Application by Council for Recusal of the Judge

An Application by the Council of the City of Sydney (No. 2) [2021] NSWSC 1330 (19 October 2021)

The Court delivered an interlocutory judgment in August 2021 dealing with two Motions relating to monies paid into Court.  The applicants allege that the judgment demonstrates apprehended bias against them and as such applied for recusal against his Honour.  The Court, in making its judgment, relied upon the arguments of the Chadhope parties.

Facts:

In the Court’s first judgment, the Court dealt with a Motion by the plaintiff, the Council, for payment of its costs and a Motion brought by other claimants to the fund in Court against the Council.  After a hearing on 5 July 2021, the Court gave a judgment of some 71 paragraphs, including orders on 5 August 2021, deciding a number of matters and adjourning the Council’s Motion and the Chadhope parties’ Motion for further hearing.  That further hearing was to be on 12 August 2021.  The matter was adjourned to 18 October 2021. 

The Council’s Motion and the Chadhope parties’ Motion have now been adjourned for final hearing to 4 November 2021 for a further period of one hour and thereafter on the papers.  The Court has declined to join either of the Chadhope parties as defendants to the Council’s Summons and declined on procedural grounds to permit the Chadhope parties to pursue broad claims for relief against the Council in these proceedings.  The Court has also declined to join Maddocks Lawyers, the current solicitors for the Council as parties to the proceedings.  The Court has declined to allow the Chadhope parties to call on a Notice to Produce dated 5 July 2021, because it deals with the production of documents which relate to issues which the Court has determined in its judgment of 5 August 2021 that it will not be dealing with in these proceedings.

Now, in the Court's second judgment, the Chadhope parties’ applied for his Honour to disqualify himself from continuing to hear the proceedings based on the apprehension of bias principle.  Such an application was dismissed because it did not satisfy the first of these two steps in such an application: that is, it did not identify any matter which might lead the Court to decide the case other than on its legal and factual merits.  It was not necessary to consider the second step, but it was equally lacking.  The Chadhope parties contended that his Honour's first judgment was wrong.

The Chadhope parties argue that the first judgment proceeded upon an incorrect assumption that the Council is a trustee holding funds.  Mr de Robillard argues that the Council’s own accounts demonstrate that it does not control those funds and it is not a trustee.  Secondly, the Chadhope parties contend that the first judgment also incorrectly assumes there was a dispute inter partes for the Council to resolve.  The Chadhope parties submit that there was no dispute to resolve and that the Council should have simply passed the funds to ASIC, as the Council had already decided by September 2020 that Ms McAndrews’ claim could be dismissed.

The Chadhope parties say that the only way to determine this matter “would have been to determine the Summons first” and then to decide later whether the Council was entitled to costs. The applicants further argue the proceedings should be stayed pending the filing of an appeal against the refusal of the recusal application  

Issues:

I. Whether or not a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the questions the judge is required to decide

II. Whether or not a stay should be granted.

Applicable law:

Corporations Act 2001, s 601AH(2) - provides that the Court may make an order that ASIC reinstate the registration of a company if:

(a)  an application for reinstatement is made to the Court by:

(i)  a person aggrieved by the de-registration; or

(ii)  a former liquidator of the company; and

(b)  the Court is satisfied that it is just that the company's registration be reinstated.

Local Government Act 1993 s 720 - provides that any balance of the purchase money must be paid into the council's trust fund and held by the council in trust for the persons having estates or interests in the land immediately before the sale according to their respective estates and interests.

Local Government Act 1993 s 725 - provides that a transfer or conveyance issued by a council under this Division is not invalid merely because the council has failed to comply with a requirement of this Division with respect to the sale of the land to which the transfer or conveyance relates.

Trustee Act 1925, Part 4 - provides for the payment into court by trustees, persons liable to minor or person of unsound mind, life assurance companies through money or securities.

Uniform Civil Procedure Rules 2005, rr 55, 55.9 - provides that if a trustee proposes to pay money or securities into court, the trustee must commence proceedings in the court by filing a summons seeking to have the money or the securities paid into court.

An Application by the Council of the City of Sydney [2021] NSWSC 979 - the Court dealt with a Motion by the plaintiff, the Council, for payment of its costs and a Motion brought by other claimants to the fund in Court against the Council.

Ebner v Official Trustee [2000] HCA 63; (2000) 205 CLR 337 - provides that a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide.  

Analysis:

Even if there is substance to the submission that the Council was not a trustee of the funds in question, the incorrectness of the first judgment on that issue would not demonstrate bias.  The first judgment does not decide whether the Council will be reimbursed for its costs on a trustee basis, or any other basis. The Chadhope parties’ submissions do not show how the matter that they have sought to identify as an indicator of apprehended bias is logically connected with the remaining issues to be decided.  As the Court pointed out during argument, the Court’s records indicate that the Council has paid into Court.

The Court’s records currently indicate that the sum of $51,171.66 is held in Court.  The Notice to Produce dated 5 July 2021 deals with the production of documents which relate to issues which the Court has determined in its judgment of 5 August 2021 that it will not be dealing with in these proceedings.  The first judgment says what it does and if it is wrong, it is amenable to a properly argued appeal.  It does not demonstrate that the remaining issues in the proceedings will not be determined on their merits.  The remaining issues in the proceedings are listed for hearing on 4 November 2021, which is over two weeks away.

No decision will be made that would prejudice the interests of the Chadhope parties before then. If the Chadhope parties’ wish to seek leave to appeal before then, they may do so, and if they are given leave to appeal then they can request the Court of Appeal can grant a stay. Nothing will happen to prejudice the Chadhope parties’ position before 4 November 2021.

Conclusion:

The Court denied the recusal application.  The oral application made by the Chadhope parties to stay the proceedings pending an application by them to appeal is also dismissed.  The Court has declined to allow the Chadhope parties to call on a Notice to Produce dated 5 July 2021.  The costs agreement referred to in these orders is produced upon terms that the Chadhope parties may not publish or disclose it to any third party and may only use it for the purposes of these proceedings.