Pacific Equities & Investments Ltd v Goledu [2008] PGNC 97; N3400 (8 May 2008)

N3400

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CIA 19 OF 2006

BETWEEN:

PACIFIC EQUITIES & INVESTMENTS LIMITED
Applicant

AND:

TEUP GOLEDU, The Chairman Securities Commission of PNG

First Respondent

AND:

MELANESIAN TRUSTEE SERVICES LIMITED
Second Respondent

AND:

NATIONAL SUPERANNUATION FUND LIMITED
Third Party/Applicant

Waigani: Hartshorn, J.
2007: 12 December,
2008: 8 May

DISQUALIFICATION - Apprehended bias - whether prior professional relationship between lawyer and client will disqualify lawyer, on becoming a judge, from sitting in proceedings to which former client is a party -whether reasonable apprehension of prejudgement of an issue - whether reasonable apprehension that judge may be predisposed to a view of the issue because of past involvement

Facts:
The appellant Pacific Equities & Investments Ltd (PEIL) seeks that the presiding Judge in this matter (Hartshorn J) be disqualified from further hearing and dealing with pending motions in this proceeding, the proceeding generally and any other related proceedings concerning or between the parties on the basis of there being a reasonable apprehension of his bias. The application was opposed by the first and second respondents and the third party applicant.

Held:

1. PEIL has not demonstrated that there is a reasonable apprehension of bias on the part of the presiding Judge towards or against any of the parties and that the presiding Judge should be disqualified on the grounds that:

a) he gave legal advice to a third party concerning the publication of a proposed statement relating to the dispute the subject of the present proceedings,

b) he gave advice to the predecessor of Nasfund on various matters unrelated to the present dispute,

c) his former firm of which he was resident managing partner, acts in proceedings for a unit holder of Pacific Balance Fund against PEIL and MTSL although the issues in those proceedings are not the issues in the present dispute,

d) he gave a decision against PEIL, the appeal from which is pending.

2. PEIL has not demonstrated that the presiding Judge should be disqualified on other grounds such as having a direct or indirect interest in the proceedings or because the presiding Judge was aware of extraneous information.

3. Accordingly the application of the applicant for the presiding Judge to disqualify himself is refused.

Cases cited:

Papua New Guinea Cases
Gobe Hongu Ltd v. National Executive Council & Ors (1999) N1964
Hitron Pty Ltd v. PNG Telecommunication Authority [2000] PNGLR 357
Coecon Ltd v. National Fisheries Authority of PNG (2002) N2182
Bank of Papua New Guinea & Anor v. Marshall Cooke QC & Anor (2003) N2369
The State v. Puli A’aron (2003) N2432
Paru Aihi v. Sir Moi Avei (2004) N2523

Overseas Cases
Livesey v. NSW Bar Association [1983] HCA 17; (1983) 151 CLR 288
Re JRL; Ex parte CJL [1986] HCA 39; (1986) 161 CLR 342 at 352; [1986] HCA 39; 66 ALR 239
Raybos Australia Pty Ltd v. Tectran Corp. Pty Ltd (No. 4) (1986) 6 NSWLR 674
Re Polites; Ex parte The Hoyts Corporation Pty Ltd [1991] HCA 31; (1991) 173 CLR 78
Webb v. R [1994] HCA 30; (1994) 181 CLR 41
A1 v. King QC (1996) (FCA, Merkel J. 31 May 1996, BC 9602233)
Aussie Airlines Pty Ltd v. Australian Airlines Pty Ltd & Qantas Airlines Ltd [1996] FCA 1308; (1996) 65 FCR 215
Gascor t/as Gas & Fuel v. Ellicott, Esso Australia Resource Ltd & Anor [1997] 1 VR 332
PNG Pipes Pty Ltd and Sankaran Venugopal v. Mujo Sefa, Globes Pty Ltd and Romy Macasaet (1998) SC 592
S&M Motor Repairs Pty Ltd v. Caltex Oil (Australia) Pty Ltd (1998) 12 NSWLR 358
Kartinyeri v. Commonwealth of Australia [1998] HCA 52
Ebner v. Official Trustee in Bankruptcy [2000] HCA 63
S&R Investments Pty Ltd v. Minister for Planning [2001] WASC 255
Smits v. Roach [2006] HCA 36
British American Tobacco Australia Ltd v. Peter Gordon & Anor [2007] NSWSC 109

Counsel:
Mr. P. N. Mawa, for the Appellant
Mr. R. Raka, for the First Respondent
Mr. D. Koeget, for the Second Respondent
Mr. E. G. Andersen, for the Third Party Applicant

8 May, 2008

1. HARTSHORN, J: The appellant Pacific Equities & Investments Ltd (PEIL) seeks that I be disqualified from further hearing and dealing with pending motions in this proceeding, the proceeding generally and any other related proceedings concerning or between the parties on the basis of there being a reasonable apprehension of my bias.

2. The other parties, the first respondent (Goledu), second respondent (MTSL) and third party applicant (Nasfund) oppose the application.

3. The grounds upon which PEIL rely are that:

a) in proceedings OS 673 of 2006 between PEIL as applicant, MTSL as respondent and Nasfund as third party applicant, before I heard an application by PEIL for injunctive relief I made the following disclosure in open court:

" .... Before we start on this I just want to mention something to counsel concerning my sitting on this matter. I have given advice to a third party concerning the publication of a proposed statement relating to this dispute but it did not involve at all in any way a consideration of the issues before the court today. I have also given advice to the predecessor of Nasfund on various matters but totally unrelated to what is before us today. And thirdly, that the firm in which I was the resident managing partner, Blake Dawson Waldron acts in current proceedings for a unit holder of Pacific Balanced Fund in proceedings against Pacific Equities and Melanesian Trustees Services. The issues there are not the issues in these proceedings and I did not have carriage of that file in any event. Taking the three matters that I have mentioned into account individually and also collectively, I am satisfied that I am not precluded from hearing this matter. I will hear counsel on what I have just said." (disclosure)

b) counsel who appeared for PEIL in the application informed the court that he had no submissions on my disclosure.

c) I refused the application of PEIL for injunctive relief. That decision is the subject of an appeal to the Supreme Court and is still pending.

4. The leading case in respect of civil matters concerning an application for disqualification is the Supreme Court decision of PNG Pipes Pty Ltd and Sankaran Venugopal v. Mujo Sefa, Globes Pty Ltd and Romy Macasaet (1998) SC592.

5. In that case it was held that:

"the test applied in determining whether apprehension of bias was satisfied was whether an objective observer, knowing all surrounding facts, would be left with an apprehension, not a conviction that the judicial officer was predisposed, by matters extraneous to a proper adjudication, to reach a particular conclusion."

6. The PNG Pipes case (supra) was relied upon in the National Court decision of Gobe Hongu Ltd v. National Executive Council & Ors (1999) N1964, where Sevua J. held:

1) Judges should not too readily accede to applications for disqualification, whereby parties may effectively influence the choice of a Judge in their cause, Re JRL; Ex parte CJL [1986] HCA 39; (1986) 161 CLR 342 at 352; [1986] HCA 39; 66 ALR 239;

2) Judges should resist from being driven from their Courts by the conduct or assertion of parties. Raybos Australia Pty Ltd v. Tectran Corp. Pty Ltd (No. 4) (1986) 6 NSWLR 674 (at 689);

3) A Judge may disqualify himself in circumstances where a fair minded lay observer, with knowledge of the material facts might entertain a reasonable apprehension that the Judge might not bring an impartial and unprejudiced mind to the resolution of the question in issue. Livesey v. NSW Bar Association [1983] HCA 17; (1983) 151 CLR 288;

4) A Judge should disqualify himself by reason of apprehension of bias, under one or more of the following principles, where it is demonstrated that, firstly, he has an interest in the case before him, which interest may be direct, indirect, pecuniary or otherwise. Secondly, by his conduct including published statements, whether such conduct is in the course of, or outside the proceedings. Thirdly, where the Judge, through association or relationship, either by himself, his spouse or children, has a direct pecuniary interest in the case. And finally, disqualification by extraneous information, where the Judge had presided over an early case or he has had some knowledge of prejudicial and inadmissible facts. Webb v. R [1994] HCA 30; (1994) 181 CLR 41;

5) It is of fundamental importance in the administration of justice that litigants and the general public have full confidence in the integrity, including the impartiality of those entrusted with the administration of justice so that the impartiality and the Constitutional independence of the judiciary is not interfered with.

6) The test of an ‘objective observer’ established by the Supreme Court in PNG Pipes Ltd & Anor v. Mujo Sefa & Ors should also include ‘a fair minded, lay observer’ as considered in Livesay v. NSW Bar Association (supra).

7. These cases have been followed in Hitron Pty Ltd v. PNG Telecommunication Authority [2000] PNGLR 357, Coecon Ltd v. National Fisheries Authority of PNG (2002) N2182, Bank of Papua New Guinea & Anor v. Marshall Cooke QC & Anor (2003) N2369 and The State v. Puli A’aron (2003) N2432.

8. In the judgments of PNG Pipes (supra) and Gobe Hongu (supra) there are numerous references to Australian and English cases on the question of disqualification. In PNG Pipes (supra) the Supreme Court stated that:

"It is useful and instructive to refer to similar cases and statements of principle in overseas jurisdictions which may be of assistance."

It is apparent that the Courts in this jurisdiction have taken into account and have adopted Australian and English authorities on the question of disqualification and I do not see any reason why this should not be so.

9. In considering whether a reasonable apprehension of bias has been established, it is necessary first to identify the facts, matters and circumstances by reason of which it is said that a judge might decide a case other than on its merits and secondly, to articulate the logical connection between those facts, matters and circumstances and the apprehended deviation from the course of deciding the case on the merits, Ebner v. Official Trustee in Bankruptcy [2000] HCA 63; Smits v. Roach [2006] HCA 36.

10. The facts, matters and circumstances which it is contended might lead me to decide matters other than on their legal and factual merits in summary are that:

a) I gave legal advice to a third party concerning the publication of a proposed statement relating to the dispute the subject of the present proceedings (present dispute),

b) I gave advice to the predecessor of Nasfund on various matters unrelated to the present dispute,

c) My former firm of which I was resident managing partner, acts in proceedings for a unit holder of Pacific Balance Fund against PEIL and MTSL although the issues in those proceedings are not the issues in the present dispute,

d) I gave a decision against PEIL, the appeal from which is pending.

11. The logical connection between those facts, matters and circumstances and the supposed deviation from deciding the case on its merits, I believe it is contended on behalf of PEIL to be:

a) In these proceedings I would be requested to give a decision on a dispute where I have already given advice to a third party concerning a proposed statement to be made about the present dispute. An objective, fair minded lay observer might think that I had prejudged the issues between the parties.

b) An objective, fair minded lay observer might think that because I had given advice to the predecessor of Nasfund on unrelated matters, I may be predisposed to find in favour of Nasfund in these proceedings.

c) An objective, fair minded lay observer might think that because my former firm acts in proceedings for a unit holder of Pacific Balanced Fund against PEIL and MTLS and although the issues in those proceedings are not those in the present dispute, I may be predisposed to find against PEIL and/or MTLS in these proceedings.

d) An objective, fair minded lay observer might think that as I refused PEIL injunctive relief in proceedings that have related issues involving 2 of the parties to these proceedings and the appeal from the decision is pending, I may be predisposed to find against PEIL in these proceedings.

12. As to the contention in 11 (a) above that I have already given advice to a third party concerning a proposed statement to be made about the present dispute and as a consequence I have prejudged the present dispute, it is necessary when considering an allegation of apprehended prejudgement to precisely identify the issue said to have been prejudged and the objective, fair minded lay observers assumed knowledge of a judge's ability to consider an issue afresh, aided by evidence and argument.

13. This approach was adopted in the recent New South Wales Supreme Court case of British American Tobacco Australia Ltd v. Peter Gordon & Anor [2007] NSWSC 109 following the Federal Court of Australia decision of A1 v. King QC (1996) (FCA, Merkel J. 31 May 1996, BC 9602233).

14. Here, the issue upon which I gave advice concerned a proposed statement to be made about the present dispute. That is not the same issue as the issues contained in the present dispute. I did not give advice on the present dispute and it was not necessary for me to form a view on the present dispute in giving the advice that I did. The issues in the present dispute and the issue concerning a proposed statement to be made about the present dispute are distinct.

15. As to whether an objective, fair minded lay observer would think that because I have given advice concerning the proposed publication of a statement concerning a dispute to a third party, I am likely to have prejudged the present dispute

16. In British American Tobacco (supra), Brereton J. noted that the various authorities attribute the objective, fair minded lay observer with some knowledge of the way in which lawyers and judges work and that those authorities have established the following propositions;

a) A prior professional relationship between a lawyer and client - even a long and proximate one - does not generally justify a reasonable apprehension that the lawyer, on becoming a judge, will not determine proceedings to which the former client is a party impartially on their legal and factual merits, because the relevant fair minded observer understands that the counsel is not beholden to the client after the relationship is severed, Re Polites; Ex parte The Hoyts Corporation Pty Ltd [1991] HCA 31; (1991) 173 CLR 78; Aussie Airlines Pty Ltd v. Australian Airlines Pty Ltd & Qantas Airlines Ltd [1996] FCA 1308; (1996) 65 FCR 215; S&M Motor Repairs Pty Ltd v. Caltex Oil (Australia) Pty Ltd (1998) 12 NSWLR 358.

b) Even having given advice to the former client, present litigant on an issue that arises in the matter before the court does not generally give rise to such an apprehension, because a judge can be expected to approach afresh with an open mind from the bench issues on which he or she has previously advised, illuminated by evidence and argument, Polites (supra);Kartinyeri v. Commonwealth of Australia [1998] HCA 52; A1 v. King (supra)

c) Nor does having advocated forensically a position on such an issue generally give rise to such an apprehension, Gascor t/as Gas & Fuel v. Ellicott, Esso Australia Resource Ltd & Anor [1997] 1 VR 332; indeed the position is a fortiori having given advice, because whereas giving advice involves counsel in reaching and expressing his or her own opinion on the issue, proper advocacy involves no more than presenting a tenable argument, which does not necessarily reflect counsel’s own opinion on the issue; advice therefore involves far greater potential for prejudgement than advocacy.

d) However, if the judge may be considered to have an interest in the outcome - for example, if the appropriateness of the advice is in issue, or if it will be necessary to decide whether a course of conduct advised by the judge as counsel was legally effective or appropriate - a reasonable apprehension of bias will arise, Polites (supra); A1 v. King (supra).

e) Moreover, if the judge as counsel may reasonably be supposed to have gained special knowledge of the facts through prior involvement - including through privileged material in a brief - that may found a reasonable apprehension that as judge he or she may have in mind extraneous material not known to at least one party, S&R Investments Pty Ltd v. Minister for Planning [2001] WASC 255, because a lay observer may reasonably think that a judge might not be able to put such information out of his or her mind.

17. As to the above propositions, 16 (a) and (b) are concerned with where a judge is determining proceedings involving a former client. In contention 11 (a), I gave advice to a third party, not to a former client who is a party to these proceedings.

18. As to propositions 16 (c) and (d), these concern a judge determining proceedings in which there is an issue upon which he has given advice. As stated, I have not given advice on an issue in the present dispute.

19. As to proposition 16 (e), this appears also to be based on a lawyer, now a judge, giving advice and gaining special knowledge. Again, I did not give advice on an issue in the present dispute and was not in a position to receive special knowledge from any of the parties. In any event, there is no evidence of me receiving any special knowledge.

20. As to the contention in 11 (b) that as I or my former firm have given advice to the predecessor of Nasfund on unrelated matters I may be predisposed to find in favour of Nasfund in these proceedings;

21. Proposition 16 (a) is specifically relevant here. A prior professional relationship between a lawyer and client - even a long and proximate one - does not generally justify a reasonable apprehension that the lawyer on becoming a judge will not determine proceedings to which a former client is a party impartially on their legal and factual merits. Here, there is no evidence to suggest otherwise.

22. I do not accept that there is a reasonable apprehension that I may be predisposed to find in favour of Nasfund.

23. As to contention 11 (c) that as my former firm currently acts in proceedings for a unit holder of Pacific Balanced Fund against PEIL and MTLS, I may be disposed to find against PEIL and/or MTLS in these proceedings;

24. Proposition 16 (a) is relevant here as it concerns a prior professional relationship I had through my former firm - that firm acting in proceedings against PEIL and MTLS.

25. As I mentioned in my disclosure, the issues in those proceedings are not the issues in the present dispute and I did not have carriage of the matter on behalf of my former firm.

26. Proposition 16 (b) is also relevant here – "Even having given advice to the former client, present litigant on an issue that arises in the matter before the court does not generally give rise to such an apprehension...".

27. Although I did not give advice, it is conceded that my former firm would have done and therefore I am taken to have. That advice however, would have been on issues that are not in the present dispute.

28. I do not accept that there is a reasonable apprehension that I may be predisposed to find against PEIL and/or MTLS because of this circumstance.

29. As to contention 11 (d) that as I refused PEIL injunctive relief in proceedings that have related issues involving 2 of the parties to these proceedings and that an appeal from that decision is pending, I may be predisposed to find against PEIL in these proceedings;

30. As to this contention, I refer to the decisions of Sevua J. in Gobe Hongu (supra) where His Honour rejected an application for disqualification made on the basis that His Honour had ruled against the applicant in an earlier application for interlocutory relief and Injia DCJ in Paru Aihi v. Sir Moi Avei (2004) N2523, where His Honour refused a disqualification application made on the basis that His Honour was a member of the bench of 3 previous Supreme Court election review cases in which His Honour ruled against the applicant.

31. I am not satisfied that PEIL has demonstrated that there is a reasonable apprehension of my bias towards or against any of the parties and that I should be disqualified on the grounds contended.

32. I am also not satisfied that PEIL has demonstrated that I should be disqualified on other grounds such as having a direct or indirect interest in the proceedings or because I am aware of extraneous information.

33. Accordingly the application of the applicant for me to disqualify myself is refused. The applicant is to pay the costs of and incidental to the application to the respondents and third party applicant.

___________________________________________
Mawa Lawyers: Lawyers for the Appellant
Elemi Lawyers: Lawyers for the First Respondent
Gubon Lawyers: Lawyers for the Second Respondent
Gadens Lawyers: Lawyers for the Third Party Applicant