FEDERAL COURT OF AUSTRALIA

ACCC v SIP Australia Pty Limited [2000] FCA 1258

COURTS AND JUDGES – disqualification for apprehended bias – pre‑judgment in earlier judgment – earlier judgment based on statement of agreed facts – no issue of credibility of witnesses in earlier judgment – earlier judgment did not involve all parties.

Trade Practices Act 1974 (Cth): s 45(2)(a)(i) & (ii), s 45(2)(b)(i) & (ii)

Ebner v Official Trustee in Bankruptcy [1999] FCA 110  referred to

Webb v The Queen (1994) 181 CLR 41  referred to

Livesey v New South Wales Bar Association (1983) 151 CLR 288  referred to

R v Watson; Ex parte Armstrong (1976) 136 CLR 248  referred to

Australian National Industries Ltd v Spedley Securities Ltd (In Liq) (1992) 26 NSWLR 411  referred to

Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70  referred to

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v SIP AUSTRALIA PTY LIMITED & ORS

V 189 of 1999

GOLDBERG J

6 SEPTEMBER 2000

MELBOURNE

THE COURT ORDERS THAT:

1.         The application by the first, second and third respondents that Justice Goldberg disqualify himself from hearing the proceeding further be dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

REASONS FOR JUDGMENT

1                     On 21 April 1999 the applicant (“the Commission”) filed an application alleging contraventions of s 45(2)(a)(i) and (ii) and s 45(2)(b)(i) and (ii) of the Trade Practices Act 1974 (Cth) (“the Act”) by the first respondent, SIP Australia Pty Limited (“SIP”), two of its directors, the second and third respondents, and by the fourth respondent, Baker Bros (Aust) Pty Ltd (“Baker Bros”) and two of its directors, the fifth and sixth respondents.  The contraventions alleged arose out of what are claimed by the Commission to be price fixing and customer sharing activities which occurred principally in Victoria and New South Wales between January 1994 and June 1998 in relation to the supply of compressors and compressor parts.

2                     Baker Bros and its two directors filed a defence admitting the allegations against them and, as a result, the Commission and Baker Bros and its two directors joined in an application to the Court to make consent orders restraining Baker Bros and its two directors from engaging in the activities which they admitted had contravened the Act for a period of three years.  A joint submission by the Commission, Baker Bros and its two directors, was filed in Court which set out facts agreed between the Commission, Baker Bros and its two directors, the orders consented to and submissions as to the appropriate penalties to be paid by Baker Bros and its two directors.

3                     The issues involving Baker Bros and its two directors came on for hearing before me and I heard submissions from the Commission and Baker Bros and its two directors as to the orders which should be made and as to the appropriate penalties to be imposed by the Court.  On 25 June 1999 I made orders restraining Baker Bros and its two directors from certain conduct for a period of three years and ordered Baker Bros to pay a pecuniary penalty in the amount of $50,000 and its two directors each to pay a pecuniary penalty of $5,000:  Australian Competition & Consumer Commission v SIP Australia Pty Limited (1999) ATPR 41‑702.

4                     In par 5 of my reasons for judgment I made the following observation:

“It is important to note that the matter presently before me is only a partial resolution of the proceeding.  The joint submissions have been made by the Commission and the fourth, fifth and sixth respondents.  The first, second and third respondents are not a party to the submissions and therefore are not to be taken as accepting the agreed facts.  The proceeding against them must proceed to trial in the ordinary course.  Therefore, where in these reasons I refer to submissions of ‘the parties’ I am referring to the Commission and the fourth, fifth and sixth respondents.”

5                     On 5 May 1999 I ordered, inter alia, that SIP and its two directors file a defence which they did on 30 June 1999.  In that defence SIP and its two directors, in substance, denied the conduct which was alleged against them and denied that they had engaged in any conduct which constituted a contravention of the Act.  Thereafter, from time to time I made orders and gave directions for the purpose of progressing the proceeding against SIP and its two directors to a final hearing.

6                     The last order which I made was on 19 April 2000 when I gave directions to conclude interlocutory steps and fixed the proceeding for trial to commence on 16 October 2000.  I adjourned the directions hearing at that time to 23 August 2000.

7                     Prior to that hearing, on 8 August 2000, the solicitors for SIP and its two directors sent a letter to me at the Court (which was copied to the Commission’s solicitors) which was in the following terms:

“We act for SIP Australia Pty Limited (‘SIP Australia’), Filippo Ippaso and John Gates, who are respectively the First, Second and Third Respondents in these proceedings (‘the SIP Parties’).

We are writing to express a concern our clients hold which arises out of the circumstance that your Honour has previously made orders in these proceedings in relation to matters which are the subject of the dispute between the ACCC and our clients.

As your Honour is aware, the Fourth, Fifth and Sixth Respondents – Baker Brothers (Australia) Pty Limited, Andrew Clive Baker and Guy Edwin Baker – last year admitted that the conduct engaged in by them was in breach of the Trade Practices Act.  At that time, joint submissions, including a Statement of Agreed Facts, were prepared by the ACCC and the Baker Brothers parties.  Based upon those agreed facts, your Honour found that the agreements in issue constituted contraventions of s.45(2)(a)(i) and (ii) and s.45(2)(b)(i) and (ii) of the Trade Practices Act, and your Honour imposed penalties upon the Baker Bros parties.

As you are aware, s.45 of the Trade Practices Act requires that a party enter into a contract or arrangement, or arrive at an understanding, with another party.  In this case, that other party is SIP Australia.  Whilst we are aware that your Honour’s findings of fact are not binding upon SIP Australia, we are concerned that your Honour may feel some embarrassment accepting our clients’ contentions that the conduct of both the SIP parties and the Baker Bros parties was not conduct in contravention of s.45 of the Act for the reason that your Honour has already imposed penalties upon Baker Bros parties in respect of that same conduct.  One aspect of the SIP parties’ defence is that the alleged market sharing conduct is properly characterised as exclusive dealing which is regulated by s.47 of the Act, and not s.45 pursuant to s.45(6).  The relevant s.47 conduct is subject to the competition test, which has not been pleaded by the Applicant.

In the circumstances, it may be more appropriate that a different judge hears the proceedings against the SIP Parties.

We do wish to make it clear that there is no suggestion of actual bias against our clients; our clients’ concern is merely one of an apprehension of bias given the matters referred to above.

We have contacted the Applicant about this matter.  The Applicant has indicated that it does not consider there to be any difficulty with your Honour hearing the matter against the SIP Parties.  We have also informed the Applicant that we would be writing this letter to your Honour.

Given the next directions hearing for this issue is set down for 23 August 2000, it may be that the appropriate way forward in these proceedings is for this issue to be addressed on that occasion.  Alternatively, your Honour may consider it appropriate to require the SIP Parties to relist the matter by way of a Notice of Motion.”

(underlining in original letter)

At the directions hearing, adjourned on 23 August 2000 to 24 August 2000, counsel for SIP and its two directors submitted that I should disqualify myself from hearing the proceeding against SIP and its two directors on the ground of there being a reasonable apprehension of bias.  It was submitted that the conduct in respect of which I had made findings of fact and imposed penalties against Baker Bros and its two directors involved the making of agreements to which SIP is said to be a party.  As I had made findings of fact, albeit by consent and on the basis of the facts set out in the joint submissions and found contraventions of the Act in respect of that conduct, it was submitted in effect that I might be seen to be influenced by such matters in hearing the proceeding because SIP and its two directors were contesting the findings of fact to which Baker Bros and its two directors had agreed and were contesting that the conduct alleged by the Commission constituted contraventions of the Act.  It was not suggested that in the hearing against SIP and its directors I was bound by anything contained in the joint submissions and it was accepted by SIP that nothing I had said in my earlier reasons for judgment was in any way determinative of any issue involving SIP.  It was put that the reasonable apprehension of bias arises by reason that it might be considered that a judge who imposed penalties on the basis of agreed facts might be embarrassed in coming to a conclusion in relation to the characterisation of that conduct, the subject of the agreed facts, and whether the conduct alleged against SIP and its directors occurred.

8                     The general principle relevant in this area is that a judge should not sit and hear a case if there is a reasonable apprehension that he or she will not bring an impartial and unprejudiced mind to the resolution of the issues.  The issue is not whether the judge will decide the matter adversely to one party:  Re JRL; Ex parte CJL (1986) 161 CLR 342 at 352.

9                     The High Court has repeatedly stated the relevant test in terms of whether the parties or the public:

“might entertain a reasonable apprehension that [the judge] might not bring an impartial and unprejudiced mind to the resolution of the question involved …”

Livesey v New South Wales Bar Association (1983) 151 CLR 288 at 293‑294.  See also R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 262; Re Polites; Ex parte The Hoyts Corporation Pty Ltd (1991) 173 CLR 78.

10                  It was recently observed by a Full Court of the Federal Court in Ebner v Official Trustee in Bankruptcy [1999] FCA 110 at [32]

“In Australia, the High Court has consistently held that the proper test is whether fair‑minded people might reasonably apprehend or suspect that the judge has prejudged or might prejudge the case”.

See also Clenae Pty Ltd v Australia & New Zealand Banking Group Limited [1999] VSCA 35.

11                  In Webb v The Queen (1994) 181 CLR 41 Deane J dissented, not as to the relevant principles of law to be applied, but rather as to whether, in the circumstances then before the Court, a fair‑minded observer would have apprehended a lack of impartiality on the part of the juror who, in the course of a murder trial gave a bunch of flowers to the deceased’s fiance in the courthouse with a request that she give it to the deceased’s mother.  Deane J noted that there were four categories of cases covered by the doctrine of disqualification by reason of the appearance of bias.  His Honour, at 74, stated the categories as follows:

“The first is disqualification by interest, that is to say, cases where some direct or indirect interest in the proceedings, whether pecuniary or otherwise, gives rise to a reasonable apprehension of prejudice, partiality or prejudgment.  The second is disqualification by conduct, including published statements.  That category consists of cases in which conduct, either in the course of, or outside, the proceedings, gives rise to such an apprehension of bias.  The third category is disqualification by association.  It will often overlap the first and consists of cases where the apprehension of prejudgment or other bias results from some direct or indirect relationship, experience or contact with a person or persons interested in, or otherwise involved in, the proceedings.  The fourth is disqualification by extraneous information.  It will commonly overlap the third and consists of cases where knowledge of some prejudicial but inadmissible fact or circumstance gives rise to the apprehension of bias.”

In a footnote, his Honour observed that an example of an overlap of the third and fourth category was a case where a judge is disqualified by “reason of having heard some earlier case”.  In this context Deane J referred to two cases:  Livesey v New South Wales Bar Association (supra) and Australian National Industries Ltd v Spedley Securities Ltd (In Liq) (1992) 26 NSWLR 411.

12                  In each of those cases it was held that a trial judge should disqualify himself from hearing a matter on the ground of reasonable apprehension of bias by reason of prejudgment of the issues or the credibility of a witness.  In each of those cases the trial judge had made findings in an earlier case in relation to the credit of a witness who was to be called.

13                  In Livesey v New South Wales Bar Association (supra) at 294 the High Court considered the situation confronting a judge asked to disqualify himself or herself on the ground of a previous judgment in the following terms:

“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 pre‑judgment can be a difficult one involving matters ‘of degree and particular circumstances may strike different minds in different ways’ (per Aickin J. in Shaw [(1980 55 ALJR 16].  If a judge at first instance considers that there is any real possibility that his participation in a case might lead to a reasonable apprehension of pre‑judgment or bias, he should, of course, refrain from sitting.  On the other hand, it would be an abdication of judicial function and an encouragement of procedural abuse for a judge to adopt the approach that he should automatically disqualify himself whenever he was requested by one party so to do on the grounds of a possible appearance of pre‑judgment or bias, regardless of whether the other party desired that the matter be dealt with by him as the judge to whom the hearing of the case had been entrusted by the ordinary procedures and practice of the particular court.”

In that case two members of the New South Wales Court of Appeal had made adverse findings in a previous hearing of the credit and credibility of a witness in a case before them.  The High Court concluded, at 300, that as the witness in respect of whom adverse findings had been made in the previous case was a possible and critical witness in the later case, and was in fact called to give evidence, the appellant or a fair‑minded observer:

“might have entertained a reasonable apprehension that the views which the two members of the Court of Appeal had formed and expressed in the Bacon case might result in the proceedings against the appellant being affected by bias by reason of prejudgment.”

14                  In Australian National Industries Ltd v Spedley Securities Ltd (In Liq) (supra) a trial judge in previous proceedings had made findings critical of the credit and credibility of witnesses who were proposed to be witnesses before him.  A majority of a full bench of the New South Wales Court of Appeal (Kirby P, Mahoney and Meagher JJA) concluded that the trial judge was disqualified from hearing the case before him on the grounds of apprehended bias by pre‑judgment.

15                  The critical issue in Livesey v New South Wales Bar Association (supra) and Australian National Industries Ltd v Spedley Securities Ltd (In Liq) (supra) was that the judge had made previous findings on the credit, credibility and conduct of witnesses who would be giving evidence before the judge.  As was observed in R v Watson; Ex parte Armstrong (supra) at 264 per Barwick CJ, Gibbs, Stephen and Mason JJ:

“As the cases show, there are some matters on which a judge may have preconceived opinions, and yet be qualified to sit, but speaking generally the credit of an essential witness, where the case may turn on credibility, is not one of them.”

16                  It was also relevant in those cases that the judge had made findings of fact which had been contested between the parties.  It is important that a case be determined by reference to its own facts and that the fact‑finding process not be seen to be influenced by any previous decision or judgment of a judge on the same facts.  This proposition was adverted to by Mahoney JA (with whom Meagher JA agreed) in Australian National Industries Ltd v Spedley Securities Ltd (In Liq) (supra) at 442:

“As I have indicated, the pre‑judgment principle was formulated in its present form because the public should be reassured that each case will be decided impartially and by reference to its own facts.  There are many circumstances which may give rise to an apprehension by such a person that a case will not be so decided:  personal bias, interest, a relationship to the parties and unjudicious statements are some of the matters which may give rise to such an apprehension.  But the court has, in my respectful opinion correctly, indicated that a previous decision of the same fact or upon the credibility of a relevant witness will create such an apprehension, normally if not inevitably.  The effect of the decisions is, in my opinion, to indicate the effect of such a decision in the assessment of the apprehension of partiality by the ordinary person.”

17                  In Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70, Gaudron and McHugh JJ said at 100:

“A reasonable bystander does not entertain a reasonable fear that a decision‑maker will bring an unfair or prejudiced mind to an inquiry merely because he has formed a conclusion about an issue involved in the inquiry.  … When suspected prejudgment of an issue is relied upon to ground the disqualification of a decision‑maker, what must be firmly established is a reasonable fear that the decision‑maker’s mind is so prejudiced in favour of a conclusion already formed that he or she will not alter that conclusion irrespective of the evidence or arguments presented to him or her.”

18                  I have no embarrassment or concern about hearing this matter, nor do I consider, consistently with the authorities to which I have referred that a reasonable and informed bystander would have a reasonable apprehension that I might not bring an impartial and unprejudiced mind to the issues to be placed before me.  I did not make any findings of fact against Baker Bros and its two directors on the basis of resolving contested issues of fact.  I did not see or hear from any witnesses on behalf of Baker Bros and its two directors.  There was placed before me a joint submission containing agreed facts and, in those circumstances, I did not give detailed consideration to those facts other than to rehearse facts taken from the statement of claim and the agreed facts.  In par 7 of my earlier judgment I said:

“The facts to which I refer are taken from the statement of claim (the allegations in which are admitted by the parties) and the parties’ joint submissions.”

As I observed in par 4 above I specifically noted that SIP and its directors were not a party to the submissions placed before me and were not to be taken as accepting the agreed facts.  No issue of credit or credibility of any witness arose in the course of the hearing which led to my earlier reasons for judgment.

19                  To the extent to which the authorities to which I have referred suggest that a judge should disqualify himself or herself from hearing a case where the judge has previously made a decision on the same facts, I consider that those authorities were dealing with contested hearings where the judge had to decide facts which were contested and where the judge had to decide which witness to accept.  I do not regard those authorities as requiring a judge to disqualify himself or herself in circumstances where, such as here, the judge has simply adopted, by consent, an agreed statement of facts.  More particularly is this so where the judge has expressly noted that the party in the subsequent proceeding has not accepted the agreed facts and that the proceeding against that party must go to trial in the ordinary course.

20                  I did not give any detailed consideration to the issue whether the allegations in the Commission’s statement of claim that there had been contraventions of s 45(2)(a) and s 45(2)(b) of the Act were correct as a matter of law.  That those allegations constituted such contraventions was admitted by Baker Bros and its two directors. 

21                  In such circumstances I do not consider that a reasonable fair‑minded observer would consider that I have pre‑judged any issue or that I would not bring an impartial and unprejudiced mind to the issues before me.

22                  I therefore decline to accede to the request that I disqualify myself from the hearing of the proceeding against SIP and its two directors.

Associate:

Dated:              6 September 2000