Cennzeal Pty Ltd & Anor v Dawson Properties (Ventures) Pty Ltd & Ors

1. [1]

   Application is made that I disqualify myself from the further hearing of any matter interlocutory or otherwise in connection with this case.

2. [2]

   The first intimation I received of such application was in an email sent by Mr Smits, appearing for the first plaintiff, to my Associate at 10.07pm on Thursday 13 July 2017 (the 13 July Letter). The matter had been relisted before me on Friday 14 July 2017 as a result of the plaintiff’s apparent inability to comply with an order for security for costs which I made on 30 March 2017, and the defendants’ application to dismiss the claim accordingly. The first plaintiff, represented by Mr Smits, relies upon the affidavit of Mr Peter Shah Mahommed dated 13 July 2017. Mr Orlizki, solicitor, appears for the first to fourth defendants.

Background facts

1. [3]

   The proceedings involve a dispute between a number of joint venturers.

2. [4]

   The most current pleading on which the plaintiff relies, as I understand it, is a further amended statement of claim.

3. [5]

   The genesis of the original dispute arises out of an agreement executed between numerous of the defendants and a company First Debenture Limited (FDL), formerly the third plaintiff. That company is in liquidation. The agreement was described as the Project Management Agreement (PMA). In broad terms the defendants, being the Dawson entities, were to acquire certain property and/or home units in Bellbird and Dubbo. FDL asserted it was beneficially entitled to 50% of the units in two property trusts namely the Dubbo Project Trust and the Bellbird Project Trust.

4. [6]

   It is further asserted that one or other of the Dawson entities would arrange for the funding for the acquisition, development, management, holding and realisation of the two developments for financial return.

5. [7]

   FDL was to be remunerated in relation to these activities in return for it providing services by way of acquisition, management, development, marketing and sales. As the result of certain events which have occurred, FDL alleges that each of the relevant defendants has breached fiduciary obligations to it. Other breaches are also alleged.

6. [8]

   I have had this matter before me from 2015 – 2017, with numerous motions and applications. An initial scan of Justice Link reveals the matter has come before me on approximately 25 occasions, with the matter first appearing to be listed before me on 6 May 2015. On all relevant occasions both sides have been represented by legal practitioners.

7. [9]

   The most recent date matters of substance were ventilated before me was 30 March 2017. At that hearing, the defendants sought a number of orders some of which were consented to and some which were not opposed, for example the removal of FDL as a party by reason of it having gone into liquidation. Further Mr Smits who was a party was removed because he had for some little time been a bankrupt. The matter which occupied me for a good portion of that hearing was whether the first plaintiff should provide security for costs. I heard the application and made orders that security be provided in the amount of $85,000 in an acceptable form. I gave an ex tempore judgment. No appeal was lodged in respect of that judgment however no security has been provided either. As I understand it the first plaintiff wishes to agitate that there should be some variation in the orders I made on 30 March 2017, but not before me.

8. [10]

   For various reasons to which I will return, application is made that I disqualify myself.

Apprehended Bias

1. [11]

   As I understand it there is no allegation of actual bias.

2. [12]

   The test for determining whether a judge should disqualify himself or herself by reason of apprehended bias is whether a fair minded lay observer might reasonably apprehend the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide; Johnson v Johnson (2000) 201 CLR 488 (Johnson) at [11]. This decision has been affirmed in a number of cases including Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 and Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427.

3. [13]

   The defendants, in addition, have referred me to the principles recently stated by the NSW Court of Appeal (Ward JA (as her Honour then was) with Payne JA agreeing) in Crossman v Sheahan [2016] NSWCA 200 at [169]-[171]:

4. [14]

   There is no doubt that an application for disqualification can be made without the filing of a formal motion. The application should however be determined by the judge whose disqualification is sought and should not involve a contest on the facts: Barton v Walker [1979] 2 NSWLR 740; Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411 at 436; Wentworth and Graham [2003] NSWCA 240.

5. [15]

   A mere indication by a party that it wishes a judge to disqualify himself or herself is not of itself a proper ground for the judge to recuse. Judges are required to discharge their professional obligations unless as a matter of law they are disqualified. They should not accede too readily to an application for disqualification.

6. [16]

   Further, any application should be made as soon as reasonably practicable after the party seeking disqualification becomes aware of the relevant facts; Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88 per Basten JA at [23]-[34].

7. [17]

   I will set out in detail below the complaints which are made by Mr Smits in the 13 July Letter and which are said to give rise to the relevant apprehension. However, in short, they refer to “many case management directions” various “orders” and “case management directions” made over time. They also involve allegations that I had expressed negative views upon the conduct of the principal of the plaintiff at least on 30 March 2017.

8. [18]

   It is certainly true that the conduct of a trial judge even during interlocutory skirmishes or directions hearings could at least theoretically amount to a proper basis for disqualification. Judges however especially in the case management of commercial matters are not only entitled but indeed obliged sometimes to express their views in order genuinely to engage in constructive debate on crucial issues. Part of a judge’s obligation in that regard is to be drawn from section 56 of the Civil Procedure Act 2005 (NSW).

9. [19]

   Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said in Johnson at [13]-[14]:

10. [20]

    In R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 264, Barwick CJ, Gibbs, Stephen and Mason JJ said:

11. [21]

    Further, as noted by the High Court (Brennan, Deane and Gaudron JJ) in Vakuata v Kelly (1989) 167 CLR 568 at 572:

The Complaints

1. [22]

   The first plaintiff’s 13 July Letter contains the following paragraphs which are desirable to set out at length:

The parties’ submissions

1. [23]

   In making this application, Mr Smits, who appears for the first plaintiff, relied upon what he had said in the 13 July Letter, amplified in oral submissions. He also relied upon the affidavit of Mr Peter Shah Mahommed dated 13 July 2017.

2. [24]

   In written submission, the defendants maintain the first plaintiff has not identified anything that might lead me to decide a question other than on its merits. To support this proposition, the defendants point to the fact the majority of matters I have heard during the course of this case have been by consent or not seriously contested. As for the contested interlocutory hearing before me regarding the variation of McDougall J’s freezing orders, the defendant notes I was not required to resolve any contested factual issues, and hence no factual findings materially adverse to any party, including the Plaintiffs, were made.

3. [25]

   The defendants also submit that in any event, the first plaintiff has waived any right to make this application based on matters that arose prior to the security for costs application, given the plaintiffs made no application during or prior to the security for costs application for me to disqualify myself.

The evidence before me

1. [26]

   The first plaintiff made no attempt whatsoever to tender any transcripts. As I have said, apart from the assertions in the 13 July Letter, he relied on the affidavit of Mr Mahommed dated 13 July 2017.

2. [27]

   This affidavit is a collection of summarised and/or extracted orders I have made from time to time. In addition, the affidavit can best be described as a detailed submission and it is in large part argumentative. It makes numerous complaints, not limited to my conduct.

3. [28]

   Mr Mahommed’s means to fund security for costs is dealt with, as is his purchase of numerous shares in the allotment. The affidavit also contains complaints about the judgment handed down by me on 30 March 2017.

4. [29]

   In my view, the matters dealt with in the affidavit of Mr Mahommed are largely irrelevant to the current application.

Consideration

1. [30]

   The first observation to make about the complaints is that they are not confined to the proceedings on 30 March 2017. Paragraph 5 refers to “many ….directions” and certain “findings”. No detail is provided as to what directions or findings are referred to or when they were made and whether they were opposed or by consent. It is said however they have been made over the last two years.

2. [31]

   Paragraph 6 refers to “some of the Orders and Case Management Directions”. Again no detail is provided as to what Directions are being referred to.

3. [32]

   Paragraph 7 proceeds upon the basis there is no other view open factually on the material in particular whether the PMA was abandoned by the parties. That issue will turn on factual material as yet untested, and conversations. This is one of the allegations that will need investigation at trial. Reference is made back to Mr Glasson of Counsel who appeared in earlier times and who prepared some submissions dated 4 December 2015.

4. [33]

   What is abundantly plain from paragraph 7 is that the question of abandonment will arguably loom large in the proceedings. It is a little premature, in my view, for any judge to be engaging with these issues except on an entirely tentative basis in the absence of having heard the witnesses who were privy to the relevant contractual arrangements and/or conversations. I note I have made an order that the question of abandonment be determined as a separate question. No hearing date has yet been fixed.

5. [34]

   Paragraph 8 alleges that I have expressed “negative views”. Again no detail is provided. There are no transcript references which could be analysed and addressed and most importantly placed in some sort of context.

6. [35]

   Paragraph 9 refers to my refusal to make an order for costs in favour of the plaintiff on a summary dismissal application. Costs of course are very much in the discretion of the judge and again there is simply no detail provided. However there is an assertion that “some of your Honour’s other comments on 30 March 2017 were extraordinary and prescient”. Again there is no detail at all so that the matter can be properly and objectively examined. Indeed it is not entirely clear to me what is meant by this assertion.

7. [36]

   Paragraph 10 refers to my having made assumed findings on matters “not properly recorded, raised or rebutted in admitted or admissible evidence or submissions”. No detail again is provided. The comments which undoubtedly are being referred to are that Mr Mahommed did not provide any evidence that he would stand by the plaintiff or was able to do so and hence was a factor expressly referred to in the context of my granting the orders for security for costs. That is a fact and one relevant to the question of security. That observation is recorded in my judgment of 30 March 2017, in respect of which there has been no appeal.

8. [37]

   Paragraph 11 asserts that it is to be “assumed or inferred” that I might have engaged in some extracurial fact finding. Again that submission is entirely opaque. It is not capable of being comprehended especially without any reference being made to part of the judgment on security for costs or indeed any part of the transcript before me on 30 March 2017. Leaving aside the obscure nature of the allegation, it is unhelpful because it cannot be appropriately analysed.

9. [38]

   Paragraph 12 submits that, although I had apparently intimated that I had read Mr Glasson’s submissions of 4 December 2015, because I did not give those submissions the weight they deserved somehow or other this would amount to a “serious matter for concern”. Again no detail is provided. The weight to be given to any submission will vary according to its content.

10. [39]

    Paragraph 13 adds that “essentially and generally” the nature of the complaint is that the case management has been conducted extensively on a one sided basis and that the security question was decided in an unfair and prejudicial way to the plaintiffs.

11. [40]

    I reiterate at this point no appeal was lodged against my judgment of 30 March 2017 in which I ordered security. No complaint was made during the hearing and no application for disqualification was made or hinted at.

12. [41]

    The manner in which this application has been formulated and put to the court simply does not permit any person to make an assessment of the complaints to detect whether or not the requisite test has been met. There is simply no work for a hypothetical observer to do by reason of the total lack of any detail.

13. [42]

    Any party is perfectly entitled to make such an application as the present. A practitioner or person making such an application bears an onus at least to expose fairly and objectively and at a level of precision why it is that the complaints are to be sustained and the requisite test met. That has not been done in this case. In the circumstances it seems to me the application must be dismissed.

14. [43]

    I am aware the defendants seek to have the plaintiff’s claim dismissed and if I understand it correctly the plaintiff wishes to re-open with fresh materials on the security for costs question.

15. [44]

    It seems to me appropriate however that I not proceed to hear any further matter at least for a short period to enable the plaintiff to make an application, if any, to the Court of Appeal. I therefore propose to stand all applications over for 14 days at which point I would expect to be updated on what the current situation is.