Clenae Pty Ltd & Ors v Australia & New Zealand Banking Group Ltd [1999] VSCA 35

I desire to add some brief observations of my own with regard to the appellants' contention that the trial judge was disqualified, by reason of his shareholding in the respondent bank, from giving judgment in the matter. In doing so, I am content to adopt the facts as recited by Charles, J.A.

6. Even if authority binding on this Court compelled me to conclude that the trial judge's acquisition of 2,400 shares in the respondent bank amounted to a disqualifying interest, I would not be prepared for that reason alone, in the peculiar circumstances of this case, to set his Honour's decision aside and order a re-trial. His Honour acquired his shares, by inheritance, some time after the hearing had concluded and before he had given judgment. The trial of the issues had been a lengthy one and, during its course, many witnesses had been called and examined. It no doubt involved the parties in the commitment of considerable resources and expense. It is apparent from his Honour's reasons that many of the issues raised by the evidence were factual and their resolution was, at least in part, clearly dependent upon the judge's view of the character and credibility of the witnesses who gave that evidence. One of the critical witnesses who gave evidence for the respondent bank, Mr. Skehan, had died after the conclusion of the hearing. In these circumstances, I agree with Callaway, J.A. (whose reasons I have also had the advantage of reading in draft) that the nature of the trial and the course which it had followed required the judge to give judgment in the matter, notwithstanding his adventitious acquisition of shares in the respondent company. The obligation imposed upon the judge by the circumstances, in my opinion, went beyond mere convenience of the type to which Kirby, P. referred in Australian National Industries Ltd. v. Spedley Securities (1992) 26 N.S.W.L.R. 411 at 421-2.

9. In any event, and notwithstanding the conclusion which I have expressed in the preceding paragraph, I agree with Charles, J.A. that authority which binds this Court does not compel us to conclude that it is the mere shareholding by a judicial officer ("judge") in a party which, alone, constitutes the "disqualifying pecuniary interest", but rather it is the potential interest, created by that shareholding, in the subject matter or outcome of the litigation which is the disqualifying factor. The survey of the authorities, which Charles, J.A. has made, demonstrates that uncertainty continues to exist about the scope of the pecuniary interest which automatically disqualifies a judge from deciding a cause. Indeed, as his Honour points out, doubt remains as to whether, in this country, the so-called "automatic disqualification rule", by reason of direct pecuniary interest, has survived the development by the High Court of the "reasonable apprehension" test. On the assumption that it has survived, I agree with Charles, J.A. that its scope of operation is limited to the circumstances which his Honour has described.

12. The appellants contend that authority compels us to conclude that the scope of the disqualifying interest rule is much more stringent and requires a judge with a shareholding in a party, no matter how small, to disqualify himself or herself (subject to waiver or necessity), regardless of whether or not the outcome of the case could have any bearing at all upon the judge's interest. The appellants submit that the law requires the application of this strict test in order to ensure that public confidence in the fairness and impartiality of administration of justice can be maintained. Any relaxation of this test, the appellants contend, will lead to practical difficulties because, although judges can be readily assumed to know of their shareholding interests, it cannot be assumed that they can so readily assess the impact of their decision upon the interest which they have.

These contentions raise issues which travel beyond mere academic interest in times when many, if not most judges, can be expected to have shareholdings in corporate litigants.

16. I am, with respect, unable to accept the appellants' submissions. Not only does it seem to me that the scope which Charles, J.A. has attributed to the rule better exemplifies its underlying principle that a person should not be a judge in his or her own cause, but I am by no means satisfied that the rule as his Honour perceives it to be either relaxes standards or creates the practical difficulties suggested.

19. It is the current and standard practice of judges to disclose to the parties, at the outset of a case, the existence of a shareholding interest which they have in one of the parties. That disclosure, as I understand it, is not made in the interests of fulfilling idle curiosity. Rather it is designed to advise the parties of facts upon which they can make an informed decision as to whether the judge's interest could possibly incline him or her to pre-judge the issues. It is not uncommon, in my experience, for the judge to add to the disclosure a statement to the effect that he or she does not believe that the interest disclosed will cause embarrassment in fairly trying the cause.

One thing, however, is clear, whether or not the disclosure is accompanied by the addendum to which I have referred. If the parties elect to proceed with the litigation in the light of the interest disclosed, they will not thereafter be heard to contend that the judge had a possible interest in the outcome of the litigation. In this sense it seems to me that the scope of the waiver itself indicates the scope of the disqualifying interest.

23. Nor, with respect to those who think to the contrary, does it seem to me that the rule, as Charles, J.A. and I perceive it to be, causes the formidable practical difficulties which are said to attend its application. Once the issue of shareholding is raised, the parties will readily be able to direct argument as to whether the outcome might possibly affect or be affected by the interest disclosed. If, ultimately, the judge has any doubt about the matter he or she will be required to withdraw. As I see it, no greater difficulties of fact or degree are created either for the judge, or an appellate court, than exist in a case where the judge is challenged on the grounds of "reasonable apprehension of bias". Indeed this was the question which the trial judge asked himself in Re Maxwell William Ebner (a Bankrupt); Ebner v. The Official Trustee in Bankruptcy [1999] F.C.A. 110. In that case the judge had a beneficial interest in some 9,000 shares in the same bank which is the respondent to this appeal. The bank was not a party to the cause in Ebner's case but it was a major creditor of the bankrupt and stood to gain from the success of the Official Trustee in an action to set aside a transfer from the bankrupt to his wife. The bank, no doubt for that reason, was funding the action brought by the Official Trustee.

At the commencement of the action the judge declared the nature of his shareholding interest in the bank and counsel for the respondent objected to his Honour continuing to hear the case on the ground that such an interest might give rise to a reasonable apprehension of bias. In refusing to disqualify himself the judge said (para 16):

"It seems to me that the issues before the court ... are such that they could not in my opinion impact in any significant way on the share price of the ANZ Bank, and it seems to me therefore that, to that extent, there is no real pecuniary interest that I have in the proceeding in any way which is such that ... an objective observer, knowing all the relevant facts, would entertain a reasonable apprehension that I would not decide the case impartially or without prejudice."

The judge having found for the Official Trustee, the matter went on appeal to the Full Court of the Federal Court. One of the grounds of appeal was that the judge's decision was voidable because he was disqualified on account of his pecuniary interest in a major creditor. Whilst the court expressed reservations about the need for and utility of a strict rule calling for automatic disqualification on account of shareholding in one of the parties (no matter how insignificant), it appears to have accepted, albeit in obiter, that the rule exists in this country in the rigid form for which the appellants here contend (paras 37, 41). The court however expressed the view that such a rule should be narrowly confined in its operation to those cases where the judge has an interest in an actual party to the litigation and stated (para 48) that, if it were not so confined, it would "create formidable practical difficulties".

29. Whatever difficulties might be perceived to exist if the rule were extended to shareholding interests in non-parties, I do not share the view that similar difficulties exist to preclude a judge from determining whether his or her shareholding interest in a party might be affected by the outcome of the cause. The trial judge in Ebner's case appears to have entertained no difficulty in concluding that there could not be any "reasonable apprehension of bias" because the value of his interest in the bank could not possibly have been affected by the outcome of the litigation and, if the appellant in that case had not made the concession that the trial judge was entitled to form that view, the Full Court would have had to consider the same question for itself.

32. If the disqualifying interest rule is to apply in the stringent form for which the appellants here contend, it is not difficult to foresee that its application in that form will give rise to undesirable practices which are just as subversive of the public's confidence in the administration of justice as are the consequences which the appellants contend will flow from the broader formulation of the rule which I prefer. If a judge is bound to stand aside, upon objection, on account of holding a share interest in a party which could not possibly be affected by the outcome of the cause, then not only will inconvenience, cost and delay be occasioned to the parties but it will inevitably provide opportunities to parties to seek to avoid a hearing before judges whom they regard as possibly unfavourable to their cause. Furthermore, on this view, if the judge neglects, or fails for whatever reason, to disclose such an interest, his judgment will be liable to be set aside. As the court in Ebner's case remarked (para 37):

"Why is it to be assumed that the confidence of fair-minded people in the administration of justice would be shaken by the existence of a direct pecuniary interest of no tangible value, but not by the waste of resources and the delays brought about by the setting aside of a judgment on the ground that the judge is disqualified for having such an interest?"

I agree with the sentiments expressed by the court in this passage. It is such reasons which compel me to the view that, if the automatic disqualification rule continues to exist, it does not operate to automatically disqualify a judge on grounds of mere shareholding in a party alone, but is limited to cases where the judge's pecuniary interest will or might be affected by the outcome of the relevant proceedings.

40. In the late 1940s, Clement Martin Quick ("the deceased") with other members of the Quick family bought a property (which they called "Clenae") of some 1,680 acres in the Warracknabeal district. Mr. Quick died on 4 October 1986 leaving two sons, Clement Reginald Quick ("C.R. Quick") and Wesley Malcolm Quick ("W.M. Quick"), who became his executors. The Quick brothers, with their father while he was alive, carried on business as farmers and graziers near Brim, in western Victoria, and the brothers have for a number of years conducted business, together with their wives, under the name of C.M. Quick & Sons. By 1985 the Quick family had progressively built up their land holding in the Warracknabeal district to a total of in excess of 6,300 acres in eight different parcels of land.

43. Since the 1920s the Quick family had banked with the Warracknabeal branch of the Australia and New Zealand Banking Group ("the Bank") and its predecessor known in the 1920s as "the Union Bank". The brothers had commenced farming in partnership with their parents, but since about 1971 the brothers took all major decisions together. Most dealings with the Bank were however left to Mr C.R. Quick.

46. In the early 1980s the Bank established a new form of lending under which the debtor's liability to the Bank to repay principal and interest was expressed in a foreign currency. The Bank promoted foreign currency loans to farmers in the Horsham district. On 5 March 1985 Mr. C.R. Quick attended the Wimmera Machinery Field Day at Longerenong Agricultural College in Horsham where the Bank had a marquee and there were bank managers available to discuss what the Bank could do for farmers. On this occasion Mr. Quick heard some officer of the Bank speaking of the advantages and desirability of a foreign currency loan in Swiss francs for farmers, and in particular to finance the purchase of farms. One of the points emphasized by the Bank officer was that foreign currency loans had low interest rates and were five-year interest-only loans.

50. Shortly after the March Field Day, a property (called "Weidemans") which linked two of the Quicks' properties came onto the market. The Quicks were interested in purchasing Weidemans and estimated they needed approximately $300,000 for the purpose. Their borrowings from the Bank, in overdraft and under mortgages enabling the purchase of various other properties then amounted to some $700,000. Mr. C.R. Quick went to the Bank's Warracknabeal branch manager, Mr. S. May, and told him of their interest in buying Weidemans. They discussed the finance needed and Mr. Quick asked Mr. May about borrowing offshore.

53. On 17 May 1985 the Quicks signed a sale note for the purchase of Weidemans, subject to finance. On 18 June 1985, Clenae Pty. Ltd., a company established by the Quick family in or about 1982 to hold one of their properties, executed the Bank's standard form entitled "Foreign Currency Loan Application - Form B", making application to the Bank for the provision to it "of a loan facility funded by borrowing by the Bank overseas", and stating that the "making of an Advance by the Bank to the customer shall be and be evidence of the acceptance by the Bank of this Application on the terms and conditions set out."

56. On 27 June 1985 the Bank advanced AUD$1m. to Clenae which, when disbursed in accordance with the Bank's letter of 1 July, paid off most, if not all, of the Quick family's existing debts and the price outstanding for Weidemans. The sum of AUD$1m. represented CHF1,720,000 and the interest rate was said to be then 7.681 per cent.

59. By the month of December 1985 there had already occurred a substantially adverse movement in the exchange rate of the Australian dollar against the Swiss franc. On 20 December 1985 and in June 1986 the loan was rolled over for a further six-month period. On 22 January 1987 however the loan was converted, at the insistence of the Bank, into a loan in Singapore dollars, and in March 1987 the Bank placed a stop loss order at 1.39 Singapore dollars on the account. On 4 November 1987 the Australian dollar fell below the level fixed by the stop loss order and the foreign currency loan was converted by the Bank from approximately SGD$2.4m. to approximately AUD$1.8m.

62. In about June 1988 the Bank established a further overdraft limit of $120,000 ("to fund the 1988-1989 cropping programme") at which time the Quicks signed a document, including the following:

"We acknowledge and agree that our liabilities to the Bank, including those in the name of our family company Clenae Pty. Ltd. as at 30 March 1988 stand at $2,446,346.88 including bank interest accrued and bank fees but excluding the additional $120,000 line."

A written agreement dated 31 August 1989 ("the First Agreement") was later executed between the Bank, and Messrs. C.R. and W.M. Quick and Clenae Pty. Ltd. The First Agreement provided inter alia -

"That the Quicks should pay to the Bank in reduction of principal three equal consecutive instalments of $170,000 on 31 March 1990, 1991 and 1992 and the proceeds of the sale of 'lots' to be sold no later than 31 March 1991."

A second agreement was executed on 9 June 1992 ("the Farm Restructuring Agreement") between the Bank and Messrs. C.R. and W.M. Quick and Clenae Pty. Ltd. A third agreement was executed on 15 October 1993 between the same parties ("the October Agreement"). The First Agreement contained releases by Messrs C.R. and W.M. Quick and Clenae Pty. Ltd. of the Bank "from all liability, actions, claims, suits, demands and costs whatsoever". The second and third agreements contained releases of claims against the Bank in substantially similar form.

70. The writ in these proceedings was issued by the Bank on 7 February 1994. Repayment was claimed of the various sums alleged to be owing by Clenae Pty. Ltd. and Messrs C.R. and W.M. Quick to the Bank, and which were said to total (together with interest) some $3,026,269.80. Of these amounts, $1m. represented the original foreign currency loan to Clenae Pty. Ltd., some $222,000 a further loan to C.M. Quick & Sons, and $178,000 a further loan to Clenae Pty. Ltd.. Large amounts were owing by way of interest on each of these loans. Between 1985 and 1995 a number of poor farming seasons had been experienced in the Wimmera district and financial returns were well below projected incomes in a number of these years, which had contributed to the Quick family's inability to meet many interest payments.

73. The defendants counterclaimed against the Bank and, at the trial, the principal issues were, in broad terms, first, whether the Bank had, or alternatively, was entitled in the circumstances to enforce, legal rights against the defendants in respect of moneys advanced to them by the Bank; and, secondly, whether the defendants were entitled to succeed in various causes of action founded on differing obligations alleged to be owed by the Bank to the defendants, including one of honesty, one to exercise reasonable care and skill, one not to engage in misleading and deceptive conduct, and one not to engage in unconscionable conduct, and a fiduciary obligation. The Bank, for its part, denied each of the allegations made by the defendants of breach, and further relied on the three releases to which previous reference has been made.

76. The proceedings were heard by the learned judge over some 18 days in March, April and May 1996. On 25 March 1996 his Honour directed that the trial proceed on all issues other than the quantification of damage on the counterclaim. His Honour reserved his decision on these issues on 2 May 1996. During the trial his Honour heard evidence from Mr. C.R. Quick and Mr. W.M. Quick, Mrs. Cheryl Quick, and various other witnesses on the part of the defendants, and some ten witnesses on behalf of the Bank.

The acquisition by the judge of a shareholding in the Bank

81. On 14 July 1996, some two-and-a-half months after judgment had been reserved, the learned judge's mother died. The judge and his brother were named as executors of their mother's estate under her will dated 10 December 1995. An application for probate was made by his Honour and his brother to the Supreme Court of Victoria, and probate was granted to them on 12 September 1996. His Honour swore an affidavit on 4 September 1996 referring to an Inventory of Assets and Liabilities for his mother's estate which was signed by his Honour.

84. By the will, the learned judge and his brother were bequeathed the deceased's residuary estate as tenants-in-common in equal shares. The residuary estate included 4,800 shares in the Bank, and a debenture No. 1366106005 for $200,000 secured over the assets of Esanda Finance Corporation Limited ("Esanda"). Esanda was, on 15 October 1997, a wholly-owned subsidiary of the Bank. On 9 October 1996 his Honour became registered as the holder of 2,400 shares in the Bank.

88. On 9 October 1997, the learned judge published his reasons for judgment and at 10 a.m. on 10 October his Honour made orders in accordance with minutes of proposed orders submitted by the parties. In reasons for judgment, the learned judge rejected each of the defendants' claims that the Bank had acted in breach of the various obligations alleged against it. Insofar as the defendants' claim was based on negligent misstatements alleged to have been made by Mr. W.J. Skehan (the Bank's Ballarat Area Manager) to Mr. C.R. Quick, his Honour in substance rejected the defendants' evidence and accepted Mr. Skehan's evidence. Although his Honour accepted in part Mr. C.R. Quick's evidence as to what was said on behalf of the Bank at the Wimmera Field Day and by Mr. Moreno (the State Manager, International Services, of the Bank), nevertheless, in the light of the continued warnings which his Honour found had been given by Mr. Skehan and Mr. C.R. Quick's own evidence as to his appreciation of the risks of currency fluctuations, his Honour was not satisfied that negligent statements (if any) made at the Wimmera Field Day or by Mr. Moreno had played any material part in inducing the Quicks to enter the foreign currency loan. The learned judge also accepted that the releases contained in the first and second agreement were effective to release the Bank from all claims the defendants had against the Bank relating to the foreign currency loan (if, contrary to his Honour's conclusions the defendants had any). His Honour rejected the defendants' claims that these agreements (and the releases) were entered into as a result of unconscionable dealing by the Bank or as a result of illegitimate pressure by the Bank amounting to economic duress. Mr Skehan died on 1 September 1997.

The discovery by the defendants of the learned judge's shareholding

92. At 11 a.m. on 10 October 1997, one hour after the learned judge had made orders in accordance with the minutes of orders submitted by the parties, the appellants' solicitor searched the share register of the Bank and found that his Honour and his brother were each the registered owner of 2,400 "A" class $1 fully-paid shares in the bank.

96. From these orders, the defendants, as appellants, brought two separate appeals, which were heard together by this Court. In the principal appeal, the appellants' first argument was that the trial judge was disqualified from giving judgment by reason of direct pecuniary interest. The second issue was whether the learned judge was in error in the way in which the appellants' claims in the tort of negligence were rejected. The appellants also relied upon the equitable doctrine of unconscionability, and sought to argue that the releases were not effective to release the Bank from the various claims made by the appellants. The second appeal which was sensibly not pressed in this Court related to a claim that the learned judge should have recalled or withdrawn his judgment upon application.

The first ground - disqualification by way of interest

100. Mr. Douglas, Q.C., who appeared with Mr. Connor for the appellants, argued that the learned judge acquired his shares in the Bank whilst he was adjudicating in this particular matter, and did not disclose that fact to the parties. Accordingly he submitted that the judgment and orders must be set aside. In his submission the fundamental principle was that no person can be a judge in his own cause and the principle extended to situations where the judge is not a party but has a financial or property or proprietary interest in the outcome of the proceeding. Mr. Douglas submitted that the judge was disqualified automatically and without any investigation into whether there was a likelihood or suspicion of bias. The principle applied, so the argument ran, to the situation where the judge holds shares in a company which is a party to the litigation, and it was submitted that the extent of the judge's personal or pecuniary interest in the outcome was immaterial. The principle was said to apply to such an interest however small. Reliance was placed on a line of cases beginning with Dimes v. Grand Junction Canal Proprietors [1852] EngR 789; (1852) 3 H.L.C. 759 and continuing to R. v. Bow Street Magistrate; ex parte Pinochet Ugarte (No. 2) [1999] UKHL 1; [1999] 2 W.L.R. 272. Mr. Douglas also submitted that an interest in the nature of a loan to a party was also a sufficient pecuniary interest to require a judge to disqualify himself unless the parties consented to his hearing the case, but reliance was primarily placed upon the learned judge's shareholding. Indeed the relevant ground of appeal as amended during argument, asserts that "the learned trial judge was disqualified from giving judgment in the matter by reason of beneficially holding 2,400 shares in the respondent company."

103. Mr. Shaw, Q.C., who appeared with Mr. Berglund for the Bank, argued that the appellants' submissions failed to take into account properly the fact that it is not the mere holding of an interest which disqualifies a judicial officer. The interest, said Mr. Shaw, must be one which may be affected by the decisions to be made. To suggest otherwise, particularly in relation to an assertion that an interest as a lender is sufficient to disqualify the judicial officer, would render most judicial officers incapable of hearing cases involving their bankers if they held a credit account with the bank. Mr. Shaw submitted that the rule may be stated as being: subject to exceptions relating to waiver and necessity a judicial officer is disqualified from participating in a decision where he or she has a direct pecuniary interest in the outcome of the proceeding; such an interest occurs when the judicial officer has an interest in one of the parties to the proceeding and as a direct result of the decision made it can reasonably be said that the value of the interest will vary; it matters not that the interest on variation in value is small. Mr. Shaw submitted that in the present appeal the value of the interest held by his Honour was so unlikely to be affected by the decision of the court having regard to the effect a successful claim would have upon a company the size of the Bank, and the fact that its shares are traded on the Australian Stock Exchange, that it could not be said that the judge had a pecuniary interest in the outcome of the proceeding. He submitted that it could not be the case that a judge who has a shareholding in a party, but which shareholding will not be affected by any decision to be made, has a direct pecuniary interest in the outcome of the proceeding or has such an interest that warrants disqualification.

The evidence before the Court as to the judge's shareholding

107. The affidavit material disclosed that in an inventory of assets and liabilities as at 29 August 1996 the judge's mother was shown as having 4,800 shares in the Bank, each of which was said then to have a value of $6.01, the shareholding being valued at $28,848. The value of these shares on the Australian Stock Exchange during the period 14 July 1996 to 9 October 1997 fluctuated from $5.90 per share on 17 July 1996 to $11.45 on 26 September 1997. On the latter date, therefore, the value of 2,400 such shares was $28,290. The 1998 financial statements of the Bank, summarizing the financial position of the Bank and its subsidiaries for the financial year ending 30 September 1998, show that as at 30 September 1998 the Bank's share capital was 1,539,440,677 ordinary shares fully paid, 169,000 ordinary shares paid to 10 cents per share and 64,016,000 preference shares fully paid; and there were 151,564 shareholders. In 1997 the ordinary issued shares of the Bank numbered 1,508.6m. and there were 132,450 shareholders. As at 30 September 1997 the net assets of the Bank and controlled entities were $6,993m. The figure for 1998 was $8,391m. Share capital and reserves attributable to members of the Bank as at 1997 were $6,943m., and for 1998 $8,335m. Operating profit after income tax of the Bank for 1997 was $1,024m. and for 1998 was $1,106m. In 1997 $695m. was the amount provided for or paid in ordinary share dividends. For 1998 the amount provided for or paid in ordinary share dividends was $747m.

110. Mr. Douglas conceded at the outset of his argument that he could not argue on the evidence before this Court that any verdict would have affected the value of the shares at the end of the litigation. Clenae Pty. Ltd. and W.M. Quick & Sons had received loans from the Bank (including their foreign currency loan in dispute) to the value of at least $1,400,000, upon which most interest remained unpaid. The total debt figure as at the time of issue of proceedings in 1994 was some $3,026,000. Although the defendants claimed unliquidated damages, if they had succeeded on all issues it is unlikely that the verdict would have exceeded $1m. Even if the amount of damages were put at $1.5m., it could not, I think, have been seriously argued that an award of this order would have had any impact at all on the value of the judge's shares or on the potential dividend payable for the shares. Nor could it have had any impact on Esanda's ability to meet its obligations on the debenture for $200,000 which was part of the estate of the judge's mother. In all the circumstances I have no doubt that Mr. Douglas' concession was properly made.

114. It is a fundamental principle of our law that a person may not be a judge in his or her own cause. The test to be applied by the courts has been settled by a long list of decisions of the High Court in the following terms: that a judge should not sit to hear a case if in all the circumstances the parties or the public might entertain a reasonable apprehension that the judge might not bring an impartial or unprejudiced mind to the resolution of the question involved in it; see e.g. R. v. Commonwealth Conciliation and Arbitration Commission; ex parte Angliss Group (1969) 122 C.L.R. 546, at 553-554; R. v. Watson; ex parte Armstrong [1976] HCA 39; (1976) 136 C.L.R. 248, at 261-262, 264, 267; Livesey v. NSW Bar Association [1983] HCA 17; (1983) 151 C.L.R. 288 at 293-294, 300; Re JRL; ex parte CJL [1986] HCA 39; (1986) 161 C.L.R. 342, at 349, 351, 359, 368, 371; Webb v. R. [1994] HCA 30; (1993-1994) 181 C.L.R. 41 at 47, 57, 67, 87. The High Court has specifically rejected (Webb per Mason, C.J. and McHugh, J. at 47, Brennan, J. at 57, Deane, J. at 69-74, Toohey, J. at 87-88) the test which continues to be applied in the House of Lords, the "real likelihood" or "a real danger" of bias; R. v. Gough [1993] UKHL 1; [1993] A.C. 646, at 670 per Lord Goff of Chieveley. In Webb, Brennan and Deane, JJ. dissented, but only as to whether the fair-minded observer would in all the circumstances have apprehended a lack of impartiality on the part of a juror, not as to the law. The test applied in Australia is of a reasonable apprehension on the part of a fair-minded and informed observer (Webb, at 53, 57 and 73-74). Deane, J. in Webb (at 73) said that the knowledge to be attributed to the fair-minded observer is -

"a broad knowledge of the material objective facts as ascertained by the appellate court, as distinct from a detailed knowledge of the law or knowledge of the character or ability of the members of the relevant court. The material objective facts include, of course, any published statement, whether prior, contemporaneous or subsequent, of the person concerned."

118. There are, as Deane, J. observed in Webb at 74, at least four distinct, though sometimes overlapping, main categories covered by the doctrine of disqualification by reason of the appearance of bias; the first of which, for present purposes, is disqualification by interest. It has been conventional to distinguish allegations of bias through pecuniary interest from other allegations of a non-pecuniary nature, since the very special case of a direct pecuniary interest, when found to exist, results in the disqualification of the judge being automatic, without there being any "question of investigating, from an objective point of view, whether there was any real likelihood of bias, or any reasonable suspicion of bias, on the facts of a particular case"; Gough per Lord Goff of Chieveley at 661; see also Dimes at 793; Webb per Deane, J. at 74-75. Since Webb, there is now a question, to which I shall return, whether in Australia it is the same test (the "reasonable apprehension" test) which must be applied to all four categories notwithstanding that disqualification follows automatically upon a finding of direct pecuniary interest; see in particular per Deane, J. in Webb at 67-68, and 74-75, in a detailed examination of the categories of case covered by the doctrine of disqualification by reason of an appearance of bias. The view that there is a single test applicable to all four categories may also be implicit in the language used in Webb by Mason, C.J. and McHugh, J. at 47-53 (with whom Brennan, J. agreed at 57) and by Toohey, J. at 86-87. The Court in Webb was however not concerned with apparent bias resulting from pecuniary interest. If the reasonable apprehension test is also to be applied to the category of pecuniary interest, it presumably does so on the presumptive basis that a relevant direct pecuniary interest immediately establishes the necessary reasonable apprehension or suspicion.

121. The argument for the appellants was that if a judge owns any shareholding, however small, in a litigant, that is in itself sufficient to disqualify the judge as having a direct pecuniary interest in the proceedings. There is a substantial body of case law which supports this submission, although, I think, none which could be regarded as binding Victorian courts to take such a view. It is convenient to begin with Dimes. There the Lord Chancellor had an interest as shareholder in the Grand Junction Canal, a public company. The Vice-Chancellor granted the relief sought by the company against a landowner and the Lord Chancellor on appeal affirmed the order. In the House of Lords, Lord Campbell said, at 793-794 -

"No one can suppose that Lord Cottenham could be, in the remotest degree, influenced by the interest that he had in this concern; but, my Lords, it is of the last importance that the maxim that no man is to be a judge in his own cause should be held sacred. And that is not to be confined to a cause in which he is a party, but applies to a cause in which he has an interest. Since I have had the honour to be Chief Justice of the Court of Queen's Bench, we have again and again set aside proceedings in inferior tribunals because an individual, who had an interest in a cause, took a part in the decision. And it will have a most salutory influence on these tribunals when it is known that this high Court of last resort, in a case in which the Lord Chancellor of England had an interest, considered that his decree was on that account a decree not according to law, and was set aside. This will be a lesson to all inferior tribunals to take care not only that in their decrees they are not influenced by their personal interest, but to avoid the appearance of labouring under such an influence."

125. Then in R. v. Hammond (1863) 9 L.T.(N.S.) 423 Blackburn, J. said (arguendo) "The interest to each shareholder may be less than a farthing, but still it is an interest". Again, in R. v. Rand (1866) L.R. 1 Q.B. 230, Blackburn, J. (speaking for the Court of Queen's Bench) said at 232 -

"There is no doubt that any direct pecuniary interest, however small, in the subject of inquiry, does disqualify a person from acting as a judge in the matter; and if by any possibility these gentlemen, though mere trustees, could have been liable to costs, or to other pecuniary loss or gain, in consequence of their being so, we should think the question different from what it is: for that might be held an interest. But the only way in which the facts could affect their impartiality, would be that they might have a tendency to favour those for whom they were trustees; and that is an objection not in the nature of interest, but of a challenge to the favour."

Then, in Leeson v. General Council of Medical Education and Registration (1889) 43 Ch.D. 366, Bowen, L.J. said, at 384 -

"Nothing can be clearer than the principle of law that a person who has a judicial duty to perform disqualifies himself from performing it if he has a pecuniary interest in the decision which he is about to give, or a bias which renders him otherwise than an impartial judge. If he is an accuser he must not be a judge. If he has a pecuniary interest in the success of the accusation he must not be a judge. Where such a pecuniary interest exists, the law does not allow any further inquiry as to whether or not the mind was actually biased by the pecuniary interests. The fact is established from which the inference is drawn that he is interested in the decision, and he cannot act as a judge."

One of the strongest statements to the same effect is that of Lord Buckmaster in Sellar v. Highland Railway Co. [1919] UKHL 1; [1919] S.C.(H.L.) 19, most recently quoted by Lord Hope of Craighead in Pinochet at 288. After referring to Dimes, Lord Buckmaster said -

"The law remains unaltered and unvarying today, and, although it is obvious that the extended growth of personal property and the wide distribution of interests in vast commercial concerns may render the application of the rule increasingly irksome, it is nonetheless a rule which I for my part should greatly regret to see even in the slightest degree relaxed. The importance of preserving the administration of justice from anything which can even by remote imagination infer a bias or interest in the judge upon whom falls the solemn duty of interpreting the law is so grave that any small inconvenience experienced in its preservation may be cheerfully endured. In practice also the difficulty is one easily overcome, because, directly the fact is stated, it is common practice that counsel on each side agree that the existence of a disqualification shall afford no objection to the prosecution of the suit, and the matter proceeds in the ordinary way. But if the disclosure is not made, either through neglect or inadvertence, the judgment becomes voidable and may be set aside."

133. A like view has not infrequently been taken in courts in this country; see, in New South Wales, Commercial Banking Company v. Balgarnie [1864] S.C.Rep. 27, at 28-29 per Stephen, C.J. and Wise, J. (the latter quoting Dimes); and Ex parte Dalton [1876] S.C.Rep. 277, at 281-2 per Martin, C.J. and Manning, J.; and in Queensland, R. v. Lowe, ex parte Queensland [1912] S.C.Rep.Qd. 188.

136. The rationale for these decisions begins with the proposition that a person may not be a judge in his own cause. Lord Hewitt C.J. in R. v. Sussex Justices, ex p. McCarthy [1924] 1 K.B. 256 in a celebrated passage at 258-259 referred to it being of "fundamental importance that justice should not only be done, but should manifestly be seen to be done". Judges (such as Lord Buckmaster in Sellar) have emphasized the importance of preserving the administration of justice from anything which can even by remote imagination infer a bias in the judge; once a personal financial interest of the judge has been shown to exist, there is said to exist a powerful risk of bias on the part of the judge, no matter how hard the judge strives to overcome it (Galligan, Due Process and Fair Procedures; A Study of Administrative Procedures, 1996, 446). Since there would obviously be a difficulty in determining when exactly a shareholding becomes large enough so that partiality might be suspected, it is argued that the most practical approach remains the disqualification of the judge, no matter how small the shareholding (Cranston, Disqualification of Judges for Interest, Association or Opinion [1979] P.L. 237 at 243).

139. Considerations such as these have led numerous texts to support the rule in its strictest form; see e.g. De Smith, Woolf & Jowell, Judicial Review of Administrative Action, 5th ed., 1995, 528-9; Aronson & Dyer, Judicial Review of Administrative Action, 1996, 597-598; Craig, Administrative Law, 1983, 291-2; Halsbury's Laws of Australia, Vol. 8, Disqualification for Interest and Bias, paras. 125-290, 125-295, 125-300; Jones & Thompson, Garner's Administrative Law, 8th ed., 1996, at 242-243; The Laws of Australia, Vol. 2, Chapter 4, The Rule Against Bias; par.57; Cranston, op cit, 238-243.

142. Dimes is the decision usually quoted as the principal source of the rule. Upon examination, it is hardly a compelling authority for the view that the rule must be applied, no matter how small the shareholding. The Lord Chancellor owned a substantial shareholding in the Grand Junction Canal company, the shareholding being said to have a value of "several thousand pounds". The then Lord of the Manor of Rickmansworth (see 3 H.L.C. at 760-761), placed a bar across the canal and then threw a large quantity of bricks into the canal to prevent the passage of barges, threatening wholly to stop navigation unless the company paid him £5,000. That sum would by today's measurement have a value well in excess of AUD$500,000 (Global Financial Data, a measure available on the Internet of English consumer prices from 1264-1998, suggests that as from 1855 to 1998 it would be necessary to multiply the 1855 figure by a factor of roughly 46 to achieve 1998 values). The landowner's proposed actions would have brought the business of the canal company to a complete halt. Lord Cottenham was repeatedly referred to in argument as being "largely interested" (at 768), as having an interest in the company which was "very considerable" and being "a large shareholder" (both at 769). Dimes is scarcely the best springboard for the view that an insignificant shareholding in a litigant is sufficient to disqualify a judge.

145. When one examines the 19th century decisions concerning disqualification for pecuniary interest, it must be borne in mind that it was not until the Limited Liability Act 1855 that a company could secure the limited liability of its members to the nominal amount of the shares held by them respectively. The Companies Act 1862 was the first enactment to bear that short title. It was not until 1897 that Salomon v. A. Salomon & Co. Ltd. ([1897] A.C. 22) entered the law reports. Although it is now long-established that a shareholder has no interest in the assets of the company (Macaura v. Northern Assurance Co. Ltd. [1925] A.C. 619 per Lord Buckmaster at 626; Re Webster [1975] HCA 22; (1975) 132 C.L.R. 270, at 287), the attitude of members of even the Court of Appeal in 1895 was, not surprisingly, very different from today's. Notwithstanding that all three judges in that court had no doubt that the incorporation of A. Salomon & Co. Ltd. had been properly effected, and that every necessary detail for incorporation had been scrupulously observed (Broderip v. Salomon [1895] 2 Ch. 323 per Lindley, L.J. at 337, per Lopes, L.J. at 340 and per Kay, L.J. at 343), Lindley, L.J. said (at 338-9) that Mr. Salomon's incorporation of his business was merely "a device to defraud creditors", that -

"In a strict legal sense the business may have to be regarded as the business of the company; but if any jury were asked, Whose business was it? they would say Aaron Salomon's, and they would be right, if they meant that the beneficial interest in the business was his."

"If the legislature thinks it is right to extend the principle of limited liability to sole traders it would no doubt do so, with such safeguards, if any, as it may think necessary. But until the law is changed such attempts as these ought to be defeated whenever they are brought to light. They do infinite mischief; they bring into disrepute one of the most useful statutes of modern times, by perverting its legitimate use, and by making it an instrument for cheating honest creditors."

151. These sentiments were echoed in both the other judgments in that court. As Lord Halsbury, L.C. said on appeal ([1897] A.C. at 33-34):

"The truth is that the learned judges have never allowed in their own minds the proposition that the company has a real existence."

155. In more recent times the interest of the shareholder has been viewed in a rather different light from that taken by the Court of Appeal in 1895. In The Modern Corporation & Private Property, (1991), Berle and Means, at 114, identified the three principal interests of the shareholder in a company as being first that the company should be made to earn the maximum profit compatible with a reasonable degree of risk, secondly that as large a proportion of these profits should be distributed as the best interests of the business permit, and thirdly that the stock should remain freely marketable at a fair price. Consistently with these propositions, it cannot now be said that a shareholder is in any sense a party to litigation in which the company is involved. As Lord Goff said in Pinochet, after referring to Dimes, at 286 -

"As stated by Lord Campbell the principle is not confined to a cause to which the judge is a party, but applies also to a cause in which he had an interest. Thus, for example, a judge who holds shares in a company which is a party to the litigation is caught by the principle, not because he himself is a party to the litigation (which he is not), but because he has by virtue of his shareholding an interest in the cause. That was indeed the ratio decidendi of the famous Dimes case itself."

159. If then the shareholder is not a party to litigation in which the company is involved, and has no interest in the assets of the company, it should follow that the shareholder would not ordinarily have a financial interest in the outcome of litigation in which the company was a party unless the outcome might, as a possibility, affect either the value of the shares in question or the potential dividend attributable to them. And, if a judge as shareholder does not become a party to litigation in which the company is involved, and has no legal or equitable interest in the company's assets, why should the judge be disqualified by a shareholding unless the value of the shares or the amount of the likely dividend could be affected by the outcome; or, that is, unless the judge is financially interested in the outcome of the litigation? There remains a further question whether the judge should be disqualified if the shareholding can be described as significant, even though the judge has no financial interest in the outcome of the litigation.

163. It is the practice of most, if not all, Victorian (and, I believe, Australian) judges who hold shares in companies litigating in their courts to declare their shareholding at the outset of proceedings, a course which (as Lord Buckmaster predicted in Sellar) is almost invariably followed by the parties stating that they have no objection to the judge continuing in the case. The consequence is, naturally, that there is relatively little recent authority on the question whether a shareholding in a litigant company is sufficient to disqualify a judge, in the absence of consent of the parties. The issue arose in the course of the Bank Nationalization case (Bank of New South Wales v. Commonwealth [1948] HCA 7; (1948) 76 C.L.R. 1) when it was disclosed that the wife of Starke, J. held shares in one of the plaintiff banks and that Williams, J. was a holder of shares in two of the plaintiff banks, but this holding was as bare trustee for the judge's sister who lived abroad. In the course of argument, Latham, C.J. said -

"You draw a distinction, do you not - an actual pecuniary interest and embarrassment in hearing the case? For example, if there is any degree of pecuniary interest, however small, a judge is disqualified from sitting. If, however, there is no pecuniary interest, then it becomes a matter of a question in all the circumstances of the case whether there is any degree of embarrassment which would prevent a fair trial. In neither of the cases mentioned is there any actual pecuniary interest - none. My learned brothers have said that they do not regard the existence of the facts stated as in any way affecting a fair and impartial consideration of the issues in the case. It appears to me that that has to be accepted."

(This passage was not included in the report in 76 C.L.R., but was quoted by Wanstall, J. in R. v. The Industrial Court [1966] Qd.R. 245 at 279-280.)

168. In R. v. The Industrial Court, the Full Court of the Supreme Court of Queensland held that the President of the Industrial Court was not disqualified by virtue of the fact that his wife held some 1,235 five-shilling stock units in Mt Isa Mines Ltd., which was a party to proceedings before the Industrial Court involving a long industrial dispute. The court held that the President did not by virtue of his wife's shareholding have a disqualifying interest, the question being whether in all the circumstances of the case it had been shown that there was a real likelihood of bias, all three judges relying on the Bank Nationalization Case for this purpose (Mansfield, C.J. at 268, Mack, J. at 278, and Wanstall, J. at 278-282).

171. The statement by Latham, C.J. in argument in the Bank Nationalization Case gives some support to the view that any degree of pecuniary interest, however small, is sufficient to disqualify a judge from sitting, although no clear assistance was given for identifying how such an interest is to be found to exist. The Bank Nationalization Case is presumably authority for the view that a small shareholding held by a judge's wife is not a source of disqualification for the judge, nor is a shareholding held as bare trustee for a relative. The case was certainly treated as authority for the former proposition by all members of the Full Court in Queensland in 1966.

174. In Holyoak v. R. (Butterworths Unreported Cases, BC9504155, Court of Criminal Appeal of Western Australia, 7 September 1995) a juror disclosed after the jury had been empanelled that she was a "reasonably modest" shareholder in Westpac Bank, the parent company of Australian Guarantee Corporation Ltd., which was the complainant in relation to a number of charges of false pretences and forgery with which the accused had been charged. Counsel for the accused asked the judge to discharge the juror, but the judge refused. The appellant was convicted and one of the grounds of appeal was the failure to discharge the juror. Malcolm, C.J., with whom Pidgeon and Steytler, JJ. agreed, said at 6 that since Webb, the test to be applied for determining whether a juror should be discharged for bias was the reasonable apprehension test as formulated by Mason, C.J. and McHugh, J. in Webb at 47 and rejected the view that a fair-minded and informed member of the public would have had any such apprehension or suspicion. I should add that in Webb, all members of the Court agreed in the view that the test for the apprehension of bias applies to jurors in precisely the same way as it does to judges (Mason, C.J. and McHugh, J. at 53, Brennan, J. at 57, Deane, J. at 68-69, and Toohey, J. at 87). Malcolm, C.J. stated in terms that, after Webb, the test to be applied where a juror was said to be biased by reason of a shareholding was the reasonable apprehension test.

177. Justice Thomas of the Supreme Court of Queensland in Judicial Ethics in Australia (2nd ed. 1997) stated at 54-55, on the basis of the Bank Nationalization Case and R. v. Industrial Court that "Australian courts have adopted a pragmatic approach in the area of financial interest." After referring to the argument that Dimes allows no discretion to the appeal court and that the ownership of even a small parcel of shares in a large corporation renders the decision of the trial judge void, his Honour continued -

"Whilst that view is arguable, I disagree with it. It is difficult to think that any court of authority today in Australia would void a decision where the holding was so indirect, theoretical and immaterial. A question of degree seems to be involved."

183. The approach of Australian courts to this question has been criticized as involving an unacceptable departure from Dimes (see e.g. Cranston, at 239-240, 242-243). This criticism is open to the objection that the view expressed in argument in the Bank Nationalization Case and the decision in R. v. Industrial Court both arrive at a conclusion (that the judges were not disqualified by bias) entirely consistent with that to which Blackburn, J. came in Rand. But if the criticism implies that English courts maintain a more strict and "principled" approach to the question of bias through financial interest than do Australian courts, or that Australian courts have been alone in applying some more flexible and lesser standard, that criticism appears to be unjustified. Writing in 1976, Professor Shetreet (Judges on Trial, at 303-4) stated the law in strict terms, that any pecuniary interest, no matter how small, is sufficient to disqualify a judge; but later asserted (at 309) that -

"The English practice does not take the strict view and allows a judge to sit when the interest is minor or minimal provided that he always discloses it. Whether or not the shareholding would be regarded as minor would depend on the number of shares, when compared with the total capital; the amount involved in the litigation; whether the company is a public or private company; whether the judge has shares in the company which is a party to the proceedings or in another company which has an interest in it, and how much interest it has in it; to what extent the issue under adjudication would have any effect on his interest."

These views were formed after very wide-ranging interviews had been conducted in and following 1972 with many members, including judges, of the legal profession in England. The author also stated that a shareholding by the judge's wife was considered in the same light as if the judge himself were a shareholder. I have some difficulty with the author's qualification that the judge is allowed to sit "provided that he always discloses" his shareholding. If the shareholding is properly to be regarded as a disqualification, disclosure of its existence would merely create the occasion for a party to object, or by consenting, to waive any such objection; and absent a waiver, the disqualifying factor should under the strict rule remain extant, and a decision by the judge in the absence of consent should remain voidable. The added importance of disclosure, as it seems to me, is that it enables an objector to state the grounds of the objection; and, in doing so, draw to the judge's attention some basis for recusal which may previously have escaped the judge's notice.

188. Precisely this view appears to have been taken by the present Lord Chief Justice, Lord Bingham of Cornhill, in contributing (while still Master of the Rolls) a chapter entitled "Judicial Ethics" in Legal Ethics and Professional Responsibility (1995). Lord Bingham said, at 40-41 after referring to Dimes, that -

"This was ... a very strong decision, but I have no doubt that it would be followed today on similar facts although I do not think a judge would stand down on account of a shareholding in a litigant company, or perhaps even disclose it, unless the shareholding and the action were such that the outcome could have a more than negligible effect on his fortune. That accords with an occasion in the Court of Appeal when, at the outset of a very lengthy and obviously tedious patent appeal, one member of the court disclosed that he held shares in one of the litigant companies. 'If my Brother thinks,' said (Charles) Russell, L.J., presiding, 'that he can escape from this case on a ground as tenuous as that, he is in error.'"

192. In R. v. Mulvihill [1990] 1 W.L.R. 438, the appellant appealed against his conviction on the charge of conspiracy to rob persons at premises belonging to banks, on the ground that the trial judge owned shares in one of the banks that had been robbed. The judge had not disclosed that he owned 1,650 shares in the National Westminster Bank Plc. The Court of Appeal held that the test to be applied was whether a reasonable and fair-minded person sitting in court and knowing of the judge's shareholding would have had a reasonable suspicion that a fair trial for the appellant was not possible, and held that there was no question of bias having arisen in the circumstances.

195. The decision in Pinochet itself suggests that Lord Bingham's views are shared by a majority of the House of Lords in that case. Lord Browne-Wilkinson said, at 283, that -

"The rationale of the whole rule is that a man cannot be a judge in his own cause. In civil litigation the matters in issue will normally have an economic impact; therefore a judge is automatically disqualified if he stands to make a financial gain as a consequence of his own decision of the case." (Emphasis added.)

"The question which arises is whether his connection with that party will (subject to waiver) itself disqualify him from sitting as a judge in the proceedings, in the same way as a significant shareholding in a party will do, and so require that the order made upon the outcome of the proceedings must be set aside." (Emphasis added.)

Lord Nolan agreed with Lord Browne-Wilkinson and Lord Goff. Lord Hope of Craighead also agreed with Lord Browne-Wilkinson and Lord Goff, although Lord Hope later quoted from Lord Buckmaster's speech in Sellar and mentioned Lord Wensleydale's recusal in London and North Western Railway Co. v. Lindsay (1858) 3 Macq. 99 on the ground that he was a shareholder in the appellant, suggesting that Lord Hope was a supporter of the strict view. Lord Hutton also agreed with Lord Browne-Wilkinson, although later appeared to state (at 293) that a judge's shareholding (which might be small) in a public company involved in litigation would be ground for recusal.

203. In Canada, the position in relation to disqualification of a judge for pecuniary interest was said to be unclear in the Canadian Judicial Council Report, Commentaries on Judicial Conduct (1991). When discussing the question what a judge should do when the share interest is insignificant in relation to the total share issue of the corporation, or the amount at issue in the litigation could not possibly affect the value of the corporation's shares, the Council's report stated (at 57-58) that a considerable majority of respondents to the relevant questionnaire thought that a judge was disqualified even for small amounts of securities. A significant number however did not agree, and a minority of the respondents thought it absurd to say that a judge is disqualified where the judge's holdings are insignificant in amount or where the litigation could not possibly affect the value of the judge's shares.

206. The question of pecuniary disqualification was considered by the Court of Appeal in New Zealand in Auckland Casino Ltd. v. Casino Control Authority [1995] 1 N.Z.L.R. 142. The appellant was an unsuccessful applicant to the Authority for a casino premises licence under the Casino Control Act 1990. The licence was granted by the Authority to Sky Tower Casino Ltd., after a 49-day hearing. Two of the six members of the Authority held shares and convertible notes in Brierley Investments Ltd., which held 80 per cent of the shares in Sky Tower. The appellant's claim of apparent bias was rejected by the court on the grounds of waiver and failure to move with reasonable expedition, but Cooke, P. made the obiter observation at 148, that the court was inclined to think that the words "however small" used by Blackburn, J. in Rand, should be treated at the present day in New Zealand as an exaggeration and that there was scope for the de minimis rule; and that in that case interests via the 80 per cent parent company were sufficiently direct to be realistically within the disqualification rule. Cooke, P. also said at 148 that "A firm and realistic rule of pecuniary disqualification is necessary to assist public confidence in the administration of justice and the impartiality of licensing bodies. The existence of an irrebuttable presumption in cases of direct pecuniary interest was assumed in argument."

210. Those judges who are thought to have stated the pecuniary disqualification rule in its strictest form have frequently couched the rule in terms which readily lend themselves to the conclusion that the judge is not disqualified unless the judge has a pecuniary interest in the outcome of the litigation. Thus in Dimes itself, Lord Campbell at 793 said the rule applied to a cause "in which [the judge] has an interest". In Rand, Blackburn, J. at 232 spoke of the disqualifying factor as "any direct pecuniary interest, however small, in the subject of inquiry". In Leeson, Bowen, L.J. at 384 referred to the disqualifying factor as "a pecuniary interest in the decision" and "a pecuniary interest in the success of the accusation". In R. v. Watson, ex p. Armstrong, Barwick, C.J., Gibbs, Stephen and Mason, JJ. referred, at 263, to Dimes for the "rule that a judge may not sit in a cause in which he has an interest." In Gough, Lord Goff at 661 and 664 referred to "a pecuniary interest in the outcome of the proceedings" and Lord Woolf at 673 to "a pecuniary interest in the subject matter of the proceedings". In Webb, Deane, J. referred at 75 to "a direct pecuniary interest in the outcome of the proceedings", adding by footnote "in the sense of an interest sounding in money or money's worth". In Pinochet, Lord Browne-Wilkinson on three occasions (at 281-282) referred to the rule applying where "the judge had an interest in the outcome", and Lord Goff spoke at 286 of a judge having "by virtue of his shareholding an interest in the cause". Each of these phrases suggests in one way or another that automatic disqualification should not follow merely because a judge has a shareholding in a party to litigation, but that something more is required, an interest in the outcome, or the cause itself, or the subject matter of the proceedings.

213. The problem which next must be addressed is how a court is to establish whether the judge is interested in the outcome or the cause. The difficulties involved in such an inquiry have led some to argue that the most practical approach must be disqualification, however small a judge's shareholding (see e.g. Cranston at 243). Examination however of judicial statements both in England and Australia earlier in this judgment suggests that this solution may not now be acceptable to the courts of either country. The question can be approached in two ways, depending upon whether the reasonable apprehension test in Webb governs pecuniary disqualification; or, if there is a special category of automatic disqualification resulting from pecuniary interest, whether an interest in the outcome or the cause is established simply by the existence of a shareholding in a litigant, or in some other way.

216. Any investigation of this question must, I think, commence with the context provided by the legal proceedings themselves. For example, litigation arising out of a contested takeover would readily, if not usually, affect the value of shares in the target company (and possibly also the bidder). The result of an application for a casino licence, as in the Auckland Casino Case, would have been likely to affect the value of the shares in the winning or, for that matter, the losing bidders (see [1995] 1 N.Z.L.R. at 148). There will often be cases where a company is party to litigation (say, as stakeholder) in circumstances where the company itself has no financial interest in the decision at all. Whether there was a financial interest in the outcome of litigation would be more easy to decide when the action involved a liquidated claim, say for debt, than if, as here, the claim sounded in unliquidated damages. The relevant matters thereafter would include the ratio of the judge's shareholding to the company's total issued share capital; the amount involved in the litigation; whether the company is a public or private company; and to what extent the issue under adjudication would have any effect on the judge's interest as shareholder; see Shetreet, 303. Furthermore, in order that justice may positively be seen to be done, any reasonable doubt in a marginal case would usually require to be resolved in favour of disqualification.

219. Notwithstanding Mr Douglas' concession that he could not argue that the value of the judge's shareholding would have been affected by the outcome of this litigation, it is, I think, essential to scrutinize the process by which this question would have been determined, had there been a contest. I certainly share the view that the administration of justice must be preserved from anything which could reasonably suggest a bias or interest in the judge. And if the obstacles in the process were insurmountable, or even very difficult to overcome, the argument in favour of maintaining the strict approach might well become unanswerable. But, by way of example, an examination of the judge's position in the present case shows, in my view, that although there will be difficulties in the procedure on occasions, giving rise to differing views, these are not sufficient to make it necessary to insist upon the strict approach of disqualifying a judge by reason of a shareholding (however small) in a litigant company.

222. Here the number and value of the shares of which the learned judge became the owner upon his mother's death can only be described as minuscule when compared with the Bank's total shareholding and asset value. The litigation involved a claim for unliquidated damages which, I have said, might, if successful, have resulted in an award of damages of up to $1,500,000 (although damages were unlikely to exceed $1m.). That amount is substantial but, having regard to the Bank's annual profit of over $1b. and the Bank's total asset value, the success of the claim could not, as Mr. Douglas conceded, have affected the value of the judge's shareholding. Nor could the outcome have affected the amount of the potential dividend, or the ability of the Bank's subsidiary, Esanda, to meet its obligations upon the debenture. The judge, on this analysis, did not have any financial interest in the outcome of the litigation, and this conclusion is one which in my view could not be said to be marginal or open to reasonable question. I have not ignored the fact mentioned by Mr. Douglas in argument, that there was before the Court a report published in The Age newspaper on 16 October 1997, in which the reporter, commenting on the judge's decision in the case, stated that the "decision was widely seen as a ground-breaking judgment for 1750 foreign-currency loans arranged by the ANZ Bank in the mid-1980s" and that "legal sources" said that if Mr. Quick had won the case "many other ANZ forex borrowers could have mounted similar damages claims against the Bank". By mid-1997, there had been a substantial volume of cases against various banks brought by foreign currency borrowers, a number of which had succeeded, these decisions being well-publicized. No evidence was placed before this Court of any other proceeding actually having been commenced by a foreign currency borrower against the ANZ Bank. In the absence of any such evidence, and having regard to the length of time which by 1997 had elapsed since the "mid-1980s", I would not be prepared to treat this unsubstantiated newspaper report as establishing that the present action was in any sense a test case, certainly not in the absence of evidence of any other proceedings having been commenced against the Bank.

225. When the learned judge became entitled to his mother's shares in the Bank, hindsight now suggests that his Honour should, with respect, immediately have informed the parties of this fact. If any party had then asked the judge to recuse himself, his Honour would, I think, have had the option of forthwith selling his shareholding, as an alternative to merely accepting or rejecting this submission (although, see the Auckland Casino Case at 149). In deciding whether to accept the submission, his Honour would also have been obliged to consider the question of necessity in all the circumstances of the case, including that a lengthy trial had been completed some months beforehand. To paraphrase what was said by Brennan, Gaudron and McHugh, JJ. in Re Polites, Ex parte Hoyts Corporation Pty. Ltd. [1991] HCA 25; (1991) 173 C.L.R. 78 at 92, the judge should not have disqualified himself unless he was obliged to do so, "especially where the parties had been engaged in the proceeding for some time, with the inevitable commitment of resources and costs that that entails". Furthermore, as Mason, J. said in Re JRL, Ex p. CJL at 352 -

"Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour."

229. If there is a separate rule for automatic disqualification for financial interest, unrelated to a reasonable apprehension of bias, in my view the irrebuttable presumption of bias only arises (subject to questions of waiver or necessity) where the judicial officer has a direct pecuniary interest in the outcome of the proceeding. Such an interest would exist when the judicial officer has a pecuniary interest in one of the parties, and, as a direct result of the decision made, it can reasonably be said that that interest might be affected. If the question arises at the outset of a hearing, and the judge, after an objection is taken, remains in any reasonable doubt as to whether the judge's pecuniary interest might be affected by the outcome, doubt should be resolved in favour of recusal. Different considerations, such as necessity and fairness to all parties, would be involved if the question arises, as here, at a later stage in the hearing. In the present case, I would conclude that the learned judge's interest in the Bank, by reason of his shareholding or under the debenture, would not have been affected by the outcome of this action. Accordingly, on this test, the judge had no direct pecuniary interest requiring his disqualification. On this view, it is unnecessary to consider whether there is scope for a de minimis exception to the rule.

232. I should add that if I had taken the view that the judge had an interest in the outcome by virtue of his shareholding, I should in any event have agreed with Callaway, J.A. that a new trial should not be directed, for the reasons he gives. Mr Douglas put to the Court that, having regard to the very lengthy time taken (17 months) to deliver judgment, much of the benefit his Honour would have gained from seeing and hearing the witnesses might have disappeared; see Goose v. William Sandford & Co. unreported, Court of Appeal, 13 February 1998; R. v. Maxwell, unreported, Court of Criminal Appeal of New South Wales, 23 December 1998. I have considerable sympathy with this argument. The delay in giving judgment, which was of a quite unacceptable order, would certainly have weakened the judge's advantage in observing the witnesses. I am none the less persuaded that it would in any event have been wrong to order a re-trial.

235. If, on the other hand, the question of disqualification for apparent bias is now to be determined in Australia by reference to the test of a reasonable apprehension of bias, a somewhat different answer is dictated. As Tadgell, J.A. said in Gascor v. Ellicott [1997] 1 V.R. 332, at 342, "A reasonable apprehension is to be established to the Court's satisfaction; it is a reasonable and not a fantastic apprehension that is to be established; and the apprehension is to be attributed to an observer who is 'fair-minded' - which means 'reasonable'". The question, as Aickin, J. observed in Re Lusink, ex parte Shaw (1980) 55 A.L.J.R. 12, at 16, involves matters "of degree and particular circumstances may strike different minds in different ways"; see also Livesey v. N.S.W. Bar Association, at 294. If the judge had a direct pecuniary interest in the outcome of the litigation, I have already suggested that this fact without further investigation would, subject to possible de minimis considerations, lead the Court to conclude that bias was reasonably apprehended. But if the judge had a shareholding in a litigant that could be described as significant it might well be that a court would find that a reasonable apprehension of bias existed, even though the judge had no direct pecuniary interest in the outcome. The interests of the shareholder discussed by Berle and Means might well cause a fair-minded and objective observer to consider that the holder of a significant shareholding in a company might not bring an impartial or unprejudiced mind to the resolution of a question in the litigation, notwithstanding that the judge had no financial interest in the outcome.

238. It has been suggested that in the consideration of this question it does not go far enough simply to examine the ratio of the judge's shareholding to the company's total issued share capital, "for it is also necessary to scrutinize the value of those shares as compared with the judge's total assets" (Cranston, 243), which would lead, as the commentator observed, to a considerable invasion of a judge's privacy. I should myself have thought that this factor is quite irrelevant to the question whether the judge has any pecuniary interest in the outcome; but also that in most cases it would be irrelevant to what I would regard as the wider question - whether the shareholding could lead to a reasonable apprehension of bias. In the present case, assuming a generous dividend rate of, say, ten per cent of the highest relevant value of the shares, their annual dividend would, after tax, add approximately $1,500 per annum to the judge's disposable income. I would not characterize the judge's shareholding as "significant", and certainly not as sufficient, in all the circumstances, to lead to a reasonable apprehension or suspicion of bias in the mind of a fair-minded and informed independent observer.

241. Since completing these reasons, the parties have referred the Court to the decision of the Full Federal Court in Re Maxwell William Ebner; Ebner v. Official Trustee 1999 F.C.A. 110 (decided by Sackville, Finn and Kenny, JJ. on 10 March 1999). The judge at first instance had decided that a registered transfer of an interest in land to the bankrupt's wife was void against the Official Trustee. The judge during the hearing declared an interest in a trust which held 9,000 shares in the ANZ Banking Group Ltd. (the respondent in the present appeal) which was not a party to the proceedings determined by the primary judge but was a creditor (claiming $1.3m.) of the bankrupt and contributed to the funding of the proceedings instituted by the Official Trustee. The judge refused to disqualify himself. The question with which the court was concerned was whether the rule of automatic disqualification applies where a judge is not a shareholder in a party. The appellant's counsel conceded that the appellant could not establish any reasonable apprehension of bias on the part of the primary judge. Many of the cases considered in argument by this Court were also considered by the Full Federal Court.

244. The court, after referring to Webb, noted at para. 36 that it might be thought anomalous that a special rule of automatic disqualification had survived for cases of direct pecuniary interest, especially in Australia where the more stringent "reasonable suspicion" test has been adopted, and raised the question at paras. 37-40 why the confidence of fair-minded people in the administration of justice would be shaken by the existence of a direct pecuniary interest of no tangible value. Their Honours however stated at para. 41 that they accepted that unless and until the High Court rules otherwise the law requires a judge having a "direct pecuniary interest" to disqualify himself or herself. The question for the Court was what constitutes a direct pecuniary interest in the outcome. The appellant's argument was that it was a small step from Dimes to apply the principle of automatic disqualification to the circumstances before the Federal Court; and that it was a fair inference from the evidence that the bank was a major creditor of the bankrupt estate and that it was likely to receive a substantial share of the net proceeds of any assets recovered by the Official Trustee. The court said, at para. 48 -

"In our view considerable caution should be exercised before extending the scope of direct pecuniary interest disqualification beyond the established categories. The very point of requiring a direct pecuniary interest is to avoid the practical difficulties resulting from an over-broad automatic disqualification rule. A line can and should be drawn between a case in which a judge has a shareholding, however small, in one of the parties to the litigation and the case in which the judge has a shareholding in a corporation which may ultimately obtain a financial benefit from proceedings, although not as a direct beneficiary of any order made by the court. In the former case the principle is clear (if stringent) and can generally be applied by the judge making some straightforward enquiries. A test which turns on whether a non-party corporation might obtain a financial benefit from the proceedings is uncertain in its application and would create formidable practical difficulties, especially where neither the pleadings nor the evidence identify which corporations might obtain such benefit. In our view, a test of this kind would be likely to diminish rather than enhance confidence in the administration of justice."

248. It will be seen that the Full Federal Court was not dealing with the question with which this Court is concerned (whether a judge as shareholder has a direct pecuniary interest in litigation in which the company is a party) but it is clear that the court assumed that a judge would be disqualified by any shareholding in a litigant. I agree with respect with the court's conclusion that a judge as shareholder in the bank, a supporting creditor in the bankruptcy proceedings, did not have a direct pecuniary interest requiring disqualification. With the greatest of respect, for the reasons I have given, I do not agree with the court's assumption (which I think was in any event obiter) that any shareholding however small, in one of the parties to the litigation is sufficient to disqualify the judge. Furthermore, had it not been for counsel's concession that the appellant could not establish a reasonable apprehension of bias, I should have thought that it would have been necessary for the court to embark on the test last mentioned in the passage quoted above, in order to establish whether an informed observer might reasonably apprehend the existence of a bias in the judge.

255. The second major issue argued for the appellants was that the long-standing relationship between the Quick family and the Bank, dating back to the 1920s, together with the Quick family's known dependence upon the Bank for financial assistance and advice, created the context in which the Bank's obligations to the Quick family had to be assessed. Then, in the early 1980s the Bank established a new and dangerous form of lending in foreign currency loans and the Bank had developed guidelines for its officers in relation to such loans. The Bank wished to take an aggressive role in the arrangement of off-shore financing. The Bank had promoted foreign currency loans to farmers in the Horsham District and (at the Wimmera Machinery Field Day held on 5 March 1985) Mr Quick heard some officer of the Bank speaking of the advantages and desirability of a foreign currency loan in Swiss francs for farmers and in particular to finance the purchase of farms; and one of the points emphasized by the Bank officer was that foreign currency loans had low interest rates and were five-year interest-only loans. Mr. Douglas submitted that the Bank was well aware of the risks that such loans would present to a farming family.

258. The learned judge recorded the appellants' submission as to the nature of the Bank's duty as being -

"that the Bank owed the appellants a duty to advise them and provide information to them with reasonable care and skill in relation to the foreign currency loan."

"There was a duty of care owed by the Bank to the appellants but it was limited to the advice given as to the risks attendant upon a foreign currency loan. However, I am satisfied that there was no breach of that duty."

Elaborating upon the issue of the duty, his Honour said -

"In the circumstances of the present case, it seems to me that the Bank did no more than assume the responsibility to alert the appellants generally in relation to the risks of foreign currency loans. I consider that this responsibility was assumed by virtue of the advice given by Mr Skehan to Mr C. Quick commencing in August 1983 and continuing into 1985. I am satisfied that the Bank did not assume responsibility as a financial adviser to advise the appellants of the wisdom of a foreign currency loan in the light of their particular financial circumstances."

Accordingly his Honour found that it was unnecessary for him to analyse the expert evidence concerning the foreign exchange market and related issues.

267. The submission made by Mr. Douglas in these circumstances was that the learned judge had erred in confining the Bank's duty to being no more than to alert the appellants generally as to the risks of foreign currency loans. He submitted that the judge had adopted an approach to determining whether a duty of care existed which did not fully comprehend the appellants' claim in negligence. His Honour was said to have defined the content of the Bank's duty in a very specific way in addressing the question whether a duty of care and skill was owed by the Bank to the appellants. The argument continued that the learned judge gave paramountcy to the concept of assumption of responsibility by looking only subjectively as to what responsibility the Bank itself had assumed, whereas an objective test should have been applied to the question whether responsibility should be held by the court to have been assumed by the Bank to the appellants. Accordingly it was submitted that the tort of negligence is concerned with risks created for one person by reason of another's conduct, and that, once the relationship of proximity was properly identified, it was apparent that the Bank had not discharged its duty merely by adverting to the existence of a risk without any need to elaborate upon the nature of a risk; for example, the likelihood of the risk eventuating and the extent of the loss which would be suffered if the risk did eventuate. To draw support for this argument, Mr Douglas relied on Caltex Oil (Australia) Pty. Ltd. v. The Dredge 'Willemstad' [1976] HCA 65; (1976) 136 C.L.R. 529 per Stephen, J. at 558-576; San Sebastian Properties Pty. Ltd. v. The Minister [1986] HCA 68; (1986) 162 C.L.R. 340 at 354-355; Wardley Australia Ltd. v. Western Australia [1992] HCA 55; (1992) 175 C.L.R. 514 at 527; Hawkins v. Clayton Utz (1988) 164 C.L.R. 539, at 600-601; Bryan v. Maloney (1995) 182 C.L.R. 609, at 617-619; Hill v. Van Erp (1997) 188 C.L.R. 159 at 192-197; and Williams v. Natural Life Foods [1998] UKHL 17; [1998] 2 All E.R. 577, per Lord Steyn at 582. Mr Douglas submitted that in all the circumstances the Bank's obligation was not merely to warn the appellants, but to "exhort" them not to take the loan, and that the appropriate standard of care in the circumstances dictated that the Bank should not have marketed foreign currency loans at all to persons such as the appellants. He submitted that all the elements of assumption of risk, vulnerability, dependence, reliance and forseeability of harm were present to give rise to this duty of care and that the Bank's obligation was increased by virtue of the appellants having existing property rights which were at risk as a result of the Bank's conduct.

270. It is necessary now to examine the facts found by the learned judge with some care. The following summary is taken from the judge's reasons at 5-13, 63-65 and 67-73. In August 1983 Mr C.R. Quick telephoned Mr Skehan and first raised the possibility of the Bank making a foreign currency to the Quick family. Mr. Skehan informed Mr Quick of the risk in which a borrower was placed, of adverse foreign currency movements against the Australian dollar. Mr Skehan mentioned the possibility of hedging to protect against that risk and advised Mr Quick that with the costs and fees involved in obtaining protection the overall cost of a loan would then be similar to an Australian dollar loan. Mr Skehan also told Mr Quick that means of offshore funding were available without hedging but that the customer needed to have a guaranteed cash-flow or an ability to provide cover by way of a claw-back provision. Mr Skehan then wrote to Mr C.R. Quick a letter dated 19 August 1983 which included the following passage -

"As discussed by phone, I am enclosing some examples of currency movements of the last 18 months, Australian Dollar-Swiss Franc, which indicate the vulnerability of being exposed. Movements can be and have been more dramatic than these quoted. Forward cover, conversion to USA and then Hedging costs, fees etc., as stated on the phone, at date, about put the overall cost of Offshore borrowings close to those in Australia. There are methods of Offshore funding on an unhedged basis, but for us to arrange this there needs to be a guaranteed Cash Flow or realization of assets to cover 'claw-back' commitments in covering a re-evaluation of any loan resulting in a shortfall each (6) months (loans are rolled over each six months), by placing shortfall funds on deposit as reserve to cover exchange risk."

Enclosed with the letter was a sheet showing fluctuations in the $A-Swiss franc exchange rate and showing a considerable decline in the value of the $A against the Swiss franc from January 1982 to August 1983. From August 1983 until the beginning of 1985 Mr Skehan had several further discussions with Mr Quick relating to foreign currency loans and these discussions became more frequent early in 1985. Mr Quick began pressing the Bank for a foreign currency loan and on one occasion before May 1985 Mr Quick told Mr Skehan that he had spoken with a merchant banker about a foreign currency loan and that he was eager to draw one down. During these further discussions Mr Skehan again told Mr Quick about the risks of losing money because of adverse changes in the exchange rate and Mr Skehan reiterated in substance what he had said in August 1983 concerning hedging. In addition, Mr Skehan told Mr Quick that in his opinion a foreign currency loan was not generally appropriate for people such as farmers whose cash-flow fluctuated.

275. It is important to note that there were significant differences in the evidence given by Mr C.R. Quick and Mr Skehan as to the events I have just recounted. Mr Quick's witness statement made no reference to conversations with, or the letter from, Mr Skehan concerning foreign currency loans in and after August 1983 nor to the discussions with Mr Skehan in 1985 prior to May of that year. Mr C.R. Quick's evidence suggested that he had not spoken to Mr Skehan concerning foreign currency loans prior to May 1985. The learned judge however rejected Mr Quick's version of these events, and preferred Mr Skehan's. His Honour found that Mr Skehan at no time recommended to Mr C.R. Quick that he take a foreign currency loan and rejected Mr Quick's evidence that Mr Skehan had said to him that the Australian currency had dropped, that everything was "bottoming out", that he thought that a foreign currency loan was "the way to go" and that the Bank would monitor the loan. The learned judge did not accept Mr Quick's testimony that Mr Skehan had told him that there was a "low degree of risk" of adverse movements in the Swiss franc-Australian dollar exchange rate or that the Australian dollar had "plateaued" and would go the other way. His Honour generally preferred Mr Skehan's evidence to that of Mr Quick and, as he put it in summary, said "I do not accept Mr C. Quick's evidence that it was Mr Skehan who convinced him to take a foreign currency loan."

278. Thereafter Mr C.R. Quick spoke to a number of persons unrelated to the Bank in relation to the taking of a foreign currency loan. He spoke to a Mr Michael Henderson in Geelong about the matter, to an old friend Mr Bill Norton, head of the Financial Markets section of the Reserve Bank of Australia, to Mr Bruce Bond, a financial adviser who speaks regularly on ABC Radio, and to Mr Simon Montana of Consolidated Currencies. His Honour said that after the discussion with Mr Norton, Mr Quick clearly knew that there was a risk that the $A would further decline against the Swiss franc, thereby increasing the amount Clenae would have to repay in Australian dollars on the Swiss franc borrowings. On the basis of all this material, his Honour found that it was undeniable that Clenae's controllers entered into the foreign currency loan transaction knowing of the risk and accepting it.

281. In late May 1985 Mr C.R. Quick telephoned Mr Moreno of the international section of the Bank and obtained advice as to "the applicable interest rate of the loan". There were differences between Mr Moreno and Mr Quick as to what was said in these conversations, with the learned judge again rejecting Mr Quick's evidence in some respects, in particular Mr Quick's assertion that Mr Moreno had stated his belief that the exchange rate for Swiss francs into Australian dollars would improve to approximately four Swiss francs to each Australian dollar, which would mean that a $1m. loan would only require $.5m. to be repaid at the end of the five-year term. Clenae then applied for the foreign currency loan by writing, dated 18 June 1985 and on 27 June 1985 the loan was drawn down in favour of Clenae. On 24 June 1985, Messrs C.R. and W.M. Quick visited Mr Moreno at his office to discuss interest rates and at that meeting his Honour found that Mr Moreno said that the Australian dollar had bottomed against the Swiss franc and showed them a graph which illustrated the downward trend of the Australian dollar against the Swiss franc and then its levelling out.

284. The learned judge then held in relation to the appellants' claim of negligence against the bank that -

"In the circumstances of the present case, it seems to me that the Bank did no more than assume the responsibility to alert the defendants generally in relation to the risks of foreign currency loans. I consider that this responsibility was assumed by virtue of the advice given by Mr Skehan to Mr C. Quick commencing in August 1983 and continuing into 1985. I am satisfied that the Bank did not assume responsibility as a financial adviser to advise the defendants of the wisdom of a foreign currency loan in the light of their particular financial circumstances. Nor do I think that the Bank knew or ought to have known that the defendants were relying upon the bank for such advice - indeed, I do not think that they were.

I am satisfied that Mr C. Quick, having initiated the suggestion of taking a foreign currency loan, having heard Mr Skehan's warnings as to the risks, made up his own mind in consultation with his brother and their wives. By the time Messrs. C. & W. Quick spoke to Mr Moreno, they had already decided, after inquiries and discussions with others, to take such a loan.

In my view, therefore, there was a duty of care owed by the Bank to the defendants but it was limited to the advice given as to the risks attendant upon a foreign currency loan. However, I am satisfied that there was no breach of that duty. In my opinion, the advice and warnings given throughout by Mr Skehan constituted reasonable and adequate advice and warning in the circumstances as to the risks of exchange rate fluctuations and the resulting problems which might arise in relation to servicing a foreign currency loan having regard to the variable cash flow provided by farm income. I note that Mr Biesek and Mr Slatyer, two experts called by the defendants, each considered that Mr Skehan's letter of 19 August 1983 was a satisfactory warning concerning the risks of a foreign currency loan. I do not think that it was incumbent upon the Bank to give more detailed advice to the defendants concerning techniques of risk protection or of loss minimisation (such as hedging) or of 'monitoring' loans. In any event, the expert evidence does not at all satisfy me that there were any techniques available of such utility in the circumstances as ought to have been drawn to the defendants' attention. In particular, I was not persuaded by the evidence of Mr Slatyer that, in effect, it was negligent of the Bank to fail to recommend 'active management' of a foreign currency loan or to fail to advise as to techniques of so-called 'selective hedging'. In this respect, and generally, I prefer the evidence of Professor Valentine. Having regard to my view as to the limited duty of care imposed on the Bank it is unnecessary to analyse the expert evidence concerning the foreign exchange market and related issues.

Insofar as the defendants maintained any claim that the Bank was negligent in 'managing' the FCL, this was not proved. Indeed, the Quicks tended to resist the suggestions and actions by the Bank to protect them against ongoing losses, in the hope that the exchange rate would rebound. There was no evidence which satisfied me that the Bank's actions (or suggestions) in that regard were negligent."

291. The facts found by the learned judge were, of course, destructive of the appellants' case. Insofar as there were differences in the evidence given by Mr Skehan and Mr C.R. Quick, or as to inferences to be drawn from Mr Quick's evidence, no attempt was made by the appellants during argument to suggest that his Honour's conclusions were in any way defective. His Honour was, with respect, plainly entitled to prefer Mr Skehan's evidence, supported as it was by diary notes and letters. On the other hand his Honour was in a number of respects critical of Mr C.R. Quick's evidence, both as to its content and the manner in which it was given.

294. Insofar as the appellants' argument was that the Bank was obliged to exhort (rather than warn) the Quick family not to take a foreign currency loan, the appellants' difficulty lies first in persuading this Court to accept that so ambiguous and non-specific a duty of care could be found to exist in the circumstances. Mr Skehan had in fact given Mr C.R. Quick a number of explicit warnings against borrowing in foreign currency, as well as sending him the letter of 19 August 1983, the terms of which have already been quoted, and which was said by the appellants' two expert witnesses to be an acceptable form of letter advising as to the risks of off-shore borrowing. The learned judge found that the Bank gave limited advice to the appellants in relation to foreign currency loans, that that advice was given correctly and without negligence, and that the Bank had in all the circumstances no obligation to give any further warning. In my view, with respect, no error is to be found in his Honour's reasoning.

297. Was there then, in the circumstances found by the judge, any basis for asserting, as Mr Douglas argued, that the Bank should not have marketed foreign currency loans at all to persons such as the appellants? As Lockhart, Beaumont and Gummow, JJ. said in David Securities Pty. Ltd. v. Commonwealth [1990] FCA 148; (1990) 23 F.C.R. 1, at 22 -

"It is clear that the rule as to things dangerous in themselves can have no direct application here. Nor, in our view, can the rule as to things inherently dangerous provide an appropriate analogy in the case of a borrowing in a foreign currency. It may be accepted that there will always be a risk of an adverse movement in the rate of exchange. But it does not follow that a foreign loan transaction is something 'dangerous', let alone 'dangerous in itself', or anything analogous to such a special thing. Speaking generally, all that can be said is that it is possible that such a transaction may result in some economic gain in certain events or in some economic loss if other contingencies occur. A foreign borrowing is not itself dangerous merely because opportunities for profit, or loss, may exist."

See also Commonwealth Bank of Australia v. Mehta (1991) 23 N.S.W.L.R. 84 per Meagher, J.A. at 92; Lenin v. Australian Bank Ltd., Cole, J., Supreme Court of New South Wales, 21 June 1991, unreported, at 2-3; and ANZ Banking Group Ltd. v. Dunstan's Hotel, Hedigan, J., 17 October 1995, unreported, at 19-27.

302. In my view the appellants cannot make good the argument that the Bank should not in all the circumstances have marketed foreign currency loans to them at all. No error is, with respect, in my view to be found in his Honour's reasons for rejecting the appellants' claim in negligence. I must add that it is no easy matter to detect in the appellants' pleadings the duty now sought to be alleged, that the Bank should not have sold foreign currency loans to the appellants at all. The matter does not appear to have been argued at any length before the learned judge. Having regard to the findings of fact made by his Honour, I think the appellants' claim in negligence was properly dismissed.

Fraudulent misrepresentation and negligent mis-statement

306. Although three allegedly fraudulent representations were pleaded, only one of these was pressed at trial. The learned judge found that no such representation was made and was not satisfied that the appellants entered into the foreign currency loan transaction induced by the pleaded representation. No attempt was made to pursue this issue during the appeal.

309. The appellants' case in relation to negligent mis-statement depended largely upon whether Mr C.R. Quick's evidence, that certain statements were made to him by Mr Skehan, was accepted. The learned judge, as I have said, preferred Mr Skehan's evidence. Mr C.R. Quick also claimed that he had relied on statements made by bank officers at the Wimmera Field Day, and by Mr Moreno. His Honour accepted in part Mr Quick's evidence of these matters, but in the light of Mr Skehan's continued warnings, and Mr Quick's own evidence as to his appreciation of the risks of currency fluctuations, said that he was not satisfied that negligent statements (if any) made at the Field Day or by Mr Moreno played any material part in inducing the Quick family to enter the foreign currency loan.

312. No attempt also was made during the appeal to challenge the learned judge's findings in this regard, which were, in any event, plainly open on the evidence before his Honour.

316. Insofar as the appellants asserted that a fiduciary obligation had arisen in the circumstances of the relationship between the Bank and the Quick family, his Honour held that the history of the family's dealings with the Bank did not of itself establish the existence of any fiduciary duty on the part of the Bank towards the Quicks as customers, nor did it demonstrate that the family were in any position of disadvantage or vulnerability which caused them, in particular Mr C.R. Quick, to place special or particular reliance upon receiving the Bank's advice in relation to the wisdom of taking a foreign currency loan. His Honour found that the foreign currency loan was not a transaction in which the Bank created any expectation that it was acting in the defendant's interests and not in its own interests, which were real commercial interests.

319. Mr Douglas during argument abandoned the claim of breach of fiduciary duty in light of the decision of the High Court in Breen v. Williams (1996) 186 C.L.R. 71, but continued to maintain that the Bank had acted unconscionably both in relation to the original loan and the three later agreements. I shall deal shortly with unconscionability in relation to these agreements. As to the loan itself, it is sufficient to say that Mr Douglas argued that there was unconscionability resulting from the Bank having acted negligently in making that loan. On the facts found by the learned judge, this argument cannot succeed.

The three subsequent agreements and unconscionability

323. Mr Douglas made a number of arguments in relation to the First Agreement of 31 August 1989, the Farm Restructuring Agreement of 9 June 1992, and the October Agreement of 15 October 1993, each of which contained a release of the appellants' various claims against the Bank. The argument of unconscionability was directed specifically to these three agreements and the releases contained in them, and it was submitted that equity could, and here should, restrain the exercise of legal rights in circumstances where that would be unconscionable (see Bridgewater v. Leahy [1998] HCA 66; (1998) 158 A.L.R. 66, at 81, 93). An interesting argument was also made as to the proper construction of these releases, and to the question whether they were effective to release the Bank from any defences the appellants might have against the Bank's claim. Mr Douglas also submitted that these three agreements were executed by the appellants under unconscionable pressure applied by the Bank.

326. Having regard to the rejection of the appellants' principal submissions, it is not necessary to deal at any length with these arguments. The Bank obtained judgment on its debt, the amount of which was clearly acknowledged in these various agreements. At no stage was any argument addressed to this Court to suggest that the debt (or the judgment) had been improperly quantified - subject of course to the various counterclaims made by the appellants. These counterclaims having been rejected, it is sufficient to say that on the learned judge's findings, there was no room for a conclusion of unconscionable conduct. While these agreements were being negotiated, the Quick family was at all times receiving independent legal advice. The terms of the First Agreement had the effect of giving the appellants time to improve their financial position after lengthy negotiations and a debt mediation. The Farm Restructuring Agreement involved the Bank agreeing to accept a very substantial reduction in debt. It is sufficient to say on these arguments that the learned judge was clearly entitled to find that the Bank took no unfair advantage of the appellants.

329. In all the circumstances I would dismiss both appeals.

334. Against the background of the facts described by my brother Charles, five questions arise for consideration: first, whether the learned trial judge was disqualified from giving judgment by reason of his Honour's having become the beneficial holder of 2,400 shares in the respondent; secondly, if so, whether the judgment should be set aside, either absolutely or on terms; thirdly, whether his Honour erred in finding that the respondent was not negligent; fourthly, whether his Honour erred in finding that the respondent did not engage in unconscionable conduct either in respect of the original loan or in respect of the releases; and finally, whether the releases bar the assertion of a defence or only of a claim.

337. Subject to para. 93 below, I find it unnecessary to decide any of those questions except the second and third. If the learned judge was disqualified, I am nevertheless of opinion that the judgment should not be set aside. Mr. Douglas submitted that his Honour erred in one or other of two respects in finding that the respondent was not negligent. I do not accept either branch of the submission. The only kind of unconscionability that was suggested was unconscionability deriving, in effect, from the negligence. It was said that, if there was a relationship of proximity, a duty of care and breach thereof, it was unconscientious to enforce or take advantage of the rights thereby acquired. Rejection of the submission on negligence means that that argument fails and the respondent does not have to rely on the releases.

340. As a preliminary to deciding the second question, I shall however make some observations on the first:

(a) This case does not concern a judge who holds his or her shares as a bare trustee, as Williams, J. did in the Bank Nationalization Case: see R. v. The Industrial Court [1966] Qd.R. 245 at pp.279-280. Nor may the holding itself be regarded as de minimis, so there is no occasion to consider the correctness of the tentative view expressed by the New Zealand Court of Appeal in Auckland Casino Ltd. v. Casino Control Authority [1995] 1 N.Z.L.R. 142 at p.148, assuming that that view applies to a minuscule shareholding rather than to a negligible interest in the case.

(b) This is an ordinary commercial dispute. If there is room for a presumption that a shareholding imports an interest in the litigation, there is room for that presumption to operate. It is not like a dispute between two shareholders as to which of them is to receive a dividend that the company is undoubtedly liable to pay to one or other of them.

(c) To hold that a judge who is the beneficial owner of 2,400 shares in a bank should automatically disqualify himself or herself accords with well established practice and causes little inconvenience and no injustice if the position becomes apparent at the outset. In the unusual case where it becomes apparent later, justice is served by balancing the competing considerations.

(d) The contrary view gives rise to undesirable questions of fact and degree on which reasonable minds may differ. In particular an appellate court may differ from a judicial officer's assessment as to whether the result of the case might affect the value of his or her shares. In the absence of exceptional circumstances, there will then have to be a retrial.

(e) As a general rule, it is the duty of a judicial officer to hear and determine the cases allocated to him or her by his or her head of jurisdiction. Subject to certain limited exceptions, a judge or magistrate should not accede to an unfounded disqualification application. It has not hitherto been the practice for a judge or magistrate who holds shares in one of the parties to refuse to disqualify himself or herself if objection is taken.

346. Finally, and very importantly, this case does not raise for consideration the position of a judge who does not know or forgets that he or she holds shares in a company. It was not submitted that that was the position of the learned judge here. I do not desire, by the reservations expressed above, to cast any doubt on the protection afforded by a properly administered blind trust. As at present advised, I do not think that the beneficiary of such a trust is disqualified, however great his or her beneficial interest may be.

349. Where a judge has, or is presumed to have, an interest in a case and the parties do not expressly or impliedly consent to his or her determining it, the judgment is voidable, but it does not follow that it is voidable as of right. The purpose of the rule is to ensure a fair trial and there may be circumstances, of which the present case is an example, where that purpose would be defeated by setting aside the judgment. Granted that a completely fair trial has not been had in the first instance, even greater unfairness would ensue if a new trial were directed. Irremediable prejudice would be suffered by the respondent if the case were to be re-tried by a judge who could not have the advantage of seeing and hearing Mr. Skehan give evidence. That prejudice is far greater than the prejudice that has been sustained by the appellants. No one suggests that the learned judge in fact had an interest in the outcome of the case or that he was actually, or in any other respect ostensibly, biased. The sole objection is the technical objection that his Honour was the beneficial holder of a tiny fraction of the shares in the respondent. To order a retrial would be to right a small wrong by doing a far greater wrong.

352. A balancing exercise of that kind, mindful of the purpose of the rule, may also be explained in terms of necessity, for necessity is a concept that depends upon the circumstances. It invites the question "Necessary for what purpose?" There may, for example, be only one judge who can hear a genuinely urgent application for an interim injunction. He or she may have an interest in the case. It is nevertheless necessary that that judge hear the application because of its urgency. It is no answer to say that next week another judge will be available who is not embarrassed. By parity of reasoning, after Mr. Skehan's death, it was necessary to a fair adjudication that the case be decided by the judicial officer who had seen all the significant witnesses notwithstanding his having acquired an interest in the respondent. That would not have been true if Mr. Skehan had been an incidental witness or if the Bank could achieve a comparable forensic advantage by relying on his diary notes. The judgment of Charles, J.A. shows that the former was far from being the case and I do not consider that the diary notes would be an adequate substitute.

355. The analysis in para. 92 may well be preferable to that in para. 91, for it means that the learned judge in the present case would have been justified in insisting on delivering judgment and implies that the judgment was not voidable at all. Approaching the matter in that way, the first of the five questions set out at the beginning of these reasons should itself be answered in the negative. Mr. Douglas prayed in aid the observations of Deane, J. in Laws v. Australian Broadcasting Tribunal [1990] HCA 31; (1990) 170 C.L.R. 70 at pp.96-98 and of Kirby, P. in Australian National Industries Ltd. v. Spedley Securities Ltd. (1992) 26 N.S.W.L.R. 411 at pp.421-422 but, properly understood, I think that they support rather than hinder the foregoing analysis. The exigencies of a fair adjudication meant that it was necessary, not convenient, that his Honour should decide the case.

358. Turning to the question of negligence, it is important to appreciate that the duty asserted on appeal was with respect to pure economic loss, particular emphasis being laid on the judgment of Stephen, J. in Caltex Oil (Australia) Pty. Ltd. v. The Dredge "Willemstad" [1976] HCA 65; (1976) 136 C.L.R. 529. That duty was said to be enlivened, in part, by the existence of the appellants' properties which, although they were already mortgaged, would be exposed to further risk. Mr. Douglas submitted that the duty was breached either by the respondent's not declining to make a foreign currency loan to the appellants or by its failing to exhort them not to enter into such a transaction. It was not, as I understood the submission, the information given to the appellants of which complaint was made but the character of the advice given to them, considered as a warning or exhortation. I do not accept that a foreign currency loan to the appellants was so dangerous that it should have been refused altogether or that the respondent should have given a stronger warning than it did.

361. The parties have drawn our attention to the recent decision of the Full Court of the Federal Court in Re Ebner [1999] FCA 110. It confirms my reservations (see especially paras. 41 and 48 of their Honours' reasons) and casts no doubt upon the necessity version of the argument that I have accepted. As I have already said, that may well be the preferable version.

364. For these reasons I, too, would dismiss the appeals.