Ebner v Official Trustee in Bankruptcy

• Jurisdiction: Australia Federal only
• Judge: Gleeson CJ,McHugh,Gummow,Hayne JJ,Gaudron J,Kirby J,Callinan J
• Judgment Date: 07 December 2000
• Neutral Citation: [2000] HCA 63,2000-1207 HCA A
• Court: High Court
• Docket Number: M131/1999

Maxwell William Ebner

Appellant

and

The Official Trustee in Bankruptcy

Respondent

Clenae Pty Ltd & Ors

Appellants

and

Australia and New Zealand Banking Group Limited

Respondent

[2000] HCA 63

Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ

M131/1999

HIGH COURT OF AUSTRALIA

Ebner v The Official Trustee in Bankruptcy

Clenae Pty Ltd v ANZ Banking Group Ltd

Courts and judges — Bias — Reasonable apprehension of bias — Direct or indirect shareholding by judge in a corporation which is a party to litigation or financially interested in its outcome — Whether judge automatically disqualified — Principles governing disqualification — Disclosure — Relationship between principles governing disqualification and requirement of disclosure — Necessity — Whether there is a principle of necessity — Circumstances for operation of principle of necessity.

Constitutional Law (Cth) — Chapter III — Judicature of the Commonwealth — Impartiality of Judiciary — Bias — Reasonable apprehension of bias — Whether requirement of impartial and independent judge derived from implications arising from Chapter III of the Constitution.

Words and Phrases: ‘impartial’, ‘independent’.

Constitution, Ch III.

Representation:

G T Bigmore QC with M N C Harvey for the appellant (instructed by Clayton Utz)

J B R Beach QC with M Clarke for the respondent (instructed by Deacons)

ORDER

Appeal dismissed with costs.

1 Gleeson CJ, McHugh, Gummow and Hayne JJ. These two appeals were heard together. In each case it was contended that the judge who heard and determined the proceedings at first instance was disqualified by reason of a shareholding in a listed public company, Australia and New Zealand Banking Group Ltd (‘the Bank’). In the first case, the judge did not hold shares in the Bank personally, but was a beneficiary of a trust which held the shares. The Bank was not a party to the proceedings, but had a financial interest in the outcome. In the second case, the judge held the shares personally, and the Bank was a party to the proceedings. In that case, the circumstances in which the judge came to hold the shares also gave rise to a question whether, even if the judge would otherwise have been disqualified, considerations of necessity required that he should determine the matter.

2 Ownership of shares in a listed public company, a common form of investment, is one possible form of association between a judge and a litigant, and of potential interest in the outcome of litigation. The facts of these two cases illustrate differences in the nature and degree of the association and potential interest that might exist. Such possible differences are further exemplified by Dovade Pty Ltd v Westpac Banking Group1. In that case a bank was a party to litigation. The trial judge was a customer of the bank, which held a mortgage over some land owned by the judge. The judge's wife owned shares in the bank worth about $89,000 2. There are many possible forms of association, personal, social, financial, or ideological, that might exist between a judge and a litigant, or someone concerned in litigation. Such association may, or may not, have the potential to bring into question the independence or impartiality of the judge. It may, or may not, give rise to a suggestion that a judge has an interest in the outcome of proceedings.

3 Fundamental to the common law system of adversarial trial is that it is conducted by an independent and impartial tribunal. Perhaps the deepest historical roots of this principle can be traced to Magna Carta (with its declaration that right and justice shall not be sold 3) and the Act of Settlement 1700 4 (with its provisions for the better securing in England of judicial

independence 5). It is a principle which could be seen to be behind the confrontation in 1607 between Chief Justice Coke and King James about the supremacy of law 6. It could be seen to be applied when Bacon was stripped of office and punished for taking bribes from litigants 7. Many other examples could be drawn from history. It is unnecessary, however, to explore the historical origins of the principle. It is fundamental to the Australian judicial system.

4 The principle has been applied not only to the judicial system but also, by extension, to many other kinds of decision making and decision maker. Most often it now finds its reflection and application in the body of learning that has developed about procedural fairness 8. The application of the principle in connection with decision makers outside the judicial system must sometimes recognise and accommodate differences between court proceedings and other kinds of decision making. Two examples will suffice to make the point. First, as Mason CJ and Brennan J said in Laws v Australian Broadcasting Tribunal9:

‘The rule of necessity gives expression to the principle that the rules of natural justice cannot be invoked to frustrate the intended operation of a statute which sets up a tribunal and requires it to perform the statutory functions entrusted to it. Or, to put the matter another way, the statutory requirement that the tribunal perform the functions assigned to it must prevail over and displace the application of the rules of natural justice. Those rules may be excluded by statute: Twist v Randwick Municipal Council10;

Salemi v MacKellar [No 2] 11; FAI Insurances Ltd v Winneke12.’

Secondly, few administrative decision makers would enjoy the degree of independence and security of tenure which judges have.

5 These differences, however, must not obscure the fundamental principle. That principle is obviously infringed in a case of actual bias on the part of a judicial officer or juror. No suggestion of actual bias is made in the present appeals.

6 Where, in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge (or other judicial officer or juror), as here, the governing principle is that, subject to qualifications relating to waiver (which is not presently relevant) or necessity (which may be relevant to the second appeal), 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 13. That principle gives effect to the requirement that justice should both be done and be seen to be done 14, a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial. It is convenient to refer to it as the apprehension of bias principle.

7 The apprehension of bias principle may be thought to find its justification in the importance of the basic principle, that the tribunal be independent and

impartial. So important is the principle that even the appearance of departure from it is prohibited lest the integrity of the judicial system be undermined. There are, however, some other aspects of the apprehension of bias principle which should be recognised. Deciding whether a judicial officer (or juror) might not bring an impartial mind to the resolution of a question that has not been determined requires no prediction about how the judge or juror will in fact approach the matter. The question is one of possibility (real and not remote), not probability. Similarly, if the matter has already been decided, the test is one which requires no conclusion about what factors actually influenced the outcome. No attempt need be made to inquire into the actual thought processes of the judge or juror.

8 The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an ‘interest’ in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.

9 The apprehension of bias principle which has become part of the common law of Australia is expressed somewhat differently from the corresponding principle adopted in England 15. Allowing for that difference, it is of interest to note what was said recently by the Court of Appeal of England in Locabail (UK) Ltd v Bayfield Properties Ltd16:

‘In practice, the most effective guarantee of the fundamental right [to a hearing before an impartial tribunal] is afforded not … by the rules which provide for disqualification on grounds of actual bias, nor by those which provide for automatic disqualification, because automatic

disqualification on grounds of personal interest is extremely rare and judges routinely take care to disqualify themselves, in advance of any hearing, in any case where a personal interest could be thought to arise. The most effective protection of the right is in practice afforded by a rule which provides for the disqualification of a judge, and the setting aside of a decision, if on examination of all the relevant circumstances the court concludes that there was a real danger (or possibility) of bias.’

10 The concluding words of that passage reflect the difference between the English and Australian apprehension of bias rules. Substituting the Australian rule for the English, we agree with what the Court of Appeal said.

11 For reasons that will appear, in both of the present appeals the...