Federal Court of Australia

Australian Securities and Investments Commission v Bekier (Separate Relief Hearing) [2025] FCA 84

ORDERS

THE COURT ORDERS THAT:

1.    The order of the Court made on 5 February 2025 be varied to provide that the trial listed to commence on 10 February 2025 pursuant to Order 4 of the Orders dated 14 September 2023 be a final hearing in respect of the question of whether the defendants, save for the third and fourth defendants, have contravened the Corporations Act 2001 (Cth) as alleged (Hearing), separately and before any other issue, including the application of ss 1317S and 1318 of the Corporations Act 2001 (Cth), in the case between the plaintiff and the first, second and fifth – eleventh defendants.

AND THE COURT DIRECTS THAT:

2.    The direction of the Court made on 5 February 2025 be varied to provide that the National Operations Registrar allocate to another Judge of the Court the resolution of the case as between the plaintiff and the third and fourth defendants.

Date orders authenticated: 14 February 2025

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

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from the transcript)

LEE J:

A    INTRODUCTION

1    On 31 January 2025, that is, 11 days before the commencement of the final hearing in this proceeding, my Associate received a communication sent jointly by the plaintiff, the Australian Securities and Investments Commission (ASIC), and the fourth defendant, Mr Harry James Theodore (Mr Theodore).

2    By this communication, the Court was advised that ASIC and Mr Theodore had reached agreement on a proposed resolution to ASIC’s claims against Mr Theodore. Although the details were not then provided, it has later become apparent that this agreement includes proposed consent declarations and orders in the following terms:

THE COURT DECLARES THAT:

1.    The Fourth Defendant, in the period between 6 November 2019 and 18 March 2020, contravened s 180(1) of the Corporations Act 2001 (Cth) by failing to discharge his duties to The Star Entertainment Group Ltd’s (Star) [sic] with the degree of care and diligence that a reasonable person would exercise, if they were a officer of a corporation in Star’s circumstances and occupied the office held by the Fourth Defendant and had the same responsibilities, when, in circumstances where China UnionPay (CUP) and National Australia Bank Ltd (NAB) had sought confirmation from Star that CUP’s debit cards were not being used at Star’s properties to fund gambling, he failed to prevent Star sending to NAB, on 7 November 2019, an email which contained inaccurate, incomplete and misleading representations in respect of that issue.

THE COURT ORDERS THAT:

2.    Pursuant to s 206C(1) and/or s 206E of the Corporations Act 2001 (Cth) (Act), the Fourth Defendant be disqualified from managing corporations for a period of 9 months.

3.    Pursuant to s 1317G of the Act that the Fourth Defendant pay to the Commonwealth of Australia within 28 days a pecuniary penalty in the amount of $60,000.

4.    The proceeding otherwise be dismissed as against the Fourth Defendant.

3    Both ASIC and the first defendant, Mr Matthias Michael Bekier, proposed the referral of the aspect of the proceeding which related to the making of these proposed declarations and orders to another judge. Given the nature of the agreement and conscious of the fact that reallocation would place a burden on another judge of the Court at a time when the demands on the judges in the Sydney Registry are such that it is unclear as to when this aspect of the matter could be heard and determined, I instructed my Associate to indicate my preliminary view that although I did not then know the detail of the proposed orders, I did not consider that any real or substantive issue of apprehended bias would likely arise. Having noted this, I indicated that I would hear from the parties should they contend (with their greater knowledge) that such a course was necessary in the administration of justice.

4    After this communication, on 3 February 2025, I received the joint submissions of ASIC and Mr Theodore on liability and relief and the proposed orders.

B    CONSIDERATION

5    The relevant test where there is an application for disqualification for apprehended bias is whether “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”: Ebner v Official Trustee in Bankruptcy [2000] HCA 3; (2000) 205 CLR 337 (at 344 [6] per Gleeson CJ, McHugh, Gummow and Hayne JJ); Charisteas v Charisteas [2021] HCA 29; (2021) 273 CLR 389 (at 296 [11] per Kiefel CJ, Gageler, Keane, Gordon and Gleeson JJ).

6    The application of this “double might” test requires two steps. First, “it requires the identification of what it is said might lead a judge … to decide a case other than on its legal and factual merits”; and, secondly, “an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits”: Ebner (at 345 [8] per Gleeson CJ, McHugh, Gummow and Hayne JJ); Charisteas (at 296 [11] per Kiefel CJ, Gageler, Keane, Gordon and Gleeson JJ).

7    All the relevant circumstances of the particular case may be taken into account in applying the test, although one is to take into account only such knowledge of matters of legal or other processes that can reasonably be attributed to the lay observer, including matters of which the observer would take into account before reasonably forming any firm apprehension.

8    It has often been said it is necessary to bear in mind the caution that judges should not too readily accede to applications for disqualification for apprehended bias. However, from my general observation, it seems to me that applications are made and granted more readily now than in previous times. Perhaps this is because of the cost and other consequences that can flow if a judge gets the assessment as to whether the Court has been properly constituted wrong. But it is a trend that is noticeable.

9    Of course, this is an unusual case, in that the issue of apprehended bias has not yet crystallised. I have not considered the joint submissions in any detail, nor any evidence proposed to be led by Mr Theodore, nor have I recorded my reasons for the disposition of the case against Mr Theodore. If all parties had been prepared to waive any issue of possible apprehended bias relevant to this issue at this time, I would have proceeded to hear this aspect of the case with alacrity, and, indeed, would have tried to dispose the case against Mr Theodore before the commencement of the balance of the hearing (particularly since he has agreed to consent to disqualification for a period of nine months from the date of any order).

10    The course of dealing with the matter immediately made intuitive sense to me and would have best facilitated the overarching purpose. I hardly thought I would be distracted from later fulfilling my judicial function properly and in accordance with my oath in disposing the balance of the case because I had resolved the case against Mr Theodore based on different evidence. But my subjective view is not the test, and I cannot require individuals to waive a point in advance if they are not prepared to do it.

11    It is entirely unclear to me as to when another judge will be able to hear this aspect of the case, let alone deliver judgment. Having said this, at least two defendants have raised the prospect of bringing an application for apprehended bias, although, of course, they recognised the issue has not yet crystallised. Even in the face of some opposition, I considered whether I ought to proceed in these circumstances.

12    Reference has often been made to the artificiality of the reasonable observer test as merely a proxy for a broader evaluative judgment that is undertaken by the Court itself, and it seems to me that at this stage, I could reasonably predict the matters that may arise at a separate penalty hearing, and upon the delivery of judgment.

13    One of the particular factors called in aid by those contending for reallocation was the commonality of pleading, as between Mr Theodore and the second defendant, Ms Martin, in the amended statement of claim (at [318] and [321]), concerning a matter that is relevant to the characterisation of a communication, the subject of the proposed consent declaration.

14    In this regard, I thought that this issue may be able to be avoided, because declarations of right are, of course, usually a discretionary remedy, and subject to hearing further submissions, it did not seem to me it necessarily was the case that the declaration added much to the relief sought. I have been disabused, however, of this misapprehension, and although it is not stated in the declaration itself, the declaration is sought under s 1317E(1) of the Corporations Act 2001 (Cth), which requires the Court to make a declaration if the preconditions for the making of the declaration are made out.

C    ORDERS

15    On balance, even though I consider any application for disqualification will likely be less than objectively compelling (and despite what may be some delay and inconvenience to Mr Theodore), I do not want to create a risk of a potential problem when the “downside” would be so significant. Hence, I will arrange for an order to be made, which separates out all issues in the proceedings, other than any relief against Mr Theodore, and directs that the National Operations Registrar allocate to another judge of the Court the hearing of the balance of the matter, that is, the resolution of the case between ASIC and Mr Theodore.

16    Accordingly, I make the following order and direction:

THE COURT ORDERS THAT:

1.    The trial listed to commence on 10 February 2025 pursuant to Order 4 of the Orders dated 14 September 2023 be a final hearing in respect of all issues in the proceeding, save for any relief sought against the fourth defendant, Mr Theodore.

AND THE COURT DIRECTS THAT:

1.    The National Operations Registrar allocate to another Judge of the Court the balance of the matter in respect of any relief sought against Mr Theodore, being the resolution of the case as between ASIC and Mr Theodore.

D     A FURTHER MATTER

17    Immediately prior to these revised reasons for the making of my orders of 5 February 2025 being published, a further communication was received by my Chambers advising that ASIC and the third defendant, Mr Gregory Francis Hawkins, have reached an agreement on a proposed resolution to ASIC’s claims against Mr Hawkins. A proposed form of order has been sent referring the resolution of this further aspect of the case to another judge in conformity with the order made above. This order ought to be made. Additionally, it is appropriate to vary the order made on 5 February 2025 to give greater precision to the issues all parties considered were to be determined at the present hearing. The part heard hearing will now be a final hearing in respect of the question of whether the defendants, save for Mr Theodore and Mr Hawkins, have engaged in contravening conduct.

Associate:

Dated: 14 February 2025

SCHEDULE OF PARTIES