Mackinnon as plaintiff representative of 153 plaintiff group members v Partnership of Larter, Jones, Miraleste Pty Ltd t/as USG Partner and Johnson, t/as "STC Sports Trading Club" (No 4)

1. [1]

   Shortly after the matter was called on for hearing on Monday 12 February 2018, the sixth day of the hearing of these proceedings, Mr Argy, who appears for the fifth defendant, Ms Leigh Johnson, applied for an order that I recuse myself from the further hearing of the proceedings.

2. [2]

   At that stage, Ms Johnson was still under cross-examination. The cross-examination commenced on Friday 9 February 2017.

3. [3]

   Immediately before making that application Mr Argy informed me that Ms Johnson was in any event unable to attend Court on 12 February 2018 for medical reasons. Ms Johnson was not able to return to Court that week. The matter has now been adjourned to 14 March 2018, when Ms Johnson’s cross-examination is scheduled to continue and the matter to conclude.

4. [4]

   I invited Mr Argy to make submissions in support of the application. He did so.

5. [5]

   Having considered those submissions during the day, I declined to recuse myself.

6. [6]

   I said I would give my reasons later. These are those reasons.

7. [7]

   This is a class action.

8. [8]

   The plaintiff, Mr Ian Mackinnon, brings the proceedings as a representative of 153 group members, each of whom made an investment in a purported sports betting and trading scheme. The investments were made by way of loans to a partnership which was originally styled “The STC Sports Trading Club”. On or about 21 January 2014 that partnership purportedly changed its name to “STC Sports Trading Club”. There is a dispute as to whether a new partnership was thereby formed.

9. [9]

   The amount invested by group members was in the order of $12.3 million.

10. [10]

    On 30 December 2012, Ms Johnson (who is a solicitor) and the second defendant, Ms Anne Larter, executed a document called “Limited Partnership Agreement”. That document stated that the name of the partnership was “The Sports Trading Club Partnership”.

11. [11]

    In that document Ms Larter was described as a “General Partner” with “unlimited liability for the obligations, debts and liabilities of the Partnership”.

12. [12]

    Ms Johnson was described as a “Limited Partner” with “limited liability to the amount of [her] invested capital”. Ms Johnson invested $182,500 in the venture.

13. [13]

    The Limited Partnership Agreement was not registered for the purposes of s 50A of the Partnership Act 1892 (NSW).

14. [14]

    Ms Johnson resigned as partner on 21 January 2014.

15. [15]

    In the meantime, on 28 October 2013 and 4 November 2013, Mr Mackinnon and his wife, Mrs Belinda Mackinnon, executed documents entitled “Loan & Profit Sharing Agreement” pursuant to which they loaned a total of $200,000 to the partnership. That money was to be “applied by the Partnership for trading on financial markets including but not limited to sports and prediction markets”.

16. [16]

    Mr Mackinnon alleges that the Sports Trading Club (which I will call “STC”) was a fraudulent scheme masterminded by the twelfth defendant, Mr Peter Foster, who is said to be a notorious confidence trickster. Mr Mackinnon alleges that none of the funds invested was used for sports betting or trading and that, instead, the funds were misappropriated by Mr Foster and transferred to offshore companies and bank accounts associated with him and his niece, Ms Arabella Foster, in Hong Kong, the Cayman Islands and Vanuatu.

17. [17]

    Ms Johnson is the only active defendant.

18. [18]

    Ms Larter entered a submitting appearance. Mr Foster, who is presently in custody, has not appeared. He has stated, through his solicitor, that he does not propose to appear nor seek an adjournment of these proceedings pending the outcome of criminal charges pending against him.

19. [19]

    The third and fourth defendants, Mr Alan Jones and a company associated with him, are alleged to have been partners in STC following Ms Johnson’s resignation. They did not appear when the matter was called on for hearing.

20. [20]

    The sixth to eleventh defendants, to or through whom it is alleged investors’ funds passed, have either not appeared, or have consented to judgment.

21. [21]

    The allegations made against Ms Johnson are very serious.

22. [22]

    They include that Ms Johnson made representations, including by silence, concerning STC that were misleading or deceptive, and made with the knowledge that they were false.

23. [23]

    Mr Mackinnon alleges that Ms Johnson:

24. [24]

    Ms Johnson denies each of these allegations.

25. [25]

    Mr Mackinnon also seeks to recover from Ms Johnson, as one of the investors, the amount he advanced as a debt.

26. [26]

    On 12 February 2018, the proceedings had reached the stage where Mr Mackinnon’s case had closed. He called a number of witnesses. Those witnesses included Mr Kenneth Gamble, a private investigator, who gave evidence of the result of his investigation into this scheme, and Mr Pieter de Klerk, who is one of the group members and who also, separately, advanced US$1 million to acquire what was said to be the “South African rights” to conduct the STC scheme.

27. [27]

    Ms Johnson has sworn an affidavit dated 3 August 2017 which contains 986 paragraphs and is 466 pages long. She prepared it at a time when she was self-represented.

28. [28]

    Mr Dixon, who appears for Mr Mackinnon, commenced to cross-examine Ms Johnson on that affidavit on 9 February 2018 (the fifth day of the proceedings).

The recusal application

1. [29]

   Mr Argy submitted that the basis for his application that I recuse myself was “that your Honour has unduly intervened in questioning parties and witnesses, taking up the arguments of the plaintiff, [and] expressing opinions on matters where there is still evidence and submissions to be had”.

2. [30]

   Although Mr Argy made no reference to authority, he submitted that a fair minded lay observer of the proceedings might conclude that I had formed the view that Ms Johnson “was complicit in the masking of Peter Foster’s identity in furtherance of the alleged fraudulent scheme, and really, I think, your Honour, your Honour appeared not open to carefully hearing Ms Johnson’s side of the story and [to be] approaching it with a greater degree of overt scepticism than one might expect”.

3. [31]

   Mr Argy also submitted that “your Honour has not given me the latitude to cross-examine witnesses” and that I had “closed down” aspects of his cross-examination on what Mr Argy described as “the partnerships defence”. I understand this defence to involve the contention that, upon Ms Johnson’s resignation from the partnership in January 2014, that partnership ceased to exist and a new partnership came into being.

4. [32]

   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 that 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; [2000] HCA 48 at [11]; followed in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 at [6], Michael Wilson & Partners v Nicholls (2011) 244 CLR 427; [2011] HCA 48 at [2]).

5. [33]

   I must therefore determine whether bias would be apprehended by a “fair minded lay observer”.

6. [34]

   The attribute of ‘fair mindedness’ is described by Lord Hope of Craighead in Helow v Secretary of State for the Home Department [2008] 1 WLR 2416 at [2], recently cited with approval by Davies J in Marlinspike Debt Acquisitions Pty Ltd v The Undone Pty Ltd (No 2) [2018] NSWSC 72:

7. [35]

   The characteristics of a “lay” observer were described by French CJ in British American Tobacco v Laurie (2011) 242 CLR 283; [2011] HCA 2 at 300:

8. [36]

   Nevertheless, the “fair minded lay observer is an informed observer who takes into account the circumstances in which those observations were made and the totality of what the judge said” (Slavin v Owners Corporation Strata Plan 16857 [2006] NSWCA 71 at [27] (Giles JA)). Thus in considering whether the fair minded lay observed would have formed the requisite apprehension, the observer must be considered to have “taken the trouble to inform himself or herself to the extent necessary to make a fair judgment” (British American Tobacco v Laurie at [47] (French CJ), and “to have sought to be informed on at least the most basic considerations relevant to arriving at a conclusion founded on a fair understanding of the relevant circumstances” (Johnson v Johnson at [125] (Kirby J)).

9. [37]

   In Isbester v Knox City Council (2015) 255 CLR 135; [2015] HCA 20 at [23], Kiefel, Bell, Keane and Nettle JJ considered that this observer is “taken to be aware of the nature of the decision and the context in which it was made as well as to have knowledge of the circumstances leading to the decision”.

10. [38]

    Agreeing with the plurality, Gageler J said at [59] that the test for apprehended bias in the curial context necessarily involved three analytical steps. He went on to say:

11. [39]

    Stating the matter in the terms articulated by Gageler J, I understood Mr Argy to contend that:

The “interventions”

1. [40]

   Mr Argy cross-examined each of the witnesses called on behalf of Mr Mackinnon. They included Mr Gamble and Mr de Klerk.

2. [41]

   The impression I gained was that Mr Argy is not an experienced cross-examiner. At times, I found it hard to see the relevance of Mr Argy’s questions and the direction his cross-examination was taking. For example, Mr Argy spent much time asking witnesses to confirm the contents of documents when their meaning was clear and uncontroversial.

3. [42]

   The Court had allocated five days for the hearing of this matter.

4. [43]

   During the course of Mr Argy’s cross-examination, it became clear that the proceedings would not finish in anything like five days. In those circumstances, from time to time, I felt obliged to intervene to ensure that the matter progressed at a reasonable rate and that time was not unnecessarily wasted, bearing in mind my obligation under s 56 of the Civil Procedure Act 2005 (NSW) to conduct proceedings consistently with the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings.

5. [44]

   Mr Argy identified points in the transcript which, he submitted, show “interventions” by me that suggest I had a closed mind to Ms Johnson’s case and was unduly sceptical of it. To explain why I declined to recuse myself, it is necessary to go to each of those instances.

6. [45]

   I must also explain the context in which each of the “interventions” took place. That does mean that these reasons are lengthy.

7. [46]

   Ms Johnson’s evidence is that she agreed to become a “limited partner of the new business” as a result of a proposal made to her by Mr Foster, for whom she had acted in earlier proceedings.

8. [47]

   In her affidavit, Ms Johnson said that Mr Foster “stressed that he wouldn’t involve himself in any more scams”, that he had “wasted too much of his life getting into trouble”, that “the business would be a legitimate business” and that “he would not be involved at all in the management or operation of the proposed new business but would only be involved in setting up and operating the business’s website and similar technological aspects”.

9. [48]

   In April 2013, about four months after Ms Larter and Ms Johnson executed the Limited Partnership Agreement, Mr Tassell of the law firm Pikes & Verekers wrote to two private investigators stating that he acted for Ms Johnson and Ms Larter. Mr Tassell referred to two emails that those investigators had sent to a Dr Alan Snyder. The letter stated:

10. [49]

    On that topic the following exchange occurred in cross-examination at T378:

11. [50]

    During that exchange, Ms Johnson gave evidence that it was Ms Larter, and not Ms Johnson, who gave Mr Tassell instructions about the letter (“[n]o, she did”).

12. [51]

    Mr Argy submitted that the questions I asked at the end of the passage showed that I was “seeking to support a prospective finding that Ms Johnson had given such instructions by virtue of being present” and that this was “completely contrary” to the evidence that Ms Johnson had given a few moments earlier.

13. [52]

    I do not accept that a fair minded lay observer would apprehend from the questions I asked that I formed any view about this matter. I was merely seeking to ascertain Ms Johnson’s position about the description in the letter of Mr Foster as a “notorious conman”, which I considered to be a critical aspect of the letter. In my opinion, that is how a fair minded lay observer would have seen matters. My questions led Ms Johnson to agree that she had seen the letter and “must have been aware of it”.

14. [53]

    Mr de Klerk gave evidence in cross-examination that he met Ms Johnson when he travelled to Sydney from Perth on 13 and 14 March 2013, and again on 30 May 2013.

15. [54]

    In his affidavit of 27 October 2016, Mr de Klerk said that during his March 2013 visit to Sydney, he met with Ms Johnson and Mr Kevin Joseph at Catalina restaurant and that:

16. [55]

    In relation to that matter, the transcript records at T180:

17. [56]

    Thereafter Mr de Klerk gave evidence of a discussion at the meeting concerning the possibility of Mr de Klerk acquiring the STC “South African rights”. Mr de Klerk also gave evidence that he asked questions of Ms Johnson concerning a document “Sports Trading Club Associate Member Proposal” that Mr Mackinnon, and evidently, the other investors, received before advancing funds to the Partnership.

18. [57]

    Mr Argy submitted that my “intervention”, asking what possible relevance a discussion of “personal matters” could have to the issues, “suggested a closed mind to possible relevance despite it being earlier in the evidence and having heard no submissions”.

19. [58]

    I do not accept that a fair minded lay observer would have that apprehension.

20. [59]

    In his affidavit, Mr de Klerk said that the discussion was about “personal matters” and did not elaborate. That suggested the matters discussed did not relate to Mr de Klerk’s investment and were thus not relevant to the issues in the proceedings. Mr Argy asked what “personal” matters were discussed. On the face of it, that question was not directed to a relevant matter; hence my inquiry. After Mr de Klerk made clear that, despite his description of that conversation, the “South African investment or the investment in the Partnership” was discussed, I permitted the cross-examination to continue. I do not see how a fair minded lay observer would apprehend that I had a closed mind from this exchange.

21. [60]

    Mr de Klerk also gave evidence in his affidavit of 27 October 2016 that prior to 13 March 2013:

22. [61]

    The following exchange occurred in relation to that sentence at T227:

23. [62]

    Mr Argy submitted that, in rejecting his question, I had confused the discussion which took place at the 13 March 2013 meeting with the conversation (the subject of his questions) that occurred in the arranging of that meeting.

24. [63]

    That is not correct. The preceding day Mr de Klerk gave this evidence at T178:

25. [64]

    There was no confusion on my part. Mr de Klerk did give the evidence to which I referred in rejecting Mr Argy’s question. Mr de Klerk was clearly of the same opinion, hence his answer “that’s correct” after my statement.

26. [65]

    In any event, Mr Argy’s question “[w]ell, that's the impression one gets from your first affidavit, isn't it?” is one I would have rejected.

27. [66]

    Before each of these visits, Mr de Klerk had received correspondence from “Mark Hughes” who described himself as the “National Sales Manager of the Sports Trading Club Partnership”.

28. [67]

    In his affidavit of 31 August 2017, Mr de Klerk said that during the March 2013 visit he asked to meet “Mark Hughes” and was told by Ms Johnson that:

29. [68]

    Mr de Klerk also gave evidence that when he attended the STC premises on 30 May 2013 he asked to speak to “Mark Hughes” and that, in Ms Johnson’s presence, a person who introduced himself to Mr de Klerk as “Kevin Joseph” said (of “Mark Hughes”) (at T251):

30. [69]

    Mr de Klerk gave evidence that Ms Johnson was present during some of the Skype video call to “Mark Hughes”. Mr de Klerk’s evidence is that he has since recognised the person he understood to be “Mark Hughes” on the Skype video call as Mr Foster.

31. [70]

    Although Ms Johnson does not dispute that she knew who Mr Foster was (indeed, as I have said, her evidence is that Mr Foster invited her to become involved in the STC venture) she denies appreciating that the person “Mark Hughes” on the Skype video call was Mr Foster and, as I understand it, denies being present during the Skype video call and thus denies that she could have appreciated that “Mark Hughes” was Mr Foster.

32. [71]

    In that context, Mr de Klerk gave this evidence in answer to questions from Mr Argy (at T255):

33. [72]

    Mr de Klerk then gave this evidence in response to questions from me:

34. [73]

    Following on that was the following passage of evidence at T256:

35. [74]

    Mr Argy submitted that, during this passage, I was “leading” Mr de Klerk thereby revealing that I had formed a view about the question of whether or not Ms Johnson had concealed from Mr de Klerk that she knew that “Mark Hughes” was Mr Foster.

36. [75]

    I do not think a fair minded lay observer would form this apprehension.

37. [76]

    I was merely reciting to the witness the evidence he had given. I made that clear by my question “[t]hat’s what you say?”.

38. [77]

    At the end of his cross-examination of Mr de Klerk, Mr Argy suggested that during the Skype video call “Mark Hughes” said something to the effect that “Anne Larter and Leigh Johnson would never agree” to a particular matter. Mr de Klerk agreed that “Mark Hughes” had said something to that effect.

39. [78]

    The cross-examination continued (at T281):

40. [79]

    Immediately following those questions the following exchange took place between me and Mr Argy at T282:

41. [80]

    I understood Mr Argy to be foreshadowing that Ms Johnson’s evidence would be that, although she recognised the voice on the Skype video call as being that of Mr Foster, she did not know that Mr de Klerk thought that the voice belonged to “Mark Hughes”.

42. [81]

    That evidence, if given, would appear to be inconsistent with the evidence that Mr de Klerk had given and that prompted me to say “I look forward to hearing that evidence”.

43. [82]

    I do not accept that a fair minded lay observer would apprehend from those words that I had formed any view about the case. Rather, that I was curious to see how the evidence would play out.

44. [83]

    In August 2013 Mr de Klerk had an SMS exchange with Ms Johnson.

45. [84]

    On 16 August 2016 Ms Johnson sent Mr de Klerk an SMS:

46. [85]

    Mr de Klerk replied on 20 August 2013 saying:

47. [86]

    Ms Johnson replied:

48. [87]

    In relation to that message Mr de Klerk gave evidence in cross-examination at T207:

49. [88]

    On 30 August 2013 Ms Johnson sent a further SMS to Mr de Klerk:

50. [89]

    Mr de Klerk replied:

51. [90]

    In that context I asked the following questions of Mr de Klerk at T209:

52. [91]

    Mr Argy submitted that my comment “[e]specially when it wasn’t true” might cause a fair minded lay observer to apprehend that I was not open to considering Ms Johnson’s “side of the story”.

53. [92]

    I do not accept that submission. There is no dispute that on 30 August 2013, Ms Johnson was still “associated” with STC. It is common ground that Ms Johnson did not resign from the STC Partnership until January 2014.

54. [93]

    In an email Ms Johnson sent to Ms Larter and Mr Foster on 10 September 2013, Ms Johnson expressed concerns at a report she received from “Kevin McMullen” that:

55. [94]

    Later in that email Ms Johnson listed a number of concerns that she insisted “be satisfactorily addressed” if she was to “remain associated with STC as the limited partner”. These included security of the monies of investors, ascertainment of STC’s financial position and payment to her of the amounts “owed to me by STC”.

56. [95]

    Still later in the email, Ms Johnson said that:

57. [96]

    Nonetheless, Ms Johnson did not resign from the partnership until January 2014.

58. [97]

    Thus, the email makes clear that Ms Johnson was then still “associated with STC”, albeit expressing serious concerns about that association.

59. [98]

    A fair minded lay observer, properly informed of that context, in which I made the remark “especially when it wasn’t true”, would not in my opinion apprehend that it bespoke some kind of prejudgment about Ms Johnson’s case generally.

60. [99]

    Later in Mr Argy’s cross-examination of Mr de Klerk, he asked what steps Mr de Klerk had taken to make public his concerns about the STC venture.

61. [100]

    Mr de Klerk gave the following evidence at T264:

62. [101]

    Mr Argy submitted that my comment that it was “rich” of Mr Argy, as Ms Johnson’s advocate, to ask Mr de Klerk of the steps he had taken, would convey to a fair minded lay observer that I was not open to considering Ms Johnson’s “side of the story” and was approaching her case with some scepticism.

63. [102]

    One of the allegations made by Mr Mackinnon in the Further Amended Commercial List Statement, and one which Mr Dixon has emphasised, is that Ms Johnson (and others) concealed from investors their knowledge that the STC operation was not a legitimate sports betting or trading business but was a fraudulent scheme in which loans from investors were being misappropriated.

64. [103]

    My observation was merely intended to convey that, in the context of that claim, it was remarkable that, on Ms Johnson’s behalf, Mr Argy ask what steps Mr de Klerk, himself an investor, would take to warn other investors.

65. [104]

    However, as the subsequent passage in the transcript shows I was persuaded that Mr Argy’s questions might be relevant and allowed him to continue.

66. [105]

    Thus the matter continued:

67. [106]

    In the context in which my “fairly rich” comment was made, I do not consider that a fair minded lay observer would apprehend that I was not open to fairly considering Ms Johnson’s case.

68. [107]

    In the course of her cross-examination, Ms Johnson gave evidence that in late August 2013 she had received an aggressive telephone call from Ms Larter (who hitherto Ms Johnson said she regarded as a close friend). Ms Johnson described the conversation at T395:

69. [108]

    Ms Johnson gave evidence that by now, she had formed the view that Mr Foster and Ms Larter were “interchangeable”.

70. [109]

    Ms Johnson then gave this evidence, initially in answer to a question from Mr Dixon, and then in answer to questions from me at T398:

71. [110]

    Mr Argy submitted that my questions “[h]ave you ever mentioned that before?” and “[d]id you just make up that evidence you gave?” also showed that I was not open to considering Ms Johnson’s “side of the story”.

72. [111]

    Ms Johnson’s reference to “Justice Logan’s Associate” was an allusion to the fact that on 27 September 2013 Logan J published his judgment in Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (No 3) [2013] FCA 984. In that judgment, his Honour held that two charges of contempt of court against Mr Foster had been proved.

73. [112]

    In that context, there is an email from Ms Johnson to Ms Larter in evidence, dated 29 September 2013, in which Ms Johnson stated:

74. [113]

    In circumstances where Ms Johnson’s affidavit is 466 pages long, where the answer to my question “have you ever mentioned that before?” was “I don’t know, did I put it in my affidavit?”, where it is clear that Ms Johnson knew of Logan J’s judgment and of the circumstances of Mr Foster’s arrest, I asked the question “did you just make up that evidence you gave?”.

75. [114]

    Contrary to Mr Argy’s submission, I did not ‘put’ to Ms Johnson that she made the evidence up. A fair minded lay observer would not apprehend in those circumstances that I would not bring an impartial mind to the resolution of the real issues of the case.

76. [115]

    Mr Argy submitted that I had adopted an “aggressive demeanour” when I asked that question. That is not my recollection.

77. [116]

    I did find it strange that Ms Johnson did not know whether she had, in her affidavit, mentioned sending anonymous emails to “the lawyers for ASIC” and Justice Logan’s Associate. My tone may have reflected that fact.

78. [117]

    Nonetheless, I do not consider that a fair minded lay observer, understanding this context, would apprehend that I might not bring an impartial and unprejudiced mind to resolution of the issues in the proceedings. The matter concluded with my remark that “[w]e can look for that overnight” at T400.

79. [118]

    As it turns out, the evidence that Ms Johnson did give in her affidavit about these matters was as follows:

80. [119]

    There is no reference in that passage to either ASIC or Logan J’s Associate. This is a further matter that will doubtless be addressed in final submissions.

Other matters

1. [120]

   In the note that Mr Argy sent me late on the afternoon of 12 February 2018, he referred to a number of other transcript references. I will deal with them in the order set out in Mr Argy’s note.

2. [121]

   During Mr Argy’s cross-examination of Mr Mackinnon, the following exchange occurred at T99:

3. [122]

   In his note, Mr Argy did not articulate how this aspect of the transcript would create an apprehension in the fair minded lay observer that I might deviate from a neutral evaluation of the facts.

4. [123]

   Immediately after Mr Mackinnon left the Court, I had this exchange with Mr Argy:

5. [124]

   In my opinion, a fair minded lay observer of the proceedings would appreciate that I was simply seeking to ascertain from Mr Argy what case Ms Johnson proposed to make concerning her knowledge of the bona fides of the STC scheme.

6. [125]

   During his cross-examination of Mr de Klerk, Mr Argy asked questions about the “Sports Trading Club Associate Member Proposal” to which I have referred at [56]. At one point Mr Argy was asking Mr de Klerk questions about the proper construction of that document. Thus at T159 this exchange occurred:

7. [126]

   This is not an occasion where I “shut down” cross-examination. After I said “[g]o on”, Mr Argy continued to question Mr de Klerk as to his understanding of the meaning of the clause in question.

8. [127]

   In that regard Mr Argy’s submission was:

9. [128]

   I do not accept that a fair minded lay observer would apprehend that I had displayed bias by enquiring of Mr Argy “[w]here are we going?”.

10. [129]

    Mr de Klerk gave evidence that once he understood that the “trading floor” was at premises in Market Street, Sydney, but that, ultimately, he was told it was located within an apartment occupied by a Mr Holmes (who Mr Gamble said was a “real trader”) on the Gold Coast. Later, Mr de Klerk visited that apartment.

11. [130]

    At T168 I asked Mr de Klerk about that visit:

12. [131]

    Mr Argy submitted that my reference to “this so called trading floor” was “partisan”. Mr Argy did not elaborate on that submission.

13. [132]

    I do not accept that my words would create an apprehension that I was in any way “partisan”. There is an issue in this case as to whether STC ever operated a legitimate “trading floor”. A fair minded lay observer of these proceedings would know that, and would understand that my words “so called” merely reflected the fact that I understood there to be an issue in the proceedings as to whether STC operated any legitimate trading floor.

14. [133]

    In a similar context I later asked Mr de Klerk these questions (at T169):

15. [134]

    Mr Argy submitted that this passage showed that I was “leading” Mr de Klerk “to identify Ms Johnson as source of Gold Coast location of trading floor”.

16. [135]

    I was doing no such thing. Mr de Klerk had given evidence, in his affidavit of 31 August 2017 that, at the lunch at Catalina on 14 March 2013, he had said to Ms Johnson “I still want to meet Anne [Larter] and Mark [Hughes] and I want to physically visit your trading floor” and that Ms Johnson replied:

17. [136]

    In the passages from the transcript at T169 I was doing no more than reciting to Mr de Klerk the evidence he had given. A fair minded lay observer of the proceedings would understand that and would understand that I was not “leading” Mr de Klerk to do anything.

18. [137]

    During his cross-examination of Mr de Klerk, Mr Argy asked him questions about an email that someone from “STC London” had sent to “Leigh and Mark” (that is Ms Johnson and “Mark Hughes”).

19. [138]

    On 4 June 2013 Ms Johnson forwarded that email to Mr de Klerk with a note “please call Mark to discuss at your convenience”.

20. [139]

    In that regard the following exchange took place at T194:

21. [140]

    Leaving aside the fact that Mr Argy was seeking to cross-examine Mr de Klerk about an email to which he was a stranger, my rejection of his question did, I accept, flow in part from my misreading of the document.

22. [141]

    The transcript reveals that I made that clear and permitted Mr Argy to continue. After I rejected Mr Argy’s question, he cleared the matter up with the witness, explained to me that I had misread the document, following which I acknowledged that fact.

23. [142]

    In that regard Mr Argy’s submission was:

24. [143]

    I do not accept that a fair minded lay observer, seeing this exchange, would have “apprehended bias” on my part.

25. [144]

    I have referred above to the SMS exchange between Ms Johnson and Mr de Klerk. Following Mr de Klerk’s message referred to at [89] Leigh Johnson sent Mr de Klerk a message in which she said that Ms Larter was “in [with] Peter Foster”.

26. [145]

    As the evidence stands to date, this appears to be the first time that Mr Foster’s name is mentioned in any document associated with STC and the first time that Ms Johnson had said anything to Mr de Klerk about Mr Foster. Mr Argy did not suggest to Mr de Klerk that, prior to receiving this SMS, Mr de Klerk knew who Mr Foster was.

27. [146]

    At T272 Mr Argy asked Mr de Klerk:

28. [147]

    Mr de Klerk answered that question “no”.

29. [148]

    I then had this exchange with Mr de Klerk at T272:

30. [149]

    In regard to that passage Mr Argy submitted:

31. [150]

    I do not accept that I was “leading” Mr de Klerk. I was seeking to clarify what his understanding then was as to Ms Johnson’s knowledge of “Mark Hughes”. I do not accept that a fair minded lay observer would have apprehended that I had formed any view about the merits of the case based on that question.

“Closing down” cross-examination

1. [151]

   Mr Argy submitted that I had refused to give him “latitude” in relation to his cross-examination of Mr Gamble concerning matters concerning the STC Partnership and that this might also create an apprehension in a fair minded lay observer that I had a closed mind concerning Ms Johnson’s case.

2. [152]

   During his cross-examination of Mr Gamble, Mr Argy asked questions about a screenshot that Mr Gamble had taken of the STC website. Mr Gamble had used a computer program known as “Internet Archive: Wayback Machine” to obtain an image of the STC website as at 18 June 2013.

3. [153]

   Mr Argy commenced asking Mr Gamble questions as to what other dates could be accessed using the Wayback Machine, which led to this exchange at T125:

4. [154]

   Mr Argy submitted that I had precluded him from “asking Mr Gamble why he did not reproduce available snapshots from more relevant dates”. That is true, and that is because I did not see that issue as being relevant or capable of casting any light on any issue which was relevant.

5. [155]

   Later Mr Argy asked Mr Gamble questions about a clause in the Loan and Profit Sharing Agreement executed by Mr and Mrs Mackinnon.

6. [156]

   The following appears at T130:

7. [157]

   Mr Argy submitted that I had precluded him testing “Mr Gamble’s theory of the case in terms of breach of contract and misleading conduct alternatives”.

8. [158]

   In his affidavit, Mr Gamble did express opinions as to what he said was the fraudulent nature of the STC scheme. I received Mr Gamble’s affidavit only as evidence of the objective facts that his affidavit proved (for example, as to the movement of funds). I did not consider that I would be assisted by hearing Mr Gamble’s view as to what the relevant clause in the Loan and Profit Sharing Agreement “contemplates”. Accordingly, I do not accept Mr Argy’s submission that “cross-examination [on Mr Gamble’s] understanding of the contract is germane”.

9. [159]

   Mr Gamble made clear that he had an interest in the result of the proceedings. The organisation of which he is a member was charging a fee for his services and stood to earn a commission if the proceedings are successful.

10. [160]

    In that context, Mr Argy drew attention to the following exchange I had with Mr Gamble at T139:

11. [161]

    Mr Argy submitted that, accordingly, “the foundation for Mr Gamble’s ‘very strong view’ that fraud pervaded everything was entitled to be tested”.

12. [162]

    I do not accept it follows that Mr Argy was entitled to ask unlimited questions of Mr Gamble about Mr Gamble’s “theory of the case”. I made it clear that I did not propose to accept Mr Gamble’s “theory of the case” merely because he has proposed it. He is a private investigator with a clear interest in a successful outcome of these proceedings. I propose to treat his evidence accordingly and do not consider that his “theories” are relevant merely because, absent objection from Mr Argy, they have been admitted into evidence. It did not assist me to have Mr Argy cross-examine him on every aspect of it.

13. [163]

    There are in evidence documents lodged with ASIC concerning the Partnership. I understand there to be a dispute as to whether all of the information on those records is accurate.

14. [164]

    Mr Argy spent time cross-examining Mr Gamble about those entries. As I have said, Mr Gamble is a private investigator. He made clear that he has no personal knowledge of the accuracy of the information in the documents lodged with ASIC and that, for the purpose of his investigation, he had assumed that that information was accurate.

15. [165]

    An example of an exchange concerning that issue is at T337:

16. [166]

    I did close down Mr Argy’s cross-examination on this subject at that point because, as I saw it, Mr Argy was doing no more than asking Mr Gamble what Mr Gamble made of the various documents lodged with ASIC. I could not see how those questions would assist me resolving the issues in the proceedings.

17. [167]

    In my opinion, a fair minded lay observer hearing what passed between me and Mr Argy on this subject would apprehend that I was doing no more than endeavouring efficiently to case manage the proceedings. I do not accept that any fair minded lay observer would conclude that I had formed any view about the merits of the case based on these interventions.

18. [168]

    During his cross-examination of Mr de Klerk, Mr Argy raised the question of a proposal that had evidently been made to Mr de Klerk that he acquire the rights to operate an STC venture in South Africa. In the course of doing so Mr Argy showed Mr de Klerk an unexecuted document purporting to be a “National Licence for Australia” between a company called Sports Traders Limited and Ms Larter and Ms Johnson (Exhibit 5D-1).

19. [169]

    The following exchange occurred:

20. [170]

    Mr Argy submitted that, by rejecting question, I had “precluded pursuit of cross-examination which could have established legitimacy of initial structure and commencement of Australian business”.

21. [171]

    I do not agree and do not consider a fair minded lay observer of these proceedings would have apprehended that my rejecting the question meant I would apply an impartial mind to the resolution of the proceedings. Mr Argy’s question as to whether Exhibit 5D-1 bore “any resemblance” to a joint venture agreement signed by Mr de Klerk concerning South African rights was plainly objectionable, was objected to and properly rejected.

22. [172]

    As I have discussed, Mr de Klerk’s evidence was that he thought he was dealing with someone called “Mark Hughes” and that he had had a Skype video call with “Mark Hughes” on 30 May 2013.

23. [173]

    Ms Johnson replied to Mr de Klerk’s SMS set out at [89] (in which he said he was “a bit shocked to hear that” Ms Johnson was “no longer associated” with STC) as follows:

24. [174]

    That caused Mr de Klerk to make enquires of third parties as to who “Peter Foster” was. Those enquiries quickly led him to conclude that Mr Foster was the person who had been introduced to him as “Mark Hughes”.

25. [175]

    Mr de Klerk’s 27 October 2016 affidavit evidence is:

26. [176]

    In that regard Mr Argy submitted that I was “leading” Mr Argy “in favour of the plaintiff” in this passage of evidence. The following appears at T211:

27. [177]

    Mr Argy submitted that I was “leading” Mr de Klerk when I said that “we all know what would have happened then”.

28. [178]

    I do not accept that submission. I do not consider that a fair minded lay observer of the proceedings would apprehend that I might not bring an impartial mind to Ms Johnson’s defence in these proceedings. Mr de Klerk’s unchallenged evidence was that, had he known that “Mark Hughes” was Mr Foster, he would not have advanced funds to the Partnership. I was merely reciting to Mr de Klerk what I understood to be his unchallenged position, hence his response “of course”.

29. [179]

    In his 27 October 2016 affidavit, Mr de Klerk had said that his decision to invest in STC “was based solely on information I was given by Mark Hughes”. Two paragraphs later, in his affidavit, Mr de Klerk made the statement I have set out at [175] above that had he known that “Mark Hughes” was “the conman Peter Foster” he would not have advanced funds.

30. [180]

    Mr de Klerk made the same statement to the Police. Mr Argy sought to cross-examine Mr de Klerk on that part of his statement to the Police where he said that his decision to invest in STC was “based solely” on information given to him by “Mark Hughes”.

31. [181]

    Thus the following exchange took place at T218:

32. [182]

    In that regard Mr Argy submitted that I was “leading witness with partisan evidence despite previous questions being intended to undermine credit”.

33. [183]

    I do not accept that a fair minded lay observer would have this apprehension. As the passage reveals, these questions were asked at 4pm on 7 February 2013. Mr Argy had been cross-examining Mr de Klerk since 10:40am that morning.

34. [184]

    Mr Argy was seeking to isolate Mr de Klerk’s statement that his decision to invest “was based solely on the information I was given by Mark Hughes” from the obvious qualifications that Mr de Klerk made in both his affidavit and in his Police statement that he would not have invested had he known that “Mark Hughes” was not the real name of the person with whom he was dealing.

35. [185]

    I do not accept that a fair minded lay observer of the proceedings would apprehend I was “leading” Mr de Klerk with “partisan evidence” or, as Mr Argy also submitted, “conflating two questions when first one went to credit”.

36. [186]

    On 8 February 2018, by which time Mr Argy’s cross-examination of Mr de Klerk had occupied over 100 pages of the transcript, Mr Argy and I had this exchange after, once again, Mr Argy had asked Mr de Klerk to confirm something to which he had deposed at T249:

37. [187]

    In regard to this passage, Mr Argy submitted that I was “precluding legitimate cross-examination of Mr de Klerk”.

38. [188]

    I was doing no such thing and no fair minded lay observer of the proceedings would have thought I was. I was merely pointing out to Mr Argy that there was no need for him to continually ask Mr de Klerk to confirm evidence he had already given.

39. [189]

    As the transcript reveals, Mr Argy continued asking questions about Ms Larter.

40. [190]

    I was dissatisfied at the pace and manner at which Mr Argy’s cross-examination of Mr de Klerk was proceeding. At around midday on 8 February 2018 I directed Mr Argy to finish his cross-examination at 1pm that day. I did so because this matter, which had been allocated five days, was then in its fourth day. Mr de Klerk had then been in the witness box for well over a day.

41. [191]

    Ultimately, immediately before the luncheon adjournment, Mr Argy and I had this exchange at T271:

42. [192]

    In this regard Mr Argy submitted “time limit on cross-examination of Mr de Klerk was extended but apprehension of bad [sic] not thereby dissipated”.

43. [193]

    I do not consider a fair minded lay observer would apprehend, from my placing a time limit on Mr Argy’s cross-examination of Mr de Klerk, that I would deviate from a neutral evaluation of the matters on which he sought to cross-examine, let alone from the issues in dispute in these proceedings. The fact that I relented in the circumstances clearly indicates otherwise.

44. [194]

    I was doing no more than endeavouring to manage the progress of a case that seemed destined to run beyond the time originally allocated for it. A fair minded lay observer would have understood this to be the case.

The timing of the recusal application

1. [195]

   Mr Argy’s application that I recuse myself was made part way through Ms Johnson’s cross-examination.

2. [196]

   The evidence is not yet concluded and, obviously, I have not yet heard final submissions.

3. [197]

   Assuming, contrary to my own view, that the first step identified by Gageler J has been established, namely identification of factors which might cause questions in the proceedings to be resolved otherwise than as a result of a neutral evaluation of the merits, the second and third steps must also be addressed.

4. [198]

   They are the articulation of how the identified factor might cause, in the ultimate determination of the case, a deviation from a neutral evaluation of its merits and the reasonableness of an apprehension that this will be the outcome of the case.

5. [199]

   Inherent in the application before me is the unstated proposition that, to adopt the language of Hayne J in The Minister for Immigration v Legeng (2001) 205 CLR 507; [2001] HCA 17, at [185], I “will [apply any preconceived opinion] without giving the matter fresh consideration in the light of whatever may be the facts and arguments relevant to the particular case”.

6. [200]

   I do not accept that the fair minded lay observer of these proceedings would, having heard the matters I have set out above, form an apprehension that, no matter how the balance of the case proceeds, and no matter what submissions were put to me in final address, I would, come what may, adhere to any preconceived opinions to which I may have come. Of course, as I have sought to emphasise, I do not accept that I have come to any such opinions, nor that any fair minded lay observer would apprehend I had done so.

7. [201]

   Accordingly, my conclusion was that even if the first step identified by Gageler J had been established, the second and third steps had not.

Conclusion

1. [202]

   It is for these reasons that I refused to recuse myself.