Gold Peg International P/L v Kovan Engineering

Federal Court of Australia|2004-11-26|Before: Peg International P, Crennan J, International P

REASONS FOR JUDGMENT 1 On 5 July 2002 Gold Peg International Pty Ltd ("the applicant") filed an application and statement of claim alleging, in essence, against Kovan Engineering (Aust) Pty Ltd ("the first respondent") that in advertising, promoting and offering to sell certain cookers, the first respondent engaged in conduct in breach of ss 52, 53(c) and 53(d) of the Trade Practices Act 1974 (Cth) and also that it threatened to infringe copyright which the applicant claimed it owned in certain drawings for a cooker, being artistic works under s 10(1) of the Copyright Act 1968 (Cth) ("the Copyright Act"). 2 It was further alleged that the second and third respondents were or had been directly or indirectly knowingly concerned in the conduct complained of. Each of the corporate parties is a company run by a family. Mr Smith is a principal of the applicant and Mr Zakis and Mrs Zakis, the second and third respondents, are principals of the first respondent. 3 The respondents made an application for disqualification for apprehended bias on the eighth day of the hearing. It was contended by the respondents that that language used in eight passages in the transcript of the hearing was such as to create an ineradicable apprehension of pre‑judgment of certain issues in dispute. There was no complaint made of any actual bias. 4 In written submissions the case for the respondents on the apprehension of bias based on statements made during the course of the hearing was put thus: "The statements set out above, when considered in their totality, would raise in the mind of the fair minded lay observer the ineradicable possibility that your Honour had already determined that there was an oral agreement in existence at the time of negotiations between Kovan and Gold Peg commencing in 1994, and the negotiations between them from that date related to the reduction of the oral agreement to writing, or the written acknowledgement by Kovan of intellectual property rights that Gold Peg had pursuant to that oral agreement. In fact, Kovan strenuously denies that there was ever an oral agreement between Kovan and Gold Peg about ownership of intellectual property and the existence or otherwise of that alleged oral agreement is the central issue in this proceeding. Further, the statements referred to above, when considered in their totality, would raise in the mind of the fair minded lay observer the ineradicable possibility that your Honour had already determined that Mr Smith or Gold Peg had always claimed the copyright subsisting in drawings created by Kovan, even before 1994. Again, this is strenuously denied by Kovan." 5 The prejudgment alleged in the second paragraph was given little prominence in oral argument conducted by senior counsel for the respondents compared with submissions made in respect of the prejudgment alleged in the first paragraph. 6 Under paragraph 11 of the current statement of claim the applicant claimed intellectual property rights in two discrete sets of drawings in respect of a cooker, which it pleaded were covered by the terms of an agreement of 1992, between the applicant and the first respondent, for the manufacture by the first respondent of cooking machines. 7 Mr Smith as inventor of the cooker had previously assigned equipment, drawings, prototypes and other ownership rights to Danish Membrane Filtration and International Dairy‑Engineering AS, trading as Alfa‑Laval Cheese (Alfa‑Laval) Systems in 1986. By letter dated 11 February 1992 Alfa‑Laval Dairy System AB ("Alfa‑Laval") (described therein as "the parent company") "returned (previously assigned rights)." 8 The applicant claimed copyright ownership of drawings which it claims are included as part of the subject matter of the assignment back to it from Alfa‑Laval. The drawings are described in the proceeding as the "Alfa‑Laval drawings". It needs to be noted that the respondents concede that copyright subsists in the Alfa‑Laval drawings and the respondents make no claims that they own copyright in the Alfa‑Laval drawings, including any manufacturing drawings of Alfa‑Laval or any related company of Alfa‑Laval. The first respondent made two cookers for an Australian subsidiary of Alfa‑Laval between 1987 and 1989 and commenced manufacturing cookers for the applicant in about March 1992. 9 Secondly, the applicant claimed copyright ownership of any engineering drawings modifying or enhancing the Alfa‑Laval drawings which were made by the first respondent during the course of its manufacture of cookers for the applicant. These are referred to in the applicant's pleading and elsewhere in the proceeding as the "RotaTherm" drawings. These same drawings are referred to by the respondents in their defence as the "Kovan drawings", the "Kovan Employee Drawings" and "Kovan Consultants Drawings". The respondents claim ownership of these drawings arising out of authorship, or otherwise, under the provisions of the Copyright Act. 10 It is sufficient for present purposes to note that in their defence, as it presently stands, the respondents deny the agreement and its terms as pleaded by the applicant and then aver positively that the first respondent manufactured and sold cookers and parts of cookers to the applicant, for which it has been paid in accordance with quotes. 11 During the course of argument the respondents' counsel conceded there was "an oral agreement for manufacture" although his final position appeared to be that there is an "uncontested fact that there was a series of agreements for the supply of cookers". He then said "There was never any argument as to whether we'd (the first respondent) manufactured and supplied cookers . . ." 12 It is not in contest that the first respondent was authorised or licensed by any manufacturing agreement to make such use of the Alfa‑Laval drawings, including copying them, as was necessary for its manufacture of cookers for the applicant. 13 Whether there was one, or several agreements for manufacture and supply, the real issue in dispute is whether the single, or several agreements, contained any terms dealing with copyright ownership. The copyright ownership issues cover (i) the applicant's ownership of the Alfa‑Laval drawings, and (ii) the ownership of copyright in the manufacturing drawings which the first respondent prepared or had prepared. 14 The proceeding is not without complexity.

The governing principles 15 Well‑established principles govern this application. In Livesey v New South Wales Bar Association (1983) 151 CLR 288 ("Livesey") at 293-4, the principle was stated as follows: "That principle is 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 he might not bring an impartial and unprejudiced mind to the resolution of the question involved in it." The court deprecated using the phrase "suspicion of bias" in any statement of the relevant principle as capable of raising "unintended nuances of meaning" and went on to indicate a judge should not automatically stand aside when a party makes such a request. In applying the principle to the facts, (at 300), the court referred to whether "the appellant or a fair‑minded observer" might have entertained "a reasonable apprehension" of bias by reason of prejudgment. A judicial proceeding must be conducted impartially to ensure a "fair-minded observer" and "fair‑minded people" will have confidence in a decision made in the case: R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 264 per Barwick CJ, Gibbs, Stephen and Mason JJ ("R v Watson"). 16 As a result of an increase in the frequency of certain applications for disqualification after R v Watson and Livesey were decided, a clear indication was subsequently given that the issue which needs to be determined on an application such as this is whether an appearance of prejudgment has been shown to the necessary degree, not whether the matter is likely to be decided adversely to one party: Re JRL; Ex parte CLJ (1986) 161 CLR 342 at 352 per Mason J ("Re JRL"); see also Helljay Investments Pty Limited v Deputy Commissioner of Taxation (1999) 166 ALR 302 at 306 [11] per Hayne J ("Helljay"). In Helljay, Hayne J observed: "The principles about apprehension of bias must be understood in the context of a judicial system founded in precedent and directed to establishing, and maintaining, consistency of judicial decision so that like cases are treated alike and principles of law are applied uniformly." To similar effect, Hayne J has recognised that courts apply "rules for decision‑making" which "are set by legislative or judicial processes which are external to the judge.": Re Minister for Immigration and Multicultural Affairs; Ex parte Jia Legeng [2001] 205 CLR 507 at 562; See also Webb v The Queen (1994) 181 CLR 41 at 73 per Deane J. 17 In Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at [6] to [8] ("Ebner"), Gleeson CJ, McHugh, Gummow and Hayne JJ said: "Where, in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge . . ., a judge is disqualified if a fair‑minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide. That principle gives effect to the requirement that justice should both be done and be seen to be done, a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial. It is convenient to refer to it as the apprehension of bias principle. . . . The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge . . . to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits . . ." 18 The principle restated in Ebner was described in Johnson at [10] as "well‑established" and set out at [11] as follows: ". . . the test to be applied . . . in determining whether a judge is disqualified by reason of the appearance of bias . . . is whether a fair minded lay observer might reasonably apprehend that a judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge has to decide." The court went on to note, at [12], the hypothetical reasonable observer is postulated in order to emphasise that the test is objective and also noted that the observer is taken to be "reasonable" and that the person observed is "a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial." 19 The standard from R v Watson through to Ebner has been constant and is "a reasonable apprehension of bias." However, the test to be applied in respect of the standard has evolved from that stated in R v Watson and Livesey, to the present test in Johnson at [11] and Ebner at [6]. 20 When assessing the logical connection between a matter complained of and any feared deviation from deciding a case on the merits (the second step referred to in Ebner), it is important to bear in mind the characteristics of modern litigation. In Johnson, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJobserved at [13]: "Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx. In Vakauta v Kelly Brennan, Deane and Gaudron JJ, referring both to trial and appellate proceedings, spoke of the "the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case". Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgment. Judges are not expected to wait until the end of a case before they start thinking about the issues, or to sit mute while evidence is advanced and arguments are presented. On the contrary, they will often form tentative opinions on matters in issue, and counsel are usually assisted by hearing those opinions, and being given an opportunity to deal with them." 21 In applying Johnson and Ebner, the Court of Appeal in New South Wales has stressed the "strong need for courts to apply realistic criteria in considering whether a reasonable apprehension of bias has been established" especially where the application is based on prejudgment. Kwan v Kang & Ors [2003] NSWCA 336 at [77] per Sheller, Ipp and Tobias JJA ("Kwan"). In Kwan, the Court also stressed the element of "reasonableness" as an attribute of the "fair‑minded lay observer" at [82] and [83], following the majority judgment in Johnson set out above and also Kirby J in Johnson at [43] and [53]. The Court of Appeal's recommendation that realistic criteria be applied was followed by Austin J, in a complex hearing, in ASIC v Rich [2004] NSWSC 970. 22 In dealing with the established principles, the respondents' counsel drew particular attention to the judgment of Kirby J in Johnson at [41] and [48] where his Honour stated: "The reason commonly given for adopting the comparatively strict approach that has found favour in this court in recent years is that it mirrors the importance attached by law not only to the actuality of justice (that is, whether the adjudicator had, in fact, prejudged issues in the case) but also the appearance of impartiality both to the parties and to the community . . . However, the test which the law calls for interposes a fictitious bystander. It hypothesises a person whose judgment in the matter is taken to be determinative. One might consider that the fiction should not be taken too far. Indeed, it is important to reserve to the appellate court a capacity to review the facts and the complaints having regard to the "serious and sensitive issues" . . . raised by an allegation of prejudgment." 23 I do not regard Kirby J's statements as signifying any departure from an objective test by reference to a fictitious bystander, a construct he was seeking to explain. 24 Having drawn attention to the judgment of Kirby J, the respondents' counsel submitted: "So while the test to be applied is to a fictitious bystander rather than a party, in a sense there's no real significance to that because the rationale of the rule is both to the community generally but very importantly, from the perspective of reasonable parties so that the parties are not at risk, or there's not a real possibility of the parties at the end of the trial having a justifiable sense that they didn't get a fair hearing - not that they didn't get one, that there's a real possibility that they could reasonably have that apprehension." 25 I do not think the submission suggests applying the relevant principle other than by reference to a "fair‑minded lay observer", the approach laid down in Johnson at [11] and Ebner at [6]. The principle that a judge should disqualify himself or herself if a fair‑minded lay observer might reasonably apprehend bias reflects a concern to maintain public confidence in the administration of justice. The hypothetical fair‑minded lay observer is a touchstone and a representative of the parties and the public.

Consideration 26 I have given careful consideration to the respondents' submissions and the context of each passage complained of. In relation to the allegation that the passages by their language, and cumulatively, give rise to a reasonable apprehension that there has been a prejudgment that there was an oral agreement in existence at the time of negotiations between the parties commencing in 1994, it must be observed that it is not a material fact in contention that there was an oral agreement or several oral agreements between the parties for the manufacture and supply of cookers commencing in 1992. So much is expressly conceded in the respondents' own written evidence at many points. There were invoices raised and it could not seriously be denied that there was an oral manufacturing and supply agreement (or a series of them) upon which the first respondent could have sued if, for example, the applicant declined to pay the purchase price. 27 During the course of argument the respondents' counsel conceded this and also conceded that an apprehension of bias could not arise out of statements dealing with uncontested matters. Such concessions were responsible and correct. In this context, the respondents' counsel was given an opportunity to deal with a real concern of mine that the respondents' application was based on misapprehension and misunderstanding rather than any apprehension of bias. This was because the fact that manufactured goods were provided by the first respondent to the applicant pursuant to some oral agreement or several agreements commencing about March 1992, was not in dispute. In raising those matters, an assurance was given by me that I had no concluded views about the matters in dispute. 28 The respondents' counsel then said that the statements complained of would be understood by a reasonable bystander as statements which "were made in a way that created an apprehension that your Honour wasn't simply referring in these observations to an agreement or agreements for the supply and manufacture but was making observations about an oral agreement dealing with copyright." It was submitted that references to "an oral agreement (prior to 1994)", being the subject matter of a reasonable apprehension of prejudgment, as identified in written submissions extracted at paragraph 7 above, should be treated by me as references to "an oral agreement (prior to 1994) dealing with copyright." 29 In giving careful consideration to the application to disqualify myself, I have borne in mind that I am not required to be mute during this proceeding, Johnson at [13] and that it is appropriate for a trial judge to raise with counsel, established principles of law of possible importance to the case Helljay at [12], Johnson at [13], Jia at [562]). Further, the Copyright Act was the legislative backdrop of the case. 30 Secondly, I have also taken into account the desirability of the trial judge in this case having at least a preliminary understanding of the way in which the case is put, on the issue of the ownership of copyright in the manufacturing drawings, before embarking on an extensive forensic exercise, foreshadowed, in respect of some 600 drawings. A blank mind is unlikely to be one which would follow the complex issues raised on substantiality, both as it occurs in the jurisprudence relevant to the subsistence of copyright, and in the discrete context of infringement of copyright in artistic works. (See ss 13(1), 14(1), 31(1) and 36(1) of the Copyright Act.) 31 Thirdly, I appreciate the need to be careful to avoid judicial obligations by too readily acceding to such an application: Re JRL at 352; see also the observations of Kirby J in Johnson at [43]. There is also a need to avoid being influenced by the appeal of abstaining from sitting further. Kartinyeri and Anor v Commonwealth of Australia (1998) 156 ALR 300 at [38] per Callinan J.

Statements 32 There were eight passages in the transcript containing statements said to give rise to an apprehension of bias by reason of prejudgment. I turn to consider each of them in the same order as respondents' counsel dealt with them.

T 469 lines 1- 20 33 JUDGE: Was the dispute between you and Mr Smith about who owned the IP rights or was the dispute about whether or not Kovan would confirm in writing some agreement about the IP rights? Do you have any recollection of that?---Well, actually, I don't think, as such, we had what you would call a dispute. He tabled something to which we had not responded. So we hadn't entered into a dispute with Mr Smith, and I was very very careful that we didn't. How would you describe the arrangements, whatever they were, in relation to any IP rights in relation to the drawings in respect of the cooker?---Well, I think without question, based on my experience over the years, that if - sorry, I'm not allowed to? There has to be some questioning at some stage about the factual position in relation to this, doesn't there, Mr Collins? COUNSEL: There was going to be, your Honour. JUDGE: I will withdraw the question for the time being and leave it to yourself and Mr Golvan. Very well, I say no more. 34 The context in which these questions were asked is that Mr Miller, a former principal of the first respondent, swore an affidavit in the proceeding. He deposed that the first respondent would not consider the manufacture of cookers for the applicant until the applicant obtained "clear rights" from Alfa‑Laval, particularly in respect of a right to "the use of the Alfa‑Laval drawings which were in [the first respondent's] possession". He also gave evidence of the terms upon which manufacturing by the first respondent for the applicant commenced in 1992 and of his efforts subsequently to obtain a written agreement, containing exclusive rights, for the first respondent. 35 Just prior to the questions asked, Mr Miller was asked by the respondents' counsel in the context of seeking legal advice in 1998 ". . . do you recall that one of the issues you had to seek advice on was intellectual property rights, those which might be Kovan's and those which might be Gold Peg's?" 36 That was the context in which the questions objected to were asked. 37 The first question in this passage was a question based on documents in evidence. 38 As to the second question in the passage, particular exception was taken to the use of the word "arrangements" in the question as evidencing prejudgment that there was an "oral agreement dealing with copyright." Whether or not there was any oral agreement, or any term in any manufacturing agreement about copyright ownership, the arrangement between the parties involved, at least, an authorisation by the applicant of the first respondent in respect of the Alfa‑Laval drawings. In my view, given the history of the matter, the question cannot give rise to a reasonable apprehension of prejudgment as alleged.

T 470 lines 15 - 42 39 JUDGE: - - - because at the end of the day, to me, the issue is very clear and very stark. There probably was some sort of agreement between these people, the contents of which I am unsure about, and one very likely possibility - but it may not be the one it was - is that both sides knew that Mr Smith was claiming the IP rights and it's not something they kept debating all the time. Every now and again there are bits of evidence of the sort that we just heard which rather support that scenario. The real fight when they are seeking legal advice is whether or not Kovan will in writing confirm his rights. There is a lot of evidence about his assertion of them, in the context of him having a manufacturing agreement with Kovan - a lot of evidence. In the usual course, the implied term in that context would be that Kovan doesn't assert any independent copyright rights, just as the evidence indicated this morning in relation to Alfa Laval. So all I am saying is that questioning about what you would have done hypothetically in the period of 1998, whatever the answers are, is a very indirect way of coming at the true subject matter of dispute which I will be required to resolve. It's an inferential way of coming at it, not a direct way. You are the cross‑examiner. There is no criticism involved here. COUNSEL: Yes, your Honour. JUDGE: But I am bound to indicate that at the end of the day there is a very simple subject matter on this particular issue that is not really resolved, or can't be resolved, through inferences in a possible scenario. It's like BP (BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266) v and Codelfa (Codelfa Constructions Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337). "We don't keep talking about all of that all the time." Am I making myself plain? "We knew that. We knew Mr Smith always claimed the copyright." I know there's an issue of future drawings and I'm not seeking to oversimplify it. 40 The reference to "some sort of agreement" and the statements generally in this paragraph can hardly be controversial given counsel's concession that manufacturing did occur pursuant to agreements which commenced in 1992. The statements directed counsel's attention to the possible relevance of certain established principles of law. Counsel's attention was also drawn to the possibility that adverse inferences in respect of conduct in 1998 might not resolve the issues in dispute, especially as to the terms of any agreement in 1992. In my view this could not give rise to a reasonable apprehension of prejudgment as alleged.

T 471 lines 25 to 35 41 JUDGE: But I think a lot of witnesses - well, the witnesses we've seen occasionally get confused about having it constantly put to them that they didn't advert to something at a particular period of time - and this impression may be dispelled when Mr Zakis gets into the witness box - but it seems to me the reason they do that is because they did seem to have some shared understanding about this but it wasn't in writing. That's one possibility. COUNSEL: It's one possibility, but your Honour will see ‑ ‑ ‑ JUDGE: Put it that way. And I'm not shutting my mind to other possibilities, I hasten to say. But that's one possibility. 42 This statement merely draws counsel's attention to the issues in the case arising on the evidence. There is ample support in the authorities for the proposition that such dialogue is a helpful part of modern litigation and even the expression of tentative views (which none of the statements complained of evince) should not be taken on that account alone to indicate prejudgment: Re Lusink; Ex parte Shaw (1980) 55 ALJR 12 at [15/16] per Murphy J; Vakauta v Kelly (1989) 167 CLR 568 at [571] per Brennan, Deane and Gaudron JJ; Johnson at [13]. In my view, the statement could not give rise to a reasonable apprehension of prejudgment alleged.

T 290 lines 30 to 40 43 COUNSEL: Did they tell you that they would give you the IP if you'd given them a long‑term supply agreement?---Not in those terms, no. That sort of ‑ ‑ ‑ That was the gist of the negotiation, wasn't it?---Sorry? That was the gist of the negotiation, wasn't it?---No. No, it was really on costings. That was the gist of it. JUDGE: Did they tell you they would give a written acknowledgment of your IP rights, if you would give them an exclusive supply agreement? ---Yes, that was said. 44 This question to the witness, Mr Miller is an obvious question in respect of an issue in dispute, and differs only from a question which had just been asked by the respondents' counsel, in that it is based more closely on documents already in evidence. In my view it could not give rise to a reasonable apprehension of prejudgment alleged.

T 482 lines 7 to 19 45 JUDGE: Advice about the Mr Keiser issue or advice as between Smith and Kovan inter se? But it's a matter for you. It's just in terms of the use I can make of any answers. COUNSEL: That's true, but your Honour will note that in paragraph 54 - about the fact, "We had this potential new investor and still had no agreement." JUDGE: Yes. COUNSEL: And they sought the confidentiality. JUDGE: No written agreement. They'd sought advice in relation to the confidentiality ‑ ‑ ‑ 46 Exception was taken to the reference to "No written agreement". Given the respondents' counsel's concessions comment hardly seems necessary. On no view could the statement give rise to a reasonable apprehension of a prejudgment as alleged.

T 499 lines 4 to 38 47 COUNSEL: But your Honour - no, this is important because it's entirely inconsistent to say, "My understanding throughout was that they were Mr Smith's - the intellectual property rights including the drawings" - and understood that he must have thought that - and I accepted that - to go along to a solicitor and seek advice as to whether they were yours, and if so, what you should do about them. JUDGE: Not really. "We have got no written agreement; we've fallen out; we've put a lot of effort into these and we would like to assert any rights we have got in relation to them." COUNSEL: But only that you've got and you are entitled to, consistent with any agreement you've got or any understanding upon which you have conducted yourself. JUDGE: Yes. COUNSEL: So that's the point. JUDGE: Yes. COUNSEL: I don't know if I'm being ‑ ‑ ‑ JUDGE: The Kovan people seem to be operating on the basis that - seem to be distinguishing between a written agreement and an oral agreement, as though somehow a written agreement is better, or ‑ ‑ ‑ COUNSEL: It obviously is better. JUDGE: - - - an agreement where an oral agreement isn't enforceable, but that's all beside the point, perhaps. COUNSEL: No, your Honour. No-one drew the distinction, saying, "Oh, well, we've only got an oral agreement. No-one referred to an oral agreement. That's the point. 48 These statements hardly require comment given the respondents' counsel's concessions. The statements could not give rise to a reasonable apprehension of prejudgment as alleged.

T 543 line 27 to T 544 line 3 49 COUNSEL: Was there any unresolved conflict or point of difference that you discussed with Mr Rees?---Well, you're putting it in a conflict sense. It wasn't that we were saying to Mr Smith, "We don't agree with that," and he's saying, "Well, you should." That's a conflict. We're saying that if we acknowledge that, then we don't have any rights. Kovan has nothing and we're even more vulnerable. You wouldn't do it unless you got something in return?---We would try not to. You try not to. JUDGE: You didn't sign anything?---Pardon? Is the position that you wouldn't sign any acknowledgment, you would not sign any written document acknowledging what Mr Smith was seeking, without having an exclusive supply agreement?---Some arrangement, yes. COUNSEL: And nor would you say anything to that effect, would you? ---Pardon? Nor would you say it?---No, we didn't say it. And you never said it, did you?---No. 50 The questions asked are fairly based on documentary evidence. The context was evidence was being given about the circumstances in which the first respondent declined to sign a written confidentiality agreement proposed by the applicant in 1998. No reasonable apprehension of prejudgment as alleged could arise.

T561 lines 17 to 18 51 JUDGE: There were no written agreements in place at the time between Kovan and Gold Peg?---Between Kovan and Gold Peg, no. 52 The respondents' emphasize the words "written agreements" as they occur in a question to Mr Miller as giving rise to a reasonable apprehension of prejudgment as already described. The context of passage 8 was that a reference had earlier been made to a valuation which stated inter alia: "The cookers are manufactured by the company and invoiced to Gold Peg Pty Ltd, an unrelated company subsidiary specialising in food technology. Cookers comprise the balance of the company's turnover. Gold Peg Pty Ltd on-sells the cookers to customers throughout the world. These machines are under the name of Gold Peg. No agreements of any sort are in place between Kovan and Gold Peg." In its terms, the valuation both describes a manufacturing and supply arrangement, or agreement between the applicant and the first respondent and then disclaims "agreements of any sort" between them. Prior to the question being asked, the witness had just disagreed with counsel as the following exchange shows: "Q. That (the valuation) continued, "Gold Peg on‑sells the cookers to customers throughout the world. These machines are under the name of Gold Peg. No agreements of any sort are in place between Kovan and Gold Peg? A. Yes. Q. You believed that to be true at the time didn't you? A. No." 53 The question complained of did no more than narrow the witness's disagreement with counsel to what was not in dispute, ie. that there were "no written agreements" in place. Bias is not shown when a trial judge does no more than ask a question clarifying an inconsistency in a witness's evidence: Cairnstores Ltd v Aktiebolaget Hassle [2003] FSR 23. No reasonable apprehension of bias by prejudgment could arise out of this exchange.

Conclusion 54 Having heard oral submissions explaining how the statements complained of could give rise to apprehensions of bias, then applying the principle and approach of Johnson at [11], and restated in Ebner at [6], I do not accept that they reasonably could do so. In reaching that conclusion I have applied realistic criteria as recommended in Kwan at [77]. 55 Nor do I consider that the statements considered in their totality are capable of raising in the mind of "a fair‑minded lay observer", who is "reasonable", (Johnson at [11/12]) an ineradicable possibility that I have prejudged matters alleged to have been prejudged or that I would not bring an impartial and unprejudiced mind to the disputed issues before me. 56 In responding to the application for disqualification, senior counsel for the applicant submitted that the application was misconceived and that there was nothing in the statements complained about which provided any basis for any apprehension of bias. For the reasons I have given, I agree with this submission. 57 Accordingly, I decline to grant the application that I disqualify myself from the further hearing of this proceeding.

I certify that the preceding fifty‑seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Crennan.

Counsel for the Applicant: Colin Golvan SC Dr Staniforth Ricketson

Counsel for the Respondent: David Collins SC Andrew McClelland

Solicitor for the Respondent: Brian Ward & Partners

Trade Practices Act 1974(Cth)

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