Kowalski v Mitsubishi Motors Australia Limited

REASONS FOR JUDGMENT 1 This is an application for leave to appeal from an order of a Judge of the Court of 4 December 2008. The judge refused an application on motion by the applicant that that Judge should disqualify himself from hearing and determining the application: [2008] FCA 1873. The Judge also made an order that the applicant should pay the costs of the hearing on 24 November 2008 and the outline of submissions dated 24 November 2008 in relation to the motion. 2 The principles upon which leave to appeal should be given under s 24(1A) Federal Court of Australia Act 1976 (Cth) and Order 52 Rule 10 of the Federal Court Rules are now well established. The Court has an unfettered discretion to grant leave if it is appropriate to do so: Décor Corporation v Dart Industries (1991) 33 FCR 397. Generally speaking, the Court will consider whether in all the circumstances the decision is attended with sufficient doubt to warrant its being reconsidered by a Full Court; and secondly, whether substantial injustice would result if leave to appeal were refused, supposing the decision to have been wrong. 3 To establish bias or apparent bias on the part of the judge it is necessary to determine objectively 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 which the judge is required to decide: Johnson v Johnson (2000) 201 CLR 488 at 492. 4 In this matter, as the reasons for judgment indicate, there were in essence two grounds upon which the applicant said that the Judge proposing to hear the matter was or might reasonably appear to have been biased. They were, first, the fact of that Judge's involvement in the proceeding by the interlocutory orders made by him on 11 November 2008; and secondly, his involvement as a Judge of the Supreme Court of South Australia in two actions in that Court: Mitsubishi v Kowalski [2004] SASC 302 and Kowalski v Layton [2006] SASC 28. There have been additional factors raised on this application for leave to appeal by the applicant. They are, thirdly, that the Judge made an order for costs when dismissing the motion when it was apparent that the respondent was disputing that the applicant was entitled to maintain the proceeding at all, including relevantly whether he was entitled to do so in this Court; fourthly, that the order for costs was made without the respondent to the proceeding and to the motion having applied for an order for costs; and fifthly, that his Honour was aware that the respondent either had, or allegedly had, failed to comply with the statutory obligation to disclose to Medicare the payment and the terms of payment of certain moneys to the applicant so as to enable Medicare to determine the extent to which moneys from that payment should have been applied in the reimbursement of benefits paid by Medicare, so it was argued that the respondent is a wrongdoer and that the Court should not have aided a wrongdoer by making the order for costs, or indeed for entertaining the application for costs on the motion. 5 To address those matters it is necessary to understand a little of the nature of the claim and of the procedural background to the principal claim. 6 It commenced on 20 October 2008 by Application and Statement of Claim seeking relief under the Corporations Act 2001 (Cth) and at common law, and then subsequently under the Trade Practices Act 1974 (Cth), in essence, for having failed to disclose the terms upon which, and the nature of, certain moneys paid by the respondent to the applicant so as to have avoided unlawfully the statutory obligation to pay to Medicare certain moneys from that payment, and thereby, to have caused the applicant significant financial and physical detriment. It is not necessary to refer to the nature of the claim in any further detail. 7 In addition to the motion for disqualification to which I have referred, the respondent anticipated at the first directions hearing on 11 November 2008, an application to summarily dismiss the proceeding under s 31A Federal Court of Australia Act 1976 (Cth) and under O 20 r 5 of the Federal Court Rules on the ground that the proceeding had no reasonable prospect of success. Included in its anticipated contention was that the applicant in this Court had no reasonable prospects of success because federal jurisdiction was not enlivened by the claim. 8 On 11 November 2008, the Judge gave directions with a view to progressing the proceeding in a way which would bring those issues to a head. His Honour dispensed with compliance with the obligation to file a defence until further order, in effect to have those interlocutory issues addressed. He fixed a limited time within which any strike out motion should be made, and a timetable for the filing of evidence and submissions in relation to that motion. He also fixed a return date for the anticipated motion of 6 February 2009. 9 It is convenient to deal with one of the applicant's contentions at this point. Subject to the contention of the applicant that no application from the respondent should have been maintained because it is a wrongdoer, in my view, those interlocutory orders do not in the faintest way suggest bias on the part of the Judge. They are routine procedural orders appropriately made in circumstances where a summary dismissal application was contemplated. It may be that the applicant does not say that those orders, by themselves, indicate an appearance of bias, but says that they do so because of the allegation of wrongdoing on the part of the respondent. If, as I apprehended, he says the directions given on 11 November 2008 might indicate a perception of bias on the Judge's part, I consider that contention is plainly wrong. It could not support the application for leave to appeal. 10 Subsequently, on 15 December 2008, the respondent issued a strike out motion returnable for 6 February 2009. That prompted, apart from the motion to have the Judge disqualify himself from hearing the matter, a motion from the applicant to strike out or dismiss the respondent's motion. That too is returnable for 6 February 2009. 11 That is the context in which the motion to have the Judge disqualify himself for apparent bias came to be heard. It is the context in which it is appropriate to consider whether leave to appeal from the order dismissing the motion to which I have referred should be made. I have, for the reasons already given, rejected one basis on which the appeal is sought. 12 In relation to the second point which was put before the Judge, that is, his involvement as a Judge of the Supreme Court of South Australia in the two actions in that Court referred to, his Honour at paragraphs [5] and [6] of his reasons identified the nature of those proceedings and his role in them. There is nothing in the nature of those proceedings, or what his Honour said or the role he played in those proceedings, which might indicate that his Honour had clear views, or indeed any views, about the issues which the principal proceedings in this case give rise to. There was no issue of credit on any significant issue of fact relevant to these proceedings. The mere fact of having decided those proceedings is not of itself a reason for the Judge to have disqualified himself. Those propositions emerge from the decisions of the High Court in Livesey v NSW Bar Association (1983) 151 CLR 288 and Re JRL; Ex parte CJL (1986) 161 CLR 342. In that respect, also in my view, the applicant has not shown that the decision of the learned Judge was attended with sufficient doubt to warrant its being reconsidered. 13 That leaves the other matters which I have identified and which the applicant had raised today. 14 The contention that there was apparent bias because a costs order on the motion was made when there was no application for an order for costs is plainly wrong. The material before the Court includes the transcript of the hearing before the learned Judge on 4 December 2008. It is apparent from that transcript that, having decided not to disqualify himself, the Judge then raised the question of whether any application for costs was to be made. The respondent formally applied for costs. Submissions were made in relation to that issue and the order for costs was made. There is no basis upon which it could be said that the order for costs was made without application on the part of the respondent. Consequently no prospect of the applicant showing to the contrary. To the extent to which that point is presented as a reason to grant leave to appeal, I reject it. 15 The other two matters are slightly interrelated. First is the claim that the respondent is a wrongdoer so that the Court should not have entertained its claim to costs at all, and second that the Court should not have made an order for costs under s 43 of the Federal Court of Australia Act 1976 (Cth) in circumstances where the respondent was asserting, at that point in an anticipatory way, that the Court should summarily dismiss the proceedings, amongst other reasons, because no federal jurisdiction was properly enlivened. 16 In my view, the fact that the learned Judge entertained the motion to disqualify himself and indicated that he would entertain motions to summarily dismiss the proceedings, including on the ground of lack of jurisdiction and apparently - depending upon the outcome of those outstanding interlocutory proceedings - would entertain the proceeding itself does not provide any reason why objectively it might be perceived by a reasonable bystander that his Honour would not approach the questions in the proceedings in an impartial and unprejudiced way. 17 The issue as to whether the respondent failed to comply with the legislation referred to and so is a wrongdoer is an issue in the proceeding. It is a matter to be decided. But by entertaining interlocutory steps, does not indicate that the issue has been prejudged either for or against the applicant. It is simply necessary that the issue be addressed in due course, in the conduct of the proceedings. It is possible it will be addressed on the applicant's motion listed for hearing, together with the respondent's motion, on 6 February 2009. There is nothing, in my opinion, to indicate objectively that the judge might not bring an impartial and unprejudiced mind to the resolution of that question. Indeed, to have adopted a different course might well indicate to the contrary. I therefore reject the proposition that the decision of his Honour not to disqualify himself for that reason is attended with sufficient doubt to warrant the grant of leave to appeal. 18 That leaves the question of having made an order for costs on the applicant's motion which was refused, firstly in circumstances of the allegation that the respondent was a wrongdoer - which I have already dealt with - and secondly in the context of the respondent asserting that proceeding should be dismissed (inter alia) because it does not enliven federal jurisdiction. The applicant contends that, in those circumstances, no such order could be made and the making of such an order therefore demonstrates bias or apparent bias on the part of the Judge. I do not finally determine whether his proposition that, if the proceeding is summarily dismissed or indeed dismissed after a hearing for lack of federal jurisdiction, there is no power in the Court to make an order for costs. But to make an order for costs on the motion in light of the power of the Court under s 43 of the Federal Court of Australia Act 1976 (Cth) at a point where the applicant had sought to enliven the jurisdiction of the Court and to maintain it, and in that context had applied unsuccessfully for the Judge to disqualify himself, does not demonstrate that his decision not to disqualify himself is attended with sufficient doubt to warrant it being reconsidered. 19 Accordingly, in my view, there is no sufficient reason shown in the matters raised by the applicant to grant leave to appeal from the decision of the Judge not to disqualify himself and to dismiss the motion that he should do so. I would refuse to make the order sought 20 I note that, by refusing the applicant leave to appeal, he will not ultimately be precluded if the proceedings are unsuccessful (either by summary dismissal or after full hearing) from raising that issue if he appeals from that outcome. The applicant nevertheless, if he is ultimately unsuccessful and if he appeals, will be able to include in the grounds of appeal a challenge to the Judge having heard the matter because of bias or apparent bias on his part. However, that is or may be a long way down the track. The fact that he has, or may have that right, ultimately has not weighed heavily in the decision which I have made. 21 For the reasons I have given, the application for leave to appeal is refused. I order that the respondent's costs should abide the event in the principal action, to the intent that if the applicant is successful in that action, the respondent will not recover costs of this application. If the principal action is unsuccessful, the respondent will be entitled to costs of this application. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield.