FEDERAL COURT OF AUSTRALIA

Asden Developments Pty Ltd (in liq) v Dinoris [2015] FCA 729

THE COURT ORDERS THAT:

1.    The applicant’s application made on 14 July 2015 is dismissed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

EX TEMPORE REASONS FOR JUDGMENT

1    Mr Martin QC for the applicant, Asden Developments Pty Ltd (In Liquidation) (Asden), has applied to have me recuse myself based on certain comments I made on Friday, 10 July 2015, at a pre-trial case management hearing. The basic principles applicable to such an application are clearly established in a number of recent High Court decisions. Perry J has provided a convenient summary of those principles in the recent decision of Picos v Servcorp Limited [2015] FCA 344 at [15]. In that summary, her Honour stated, by reference to the High Court decision of Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [31], that the basic test was as follows:

… 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 …

2    Her Honour also quoted from another High Court decision of Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 at [8], as follows:

In applying this test, it is necessary, first, to identify what it is said might lead a judge to decide a case other than on its legal and factual merits. Secondly, 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.

3    In this application, as I have already mentioned, the first step constitutes certain comments I made during the pre-trial case management hearing I conducted on 10 July 2015. I should provide some brief background to that case management hearing. I called it because, having read the pleadings and various documents that I ordered be filed in this proceeding, including the notices stating the outstanding objections to evidence, I became concerned about whether this trial, which was due to start on 14 July 2015, would be conducted efficiently. My concerns were numerous. The fact the case management hearing lasted approximately two hours provides some indication as to how extensive those concerns were.

4    Among them were the following matters, in no particular order of importance and without intending to be an exhaustive list. First, the objection to the expert evidence in the affidavit of Mr Clout, the present liquidator of Asden, and the fact that neither party appeared to have appreciated that r 23 of the Federal Court Rules 2011 (Cth) (the Rules) and Practice Note CM7 applied to that evidence, and neither party appeared to have identified the fact that r 23 and its associated practice note had not been complied with. Secondly, the fact that one of the affidavits filed by the respondents (Mr Dinoris’ affidavit) comprised approximately 1,800 pages. Thirdly, the failure of the pleadings to clearly and properly identify the central issues each party wished to agitate in the trial. Fourthly, what evidence each party intended to call to prove their cases – this was obviously dictated by the pleadings being put in order, but I still wanted to identify what that evidence would be. And, finally, what I thought were pedantic responses by both sides to the facts the other side sought to have agreed in their statements of agreed facts.

5    My comments, as identified by Mr Martin, fell into two categories: first, comments about the proposed evidence of Ms Nichols who was, at the relevant time, the sole director of Asden; and, secondly, comments about the proposed expert evidence of Mr Clout. Mr Clout is the liquidator of Asden, having been appointed to that position in 2013 to replace the respondents. The quality of the transcript of the case management hearing is particularly poor. Nonetheless, the following extracts constitute those upon which Mr Martin relies. In relation to Ms Nichols, I stated:

“So even if I accept Ms Nichols…”

And then later:

“Having made all these transfers, [Ms Nichols] put her hands in the air and said ‘Here, you can have it back’.”

6    In relation to Mr Clout, I stated:

In a party who I regard Mr Clout as in these circumstances as an expert witness because he is not intervenor (sic) of the parties …… And I can’t place the same weight that I could place on his evidence as an expert that I could on an independent expert … If you persist with it, the problem for you may be that I will give no or little weight to it in which event probably …

(Errors and omissions in original transcript)

7    Both sets of comments arose during a discussion about the issues that were to be agitated at the trial and the evidence that each party intended to call to establish their case. My questions about Ms Nichols’ evidence were directed to gaining an understanding as to how precisely her evidence would be used to prove a particular element of the applicant’s case. In this respect, I should record that Asden’s primary case, as explained to me, is that the respondents failed in their duty as liquidators of Asden by not taking prompt action to recover certain moneys that had been transferred out of the company’s accounts shortly before it was placed in voluntary liquidation.

8    I was aware from the statement of claim that Asden alleged that Ms Nichols and a person by the name of Mr Levis had together “misappropriated” – and that was the expression used in the statement of claim – the various sums of money that Asden was now seeking to reclaim from its former liquidators, the respondents, as a result of them allegedly having breached their duty. I was also aware from the affidavit evidence filed on behalf of Asden that Ms Nichols was to give evidence at the trial that, if she had been asked to do so by the respondents soon after she had transferred the money on Mr Levis’ advice, she would have willingly repaid that money to the respondents.

9    It was in that context that I made the comments about Ms Nichols’ evidence. My comments were made to test Mr Martin on the strengths and weaknesses of the applicant’s case, rather than to express any concluded views on Ms Nichols’ evidence. After all, I had not heard it by that stage. As a counsel of perfection, it might have been as well if I had stated that I had not reached any conclusions about her evidence, but in circumstances where I was having a discussion with senior counsel during a case management hearing, I did not think it was necessary to take that counsel of perfection.

10    My comments were colourful and frank, but I do not think a reasonable independent observer might have concluded from them that I had already decided not to accept Ms Nichols’ evidence. Viewed against the background in which the comments were made, I think they fell into the realm described by the High Court in one of its many decisions on apprehended bias, Johnson v Johnson (2000) 201 CLR 488; [2000] HCA 48 (Johnson), particularly at [13] of the decision per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. Their Honours said:

The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, 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. In Vakauta v Kelly (1989) 167 CLR 568 at 571 Brennan, Deane and Gaudron JJ, referring both to trial and appellate proceedings, spoke of “the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case” … Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgment.

(Citation omitted)

11    There were also similar comments by at least three judges of the Court in the more recent decision of Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55 (Concrete). In the decision of Kirby and Crennan JJ at [112], having quoted from the decision in Johnson (above), their Honours said:

Sometimes judicial interventions and observations can exceed what is a proper and reasonable expression of tentative views. Whether that has happened is a matter of judgment taking into account all of the circumstances of the case ... However, one thing that is clear is that the expression of tentative views during the course of argument as to matters on which the parties are permitted to make full submissions does not manifest partiality or bias …

(Citations omitted)

12    And, further – and I interpolate that this was a case involving the evidence of an architect where the trial judge was particularly troubled by certain inconsistencies he had detected in the evidence the architect had given – their Honours said (at [114]):

The inherent tension in the architect’s dual roles led to the architect adopting inconsistent positions in respect of the facts which his Honour was attempting to understand. Those inconsistent positions are illustrated by the evidence extracted above of the architect’s conduct prior to the sale. When what was said by his Honour is seen in that proper context, and given the necessity for a contemporary trial judge to identify the issues and “to understand the evidence” … and also given his Honour’s assurances of keeping an open mind, there is nothing in his Honour’s remarks taken individually, or considered cumulatively, which was capable of giving rise to a reasonable apprehension of bias.

(Citation omitted)

13    There were also similar observations made by Callinan J at [177]–[180] in Concrete.

14    Mr Clout’s expert evidence is in a different category entirely. That part of his evidence is contained in an affidavit to which objection had been taken. I was aware of this from the notices of objection that had been filed by the respondents in accordance with directions I had given some months ago. My discussion with Mr Martin related to aspects of that evidence, particularly its admissibility, given the provisions of the Evidence Act 1995 (Cth), in particular s 79, which I mentioned, and the fact that the evidence did not comply with, as I have already observed, r 23 of the Rules and the related practice note (see at [4] above).

15    I observed that expert evidence is intended to assist the Court to understand an area of human affairs with which it may not be familiar, and I also observed that I had some difficulty with the concept of expert evidence being given by a party, in this case the current liquidator of Asden. I pointed out that such expert evidence may not be regarded as independent expert evidence. I also pointed out that r 23 of the Rules was, among other things, intended to ensure that expert witnesses were aware of their obligations and particularly the need to be independent of the party whose interests they served. It was against that background that I queried Mr Martin about the weight I might give to Mr Clout’s expert evidence.

16    But, as with the comments I made about Ms Nichols’ proposed evidence and, in my view, even more so in the case of Mr Clout’s expert evidence, I do not consider my comments about his evidence fall into the category that might lead a reasonable, independent observer to conclude that I had already decided not to accept his evidence, or had reached any particular conclusion about it. Instead, I consider it falls into the same category as was identified by the High Court in the decisions of Johnson and Concrete quoted above.

17    I might add that I have approached this application on the basis that the applicant will still call Mr Clout to give that evidence, despite the indication Mr Martin gave that another witness may now be called to give that evidence.

18    For these reasons, I do not propose to accede to the applicant’s application that I recuse myself.

Associate:    

Dated:    30 July 2015