Reported Decision : 58 ACSR 277 New South Wales Supreme Court CITATION : J Aron Corporation v Newmont Yandal [2006] NSWSC 720 HEARING DATE(S) : 6 July 2006 JUDGMENT DATE : 18 July 2006 JURISDICTION : Equity JUDGMENT OF : Austin J DECISION : His Honour will not hear the application CATCHWORDS : COURTS AND JUDGES - application to vary or vacate and replace orders - whether judge who made order should disqualify himself from hearing application, on ground of apprehended bias - judge made statements at later directions hearings expressing his intention in making the orders and making application LEGISLATION CITED : Corporations Act 2001 (Cth), s 445D Ebner v Official Trustee in Bankruptcy (2001) 205 CLR 337 Galea v Galea (1990) 19 NSWLR 263 J Aron Corporation v Newmont Yandal Operations Pty Ltd [2004] NSWSC 159; (2004) 49 ACSR 97 J Aron Corporation v Newmont Yandal Operations Pty Ltd [2004] NSWSC 1145 J Aron Corporation v Newmont Yandal Operations Pty Ltd [2005] NSWSC 238 J Aron Corporation v Newmont Yandal Operations Pty Ltd [2005] NSWSC 1159 CASES CITED : J Aron Corporation v Newmont Yandal Operations Pty Ltd [2006] NSWCA 46 Johnson v Johnson (2000) 201 CLR 488 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 Owston Nominees No 2 Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558 R v Gough [1993] AC 646 R v Watson; Ex parte Armstrong (1976) 136 CLR 248 Re JRL; Ex parte CJL (1986) 161 CLR 342 The J Aron Corporation and The Goldman Sach Group Inc (P/XD1) Newmont Yandal Operations Pty Ltd (D/XC1) Mark Anthony Korda and Mark Francis Xavier Mentha (XD2) Clynton Court Pty Ltd (Subject to a Deed of Company Arrangement) (XD3) Australian Metals Corporation Pty Ltd (XC2) Eagle Mining Pty Ltd (XC2) Great Central Holdings Pty Ltd (XC2) PARTIES : Great Central Investments Pty Ltd (XC2) Great Central Mines Pty Ltd (XC2) Hunter Resources Pty Ltd (XC2) Matlock Castellano Pty LTd (XC2) Newmont Wiluna Gold Pty Ltd (XC2) Newmont Wiluna Metals Pty Ltd (XC2) Newmont Wiluna Mines Pty Ltd (XC2) Quotidian No 117 Pty Ltd (XC2) Newmont Australia Ltd (XC3) FILE NUMBER(S) : SC 2407/04 V R Gray (P) COUNSEL : T Bathurst QC & M Henry (D/XCs) V Whittaker (XD2, XD3) Abbott Tout (P) SOLICITORS : Arnold Bloch Leibler (D/XCs) Gadens Lawyers (XD2, XD3) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION AUSTIN J TUESDAY 18 JULY 2006 2407/04 THE J ARON CORPORATION PTY LTD & ANOR V NEWMONT YANDAL OPERATIONS PTY LTD JUDGMENT (revised on 18 July 2006 to correct typographical and minor errors) 1 HIS HONOUR: On 14 June 2006 the plaintiffs made an application by notice of motion seeking relief to the effect that orders made by me on 7 April 2005 be varied or vacated and replaced. By those orders I answered certain questions for separate determination in this proceeding, dismissed the amended cross-claim and ordered that judgment in the proceeding be entered for the defendant. I shall refer to the proceeding as "the 2004 proceeding". 2 At a directions hearing on 15 June 2006, counsel for the plaintiff informed the court that the plaintiffs' motion is "an application to alter the record of the court". The plaintiffs submitted that the application should be heard and determined by me, as the judicial officer who made the orders that are the subject of the application. The defendant and cross-claimants ("the Newmont Companies") submitted otherwise. By their interlocutory process filed on 21 June 2006, the Newmont Companies pray that I disqualify myself from hearing and determining the plaintiffs' motion. Background facts 3 By proceeding No 4666 at 2003 ("the 2003 proceeding") the plaintiffs challenge various deeds of company arrangement entered into by companies in the Newmont Yandal group. The 2003 proceeding is major litigation, both in terms of the likely length and complexity of the final hearing and the amount of money at stake. From an early stage, the proceeding has needed case management, which I have endeavoured to supply. 4 Broadly speaking, the plaintiffs' challenge to the deeds in the 2003 proceeding was initially on three grounds, relating to breach of duty by the directors who resolved to enter into the deeds, wrongdoing by the administrators leading to relief under s 445D and other provisions, and the validity of the resolution or resolutions to approve the deeds. I shall call the third ground "the formal defect issue". The first two grounds involve substantial allegations of fact, likely to be contested, giving rise to the probability of a lengthy trial. The formal defect issue, which has been addressed in the manner described below, raised a point of law on the basis of uncontroverted facts, relating to whether the creditors of the Newmont Yandal Group companies made a decision by a single resolution which was effective to constitute approval of the deeds for all 14 Group companies. 5 The plaintiffs made an application, which was contested, for an order for the separate determination of the formal defect issue. I declined to make such an order, for reasons published on 12 March 2004 (J Aron Corporation v Newmont Yandal Operations Pty Ltd [2004] NSWSC 159; (2004) 49 ACSR 97). For convenience I shall repeat the summary of my reasons that I gave in two subsequent judgments ([2004] NSWSC 554, and [2004] NSWSC 1145 at [20]): (1) either there is no deed of company arrangement for the purposes of Part 5.3A of the Corporations Act, or deeds of company arrangement have been executed to which Part 5.3A applies, but those deeds are arguably defective in ways entitling the plaintiffs to apply for relief under the statute; (2) if there is no deed of company arrangement for the purposes of Part 5.3A, but only an instrument inter parties, then (a) the plaintiffs, claiming to be creditors of Newmont Yandal, are not entitled to seek separate determination of a question concerning the proper construction of the instrument, because they are not parties to it (b) even if the plaintiffs, as non-parties to the principal deed, were entitled to ascertain the proper construction of the instrument, it would be inappropriate to decide that question in the 2003 proceeding as presently constituted, because the decision would affect persons not parties to the proceeding, namely Newmont Australia (a party to the principal deed) and other unsecured creditors of Newmont Yandal; (c) a separate determination, in favour of the plaintiffs, of the questions which were then proposed would not lead to a judgment disposing of the 2003 proceeding, because the deeds of company arrangement have been performed, employees and trade creditors have been paid, and complex questions would remain as to the appropriate orders in light of performance of the deeds; (3) if the principal deed is effective under Part 5.3A (whether or not any formal defect exists), then (a) the rights of the plaintiffs are those rights conferred by Part 5.3A and other parts of the Corporations Act; (b) if the plaintiffs make any application in reliance on their statutory rights to do so (such as s 445G, 447A or 1322), the statutory provisions give the court substantial discretion; (c) the exercise of the court's discretion depends upon an understanding of all relevant facts and circumstances; (d) therefore, in order to persuade the court to grant relief under such statutory provisions, it would be necessary to enter into proof of the whole or a substantial part of the facts that would be at issue in the final hearing, and little or nothing would be gained by having those matters considered in the context of a separate determination of questions. 6 In my judgment of 12 March 2004 I observed (at [24]) that if there was no valid deed of company arrangement for the purposes of Part 5 .3A as the plaintiffs contended, then as a creditor of Newmont Yandal they would be entitled to bring a proceeding for recovery of their debt. After my reasons for judgment were delivered, the plaintiffs commenced the 2004 proceeding, in which they sought to recover their claims in debt from Newmont Yandal. It is very clear that their objective in doing so was to put themselves in a better position to have the formal defect issue ventilated and resolved as a separate issue prior to the hearing and determination of the 2003 proceeding. They proposed to avoid overlapping between the 2003 and 2004 proceedings by seeking leave to amend their statement of claim in the 2003 proceeding to remove the formal defect issue from that proceeding. 7 Newmont Yandal, as defendant, pleaded the deed of company arrangement by way of defence to the plaintiffs' claim in debt, and filed a cross-claim seeking to invoke s 1322 or s 447A to cover the possibility that there might be some defect in the deed needing to be cured by order of the court. All the parties to the 2003 proceeding were either parties to the proceeding or the cross-claim in the 2004 proceeding. 8 There were many directions hearings and several interlocutory applications during 2004 (described in [2004] NSWSC 1145, paras [22]-[37]). One of them was an application by the Newmont Companies for the 2004 proceeding to be summarily dismissed or indefinitely stayed, or joined with the 2003 proceeding in some appropriate fashion. In reasons for judgment delivered on 31 May 2004 ([2004] NSWSC 543), I declined to grant that relief, preferring to allow the 2004 proceeding to evolve through pleadings and to see what applications would then be made. At a directions hearing on 15 June 2004, counsel for the Newmont Companies informed me that in the circumstances, his client would consent to orders for the separate determination of questions, if they were drafted so as to exclude discretionary matters. But on that occasion senior counsel for the second and third cross-defendants (Clynton Court in Messrs Korda and Mentha) opposed the making of orders for the separate determination of questions. 9 After the text of the proposed questions for separate determination was settled by the parties, I heard further argument and delivered a judgment on 22 June 2004 ([2004] NSWSC 544), in which I reached the provisional view that there was probably a good case for making orders for the separate determination of questions in the 2004 proceeding, but it was premature to make a decision on the matter until the precise issues in that proceeding had been defined by pleadings, and any application for joinder of additional parties had been heard and determined. I adjourned the application for further consideration once pleadings had closed. 10 Once pleadings had closed and no application for joinder had been made, I heard further argument as to whether to make orders for the separate determination of questions. During the course of submissions on 22 October 2004, the following exchange occurred between Mr Bathurst QC, for the Newmont Companies, and myself (Transcript, page 4): "Bathurst: If your Honour orders separate questions - I will come to why your Honour should not in a moment - they should be separate questions in each of the 2003 and 2004 proceedings because the issues are raised in each of the 2003 and 2004 proceedings. That shows - again this is said irrespective of separate questions - the difficulty of these two cases in effect being run separately, whether on the legal issues postulated or on the discretionary issues … if the cases are not heard together or there is a danger of inconsistent verdicts - a difficulty if the 2004 proceedings for example are heard first, of what constituted a res in those proceedings so as to bind the parties in the 2003 proceedings and the difficulties in relation to Anshun on the basis that the whole of the case was not brought forward in the 2004 proceedings. Those very unsatisfactory consequences, in our submission, can be avoided if the two sets of proceedings are joined together. Once they are joined together consideration can then be given to the separate questions. "His Honour: Can I just think about one thing. Those submissions that you have just made are directed primarily, I think, to running the 2004 proceedings to final verdict before the hearing [of] the 2003 proceedings. I wonder to what extent you make the same submissions in the event that I make an order for determination of separate questions in only the 2004 proceedings. "Bathurst: If your Honour made an order for separate determination of questions in the 2004 proceedings it should be at the very least on the condition that the parties to the 2003 proceedings acknowledge that they will be bound by the answers to the questions in the 2003 proceedings. It can be overcome that way. "His Honour: What are the chances of getting that acknowledgement? "Bathurst: I would not see any difficulty of giving it for our part. We don't want to cause any difficulties on this. …" 11 At the time, I understood Mr Bathurst QC to be proposing a condition that would prevent either party from later making an argument based on res judicata or Anshun or other estoppel, so as to treat the resolution of the questions for separate determination as having some greater significance than merely providing a separate answer to the formal defect issue. 12 I delivered my reasons for judgment on the application for separate determination in the 2004 proceeding on 29 November 2004 (J Aron Corporation v Newmont Yandal Operations Pty Ltd [2004] NSWSC 1145). I decided that I should make orders for the separate determination of eight questions set out in an appendix to my reasons for judgment. Broadly speaking, my reasoning was that: · the differently constituted 2004 proceeding overcame the plaintiffs' lack of standing; · Newmont Australia was a party to the cross-claim and therefore on notice of the issues raised in the proceeding; · it was unnecessary for the plaintiffs to pursue their action in debt in some representative capacity for other creditors; · there was a reasonable prospect that the separate determination of questions would bring final resolution to the 2004 proceeding and contribute to the just, quick and cheap resolution of the dispute between the parties; · the drafting of the proposed questions had removed from the separate determination any matter involving the exercise of discretion; · in light of the questions as formulated, the prospect of the court making findings of credit at the hearing of the separate questions that might be inconsistent with findings at the final hearing was not high; · although the separate determination of questions would not necessarily remove the cloud of uncertainty that the formal defect issue had cast over the administrations, it would least be a step towards doing so, and if the administrators were left in limbo it would be open to them to make another form of application. 13 Question 1 asked whether the creditors of each of the Newmont Yandal Group companies passed resolutions that each of them execute deeds of company arrangement. Questions 2-8 would only arise if the court answered Question 1 in the negative. In the course of my reasons for judgment, I said (at [55]): "I intend to adopt the suggestion put forward by senior counsel for the defendant, that I should make the order on the condition that the parties to the 2003 proceeding acknowledge that they will be bound by the answers to the questions given in the 2004 proceeding. This may not be necessary, but seems to me an appropriate way of avoiding any uncertainty with respect to estoppel and res judicata." 14 On 3 December 2004 I made orders consequent upon my judgment of 29 November. Order 1 was an order for the separate determination of the questions I had set out in an appendix to my judgment. Order 2 was as follows: " I make the order in para 1 on condition that the parties to the proceeding and cross-claim who are also parties to the 2003 proceeding, have acknowledged to the court that they will be bound by the answers to the questions set out in my order in para 1." 15 In making this order, my intention was to prevent any party from contending that any res judicata or estoppel would limit the contest in the 2003 proceeding of any of the issues other than the formal defect issue. I did not pay close attention to the drafting, which I borrowed from Mr Bathurst QC's submission, because I believed that all parties would attach to the words that I used the significance that I had understood Mr Bathurst to attribute to them. If I had detected any lack of consensus on this point, I would not have proceeded with the separate determination hearing until the question had been resolved so as to avoid any res judicata or estoppel issue remaining outstanding. 16 The separate determination of questions was heard by me on 14, 15 and 16 March 2005. By the end of the hearing, I had reached the conclusion that the correct answer to Question 1 was "yes". It was therefore unnecessary to hear argument on Questions 2-8. With the concurrence of the parties, I announced my decision on Question 1, reserving my reasons for decision. I published my reasons for judgment on 24 March 2005 (J Aron Corporation v Newmont Yandal Operations Pty Ltd [2005] NSWSC 238). 17 Both proceedings came before me on 7 April 2005. One of the purposes of that hearing was for the court to make orders with respect to the separate determination of questions in the 2004 proceeding, dealt with in the judgment of 24 March. It was also necessary to give directions with respect to 2003 proceeding. Mr Gray, counsel for the plaintiffs, informed the court that the parties had not agreed on what should happen (that is, what were the next steps in the litigation as a whole). He said (Transcript page 3): "In order to indicate where we see the position, can I give your Honour a short chronology of what happened some year or 18 months ago in the 2003 proceedings. So far as the 2004 proceedings are concerned, we accept that the outcome should be judgment for the defendant …". 18 I made orders formally answering the questions that had been set for separate determination, and then I said: "Secondly, I suppose the correct way to deal with [the 2004 proceeding] is to dismiss the amended cross-claim and enter judgment for the defendants in the proceedings." 19 Mr Bathurst QC said, "If your Honour pleases". Then I made orders to that effect. There was no discussion about res judicata or any form of estoppel. 20 Then attention shifted to the directions that should be made in the 2003 proceeding, which was by then (as Mr Gray said) "the only extant proceeding". I made directions on various matters, including a direction to the plaintiffs, suggested by Mr Bathurst QC, that they amend their statement of claim in the 2003 proceeding to delete those paragraphs dealing with the formal defect issue. This was on the basis that the formal defect issue had been addressed by the separate determination of questions. 21 Judgment in the 2004 proceeding was taken out on the following day. The judgment reflected the orders I had made orally on 7 April. No mention was made in the orders of any condition or restriction relating to res judicata or estoppel. 22 Subsequently the plaintiffs appealed against my judgment of 24 March 2005. In June 2005 the plaintiffs filed an amended statement of claim in the 2003 proceeding. On 8 November 2005 the Newmont Companies, as first and fourth defendants in the 2003 proceeding, provided the plaintiffs with a draft amended defence which pleaded that the judgment in the 2004 proceeding gave rise to res judicata, issue estoppel and Anshun estoppel in the 2003 proceeding. 23 On 11 November 2005 the Newmont Companies made an application to Palmer J for a stay of the 2003 proceeding pending the outcome of the appeal against the judgment of 24 March that had been delivered in the 2004 proceeding. During the course of argument on this application, Mr Bathurst QC indicated that if the Court of Appeal dismissed the plaintiffs' appeal, the judgment in the 2004 proceeding would be res judicata having an effect on the 2003 proceeding. Palmer J made an order staying the 2003 proceeding, for reasons given ex tempore (J Aron Corporation v Newmont Yandal Operations Pty Ltd [2005] NSWSC 1159). During the course of those reasons, his Honour said (at [12]): "The Defendants' submissions are essentially as follows. If the answer given by Austin J to question one of the separate questions is upheld in the Court of Appeal, the result will be that it will have been held that the resolutions referred to in that separate question were validly passed, the Deeds of Company Arrangement came into effect and the judgment consequently entered for the Defendants in the 2004 proceedings will stand. That the Defendants are not indebted to the Plaintiffs will be res judicata. Consequently there will be no point in agitating the questions which arise in the 2003 proceedings, as those questions essentially concern whether or not the Deeds of Company Arrangement, having come into effect, should nevertheless be terminated or declared invalid for a number of different reasons. This is so, the Defendants say, because even if the Deeds are terminated, the judgment in the 2004 Proceedings in favour of the Defendants precludes the Plaintiffs from seeking to recover the alleged debt." 24 On 2 December 2005, the plaintiffs made an application to me, in circumstances where Palmer J had indicated he was not available to hear the application, for orders directing the defendants to comply with some orders for discovery that had been made by the court on 29 July 2005. At issue was whether the order by Palmer J on 11 November 2005 for a stay of the 2003 proceeding operated retrospectively so as to relieve the defendants of their discovery obligation, or only prospectively, so that the pre-existing discovery obligation should be performed. On that day the principal issue was whether the application, which I was available to hear on 7 December, would be a substantial application involving the tendering of evidence, or a brief application involving merely the construction of Palmer J's order. After submissions, I decided that the only application I would be able to hear on 7 December would be of the latter kind. 25 During the hearing on 2 December, I made some observations about the res judicata and estoppel defences, although those matters did not bear on the decision to be made on the day. I said (Transcript, page 4): "My understanding of the effect of the determination of the separate questions on 24 March and the consequent entry of judgment in the 2004 proceedings was to leave the 2003 proceeding standing, except in respect of the specific grounds of validity that had been alleged and dealt with in the separate questions, namely the procedural issues about the way in which the meetings were run. In other words, it seemed to me what survived for determination was a substantial case as to whether the J Aron interests could establish any grounds for termination of the deed of company arrangement: the sort of grounds that are set out in the Act. Now it seems to be argued on [the first and fourth defendants'] side that the entry of judgment in the 2004 proceedings creates a res judicata that prevents those issues from being ventilated, or prevents them from being ventilated effectively, so that if the appeal against my judgment of 24 March 2005 fails, the argument seems to run, there is no utility in the 2003 proceeding. That was certainly not my intention. If I've inadvertently, as it were, or without intending to do so, achieved that res judicata outcome by the entry of judgment in the 2004 proceeding, I would want to do whatever I could to put paid to that argument." 26 Later on the same day, there was the following exchange between me and Mr Henry, counsel for the Newmont Companies (Transcript, pages 4-5): "His Honour: I just wonder whether there is any scope for me to rescind or vary the order entering judgment in the 2004 proceeding. Henry: There is no application before you. His Honour. There isn't any application before me now, but I've laid it on the table. Henry: I hear what your Honour says. It is a matter for my friend. His Honour: It is. Henry: It is also a matter for him to consider in the context of the appeal which, your Honour may be aware, has been listed for 7 and 8 February. I hear what your Honour says. There is nothing I think I can say about it, but in my respectful submission it doesn't actually bear upon this issue. His Honour: No, that is right, but it just seems to me that perhaps through something that I have done there is a risk that the proper course of the proceedings might be diverted into paths that I didn't contemplate that they would finish up in. Henry: I think it is fair to say this much: before Justice Palmer on 11 November Mr Ellicott, who appears for the plaintiffs, certainly didn't accept that the effect of your Honour's judgment has the effect that my clients contend. His Honour: Yes, but to avoid doubt maybe there is something I can do and I must say, subject to argument and without pre-determining the issue, my disposition would be to do something." 27 After Mr Ryckmans for the plaintiffs outlined the arguments that had been foreshadowed by the defendants, I said (Transcript, page 6), "That is an issue that greatly concerns me". A little later I said: "What I flagged was whether it would be appropriate for the court to vacate the entry of judgment so as to minimise or remove arguments which allege that the orders made have produced a result which it was certainly not my intention to produce." 28 I heard the plaintiffs' application on 7 December 2005, as foreshadowed, and dealt with it by ex tempore reasons for judgment, holding that Palmer J's order had the effect of suspending the obligation of the Newmont Companies to give further discovery. At the end of my judgment I made the following remarks: "21 I touched on another matter that is troubling me on 2 December 2005, and I shall make some further remarks now. The matter that concerns me arises out of the ex tempore reasons for judgment given by Palmer J on 11 November - in particular, the argument put to Palmer J and reflected in paragraph 12 of his reasons for judgment. The defendants contended that if the appeal on my determination of the separate questions is unsuccessful, there will nevertheless be little or no utility left in the 2003 proceeding. They submitted that it is res judicata, by virtue of judgment having been entered for the defendants in the 2004 proceeding, that the defendants are not indebted to the plaintiffs in any event (that is to say, even if one or more of the grounds for terminating the deeds of company arrangement which remain extant in the 2003 proceeding are successfully pressed). "22 My intention in making the orders that I made in the 2004 proceeding, consequent upon determination of the separate questions, was to leave for determination in the 2003 proceeding all of the issues that remained in the statement of claim in that proceeding as amended to that time (that is to say, excluding what has been called the formal defect argument). Though not articulated, my intention was that if the plaintiffs were able to establish any of the grounds for termination of the deeds, and were able to persuade the Court to exercise all appropriate discretions in favour of making orders to terminate the deeds, then it would be open to the plaintiffs to assert their claimed debt notwithstanding the entry of judgment in the 2004 proceeding. "23 I understand that the orders that I made on 7 April 2005, giving judgment for the defendants, have been entered. The Court has an inherent power to vary an order or judgment that does not reflect the true intent of the judicial officer concerned: see Ritchie's Uniform Civil Procedure at [36.17.15]. If that power is available in the present circumstances, I would be disposed to exercise it so as to vary the orders previously made in the 2004 proceeding. I have in mind that the variation would be along the lines of an additional provision stating that the orders, including the entry of judgment, were made without affecting or limiting the rights of the plaintiffs to pursue the relief currently sought in the 2003 proceeding and to assert, if they succeeded in obtaining such relief, that they are creditors of one or more of the defendant entities. "24 There is no application before me for any such variation to be made, although the court could proceed of its own motion. Whether the court has jurisdiction to make such an order, and whether if it has it would be appropriate for the court to do so, are matters which I think will involve some complexity. The court ought not to act without giving the parties the opportunity to consider what I have said and make appropriate submissions. Given that the hearing of the appeal against my orders is pending and the problem could be addressed by the Court of Appeal, it seems to me that the court should not, of its own motion, pursue the matter further for the time being. But I have recorded my views in case they have any relevance to the appeal and in case any application on this subject matter is in contemplation. These are difficult matters but in view of my firm understanding of the intention lying behind the orders I have made, I thought it appropriate to take the unusual step of recording my views." 29 The appeal was dismissed on 15 March 2006 (J Aron Corporation v Newmont Yandal Operations Pty Ltd [2006] NSWCA 46). The Court of Appeal addressed only Question 1, which I had resolved against the plaintiffs. The judgments published by their Honours do not indicate that the observations I made in paras 21-24 of my judgment of 7 December 2005 were drawn to the Court of Appeal's attention, and nothing was said about the res judicata and estoppel issues. 30 The matter returned to me for directions on 13 April 2006. Counsel for the first defendant submitted that, as the res judicata and estoppel defences would mean that a very large proportion of the case would be shut out, his client should not be compelled to prepare, by way of discovery and evidence, for a case that may not occur. Senior counsel for the plaintiffs described the estoppel defence as "laughable". 31 During the course of argument, I said (Transcript, page 3): "Some statements I made which were recorded in the transcript [were] broadly to the effect that if the entry of judgment in the other proceedings has the effect which was claimed on your side at the time, that would be an effect that I did not intend in making the orders. I ought not to hear the application that might arise based upon various forms of res judicata and estoppel. What I've said has not led to any application under the slip rule or any other rule. The order stands. Whether it's too late to make such an application is not for me to speculate [about] but I would not hear that matter." 32 The Newmont Companies, as first and fourth defendants, filed and served Amended Defences on 4 May 2006, which plead that the judgment in the 2004 proceeding gives rise to res judicata and estoppel defences. On 25 May 2006 the matter came before me again for directions. I was invited to re-visit an earlier decision that discovery should not proceed for the time being. I was given draft short minutes of orders, one version of which contemplated that there would be an interlocutory process for the determination of separate questions regarding the res judicata and estoppel issues. The following exchange occurred between me and Mr Finch SC for the plaintiffs: "His Honour: I don't think I should hear that myself [referring to the interlocutory application for orders for the separate determination of the res judicata and estoppel issues]. Finch: Your Honour has already said something to that effect. We would not suggest that your Honour should hear it, it's a matter for your Honour. It's our submission that far from being barred from hearing it, your Honour is the judicial officer best equipped, on one view, to say what it was. His Honour: I formed and expressed a view, which is that the order for the entry of judgment, which was a consent order, in light of my decision, to the extent that it might have had an effect in terms of res judicata, was mistaken, and I said things designed to encourage some application to me to fix it up. Finch: As your Honour knows, no such application was made. His Honour: That's right. I think, having done that, it might be better if someone else heard it. Finch: I appreciate your Honour's decision. I don't think I can dissuade your Honour from that, having regard to the relevant factors here. We say we would not oppose your Honour hearing the matter." 33 It emerges from these materials that my intention, at the time of publication of my judgments of 29 November 2004 and 24 March 2005, and at the time that I made orders on 3 December 2004 and 7 April 2005, and subsequently, has been that the resolution of questions for separate determination, and consequently the disposition of the 2004 proceeding once that step had been taken, were to be on the basis that there would be no occasion for raising res judicata or estoppel arguments except with respect to the matters directly involved in the answering of the question. In raising a defence of res judicata, issue estoppel and Anshun estoppel on the ground that entry of judgment against the plaintiffs in a proceeding in which they asserted a claim to relief as creditors prevents them from pursuing the bulk of their claims to relief in the 2003 proceeding, the Newmont Companies are seeking to derive consequences from my orders that are contrary to my intention. It would not be appropriate for me to make any determination, in the context of the present application, as to whether there was a common understanding between the parties to the same effect. 34 The plaintiffs' application for variation of my orders of 7 April 2005 was filed, as I have said, on 14 June 2006. It seeks alternative orders for variation, each for the purpose of giving effect to my intention at the time when the order was made. In the first alternative, a condition would be added that no party would be permitted to rely on any estoppel or res judicata arising out of the orders, except that the plaintiffs would be unable to assert in the 2003 proceeding or any other proceeding that creditors did not vote in favour of a resolution of each Newmont Yandal Group company to execute a deed of company arrangement. In the second alternative, my orders would be vacated and instead, there would be orders answering Question 1, declaring that the other questions did not arise and ordering that the 2004 proceeding be stayed until further order. 35 In these circumstances, the Newmont Companies submit that I should disqualify myself from hearing the plaintiffs' application to vary my orders, on the ground of apprehended bias. The submission appeals to what has been described as "a 'fundamental rule' [Re JRL; Ex parte CJL (1986) 161 CLR 342 at 351, per Mason J; …] of natural justice and an 'abiding value of our legal system' [Galea v Galea (1990) 19 NSWLR 263 at 277] that every adjudicator must be free from bias": Johnson v Johnson (2000) 201 CLR 488, at 501 per Kirby J. "Bias", for the purposes of the "fundamental rule", is not to be equated with lack of good faith. As Lord Goff said in R v Gough [1993] AC 646, 659: "… bias is such an insidious thing that, even though a person may in good faith believe that he was acting impartially, his mind may unconsciously be affected by bias." 36 The "fundamental rule" has been extended, by the courts insisting that the appearance of bias must also be avoided. Thus, in R v Sussex Justices; Ex parte McCarthy [1924] 1 KB 256, Lord Hewart CJ said (at 259): "… it is not merely of importance but is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done." 37 This extension of the "fundamental rule" is based upon the need for public confidence in the administration of justice, for "if fair-minded people reasonably apprehend or suspect that the tribunal has prejudged the case, they cannot have confidence in the decision": R v Watson; Ex parte Armstrong (1976) 136 CLR 248, 263 per Barwick CJ, Gibbs, Stephen and Mason JJ; Johnson, at 493 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. 38 The requirement to avoid the appearance of bias is assessed, in Australia, by reference to an objective test, stated by Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ in the High Court in Johnson, at 492, namely: "… whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question that the judge is required to decide." See also Ebner v Official Trustee in Bankruptcy (2001) 205 CLR 337, at 344. 39 At the hearing on 6 July 2006, Mr Bathurst QC, for the Newmont Companies, submitted (Transcript, page 2-3) that a fair-minded lay observer might reasonably apprehend that I might not bring an impartial and unprejudiced mind to the resolution of the question whether to vary or vacate my orders of 7 April 2005. He submitted that, while I had not pre-judged the question whether the court has power to make such an order, there is a reasonable apprehension that I have formed a view as to how the court should exercise any discretion it might have if the power exists. 40 Mr Bathurst outlined the case that the Newmont Companies will make on the application for variation of my orders. It was plain from his outline that the court will be invited to deny the application partly on discretionary grounds. The Newmont Companies will point out that I invited the plaintiffs to make an application to vary the orders prior to the hearing in the Court of Appeal, and the plaintiffs chose not to make the application at that time. If they had done so and had been successful, a consequence would have been that an appeal to the Court or Appeal would lie only with leave. In Mr Bathurst's submission, there was a real possibility that the Court of Appeal may have declined leave at that stage, preferring to deal with the matter when all issues in both the 2004 and 2003 proceedings had been heard. 41 Mr Bathurst informed the court that none of the arguments to be put by the Newmont Companies on the application to vary the orders will depend on my intention. He said (Transcript, page 5): "Your Honour's intention in this sort of case would be a given. Your Honour has articulated it and, with respect, articulated it clearly and any judge who hears it will have the benefit of your Honour's views, which I can tell your Honour won't be challenged by us and indeed can't be challenged by us." 42 In my opinion a fair-minded lay observer would reasonably apprehend that I might not bring an impartial and unprejudiced mind to the resolution of such a discretionary argument. The observer would infer from my various statements that, if I decided I had the power to vary or vacate and replace my orders, I would use that power to prevent the Newmont Companies from raising defences in the 2003 proceeding that I intended to exclude, and that I would not pay due regard to discretionary considerations alleged by the Newmont Companies to point against the exercise of the power. I hope that apprehension would be unfounded, but in my view this is a clear case where the basis of such an apprehension has been laid. 43 Mr Gray, appearing to the plaintiffs, submitted (Transcript, page 7) that it is contrary to the authorities, cited at length in the plaintiffs' written submissions, for the Newmont Companies to contend that there is a reasonable apprehension that the court would refuse to give significance to matters that had never previously been put to it. I disagree. The application of the Johnson test requires the court to make a commonsense assessment of the effect that the judge's statements would have on a fair-minded lay observer. My statements, quoted above, would suggest to the mind of such an observer that I was intent on "fixing up" a problem that had arisen with my orders, if I had the power to do so, even though my judicial duty would be to assess the discretionary considerations placed before me on the application in a fair and impartial manner. In my opinion that is a sufficient basis for me to decline to hear the application. 44 In written submissions the plaintiffs submitted that the appropriate court to determine an application to amend a judgment is the court that made the judgment. They said that the authorities make this plain, and they listed a "representative sample" of eleven cases. I have considered those cases, but I have not been able to discover in them any principle directly applicable to the present circumstances. In my opinion, the cases do not require that the judge who made the original orders must hear an application to vary them, where there is good reason for some other judge to hear the application. Thus, where the judge who made the original orders has retired, it is open to another judge of the same court to vary those orders where legislative power and principles make it necessary or appropriate to do so: Owston Nominees No 2 Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558, at [22] per Allsop J. In the present case, it is important that according to Mr Bathurst QC's submissions, the Newmont Companies regard my statements of intention as clear and they will not challenge them. The position would have been more difficult had there been some issue about my intention in making the orders. 45 The submissions of the parties addressed the question whether the apprehended bias rule is superseded by a rule of necessity (see esp Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70, at 88, 89 and 96). But here there is no necessity for me to hear the application. There is no substantial difficulty in allocating the application for hearing by another judge of the Equity Division. The only disadvantage in doing so is that the judge who hears the application will have to spend some time familiarising himself with the issues, with which I am very familiar. Given the availability of another judge, I would have been strongly inclined not to hear the application even if the Newmont Companies' ground for opposition was substantially weaker than it is. It is important, in strenuously contested litigation of this kind, to take such practical steps as are available to limit the field of potential disputation. For that reason, I may well have declined to hear the application as soon as the Newmont Companies objected to my doing so, were it not for the plaintiffs' insistence that I should hear it. ********** 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.