Dovade Pty Limited & Ors v Westpac Banking Corporation & Anor S78/1999 [2001] HCATrans 181 (4 May 2001)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S78 of 1999

B e t w e e n -

DOVADE PTY LIMITED; PALLISAR PTY LIMITED; FALDAN PTY LIMITED; ABOGADO PTY LIMITED; CONNEMARA PTY LIMITED; EMPIRNALL HOLDINGS PTY LIMITED; and BARRAGOLD HOLDINGS PTY LIMITED

Applicants

and

WESTPAC BANKING CORPORATION and BILL ACCEPTANCE CORPORATION LIMITED

Respondents

Application for special leave to appeal

GLEESON CJ

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 4 MAY 2001, AT 9.33 AM

Copyright in the High Court of Australia

MR J.E. MIDDLETON, QC: If the Court pleases, I appear with my learned friend, MR A.J. McQUILLEN, on behalf of the applicants. (instructed by Logie-Smith Lanyon)

MR T.E.F. HUGHES, QC: May it please your Honours, I appear with my learned friend, MR J.E. MARSHALL, for the respondents. (instructed by Clayton Utz)

GLEESON CJ: Yes, Mr Middleton.

MR MIDDLETON: If the Court pleases. It will be apparent that this application was filed prior to the case of Ebner and that gave rise to the filing by the applicants of a further amended summary of argument which I will take the Court has read and is familiar with.

GLEESON CJ: Yes.

MR MIDDLETON: The primary submission we make in relation to the current application is that there are still issues of importance to be dealt with by this application, despite the decision of the majority in Ebner's Case.

GLEESON CJ: Have you filed an amended draft notice of appeal?

MR MIDDLETON: We have not and I will need to address that, if leave is granted, and we will need to adopt the summary arguments in the notice of appeal and I would seek leave to do that if we get to that stage.

GLEESON CJ: Perhaps you could indicate, at this stage, in a general way, the form of the amended notice of appeal that you have in mind.

MR MIDDLETON: Yes. The form of the amended notice of appeal would basically take into account the three matters raised in our summary of argument, namely, the failure to disclose, giving rise to disclose an association with the Bank and the partial failure to disclosure, we would say, in relation to the association with the witness, giving rise to an evidentiary basis for there being an apprehension of bias. Secondly, we would say that all the factors which we list in paragraph 5 of our summary of argument give rise to a reasonable apprehension of bias. They will be the matters that will be raised.

The important matters to be raised are twofold in this case, we say. One is the question that has not yet been decided by this Court, we would say, that in circumstances where you have known disclosure prior to the situation of the trial beginning, in circumstances in this case where there is non-disclosure of the Westpac association.

GLEESON CJ: Just what do you mean by that expression? What should have been disclosed?

MR MIDDLETON: What should have been disclosed is the - if I could go back a bit - nothing was disclosed at all, but what should have been disclosed was the banker/client relationship. What should have been disclosed - - -

GLEESON CJ: Do you mean the judge should have disclosed that he was a customer of the Bank?

MR MIDDLETON: Yes, and, further, we would say, the extent of that association - - -

GLEESON CJ: What was that?

MR MIDDLETON: He had a mortgage with the Bank which was payable on demand and had been in existence for some time. He was a person who was not just dealing with domestic matters but he had rural interests and other interests which may or may not have affected the relationship. We do not know. There is not sufficient evidence about that at the moment.

GAUDRON J: Where is the evidence that his Honour had rural and other interests?

MR MIDDLETON: Because there is evidence that there was a company - Lochliely, I think - that he was a director of that had rural interests. That is as far as it goes, your Honour.

GAUDRON J: Yes. His position in that company was as trustee?

MR MIDDLETON: Was as a director who was the trustee. So, his interest is - I do not overstate that - - -

GAUDRON J: And there is no evidence that that company had any relationship with the Bank at the relevant time?

MR MIDDLETON: No. This raises one of the difficulties with this matter. I am just addressing what the presiding judge is asking at the moment as to what the association is and that is what the arrangement is. What is the unusual feature of this case is the fact that there was no disclosure itself is an - - -

GLEESON CJ: Perhaps I should very quickly interrupt you to say that I understand the Registry has disclosed to the parties that I am a shareholder in the Bank and both parties have no objection to me sitting.

MR MIDDLETON: Yes, thank you, your Honour. Yes, that has been disclosed and we have no objection. It is the fact - and the essential ingredient in this case is the fact of non-disclosure. They are the matters the presiding judge requested in relation to the appeal notice.

Can I go through why this is not the straightforward case that Ebner was. Ebner's Case was a straightforward case, and the majority said so, of where you had the ownership of shares in a pubic company. That is not this case. This is a case where you have a combination of factors and they are as follows. You have what I would say the association with a witness of credit and a pivotal witness of credit called on behalf of the applicants.

GLEESON CJ: And what was that association?

MR MIDDLETON: That association was that the trial judge was the person who prosecuted that witness for serious offences against the Corporations Law or the Companies Act.

GLEESON CJ: Now, I thought something was said about that at the trial.

MR MIDDLETON: Yes, it was and as a question of waiver in relation to that particular issue. I do not take issue with that, that that issue was raised before the trial judge and it was addressed by counsel in appearing for the applicants.

GLEESON CJ: By the way, what was the name of that witness?

MR MIDDLETON: Whitbread. Now, can I just take your Honours to that aspect because it is important. At page 1 of the application book, volume 1 - - -

GAUDRON J: Now, I think I might at some stage about 30 years ago have come across Mr Whitbread, does that matter?

MR MIDDLETON: No, it does not. It is the nature of the association. Now, what happened at page 1 - if one has a look at line 30:

(Mr Graham drew his Honour's attention to the fact that his Honour might have had some involvement formerly with Cambridge Credit Corporation, one of the people involved in that organisation being Mr Whitbread who was a witness in this matter. Mr Graham indicated that although he brought to His Honour's attention, it did not cause him any concern.)

So, that would be, in the normal course of events, a waiver. Now, more than that, if one goes over to page 4 of the application book, line 15, after the short adjournment, his Honour, of his own motion:

Mr Graham, I am just wondering about what I said earlier. I would like to make my position clear. I had been briefed by the Corporate Affairs Commission of the proposed prosecution, amongst others, of Mr Whitbread. Mr Gormly was senior counsel. There were some junior counsel. The matter came before Mr Gilmore when an application was made for a stay that was argued before a magistrate and then the Corporate Affairs Commission appealed against that decision and I, on behalf of the Corporate Affairs Commission, appeared as leading counsel before Justice Maxwell who upheld the stay and in the Court of Appeal which upheld Mr Justice Maxwell. That has been my involvement.

And, if you go down to line 35, his Honour said:

Thank you for drawing that to my attention. What I said earlier today remains. I am not in the least bit embarrassed. It is not any part of my function to form any view of what Mr Whitbread may or may not have done.

Mr Graham, earlier than that said he saw no difficulty with his Honour proceeding. Now, the Court of Appeal below dealt with that matter and said there was a waiver, and so there was, but what the Court of Appeal did not do and what we say is the answer to that is that that was looked at in isolation without, of course, at that particular time, anyone knowing about the association with the Bank. So, when you have a number of matters that are brought together, the waiver is not a true waiver because it is another aspect which is going to be put in the melting pot as with in all the circumstances a fair-minded lay observer where there is a real possibility that justice will not be done.

So, the way in which we seek to deal with that in this application is, yes, that was said, but you can waive something in isolation but if you know the judge has lots of other involvements you may say, "Well, with all those other involvements this one is the one that takes it over the line" and you would not waive it.

GLEESON CJ: The fact that it appeared on a stay of proceedings years before brought by one of the witnesses - on an application for a stay of proceedings of a criminal prosecution brought by one of the witnesses.

MR MIDDLETON: The importance of this is this, as we say, it is a criminal case he was involved in. A barrister who is involved in a criminal case has a duty to assess the evidence and see whether it is, as a matter of law, capable of supporting a conviction. He must, by virtue of his role - it is not like a civil case - as a prosecutor in his own mind come to the view whether or not the material is worthy of prosecuting and in - - -

GAUDRON J: But not whether or not it is true.

MR MIDDLETON: No.

GAUDRON J: Whether or not if accepted by a jury as true.

MR MIDDLETON: Exactly, but you have to have a conviction that there is evidence capable of supporting the conviction.

GAUDRON J: Yes, which if accepted by a jury is true.

MR MIDDLETON: Yes, exactly, your Honour, but you get to a stage where - again looking at the person in the back of the courtroom, the fair-minded lay observer and the party to litigation, sees that there is a judge who has prosecuted not just for one day - this was a well-known prosecution, Cambridge Credit Corporation - who, duty bound, as a barrister is to take the view that I have expressed as part of his obligation as counsel and who put before the court in the case of Cooke v Purcell that there was a strong case against Mr Whitbread and others and who has sought to lead some 3,383 or so documents in support of that case.

So, it was a celebrated case. It was a matter which was argued before Justice Maxwell on a stay because of the delay for some 19 days. Mr Rolfe was the counsel in that endeavour. It went to the Court of Appeal and the Court of Appeal decided that the interests of justice could not be dealt with if the trial proceeded because of the delay basically involved and the prejudice to the accused. So, you have a situation where Mr Rolfe has been - I am sorry - at that stage was involved in prosecuting, a lengthy period of time, and in a situation where the prosecution, because of delay, was not going to proceed.

Now, that is one aspect which we say was not fully disclosed. He disclosed his role as counsel but did not fully disclose his role, we would say, in relation to whether or not he had a function as to what - take a view as to what Mr Whitbread did or did not do.

Now, we accept what Justice Gaudron says in relation to, "It is not your role as counsel to say whether they are guilty or not", but you do form a view. You do form a view. So the association with a witness is an important aspect and leg of our application, but that is not all. We then have the customer/mortgagor relationship, which was not disclosed at all, and it is the significance of the non-disclosure that takes that particular aspect and elevates it to the position which was decided in Ebner that a mere banker/customer relationship may or may not lead anywhere, but we do not have a mere banker/customer relationship in this particular case when you add the non-disclosure.

Now, what the Court said in Ebner is that the fact of non-disclosure does not itself mean that there is automatic disqualification - we obviously have to accept that - but what Ebner did say was that it is a matter which can be taken into evidence and would impact upon the apprehension. Now, that is the issue which we would seek to have agitated in this case, to what extent that occurs in a situation which is not as straightforward as Ebner. You then have the situation in this particular case - you have the applicants are the ones, we say, left in the dark.

The judge knows his relationship with the Bank. The Bank is a party to this litigation. It knows the relationship it has with the judge, but the applicants have no knowledge whatsoever until they read it in a newspaper about the tipstaff of the judge being charged, or I think convicted, of stealing money from the judge in relation to some Westpac accounts. So the applicant, shock oh shock, comes for the first time to hear that, heaven forbid, there is a relationship that the judge had which was not disclosed at all. He knows about the Whitbread association and he knows about the other matters that have come out.

Now, what we need to show is we have to show the factors that give rise to the deviation that we say we fear, and they are the factors, and then you need to show, of course, that that fear deviation is connected with those factors. We would say that is clear, putting aside the waiver point, that there may be a strong commitment or obligation to the Bank getting preferred or favoured treatment over a period of time in relation to the connection to the - - -

GAUDRON J: No, but you cannot just say "getting preferred or favoured treatment". You are just taking that out of thin air, are you not?

MR MIDDLETON: The answer we would say is in the circumstances of this case, yes, and if this was a situation of a mere disclosure of banker/customer, that would be the end of it.

GAUDRON J: Would not banker/customer in the majority of cases also involve a mortgage, of one sort or another, in many cases?

MR MIDDLETON: In many cases it would be implicit but not express.

GAUDRON J: Unless one happens to have independent wealth.

GLEESON CJ: Or unless you really did have a favourable association with a bank.

MR MIDDLETON: You see that raises the issue which we want to agitate in this case. Your Honours are correct to be concerned, with the greatest of respect, that mere banker/customer or a mortgage is not sufficient, but what happened in this case was the non-disclosure. That elevates it as to a - - -

GAUDRON J: But you are not suggesting, are you, that every judge in every case involving a bank should say, "I have a mortgage"? Then do you say how much the mortgage is for; what it is secured over; when it was entered into; how long it has been current?

GLEESON CJ: And what your assets are so that you can measure the significance of the mortgage in the totality of your financial position?

MR MIDDLETON: I do not need to suggest that in this case because that is not our case. If this case was a case where the judge had disclosed some interest in the Bank just by merely saying, "I am a customer of the Bank", that probably would be the end of the matter. What is not the end of the matter is when he says nothing, absolutely nothing, then that raises an evidentiary query. It opens the door to why that has not occurred.

GLEESON CJ: It opens the door to a lot of things. Why does it not open the door to an investigation of the extent of the judge's assets so that you can measure the significance of his relationship with the Bank?

MR MIDDLETON: It may well, your Honour. It may well.

GLEESON CJ: So if the judge is a multi-millionaire, you might say, "No problem". But if the judge is an ordinary person, you would say something different.

MR MIDDLETON: No, he may not, your Honour. He may be a multi-millionaire who requires the Bank for accommodation and favours and having a very close relationship with the Bank because of that fact. What the Court of Appeal did, if I could take your Honours to page 506 of the application book, is to anticipate the very thing that we say could well have occurred here and was not disclosed, because - this is in volume 3, page 506 of the application book. After the Court of Appeal said the mere banker/customer relationship is not sufficient, then at paragraph 102 they say:

Obviously, there will be situations where the affairs of a particular bank branch or group of bank personnel are involved in litigation, or where the judge has some special association with the branch or bank personnel.

GLEESON CJ: May I interrupt you to ask a question?

MR MIDDLETON: Yes.

GLEESON CJ: I presume that the form of apprehended bias you are alleging here is bias by association?

MR MIDDLETON: Yes.

GLEESON CJ: Thank you.

MR MIDDLETON: Yes:

And it is conceivable that a particular judge may be in such financial difficulty or may through some dealing with a present or former bank have a such a level of obligation towards or animus against a bank that there may be actual bias or at least its appearance to a reasonable observer. But these are exceptional cases. They are no different from the infinite range of adventitious relationships with litigants, counsel or witnesses that could arise in any piece of litigation -

What the Court of Appeal accepted was there could be circumstances where there is a relationship between the Bank and the judge.

GLEESON CJ: Yes. It is not the fact but if I had happened to have been a customer of Westpac 30 years ago, or Bank of New South Wales 30 years ago, somebody might say, "He might have had a terrible dispute with the Bank and that is why he changed banks is no longer a customer".

MR MIDDLETON: And if the judge felt as though that was going to impact upon his partiality, he would disclose that or, alternatively, say, "I just simply cannot hear this case because of that dispute and I still feel angry towards the Bank". That would be acceptable and proper.

In this case you are left with such disquiet, where you have all the aspects of association with Whitbread, you have association with the Bank, you have non-disclosure - and I put it very highly in relation to non-disclosure. That is what makes this case different. It is the non-disclosure which colours everything else.

GAUDRON J: Is it the practice in New South Wales for a banker/customer relationship to be disclosed?

MR MIDDLETON: I cannot answer that question, but it is certainly in Victoria. Any association with a bank of shareholdings you disclose.

GAUDRON J: Shareholdings?

MR MIDDLETON: Yes. I cannot answer in relation to that.

GLEESON CJ: That is because shareholdings is a different kind of bias. It is a bias through interest, but once you get into the area of bias by association and you get into obligations of disclosure, there is difficulty knowing where it ends.

MR MIDDLETON: Exactly, and that is the issue we say this Court should deal with, because Ebner did not deal with that, as your Honour may recall. Ebner said disclosure where there is a straightforward case of shareholding is one matter and we can dealt with that. Problems arise, the majority said, in different cases, and a different case is this case. That is the issue: how far and what impact does it have, in the circumstances of this case, the fact of non-disclosure?

Now, we say it is attenuated by sufficient doubt. A fair-minded lay person, putting all these things together, association, non-disclosure, "We are in the dark", so one looks at the litigant, and this was a large claim. We are not dealing with a small claim by the Bank. It was a large claim, many, many millions of dollars.

GLEESON CJ: Thank you.

MR MIDDLETON: If the Court pleases.

GLEESON CJ: We do not need to hear you, Mr Hughes.

In the light of what occurred at the trial concerning the witness, Whitbread, and in the light of the decision of this Court in Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 75 ALJR 277, the Court is of the view that there are insufficient prospects of success to warrant a grant of special leave and the application is refused with costs.

MR MIDDLETON: Could I address the Court on the question of costs very briefly?

GLEESON CJ: Yes.

MR MIDDLETON: In our outline the Court will see that we sought that the costs not be paid by the applicants in the event this occurred on the basis that there was the decision of Ebner following on as a matter of importance as far as this particular issue was concerned. That matter was put in our application and I revisit it for the Court.

GLEESON CJ: Yes, the applicant must pay the respondents' costs of the application.

AT 9.54 AM THE MATTER WAS CONCLUDED