R v Watson

IN THE FEDERAL COURT OF AUSTRALIA) ) BANKRUPTCY DISTRICT ) No NP 721 of 1996 ) No NP 722 of 1996 OF THE STATE OF NEW SOUTH WALES ) RE: ERIC ABRAHAM JURY and HOUDA JURY Debtors EX PARTE: WESTPAC BANKING CORPORATION Creditor 22 MAY 1997 REASONS FOR JUDGMENT LOCKHART J. These are two petitions by Westpac Banking Corporation ('Westpac') to sequestrate the estates of Eric Abraham Jury and his wife, Houda Jury ('Mr and Mrs Jury'), being heard together by consent. The acts of bankruptcy relied on in the petition are the failure of Mr and Mrs Jury to comply with the requirements of bankruptcy notices, based on debts said by Westpac to be due by them for substantial sums of money arising from judgment entered by the Supreme Court of New South Wales against them in the Commercial Division of that Court on 21 November 1995. The judgment followed a contested hearing lasting 22 days before Rolfe J. The curial history of this matter is long and complicated, most of which is not relevant for present purposes. Mr and Mrs Jury oppose the petition on the ground that the judgment entered by Rolfe J is alleged to have been obtained as a result of a miscarriage of justice. This assertion of miscarriage of justice is based upon an allegation that there was a reasonable apprehension of bias against Rolfe J because he appeared as one of a number of counsel (he then being Queen's Counsel) on behalf of the Corporate Affairs Commission of New South Wales ('the Commission') in a prosecution of a Mr Whitbread and other persons who were former directors of Cambridge Credit Corporation Limited ('Cambridge Credit'). Cambridge Credit was a large public company which in 1974 was placed in the hands of a receiver. It was a spectacular company crash with large losses of investors' funds. On 19 February 1985 the Attorney-General of New South Wales directed that a prosecution be instituted against certain directors and officers of Cambridge, including Mr Whitbread. The charge was that they conspired together to cheat and defraud members of the public between 1966 and 1974. Informations were laid against Mr Whitbread and others on 4 March 1985. The delay between the appointment of the receiver and the laying of the informations was in excess of ten years. Committal proceedings involving Mr Whitbread and others commenced on 31 May 1985 before Magistrate Gilmore. Counsel for the Commission were Mr Gormly QC, Mr Rolfe QC and two junior counsel. Mr Whitbread appeared for himself. The proceedings were adjourned to 7 November 1985. It appears that they were then adjourned to 10 February 1986. They later concluded on 15 August 1986, having lasted overall, after adjournments, for 12 days. On the third day of the committal proceedings an application was made by all the respondents to Magistrate Gilmore to stay the proceedings. His Worship declined to hear the application after counsel for the Commission submitted that he had no jurisdiction to do so. The respondents, including Mr Whitbread, then filed summonses in the Common Law Division of the Supreme Court seeking a permanent stay of the prosecution on the ground that the delay was such as to deny them the opportunity of a fair trial. The summonses were heard by Maxwell J of the Supreme Court who, after a hearing lasting 19 days commencing in August 1986, delivered judgment on 9 December 1986, granting the permanent stay. An appeal was then brought by the Commission to the New South Wales Court of Appeal from Maxwell J's judgment. It was heard in May 1988 before the Court of Appeal. Judgment was given by the Court of Appeal on 9 August 1988, dismissing the appeal. The history of the prosecution and the stay application is conveniently summarized in the judgment of Clarke JA in Cooke v Purcell, Whitbread & Ors (1988) 14 NSWLR 51, at 72-77 and 82-86. Mr Rolfe QC appeared for the Commission in the appeal to the Court of Appeal of New South Wales. Subsequently, Westpac and Bill Acceptance Corporation Limited ('Bill Acceptance') brought proceedings in the Supreme Court of New South Wales against Mr and Mrs Jury and other defendants. They came on for hearing before Rolfe J on 26 September 1995. Senior and junior counsel appeared for Westpac and Bill Acceptance. Mr Graham QC and two junior counsel appeared for a number of defendants including Mr Jury. Mr White of counsel appeared for Mrs Jury. On the first day of the hearing (26 September 1995) Mr Graham QC drew Rolfe J's attention to the fact (I quote from the transcript): 'That his Honour might have had some involvement formerly with Cambridge Credit Corporation, one of the people involved in that organization being Mr Whitbread who was a witness in this matter.' Mr Graham indicated that although he brought this to his Honour's attention, it did not cause him any concern.' Rolfe J said that his recollection was that he was briefed to appear in some capacity with Mr Gormly QC in the prosecution which reached the point of an application being made before Magistrate Gilmore for a stay of proceedings on the basis of the delay in bringing the prosecution. His Honour said that he thought this was argued by Mr Gormly and that the matter later came on for hearing before Maxwell J who granted a stay and the Court of Appeal upheld his Honour's decision. His Honour said that on 'that short narration' he did not feel embarrassed. A little later during the same day Rolfe J said to counsel: 'I am just wondering about what I said earlier. I would like to make my position clear. I had been briefed by the Corporate Affairs Commission of the proposed prosecution, amongst others, of Mr Whitbread. Mr Gormly was senior counsel. There were some junior counsel. The matter came before Mr Gilmore when an application was made for a stay that was argued before a magistrate and then the Corporate Affairs Commission appealed against that decision and I, on behalf of the Corporate Affairs Commission, appeared as leading counsel before Justice Maxwell who upheld the stay and in the Court of Appeal which upheld Mr Justice Maxwell. That has been my involvement.' Mr Graham then (quoted from the transcript) responded to his Honour in these terms: 'I think the matter that concerned us was if your Honour had held a brief to prosecute Mr Whitbread your Honour may have found some difficulty in dealing with Mr Whitbread in relation to evidence in this case. Our view was understanding that to be case [sic], we were not in the least bit troubled by it and did not want your Honour to be embarrassed half way through the case.' Rolfe J replied: 'Thank you for drawing that to my attention. What I said earlier today remains. I am not in the least bit embarrassed. It is not any part of my function to form any view on what Mr Whitbread may or may not have done. I do not consider I should of my own motion and I certainly would not disqualify myself.' Rolfe J gave judgment on 21 November 1995. The proceedings brought by Westpac and Bill Acceptance against Mr and Mrs Jury and other defendants are rather complicated and involve several claims and cross-claims. The claims included: (1) A claim by Westpac for recovery of moneys advanced to a company, Pallisar, and another company, Logwon. There was a claim against Mr and Mrs Jury based on their having guaranteed those debts. (2) A claim by Bill Acceptance against a company, Dovade, to recover money advanced to Dovade for its takeover of Trinity Properties Limited. There were also claims against the guarantors of that debt. (3) A claim by various companies which had provided security for the debts referred to in (1) and (2) above to restrain the appointment of a receiver. This claim was originally brought in the Equity Division, but later heard by Rolfe J. (4) A cross-claim by Dovade and various other people including Mr Jury, but not Mrs Jury, against Bill Acceptance based on causes of action including negligence, breach of fiduciary duty and otherwise concerning advice given by Bill Acceptance in relation to a takeover made by Dovade of Trinity Properties. That cross-claim also joined Westpac and alleged against it that Bill Acceptance acted as agent for Westpac and therefore Westpac was liable for whatever amount might be recovered against Bill Acceptance. (5) A cross-claim by Mrs Jury for relief under the Contracts Review Act 1980 (NSW). It appears that the claim by Westpac mentioned in (1) above was resolved or compromised and the agreement was recorded in an exhibit (exhibit Y before Rolfe J). Hence, there was no defence to the Westpac claim which then formed the basis for the bankruptcy notice with which this proceeding is concerned. The quantum of the claim by Bill Acceptance referred to in (2) above was also agreed by the relevant parties. That claim has no relevance to these proceedings because Bill Acceptance has not sought to make Mr and Mrs Jury bankrupt. The former Equity Division claim of the companies mentioned in (3) above was dismissed by Rolfe J and there was no appeal from that part of his Honour's judgment. The cross-claim referred to in (4) above was dismissed by Rolfe J. His Honour concluded that the cross-claim was a 'fabrication'. His Honour said in the course of his reasons for judgment that the evidence did not satisfy him that there was any agency as between Bill Acceptance and Westpac and that each company operated independently and made its own decisions. In those circumstances Rolfe J said that he did not consider that any case had been made out against Westpac. His Honour also dismissed the cross-claim brought by Mrs Jury under the Contracts Review Act. Mr and Mrs Jury appealed to the Court of Appeal of New South Wales from Rolfe J's judgment on 19 December 1995. In February 1996 they sought a stay of execution of Rolfe J's orders made on 21 November 1995 (there were other applicants for the stay; but only Mr and Mrs Jury are relevant for present purposes). The stay was opposed. The stay application was heard by Sheller JA who declined to grant a stay of execution. His Honour said in the course of his reasons: 'Bearing in mind the difficult task which any appellant faces in seeking to set aside findings of fact based upon the credibility of witnesses, I am not persuaded that this appeal has any real prospects of success.' Sheller JA also refused to expedite the hearing of the appeal brought to the Court of Appeal. Application was made by the unsuccessful parties to the New South Wales Court of Appeal for a review of Sheller JA's order refusing expedition. It appears that that application was unsuccessful. The appeal to the Court of Appeal has not yet been heard. The question before this Court for determination is whether this is an appropriate case for the Court to go behind the judgment of Rolfe J of 21 November 1995 and entered on 29 November 1995 and inquire whether there was, in truth, a debt due by Mr and Mrs Jury to Westpac. I mentioned earlier the essential ground relied on by Mr and Mrs Jury to support their case that the Court should go behind the judgment, namely, that the judgment was obtained as a result of a miscarriage of justice in that there was a reasonable apprehension of bias or ostensible bias by Rolfe J by reason of his earlier association as counsel for the Commission concerning the prosecution of Mr Whitbread and the application for stay of the committal proceedings which was heard by Maxwell J, and the hearing of the appeal from Maxwell J's decision to the Court of Appeal in 1988. I agree with the submission of counsel for Westpac that, if any miscarriage of justice could have occurred at all, it could not relate to the orders of Rolfe J for payment of moneys by Mr and Mrs Jury to Westpac (what I referred to earlier as claim (1)) which in itself seems to me to be a sufficient answer to the defence. I propose to examine, however, the question of apparent or ostensible bias. Counsel for Westpac submitted that this Court has no power to go behind a judgment of a superior court after a contested hearing. I reject that submission. The Court would not go behind such a judgment lightly; but the jurisdiction and the power of the Court to do so cannot be doubted. Principles relating to disqualification of a judicial officer on the ground of apprehended bias are well established and need not be mentioned in any depth. The governing principle is that apprehended bias may be established if a fair minded observer might entertain apprehension of bias by the judge of prejudgment of the issues or the credibility of a material witness: R v Watson (1976) 136 CLR 248; Livesey v New South Wales Bar Association (1983) 151 CLR 288; Vakauta v Kelly (1989) 167 CLR 568. On 26 September 1995 Rolfe J commenced to hear the case which led to the entry of judgment which is the foundation of the present bankruptcy proceedings. The committal proceedings in which Rolfe J had appeared as counsel took place approximately ten years earlier, although his Honour did appear (as mentioned earlier) as counsel before Maxwell J and the Court of Appeal in relation to the stay application. The hearing before the Court of Appeal concluding on 19 May 1988, some seven years or so before the proceedings in the Supreme Court with which this case is directly concerned. Rolfe J was not involved in the decision to prosecute Mr Whitbread or the other defendants in the earlier proceedings. Those earlier proceedings were not, of course, against Mr and Mrs Jury. The only relevant person involved was Mr Whitbread, but I accept that he was an important witness in Mr and Mrs Jury's case in the proceeding before Rolfe J. I have examined the material before the Court and so far as I can see the involvement of Mr Rolfe QC as he then was in the earlier proceedings on which reliance was placed by Mr and Mrs Jury was the involvement one would expect to find of senior counsel for a party. I am not persuaded that fairminded people might reasonably apprehend or suspect that Rolfe J had prejudged the case. The evidence does not establish that Rolfe J's earlier involvement as counsel in the Whitbred proceedings would lead the fairminded observer to think that Rolfe J might not resolve the case before him in a fair way and with an unprejudiced mind. This is not a case where this Court should go behind the judgment of Rolfe J: Wren v Mahony (1972) 126 CLR 212. I do not find it necessary therefore to deal with the argument advanced by counsel for Westpac that there had been a waiver by senior counsel for Mr Jury on the first day of the 22 day hearing before Rolfe J. Nor am I persuaded that this Court should await the determination of the appeal in the New South Wales Court of Appeal which as I understand it, has not yet been heard. This Court must decide the matter of ostensible bias for itself on the hearing of the bankruptcy petitions. The formalities that must be established in order to obtain a sequestration order have been established in this matter. There was one small problem, namely, that the creditor's petition records the date of service of the bankruptcy notice on Mr Jury incorrectly as being 15 March 1996 whereas it should be 14 March 1996. Accordingly, the Court grants leave to Westpac to amend paragraph 4 of the petition to sequestrate the estate of Eric Abraham Jury by inserting 14 March 1996 in lieu of 15 March 1996. The Court makes sequestration orders against the estates of Eric Abraham Jury and Houda Jury and orders that the costs of the petitioning creditor (including reserved costs, if any) be taxed and paid in accordance with the Bankruptcy Act 1966. I hereby certify that this and the preceding thirteen (13) pages are a true copy of the reasons for judgment herein of the Honourable Justice Lockhart. Associate Dated: 22 May 1997 Counsel for the Debtors: Mr W Hodgkiss Solicitors for the Debtors: Leary & Co Counsel for the Creditor: Mr J E Marshall Ms E A Cheeseman Solicitors for the Creditor: Clayton Utz Date of Hearing: 11 November 1996 Date of Judgment: 22 May 1997