Fried v National Australia Bank Ltd

The application by NAB and Bendigo Bank that I disqualify myself 35 On Friday 9 June 2000 both NAB and Bendigo Bank made application that I no longer continue to sit as the trial judge in this proceeding. The basis for that application was that a reasonable apprehension of bias may arise because of my association with Mr Rado. Both NAB and Bendigo Bank stressed that the application was made not on the basis of any suggestion of actual bias, but solely on the basis of apprehended bias. 36 Mr Karkar commenced his submission by referring to a series of authorities which, he contended, set out the principles governing applications of this type. These authorities all support the principle 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 and unprejudiced mind to the resolution of the issues before him: R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 258-263; Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293-294; and Re J.R.L.; Ex parte C.J.L. (1986) 161 CLR 342 at 349 and 351. 37 Mr Karkar then referred to Vakauta v Kelly (1989) 167 CLR 567. There, in the course of the trial of a personal injuries case, the judge, who was sitting without a jury, made statements critical of evidence given by the defendant's medical witnesses in previous cases. The judge also made remarks critical of the efficiency of the Government Insurance Office by whom those witnesses had been retained. Counsel for the defendant did not object to the remarks and made no application about them. The High Court held that the remarks would have excited in the minds of the parties and in members of the public a reasonable apprehension that the judge might not bring an unprejudiced mind to the resolution of the matter before him. However, by majority, the Court held that by not objecting to the judge's remarks the defendant had waived any right to appeal against an adverse decision on the ground of what had been said at the hearing. Toohey J said at 584-5: "I accept the observation of McHugh J.A. in the instant case that "in the case of a professional judge whose training, tradition and oath or affirmation require him to discard the irrelevant, the immaterial and the prejudicial, a conclusion that there is a reasonable apprehension that he is biased should not be drawn lightly". In effect, that is what this Court said in Livesey. And it is true, as Clarke J.A. pointed out, that it is a "reasonable apprehension" with which the court is concerned. And, if it adds anything, it is such an apprehension in "a fair-minded observer": Livesey. But, in this regard, the public perception of the judiciary is not advanced by attributing to the reasonable or fair-minded observer a knowledge of the law and an awareness of the judicial process that ordinary experience suggests not to be the case. Such an observer, on being told the nature of the litigation in the present case and then being told of his Honour's remarks, is unlikely to conclude that his Honour was showing no bias against the appellant's potential witnesses and in turn against the appellant's case as to the extent of the respondent's disabilities. On the contrary, the observer is likely to conclude that his Honour would approach the assessment of damages with a strongly held opinion that the evidence of the appellant's medical witnesses (which he had not heard) would almost certainly be loaded against the respondent and therefore be worthy of little credence." (Footnotes omitted) 38 Mr Karkar referred to Webb v The Queen (1994) 181 CLR 41 where at 74 Deane J, who, with Brennan J, dissented, summarised the relevant principles in the following terms: "The area covered by the doctrine of disqualification by reason of the appearance of bias encompasses at least four distinct, though sometimes overlapping, main categories of case. The first is disqualification by interest, that is to say, cases where some direct or indirect interest in the proceedings, whether pecuniary or otherwise, gives rise to a reasonable apprehension of prejudice, partiality or prejudgment. The second is disqualification by conduct, including published statements. That category consists of cases in which conduct, either in the course of, or outside, the proceedings, gives rise to such an apprehension of bias. The third category is disqualification by association. It will often overlap the first and consists of cases where the apprehension of prejudgment or other bias results from some direct or indirect relationship, experience or contact with a person or persons interested in, or otherwise involved in, the proceedings. The fourth is disqualification by extraneous information. It will commonly overlap the third and consists of cases where knowledge of some prejudicial but inadmissible fact or circumstance gives rise to the apprehension of bias." (Footnotes omitted) 39 Mr Karkar submitted that the application that I disqualify myself fell squarely within the principles laid down in the third and fourth categories to which Deane J had referred. 40 Mr Karkar then drew attention to certain observations in the judgment of Kirby P in S & M Motor Repairs Pty Ltd v Caltex Oil (Australia) Pty Ltd (1988) 12 NSWLR 358 at 368-369. There his Honour said: "Necessarily, where what is alleged is a reasonable apprehension of bias, the fact situations will greatly vary. Thus the apprehension of bias may be grounded in prior judicial activity (as it was in Livesey) or in family, financial or professional relationships with one of the parties. The determination of whether there is, by the stated test, a reasonable apprehension of bias depends upon a full understanding of the facts from which it is suggested that such apprehension arises. In so far as such bias is said to arise from a relationship between the parties, it is clearly relevant to know the duration of that relationship, its intensity and nature and the time that has elapsed between its last renewal and the performance of judicial functions said to be affected by it." 41 Kirby P went on to consider a number of conventions which have developed to ensure the maintenance of high standards and to preserve the appearance of the neutrality and impartiality of judges. He pointed out that if a judge prefers, because of some past association, not to sit in cases involving particular parties for fear of actual or imputed bias, he or she will so indicate and, save for necessity, will not sit in such cases. 42 Kirby P continued at 369: "If a judge has had any connection, even indirect, with litigation that comes before the court, he or she will so indicate when the list of sitting arrangements is distributed. A substitution will then be arranged. If the connection is not noted until the judge is actually sitting, cases have arisen where even in mid hearing, the court has been reconstituted, usually on the insistence of the judge concerned. Even minor connections with the parties, with their interests or with issues raised in the litigation are usually, in my experience, announced. Thus where a judge holds appointment as a university chancellor, and a case comes before the court involving a college or another university, it has been the practice in the Court of Appeal for the judges concerned to announce in public and at the beginning of proceedings, the judge's appointment in order to give the parties the opportunity to make submissions, which the judge can then weigh." 43 Mr Karkar next referred to Trustees of the Christian Brothers v Cardone (1995) 57 FCR 327. There the appellant, a corporation, occupied land on which a school was situated. Relying on occupier's liability the respondent claimed damages for personal injuries against the appellant. The trial judge had attended the school, his sons attended it, and he was chairman of the school board. The judge also knew three teachers who were to be called to give evidence in support of the appellant's case. When the matter came on, the appellant invited the judge to disqualify himself on the basis of possible embarrassment if the judge were to decide issues of credit between the respondent and the teachers. The respondent did not ask the judge to disqualify himself, and the appellant raised no objection to the judge trying the matter if he felt able to try it. The judge proceeded to hear the case and gave judgment for the respondent. 44 On appeal it was contended that the judge had erred in not disqualifying himself on the ground of apprehended bias. It was contended, in substance, that because of his association with the appellant there was an apprehension of bias in favour of the appellant, and that there was a further apprehension that, in order to dispel the first apprehension, the judge would decide in favour of the respondent. 45 Wilcox J delivered a short judgment in which he agreed with Ryan J that the appeal should be dismissed. His Honour said at 336: "There is no general rule that a judge is disqualified from hearing a case in which a witness known to him or her will be called. If there were such a rule, it would frequently cause difficulties in a small jurisdiction such as the Australian Capital Territory. There must be many Territory residents known to all three resident judges. On the other hand, expect perhaps in an emergency situation, it is clearly undesirable for a judge to hear a case in which a person well-known to him or her is to give important and controversial evidence, especially if the witnesses' credit may be in issue. It might be difficult for the judge to bring an open mind to the evaluation of that person's evidence." 46 Gallop J dissented. His Honour concluded that it was clear that the trial judge should have disqualified himself. His association with the school was not minimal and was current. In Gallop J's view there would need to have been a very clear and unequivocal waiver by the appellant of its right to seek the trial judge's disqualification to dispel the apprehension that he might not bring an impartial and unprejudiced mind to the trial of the action. 47 Finally, Mr Karkar referred to Aussie Airlines Pty Limited v Australian Airlines Pty Ltd (1996) 65 FCR 215 where Merkel J at 226-236 canvassed the relevant authorities. As his Honour noted, the resolution of the issue of possible disqualification requires one to ask how the matter would appear, viewed reasonably, to the public and the parties. It is idle, therefore, to start such an inquiry by stating that the judge himself is confident that he will act impartially, or that counsel for the party making the application that the judge not sit does not contend that the judge will not act impartially. The matter is to be considered through the eyes of the hypothetical reasonable and fair-minded but "informed" observer. 48 Having canvassed the authorities Mr Karkar emphasised the following matters in support of NAB's application that I no longer continue to sit as the trial judge in this proceeding: · Mr Rado is, and has been for a number of years, my accountant and that of my wife. He is also the accountant who handles the taxation affairs of a family investment company. · I know Mr Rado reasonably well, though on a professional rather than social basis. · By reason of my past and continuing association with Mr Rado I have acquired a knowledge and understanding of his personality and character, and of the way in which he carries out his accounting responsibilities. Such knowledge may, at least subconsciously, influence any assessment which I might make of Mr Rado's evidence. · Mr Rado is now to be a witness in this proceeding. His evidence bears directly upon the matters pleaded by NAB in pars 59A-59G of its further amended defence. His credit will be in issue. · The witness statement prepared on behalf of Mr Rado indicates that his evidence will, in part at least, be relied upon by the applicants to blunt the attack made by Mr Karkar upon Mr Fried's credit. In so far as Mr Fried denies having had any involvement in the preparation of the applicants' tax returns, and asserts that the information contained in those returns was provided to Mr Rado by others, Mr Rado supports that claim. · Had Mr Rado's name appeared on the list of witnesses to be called in this proceeding there would be little doubt that I would have declined to hear this case and arranged for it to be heard by another judge. · The fact that I had indicated that I was not personally troubled at the thought that I might be required to make findings adverse to Mr Rado's credit was of little consequence when considering whether the fair-minded observer might entertain a reasonable apprehension of bias. · No question of necessity could possibly be said to arise. · Despite the cost, inconvenience and delay which undoubtedly would be caused to the parties if I were to disqualify myself, this was a paradigm case requiring that course to be followed. Although the trial had been running for three weeks, it was still only in its early stages. Far greater harm would be done were I to continue to sit as the trial judge, and were my decision ultimately to be overturned. 49 Mr Garratt joined with Mr Karkar in submitting that I should disqualify myself. He adopted the submissions advanced by Mr Karkar. He added, however, that whether or not Mr Rado was called to give evidence, his role in some of the events which gave rise to this proceeding had been very significant, and it was likely that I would have to make findings regarding his conduct. 50 Mr Black, counsel for WF Titchener & Co Pty Ltd, the auditors of the Aroni Colman Trust Account, a cross-respondent in this proceeding, neither supported nor opposed the application that I disqualify myself. 51 Mr Young submitted that I should not accede to the application that I no longer sit as the trial judge in this proceeding. He submitted firstly that an application of this type should not be lightly granted. He drew attention to certain observations in the joint judgment of Brennan, Deane and Gaudron JJ in Vakauta v Kelly at 570-571 where their Honours said: "It is inevitable that a judge who sits regularly to hear claims for damages for personal injury will form views about the reliability and impartiality of some medical experts who are frequent witnesses in his or her court. In some cases and notwithstanding the professional detachment of an experienced judge, it will be all but impossible to put such preconceived views entirely to one side in weighing the evidence of a particular medical expert. That does not, however, mean that the judge is disqualified from hearing the particular action or any other action involving that medical expert as a witness. The requirement of the reality and the appearance of impartial justice in the administration of the law by the courts is one which must be observed in the real world of actual litigation. That requirement will not be infringed merely because a judge carries with him or her the knowledge that some medical witnesses, who are regularly called to give evidence on behalf of particular classes of plaintiffs (e.g. members of a particular trade union), are likely to be less sceptical of a plaintiff's claims and less optimistic in their prognosis of the extent of future recovery than are other medical witnesses who are regularly called to give evidence on behalf of particular classes of defendants (e.g. those whose liability is covered by a particular insurer). If it were so infringed, the administration of justice in personal injuries cases would be all but impossible. In that regard, both necessity and common sense require that a distinction be drawn between the case where a judge has some preconceived views about the expertise or reliability of the professional opinions of an expert medical witness and the case where a judge has preconceived views about the credit or trustworthiness of a non-expert witness "whose evidence is of significance on … a question of fact" which "constitutes a live and significant issue" in the case …." 52 Mr Young submitted that both Mr Karkar and Mr Garratt had greatly overstated the importance of Mr Rado as a witness in the proceeding. He submitted that the evidence which Mr Rado would give was in narrow compass, and ought to be viewed as being relatively uncontentious. He submitted that there was no proper basis for any attack to be made upon Mr Rado's credit, and that Mr Karkar had been unable, when questioned by me about this matter, to point convincingly to any area where issues concerning his credit might arise. 53 Mr Young denied that Mr Rado was being called in order to bolster Mr Fried's credit. He submitted that the only reason Mr Rado's evidence had now become relevant was because NAB had amended its defence to include the allegations contained in pars 59A-59G. Even so, Mr Young submitted, Mr Rado's evidence was only peripherally relevant to those allegations. 54 Mr Young submitted that not only had Mr Karkar's cross-examination of Mr Fried been unduly lengthy and oppressive, but there had been no proper foundation for the attacks made upon his credit in relation to the applicants' tax returns. He submitted that I should not entertain the application by NAB and Bendigo Bank that I disqualify myself upon the basis of what had been a wholly improper attack upon Mr Fried's credit. The fact that Mr Rado's evidence might be seen as blunting an attack which ought never to have been made did not provide any basis for my being asked no longer to sit. Nor should an unjustified attack on Mr Fried provide any basis for a further unjustified attack to be made upon Mr Rado. 55 Finally, Mr Young submitted that I should take into account the undeniable prejudice which the applicants, in particular, would suffer if the trial of this proceeding were to be aborted, and the matter allocated to a different judge. He reminded me of the considerable costs incurred to date by his clients, and of the effect of any further delay upon them should I accede to the respondents' application. 56 At the conclusion of his submission, Mr Young reminded me that it was by no means clear that the difficulty which had arisen as a result of Mr Rado's situation would be resolved if he were to elect not to call him to give evidence. He referred in particular to a passage in Livesey where the Court observed at 300: "The consideration that the relevant question of fact may be conceded or that the relevant person may not be called as a witness if the particular judge sits would not, of course, avoid the appearance of bias." 57 Mr Young's reference to that passage was made in response to the one obvious difficulty which would arise if he were now to elect not to call Mr Rado. No doubt I would then be confronted with a submission on behalf of NAB and Bendigo Bank that an inference of the kind contemplated in Jones v Dunkel (1959) 101 CLR 298 should be drawn against the applicants. The applicants would respond that the reason Mr Rado was not called was obvious, and their failure to call him should not give rise to any such inference. The solution to that particular dilemma is by no means an easy one. 58 In any event, as Mr Young acknowledged, a decision by the applicants not to call Mr Rado would do nothing to overcome the fact that I know him well. It would still be said by the respondents that I could not be expected to ignore what I know about him when considering the probabilities of Mr Fried's account of his relationship with Mr Rado being true. I indicated to Mr Young that I agreed with the submission that it would place the applicants in an invidious position were I to say that I would continue to hear this case provided Mr Rado was not called to give evidence. I made it clear that I was saying no such thing. 59 Mr Young then sought final instructions from his clients as to whether Mr Rado would be called to give evidence. After obtaining those instructions, Mr Young submitted that I should deal with the present application on the footing that the applicants proposed to call Mr Rado, and that he would give evidence in accordance with his witness statement. Accordingly, I will deal with the application on that basis.