Kwan v Kang & 2 Ors

CATCHWORDS : PRACTICE AND PROCEDURE - Alteration of reasons for judgment - APPREHENDED BIAS - Apprehended bias by reason of pre-judgment - Johnson v Johnson (2000) 201 CLR 488 test - Findings at an interlocutory stage expressed in terms of finality - Undesirability of judges supporting interlocutory evidentiary rulings by commenting on evidence. D Conveyancing Act 1919, s 37A LEGISLATION CITED : District Court Act 1983 Evidence Act 1995, ss 118, 119, 120, 125 Adames v Hallett (1868) LR 6 Eq 468 Bar-Mordecai v Rotman [2000] NSWCA 123 Brady v Stapleton (1952) 88 CLR 322 Bromley v Bromley [1965] P 111 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 Harris v Beauchamp Brothers [1894] 1 QB 801 In Re Harrison; Ex parte Butters (1880) 14 Ch D 265 Johnson v Johnson (2000) 201 CLR 488 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 Metropolitan Properties Company (FGC) Limited v Lannon [1969] 1 QB 577 CASES CITED : Noakes v J Harvy Holmes & Son (1979) 37 FLR 5 Reese River Silver Mining Co v Atwell (1869) LR 7 Eq 347 Re JRL; Ex Parte CJL (1986) 161 CLR 342 Re Lusink; Ex parte Shaw (1981) 55 ALJR 12 Re Polites; Ex parte Hoyts Corporation Pty Limited (No 2) (1991) 173 CLR 78 R v Australian Stevedoring Industry Board; Ex Parte Melbourne Stevedoring Company Pty Limited (1953) 88 CLR 100 R v Gough [1993] AC 646 R v Masters (1992) 26 NSWLR 450 R v Watson; Ex parte Armstrong (1976) 136 CLR 248 Southern Equities Corporation Limited (In Liq) v Bond (2000) 78 SASR 339 Texas Co (Australasia) Ltd v Federal Commissioner of Taxation (1940) 63 CLR 382 Vakauta v Kelly (1988) 13 NSWLR 502 Webb v The Queen (1994) 181 CLR 41 Christopher Anthony Kwan (Appellant) PARTIES : Wei Ling Kang (First Respondent) Kate Woowin (Second Respondent) Eileen Woowin (Third Respondent) FILE NUMBER(S) : CA 41215/02 M L D Einfeld QC/F Donohoe (Appellant) COUNSEL : G C Lindsay SC/M A Robinson (First Respondent) No appearance (Second Respondent) No appearance (Third Respondent) Verekers (Appellant) SOLICITORS : Legal Aid Commission (First Respondent) No Appearance (Second Respondent) No Appearance (Third Respondent)

LOWER COURT Supreme Court - Equity Division JURISDICTION : LOWER COURT ED 3510/99 FILE NUMBER(S) : LOWER COURT Santow J JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41215/02 ED 3510/99

SHELLER JA IPP JA TOBIAS JA Tuesday 9 December 2003 CHRISTOPHER ANTHONY KWAN v WEI LING KANG & 2 ORS Facts The third respondent, Mrs Eileen Woowin ("Mrs Woowin") and the second respondent, Miss Kate Woowin ("Kate"), invited the first respondent to reside at Kate's house ("the Castlecrag property") and work for them. During the four years, up until 1995, in which the first respondent and his family so resided, he carried out fairly extensive work on the house. In 1999, the first respondent commenced proceedings in the District Court, claiming payment for the work he had performed. Herron DCJ held that he was entitled to judgment against the Woowins in the sum of $108,345 and 50% of his legal costs. The judgment so granted remains wholly unsatisfied.

In 1999, the appellant and Kate executed and registered a mortgage over the Castlecrag property not including a laneway. By the mortgage, Kate acknowledged that she owed the appellant $741,380 in respect of a loan of money made to her in 1998. On 22 July 1999, Kate sold the Castlecrag property without the laneway to an unrelated party for $825,000. The net proceeds of the sale were paid to the appellant in discharge of the mortgage. The first respondent commenced proceedings against the appellant in the Supreme Court asserting that the loan and the mortgage were spurious contrivances that were set up by Kate and the appellant solely for the purpose of frustrating any judgment that he might obtain against the Woowins.

Santow J upheld the first respondent's claim. In the course of the trial, the first respondent sought access to certain documents for which privilege was claimed. Attention was drawn to s 125 of the Evidence Act 1995, which would prevent privilege attaching to the documents. Santow J proceeded to consider s 125, which involved determining whether there were reasonable grounds for finding that fraud or an abuse of power was committed and that "the document was prepared in furtherance of the commission of the fraud or the abuse of power". In a written judgment delivered 16 August 2001, Santow J held that the documents were in furtherance of the commission of a fraud or abuse of power, such that s 125 of the Evidence Act applied.

On the basis of that judgment, the appellant brought an application that Santow J disqualify himself on the grounds of apprehended or perceived (not actual) bias for pre-judgment of the principal matters for determination in the proceedings. Santow J refused to disqualify himself and revised his judgment.

The appellant appeals against the refusal by Santow J to disqualify himself.

Revision of judgments

1. Santow J was entitled to review and change his written judgment of 16 August 2001: Bar-Mordecai v Rotman [2000] NSWCA 123 applied; Bromley v Bromley [1965] P 111 considered; Texas Co (Australasia) Ltd v Federal Commissioner of Taxation (1940) 63 CLR 382 and Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 referred to.

Apprehended bias by reason of pre-judgment 2. The whole of the revised judgment (and the judgment rejecting the application for disqualification) must be considered when determining whether the trial judge pre-judged the issue of fraud: Webb v The Queen (1994) 181 CLR 41.

3. The test for perceived or apprehended bias by reason of pre-judgment is "whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind": Johnson v Johnson (2000) 201 CLR 488. The element of reasonableness needs to be stressed: Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70. There must be a reasonable apprehension on the part of the fictitious observer that the decision-maker's mind is so prejudiced in favour of a conclusion already formed that he or she might not alter that conclusion, irrespective of the evidence or arguments presented.

4. The effect that his Honour's remarks might have on a reasonable bystander has to be judged by the language used in the various judgments, read as a whole, and also by bearing in mind that the fraud, in furtherance of which his Honour was "satisfied" that the documents had been prepared, was the very fraud the first respondent alleged in attempting to prove that the loan and mortgage were fraudulent shams and not genuine transactions. A finding on such an issue, expressed in terms of finality, when made at an interlocutory stage, will usually give the impression that the judge's mind is made up before evidence and final addresses are complete, such that, when the time comes to give final judgment, the judge might not be impartial or might be prejudiced against the party who was unsuccessful in the interlocutory judgment.
5. A reasonable apprehension of bias (albeit not actual bias) arose, and his Honour erred in not disqualifying himself: Johnson v Johnson (2000) 201 CLR 488 applied; Southern Equities Corporation Limited (In Liq) v Bond (2000) 78 SASR 339 considered; Re Lusink; Ex parte Shaw (1981) 55 ALJR 12 distinguished. Orders
6. Appeal upheld. Orders of Santow J set aside and new trial ordered.
7. The first respondent to pay half the costs of the appeal.
8. Certificates are granted to the appellant and the first respondent under the Suitors' Fund Act 1951, if they are otherwise entitled.
9. Upon the first respondent giving to the Court the usual undertaking as to damages, it is ordered that, up to and including the time of the final determination by this Court of these proceedings as against the appellant, the appellant either himself or by his servants or agents shall not assign, dispose of, charge or encumber his interest in the property at and known as 21 Cammeray Road, Castle Cove, being the land comprised in Folio Identifier 507/200619 (the "Property") so as in no way to reduce the monetary value of his interest in the Property below $300,000.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 41215/02 ED 3510/99

SHELLER JA IPP JA TOBIAS JA

Tuesday 9 December 2003 CHRISTOPHER ANTHONY KWAN v WEI LING KANG & 2 ORS Judgment 1 THE COURT:

This is an appeal against a judgment of Santow J by which he upheld the first respondent's claim against the appellant.

The first respondent's inability to execute on the District Court judgment 2 The first respondent is a carpenter. Until about the end of 1991, or early in 1992, he lived and worked in China. In the latter part of 1991, he met the third respondent, Mrs Eileen Woowin ("Mrs Woowin"), and the second respondent, Miss Kate Woowin ("Kate"). Kate is Mrs Woowin's daughter. The Woowins lived in Sydney in a residence owned by Kate at 228 Edinburgh Road, Castlecrag ("the Castlecrag property"). 3 According to the first respondent, the Woowins were impressed with his carpentry skills. They wanted him to do a considerable amount of work on Kate's house. This led to the Woowins inviting the first respondent to come to Australia with his wife and child, and to reside with them at Kate's house. The Woowins suggested that he stay and work for them for about two years. Hoping to improve his life and that of his family, he agreed. 4 The first respondent and his family lived in the Castlecrag property for some four years. During this time he carried out what must have been fairly extensive work on the house. In 1995 the relationship between the first respondent and the Woowins deteriorated and became acrimonious. This led to the first respondent and his family leaving the Castlecrag property. 5 The first respondent commenced proceedings against Mrs Woowin and Kate in the District Court, claiming payment for the work he had performed as well as other relief not presently relevant. The trial, over which Herron DCJ presided, ran for 41 days. On 29 October 1999, Herron DCJ held that the first respondent was entitled to judgment against the Woowins in the sum of $108,345 together with 50% of his legal costs. The sum of $108,345 represented $89,100 for the work the first respondent had performed on the Castlecrag property and $19,245 in respect of interest under the District Court Act 1983. 6 The judgment so granted in favour of the first respondent remains wholly unsatisfied. The first respondent's attempts to execute upon it have failed. By the time Herron DCJ delivered judgment in the District Court proceedings, Mrs Woowin and Kate had departed Australia for China or Hong Kong. Their address was unknown and they had left no assets behind. 7 Prior to 1999, the Woowins' main asset within this jurisdiction was the Castlecrag property. That property was held by Kate under two titles. One title related to a four metre wide strip of land at the rear of the house lying between the larger portion of the Castlecrag property and neighbouring residential property. At the trial before Santow J this strip of land was called "the laneway". There was no public access to this land. His Honour observed that, despite the nomenclature, there was, in fact, no separate physical laneway discernible. 8 On 20 May 1999, the first respondent's solicitor lodged a caveat over the title to the laneway. She did so in the belief that the title in question related to the whole of the Castlecrag property. She thereby made a mistake under which she and the first respondent laboured until after the trial before Herron DCJ commenced. 9 On 21 May 1999, the solicitor acting for the Woowins discovered that a caveat had been entered against the title of the laneway, but no caveat had been entered against the title in respect of the remainder of the Castlecrag property. 10 On 28 June 1999, the appellant and Kate executed a mortgage over the Castlecrag property. Shortly thereafter, the mortgage was duly registered over the remainder of the Castlecrag property, that is, not including the laneway. By the mortgage, Kate acknowledged that she owed the appellant $741,380 in respect of a loan of money made to her in January 1998. The mortgage provided for interest at the rate of 9% per annum and recorded that the principal and interest were repayable to the appellant on demand. 11 On 9 July 1999, Kate exchanged contracts for the sale of the Castlecrag property, that is, without the laneway - which was not part of the sale, with an unrelated party, Stamsat Pty Limited, for a sale price of $825,000. 12 On 22 July 1999, the transfer to Stamsat of the Castlecrag property (without the laneway) was registered and settlement was effected. By Kate's direction, the sum of $804,987.98, being the net proceeds of the sale after commission and legal costs, was paid to the appellant in discharge of the mortgage. 13 The appellant transmitted the money he had so received to his bank account in Hong Kong. He lent part of the proceeds, about $67,000, to the Woowins to assist them in paying the costs of the District Court trial.

The first respondent successfully sues the appellant 14 After the first respondent found that he could not obtain satisfaction from the Woowins for the judgment he had obtained, he commenced proceedings against the appellant in the Supreme Court. In his statement of claim, he asserted that the appellant had conspired with the Woowins for the purpose of preventing him from recovering, from Kate and Mrs Woowin, the remuneration to which he was entitled for work done on the Castlecrag property. He contended that the appellant had not made a loan to Kate (in respect of which the mortgage purported to be given), that the mortgage was a sham, and that the proceeds of the Castlecrag sale were to be regarded as having been received by the appellant on trust for Kate. His case was that the loan and the mortgage were spurious contrivances that were set up by Kate and the appellant solely for the purpose of frustrating any judgment that he, the first respondent, might obtain against the Woowins. 15 Santow J upheld the first respondent's claim. He held that no bona fide loan transaction had taken place, the agreement for loan referred to in the mortgage was a sham and a nullity, as was the mortgage. His Honour made several declarations and other orders based on these findings. The most significant order made by his Honour was order 9, which was in the following terms: "9. That the [appellant] account to the [first respondent] (or as the Court may direct) for all monies paid to the [appellant] or at his direction from the proceeds of the sale of the Castlecrag property by [Kate] to the extent necessary to satisfy: (a) the entitlements of the [first respondent] under the judgment of the District Court of New South Wales (including the order for costs) given in favour of the [first respondent] against [Kate] and [Mrs Woowin] on 29 October 1999 … including interest accrued and accruing thereon pursuant to the District Court Act 1973. (b) the order for costs made by the Court of Appeal in favour of the [first respondent] against [Kate] and [Mrs Woowin] in respect of their appeal … from the judgment of the District Court."

The procedure adopted on appeal in regard to the disqualification ground 16 The appellant's appeal against the judgment of Santow J is founded on several grounds. One ground is that, after the trial had commenced, Santow J made a determination in regard to the admissibility of certain documents and in so doing made findings which "gave rise to a reasonable apprehension of bias in the resolution of the principal matters for determination in the proceedings." For that reason, it is said, his Honour should have disqualified himself from hearing the proceedings (as the appellant had requested him to do). 17 This ground appeared to the Court to be significant and, when addresses on the appeal commenced, the presiding judge (Sheller JA) suggested to Mr Einfeld QC, who together with Mr Donohoe, appeared for the appellant, that, as it was essentially a preliminary matter, it should be argued first. This Mr Einfeld proceeded to do. When he had concluded that part of his argument, the question arose whether the Court should then hear from Mr Lindsay SC, who together with Mr Robinson, appeared for the first respondent, on that issue alone. The Court inquired from Mr Einfeld whether he submitted that, should the appellant succeed on the disqualification argument, there should be a retrial. Mr Einfeld replied that there should not be a retrial as, had Santow J not erred as submitted in the other grounds of appeal, the first respondent's claim would have failed. The Court then (before hearing Mr Lindsay) heard from Mr Einfeld on the other grounds of appeal. Mr Lindsay responded on the merits of the appeal as a whole. 18 We have set out the procedure that was adopted during argument as, for reasons that will appear, the approach adopted by the parties has relevance to the costs of the appeal. 19 While Mrs Woowin and Kate were cited as respondents in the appeal, they were not served with the notice of appeal and they took no part in the appeal.

The events leading to the arguments based on s 125 of the Evidence Act 1995 20 The trial commenced before Santow J on 20 February 2001. From the start there were disputes as to the admissibility of documents. Both parties made submissions as to the issues that arose but it was not possible that day to resolve the issue. Submissions on admissibility questions including questions of privilege continued the next day, again without resolution. 21 On 22 February 2001, the hearing commenced with privilege issues again being raised. Mr Lindsay foreshadowed issuing subpoenas. It was contemplated that the response to these might give rise to additional questions of privilege. The matter was then adjourned. The next trial day of substance was 14 August 2001. 22 In the interim the first respondent's solicitor wrote to the Woowins inviting them to participate in the proceedings and "to comply with discovery obligations". The Woowins did not respond. The first respondent caused further subpoenas to be issued and these produced two other sets of documents. One of these sets of documents came from Mr Schrader ("the Schrader documents"), a solicitor who had, for a time, acted for the Woowins in the District Court proceedings. 23 On 14 August 2001, in effect, the fourth day of the trial, Mr Lindsay sought access to the Schrader documents. Discussion took place as to the issues that arose and the procedure that should be adopted. Mr Lindsay drew attention to the fact that there was a question whether s 125 of the Evidence Act 1995 prevented "any privilege attaching to the documents, in any event". 24 Before dealing with the issues that arose by reason of s 125, Santow J raised the question whether he should himself consider those issues or find another judge to do so. Mr Einfeld, for the appellant, informed his Honour that the appellant had no objection to his Honour dealing with the matter. Santow J proceeded to consider the s 125 issues that were put before him.

Section 125 of the Evidence Act 25 Section 125 of the Evidence Act provides: "(1) This Division does not prevent the adducing of evidence of: (a) a communication made or the contents of a document prepared by a client or lawyer (or both), or a party who is not represented in the proceeding by a lawyer, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty, or (b) a communication or the contents of a document that the client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power. (2) For the purposes of this section, if the commission of the fraud, offence or act, or the abuse of power, is a fact in issue and there are reasonable grounds for finding that: (a) the fraud, offence or act, or the abuse of power, was committed, and (b) a communication was made or document prepared in furtherance of the commission of the fraud, offence or act or the abuse of power, the court may find that the communication was so made or the document so prepared." 26 Thus, legal professional privilege or "client legal privilege" under ss 118 to 120 of the Evidence Act does not prevent the adducing of evidence of the contents of a document if it was prepared in furtherance of "the commission of a fraud" or "a deliberate abuse of a power". If the commission of the fraud or the abuse of power is a fact in issue and "there are reasonable grounds for finding that the fraud or abuse of power was committed and the document was prepared in furtherance of the commission of the fraud or the abuse of power", the court may find that the document was so prepared. 27 In the case before Santow J the commission of a fraud was in issue as that went to the question whether the loan transaction and the mortgage to which Kate and the appellant were parties were shams. Thus, when the first respondent sought to rely on s 125, the question whether there were "reasonable grounds" within the meaning of that section became critical.

Events leading to the written judgment of 16 August 2001 28 Argument as to admissibility of documents took place throughout 14 August 2001 and continued during 15 August 2001. Some issues that were debated concerned "who was making the claim for privilege and on what instructions", others concerned s 125 of the Evidence Act. His Honour reserved judgment and said he would look at certain of the documents concerning which argument had taken place. On 16 August 2001, further argument took place as to admissibility questions. 29 In summary, until the close of submissions on 16 August 2001, questions of admissibility of documents had, without final resolution, occupied the court for much of the six days that the trial had then run. 30 Eventually, at 4.15 pm that day, Santow J delivered an oral judgment in regard to the admissibility of certain documents to which the argument based on s 125 of the Evidence Act did not apply. He held that those documents were "no longer confidential" and "not the subject of legal professional privilege". 31 Immediately after the delivery of that ex tempore judgment, his Honour delivered a written judgment relating to the Schrader documents to which the arguments concerning s 125 of the Evidence Act related.

The written judgment of 16 August 2001 32 Santow J noted at the commencement of the written judgment of 16 August 2001 that the issue of privilege had arisen "as a matter of urgency". His Honour observed: "Although the standard of proof is not required to the level of proof on the balance of probabilities that the communication was made in the commission of a fraud or other improper purpose, there must be 'something to give colour to the charge', some evidence of a prima facie level that has foundation in fact grounding such a claim." 33 His Honour said that he would "follow the view, though expressed as tentative, that 'fraud', as used in s 125, requires an element of dishonesty". He said he would also use that term to include "the kind of sharp practice encompassed by the Shorter Oxford Dictionary sense of dishonesty, namely 'lack of probity; disposition to deceive, defraud or steal'." He said that he would "agree also" that a dishonest abuse of power would be caught by s 125(1)(b) "as is clear from the requirement that there be a 'deliberate' abuse of power." 34 Santow J proceeded in para 37 of his judgment to say: "For the purpose of answering the questions earlier posed and in particular as to whether s 125 does apply, I have, pursuant to s 133, inspected the relevant documents. It is clear from an examination of those documents insofar as they constitute communications made or the contents of a document prepared by a client or lawyer that a substantial number of them are 'in furtherance of the commission of a fraud' or involve 'a deliberate abuse of a power'. This is clear by applying the principles earlier set out in the context of the present litigation and by reference to the content of the documents themselves. Indeed inferences to that effect sufficient to establish reasonable grounds may fairly be drawn from those documents that are in public domain, including the documents in respect of which privilege ceased to apply by reason of their ceasing to be confidential." 35 Paragraph 38 of his Honour's judgment commenced: "On the basis of my perusal of the privileged documents and the other documents I am satisfied that there are reasonable grounds to draw the following inferences and that these in turn are sufficient to constitute 'fraud' in the sense delineated by the above principles …".

His Honour went on to set out a number of inferences that he had drawn. 36 In para 39 Santow J stated: "I then conclude that there are reasonable grounds for finding that fraud in the sense of alienation of property with intent to defraud creditors did occur by reason of the disposition of the Castlecrag property and the associated mortgage, within the meaning of s 37A of the Conveyancing Act 1919, where fraud is used in a sense that connotes dishonesty." 37 In para 41 his Honour again referred to an inference of dishonesty and a deliberate abuse of power, as to which, he said, he was satisfied he had "reasonable grounds to draw." 38 In para 43 his Honour referred to a statement made in the District Court on 1 June 1999 by a barrister on behalf of the Woowins to the effect that "the [first respondent] has taken a caveat over the premises at Edinburgh Road, Castlecrag so in the long term certainly the cost issue is something that is secured your Honour". Santow J observed that there was a strong suggestion that the Woowins would have been aware that that statement "was seriously misleading". It was misleading because the first respondent's caveat was only in respect of the title to the laneway and not the remainder of the Castlecrag property. 39 His Honour stated in para 43 that the appellant "was present at the hearing on that day" and remarked further: "To mislead the Court is a clear abuse of process, where the client retains the obligation to the Court though the client's counsel is unaware that the Court is being misled having regard to the extent of counsel's instructions. That in turn constitutes a deliberate abuse of a power, namely the power conferred by statute to bring legal proceedings. That independently provides the reasonable grounds for inferring a dishonest abuse of power within the meaning of s 125." 40 His Honour proceeded in para 44 to say: "There remains the question whether the communications were made or the documents prepared, in furtherance of the commission of the fraud or abuse of power earlier identified. With minor exceptions, I am satisfied the documents in respect of which there is still an extant claim of privilege were so prepared, there being no necessity that the lawyer be aware of there being an intention to commit fraud or abuse of power so long as the clients have that intention." 41 His Honour concluded that the documents in question, which he identified, were "not prevented by the relevant provisions of the Evidence Act from being adduced, since they fall within s 125 of the Act." 42 In the context of the issues that fall for consideration in this appeal, paras 37, 43 and 44 call for particular comment. 43 The appellant focused on Santow J's observation in para 37 that "a substantial number" of the documents he examined were prepared "'in furtherance of the commission of a fraud' or involve[d] 'a deliberate abuse of a power'." 44 The ordinary meaning of these words is that his Honour was making a finding in absolute and unconditional terms; that is, that the documents in question were in fact prepared in furtherance of the commission of a fraud or involved a deliberate abuse of a power. The corollary flowing, by inference, from such a finding is that the Woowins intended to commit a fraud or an abuse of power. 45 The inference that Santow J intended to make that finding in absolute and unconditional terms is reinforced by the succeeding words in para 37, namely: "Indeed inferences to that effect sufficient to establish reasonable grounds may fairly be drawn from those documents that are in public domain, including the documents in respect of which privilege ceased to apply by reason of their ceasing to be confidential."

This passage contrasts the absolute and unconditional finding of fraud or deliberate abuse of power (that his Honour made after examining the documents in respect of which legal professional privilege was claimed) with a finding (based on other documents in respect of which privilege ceased to apply by reason of their ceasing to be confidential) that "reasonable grounds" existed to draw an inference of fraud or deliberate abuse of power. 46 Paragraph 44 contains an unequivocal statement in absolute and unconditional terms that certain documents, in respect of which there was "still an extant claim of privilege," were prepared "in furtherance of the commission of the fraud or abuse of power earlier identified". 47 As regards para 43, while the appellant admitted that he was present for part of the time at the hearing on the day when the statement was made, he asserted that he was not present all the time and, in effect, denied that he knew that the barrister had made the statement in question. The appellant had not given this evidence at the time Santow J found that he "was present at the hearing". Paragraph 43 is, nevertheless, capable of supporting an inference that his Honour had concluded, finally, that the appellant had acted dishonestly.

The documentary evidence of fraud 48 There was potentially powerful evidence amongst the Schrader documents in respect of which legal professional privilege was claimed, of fraud or the intent to commit a fraud on the part of the Woowins. It is sufficient to refer to a purported letter, which the first respondent submitted was prepared by Kate (but which the appellant submitted was prepared by Mrs Woowin) and addressed to the appellant (but which he denied receiving), in which the following was asserted: "What make you say that we owe you 600,000 to the lawyers? If you want to help us to transfer our house to you, you still don't need to creat [sic - create] a case of owing you 600,000. And did not our house is worth 850,000, not 750,000? And what does it mean that the balance purchase price of 150,000 would be then returned to China? What does that mean? If like before, I could transfer the house to you as a gift, now that you are telling the world that I owe you money, if I give you the house, it would mean that I really owe you that much, have you ever considered my feelings? And where do you want me to transfer the money? If to China, then I would not be able to transfer it out of China later. I told you that you should not let the other side know that I have funds in Hong Kong, now you are telling them that, it seems you don't really care what happens to the assets under my name, if I transfer the house to you because I owe you, then the house under your name probably would be safe, but the funds under my name would not be safe, the court would still treat it as the same as the house under my name. Besides, I don't know what kind of action the court would take if it found that the house was transferred to you only days before the hearing. I hope you consider things on an overall scale, not just part of it." 49 The denial in this document that the Woowins owed the appellant an amount in the vicinity of $600,000 (that being the sum that the appellant at one point told his lawyers was owing to him by Kate) was indicative that the loan alleged by the appellant was a sham. The entire tenor of the passage quoted suggests that a dishonest scheme was being concocted to allow Kate to escape paying the amount Herron DCJ found she owed the first respondent. The passage was heavily relied on by Santow J in reaching his conclusion that s 125 applied to deny legal professional privilege to the Schrader documents. 50 Nevertheless, it was not appropriate for a finding of fraud or abuse of power to be made in absolute and unconditional terms at the stage that the evidentiary ruling in question was handed down. Apart from the fact that s 125 of the Evidence Act required only that there be reasonable grounds for finding that a fraud or abuse of power had been committed, the first respondent had not yet closed his case and the appellant had not opened his; in particular the appellant had not yet gone into evidence and had not had any opportunity to explain the documents in question. 51 The question arises whether, taking into account all the relevant material, Santow J did make such a finding in absolute and unconditional terms. This is part of the larger question whether, from the way his Honour expressed himself, a reasonable apprehension of bias arose. We will come to this issue later in these reasons. 52 Finally, as we have observed, para 43 is open to the construction that Santow J thereby made a finding, in unqualified terms, that the appellant was in court when the misleading statement was made, that he must have heard that statement, and yet did nothing to remedy the misleading impression that had been created. This would have been an inappropriate finding, as the appellant had not yet testified. The language of para 43 is an additional factor to which regard must be had in determining whether a reasonable apprehension of bias arose.

The disqualification application 53 When the hearing recommenced on the morning of 17 August 2001, his Honour said: "Overnight, because of the way in which matters transpired yesterday, I took the opportunity to both do the necessary revisions to the ex tempore oral judgment I handed down, and also made oral corrections to the first judgment and made them refer to each other where appropriate. I appreciate there is the odd error."

He said that his associate was "just doing the necessary corrections and you should have that later this morning." 54 Mr Einfeld then informed his Honour: "We have instructions, arising from the judgments yesterday but subject to their correction or modification in the way your Honour has indicated, to make an application to your Honour to the effect that arising from the conclusions to which your Honour has come and the reasons for them, your Honour not continue to hear the case. We will make, therefore, an application that your Honour disqualify yourself from continuing with the hearing on the ground of apprehended, we emphasise, not actual bias." 55 Mr Einfeld told Santow J that the appellant would argue that: "[Y]our Honour, having come to a number of the views that your Honour has expressed in the reasons for decision handed down last night, would give the reasonable bystander a reason or apprehension that matters to be determined on the final hearing are the subject of preconsideration and prejudgment. Your Honour will appreciate nothing, as I say, is intended disrespectfully." 56 Mr Einfeld elaborated on the submission by saying that the written judgment of 16 August 2001 suggested that Santow J "had formed a very strong view of numerous matters adversely to the [appellant]." He said that the "most obvious category" of these views was: "a conclusion that documents inspected establish that there was the commission of a fraud or there was an involvement in a deliberate abuse of power." 57 Mr Einfeld submitted that the strength of Santow J's expression was such that his Honour would find it "extremely difficult" to "bear an impartial decision when it came to determine that finally". Mr Einfeld referred particularly to paras 37 and 44 and said that the problems with the judgment were "epitomised" by para 44. 58 Full argument ensued and the following exchange took place: "HIS HONOUR: I think you may take it that I will make it clear beyond doubt that in all of this assessment I simply place it on the basis of reasonable grounds. Obviously when I refer to this being clear by applying the principles I mean by that the principles which conclude that the level of proof is at the level of reasonable grounds but to make it crystal clear I will correct that. EINFELD: That itself imposes a problem and this is said in the same respect as in all the earlier submissions. HIS HONOUR: I don't know that it is appropriate that I should analyse my own judgment. What I am certain about is where there is clear error and if it be the case that something is expressed in a way that does not convey sufficiently clearly what I intended perhaps that is something I will live with but I will think about that matter. EINFELD: We submit that the reasons having been delivered would stand."

The revised judgment and the dismissal of the application for disqualification 59 After argument on the disqualification issue had been completed, his Honour delivered an oral judgment. That judgment was transcribed and was handed down on 22 August 2001. 60 In that judgment Santow J referred to a judgment he intended to deliver revising the written judgment of 16 August 2001 and said: "The revised judgment must speak for itself. This includes whether, read in its original or revised form, there could be any room for doubt as to the findings in relation to s 125 being on a prima facie basis of reasonable grounds. It is entirely inappropriate for a judge to attempt to explain or justify his or her judgment once delivered or descend into detailed explanation. That is no less important in an application for disqualification, where avenues of appeal are the proper forum for any debate about the correctness of the judgment." 61 His Honour proceeded: "In the nature of a determination of whether or not s 125 of the Evidence Act permits the adducing of otherwise privileged communications or documents, the judge will have to form a view, though importantly only at the prima facie or reasonable grounds level, of whether fraud or abuse of process has occurred. That concept of fraud carries with it the notion of dishonesty. But it does not follow that, in assessing all of the evidence including evidence later given by the party concerned, I, as the trial judge, cannot apply to that evidence an impartial mind, free of prejudgment, assessing the credit of the witness accordingly. Indeed it is relatively commonplace … for a judge to hear interlocutory determinations, or consider material ultimately not admitted. This is without there being any reasonable apprehension to a fair-minded observer that the judge could not thereafter bring to bear a mind free of bias or pre-judgment when it comes to a final determination of the issues." 62 His Honour concluded that, for the reasons expressed, no reasonable apprehension of bias or pre-judgment on his part arose. In the result, the learned judge concluded that he was not disqualified from hearing the remainder of the case. 63 Immediately thereafter, Santow J handed down in written form what he described as a "revised" judgment. The first paragraph of that judgment stated that the revised judgment was "a revision of the judgment handed down urgently on 16 August 2001, incorporating certain factual corrections or clarifications." His Honour stated that the revised judgment "replaces my earlier judgment and takes account of further submissions by the parties." 64 The revised judgment made a number of alterations to the written judgment handed down on 16 August 2001. The alterations presently relevant are as follows:

(a) The second sentence of para 37 was amended to read: "It is clear from an examination of those documents insofar as they constitute communications made or the contents of a document prepared by a client or lawyer that there are reasonable grounds for concluding that a substantial number of them are 'in furtherance of the commission of a fraud' or involve 'a deliberate abuse of a power'." The italicised words were new.

(b) The following words were inserted in a new concluding paragraph (para 46): "I should emphasise, so as to leave no room for misunderstanding, that that finding, and the anterior matters that I have determined are only determined at the prima facie level of there being reasonable grounds. They do not constitute binding findings of fact and may be controverted for the purposes of the substantive issues still to be determined. It remains therefore open to the First Defendant to adduce such evidence and make such submissions as are relevant to those substantive issues." 65 His Honour made no change to paras 43 and 44 of the written judgment of 16 August 2001. 66 The learned judge was entitled to review and change the judgment he had given on 16 August 2001: see Bar-Mordecai v Rotman [2000] NSWCA 123 where Sheller, Stein and Giles JJA said at [193]: "It is always possible, indeed proper, for a judge to revise ex tempore reasons. So long as the substance of the ex tempore reasons is not altered, nor the orders which they sustain, there is no bar to revision, even if it is extensive."

Their Honours referred to the following remarks of Gleeson CJ in (1997) 9 Judicial Officers' Bulletin at 25: "A judicial officer revising a transcript of reasons for a decision is entitled to alter the transcript where, because of a slip, the reasons as expressed do not reflect what the judicial officer meant to say; or where there is some infelicity of expression which the judicial officer desires to remedy. There is no reason, in law or in policy, why a judicial officer who delivers a judgment ex tempore should be strictly bound to the precise manner in which the reasons were expressed. On the contrary, judges and magistrates are encouraged, where it is possible and appropriate to do so, to decide cases promptly and to give their judgments immediately. It would not advance that policy to prevent them from later improving the manner of expression of their reasons, provided, of course, that they do not alter the substance."

As this Court noted in Bar-Mordecai v Rotman , in Bromley v Bromley [1965] P 111 at 116, Danckwerts LJ said, in effect, that judges were entitled to alter their reasons if they did not say clearly what they meant or sometimes, by a slip, said something which they could not possibly have meant. 67 We would refer also to Texas Co (Australasia) Ltd v Federal Commissioner of Taxation (1940) 63 CLR 382 where Starke J said at 487 that a superior court has power to review, correct or alter its judgment at any time until its order is perfected. See also Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 at 28. 68 It is important to note, however, that in the revised judgment Santow J did not say that in the written judgment of 16 August 2001 he had said something that he did not mean, or that he had said something by mistake, or had not said something he meant to say. The omission to make any alteration to paras 43 and 44 is also significant. 69 The whole of the revised judgment (and the judgment rejecting the application for disqualification) must be considered when determining whether Santow J prejudged the issue of fraud: see Webb v The Queen (1994) 181 CLR 41 at 73 to 74 where Deane J said: "The fair-minded observer is a hypothetical figure. While the question is not settled by any decision of the Court, it appears to me that the knowledge to be attributed to him or her 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. If, in the particular case, the proper conclusion is that a fair-minded lay observer with a broad knowledge of those facts would not entertain a reasonable apprehension of bias, that is the end of the issue of disqualification by reason of an appearance of bias." (emphasis added).

The test to be applied in determining whether there is a reasonable apprehension of bias 70 Kirby J remarked in Johnson v Johnson (2000) 201 CLR 488 at 501: "It is a 'fundamental rule' of natural justice and an 'abiding value of our legal system' that every adjudicator must be free from bias."

His Honour went on to explain that, by reason of the importance that the law attributes to the appearance, as well as the actuality, of justice, it is also a fundamental rule that every adjudicator must be free from apprehended bias. 71 An underlying reason for this rule is the maintenance of public confidence in the legal system. This was stressed by Lord Denning MR in Metropolitan Properties Company (FGC) Limited v Lannon [1969] 1 QB 577 at 599 when he said: "Justice must be rooted in confidence: and confidence is destroyed when right-minded people go away thinking: 'The judge was biased'." 72 Similar sentiments were expressed in R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 265 by Barwick CJ, Gibbs, Stephen and Mason JJ who said: "A party who believes, on reasonable grounds, that the judge has decided, in advance, to disbelieve her evidence cannot have confidence in the result of the proceedings …". 73 In R v Australian Stevedoring Industry Board; Ex Parte Melbourne Stevedoring Company Pty Limited (1953) 88 CLR 100 the test for determining whether apprehended judicial bias exists was stated (at 116) to be as follows: "The [judicial] officer must so have conducted himself that a high probability arises of a bias inconsistent with the fair performance of his duties, with the result that a substantial distrust of the result must exist in the minds of reasonable persons." (emphasis added). 74 This approach has, however, undergone a significant change. In Johnson v Johnson, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ made this clear at 492: "It has been established by a series of decisions of this Court that the test to be applied in Australia in determining whether a judge is disqualified by reason of the appearance of bias (which, in the present case, was said to take the form of prejudgment) is 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 the judge is required to decide."

Their Honours described the test in these terms as being "well settled". 75 The test so enunciated was repeated and affirmed in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 (at 344 and 363). 76 Due weight must be given to the change in the test and the lower threshold it articulates; it represents greater awareness and recognition of a foundation of our public system of justice, namely, that the community must have confidence that justice is being administered in a fair and impartial way.

The need for realistic criteria 77 Despite the importance of the appearance of justice being seen to be done, there is a strong need for courts to apply realistic criteria in considering whether a reasonable apprehension of bias has been established. This is particularly so when dealing with a disqualification application based on what is said to be pre-judgment by a judicial officer. This has often been stressed. 78 Judicial officers are required to discharge their professional duties unless disqualified by law. They should not accede too readily to suggestions of an appearance of bias. Nothing should be done that would encourage parties to seek such disqualification without justification. See the observations of Kirby J in Johnson v Johnson at 504 and Re JRL; Ex Parte CJL (1986) 161 CLR 342 at 352 per Mason J. 79 In Johnson v Johnson, Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said (at 493) that two things need to be remembered in applying the test they had laid down for apprehended bias: "[T]he observer is taken to be reasonable; and the person being observed is 'a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial": Vakauta v Kelly (1988) 13 NSWLR 502 at 527, per McHugh JA, adopted in Vakauta v Kelly (1989) 167 CLR 568 at 584-585, per Toohey J." 80 When dealing specifically with the fictitious bystander, who is deemed to be the judge of the judicial conduct subject to challenge, they said (at 493): "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. … 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." 81 Kirby J (at 508) also referred to the attributes of the fictitious bystander to whom courts defer. He said: "Such a person is not a lawyer. Yet neither is he or she a person wholly uninformed and uninstructed about the law in general or the issue to be decided. Being reasonable and fair-minded, the bystander, before making a decision important to the parties and the community, would ordinarily be taken to have sought to be informed on at least the most basic considerations relevant to arriving at a conclusion founded on a fair understanding of all the relevant circumstances. The bystander would be taken to know commonplace things, such as the fact that adjudicators sometimes say, or do, things that they might later wish they had not, without necessarily disqualifying themselves from continuing to exercise their powers. … The fictitious bystander will also be aware of the strong professional pressures on adjudicators (reinforced by the facilities of appeal and review) to uphold traditions of integrity and impartiality. Acting reasonably, the fictitious bystander would not reach a hasty conclusion based on the appearance evoked by an isolated episode of temper or remark to the parties or their representatives, which was taken out of context. Finally, a reasonable member of the public is neither complacent nor unduly sensitive or suspicious." 82 While the test for apprehended bias by reason of pre-judgment is based on what may be regarded as a fairly low threshold of satisfaction, namely, "whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind" to the issue, the element of reasonableness needs to be stressed. In Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 100 Gaudron and McHugh JJ pointed out: "A reasonable bystander does not entertain a reasonable fear that a decision-maker will bring an unfair or prejudiced mind to an inquiry merely because he has formed a conclusion about an issue involved in the inquiry." 83 There must be a reasonable apprehension on the part of the fictitious observer that the decision-maker's mind is so prejudiced in favour of a conclusion already formed that he or she might not alter that conclusion, irrespective of the evidence or arguments presented to him or her (see the approach expressed in Laws v Australian Broadcasting Tribunal at 100, varied in the light of Johnson v Johnson).

The need to prove the reasonable possibility of the decision being made unfairly or impartially or with prejudice 84 In Re JRL; Ex Parte CJL Mason J said at 352: "It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party." 85 In R v Masters (1992) 26 NSWLR 450 at 471 this Court, in a joint judgment, referred to Re Polites; Ex parte Hoyts Corporation Pty Limited (No 2) (1991) 173 CLR 78 at 85-87 and Re JRL; Ex Parte CJL and said: "The effect of those unanimous pronouncements was clear. The fact that a judge has decided an issue in a particular way, and is likely to decide it in the same way when it arises again, does not amount to pre-judgment which may require him to disqualify himself in order to avoid an apprehension of bias. The reasonable apprehension which should lead to disqualification must be that the judge will not decide the case impartially or without prejudice, not simply that he or she will decide the case adversely to one party." 86 It is not unknown for judges to make findings on an interlocutory issue and to express those findings in a way that indicates that they have come to a final conclusion. If that conclusion is as to a significant issue on which the ultimate result of the trial depends, and further evidence is still to be led and final addresses are still to be made, the likely consequence is that the judge concerned will have to disqualify himself or herself. 87 The reason for this is that a finding expressed in terms of finality, when made at an interlocutory stage, will usually give the impression that the judge's mind is made up. If the judge's mind is made up before evidence and final addresses are complete, it will mean that a conclusion has been unfairly arrived at. There is then likely to be an apprehension that, when the time comes to give final judgment, the judge might not be impartial or might be prejudiced against the party who was unsuccessful in the interlocutory judgment. It will then not merely be an apprehension that the judge will decide the case adversely against that party. 88 There will be little the judge could do to erase an impression so brought about, save, perhaps - if that were the case - to say that a mistake has been made in the mode of expression. That did not occur in the present case: see [68] above.

Did a reasonable apprehension of bias arise? 89 On the first respondent's behalf it was submitted that when regard is had to the written judgment of 16 August 2001 as a whole, and the revised judgment, it can be seen that Santow J only intended to decide the issues of admissibility and privilege on the basis of whether "reasonable grounds" existed to draw the inference that a fraud or abuse of power had been committed. It was submitted that his Honour did not intend to make any final judgment on these questions. 90 The first respondent's submissions are not dissimilar to those that were successful in Re Lusink; Ex parte Shaw (1981) 55 ALJR 12 where the majority of the High Court accepted that the trial judge had expressed herself more absolutely than was prudent, but her remarks were stated to be, and could fairly be regarded as being preliminary only, and not involving any pre-judgment of the case. 91 The issues that arise in this case are also not dissimilar to those that were discussed in Southern Equities Corporation Limited (In Liq) v Bond (2000) 78 SASR 339. In that case the Full Court of the Supreme Court of South Australia dealt with an appeal from a decision of Debelle J not to disqualify himself when it had been submitted to him that he should do so on the grounds that he had made findings of fact and credit in an application for a Mareva injunction that gave rise to a reasonable apprehension of bias. 92 Olsson J (with whom Bleby J, in effect, agreed - Williams J dissenting) observed (at 349) that one of the matters that Debelle J had been called upon to consider was whether it had been established that a danger existed that, if successful in the action, the plaintiffs would not be able to have the judgment satisfied. His Honour said at 350: "Such an exercise may well involve issues of credibility. It almost inevitably requires the making of specific findings of fact on the evidence available. It follows that, even if those findings are expressed to be only provisional, they may, quite reasonably and naturally, engender an apprehension of pre-judgment as to other issues at trial, if the findings are made by the trial judge. Much, of course, will depend upon the precise nature of the findings and the manner in which they are expressed." 93 The problem identified by Olsson J was that Debelle J had expressed his findings in absolute and unqualified terms, "as the outcome of a hotly contested inter partes dispute and a close analysis of a considerable quantity of evidentiary material." The same applies in the case with which we are presently concerned. 94 Olsson J considered that it was important that many of the factual issues to which Debelle J had regard "were matters which were, or were proposed to be and now are, in issue on the pleadings; and would have to be traversed at trial". His Honour said at 351-352: "The findings made in relation to them were highly adverse to the appellants in a case in which their credibility and probity arise as paramount considerations. The very basis of the applications before the learned judge involved a direct attack upon the credit of both appellants (having regard to the content of their sworn testimony on examination, when contrasted with other evidence presented) against the background of an allegation of conspiracy - in relation to which credit and probity was all important. It was the specific case of the liquidator, on the applications before Debelle J, that the sworn evidence of the appellants was either false or deliberately misleading. The findings made unequivocally indicated a conclusion that they had not been witnesses of truth as to important matters; and that they had deliberately engaged in a course of highly improper conduct, contrary to their duty as directors. The relevant conduct would plainly arise for consideration at trial. With the wisdom of hindsight, it would have been preferable for applications of this type to have been dealt with by a judge other than the trial judge, so as to avoid the situation which has actually arisen. However, as matters now stand, it seems to me that the appellants have demonstrated a situation of apprehended bias. It is almost inevitable that, if Debelle J now embarks upon the trial, there will be a strong perception that he comes to his task from a particular point of view, and with a particular feeling towards the all important issues of the credibility and probity of the appellants - from which it is reasonably considered that he may find it intellectually difficult, if not impossible, to retreat." 95 The same considerations apply in the present case. The effect that his Honour's remarks might have on a reasonable bystander has to be judged not only by the language used in the various judgments, read as a whole, but also by bearing in mind that the fraud, in furtherance of which he was "satisfied" that the documents had been prepared, was the very fraud the first respondent alleged in attempting to prove that the loan and mortgage were fraudulent shams and not genuine transactions. His Honour had stated that he was satisfied about the very allegation of fraud on which the first respondent was still to lead evidence and the appellant was still to rebut. 96 It is indeed the case that on many occasions Santow J referred to the need to make the decision on the basis of an inference resting on "reasonable grounds". He expressed the relevant test in the correct terms. At times he stated that the relevant findings were based on reasonable grounds and at times he stated that there were "reasonable grounds for finding …". 97 Nevertheless, it cannot be gainsaid that in paras 37 and 44 of the written judgment of 16 August 2001 the judge expressed his findings in emphatic language of absolute finality. There is no ambiguity or equivocation in the words used. We have previously commented on the inference that is capable of arising from para 43. 98 We repeat that in para 37 Santow J stated: "It is clear from an examination of those documents insofar as they constitute communications made or the contents of a document prepared by a client or lawyer that a substantial number of them are 'in furtherance of the commission of a fraud' or involve 'a deliberate abuse of a power'. This is clear by applying the principles earlier set out in the context of the present litigation and by reference to the content of the documents themselves."

And in para 44 his Honour stated: "There remains the question whether the communications were made or the documents prepared, in furtherance of the commission of the fraud or abuse of power earlier identified. With minor exceptions, I am satisfied the documents in respect of which there is still an extant claim of privilege were so prepared … ". 99 Of course, there are inconsistencies between what is stated in paras 37 and 44, on the one hand, and the findings based on reasonable grounds that appear so often in the judgment of 16 August 2001, on the other. But the "reasonable grounds" findings do not cure the impression given by the findings in absolute terms made in paras 37 and 44. Rather, the reader tends to gain the impression that the findings in absolute terms represent the innermost belief of the judge, whereas the qualified findings are made according to a required formula. 100 The statements by Santow J in the revised judgment that his findings were "determined at the prima facie level of there being reasonable grounds" and "[t]hey do not constitute binding findings of fact and may be controverted for the purposes of the substantive issues still to be determined" did not, in our view, eradicate the strong impression given by the unequivocal words in paras 37 and 44, This impression is reinforced by his Honour's omission, in the revised judgment, to amend paras 43 and 44 - although he made changes to para 37. 101 As Lord Goff said in R v Gough [1993] AC 646 at 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."

We unreservedly accept, of course, that his Honour was able to adjudicate impartially on the ultimate fraud issue before him, and that he believed that he could do so. But the insidious nature of bias is such that we think, applying the test laid down in Johnson v Johnson , that a reasonable apprehension of bias in the sense described in that case arose. 102 Had Santow J stated that in making what appeared to be absolute and unconditional findings he had made a mistake, had not intended to make findings on that basis and his use of language was in error, a different conclusion may have been open, but as already observed in [68] and [88] above, neither in the revised judgment nor at any other time did his Honour explain his earlier remarks in this way. 103 In our opinion, the apprehension of bias created by the written judgment of 16 August 2001 was not dispelled by the revised judgment or anything else his Honour said in this connection. That being so there is no option but to hold that his Honour erred in not disqualifying himself. In our opinion, the facts of this case are very different from those in Re Lusink; Ex parte Shaw.

A new trial? 104 Mr Einfeld submitted that, should the disqualification ground succeed, there should not be an order for a retrial. He submitted, as we have noted, that the first respondent's case was hopeless and a new trial would be futile. We do not accept this submission. 105 As we consider that a retrial should be ordered, it would be advisable to say as little as possible about the merits of the first respondent's case. It is necessary, nevertheless, to make the following comments in explanation of our decision that the first respondent's case is not hopeless. 106 Firstly, there are grounds on which a different judge might come to the same decision as his Honour on the facts. This decision will turn, at least to a significant degree, on the credibility of the appellant and any witnesses he may call at any new trial. As an appellate tribunal that neither sees nor hears the witnesses, we are not able to make a determination as to credibility of the kind required. 107 Secondly, should the judge hearing the new trial come to the same conclusion as Santow J on the facts, it would be open to that judge, subject to the arguments advanced by the first respondent as to the applicability to the facts of s 37A of the Conveyancing Act, to make an order in the same terms as order 9 made by his Honour referred to above (that being an order requiring the appellant to account for the proceeds of the sale of the Castlecrag property). Authority for the making of such an order lies in Noakes v J Harvy Holmes & Son (1979) 37 FLR 5 where Brennan J (with whom Deane and Fisher JJ agreed) discussed legislation equivalent to s 37A of the Conveyancing Act 1919 and said (at 11): "The court will make such orders consequential upon the avoidance of a transfer of property as are necessary to give effect to the superior title of the creditors claiming the benefit of the statute against the party whose title was acquired under the impeached transfer. The statute enures for the benefit of unsecured creditors generally; and not only existing but subsequent creditors are let in to participate rateably in the property which becomes available (May, Fraudulent Conveyances , 3rd ed., p.39). Thus in a successful suit to declare a transfer void under the statute, the transfer is declared to be void as against all the creditors ( Adames v Hallett (1868) LR 6 Eq 468, at p 473; and see Seton, Judgments and Orders , 6th ed., p 2345). Indeed a creditor's claim is properly to be made on behalf of himself and the other creditors ( Reese River Silver Mining Co v Atwell (1869) LR 7 Eq 347). It may be made by a trustee in bankruptcy who represents the general body of creditors, as in Brady v Stapleton (1952) 88 CLR 322 and Ex parte Butters (1880) 14 Ch D 265. The statute is not for the benefit solely of the unsecured creditor who sues, and he cannot obtain an order which secures the available property to him alone, or indeed, to him in priority to other creditors." 108 Whether, should the first respondent be successful in a new trial, a receiver should be appointed in regard to the moneys accounted for, will be a matter for the judge hearing the new trial: see Harris v Beauchamp Brothers [1894] 1 QB 801 at 808 where Davey LJ said that, in a suit by a judgment creditor to impeach an assignment or conveyance as fraudulent upon creditors, the Court would, as ancillary to the principal relief sought in a proper case, appoint a receiver to preserve the property until the hearing of the impeachment suit.

Conclusion 109 We would uphold the appeal, set aside the orders made by Santow J and order a new trial. 110 A considerable part of the argument on appeal was taken up with whether, in the event of the Court upholding the appellant's disqualification argument, a retrial should be ordered. While the appellant succeeded on the disqualification argument, he failed in his submission that there should be no retrial. In the circumstances, the first respondent should be ordered to pay only half the costs of the appeal. 111 Certificates are granted to the appellant and the first respondent under the Suitors' Fund Act 1951, if they are otherwise entitled. 112 Prior to the delivery of judgment by Santow J, an order was made by consent in the following terms: "Upon the [first respondent] giving to the Court the usual undertaking as to damages, order that, up to and including the time of the final determination by this Court of these proceedings as against the [appellant], the [appellant] either himself or by his servants or agents shall not assign, dispose of, charge or encumber his interest in the property at and known as 21 Cammeray Road, Castle Cove, being the land comprised in Folio Identifier 507/200619 (the "Property") so as in no way to reduce the monetary value of his interest in the property below $300,000."

There are convincing grounds on which an order in the same terms should now issue, pending the final determination of the new trial; accordingly, an order is now made to that effect.

113 In conclusion, we would draw attention to the address delivered by Heydon J to the National Judicial Orientation Programme on 13 October 2003 entitled 'Practical Impediments to the Fulfilment of Judicial Duties'. His Honour said, in regard to the duty of a judge to rule on the admissibility of evidence as it is tendered: "In my opinion this is one island of immunity from the rising tide of a general duty to give reasons. It is also an area where there is not much practical utility in giving reasons except on fundamental questions of relevance, because there it enables counsel sensibly to modify the future conduct of the proceedings. Nor is there a duty to hear counsel in support of every objection. Yet is common now for every objection to be attended by speeches supporting and opposing the objection, and by the giving of reasons for the ruling. A return to the more economical practices of former times is desirable, because it is highly unsatisfactory that the flow of oral testimony, particularly that elicited in cross-examination, should be interrupted significantly …". 114 If possible, argument as to admissibility of evidence should be brief and to the point and succinct rulings on the issues should be made as and when they arise. There are dangers in postponing evidentiary rulings, as confusion as to what evidence is admissible and what is not often then occurs. In many instances it will be open to a trial judge to make evidentiary rulings without giving reasons. In other instances, very brief reasons would be appropriate. It will be rare for the exigencies of a case to require lengthy and detailed reasons to be given in support of such rulings. This case affords an example of the undesirability of a judge, in the course of a trial, supporting interlocutory evidentiary rulings by commenting on evidence. 115 The orders to be made are therefore as follows:

(a) Appeal upheld. Orders of Santow J set aside and new trial ordered.

(b) The first respondent to pay half the costs of the appeal.

(c) Certificates are granted to the appellant and the first respondent under the Suitors' Fund Act 1951, if they are otherwise entitled.

(d) Upon the first respondent giving to the Court the usual undertaking as to damages, it is ordered that, up to and including the time of the final determination by this Court of these proceedings as against the appellant, the appellant either himself or by his servants or agents shall not assign, dispose of, charge or encumber his interest in the property at and known as 21 Cammeray Road, Castle Cove, being the land comprised in Folio Identifier 507/200619 (the "Property") so as in no way to reduce the monetary value of his interest in the Property below $300,000. **********

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