Sydney Refractive Surgery Centre Pty Ltd v Commissioner of Taxation

The Application 16 As I have recorded, Mr Smark invited me to deal with the disqualification application at the interlocutory hearing in the taxation proceedings on 18 September 2007 which, at the parties' request, had been listed at short notice. I indicated to Mr Smark that I was content to follow the course he suggested. 17 Mr Smark did not file any written submissions, but made brief oral submissions on behalf of Channel 7 in support of the disqualification application. I should record that Mr Smark advanced the oral submissions in the interests of his client in an entirely appropriate manner. The Commissioner made no submissions in relation to the application. 18 Mr Smark accepted that, in view of the contents of the letter of 11 September 2007, the publication in the Australian Financial Review of the letter from the Court's Director of Public Information took on 'a very subsidiary role in [the disqualification] application'. 19 Mr Smark confirmed that the taxation proceedings would not involve any questions of credit and that there would be no dispute as to primary facts. However, he submitted that because of the criticisms made of Seven in the C7 Judgment, a hypothetical reasonable observer would harbour a concern that I would be 'annoyed at Channel 7' and that this might cause me to prejudge the issues in the taxation proceedings.

REASONING 20 The test for determining whether a judge is disqualified by reason of the appearance of bias was authoritatively stated by the High Court in Johnson v Johnson (2000) 201 CLR 488, at [11]: 'the test to be applied in Australia in determining whether a judge is disqualified by reason of the appearance of bias (which, in the present case, was said to take the form of prejudgment) is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide.' (Emphasis added.) As the Court noted (at [12]), that this test has been adopted in preference to the less stringent test applied in England: '… for the reason that it gives due recognition to the fundamental principle that justice must both be done, and be seen to be done. It is based upon the need for public confidence in the administration of justice. "If fair-minded people reasonably apprehend or suspect that the tribunal has prejudged the case, they cannot have confidence in the decision". The hypothetical reasonable observer of the judge's conduct is postulated in order to emphasise that the test is objective, is founded in the need for public confidence in the judiciary, and is not based purely upon the assessment by some judges of the capacity or performance of their colleagues. At the same time, two things need to be remembered: the observer is taken to be reasonable; and the person being observed is "a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial"'. (Citations omitted.) 21 It is also necessary to bear in mind the observations of Mason J in Re JRL; Ex parte CJL (1986) 161 CLR 342, at 352: 'It seems that the acceptance by this Court of the test of reasonable apprehension of bias … has led to an increase in the frequency of applications by litigants that judicial officers should disqualify themselves from sitting in particular cases on account of their participation in other proceedings involving one of the litigants or on account of conduct during the litigation. It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party. There may be many situations in which previous decisions of a judicial officer on issues of fact and law may generate an expectation that he is likely to decide issues in a particular case adversely to one of the parties. But this does not mean either that he will approach the issues in that case otherwise than with an impartial and unprejudiced mind in the sense in which that expression is used in the authorities or that his previous decisions provide an acceptable basis for inferring that there is a reasonable apprehension that he will approach the issues in this way. In cases of this kind, disqualification is only made out by showing that there is a reasonable apprehension of bias by reason or prejudgment and this must be "firmly established". … Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour'. See also Ebner v Official Trustee (2000) 205 CLR 337, at [6]-[9], per Gleeson CJ, McHugh, Gummow and Hayne JJ. 22 It is true that in the C7 Judgment I found against Seven on all the causes of action upon which it relied. I also criticised the manner in which Seven presented important aspects of its case and expressed disapproval of what I regarded as the disproportionately large amount of costs incurred by the parties although, as I have noted, my criticisms were by no means confined to Seven. 23 A fair-minded observer, however, in considering whether there is a reasonable apprehension that I might bring an impartial and unprejudiced mind to the resolution of the particular questions that arise in the taxation proceedings, would take into account a number of factors. These include the following: · The issues in the taxation proceedings essentially involve questions of law relating to the liability of SRSC to capital gains tax in respect of the award of damages to it in the defamations proceedings. There is no dispute as to the primary facts and no issues as to credit arise. (As Mr Smark pointed out, if there were any issues of credit, they would not involve officers of Channel 7.) Channel 7 accepts that the adverse findings as to the credit of certain officers of Seven made in the C7 Judgment are of no great significance in assessing whether there is a reasonable apprehension of bias in the taxation proceedings. · The legal issues (and the factual issues, if any) in the taxation proceedings have no relationship whatsoever to those addressed in the C7 Case. If it matters, there is no suggestion of any procedural problems or costs issues in the taxation proceedings of the kind that attracted attention in the C7 Judgment. None of the conclusions reached in the C7 Judgment, or opinions expressed, has any relevance to the issues that arise in the taxation proceedings. There is no basis for a reasonable observer to conclude from the reasoning in the C7 Judgment that I would be likely to prefer one view of the law (or facts) over another in the taxation proceedings. · As I understood Mr Smark, the only substantial basis for suggesting that there would be a reasonable apprehension of bias in the taxation proceedings, is that what was said to be my 'annoyance' at Seven's conduct of the C7 Case would detract from the necessary appearance of impartiality and want of prejudice. I doubt that a fair-minded observer would read the C7 Judgment as exhibiting judicial 'annoyance' at Seven, as distinct from understanding the judgment to record the considered views of a trial Judge, even if strongly expressed at times, on matters of importance arising from the manner in which the proceedings were conducted. In any event, the hypothetical fair-minded observer would regard it as significant that any 'annoyance' had been expressed in a judgment delivered in an entirely separate case. The suggestion advanced by Mr Smark also seems to me to overlook the fact that the hypothetical fair-minded observer would recognise that the decision-maker is a: 'professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial'. Such a judge would be taken by a fair-minded observer to be perfectly capable of ensuring that any criticisms of Seven in the C7 Case did not influence his judgment in the taxation proceedings. 24 In my view, the test for determining whether there is a reasonable apprehension of bias in the present case has not been satisfied. None of the matters raised by Channel 7 seems to me sufficient to lead a fair-minded lay observer reasonably to apprehend that I might not bring an impartial and unprejudiced mind to the resolution of the particular questions presented by the taxation proceedings. 25 It was for these reasons that I declined the application to disqualify myself. I certify that the preceding twenty-five (25) numbered Paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.