Ozmen v Culture Map Pty Ltd

Federal Court of Australia|2020-12-11|Before: Rares J

The first and third respondents' interlocutory application for recusal dated 28 August 2020 be dismissed with costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

RARES J: 1 This is an application by Culture Map Pty Ltd and Eric Woo, the first and third respondents (compendiously Culture), that I recuse myself in this proceeding (the Culture Map proceeding). The application is based on remarks and conduct of mine in another proceeding between Ozmen Entertainment Pty Ltd and Kanki Sea Tourism Hospitality & Entertainment Pty Ltd, as applicants, and Neptune Hospitality Pty Limited, as respondent (the Neptune proceeding), that are said to give rise to a reasonable apprehension of bias, including during a case management hearing in the Neptune proceeding on 31 July 2020 (see, among others, my decision on the substantive issues: Ozmen Entertainment Pty Ltd v Neptune Hospitality Pty Limited (2019) 369 ALR 644). 2 In the Culture Map proceeding, the applicants are Mert Ozmen, who was the principal of the eponymous "Ozmen Entertainment" in the Neptune proceeding, and his nephew, Kartal Altikulacoglu (collectively the Ozmen parties), and they also seek leave under s 237 of the Corporations Act 2001 (Cth) to bring this proceeding in the name of Entertainment as third applicant. Their originating application seeks relief against a financier, Culture Map, and its then two directors, the second respondent, known as John Le, who has since ceased to be a director, and the third respondent, Mr Woo. The relief claimed included that an amended purchase of business agreement for the purchase of shares between Mr Ozmen and his nephew, as vendors, and Culture Map, as purchaser, dated 9 July 2018, be specifically performed and carried into effect. 3 At the moment, the parties in the Culture Map proceeding appear to have put on outlines of evidence and it is ready for hearing.

Basis of recusal application 4 There are two bases on which Culture bring the recusal application. First, Culture rely on my findings in the Neptune proceeding, principally in Ozmen 369 ALR at 693 [255], and the contention that a fair-minded lay observer might perceive that I might not bring an impartial mind to the resolution of issues in the Culture Map proceeding as to Mr Ozmen's financial capacity and resources at some relevant time in this proceeding. Secondly, Culture submit that, during the case management hearing in the Neptune proceeding on 31 July 2020, I engaged in unjudicial behaviour by reason of which a fair-minded lay observer might perceive that I might have a personal bias or animus against Ms Nolan of counsel, who appears for both Entertainment and Kanki in the Neptune proceeding and for Culture in the Culture Map proceeding. 5 It is important to understand at the outset that, first, Culture Map had effective control of Entertainment and Kanki during the hearing of the Neptune proceeding in early 2019 and thereafter, by reason of its 51 per cent controlling shareholdings in each company and, secondly, in Ozmen 369 ALR at 648 [13], I recorded: The parties agreed that the ascertainment of what may be due to one side or the other will occur, probably by the appointment of a referee, once I have decided the substantive issues. (emphasis added)

Background to the recusal application 6 After the Culture Map proceeding was filed in late 2018, it was docketed to me. At no time until 31 August 2020, when this interlocutory application was filed, had Culture suggested in Court to me that I recuse myself by reason of any apprehension of bias arising from the Neptune proceeding. 7 However, this possibility had been alive to Culture's solicitors and counsel from the outset since they took over the conduct of the Neptune proceeding from Entertainment's and Kanki's previous solicitors in May 2019. At about this time, on 15 May 2019, Metis Law sent the Ozmen parties' solicitors, Craddock Murray Neumann Lawyers Pty Limited, a letter that referred to my reasons in Ozmen 369 ALR 644, saying: We also request your client to have this matter docketed to another Judge. Given that Rares J has been hearing the Neptune matter, in order to ensure a fair trial, we propose (as was mentioned by His Honour at the case management hearing) that His Honour does not hear this matter. 8 On 5 July 2019, counsel for Culture emailed the Ozmen parties' solicitors, saying: We will need to apply to the court that the proceedings be removed from Rares J's docket. 9 She repeated this in her email of 10 July 2019, where she said: Also, we need to have the matter reallocated to another docket. Rares J will need to recuse himself. 10 Despite those assertions, the Culture Map proceeding continued before me without any application for my recusal. On 13 September 2019, I ordered that Culture and Mr Le serve outlines of any evidence of lay witnesses upon whom they intended to rely by 25 October 2019. On 15 November 2019, I extended that time to 29 November 2019 and ordered that (because of Culture's earlier defaults in serving its evidence), unless the Court otherwise ordered, they may not rely on any evidence of a lay witness in respect of a matter not in an outline of evidence served pursuant to the orders of 15 November 2019. On that occasion, I stood the proceeding over to 6 December 2019. 11 As at 6 December 2019, Culture were in default of compliance with the orders for serving their outlines, and applied for an order relieving them of the effect of the guillotine order made on 15 November 2019. I refused that application. On that day, I set down the Culture Map proceeding down for final hearing for two days commencing on 23 March 2020. I refused to allow Culture further time in which to put on evidence. 12 The Ozmen parties became self-represented in February 2020 after their solicitors filed a notice of ceasing to act. In the event, because of the COVID-19 pandemic, the Chief Justice ordered that all hearings in the Court be vacated in the week commencing 23 March 2020 and so the hearing of the Culture Map proceeding did not go ahead.

Background to the Neptune proceeding 13 On 17 April 2019 in the Neptune proceeding, I ordered that the parties provide particulars of the amounts that each would claim in respect of unresolved issues. Those particulars were needed in order to resolve what amount of security should be placed in ship's mortgages to be given to secure Neptune's best arguable claim. 14 Neptune appealed from the orders that I made on 9 May 2019 (Ozmen Entertainment Pty Ltd v Neptune Hospitality Pty Ltd (No 5) [2019] FCA 904) in consequence of my findings in Ozmen 369 ALR 644, that had been the subject of long and complex arguments over five days following the delivery of my reasons on 3 April 2019, when other counsel and solicitors represented Entertainment and Kanki. The Full Court dismissed that appeal substantially on 19 March 2020: Neptune Hospitality Pty Ltd v Ozmen Entertainment Pty Ltd (2020) 375 ALR 489. Once that occurred, the Neptune proceeding came back before me for case management to deal with the outstanding issues for the referee. 15 Thereafter, there were issues between, principally, the receivers, whom Burley J had appointed in 2018. The receivers were no longer necessary, following my findings in Ozmen 369 ALR at 700 [287] that Entertainment and Kanki had validly terminated the joint venture in July 2017. Over the intervening period until 22 May 2020, I also dealt with issues arising out of the termination of the receivership and payment of the receivers, during which the new counsel and solicitors, being those now representing Culture in the Culture Map proceeding, have also represented Entertainment and Kanki in the Neptune proceeding. 16 At the 22 May 2020 case management hearing in the Neptune proceeding, Ms Nolan, as counsel for Entertainment and Kanki, said that there was no utility in making a reference where Neptune was impecunious. She contended that I should not make any order for a reference. She also argued that, if Neptune were to pursue a claim, Entertainment and Kanki would seek security for costs. During the course of that hearing, she also said that her clients would need another month to deal with any properly particularised claim by Neptune. Then, the transcript proceeded: MS NOLAN: All right. Well, your Honour has heard that my clients intend to seek security for costs. Within that formulation of case management, where would your Honour anticipate hearing that application? At the conclusion of our joint - our exchange of claims, or at the conclusion of the defence's? Because in my submission, your Honour would take into account the likelihood of my friend's client succeeding as a basis for ordering security. Is that - - - HIS HONOUR: Well - - - MS NOLAN: When would you like that returned? HIS HONOUR: Well, it's really a matter for your client to say what to do. So you want to - I mean, part of the ascertainment of what the security will involve would be working out what on earth the referee is going to have to deal with, part of it being - - - MS NOLAN: Your Honour - - - HIS HONOUR: Yes? MS NOLAN: We will put it on straightaway. I mean, we will put - my friends are on notice that it's coming, and it's coming. So it will be put on fairly straightaway and then it will automatically trigger a return date and all I'm trying to do is align that with what your Honour foresees as being proper case management of this stage of the proceedings. 17 I then made the following orders: 1. The applicants file and serve any application for security for costs by 5 June 2020. 2. The parties file and serve their particularised points of claim by 19 June 2020. 3. The respondent file and serve any affidavits and evidence on which it intends to rely in relation to the application for security for costs by 27 June 2020. 4. The applicants file and serve any affidavits in reply in relation to the application for security for costs together with submissions of no more than 5 pages by 24 July 2020. 5. The parties file and serve properly particularised defence to points of claim by 17 July 2020. 6. The parties are to confer and file an agreed statement of issues to be submitted to a referee by 24 July 2020 or, in the event the parties cannot agree, a marked up copy showing points of disagreement. 7. The respondent file and serve submissions in reply of no more than 5 pages by 29 July 2020. 8. The matter be listed for a case management hearing at 9:30am on 31 July 2020. 9. The case management hearing listed for 25 September 2020 is vacated. 18 The Neptune proceeding came back before me on 31 July 2020 for the hearing of the application for security for costs and the determination of what should be referred to a referee. Neptune did not file any affidavits under order 3 made on 22 May 2020. Entertainment and Kanki did not file any submissions in relation to its application for security for costs pursuant to order 4, or any statement of issues under order 6. Counsel for Entertainment and Kanki told me that the two reasons why she had decided not to file any issues for reference were that, first, the Neptune proceeding should not be referred to a referee at all because all issues could be simply determined by the Court and there was nothing appropriate to refer to a referee and, secondly, the claims put on by Neptune had not been properly particularised. 19 The solicitor for Neptune said then that was the first time he had heard that Entertainment and Kanki suggested that there was nothing appropriate for referral, and that it had always been their position that numerous matters should be referred to a referee. As I recorded in Ozmen 369 ALR at 648 [13], this position was common ground at the trial in early 2019. 20 Thus, despite the orders of 22 May 2020, there were no submissions filed on the issue of security for costs, the issues for the referee or otherwise. Instead, I was confronted at the hearing on 31 July 2020 with an affidavit of over 70 pages, made by one of the solicitors in Metis Law, My-Linh Dang, on 30 July 2020, which she said was made in support of the application for security for costs in respect of the reference. 21 During the course of that hearing on 31 July 2020, I expressed a degree of irritation with the position that neither party had complied properly with the case management orders of 22 May 2020 so as to have the matter ready for a hearing on that day to determine, first, what issues were in dispute concerning the subject matter of the reference, through having a document with each side's contentions identified, or, secondly, the security for costs claim. Entertainment's and Kanki's application for security required some justification, to say the least, in circumstances where both sides appeared to have claims that the other owed them money and the applicants (Entertainment and Kanki) were in the unusual position of seeking security for costs against the respondent (Neptune) in respect of both sides' claims against the other that, I had understood, would be the subject of the reference. That was why I had ordered Entertainment and Kanki to file and serve written submissions on their claim for security for costs. 22 In an exchange with the solicitor for Neptune, I observed that most of the annexures to the affidavit of Ms Dang were correspondence between solicitors, and that this material was entirely unhelpful. I said that this was why I earlier had ordered submissions limited to five pages, so I would know what the issues were. I noted that neither party had put on any submissions and, in the event, Neptune had not put on any evidence. 23 Then I put to counsel for Entertainment and Kanki: HIS HONOUR: Well, now, Ms Nolan, your client is in egregious default on these things. Why on earth - and every time we come along, I get the same sort of thing, "Oh, we didn't do it, but, you know, give us some more time". Why should I give you any more time? Why shouldn't I just - - - MS NOLAN: I'm not asking for any more time. I don't understand my friend's ..... HIS HONOUR: You're in breach of my orders, Ms Nolan. That's ..... MS NOLAN: I don't believe I am. I don't believe I am. … HIS HONOUR: Why shouldn't I dismiss the application for security for costs because you are in default of my orders to put on some submissions about it? MS NOLAN: My instructing solicitor has informed me that there has been no evidence put on by the respondent, and I - - - HIS HONOUR: So what? MS NOLAN: I haven't finished, your Honour. I can't hear you very well, so I'm struggling here at the moment. There has been no evidence put on and there hasn't been anything to reply to, and that's the basis - I wasn't aware that there was a need for any submissions. That's not something that has been intentionally not done. HIS HONOUR: The orders of 22 May, Ms Nolan, make that argument rubbish. Now, don't give me some nonsense that you weren't aware of things. If I make orders, I expect them to be obeyed, not ignored. MS NOLAN: I understand that. I'm not giving you rubbish, your Honour. I don't give rubbish. I'm just saying that - I'm looking at what my instructing solicitor's instructions are, and she says there's - I would not have not put on submissions in circumstances where I understood that to be your Honour's intention by those orders. My friend hasn't put on any evidence in response and I've been told there was nothing to reply to. I haven't got the orders in front of me. Now, if that's a misunderstanding, that can be remedied straightaway, but your Honour wasn't about to hear from me today. I didn't understand that to be the case. And, in any event, the position of the applicants has always been made plain, and that is that they do not seek a reference. And in those circumstances, if it is the respondent who is applying for the reference, then they are the applicant for the reference. (emphasis added) 24 Ms Nolan said that her side had not intentionally failed to comply with the 22 May 2020 orders, and that her instructing solicitor, Ms Dang, had misinterpreted order 4 as not requiring any submissions if Neptune did not file any evidence in opposition to the application for security. She said that she acted on Ms Dang's instructions and that she (Ms Nolan) did not go back to look at the 22 May 2020 orders or have them before her during that hearing. She said that she could remedy that default quickly, no doubt by filing some submissions, as to the basis for ordering a respondent, such as Neptune, to give security for costs. 25 I concluded that exchange by saying that, in trying to deal with the issues between the parties in the Neptune proceeding, I had expended a considerable degree of judicial time, not only hearing the trial for 14 days and then spending five days settling orders in May 2019, but also during a number of subsequent applications dealing with the receivership and the formulation of issues for the reference. I said that I had hoped, by making the 22 May 2020 orders, that, on 31 July 2020, I would be able to decide the outstanding security and reference issues, but expressed my frustration that I had received no assistance from the parties on that occasion. 26 I finished that hearing by saying that I would refer the matter to the Registrar, so that the parties could sit down with him to case manage it bit-by-bit, because I had done all of the case management that I was prepared to do and that the parties were not co-operating in breach of their duties under s 37N of the Federal Court of Australia Act 1976 (Cth). 27 Culture rely on this exchange in the Neptune proceeding to seek that I disqualify myself in the Culture Map proceeding. 28 On 27 November 2020, the Registrar provided orders that the parties had agreed, or were prepared to have me make, for ordering the Neptune proceeding to go to a reference before the Hon Roger Gyles AO QC. On that day, I made those proposed orders, including an order that on or before 10 December 2020 Entertainment and Kanki pay 50 per cent, and Neptune pay 50 per cent, of the estimated costs for the referee of $140,000 into Court or an interest-earning account agreed by the parties. 29 On 10 December 2020, Mr Kerr made an affidavit in which he said that, in the Neptune proceeding, his client had not been able to raise that money to provide security for the referee's costs because of the consequences of the COVID pandemic and its impact on the business of running Seadeck. He noted that she was a vessel offering a public venue and entertainment, and now had a very restricted passenger-carrying ability due to public health regulations. The parties in the Neptune proceedings agreed that I should hear that issue on 17 December 2020 to determine what ought happen to the reference, as well as the security for costs application that I did not hear on 31 July 2020.

The absence of any application for recusal in the Neptune proceeding 30 Once the disqualification application was filed on 31 August 2020, my associate inquired on 3 September 2020 of the parties in the Neptune proceeding whether Entertainment and Kanki, which are represented by the same counsel and solicitors who represent Culture in the Culture Map proceeding, would be applying for me to disqualify myself in the Neptune proceeding on the same basis. 31 On 3 September 2020, Ms Dang emailed my associate and the other parties saying that her clients in the Neptune proceeding did intend to make a similar application, and wished it to be heard together with this one, when it was originally listed on 30 October 2020. I was unable to hear it on 30 October 2020, and adjourned the hearing to today, along with a raft of other interlocutory applications by the parties in both the Culture Map and Neptune proceeding that need resolution. 32 On 8 December 2020, Ms Dang emailed my associate to confirm a new position, namely that no application for recusal was now going to be made in the Neptune proceeding. 33 At the commencement of my hearing an application in the Neptune proceeding this morning, Ms Nolan told me that her clients in the Neptune proceeding (Entertainment and Kanki) waived any entitlement to make any submission or application seeking my recusal from hearing that proceeding based on apprehension of bias. She emphasised in the Neptune proceeding that this waiver was not a concession, as she did again later, when addressing me on the present application in the Culture Map proceeding.

The issues 34 The first basis on which Culture seek my recusal is that, by attributing egregious delay or default to Entertainment and Kanki in the 31 July 2020 hearing, I had conflated their position in the Neptune proceeding with Culture's defaults in complying with orders for filing outlines of its evidence in the Culture Map proceeding. Culture argued that I would be asked to make findings in the Culture Map proceeding based on, among others, Mr Ozmen's financial circumstances at various times in issue, in circumstances where, in the Neptune proceeding, I had made findings already about the same subject matter. Culture contended that my assertion that there had been delay or default by Entertainment and Kanki showed that a fair-minded lay observer might think that I might conflate the default of Culture, represented by the same lawyers, with other findings I had made previously in the Neptune proceeding. They submitted that I had expressed clear views and made findings of fact about live issues in the Neptune proceeding that would also be live and contentious issues in the Culture Map proceeding. They argued that there was a danger that other issues could arise in the Culture Map proceeding that might cause a fair-minded lay observer to think that I might have prejudged those issues, and would adhere to the views and findings that I had made in the Neptune proceeding when approaching the evaluation of evidence in the Culture Map proceeding. This argument was based on authorities such as Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 300 and British America Tobacco Australian Services Limited v Laurie (2011) 242 CLR 283 at 331-333 [139]-[145]. 35 They argued that this fear, that, potentially, I might conflate knowledge gained or findings made in the Neptune proceeding with matters I had to determine in the Culture Map proceeding and that this might affect my ability to decide the issues on the evidence in the Culture Map proceeding with an uncluttered and impartial mind. They contended that that was the basis on which Metis Law had written the letter of 15 May 2019, and their counsel had sent her emails on 5 and 10 July 2019, discussing my suggested recusal. In submissions today, Ms Nolan said that the reality of this conflation argument became obvious to her only on 31 July 2020. That occurred, she argued, through my attributing delay to her clients in the Neptune proceeding where she was acting for them when, in fact, as she accepted, it was only Culture that, up to then, had engaged in delay or defaults. 36 In support of this first contention, Culture relied upon: what I found in Ozmen 369 ALR at 693 [255]: Mr Ozmen had told Mr Robertson and Mr Douchkov from the inception of their relationship in 2014 that he, Mr Ozmen, had no money, and the Australians would have to pay all expenses in getting Seadeck to Sydney and getting her ready for the joint venture business. In those circumstances, it is safe to infer that, when he engaged with Culture Map, Mr Ozmen needed financial resources in order to assert and protect Kanki's and Entertainment's rights under the JVA and the charterparty in circumstances where Kanki had not received any substantial funds from net profit or otherwise since late January 2017 or early February 2017. an email (that had been in evidence in the Neptune proceeding) dated 4 August 2017 from Scott Robertson, who was a witness in the Neptune proceeding, that Mr Ozmen's employment had been terminated on 17 July 2017, Neptune's assertion in the Neptune proceeding that it made numerous payments to Mr Ozmen and other parties related to him up to 18 January 2018. Culture based that claim on a payment schedule that apparently was produced in the Neptune proceeding in the course of recent hearings late in 2020 before the Registrar, to whom I had referred the task of identifying and formulating which of the still outstanding issues ought be placed before a referee. The material in the payment schedule indicates that the only payments made after 17 July 2017 that could have been to Mr Ozmen's possible benefit were payments to Kennards Self Storage of the same small amount on a monthly basis up until 10 January 2018, the relevance of which is not apparent to me, and an assertion by one of Culture's solicitors, David Kerr, in his affidavit of 4 December 2020, that Mr Ozmen or his nephew exchanged a number of emails or text messages dated 14 August 2017 and 5 June 2018 and 7 October 2018 that are attached to his witness statement that relate somehow to his financial position, which may or may not be subject of evidence sought to be adduced at a later point in the Culture Map proceeding. 37 Culture also assert that, in Ozmen 369 ALR 644, I made findings relating to Mr Ozmen's financial position that additionally give rise to their apprehended bias allegation. Those include findings (Ozmen 369 ALR at 648 [16] and 649 [20]) that: Mr Ozmen had made clear at the outset of negotiations with Neptune and its associates that he had no available financial resources to contribute to getting Seadeck, the vessel the subject of the joint venture and owned by Entertainment, to Australia, into a condition and fitted out so as to be capable of being classed and then surveyed, to carry 800 passengers or so on cruises here. Under the joint venture between Kanki and Neptune, they both demise chartered Seadeck from Entertainment. Ultimately, that joint venture failed, as I described in the Neptune judgment, and In his 27 October 2015 email, Mr Robertson said that Mr Ozmen had come to Sydney shortly after Seadeck's detention occurred and informed the Neptune side that he was not in a financial position to help in the resolution of the problems in Egypt, and asked if they would pay a sum in US dollars equivalent to AUD250,850.38 to do so. Mr Robertson said that Neptune agreed to lend that sum and paid it in good faith on that basis. He said that Neptune could provide "full details of the breakdown of" each of the following five categories of costs it had incurred, namely: (1) the legal and further transportation costs to get the vessel to Batam; (2) the cost of new upholstery; (3) the costs incurred by Neptune paying for a berth in Sydney whilst Seadeck was detained in Egypt, and undergoing repairs and refitting in Batam; (4) the costs of Mr Robertson and David Auld, a contractor that Neptune had engaged in project managing delivery of the vessel between Egypt and Sydney; and (5) the cost of the Batam repairs and maintenance together with the survey costs to get the vessel from Batam to Sydney. 38 The second basis on which Culture argued that I ought disqualify myself is that my behaviour towards counsel on 31 July 2020 amounted to judicial bullying by, among other conduct, impugning her honesty, and that my comments were capable of creating the perception in a fair-minded lay observer that I might have a personal animus towards her so that I would not be able to hear Culture's case impartially or as a detached judge in the Culture Map proceeding. They contended that this was because the fair-minded lay observer might be conscious of my conduct on 31 July 2020 in the Neptune proceeding, and might consider it as reflecting my attitude that I would maintain towards Ms Nolan in the Culture Map proceeding, so that I might not hear or decide this matter impartially. 39 I expressed some puzzlement that Entertainment and Kanki could assert that they had waived any suggestion of an apprehension of bias in the Neptune proceeding in circumstances where, first, I had still to decide whether or not they should be allowed to pursue their application for security for costs of the reference despite their defaults, through what they said was a misunderstanding of the orders, on 31 July 2020 concerning the filing of submissions and a marked-up version of points of agreement and disagreement as to the terms of the reference and, secondly, because of Entertainment and Kanki's recent default through inability, it is said, to provide $70,000 as security for the referee's costs, as ordered on 27 November 2020. 40 Ms Nolan also sought to compare my conduct complained of to that of the trial judge in Adacot and Sowle [2020] FamCAFC 215 at [108], where the Full Court of the Family Court said that: The primary judge's interventions could not be regarded as justified even if some delay or inconvenience was caused by reason of the raising of the interlocutory applications late in the piece. The tone, nature and ferocity of his Honour's comments could never be seen as justified, and in our view resulted in the father not receiving a fair trial and raised the identified apprehended bias, that no matter what the father's case was as presented, it would be rejected. 41 Ms Nolan said that Entertainment's and Kanki's waiver in the Neptune proceeding was not a concession that could preclude the reasonable possibility that a fair-minded lay observer might apprehend that I might not bring an impartial mind to the resolution of any outstanding questions in the Neptune proceeding. Rather, she asserted, Entertainment and Kanki had simply waived their right to rely on the very behaviour on my part in the Neptune proceeding of which they complain in this proceeding.

Principles for apprehension of bias 42 An apprehension of bias in the form of prejudgment disqualifies a judge from hearing or continuing to hear a proceeding. The test 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 asked to decide: Johnson v Johnson (2000) 201 CLR 488 at 492-493 [11]-[12] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. The test is objective and requires the decision-maker to assume that the observer is reasonable and their Honours said (at 493 [12]): 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. 43 The reasonableness of any apprehension is to be considered in the context of ordinary judicial practice including the exigencies of modern litigation, such as active case management. While one or more interventions by a judge in the conduct of a case by, among other means, the expression of tentative views in exchanges with counsel, might reflect a certain tendency of mind, since such intervention was not on that account alone to be taken to indicate prejudgment: Johnson 201 CLR at 492-493 [12]-[13]. 44 Indeed, as Gleeson CJ, Gaudron, McHugh Gummow and Hayne JJ said in Johnson 201 CLR at 493-494 [13]-[14]: 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. In Vakauta v Kelly ((1989) 167 CLR 568 at 571) Brennan, Deane and Gaudron JJ, referring both to trial and appellate proceedings, spoke of "the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case" (See also Re Lusink; Ex parte Shaw (1980) 55 ALJR 12 at 15; 32 ALR 47 at 53, per Murphy J). 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. There was argument in this Court, prompted by Anderson J's explanation of what he intended to communicate, about whether the effect of a statement that might indicate prejudgment can be removed by a later statement which withdraws or qualifies it. Clearly, in some cases it can. So much has been expressly acknowledged in the cases (eg, Re JRL; Ex parte CJL (1986) 161 CLR 342 at 372, per Dawson J; Vakauta v Kelly (1989) 167 CLR 568 at 572, per Brennan, Deane and Gaudron JJ; at 577, per Dawson J). No doubt some statements, or some behaviour, may produce an ineradicable apprehension of prejudgment. On other occasions, however, a preliminary impression created by what is said or done may be altered by a later statement. lt depends upon the circumstances of the particular case. The hypothetical observer is no more entitled to make snap judgments than the person under observation (emphasis added) 45 The test involves, first, ascertaining whether there is a real, and not remote, possibility that the judge might not decide the case on its legal and factual merits and, secondly, the articulation of a logical connection between that matter and the asserted deviation from the course of deciding a case on its merits; that is, impartially: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 345 [8] per Gleeson CJ, McHugh, Gummow and Hayne JJ. However, a fair and unprejudiced mind: is not necessarily a mind which has not given thought to the subject matter or one which, having thought about it, has not formed any views or inclination of mind upon or with respect to it: The Queen v Commonwealth Conciliation and Arbitration Commission; ex parte Angliss Group (1969) 122 CLR 546 at 554 per Barwick CJ, McTiernan, Kitto, Taylor, Menzies, Windeyer and Owen JJ 46 The requisite state of the judge's mind is that the fair-minded lay observer might reasonably consider, as a real possibility, that the judge might be so committed to a conclusion already formed that he or she is incapable of altering it, whatever evidence or arguments may be presented: Cabcharge Australia Ltd v Australian Competition and Consumer Commission [2010] FCAFC 111 at [25]-[29] per Kenny, Tracey and Middleton JJ. 47 A judge's expression of tentative views during the course of argument as to matters on which the parties are permitted to address full argument does not manifest any partiality or bias or amount to a predetermination of the issues: Bienstein v Bienstein (2003) 195 ALR 225 at 234 [34] per McHugh, Kirby and Callinan JJ citing Re Keely; Ex parte Ansett Transport Industries (1990) 94 ALR 1 at 9 where Dawson J noted that the mere fact that there the judge had persistently expressed views on a line of inquiry that he had raised during argument, that had been met with equally persistent resistance, did not give rise to an appearance of bias. That was because, his Honour said, the judge's views were tentative and not concluded, and he had allowed the party complaining a full opportunity to make any submissions it wished about the matters it sought to explore. 48 In The Queen v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 264, Barwick CJ, Gibbs, Stephen and Mason JJ said: The remarks on which the wife's submission was founded were made during argument in an interlocutory proceeding. One must be careful not to exaggerate the importance of remarks of that kind. During the course of argument a judge will often follow the common, and sometimes necessary, course of formulating propositions for the purpose of enabling their correctness to be tested, and as a general rule anything that a judge says in the course of argument will be merely tentative and exploratory. (emphasis added) 49 And, in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at 582 [4], Gummow ACJ, in agreeing with what Callinan J and Kirby and Crennan JJ had said on the issue of apprehension of bias, adopted the conclusion stated by Lord Walker of Gestingthorpe for the Privy Council in Almeida v Opportunity Equity Partners Ltd [2006] UKPC 44 at [103], namely: The judge's interventions were motivated, not by partiality, but by the wish to understand the evidence (which was often obscure and inconsequential) and to push on the trial process. 50 The fair-minded lay observer is a person who is well-informed: Webb v The Queen (1994) 181 CLR 41 at 51, 52 and 55 per Mason CJ, 57 per McHugh J, with Brennan J agreeing on this point at 87-88, per Toohey J at 88 and see too at 76 per Deane J; Concrete 229 CLR 609-610 [110]-[112], 635-636 [177]. Importantly, a judge's duty is to hear and determine the litigation before him or her. In Livesey 151 CLR at 294, Mason, Murphy, Brennan Deane and Dawson JJ, said: … it would be an abdication of judicial function and an encouragement of procedural abuse for a judge to adopt the approach that he should automatically disqualify himself whenever he was requested by one party so to do on the grounds of a possible appearance of pre-judgment or bias, regardless of whether the other party desired that the matter be dealt with by him as the judge to whom the hearing of the case had been entrusted by the ordinary procedures and practice of the particular court. 51 In Re JRL; Ex parte CJL (1986) 161 CLR 342 at 352, Mason J restated that principle and also said that: There may be many situations in which previous decisions of a judicial officer on issues of fact and law may generate an expectation that he or she is likely to decide issues in a particular case adversely to one of the parties. 52 He said that this did not mean that the judge would … approach the issues in the particular case otherwise than with an impartial and unprejudiced mind in the sense in which that expression was used in the authorities or that the judge's previous decisions provided an acceptable basis for inferring that there is a reasonable apprehension that the judge will approach the issues in this way. 53 Rather, Mason J said that the judge will be disqualified only if it is firmly established that there is a reasonable apprehension of bias by reason of prejudgment. 54 In Vakauta v Kelly (1989) 167 CLR 568 at 572, Brennan, Deane and Gaudron JJ said that where comments made by a judge were likely to convey to a reasonable intelligent lay observer an impression of bias, a party who had legal representation was not entitled to stand by until the contents of the final judgment became known, and then, if those contents proved unpalatable, to attack the judgment on the ground that, by reason of the earlier comments there had been a failure to observe the requirement of the appearance of impartial judgment. They said that by standing by the party waived the right, subsequently, to object. It was obvious why that was so, their Honours said, because (at 572): … if clear objection had been taken to the comments at the time when they were made or the judge had been asked to refrain from hearing the matter, the judge may have been able to correct the wrong impression of bias, which had been given or alternatively may refrain from further hearing. It would be unfair and wrong if failure to object until the contents of the final judgment were known to give the party in default the advantage of an effective choice between acceptance or rejection of the judgment, and to subject the other party to a situation in which it was likely that the judgment be allowed to stand only if it proved to be unfavourable to him or her. 55 In Michael Wilson Partners & Partners v Nicholls (2011) 244 CLR 427 at 451 [84], Gummow ACJ, Hayne, Heydon, Crennan and Bell JJ, noted that when a judge had refused to disqualify himself after an application had been made, the question of whether the party's failure to seek leave to appeal against that refusal amounted to a waiver, would depend on whether the failure to seek leave to appeal was reasonable.

Consideration 56 In my opinion, Culture has not given any reasonable explanation as to why a fair-minded lay observer might form the view that I might not decide any live issue in the Culture Map proceeding (or the Neptune proceeding) impartially on the evidence and the law, by reason of my conduct on 31 July 2020. 57 I do not understand the mental process by which a fair-minded lay observer, simultaneously, might be able to think that a party who says that my conduct in the Neptune proceeding might give rise to an apprehension of bias based on alleged judicial bullying of the very counsel who is also going to present arguments for Culture in this proceeding when her clients in the Neptune proceeding have waived their right to complain of that apprehension in it. The observer would know that Culture Map is in commercial control of both Entertainment and Kanki, which have waived any entitlement to rely on that same conduct in the Neptune proceeding in which that conduct occurred. It is difficult to comprehend how Culture can assert that the fair-minded lay observer who was aware of that waiver, might think that, in the Culture Map proceeding, I might not bring an impartial mind and might not determine the issues impartially. 58 I accept that, during the hearing on 31 July 2020, I was, and gave the appearance of being, irritated by both parties' failure to comply with the orders on 22 May 2020, and particularly by the submission made by Ms Nolan that despite my previous ruling on 22 May 2020, in accordance with her clients' agreed position throughout my hearing of the Neptune proceeding (as recorded in Ozmen 369 ALR at 48 [13]) that there would be a reference of the current live issues, she continued to traverse the old ground that she had raised on previous occasions, and I had not accepted, namely her clients did not see any need for a reference. 59 I was (and also gave the appearance of being) irritated that counsel was not even prepared at that hearing in accordance with the orders that I had made on 22 May 2020 (including, at her suggestion, for the proper case management of the Neptune proceeding) so that I would be able to be deal on 31 July 2020 with her clients' application for security for costs of the reference, for which there had been no submissions. 60 If I conflated the failure of Culture to adhere to earlier orders in the Culture Map proceeding, as Ms Nolan suggested, with the conduct of her clients in the Neptune proceeding by saying what I have set out at [23] above about her client being in egregious default, then that may have been an unfortunate slip or incautious remark: cf Laurie 242 CLR at 332 [140] per Heydon, Kiefel and Bell JJ. I have not gone over in these reasons the whole history of the Neptune proceeding to deal with whether there were other delays to which my comments may have referred. 61 In Ebner 205 CLR at 345, Gleeson CJ, McHugh, Gummow and Hayne JJ said: The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an "interest" in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed. (emphasis added) 62 Let me be quite clear that, as Ms Nolan accepted, I have no animus against her. She is a member of the bar of long standing and repute. Perhaps she was entitled to feel somewhat aggrieved, on 31 July 2020, about the displeasure that I expressed that the orders I had made on 22 May 2020 for the preparation of the hearing on 31 July 2020 had not been obeyed, and that she did not even have the 22 May 2020 orders in front of her. At the time I thought, and still think, that she was cavilling with my earlier case management, based on the previously agreed position that there would be a reference, she having had the debate and lost it at the 22 May 2020 case management hearing. 63 Be that as it may, in my opinion, the fair-minded lay observer would regard (as I did) her conduct as an irrating flourish of counsel that was robustly checked by the judge. 64 In IOOF Australia Trustees Ltd v SEAS Sapfor Forests Pty Ltd (1999) 78 SASR 151 at 189 [236]-[237] Doyle CJ, with whom Prior and Mullighan JJ agreed, said: The fair-minded observer must be taken to be acquainted with the course of the whole case. That observer would have seen that almost from the outset the judge and Mr Abbott had differed on the appropriate approach to the case; that the same issues tended to keep arising and to be debated again; that Mr Abbott not only maintained his point of view, but was inclined to argue at length issues on which the judge had already indicated a firm view; that the judge was greatly concerned by the ever increasing length of the case; that Mr Abbott engaged in some strident criticism of the judge's approach and at times was reluctant to accept the judge's authority. The fair-minded observer would appreciate that the judge had, as the case unfolded, formed pretty definite views about its proper management, views to which Mr Abbott was implacably opposed. The fair-minded observer would realise that the judge and Mr Abbott were going to continue to disagree on these issues, and that to the judge Mr Abbott's continued opposition would appear to be obstruction to the sensible conduct of the case. The fair-minded observer would understand that the judge need not and should not permit these matters to be constantly re-agitated, and also that when the issues on a point were clear, time limits for argument on them could be set. The fair-minded observer would realise that on certain issues, particularly of procedure, the judge had obviously made his mind up, but that that was inevitable in a long running case like this. The observer would conclude that the point had been reached at which Mr Abbott should, without having to concede the correctness of the judge's course, recognise the judge's authority, conduct his case accordingly while maintaining his opposition, and consider his client's remedies at the end of the case. (emphasis added) 65 In my opinion, I was, and the fair-minded lay observer would regard me as being, irritated by Ms Nolan's constant reagitation of a point that not only was incorrect as originally formulated, and again formulated today, being that Entertainment and Kanki had always opposed a reference when that had not been the position at the time of the trial or, following the delivery of my reasons, at the time of me formulating on 9 May 2019 orders that provided for the giving of security and ship's mortgages, after five days of bitter argument between the parties. 66 Having regard to the conduct of Entertainment and Kanki in the Neptune proceeding, and the fair-minded observer's knowledge that Culture was in control of those parties and was also represented by the same solicitors and counsel in the Culture Map proceeding, I am of opinion that no reasonable lay observer might reasonably form a view that I might have prejudged the issues in either proceeding, or formed an animus against counsel (or solicitors). This observer might consider that I was upset or irritated on 31 July 2020, perhaps overly so, by a disregard, however unintentionally, for the orders that I had made on the previous occasion. 67 The primary basis, as I understood it, on which Culture sought my disqualification in the Culture Map proceeding is that I had made clear findings of fact in the Neptune proceeding so that the fair minded lay observer might reasonably think that I might not bring an impartial or unprejudiced mind to resolving the same or similar issues on whatever evidence or argument will be before me be in the Culture Map proceeding. 68 None of Mr Ozmen nor his colleagues, including his nephew, gave evidence before me. The evidence of Entertainment and Kanki at the trial in the Neptune proceeding was entirely documentary. Only witnesses from Neptune's side gave evidence and were cross-examined. It would have been clear to the fair-minded lay observer who was aware of the conduct of the trial and reading the judgment in Ozmen 369 ALR 644 as a whole that my findings at 648 [16], 649 [20] and 693 [255] were made on the basis of documents put in evidence before me that permitted the inferences that I found there to be drawn. 69 In my opinion, there is no basis on which the fair-minded lay observer might reasonably apprehend that I might not bring an unprejudiced or impartial mind to the resolution of all issues in the Culture Map proceeding, including if Mr Ozmen or his nephew gives evidence and his credit is challenged. 70 This case is a world away from the situation in Livesey 151 CLR 288, where the members of the Court of Appeal, whom the High Court found to be disqualified for apprehension of bias, had made declarations in an earlier proceeding that Wendy Bacon, a witness whom Mr Livesey wished to call in his proceeding, not be admitted onto the roll of barristers. That witness was going to give evidence in the proceeding on behalf of a party in the Livesey matter before two of the same judges. That circumstance informed their Honours' comment (151 CLR at 300) that: … a fair-minded observer might entertain a reasonable apprehension of bias by reason of prejudgment if a judge sits to hear a case at first instance after he has, in a previous case, expressed clear views either about a question of fact which constitutes a live and significant issue in the subsequent case or about the credit of a witness whose evidence is of significance on such a question of fact. The consideration that the relevant question of fact may be conceded or that the relevant person may not be called as a witness if the particular judge sits would not, of course, avoid the appearance of bias. To the contrary, it would underline the need for the judge to refrain from sitting. (emphasis added) 71 Here, the issue of possible conflation of evidence or findings from the Neptune proceeding in the Culture Map proceeding was a matter that, as early as May 2019, had exercised the minds of those acting for Culture. Yet, they did nothing to raise an objection to my retaining this proceeding in my docket, together with the Neptune proceeding, until after the case management hearing in the Neptune proceeding on 31 July 2020. 72 In my opinion, there is no basis reasonably to consider that the fair-minded lay observer might form a view that I might not decide either proceeding on its legal and factual merits. The present situation is very different from that which Heydon, Kiefel and Bell JJ discussed in Laurie 242 CLR at 331-332 [139]-[140]. There, the judge had formed the considered view, in a previous judgment, that a party had engaged in fraud. It was not an incautious remark or expression of a tentative opinion. 73 Here, my findings in Ozmen 369 ALR 644 about whatever Mr Ozmen's financial position may have been were based on inferences from documents and evidence in the trial that I heard. That trial occurred in circumstances in which Culture was then in control of Entertainment and Kanki, and that that control was an issue in the Neptune proceeding. I did not understand, and still do not understand, that Culture's control of Entertainment and Kanki at the time of the hearing in the Neptune proceeding to be in dispute in the Culture Map proceeding; see, e.g Ozmen 369 ALR at 690-691 [242]-[248], where Neptune had raised issues about Culture's position. I did not make any findings on that matter the subject of any complaint here. 74 I reject the argument that a fair-minded lay observer might reasonably apprehend that I might not bring an impartial mind to the resolution of the issues in the Culture Map proceeding. To the extent that Culture could otherwise have relied on any such possibility, the time has long passed when they can make such a complaint. In my opinion, Culture has not identified any logical connection between the feared deviation from the course of my deciding the Culture Map proceeding on its legal and factual merits and any suggestion of the possibility of some form of cross-pollination that might allow a fair-minded lay observer reasonably to form the view that I might prejudge whatever conclusion I might arrive at about any of the witnesses' credit or of any party's financial position. 75 However, it may be inferred that, because the Culture Map proceeding involves a loan agreement, it is highly likely that at some point Mr Ozmen or the Ozmen parties needed some money, which Culture was going to provide. To the extent that his or their financial position will be in issue at the trial, it will need to be established at what point that issue arose and what his or their financial position then was, being a subject that I have no views or information about beyond what was in evidence in the Neptune proceeding, which may or may not be evidence in the Culture Map proceeding. Obviously, any of those views or that information will be irrelevant to, and I will disregard, in assessing the evidence tendered at the trial of the Culture Map proceeding.

Conclusion 76 For these reasons, I dismiss the application for recusal with costs. 77 I certify that the preceding seventy-six (76) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

SCHEDULE OF PARTIES NSD 2423 of 2018 Respondents Fourth Respondent: GUNAY KOYUNOGLU

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (11 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (20)

Cited By (1)