Smits & Anor v Roach & Ors [2006] HCATrans 74 (28 February 2006)

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Smits & Anor v Roach & Ors [2006] HCATrans 74 (28 February 2006)

Last Updated: 28 February 2006

[2006] HCATrans 074

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S398 of 2005

B e t w e e n -

LEONARDUS GERARDUS SMITS

First Appellant

JOHN ANTHONY LESLIE

Second Appellant

and

WALTER EDWARD ROACH

First Respondent

WINNOTE PTY LIMITED (IN LIQUIDATION)

Second Respondent

SYDTECH PTY LIMITED (IN LIQUIDATION)

Third Respondent

GLEESON CJ
GUMMOW J
KIRBY J
HAYNE J
HEYDON J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 28 FEBRUARY 2006, AT 10.16 AM

Copyright in the High Court of Australia

__________________

MR J. McC. IRELAND, QC: May it please the Court, I appear with my learned friend, MR H. ALTAN, on behalf of the appellants. (instructed by Moloney Lawyers)

MR T.G.R. PARKER, SC: May it please the Court, I appear with my learned friend, MR N.J. OWENS, for the respondents. (instructed by Henderson Taylor Workplace Lawyers)

GLEESON CJ: Yes, Mr Ireland.

MR IRELAND: May it please the Court. Your Honours are aware that this case arose out of a late disclosure by the trial judge of his association with a matter which the appellants claim affected his capacity to sit independently and without bias in the proceedings.

KIRBY J: Just let me get a factual matter clear. I have read Mr Lindsay’s affidavit which was filed in the Court of Appeal. In that affidavit, which is in the back of the appeal book - - -

MR IRELAND: Page 234, your Honour.

KIRBY J: - - - he rather suggests that there might have been some communication with him on the week before the case began.

MR IRELAND: Could I trace that?

KIRBY J: Yes.

MR IRELAND: Your Honour, what happened was this, and this is 236, line 30. The case was scheduled to commence on Monday, 11 March 2002 and:

His Honour had invited the parties to indicate, if possible by close of business on Friday 8 March 2002, whether they had any objection to his presiding at the hearing.

That was not accompanied by any statement of any matter which might have engendered concerned, but it set the parties about thinking as to what - - -

GUMMOW J: Wait a minute, just slow down a bit, Mr Ireland - 230?

MR IRELAND: I am so sorry, your Honour, 236 line 30.

GUMMOW J: Yes, this is Mr Lindsay’s account.

MR IRELAND: Yes, his Honour was asking me about that and the judge had indicated in general terms whether there was any objection to him sitting.

GLEESON CJ: Why was he asking that question?

MR IRELAND: Well, that was born out of a number of factors, as it turned out, your Honour. First of all, the appellants before you, who were the plaintiffs at the trial, were a practising firm of solicitors who were regularly before the courts. That of itself would not be of particular consequence. However, Mr Leslie, one of the appellants, had actually been a registrar of the court for a number of years and he had some, perhaps greater than usual, association with some of the judges. Thirdly, and this was the matter that ended up in some form of - - -

KIRBY J: But that would have been before Justice McClellan’s appointment to the Supreme Court.

MR IRELAND: One would have thought so. That is certainly correct, your Honour.

KIRBY J: So we can cut that one out. The first one is completely spurious, the fact that the judge would have some social association or litigious association in the court with practitioners, that is irrelevant.

MR IRELAND: The third matter which was revealed, and this is at appeal book 230, line 26 of Mr Leslie’s affidavit, is that it turned out that Mr Leslie “had played golf several times” with the judge and his father and son-in-law and that was the matter that Mr Leslie believed might have created some matter of concern, in other words, that the normal professional association between at least Mr Leslie and the judge went beyond court encounters.

Now, Mr Lindsay, as your Honours will have seen, did not take it upon himself to make any decisions about this message, and I should say, your Honours, that it is not unknown that judges will in the commercial list as it then was, that if a particular judge is sitting on a case and there is anything at all that the parties themselves want to raise, that there would be an intimation in that list from the previous week who the trial judge will be and if it creates any difficulties. That is not a matter - - -

KIRBY J: There are a lot of things that may or may not be not unknown. For example, it is quite easy for judges to give directions to registrars that they will not sit in cases of firms in which a relative is connected. I did that in respect of my brother - - -

MR IRELAND: Yes, I remember that. I remember that was the general - - -

KIRBY J: - - - and I never sat in a case in such matters, so that is not unknown too. But what I am concerned at here is that Justice McClellan was flagging an issue by the communication to counsel and giving your side the opportunity to raise any objection because that would be relevant to waiver.

MR IRELAND: His Honour was not flagging any issue at all. His Honour made a general inquiry of the parties, both of the parties, whether there would be any problem, I think the words were, of his sitting. His Honour did not raise any particular matter that might have borne on that, and it is quite clear from his Honour’s remarks in the disqualification application that his Honour gave absolutely no attention to the fact that his brother, Mr Geoffrey McClellan, was as it turned out not only a partner of Freehills, but the chairman of partners.

GLEESON CJ: It is interesting that you should say that. On page 230 and the top of 231 Mr Leslie says that he did not know that Mr Geoffrey McClelland was the chairman of Freehills. Where in his affidavit does he say he did not know that Mr Geoffrey McClellan was a partner of Freehills?

MR IRELAND: He does not say it expressly.

GLEESON CJ: Do you invite us to find as a fact that Mr Leslie did not know that Mr Geoffrey McClellan was a partner of Freehills, or is the material fact that he did not know he was the chairman of Freehills?

MR IRELAND: No, the three material facts were that he did not know that he was a partner - - -

GLEESON CJ: Where is that evidence?

MR IRELAND: As I say, your Honour, it is not expressed. It is implicit in paragraph 9 on page 230.

GLEESON CJ: I am just not quite sure why we should infer things if it is left to implication.

MR IRELAND: Your Honour, I have to say it is left to implication. I cannot create a paragraph that is not there. I have to abide by my instructions and also the way in which the courts below treated the matter.

HEYDON J: Paragraph 11 on page 231.

MR IRELAND: Yes. I was going to say three things: one, a partner of Freehills; two, chairman of partners; three, a defendant in the action - - -

GUMMOW J: The statement “a partner of Freehills” is meaningless.

MR IRELAND: Well, they would call it that, your Honour.

GUMMOW J: Looking at paragraph 11, it seems to suggest, at least in the deponent’s view, that there are a number of partnerships.

MR IRELAND: In the deponent’s view?

GUMMOW J: Yes.

MR IRELAND: The Sydney partnership?

GUMMOW J: Yes. For all I know it is just a franchised name.

MR IRELAND: Yes, well, your Honour, there was obviously no detailed evidence about that. We would all be speculating.

GUMMOW J: Yes.

GLEESON CJ: Part of the factual problem, Mr Ireland, is that the evidence is left in an indecisive or an inconclusive state. We have Mr Lindsay saying in an affidavit before the Court of Appeal on page 279 that he believes he told Mr Haffenden and Mr Leslie, or made a reference to the fact, that Mr Geoff McClellan was a partner of Freehills. He believes that, he says, but he may be mistaken.

MR IRELAND: I accept that, your Honour. As against that, one has the position, accepted by the trial judge at the time of the disqualification application and accepted in the Court of Appeal, that it was only Mr Lindsay within the plaintiffs’ camp, if I could say that - the appellants’ camp now – who knew that fact.

GLEESON CJ: But the Court of Appeal has made no finding of fact about whether Mr Lindsay actually told Mr Leslie that Mr McClellan’s brother was a partner at Freehills.

MR IRELAND: No, your Honour, but the - - -

KIRBY J: You had better give us the reference to where the Court of Appeal said that they accepted that only Mr Lindsay knew of the relationship.

GLEESON CJ: Well, they said the opposite of that on page 290 in paragraph 43.

MR IRELAND: In the judgment, your Honour, at paragraph 43 Justice Sheller says:

As counsel, Mr Lindsay was bound to disclose to his clients that McClellan J’s brother was a partner at Freehills.

Pausing there, that seems to, I am sorry to say it, imply that since there was a duty of disclosure they did not know. Secondly, and this is the significant sentence for my purposes in light of the Chief Justice’s comment:

Indeed, according to his evidence, Mr Lindsay may well have done so. If the appellants did not act on that information at that time, or if Mr Lindsay did not inform them, they waived their right to seek to have the judge disqualify himself on the ground of his relationship with a partner in Freehills who was also the chairman. Ground 9 of the appeal accordingly fails.

Could I just ask your Honours, please, just for a moment to perhaps start at the beginning where the trial judge dealt with the matter in the disqualification judgment which commences at 216. This is the judgment on the disqualification. At the foot of 217, paragraph 9 of the judgment, he says:

In his affidavit, Mr Leslie deposes to the fact, which is true, that before the proceedings commenced I did not disclose that my brother is the chairman of Freehills. He says this fact was not known to him and swears that he was informed by his partner, Mr Smits, Mr Geoffrey Lindsay of Senior Counsel, and Mr William Haffenden of junior counsel, that none of those persons were aware of that fact.

Although I accept that this may be the case in relation to Messrs Leslie, Smits and Haffenden, I thought it unlikely to be the case in relation to Mr Lindsay. I asked Mr Leslie to tell me from the bar table whether he sought to sustain the allegation that Mr Lindsay was not aware that my brother was a partner of Freehills. He indicated that he did not and that that part of his affidavit was wrong.

So the judge obviously proceeds on the basis that Mr Lindsay and Mr Lindsay alone was aware of this association.

GLEESON CJ: In the course of the application to the judge to disqualify himself, the reason for disqualification was expressed, as I understand it, at the bottom of 270 and the top of 271.

MR IRELAND: As set out by the Court of Appeal.

GLEESON CJ: No. Counsel, Mr Haffenden, was asked by Justice McClellan why he should disqualify himself.

MR IRELAND: Yes, your Honour, correct.

GLEESON CJ: After an exchange over a couple of pages, Mr Haffenden answered the question at the bottom of 270 and the top of 271. Is that correct?

MR IRELAND: It starts at 269, line 35. His Honour then says:

What is the potential conflict?

HAFFENDEN: The argument was always been, as we perceive it from Mr Roach, that the position of his cases were that there was a need to have these proceedings heard before the Freehills proceedings. The reason being is there was a need to quantify his costs in order to consider negotiations –

and then he says, and this is the important part from my point of view, at line 11 on 271:

Now the issue of what costs there may have been may very well impact upon those Freehills proceedings or any claim against Freehills or any settlement with Freehills.

HAYNE J: What does that mean?

MR IRELAND: What that means, your Honour, is that the action before the trial judge was a claim for fees in their retainer which had subsisted for a period and been determined.

HAYNE J: I understand that, yes. What is this impact that is spoken of?

MR IRELAND: The financial impact.

HAYNE J: How?

MR IRELAND: If the trial judge had awarded the costs to the plaintiffs before him, which were substantial, as the Court of Appeal found, the impact would have been that because Mr Geoffrey McClellan was a partner of Freehills, he would have been visited with that liability.

HAYNE J: Why?

MR IRELAND: In the event that the firm had suffered an adverse order for costs in the litigation.

HAYNE J: There is about four steps in that chain of argument, Mr Ireland, each of which, I suspect, requires to be articulated with some considerable care. First, this was an action by solicitors against their client depending immediately upon the particular arrangements made between solicitor and client in respect of fees and costs, is that right?

MR IRELAND: Yes.

HAYNE J: Secondly, the action, or the proceeding which gave rise to the making of the fee agreement was a proceeding against Freehills, correct?

MR IRELAND: I am not sure – if your Honour means that the proceedings in which the.....were acting was a claim against Freehills, yes.

HAYNE J: Yes, Mr Leslie had been retained to act for the Roach interests in a proceeding against Freehills.

MR IRELAND: Yes, your Honour.

HAYNE J: If that action had succeeded, one would ordinarily expect that success would be attended by an order for costs, is that right?

MR IRELAND: Yes, your Honour.

HAYNE J: Those costs would be fixed in accordance with the processes then applying in the Supreme Court of New South Wales, is that right?

MR IRELAND: Or by agreement.

HAYNE J: Parties may agree to anything they choose, Mr Ireland, but absent agreement they would be fixed by the processes - - -

MR IRELAND: Of what we call assessment, your Honour.

HAYNE J: By the processes applied by the Supreme Court of New South Wales, correct?

MR IRELAND: Yes, your Honour.

HAYNE J: Which are processes directed, are they not, to determining what are the reasonable costs of the prosecution of the litigation? Is that right?

MR IRELAND: Yes, your Honour, depending upon the basis upon which the costs are assessed. If they are assessed on an indemnity basis, there is a different standard, but in each case they have to be incurred and reasonable, according to - - -

HAYNE J: Even if assessed on what is commonly called solicitor own client basis, questions of reasonableness represent a cap, do they not?

MR IRELAND: I think I have just said that, your Honour.

HAYNE J: Yes. How then is it said that there may have been, may very well impact upon the Freehill proceedings the amount which the firm recovers from its own client?

MR IRELAND: Because, your Honour, if the Roachs had suffered an obligation to pay these costs for the work done in the first part of these proceedings then those costs would form part of the costs incurred and probably visited against Freehills on an adverse outcome to Freehills in that litigation.

HAYNE J: Well, that which was reasonable would be visited - - -

MR IRELAND: I accept that.

HAYNE J: - - - and that which was reasonable would not be affected, would it, relevantly in any respect?

MR IRELAND: No, of course not, your Honour. On the findings of the Court of Appeal all that was left in this case for us at best was a quantum meruit which in here is reasonable quantum. But, your Honour, there is nothing terribly startling about that. I mean, the amount was of the order of half a million dollars or more which was either potentially payable as part of the Freehills costs on an adverse outcome or not and the Court of Appeal held that that was a significant impact also upon Mr Geoffrey McClellan’s position - could I just give your Honours a reference to that. As your Honour says, that is the unthreading of the logic that lay behind the submission.

HAYNE J: The impact on Mr Geoffrey McClellan’s position makes a number of assumptions about what is “the Freehills partnership” - or as Justice Gummow suggested, “partnerships” - about the interest Mr Geoffrey McClellan had in it and about the consequences that would fall upon him in that capacity, whatever it was in respect of this particular liability.

MR IRELAND: Well, your Honour, it should not be overlooked, as I have said - and this was a critical matter that was uncontroversial - but whatever the structure of the partnership of Freehills, and I take fully the point that Justice Gummow has mentioned, what it really meant, Mr Geoffrey McClellan was a defendant in the proceedings, so there cannot be any doubt about his potential liability for these costs on the assumptions that are made.

GLEESON CJ: Mr Ireland, I am still puzzled about this impact.

MR IRELAND: We seem to be dealing with the notice of contention at the moment, your Honour.

GLEESON CJ: Yes. Well, we are just dealing with step one in the process of reasoning.

MR IRELAND: Of course. I wish to deal with it, your Honour - - -

GUMMOW J: Yes. Well, you are going to have to.

MR IRELAND: Sooner rather than later, I suspect.

GLEESON CJ: You are certainly not going to be able to complain for denial of natural justice.

MR IRELAND: Not this time.

GLEESON CJ: Mr Ireland, there is litigation on foot between the Roach interests and Freehills.

MR IRELAND: Yes, your Honour.

GLEESON CJ: It does not make any difference to Freehills, does it, who is acting for the Roach interests or - - -

MR IRELAND: It might do in some senses but not in the relevant sense.

GLEESON CJ: If Freehills lose that litigation and have an order for costs against them they are going to have to pay the reasonable costs of the Roach interests in the litigation against Freehills and any dispute between the Roach interests and their own solicitors is a matter of indifference to Freehills, is it not?

MR IRELAND: Not really, for this reason, that in summary, for about two and half years, or I think a little more, until April 1999, Smits Leslie had acted for the Roach interests in those proceedings. The recoverability of any costs ultimately against Freehills, assuming an adverse result on the part of Freehills, depends in the first step upon there being costs incurred by the Roach interests to their solicitors of the day. If, through reasons that we understand but perforce of this case there is no liability to those solicitors, Freehills can say as to that $500,000 that you claim in your bill, you have no liability for that, so if the judge dismisses the action as he did for that first portion of the costs they are not recoverable against Freehills.

GLEESON CJ: But if the Roach interests have some – let me use a neutral expression – special agreement with their solicitors as to the terms on which their solicitors are entitled to be paid, for the reasons that Justice Hayne raised with you that is a matter of indifference to Freehills, is it not?

MR IRELAND: That is.

GLEESON CJ: Freehills are going to say, “We’re liable to pay you a reasonable cost. We don’t care what special arrangement you have. If you’ve got some special litigating funding arrangement with Rene Rivkin or Mr Rayment or whoever, we don’t care about that. We’re up for your costs, your reasonable costs”.

KIRBY J: But presumably, they would still be substantial if under the agreement it is $500,000 presumably it still - - -

MR IRELAND: No, it is not under the agreement it is $500,000. The estimate of the quantum meruit was - under the agreement was an exorbitant amount.

KIRBY J: That is right, yes.

MR IRELAND: That is why the case failed.

KIRBY J: Are we talking therefore of three categories? Under the agreement I think it was 700,000 or thereabouts, maybe more; then by the quantum meruit a reasonable amount, 500,000; then under the court rules were we talking about 300,000 or 200,000, or what?

MR IRELAND: The step that I am obviously not getting across here is that if I have no liability to my solicitor to pay the costs, I cannot recover them from the opposite party.

GLEESON CJ: But you are going to have a liability to somebody in some amount, are you not, if you have successfully sued Freehills?

MR IRELAND: Well, from the time when these solicitors ceased to act in April 1999 until the conclusion of those proceedings, but what Mr Roach cannot turn around and say in the event that the action by my clients fails, is that he should recover costs that he does not have to pay to Smits Leslie.

GLEESON CJ: If somebody tapped Mr Geoffrey McClellan on the shoulder at the time this litigation was going on and said, “Who would you like to win this case, Smits Leslie or the Roaches?”, his response would be, would it not, “It makes no difference to me”.

MR IRELAND: Well, it might make a difference to him, your Honour.

GLEESON CJ: That is what we are trying to understand.

MR IRELAND: I know, Your Honour, and let me try and improve my submissions on this aspect. One puts aside, in my respectful submission, any question of insurance. That is something I think raised on the other side in their submissions in reply and we join issue with them that that should be taken into account. It goes a bit further than simply the money because here you have a judge whose brother is a, I hesitate to say chairman of partners because that seems to have attracted legitimate criticism as being not very specific, but he is a senior person in a firm of solicitors sued in a notorious case which is pending. The question then becomes, as was put on the other side, what significance does that have for the judge and what significance does it have for Mr Geoffrey McClellan? The significance for Mr Geoffrey McClellan, we would suggest, is self-evident in that any potential increase in that firm’s liability, not only his own personal liability, but that firm’s liability for an increment of costs is, as the Court of Appeal has held in this matter, a significant matter.

KIRBY J: I thought your first argument is its significance is in the association and your second argument is its significance lies in the financial possibility.

MR IRELAND: It is, your Honour.

KIRBY J: But your first argument, as I understand it, is that the association is what triggers the obligation of disclosure, disclosure in court, not just in private communications, but in court where the public and the person, the lay observer sitting at the back of the court, can observe it.

MR IRELAND: Your Honour says not only in private communications. I want to make it clear - - -

KIRBY J: I am referring to the communication on the Thursday or the Friday before the hearing.

MR IRELAND: Your Honour, that was not a disclosure by the judge of his association with his brother at all.

KIRBY J: Well, it was something which does not happen in every case. The judge asks does anyone have any objection to my sitting.

MR IRELAND: Not raising the matter – can I just make that good from the judge’s own judgment on the disqualification application. It is at 218. His Honour says at line 30 when recounting the history – can I start with line 25:

Although those proceedings involve a claim for professional fees in relation to proceedings brought by the Roaches against Freehill Hollingdale & Page, I did not believe that fact caused me any embarrassment in determining the dispute between the present parties. For that reason, I did not believe it necessary for me to disclose that my brother is the chairman of Freehills, although I always believed, as it happens correctly, that at least Mr Lindsay would have been aware of that fact.

So it is distracting to think the judge’s communication on the Thursday had anything to do with the disclosure about his connection with his brother and, hence, Freehills.

KIRBY J: It is unusual for a judge. I mean, we do not give parties options under our system, and for very good reasons which were mentioned, I think, in Fingleton, to pick and choose amongst judges. So it is not usual for a judge to have the registrar communicate with parties, “Do you want me or do you want someone else?” I mean, that does not happen in our system.

MR IRELAND: All I can – it does not, your Honour.

KIRBY J: Therefore the communication, notwithstanding what the judge has said at page 218, is an unusual step to take.

MR IRELAND: I accept that and it set the bells going - - -

KIRBY J: It indicates that something is troubling the judge that leads him to do it.

MR IRELAND: Well, not necessarily, your Honour. There is something in his mind which he has not raised and that is clear enough from the - - -

KIRBY J: Well, maybe he has not focused on it and expressed it and made it concrete, but something has caused him to do something which is unusual, at least in my experience. You only ever communicate where there might be a reason for disqualification which you want to clear out of the way because after all you then have to get somebody else to sit for you.

MR IRELAND: Well, the factors in this case, your Honour, which were unusual, were obviously the judge’s association with his brother. We can put that to one side. That is the matter under debate. But there was also the fact that Mr Leslie had been a registrar of the court. I do not know whether his Honour thought that gave Mr Leslie a proximity to the court that was unusual. Thirdly, there was clearly some social contact between the judge. They played golf with each other at the same golf club regularly. So it was a case where the parties being solicitors of the court stood in a slightly different situation from the ordinary litigant who has no such connections. Whatever it was that prompted the judge to do this, he makes it clear that it was not this matter that concerned him. So it is wrong to treat his communication on the Thursday as any intimation of that matter.

So this is treated as a case in which there was not a disclosure until the judge brought it out into the open at the end of the case and your Honours know how that happened because he prepared a draft judgment which he made available confidentially to the parties and, because the Freehills litigation was pending, there were concerns that things the judge might include in the judgment about negotiations to settle those proceedings whilst they were in the hands of my clients might affect either Mr Roach, I think, in terms of what his expectations were in the case, because advice had been tendered as to what the outcome might be, or also, on the other hand, there may be matters where Freehills had made offers which are referred to by the judge in his judgment. There was a sensitivity which at once arose as to the public – I am sorry, I beg your pardon. There was a question there about the measure of the communication.

So this case, on the issue of whether the circumstances engendered a reasonable apprehension of bias, has as its clear position the judge not regarding the connection with his brother and Freehills as of any significance until it arose at the end of the case when these questions of confidentiality that I have mentioned are going to be – and then his Honour says, “I should say that my brother is the chairman of Freehills”, and it is that fact that gives him the impetus to make the disclosure, because Freehills are now into the picture. They have been asked to come up and comment on the draft judgment and to indicate whether there is any embarrassment caused by matters which might be included in a published judgment about the pending case.

It is only at that point, and we say at the wrong point, that his Honour identifies the difficulty. But it is very distracting, your Honour, because as Mr Lindsay says in his affidavit, this message comes through on the Thursday beforehand. He, Mr Lindsay, is devoting himself to preparation of the case. He leaves it to his junior, Mr Haffenden, and the clients to try and work out what this is all about. They come up with the thought that it is because Mr Leslie has played golf with the judge. They then announce on the morning of the hearing that the matter raised by his Honour is not a problem and leave it there. But, of course, they are very much barking up the wrong tree at that point. So it is in that unusual state of facts that the matter was not raised. So then that really takes me to - - -

KIRBY J: Of course, I suppose that you say that that merely underlines the importance not of dealing with these matters through registrars but of putting on the record in public in the court any matter that may be of concern. So we are defending here not only the interests of parties but the interests of the public to have independent and impartial judges.

MR IRELAND: After all, the test that is being observed here is that not of the parties’ own view of the litigation but, rather, the question of what the lay observer would take from these facts. There is an element of the proper administration of justice, as we have been so bold to put in our written submissions, here. Where you have a judge, as in this case, who knows a fact that, as it happens, is not known to the relevant parties, it behoves that judge, in my respectful submission, to raise the matter.

The judges are becoming more and more conservative about this, as your Honours know. I mean, even on special leave applications on Fridays we have members of this Court mentioning matters in these sort of areas. The reason to do that is to clear the problem out of the way. Of course there are limits which the judges should observe and the judges should not be put in a position where they have to imagine all sorts of matters that might bear on the thing, and that is the area in which the problems arise, but in matters where there is a definite connection with the judge and the litigation that needs to be aired then the right approach is for the judge, alone in knowledge of that connection, to ventilate it. Then nobody can say, “We didn’t have an opportunity”.

This case is distinct from the cases like Vakauta v Kelly where the judge makes some observation in the course of the hearing that everyone who is present can understand and evaluate. If the judge says something horrible about one of the parties and then counsel for that party is required at that point to take the objection and say, “Well, your Honour really has said too much”. We have all been in cases where that has happened and the case perhaps gets aborted at an early stage. It is done on the spot and then, understandably, the court says, “Well, you can’t stand by and let all that happen; see how you go in the result” and then say, “Well, on day three the judge made some nasty commences about my client and therefore he should have disqualified himself”. That is the Vakauta v Kelly line of country.

KIRBY J: The Court of Appeal does not seem to have attached significance to the communication on the Thursday before the trial.

MR IRELAND: None at all.

KIRBY J: It appears to accept what Justice McClellan said, that he really only turned his attention to the matter, presumably in the course of writing his reasons, in the case where the potential to affect Freehills was presented to his mind.

MR IRELAND: In the way that I have tried to describe because of the confidentiality issues and the settlement problem. All of that was duly coped with in protective orders that were made at the end of the case, but in the midst of all this the bombshell was dropped, so far as my clients were concerned, of this connection and we then made the application.

GLEESON CJ: When you say the bombshell was dropped so far as your clients were concerned, what are we to make of the unresolved question of whether or not Mr Lindsay told Mr Leslie about it? Mr Lindsay says he may well have done so, or the Court of Appeal says he may well have done so. If you were to succeed, would the matter have to go back to the Court of Appeal to find that fact?

MR IRELAND: That is what the respondents have argued in their submissions. We would say that, although this doubt existed in Mr Lindsay’s mind, he could not say definitively he had not. It was a weak piece of evidence. The thrust of his evidence was that he was not embarking upon the disqualification issue that arose over the weekend. He was to focus on the case itself and he left Mr Haffenden who, I think it is uncontroversial, junior counsel, had no knowledge of this association.

KIRBY J: But it is pretty hard to prevent the respondents having the factual issues which have never been finally determined resolved finally.

MR IRELAND: I can only say in answer to that question and in answer to the Chief Justice’s question that this case was treated by both courts below on the footing that Mr Lindsay and Mr Lindsay alone knew of this connection.

KIRBY J: Well, you say that. You had better give us very clear indications that that is what the Court of Appeal accepted for the purpose of its determination, because they left it in the word “may”. The verb they used was “may”, I think.

MR IRELAND: They did. We would say that the reasoning of the Court of Appeal is really antithetical to a conclusion that they already knew because the Court of Appeal dedicated its reasoning in the case to the view that Mr Lindsay ought to have informed my clients of that subject matter.

GLEESON CJ: The Court of Appeal decided the case on the basis that as far as they were concerned it did not matter whether Mr Lindsay had told Mr Leslie, but if you are right, it did matter.

MR IRELAND: I accept that.

GLEESON CJ: Nobody has ever decided whether he told him or not.

MR IRELAND: The trial judge did.

KIRBY J: It is at 43 that they say, “according to his evidence, Mr Lindsay may well have done so.”

MR IRELAND: Your Honour, that is mentioned twice, I think, in the Court of Appeal’s judgment. The second reference is paragraph 43.

GUMMOW J: There has to be a bit of cross-examination.

MR IRELAND: Mr Smith then appearing did not want to cross-examine Mr Lindsay. He forwent that honour on the day in the Court of Appeal. This arose, as your Honour is obviously identifying, not before the trial judge. The Court of Appeal actually – what happened if you want to know, the Court of Appeal said, “Look, we’re a bit concerned about this. We don’t really know what happened”. Mr Lindsay was then asked without any further contact to make an affidavit. The affidavit arrived in court and I said, ‘I’ll read it. I haven’t even read it”. I had not spoken to Mr Lindsay about what was in his affidavit. This is perhaps more like the old days. Mr Smith then appearing said, “I don’t want to cross-examine him”. I was told when I came to the Bar that counsel did not give evidence; they just stood up and told the court what had happened, but I think those days are gone, and maybe for good reasons. But to answer your Honour’s question, there was no cross-examination.

KIRBY J: So is it your suggestion, either on a basis of waiver, if we are in the realm of waiver, or on the basis of acceptance, that the statement by Mr Lindsay should be accepted? But even it is equivocal if it is does not resolve the matter and the Court of Appeal does not resolve it.

MR IRELAND: When you read the affidavit – your Honour, it is reproduced in the judgment. It is also reproduced photographically within the appeal book at 235 and following. Could I just ask your Honour to read two other parts of his affidavit? May I ask the Court, please, to go to 238, line 10:

12. At no time before the publication of McClellan J’s Reasons for Judgement in June 2002 did I discuss with any or all of Mr Haffenden, Mr Smits or Mr Leslie that his Honour was the brother of the “Chairman of Partners” of Freehills. That fact, if it was ever known to me, was not a fact of which I was at all conscious before I was informed of his Honour’s announcement at the time of publication of his Reasons.

13. At no time before the time of publication of his Honour’s Reasons for Judgment in June 20002 did I discuss with any or all of Mr Haffenden, Mr Smits or Mr Leslie (other than as set out in paragraph 11 of this Affidavit) the fact that his Honour was the brother of Mr Geoff McClellan, a partner of Freehills.

14. I did not make a conscious tactical decision about whether or not the Plaintiffs should object to his Honour’s participation in the hearing. Given the range and frequency of contact between the Plaintiffs and all of the judges of the Equity Division, and the fact (as I believed) that Mr Geoff McClellan was only one of a very large number of members of Freehills, I did not consider a decision by the Plaintiffs not to object to McClellan J as remarkable.

So he does not, himself, evaluate the question, because of the distraction of the judge’s inquiry. It perhaps flows through his mind that he knows, because he himself did his articles at Freehills, that Mr Geoffrey McClellan was there, and that is the level of attention he gives to it.

HAYNE J: Does not that evidence, rising as far or as low as it does, indicate the need to undertake the inquiries suggested in Ebner [2000] HCA 63; 205 CLR 337 at 345 in paragraph 8 of identifying what it is said might lead the judge to decide a case other than on its legal and factual merits and to articulate the logical connection between the matter and the feared deviation?

MR IRELAND: Your Honour, I realise I have to do that in this case. There is no dispute from me about the need to that. Your Honour in the earlier questions to me has pointed out that matter already.

GUMMOW J: What was the evidentiary footing before the primary judge on which this motion was decided? The Court of Appeal was dealing with an appeal after all is said and done.

MR IRELAND: The evidentiary footing before the primary judge did not include Mr Lindsay’s affidavit, if that is what your Honour is saying, but it did include Mr Leslie’s affidavit.

KIRBY J: But the Court of Appeal has power under the Act to receive additional evidence in certain circumstances and it did.

MR IRELAND: It invited it, in fact, and both sides said let Mr Lindsay tell his story and there was no - - -

KIRBY J: But there was the affidavit before Justice McClellan, which was an imperfect affidavit, as was later accepted, because he had said Mr Lindsay did not know, and he did, and the judge called him forward.

MR IRELAND: Your Honour, there is a bit of an unfairness to Mr Leslie in that because what he swore in his affidavit was that he - - -

KIRBY J: Where is that affidavit?

MR IRELAND: I am sorry, it is at 229. To be fair to Mr Leslie, at paragraph 9 of that affidavit, at the foot of page 230 he says:

On 14 and 17 June 2002, His Honour disclosed for the first time in these proceedings that his brother, Mr Geoffrey Allan McClellan, is the Chairman of Freehills. This fact was not known to me, and I am informed by each of (1) my partner, the First Plaintiff, (2) Mr Geoffrey Lindsay, SC, the Plaintiffs’ Senior Counsel, and (3) Mr William Haffenden, the Plaintiff’s Junior Counsel, and verily believe, that none of those persons was aware of that fact.

That is undoubtedly true because Mr Geoffrey Lindsay has told us he did not know that he was chairman.

KIRBY J: I see, so that is specific to the position of chairman?

MR IRELAND: It is, so it is - - -

KIRBY J: It seems something of a red herring.

MR IRELAND: I think it is, your Honour.

KIRBY J: It adds something to the colour of the matter, but it does not affect the fact that he was a defendant.

MR IRELAND: Well, it sounds as if poor Mr Leslie has been lying. In fact, what he said was quite accurate. The judge then drew him forward into the court, slightly unusually you might think when he was represented by counsel, and without his hearing aid, as it turned out, and said to him, “What’s the story about this? Mr Lindsay I’m sure would know”, and he said, “Well, your Honour, I resile from that. I spoke to Mr Lindsay again and if he knew that the judge’s brother was at Freehills, then I accept that fully”. So the matter did not go off on any uncertainty.

HAYNE J: But all of this reveals the lack of articulation. You have these notions of “brother”, “chairman”, “partner”, “costs”, “increase”, thrown into the washing machine with no articulation of how they are connected. Now, at some point you are going to have to connect them.

MR IRELAND: Well, your Honour, it seems to me the Court of Appeal did not have any problem with that.

GUMMOW J: So what?

GLEESON CJ: Well, the reasoning of the Court of Appeal for the conclusion – more accurately, the conclusion of the Court of Appeal is at the bottom of 276, is it not, and just at the moment I cannot find the reasons for that conclusion.

MR IRELAND: One needs also to look at paragraph 29, with respect, which is on page 282 of the appeal book, where Justice Sheller says that:

The trial Judge was related as brother to a partner in, and chairman of, a firm of solicitors, whose liability to pay costs in the proceedings brought against the firm by parties to the proceedings before the Judge, might be significantly affected by the outcome of the proceedings before the Judge. The appellants claimed that these maters might give rise to a reasonable apprehension by a fair minded lay observer that the trial Judge might not bring an impartial mind - - -

GLEESON CJ: Before you part from the first sentence in that paragraph, where does Justice Sheller explain why the liability to pay costs in the proceedings might be significantly affected by the outcome of the proceedings before the judge?

MR IRELAND: I do not think he takes it further than that, your Honour.

GLEESON CJ: Well, the first sentence of paragraph 29, like the last sentence of paragraph 23, is a statement of a conclusion, but where are any reasons given for that conclusion?

MR IRELAND: Well, it would seem that, as your Honour has quickly identified, the last paragraph on page 276 of the book which is within paragraph 23, the last sentence – and this is the Court’s own expression; it is not a recitation of counsel’s argument – if one goes back to the previous sentence:

The degree to which the plaintiffs in the proceedings before McClellan J were entitled to recover their costs from the Roach interests would translate into an increase in the costs that the Roach interests could recover if they were successful.

That was the submission I seemed to be doing rather badly with before this Court when we started. His Honour makes the finding:

In that way, success by the plaintiffs in the proceedings before McClellan J could add to the amount for which Freehills would be liable to indemnify the Roach interests by an amount in the order of $500,000.

HAYNE J: Can I put the matter this way to you, Mr Ireland, so that you can test it. Let it be assumed, of course contrary to the fact, that Justice McClellan had been a shareholder in an enterprise marked “Freehills”. What Ebner reveals is that barely referring to the fact of shareholding takes you nowhere. You have to understand what the financial consequences of the outcome of the litigation would be on that shareholding. Now, leave aside the fact for the moment that we are at the remove of blood relationship, a rather significant fact - - -

MR IRELAND: Your Honour, I cannot win this case without that.

HAYNE J: - - - at least on the financial side, do you not have to sheet home precisely, or at least with a great degree of greater precision than this, what the financial consequences are?

MR IRELAND: Well, your Honour, I do not have to go any further than the Court of Appeal went to say that as a defendant in the action there is a potential increase in the liability of Mr Geoffrey McClellan to costs of the order of half a million dollars. That quantifies it for all the relevant purposes that I need to make the statement. One cannot, with great respect, segregate in this case that financial matter with the other matter, which is the association simpliciter which I would just – could I just give your Honours one reference in the Court of Appeal’s judgment that I was coming to before the Chief Justice asked me to stop. In paragraph 29 of the judgment at the top of page 283 of the book:

The appellants’ formal application to the Judge came after the hearing was complete and a judgment delivered. It was not a claim without substance. There was no evidence about the relationship between the trial Judge and his brother. The Court should assume that it was close. There was not the slightest suggestion, nor could there be, that the trial Judge conducted the case and decided it other than impartially and fairly, without favour, affection or ill will and without regard to any pecuniary interest Freehills might have in the outcome. Freehills were before the Court - - -

GUMMOW J: Why should the Court assume that it is close?

KIRBY J: Most relationships with brothers are. Some are not, but most are.

MR IRELAND: I cannot speak, your Honour, I do not have one.

KIRBY J: Well, I have two.

MR IRELAND: But I think what his Honour was saying was that - - -

GUMMOW J: Close in what sense?

MR IRELAND: Close in concern, close in family concern. You are worried about the fact that your brother is on the end of a $900 million claim and that the insurers might suddenly pull out. You worry about these things. I think that is what he means.

KIRBY J: Anyway, it was for the Court of Appeal to draw inferences and make decisions on facts.

MR IRELAND: Which they did. They seem to have done that, but it is right to say, as Justice Gummow has raised it, that one has to evaluate that. But we would say, with the greatest of respect, there is nothing wrong with that inference, that one treats the judge as having a genuine and automatic concern for his brother’s situation as potentially on the end of a very, very large piece of litigation with all the uncertainties, financial and otherwise.

GUMMOW J: You would need to know what your brother’s insurance situation was.

MR IRELAND: Well, he might know, your Honour.

GUMMOW J: This is just some sort of bourgeois fantasy land. You would need to be specific. We are not talking about happy families. We are talking about business.

MR IRELAND: Your Honour, how could we be specific about that - - -

GUMMOW J: I have no idea.

MR IRELAND: - - - if we did not know the fact, we did not have the key to this problem to unlock the door.

KIRBY J: Was insurance raised by the respondent?

MR IRELAND: In the Court of Appeal?

KIRBY J: Yes, or anywhere.

MR IRELAND: Yes, an argument was raised that it would be probably inconsequential because you divide it by the number of partners and one does not know the levels of insurance.

KIRBY J: Was this a de minimis argument?

MR IRELAND: I do not think it was quite put that way, but it was certainly put on the basis of uncertainty as to the actual amount of money that might be visited upon Mr Geoffrey McClellan in the circumstances which were being contemplated. Our riposte to that, of course, was you cannot always count on your insurance. We like to think so, but to the fair-minded observer there was enough of a connection both personal and financial only that the judge should raise it.

GUMMOW J: You are talking about half a million dollars?

MR IRELAND: Yes.

GUMMOW J: You are talking about, what you seem to be suggesting, a very large legal firm?

HAYNE J: Compulsorily insured, one assumes?

MR IRELAND: Not to $970 million. To $1 million.

KIRBY J: How much?

MR IRELAND: The compulsory insurance – I can say two things. The compulsory level of insurance is very low.

HAYNE J: For firms? I know for the Bar. I thought that there was a sliding scale for firms, perhaps I am mistaken.

MR IRELAND: It is elective. It certainly does not get anywhere near the figure of $970 million.

KIRBY J: Anyway, is there evidence about this, or is this - - -

MR IRELAND: No, there is not. I am being drawn into the debate. I am responding. I am being asked.

KIRBY J: I realise that.

HAYNE J: It is a matter of law.

MR IRELAND: As a matter of law, your Honour, there is no compulsory level of insurance of any firm of solicitors which would cover them for a claim, as it then was, of $900 million. That is the law on the point. Of course we will give your Honour the references to the legislation.

GUMMOW J: But we are worrying about this costs order that is going to flow on, are we not?

MR IRELAND: Yes, and we are worried about solvent partners. I mean, it is not the first time in history that firms of solicitors have individually been put under great strain by claims made upon them. There are notorious examples of that, where some people have not been able to pay and others have had to make up the difference. So the insurance really is a furphy to the perception question. It might be a comforting result at the end of the day, but the lay observer does not treat it that way and that is the test.

GUMMOW J: The lay observer is not a naïve character.

MR IRELAND: I accept that, but there are too many questions - - -

GUMMOW J: You do not get much mileage in this context going to this notion of lay observer - - -

MR IRELAND: I will not mention it again then, if your Honour thinks that that is - - -

GUMMOW J: - - - in the sense that it is some innocent abroad.

MR IRELAND: No, I do not put that, your Honour. In fact your Honours have said, of course, on more than one occasion, that a certain degree of sophistication has to be attributed to the lay observer. I accept that position, but that sophistication should at least permeate the considerations that I have sought to articulate.

GUMMOW J: Anyhow, you were on paragraph 29 of the Court of Appeal and I took you off it.

KIRBY J: You stumbled over close fraternal relations, or at least you were stumbled.

MR IRELAND: No. His Honour rightly stopped me there and said what was meant by that and I tried to explain it, that was all, but I did not feel myself fall - - -

KIRBY J: Please do not pause on it again. Move on.

MR IRELAND: So that is what the court says. Then it says in the last sentence:

Freehills were before the Court only on the very limited question of privilege that might be infringed by the publication of McClellan J’s reasons for judgment.

KIRBY J: Is that strictly accurate? They were before the court for that but the issue was whether they were affected indirectly by the result of the court’s determination.

MR IRELAND: Yes, it was.

KIRBY J: They were before the court on the motion, I assume, were they?

MR IRELAND: They were brought to the court not on the motion for disqualification but, rather, his Honour gave directions at the end of the day with respect to publication of the judgment and they were brought in on that question because they had an interest in it. That was what turned an electric light on in his Honour’s head, that maybe he should say that his brother was the chairman, as he said, of partners of Freehills - - -

KIRBY J: That means that when preparing or after preparing his reasons, or in the course of preparing his reasons, the significance of the reasons to Freehills occurred to his Honour?

MR IRELAND: That is so.

GLEESON CJ: The significance of the reasons in relation to the confidentiality of some of the information contained in the judgment.

MR IRELAND: I accept that, your Honour.

GLEESON CJ: Not the significance of the reasons relating to Roach’s liability to Smits Leslie for costs.

MR IRELAND: Certainly not, because his Honour to the end said that was an irrelevant matter which caused him no embarrassment and that situation continued from the beginning to the end of his Honour’s dealing with the matter.

KIRBY J: That is relevant to the second of your argument. The first of your arguments is association. The second of the arguments is financial interest.

MR IRELAND: Yes, it is. The association, of course, had not changed. The association was the same from the beginning to the end of his Honour’s consideration on that point and we say he overlooked it.

KIRBY J: The association with a defendant was something that occurred to his Honour when he was writing his reasons, or after writing them?

MR IRELAND: When he was writing the reasons I think it was the need to uphold Freehills’ confidence that occurred to him because he was about to publish paper that went into the details of the settlement.

GLEESON CJ: As I understand it, there was some question about the actual form in which the reasons were to be published which was ultimately agreed between the parties in some way.

MR IRELAND: It was, your Honour. His Honour was loath to publish something without resort to the parties to decide whether things should be anonymised or referred to more generally.

GUMMOW J: Do we have the motion that was filed before the primary judge?

MR IRELAND: Yes, your Honour. It is 220 and paragraph 4 was the relevant prayer.

GUMMOW J: Thank you.

MR IRELAND: This was terribly unfortunate in a way, but what could my client do? Vakauta v Kelly would have said if we had stood by when this had been raised, that would have been the end of it. We had to ask the judge.

GLEESON CJ: It just demonstrates the care with which some of these issues need to be approached because the consequences of this are visited on the other parties to the litigation. Your ultimate proposition, as I understand it, is that this litigation has to begin again before another judge.

MR IRELAND: That is true, although I think it would be common ground that the Court of Appeal disposed of some matters which would not be reagitated. Can I tell your Honours the significance of the new trial application. As your Honours know, the key issue in the case was the legality or otherwise of the retainer agreement. It contained provisions which were champertous. The trial judge held that those champertous provisions infected all ways in which any claim for fees might be made. There was another separate part of the case which depended upon a settlement agreement which would allow my clients to participate in the liquidation of two of the respondents in certain events.

When the matter went to the Court of Appeal we had lost every point. In the Court of Appeal their Honours said that a quantum meruit would have been available but for the fact that we had repudiated the agreement. So his Honour’s findings of fact on repudiation of the retainer agreement were critical to the outcome on the quantum meruit. I do not need to go over the material, but his Honour was highly critical of my clients and the result on the repudiation issue depended upon his Honour’s view of the witnesses on both sides.

So that what we seek to resurrect if we succeed in this Court is a remitter for trial on the repudiation issue, which is what is set forth in our written submissions here, but we are not concerned to reagitate any question that the Court of Appeal has decided. Their Honours did not deal with the repudiation issue because that rested on the trial judge’s finding that we had repudiated the agreement.

KIRBY J: I know you said that at the special leave application and that was common ground between the parties, but it does, as I think the Chief Justice hinted at the special leave hearing, raise at least a conceptual problem that you are attacking the integrity of the trial and yet you are content that part of the trial which you say was flawed for lack of impartiality, lack of independence, can stand.

MR IRELAND: All I am saying, your Honour, is that any trial that we seek will not go over the ground that was finally determined by the Court of Appeal. Those were legal questions, so any trial judge approaching this anew will be concerned ultimately with the retainer and - - -

KIRBY J: And you have not appealed those points to this Court.

MR IRELAND: No, we have not; they are finished for us – and nor have the other side.

KIRBY J: Would you just identify what those points are that the Court of Appeal’s rulings will stand.

MR IRELAND: That the contractual claim under the retainer agreement was barred for illegality because the Legal Profession Act outlawed the champertous provisions. We could not sue on a champertous provision. Secondly, that the Court of Appeal’s determination on what was called the ten point plan, which was the further agreement, in which we actually succeeded in the Court of Appeal – so all that is left, as we understand it, if this were retried, is the issue of the claim under the retainer agreement, not maintaining that the terms of the agreement can sustain an agreed charge, but rather that a quantum meruit will lie so long as we establish at trial that it was the clients rather than the solicitors who repudiated the agreement.

GUMMOW J: You were approbating and reprobating in a sense in the Court of Appeal. If one looks at the grounds of appeal at 224, it is at ground 9 that we come to the disqualification point which would vacate the whole thing if you won, would it not?

MR IRELAND: It would have if the Court of Appeal had accepted that ground.

GUMMOW J: Yes.

MR IRELAND: They would have upheld that ground in limine and sent the whole thing back.

GUMMOW J: That is right.

MR IRELAND: But they did not do that.

GUMMOW J: I know, but what happened to grounds 1 to 8 in the Court of Appeal? Have they all been dealt with or only some of them?

MR IRELAND: Ground 1 has been dealt with, 2 has been dealt with in our favour, 3 has been dealt with against us, 4 has been dealt with upon the basis of the repudiation by the solicitors of the retainer, 5 has been dealt with, 6 is, we would say, reinvigorated if your Honours send it back, as I have tried to articulate, that the judge’s finding that we repudiated the settlement would be the subject of a matter of fresh trial, and 7 is consequential on 6.

GLEESON CJ: But the Court of Appeal dealt with this matter on a rehearing. You had a hearing before Justice McClellan and then you had a rehearing before the Court of Appeal and in your rehearing before the Court of Appeal you agitated all the complaints you had about the findings of fact and law by Justice McClellan and in addition, you said, in any event he was disqualified.

MR IRELAND: And, hence, there should be a new trial, which was an overarching ground.

GLEESON CJ: Now, what is the significance of the fact that you have had a rehearing before three judges who were not disqualified of all the issues of fact and law that you want to agitate?

MR IRELAND: The significance is that insofar as their Honours acted on a finding of fact at a trial which, let me assume, is flawed from the beginning, then we would not be prevented from re-litigating that matter at first instance.

KIRBY J: You are happy with their determination of - - -

MR IRELAND: On some matters.

KIRBY J: - - - so-called bias, but you are unhappy with their determination of waiver. You say they made a legal error in the way they decided waiver and you want that corrected, but you are quite content with the Court of Appeal decision on the fact that Justice McClellan ought to have disclosed and that a reasonable observer might think his Honour to have been - - -

MR IRELAND: I thought the Chief Justice was asking me one step behind that.

GUMMOW J: .....worry about consequences.

MR IRELAND: Yes.

GUMMOW J: Where are we going and why are we here - - -

MR IRELAND: I think it was because you granted special leave. That is why we are here.

GLEESON CJ: Yes, but you want to go back to another judge.

MR IRELAND: Yes.

GLEESON CJ: Well, when you get back to the other judge - - -

GUMMOW J: Will there be an estoppel arising from the treatment of the Court of Appeal of grounds 1 to 8? If not, what is outside the estoppel and what is left?

MR IRELAND: What is left, as I have said twice – I should be very precise about this – is our claim for a quantum meruit for work done during the period of retainer.

GLEESON CJ: I thought that you had suggested – and I may have misunderstood you – that when it goes back for a new trial, the only significance of the judgment of the Court of Appeal will be that insofar as they have made decisions on questions of law a primary judge will be either bound, or at least under heavy pressure, to follow them.

MR IRELAND: I went a step further and I said we would not re-agitate those. I do not want to re-agitate before the trial judge matters - - -

GLEESON CJ: But as to any matters of fact the litigation will go back to the beginning, will it not?

MR IRELAND: Yes, but I restrict myself by saying that the practical consequences of that is we are left with a quantum meruit claim. Critical to that is a finding about repudiation. If, as the trial judge found, we repudiated the contract, we do not have a quantum meruit.

GLEESON CJ: Now, did you have a rehearing on the issue of repudiation before the Court of Appeal?

MR IRELAND: No. It was just accepted that we could not press it because it rested in the question of fact. We did not develop grounds. His Honour hated my clients and loved the Roaches.

GLEESON CJ: But you had a full right of appeal by way of rehearing before the Court of Appeal and you did not press on that appeal a challenge to that finding of fact.

MR IRELAND: No, because it was doomed.

GUMMOW J: So what?

GLEESON CJ: You mean you made an assessment you would not win?

MR IRELAND: We made a formal submission that it was wrong and nothing else was said. In other words, we could not win in any developed argument which depended on the judge’s assessment of what had been said on critical days and whom he preferred. The judge said that we drove the clients away and our case was that they had repudiated the arrangement. The judge, in the end, solved the problem by saying that the termination of the retainer fell within the provision to the agreement which said in the event that the solicitors become satisfied that trust has been lost then the agreement will itself terminate. So it was not a repudiation – termination analysis at all and I could only have succeed on the Court of Appeal on that if the judge had accepted the trial submission on the facts. I have thought about the intricacies of all this and it is a very messy situation procedurally.

GUMMOW J: But in a way you had an election when you prepared this notice of appeal. The bias claim strikes at the absolute record, but for some purposes you wanted to adopt the record and get it altered in your favour.

MR IRELAND: Do your Honours mean in this Court.

GUMMOW J: No, in the Court of Appeal.

MR IRELAND: In the Court of Appeal. Well, is that right though, your Honour? I mean, can I not say, “The judge was biased, I want a new trial, but if I’m wrong about that, he was wrong in law”, and that is what happened. Is there anything wrong with that, with great respect? If I do not get the new trial - - -

GLEESON CJ: All it demonstrates is that the consequences of your basic submission about disqualification are visited on the other party to the litigation.

MR IRELAND: Yes.

GLEESON CJ: Justice McClellan in not a party to these proceedings.

MR IRELAND: But that always happens, your Honour, there is nothing unusual about that.

GLEESON CJ: Exactly. That is why you have to be so accurate in identifying the disqualifying feature.

MR IRELAND: Yes, I accept that.

GUMMOW J: You have not faced up to paragraph 8 of Ebner, it seems to me.

MR IRELAND: Well, I have faced up to it, your Honour. I might have failed to pass the test. I put two elements, and I have tried to sustain it by reference to what the Court of Appeal has said as a matter of finding, and I cannot do any better than that. I cannot reformulate the ground. It is paragraph 23 and paragraph 29. That is on the issue of whether the occasion for disqualification arose. Although the matter has been turned around, it is logical to deal with it this way. I have not really said anything about waiver yet.

GUMMOW J: You see, if you win here on the bias point, you then want to have a free kick back at trial on this quantum meruit issue - - -

MR IRELAND: It is not really a free kick, with respect.

GUMMOW J: - - - despite the fact that it is bound up with the other side of the election, to use that expression, that you pursued in the Court of Appeal to produce the res judicata.

MR IRELAND: All I can say, your Honour, I hope politely, is I do not accept I have made an election.

GUMMOW J: You want to undo that part of the res judicata by going back and having a trial.

MR IRELAND: Your Honour, in my respectful submission, I am entitled to say as a first ground of appeal I should have a new trial, and I am entitled to say alternatively that the judge applied the law wrongly in his evaluation of the contract issues, and there is no incompatibility in that. What is odd is that I am upheld in part by the Court of Appeal on the occasion for disqualification, and I am here trying to persuade your Honours that the Court of Appeal itself was wrong on the waiver point, but really facing, as I do face up to, the logic of proceeding in the way we have done today, that one has to identify the occasion before one even is troubled by the waiver.

GUMMOW J: Can I put this to you, Mr Ireland? There could be a reaction to all of this that this was done somewhat on the run before the primary judge, after there was awareness of this unhappy news in the form of a judgment that was coming down, has done something on the run and not really patched up in the Court of Appeal and that is very unfortunate when one bears in mind the consequences that are then visited on the other side. Hence the importance of paragraph 8 of Ebner.

MR IRELAND: Yes. Well, your Honour, I cannot really spell out any more than I have tried to do what the factors are that give the reasonable apprehension for bias. In the argument as we have had it this morning, the Court is drawing my attention to the fact that there are a number of steps of logic which implicitly it might be said the reasonable lay observer would not follow or take to reach a conclusion that the association in its financial dimension was one that could be treated as affecting the judge’s inclination in the case to judge it one way or the other.

But I do persist in my submission, your Honour, that this is a case – Justice Deane said in Webb’s Case that the categories of interest and association often overlap, and this is a classic case of that. In other words, they are not discrete categories for disqualification. You have a case where, because of an association with a subject matter of the case, which can take many forms, there is also generated a financial relation which has to be taken account, and at the end of the day your Honours have to apply that lay observer’s test and say, “We as judges can rationalise insurance matters and the intricacies of how many partners there are in Freehills”, but the person who is the observer to be tested in all this does not view it, in my submission, in that way.

GUMMOW J: Would you say that this judge should not sit on any matter in which his brother’s firm were solicitors on the record?

MR IRELAND: No.

GUMMOW J: Why is that okay?

MR IRELAND: Because his brother – I certainly say the judge should not sit on any matter in which Freehills are a defendant or a party. Your Honour said “on the record”, I think.

GUMMOW J: No, solicitors for a party, solicitors on the record, yes.

MR IRELAND: That has been treated, your Honours, as a place where the line is drawn and that is because the judge’s brother’s own contact with any particular piece of litigation may be various. If the judge’s brother was going to be a witness in a case in which his firm - - -

GUMMOW J: No, I am not talking about - - -

MR IRELAND: That would be a clear case on the other side of the line. If the judge’s brother was in the commercial area of the firm and had absolutely nothing to do with the case, then it is a clear case on the other side of the line. This is somewhere in the middle and the question is on which side of the line does it fall, as in so many of these cases. So it is really no good taking the extreme example on either side of a bright line. There is no bright line in a case such as this. It does not do any good to say it one way and really it does not do my opponents any good to say it the other.

GUMMOW J: But would it matter if the firm had a contingency fee arrangement?

MR IRELAND: If a firm was on the record for a client before the judge with a contingency fee arrangement and that was all that appeared, I think it might matter, your Honour.

GLEESON CJ: What if Justice McClellan’s brother appeared before him as an advocate?

MR IRELAND: That runs into another series of problems. If the judge appeared before him as - - -

GUMMOW J: It could lead to some family tension. He could be concerned about this brother not doing very well.

MR IRELAND: Your Honour, we would say that – to answer the Chief Justice’s question, we know the history, particularly in New South Wales. There have been a lot of parents and children judges and members of the Bar and at one stage it was thought if it was not too contentious, it would be all right. Now it is, as I understand it, the subject of Bar Association rules which reflect the position that you do not want to put the judge in the position where he has to decide that his child is going to lose the case. It is just human nature.

KIRBY J: It was said rather unkindly and probably quite falsely that Clive Evatt QC got a little bit of help from Bert Evatt when he was a Justice of this Court.

MR IRELAND: I never heard that, your Honour. We can multiply the examples, I am sure in any jurisdiction, Victoria, New South Wales, because the legal community tends to be a community in which there are judges and their children are members of the Bar. You have to cope with these problems. These are all interesting problems but it is not the one I have to deal with today. This is the one about the secret news.

KIRBY J: As you say, it is a question of the line. As I indicated earlier, I did not hear cases in which my brothers were involved but on one occasion one came into court to ask for an adjournment which was consented and that did not seem to create any problems to me.

MR IRELAND: But there was not a brother on each side of the matter though when they consented, your Honour.

KIRBY J: No, not on that occasion.

MR IRELAND: That would make it difficult.

KIRBY J: I think it is a matter of prudence and judgment.

MR IRELAND: Yes. It is difficult to answer unequivocally the Chief Justice’s question.

GLEESON CJ: The question of what the judge ought to do in prudence may be a very different question from the question of what are the consequences for the other party to the litigation if the judge does not do it. You may advise a judge that it would be better not to allow trouble to arise by saying something or by doing something but we are faced with the different question which is: in circumstances where the judge does nothing or says nothing, what are the consequences for the parties to the litigation?

MR IRELAND: The problem is, your Honour, that if you give attention to, let me say, the requirement that the judge really should ventilate the matter, if he does so at the outset then one gets on to the list office and starts with another judge. The problem is if it stays buried and hidden, then it may not be till the case is almost over, as in this case, that the true difficulty arises. Both parties become a casualty in the situation at that point. The respondent becomes a party because costs have been expended. We all know that the suit is – I had one of these where a judge in the Supreme Court went too far in something he said and the parties get some limited reimbursement from the suitors fund, at least in New South Wales, but there is still a cost beyond all of that. The earlier these things are dealt with, the better. The problem about that is that if - - -

HAYNE J: But that is to speak of considerations of prudence as distinct from considerations of requirements of law, a distinction plainly drawn which divided the Court in Ebner.

MR IRELAND: In Ebner, yes, I accept that.

HAYNE J: Justice Kirby, I think, took a view different from the view of other members of the Court.

MR IRELAND: That is so, your Honour, but all that is to say is that it depends what importance you attach to this principle. It seems to us, with the greatest of respect, that you cannot have one rule and call it a rule of prudence that will operate at the outset and then say because things have come so far, the judge being imprudent on this hypothesis, the cost to the other side is too great.

GLEESON CJ: You do not have a rule of prudence. You have a rule of law and considerations of prudence.

MR IRELAND: Yes.

GLEESON CJ: And there may be an error involved in leaping from a conclusion about what considerations of prudence dictate to a conclusion that that is the rule of law.

MR IRELAND: Yes, your Honour, it is easy in one breath for me to say the judge should have raised it and all this trouble has followed on my arguments but, as your Honour says, the real question is, the acid question, did the judge need to raise it with all the consequences that would follow upon my arguments?

GLEESON CJ: There is an anterior question that you have been anxious to come to, that is, should Mr Lindsay have raised it?

MR IRELAND: Yes. Can I deal with that relatively shortly, your Honour. I have already said that the source of Mr Lindsay’s knowledge of the connection between the judge and the solicitors was Mr Lindsay’s own background with the firm.

KIRBY J: Can I ask, just before you go on to this issue, have you said everything that you want to say concerning the findings of the Court of Appeal that Freehills had a contingent financial interest?

MR IRELAND: Yes, your Honour.

KIRBY J: The Court of Appeal found that and that was in your favour and that has been the subject of a lot of debate this morning, but if there is any other factual material in order to understand why the Court of Appeal came to that conclusion, I would appreciate a note later which, as it were, gives the reasons for the Court of Appeal’s decision, because it has been suggested that they do not spell out the steps. I think I understand why you say those steps are there, but I would like to have a note which, as it were, takes it step by step.

MR IRELAND: Yes, your Honour. I have been challenged on the footing that, really, these remarks of the Court of Appeal are empty of content. You say the judge is close to his brother, but what does that mean? You say there will be - - -

KIRBY J: No, I am thinking more of how contingently a conclusion the judgment which Justice McClellan entered could in the subsequent litigation involving Freehills be brought home to Freehills in toto.

MR IRELAND: I would like an opportunity - - -

KIRBY J: Do not worry. As far as I am concerned, I am not troubled the brother being a party to his having an interest and if that is relevant to that being brought home to Freehills in that respect. But the steps that make Freehills contingently liable at the end of the total litigation in a way that was not really necessary for final conclusion in that part of the litigation which was hived off and dealt with by Justice McClellan is something I am not entirely sure that I understand and the Court of Appeal does not really spell it out. It, in a sense, seems to take it as if it is self-evident. Well, I would like to have the steps explaining why it is self-evident in a note.

MR IRELAND: We will do that, your Honour.

KIRBY J: Can I also mention that the House of Lords a few weeks ago in Gillies v Secretary of State for Work and Pensions [2006] UKHL 2 considered issues of bias and essentially followed what this Court said in Johnson v Johnson, or at least it followed what has been said in a number of Commonwealth courts, including this Court.

MR IRELAND: Yes, your Honour. Your Honour, I have covered some of the ground factually as I have gone to the affidavit of Mr Lindsay, the affidavit of Mr Leslie and the way in which the matter was treated, and your Honours have pressed me on whether or not the appellants indeed knew, as Mr Lindsay thought he might have told them or might have mentioned this question. My submission on that is that the judge below accepted the matter on the footing that Mr Lindsay alone was the person with the relevant knowledge and the Court of Appeal, despite the passages that have been referred to, with the benefit that the judge did not have of Mr Lindsay’s affidavit, held in a sort of bifurcated way that if he did not tell and he should have done, and if he did tell them, that was the end of it.

The analysis as it would proceed on the waiver issue would be very different in those two compartments. The arguments which have been filed on the other side seem to assume that one deals with this matter, as the Court of Appeal did, as a question of imputation of knowledge. In other words, assume Mr Lindsay knew the relevant fact, is that a matter which should be imputed to the appellants? Our quick answer to all of that is twofold. One, we say that the idea of imputing knowledge is really a false trail in this connection. We refer in our written submissions – and may I just go to it – to what Lord Justice Hoffmann, as his Lordship then was, had to say in a case called El Ajou v Dollar Holdings. It is reported, I think, only at - - -

GUMMOW J: Which paragraph of your submissions? Is it 37 of your submissions?

MR IRELAND: Yes. We have referred to it, your Honour, in our submissions.

GUMMOW J: [1993] EWCA Civ 4; [1994] 2 All ER 685?

MR IRELAND: That is so. I just wanted to take your Honour briefly to the passage at 703, if your Honour pleases. His Lordship said this was an important point of principle. At point h on 703, in the context of a discussion of the principles applicable for an agent’s duty, Lord Justice Hoffmann said:

But Mr Beloff’s submission that DLH must be treated as if the duty had been discharged raises an important point of principle. In my judgment the submission is wrong. The fact that an agent owed a duty to his principal to communicate information may permit a court to infer as a fact that he actually did so. But this is a rebuttable inference of fact and in the present case the judge found that Mr Ferdman did not disclose what he knew to anyone else acting on behalf of DLH.

So we would say, your Honour, that the question of imputation may simply be part of a fact-finding process.

GLEESON CJ: There is also a question, is there not, as to whether agency is an adequate context in which to consider this problem?

MR IRELAND: I was coming to that – for two reasons. There are many cases in which the whole question of the role of counsel acting as, it is said, sometimes, an agent for the party comes into play – notoriously, this Court’s decision in Harvey v Phillips, which was a case about counsel’s ability to settle a case without instructions. When one traces it back, as you might expect, there have been literally - - -

GUMMOW J: Do you have a reference to Harvey v Phillips in your outline?

MR IRELAND: It is not actually, your Honour, I am sorry. The reference was something we thought in preparing further for the matter yesterday we ought to just mention. It is illustrative. The reference to Harvey v Phillips is [1956] HCA 27; (1956) 95 CLR 235.

GLEESON CJ: In Matthews v Munster (1887) 20 QBD 141 Lord Esher said that:

the relationship between counsel and his client . . . is sometimes expressed as if it were that of agent and principle. For myself I do not adopt and have adopted that phraseology, which seems to me to be misleading.

There are a number of cases, I think, that have said that it is an inadequate – not necessarily wrong but inadequate description of the role of counsel to describe counsel as an agent.

MR IRELAND: It was our submission in reply that it is not the way in which one should look at it in the context of this case. This case illustrates the point quite neatly when one is looking at the suggestion that, as the Court of Appeal upheld, there has been a waiver. The essence of a waiver in this context would be a choice between two conflicting courses of action, sometimes called an election in another context, in a contractual or conveyancing context, for example. We would say that the one thing that does have to be demonstrated in such a case when applying the doctrine of waiver is that something has been done by the party who is said to have waived some course of action to evince that choice.

KIRBY J: To what?

MR IRELAND: Evince, to show that choice, to communicate it to the other side. So that if you have Mr Lindsay, on the findings of fact, knowing of this matter, you add to that fact, as I say, in evaluating a matter of presumption that he said he did not give the matter any forensic attention, indeed, it is in the context of somebody else having to answer the judge’s query of the previous Thursday - - -

KIRBY J: Can I just get a fact right. Mr Lindsay knew that the brother worked at Freehills - - -

MR IRELAND: Was a partner at Freehills.

KIRBY J: - - - because they were there when they were article clerks and might have worked together at that time?

MR IRELAND: Mr Lindsay had done his articles at Freehills and he knew of Mr Geoffrey McClellan’s connection with the firm because he had worked there.

KIRBY J: He said he did not believe he had been briefed by him.

MR IRELAND: He did.

KIRBY J: Did he accept in his affidavit that he knew at the relevant time, the time of the trial, that Mr McClellan was still a partner of Freehills?

MR IRELAND: Yes, he knew that much, but we emphasise the fact that when one looks at his affidavit it is really uncontestable that he did not evaluate the matter, but critically for the purposes of any application of the doctrine of waiver there was no - - -

KIRBY J: That is why I am still a little troubled that when he got up and said to the judge at the very beginning of the trial, this having implications for third parties and for the public and costs of trials and so on of the seven day trial, and he said, “There is no problem with your Honour sitting”.

MR IRELAND: No. What he said was – and I will get the reference – “Your Honour raised a matter with respect to your Honour sitting which was connected with a social connection with the parties”.

KIRBY J: Well it may have just been ships passing in the night but at least he does say that there is no problem with the judge sitting.

MR IRELAND: Of the social connection between the parties and the judge.

KIRBY J: Is that on the transcript? We do not have the transcript of that exchange.

MR IRELAND: I know. I am just trying to get it found, your Honour. I just cannot put my hand on it this second.

KIRBY J: Is the transcript of the opening of the trial available?

MR IRELAND: It will be.

KIRBY J: I mean that would be part of the record below.

MR IRELAND: I think I am accurately paraphrasing. We will get the document. It says, almost the first line in the transcript, “The matter your Honour raised, there is no problem insofar as my clients are concerned relating to the social connection with your Honour and we understand the defendants take the same position.” But we will get the transcript, your Honour. It was focused on what they perceived to be the problem – nothing to do with the judge’s brother. That is clear.

KIRBY J: I am sorry I interrupted.

MR IRELAND: Can we supply that judgment, your Honour?

KIRBY J: Yes.

MR IRELAND: I think I am accurately paraphrasing it.

KIRBY J: I am sorry to have interrupted you but I just was, and I am still, a bit troubled by that opening gambit because it unusual.

MR IRELAND: It is very important. It is very distracting in this case. It is like a boxing match. You have to sort of feint when this thing comes up. It is dealt with on one basis, and of course the real problem never emerges from our perspective. Can I read it out onto the record? This is on the first day. I am sure my friend will not object.

A question having risen –

it says “risen” –

as to whether or not an objection would be taken to your Honour dealing with the case because of past contact with one of the plaintiffs, I am instructed to inform the court that on our side of the record, and I understand on the defendants’ side of the record as well, there is no objection to your Honour dealing with the matter.

So it was very specific. So our fundamental submission on the waiver point really is there was no communication of this choice which existed. You cannot apply a doctrine of waiver unless somebody is misled into thinking that the choice has been taken by some communication in fact about that choice, and that just is not evident in this case.

GLEESON CJ: What, if any, significance attaches to the fact that it never occurred to Mr Lindsay that there was any problem arising out of the connection between the judge and his brother?

MR IRELAND: Some significance, but not decisive significance, because it is part of the inner ruminations of counsel. The reason that most of the problems in this area are so easily solved – counsel is charged with conducting a case, he decides not to cross-examine a witness; it is self-evident that he has let him go. The other side then act in the case in conformity with that decision. The client cannot say later, “Oh well, I didn’t know about that. We didn’t discuss with counsel whether that witness would be cross-examined.” You cannot revisit that issue because the party in the litigation is bound by, let me say, his agent’s conduct of the trial squarely within matters which are communicated in one way or another to the other side. But this is not a matter which arose or, put another way, if the matter was not raised for attention by either side, how can it be said that anyone would treat one course of action as waived?

GLEESON CJ: In some of the cases it is said that the reason it is incomplete to describe counsel as an agent is that counsel is an officeholder and the reason clients are bound by the conduct of their counsel is not on a principle of agency, but by reason of the office of counsel.

MR IRELAND: Well, your Honour, Harvey v Phillips and many other cases do from time to time treat it as an agency question. In fact, Harvey v Phillips articulates the point that where there is a private limitation on the authority of counsel as agent, that will be decisive so long as it is apparent to the other side. But where there is a secret limitation, in other words, the client says, “Mr Ireland, I don’t want you to settle this case come what may; that is my instruction to you” - - -

GLEESON CJ: Harvey is a case about contract.

MR IRELAND: It is a case about settlement.

GLEESON CJ: A settlement contract.

MR IRELAND: A settlement agreement, I am sorry, your Honour, yes, it is, and there are many cases about settlement in the books. Most of the cases are about settlement. One case which is in our favour, if I could just mention it, was where it was held, one might have thought surprisingly, that it was not part of counsel’s authority to agree to a reference, that counsel was briefed in the action to conduct the action and when counsel agreed that there should be a reference out, it was held that that was outside counsel’s authority and the client was not bound by it. I will just give your Honours a the reference. But it does show that, even on an agency approach, there has to be some controlling limit to that, which I suppose would be the notion of scope of agency in orthodox terms.

But our stronger point, if I might say so, your Honour, really is that there is no evident election or waiver, and just as in Vakauta v Kelly which had two aspects – one was standing by whilst the judge says unpleasant things about the GIO doctors in court, that is waived, no objection taken, but the court says in the final judgment when the judge reiterates different unpleasant things about the same doctors, that cannot be waived because it is only apparent when the judgment is delivered, and hence a new trial is ordered. So we say, your Honour, that that last factor is decisive on the issue of waiver in this case and one does not really need to get into the realms of imputation of knowledge.

GLEESON CJ: I have seen many examples of cases where judges have disclosed circumstances of possible disqualification and counsel have indicated from the Bar table that they had no objection to the judge sitting in - - -

MR IRELAND: Without reference to the client.

GLEESON CJ: In circumstances where it was obvious that they had not obtained instructions from their client.

MR IRELAND: Yes, yes.

GLEESON CJ: Indeed, in circumstances where the client was not in court. Why is the client bound in those cases?

MR IRELAND: Because of the public nature of the election. In other words, the matter is raised and the position is taken and the other side understand that position and that the decisive reason that one would say in those cases that waiver has occurred is the matter has been voiced and a position taken. Then the other side would complain if that was resiled from and the Appeal Court would say, “Do not be preposterous, you had your chance.” It is true that the client was not in court that day, but the matter having been raised, it was competent for counsel to indicate an attitude and that then took it into the field where the litigant is bound, just as he will be if counsel does not cross-examine or does not call a witness, because it is part of the open proceedings where the issue is in play, publicly, in the administration of the trial and a position is taken. But that is different from our case.

HEYDON J: Do you have any authority of that distinction?

MR IRELAND: No.

HEYDON J: It is equally unfair to the client if later he learns that he had an available point he might have liked to take whether the barrister - - -

MR IRELAND: It is always unfair, your Honour, but - - -

HEYDON J: - - - says to the judge, “We do not seek for you to stop hearing this case on that ground”, as distinct from being silent.

MR IRELAND: Yes. What all the cases seem to say – and we will just check while my learned friend is responding to try and give your Honour some references – is that once the matter is in play it is for counsel to deal the cards.

HEYDON J: Just one will do, a good one.

MR IRELAND: Otherwise the system completely breaks down because every disgruntled litigant gets a new set of lawyers and complains about the forensic decisions that were made by the first set. The Court will not tolerate that.

KIRBY J: That may be because of some principle of the kind that informed the majority of the Court’s decision in Ryan D’Orta Ekenaike, the immunity for things done in the hurly burly of the conduct of trials.

MR IRELAND: Well, it is connected with that, your Honour. It is connected with that question, but it is a different and more important rule and that is that where someone, as an advocate conducting the case, takes a decision which affects inevitably and irretrievably the course of the trial, then in those circumstances there should not be a capacity on the part of a litigant himself or herself to resile from that position and - - -

KIRBY J: But I have a similar problem to Justice Heydon. I was searching in your submissions for something in the nature of this decision that distinguishes it from the cases like Blackburn and earlier cases where it has been held to be within the agency, if I can use that expression, of counsel. Now, if you can agree to the one, but not to the other, then conceptually it seems to be in the same category kind of decision. So what is it that distinguishes this type of decision from other decisions, all the many other decisions that counsel have to make?

MR IRELAND: What I have tried to say – and I hope clearly in the written submissions and if I have not let me try and clarify it – is that where matters are apparent on the face of the proceedings that a forensic choice has been made, then the litigant will be bound by counsel’s actions and words in relation to that choice, absent some permission to resile from them. But where the matter is not in play at all and just exists in the possibility of counsel’s, I have said in the submissions, private rumination about this matter, then the litigant could not be held to that.

GLEESON CJ: But this principle is often applied in cases where counsel just has not thought about the matter at all. In other words, it applies not only to things that counsel has not done, but to things that counsel has not thought about.

MR IRELAND: Yes, but because not taking up a course of action, my example is a witness or tender of a document, is self-evident in the proceedings that that has been done. One might in the course of those proceedings, before the conclusion, say to the judge, “I am sorry, I have made a mistake, I want to seek leave to reopen” and then that is dealt with on its merits. But it becomes a matter as part of the forensic process. This thing in this case, that is the question of the judge’s association and the implications for it to both of the parties just never got on the table for discussion.

KIRBY J: If the test is self-evidence, why would one say that, just as the judge had to turn his attention to it out of prudence, therefore Mr Lindsay had to turn his attention to it and to reveal the relationship to the clients and make sure that they have given thought to that. In appellate courts we are always blessed with hindsight, we are always looking ex post, but why was it not reasonable to say that Mr Lindsay, knowing of the position of the brother in the firm, ought not to have drawn that to the notice of his clients and say, “Well, you know that - the judge has asked do we have any difficulty. He’s referred to some social things”, or we assume that is what he – “but there is this other factor. What do you say about that? Do you have any problem with him sitting?” A decision of the Court of Appeal and of this Court saying that there was waiver would in a sense put the weights on the judge but also on counsel to turn their mind to such questions a priori and not ex post.

MR IRELAND: Your Honour, again it is in a realm of difficulty, this one. On the facts of this case it is against me in a sense that the whole question of disqualification was first raised by the judge because we are in an environment of self-consciousness about that, the judge having first raised it. That point is against me. In my favour though is the submission which we have made in the written submissions that how do you set limits upon these matters? On the facts of this case Mr Lindsay made it perfectly clear and there was no cross-examination on the affidavit that he left it to junior counsel and to the clients to deal with this matter raised by the judge. He did not enter the field. So on the facts of this case I really have an answer not in principle but on the particular facts.

KIRBY J: But you have on the particular facts that Mr Lindsay said, “It didn’t trouble me when I turned my mind to it that there was this relationship”. Often people in the club are not concerned but lay litigants – of course these are not entirely lay litigants.

MR IRELAND: No, they are not.

KIRBY J: But lay litigants are deeply concerned about such matters. It may seem unreasonable to us lawyers but that is sometimes the case.

MR IRELAND: Really, your Honour, there are two ways of solving the problem that your Honour posits. One is for the judge to have some responsibility to articulate the matter and then it is dealt with properly and fully. The other is to rely on the judgment of those who conduct the cases to - - -

KIRBY J: Why not rely on both.

MR IRELAND: You cannot rely on both.

KIRBY J: The judge in the first instance and, to the extent that counsel knows anything, counsel in the second instance.

MR IRELAND: We would prefer to say, your Honour, that this is a rule about the open administration of justice, the answer to which should not lie in the privately held decisions either of the judge not to raise the matter or of the barrister for whatever tangential or other reasons on the other side. So the only satisfactory rule to impose is that where the judge has the connection – after all, it is he who has the connection.

GLEESON CJ: We know why the barrister did not raise the matter. It never occurred to him that there was a problem.

MR IRELAND: That is neutral.

CRENNAN J: But in that context what should we make of the fact that Mr Leslie, who I think has been practising for over 40 years, remains silent on whether or not he knew that Mr Geoff McClellan was a partner at Freehills?

MR IRELAND: He did not know. Mr Leslie himself did not know.

CRENNAN J: He does not say that though, does he? He says he did not know that Mr Geoff McClellan was chairman.

MR IRELAND: Yes, and that was what the Chief Justice asked me at the beginning of all this, whether or not that carries with it the implication - I was criticised for using that word – that he did not know he was a member of the firm.

CRENNAN J: It cannot carry that implication, can it? You cannot make the inference that he did not know. You are speaking of a deponent who is a solicitor for over 40 years who was a registrar at some stage who remained silent on the issue of whether or not he knew.

MR IRELAND: One cannot really speculate about that. You cannot say that because – your Honour, I was asked to give further references. I should have come back to paragraph 23 of the Court of Appeal’s decision. It is page 178 of the appeal book – I am sorry, I have been given the wrong – it is paragraph 23 of the Court of Appeal’s judgment.

GUMMOW J: Page 276?

MR IRELAND: Yes, I am sorry, your Honour, 276:

The following matters are established and not in dispute. His Honour’s brother was on the date of judgment a partner and the chairman of Freehills. It is assumed that he had been both from the time the proceedings began before McClellan J. Neither of the plaintiff solicitors nor junior counsel, Mr Haffenden, was aware of this before the trial - - -

GUMMOW J: Well, what is the foundation for that finding?

MR IRELAND: I think it must be the implication that the court has criticised - - -

KIRBY J: Is that contested in the notice of contention?

MR IRELAND: No.

CRENNAN J: There was no cross-examination, I take it, of Mr Leslie?

MR IRELAND: No, the judge just brought him forward.

CRENNAN J: Brought him forward, yes.

MR IRELAND: There is a certain unreality about all this, and I was slightly surprised that the Court was seeing it as an issue, as that passage I have just referred to - - -

GLEESON CJ: What in fact happened was, as I understand it, the judge read this affidavit of Mr Leslie and he said, “Just a minute, you are not telling me that Mr Lindsay didn’t know that my brother was a partner at Freehills?” and they said, “No, no, we are not telling you that”, and it sort of moved on from there.

MR IRELAND: After swearing his affidavit when he did believe that, he had spoken to Lindsay and he said, “I resile from that”, and it went forward on the correct factual basis, which is that which the Court of Appeal sets out in paragraph 23.

GLEESON CJ: Now, the Court of Appeal said, “That is enough. The fact that Mr Lindsay knew it is enough and we are not going to make a finding of fact about whether Mr Lindsay told Mr Leslie. He may well have.”

MR IRELAND: But, as you say, no finding made, so the decisive reasoning is it did not matter.

GLEESON CJ: Well, what I cannot relate, I must say, is what the Court of Appeal says at page 276 in the third sentence of paragraph 23 with what the Court of Appeal said in the second sentence of paragraph 43.

MR IRELAND: Yes.

GLEESON CJ: They just seem to me to be inconsistent.

MR IRELAND: Well, the inconsistency resolves our way, we say, for the purpose of this waiver argument, because the underlying facts are not in contest. Justice Sheller says in 43:

Indeed, according to his evidence, Mr Lindsay may well have done so.

That is a sort of parenthesis. But they do not proceed upon the basis that the litigants were told, and that is plain enough from paragraph - - -

GLEESON CJ: But this is all in a context where their conclusion or their opinion is it does not matter.

MR IRELAND: Yes, and that is why I say the overwhelming reasoning is the imputation argument.

GLEESON CJ: Yes. That probably explains why the fact finding of the Court of Appeal on this matter - - -

MR IRELAND: Is a bit hit and miss.

GLEESON CJ: - - - is not rigorous, because it is not a factual issue that they found it necessary to resolve.

MR IRELAND: Yes, I think that is right, your Honour, with respect. So we were overwhelmed by the imputation argument in the Court of Appeal. For the reasons I have advanced, that it was the wrong approach.

KIRBY J: Is there any authority on the imputation argument in relation to counsel that has explored the issue of the limits of what will be attributed and how you distinguish from, say, legal knowledge and matters of that kind, and personal associations in relationships?

MR IRELAND: Not in the context of counsel. The closest it gets is the case that Justice McHugh mentioned in the leave application which we have referred to in paragraph 36 of our written submissions which is Tate v Hyslop. It is a case where solicitors who regularly acted for insurers were told of a particular arrangement and it was held that the knowledge of the solicitors should not be imputed to the underwriters but, as we have said in our written submissions, these insurance cases raising, as they do, questions of disclosure are really in a slightly different realm. That is our primary position on insurance cases and, as the Chief Justice said, the position of counsel is not or may not be comprehensively described as simply an example of simple agency.

GUMMOW J: It is simply because counsel are officers of the court.

MR IRELAND: I know. Counsel cannot peddle rubbish that the clients want to put up. They have that discretion. You may think that that rule is not observed.

GUMMOW J: Their duties do not flow just in one channel.

MR IRELAND: No.

GUMMOW J: So why are we worried about Tate v Hyslop? I know it is in Bowstead and Professor Reynolds gets very agitated about it.

MR IRELAND: I was only answering Justice Kirby’s question and that is about the closest it comes in terms of imputation of knowledge to solicitors, and that is decided on the basis that the solicitors are – occasional solicitors, let me say, for the insurers are not charged with the task in this case of acting in that capacity which is really a different reason to make the finding.

HAYNE J: This question as to the consequence to be attributed to counsel’s knowledge of the fact may have to be rooted back into the notion of adversarial trial, may it not, and in particular to considerations of the kind Sir Garfield Barwick mentioned in Ratten v The Queen 131 CLR 510, true it is in the criminal context, particularly at 517 where Sir Garfield, speaking of criminal trial, said:

It is a trial, not an inquisition: a trial in which the protagonists are the Crown on the one hand and the accused on the other. Each is free to decide the ground on which it or he will contest the issue, the evidence –

et cetera. Now, whereas here counsel is retained for a party and the relevant hypothesis for consideration is that counsel knows of an association which is of a kind that would excite the reasonable observer, does not counsel’s continued conduct of the trial – leave aside the fact of conduct of the trial to the point which this trial had got – given the nature of adversarial trial, have the inevitable consequence that the point is no longer open?

MR IRELAND: No, because the issue that is up for grabs is the judge’s suitability to hear the case. What happens in the framework of a trial before a judge who is appropriately to hear the case is one thing. Where the very matter touches the suitability of the judge to sit at all is in a different arena. Those are my respectful submissions.

GLEESON CJ: Thank you, Mr Ireland.

KIRBY J: Mr Ireland, just before you finish, during the argument I was handed a note that one of my associates worked at one stage at Freehills. They are not on the record in the case and therefore not having noticed that was not a fault. The associate did not work on the case. I will direct the associate has nothing to do with the preparation of my reasons in the matter, but the rule of prudence requires that I should disclose that to you. It is not unknown for associates to come from various firms, including Freehills, but I thought I should put that on the record in case you want, over the lunchtime, to take instructions from your client.

MR IRELAND: Yes.

GUMMOW J: I certainly do not regard myself as bound by any such rule of prudence.

MR IRELAND: No. I do not want to enter the debate but I will take those instructions.

GUMMOW J: I have not observed them for the last 20 years and I do not propose to start.

KIRBY J: Ebner shows that different judges take different views and different courts take different views on these matters, but I am doing what I consider to be right.

MR IRELAND: Thank you, your Honour.

GLEESON CJ: Thank you, Mr Ireland. Yes, Mr Parker.

MR PARKER: In our written submissions in paragraph 14 we have set out to state the chain of reasoning which leads to the asserted difficulty with the judge deciding the case on its merits. May I just say one further thing in relation to paragraph (b) – that is the second step – arising out of what Justice Hayne said in the course of the argument? His Honour made the point that the costs would need to be assessed. That might be a significant matter in this case because it would appear from the judge’s recounting of the background of the litigation starting at page 88 of the appeal book in paragraph 12 - - -

KIRBY J: At the outset, do you accept that the judge ought to have disclosed at the beginning of the proceedings, in public and on the record, that one of the defendants contingently possibly affected by the proceedings outcome was his brother?

MR PARKER: No, I do not.

GUMMOW J: Be careful before you answer that. The word “ought” is a phrase of indeterminate reference.

MR PARKER: I was about to say if by “ought” your Honour meant whether there was an obligation under the principles that we are dealing with here which would lead to the conclusion that he would have been biased, then the answer is, no, I do not accept it. If your Honour is asking was it a matter of prudence, then I do not really have anything I can say about it.

GLEESON CJ: I think, actually, it was in Ebner that this Court pointed out that judges should not lightly offer to disqualify themselves because if they did you would very quickly get to a situation where litigants would choose their judges.

MR PARKER: Yes, and I think that point has been made in other disqualification cases in this Court as well.

KIRBY J: In JRL, I think, Justice Mason said something similar.

MR PARKER: That is right, said it had to be said loudly and clearly. Just to go back to paragraph 14(b) of our submissions, apparently the issues on which Mr Ireland’s clients worked extended beyond the litigation of the case against Freehills. There is reference in paragraph 12 to the removal of a gentleman called Mr Luscombe as a shareholder in one of the companies and then in paragraph 19 on page 89 there is reference to consideration being given to suing the Victorian Government and - - -

HAYNE J: But what you say in paragraph 14(b) must be understood, must it not, against one outcome of the litigation involving this firm Smits Leslie being that Smits Leslie would be entitled to recover no costs from the Roach interests and the Roach interests, at least arguably, thus could not recover as costs from Freehills that which they were not bound to pay out to Smits Leslie?

MR PARKER: I accept that if they failed then there would be nothing recoverable. The point that I am seeking to make is that it is another element of the indirectness of the relationship, because even if they could recover, it is by no means a dollar for dollar relationship between what was recovered in these proceedings and what ought to be recovered against Freehills. That would depend, for instance, on whether all of the costs that they did under the retainer were even costs relating to the Freehills proceedings and I am seeking to make the point that on the facts it would appear that they were not.

HAYNE J: And one outcome of this litigation would have been that Freehills would otherwise have been relieved of an obligation pro tanto that otherwise might be expected to have been incurred had they, that is Freehills, lost the litigation instituted by the Roaches against them.

MR PARKER: I accept that but it is a question of how much the pro tanto is because that in itself depends upon a lot of other factors that were not explored and we do not know. One other comment that the judge made in the course of his judgment was that he was critical of the way the case had been prepared. He said that they had not prepared the case properly and there may well have been questions about whether all of the costs from that particular period would have been allowed on assessment for that reason. The assessor might have concluded, for instance, that many of these costs were costs which should not have been incurred or had not really advanced the progress of the proceedings. The judge made comments in the part of the judgment to which I referred about the lack of progress in the proceedings. But I come back to accepting what Justice Hayne has put to me. Ultimately there was in a sense a contingent possibility of a benefit for Freehills if this litigation failed.

GLEESON CJ: Can I just understand something about the facts better than I do at the moment, Mr Parker. The relationship between Smits Leslie and the Roaches had broken down completely by the time of the litigation before Justice McClellan.

MR PARKER: Yes.

GLEESON CJ: But the litigation against Freehills was still being pursued by the Roaches with some other solicitor.

MR PARKER: That is correct.

GLEESON CJ: Was that the one with the litigation funding?

MR PARKER: I believe that it was pursuant to the litigation funder. I think the litigation funder found a solicitor. There is reference in the judgment to the litigation funder becoming involved.

GLEESON CJ: Do we know anything from the material before us as to the basis on which the new solicitor was acting?

MR PARKER: We do not. Can I go to paragraph 15 of our written submission where we make the point about the chain of reasoning - - -

KIRBY J: Something must have happened in the judge’s ruminations that led him at a certain point to consider that he was obliged to make disclosure and to put it on the record and that was at a rather important point when he was making his decision.

HAYNE J: Yes, there was a dispute about confidentiality which directly and immediately affected Freehills.

MR PARKER: But Freehills were actually a party before the judge at that point; they were represented.

GLEESON CJ: We know what it was that made the judge think he had to make disclosure.

MR PARKER: It was not this argument occurring to him, it was - - -

KIRBY J: No, but that is the point I am seeking to flush out. The points are not divorced. They are related because they arose in his Honour’s ruminations when he was considering this case.

MR PARKER: In our submission, there is no relationship at all between them; it is a mere coincidence.

KIRBY J: So it is only coincidence that led the judge to take the step of seeking to disclose that matter which he said had not occurred to him before.

MR PARKER: The judge had to disclose that matter because Freehills were a party to an application before him and ordinary principles would require, if there was an association with Freehills, that he say something about it. That is the only reason it came out.

GUMMOW J: The judge points it out at page 216, the first paragraph of his judgment.

MR PARKER: So we adopt what has already fallen from the Chief Justice and I think Justice Hayne just now on that. We say there is no connection. This argument or this strained chain of reasoning which leads to the conclusion that the judge is supposed to be biased is something that never relevantly occurred at any time to the judge. It is not as if he failed to notice it and then the light turned on, as my friend put it. He referred to it and made the disclosure about Freehills entirely as a result of a coincidence.

HEYDON J: The transcript of 26 June 2002 which is in the supplementary appeal book reveals the judge is constantly groping in trying to work out what point is being made, which supports what you just said.

MR PARKER: Yes, that is correct, your Honour. He constantly asks, “What’s the problem?” I mean, it is articulated eventually and then he says, “I still don’t see it”.

It has been put against us that this is a category 1 – and I am speaking of the categories that Justice Deane enumerated in Webb’s Case – this is a category 1 case, that is interest, and a category 3 case, that is association. In our submission, this is not an interest case at all. Interest cases are about interests that the judge has. The judge had no interest. If this is anything, this is an association case. This is a case where the judge has a connection, falling short of any pecuniary interest or any other type of interest, or an association with someone who has an interest in the proceedings.

Now, we accept that there might be circumstances in which the judge could have an association with someone who had an interest in the proceedings and that that could give rise to a reasonable apprehension of bias, but the point we want to make is that that could only be so if it was a known interest, that is, known to the judge.

Now, an important fact in this case is that not only was it never established what precise interest Mr McClellan had in the outcome of these proceedings, in the sense that there was no exploration of the question of insurance and the like, but it was never suggested that the judge had any knowledge of those matters. It was never suggested that the judge knew what his brother’s insurance arrangements were.

KIRBY J: Well, that is true, but lawyers being what they are, when people get together they tend, amongst other things, to talk about their firms and the issues that arise and so on. The difficulty I have is that lawyers may regard these as innocent but other people do not necessarily do so.

MR PARKER: But if your Honour was intending to put to me then that perhaps the judge had discussed the question of insurance - - -

KIRBY J: No, not necessarily insurance, but just the issues of the firm. I do not think it does need to get down to the involvement of the insurance, but the interests, the future, the personalities and so on of the firm. These things do tend to get discussed.

MR PARKER: The judge would recognise, as any reasonable observer would recognise, that there would likely be insurance and the question whether the judge’s brother had any real interest in the outcome of these particular proceedings would depend - - -

KIRBY J: You are thinking in very mercantile thoughts. You are thinking in terms of dollars and cents. I am thinking in associative thoughts, of association, of empathy, of interest in the sense of identification and involvement in a general way, in an emotional way, sensitive to a brother’s position in a legal firm.

MR PARKER: Your Honour, in the case that is put against us, the interest is essential. It has not been said against us that it is merely because Mr McClellan, for instance, was a defendant in the proceedings and might be called as a witness. What is being put is a - - -

KIRBY J: But it is put on the basis of association.

MR PARKER: It is being put on the basis of an association combined with a mercantile interest. The mercantile interest is Freehills will have to pay the costs. That is the thing that makes this case, because without that factor there is nothing. Our point is that that interest is required under the principles in Ebner to be articulated and identified as a matter of evidence and that never happened in this case.

KIRBY J: You did not put on any evidence about the insurance of Freehills?

MR PARKER: No, but of course it was not our onus.

KIRBY J: Yes, but you are relying on it now.

MR PARKER: I am allowed to rely on an absence of evidence - - -

KIRBY J: But absence of evidence of insurance leaves me in a position that I just do not know. I do not know the extent of it. I do not know what it covers. I do not know whether it covered this risk. I do not know whether it is big enough.

MR PARKER: That is the point we are coming to. These are all matters of speculation and we are saying that it is not enough to just say - - -

KIRBY J: But you are asserting insurance.

MR PARKER: - - - there might be an interest, there is a speculated interest. We are saying there needs to be an established interest and, furthermore, it needs to be shown that the judge was aware of that interest. Unless one can establish that there was an interest and the judge was aware of it, there is no basis for the informed observer to recognise that there is any problem.

GLEESON CJ: At page 271, line 13 there is a sentence consisting of four words which identifies the argument for the proposition that the judge should have disqualified himself. What he said is, “That is the argument.” The argument is to be found in the preceding sentence. That, as I understand it, is the only basis upon which it was ever suggested or has ever been suggested that the judge should have disqualified himself.

MR PARKER: Your Honour is correct, with respect.

KIRBY J: Yes, but the argument that is put before us is that there are two foundations. Good or bad, they are association and interest. Association is not precisely dollars and cents.

MR PARKER: Your Honour, I have made the submission. We say that ultimately there is a two-headed or a double element to the claim that is made and there must be one. It is not said that pure association, namely the fact that Mr McClellan was a defendant in the proceedings, was relevant. That was not put to his Honour at first instance.

KIRBY J: So the standard that our courts are to accept if this argument is correct is that though you may have a lay litigant – that is not this case but you might have a lay litigant – the judge is deciding a matter which down the track may have implications for his brother, however big or however small, and the judge does not have to disclose that matter on the record.

MR PARKER: Unless it is shown what the interest is and that the judge is aware that it is a substantial interest, because the point is it might not be an interest at all, it might not be a substantial interest. If he is totally - - -

KIRBY J: But the judge will ordinarily not know that. The judge will not know that and that is why one might argue that the matter ought to be stated so that it can be considered and instructions taken and decisions made in a transparent way.

MR PARKER: May I ask your Honour this question because that is what Mr Ireland said. The judge did not see there was any problem. That is why he did not mention it. It never occurred to him that there was any problem and the judge did not have - - -

KIRBY J: The Court of Appeal considered there to be a problem.

MR PARKER: The judge did not have any information that would allow him to be precise about whether there was a problem or there was not. He did not know what impact this case would have on his brother’s position. He did not know whether it be large or small, insured, uninsured. There is nothing to suggest that it was ever known and he did not consider there was a problem and yet it is now being said that the attitude of the reasonable bystander would require him to disqualify himself in circumstances where he does not even know what the interest is.

KIRBY J: The suggestion is that the obligation is to disclose it so that a question of objection can be addressed to the attention of the litigant who is entitled to an independent and impartial tribunal. So that conscious decisions can be made on such a matter. The fact that we are all here is because that was not done.

MR PARKER: Your Honour, that was dealt with in Ebner and I do not want to add to what I have already said about that and what we have said in the written submissions.

KIRBY J: No, but I agreed with the rest of the Court in Ebner. It was Clenae that I took a different view. Ebner does not mean that you do not have to disclose anything if it is an association. Ebner was concerned with financial interest.

MR PARKER: I correct what I have said but I do not want to add to what we have said in the submissions about that topic. It is a different question to ask whether it would have been wise for the judge to take the action and to ask whether if he had not failed to take the action it results in an apprehension of bias and the trial being, in effect, having to be redone. Can I refer in this connection to one of the cases that we have referred to?

GUMMOW J: Just before you do that, Mr Parker, is there any evidence in support of this motion before Justice McClellan? Looking at the transcript, there does not seem to be.

MR PARKER: No. Mr Lindsay was not sworn. The application was dealt with - - -

GLEESON CJ: Mr Leslie, I think you mean.

MR PARKER: I am sorry.

GUMMOW J: Mr Leslie was not sworn.

MR PARKER: Mr Leslie was not sworn.

GUMMOW J: Was there any affidavit evidence?

MR PARKER: There was an affidavit handed up.

GUMMOW J: Where do we see that?

MR PARKER: If your Honours look at the transcript, it is at the supplementary appeal book, page 3. There his Honour, between lines 30 and 35, says “I will see the documents.” We infer that is the notice of motion and the affidavit.

I will see the documents.

The documents are handed up. The notice of motion does not seem ever to have been formally filed. The affidavit does not seem ever to have been formally filed. It certainly was not read.

GUMMOW J: What was the affidavit?

MR PARKER: That is the affidavit which is at 229 which is Mr Leslie’s affidavit.

GLEESON CJ: That affidavit seems to have been treated as being in evidence for the purpose of the judgment that the judge gave.

MR PARKER: As we would put it, the judge certainly did not formally take it into evidence. His judgment really proceeds on the assumption that the affidavit is correct.

GLEESON CJ: Although, in one respect, Mr Leslie resiled from something that he said in the affidavit.

MR PARKER: Yes, with the correction. So what the judge did was he got the affidavit, read it, said, “Well, it must be wrong about Mr Lindsay”, called Mr Leslie forward. Mr Leslie said from the well of the court that was wrong, and then the judge then said, “Well, have you anything else, Mr Haffenden?” Mr Haffenden said, “No” and the judge then delivered his judgment.

KIRBY J: The point about Mr Leslie’s affidavit was that it was referring to the fact that the brother was the chairman of partners of Freehills not as a partner of Freehills.

MR PARKER: I do not think that is how his Honour understood it and I do not think that is how Mr Leslie understood it because Mr Leslie did make the correction and said from the well of the court, “No, I was wrong about that.”

KIRBY J: Is that in this transcript?

MR PARKER: Yes, I believe so, your Honour. Page 4, line 30, your Honour, there is Mr Leslie recorded as saying:

I did speak to him last week.

That is Mr Lindsay:

I understand, since I swore my affidavit, that Mr Lindsay now says that he did say that and that part of my affidavit is incorrect, according to Mr Lindsay.

CRENNAN J: Yes, Mr Parker, but a separate point, I think, arising out of paragraph 9 of Mr Leslie’s affidavit on page 230, so far as your side was concerned, did the matter proceed before his Honour on the basis – you will see there in paragraph 9 Mr Leslie says nothing about whether or not he knew Mr Geoff McClellan was a partner. He deals with the issue of being chairman. Was the case conducted before the trial judge on the basis, so far as your side was concerned, of some acceptance that Mr Leslie did not know that Mr Geoff McClellan was a partner at Freehills?

MR PARKER: My friend nods because we did not actually say any – my predecessor did not say anything in the course of this application. He neither accepted the accuracy of what Mr Leslie had said in his affidavit, nor said anything to contest it. It was entirely a debate between the judge and Mr Arnold’s predecessor, Mr Haffenden.

GLEESON CJ: Then the matter was complicated in the Court of Appeal because Mr Lindsay put in an affidavit which the Court of Appeal understood as meaning he may well have told Mr Leslie.

MR PARKER: Yes, but in my submission, when one looks at the whole of what happened before the trial judge, the case in essence has been decided on the assumption that everything in Mr Leslie’s affidavit is correct, except perhaps what he said about Mr Lindsay, and the judge is saying, “Well, even if all of that is right, I don’t have any difficulty with sitting. There’s no problem and there’s a waiver”, and the Court of Appeal has dealt with the case on the same basis. There has been no real forensic contest about the accuracy of the other statements made in Mr Leslie’s affidavit, mainly the statement that he and Mr Smits did not know and did not find out until afterwards, and also the important statement which appears at paragraph 12 of the affidavit on page 231 where there is an assertion which is made that, had the matter been disclosed, both Mr Smits and Mr Leslie would have insisted on an application being made to disqualify the judge.

Now, those are all factual matters, as we have said in our written submission, and we say that they have not been properly the subject of findings because of the way the case has been dealt with, and if my friend were to succeed, they would need to go back because if they are not right – and we do not accept that they are necessarily right – then my friend’s application will ultimately fail on the facts.

Of course, we developed that as part of our waiver argument because it is our submission that the possibility of that sort of outcome shows that this sort of inquiry cannot be the inquiry on which the court should embark when somebody says, “Well, counsel did something that I didn’t approve of”. Inevitably, that brings us into asking two questions: well, did counsel in fact disclose it or not disclose it; and then, if they did, would it have made any difference? Those are matters which are entirely internal to the other side, and it cannot be the case that the position of the court and the position of the other party to the litigation will ultimately depend upon the factual answers to those questions.

KIRBY J: The Court of Appeal did not, in the way it approached the matter, have to determine a causation question, did it?

MR PARKER: No, they have really dealt with – and this is what we say, there has already been reference to the fact that what they said in paragraph 23 is not consistent with what they said in paragraph 43. We say what they have said earlier in their judgment is really – they picked up the same assumption that the trial judge has made. But it is clear from 43 that they are not making any factual findings on the question. Now, I have skipped ahead to say something about waiver.

GUMMOW J: You have a summons, have you not? Do we not have to deal with that, page 326?

MR PARKER: Yes, your Honour. We were late on filing our notice of contention. Formally, we need leave.

GLEESON CJ: Is that opposed, Mr Ireland? Yes, you have that leave.

MR PARKER: I was going to refer the Court to the S & M Case 12 NSWLR 358. The relevant passage is the dialogue between the citizens that takes place - - -

KIRBY J: Just before you move to that, I am looking at your notice of contention. It does not specifically raise what I call the causation point, that is to say that you contend that even if the Court of Appeal was right in the legal treatment of bias, that it would not have made any difference in this case. Is that not a separate question?

MR PARKER: I must say I had not seen it as a separate question.

GLEESON CJ: Your notice of contention would only have to cover an adverse decision to you in the Court of Appeal, would it not?

MR PARKER: Yes.

GLEESON CJ: Your notice of contention, as I understand it, is directed towards the disqualification issue.

MR PARKER: Yes.

KIRBY J: But it does not tender the issue for our decision. I mean, at least at some stage, if the appellants succeeded – as I understand it, you say, well, even if they succeed, they are not entitled to the order they seek. They are only entitled to the matter going back for trial on the issues of fact so that they may be properly determined.

MR PARKER: Yes.

KIRBY J: I would have thought that is a notice of contention.

MR PARKER: I must say, and I misunderstood what your Honour said to me earlier, that from our point of view we did not see that as something that was a notice of contention. We saw it as part of resisting the orders which my friend seeks. He comes here and asks to have the judgment of the Court of Appeal set aside. We seek to maintain it. If he succeeds in knocking over their judgment it is open to us to say some lesser order than he seeks, namely, remittal for a new trial.

KIRBY J: I have raised the matter.

MR PARKER: Yes.

GUMMOW J: Why do we have to go back to S & M Motors? This Court has dealt with the subject since then. Why do we go back to S & M Motors? The starting point is the decision of this Court.

MR PARKER: In Ebner. I accept that, your Honour, but what I wanted to refer to the dialogue for was that in the dialogue one of the points that is made is the judge might be associated with someone who has an interest. There is an element of speculation. The second citizen who represents the view in effect of the majority in that case is firm in insisting that if you do not know you do not take it into account, and that is something that we are seeking to rely on here. We are saying that if you do not know what the interest is or you do not know that the judge knows of an interest then the reasonable bystander does not.

GLEESON CJ: This is an aspect of a very old problem in this area of the law to which there may be no satisfactory answer, but how much knowledge do you attribute to the observer?

MR PARKER: We say that you have to attribute to the observer knowledge in an interest case knowledge of what the interest in fact is and in an association case knowledge of what the association in fact is and we say that at that point you do not then fill in any gaps in the reasoning process that you need under Ebner to carry out by speculating on the possibility of there being some other fact or interest.

GLEESON CJ: It depends on the force of this double-barrelled reference to “might” in the standard test, does it not?

MR PARKER: It does.

GLEESON CJ: It is there in the test but it sounds like a word that, in some respects, invites speculation.

MR PARKER: It invites speculation as to whether the judge will ultimately be true to the judicial oath or not. It certainly invites speculation as to that because everybody accepts the judge is not likely to be affected by these things so when the word - - -

KIRBY J: That sounds like actual bias, which is not alleged here. That is not betraying the judicial oath, it is what other people may think has happened.

MR PARKER: And that is why the word “might” is used because you do not have to show actual bias, you have to show grounds which might lead to a departure.

KIRBY J: No one has suggested that Justice McClellan was actually biased.

MR PARKER: I know that, your Honour.

GLEESON CJ: We are talking about apprehension of bias.

MR PARKER: Yes.

GLEESON CJ: It is an apprehension based on what level of knowledge or information.

MR PARKER: That is the question. The answer posed by this dialogue, inferentially, is that you do not speculate as to the existence of further facts which, if they existed, might give rise to an apprehension of bias. One cannot have that double-barrelled element of speculation. Can I just illustrate that by reference to one of the matters that was referred to there. On about page 380, starting about line C:

First Citizen. Well, he may at least unconsciously be affected in his decision by a feeling that the people he knew in Caltex would be pleased by a decision in the company’s favour . . .

Second Citizen. Then, what do you think the chances are that the judge became friendly with somebody sufficiently high and permanent in Caltex for him possibly to be unconsciously affected in his decisions about the company?

First Citizen. I think it is possible.

Second Citizen. Have you any reason at all for thinking that this judge has such a friend in Caltex?

First Citizen. No, but it might be so.

The answer given by the court there was that that is not enough, you cannot speculate that he has a friend there or that he knows somebody.

GUMMOW J: All this is paragraph 8 of Ebner.

GLEESON CJ: You do not have the reasonable observer sitting in the back of the court thinking to himself the judge’s brother might owe him money.

MR PARKER: Yes.

GLEESON CJ: He might.

MR PARKER: That is exactly what we say. You do not speculate about those sorts of matters. It is a question of what the judge knows - - -

KIRBY J: There is a bit of a difference between a retainer and you are at the Bar and the judge on the Bench for a year and an association with a brother which is lifelong, fixed in blood, and in most cases close, and the brother is a defendant in an action contingently to be affected. It is quite a different factual situation.

MR PARKER: We rely on it for its approach because the approach there is a refusal on the part of the reasonable bystander to assume or guess about the existence of other facts, which if those other facts existed would cause a problem, and in our submission, that must be so because otherwise this test would become a paranoid’s charter, because it would allow a party not to have established circumstances which give rise to the problem but to hypothesise those circumstances from other facts and then build on that to then say the judge should be disqualified.

GLEESON CJ: Is that a convenient time, Mr Parker?

MR PARKER: Thank you, your Honour.

GLEESON CJ: We will adjourn until 2.15 pm.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.17 PM:

GLEESON CJ: Yes, Mr Parker.

MR PARKER: I have already submitted that in a case of this kind it is necessary to show both that the associate in fact has a substantial interest in the outcome of the proceedings and, secondly, that the judge knows of that. May I just give the Court a reference which does not appear in our written submissions to American authority on that question which on the face of it goes in a slightly different direction. The case is called Liljeberg v Health Services Acquisition Corporation and I understand that copies of that were made available to the Court.

Your Honours, the law in the United States is statutory, that is at least in the federal sphere. The relevant extract from the statute appears at pages 858 and 859 of the report. It is Title 28 of USC, section 455. Subparagraph (a) provides for a general obligation to disqualify where the judge’s “impartiality might reasonable be questioned.” That obviously has some similarity to our test. Then subparagraph (b) contains a number of specific situations where the judge is required to disqualify himself or herself. The full provisions of the statute are not set out there. It is only subparagraph (b)(4) which appears but there are a number of actual other paragraphs. Apparently this legislation was based on a committee of the ABA in the 1970s which included a number of judges, including one judge of the Supreme Court of the US and in effect this legislation reflects quite closely the ABA requirements. Relevantly your Honours will see that in the case of an associate having an interest, the judge is required to know that there is a financial interest.

GLEESON CJ: Where did you get that word “associate”?

MR PARKER: That is the word that I am using to describe spouse, minor child residing in the household in (b)(4). Now, in this case, it was actually an application for disqualification under subparagraph (a). The judge had been the chairman of trustees of a university which had some interest in some proceedings which later came before the judge. By the time the proceedings came before the judge, it appeared on the facts that the judge had actually forgotten that there was an interest, so there was no subjective knowledge.

The majority of the Court held - and the reasoning starts at page 861. It is at the beginning of the page at about point 2, “Contrary to petitioner’s contentions”. So the finding of the majority was that although the judge did not in fact know at the time he ought to have known, so they adopted some form of constructive notice under subparagraph (a). The minority strongly repudiated that and the minority’s judgment is found in the Chief Justice’s judgment at pages 872 to 873.

Now, it is a very different context because of the statutory element, but I thought I should draw that to the Court’s attention. On the face of it, it seems to be against the submission that I make that knowledge is necessary, but of course even on the facts of this case, in our submission, it cannot be said that the judge ought to have known the relevant facts which would give his brother an interest or not, namely, the state of the insurance position and the like. So that even if one adopted the majority’s approach it could not be said, we would say, that the judge had some sort of duty to inquire into such matters.

KIRBY J: But is the case not a little closer to the case of Lord Hoffmann in the Pinochet litigation where the disqualifying element which the House of Lords found was that Lady Hoffmann had worked for and been associated with Amnesty International, and his Lordship had had that association too?

MR PARKER: I do not think it was an association solely through Lady Hoffmann, as I understand it.

KIRBY J: No, you are right. It was both his Lordship’s involvement with a fundraising endeavour of Amnesty International but also his wife, I think, worked there at some time.

MR PARKER: Also, as I understand it, the important facts were that his Lordship was the chairman of a charity which was the charitable arm of Amnesty International. There were two arms. There was in fact a non-charitable and a charitable arm. He was the chairman of the charitable arm, but importantly, although the charitable arm was not a party to the proceedings it was the non-charitable arm that was the party to the proceedings. The charitable arm had actually sought and got a report from the non-charitable arm, AI, on torture in Chile. As we read their Lordship’s decision - - -

GUMMOW J: They were applying a different criterion to that we applied in Ebner.

MR PARKER: That is true and they said that.

GUMMOW J: I think we said so in that. A stricter criterion..... I am not sure Lord Hoffmann would have been, in accordance with Ebner, treated in the same way.

MR PARKER: I accept that.

GLEESON CJ: Did the outcome in that case turn in part upon the nature of Amnesty International which is, of course, a proselytising organisation.

MR PARKER: Yes, I think so, because the facts that were seen as important were first, Amnesty International itself had intervened in the proceedings in effect as amicus curiae, or on the face of it as amicus curiae, but really to contend for a particular outcome, namely, to support the extradition application.

KIRBY J: Here, of course, the brother is a party to the proceedings down the track.

MR PARKER: Yes, but Amnesty International was a party to the proceedings before his Lordship. The proceedings that Lord Hoffmann sat on were the extradition proceedings.

KIRBY J: It is a question of what is before the Court. It is not immediately before the Court but it is contingently involved in the matter that is before the Court. That is the complaint that is made.

MR PARKER: I have said what I wanted to say about that and its remoteness and the like.

KIRBY J: I am just drawing the comparison of the two cases. You were going on to say that there was something else.

MR PARKER: It was a very different case because Amnesty International was, in effect, a party to the proceedings that his Lordship was sitting on, not a party to some other proceedings that were going to be affected by it. They were actually, in effect, a party to those proceedings because they had intervened and said Senator Pinochet should be extradited. Although Lord Hoffman did not hold any position with Amnesty International, he held a position with the charitable company and the charitable company had called for a report on torture in Chile and had made a public statement to the effect that was consistent with Amnesty International’s position in the proceedings and the Lords really treated both of those bodies as being, in substance, the same body.

They just said, well, sure part of it is charity, but that is because that is its charitable wing, but in substance it is the same organisation. So this was a case on that view where Lord Hoffman was the chairman of an organ – of a body which body had a publicly stated view on the case and - - -

GLEESON CJ: It was an advocate – it was a body whose function was advocacy.

MR PARKER: And had intervened in the very case to advocate a particular outcome. So we would say that is very different from the sort of considerations that apply here.

HAYNE J: The particular decision was the outcome of applying what was seen as an automatic rule, was it not, in Pinochet?

MR PARKER: I think they applied the Gough test.

GUMMOW J: Look at paragraphs 33 and 88 of Ebner, which I keep bleating about with no great effect.

MR PARKER: That brings me to the second part of the argument, which is waiver. In our paragraphs 21 and following, we first set out the way in which we say the Court should apply the principle, or the principle that we are contending for. We complain a little of being misrepresented slightly by Mr Ireland. We do not like the word “imputation” either.

GUMMOW J: Can you say that again, Mr Parker.

MR PARKER: We do not like the word “imputation” either because we see the word “imputation” as being confined to a situation where the action is in one person and the knowledge is in somebody else. We simply say that the test here is whether the agent - - -

GUMMOW J: Mr Ireland is right, is he not? The restatement has nothing to do with this. Sections 272 and following in the second restatement and article 503 in the draft third restatement which follows it up, they are all dealing with agency in its ordinary sense, agent bringing about a legal relationship on the part of the principal and some third party in contract or tort.

MR PARKER: Certainly the case is in that area but it is cast in terms of transaction. We would say that there is no reason why the principles which apply in a commercial transaction should be any different when analysing the effect of the conduct of counsel vis-à-vis the court in the first instance and then the other party. In a sense when counsel is asked to appear in court on the client’s behalf, he is engaging in a transaction on the client’s behalf. That is the way we would see it. So we would seek to support what we say by reference to the restatement. The ultimate principle for which we contend is that if the agent is acting with the authority of the principal – and I am acknowledging what the Chief Justice has said that it is sometimes said an agent is not the right way to describe or is an incomplete description of what counsel is, but within the law of agency, starting with that, if the agent is acting with the authority of the principal, then both the knowledge and the action are seen in law as the principal’s actions. That is the principle that we ask this Court to apply. We recognise that it might be said that counsel has a wider duty than simply an ordinary agent. Clearly he does.

GLEESON CJ: If Mr Lindsay had not objected to an inadmissible question, then when the matter went to the Court of Appeal, Mr Lindsay’s client would not be entitled to complain about the admission of inadmissible evidence because Mr Lindsay had not objected to the question. Nobody would bother to inquire why Mr Lindsay did not object to the question. It might be because he did not hear it or it might be because he was unfamiliar with a section of the Evidence Act or whatever. What is the difference in principle between Mr Lindsay not objecting to an inadmissible question and Mr Lindsay not objecting to a judge sitting?

MR PARKER: In our submission, there is none. They are both tasks which Mr Lindsay was required, by being counsel, to carry out on his client’s behalf.

GLEESON CJ: The argument against you is that Mr Lindsay’s forensic decisions, like objecting or not objecting to evidence or applying or not applying for adjournment or whatever the case may be, are forms of open conduct that the other side observes and relies on and it is suggested that there is some difference where Mr Lindsay does not object, for whatever reason or for no reason, to a judge sitting.

MR PARKER: Well, we say two things. First, there cannot be any difference between whether Mr Lindsay says nothing at all or whether the matter is specifically raised. In a sense, it is a red herring that the question of the golf even came up. The outcome would be the same if nothing had even been mentioned because Mr Lindsay would have been conscious of the fact. He was conscious of the fact when the trial began that the judge’s brother was a partner of Freehills.

KIRBY J: The transcript which was read to us does seem to indicate that the matter which Mr Lindsay thought the judge was raising was to do with the social connection with the appellant.

MR PARKER: But we say that that is the point. If that conversation had never taken place, the result would be the same because Mr Lindsay knew the judge had this association or alleged association. He knew there was a right to object and - - -

KIRBY J: But the mind is a funny thing. Sometimes you know things, but you do not, as it were, bring it forth to your conscious mind unless it is drawn to your notice.

MR PARKER: And that is why we say that the answer to the question cannot depend upon what your conscious mind did or did not say, on what instructions you sought or did not seek from your client, because as soon as one gets into that, one gets into all of these subjective questions which the other party to the transaction, if you will, has no opportunity to deal with. They have no way of knowing.

KIRBY J: But if the ordinary practice is for a judge to raise this matter and put it on the record in the presence of the litigants, then the failure of counsel to attend to it is perhaps understandable.

MR PARKER: Well, it is perhaps understandable but - - -

KIRBY J: I mean, there is lots of things going through the mind of a barrister at the beginning of a case and then during the conduct of a case and the person who most intimately knows of the relevant potentially disqualifying factor is the person who has that factor.

MR PARKER: But we are not criticising Mr Lindsay for not raising it. We are just saying that he having not raised it, it should not be open to the other party to say, “Well, in fact, he didn’t raise it with us either and because in fact he didn’t raise it with us either, although you would have had no way of knowing whether he had, because in fact he didn’t raise it, now the trial can be set aside, start again.”

KIRBY J: Under the doctrine of this Court in relation to counsel’s liability the lay client has no remedy against counsel for such a failure.

MR PARKER: That may or may not be so, but it cannot affect the unfairness from our point of view.

KIRBY J: It is a matter that makes me pause before embracing that doctrine.

MR PARKER: Well, one can understand your Honour’s solicitude for the position of the client.

KIRBY J: Leave aside these clients here. We always have to look at cases as they fall on a multitude of circumstances. These cases, after all, the appellants were lawyers, but in many cases they are not and we have to ask what should a judge do in those circumstances.

MR PARKER: But the client’s interests are not only the interests to be considered; there are the other parties’ interests. From our point of view, we would have had no knowledge as to what went on between Mr Lindsay. For all we know, he did disclose it or he did not disclose it and Mr Lindsay - - -

KIRBY J: Yes, but you are relying on a legal fiction that Mr Lindsay will be responsible for making the decisions and will turn his mind to the judge’s brother’s relationship, its potential down the track and will advise the client, and that really is a fiction.

MR PARKER: Your Honour says that it is a fiction and let me accept that for the moment for the sake of argument, but the point is that the Court should not adopt a rule which makes the question of what disclosure in fact took place and whether that disclosure in fact would have made any difference the criterion for whether the trial should now in effect be set aside, because in doing so the Court works a substantial injustice to the other party who is completely innocent and who has no means of doing anything about it. What were we supposed to do?

KIRBY J: That is one way to look at it, Mr Parker. The other way to look at it is that these rules are to maintain the right to an independent and impartial tribunal which is a human right, possibly even an implied constitutional right, and inhering in the person and ordinarily provided by our courts to litigants. Judges have no association or connection or interest. That is the issue which we have to keep in mind, it seems to me, in resolving the application of the rules of law to the particular case because once you lose that feature of our courts you have lost a very precious thing.

MR PARKER: The question remains though, what should the judge have done and what should my clients have done?

GLEESON CJ: I presume Mr Leslie waived professional privilege when he filed that affidavit or read that affidavit.

MR PARKER: Yes.

GLEESON CJ: Presumably, in the ordinary case, unless there is a waiver of professional privilege, no one will know what went on between Mr Lindsay and his clients.

MR PARKER: That is correct.

GLEESON CJ: If anybody asked Mr Lindsay what he had told his clients, his proper answer to that would be, “Mind your own business.”

MR PARKER: It is privileged. He would not be entitled to tell them.

KIRBY J: Here it is out. We do have this information.

MR PARKER: That is because the client has chosen to open it up and to make an assertion which, as I have been at pains to point out, has not been fully ventilated, but to make an assertion about what in fact did happen. The question remains – and we have asked these rhetorical questions in our written submissions, “What is the judge to do? What are we to do?” In the case put by the Chief Justice where the judge says, “I have this – there is this issue that is raised. Is there any problem?” and counsel says, “There is no problem”, should the judge say, “Wait a moment. Shouldn’t you get some instructions on that?” If counsel gets five minutes instructions and comes back to court and says, “I have got instructions”, does the judge say, “Will you explain very clearly not only that I have this association but you can object?”

We would say you only have to ask those questions to see that if that were the test, if actual knowledge of the client were the test, then there would be something wrong with the situation which would result. Can I just emphasise that in paragraph 15 of his affidavit Mr Lindsay - - -

GUMMOW J: Page?

MR PARKER: Page 238, your Honour. In the second sentence Mr Lindsay said this:

I was unconcerned that he –

that is the judge –

did not refer to the fact that his brother was a partner of Freehills because I believed that fact to have been known to all parties.

How can that sit?

KIRBY J: Yes, but, I mean, for example, I did not know that so I would not be surprised. That would be a bold assumption.

MR PARKER: That is what he assumed and the case for the appellants here - - -

KIRBY J: There are a lot of assumptions here. The question is whether there should be assumptions or whether things should be spelt out.

MR PARKER: The case for the appellants and they complain about the fact that the judge did not make any disclosure when, according to at least Mr Lindsay’s side of the record, everybody knew about it. Why did the judge need to make any disclosure here, we ask. Why was it necessary for him to come onto the bench? That gets back to the second point that said the fact that he did not make a public disclosure makes the difference. We say that the question of whether the disclosure is public or not cannot be the criterion for waiver. What would happen if he made the disclosure in chambers? Would it be a different outcome?

Now, it is for those reasons that we say that the Court of Appeal was right when faced with a choice between allowing the problem, if there was one, or the fact that instructions had not been sought if that was the case, to fall either on the clients or on the other parties to the proceeding, they made the right decision in saying that it had to fall on the clients.

Can I just point out that one of the cases that my friend referred to, the Dovade Case 46 NSWLR, comes to the same conclusion. This is not the first time, it appears, that the Court of Appeal has reached that particular conclusion. Can I just refer the Court briefly to Dovade. At page 181, paragraph 52 at about the middle of the page their Honours speak of the judge’s involvement in the earlier criminal proceedings and they then say:

But all of these matters were known to the appellants’ counsel. The exchange between Rolfe J and Mr Graham QC indicates clearly that counsel was aware of the earlier proceedings.

So they put it on the basis of counsel’s awareness, not the client’s awareness, and that becomes clearer when one goes to paragraph 54:

It has not been suggested that Mr Jury was unaware of the exchange, although it would not matter if that were the case -

They refer to Birks. That is also a case which was referred to on our list and that case picked up something that Justice Hayne said earlier in Ratten; it is an emphasis of the width of counsel’s authority to conduct the case as counsel sees fit.

HAYNE J: It is an emphasis on the adversarial nature of the process.

MR PARKER: That is part of it, and Birks goes on to say that it is a corollary of the adversarial nature of the process that the parties must be bound by counsel’s conduct.

GLEESON CJ: It may be that what the Court of Appeal regarded as a very good reason why in paragraph 43 they left unresolved the factual question of what went on between Mr Lindsay and his clients, it may be that as a matter of principle this sort of matter should not turn on what went on between Mr Lindsay and his clients.

MR PARKER: Yes, your Honour, we adopt that.

GLEESON CJ: Indeed, in many cases what went on between Mr Lindsay and his clients would be unknown and unknowable.

MR PARKER: And then if it were opened up, as it is here, it would lead to an intense factual inquiry. I mean, if this matter were to go back to have determined the factual questions of what the clients knew, then there will be in effect a discovery process because we would be entitled to see all of the communications that had passed over these days and any notes that the solicitors had made of the relevant conferences.

Mr Smits, who of course had not given any direct evidence at all because everything was on information belief from him, Mr Smits would give evidence, Mr Leslie would give evidence, and there would be an exploration of whether they would really have objected to Justice McClellan. It is clear that that could be a very extensive factual investigation which is all, as I have said before, internal to the other party.

KIRBY J: But all of this is, in a sense, an argument for the judge taking the initiative of putting the matter on the record in public on the transcript in the presence of the litigant, so that the matter is there out and you do not have to go into inquiries as to what happened in the camp; it is there in the open.

MR PARKER: I can only repeat what I have said before, your Honour, that we are not talking about, with the benefit of hindsight - - -

KIRBY J: You are trying to lead us from the difficulties that arise down the path that you are urging, but the other alternative is to say there are these difficulties but the way that the law avoids them is by disclosure because that defends the important public interest in the independent and impartial tribunal.

MR PARKER: The submission we make is that if the Court adopts as a criterion the question of whether the client in fact knew, it is bound to lead to these sort of invidious factual inquiries in a way that is quite unfair to the other party to the proceedings and quite inconsistent with the attitude which the courts take towards the authority of counsel in every other area of conduct of proceedings.

KIRBY J: Then do you add – and therefore, that to avoid the mischief that you have just identified, the way to do that is to oblige the judge to disclose any matters that might be grounds for disqualification so that any submission can be made.

MR PARKER: The way to do it is to apply an attitude to waiver which simply asks whether, when counsel does not object, that was within counsel’s apparent authority.

HAYNE J: And to frame it in terms of right or duty would require us to reopen what was said by a majority of the Court in Ebner in paragraphs 66 to 73.

MR PARKER: Quite, your Honour.

HAYNE J: A point about which the Court divided and I think I am right in saying the division was that Justice Kirby was the sole dissentient on this point.

MR PARKER: Yes, your Honour.

KIRBY J: I think the position that I adopted is in line with the position adopted in Canada, England, New Zealand and South Africa. One day we may have to reconsider those principles, although it may fall to our successors.

MR PARKER: There was reference in my friend’s submissions to the case of Harvey v Phillips, the High Court case about settlement.

GLEESON CJ: That is a straight contract case, is it not?

MR PARKER: Yes, it is. What that case was about was whether there was actual authority.

GLEESON CJ: Yes, but authority to bring about legal relations.

MR PARKER: To bring about a contractual settlement of proceedings.

GLEESON CJ: In the form of a contract to settle proceedings.

MR PARKER: The Court’s holding was that given that on the facts it was found that there was actual authority, that was the end of it and there was no discretion in the Court to upset that particular contractual arrangement. In our submission, that does not really tell us much about the issues in this particular case. In particular it does not tell us about what counsel’s usual authority is in relation to proceedings because the very factual basis of the case was these were the instructions counsel was given.

What actually happened in that case was that the client was put under a great deal of pressure to settle the case by counsel and the High Court’s ultimate finding was that consent had been given for a short period of time but had been given and existed at the time and therefore there was actual authority.

My learned friend referred also to – he did not name it but I assume he is referring to the case of Neale v Gordon Lennox [1902] AC 465 about a reference. Again, the issue in that case is remote from the present. What was actually held was that in circumstances where on the facts counsel had ostensible but not actual authority, the court was not bound by the compromise that had been reached or the agreement that had been reached and could upset an interlocutory order. So, again, the case does not tell us anything about what counsel’s usual authority is because in the case what counsel’s authority was had been fully canvassed.

We simply submit that there is no basis for distinguishing between a decision as to whether to take a bias objection from any other type of decision which counsel is called upon to make, such as whether to ask a question, whether to cross-examine. All of those decisions are decisions taken in the interests of advancing the client’s case, hopefully, and involve the counsel in exercising forensic judgments subject to the overriding requirement of counsel’s duty to the Court.

KIRBY J: But asking questions and submitting evidence and so on are the routine work of a barrister. Objecting to a judge on the ground of bias, or ostensible bias, is still a very exceptional thing and is, one would hope, only to be done after careful deliberation and with specific instructions. So it is not really a routine thing. It is something very particular and specific.

MR PARKER: The fact that it happens more or less often does not make it different in principle from any other decision that counsel is called upon to make in the conduct of the case.

KIRBY J: No, but I am just concerned about a rule that would, as it were, oblige people in the position of Mr Lindsay to raise this point, take the objection when it really is not brought to his attention and he has his mind on lots of other things, and it might be tucked away in the back of his mind. I mean, leave aside this case and consider some other association which the judge might have with some organisation or the like does make a big demand on counsel to think about these things, whereas the person best placed to put them in the public domain is the person who is affected.

MR PARKER: It does make a demand on counsel, but it has never been suggested that that relevantly makes any difference. It was never suggested in Vakauta, for instance. No doubt junior counsel in Vakauta found himself in a very difficult situation - - -

KIRBY J: But he was sitting in court - - -

MR PARKER: - - - with the judge saying all these horrible things about a witness. But that did not mean that when junior counsel did not say anything to the judge that there was not a waiver.

KIRBY J: No, but that is quite different. He is in court when this drama is unfolding and in that particular court there would have been no doubt in anybody’s mind as to what was happening.

MR PARKER: But when Mr Lindsay stood up before the judge on the morning of this case he knew very well and believed that everybody else knew that the judge had this association, so-called. Why is that any different from junior counsel who observes the very facts that give rise to the ground for a disqualification application and then does nothing? In our submission, there is no difference at all.

KIRBY J: Well, you do not think there is a difference there. I am afraid I am not convinced that there is no difference - Justice Hunt making a lot of noise in court and distant memories of the personal family associations of a judge.

MR PARKER: Yes, Mr Owens draws my attention to the fact that if one looks at paragraph 14 of Mr Lindsay’s affidavit, page 238 of the appeal book, the way Mr Lindsay deals with it in the second sentence suggests that it was something that he was alive to. It was not as if he completely overlooked the fact that there was an association. He was aware of the association at all times. He just did not think that it led anywhere and he,
therefore, did not think, when his client said nothing about it, that there was anything remarkable about that. So it is not a situation where, for instance - - -

KIRBY J: Well, that is not thinking about it - - -

MR PARKER: - - - he has been so busy working on something else that it has driven it out of his mind or it is unimportant. There was anxious consideration given, it would appear from Mr Lindsay’s affidavit, on the appellant’s side, to whether to object.

KIRBY J: My point though is that there is a big difference between not thinking about it and being in court whilst the disqualifying element is played out in front of the barrister personally. It is not the same thing.

MR PARKER: I have made our submission about that, your Honour, and those are the submissions that we would put in response to the appeal.

KIRBY J: Mr Parker, I raised with Mr Ireland earlier a point which goes equally for your side. I assume that you have no objection to my participating.

MR PARKER: We have no objection, your Honour.

GLEESON CJ: Yes, Mr Ireland.

MR IRELAND: We have no objection to your Honour participating, having taken instructions on the matter. Whilst we are on page 238, if your Honours still have it open, which was the Lindsay affidavit, it is legitimate to point to the next paragraph, 15, which said:

Had McClellan J announced . . . his brother was “the Chairman of Partners” of Freehills – that fact being unknown to me –I would have taken specific instructions in relation to it.

So it is a rather odd reasoning in the mind of counsel. He knows from his - - -

GUMMOW J: We do not know what chairman of partners are either.

MR IRELAND: I knew you would say that, your Honour. But he seems to have attributed something to it.

GUMMOW J: You and I grew up in a world when there were senior partners.

MR IRELAND: That is right, Sir Norman Cowper.

GUMMOW J: Exactly.

GLEESON CJ: I am not sure I understand the second sentence of paragraph 14 of Mr Lindsay’s affidavit.

MR IRELAND: I think what he is saying there is, “I knew of the general brotherly association between the judge and Mr Geoffrey McClellan”. He seems to be then saying that because the plaintiffs - - -

GUMMOW J: It is an Animal Farm point, is it not? The chairman is more equal than the other members of the farm.

MR IRELAND: Yes, something like that. Your Honour the Chief Justice asked me about paragraph 14, I think.

GLEESON CJ: Yes. The second sentence of paragraph 14 begins with “Given the range”, et cetera. I just do not understand the point that is there being made.

MR IRELAND: What he seems to be saying is, “Look, Mr Geoffrey McClellan’s just one of the people”. It is Justice Gummow’s analogy. If he was chairman of partners, whatever that means – let me speculate that it means someone who is in charge of the firm’s profile, their press releases, their public image, et cetera. Those sort of considerations - - -

GUMMOW J: It does not necessarily mean the most learned or skilled person in the partnership.

MR IRELAND: It will not be; it never is.

GLEESON CJ: But that is not the problem I am having. The problem I am having is what does the range and frequency of contact between the plaintiffs and the judges of the equity division have to do with it?

MR IRELAND: Nothing logically.

GLEESON CJ: That is my problem in understanding the point being made in that sentence.

MR IRELAND: Whatever poor Mr Lindsay is saying in this affidavit, he is saying that the fact that he was one of the partners was a matter that went through to the keeper, to use a sporting analogy, I am sorry. If someone had said, “Look, he’s the chairman of partners”, then he would have taken instructions. That is what he said.

I wanted to answer another point. We know in this case – and this would be a highly unusual case – what the mind processes of Mr Lindsay were. On the respondents’ case, if we have none of this evidence, there is still a waiver.

GLEESON CJ: Exactly. On the respondents’ case, you do not psychoanalyse Mr Lindsay and you do not get behind professional privilege. On the respondents’ case, you just look at what happened and what did not happen.

MR IRELAND: We are happy to have the contest there because we think we ought to prevail because counsel’s position is not simply that of an agent. It is not a mechanistic imputation of knowledge issue. It is a question of whether – as Justice Kirby said I think more than once today, the better result is to have the judge, where there is something that ought to be raised, raise it. I know that in Ebner your Honours have said in the majority at least that it is mistaken to talk about - - -

KIRBY J: In Ebner the Court was unanimous in the orders.

MR IRELAND: The Court was unanimous in the result but I am saying - - -

KIRBY J: The orders.

MR IRELAND: Yes. Your Honours all have said, I think, in the different ways in which the reasons have been expressed, that there is really no inquiry which gives attention to a duty in the judge to disclose. That is the point in this case why I have to engage Ebner.

GLEESON CJ: Mr Ireland, the judge is not a party to these proceedings. We are not dealing with a complaint against the judge. What the judge ought to have done or failed to do is not a matter in issue. The issue that we have to decide is whether or not the judge was disqualified.

MR IRELAND: Yes, on the facts as they are now known.

GLEESON CJ: On the facts as they are known to us. That is the question that arises for our decision.

MR IRELAND: I accept that a hundred per cent, your Honour, but all I am saying is in a case of association particularly, there will be circumstances where only the judge can supply the information, and that is
where the problem engages in this case, and that is a hard case. It is left on the Court of Appeal’s approach to the vagaries of whether Mr Lindsay knew or did not know of this matter.

We happen to know in this case what his mind processes were, as your Honour has said, but the rule that you will make in this case will apply to the case where nothing is known. Therefore, one has to give some attention in an association case to what is the best means of solving this, which is a problem for the administration of justice, that is all.

HAYNE J: Just before you pass from that, it may or may not be a matter of any significance, Mr Ireland, but this question of disclosure was one that arose in the case reported in Ebner only in the Clenae litigation – see paragraph 66. It is in that case I think where the Court divided in orders as well as reasoning.

MR IRELAND: Yes, thank you. I was thinking of the dicta in Ebner which specifically talk about – in the joint report which specifically talk about the inappropriateness of imposing some suggested duty on the judge.

HAYNE J: Yes.

MR IRELAND: That was the context of my submission, your Honour. But it is a problem. It is easy enough to say, “Look, leave it to the barristers to guess”, but it really does repose in the barristers a terrible responsibility, coupled with the fact that on the law, as this Court has now stated it, if the barrister gets it wrong with real consequences then presumably the barrister is immune from suit. It leaves the client in what we like to call a difficult position. It is not a happy result in the intersection of the various issues that arise if it could be – I would have to tentatively ask your Honours to maybe reconsider the extent of the rule that you have enunciated in Ebner in a context such as this which is an unusual one.

Your Honours, we did hand up, just so that your Honours have it – I think it has been passed up to the staff – the actual transcript which I read out, that single page.

GLEESON CJ: Yes, we have that, thank you.

MR IRELAND: Your Honour, that is really all I wanted to say in reply.

GLEESON CJ: Thank you, Mr Ireland. We will reserve our decision in this matter and we will adjourn until 10.15 tomorrow morning.

AT 3.00 PM THE MATTER WAS ADJOURNED