Case: Perovich v Traditional Values Management Limited [2006] FMCA 1471
Outcome: discussed
In dealing with the disqualification application he said: "[3] The respondent made two preliminary instanter applications. First, the respondent applied for an order than I disqualify myself from hearing the application. The basis for such application was that I had earlier dismissed an application by the respondent to set aside the bankruptcy notice (see Perovich v Lane Rowin Pty Ltd [2007] FMCA 940). That decision is the subject of an appeal, but there is no stay of the judgment in force. In reliance on that fact it was submitted that the respondent perceives that I may be biased against her because of my previous adverse finding against her. I should add that I have not only decided that matter involving the respondent but other matters as well (Perovich v Neolido Holdings Pty Ltd [2007] FMCA 1105 ; Perovich v Traditional Values Management Ltd [2006] FMCA 1471 ; Perovich v Tesla Nominees Pty Ltd [2006] FMCA 1342). The respondent did not rely on my having heard those matters as founding her application that I disqualify myself." His Honour reviewed various authorities and concluded: "[12] The issue that I have previously decided is whether or not the bankruptcy notice overstated the amount due by the respondent to the applicant. That issue was decided on documentary and unchallenged evidence. No finding of credit was made against the respondent. It is presumably said that having found that the bankruptcy notice did not overstate the amount of the debt owed by the respondent to the applicant there is a reasonable apprehension that I cannot impartially decide the issue of whether the respondent is able to pay her debts, as required by s 52(2)(a) of the Act . In my view the two issues are quite separate and there is not a logical connection between my having previously determined the validity of the bankruptcy notice and the feared deviation from the course of deciding the case on its merits. I have not, because it has not previously arisen, expressed any view about a question of fact which is in issue on the present application, nor about the credit of a witness whose evidence is of significance on such a question of fact. His Honour held that in these circumstances authority mandated that he refuse to accede to the application for disqualification. 28 The appellants' argument on appeal did not seek to challenge the finding of the Federal Magistrate that he was not disqualified from dealing with the creditor's petition because of his earlier decision not to set aside the bankruptcy notice. What was argued was that the learned Magistrate should have disqualified himself by reason of the fact that he had made adverse findings relating to Mrs Perovich's credit in another, earlier, decision, to which he referred in his reasons, namely, Perovich v Traditional Values Management Limited [2006] FMCA 1471. In that case the Magistrate had dealt with an application by the appellants for a declaration that a bankruptcy notice had not properly been served on them. Mrs Perovich swore an affidavit in support of the application and gave oral evidence before the Federal Magistrate. He found significant parts of that evidence to be unsatisfactory. He found her to be an unreliable witness. She was "evasive and vague when it suited her, and implausible in other respects." He was not prepared to act on her unsupported evidence. The application was dismissed. This occurred on 14 September 2006. 29 Senior counsel for Mrs Perovich (who did not appear below) accepted that the adverse credit findings in Traditional Values were not relied on in support of the disqualification application. He also accepted that these findings were known to Mrs Perovich prior to the disqualification application being made and that, for some unexplained reason, they were not made known to counsel then appearing. Despite this, it was argued that the Federal Magistrate should be taken to have been aware of his earlier decision, given that he had referred to it in his reasons in the present case. Attention was also directed to the Federal Magistrate's statement that he had not previously expressed any view about the credit of any witness appearing before him. 31 Mrs Perovich contends that a reasonable apprehension of bias on the part of the Federal Magistrate arose in the present case because he had earlier made adverse findings relating to her credit and because there was a significant issue to be decided which depended, if she were to prevail, upon acceptance of her evidence that she was not insolvent. During argument senior counsel accepted that, by reason of the effluxion of time, the Federal Magistrate may well have forgotten that he had earlier made adverse findings concerning Mrs Perovich's credibility. Although Traditional Values had been referred to in the Magistrate's reasons, it was possible that this was because the Magistrate had extracted the case name from Court records without re-reading his reasons. Nonetheless, senior counsel submitted that the reasonable observer, seized of the knowledge that the earlier adverse credit findings had been made, would entertain a reasonable suspicion that the Magistrate would have regard to those findings when resolving credibility issues in the present case. Although the disqualification application had been made only by reference to the Federal Magistrate's earlier refusal to set aside the bankruptcy notice, the application had been made. This was not a case, so the argument ran, in which an applicant with good reason to seek a judge's disqualification stood by in the hope of a favourable decision and only alleged bias once that hope had been disappointed: cf Vakauta v Kelly [1989] HCA 44 ; (1989) 167 CLR 568 at 572. 33 I have read carefully what the Federal Magistrate said in para [12] of his reasons. They may be understood as an assertion that he had not, previously, had occasion to pass on Mrs Perovich's credibility. In this he was mistaken. The mistake was understandable given that almost twelve months separated the Traditional Values decision and the decision presently under appeal. It is also understandable because counsel appearing for Mrs Perovich had not drawn the Federal Magistrate's reasons in Traditional Values to his attention or sought to rely on them in support of the disqualification application. In these circumstances it is reasonable to infer that the learned Magistrate's mistake was attributable to him not remembering that, in Traditional Values , he had reflected adversely on Mrs Perovich's credit. A reasonable observer, knowing that the Federal Magistrate had not recalled what he had earlier said about Mrs Perovich's credibility and knowing that her credit was not in issue in the present matter, would not, in my opinion, entertain a reasonable apprehension of bias on the part of the Federal Magistrate.