Federal Court of Australia

Independent Commission Against Corruption v Waterhouse [2026] FCA 424

ORDERS

THE COURT ORDERS THAT:

1.    The respondent’s application for orders reconstituting the Court be dismissed.

2.    Leave be granted to both parties to inspect any documents produced in response to compulsory process issued in these proceedings and produced to the Registry.

3.    Pursuant to s 52(5) of the Bankruptcy Act 1966 (Cth), the creditor’s petition be extended until 4.15pm on 1 December 2026.

4.    The hearing of the creditor’s petition be listed to commence at 10.15am on 30 November 2026.

5.    The respondent is to file his opening written submissions on or by 16 October 2026.

6.    The applicant is to file its opening written submissions on or by 13 November 2026.

7.    The submissions filed by the parties in accordance with these Orders are to be in Times New Roman 12-point type, are to refer to any authorised report and medium neutral citation of any cases referred to or cited (or in the absence of an authorised report, any unauthorised report and the medium neutral citation), and are not to include footnotes.

8.    By no later than 20 November 2026, the parties are to deliver to the Associate to Justice Lee a Court Book, in hard copy and electronically, which:

(a)    as Part A contains the final version only of the petition and any notice stating the grounds of opposition filed by the respondent;

(b)    as Part B contains the final versions of the opening submissions of each party (updated to contain cross references to Part C of the Court Book to the extent a document is the subject of reference);

(c)    as Part C contains, in chronological order, one paginated copy only of the documents a party has referred to in opening submissions and, in this regard, if only part of a document is to be relied upon, only part of the document should be reproduced; and

(d)    as Part D contains any of the lay affidavit material proposed to be relied upon by any party (without any annexures or exhibits) and, to the extent the affidavit refers to any document in Part C, a cross reference to Part C of the Court Book.

9.    The Court Book is to contain double-sided printing and, to the extent filed Court documents are reproduced, the Notice of Filing form is to be reproduced at the end of the relevant court document.

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 AND BACKGROUND TO APPLICATION

1    This bankruptcy proceeding, described in further detail below, has been allocated to my docket in accordance with the Court’s usual allocation procedures and is before me today for a first case management hearing.

2    The respondent, Mr Waterhouse, who is a solicitor, opposes the making of a sequestration order and, by emails sent to my Associate prior to the case management hearing, contends that I should disqualify myself from hearing the matter and that what he describes as “special arrangements” should be made. Oral submissions made this morning did not always distinguish between allegations of actual and apprehended bias as providing a basis for disqualification; but it seems to me that Mr Waterhouse’s primary focus is on apprehended bias.

3    It is appropriate to set out significant parts of the email communications to my Chambers prior to today, because that material sets out the basis upon which Mr Waterhouse relies upon to demonstrate the basis for my disqualification, as confirmed during oral submissions this morning.

4    First, in an email sent to my Associate on 9 March 2026 (first email), Mr Waterhouse asserts that:

If I get an honest and impartial judge I will be able to prove my case because much of my evidence is compelling and irrefutable and even undefendable. The evidence I have put on in this case is over 7000 pages. But so far no one in the Court wants to read it. 

Indeed the ICAC chose not to contest any of my evidence in the other courts and put nothing on themselves yet were still able to defeat me...because they knew the (corrupt) judges were rigged against me....yes....very outrageous allegations but allegations that my evidence can prove before an independent and impartial court but cannot prove before a rigged court... which is certain to happen again.

Justice Lee should decline the docket and refer the matter to the Chief Justice with a recommendation for ‘special arrangements’ for an international judge/jurist from outside the jurisdiction and the reach of politicians to be appointed an acting Federal Court Justice to hear and determine just this case.

This is not unknown. Australian judges sit on foreign courts when local cases have a political flavour raising suspicion of possible political interference. Justice Dowd was previously Chairman of the International Commission of Jurists...an international body that holds itself available to provide judges for such cases as this...The cost of this exercise will be insignificant compared to the public benefit.

I will object to Justice Lee dealing in any way with this case without the making of ‘special arrangements’.

5    Then, three days later, on 12 March 2026, a further email was sent to my Associate (second email). The second email referred to the fact my late father-in-law:

…was appointed to high public office (Ombudsman) by a Labor Party Government in 1988. Landa’s law firm had close connections to the NSW Labor Council and his father was also a minister in the NSW Labor Party Government in the 50’s and 60’s. His cousin Paul Landa was very close to Neville Wran and served as the NSW Attorney General under the Neville Wran Government.

6    After then noting that I was “on a short list for appointment by the Labor Government as the Royal Commissioner to conduct the public inquiry into the Bondi massacre” and that I “had several involvements in ICAC inquiries” and other matters, the second email went on to suggest:

The Federal Court is showing all the hall marks (sic) of doing another rigging of this case for its political masters/benefactors.

7    Mr Waterhouse further asserted:

I have no faith, trust or confidence that your Court will provide to me a truly independent and impartial court.

8    Indeed, Mr Waterhouse goes further, asserting that courts generally have:

ignored my evidence and submissions, intentionally misapplied the law, wrote up fake facts to suit their perverse judgements and for good measure falsely character assassinated me…

9    Returning to the topic of my personal position, Mr Waterhouse contends that because of “connection[s] to the Labor Party”, I should not hear the matter. Reflecting his contention initially raised in the first email, Mr Waterhouse continued by asserting that:

The only way the Federal Court can guarantee me [an impartial hearing] is by moving for ‘special arrangements’ … [including] an international judge/jurist from outside the jurisdiction…

10    Then, on 2 April 2026, my Associate received an email from the Crown Solicitor’s Office proposing a set of case management orders and indicating that:

At the case management hearing, the Commission will propose that the orders set out in the attached Short Minutes of Order be made by the Court.

The Applicant has expressed that he considers the proposed orders to be appropriate in the circumstances.

11    I pause to add this last communication from the Crown Solicitor appeared odd for two reasons. First, the orders proposed that Mr Waterhouse “file and serve an interlocutory application to extend time pursuant to s 52(4) (sic) of the Bankruptcy Act 1966 (Cth), any evidence in support and submissions by 15 April 2026”, and then proposed a timetable leading up to a hearing of this interlocutory application for half a day sometime in the middle of this year. I will come back to this proposal below. Secondly, it presupposed that without resolving an outstanding question as to whether the Court was properly constituted (by a judge free from the infirmity of bias), it suggested that I make orders.

12    In any event, I instructed my Associate to respond on 7 April 2026, in the following terms:

The matter remains listed for a case management hearing at 9:30am on Friday, 10 April 2026. The case management hearing will proceed as listed.

His Honour notes that there is an outstanding application concerning disqualification. It would not be appropriate for his Honour to make any orders until the issue as to whether the Court is properly constituted is resolved.

That issue, and any proposed procedural orders (should his Honour not disqualify himself), will be addressed at the case management hearing. The parties should be in a position to address the disqualification issue on Friday.

13    That prompted a third email from Mr Waterhouse sent on 8 April 2026 (third email), which relevantly noted:

I take your email reference to an ‘outstanding application concerning disqualification’ to mean my foreshadowed application to Justice Lee made in my emails to you to recuse himself.

There is however my outstanding filed application for the whole court to recuse itself and for ‘special arrangements’ to be made for the appointment of an acting Federal Court judge to try just this one case....One ground for which is the evidenced political interference in this case. This has been listed before a full court on the 22nd July 2026.

I am of the opinion that my case for Justice Lee to recuse himself should be left until after the issue of ‘special arrangements’ has been determined. If Justice Lee were not to recuse himself and my application for ‘special arrangements’ is upheld then the trial of my application for Justice Lee to recuse himself would have been a waste of time and money. 

I advise that my application for justice (sic) Lee to recuse himself is not a short matter at all. Because of the political interference in this case from day one starting in 1999 and continuing right up until the very present my case for recusal is very long in evidence.

The presentation of that evidence for recusal could take 4-6 months. Conspiracy evidence is always long and complex especially when it involves political interference and the fixing of judges to pervert justice... as has already happened in the NSW Supreme Court, Court of Appeal and the High Court in this very matter. 

I know that if ‘special arrangements’ are not made in this case then the fix is on and I have no chance of winning no matter what my evidence, or what the law is or what I say. The ICAC and its co-conspirators have not come all this way to the Bankruptcy Court to lose it here. They have spent 26 years fixing it everywhere else so why stop now. They must stop me exposing their subversion of the legal system...their very survival depends on it.

…

My application to Justice Lee to recuse himself can’t be properly heard in such a short time. The evidence for which already exceeds 7000 pages. I did not create this monster of a case.

B    THE APPLICATION FOR AN ADJOURNMENT

14    As can be seen, Mr Waterhouse, in his third email, referred to the Full Court listing. To understand why that listing was mentioned by Mr Waterhouse, it is necessary to explain the nature of the proceeding listed today, its time constraints, and how a separate Full Court listing came about.

15    The present proceeding is a creditor’s petition brought by the applicant under s 43 of the Bankruptcy Act 1966 (Cth). The petition asserts an act of bankruptcy was the failure by Mr Waterhouse to comply, on or before 21 March 2025, with the requirements of a bankruptcy notice served on 28 February 2025. The petition and the affidavit verifying it are each dated 26 June 2025, and the Court file refers to the creditor’s petition as having been lodged and accepted for filing on 30 June 2025.

16    On that footing, without deciding any point as to validity of steps taken prior to filing or service, it appears that the petition was presented on 30 June 2025. That date matters because, by force of s 52(4) of the Bankruptcy Act 1966 (Cth), a creditor’s petition lapses at the expiration of 12 months commencing on the date of presentation of the petition, unless the Court makes an order under s 52(5) fixing a later period. Section 52(5) permits the Court, if it considers it just and equitable to do so, to order that the petition lapse only at a period exceeding 12 months, but not exceeding 24 months, commencing on the date of presentation. In the present case, absent such an extension, the creditor’s petition will, therefore, lapse on 30 June 2026.

17    As noted above, the proposed orders foreshadowed an application by Mr Waterhouse to extend the life of the petition if it is “just and equitable” to do so. Pausing there, it is worth noting that in deciding whether to extend time the Court considers factors such as delays caused by the debtor’s conduct, prejudice to creditors, and the overall fairness of keeping the petition alive. Such applications are therefore interlocutory in nature; they do not affect the petition but serve to preserve the proceeding from lapse while substantive issues are resolved, if it is appropriate to do so. I had assumed, given the terms of the proposed orders of ICAC, that the application to extend would be contested.

18    On 5 December 2025, Mr Waterhouse filed an interlocutory application seeking, in substance, orders that the Federal Court “is recused for apprehended bias and for other reasons” and that all disputed issues be adjourned until a specially arranged acting Federal Court judge can be appointed. That application came before Markovic J on 4 March 2026. Her Honour made directions for submissions on the question whether an order should be made removing the interlocutory application from the Court file pursuant to r 2.28(1) of the Federal Court Rules 2011 (Cth), and referred the “balance of the proceeding to the National Operations Registrar for allocation to a docket judge”. That referral is how it came about that I was allocated the hearing of the substantive matter.

19    It is important to distinguish between the hearing of the creditor’s petition being case managed in my docket and the issue before the Full Court. The question whether an order should be made under r 2.28 in relation to Mr Waterhouse’s interlocutory application is one thing; the question whether I should disqualify myself from taking steps in relation to the hearing of the creditor’s petition is quite another. The former concerns the institutional disposition of Mr Waterhouse’s broader interlocutory application. The latter concerns whether I should continue to exercise judicial power in this proceeding whereby the applicant seeks a sequestration order.

20    The existence of the r 2.28 issue does not relieve me of the obligation to case manage this proceeding and the anterior question as to whether I disqualify myself. Nor, given the nature of bankruptcy proceedings, would it be appropriate simply to leave the creditor’s petition to drift while that separate issue before the Full Court is resolved. Quite apart from the mandate to facilitate the overarching purpose in Pt VB of the Federal Court of Australia Act 1976 (Cth), it is well established that bankruptcy matters, by their very nature, generally require prompt attention and resolution. In those circumstances, as foreshadowed by my communication to the parties earlier this week, I propose to determine immediately Mr Waterhouse’s application that I disqualify myself.

21    In doing so, I am conscious that, in the third email, Mr Waterhouse has referred to a range of matters that he says are material to whether this Court can determine the matter free from bias. At the commencement of oral submissions today, he indicated that he thought it might take a hearing of four to six months to develop his submissions on his allegations of bias. But as I pointed out, it is necessary to bear in mind a difference between the substantive or ultimate contentions that Mr Waterhouse seeks to make in opposition to the making of a sequestration order and the preliminary issue as to whether I am prevented by reason of bias from determining those issues.

C    CONSIDERATION OF THE APPLICATION FOR DISQUALIFICATION

22    As it happens, the contentions of Mr Waterhouse may be dealt with relatively shortly.

23    First, even if I was to disqualify myself, the matter would be allocated to another judge of this Court. The suggestion that this Court can, or should, arrange for some form of specially constituted or international tribunal betrays a fundamental misunderstanding of our constitutional structure. Judges of this Court are appointed pursuant to Ch III of the Constitution. The judicial power of the Commonwealth is exercised by courts constituted in accordance with that Chapter or State courts vested with power by the Commonwealth to do so. There is no mechanism, still less any entitlement, for a litigant to insist upon the appointment of an ad hoc or foreign judge to determine a controversy properly brought within the bankruptcy jurisdiction of this Court to determine.

24    The Court’s obligation is to provide a hearing according to law before a duly constituted court. That obligation is not displaced by a litigant’s dissatisfaction with earlier proceedings, nor by assertions, however strongly expressed, that those proceedings were “rigged”.

25    Secondly, I turn to the more particular aspects of the application that I disqualify myself. The governing principles are very well-settled and do not require elaboration. 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 issues: Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 (at 344 [6] per Gleeson CJ, McHugh, Gummow and Hayne JJ). The High Court recently reaffirmed the orthodox approach in SunshineLoans Pty Ltd v Australian Securities and Investments Commission [2026] HCA 8, including emphasising the necessity of identifying a logical connexion between the matter relied upon and the feared departure from deciding the case on its merits.

26    General assertions of systemic corruption or political interference, without a logical connexion to the issues for determination, do not suffice to establish apprehended bias. This reflects the reality that the hypothetical construct of a fair-minded observer is neither unduly sensitive nor prone to suspicion.

27    The matters relied upon concerning my alleged connexions are, in substance, references to family associations, focussing largely upon relations with a former Premier of this State, the Hon Neville Wran AC QC, and my professional experience with ICAC (the petitioning creditor). Reference was also made to my having “friends” within the Australian Labor Party. Even taken at their highest, these matters either singly or in combination, do not identify any interest, pecuniary or otherwise, to the outcome of this proceeding, nor any circumstance capable of affecting the discharge of judicial duty.

28    Further, and somewhat ironically, the contentions concerning my personal position sit uneasily with two objective facts: first, that I was appointed to this Court by the Governor General in Executive Council upon the recommendation of an Attorney-General of a different political persuasion; and secondly, to the extent as a barrister I appeared at ICAC, it was for persons being investigated, and not for the Commission.

29    At the risk of getting bogged down by peripheral detail, this is not the extent of the apparent misunderstandings. Although Mr Waterhouse’s suggestions of relevant family connexions go back to my wife’s grandfather, the Hon Abram Landa CMG (a man elected to the New South Wales Parliament as member for Bondi in the 1930 election which brought Jack Lang to the Premiership for the second time), there is a lack of logic in suggesting he had anything to do with Mr Wran in the 1970s, particularly following his appointment as Agent-General of this State to London by the coalition Askin government immediately after the 1965 state election occasioning a by-election for a marginal seat (which led to disciplinary action by the Australian Labor Party). Similarly, the infirm nature of the allegations generally is illustrated by the reality that my late father-in-law, Mr David Evatt Landa AM, held political office as an independent, and his subsequent appointments to public office were made by the Unsworth Labor government (after Mr Wran’s retirement) and later by the Fahey coalition government. Although his cousin, the Hon David Paul Landa QC held several Cabinet positions in the Wran government, including as Attorney-General before his untimely death at the age of 43, it is somewhat unclear as to how any supposed relationship with a man I never met and who died when I was a law student has anything to do with my ability to discharge the judicial function.

30    Finally, as I indicated in response to a question by Mr Waterhouse, although I do have friends who have been, or are, members of the Labor Party, that does not exhaust my friendship group: happily, I have friends of all political persuasions.

31    Apart from being factually misconceived, Mr Waterhouse’s contentions do not even come close to satisfying the applicable test.

32    Leaving aside any residual allegation of actual bias, which is untenable, a fair-minded lay observer would not regard the matters relied upon as giving rise to any reasonable apprehension of bias, even given the breadth of the two “might” test.

33    There is simply no logical connexion articulated between the matters asserted and the determination of the issues in this case. This is a creditor’s petition. The questions for determination are statutory and confined, notwithstanding the apparent breadth of Mr Waterhouse’s foreshowed opposition. Mr Waterhouse’s emails do not explain how any of the asserted matters could be reasonably perceived as leading a judge to resolve the relevant issues otherwise than according to law.

34    The broad assertions of systemic corruption, political interference and prior “rigging” in support of my disqualification stand in the same position. They are serious in tone and substance, but they are unparticularised in any way that bears upon the issues before the Court, and they do not provide a rational basis for apprehending that this Court will not perform its task impartially. Needless to say, this conclusion does not involve any prejudgment of the substantive issues Mr Waterhouse wishes to advance at any hearing. Mr Waterhouse wishes to agitate arguments in support of his contention that the judgment debt was not properly obtained, and that allegation will be dealt with, in due course, based on any evidence adduced relevant to any opposition raised to the making of a sequestration order.

35    It should be added, without undue elaboration, that the apprehended bias principle is not engaged by the strength of a litigant’s belief that he has been wronged, nor by a generalised lack of confidence in courts. It requires an objective and reasoned basis. That is absent here.

36    In those circumstances, the application for my disqualification and the related relief that I make a request for reallocation to the Chief Justice must be refused. The request for “special arrangements” is misconceived.

37    The matter will now proceed without delay for case management in the ordinary way.

[the parties then addressed]

D    Extension of creditor’s petition

38    Following the determination of the disqualification application, I heard submissions from the parties as to the course this matter should take. It became apparent during those submissions that the petitioning creditor, ICAC, proposes to seek an extension of the creditor’s petition, notwithstanding that the orders it provided foreshadowed that it was Mr Waterhouse who was to bring the application.

39    Both parties have confirmed before me today that the extension is by consent. That is not, of course, determinative of whether (pursuant to section 52(5) of the Bankruptcy Act 1966 (Cth)) it is just and equitable to extend the period at the expiration of which the petition would lapse. Indeed, even if an extension is granted, it is necessary that the application for a sequestration order be heard and determined by 30 June 2027, which is 24 months after the presentation of the petition.

40    The first available date upon which I can commence to hear the matter on a final basis is 30 November 2026. I will set the hearing down to commence on that date. I will have a much better idea by the commencement of the hearing, after having considered the opening submissions, as to how long it will take for me to hear the matter and then deliver reasons. I will further extend the life of the petition at that time to allow for the orderly resolution of the dispute.

E    Conclusion

41    Accordingly, given when the hearing can be dealt with, I am satisfied it is just and equitable that the creditor’s petition be extended, and in the first instance, I will extend it to 4.15pm on 1 December 2026.

42    Both parties have indicated that they have filed all the material upon which they propose to rely, subject to any material emerging from production of documents pursuant to compulsory process which, to the extent it is relevant, could be the subject of tender at the hearing.

43    I will make orders concerning the provision of written submissions in advance of the hearing and the preparation of a court book.

Associate:

Dated: 13 April 2026