety: indeed, the exchange indicates the contrary. The absence of any recorded response to Mr Coles' question does not suggest any irregularity: if Mr Coles had not been satisfied about the matter, he would surely have spoken up. 78 The reference in the transcript to a loan of $400,000 may or may not be an accurate record of what Mr Bakarich said. Even if it were not, it cannot reasonably be suggested that this materially affected the primary judge's decision; and any suggestion that this was a deliberate and dishonest manipulation of the transcript is fanciful in the extreme. 79 The other alleged omissions from the transcript relate to matters that, if they were material, could have been taken up by the appellants' counsel at the hearing. It appears that the three affidavits referred to by Mr Bakarich were not read, and that may be because Mr Sackar accepted that the deponents were wrong in their assertions. "Neil" was in any event subsequently identified, and if this was important to the case it could then have been followed up. Ms Garland was cross-examined, and if there was anything significant that she volunteered in court before giving evidence, this could have been dealt with in cross-examination. 80 In our opinion, none of the matters raised by Mr Bakarich suggest any irregularity or impropriety, and they do not justify reopening the appeal.

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Bank's dealings with appellants 84 Mr Bakarich claims that the evidence before the primary judge established that on 18 October 1988 the Bank without authority withdrew $15,000 from an account of A Bakarich Industries Pty Limited and put it into an account of Celsius Airconditioning Pty Limited, a company owned by Steven Bakarich and his wife; but no finding to that effect was made by the primary judge and no relief was given in respect of it. 85 Mr Bakarich also claims that the Bank without authority paid out amounts totalling $400,000 from the account of Demson Pty Limited, after Mr Bakarich had in January 1990 instructed the Bank to contact him before approving any transaction on that account; and also claims that he can prove other improper conduct by the Bank. 86 Mr Bakarich also claims that forensic evidence is now available that would show that all the documents relied on by the Bank were executed on the same occasion in September 1989 contrary to the findings of the primary judge and to the findings of the Court of Appeal. 87 More generally, Mr Bakarich claims that the Bank dealt improperly with the appellants' funds to prop up the business of his brother Steven, and misrepresented to Mr Bakarich that this was a successful business, so as to obtain the benefit of guarantees and security from the appellants. 88 In our opinion, none of these matters could justify reopening the appeal. 89 The claim concerning $15,000 was a ground of appeal, but no submissions were advanced in respect of it. No explanation for this is advanced which could justify reopening the appeal to deal with this matter. 90 The claim concerning payment of money from the account of Demson Pty Limited was adverted to in the final version of the appellants' statement of claim (pars 7G to 7K), but apart from an allegation of misleading conduct (par 7R) no cause of action based on this claim was formulated. The claim does not appear to have been supported before the primary judge, and was not included in any notice of appeal and was not raised in the hearing of the appeal. There is still no formulation of any cause of action in respect of this claim, no significant evidence has been provided (for example evidence showing that the Bank was bound to act on Mr Bakarich's instruction or that any person authorising the payments did not have authority to do so), there is no evidence that evidence to prove this case is now available which was not available at the trial, and no explanation is given for not supporting this claim at the trial or on appeal. 91 The circumstance that forensic evidence might now, if permitted, support Mr Bakarich's claim that all documents were executed on the one occasion, could not justify reopening the appeal. Whether or not the evidence would support that conclusion is entirely speculative; and even if it did provide some such support, it is unlikely in the extreme that it could overcome the consideration referred to in par [75] of the original judgment, namely that two guarantees in evidence were in fact executed, were dated 18 August 1989, bore identification T/LS 14(U) and were initially stamped to $527,000; and that on 29 August 1989, two documents dated 18 August 1989 bearing that identification were sent to the Bank's Branch Securities to be stamped to $527,000. 92 The more general complaint was litigated at the trial and on appeal. No evidence has been provided which was not reasonably available at the trial, let alone at the appeal, which could materially affect the decision.

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