Henry: I hear what your Honour says. It is a matter for my friend.
His Honour: It is.
Henry: It is also a matter for him to consider in the context of the appeal which, your Honour may be aware, has been listed for 7 and 8 February. I hear what your Honour says. There is nothing I think I can say about it, but in my respectful submission it doesn't actually bear upon this issue.
His Honour: No, that is right, but it just seems to me that perhaps through something that I have done there is a risk that the proper course of the proceedings might be diverted into paths that I didn't contemplate that they would finish up in.
Henry: I think it is fair to say this much: before Justice Palmer on 11 November Mr Ellicott, who appears for the plaintiffs, certainly didn't accept that the effect of your Honour's judgment has the effect that my clients contend.
His Honour: Yes, but to avoid doubt maybe there is something I can do and I must say, subject to argument and without pre-determining the issue, my disposition would be to do something."
27 After Mr Ryckmans for the plaintiffs outlined the arguments that had been foreshadowed by the defendants, I said (Transcript, page 6), "That is an issue that greatly concerns me". A little later I said:
"What I flagged was whether it would be appropriate for the court to vacate the entry of judgment so as to minimise or remove arguments which allege that the orders made have produced a result which it was certainly not my intention to produce."
28 I heard the plaintiffs' application on 7 December 2005, as foreshadowed, and dealt with it by ex tempore reasons for judgment, holding that Palmer J's order had the effect of suspending the obligation of the Newmont Companies to give further discovery. At the end of my judgment I made the following remarks:
"21 I touched on another matter that is troubling me on 2 December 2005, and I shall make some further remarks now. The matter that concerns me arises out of the ex tempore reasons for judgment given by Palmer J on 11 November - in particular, the argument put to Palmer J and reflected in paragraph 12 of his reasons for judgment. The defendants contended that if the appeal on my determination of the separate questions is unsuccessful, there will nevertheless be little or no utility left in the 2003 proceeding. They submitted that it is res judicata, by virtue of judgment having been entered for the defendants in the 2004 proceeding, that the defendants are not indebted to the plaintiffs in any event (that is to say, even if one or more of the grounds for terminating the deeds of company arrangement which remain extant in the 2003 proceeding are successfully pressed).
"22 My intention in making the orders that I made in the 2004 proceeding, consequent upon determination of the separate questions, was to leave for determination in the 2003 proceeding all of the issues that remained in the statement of claim in that proceeding as amended to that time (that is to say, excluding what has been called the formal defect argument). Though not articulated, my intention was that if the plaintiffs were able to establish any of the grounds for termination of the deeds, and were able to persuade the Court to exercise all appropriate discretions in favour of making orders to terminate the deeds, then it would be open to the plaintiffs to assert their claimed debt notwithstanding the entry of judgment in the 2004 proceeding.
"23 I understand that the orders that I made on 7 April 2005, giving judgment for the defendants, have been entered. The Court has an inherent power to vary an order or judgment that does not reflect the true intent of the judicial officer concerned: see Ritchie's Uniform Civil Procedure at [36.17.15]. If that power is available in the present circumstances, I would be disposed to exercise it so as to vary the orders previously made in the 2004 proceeding. I have in mind that the variation would be along the lines of an additional provision stating that the orders, including the entry of judgment, were made without affecting or limiting the rights of the plaintiffs to pursue the relief currently sought in the 2003 proceeding and to assert, if they succeeded in obtaining such relief, that they are creditors of one or more of the defendant entities.
"24 There is no application before me for any such variation to be made, although the court could proceed of its own motion. Whether the court has jurisdiction to make such an order, and whether if it has it would be appropriate for the court to do so, are matters which I think will involve some complexity. The court ought not to act without giving the parties the opportunity to consider what I have said and make appropriate submissions. Given that the hearing of the appeal against my orders is pending and the problem could be addressed by the Court of Appeal, it seems to me that the court should not, of its own motion, pursue the matter further for the time being. But I have recorded my views in case they have any relevance to the appeal and in case any application on this subject matter is in contemplation. These are difficult matters but in view of my firm understanding of the intention lying behind the orders I have made, I thought it appropriate to take the unusual step of recording my views."
29 The appeal was dismissed on 15 March 2006 (J Aron Corporation v Newmont Yandal Operations Pty Ltd [2006] NSWCA 46). The Court of Appeal addressed only Question 1, which I had resolved against the plaintiffs. The judgments published by their Honours do not indicate that the observations I made in paras 21-24 of my judgment of 7 December 2005 were drawn to the Court of Appeal's attention, and nothing was said about the res judicata and estoppel issues.
30 The matter returned to me for directions on 13 April 2006. Counsel for the first defendant submitted that, as the res judicata and estoppel defences would mean that a very large proportion of the case would be shut out, his client should not be compelled to prepare, by way of discovery and evidence, for a case that may not occur. Senior counsel for the plaintiffs described the estoppel defence as "laughable".
31 During the course of argument, I said (Transcript, page 3):
"Some statements I made which were recorded in the transcript [were] broadly to the effect that if the entry of judgment in the other proceedings has the effect which was claimed on your side at the time, that would be an effect that I did not intend in making the orders. I ought not to hear the application that might arise based upon various forms of res judicata and estoppel. What I've said has not led to any application under the slip rule or any other rule. The order stands. Whether it's too late to make such an application is not for me to speculate [about] but I would not hear that matter."
32 The Newmont Companies, as first and fourth defendants, filed and served Amended Defences on 4 May 2006, which plead that the judgment in the 2004 proceeding gives rise to res judicata and estoppel defences. On 25 May 2006 the matter came before me again for directions. I was invited to re-visit an earlier decision that discovery should not proceed for the time being. I was given draft short minutes of orders, one version of which contemplated that there would be an interlocutory process for the determination of separate questions regarding the res judicata and estoppel issues. The following exchange occurred between me and Mr Finch SC for the plaintiffs:
"His Honour: I don't think I should hear that myself [referring to the interlocutory application for orders for the separate determination of the res judicata and estoppel issues].
Finch: Your Honour has already said something to that effect. We would not suggest that your Honour should hear it, it's a matter for your Honour. It's our submission that far from being barred from hearing it, your Honour is the judicial officer best equipped, on one view, to say what it was.
His Honour: I formed and expressed a view, which is that the order for the entry of judgment, which was a consent order, in light of my decision, to the extent that it might have had an effect in terms of res judicata, was mistaken, and I said things designed to encourage some application to me to fix it up.
Finch: As your Honour knows, no such application was made.
His Honour: That's right. I think, having done that, it might be better if someone else heard it.
Finch: I appreciate your Honour's decision. I don't think I can dissuade your Honour from that, having regard to the relevant factors here. We say we would not oppose your Honour hearing the matter."
33 It emerges from these materials that my intention, at the time of publication of my judgments of 29 November 2004 and 24 March 2005, and at the time that I made orders on 3 December 2004 and 7 April 2005, and subsequently, has been that the resolution of questions for separate determination, and consequently the disposition of the 2004 proceeding once that step had been taken, were to be on the basis that there would be no occasion for raising res judicata or estoppel arguments except with respect to the matters directly involved in the answering of the question. In raising a defence of res judicata, issue estoppel and Anshun estoppel on the ground that entry of judgment against the plaintiffs in a proceeding in which they asserted a claim to relief as creditors prevents them from pursuing the bulk of their claims to relief in the 2003 proceeding, the Newmont Companies are seeking to derive consequences from my orders that are contrary to my intention. It would not be appropriate for me to make any determination, in the context of the present application, as to whether there was a common understanding between the parties to the same effect.
34 The plaintiffs' application for variation of my orders of 7 April 2005 was filed, as I have said, on 14 June 2006. It seeks alternative orders for variation, each for the purpose of giving effect to my intention at the time when the order was made. In the first alternative, a condition would be added that no party would be permitted to rely on any estoppel or res judicata arising out of the orders, except that the plaintiffs would be unable to assert in the 2003 proceeding or any other proceeding that creditors did not vote in favour of a resolution of each Newmont Yandal Group company to execute a deed of company arrangement. In the second alternative, my orders would be vacated and instead, there would be orders answering Question 1, declaring that the other questions did not arise and ordering that the 2004 proceeding be stayed until further order.
35 In these circumstances, the Newmont Companies submit that I should disqualify myself from hearing the plaintiffs' application to vary my orders, on the ground of apprehended bias. The submission appeals to what has been described as "a 'fundamental rule' [Re JRL; Ex parte CJL (1986) 161 CLR 342 at 351, per Mason J; …] of natural justice and an 'abiding value of our legal system' [Galea v Galea (1990) 19 NSWLR 263 at 277] that every adjudicator must be free from bias": Johnson v Johnson (2000) 201 CLR 488, at 501 per Kirby J. "Bias", for the purposes of the "fundamental rule", is not to be equated with lack of good faith. As Lord Goff said in R v Gough [1993] AC 646, 659:
"… bias is such an insidious thing that, even though a person may in good faith believe that he was acting impartially, his mind may unconsciously be affected by bias."
36 The "fundamental rule" has been extended, by the courts insisting that the appearance of bias must also be avoided. Thus, in R v Sussex Justices; Ex parte McCarthy [1924] 1 KB 256, Lord Hewart CJ said (at 259):
"… it is not merely of importance but is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done."
37 This extension of the "fundamental rule" is based upon the need for public confidence in the administration of justice, for "if fair-minded people reasonably apprehend or suspect that the tribunal has prejudged the case, they cannot have confidence in the decision": R v Watson; Ex parte Armstrong (1976) 136 CLR 248, 263 per Barwick CJ, Gibbs, Stephen and Mason JJ; Johnson, at 493 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.
38 The requirement to avoid the appearance of bias is assessed, in Australia, by reference to an objective test, stated by Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ in the High Court in Johnson, at 492, namely:
"… whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question that the judge is required to decide."
See also Ebner v Official Trustee in Bankruptcy (2001) 205 CLR 337, at 344.
39 At the hearing on 6 July 2006, Mr Bathurst QC, for the Newmont Companies, submitted (Transcript, page 2-3) that a fair-minded lay observer might reasonably apprehend that I might not bring an impartial and unprejudiced mind to the resolution of the question whether to vary or vacate my orders of 7 April 2005. He submitted that, while I had not pre-judged the question whether the court has power to make such an order, there is a reasonable apprehension that I have formed a view as to how the court should exercise any discretion it might have if the power exists.
40 Mr Bathurst outlined the case that the Newmont Companies will make on the application for variation of my orders. It was plain from his outline that the court will be invited to deny the application partly on discretionary grounds. The Newmont Companies will point out that I invited the plaintiffs to make an application to vary the orders prior to the hearing in the Court of Appeal, and the plaintiffs chose not to make the application at that time. If they had done so and had been successful, a consequence would have been that an appeal to the Court or Appeal would lie only with leave. In Mr Bathurst's submission, there was a real possibility that the Court of Appeal may have declined leave at that stage, preferring to deal with the matter when all issues in both the 2004 and 2003 proceedings had been heard.
41 Mr Bathurst informed the court that none of the arguments to be put by the Newmont Companies on the application to vary the orders will depend on my intention. He said (Transcript, page 5):
"Your Honour's intention in this sort of case would be a given. Your Honour has articulated it and, with respect, articulated it clearly and any judge who hears it will have the benefit of your Honour's views, which I can tell your Honour won't be challenged by us and indeed can't be challenged by us."
42 In my opinion a fair-minded lay observer would reasonably apprehend that I might not bring an impartial and unprejudiced mind to the resolution of such a discretionary argument. The observer would infer from my various statements that, if I decided I had the power to vary or vacate and replace my orders, I would use that power to prevent the Newmont Companies from raising defences in the 2003 proceeding that I intended to exclude, and that I would not pay due regard to discretionary considerations alleged by the Newmont Companies to point against the exercise of the power. I hope that apprehension would be unfounded, but in my view this is a clear case where the basis of such an apprehension has been laid.
43 Mr Gray, appearing to the plaintiffs, submitted (Transcript, page 7) that it is contrary to the authorities, cited at length in the plaintiffs' written submissions, for the Newmont Companies to contend that there is a reasonable apprehension that the court would refuse to give significance to matters that had never previously been put to it. I disagree. The application of the Johnson test requires the court to make a commonsense assessment of the effect that the judge's statements would have on a fair-minded lay observer. My statements, quoted above, would suggest to the mind of such an observer that I was intent on "fixing up" a problem that had arisen with my orders, if I had the power to do so, even though my judicial duty would be to assess the discretionary considerations placed before me on the application in a fair and impartial manner. In my opinion that is a sufficient basis for me to decline to hear the application.
44 In written submissions the plaintiffs submitted that the appropriate court to determine an application to amend a judgment is the court that made the judgment. They said that the authorities make this plain, and they listed a "representative sample" of eleven cases. I have considered those cases, but I have not been able to discover in them any principle directly applicable to the present circumstances. In my opinion, the cases do not require that the judge who made the original orders must hear an application to vary them, where there is good reason for some other judge to hear the application. Thus, where the judge who made the original orders has retired, it is open to another judge of the same court to vary those orders where legislative power and principles make it necessary or appropriate to do so: Owston Nominees No 2 Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558, at [22] per Allsop J. In the present case, it is important that according to Mr Bathurst QC's submissions, the Newmont Companies regard my statements of intention as clear and they will not challenge them. The position would have been more difficult had there been some issue about my intention in making the orders.
45 The submissions of the parties addressed the question whether the apprehended bias rule is superseded by a rule of necessity (see esp Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70, at 88, 89 and 96). But here there is no necessity for me to hear the application. There is no substantial difficulty in allocating the application for hearing by another judge of the Equity Division. The only disadvantage in doing so is that the judge who hears the application will have to spend some time familiarising himself with the issues, with which I am very familiar. Given the availability of another judge, I would have been strongly inclined not to hear the application even if the Newmont Companies' ground for opposition was substantially weaker than it is. It is important, in strenuously contested litigation of this kind, to take such practical steps as are available to limit the field of potential disputation. For that reason, I may well have declined to hear the application as soon as the Newmont Companies objected to my doing so, were it not for the plaintiffs' insistence that I should hear it.