Federal Court of Australia

Global Capital Property Fund Limited (in liquidation) v Point Bay Developments Pty Ltd [2025] FCA 1597

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application filed on 31 October 2025 is allowed.

2.    The proceeding is referred to the National Operations Registrar for reallocation to another docket judge.

3.    There is no order as to costs.

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

REASONS FOR JUDGMENT

NESKOVCIN J:

1    The first respondent, Point Bay Developments Pty Ltd (PBD), has brought an application that I recuse myself from the further hearing and determination of this proceeding. The application is brought on the ground of apprehended bias.

2    PBD relied on two matters, which it submitted give rise to a reasonable apprehension of bias:

(a)    first, that a fair-minded lay observer might perceive that I had prejudged significant issues in this proceeding in light of findings I made in a proceeding brought by the Australian Securities and Investments Commission (ASIC) (ASIC proceeding), which are set out in Australian Securities and Investments Commission v United Global Capital Pty Ltd [2024] FCA 1215 (ASIC v UGC); and

(b)    further or alternatively, that a fair-minded lay observer might perceive that extraneous information I received in the course of the ASIC proceeding might influence my determination of significant issues in this proceeding.

3    The sixth respondent, Isabella Pappas, supported the application. The remaining respondents did not seek to be heard on the application.

4    The applicant, Global Capital Property Fund Limited (in liquidation) (GCPF), opposed the application and provided written and oral submissions to assist the Court.

5    For the reasons that follow, I have decided that I should recuse myself from the further hearing and determination of this proceeding.

background

6    United Global Capital Pty Ltd (UGC) carried on a financial services business and held an Australian Financial Services Licence that authorised it to provide financial product advice to retail and wholesale clients and to provide specified financial products.

7    GCPF was a property development investment company. The vast majority of GCPF’s shareholders came to acquire their shares in GCPF through referrals from UGC or its corporate authorised representatives under what was described as the “UGC Advice Model”.

8    In June 2024, ASIC commenced the ASIC proceeding seeking the appointment of receivers to the property of UGC and GCPF. UGC and GCPF were the first and second respondents respectively in the ASIC proceeding. At the relevant times, the directors of GCPF were Mr Pappas, Mr Hewish and Mr Dickinson, the second to fourth respondents respectively in this proceeding. Mr Pappas was also the sole director of PBD and Mr Hewish was the sole director of UGC.

9    On 9 August 2024, the creditors of UGC resolved to place UGC into liquidation and liquidators were appointed.

10    On 9 September 2024, ASIC brought an application to wind up GCPF on just and equitable grounds pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth).

11    GCPF consented to the winding up on a “no admissions” basis. Whilst ASIC submitted that the Court was entitled to treat GCPF’s consent to the winding up as an admission of all facts necessary or appropriate to grant that relief, it remained necessary for the Court to be satisfied that it had power to make the proposed orders and that they were appropriate: ASIC v UGC at [4].

12    ASIC sought to wind up GCPF on the grounds that there was a lack of confidence in the conduct and management of GCPF’s affairs and a risk to the public interest that warranted protection. Relevantly, the principal matters relied upon by ASIC were that:

(a)    the vast majority, if not all, shareholders of GCPF were misled into purchasing shares in GCPF and/or purchased their shares – almost invariably using sizable portions or all of their retirement savings – based on inappropriate and conflicted advice, pursuant to the UGC Advice Model, which saw the retirement savings of hundreds of UGC clients imperilled by investment in GCPF, which in turn invested in special purpose vehicles undertaking high-risk property development projects; and

(b)    GCPF was riddled with conflicts of interest, and its investments had been improperly managed, were inadequately secured or entirely unsecured, were poorly documented, in disarray and appeared in many instances to be loss making.

13    On 3 October 2024, I made an order that GCPF be wound up pursuant to s 461(1)(k) of the Act, having found that it was appropriate to wind up GCPF because of a lack of confidence in the conduct and management of GCPF’s affairs and a risk to the public interest that warranted protection: ASIC v UGC at [36].

14    On 4 March 2025, GCPF, by the Liquidators, commenced this proceeding against PBD by originating application and concise statement. Pursuant to consent orders made on 26 June 2025, as amended on 14 August 2025, GCPF filed a statement of claim on 25 August 2025.

15    To understand the overlap in issues between the ASIC proceeding and this proceeding, it is appropriate to describe GCPF’s allegations in this proceeding. In its statement of claim, GCPF makes claims against PBD for breach of fiduciary duties, knowing receipt and knowing assistance and knowing involvement in contraventions of statutory duties.

16    GCPF alleges that PBD breached fiduciary duties owed to GCPF which are said to arise as an incident of the relationship between the parties established by a joint venture agreement to acquire and develop a property in Shoal Point Bay, Mackay, Queensland (PBD JV Agreement). Under the PBD JV Agreement, GCPF provided debt funding for the project and PBD was to manage the development. Provision was made for an equal profit share after the funds advanced by GCPF had been repaid.

17    GCPF alleges that PBD breached fiduciary duties owed to GCPF by acting in a position of conflict and preferring its own interests to those of GCPF, inter alia by:

(a)    directing payments from funds advanced by GCPF to third parties otherwise than for the purpose of the purchase and development of the relevant property;

(b)    procuring a variation agreement (PBD JV Variation Agreement), under which the terms of the PBD JV Agreement were varied so that GCPF was no longer entitled to any profit share;

(c)    entering into a variation of an existing option instrument which had the effect of reducing the consideration payable by the option holder for the relevant property by $700,000 (Incentive Agreement); and

(d)    failing to account to GCPF for all funds received in respect of the sale of the option property.

18    In support of its claims against PBD, GCPF relies on allegations that Mr Pappas, Mr Hewish and Mr Dickinson breached fiduciary and statutory duties owed to GCPF by acting in a position of conflict and causing GCPF to enter into the PBD JV Agreement, the PBD JV Variation Agreement and the Incentive Agreement.

19    For the purpose of the knowing assistance claim against PBD, GCPF alleges that the breaches of fiduciary duty by Mr Pappas, Mr Hewish and Mr Dickinson constituted a dishonest and fraudulent design on the basis that the breaches were deliberate, self-interested and concealed from shareholders of GCPF or, alternatively, undertaken without the approval shareholders of GCPF. The alleged acts of assistance of PBD comprise, in substance, the matters identified in paragraph 17 above. GCPF alleges that PBD had the requisite knowledge of the dishonest and fraudulent design by attribution of the knowledge of Mr Pappas.

20    The knowing receipt claim concerns, among other things, the receipt by PBD of property transferred to PBD as a result of the alleged fraudulent design and breaches of fiduciary duties by Mr Pappas, Mr Hewish and Mr Dickinson. Once again, GCPF alleges that PBD had the requisite knowledge of the directors’ breaches by attribution of the knowledge of Mr Pappas.

21    PBD has not yet filed a defence to the statement of claim.

relevant legal principles

22    The relevant principles are well established and were not in dispute.

23    The relevant test for disqualification 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 question the decision-maker is required to decide: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 at [6] (Gleeson CJ, McHugh, Gummow and Hayne JJ).

24    The application of the criteria for the determination of an apprehension of bias involves three steps:

(a)    first, identification of the factor which it is said might lead a judge to resolve the question other than on its legal and factual merits;

(b)    second, articulation of the logical connection between that factor and the apprehended deviation from deciding that question on its merits; and

(c)    third, assessment of the reasonableness of that apprehension from the perspective of a fair-minded lay observer: Ebner at [8] (Gleeson CJ, McHugh, Gummow and Hayne J); QYFM v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2023) 279 CLR 148; [2023] HCA 15 at [38] (Kiefel CJ and Gageler J, as his Honour then was).

25    In relation to the attributes of the fair-minded lay observer, in QYFM¸ at [47]–[48], Kiefel CJ and Gageler J observed that:

47.    Being "fair-minded", the observer "is neither complacent nor unduly sensitive or suspicious". Yet the observer is cognisant of "human frailty" and is all too aware of the reality that the judge is human. The observer understands that "information [as well as attitudes] consciously and conscientiously discarded might still sometimes have a subconscious effect on even the most professional of decision-making".

48.    Being "lay", the observer "is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge". Though the observer may be taken to understand that the judge, by reason of professional training and experience and fidelity to the judicial oath or affirmation, will have a greater capacity than most to discard "the irrelevant, the immaterial and the prejudicial" and to discharge the judicial function uninfluenced by past professional relationships, "the public perception of the judiciary is not advanced by attributing to the ... observer a knowledge of the law and an awareness of the judicial process that ordinary experience suggests not to be the case". This indicates that the observer will see the person who is currently a judge as the person who was formerly an advocate and may be less inclined to dissociate the advocate from the cause advocated than would someone steeped in the adversary process with a cultivated sense of the ethics of the legal profession and the profundity of the judicial oath.

[Footnotes omitted]

26    It is also important to bear in mind the duty of judges to hear matters allocated to them. In Ebner, at [19], the plurality stated:

Judges have a duty to exercise their judicial functions when their jurisdiction is regularly invoked and they are assigned to cases in accordance with the practice which prevails in the court to which they belong.  They do not select the cases they will hear, and they are not at liberty to decline to hear cases without good cause.  Judges do not choose their cases; and litigants do not choose their judges.  If one party to a case objects to a particular judge sitting, or continuing to sit, then that objection should not prevail unless it is based upon a substantial ground for contending that the judge is disqualified from hearing and deciding the case.

27    In Livesey v NSW Bar Association [1983] HCA 17; (1983) 151 CLR 288 at 300 (Mason, Murphy, Brennan, Deane and Dawson JJ), it was said that a fair-minded observer might entertain a reasonable apprehension of bias by reason of pre-judgment if a judge sits to hear a case at first instance after the judge has, in a previous case, expressed clear views about a question of fact which constitutes a live and significant issue in the subsequent case or about the credit of a witness whose evidence is of significance on such a question of fact.

28    In Australian National Industries Ltd v Spedley Securities Ltd (In liquidation) (1992) 26 NSWLR 411 at 438, Mahoney JA (with whom Meagher JA agreed at 447–8) stated:

In my opinion, four things emerge from the decision in Livesey and the cases which have succeeded it: (a) the disqualification of a judge for apprehended pre-judgment depends on form rather than substance; (b) whether there is an unacceptable appearance of pre-judgment is to be decided, not according to likelihood, but according to possibility; (c) it is to be judged, not according to what the court and the parties know, but according to the impressions of a lay person who does not know the facts; and (d) there will be an unacceptable appearance of pre-judgment if the judge has previously dealt with the issue of fact or credibility which is before him in the instant case.

29    A reasonable apprehension of bias may also arise from a decision-maker receiving extraneous information, including knowledge of some prejudicial but inadmissible fact or circumstance, because of its subconscious influence. In Getswift Ltd v Webb (2021) 283 FCR 328 at [44]–[45] (Middleton, McKerracher and Jagot JJ), the Full Court stated:

Whilst then a judge is understood by the hypothetical observer to be able to discard the irrelevant, the immaterial and the prejudicial, and decide cases solely on the material that is in evidence, there still remains the possibility of apprehension of bias in respect of judicial officers seized of extraneous information. Otherwise, there would be no place for the recognition of human frailty and human nature which are accepted aspects of the approach of the fair-minded lay observer in considering apprehension of bias.

It follows that there is a need to recognise “human frailty” such that, even where a decision-maker has expressly disavowed consideration of certain material, it may be that the particular nature and relevance of that material can still give rise to the risk of a subconscious influence.

analysis of factors relied on by pbd

30    As already mentioned, the factors relied upon by PBD as giving rise to a reasonable apprehension of bias are pre-judgment and receipt of extraneous information. I will consider those factors in turn and approach the determination of the application according to the three-step test identified in Ebner and QYFM, as PBD did in its submissions.

Pre-judgment - the reasons in the ASIC proceeding

31    PBD submitted that the central issues in this proceeding concerning PBD are, firstly, the issue of whether the directors of GCPF breached their fiduciary and statutory duties by acting in a position of conflict in causing GCPF to enter into the PBD JV Agreement, the PBD JV Variation Agreement, and the Incentive Agreement (Conflict Issue), and, secondly, whether the alleged breaches of fiduciary duty by Mr Pappas, Mr Hewish and Mr Dickinson constituted a dishonest and fraudulent design (Fraudulent Design Issue).

32    PBD submitted that the factor that might lead me to resolve the Conflict Issue and the Fraudulent Design Issue other than on their legal and factual merits was the reasons for making the winding up order made in respect of GCPF in ASIC v UGC. In particular, PBD identified the following aspects of the findings in ASIC v UGC:

(a)    ASIC v UGC at [32(c)], in relation to the management of GCPF’s affairs, where I stated that:

in respect of the “Point Bay Development” which reached completion and was sold in March 2024 for nearly $50 million, GCPF was to receive $29,860,000 from the settlement and announced to investors that “approximately $29 million [was paid] to the company”. However, GCPF received only $23 million in its bank account, which was less than the principal it had advanced, of $23.5 million. This seems inexplicable in light of GCPF’s announcement that approximately $29 million had been paid to it. A further troubling matter is that GCPF held a registered mortgage over the project land and it is unclear why GCPF released the mortgage at settlement, allowing the settlement to go through without GCPF receiving the funds advanced on the project.

(e)    ASIC v UGC at [35], on the question of risk to the public interest, I stated that:

ASIC submitted, and I accept, that GCPF’s investments are highly speculative and some are likely to be loss making. The profitability of the projects in which GCPF invested will determine the return to shareholders, who have not yet received any return on their investments and whose capital is locked up in GCPF. Decisions will need to be made in relation to further funding for some of the projects and in relation to the future of the projects that are no longer viable. ASIC submitted, and I accept, that the directors of GCPF are hopelessly conflicted. Moreover, there is a risk of ongoing dissipation of funds to related entities, which may adversely affect the profitability of the projects and ongoing expenses of GCPF, to the detriment of shareholders.

33    PBD submitted that the feared deviation from deciding the Conflict Issue and the Fraudulent Design Issue on their legal and factual merits were the findings in the winding up reasons in ASIC v UGC with respect to the “hopelessly conflicted” position of the directors of GCPF and the “justifiable lack of confidence” in them. PBD submitted that those findings might be perceived by a fair-minded lay observer as an indication that I might have prejudged those issues, in the sense that my mind may not be open to persuasion on the relevant issues.

34    PBD submitted that the logical connection between the findings in the winding up reasons and the apprehended deviation from deciding the issues on their merits were that the matters on which I made findings in the winding up reasons in the ASIC proceeding were substantially the same (alleged) matters which I would need to determine afresh in this proceeding when adjudicating upon the Conflict Issue and the Fraudulent Design Issue. PBD submitted that, “a reasonable observer might possibly apprehend that at the trial the Court might not move its mind from the position reached on one set of materials, even if different materials were presented at the trial”.

35    PBD submitted that the Conflict Issue and Fraudulent Design Issue will be significant in the disposition of GCPF’s claims against PBD in this proceeding, as well as GCPF’s claims against Mr Pappas, Mr Hewish and Mr Dickinson. Further, that the fair-minded observer might entertain a reasonable apprehension of bias where a judge has previously expressed clear views on a significant disputed issue.

36    In an application to cross-vest a related proceeding to this Court, GCPF acknowledged that the reasons given in the ASIC proceeding dealt with related matters and transactions to those raised in this proceeding. Indeed, in that application which was made in late 2024 (not long before this proceeding was commenced), counsel for GCPF submitted that this Court was already “seized of a lot of evidence”.

37    The application in the ASIC proceeding to wind up GCPF was unopposed. PBD and the directors of GCPF did not put on any evidence or seek to be heard in relation to ASIC’s case. Nevertheless, it was a final hearing in which final relief was sought. In determining ASIC’s application to wind up GCPF on just and equitable grounds, I accepted ASIC’s submissions and made findings in relation to GCPF and the directors, who are parties to this proceeding.

38    In light of the identified findings in ASIC v UGC repeated in paragraph 32 above, particularly when those reasons are considered in the context of the “extraneous information” which I will come to next, I am satisfied that it is appropriate for me to recuse myself from the further hearing and case management of this proceeding.

The extraneous information

39    In the ASIC proceeding, ASIC relied on an affidavit of Ms Susanne Harris, Acting Senior Manager in ASIC’s Investigation and Enforcement Action team, in support of the winding up application: ASIC v UGC at [2].

40    Ms Harris’ affidavit referred to and extracted parts of an adverse determination made by an ASIC delegate in relation to UGC and Mr Hewish, the sole director of UGC and a director of GCPF. In her affidavit, Ms Harris also expressed various opinions, on behalf of ASIC, in relation to the UGC Advice Model and the extent to which Mr Hewish, Mr Pappas and Mr Dickinson were involved in or benefited from the UGC Advice Model.

41    The ASIC delegate’s adverse determination was referred to in ASIC v UGC at [26]–[27], as follows:

26.    In the determination to cancel UGC’s AFSL, a delegate of ASIC made the following adverse determinations against UGC in relation to the UGC Advice Model:

139    To summarise, I am satisfied that UGC acted dishonestly and unfairly by using the client onboarding process because the prospective client - who wanted to win an iPhone - was lured into receiving a free superannuation health check which was nothing of the sort. Rather, the superannuation health check was a mechanism used by UGC to determine whether the prospective client was worth pursuing or not, and if they were, they were sold an SMSF with most of their retirement savings invested in the highly speculative GCPF or the speculative Pivotal.

140    UGC's submission is that its conduct was the result of inadvertence; I disagree and am satisfied that this dishonest and unfair element of its financial services business was undertaken deliberately.

27.     The delegate also made adverse determinations regarding Mr Hewish, finding that he had demonstrated a lack of fairness, honesty, trustworthiness, professionalism and judgement.

42    As to the relevance of the ASIC delegate’s adverse determination in this proceeding, PBD raised two points:

(a)    firstly, the ASIC delegate’s adverse determination was referred to in and exhibited to a affidavit recently filed in this proceeding on behalf of GCPF in support of a freezing order application; and

(b)    secondly, the ASIC delegate’s adverse determination is referred to in particulars in support of allegations in GCPF’s statement of claim in this proceeding.

43    In relation to the three-step test in Ebner, PBD submitted that the matters apprehended to be determined other than on their legal and factual merits were the Fraudulent Design Issue and whether Mr Pappas (and through him PBD) had the requisite knowledge of the directors’ alleged fraudulent design.

44    PBD further submitted that:

(a)    the matter which might lead me to resolve those issues otherwise than on their legal and factual merits is the receipt in the ASIC proceeding of the ASIC delegate’s adverse determinations in relation to UGC and the UGC Advice Model and Ms Harris’ opinion evidence in relation to Mr Hewish, Mr Pappas and Mr Dickinson;

(b)    the feared deviation from deciding those issues on their legal and factual merits is that I may be subconsciously influenced by the ASIC delegate’s adverse determinations and Ms Harris’ opinion evidence; and

(c)    the logical connection between the receipt of the ASIC delegate’s adverse determinations and Ms Harris’ opinion evidence and the feared deviation arises because the Fraudulent Design Issue will require the Court to determine whether those breaches were deliberate and self-interested and the ASIC delegate’s adverse determinations and Ms Harris’ opinion evidence may subconsciously influence the Court’s determination.

45    GCPF submitted that judges are accustomed to dealing with inadmissible evidence and being presented with material, even it if is ultimately ruled inadmissible. However, ASIC is not a party to this proceeding. The ASIC delegate’s adverse determinations and Ms Harris’ opinion evidence were given in a different proceeding, but GCPF has put forward the ASIC delegate's adverse determinations as supportive of its pleading in this proceeding and in support of its application for freezing orders. Thus, it is not simply material that might have been looked at in a different proceeding – it is material that might have ongoing significance in this proceeding and which was used, by me, to support determinations in a different proceeding (adversely to the respondents’ interests) on matters that are likely to arise in this proceeding. Even if this factor were not a sufficient basis for disqualification, it is a factor which in combination with the previous factor (pre-judgment) supports the conclusion that I should recuse myself from further involvement in this proceeding.

46    Finally and for completeness, GCPF submitted that PBD’s delay in bringing this application was a factor that weighed against recusal, including because it may result in significant case management inefficiencies. I have considered this factor, however, I do not accept that there was any consequential delay. As counsel for PBD said, it was the reference to the ASIC delegate’s adverse determination in the recent affidavit that was filed in the freezing order application that brought the recusal issue to the fore. Furthermore, as counsel for the applicant conceded, the timing of the recusal application has not caused any prejudice to GCPF, noting that the proceeding is at an early stage.

conclusion

47    For the reasons given, I am comfortably persuaded that the test in Ebner is satisfied and that I should recuse myself from further involvement in this proceeding.

Associate:

Dated: 17 December 2025