Nicholls v Michael Wilson & Partners Limited  NSWCA 222 is a recent New South Wales Court of Appeal judgment which has an interesting spin on disqualification of judges for bias. The case was an appeal against an action in the Supreme Court which resulted in a very substantial award for the actions of some Australian lawyers in Kazakhstan in leaving their old law firm and taking the clients with them. The law firm then took global action against the Australian lawyers, which for those who know me will be aware I was briefly involved. My part was a bit part of no consequence, but the case has created some interesting law, not much of which survived to the Court of Appeal. In this note I will just deal with the bias aspect because this has some resonance for New Zealand lawyers following the recent resignation of Justice Bill Wilson from the New Zealand Supreme Court.
The Nicholls case is somewhat different, but the NSW Court of Appeal overturned the decision on a number of grounds including what is described as a reasonable apprehension of bias. The court held that because the judge heard a number of ex parte applications over a lengthy period, in which the courts were closed, including keeping secret files in his chambers at one stage, that a dangerous perception of bias was created. The defendants only became aware of the existence of the ex parte applications and the content and the confidentiality orders late in the day. They made an application that the judge recuse himself, but he refused.The test was applied of whether a fair minded bystander might consider that trial judge might not bring to bear a mind free of prejudice against the party in whose absence affidavits had been read and orders made. It is worth noting that the court identified seven occasions on which the judge had entertained ex parte applications in closed court and had delivered three confidential judgments and had made confidential orders. There were 3 applications for recusal, rejected by the trial judge.
At para 10 the court said:-"Because the hypothetical fair-minded observer is postulated to emphasise the purpose of maintaining public confidence in the administration of justice, the postulate has particular relevance in circumstances where a judge may have confidence in her or her colleague’s ability to avoid prejudgment, but the lay observer may not. On the other hand, where the reviewing judge holds an apprehension of prejudgment it seems unnecessary to ask whether that apprehension would be shared by the lay observer. As the present case illustrates, to inquire into the mind of the lay observer may, in some circumstances, require the attribution of quite sophisticated knowledge about how the legal system usually operates. Without that knowledge, the lay observer may say, ‘If that is how the system usually operates, I am content with that’. A judge may know that that is not how the system usually operates, or is not how it should operate. It might be thought sufficient for the reviewing judge to rely on his or her own apprehension of bias in such circumstances, rather than undertaking the wholly artificial exercise of transferring the knowledge of the professional to the hypothetical lay observer. To reiterate, the role of the lay observer may be critical in the reasoning process where the reviewing judge does not personally entertain a relevant apprehension"
However the failure to properly consider the effect of the confidential material on an assessment of the evidence of Mr Wilson where issues of adverse findings were considered, meant that that a lay observer may have thought the judge biased.
The law firm is I expect upset that they have to have a rehearing of the case, although some of the other findings of the judge did not survive either and the result on re hearing may be different. It illustrates the enormous litigation risk, even with the best counsel and leading law firms. But it can also demonstrate the need to focus on a few good points rather take a scattergun approach to litigation. If this had been done, and a more open and transparent approach rather than the secret squirrel approach adopted, the judgment would have been more focused and less susceptible to appeal.