Royal Guardian Mortgage Management Pty Ltd v Nguyen

Court of Appeal (NSW)|2016-02-10|Before: Basten JA, Ward JA, Adams J

Background

It is convenient at this stage to provide the following further summary of the chronology of events and the content of the various employment contracts.

Establishment of RGMC and RGMM

Mr Tomazin established RGMC in 1998 and RGMM in 2000. He was a director of RGMM and held approximately half the shares in that company. His business partners were Mr Pusic and Mr Pondelak, who each held shares in the company.

Commencement of Ms Nguyen's employment with RGMM

Prior to her employment with RGMM, Ms Nguyen was employed as Credit Manager at MortgagePort, a mortgage manager for residential home loans funded by a particular lender ([20] of her first affidavit made 29 October 2012). Ms Nguyen's evidence ([27] of that affidavit) was that Mr Tomazin approached her in late 2000 and informed her that he wanted her to run a new company he had set up; that it would deal only with brokers; and that his aim was to increase the overall volume of the group's business.
The significance of increased business volume, as noted by the primary judge at [4], was that the greater the value of loans referred by an originator or introducing broker (the "book"), the lower the wholesale cost of the loans and hence the higher the "margin" available to the mortgage manager on the final interest rate to the borrower. One advantage of a higher margin was that it enabled a reduced interest rate to be offered to the borrower and hence enabled the mortgage originator or manager to compete more effectively for business. Ms Nguyen's evidence was that Mr Tomazin told her in December 2000 that his aim with RGMM as a wholesale company was to "increase the overall business volume" so that he could get a lower delivery rate from the funders and that, in this way, RGMC (an unrelated company but one that he controlled and in which he held a large shareholding) would be more profitable.
By letter dated 18 December 2000, on the letterhead of RGMC, Mr Tomazin wrote to Ms Nguyen offering her a senior management position "within our firm" at a salary of $75,000, plus superannuation, "with a generous commission structure for any directly referred successful Applicants". The description "our firm" was somewhat misleading since Ms Nguyen's employment contract, headed "Executive Employment Agreement" and dated 12 March 2001 was not with RGMC but, rather, with RGMM. The explanation for this seems to be that Mr Tomazin did not generally distinguish between the companies he saw as part of the so-called "Royal Guardian" group. For present purposes nothing turns on this discrepancy.

Primary judgment

His Honour's ultimate conclusion (stated at [185]) was that, on the "crucial" issues in the case, he accepted the respondents' evidence rather than that of Mr Tomazin and that tendered on behalf of RGMM. His Honour's reason for that conclusion is encapsulated in his statement that, overall, he had formed the view that the respondents' account of their relationship with Mr Tomazin from its commencement to its conclusion "made more sense and integrated the objective elements more coherently and persuasively than Mr Tomazin's [account]" ([185]).
His Honour attached particular significance in this regard to the circumstances surrounding the "so-called" Bethian management agreement and "the Dibelle accreditation". His Honour concluded that the explanations of the respondents, and Ms Nguyen in particular (of whom he said he had formed a "generally favourable view" - [193]), should be accepted ([185]).
Having thus summarised his overall conclusion, his Honour then set out (from [186]) in more detail the reasoning that underpinned that conclusion.
In essence, his Honour's reasoning process was that: having regard to the credit findings made as to the respondents (particularly his favourable view of Ms Nguyen but also his favourable view of Mrs Faina Stolyar) and to the accounting treatment of the payments by RGMM to Bethian, he accepted the respondents' evidence as to the factual issues in dispute in relation both to the existence of the Bethian management agreement and to the Dibelle entities' accreditation agreements. On the basis of those findings (and expressly disavowing reliance on Mr Tomazin's demeanour), his Honour concluded that Mr Tomazin was a dishonest witness whose evidence on those matters should be rejected ([190]). His Honour also said that the adverse view he had formed of Mr Tomazin's credit on those issues necessarily impinged on the other matters in issue.
Thus, it was to a large extent because his Honour believed the respondents' evidence as to the existence of the Bethian management agreement and Dibelle accreditation agreements that he concluded that Mr Tomazin's evidence was dishonest (and, when he later came to consider the issue of costs, that RGMM had knowingly commenced proceedings that were without foundation).

Bethian management agreement

Of the two matters to which his Honour attached particular significance in reaching his overall conclusion, his Honour addressed first the Bethian management agreement.
His Honour considered that there were a number of matters which invited scepticism in relation to the respondents' claim in this regard: namely, the way in which the existence of the Bethian management agreement had been disclosed by Ms Nguyen; the fact that the respondents had not insisted on documentation of the claimed outstanding bonus payments; and the failure of the respondents to produce any of the crucial documents. As to the last, his Honour expressed the view that the non-production of the Bethian accreditation agreement, the Bethian management agreement and the Dibelle accreditation agreements "strongly suggested" that they never existed ([186]).
On the other hand, his Honour considered that the accounting treatment of the payments to Bethian gave significant support to Ms Nguyen's account of events.
His Honour (from [188]-[194]) made findings as to the credit of the main witnesses from each side. As to the respondents, his Honour said that the differing accounts they gave of important conversations or interactions with Mr Tomazin formed a significant part of his assessment of their veracity ([188]). His Honour considered that it was unlikely that there would have been such differences had the respondents' accounts been fabricated. As to Mr Tomazin, as already noted his Honour concluded that "because of findings … made as to certain issues", particularly Dibelle and Mrs Faina Stolyar, Mr Tomazin had not stated the truth about those issues ([190]).
At [193], his Honour concluded, on the balance of probabilities, that the Bethian management agreement (providing for the payments described by Ms Nguyen) had been entered into and that the payments made to Bethian were made under its terms as a fee distinct from the bonuses to which Ms Nguyen and Mr Stolyar were entitled. His Honour said that he did so "largely for the reasons … already mentioned when dealing with the surrounding facts".
His Honour then said that his conclusion in this regard was influenced by two considerations.
First, the generally favourable view his Honour had formed of Ms Nguyen as a witness on the one hand and the adverse view his Honour had formed of Mr Tomazin's honesty on the other. Referring in particular to the Dibelle accreditation issue, his Honour said that he was not prepared to accept the truthfulness of Mr Tomazin's evidence as to any matter of significance except where it was supported by independent evidence ([193]).
Second, his Honour invoked the principle articulated in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 arising from the failure of RGMM to adduce evidence which his Honour expected would have been available if the case that it propounded on the Bethian management/bonus issue were as Mr Tomazin had asserted. His Honour nevertheless added that, even if it were not for this second matter, he would have been satisfied that the Bethian management agreement existed and that Mr Tomazin had not told the truth about it. Hence the drawing of an adverse inference on this issue was not determinative of the question as to the existence of the Bethian management agreement. That conclusion thus squarely rested on the significance of the reference in the RGMM accounts to "commission" in relation to Bethian and his Honour's adverse view of Mr Tomazin's honesty (which in turn was based on the findings made as to the Dibelle accreditation agreement and his Honour's acceptance of Mrs Faina Stolyar's account in relation thereto).

Dibelle accreditation agreements

As to the alleged accreditation agreement with Dibelle Financial Services, his Honour was satisfied (on the balance of probabilities to the Briginshaw standard (Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 361)) that such an agreement was executed. He rejected Mr Tomazin's evidence (which he said was dishonest) as to both the loan application in 2002 and the accreditation agreement with Dibelle Financial Services ([200]).
As to the position before the Dibelle Financial Services accreditation agreement (when Ms Chahine was registered as the holder of the Dibelle Finance business name), while his Honour considered the existence of such an accreditation agreement not directly relevant to the pleaded cases he noted that the conflicting evidence raised issues about credibility and said that he was minded to accept the respondents' evidence rather than Mr Tomazin's on this issue as the "more probably truthful" ([202]).

Conclusions reached by his Honour

His Honour did not directly address the question whether the respondents' conduct, as complained of by RGMM, was a breach of their respective employment contracts. His Honour considered that it was not necessary to consider that issue, given that he was satisfied that Mr Tomazin was at all times "well aware" not only that commissions were being paid to Dibelle but also that it was the respondents' vehicle for obtaining brokers' commissions in respect of loans sought by individual borrowers ([195]).
As to the cross-claim, his Honour upheld (at [204]) the Limitation Act defence as being unanswerable and as limiting the claim for bonuses due and profit share to sums due on and from 29 April 2004. (There is no challenge to this conclusion.)
His Honour concluded (at [205]-[206]) that the variation to Ms Nguyen's employment agreement on 1 November 2002 (repeated in the 17 March 2003 variation) was effective conditionally to increase her salary and entitle her to "profit share for any profits over $210,000 per annum as from 1 July 2002" with a set off for losses against future profits.
His Honour construed cl 6.3 of Ms Nguyen's amended employment contract as meaning that if the employment ended before the end of the relevant financial year, Ms Nguyen was entitled to a 25% share of the profit attributable to the period of employment, provided that it exceeded the proportion of $210,000 attributable to that period ([207]). His Honour considered that this construction would make sense also because the business was, broadly speaking, steady and exhibited little volatility.
At [208] his Honour concluded that the effect of the variation was that, if RGMM made a profit of $210,000 (disregarding directors' fees), Ms Nguyen would be paid 25% of the profit after tax, disregarding the payment of "rent" to RGMC but counting all other "conventional" outgoings, including the directors' fees. At [209] his Honour held that Ms Nguyen's profit share was to be calculated on the basis of those amendments.
As to Mr Stolyar, his Honour concluded that, although he continued to refer loans to RGMM (or RMM) after his resignation on 16 June 2005, he was not otherwise employed by RGMM. His Honour nevertheless said (at [210]): … Given the history to which I have referred and the objective facts, it seems to me that the inference that Mr Stolyar was entitled to payment in respect of the loans he continued to refer to RGMM is inescapable. (Payment for the referrals to RMM is not within the scope of this litigation.) The likely inference is that the basis for payment was that to which he had hitherto been entitled, namely 0.25 percent of those loans which settled.
His Honour proceeded to give judgment for the respondents on their cross-claim and against RGMM on its claim. His Honour stood over the question of costs to be dealt with after further submissions.

Costs judgment

In a separate judgment published on 26 September 2014 (Royal Guardian Mortgage Management Pty Limited v Nguyen (No 2) [2014] NSWSC 1327), his Honour dealt with the question of costs on the papers. His Honour there identified the relevant finding that he had made as being that: … Mr Tomazin's denials of the existence of the accreditation agreements were untrue to his knowledge, and that he knew and had consented to the arrangements by which the commission was paid to Dibelle. ([6])
His Honour went on to say that it followed from the above finding that the commissions paid by RGMM (to Dibelle) were not extracted in breach of the respective employment contracts. His Honour concluded that, therefore, the statement of claim "did not have an honest basis" and that RGMM, through Mr Tomazin, knew that to be the case ([6]).
His Honour also concluded that there was no proper basis for defending the cross-claim in respect of bonuses or in respect of Ms Nguyen's claimed profit share ([7]). His Honour stated that he had not found that Mr Tomazin's evidence on the issue as to the existence of the Bethian management agreement was dishonest (though I interpose to note that that would seem to have been the effect of what was said in the last sentence of [193] in the principal judgment). However, his Honour then said he considered that it followed, from the finding that the Bethian management agreement existed (and that Mr Tomazin had executed it), that in the absence of a reasonable possibility that his evidence of denial might be a failure of recollection or confusion "or some such explanation" then his evidence was dishonest ([7]). His Honour proceeded so to find, being of the view that a failure of recollection was not "as a matter of reality" an available explanation for Mr Tomazin's evidence. His Honour thus found that there was no proper basis for defending the cross-claim in respect of bonuses.
His Honour further found that, in circumstances where RGMM's case on the profit share claim relied on Ms Nguyen having been in breach of her contract of employment for the conduct alleged against her in the statement of claim, the defence against this aspect of her cross-claim also had no honest basis ([7]).
His Honour concluded that the respondents must be entitled to indemnity costs, RGMM "knowing full well that it had agreed to the arrangement, the non-existence of which was fundamental to its claim" ([9]). His Honour ordered costs on that basis from 24 March 2011, being the date on which an initial Calderbank offer was made by the respondents (that offer of settlement having been rejected by RGMM). (It seems his Honour would have been inclined to order indemnity costs from an earlier time but did not do so as this had not been sought by the respondents.)

Application for leave to adduce further evidence

RGMM's application to adduce further evidence can be dealt with relatively shortly. It was not opposed by the respondents. The evidence comprised the affidavit of Senior Counsel who had appeared for RGMM at the hearing (Mr MW Young SC), as well as certain email correspondence obtained on subpoenas issued to Mr McClintock SC and the lawyers acting for the primary judge in the defamation proceedings, respectively.
In his affidavit, Mr Young deposed to a conversation with the primary judge on the morning of the first day of the hearing (in which his Honour referred to personal defamation proceedings to which he was a party) and to his Honour's request to have a private conversation with Mr McClintock on a "private matter unrelated to the hearing", to which Mr Young said there was no opposition. He also deposed to a conversation between the primary judge and the parties' legal representatives in the corridor after judgment was delivered in which his Honour referred to the earlier conversation in chambers relating to the defamation proceedings and said words to the effect that his Honour "now" intended to brief Mr McClintock in those defamation proceedings.
The documentary evidence obtained on subpoenas served on Mr McClintock and his instructing solicitors, respectively, was:

an email chain dated 21-23 May 2014 between the primary judge's associate and Mr McClintock, going to the listing of the matter for judgment and his Honour's request that Senior Counsel attend on that occasion (1(d) of the amended notice of motion);
an email chain dated 14-27 May 2014 between the primary judge and the solicitor acting for him in the defamation proceedings, Mr Patrick George, in which reference is made to his Honour's understanding that Mr McClintock might be holding available the date for a mediation of the defamation proceedings dispute (1(e) of the amended notice of motion); and
a further email dated 4 June 2014 from Mr George to Mr McClintock forwarding material in relation to the defamation proceedings (1(f) of the amended notice of motion).

Leave to adduce the further evidence should be granted. This was evidence that was either not of its very nature in existence at the time of the hearing (namely, the evidence as to the conversation following delivery of judgment and of the potential "holding" by Mr McClintock of the date for mediation in the defamation proceedings, as well as the making of the request that Senior Counsel attend when judgment was delivered) or was evidence the significance (or potential significance) of which could only reasonably be appreciated after the judgment and as a result of the conversation with Counsel outside court (namely the evidence as to the private conversation between Counsel and the primary judge on the first day of the hearing as to the existence of personal defamation proceedings).
For the reasons that I set out in due course, however, this evidence does not either alone or in context with the complaint of procedural unfairness lead to a conclusion that there was a reasonable apprehension of bias on the part of the primary judge.

Appeal

The appeal grounds fall into two groups: first, the complaints as to procedural unfairness and apprehended bias (grounds 1 and 2) and, second, the complaints as to errors of law and challenges to the factual findings (grounds 3-22).

Grounds 1 & 2 - Procedural unfairness/apprehended bias

Grounds 1 and 2 of the notice of appeal are as follows: 1 His Honour failed to exercise procedural fairness, and the trial miscarried, for the following reasons: a. frequent interruption of cross-examination by Senior Counsel for the Respondent (Defendant) of Mr Tomazin (a witness for the Plaintiff). b. cross-examination Mr Tomazin [sic] at length and leading evidence. c. argumentative behaviour towards Mr Tomazin during cross-examination. d. frequent interruption of cross-examination by Senior Counsel for the Appellant (Plaintiff) of Ms Nguyen (a witness for the Defendant). e. The intention of the trial judge to engage senior counsel for the respondents as his counsel in his personal defamation action, which intention was formed during the trial or during the period in which judgment was reserved, and was only disclosed to senior counsel for the appellant after judgment had been delivered. 2 The trial miscarried in that the conduct set out in paragraph 1 above, taken together, gave rise to an apprehension of bias. Although counsel for the plaintiff did not object in the course of the trial, no waiver operates against the plaintiff because the impression of bias at trial is to be placed in the context of the serious adverse credit findings made against the plaintiff's principal witness, and in the context of the trial judges [sic] intention referred to in e above.
Although there is a degree of overlap in respect of these grounds, they are separate grounds of appeal and should be dealt with as such.

Ground 1 - Failure to exercise procedural fairness

In essence, RGMM's complaint as to a denial of procedural fairness is that there was excessive judicial intervention in the course of the hearing. In particular, though not exclusively, RGMM complains of the primary judge's conduct during the course of Mr Tomazin's cross-examination.
Although RGMM also contends that this conduct created an apprehension of bias and relies (at ground 1(e)) on the inference that his Honour found an intention at some point from the start of the trial to retain Mr McClintock as his own barrister, ground 1 is not in terms put as a complaint of apprehended bias. In other words, whether or not the nature or level of judicial intervention is found to have given rise to a reasonable apprehension of bias, RGMM argues, as I understand it, that the hearing miscarried due to a denial of procedural fairness arising from the primary judge's intervention in the course of the hearing.

Legal principles

Before turning to a consideration of the transcript, it is convenient to refer to various of the cases in which the issue of excessive judicial intervention has been the subject of consideration.
The starting point is to note the respective roles of judge and counsel as discussed in the English Court of Appeal some half a century or so ago. In Yuill v Yuill [1945] P 15; [1945] 1 All ER 183 Lord Greene MR said (at 20): … A judge who observes the demeanour of the witnesses while they are being examined by counsel has from his detached position a much more favourable opportunity of forming a just appreciation than a judge who himself conducts the examination. If he takes the latter course he, so to speak, descends into the arena and is liable to have his vision clouded by the dust of the conflict. Unconsciously he deprives himself of the advantage of calm and dispassionate observation. It is further to be remarked, as everyone who has had experience of these matters knows, that the demeanour of a witness is apt to be very different when he is being questioned by the judge from what it is when he is being questioned by counsel, particularly when the judge's examination is, as it was in the present case, prolonged and covers practically the whole of the crucial matters which are in issue. (my emphasis)
Some decade or so later, in Jones v National Coal Board [1957] 2 QB 55 at 63-64, Denning LJ said: In the system of trial which we have evolved in this country, the judge sits to hear and determine the issues raised by the parties, not to conduct an investigation or examination on behalf of society at large … So also it is for the advocates, each in his turn, to examine the witnesses, and not for the judge to take it on himself lest by so doing he appear to favour one side or the other: … And it is for the advocate to state his case as fairly and strongly as he can, without undue interruption, lest the sequence of his argument be lost … The judge's part … is to hearken to the evidence, only himself asking questions of witnesses when it is necessary to clear up any point that has been overlooked or left obscure; to see that the advocates behave themselves seemly and keep to the rules laid down by law; to exclude irrelevancies and discourage repetition; to make sure by wise intervention that he follows the points that the advocates are making and can assess their worth; and at the end to make up his mind where the truth lies. If he goes beyond this, he drops the mantle of a judge and assumes the robe of an advocate; and the change does not become him well. ... (my emphasis)
In Galea v Galea (1990) 19 NSWLR 263 the issue arose in the context of a complaint as to the judge's questioning of the party against whom judgment was later given. In that case, an application for disqualification of the judge had been made and rejected at the hearing. Kirby A-CJ (with whom Meagher JA agreed) relevantly summarised the guidelines in complaints of excessive judicial interference as follows (at 281-282): 1. The test to be applied is whether the excessive judicial questioning or pejorative comments have created a real danger that the trial was unfair. If so, the judgment must be set aside: see E H Cochrane Ltd v Ministry of Transport [1987] 1 NZLR 146. 2. A distinction is drawn between the limits of questioning or comments by a judge when sitting with a jury and when sitting alone in a civil trial. Although there is no relevant distinction, in principle, between the judicial obligation to ensure a fair trial whatever the constitution of the court, greater latitude in questioning and comment will be accepted where a judge is sitting alone. This is because it is conventionally inferred that a trained judicial officer, who has to find the facts himself or herself, will be more readily able to correct and allow for preliminary opinions formed before the final decision is reached: see R v Matthews (1983) 78 Cr App R 23; E H Cochrane C Ltd v Ministry of Transport. 3. Where a complaint is made of excessive questioning or inappropriate comment, the appellate court must consider whether such interventions indicate that a fair trial has been denied to a litigant because the judge has closed his or her mind to further persuasion, moved into counsel's shoes and "into the perils of self-persuasion": see Sir Robert Megarry, "Temptations of the Bench" (1978) 16 Alta L Rev 406 at 409; see also U Gautier, "Judicial Discretion to Intervene in the Course of the Trial" (1980) 23 Crim LQ 88 at 95-96 and cases there cited. 4. The decision on whether the point of unfairness has been reached must be made in the context of the whole trial and in the light of the number, length, terms and circumstances of the interventions. It is important to draw a distinction between intervention which suggests that an opinion has been finally reached which could not be altered by further evidence or argument and one which is provisional, put forward to test the evidence and to invite further persuasion: see In the Marriage of Lonard (1976) 26 FLR 1 at 10-11; 11 ALR 618 at 626; see discussion [1976] ACLD DT 630; cf Ex parte Prentice; Re Hornby (1969) 90 WN (Pt 1) (NSW) 427; [1970] 1 NSWR 654. 5. It is also relevant to consider the point at which the judicial interventions complained of occur. A vigorous interruption early in the trial or in the examination of a witness may be less readily excused than one at a later stage where it is designed for the legitimate object referred to in Jones, namely of permitting the judge to better comprehend the issues and to weigh the evidence of the witness concerned. By the same token, the judge does not know what is in counsel's brief and the strength of cross-examination may be destroyed if a judge, in a desire to get to what seems crucial, at any stage prematurely intervenes by putting questions: see Yuill (at 185) and Gautier (at 117). 6. The general rules for conduct of a trial and the general expression of the respective functions of judge and advocate do not change. But there is no unchanging formulation of them. Thus, even since Jones and Tousek, at least in Australia, in this jurisdiction and in civil trials, it has become more common for judges to take an active part in the conduct of cases than was hitherto conventional. In part, this change is a response to the growth of litigation and the greater pressure of court lists. In part, it reflects an increase in specialisation of the judiciary and in the legal profession. In part, it arises from a growing appreciation that a silent judge may sometimes occasion an injustice by failing to reveal opinions which the party affected then has no opportunity to correct or modify. In part, it is simply a reflection of the heightened willingness of judges to take greater control of proceedings for the avoidance of the injustices that can sometimes occur from undue delay or unnecessary prolongation of trials deriving in part from new and different arrangements for legal aid. The conduct of criminal trials, particularly with a jury, remains subject to different and more stringent requirements: see Whitehorn v The Queen (1983) 152 CLR 657 discussed in R v R (1989) 18 NSWLR 74 at 84F per Gleeson CJ.
His Honour had earlier said (at 278), in a passage to which the respondents drew attention, that: … the test for the appearance of impartiality is not one applied only at the outset of proceedings or in respect of preconceptions. From first to last, from beginning to end, the appearance of an impartial and unprejudiced mind on the part of a judicial officer is of the essence of the system of justice. If at any point there is a loss, in fact or appearance, of that impartiality the trial will thereafter miscarry. The litigant who can establish such a miscarriage has not had a trial according to law. Subject to other arguments, for example, as to waiver, that litigant is entitled to a re-trial. (my emphasis)
The principles articulated in Galea were considered more recently in the Full Court of the Supreme Court of South Australia in R v T, WA [2014] SASCFC 3; (2014) 118 SASR 382 by Kourakis CJ. His Honour, in a case involving intervention by a judge sitting without a jury in a criminal trial, identified three basic grounds on which excessive judicial intervention would give rise to a miscarriage of the trial, those being (see [38]): (i) the questioning unfairly undermines the proper presentation of a party's case (the disruption ground); (ii) the questioning gives an appearance of bias (the bias ground); and (iii) the questioning is such an egregious departure from the role of a judge presiding over an adversarial trial that it unduly compromises the judge's advantage in objectively evaluating the evidence from a detached distance (the dust of conflict ground).
His Honour phrased the "dust of conflict ground" in terms of compromising the capacity of the judge to adjudicate on the basis that it could only ever be a matter of speculation for an appellate court as to whether a judicial officer's vision was in fact "clouded by the dust of conflict". His Honour said (at [39]): … If the appeal court, on an appeal by way of rehearing, concludes that a judge's findings were wrong in fact on the evidence, it may correct them without relying on the judge's excessive judicial intervention. However, in those cases in which the facts, as found, were open to the trial judge, particularly given the judge's advantage in assessing the credibility of the witnesses, it is impossible for an appeal court to say whether or not the judge's finding in fact proceeded from a clouded, or clear headed, evaluation of the evidence. Moreover, because this ground, in effect, alleges an error of law which will generally result in a retrial irrespective of the appeal court's view of the weight of the evidence, it is better based on an objective standard measured by an assessment of the degree to which the departure from a judge's traditional role compromises the judicial capacity to objectively evaluate the evidence. (my emphasis)
At [40], Kourakis CJ acknowledged that many interventions will attract a consideration of both the bias and dust of conflict grounds but accepted that there would be some interventions which, even though they did not suggest pre-judgment, nevertheless showed that the judicial officer had lost the advantage of judicial detachment which he or she would otherwise have enjoyed as a judge adhering to the common law adversarial method of trial.
In this Court, the issue of judicial intervention was considered in Ellis v R [2015] NSWCCA 262. There, the Court (Bathurst CJ; R A Hulme and Garling JJ) noted the dangers resulting from excessive intrusion by a trial judge in adversarial proceedings as including the inability of a judge who has "descended into the arena" properly to assess the demeanour of a witness and the possibility of creating the impression of pre-judgment. The Court emphasised that the ultimate question is always whether the intervention was unjustifiable and resulted in a miscarriage of justice.
Relevantly, in Ellis the Court said (at [65]): Although a number of these decisions seem to be based on the proposition that the conduct of the judge founded a reasonable apprehension of bias, that is not necessarily the case. A miscarriage of justice will occur in circumstances where the conduct of the judge prevents a party from properly presenting his or her case: Jones v National Coal Board. In R v T, WA [2014] SASCFC 3; (2013) 118 SASR 382 at [38], there referring with apparent approval to the judgment of Kourakis CJ referred to above.
Finally, I note that in Michel v The Queen [2009] UKPC 41; [2010] 1 WLR 879, Lord Brown, delivering judgment for the Privy Council, identified the ways in which judicial intervention might lead to a miscarriage of justice as including not only interventions that prevent counsel from properly presenting the case but also interventions that prevent the relevant party (there, the defendant) from doing himself or herself justice in the giving of his or her evidence; as well as interventions that deny the basic right underlying the adversarial system of trial, namely that of having an impartial judge to see fair play in the conduct of the case. Lord Brown noted (at [31]) that "[t]he core principle, that under the adversarial system the judge remains aloof from the fray and neutral during the elicitation of the evidence, applies no less to civil litigation than to criminal trials".
Lord Brown acknowledged that the judicial officer could properly "clear up ambiguities" and "clarify the answers being given" but said (at [34]) that: … he should be seeking to promote the orderly elicitation of the evidence, not needlessly interrupting its flow. He must not cross-examine witnesses, especially not during evidence-in-chief. He must not appear hostile to witnesses, least of all the defendant. He must not belittle or denigrate the defence case. He must not be sarcastic or snide. He must not comment on the evidence while it is being given. And above all he must not make obvious to all his own profound disbelief in the defence being advanced.

Review of the transcript

In the present case, RGMM prepared an appendix of transcript references in respect of instances where it is said there was judicial interference in the cross-examinations of Mr Tomazin and Ms Nguyen, respectively, and in oral submissions went through a number of those instances. I have nevertheless (as urged by Senior Counsel for the respondents) carried out my own review of the whole of the transcript, from which I make the following observations in no particular order.

Timing of the interventions

First, the judicial interventions commenced at a very early stage in the proceedings (a matter of some relevance given the comments made in Galea as to the stage at which the judge intervenes). Indeed the first intervention came before the start of cross-examination of the first witness (T 82), when the General Manager of RGMC, Mr Stariha, having given his name, address and occupation in chief, was asked by his Honour: Where does the "Royal" come from, by the way? Or is it simply an attempt to gain respectability, is it? (my emphasis) a question Mr Stariha was perhaps unsurprisingly not able to answer, he not having been responsible for the establishment of either RGMC or RGMM. (I emphasise the second half of that question - which may have been jocular in tone or may equally have been sarcastic in tone - because it was an issue raised again by his Honour in questions later put to Mr Tomazin (at T 121.4) in what on paper would seem less likely to be a judicial intervention - and because it is an example of a question the answer to which can have had no relevance to any issue in the case unless his Honour was raising it as potentially going to the credit of the witness and nowhere was this suggested to be the case.)
His Honour's first interventions during the other witnesses' evidence also generally commenced at an early stage. In Mr Tomazin's oral evidence the first intervention came in the course of examination in chief while Mr Tomazin was explaining certain corrections to his affidavit (see T 113-119), and was not limited to the asking of questions in clarification of the corrections but included comments by his Honour on answers given by Mr Tomazin to his Honour's questions (T 118.36: "I don't know that that's an answer"; T 119.47: "That's a start"). In Ms Nguyen's evidence, the first intervention came when clarifying the name his Honour should use when addressing her and his Honour commented "Well that's what you use for business is it?" (questions about which no complaint could be or was made) and then continued during examination in chief (see from T 240.6). In Mrs Faina Stolyar's case the first questioning came at the start of her cross-examination (see T 419.49) and included questioning as to whether her husband was responsible for the handling of their finances (T 419). In Mr Stolyar's case, his Honour again asked questions almost from the start of his cross-examination (commencing with what was clearly a question in clarification at T 449).

Extensiveness of the interventions

Second, his Honour's interventions continued at regular intervals throughout the whole of the oral evidence of every witness. On my review of the transcript there are relatively few pages on which judicial intervention of some kind or another in the course of the questioning of witnesses does not appear. That means, of course, that his Honour's questioning was not confined to the witnesses called by RGMM, nor were his interruptions to, and intervention in, counsel's role confined to that of RGMM's Counsel (a fact that strongly points against there being any reasonable apprehension of bias).

Questions in clarification

Third, it is clear that a large number of the interventions were in the nature of clarification, either of questions asked of the witnesses or of answers given by the witnesses, or to remove ambiguity or doubt. I do not propose to give an exhaustive list of the questions I have characterised as being in the nature of clarification. No doubt there might be debate as to the precise characterisation of various of the interventions in that regard.
It is also pertinent to note that one cannot discern from the transcript the tone in which such questions were interposed (so, for example, questions commencing along the lines "no, you are being asked" (such as at T 91.26 in the cross-examination of Mr Stariha) or putting his Honour's own comment on Counsel's question, such as that (T 184.28) to Mr Tomazin "You're not being asked about that. You're merely being asked a chronological fact".
The latter example illustrates a further problem in that it appears to involve a mischaracterisation of the question that Mr Tomazin had been asked - that being not as to a chronological fact as such but as to his awareness that after the arrangements set out in the handwritten agreement of March 2007 Ms Nguyen had started working at MortgagePort.
Leaving aside any complaint about the manner in which such interventions occurred, and perhaps also the complaint as to the volume of the interventions, there can be (and was) no complaint as to questions being put by the primary judge to the witnesses to remove doubt as to their understanding of what was being asked by Counsel or what the witnesses meant by particular answers.

Questions posed to obtain a better understanding of particular matters

Fourth, and not far removed from the above category of questions, are questions which appear to be an attempt by his Honour to clarify in his own mind factual matters of potential relevance to the case he would have to decide. For example, his Honour asked questions of Mr Stariha as to the role of a broker (T 90.32-91.50); as to whether there was any special meaning, in Mr Stariha's business, of the word "profits" (T 95.29); and as to whether accredited brokers were outside brokers (T 103).
Again, it is unlikely that complaint could fairly have been made of questions of that kind. However, in some instances his Honour appears to have opened up lines of enquiry that had not at that stage been raised (and may or may not have been intended to be explored by Counsel for one or other of the parties). Significantly, an example of those instances includes the questioning by his Honour as to the preparation of the RGMM accounts; questioning that ultimately became of little or no importance to his Honour's reasoning on the respondents' bonus claim.
In the course of Mr Tomazin's cross-examination (see T 168.24), after Mr McClintock had taken Mr Tomazin to the description in the accounts of RGMM of payment of $1.19m as commission (not as bonus), his Honour commenced a line of questioning which, with only three questions interposed by Counsel, one of which his Honour in any event interrupted, went for about two and a half pages of transcript (T 168.24 - T 170.44) about the preparation of the RGMM accounts. That line of questioning commenced with the question "[s]o that must have been done by the accountant on the basis of material supplied to him by company? The accountant draws these accounts, does he not, or she?", the answer to which his Honour almost immediately interrupted to pose the further question "[s]o it does so on the basis of materials supplied presumably by your in-house accountant, is that right?", and then, after the witness accepted that proposition, "[s]o the accountant was given to understand that these sums were being paid to Bethian?".
The flavour of this line of questioning can be seen in the transcript (T 1/168.37 - T 1/169-45), in the course of which the primary judge paraphrased (at T 1/39) a question put earlier by Mr McClintock (at T 167.44) as to the legal basis on which Mr Tomazin asserted he had permitted $1.193m in the year ended 2004 and $1.2m in the year 2005 to be paid to Bethian. Mr Tomazin had answered that question by reference to cl 6.3 of the employment contracts. The question put by his Honour (as to why the payments would be characterised as being commission when there was no relationship between the two companies) might be what Mr McClintock's question was driving at; it was not what he had actually asked. Moreover, it had been answered by Mr Tomazin, albeit that Mr McClintock had then pointed to a difficulty with that answer, namely that cl 6.3 was in the employment contracts with the respondents and that there was no employment (or agency) agreement with Bethian and it was not an active company for writing loans or introducing loans.

Interruptions

The above passages also illustrate my fifth observation from the transcript, namely that (and this is accepted by Counsel for the respondents) there were a number of instances when the transcript reflects (by a dash) that his Honour had interrupted the witness (or the cross-examiner). I accept that it may be that there were instances where the dash might indicate that the two were talking over each other and there was one example where the transcript is unclear in that regard (there being no dash -T 148.47 and T 148.50) but can only sensibly be read as being that the two were speaking at once (see T 168-172). Moreover, some of the interruptions, such as that at T 169.50, can only be read as implying or conveying doubt or scepticism on the part of his Honour as to the answer that was being given.

Questions in impermissible form

Sixth, while a number of the questions asked by his Honour could no doubt have been put, without objection, by Counsel, some of his Honour's interventions involved putting a series of questions in one, which would surely have been objectionable had they in fact been put by Counsel, or where the questions involved commentary by his Honour and it was unclear what the witness was being asked. An example of the latter can be seen in the passage already extracted above (at T 170.4) when his Honour expressed his difficulty in thinking that any "significant and responsible and proper accounting practice" would not have made a particular notation in the books.
Examples of multiple questions being put at once can be seen during the cross-examination of Mr Stariha (at T 99.48) about the use of the word "rent" in certain invoices. Following a question in which his Honour asked "[i]f what you say is correct [i.e., that the description of rent encompassed "cost recovery" including elements relating to payment of salaries for administrative staff, rather than simply rent payable for the premises in question] it follows that describing this total amount of rent is misleading", answered by Mr Stariha with "As the one line, yes", his Honour then asked: Q. Why would you use rent? Where did rent come from? Did you pick it out of the air? Why wouldn't you have said expenses or something like that? Why would you use the word "rent" or perhaps was that word not chosen by you? A. I don't think the word was chosen by me. Q. Who was it chosen by? A. Probably the account staff at the time.
Similarly, the questioning by his Honour of Mr Tomazin as to why Mr Tomazin had not recounted in his affidavit what he said he had been told following a review of the files after the respondents left, namely that over 50% of the Dibelle clients had had a pervious loan with the Royal Guardian group, included the following (from T 131.45): Q. But Mr Tomazin, how then could it have slipped your mind when dealing with this very subject matter in paragraph 61, and how could you have characterised it as the extent of Beth and Ian's involvement in Debelle [sic], it didn't have anything to do with Beth and Ian's involvement in Debelle [sic] at all. It had everything to do with the work that was or the clients that were deflected from RGMM to Debelle [sic], which is a completely different matter. Now that's why I have a difficulty with paragraph 61, do you see the point that I make? A. I understand your point sir, yes.
His Honour then went on to press that point in the following eight questions, interrupting Mr Tomazin's answers twice, which led ultimately to the following (at T 133.4-6): Q. You mentioned something which is irrelevant and you omit mentioning the one important thing she told you, that's what I don't understand, you see? A. Well, you are right. I should have. You are right.
It is difficult not to conclude that, by this stage in the questioning from his Honour, Mr Tomazin may have felt driven to the concession he made above. In passing, I note that in the course of the questions posed by his Honour, he three times referred to the omission from Mr Tomazin's affidavit being troubling; asked Mr Tomazin to explain it; referred to the "deflection of the clients" as "the pointy end of this charade" (following Mr Tomazin's statement that the whole Dibelle set up of the business was a "cover up"); and asked Mr Tomazin "perhaps you could concentrate on my question, however" when Mr Tomazin appears to have been answering the very question that he had just been asked.

Debate as to issues in presence of witness

Seventh, there were instances where his Honour engaged in debate or discussion with Counsel as to the relevance of a line of questioning, or as to the nature of the case that was being put, while the witness remained in the witness box in the course of cross-examination (c.f. during the cross-examination of Mr Stolyar in which Mr Young's request that he go outside was acceded to - T 495). So, for example, in the discussion (at T 280/281) as to group certificates, his Honour asked various questions of Mr Young; then (somewhat ironically given the present complaint) said he would bully Mr McClintock equally; and suggested that if the respondents "were not diddling the Tax Commissioner" the group certificates would show that and it would be "game set and I should have thought match". The fact that the discussion took place in front of the witness appears to have elicited an attempt by Ms Nguyen to offer an explanation (T 281.45) at which point his Honour made clear that "she doesn't get to make speeches. She answers questions" (T 282.13) (a response hardly partisan to Ms Nguyen, I note).
See also the further discussion (at T 1/284.27-40) in the course of Ms Nguyen's cross-examination, and in her presence, as to his Honour's intention to take judicial notice that a group certificate must be submitted with a tax return, which led to the statement by his Honour as to his present view being that if Ms Nguyen's income tax returns did not disclose bonuses he would infer that this was because it was not in the group certificate and that it was not in the group certificate because it was not paid (T 285.40), and the lengthy interruption of Ms Nguyen's cross-examination at T 1/310/311, when his Honour pointed out areas that struck him as problematic for Mr Young's case. See also the transcript at T 1/296.17; T 1/296.22 - T 1/297.42; and T 1/395.32.
At one stage, his Honour appears simply to have ignored the intimation by Mr Young in the course of the cross-examination of Ms Nguyen that an explanation as to the relevance of her awareness of the structure of the loans should take place in the absence of the witness (T 1/261.43), though perhaps this was because the request was not pressed.

Unsuccessful attempts by Counsel to resume examination of witness

That leads me to my eighth observation. There were two instances where Mr McClintock appears to have sought (unsuccessfully) to resume the conduct (or control) of the cross-examination, from which an inference can arguably be drawn as to the perception of the cross-examiner as to the judicial interruptions. So, for example, from T 1/145.20-33, there is an exchange arising out of cross-examination by Mr McClintock of Mr Tomazin as to the inconsistencies in his affidavits in relation to his overseas travel in 2005, at which point Mr McClintock seeks to "take this" but asks only two questions before the primary judge then intervenes again at T 1/146.1).

Tone

Ninth, although I readily accept that the tone in which questions are asked or comments are made cannot be discerned when reading a transcript (a comment that applies equally to the submissions made for RGMM as to perceived impatience or testiness on the part of the primary judge and to the submissions made for the respondents to the effect that parts of the transcript should be read as being interventions in a joking way), there are some instances where it is difficult not to conclude that his Honour was being openly sarcastic or dismissive, or at least displaying scepticism or incredulity at answers given by particular witnesses.
So, for example, while the earlier questioning of Mr Stariha as to the reason for the inclusion of the word "Royal" in the company name might well have been done in a jocular fashion, it is difficult to see the following questioning of Mr Tomazin as not involving at least a display of cynicism on the part of the primary judge. At the commencement of Mr Tomazin's cross-examination, his Honour asked the following (T 1/121.14): Q. Where did the name Royal come from? A. Good question. We were looking to get a suitable attractive name and at one stage we were looking at Guardian like Royal the real estate. Q. So you invented it. I mean it's got nothing to do with royalty at all? A. That's correct. Q. Isn't there another large company called Royal Guardian Insurance? A. Yes. Q, Were you trying to associate yourselves with a large corporation of that kind? A. Not really. I think there's a lot of companies using Royal. There's hundreds of them.
While nothing turns on the reason for the choice of company name, the suggestion implicit in the above (that the company name was the product of some attempt by Mr Tomazin to associate the company, presumably misleadingly, with a large corporation such as Royal Guardian Insurance) can surely not have been one that would put a witness at ease.
Other examples of seemingly sarcastic or dismissive comments include his Honour's question of Mr Tomazin at T 1/227.19 ("Do you have any answer to that apparent mystery?"); the comments as to whether an accountant would have simply "tossed a coin" when determining what to call the payments to Bethian into the accounts (to which I have already referred); and in the course of the cross-examination as to Mr Tomazin's travel arrangements, to which I have referred above but which continued on at some length, that an answer given by Mr Tomazin ("It's partially incorrect") meant that he "got halfway here and went back" (T 1/148.41). See also the questioning by his Honour from T 1/206.14-34 and the comment made by his Honour during Mr Tomazin's cross-examination (at T 1/172.43), after Mr McClintock had obviously become concerned that Mr Tomazin was appearing tired: MCCLINTOCK …. Q. Mr Tomazin, are you getting tired? A. Oh, we are going over and over. I have answered the same question over and over. HIS HONOUR: Well, you haven't, actually. Certainly you have been asked the same question again, but the extent to which you have answered it is another matter entirely.

Intervention on both sides

Tenth, as I have already noted, there was interruption by the primary judge of both Counsel in the course of their respective examination and cross-examination of witnesses. To that can be added that his Honour showed no partisanship in the determination of objections to questions and in debating the relevance of particular matters to the issues in the case. See for example at T 1/139.14-34, where his Honour argued with Mr McClintock as to whether it followed from what Mr Stariha had said that something was simply a matter of guesswork (as opposed to an inference) and disallowed the question. Indeed, on one occasion his Honour implicitly castigated Mr McClintock for interfering in Mr Young's cross-examination (see T 1/380.28 where his Honour advised Mr McClintock that if he wanted to give evidence then Mr Young could cross-examine him but "otherwise I suggest you refrain from the bar table"). That is hardly suggestive of bias in favour of the respondents' legal representatives.

"Tag team" effect of interventions

Next, there are large tracts of the transcript - particularly in the cross-examination of Mr Tomazin, though not confined to this - where the questioning reads as though there is a "tag team" between the primary judge and the cross-examiner. For example, I refer to the passages at T 1/124/125, where there were lengthy interruptions in the cross-examination of Mr Tomazin on the topic of why he had not sued RGMM in 2005, when he said he had discovered that the Dibelle referrals included borrowers who had previously done business with RGMM; at T 1/128/133, where there was extensive questioning of Mr Tomazin by his Honour; from T 1/145/152 as to the issue of Mr Tomazin's travel arrangements; from T 1/168/170 as to RGMM's accounts; from T 1/175/177 as to Mr Tomazin's conversation with Ms Nguyen in 2005 in relation to Dibelle; from T 1/184/185 in which his Honour put to Mr Tomazin that he did not "own the clients"; from T 1/186/190 as to the database allegation; from T 1/192/193; T 1/195/197; T 1/198/200 as to the conversation (and reason for the conversation) with Ms Nguyen in 2007; and the questioning by his Honour at T 1/206/207.
It would hardly have been surprising if Mr Tomazin had formed the impression that his Honour was conducting the case (something expressly disavowed by the primary judge at T 1/209.1).

Comparison of interventions as between Mr Tomazin's evidence and that of Ms Nguyen

Finally, as already noted, his Honour's interventions were not limited to the evidence given by RGMM's witnesses. His Honour also intervened in the questioning of each of Ms Nguyen, Mrs Faina Stolyar (though not as much) and Mr Stolyar (again exhibiting features of a tag team approach to the respective cross-examinations - see for example T 1/470).
In the case of Ms Nguyen's cross-examination, as already noted, his Honour intervened at T 1/296/297 to ask questions about the lack of reference to a written Bethian management agreement in her affidavit, and again at T 1/301/302 and 303, his Honour questioned Ms Nguyen directly on that issue. Senior Counsel for the respondents on this appeal argues that the passage of questioning at T 1/201/302 indicates that his Honour did not have a closed mind on the issue (with which I agree) and that his Honour was at least as strongly questioning her as he had done with Mr Tomazin (with which I disagree). It was not, for example, suggested to Ms Nguyen that his Honour was having any difficulty as to her candour, or that things would move on faster if she concentrated on his questions, or that she should answer questions "fair and square", or that she need not be defensive. Rather, what his Honour did, at for example T 1/302.11, was in effect to anticipate what Mr Young would submit at the end of the case and ask Ms Nguyen what her answer was to that.
Similarly, the respondents draw attention to the questioning of Ms Nguyen by his Honour from T 1/328.19 as to the substantial profit sharing between the respondents and Ms Chahine, which it is said involved the putting of propositions not favourable to Ms Nguyen's case. Again however, that questioning was not accompanied by comments that, at least on paper, appear sarcastic or dismissive.
On at least two occasions his Honour interrupted Ms Nguyen's answers to tell her that she had not been asked for an explanation (see T 1/355.22 - "You haven't been asked for an explanation, your answer is no"; T 1/245.50 "No, the answer is "no"; you don't have to give an explanation unless you're asked for one"). His Honour also corrected her when he considered that she was not answering the question Mr Young had asked at T 1/360.32.
On various occasions his Honour clarified or rephrased questions for her (T 1/239.29, interrupting her answer to a question by her own Counsel to pose his own question; at T 1/246 to tell her what he thought Mr Young was really asking her; at T 1/246.35 to step in and rephrase the question; at T 1/247.3 to put the question another way; and at T 1/248.35 stepping in to rephrase a question Ms Nguyen had said was "really long"). At T 1/399.31, the closest that his Honour came to expressing scepticism of Ms Nguyen's account, his Honour said "Had you entirely forgotten that, as at March 2006, about the bonuses that you were owed? Had you forgotten it?" (see also the questioning at T 1/410).
In comparison, therefore, there are instances where the questioning by his Honour of Ms Nguyen seems at least on paper to have been favourably expressed in the sense of interpreting her answers consistent with a sympathetic disposition to her evidence (such as suggesting her evidence was that she felt a sense of betrayal), or assisting in "breaking down" questions for her (T 1/237), which may be contrasted with instances in his Honour's questioning of Mr Tomazin which seems designed to elicit an unfavourable response to RGMM's case. However, that is very much a matter of impression and overall I would not place weight on this factor.

Conclusion as to procedural unfairness

There can be no doubt that, as was accepted by Senior Counsel for the respondents in the context of the exchange between his Honour and Mr McClintock at T 1/139.11 - 33 (see T 88.28), the transcript revealed a predisposition on the part of the primary judge to intervene.
That intervention was not limited to questions going to the clarification of ambiguity or misunderstanding. Nor was it intervention of the kind referred to in Galea, namely intervention at a later stage in the proceedings for the purpose of better comprehension of the issues and the balancing of the evidence of the witness concerned.
While I have no doubt that the primary judge's interventions were on the whole made in order to enable his Honour to obtain a thorough understanding of the matters in issue in the proceedings and the evidence that went both for and against those issues, it is in my respectful opinion unarguable that the primary judge (throughout the whole of the oral evidence adduced by both sides) descended into the arena and adopted the mantle of advocate. The proceeding became, to a significant extent, an inquisitorial hearing.
I do not accept the submission for the respondents to the effect that the level of judicial intervention in this case is explicable by the modern expectation of more active involvement on the part of trial judges in today's era of civil case management. There is a distinction between active case management by a trial judge and the assumption of the role of advocate in the proceedings. Further, while I accept that, in Galea, Kirby A-CJ referred to the growing acceptance of the utility of a judge expressing tentative views as a hearing develops so that counsel might have the opportunity to correct and to persuade before judgment (at [20]), the interventions in the present case went well beyond this.
In my opinion there was procedural unfairness in the present case in that RGMM (as also for that matter were the respondents) was deprived of the opportunity to have a hearing conducted in accordance with the adversarial system where the judge remains "above the fray". In other words, I consider that this is a case falling clearly within Kourakis CJ's third "dust of the conflict" ground.
That said, in Ellis the circumstance in which it was contemplated that procedural unfairness not of itself amounting to apprehended bias could cause a hearing to miscarry (there in the criminal context) was where a party was thereby prevented from properly presenting its case. The respondents, though accepting that there were numerous interventions by his Honour in the course of the hearing and acknowledging (at least implicitly) the undesirability as a general rule of judicial interruption of counsel's cross-examination, nevertheless argue that the judicial intervention by his Honour was not such as to warrant appellate interference (whether or not there was a waiver, which I consider in due course). It is submitted that what was necessary was for RGMM to establish that the judicial questioning or pejorative comments created a real danger that the trial was unfair; that RGMM did not do this; and that RGMM in particular did not identify any specific respect in which the trial could be said to be potentially unfair.
However, RGMM did point to the questioning by his Honour of Mr Tomazin as to the preparation of the RGMM accounts as being a matter critical to his Honour's ultimate conclusion as to the existence of the Bethian management agreement (and hence the cross-claim by the respondents for unpaid bonuses).
RGMM submitted that his Honour's finding (that the description in RGMM's accounts of the payments to Bethian as "commission" was the result of professional consideration based on information which was appropriately verified) was a conclusion based on his Honour's own argumentative hypothesis (at T 1/169-170) that if RGMM's accounts showed a payment as a "commission", such a payment could not have in fact been the payment of a bonus. It submitted that his Honour exhibited an overbearing insistence on that hypothesis during the course of Mr Tomazin's cross-examination (an hypothesis not accepted by Mr Tomazin). RGMM argued that this was an impermissible intervention by his Honour; that the evidence did not form a proper basis for his Honour's conclusion at [78]; and that, even if it could have been the basis for such a conclusion, his Honour did not give consideration to the alternative conclusion based on the evidence, that the money paid to Bethian was the respondents' bonuses. There is much force to that submission. This topic was one that was first raised by his Honour and it was the subject of prolonged questioning by his Honour.
Other topics on which his Honour questioned Mr Tomazin, to which RGMM points in this regard, were: inconsistencies in the evidence of Mr Tomazin as to when he said he had had a conversation with Ms Nguyen in relation to Dibelle (T 1/145-151); the issue of Ms Nguyen 'stealing' RGMM's client database (T 1/188-190); the purpose of Mr Tomazin's telephone call to Ms Nguyen in February 2009 and the omission from his affidavit evidence of the additional reasons Mr Tomazin cited as reasons to call Ms Nguyen in February 2009 (T 1/192; 195); and the treatment of rent charged by RGMC to RGMM, which Mr Tomazin said was for all the services which RGMC provided to RGMM, in the course of which his Honour questioned the honesty of the accounting records (T 1/227-228).
To adopt the words of Lord Brown in Michel, in the present case the primary judge interrupted the flow of cross-examination on numerous occasions; he was at times sarcastic and dismissive of Mr Tomazin's evidence (and to a lesser extent of Mr Stariha's evidence); he commented on the evidence of various of the witnesses while it was being given, and, if not displaying "profound disbelief", on paper he certainly seems at times to have displayed a degree of scepticism of the evidence given by Mr Tomazin.
The respondents nevertheless submit that it can be inferred, from the lack of objection by RGMM's Senior Counsel during the course of cross-examination, that there was not a perception by Counsel of procedural unfairness at the hearing and hence, as I understood the argument, that it should not be concluded that there was procedural unfairness in the manner in which the hearing was conducted. While I accept that the lack of objection may indicate that there was no perception of procedural unfairness at the time on the part of RGMM's Counsel, that alone does not persuade me (having closely reviewed the whole of the transcript) that there was no such unfairness. (I consider the question of waiver below (at [250]-[257]).)
In particular, I see the unfairness to RGMM as lying in the fact that its principal witness was subjected to what amounted to extensive cross-examination by the primary judge. While any adverse effect this may have had on Mr Tomazin's demeanour is not material in light of his Honour's express disavowal of reliance on demeanour when making the findings he did as to credit, the disruption caused to the giving of Mr Tomazin's evidence seems likely to have adversely affected RGMM's ability properly to present its case. For example, it is evident from the transcript that there were occasions on which Mr Tomazin was confused during the process of questioning by both the primary judge and the respondents' Counsel (such as when he asked the judge to "slow down" when being pressed as to inconsistencies in his affidavit evidence - see for example, at T 149.6 - and also during the questioning as to why he had not referred in his affidavit to a particular reason for contacting Ms Nguyen in 2009 - leading to the seemingly resigned answer that his Honour was right and he should have included that matter in his affidavit).
I am therefore driven to conclude that, subject to the question of waiver, there was procedural unfairness in the conduct of the hearing at first instance which would warrant appellate intervention.
RGMM goes further than this, however, and submits that the number and tone of his Honour's interventions, taken cumulatively, would have required him to recuse himself for apprehended bias if such an application had been made. I disagree. Viewed as a whole, I am not satisfied that the test for apprehended bias (which I consider below) was met whether by reference to the level of intervention alone or to the dismissive way in which some of Mr Tomazin's responses were treated. I think it is apparent that, in the main, his Honour's interventions were an attempt to elicit precisely where the truth lay. Taken as a whole, they were not such as to indicate either pre-judgment or a closed mind. That, however, does not address the potential for unfairness given the inquisitorial nature of the intervention.

Ground 2 - Apprehended bias

As to the second ground, namely apprehended bias, there is no dispute between the parties as to the applicable test, that being as stated by the plurality in Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 (at [6]), namely whether "a fair minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide".
RGMM accepts that the test for apprehended bias requires, first, the identification of what it is said might lead the judge not to bring an impartial mind to the relevant question and, second, an assessment of the reasonableness of the asserted logical connection between that matter and the possibility of departure from impartial decision making. It also accepts that the hypothetical observer is taken to be a rational person who is neither complacent nor unduly sensitive or suspicious and to be someone who is aware of the oath or affirmation taken by judges and their judicial obligations more generally.
It is submitted by RGMM, first, that the strong findings that Mr Tomazin was a dishonest witness ([193], [194], [200], [201]), when viewed in the context of his Honour's "cumulative interruptions and argumentative cross-examination of Mr Tomazin", give rise to an apprehension of bias; and that this, appearing as it did in the judgment, cannot be said to have been waived. In other words, it is submitted that adverse findings or comments made in the subsequent judgment created an apprehension of bias when considered together with the judge's conduct at trial. I disagree.
Generally speaking, it is not sufficient to establish bias simply by pointing to adverse findings even where, as here, they are strong adverse credit findings. As Campbell JA observed in Knaggs v Director of Public Prosecutions (NSW) [2007] NSWCA 83; (2007) 170 A Crim R 366 at [95] in the context of a claim of apparent bias: That a judge has not accepted submissions, or has taken a view of evidence in a way that one of the litigants disagrees with or asserts is wrong in principle, is not enough to establish a reasonable apprehension of bias.
Even when considered with the level of judicial intervention that occurred in the present case, this does not create the impression of pre-judgment; indeed quite the reverse. Where his Honour had formed a preliminary view of particular matters he appears to have been at pains to raise that with Counsel in order to give them an opportunity to address the relevant issue(s).
The second matter to which RGMM points is that to which the further evidence sought to be adduced on this application relates. Mr Young has deposed that at the morning tea adjournment on the first day of trial his Honour invited Counsel for the parties to morning tea, during which he referred to defamation proceedings that he had commenced, and that at the conclusion of morning tea the judge informed him that he wished to speak to Senior Counsel for the respondents about a private matter that was unrelated to the proceedings. His Honour did not indicate the subject matter of that proposed conversation (nor was he asked). Mr Young informed his Honour that he did not object to this. The content of the ensuing private conversation has not been disclosed.
When the matter was subsequently listed for judgment, his Honour's associate requested in advance the attendance on that occasion of Senior Counsel for both parties. That might have been explicable if it was likely that contentious issues were anticipated would arise on the delivery of judgment though whether that was the case here is largely speculation, there merely being a passing reference to this in the email sent by the associate to the parties but no transcript to suggest that when judgment was handed down any such issue was raised by the primary judge.
Neither of the respondents' Counsel was able to attend when judgment was delivered. Their solicitor did, as did Mr Young, appearing for RGMM. Mr Young deposed that, after the judgment was handed down, his Honour asked the legal representatives to see him briefly in the corridor behind the Court. His Honour then referred to the defamation matter that had been discussed during the morning tea on the first day of the hearing, and expressed his intention or desire to engage Mr McClintock as his Senior Counsel in the matter now that the judgment had been delivered. His Honour asked Mr Young if he saw any difficulty with that course. Mr Young said that he did not.
RGMM submits that the inference arising from the above is that his Honour had formed an intention at some time in the period from the commencement of the hearing, or while the judgment was reserved, to engage Mr McClintock in his personal defamation proceedings or was giving consideration to the engagement of Senior Counsel.
While I accept that an inference would readily be drawn (from the material on which RGMM relies and, in particular, the belief expressed by his Honour in the email correspondence produced on subpoena to the effect that Mr McClintock may have been "holding" the mediation date available) that at least during part of the time that the judgment was reserved such an intention had been formed, I do not accept that a fair-minded lay observer would infer that his Honour had formed the intention personally to retain Mr McClintock in the matter as at the commencement of the hearing. Nor can the point at which his Honour did so be determined. All that could reasonably be said is that, at least by the time the matter was listed for judgment, his Honour must have had such an intention or at least the possibility of briefing Mr McClintock in mind.
RGMM does not submit that the formation of such an intention, by itself, necessarily gives rise to an apprehension of bias. RGMM points to what was said by Merkel J in Aussie Airlines Pty Limited v Australian Airlines Pty Limited (1996) 65 FCR 215 at 222, namely that: In such cases the question is not whether the mere existence of the association in question was disqualifying but whether its nature and extent in the circumstances of the particular case resulted in the line being crossed. More precisely the line to be crossed in each such case is defined as whether the association is such that a reasonable bystander can say that the adjudicator might not bring an impartial and unprejudiced mind to the resolution of the case. There must be something in the nature or extent of the association which leads that bystander to conclude, whether for friendship, love, money, fear, favour or otherwise, that the adjudicator might be influenced by it. Where the association in question is trivial, remote or indirect the courts might conclude that it is not a disqualifying one.
RGMM further accepts that a failure to disclose an association with a party, legal representative or witness involved in the proceedings does not give rise to an automatic right of disqualification. However, it submits that a failure to disclose may cast evidentiary light on the ultimate question of reasonable apprehension of bias since, in the words used in Aussie Airlines (at 221D-E), it may cause the impression that something was "wrong about it all". It is noted that the Court there said that "[a] failure to disclose no matter how unwitting, can undermine public confidence in the integrity of, and the administration of justice by, the judicial officer or the tribunal concerned".
RGMM submits that the test for apprehended bias is satisfied having regard to: his Honour having apparently formed the intention during the trial or in the period in which judgment was reserved to engage Senior Counsel for the respondents to represent him in his private defamation proceedings or having at least considered so doing; his Honour's conduct of the trial; and the finding by his Honour that Mr Tomazin was a dishonest witness. It submits that a reasonable lay observer might think that the trial judge might not have brought an impartial mind to the resolution of the competing evidence and issues in dispute at the trial. RGMM notes that, unlike the position in Michael Wilson & Partners Limited v Nicholls [2011] HCA 48; (2011) 244 CLR 427, here the primary judge was required to adjudicate on the evidence and to make credit findings on witnesses for the respective parties.
The respondents for their part submit that the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. They again argue that in a modern trial a judge hearing a civil matter without a jury is expected to intervene in proceedings to ensure a just and expeditious trial.
I would accept, for present purposes, that a reasonable fair minded lay observer, having the characteristics referred to above and knowing of Mr McClintock's expertise in defamation matters, might reasonably infer (from the reference to the defamation proceedings at morning tea followed by the request that his Honour speak privately to Mr McClintock on an undisclosed subject unrelated to the proceedings then being heard by his Honour), that the topic of the relevant discussion was the defamation proceedings. Even so it is by no means an obvious inference that the observer would conclude that the discussion at that stage was about retaining Mr McClintock at some later date, particularly when in the morning tea discussion his Honour had identified another barrister who was then retained to act for him in the proceedings. Similarly, I am not persuaded that a fair minded lay observer might reasonably draw such an inference from the fact that in the post-judgment discussion there was a reference back to the topic of the morning tea discussion.
In any event, there is simply no logical connection between his Honour considering the retainer of, and at some point forming an intention to retain, Mr McClintock to act for him in a personal matter and the possibility that his Honour would not conduct and decide the case before him in an impartial manner.
As the respondents argue, there is no reason, for example, to think that the primary judge's interventions might have arisen from a concern that Mr McClintock might not have accepted the brief to appear for his Honour, or that Mr McClintock might have worked any less diligently on the defamation matter but for those interventions. Indeed, not all of the interventions were favourable to Mr McClintock nor were they suggestive of any pre-disposition to find in his clients' favour.
I accept the respondents' submission that a fair minded lay observer, even in light of the primary judge's interventions during the hearing, could not reasonably have apprehended that a relationship or association of the kind here in question might have resulted in any deviation from the impartial resolution of these proceedings.
Ground 2 fails for this reason.

Waiver

The principal submission by the respondents on the first two grounds is that RGMM has waived any right now to object to his Honour's interventions, having been represented by Senior Counsel during the hearing who made no complaint about those matters.
It is accepted by RGMM that no complaint was made at the hearing as to his Honour's interventions in the course of cross-examination; nor was there any application for his Honour to disqualify himself. It is also accepted by RGMM that a failure to complain at trial is usually fatal to a ground of appeal that the trial miscarried because of apprehended bias or an absence of procedural fairness (referring to Vakauta v Kelly [1989] HCA 44; (1989) 167 CLR 568 at 572, 577, 587; Ball v McInerney [2014] NSWCA 331 at [90]).
However, RGMM argues that no question of waiver arises when ostensible bias is apparent in the judgment and submits that, in assessing whether ostensible bias appears in the judgment, it is permissible to evaluate what was said in the judgment in the light of what had been said at the hearing (by reference to what was said in Vakauta v Kelly at 573, 579, 588). As to the issue of apprehended bias (which fails in any event for the reason set out above), RGMM submits that there can be no issue of waiver in this regard since Mr Young only became aware of the issue involving Senior Counsel for the respondents after the delivery of judgment.
The respondents point out that in Vakauta v Kelly the judgment itself referred to the preconceived views held by the primary judge about the witness in question. It is said that the mere fact that in the present case his Honour preferred the evidence of the respondents over that of Mr Tomazin (and made strong adverse credit findings against Mr Tomazin) does not revive an apprehension of bias. The respondents submit that to hold otherwise would unfairly provide RGMM with an opportunity to wait to see whether the outcome of the proceedings was favourable to it before raising an objection the basis of which was already well known to it.
In the present case, the fact that there was no objection at the time of the hearing to the manner and extent of his Honour's interventions may well be explicable having regard to the difficulty of determining at what point the judicial intervention warranted such an objection (though by the time of the comment as to the difference being that of candour (see T 1/195.41 - T 197.10) that point must have been close) or by reference to the understandable disinclination of Counsel to risk putting the judge "off-side" by such an objection or to appear overly protective of a witness. However, a difficulty of that kind points to a forensic decision having been made not to raise the point. Ordinarily, parties are bound by the forensic decisions made in the course of proceedings.
I have had some hesitation as to whether there was a waiver of the right to object to the procedural unfairness constituted by his Honour's level of intervention during the hearing. The respondents argue that so to conclude would allow a party to leave such a point up his or her sleeve until the outcome of the proceedings was known. I have, however, had the benefit of considering Basten JA's reasons for concluding that in the present case there was no waiver (see [30]-[34] above). I agree that, for those reasons, in the present case there was no effective waiver of the complaint as to the unfairness of the trial.
As I have not found any apprehended bias, the question of waiver does not arise in that context. Had it arisen, I would have been of the view that there was no waiver at the stage of the morning tea conversation, since the topic of conversation was not known, and that there could have been no waiver by the time of the discussion after judgment was handed down, since any waiver at that point could only have been of a right of appeal and it is a moot point whether Mr Young would have had ostensible authority to waive a right of appeal at that stage.
Accordingly, I consider that the judgment must be set aside on the ground of procedural unfairness.

Remaining grounds - Errors of law and fact finding

The remaining grounds of appeal raise issues as to a range of matters in respect of which it is contended that the primary judge erred in law or in the process of fact finding: as to the proper construction of the respondents' employment contracts (grounds 3, 4, 6 and 7); as to whether there was an oral variation to the profit sharing arrangement between Ms Nguyen and RGMM (ground 10); as to whether the respondents were in breach of their employment contracts (grounds 8 and 9); as to the findings made in relation to the alleged Bethian management agreement (grounds 11-13) and the alleged Dibelle accreditation agreements (grounds 14-17); and as to the conclusions his Honour reached as to the damages to be awarded to the respondents (grounds 19-22).
In light of the conclusion reached on ground 1, the matter should be remitted for re-trial. In those circumstances, there is a tension between the importance, emphasised by the majority of the High Court in Kuru v State of New South Wales [2008] HCA 26; (2008) 236 CLR 1 (Gleeson CJ, Gummow, Kirby and Hayne JJ at [12]), for an intermediate appellate court to consider whether to deal with all grounds of appeal and not just what is identified as the decisive ground; and the undesirability of this Court expressing views as to the remaining grounds of appeal when those matters will need to be considered afresh on the remittal of the matter to the Common Law Division.
I note that in Kuru it was expressly recognised that there could be no universal rule in this regard and that in that case the question confronting this Court had not been one raising questions of apprehended bias or procedural unfairness such as would result, if successful, in a re-trial at first instance. In the passage extracted by Basten JA (at [10]) from Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55; (2006) 229 CLR 577 Kirby and Crennan JJ expressed the view that if apprehended bias was made out a re-trial would be ordered irrespective of possible findings on other issues, since even if the judge were found to be correct this would not assuage the impression that there was an apprehension of bias.
In the present case, the argument against dealing in this Court with the remaining grounds of appeal in my opinion must prevail because here the substantive issues in dispute between the parties turned in a number of crucial respects (such as the breach of contract claim by RGMM and the cross-claim by the respondents for payment of bonuses/profit shares) on findings of credibility.
Indeed, had I not concluded that there had been no waiver of the complaint as to the procedural unfairness of the trial, I would still have been of the view that the judgment should be set aside and the matter remitted for a re-trial on the basis that the credibility findings on critical issues were not sustainable on the reasoning of the primary judge. Hence I have concluded that, while accepting the desirability in the ordinary case of dealing at intermediate appellate level with all grounds of appeal, this is a case where such a course is not appropriate.
That said, my reasons for the conclusion as to his Honour's credibility findings should be stated and I set them out as follows by reference to the following grounds of appeal which expressly challenge the credibility findings (ground 13, which relates to the conclusion reached as to the existence of the alleged Bethian management agreement, and parts of grounds 14-16 and 18 relating to the alleged Dibelle accreditation agreements and RGMM's knowledge of the Dibelle arrangements).

Ground 13 - The Bethian management agreement

The respondents relied on the existence of the alleged Bethian management agreement in answer to the basis on which RGMM had sought to defend their bonus claim, namely that the bonuses had been paid at the direction of the respondents to Bethian. Ms Nguyen's evidence was that the amounts paid to Bethian were management fees due under a separate agreement and hence did not discharge RGMM's obligation to pay the bonuses.
As noted earlier (see [133]-[136] above), his Honour's conclusion in the respondents' favour on this issue was explained by reference to reasons that his Honour had "already mentioned" when dealing with the surrounding facts ([193]) and influenced by two considerations, the first of which was his generally favourable view of Ms Nguyen's evidence and his adverse view as to Mr Tomazin's honesty.
Ground 13 of the grounds of appeal squarely challenges those credibility findings: 13 To the extent that his Honour's finding as to the existence of the Bethian Management Agreement depend on the credibility of witnesses, his Honour, because of the matters in paragraph 11 above, palpably misused his advantage.
In Baira v RHG Mortgage Corporation Limited [2012] NSWCA 387, Bathurst CJ emphasised (at [173]) the restraints on an appellate court in reviewing findings of a trial judge based on credit and said: Such findings can only be overturned if the appellate court is satisfied that the findings are glaringly improbable or contrary to compelling inferences: Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [28]-[29], or if it can be shown that the judge has palpably misused his advantage or acted on facts which were inconsistent with the evidence or glaringly improbable: Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472 at 479; Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167 at 178-179.
Conscious of those appellate restraints, I have nevertheless concluded (for the reasons I set out at [278]-[285]) below) that his Honour's finding that Mr Tomazin was a dishonest witness was not supported by the evidence and therefore that his Honour's fact finding erred in this regard. Ground 13 is therefore made good.
In Baira, at [175] Bathurst CJ went on to note: However, if it can be shown that in reaching his conclusion the primary judge failed to deal in a satisfactory way with the substantial amount of evidence necessary to be dealt with before the relevant finding against the Iannis could be made, an appellate court on a rehearing is entitled to order a retrial: Fox v Percy supra [104]; State Rail Authority NSW v Earthline Constructions Pty Limited supra at [60], [90], [94]. This is because in such a situation there has not been a determination of the case upon a consideration of the real strength of the body of evidence presented.
In the present case, the primary judge's reasoning as to the dishonesty of Mr Tomazin is unsatisfactory for similar reasons to that which led Basten JA to criticise the not dissimilar reasoning in Baira (see [316]).
Since the finding as to the existence of the Bethian management agreement was based to a large extent on findings influenced, as his Honour made clear they were, by the adverse findings as to Mr Tomazin's dishonesty, I am forced to conclude that this is a case where the primary judge has misused his advantage of seeing and hearing the respective witnesses. Thus even if I had not been of the view that ground 1 was made out and a re-trial was required, I would have concluded that the finding as to the existence of the Bethian management agreement must be set aside and the matter must be remitted for rehearing on the respondents' respective cross-claims.

Grounds 14-16, 18 - Dibelle Finance and Dibelle Financial Services Pty Limited

These grounds (together with ground 18) relate to the findings that formed the basis for the primary judge's conclusion that there was no breach by the respondents of their contractual obligations to RGMM by reason of their involvement in the Dibelle referrals. They are as follows: 14 His Honour: a. erred in finding that the arrangement whereby the respondents received payments from Dibelle Finance and subsequently from Dibelle Financial Services were not a means by the respondents for avoiding the payment of income tax properly payable; and b. erred in rejecting the appellant's submission that such conduct was significant for the credit of each of the respondents; and accordingly c. erred in his assessment of the credit of the respondents. 15 In consequence of his Honour's error referred to in ground 13, his Honour: a. erred in accepting the evidence of Faina Stolyar that she signed the Dibelle Financial Services accreditation agreement in the presence of Mr Tomazin, since although that finding was based in part upon an assessment of the credit of Mrs Stolyar, it was also based significantly on an assessment of the credit of the respondents, which assessment erred in consequence of the matter referred to in ground 13; b. erred in finding that Mr Tomazin was dishonest with regard to the meeting with Faina Stolyar and the execution of the Dibelle Financial Services accreditation agreement; and consequently c. erred in concluding that this finding of dishonesty should be borne in mind when weighing the evidence of Mr Tomazin on other relevant matters. 16 His Honour erred in finding that Mr Tomazin knew of, and implicitly endorsed, the Respondents [sic] use of Dibelle Finance and Dibelle Financial Services as vehicles for the introduction of loans sought by individual borrowers in circumstances where: a. his Honour's finding depended in part upon his assessment of the credit of Mr Tomazin and the respondents, in circumstances where his Honour's assessment was in error, for the reasons referred to in Grounds 13 and 14; b. there was unchallenged evidence that the introductioning [sic] of loans through Dibelle Financial Services and Dibelle Finance and the assessment of viability of those same loans in their employed capacity jeopardised the accreditation of Royal Guardian Mortgage Corporation Pty Ltd which held the lender accreditation for the benefit of the Appellant. c. Dibelle Financial Services was set up in suspicious circumstances leading to an inference of concealment from the Appellant of the formation of that business for the benefit of the Respondents; the creation of the corporate entity was in the name of the Second Respondent's mother's maiden name as the sole director and shareholder. 17 His Honour erred in finding that Dibelle Financial Services Pty Ltd (Dibelle Financial Services) was accredited in circumstances where: a. no Dibelle Financial Services accreditation agreement was tendered at hearing, nor any accreditation agreements for Dibelle Finance and Bethian; b. Dibelle Financial Services did not have professional indemnity insurance which was required for accreditation; c. the Respondents would act as introducers of loans to the Appellant through Dibelle Financial Services would then assess the viability of those loans in their employed capacity, amounting to a conflict of interest, and in circumstances where there was uncontradicted evidence that such conduct would be in contravention of the accreditation criteria with the lenders. 18 His Honour erred in finding that Ms Chahine executed an accreditation agreement on behalf of Dibelle Finance in circumstances where: a. To the extent his Honour's finding was based on his assessment of the credit of the respondents, his honour [sic] erred in such finding, for the reasons referred to in ground 13; b. to the extent his Honour's finding was dependent upon's [sic] assessment of the credit of Mr Tomazin, that assessment was erroneous for the reasons referred to in ground 14; c. Dibelle Financial Services did not have professional indemnity insurance which was required for accreditation; d. the Respondents would act as introducers of loans to the Appellant through Dibelle Financial Services would then assess the viability of those loans in their employed capacity, amounting to a conflict of interest, and in circumstances where there was uncontradicted evidence that such conduct would be in contravention of the accreditation criteria with the lenders. e. no Dibelle Finance accreditation agreement was tendered at hearing, nor any accreditation agreements for Dibelle Financial Services or Bethian.
As noted earlier, the process by which his Honour reached the conclusion that Mr Tomazin was aware of the respondents' connection with the Dibelle entities involved, first, his acceptance of Mrs Faina Stolyar's evidence that she had attended with the respondents when the Dibelle Financial Services accreditation agreement was executed by Mr Tomazin. His Honour considered that this was something about which Mrs Faina Stolyar could not be mistaken and, having considered her to be a truthful and reliable witness, his Honour did not accept she had fabricated her account with the respondents ([196]).
His Honour then said that it followed, from that, that he rejected Mr Tomazin's account. So much can be accepted. RGMM does not challenge his Honour's acceptance of the evidence of Mrs Faina Stolyar. However, this is not (as the respondents submitted) fatal to the challenge made by RGMM to the finding of Mr Tomazin's awareness of the Dibelle arrangement.
His Honour at [197] noted that there were four significant matters that supported Mr Tomazin's denial that the Dibelle entities were accredited but proceeded in effect to explain why those matters could be put aside or did not have sufficient force to lead to the acceptance of that denial (including, as to the third and fourth of those factors, his Honour's acceptance of Ms Nguyen's evidence based at least in part on his view of Ms Nguyen's demeanour). Then, at [198], his Honour took into account matters that he considered were inconsistent with Mr Tomazin having a genuine belief that he had been deceived by the respondents.
His Honour's ultimate conclusion (at [200]) that Mr Tomazin's evidence as to the 2002 loan agreement with Mrs Faina Stolyar and the Dibelle Financial Services accreditation agreement was dishonest was expressed as follows: Considering the evidence as a whole, including those matters pointing in the opposite direction, I am satisfied that the accreditation agreement between Dibelle Financial Services Pty Ltd was executed as the defendants and Faina assert. It follows that I reject the evidence of Mr Tomazin as to this matter. Bearing in mind the gravity of the conclusion, I am actually persuaded on the balance of probabilities (see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 67 ALJR 170; (1992) 110 ALR 449 at [3] per Mason CJ, Brennan, Deane and Gaudron JJ) that Mr Tomazin's evidence as to the loan application and the accreditation agreement was dishonest. (my emphasis)
That conclusion then fortified his Honour in the conclusion that there had been an earlier accreditation agreement when Ms Chahine was introduced to Mr Tomazin, though his Honour emphasised that his conclusion was not dependent on his view of Mr Tomazin as a dishonest witness. It is not, however, clear what informed his Honour's conclusion as to the agreement with Ms Chahine other than the credibility of Mr Tomazin on the one hand and the respondents on the other, since there was nothing in writing in relation to that alleged agreement.
The positive finding that Mr Tomazin was a dishonest witness is troubling. Since his Honour expressly disavowed reliance on demeanour as leading to that conclusion, one would assume this Court should be in as good a position as the primary judge to form a view as to that conclusion.
Ultimately, the difficulty with his Honour's conclusion is that it seems to have been based on nothing more than the fact that his Honour accepted the conflicting version of events given by the respondents and by Mrs Faina Stolyar; and therefore concluded that Mr Tomazin must have lied. The fact that one version of events is seen as more credible does not carry with it the necessary consequence that the person putting forward the less credible version must be lying. There is a difference between the rejection of a person's evidence and a finding that he or she deliberately lied.
The respondents place emphasis on his Honour's acceptance of Mrs Faina Stolyar's credit, which as noted above has not been challenged. However, that evidence relevantly established only the execution of an agreement of which there was no copy before the Court. Even assuming that Mrs Faina Stolyar had given attention at the time to what she was being asked to sign and had recalled it accurately, her evidence does not establish that Mr Tomazin was aware that the respondents themselves (as opposed to Mrs Faina Stolyar, who was the sole shareholder and director and was using her maiden name for the purposes of registration of the company) were associated with the Dibelle entities, in the sense of performing work for the Dibelle entities and receiving substantial benefits from the Dibelle referrals.
The evidentiary basis for his Honour's conclusion that Mr Tomazin's denial that he had met Mrs Faina Stolyar (not accepted by his Honour) was dishonest is not clear. It is not, for example, clear why that denial could not equally have been consistent with a mistaken recollection of events.
The respondents submitted that his Honour's conclusion that the denial was dishonest can be explained by reference to the fact that Mrs Faina Stolyar spoke heavily accented English and was someone who was related to senior employees of Mr Tomazin's company. Apart from the fact that Mrs Faina Stolyar deposed in her affidavit that her ability to speak English was "constrained" there is little to enlighten the Court on that issue. Nevertheless, assuming her to have been an idiosyncratic and memorable witness in his Honour's eyes, that says nothing as to whether she was someone that Mr Tomazin would necessarily have remembered meeting on two occasions some years before he gave evidence.
In the absence of an understanding of the people with whom Mr Tomazin ordinarily dealt on a business basis, or his attitude to or interest in the relatives of his employees generally or with reference to the respondents in particular, it is difficult to see how the preference of one version of events as to the execution of the Dibelle Financial Services accreditation agreement with Mrs Faina Stolyar would lead inexorably to the conclusion that the proponent of the other version was giving knowingly false evidence. That conclusion was not in my opinion supported by the objective evidence, yet it was a large plank in the reasoning that led to the finding that at all relevant times Mr Tomazin was aware that the respondents were obtaining significant benefits through their association with the Dibelle entities (and it also had significant adverse consequences for RGMM in terms of the indemnity costs orders).
Since the findings as to the existence and execution of the Dibelle accreditation agreements (of which there was no documentary evidence) are not of themselves sufficient to support a finding that Mr Tomazin had the requisite awareness that under the Dibelle accreditation arrangements the respondents were receiving substantial benefits, the challenge to the findings as to that aspect of the matter are made good.
In those circumstances the credit-based findings in relation to the Dibelle issue (and hence the Bethian management agreement issue, which turned largely on the Dibelle finding) should be set aside. This is not simply a case where (in the words of Beazley JA, as her Honour then was, in Nominal Defendant v McLennan [2012] NSWCA 148 at [141]) an appellate court thinks that the probabilities of the case are against (or even strongly against) the relevant findings of fact but rather it is where it must, with respect, be concluded that the primary judge "failed to use or has palpably misused his advantage" (see Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472 at 479). That conclusion would have the necessary consequence that the findings as to there being no breach of contract by reference to the respondents' dealings with Dibelle (grounds 8 and 9) would also need to be set aside.

Conclusion

For the reasons set out above the orders made by the primary judge on 24 and 26 September 2014 should be set aside and the matter remitted to the Common Law Division for re-hearing of both the claims by RGMM and the respondents' cross-claims.
Ordinarily, costs of the appeal would follow the event. In their written submissions the respondents sought to reserve argument on the question of costs until after the outcome of the appeal. In circumstances where is nothing to suggest that the ordinary order for costs would not be appropriate, I agree with Basten JA that costs should be ordered in favour of RGMM. If the respondents seek to vary that order it is open to them to apply so to do.

Orders

In the circumstances I propose the following orders: 1. Appeal allowed. 2. Set aside the judgment for the defendants and the orders made on 24 and 26 September 2014 by Adams J. 3. Remit the proceedings to the Common Law Division for re-hearing. 4. Respondents to pay the appellant's costs of the appeal. Costs of the proceedings at first instance to be dealt with by the judge re-hearing the matter in the Common Law Division. 5. The respondents to be given a certificate under the Suitors' Fund Act 1951 (NSW).
EMMETT AJA: This appeal arises out of employment agreements between the Appellant, Royal Guardian Mortgage Management Pty Ltd (RGMM), on the one hand, and each of the Respondents, Beth Nguyen (Ms Nguyen) and Ian Stolyar (Mr Stolyar), on the other. Ms Nguyen was employed as the General Manager of RGMM's mortgage lending business and Mr Stolyar was employed as a senior manager of that business. RGMM commenced proceedings in the Common Law Division of the Supreme Court against Ms Nguyen and Mr Stolyar, claiming damages by reason of alleged breaches of their employment contracts. RGMM claimed that Ms Nguyen and Mr Stolyar acted in breach of their employment contracts by causing referrals of potential borrowers through other parties (the Dibelle referrals), thereby being paid commissions to which they were not entitled.
RGMM claimed that commissions in sums exceeding $2 million were paid in respect of the Dibelle referrals. Ms Nguyen and Mr Stolyar on the other hand, filed a cross claim seeking recovery of damages for alleged failure on the part of RGMM to pay them a share of profits earned by RGMM. Ms Nguyen and Mr Stolyar claimed to be entitled to sums totalling more than $3.6 million in respect of profit shares.
On 24 September 2014, for reasons published on 28 May 2014, a judge of the Common Law Division (the primary judge) directed judgment for Ms Nguyen and Mr Stolyar on the claim made by RGMM. In respect of the cross claim, his Honour directed judgment for Ms Nguyen against RGMM in the sum of $1,930,013.91 and for Mr Stolyar against RGMM in the sum of $971,756.74.
On 27 August 2014, RGMM appealed from the orders by the primary judge. An amended notice of appeal was filed on 13 March 2015. The grounds of appeal relied on by RGMM were, first, that his Honour failed to exercise procedural fairness, such that the trial miscarried in that the conduct of the primary judge gave rise to an apprehension of bias. The other grounds related to findings made and conclusions reached by his Honour in rejecting RGMM's claim and in accepting the claims made by Ms Nguyen and Mr Stolyar.
The complaint of procedural unfairness and miscarriage of justice are based on two matters. The first is the extent to which the primary judge interfered in the conduct of the trial by engaging in cross examination of witnesses, principally the principal witness called on behalf of RGMM. The second matter is that, shortly after giving judgment, the primary judge retained to act for him, in proceedings in which his Honour was personally involved, senior counsel for Ms Nguyen and Mr Stolyar. RGMM contends that an inference should be drawn that his Honour had discussed that possible retainer with senior counsel during the course of the trial.
RGMM's claim against Ms Nguyen and Mr Stolyar is that they placed themselves in a position where their personal interests were in conflict with their duties to RGMM as employees, by reason of their involvement in the Dibelle referrals. Their principal answer to the claim was that their arrangements were known to and were approved by RGMM. His Honour accepted that answer. The basis for his Honour's conclusion in that regard depends very much on his Honour's assessment of the credit and reliability of the principal witness for RGMM, Mr Anthony Tomazin.
The claim by Ms Nguyen and Mr Stolyar against RGMM depended upon their claim that RGMM entered into a management agreement with Bethian Pty Limited, a company formed by them (Bethian). The existence of such an agreement depended upon the evidence of Ms Nguyen. In two affidavits sworn by her, she did not suggest that such an agreement was in writing. However, in the course of cross examination, she asserted that the management agreement was written. No document was ever produced and the explanation proffered by Ms Nguyen was hardly convincing. Nevertheless, the primary judge accepted that there was such an agreement, although his Honour made no findings as to its terms.
It was common ground that substantial sums were paid to Bethian. RGMM contended that those payments were made in satisfaction of the profit share arrangement sued upon in the cross claims. Ms Nguyen and Mr Stolyar contended that their entitlement to a share in profit was calculated as 0.25% of total amounts lent by lenders as approved by RGMM. They asserted that the amounts payable under the management agreement were 0.25% of the net amounts so lent. In respect of the year ended 30 June 2015, "total settlements" amounted to $32,905,877, whereas "net settlements" amounted to $32,763,977. The difference of $141,900 is insignificant in the total.
Having regard to the somewhat incredible evidence given by Mr Stolyar concerning the existence of a written agreement and the miniscule difference between "total settlements" and "net settlements", I would have been disposed to conclude that Ms Nguyen and Mr Stolyar failed to establish, on the balance of probabilities, that they were entitled to receive a payment of profit share over and above the sums paid by RGMM to Bethian.
I have had the advantage of reading in draft form the proposed reasons of Ward JA. I agree with her Honour's conclusions, for the reasons proposed by her Honour. In particular, I agree with her Honour's conclusions that, in the circumstances, there was a denial of procedural fairness, as a consequence of which the orders made by the primary judge must be set aside.
It is therefore not necessary to deal with the other grounds raised in the appeal and cross-appeal. However, I would be disposed to conclude, even in the absence of the denial of procedural fairness, that there were errors on the part of the primary judge that would lead to the orders being set aside and the matter being remitted for retrial. Since there is to be a retrial on all issues, it is undesirable to express any conclusion on the evidence before his Honour.
I agree with Ward JA that the appeal should be allowed, that the orders made by the primary judge should be set aside and that the proceedings should be remitted to the Common Law Division for re-hearing. I also agree that Ms Nguyen and Mr Stolyar should pay the costs of the appeal but should have a certificate under the Suitors' Fund Act 1951 (NSW). The question of the costs at first instance will be a matter for the Common Law Division on the re-hearing of the matter.

Endnotes

Royal Guardian Mortgage Management Pty Ltd v Nguyen [2014] NSWSC 665.
(2006) 229 CLR 577; [2006] HCA 55.
Concrete at [2].
Concrete at [172].
Concrete at [117] (reference omitted).
Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [76].
[1945] P 15 at 20.
[2014] SASCFC 3 at [39].
[2010] 1 WLR 879; [2009] UKPC 41 (on appeal from the Court of Appeal of Jersey).
Michel at [31].
Jurats were assessors under Jersey law who sat with a Commissioner.
Michel at [34].
[2010] 107 SASR 237 at [16].
(2000) 199 CLR 620; [2000] HCA 3.
RPS at [11].
Below at [173]-[215].
Below at [229].
(1989) 167 CLR 568.
Vakauta at 572.
Ibid.
Vakauta at 573.
Concrete at [112].
Concrete at [114].
Concrete at [179].
Vakauta at 588.
Cf Smits v Roach (2006) 227 CLR 423; [2006] HCA 36.
R v T, WA at [40].
See below at [236]-[238].
(2003) 214 CLR 118; [2003] HCA 22.
Fox at [28].
Fox at [29].
See generally, Nominal Defendant v Smith [2015] NSWCA 339 at [7]-[11] (in my judgment) and [73]-[77] (Leeming JA); Small v K & R Fabrications (W'Gong) Pty Ltd [2016] NSWCA 70 at [13] (in my judgment), McColl JA and Simpson JA agreeing).

Amendments 02 May 2016 - Typographical errors DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 May 2016

Suitors' Fund Act 1951(NSW)

Nominal Defendant v McLennan [2012] NSWCA 148 Nominal Defendant v Smith [2015] NSWCA 339 North-West Transportation Co Limited v Beatty (1887) 12 App Cas 589 Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc [1994] HCA 54; (1994) 181 CLR 404 R v T, WA [2014] SASCFC 3; (2014) 118 SASR 382 Royal Guardian Mortgage Management Pty Limited v Nguyen [2014] NSWSC 665 Royal Guardian Mortgage Management Pty Limited v Nguyen (No 2) [2014] NSWSC 1327 RPS v The Queen [2000] HCA 3; (2000) 199 CLR 620 Small v K & R Fabrications (W'Gong) Pty Ltd [2016] NSWCA 70 Smith v New South Wales Bar Association [1992] HCA 36; (1992) 176 CLR 256 Smits v Roach [2006] HCA 36; (2006) 227 CLR 423 Vakauta v Kelly [1989] HCA 44; (1989) 167 CLR 568 Visscher v the Honourable President Justice Giudice [2009] HCA 34; (2009) 239 CLR 361 Yuill v Yuill [1945] P 15; [1945] 1 All ER 183 Category: Principal judgment Parties: Royal Guardian Mortgage Management Pty Limited (Appellant) Beth Ngoc Nguyen (First Respondent) Ian Stolyar (Second Respondent) Representation: Counsel: TD Blackburn SC with Ms N Oreb (Appellant) RG McHugh SC with RJ May (Respondents)

Solicitors: Bransgroves Lawyers (Appellant) Gilbert + Tobin (Respondents) File Number(s): 2014/00185879 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Common Law Division Citation: [2014] NSWSC 665 Date of Decision: 28 May 2014 Before: Adams J File Number(s): 2010/00105936

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