Federal Court of Australia

Webb v GetSwift Limited (No 6) [2020] FCA 1292

ORDERS

THE COURT ORDERS THAT:

1.    The application for an order that this proceeding be referred to the National Operations Registrar for reallocation to a judge in the Commercial and Corporations National Practice Area be dismissed.

2.    There be no order as to costs.

3.    Any party wishing to appeal Order 1 have leave to appeal in accordance with s 24(1A) of the Federal Court of Australia Act 1976 (Cth), subject to the filing of a notice of appeal by 23 September 2020.

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

REASONS FOR JUDGMENT

LEE J:

A     INTRODUCTION

1    GetSwift Limited (GetSwift) and Mr Macdonald contend that I should “recuse” myself from the initial hearing of this class action. For reasons which are unclear, over the last decade or so, the Americanism “recuse” seems to have been almost uniformly embraced to describe applications of this type; but perhaps futilely, I will continue to describe the present application as one whereby I am asked to disqualify myself. The ground is that a fair-minded lay observer might reasonably apprehend that I might not bring an impartial mind to the resolution of the questions that arise for decision at the initial hearing of the class action. In practical terms, this means that GetSwift seeks an order that this proceeding be referred to the National Operations Registrar for reallocation to a judge in the Commercial and Corporations National Practice Area.

2    For those interested, this argument will no doubt engender feelings of déjà vu. I delivered a judgment in September last year (Webb v GetSwift Limited (No 5) [2019] FCA 1533) where, by reference to the lodestar of the overarching purpose, I determined that I should hear this class action together with the related proceeding VID 146 of 2019 (ASIC proceeding): see Webb (No 5) (at [7]–[8] and [30]). Even though it was not then contended that a reasonable apprehension of bias existed, after considering the authorities I noted (at [26]) that I did not consider that there was then a high likelihood, let alone an inevitability, that a reasonable apprehension of bias might arise in the mind of a fair-minded lay observer. These reasons assume a familiarity with this previous judgment.

3    This is not to say GetSwift and Mr Macdonald are now precluded from seeking my disqualification. They are not. In Webb (No 5) (at [30]) I recognised that “there is a non-fanciful risk that an issue may well arise in the future which does cause difficulty in me hearing both the ASIC proceeding and the class action” and said that this risk “cannot be entirely dismissed”. By this application, GetSwift and Mr Macdonald contend that what was previously a risk has now crystallised into a reality, such that my disqualification is now warranted.

B     THE TWO PROCEEDINGS

4    I am not going to repeat the background I have set out in Webb (No 5). It is well to commence by updating the position subsequent to that decision. The current state of play is as follows:

(1)    the ASIC proceeding is currently part-heard on liability issues; the hearing commenced on 15 June 2020 and continued until 15 July 2020, by which time each party had closed their evidentiary case; I have already heard a day of oral closing submissions and the proceeding is presently adjourned for the finalisation of those submissions later this month, at the conclusion of which, judgment will be reserved;

(2)    on 15 September 2020, I was scheduled to hear the initial trial of the class action (with an estimated duration of four weeks), which would determine the applicant’s claim and common issues, and at the conclusion of which, judgment would also be reserved;

(3)    my intention (as no doubt would have been obvious) was that the judgment in each proceeding would be based upon (and only based upon) the evidence adduced in, and argument advanced in, that individual proceeding (that is, without regard to the evidence adduced in, and argument advanced in, the other proceeding);

(4)    in the event that upon the delivery of judgment in the ASIC proceeding, none of ASIC’s alleged contraventions are upheld, the ASIC proceeding would come to an end; however, in the event that the Court upholds any of ASIC’s alleged contraventions of civil penalty provisions, then there would need to be a further hearing on penalty; and

(5)    to facilitate its anticipated initial hearing, separate case management directions were made in the class action (including as to the service of evidence and submissions as well as other steps).

5    Turning to the substance of the proceedings, the observation made in Webb (No 5) (at [13]) that the “allegations raised by ASIC and by Mr Webb are largely the same, save that in the class action the allegations relate to GetSwift’s contractual obligations and dealings with a total of 16 customers, comprising 13 customers referred to in the ASIC proceeding plus an additional three customers” remains accurate.

6    More particularly, in the ASIC proceeding, it is now established that the evidence adduced concerned matters such as the basis GetSwift had for a number of alleged representations, the materiality of certain information, the states of mind of Mr Hunter, Mr Macdonald and Mr Eagle about these and other matters relevant to their alleged knowing involvement in GetSwift’s alleged contraventions, and whether the conduct of Mr Hunter, Mr Macdonald and Mr Eagle fell short of the degree of care and diligence to be expected of reasonable officers in their positions. While Mr Hunter is not a respondent to the class action, the allegations made against Mr Macdonald in the ASIC proceeding are for the most part replicated and the allegations in the class action are supplemented by claims in relation to an Appendix 4C filing and certain supposed “progressive and cumulative representations” that are not raised in the ASIC proceeding.

7    As a result, it is correct to submit, as GetSwift does, that there are a large number of factual contentions to be considered in the ASIC proceeding which will also arise for determination in the initial hearing of the class action and, to the extent that identical factual questions are not raised in the class action, any additional issues are likely to be similar in nature.

8    As I anticipated in Webb (No 5) (at [13]), the documentary evidence adduced in the ASIC proceeding and the documentary evidence proposed to be adduced in the class action is substantially common. The position as to the testimonial evidence requires some elaboration.

9    In the ASIC proceeding, ASIC relied upon 19 witnesses from customers of GetSwift: four witnesses who were former associates of GetSwift; 10 witnesses from ASIC, the Australian Securities Exchange and Chi-X Australia (a securities and derivatives exchange); and four witnesses from organisations who were large investors in GetSwift. It also relied on opinion evidence from Mr Molony as a “professional investor”. Senior Counsel for GetSwift accepted on this application that none of the witnesses called by ASIC were challenged on their credit.

10    Importantly, GetSwift did not call any witnesses; Mr Hunter, Mr Macdonald and Mr Eagle did not get in the witness box – nor did they call any other witnesses.

11    The applicant in the class action, Mr Webb, intends to give evidence and additionally has foreshadowed calling seven out of the 19 witnesses from customers of GetSwift that were called in the ASIC proceeding (and who were cross-examined, although not as to their credit, in that proceeding). Three of these seven witnesses will only be called if efforts to secure their attendance remotely from overseas are successful. All witnesses identified as being likely to be called have been required for cross-examination.

12    As to opinion evidence, Mr Webb intends to rely upon evidence from two experts: an economist, Dr Ramsey Zein; and a market analyst, Mr Robert Turner. GetSwift also intends to rely upon expert evidence from two witnesses: an economist, Dr Sanjay Unni; and a market analyst, Mr Martin Duncan. Orders have been made for supervised conclaves to take place between experts, so a joint report can be provided to the Court in relation to each of these areas of specialised knowledge.

C    APPLICABLE PRINCIPLES

13    There is no controversy as to the applicable principles. I set them out in detail in Webb (No 5) (at [20]–[24]). They were also recently and comprehensively set out by John Dixon J in Bolitho v Banksia Securities Limited (No 11) [2020] VSC 567 (at [7]–[21]).

14    I will not set them all out again but will confine myself to identifying three related aspects of the relevant principles that were contended to be of especial, present importance.

15    First, the present inquiry does not involve any prediction about how I will approach the determination of the overlapping issues (for example, by predicting whether I will put aside the irrelevant or the extraneous) because the relevant inquiry has as its focus the appearance as to what might occur. In elaboration of this point, Mr Macdonald contended that the outcome of the present application largely depends on the reasonable observer’s understanding of the extent of the “ability of a judge to discard the irrelevant, the immaterial and the prejudicial”. It was said that the focus must be on the understanding of the reasonable observer rather than the actual ability of a judge to keep information segregated and that “the reasonable observer would be disinclined to believe that a judge would be able to compartmentalise information in their mind in a manner that was inconsistent with the ordinary experience of a non-lawyer”. Reference was made to a reasonable observer knowing that the difficulties in bringing a fresh mind to a new case are “amplified where there are a large number of issues in contention” and reliance was placed on the comments of Middleton J in Kirby v Centro Properties Ltd (No 2) [2011] FCA 1144; (2011) 202 FCR 439, where his Honour said (at 450 [64]):

It is the number of factual findings now in contention, upon which I reached judgment in the ASIC proceeding, which makes the apprehension in the eyes of the reasonable lay observer more apparent and potentially real. It may be assumed I would be able to make different findings of fact in this proceeding based upon the evidence in this proceeding. However, where there are so many factual findings which are now in contention, the reasonable lay observer might have an apprehension the judge would find it difficult to “start afresh”.

16    Related to this point, reliance was placed on the comments of Heydon, Kiefel and Bell JJ in British American Tobacco Australia Services Limited v Laurie [2011] HCA 2; (2011) 242 CLR 283, where their Honours observed (at 331 [139]):

It is fundamental to the administration of justice that the judge be neutral. It is for this reason that the appearance of departure from neutrality is a ground of disqualification. Because the rule is concerned with the appearance of bias, and not the actuality, it is the perception of the hypothetical observer that provides the yardstick. It is the public’s perception of neutrality with which the rule is concerned. In Livesey it was recognised that the lay observer might reasonably apprehend that a judge who has found a state of affairs to exist, or who has come to a clear view about the credit of a witness, may not be inclined to depart from that view in a subsequent case. It is a recognition of human nature.

(emphasis in original).

17    GetSwift pointed out that adequate recognition must be given to the possibility of human frailty and although judges are equipped by training, experience and their oath to decide factual contests on the material in evidence, the reasonable observer is not presumed to reject the possibility of prejudgment. It is for this reason that any expression I may make (or have made) as to my willingness or confidence in my ability to maintain an open mind, is irrelevant if a reasonable observer might apprehend some prejudgment.

18    Secondly, relying on Livesey v New South Wales Bar Association (1983) 151 CLR 288 (at 294 per Mason, Murphy, Brennan, Deane and Dawson JJ), GetSwift stressed the need for caution, and it was pointed out that if a judge considers that there is any real possibility that a reasonable apprehension of prejudgment or bias exists, “he should, of course, refrain from sitting.” Consistently with this, in a case of real doubt, it is often prudent for a judge to decide not to sit in order to avoid the inconvenience that could result if an appellate court were to take a different view.

19    Thirdly, cases which involve factual findings and rulings made in earlier proceedings form part of a wider category of case where the reasonable apprehension of bias arises from the decision-maker’s possession of “extraneous information”. This is important in the present circumstances because it is not a complete answer to an assertion of apprehended bias that, although a judge knows of some extraneous information by reason of having heard an earlier case, no relevant findings have actually been made in that earlier case.

20    All these three related points are well made and are undoubtedly central to informing the approach I should take.

21    Before leaving the relevant principles, I should make two further points. First, in Webb (No 5) I observed (at [24]) that:

Saying that a judge has prejudged or will prejudge an issue, or even saying there is a real likelihood that a reasonable observer might reach that conclusion, carries with it the contention that the judge might apply that opinion formed during the course of the ASIC proceeding to the matters in issue in the initial trial of the class action, and further, the judge might do so without giving the matter fresh consideration in the light of whatever may be the facts and arguments advanced in the class action.

(emphasis added).

22    It was argued on this application that this extract revealed “a slight distortion of the relevant test” because the present application does not involve saying that “a judge has prejudged or will prejudge an issue”; nor is the question whether a reasonable observer might reach the conclusion that “the judge has prejudged or will prejudge an issue”. I do not think my comments amounted to a distortion of the “two might” test; in fact, they are a paraphrase of Hayne J’s comments in Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17; (2001) 205 CLR 507 (at 564 [185]). In any event, I accepted then, as I do now, that the relevant question is whether the relevant observer might reasonably apprehend that the judge might not bring an impartial mind. The test is not framed in terms of certainties and is concerned with appearances and not actualities. Moreover, the question is one of possibility (real and not remote) and not one of probability: Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 (at 345 [7] per Gleeson CJ, McHugh, Gummow and Hayne JJ). A real likelihood of bias need not be demonstrated; “a reasonable apprehension of bias in the mind of the fair-minded lay observer is sufficient” and the test is neither narrow nor technical: Wilson v Waigani Pty Ltd [2018] VSC 302 (at [239] per Croft J). In other words, the threshold to establish a reasonable apprehension is lower than the standard necessary to be satisfied as to a reasonable belief of the matter: Health Care Complaints Commission v Wallach [2004] NSWSC 927 (at [16] per Barr J); Aurora Funds Management Limited v Australian Government Takeovers Panel [2020] FCA 496; (2020) 144 ACSR 593 (at 615 [87] per Perram J).

23    Secondly, as was emphasised by Basten JA in Lee v Cha [2008] NSWCA 13 (at [44] with whom Hodgson and Bell JJA agreed), the key part of the test is that the observer is understood to be a layman and not a lawyer. Indeed, I cannot attribute to the reasonable lay observer an understanding of legal issues as if the layman were a litigation lawyer. It might be thought this somewhat conflicts with the notion that it is necessary to consider the legal, statutory and factual contexts in which any decision as to disqualification is made (Isbester v Knox City Council [2015] HCA 20; (2015) 255 CLR 135 (at 146 [20] per Kiefel, Bell, Keane and Nettle JJ)) and that the hypothetical fair minded lay observer assessing possible bias is to be taken to have knowledge of the circumstances leading to the decision: see Bolitho v Banksia Securities Limited (No 11) (at [17] per John Dixon J). But properly understood, there is no such tension. The hypothetical observer must be taken to understand the relevant context: the headline notions that credit is not in issue, the expert evidence is not central, and the core documentary material will likely be decisive – to proceed otherwise would be unreal and render the test unworkable, but this is not the same thing as saying the hypothetical observer understands the more granular reasons why this is the case forensically or as a matter of law.

D    RELEVANT FACTUAL MATTERS AND THE ATTRIBUTES AND KNOWLEDGE OF THE HYPOTHETICAL OBSERVER

24    As touched on above, it is important at the outset to recognise that circumstances have developed since Webb (No 5) was decided and the earlier application was brought and resolved on the premise that it was (at [25]) “necessarily based on a degree of supposition and prognostication”.

25    We now know the class action has not settled and the Court will be required to make findings on factual matters in contention common to both proceedings including:

(1)    the state of affairs of agreements and dealings between GetSwift and its clients;

(2)    the materiality of certain information;

(3)    the beliefs that would be held by a reasonable shareholder regarding GetSwift’s statements in relation to the company’s business model;

(4)    the beliefs that would be held by a reasonable shareholder regarding GetSwift’s statements in relation to the status of its agreements with certain customers;

(5)    the basis for various statements alleged to have been made by the company; and

(6)    the relevant involvement of GetSwift’s directors in the company’s conduct in releasing certain announcements.

26    It is also now evident that there are to be some differences in the evidence relied upon across the two proceedings, with the result that the Court will be in possession of information extraneous to the evidence adduced in the class action when making findings in the class action. As detailed above, there will be differences in the expert and lay material that will be received and as to (four to seven) lay witnesses, each of those witnesses will, it appears, be called and cross-examined again.

27    Notwithstanding this, I think the respondents considerably overstate the position to assert that this extraneous information is “vast and substantial”. It is important to recognise the reality I referred to in Webb (No 5) (at [17]–[18]):

As those experienced in commercial litigation in general, and in securities class actions in particular, would readily appreciate, what matters most in the determination of the issues in cases such as this is the analysis of such contemporaneous notes and documents as may exist and the probabilities that can be derived from these documents and any other objective facts. Take the example of the dealings between GetSwift and the customers: there is likely to be a documentary record both within the business records of GetSwift and their contractual counterparty which records dealings between them which go beyond the agreement itself. Additionally, experience suggests that it is also likely that there will be informal email exchanges, both between GetSwift and the customers, and within the relevant organisations.

As Leggatt J said in Gestmin SGPS SA v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) at [15]-[23], there are a number of difficulties with oral evidence based on recollection of events given the unreliability of human memory. Moreover, considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. As his Lordship noted, a witness is asked to make a statement, often when considerable time has already elapsed since the relevant events. The statement is usually drafted by a solicitor who is inevitably conscious of the significance for the case of what the witness does or does not say. The statement is often made after the memory of the witness has been “refreshed” by reading documents. The documents considered can often include argumentative material as well as documents that the witness did not see at the time and which came into existence after the events which the witness is being asked to recall. It may go through several iterations before it is finished. As Lord Buckmaster famously said, the truth “may sometimes leak out from an affidavit, like water from the bottom of a well”. This may be overly cynical, but the surest guide for deciding the case will be as identified by Leggatt J at [22]:

… the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on the witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.

28    These comments have been amply borne out by the reality of the forensic contest as it played out in the ASIC proceeding and as it is likely to play out in the class action as it develops. At the risk of some over-generalisation, a review of the submissions of all parties in the ASIC proceeding reveals that it is common ground that the determination of the factual issues essentially turns on an analysis of the contemporaneous material, known facts, and inferences to be drawn from the material in evidence in accordance with principle. The ASIC proceeding is far less about what actually occurred and far more about the application of legal norms to those (in large part) uncontested facts – as one would expect when witnesses are not challenged as to their credit and the respondents do not go into evidence save for a documentary tender. In this regard, GetSwift recognises that there will be “a substantial overlap in a large number of documents tendered” in both cases. In my view, when one focusses on the documents of real significance, this rather understates the position. Both ASIC and Mr Webb have an interest in adducing all significant contemporaneous documents they consider to be inculpatory of the allegations concerning dealings with the common customers and the market, and the respondents no doubt have an interest in both proceedings in adducing all important contemporaneous documents they consider to be exculpatory. As GetSwift itself recognises, there will be a common “core-body of documentary material”. Of course, it is necessary to bear in mind that forensic decisions such as the way common witnesses are cross examined and eschewing calling witnesses in the respondents’ cases may differ in the class action; and GetSwift’s assertion that the Court could not just dismiss the evidence of the 30 to 33 lay witnesses, the evidence of Mr Molony and all of the cross-examination, as being marginal or insignificant is true; but these matters do not significantly detract from the force of the point that the factual findings in both cases are highly likely to be based on inferences drawn from the important contemporaneous documentary evidence that will be in evidence in both cases and known or probable facts. To recognise this is simply to recognise the practical reality of these forensic contests.

29    Hence, although it is literally true to state that the Court will be asked to decide the same issues (or substantially the same issues) on two sets of evidence, it is also superficial. The real point is whether one accepts the submission made that a fair-minded 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 by reason of the possession of the type of extraneous information that will likely be present in this case. Put another way, there is a need to focus on the third step that Gageler J identified in Isbester (at 155–6 [59]), being consideration of the reasonableness of the apprehension of a deviation from a neutral evaluation of the merits being caused by the factor which it is hypothesised might cause the issues to be resolved otherwise than as the result of neutral evaluation. GetSwift goes so far as to suggest it “would involve a near super-human effort to put all of the “extraneous information” out of mind and approach the same issues afresh” and that “due regard must be had for human frailty and human nature”. But even if these submissions were dismissed as being somewhat hyperbolic in the present circumstances, one comes back to the need to have regard to appearance and not actuality.

30    As I observed in McKenzie v Cash Converters International Ltd (No 3) [2019] FCA 10 (at [28]–[29]), the fact that the relevant test requires consideration through the attribution of knowledge of matters to a hypothetical fair-minded lay observer is despite some criticism that this amounts to a fiction used to connote a degree of detachment or objectivity to a process which inevitably involves the application of normative standards of behaviour determined by the Court itself: see, for example, Martin CJ’s comments in Commonwealth Bank of Australia v Jackson McDonald (a firm) [2014] WASC 301 (at [24]). But given the required approach:

it is necessary to understand the attributes of l’homme moyen. This paragon has admirable traits and, more particularly:

(1)    is taken to be reasonable: Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488 at 492-493 [12];

(2)    does not make snap judgments: Johnson at 494 [14];

(3)    is neither complacent nor unduly sensitive or suspicious: Johnson at 508-509 [53];

(4)    knows of all the circumstances of the case: Re JRL; ex parte CJL (1986) 161 CLR 342 at 355, 359, 368 and 371-2; Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 87-8 and 95; and

(5)    will have regard to the fact that a judicial officer’s training, tradition and judicial oath equip the judge with the ability to discard the irrelevant, the immaterial and the prejudicial: Johnson at 492-493 [12].

31    So what would a hypothetical observer likely recognise here?

32    First, as GetSwift submits, a hypothetical observer would recognise that the concerns in this case are not simply confined to the knowledge of extraneous information gained from routine rulings of trial judges excluding irrelevant and prejudicial material from evidence; it is information not in evidence in the class action but obtained by the trial judge in the final hearing of the ASIC proceeding, which overlaps significantly with the issues under contention in the class action.

33    Secondly, however, knowing all the circumstances of the case, a hypothetical observer would recognise that given the allegations are so closely connected and the most important evidentiary material is documentary which is likely to be common across both proceedings, it is not as if the trial judge is required to put out of mind the “core” contemporaneous documentary evidence that will be in evidence in both cases and known relevant common facts. As to the expert evidence of Mr Molony (such as was ultimately admitted), it could only ever provide some assistance in determining the objective, predictive (and one might say commonsense) exercise that s 674 of the Corporations Act 2001 (Cth), read together with s 677, requires; specifically, whether the pleaded (omitted) “information” would, or would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose the relevant shares.

34    Thirdly, connected to this last point, although the relevant facts might at first glance be thought to be complex, they are not. Indeed, the factual issues were not in substantial contest in the ASIC proceeding. What is in contest is the inferences and conclusions (both factual and legal) to be drawn from contemporaneous communications. Given the need to bear in mind one is dealing with a lay observer, that is probably all the knowledge that is necessary to impute. But this general proposition, which can readily be grasped, is to the extent relevant, borne out by a closer, more sophisticated analysis, which is that of a lawyer and not a layman. Although there are some minor issues as when certain customers ceased engaging with GetSwift regarding the use of GetSwift’s software, these do not depend on credit issues. Indeed, the real contest in the continuous disclosure cases is: (a) whether the “information” pleaded which ASIC alleges GetSwift was obliged to disclose under s 674 of the Corporations Act and ASX Listing Rule 3.1 did, in fact, exist; (b) to the extent that the pleaded information did exist, whether GetSwift had that information and was aware of the information for the purposes of s 674(2)(b) and Listing Rule 3.1 (which although a mixed question of law and fact is, to the extent it is a factual inquiry, likely to be determined by reference to the “core” common contemporaneous documents); (c) whether information regarding GetSwift’s business model and the terms on which GetSwift entered into agreements with customers was “generally available” within the meaning of s 674(2)(c)(i) (which again, to the extent it is a factual inquiry, is one based on the “core” common contemporaneous documents); and (d) to the extent that there was information of which GetSwift was aware and which was not generally available, the objective question as to whether or not a reasonable person would have expected that information, if it were generally available, to have had a “material effect” on the price or value of GetSwift’s shares for the purposes of s 674(2)(c)(ii) and Listing Rule 3.1. As to the misleading and deceptive conduct case, in summary, the defence case was: (a) GetSwift did not make the alleged representations, many of which are implied; (b) if they were made, they were not misleading, including by reason of the fact that information about GetSwift’s pay-per-use business model and the general terms on which GetSwift engaged with customers was generally available; and (c) insofar as ASIC relies on silence, the defence is that the information that ASIC contends GetSwift was obliged to disclose was immaterial, and a reasonable investor would only have expected revelation of material information. Finally, as to the knowing involvement and breach of duty cases, these involve the application of the law to facts that are largely undisputed and inferences to be drawn from the contemporaneous and largely “core” documentary record.

35    Fourthly, although like in Centro, the hypothetical observer would be taken to understand the trial judge has heard submissions and received evidence from a large number of witnesses over the course of a lengthy hearing of the ASIC proceeding and that during that time and thereafter, the trial judge would have assessed and contemplated the factual and legal issues under contention; unlike in Centro, however, being a case where judgment had been delivered and findings had been made, including resolving issues as to credit, the hypothetical observer acting reasonably would also appreciate that until one comes to reach conclusions on the material by writing a judgment in a case raising complex legal issues, the views formed to that time would be preliminary.

36    Fifthly, the hypothetical observer would be taken to be familiar with human frailty (perhaps fortunately, the test focuses on a hypothetical rather than the actual decision maker, so it would be wrong to speculate as to whether that familiarity would have any particular resonance in the present circumstances). Having said that, this recognition given to the possibility of human frailty must be balanced against the knowledge to be attributed that judges are equipped and obliged by their oath to decide factual and legal contests on the material in evidence.

37    The list of knowledge to be attributed to the hypothetical observer could go on, but the above seems to me, on the basis of the submissions put, to be the most important in assessing whether apprehended bias exists.

E    ASSESSMENT AND CONCLUSIONS

38    Correctly, GetSwift points to my observations in Webb (No 5) (at [26]), where I noted that “it is appropriate to proceed on the basis that it will create some challenge for a trial judge to sit sphinx-like through the ASIC proceeding and form no preliminary views as to the likely factual findings that will be made. It is a tad unrealistic to expect that a judge would approach the class action entirely tabula rasa”. But this is different from concluding that the properly informed relevant observer might reasonably apprehend that the judge might not bring an impartial mind to the determination of the controversy in the class action because of the existence of the particular extraneous information identified given the circumstances of this case. Or to put it another way, it is different from the reasonable observer possibly apprehending “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” (using the language of Laurie (at 333 [145] per Heydon, Kiefel and Bell JJ)). Of course, the fact that no findings have been expressed in a written judgment is far from determinative, but it is surely relevant to the formation of a hypothetical observer’s reasonable view at the present time that no definitive conclusions have been reached.

39    I accept that it must be borne firmly in mind, using the language of Ebner (at 345 [7] per Gleeson CJ, McHugh, Gummow and Hayne JJ), that the present inquiry does not involve any prediction about how I in fact will approach the determination of the overlapping issues; but it is also necessary to bear in mind the rule is directed to an apprehension of possible prejudgment. As Gleeson CJ and Gummow J noted in Jia Legeng (at 531–2 [71]–[72]):

Decision-makers, including judicial decision-makers, sometimes approach their task with a tendency of mind, or predisposition, sometimes one that has been publicly expressed, without being accused or suspected of bias. The question is not whether a decision-maker’s mind is blank; it is whether it is open to persuasion…

... Natural justice does not require the absence of any predisposition or inclination for or against an argument or conclusion.

40    Mr Macdonald is correct to submit that the present application “largely depends on” (but I would interpolate, is not wholly dependent upon) the reasonable observer’s understanding of the extent of the “ability of a judge to discard the irrelevant, the immaterial and the prejudicial”.

41    However, given the relevant factual and legal context explained above, I do not consider that a reasonable hypothetical observer, knowing all the circumstances of the case (including, to the extent it could be comprehended by a lay observer, the issues, the nature of the evidence and the extraneous material identified) might reasonably apprehend that the judge might not bring an impartial mind to the determination of the controversy in the class action.

42    Having said this, there are a number of matters that have caused me pause in reaching this conclusion.

43    The most weighty is the submission, identified above, that the cautious and precautious approach where there is “any real possibility” that the trial judge’s participation might lead to a reasonable apprehension of prejudgment or bias, is that the trial judge “should, of course, refrain from sitting” (Livesey (at 294 per Mason, Murphy, Brennan, Dean and Dawson JJ)) and “[i]n a case of real doubt, it will often be prudent for a judge to decide not to sit” (Ebner (at 348 per Gleeson CJ, McHugh, Gummow and Hayne JJ)). I am entreated to take the “prudent” course – a submission, which for a variety of reasons, has an intuitive, almost beguiling, attraction. But I do not think I should accede to it. Balanced against admonitions as to prudence, is the well-established proposition that disqualification should not occur unless “substantial grounds” are established: Bienstein v Bienstein [2003] HCA 7; (2003) 195 ALR 225 (at 233 [36] per McHugh, Kirby and Callinan JJ); see also R v Watson; ex parte Armstrong (1976) 136 CLR 248 (at 262 per Barwick CJ, Gibbs, Stephen and Mason JJ) quoting R v Commonwealth Conciliation and Arbitration Commission (1969) 122 CLR 546 (at 553–4 per Barwick CJ, McTiernan, Kitto, Taylor, Menzies, Windeyer and Owen JJ); Laurie (at 305 [45]  per French CJ and at 313–4 [71] per Gummow J); Hamod v New South Wales [2011] NSWCA 374 (at [258] per Beazley JA, with whom Giles and Whealy JJA agreed). This is an important factor as a matter of principle as it provides a safeguard against a form of judge “shopping” – although there is no suggestion of this occurring in the present case.

44    A further matter requiring reflection was not the focus of submissions of the parties but should be mentioned: that is, the operation of s 140 of the Evidence Act 1995 (Cth). Section 140(2) requires a court to consider each of the following matters when determining whether a case is proved on the balance of probabilities: (a) the nature of the cause of action or defence; and (b) the nature of the subject matter of the proceeding; and (c) the gravity of the matters alleged.

45    In this regard, in assessing the nature of the cause of action or defence, the court may take into account the gravity of the consequences which flow from a particular finding: Morley v Australian Securities and Investments Commission [2010] NSWCA 331; (2010) 274 ALR 205 (at 341 [742] per Spigelman CJ, Beazley and Giles JJ). Hence, the graver the consequences of a particular finding (such as a civil penalty as opposed to monetary liability), the “stronger” the evidence needs to be in order to conclude that the allegation is established on the balance of probabilities: Morley (at [746]).

46    It is trite that where a civil proceeding involves allegations of conduct that is criminal or amounts to a breach of a civil penalty, the standard of proof remains the balance of probabilities. Judicial statements that clear, cogent or strict proof is required to establish serious matters do not address the standard of proof but rather the conventional view that people do not ordinarily engage in seriously wrongful conduct and courts should not lightly make such findings. Although the prism through which the evidence is assessed may, by reason of s 140(2), be somewhat different, it is to be remembered that here we are dealing with largely the same course of events in the class action as in the ASIC proceeding. In both cases, if relevant facts alleged are to be proved by the relevant moving party, this will only be if, adopting the language of Sir Owen Dixon: (a) the tribunal of fact feels an actual persuasion of their occurrence or existence (Briginshaw v Briginshaw (1938) 60 CLR 336 (at 361 with emphasis added); (b) the whole of the evidence establishes a “reasonable satisfaction” on the preponderance of probabilities such as to sustain the relevant issue (Axon v Axon (1937) 59 CLR 395 (at 403)); and (c) there is “a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied” (Jones v Dunkel (1959) 101 CLR 298 (at 305)).

47    Any differences mandated by s 140 of the Evidence Act in the circumstances of this case do not seem to me, on examination, to loom large when it comes to the process of fact finding and whether I have reached that level of actual persuasion of the existence of relevant facts. It does not affect my view as to the apprehension of the reasonable bystander.

48    I have reached the conclusion that I should not disqualify myself, notwithstanding I accept that there is an unusual need for caution in the present circumstances. The Court will be hearing the class action at the same time as it has reserved judgment in the ASIC proceeding. In the course of the initial trial of the class action, some extraneous information to that received in the ASIC proceeding will be received. In particular, expert evidence in the class action will likely be received from four experts who will address matters which are in issue in the ASIC proceeding, particularly in connexion with the question of materiality of alleged nondisclosures. This includes substantive issues on which the Court has already received detailed submissions in the ASIC proceeding, a number of which were not the subject of extensive expert evidence. I accept the question of materiality is a key issue in the ASIC proceeding, but for reasons substantially similar to those that I have already explained in relation to the class action, I do not consider that a reasonable bystander knowing all the circumstances of the case might reasonably apprehend that the judge might not bring an impartial mind to the determination of the controversy in the ASIC proceeding.

49    Nonetheless, as I indicated to the parties, I did not wish to take any step now that would imperil the principled disposition of the ASIC proceeding. On the hearing of the interlocutory application, senior counsel for Getswift indicated that if I did not disqualify myself, he expected that such course would result in an application for leave to appeal (T16.10–3). In those circumstances, as I discussed with the parties, the safest course was to vacate the current commencement date of the class action hearing to allow time for any dissatisfied party to persuade others that I should have disqualified myself from hearing the class action but without, in the interim, risking the miscarriage of the ASIC proceeding I have now heard by receiving any extraneous information. In any event, proceeding with this Victorian matter in the context of the current lockdown would additionally have created difficulties which, although not insuperable if the case could otherwise proceed, may reduce as time goes on.

50    In Webb (No 5) (at [1]–[2]) I referred to one of the more recent developments in Pt IVA proceedings, which is evident from a review of cases before the Court, being the increasing prevalence of matters in which a regulator has commenced a civil penalty proceeding and an applicant has sought relief in a class action proceeding, arising out of the same underlying factual substratum.  It is for this reason, I explained, that an application for disqualification in this case, which if accepted would require two judges of the Court to determine two proceedings arising out of the same essential facts, “is unusual and raises issues of case management generally, which have a significance transcending the circumstances of the current parties”. As I further said (at [32]):

This problem will arise again.  There are great economies likely to be achieved by the one docket judge case managing both regulatory proceedings and a class action if they involve consideration of the same underlying facts.  If an issue arose which went to the proper constitution of the court then, naturally enough, the necessity for the proceedings to be determined according to law by a properly constituted court would trump any cost considerations …  

51    Many of these cases, like the present one, are very large pieces of litigation involving significant documentary tenders and the resolution of complex legal issues. The demands on a trial judge hearing such cases are pressing and the vexation only increases when the parties leave the courtroom – these cases require significant time to be set aside to allow for judgments to be written, meaning judges of the Court have less time to manage and hear other cases. The demands of the Court will increase and the prejudice to other litigants will worsen if the principles of apprehended bias, properly applied, require disqualification in circumstances such as the present.

52    The maxim fiat justitia, ruat coelum might easily be dismissed in a cynical age by some as a hoary old chestnut, but like a number of similar sayings, it has residual rhetorical force because it reveals a kernel of truth: every litigant is entitled to a properly constituted court free from bias – whatever the burdens on the Court and judges and irrespective of the fact that expedience might suggest otherwise. These cases cannot be determined simply on the basis of what is convenient. If, contrary to my view, the law requires disqualification then so be it: but it is a result that should not be viewed with equanimity from a public policy perspective.

53    The relief sought in the interlocutory application should be refused. The application was properly made and there should be no order as to costs. In the light of the expectation that GetSwift will pursue the matter of apprehended bias, and because the point does give rise to issues of some general importance, I consider it appropriate to grant leave to appeal to any party who wishes to appeal from my order dismissing the interlocutory application, provided a notice of appeal is filed within 14 days. I will hear from the parties as to what, if any, further orders should be made pending the disposition of any appeal.

Associate:

Dated:    9 September 2020