Lewis v Nortex Pty Ltd

3081/97 PETER LAWRENCE LEWIS v NORTEX PTY LTD (In Liq) 1750/02 LAMRU PTY LTD v KATION PTY LTD JUDGMENT 1 HIS HONOUR: On 11 May 2004 on the 75th and last day of the trial in these proceedings, I heard and determined an application that I ought recuse myself for apprehended bias. I refused that application and indicated that I would give my reasons for my refusal at a later time. These are those reasons. The application was made on behalf of what have been called throughout the trial "the Lewis interests", that is, Mr PL Lewis and Kation Pty Limited ("Kation"). 2 The principles on which an application such as the present should be decided have been dealt with in a number of recent decisions of the High Court of Australia. I need refer to no more than Johnson v Johnson (2000) 201 CLR 488 and Ebner v The Official Trustee in Bankruptcy (2000) 205 CLR 337. In the latter case, the majority judges (Gleeson CJ, McHugh, Gummow and Hayne JJ) said at [6]: "Where in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge (or other judicial officer or juror), as here, the governing principle is that ... a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide."

A useful survey of the recent law is contained in the judgment of Einstein J in Idoport Pty Limited v National Australia Bank Limited [2004] NSWSC 270. 3 I should say that, as well as having tried the proceedings in this Division for 75 days at the time the application was made before me, I had comparatively recently (on 8 April 2004) heard an application in proceedings in the Common Law Division of the Court. The Common Law proceedings arose from the registration in this Court of a judgment of the High Court of New Zealand at Auckland under the Foreign Judgments Act 1991 (Cth). The plaintiff in those proceedings was Mr P L Lewis and the defendant was Mr R W Lamb. Mr Lewis, as indicated, is a party to the present proceedings. Mr Lamb is a party to portions of the present proceedings. He is not, however, directly a party to the portion of the proceedings I am currently trying, but only directly a party in parts of the proceedings which I have ordered to be determined separately from and subsequently to the questions that I am at present trying. So far as the present trial is concerned, the relevant party is Lamru Pty Limited ("Lamru"), which is a company controlled by Mr Lamb. In the Common Law proceedings, Mr Lamb made an application for the stay of the registered judgment and I stayed that judgment until the determination of the proceedings before me: Lewis v Lamb [2004] NSWSC 322 ("my Common Law judgment"). 4 The application for me to recuse myself was made upon written submissions prepared by Mr Cotman, of Senior Counsel for the Lewis interests. Mr Cotman was unable to be present when the matter was argued and the oral argument was put by Mr J T Johnson, who has been Mr Cotman's junior throughout the trial. I did not find it entirely easy, either on Mr Cotman's written submissions or on the oral submissions put to me by Mr Johnson, to understand what the core or main thrust of the submission relied on was. For that reason, I propose to take the slightly unusual course of quoting from the transcript statements made by Mr Johnson as to what the central thrust of the submission was. I should say at once that, at all points of time, counsel for the Lewis interests eschewed any submission that there was actual bias on my part and relied only on apprehended bias. 5 Mr Johnson also eschewed any submission that the application was based on the wrongness of any decision that I had made, including the decision in the Common Law proceedings. Despite that, there seems to me to be a strong overtone in senior counsel's written submissions, and to some degree in Mr Johnson's submissions, of the wrongness, particularly of the Common Law decision, as being a factor in the application. When I challenged Mr Johnson concerning this, he said: "What I am saying is that when one looks at the way in which your Honour approached the stay process in respect of the registered foreign judgment and the repeated stays that have been granted at the instance of Mr Lamb in the Equity proceedings - and these are detailed in paragraph 5 of our submissions - and the circumstances under which that stay was granted, which are dealt with in paragraph 6 of the outline of submissions in detail, when combined, the interested bystander, as Kirby J has considered, would consider that in the Equity proceedings there was a predetermination by your Honour of the outcome of the proceedings and an unequal dealing between what might be described as the Lewis interests on the one hand and the Lamb interests on the other."

I am not quite sure which of the multifarious issues in these proceedings it is said that it might be apprehended that I have predetermined. Later, in answer to a challenge as to the main thrust of the applicant's submission, Mr Johnson said: "The submissions that we make are the written submissions. We say that a reasonable person, being aware of all the facts, would form a view, having regard to what are perceived - and they are set out because of the number of stay orders that have been done, and we would say that anything that has been directed against the liability of Mr Lamb in these proceedings has effectively been stayed, including the right to recover, as I have indicated several times, the consent judgment where there is no causal connection whatsoever - that, we say, when looked at in the overall context of your Honour's conduct, would lead, again to use Kirby J's view, the fictitious bystander to form an apprehension necessary to cause your Honour to disqualify yourself."

It would seem that some central part in this application is played by my entertaining the application in the Common Law Division and the way in which I determined it. I asked Mr Johnson whether a submission was made that my decision in the Common Law proceedings was so lacking in reason that it might be thought it must proceed from bias, but he declined to make that submission. 6 There seemed at some stage to be some suggestion that I had been approached or had entered upon the application in the Common Law proceedings in some surreptitious way. I do not think this suggestion was persisted in and it clearly could not be in the face of documents that were in evidence as to how I came to be engaged in the Common Law proceedings. Mr Motbey, of counsel for Lamru, sent an email to my Associate on 2 April 2004 in which he indicated that there would be an application in the Common Law proceedings for stay of execution, which he would ask me to deal with and asked whether my Associate could arrange for me to have the Common Law file. A copy of this communication was sent by Mr Motbey to the solicitor for the Lewis interests. And to show that he was in no doubt about what was occurring, the solicitor responded to my Associate by email within two hours after the original email was sent. His communication did end with the following paragraph: "Notwithstanding that there are other proceedings between our respective clients currently being heard before his Honour Justice Hamilton, registration of the Judgment is not a matter related to any of these matters being heard. There is accordingly no proper reason why the procedure provided in Part 59A of the Supreme Court Rules ought to be varied or for this matter to be referred to his Honour."

This does not really support the submissions or remarks made by Mr Johnson in oral submissions, to the effect that I had taken it upon myself to bring a proceeding that was regularly commenced in the Common Law Division before me without consulting the Lewis interests concerning it. There is a suggestion in the communication quoted that the Common Law matter should not be referred to me. But it should be noted that, once the matter was before me for argument on 8 April 2004, no objection was taken in the course of argument to my personally being involved in the hearing of the matter. It was certainly suggested that the matter should not be transferred from the Common Law Division to the Equity Division. I did not have any fixed idea about that, as I acceded to the submission and did not transfer the matter. 7 It is then apparently suggested that there is something untoward in my proceeding to hear the matter in the Common Law Division (with the prior consent of the Chief Judge at Common Law). This seems to proceed upon the basis that there is something very strange and untoward in a Judge of one of the trial Divisions of this Court hearing a matter that was filed in the other. But, although it is not an everyday occurrence, it is something that quite frequently occurs. One of the circumstances in which it does occur is that, where a matter in one Division is related to a matter in the other Division, so that the time of the Court (and, indeed, the time of and cost to the parties) may be saved by the one matter being dealt with by the Judge who is seized of and knowledgeable about the other matter, then that quite frequently occurs. It is probably no affair of the parties, but the administrative arrangement is that, if the case is not actually referred by some Judge of the Division in which it is filed to the other Division, then the Judge in the other Division will not take the matter in the first Division without the courtesy of a consultation concerning that course with the Chief Judge of the other Division. 8 The other matter that was referred to was a remark I made to the effect that I would not let the matter pass the day on which it was first raised without there being some restraint in force so that the situation could be preserved until the defendant in the Common Law Division's application was heard. There does not seem to me to be anything untoward in this remark or any indication of prejudgment of the substance of that application, much less of these proceedings. Any complaint now made about it by the Lewis interests must be viewed in light of the fact that they, indeed, voluntarily proffered undertakings to the Court not to enforce the registered judgment until the defendant's application in the Common Law Division had been heard. This was not a restraint imposed by the Court, but one proffered by them. 9 There does not, therefore, seem to me to be anything arising from the manner in which I became seized of the application in the Common Law Division that could lead in the requisite way to an apprehension of bias. 10 It is suggested, however, that those facts should be seen in combination with other things, of which I shall refer principally to two. One is the result that was produced in the application in the Common Law Division and the reasons that I gave for judgment. I find the submissions about this hard to follow. It is submitted vehemently on behalf of the Lewis interests that there is significance in the fact that there is absolutely no connection or relation between the two sets of proceedings (ie, the Common Law proceedings and these proceedings) or the results that may flow from them. The written submissions are couched in fairly intemperate language and the suggestion is, in general terms, that I was quite wrong in finding that there was any sufficient connection between the subject matters of the two sets of proceedings to justify the stay. My reasons for coming to that conclusion are set out in my Common Law judgment and there is no need to repeat them here. This submission, however dressed up, seems to be, in reality, a complaint that I was wrong in that judgment. I may or may not be, but that cannot properly go to the question of apprehension of bias. 11 I should add that the suggestion that there is no possible connection or relation between the results of the two proceedings itself seems to proceed on a misapprehension. It seems to be assumed, in relation to the submissions that are put, that any fruits of the Equity litigation must go, in the first instance, into the funds of Nortex Pty Limited (in liquidation) ("Nortex") from which it is said they are likely never to emerge in the light of the financial state of that liquidation. However, this completely ignores the fact that Lamru seeks judgment against both Mr Lewis and Kation personally on the basis that if it obtains such judgments (which it may or may not do) they will be payable direct to Lamru, not Nortex. I have not, as has been suggested, for a moment lost sight of the distinction in legal personality between Lamru and Mr Lamb; but as Mr Lamb is the controller of and a shareholder in Lamru, and is also, one imagines, owed by it the money which he has made available for its costs, there can, in my view, be little doubt that there is at least room for moneys to return from Lamru to Mr Lamb, if judgment be obtained against Mr Lewis and Kation, and that that money may well go in satisfaction of the New Zealand judgment. 12 The second matter which it is said, viewed in connection with the foregoing, would raise an apprehension of bias is what are said to be "repeated stays" on my part in favour of Mr Lamb. Insofar as I can grasp what this refers to, I gather it refers to decisions early in the proceedings, some two years ago, that, as I have indicated above, questions - some of which involve Mr Lamb personally - be heard and decided separately from and after the questions being decided in the present trial. Those orders, whether ultimately they be thought to be beneficial or not, in light of the large volume of water that has flowed under the bridge since then, were simply efforts at the time to keep these proceedings on the rails and to prevent a trial then about to be begun, or under way, from being aborted by new matters brought forward late in the day. I find it strange that two years down the track there is now an effort somehow to characterise them as decisions unduly in Mr Lamb's favour, whether viewed alone or in conjunction with other matters. 13 It is my view that the fair minded lay observer would not perceive, in the matters that have been brought to my attention, considered separately or together, anything that would give rise to an apprehension on his or her part of bias. In saying this, I am taking into account the matters I have discussed above and all matters that have been put to me in oral and written submissions. 14 I should say that so far as the questions relating to my coming to sit in the Common Law Division are concerned, I do not find it an entirely easy question as to what knowledge the lay observer should be taken to have in relation to the administrative arrangements in this Court as to the circumstances in which Judges in one trial Division will sometimes sit in the other. I do not think it is necessary to determine that. If it is taken that those things are not something within the knowledge of the lay observer, then I do not think that the lay observer would see anything untoward in a person, who is a Judge of the Supreme Court, sitting in one or the other of the trial Divisions of the Court. If, on the other hand, the lay observer is to be taken as knowing the arrangements that exist within the Court for the assignment of Judges to Divisions or the circumstances in which Judges usually sitting in one trial Division sometimes sit in the other, then that observer would be aware of the matters that I have set out above. Particularly that observer would be aware that for the sake of saving time and costs, it is not unusual, when matters are related, for a Judge seized of a matter in one Division to deal with a matter in the other Division which is related. 15 A great part of the submissions put on behalf of the Lewis interests really turns on the vehement submission that the two proceedings are not related in any way and I am quite wrong in saying that they are. However, that is something I have dealt with elsewhere. Even if I were wrong about there being a relation or sufficient relation between the matters to found a stay, then that wrongness would not, in my view, be a proper foundation for an apprehension of bias. As I have said, the Lewis interests seem to have a foot in both camps here. They eschew that wrongness of decision may found an apprehension of bias; on the other hand, they refer continually to the wrongness of the decisions that I have come to, particularly the decision concerning the stay of execution. 16 I need add only one other thing: that is, that I have borne in mind the various warnings that are given against judges faced with a recusal application too easily abdicating the responsibility of continuing to try proceedings in which such an application has been made. That matter is referred to by Einstein J in his judgment in Idoport supra at [28] - [30]. If a Judge on the 75th day of a trial is asked to recuse himself or herself, and has plainly done something which fairly gives rise to an apprehension of bias, then, however unfortunate it may be, that Judge should disqualify himself or herself, even at that late stage. But it is a grave step to throw away 75 days of hearing, necessitating a complete new trial and should not be taken lightly. In any event, as I say, I have reasonably comfortably come to the view that there is no basis for saying that an apprehension of bias would arise in the present circumstances. 17 It is for these reasons that I have refused to discharge myself from the hearing of the trial in these proceedings.

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