Federal Court of Australia

Hillier v Martin (No 2) [2021] FCA 509

ORDERS

THE COURT ORDERS THAT:

1.    The respondent’s application for an order in terms of paragraph 3 of the interlocutory application dated 26 March 2021 is dismissed.

2.    There be a further case management hearing on a date to be fixed not earlier than 17 May 2021.

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

REASONS FOR JUDGMENT

CHARLESWORTH J

1    The applicant and respondent in these proceedings are brother and sister respectively. The suit relates to the ownership and conduct of a hamburger restaurant business trading under the name “Nordburger”. Both parties have been legally represented throughout the proceeding.

2    The applicant, Mr James Hillier, asserts that he has an equitable interest in the assets and income of the Nordburger business in a proportion of at least 40%. In broad summary, he alleges that the respondent, Ms Victoria Martin, has wrongfully denied him the full extent of his asserted interests. He seeks orders for the provision of financial information relating to the Nordburger business and otherwise affecting its control. There are a multitude of issues in dispute, including the availability of claimed relief under the Trustee Act 1936 (SA) and the Australian Consumer Law. Attempts to resolve the dispute by mediation have thus far been unsuccessful. The trial is presently set down to commence on 21 June 2021 with five days set aside.

3    The respondent’s husband is Mr Thomas Martin. Mr Martin is likely to be a witness in the proceedings in respect of some (but not all) of the critical issues.

4    In February 2019 I determined an interlocutory application brought by Mr Martin in connection with two proceedings in which he was a party. Among other things, the application involved an assessment of a claim for legal professional privilege made by a law firm of which Mr Martin was formerly a partner, Norton Rose Fulbright Australia (NRFA). I describe the subject matter of those proceedings later in these reasons. Relevantly, Mr Martin applied for an order for further and better discovery which included a challenge to claims of legal professional privilege made by NRFA in respect of a considerable quantity of documents. I will refer to that interlocutory application as the NRFA application.

5    On the NRFA application, Mr Martin argued inter alia that the documents were not privileged for at least two reasons. First, he submitted that the legal practitioners who were parties to communications were not sufficiently independent of the issues arising in the proceedings such that privilege could not attach to the communications. Second, he alleged that the communications had come into existence in the furtherance of a fraud. The fraud alleged in challenging the claim of privilege was the same fraud alleged by Mr Martin in the substantive proceedings between him and NRFA.

6    In the course of determining the NRFA application I inspected the documents subject to the privilege claim. That occurred in early 2019. In the result, I rejected Mr Martin’s submissions and upheld the claim for privilege:  Martin v Norton Rose Fulbright Australia (No 2) [2019] FCA 96 (Reasons). As expressed in the Reasons I concluded that it had not been established on the material then before me that the documents subject to the privilege claim had been brought into existence in furtherance of a fraud:  Reasons at [198]. I said that my inspection of the material subject to the claim had not caused me to alter my view in respect of the fraud issue:  Reasons at [215].

7    Upon giving judgment I raised with the parties my preliminary view that it was appropriate that I recuse myself from presiding further in the proceedings including because of the observations I had made in the Reasons. After hearing from the parties, on 18 February 2019 I recused myself on the basis that I had inspected documents that were directly relevant to the issues in dispute in the proceedings which, as I have said, included the same allegations of fraud directed by Mr Martin to NRFA in the substantive claim.

8    NRFA maintains its claim for privilege in respect of the documents previously inspected by me. Some of the documents are subject to confidentiality orders. All of them are subject to an implied undertaking as to their use in accordance with the principles stated in Home Office v Harman [1983] 1 AC 280.

9    This proceedings was commenced in August 2020. There have been significant interlocutory disputes and many orders have been made with a view to progressing the matter to trial.

10    On 26 March 2021, the respondent made an application for an order that I be disqualified from presiding further in this action on the grounds of apprehended bias. That application had been foreshadowed for the first time a few days prior. It is submitted that the apprehension of bias arises by virtue of my having inspected privileged documents in determining the NRFA application. It is submitted that the privileged documents might be directly relevant to the issues to be determined in this action and/or that might be relevant to my assessment of the credibility of Mr Martin as a witness.

11    The applicant submits that the belated making of the recusal application gives rise to a waiver of the right to object to my involvement in the proceedings. As explained below, I consider there has been a waiver of the right to object to the array of case management orders made to date on the grounds of apprehension of bias. However, I do not consider the delay in bringing the application to preclude the respondent from now raising a question as to whether I should continue to preside.

PRINCIPLES

12    The test for apprehended bias is whether a fair-minded lay observer might reasonably apprehend that the decision-maker might not bring an impartial mind to the resolution of the issues he or she is to decide:  Johnson v Johnson (2000) 201 CLR 488 at [11], affirmed in Ebner v Offıcial Trustee in Bankruptcy (2000) 205 CLR 337 at [6] (Gleeson CJ, McHugh, Gummow and Hayne JJ); see also Isbester v Knox City Council (2015) 255 CLR 135, Kiefel, Bell, Keane and Nettle JJ (at [12]). See also ALA15 v Minister for Immigration and Border Protection [2016] FCAFC 30, Allsop CJ, Kenny and Griffiths JJ (at [35] – [36]).

13    The test is often referred to as the double-might test. As I said in Burgess v Minister for Immigration and Border Protection (2018) 259 FCR 197:

35    The first ‘might’ concerns the likelihood (to be assessed by the Court) of the lay observer forming the reasonable apprehension. The second ‘might’ concerns the content of the apprehension itself. It concerns the assessment (notionally made by the lay observer) of the likelihood of the decision-maker having a foreclosed mind (as opposed to having a predisposed opinion) and so deviating from the course of deciding a case on its merits.

36    Judicial statements to the effect that an allegation of apprehended bias must be distinctly made and clearly established are not to be understood as altering the degrees of likelihood inherent in the test itself:  see MZZXM v Minister for Immigration and Border Protection [2016] FCA 405 at [106] and the cases cited therein. Each ‘might’ in the double might test connotes a degree of likelihood that is lower than that which may be required by the civil standard of proof in an ordinary fact-finding context. It must nonetheless be shown that the reasonable lay observer might apprehend that the decision-maker might have a foreclosed mind. It is not sufficient to demonstrate that the observer may have ‘a vague sense of unease or disquiet’ on the question:  Jones v Australian Competition and Consumer Commission (2002) 76 ALD 424 (Jones) at [100] (Weinberg J).

14    Where it is apprehended that the judge has not discharged the duty to disqualify herself an adequate factual foundation should be advanced to lend reasonable support for the apprehension. In Isbester, Kiefel, Bell, Keane and Nettle JJ confirmed (at [23]) that the fair-minded observer is taken to have “knowledge of the circumstances”. And as the Full Court of the Federal Court (Kenny, Bromberg and Anderson JJ) said in Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v CQZ15 [2021] FCAFC 24 at [91]:

In the context of apprehended bias, the hypothetical fair-minded lay observer is attributed with the appropriate knowledge to be able to make a reasonably informed assessment of the likelihood of apprehended bias. Such knowledge includes knowledge of the relevant legal framework – in this case knowledge of the procedures governing the Tribunal’s decision-making under Part 7 of the Migration Act. The hypothetical observer is also attributed with knowledge of the identity of the decision-maker, the nature of the decision and issues in question, and of the relevant facts and circumstances leading to the decision, including, of course, the impugned conduct:  see, for example, CNY17 at [17] (Kiefel CJ and Gageler J); [58] –[59] (Nettle and Gordon JJ); Isbester at [23] (Kiefel, Bell, Keane and Nettle JJ); Re Refugee Review Tribunal v Ex parte H [2001] HCA 28; 75 ALJR 982 at [27]–[28]. It has been authoritatively stated that the fair-minded lay observer has ‘broad knowledge of the material objective facts … as distinct from a detailed knowledge of the law or knowledge of the character or ability of the [decision-maker]’: Webb at 73, as quoted in CNY17 at [58].  …

(emphasis added)

15    There must be a “logical connection” between the identified circumstance and the “feared deviation from the course of deciding the case on its merits”:  Ebner at [8]; Isbester at [21].

SUBMISSIONS AND EVIDENCE

16    The respondent relies upon an affidavit affirmed by Mr Martin on 30 March 2021. The affidavit deposes to facts relating to the proceedings between him and NRFA. It also contains material in the nature of submissions in connection with the recusal application and has been read for both purposes.

17    Counsel for the respondent’s submissions on the application were interrupted by an application made without notice by Mr Martin himself. Mr Martin asserted that he had “standing” to be heard on the recusal application and to make submissions on the merits of the application on his own behalf. Mr Martin submitted that he had interests in the outcome of the proceedings as the beneficiary and appointer of a trust which is said to hold the assets of the Nordburger business. He submitted that he had “standing” in the proceedings by virtue of a number of provisions of the Trustee Act, without going to far as to say that he ought properly to be joined as a party. I did not consider it convenient to determine whether Mr Martin was entitled to make an application for recusal in a proceeding, to which he is not a party. Rather, in my discretion, I granted Mr Martin an audience in respect of matters relevant to the respondent’s application provided that the submissions were not repetitive of that which had already been said in his affidavit and that which had already been advanced by the respondent’s counsel. My references in these reasons to the respondent’s submissions may be taken to subsume what was said by Mr Martin. I have otherwise drawn no conclusion as to whether Mr Martin has a general right of audience in these proceedings for all purposes.

Asserted bases for recusal

18    Broadly summarised, there are two asserted bases for recusal. First, it is submitted that there is a commonality of issues as between these proceedings and the proceedings involving NRFA, with the result that I have read documents that are directly relevant to the determination of issues in this action to which the parties to these proceedings have no access. I will refer to that as the commonality issue. Second, it is submitted that the documents I have inspected contain statements that are relevant to my assessment of Mr Martin’s credit as a witness. I will refer to that as the credibility issue.

Factual circumstances known to the lay observer

19    The present case is not founded upon impugned conduct on the part of a presiding judge, but rather upon the asserted possession of knowledge by the judge to which neither party can have access. The circumstances give rise to a question as to what knowledge the fair-minded observer must be taken to have about the extraneous information that has been accessed and retained by the presiding judge.

20    The fair-minded observer must of course be taken to know the issues that arise in the respective proceedings and knowledge of the fact that in determining the NRFA application I had access to documents over which a claim for legal professional privilege was made and to which the parties in this action do not have access. The list of those documents (including brief descriptions of them) is in evidence before me on this application. The fair-minded observer may be taken to know the document descriptions.

21    Counsel for the applicant submitted that the double-might test requires that I should not proceed on the basis of knowledge I in fact possess by reference to the documents (or do not possess as the case may be), but rather on the basis of information that the fair-minded lay observer may reasonably believe to have been contained in the documents. The respondent’s submissions did not directly address that question but her various arguments appeared to encapsulate both approaches, as did the submissions advanced by Mr Martin.

22    I consider it appropriate to adopt both approaches. The double-might test may be applied in factual circumstances where a fair-minded lay observer reasonably believes a presiding judge to be in possession of knowledge that she is unable to disclose. However, on that approach the mere imputation of the knowledge to the judge is not to be regarded as the end point, rather it is the starting point. It would remain necessary to apply the double-might test, proceeding from the premise that the judge in fact has the imputed knowledge. That approach is appropriate because the principles in relation to apprehended bias are founded on the imperative that justice not only be done, but seen to be done.

23    However, should it be concluded that no apprehension of bias arises in the application of the imputed knowledge approach, in my view it would remain necessary for the presiding judge to consider the application of the test to the information in fact in her possession. It would be artificial for the presiding judge to ignore the content of any recalled information, the actual possession of which would justify disqualification in accordance with legal principle. In other words, there may be an alternate basis for disqualification founded on actual knowledge of the judge, even if the double-might test is not satisfied on the imputed knowledge approach.

24    It is convenient to expand on the question of actual knowledge by reference to the particular facts of the case before turning to examine the asserted bases for recusal in more detail.

Actual knowledge of the presiding judge

25    In my view, where a judge is in possession of extraneous information that properly forms the basis of disqualification for apprehended bias, two things should occur. Either the judge should disqualify herself of her own initiative, or the judge should bring the information to the attention of the parties (at least in cases where the parties are represented), even if the judge believes the parties may be aware that the judge is in possession of it. That view may not be uniformly held. Different judges may reasonably adopt different approaches. But it cannot be doubted that in all cases there arises an obligation to act judicially and to observe the rules of procedural fairness both as to the hearing rule and as to the rule against bias.

26    Where the judge is in possession of confidential information then, depending on the content of the information, the fact of its possession may present an insuperable difficulty. The difficulty may arise if the judge cannot act judicially by drawing the parties’ attention to matters that affect the application of legal principle in the case, including the principles stated in Ebner. In that instance, an affected party may be deprived of the opportunity to make an application for disqualification by reference to the content of the documents themselves if that content cannot be disclosed. In an appropriate case, that disadvantage may, in and of itself, provide a proper basis for ceasing to preside in the trial of a cause, not necessarily because an apprehension of bias arises but because the judge is unable to explain to the affected party why an apprehension of bias does or does not exist.

27    I have given careful consideration to this wider legal framework in which the recusal application is made. However, I am also mindful that the application before me is limited to one requiring the direct application of the principles in Ebner. It is the principle stated in Ebner that is invoked by the respondent, neither party suggesting that I should cease to preside in these proceedings on the basis of any other legal principle, including principles concerning the hearing rule.

28    To the extent that the respondent’s submissions invited me to proceed on the basis of information in fact accessed and retained by me by reason of having inspected the privileged documents, I am not satisfied that the test in Ebner is satisfied. On the facts of the present case, I am able to provide reasons for that conclusion without affecting NRFA’s claim of privilege.

29    In the circumstances described below, I have retained no knowledge as to whether the privileged documents contained any communication that might conceivably bear on my assessment of the issues to be determined in these proceedings (including the assessment of the credibility of any witness). To the extent that it has been suggested that I can and should refresh my memory as to the content of the documents for any purpose, I have not done so.

30    Given what I have said above, my actual inability to recall the content of the documents is not determinative of the application. It is necessary to consider the submission that an apprehension of bias arises because of knowledge the fair-minded observer, acting reasonably, may nonetheless impute to me.

The commonality issue

31    In his amended statement of claim, the applicant alleges that a meeting took place in Adelaide on 29 April 2016. It is not in dispute that Mr Martin attended that meeting. The applicant alleges that things were said and done in connection with that meeting (including in connection with an invitation to attend it) that resulted in the applicant executing a document titled “Deed Poll”. It is reasonable to infer that the applicant perceives his execution of the document to adversely affect his interests. Among the relief sought by the applicant is an order that the Deed Poll be set aside in equity or under s 237 of the Australian Consumer Law. That relief is founded upon claims that the conduct at and leading up to the 29 April 2016 meeting (including Mr Martin’s conduct) amounted to economic duress or was unconscionable. What transpired at and in connection with the 29 April 2016 meeting is plainly an issue in dispute. However, the fact that the meeting occurred, the fact that Mr Martin attended at the meeting, and whether Mr Martin devoted time in preparing for the meeting are not.

32    The applicant also alleges the existence of a joint venture agreement between himself, the respondent, and an accountant. The accountant is not joined as a party and the relief sought by the applicant does not appear to include any order that would operate directly to the benefit of the accountant. There may be an indirect benefit, however, in that the claimed relief includes orders that would operate to vest control of the business in the applicant who may recognise the accountant’s interest without qualification. The respondent denies the accountant’s interest in the business. On the applicant’s pleaded case, his future dealings with the accountant are the subject of some clauses in the Deed Poll. As such, it does not appear to be disputed that the conduct of the accountant was a topic discussed by the participants in the 29 April 2016 meeting. The applicant otherwise pleads a narrative of alleged facts supporting his claim that he has at least a 40% share in the Nordburger business, much of which is disputed by the respondent.

33    As has been mentioned, the issue arising on the NRFA application was whether NRFA’s claim of privilege in relation to documents could properly be maintained. I do not accept the submission that there is an “overlap” of issues arising on that application (or in the underlying action) and this proceeding. As explained above, approached by reference to the pleadings, determination of the issues relating to privilege relevantly required an assessment to be made as to whether the documents constituted confidential communications between a lawyer and client for the dominant purpose of obtaining or receiving legal advice. If the documents were so categorised, it was necessary to determine whether an established exception to the privilege doctrine applied, namely that the communications occurred in the furtherance of a fraud in accordance with the principles stated in Attorney-General (NT) v Kearney (1985) 158 CLR 500.

34    There is otherwise no coincidence of pleaded allegations as between the NRFA proceedings in this Court and the proceedings presently before me.

35    However, that does not preclude a finding that the documents discovered by NRFA may have contained information concerning the Nordburger business. To understand why that is so it is necessary to provide some further information about the NRFA proceedings and the background in which they were commenced.

36    Mr Martin’s status as a partner with NRFA was terminated on 15 July 2016. On 5 August 2016 Mr Martin lodged an application in the Fair Work Commission (FWC) alleging, among other things, that there was an employment relationship that had been terminated by NRFA in contravention of certain provisions of the Fair Work Act 2009 (Cth) (FW Act). I will refer to that as the FW claim. The FW claim included an allegation that NRFA had unlawfully discriminated against Mr Martin on the grounds of his family responsibilities, including in connection with his taking time away from work for the purpose of travelling to Adelaide to attend to crises arising in his wife’s business. In order for Mr Martin to pursue the dispute under the FW Act in this Court it was necessary for the FWC to first issue a certificate in respect of it. This Court would otherwise have no power to adjudicate the dispute:  see by way of illustration Forbes v Petbarn [2018] FCA 256.

37    Among other things, NRFA denied the existence of an employment relationship. It commenced an application for judicial review in this Court concerning the FW claim. The relief sought in that proceeding was an order in the nature of prohibition that would, if made, have prevented the FWC from issuing a certificate under the FW Act in connection with the dispute. In the Reasons, I referred to NRFA’s application for judicial review as the prohibition proceedings. I will use the same description here.

38    In circumstances that became controversial Mr Martin entered into a settlement agreement with NRFA in respect of the FW claim and subsequently withdrew it. As a consequence, the subject matter of the prohibition proceedings fell away, leaving only the question of costs to be determined.

39    Mr Martin then commenced a new proceeding in this Court alleging inter alia that NRFA’s commencement of the prohibition proceedings constituted an actionable abuse of process for which damages were payable and that NRFA had committed the tort of deceit in procuring the settlement agreement. The allegations in Mr Martin’s proceeding are summarised at [95] of the Reasons as follows:

(1)    At the time that an agreement for the conduct of the private mediation had been reached by the parties, the initiating documents in the prohibition proceeding had been faxed to the New South Wales District Registry of this Court for filing but not yet accepted for filing by the Registrar:  see generally rr 2.21(1)(c), 2.22, 2.25(1) and 2.27 of the Rules.

(2)    At the time that the terms for the conduct of a private mediation were agreed, a partner of NRFA, Mr Cross, represented to Mr Martin’s solicitor that NRFA had put a stop to the filing of the prohibition proceeding.

(3)    Mr Martin agreed to participate in the private mediation on that basis.

(4)    The initiating documents were nonetheless accepted for filing and then served on Mr Martin. Service occurred on 23 September 2016.

(5)    In correspondence accompanying the served documents, Mr Cross represented that there was nothing NRFA could have done to avoid the acceptance of the documents for filing (and hence the commencement of the prohibition proceeding).

(6)    Mr Martin was intentionally deceived into believing that the commencement of the prohibition proceeding could not have been avoided by NRFA.

(7)    NRFA had not in fact put a stop to the filing of the documents, but instead had taken positive steps to secure the acceptance of the initiating documents by the Registrar, including by paying a filing fee.

(8)    The initiating documents were accepted for filing by the District Registrar on 22 September 2016 without a lawyer’s signature endorsed on the originating application.

(9)    On 22 September 2016, Mr Cross applied his signature and the date 19 September 2016 to the originating application after it had been sealed by the Court and so deliberately altered an initiating process.

(10)    By his email correspondence and by applying his signature and dating the document, Mr Cross intended to deceive Mr Martin into persisting with the private mediation, to gain leverage in settlement negotiations and so cause him to compromise his position in the underlying dispute.

(11)    Had Mr Martin known that NRFA did not put a stop to the filing of the prohibition proceeding, he would not have participated in the private mediation and he would not have withdrawn the FWC proceeding. He would instead have obtained a certificate under s 368(3)(c) of the FW Act and commenced a general protections court application in this Court.

(12)    The commencement and continuation of the prohibition proceeding (including NRFA’s persistence with its costs application) of itself constitutes an actionable abuse of process for which damages are payable.

40    As can be seen from that summary, no occasion arose for a determination of the issues that might have arisen on the FW claim had it not been compromised and had a certificate been issued by the FWC in respect of it and had the allegations underlying the claim become the subject of proceedings under the FW Act in this Court.

41    I have not overlooked that NRFA’s obligation to give discovery was defined by categories. One of the categories was directed to capturing documents relevant to the preparation of NRFA’s defence to the FW claim. That category was expressed as follows:

i.    All documents relating to any internal communications between partners and/or employees of the Respondents relating to the conduct or compromise of the [FW claim].

42    In his unchallenged affidavit evidence, Mr Martin deposed that he understood NRFA’s position on the FW claim to include an allegation that he was in breach of his obligations under a partnership agreement because of his failure to devote his full time and energy to the business including, to the best of his recollection “on account of my travel to Adelaide for the 29 April 2016 meeting and the work that I had done to support the Respondent in relation to the Nordburger business”. Assuming that to be the case, the category of discovery numbered (i) would give rise to an obligation on NRFA to discover documents relating to the conduct of that defence, whether or not the merits of the defence were directly in issue in this Court.

43    In light of that background, for the purpose of this application, I am satisfied that there exists a reasonable basis for the fair-minded observer to believe that documents relating to that defence were among the privileged documents.

44    In addition, Mr Martin has deposed to preparing communications relating to the Nordburger business and the 29 April 2016 meeting using NRFA information systems. That he did so may be accepted. Those original communications are not privileged in the hands of NRFA. However, copies of the communications may become the subject of a claim for privilege if the copies came into existence for the dominant purpose of NRFA obtaining legal advice in connection with their rights and liabilities in their dealings with Mr Martin. By way of example, Mr Martin’s affidavit annexes an email dated 11 January 2016 from him to a colleague at NRFA in which he states that he is “dealing with a sticky situation” in his wife’s business and provides some detail about the concerns that he had at that time about the conduct of the applicant in these proceedings and the accountant referred to earlier in these reasons. Mr Martin deposes to having drafted further emails to other colleagues that he cannot presently locate and which he says give a more detailed report of the issues concerning the Nordburger business and his involvement in it at that time. The original communications have not been produced.

45    Mr Martin submits that the fair-minded observer might reasonably assume that the documents subject to NRFA’s privilege claim may include copies of the materials he drafted using NRFA’s information systems. I accept that submission. There is support for it in the description of one of the privileged documents which suggests that a communication drafted by Mr Martin was forwarded to NRFA’s advisers.

46    In addition, Mr Martin deposes:

The Nordburger business clearly formed part of the advice sought by Norton Rose from Mr Cross because it is explicitly referred to in Part 3 of the List of Documents. Item 435 is an email sent from Mr McKimmie to Mr Cross on 29 September 2016, which attached the current and historical company register for both Nordburger Pty Ltd, and another company, Nordburger Holdings Pty Ltd. This latter company had been created at the direction of Mr Craig, without the knowledge or consent of the Respondent, and had not included her as either a director or shareholder. The operational and taxation problems that this had caused were a primary basis for the advice sought from JL Lawyers in August 2015, as described in the Applicant’s statement of claim.

47    I accept that the description of the privileged documents includes an email with attached company extracts bearing the Nordburger company names. However, it does not follow that the “Nordburger business clearly formed part of the advice” that NRFA sought from its advisers if what is meant by that assertion is that the email contains advice concerning the same issues arising for determination in this action.

48    I will nonetheless proceed on the assumption that the fair-minded observer might impute to me knowledge that in 2016 Mr Martin made NRFA aware of the allegations he and his wife were at that time making against the accountant and that reports that he may have drafted (whether in email correspondence or otherwise) may be included among the privileged documents.

49    However, proceeding from that premise, it does not follow that the fair-minded observer might reasonably apprehend that I may not bring an impartial mind to bear on the substantive issues to be determined in this action. In my view, no reasonable apprehension of bias can arise merely because Mr Martin previously made out of court statements about the ownership or conduct of the Nordburger business.

50    To the extent that Mr Martin has made previous out of court statements about facts in issue, those original statements are not privileged (even if copies of them may be). It is not suggested that the documents contain anything other than a description of events related from Mr Martin’s point of view at the relevant time.

51    It has not been demonstrated that a fair-minded observer might reasonably apprehend that I might not bring an impartial mind to my assessment of the respondent’s case merely because I am to be imputed with knowledge of out of court statements in which Mr Martin may have described events to others from his point of view. The respondent has not demonstrated how the documents falling within this class might conceivably be regarded as harmful to either party’s case. If the documents are directly relevant to either party’s case and they are in the respondent’s possession or control, they must be discovered in these proceedings in any event pursuant to an order for standard discovery to which the respondent has consented.

52    It is necessary to give further consideration to this category of documents in determining the submissions concerning my assessment of Mr Martin’s credibility, to which I now turn.

The credibility issue

53    There are two aspects to the credibility issue.

54    First, it is submitted that the privileged documents are likely to contain statements by NRFA’s representatives that are critical and derogatory of Mr Martin and that otherwise expressed a degree of frustration toward him and the persistence of his claims. I consider there to be a reasonable basis for the fair-minded observer to make that assumption, not least because NRFA and Mr Martin are adversaries in long-running litigation and because of the nature of the issues in dispute between them. Plainly, any derogatory expressions of opinion contained in the privileged documents would be irrelevant to the determination of the substantive issues in these proceedings and to my assessment of Mr Martin’s credibility.

55    At this juncture it is necessary to recall the attributes that the fair-minded observer must be taken to have. The Full Court in Martin v Norton Rose Fulbright Australia (No 2) [2020] FCAFC 42 at [21] (Besanko, Flick and Abraham JJ) said that the fictional observer is:

… (1) taken to be reasonable; (2) does not make snap judgments; (3) knows commonplace things and is neither complacent or unduly sensitive or suspicious; (4) has knowledge of all the circumstance of the case; and (5) is an informed one who will have regard to the fact that a judicial officer’s training, tradition and oath or affirmation, equip the officer with the ability to discard the irrelevant, the immaterial and the prejudicial.  …

56    The effect of the respondent’s submission (adopted by Mr Martin) is that the fair-minded observer might apprehend that I might be influenced by any expressions of opinion by non-party adversaries about Mr Martin to such an extent that I might not put those irrelevant opinions out of my own mind when assessing the veracity and reliability of his evidence. I do not accept that submission. The Court has before it material filed by both parties that is highly critical of each other and of non-parties, including material that is highly critical of Mr Martin. The presiding judge in a commercial action of this kind (indeed in all actions) must be taken to be equipped with the ability to discard material other than that which is admitted in evidence in the proceedings. Accordingly, even if the fair-minded observer might reasonably expect the privileged documents to have contained derogatory remarks or opinions expressed by NRFA representatives, that circumstance does not fulfil the double-might test in and of itself.

57    A discrete feature of this case is that Mr Martin cannot make submissions about the derogatory remarks to the extent that they were contained in privileged documents and are now retained by me. That would give rise to the potential for difficulty described earlier in these reasons in circumstances where actual knowledge of derogatory remarks is in fact retained in the mind of the judge but cannot be disclosed to the parties. As I said at [26] above, it would be appropriate to cease presiding in a proceeding if the claim of privilege over the inspected document precluded me from disclosing actual knowledge of information to Mr Martin upon which a proper claim for recusal for apprehended bias may conceivably be based. However, as I have mentioned, that circumstance does not arise on the particular facts of this case by reference to any actual knowledge. Having read the documents more than two years ago in the context of a busy docket and with a mind engaged upon different issues, I do not have any recollection of any content that should and would otherwise fairly be disclosed to the parties in this action were it not for the maintenance of the privilege claim.

58    Further in relation to the question of Mr Martin’s credit, it is submitted that the Court would be placed in an impossible position should he give evidence in the proceedings that is inconsistent with out of court statements that have been made by him and which are likely to be contained or otherwise evidenced in the privileged materials. In that event, it was submitted (particularly by Mr Martin himself) that the Court may form an adverse view as to Mr Martin’s credit and yet not be in a position to draw his attention to the prior inconsistency and afford him an opportunity to explain it. These submissions must be rejected whether or not the test turns on the actual knowledge of the presiding judge or upon the knowledge the fair-minded observer might reasonably impute to the presiding judge.

59    As I have already observed, original documents evidencing Mr Martin’s prior out of court statements are not privileged. Their general content is within his knowledge, even if the documents evidencing them are not presently in his physical custody and even if copies of the documents properly fall within the scope of NRFA’s privilege claim. Mr Martin has produced to this Court the email of 11 January 2016 to his colleague and deposed that the other communications were similar, albeit more detailed, in their content. He may be cross-examined on any inconsistency between his testimony and the statements made in the 11 January 2016 email to the extent that the subject matter of the material is relevant to any issue to be decided. That may be done without any apprehension of bias arising.

60    The submissions on this aspect of the application wrongly presume that the Court has committed to memory the content of other out of court statements that may have been among NRFA’s privileged materials so as to be in any position to identify inconsistencies between those accounts and the evidence Mr Martin ultimately gives at the trial of this action.

61    Even if those presumptions were not wrong, the hypothesis to which Mr Martin refers is just that: a hypothesis. The hypothesis is that a circumstance may arise at a later time (namely Mr Martin giving inconsistent evidence at the trial) that may form the basis for a successful recusal application at that later time.

62    In Livesey v New South Wales Bar Association (1983) 151 CLR 288, Mason, Murphy, Brennan, Deane and Dawson JJ (at 294):

… 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 …

63    In accordance with that principle, I should not recuse myself on the basis of facts that have not presently arisen and that are not presently expected to arise, even if it could be shown that there is some possibility that the factual circumstances may arise. That is not the manner in which the double-might test is to be applied. The mere possibility (if it exists) would not be a proper basis to disqualify myself.

64    It follows that the respondent’s interlocutory application must be dismissed.

WAIVER

65    I have deferred giving reasons in connection with the question of waiver until the conclusion of these reasons so as not to distract from consideration of the respondent’s submissions.

66    In Vakauta v Kelly (1989) 167 CLR 568 the High Court considered an appeal founded on apprehended bias arising from comments made by the presiding judge in the course of a proceeding. Brennan, Deane and Gaudron JJ said (at 572):

Where such comments which are likely to convey to a reasonable and intelligent lay observer an impression of bias have been made, a party who has legal representation is not entitled to stand by until the contents of the final judgment are known and then, if those contents prove unpalatable, attack the judgment on the ground that, by reason of those earlier comments, there has been a failure to observe the requirement of the appearance of impartial judgment. By standing by, such a party has waived the right subsequently to object.

67    The principle was recently applied by the Full Court of this Court in AAL19 v Minister for Home Affairs (2020) 277 FCR 393, Logan, Markovic and Anastassiou JJ (at [101]):

If a person is aware of the circumstances that may give rise to the disqualification of a decision-maker on the basis of an appearance of bias but nonetheless acquiesces in the process of decision-making by not taking objection, ordinarily that person will be held to have waived the objection:  Vakauta v Kelly (1989) 167 CLR 568, at 587, per Toohey J (with whom, in this regard, at 570, Brennan, Deane and Gaudron JJ agreed), see also per Dawson J, at 577 – 579; Michael Wilson, at [76]. Acquiescence with such a consequence is not confined to an exercise of judicial power: Smits v Roach (2006) 227 CLR 423, at [43], per Gleeson CJ, Heydon and Crennan JJ (Gummow and Hayne JJ agreeing, at [61], in this regard).

68    The circumstances giving rise to the present application were in existence from the commencement of the proceedings. It is reasonable to infer that the respondent has been in possession of sufficient information to make the application from that time. Among other things, the inference is supported by the spousal relationship between the respondent and Mr Martin, together with the publication of the Reasons on the NRFA application, together with the known and obvious centrality of the evidence Mr Martin may give at the trial of the applicant’s claim. In addition, the fact of Mr Martin’s involvement in the NRFA proceedings was raised by the applicant at the commencement of these proceedings as a basis for asserting a highly contentious concern that Mr Martin had misappropriated funds from the Nordburger business to meet his cost liabilities in his proceedings against NRFA. In the course of argument on an interlocutory application related to that allegation (not ultimately determined) I expressly stated that I had presided in the earlier proceedings concerning NRFA. That was done in the context of pointing out to the applicant’s Counsel that even on the applicant’s case, the respondent had a sizeable share of the Nordburger business and that even if she had expended her own monies to fund her husband’s litigation, that would not of itself support an allegation of misappropriation or other wrongdoing on her part or on Mr Martin’s part.

69    The respondent has adduced no evidence to rebut the inference that she had knowledge of the factual circumstances upon which the recusal application was based in August 2020 when this action was commenced.

70    Counsel for the respondent asserted from the bar table that the respondent gave her solicitors instructions to make the present application because she had read the Reasons for judgment I delivered in determining an application for a suppression order that had been made by Mr Martin on his own behalf in this action in March this year:  Hillier v Martin [2021] FCA 269. Counsel asserted that the reasons for refusing to make the order contained a statement to the effect that I considered the interests of Mr and Mrs Martin in the proceedings to be aligned. The passage relied upon is expressed as follows (at [34]):

There is a distinction to be drawn between admissibility of hearsay evidence which may turn on sufficiency of a factual basis stated in the affidavit itself. Evidence may be ruled inadmissible if there appears to be insufficient factual foundation for it. I consider it was open to the respondent to press for a ruling that the affidavit of Mr Hillier (or at least the serious allegations contained in it) not be admitted in evidence on the basis that they were inadmissible. That was not the course taken by the respondent, who it is to be recalled is Mr Martin’s wife. I consider it was open to Mr Martin at the earlier hearings to seek an audience in relation to the allegations made in the affidavit, including for the purposes of seeking a suppression order and for the purposes of seeking orders, as he has done today, striking out the allegations as constituting or manifesting an abuse of the Court’s processes. Instead, Mr Martin deposed to an affidavit in which he disputed the allegations and complained of the absence of a proper foundation for them.

71    The respondent did not give evidence to the effect that it was that passage that precipitated the recusal application at this advanced stage of the proceedings and it is unclear to me how it could have done so. The extracted passage merely points to the circumstance that Mr Martin gave evidence in the proceedings by way of an affidavit and that neither he nor his wife made an application for a suppression order in relation to the contentious allegations at that time. The passage contains an observation that Mr Martin cooperated with the respondent in the presentation of her case by affirming affidavit evidence to be adduced in the case. I am not satisfied that my recent observation of that cooperation (or anything else said in those reasons) furnishes a reasonable explanation for the delay in bringing the present application. I consider the respondent has waived any right to object to any interlocutory orders made to date in these proceedings on the particular grounds of apprehended bias now asserted.

72    However, as I said at the outset, the circumstance that the respondent was in a position to make the application at the outset of the proceedings does not preclude her from making the present application insofar as it constitutes an objection to my presiding in the future conduct of the matter. In the absence of any submission that the recusal application constitutes an abuse of the Court’s processes, it is appropriate to determine the application on its substantive merits, as I have now done.

Associate:

Dated:    12 May 2021