WARWICK ENTERTAINMENT CENTRE PTY LTD -v- EARLMIST PTY LTD [2016] WASC 79 (11 March 2016)

3 On 30 April 2015, Mr Carey swore an affidavit in which he denies that the books of account for Warwick and Earlmist correctly record the indebtedness of Earlmist to Warwick. Mr Carey's denial is based on three claims. First, Mr Carey says that Warwick and Earlmist executed an option agreement dated 24 November 1997 (Option Agreement) which is annexed to Mr Carey's affidavit sworn 30 April 2015. The Option Agreement recites that Earlmist has entered into agreements to become the registered proprietor of certain property (the Property) and has agreed to grant to Warwick an option to purchase the Property. Clause 2 of the Option Agreement provides that in consideration of the payment of the Option Fee by Warwick, receipt of which is acknowledged by Earlmist, Earlmist grants to Warwick an option to purchase the Property. The Option Fee is the sum of $1 million. Clause 6 provides that if the Option Fee is not paid in cash, it will attract interest at the rate of 10% calculated on a monthly basis until paid. Mr Carey says that the Option Fee was not paid and accordingly interest has accrued at 10% per annum so that Warwick was indebted to Earlmist for $2.7 million as at December 2014. Warwick's books of account do not refer to the unpaid Option Fee.

4 In regard to the debt alleged to be owed by Earlmist to Warwick flowing from the purported issue of a special income unit in the Earlmist Unit Trust, Mr Carey says that at the date of the resolution Earlmist was in receivership and he, as a director of Earlmist, had no power to issue a special income unit in the Earlmist Unit Trust and the purported issue was in breach of the deed of charge granted by Earlmist in favour of St George Bank, which appointed the Receivers.

5 Mr Carey further says that as at 9 August 2012, Rompride Pty Ltd was owed $10,006,780 by Warwick, and that on 9 August 2012 Rompride assigned to Earlmist $3 million of that debt by a deed of assignment, notice of which was given to the Receivers. Mr Carey says that Warwick's books of account make no reference to its indebtedness to Earlmist for $3 million.

6 Earlmist has not amended its defence to plead the matters referred to by Mr Carey in his affidavit. Accordingly, Warwick has not filed a reply to a defence based on Mr Carey's claims. Senior counsel for Warwick, Mr Thomson SC, informed the court that Warwick does not accept the authenticity of the Option Agreement produced by Mr Carey. Warwick's claim against Earlmist in respect of the Book Debt is based on the books of account of Earlmist and Warwick. Furthermore, Warwick says that Earlmist has acknowledged or admitted that it is indebted to the plaintiff in the sum of $1,373,453, in that Earlmist submitted to the Receivers a report as to affairs (RATA) signed by Mr Carey and Mr Rundle on 2 March 2006 which admits the debt.

7 Earlmist has moved that I should not case manage this action, nor try the action, because of findings I made as the trial judge in CIV 1094 of 2008 in this court between Warwick and Silkchime Pty Ltd (Warwick v Silkchime). In that action, I made findings adverse to the credibility of Mr Carey and Mr Patrick Ho, whose evidence Earlmist says will be crucial to its case in this proceeding. Earlmist further says that I made favourable findings in relation to the credit of Mr Russell Morgan, an employee of the Receivers who has had the daytoday conduct of the receivership of Warwick, and that the credibility of Mr Morgan will also be at issue in this proceeding. Earlmist submits that in those circumstances a fairminded lay observer might reasonably apprehend that I might not bring an impartial and unprejudiced mind to the issues in this case. Earlmist's application is not brought on the basis that I am biased against anyone, but on the basis that there is a reasonable apprehension of bias.

8 The legal test of when a judge will be disqualified on the ground of a reasonable apprehension of bias is set out in Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337, 344, where Gleeson CJ, McHugh, Gummow and Hayne JJ said:

[A] judge is disqualified if a fairminded 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 [6].

Their Honours referred to this as the apprehension of bias principle.

9 In Re JRL; Ex parte CJL [1986] HCA 39; (1986) 161 CLR 342, 352, Mason J said that in cases of this kind disqualification is only made out by showing that there is a reasonable apprehension of bias by reason of prejudgment and this must be firmly established. His Honour said that 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.

10 In Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488, 492 94 [12] [14], Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ stated some of the characteristics imputed to the judge and the hypothetical observer for the purpose of the apprehension of bias principle. First, the hypothetical observer is taken to be reasonable. Secondly, whilst the observer is not to be assumed to have a detailed knowledge of the law, or the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. Thirdly, the judge is taken to be a professional judge whose training, tradition and oath or affirmation requires the judge to discard the irrelevant, the immaterial and the prejudicial. Thus, judges are expected to be equipped by training, experience and their oath or affirmation to decide factual contests solely on the material that is in evidence, together with other material which is notorious or common knowledge.

11 Senior counsel for the plaintiff pointed out that in Ebner Gleeson CJ, McHugh, Gummow and Hayne JJ said of the apprehension of bias test:

First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an 'interest' in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decisionmaking, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed [8].

12 Their Honours' words apply equally to a claim of apprehended bias by reason of prejudgment. In applying the Ebner test, it is necessary to identify what it is said that might lead the judge to decide a case other than on its legal and factual merits and to articulate the logical connection between that matter and the feared deviation from the course of deciding the case on its merits. The last sentence of that passage from Ebner's case suggests that there is an additional third step. In Isbester v Knox City Council [2015] HCA 20; (2015) 89 ALJR 609, 619, Gageler J set out the three steps as follows:

Step one is identification of the factor which it is hypothesised might cause a question to be resolved otherwise than as the result of a neutral evaluation of the merits. Step two is articulation of how the identified factor might cause that deviation from a neutral evaluation of the merits. Step three is consideration of the reasonableness of the apprehension of that deviation being caused by that factor in that way [59].

13 In Livesey v New South Wales Bar Association [1983] HCA 17; (1983) 151 CLR 288, Mason, Murphy, Brennan, Deane and Dawson JJ set out the test to be applied in a case of apprehension of bias by reason of prejudgment:

[A] fairminded observer might entertain a reasonable apprehension of bias by reason of prejudgment if a judge sits to hear a case at first instance after he has, in a previous case, expressed clear views either about a question of fact which constitutes a live and significant issue in the subsequent case or about the credit of a witness whose evidence is of significance on such a question of fact (300).

I note that their Honours there referred to two things the judge may have done in the previous case, either of which might give rise to an apprehension of bias. First, the judge may have expressed, in the previous case, a clear view about a question of fact which is a live issue in the second matter. Secondly, the judge may have expressed a clear view as to the credibility of a witness whose evidence goes to a question of fact in issue in the second matter.

14 The rule against bias, actual or apprehended, in relation to prejudgment is directed to prejudgment incapable of being altered by evidence or argument: see Gleeson CJ and Gummow J in Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17; (2001) 205 CLR 507, 531 532 [71] [72].

15 In British American Tobacco Australia Services Ltd v Laurie [2011] HCA 2; (2011) 242 CLR 283, the High Court held, by a threetwo majority, that a trial judge was disqualified from hearing a matter when he had heard and determined very similar questions of fact and credibility involving the same respondent at an interlocutory stage of a different matter some three years earlier. The dissenting judges, French CJ and Gummow J, based their decision on the provisional findings made by the judge in the earlier interlocutory decision. The majority acknowledged that different evidence might be led at the trial but observed the judge's previous finding was expressed without qualification or doubt. The majority said:

The hypothetical observer is reasonable and understands that Judge Curtis is a professional judge. None the less, the observer is not presumed to reject the possibility of prejudgment. If it were otherwise an apprehension of bias would never arise in the case of a professional judge.

Whenever a judge is asked to try an issue which he or she has previously determined, whether in the same proceedings or in different proceedings, and whether between the same parties or different parties, the judge will be aware that different evidence may be led at the later trial. Judge Curtis's express acknowledgment of that circumstance does not remove the impression created by reading the judgment that the clear views there stated might influence his determination of the same issue in the Laurie proceedings. Allsop P's conclusion was correct. In addition to the possibility of the evidentiary position changing, a reasonable observer would note that the trial judge's finding of fraud was otherwise expressed without qualification or doubt, that it was based on actual persuasion of the correctness of that conclusion, that while the judge did not use violent language, he did express himself in terms indicating extreme scepticism about BATAS's denials and strong doubt about the possibility of different materials explaining the difficulties experienced by the judge, and that the nature of the fraud about which the judge had been persuaded was extremely serious. In the circumstances of this unusual case, a reasonable observer might possibly apprehend that at the trial the court might not move its mind from the position reached on one set of materials even if different materials were presented at the trial - that is, bring an impartial mind to the issues relating to the fraud finding. Johnson v Johnson is distinguishable [144] [145]. (footnotes omitted)

16 In Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 244 CLR 427, the High Court held that the hearing of a number of ex parte applications did not give rise to any apprehension of bias on the part of the judge, therefore not disqualifying him from hearing the subsequent substantive matters. The court focused specifically on prejudgment of matters of fact or credibility.

17 The first step in the test for apprehension of bias by reason of prejudgment is to identify what it is that is said that might lead the judge to decide a case other than on its legal and factual merits.

18 On 1 August 2012, I delivered my reasons for judgment in Warwick Entertainment Centre Pty Ltd (Receivers and Managers Appointed) atf The Warwick Entertainment Centre Unit Trust v Silkchime Pty Ltd (Receivers and Managers Appointed) atf The Silkchime Unit Trust [No 2] [2012] WASC 275 (Warwick v Silkchime). This summary of my reasons for judgment is based upon the judgment of McLure P in Silkchime Pty Ltd v Warwick Entertainment Centre Ltd [No 2] [2013] WASCA 224, the appeal from my judgment in that action.

19 Warwick claimed that Silkchime was indebted to it in a sum in excess of $12 million as a result of sums advanced by Warwick to Silkchime. Silkchime admitted that Warwick advanced $3.6 million to it by way of loan to purchase some land (Loan 1) and some subsequent advances. Silkchime proceeded with the development of the land which was subdivided into two lots. Some, but not all, of the lots had been sold when, on 24 January 2006, receivers and managers were appointed in respect of all the property of Warwick and of the lots in the land still owned by Silkchime at that time.

20 Silkchime admitted Loan 1 and subsequent advances but claimed that that loan and advances were made by Warwick to Silkchime pursuant to an oral joint venture agreement made in or about 1994, reduced to writing on 20 July 1995 and dated 22 August 1995 (the JVA). Silkchime claimed that the JVA was to the effect that the loans were made on a nonrecourse, interestfree basis. Silkchime also claimed that the accounts of Warwick and Silkchime incorrectly recorded expenses incurred in the Warwick Commercial Park development (Loan 2) as a loan made by Warwick to Silkchime when they should have been recorded as a loan by Warwick to Westpoint Corporation, which then lent the money to Westpoint Constructions Pty Ltd. What was contentious was the accounting treatment of advances made under a facility granted by National Mutual Ltd to Warwick, all of which were drawn down by 30 June 1997. Westpoint Corporation was the head company of the Westpoint Group and acted as the Group's treasury. At about the same time as receivers were appointed to Warwick and Silkchime, Westpoint Corporation was placed in voluntary administration. Subsequently, Westpoint Corporation was ordered to be wound up and liquidators were appointed.

21 Mr Morgan is a chartered accountant who, as I have said, had the conduct of the receivership on behalf of the Receivers. Based on the evidence of Mr Morgan and an independent expert, Mr Langridge, I found, in essence, that the balance of the loans from Warwick to Silkchime were as disclosed in the accounting records of both Warwick and Silkchime.

22 The loans were recorded in a report as to affairs (RATA) signed by Mr Carey and Mr Rundle and submitted to the receivers of each company on 2 March 2006 pursuant to s 475(1) of the Corporations Act 2001 (Cth). Mr Carey was a director of each company and Mr Rundle was the chief financial controller of the Westpoint Group from October 1997 to January 2006. The Warwick RATA stated that it was owed $12,706,904 by Silkchime. The Silkchime RATA stated that it owed Warwick $12,673,372. In his evidence in Warwick v Silkchime, Mr Carey claimed to have signed a declaration sent with each RATA to the effect that the RATA was compiled on his behalf by Mr Rundle and Mr Greg Nairn who had been responsible for managing the books and records of the relevant company up until the date of appointment of the Receivers and that he had not personally verified the contents of the RATA as he did not have the necessary information to do that.

23 I found, based on s 1305 of the Corporations Act, that the financial records and other books of Warwick and Silkchime are prima facie evidence of the matters recorded in them. I concluded that the court should find that Silkchime was indebted to Warwick in the sum of $12,706,904 unless there was evidence to the contrary.

24 Silkchime's claim that there was a joint venture agreement turned on the testimony of Mr Carey and the Ho brothers, Patrick and Stephen. Each of the Ho brothers was a director of Silkchime. Mr Carey gave evidence as follows. The oral joint venture agreement was made in meetings between Mr Carey and the Ho brothers and in telephone conversations between Patrick Ho and Mr Carey in 1993 and 1994. On a flight to Singapore to visit the Ho brothers on 19 July 1995, Mr Carey wrote by hand a joint venture agreement between Warwick and Silkchime. He had with him on the flight a document prepared by a solicitor, which he used as a guide for formatting and wording the JVA and also a list of permitted uses under the Town Planning Scheme. The JVA was typed in the business centre at the Pan Pacific Hotel in Singapore on the morning of 20 July 1995. Mr Carey met with the Ho brothers in his room at the Pan Pacific Hotel around 11.00 am on 20 July 1995. Mr Carey showed them the JVA. He also showed them mortgage and security documents for a proposed borrowing by Silkchime from Challenge Bank. Mr Carey said that the documents needed to be signed. Patrick and Stephen Ho looked at the documents. The Challenge Bank mortgage and other security documents and the JVA were signed in Mr Carey's hotel room on 20 July 1995. After the document was signed by Patrick Ho, Stephen Ho and Mr Carey, Mr Carey affixed the seal for Silkchime and the seal for Warwick to the JVA. He did not date the JVA in Singapore on the day it was signed. The date is handwritten. The JVA is dated 22 August 1995. Mr Carey probably dated the document on that date in Perth. Mr Carey had taken a seal for Silkchime and a seal for Warwick to Singapore, both of which he affixed to the JVA after it was signed. Mr Carey did not affix the Silkchime seal to the Challenge Bank mortgage because he understood that the seal would be affixed in Perth by David Hewitt. Mr Hewitt was then the financial controller for the Westpoint Group. The seals which Mr Carey took with him to Singapore were given to him by Mr Hewitt or his personal assistant. After the JVA was signed, Mr Carey brought it back to Australia. The copy of the JVA which was adduced in evidence by Silkchime was located by Mr Carey amongst files for the Warwick Commercial Park that were not taken by ASIC. Mr Carey has no knowledge of the whereabouts of the original JVA.

25 Mr Patrick Ho gave evidence as follows. He had a telephone conversation with Mr Carey about the development of the Warwick land. Mr Carey suggested that they should buy the land so as to enhance the value of Warwick Entertainment Centre. Mr Patrick Ho spoke to his brother. He then called Mr Carey again and said they would proceed. He signed the JVA in Mr Carey's hotel room in Singapore on 20 July 1995 and his brother and Mr Carey each signed the document on the same occasion. Mr Ho read the document before he signed it and it was roughly the same as what Mr Carey had told him over the telephone. Mr Stephen Ho gave evidence that he signed the JVA at the Pan Pacific Hotel in July 1995 and that his brother and Mr Carey signed the document on the same occasion.

26 I did not accept Mr Carey's testimony about the existence of the JVA. I found that the JVA was not executed by Mr Carey and the Ho brothers in Singapore in 1995 as they claimed and that it was not signed until some years after the relevant advances had been made by Warwick to Silkchime. I did not make any express finding as to the date when the JVA was signed. However, as McLure P stated in the Court of Appeal, an analysis of my reasons for judgment shows that I found that the JVA was not in existence before the Receivers were appointed in January 2006.

27 There were a number of bases for my finding. First, the objective circumstances at the time of the alleged signing of the JVA in July 1995 in Singapore were inconsistent with its execution at that time. In particular, the common seal of Silkchime on the JVA is a round seal, whereas other documents executed at the same time by Silkchime bear a square seal. The other documents were stamped, the JVA was not.

28 Secondly, the accounting treatment in the financial records of both Warwick and Silkchime of the balance between the companies was inconsistent with the existence of a joint venture in the terms set out in the JVA. The accounts of both companies treated the advances as a loan and interest was charged on those loans. Before October 1997, Tracey Lodge, a chartered accountant, was responsible for the management of the Warwick and Silkchime accounts and reported directly to Mr Carey. Mr Hewitt was the Westpoint Group chief financial controller prior to October 1997 when he was replaced by Mr Rundle. I rejected Mr Carey's evidence that Mr Hewitt gave him the corporate seals he took to Singapore in July 1995 and that he gave the executed JVA to Mr Hewitt on his return to Perth. I found that Mr Hewitt and Ms Lodge, neither of whom were called as witnesses, were not aware of the JVA or of any contractual arrangement between Warwick and Silkchime to the effect that the loans from Warwick to Silkchime were interestfree and nonrecourse. Further, Mr Rundle did not raise with Mr Carey or anyone else the correctness in the Warwick and Silkchime accounts of the treatment of the loans from Warwick to Silkchime or the interest charged on those loans. Mr Rundle did not see a copy of the JVA during the time of his employment at the Westpoint Group.

29 Thirdly, the RATAs for both Silkchime and Warwick signed by Mr Carey and Mr Rundle and dated 2 March 2006 are consistent with the accounts of Silkchime and Warwick and inconsistent with the JVA. The declaration signed by Mr Carey is not a declaration that he had not read or considered the RATAs. I found that Mr Carey signed the RATA, which stated that he certified that the particulars contained in it were true to the best of his knowledge and belief and Mr Carey could not have done that if he knew that the advances made by Warwick to Silkchime were governed by the JVA which provided that the loans were interestfree and nonrecourse.

30 Fourthly, I relied on Silkchime's delay in disclosing the JVA. Silkchime did not raise the existence of the JVA in response to the demand for repayment of the debt when it was first made in a letter dated 14 June 2007 from the Receivers to Mr Carey as a director of Silkchime. The 14 June 2007 letter referred to the debt of $12,706,904 owed by Warwick to Silkchime, the RATA signed by Mr Carey and demanded payment of the debt within seven days. The solicitors for Mr Carey responded by letter dated 21 June 2007 which made no reference to the JVA. Mr Carey said the letter was written on his instructions and that he saw it before it was sent. Again, no reference was made to the JVA in a letter dated 10 July 2007 from Mr Carey's solicitors to the Receivers' solicitors. The JVA was first referred to in a letter dated 18 July 2007 from Mr Carey's solicitors to the Receivers' solicitors.

31 I found that Mr Patrick Ho was an unsatisfactory witness. Mr Patrick Ho swore an affidavit in Singapore on 6 June 2008. He signed a witness statement dated 4 October 2011. In crossexamination, Mr Ho was shown his witness statement dated 4 October 2011. He said he had not signed any other witness statement in respect of the JVA. The following day, he was shown his affidavit of 6 June 2008 which referred to him signing the JVA and annexed a copy of the JVA. When it was put to him that his evidence of the previous day saying that he had only signed one witness statement was not accurate, Mr Patrick Ho accepted that was so and said it was an oversight. Paragraph 12 of the affidavit sworn by Mr Patrick Ho stated that Mr Carey arrived in Singapore on 19 August 1995 and that Mr Patrick Ho, his brother and Mr Carey executed the JVA on the following day. When the affidavit was given to Mr Patrick Ho in the course of his crossexamination, he immediately turned to page 4 and said that there was a typing error there. Mr Ho denied that he had looked at the affidavit between the end of court on the previous day and being shown the affidavit in court that day. Mr Ho denied that he immediately turned to page 4 and identified a typing error because he knew that there was a statement on that page that was inconsistent with his current evidence. His explanation for immediately turning to page 4 and then identifying a typing error was that he knew there was something wrong with the document when counsel brought it up and because he 'got a sixth sense feeling and there's a divine intervention'. I did not accept the evidence of Mr Patrick Ho. I did not accept that he had a sixth sense or that it was divine intervention that led him to identify what he claimed to be a typing error. I found that Mr Ho had recently read, or had had his attention drawn to, the affidavit and knew that it contained a statement inconsistent with his evidence that the JVA was executed in Singapore on 20 July 1995. I found that when Mr Ho was giving evidence he sought to not disclose the existence of the affidavit he swore on 6 June 2008 because he knew it contained a statement inconsistent with his evidenceinchief. I found that when he was given the affidavit in the course of his crossexamination, Mr Ho immediately turned to page 4 because he knew it contained a statement inconsistent with his evidence and he knew that because he had recently read it.

32 I found that Mr Stephen Ho had no independent recollection of signing the JVA and I did not accept his evidence that he recollected signing it.

33 Based on the evidence as a whole, I rejected the evidence of Mr Carey, Mr Patrick Ho and Mr Stephen Ho that the JVA was executed on 20 July 1995 in Singapore. I also found that there was no oral agreement made by Warwick and Silkchime through Mr Carey and the Ho brothers establishing that Warwick would lend money to Silkchime on a nonrecourse, no interest basis.

Connection between previous findings and apprehended bias

34 The test for apprehended bias requires the person claiming bias to explain the logical connection between the suggested source of bias and its supposed effect.

35 Counsel for Earlmist, Mr Metaxas, submitted that in this proceeding, the court will be called upon to consider the following issues:

(1) the authenticity of the Option Agreement, that is, whether the Option Agreement was made between Warwick and Earlmist in November 1997;

(3) whether the RATA is displaced by evidence as to the company debt;

(4) the efficacy of the note Mr Carey says he sent with the RATAs;

(6) the accuracy of the books of account for Warwick and Silkchime; and

(7) the notes in the accounts as to whether interest was payable.

36 Earlmist says that the Option Agreement was signed by Mr Carey and Mr Patrick Ho. Earlmist's case in relation to the Option Agreement will rest on the testimony and credibility of Mr Carey and Mr Patrick Ho. Earlmist's response to the admission of the Book Debt in the RATA will rest upon the testimony of Mr Carey to establish that he signed a declaration which was attached to the RATA which stated that it was compiled by employees who had been responsible for managing the books and records of the company and he had not personally verified the contents of the RATA as he did not have the information necessary to do that.

37 There is a logical connection between the findings I made in Warwick v Silkchime and 'the feared deviation from the course of deciding the case on its merits'. Mr Metaxas said that my findings in Warwick v Silkchime about the credibility of Mr Carey and Mr Patrick Ho are so seriously adverse that it would be inappropriate for me not to recuse myself from presiding in this proceeding. Mr Metaxas submitted that my findings are to the effect that Mr Carey and the Ho brothers all lied when they gave evidence that the JVA was executed in July 1995 and 'they all lied for a purpose which was to advance the interests of Silkchime in resisting the claim for the payment of money'. Mr Metaxas further submitted that my findings in Warwick v Silkchime are findings to the effect that the evidence of Mr Carey and the Ho brothers was fabricated and that the production of the document was an attempt to deceive. I accept that a fairminded reader might read my reasons for judgment in Warwick v Silkchime to contain findings of the character described by Mr Metaxas.

38 In a case such as the present where there is no allegation of actual bias, the question whether a judge who is confident of his own ability to determine the case before him fairly and impartially on the evidence should refrain from sitting because of a suggestion that the views which he has expressed in his judgment in some previous case may result in an appearance of prejudgment can be a difficult one involving matters of degree and particular circumstances may strike different minds in different ways: Livesey (294).

39 I find that there is a real possibility that my participation in this case might lead to a reasonable apprehension of prejudgment. There are two matters which lead me to that conclusion. The first is the character and gravity of my findings about the testimony of Mr Carey and Mr Patrick Ho in Warwick v Silkchime. I am confident that if I am the trial judge in this action I would determine the authenticity of the Option Agreement and other questions of fact in this case by reference to the evidence presented and uninfluenced by any view I formed of Mr Carey and Mr Ho, or their evidence, in Warwick v Silkchime. However, a fairminded lay observer might reasonably think that I might not be able to eradicate the effect of the conclusions I reached in Warwick v Silkchime about the conduct and credibility of Mr Carey and Mr Ho from my mind in attempting to deal fairly and impartially with their evidence on the trial of this action.

40 The second matter is the similarity of some of the issues in this action and some of the issues in Warwick v Silkchime. A central question in Warwick v Silkchime was the authenticity of the JVA signed by Mr Carey and the Ho brothers in 1995, 11 years before the appointment of the Receivers and 17 years before the trial of the action. In this case, a central issue will be the authenticity of the Option Agreement signed by Mr Carey and Mr Patrick Ho nine years before the appointment of the Receivers and 18 or more years before the trial of the action. In each case, Warwick claims that the alleged agreement is inconsistent with objective circumstances. In each case the instrument, the JVA in Warwick v Silkchime and the Option Agreement in this case, only came to light after the Receivers were appointed and made claims on Silkchime or Earlmist respectively. In each case, Warwick claims that the agreement is inconsistent with a RATA signed by Mr Carey. In each case, the court is or will be called upon to consider Mr Carey's explanation for signing the RATA and of the apparent inconsistency between the alleged agreements and objective circumstances. The issues concerning the credibility of Mr Carey and Mr Ho arise in each case in strikingly similar circumstances. Those strikingly similar circumstances might cause a fairminded lay observer to reasonably apprehend that I might not be able to eradicate the effect of the conclusions I reached in Warwick v Silkchime in determining the relevant issues in this action, which bear a striking similarity to the relevant issues in Warwick v Silkchime.

41 For the reasons stated, I will not case manage or try this action. The action will be allocated to a new case manager.