Federal Court of Australia

Bhnan v Micheletto & Carrafa (Trustees) [2022] FCA 846

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    The orders of the primary judge made on 4 June 2021 be set aside.

3.    The matter be remitted to Division 2 of the Federal Circuit and Family Court of Australia for rehearing before a different judge of that Court in a new trial.

4.    The respondent pay the appellant’s costs of the appeal as agreed or taxed.

5.    Certificates be granted to the appellant and the respondent under s 8(1) of the Federal Proceedings (Costs) Act 1981 (Cth) in respect of any costs incurred by them in relation to the new trial.

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

REASONS FOR JUDGMENT

STEWART J:

Introduction and background

1    This is an appeal from the judgment of the Federal Circuit Court of Australia published to the parties as Micheletto & Carrafa as Joint and Several Trustees of the property of Aid Eshi (Bankrupt) v Bhnan [2021] FCCA 1248 (J). The reasons for judgment are not publicly available because the day after they were published in writing a different judge of the Circuit Court suppressed the further publication of the written reasons unless references to the name of a third party were removed, and that appears not to have been done. The suppression order was made because certain findings in the reasons and a notation in the orders were made against the third party without her having been given an opportunity to be heard.

2    The third party then brought judicial review proceedings in this Court claiming that the findings and notation were made without procedural fairness. That claim was upheld and, consequently, the notation was declared to be invalid: see Jajoo v Micheletto [2021] FCA 1238.

3    The appellant in the present proceeding, Ms Stephanie Bhnan, was the first respondent in the Circuit Court. Her counsel was Mr DeBuse. The respondent Trustees, being the applicants in the proceeding below, are the trustees in bankruptcy of Mr Aid Eshi, the second respondent below. Their counsel was Mr Harrison, as on the appeal.

4    The Trustees were appointed pursuant to an order of the Circuit Court made on 30 April 2020, by which Mr Eshi was declared bankrupt with the date of the relevant act of bankruptcy being 12 February 2020.

5    In the Circuit Court, the Trustees contended that a transfer of a property at Edensor Park from Mr Eshi to Ms Bhnan on 26 February 2020 – ie, after the act of bankruptcy – was void as against the Trustees pursuant to either ss 120 or 121 of the Bankruptcy Act 1966 (Cth).

6    Under s 120, a transfer of property by a person who later becomes a bankrupt to another person is void against the trustee in the transferor’s bankruptcy if the transfer took place in the period beginning five years before the commencement of the bankruptcy and ending on the date of the bankruptcy, and the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property. Under s 120(4), the trustee must pay to the transferee any amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee.

7    Under s 121, a transfer of property by a person who later becomes a bankrupt to another person is void against the trustee in the transferor’s bankruptcy if the property would probably have become part of the transferor’s estate or would probably have been available to creditors if the property had not been transferred, and the transferor’s main purpose in making the transfer was to prevent the transferred property from becoming divisible among the transferor’s creditors or to hinder or delay the process of making property available for division among the transferor’s creditors. As with s 120(4), under s 120(5) the trustee must pay to the transferee any amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee. Thus, it was an issue at trial not only whether Ms Bhnan had paid the whole purchase consideration, but also whether she had paid part of the consideration and, if so, how much.

8    It was not in dispute that Mr Eshi sold the property to Ms Bhnan by a contract of sale dated 25 November 2019 for the purchase price of $1.5 million with settlement to take place on 26 February 2020. The Trustees pleaded that, at settlement, some $1.2 million was paid to the outgoing mortgagee as well as some further ordinary costs of settlement but that Ms Bhnan failed to pay the balance of the contract price in the sum of approximately $300,000. The $1.2 million was obtained, and paid, by Ms Bhnan by way of loan from the incoming mortgagee.

9    Ms Bhnan denied that she had failed to pay the shortfall. On her case, the shortfall was made up by the following:

(1)    $40,000 paid by way of bank cheque to Mr Eshi on 29 November 2019;

(2)    $50,000 paid by way of a series of bank transfers to Mr Eshi between 14 January 2020 and 20 March 2020;

(3)    $80,000 paid by way of transfer of a Mercedes-Benz GLE class motor vehicle, which Mr Eshi caused to be registered in his wife’s name;

(4)    $70,000 paid in cash on or about 24 February 2020 (which amount she and her husband had borrowed from her husband’s brother, Mr Roni Kakos); and

(5)    $60,000 set off against debts owed by BMP Global Transport Pty Ltd, a company of which Mr Eshi was owner and director, to HorizenOne Pty Ltd, a company of which Ms Bhnan is director and partly owns with her husband, Mr Randy Bhnan.

10    However, notwithstanding that there appeared to be contemporaneous records of at least some of the payments identified in the preceding paragraph in evidence (including the bank cheque), the primary judge rejected the entirety of Ms Bhnan’s case. His Honour found that none of the $300,000 shortfall was actually paid (J[21]), that receipts recording the receipt by Mr Eshi of two $150,000 payments by Ms Bhnan were patently false (J[17], [19]), and that, because the incoming mortgagee believed that it was lending on the basis that Ms Bhnan had contributed 20% of the purchase price, the incoming mortgagee was misled and Ms Bhnan committed a fraud upon it (J[36]-[38]). That is in circumstances where no such fraud was pleaded, put or submitted on behalf of the Trustees, and where the incoming mortgagee was not a party to the proceeding, it gave no evidence and it obtained mortgage security over the property which was valued at more than what it lent. As will be seen, the notion that the incoming mortgagee was defrauded by Ms Bhnan was a case developed, pursued in cross-examination and upheld by his Honour.

11    His Honour further found that, because of what was said to be the “unusual nature” of the transaction as well as the fact that Mr Eshi remained in the property for some time after settlement, the main purpose of the transfer was to prevent the property from being divisible amongst Mr Eshi’s creditors (J[41]). The s 121 claim was thus upheld, and no findings were made on the s 120 claim.

12    His Honour made orders, inter alia, declaring the transfer void as against the Trustees and evicting Ms Bhnan. Because his Honour found that no consideration had been paid by Ms Bhnan, Ms Bhnan got no credit under s 121(5) for the sums that she said that she had paid, including the sum of $40,000 apparently paid by bank cheque. Ms Bhnan also got no credit for the $1.2 million paid by her that his Honour accepted that she had borrowed from the incoming mortgagee, although his Honour declared that the Trustees are entitled to be recorded as the registered proprietors of the property “subject to the existing registered mortgage encumbrance”. The result was that Ms Bhnan remained indebted to the mortgagee for the amount borrowed by her and paid to Mr Eshi, but the mortgagee had the security of the Trustees’ property.

The appeal

13    The supplementary notice of appeal sets out five grounds of appeal. In substance, they are:

(1)    Grounds 1-4: that the primary judge’s fact finding and reasons are inadequate; and

(2)    Ground 5: that Ms Bhnan was denied procedural fairness by reason of the primary judge’s interventions, which gave rise to a reasonable apprehension of bias.

14    Where an appellate court is faced with an appeal ground alleging a want of procedural fairness or apprehended bias, the court should deal with that ground first: Jorgensen v Fair Work Ombudsman [2019] FCAFC 113; 271 FCR 461 at [93] per Greenwood, Reeves and Wigney JJ. As explained by Kirby and Crennan JJ in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd [2006] HCA 55; 229 CLR 577 at [117], that is because, if the ground is upheld, it would strike at the validity and acceptability of the trial itself and it would require that the matter be remitted for retrial. It is therefore appropriate to consider Ms Bhnan’s fifth ground of appeal first.

15    For the reasons that follow, I have reached the conclusion that the apprehended bias ground must succeed. That has the result that it is neither necessary nor desirable to consider the remaining grounds.

Apprehended bias

Principles

16    In the present case, what is said to give rise to a reasonable apprehension of bias are the interventions of the primary judge at trial. Where a complaint of excessive judicial intervention is made, it is important to bear in mind that such conduct may give rise to a miscarriage of justice not only by reason of an apprehension of bias. Thus in Michel v The Queen [2009] UKPC 41; [2010] 1 WLR 879 at [34], Lord Brown JSC, delivering the advice of the Board, said the following of the conduct ordinarily required of a judge at trial:

… Of course he can clear up ambiguities. Of course he can clarify the answers being given. But he should be seeking to promote the orderly elicitation of the evidence, not needlessly interrupting its flow. He must not cross-examine witnesses, especially not during evidence in-chief. He must not appear hostile to witnesses, least of all the defendant. He must not belittle or denigrate the defence case. He must not be sarcastic or snide. He must not comment on the evidence while it is being given. And above all he must not make obvious to all his own profound disbelief in the defence being advanced.

17    That passage has been cited with approval in numerous judgments of intermediate appellate courts in Australia, including R v T, WA [2014] SASCFC 3; 118 SASR 382 at [52] per Kourakis CJ, Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88; 332 ALR 128 at [17]-[18] per Basten JA and [172] per Ward JA, Navarro and Navarro [2019] FamCAFC 32 at [11], Jorgensen at [102] and Gambaro v Mobycom Mobile Pty Ltd [2019] FCAFC 114; 271 FCR 530 at [24].

18    It is equally important to observe that there is a difference between judicial interventions during submissions and when witnesses are giving evidence: see Serafin v Malkiewicz [2020] UKSC 23; [2020] 1 WLR 2455 at [40]-[43] and Manly Fast Ferry Pty Ltd v Wehbe [2021] NSWCA 67 at [121] per Leeming JA (in dissent). In respect of cross-examination, Lord Wilson (with whom Lord Reed PSC, Lord Briggs, Lady Arden and Lord Kitchin JJSC agreed) in Serafin at [40] endorsed the view that interventions should be as infrequent as possible.

19    In R v T, Kourakis CJ at [38] considered that judicial intervention by way of questioning may give rise to a miscarriage of justice on one of three basic grounds:

(1)    The disruption ground: where judicial questioning unfairly undermines the proper presentation of a party’s case.

(2)    The bias ground: where the questioning gives an appearance of bias.

(3)    The dust of conflict ground: where the questioning is such an egregious departure from the role of a judge presiding over an adversarial trial that it unduly compromises the judge’s advantage in objectively evaluating the evidence from a detached distance.

20    As mentioned, the present appeal concerns an allegation that the primary judge’s interventions gave rise to a reasonable apprehension of bias. In that respect, the applicable principles are well established and are not in dispute. The “double ‘might’” test as articulated in Ebner v Official Trustee in Bankruptcy [2000] HCA 63; 205 CLR 337 at [6] was recently reaffirmed in Charisteas v Charisteas [2021] HCA 29; 393 ALR 389 at [11]:

The apprehension of bias principle is that “a judge is disqualified if 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”.

21    The application of that principle to an allegation of apprehended bias arising from judicial intervention was considered in Johnson v Johnson [2000] HCA 48; 201 CLR 488, where the majority (consisting of Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) made the following relevant remarks:

12    … The hypothetical reasonable observer of the judge’s conduct is postulated in order to emphasise that the test is objective, is founded in the need for public confidence in the judiciary, and is not based purely upon the assessment by some judges of the capacity or performance of their colleagues. At the same time, two things need to be remembered: the observer is taken to be reasonable; and the person being observed is “a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial”.

13    Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx. In Vakauta v Kelly [(1989) 167 CLR 568 at 571] Brennan, Deane and Gaudron JJ, referring both to trial and appellate proceedings, spoke of “the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case”. Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgment. Judges are not expected to wait until the end of a case before they start thinking about the issues, or to sit mute while evidence is advanced and arguments are presented. On the contrary, they will often form tentative opinions on matters in issue, and counsel are usually assisted by hearing those opinions, and being given an opportunity to deal with them.

(Footnotes omitted.)

22    Further, as explained by the Full Court in Dennis v Commonwealth Bank of Australia [2019] FCAFC 236; 272 FCR 343 at [32], it is not a predisposition for a particular outcome that engages the rule but rather a reasonable apprehension of prejudgment.

Prejudgment?

23    Ms Bhnan submits that a critical factual question the primary judge was required to determine was whether any or all of the shortfall was paid. She submits that in respect of that issue, the primary judge evinced by his interventions a “strident” and “seemingly concluded” view that Ms Bhnan’s case was all a fraud, and that a fair-minded observer of those interventions might conclude that his Honour’s mind was so made up that he might not be open to changing it.

24    The Trustees’ submissions do not expressly contend that the primary judge’s interventions did not give rise to a reasonable apprehension of bias. Rather, they say only that Ms Bhnan waived her right to rely on this ground on appeal because of a failure to raise it, or to adequately raise it, at the hearing below. I will return to the question of waiver below.

25    In order to determine whether the appellant’s submissions are made good, it will be necessary for the appellate court to consider the interventions in the context of the trial as a whole: Jorgensen at [104]. The relevant context includes that the hearing occurred over two days and judgment was delivered ex tempore at the conclusion of closing submissions on the second day. However, in substance, the hearing occurred only on the second day. The written reasons were not published until some six weeks later.

26    The first day of the hearing was 23 April 2021. Shortly after the hearing commenced, the primary judge indicated to counsel that he had read all the affidavits (T4.5) and that his initial impression was that there were inconsistencies between the case advanced by Ms Bhnan (ie, that the shortfall was paid) and the evidence of payments (T9.25ff).

27    His Honour encouraged the parties to settle the matter and adjourned briefly for discussions to take place. However, upon resuming, his Honour informed the parties that he had to deal with a family emergency and adjourned the matter to 4 June 2021.

28    Nothing objectionable occurred in the first day of the hearing and Ms Bhnan makes no complaint of the primary judge’s conduct in relation to it.

29    The hearing was resumed on 4 June 2021. The apprehension of prejudgment arises from interventions not only during Ms Bhnan’s cross-examination, of which there were many, but also from interventions during the cross-examination of other witnesses.

30    The first witness cross-examined was Mr Micheletto, one of the respondent Trustees. Mr DeBuse was conducting a line of enquiry in relation to Mr Micheletto’s conversations with Mr Bhnan when the primary judge objected to the relevance of the questions and remarked, inter alia, that Mr Bhnan “wasn’t a party to the transactions” or the proceeding (T26.41, T27.10). His Honour then expressed a seemingly concluded view as to Ms Bhnan’s case in relation to the receipts being incorrect and that she had misrepresented her equity in the property to the incoming mortgagee, as follows:

HIS HONOUR: … The proceedings involve what occurred by Stephanie Bhnan in proceeding with a transaction in respect of which, as I’ve identified earlier, there are patently incorrect receipts that have been created and maybe not by her or by her husband. There are patently disconnects between the PEXA settlement amount and the amount on the contract. And there’s patently a disconnect between what must have been the represented equity in respect of the property at the time that there was approval from the lenders.

(T27.10-16, emphasis added.)

31    The next witness was Ms Bhnan. Within three pages (in the transcript) of the commencement of cross examination by Mr Harrison, the primary judge interrupted the cross-examination. Mr Harrison was conducting a line of enquiry about a credit quote and proposal document that recorded Ms Bhnan as being employed by Horizen as a receptionist rather than a director, the apparent purpose being to call Ms Bhnan’s credit into question (T33.8). The primary judge’s intervention appears to have been for the purpose of controlling Ms Bhnan’s (virtual) court room behaviour and to clarify a question Mr Harrison had asked immediately prior to his Honour’s intervention. However, as the following extract, which I have labelled for ease of reference, shows, his Honour quickly changed course and proceeded very swiftly to put to Ms Bhnan his answer to the critical question that he was required to decide:

HIS HONOUR: Ms Bhnan, while you do have your lawyers with you, you are not to ask them questions when you are being asked questions. Do you understand that?---Yes, yes, yes. Yes, my Honour.

Okay. Now, what was pointed out to you is that that form says your role was a receptionist, and that wasn’t your role, was it, in the company?---Yes.

Ms Bhnan, it’s apparent that you got approval from the lender to provide 1.2 million for the purchase of the property which you identified to the lender was going to be acquired, I think, at a security value of 1.6 or thereabouts; is that right?---Yes, my Honour.

And it’s apparent that you represented to the lender that you were going to put in equity in the order of about 20 per cent; is that right?---Yes, my Honour.

[Q1] And you didn’t put in an equity of 20 per cent in the purchase; did you?---We give her money, my Honour.

(T34.19-35, emphasis added.)

32    As can be seen, Ms Bhnan denied the proposition put to her by the primary judge. Mr Harrison’s cross-examination then continued on the topic of Ms Bhnan’s role at Horizen. Then, shortly thereafter, while Mr Harrison was still cross-examining Ms Bhnan on the same topic as before, the primary judge interrupted Mr Harrison’s cross-examination again and the following exchange, which I have also labelled for ease of reference, took place:

HIS HONOUR: Ms Bhnan, would you turn, please, to page 604, and when you obtained this loan finance, you can see you represented that you put equity into the property so that the lender was only providing 75 per cent; can you see that?---Just one second, my Honour. Yes, my Honour.

And you knew, didn’t you, that you were making an application to borrow funds on the basis that you were going to put in the difference, that is, the 25 per cent, so that the security provider would have you contributing an equity amount to the acquisition of the property; is that correct?---Yes, my Honour.

[Q2] And you realise that by not putting in any equity in the purchase of the property, that was a fraud on the lender?

MR DEBUSE: I object, your Honour. She hasn’t accepted, and, in fact, denied the premise of your Honour’s question.

HIS HONOUR: No, Mr DeBuse, I propose to allow it so that the witness has an opportunity to respond. Do you want to respond, Ms Bhnan?---Yes, my Honour.

[Q3] On the face of this loan document, you made a representation to the lenders that, as far as I can see, was false, that you were actually going to put in equity for the acquisition of the property; isn’t that the case?---I – I can’t understand, my Honour.

[Q4] Ms Bhnan, you didn’t, in fact, when the property was purchased, provide to the vendor an equity at the time of settled in respect of 20 per cent or 25 per cent; did you?---Yes, my Honour.

(T35.25 – 36.3, emphasis added.)

33    This exchange is troubling for a number of reasons:

(1)    As mentioned, Mr Harrison had only been cross-examining Ms Bhnan about her stated occupation in a loan document. The case that Ms Bhnan did not put any equity into the property and that there was thereby a fraud on the lender came directly from his Honour.

(2)    Q2, to which Mr DeBuse objected, takes as its premise an affirmative answer to the proposition put by Q1, which proposition Ms Bhnan denied.

(3)    After wrongly rejecting Mr DeBuse’s objection to Q2, his Honour by Q3 and Q4 again pressed Ms Bhnan on what was put to her by Q1. Q3 and Q4 were equally objectionable.

(4)    Although possibly qualified to some extent by the rider “as far as I can see”, a matter to which I shall return, his Honour clearly intimated by Q3 that he viewed what Ms Bhnan had stated on her loan documents regarding her contribution to the purchase price – ie, the contribution that is her defence – to be false.

(5)    Finally, it is to be recalled that this exchange occurs early in Ms Bhnan’s cross-examination in circumstances where Mr Harrison had not yet broached the topic of whether Ms Bhnan herself contributed any equity to the purchase price.

34    In my view, that conduct by his Honour conveyed that his Honour had formed a firm view early in Ms Bhnan’s evidence that, save for the $1.2 million provided by the incoming mortgagee, Ms Bhnan had not contributed any equity of her own to the purchase price and that she had defrauded the lender. In the words of Lord Brown JSC, his Honour made obvious “his own profound disbelief in the defence being advanced”.

35    Relevant to evaluating his Honour’s qualifying remark of “as far as I can see” in Q3, as well as his occasional use of “on one view” (as seen in the transcript extracts at the schedule to these reasons) thereby implying the existence of a different view, a majority of the High Court made the following remarks in Johnson at [14]:

There was argument in this Court, prompted by Anderson J’s explanation of what he intended to communicate, about whether the effect of a statement that might indicate prejudgment can be removed by a later statement which withdraws or qualifies it. Clearly, in some cases it can. So much has been expressly acknowledged in the cases. No doubt some statements, or some behaviour, may produce an ineradicable apprehension of prejudgment. On other occasions, however, a preliminary impression created by what is said or done may be altered by a later statement. It depends upon the circumstances of the particular case. The hypothetical observer is no more entitled to make snap judgments than the person under observation.

36    The High Court’s remarks were made in the context of assessing whether a remark made by the primary judge in that case, Anderson J, namely that “I will rely, principally, on witnesses other than the parties in this matter – and documents – to determine where the truth lies” (at [7]), was such as to give rise to an apprehension of prejudgment of the parties’ credit. The next day, Anderson J dismissed an application for disqualification made on the basis of that remark and said (extracted in Johnson at [8]):

Before this matter began, I spent two days reading the affidavits filed by both parties and some of the witnesses … It was apparent that there was a wide divergence between the evidence of both parties relating to the matters in issue in this case. That has become more apparent as the case has proceeded. I drew attention to this difficulty. When yesterday I repeated what I earlier said, I was simply pointing out to the parties the wide divergence. It was going to be a difficult task. My statement was not to be taken as a predetermination of the credibility of both parties, or of either of them. My statement merely affirms my need to look to the other evidence to assist in determining who is telling the truth. I was not saying I would not accept the evidence of either party; I did not reject the credit of both parties; I was merely saying that the other evidence was important in determining the credit of one or other of the parties.

37    The majority held that, devoid of context, Anderson J’s first-quoted remark could have given an impression that he had already discounted the credit of the parties, both of whose evidence he had not heard. However, to so isolate his Honour’s words would be unreasonable and there was no reasonable ground to reject his Honour’s later explanation of what he had intended to convey. (At [16].)

38    Despite the primary judge’s use of the phraseology “on one view” and “as far as I can see”, there is nothing in his Honour’s extracted remarks or indeed the rest of the transcript that indicates that he was open to any other view or that he was open to seeing something other than what he saw as the basis for justifying Q3. That is to say, although the use of “as far as I can see” in Q3, when considered apart from the remainder of his Honour’s interventions, may convey only a predisposition as opposed to a reasonable apprehension of prejudgment, in the context of the hearing as a whole, including Q2 which takes as its premise an affirmative answer to that which Ms Bhnan denied, the impression conveyed is that the adopted phrase meant quite literally that that was all that his Honour could see. If anything, the remainder of the transcript, which the parties invited me to read in its entirety, further confirms that the apprehension of prejudgment was ineradicable.

39    In that regard, his Honour engaged in further extensive and aggressive cross-examination of Ms Bhnan and put many direct propositions to her (T44.18 – 45.33; T47.43 – 49.15). Some of those questions were unfair and it was apparent that they caused Ms Bhnan confusion and caused her to make concessions that she may not otherwise have made: cf Jorgensen at [148]. Indeed, it elicited a response from Ms Bhnan explaining the limitations of her English abilities, including that she “can’t understand everything in English and that she came to Australia as a refugee” (T44.27 and 36).

40    The propositions put to Ms Bhnan by the primary judge included the introduction of what I shall call the “stakeholder argument”, which is that a provision of the contract of sale was that a deposit was to be held by a stakeholder and that none of the funds said to be advanced by Ms Bhnan (or on her behalf) were paid to a stakeholder. The stakeholder argument was not a case advanced by or sought to be advanced by the Trustees, but was rather a case conceived and advanced directly by his Honour. It ultimately made its way into his Honour’s reasons at J[25].

41    Another issue raised by the primary judge concerned the payment of stamp duty. One of the affidavits relied on by Ms Bhnan was that of Mr Kakos, Mr Bhnan’s brother. In his affidavit he said that Mr Bhnan had asked to borrow $70,000 from him for buying a house which he then put together in cash and gave to Ms Bhnan. It was Ms Bhnan’s evidence that that $70,000 was then given by her to Mr Eshi in part payment of the purchase price of the property.

42    When Mr Harrison was cross-examining Ms Bhnan about the $70,000 in cash that she said she had been given by Mr Kakos, his Honour intervened and said to Mr Harrison that s 121(5) has no application to moneys paid for stamp duty, implying that cross-examining on the payment of the $70,000 in cash was pointless because that money had been paid to the Office of State Revenue for stamp duty. However, that had never been suggested by anyone. The judge’s intervention caused Mr Harrison to move on to a different topic in his cross-examination. (T55.21 – T56.21.)

43    Then, when Mr Harrison sought to cross-examine Mr Kakos about the loan by him of $70,000 to his brother, the primary judge said that “the 70,000, on no view, meets the requirements of 121(5)”, that it is “not money given to the transferee [scil. transferor]” and that the witness’s evidence was therefore not relevant. Mr Harrison correctly sought to explain to his Honour that it was Ms Bhnan’s case that the $70,000 formed part of the $1.5 million purchase price paid by her, which caused his Honour to seek clarification from Mr DeBuse, who initially maintained that the $70,000 was paid as part of the purchase price. Under sustained questioning by his Honour, Mr DeBuse ultimately – apparently against Ms Bhnan’s evidence and the PEXA record which showed that of the $1,270,477.66 paid by the incoming mortgagee on settlement, $67,822 was disbursed to the OSR for stamp duty – conceded his Honour’s position that the $70,000 in cash obtained from Mr Kakos was paid as stamp duty. That is something that had not been contended by the Trustees. On the basis of that concession, his Honour then persuaded Mr Harrison, against his continued resistance, that there was no relevant question that could be asked of Mr Kakos. (T61.19 – T63.17.)

44    Notwithstanding the subsequent concession by Mr DeBuse, his Honour’s statement of an apparently concluded view at that stage of the trial that on “no view” could the $70,000 be regarded as a payment towards the purchase price further supports the impression of prejudgment by the primary judge. The effect of what his Honour said was to reject a critical part of Ms Bhnan’s evidence before the evidence in the case was complete.

45    The full portions of the transcript referred to above, as well as others, are set out in a schedule to these reasons. The extracts do not exhaust the extent of the primary judge’s interventions. However, it is also important to note that the interventions were, at times, separated by stretches of evidence, discussion or argument of which no criticism has been made.

46    Finally, immediately after the evidence was completed, and reversing the usual order, his Honour said that he would hear Mr DeBuse first and only thereafter would he hear from Mr Harrison in closing submissions “because at the moment I would not need to hear from Mr Harrison” (T73.7). His Honour said that that was because it appeared there was no consideration paid beyond the payment by the mortgagee. After Mr DeBuse had addressed the Court, including in response to his Honour’s comments on the stakeholder argument (T74.39) and the so-called fraud on the lender (T79.30), neither of which had been raised by the Trustees, his Honour said that he did not propose to call on Mr Harrison (T82.5) and proceeded to immediately deliver judgment ex tempore. Although none of that conduct by the primary judge taken on its own would be sufficient to establish a reasonable apprehension of bias, in the context of the trial as a whole and in particular his Honour’s lines of cross-examination of the witnesses, it serves to support and confirm such an apprehension.

47    In the circumstances, I have concluded that his Honour’s interventions at trial were such as to give rise to a reasonable apprehension of bias in the sense 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 was required to decide. It is noteworthy that the Trustees do not seriously contend otherwise but rely merely on a procedural response.

Waiver?

48    As mentioned, the Trustees submit that Ms Bhnan is precluded from raising apprehended bias as a ground of appeal because of her failure to raise it before the primary judge. They say that a failure, in particular, to make an application before the primary judge to either stand the matter down or for disqualification is fatal. In support of that proposition, they rely on Vakauta v Kelly [1989] HCA 44; 167 CLR 568 at 572. There, Brennan, Deane and Gaudron JJ said:

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. The reason that is so is obvious. In such a case, if clear objection had been taken to the comments at the time when they were made or the judge had then been asked to refrain from further hearing the matter, the judge may have been able to correct the wrong impression of bias which had been given or alternatively may have refrained from further hearing. It would be unfair and wrong if failure to object until the contents of the final judgment were known were to give the party in default the advantage of an effective choice between acceptance and rejection of the judgment and to subject the other party to a situation in which it was likely that the judgment would be allowed to stand only if it proved to be unfavourable to him or her.

49    In response to Ms Bhnan’s submission that there was no waiver because, in the extract at [32] above, Mr DeBuse objected to the primary judge’s line of questioning, the Trustees submit that the nature and basis of that specific objection was not articulated. What was required, the Trustees contend, is that an application for disqualification alleging apprehended bias must specify what conduct, acts, facts, matters and things give rise to the apprehension of bias.

50    However, Vakauta does not require an application of such specificity or an objection to similar effect, failing which a party would be taken to have waived reliance on the ground of apprehended bias in any appeal. All that is said by the plurality is that a party “is not entitled to stand by”. Their Honours then give examples of what counsel might otherwise have done to provoke a judge into rethinking an intervention that might give rise to an apprehension of bias. There is nothing in that paragraph that prescribes exactly what is required of a party who takes issue with the conduct of a judge. Indeed, such a prescriptive reading is contrary to intermediate appellate court authority.

51    In that regard, in Nguyen at [25], Basten JA cautioned against reading the passage from Vakauta relied upon by the Trustees and quoted at [48] above out of context. As his Honour points out, it was not applied in the circumstances of the case itself. Thus, in Vakauta at 573, their Honours held:

If the above comments made by the learned trial judge in the course of the trial had stood alone, we would have been of the view that the appellant, having taken no clearly stated objection to them at the time and having stood by until the contents of his Honour’s judgment were known, could not now found upon them in order to have that judgment set aside on the grounds of a reasonable apprehension of bias. The statements which the learned trial judge had made about his preconceived views of Dr Lawson were, however, effectively revived by what his Honour said in his reserved judgment. The appellant’s failure to object to the comments made in the course of the trial cannot, in our view, properly be seen as a waiver of any right to complain if comments made about Dr Lawson in the judgment itself would, in the context of those earlier comments, have the effect of conveying an appearance of impermissible bias in the actual decision to a reasonable and intelligent lay observer. While, as we have indicated, the line between comments which would be likely to have that effect and comments which would not is necessarily an imprecise one, we have come to the conclusion that, when they are read in the context of what was said in the course of the trial, his Honour’s comments in his judgment fall on the wrong side of that line.

52    In Nguyen, Basten JA (with whom Ward JA agreed on these points (at [255])) did not consider that a failure to object disentitled the appellant to appeal on the ground of procedural unfairness arising from judicial interventions:

31    The first difficulty is the identification of a point in time at which objections should have been taken, absent which any right of appeal based on the unfairness of the trial was deemed to have been waived. Counsel is not generally expected to maintain a running commentary on how the judge is handling a trial, nor should such conduct be encouraged. While it is possible to say at the end of the trial that there has been unfairness, that, as in the present case, will be an evaluative assessment made on the basis of the course of the trial taken as a whole, even if it is not necessary for that purpose to refer to the judgment. The unfolding situation is quite different from one where a single incident, or known association, is relied upon.

32    Secondly, it could hardly be said that counsel for the appellant stood by, taking no point about unfairness, and saving the challenge for an appeal in the event that his client’s case was dismissed. It was clear that senior counsel for the respondents, whose cross-examination of Mr Tomazin was regularly interrupted, sought on occasion to recover control of the process, unsuccessfully. It would have been awkward, to say the least, for senior counsel for the appellant to intervene in his opponent’s cross-examination to object to the course being taken by the judge. Even supposing that course should have been taken at some point, it does not follow that the appellant’s right to a fair trial was “waived” because its counsel did not intervene.

33    Thirdly, the full extent to which the risks associated with the judge’s interventions were to materialise was not apparent until the judgment was delivered. Whether or not he had pre-judged issues, he found in several respects that Mr Tomazin’s evidence was dishonest. He did that, despite expressly disavowing reliance on Mr Tomazin’s demeanour. However, the difficulty of judging Mr Tomazin’s demeanour (and hence credibility) was partly a result of his own constant interventions in the cross-examination. In effect, Mr Tomazin was deprived of the opportunity to satisfy the judge by his demeanour in the course of cross-examination, free from judicial intervention, that he was entirely honest. On the other side of the coin, the judge accepted the evidence, particularly of Ms Nguyen, of whom he formed a “generally favourable view”. Again, the appellant was deprived, through interruptions of the cross-examination of Ms Nguyen, of the opportunity to persuade the judge to a different view.

34    In these circumstances, waiver was a false issue: it could not be said that there was some inescapable point at which counsel for the appellant had either to request the judge to desist from his intrusive interventions, or to abort the trial, absent which no complaint of unfairness could be raised on appeal. The trial was unfair and the judgment must be set aside on that ground.

53    These passages were cited with approval by the Full Court in Jorgensen at [149]. In the circumstances of that case, their Honours remarked:

It is also of limited significance that Mr Jorgensen’s counsel did raise any real objections to the primary judge’s interventions. Indeed, the suggestion that Mr Jorgensen could have objected to the course taken by the primary judge is somewhat unrealistic. As already noted, the interventions commenced early in the cross-examination and continued at regular intervals throughout the cross-examination. As Basten JA pointed out in Nguyen (at [31]), where the objectionable conduct on the part of the trial judge is an “unfolding situation”, it is difficult to identify the point in time at which objection should have been taken. Perhaps more significantly, as was the case in Nguyen, it would have been “awkward, to say the least” for Mr Jorgensen’s counsel to intervene in her “opponent’s cross-examination to object to the course being taken by the judge”: Nguyen at [32] (Basten JA); see also Ward JA at [254]. In those circumstances, as in Nguyen, Mr Jorgensen’s right to a fair trial was not “waived” because his counsel did not object. And even if it could be said that the absence of any objection indicated that Mr Jorgensen’s counsel did not perceive there to be any procedural unfairness at the time, that alone would not compel a conclusion that the trial was not, in any event, unfair.

54    The present case is in one way different to the circumstances of Nguyen and Jorgensen. Ms Bhnan submits that, although there were subsequent objectionable interventions, the key intervention that makes out the apprehended bias is that which is extracted above at [32]. When his Honour asked the first objectionable question (ie, Q2), Mr DeBuse did object; he did not merely stand by and let the judge’s cross-examination continue. It is “awkward, to say the least” for counsel to object to a judge’s question, particularly during the opponent’s cross-examination. But Mr DeBuse was not cowed. He rightly objected. In my view, it cannot be said that, by her counsel failing to do more than object to his Honour’s question, Ms Bhnan thereby waived her right to a fair trial, or to subsequently object to unfairness in the trial.

55    In respect of the cross-examination conducted by his Honour subsequent to that extract, I agree with Basten JA (at [31]) that counsel is not required to maintain a running commentary. To require Mr DeBuse to so do whilst his Honour was taking over Mr Harrison’s cross-examination and case would not only have been awkward but may also have unproductively inflamed the situation. In such a circumstance, in the heat of the moment counsel is required to tread a narrow path between properly and fearlessly defending their client’s interests and not escalating the judge’s apparent antipathy to counsel’s case and client. Whilst counsel cannot “stand by”, it is also important to not be unduly critical, with the benefit of a transcript and hindsight, of how counsel handled a difficult and doubtless stressful situation.

56    Finally, as in Nguyen (at [33]), the full extent of the risks of the primary judge’s conduct did not materialise until after judgment had been delivered. In that respect, it was only at that time that it was revealed that his Honour’s decision was to be based almost exclusively on the case that he himself advanced earlier that day, namely, the so-called fraud on the mortgagee, stakeholder and stamp duty arguments which were not otherwise part of the Trustees’ case. If, for example, the primary judge accepted any or all of Ms Bhnan’s case, then there would be no cause for her to complain about his interventions and ostensibly biased interventions for it would have coloured those interventions in a different light. It is for that reason that in Concrete at [179], Callinan J observed that the Full Court had been correct “to look not only at the course of the trial, but also at the reasons for judgment”. In the present case, the reasonable apprehension of prejudgment of the issue his Honour was required to decide and the integers of that issue, as exposed by his Honour’s interventions during the hearing, were not only further confirmed when judgment was delivered ex tempore, they were also revived.

Disposition

57    The appeal must be allowed. I will set aside the orders of the primary judge and remit the matter for retrial by a different judge in what is now Division 2 of the Federal Circuit and Family Court of Australia.

58    There remains the issue of the costs of the hearing below, the appeal and the new trial.

59    Ms Bhnan submits that the costs order below should be set aside and the costs below should be costs in the cause of the new trial. Setting aside the orders below will have that effect – the costs of the trial are costs in the same cause as the cause tried in the new trial.

60    In relation to the appeal, Ms Bhnan submits that the Trustees should pay her costs. The Trustees submit that the costs of the appeal should be costs in the cause of the rehearing. They also invite the Court to issue a costs certificate for the new trial under s 8 of the Federal Proceedings (Costs) Act 1981 (Cth).

61    In view of the fact that the appeal was unsuccessfully contested by the Trustees, including on the ground that Ms Bhnan waived any right to rely on apprehended bias, the Trustees should pay the cost of Ms Bhnan’s appeal. That is consistent with the ordinary rule that costs follow the event. It would not be fair on Ms Bhnan, having succeeded in the appeal, to have to bear the costs of the appeal if, for whatever reason, she is ultimately ordered to pay the costs of the new trial.

62    The issue of the costs certificate is, however, not without difficulty. The problem is that by no fault of either of the parties, the costs below have now been wasted. In those circumstances, it seems to me that the ideal result would be for the parties to bear their own costs of the hearing below and a certificate be issued to both parties in respect of those costs. The costs of the new trial would then follow the result or, in any event, be at the discretion of the judge hearing the new trial.

63    However, the provisions of the Costs Act do not permit the issue of costs certificates in respect of a trial that has miscarried but only in respect of a new trial. Further, the maximum amount payable by the Attorney-General in respect of a costs certificate for a proceeding in the Federal Circuit and Family Court of Australia is $4,000: see s 18 of the Costs Act and reg 6, item 3 of the Federal Proceedings (Costs) Regulations 2018 (Cth). That is a very modest amount relative to what the costs of the new trial are likely to be.

64    Given that the need for a new trial arises not from any fault of the parties but from the conduct of the primary judge, and adopting the wording of s 8 of the Costs Act, I am of the opinion that it would be appropriate that the Attorney-General authorise a payment under the Costs Act to the appellant and the respondent of any costs incurred by them in relation to the new trial. An order to that effect does not affect the discretion vested in the judge hearing the new trial in relation to the costs of the new trial, and applies regardless of who is ordered to pay those costs. That is because the certificates can apply to any unrecovered or unrecoverable costs.

Associate:

Dated:    20 July 2022

SCHEDULE

Cross-examination of Mr Micheletto by Mr DeBuse

Transcript p 21 line 28 to p 22 line 43:

HIS HONOUR: I reject that. Mr DeBuse, it is patent that the trustee has given your client an opportunity to make a payment in respect of what is an obvious undervalue of the property in terms of what your client paid, on one view of the evidence, which is being advanced by the trustee. Your client sought to take advantage of that opportunity and avoid the declaration of the whole property being declared to be on trust is a matter for your client. Can’t see how this evidence is relevant. Next question, please.

MR DEBUSE: Your Honour, can I just – well, I will put this question. You appreciated that there was alternative between affirming the contract and declaring it void.

HIS HONOUR: I reject that, Mr DeBuse. The contract that your client executed and its consequences, including the question of the purported approval of a borrowing from Linda, is ..... matter which the court will address. There is no principle that undermines the trustee’s entitlement to seek to recover under 120 or 121 property that should have formed part of the estate. I can’t see how these questions are in any way relevant. This is not a contract case. Next question - - -

MR DEBUSE: Your - - - .

HIS HONOUR: - - - please.

MR DEBUSE: Your Honour, can I just be heard very briefly. I don’t want to cavil with your Honour’s ruling, but just so that it’s clear, the submission that I would make is that plaintiff had an election between affirming the contract or deciding to have it declared void.

HIS HONOUR: Yes. And - - -

MR DEBUSE: And it - - -

HIS HONOUR: - - - I’m making it very clear I don’t accept there was any such election that was required.

MR DEBUSE: I appreciate - - -

HIS HONOUR: That’s something - - -

MR DEBUSE: - - - your Honour - - -

HIS HONOUR: - - - that would arise in the course of what I will call an enforcement of contractual rights. These are statutory proceedings to recover relief. If your client fails, as I have made clear now on several occasions, it’s likely that the court will make a declaration that the whole of the property is held in the name or at least held by the trustees, the applicants, and your client will have no interest. And it’s not a question of simply making a payment, the opportunity to which was given to you and has been that it will be the whole property being transferred. What’s your - - -

MR DEBUSE: Your Honour - - -

HIS HONOUR: - - - next question, please?

MR DEBUSE: Your Honour, before – your Honour, I don’t want to make submissions in the middle of my cross-examination, but your Honour would recall that the trustee has to give the consideration that has been paid back.

HIS HONOUR: But, Mr DeBuse, if you’re proceeding under that apprehension, you need to take on board what I have earlier said, which is that on one view, the PEXA record identifies no other consideration than that coming from the mortgagee. And whether any payments or transactions that you have identified are taken to be payments referable to any consideration over the property is very much an issue in the proceedings.

Cross-examination of Ms Bhnan by Mr Harrison

Transcript p 44 line 18 to p 45 line 33:

HIS HONOUR: Just – Ms Bhnan, can I just ask you, have you been involved in the purchase of property before?---What do you mean this - - -

Have you purchased real estate prior to this acquisition, in respect of this property?---It was on market, my Honour. And then we go and see the house - - -

Have - - -?--- - - - and I like the house.

Have you engaged in property transactions before?---No. What do you mean, my Honour? I can’t understand everything in English, I’m not that perfect. Sorry about that.

Have you, before, been the owner of any real property in New South Wales?---No. No, my Honour.

Did you know that there was a contract that you entered into that identified that there was a deposit to be held by a stakeholder?---My Honour, they tell me about it, but to be honest to you, I – this is the first time to me to buy a house and I don’t know how is the rule here. I’m sorry about that. But I just was refugee before. I only start here from the – zero. And when you start from zero, you don’t know everything what’s going on on this country. You’re still building yourself, step by step. That’s why all this thing is happened to us, because we don’t know everything how it’s go here.

And there’s so many people, they are dirty in their heart, but to you – you – because you are very clean, you don’t know what’s going on. And even now, the guy – the person that is talking to me, I don’t even know who he is and why he is doing this to me. To be honest, I don’t know what’s going on.

Ms Bhnan - - -?---So it ..... this is the .....

Ms Bhnan – Ms Bhnan, you purported to purchase a property in respect of which there was a deposit that was to be held by a stakeholder. Do you recall signing the contract to purchase the property?---Yes.

And there was no stakeholder, was there, holding any deposit?--- We give him $40,000 from beginning, my Honour. And then pay him step by step. Because he said maybe I going to help you, or like that. Because we didn’t think the house is going to be a lot of money, like, one thousand – sorry, one million-point-five. And at that time, on the same time that we decide to take this house, they just take us out from the house that we are renting because they sell it on the auction. So I have no choice. I have to do – I am not going to be on the streets – me and my kids. I need a house to be live in.

HIS HONOUR: And Ms Bhnan, you provided the contract that you entered into, did you, to your financier at the time of trying to obtain the funds from the mortgage lender, is that right?---Yes, my Honour.

And – and in that contract, you represented that there had been a deposit paid to a stakeholder for 10 per cent, is that right?---Yes, my Honour.

And there was no stakeholder holding a 10 per cent deposit, was there?---Yes, my Honour.

And while I understand you’ve identified some amounts that you’ve paid Mr Eshi, in your affidavit, none of those payments are loans that were identified at the time of settlement as consideration given for the purchase of the property, were they?---Sorry. Can you just repeat that, my Honour?

Yes. At the time of the PEXA settlement for the acquisition of the property, none of the payments that you allege were identified as consideration for the purchase of the property, were they?---Yes, my Honour.

Yes. Yes, Mr Harrison.

Transcript p 47 line 43 to p 49 line 15:

HIS HONOUR: Ms Bhnan, sorry, this is Judge Street. Ms Bhnan, you annexed the two documents to your affidavit. Why did you do that?---Sorry, my Honour?

If you turn to your affidavit, you’ve annexed two written instructions – one dated 4 December 2019 and one dated 17 January 2020 to your affidavit. Why did you do that?---Just one second, my Honour. Let me see that. Because Aid – he told us that we – we pay him the 10 per cent or 20 per cent of the – of the house.

And if you look at the first instruction of 4 December 2019 there wasn’t an amount of 150,000 that was paid to you directly was – at least was paid directly to Mr Eshi, was there?---Yes, my Honour.

And if you look at the document dated 17 January 2020 there wasn’t a further 150,000 paid to Mr Eshi by you as asserted in that document on 17 January 2020, was there?---Yes, my Honour.

And nowhere in your affidavit did you explain that these documents weren’t correct, did you?---No, my Honour.

Why not?---No, they didn’t explain to me, my Honour.

When was the first time you saw these two documents of 4 December 2019 and 17 January 2020?---The 4th of – sorry, can you say the date again, my Honour?

You’ve annexed two documents to your affidavit that I’ve just asked you some questions about. That’s the one of 4 December 2019 and the one of 17 January 2020. Both of which are plainly what I would call, incorrect. When did you first see them? Was it when you were preparing your affidavit? Or had you seen them at the time that you were preparing to settle the purchase of the property?---I see them after the settlement – after everything. When they just say, like, they give us paper. They say you have to go to court or everything like that.

I see. All right - - -?---It - - -

- - - Just in relation to the two documents – when you identified them in your affidavit was there any reason why you didn’t explain that they were false documents?---Because as I told you, my Honour, I done everything here. I didn’t think there was something wrong on the paper. That’s what’s happened ..... my Honour.

Now, was Mr Eshi a debtor of HorizonOne when you became a director?---No, my Honour.

Did Mr Eshi owe money to HorizonOne?---He owe us. Yeah. He owe money to HorizonOne.

And at the time you entered into the contract of purchase with Mr Eshi you knew he owed money to HorizonOne?---Yes, my Honour.

And at the time you entered into the contract I take it you knew Mr Eshi was in financial difficulty. Is that correct?---I don’t know anything about Mr Eshi to be honest, my Honour. The first time that I saw him I know about him. It was when we saw him in the David Legal to have a house.

Ms Bhnan, if you – at the time that you entered into the contract to purchase the property, you knew that you weren’t paying a 10 per cent deposit to any independent stakeholder, correct?---Yes. Because, like, my husband told me we have money with Aid Eshi we have to pay for ..... and we gave him the money that we show you through the bank. And the car and everything. And that was, like, the 10 or 20 per cent of the money for the whole house.

And is it correct that the reason that the money wasn’t paid to a stakeholder was that you knew Mr Eshi was in financial difficulty?---In financial – no. No. I didn’t know anything about the financial difficulty for Mr Eshi.

Yes, Mr Harrison.

Transcript p 55 line 21 to p 56 line 21:

[MR HARRISON:] You say that there was – you say that there was $70,000 paid in cash; do you remember saying that in your affidavit?---Yes.

Did you ever see the cash?---Yes.

How big – how – what was the cash made of? Was it – was it all hundred dollar notes, hundreds, fifties, twenties, a combination?---Well, this is – like, I can’t remember if it’s hundreds or twenties, like – what’s this point of question? I can’t understand. If it’s five cents or if it’s 100. What’s the point?

Did you count it?---Yes, I count it.

You counted it?---Yes. But I can’t remember if it was 50 or 100.

All right. In your affidavit you don’t say that you counted it?--- ..... every day. I have four kids. Do I remember every day how much money I give to my kids? Do I have - - -

Ms Bhnan - - -?--- ..... money, it was – if it was 100 or 50, or - - -

Ms Bhnan, please listen to me for a minute?---Yes.

In your affidavit, you don’t say that you counted the money. Can you explain why you didn’t say that in the affidavit?---Well, it’s only so many thing, I can’t remember it.

Was the money – was the money in a bag?--- .....

Was the money in a bag, or was it in a suitcase, or something else?---I can’t remember.

Well, in your affidavit you say it was in an envelope?---Yes, it was in an envelope.

Yes, that’s right. I can remember that now.

You’ve just simply – this whole story about the $70,000 cash: it’s just made up, isn’t it? It never happened?---It’s happened.

How big was the bundle of cash?---It’s happened, and Ronnie, his brother, he gave it to me, when he called me and he tell me, “Just come to take the money.” He was in the coffee next to NAB – National Bank – in Fairfield. And that is in the Fairfield Forum shop and the Kmart, and call us where they are.

HIS HONOUR: Mr Harrison, I just don’t want to interrupt you unnecessarily, but I should point out that section 121(5) has no application to moneys paid for stamp duty. How much longer will you be?

MR HARRISON: I will bring this to as swift a conclusion as I can, your Honour.

HIS HONOUR: Thank you.

Transcript p 57 line 32 to line 46:

HIS HONOUR: Ms – I will just pause, Mr Harrison. Just pause. Ms Bhnan, at the time that you entered into the contract for the purchase of the land – at that time, you knew Mr Eshi was going to remain living in the property after it was purchased; is that right?---Sorry, just again, my Honour?

At the time that you entered into the contract for the purchase of the land, you knew Mr Eshi was going to remain living in the premises after the purchase; is that right?---Yes, my Honour.

And in those circumstances, you knew that Mr Eshi was in financial difficulty at the time that you entered into the contract; correct?---No, Mr Honour, I didn’t know about that. He tell me he going to see the house for rent, and then he’s going to move as soon as possible.

Yes. Please continue, Mr Harrison.

Discussion regarding the $70,000 cash borrowed from Mr Kakos

Transcript p 61 line 19 to p 63 line 17:

HIS HONOUR: Mr – Mr Harrison, just before you do, can I just clarify, in relation to what I said about section 121 subsection (5), is this relevant? In other words, does it matter one iota where the 70,000 came from, because it’s not consideration that would be taken into account.

MR HARRISON: Well, your Honour, the position of the – the position of the respondents is to say that there was full consideration paid for the - - -

HIS HONOUR: I understand that.

MR HARRISON: Yes.

HIS HONOUR: But the 70,000, on no view, meets the requirements of 121(5). It’s stamp duty. That’s not money given to the transferee. Is there anything else you want to say in relation to the relevance of cross-examining these two witnesses, that is – I mean, if there is something relevant, by all means, let me know.

MR HARRISON: There is, your Honour. I understand the respondent’s case to be that the stamp duty aside, the $70,000 formed part of the $1.5 million purchase price stated in the contract.

HIS HONOUR: I don’t understand that to be the case. I do understand the assertion being advanced that the stamp duty was to be part of the consideration to be taken into account. However, under 121 subsection (5), it’s clear it could not possibly be.

MR HARRISON: Your Honour, we - - -

HIS HONOUR: But if it – is it contended, Mr – is it contended, Mr DeBuse, that the 70,000 from the brother-in-law was other than for stamp duty?

MR DEBUSE: Yes, your Honour. The stamp duty was paid directly from the $1.2 million.

HIS HONOUR: I see. So you contend 70,000 was, in fact, a payment made - - -

MR DEBUSE: Yes.

HIS HONOUR: - - - referable not to the stamp duty that it reflects the amount of, but in relation to the consideration for the purchase, do you?

MR DEBUSE: So your Honour, the bank advanced $1.2 million and $68,000 of that, I think, was – came from – was part of the PEXA settlement.

HIS HONOUR: Mr DeBuse, on the face of the evidence, as I understand it - - -

MR DEBUSE: Yes, I understand what your Honour is putting to me. I just - - -

HIS HONOUR: - - - other than your provided funds for the stamp duties and, it appears those funds were provided at settlement. But if you want to contend the contrary, I won’t stop you.

MR DEBUSE: I understand what your Honour is putting to me. Can I just have – I

understand what your Honour is putting to me. I just need to absorb it for a second. I don’t want to waste people’s time. I just want to – I accept that the $70,000 is not an amount that your Honour needs to consider for the purpose of 121(5).

HIS HONOUR: Yes. Thank you. Mr - - -

MR DEBUSE: I think - - -

HIS HONOUR: - - - Harrison, in light of that, do you wish to ask any questions of Mr Kirkos?

MR HARRISON: Your Honour, I’m – maybe, I’m failing to grasp the obvious, and I apologise. I understand the first respondent, Ms Bhnan’s case to be this. They’re - - -

HIS HONOUR: Well, no. Don’t put what you understood it to be. Mr DeBuse has acknowledged the 70,000 can’t fall within section 121(5). In those circumstances - - -

MR HARRISON: Both that - - -

HIS HONOUR: In those circumstances, is there any question you want to ask the brother-in-law, Mr Kirkos?

MR HARRISON: In that case, I understand the – Mr Bhnan’s position to be slightly different, therefore, from what’s in her defence, namely, that a total consideration, taking her case at the highest, there was ..... only one .....

HIS HONOUR: Mr Harrison, all cases move during the course of the case. Mr DeBuse just clearly understood and heard what the court has said about the nature of stamp duty.

MR HARRISON: Yes.

HIS HONOUR: It’s apparent from the PEXA that there were funds provided for the stamp duty. And given the concession just made by Mr DeBuse, it’s apparent the 70,000, if you otherwise make out the entitlements under section 121, can’t be said to be consideration. Is there, in those circumstances, any question you wish to ask Mr Ronnie Kirkos?

MR HARRISON: No, your Honour.