JUDGMENT No. oan2o% ) FY etescereccce CATCHWORDS PRACTICE AND PROCEDURE - allegation of prejudgment or apprehended bias - principles. Laws v. Australian Broadcasting Tribunal (1990) 170 CLR 70 Webb v. R. (1994) 122 ALR 41 : HIELD ID v. THE OFFICIAL T E IN_BANKRUPTCY NB 209 of 1992 Burchett J. Sydney 21 October 1994 NB 209 of 1992 , ROSE SHIELDS JAMES ISAAC KEITH SHIELDS and ISAAC JOHN MACKAY SHIELDS Applicants AND: TEE _ IN Respondent CORAM: Burchett J. PLACE: Sydney DATE : 21 October 1994 REASONS FOR JUDGMENT BURCHETT J. This is an application for an interlocutory injunction to restrain the Official Trustee in Bankruptcy from proceeding with a sale of certain items of equipment which he claims as Trustee in respect of the bankrupt estates of Geoffrey Neil Keith Shields and Norma Rose Shields. The sale is fixed for 22 October 1994. The applicants are a son of the bankrupts and his uncle, a brother of the male bankrupt. They were both named as applicants in a notice of motion which was filed in Court on Tuesday 11 October 1994 by the first applicant, who then appeared in person and (by leave) for the second applicant. A document that apparently emanated from the second applicant, headed "TALK IN COURT", which the first applicant handed up to the Court together with his affidavit and the notice of motion, had annexed to it a photostat medical certificate dated 9 October 1994, indicating 2. that the second applicant was suffering from highly contagious chicken-pox and was not fit to appear in Court; the certificate indicated he was "likely to resume duties on 17/10/94". I was not asked to adjourn the motion, although the question was mooted. On the contrary, the first applicant had come from Nyngan prepared to present the application. The document handed up by him, to which I have referred, stated: "THERE ARE MATTERS WHICH MUST BE DEALT WITH TODAY WHICH ARE IN THE NOTICE OF MOTION ACCOMPANIED BY AN AFFIDAVIT." After referring to the matter of leave to file the notice of motion and an affidavit in Court, it continued: "The Notice of Motion is asking for a stay or a [sic] interlocutory order to stop the sale of the goods listed in the Affidavit together with the newspaper cutting stating that the sale will be on 22 October, 1994. In the alternative an undertaking by the Respondents not to proceed with the sale until at least the second applicant is well enough to appear with the first applicant." It appeared to me that the first applicant, who told me he had run his own business for the past three years, had a good understanding of the nature of the application he was making. He identified three particular items in the list of goods to be sold, claiming that the Official Trustee did not have a good title to sell those items. After he had given oral evidence of the basis of his claim and after I had adjourned the hearing for some hours to enable registration details of a prime mover which was one of the items to be checked, Miss Nash conceded, on behalf of the Official Trustee, that these items should be excluded from the sale, and an appropriate undertaking was given that they 3. would be excluded. Only one further item was then the subject of specific dispute by the first applicant, a particular press. Miss Nash indicated that the Official Trustee would be prepared to have any identifying marks on this press checked against the claim put forward by the first applicant, and I adjourned the motion to Friday 14 October, so this could be done. At that stage it was my understanding that the first applicant had no further particular matter to put forward, and that every point which he had identified, and wished, after discussion, to pursue, had been considered, subject to the question of confirmation of what he had said about the identification of the press. Nevertheless, I invited him to check the equipment during the adjournment, so as to be able to raise any matters he might have overlooked. In view of what happened later, I should record that it appeared to me the solicitor for the Official Trustee adopted throughout the hearing an attitude calculated to accord to Mr Shields the utmost fairness. When the matter came back before the Court on Friday 14 October, the second applicant was present at Court, and I was informed that the arrangement as to inspection of the press had been countermanded, apparently by him. By what title he claimed to have the right to exclude persons authorized by the Official Trustee from access to the press, which is on property at Nyngan standing in the names of the bankrupts, was not made clear. The second applicant alleged that all items referred to in the notice of motion belonged to his mother (as to a two thirds interest) and to himself and the male bankrupt as to the remaining one 4. third interest. None of the equipment, he swore, belonged to his brother, the bankrupt. The claim made by the second applicant was said by him to have arisen by virtue of the will of his father, who appears to have died in 1977, but the will was not produced or tendered, and the claim was made only in broad general terms. It is plainly inconsistent with a bill of sale dated 29 May 1990, made between the bankrupts as "mortgagors" and the second applicant himself as mortgagee. For that bill of sale lists a number of items, including the very prime mover to which I have earlier referred, in a schedule embraced by its first recital, as follows: "WHEREAS the Mortgagor is possessed of or entitled to be possessed of the plant ... goods ... and merchandise trade goods personal chattels... specified in the Schedule following". And it contains an assignment by the mortgagor "as beneficial owner" of those goods, subject to a proviso for redemption. Mr Isaac Shields gave evidence that this bill of sale was drawn up by the family solicitor, acting for him as well as for the mortgagors. The evidence shows that the same solicitor had drawn up an earlier bill of sale, which has now lapsed under s. 5 of the Bills of Sale Act, 1898 (NSW), in favour of yet another member of the Shields family, apparently the mother of the second applicant and the male bankrupt. There is, as well, a third bill of sale in evidence, in favour of a brother and sister of the female bankrupt, which has also lapsed. 5. The second applicant's broad assertion in relation to all items was, furthermore, inconsistent with the evidence of the first applicant, who swore quite specifically that his father bought certain of them, and also that he himself bought another item, paying $5,000 for it last January. The inconsistency between the evidence of the first applicant and the second underlines the fact that the father of the one and brother of the other, who must know the truth of the matter, was not a witness, and no explanation was given of his absence. On the earlier day, after reference had been made to the lathe and there had been some discussion about the prime mover, the first applicant indicated that a rake remained in dispute, and the following exchange took place between the Court and him: "HIS HONOUR: The twenty-foot rake you mentioned to me a minute ago, is there anything else that concerns you and your uncle in relation to this? MR SHIELDS: I do not think so, your Honour. HIS HONOUR: The rest is not your business, is that right? MR SHIELDS: I guess so, your Honour. HIS HONOUR: All right. Is there anything else you are concerned about in this application before me other than the lathe on which you win, the Osh Kosh tipper which we are going to find out about and the rake, anything else? MR SHIELDS: No, your Honour." During the course of the further hearing on Friday 14 October, the second applicant, for the first time, asked me to disqualify myself from continuing to hear the matter. He relied 6. on the proposition that I had been involved in the dismissal by a Full Court of an application for leave to appeal made by him, Claiming that this fact raised an appearance of prejudgment or bias. The case to which he referred was Shields v. Australia and New Zealand Banking Group (Full Federal Court, Burchett, Heerey and Beazley JJ., unreported, 1 June 1994). Mr Isaac Shields acknowledged that this case had nothing to do with the issues involved in the present case. In fact, it was an application for leave to appeal from the refusal of a judge of the Court to grant an interlocutory injunction restraining the Bank from selling a house. Before the matter came before the Full Court, the house had been sold. On this basis, the Court took the view that the only remedy left for Mr Shields, assuming he succeeded in his principal proceeding, would be damages; and, that being s0, a grant of leave to appeal in the interlocutory proceeding would be a futility. Mr Shields himself, in argument, acknowledged that he "no longer" had an appeal against the interlocutory order, the matter being "dead now". It was on this basis that the Full Court, in an ex tempore judgment which I delivered, dismissed the application for leave to appeal. The decision involved no ruling at all upon the merits of the matter. There was an earlier appeal by Mr Isaac Shields heard by a Full Court of which I was a member. That was Shields v. Australia and New Zealand Banking Group Limited (Full Federal Court, Neaves, Burchett and Hill JJ., unreported, 3 March 1994). That appeal was dismissed by a joint judgment of the Court, but I do not understand it to have been the basis of the contention 7. that I should have disqualified myself in the present matter. It was not the basis of any such application in the later appeal to which I have referred. It was not concerned with any question relevant to the present matter. What was involved was a settlement of a different proceeding, between the Bank and Mr Shields and his wife, a settlement which they sought to set aside in an action heard by Wilcox J. From his decision adverse to Mr and Mrs Shields, they appealed to the Full Court. Their appeal was dismissed on the ground that Wilcox J., who had heard and seen the witnesses, had concluded that it was "not a case where judgment was entered without consent". The Full Court remarked that the trial Judge had had "an opportunity to observe the witnesses", and it could not disagree with his finding. It added: "On the material in the appeal book, we could only reach the same conclusion." The rule to which Mr Isaac Shields makes appeal has been stated in a number of recent appellate decisions. In anc Sector Union of Australia: Ex parte Illaton Pty Ltd (1992) 107 ALR 581 at 582, Deane, Toohey and Gaudron JJ. put it as follows: 'The central principle involved in the applications is well settled. It is that a judge or person obliged to act judicially in the discharge of the functions of a public tribunal should not sit to hear a matter if, in all the circumstances, a party or the public might entertain a reasonable apprehension that she or he might not bring an impartial and unprejudiced mind to the resolution of the question or questions in it." To the same effect is the statement of Mason C.J. and McHugh J. in Webb v. R. (1994) 122 ALR 41 at 44: 8. "When it is alleged that a judge has been or might be actuated by bias, this court has held that the proper test is whether fair-minded people might reasonably apprehend or suspect that the judge has prejudged or might prejudge the case." The proposition was elaborated by Gaudron and McHugh JJ. in Laws yv. Australian Broadcasting Tribunal (1990) 170 CLR 70 at 99-100: "(T)he rules of natural justice would only require their disqualification [that is the disqualification of certain members alleged to have prejudged an issue] if a reasonable bystander would entertain a reasonable fear that they were incapable of bringing fair and unprejudiced minds to the inquiry ... . A reasonable bystander does not entertain a reasonable fear that a decision-maker will bring an unfair or prejudiced mind to an inquiry merely because he has formed a conclusion about an issue involved in the inquiry ... - When suspected prejudgment of an issue is relied upon to ground the disqualification of a decision- maker, what must be firmly established is a reasonable fear that the decision-maker's mind is so prejudiced in favour of a conclusion already formed that he or she will not alter that conclusion irrespective of the evidence or arguments presented to him or her." See also Vakauta v. Kelly (1989) 167 CLR 568; Re Media, i arte Hoyts Ltd (1994) 119 ALR 206 at 210; ustralian ni s Telecommunications Corporation Limited v. McAuslan (1993) 47 FCR 492 at 494-495, 514; Gas §& Fuel Corporation Superannuation Fund ve. Saunders (1994) 123 ALR 323 at 337-339; Shields v. CBFC Limited (Full Federal Court, Spender, Foster and O'Loughlin JJ., unreported, 6 September 1994). 9. In my opinion, the application of these principles to the facts of the present case requires the clear conclusion that I should not have disqualified myself, and I did not do so. I return to the motion for interlocutory relief. There is simply no acceptable evidence, given the exclusion of the items which, after discussion with Mr James Shields and after investigation, Miss Nash undertook to exclude from the sale, that any single item is not property of the bankrupts which the Official Trustee is entitled to sell. Having observed the demeanour of Mr Isaac Shields, and having considered the probabilities in the light of the evidence given by Mr James Shields, and of the bills of sale to which reference has been made, I am unable to give any credence, even apart from its lack of particularity, to the version put forward by Mr Isaac Shields. I hoid that there is no serious question to be tried in respect of the items proposed to be sold, other than those the subject of the undertaking that was given. Even if I had been persuaded that a sufficient case had been made out in respect of the remaining items, I do not think the balance of convenience would have favoured the grant of an injunction. Disruption of the orderly sale proposed by the Official Trustee, in the circumstances of this case, would have involved considerable inconvenience and expense. It is not suggested that damages would not be an adequate remedy, if the applicants have a valid case. 10. For these reasons, I accepted the undertaking proffered by the solicitor for the Official Trustee, and dismissed the motion with costs, including reserved costs. I certify that this and the preceding nine (9) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett. Associate: Prleppa 0 Lea Date: 21 October 1994 On 11 October 1994, the Applicants appeared (by leave) by the Applicant James Isaac Keith Shields. On 14 October 1994, the Applicants appeared in person. Solicitor for the Respondent: Miss Sally Nash of Sally Nash & Co Dates of hearing: 11 and 14 October