Michael.1
Insolvency and related law and policy, and more

Michael Murray is an Australian author and commentator on corporate and personal insolvency law and related issues, in Australia and internationally. He has a strong law and policy background, is independent of any connections, and his views are his own. He gives no legal advice. 

Judicial impartiality report awaits the High Court decision in Charisteas – more dancing on pinheads

Following a recent Australian Law Reform Commission seminar – Impartiality from both sides of the Bench | ALRC  – held on 19 July 2021, the ALRC advised that the “next progress points” for its inquiry are the judgment of the High Court of Australia in Charisteas[1] and the publication of the ALRC’s final report. That is because the terms of reference require the ALRC to report by 30 September 2021, or two months from delivery of the Charisteas decision, whichever is later.

[For earlier comment, see Apprehensions of the fair-minded lay observer – a law reform review of judicial impartiality | Murrays Legal.]

The High Court[2] heard the Charisteas matter on 3 September 2021 and a judgment is reserved.[3]  It involves in part a question of whether there was a reasonable apprehension of bias because the judge hearing a matter engaged in undisclosed communications and personal contact over coffee with the then counsel for one of the parties prior to the commencement of the trial and after judgment was reserved but before judgment was delivered. The Family Court held by a majority that there was no reasonable apprehension of bias: Strickland and Ryan JJ, Alstergen CJ dissenting.[4]

The Chief Justice said that “a fair-minded lay observer might reasonably apprehend that the judge might not have brought an impartial mind to the resolution of the proceeding”.  He was on the panel at the ALRC seminar.

Insolvency practitioner independence

As I have explained, independence is much an issue in relation to insolvency practitioners, the criteria for which broadly apply the equivalent test for judges, in Ebner v Official Trustee.  IPs make quasi-judicial decisions, for example in deciding on whether to admit a creditor’s claim and for what value, and their other legally based decisions and business decisions can raise issues of perceived bias, for example not to pursue a particular asset recovery claim.

The test depends on reasonable perceptions that an IP would not bring an objective and fair mind to a decision to be made, even if there is no real concern that the IP would not do so.  Even then, it seems that human psychology can operate regardless of best intentions.

Just as the fair minded observer is taken to have some understanding of the way courts and counsel operate, so to in insolvency; for example, the fact that that the law requires debtors to choose their IP does not mean the IP is not thereby independent.  But necessarily, if the IP and the debtor are personal friends over a long period, while the IP may say he or she will carry out their duties ‘without fear or favour’, the reasonable perception is otherwise. That was the case in Commonwealth v Irving, Branson J saying that

“(q)uestions of judgment and degree will, no doubt, arise in any case in which personal associations are suggested to give rise to perceptions of possible bias. Intimate relationships of long standing will be at one end of the scale and professional connections of a passing nature will, perhaps, be at the other.  It is not, in my view, the law that mere professional acquaintanceship creates actual bias or a reasonable perception of bias”.

However, the circumstances of that particular case went “beyond mere professional acquaintanceship”.[5]

Clapham, Bondi and Emu Plains buses

The reasonable bystander has been variously described as being the man on the Clapham omnibus or the Bondi bus, with the Christeas hearing bringing up an old one, the man on the Emu Plains omnibus.[6]

In another but related context in insolvency, the rule in ex parte James, English law recently referred to the standards of the “right thinking person”, in determining whether an IP should act fairly, according to the standards of conduct of a judge, rather than in accord with the strict law. “Trustees in bankruptcy, liquidators in compulsory liquidations and administrators are all officers of the court. … As such, they are acting on behalf of the court and they will accordingly be held to these standards by the court”. 

It was in the ex parte James context that “the person on the Bondi bus” was one Australia judge’s reference point.[7]

Dancing on pinheads

The difficulty in determining criteria for these sort of issues led the English Court of Appeal to say that the formulation of the various tests in the numerous cases had something of the quality of dancing on pinheads”. The insolvency rule in ex parte James – another in a series of cases ‘dancing on pinheads’ | Murrays Legal.

In the different but related issues before the High Court in Charisteas, there are some signs of the sensitivity – physical and personal – of dancing on pinheads.

The various Judges and counsel raised issues about degrees of friendship between say a judge and a barrister, and when a relationship might cross a boundary, such that “a hypothetical observer might believe that there was an intimate relationship between the judge and the solicitor. That is over the line”. Then there are “graduations between somebody who was merely a colleague in chambers on another floor, versus the person who was in the room next to you, versus [a case where] the judge actually made a speech at the counsel’s wedding – they were that close”, leading to a comment that “there is not only one form of intimate relationship. The nature of a relationship that a practitioner and a judge might have is not to be expressed in a friendship or an intimate relationship”.

In the end, that is only part of the issue.  Judicial independence sits within a broader context of the standard of independence generally expected, in many areas, but with the standards set in some areas, for example, by government, sometimes having a pervasive and perverse influence.

A decision is awaited; as will then be the ALRC’s views through its report, to be delivered to government.

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[1] Charisteas v Charisteas & Ors (P6/2021)

[2] Kiefel CJ and Keane, Gageler, Gordon and Gleeson JJ.

[3] Charisteas v Charisteas & Ors [2021] HCATrans 141 (3 September 2021) (austlii.edu.au)

[4] [2020] FamCAFC 162

[5] Commonwealth v Irving FCA, 3 April 1996, (1996) 65 FCR 291, (1996) 144 ALR 172.

[6] S & M Motor Repairs v Caltex (1988) 12 NSWLR 358 at 375-6.

[7] Presbyterian Church Trust v Scots Church Development [2007] NSWSC 676.

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