New South Wales Supreme Court CITATION : Idoport Pty Limited & Anor v National Ausralia Bank Limited & 8 Ors, Idoport Pty Limited & Anor v Donald Robert Argus [2004] NSWSC 270 HEARING DATE(S) : 5/04/04 JUDGMENT DATE : 5 April 2004 JURISDICTION: Equity Division Commercial List JUDGMENT OF : Einstein J DECISION : Reasons given for trial judge refusing to recuse CATCHWORDS : Courts and Judges - Bias - Principles - Procedures to determine claims that a judge should recuse for apprehended bias - Whether reasonable apprehension of bias - Final hearing of proceedings continued for one and a half years - Proceedings then dismissed for failure to comply with security for costs orders - Defendants motions seek a gross sum costs order - Plaintiff opposes trial judge hearing motions on grounds of apprehended bias relying upon comments as to reasonableness of defendants legal expenditure in resisting the proceedings made on various occasions during determination of sundry interlocutory applications - Refusal to withdraw - Costs - Application for gross sum costs order pursuant to Part 52A rule 6 (2) (c) of the Supreme Court Rules 1970 (NSW) LEGISLATION CITED : Legal Profession Act 1987 (NSW) Supreme Court Rules 1970 (NSW) Australian National Industries Ltd v Spedley Securities Ltd (in liq) & Anor (1992) 26 NSWLR 411 Bainton v Rajski (1992) 29 NSWLR 539 Barbosa v Di Meglio [1999] NSWCA 307 Barton v Walker (1979) 2 NSWLR 740 Beach Petroleum NL & Claremont Petroleum NL v Johnson (1995) 57 FCR 119 Clenae Pty Ltd & Ors v Australia and New Zealand Banking Group Ltd (2000) 205 CLR 337 Dovade Pty Ltd & Ors v Westpac Banking Group & Anor (1999) 46 NSWLR 168 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 Finance Sector Union of Australia, Re; Ex Parte Illaton Pty Ltd (1992) 107 ALR 581 Gascor t/as Gas & Fuel v Ellicott, Esso Australia Resource Ltd & BHP Petroleum (NW Shelf) Pty Ltd [1997] 1 VR 332 Gas & Fuel Corporation Superannuation Fund and Ors v Saunders and Anor (1994) 123 ALR 323 Hadid v Lenfest Communications Inc [2000] FCA 628 Hagan v Independent Commission Against Corruption [2003] NSWCA 93 Harrison v Schipp (2002) 54 NSWLR 738 CASES CITED : Idoport Pty Ltd & Anor v National Australia Bank Ltd & Ors, [1999] NSWSC 828; [2000] NSWSC 338; [2000] NSWSC 945; [2000] NSWSC 1141; [2001] NSWSC 427; [2001] NSWSC 509; [2001] NSWSC 648; [2001] NSWSC 838 JRL, Re; Ex parte CJL (1986) 161 CLR 342 Kwan v Kang [2003] NSWCA 336 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 Livesey v New South Wales Bar Association (1983) 151 CLR 288 Masters v R (1992) 26 NSWLR 450 Minister for Immigration and Multicultural Affairs v Jia (2001) 205 CLR 507 Minister for Immigration and Multicultural Affairs v Wang (2003) 196 ALR 385 R v Australian Stevedoring Industry Board; Ex Parte Melbourne Stevedoring Co Ltd (1953) 88 CLR 100 R v Commonwealth Conciliation & Arbitration Commission; Ex parte Angliss Group (1969) 122 CLR 546 R v Watson; ex parte Armstrong (1976) 136 CLR 248 Rajski v Wood & Ors (1989) 18 NSWLR 512 Re Keely; Ex Parte Ansett Transport Industries (Operations) Pty Ltd (1990) 94 ALR 1 Vakauta v Kelly (1989) 167 CLR 568 Webb & Hay v R (1994) 181 CLR 41 Wentworth v Wentworth, unreported, NSWCA, 21 February 1996, BC9600215 Idoport Pty Limited (Plaintiff) PARTIES : National Australia Bank Limited (Defendant) Donald Robert Argus (Defendant) FILE NUMBER(S) : SC 50113/98; 50026/99 COUNSEL : Mr N Hutley SC, Mr A Paterson (P) Mr TF Bathurst QC, Mr JA Halley (D) SOLICITORS : Withnell Hetherington (Plaintiff) Freehills (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST Einstein J Monday 5 April 2004 ex tempore Revised 21 April 2004 50113/98 IDOPORT PTY LIMITED & ANOR v NATIONAL AUSTRALIA BANK LIMITED & 8 ORS 50026/99 IDOPORT PTY LIMITED & ANOR v DONALD ROBERT ARGUS JUDGMENT Background 1 In mid 1999 a contested application for interlocutory relief inter alia seeking orders for the appointment of a receiver manager to certain assets of the National Australia Banking Group and sundry other orders was determined and limited relief was granted. I was the judge who heard and determined those interlocutory proceedings. 2 The final hearing commenced in due course on 24 July 2000. 3 On 29 January 2002, the Court dismissed all of the claims brought by the plaintiff against the defendants and made orders requiring the plaintiff to pay the defendants' costs of the proceedings (see [2002] NSWSC 18) (29 January 2002 judgment). 4 On 15 August 2002, the Court of Appeal dismissed the plaintiff's appeals with costs [see [2002] NSWCA 271]. Applications for special leave to appeal to the High Court were dismissed with costs on 20 June 2003. 5 On 1 September 2003, the defendants filed notices of motion in the proceedings seeking a gross sum costs order pursuant to Part 52A rule 6(2)(c) of the Supreme Court Rules 1970 (NSW). 6 At a directions hearing before Justice Bergin on 12 March 2004, the defendants sought directions that the proceedings "be listed for further directions before [myself]". The plaintiff apparently opposed those directions on the grounds of apprehended bias. 7 The defendants have asked that the notice of motion be referred to me for hearing. The plaintiff apparently opposed that on the same grounds. On 17 March 2004, Bergin J referred the issue to me. Matters of Procedure 8 The rules of procedure governing the manner in which a superior court judge must deal with an objection to his or her hearing of a particular case are as follows: · A judge must not (in ordinary circumstances) entertain any formal application or notice of motion seeking disqualification on the ground of bias, as "[i]t is beyond doubt that a judge of any court who might reasonably be suspected of bias should not hear the cause": Barton v Walker (1979) 2 NSWLR 740 at 748 per Samuels JA (with whom Reynolds and Glass JJA agreed) citing R v Watson; ex parte Armstrong (1976) 136 CLR 248 at 264. Rather the proper course is for a party to raise its concerns by way of objection, to be dealt with in the usual manner, as "[o]rdinarily matters of bias or pre-judgment are not susceptible of proof in the ordinary way, by allegation and counter-allegation; whether a judge is affected in such fashion is ordinarily a matter known essentially to him": Australian National Industries Ltd v Spedley Securities Ltd (in liq) and Anor (1992) 26 NSWLR 411 at 436, per Mahoney JA with whom Gleeson CJ and Meagher JA agreed. · Accordingly, a decision of a judge to disqualify or not to disqualify him or herself from the hearing of a particular case is not an order or a direction and, as such, relief in the nature of injunction or the prerogative writs will not lie: Barton v Walker (1979) 2 NSWLR 740 at 755, per Samuels JA (with whom Reynolds and Glass JJA agreed). Rather, as stated by Gleeson CJ in Minister for Immigration and Multicultural Affairs v Wang (2003) 196 ALR 385 at 389: "[i]f one party takes objection to a judge hearing a case, then that objection will be determined in accordance with ordinary procedures and, if unsuccessful, may ultimately constitute a ground of appeal." · Thus while the judge may publish reasons rejecting any such objection, appeal against those reasons will not lie save insofar as they are an aspect of a subsequent order or determination susceptible to appeal in the ordinary course: Rajski v Wood & Ors (1989) 18 NSWLR 512 at 518, per Kirby P. · Nonetheless, despite the general rule that disqualification is not usually a matter for factual contestation, there exists scope for the judge in certain circumstances to adopt an informal procedure by which the parties may be heard in this regard. This proposition was advanced, with an abundance of caution, by Mahoney JA in Bainton v Rajski (1992) 29 NSWLR 539 at 545 in the following manner: "The third matter is more complicated. It involves the procedure to be adopted where it is not immediately apparent to the judge what are the reasons advanced against his determining the proceeding. In such a case the judge may feel it appropriate to adopt a procedure whereby he can be informed of what, in principle, is urged against his determining the proceeding. In my opinion, within the limits of the principle established by Barton v Walker , it is open to a judge to adopt a procedure appropriate to determine what in principle are the matters urged against his determining the proceeding. There are, of course, dangers inherent in such a procedure. If the judge invites such a statement, he may invite, or provide the occasion for the allegation of matters which, by the fact of their allegation, may produce embarrassment or apprehension of the kind referred to in the Livesey [see p. 1 above] decision. It may provide the occasion for the allegation of matters which are inaccurate or manipulative, or which constitute contempt of court. If a procedure is adopted which invites a statement of such matters, experience has suggested that it may be necessary to provide formal sanctions which will deter the making of allegations which are untrue or worse. In some cases, a course which requires a prior statement of such matters on affidavit will provide the safeguard of penalties for perjury, false swearing or the like. In other cases, the sanction of contempt of court may be available. But, I think, the proper conclusion is that such a procedure will ordinarily be inapt if the facts in question are contested facts." 9 Indeed, demonstrating the width of the judge's discretion in dealing with objections to him or her hearing a matter (again, of course, within the dictates of Barton v Walker), the adoption of a course allowing the parties to advance submissions on the question of disqualification was precisely that undertaken by Cole J in Spedley. As detailed by Mahoney JA on appeal at 436-437, the trial judge heard submissions and then made an order properly the subject of appeal in itself, an action which "by his judgment, invited the decision of the Court on the matter." As per Mahoney JA at 436, such a procedure might be particularly convenient in circumstances where the hearing is expected to occupy a substantial degree of the Court's time. As a matter of further observation, it might also be stated that, on the facts of Spedley, the basis of the submission that Cole J recuse were particularly susceptible to factual submission and formal reasons. More specifically, there was no suggestion of actual bias or partiality arising from a pecuniary interest or personal relationship debate which could potentially scandalise or embarrass the Court, and as a result many of the concerns expressed in Barton v Walker were not applicable. Gross sum costs orders 10 The availability of a gross sum costs order arises under Part 52A, rule 6(2)(c) of the Supreme Court Rules 1970 (NSW) ("Supreme Court Rules"). That section provides: "Where the Court orders that costs be paid to any person, the Court may, at any time prior to the costs being referred by the registrar for assessment, further order that, as to the whole or any part (specified in the order) of the costs, instead of assessed costs, that person shall be entitled to: … (c) a gross sum specified in the order instead of the assessed costs." 11 The power conferred by Part 52A rule 6(2) is not confined. The discretion to exercise the power will depend upon the circumstances. The state of the authorities will fall for examination upon the hearing of the motion. It is suggested by the parties that they will reveal that the discretion: · may be exercised where the assessment of costs would be protracted and expensive: Harrison v Schipp (2002) 54 NSWLR 738 (Harrison) at 742. · may be exercised in complex cases: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 (Beach Petroleum) at 120; Hadid v Lenfest Communications Inc [2000] FCA 628 (Hadid) at [24]. 12 There is authority for the proposition that: · Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs: Harrison at 743. · Rather, a gross sum is to be fixed broadly having regard to the information before the Court: Beach Petroleum at 124; Hadid at [35]. · In determining an appropriate gross sum amount, it is relevant to consider what might be determined as a fair and reasonable amount if the matter were subject to a traditional costs assessment (Harrison at 745 [39]). · In an assessment of costs pursuant to section 208F(1) of the Legal Profession Act 1987 (NSW) a costs assessor must consider: - whether or not it was reasonable to carry out the work to which the costs relate; and - what is a fair and reasonable amount of costs for the work concerned. Desirability of applications to be heard before trial judge 13 It is desirable, wherever possible, for the hearing of an application for such an order to be heard before the trial judge. 14 In Wentworth v Wentworth, unreported, NSWCA, 21 February 1996, BC9600215 ("Wentworth") at 35, Clarke JA (with whom Grove AJA agreed and with whom Priestley JA generally agreed) said that the exercise of the power to make a gross sum costs order "will almost universally be within the province of the trial judge". His Honour added that "in general it will be a trial judge, who has seen and heard the case unfold, who will exercise these powers". Although his Honour, in the context in which he was writing, was contrasting the position of the trial judge to the position of the Court of Appeal, his reasoning and the imperatives imposed by the overriding purpose in Part 1 rule 3 of the Supreme Court Rules apply equally to the position of another judge of the Supreme Court sitting alone exercising original jurisdiction. The test to be applied 15 The most recent authoritative formulation of the test for 'apprehended bias' is contained in the joint judgment of Gleeson CJ, McHugh, Gummow and Hayne JJ in Ebner v Official Trustee in Bankruptcy; Clenae Pty Ltd & Ors v Australia and New Zealand Banking Group Ltd (2000) 205 CLR 337. In that case, the majority held (at 344) 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" (emphasis added). With respect to the precise test to be applied in ascertaining whether such a reasonable apprehension exists, their Honours propounded the following (at 345): "[t]he apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. " 16 Of critical importance is the construction of 'might', a term derived from the judgment of Mason, Murphy, Brennan, Deane and Dawson JJ in Livesey v New South Wales Bar Association (1983) 151 CLR 288 and utilised in deliberate contrast to previous dicta requiring a "real" apprehension of bias, in the sense that there exists a "high probability" of the same: R v Australian Stevedoring Industry Board; Ex Parte Melbourne Stevedoring Co Ltd (1953) 88 CLR 100 at 116, per Dixon CJ, Williams, Webb and Fullagar JJ. The majority in Ebner held (at 345) that: "[d]eciding whether a judicial officer… might not bring an impartial mind to the resolution of a question that has not been determined requires no prediction about how the judge … will in fact approach the matter. The question is one of possibility (real and not remote), not probability. " See further: Bainton v Rajski (1992) 29 NSWLR 539 at 540, per Mahoney JA; Gas & Fuel Corporation Superannuation Fund and Ors v Saunders and Anor (1994) 123 ALR 323 (FCFCA) at 338, per Gummow and Heery JJ (with whom Davies J agreed); Hagan v Independent Commission Against Corruption [2003] NSWCA 93 at [16], per Mason P (with whom Hodgson JA and Davies AJA agreed). 17 The above tests notwithstanding, it must nonetheless be borne in mind that the application of the 'principle of apprehension' aspect of the rule is necessarily predicated upon what Brennan, Deane and Gaudron JJ in Vakauta v Kelly (1989) 167 CLR 568 at 570 deemed a "real world" understanding of legal proceedings. Specifically, their Honours stated (at 570) that the "requirement of the reality and the appearance of impartial justice in the administration of the law by the courts is one which must be observed in the real world of actual litigation." Alternatively expressed, the application of the relevant rule is thereby entirely contingent, within the parameters of the impartial administration of justice, on the circumstances of the case and the content of the matters said to give rise to an apprehension of bias. Attributes of the "fair-minded lay observer" 18 The test for apprehension of bias such as to disqualify a judge is objective. It is a reasonable and not a fanciful or fantastic apprehension that must be established: Gascor v Ellicott [1997] 1 VR 332 at 342 per Tadgell JA, approved by the NSW Court of Appeal in Dovade Pty Ltd v Westpac Banking Group & Anor (1999) 46 NSWLR 168 at 188 [92]; see also Barbosa v Di Meglio [1999] NSWCA 307 at [8] per Mason P. Accordingly, the fictional observer, by reference to whom the test is formulated, is taken to be reasonable: Johnson at 493 [12]. 19 The observer is not assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge: Webb & Hay v R (1994) 181 CLR 41 (Webb) at 73 per Deane J, cited with approval in Johnson at 493 [13]. The context connotes knowledge of "ordinary judicial practice" and the actual circumstances of the case: see Johnson at 493 [13] and Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 ("Laws") at 87 per Mason CJ and Brennan J. Prejudgment as bias 20 A party alleging apprehension of bias in the form of prejudgment must show a reasonable apprehension on the part of the fictitious observer 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": Laws at 100 per Gaudron and McHugh JJ; see also JRL, Re; Ex parte CJL (1986) 161 CLR 342 ("Re JRL") at 352 per Mason J; Kwan v Kang [2003] NSWCA 336 ("Kwan") at [83] per Sheller, Ipp and Tobias JJA. 21 The state of mind described as bias in the form of prejudgment is one so committed to a conclusion already formed as to be incapable of alteration; whatever evidence or arguments may be presented: Minister for Immigration and Multicultural Affairs v Jia (2001) 205 CLR 507 ("Jia") at 531-532 [71]-[72] per Gleeson CJ and Gummow J and at 564 [185]-[186] per Hayne J. Natural justice does not require the absence of any predisposition or inclination for or against an argument or conclusion: Jia at 531 [71] per Gleeson CJ and Gummow J. 22 Saying that a decision-maker has prejudged or will prejudge an issue, or even saying that there is a real likelihood that a reasonable observer might reach that conclusion, is to make a statement which has several distinct elements at its roots: Jia at 564 [185] per Hayne J. "First, there is the contention that the decision-maker has an opinion on a relevant aspect of the matter in issue in the particular case. Secondly, there is the contention that the decision-maker will apply that opinion to that matter in issue. Thirdly, there is the contention that the decision-maker will do so without giving the matter fresh consideration in the light of whatever may be the facts and arguments relevant to the particular case." [ Jia at 564 [185]] 23 Most importantly: "there is the assumption that the question which is said to have been prejudged is one which should be considered afresh in relation to the particular case." [ Jia at 564 [185]] "The question is not whether a decision-maker's mind is blank; it is whether it is open to persuasion": [ Jia at 531 [71] per Gleeson CJ and Gummow J]. 24 Natural justice does not require the absence of any predisposition or inclination for or against an argument or conclusion: Jia at 531 [71]; see also Vakauta v Kelly (1989) 167 CLR 568 ("Vakauta") at 570-571 per Brennan, Deane and Gaudron JJ and at 575-576 per Dawson J. 25 Accordingly, a trial judge's relevant obligation in hearing a gross sum costs application would not be to approach the application with a mind free of the views formed during the hearing. Indeed, this would be totally contrary to the policy behind the availability of a gross sum costs order: see Harrison at 742-743; Wentworth at 35. Rather, the trial judge's obligation is to afford both sides a fair hearing, with the opportunity to lead evidence relevant to the issues that have to be determined, and to make submissions on those issues. The trial judge must bring to bear an open mind in the sense of being prepared to be persuaded by that evidence and those submissions. It would be a failure to meet this obligation that a reasonable person must apprehend in order for a party seeking a disqualification of a trial judge to succeed. 26 It is irrelevant whether a party considers that a trial judge is likely to decide the case adversely to it by, for example, awarding the other party a significant amount in gross sum costs: Re JRL at 352; Masters v R (1992) 26 NSWLR 450 ("Masters") at 471 per Hunt CJ at CL, Allen and Badgery-Parker JJ. Further, the fact that it may be easier to persuade a trial judge of a proposition than it is to persuade another judge does not mean that either of them is affected by prejudgment: Jia at 531 [71]; see also R v Commonwealth Conciliation & Arbitration Commission; Ex parte Angliss Group (1969) 122 CLR 546 ("Angliss") at 553-555 per Barwick CJ, McTiernan, Kitto, Taylor, Menzies, Windeyer and Owen JJ. Comments made by judges must be considered in context 27 Any comments made by a trial judge on which a party seeks to rely as evidence of a reasonable apprehension of bias must be considered in the context in which they were made including the context of ordinary judicial practice: Johnson at 493 [13] and 494-495 [16]-[17]; Re JRL at 371 per Dawson J; Webb at 73-74 per Deane J; Kwan at [69]. The rules and conventions governing such practice are not frozen in time but take account of the exigencies of modern litigation: Johnson at 493 [13]. It is not appropriate to consider the comments of the trial judge in isolation from their relevant context. Accordingly, the judgments and transcripts relevant to the comments relied upon by a party must be considered when determining whether a trial judge prejudged relevant issues: Johnson at [13]. The danger of a judge disqualifying himself or herself too readily 28 It is important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge they may be able to influence the composition of the Bench: see Re JRL at 352; Ebner at 348 [20]. 29 It would be: "an abdication of judicial function and an encouragement of procedural abuse for a judge to adopt the approach that he should automatically disqualify himself whenever he was requested by one party to do so on the grounds of a possible appearance of pre-judgment or bias, regardless of whether the other party desired that the matter be dealt with by him as the judge to whom the hearing of the case had been entrusted by the ordinary procedures and practice of the particular court". [L ivesey at 294] 30 In Angliss at 554, the High Court rejected the notion that a fair and unprejudiced mind was "necessarily a mind which has not given thought to the subject matter or one which, having thought about it, has not formed any views or inclination of mind upon or with respect to it". The comments relied upon by the plaintiff 31 The plaintiff submits that the judge who hears the application for a gross sum costs order will have to determine "whether particular work was necessary, whether the extent of the evidence filed by the defendants was appropriate, [and] whether the hourly and daily rates charged by the [defendants' legal representatives]… are appropriate". 32 The plaintiff contends that I "[expressed] opinions…touching upon" matters that will be at issue in the gross sum costs application namely, "the reasonableness of charges of the defendants' lawyers, the volume of work which was undertaken for the case, and of the expenses incurred by [the defendants]". 33 The plaintiff then quotes certain comments made by me in certain judgments made during the course of the proceedings (most particularly judgments of 13 September 2001, 5 October 2000, 26 November 2001, and 29 January 2002), and certain transcript references, as demonstrating that a reasonable person could take the view that I "prejudged the issues" for determination in the gross sum costs application. Analysis of the Idoport judgments 34 The grounds upon which the claim is advanced that "a reasonable person could take the view that I had prejudged the issues" are certain comments and findings made by me in relation to the reasonableness of both the defendants' expenditure in resisting the proceedings, and the conclusions of Ms Vine-Hall regarding likely determinations of costs assessors. Those reasons, in terms of the comments and findings in the Idoport judgments properly construed, could not it seems to me give rise to any such apprehension: I deal with those matters seriatim: · comments as to the reasonableness of the defendants' legal expenditure require to be viewed in the context of the sheer scale of the litigation and the plaintiff's claims. Accordingly, such comments are not so much a matter of prejudgment as they are of conclusions from readily observable fact. See: (i) [1999] NSWSC 828 at [174]: Observations made on the expected length of the hearing and the volume of material likely to be produced. (ii) [2000] NSWSC 338 at [45] - [71]: Observations made in the process of determining whether the proceedings should be heard in the Technology Court. (iii) [2000] NSWSC 945 Judgment on motion to hear proceedings No 3991 of 2000 together with proceedings No 50113 of 1998 and 50026 of 1999, 5 October 2000 (revised 10 October 2000): Observations noting that the plaintiff had briefed seven counsel (including two senior counsel) and the defendants five (including 3 senior counsel). · comments as to the right of the defendants to resist the proceedings as they see fit are a mere corollary of others to the effect that the plaintiff has an equal right to prosecute their claims as they see fit. In [2001] NSWSC 427 for example, the right of the defendant to "take care and time in defending the proceedings" is counterbalanced with the expressed entitlement of the plaintiff to "pursue their pleaded cases with vigour" [at 7]. More directly, in [2001] NSWSC 509 it was stated (at paragraph [42]) that: [i]t is important for the Court to permit the plaintiffs the opportunity to pursue the case which they seek to pursue if this can be done within the constraints of the litigation and without any real or significant prejudice to the defendants. · comments as to the size of the defendants' legal resources are often made when the Court expressed the difficulties posed by the scale of the litigation in terms of compliance with the overriding purpose of the Court to manage cases to a 'just, quick and cheap' disposal. Specifically, in order to provide reasons for the flexibility accorded parties in regards to (for example) leave to amend pleadings, it was necessary to detail the extent to which the Idoport proceedings deviated from the norm of litigation in the Commercial List. See, for example: (i) [2000] NSWSC 1141 at paragraphs [10] - [12] (ii) [2001] NSWSC 509 at [45]: Size of defendants' legal team as a reason justifying giving leave to the plaintiff to amend. (iii) [2001] NSWSC 509 at [39]: "On anyone's terms these are massive legal resources." (iv) [2001] NSWSC 648 at [37] (v) [2001] NSWSC 838 at [11]. 35 To my mind there is substance in each of the defendant's submissions dealing with the particular analysis of the judgments of 13 September 2001 5 October 2000 26 November 2001 and 29 January 2002 in particular in relation to the judgment of 13 September 2001. · The statements relied upon by the plaintiff need to be seen in the context in which they were made namely the application was one for security for costs. By its nature a security for costs application is concerned with estimating likely future costs rather than a determination of whether costs that have been incurred can be recovered on an assessment or by way of a gross sum. · The Court was not considering the reasonableness of costs that had been incurred but rather the reasonableness of the estimates advanced by Mr Lovell of future costs. The Court reduced the estimates advanced by Mr Lovell by 15 percent to take account of uncertainties such as the proceedings concluding earlier than expected or for changes in approach: See paragraph 152 of the 13 September 2001 judgment. · The specific and discrete context provided by a security for costs application was highlighted by the inclusion of paragraphs 69-81 in the 13 September 2001 judgment which dealt with the general principles concerning delay as a factor in security for costs applications. Paragraph 82 of the 13 September 2001 judgment is the commencement of an examination of the facts in relation to that factor and introduces paragraph 83 under the heading "Time estimates for the final hearing". The reference to the defendants' conduct as being a "logical and reasonable approach" is in the context of the duration of the final hearing which was relevant to whether there had been a delay in bringing the application for security for costs and the effect the amendments to the statement of claim would have on the length of hearing. That was made plain in the subsequent paragraphs and in particular by the conclusion reached on that issue set out at 98. · The analysis undertaken by the Court in the 13 September 2001 judgment is unexceptional in the context of a security for costs application. The effect of the plaintiff's complaints about the comments made by the Court in that judgment would be that a trial judge who heard a security for costs application could not subsequently hear a gross sum costs application in the proceedings. Such a result I accept would be surprising and would significantly limit the utility of the gross sum procedure. The Judgment of 5 October 2000 36 That judgment concerned a motion filed by the defendant seeking an order that there be a consolidation of the two sets of proceedings. Reference has already been made to this judgment. The comments of which the plaintiff complains appear in the judgment under the heading "Background leading to the motion". Paragraph 23 of the plaintiff's submission quotes part of paragraph 4 of that judgment. The first sentence of paragraph 4 of that judgment stated: "Following the delivery of the interlocutory judgment in late August 1999 the parties continued under active case management by the Court to work their way through innumerable timetables and cross-applications dealing with matters going to pleadings discovery and witness statements." 37 The judgment then states: "I venture to suggest that there would be few occasions when as much energy and time has been spent by parties to proceedings in this country in preparing for a final hearing. Presumably this is because of the significance to the parties of the issues the plaintiffs asserting that the relief to which they are entitled exceeds the market capitalisation of the National Australia Bank Limited." 38 The Court was then not dealing with a costs application. The Court was then not making any statement about the reasonableness of the costs incurred. 39 In context the Court was not suggesting that the significance of the issues to the parties or the amount of energy and time spent by the parties in any way justified any amount of work conducted by the defendants' legal representatives the extent of the evidence filed by the defendants or the hourly and daily rates charged by the defendants' legal representatives. Those comments were indeed prefatory to the Court's discussion of the facts and law which then followed in order to resolve the issue as to the motion to have the two sets of proceedings determined together. The Judgment of 26 November 2001 40 That judgment concerned a number of motions filed by the parties including a motion filed by the defendants to dismiss the MLC proceedings and a motion filed by the plaintiff to amongst other things adjourn the proceedings and the MLC proceedings until February 2002. After hearing the parties' respective submissions the proceedings were adjourned until late January 2002. The first two sentences of paragraph 102 were in the following terms: "Subject to one qualification each of these submissions seems to me to be of substance. The qualification concerns the proposition that the increase in the projected duration of the trial has been largely if not entirely due to the volume of material and the extent of evidence and cross-examination propounded by the defendants." 41 The reference to "these submissions" was a reference to the plaintiff's submissions quoted at paragraph 101 of the 26 November 2001 judgment which had included the following: "The JMG parties sought and continue to seek to have funding to continue with the trial of the proceedings to the end of the proceedings. However the increase in the projected duration of the trial of the proceedings has been such it is submitted as could not reasonably have been expected by the JMG parties. It has been largely if not entirely due to the volume of material propounded by the defence and the extent of evidence and cross-examination propounded by the defendants. This has increased the risk that (whatever might be the legal position between the plaintiff and the funder) funding might cease." 42 Put in context the Court in paragraph 102 of the 26 November 2001 judgment was about rejecting the plaintiff's allegation that the defendants' actions were the sole or predominant cause of the increase in the projected duration of the final hearing. In using the words "legitimately engaged" and "legitimately entitled" the Court was rejecting any notion that there was any link between the defendants' conduct and the risk that the plaintiff's funding might cease. The comments do not seem to me to relate to the costs of the defendants. The Judgment of 29 January 2002 43 That judgment set out the Court's reasons for dismissing the plaintiff's claims in the proceedings. None of the comments referred to in paragraph 102 of the 26 November 2001 judgment and paragraph 83 of the 13 September 2001 judgment were directed to the reasonableness of the costs in the sense relevant for a gross sum costs application. 44 For all of those reasons it is not apparent how any issue of prejudgment of the type the subject of the submissions presently before the Court was involved. Application of the Rule in the Present Situation 45 The plaintiff's grounds of objection to my hearing the defendant's notice of motion are relatively unusual in that the majority of circumstances in which bias, actual or apprehended, is said to arise concern pecuniary interests or personal relationships connecting the judge to the proceedings: see Halsbury's Laws of Australia at [125-290] and the authorities cited therein. 46 Nonetheless, the handing down by a judge of prior determinations of fact and credit was in Australian National Industries Ltd v Spedley Securities Ltd (in liq) and Anor recognised by the Court of Appeal as a basis for disqualification on the ground of apprehended bias. That matter, like the present, was a complex and lengthy piece of commercial litigation in which the liquidators of the plaintiff (Spedley) commenced proceedings against no fewer that forty-eight separate defendants, including various directors of Spedley in the years leading up to its winding up. Cole J was the judge assigned to the case management of the proceedings, during the interlocutory stage of which he was called upon to make numerous determinations concerning the credit of certain defendants as witnesses of truth, and whether they had breached fiduciary and other duties that were the very gravamen of the action. Despite the risk of pre-judgment apprehended bias arising, his Honour - after providing extensive reasons on the matter - refused to disqualify himself. On appeal a five-member bench of the Court of Appeal reversed his Honour's decision on the basis of the very strict Livesey test of a 'possibility' of apprehended bias arising (see especially Mahoney J at 447), and notwithstanding the administrative difficulties that would flow from having to re-list the proceedings in a very busy Commercial Division. 47 Notwithstanding the above Spedley ratio that case may be distinguished from the circumstances of the Idoport proceedings on the following bases: · the previous findings of fact and credit found to give rise to apprehended bias in Spedley were central to the ongoing conduct of the litigation. As stated by Mahoney JA at 442-443: "In the present case, the matters upon which decisions have been or will be made are not merely peripheral: they are at the heart of what, in the subsequent cases, the court will be required to determine. The solvency of Spedley at a particular time or times will not be merely circumstantial evidence: it will be part of the very claim or cause of action itself. The credibility of, for example, Mr Yuill and Mr Maher will not be peripheral or incidental. As I understand the matter as it has been placed before this Court, the evidence of the witnesses in question will directly determine or directly bear upon the existence of facts central to the claims to be decided. Accordingly, in my opinion, the fact that such matters have been decided in earlier cases will be of particular significance. If prior decisions of fact or credibility are to be seen as of such importance in creating the apprehension on which the principle is based, these prior decisions are decisions on matters which, being at the heart of the issues, must have particular force in creating such an apprehension." · In contrast the various comments made by me in the Idoport proceedings related more to readily observable facts and the difficulty of case managing such large scale litigation rather than to firm conclusions as to the justifiable extent of the defendants' expenditure on resisting the action. Such comments are, to utilise the words of Mahoney JA, indeed "peripheral and incidental" to the issues which I will be called upon to determine. Moreover, the required findings of fact as to the reasonableness of the defendants' expenditure in a hearing on an application for lump sum costs are of a different nature to any conclusions as to costs made thus far. · It has been held by the High Court that the expression by a trial judge of merely tentative views on matters to which the parties are entitled to put full submissions is not sufficient to give rise to apprehended bias. In Re Keely; Ex Parte Ansett Transport Industries (Operations) Pty Ltd (1990) 94 ALR 1, the trial judge advanced propositions to a party not specifically put to him in argument and used language ("strike-breakers") which the defendant claimed gave rise to an apprehension of partiality. In refusing the defendant's application for orders nisi, Dawson J said: "If his Honour expressed views, he did so tentatively and not in any concluded way. He allowed the applicants full opportunity to make whatever submissions they wished about the matters which he sought to explore. If any criticism can be made of the proceedings it must surely be that argument was not more closely confined. His Honour did on occasions use language which might be described as colourful, but he did so indiscriminately and not for the purpose of voicing any prejudice against the applicants. That was simply his mode of expression. His Honour did not, in my view, use emotive terms. The expression "strike-breaker" was a term which had been used in the context of the dispute between the pilots and the airlines and it is not apparent that his Honour used it in any pejorative sense against the airlines. It is quite clear that the applicants disagreed with the line of inquiry undertaken by his Honour, but his Honour's refusal to accept the applicants' submissions (albeit not in any concluded way) displayed no lack of impartiality" · The dictates of procedural fairness and natural justice which underpin the rule are cognisant of the reality of litigation and, as such, do not demand a judicial mind that is absolutely devoid of any forethought on the question in issue. In R v Commonwealth Conciliation & Arbitration Commission; Ex Parte Angliss Group (1969) 122 CLR 546, the Court (Barwick CJ, McTiernan, Kitto, Taylor, Menzies, Windeyer and Owen JJ) stated (at 553-554) that: "[t]hose requirements of natural justice are not infringed by a mere lack of nicety but only when it is firmly established that a suspicion may reasonably be engendered in the minds of those who come before the tribunal or in the minds of the public that the tribunal or a member or members of it may not bring to the resolution of the questions arising before the tribunal fair and unprejudiced minds. Such a mind is not necessarily a mind which has not given thought to the subject matter or one which, having thought about it, has not formed any views or inclination of mind upon or with respect to it. " · In regard to the plaintiff's concerns regarding my previous findings as to the reliability of Ms Vine-Hall as an expert witness, it is critical to note that a distinction is drawn when applying the pre-judgment aspect of the rule against apprehended bias between prior expressed views as to the reliability of expert witnesses who have come before the judge in question on numerous occasions and those regarding the reliability and truthfulness of lay witnesses. In Vakauta v Kelly (1989) 167 CLR 568, the trial judge made relatively abrasive comments regarding the reliability of an expert medical witness called by the defendant insurers, including the remark that such experts "think you can do a full week's work without any arms or legs." While the whole Court held that such comments were sufficient to raise a reasonable apprehension of prejudgement, Brennan, Deane and Gaudron JJ noted (at 570-571) that: "It is inevitable that a judge who sits regularly to hear claims for damages for personal injury will form views about the reliability and impartiality of some medical experts who are frequent witnesses in his or her court. In some cases and notwithstanding the professional detachment of an experienced judge, it will be all but impossible to put such preconceived views entirely to one side in weighing the evidence of a particular medical expert. That does not, however, mean that the judge is disqualified from hearing the particular action or any other action involving that medical expert as a witness. The requirement of the reality and the appearance of impartial justice in the administration of the law by the courts is one which must be observed in the real world of actual litigation. That requirement will not be infringed merely because a judge carries with him or her the knowledge that some medical witnesses, who are regularly called to give evidence on behalf of particular classes of plaintiffs (e.g members of a particular trade union), are likely to be less sceptical of a plaintiff's claims and less optimistic in their prognosis of the extent of future recovery than are other medical witnesses who are regularly called to give evidence on behalf of particular classes of defendants (e.g those whose liability is covered by a particular insurer). If it were so infringed, the administration of justice in personal injuries cases would be all but impossible. In that regard, both necessity and common sense require that a distinction be drawn between the case where a judge has some preconceived views about the expertise or reliability of the professional opinions of an expert medical witness and the case where a judge has preconceived views about the credit or trustworthiness of a non-expert witness 'whose evidence is of significance on ... a question of fact' which 'constitutes a live and significant issue' in the case (see Livesey v New South Wales Bar Association (1993) 151 CLR 288 [at 300] )." · Accordingly, given the basis of the plaintiff's objections regarding the previous evidence of Ms Vine-Hall in terms of the judgement on the September 2001 security for costs application is that I did not accept certain portions of her evidence, on the above dicta no reasonable apprehension of pre-judgement arises. · The defendants' application for lump-sum costs will raise questions of fact and law distinct and separate from those in regard to which I have previously expressed a view as to the reasonableness of the defendants' costs. In addition to the distinction between future and past estimates of costs is the fact that lump sum costs applications require the presiding judge to determine: (i) Whether he or she is in possession of sufficient factual information regarding the proceedings to come to an accurate lump-sum determination of costs; and (ii) If so, what a reasonable quantum of such costs would be. · It was the necessity for the presiding judge to determine the first of these questions that led the Court of Appeal in Wentworth to dictate that the exercise of the power to award lump sum costs under Part 52A rule 6 "will almost universally be within the province of the trial judge" (BC9600215 at 35). From this proposition the following two conclusions flow: First, that an inquiry into the course of the Idoport proceedings with respect to whether sufficient factual information exists as to accurately quantify any lump sum costs award is markedly different from any comments on costs previously made by myself concerning the reasonableness of costs actually incurred). And, second, given the sheer complexity of the Idoport proceedings for me to recuse would arguably constitute, in effect, a de facto judgment for the plaintiff in this application, given that it may be that it is unlikely that any other judge would have a sufficient familiarity with the issues to quantify any lump sum costs order. · Finally, and perhaps most critically, it must be emphasised "loudly and clearly" that apprehended bias as a ground of disqualification does not relate to an apprehension that, based on prior decisions of fact and law, a particular judge might decide a case adversely to one party. Rather, commensurate with the status of the rule as an adjunct of broader procedural fairness requirements, the apprehension must be that partiality or prejudice will be brought to the proceedings such as to undermine the administration of justice in the most general of senses. This conclusion was made manifestly clear by Deane, Toohey and Gaudron JJ in Finance Sector Union of Australia, Re; Ex Parte Illaton Pty Ltd (1992) 107 ALR 581, where their Honours stated (at 583) that: "care must be taken to bear in mind that the basis for disqualification by reason of apprehended bias is that there are grounds upon which a party or the public might entertain a reasonable apprehension that the particular member of the Commission will not decide the case impartially or without prejudice. The basis for disqualification is not merely that the member's past decisions, on questions of fact or law, might lead to a reasonable expectation that she or he will decide the case adversely to one of the parties. Nor is it that she or he has had previous contact or experience, as a member of the Commission, with the facts involved in the particular matter, with the context in which the particular matter arises, or with one or more of the parties involved in the particular matter." · Similarly in Re JRL; Ex Parte CJL (1986) 161 CLR 342, Mason J (at 352) emphasised the following: "[i]t needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party. There may be many situations in which previous decisions of a judicial officer on issues of fact and law may generate an expectation that he is likely to decide issues in a particular case adversely to one of the parties. But this does not mean either that he will approach the issues in that case otherwise than with an impartial and unprejudiced mind in the sense in which that expression is used in the authorities or that his previous decisions provide an acceptable basis for inferring that there is a reasonable apprehension that he will approach the issues in this way." 48 Such dicta bear directly upon the plaintiff's primary objections to my hearing this application; the comments and findings which their submissions claim manifest apprehended bias are, taken at their highest, mere suggestions that it was reasonable that the defendant incurred a high degree of legal costs in resisting this action. 49 The plaintiff contends that this case is different in that, in the usual course: (a) the trial judge would have had no occasion to have previously expressed an opinion on the quantum or calculation of costs; (b) the trial judge would make a determination as to whether there should be a lump sum costs order after he had heard the whole of the trial, or the whole of the relevant part of the trial; and (c) the trial judge would make his determination relatively shortly after the conclusion of the trial. 50 As to (a), I have clearly not "previously expressed an opinion on the quantum or calculation of costs" for the purposes of any gross sum costs application. 51 As to (b), I did relevantly hear "the whole of the trial", as that phrase applies to the present facts, given that the plaintiff's claims have been dismissed. 52 As to (c), having regard to the size and nature of the proceedings, I remain in a superior position to any other judge to determine the appropriate gross sum notwithstanding the effluxion of time. The way forward 53 Directions will require to be given to ready the motion for hearing. The parties should exchange proposed timetables in this regard and the matter will be stood over until a date which counsel and I will discuss in a moment where either the list judge or I will attend to the making of timetable orders. On that occasion hopefully a date for the hearing will be examined. 54 As earlier ordered the cost of transcription of today's hearing will be costs of the defendants' motion. 55 I order that in relation to the matters which have been before the Court today the defendants' costs of preparing submissions and of the occasions when the matter has been before the Court be paid by the plaintiff. I certify that paragraphs 1 - 55 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 5 April 2004ex tempore and revised 21 April 2004 ___________________ Susan Piggott Associate 21 April 2004 Last Modified: 04/30/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.