FEDERAL COURT OF AUSTRALIA

Spalla v St George Wholesale Finance Pty Ltd [2006] FCA 416

PRACTICE AND PROCEDURE – disqualification for apprehended bias – allegation that certain rulings and statements made by the trial judge taken together evidenced bias – application of “fair-minded lay observer” test – no grounds for disqualification

Ebner v Official Trustee in Bankruptcy (2001) 205 CLR 337 applied

Johnson v Johnson (2000) 201 CLR 488 applied

Antoun v The Queen [2006] HCA 2 referred to

ANTHONY PATRICK SPALLA v ST GEORGE MOTOR FINANCE LTD (ACN 007 656 555), ST GEORGE WHOLESALE FINANCE PTY LTD (ACN 001 834 886), ANDREW WILLIAM BECK, ANDREW STEWART HOME, DELIOTTE TOUCHE TOHMATSU, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, SIMON ALEXANDER WALLACE SMITH, ST GEORGE MOTOR WHOLESALE PTY LTD (ACN 007 664 217), GUISEPPE MICHELE RAMBALDI and IRLMOND PTY LTD ACN 066 314 870 (RECEIVERS AND MANAGER APPOINTED) (IN LIQUIDATION)

VID 631 OF 2005

KENNY J

18 APRIL 2006

MELBOURNE

THE COURT ORDERS THAT:

1.                  The application be dismissed.

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

REASONS FOR JUDGMENT

1                     In this proceeding, the applicant, Anthony Spalla, seeks to set aside a deed of settlement entered into by the respondents.  The matter was part heard over four days from 14 March to 17 March 2006.  At the beginning of the fourth day of the hearing, counsel for the applicant confirmed that, as he had intimated late on the third day, his instructions had been withdrawn.  He also informed the Court that those of his instructing solicitor had been withdrawn.  His instructing solicitor subsequently filed an affidavit as to when these instructions had been withdrawn.  The Court adjourned the further hearing of the matter until 26 April 2006 to allow Mr Spalla an opportunity to retain new counsel.  Mr Spalla has not yet retained new representation and is currently proceeding in person.

2                     By a facsimile dated 28 March 2006, Mr Spalla asked for a “declaration of a mistrial” on the grounds that: (1) he had been “unable to engage new legal representation, due in no small measure, to the contents of a letter … from Russell Kennedy …”; and (2) apprehended bias on my part.

3                     On 7 April 2006, I heard the parties on the matters raised by Mr Spalla.  On that day, I stated that I would not disqualify myself from proceeding with the adjourned hearing, which would continue on 26 April 2006, as previously ordered.  I also stated that, at today’s directions hearing, I would deliver short reasons for declining to make orders of the kind Mr Spalla sought.  These are my reasons.

submissions

4                     At the hearing on 7 April 2006, Mr Spalla raised a number of grounds in support of his application.  These included the following:

·                    My direction that the trial continue despite the illness of senior counsel for the applicant.

·                    My having been a member of a Full Court that was to hear an appeal in a related matter, even though the appeal did not proceed.

·                    My ruling denying in part Mr Spalla’s application for leave to amend further his notice of motion.

·                    My ruling that Mr Spalla’s affidavit of 1 June 2005 was inadmissible.

Mr Spalla also directed my attention to a number of isolated remarks from the transcript of the first four days of hearing in this proceeding. 

5                     Mr Spalla argued that, considered together, these factors would suggest to a reasonable lay observer that I had prejudged his credibility and the issues in this case.  He suggested that, under the test established in Ebner v Official Trustee in Bankruptcy (2001) 205 CLR 337 (“Ebner”) and Johnson v Johnson (2000) 201 CLR 488 (“Johnson”), I should disqualify myself from the further hearing in the case.

6                     The respondents opposed Mr Spalla’s application.  In the circumstances, it is unnecessary to review their submissions in detail.

consideration

7                     The governing principle in determining whether a judge is disqualified on the ground of apprehended bias 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”: Johnson at 492 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.   The focus of this test is whether an observer might conclude that the judge would decide a case “other than on its legal and factual merits”: Ebner at 345 per Gleason CJ, McHugh, Gummow and Hayne JJ.

8                     The High Court has emphasised that judges should not be overly hasty in acceding to motions to disqualify.  This is because judges “have a duty to exercise their judicial functions when … they are assigned to cases in accordance with the practice which prevails in the court to which they belong”: Ebner at 348.  This ensures that litigants do not have the opportunity to select their judges (and that judges do not select their cases).

9                     In this matter, the applicant has identified no factors which, considered individually or cumulatively, warrant my disqualification.  The High Court has stressed that the reasonableness of any complaint of apprehended bias is “to be considered in the context of ordinary judicial practice”:  Johnson at 493.  Thus, events occurring within the ordinary course of litigation will not give rise to an apprehension of bias.  As the High Court has explained, “modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx”: Johnson at 493.  As a case progresses, a judge may make rulings, as needs be, on adjournment applications, the admissibility of evidence, the amendment of pleadings and the like but the fact that the ruling may suit the immediate interests of one side rather than the other does not mean that the judge has formed any concluded view about the ultimate merits of the case.   From time to time, a judge may also indicate to counsel that she or he is taking some necessarily tentative view on an issue.  The reason for this is most often to allow counsel an opportunity to deal with the problem that the judge perceives, whether rightly or wrongly, to lie in counsel’s way.   

10                  As the High Court’s judgment in Antoun v The Queen [2006] HCA 2 indicates, there remain limits on the manner in which a judge may conduct a case even allowing for modern case management practices.  In the present case, however, the applicant has identified what are for the most part rulings that are commonplace in many trials. 

11                  Mr Spalla first raised the issue of my decision to continue with the hearing despite the illness of his senior counsel.  As the respondents noted, this was a qualified decision.  After a colloquy with the applicant’s junior counsel (who has apparently over ten year’s experience at the bar) I ruled that the hearing should continue in order that the applicant might present his evidence in chief notwithstanding the absence of senior counsel.  The applicant’s counsel apparently conceded that he could cope with the presentation of evidence in chief although not cross-examination.  I ruled that I would adjourn the hearing, if needs be, to allow the applicant the benefit of senior counsel in the cross-examination of the respondents’ witnesses.  A date was nominated, which was available to the Court, and, on the information before me at that time, gave the applicant a sufficient opportunity to order his affairs. The respondents opposed any adjournment.  My decision favoured neither party. It was a straightforward example of case management, which took account of the interests of all parties, as well as broader interests in the timely progression of cases in order that other litigants might also be heard.  Decisions such as these are routine and are not proper bases for disqualifying the trial judge.

12                  Similar considerations apply to Mr Spalla’s complaints about my rulings concerning the admissibility of his affidavit of 1 June 2005 and his application for leave to amend further his notice of motion.  The rulings have not been as Mr Spalla wanted. 

13                  Although strictly irrelevant, I interpolate here that that my ruling on Mr Spalla’s application to amend his motion further was not entirely against him.  Although I did not grant him the leave he sought there and then, I indicated that I would hear and determine his application for a declaration that the deed of settlement was unenforceable and consequential relief, upon the basis that he might rely on any general law or statutory provision as might justify such relief.  This covered much of the proposed amendments. 

14                  Be this as it may, the mere fact a litigant does not gain rulings in his or her favour in the course of a trial does not reasonably create an apprehension of bias on the part of a fair-minded lay observer.  As I have said, when such rulings are made, they will almost inevitably suit the immediate interests of one party rather than another.  It may be that the less favoured party is discouraged by the turn of events, though these events may have no ultimate bearing on the outcome of the case.  Whatever the ultimate and as yet unknown effect of a ruling or rulings on the ultimate outcome, an adverse ruling of this kind does not indicate that the judge has reached any view on the ultimate merits. 

15                  Mr Spalla also raised the fact that I was a member of a Full Court of this Court that convened to hear an appeal in a closely related matter.  Since the appeal did not proceed, the fact is of no relevance to Mr Spalla’s present application for my disqualification.

16                  Finally, Mr Spalla reviewed the hearing transcript and identified extracts that he said suggest bias on my part against his side.  It is unnecessary to review each and every one of these extracts.   It is true that, on occasion, I expressed frustration with the slow progress of the hearing.  For example, much Court time was spent discussing the issue of legal professional privilege.  This occurred because the applicant wished to introduce into evidence counsel’s written opinions yet maintain privilege for these documents as against some of the respondents.  I expressed dissatisfaction that the applicant had not developed any proposal for how to do this.  Ultimately, with the respondents’ co-operation, a solution to this problem was found.  It seemed to me, however, that, since the applicant had been assisted by senior and junior counsel prior to trial, he should have developed some proposal in advance of trial, particularly as the problem with privilege was obvious given the nature of the evidence the applicant wished to introduce.  Further, at the time junior counsel informed the Court that his retainer and that of his instructor had been terminated, I sought to remind Mr Spalla of his responsibilities as a litigant.  

17                  It must be borne steadily in mind that as the judge in this case I have a duty to both Mr Spalla and the respondents to ensure that the trial is conducted fairly and in as timely a fashion as possible.  As I have said, I also have a responsibility to other litigants who desire the Court’s attention and, more broadly, to the community at large, to ensure that the resources of the Court are properly utilized.  Considered in context, and having regard to what transpired in the course of the hearing, my remarks would not suggest to a reasonable fair-minded lay observer that I would be unable to decide the ultimate issues in this case other than on their legal and factual merits. 

18                  For these reasons, I decline to accede to Mr Spalla’s application that I should disqualify myself on the ground of apprehended bias from the further hearing of this proceeding.

19                  It did, however, seem to me that the letter from Russell Kennedy to Mr Spalla, which was also the subject of Mr Spalla’s complaint, particularly in its last paragraph, was inappropriate.  Counsel for the ninth and tenth respondents did not seek to defend it and undertook to have the matter remedied.

20                  I shall hear the parties on the question of costs.  

Associate:

Dated:              18 April 2006