(iii) "In relation to the proceedings being contemplated in Switzerland".
20 The basis on which the Court was being invited to sanction a unilateral departure by the respondent from its agreement with the appellants, as encapsulated in the consent orders, was not explained. Nor was it explained why the appellants could not be heard on that issue.
21 Ms Dixon's somewhat coy reference to "proceedings being contemplated in Switzerland" was the subject of elaboration in the affidavit of Mr Wilson of 26 March 2007. First, in relation to a topic which he identified by a heading in his affidavit as "Swiss Criminal Proceedings", Mr Wilson stated:
"75 I understand that the best course of action to get information and/or preserve any assets which may be held by Mr Emmott, Mr Risbey and/or the entities controlled by them in Switzerland is to make a criminal complaint against each of them to the Swiss authorities.
76 I believe that, in order to obtain relevant information and to put measures in place to protect assets which are alleged to belong to MWP, criminal proceedings are the most appropriate forum to obtain the relief sought. That is the case as the Swiss authorities are not restricted by Swiss banking legislation regarding privacy. I believe that the nature of the charges that would be laid under the Swiss penal code against each of Mr Risbey and Mr Emmott include embezzlement, money laundering, forgery and disloyal management."
22 That the orders were sought by the respondent, partly in aid of criminal proceedings, and for the principal (if not the sole) purpose of providing information for further civil action, should have raised a question as to the propriety to the course being undertaken before the primary judge. That the proposed course did not directly involve the appellants should have raised a further question.
23 Mr Wilson also gave evidence as to the questions of confidentiality and urgency. However, Mr Wilson identified no urgency except the general wish to test the accuracy of the disclosure affidavits. Ms Dixon, however, identified the need for urgency in the following terms (open affidavit, par 13):
"Further, I am informed by Mr Lawrence Cohen QC, MWPs counsel in the UK, BVI, the Bahamas and NSW, and verily believe that it is necessary to use the documents for further applications that are needed from time to time in the British Virgin Islands, in particular the proposed Application to the BVI Court to appoint a Receiver over companies associated with Mr Nicholls and Mr Slater and in relation to proceedings being contemplated in Switzerland."
24 In the course of the hearing on 26 March before the primary judge, counsel for the respondent informed the Court (apparently without supporting evidence) that the application in the British Virgin Islands was to be made "in the next few days": Tcpt, 26/03/07, p 4 (25) and p 6 (45). Counsel further stated (Tcpt, p 7 (45) and p 14 (30)):
"The excruciatingly urgent parameter is that there is going to be an application made in the British Virgin Islands on Wednesday their time, which is Wednesday evening our time, for the appointment of receivers to a number of companies.
…
The reason for the application on Wednesday is because leading counsel for the plaintiff overall, in the various jurisdictions in the world, is actually going to be in the British Virgin Islands on Wednesday."
25 The question of urgency may not have been critical, although from the phrase "excruciatingly urgent parameter", which emanated from his Honour in the first place, it is clear that his Honour was concerned about the asserted urgency. The question of confidentiality was of greater significance. That was addressed by Mr Wilson in his affidavit at par 82, in the following terms:
"The need for confidentiality arises for the following reasons:
(a) if finance has been provided to the Temujin Companies, Mr Slater and/or Mr Nicholls, and Incomeborts and Norgulf are controlled by Messrs Slater and Nicholls, which the evidence referred to in paragraph[s] 38 and 44 suggests that they are, should the [appellants] become aware that MWP seeks information in relation to those companies from Macquarie Bank it is highly likely that the assets controlled by those companies, being at least 15 million shares in Max Plc, currently worth £18,750,000 at £1.25 per share, will be removed from those companies;
(b) if a receiver has been appointed over the assets of Norgulf and Incomeborts in the BVI, the $10m which was provided to Temujin, will still be in the hands of Temujin; and
(c) if Mr Risbey and/or Mr Emmott becomes aware that MWP will be provided information that will show that each has interests other than those that they have set out in their respective Affidavits, there is a danger that the assets controlled by each of them in Switzerland will be dissipated thereby endangering the purpose of the proposed criminal complaint to the Swiss authorities referred to in paragraphs 75 to 78 above."
26 Paragraphs 38 and 44, referred to by Mr Wilson in (a) above, related attempts by Mr Slater to obtain funds in Australia to invest in the Chilisai project. Mr Wilson inferred from an exchange of emails that funding had been sought from Macquarie Bank Ltd. Mr Wilson was of the view that the transaction (if it eventuated) should have been referred to in the disclosure affidavits, which provided the reason for the subpoena to Macquarie Bank. What precisely the appellants would have done to conceal the information if the application had been made inter partes, was not entirely clear.
27 In the course of the hearing, his Honour noted that there was "a mountain of material and detail" which made it "very difficult" to provide a short judgment supporting the orders made: Tcpt, p 15(42). He sought the assistance of counsel for the respondent, asking him to provide something in "summary form" setting out "that which is said to be really proven" so as to "put before me a piece of paper which I could have marked for identification, adopt and accept as proven": Tcpt, p 15(45)-(50). It appears that that course was not ultimately taken, as there was no break in the proceedings before his Honour delivered judgment in relation to the confidential subpoena to Macquarie Bank Ltd: Tcpt, p 25. Counsel then addressed separately on orders 6 and 7 relating to the variation of the consent orders and the use of the disclosure of affidavits in other jurisdictions: Tcpt, p 26. Again, there was no break before his Honour delivered a judgment: Tcpt, p 29. (The request for assistance was repeated on a later occasion.)
28 There was no copy in the materials of either ex tempore judgment, but only a revised version, apparently completed on 5 April 2007 and provided to the respondent. That version combined brief reasons in relation to the separate orders.
29 The primary judge made orders on 26 March broadly in accordance with the orders sought in the notice of motion. Thus, the respondent was granted leave to issue a subpoena to Macquarie Bank, to be served by 7pm on Monday, 26 March and to be returnable before his Honour at 2pm on 28 March. Order 3 read:
"Macquarie Bank shall not inform any person or entity that it has been served with and/or produced documents pursuant to the Subpoena referred to in order 2 above, other than for the purposes of obtaining legal advice in connection with such Subpoena."
30 The substance of the other orders was noted at [12] above. The judgment noted that it was important for the Court to "scrutinise very closely" an application to vary orders made by consent: at [20]. His Honour identified the test as whether there had been "a significant change in the circumstances" since the consent orders were made: at [21]. To that end, his Honour was satisfied that there were "a number of stark inconsistencies" between the disclosure in these proceedings and the disclosures made in the British Virgin Islands: at [22]. The discrepancies were described as "significant, indeed very significant": at [25]. The reasons indicated that this conclusion was derived from the "confidential affidavit" of Ms Dixon. No attempt was made in the reasons to identify the discrepancies.
31 On the return of the subpoena on 28 March, documents were produced by Macquarie Bank and the respondent was given access. It was also given leave to use the documents in connection with the other proceedings identified on the first motion. Confidentiality was sought to be maintained by orders that the notice of motion, the documents produced and the associate's note of the making of the orders not be shown on the Court file, but that the documents be retained in the chambers of Einstein J. The Registry was directed not to make an electronic record of the orders, the notice of motion or "any other aspect of the closed Court hearing of 28 March 2007". The orders were to be entered forthwith and the sole Registry copy of the orders was to be "directly delivered to the chambers of his Honour Justice Einstein". The fact that the regime was instituted for documents to be retained in the judge's chambers was a significant aspect of the regime to maintain confidentiality. Why it was thought necessary that a person inspecting the Court file was not to be allowed to discover even the occurrence of the ex parte hearing is unclear.
32 The matter came back before his Honour on 30 March 2007, again ex parte, at which time he was informed that the receivers had been appointed in the British Virgin Islands' proceedings. Further production by Macquarie Bank was expected on the following Tuesday and the matter was stood over until Wednesday, 4 April 2007. The expectation noted by counsel for the respondent was that on 4 April "we should be able to have orders made lifting most of the confidentiality": Tcpt, 30/03/07, p 2 (10). The regime for confidentiality noted above was continued in the orders of 30 March 2007.
33 As foreshadowed in a hearing on 5 April 2007, the next day his Honour made further orders which purported to lift the confidentiality requirements in respect of all the material which had been before the Court over the previous 10 days, with the exception of any references to the possible criminal complaint proposed to be made in Switzerland. The respondent was ordered to serve that material, in redacted form, on the solicitors for the appellants by 5pm on 5 April 2007. The original documents were ordered to be retained in the chambers of Einstein J. Copies of the documents in the form served on the appellants were also to be provided by the respondent to the Court for placing on the Court file. The order of 5 April was also to be served on the appellants on that day. That occurred.
34 On 12 April 2007 a further ex parte motion (dated 10 April 2007) came before the primary judge, pursuant to which the respondent sought the following orders:
"2. To the extent necessary, the [respondent] be granted leave to:
(a) make a criminal complaint to the District Attorney, Zug, Switzerland and, if criminal proceedings are commenced in that jurisdiction, to be joined as a civil party to such proceedings;
(b) provide assistance to the receiver of: [the BVI companies] to furnish money laundering report to the Financial Investigation Agency in the British Virgin Islands; and
(c) make a criminal complaint to the police in the United Kingdom.
3. For the purposes of making the complaints, being joined as a civil party to criminal proceedings in Switzerland and/or providing assistance as described in paragraph 2 above, the [respondent] be permitted to supply and make use of the following affidavits:
(a) the Disclosure Affidavits filed by the First and Second Defendants …; and
(b) documents produced on subpoena by Westpac Banking Corporation in these proceedings."
35 The confidentiality regime earlier established was sought to apply to the motion.
36 As explained in the supporting affidavit of Mr Wilson dated 10 April 2007, the proposed criminal complaint in Switzerland related to "allegations of the following criminal activities by Emmott, Risbey and others", the 'others' apparently being intended to comprehend Messrs Slater and Nicholls who were alleged to have facilitated the money laundering. The criminal activities were said to be embezzlement, money laundering, forgery and "disloyal management". Mr Wilson asserted a continuing need for confidentiality and urgency on the following bases:
"29. The need for confidentiality arises, because if any of the Defendants to any of these proceedings, the UK Proceedings and the BVI Proceedings, including Risbey, Emmott, Nicholls and/or Slater or others, become aware of the proposed Criminal Complaints, there is a danger that the assets controlled by them will be dissipated thereby endangering the purpose of the proposed criminal complaints.
30. The need for urgency arises as MWP, and its advisors worldwide, are engaged in a tracing exercise in relation to assets, monies and interests which MWP allege were stolen and improperly taken by Emmott, Nicholls and Slater (and their nominees) and there is a real danger that, as more time passes, more of the assets which are in the hands of Emmott, Nicholls, Slater (and their nominees) and/or their associates and entities controlled by them, will be dissipated and unrecoverable."
37 The orders sought by the respondent were made by Einstein J on 12 April 2007, in the terms sought.
38 In the course of a hearing, which probably took place on 11 April, although the transcript is confused in respect of dates, counsel for the respondent noted that neither Mr Emmott nor Mr Risbey was a party to the New South Wales proceedings, and continued (Tcpt, p 8(25)-(45):
"I mention that for the purposes of making clear that the principal direction of the criminal complaints is Mr Emmott and Risb[e]y, however, the Court ought to be aware that the complaints do also make some reference to Messrs Nicholls and Slater, so that whilst we can say that those individuals are not the focus of the complaints our client proposes to make to the authorities, I should tell your Honour that I can't guarantee what the authorities are going to do and, of course, once information is put before prosecuting authorities they can take views and they may well wish to do something with Messrs Nicholls and Slater, but as I said, they are not the focus of the complaint from our perspective, but because they form part of the factual matrix I can't guarantee that they won't be caught up in it in due course."
39 An exchange with counsel, which later drew some attention appears in the transcript at pp.13-14:
"HIS HONOUR: Mr Jones, I certainly don't understand that there is a crisis about this being done this afternoon. I can see that it is important to have it finalised, but there is no receivership application tomorrow afternoon or anything like that going on now.
What I would really like to do, if you don't mind, is to ask you in terms of assisting the Court from the notes that you have been taking and the matters that you have been putting forward to give me a document which sets out in the cogent manner in which you have endeavoured this afternoon to deal with it what are the suggested substantive reasons for the Court making those orders.
MR JONES: Yes.
HIS HONOUR: It is an important area and it is one which is slightly off the radar in many ways for many people and I wouldn't like to make orders without giving the reasons as clearly as I can. That shouldn't take you too long.
MR JONES: No.
…
HIS HONOUR: … This is all ex parte. I will read the materials and presumably likely will grant the leave that is sought, etc, but it shouldn't be taken as read that this is a given. I think I follow everything that you have been putting. …
MR JONES: There is actually a skeleton argument commencing at page 47, which Mr Cohen put before the UK court in obtaining similar orders, which is probably a more useful set of notes.
HIS HONOUR: Yes, thank you. Would you be able in the document that I am asking for to weave in the analysis that you say comes forward from this Attorney General for Gibraltar v May case? …
HIS HONOUR: In any event, what it amounts to I suppose is a weaving together of that which has passed and that which is now sought and the essential justice of the situation, which from my past and present experience with you I don't think you would find too difficult, but there is now an obligation on a judge hearing an ex parte application to give some reasons and I want to give some reasons which I follow fully and which will be of the necessary substance in an area which is somewhat unusual."
40 The effect of the orders, made without notice to Mr Nicholls or Mr Slater and inconsistently with the original consent orders under which the affidavits were provided, was to permit further disclosure of the affidavits to authorities in other countries, for purposes which, it appears to have been conceded, were not directed to the appellants. That concession did not sit comfortably with counsel's further statement that "at the time the disclosure affidavits were supplied to this Court, neither Mr Nicholls nor Mr Slater sought to invoke a privilege against self-incrimination": Tcpt, 11/04/07, p 10 (40).
41 In a judgment dated 12 April 2007, the primary judge accepted as "of substance" the following submissions, at [7]-[8]:
"i. whilst it cannot be certain that Messrs Nicholls and Slater will not become parties to any subsequent criminal prosecutions, the Court ought to take comfort from the fact that the commencement of such proceedings would follow the responsible exercise of a prosecutor's discretion in each relevant jurisdiction;
ii. it is generally in the interests of justice to ensure that activity that may have the suspicion of criminality about it be brought to the attention of relevant prosecuting authorities for their consideration."
42 His Honour continued at [19]:
"The final matter of substance is the need for confidentiality. The reason for confidentiality at this stage is to facilitate the effectiveness of the prosecutor's inquiries in each jurisdiction, as well as to ensure the effectiveness of steps that may be taken by the authorities in Switzerland (in the form of disclosure and securing assets in that jurisdiction). Clearly the potential effectiveness of those steps may be placed at some jeopardy if those involved become aware of those steps being taken."
43 It may be remarked that the fair-minded observer who was aware of these matters, might well infer that his Honour was of the view that there were reasonable grounds for suspicion that colleagues of Messrs Nicholls and Slater, and perhaps Messrs Nicholls and Slater themselves, were or might be involved in criminal activities, including embezzlement, money laundering, forgery and disloyal management (whatever the latter might involve). He or she might also infer that his Honour was satisfied that, if Messrs Nicholls and Slater became aware of the complaint and the investigations, they might take steps to jeopardise the effectiveness of the possible actions taken by criminal investigating authorities in, for example, Switzerland. What those steps might be (other than disposal of unidentified assets) was not made clear.
44 The respondent was before his Honour, again ex parte, on 6 June 2007, at his Honour's request, "because of my anxiety to ensure that the Court was kept entirely informed as to the extent to which and reasons for which the existing confidentiality regime or regimes need to be continued": Tcpt, 06/06/07, p 1(30). In support of continuing the regime, counsel for the respondent provided written submissions which his Honour accepted as justifying the continuation of the regime if he were satisfied that there was "evidence to corroborate what is put in these submissions": Tcpt, p 4(35). The matter was then stood over to allow evidence to be filed, a further hearing taking place on 11 July 2007.
45 By this stage, the confidentiality regime had become self-perpetuating. On 23 April 2007 the respondent had filed what was known as a "suspicious activity report" in the British Virgin Islands. A court there had made orders imposing a confidentiality regime in similar form to that made in this jurisdiction. Solicitors in the BVI wrote to the Financial Investigation Agency there on 4 July 2007 a letter which included the following statement (par 1.3):
"We are informed by Messrs Clayton Utz that the NSW Court will not order the discontinuation of the confidentiality regime if to do so would cause Messrs Clayton Utz to commit an offence in the BVI by serving the material that was relied upon in support of the application for the NSW orders on Messrs Henry Davis York, the solicitors for Mr Nicholls, Mr Slater and [the Temujin companies]."
46 A similar letter was sent by solicitors in London to the Serious Organised Crime Agency in the UK, dated 5 July 2007, seeking confirmation of the Agency's requirement that the material provided to it remained confidential. On 9 July, the Agency responded in the following terms:
"With regard to the proceedings in Australia, SOCA takes the view that the same factors which mitigate [sic] against the disclosure of the Suspicious Activity report ("SAR") or the fact that the SAR was made apply equally to disclosure outside of the jurisdiction. Such a disclosure may have the effect of prejudicing any investigation which follows from the SAR and/or have a detrimental impact on the reporter.
Accordingly, SOCA … suggests that the Supreme Court of New South Wales treat the SAR with the same degree of confidentiality as the High Court of England and Wales."
47 It has been assumed that there was a hearing on 11 July, but that is not entirely clear, there being no transcript for that day. However, orders were made on that day, the effect of which was to maintain the confidentiality regime and to stand the proceedings over to 28 September 2007. The transcript of the day's hearing was ordered to be subject to the same regime. Further, there was an order that the transcript be kept in the chambers of the primary judge.
48 There was a note appended to the orders in the following terms:
"It is appropriate to note that absent special circumstances being shown to the Court by affidavit by the plaintiff's solicitors on 28 September 2007 the strong likelihood is that the Court will on that day make an order revoking all confidentiality orders made at the instance of the plaintiff at any time in these proceedings."
49 There appears to have been no hearing on 28 September, but the matter was back before his Honour on 11 October 2007. Counsel for the respondent opened the proceedings with the following statement:
"Your Honour, the position is that what we are asking for is to remove your Honour of the burden of having the material in your chambers. What should happen is that the material ought to be placed into an envelope, put on the Court file with 'Until further order it can't be opened'."
50 In a judgment delivered on 18 October 2007, the primary judge made the orders sought. The judgment does not disclose any reason for the change in the confidentiality regime. The result was that numerous documents were to be placed in a sealed envelope on the Court file which was not to be opened until further order of the Court. The documents included four notices of motion, five orders of the Court, six affidavits, transcripts and Associate's record of proceedings taken on six or seven occasions, together with three judgments, including the one providing for the new regime, which was inaccurately identified as the judgment made on 11 October 2007, together with a handful of related documents. Two matters were noted in the judgment which were of continuing significance. First, none of the overseas authorities had sought to insist on continuing non-disclosure: . Secondly, the Swiss authorities had frozen relevant assets in Switzerland and, his Honour concluded, that "continuing confidentiality could no longer be justified on this separate basis": [6]. Whether or not his Honour's assessment of the attitude of the criminal investigating authorities in three overseas jurisdictions was correct, the conclusions his Honour reached might have raised a serious question as to why continuing confidentiality was required at all.
51 The confidentiality regime was not finally lifted (in relation to the criminal complaints) until 13 June 2008. The circumstances in which that occurred will be addressed below.
(c) disqualification applications
52 It remains to consider the applications by the appellants for his Honour to disqualify himself. The first recusal motion was made on 12 May 2008. The grounds of the application, based on the ex parte application and judgment of 26 March 2007, were set out in a letter to the respondent's solicitors dated 9 May 2008. A letter in reply of the same date noted, among other things, that the Court "made orders in relation to the confidentiality of the application and ancillary documentation in order not to undermine the Freezing Orders". That was not strictly correct; no reference was made to the continuing confidentiality regime.
53 The transcript of 12 May 2008 records the submissions on the recusal application, and indicates that there was a judgment delivered. However, on the appeal, it was agreed between the parties that there was no judgment and that his Honour merely indicated his decision, which was to reject the application. His Honour then proceeded to hear other interlocutory applications and delivered a judgment on 23 May 2008. That judgment ([2008] NSWSC 501) did not address the recusal application.
54 Following his Honour's determination of the application, senior counsel for the appellants sought access to the unredacted transcript of 26 March 2006 and the reasons for judgment. Counsel for the respondent indicated that he would need to get instructions as to whether that was opposed. The following exchange then took place between Mr Lindsay SC (for the appellants) and his Honour (Tcpt, 12.05.08, p 8 (20-30)):
"MR LINDSAY: I do no more than to draw to your Honour's attention one of the implications arising from your Honour's decision, which I accept has been made. One of the implications of that is that your Honour has access to material about the case that we don't and therefore we are not able really to understand fully what material your Honour does or does not have.
HIS HONOUR: Are you suggesting that I have some material in my chambers which [is] being secreted at the moment or some such thing?
MR LINDSAY: Your Honour, I am not endeavouring to make any …
HIS HONOUR: Well, I just don't quite follow that [what?] you are suggesting. Are you suggesting that I have been the person who has from time to time on ex parte applications been furnished with information and that is information which your clients still do not have?"
55 The suggestion that material had been supplied on the ex parte applications which had not been provided to the appellants was correct. His Honour's response was perhaps unfortunate: it had not been suggested that he was secreting material in his chambers, but it was nevertheless true that, pursuant to the confidentiality regime, material had been held in his chambers for some months, rather than in the Registry.
56 Shortly after that hearing, a solicitor acting for the appellants inspected the Court file and discovered that there had been ex parte hearings on 10 April, 6 June and 11 October 2007, of which the appellants had never been informed. He further identified ex parte judgments dated 12 April, 11 October and 18 October 2007, copies of which, he asserted, had never been served on the appellants. Supported by an affidavit to that effect, the appellants applied to the List Judge on 6 June 2008 for access to documents held on the Court file in an envelope sealed and marked "Confidential and not to be opened pending further order of the Court": Tcpt, 06/06/08, p 16(35). The motion was stood over until 13 June 2008, on which occasion orders granting access were made by consent, although subject to certain qualifications which are not presently relevant.
57 The second recusal application was made on 4 June 2009. The submissions of 4 June 2009 included matters which were raised before this Court, and relied, in part, upon the fact that "the questions to be determined at trial will include questions about the bona fides of the [respondent's] ex parte applications to the judge and whether the [respondent], in making those applications, deliberately [misled] the Judge": submissions, par 4. That statement, no doubt somewhat elliptically, foreshadowed not only the claim that the proceedings were an abuse of process (raised by a motion of which notice was given on 10 July 2009) but also the extensive cross-examination of Mr Wilson on the basis of the material that had been put before the primary judge in the course of the ex parte applications.
58 His Honour rejected the appellants' application in an ex tempore judgment delivered on 4 June 2009: Michael Wilson & Partners Ltd v Nicholls [2009] NSWSC 505. After noting the relevant principles, and noting that each of the matters relied upon was an interlocutory decision determined by him, he proceeded to address the issues raised, by reference to the paragraphs of the appellants' outline of submissions. Paragraph 3 thereof set out in paragraphs (a)-(f) matters which were clearly cumulative in effect. Paragraph (a) identified the various applications before his Honour in 2007 in sub-paragraphs, (i)-(iv). His Honour dealt with them seriatim, in effect treating each element as a separate "ground" and dismissing it as of "no substance".
59 Sub-par 3(a) identified the seven occasions on which the judge had entertained ex parte applications in closed court, had delivered three confidential judgments and had made confidential orders which, it was asserted at 3.a.iii, were designed:
"(A) To expose the [appellants] to a criminal investigation overseas, which the [respondent] proposed to institute by way of a complaint to authorities in Switzerland, in aid of the [respondent's] international pursuit of 'discovery' for the purpose of these proceedings; and (B) to impose upon the [appellants] an obligation to pay the costs of transcript of 'confidential' proceedings as part of the ordinary costs in the proceedings": (Tcpt, 10/04/2007, p 16).
60 His Honour dealt with the complaints in sub-paragraphs (i) and (ii) in the following manner:
"[23] As to the matter referred to in a 3a[i] [which is conveniently treated with together with 3a[ii]], there is no substance in the complaint that the Court entertained ex parte applications by the [respondent] in closed Court on a number of occasions. This is the nature of the judicial process. The applications were for freezing orders across a number of jurisdictions. On each occasion reasons for giving the ex parte relief were given and to some extent these are identified in the [appellants'] outline at 3a[ii]. The confidentiality orders were deemed necessary on the evidence.
[24] As to the matter referred to in 3a[iii], the orders are self-explanatory and again on each occasion, reasons were given for ex parte orders. To the extent that the orders were ex parte the Court was satisfied that the [respondent] was entitled at that time and in those circumstances to have the orders which were made, made. The costs complaint is of no substance."
61 The costs complaint may be left to one side. In relation to the other material, the response given by the primary judge was, in effect, that the orders were in themselves entirely appropriate. That answer, with respect, missed the point, which was whether these circumstances (in combination with others) might have led the fair-minded lay observer to apprehend prejudgment which might affect the hearing which was yet to occur.
62 The events referred to in 3.a.iv involved the exchange which occurred during the hearing on 10 (or 11) April 2007 and set out at [39] above. Again his Honour said there was "no substance in the complaint": at [25]. He described the document sought as a "more detailed submission". However, the remarks in the transcript are in a form which might have suggested to a lay observer that his Honour was seeking assistance in providing adequate reasons to justify the orders which he expected to make.
63 In the statement of grounds, at paragraph 3.b.i and ii, the appellants had noted that the orders were predicated upon acceptance by the judge of matters asserted by Mr Wilson and upon -
"(ii) findings that conduct of the [appellants] was 'suspicious' and that they could not be trusted: (A) to respect orders of the Court as to the maintenance of confidentiality; (B) to co-operate with police investigations; or (C) not to dissipate assets."
64 His Honour referred to these matters as being of "no substance". He continued at [26]:
"These were interlocutory orders based upon the evidence put before the Court and in each case reasons were given. Each of the relevant occasions involved an ex parte exercise of the appropriate approach to determining the strength or weakness of a particular case and where the balance of convenience lay."
65 As explained at [40] above, the purposes of the orders sought in the notice of motion dated 10 April 2007 were, as his Honour acknowledged, unusual. Not only were the orders (permitting use of the disclosure affidavits for the purpose of criminal complaints) unusual, but the circumstances in which the orders were made were unusual. A freezing order which is made ex parte and takes effect immediately will usually involve notice being given to the affected party within a day or two, so that the party may have an opportunity to challenge the order, being aware of all the material that had been before the judge when the order was made. No doubt it is true to say that the order is made on the basis that there is a real risk of dissipation of property if the affected party were to be given advance warning of the proposed order. However, the assumption is of no great consequence in circumstances where the order can readily be undone without lasting prejudice and where the affected party has an opportunity to seek that step. The orders sought in April 2007, once made, were not readily to be undone, might well give rise to lasting prejudice and, in relation to the orders not disclosed on 5 April 2007, the affected parties were given no opportunity to seek relief of any kind until more than a year later.
66 None of these factors was addressed in the judgment of 4 June 2009: at the very least, that judgment would have failed to diminish any concerns that the lay observer might have had arising from the earlier proceedings of April 2007. It is probable that the manner in which this complaint was dealt with might have confirmed pre-existing fears that his Honour might not approach the substantive issues with a mind free from prejudgment.
67 Ground 3.c and 3.d were dealt with by his Honour together and need to be set out in full:
"c. Not only did the judge not disclose the 'confidential' proceedings to the [appellants] on 12 May 2008 (when an opportunity for him to do so naturally arose), he made observations in the course of argument on that date which, to a fair-minded observer in light of events that subsequently occurred, suggests that he unduly identified his role with the interests of the [respondent]. See transcript (12 May 2008, pages 8 (line 15) - 10 (line 2).
d. Only after Bergin J made orders on 13 June 2008 granting to legal representatives of the [appellants] access to the Court File (including 'Confidential' material on the File) was there a disclosure to the [appellants] of the nature and extent of the Judge's private dealings with the [respondent]."
68 Extracts from the transcript of 12 May 2008, at the pages identified in ground 3.c, have been set out above at [54]. This transcript included his Honour's question to Mr Lindsay as to whether he was suggesting that he (Einstein J) had "some material in my chambers" which was being "secreted at the moment". By the stage of the hearing on 4 June 2009, it was known to all parties that the material had, perhaps unusually, been held in his Honour's chambers and not in the Court Registry, for a period of months. Otherwise, his Honour's comments on 12 May were directed to counsel for the respondent and, at least implicitly, suggested that he should seek instructions which would permit the revocation of the existing confidentiality regime. That material did not suggest his Honour unduly identified his role with the interests of the respondent, but it was, perhaps, an opportunity for his Honour to explain what was implicit, namely that he was concerned at the ongoing confidentiality regime, which had (by May 2008) been in place for over a year.
69 All that his Honour said in respect to these matters in his judgment of 4 June 2009 was, at [27]:
"As I made clear to Mr Lindsay SC when speaking to his outline, I had considerable difficulty following exactly what the suggested facts were in relation to the matters referred to in 3c and 3d. If and when orders were made permitting access to previously restricted material they were no doubt acted upon."
70 In the course of submissions on 4 June 2009, Mr Lindsay SC referred to par 3.c and the transcript of 12 May 2008 and noted (Tcpt, p 6 (10)):
"… [a]n exchange between Bench and Bar took place in which following upon the delivery of the judgment, I indicated that it was apparent that there were matters of communications between the plaintiff and your Honour to which the defendants were not privy. And your Honour asked me whether I was suggesting that you had some undisclosed documents in your chambers and I said, as I had to say, that I was not in a position to advance any such proposition because we couldn't know.
As it happens, after the passage of some time, on 13 June 2008 the then List Judge made orders granting the [appellants'] legal representatives access to the Court file including confidential material, and that disclosed that there were documents which were in your Honour's chambers as a result of the confidential orders that were made. In our submissions, this is a factor which goes again to the question of reasonable apprehension of bias. It wasn't until after the orders made by Bergin J on 13 June 2008 that the [appellants] became aware of the nature and extent of the private proceedings initiated by the [respondent] before your Honour."
71 Ground 3.d may be understood as identifying the time at which a critical element in the removal of the confidentiality regime was achieved. The transcript indicates a concern on his Honour's part that there was some implicit criticism of his conduct, arising from the fact that the orders were made by Bergin J. However, the nub of the complaint came in paragraph 3.c. In that regard, the following exchange had taken place in the course of the hearing on 4 June 2009 (Tcpt, p 8 (10)-(40):
"HIS HONOUR: Now where was that Court file?
LINDSAY: Part of it - according to the orders that your Honour made, the confidential orders you made - was to be kept off the Court file and in your Honour's chambers.
HIS HONOUR: But I mean that did occur, there's no doubt that at some stages I did direct that the sensitivity of the matter was such that it [should] not yet go on to the usual system but at some stage - and I can't recall exactly when - I also opened the whole of the materials which could be disclosed to the [appellants] and I'm having very great difficulty in following the strength or fact that you've been putting forward when you have in your …
LINDSAY: Those matters were not disclosed to us on 12 May 2008, nobody disclosed those matters to us and the evidence put before Bergin J on 5 June was that the [appellants] had no knowledge of the various matters of 2007 … .
HIS HONOUR: Well as I say, I'm having real difficulty in following the precise chronology but the materials which, as far as I can recall it, were appropriate for the defendants to have - ultimately all materials as I think I recall - certainly came forward at some date and when you are referring to Bergin J making certain orders and then coupling that with some suggestions that the materials were not yet on the court file, I'm just having very great difficulty in understanding that."
72 That his Honour had no clear recollection of what had occurred, in part, in 2007 and in part a year before the hearing then in progress, namely in May 2008, was unremarkable. However, there were three aspects of the hearing on 4 June 2009 which could have given rise to concern in the mind of a lay observer. First, in respect of a matter which his Honour appeared to appreciate could give rise to concern, and about which he had no sufficient recollection, he simply recorded the fact of his confusion in an ex tempore judgment without, it would appear, seeking to refresh his memory as to the circumstances. Secondly, and consequentially, he forwent an opportunity to explain publicly what had given rise to his question about any allegation of secreting documents in his chambers. Thirdly, apparently in the belief that relevant material had been disclosed at an earlier point in time, he forwent an opportunity to explain why the confidentiality regime had been allowed to remain in place until June 2008, in circumstances where the transcript of 12 May 2008 suggested that he was conscious of its continued operation at that time.
73 Ground 3.e relied upon the respondent's conduct in opposing the recusal application of 12 May 2008, combined with its failure to disclose the nature and extent of the ex parte hearings as showing that it had acted in a manner which suggested that the primary judge was its "Judge of choice". That raised a question as to the proper role for a party on the other side of the record from the party making the recusal application. The non-applicant party has no interest in which judge sits on proceedings. However, depending on the circumstances and timing, a successful recusal application may delay proceedings, or, where the application is made during the course of proceedings, result in increased expense and other detriments, flowing from the need to reconstitute the court and recommence the hearing. While there can be no general rule, there are circumstances in which it is inappropriate for the non-applicant to make submissions and other circumstances where, if submissions are made, care should be taken to ensure that they do no go beyond appropriate clarification of the facts and the law. It was not suggested in this case that the submissions were inappropriate and that factor can be put to one side. (At the hearing on 4 June 2009, the respondent neither consented to nor opposed the recusal application and made no submissions.)
74 A further ground, 3.f, related to findings made on 23 May 2008: his Honour's rejection of that ground was orthodox and need not be referred to further.
75 A third recusal application was made, somewhat obliquely, on 15 June 2009 at the commencement of the final hearing. Nothing new was raised at that time and it was not expressly dealt with by the primary judge by way of a further ruling. Nothing more need be said in relation to that application.
(d) waiver
76 Before considering the application of relevant principles to the circumstances set out above, it is convenient to address a somewhat belated submission by the respondent that the appellants could not be heard to complain about any apprehension of bias based on circumstances preceding the trial, because, having made an unsuccessful recusal application, they took no steps to have the matter reviewed in this Court. That, it was submitted, constituted a waiver of any ongoing entitlement to challenge the final judgment on that basis.
77 No authority was drawn to the Court's attention to support the submission that failure to take an interlocutory appeal could constitute waiver. There are a number of powerful reasons for rejecting the submission. First, it is clear that there was no express waiver and that, accordingly, any waiver must be implied. Secondly, the kind of situation in which waiver may be implied is where a litigant "who is aware of the circumstances constituting a ground for such objection fails to object": Smits v Roach [2006] HCA 36; 227 CLR 423 at [43] (Gleeson CJ, Heydon and Crennan JJ). In a case where recusal applications were made on two occasions in a timely fashion (indeed the first may have been premature) and reiterated at the opening of the hearing (Tcpt, 15/06/09, p 37(15)), it is impossible to say that the appellants stood by until the contents of the final judgment were known and then, on finding them unpalatable, complained of apprehended bias: cf Vakauta v Kelly, at 572 (Brennan, Deane and Gaudron JJ). Thirdly, dismissal of the recusal application did not constitute a judgment or order from which an appeal lay: Lee v Cha [2008] NSWCA 13 at [2] (Hodgson JA), [13]-[25] (in my judgment, Bell JA agreeing). Fourthly, there was no suggestion that prohibition lay against a judge in the Equity Division: Lee v Cha at [2]. Fifthly, even if there were a right of appeal, perhaps because his Honour could have been asked to rule upon an interlocutory matter requiring determination, permitting, in effect, a collateral challenge to the dismissal of the recusal application, the appellants would nevertheless have required leave. Whether this Court would have favoured such a course at a point where the trial was about to begin may be doubted. As noted in Lee at [36] and [37], the Court will generally exercise restraint and not interfere in proceedings at an interlocutory stage unless there is some clear reason to do so, sufficient to outweigh "the undesirability of discontinuity, disruption or delay" in the orderly hearing of a claim.
78 The suggestion that any implied waiver precluded agitation of the ground of apprehended bias must be rejected.
(e) application of principles
79 In dealing with the particular circumstances set out above, the following factors are relevant: